EXHIBIT
10.8 – 2007 Unit Appreciation Agreement


EAST FORK BIODIESEL, LLC

2007 UNIT APPRECIATION PLAN


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EAST FORK BIODIESEL, LLC

2007 UNIT APPRECIATION PLAN


Section 1

Purpose


                    The
2007 East Fork Biodiesel Unit Appreciation Plan (the “Plan”) has been
established by East Fork Biodiesel, LLC (the “Company”), an Iowa limited
liability company, to: (a) attract and retain qualified employees and
directors; (b) motivate Participants to achieve long-range goals; (c) provide incentive
compensation opportunities that are competitive with those of similar
companies; and (d) further align Participants’ interests with those of the
Company through compensation that is based on the value of the Company’s
Membership Interests.


Section 2

Definitions


          2.1          Definitions.
When capitalized in the Plan, the following terms have the specified meanings: 


	
 

	
 


	
 

	
(a)          “Account”
 means the bookkeeping account maintained on the Company’s records for each
 Participant to reflect the value of the Award for such Participant. 


	
 

	
 


	
 

	
(b)          “Award”
 means an award of a Right under the Plan, as evidenced by a Notice of Award
 under the Plan (in a form approved by the Administrative Committee).


	
 

	
 


	
 

	
(c)          “Award
 Date” means the date the Administrative Committee makes an Award to a
 Participant under this Plan.


	
 

	
 


	
 

	
(d)          “Company”
 means East Fork Biodiesel, LLC, an Iowa limited liability company or any
 successor thereto by merger, consolidation, liquidation or other reorganization
 or change of control which has made provision for adoption of this Plan and
 the assumption of the company’s obligations thereunder. 


	
 

	
 


	
 

	
(e)          “Beneficiary”
 means the person designated by the Participant on a Beneficiary Designation
 Form provided by the Administrative Committee which is dated and signed by
 the Participant and filed with the Administrative Committee prior to the
 Participant’s death. In the event the Participant has not named a
 Beneficiary, the decedent’s estate shall be the Beneficiary. 


	
 

	
 


	
 

	
(f)          “Board”
 means the Board of Directors of the Company.


	
 

	
 


	
 

	
(g)          “Change
 in Control” means a change in the ownership or effective control of the
 Company, or in the ownership of a substantial portion of the assets of the
 Company, as such change is defined in Section 409A of the Code and
 regulations thereunder. 


	
 

	
 


	
 

	
(h)          “Code”
 means the Internal Revenue Code of 1986, as amended. 








	
 

	
 


	
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(i)          “Administrative
 Committee” means the designated committee of the Board, which has been
 appointed by the Board to oversee administration of the Plan. Unless and
 until such committee is appointed, all references to the Administrative
 Committee refer to the Board. 


	
 

	
 


	
 

	
(j)          “Disability”
 means a Participant: (1) is unable to engage in any substantial gainful
 activity by reason of any medically determinable physical or mental
 impairment which can be expected to result in death or can be expected to
 last for a continuous period of not less than twelve (12) months; or (2) is,
 by reason of any medically determinable physical or mental impairment which
 can be expected to result in death or can be expected to last for a
 continuous period of not less than twelve (12) months, receiving income replacement
 benefits for a period of not less than three (3) months under an accident and
 health plan covering employees of the Company. Medical determination of
 Disability may be made by either the Social Security Administration or by the
 provider of an accident or health plan covering employees of the Company.
 Upon the request of the Committee, the Participant must submit proof to the
 Committee of the Social Security Administration’s or the provider’s
 determination. 


	
 

	
 


	
 

	
(k)          “Effective
 Date” means the date on which this Plan is approved by the Board.


	
 

	
 


	
 

	
(l)          “Eligible
 Person” means an individual designated by the Board as eligible to
 participate in the Plan. Eligibility will be limited to a select group of
 management or highly compensated employees (of the Company and its
 subsidiaries) as contemplated within the meaning of ERISA. The Eligible
 Persons as of the Effective Date are:








	
 

	
 

	
 

	
 


	
 

	
 

	
(1)

	
the members of the Board; 


	
 

	
 

	
 

	
 


	
 

	
 

	
(2)

	
the Chief Executive
 Officer; and 


	
 

	
 

	
 

	
 


	
 

	
 

	
(3)

	
the Chief Financial
 Officer.








	
 

	
 


	
 

	
(m)          “ERISA”
 means the Employee Retirement Income Security Act of 1934, as amended.


