EXHIBIT
10.5

          

           

          Confidential
treatment has been requested for portions of this exhibit. The copy filed
herewith omits the information subject to the confidentiality request. Omissions
are designated as [***]. A complete version of this exhibit has been filed
separately with the Securities and Exchange Commission.

        

         

        
          	
                  

                	
                  1600
      Broadway, Suite 2200

                  
                    Denver,
      CO 80202

                  

                


        

      

    

    
    

      

    CONFIDENTIAL
AND PROPRIETARY

    


    September
23, 2010

    


    Cargill,
Inc.

    15407
McGinty Road, West MS 62

    Wayzata,
MN 55391-2399

    Attn:
Brian Silvey

    


    Cargill
Commodity Services, Inc.

    15407
McGinty Road, West MS 19

    Wayzata,
MN 55391-2399

    Attn:
Dennis Inman

    


    Re: BioFuel Agreements

    


    Dear Mr.
Inman and Mr. Silvey:


     

    We direct
your attention to (a) the following agreements by and among Cargill,
Incorporated, Cargill Commodity Services, Inc. (collectively “Cargill”) and our
subsidiary, Buffalo Lake Energy, LLC (“BLE”): (i) the Master Agreement, dated
September 25, 2006; (ii) the Ethanol Marketing Agreement, dated as of September
25, 2006; (iii) the Corn Supply Agreement, dated September 25, 2006, (iv) the
Distillers Grains Marketing Agreement, dated as of September 25, 2006; (v) the
Grain Facility Lease, dated September 25, 2006 and (vi) that certain Agreement
and Omnibus Amendment dated as of July 30, 2009 (the “BLE Omnibus Agreement”
and, together with the forgoing agreements, the “BLE Agreements) and (b) the
following agreements by and between Cargill and our subsidiary, Pioneer Trail
Energy, LLC (“PTE”): (i) the Master Agreement, dated September 25, 2006; (ii)
the Ethanol Marketing Agreement, dated as of September 25, 2006; (iii) the Corn
Supply Agreement, dated September 25, 2006, (iv) the Distillers Grains Marketing
Agreement, dated as of September 25, 2006; (v) the Grain Facility Lease, dated
September 25, 2006 and (vi) that certain Agreement and Omnibus Amendment dated
as of July 30, 2009 (the “PTE Omnibus Agreement” and, together with the forgoing
agreements, the “PTE Agreements”).

     

    In
consideration of the mutual agreements contained in this letter and our
discussions regarding the resolution of certain payment and performance
obligations, respectively, of each of the parties hereto, the parties agree to
the following:

     

    
      	
            	
              1. 

            	
              Notwithstanding
      anything to the contrary contained in the BLE Agreements or the PTE
      Agreements, for the remaining duration of each of those agreements the
      commissions, rents and other consideration payable to Cargill thereunder
      shall be as set forth on the schedule attached hereto as “Exhibit
      A”.

            


    

     

    (303)
640-6500 • (303) 592-8117 (fax)


    
      
         


      

      
        
        

        
          

        

      

      
         


      

    

     

    Letter
Agreement re: BioFuel Agreements

    Cargill,
Inc.

    Cargill
Commodity Services, Inc.

    September
23, 2010

    


    
      	
            	
              2. 

            	
              Notwithstanding
      anything to the contrary contained in the Distillers Grain Marketing
      Agreements described above, the Producer under such Agreements (as defined
      therein) shall be entitled to use any other marketer of its choosing to
      market and sell the wet distiller’s grains produced (DWG, MDWG, and CDS);
      for the purpose of clarity, no minimum commission shall be owed under
      Section 3.2 of the respective Distillers Grain Marketing Agreement on any
      shortfall due to the sales of such wet distiller’s grains to a third
      party.

            


    

    
      	
            	
              3. 

            	
              All
      ongoing deferrals under the Omnibus Agreements shall cease immediately;
      provided that,
      notwithstanding anything contained in those Agreements to the
      contrary, neither BLE nor PTE shall be required to begin repayment of any
      Deferred Rent Payments, Deferred Ethanol Commission Payments or Deferred
      DG Commission Payments (as each term is defined therein) unless and until
      the elevator turn back discussions (described below) are concluded. For
      the avoidance of doubt, all such Deferred Rent Payments, Deferred
      Commission Payments and Deferred DG Payments shall be and remain
      continuing obligations of BLE and PTE, respectively, and shall be due,
      payable in full and repaid on the earlier to occur of (i) a complete
      refinancing of the senior bank credit facility to which PTE and BLE are
      parties; (ii) such time as PTE and BLE collectively have accumulated $25
      million or more in cash available for such purpose; (iii) September 25,
      2014; or (iv) BioFuel, the LLC, BLE and PTE files a voluntary petition in
      bankruptcy, has filed against it an involuntary petition in bankruptcy,
      makes an assignment for the benefit of creditors or has a trustee or
      receiver appointed for any or all of its
assets.

