10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC  20549

FORM 10-K

x	Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	for the fiscal year ended August 31, 2006.
o	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	for the transition period from                         to                        .

Commission File Number:  000-51096

Golden Oval Eggs, LLC
(Exact name of registrant as specified in its charter)

Minnesota	20-0422519
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

1800 Park Avenue East, P.O. Box 615
Renville, MN  56284
(Address of principal executive offices)

(320) 329-8182
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:   None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.
Yes o No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark if disclosure of delinquent filers pursuant to Rule 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicated by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer:

Large Accelerated Filer o Accelerated Filer o Non-Accelerated Filer x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

Golden Oval Eggs, LLC is a limited liability company whose common equity, consisting of its Class A units and Class B Units, is subject to significant restrictions on transfer under its Limited Liability Company Agreement.  No public market for voting and non-voting common equity of Golden Oval Eggs, LLC is established and it is unlikely in the foreseeable future that a public market for its voting and non-voting common equity will develop.

As of November 26, 2006, there were outstanding 5,167,865 Class A Units and 697,350 Class B Units.

DOCUMENTS INCORPORATED BY REFERENCE:

Pursuant to General Instruction G (3), the Company omits Part III, Items 10, 11, 12, 13, and 14 and incorporates such items by reference to an amendment to this Annual Report on Form 10-K to be filed within 120 days after August 31, 2006 or to a definitive proxy statement to be filed within 120 days after August 31, 2006 with the Securities and Exchange Commission.

PART I

Item 1.         Business.

Introduction

Golden Oval Eggs, LLC, a Delaware limited liability company, is an egg production and processing company based in Renville, Minnesota.  Effective August 31, 2004, Midwest Investors of Renville, Inc., d/b/a “Golden Oval Eggs”, a Minnesota cooperative (the “Cooperative”) was converted into a limited liability company with Golden Oval Eggs, LLC being the surviving company in the conversion.  We operate as the successor to the Cooperative and our operations are a continuation of the operations of the Cooperative.

Our production output consists of liquid whole egg, liquid egg white and liquid egg yolk, and since the latter part of the fiscal year, further processed, value added egg products. Our unpasteurized liquid egg products are sold on a direct basis to companies who further process the unpasteurized liquid egg into various finished egg products such as dried eggs, frozen, hard cooked, extended shelf-life liquid, pre-cooked egg patties, specialty egg products, etc.  Institutional, food service, restaurants, and food manufacturers in turn purchase these further processed products.  On June 30, 2006, we completed the acquisition of certain egg processing assets of MoArk, LLC and its subsidiaries, Cutler at Abbeville, L.L.C., Hi Point Industries, LLC, L&W Egg Products, Inc., Norco Ranch, Inc. and MoArk Egg Corporation (the “MoArk Acquisition”).  MoArk, LLC is a subsidiary of Land O’Lakes, Inc.  As a result of the MoArk Acquisition, we are able to further process the raw liquid egg into various finished egg products and through this additional product line, sell products to retail, foodservice and institutional markets, as well as expand our share of the volume of first stage liquid egg processing.  We believe the product lines acquired through the MoArk Acquisition have an annualized sales volume somewhat larger than that of Golden Oval, positioning us to serve larger customers on a broader geographical basis. By adding economic value to unpasteurized liquid eggs in our further processed products, we believe our exposure to the volatility of the commodities markets will decrease as raw commodities become a smaller portion of our total cost.

From 1995 to 2006, our egg product sales have increased from approximately 7 million liquid pounds to approximately 258 million liquid pounds.  Through the MoArk Acquisition, we acquired five facilities producing various liquid, hard-cooked, dried, refrigerated and frozen egg products.

Our revenues, which were primarily derived from the production and sale of egg products, were $93.6 million during fiscal 2006 (ending August 31, 2006), $63.2 million during fiscal 2005 (ending August 31, 2005), and $83.5 million during fiscal 2004 (ending August 31, 2004).

Sales, Marketing and Customers

In the past, a majority of our egg products were sold through a variety of contract arrangements in an effort to reduce price and product sales risk.  As a result, we are currently  a party to several multi-year written contracts to supply different customers, based on formula pricing, fixed price, toll milling and market based pricing. Those contracts typically involve the customer’s agreement to purchase a specified quantity of egg products each year during the term of the applicable agreement, and allow either party to terminate the contract upon specified notice to the other party. Historically, egg products priced on a “non-market” basis under these long-term contracts have accounted for more than half of total sales volume, although this percentage tends to fluctuate over time.  Pricing under these non-market contracts is generally reflective of historical average market prices. The current contracts expire at various times

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over the next five years, subject to termination by either party on from six to 24 months’ notice. In the event that any such contractual arrangements were terminated, we would anticipate selling available products into the commodity markets for such products.

In fiscal year 2006, there were three customers who each represented more than 10% of our total revenues for fiscal year 2006:  Primera Foods (14%), Sunny Fresh Foods (23%) and Michael Foods (31%). MoArk is, directly or indirectly through affiliates, in the business of production, marketing, sale and distribution of shell eggs.  MoArk also was in the separate business of manufacturing, marketing, selling and distributing liquid egg products, some of which were sourced from us, until we acquired this business through the MoArk Acquisition.  While most of our sales are made in the U.S., some of our sales are outside of the U.S., primarily to customers in Canada.  In 2006, non-U.S. sales totaled approximately $3,532,000, with sales in 2004 and 2005 approximately $6,289,000 and $3,858,000, respectively.

Egg Industry and Markets

In 2005, the total number of egg laying hens (“layers”) in the U.S. was 286 million up three million from 2004, according to the U.S. Department of Agriculture (“USDA”).  The flock size on October 1, 2006 was 288 million layers, slightly larger than the previous year according to a report of the USDA.  .

Market Segmentation

In the U.S., there were 213.9 million cases (30 dozen eggs per case) of shell eggs used in production in calendar year 2005.  Of these 213.9 million cases,

·68.2 million cases (32%) were further processed into other products such as pasteurized liquid, frozen, pre-cooked, hard-cooked and dried eggs;

·125.5 million cases (59%) went to retail;

·18.2 million cases (9%) went for foodservice use; and

·2.0 million cases (1%) were exported.

We participate in the market encompassing the 68.2 million cases, or 2.6 billion pounds of liquid egg, that are further processed into various types of egg product.  We sold 258 million pounds of egg products in our fiscal year 2006.

Competition

We compete with a number of egg production companies in the U.S. and in Canada, both for customers for unpasteurized liquid egg and for further processed egg product.  Our primary competitors include Michael Foods, Sunny Fresh Foods, Sonstegard Foods, ConAgra Foods, Sparboe Companies, Crystal Lake, LLC, Wabash Valley Produce, American Egg Products, Deb El Foods, Echo Lake Produce, and Rose Acre Farms.  We also compete with some of our customers who produce their own unpasteurized liquid egg in addition to purchasing our unpasteurized liquid egg and who further process unpasteurized liquid egg into other egg products.

At August 31, 2005, we had flocks of 6.1 million layers and at August 31, 2006, we had flocks of 7.0 million layers, an increase of 14% due to the completion of the Thompson facility in January 2006.  In calendar year 2005, there were approximately 255 egg producing companies nationally with flocks of 75,000 hens or more, representing approximately 95% of all the layers in the U.S. Of these 255 companies, there are approximately 64 egg producing companies with more than 1 million layers.  Egg Industry Magazine ranked us as the 8th largest producer nationally as of December 31, 2005 by layers.  According to Egg Industry Magazine, the top twenty producers represented 59% of the national flock of layers.

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Production

Our production operations in Renville, Minnesota and Thompson, Iowa consist primarily of a fully automated, environmentally controlled, egg flow, feeding and watering system for layers complex where the hens produce shell eggs.  These eggs gently roll to a conveyor belt that delivers the eggs to the processing facility in an adjacent building. Eggs are cleaned, shells removed, and yolks separated from whites.  The raw liquid egg is stored in stainless steel tanks, and later shipped out to customers or our own further processing facilities.  In addition to processing eggs from our own layers, we also purchase eggs from third parties for our off-line production at the Renville facility.

The facilities acquired in the MoArk Acquisition do not produce eggs, but procure shells eggs for their own production into liquid eggs as well as purchasing liquid eggs from other suppliers, including Golden Oval.  The acquired facilities will rely upon liquid egg production from our Thompson and Renville facilities for a portion of their supply of raw liquid egg.  These plants generally have egg breaking and pasteurizing capabilities, in addition to a wide range of production platforms for further processed products, as well as refrigerated and frozen storage.

Feed is a primary cost component in the production of eggs.  In our Thompson, Iowa production facility, we built our own feed mill onsite.  To serve our Renville, Minnesota facility, we jointly own a feed mill, United Mills, with two other companies.  We purchase corn and other feed ingredients and custom mix our own feed. In September 2004, we began processing the shell by-products from our liquid egg processing into poultry feed.  Prices for feed and feed ingredients can fluctuate and can be affected by weather and by various supply and demand factors. We generally purchase the feed needed for our hens based upon the then-prevailing market price for such feed and feed ingredients.

Governmental Regulation

We are subject to federal and state regulations relating to grading, quality control, labeling, sanitary control and waste disposal.  Our egg processing facilities are subject to regulation by both the U.S. Department of Agriculture and the U.S. Food and Drug Administration.  We believe that we are in material compliance with the applicable regulatory requirements.  We also maintain our own inspection program to assure compliance with applicable regulatory requirements, our standards and customer specifications.

Environmental Matters

We are subject to several federal and state environmental regulations. The federal environmental regulations with which we must comply were promulgated by the U.S. Environmental Protection Agency (the “EPA”) pursuant to the Clean Air Act, Clean Water Act and Resource Conservation and Recovery Act.  The EPA has delegated permitting and most enforcement authority under each of these acts to Minnesota and Iowa, where we have facilities. Thus, we are primarily required to comply with the provisions of regulations promulgated by the Minnesota Pollution Control Agency, as well as the Iowa Department of Natural Resources, pursuant to these federal acts.

In addition to federally derived regulation, we also manage any solid waste, such as deceased hens and waste egg shells, pursuant to Minnesota Pollution Control Agency and Iowa Department of Natural Resources solid waste regulations.

In an effort to ensure that we do not experience any issues related to federal enforcement actions, in July 2005 we agreed to participate in a national program established by the Environmental Protection

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Agency under which we entered into a Consent Agreement and Final Order with the EPA under which the EPA released us from potential federal enforcement actions under the Clean Air Act, the hazardous substance release notification provisions of the Comprehensive Environmental Response, Compensation and Liability Act, and the emergency notification provisions of the Emergency Planning and Community Right-to-Know Act.  In return, we agreed to be potentially selected as one of several egg production farms that will receive on-site monitoring to determine potential air emissions from poultry barns.  Under the Consent Agreement, we also agreed to comply with new regulations likely to be promulgated by the EPA at the end of the air monitoring study period later in this decade.

Except for the Iowa Department of Natural Resources Notice of Violation matter discussed under Part I, Item 3.  “Legal Proceedings”, we believe that we are currently in compliance with applicable environmental laws and regulations and have all necessary permits for existing operations. As we expand our operations, we will need to continue to obtain necessary permits and maintain compliance with regulatory reporting requirements. We maintain an on-going program designed to ensure compliance with environmental laws and regulations. We cannot predict whether future changes in environmental laws or regulations might increase the cost of operating our facilities and conducting our business. Any such changes could have material adverse consequences on our business, results of operations and our unitholders.

Intellectual Property Rights

As a result of the MoArk Acquisition, we acquired certain intellectual property assets, including an exclusive, royalty bearing license from Land O’ Lakes for certain egg products, a half interest in a patent to produce a value added product for use in the industrial market, a trademark for an extended shelf life product, and several registered and unregistered trademarks and trade names, as well as other patents and patent applications.

Research and Development

In connection with the MoArk Acquisition, on July 1, 2006, we entered into an agreement with RTECH Laboratories, a business unit of Land O’ Lakes, Inc., for research and development services for products covered by a license agreement and for unlicensed products, for a fee of $236,000 per year, subject to annual increase. The agreement with RTECH Laboratories expires December 31, 2008.   We had no material expenditures for fiscal years 2006, 2005 or 2004 in research and development.

Employees

As of August 31, 2006, we had approximately 733 full-time employees and six part-time employees.  None of our employees are covered by collective bargaining agreements. We consider our relationships with employees to be good.

Available Information

Our website address is www.goldenovaleggs.com . We make available, free of charge, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) as soon as reasonably practicable after we electronically file such materials with, or furnish such materials to, the Securities and Exchange Commission.

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Item 1A.      Risk Factors.

If any of the following risks actually occur, our results of operations, cash flows, and the market for and market price of our Class A Units could be negatively impacted.  Although we believe that we have identified and discussed below the key risk factors affecting our business, there may be additional risks and uncertainties that are not presently known or that are not currently believed to be significant that may adversely affect our performance or financial condition.

Market prices of wholesale liquid eggs are volatile and changes in these prices can adversely impact our results of operations.

Our operating results are significantly affected by wholesale liquid egg market prices, which fluctuate widely and are outside of our control. Small increases in production or small decreases in demand can have a large adverse effect on the price to our customers of our liquid egg products.  Over the last several years, egg prices and demand for liquid egg have both increased and decreased, due to a variety of factors such as decrease in production of eggs due to facilities closures, reduction in the number of laying hens (layers) due to the implementation of animal welfare standards and the outbreak of poultry disease, and consumer preference for high protein/low carbohydrate diets.  Even though increases in production or decreases in may result in disproportionate adverse impact on liquid egg prices, we may not be able to correspondingly adjust our production, expenses or prices to our customers to mitigate the impact of the decline in liquid egg prices.  The volatility of liquid egg prices and our inability to timely anticipate and respond to changes in liquid egg pricing can have a material adverse effect on our future results of operations and financial condition

Changes in consumer demand for liquid eggs can negatively impact our business.

Demand for liquid eggs has increased in recent years as a result of a number of factors. We believe that increased fast food restaurant consumption, favorable reports from the medical community regarding the health benefits of liquid eggs, reduced liquid egg cholesterol levels, current high protein diet trends and industry advertising campaigns have all contributed to the increase in liquid egg demand.  However, there can be no assurance that the demand for liquid eggs will not decline in the future. Adverse publicity relating to health concerns and changes in the perception of the nutritional value of liquid eggs, as well as movement away from popular high protein diets, could adversely affect demand for liquid eggs, which would have a material adverse effect on our future results of operations and financial condition.

Feed costs are volatile and changes in these costs can adversely impact our results of operations.

Feed costs represent a significant element of our liquid egg production cost, equating to approximately 40% of total annual cost in each of the last five fiscal years. Although feed ingredients are available from a number of sources, we have little, if any, control over the prices of the ingredients that we purchase, which are affected by various demand and supply factors and have experienced significant fluctuations in the past.  Increases in feed costs which are not accompanied by increases in the selling price of liquid eggs will have a material adverse effect on the results of our operations.  Recently, increased demand for corn for ethanol production has resulted in rising prices despite abundant supplies for the first time in many years.  The impact of a permanent increase in demand for ethanol may raise production costs adversely affecting our ability to compete with other food sources, as eggs become relatively more expensive compared to other food sources.

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Our sales will decline and our business will be materially harmed if there is any loss of any significant customer or any reduction, delay or cancellation of orders from any significant customer.

During 2006, we derived more than 10% of our revenue from Primera Foods, Sunny Fresh Foods, and Michael Foods, who represented 14%, 23%, and 31% of our revenues for fiscal year 2006, respectively.  During 2005, we derived approximately 94% of our revenue from four customers who each represented more than 10% of our revenue for fiscal year 2005.  The loss of these customers or any other large customer would have a negative impact on our operating results.  While we would attempt to replace the lost sales through other customers, we cannot be certain that we would be able to replace any lost sales.  Our customers could cease buying our products from us at any time and for any reason.  The loss of any major customer would disrupt distribution of our products and result in a loss of revenue.  If a significant number of our customers cease purchasing products from us, our business would be materially and adversely harmed.  Further, any significant reduction or delay in the historical level of orders from our customers or cancellation of orders from any significant customer would have a negative impact on our operating results.

Servicing our indebtedness requires a significant amount of cash, and our ability to generate cash depends on many factors beyond our control.

We expect to obtain the cash to make payments on our debt and to fund working capital, capital expenditures, strategic acquisitions, investments and joint ventures and other general corporate requirements from our operations. Our ability to generate cash is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. We cannot assure investors that our business will generate sufficient cash flow from operations, that we will realize currently anticipated cost savings, net sales growth and operating improvements on schedule, or at all, or that future borrowings will be available to us under our credit facility in amounts sufficient to enable us to service our indebtedness or to fund our other liquidity needs.

If we cannot service our indebtedness, we will have to take actions such as reducing or delaying capital expenditures, strategic acquisitions, investments and joint ventures, selling assets, restructuring or refinancing our indebtedness, deferring member distributions or seeking additional equity capital, which may adversely affect our membership and affect their willingness to remain members. We may not be able to take any of these steps to service our debt on commercially reasonable terms, or at all.  In addition, the terms of existing or future financing agreements, including our existing credit agreement, may restrict us from adopting any of these alternatives.

Failure to comply with applicable governmental regulations, including environmental regulations, could harm our operating results, financial condition and reputation.

We are subject to federal and state regulations relating to grading, quality control, labeling, sanitary control and waste disposal. As a fully-integrated liquid egg producer, our liquid egg facilities are subject to United States Department of Agriculture (the “USDA”), and Food and Drug Administration (the “FDA”), regulation and various state and local health and agricultural agencies. Our liquid egg processing facilities are subject to periodic USDA inspections. Our feed production facilities are subject to FDA regulation and inspections.

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Our operations and facilities are also subject to various federal, state and local environmental, health and safety laws and regulations governing, among other things, the generation, storage, handling, use, transportation, disposal and remediation of hazardous materials. Under these laws and regulations, we are also required to obtain permits from governmental authorities, including, but not limited to wastewater discharge permits.

If we fail to comply with any applicable law or regulation or permit, or fail to obtain any necessary permits, we could be subject to significant fines and penalties or other sanctions, our reputation could be harmed and our operating results and financial condition could be materially and adversely affected.  In particular, the resolution of the notice of violation issued against us by the Iowa Department of Natural Resources relating to the wastewater treatment facility at our Thompson, Iowa facility may result in fines or expense, either or both of which may be significant.  See Part I of this Form 10-K, Item 3.  “Legal Proceedings.”  In addition, because these laws and regulations are becoming increasingly more stringent, there can be no assurances that we will not be required to incur significant costs for compliance with such laws and regulations in the future.

Our business is highly competitive.

The production and sale of fresh liquid eggs, which have accounted for virtually all of our net sales in recent years, is intensely competitive. We compete with a large number of companies that may prove to be more successful than we are in marketing and selling liquid eggs. We cannot assure you that we will be able to compete successfully with any or all of these companies, some of whom have greater marketing, financial, development and personnel resources than we do.

In addition, increased competition could result in price reductions, greater cyclicality, reduced gross profit margins and loss of market share and could require increased spending by us on product research and development, sales and marketing support, which would negatively affect our business, results of operations and financial condition.

We may not be able to successfully integrate the recently purchased MoArk assets, and anticipated benefits of the transaction may not be realized.

On June 30, 2006, we purchased assets relating to a business of manufacturing, marketing, selling and distributing liquid egg products from MoArk, LLC and other indirect subsidiaries of Land O’Lakes, Inc.  The integration of these assets into our ongoing business will be a complex, time consuming and expensive process and may disrupt business operations if not completed in a timely and efficient manner. In addition, anticipated synergies from the transaction may not materialize.  Competitors, customers and suppliers may react in ways not anticipated to the acquisitions, and commercial relationships may change in ways not advantageous to us.  Failure to successfully integrate the assets with our businesses or receive the anticipated benefits could have a material adverse effect on our business, financial condition and operating results.

Agricultural risks could harm our business.

Our liquid egg production activities are subject to a variety of agricultural risks. Unusual or extreme weather conditions, disease and pests can materially and adversely affect the quality and quantity of liquid eggs we produce and distribute. If a substantial portion of our production facilities are affected by any of these factors in any given quarter or year, our business, financial condition and results of operations could be materially and adversely affected.

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If we do not maintain adequate supply of eggs or if we fail to adequately forecast demand, the likely resulting delays in delivering products to our customers would damage our business.

We do not maintain a significant inventory of liquid egg product.  We forecast production based on past sales and our estimates of future demand.  In the event that we significantly underestimate our needs or encounter an unexpectedly high level of demand for our liquid egg product or we are unable to produce liquid egg product in a timely manner, we may be unable to fill our product orders on time which could harm our reputation and result in reduced sales.

Outbreaks of disease affecting poultry could reduce our ability to produce our liquid egg product and reduce sales.

The productivity and profitability of our business depends upon the health of hens that produce our eggs (“layers”) and disease control among the population of our layers.

We face the risk of outbreaks of poultry diseases, such as Newcastle disease and avian influenza (also known as “bird flu”), which could lead to the destruction of our poultry flocks. Because these diseases can be highly contagious and destructive, any such outbreak of disease could result in the widespread destruction of infected flocks. Destruction of any part of our flocks could result in a decreased supply of layers and eggs, which could reduce our sales and profit margin, as well as result in increased expense to replace the destroyed infected flocks and to contain the poultry disease.  Additionally, our business may be adversely impacted if public concerns about the poultry diseases led consumers in the United States to reduce their consumption of eggs and egg products generally or reduce their consumption of our liquid egg products in response to any outbreak of disease among our flocks.

Product liability claims or product recalls could adversely affect our business reputation and expose us to increased scrutiny by federal and state regulators.

The sale of food products for human consumption involves the risk of injury to consumers and the sale of animal feed products involves the risk of injury to those animals as well as human consumers of those animals. Such hazards could result from:

·tampering by unauthorized third parties;

·product contamination (such as listeria, e. coli. and salmonella) or spoilage;

·the presence of foreign objects, substances, chemicals, and other agents; or

·improperly formulated products which either do not contain the proper mixture of ingredients or which otherwise do not have the proper attributes.

Most of the products that we sell are integrated into products sold by third parties and such third parties may not have adequate quality control standards to assure that such products are not adulterated, misbranded, contaminated or otherwise defective.  We may be subject to claims made by consumers as a result of products manufactured by these third parties.

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Consumption of our products may cause serious health-related illnesses and we may be subject to claims or lawsuits relating to such matters.  An inadvertent shipment of adulterated products is a violation of law and may lead to an increased risk of exposure to product liability claims, product recalls and increased scrutiny by federal and state regulatory agencies. Such claims or liabilities may not be covered by our insurance or by any rights of indemnity or contribution which we may have against others in the case of products which are produced by third parties. In addition, even if a product liability claim is not successful or is not fully pursued, the negative publicity surrounding any assertion that our products caused illness or injury could have a material adverse effect on our reputation with existing and potential customers and on our brand image. If we determine to recall any of our products, we may face material consumer claims.

Special interest groups can have adverse impacts on the industry’s reputation, and as the Golden Oval brand becomes known the risk of identification by special interest groups increases.

Changing consumer expectations with regard to treatment of animals and animal effluent may result in unfavorable publicity for participants in the industry who do not meet the demands of activists.  The unfavorable publicity may adversely affect the entire industry regardless of the practices of any particular producer.  Furthermore, as the Golden Oval brand becomes more recognizable, the potential for being singled out by special interest pressure groups may increase, diverting management time and attention and having an adverse impact on sales, operations, and returns to unitholders.

The price of our Class A Units may be volatile and a unitholder’s investment could decline in value.

The price of our Class A Units has fluctuated in the past and may continue to fluctuate significantly, making it difficult for an investor to resell shares or to resell shares at an attractive price.  The market prices for securities of emerging companies have historically been highly volatile.  Future events concerning us or our competitors could cause such volatility, including:

·         actual or anticipated variations in our operating results;

·         technological innovations or new commercial products introduced by us or our competitors;

·         developments concerning proprietary rights;

·         changes in senior management;

·         investor perception of us and our industry;

·         general economic and market conditions including market uncertainty;

·         national or global political events; and

·         public confidence in the securities markets and regulation by or of the securities markets.

In addition, the market for the Class A Units is subject to price and volume fluctuations that affect the market prices for companies in general, and small-capitalization companies in particular, which are often unrelated to the operating performance of these companies.  Any failure by us to meet or exceed estimates of unitholders is likely to cause a decline in the price of our Class A Units.

There is no public market for our Class A Units and no public market is expected to develop.

There is no established public trading market for our Class A Units, and we do not expect one to develop in the foreseeable future. To maintain our partnership tax status, we do not intend to list the units on any stock exchange or automatic quotation system such as the Nasdaq Stock Market. As a result, unitholders may have to hold their Class A Units for an indefinite period of time because they may not be able to readily resell their units.  Further, even if a unitholder is able to sell the Class A Units, the unitholder may not be able to sell at a price equal to the unitholder’s investment or a price that is otherwise attractive to the unitholder.

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The Class A Units are subject to significant restrictions on transfer.

The ability to transfer our Class A Units is restricted by our Limited Liability Company Agreement.  Members wishing to transfer their Class A Units will be required to obtain the prior consent of our Board of Managers before making any transfer of the Class A Units. Transferability of units is restricted in part to ensure that we are not deemed a “publicly traded partnership” and thus taxed as a corporation. As a result, unitholders may have to hold their Class A Units for an indefinite period of time because they may not be able to readily resell their units.

Future sales of shares of our units in the public market may negatively affect our Class A Units price.

Future sales of our Class A Units, our Class B Units or any other newly-created class of membership units, or the perception that these sales could occur, could have a significant negative effect on the market price of our Class A Units.  In addition, issuances of additional Class A Units could decrease future distributions to holders of Class A Unit, if any, and could depress the market value of our Class A Units.  Because our Class B Units are treated as the same as Class A Units for the purposes of distributions, the issuance of additional Class B Units could also dilute future distributions to holders of Class A Units.  Dilution and potential dilution, and the possibility of additional issuances and sales of our Class A Units, Class B Units or other classes of units may negatively affect both the trading price of our Class A Units and the liquidity of our Class A Units.

Our ability to issue additional Class A Units or other classes of units may dilute or otherwise limit your voting or economic rights or have the effect of preventing a change in control.

Our Board of Managers has the ability to issue an unlimited number of additional Class A Units or units of other classes. The Board of Managers also has the ability to establish the designations, powers, preferences, rights, qualifications, limitations or restrictions of any additional class of units, and to alter the relative economic rights of units.  Such rights, powers, preferences and privileges may be greater than those associated with the Class A Units.  Issuances of additional units may have the effect of diluting or otherwise limiting the voting or economic rights of holders of Class A Units, particularly if the units are issued on more favorable terms than the Class A Units.  Issuance of additional classes of units may also have the effect of preventing changes in control of Golden Oval Eggs, even if such change in control would be beneficial to holders of Class A Units.

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We are dependent on key personnel.

Our future success depends, in significant part, upon the continued service and performance of our senior management and other key personnel, in particular Dana Persson, our Chief Executive Officer. The loss of Mr. Persson’s services could impair our ability to effectively manage our company and to carry out our business plan.  We have an employment agreement with Mr. Persson that provides that Mr. Persson will serve as our Chief Executive Officer and that either party may terminate Mr. Persson’s employment at any time with or without cause. However, if we terminate Mr. Persson’s employment, we would be required to make specified payments to him as described in his employment agreement. The other members of our management team also have significant experience with our company and in our industry. The loss of any member of our senior management could likewise impair our ability to effectively manage our company and carry out our business plan.  We do not carry key person life insurance on any of our executive officers.  In addition, competition for skilled employees in our industry is intense.  We are actively seeking a qualified candidate to fulfill the duties of Chief Financial Officer.  Until we hire a permanent Chief Financial Officer, we have hired an interim Chief Financial Officer.  As a result, we may experience more difficulty producing financial statements that are timely and accurate than we would if we had a permanent Chief Financial Officer.  Further, the fact that we have an interim Chief Financial Officer may create a lack of confidence in our financial management. Our future success also depends on our continuing ability to attract, retain and motivate highly qualified managerial, operations and sales personnel.  Our inability to retain or attract qualified personnel could have a significant negative effect and materially harm our business and financial condition.

Compliance with changing regulation of corporate governance and public disclosure may result in additional expenses.

Keeping abreast of, and in compliance with, changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002 and in particular Section 404 of that act relating to management certification of internal controls, the regulations of the Securities and Exchange Commission , have required an increased amount of management attention and external resources.  We intend to invest all reasonably necessary resources to comply with evolving corporate governance and public disclosure standards, and this investment may result in increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities.

Item 1B.      Unresolved Staff Comments.

None.

Item 2.         Properties.

We maintain production and processing facilities at a total of seven sites, including our original 60-acre site in Renville, Minnesota and a second 240-acre site northeast of Thompson, Iowa.  The remaining five facilities were acquired with the MoArk Acquisition, with one each in Alabama, Missouri and Ohio, and two in California.

Abbeville, Alabama

We own the production facility in Abbeville, which is a 90,000 square foot facility, built in 1970.  Approximately 30,000 square feet are occupied by freezers and finished product coolers.  The plant has egg breaking, pasteurizing, and drying capabilities, in addition to a wide range of production platforms for further processed products.  The Abbeville facility is subject to a mortgage to secure our indebtedness.

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Vernon, California

We lease approximately 30,034 square feet of manufacturing and processing space in our Vernon facility pursuant to three leases . Two leases expire April 30, 2007 while the third lease expires January 31, 2007.  Total monthly payments on the leases are $13,802.

The Vernon facility is located near Los Angeles and has breaking, pasteurizing, and packaging capabilities as well as refrigerated and frozen storage.

Norco, California

We lease approximately 102,000 square feet in Riverside County, California pursuant to a sublease we entered into in connection with the MoArk Acquisition. The sublease expires February 2, 2010 and monthly payments are $11,650.  This site has breaking, pasteurizing, packaging, freezing, and hard cooked capabilities.

Neosho, Missouri

We lease a  30,650 square foot facility in Neosho.  The lease on the Neosho facility terminates on December 31, 2006 and requires monthly lease payments based on a sliding schedule consisting of a charge per case of eggs received for breaking and a flat charge per tanker of liquid egg received. The average monthly lease payment is approximately $22,380.  This facility has breaking, pasteurizing and packaging capabilities as well as refrigerated and frozen storage.

Millersburg, Ohio

We lease the  45,000 square feet Millersburg facility pursuant to a lease that expires June 30, 2008, subject to automatic annual renewals and that calls for monthly payments of $13,480 per month until June 30, 2007 and thereafter, at a monthly rate subject to adjustment with the Consumer Price Index.  The Millersburg facility is primarily an egg breaking operation with limited pasteurization and packaging capacity

Renville, Minnesota

The Renville facility consists of a total of 623,000 square feet of barns, processing and office space.   The corporate offices of Golden Oval Eggs are located at this processing operation. Our Renville facility is subject to a mortgage to secure our indebtedness.

Thompson, Iowa

The Thompson facility consists of 1,660,800 square feet of production and storage space, with the second phase of construction adding three layer barns was completed in the first calendar quarter of 2006.  We own the land on which our Thompson facility is located through Midwest Investors of Iowa, Inc., a cooperative that we control. The land is collateral for debt obligations of Midwest Investors of Iowa, Inc. relating to the land.

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Item 3.         Legal Proceedings.

Our Thompson, Iowa facility has an industrial wastewater treatment facility designed to treat wastewater from egg breaking.  The Thompson facility also has an associated National Pollution Discharge and Elimination System (“NPDES”) permit from the Iowa Department of Natural Resources (“IDNR”) that governs the quality of the wastewater influent to and effluent from the treatment facility.

On June 14, 2006, a Notice of Violation (“NOV”) was issued against us by the IDNR regarding alleged violations of the NPDES permit limits for biochemical oxygen demand, total suspended solids, and ammonia nitrogen.  Additional NOVs were issued on August 24, 2006 and November 13, 2006 relating to the same alleged NPDES permit violations for different time periods.  On November 15, 2006, we were notified by the IDNR that the IDNR intends to ask the Iowa Environmental Protection Commission to refer the matter to the Iowa Attorney General to seek appropriate relief through the courts, which may include a judicial consent decree.

We and legal counsel are investigating the facts underlying the NOVs, and have met with IDNR representatives to address the resolution of the NOVs and compliance with the NPDES permit.  At this time, the outcome of the resolution of the NOVs cannot be ascertained.  However, the resolution of the NOVs is likely to result in capital expenditures for permanent improvements to the wastewater treatment facility, as well as expenditures for interim improvements while permanent improvements to the wastewater treatment facility are permitted and constructed, and may also involve the assessment against us of a monetary penalty.  The expense associated with the interim solution, permanent improvement to the wastewater treatment facility, compliance with the NPDES permit and the amount of penalty or fine imposed by the IDNR may be significant, both individually and in the aggregate.  However, we cannot reasonably estimate the amount of such costs at this time.

Item 4.         Submission of Matters to a Vote of Security Holders.

None.

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PART II

Item 5.         Market for Registrant’s Common Equity and Related Stockholder Matters.

There is no established trading market for our Class A Units or our Class B Units.  As of August 31, 2006 there were 691 holders of Class A Units and one holder of Class B Units.

Item 6.         Selected Financial Data.

The following table sets forth selected financial data of Golden Oval Eggs, LLC. The information presented as of and for the fiscal years ended August 31, 2006, 2005, 2004, 2003, and 2002 is derived from the Company’s financial statements, which have been audited by Moore Stephens Frost, PLC, our independent auditors.

We encourage you to read the financial data presented below along with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as the financial statements and related notes included at the end of this Annual Report on Form 10-K.

Selected Financial Data of Golden Oval Eggs, LLC
(in thousands, except share and per share data)

	2006			2005			2004			2003			2002
Income Statement Data:
Revenues, net	$	93,638		$	63,196		$	83,543		$	53,052		$	46,169
Cost of goods sold	79,851			52,118			50,693			43,300			39,450
Gross profit	13,787			11,078			32,850			9,752			6,719
Operating expenses	9,734			7,677			9,749			3,208			3,339
Income from operations	4,053			3,401			23,101			6,544			3,380
Interest expense	(3,835		)	(6,385		)	(2,732		)	(3,520		)	(3,466		)
Non-controlling interest in income of consolidated entities	42			(103		)	(41		)	—			35
Other income	805			750			513			509			385
Income (loss) before income tax expense (benefit)	1,065			(2,337		)	20,841			3,533			299
Income tax expense (benefit)	2			(378		)	2,926						—
Net income (loss)	$	1,063		$	(1,959	)	$	17,915		$	3,533		$	299
Weighted average common shares/ members’ units outstanding	4,811,023			4,581,762			4,581,762			4,581,762			4,388,517
Net income (loss) per common share/members’ unit	$	0.22		$	(0.43	)	$	3.91		$	0.77		$	0.07
Distributions per common share/members’ unit	$	—		$	—		$	4.22		$	—		$	—

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	2006		2005		2004		2003		2002
Balance Sheet Data:
Current assets	$	32,936	$	17,992	$	25,926	$	18,211	$	14,420
Property, plant and equipment	79,829		69,614		55,143		38,118		42,537
Other assets	45,235		3,339		6,396		8,531		9,815
Total assets	$	158,000	$	90,945	$	87,465	$	64,860	$	66,772
Current liabilities	$	26,169	$	13,523	$	24,360	$	6,025	$	8,965
Long-term debt, less current maturities	94,257		46,546		30,335		32,804		35,309
Total owners’ equities	$	37,574	$	30,876	$	32,770	$	26,031	$	22,498
Weighted average common shares/members’ units outstanding	4,811,023		4,581,762		4,581,762		4,581,762		4,581,762
Book value per common share/member unit	$	7.63	$	6.73	$	7.15	$	5.68	$	4.91

Item 7.         Management’s Discussion and Analysis of Financial Condition and Results of Operation.

Forward-Looking Statements

The following discussion contains forward-looking statements. Such statements are based on assumptions by our management, as of the date of this report, and are subject to risks and uncertainties, including those discussed under Part I, Item 1A. “Risk Factors” in this report, that could cause actual results to differ materially from those anticipated. We caution readers not to place undue reliance on such forward-looking statements.

Overview

We are engaged in the production of egg products.  From 1994 to 2006, we were a first stage processor engaged in the breaking and sale of non-pasteurized liquid whole eggs, liquid whites, and liquid yolks. We primarily marketed our liquid eggs on a direct basis to companies who further process the raw liquid eggs into various egg products such as dried eggs, frozen, hard cooked, extended shelf-life liquid, pre-cooked egg patties, specialty egg products, etc.  Institutional, food service, restaurants, and food manufacturers in turn purchase these further processed products.

On June 30, 2006, we completed the acquisition of certain liquid egg processing assets of MoArk, LLC and its subsidiaries, Cutler at Abbeville, L.L.C., Hi Point Industries, LLC, L&W Egg Products, Inc., Norco Ranch, Inc. and MoArk Egg Corporation (the “MoArk Acquisition”).  With the MoArk Acquisition, we entered into the business of further processing liquid egg into various finished egg products, as well as hope to gain a larger presence in the first stage processing business.  We have maintained our integrated production facilities in Renville, Minnesota and Thompson, Iowa, and will continue to supply some of the needs of the acquired facilities which were customers prior to the acquisition.

Our operating income or loss is significantly affected by wholesale liquid egg prices and feed costs, primarily corn and soybean meal, which can fluctuate widely and are outside of our control. Liquid eggs are a commodity product and prices fluctuate in response to supply and demand factors.  Feed costs are similarly commodity products subject to wide fluctuations, but not necessarily correlated with liquid egg prices.

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Our cost of production is materially affected by feed costs, which average approximately 40% of our total costs. Approximately 75% of these feed costs are incurred in the procurement of corn and soybean meal.  The cost of these ingredients is affected by a number of supply and demand factors such as crop production and weather, and other factors, such as the level of grain exports, over which we have little or no control.

The open market quoted price of liquid unpasteurized whole eggs has fluctuated widely over the last 5 years, from a low of $0.21 per pound to a high of $0.76 per pound, according to reports by Urner Barry Publications, Inc. The high occurred in 2004, leading to record profits for the industry and us.  Market prices averaged less than $0.27 per pound in fiscal year 2005 and fiscal year 2006.  Both years are below five year average prices of $0.35 per pound.

We sell a significant amount of our production under contract at prices that are fixed and not tied to the then-prevailing market price. Depending upon market circumstances, the prices generated by our contract sales tend to be either less or more than what the prevailing open market prices would generate.

We completed construction of the second phase of expansion at our Thompson facility during fiscal 2006, bringing total production capacity to just over 200 million pounds annually.  Currently, we do not have any additional facility expansions underway at any of our facilities.

Results of Operations

The following table presents the amounts sold and weighted average sales prices of those sales for the liquid eggs for the twelve month fiscal periods presented.

Year ending August 31	2004		2005		2006
Pounds sold (in millions)	157.5		179.6		258.2
Average price per pound	$	0.516	$	0.334	$	0.349

Fiscal Year Ended August 31, 2006 Compared to Fiscal Year Ended August 31, 2005

Net Sales.  Net Sales for the fiscal year ended August 31, 2006 were $93.6 million, an increase of $30.4 million, or 48.1%, as compared to fiscal year 2005.  The increase is due to increased sales of liquid egg products largely attributable to the completion of the Thompson, Iowa facility in January 2006 and the resultant sale of its production, accounting for $11.2 million of the increase.  Sales of product produced at the facilities acquired in the MoArk Acquisition generated additional sales of $20.2 million from July 1, 2006, the first day following the closing of the acquisition, to August 31, 2006, our fiscal year end.  A small decline in the weighted average selling price of liquid eggs accounted for approximately $0.8 million of reduced sales.

Cost of Goods Sold.  Cost of goods sold for fiscal 2006 was $79.8 million, an increase of $27.7 million, or 53.2% over the prior year.  The MoArk Acquisition businesses accounted for $18.9 million of the increase, with the balance attributable to increased sales volumes in the liquid egg business existing prior to the acquisition.  Unit costs of production declined slightly due to modest declines in the average cost per ton of feed and the cost per dozen of purchased shell eggs.

Operating Expenses.  Operating expenses for fiscal 2006 were $9.7 million, an increase of $2.0 million, or 26.8% from the prior year.  New management and technical staff hired in anticipation of managing a larger and more complex business contributed to an increase in expenses, while the newly

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acquired business accounted for $1.0 million. Amortization of intangibles arising from the acquisition accounted for $0.3 million of expense in the last two months of the fiscal year.

Total Other Expense.  Total other expense declined to $3.0 million from $5.7 million in the prior year, a reduction of $2.7 million.  In the prior year, charges related to the retirement of the 2000 bonds resulted in a charge to interest expense of $2.3 million reflecting the adjustment of the embedded interest rate swap agreement to fair market value.  No such charges were incurred in fiscal year 2006.  Interest income of consolidated entities increased by $0.2 million over the prior year, while miscellaneous other income was largely unchanged.

Income Taxes.  We expect to be treated as a partnership for federal income tax purposes that will not be required to pay income tax.  Rather, our members will pay tax on their share of our net income.  Accordingly, we did not record a provision for income taxes in fiscal year 2006 or fiscal year 2005.

Our Conversion From A Cooperative to a Limited Liability Company

Effective August 31, 2004, Midwest Investors of Renville, Inc., d/b/a “Golden Oval Eggs”, a Minnesota cooperative (the “Cooperative”) was converted into a limited liability company with Golden Oval Eggs, LLC being the surviving company in the conversion.  We operate as the successor to the Cooperative and our operations are a continuation of the operations of the Cooperative.

Fiscal Year Ended August 31, 2005 Compared To Fiscal Year Ended August 31, 2004

Net Sales.  Net sales for the fiscal year ended August 31, 2005 were $63.2 million, a decrease of $20.3 million, or 24.3%, as compared to fiscal year 2004. The decrease in revenues occurred despite an increase in total pounds of egg products sold of 22.1 million lbs, or 14.0%, as compared to fiscal year 2004. Egg product selling prices during fiscal 2005 averaged $0.334 per lb, a decrease of $0.182 per lb, or 35.3%, as compared with fiscal 2004.  Our average selling price is the blended price for liquid whole eggs, liquid egg whites and liquid egg yolks.  Four new layer barns were brought on line at the Thompson, Iowa facility during fiscal 2005.  These new barns, along with the two barns added in the fourth quarter of fiscal 2004, accounted for the increased production during fiscal 2005.  Domestic demand for eggs weakened during fiscal 2005 as the popularity of the high protein diets started to fade.  This, coupled with an increase in the supply of eggs, caused the lower egg prices during fiscal 2005.

Cost of Goods Sold.  Cost of goods sold for fiscal 2005 was $52.1 million, an increase of $1.4 million, or 2.8%, as compared to fiscal 2004.  While there was an increase in production of 14.0%, cost of goods sold was held to a 2.8% increase because of a drop in feed prices and a drop in the price paid for shell eggs used for our off-line breaking in Renville.  Feed costs decreased $0.6 million, despite consuming 28,865 more tons of feed with the additional barns.  Feed costs per ton during fiscal 2005 dropped $19.58, or 16.2%, as compared to fiscal 2004.  The decrease in feed cost was the result of a drop in corn and soy bean meal prices.  Shell eggs purchased for the off-line production decreased in cost by $3.3 million, or 48.1%, despite having only a 7.5% reduction in quantity purchased.  These cost reductions netted out the increase in cost of goods associated with the new layer barns at the Thompson site.

Operating Expenses.  Operating expenses for fiscal 2005 were $7.7 million, a decrease of $2.1 million, or 21.3%, as compared to fiscal 2004.  Bonus compensation was high in 2004 due to the record profitability and dropped $2.9 million in fiscal 2005.  Professional services relating primarily to our public reporting requirements increased $0.2 million as compared to fiscal 2004.  The rest of the operating expenses increased a net of $0.7 million in fiscal 2005, as compared to fiscal 2004.  This increase was the result of the growth we experienced in fiscal 2005.

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Total Other Expense.  Total other expense for fiscal 2005 was $5.7 million, an increase of $3.5 million, or 153.9%, as compared to fiscal 2004.  In September 2004, we entered into a new financing agreement and retired the 2000 bonds.  (See Item 7.  “Management’s Discussion and Analysis of Financial Condition and Results of Operation — “Liquidity and Capital Resources”)  The increase in total other expense is the result of the 2000 bond payment.  We wrote off the $0.8 million book value of capitalized bond issuance costs recorded relating to the 2000 bonds.  The 2000 bonds also had an embedded interest rate swap agreement derivative instrument which had been considered clearly and closely related.  With the retirement of the 2000 bonds, we recorded the carrying value of this instrument at fair market value, with the offset to interest expense in the amount of $2.3 million.  Of the increase, $0.3 million relates to increased interest costs relating to the increased debt balances associated with the expansion of the Thompson, Iowa facility.

Income Taxes.  As of August 31, 2004, we accrued for the estimated liability related to the final tax return of our predecessor entity, the Cooperative.  The liability paid in 2005 related to this final return was $0.4 less than the accrued liability at August 31, 2004.  This amount was recorded as an income tax benefit in fiscal 2005.  We expect to be treated as a partnership for federal income tax purposes and therefore, we will pay no federal income tax.  Instead, our members will pay tax on their share of our net income.