	
 

	
 


	
 

	
(n)          “Fair
 Market Value” means the market value of each Unit of Membership Interest
 as of a Valuation Date, determined using the following method:








	
 

	
 


	
 

	
The value shall be the
 average value of all trades of Membership interests during the last three (3)
 months. If no trades have occurred during the last three (3) months, the
 value shall be the average of the trades that have occurred during the last
 six (6) months. If no trades have occurred during the last six (6) months,
 the value shall be the average of all trades that have occurred during the
 last twelve (12) months. If no trades have occurred during the past twelve
 (12) months, the Company shall engage a professional business valuation
 expert to determine the value of the Membership Interests.








	
 

	
 


	
 

	
(o)          
 “Participant” means an Eligible Person who has an Account under the
 Plan. 








	
 

	
 


	
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(p)          
 “Plan” means the 2007 East Fork Biodiesel Unit Appreciation Plan, as
 set forth in this document and as amended from time to time. 


	
 

	
 


	
 

	
(q)          
 “Right” means a Unit Appreciation Right granted in accordance with
 Section IV of this Plan. 


	
 

	
 


	
 

	
(r)          
 “Unit” means the units of ownership of East Fork Biodiesel, LLC. 


	
 

	
 


	
 

	
(s)          “Terminate”
 and “Termination” means that an employee terminates employment with
 the Company or a director ceases to be a member of the Board. If a Participant
 is both an employee and a director, Terminate and Termination mean the later
 of (1) the Participant’s termination of employment, or (2) termination as a
 member of the Board. 


	
 

	
 


	
 

	
(t)          
 “Termination Date” shall be the date an employee or director last
 performs services for the Company (or its subsidiaries) in conjunction with a
 Termination.


	
 

	
 


	
 

	
(u)          
 “Valuation Date” means the date on which the value of a Unit is
 determined for purposes an Award or conversion of an Award under of this Plan.





          2.2          Interpretation.
Wherever the fulfillment of the intent and purpose of this Plan requires, and
the context will permit, the use of the masculine gender includes the feminine
and use of the singular includes the plural.


Section 3

Participation


Subject to the terms and
conditions of the Plan, the Administrative Committee shall determine and
designate, from time to time, the Eligible Persons who will be granted one or
more Awards under the Plan. Upon receiving an Award, an Eligible Person shall
become a Participant in the Plan and shall continue to be a Participant until
his or her entire interest in the Plan is distributed.


Section 4

Stock Appreciation Right


          4.1          Characteristics.
A Right is a right that entitles the Participant to receive, in cash and under
the conditions and at the time and form payable under the Plan, the value equal
to the excess, if any, of: (i) the Fair Market Value of a Unit of Membership
Interest on a Valuation Date; over (ii) the Fair Market Value of a Unit of
Membership Interest on the date of an Award. Rights do not have voting rights
or any other rights of the owner of an actual Unit.


          4.2          Aggregate
Number of Units. The total number of authorized Units under this Plan is __________
(____) Units. The aggregate number of Units awarded to any one Participant
shall be _______________ (___) Units; provided, however, upon Termination of a
Participant, the Units awarded to him shall no longer be considered outstanding
for purposes of this Section 4.2. 


	
 

	
 


	
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          4.3          Awards.
The Administrative Committee shall make Awards under this Plan by issuing a
Notice of Award to Participants. Awards under this Plan shall be in the form of
Rights, which shall be credited to a separate bookkeeping account for each
Participant to track the value of the Rights for that Participant. Each Right
shall be assigned an initial value equal to the Fair Market Value of one Unit
of Membership Interest on the date of the Award. The Administrative Committee
has discretion to vary the terms of an Award based on each Participant’s
situation and the best interests of the Company. The Notice of Award may
include such provisions as the Committee deems necessary to comply with the
terms of an employment agreement between a Participant and the Company. 


          4.4          Vesting.



	
 

	
 


	
 

	
(a)          
 General Schedule. Awards under this Plan shall be vested under the
 following schedule, provided that the Participant continues to be employed by
 the Company (or continues to be a director of the Company, as the case may
 be) at the applicable time:








	
 

	
 

	
 

	
 


	
Time

	
 

	
Vesting Percentage


	


	


	



	
The date of the Award

	
 

	
20

	
%


	
The first anniversary of
 the date of the Award

	
 

	
40

	
%


	
The second anniversary of
 the date of the Award

	
 

	
60

	
%


	
The third anniversary of
 the date of the Award

	
 

	
80

	
%


	
The fourth anniversary of
 the date of the Award

	
 

	
100

	
%





The unvested portion of an
Award shall be immediately forfeited upon the Participant’s Termination Date. 