            


    

     

    The
foregoing shall take effect immediately upon the later to occur of (i) your
execution of this letter, or (ii) closing and funding of the Bridge Loan (as
described below), provided that if such payment does not occur by September 30,
2010 the foregoing (items 1-3 above) shall be void and of no effect. All of the
other terms and conditions of the BLE Agreements and PTE Agreements shall remain
in full force and effect unless terminated, amended or modified in writing as
provided therein. We agree to cooperate in good faith with Cargill and its
attorneys to execute such further documentation concerning the understandings
set forth herein and any issues relating thereto as may be reasonably acceptable
to the parties.


     

    In
addition, we will continue to negotiate the terms of a proposal to turn back
occupancy and operation of the Grain Facilities to Cargill, to be completed no
later than December 31, 2010, subject to an adjustment of fees for corn
procurement and elevator operation and maintenance to reflect the cost of
operation to Cargill, currently estimated at $[***] per bushel. The Grain
Facilities will be turned back to Cargill and Cargill will become responsible
for all subsequent capital improvements and maintenance of the Grain Facilities.
Thereafter, Cargill will continue to be responsible for all corn procurement for
the Plants.


     

    BioFuel
Energy Corp. (“BioFuel”), is in the process of obtaining approximately $18
million for a short-term financing (the “Bridge Loan”) from a group of
investors, the proceeds of which are to be used to pay the entire outstanding
principal amount of its outstanding working capital loans under a separate
senior secured credit facility between BLE, PTE, BFE Operating Company, LLC and
a group of lenders (the “Credit Agreement”). Notwithstanding anything to the
contrary contained in that certain Agreement dated January 14, 2009 by and
between BioFuel Energy, LLC (the “LLC”) and Cargill (the “Settlement
Agreement”), Cargill agrees that the proceeds of the Bridge Loan may be
contributed by BioFuel to the LLC and used by the LLC as described herein, that
such proceeds shall not be considered “Available Cash Received” (as defined in
the Settlement Agreement) and that no such proceeds shall be owed to Cargill
under the Settlement Agreement.


    
      
         


      

      
        2

        
          

        

      

      
         


      

    

     

    Letter
Agreement re: BioFuel Agreements

    Cargill,
Inc.

    Cargill
Commodity Services, Inc.

    September
23, 2010


     

    In order
to repay the Bridge Loan and certain other indebtedness, and for additional
capital, BioFuel proposes to conduct an offering of rights to purchase common
and/or preferred stock or, if a depositary structure is utilized, depositary
shares representing preferred stock (the “Offered Stock”) to its existing
shareholders, including Cargill (the “Rights Offering”). The parties agree that,
upon completion of the Rights Offering: (A) a portion of the proceeds therefrom,
will be used to pay Cargill the amount of $2,800,828.57, pursuant to Section
2.01(b) of the Settlement Agreement and (B) Cargill will forgive the remaining
Payable (as defined in the Settlement Agreement) in exchange for shares of the
Offered Stock in an amount equal to the amount of the remaining Payable and any
accrued interest, with the value of such shares to be as set forth in the
following sentence. The shares of Offered Stock will be issued to Cargill on the
twelfth business day following the Rights Offering and will be valued for
purposes of the foregoing at a per share value based upon the average of the
volume weighted averages of the trading prices of the BioFuel Common Stock on an
as-converted to common stock basis, as such prices are reported on the NASDAQ
Global Market (as reported by Bloomberg Financial Markets or such other source
as the parties shall agree in writing), for the 10 consecutive trading days
ending on the second trading day immediately preceding the date the Offered
Stock is issued to Cargill. The Offered Stock issued to Cargill shall be the
same and/or shall have the same par value, rights, preferences and powers as the
shares issued to any other participant or purchaser in the Rights Offering. All
of the foregoing set forth in this paragraph is expressly contingent upon the
successful completion of the Rights Offering and the ability to raise sufficient
proceeds from the Rights Offering to accomplish all of the
foregoing.


     

    BioFuel,
the LLC, BLE and PTE, on behalf of themselves and their respective successors,
assigns, executors and administrators hereby agree to fully release Cargill, its
affiliates, directors, officers and shareholders (the “Cargill Parties”) from
any and all claims, whether contingent or known, based upon or consisting of any
allegation that any Cargill Party bears responsibility or liability for the
financial condition of the BFE Entities.