Fiscal Year Ended August 31, 2004 Compared To Fiscal Year Ended August 31, 2003

Net Sales.  Net Sales for the fiscal year ended August 31, 2004 were $83.5 million, an increase of $30.4 million, or 57.3%, as compared to fiscal year 2003. The increase in revenues was due primarily to the increase in total pounds of egg products sold and egg product selling prices during fiscal 2004 as compared with fiscal 2003. Pounds sold for fiscal 2004 were 157.5 million, an increase of 11.6 million, or 8%, as compared to fiscal 2003. Two new layer barns were brought on line during the fourth quarter of 2004.  These new barns accounted for $4 million of the increased sales, while the rest of the increase in pounds sold resulted from changes in the amount and composition of feed used.  Of the increased sales, $2.3 million came from the implementation of FASB Interpretation No. 46R (“FIN 46R”) which consolidated variable interest entities in the current year with our historical operations.  Domestic demand for eggs were strong, which resulted in higher selling prices during fiscal 2004.  Our average selling price per pound for fiscal 2004 was $0.515, compared to $0.364 for fiscal 2003, an increase of 41.5%.  Our average selling price is the blended price for liquid whole eggs, liquid egg whites and liquid egg yolks. The factors relating to the increase in sales prices are discussed in the overview above.

Cost of Goods Sold.  Cost of goods sold for fiscal 2004 was $50.7 million, an increase of $7.4 million, or 17.1%, as compared to fiscal 2003. The increase is due to an increase in the cost of eggs purchased from third parties for our off-line production, an increase in the cost of feed and the cost of goods associated with the additional 2 layer barns added during the fourth quarter of 2004.  We buy a significant number of shell eggs from third parties for processing at our Renville egg breaking facility. The cost of these eggs during fiscal 2004 increased $2.8 million, or 70%, as compared to fiscal 2003. This increase is due primarily to the overall rise in prices in the egg industry. Over this same period, feed costs increased by $3 million, or 16%.  Approximately $1.9 million of the increase in feed costs is due to increased feed prices due primarily to increases in the price of soy meal and corn, and approximately $1.1 million is due to an increase in the amount of feed used.  Approximately $0.3 million of the increase is the result of the implementation of FIN 46R which consolidated variable interest entities in the current year with our historical operations.  The rest of the increase is the result of the additional barns added during the fourth quarter of 2004.

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Operating expenses.  Operating expenses for fiscal 2004 were $9.7 million, an increase of $6.5 million, or 203%, as compared to fiscal 2003. Increased bonus compensation due primarily to record profitability accounts for approximately $2.8 million of the increase. Professional services relating primarily to the limited liability company conversion account for approximately $1.1 million of the increase.  $1.9 million of the increase was the result of the operating expenses of the variable interest entities consolidated as a result of the implementation of FIN 46R.

Total Other Expense.  Total other expense for fiscal 2004 was $2.3 million, a decrease of $0.7 million, or 23.3%, as compared to fiscal 2003. This reduction was the result of lower interest expense due to decreased outstanding principal balances.

Income Taxes.  As a cooperative, we were subject to federal income tax only on certain nondeductible expenses and any amount of net proceeds not returned in the form of cash, qualified written notices of allocation or qualified per unit retainage certificates issued within eight and one-half months after the fiscal year end.  Income tax expense for fiscal 2004 was $2.9 million.  Following the conversion of the Cooperative, we expect to be treated as a partnership for federal income tax purposes and therefore, we will pay no federal income tax.  Instead, our members will pay tax on their share of our net income.

Liquidity and Capital Resources

Our working capital at August 31, 2006 was $6.8 million compared to $4.5 million at August 31, 2005.  Our current ratio was 1.3 at August 31, 2006 compared to 1.3 at August 31, 2005.  On June 30, 2006, we entered into a new financing agreement with our lenders, amending and restating the credit agreement entered into on September 13, 2004 and first amended on November 30, 2005.  The new agreement provides us with an additional $38.0 million of debt that was used to finance the MoArk Acquisition, and maintains revolving lines of credit and swing loans to facilitate seasonal variations in liquidity requirements.  We expect that cash flow from operations and proceeds from our existing credit lines will be sufficient to fund operations, to make all payments of interest and principal when due, and to make distributions to our members for at least the next 12 months. We may require significant additional capital resources in order to proceed with potential future expansions or to otherwise respond to competitive pressures in the industry.

The cost of the MoArk Acquisition was financed by $38.0 million of new debt, a $17.0 million note from Land O’Lakes, Inc., the parent of the seller, and the sale of $5.0 million of new Class B Units to Land O’Lakes, Inc.  Transaction costs of approximately $1.1 million were financed from current operations.

Capital expenditures on land and equipment totaled $2.6 million in 2006.  An additional $35.7 million was expended on the purchase of assets relating to the acquisition.  Capital expenditures for 2005 totaled $20.6 million, primarily for the construction of the second phase of expansion at the Thompson facility.  Capital expenditures totaled $19.4 million in 2004.

Our long-term debt including current maturities at August 31, 2006 was $103.7 million, compared to $51.2 million at August 31, 2005, and $33.0 million at August 31, 2004. The increase in long term debt in 2006 is due exclusively to the MoArk Acquisition, less current payments.  Substantially all trade receivables and inventories collateralize our line of credit, and property, plant and equipment collateralize our long-term debt under our loan agreements. We are required by certain provisions of our loan agreements, as amended and restated on June 30, 2006, to maintain (1) a minimum tangible net worth of not less than $28.8 million plus 40% of earnings plus 100% of all equity contributed after August 31, 2005; (2) working capital of no less than $7.0 million; (3) a current ratio of not less than 1.25:1; (4) a leverage ratio which does not get tested until November 30, 2006; (5) a fixed charge coverage ratio of no

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less than 1.0:1 at fiscal year end, and (6) a requirement that a certain portion of our production be sold under non-market contracts as well as restrictions on the maximum amount of operating leases in effect at any one time.  We complied with all covenants except as the covenant relating to minimum working capital as of August 31, 2006.  We requested a waiver of this non-compliance and received the waiver effective as of August 31, 2006.  We are current on all interest and principal repayment requirements.

We have an interest rate collar agreement that was originally embedded in our Corporate Bonds, Series 2000, which limited the variability of the interest rate on the bonds to a range of 8.46% to 7.31%, and was determined to be clearly and closely related.  During the prior year, we entered into a new financing agreement.  A portion of the proceeds from the new financing was used to retire the Corporate Bonds, Series 2000.  At the time the Corporate Bonds, Series 2000 were retired in September 2004, the interest rate collar agreement became a separate stand-alone agreement.  As of August 31, 2006, the interest rate collar agreement, which terminates on July 10, 2010, has a notional amount of $18.1 million.  The interest rate collar agreement requires that we maintain a collateral account.  The fair value of the interest rate collar agreement is recorded as a reduction of the value of the collateral account in our consolidated balance sheet.  As of August 31, 2006, the net value of the collateral account was $0.5 million.

Net cash flow from operations was $1.4 million for fiscal 2006.  A total of $38.3 million was paid for fixed assets and intangibles during the course of the year.  Proceeds from new debt were $41.0 million and $5.5 million of debt was repaid.  The revolving line of credit provided an additional $1.1 million in funds.  An additional $0.3 million was paid for financing costs related to the MoArk Acquisition.  Cash balances declined $0.5 million at the end of fiscal year 2006.

Net cash flow from operations was $2.0 million in fiscal 2005.  $20.6 million was the cash paid for the purchase of property, plant and equipment.  $2.5 million was returned from our restricted cash account. $2.7 million was received from the revolving line of credit and $42.6 million was received from the issuance of long-term debt and was used to pay off $24.3 million of long-term debt, $10.3 in distributions to our members and $1.5 million was used to pay deferred debt costs.  The net effect of this activity was a reduction in cash of $6.9 million since August 31, 2004.

Net cash flow from operations was $28.7 million for fiscal 2004. This increased level of cash flow was primarily the result of improved profit margins resulting from the record high sales prices. We believes that these profit margins are not sustainable over the long term. See “Overview” above. Despite the increased levels of sales revenue, outstanding accounts receivable remained unchanged. Increase in corn and soybean prices, along with the addition of two more laying flocks, increased inventory $1.9 million. Overall the changes in net non-cash working capital were not material.  This cash flow has allowed us to (1) pay $19.4 million towards the Thompson expansion, (2) make a $1.8 million distribution to its shareholders, (3) set aside $1.1 million to restricted cash account to be used to pay the 2001 bond debt, (4) payoff $2.5 million of long-term debt and (5) increase its cash on hand to $7.6 million.

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Contractual Obligations

The following table presents our various known contractual obligations as of August 31, 2006, in thousands:

	Payments due by period
		Less than			More than
Contractual Obligations	Total	1 year	1-3 years	3-5 years	5 years
Long-Term Debt	103,718	9,461	36,134	19,369	38,754
Operating Leases	5,202	1,309	2,415	1,169	309
Construction Obligations	—	—	—	—	—
Total	108,920	10,770	38,549	20,538	39,063

The data presented in the preceding table does not include any expected interest payments. We have no material purchase obligations as of August 31, 2006.

Critical Accounting Estimates

We prepare our financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Our significant accounting policies are discussed in detail in Note 1 to the consolidated financial statements included at the end of this document. Certain of these accounting policies as discussed below require management to make estimates and assumptions about future events that could materially affect the reported amounts of assets, liabilities, revenues and expenses and disclosure of contingent assets and liabilities. We base our assumptions, estimates and judgments on historical experience, current trends and other factors that management believes to be relevant at the time the consolidated financial statements are prepared.  On a quarterly basis, management reviews the accounting policies, assumptions, estimates and judgments to ensure our financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.

We believe that the following accounting policies are the most critical to aid in fully understanding and evaluating our reported financial results, and they require our most difficult and subjective judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain. We have reviewed these critical accounting policies and estimates with the Audit Committee of our Board of Managers.

Allowance for Doubtful Accounts.  In the normal course of business, we extend credit to our customers on a short-term basis. Although credit risks associated with its customers are considered minimal, we routinely review our accounts receivable balances and make provisions for probable doubtful accounts. In circumstances where management is aware of a specific customer’s inability to meet its financial obligations to us (e.g. bankruptcy filings), a specific reserve is recorded to reduce the receivable to the amount expected to be collected. For all other customers, we recognize reserves for bad debts based on management’s experience and the length of time the receivables are past due, generally the entire balance for amounts more than 90 days past due.

Inventories.  Inventories of eggs, processed egg products, feed and supplies are valued principally at the lower of cost (first-in, first-out method) or market. If market prices for eggs and feed grains move substantially lower, we would record adjustments to write-down the carrying values of eggs and feed inventories to fair market value.

22

The cost associated with flock inventories, consisting principally of chick costs, feed, labor, and overhead costs, are accumulated during the growing period of approximately 18 weeks.  Layer flock costs are capitalized to the point at which the pullet goes into production and are amortized over the productive lives of the flocks, generally 18 to 24 months. High mortality from disease or extreme temperatures would result in abnormal adjustments to write-down flock inventories. Management continually monitors each flock and attempts to take appropriate actions to minimize the risk of mortality loss.

Long-Lived Assets.  Depreciable long-lived assets are primarily comprised of buildings and improvements and machinery and equipment. Depreciation is provided by the straight-line method over the estimated useful lives based on management’s experience, which is 7 to 39 years for buildings and improvements and 3 to 15 years for machinery and equipment. An increase or decrease in the estimated useful lives would result in changes to depreciation expense. In the year ending August 31, 2006, there were no write-offs as a result of changes to asset useful lives.

We continually reevaluate the carrying value of our long-lived assets for events or changes in circumstances that indicate that the carrying value may not be recoverable. As part of this reevaluation, if impairment indicators are present, we estimate the future cash flows expected to result from the use of the asset and its eventual disposal. In the year ending August 31, 2006, we determined that no impairment indicators were present in our reevaluation processes.

Intangible Assets

As a result of the MoArk Acquisition that was completed June 30, 2006, we acquired intangible assets consisting of licenses to use certain brand names and trademarks, licenses of certain product technology and certain patents and patent applications.  We have recorded the excess of consideration paid over assets acquired.  Financial Accounting Standard No. 141 “Business Combinations” dictates that values be assigned to certain intangible assets.  We have accordingly made estimates of the values to be carried on our books for intangible assets acquired, including registered and unregistered trade names and trademarks, licensing agreements, and patents and patent applications.  The values of these assets are determined by forecasting future cash flows and assessing the risk of achieving the forecast.  Those intangible assets with finite lives will be amortized over a period matching the life of the underlying intellectual property, for example, the term of the license agreement or the remaining life of the patent.  Those intangibles with indefinite lives have been recorded as goodwill, and will not be amortized over a fixed time period.  Rather, they will be tested for impairment when impairment indicators are deemed present.  As of August 31, 2006, we did not undertake a reevaluation of carrying cost as the intangible assets acquired in the MoArk Acquisition have only been held for two months.  Prior to this fiscal year, there were no intangible assets to test.

Financial Instruments.  Our financial instruments consist primarily of cash equivalents, accounts receivable, long-term receivable, accounts payable, debt, and an interest rate collar agreement.  The carrying amounts of cash equivalents, accounts receivable, and accounts payable approximate their fair values because of the short-term maturity of such instruments.  The stated value of our long-term receivables approximates their fair value based on current market rates for financial instruments of the same remaining maturities and risk characteristics.  The carrying values of long-term debt instruments approximate their fair value because interest rates on such debt are periodically adjusted and approximate current market rates. The interest rate collar agreement manages our exposure to fluctuations in interest rates.  We have accounted for this agreement in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 133, “Accounting for Derivative Instruments and Hedging Activities, “as amended by SFAS No. 138 “Accounting for Certain Derivative Instruments” and SFAS No. 149 “Amendment of Statement 133 on Derivative Instruments and Hedging Activities”. Interest rate swap contracts are reported at fair value with the gain or loss on market value recorded as an increase or

23

reduction of interest expense. At August 31, 2006, no interest rate swap agreements are designated as hedges.  An increase or decrease in the fair value of these financial instruments would result in changes of the recorded value of these financial instruments in our consolidated financial statements.  During the year ended August 31, 2005, we had only one abnormal and material adjustment due to fluctuations in the fair values of financial instruments.  This adjustment recognized a $2.3 million decrease in the recorded value of the collateral on the interest rate collar agreement at the time this agreement was determined to no longer be clearly and closely related to the Corporate Bonds, Series 2000.  In fiscal 2006, a net gain of $1.3 million was recorded as a reduction in interest expense due to changing collateral values.

Recent Accounting Pronouncements

The FASB issued SFAS No. 123R “Share-Based Payment”, as amended, which revised SFAS No. 123, “Accounting for Stock-Based Compensation” and superseded APB Opinion No. 25, “Accounting for Stock Issued to Employees”.  This statement establishes standards for accounting for transactions in which an entity exchanges its equity instruments for goods or services.  It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments.  This statement is effective for public entities as of the beginning of the first interim or annual reporting period that begins after June 15, 2005.  We currently do not believe that the adoption of SFAS No. 123R will have a material impact on the consolidated financial statements.

Item 7A.      Quantitative and Qualitative Disclosures About Market Risk.

Market risk is the risk of loss to future earnings, to fair values or to future cash flows that may result from changes in the price of a financial instrument. The value of a financial instrument may change as a result of changes in interest rates, commodity prices, exchange rates, equity prices and other market changes. Market risk is attributed to all market-risk sensitive financial instruments, including long-term debt.

We do not believe we are subject to any material market risk exposure with respect to interest rates, commodity prices, exchange rates, equity prices, or other market changes that would require disclosure.

Item 8.         Financial Statements and Supplementary Data.

The Report of Independent Registered Public Accounting Firm and our consolidated balance sheets as of August 31, 2006 and 2005, our related consolidated statements of operations, owners’ equity and cash flows for each of the three years in the period ended August 31, 2006, and the Notes to the Consolidated Financial Statements are set forth listed immediately following the signature page of this Annual Report on Form 10-K.

Item 9.         Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

There are no disagreements with the accountants on accounting or financial disclosure.

24

Item 9A. Controls and Procedures.

Disclosure Control and Procedures

Our Chief Executive Officer, Dana Persson, and our Interim Chief Financial Officer, Thomas A. Powell, have evaluated our disclosure controls and procedures as of the end of the period covered by this report.

In this evaluation, the Chief Executive Officer and the Interim Chief Financial Officer considered whether our disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Interim Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.  In the course of their evaluation, our Chief Executive Officer and Interim Chief Financial Officer reviewed the process for receiving and communicating to management the Notices of Violation issued by the Iowa Department of Natural Resources relating to the operation of our facility in Thompson, Iowa.  Our Chief Executive Officer and Interim Chief Financial Officer have determined that the receipt of the Notices of Violation in June 2006 and August 2006 was not timely communicated to our Chief Executive Officer and Interim Chief Financial Officer to allow them to make timely decisions regarding required disclosure under the Exchange Act.

A description of the Notices of Violation referred to above and other matters relating thereto may be found under Part II, Item 3. “Legal Proceedings” of this Annual Report on Form 10-K.

Because all of the Notices of Violation were received during the quarter covered by this Annual Report on Form 10-K or subsequent to that quarter, our management believes that the disclosures contained in the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2006 were appropriate.

In light of the conclusion above regarding the effectiveness of our disclosure controls and procedures, the Company is taking steps to improve by implementing additional training for employees at the Thompson facility, adopting new policies regarding proper communication to supervisors, clarifying responsibility for communications, both internally and externally, and by establishing new and back-up communication channels to ensure that government correspondence and inquiries, any potential legal matter and other similar material information, are specially handled on an expedited basis.

Changes in Internal Control Over Financial Reporting

There have been no changes in internal control over financial reporting that occurred during the fiscal period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Item 9B. Other Information

None.

25

PART III

Pursuant to General Instruction G (3), we omit Part III, Items 10, 11, 12, 13, and 14 and incorporates such items by reference to an amendment to this Annual Report on Form 10-K to be filed within 120 days after August 31, 2006 or to a definitive proxy statement to be filed within 120 days after August 31, 2006 with the Securities and Exchange Commission.

PART IV

Item 15.Exhibits and Financial Statement Schedules.

(a)      The following are filed as part of this report:

1.    Financial Statements

Independent Auditor’s Report

Consolidated Balance Sheets as of August 31, 2006 and 2005

Consolidated Statements of Operations for the years ended August 31, 2006, 2005 and 2004

Consolidated Statements of Changes in Owners’ Equity for the years ended August 31, 2006, 2005 and 2004

Consolidated Statements of Cash Flows for the years ended August 31, 2006, 2005 and 2004

Notes to Consolidated Financial Statements

2.    Financial Statement Schedules

All schedules are omitted as the required information is inapplicable or the information is presented in the consolidated financial statements or related notes.

3.    Exhibits

Exhibit Number	Exhibit Description
2.1	Amended and Restated Agreement and Plan of Merger between Midwest Investors of Renville, Inc. and Golden Oval Eggs, LLC (incorporated by reference to Appendix A to the Registration Statement on Form S-4 (File No. 333-112533) (the “Form S-4”)).
3.1	Certificate of Formation of Golden Oval Eggs, LLC dated November 24, 2003 (incorporated by reference to Appendix B to the Form S-4).
3.2	Amended and Restated Limited Liability Company Agreement of Golden Oval Eggs, LLC adopted effective August 31, 2004 (incorporated by reference to Appendix C to the Form S-4).

26

3.3	Certificate of Designation for Class B Units of Golden Oval Eggs, LLC dated June 30, 2006.
10.1	Employment, Non-Competition and Severance Agreement dated September 1, 2004 between Dana Persson and Golden Oval Eggs, LLC (incorporated by reference to Exhibit 10.1 of the Company’s Annual Report on Form 10-K for the year ended August 31, 2005).*
10.2	Employment, Non-Competition and Severance Agreement dated September 1, 2004 between Doug Leifermann and Golden Oval Eggs, LLC (incorporated by reference to Exhibit 10.7 of the Company’s Annual Report on Form 10-K for the year ended August 31, 2005).
10.3	Employment, Non-Competition, and Severance Agreement dated May 23, 2006 by and between Golden Oval Eggs, LLC and Robert A. Harrington (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K dated May 23, 2006).
10.4	Litter Handling Agreement dated January 1, 2002 by and between Farmers Cooperative Company and Golden Oval Eggs, LLC, successor to Midwest Investors of Renville, Inc. (incorporated by reference to Exhibit 10.5 of the Form S-4). **
10.5	Litter Handling Agreement dated March 31, 2003 between Co-op Country Farmers Elevator and Golden Oval Eggs, LLC, successor to Midwest Investors of Renville, Inc. (incorporated by reference to Exhibit 10.6 of the Form S-4). **
10.6	Independent Contractor Agreement for Pullet Production dated November 1, 2003 among Pullet Connection, Inc., Barbara Frank and Golden Oval Eggs, LLC, successor to Midwest Investors of Renville, Inc. (incorporated by reference to Exhibit 10.7 to the Form S-4).
10.7	Joint Venture Agreement between Midwest Investors of Iowa, Cooperative and Golden Oval Eggs, LLC, successor to Midwest Investors of Renville, Inc. (incorporated by reference to Exhibit 10.8 to the Form S-4).
10.8	Land Lease Agreement dated October 1, 1999 between Midwest Investors of Iowa, Cooperative and Golden Oval Eggs, LLC, successor to Midwest Investors of Renville, Inc. (incorporated by reference to Exhibit 10.9 to the Form S-4).
10.9	Asset Purchase and Sale Agreement dated as of May 23, 2006 between Moark, LLC, Cutler at Abbeville, L.L.C., Hi Point Industries, LLC, L&W Egg Products, Inc., Norco Ranch, Inc. and Moark Egg Corporation, collectively as Seller and Golden Oval Eggs, LLC and GOECP, LP as Buyer (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K dated May 23, 2006).
10.10	Subordinated Promissory Note in principal amount of $17,000,000 dated June 30, 2006 made by Golden Oval Eggs, LLC, a Delaware limited liability company Midwest Investors of Iowa, Cooperative, an Iowa Cooperative, and GOECA, LP as debtors to the order of Land O’ Lakes, Inc.
10.11	Security Agreement dated as of June 30, 2006 by Golden Oval Eggs, LLC, GOECA, LP, and Midwest Investors of Iowa, Cooperative, for the benefit of Land O’ Lakes, Inc.
10.12	Subordination and Intercreditor Agreement dated as of June 30, 2006 made Land O’ Lakes, Inc. in favor of CoBank ACB, as agent.
10.13	Warrant to purchase Units of Golden Oval Eggs, LLC dated as of June 30, 2006 issued to Land O’Lakes, Inc.
10.14	Amended and Restated Credit Agreement dated as of June 30, 2006 among Golden Oval Eggs, LLC, Midwest Investors of Iowa, Cooperative, and GOECA, LP, CoBank ACB, and Metropolitan Life Insurance Company.

27

21.1	Subsidiaries of Golden Oval Eggs, LLC, the registrant.
23.1	Consent of Moore Stephens Frost PLC.
31.1	Certification of Chief Executive Officer pursuant to Rule13a-14(a) or 15d-14(a).
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a).
32.1	Certification Pursuant to 18 U.S.C. Section 1350.

*              Indicates management contract or compensatory plan, contract or arrangement

**           Portions of the exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment under Rule 406 of the Securities Act of 1933, as amended.

28

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Golden Oval Eggs, LLC has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

GOLDEN OVAL EGGS, LLC
By:	/s/ Dana Persson
Dana Persson, President and Chief Executive Officer
By:	/s/ Thomas A. Powell
Thomas A. Powell, Interim Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed by the following persons on November 29, 2006 on behalf of Golden Oval Eggs, LLC in the capacities indicated.

(Power of Attorney and Signatures)

Each person whose signature appears below constitutes and appoints Dana Persson and Thomas Powell as his true and lawful attorneys-in-fact and agents, each acting alone, with the full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any or all amendments to this Annual Report on Form 10-K and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, each acting alone, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all said attorneys-in-fact and agents, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue thereof.

/s/ Dana Persson	President and Chief Executive Officer
Dana Persson	(principal executive officer)
/s/ Thomas A. Powell	Interim Chief Financial Officer
Thomas A. Powell	(principal financial and accounting officer)
/s/ Chris Edgington	Chairman
Chris Edgington
/s/ Marvin Breitkreutz	Vice Chairman
Marvin Breitkreutz
/s/ Mark Chan	Manager
Mark Chan
/s/ Howard Dahlager	Manager
Howard Dahlager
/s/ Rodney Hebrink	Manager
Rodney Hebrink
/s/ James N. Rieth	Manager
James N. Rieth
/s/ Paul Wilson	Manager
Paul Wilson

29

GOLDEN OVAL EGGS, LLC

August 31, 2006, 2005 and 2004

Consolidated Financial Statements

With

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm

Members and Board of Managers
Golden Oval Eggs, LLC
Renville, Minnesota

We have audited the accompanying consolidated balance sheets of Golden Oval Eggs, LLC as of August 31, 2006 and 2005, and the related consolidated statements of operations, changes in owners’ equity and cash flows for each of the three years in the period ended August 31, 2006.  These consolidated financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Golden Oval Eggs, LLC as of August 31, 2006 and 2005, and the consolidated results of its operations and its cash flows for each of the three years in the period ended August 31, 2006, in conformity with accounting principles generally accepted in the United States of America.

Moore Stephens Frost

Certified Public Accountants

Little Rock, Arkansas
November 27, 2006

F-1

GOLDEN OVAL EGGS, LLC

Consolidated Balance Sheets

August 31, 2006 and 2005

(In Thousands)

Assets	2006			2005
Current assets
Cash and cash equivalents	$	222		$	690
Accounts receivable	14,854			4,809
Inventories	16,005			11,189
Restricted cash	779			917
Other current assets	1,076			387
Total current assets	32,936			17,992
Property, plant and equipment
Land and land improvements	11,553			11,163
Buildings	40,669			34,782
Leasehold improvements	860			—
Equipment	72,312			54,819
Construction in progress	57			6,502
	125,451			107,266
Accumulated depreciation	(45,622		)	(37,652		)
Total property, plant and equipment, net	79,829			69,614
Other assets
Investments	1,576			1,529
Intangible assets, net	20,724			1,773
Goodwill	22,858			—
Note receivable	77			37
Total other assets	45,235			3,339
Total assets	$	158,000		$	90,945

F-2

Liabilities and Owners’ Equity	2006		2005
Current liabilities
Revolving line of credit	$	3,869	$	2,724
Accounts payable	7,665		2,830
Accrued interest	812		333
Accrued compensation	1,485		1,449
Other current liabilities	2,877		1,519
Current maturities of long-term debt	9,461		4,668
Total current liabilities	26,169		13,523
Long-term debt, less current maturities	94,257		46,546
Commitments and contingencies - See Notes 7 and 12
Members’ equity
Members’ equity	36,701		29,891
Non-controlling interest in consolidated entities	873		985
Total members’ equity	37,574		30,876
Total owners’ equity	37,574		30,876
Total liabilities and owners’ equity	$	158,000	$	90,945

The accompanying notes are an integral part of these consolidated financial statements.

F-3

GOLDEN OVAL EGGS, LLC

Consolidated Statements of Operations

For the Years Ended August 31, 2006, 2005 and 2004

(In Thousands, except per share/members’ unit data)

	2006			2005			2004
Net sales	$	93,638		$	63,196		$	83,543
Cost of goods sold	79,851			52,118			50,693
Gross profit	13,787			11,078			32,850
Operating expenses	9,734			7,677			9,749
Income from operations	4,053			3,401			23,101
Other income (expense)
Interest expense	(3,835		)	(6,385		)	(2,732		)
Non-controlling interest in income of consolidated entities	42			(103		)	(41		)
Other income	805			750			513
Total other expense	(2,988		)	(5,738		)	(2,260		)
Income (loss) before income taxes	1,065			(2,337		)	20,841
Income tax expense (benefit)	2			(378		)	2,926
Net income (loss)	$	1,063		$	(1,959	)	$	17,915
Basic and diluted earnings per common share/members’ unit	$	0.22		$	(0.43	)	$	3.91
Distributions per common share/members’ unit	$	—		$	—		$	4.22

F-4

GOLDEN OVAL EGGS, LLC

Consolidated Statements of Changes in Owner’s Equity

For the Years Ended August 31, 2006, 2005 and 2004

(In Thousands)

	Common								Qualified						Non-Controlling
	Stock/		Common			Additional			Written			Unallocated						Interest in			Total
	Class A	Class B	Stock			Paid-in			Notices			Capital			Members’			Consolidated			Owners’
	Units	Units	Amount			Capital			of Allocation			Reserve			Equity			Entities			Equity
Balance - August 31, 2003	4,582	—	$	46		$	19,923		$	—		$	6,062		$	—		$	—		$	26,031
Cumulative effect of adoption of FIN-46R	—	—	—			—			—			—			—			866			866
Distributions paid	—	—	—			—			—			(1,833		)	—			—			(1,833		)
Distributions declared	—	—	—			—			7,250			(17,500		)	—			—			(10,250		)
Net income	—	—	—			—			—			17,915			—			—			17,915
Non-controlling interest in income of consolidated entities, net of distributions	—	—	—			—			—			—			—			41			41
Balance - August 31, 2004	4,582	—	46			19,923			7,250			4,644			—			907			32,770
Conversion to LLC	—	—	(46		)	(19,923		)	(7,250		)	(4,644		)	31,863			—			—
Distributions paid	—	—	—			—			—			—			(13		)	—			(13		)
Net loss	—	—	—			—			—			—			(1,959		)	—			(1,959		)
Non-controlling interest in income of consolidated entities, net of distributions	—	—	—			—			—			—			—			78			78
Balance - August 31, 2005	4,582	—	—			—			—			—			29,891			985			30,876
Units issued as compensation	121	—	—			—			—			—			747			—			747
Units issued for acquisition	—	697	—			—			—			—			5,000			—			5,000
Net income	—	—	—			—			—			—			1,063			—			1,063
Non-controlling interest in income of consolidated entities, net of distributions	—	—	—			—			—			—			—			(112		)	(112		)
Balance - August 31, 2006	4,703	697	$	—		$	—		$	—		$	—		$	36,701		$	873		$	37,574

The accompanying notes are an integral part of these consolidated financial statements.

F-5

	2006			2005			2004
Cash flows from operating activities
Net income (loss)	$	1,063		$	(1,959	)	$	17,915
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation	8,083			6,167			4,412
Amortization	498			228			261
Stock issued as Board of Directors compensation	14			—			—
(Gain) loss on disposals of property, plant and equipment	(9		)	(1		)	61
Loss on retirement of bonds	—			848			—
Non-controlling interest in income of consolidated entities, net of distributions	(112		)	78			41
Unrealized loss on hedging activities	—			2,302			—
Changes in operating assets and liabilities, net of effects of adoption of FIN-46R
Accounts receivable	(10,045		)	1,111			368
Inventories	(4,816		)	(2,018		)	(1,465		)
Other current assets	(689		)	534			(228		)
Accounts payable	4,835			(732		)	1,146
Income taxes payable	—			(2,685		)	2,685
Accruals and other current liabilities	2,606			(1,918		)	3,250
Deferred income taxes	—			—			236
Net cash provided by operating activities	1,428			1,955			28,682
Cash flows from investing activities, net of effects of adoption of FIN-46R
Purchases of property, plant and equipment	(2,612		)	(20,641		)	(19,397		)
Acquisition of Moark assets	(35,703		)	—			—
Proceeds from sales of property, plant and equipment	33			4			4
Advance of note receivable	(40		)	(14		)	—
Purchase of investment in United Mills	—			—			(38		)
Purchases of investments in other cooperatives	(59		)	(58		)	(254		)
Retirement of investment in other cooperatives	12			41			292
Net cash used by investing activities	(38,369		)	(20,668		)	(19,393		)

F-6

	2006			2005			2004
Cash flows from financing activities, net of effects of adoption of FIN-46R
Net increase in revolving line of credit	$	1,145		$	2,697		$	7
Proceeds from issuance of long-term debt	41,000			42,550			—
Payments of long-term debt	(5,496		)	(24,288		)	(2,503		)
Payment of deferred financing costs	(314		)	(1,469		)	—
Restricted cash	138			2,534			(603		)
Cash distributions	—			—			(1,833		)
Patronage dividend	—			(10,263		)	—
Net cash provided (used) by financing activities	36,473			11,761			(4,932		)
Net increase (decrease) in cash	(468		)	(6,952		)	4,357
Cumulative cash effect of adoption of FIN-46R	—			—			856
Cash and cash equivalents - beginning of year	690			7,642			2,429
Cash and cash equivalents - end of year	$	222		$	690		$	7,642
Supplementary disclosures of cash flow information
Cash paid during the period for
Interest, net of capitalized interest of $171 and $702 during 2006 and 2005, respectively	$	3,664		$	3,276		$	3,158
Income taxes	2			2,307			—
Supplementary disclosures of non-cash transactions
Patronage dividends declared	$	—		$	—		$	10,250
Qualified written notices of allocation declared	—			—			7,250
and issued	—			—			(7,250		)
Class B units issued for acquisition	5,000			—			—
Long-term debt issued for acquisition	17,000			—			—

The accompanying notes are an integral part of these consolidated financial statements.

F-7

GOLDEN OVAL EGGS, LLC

Notes to Consolidated Financial Statements

August 31, 2006, 2005 and 2004

(In Thousands, except per share/members’ unit data)

1.Summary of Significant Accounting Policies

a.Organization — Golden Oval Eggs, LLC (the “Company”) was organized as a Delaware limited liability company to affect the reorganization of Midwest Investors of Renville, Inc. (“MIR”) effective August 31, 2004.  MIR was incorporated as a cooperative under the laws of the state of Minnesota in March 1994.  Upon conversion, MIR patrons’ equity, including common stock, additional paid-in capital, qualified written notices of allocation and unallocated capital reserve have been converted into members’ equity of the Company.  At the time of conversion, MIR patrons’ obligations to deliver one bushel of corn per share of common stock pursuant to marketing agreements with MIR were terminated.

b.Principles of consolidation — The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, GOECA, LP, the accounts of AEI, LLC of which the Company holds a 68% membership interest at August 31, 2006 and the accounts of  variable interest entities in which the Company is the primary beneficiary.  United Mills, a Minnesota Cooperative, of which the Company holds a 33 1/3% membership interest and is also a purchaser of feed produced by United Mills; and Midwest Investors of Iowa, Inc. a lessor of property to the Company.  The Company investments in 20 percent to 50 percent owned entities that are not variable interest entities in which the Company is the primary beneficiary are accounted for using the equity method.  The Company investments in less than 20 percent owned entities that are not variable interest entities in which the Company is the primary beneficiary and in which the Company does not exercise significant influence over operating and financial policies are accounted for under the cost method.  All material intercompany accounts and transactions have been eliminated in the consolidated financial statements.

c.Business operations and environment — The Company is an integrated poultry and liquid egg processing operation that produces and sells liquid and processed egg products, principally in the United States and Canada.

The Company operates in an environment wherein the commodity nature of both its products for sale and its primary raw materials cause sales prices and purchase costs to fluctuate, often on a short-term basis, due to the worldwide supply and demand situation for those commodities.  The supply and demand factors for its products for sale and the supply and demand factors for its primary raw materials correlate to a degree, but are not the same, thereby causing margins between sales price and production costs to increase, decrease, or invert, often on a short-term basis.

d.Cash equivalents — The Company considers all highly liquid cash investments purchased with an original maturity of three months or less to be cash and cash equivalents.

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e.Accounts receivable — Accounts receivable are recorded at the invoiced amount and do not bear interest.  The Company reviews its customer accounts on a periodic basis and records a reserve for specific amounts that the Company feels may not be collected.  The Company’s management deems accounts receivable to be past due based on contractual terms.  Amounts will be written off at the point when collection attempts on the accounts have been exhausted.  Management uses significant judgment in estimating uncollectible amounts.  In estimating uncollectible amounts, management considers factors such as current overall economic conditions, industry-specific economic conditions, historical customer performance and anticipated customer performance.  While management believes the Company’s processes effectively address its exposure to doubtful accounts, changes in the economic, industry or specific customer conditions may require adjustment to any allowance recorded by the Company.  As of August 31, 2006, management has determined that an allowance of $30 is required due to the changing nature of the customer base.  In 2005, no allowance for doubtful accounts was considered necessary by the Company’s management.

f.Inventories — Pullet and layer hen inventories are stated at the cost of production which includes the costs of the chicks, feed, overhead and labor.  Layer hen flock costs are capitalized to the point at which the pullet goes into production and are amortized over the productive lives of the flocks, generally 18 to 24 months.  Feed, supplies, ingredients, liquid egg inventories and processed egg products are stated at the lower of cost (first-in, first-out) or market.

g.Investments — trading securities — From time to time, the Company holds certain commodity futures contracts in the regular course of business to manage its exposure against commodity price fluctuations on anticipated purchases of raw materials.  The contracts are generally for short durations of less than one year.  Although these instruments are economic hedges, the Company does not designate these contracts as hedges for accounting purposes pursuant to Statement of Financial Accounting Standards (“SFAS”) No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended.  As a result, the Company records these contracts as investments and are they classified as trading securities under SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities,” as amended by SFAS No. 130, “Reporting Comprehensive Income.”  Accordingly, these investments are recorded at fair value based on quoted market prices. The Company’s unrealized gains and losses in the commodities futures contracts are included in earnings in the periods in which they arise.  At August 31, 2006 and 2005, there were no such contracts outstanding.

h.Property, plant and equipment — Property, plant, leasehold improvements, and equipment are stated at cost and depreciated is provided primarily by the straight-line method over the following lives:

Land improvements	7 to 15 years
Buildings	7 to 39 years
Leasehold Improvements	1 to 3 years
Equipment	3 to 15 years

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Costs of maintenance and repairs that do not improve or extend asset lives are expensed as incurred.  Major additions and improvements of existing facilities are capitalized.  For retirements or sales of property, the Company removes the original cost and the related accumulated depreciation from the accounts and the resulting gain or loss is reflected in other income in the accompanying consolidated statements of operations.  Depreciation and repairs and maintenance expenses are allocated to either cost of goods sold or operating expenses in the accompanying consolidated statements of operations based on the nature and use of the related asset.

i.Impairment of long-lived assets to be held and used — The Company reviews the carrying value of long-lived assets for impairment whenever certain triggering events or changes in circumstances indicate that the carrying amounts of any asset may not be recoverable.  Recoverability of assets to be held and used is measured by a comparison to the carrying amount of an asset to future net cash flows expected to be generated by the asset.  If such assets are considered to be impaired, the impairment to be recognized is measured by the excess of the carrying amount over the fair value of the assets.  No triggering events or changes in circumstances were identified by management for the years ended August 31, 2006, 2005 and 2004.

j.Investments (not in thousands) — Investments include the Company’s investments in St. Paul Bank for cooperatives and four additional cooperatives involved in activities which are similar or complementary to the Company.  Additionally, fiscal years 2006 and 2005 include United Mills’ investment in Land O’Lakes, Inc. and five additional cooperatives involved in activities which are similar or complementary to United Mills.

k.Restricted cash — Restricted cash consists of cash that is restricted as to future use by contractual agreements associated with the outstanding bonds and an interest rate collar agreement at August 31, 2006 and 2005.  See Note 7 for further discussion of the interest rate collar agreement.

l.Intangible assets — Intangibles include patents, brand names, contractual license agreements and costs incurred in connection with the acquisition of financing.  Financing costs are capitalized and amortized over the life of the related financing instrument.  Patents, brand names and licenses are valued based upon net present value of the projected cash flow streams for each within determinable time frames, based upon brand name life (15 years), contractual license agreement terms (10 years) or remaining patent life (11.3 years).  Intangibles are shown net of accumulated amortization on the accompanying consolidated balance sheets.

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m.Goodwill — Goodwill represents the excess purchase price over the fair value of net assets acquired in the acquisition of certain assets from Moark, LLC and its subsidiaries, Cutler at Abbeville, LLC, Hi Point Industries, LLC, L&W Egg Products, Inc., Norco Ranch, Inc. and Moark Egg Corporation (the “Moark Acquisition”) on June 30, 2006.  The Company accounts for goodwill in accordance with the provisions of SFAS 142, “Goodwill and Other Intangible Assets,” and will test goodwill for impairment on an annual basis or earlier, if facts and circumstances indicate that there may be a potential impairment.  The test for impairment will be based upon a number of factors including operating results, business plans and projected future cash flows.

n.Derivative financial instruments — The Company entered into an interest rate collar agreement to manage its exposure to fluctuations in interest rates.  The Company has accounted for this agreement in accordance with SFAS No. 133, “Accounting for Derivative Instruments and Hedging” (as amended by SFAS No. 138, “Accounting for Certain Derivative Instruments and Certain Hedging Activity” and SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities”).  Interest rate swap contracts are reported at fair value with the gain or loss on market value recorded as an increase or reduction of interest expense.  At August 31, 2006, no interest rate swap agreements are designated as hedges.

o.Income taxes — Golden Oval Eggs, LLC and AEI, LLC are limited liability companies and as such, are treated as partnerships for income tax purposes.  Accordingly, the taxable income or loss of these entities is reported on the individual income tax returns of their members.  No provision for income taxes or deferred income tax liability related to these entities is included in the accompanying consolidated financial statements.

United Mills, Midwest Investors of Iowa, Inc. and MIR (prior to its conversion to a LLC) are subject to federal and certain other income taxes and operate as cooperatives that qualify for tax treatment under Subchapter T of the Internal Revenue Code.  Accordingly, under specific conditions, these entities can exclude from taxable income amounts distributed as qualified patronage refunds to their members.  Provisions for income taxes are recorded only on those earnings not distributed or not expected to be distributed as patronage refunds.

p.Fair value — The Company’s financial instruments consist primarily of cash equivalents, accounts receivable, long-term receivable, accounts payable and debt.  The carrying amounts of cash equivalents, accounts receivable and accounts payable approximate their fair values because of the short-term maturity of such instruments.  The stated value of the Company’s long-term receivables approximates their fair value based on current market rates for financial instruments of the same remaining maturities and risk characteristics.  The carrying values of long-term debt instruments approximate their fair value because interest rates on such debt are periodically adjusted and approximate current market rates.

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q.Revenue recognition — Revenue is recognized by the Company when the following criteria are met: persuasive evidence of an agreement exists; delivery has occurred (Free-on-Board (“FOB”) shipping point or destination, depending on the customer) or services have been rendered; the Company’s price to the buyer is fixed and determinable; and collectibility is reasonably assured.  All of the Company’s products are delivered directly to its customers.  The Company receives orders for all sales and mails invoices on shipment.  Physical delivery is the point in time at which revenue is considered earned since the risks and rewards of ownership generally rest when title passes to the customer.  FOB terms generally designate at which point title passes to the customer.  These terms are contractual between the parties involved.  Product shipped FOB shipping point is recognized as revenue when the product leaves the Company’s premises.  Product shipped FOB destination is recognized as revenue when the product reaches the customer.  At the time of shipment, all prices are fixed and all sales are made on the basis that collection is expected in line with the Company’s standard payment terms.

r.Estimates — The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

s.Shipping and handling costs — All shipping and handling costs incurred during the year are included in cost of goods sold in the accompanying consolidated statements of operations.

t.Reclassifications — Certain reclassifications have been made to the 2005 and 2004 balances in order to conform to the 2006 presentation.

u.Recently issued accounting standards — The Financial Accounting Standards Board (“FASB”) issued SFAS No. 123R “Share-Based Payment,” as amended, which revised SFAS No. 123, “Accounting for Stock-Based Compensation” and superceded Accounting Principles Bulletin (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees.”  This statement establishes standards for accounting for transactions in which an entity exchanges its equity instruments for goods or services.  It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments.  This statement is effective for public entities as of the beginning of the first interim or annual reporting period that begins after June 15, 2005.  For the Company, SFAS No. 123R was effective for the reporting period beginning September 1, 2006.  The adoption of SFAS No. 123R did not have a material impact on the results of operations of the Company.

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2.Acquisition of Assets

On June 30, 2006, the Company and its wholly-owned subsidiary, GOECA, LP, purchased from Moark, LLC and its subsidiaries, Cutler at Abbeville, L.L.C., Hi Point Industries, LLC, L&W Egg Products, Inc., Norco Ranch, Inc. and Moark Egg Corporation (collectively, the “Seller”) certain assets relating to the business of manufacturing, marketing, selling and distribution of egg products.  Moark, LLC is a subsidiary of Land O’Lakes, Inc. (“LOL”).  GOECA, LP is a newly-formed Delaware limited partnership controlled by the Company that will continue portions of the acquired business.  The purchase was pursuant to an asset purchase agreement dated May 23, 2006.

In connection with the closing, the Company paid the Seller the total purchase price of $60,000 consisting of $38,000 in cash (of which $1,500 was paid as an earnest money deposit in connection with the execution of the asset purchase agreement), an additional $17,000 paid in the form of a subordinated promissory note bearing interest at a rate of 12% per year (the “Note”) issued to LOL and $5,000 paid by issuance of 697,350 Class B Units.  Transaction costs of $1,097 were funded by current operations and became part of the allocated purchase price.

The Company allocated the purchase price based upon the fair value of the assets acquired as follows:

Inventory	$	3,394
Land	55
Building	1,850
Leasehold improvements	861
Equipment	12,944
Acquired Intangibles	19,135
Goodwill	22,858
Total purchase price	$	61,097

3.Variable Interest Entities

FASB Interpretation No. 46R (Revised December 2003), “Consolidation of Variable Interest Entities” (“FIN-46R”), requires that if an enterprise is the primary beneficiary of a variable interest entity, the assets, liabilities and results of operations of the variable interest entity should be included in the consolidated financial statements of the enterprise.  The Company holds various investments or variable interests, that for purposes of FIN-46R, were evaluated and the Company determined that it was the primary beneficiary.  As such, the financial statements of these entities were consolidated in the accompanying consolidated financial statements.  Creditors of the variable interest entities lack recourse to the general assets of the Company as the primary beneficiary.

