Document:

EXHIBIT 10.12

SUBORDINATION AND INTERCREDITOR AGREEMENT

THIS SUBORDINATION AND
INTERCREDITOR AGREEMENT, dated as of June 30, 2006, is made and given by LAND
O’LAKES, INC., a Minnesota cooperative corporation, (the “Junior Creditor”)
in favor of COBANK, ACB, a federally chartered instrumentality under the Farm
Credit Act of 1971, as agent (the “Agent”) for the lenders from time to
time party to the Credit Agreement (as defined below), (together with the
Agent, the “Senior Creditors”).

RECITALS:

A.            Golden Oval Eggs, LLC, a limited liability
company organized under the laws of the State of Delaware, Midwest Investors of
Iowa, Cooperative, a cooperative organized under the laws of the State of Iowa
and GOECA, LP, a Delaware limited partnership (individually, a “Borrower”
and, collectively, the “Borrowers”), is or may become indebted to the
Junior Creditor under that certain promissory note dated as of June 30, 2006
made by the Borrowers and payable to the Junior Creditor in the original
principal amount of $17,000,000, in the form attached hereto as Exhibit A (the
“Subordinated Note”).

B.            The Borrowers are now, or may hereafter be,
indebted to the Senior Creditors as a result of the advance of monies and other
extensions of credit by the Senior Creditors to the Borrowers under or pursuant
to a Credit Agreement dated as of September 13, 2004, as amended from time to
time (as the same may be amended, restated or otherwise modified from time to
time hereafter, the “Credit Agreement”) between the Borrowers, the Agent
and the Senior Creditors.

C.            The Junior Creditor and Senior Creditors each
acknowledge that the loan or advance of monies or other extensions of any
financial accommodation or credit to the Borrowers by each of the Junior
Creditor and the Senior Creditors is of value to the other party.

NOW, THEREFORE, for good and
valuable consideration, receipt of which is hereby acknowledged by the parties,
and in order to induce the Senior Creditors to continue to make loans or extend
credit or any other financial accommodation to or for the benefit of the
Borrowers, or to grant such renewals or extension thereof as the Senior
Creditors may deem advisable, and to better secure the Senior Creditors in
respect of the foregoing, the parties hereby agree as follows:

Section 1.               Definitions, Rules of Constructions.

1.1           For purpose of this Agreement, the following terms shall have the
following meanings:

“Bankruptcy Code”
shall mean 11 U.S.C. 101 et seq., as amended from time to time.

“Borrower” and “Borrowers”
shall have the meaning given to such terms in Recital A, above, and any
successor (including a debtor-in-possession under the Bankruptcy Code),
assignee, receiver, trustee or estate thereof.

“Credit Agreement”
shall have the meaning given to that term in Recital B, above, and shall
include any amendments, modifications or restatements thereto or thereof and
any credit agreement hereafter entered into in replacement thereof.

“Default” shall mean
any event which with the giving of notice or lapse of time, or both, would
become an Event of Default.

 

“Event of Default”
shall mean (i) any Event of Default (as therein defined) under the Credit
Agreement, (ii) any failure of any Borrower to pay when due (whether at the
date scheduled therefor or earlier upon acceleration), or when demanded (with
respect to any obligation payable on demand), any item constituting Senior
Debt, or (iii) any event shall occur or condition shall exist and shall
continue for more than the period of grace, if any, applicable thereto and
shall have the effect of causing, or permitting the Senior Creditors or any
subsequent holder of Senior Debt to cause, any item of Senior Debt to become
due prior to its stated maturity or to realize upon any collateral given as
security therefor.

“Junior Collateral”
shall mean the property or interests in property of the Borrowers identified on
Exhibit B hereto in which the Borrowers have granted to Junior Creditor
a security interest to secure payment of the Subordinated Note.

“Junior Creditor”
shall mean Land O’Lakes, Inc. and any successor thereto (including a
debtor-in-possession under the Bankruptcy Code), assignee, receiver, trustee or
estate thereof.

“Junior Creditor
Documents” shall mean the Subordinated Note, the Subordinated Security
Documents and any documents or instruments executed and delivered by the
Borrowers in connection with any of the foregoing.

“Lien” shall mean any
mortgage, deed of trust, pledge, lien, security interest, charge, set-off right
or other encumbrance, whether now existing or hereafter created, acquired or
arising.

“Permitted Payments”
shall have the meaning given in Section 3 below.

“Person” shall mean
an individual, cooperative, corporation, association, partnership, limited
partnership, limited liability company, trust, organization, individual or
government or any governmental agency or any political subdivision thereof.

“Senior Collateral”
shall mean all collateral now or hereafter securing payment of the Senior Debt,
including proceeds thereof.

“Senior Creditors”
shall have the meaning given in the preamble to this Agreement and shall
include any successor to any Senior Creditor (including a debtor-in-possession
under the Bankruptcy Code), assignee, receiver, trustee or estate of any Senior
Creditor.

“Senior Creditor
Documents” shall mean (a) the Credit Agreement, (b) all promissory notes
delivered in connection with the Credit Agreement, and (c) all Credit Documents
(as described in the Credit Agreement) and any mortgages, guaranties, deeds of
trust, security agreements or other documents given by any Person in favor of
the Agent or the Senior Creditors to secure all or any portion of the Senior
Debt, in each of the forgoing cases as any of the forgoing may be amended,
supplemented, restated, extended or otherwise modified from time to time.