	
 

	
 


	
 

	
(b)          Accelerated
 Vesting. Rights not otherwise vested under Section 4.4(a) above shall
 become immediately 100% vested upon the occurrence of any of the following
 events while the Participant is employed by the Company or is a director of
 the Company, as the case may be: (1) the Participant’s death or Disability,
 (2) a Change in Control, or (3) upon Participant’s retirement after attaining
 age sixty-five (65) with at least five (5) years of service with the Company.


	
 

	
 


	
 

	
(c)          Discretionary
 Authority. The Administrative Committee has complete discretion and
 authority to change the vesting schedule for one or more Participants, which
 may include acceleration of vesting under current or prior Awards, to the
 extent such change is deemed to be in the best interests of the Company. 


	
 

	
 


	
 

	
(d)          Forfeiture
 for Felony Conviction. If a Participant is convicted of a felony related
 to his or her duties as an employee or director of the Company, his or her
 entire Account shall be forfeited immediately upon entry of the conviction.
 If the felony conviction is reversed on appeal, the Participant’s Account
 shall be reinstated as if the conviction had never occurred. 








	
 

	
 


	
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(e)          Termination
 for Cause. If a Participant is Terminated “for cause,” then his or her
 unvested Rights shall be permanently forfeited, no further appreciation shall
 be credited to his or her Account after the Termination Date, the
 Participant’s distribution elections shall be automatically revoked, and the
 vested Account balance shall be distributed in a single lump sum as soon as
 practicable after the Termination Date. For purposes of this Plan,
 Termination “for cause” means Termination for any of the following reasons: 








	
 

	
 


	
 

	
(1)          commission
 of an intentional act of fraud, embezzlement, or theft that occurs while
 performing services as an employee or director of the Company; 


	
 

	
 


	
 

	
(2)          intentional
 damage to the Company’s assets; 


	
 

	
 


	
 

	
(3)          intentional
 breach of any of the Company’s written policies, including policies regarding
 confidentiality;


	
 

	
 


	
 

	
(4)          intentional
 breach of an employment agreement; 


	
 

	
 


	
 

	
(5)          willful
 and continued failure to substantially perform the Participant’s duties for
 the Company (other than as a result of Disability); or 


	
 

	
 


	
 

	
(6)          willful
 conduct by the Participant that is demonstrably and materially injurious to
 the Company, whether monetarily or otherwise.





Section 5

Payment


          5.1
          Time and Form of
Payment. Unless a Participant makes a different election under Section 5.2
or 5.3, a Participant’s Account shall be distributed beginning on his or her
Termination Date (allowing for a reasonable administrative delay to process the
distribution) and the distribution shall be paid in five (5) substantially
equal annual installments. If the Participant is a “key employee” as defined in
Code Section 416(i) and regulations under Code Section 409A, and the
distribution is made on account of the Participant’s termination of employment
(for a reason other than death, Disability, or a Change in Control), the first
installment may not be paid earlier than six (6) months after the Participant’s
Termination Date. 


          5.2
          Initial Election
By Participant. No later than thirty (30) days after a Participant is
notified of an Award, the Participant may elect the time and the form of
payment of the Account balance.


	
 

	
 


	
 

	
(a)            Time
 of Payment. The Participant may elect a scheduled distribution date,
 which may not be later than the later of (1) the January containing or next
 following the Participant’s sixty-fifth (65th) birthday; or (2)
 his or her Termination Date. 


	
 

	
 


	
 

	
(b)            Form
 of Payment. The Participant may elect from the following forms of payment:
 single lump sum or substantially equal annual installments over five (5), ten
 (10), fifteen (15) or twenty (20) years.








	
 

	
 


	
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         5.3          Subsequent
Election by Participant. A Participant may change his or her form of
distribution determined under Section 5.1 or 5.2, provided that: 


	
 

	
 


	
 

	
(a)          his
 or her change is filed with the Committee at least twelve (12) months prior
 to the date that a payment would otherwise be made; and 


	
 

	
 


	
 

	
(b)          the
 first payment made under the subsequently elected form of payment cannot be
 made sooner than five (5) years after the date that a payment would have been
 made in the absence of this subsequent election. 





For purposes of this Section
5.3, the payment date for a series of installment payments is treated as the
date on which the first of such installment payments would be made under the
terms of this Plan.


