Exhibit 10.2


 


EXECUTION VERSION


 


THIS AGREEMENT (the “Agreement”) is
entered into on January 14, 2009, by and between BioFuel Energy, LLC, a
Delaware limited liability company (the “Company”), and Cargill,
Incorporated, a Delaware corporation (“Cargill”).


 


RECITALS


 


WHEREAS, in
2008 the Company and Cargill entered into a number of hedging and fixed-price
purchase contracts with respect to corn (the “Contracts”), all of which
have been liquidated;


 


WHEREAS, immediately
prior to the Initial Payment (as defined below), the Company owed Cargill
$17,402,485.71 (the “Payable”) arising from the liquidated Contracts;


 


WHEREAS, the
Company is also the borrower of indebtedness (together with interest and any
other amounts owed in respect thereof, the “Subordinated Debt”) under a
loan agreement dated September 25, 2006, among the Company and certain
affiliates of Greenlight Capital, Inc. and Third Point LLC (such
affiliates, the “Subordinated Debt Holders”); and


 


WHEREAS, on December 5,
2008, the Company paid Cargill $3,000,000.00 (the “Initial Payment”) in
partial satisfaction of the Payable;


 


NOW, THEREFORE,
in consideration of the foregoing, the mutual promises herein contained and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties agree as follows:


 


ARTICLE I


 


Definitions
and Usage


 


SECTION 1.01.  Definitions.  In addition to the terms defined elsewhere in
this Agreement, the following terms shall have the following meanings:


 


“Available
Cash Received” shall mean:


 


(a) 100% of the cash proceeds actually received by the Company
after the date of this Agreement from its subsidiaries by way of dividend or
distribution in compliance with the subsidiaries’ credit facilities, other than
(i) any such cash proceeds consisting of management fees paid by such
subsidiaries in compliance with their credit facilities (which are currently $800,000.00
per month) and (ii) any other such cash proceeds reasonably required to be
spent or reserved by the Company for payment of professional fees, taxes, employee
compensation or other similar matters; and


 

















 


(b) 50% of the cash proceeds actually received by the Company after
the date of this Agreement from any Equity Issuance (or cash contribution from
holders of Equity Interests) or incurrence of indebtedness for borrowed money,
net of all taxes and customary fees, commissions, costs and other expenses
incurred in connection therewith.


 


“Business
Day” shall mean a day other than a Saturday, Sunday or legal holiday in the
State of New York.


 


“Cargill
Designated Funds” shall mean (i) until the Cash Reallocation Trigger,
100% of Available Cash Received and (ii) thereafter, 50% of Available Cash
Received.


 


“Cash
Reallocation Trigger” means the payment by the Company to Cargill after the
date hereof of an aggregate of $2,800,828.57 in satisfaction of the Payable
pursuant to Article III of this Agreement.


 


“Equity
Issuance” shall mean any issuance or sale by the Company of any Equity
Interests thereof, except in each case for (i) any such issuance or sale
to its subsidiaries and (ii) any such issuance or sale to management,
employees or directors of the Company, BioFuel Energy Corp. or any of the
Company’s subsidiaries pursuant to an employee or director stock option or
stock purchase plan or an employee or director benefit plan.


 


“Equity
Interests” shall mean shares of capital stock, membership interests or
other equity interests, and any option, warrant or other right entitling the
holder thereof to purchase or otherwise acquire an equity interest.


