EXHIBIT 10.10

GOE/LOL

SUBORDINATED PROMISSORY NOTE

RIGHTS OF THE HOLDER TO RECEIVE PAYMENTS HEREUNDER ARE SUBJECT TO A
SUBORDINATION AND INTERCREDITOR AGREEMENT (THE “SUBORDINATION AGREEMENT”) DATED
THE DATE HEREOF EXECUTED BY THE HOLDER REFERRED TO BELOW IN FAVOR OF COBANK,
ACB, AS AGENT FOR THE LENDERS (TOGETHER WITH THE AGENT, THE “SENIOR LENDERS”)
PARTY TO THAT CERTAIN AMENDED AND RESTATED CREDIT AGREEMENT OF EVEN DATE
HEREWITH BETWEEN THE DEBTORS (AS DEFINED BELOW) AND THE SENIOR LENDERS (THE
“CREDIT AGREEMENT”).

SUBORDINATED PROMISSORY NOTE

$17,000,000

June 30, 2006     

 

Minneapolis, Minnesota

 

FOR VALUE RECEIVED, Golden Oval Eggs, LLC, a Delaware limited liability company
Midwest Investors of Iowa, Cooperative, an Iowa Cooperative, and GOECA, LP, a
Delaware limited partnership (the “Debtors”), hereby promise to pay to the order
of Land O’ Lakes, Inc., a Minnesota cooperative corporation (the “Holder”), at
4001 Lexington Avenue North, Arden Hills, MN 55126, or such other address or
such other holder as the Holder of this Note may specify, in lawful money of the
United States of America and in immediately available funds, the principal sum
of Seventeen Million Dollars ($17,000,000) together with interest on the
outstanding principal from the date hereof until paid in full at the applicable
interest rate provided below.

This Note was issued pursuant to that certain Asset Purchase Agreement dated as
of May 23, 2006 (the “Agreement”) among the Debtors, the Holder and others. 
Except as otherwise defined in this Note, all capitalized terms shall have the
meanings provided in the Agreement.

Repayment

1.             No payments of principal or interest shall be due or payable
under this Note until June 30, 2008, at which point Debtors shall be obligated
to begin making payments of $200,000 (with such payments being applied against
principal, which shall be defined as the original principal amount of this Note
plus all accrued but unpaid interest from the date of issuance to June 30, 2008,
or an estimated $21,080,000) and on the last day of each succeeding calendar
quarter through and including June 30, 2009 (the “Maturity Date”), at which
point the entire unpaid balance of principal and interest shall be due and
payable in full.  In addition to, and together with, the above-described
payments of principal, Debtors shall, commencing June 30, 2008, be obligated to
pay interest on a monthly basis.

Interest; Warrant Coverage

2.             Subject to the other provisions of this Note, interest shall
accrue on the unpaid principal balance at the rate of twelve percent (12%) per
annum, computed on the basis of a 365-day year containing 12 months, counting
the actual number of days in each month; provided, however, that in the event
Debtors fail to make a scheduled payment of principal and/or interest at any
time between June 30, 2008 and the Maturity Date, then the applicable interest
rate shall increase to twelve and a quarter percent (12.25%); in the event
Debtors fail to make a scheduled payment of principal and/or interest for a
second time between June 30, 2008 and the Maturity Date, then the applicable
interest rate shall increase to twelve and a half percent (12.50%); in the event
Debtors fail to make a scheduled payment of principal and/or interest for a
third time between June 30, 2008 and the Maturity Date, then the applicable
interest

--------------------------------------------------------------------------------

rate shall increase to twelve and three quarters percent (12.75%); and in any
event, if there remains outstanding any amounts due under this Note after June
30, 2009, then the applicable interest rate for the period from June 30, 2009
until this Note is paid in full, shall be the then applicable interest rate plus
one percent (1%); provided, however, that in no event shall the applicable
interest rate (including the “Default Rate” described in Section 6, below)
exceed thirteen and three quarters percent (13.75%).

In the event this Note has not been paid in full on or before the Maturity Date,
Holder shall have the right, at Holder’s option, to exercise that number of
units of the common membership interests of Debtor Golden Oval Eggs, LLC equal
to ten (10%) of the then-issued and outstanding units of such Debtor’s common
membership interest at an exercise price of $0.01 per share pursuant to the
Warrant issued by Debtor Golden Oval Eggs, LLC to Holder as of the date hereof.

Optional Prepayments

3.             The Debtors may prepay in whole, or from time to time in part,
amounts due under this Note, without penalty or premium.  Any partial
prepayments shall be applied first to accrued interest and then to the
installments of principal in the inverse order of their maturity.

Payments of Principal and Interest

4.             The Debtors shall pay to the Holder, either by certified check or
by wire transfer of immediately available funds to such account as Holder may
specify in writing, all amounts payable to Holder in respect of the principal
of, or interest on, this Note, without any presentation of this Note.  Each such
payment, when paid, shall be applied first to the payment of interest accrued
and unpaid on this Note, and second to the payment of the principal hereof. 
Notwithstanding any other provision of this Note, in no event shall the interest
due under this Note exceed the highest rate permitted by applicable law.