          5.4
        Intervening Events. A Participant’s Account shall be distributed
immediately in a single lump sum if, prior to the Participant’s Termination
Date, any of the following events occur:


	
 

	
 


	
 

	
(a)          the
 Participant’s death;


	
 

	
 


	
 

	
(b)          a
 Change in Control; 


	
 

	
 


	
 

	
(c)          the
 Participant’s Disability; or


	
 

	
 


	
 

	
(d)          the
 Participant’s Termination “for cause”; provided, however, in the event of a
 Termination “for cause,” the Participant’s Account shall be distributed in a
 single lump sum as soon as practicable after Termination, in accordance with
 Section 4.4(e).





Section 6

Death of Participant


          6.1          Death
Before Distributions Begin. If the Participant dies before distributions
begin, the Administrative Committee shall authorize distribution of the Account
to the Beneficiary in the form of a single lump sum as soon as administratively
possible after receiving proof of the Participant’s death. 


          6.2          Death
During Distribution of a Benefit. If the Participant dies after any benefit
distributions have begun under this Plan, but before receiving all such
distributions, the Administrative Committee shall distribute to the Beneficiary
the remaining benefits at the same time and in the same amounts that would have
been distributed to the Participant if the Participant had survived. 


          6.3          Beneficiary
Designations. Each Participant shall have the right, at any time, to
designate a Beneficiary to receive any benefit distributions under this Plan
upon the death of the Participant. The Participant shall designate a
Beneficiary by completing and signing the


	
 

	
 


	
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Beneficiary Designation
Form, and delivering it to the Administrative Committee or its designated
agent. If the Participant names someone other than his or her spouse as a
Beneficiary, a spousal consent, in the form designated by the Administrative
Committee, must be signed by the Participant’s spouse and returned to the
Administrative Committee. The Participant’s beneficiary designation shall be
deemed automatically revoked if the Beneficiary predeceases the Participant or
if the Participant names a spouse as Beneficiary and the marriage is
subsequently dissolved. The Participant shall have the right to change a
Beneficiary by completing, signing and otherwise complying with the terms of
the Beneficiary Designation Form and the Plan’s rules and procedures, as in
effect from time to time. Upon the acceptance by the Administrative Committee
of a new Beneficiary Designation Form, all Beneficiary designations previously
filed shall be cancelled. The Administrative Committee shall be entitled to
rely on the last Beneficiary Designation Form filed by the Participant and
accepted by the Administrative Committee prior to the Participant’s death. No
designation or change in designation of a Beneficiary shall be effective until
received, accepted and acknowledged by the Administrative Committee or its
designated agent. If the Participant dies without a valid beneficiary
designation, or if all designated Beneficiaries predecease the Participant,
then the Participant’s spouse shall be the designated Beneficiary. If the
Participant has no surviving spouse, the benefits shall be made to the personal
representative of the Participant’s estate.


Section 7

Limitations


          7.1          Requirement
of Non-Competition. If the employment agreement of any Participant contains
a requirement that the Participant refrain from competition with the Company,
at any time the Committee determines that a Participant is in violation of such
non-competition agreement, it may discontinue the payment of such benefits to
such person.


Section 8

Administration of the Plan


          8.1          Administrative
Committee Duties. This Plan shall be administered by the Administrative
Committee. The Administrative Committee shall administer this Plan according to
its express terms and shall also have the discretion and authority to (i) make,
amend, and enforce all appropriate rules and regulations for the administration
of this Plan, and (ii) decide or resolve any and all questions, including
interpretations of this Plan, as may arise in connection with the Plan to the
extent the exercise of such discretion and authority does not conflict with
Section 409A of the Code and regulations thereunder. 


          8.2          Agents.
In the administration of this Plan, the Administrative Committee may designate
agents and delegate to them such administrative duties as it sees fit, and may
from time to time consult with counsel who may be counsel to the Company.
Unless specifically stated to the contrary, the Administrative Committee’s
agents shall have the same discretion and authority as the Administrative
Committee itself. 


          8.3          Binding
Effect of Decisions. The decision or action of the Administrative Committee
or its designated agent with respect to any question arising out of or in
connection


	
 

	
 


	
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with the administration,
interpretation and application of the Plan including those persons who shall be
participants in the Plan and the number of Units awarded, and the rules and
regulations promulgated hereunder shall be final and conclusive and binding
upon all persons having any interest in the Plan. 


          8.4          Indemnity
of Administrative Committee. The Company shall indemnify and hold harmless
the members of the Administrative Committee against any and all claims, losses,
damages, expenses or liabilities arising from any action or failure to act with
respect to this Plan, except in the case of willful misconduct by the Committee
or any of its members. 


          8.5          Company
Information. To enable the Administrative Committee to perform its
functions, the Company shall supply full and timely information to the
Administrative Committee on all matters relating to the date and circumstances
of the retirement, Disability, death, or Termination Date of the Participant,
and such other pertinent information as the Administrative Committee may
reasonably require. The Participant hereby consents to the disclosure of such
information to the Administrative Committee or its designated representative.