“Senior Debt” shall
mean all liabilities and obligations of the Borrowers to the Senior Creditors
howsoever created, arising or evidenced, whether direct or indirect, absolute
or contingent, due or to become due, now existing or hereafter arising or incurred,
including, without limitation, all of the Borrowers’ obligations to the Senior
Creditors under the Senior Creditor Documents, and all other obligations under
any other agreement between the Borrowers and the Agent or the Senior Creditors
now or hereafter in effect, and also including, without limitation, any and all
interest accruing on any of the Senior Debt after the commencement of any
proceedings referred to in Section 6 hereof, notwithstanding any provision or
rule of law which might restrict the rights of the Senior Creditors, as against
the Borrowers or anyone else, to collect such interest.

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“Subordinated Debt”
shall mean all obligations, liabilities and indebtedness of the Borrowers to
the Junior Creditor under the Junior Creditor Documents.

“Subordinated Note”
shall have the meaning given to such term in Recital A above, and shall include
any amendments, modifications or restatements thereto or thereof and any note
hereafter entered into in replacement thereof (but nothing in this definition
shall be deemed to waive the provisions of Section 12 below requiring the
Senior Creditors’ prior written consent to any change in any instrument or
agreement evidencing the Subordinated Debt, including without limitation any
warrants attached thereto).

“Subordinated Security
Documents” shall mean any security agreement or other document in which the
Borrowers have granted to the Junior Creditor a security interest in the Junior
Collateral.

1.2           In this Agreement, in the computation of a
period of time from a specified date to a later specified date, unless
otherwise stated the word “from” means “from and including” and the word “to”
or “until” each means “to but excluding.”

1.3           Other terms may be defined in other parts of
this Agreement.  All references to agreements
and other contractual instruments shall be deemed to include all subsequent
amendments thereto or changes therein entered into in accordance with their
respective terms, and all references to Persons shall be deemed to include
their permitted successors and assigns. 
Unless the context in which used herein otherwise clearly requires, “or”
has the inclusive meaning represented by the phrase “and/or.”  All incorporations by reference of covenants,
terms, definitions or other provisions from other agreements are incorporated
into this Agreement as if such provisions were fully set forth herein, and
include all necessary information and related provisions from such other
agreements, and all such covenants, terms, definitions or other provisions from
other agreements incorporated into this Agreement by reference shall survive
any termination of such other agreements until the Senior Debt has been paid in
full and all financing arrangements between the Borrowers and the Senior
Creditors shall have been terminated.

Section 2.               Standby; Subordination; Standby;
Subordination.

2.1           The payment and performance of the
Subordinated Debt is hereby subordinated to the payment and performance of the
Senior Debt, and, except as set forth in Section 3 below, the Junior Creditor
will not ask, demand, sue for, take or receive from any Borrower or any other
Person liable for all or any part of the Senior Debt, by setoff or in any other
manner, the whole or any part of the Subordinated Debt, or any monies which may
now or hereafter be owing in respect of the Subordinated Debt (whether such
amounts represent principal or interest, or obligations which are due or not
due, direct or indirect, absolute or contingent), including, without
limitation, taking any security for any of the foregoing, except as set forth
in Section 2.2, or the taking of any negotiable instrument therefor (except the
Subordinated Note), unless and until all of the Senior Debt shall have been
fully and indefeasibly paid and satisfied and all financing arrangements
between the Borrowers and Senior Creditors pursuant to the Credit Agreement
have been terminated.  The Subordinated
Debt shall continue to be subordinated to the Senior Debt even if the Senior
Debt is subordinated, avoided or disallowed under the United States Bankruptcy
Code or other applicable law.  The Junior
Creditor shall not challenge, and irrevocably waives any right it may have to
challenge, the validity, enforceability or priority of the Senior Debt in any
judicial, administrative or alternative dispute resolution proceeding.

2.2           The Junior Creditor warrants and represents
that the Subordinated Debt is unsecured except for its subordinated security
interest securing the Subordinated Note in the Junior Collateral as permitted
hereunder, and agrees that the Junior Creditor hereafter will not, unless and
until all of the Senior Debt shall have been fully and indefeasibly paid and
satisfied and all financial arrangements between the Borrowers and the Senior
Creditors pursuant to the Credit Agreement shall have been 

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terminated,
accept any other security therefor from any Borrower or any other Person liable
for all or any part of the Senior Debt for the benefit of any Borrowers and in
the event the Junior Creditor does obtain any such additional security for the
Subordinated Debt, at the request of the Agent, the Junior Creditor hereby
authorizes the Agent to file such subordinations, termination statements and
releases as the Senior Creditors shall reasonably request to subordinate or
release the Junior Creditor’s security interest in or lien against such
property.  Prior to the indefeasible
payment in full and discharge of the Senior Debt and the termination of all
financial arrangements between the Borrowers and the Senior Creditors pursuant
to the Credit Agreement, the Junior Creditor shall have no right to enforce any
claim or take action against any collateral held by it with respect to the
Subordinated Debt, or to take any action against any Borrower or the property
of any Borrowers or of any other Person liable for all or any part of the
Senior Debt.   The Junior Creditor shall
not challenge, and irrevocably waives any right it may have to challenge, the
attachment, validity, perfection, priority or extent of the Lien of the Senior
Creditors or any of them, in the Senior Collateral in any judicial,
administrative or alternative dispute resolution proceeding.