     

    If this
letter comports with your understanding of our agreement, please sign below as
the properly designated representative of Cargill and return to me (via pdf or
fax) no later than September 23, 2010.


     

    Sincerely,


     

    BioFuel
Energy Corp.


     

    /s/ Scott
Pearce

    Scott
Pearce

    President
and CEO


    
      
         


      

      
        3

        
          

        

      

      
         


      

    

     

    
      Letter
Agreement re: BioFuel Agreements

      Cargill,
Inc.

      Cargill
Commodity Services, Inc.

      September
23, 2010

      


      
        
          
            
              
                
                  
                    
                      
                        
                          	
                                  BFE
      Operating Company, LLC

                                	 
      
	 
      	 
      
	
                                  By:

                                	/s/
      	 
      
	
                                  Its:

                                	
                                  Authorized
      Representative

                                	 
      
	 
      	 
      
	
                                  Pioneer
      Trail Energy, LLC

                                	 
      
	 
      	 
      
	
                                  By:

                                	/s/
        	 
      
	
                                  Its:

                                	
                                  Authorized
      Representative

                                	 
      
	 
      	 
      
	
                                  Buffalo
      Lake Energy, LLC

                                	 
      
	 
      	 
      
	
                                  By:

                                	/s/  	 
      
	
                                  Its:

                                	
                                  Authorized
      Representative

                                	 
      


                        

                      

                    

                  

                

              

            

          

        

      

      


      
        	
                Agreed
      to as of the date first set forth above:

              	 
      
	 
      	 
      
	
                Cargill,
      Incorporated

              	 
      
	 
      	 
      
	
                /s/
      Brian Silvey

              	 
      
	
                Name:
      Brian Silvey

              	 
      
	
                Title:

              	 
      
	 
      	 
      
	
                Cargill
      Commodity Services, Inc.

              	 
      
	 
      	 
      
	
                /s/
      Dennis Inman

              	 
      
	
                Name:
      Dennis Inman

              	 
      
	
                Title:

              	 
      


      

       

    

    
      
        
           


        

        
          4

          
            

          

        

        
           


        

      

    

     

    EXHIBIT
“A”


     

    COMMISSIONS, FEEs and
RENTS


     

    Ethanol
marketing commissions: The “Cargill Commission” under each Ethanol Marketing
Agreement shall be $[***] per gallon.


     

    DDG
Marketing Commissions: the first three paragraphs of “Exhibit A” to each of the
Distillers Grains Marketing Agreements shall each be replaced in their entirely
as follows:


     

    Cargill
agrees to pay Producer for all Standard-Grade DDG and DDGS loaded into railcars
and trucks and weighed at the Facility for shipment to customers an amount equal
to [***] percent ([***]%) of the F.O.B. Facility Price, with Cargill being
entitled to retain as its commission the greater of the remaining [***] percent
([***]%) or $[***] per ton (“Initial Price”), with settlement weights as
described in Section 8.4 of the Agreement.


     

    Cargill
agrees to pay Producer for all Non-Standard-Grade DDG and DDGS loaded into
railcars and trucks at the Facility and weighed for shipment to customers, an
amount equal to the F.O.B. Facility Price for such Non-Standard-Grade DDG or
DDGS less [***] percent ([***]%) of the weighted average F.O.B. Facility Price
of all Standard-Grade DDG or DDGS sold by Cargill to third parties in a
rolling [***] period preceding the date of Producer’s invoice, with Cargill
being entitled to retain as its commission the greater of the remaining [***]
percent ([***]%) or $[***] per ton (“Non-Standard Initial
Price”).


     

    Corn Commissions: current corn commissions shall
remain at $[***] per bushel, as provided in the Corn Supply Agreements;
provided
that, the
corn payment terms included in Section 2.2(c)  and 2.2(d) of each of the
Omnibus Agreements (e.g., modifying Sections 13(d) and 13(e) of each respective
Corn Supply Agreement), including without limitation the option to utilize the
“Concessionary Payment Date,” shall remain in effect for the duration of the
terms of the respective Corn Supply Agreements, subject to the payment of
interest, at an annualized rate of [***]% based on a 360 day year, on all such
extended payment amounts. For the purpose of clarity, in the event the parties
agree on the terms of turning back the Grain Facilities to Cargill, any revised
corn commission schedule will retain the foregoing proviso.

       

      Grain
Facility Lease Payments: the monthly rentals payable under each of the Grain
Facility Leases shall be reduced by $[***] per month for each plant, as
permanent reductions rather than deferrals, for the duration of the Lease term
or until such time as the Grain Facilities are turned back to Cargill (at which
time such Leases shall cease).

    


    
      
         


      

      
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