Section 9

Claim Procedures


          9.1          Claims
Procedure. A Participant or Beneficiary (“claimant”) who has not received
benefits under the Plan that he or she believes should be distributed shall
make a claim for such benefits as follows:


	
 

	
 


	
 

	
(a)          Initiation
 – Written Claim. The claimant initiates a claim by submitting to the
 Administrative Committee a written claim for the benefits. If such a claim
 relates to the contents of a notice received by the claimant, the claim must
 be made within sixty (60) days after such notice was received by the
 claimant. All other claims must be made within one hundred eighty (180) days
 of the date on which the event that caused the claim to arise occurred. The
 claim must state with particularity the determination desired by the
 claimant. 


	
 

	
 


	
 

	
(b)          Timing
 of Committee Response. The Administrative Committee shall respond to such
 claimant within ninety (90) days after receiving the claim. If the
 Administrative Committee determines that special circumstances require
 additional time for processing the claim, the Administrative Committee can
 extend the response period by an additional ninety (90) days by notifying the
 claimant in writing, prior to the end of the initial ninety (90) day period,
 that an additional period is required. The notice of extension must set forth
 the special circumstances and the date by which the Committee expects to
 render its decision. 


	
 

	
 


	
 

	
(c)          Notice
 of Decision. If the Committee denies part or all of the claim, the
 Committee shall notify the claimant in writing of such denial. The Committee
 shall write the notification in a manner calculated to be understood by the
 claimant. The notification shall set forth:








	
 

	
 


	
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(1)          the
 specific reasons for the denial; 


	
 

	
 


	
 

	
(2)          a
 reference to the specific provisions of the Plan on which the denial is
 based; 


	
 

	
 


	
 

	
(3)          a
 description of any additional information or material necessary for the
 claimant to perfect the claim and an explanation of why it is needed; 


	
 

	
 


	
 

	
(4)          an
 explanation of the Plan’s review procedures and the time limits applicable to
 such procedures; and 


	
 

	
 


	
 

	
(5)          a
 statement of the claimant’s right to bring a civil action under ERISA Section
 502(a) following an adverse benefit determination on review.





          9.2          Review
Procedure. If the Administrative Committee denies part or all of the claim,
the claimant shall have the opportunity for a full and fair review by the Administrative
Committee of the denial, as follows:


	
 

	
 


	
 

	
(a)
           Initiation –
 Written Request. To initiate the review, the claimant, within sixty (60)
 days after receiving the Administrative Committee’s notice of denial, must
 file with the Administrative Committee a written request for review. 


	
 

	
 


	
 

	
(b)
           Additional
 Submissions – Information Access. The claimant shall then have the
 opportunity to submit written comments, documents, records and other
 information relating to the claim. The Administrative Committee shall also
 provide the claimant, upon request and free of charge, reasonable access to,
 and copies of, all documents, records and other information relevant (as
 defined in applicable ERISA regulations) to the claimant’s claim for benefits.
 


	
 

	
 


	
 

	
(c)
           Considerations
 on Review. In considering the review, the Administrative Committee shall
 take into account all materials and information the claimant submits relating
 to the claim, without regard to whether such information was submitted or
 considered in the initial benefit determination. 


	
 

	
 


	
 

	
(d)
           Timing of
 Administrative Committee Response. The Administrative Committee shall
 respond in writing to such claimant within sixty (60) days after receiving
 the request for review. If the Administrative Committee determines that
 special circumstances require additional time for processing the claim, the
 Administrative Committee can extend the response period by an additional
 sixty (60) days by notifying the claimant in writing, prior to the end of the
 initial sixty (60)-day period, that an additional period is required. The
 notice of extension must set forth the special circumstances and the date by
 which the Administrative Committee expects to render its decision. 


	
 

	
 


	
 

	
(e)
           Notice of
 Decision. The Administrative Committee shall notify the claimant in
 writing of its decision on review. The Committee shall write the notification
 in a manner calculated to be understood by the claimant. The notification
 shall set forth:








	
 

	
 


	
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(1)          the
 specific reasons for the denial; 


	
 

	
 


	
 

	
(2)          a
 reference to the specific provisions of the Plan on which the denial is
 based; 


	
 

	
 


	
 

	
(3)          a
 statement that the claimant is entitled to receive, upon request and free of
 charge, reasonable access to, and copies of, all documents, records and other
 information relevant (as defined in applicable ERISA regulations) to the
 claimant’s claim for benefits; and 


	
 

	
 


	
 

	
(4)          a
 statement of the claimant’s right to bring a civil action under ERISA Section
 502(a).