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The Company leases land from Midwest Investors of Iowa, Inc., which it controls.  The Company has determined that it is the primary beneficiary and the lessor is a variable interest entity.  Under FIN-46R, the lessor is required to be consolidated in the Company’s consolidated financial statements as of September 1, 2003.  The land, which totals $1,002 and is collateral for the related obligation, has been recorded as an asset in the Company’s consolidated balance sheets and the outstanding debt has been recorded as a liability.  The Company had recorded a note receivable of $950 from Midwest Investors of Iowa, Inc. which was secured by this land.  The note due in October 2014, bears interest at eight percent and is payable in monthly installments, including interest.  As a result of the FIN-46R implementation, and the consolidation of Midwest Investors of Iowa, Inc. the note receivable was eliminated.

Additionally, the Company owns a 33 1/3% interest in United Mills, a Minnesota cooperative, from which it also purchases feed.  The Company has evaluated its equity investment in United Mills and has determined that United Mills is a variable interest entity under FIN-46R.  The Company has concluded that it is the primary beneficiary as defined by FIN-46R and as a result, the Company is required to consolidate United Mills on September 1, 2003.  FIN-46R requires that the Company account for United Mills as if it had been consolidated since the initial investment in 1995.  A total of $ 1,903 and $1,647 of assets of United Mills recorded in the consolidated balance sheets as of August 31, 2006 and 2005, respectively, serve as collateral for the obligations of the variable interest entity.

The Company’s investment in United Mills was accounted for using the equity method for the year ended August 31, 2003.  Since United Mills is a cooperative, the income and capital reserves are allocated to the member-patrons on the basis of patronage the Company has with the cooperative, which was 50.0% for the year ended August 31, 2003.  United Mills maintains a revolving capital account, funded by its patrons.  The principal source of this capital account is the contribution, on a monthly basis, of $3.00 per ton of feed purchased.  Revolving capital credits may be retired at any time at the discretion of the Board of Directors of United Mills.  United Mills has historically followed a policy of retiring capital credits on a monthly basis at the rate of $3.00 per ton of feed purchased during the corresponding month two years prior.  These payments to and from United Mills are reflected as purchase of and retirement of investment in United Mills, respectively, in the accompanying consolidated statements of cash flows.

United Mills reported the following financial results for fiscal year 2003:

Sales	$	8,119
Gross profit	626
Net income	37

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FIN-46R encouraged but did not require restatement, accordingly, the Company accounted for this change with a cumulative effect adjustment at the beginning of 2004.  The non-cash effects of adoption of FIN-46R for purposes of the statement of cash flows for the year ended August 31, 2004 were as follows:

Accounts receivable	$	211
Inventories	(472		)
Other current assets	144
Property, plant and equipment	(2,105		)
Investments	217
Bond issue costs	(4		)
Notes receivable	927
Accounts payable	1,035
Other current liabilities	(153		)
Long-term debt	149
Minority interest	907
Cumulative cash effect of FIN-46R adoption	$	856

4.Inventories

Inventories consist of:

	2006		2005
Hens and pullets	$	10,050	$	9,826
Eggs and egg products	3,409		191
Feed, supplies and other	2,546		1,172
Total inventories	$	16,005	$	11,189

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5.Intangible Assets, Net

Intangible assets consist of the following:

	2006		2005
Net patent cost ($11,299 less amortization $166)	$	11,133	$	—
Net brand name cost ($4,040 less amortization $45)	3,995		—
Net license cost ($3,796 less amortization $63)	3,733		—
Net deferred financing costs ($2,679 less amortization $816)	1,863		1,773
Net intangibles	$	20,724	$	1,773

The amortization periods for these intangible costs range from seven to fifteen years.  The future amortization expense is as follows:

2007	$	1,897
2008	1,892
2009	1,866
2010	1,865
2011	1,865
Thereafter	11,339
	$	20,724

As discussed in Notes 6 and 7, the Company obtained new financing with a financial institution in the fourth quarter of fiscal year 2006.  In conjunction with this refinancing, the Company capitalized financing costs incurred in the amount of $ 314, which is being amortized over the term of the loan.

6.Revolving Line of Credit

On June 30, 2006, the Company amended the revolving short-term line of credit with a maximum indebtedness of the lesser of $15,000 or the limit established by the borrowing base computation with a variable interest rate (9.75% at August 31, 2006).  The balance at August 31, 2006 and 2005 was $3,869 and $2,724, respectively.  Credit line availability as of August 31, 2006 was $9,504.  The weighted average interest rates for these borrowings were 7.06% and 4.54% for the years ending August 31, 2006 and 2005, respectively, based on average amount outstanding.  The average amount outstanding on the line of credit was $1,504 and $1,481 with a maximum outstanding month end balance of $4,388 and $5,630 for the years ending August 31, 2006 and 2005,

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respectively.  There is a quarterly nonuse fee at the rate of one quarter of one percent on the daily average unused amount on the line of credit.  The line of credit may be withdrawn immediately upon matured default as defined in the note agreement.  The date of maturity on the line is through April 30, 2007.

7.Long-Term Debt and Derivative Instruments

Long-term debt consists of:

	2006		2005
Note payable to a bank; variable interest rate, currently at 9.6% as of August 31, 2006, paid monthly, principal paid in equal monthly payments of $317 starting in July 2006 through June 2015; secured by all assets of the Company.	$	37,366	$	—
Note payable to a bank; bearing interest at 6.1%; interest paid monthly, principal paid in equal monthly payments of $183 through September 2014; secured by substantially all land, buildings and equipment of the Thompson, IA facility, with a net book value of $52,763.	17,784		19,983
Note payable to a company; bearing interest at 12%, secured by a subordinated lien on all pledged assets, interest accrues monthly until June 2008 when monthly installments of $200 will commence maturing on June 1, 2009.	17,000		—
Note payable to a bank; bearing interest at 6.1%; interest paid monthly, principal paid in equal monthly payments of $83 starting in January 2006 through December 2015; secured by substantially all land, buildings and equipment of the Thompson, IA facility, with a net book value of $52,763.	9,333		10,000

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	2006		2005
Note payable to a bank; variable interest rate, currently at 9.7% as of August 31, 2006, paid monthly, principal paid in equal monthly payments of $83 starting in January 2006 through December 2015; secured by substantially all land, buildings and equipment of the Thompson, IA facility, with a net book value of $52,763.	$	9,333	$	10,000
Corporate bonds, series 1999, bearing interest at 8.44%; interest payable semiannually, principal payments due in annual installments from 2001 to July 2014 in amounts ranging from $432 to $1,240; secured by substantially all land, buildings and equipment of the Renville, Minnesota facility amounting to a net book value of $7,346.	7,600		8,248
Note payable to a bank; variable interest rate, currently at 6.3% as of August 31, 2006, paid monthly, principal paid in equal monthly payments of $25 starting in January 2006 through December 2015; secured by substantially all land, buildings and equipment of the Thompson, IA facility, with a net book value of $52,763.	2,800		—
Corporate bonds, series 2001, bearing interest at 8.75%; interest payable semiannually, principal payments in equal annual installments of $300 from 2002 to January 2011; secured by substantially all land, buildings and equipment of the Renville, Minnesota facility amounting to a net book value of $7,346.	1,500		1,800
Note payable to a company; non-interest bearing; secured by certain equipment with a net book value of $632; payable in monthly installments of $4 beginning November 2005 through October 2014.	408		450

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	2006		2005
Note payable to a company; non-interest bearing; secured by certain equipment with a net book value of $327; payable in monthly installments of $5 beginning June 2003 through May 2011.	$	267	$	324
Note payable to a company; variable interest rate on two-thirds of note balance (4% at August 31, 2006); with remaining one-third of note balance being non-interest bearing; unsecured; payable in annual installments of $30, plus interest, through January 2010.	120		150
Note payable to a bank; variable interest rate; secured by assets of United Mills with lack of recourse to the Company; payable in monthly installments of $2; maturing November 2011.	117		132
Note payable to a company; bearing interest at 2%, unsecured: payable in annual installments of $10, plus interest, through November 2014.	90		100
Note payable to a company; non-interest bearing; secured by certain equipment with a net book value of $19; payable in monthly installments of $3, maturing July 2006.	—		27
	103,718		51,214
Less current maturities	9,461		4,668
Long-term debt, less current maturities	$	94,257	$	46,546

Aggregate maturities of long-term debt are as follows:

2007	$	9,461
2008	10,138
2009	25,996
2010	9,668
2011	9,701
Thereafter	38,754
Total	$	103,718

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The Company entered into an Amended and Restated Credit Agreement dated June 30, 2006 for a new term loan and a revolving line of credit (see Note 6) through a financial institution.  The proceeds were used fund an acquisition of assets from Moark, LLC and its subsidiaries (see Note 2).  The Amended and Restated Credit Agreement contains certain restrictive covenants including covenants requiring the Company to maintain (1) a minimum tangible net worth of not less than $28,800+(40% x net earnings)+equity contributed; (2) working capital of no less than $7,000; (3) current ratio of not less than 1.25 to 1.00; (4) leverage ratio of no more than 6.50 to 1.00 (effective 11/30/2006); (5) a fixed charge coverage ratio no less than 1.00 to 1.00; and (6) a risk management percentage requiring a certain percentage of egg production (based on egg production under contract divided by total finished egg production) based on the Company’s current ratio.  As of August 31, 2006, the Company was in compliance with all covenants, but the minimum working capital covenant.  The Company’s lenders waived this covenant violation as of August 31, 2006.

The Company is exposed to interest rate risk on its debt and enters into interest rate collar agreements to manage this risk.  The Company has not elected to treat its interest rate collar derivatives as hedges and thus recognizes the changes in fair value of its derivative instruments currently in earnings in interest expense.  It is the Company’s policy and practice to use derivative financial instruments only to the extent necessary to manage its exposure and the Company does not hold or issue derivative financial instruments for trading or speculative purposes.

The interest rate collar agreement was originally embedded in its Corporate Bonds, Series 2000, which limited the variability of the interest rate on the bonds to a range of 8.46% to 7.31%, and was determined to be clearly and closely related.  During 2005, the Company entered into a new financing agreement.  A portion of the proceeds from the new financing were used to retire the Corporate Bonds, Series 2000.  At the time the Corporate Bonds, Series 2000 were retired in September 2004, the interest rate collar agreement became a separate stand alone agreement.  As of August 31, 2006, the interest rate collar agreement, which terminates on July 10, 2010, has a notional amount of $18,130.  The interest rate collar agreement requires that the Company maintain a collateral account.  The fair value of the interest rate collar agreement is recorded as a reduction of the value of the collateral account in the accompanying consolidated balance sheets.

For the fiscal year ended August 31, 2005, the Company recognized non-cash charges before income taxes of $2,302 from the change in fair value of this derivative financial instrument.

For fiscal year ended August 31, 2006, the Company recognized cash income from the derivative of $1,349.

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8.Income Taxes

Income taxes consist of:

	2006		2005			2004
Current tax (benefit) expense	$	2	$	(378	)	$	2,690
Deferred tax expense	—		—			236
	$	2	$	(378	)	$	2,926

A reconciliation between income taxes at the federal statutory rate and the Company’s income taxes is as follows:

	2006		2005			2004
Federal income taxes at statutory rate	$	—	$	—		$	7,087
State income taxes, net of federal taxes and state NOL carryforwards	—		—			1,361
Effect of (utilization) generation of NOL carryforwards	—		—			(3,220		)
Deduction for retirement of non-qualified per-unit retains	—		—			(386		)
Effect of patronage distributions	—		—			(7,082		)
Gain on conversion to limited liability company	—		(380		)	7,064
Tax basis adjustment for inventory	—		—			(673		)
Accrued vacation	—		—			15
263a adjustment	—		—			(1		)
Tax basis adjustment for depreciation	—		—			(1,239		)
Tax expense of consolidated variable interest entities	2		2			—
	$	2	$	(378	)	$	2,926

During the year ended August 31, 2004, the Company was subject to federal income tax only on certain nondeductible expenses and any amount of net proceeds not returned to patrons in the form of cash, qualified written notices of allocation or qualified per unit retainage certificates issued within eight and one-half months after the fiscal year end.

Temporary differences giving rise to deferred tax assets relate to alternative minimum income tax credit carryforwards.  These carryforwards were generated during fiscal 1998 and 1997.  These carryforwards were utilized to offset the 2004 regular income tax liability of the Company.

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In 2005, MIR filed its final tax return as a cooperative, for the year ended August 31, 2004.  As of August 31, 2004, the Company accrued for the estimated liability related to MIR’s final tax return.  The actual liability paid in 2005 related to this final return was $380 less than the accrued liability at August 31, 2004.  This amount was recorded as an income tax benefit in the accompanying 2005 consolidated statement of operations.

9.Owners’ Equity

a.Description of members’ equity — Upon conversion to a limited liability company, MIR’s patrons’ equity, including common stock, additional paid-in capital, qualified written notices of allocation and unallocated capital reserve have been converted into Class A Units of the Company.  As of August 31, 2006, there were 4,702,965 Class A Units outstanding.  Each unit holder holding a Class A Unit has the right to a pro rata share of the Company’s profits and losses, subject to any preferential rights of any other class of units the Company may issue in the future; receive distributions when declared by the Board of Managers ratable in proportion to units held, subject to any preferential rights of any other class of units the Company may issue in the future and to any applicable lender restrictions; and to vote on matters submitted to a vote of the Company’s members, if the unit holder is also a member.  Membership in the Company is available to any individual, corporation or other entity which acquires a minimum of 2 Class A Units and is approved for membership by the Board of Managers.  Each member has one vote for each Class A Unit held on matters submitted to the members for approval.  A member may not transfer units without approval by the Board of Managers or without compliance with or waiver of certain conditions and procedures.

In connection with the asset acquisition described in Note 2, the Company obtained assets valued at $5,000,000 in exchange for the issuance to LOL of 697,350 newly-created Class B Units of the Company.  The Class B Units are designated and issued pursuant to, and shall be entitled to such rights, preferences and benefits which are set forth in the Certificate of Designation (the “Certificate”), which is incorporated as a part of the Company’s Limited Liability Company Agreement.  On June 30, 2006, LOL was admitted as a Class B member of the Company.  The Certificate authorizes the issuance of 697,350 Class B Units plus such number as are issuable upon exercise of the warrant to purchase Class B Units, as described below.  The Certificate may not be amended without the approval of the Class B member.

Pursuant to the Certificate, the financial and governance interests of the Class B Units and the rights of the holders of Class B Units are equal in all respect to those of the Class A Units and holders of Class A Units.

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Class B members are entitled to one vote for each Class B Unit held by the Class B member, with all votes cast by the Class B member counted with all votes cast by Class A members in determining whether a matter requiring a vote of members has been adopted and approved by the members.  Further, the Class B Unit holders shall have the right to convert the Class B Units into Class A Units on the basis of one Class B Unit for one Class A Unit.  The Certificate also provides the Class B member preemptive rights to make additional capital contributions to purchase units of the Company before the Company may accept additional capital contributions from other persons or may enter into contribution allowance agreements with other persons, subject to certain exceptions.  If the Class B Unit holder does not exercise its preemptive rights and if the Company issues units at an equivalent value of less than $7.17 per Class B Unit, then, for so long as the Company is indebted to LOL, the Company must issue additional units to the Class B Unit holder so that the consideration value paid for the Class B Units is not diluted by the additional capital contribution, subject to certain exceptions.  LOL has the right to an observer for all of the Company’s Board of Managers meetings, whether scheduled or specifically called.  This observation right will continue for the following periods, whichever is longer: (1) LOL is in compliance with covenants regarding noncompetitive activities and the Company is indebted to LOL under a subordinated loan or note as part of the transaction to acquire assets from Moark, LLC and others; (2) LOL is a member holding Class B Units; or (3) the period for the earn out under the asset purchase agreement relating to the acquisition from Moark, LLC and it subsidiaries.  The Certificate also provides that the Company may not create a class or series of units having rights, powers, preferences or privileges greater or superior in any respect to the Class B Units or the holders of Class B Units, unless the provisions apply equally to Class A Units and the holders of Class A Units; or amend the Limited Liability Company Agreement or any appendices thereto if the amendment would modify the limited liability of a Class A and Class B Unit holder, or the voting rights or interest of a Class A and B Unit holder in profits, losses, other items of income or loss, or any distributions unequally where the amendment adversely affects only the Class B Unit holder.

In connection with the note, the Company issued to LOL a warrant dated June 30, 2006 for the purchase of Class B Units of the Company (the “Warrant”).  In the event that the note issued to LOL in connection with the asset acquisition is not paid in full on or before July 1, 2009, the Warrant will become exercisable for such number of Class B Units as is equal to 10% of all the issued and outstanding units of the Company.  The Warrant will expire on July 1, 2011 and has an exercise price of $.01 per Class B Unit.  If the note is paid in full at any time prior to July 1, 2009, the Warrant will be void.

Basic earnings per member unit is computed by dividing income available to members by the weighted average number of member units outstanding for the period.  Diluted earnings per member unit is computed based on net income divided by the weighted average number of member units and potential member units.  Member unit equivalents include those related to share-based compensation, convertible notes and warrants; however, the Company had no such member unit equivalents during the year ended August 31, 2006.  The weighted average number of member units outstanding for computing basic and diluted earnings per unit was 4,811,023 during the year ended August 31, 2006.

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b.Description of patrons’ equity — Authorized capital as of August 31, 2004 consisted of 50,000 shares of common stock, par value of one cent and 10,000 shares of revolving preferred stock, par value of one cent.  As of August 31, 2004, common shares issued and outstanding are 4,582.  Basic earnings per common share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period.  Diluted earnings per common share is computed based on net income divided by the weighted average number of common and potential common shares.  Common share equivalents include those related to stock options, convertible notes and warrants; however, the Company had no such common share equivalents during the year ended August 31, 2004.  The weighted average number of common shares outstanding for computing basic and diluted earnings per share was 4,582 during the year ended August 31, 2004.  No preferred stock was issued or outstanding as of August 31, 2004.

c.Per unit retains — The Company may require investment in its capital in addition to the capital raised through the sale of common and preferred equity.  This investment will be direct capital investments from a retainage on a per unit basis of the products, principally grain, purchased from its members.  In addition, such retained amounts will be made on all products delivered, in the same amount per unit and will at no time become a part of net annual savings available for patronage.

d.Unallocated capital reserve — The Company’s net operating margin, less any amount distributed or allocated to patrons as written notices of allocations, is included in the unallocated capital reserve.  In accordance with its bylaws, the Company allocates patronage margins to its patrons as determined for income tax purposes.  These allocations may be made in cash, units or in the form of written notices of allocations in proportions determined by its Board of Managers.

e.Distributions — The Company’s bylaws provide that, each year, annual savings be distributed to members and patrons on the basis of their patronage with the Company.  The distribution can be made in cash, units or written notices of allocation or any combination thereof.  The distributions must be made within 8 1/2 months after the end of the fiscal year.  Distributions declared for the year ended August 31, 2004 were $17,500, $10,250 of which will be paid in cash and $7,250 of which will be made in written notices of allocation.

f.Non-controlling interest — Non-controlling interest represents the non-controlling members’ proportionate share of the equity of AEI, LLC, the minority stockholders’ proportionate share of the equity of United Mills, and the patrons’ equity in Midwest Investors of Iowa, Inc.  At August 31, 2006, the Company owned 68% and at August 31, 2005, it owned 60% of the equity and voting control of AEI, LLC, which requires that AEI, LLC’s operations be included in the consolidated financial statements of the Company.  At August 31, 2006 and 2005, the Company owned 33 1/3% of United Mills’ equity.  United Mills is accounted for as a variable interest entity in which the Company has been determined to be the primary beneficiary, which requires that United Mills’ operations be included in the consolidated financial statements of the Company.  At August 31, 2006 and 2005, the Company did not own any interest in Midwest Investors of Iowa, Inc.  Midwest Investors of Iowa, Inc. is accounted for as a variable interest entity in which the

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Company has been determined to be the primary beneficiary, which requires that Midwest Investors of Iowa, Inc.’s operations be included in the consolidated financial statements of the Company.  The 32% equity interest of AEI, LLC, the 66 2/3% interest of United Mills and the 100% interest of Midwest Investors of Iowa, Inc. not owned by the Company are shown as non-controlling interest in the accompanying 2006 and 2005 consolidated financial statements.

10.Related Party Transactions

The Company has entered into a grain handler agreement with a cooperative which has an ownership interest in the Company.  For the years ended August 31, 2006, 2005 and 2004, the Company has purchased services totaling $4, $33 and $104, respectively, from this cooperative, with accounts payable for these services of $0, $7 and $3 as of August 31, 2006, 2005 and 2004 respectively.

For the year ended August 31, 2003, the Company has purchased feed totaling $5,030 from United Mills.  These transactions were eliminated through consolidation of the financial statements as of and for the years ended August 31, 2005 and 2004, as a result of the implementation of FIN-46R (see Note 2).

The Company leases land from a commonly managed cooperative and the Company holds a note receivable of $950 and mortgage for that land from the cooperative.  Rent expense for the year ended August 31, 2003 totaled $78.  Interest income for the year ended August 31, 2003 totaled $76.  These transactions were eliminated through consolidation of the financial statements, as of and for the years ended August 31, 2005 and 2004, as a result of the implementation of FIN-46R (see Note 2).

The Company had approximately $190 included in accounts receivable at August 31, 2004, for litter sales to related parties with total sales of $262, $42 and $234 for the years ending August 31, 2006, 2005 and 2004, respectively, which are included in other income in the accompanying consolidated statements of operations.  There were no such amounts owed to the Company for such sales at August 31, 2006 or 2005.

As a result of the MoArk Acquisition completed on June 30, 2006, the Company issued 697,350 of its newly-created Class B Units to LOL. See Note 2 for a description of the consideration paid by the Company in the MoArk Acquisition.  The Certificate of Designation relating to the Class B Units provides that each Class B Unit is convertible at any time into one Class A Unit at the election of the holder.  See Note 9(a) for a description of the Class B Units.  Therefore, as of August 31, 2006, LOL is the beneficial owner of 12.9% of the Company’s Class A Units, based upon 4,702,965 Class A Units outstanding as of August 31, 2006.  As a result of its beneficial ownership, LOL is considered a related party for the purposes of this Note 10.  In addition to the Notes and other agreements relating to our payment of the purchase price, the Company and LOL (or its affiliates) also became parties to agreements as a result of the MoArk Acquisition under which the Company paid or accrued as an expense the following amounts to LOL (or its affiliates) during the period from July 1, 2006 to August 31, 2006, the period following the closing of the MoArk Acquisition to the Company’s fiscal year end:  egg supply agreement with MoArk, LLC, $767; research and development services agreement, $45; sublease of Norco, California facility, $23;  trademark license agreements, $18; and transition and shared services agreement, $260.

11.Pension Plan

The Company has a defined contribution plan with a 401(k) feature which covers all full-time employees that have six months of eligible service.  Employees are permitted to contribute up to their individual permissible legal limits.  The Company may make, but is not required to make, a matching contribution to the plan of an amount and type determined each year.  The Company may also make, but is not required to make, a discretionary contribution to the plan for a plan year.  Contributions made by the Company to the plan totaled $406, $318 and $262 for the years ended August 31, 2006, 2005 and 2004, respectively.

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12.Commitments and Contingencies

a.The Company has entered into an agreement with an independent contractor who will care for and raise a portion of the Company’s pullet flocks until they are old enough to be transferred into a layer facility and begin production.  This agreement relates to all pullets associated with the Company’s Renville, Minnesota, pullet flocks.  This agreement had an initial term of five years and expires in 2008.  The independent contractor is paid per acceptable pullet delivered to the layer facility.

b.The Company leases certain equipment and land under various lease agreements that are classified as operating leases.  Rent expense for all operating leases amounted to $712, $302 and $231 for the years ended August 31, 2006, 2005 and 2004, respectively.  At August 31, 2005, future minimum rental commitments under non-cancelable operating leases are as follows:

2007	$	1,309
2008	1,250
2009	1,165
2010	729
2011	440
Thereafter	309
	$	5,202

c.At August 31, 2005, the Company had committed to contracts for the layer houses and office addition totaling $7,729 with $1,502 remaining on the projects.  These projects were all completed in 2006.

d.The Company’s Thompson, Iowa facility has an industrial wastewater treatment facility designed to treat wastewater from egg breaking.  The Thompson facility also has an associated National Pollution Discharge and Elimination System (“NPDES”) permit from the Iowa Department of Natural Resources (“IDNR”) that governs the quality of the wastewater influent to and effluent from the treatment facility.

On June 14, 2006, a Notice of Violation (“NOV”) was issued against the Company by the IDNR regarding alleged violations of the NPDES permit limits for biochemical oxygen demand, total suspended solids, and ammonia nitrogen.  Additional NOVs were issued on August 24, 2006 and November 13, 2006 relating to the same alleged NPDES permit violations for different time periods.  On November 15, 2006, the Company was notified by the IDNR that the IDNR intends to ask the Iowa Environmental Protection Commission to refer the matter to the Iowa Attorney General to seek appropriate relief through the courts, which may include a judicial consent decree.

The Company and legal counsel are investigating the facts underlying the NOVs, and have met with IDNR representatives to address the resolution of the NOVs and compliance with the NPDES permit.  At this time, the outcome of the resolution of the NOVs cannot be ascertained.  However, the resolution of the NOVs is likely to result in capital expenditures for permanent improvements to the wastewater treatment facility, as well as expenditures for interim improvements while permanent improvements to the wastewater treatment facility are permitted and constructed, and may also

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involve the assessment against us of a monetary penalty.  The expense associated with the interim solution, permanent improvement to the wastewater treatment facility, compliance with the NPDES permit and the amount of penalty or fine imposed by the IDNR may be significant, both individually and in the aggregate.  However, management cannot reasonably estimate the amount of such costs at this time.

e.During the year ended August 31, 2004, the Board of Managers of the Company approved a bonus for its president and chief executive officer to be paid in the combined form of cash and approximately $575,000 in restricted Class A Units of the Company.  Certain of the terms and conditions of the restricted Class A Unit grant were agreed to by the Board of Managers and the president of the Company subsequent to year end.  The liability for this bonus has been included in accrued compensation in the accompanying consolidated financial statements at August 31, 2005 and 2004.

13.Concentrations of Credit Risk

Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of trade accounts receivable with customers, cash investments and other short-term investments deposited with financial institutions.  The Company generally does not require collateral from its customers.  Such credit risk is considered by management to be limited due to its customers’ financial resources and past payment history.

At August 31, 2006, 2005 and 2004, the Company maintained cash balances with financial institutions in excess of the federal deposit insurance limit.

14.Major Customers

At August 31, 2006, the Company has supply agreements for liquid egg products with three of its major customers, which expire at various times over the next five years.  Sales to these three customers are presented as follows as a percentage of total sales: 23%, 14%, and 31% for the year ending August 31, 2006, 31%, 20%, and 33% for the year ending August 31, 2005 and 24%, 24%, and 30% for the year ending August 31, 2004.  The Company had balances due from these customers of $1,201, $1,250, and $2,766 at August 31, 2006, respectively, and $933, $989, and $1,424 at August 31, 2005, respectively.

The third customer discussed above has operations in Canada.  Sales to the non-U.S. subsidiary of this customer represented 4%, 6% and 8% of total sales for the years ending August 31, 2006, 2005 and 2004, respectively.  The Company had balances due from these non-U.S. sales of $191 and $181 at August 31, 2006 and 2005, respectively.

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15.Quarterly Financial Data

Quarterly financial data is as follows:

	Net Sales		Operating Income (Loss)			Net Income (Loss)			Earnings Per Share or Unit (Basic and Diluted)			Weighted Average Outstanding Shares/Units
Fiscal year 2006 quarter ended:
November 30, 2005	$	19,033	$	1,913		$	1,583		$	0.34		4,689
February 28, 2006	19,082		973			545			0.12			4,689
May 31, 2006	19,217		1,052			532			0.11			4,698
August 31, 2006	36,306		115			(1,597		)	(0.31		)	5,168
	$	93,638	$	4,053		$	1,063		$	0.22		4,811
Fiscal year 2005 quarter ended:
November 30, 2004	$	17,295	$	2,720		$	1,350		$	0.29		4,582
February 28, 2005	15,042		1,499			684			0.15			4,582
May 31, 2005	15,678		(202		)	(678		)	(0.15		)	4,582
August 31, 2005	15,181		(616		)	(3,315		)	(0.72		)	4,582
	$	63,196	$	3,401		$	(1,959	)	$	(0.43	)	4,582
Fiscal year 2004 quarter ended:
November 30, 2003	$	20,471	$	7,708		$	7,049		$	1.54		4,582
February 29, 2004	20,425		7,549			6,921			1.51			4,582
May 31, 2004	21,344		6,209			5,539			1.21			4,582
August 31, 2004	21,303		1,635			(1,531		)	(0.35		)	4,582
	$	83,543	$	23,101		$	17,978		$	3.91		4,582

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EX-3.3

EXHIBIT 3.3

GOLDEN OVAL EGGS, LLC

CERTIFICATE OF DESIGNATION
CLASS B UNITS

I, the undersigned officer of Golden Oval Eggs, LLC, a Delaware limited liability company, (the “Company”) HEREBY CERTIFY:

That, effective September 1, 2004, Golden Oval Eggs, LLC adopted through the plan of merger the Amended and Restated Limited Liability Company Agreement to which this Certificate of Designation is incorporated as part of the Limited Liability Company Agreement of the Company.

That, effective June 30, 2006, (the “Closing”), pursuant to the authority conferred upon the Board of Managers by the Amended and Restated Limited Liability Company Agreement of the Company (“Company Agreement”), the Board of Managers adopted the following resolutions creating “Class B Units” to be issued by the Company, designating the relative rights, preferences, privileges and limitations of the Class B Units, and authorizing the undersigned officer to certify and execute this Certificate of Designation.

WHEREAS, under the Company Agreement, the Board of Managers is authorized, by the adoption of resolutions and without the approval of the members of the Company, to amend the Company Agreement to permit the issuance of Class B Units, to establish the number of Class B Units and to fix the designation, relative rights, preferences, privileges and limitations of the Class B Units; and

WHEREAS, the Board of Managers believes it to be in the best interest of the Company to set forth the relative rights, preferences, privileges and limitations of the Company’s Class B Units as set forth below:

DESIGNATION OF CLASS B UNITS

NOW, THEREFORE, BE IT RESOLVED, that the Board of Managers hereby designates a new class consisting of (a) 697,350 authorized limited liability company units, and (b) that number of additional authorized limited liability company units that may become issuable under that certain Warrant issued by the Company to Land O’Lakes, Inc. as of June 30, 2006, all to be issued by the Company as “Class B Units.”  Subject to applicable law and the provisions of the Amended and Restated Limited Liability Company Agreement, as amended by this Certificate of Designation, the Class B Units shall have the rights, preferences, privileges and limitations set forth below. This Certificate of Designation shall constitute an amendment of the Company Agreement.  In the event of any conflict between the provisions of this Certificate of Designation and the Company Agreement prior to the adoption of the Certificate of Designation, the provisions of this Certificate of Designation shall control.  All other terms and conditions of the Company Agreement shall remain in full force and effect, applying to the Class B Units as well as the Class A Units established under the Company Agreement.  All terms used in this Certificate of Designation shall have the meanings ascribed to them in the Company Agreement, unless specifically defined in this Certificate of Designation.

1.Admission of Land O’Lakes, Inc. as Class B Member.  Land O’Lakes, Inc. is hereby admitted as a Class B Member of the Company, and the execution of this Certificate of Designation by the undersigned officer under authority of the Board of Managers shall constitute prima facie evidence of the admission of Land O’ Lakes, Inc. as a Class B Member pursuant to Section 4.3(b) of the Company Agreement.  Class B Members must hold a minimum of 2,000 Class B Units.

2.Non-Competitive Activities.  Land O’Lakes as a member of the Company shall not be deemed or determined to be a competitor of the Company under Section 2.9 or Section 5.3(e) of the Company’s limited liability company agreement by virtue of its ownership or participation in the shell egg business generally and participation as it relates to Land O’Lakes ownership in (1) Moark, LLC, Hi-Point Industries, LLC, Norco Ranch, Inc., and Moark Egg Corporation, or (2) a joint venture involving egg products in which the current shell egg business is repositioned, provided, however, if Land O’ Lakes or its agents, employees, or personnel has a role in governance or management of the joint venture, Land O’Lakes shall forfeit its observational rights under Section 3, unless otherwise agreed to in writing by Golden Oval.

3.Relationship to Class A Units.  Except as expressly provided in this Certificate of Designation, the Interest of the Class B Units and the holders of Class B Units shall be equal in all respects to those of the Class A Units and the holders of Class A Units.  Land O’Lakes shall have the right to designate a person to have observational rights for all Company Board of Managers meetings, whether scheduled or specifically called during the period when:  (1) Land O’Lakes is in compliance with Section 2 above and the Company is indebted to Land O’Lakes under a subordinated loan or note (the “Subordinated Note”) as part of the transaction to acquire assets from Moark, LLC and others (the “Transaction”); (2) Land O’Lakes is a member holding Class B Units; or (3) the period for the Earn Out under Section 3.1(b) of the Asset Purchase Agreement; whichever of the three periods is longer.  Any observational rights shall be conducted solely for the purpose of Land O’Lakes, Inc. being informed about the capability of Golden Oval to repay the Subordinated Note, Land O’Lakes’ ownership interests in the Company, and the information received by Land O’Lakes through the observational rights is restricted and may not be disseminated or used within Land O’Lakes or by the person conducting the observational rights for any purpose whatsoever other than to evaluate Golden Oval for purposes of the Subordinated Note.  The Chair of the Golden Oval Board of Managers may dismiss the Land O’Lakes’ observational rights designee for the agenda items or Board discussion of any Board meeting, and preclude receipt of any written or other informational materials, relating to topics concerning a conflict of interest with Land O’Lakes or one of its subsidiaries, or a conflict or dispute regarding the assets or liabilities arising out of the Asset Purchase and Sale Agreement between Moark, LLC and its affiliates and Golden Oval Eggs, LLC and GOECA, LP relating to those Sellers or Land O’Lakes, or a strategic business plan of Golden Oval that competes with Land O’Lakes, its subsidiaries or Land O’Lakes’ business affiliates.  Upon request, the Chair, within three (3) business days, must provide the reasons for dismissal of the observational rights in writing to Land O’Lakes in a manner that does not disclose the information that is restricted.  The corresponding notice provisions related to the Board of Managers meetings shall apply to the Class B Unitholder in all regards as long as the Class B Unitholder has observational rights under this Section 3.  Without limiting the foregoing, and notwithstanding any provision to the contrary in the Company Agreement, the Company may not (1) create a class or series of units having rights, powers, preferences or privileges greater or superior in any respect to the Class B Units or the holders of Class B Units, unless the provisions apply equally to Class A Units and the holders of Class A Units; or (2) amend the Company Agreement or any Appendices thereto if the amendment would modify the limited liability of a Class A and Class B Unitholder, or the voting rights or Interest of a Class A and B Unitholder in Profits, Losses, other items of income or loss, or any Distributions unequally where the amendment

2

adversely affects only the Class B Unitholder.  It is the intention of the Company that, except for those express provisions set forth in this Certificate of Designation, the Interests and rights, powers, preferences and privileges of Class A Units and the holders of Class A Units, shall be identical to the Interests and rights, powers, preferences and privileges of Class B Units and the holders of Class B Units, whether with respect to each other or with respect to additional classes of units created under the Company Agreement.

4.No Amendment.  This Certificate of Designation may not be amended without the prior written consent of all holders of Class B Units.

5.Class B Member Voting Rights.  Class B Members are entitled to one (1) vote for each Class B Unit held by the Class B Member.  Except where the Act requires a class vote notwithstanding the Company Agreement on matters submitted to a vote of the Members of the Company pursuant to Section 4.4 of the Agreement, all votes cast by the Class B Member by virtue of ownership of Class B Units shall be counted with all votes cast by Class A Members by virtue of ownership of Class A Units in determining whether a matter requiring a Member vote has been adopted and approved by the Members.  Except as to matters to which the Act requires a class vote notwithstanding the Company Agreement, the Class B Units shall not be voted as a class separate from the Class A Units.

6.Distribution and Allocations.  Prior to the Closing, Profits or Losses shall not be allocated to the Class B Units or the holders of Class B Units.  On and after the Closing, Profits and Losses shall be allocated to the Class B Units and the holders of Class B Units in accordance with the Company Agreement.  At all times following the Closing, Liquidating Distributions shall be made to the Class B Units and the holders of Class B Units in accordance with the Company Agreement.

7.Class Percentage.  For purposes of the Company Agreement, as amended by this Certificate of Designation, the term “Class Percentage” shall mean the percentages of allocations among the different classes of Units shown on the Unit Ledger attached to the Company Agreement as Addendum A, as the Unit Ledger is adjusted from time to time in accordance with the Company Agreement.  As of the effective date of this Designation the Company has 4,702,677 Class A Units outstanding. The Class Percentage of the Class B Units is 12.91% upon designation of the Class B Units.

8.Transfer.  Class B Units are transferable only with the approval of the Board of Managers, in accordance with the Company Agreement, as amended from time to time, and any transfer policies and procedures adopted by the Board of Managers from time to time as provided in the Company Agreement.  Notwithstanding the foregoing, however, Class B Units may be pledged as collateral to support the Unitholder’s own financing, subject to the transfer provisions in the Company Agreement.

9.Pre-Emptive Rights.

(a)Procedure to Purchase Additional Units.  Except as set forth in Section 9(b) below, the Class B Member (for purposes of this Section, a “Qualified Member”) shall have the pre-emptive rights provided for in this Section.  A pre-emptive right under this Section is the right of a Qualified Member to make additional Capital Contributions of a certain amount to purchase Units before the Company may accept additional Capital Contributions from other Persons or may enter into contribution allowance agreements with other Persons.  If the Board of Managers determines that additional capital is required and proposes to accept additional Capital Contributions and issue additional Units, the Board shall cause notice to be given to the Qualified Member at least twenty days prior to the date by which the Qualified Member must exercise a pre-emptive right.  The notice must contain:  (1) the extent of the Member’s pre-emptive right; the method used to determine the Member’s pre-emptive right; the terms and conditions upon

3

which the Member may make an additional Capital Contribution to purchase additional Units; and (2) the time within which and the method by which the Member must exercise the right.  The extent to which the Qualified Member may make an additional Capital Contribution to purchase additional Units or obtain a right to make an additional Capital Contribution under a contribution allowance agreement to purchase additional Units, by exercise of a pre-emptive right, is the percentage of the number of Units held by the Qualified Member before the contribution to the total number of Units issued and outstanding before the contribution is multiplied by the amount of additional Capital Contributions and additional Units the Board is proposing to accept and issue.  The Qualified Member may waive a pre-emptive right in writing.  The waiver is binding upon the Qualified Member whether or not consideration has been given for the waiver.  Unless otherwise provided in the waiver, a waiver of pre-emptive rights is effective only for the proposed contribution or contribution allowance agreements described in the waiver.  If the Qualified Member does not exercise pre-emptive rights under this Section, then for a period of ninety days after the date fixed by the Board for the exercise of those pre-emptive rights and to the extent of the pre-emptive rights not exercised, the Board may accept additional Capital Contributions for the purchase of additional Units or make contribution allowance agreements for the purchase of additional Units on terms no less favorable to the Company that those offered to the Qualified Member.  Nothing in this Section eliminates or reduces the quantum of Manager consent required to accept additional capital contributions or issue Units under the Company Agreement.

(b)Exceptions to Preemptive Rights.  The provisions of Section 9(a) shall not be applicable to, and no pre-emptive rights shall arise as to, additional Capital Contributions or contribution allowance agreements to purchase additional Units made or entered into with respect to:  (1) the issuance of options to purchase Units granted to employees, consultants or Managers of the Company approved by the Board or pursuant to any plan or arrangement approved by the Board, including the issuance of Units upon exercise of the options; (2) securities issued or issuable to lending or leasing institutions in connection with the Company’s debt, equipment leasing or other non-equity financing approved by the Board; (3) securities issued or issuable in connection with a bona fide business acquisition by the Company, whether by plan of merger, consolidation, sale of assets, sale or exchange of equity interests or otherwise; or (4) contributions to be made in a form other than money, provided such non-money contribution shall have been approved by the Class B Unitholder and all of the Managers then in office.

(c)No Additional Capital Contribution Required.  The Class B Unitholder may elect to participate in future capital contributions pursuant to the procedures in this Section 9.  Nothing stated herein or in the Company Agreement, however, shall require the Class B Unitholder to make additional capital contributions in any round at any time.

10.Non-Dilution of Unit Value.

(a)Make Whole Provision. If the Class B Unitholder does not exercise pre-emptive rights under Section 9 and if the Company issues Units at an equivalent value of less than $7.17 per Unit for the Units acquired by the Class B Unitholder under this Certificate of Designation, then, for so long as the Company is indebted to Land O’Lakes, Inc., the Company shall issue additional units to the Class B Unitholder so that the consideration value paid for the Class B Units is not diluted by the additional capital contributions.

(b)Exceptions to Non Dilution Provisions.  The provisions of Section 10 shall not be applicable to, and no non-dilution rights shall arise as to, additional Capital Contributions or contribution allowance agreements to purchase additional Units made or entered into with respect

4

to:  (1) the issuance of options to purchase Units granted to employees, consultants or Managers of the Company approved by the Board or pursuant to any plan or arrangement approved by the Board, including the issuance of Units upon exercise of the options; (2) securities issued or issuable to lending or leasing institutions in connection with the Company’s debt, equipment leasing or other non-equity financing approved by the Board, including, without limitation, the Warrant issued to Land O’Lakes, Inc. as of June 30, 2006; (3) securities issued or issuable in connection with a bona fide business acquisition by the Company, whether by plan of merger, consolidation, sale of assets, sale or exchange of equity interests or otherwise; or (4) contributions to be made in a form other than money, provided such non-money contribution shall have been approved by the Class B Unitholder and all of the Managers then in office.

11.Conversion to Class A Units.  The Class B Unitholder shall have the right to convert the Class B Units to Class A Units on a basis of one Class B Unit for one Class A Unit.

12.Membership Qualification.  In connection with the establishment of the Class B Units, the Board of Managers does hereby amend Section 4.2(a) of the Company Agreement to indicate that Class A Members must hold at least 2,000 Class A Units and that Class B Members must hold at least 2,000 Class B Units.

IN WITNESS WHEREOF, I have executed this Certificate and do affirm the foregoing as true and correct, as of this 30th day of June, 2006.

GOLDEN OVAL EGGS, LLC
By:	/s/ Dana Persson
Its:	President & Chief Executive Officer
Name:		Dana Persson

5

EX-10.10

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

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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.

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(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.

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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

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EX-10.11

EXHIBIT 10.11

SECURITY AGREEMENT

This Security Agreement, dated as of June 30, 2006 (the “Security Agreement”), is made by Golden Oval Eggs, LLC, a Delaware limited liability company, GOECA, LP, a Delaware Limited Partnership, and Midwest Investors of Iowa, Cooperative, an Iowa Corporation (each a “Grantor,” together the “Grantors”), for the benefit of Land O’Lakes, Inc., a Minnesota cooperative corporation (the “Secured Party”).

RECITALS

In connection with the closing of the transactions contemplated in that certain Asset Purchase and Sale Agreement dated as of May 23, 2006, between Golden Oval Eggs, LLC (“Golden Oval”) and certain affiliates of Secured Party (the “Asset Purchase Agreement”), Golden Oval has issued to Secured Party a Subordinated Promissory Note (the “Subordinated Note”) of even date herewith, which note was issued subject to the terms, conditions and restrictions more particularly described in that certain Subordination and Intercreditor Agreement (the “Subordination Agreement”) of even date herewith between Golden Oval, Golden Oval’s senior lender and Secured Party;

It is a condition to Secured Party’s acceptance of the Subordinated Note that the Grantors deliver to Secured Party this Security Agreement to secure, subject to the Subordination Agreement, the obligations under the Subordinated Note.

ACCORDINGLY, in consideration of the foregoing and the agreements set forth below, the Grantors hereby agree as follows:

1.Definitions. All capitalized terms that are not otherwise defined herein shall have the meanings given them in the Asset Purchase Agreement. All terms defined in the UCC and not otherwise defined herein have the meanings assigned to them in the UCC.  In addition, the following terms have the meanings set forth below or in the referenced Section of this Agreement:

“Accounts” means all of each Grantor’s accounts, as such term is defined in the UCC, including each and every right of such the Grantor to the payment of money, whether such right to payment now exists or hereafter arises, whether such right to payment arises out of a sale, lease or other disposition of goods or other property, out of a rendering of services, out of a loan, out of the overpayment of taxes or other liabilities, or otherwise arises under any contract or agreement, whether such right to payment is created, generated or earned by such Grantor or by some other person who subsequently transfers such person’s interest to the Grantor, whether such right to payment is or is not already earned by performance, and howsoever such right to payment may be evidenced, together with all other rights and interests (including all Liens) which such Grantor may at any time have by law or agreement against any account Grantor or other obligor obligated to make any such payment or against any property of such account Grantor or other obligor; all including but not limited to all present and future accounts, contract rights, loans and obligations receivable, chattel papers, bonds, notes and other debt instruments, tax refunds and rights to payment in the nature of general intangibles.