 


ARTICLE II


 


Initial
Actions


 


SECTION 2.01.  Forgiveness of Payable.  By executing this Agreement, Cargill
acknowledges receipt of the Initial Payment and acknowledges and agrees that,
subject to Article V hereof,:


 


(a) effective as of December 1, 2008, it unconditionally and
irrevocably forgave, and waived all rights with respect to, $3,000,000.00 of
the Payable and any and all interest, fees and other charges associated with
the entire amount of the Payable, in each case that accrued or may have accrued
through and including November 30, 2008, and as a result of the foregoing,
as of December 1, 2008, the remaining amount of the Payable was
$11,402,485.71; and


 


(b) for each additional $1.00 paid by the Company to Cargill after
the date of this Agreement pursuant to Section 3.01 hereof up to
$2,800,828.57, Cargill shall unconditionally and irrevocably forgive, and waive
any and all rights with respect to, (i) an additional $1.00 of the Payable
(i.e., $1.00 shall be forgiven in addition to the $1.00 of the Payable
that is satisfied as a result of such payment)


 


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and
(ii) any and all accrued interest with respect to the $1.00 forgiven
pursuant to sub-clause (i) of this clause (b).


 


SECTION 2.02.  Interest.  Beginning December 1, 2008, interest on
the outstanding Payable began to accrue, and will continue to accrue, at a rate
of 5.0% per annum, compounded quarterly.


 


SECTION 2.03.  Payment to Subordinated Debt Holders.  Cargill acknowledges and agrees that the
Company may, at any time after the date hereof, make one or more payments, up
to an aggregate amount of $2,000,000.00, in respect of principal, interest or
other amounts in respect of the Subordinated Debt, provided that no such
payment shall be made unless and until a written agreement between the Company
and the Subordinated Debt Holders has been entered into pursuant to which:


 


(a) the interest rate in respect of the Subordinated Debt is
reduced, effective as of December 1, 2008, to 5.0% per annum until the
earlier of full satisfaction of the Payable and March 2015, at which time
the interest rate in respect of the Subordinated Debt shall automatically
revert to the original interest rate payable in respect of the Subordinated
Debt;


 


(b) the Subordinated Debt Holders agree that (i) the Company
will not be obligated to make any further cash payments of principal, interest
or other amounts in respect of the Subordinated Debt until the Cash Reallocation
Trigger has occurred and (ii) from the time of the Cash Reallocation
Trigger until the Payable has been fully satisfied pursuant to Article III
of this Agreement, the Company will only be obligated to make cash payments to
Cargill from the Cargill Designated Funds and will be obligated to make payments
in respect of the Subordinated Debt with Available Cash Received that does not
constitute Cargill Designated Funds; and


 


(c) the Subordinated Debt Holders agree that they will not, as a
result of or in connection with any failure by the Company to make payments of
principal, interest or other amounts in respect of the Subordinated Debt,
exercise or seek to exercise any rights or remedies (including setoff or
recoupment) with respect to the Subordinated Debt or institute any action or
proceeding with respect to such rights or remedies, other than as a result of
or in connection with any Event of Default (as defined in Section 4.01
hereof) or any violation of or default under the written agreement contemplated
by this Section 2.03.


 


ARTICLE III


 


Payments


 


SECTION 3.01.  Payments to Cargill.  Upon receipt of any Available Cash Received
in excess of $100,000.00 (it being understood that Available Cash Received not
in excess of such amount shall be included in subsequent calculations of Available
Cash Received), the Company will, within two Business Days of such receipt, 


 


3

















 


make payment to Cargill in respect of the Payable and/or accrued
interest thereon, allocated as set forth in Section 3.02(c) hereof.  Each such payment shall be in an amount equal
to the amount of Cargill Designated Funds attributable to such receipt of Available
Cash Received.


 


SECTION 3.02.  Payments Generally.


 


(a) Cargill acknowledges and agrees that (i) the Company’s
obligation to pay the Payable and any accrued interest thereon shall only be
due upon receipt of and shall only be payable from, Available Cash Received,
and at such time shall only be due and payable in an amount equal to the
Cargill Designated Funds attributable to such Available Cash Received, and (ii) unless
an Event of Default has occurred, Cargill will not exercise or seek to exercise
any rights or remedies (including setoff or recoupment) with respect to the
Payable or institute any action or proceeding with respect to such rights or
remedies.