          9.3          Delegation
of Authority to Decide Claims. The Administrative Committee may delegate
its authority to decide claims to one or more officers of the Company, and such
delegation shall include the full discretionary authority granted to the
Administrative Committee under Section 8.1. If the claimant is a member of the
Administrative Committee or has been delegated authority by the Administrative
Committee, the claimant may not participate in the deliberation or
decision-making process regarding his or her own claim.


Section 10

Amendments & Termination


          10.1          Amendments.
This Plan may be amended only by action of the Board, evidenced by a written
amendment signed by an authorized representative of the Company. 


          10.2          Plan
Termination Generally. This Plan may be terminated only by action of the
Board, evidenced by a written amendment signed by an authorized representative
of the Company. Any Rights granted under the Plan prior to the date of
termination shall be governed by the terms of the Plan (including any
provisions with respect to continued vesting) in effect prior to the Board’s
action to terminate the Plan. Except as provided in Section 10.3, the termination
of this Plan shall not cause a distribution of benefits under this Plan.
Rather, upon such termination benefit distributions will be made at the
earliest distribution event permitted under Section V. 


          10.3          Plan
Terminations Under Section 409A. The Company may distribute the vested
Account balance, determined as of the Valuation Date immediately preceding
termination of the Plan, to the Participant in a lump sum if the Company
terminates this Plan in the following circumstances:


	
 

	
 


	
 

	
(a)          Within
 thirty (30) days before, or twelve (12) months after a Change in Control,
 provided that all distributions are made no later than twelve (12) months
 following such termination of the Plan and further provided that all the
 Company’s arrangements which are substantially similar to the Plan are
 terminated so the Participant and all participants in the similar
 arrangements are required to receive all amounts of compensation deferred 








	
 

	
 


	
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under the terminated
 arrangements within twelve (12) months of the termination of the
 arrangements; or


	
 

	
 


	
 

	
(b)          Upon
 the Company’s dissolution or with the approval of a Bankruptcy court provided
 that the amounts deferred under the Plan are included in the Participant’s
 gross income in the latest of (1) the calendar year in which the Plan
 terminates; (2) the calendar year in which the amount is no longer subject to
 a substantial risk of forfeiture; or (3) the first calendar year in which the
 distribution is administratively practical; or 


	
 

	
 


	
 

	
(c)          Upon
 the Company’s termination of this and all other account balance plans (as
 referenced in Section 409A of the Code or the regulations thereunder),
 provided that all distributions are made no earlier than twelve (12) months
 and no later than twenty-four (24) months following such termination, and the
 Company does not adopt any new account balance plans for a minimum of five
 (5) years following the date of such termination.





Section 11

Miscellaneous


          11.1          Binding
Effect. This Plan shall bind the Participant and the Company, and their
beneficiaries, survivors, executors, administrators and transferees. 


          11.2          No
Guarantee of Employment. This Plan is not a contract for employment. It
does not give the Participant the right to remain as an employee or director of
the Company, does not interfere with the Company’s right to discharge the
Participant, nor does it constitute evidence of a Participant’s compensation at
any particular rate of remuneration. It also does not require the Participant
to remain an employee or director nor interfere with the Participant’s right to
terminate employment at any time. 


          11.3          Non-Transferability.
Benefits under this Plan cannot be sold, transferred, assigned, pledged,
attached or encumbered in any manner. 


          11.4          Tax
Withholding and Reporting. The Company shall withhold any taxes that are
required to be withheld, including but not limited to taxes owed under Section
409A of the Code and regulations thereunder, from the benefits provided under
this Plan. The Participant acknowledges that the Company’s sole liability
regarding taxes is to forward any amounts withheld to the appropriate taxing
authority(ies). Further, the Company shall satisfy all applicable reporting
requirements, including those under Section 409A of the Code and regulations
thereunder. 


          11.5          Applicable
Law. The Plan and all rights hereunder shall be governed by the laws of the
State of Washington, except to the extent preempted by the laws of the United
States of America. 


          11.6          Unfunded
Arrangement. The Rights are merely an unfunded and unsecured promise to pay
dollars in the future, i.e. deferred compensation subject to forfeiture. Each


	
 

	
 


	
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Participant and each
Beneficiary are general unsecured creditors of the Company for the distribution
of benefits under this Plan. The benefits represent the mere promise by the
Company to distribute such benefits. It is not intended that the Rights
constitute “property” under Code § 83, nor that it be constructively received
by a Participant under the Code. The rights to benefits are not subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment, or garnishment by creditors. Any insurance on the
Participant’s life or other informal funding asset is a general asset of the
Company to which the Participant and Beneficiary have no preferred or secured
claim. 