“Collateral” means all of each Grantor’s personal property, including, without limitation, all of each Grantor’s Accounts, chattel paper, deposit accounts, documents, Equipment, General Intangibles, goods, instruments, Inventory, Investment Property, letter-of-credit rights, letters of credit, all sums on deposit in any collateral account, and any items in any lockbox; together with (i) all substitutions and replacements for and products of any of the foregoing; (ii) in the case of

all goods, all accessions; (iii) all accessories, attachments, parts, equipment and repairs now or hereafter attached or affixed to or used in connection with any goods; (iv) all warehouse receipts, bills of lading and other documents of title now or hereafter covering such goods; (v) any money, or other assets of each Grantor that now or hereafter come into the possession, custody, or control of the Secured Party; and (vi) proceeds of any and all of the foregoing.

“Default” means an event that, with giving of notice or passage of time or both, would constitute an Event of Default.

“Equipment” means all of each Grantor’s equipment, as such term is defined in the UCC, whether now owned or hereafter acquired, including but not limited to all present and future machinery, vehicles, furniture, fixtures, manufacturing equipment, shop equipment, office and recordkeeping equipment, parts, tools, supplies, and including specifically the goods described in any equipment schedule or list herewith or hereafter furnished to the Secured Party by a Grantor.

“Event of Default” means (a) any party signing the Subordinated Note shall fail to pay any or all of the Obligations when due, or (b) any Grantor shall fail to observe or perform any covenant or agreement herein binding on it.

“General Intangibles” means all of each Grantor’s general intangibles, as such term is defined in the UCC, whether now owned or hereafter acquired, including all present and future Intellectual Property Rights, customer or supplier lists and contracts, manuals, operating instructions, permits, franchises, the right to use any Grantor’s name, and the goodwill of any Grantor’s business.

“Intellectual Property Rights” means all actual or prospective rights arising in connection with any intellectual property or other proprietary rights, including all rights arising in connection with copyrights, patents, service marks, trade dress, trade secrets, trademarks, trade names or mask works.

“Inventory” means all of each Grantor’s inventory, as such term is defined in the UCC, whether now owned or hereafter acquired, whether consisting of whole goods, spare parts or components, supplies or materials, whether acquired, held or furnished for sale, for lease or under service contracts or for manufacture or processing, and wherever located.

“Investment Property” means all of each Grantor’s investment property, as such term is defined in the UCC, whether now owned or hereafter acquired, including but not limited to all securities, security entitlements, securities accounts, commodity contracts, commodity accounts, stocks, bonds, mutual fund shares, money market shares and U.S. Government securities.

“Lien” means any security interest, mortgage, deed of trust, pledge, lien, charge, or encumbrance of any kind whatsoever, including, but not limited to the interest of the lessor or titleholder under any capitalized lease, title retention contract or similar agreement and the interest of any bondsman under any payment or performance bond, in, of or on any assets or properties of a person, whether now owned or hereafter acquired and whether arising by agreement or operation of law.

“Obligations” means each and every debt, liability and obligation of every type and description arising under or in connection with the Subordinated Note.

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“Permitted Liens” means the Security Interest and any Lien of Golden Oval’s senior lender as identified in the Subordination Agreement.

“Security Interest” has the meaning given in Section 2 hereof.

“UCC” means Uniform Commercial Code as in effect from time to time in the State of Minnesota.

2.Security Interest. Subject to the terms of the Subordination Agreement, the Grantors hereby grant the Secured Party a security interest (the “Security Interest”) in the Collateral to secure payment of the Obligations.

3.Grantors Acknowledgment/Financing Statements.  The Grantors hereby acknowledge that the grant of the Security Interest in Section 2 hereof constitutes a grant of a security interest in all of the collateral and authorizes the Secured Party to file financing statements designating the collateral described therein as “all personal property” of each Grantor.

4.Representations, Warranties and Agreements. Each Grantor hereby represents, warrants and agrees as follows:

(a)Title. Such Grantor (i) has absolute title to each item of Collateral in existence on the date hereof, free and clear of all Liens, except Permitted Liens, (ii) will have, at the time the Grantor acquires any rights in Collateral hereafter arising, absolute title to each such item of Collateral free and clear of all Liens, except Permitted Liens, (iii) will keep all Collateral free and clear of all Liens, except Permitted Liens, and (iv) will defend the Collateral against all claims or demands of all persons other than the Secured Party, except with respect to Permitted Liens. Except as permitted under the Credit Agreement, the Grantor will not sell or otherwise dispose of any Collateral or any interest therein, without the prior written consent of the Secured Party.

(b)Legal Name; Chief Executive Office; Identification Numbers. Each Grantor’s correct legal name, chief executive office and principal place of business, federal employer identification number and organizational identification number are properly set forth by its signature below.

 (c)Changes in Name, Location or Jurisdiction of Organization. No Grantor will change its name, business address, or jurisdiction of organization without prior written notice to the Secured Party.

(d)Fixtures. No Grantor will permit any tangible Collateral to become part of or to be affixed to any real property without first assuring that the Security Interest will be prior and senior to any Lien then held or thereafter acquired by any mortgagee of such real property or the owner or purchaser of any interest therein.

(e)Miscellaneous Covenants. Each Grantor will:

(i)keep all tangible Collateral in good repair, working order and condition, normal depreciation excepted, and will, from time to time, replace any worn, broken or defective parts thereof;

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(ii)promptly pay all taxes and other governmental charges levied or assessed upon or against any Collateral;

(iii)at all reasonable times, permit the Secured Party or its representatives to examine or inspect any Collateral, wherever located, and to examine, inspect its books and records pertaining to the Collateral and its business and financial condition;

(iv)keep accurate and complete records pertaining to the Collateral and pertaining to its business and financial condition and submit to the Secured Party such periodic reports concerning the Collateral and its business and financial condition as the Secured Party may from time to time reasonably request;

(v)promptly notify the Secured Party of any material loss of or damage to any Collateral or of any material adverse change, known to it, in the prospect of payment of any sums due on or under any instrument, chattel paper, or account constituting Collateral;

(vi)at all times keep all tangible Collateral insured against risks of fire (including so-called extended coverage), theft, collision (in case of Collateral consisting of motor vehicles) and such other risks and in such amounts as the Secured Party may reasonably request, with any such policies containing a bank loss payable endorsement acceptable to the Secured Party; and

(vii)not amend any financing statement in favor of the Secured Party as secured party except upon written authorization of the Secured Party.

5.Remedies upon Event of Default. Upon the occurrence of an Event of Default and at any time thereafter, the Secured Party may (but need not) take any and all actions the Secured Party is permitted to take as provided under the Subordination Agreement.

6.Notices; Requests for Accounting. All notices and other communications hereunder shall be in writing and mailed or delivered (which delivery may be by telecopy) to the party to whom notice is being given at its address set forth in the Subordinated Note (with respect to the Secured Party), under its signature to this Agreement (with respect to each Grantor) or, as to each party, at such other address as may hereafter be designated by such party in a written notice to the other party complying as to delivery with the terms of this Section. All such notices, requests, demands and other communications, when delivered, shall be effective upon actual delivery, and when mailed shall be effective one business day after the date sent by nationally recognized overnight mail courier or delivery service, addressed as aforesaid.

7.Miscellaneous. This Agreement has been duly and validly authorized by all necessary corporate action. This Agreement does not contemplate a sale of accounts, or chattel paper. This Agreement may be waived, modified, amended, terminated or discharged, and the Security Interest may be released, only explicitly in a writing signed by the Secured Party, and, in the case of amendment or modification, in a writing signed by each Grantor. A waiver signed by the Secured Party shall be effective only in the specific instance and for the specific purpose given. Mere delay or failure to act shall not preclude the exercise or enforcement of any of the Secured Party’s rights or remedies. All rights and remedies of the Secured Party shall be cumulative and may be exercised singularly or concurrently, at the Secured Party’s option, and the exercise or enforcement of any one such right or remedy shall

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neither be a condition to nor bar the exercise or enforcement of any other. The Secured Party’s duty of care with respect to Collateral in its possession (as imposed by law) shall be deemed fulfilled if the Secured Party exercises reasonable care in physically safekeeping such Collateral or, in the case of Collateral in the custody or possession of a bailee or other third person, exercises reasonable care in the selection of the bailee or other third person, and the Secured Party need not otherwise preserve, protect, insure or care for any Collateral. The Secured Party shall not be obligated to preserve any rights any Grantor may have against prior parties, to realize on the Collateral at all or in any particular manner or order, or to apply any cash proceeds of Collateral in any particular order of application. This Agreement shall be binding upon and inure to the benefit of each Grantor and the Secured Party and their respective successors and assigns and shall take effect when signed by each Grantor and delivered to the Secured Party, and each Grantor waives notice of the Secured Party’s acceptance hereof. This Agreement shall be governed by and construed in accordance with the substantive laws (other than conflict laws) of the State of Minnesota. If any provision or application of this Agreement is held unlawful or unenforceable in any respect, such illegality or unenforceability shall not affect other provisions or applications which can be given effect and this Agreement shall be construed as if the unlawful or unenforceable provision or application had never been contained herein or prescribed hereby. All representations and warranties contained in this Agreement shall survive the execution, delivery and performance of this Agreement and the creation and payment of the Obligations.

[signatures next page]

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IN WITNESS WHEREOF, each Grantor has executed this Agreement as of the date and year first above written.

GOLDEN OVAL EGGS, LLC
By		/s/ Dana Persson
Its	President and Chief Executive Officer
FEIN:
MIDWEST INVESTORS OF IOWA, COOPERATIVE
By		/s/ Dana Persson
Its	President and Chief Executive Officer
FEIN:
GOECA, LP
By		/s/ Dana Persson
Its	President and Chief Executive Officer
FEIN:

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EX-10.12

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.

1.1For 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.

1.2In 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.”

1.3Other 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.

2.1The 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.

2.2The 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.

2.3The 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.

2.4The 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.

3.1Notwithstanding 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.

22.1This 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.

22.2This 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.

22.3The 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.

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22.4The 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.

22.5All 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.

22.6This 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]

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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 Officer

EX-10.13

EXHIBIT 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.

EX-10.14

Exhibit 10.14

Execution Copy

AMENDED AND RESTATED CREDIT AGREEMENT

Among

GOLDEN OVAL EGGS, LLC,

as a Borrower and as the Borrowers’ Agent,

GOECA, LP

as a Borrower,

MIDWEST INVESTORS OF IOWA, COOPERATIVE

as a Borrower,

COBANK, ACB,

as a Lender and as Administrative Agent,

METROPOLITAN LIFE INSURANCE COMPANY,

as a Lender,

and

THE OTHER LENDERS FROM TIME TO TIME PARTY HERETO

TABLE OF CONTENTS

ARTICLE I DEFINITIONS AND ACCOUNTING TERMS		1
Section 1.1	Defined Terms	1
Section 1.2	Accounting Terms and Calculations	19
Section 1.3	Computation of Time Periods	19
Section 1.4	Other Definitional Terms	19
ARTICLE II TERMS OF THE CREDIT FACILITIES		19
Section 2.1	Lending Commitments	19
Section 2.2	Procedure for Loans	20
Section 2.3	Notes	22
Section 2.4	Conversions and Continuations	23
Section 2.5	Interest Rates, Interest Payments and Default Interest	24
Section 2.6	Repayment	26
Section 2.7	Prepayments	28
Section 2.8	Letters of Credit	29
Section 2.9	Procedures for Letters of Credit	29
Section 2.10	Terms of Letters of Credit	29
Section 2.11	Agreement to Repay Letter of Credit Drawings	29
Section 2.12	Obligations Absolute	29
Section 2.13	Fees	30
Section 2.14	Computation	31
Section 2.15	Payments	31
Section 2.16	Use of Loan Proceeds	31
Section 2.17	Interest Rate Not Ascertainable, Etc.	32
Section 2.18	Increased Cost	32
Section 2.19	Illegality	33
Section 2.20	Capital Adequacy	33
Section 2.21	Funding Losses; Quoted Rate and LIBOR Rate Advances	33
Section 2.22	Discretion of Lenders as to Manner of Funding	34
Section 2.23	Prepayment of Term Loans	34
Section 2.24	Replacement of Certain Lenders	34
Section 2.25	Taxes	34
Section 2.26	Capitalization	36
Section 2.27	Security	36
ARTICLE III CONDITIONS PRECEDENT		36
Section 3.1	Conditions to Closing	36
Section 3.2	Conditions Precedent to All Loans and Letters of Credit	41
Section 3.3	Conditions Subsequent	42
ARTICLE IV REPRESENTATIONS AND WARRANTIES		42
Section 4.1	Organization, Standing, Etc.	42
Section 4.2	Authorization and Validity	42

i

Section 4.3	No Conflict; No Default	43
Section 4.4	Government Consent	43
Section 4.5	Financial Statements and Condition	43
Section 4.6	Litigation	43
Section 4.7	Environmental, Health and Safety Laws	43
Section 4.8	ERISA	44
Section 4.9	Federal Reserve Regulations	44
Section 4.10	Title to Property; Leases; Liens; Subordination	44
Section 4.11	Taxes	44
Section 4.12	Trademarks, Patents	44
Section 4.13	Burdensome Restrictions	44
Section 4.14	Force Majeure	44
Section 4.15	Investment Company Act	45
Section 4.16	Public Utility Holding Company Act	45
Section 4.17	Full Disclosure	45
Section 4.18	Subsidiaries	45
Section 4.19	Labor Matters	45
Section 4.20	Security Documents	45
Section 4.21	Solvency	46
Section 4.22	Eligibility	46
Section 4.23	Material Contract	46
Section 4.24	Moark Acquisition	46
Section 4.25	Subordinated Debt	47
ARTICLE V AFFIRMATIVE COVENANTS		47
Section 5.1	Financial Statements and Reports	47
Section 5.2	Existence	49
Section 5.3	Insurance	50
Section 5.4	Payment of Taxes and Claims	50
Section 5.5	Inspection	50
Section 5.6	Maintenance of Properties	50
Section 5.7	Books and Records	50
Section 5.8	Compliance	50
Section 5.9	ERISA	50
Section 5.10	Environmental Matters; Reporting	50
Section 5.11	Further Assurances	51
Section 5.12	Compliance with Terms of Material Contracts	51
ARTICLE VI NEGATIVE COVENANTS		51
Section 6.1	Merger	51
Section 6.2	Disposition of Assets	51
Section 6.3	Plans	52
Section 6.4	Change in Nature of Business	52
Section 6.5	Subsidiaries	52
Section 6.6	Negative Pledges	52
Section 6.7	Restricted Payments	52
Section 6.8	Transactions with Affiliates	52
Section 6.9	Accounting Changes	52

ii

Section 6.10	Subordinated Debt	52
Section 6.11	Investments	53
Section 6.12	Indebtedness	53
Section 6.13	Liens	54
Section 6.14	Contingent Liabilities	54
Section 6.15	Tangible Net Worth	55
Section 6.16	Current Ratio	55
Section 6.17	Working Capital	55
Section 6.18	Leverage Ratio	55
Section 6.19	Fixed Charge Coverage Ratio	55
Section 6.20	Operating Leases	55
Section 6.21	Risk Management	55
Section 6.22	Material Contracts	55
Section 6.23	Eligibility	55
Section 6.24	Real Estate Plan	55
ARTICLE VII EVENTS OF DEFAULT AND REMEDIES		55
Section 7.1	Events of Default	55
Section 7.2	Remedies	57
Section 7.3	Offset	57
ARTICLE VIII THE ADMINISTRATIVE AGENT		58
Section 8.1	Appointment and Authorization	58
Section 8.2	Note Holders	58
Section 8.3	Consultation With Counsel	58
Section 8.4	Loan Documents	58
Section 8.5	CoBank and Affiliates	58
Section 8.6	Action by Administrative Agent	58
Section 8.7	Credit Analysis	59
Section 8.8	Notices of Event of Default, Etc.	59
Section 8.9	Indemnification	59
Section 8.10	Payments and Collections	59
Section 8.11	Sharing of Payments	61
Section 8.12	Advice to Lenders	61
Section 8.13	Defaulting Lender	61
Section 8.14	Resignation	62
ARTICLE IX MISCELLANEOUS		62
Section 9.1	Modifications	62
Section 9.2	Expenses	63
Section 9.3	Waivers, etc.	64
Section 9.4	Notices	64
Section 9.5	Taxes	64
Section 9.6	Successors and Assigns; Participations; Purchasing Lenders	64
Section 9.7	Confidentiality of Information	66
Section 9.8	Governing Law and Construction	67
Section 9.9	Consent to Jurisdiction	67

iii

Section 9.10		Waiver of Jury Trial	67
Section 9.11		Survival of Agreement	67
Section 9.12		Indemnification	67
Section 9.13		Captions	68
Section 9.14		Entire Agreement	68
Section 9.15		Counterparts	68
Section 9.16		Borrower Acknowledgements	68
Section 9.17		Appointment of and Acceptance by Borrowers’ Agent	69
Section 9.18		Relationship Among Borrowers	69
Section 9.19		Interest Rate Limitation	71
Section 9.20		Ratification of Prior Transactions	71
Annexes
Annex I	Pricing Grid
Annex II	Risk Management Grid
Schedules
Schedule 3.1(a)		Landlord/Bailee Locations
Schedule 3.1(l)		Material Contracts
Schedule 4.6		Litigation
Schedule 4.7		Environmental Matters
Schedule 4.10		Moark Leases
Schedule 6.11		Existing Investments
Schedule 6.12		Existing Indebtedness
Schedule 6.13		Existing Liens
Schedule 6.14		Existing Contingent Obligations
Exhibits
Exhibit A-1		Form of Revolving Note
Exhibit A-2		Form of Term Notes
Exhibit B		Form of Security Agreement
Exhibit C		Form of Mortgage
Exhibit D		Form of Pricing Report
Exhibit E		Borrowing Base Formula
Exhibit F		Form of Borrowing Base Certificate
Exhibit G		Form of Compliance Certificate
Exhibit H		Form of Assignment Agreement
Exhibit I		Form of Environmental Indemnity
Exhibit J		Form of Contract Assignment

iv

AMENDED AND RESTATED CREDIT AGREEMENT

THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of June 30, 2006, is by and between GOLDEN OVAL EGGS, LLC, a limited liability company organized under the laws of the State of Delaware, GOECA, LP, a Delaware limited partnership, and MIDWEST INVESTORS OF IOWA, COOPERATIVE, a cooperative organized under the laws of the State of Iowa (individually each a “Borrower” and collectively the “Borrowers”), the banks and other financial institutions or entities which are signatories hereto (individually each a “Lender” and collectively the “Lenders”), COBANK, ACB, a federally charted instrumentality under the Farm Credit Act of 1971, as amended, one of the Lenders and as agent for the Lenders (in such capacity, the “Administrative Agent”), and METROPOLITAN LIFE INSURANCE COMPANY, as a Lender.

RECITALS

A.The Borrowers, the Lenders and the Administrative Agent are parties to a Credit Agreement dated as of September 13, 2004, as amended by that certain First Amendment to Credit Agreement dated as of November 30, 2005 (as so amended and as otherwise amended, supplemented or modified form time to time, the “Existing Credit Agreement”);

B.The Borrowers, the Lenders and the Administrative Agent each wish to amend certain provisions of the Existing Credit Agreement; and

C.This Agreement amends, restates and replaces the Existing Credit Agreement in its entirety.

ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS

Section 1.1Defined Terms.  As used in this Agreement the following terms shall have the following respective meanings (and such meanings shall be equally applicable to both the singular and plural form of the terms defined, as the context may require):

“Adjusted LIBOR Rate”:  With respect to each day, the rate (rounded upward, if necessary, to the next one sixteenth of one percent) determined by dividing the LIBOR Rate in effect on such day by 1.00 minus the LIBOR Reserve Percentage.

“Adjusted Dividend Accrual”:  For any period of determination, fifty percent (50%) of the consolidated net income of the Borrowers’ Agent, as adjusted from time to time to reflect actual dividends or cash patronages.

“Administrative Agent”:  As defined in the opening paragraph hereof.

“Advance”:  Any portion of the outstanding Revolving Loans, Swing Line Loans or Term Loans by a Lender as to which one of the available interest rate options and, if pertinent, an Interest Period, is applicable.  Subject to the terms and conditions hereof, an Advance may be a Tranche A Advance, a Quoted Rate Advance, a LIBOR Rate Advance, a Base Rate Advance or, for the two months prior to the applicable maturity date for a Loan only, a LIBOR Index Rate Advance.

“Affiliate”:  When used with reference to any Person, (a) each Person that, directly or indirectly, controls, is controlled by or is under common control with, the Person referred to, (b) each Person which beneficially owns or holds, directly or indirectly, five percent or more of any class of voting Equity Interests of the Person referred to, (c) each Person, five percent or more of the voting Equity Interests (or if such Person is not a corporation, five percent or more of the equity interest) of which is beneficially owned or held, directly or indirectly, by the Person referred to, and (d) each of such Person’s officers, directors, joint venturers and partners.  The term control (including the terms “controlled by” and “under common control with”) means the possession, directly, of the power to direct or cause the direction of the management and policies of the Person in question.

“Aggregate Revolving Commitment Amount”:  As of any date, the sum of the Revolving Commitment Amounts of all the Revolving Lenders.

“Applicable Commitment Fee Percentage”:  The Applicable Margin at which the Commitment Fees accrue.

“Applicable Lending Office”:  For each Lender and for each type of Advance, the office of such Lender identified as such Lender’s Applicable Lending Office on the signature pages hereof or such other domestic or foreign office of such Lender (or of an Affiliate of such Lender) as such Lender may specify from time to time, by notice given pursuant to Section 9.4, to the Administrative Agent and the Borrowers’ Agent as the office by which its Advances of such type are to be made and maintained.

“Applicable Margin”:  Subject to the last sentence of this definition, with respect to computation of the applicable interest rate or the Applicable Commitment Fee Percentage on Advances or Commitments under the Revolving Loans, the Second Tranche 2 Advances and the Final Tranche 2 Advances with respect to the Tranche A2 Term Loans, the Tranche A3 Advances with respect to the Tranche A3 Term Loans, the Tranche B Term Loans or the Letter of Credit Fee, as the case may be, the margin payable by the Borrowers with respect thereto, as set forth and described in Annex I, established as of the first day of each Fiscal Quarter after the Compliance Certificate required by Section 5.1 is delivered as of the last day of the next preceding Fiscal Quarter (i.e. adjustments shall be made one Fiscal Quarter in arrears); provided, however, that any adjustment in the Applicable Margin shall not become effective until the Administrative Agent shall have received the Compliance Certificate and related financial statements relating to the last day of such next preceding Fiscal Quarter pursuant to Sections 5.1(c) and (d) hereof; provided, further, that notwithstanding anything herein to the contrary, for the first two full Fiscal Quarters following the Effective Date, the Applicable Margin shall be determined at the highest level described in Annex I.  If a Compliance Certificate and related financial statements of the Borrowers’ Agent and a related certification of the Borrowers’ Agent pursuant to Sections 5.1(c) and (d) necessary to establish the Applicable Margin hereunder are not received by the Administrative Agent on or prior to the date required pursuant to Sections 5.1(c) and (d) hereof, the Applicable Margin shall be determined at the highest level described in Annex I and shall remain in effect until one Business Day after such time as the required financial statements are received.

“Applicable Permits”: Any permit, license or similar authorization of or from a governmental agency or political subdivision that is necessary for a Borrower to construct, operate, maintain, own or lease its businesses.

“Assignees”: As defined in Section 9.6(c).

“Assignment Agreement”: As defined in Section 9.6(c).

2

“Base Rate”:  The rate of interest per annum from time to time established by CoBank as its “CoBank Base Rate.” CoBank may lend to its customers at rates that are at, above or below the Base Rate.  For purposes of determining any interest rate hereunder or under any other Loan Document which is based on the Base Rate, such interest rate shall change as and when the Base Rate shall change.

“Base Rate Advance”:  An Advance with respect to which the interest rate is determined by reference to the Base Rate.

“Bear Stearns Interest Rate Swap Agreement”:  That certain Fixed Income Derivative Amended Confirmation, Reference NE87521, dated May 17, 2000 between Bear Stearns and Borrowers’ Agent.

“Board”:  The Board of Governors of the Federal Reserve System or any successor thereto.

“Borrower”:  As defined in the opening paragraph hereof.

“Borrowers’ Agent”:  Golden Oval Eggs, LLC, a limited liability company organized under the laws of the State of Delaware.

“Borrowing Base”:  As determined in accordance with the formula set forth in Exhibit E hereto.

“Borrowing Base Certificate”:  A certificate in the form of Exhibit F hereto.

“Borrowing Base Deficiency”:  At the time of any determination, the amount, if any, by which Total Revolving Outstandings exceed the Borrowing Base.

“Business Day”:  Any day (other than a Saturday, Sunday or legal holiday in the State of Colorado or the State of Iowa) on which banks are permitted to be open in Denver, Colorado or Des Moines, Iowa.

“Capital Expenditures”:  For any period, the sum of all amounts that would, in accordance with GAAP, be included as additions to property, plant and equipment on a consolidated statement of cash flows for the Borrowers’ Agent during such period, in respect of (a) the acquisition, construction, improvement, replacement or betterment of land, buildings, machinery, equipment or of any other fixed assets or leaseholds, (b) to the extent related to and not included in (a) above, materials, contract labor (excluding expenditures properly chargeable to repairs or maintenance in accordance with GAAP), and (c) other capital expenditures and other uses recorded as capital expenditures or similar terms having substantially the same effect, but excluding (i) layer purchases, (ii) capitalized expenses, (iii) expenditures incurred in connection with the Thompson Construction and (iv) expenditures incurred in connection with the Moark Acquisition.

“Capital Lease”:  A lease of (or other agreement conveying the right to use) real or personal property with respect to which at least a portion of the rent or other amounts thereon constitute Capital Lease Obligations.

“Capital Lease Obligations”:  As to any Person, the obligations of such Person to pay rent or other amounts under a lease of (or other agreement conveying the right to use) real or personal property which obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person under GAAP (including Statement of Financial Accounting Standards No. 13 of the Financial Accounting Standards Board), and, for purposes of this Agreement, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP (including such Statement No. 13).

3

“Change of Control”:  The occurrence, after the Closing Date, of any of the following circumstances: (a) any Person or two or more Persons acting in concert (other than the current holders of the Equity Interests of the Borrowers’ Agent) acquiring beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934), directly or indirectly, of Equity Interests of the Borrowers’ Agent representing 50% or more of the combined voting power of all Equity Interests of Borrowers’ Agent entitled to vote in the election of directors; or (b) any Person or two or more Persons acting in concert (other than the current holders of the Equity Interests of the Borrowers’ Agent) acquiring by contract or otherwise, or entering into a contract or arrangement which upon consummation will result in its or their acquisition of, control over Equity Interests of any Borrower representing 50% or more of the combined voting power of all Equity Interests of Borrowers’ Agent entitled to vote in the election of directors.  For the avoidance of doubt, acquiring membership interests in Borrowers’ Agent pursuant to an offering does not constitute “acting in concert” for purpose of this definition.

“Charges”:  As defined in Section 9.19.

“Closing Date”:  June 30, 2006.

“CoBank”:  CoBank, ACB, in its capacity as one of the Lenders hereunder.

“CoBank Equities”:  As defined in Section 2.27.

“Code”:  The Internal Revenue Code of 1986, as amended.

“Commitments”:  The Revolving Commitment and the Term Loan Commitments.

“Commitment Fees”:  As defined in Section 2.13(b).

“Contingent Obligation”:  With respect to any Person at the time of any determination, without duplication, any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness of any other Person (the “primary obligor”) in any manner, whether directly or otherwise: (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or to purchase (or to advance or supply funds for the purchase of) any direct or indirect security therefor, (b) to purchase property, securities, Equity Interests or services for the purpose of assuring the owner of such Indebtedness of the payment of such Indebtedness, (c) to maintain working capital, equity capital or other financial statement condition of the primary obligor so as to enable the primary obligor to pay such Indebtedness or otherwise to protect the owner thereof against loss in respect thereof, or (d) entered into for the purpose of assuring in any manner the owner of such Indebtedness of the payment of such Indebtedness or to protect the owner against loss in respect thereof; provided, that the term “Contingent Obligation” shall not include endorsements for collection or deposit, in each case in the ordinary course of business.

“Contract Assignments”:  Those certain Assignments of Contracts entered into pursuant to the Existing Credit Agreement and those certain Assignments of Contracts dated as of June 30, 2006 executed by the Borrowers’ Agent with respect to each Material Contract identified on Schedule 3.1(l) as requested by the Administrative Agent.

“Current Assets”:  As of any date, the consolidated current assets of the Borrowers’ Agent, determined in accordance with GAAP.

4

“Current Liabilities”:  As of any date, the consolidated current liabilities of the Borrowers, determined in accordance with GAAP.

“Default”:  Any event which, with the giving of notice (whether such notice is required under Section 7.1, or under another provision of this Agreement, or otherwise) or lapse of time, or both, would constitute an Event of Default.

“Default Rate”:  The sum of the interest rate per annum otherwise applicable to an Advance plus five percent (5%).

“Defaulting Lender”: at any time, any Lender that, at such time (a) has failed to make a Revolving Loan or its Term Loan or any Advances thereunder required pursuant to the terms of this Agreement, including the funding of any participation in accordance with the terms of this Agreement, (b) has failed to pay to the Administrative Agent or any Lender an amount owed by such Lender pursuant to the terms of this Agreement, or (c) has been deemed insolvent or has become subject to a bankruptcy, receivership or insolvency proceeding, or to a receiver, trustee or similar official.

“EBITDA”:  For any period of determination, the consolidated net income of the Borrowers’ Agent before extraordinary gains or losses, deductions for income taxes, Interest Expense, non-layer depreciation and amortization, all as determined in accordance with GAAP.

“Environmental Indemnity”:  The Unsecured Environmental Indemnity by the Borrowers in favor of the Lenders, in the form of Exhibit I.

“Equity Interests”: All shares, interests, participation or other equivalents, however designated, of or in a corporation or limited liability company, whether or not voting, including but not limited to common stock, member interests, warrants, preferred stock, convertible debentures, and all agreements, instruments and documents convertible, in whole or in part, into any one or more or all of the foregoing.

“ERISA”:  The Employee Retirement Income Security Act of 1974, as amended.

“ERISA Affiliate”:  Any trade or business (whether or not incorporated) that is a member of a group of which the Borrower is a member and which is treated as a single employer under Section 414 of the Code.

“Event of Default”:  Any event described in Section 7.1.

“Existing Credit Agreement”:  As defined in the recitals hereto.

“Federal Funds Rate”:  For any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions, with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day on such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

“Final Tranche 2 Advances”:  The third and final Advances made by the Tranche A2 Term Lenders or Tranche B2 Term Lenders after the First Tranche 2 Advances and Second Tranche 2 Advances have been made, which Advances shall be in a maximum aggregate amount equal to (i) with respect to the Tranche A2 Term Loans, the Tranche A2 Term Loan Commitment Amount minus the First

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Tranche 2 Advances made by the Tranche A2 Term Lenders minus the aggregate amount of the Second Tranche 2 Advances made by the Tranche A2 Term Lenders, and (ii) with respect to the Tranche B2 Term Loans, the Tranche B2 Term Loan Commitment Amount minus the First Tranche 2 Advances made by the Tranche B2 Term Lenders minus the aggregate amount of the Second Tranche 2 Advances made by the Tranche B2 Term Lenders.

“First Tranche 2 Advance”:  The initial Advance of the Tranche A2 Term Loans and the Tranche B2 Term Loans, which Advances shall be in a maximum amount of $6,700,000 and $3,300,000, respectively.

“Fiscal Quarter”:  Each three (3) month period ending November 30, February 28 (or 29, as the case may be), May 31, and August 31.

“Fixed Charge Coverage Ratio”:  For any period of determination, the ratio of

(a)EBITDA minus Capital Expenditures not financed with Indebtedness minus Equity Interest re-purchases by the Borrowers’ Agent, minus equity retirements by the Borrowers’ Agent, minus Adjusted Dividend Accrual,

to

(b)the sum of Interest Expense and all required principal payments with respect to Total Liabilities (including but not limited to all payments with respect to Capital Lease Obligations of the Borrowers’ Agent),

in each case determined for said period on a consolidated basis in accordance with GAAP.

“Funded Debt”:  At the time of determination, the amount on a consolidated basis of all Indebtedness of the Borrowers’ Agent for borrowed money or the deferred purchase price of property, or that bears interest on such date, plus the face amount of any letter of credit for which the Borrowers’ Agent is the account party.

“GAAP”:  Generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession, which are applicable to the circumstances as of any date of determination.

“GOE/MII Security Agreement”:  That certain Security Agreement dated as of September 13, 2004 executed by the Borrowers’ Agent and Midwest Investors of Iowa, Cooperative.

“GOECA”:  GOECA, LP, a Delaware limited partnership.

“GOECA Security Agreement”:  The Security Agreement executed by GOECA in the form of Exhibit B attached hereto.

“Immediately Available Funds”:  Funds with good value on the day and in the city in which payment is received.

“Indebtedness”:  With respect to any Person at the time of any determination, without duplication, all obligations, contingent or otherwise, of such Person which in accordance with GAAP should be

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classified upon the balance sheet of such Person as liabilities, but in any event including: (a) all obligations of such Person for borrowed money (including non-recourse obligations), (b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid or accrued, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property purchased by such Person, (e) all obligations of such Person issued or assumed as the deferred purchase price of property or services, (f) all obligations of others secured by any Lien on property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed, (g) all Capital Lease Obligations of such Person, (h) all obligations of such Person in respect of interest rate swap agreements, cap or collar agreements, interest rate futures or option contracts, currency swap agreements, currency futures or option agreements and other similar contracts, excluding the Bear Stearns Interest Rate Swap Agreement, (i) all obligations of such Person, actual or contingent, as an account party in respect of letters of credit or bankers’ acceptances, (j) all obligations of any partnership or joint venture as to which such Person is or may become personally liable, (k) all obligations of such Person under any Equity Interests issue by such Person, and (l) all Contingent Obligations of such Person.

“Indemnitee”:  As defined in Section 9.12.

“Interest Expense”:  For any period of determination, the aggregate consolidated amount, without duplication, of interest paid, accrued or scheduled to be paid in respect of any Indebtedness of the Borrowers’ Agent, including (a) all but the principal component of payments in respect of conditional sale contracts, Capital Leases and other title retention agreements, (b) commissions, discounts and other fees and charges with respect to letters of credit and bankers’ acceptance financings and (c) net costs under interest rate protection agreements, in each case determined in accordance with GAAP.

“Interest Period”:  With respect to each LIBOR Rate Advance, the period commencing on the date of such Advance or on the last day of the immediately preceding Interest Period, if any, applicable to an outstanding Advance and ending one, two, three, six or nine months thereafter, as the Borrowers may elect in the applicable notice of borrowing, continuation or conversion; provided that:

(1)  Any Interest Period that would otherwise end on a day which is not a LIBOR Business Day shall be extended to the next succeeding LIBOR Business Day unless such LIBOR Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding LIBOR Business Day;

(2)  Any Interest Period that begins on the last LIBOR Business Day of a calendar month (or a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last LIBOR Business Day of a calendar month; and

(3)  Any Interest Period that would otherwise end after the Termination Date shall end on the Termination Date.

For purposes of determining an Interest Period, a month means a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month; provided, however, that if there is no numerically corresponding day in the month in which such an Interest Period is to end or if such an Interest Period begins on the last Business Day of a calendar month, then such Interest Period shall end on the last Business Day of the calendar month in which such Interest Period is to end.

“Investment”:  The acquisition, purchase, making or holding of any Equity Interests or other security, any loan, advance, contribution to capital, extension of credit (except for trade and customer accounts receivable for inventory sold or services rendered in the ordinary course of business and payable

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in accordance with customary trade terms), any acquisitions of real or personal property (other than real and personal property acquired in the ordinary course of business) and any purchase or commitment or option to purchase Equity Interests, securities or other debt of or any interest in another Person or any integral part of any business or the assets comprising such business or part thereof and the formation of, or entry into, any partnership as a limited or general partner or the entry into any joint venture.  The amount of any Investment shall be the original cost of such Investment plus the cost of all additions thereto, without any adjustments for increases or decreases in value, or write-ups, write-downs or write-offs with respect to such Investment.

“Land O’ Lakes”:  Land O’ Lakes, a Minnesota cooperative corporation.

“Landlord Consents”:  Each Lease Assignment Agreement, in form and substance satisfactory to the Administrative Agent, executed by the Borrowers’ Agent or GOECA, as applicable, and the lessor of each Moark Lease.

“Lender”:  As defined in the opening paragraph hereof, and includes the Swing Line Lender, as applicable.

“Letter of Credit”:  An irrevocable letter of credit issued by the Administrative Agent pursuant to this Agreement for the account of a Borrower.

“Letter of Credit Bank”:  CoBank, ACB.

“Letter of Credit Commitment Amount”:  $1,000,000.00.

“Letter of Credit Fee”:  As defined in Section 2.13(d).

“Leverage Ratio”:  At the time of any determination, the ratio of (a) Funded Debt to (b) EBITDA.

“LIBOR Business Day”:  A Business Day which is also a day for trading by and between banks in United States dollar deposits in the interbank Eurodollar market and a day on which banks are open for business in New York City.

“LIBOR Index Rate”:  A rate of interest per annum equal to the rate of interest of a LIBOR Rate Advance for an Interest Period selected by the Administrative Agent plus the Applicable Margin; provided, however, that the Interest Period shall not exceed the lesser of two (2) months and the period from the date of the Advance to the maturity date of the Loan to which such Advance relates.

“LIBOR Index Rate Advance”:  An Advance with respect to which the interest rate is determined by reference to the LIBOR Index Rate; provided, that such Advance may be made and maintained for a Loan only during the two months prior to the applicable maturity date for a Loan.

“LIBOR Rate”:  With respect to each Interest Period applicable to a LIBOR Rate Advance determined by reference to the Adjusted LIBOR Rate, the average offered rate for deposits in United States dollars (rounded upward, if necessary, to the nearest 1/16 of 1%) for delivery of such deposits on the first day of such Interest Period, for the number of days in such Interest Period, which appears on Telerate page 3750 as of 11:00 A.M., London time (or such other time as of which such rate appears) two LIBOR Business Days prior to the first day of such Interest Period, or the rate for such deposits determined by the Administrative Agent at such time based on such other published service of general application as shall be selected by the Administrative Agent for such purpose; provided, that in lieu of determining the rate in the foregoing manner, the Administrative Agent may determine the rate based on

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rates at which United States dollar deposits are offered to the Administrative Agent in the interbank Eurodollar market at such time for delivery in Immediately Available Funds on the first day of such Interest Period in an amount approximately equal to the Advance by the Administrative Agent to which such Interest Period is to apply (rounded upward, if necessary, to the nearest 1/16 of 1%).  “Telerate page 3750” means the display designated as such on the Telerate reporting system operated by Telerate System Incorporated (or such other page as may replace page 3750 for the purpose of displaying London interbank offered rates of major banks for United States dollar deposits).

“LIBOR Rate Advance”:  An Advance with respect to which the interest rate is determined by reference to the Adjusted LIBOR Rate or the LIBOR Index Rate.

“LIBOR Reserve Percentage”:  As of any day, that percentage (expressed as a decimal) which is in effect on such day, as prescribed by the Board for determining the maximum reserve requirement (including any basic, supplemental or emergency reserves) for a member bank of the Federal Reserve System, with deposits comparable in amount to those held by the Lender, in respect of “Eurocurrency Liabilities” as such term is defined in Regulation D of the Board. The rate of interest applicable to any outstanding Revolving Loans shall be adjusted automatically on and as of the effective date of any change in the LIBOR Reserve Percentage.

“Lien”:  With respect to any Person, any security interest, mortgage, pledge, lien, charge, encumbrance, title retention agreement or analogous instrument or device (including the interest of each lessor under any Capital Lease), in, of or on any assets or properties of such Person, now owned or hereafter acquired, whether arising by agreement or operation of law.

“Loan”: A Revolving Loan, a Term Loan or a Swing Line Loan.

“Loan Documents”: This Agreement, the Notes, any Rate Protection Agreement, the Subordination Agreement and the Security Documents.

“Margin Assignment”:  Collectively, that certain Assignment Of Hedging Account and Futures Contract dated as of September 13, 2004 executed by the Borrowers’ Agent in favor of the Administrative Agent and any other Assignment of Hedging Account and Futures Contract in the form of Exhibit B to the Security Agreement, executed by the Borrowers’ Agent.

“Material Adverse Occurrence”:  Any occurrence of whatsoever nature (including, without limitation, any adverse determination in any litigation, arbitration, or governmental investigation or proceeding) which could reasonably be expected to materially and adversely affect (a) the financial condition or operations of the Borrowers, (b) impair the ability of any Borrower to perform its obligations under any Loan Document, or any writing executed pursuant thereto, (c) the validity or enforceability of the material obligations of any Borrower under any Loan Document, (d) the rights and remedies of the Lenders or the Administrative Agent against any Borrower, (e) the timely payment of the principal of and interest on the Loans or other amounts payable by the Borrowers hereunder, or (f) the validity of the joint and several nature of the obligations of the Borrowers with respect to all of the Obligations.

“Material Contracts”:  All contracts that are material to the ongoing and continued operations of the Borrowers’ business operations, including all material products marketing agreements (including egg and manure marketing agreements) and all material supply agreements.

“Maximum Rate”:  As defined in Section 9.19.

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“Moark Acquisition”:  The acquisition by the Borrowers’ Agent of the liquid egg operations of Moark, LLC, a Missouri limited liability company, and certain of its affiliates, as contemplated pursuant to the Moark Acquisition Documents.

“Moark Acquisition Documents”:  Collectively, (i) the Asset Purchase and Sale Agreement dated as of May 22, 2006 by and among the Borrowers’ Agent, Moark, LLC, a Missouri limited liability company, and its Affiliates party thereto, and (ii) each other document instrument and agreement executed in accordance with such agreement.

“Moark Leases”:  The leases identified on Schedule 4.10.

“Moark Property”:  The approximately 5.55 acre site located in Henry County, Alabama, owned in fee simple by Borrowers’ Agent, as more particularly described in the Moark Mortgage.

“Moark Mortgage”:  The Mortgage executed by the Borrowers’ Agent, in substantially the form of Exhibit C hereto, encumbering the Moark Property.

“Mortgages”:  Collectively, (a) the Thompson Mortgage, (b) the Moark Mortgage and (c) the Renville Mortgage.

“Net Present Value”:  With respect to a prepayment of a Term Note, the amount of each prospective payment of principal and interest that, without such prepayment, could otherwise have been received by the applicable Lender over the shorter of the remaining contractual life of its Term Note or next repricing date, discounted at a rate equal to (i) the yield of U.S. Treasury Notes that shall be imputed, by linear interpolation, from the current weekly yield of those United States Treasury Notes having a maturity as close as practicable to that of each specific payment of principal and/or interest, as published in the most recent Federal Reserve Statistical Release H.15 (519) or any successor publication, plus (ii) 0.75%.

“Note”:  A Term Note or a Revolving Note.

“Obligations”:  The Borrowers’ obligations in respect of the due and punctual payment of principal and interest on the Notes and Unpaid Drawings when and as due, whether by acceleration or otherwise and all fees (including Commitment Fees), expenses, indemnities, reimbursements and other obligations of the Borrowers under this Agreement or any other Loan Document, and the Rate Protection Obligations, in all cases whether now existing or hereafter arising or incurred.

“Operating Lease”:  For any Person, a lease of property that would not be classified as a Capital Lease, other than a lease under which such Person is the lessor.

“Original Funding Date”:  September 13, 2004.

“Other Taxes”:  As defined in Section 2.25(b).

“Participants”:  As defined in Section 9.6(b).

“PBGC”:  The Pension Benefit Guaranty Corporation, established pursuant to Subtitle A of Title IV of ERISA, and any successor thereto or to the functions thereof.

“Permitted Encumbrances”:  Encumbrances affecting the real property described in the Mortgages that are permitted in accordance with the terms of the Mortgages and, with respect to any other

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property of the Borrowers, encumbrances in the nature of zoning restrictions, easements and rights or restrictions on the use of real property and landlord’s Liens under leases on the premises rented that do not materially detract from the value of such property or impair the use thereof in the business of a Borrower.

“Person”:  Any natural person, corporation, partnership, limited partnership, limited liability company, joint venture, firm, association, trust, unincorporated organization, government or governmental agency or political subdivision or any other entity, whether acting in an individual, fiduciary or other capacity.

“Plan”:  Each employee benefit plan (whether in existence on the Original Funding Date or thereafter instituted), as such term is defined in Section 3 of ERISA, maintained for the benefit of employees, officers or directors of a Borrower or of any ERISA Affiliate.

“Prepayment Event”:  Means:

(a)any sale, transfer or other disposition (including pursuant to a sale and leaseback transaction) of any property or asset of any Borrower, other than dispositions described in clauses (a), (b) and (c) of Section 6.2; or

(b)any casualty or other insured damage to, or any taking under power of eminent domain or by condemnation or similar proceeding of, any property or asset of any Borrower, but only to the extent that the net proceeds therefrom have not been applied, or committed pursuant to an agreement (including any purchase orders) to be applied, to repair, restore or replace such property or asset within 180 days after such event.

“Prepayment Fee”:  As defined in Section 2.23.

“Pricing Report”:  A pricing report in the form attached hereto as Exhibit D.

“Quoted Rate”:  The fixed interest rate per annum quoted by CoBank in it its sole discretion and set forth in a Quoted Rate Offer that has been accepted by the Borrower, which rate shall apply only to the specific amounts with the specific maturities set forth in the Quoted Rate Offer.