 


(b) All payments to be made in respect of the Payable or accrued
interest thereon shall be payable by wire transfer in immediately available
funds to the account to which the Initial Payment was paid or to such other account
as may be designated by Cargill in advance of any such payment.


 


(c) Until an aggregate amount of $2,800,828.57 has been paid to
Cargill pursuant to this Agreement, all payments to Cargill pursuant to this
Agreement shall be applied to permanently reduce the Payable.  Thereafter, payments to Cargill pursuant to
this Agreement shall be applied (i) first, to accrued and unpaid interest
and (ii) second, toward further permanent reduction of the Payable.


 


ARTICLE IV


 


Event of
Default


 


SECTION 4.01.  Event of Default Generally.  An “Event of Default” shall only occur
if the Company shall fail to make any payment hereunder within two Business
Days of the date such payment becomes due.


 


SECTION 4.02.  Notice of Default.  If an Event of Default shall occur and be
continuing, Cargill may by written notice to the Company declare the Payable
and all interest accrued thereon to be immediately due and payable.


 


SECTION 4.03.  Waiver.  No failure by Cargill to exercise any right
or remedy consequent upon a breach of this Agreement shall constitute a waiver
of any such breach.


 


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ARTICLE V


 


Clawback


 


 


SECTION 5.01.  Clawback.  In the event that any payment (or portion of
any payment) made by the Company with respect to the Payable is recovered from Cargill,
in whole or in part, as a result of any court order in bankruptcy, insolvency
or similar proceeding (whether considered in equity or at law) instituted by or
against the Company or any of its affiliates, the entire unpaid amount of the Payable,
plus the amount of any payment so recovered from Cargill and any amounts
previously forgiven pursuant to Section 2.01(a) or 2.01(b) of
this Agreement, shall be due and payable to Cargill.


 


ARTICLE VI


 


Covenants


 


SECTION 6.01.  Distributions.  The Company shall use its commercially
reasonable efforts, subject to its prudent business judgment, to cause its
operating subsidiaries to distribute on a quarterly basis all amounts permitted
to be distributed to it under the subsidiaries’ credit facilities.


 


SECTION 6.02.  Other Agreements.  The Company and Cargill agree to engage promptly
in good faith negotiations with respect to a mutually agreeable restructuring
of the outstanding silo leases and corn supply agreements between the two
parties.  During negotiations, the
following matters will be considered by the parties: (i) Cargill’s
repayment of the Company’s and its subsidiaries’ investment in the silos, (ii) a
reduction in the Company’s and its subsidiaries’ need for working capital in
return for a higher per bushel of corn fee payable to Cargill and (iii) a
sharing agreement to cover profitability in Cargill’s corn purchase effort for
the Company.  It is the intention of the
parties that the Company will be, even on a worst case basis, no worse off on
an operating cash flow basis if the contemplated restructuring occurs.


 


SECTION 6.03.  Inspection of Books and Records.  Cargill shall have the right, upon reasonable
written notice and during normal business hours, at its own expense to examine
the financial books and records of the Company solely to the extent reasonably
necessary to confirm the Company’s compliance with this Agreement, provided,
however, that such access shall not apply to any books and records of the
Company that is attorney work-product or protected by the attorney-client
privilege and such access shall not unreasonably disrupt the normal operations
of the Company.  All information obtained
during the course of such examination shall be kept confidential and shall not
be disclosed by Cargill.


 


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ARTICLE VII


 


Miscellaneous


 


SECTION 7.01.  Representations.  Each party hereby represents and warrants to
the other party that (i) such party has full power and authority to
execute this Agreement, (ii) the execution and delivery by such party of
this Agreement has been duly authorized by all necessary action and no other
proceedings on the part of such party are necessary to approve this Agreement
and (iii) such party has duly executed and delivered this Agreement, and
this Agreement constitutes a legal, valid and binding obligation of such party,
enforceable against it in accordance with its terms, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other laws relating to or affecting creditors’ rights generally and general
equitable principles (whether considered in a proceeding in equity or at law).