          11.7          Entire
Plan. This Plan constitutes the entire agreement between the Company and
the Participant as to the subject matter hereof. No rights are granted to the
Participant by virtue of this Plan other than those specifically set forth
herein. 


          11.8          Alternative
Action. In the event it shall become impossible for the Company or the
Committee to perform any act required by this Plan, the Company or Committee
may in its discretion perform such alternative act as most nearly carries out
the intent and purpose of this Plan and is in the best interests of the
Company, provided that such alternative acts do not violate Section 409A of the
Code. 


          11.9          Headings.
Article and section headings are for convenient reference only and shall not
control or affect the meaning or construction of any of its provisions. 


          11.10          Validity.
In case any provision of this Plan shall be illegal or invalid for any reason,
said illegality or invalidity shall not affect the remaining parts hereof, but
this Plan shall be construed and enforced as if such illegal and invalid
provision has never been inserted herein. 


          11.11          Compliance
with Section 409A. This Plan shall at all times be administered and the
provisions of this Plan shall be interpreted consistent with the requirements
of Section 409A of the Code and any and all regulations thereunder, including
such regulations as may be promulgated after the Effective Date of this Plan.


          IN
WITNESS WHEREOF, and pursuant to proper authority, a duly authorized
representative of the Company has signed this Plan on this 17th
day of September, 2007. 


EAST FORK BIODIESEL, LLC 


	
 

	
 


	
By: 

	



	
 

	






	
 

	
 

	
 

	
 

	
 


	
Name:

	
Kenneth M.
 Clark, 

	
 

	
its

	

 President







	
 

	
 


	
© Lane & Waterman LLP

	
12











EAST FORK BIODIESEL, LLC

2007 UNIT APPRECIATION PLAN


NOTICE OF AWARD AND AGREEMENT


          This
Agreement is entered into between East Fork Biodiesel, LLC (the “Company”) and
the _________________________________ (the “Participant”), pursuant to the East
Fork Biodiesel, LLC 2007 Unit Appreciation Plan (the “Plan”). 


	
 

	
 


	
I.

	
Provisions of Plan 





         Participant,
by his/her signature below, hereby acknowledges (a) receipt of a copy of the
Plan document, (b) having read and understood the provisions of the Plan
respecting the entitlement to and calculation of benefits, and (c) that the
Plan may be amended or terminated by the Board of Directors at any time in
accordance with its terms. All of the terms and conditions of the Plan are contained
in the Plan document. Capitalized terms used herein shall have the meaning so
defined in the Plan document. In the event of any conflict between this
Agreement and the Plan, the provisions of the Plan shall be controlling. 


	
 

	
 


	
II.

	
Award, Valuation, Vesting and Conversion of Rights 





          A.          Award.
Pursuant to this Notice of Award, the Company has awarded Participant _________________ (_____)
Unit Appreciation Rights under the Plan. Participant agrees to the terms of the
Plan governing the vesting, conversion and distribution of the Award and
understands that the elections made in this Agreement will be effective for the
Rights awarded and, unless a subsequent election is made at the time of, and
with respect to, future Awards, shall also apply to any other Awards under the
Plan. The elections are irrevocable, except as specifically set forth in the
Plan. 


          B.          Value.
The base value of each Unit awarded under this Notice of Award, for purposes of
Section 4.2 of the Plan, represents the Fair Market Value of one (1) Unit of
the Company’s Membership Interests at the closing price as of the date this
Award is approved by the Board or the Administrative Committee. 


          C.          Vesting.
This Award shall vest in accordance with the Vesting provisions of Plan Section
4.4. 


	
 

	
 


	
III.

	
Timing and Form of Distribution 





          Participant
understands that the distribution of his or her Account under the Plan shall be
paid in cash at the time and in the form set forth in the Plan, unless the
Participant indicates a different time and/or form of payment in the following
tables: 


	
 

	
 

	
 

	
 


	
 

	
A.

	
Time of Payment (Select
 One):


	
 

	
 

	
o

	
Scheduled Distribution
 Date:________________________ (specify date)


	
 

	
 

	
o

	
Participant’s Termination
 Date





1







	
 

	
 

	
 

	
 


	
 

	
B.

	
Form of Payment (Select
 One):


	
 

	
 

	
o

	
Single lump sum


	
 

	
 

	
o

	
Approximately equal
 installments over five (5) years.