2.3           The Junior Creditor hereby agrees that its
security interest in the Junior Collateral is subject and subordinate to the
security interest of the Senior Creditors in the Junior Collateral to secure
indebtedness of the Borrowers to Senior Creditors.  The Junior Creditor hereby further agrees
that (A) the Junior Creditor shall have no right to possession of any of the
Junior Collateral or to foreclose upon any of the Junior Collateral, whether by
judicial action or otherwise, unless and until all of the indebtedness of the
Borrowers to Senior Creditors secured by Senior Creditors’ senior security
interest in the Junior Collateral shall have been fully and indefeasibly paid
and satisfied and all financial arrangements between the Borrowers and Senior
Creditors secured by such senior security interest have been terminated and (B)
at the request of the Agent, in connection with any sale of all or any part of
the Junior Collateral by the Senior Creditors or to which Senior Creditors have
consented, the Junior Creditor shall execute and deliver to the Agent such
termination statements and releases as the Senior Creditors shall reasonably
request to release, or evidence the release of, the Junior Creditor’s security
interest in the Junior Collateral.   The
Junior Creditor will not join with any creditor (unless the Senior Creditors
shall so join) in bringing any proceeding against any Borrower under any
bankruptcy, reorganization, readjustment of debt, arrangement of debt
receivership, liquidation or insolvency law or statute of the federal or any
state government.

2.4           The Junior Creditor acknowledges and agrees
that, to the extent the terms and provisions of this Agreement are inconsistent
with any agreement or understanding between the Junior Creditor and the
Borrowers, including without limitation, the Junior Creditor Documents, such
agreement or understanding shall be subject to this Agreement.

Section 3.               Permitted Payments.

3.1           Notwithstanding the provisions of Section 2
of this Agreement, until the Agent gives the Junior Creditor written notice (in
the manner set forth below) of the occurrence of an Event of Default or a
Default, and provided that:

(a)           there shall not then exist any breach of this Agreement by the Junior
Creditor which has not been waived, in writing, by the Senior Creditors,

(b)           at the time of the payment described below no Event of Default or
Default exists and is continuing,

(c)           the payment described below, if made, would not give rise to the
occurrence of any Event of Default or Default, and

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(d)           none of the events described in Section 6 has occurred,

the
Borrowers may pay to the Junior Creditor, and the Junior Creditor may accept
from the Borrowers the warrants set forth in the Subordinated Note (which may
not be exercised prior to the scheduled maturity of the Subordinated Debt) and,
following the second anniversary of the effective date hereof, interest and
ordinary scheduled principal payments when due (without acceleration) set forth
in the Subordinated Note (the “Permitted Payments”).  Notwithstanding the foregoing, Permitted
Payments of scheduled principal may not exceed $200,000 per calendar quarter.

Section 4.               Notice of an Event of Default. 
Immediately or no later than five (5) business days after the Junior
Creditor becomes aware of an occurrence of an event of default under the Junior
Creditor Documents, the Junior Creditor shall give written notice thereof to
the other party as provided in Section 17 hereof.  A failure to give such notice shall not
diminish the Junior Creditor’s rights under its creditor documents.

Section 5.               Subordinated Debt Owed Only to the Junior
Creditor.  The Junior Creditor warrants and represents that
the Junior Creditor has not previously assigned any interest in the
Subordinated Debt, that no other Person owns an interest in the Subordinated
Debt (whether as joint holders of Subordinated Debt, participants or otherwise)
and that the entire Subordinated Debt is owing only to the Junior
Creditor.  The Junior Creditor further
covenants that the entire Subordinated Debt shall continue to be owing only to
the Junior Creditor unless it is assigned or pledged to the Junior Creditor’s
creditors, or, with the prior written consent of the Senior Creditors, which
consent shall not be unreasonably withheld by the Senior Creditors, to a Person
who agrees with the Senior Creditors to be bound by the subordination
provisions set forth herein.

Section 6.               Priority.  In the event of (a) any
distribution, division, or application, partial or complete, voluntary or
involuntary, by operation of law or otherwise, of all or any part of the assets
of any Borrower or the proceeds thereof to the creditors of any Borrower or to
their claims against any Borrower, or (b) any readjustment of the debt or
obligations of any Borrower; whether by reason of liquidation, bankruptcy,
arrangement, receivership, assignment for the benefit of creditors or any other
action or proceeding involving the readjustment of all or any part of the
Senior Debt or Subordinated Debt, or the application of the assets of any
Borrower to the payment or liquidation thereof, or (c) the dissolution or other
winding up of the business of any Borrower, or (d) the sale of all or
substantially all of the assets of any Borrower, then, and in any such
event, the Senior Creditors shall be entitled to receive payment in full of all
of the Senior Debt prior to the payment of all or any part of the Subordinated
Debt.

Section 7.               Grant of Authority to Senior Creditors.  In
order to enable the Senior Creditors to enforce any of its rights hereunder in
any of the actions or proceedings described in Section 6, each Senior
Creditor is hereby irrevocably authorized and empowered, in its discretion, to
file and present for and on behalf of the Junior Creditor such proofs of claims
or other motions or pleadings as such Senior Creditor may deem expedient or
proper to establish such Senior Creditors’ entitlement of payment from, or on
behalf of, the Junior Creditor with respect to the Subordinated Debt and to
vote such proofs of claims in any such proceeding and to demand, sue for,
receive and collect any and all dividends or other payments or disbursements
made thereon in whatever form the same may be paid or issued and to apply the
same on account of any of the Senior Debt. 
The Junior Creditor irrevocably authorizes and empowers each Senior
Creditor to demand, sue for, collect and receive each of the payments and
distributions described in Section 6 above and give acquittance therefor
and to file claims and take such other actions, in the name of such Senior
Creditor or in the name of the Junior Creditor or otherwise, as such Senior
Creditor may deem necessary or advisable for the enforcement of this
Agreement.  To the extent that payments
of distributions are made in property other than cash, the Junior Creditor
authorizes each Senior Creditor to sell such property to such buyers and on
such terms as the Senior Creditor, in its sole 

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discretion,
shall determine.  The Junior Creditor
will execute and deliver to the Senior Creditors such powers of attorney,
assignments and other instruments or documents, including debentures (together
with such assignments or endorsements as the Senior Creditors shall deem
necessary), as may be reasonably requested by the Senior Creditors in order to
enable the Senior Creditors to enforce any and all claims upon or with respect
to any or all of the Subordinated Debt and to collect and receive any and all
payments and distributions which may be payable or deliverable at any time upon
or with respect to the Subordinated Debt, all for the Senior Creditors’ own
benefit.