“Quoted Rate Offer”:  A quote of a fixed interest rate per annum provided to the Borrowers by CoBank in its sole discretion following the receipt by CoBank of a Quoted Rate Request from the Borrowers’ Agent.  Rates may be fixed by CoBank on such balances and for such periods as determined by CoBank in its sole discretion in each instance, provided that the minimum fixed period shall be 30 days for any Quoted Rate Advances for Revolving Loans and 180 days for any Quoted Rate Advances for Tranche B Term Loans.  The Quoted Rate Offer may, in the sole discretion of CoBank, include the Weekly Quoted Variable Rate.

“Quoted Rate Request”:  A request by Borrowers’ Agent to CoBank for a Quoted Rate Offer.

“Rate Protection Agreement”:  Any interest rate swap, cap or option agreement, or any other agreement pursuant to which any Borrower hedges interest rate risk with respect to a portion of the Obligations, entered into by any Borrower with a Rate Protection Provider.

“Rate Protection Obligations”:  The liabilities, indebtedness and obligations of any Borrower, if any, to any Rate Protection Provider under a Rate Protection Agreement.

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“Rate Protection Provider”:  Any Lender, or any Affiliate of any Lender, that is the counterparty of any Borrower under any Rate Protection Agreement.

“Real Estate Plan”:  The real estate plan delivered to the Administrative Agent and approved by the Lenders in accordance with Section 3.1(l).

“Regulatory Change”:  Any change after the Closing Date in federal, state or foreign laws or regulations or the adoption or making after such date of any interpretations, directives or requests applying to a class of banks including any Lender under any federal, state or foreign laws or regulations (whether or not having the force of law) by any court or governmental or monetary authority charged with the interpretation or administration thereof.

“Renville Property”:  The approximately 97.13 acre site located in Renville County, Minnesota, owned in fee simple by Borrowers’ Agent, as more particularly described in the Renville Mortgage.

“Renville Mortgage”:  The Mortgage executed by the Borrowers’ Agent, in substantially the form of Exhibit C hereto, encumbering the Renville Property.

“Replaced Lender”:  As defined in Section 2.24.

“Replacement Lender”: As defined in Section 2.24.

“Reportable Event”:  A reportable event as defined in Section 4043 of ERISA and the regulations issued under such Section, with respect to a Plan, excluding, however, such events as to which the PBGC by regulation has waived the requirement of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence of such event, provided that a failure to meet the minimum funding standard of Section 412 of the Code and of Section 302 of ERISA shall be a Reportable Event regardless of the issuance of any waiver in accordance with Section 412(d) of the Code.

“Required Lenders”:  At any time, Lenders, other than Defaulting Lenders, holding at least 66.67% of the aggregate unpaid principal amount of the Notes, excluding Notes held by Defaulting Lenders or, if no Loans are at the time outstanding hereunder, Lenders other than Defaulting Lenders whose Total Percentages aggregate at least 66.67% (with Total Percentages being computed without reference to the Revolving Commitment Amounts and Term Loan Commitment Amounts of Defaulting Lenders), provided that, if at any date of determination, there are two Lenders, the “Required Lenders” shall constitute 100% or the Lenders other than Defaulting Lenders.

“Restricted Payments”:  With respect to Borrowers’ Agent, collectively, (a) all dividends or other distributions of any nature (cash, Equity Interests, assets or otherwise), and all payments on any class of Equity Interests (including warrants, options or rights therefor) issued by such Borrower, whether such Equity Interests are authorized or outstanding on the Closing Date or at any time thereafter, or (b) any redemption or purchase of, or distribution in respect of, any of the foregoing, whether directly or indirectly.

“Revolving Commitment”:  With respect to a Revolving Lender, the agreement of such Lender to make Revolving Loans to the Borrowers in an aggregate principal amount outstanding at any time not to exceed such Revolving Lender’s Revolving Commitment Amount upon the terms and subject to the conditions and limitations of this Agreement.

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“Revolving Commitment Amount”:  With respect to a Revolving Lender, initially the amount set opposite such Revolving Lender’s name on the signature page hereof as its Revolving Commitment Amount, if any.

“Revolving Lender”:  Each Lender that has a Revolving Loan or holds a Revolving Commitment.

“Revolving Loan”:  As defined in Section 2.1.

“Revolving Loan Date”:  The date of the making of any Revolving Loans hereunder.

“Revolving Notes”:  The promissory notes of the Borrowers in the form of Exhibit A-1 hereto, evidencing the obligation of the Borrowers to repay the Revolving Loans, and “Revolving Note” means any one of such promissory notes issued hereunder without distinction.

“Revolving Loan Percentage”:  With respect to any Lender, the percentage equivalent of a fraction, the numerator of which is the Revolving Commitment Amount of such Lender, if any, and the denominator of which is the Aggregate Revolving Commitment Amount.

“Second Tranche 2 Advance”:  The second Advances of the Tranche A2 Term Loans and the Tranche B2 Term Loans, which Advances shall be in a maximum amount of $6,700,000 and $3,300,000, respectively.

“Security Agreements”:  The GOE/MII Security Agreement and the GOECA Security Agreement.

“Security Documents”:  The GOE/MII Security Agreement, the GOECA Security Agreement, the Contract Assignments, any Margin Assignments, the Mortgages, the Landlord Consents and each other agreement, document or instrument pursuant to which the Administrative Agent is granted a Lien to secure the Obligations, as the same may be amended, supplemented, extended, restated or otherwise modified from time to time.

“Series 1999 Bonds”:  Corporate Bond Series 1999 bearing 8.44% interest and due July 2014.

“Series 2000 Bonds”:  Corporate Bond Series 2000 bearing variable interest and due 2002-2015.

“Series 2001 Bonds”:  Corporate Bond Series 2001 bearing 8.75% interest and due January 2011.

“Subordinated Debt”:  Any Indebtedness of any Borrower, now existing or hereafter created, incurred or arising, which is subordinated in right of payment to the payment of the Obligations in a manner and to an extent (a) that Required Lenders have approved in writing prior to the creation of such Indebtedness, or (b) as to any Indebtedness of any Borrower existing on the date of this Agreement, that Required Lenders have approved as Subordinated Debt in a writing delivered by Required Lenders to the Borrowers’ Agent on or prior to the Closing Date.

“Subordination Agreement”: The Subordination Agreement dated of even date herewith by and between Land O’ Lakes and the Administrative Agent.

“Subordinated Promissory Note”:  The Subordinated Promissory Note dated of even date herewith executed in favor of Land O’ Lakes by each of the Borrowers.

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“Subsidiary”:  Any corporation or other entity of which Equity Interests having ordinary voting power for the election of a majority of the board of directors or other Persons performing similar functions are owned by any Borrower either directly or through one or more Subsidiaries.

“Swing Line Lender”:  CoBank.

“Swing Line Loans”:  As defined in Section 2.1.

“Swing Line Loan Date”:  The date of the making of any Swing Line Loans hereunder.

“Swing Line Loan Outstandings”:  As of any date of determination, the aggregate unpaid principal balance of Swing Line Loans outstanding on such date.

“Swing Line Sublimit”:  $5,000,000.

“Tangible Net Worth”:  As of any date of determination, the sum of the amounts set forth on the balance sheet of the Borrowers as the aggregate equity of the members of the Borrowers, less the book value of all intangible assets of the Borrowers, including all such items as goodwill, trademarks, trade names, service marks, copyrights, patents, licenses, unamortized debt discount and expenses, deferred tax assets and the excess of the purchase price of the assets of any business acquired by the Borrowers over the book value of such assets.

“Term Lenders”:  Collectively, the Tranche A Term Lenders and the Tranche B Term Lenders.

“Term Loan”:  Collectively, the Tranche A Term Loans and the Tranche B Term Loans.

“Term Loan Commitment”:  With respect to any Lender, the agreement of such Lender to make a Term Loan to the Borrowers in an amount equal to such Lender’s Term Loan Commitment Amount.

“Term Loan Commitment Amount”:  With respect to any Lender, the aggregate amount of such Lender’s Tranche A1 Term Loan Commitment Amount, Tranche A2 Term Loan Commitment Amount, Tranche A3 Term Loan Commitment Amount, Tranche B1 Term Loan Commitment Amount, Tranche B2 Term Loan Commitment Amount and Tranche B3 Term Loan Commitment Amount.

“Term Loan Date”:  The date of the making of the Tranche A3 Term Loans and the Tranche B3 Term Loans, which date shall be a single Business Day during the Tranche 3 Availability Period.

“Term Loan Maturity Date”:  The later of the Tranche A1 Maturity Date, the Tranche A2 Maturity Date, the Tranche A3 Maturity Date, the Tranche B1 Maturity Date, the Tranche B2 Maturity Date and the Tranche B3 Maturity Date.

“Term Loan Percentage”:  With respect to any Lender, the percentage equivalent of a fraction, the numerator of which is the amount of the Term Loan Commitment of such Lender and the denominator of which is the sum of the Term Loan Commitments of all the Lenders.

“Term Notes”:  The promissory notes of the Borrowers in the form of Exhibit A-2 hereto, evidencing the obligation of the Borrowers to repay the Term Loans, and “Term Note” means any one of such promissory notes without distinction.

“Termination Date”:  The earlier of (a) April 30, 2007 and (b) the date on which the Revolving Commitments are terminated pursuant to Section 7.2 hereof, provided that at the written request of the

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Borrowers’ Agent to the Administrative Agent, the Revolving Commitment may be renewed for any number of successive one-year periods in the sole discretion of the Revolving Lenders, in which case the Termination Date shall be extended for a period corresponding to each such renewal, if any.

“Thompson Property”:  The approximately 240-acre site located in Winnebago County, Iowa, owned in fee simple by Midwest Investors of Iowa, Cooperative and leased to Borrowers’ Agent, on which the Borrowers’ Agent’s layer facility is located, as more particularly described in the Thompson Mortgage.

“Thompson Construction”:  The construction of commercial facilities at the Thompson Property.

“Thompson Mortgage”:  The Mortgage dated September 13, 2004 executed by Midwest Investors of Iowa, Cooperative encumbering, inter alia, the Thompson Property, and recorded in the office of the Recorder of the County of Winnebago, State of Iowa, as document No. 41992, as amended, supplemented or modified from time to time.

“Total Percentage”:  With respect to any Lender, the percentage equivalent of a fraction, the numerator of which is the sum of the Revolving Commitment Amount of such Lender and the Term Loan Commitment Amount of such Lender and the denominator of which is the sum of the Revolving Commitment Amounts and Term Loan Commitment Amounts of all the Lenders.

“Total Revolving Outstandings”:  As of any date of determination, the sum of (a) the aggregate unpaid principal balance of Revolving Loans outstanding on such date, (b) the aggregate unpaid principal balance of Swing Line Loans outstanding on such date, (c) the aggregate maximum amount available to be drawn under Letters of Credit outstanding on such date and (d) the aggregate amount of Unpaid Drawings on such date.

“Total Term Outstandings”:  As of any date of determination, the sum of (a) the aggregate unpaid principal balance of the Term Loans outstanding on such date and (b) the aggregate unpaid principal balance of any another term Indebtedness of the Borrowers outstanding on such date.

“Tranche A Advances”:  A Tranche A1 Advance, a Tranche A2 Advance or a Tranche A3 Advance.

“Tranche A Term Lenders”:  Collectively, the Tranche A1 Term Lenders, the Tranche A2 Term Lenders and the Tranche A3 Term Lenders.

“Tranche A Term Loans”:  Collectively, the Tranche A1 Term Loans, the Tranche A2 Term Loans and the Tranche A3 Term Loans.

“Tranche A1 Advance”:  An Advance with respect to which the interest rate is determined by reference to the Tranche A1 Rate.

“Tranche A1 Maturity Date”:  September 20, 2014.

“Tranche A1 Rate”:  A rate of interest per annum equal to 6.08%.

“Tranche A1 Term Lender”:  Each Lender that has a Tranche A1 Term Loan or holds a Tranche A1 Term Loan Commitment.

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“Tranche A1 Term Loan”:  The term loan made to the Borrowers, jointly and severally, on the Original Funding Date by each Tranche A1 Term Lender in an amount equal to its Tranche A1 Term Loan Commitment Amount.

“Tranche A1 Term Loan Commitment”:  With respect to any Tranche A1 Term Lender, the agreement of such Lender to make a Tranche A1 Term Loan to the Borrowers in an amount equal to such Lender’s Tranche A1 Term Loan Commitment Amount upon the terms and subject to the conditions of this Agreement.

“Tranche A1 Term Loan Commitment Amount”:  With respect to a Lender, the amount set opposite such Lender’s name on the signature pages hereof as its Tranche A1 Term Loan Commitment Amount, if any.

“Tranche A2 Advance”:  An Advance with respect to which the interest rate is determined by reference to the Tranche A2 Rate.

“Tranche A2 Maturity Date”:  December 20, 2015.

“Tranche A2 Rate”:  With respect to the First Tranche 2 Advance in respect of the Tranche A2 Term Loans, a rate of interest per annum equal to 5.86%, and, with respect to the Second Tranche 2 Advance and the Final Tranche 2 Advance in respect of the Tranche A2 Term Loans, a rate of interest per annum equal to the rate of interest of a LIBOR Rate Advance with an Interest Period of 90 days plus the Applicable Margin.

“Tranche A2 Term Lender”:  Each Lender that has a Tranche A2 Term Loan or holds a Tranche A2 Term Loan Commitment.

“Tranche A2 Term Loan”:  The term loan made to the Borrowers, jointly and severally, during the Tranche 2 Availability Period by each Tranche A2 Term Lender in an amount equal to its Tranche A2 Term Loan Commitment Amount.

“Tranche A2 Term Loan Commitment”:  With respect to any Tranche A2 Term Lender, the agreement of such Lender to make a Tranche A2 Term Loan to the Borrowers in an amount equal to such Lender’s Tranche A2 Term Loan Commitment Amount upon the terms and subject to the conditions of this Agreement.

“Tranche A2 Term Loan Commitment Amount”:  With respect to a Lender, the amount set opposite such Lender’s name on the signature pages hereof as its Tranche A2 Term Loan Commitment Amount, if any.

“Tranche A3 Advance”:  An Advance with respect to which the interest rate is determined by reference to the Tranche A3 Rate.

“Tranche A3 Maturity Date”:  The ten (10) year anniversary of the Closing Date.

“Tranche A3 Rate”:  A rate of interest per annum equal to the rate of interest of a LIBOR Rate Advance with an Interest Period of 90 days plus the Applicable Margin.

“Tranche A3 Term Loan”:  As defined in Section 2.1.

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“Tranche A3 Term Lender”:  Each Lender that has a Tranche A3 Term Loan or holds a Tranche A3 Term Loan Commitment.

“Tranche A3 Term Loan Commitment”:  With respect to any Tranche A3 Term Lender, the agreement of such Lender to make a Tranche A3 Term Loan to the Borrowers in an amount equal to such Lender’s Tranche A3 Term Loan Commitment Amount upon the terms and subject to the conditions of this Agreement.

“Tranche A3 Term Loan Commitment Amount”:  With respect to a Lender, the amount set opposite such Lender’s name on the signature pages hereof as its Tranche A3 Term Loan Commitment Amount.

“Tranche B Maturity Date”:  The Tranche B1 Maturity Date, Tranche B2 Maturity Date or Tranche B3 Maturity Date, as applicable.

“Tranche B Term Lenders”:  Collectively, the Tranche B1 Term Lenders, the Tranche B2 Term Lenders and the Tranche B3 Term Lenders.

“Tranche B Term Loans”:  Collectively, the Tranche B1 Term Loans, the Tranche B2 Term Loans and the Tranche B3 Term Loans.

“Tranche B1 Maturity Date”:  September 20, 2014.

“Tranche B1 Term Lender”:  Each Lender that has a Tranche B1 Term Loan or holds a Tranche B1 Term Loan Commitment.

“Tranche B1 Term Loan”:  The term loan made to the Borrowers, jointly and severally, on the Original Funding Date by each Tranche B1 Term Lender in an amount equal to its Tranche B1 Term Loan Commitment Amount.

“Tranche B1 Term Loan Commitment”:  With respect to any Tranche B1 Term Lender, the agreement of such Lender to make a Tranche B1 Term Loan to the Borrowers in an amount equal to such Lender’s Tranche B1 Term Loan Commitment Amount upon the terms and subject to the conditions of this Agreement.

“Tranche B1 Term Loan Commitment Amount”:  With respect to a Lender, the amount set opposite such Lender’s name on the signature pages hereof as its Tranche B1 Term Loan Commitment Amount, if any.

“Tranche B2 Maturity Date”:  December 20, 2015.

“Tranche B2 Term Lender”:  Each Lender that has a Tranche B2 Term Loan or holds a Tranche B2 Term Loan Commitment.

“Tranche B2 Term Loan”:  The term loan made to the Borrowers, jointly and severally, during the Tranche 2 Availability Period by each Tranche B2 Term Lender in an amount equal to its Tranche B2 Term Loan Commitment Amount.

“Tranche B2 Term Loan Commitment”:  With respect to any Tranche B2 Term Lender, the agreement of such Lender to make a Tranche B2 Term Loan to the Borrowers in an amount equal to such

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Lender’s Tranche B2 Term Loan Commitment Amount upon the terms and subject to the conditions of this Agreement.

“Tranche B2 Term Loan Commitment Amount”:  With respect to a Lender, the amount set opposite such Lender’s name on the signature pages hereof as its Tranche B2 Term Loan Commitment Amount.

“Tranche B3 Maturity Date”:  The ten (10) year anniversary of the Closing Date.

“Tranche B3 Term Lender”:  Each Lender that has a Tranche B3 Term Loan or holds a Tranche B3 Term Loan Commitment.

“Tranche B3 Term Loan”:  As defined in Section 2.1.

“Tranche B3 Term Loan Commitment”:  With respect to any Tranche B3 Term Lender, the agreement of such Lender to make a Tranche B3 Term Loan to the Borrowers in an amount equal to such Lender’s Tranche B3 Term Loan Commitment Amount upon the terms and subject to the conditions of this Agreement.

“Tranche B3 Term Loan Commitment Amount”:  With respect to a Lender, the amount set opposite such Lender’s name on the signature pages hereof as its Tranche B3 Term Loan Commitment Amount.

“Tranche 2 Availability Period”:  The period that commenced on the later of (i) November 1, 2004 and (ii) the Business Day immediately following the day on which the Phase II Thompson Construction was completed and ending on January 20, 2006.

“Tranche 3 Availability Period”:  The period commencing on the later of (i) the date on which the Moark Acquisition is effectively completed, as determined by the Administrative Agent in its sole discretion and (ii) the date on which all conditions precedent to the effectiveness of this Agreement are completed and ending on the Closing Date.

“United Mills”:  United Mills, a Minnesota Cooperative, partially owned and affiliated with the Borrower’s Agent, with it primary address at 340 Dupont Avenue NE, Renville, Minnesota.

“Unpaid Drawing”:  As defined in Section 2.11.

“Unused Commitment”:  With respect to any Lender as of any date of determination, the amount by which the sum of such Lender’s Revolving Commitment Amount, if any, exceeds such Lender’s Revolving Loan Percentage of the Total Revolving Outstandings on such date minus the aggregate maximum amount to be drawn on any Letters of Credit outstanding on such date.

“U.S. Taxes”: As defined in Section 2.25(f).

“Weekly Quoted Variable Rate”:  A rate per annum equal at all times to the rate of interested established by CoBank on the first Business Day of each week, which CoBank may offer in its sole discretion from time to time.  The rate established by CoBank shall be effective until the first Business Day of the next week.  Each change in the rate shall be applicable to all balances subject to the Weekly Quoted Variable Rate and information about the then current rate shall be made available upon telephonic request by the Borrowers’ Agent.

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“Working Capital”:  The amount of the excess, if any, of the Current Assets over the Current Liabilities of the Borrowers’ Agent on a consolidated basis.

Section 1.2Accounting Terms and Calculations.  Except as may be expressly provided to the contrary herein, all accounting terms used herein shall be interpreted and all accounting determinations hereunder shall be made in accordance with GAAP.  To the extent any change in GAAP affects any computation or determination required to be made pursuant to this Agreement, such computation or determination shall be made as if such change in GAAP had not occurred unless the Borrowers and Required Lenders agree in writing on an adjustment to such computation or determination to account for such change in GAAP.

Section 1.3Computation of Time Periods.  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”.

Section 1.4Other Definitional Terms. The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.  References to Sections, Exhibits, schedules and like references are to this Agreement unless otherwise expressly provided.  The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.”  Unless the context in which used herein otherwise clearly requires, “or” has the inclusive meaning represented by the phrase “and/or.”  All incorporation 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 such incorporation shall include all necessary definitions and related provisions from such other agreements but including only amendments thereto agreed to by the Required Lenders (unless otherwise provided herein or therein), and shall survive any termination of such other agreements until the obligations of the Borrowers under this Agreement and the Notes are irrevocably paid in full, all Letters of Credit have expired without renewal or been returned to the Letter of Credit Bank, and the commitments of any Lender to advance funds to any Borrower are terminated.

ARTICLE II
TERMS OF THE CREDIT FACILITIES

Part A —  Terms of Lending

Section 2.1Lending Commitments.

(a)Revolving Credit.  Subject to the terms and conditions hereof, each Revolving Lender severally agrees to make a revolving credit facility available as loans (each, a “Revolving Loan” and, collectively, the “Revolving Loans”) to the Borrowers, jointly and severally, on a revolving basis at any time and from time to time from the Closing Date to the Termination Date, during which period the Borrowers may borrow, repay and reborrow in accordance with the provisions hereof, provided, that no Revolving Loan will be made in any amount which, after giving effect thereto, would cause Total Revolving Outstandings to exceed (A) the Aggregate Revolving Commitment Amount or (B) the Borrowing Base.  Revolving Loans hereunder shall be made by the several Revolving Lenders ratably in the proportion of their respective Revolving Commitment Amounts.  Revolving Loans may be obtained and maintained, at the election of the Borrowers’ Agent but subject to the limitations hereof, as Base Rate Advances, LIBOR Rate Advances or Quoted Rate Advances or any combination thereof; provided, however, that no more than five (5) LIBOR Rate Advances (excluding any LIBOR Rate Advances bearing interest at the

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LIBOR Index Rate) and no more than five (5) Quoted Rate Advances may be outstanding at any one time.

(b)Term Loans.  The Tranche A1 Term Loan, the Tranche B1 Term Loan, the Tranche A2 Term Loan and the Tranche B2 Term Loan have been fully funded.  Tranche A1 Term Loans may be maintained only as Tranche A1 Advances and Tranche A2 Term Loans may be maintained only as Tranche A2 Advances. Subject to the terms and conditions hereof, (a) each Tranche A3 Term Lender severally agrees to make term loans (each, a “Tranche A3 Term Loan” and, collectively, the “Tranche A3 Term Loans”) to the Borrowers, jointly and severally, from time to time during the Tranche 3 Availability Period, in an aggregate amount not to exceed its Tranche A3 Term Loan Commitment Amount and (b) each Tranche B3 Term Lender severally agrees to make term loans (each, a “Tranche B3 Term Loan” and, collectively, the “Tranche B3 Term Loans”) to the Borrowers, jointly and severally, from time to time during the Tranche 3 Availability Period, in an aggregate amount not to exceed its Tranche B3 Term Loan Commitment Amount.  Tranche A3 Term Loans may be obtained and maintained only as Tranche A3 Advances.  Tranche B Term Loans may be obtained and maintained, at the election of the Borrowers’ Agent but subject to the limitations hereof, as Base Rate Advances, LIBOR Rate Advances or Quoted Rate Advances, or any combination thereof; provided, however, that no more than five (5) LIBOR Rate Advances (excluding any LIBOR Rate Advances bearing interest at the LIBOR Index Rate) and no more than five (5) Quoted Rate Advances may be outstanding at any one time.

(c)Swing Line Loans.  Subject to the terms and conditions hereof, the Swing Line Lender agrees to lend to the Borrowers, jointly and severally, at any time and from time to time from the Closing Date to the Termination Date, such sums (each, a “Swing Line Loan” and, collectively, the “Swing Line Loans”) as the Borrowers’ Agent may request in an aggregate amount up to the Swing Line Sublimit; provided, that no Swing Line Loan will be made in any amount which, after giving effect thereto, would cause (i) Swing Line Outstandings to exceed the Swing Line Sublimit or (ii) Total Revolving Outstandings to exceed the lesser of (A) the Aggregate Revolving Commitment Amount or (B) the Borrowing Base.  All Swing Line Loans shall be obtained and maintained as Base Rate Advances.

Section 2.2Procedure for Loans.

(a)Procedure for Revolving Loans.  Not later than 2:00 P.M. (Central time) three LIBOR Business Days prior to the requested Revolving Loan Date if the Revolving Loans (or any portion thereof) are requested as LIBOR Rate Advances and not later than 2:00 P.M. (Central time) on the requested Revolving Loan Date if the Revolving Loans are requested as Quoted Rate Advances or Base Rate Advances, Borrowers’ Agent shall submit to the Administrative Agent a written or telephonic request for borrowing, provided that no more than one request for Borrowing may be made on any Business Day.  Each request for Revolving Loans hereunder shall be irrevocable and shall be deemed a representation by each Borrower that on the requested Revolving Loan Date and after giving effect to the requested Revolving Loans the applicable conditions specified in Article III have been and will be satisfied.  Each request for Revolving Loans hereunder shall specify (i) the requested Revolving Loan Date, (ii) the aggregate amount of Revolving Loans to be made on such date which shall be in a minimum amount of $200,000 or, if more, a whole multiple of $100,000 in excess thereof, provided that no minimums shall apply if the Revolving Loans are funded as (A) Base Rate Loans or (B) Quoted Rate Loans for which the Quoted Rate is the Weekly Quoted Variable Rate, (iii) whether such Revolving Loans are to be funded as Base Rate Advances, LIBOR Rate Advances or Quoted Rate Advances (and, if such Revolving Loans are to be made with more than one applicable interest rate choice, specifying the

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amount to which each interest rate choice is applicable) and (iv) in the case of LIBOR Rate Advances, the duration of the initial Interest Period applicable thereto.  The Administrative Agent may rely on any telephone request by the Borrowers’ Agent for Revolving Loans hereunder which it believes in good faith to be genuine; and each Borrower hereby waives the right to dispute the Administrative Agent’s record of the terms of such telephone request.  The Administrative Agent shall promptly notify each other Revolving Lender of the receipt of such request, the matters specified therein, and of such Lender’s ratable share of the requested Revolving Loans.  On the date of the requested Revolving Loans, each Lender shall provide its share of the requested Revolving Loans to the Administrative Agent in Immediately Available Funds not later than 4:00 P.M. (Central time).  Unless the Administrative Agent determines that any applicable condition specified in Article III has not been satisfied, the Administrative Agent will make available to the Borrowers at the Administrative Agent’s principal office in Denver, CO in Immediately Available Funds not later than 4:00 P.M. (Central time) on the requested Revolving Loan Date the amount of the requested Revolving Loans.  If the Administrative Agent has made a Revolving Loan to the Borrowers on behalf of a Revolving Lender but has not received the amount of such Revolving Loan from such Lender by the time herein required, such Lender shall pay interest to the Administrative Agent on the amount so advanced at the Federal Funds Rate from the date of such Revolving Loan to the date funds are received by the Administrative Agent from such Lender, such interest to be payable with such remittance from such Lender of the principal amount of such Revolving Loan (provided, however, that the Administrative Agent shall not make any Revolving Loan on behalf of a Lender if the Administrative Agent has received prior notice from such Lender that it will not make such Revolving Loan).  If the Administrative Agent does not receive payment from such Lender by the next Business Day after the date of any Revolving Loan, the Administrative Agent shall be entitled to recover such Revolving Loan, with interest thereon at the rate (or rates) then applicable to such Revolving Loan, on demand, from the Borrowers, without prejudice to the Administrative Agent’s and the Borrowers’ rights against such Lender.  If such Lender pays the Administrative Agent the amount herein required with interest at the Federal Funds Rate before the Administrative Agent has recovered from the Borrowers, such Lender shall be entitled to the interest payable by the Borrowers with respect to the Revolving Loan in question accruing from the date the Administrative Agent made such Revolving Loan.

(b)Procedure for Term Loans.  Not later than 2:00 P.M. (Central time) three LIBOR Business Days prior to the requested Term Loan Date for the Advances in respect of the Tranche A3 Term Loans and for the portions of the Tranche B3 Term Loans that are requested as LIBOR Rate Advances and not later than 2:00 P.M. (Central time) on the requested Term Loan Date for the portions of the Term Loans that are requested as Base Rate Advances or Quoted Rate Advances, the Borrowers’ Agent shall submit to the Administrative Agent a written request for borrowing.  Such request for Term Loans hereunder shall be irrevocable and shall be deemed a representation by each Borrower that on the requested Term Loan Date and after giving effect to the requested Term Loans the applicable conditions specified in Article III have been and will be satisfied.  Each request for Term Loans hereunder shall specify (i) the requested Term Loan Date, (ii) the aggregate amount of Term Loans to be made on such date which, except for Base Rate Advances or Quoted Rated Advances, shall be in a minimum amount of $200,000 or, if more, a whole multiple of $100,000 in excess thereof, (iii) the type of Advance  the Term Loans are to be funded as (and, if such Term Loans are to be made with more than type of Advance, specifying the amount to which each type of Advance is applicable) and (iv) in the case of LIBOR Rate Advances, the duration of the initial Interest Period applicable thereto.  The Administrative Agent shall promptly notify each other Term Lender of the receipt of such request, the matters specified therein, and of such Lender’s ratable share of the requested Term Loans.  On the date of the requested Term Loans, each Lender shall provide its share of the requested Term Loans to the

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Administrative Agent in Immediately Available Funds not later than 4:00 P.M. (Central time).  Unless the Administrative Agent determines that any applicable condition specified in Article III has not been satisfied, the Administrative Agent will make available to the Borrowers at the Administrative Agent’s principal office in Denver, CO in Immediately Available Funds not later than 4:00 P.M. (Central time) on the requested Term Loan Date the amount of the requested Term Loans.  If the Administrative Agent has made a Term Loan to the Borrowers on behalf of a Term Lender but has not received the amount of such Term Loan from such Lender by the time herein required, such Lender shall pay interest to the Administrative Agent on the amount so advanced at the Federal Funds Rate from the date of such Term Loan to the date funds are received by the Administrative Agent from such Lender, such interest to be payable with such remittance from such Lender of the principal amount of such Term Loan (provided, however, that the Administrative Agent shall not make any Term Loan on behalf of a Lender if the Administrative Agent has received prior notice from such Lender that it will not make such Term Loan).  If the Administrative Agent does not receive payment from such Lender by the next Business Day after the date of any Term Loan, the Administrative Agent shall be entitled to recover such Term Loan, with interest thereon at the rate (or rates) then applicable to such Term Loan, on demand, from the Borrowers, without prejudice to the Administrative Agent’s and the Borrowers’ rights against such Lender.  If such Lender pays the Administrative Agent the amount herein required with interest at the Federal Funds Rate before the Administrative Agent has recovered from the Borrowers, such Lender shall be entitled to the interest payable by the Borrowers with respect to the Term Loan in question accruing from the date the Administrative Agent made such Term Loan.

(c)Procedure for Swing Line Loans.  Not later than 2:00 P.M. (Central time) on the requested Swing Line Loan Date, Borrower’s Agent shall submit to the Swing Line Lender a verbal, written or electronic request for borrowing.  Each request for Swing Line Loans hereunder shall be irrevocable and shall be deemed a representation by each Borrower that on the requested Swing Line Loan Date and after giving effect to the requested Swing Line Loans the applicable conditions specified in Article III have been and will be satisfied.  Each request for Swing Line Loans hereunder shall specify (i) the requested Swing Line Loan Date, and (ii) the aggregate amount of Swing Line Loans to be made on such date.  The Administrative Agent may rely on any telephone request of the Borrower’s Agent for Swing Line Loans hereunder which it believes in good faith to be genuine; and each Borrower hereby waives the right to dispute the Administrative Agent’s record of the terms of such telephone request.   Unless the Swing Line Lender determines that any applicable condition specified in Article III has not been satisfied, the Swing Line Lender will make available to the Borrowers in Immediately Available Funds not later than 4:00 P.M. (Central time) on the requested Swing Line Loan Date, the amount of the requested Swing Line Loans.

Section 2.3Notes.  The Revolving Loans and Swing Line Loans (if applicable) of each Lender shall be evidenced by a single Revolving Note payable to the order of such Lender in a principal amount equal to such Lender’s Revolving Commitment Amount originally in effect. The Term Loans of each Lender shall be evidenced by Term Notes payable to the order of such Lender in the principal amount equal to such Lender’s Tranche A1 Term Loan Commitment Amount, Tranche A2 Term Loan Commitment Amount, Tranche A3 Term Loan Commitment Amount, Tranche B1 Term Loan Commitment Amount, Tranche B2 Term Loan Commitment Amount or Tranche B3 Term Loan Commitment Amount, as applicable; provided, however, that the Term Loans in respect to the Tranche A2 Term Loan Commitment Amount may be evidenced by one or more Term Notes in amounts equal to the maximum amount of the First Tranche 2 Advance, the Second Tranche 2 Advance or the Final Tranche 2 Advance in respect of such Term Loans, or any combination thereof.  Upon receipt of each Lender’s Notes from the Borrowers, the Administrative Agent shall mail such Notes to such Lender.

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Each Lender shall enter in its ledgers and records the amount of its Term Loans and each Revolving Loan, the various Advances made, converted or continued and the payments made thereon, and each Lender is authorized by the each Borrower to enter on a schedule attached to its Term Notes or Revolving Note, as appropriate, a record of such Term Loans, Revolving Loans, Advances and payments; provided, however that the failure by any Lender to make any such entry or any error in making such entry shall not limit or otherwise affect the obligation of the Borrowers hereunder and on the Notes, and, in all events, the principal amounts owing by the Borrowers in respect of the Revolving Note shall be the aggregate amount of all Revolving Loans made by the Lenders less all payments of principal thereof made by the Borrowers and the principal amount owing by the Borrowers in respect of the Term Notes shall be the aggregate amount of all Term Loans made by the Lenders less all payments of principal thereof made by the Borrowers.

Section 2.4Conversions and Continuations.  Tranche A Advances may not be converted into any other type of Advance and no other type of Advance may be converted into a Tranche A Advance.  On the terms and subject to the limitations hereof, the Borrowers shall have the option at any time and from time to time to convert all or any portion of the Advances in respect of the Revolving Loans or the Tranche B Term Loans into Base Rate Advances, LIBOR Rate Advances or Quoted Rate Advances, or to continue a LIBOR Rate Advance or Quoted Rate Advance as such; provided, however that a LIBOR Rate Advance may be converted or continued only on the last day of the Interest Period applicable thereto, a Quoted Rate Advance may be converted or continued only on the last day of the fixed rate period set forth in the corresponding Quoted Rate Offer and no Advance may be converted or continued as a LIBOR Rate Advance or a Quoted Rate Advance if a Default or Event of Default has occurred and is continuing on the proposed date of continuation or conversion.  Advances in respect of the Revolving Loans or Tranche B Term Loans may be converted to, or continued as, LIBOR Rate Advances or Quoted Rate Advances only in integral multiples, as to the aggregate amount of the Advances of all Lenders so converted or continued, of $200,000.  The Borrowers’ Agent shall give the Administrative Agent written notice of any continuation or conversion of any such Advances and such notice must be given so as to be received by the Administrative Agent not later than 2:00 P.M. (Central time) three LIBOR Business Days prior to requested date of conversion or continuation in the case of the continuation of, or conversion to, LIBOR Rate Advances and not later than 2:00 P.M. (Central time) on the date of the requested continuation of, or conversion to, Quoted Rate Advances or Base Rate Advances.  Each such notice shall specify (a) the amount to be continued or converted, (b) the date for the continuation or conversion (which must be (i) the last day of the preceding Interest Period for any continuation or conversion of LIBOR Rate Advances, (ii) the last day of the fixed rate period set forth in the corresponding Quoted Rate Offer for any continuation or conversion of a Quoted Rate Advance, (iii) a LIBOR Business Day in the case of conversions to or continuations as LIBOR Rate Advances, and (iv) a Business Day in the case of continuations or conversions to Quoted Rate Advances or Base Rate Advances), and (c) in the case of conversions to or continuations as LIBOR Rate Advances, the Interest Period applicable thereto.  Any notice given by the Borrowers’ Agent under this Section shall be irrevocable.  If the Borrowers’ Agent shall fail to notify the Administrative Agent of the continuation of any LIBOR Rate Advances within the time required by this Section, at the option of the Administrative Agent, such Advances shall, on the last day of the Interest Period applicable thereto, (A) automatically be continued as LIBOR Rate Advances with the same principal amount and the same Interest Period or (B) automatically be converted into Base Rate Advances with the same principal amount.  If the Borrowers’ Agent shall fail to notify the Administrative Agent of the continuation of any Quoted Rate Advances within the time required by this Section, or if CoBank declines to make a Quoted Rate Offer with respect to such Quote Rate Advances and the Borrowers’ Agent has not requested an alternative Advance, such Quoted Rate Advances shall, on the last day of the fixed rate period applicable thereto, automatically accrue interest at the Weekly Quoted Variable Rate until repaid or converted into another Advance.  Notwithstanding anything herein to the contrary, the Second Tranche 2 Advance and the Final Tranche 2 Advance in respect of the Tranche A2 Term Loans shall, on the last day of the 90 day Interest Period applicable thereto, automatically be

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continued at the Tranche A2 Rate applicable thereto with the same principal amount and the same Interest Period, unless otherwise agreed to by the Tranche A2 Term Lender.

Section 2.5Interest Rates, Interest Payments and Default Interest.

(a)The Revolving Loans.  Interest shall accrue and be payable on the Revolving Loans as follows:

(i)Subject to paragraph (iv) below, each LIBOR Rate Advance shall bear interest on the unpaid principal amount thereof during the Interest Period applicable thereto at a rate per annum equal to the sum of (A) the Adjusted LIBOR Rate for such Interest Period, plus (B) the Applicable Margin; provided that, any LIBOR Rate Advance made or continued during the two (2) month period ending on the Termination Date shall bear interest at the LIBOR Index Rate.

(ii)Subject to paragraph (iv) below, each Quoted Rate Advance shall bear interest on the unpaid principal amount thereof at a rate per annum equal to the Quoted Rate.

(iii)Subject to paragraph (iv) below, each Base Rate Advance shall bear interest on the unpaid principal amount thereof at a varying rate per annum equal to the sum of (A) the Base Rate, plus (B) the Applicable Margin.

(iv)Upon the occurrence of any Event of Default, each Advance in respect of the Revolving Loans shall, at the option of the Revolving Lenders, bear interest until paid in full at a rate per annum equal to the Default Rate.

(v)Interest shall be payable (A) with respect to each LIBOR Rate Advance, on the last day of the Interest Period applicable thereto (and, in the case of any LIBOR Rate Advance having an Interest Period greater than three months, on the three month anniversary of the first day of such Interest Period); provided that, with respect to each LIBOR Rate Advance made during the two (2) month period ending on the Termination Date, interest shall be payable, in arrears, on the twentieth (20th) day of each month; (B) with respect to any Base Rate Advance or Quoted Rate Advance, on the twentieth (20th) day of each month; (C) with respect to all Advances, upon any permitted prepayment (on the amount prepaid); and (D) with respect to all Advances, on the Termination Date; provided that interest under paragraph (a)(iv) of this Section shall be payable on demand.

(b)The Term Loans.  Interest shall accrue and be payable on the Term Loans as follows:

(i)Subject to paragraph (vii) below, each Tranche A1 Advance shall bear interest on the unpaid principal amount thereof at a rate per annum equal to the Tranche A1 Rate.

(ii)Subject to paragraph (vii) below, each Tranche A2 Advance shall bear interest on the unpaid principal amount thereof at a rate per annum equal to the Tranche A2 Rate.

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(iii)Subject to paragraph (vii) below, each Tranche A3 Advance shall bear interest on the unpaid principal amount thereof at a rate per annum equal to the Tranche A3 Rate.

(iv)Subject to paragraph (vii) below, each LIBOR Rate Advance in respect of the Tranche B Term Loans shall bear interest on the unpaid principal amount thereof during the Interest Period applicable thereto at a rate per annum equal to the sum of (A) the Adjusted LIBOR Rate for such Interest Period, plus (B) the Applicable Margin; provided that, any LIBOR Rate Advance made or continued during the two (2) month period ending on the applicable Tranche B Maturity Date shall bear interest at the LIBOR Index Rate.

(v)Subject to paragraph (vii) below, each Quoted Rate Advance in respect of the Tranche B Term Loans shall bear interest on the unpaid principal amount thereof at a rate per annum equal to the Quoted Rate.

(vi)Subject to paragraph (vii) below, each Base Rate Advance in respect of the Tranche B Term Loans shall bear interest on the unpaid principal amount thereof at a varying rate per annum equal to the sum of (A) the Base Rate, plus (B) the Applicable Margin.

(vii)Upon the occurrence of any Event of Default, each Tranche A Advance shall, upon thirty (30) days notice to the Borrowers from the Tranche A Term Lenders, and each Advance in respect of the Tranche B Term Loans shall, upon thirty (30) days written notice to the Borrowers from the Tranche B Term Lenders, bear interest until paid in full or until such Event of Default is cured at a rate per annum equal to the Default Rate.

(viii)Interest shall be payable (A) with respect to each LIBOR Rate Advance, on the last day of the Interest Period applicable thereto (and, in the case of any LIBOR Rate Advance an Interest Period greater than three months, on the three month anniversary of the first day of such Interest Period); provided that, with respect to each LIBOR Rate Advance made or continued during the two (2) month period ending on the applicable Tranche B Maturity Date, interest shall be payable, in arrears, on the twentieth (20th) day of each month; (B) with respect to any Base Rate Advance, in arrears, on the twentieth (20th) Business Day of each month; (C) with respect to all Advances, upon any permitted prepayment (on the amount prepaid); and (D) with respect to all Advances, on the Termination Date; provided that interest under paragraph (b)(vii) of this Section shall be payable on demand.

(c)The Swing Line Loans.  Interest shall accrue and be payable on the Swing Line Loans as follows:

(i)Subject to paragraph (ii) below, each Swing Line Loan shall bear interest on the unpaid principal amount thereof at a varying rate per annum equal to the Base Rate.

(ii)Upon the occurrence of any Event of Default, each Advance in respect of the Swing Line Loans shall, at the option of the Swing Line Lender, bear interest until paid in full at a rate per annum equal to the Default Rate.

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(iii)Interest shall be payable (A) on the twentieth (20th) day of each month; (B) with respect to all Advances, upon any permitted prepayment (on the amount prepaid); and (C) with respect to all Advances, on the Termination Date; provided that interest under paragraph (c)(ii) of this Section shall be payable on demand.

(d)Any amount of interest which shall not have been paid or have been underpaid hereunder resulting from Borrowers’ Agent’s failure to correctly report or calculate the Funded Debt to EBITDA ratio in the Compliance Certificate delivered in accordance with Section 5.1(g), shall constitute an Obligation hereunder immediately due and payable upon the earlier to occur of Borrowers’ Agent discovery of such error or demand by the Administrative Agent.  Such amounts shall bear interest for the period they are outstanding at the Default Rate.

Section 2.6Repayment.

(a)Revolving Loans.  The unpaid principal balance of all Revolving Notes, together with all accrued and unpaid interest thereon, shall be due and payable on the Termination Date.

(b)Term Loans.  The principal of each Term Loan shall be payable monthly as follows:

(i)Tranche A1 Term Loans.  The Borrowers shall make principal payments for application to the Tranche A1 Term Loans in the amount of $122,500 on the twentieth (20th) day of each month commencing on October 20, 2004, provided that in the event that any amount of principal or interest remains unpaid with respect to the Tranche A1 Term Loans on the Tranche A1 Maturity Date, such remaining amounts shall be due and payable in full on such date;

(ii)Tranche A2 Term Loans.  The Borrowers shall make principal payments for application to the Tranche A2 Term Loans in the amount of $127,500 on the twentieth (20th) day of each month commencing on January 20, 2006,  provided that in the event that any amount of principal or interest remains unpaid with respect to the Tranche A2 Term Loans on the Tranche A2 Maturity Date, such remaining amounts shall be due and payable in full on such date; and

(iii)Tranche A3 Term Loans.  The Borrowers shall make principal payments for application to the Tranche A3 Term Loans in the amount of $150,000 on the twentieth (20th) day of each month commencing on July 20, 2006, provided that in the event that any amount of principal or interest remains unpaid with respect to the Tranche A3 Term Loans on the Tranche A3 Maturity Date, such remaining amounts shall be due and payable in full on such date;

(iv)Tranche B1 Term Loans.  The Borrowers shall make principal payments for application to the Tranche B1 Term Loans in the amount of $60,833.33 on the twentieth (20th) day of each month commencing on October 20, 2004, provided that in the event that any amount of principal or interest remains unpaid with respect to the Tranche B1 Term Loans on the Tranche B1 Maturity Date, such remaining amounts shall be due and payable in full on such date;

(v)Tranche B2 Term Loans.  The Borrowers shall make principal payments for application to the Tranche B2 Term Loans in the amount of $64,166.66 on the twentieth (20th) day of each month commencing on January 20, 2006, provided that in the

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event that any amount of principal or interest remains unpaid with respect to the Tranche B2 Term Loans on the Tranche B2 Maturity Date, such remaining amounts shall be due and payable in full on such date; and

(vi)Tranche B3 Term Loans.  The Borrowers shall make principal payments for application to the Tranche B3 Term Loans in the amount of $167,000.00 on the twentieth (20th) day of each month commencing on July 20, 2006, provided that in the event that any amount of principal or interest remains unpaid with respect to the Tranche B3 Term Loans on the Tranche B3 Maturity Date, such remaining amounts shall be due and payable in full on such date.