	
 

	
 

	
o

	
Approximately equal installments
 over ten (10) years.


	
 

	
 

	
o

	
Approximately equal
 installments over fifteen (15) years.


	
 

	
 

	
o

	
Approximately equal
 installments over twenty (20) years.





Participant also understands
that the timing and form of such distribution may be changed only at the time
and in the manner provided under the Plan.


	
 

	
 


	
IV.

	
Designation
 of Beneficiary





         Participant
understands that, if he or she dies before the entire Plan Account has been
distributed, the cash equivalent value of the Plan account will be distributed
as provided in a properly filed beneficiary designation in the form and in
accordance with the terms of the Plan. If no beneficiary is named, the Award
(and associated account) will be paid as provided in the Plan. Changes to my
beneficiary designation can only be made by contacting the Company at its
corporate office. 


	
 

	
 


	
V.

	
Award of
 Rights





         Pursuant
to proper authority, effective as dated below, the Company hereby awards the
Unit Appreciation Rights described herein.


EAST FORK BIODIESEL,LLC 


	
 

	
 


	
By:

	
 


	
 

	



	
Name:
 ______________________, its_______________








	
 

	
 


	
VI.

	
Acceptance of Award





          I
hereby agree on behalf of myself and my Beneficiaries to accept these Plan
benefits and to be bound by the Plan’s terms and conditions. I understand that
the Plan is an unfunded, unsecured obligation of the Company. 


	
 


	
By:


	



	
 


	
Printed Name:
 ____________________________________


	
 


	
Social Security
 Number: ____________________________








	
 

	
 


	
Address:


	
 

	



	
 

	



	
 

	






2







2007 EAST
FORK BIODIESEL, LLC 

UNIT APPRECIATION PLAN


BENEFICIARY
DESIGNATION FORM


I, _____________________,
the undersigned Participant in the Plan, designate the following as
Beneficiary(ies) under the Plan: 


	
 

	
 

	
 


	
Name of Primary
 Beneficiary(ies)

	
 

	
Percentage Interest


	


	


	









	
 

	
 

	
 


	
Name of Contingent
 Beneficiary(ies)

	
 

	
Percentage Interest


	


	


	






Instructions:


	
 

	
 

	
 


	
 

	
•

	
Please PRINT CLEARLY or
 TYPE the names of the beneficiaries. 


	
 

	
 

	
 


	
 

	
•

	
If you are married, you
 can name a non-spouse beneficiary only with the signed consent of your spouse
 in the space provided below. 


	
 

	
 

	
 


	
 

	
•

	
Be aware that none of the
 contingent beneficiaries will receive anything unless ALL of the primary
 beneficiaries predecease you. 





          I
understand that I may change these beneficiary designations by delivering a new
written designation to the Administrative Committee, which shall be effective
only upon receipt and acknowledgment by the Administrative Committee prior to
my death. I further understand that the designations will be automatically
revoked if the Beneficiary predeceases me, or if I have named my spouse as
Beneficiary and our marriage is subsequently dissolved. 


	
 

	
 

	
 

	
 

	
 


	
By:
 ______________________________________________

	
Date: ________________________________





CONSENT OF SPOUSE


I,
____________________________________________, the undersigned spouse of the
Participant named in the foregoing “Beneficiary Designation,” hereby certify
I have read the Beneficiary Designation and fully understand the designations
herein. Being fully satisfied with the
provisions of the designation, I hereby consent to and accept the beneficiary designation, without regard to whether I
survive or predecease my spouse. This consent is irrevocable unless my
spouse changes the designation. 


I have executed this consent
this _______________ day of ______________________________, 20 _______.


	
 

	
 


	
 

	



	
 

	
Signature of spouse of
 participant











Signature of spouse
witnessed this ____________ day of ______________________________, 20 _________,
in the presence of:


	
 

	
 


	
 

	
_____________________________________________________






__________________________,
 Plan Representative
or





STATE OF__________________,
COUNTY OF __________________, SS:


          IN
WITNESS WHEREOF, before me, the undersigned, a Notary Public, personally
appeared _________________________ who executed the above Consent of Spouse as
a free and voluntary act. 


	
 

	
 


	
(SEAL)

	
 


	
 

	



	
 

	
Notary Public in and for
 said State





Received by the
Administrative Committee this ________ day of___________________, 20___. 


	
 

	
 

 
	
By:

	
________________________________
 


	
 

	
________________________________
 


	
 

	
________________, Chair of Administrative Committee





RETURN THIS FORM TO THE ADMINISTRATIVE COMMITTEE