Section 8.               Payments Received by the Junior Creditor.  
Except for Permitted Payments, if the Junior Creditor receives any
payment or distribution or security or instrument or proceeds thereof from any
Borrower or any other Person liable for all or any part of the Senior Debt upon
or with respect to the Subordinated Debt prior to the indefeasible payment in
full of the Senior Debt and termination of all financing arrangements between
the Borrowers and the Senior Creditors pursuant to the Credit Agreement, the
Junior Creditor shall receive and hold the same in trust, as trustee, for the
benefit of the Senior Creditors and shall forthwith deliver the same to the
Agent in precisely the form received (except for the endorsement or assignment
by the Junior Creditor where necessary), for application on any of the Senior
Debt, due or not due and, until so delivered, the same shall be held in trust
by the Junior Creditor as the property of the Senior Creditors.  In the event of the failure of the Junior
Creditor to make any such endorsement or assignment to the Senior Creditors,
for the benefit of the Senior Creditors, each Senior Creditor, or any of its
officers or employees, is hereby irrevocably authorized, as the Junior
Creditor’s attorney-in-fact, to make the same.

Section 9.               Continuing Nature of Subordination.  This
Agreement shall be effective and may not be terminated or otherwise revoked by
the Junior Creditor until the Senior Debt shall have been fully paid and
discharged and all financing arrangements between the Borrowers and the Senior
Creditors pursuant to the Credit Agreement have been terminated.  This is a continuing agreement of
subordination and the Senior Creditors may continue, at any time and without
notice to the Junior Creditor, to extend credit or other financial
accommodations and loan monies to or for the benefit of the Borrowers in
reliance hereon.  No obligation of the
Junior Creditor hereunder shall be affected by the death or incapacity of, or
written revocation by, the Junior Creditor or any other subordinated party,
pledgor, endorser, or guarantor, if any.

Section 10.             Additional Agreements Between Senior
Creditors and Borrowers.  The Senior Creditors, at any time and from
time to time, may enter into such agreement or agreements with the Borrowers as
the Senior Creditors may deem proper, increasing the amount of, extending the
time of payment of or renewing or otherwise altering the terms of all or any of
the Senior Debt or affecting any security underlying any or all of the Senior
Debt, and may exchange, sell, release, surrender or otherwise deal with any
such security, without in any way thereby impairing or affecting this
Agreement.

Section 11.             Bankruptcy Issues.  If
any Borrower becomes the subject of proceedings under the Bankruptcy Code and
if the Senior Creditors desire to permit the use of cash collateral or to
provide financing to such Borrower under either Section 363 or Section 364 of
the Bankruptcy Code, the Junior Creditor agrees that adequate notice of such
financing to the Junior Creditor, if required under applicable law, shall have
been provided if the Junior Creditor receives notice ten (10) days prior to
entry of any order approving such cash collateral usage or financing.  Notice of a proposed financing or use of cash
collateral shall be deemed given upon the sending of such notice to the Junior
Creditor in the manner specified in Section 17.  All allocations of payments between the
Senior Creditors and the Junior Creditor shall continue to be made after the
filing of a petition under the Bankruptcy Code on the basis provided in this
Agreement.  The Junior Creditor agrees
not to assert any right it may have to “adequate protection” of its interest in
the Junior Collateral, or any other security for the Subordinated Debt it may
have acquired, in any Bankruptcy proceeding, or to seek to have its claims in
such Bankruptcy proceeding treated as 

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“secured
claims” under Section 506(a) of the Bankruptcy Code, without the prior written
consent of the Senior Creditors.  The
Junior Creditor waives any claim the Junior Creditor may now or hereafter have
against the Senior Creditors arising out of the Senior Creditors’ election, in
any proceeding instituted under Chapter 11 of the Bankruptcy Code, of the
application of Section 1111(b)(2) of the Bankruptcy Code, and/or any borrowing
or grant of a security interest under Section 364 of the Bankruptcy Code by the
Borrowers, as debtor in possession, or by a trustee.  To the extent that the Senior Creditors
receive payments on, or proceeds of any collateral for, the Senior Debt which
are subsequently avoided, invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver or
any other party under any Bankruptcy law, state or federal law, common law or
equitable cause, then, to the extent of such payment or proceeds received, the Senior
Debt, or part thereof, intended to be satisfied shall be revived and continue
in full force and effect as if such payments or proceeds had not been received
by the Senior Creditors.  Junior Creditor
further agrees not to resist any motion or other proceeding commenced or joined
in by Senior Creditors the object of which is to obtain relief from the
automatic stay imposed by the Bankruptcy Code or to dismiss any proceedings
under the Bankruptcy Code wherein any Borrower is a debtor.

Section 12.             Instrument Legend; No Amendments to
Subordinated Instruments.  Any agreement or instrument evidencing the
Subordinated Debt, or any portion thereof, which has been or is hereafter
executed by any Borrower will, on the date hereof or the date of execution, be
inscribed with a legend conspicuously indicating that payment thereof is
subordinated to the claims of the Senior Creditors pursuant to the terms of
this Agreement.  The Junior Creditor will
not agree to any amendment, restatement or other modification of any Junior
Creditor Documents, including, without limitation, the Subordinated Note,
without the prior written consent of the Senior Creditors.