Amounts paid on the Term Notes may not be reborrowed.

(c)Repayment of Swing Line Loans with Revolving Loans.  The Swing Line Lender may, at any time, in its sole discretion, by written notice to Borrower’s Agent and the Lenders, demand repayment of its Swing Line Loans by way of one or more Revolving Loans, in which case Borrowers shall be deemed to have requested a Revolving Loan comprised solely of Base Rate Advances in the amount of such Swing Line Loans; provided, that any such demand shall be deemed to have been given one Business Day prior to the Termination Date and on the date of the occurrence of any Event of Default described in Section 7.1 and upon acceleration of the indebtedness hereunder and the exercise of remedies in accordance with the provisions of Section 7.2.  Each Lender hereby irrevocably agrees to make its pro rata share of each such Revolving Loan in the amount, in the manner and on the date specified in the preceding sentence, notwithstanding the following: (i) the amount of such borrowing may not comply with the minimum amount for Revolving Loans otherwise required hereunder, (ii) whether any conditions specified in Article III are then satisfied, (iii) whether a Default or an Event of Default then exists, (iv) failure of any such request or deemed request for a Revolving Loan to be made by the time otherwise required hereunder, (v) whether the date of such borrowing is a date on which Revolving Loans are otherwise permitted to be made hereunder, or (vi) any termination of the Commitments relating thereto immediately prior to or contemporaneously with such borrowing.  In the event that any Revolving Loan cannot for any reason be made on the date otherwise required above (including, as a result of the commencement of a proceeding under the U.S. Bankruptcy Code with respect to Borrower or any other Person), then each Lender hereby agrees that it shall forthwith purchase (as of the date such borrowing would otherwise have occurred, but adjusted for any payments received from Borrower on or after such date and prior to such purchase) from the Swing Line Lender such participations in the outstanding Swing Line Loans as shall be necessary to cause each such Lender to share in such Swing Line Loans ratably based upon its Revolving Commitment Amount (determined before giving effect to any termination of the Commitments pursuant to this Agreement), provided, that (A) all interest payable on the Swing Line Loans shall be for the account of the Swing Line Lender until the date as of which the respective participation is purchased and (B) at the time any purchase of participations pursuant to this sentence is actually made, the purchasing Lender shall be required to pay to the Swing Line Lender, to the extent not paid to the Swing Line Lender by Borrower in accordance with the terms of the relevant Revolving Note, interest on the principal amount of participation purchased for each day from and including the day upon which such borrowing would otherwise have occurred to but excluding the date of payment for such participation, at the rate equal to the Federal Funds Rate.  Notwithstanding any provision of this Agreement to the contrary, the obligation of each Lender holding a Revolving Commitment to make Revolving Loans for the purpose of repaying Swing Line Loans and each such Lender’s obligation to purchase a participation in any unpaid Swing Line Loans shall be absolute and unconditional and shall not be affected by any circumstance or event whatsoever, including without limitation (x) any setoff,

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counterclaim, recoupment, defense or any other right that such Lender may have against the Swing Line Lender, Administrative Agent or the Borrowers or any other Person for any reason whatsoever, (y) the occurrence of a Default or Event of Default, or (z) any breach of this Agreement by any part hereto.

Section 2.7Prepayments.

(a)Mandatory Prepayments for Borrowing Base Deficiency.  If at any time a Borrowing Base Deficiency exists, the Borrowers shall immediately pay on the principal of the Advances in respect of the Revolving Loans and the Swing Line Loans an amount equal to such Borrowing Base Deficiency.  Any such payments shall be applied first against Swing Line Loans and then against Revolving Loans consisting of Base Rate Advances and then to Revolving Loans consisting of Quoted Rate and LIBOR Rate Advances, in order, starting with the Quoted Rate or LIBOR Rate Advances having the shortest time to the end of the applicable Interest Period.  Following payment of the Swing Line Loans as required by this paragraph (a), the remaining amount of any such prepayment shall be for the account of each Revolving Lender in proportion to its share of outstanding Revolving Loans.

(b)Mandatory Prepayments for a Prepayment Event.  If at any time a Prepayment Event occurs, the Borrowers shall immediately pay to the Administrative Agent for the ratable benefit of the Lenders the net proceeds realized by such Prepayment Event and any prepayment fee payable under Section 2.23.  Any such prepayments shall be applied first, to the Term Loans, second, to any outstanding Swing Line Loans and third, to any outstanding Revolving Loans.  All prepayments applied to the Term Loans shall be applied to the scheduled principal payments on the Term Loans in the inverse order of their maturities.

(c)Other Mandatory Prepayments.  If at any time Total Revolving Outstandings exceed the Aggregate Revolving Commitment Amount, the Borrowers shall immediately repay to the Administrative Agent for the account of the Revolving Lenders and Swing Line Lender the amount of such excess.  Any such payments shall be applied first against Swing Line Loans and then against Revolving Loans consisting of Base Rate Advances and then to Revolving Loans consisting of Quoted Rate and LIBOR Rate Advances, in order, starting with the Quoted Rate or LIBOR Rate Advances having the shortest time to the end of the applicable Interest Period.  Following payment of the Swing Line Loans as required by this paragraph (a), the remaining amount of any such prepayment shall be for the account of each Revolving Lender in proportion to its share of outstanding Revolving Loans.

(d)Optional Prepayments.   The Term Loans may be prepaid only in accordance with Section 2.23.  The Borrowers may prepay Base Rate Advances in respect of the Revolving Loans and Swing Line Loans, in whole or in part, at any time, without premium or penalty.  Any such prepayment must be accompanied by accrued and unpaid interest on the amount prepaid.  Each partial prepayment shall be in a minimum aggregate amount for all the Lenders of $200,000 or a whole integral of $100,000 in excess thereof.  Except upon an acceleration following an Event of Default or upon termination of the Revolving Commitments in whole, the Borrowers may pay LIBOR Rate Advances only on the last day of the Interest Period applicable thereto.  The Borrowers may prepay Quote Rate Advances in respect of the Revolving Loans only if permitted by the Quoted Rate Offer.  Amounts paid (unless following an acceleration or upon termination of the Revolving Commitments in whole) or prepaid on Advances in respect of the Revolving Loans under this paragraph (d) may be reborrowed upon the terms and subject to the conditions and limitations of this Agreement.  Amounts paid or prepaid on the Advances under

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this paragraph (d) shall be for the account of each Revolving Lender in proportion to its share of outstanding Revolving Loans.

Part B — Terms of the Letter of Credit Facility

Section 2.8Letters of Credit.  Upon the terms and subject to the conditions of this Agreement, the Letter of Credit Bank agrees to issue Letters of Credit for the account of the Borrowers from time to time between the Closing Date and thirty (30) days prior to the Termination Date in such amounts as the Borrowers’ Agent shall request up to an aggregate amount at any time outstanding not exceeding the Letter of Credit Commitment Amount; provided that no Letter of Credit will be issued in any amount which, after giving effect to such issuance, would cause Total Revolving Outstandings to exceed the lesser of (a) the Aggregate Revolving Commitment Amount or (b) the Borrowing Base.  Letters of Credit issued pursuant to the Existing Credit Agreement shall remain outstanding as Letters of Credit hereunder.

Section 2.9Procedures for Letters of Credit.  Each request for a Letter of Credit shall be made by the Borrowers’ Agent in writing, by telex, facsimile transmission or electronic conveyance received by the Letter of Credit Bank by 11:00 A.M. (Central time) on a Business Day that is not less than one Business Day preceding the requested date of issuance (which shall also be a Business Day).  Each request for a Letter of Credit shall be deemed a representation by the each Borrower that on the date of issuance of such Letter of Credit and after giving effect thereto the applicable conditions specified in Article III have been and will be satisfied.  The Letter of Credit Bank may require that such request be made on such letter of credit application and reimbursement agreement form as the Letter of Credit Bank may from time to time specify, along with satisfactory evidence of the authority and incumbency of the officials of the Borrowers’ Agent making such request.  The Letter of Credit Bank shall promptly notify the other Revolving Lenders of the receipt of the request and the matters specified therein.  On the date of each issuance of a Letter of Credit the Letter of Credit Bank shall send notice to the other Revolving Lenders of such issuance, accompanied by a copy of the Letter or Letters of Credit so issued.

Section 2.10Terms of Letters of Credit.  Letters of Credit shall be issued in support of obligations of the Borrowers’ Agent in accordance with Section 2.16.  Unless the proposed Letter of Credit is cash collateralized, each Letter of Credit must expire not later than the Business Day preceding the Termination Date and no Letter of Credit may have a term longer than 12 months.

Section 2.11Agreement to Repay Letter of Credit Drawings.  If the Letter of Credit Bank has received documents purporting to draw under a Letter of Credit that the Letter of Credit Bank believes conform to the requirements of the Letter of Credit, or if the Letter of Credit Bank has decided that it will comply with the Borrowers’ Agent written or oral request or authorization to pay a drawing on any Letter of Credit that the Letter of Credit Bank does not believe conforms to the requirements of the Letter of Credit, it will notify the Borrowers’ Agent of that fact.  The Borrowers shall reimburse the Letter of Credit Bank by 9:30 A.M. (Central time) on the day on which such drawing is to be paid in Immediately Available Funds in an amount equal to the amount of such drawing.  Any amount by which the Borrowers have failed to reimburse the Letter of Credit Bank for the full amount of such drawing by 10:00 A.M. (Central t ime) on the date on which the Letter of Credit Bank in its notice indicated that it would pay such drawing, until reimbursed by the Borrowers, is an “Unpaid Drawing.”

Section 2.12Obligations Absolute.  The obligation of the Borrowers under Section 2.11 to repay the Letter of Credit Bank for any amount drawn on any Letter of Credit and to repay the Revolving Lenders to cover Unpaid Drawings shall be absolute, unconditional and irrevocable, shall continue for so long as any Letter of Credit is outstanding notwithstanding any termination of this Agreement, and shall

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be paid strictly in accordance with the terms of this Agreement, under all circumstances whatsoever, including without limitation the following circumstances:

(a)Any lack of validity or enforceability of any Letter of Credit;

(b)The existence of any claim, setoff, defense or other right which any Borrower may have or claim at any time against any beneficiary, transferee or holder of any Letter of Credit (or any Person for whom any such beneficiary, transferee or holder may be acting), the Letter of Credit Bank, the Administrative Agent, the Swing Line Lender, any Lender or any other Person, whether in connection with a Letter of Credit, this Agreement, the transactions contemplated hereby, or any unrelated transaction; or

(c)Any statement or any other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect whatsoever.

None of the Letter of Credit Bank, the Administrative Agent, the Swing Line Lender or any Lender or officers, directors or employees of any thereof shall be liable or responsible for, and the obligations of the Borrowers to the Letter of Credit Bank, the Administrative Agent, the Swing Line Lender and the Lenders shall not be impaired by:

(i)The use which may be made of any Letter of Credit or for any acts or omissions of any beneficiary, transferee or holder thereof in connection therewith;

(ii)The validity, sufficiency or genuineness of documents, or of any endorsements thereon, even if such documents or endorsements should, in fact, prove to be in any or all respects invalid, insufficient, fraudulent or forged;

(iii)The acceptance by the Letter of Credit Bank of documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary; or

(iv)Any other action of the Letter of Credit Bank in making or failing to make payment under any Letter of Credit if in good faith and in conformity with U.S. or foreign laws, regulations or customs applicable thereto.

Notwithstanding the foregoing, the Borrowers shall have a claim against the Letter of Credit Bank, and the Letter of Credit Bank shall be liable to the Borrowers, to the extent, but only to the extent, of any direct, as opposed to consequential, damages suffered by the Borrowers which were caused by the Letter of Credit Bank’s willful misconduct or gross negligence in determining whether documents presented under any Letter of Credit comply with the terms thereof.

Part C —  General

Section 2.13Fees.

(a)Closing Fees.  The Borrowers shall pay to the Administrative Agent for the benefit of the Lenders a non-refundable closing fee in the amount of $155,500 (the “Closing Fee”).

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(b)Commitment Fee.  The Borrowers shall pay to the Administrative Agent for the account of each Revolving Lender and the Swing Line Lender fees (the “Commitment Fees”) in an amount determined by applying the Applicable Commitment Fee Percentage to the average daily Unused Commitment of such Lender for the period from the Closing Date to the Termination Date.  Such Commitment Fees are payable in arrears quarterly on the last day of each calendar quarter and on the Termination Date.

(c)Administrative Agent’s Fees.  On or before the Closing Date, the Borrowers will pay to the Administrative Agent the fees set forth in the separate letter agreement dated the date hereof between the Administrative Agent and the Borrowers.

(d)Letter of Credit Fees.  For each Letter of Credit issued, the Borrowers shall pay to the Administrative Agent for the account of the Revolving Lenders, in advance on the date of issuance, a fee (a “Letter of Credit Fee”) in an amount equal to the greater of (i) $1,000 and (ii) the amount determined by applying a per annum rate equal to the Applicable Margin for LIBOR Rate Advances in respect of the Revolving Loans then in effect to the original face amount of the Letter of Credit for the period from the date of issuance to the scheduled expiration date of such Letter of Credit.  In addition to the Letter of Credit Fee, the Borrowers shall pay to the Letter of Credit Bank, on demand, all issuance, amendment, drawing and other fees regularly charged by the Letter of Credit Bank to its letter of credit customers and all out-of-pocket expenses incurred by the Letter of Credit Bank in connection with the issuance, amendment, administration or payment of any Letter of Credit.

Section 2.14Computation.  Commitment Fees, Letter of Credit Fees, interest on Revolving Loans, Term Loans and Swing Line Loans and the Default Rate shall be computed on the basis of actual days elapsed (or, in the case of Letter of Credit Fees which are paid in advance, actual days to elapse) and a year of 360 days.

Section 2.15Payments.  Payments and prepayments of principal of, and interest on, the Notes and all fees, expenses and other obligations under this Agreement payable to the Administrative Agent or the Lenders shall be made without setoff or counterclaim in Immediately Available Funds not later than 1:00 P.M. (Central time) on the dates called for under this Agreement and the Notes to the Administrative Agent at its main office in Denver, Colorado.  Funds received after such time shall be deemed to have been received on the next Business Day.  The Administrative Agent will distribute in like funds to each Lender its ratable share of each such payment of principal, interest and fees received by the Administrative Agent for the account of the Lenders on Business Day or deemed Business Day that such funds were received by the Administrative Agent.  Whenever any payment to be made hereunder or on the Notes shall be stated to be due on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time, in the case of a payment of principal, shall be included in the computation of any interest on such principal payment; provided, however, that if such extension would cause payment of interest on or principal of a LIBOR Rate Advance to be made in the next following calendar month, such payment shall be made on the next preceding Business Day.

Section 2.16Use of Loan Proceeds.  The proceeds of the Tranche A1 Term Loans, Tranche A2 Term Loans, Tranche B1 Term Loans and Tranche B2 Term Loans have been used for refinancing the Series 2000 Bonds,  the Thompson Construction and working capital for the Borrowers’ Agent.  The proceeds of the Tranche A3 Term Loans and Tranche B3 Term Loans shall be used to finance the Moark Acquisition.  The proceeds of the Revolving Loans shall be used to fund working capital requirements and for the general business purposes of the Borrowers’ Agent in a manner not in conflict with any of the Borrowers’ covenants in this Agreement.  Swing Line Loans may be used for general corporate purposes of the Borrowers in accordance with the Borrowers’ covenants in this Agreement. In no event shall the

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Loan proceeds be used (i) to purchase, or refinance the purchase price of, the Thompson Property, (ii) to purchase or carry margin stock (as defined in Regulation U of the Board) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund Indebtedness originally incurred for such purpose, or (iii) for any purpose that entail a violation of, or that is inconsistent with, the provisions of Regulations U or X of the Board.

Section 2.17Interest Rate Not Ascertainable, Etc.  If, on or prior to the date for determining the Adjusted LIBOR Rate in respect of the Interest Period for any LIBOR Rate Advance, any Revolving Lender or Term B Lender determines (which determination shall be conclusive and binding, absent error) that:

(a)deposits in dollars (in the applicable amount) are not being made available to such Lender in the relevant market for such Interest Period, or

(b)the Adjusted LIBOR Rate will not adequately and fairly reflect the cost to such Lender of funding or maintaining LIBOR Rate Advances for such Interest Period,

such Lender shall forthwith give notice to the Borrowers’ Agent and the other Revolving Lenders or Term B Lenders, as the case may be, of such determination, whereupon the obligation of such Lender to make or continue, or to convert any Advances to, LIBOR Rate Advances shall be suspended until such Lender notifies the Borrowers’ Agent and the Administrative Agent that the circumstances giving rise to such suspension no longer exist.  While any such suspension continues, all further Advances by such Lender shall be made with an interest rate option to which such suspension does not apply.  No such suspension shall affect the interest rate then in effect during the applicable Interest Period for any LIBOR Rate Advance outstanding at the time such suspension is imposed.

Section 2.18Increased Cost.  If any Regulatory Change:

(a) shall subject any Revolving Lender or Term B Lender (or its Applicable Lending Office) to any tax, duty or other charge with respect to its LIBOR Rate Advances, its Revolving or Term B Note or its obligation to make LIBOR Rate Advances or shall change the basis of taxation of payment to any Lender (or its Applicable Lending Office) of the principal of or interest on its LIBOR Rate Advances or any other amounts due under this Agreement in respect of its LIBOR Rate Advances or its obligation to make LIBOR Rate Advances (except for changes in the rate of tax on the overall net income of such Lender or its Applicable Lending Office imposed by the jurisdiction in which such Lender’s principal office or Applicable Lending Office is located); or

(b)shall impose, modify or deem applicable any reserve, special deposit or similar requirement (including, without limitation, any such requirement imposed by the Board, but excluding any such requirement to the extent included in calculating the applicable Adjusted LIBOR Rate) against assets of, deposits with or for the account of, or credit extended by, any such Lender’s Applicable Lending Office or against Letters of Credit issued by the Letter of Credit Bank or shall impose on any such Lender (or its Applicable Lending Office) or on the United States market for certificates of deposit or the interbank Eurodollar market any other condition affecting its LIBOR Rate Advances, its Revolving or Term B Note or its obligation to make LIBOR Rate Advances or affecting any Letter of Credit;

and the result of any of the foregoing is to increase the cost to such Lender (or its Applicable Lending Office) of making or maintaining any LIBOR Rate Advance or issuing or maintaining any Letter of Credit, or to reduce the amount of any sum received or receivable by such Lender (or its Applicable

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Lending Office) under this Agreement or under its Revolving or Term B Note, then, within 30 days after demand by such Lender (with a copy to the Administrative Agent), the Borrowers shall pay to such Lender such additional amount or amounts as will compensate such Lender for such increased cost or reduction.  Each Revolving and Term B Lender will promptly notify the Borrowers’ Agent and the Administrative Agent of any event of which it has knowledge, occurring after the date hereof, which will entitle such Lender to compensation pursuant to this Section and will designate a different Applicable Lending Office if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the judgment of such Lender, be otherwise disadvantageous to such Lender.  A certificate of any Revolving and Term B Lender claiming compensation under this Section, setting forth the additional amount or amounts to be paid to it hereunder and stating in reasonable detail the basis for the charge and the method of computation, shall be conclusive in the absence of error.  In determining such amount, such Lender may use any reasonable averaging and attribution methods.  Failure on the part of any Revolving and Term B Lender to demand compensation for any increased costs or reduction in amounts received or receivable with respect to any Interest Period shall not constitute a waiver of such Lender’s rights to demand compensation for any increased costs or reduction in amounts received or receivable in any subsequent Interest Period.

Section 2.19Illegality.  If any Regulatory Change shall make it unlawful or impossible for any Revolving and Term B Lender to make, maintain or fund any LIBOR Rate Advance, such Lender shall notify the Borrowers’ Agent and the Administrative Agent, whereupon the obligation of such Lender to make or continue, or to convert any Advances to, LIBOR Rate Advances shall be suspended until such Lender notifies the Borrowers’ Agent and the Administrative Agent that the circumstances giving rise to such suspension no longer exist.  Before giving any such notice, such Lender shall designate a different Applicable Lending Office if such designation will avoid the need for giving such notice and will not, in the judgment of such Lender, be otherwise disadvantageous to such Lender.  If any Revolving and Term B Lender determines that it may not lawfully continue to maintain any LIBOR Rate Advances to the end of the applicable Interest Period, all of the affected Advances shall be automatically converted to Base Rate Advances as of the date of such Lender’s notice, and upon such conversion the Borrowers shall indemnify such Lender in accordance with Section 2.23.

Section 2.20Capital Adequacy.  In the event that any Regulatory Change reduces or shall have the effect of reducing the rate of return on any Revolving or Term B Lender’s capital or the capital of its parent corporation (by an amount such Lender deems material) as a consequence of its Commitments and/or its Loans and/or any Letters of Credit or any Revolving Lender’s obligations to make Advances to cover Letters of Credit to a level below that which such Lender or its parent corporation could have achieved but for such Regulatory Change (taking into account such Lender’s policies and the policies of its parent corporation with respect to capital adequacy), then the Borrowers shall, within 30 days after written notice and demand from such Lender (with a copy to the Administrative Agent), pay to such Lender additional amounts sufficient to compensate such Lender or its parent corporation for such reduction.  Any determination by any Revolving or Term B Lender under this Section and any certificate as to the amount of such reduction given to the Borrowers’ Agent by such Lender shall be final, conclusive and binding for all purposes, absent error.

Section 2.21Funding Losses; Quoted Rate and LIBOR Rate Advances.  The Borrowers shall compensate each Revolving or Term B Lender, upon its written request, for all losses, expenses and liabilities (including any interest paid by such Lender to lenders of funds borrowed by it to make or carry LIBOR Rate Advances to the extent not recovered by such Lender in connection with the re-employment of such funds and including loss of anticipated profits) which such Lender may sustain:  (i) if for any reason, other than a default by such Lender, a funding of a LIBOR Rate Advance does not occur on the date specified therefor in the Borrowers’ Agent’s request or notice as to such Advance under Section 2.2 or 2.4, or (ii) if, for whatever reason (including, but not limited to, acceleration of the maturity of

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Advances following an Event of Default), any repayment of a LIBOR Rate Advance, or a conversion pursuant to Section 2.19, occurs on any day other than the last day of the Interest Period applicable thereto.  A Revolving or Term B Lender’s request for compensation shall set forth the basis for the amount requested and shall be final, conclusive and binding, absent error.

Section 2.22Discretion of Lenders as to Manner of Funding.  Each Revolving and Term B Lender shall be entitled to fund and maintain its funding of LIBOR Rate Advances in any manner it may elect, it being understood, however, that for the purposes of this Agreement all determinations hereunder (including, but not limited to, determinations under Section 2.21) shall be made as if such Lender had actually funded and maintained each LIBOR Rate Advance during the Interest Period for such Advance through the issuance of its certificates of deposit, or the purchase of deposits, having a maturity corresponding to the last day of the Interest Period and bearing an interest rate equal to the LIBOR Rate for such Interest Period.

Section 2.23Prepayment of Term Loans.  The Borrowers may prepay the principal amount of the Term Loans only if such payment is accompanied by accrued and unpaid interest on the amount paid and a prepayment fee (the “Prepayment Fee”) equal to (i) the Net Present Value of such Lender’s Term Note to be prepaid minus (ii) the portion of its Term Note to be prepaid.  If the Borrowers fail to pay any Prepayment Fee when due, the amount of such Prepayment Fee shall thereafter bear interest until paid at the Default Rate.  Each partial principal prepayment shall be in a minimum amount of the lesser of (i) $200,000 or a whole integral of $100,000 in excess thereof and (ii) the entire remaining principal balance of the Term Loans, and shall be applied to the principal installments in inverse order of their maturity.  Except upon an acceleration following an Event of Default or upon termination of the Term Loan Commitments in whole, the Borrowers may pay LIBOR Rate Advances only on the last day of the Interest Period applicable thereto (or, in the case of LIBOR Rate Advances made during the sixty (60) day period ending on the Termination Date, on the Termination Date).  Amounts paid or prepaid on the Term Notes under this Section shall be for the account of each Lender in proportion to its share of outstanding Term Loans, and shall be paid or prepaid ratably among the Term A Loans and the Term B Loans.  Amounts paid or prepaid on the Term Loans may not be reborrowed.

Section 2.24Replacement of Certain Lenders.  If any Lender shall become affected by any of the changes or events described in Section 2.17, 2.18, 2.19 or 2.20 (any such Lender hereinafter referred to as a “Replaced Lender”) and shall give notice to the Borrowers for any increased cost or amounts thereunder, the Borrowers may, so long as no Event of Default has occurred and is continuing, upon at least five (5) Business Days’ notice to the Administrative Agent and such Replaced Lender by the Borrowers’ Agent, designate a replacement lender (a “Replacement Lender”) reasonably acceptable to the Administrative Agent, to which such Replaced Lender shall, subject to its receipt (unless a later date for the remittance thereof shall be agreed upon by the Borrowers and the Replaced Lender) of all amounts due and owing to such Replaced Lender under Section 2.17, 2.18, 2.19 or 2.20 assign all (but not less than all) of its rights, obligations, Loans, Revolving Loan Commitment and Term Loan Commitment pursuant to an Assignment Agreement; provided, that all amounts owed to such Replaced Lender by the Borrowers (except liabilities which by the terms hereof survive the payment in full of the Loans and termination of this Agreement) shall be paid in full as of the date of such assignment.  Upon any assignment by any Lender pursuant to this Section becoming effective, the Replacement Lender shall thereupon be deemed to be a “Lender” for all purposes of this Agreement and such Replaced Lender shall thereupon cease to be a “Lender” for all purposes of this Agreement and shall have no further rights or obligations hereunder (other than pursuant to Section 2.17, 2.18, 2.19 or 2.20 while such Replaced Lender was a Lender).  No Prepayment Fee shall be payable as a result of replacement of a Lender under this Section 2.24.

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Section 2.25Taxes.

(a)Any and all payments by the Borrowers hereunder or under the Notes shall be made free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges of withholdings, and all liabilities with respect thereto, excluding, in the case of  each Lender and the Administrative Agent, taxes imposed on its overall net income and franchise taxes imposed on it in lieu of net income taxes (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities in respect of payments hereunder or under the Notes being hereinafter referred to as “Taxes”).

(b)The Borrowers agree to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies that arise from any payment made hereunder or under the Notes or from the execution, delivery or registration of, performing under, or otherwise with respect to, this Agreement or the Notes (hereinafter referred to as “Other Taxes”).

(c)The Borrowers shall indemnify each Lender and the Administrative Agent for the full amount of Taxes or Other Taxes imposed on or paid by such Lender or the Administrative Agent and any penalties, interest and expenses with respect thereto.  Payments on this indemnification shall be made within 30 days from the date such Lender or the Administrative Agent makes written demand therefor.

(d)Within 30 days after the date of any payment of Taxes, the Borrowers shall furnish to the Administrative Agent, at its address referred to on the signature page hereof, a certified copy of a receipt evidencing payment thereof.  In the case of any payment hereunder or under the Notes by or on behalf of the Borrowers through an account or branch outside the United States or by or on behalf of the Borrowers by a payor that is not a United States person, if the Borrowers determine that no Taxes are payable in respect thereof, the Borrowers shall furnish or shall cause such payor to furnish, to the Administrative Agent, at such address, an opinion of counsel reasonably acceptable to the Administrative Agent stating that such payment is exempt from Taxes. For purposes of this subsection (d) and subsection (e), the terms “United States” and “United States person” shall have the meanings specified in Section 7701 of the Internal Revenue Code.

(e)Each Lender, as of the date in becomes a party hereto, represents to the Borrowers and the Administrative Agent that it is either (i) a corporation organized under the laws of the United States or any State thereof or (ii) is entitled to complete exemption from United States withholding tax imposed on or with respect to any payments, including fees, to be made pursuant to this Agreement (x) under an applicable provision of a tax convention to which the United States is a party or (y) because it is acting through a branch, agency or office in the United States and any payment to be received by it hereunder is effectively connected with a trade or business in the United States.  Each Lender that is not a United States person (as such term is defined in Section 7701(a)(30) of the Code) shall submit to the Borrowers’ Agent and the Administrative Agent, on or before the day on which such Lender becomes a Lender, a duly completed and signed copy of either Form W-8BEN or Form W-8ECI of the United States Internal Revenue Service.  Form W-8BEN shall include the foreign Lender’s United States taxpayer identification number if required under the current regulations to claim exemption from withholding pursuant to a tax convention.  Thereafter and from time to time, each such Lender shall submit to the Borrowers’ Agent and the Administrative Agent such additional duly completed and signed copies of one or the other of such forms (or such successor forms as shall be adopted from time to time by the relevant United States taxing authorities) as may be (i) reasonably requested by the Borrowers’ Agent or the Administrative Agent and (ii) required and permitted under then-current United States law or regulations to avoid United States withholding

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taxes on payments in respect of all payments to be received by such Lender hereunder.  Upon the request of the Borrowers’ Agent or the Administrative Agent, each Lender that is a United States person (as such term is defined in Section 7701(a)(30) of the Code) shall submit to the Borrowers’ Agent and the Administrative Agent a certificate on Internal Revenue Service Form W-9 or such substitute form as is reasonably satisfactory to the Borrowers’ Agent and the Administrative Agent to the effect that it is such a United States person.

(f)If any Borrower shall be required by law or regulation to make any deduction, withholding or backup withholding of any taxes, levies, imposts, duties, fees, liabilities or similar charges of the United States of America, any possession or territory of the United States of America (including the Commonwealth of Puerto Rico) or any area subject to the jurisdiction of the United States of America (“U.S. Taxes”) from any payments to a Lender pursuant to any Loan Document in respect of the Obligations payable to  such then or thereafter outstanding, such Borrower shall make such withholdings or deductions and pay the full amount withheld or deducted to the relevant taxation authority or other authority in accordance with applicable law.

Section 2.26Capitalization.  Borrowers’ Agent agrees to purchase such equity in CoBank as CoBank may from time to time require in accordance with its Bylaws.  However, the maximum amount of equity which each Borrower shall be obligated to purchase in connection with any Loan may not exceed the maximum amount permitted by the Bylaws at the time that Loan is entered into or such Loan is renewed or refinanced by CoBank.

Section 2.27Security.  Each party hereto acknowledges that CoBank has a statutory first Lien on all of the Borrowers’ Agent’s stock and other equities in CoBank (the “CoBank Equities”) pursuant to 12 U.S.C. § 2131.  Accordingly, and notwithstanding any other provision of this Agreement or any other Loan Document to the contrary:

(a)CoBank’s statutory Lien on the CoBank Equities shall be for CoBank’s sole and exclusive benefit and shall not be subject to this Agreement or any other Loan Document nor shall the CoBank Equities (or the proceeds thereof) be subject to pro rata sharing hereunder;

(b)CoBank shall have no obligation to retire the CoBank equities upon the Borrowers’ default or at any other time, either for application to the Obligations or  otherwise; and

(c)the CoBank Equities shall not be offset against the Obligations to CoBank for purposes of determining the Lenders’ pro rata shares hereunder.

ARTICLE III
CONDITIONS PRECEDENT

Section 3.1Conditions to Closing.  The making of the Tranche A3 and Tranche B3 Term Loans and the Revolving Loans, the Swing Line Loans and the issuance of the initial Letter of Credit shall be subject to the prior or simultaneous fulfillment of the following conditions:

(a)Documents.  The Administrative Agent shall have received the following in sufficient counterparts (except for the Notes) for each Lender:

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(i)A Revolving Note and the Term Notes drawn to the order of each applicable Lender, executed by a duly authorized officer of each Borrower and dated on or before the Closing Date.

(ii)The GOE/MII Security Agreement duly executed by the Borrowers’ Agent and Midwest Investors of Iowa, Cooperative and dated on or before the Closing Date.

(iii)The GOECA Security Agreement duly executed by GOECA and dated on or before the Closing Date.

(iv)Each Contract Assignment duly executed by the Borrowers’ Agent and dated on or before the Closing Date.

(v)Each Margin Assignment duly executed by the Borrowers’ Agent and dated on or before the Closing Date.

(vi)The Moark Mortgage duly executed by the Borrowers’ Agent and dated on or before the Closing Date.

(vii)The Renville Mortgage duly executed by the Borrowers’ Agent and dated on or before the Closing Date.

(viii)The Thompson Mortgage duly executed by the Borrowers’ Agent and dated on or before the Closing Date.

(ix)Each Landlord Consent duly executed by the parties thereto and dated on or before the Closing Date.

(x)the Subordination Agreement, duly executed by the respective parties thereto and dated on or before the Closing Date.

(xi)The Environmental Indemnity duly executed by the Borrowers and dated on or before the Closing Date.

(xii)A certificate of the Secretary or Assistant Secretary (or other appropriate officer) of each Borrower dated as of the Closing Date and certifying to the following:

(A)A true and accurate copy of the limited liability company or corporate resolutions of such Borrower authorizing the execution, delivery and performance of the Loan Documents to which such Borrower is a party contemplated hereby and thereby;

(B)The incumbency, names, titles and signatures of the officers of such Borrower authorized to execute the Loan Documents to which such Borrower is a party and to request Advances;

(C)A true and accurate copy of the Certificate of Formation or Articles of Incorporation (or the equivalent) of such Borrower with all amendments thereto, certified by the appropriate governmental official of the

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jurisdiction of organization as of a date acceptable to the Administrative Agent; and

(D)A true and accurate copy of the operating agreement or bylaws (or other constitutive documents) for such Borrower.

(xiii)A certificate of good standing for each Borrower in the jurisdiction of its formation or incorporation and, with respect to the Borrowers’ Agent, in the States of Iowa and Minnesota and each other jurisdiction where the character of the properties owned or leased by such Borrower makes such qualification necessary, certified by the appropriate governmental officials as of a date acceptable to the Administrative Agent.

(xiv)A certificate dated the Closing Date of the chief executive officer or chief financial officer of each Borrower certifying as to the matters set forth in Sections 3.3 (a) and  (b) below.

(xv)The initial Borrowing Base Certificate, as of the last day of the most recent month end prior to the Closing Date.

(xvi)Insurance certificates in form and substance reasonably satisfactory to the Lenders listing the Administrative Agent as loss payee thereof and indicating that the Borrower has obtained insurance in compliance with Section 5.3 with respect to each of the businesses and real properties of the Borrowers in such amounts and with such carriers reasonably acceptable to the Lenders.

(xvii)Landlord’s waivers and/or bailee’s waivers for locations identified on Schedule 3.1(a).

(b)Opinions.  The Administrative Agent shall have received executed legal opinions of Lindquist & Vennum and Ramsey, Baxley & McDougle, counsel to the Borrowers, dated the Closing Date, delivered to the Administrative Agent in sufficient counterparts for each Lender and in form and substance reasonably satisfactory to the Lenders.

(c)Compliance.  Each Borrower shall have performed and complied with all agreements, terms and conditions contained in this Agreement required to be performed or complied with by such Borrower prior to or simultaneously with the Closing Date.

(d)Lien Searches.  The Administrative Agent shall have received the results of a recent lien search in each of the jurisdictions where the assets of the Borrowers are located, and such search shall reveal no Liens on any of the assets of the Borrowers except for those Liens permitted by Section 6.13 or discharged on or prior to the Closing Date pursuant to a document reasonably satisfactory to the Administrative Agent.

(e)Environmental Matters.  The Administrative Agent shall have received a Phase I environmental site assessment with respect to the Moark Property and Renville Property prepared by the Borrowers’ environmental consultant, along with a corresponding reliance letter from such environmental consultant, confirming that no hazardous substances were found in, on or under the Moark Property or Renville Property and the Lenders shall otherwise be satisfied in all respects with an environmental due diligence investigation of the Borrowers, including with respect to the Thompson Property.

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(f)Appraisal.  The Administrative Agent shall have received a real property appraisal of each parcel of real property described in a Mortgage (including an appraisal of all buildings thereon on an as-built basis), which appraisal shall be in form and substance reasonably satisfactory to the Lenders.

(g)Title Insurance.  The Administrative Agent shall have received a commitment for a mortgagee’s title insurance policy or marked up unconditional binder for such insurance (or equivalent thereof reasonably satisfactory to the Administrative Agent) with respect to each Mortgage.  Each such policy shall (i) be in an amount reasonably satisfactory to the Lenders; (ii) be issued at ordinary rates; (iii) insure that the Mortgage insured thereby creates a valid first Lien on the mortgaged property described therein free and clear of all defects and encumbrances, except (A) as disclosed therein and (B) with respect to the Renville Mortgage, subject only to the Lien against the Renville Property in favor of U.S. Bank National Association, as trustee for the holders of the 1999 Series Bonds and the 2001 Series Bonds; (iv) name the Administrative Agent for the benefit of the Lenders as the insured thereunder; (v) be in the form of ALTA Loan Policy - 1970 (Amended 10/17/70 and 10/17/84) (or equivalent thereof reasonably satisfactory to the Administrative Agent); (vi) contain such endorsements and affirmative coverage as the Administrative Agent may reasonably request and (vii) be issued by a title company reasonably satisfactory to the Administrative Agent (including any such title companies acting as coinsurers or reinsurers, at the option of the Administrative Agent).  The Administrative Agent shall have received evidence reasonably satisfactory to it that all premiums in respect of each such policy, all charges for mortgage recording tax, and all related expenses, if any, have been paid.

(h)A.L.T.A. Surveys.  The Administrative Agent shall have received as-built A.L.T.A. surveys of the Moark Property, the Renville Property and each property that is subject to a Landlord Consent, reasonably satisfactory in form and substance to the Administrative Agent, reasonably current and certified to the Administrative Agent for the benefit of the Lenders and the title company issuing the mortgagee’s title insurance policy by a licensed surveyor reasonably satisfactory to the Administrative Agent, showing (i) the locations on each such property of all the buildings, structures and other improvements and the established building setback lines, (ii) the lines of streets abutting each such property and width thereof, (iii) all access and other easements appurtenant to each such property, (iv) all roadways, paths, driveways, easements, encroachments and overhanging projections and similar encumbrances affecting each such property, whether recorded, apparent from a physical inspection of the sites or otherwise known to the surveyor, (v) any encroachments on any adjoining property by the building structures and improvements on each such property, (vi) if each such property is described as being on a filed map, a legend relating the survey to said map, and (vii) the flood zone designations, if any, in which each such property is located.

(i)Moark Leases.  The Administrative Agent shall have received evidence satisfactory to the Lenders that (i) each Moark Lease has been validly assigned to a Borrower, and (ii) such Borrower’s leasehold interest is clear of all defects and encumbrances on title, other than those approved by the Administrative Agent in its sole discretion.

(j)Risk Management Policy.  The Administrative Agent shall have received a Risk Management Policy for the Borrowers’ Agent that (i) has been approved by the Borrowers’ Agent’s board of directors, (ii) addresses ingredients (corn and soybean meal) utilized in the operations of the Borrowers’ Agent’s operations and the finished egg products therefrom and (iii) is in form and substance reasonably satisfactory to the Lenders.

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(k)Real Estate Plan.  The Administrative Agent shall have received a real estate plan from the Borrower’s Agent setting forth its short and long term plans with respect to owned and leased properties in a form and substance acceptable to the Lenders in their sole discretion (the “Real Estate Plan”).

(l)Material Contracts.  The Borrowers shall have delivered to the Administrative Agent true and complete copies of each Material Contract identified on Schedule 3.1(l), including any supplements or amendments thereto, and a certificate of an authorized officer of Borrowers’ Agent certifying that all such Material Contracts are true, complete and correct and are on the Closing Date in full force and effect and that neither the Borrowers’ Agent nor, to the Borrowers’ Agent’s knowledge, any other party to any such Material Contract is or, but for the passage of time or giving of notice or both, will be in breach of any material obligation thereunder.

(m)Filings, Registrations and Recordings.  Each document (including any Uniform Commercial Code or CNS financing statement) required by the Security Documents or under law or reasonably requested by the Administrative Agent to be filed, registered or recorded in order to create in favor of the Administrative Agent for the benefit of the Lenders, a perfected Lien on the collateral described therein, prior and superior in right to any other Person (other than with respect to Liens expressly permitted by Section 6.13), shall be in proper form for filing, registration or recordation, any pledged collateral shall have been duly delivered to the Administrative Agent, and the priority and perfection of the Liens created by the Security Documents shall have been established to the satisfaction of the Administrative Agent and its counsel.

(n)Existing Indebtedness.  The Administrative Agent shall have received evidence reasonably satisfactory to the Lenders that all Indebtedness of the Borrowers other than Indebtedness permitted to remain outstanding after the Closing Date pursuant to this Agreement shall have been repaid or will, as permitted hereunder, be repaid with the proceeds of the Term A3 Loan and Term B3 Loan and the initial Advance under the Revolving Loan to be made on the Closing Date.

(o)Moark Acquisition.  The Administrative Agent shall have received (i) evidence, reasonably satisfactory to the Administrative Agent, that the Borrowers’ Agent has received  cash equity contributions from Land O’ Lakes in an amount not less than $5,000,000, (ii) evidence, reasonably satisfactory to the Administrative Agent, that the Borrowers’ Agent has completed, or concurrently with the initial credit extension hereunder will complete, the Moark Acquisition in accordance with the terms of the Moark Acquisition Documents (without any amendment thereto or waiver thereunder unless consented to by the Lenders); and (iii) all of the following, each duly executed and dated the Closing Date (or such earlier date as shall be satisfactory to the Administrative Agent), in form and substance satisfactory to the Administrative Agent:

(i)Opinions.  Opinions of counsel for each Borrower, including local counsel reasonably requested by the Administrative Agent, and all other opinions issued pursuant to the Moark Acquisition;

(ii)Copies of Documents.  Copies of the Moark Acquisition Documents, certified by the secretary or assistant secretary (or similar officer) of the Borrowers’ Agent as being true, accurate and complete.

(iii)Closing Certificate, Consents and Permits.  A certificate executed by an officer of the Borrowers’ Agent on behalf of the Borrowers’ Agent certifying (A) the

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matters set forth in Section 3.2 as of the Closing Date and (B) the occurrence of the closing of the Moark Acquisition and that such closing has been consummated in accordance with the terms of the Moark Acquisition Documents without waiver of any material condition thereof; together with evidence that (1) all necessary governmental, regulatory, creditor, member, partner and other material consents, approvals and exemptions required to be obtained by the Borrowers’ Agent in connection with the Moark Acquisition, including in respect of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, have been duly obtained and are in full force and effect and (ii) all material permits necessary for the operation of any business(es) acquired in connection with the Moark Acquistion have been obtained.

(p)No Adverse Change.   Since March 31, 2006, in the judgment of the Lenders, no Material Adverse Occurrence shall have occurred.

(q)Other Matters.  All corporate and legal proceedings relating to the Borrowers and all instruments and agreements in connection with the transactions contemplated by this Agreement shall be satisfactory in scope, form and substance to the Administrative Agent, the Lenders and the Administrative Agent’s counsel, and the Administrative Agent shall have received all information and copies of all documents, including records of corporate proceedings, as any Lender or such counsel may reasonably have requested in connection therewith, such documents where appropriate to be certified by proper corporate or governmental authorities.

(r)Fees and Expenses.  The Administrative Agent shall have received for itself and for the account of the Lenders all fees and other amounts due and payable by the Borrowers on or prior to the Closing Date, including the reasonable fees and expenses of counsel to the Administrative Agent payable pursuant to Section 9.2.

(s)No Default; Representations and Warranties.  The Administrative Agent shall have received a certificate dated the requested borrowing date of the chief executive officer or chief financial officer of each Borrower certifying as to the matters set forth in Sections 3.2 (a) and  (b) below.

Any one or more of the conditions set forth above which have not been satisfied by the Borrowers on or prior to the date of disbursement of the initial Loan under this Agreement shall not be deemed permanently waived by the Administrative Agent or any Lender unless the Administrative Agent or such Lender, as the case may be, shall waive the same in a writing which expressly states that the waiver is permanent, and in all cases in which the waiver is not stated to be permanent the Administrative Agent or any Lender may at any time subsequent thereto insist upon compliance and satisfaction of any such condition as a condition to any subsequent Loan or Letter of Credit hereunder and failure by the Borrowers to comply with any such condition within five (5) Business Day’s written notice from the Administrative Agent or any Lender to the Borrowers’ Agent shall constitute an Event of Default under this Agreement.

Section 3.2Conditions Precedent to All Loans and Letters of Credit.  The obligation of the Lenders to make any Loans hereunder (including the Term Loans and the initial Revolving Loans) and of the Letter of Credit Bank to issue each Letter of Credit (including the initial Letter of Credit) shall be subject to the fulfillment of the following conditions:

(a)Representations and Warranties.  The representations and warranties contained in Article IV shall be true and correct on and as of the Closing Date and on the date of each

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Revolving Loan or the date of issuance of each Letter of Credit, with the same force an effect as if made on such date.

(b)No Default.  No Default or Event of Default shall have occurred and be continuing on the Closing Date and on the date of each Revolving Loan, the date of each Term Loan or the date of issuance of each Letter of Credit or will exist after giving effect to the Revolving Loans or Term Loans made on such date or the Letters of Credit so issued.

(c)Notices and Requests.  The Administrative Agent shall have received the Borrowers’ Agent’s request for such Loans as required under Section 2.2 or its application for such Letters of Credit specified under Section 2.9.