 


SECTION 7.02.  Notices.  Any notices and other communications required
to be given pursuant to this Agreement shall be delivered by hand, by
registered or certified mail, postage prepaid, return receipt requested, by
private courier, by facsimile or by telex, as follows:


 


	
  If to the
  Company:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  BioFuel
  Energy, LLC

  	
   

  	
   

  
	
  1600
  Broadway, Suite 2200

  	
   

  	
   

  
	
  Denver,
  Colorado 80202

  	
   

  	
   

  
	
  Attention:
  Kelly G. Maguire

  	
   

  	
   

  
	
     Vice
  President and Chief Financial Officer

  	
   

  	
   

  
	
  Fax: (303)
  592-8117

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  with a copy
  to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Cravath,
  Swaine & Moore LLP

  	
   

  	
   

  
	
  825 Eighth
  Avenue

  	
   

  	
   

  
	
  New York,
  New York 10019

  	
   

  	
   

  
	
  Attention:
  Craig F. Arcella

  	
   

  	
   

  
	
  Fax:
  (212) 474-3700

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  If to
  Cargill:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Cargill
  AgHorizons

  	
   

  	
   

  
	
  P.O. Box
  9300, MS 19

  	
   

  	
   

  
	
  Minneapolis,
  Minnesota 55440-9300

  	
   

  	
   

  
	
  Attention:
  Daniel P. Dye

  	
   

  	
   

  
	
     President

  	
   

  	
   

  
	
  Fax: (952)
  742-7313

  	
   

  	
   

  



 


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SECTION 7.03.  Headings.  The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.


 


SECTION 7.04.  Entire Agreement.  This Agreement, and any other document signed
by the parties hereto at or after the signing of this Agreement, constitute the
complete agreement among the parties concerning the subject matter in such
documents and supersede all prior understandings among such parties.


 


SECTION 7.05.  Counterparts.  This Agreement may be executed in any number
of counterparts and/or by facsimile, each of which shall be deemed to be an
original and all of which together shall be deemed to be a single agreement.


 


SECTION 7.06.  Amendments and Waiver.  No provision of this Agreement may be
amended, modified, waived or discharged unless such amendment, modification,
waiver or discharge is agreed to in writing and signed by both parties.


 


SECTION 7.07.  Further Assurances.  Each of the parties shall execute such
agreements and documents and take such further actions as may be reasonably
required or desirable to carry out the provisions hereof.  The parties shall cooperate with each other so
that each such party receives the benefits to the greatest extent possible to
which it may be entitled under this Agreement.


 


SECTION 7.08.  Reservation of Remedies.  Except as described in this Agreement, the
rights and remedies of the parties are not exclusive of any rights or remedies
which they would otherwise have thereunder or at law or in equity.


 


SECTION 7.09.  Governing Law.  This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, regardless of
the laws that might otherwise govern under applicable principles of conflicts
of law thereof.


 


SECTION 7.10.  Successors and Assigns.  This Agreement shall be binding upon and
shall inure to the benefit of the Company and Cargill and their respective successors
and permitted assigns.


 


SECTION 7.11.  Fees and Expenses.  Each party shall be responsible for its own
fees and expenses relating to the execution of this Agreement.


 


SECTION 7.12.  Waiver of Jury Trial.  The parties hereby waive trial by jury in any
action, suit, proceeding or counterclaim of any kind arising out of or related
to this Agreement to the full extent permitted by law.


 


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IN WITNESS WHEREOF, the Company and Cargill
have caused this Agreement to be duly executed as of the day and year first
above written.


 


 


	
   

  	
  BIOFUEL ENERGY, LLC,

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
    Name:

  
	
   

  	
   

  	
    Title:

  



 


 


	
   

  	
  CARGILL, INCORPORATED,

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
    Name:

  
	
   

  	
   

  	
    Title:

  



 


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