Section 13.             Waivers.  The Senior Debt shall be
deemed to have been made or incurred in reliance upon this Agreement.  The Junior Creditor expressly waives all
notice of the acceptance by the Senior Creditors of the subordination and other
provisions of this Agreement and all other notices not specifically required
pursuant to the terms of this Agreement whatsoever, and the Junior Creditor
expressly waives reliance by the Senior Creditors upon the subordination and
other agreements as herein provided.  The
Junior Creditor agrees that no Senior Creditor has made warranties or representations
with respect to the due execution, legality, validity, completeness or
enforceability of the Senior Creditors Documents, or the collectability of the
Senior Debt, and that the Senior Creditors shall be entitled to manage and
supervise their loans and other financial accommodations to the Borrowers
without regard to the existence of any rights that the Junior Creditor may now
or hereafter have in or to any of the assets of the Borrowers.  The Junior Creditor agrees that the Senior
Creditors shall have no liability to the Junior Creditor for, and waives any
claim which the Junior Creditor may now or hereafter have against, the Senior
Creditors arising out of any and all actions which any Senior Creditor in good
faith takes or omits to take (including, without limitation, actions with respect
to any security for the Senior Debt, actions with respect to the occurrence of
an Event of Default, actions with respect to the foreclosure upon, sale,
release, or depreciation of, or failure to realize upon, any security for the
Senior Debt and actions with respect to the collection of any claim for all or
any part of the Senior Debt from any guarantor or other party) with respect to
the Senior Credit Documents or any other agreement related to any Senior Debt
or to the collection of the Senior Debt or the valuation, use, protection or
release of any security for the Senior Debt. 
The Junior Creditor hereby waives any and all right to require the
marshalling of assets in connection with the exercise of any of the remedies
permitted by applicable law or agreement. 
Unless expressly waived herein, no waiver shall be deemed to have been
made by the Junior Creditor of any of its rights hereunder unless the same
shall be in writing and signed on behalf of the Junior Creditor, and each
waiver, if any, shall be a waiver only with respect to the specific instance
involved and shall in no way impair the rights of the Junior Creditor or the
obligations of the Senior Creditors to the Junior Creditor in any other respect
at any other time.

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Section 14.             Senior Creditors’ Waivers.  No
waiver shall be deemed to be made by the Senior Creditors of any of their
rights hereunder unless the same shall be in writing signed on behalf of the
Senior Creditors, and each waiver, if any, shall be a waiver only with respect
to the specific instance involved and shall in no way impair the rights of the
Senior Creditors or the obligations of the Junior Creditor to the Senior
Creditors in any other respect at any other time.

Section 15.             Financial Condition of Borrowers; Other
Actions by the Senior Creditors.  The Junior Creditor hereby assumes
responsibility for keeping informed of the financial condition of the
Borrowers, any and all endorsers and any and all guarantors of the Subordinated
Debt and of all other circumstances bearing upon the risk of nonpayment of the
Senior Debt and/or the Subordinated Debt that diligent inquiry would
reveal.  The Junior Creditor hereby
agrees that the Senior Creditors shall have no duty to advise the Junior
Creditor of information known to the Senior Creditors regarding such condition
or any such circumstances.  In the event
any Senior Creditor, in its sole discretion, undertakes, at any time or from
time to time, to provide any such information to the Junior Creditor, the
Senior Creditors shall be under no obligation (i) to provide any such
information to the Junior Creditor on any subsequent occasion, (ii) to
undertake any investigation not a part of its regular business routine, or
(iii) to disclose any information which, pursuant to its usual practices, the
Senior Creditors wish to maintain confidential. 
The Junior Creditor hereby agrees that all payments received by the
Senior Creditors may be applied, in whole or in part, to any of the Senior
Debt, as the Senior Creditors, in their sole discretion, deems appropriate and
assents to any extension or postponement of the time of payment of the Senior
Debt or to any other indulgence with respect thereto, to any substitution,
exchange or release of collateral which may at any time secure the Senior Debt
and to the addition or release of any other Person primarily or secondarily
liable therefor.

Section 16.             Subrogation.  When the Senior Debt shall
have been fully paid and discharged and all financing arrangements between the
Borrowers and the Senior Creditors pursuant to the Credit Agreement have been
terminated, the Junior Creditor shall be subrogated to the rights of the Senior
Creditors to receive payments or distribution of assets of the Borrowers made
on such Senior Debt until the principal of and premium, if any, and interest on
(and any other amounts due with respect to) the Subordinated Debt shall be paid
in full.  For the purposes of such
subrogation, no payments or distributions to the Senior Creditors of any cash,
property or securities to which the Junior Creditor would be entitled except
for these provisions shall, as between the Borrowers, their creditors other
than the Senior Creditors, and the Junior Creditor, be deemed to be a payment
by the Borrowers to or on account of Senior Debt, it being understood that
these provisions in this Section are used, and are intended, solely for the
purpose of defining the relative rights of the Junior Creditor, on the one
hand, and the Senior Creditors, on the other hand.

Section 17.             Notices.  All communications and notices
provided under this Agreement to any party shall be given in writing by manual
delivery, facsimile transmission, overnight courier or United States first
class mail to such party’s address shown on the signature page hereof, or to
any party at such other address as may be designated by such party in a notice
to the other parties.  All periods of
notice shall be measured from the date of deliver thereof if manually
delivered, from the date of sending if sent by facsimile transmission, from the
first business day after the date of sending if sent by overnight courier, or
from four days after the date of mailing if mailed.

Section 18.             Governing Law and
Construction.  THE VALIDITY,
CONSTRUCTION AND ENFORCEABILITY OF THIS AGREEMENT SHALL BE GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF COLORADO, WITHOUT GIVING EFFECT TO CONFLICT OF
LAWS PRINCIPLES THEREOF.