Section 3.3Conditions Subsequent.  Whether or not the Borrowers’ Agent or any Borrower has requested an Advance, the Borrowers shall, in each case within thirty (30) days of the Closing Date, (a) satisfy the conditions specified in Sections 3.1(e) with respect to the Renville property, (b) deliver the A.L.T.A. Surveys for the Renville Property and each property that is subject to a Landlord Consent set forth in Section 3.1(h) and (c) deliver the Direct Rail Agreement between the Borrower’s Agent and the Bay Line Railroad, L.L.C. (“Bay Line”) allowing Bay Line to cross the Moark Property.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES

To induce the Lenders to enter into this Agreement and to make Loans hereunder and to induce the Letter of Credit Bank to issue Letters of Credit, each Borrower represents and warrants to the Lenders and the Letter of Credit Bank for itself and each other Borrower that, both before and after giving effect to the Moark Acquisition:

Section 4.1Organization, Standing, Etc.  Midwest Investors of Iowa, Cooperative is a cooperative association duly incorporated and validly existing and in good standing under the laws of State of Iowa.  Golden Oval Eggs, LLC is a limited liability company duly organized and validly existing and in good standing under the laws of the State of Delaware.  GOECA, LP is a limited partnership duly organized and validly existing under the laws of the State of Delaware, Each Borrower has all requisite power and authority to carry on its business as now conducted, to enter into this Agreement, to issue the Notes and to perform its obligations under the Loan Documents.  Each Borrower (a) holds all certificates of authority, licenses and permits necessary to carry on its business as presently conducted in each jurisdiction in which it is carrying on such business, except where the failure to hold such certificates, licenses or permits would not constitute a Material Adverse Occurrence, and (b) is duly qualified and in good standing as a foreign company or corporation in each jurisdiction in which the character of the properties owned, leased or operated by it or the business conducted by it makes such qualification necessary and the failure so to qualify would permanently preclude such Borrower from enforcing its rights with respect to any assets or expose such Borrower to any Material Adverse Occurrence.

Section 4.2Authorization and Validity.  The execution, delivery and performance by each Borrower of the Loan Documents have been duly authorized by all necessary corporate or company action by such Borrower.  This Agreement constitutes, and the Notes and other Loan Documents when executed will constitute, the legal, valid and binding obligations of each Borrower, enforceable against such Borrower in accordance with their respective terms, subject to limitations as to enforceability which might result from bankruptcy, insolvency, moratorium and other similar laws affecting creditors’ rights generally and subject to limitations on the availability of equitable remedies.

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Section 4.3No Conflict; No Default.  The execution, delivery and performance by each Borrower of the Loan Documents will not (a) violate any provision of any law, statute, rule or regulation or any order, writ, judgment, injunction, decree, determination or award of any court, governmental agency or arbitrator presently in effect having applicability to such Borrower, (b) violate or contravene any provision of the Certificate of Formation, Articles of Incorporation, bylaws or limited liability company agreement, as applicable, of such Borrower, or (c) result in a breach of or constitute a default under any indenture, loan or credit agreement or any other agreement, lease or instrument to which such Borrower is a party or by which it or any of its properties may be bound or result in the creation of any Lien thereunder.  No Borrower is in default under or in violation of any such law, statute, rule or regulation, order, writ, judgment, injunction, decree, determination or award or any such indenture, loan or credit agreement or other agreement, lease or instrument in any case in which the consequences of such default or violation could constitute a Material Adverse Occurrence.

Section 4.4Government Consent.  No order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by, any governmental or public body or authority is required on the part of any Borrower to authorize, or is required in connection with the execution, delivery and performance of, or the legality, validity, binding effect or enforceability of, the Loan Documents, except for any necessary filing or recordation of or with respect to any of the Security Documents.

Section 4.5Financial Statements and Condition.  The Borrowers’ audited consolidated  financial statements as at August 31, 2005 and their unaudited financial statements as at June 30, 2006, as heretofore furnished to the Lenders, have been prepared in accordance with GAAP on a consistent basis (except for the absence of footnotes and subject to year-end audit adjustments as to the interim statements) and fairly present the financial condition of the Borrowers as at such dates and the results of their operations and changes in financial position for the respective periods then ended.  As of the dates of such financial statements, no Borrower had any material obligation, contingent liability, liability for taxes or long-term lease obligation which is not reflected in such financial statements or in the notes thereto.

Section 4.6Litigation.  Except as disclosed on Schedule 4.6, there are no actions, suits or proceedings pending or, to the knowledge of any Borrower, threatened against or affecting any Borrower or any of their properties before any court or arbitrator, or any governmental department, board, agency or other instrumentality which, if determined adversely to any Borrower, would constitute a Material Adverse Occurrence, and there are no unsatisfied judgments against any Borrower, the satisfaction or payment of which would constitute a Material Adverse Occurrence.

Section 4.7Environmental, Health and Safety Laws.  There does not exist any violation by any Borrower of any applicable federal, state or local law, rule or regulation or order of any government, governmental department, board, agency or other instrumentality relating to environmental, pollution, health or safety matters which has, will or threatens to impose a material liability on a Borrower or which has required or would require a material expenditure by a Borrower to cure.  No property of any Borrower is used for the production, storage or disposal of hazardous wastes, substances or materials.  No Borrower has received any notice to the effect that any part of its operations or properties is not in material compliance with any such law, rule, regulation or order or notice that it or its property is the subject of any governmental investigation evaluating whether any remedial action is needed to respond to any release of any toxic or hazardous waste or substance into the environment, which non-compliance or remedial action could reasonably be expected to constitute a Material Adverse Occurrence.  Except as set out on Schedule 4.7, no Borrower has knowledge that it or its property will become subject to environmental laws or regulations during the term of this Agreement, compliance with which could reasonably be expected to require Capital Expenditures that could reasonably be expected to constitute a Material Adverse Occurrence.

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Section 4.8ERISA.  Each Plan is in substantial compliance with all applicable requirements of ERISA and the Code and with all material applicable rulings and regulations issued under the provisions of ERISA and the Code setting forth those requirements.  No Reportable Event has occurred and is continuing with respect to any Plan.  All of the minimum funding standards applicable to such Plans have been satisfied and there exists no event or condition which would reasonably be expected to result in the institution of proceedings to terminate any Plan under Section 4042 of ERISA.

Section 4.9Federal Reserve Regulations.  No Borrower is engaged principally or as one of its important activities in the business of extending credit for the purpose of purchasing or carrying margin stock (as defined in Regulation U of the Board).  The value of all margin stock owned by each Borrower does not constitute more than 25% of the value of the assets of such Borrower.

Section 4.10Title to Property; Leases; Liens; Subordination.  Each Borrower has (i) good and marketable title to its real properties and (ii) good and sufficient title to, or valid, subsisting and enforceable leasehold interest in, its other material properties, including the real property subject to the Moark Leases and all other real properties, other properties and assets, referred to as owned by a Borrower in the most recent financial statement referred to in Section 5.1 (other than property disposed of since the date of such financial statements in the ordinary course of business).  None of such properties is subject to a Lien, except as allowed under Section 6.13.  No Borrower has subordinated any of its rights under any obligation owing to it to the rights of any other person.  Schedule 4.10 identifies each lease that was (or, upon consummation of the Moark Acquistition, will be) assigned to a Borrower in connection with the Moark Acquisition, and the Borrower to which such lease was assigned.

Section 4.11Taxes.  Each Borrower has filed all federal, state and local tax returns required to be filed and has paid or made provision for the payment of all taxes due and payable pursuant to such returns and pursuant to any assessments made against it or any of its property and all other taxes, fees and other charges imposed on it or any of its property by any governmental authority (other than taxes, fees or charges the amount or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which reserves in accordance with GAAP have been provided on the books of such Borrower).  No tax Liens have been filed and no material claims are being asserted with respect to any such taxes, fees or charges.  The charges, accruals and reserves on the books of the Borrowers in respect of taxes and other governmental charges are adequate and the Borrowers know of no proposed material tax assessment against it or any basis therefor.

Section 4.12Trademarks, Patents.  Each Borrower possesses or has the right to use all of the patents, trademarks, trade names, service marks and copyrights, and applications therefor, and all technology, know-how, processes, methods and designs used in or necessary for the conduct of its business, without known conflict with the rights of others.

Section 4.13Burdensome Restrictions.   No Borrower is a party to or otherwise bound by any indenture, loan or credit agreement or any lease or other agreement or instrument or subject to any charter, corporate or partnership restriction which would foreseeably constitute a Material Adverse Occurrence.

Section 4.14Force Majeure.  Since the date of the most recent financial statement referred to in Section 5.1, the business, properties and other assets of the Borrowers have not been materially and adversely affected in any way as the result of any fire or other casualty, strike, lockout, or other labor trouble, embargo, sabotage, confiscation, condemnation, riot, civil disturbance, activity of armed forces or act of God.

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Section 4.15Investment Company Act.  No Borrower is an “investment company” or a company “controlled” by an investment company within the meaning of the Investment Company Act of 1940, as amended.

Section 4.16Public Utility Holding Company Act.   No Borrower is a “holding company” or a “subsidiary company” of a holding company or an “affiliate” of a holding company or of a subsidiary company of a holding company within the meaning of the Public Utility Holding Company Act of 2005, as amended.

Section 4.17Full Disclosure.  Subject to the following sentence, neither the financial statements referred to in Section 5.1 nor any other certificate, written statement, exhibit or report furnished by or on behalf of the Borrowers in connection with or pursuant to this Agreement contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements contained therein not misleading.  Certificates or statements furnished by or on behalf of the Borrowers to the Lenders consisting of projections or forecasts of future results or events have been prepared in good faith and based on good faith estimates and assumptions of the management of the Borrower, and the Borrowers have no reason to believe that such projections or forecasts are not reasonable.

Section 4.18Subsidiaries.  No Borrower has any Subsidiaries.

Section 4.19Labor Matters.  There are no pending or threatened strikes, lockouts or slowdowns against either Borrower.  No Borrower has been or is in violation in any material respect of the Fair Labor Standards Act or any other applicable Federal, state, local or foreign law dealing with such matters. All payments due from any Borrower on account of wages and employee health and welfare insurance and other benefits (in each case, except for de minimus amounts), have been paid or accrued as a liability on the books of such Borrower.  The consummation of the transactions contemplated under the Loan Documents will not give rise to any right of termination or right of renegotiation on the part of any union under any collective bargaining agreement to which any Borrower is bound.

Section 4.20Security Documents.

(a)Each Security Agreement is effective to create in favor of the Administrative Agent for the benefit of the Lenders, a legal, valid and enforceable Lien on the collateral described therein and the proceeds thereof, and when financing statements in appropriate form are filed with the Secretary of State of Iowa, the Secretary of State of Delaware and in Minnesota, each Security Agreement shall constitute a fully perfected Lien on, and security interest in, the collateral described therein and the proceeds thereof to the extent a security interest may be perfected by filing under the applicable Uniform Commercial Code, in each case prior and superior in right to any other Person (except with respect to Liens permitted by Sections 6.13(b) and Liens permitted by Section 6.13(c) and (g) that have priority by operation of law).

(b)The Thompson Mortgage is effective to create in favor of the Administrative Agent, for the benefit of the Lenders, a valid and enforceable Lien on the Mortgage property described therein and the proceeds thereof and such Mortgage constitutes a fully perfected Lien of record on, and security interest in, the mortgaged property described therein and the proceeds thereof, as security for the Obligations prior  and superior in right to any other Person (except with respect to Permitted Encumbrances and Liens permitted by Sections 6.13(b) and (d)).  Each of the Renville Mortgage and the Moark Mortgage, when executed in accordance with this Agreement, is effective to create in favor of the Administrative Agent for the benefit of the Lenders, a legal, valid and enforceable Lien on the mortgaged property described therein and the

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proceeds thereof, and when (i) the Thompson Mortgage is filed in the applicable office of Winnebago County, Iowa, (ii) the Renville Mortgage is filed in the applicable office of Renville County, Minnesota and (iii) the Moark Mortgage is filed in the applicable office of Henry County, Alabama, each such Mortgage shall constitute a fully perfected Lien of record on, and security interest in, the mortgaged property described in such Mortgage and the proceeds thereof, as security for the Obligations, prior and superior in right to any other Person (except with respect to Permitted Encumbrances and Liens permitted by Sections 6.13(b) and (d) and, with respect to the Renville Mortgage, the Lien against the Renville Property in favor of U.S. Bank National Association, as trustee for the benefit of the holders of the 1999 Series Bonds and the 2001 Series Bonds).

Section 4.21Solvency.  After the making of any Loan and after giving effect thereto, (a) the fair value of the assets of each Borrower, at a fair valuation, will exceed its debts and liabilities, subordinated, contingent or otherwise; (b) the present fair saleable value of the property of each Borrower will be greater than the amount that will be required to pay the probable liability of its debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured; (c) each Borrower will be able to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (d) no Borrower will have unreasonably small capital with which to conduct the business in which it is engaged as such business is proposed to be conducted following the Closing Date.

Section 4.22Eligibility.  As of the Closing Date, (i) each Borrower is eligible to borrow from CoBank, and (ii) the percentage of voting control of the Borrowers’ Agent held by producers or cooperatives is 100%.

Section 4.23Material Contract.  Each Material Contract in effect on the Closing Date is identified on Schedule 3.1(l) and copies of each such Material Contract have been delivered to the Administrative Agent.  Except as has been previously disclosed to the Administrative Agent in writing, none of such Material Contracts has been amended, modified or terminated.

Section 4.24Moark Acquisition.

(a)The Borrowers’ Agent has heretofore furnished the Administrative Agent a true and correct copy of the Moark Acquisition Documents.

(b)Each Borrower and, to the Borrowers’ knowledge, each other party to the Moark Acqusition Documents, has duly taken all necessary corporate, partnership or other organizational action to authorize the execution, delivery and performance of the Moark Acquisition Documents and the consummation of transactions contemplated thereby.

(c)The Moark Acquisition will comply with all applicable legal requirements, and all necessary governmental, regulatory, creditor, shareholder, partner and other material consents, approvals and exemptions required to be obtained by the Borrowers party thereto and, to the Borrowers’ knowledge, each other party to the Moark Acquisition Documents in connection with the Moark Acquisition will be, prior to consummation of the Moark Acquisition, duly obtained and will be in full force and effect.  As of the date of the Moark Acquisition Documents, all applicable waiting periods with respect to the Moark Acquisition will have expired without any action being taken by any competent governmental authority which restrains, prevents or imposes material adverse conditions upon the consummation of the Moark Acquisition.

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(d)The execution and delivery of the Moark Acquisition Documents did not, and the consummation of the Moark Acquisition will not, violate any statute or regulation of the United States (including any securities law) or of any state or other applicable jurisdiction, or any order, judgment or decree of any court or governmental body binding on any Borrower or, to the Borrowers’ knowledge, any other party to the Moark Acquisition Documents, or result in a breach of, or constitute a default under, any material agreement, indenture, instrument or other document, or any judgment, order or decree, to which any Borrower is a party or by which any Borrower is bound or, to the Borrowers’ knowledge, to which any other party to the Moark Acquisition Documents is a party or by which any such party is bound.

(e)No statement or representation made in the Moark Acquisition Documents by any Borrower or, to the Borrowers’ knowledge, any other Person, contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they are made, not misleading.

Section 4.25Subordinated Debt.  The subordination provisions of the Subordinated Promissory Note and the Subordination Agreement are enforceable against the holders of the Subordinated Promissory Note by the Administrative Agent and the Lenders.  All Obligations constitute senior Debt entitled to the benefits of the subordination provisions contained in the Subordinated Promissory Note and the Subordination Agreement.  The Borrowers acknowledge that the Administrative Agent and each Lender are entering into this Agreement and are extending the Commitments and making the Loans in reliance upon the subordination provisions of the Subordinated Promissory Note, the Subordination Agreement and this Section 4.25.

ARTICLE V
AFFIRMATIVE COVENANTS

Until any obligation of the Lenders hereunder to make the Term Loans, Revolving Loans and Swing Line Loans and of the Letter of Credit Bank to issue Letters of Credit shall have expired or been terminated and the Notes and all of the other Obligations have been paid in full and all outstanding Letters of Credit shall have expired or the liability of the Letter of Credit Bank thereon shall have otherwise been discharged:

Section 5.1Financial Statements and Reports.  The Borrowers’ Agent will furnish to the Lenders:

(a)As soon as available and in any event within 90 days after the end of each fiscal year of the Borrowers’ Agent (including the fiscal year that ended August 31, 2005), the consolidated financial statements of the Borrowers’ Agent consisting of at least statements of income, cash flow and changes in the members’ equity, and a consolidated 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 Moore Stephens Frost or another independent certified public accountants of recognized national standing selected by the Borrowers and reasonably acceptable to the Administrative Agent, together with (a) any management letters, management reports or other supplementary comments or reports to the Borrowers’ Agent or its board of directors furnished by such accountants and (b) a letter from such accountants addressed to the Lenders acknowledging that the Lenders are extending credit in reliance on such financial statements and authorizing such reliance.

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(b)Together with the audited financial statements required under Section 5.1(a), a statement by the accounting firm performing such audit to the effect that it has reviewed this Agreement and that in the course of performing its examination nothing came to its attention that caused it to believe that any Default or Event of Default exists, or, if such Default or Event of Default exists, describing its nature.

(c)Together with the audited financial statements required under Section 5.1(a), unaudited consolidating statements of income, cash flow and changes in the members’ equity for the Borrowers’ Agent for the most recent fiscal year and a consolidating balance sheet of the Borrowers’ Agent as at the end of such year, setting forth in comparative form figures for the corresponding period for the preceding fiscal year, accompanied by a certificate signed by the chief financial officer of the Borrowers’ Agent stating that such financial statements present fairly the financial condition of the Borrowers’ Agent and that the same have been prepared in accordance with GAAP.

(d)As soon as available and in any event within 90 days after the end of each fiscal year of United Mills, (i) the financial statements of United Mills consisting of at least statements of income, cash flow and changes in the members’ equity, and a consolidated 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 an independent certified public accountant of recognized national standing selected by United Mills and reasonably acceptable to the Administrative Agent.

(e)As soon as available and in any event within 60 days after the end of each quarter, unaudited consolidated statements of income, cash flow and changes in the members’ equity for the Borrowers’ Agent for such quarter and for the period from the beginning of such fiscal year to the end of such quarter, and a consolidated balance sheet of the Borrowers’ Agent as at the end of such quarter, setting forth in comparative form figures for the corresponding period for the preceding fiscal year, accompanied by a certificate signed by the chief financial officer of the Borrowers’ Agent stating that such financial statements present fairly the financial condition of the Borrowers’ Agent and that the same have been prepared in accordance with GAAP (except for the absence of footnotes and subject to year-end audit adjustments as to the interim statements).

(f)As soon as available and in any event within 45 days after the end of each month, other than the last month of each quarter, unaudited and unconsolidated statements of income for the Borrowers’ Agent for such month and for the period from the beginning of such fiscal year to the end of such month, and unconsolidated balance sheets of the Borrowers’ Agent as at the end of such month, setting forth in comparative form figures for the corresponding period for the preceding fiscal year, accompanied by a certificate signed by the chief financial officer of the Borrowers’ Agent stating that such financial statements present fairly the financial condition of the Borrowers’ Agent and that the same have been prepared in accordance with GAAP (except for the absence of footnotes and subject to year-end audit adjustments as to the interim statements).

(g)As soon as practicable and in any event within 60 days after the end of each fiscal quarter, a Compliance Certificate in the form attached hereto as Exhibit G signed by the chief financial officer of the Borrowers’ Agent demonstrating in reasonable detail compliance (or noncompliance, as the case may be) with Section 6.15, Section 6.16, Section 6.17, Section 6.18, Section 6.19 and Section 6.21, as at the end of such quarter and stating that as at the end of such quarter there did not exist any Default or Event of Default or, if such Default or Event of Default

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existed, specifying the nature and period of existence thereof and what action the Borrowers propose to take with respect thereto.

(h)As soon as practicable and in any event within 45 days after the end of each month, a Borrowing Base Certificate signed by the chief financial officer of the Borrowers’ Agent, reporting the Borrowing Base as of the last day of the month just ended.

(i)As soon as practicable and in any event within 90 days after the beginning of each fiscal year of the Borrowers’ Agent, statements of forecasted consolidated income for the Borrowers’ Agent for each fiscal month in such fiscal year and a forecasted consolidated balance sheet of the Borrowers’ Agent, together with supporting assumptions, as at the end of each fiscal month, all in reasonable detail and reasonably satisfactory in scope to the Lenders.

(j)Immediately upon any officer or manager of any Borrower becoming aware of any Default or Event of Default, a written notice from the Borrowers’ Agent describing the nature thereof and what action Borrowers propose to take with respect thereto.

(k)Immediately upon any officer or manager of a Borrower becoming aware of any matter that has resulted or is reasonably likely to result in a Material Adverse Occurrence, a written notice from the Borrowers’ Agent describing the nature thereof and what action Borrowers propose to take with respect thereto.

(l)Immediately upon any officer or manager of a Borrower becoming aware of (i) the commencement of any action, suit, investigation, proceeding or arbitration before any court or arbitrator or any governmental department, board, agency or other instrumentality affecting a Borrower or any property of such Person, or to which a Borrower is a party (other than litigation where the insurance insures against the damages claimed and the insurer has assumed defense of the litigation without reservation) and in which an adverse determination or result could reasonably be expected to constitute a Material Adverse Occurrence; or (ii) any adverse development which occurs in any litigation, arbitration or governmental investigation or proceeding previously disclosed by a Borrower which, if determined adversely to a Borrower, could reasonably be expected to constitute a Material Adverse Occurrence, a written notice from the Borrowers’ Agent describing the nature and status thereof and what action the Borrowers propose to take with respect thereto.

(m)Promptly upon the mailing or filing thereof, copies of all financial statements, reports and proxy statements mailed to any Borrower’s members or shareholders, and copies of all registration statements, periodic reports and other documents filed with the Securities and Exchange Commission (or any successor thereto) or any national securities exchange.

(n)Promptly following receipt, copies of any notices received in connection with the Moark Acquisition.

(o)From time to time, such other information regarding the business, operation and financial condition of any Borrower as any Lender may reasonably request.

Section 5.2Existence.  Each Borrower will maintain its corporate or company existence (as the case may be) in good standing under the laws of its jurisdiction of organization and its qualification to transact business in each jurisdiction where failure so to qualify would permanently preclude such Borrower from enforcing its rights with respect to any material asset or would expose such Borrower to any material liability.

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Section 5.3Insurance.  Each Borrower shall maintain with financially sound and reputable insurance companies such insurance as may be required by law and such other insurance in such amounts and against such hazards as is customary in the case of reputable firms engaged in the same or similar business and similarly situated.

Section 5.4Payment of Taxes and Claims.  Each Borrower shall file all tax returns and reports which are required by law to be filed by it and will pay before they become delinquent all taxes, assessments and governmental charges and levies imposed upon it or its property and all claims or demands of any kind (including but not limited to those of suppliers, mechanics, carriers, warehouses, landlords and other like Persons) which, if unpaid, might result in the creation of a Lien upon its property; provided that the foregoing items need not be paid if they are being contested in good faith by appropriate proceedings, and as long as such Borrower’s title to its property is not materially adversely affected, its use of such property in the ordinary course of its business is not materially interfered with and adequate reserves with respect thereto have been set aside on such Borrower’s books in accordance with GAAP.

Section 5.5Inspection.  Each Borrower shall permit any Person designated by the Administrative Agent or any Lender to visit and inspect any of the properties, books and financial records of such Borrower, to examine and to make copies of the books of accounts and other financial records of such Borrower, and to discuss the affairs, finances and accounts of such Borrower with, and to be advised as to the same by, its officers and managers at such reasonable times and intervals as the Administrative Agent or any Lender may designate.

Section 5.6Maintenance of Properties.  Each Borrower will maintain its properties used or useful in the conduct of its business in good condition, repair and working order, and supplied with all necessary equipment, and make all necessary repairs, renewals, replacements, betterments and improvements thereto, all as may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times.

Section 5.7Books and Records.  Each Borrower will keep adequate and proper records and books of account in which full and correct entries will be made of its dealings, business and affairs.

Section 5.8Compliance.  Each Borrower (a) will comply in all material respects with all laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject and (b) will maintain and comply in all material respects with all Applicable Permits; provided, however, that failure to so comply, obtain or maintain shall not be a breach of this covenant if such failure cannot reasonably be expected to constitute a Material Adverse Occurrence and such Borrower is acting in good faith and with reasonable dispatch to cure such failure.

Section 5.9ERISA.  Each Borrower will maintain each Plan in compliance with all material applicable requirements of ERISA and of the Code and with all applicable rulings and regulations issued under the provisions of ERISA and of the Code.

Section 5.10Environmental Matters; Reporting.  Each Borrower will observe and comply with all laws, rules, regulations and orders of any government or government agency relating to health, safety, pollution, hazardous materials or other environmental matters to the extent non-compliance could result in a material liability or otherwise constitute a Material Adverse Occurrence.  No Borrower shall use its property (including any portion of the Thompson Property, the Moark Property or the Renville Property) for the production, storage or disposal of hazardous substances, wastes or materials.  The Borrowers’ Agent will give the Administrative Agent prompt written notice of any violation as to any environmental matter by any Borrower and of the commencement of any judicial or administrative proceeding relating to health, safety or environmental matters (a) in which an adverse determination or

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result could result in the revocation of or have a material adverse effect on any operating permits, air emission permits, water discharge permits, hazardous waste permits or other permits held by any Borrower which are material to the operations of such Borrower, including the Applicable Permits, or (b) which will or threatens to impose a material liability on such Borrower to any Person or which will require a material expenditure by the Borrower to cure any alleged problem or violation.

Section 5.11Further Assurances.  Each Borrower shall promptly correct any defect or error that may be discovered in any Loan Document or in the execution, acknowledgment or recordation thereof.  Promptly upon request by the Administrative Agent or the Required Lenders, each Borrower also shall do, execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register, any and all deeds, conveyances, mortgages, deeds of trust, trust deeds, assignments, estoppel certificates, financing statements and continuations thereof, notices of assignment, transfers, certificates, assurances and other instruments as the Administrative Agent or the Required Lenders may reasonable require from time to time in order: (a) to carry out more effectively the purposes of the Loan Documents; (b) to perfect and maintain the validity, effectiveness and priority of any security interests intended to be created by the Loan Documents including, without limitation, the delivery of a landlord waiver from any landlord required by the Administrative Agent or the Required Lenders; and (c) to better assure, convey, grant, assign, transfer, preserve, protect and confirm unto the Lenders the rights granted now or hereafter intended to be granted to the Lenders under any Loan Document or under any other instrument executed in connection with any Loan Document or that any Borrower may be or become bound to convey, mortgage or assign to the Administrative Agent for the benefit of the Lenders in order to carry out the intention or facilitate the performance of the provisions of any Loan Document.  The Borrowers’ Agent shall furnish to the Administrative Agent evidence reasonably satisfactory to the Administrative Agent of every such recording, filing or registration.

Section 5.12Compliance with Terms of Material Contracts.  Each Borrower shall make all payments and otherwise perform all obligations in respect of all Material Contracts to which such Borrower is a party and shall promptly provide the Administrative Agent with copies of any notices of default under any Material Contract given or received by any Borrower.

ARTICLE VI
NEGATIVE COVENANTS

Until any obligation of the Lenders hereunder to make the Term Loans and Revolving Loans and of the Letter of Credit Bank to issue Letters of Credit shall have expired or been terminated and the Notes and all of the other Obligations have been paid in full and all outstanding Letters of Credit shall have expired or the liability of the Letter of Credit Bank thereon shall have otherwise been discharged:

Section 6.1Merger.  No Borrower will merge or consolidate or enter into any analogous reorganization or transaction with any Person or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution).

Section 6.2Disposition of Assets.  No Borrower will directly or indirectly, sell, assign, lease, convey, transfer or otherwise dispose of (whether in one transaction or a series of transactions) any property (including accounts and notes receivable, with or without recourse) or enter into any agreement to do any of the foregoing, except:

(a)dispositions of inventory in the ordinary course of business;

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(b)dispositions of used, worn-out or obsolete equipment, furniture, furnishings, machinery or fixtures if (i) such equipment, furniture, furnishings, machinery or fixtures is replaced by property of equal kind and value, or (ii) if the value of such disposed equipment, furniture, furnishings, machinery or fixtures at the time of disposal is less than $150,000 for any single transaction or less than $300,000 in the aggregate in any fiscal year; and

(c)other dispositions of property if the net book value of the disposed property does not exceed (i) in any fiscal year, 10% of such Borrower’s total consolidated assets as shown on its balance sheet as of the end of the immediately preceding fiscal year, or for its most recent prior fiscal quarter, or (ii) in the aggregate during the term of this Agreement, 30% of such Borrower’s total consolidated assets as shown on its balance sheet as of the Closing Date, in each case unless the proceeds from such disposition are reinvested within twelve (12) months of such disposition to purchase other property useful and intended to be used in the business of the Borrowers’ Agent.

Section 6.3Plans.  No Borrower will permit any event to occur or condition to exist which would permit any Plan to terminate under any circumstances which would cause the Lien provided for in Section 4068 of ERISA to attach to any assets of any Borrower.

Section 6.4Change in Nature of Business.  No Borrower will make any material change in the nature of the business of such Borrower, as carried on at the date hereof.

Section 6.5Subsidiaries.  No Borrower will form or acquire any corporation which would thereby become a Subsidiary.

Section 6.6Negative Pledges.  No Borrower will enter into any agreement, bond, note or other instrument with or for the benefit of any Person other than the Lenders which would (i) prohibit such Borrower from granting, or otherwise limit the ability of the such Borrower to grant, to the Lenders any Lien on any assets or properties of such Borrower, or (ii) require such Borrower to grant a Lien to any other Person if such Borrower grants any Lien to the Lenders.

Section 6.7Restricted Payments.  No Borrower will make any Restricted Payments if a Default or Event of Default has occurred and is continuing or if a Default or Event of Default would occur as a result of such Restricted Payment.

Section 6.8Transactions with Affiliates.  No Borrower will enter into any transaction with any Affiliate of such Borrower, except upon fair and reasonable terms no less favorable than such Borrower would obtain in a comparable arm’s-length transaction with a Person not an Affiliate.

Section 6.9Accounting Changes.  No Borrower will make any significant change in accounting treatment or reporting practices, except as required by GAAP, or change its fiscal year.

Section 6.10Subordinated Debt.  No Borrower will (a) make any scheduled payment of the principal of or interest on any Subordinated Debt that would be prohibited by the terms of such Subordinated Debt and any related subordination agreement (including the Subordination Agreement); (b) directly or indirectly make any prepayment on or purchase, redeem or defease any Subordinated Debt or offer to do so (whether such prepayment, purchase or redemption, or offer with respect thereto, is voluntary or mandatory); (c) amend or cancel the subordination provisions applicable to any Subordinated Debt; (d) take or omit to take any action if as a result of such action or omission the subordination of such Subordinated Debt, or any part thereof, to the Obligations might be terminated, impaired or adversely affected; or (e) omit to give the Administrative Agent prompt notice of any notice received from any

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holder of Subordinated Debt, or any trustee therefor, or of any default under any agreement or instrument relating to any Subordinated Debt by reason whereof such Subordinated Debt might become or be declared to be due or payable, .

Section 6.11Investments.  No Borrower will acquire for value, make, have or hold any Investments, except:

(a)Investments existing on the date of this Agreement and described on Schedule 6.11.

(b)Travel advances to management personnel and employees in the ordinary course of business.

(c)Investments in readily marketable direct obligations issued or guaranteed by the United States or any agency thereof and supported by the full faith and credit of the United States.

(d)Certificates of deposit or bankers’ acceptances issued by any commercial bank organized under the laws of the United States or any State thereof which has (i) combined capital and surplus of at least $100,000,000, and (ii) a credit rating with respect to its unsecured indebtedness from a nationally recognized rating service that is reasonably satisfactory to the Administrative Agent.

(e)Commercial paper given the highest rating by a nationally recognized rating service.

(f)Repurchase agreements relating to securities issued or guaranteed as to principal and interest by the United States of America with a term of not more than seven (7) days; provided all such agreements shall require physical delivery of the securities securing such repurchase agreement, except those delivered through the Federal Reserve Book Entry System

(g)Other readily marketable Investments in debt securities which are reasonably acceptable to the Required Lenders.

(h)Any other Investment if the aggregate consideration therefor does not exceed $500,000.

(i)The Moark Acquisition.

Any Investments under clauses (c), (d), (e) or (f) above must mature within one year of the acquisition thereof by the Borrower.

Section 6.12Indebtedness.  The Borrower will not incur, create, issue, assume or suffer to exist any Indebtedness, except:

(a)The Obligations.

(b)Current Liabilities, other than for borrowed money, incurred in the ordinary course of business.

(c)Indebtedness existing on the date of this Agreement and disclosed on Schedule 6.12, but not including any extension or refinancing thereof.

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(d)Indebtedness secured by Liens permitted under Section 6.13 hereof.

(e)Subordinated Debt.

Section 6.13Liens.  No Borrower will create, incur, assume or suffer to exist any Lien, or enter into, or make any commitment to enter into, any arrangement for the acquisition of any property through conditional sale, lease-purchase or other title retention agreements, with respect to any property now owned or hereafter acquired by the Borrower, except:

(a)Liens granted to the Administrative Agent and the Lenders under the Security Documents to secure the Obligations.

(b)Liens existing on the date of this Agreement and disclosed on Schedule 6.13.

(c)Deposits or pledges to secure payment of workers’ compensation, unemployment insurance, old age pensions or other social security obligations, in the ordinary course of business of the Borrower.

(d)Liens for taxes, fees, assessments and governmental charges not delinquent or to the extent that payment therefor shall not at the time be required to be made in accordance with the provisions of Section 5.4.

(e)Liens of carriers, warehousemen, mechanics and materialmen, and other like Liens arising in the ordinary course of business, for sums not due or to the extent that payment therefor shall not at the time be required to be made in accordance with the provisions of Section 5.4.

(f)Liens incurred or deposits or pledges made or given in connection with, or to secure payment of, indemnity, performance or other similar bonds.

(g)Liens arising solely by virtue of any statutory or common law provision relating to banker’s liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a creditor depository institution; provided that (i) such deposit account is not a dedicated cash collateral account and is not subject to restriction against access by a Borrower in excess of those set forth by regulations promulgated by the Board, and (ii) such deposit account is not intended by the Borrower to provide collateral to the depository institution.

(h)Permitted Encumbrances.

(i)The interest of any lessor under any Capital Lease entered into after the Closing Date or purchase money Liens on property acquired after the Closing Date; provided, that, (i) the Indebtedness secured thereby is otherwise permitted by this Agreement and (ii) such Liens are limited to the property acquired and do not secure Indebtedness other than the related Capital Lease Obligations or the purchase price of such property.

(j)CoBank’s statutory Lien on the CoBank Equities.

Section 6.14Contingent Liabilities.  No Borrower will be or become liable on any Contingent Obligations except Contingent Obligations existing on the date of this Agreement and described on Schedule 6.14 and Contingent Obligations for the benefit of the Lenders.

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Section 6.15Tangible Net Worth.  The Borrower’s Agent will not permit its Tangible Net Worth at any time to be less than $28,000,000, plus forty percent (40%) of net earnings accumulated after August 31, 2005, plus one hundred percent (100%) of all equity contributed after August 31, 2005.

Section 6.16Current Ratio.  The Borrower’s Agent will not permit the ratio of its Current Assets to its Current Liabilities to be less than 1.25 to 1.0 at any time.

Section 6.17Working Capital. The Borrower’s Agent will not permit its Working Capital to be less than $7,000,000 at any time.

Section 6.18Leverage Ratio.  The Borrower’s Agent will not permit the Leverage Ratio, as of the last day of any fiscal quarter for the four consecutive fiscal quarters ending on that date, to be more than (a) for the period from November 30, 2006 to May 31, 2007, 6.50 to 1.0, or (b) for the period from June 1, 2007 to the Term Loan Maturity Date, 4.25 to 1.0.

Section 6.19Fixed Charge Coverage Ratio.  The Borrower’s Agent will not permit the Fixed Charge Coverage Ratio, as of the last day of any fiscal quarter for the four consecutive fiscal quarters ending on that date, to be less than (a) for the period from the Closing Date to May 31, 2008, 1.00 to 1.00, and (b) for the period from June 1, 2008 to the Term Loan Maturity Date, 1.15 to 1.0.

Section 6.20Operating Leases.  No Borrower will enter into any Operating Lease that would cause the aggregate lease payments for all Operating Leases of the Borrowers to exceed $1,600,000 on a consolidated basis per fiscal year of the Borrowers’ Agent, provided that rents paid by any Borrower for real property consisting solely of land located in the State of Iowa and leased from Midwest Investors of Iowa, Cooperative shall not be included in such calculation.

Section 6.21Risk Management.  The Borrowers’ Agent shall not fail to have the minimum required percentage of finished egg products under contract as set forth and described on Annex II, established as of the first day of each fiscal quarter after the Compliance Certificate required by Section 5.1 is delivered.

Section 6.22Material Contracts.  No Borrower shall amend or modify a Material Contract in any material respect, or terminate a Material Contract, without the prior written consent of the Required Lenders.

Section 6.23Eligibility.  No Borrower will take any action that causes it to become ineligible to borrow from CoBank.

Section 6.24Real Estate Plan.  The Borrowers shall not fail to take the actions required to be taken, and at the times required to be taken, with respect to its owned and leased real properties as set forth in the Real Estate Plan.

ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES

Section 7.1Events of Default.  The occurrence of any one or more of the following events shall constitute an Event of Default:

(a)The Borrowers shall fail to make when due, whether by acceleration or otherwise, any payment of principal of any Note.

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(b)The Borrowers shall fail to make when due, whether by acceleration or otherwise, any payment of interest on any Note or on or of any other Obligation required to be made to the Administrative Agent, the Letter of Credit Bank or any Lender pursuant to this Agreement and such failure to pay shall continue for five (5) Business Days after the date on which such payment was due.

(c)Any representation or warranty made by or on behalf of any Borrower in this Agreement or any other Loan Document or by or on behalf of any Borrower in any certificate, statement, report or document herewith or hereafter furnished to any Lender or the Administrative Agent pursuant to this Agreement or any other Loan Document shall prove to have been false or misleading in any material respect on the date as of which the facts set forth are stated or certified.

(d)Any Borrower shall fail to comply with Sections 2.16, 5.2 or 5.3 hereof or any Section of Article VI hereof.

(e)Any Borrower shall fail to comply with any other agreement, covenant, condition, provision or term contained in this Agreement (other than those hereinabove set forth in this Section 7.1) and such failure to comply shall continue for 30 calendar days after whichever of the following dates is the earliest:  (i) the date any Borrower or the Borrowers’ Agent gives notice of such failure to the Lenders, (ii) the date any Borrower should have given notice of such failure to the Administrative Agent pursuant to Section 5.1, or (iii) the date the Administrative Agent or any Lender gives notice of such failure to the Borrower.

(f)Any default (however denominated or defined) shall occur under any Security Document.

(g)Any Borrower shall become insolvent or shall generally not pay its debts as they mature or shall apply for, shall consent to, or shall acquiesce in the appointment of a custodian, trustee or receiver of such Borrower or for a substantial part of the property thereof or, in the absence of such application, consent or acquiescence, a custodian, trustee or receiver shall be appointed for any Borrower or for a substantial part of the property thereof and shall not be discharged within 45 days, or any Borrower shall make an assignment for the benefit of creditors.

(h)Any bankruptcy, reorganization, debt arrangement or other proceedings under any bankruptcy or insolvency law shall be instituted by or against any Borrower, and, if instituted against any Borrower, shall have been consented to or acquiesced in by such Borrower, or shall remain undismissed for 60 days, or an order for relief shall have been entered against such Borrower.

(i)Any dissolution or liquidation proceeding shall be instituted by or against any Borrower, and, if instituted against any Borrower, shall be consented to or acquiesced in by such Borrower or shall remain for 45 days undismissed.

(j)A judgment or judgments for the payment of money in excess of the sum of $250,000 in the aggregate shall be rendered against any Borrower and either (i) the judgment creditor executes on such judgment or (ii) such judgment remains unpaid or undischarged for more than 60 days from the date of entry thereof or such longer period during which execution of such judgment shall be stayed during an appeal from such judgment.

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(k)The maturity of any material Indebtedness of any Borrower (other than Indebtedness under this Agreement) shall be accelerated, or any Borrower shall fail to pay any such material Indebtedness when due (after the lapse of any applicable grace period) or, in the case of such Indebtedness payable on demand, when demanded (after the lapse of any applicable grace period), or 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 holder of any such Indebtedness or any trustee or other Person acting on behalf of such holder to cause, such material Indebtedness to become due prior to its stated maturity or to realize upon any collateral given as security therefor.  For purposes of this Section, Indebtedness of any Borrower shall be deemed “material” if it is Indebtedness under the Subordinated Promissory Note or if it exceeds $1,000,000 as to any item of Indebtedness or in the aggregate for all items of Indebtedness with respect to which any of the events described in this Section 7.1(k) has occurred.

(l)Any execution or attachment shall be issued whereby any substantial part of the property of any Borrower shall be taken or attempted to be taken and the same shall not have been vacated or stayed within 30 days after the issuance thereof.

(m) Any Security Document shall, at any time, cease to be in full force and effect or shall be judicially declared null and void, or the validity or enforceability thereof shall be contested by any Borrower, or the Administrative Agent or the Lenders shall cease to have a valid and perfected security interest having the priority contemplated thereunder in all of the collateral described therein, other than by action or inaction of the Administrative Agent or the Lenders if (i) the aggregate value of the collateral affected by any of the foregoing exceeds $150,000 and (ii) any of the foregoing shall remain unremedied for ten (10) days or more after receipt of notice thereof by the Borrowers’ Agent from the Administrative Agent.

(n)Any Change of Control shall occur.

Section 7.2Remedies.   If (a) any Event of Default described in Sections 7.1 (g), (h) or (i) shall occur, the Commitments shall automatically terminate and the Notes and all other Obligations shall automatically become immediately due and payable, and the Borrowers shall without demand cash collateralize an amount equal to the aggregate face amount of all outstanding Letters of Credit; or (b) any other Event of Default shall occur and be continuing, then, upon receipt by the Administrative Agent of a request in writing from the Required Lenders, the Administrative Agent shall take any of the following actions so requested: (i) declare the Commitments terminated, whereupon the Commitments shall terminate, (ii) declare the outstanding unpaid principal balance of the Notes, the accrued and unpaid interest thereon and all other Obligations to be forthwith due and payable, whereupon the Notes, all accrued and unpaid interest thereon and all such Obligations shall immediately become due and payable, in each case without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived, anything in this Agreement or in the Notes to the contrary notwithstanding, and (iii) demand that the Borrowers cash collateralize an amount equal to the aggregate face amount of all outstanding Letters of Credit.  Upon the occurrence of any of the events described in clause (a) of the preceding sentence, or upon the occurrence of any of the events described in clause (b) of the preceding sentence when so requested by the Required Lenders, the Administrative Agent may exercise all rights and remedies under any of the Loan Documents, and enforce all rights and remedies under any applicable law.

Section 7.3Offset.  In addition to the remedies set forth in Section 7.2, upon the occurrence of any Event of Default and thereafter while the same be continuing, each Borrower hereby irrevocably authorizes each Lender to set off any Obligations owed to such Lender against all deposits and credits of

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such Borrower with, and any and all claims of such Borrower against, such Lender.  Such right shall exist whether or not such Lender shall have made any demand hereunder or under any other Loan Document, whether or not the Obligations, or any part thereof, or deposits and credits held for the account of the Borrowers is or are matured or unmatured, and regardless of the existence or adequacy of any collateral, guaranty or any other security, right or remedy available to such Lender or the Lenders.  Each Lender agrees that, as promptly as is reasonably possible after the exercise of any such setoff right, it shall notify the Borrowers’ Agent of its exercise of such setoff right; provided, however, that the failure of any Lender to provide such notice shall not affect the validity of the exercise of such setoff rights.  Nothing in this Agreement shall be deemed a waiver or prohibition of or restriction on any Lender to all rights of banker’s Lien, setoff and counterclaim available pursuant to law.

ARTICLE VIII
THE ADMINISTRATIVE AGENT

The following provisions shall govern the relationship of the Administrative Agent with the Lenders.

Section 8.1Appointment and Authorization.  Each Lender appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such respective powers under the Loan Documents as are delegated to the Administrative Agent by the terms thereof, together with such powers as are reasonably incidental thereto.  Neither the Administrative Agent nor any of its directors, officers or employees shall be liable for any action taken or omitted to be taken by it under or in connection with the Loan Documents, except for its own gross negligence or willful misconduct.  The Administrative Agent shall act as an independent contractor in performing its obligations as Administrative Agent hereunder.  The duties of the Administrative Agent shall be mechanical and administrative in nature, and nothing herein contained shall be deemed to create any fiduciary relationship among or between the Administrative Agent, any Borrower or the Lenders.

Section 8.2Note Holders.  The Administrative Agent may treat the payee of any Note as the holder thereof until written notice of transfer shall have been filed with it, signed by such payee and in form reasonably satisfactory to the Administrative Agent.

Section 8.3Consultation With Counsel.  The Administrative Agent may consult with legal counsel selected by it and shall not be liable for any action taken or suffered in good faith by it in accordance with the advice of such counsel.

Section 8.4Loan Documents.  The Administrative Agent shall not be responsible to any Lender for any recitals, statements, representations or warranties in any Loan Document or be under a duty to examine or pass upon the validity, effectiveness, genuineness or value of any of the Loan Documents or any other instrument or document furnished pursuant thereto, and the Administrative Agent shall be entitled to assume that the same are valid, effective and genuine and what they purport to be.