Subordination; Security

5.             The indebtedness evidenced by this Note shall be subordinated in
accordance with and to the extent provided in the Subordination Agreement
referenced on the first page hereof.  Throughout the term of this Note, the
Holder shall receive from the Debtors copies of any periodic reports and other
information required of the Debtors by its Senior Lenders.  The Note shall be
secured by a lien on all of Debtors’ assets pledged pursuant to the Security
Agreement of even date herewith between Debtors and Holder which lien shall be
fully subordinated to the Senior Lenders, as more fully set forth in the
Subordination Agreement referenced above.

Default, Acceleration, Default Interest Rate

6.             For purposes of this Note, an “Event of Default” shall mean
Debtors’ failure to make a payment of interest or principal when due; Debtors’
failure to provide Holder with the information more particularly described in
Section 7, below; Debtors’ failure to observe any other covenant described in
this Note; or Debtors’ default under the Credit Agreement where such default
results in the acceleration of amounts due thereunder.

(a)           Upon the occurrence of any Event of Default, and while such Event
of Default is continuing, the Note shall accrue interest at the interest rate
that would otherwise then be applicable plus one percent (1%) (the “Default
Rate”), compounded and payable as provided in Section 2 above.  In the event
Debtors have no outstanding obligations to the Senior Lenders and the
Subordination Agreement has been terminated, Holder may, upon an Event of
Default, by

2

--------------------------------------------------------------------------------

written notice to Debtors, declare the indebtedness under this Note to be
immediately due and payable, whereupon the same shall become due and payable
without further notice or demand.

(b)           Upon the occurrence of any Event of Default, in the event of a
collection action or efforts pursued by Holder, Debtors shall pay Holder’s
out-of-pocket collection costs, including without limitation reasonable
attorneys’ fees and legal costs, whether or not any suit or enforcement
proceeding is commenced.

Information Rights

7.             For so long as this Note remains outstanding, Debtors will
furnish Holder such periodic financial statements and reports of Debtors as may
be required to be furnished to the Senior Lender, including, without limitation,
the following:

(A)           AS SOON AS AVAILABLE AND IN ANY EVENT WITHIN 90 DAYS AFTER THE END
OF EACH FISCAL YEAR OF DEBTORS, THE FINANCIAL STATEMENTS OF DEBTORS CONSISTING
OF AT LEAST STATEMENTS OF INCOME, CASH FLOW AND CHANGES IN MEMBERS’ EQUITY, AND
A BALANCE SHEET AS AT THE END OF SUCH YEAR, SETTING FORTH IN EACH CASE IN
COMPARATIVE FORM CORRESPONDING FIGURES FROM THE PREVIOUS ANNUAL AUDIT, CERTIFIED
WITHOUT QUALIFICATION BY CERTIFIED PUBLIC ACCOUNTANTS OF RECOGNIZED NATIONAL
STANDING, SELECTED BY DEBTORS, TOGETHER WITH ANY MANAGEMENT LETTERS, MANAGEMENT
REPORTS OR OTHER SUPPLEMENTARY COMMENTS OR REPORTS TO DEBTORS FURNISHED BY SUCH
ACCOUNTANTS.

(B)           AS SOON AS AVAILABLE AND IN ANY EVENT WITHIN 30 DAYS AFTER THE END
OF EACH FISCAL MONTH (EXCEPT FOR THE MONTH OF JANUARY), UNAUDITED STATEMENTS OF
INCOME, CASH FLOW AND CHANGES IN MEMBERS’ EQUITY FOR DEBTORS FOR SUCH MONTH AND
FOR THE PERIOD FROM THE BEGINNING OF SUCH FISCAL YEAR TO THE END OF SUCH MONTH,
AND A BALANCE SHEET OF DEBTORS AS AT THE END OF SUCH MONTH, SETTING FORTH IN
COMPARATIVE FORM FIGURES FOR THE CORRESPONDING PERIOD FOR THE PRECEDING FISCAL
YEAR.

(C)           AS SOON AS PRACTICABLE AND IN ANY EVENT WITHIN 30 DAYS PRIOR TO
THE BEGINNING OF EACH FISCAL YEAR OF DEBTORS, STATEMENTS OF FORECASTED INCOME
FOR DEBTORS FOR SUCH FISCAL YEAR AND A FORECASTED BALANCE SHEET OF DEBTORS,
TOGETHER WITH SUPPORTING ASSUMPTIONS.