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Section 19.             Consent to Jurisdiction.  AT THE OPTION OF THE SENIOR CREDITORS, THIS
AGREEMENT MAY BE ENFORCED IN ANY FEDERAL COURT OR COLORADO STATE COURT SITTING
IN FEDERAL OR STATE COURT IN THE CITY OR COUNTY OF DENVER, COLORADO; AND THE
JUNIOR CREDITOR CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND
WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT.  IN THE EVENT THE JUNIOR CREDITOR COMMENCES
ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY
ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT,
THE SENIOR CREDITORS AT THEIR OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED
TO ONE OF THE JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR IF SUCH
TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE
DISMISSED WITHOUT PREJUDICE.

Section 20.             Waiver of Jury Trial.  EACH OF THE JUNIOR CREDITOR AND EACH SENIOR
CREDITOR BY ITS ACCEPTANCE HEREOF, IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL
BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS
AGREEMENT OR UNDER ANY AMENDMENT, INSTRUMENT OR DOCUMENT DELIVERED OR WHICH MAY
IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY CREDIT
RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREE THAT ANY
SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.

Section 21.             Severability. 
Wherever possible, each provision of this Agreement shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or invalid under applicable
law, such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.

Section 22.             Miscellaneous.

22.1         This Agreement and the terms, covenants and
conditions hereof shall inure to the benefit of the Senior Creditors and their
successors and assigns.  Nothing
contained in this Agreement, expressed or implied, is intended to confer upon
any Person other than the parties hereto and thereto any rights, remedies,
obligations or liabilities hereunder or thereunder.

22.2         This Agreement sets forth the entire
understanding of the parties hereto relating to the subject matter hereof, and
all prior understandings and negotiations, written or oral, are merged into and
superseded by this Agreement.  Any
modification, amendment or waiver of this Agreement or any provision herein
shall be binding upon the parties only if contained in a writing signed by or
on behalf of the Senior Creditors and the Junior Creditor.  No failure on the part of either party to
exercise and no delay in exercising any power or right hereunder, shall operate
as a waiver thereof; nor shall any single or partial exercise of any power or
right preclude any other or further exercise thereof or the exercise of any
other power or right.  The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.

22.3         The Junior Creditor hereby acknowledges that
(a) it has been advised by counsel in the negotiation, execution and delivery
of this Agreement and the other Senior Creditors Documents, (b) the Senior
Creditors has no fiduciary relationship to the Junior Creditor, and (c) no
joint venture exists between the Junior Creditor and the Senior Creditors.

 9
 

 

22.4         The section titles contained in this
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between the parties hereto.

22.5         All covenants, agreements, representations
and warranties made in this Agreement and in any certificates or other papers
delivered by or on behalf of the Junior Creditor pursuant hereto shall be
deemed to have been relied upon by the Senior Creditors and shall survive the
execution and delivery of this Agreement, and shall continue in full force and
effect so long as any Senior Debt remains outstanding and unpaid or any
financing arrangement between the Borrowers and the Senior Creditors remains in
effect.  All statements of fact relating
to the Junior Creditor contained in any certificate or other paper delivered to
the Senior Creditors at any time after the date hereof by or on behalf of the
Junior Creditor pursuant hereto or in connection with the transactions
contemplated hereby shall constitute representations and warranties by the
Junior Creditor.

22.6         This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.

Section 23.             Action Concerning Collateral. 
Notwithstanding any security interest now held or hereafter acquired by
the Junior Creditor, the Senior Creditors may take possession of, sell, dispose
of, and otherwise deal with all or any part of the Senior Collateral, and may
enforce any right or remedy available to it with respect to the Senior
Collateral, all without notice to or consent of the Junior Creditor except as
specifically required by applicable law. 
In addition, and without limiting the generality of the foregoing, if an
Event of Default has occurred and is continuing and any Borrower intends to
sell any Collateral to an unrelated third party outside the ordinary course of
business, the Junior Creditor hereby authorizes the Senior Creditors to prepare
and record such instruments as may reasonably be necessary to terminate and
release any security interest or lien the Junior Creditor has in the Senior
Collateral to be sold.  The Senior
Creditors shall have no duty to preserve, protect, care for, insure, take
possession of, collect, dispose of, or otherwise realize upon any of the Senior
Collateral, and in no event shall the Senior Creditors be deemed the Junior
Creditor’s agent with respect to the Senior Collateral.

[Signature page follows]

 

 

 10

 

IN
WITNESS WHEREOF, this instrument has been signed as of the date first set forth
above.

	
   

  	
  THE JUNIOR CREDITOR:

  
	
   

  	
   

  	
   

  
	
   

  	
  LAND O’LAKES,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Daniel Knutson

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title

  	
    Sr.
  V.P. and Chief Financial Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address for
  Notice:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  P.O. Box 64101

  	
   

  	
   

  
	
  St. Paul, MN
  55164-0101

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Attention:
  Daniel Knutson

  	
   

  	
   

  
	
  Fax:
  651-481-2190

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Accepted:

  
	
   

  	
   

  	
   

  
	
   

  	
  COBANK, ACB, as
  Agent

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Jeff Doorenbos

  	
   

  
	
   

  	
   

  	
  Jeff Doorenbos, Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address for
  Notice:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  5500 South
  Quebec Street

  	
   

  	
   

  
	
  P.O. Box 5110

  	
   

  	
   

  
	
  Denver, CO 80217

  	
   

  	
   

  
	
  Attention: Gary
  Sloan

  	
   

  	
   

  
	
  Fax:

  	
   

  	
   

  
						

 

 

[Signature Page to
Subordination and Intercreditor Agreement]

 

ACCEPTANCE
AND ACKNOWLEDGMENT

Each
Borrower hereby accepts, and acknowledges receipt of a copy of, the foregoing
Subordination Agreement and agrees that it will not pay any of the “Subordinated
Debt” (as defined in the foregoing Agreement) or grant any security therefor,
except as the foregoing Agreement provides.