Section 8.5CoBank and Affiliates.  With respect to its Commitments and the Loans made by it, CoBank shall have the same rights and powers under the Loan Documents as any other Lender and may exercise the same as though it were not the Administrative Agent consistent with the terms thereof, and CoBank and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with the Borrower as if it were not the Administrative Agent.

Section 8.6Action by Administrative Agent.  Except as may otherwise be expressly stated in this Agreement, the Administrative Agent shall be entitled to use its discretion with respect to exercising

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or refraining from exercising any rights which may be vested in it by, or with respect to taking or refraining from taking any action or actions which it may be able to take under or in respect of, the Loan Documents.  The Administrative Agent shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required Lenders, and such instructions shall be binding upon all holders of Notes; provided, however, that the Administrative Agent shall not be required to take any action which exposes the Administrative Agent to personal liability or which is contrary to the Loan Documents or applicable law.  The Administrative Agent shall incur no liability under or in respect of any of the Loan Documents by acting upon any notice, consent, certificate, warranty or other paper or instrument believed by it to be genuine or authentic or to be signed by the proper party or parties and to be consistent with the terms of this Agreement.

Section 8.7Credit Analysis.  Each Lender has made, and shall continue to make, its own independent investigation or evaluation of the operations, business, property and condition, financial and otherwise, of any Borrower in connection with entering into this Agreement and has made its own appraisal of the creditworthiness of each Borrower.  Except as explicitly provided herein, the Administrative Agent has no duty or responsibility, either initially or on a continuing basis, to provide any Lender with any credit or other information with respect to such operations, business, property, condition or creditworthiness, whether such information comes into its possession on or before the first Event of Default or at any time thereafter.

Section 8.8Notices of Event of Default, Etc.  In the event that the Administrative Agent shall have acquired actual knowledge of any Event of Default or Default, the Administrative Agent shall promptly give notice thereof to the Lenders.  The Administrative Agent shall not be deemed to have knowledge or notice of any Default or Event of Default, except with respect to actual defaults in the payment of principal, interest and fees required to be paid to the Administrative Agent for the account of the Lenders, unless the Administrative Agent shall have received written notice from a Lender or a Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “Notice of Default”.

Section 8.9Indemnification.  Each Lender agrees to indemnify the Administrative Agent, as Administrative Agent (to the extent not reimbursed by the Borrower), ratably according to such Lender’s share of the aggregate Revolving and Term Loan Commitment Amounts from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on or incurred by the Administrative Agent in any way relating to or arising out of the Loan Documents or any action taken or omitted by the Administrative Agent under the Loan Documents, provided that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Administrative Agent’s gross negligence or willful misconduct.  No payment by any Lender under this Section shall relieve the Borrower of any of its obligations under this Agreement.

Section 8.10Payments and Collections.  All funds received by the Administrative Agent in respect of any payments made by any Borrower on the Tranche A Term Notes shall be distributed forthwith by the Administrative Agent among the Tranche A Term Lenders, in like currency and funds as received, ratably according to each such Lender’s Term Loan Percentage.  All funds received by the Administrative Agent in respect of any payments made by any Borrower on the Tranche B Term Notes shall be distributed forthwith by the Administrative Agent among the Tranche B Term Lenders, in like currency and funds as received, ratably according to each such Lender’s Term Loan Percentage.  All funds received by the Administrative Agent in respect of any payments made by any Borrower on the Revolving Notes, Commitment Fees or Letter of Credit Fees shall be distributed forthwith by the

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Administrative Agent among the Revolving Lenders, in like currency and funds as received, ratably according to each such Lender’s Revolving Loan Percentage.

(a)Personal Property.  After any Event of Default has occurred, all funds received by the Administrative Agent as realization on collateral that constitutes personal property (excluding any machinery and equipment that are fixtures to any real estate) shall (except as may otherwise be required by law) be distributed by the Administrative Agent in the following order:  (a) first, to the Administrative Agent in an amount equal to the amounts, if any, as are necessary to pay the costs and expenses (including reasonable attorneys’ fees) incurred by the Administrative Agent in connection with any enforcement action or collection proceeding in relation to the relevant personal property collateral, (b) second, to the Lenders, ratably in an amount equal to the amounts, if any, as are necessary to pay the costs and expenses (including reasonable attorneys’ fees) incurred by each Lender in connection with any enforcement action or collection proceeding in relation to the relevant personal property collateral, (c) third, to the Revolving Lenders in an amount up to but not exceeding the amount of principal then outstanding in respect of the Revolving Loans and any portion of the Obligations relating thereto and any accrued and unpaid interest thereon (including any interest that, but for the provisions of the Bankruptcy Code would have accrued on such amounts), (d) fourth, to the Term Lenders ratably, in an amount up to but not exceeding the amount of the principal of the Obligations then outstanding and any accrued but unpaid interest thereon (including any interest that, but for the provisions of the Bankruptcy Code would have accrued on such amounts), (e) fifth, to the Lenders, ratably, in an amount up to but not exceeding the amount of any other Obligations then outstanding, and (f) sixth, the remainder, if any, to the Borrowers’ Agent for the benefit of the Borrowers or as a court of competent jurisdiction may otherwise direct.

(b)Real Property.  After any Event of Default has occurred, all funds received by the Administrative Agent as realization on collateral that constitutes real property (including any machinery and equipment that are fixtures to such real property) shall (except as may otherwise be required by law) be distributed by the Administrative Agent in the following order:  (a) first, to the Administrative Agent in an amount equal to the amounts, if any, as are necessary to pay the costs and expenses (including reasonable attorneys’ fees) incurred by the Administrative Agent in connection with any enforcement action or collection proceeding in relation to the relevant real property collateral, (b) second, to the Lenders, ratably in an amount equal the amounts, if any, as are necessary to pay the costs and expenses (including reasonable attorneys’ fees) incurred by each Lender in connection with any enforcement action or collection proceeding in relation to the relevant real property collateral, (c) third, to the Term Lenders ratably, in an amount up to but not exceeding the amount the amount of the principal of the Obligations then outstanding and any accrued but unpaid interest thereon (including any interest that, but for the provisions of the Bankruptcy Code would have accrued on such amounts), (d) fourth, to the Revolving Lenders in an amount up to but not exceeding the amount of principal then outstanding in respect of the Revolving Loans and any portion of the Obligations relating thereto and any accrued and unpaid interest thereon (including any interest that, but for the provisions of the Bankruptcy Code would have accrued on such amounts), (e) fifth, to the Lenders, ratably, in an amount up to but not exceeding the amount of any other Obligations then outstanding, and (f) sixth, the remainder, if any, to the Borrowers’ Agent for the benefit of the Borrowers or as a court of competent jurisdiction may otherwise direct.

(c)General.  After any Event of Default has occurred, all funds received by the Administrative Agent, whether as payments by the Borrowers or as realization on collateral not constituting personal property or real property (which shall be distributed in accordance with subsections (a) and (b) of this Section 8.10, as applicable) or on any guaranties, shall (except as

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may otherwise be required by law) be distributed by the Administrative Agent in the following order:  (a) first, to the Administrative Agent in an amount equal to the amounts, if any, as are necessary to pay the costs and expenses (including reasonable attorneys’ fees) incurred by the Administrative Agent in connection with any enforcement action or collection proceeding hereunder, (b) second, to the Lenders, ratably in an amount equal the amounts, if any, as are necessary to pay the costs and expenses (including reasonable attorneys’ fees) incurred by each Lender in connection with any enforcement action or collection proceeding, (c) third, to the Lenders in an amount up to but not exceeding the amount of principal then outstanding on the Obligations and any accrued and unpaid interest thereon (including any interest that, but for the provisions of the Bankruptcy Code would have accrued on such amounts), (d) fourth, to the Lenders, ratably, in an amount up to but not exceeding the amount of any other Obligations then outstanding, and (e) fifth, the remainder, if any, to the Borrowers’ Agent for the benefit of the Borrowers or as a court of competent jurisdiction may otherwise direct.

Section 8.11Sharing of Payments.  If any Lender shall receive and retain any payment, voluntary or involuntary, whether by setoff, application of deposit balance or security, or otherwise, in respect of Indebtedness under this Agreement or the Notes in excess of such Lender’s share thereof as determined under this Agreement, then such Lender shall purchase from the other Lenders for cash and at face value and without recourse, such participation in the Notes held by such other Lenders as shall be necessary to cause such excess payment to be shared ratably as aforesaid with such other Lenders; provided, that if such excess payment or part thereof is thereafter recovered from such purchasing Lender, the related purchases from the other Lenders shall be rescinded ratably and the purchase price restored as to the portion of such excess payment so recovered, but without interest.  Subject to the participation purchase obligation above, each Lender agrees to exercise any and all rights of setoff, counterclaim or banker’s lien first fully against any Notes and participations therein held by such Lender, next to any other Indebtedness of the Borrowers to such Lender arising under or pursuant to this Agreement and to any participations held by such Lender in Indebtedness of the Borrowers arising under or pursuant to this Agreement, and only then to any other Indebtedness of any Borrower to such Lender.

Section 8.12Advice to Lenders.  The Administrative Agent shall forward to the Lenders copies of all notices, financial reports and other material communications received hereunder from the Borrowers by it as Administrative Agent, excluding, however, notices, reports and communications which by the terms hereof are to be furnished by the Borrowers directly to each Lender.

Section 8.13Defaulting Lender.

(a)Remedies Against a Defaulting Lender.  In addition to the rights and remedies that may be available to the Administrative Agent or the Borrowers’ Agent under this Agreement or applicable law, if at any time a Lender is a Defaulting Lender such Defaulting Lender’s right to participate in the administration of the Loans, this Agreement and the other Loan Documents, including without limitation, any right to vote in respect of, to consent to or to direct any action or inaction of the Administrative Agent or to be taken into account in the calculation of the Required Lenders, shall be suspended while such Lender remains a Defaulting Lender.  If a Lender is a Defaulting Lender because it has failed to make timely payment to the Administrative Agent of any amount required to be paid to the Administrative Agent hereunder (without giving effect to any notice or cure periods), in addition to other rights and remedies which the Administrative Agent or the Borrower may have under the immediately preceding provisions or otherwise, the Administrative Agent shall be entitled (i) to collect interest from such Defaulting Lender on such delinquent payment for the period from the date on which the payment was due until the date on which the payment is made at the overnight Federal Funds rate, (ii) to withhold or setoff and to apply in satisfaction of the defaulted payment and any related interest, any amounts otherwise

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payable to such Defaulting Lender under this Agreement or any other Loan Document until such defaulted payment and related interest has been paid in full and such default no longer exists and (iii) to bring an action or suit against such Defaulting Lender in a court of competent jurisdiction to recover the defaulted amount and any related interest.  Any amounts received by the Administrative Agent in respect of a Defaulting Lender’s Loans shall not be paid to such Defaulting Lender and shall be held uninvested by the Administrative Agent and either applied against the purchase price of such Loans under the following subsection (b) or paid to such Defaulting Lender upon the default of such Defaulting Lender being cured.

(b)Purchase from Defaulting Lender.  Any Lender that is not a Defaulting Lender shall have the right, but not the obligation, in its sole discretion, to acquire all of a Defaulting Lender’s Commitments.  If more than one Lender exercises such right, each such Lender shall have the right to acquire such proportion of such Defaulting Lender’s Commitments on a pro rata basis.  Upon any such purchase, the Defaulting Lender’s interest in its Loans and its rights hereunder (but not its liability in respect thereof or under the Loan Documents or this Agreement to the extent the same relate to the period prior to the effective date of the purchase) shall terminate on the date of purchase, and the Defaulting Lender shall promptly execute all documents reasonably requested to surrender and transfer such interest to the purchaser thereof subject to and in accordance with the requirements set forth in 9.6, including an Assignment in form reasonably acceptable to the Administrative Agent.  The purchase price for the Commitments of a Defaulting Lender shall be equal to the amount of the principal balance of the Loans outstanding and owed by the Borrower to the Defaulting Lender. The purchaser shall pay to the Defaulting Lender in Immediately Available Funds on the date of such purchase the principal of and accrued and unpaid interest and fees on the Loans made by such Defaulting Lender hereunder (it being understood that such accrued and unpaid interest and fees may be paid pro rata to the purchasing Lender and the Defaulting  Lender by the Administrative Agent at a subsequent date upon receipt of payment of such amounts from the Borrower).  Prior to payment of such purchase price to a Defaulting Lender, the Administrative Agent shall apply against such purchase price any amounts retained by the Administrative Agent pursuant to the last sentence of the immediately preceding subsection (a).  The Defaulting Lender shall be entitled to receive amounts owed to it by the Borrower under the Loan Documents which accrued prior to the date of the default by the Defaulting Lender, to the extent the same are received by the Administrative Agent from or on behalf of the Borrower.  There shall be no recourse against any Lender or the Administrative Agent for the payment of such sums except to the extent of the receipt of payments from any other party or in respect of the Loans.

Section 8.14Resignation.  If at any time CoBank shall deem it advisable, in its sole discretion, it may submit to each of the Lenders and the Borrowers’ Agent a written notification of its resignation as Administrative Agent under this Agreement, such resignation to be effective upon the appointment of a successor Administrative Agent, but in no event later than 30 days from the date of such notice.  Upon submission of such notice, the Required Lenders may appoint a successor Administrative Agent.

ARTICLE IX
MISCELLANEOUS

Section 9.1Modifications.  Neither this Agreement, any other Loan Document, nor any terms hereof or thereof may be amended, supplemented or modified except in accordance with the provisions of this Section 9.1.  The Required Lenders and each Borrower party to the relevant Loan Document may, or with the written consent of the Required Lenders, the Administrative Agent and each such Borrower may, from time to time, (i) enter into written amendments, supplements or modifications hereto and to the other

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Loan Documents for the purpose of adding any provisions to this Agreement or the other Loan Documents or changing in any manner the rights of the Lenders or of the Borrowers hereunder or thereunder or (ii) waive, on such terms and conditions as the Required Lenders or the Administrative Agent, as the case may be, may specify in such instrument, any of the requirements of this Agreement or the other Loan Documents or any Default or Event of Default and its consequences; provided, however, no such amendment, modification, waiver or consent shall:

(a)Reduce the rate or extend the time of payment of interest thereon, or reduce the amount of the principal thereof, or modify any of the provisions of any Note with respect to the payment or repayment thereof, without the consent of the holder of each Note so affected; or

(b)Increase the amount or extend the time of any Commitment of any Lender, without the consent of such Lender; or

(c)Reduce the rate or extend the time of payment of any fee payable to a Lender, without the consent of the Lender affected; or

(d)Except as may otherwise be expressly provided in any of the other Loan Documents, release any material portion of collateral securing, or any guaranties for, all or any part of the Obligations without the consent of all the Lenders; or

(e)Amend the definition of Required Lenders or otherwise reduce the percentage of the Lenders required to approve or effectuate any such amendment, modification, waiver, or consent, without the consent of all the Lenders; or

(f)Require the consent of any Lender (i) other than the Revolving Lenders if such amendment, waiver or consent relates solely to the Revolving Loans, (ii) other than the Tranche A Term Lenders if such amendment, waiver or consent relates solely to the Tranche A Term Loans, or (iii) other the Tranche B Term Lenders if such amendment, waiver or consent relates solely to the Tranche B Term Loans

(g)Amend any of the foregoing Subsections (a) through (f) of this Section or this Subsection (g) without the consent of all the Lenders; or

(h)Amend any provision of this Agreement relating to the Administrative Agent (in its capacity as agent for the Lenders) without the consent of the Administrative Agent; or

(i)Amend any provision of this Agreement relating to the issuance of Letters of Credit without the consent of the Administrative Agent.

(j)Amend any provision of this Agreement relating to the Swing Line Loans without the consent of the Swing Line Lender.

Section 9.2Expenses. Whether or not the transactions contemplated hereby are consummated, the Borrowers agree to reimburse the Administrative Agent upon demand for all reasonable out-of-pocket expenses paid or incurred by the Administrative Agent (including the fees and expenses of Dorsey & Whitney LLP, counsel to the Administrative Agent, and any filing and recording costs) in connection with the negotiation, preparation, approval, review, execution, delivery, administration, amendment, modification and interpretation of this Agreement and the other Loan Documents and any commitment letters relating thereto.  The Borrowers shall also reimburse the Administrative Agent and each Lender upon demand for all reasonable out-of-pocket expenses (including

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expenses of legal counsel) paid or incurred by the Administrative Agent or any Lender in connection with the collection and enforcement of this Agreement and any other Loan Document. The obligations of the Borrowers under this Section shall survive any termination of this Agreement.

Section 9.3Waivers, etc.  No failure on the part of the Administrative Agent or the holder of a Note to exercise and no delay in exercising any power or right hereunder or under any other Loan Document 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 and in the other Loan Documents provided are cumulative and not exclusive of any remedies provided by law.

Section 9.4Notices.  Except when telephonic notice is expressly authorized by this Agreement, any notice or other communication to any party in connection with this Agreement shall be in writing and shall be sent by manual delivery, facsimile transmission, overnight courier or United States mail (postage prepaid) addressed to such party at the address specified on the signature page hereof, or at such other address as such party shall have specified to the other party hereto in writing.  All periods of notice shall be measured from the date of delivery thereof if manually delivered, from the date of sending thereof 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; provided, however, that any notice to the Administrative Agent or any Lender under Article II hereof shall be deemed to have been given only when received by the Administrative Agent or such Lender.

Section 9.5Taxes.  The Borrowers agrees to pay, and save the Administrative Agent and the Lenders harmless from all liability for, any stamp or other taxes which may be payable with respect to the execution or delivery of this Agreement or the issuance of the Notes, which obligation of the Borrowers shall survive the termination of this Agreement.

Section 9.6Successors and Assigns; Participations; Purchasing Lenders.

(a)This Agreement shall be binding upon and inure to the benefit of the Borrowers, the Administrative Agent, the Lenders, all future holders of the Notes, and their respective successors and assigns, except that the Borrowers may not assign or transfer any of their rights or obligations under this Agreement without the prior written consent of  each Lender.

(b)Any Lender may, in the ordinary course of its commercial banking business and in accordance with applicable law, at any time sell to one or more banks or other financial institutions (“Participants”) participating interests in a minimum amount of $250,000 in any Revolving Loan or any Term Loan or other Obligation owing to such Lender, any Revolving Note or any Term Note held by such Lender, and any Revolving Commitment or any Term Loan Commitment of such Lender, or any other interest of such Lender hereunder.  In the event of any such sale by any Lender of participating interests to a Participant, (i) such Lender’s obligations under this Agreement to the other parties to this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible for the performance thereof, (iii) such Lender shall remain the holder of any such Revolving Note or any such Term Note for all purposes under this Agreement, (iv) the Borrowers, the Borrowers’ Agent and the Administrative Agent shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement and (v) the agreement pursuant to which such Participant acquires its participating interest herein shall provide that such Lender shall retain the sole right and responsibility to enforce the Obligations, including, without limitation the right to consent or agree to any amendment, modification, consent or waiver with respect to this Agreement or any other Loan Document, provided that such agreement may provide that such Lender will not

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consent or agree to any such amendment, modification, consent or waiver with respect to the matters set forth in Sections 9.1(a) through (e) without the prior consent of such Participant.  Each Borrower agrees that if amounts outstanding under this Agreement, the Revolving Notes, the Term Notes and the Loan Documents are due and unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall be deemed to have, to the extent permitted by applicable law, the right of setoff in respect of its participating interest in amounts owing under this Agreement and any Revolving Note, any Term Note or other Loan Document to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement or any Revolving Note, any Term Note or other Loan Document; provided, that such right of setoff shall be subject to the obligation of such Participant to share with the Lenders, and the Lenders agree to share with such Participant, as provided in Section 8.11.  Each Borrower also agrees that each Participant shall be entitled to the benefits of Sections 2.18, 2.19, 2.20, 2.21 and 9.2 with respect to its participation in the Revolving Commitments, Term Loan Commitments, Revolving Loans and Term Loans; provided, that no Participant shall be entitled to receive any greater amount pursuant to such subsections than the transferor Lender would have been entitled to receive in respect of the amount of the participation transferred by such transferor Lender to such Participant had no such transfer occurred.

(c)Each Lender may, from time to time, with the consent of the Administrative Agent and the Borrowers’ Agent (neither of which consents shall be unreasonably withheld or delayed; and if an Event of Default shall have occurred and be continuing, then consent of the Borrowers’ Agent shall not be required), assign to other lenders (“Assignees”) all or part of its rights or obligations hereunder or under any Loan Document in a minimum amount of $1,000,000 evidenced by any Revolving Note then held by that Lender, together with equivalent proportions of its Revolving Commitment, any Term Note then held by that Lender, its Term Loan Commitment pursuant to written agreements executed by such assigning Lender, such Assignee(s), the Borrowers and the Administrative Agent in substantially the form of Exhibit H, which agreements shall specify in each instance the portion of the Obligations evidenced by the Revolving Notes and Term Notes which is to be assigned to each Assignee and the portion of the Revolving Commitment and Term Loan Commitment of such Lender to be assumed by each Assignee (each, an “Assignment Agreement”); provided, however, that the assigning Lender must pay to the Administrative Agent a processing and recordation fee of $3,500 per assignment.  Upon the execution of each Assignment Agreement by the assigning Lender, the relevant Assignee, the Borrowers and the Administrative Agent, payment to the assigning Lender by such Assignee of the purchase price for the portion of the Obligations being acquired by it and receipt by the Borrowers’ Agent of a copy of the relevant Assignment Agreement, (x) such Assignee lender shall thereupon become a “Lender” for all purposes of this Agreement with a pro rata share of the Revolving Commitment and a Term Loan Commitment in the amount set forth in such Assignment Agreement and with all the rights, powers and obligations afforded a Lender under this Agreement, (y) such assigning Lender shall have no further liability for funding the portion of its Commitment assumed by such Assignee and (z) the address for notices to such Assignee shall be as specified in the Assignment Agreement executed by it.  Concurrently with the execution and delivery of each Assignment Agreement, the assigning Lender shall surrender to the Administrative Agent the Revolving Note and Term Note a portion of which is being assigned, and the Borrowers shall execute and deliver a Revolving Note and Term Note to the Assignee in the amount of  its Revolving Commitment and its Term Loan Commitment, respectively, and a new Revolving Note and Term Note to the assigning Lender in the amount of its Revolving Commitment and Term Loan Commitment, respectively, after giving effect to the reduction occasioned by such assignment, all such Notes to constitute “Revolving Notes” and “Term Notes” for all purposes of this Agreement and of the other Loan Documents.

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(d)The Borrowers shall not be liable for any costs incurred by the Lenders in effecting any participation under subparagraph (b) of this subsection or by the Lenders in effecting any assignment under subparagraph (c) of this subsection except with respect to the Administrative Agent as provided in this Section 9.6.

(e)Each Lender may disclose to any Assignee or Participant and to any prospective Assignee or Participant any and all financial information in such Lender’s possession concerning the Borrowers or any of their Subsidiaries (if any) which has been delivered to such Lender by or on behalf of the Borrowers or any of their Subsidiaries pursuant to this Agreement or which has been delivered to such Lender by or on behalf of the Borrowers or any of their Subsidiaries in connection with such Lender’s credit evaluation of such Borrower or any of its Subsidiaries prior to entering into this Agreement, provided that prior to disclosing such information, such Lender shall first obtain the agreement of such prospective Assignee or Participant to comply with the provisions of Section 9.7.

(f)Notwithstanding any other provision in this Agreement, any Lender may at any time create a security interest in, or pledge, all or any portion of its rights under and interest in this Agreement and any note held by it in favor of any federal reserve bank in accordance with Regulation A of the Board or U. S. Treasury Regulation 31 CFR § 203.14, and such Federal Reserve Bank may enforce such pledge or security interest in any manner permitted under applicable law.

(g)Notwithstanding any other provision in this Agreement, (i) all Revolving Loan, Term Loan or other Obligations owing to CoBank hereunder that are retained by CoBank for its own account and are not part of a sale of a participation interest or the assignment of any rights or obligations under the Loan Documents, shall be entitled to patronage distributions in accordance with the bylaws of CoBank and its practices and procedures related to patronage distributions and (ii) any Revolving Loan, Term Loan or other Obligations owing to CoBank hereunder that are not retained by CoBank for its own account and are part of a sale of a participation interest or the assignment of any rights or obligations under the Loan Documents, shall not be entitled to any such patronage distributions.

Section 9.7Confidentiality of Information.  The Administrative Agent and each Lender shall use reasonable efforts to assure that information about the Borrower and its operations, affairs and financial condition, not generally disclosed to the public or to trade and other creditors, which is furnished to the Administrative Agent or such Lender pursuant to the provisions hereof is used only for the purposes of this Agreement and any other relationship between such Lender and the Borrower and shall not be divulged to any Person other than the Lender, their Affiliates and their respective officers, directors, employees and agents, except: (a) to their attorneys and accountants, (b) in connection with the enforcement of the rights of the Administrative Agent and the Lenders hereunder and under the Loan Documents or otherwise in connection with applicable litigation, (c) in connection with assignments and participations and the solicitation of prospective assignees and participants referred to in the immediately preceding Section, (d) if such information is generally available to the public other than as a result of disclosure by the Administrative Agent or any Lender, (e) to any direct or indirect contractual counterparty in any hedging arrangement or such contractual counterparty’s professional advisor, (f) to any nationally recognized rating agency that requires information about any Lender’s investment portfolio in connection with ratings issued with respect to such  Lender, and (g) as may otherwise be  required or requested by any regulatory authority having jurisdiction over the Administrative Agent or any Lender or by any applicable law, rule, regulation or judicial process, the opinion of any Lender’s counsel concerning the making of such disclosure to be binding on the parties hereto.  No Lender shall incur any liability to the Borrower by reason of any disclosure permitted by this Section.

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Section 9.8Governing Law and Construction.  THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF COLORADO, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF.  Whenever possible, each provision of this Agreement and the other Loan Documents and any other statement, instrument  or transaction contemplated hereby or thereby or relating hereto or thereto shall be interpreted in such manner as to be effective and valid under such applicable law, but, if any provision of this Agreement, the other Loan Documents or any other statement, instrument or transaction contemplated hereby or thereby or relating hereto or thereto shall be held to be prohibited or invalid under such applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement, the other Loan Documents or any other statement, instrument or transaction contemplated hereby or thereby or relating hereto or thereto.

Section 9.9Consent to Jurisdiction.  AT THE OPTION OF THE ADMINISTRATIVE AGENT, THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY BE ENFORCED IN ANY FEDERAL COURT OR COLORADO STATE COURT SITTING IN CITY OR COUNTY OF DENVER; AND EACH BORROWER 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 ANY BORROWER 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 ADMINISTRATIVE AGENT AT ITS 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 9.10Waiver of Jury Trial.  EACH BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

Section 9.11Survival of Agreement.  All representations, warranties, covenants and agreement made by each Borrower herein or in the other Loan Documents and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Loan Document shall be deemed to have been relied upon by the Lenders and shall survive the making of the Loans by the Lenders and the execution and delivery to the Lenders by the Borrowers of the Notes, regardless of any investigation made by or on behalf of the Lenders, and shall continue in full force and effect as long as any Obligation is outstanding and unpaid and so long as the Commitments have not been terminated; provided, however, that the obligations of the  under 9.2,  9.5 and 9.12 shall survive payment in full of the Obligations and the termination of the Commitments.

Section 9.12Indemnification.  The Borrowers hereby agree to defend, protect, indemnify and hold harmless the Administrative Agent and the Lenders and their respective Affiliates and the directors, officers, employees, attorneys and agents of the Administrative Agent and the Lenders and their respective Affiliates (each of the foregoing being an “Indemnitee” and all of the foregoing being collectively the “Indemnitees”) from and against any and all claims, actions, damages, liabilities, judgments, costs and expenses (including all reasonable fees and disbursements of counsel which may be incurred in the investigation or defense of any matter) imposed upon, incurred by or asserted against any Indemnitee, whether direct, indirect or consequential and whether based on any federal, state, local or

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foreign laws or regulations (including securities laws, environmental laws, commercial laws and regulations), under common law or on equitable cause, or on contract or otherwise:

(a)by reason of, relating to or in connection with the execution, delivery, performance or enforcement of any Loan Document, any commitments relating thereto, or any transaction contemplated by any Loan Document; or

(b) by reason of, relating to or in connection with any credit extended or used under the Loan Documents or any act done or omitted by any Person, or the exercise of any rights or remedies thereunder, including the acquisition of any collateral by the Lenders by way of foreclosure of the Lien thereon, deed or bill of sale in lieu of such foreclosure or otherwise;

provided, however, that the Borrowers shall not be liable to any Indemnitee for any portion of such claims, damages, liabilities and expenses resulting from such Indemnitee’s gross negligence or willful misconduct.  In the event this indemnity is unenforceable as a matter of law as to a particular matter or consequence referred to herein, it shall be enforceable to the full extent permitted by law.

This indemnification applies, without limitation, to any act, omission, event or circumstance existing or occurring on or prior to the later of the Termination Date or the date of payment in full of the Obligations, including specifically Obligations arising under clause (b) of this Section.  The indemnification provisions set forth above shall be in addition to any liability the Borrowers may otherwise have.  Without prejudice to the survival of any other obligation of the Borrowers hereunder the indemnities and obligations of the Borrowers contained in this Section shall survive the payment in full of the other Obligations.

Section 9.13Captions.  The captions or headings herein and any table of contents hereto are for convenience only and in no way define, limit or describe the scope or intent of any provision of this Agreement.

Section 9.14Entire Agreement.  This Agreement and the other Loan Documents embody the entire agreement and understanding between the Borrowers, the Administrative Agent and the Lenders with respect to the subject matter hereof and thereof.  This Agreement supersedes all prior agreements and understandings relating to the subject matter hereof.  Nothing contained in this Agreement or in any other Loan Document, expressed or implied, is intended to confer upon any Persons other than the parties hereto any rights, remedies, obligations or liabilities hereunder or thereunder.

Section 9.15Counterparts.  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 9.16Borrower Acknowledgements.  Each Borrower hereby acknowledges that (a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Loan Documents, (b) neither the Administrative Agent nor any Lender has any fiduciary relationship to such Borrower, the relationship being solely that of debtor and creditor, (c) no joint venture exists between such Borrower and the Administrative Agent or any Lender, and (d) neither the Administrative Agent nor any Lender undertakes any responsibility to such Borrower to review or inform such Borrower of any matter in connection with any phase of the business or operations of such Borrower and such Borrower shall rely entirely upon its own judgment with respect to its business, and any review, inspection or supervision of, or information supplied to, the Borrowers by the Administrative Agent or any Lender is for the protection of the Lenders and neither such Borrower nor any third party is entitled to rely thereon.

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Section 9.17Appointment of and Acceptance by Borrowers’ Agent.  Midwest Investors of Iowa, Cooperative hereby appoints and authorizes the Borrowers’ Agent to take such action as its agent on its behalf and to exercise such powers under the Loan Documents as are delegated to the Borrowers’ Agent by the terms thereof, together with such power that are reasonably incidental thereto, and Golden Oval Eggs, LLC hereby accepts such appointment.

Section 9.18Relationship Among Borrowers.

(a)JOINT AND SEVERAL LIABILITY.  EACH BORROWER AGREES THAT IT IS LIABLE, JOINTLY AND SEVERALLY WITH EACH OTHER BORROWER, FOR THE PAYMENT OF ALL OBLIGATIONS OF THE BORROWERS UNDER THIS AGREEMENT, AND THAT THE LENDERS AND THE ADMINISTRATIVE AGENT CAN ENFORCE SUCH OBLIGATIONS AGAINST ANY OR ALL BORROWERS, IN THE LENDERS’ OR THE ADMINISTRATIVE AGENT’S SOLE AND UNLIMITED DISCRETION.

(b)Waivers of Defenses.  The obligations of the Borrowers hereunder shall not be released, in whole or in part, by any action or thing which might, but for this provision of this Agreement, be deemed a legal or equitable discharge of a surety or guarantor, other than irrevocable payment and performance in full of the Obligations (except for contingent indemnity and other contingent Obligations not yet due and payable) at a time after any obligation of the Lenders hereunder to make the Term Loans and Revolving Loans and of the Letter of Credit Bank  to issue Letters of Credit shall have expired or been terminated and all outstanding Letters of Credit shall have expired or the liability of the Letter of Credit Bank thereon shall have otherwise been discharged.  The purpose and intent of this Agreement is that the Obligations constitute the direct and primary obligations of each Borrower and that the covenants, agreements and all obligations of each Borrower hereunder be absolute, unconditional and irrevocable.  Each Borrower shall be and remain liable for any deficiency remaining after foreclosure of any mortgage, deed of trust or security agreement securing all or any part of the Obligations, whether or not the liability of any other Person for such deficiency is discharged pursuant to statute, judicial decision or otherwise.

(c)Other Transactions.  The Lenders and the Administrative Agent are expressly authorized to exchange, surrender or release with or without consideration any or all collateral and security which may at any time be placed with it by the Borrowers or by any other Person on behalf of the Borrowers, or to forward or deliver any or all such collateral and security directly to the Borrowers for collection and remittance or for credit.  No invalidity, irregularity or unenforceability of any security for the Obligations or other recourse with respect thereto shall affect, impair or be a defense to the Borrowers’ obligations under this Agreement. The liabilities of each Borrower hereunder shall not be affected or impaired by any failure, delay, neglect or omission on the part of any Lender or the Administrative Agent to realize upon any of the Obligations of any other Borrower to the Lenders or the Administrative Agent, or upon any collateral or security for any or all of the  Obligations, nor by the taking by any Lender or the Administrative Agent of (or the failure to take) any guaranty or guaranties to secure the Obligations, nor by the taking by any Lender or the Administrative Agent of (or the failure to take or the failure to perfect its security interest in or other lien on) collateral or security of any kind.  No act or omission of  any Lender or the Administrative Agent, whether or not such action or failure to act varies or increases the risk of, or affects the rights or remedies of a Borrower, shall affect or impair the obligations of the Borrowers hereunder.

(d)Actions Not Required.  Each Borrower, to the extent permitted by applicable law, hereby waives any and all right to cause a marshaling of the assets of any other Borrower or any

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other action by any court or other governmental body with respect thereto or to cause any Lender or the Administrative Agent to proceed against any security for the Obligations or any other recourse which any Lender or the Administrative Agent may have with respect thereto and further waives any and all requirements that any Lender or the Administrative Agent institute any action or proceeding at law or in equity, or obtain any judgment, against any other Borrower or any other Person, or with respect to any collateral security for the Obligations, as a condition precedent to making demand on or  bringing an action or obtaining and/or enforcing a judgment against, such Borrower under this Agreement.

(e)No Subrogation.  Notwithstanding any payment or payments made by any Borrower hereunder or any setoff or application of funds of any Borrower by any Lender or the Administrative Agent, such Borrower shall not be entitled to be subrogated to any of the rights of any Lender or the Administrative Agent against any other Borrower or any other guarantor or any collateral security or guaranty or right of offset held by any Lender or the Administrative Agent for the payment of the Obligations, nor shall such Borrower seek or be entitled to seek any contribution or reimbursement from any other Borrower or any other guarantor in respect of payments made by such Borrower hereunder, until all amounts owing to the Lenders and the Administrative Agent by the Borrowers on account of the Obligations are irrevocably paid in full.  If any amount shall be paid to a Borrower on account of such subrogation rights at any time when all of the Obligations shall not have been irrevocably paid in full, such amount shall be held by that Borrower in trust for the Lenders and the Administrative Agent, segregated from other funds of that Borrower, and shall, forthwith upon receipt by the Borrower, be turned over to the Administrative Agent in the exact form received by the Borrower (duly indorsed by the Borrower to the Administrative Agent, if required), to be applied against the Obligations, whether matured or unmatured, in such order as the Administrative Agent may determine.

(f)Application of Payments.  Any and all payments upon the Obligations made by the Borrowers or by any other Person, and/or the proceeds of any or all collateral or security for any of the Obligations, may be applied by the Lenders on such items of the Obligations as the Lenders may elect.

(g)Recovery of Payment.  If any payment received by the Lenders or the Administrative Agent and applied to the Obligations is subsequently set aside, recovered, rescinded or required to be returned for any reason (including, without limitation, the bankruptcy, insolvency or reorganization of a Borrower or any other obligor), the Obligations to which such payment was applied shall, to the extent permitted by applicable law, be deemed to have continued in existence, notwithstanding such application, and each Borrower shall be jointly and severally liable for such Obligations as fully as if such application had never been made.  References in this Agreement to amounts “irrevocably paid” or to “irrevocable payment” refer to payments that cannot be set aside, recovered, rescinded or required to be returned for any reason.

(h)Borrowers’ Financial Condition.  Each Borrower is familiar with the financial condition of the other Borrowers, and each Borrower has executed and delivered this Agreement based on that Borrower’s own judgment and not in reliance upon any statement or representation of the Lenders or the Administrative Agent.  The Lenders and the Administrative Agent shall have no obligation to provide any Borrower with any advice whatsoever or to inform any Borrower at any time of any  Lender’s actions, evaluations or conclusions on the financial condition or any other matter concerning the Borrowers.

(i)Bankruptcy of the Borrowers.  Each Borrower expressly agrees that, to the extent permitted by applicable law, the liabilities and obligations of that Borrower under this Agreement

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shall not in any way be impaired or otherwise affected by the institution by or against any other Borrower or any other Person of any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or any other similar proceedings for relief under any bankruptcy law or similar law for the relief of debtors and that any discharge of any of the Obligations pursuant to any such bankruptcy or similar law or other law shall not diminish, discharge or otherwise affect in any way the obligations of that Borrower under this Agreement, and that upon the institution of any of the above actions, such obligations shall be enforceable against that Borrower.

(j)Limitation; Insolvency Laws.  As used in this Section 9.18(j): (a) the term “Applicable Insolvency Laws” means the laws of the United States of America or of any State, province, nation or other governmental unit relating to bankruptcy, reorganization, arrangement, adjustment of debts, relief of debtors, dissolution, insolvency, fraudulent transfers or conveyances or other similar laws (including, without limitation, 11 U. S. C. §547, §548, §550 and other “avoidance” provisions of Title 11 of the United Stated Code) as applicable in any proceeding in which the validity and/or enforceability of this Agreement against any Borrower, or any Specified Lien is in issue; and (b) “Specified Lien” means any security interest, mortgage, lien or encumbrance granted by any Borrower securing the Obligations, in whole or in part.  Notwithstanding any other provision of this Agreement, if, in any proceeding, a court of competent jurisdiction determines that with respect to any Borrower, this Agreement or any Specified Lien would, but for the operation of this Section, be subject to avoidance and/or recovery or be unenforceable by reason of Applicable Insolvency Laws, this Agreement and each such Specified Lien shall be valid and enforceable against such Borrower, only to the maximum extent that would not cause this Agreement or such Specified Lien to be subject to avoidance, recovery or unenforceability.  To the extent that any payment to, or realization by, the Lenders or the Administrative Agent on the Obligations exceeds the limitations of this Section and is otherwise subject to avoidance and recovery in any such proceeding, the amount subject to avoidance shall in all events be limited to the amount by which such actual payment or realization exceeds such limitation, and this Agreement as limited shall in all events remain in full force and effect and be fully enforceable against such Borrower.  This Section is intended solely to reserve the rights of the Lenders and the Administrative Agent hereunder against each Borrower, in such proceeding to the maximum extent permitted by Applicable Insolvency Laws and neither the Borrowers, any guarantor of the Obligations nor any other Person shall have any right, claim or defense under this Section that would not otherwise be available under Applicable Insolvency Laws in such proceeding.

Section 9.19Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts that are treated as interest on such Loan under applicable law (collectively, the “Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) that may be contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance with applicable law, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender.

Section 9.20Ratification of Prior Transactions.  Each Borrower acknowledges and affirms that all transactions and loans made pursuant to the Existing Credit Agreement that took place or were

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advanced prior to the date hereof are ratified in all respects and shall hereafter be governed solely by the terms of this Agreement and the Notes.

[The next page is the signature page.]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written.

	GOLDEN OVAL EGGS, LLC,
	as a Borrower and the Borrowers’ Agent
	By:	/s/ Douglas Leifermann
	Name:   Douglas Leifermann
	Title:   Chief Financial Officer
	MIDWEST INVESTORS OF IOWA, COOPERATIVE, as a Borrower
	By:	/s/ Douglas Leifermann
	Name:   Douglas Leifermann
	Title:   Chief Financial Officer
Address for the Borrowers	GOECA, LP, as a Borrower
For Purposes of Notice:	By its General Partner
	GOEMCA, Inc.
1800 Park Avenue East
P.O. Box 615	By:	/s/ Douglas Leifermann
Renville, MN 56284	Name:   Douglas Leifermann
Fax: (320) 329-3276	Title:   Chief Financial Officer
Attention: Doug Leifermann, Vice President – Finance

S-1

Commitment Amounts

Revolving:	$15,000,000	COBANK, ACB,
Tranche A1 Term:	N/A	as a Lender and as the Administrative Agent
Tranche A2 Term:	N/A
Tranche A3 Term:	N/A	By:		/s/ Jeff Doorenbos
Tranche B1 Term:	$7,300,000	Name:  Jeff Doorenbos
Tranche B2 Term:	$7,700,000	Title:  Vice President
Tranche B3 Term:	$20,000,000
		Address for funding notices:
		5500 South Quebec Street
		Greenwood Village, CO 80111
		P.O. Box 5110
		Denver, CO 80217
		Attention: Kelly Purtell
		Fax: (303) 740-4021
		Address for all other notices:
		Interchange Tower, Suite 300
		600 Highway 169 South
		Minneapolis, MN 55426-1219
		Fax: (303) 224-2582
		Attention: Jeff Doorenbos
Revolving:	N/A	METROPOLITAN LIFE INSURANCE COMPANY, as a Bank
Tranche A1 Term:	$14,700,000
Tranche A2 Term:	$15,300,000	By:	/s/ Steven W. Craig
Tranche A3 Term:	$18,000,000	Name:			Steven W. Craig
Tranche B1 Term:	N/A	Title:
Tranche B2 Term:	N/A
Tranche B3 Term:	N/A
		Address for funding notices:
		Address for all other notices:
		4401 Westown Parkway
		Suite 220
		West Des Moines, IA 50266
		Fax: (515) 223-0757
		Attention: Tony Jennings

S-2

ANNEX I

PRICING GRID

Revolving Loans (numbers in parentheses constitute negative amounts)

Funded Debt to EBITDA	LIBOR Margin		Base Margin		Unused Fee
³ 5.25:1.00	3.75	%	1.50	%	0.625	%
³ 4.50:1.00 < 5.25:1.00	3.25	%	1.00	%	0.500	%
³ 3.75:1.00 < 4.50:1.00	2.75	%	0.50	%	0.500	%
³ 3.00:1.00 < 3.75:1.00	2.25	%	0	%	0.375	%
³ 2.25:1.00 < 3.00:1.00	1.75	%	(0.50	)%	0.375	%
< 2.25:1.00	1.25	%	(1.00	)%	0.250	%

Tranche B Term Loans, Second Tranche 2 Advance and Final Tranche 2 Advance of Tranche A2 Term Loans and Tranche A3 Term Loans (numbers in parentheses constitute negative amounts)

Funded Debt to EBITDA	LIBOR Margin		Base Margin (Tranche B loans only)
³ 5.25:1.00	4.00	%	1.75	%
³ 4.50:1.00 < 5.25:1.00	3.50	%	1.25	%
³ 3.75:1.00 < 4.50:1.00	3.00	%	0.75	%
³ 3.00:1.00 < 3.75:1.00	2.50	%	0.25	%
³ 2.25:1.00 < 3.00:1.00	2.00	%	(0.25	)%
< 2.25:1.00	1.50	%	(0.75	)%

ANNEX II

RISK MANAGEMENT GRID

Current Ratio	Minimum Percentage of Eggs Contracted
Greater than or equal to 1.25 to 1.00 but less than 1.50 to 1.00	³ 50%
Greater than or equal to 1.50 to 1.00 but less than 2.00 to 1.00	³ 40%
Greater than or equal to 2.00 to 1.00	³ 30%

EX-21.1

Exhibit 21.1

Subsidiaries of Golden Oval Eggs, LLC

Name	State or Other Jurisdiction of Incorporation
GOECA, LP	Delaware

EX-23.1

Exhibit 23.1

INDEPENDENT AUDITORS’ CONSENT

The Board of Managers

Golden Oval Eggs, LLC

Renville, Minnesota

We consent to the inclusion of our report dated November 27, 2006 with respect to the consolidated balance sheets of Golden Oval Eggs, LLC as of August 31, 2006 and 2005, and the related consolidated statements of operations, owners’ equity and cash flows for each of the three years ended August 31, 2006, which report has been included in the Annual Report on Form 10-K of Golden Oval Eggs, LLC for the year ended August 31, 2006.

Moore Stephens Frost

Certified Public Accountants

Little Rock, Arkansas

November 29, 2006

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, Dana Persson, certify that:

1.I have reviewed this Annual Report on Form 10-K of Golden Oval Eggs, LLC;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	November 29, 2006
		/s/ Dana Persson
		Dana Persson
		President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, Thomas A. Powell, certify that:

1.I have reviewed this Annual Report on Form 10-K of Golden Oval Eggs, LLC;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	November 29, 2006
		/s/ Thomas A. Powell
		Thomas A. Powell
		Interim Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION

The undersigned certifies pursuant to 18 U.S.C. Section 1350, that:

(1)                The accompanying Golden Oval Eggs, LLC Annual Report on Form 10-K for the period ended August 31, 2006, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)                The information contained in the accompanying report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:       November 29, 2006

/s/ Dana Persson

Dana Persson

President and Chief Executive Officer

/s/ Thomas A. Powell

Thomas A. Powell

Interim Chief Financial Officer