(D)           AS SOON AS PRACTICABLE AND IN ANY EVENT WITHIN 30 DAYS AFTER THE
END OF EACH MONTH, A WRITTEN REPORT ON DEBTORS’ CAPITAL EXPENDITURES, AND
PROMPTLY UPON THE MAILING OR FILING THEREOF, COPIES OF ALL FINANCIAL STATEMENTS,
REPORTS, PROXY STATEMENTS, REGISTRATION STATEMENTS, PERIODIC REPORTS AND OTHER
DOCUMENTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (OR ANY SUCCESSOR
THERETO) OR ANY NATIONAL SECURITIES EXCHANGE.

Restrictions On Debtors Actions While Subordinated Note is Outstanding.

8.             As long as this subordinated Note is outstanding, the Holder may
restrict the following actions at the Debtors:

(A)           IF THE SUBORDINATED NOTE WILL NOT BE COMPLETELY PAID OFF AS PART
OF A MERGER OR EXCHANGE, THE HOLDER CAN VETO SUCH MERGER OR PLAN OF EXCHANGE OF
THE DEBTORS.  IN THE EVENT OF A CASHLESS MERGER, SUCH APPROVAL SHALL NOT BE
UNREASONABLY WITHHELD.  IF A PORTION OF THE SUBORDINATED NOTE IS NOT BEING PAID,
THE HOLDER COULD VETO THE SALE OF FIXED ASSETS TO A THIRD PARTY OF MORE THAN 10%
PER CALENDAR YEAR, OR 30%, IN THE AGGREGATE, OF THE ASSETS OF THE DEBTORS.

3

--------------------------------------------------------------------------------

(B)           EXCEPT AS SPECIFICALLY PERMITTED IN THE CREDIT AGREEMENT, WITHOUT
PRIOR APPROVAL OF THE HOLDER, THE DEBTORS WILL NOT TAKE ON ADDITIONAL DEBT, NOR
WILL IT MORTGAGE, PLEDGE, ASSIGN, ENCUMBER OR GRANT SECURITY INTERESTS IN ANY
DEBTORS ASSETS.

(C)           THE DEBTORS WILL NOT HAVE AN ANNUAL OPERATING AND CAPITAL BUDGET
THAT EXCEEDS THE BUDGET FOR THE PRECEDING YEAR BY MORE THAN 10% IN ANY ONE YEAR
AFTER, BUT INCLUDING, THE ACQUISITION AND WITH FULL ACCOMMODATION FOR THE RECENT
GROWTH AT DEBTORS.  SUCH BUDGET TO BE DISCUSSED PRIOR TO FINANCIAL CLOSE ON THIS
TRANSACTION.

General.

9.             Debtors hereby:

(a)           waive diligence, presentment, demand for payment, notice of
dishonor, notice of non-payment, protest, notice of protest, and any and all
other demands in connection with the delivery, acceptance, performance, default
or enforcement of this Note;

(b)           waive the benefit of any statute of limitations to the maximum
extent permitted by law with respect to any action to enforce or otherwise
related to this Note;

(c)           agree that Holder shall have the right, without notice, to grant
any extension of time for payment of any indebtedness evidenced by this Note or
any other indulgence or forbearance whatsoever;

(d)           agree that no failure on the part of Holder to exercise any power,
right or privilege hereunder, or to insist upon prompt compliance with the terms
of this Note shall constitute a waiver of that power, right or privilege;

(e)           agree that the acceptance at any time by Holder of any past due
amounts shall not be deemed to be a waiver of the requirement to make prompt
payment when due of any other amounts then or hereafter due and payable; and

(f)            agree that Holder may pledge this subordinated Note to its
creditors without seeking Debtors’ consent; provided, however, that Holder shall
not be permitted to pledge or otherwise assign this Note to a competitor of
Debtors without Debtors’ advance written consent.  For purposes of this Section
9(f), the term “competitor” shall mean any person or business enterprise engaged
in a business that competes directly or indirect with that of Debtors.

Jurisdiction.

10.           This Note shall be governed in all respects by the laws of the
state of Minnesota. Debtors covenant, and by the acceptance of this Note Holder
also covenants, that each irrevocably (a) waives, to the fullest extent
permitted by law, any and all right to trial by jury in any legal proceeding
arising out of the Agreement or this Note or any of the transactions
contemplated hereby, (b) submits to the personal jurisdiction of the state
courts of Minnesota or, if the United States District Courts would otherwise
have jurisdiction, the United States District Court for the District of
Minnesota, (c) waives any and all objections (including, without limitation,
inconvenience of forum) to jurisdiction or venue within the state of Minnesota.

4

--------------------------------------------------------------------------------

 

GOLDEN OVAL EGGS, LLC

 

 

 

By

/s/ Dana Persson

 

 

Its

 President and Chief Executive Officer

 

 

 

 

 

MIDWEST INVESTORS OF IOWA, COOPERATIVE

 

 

 

By

/s/ Dana Persson

 

 

Its

 President and Chief Executive Officer

 

 

 

 

 

 

 

 

GOECA, LP

 

 

 

By

/s/ Dana Persson

 

 

Its

 President and Chief Executive Officer

 

 

5

--------------------------------------------------------------------------------