	
  

  	
  GOLDEN OVAL EGGS, LLC

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Dana Persson

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title

  	
    President
  and Chief Executive Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MIDWEST INVESTORS OF IOWA,

  
	
   

  	
  COOPERATIVE

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Dana Persson

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title

  	
    President
  and Chief Executive Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GOECA, LP, By its General Partner, GOEMCA,

  
	
   

  	
  INC.

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Dana Persson

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title

  	
    President
  and Chief Executive OfficerEXHIBIT 10.13

WARRANT

To
Subscribe for and Purchase Units of

GOLDEN
OVAL EGGS, LLC

THIS CERTIFIES THAT, for value received, LAND
O’LAKES, INC., a Minnesota cooperative corporation (herein called “Purchaser”)
is, subject to the limitations and conditions described herein, entitled to
subscribe for and purchase from GOLDEN OVAL EGGS, LLC, a Delaware limited
liability company (herein called the “Company”), at any time from and after
July 1, 2009 (the “Vesting Date”), to and including the Expiration Date, such number
of Units (as hereinafter defined) of the Company as shall equal ten percent
(10%) of all issued and outstanding units of the Company (including as
outstanding Units for purposes of this Warrant any Units issuable upon exercise
or conversion of this Warrant or of any other warrants, rights, options or
securities then exercisable or convertible) at the price of $0.01 per Unit, but only in the event
any amounts remain due and owing to Purchaser under the Subordinated Note as of
the Vesting Date.  In the event the
Subordinated Note has been paid in full at any time prior to the Vesting Date,
this Warrant shall be void ab initio.

This Warrant has been issued pursuant to that
certain Asset Purchase Agreement dated May 23, 2006 between the Company and
affiliates of the Purchaser (the “Purchase Agreement”) and the Subordinated
Promissory Note issued by the Company to Purchaser as of June 30, 2006 (the
“Subordinated Note”), in connection with the closing of the transactions
contemplated in the Purchase Agreement. 
Capitalized terms used herein and not otherwise defined shall have the
meaning set forth in the Purchase Agreement. 
“Expiration Date” shall mean July 1, 2011.

This Warrant is subject to the following provisions,
terms and conditions:

1.             The
rights represented by this Warrant may be exercised by the holder hereof, in
whole or in part, by written notice of exercise
delivered to the Company 10 days prior to the intended date of exercise and by
the surrender of this Warrant (properly endorsed if required) at the principal
office of the Company and upon payment to it by check of the purchase price for
the Units.  The Company agrees that the
Units so purchased shall be and are deemed to be issued to the holder hereof as
the record owner of such Units as of the close of business on the date on which
this Warrant shall have been surrendered and payment made for such Units as
aforesaid.  Subject to the provisions of
the next succeeding paragraph, certificates for the Units so purchased shall be
delivered to the holder hereof within a reasonable time, not exceeding 10 days,
after the rights represented by this Warrant shall have been so exercised.

2.             Notwithstanding
the foregoing, however, the Company shall not be required to deliver any
certificate for Units upon exercise of this Warrant except in accordance with
the provisions, and subject to the limitations, of paragraph 8 hereof and
the restrictive legend under the heading “Restriction on Transfer” below.

3.             The
Company covenants and agrees that all Units which may be issued upon the
exercise of the rights represented by this Warrant will, upon issuance, be duly
authorized and issued, fully paid and nonassessable.  The Company further covenants and agrees that
during the period within which the rights represented by this Warrant may be
exercised, the Company will at all times have authorized, and reserved for the
purpose of issue or transfer upon exercise of the subscription rights evidenced
by this Warrant, a sufficient number of its Units to provide for the exercise
of the rights represented by this Warrant.

4.             The
above provisions are, however, subject to the following:

 

(a)           If any
capital reorganization or reclassification of the equity interests of the
Company, or consolidation or merger of the Company with another person or
business enterprise, or the sale of all or substantially all of its assets to
another person or business enterprise shall be effected in such a way that
holders of Units shall be entitled to receive stock, securities or assets with
respect to or in exchange for Units, then, as a condition of such
reorganization, reclassification, consolidation, merger or sale, lawful and
adequate provision shall be made whereby the holder hereof shall thereafter
have the right to purchase and receive, upon the basis and upon the terms and
conditions specified in this Warrant and in lieu of the Units of the Company
immediately theretofore purchasable and receivable upon the exercise of the
rights represented hereby, such Units, securities or assets as may be issued or
payable with respect to or in exchange for a number of outstanding Units equal
to the number of Units immediately theretofore purchasable and receivable upon
the exercise of the rights represented hereby had such reorganization,
reclassification, consolidation, merger or sale not taken place, and in any
such case appropriate provision shall be made with respect to the rights and
interests of the holder of this Warrant to the end that the provisions hereof
shall thereafter be applicable, as nearly as may be, in relation to any equity
interests, securities or assets thereafter deliverable upon the exercise
hereof, including the exercise price, which shall not exceed $0.01 per
unit.  The Company shall not effect any
such consolidation, merger or sale, unless prior to the consummation thereof
the successor (if other than the Company) resulting from such consolidation or
merger or the purchaser of such assets shall assume, by written instrument
executed and mailed to the registered holder hereof at the last address of such
holder appearing on the books of the Company, the obligation to deliver to such
holder such equity interests, securities or assets as, in accordance with the
foregoing provisions, such holder may be entitled to purchase.

(b)           In
case any time:

(i) the Company
shall pay any cash distribution on its Units;

(ii) the Company
shall pay any dividend payable in equity interests upon its Units or make any
distribution (other than cash) to the holders of its Units;

(iii) the Company
shall offer for subscription pro rata to the holders of its Units any
additional equity interests of any class or other rights;

(iv) there shall be
any capital reorganization, or reclassification of the equity interests of the
Company, or consolidation or merger of the Company with, or sale of all or
substantially all of its assets to, another person or business enterprise; or

(v) there shall be
a voluntary or involuntary dissolution, liquidation or winding up of the
Company;

then,
in any one or more of said cases, the Company shall give written notice, by
first-class mail, postage prepaid, addressed to the registered holder of
this Warrant at the address of such holder as shown on the books of the
Company, of the date on which (aa) the books of the Company shall close or
a record shall be taken for such dividend, distribution or subscription rights,
or (bb) such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding up shall take place, as the case may
be.  Such notice shall also specify the
date as of which the holders of Units of record shall participate in such
dividend, distribution or subscription rights, or shall be entitled to exchange
their Units for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, as the case may be. 
Such written notice shall be given at least 20 days prior to the action
in question and not less than 20 days prior to the record date or the date on
which the Company’s transfer books are closed in respect thereto.

 

5.             As
used herein, the term “Units” shall mean and include the Company’s “Class B
Units” as defined in the Company’s Certificate of Designation of Class B Units.

6.             So
long as this Warrant remains outstanding, without the written consent of the
holder of this Warrant, the Company shall not create or issue any additional
equity interests preferred as to dividends or as to the distribution of assets
upon voluntary or involuntary liquidation, dissolution or winding up.

7.             This
Warrant shall not entitle the holder hereof to any voting rights or other
rights as a Member of the Company.

8.             The
holder of this Warrant, by acceptance hereof, agrees to give written notice to
the Company before transferring this Warrant or transferring any Units issuable
or issued upon the exercise hereof of such holder’s intention to do so,
describing briefly the manner of any proposed transfer of this Warrant or such
holder’s intention as to the disposition to be made of Units issuable or issued
upon the exercise hereof.  Such holder
shall also provide the Company with an opinion of counsel satisfactory to the
Company to the effect that the proposed transfer of this Warrant or disposition
of Units may be effected without registration or qualification (under any
Federal or State law) of this Warrant or the Units issuable or issued upon the
exercise hereof.  Upon receipt of such
written notice and opinion by the Company, such holder shall be entitled to
transfer this Warrant, or to exercise this Warrant in accordance with its terms
and dispose of the Units received upon such exercise or to dispose of Units
received upon the previous exercise of this Warrant, all in accordance with the
terms of the notice delivered by such holder to the Company, provided that an
appropriate legend respecting the aforesaid restrictions on transfer and
disposition may be endorsed on this Warrant and the certificates for such
Units.  Notwithstanding the foregoing,
neither this Warrant nor the Units issuable or issued upon the exercise hereof
may be transferred in whole or in part to a “competitor” of the Company as that
term  is defined in the Subordinated Note
(i.e., any person or business enterprise engaged in a business that competes
directly or indirectly with that of the Company).

9.             Subject
to the provisions of paragraph 8 hereof and the restrictive legend under
the heading “Restrictions on Transfer” below, this Warrant and all rights
hereunder are transferable, in whole or in part, at the principal office of the
Company by the holder hereof in person or by duly authorized attorney, upon
surrender of this Warrant properly endorsed. 
Each taker and holder of this Warrant, by taking or holding the same,
consents and agrees that the bearer of this Warrant, when endorsed, may be
treated by the Company and all other persons dealing with this Warrant as the
absolute owner hereof for any purpose and as the person entitled to exercise
the rights represented by this Warrant, or to the transfer hereof on the books
of the Company, any notice to the contrary notwithstanding; but until such
transfer on such books, the Company may treat the registered holder hereof as
the owner for all purposes.

10.           This
Warrant is exchangeable, upon the surrender hereof by the holder hereof at the
principal office of the Company, for new Warrants of like tenor representing in
the aggregate the right to subscribe for and purchase the percentage of Units
which may be subscribed for and purchased hereunder, each of such new Warrants
to represent the right to subscribe for and purchase such percentage of Units
as shall be designated by said holder hereof at the time of such surrender.

11.            All
questions concerning this Warrant will be governed and interpreted and enforced
in accordance with the internal law of the State of Minnesota.

*  *  *

[Signature Page Follows]

 

IN WITNESS WHEREOF, the Company has caused this
Warrant to be signed by its duly authorized officer and this Warrant to be
dated as of June 30, 2006.

	
  

  	
  GOLDEN OVAL EGGS, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Dana Persson

  
	
   

  	
   

  	
  Name:

  	
  Dana Persson

  
	
   

  	
   

  	
  Title:

  	
  President and Chief Executive Officer

  
					

 

 

RESTRICTION
ON TRANSFER

THE SECURITIES REPRESENTED
BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE UPON EXERCISE THEREOF MAY
NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (ii) TO THE EXTENT SUCH
APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT
RELATING TO THE DISPOSITION OF SECURITIES) OR (iii) ANOTHER EXEMPTION FROM
REGISTRATION UNDER SUCH ACT, THE AVAILABILITY OF WHICH SHALL BE THE SUBJECT OF
AN OPINION OF COUNSEL, SUCH OPINION TO BE REASONABLY SATISFACTORY TO THE
COMPANY.

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