Exhibit 10.5

 

 

 

 

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

FRESHREALM, LLC

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

 

SEVENTH AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

Effective as of February 27, 2019

THE MEMBERSHIP INTERESTS OF FRESHREALM, LLC, AND THE UNITS THEREOF REPRESENTED
BY THIS LIMITED LIABILITY COMPANY AGREEMENT, HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY OTHER APPLICABLE
SECURITIES LAWS.  SUCH MEMBERSHIP INTERESTS AND/OR UNITS MAY NOT BE SOLD,
ASSIGNED, PLEDGED OR OTHERWISE DISPOSED OF AT ANY TIME WITHOUT EFFECTIVE
REGISTRATION UNDER SUCH ACT AND LAWS OR EXEMPTION THEREFROM, AND COMPLIANCE WITH
THE OTHER RESTRICTIONS ON TRANSFERABILITY SET FORTH HEREIN.

 

 

 

 

 

 

 

 

 

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

 

TABLE OF CONTENTS

 

 

 

 

 

 

 

Page

ARTICLE I

DEFINITIONS

2

ARTICLE II

ORGANIZATIONAL MATTERS

9

2.1

Formation of Company

9

2.2

Limited Liability Company Agreement

9

2.3

Name

9

2.4

Purpose

9

2.5

Principal Office

9

2.6

Registered Office

9

2.7

Term

10

2.8

No Partnership

10

ARTICLE III

UNITS

10

3.1

Units Generally

10

3.2

Authorization and Issuance of Units

11

3.3

Units Issued to Initial Service Providers

11

3.4

Authorization to Issue Profits Interest Units

11

3.5

Issuance of Additional Units and Interests

11

3.6

Purchase of Units

12

ARTICLE IV

MEMBERS

12

4.1

Substituted Members

12

4.2

Additional Members

12

4.3

Representations and Warranties of Members

12

4.4

Limitation of Liability

13

4.5

Lack of Authority

14

4.6

Members’ Right to Act

14

 

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

 

TABLE OF CONTENTS (cont.)

 

 

 

 

4.7

No Right of Partition

14

4.8

Indemnification

14

ARTICLE V

CAPITAL CONTRIBUTIONS

16

5.1

Initial Cash Capital Contributions

16

5.2

Additional Capital Contributions

16

5.3

Capital Accounts

16

5.4

No Withdrawal

16

5.5

Loans from Members

16

5.6

Distributions In-Kind

16

ARTICLE VI

DISTRIBUTIONS

18

6.1

Distributions

17

6.2

Tax Withholding

17

6.3

Survival of Certain Provisions______________

19

6.4

Indemnification and Reimbursement for Payments on Behalf of a Member

19

ARTICLE VII

MANAGEMENT

19

7.1

Board of Directors

19

7.2

Delegation of Authority

21

7.3

Chief Executive Officer

21

7.4

Other Officers, Employees and Consultants

21

7.5

Limitation of Liability

22

ARTICLE VIII

BOOKS, RECORDS, ACCOUNTING AND REPORTS

22

8.1

Records and Accounting

22

8.2

Fiscal Year

22

 

ii

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

 

TABLE OF CONTENTS (cont.)

 

 

 

 

8.3

Reports

22

ARTICLE IX

COVENANTS

23

9.1

Confidentiality

23

9.2

Non-compete

24

9.3

Inventions

25

9.4

Other Business Activities

25

9.5

Violations

26

ARTICLE X

TAX MATTERS

27

10.1

Preparation of Tax Returns

26

10.2

Tax Elections

26

10.3

______________

26

ARTICLE XI

TRANSFER OF UNITS

28

11.1

Transfers by Members

28

11.2

Right of First Refusal

28

11.3

Approved Sale

32

11.4

Void Transfers

34

11.5

Additional Restrictions on Transfer

34

11.6

Legend

34

11.7

Transfer Fees and Expenses

34

ARTICLE XII

WITHDRAWAL AND RESIGNATION OF MEMBERS

35

12.1

Withdrawal and Resignation of Member

35

ARTICLE XIII

DISSOLUTION AND LIQUIDATION

35

13.1

Dissolution

35

13.2

Liquidation and Termination

35

 

iii

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

 

TABLE OF CONTENTS (cont.)

 

 

 

 

13.3

Cancellation of Certificate

36

13.4

Reasonable Time for Winding Up

36

13.5

Return of Capital

36

ARTICLE XIV

GENERAL PROVISIONS

36

14.1

Power of Attorney

36

14.2

Amendments

37

14.3

Title to Company Assets

37

14.4

Remedies

37

14.5

Successors and Assigns

38

14.6

Severability

38

14.7

Execution

38

14.8

Descriptive Headings

38

14.9

Applicable Law

38

14.10

Addresses and Notices

38

14.11

Creditors

39

14.12

Waiver

39

14.13

Further Action

39

14.14

Offset

39

14.15

Entire Agreement

39

14.16

Delivery by Facsimile or E-Mail

39

14.17

Dispute Resolution

40

14.18

Survival

40

14.19

Expenses

40

14.20

Effective Date

40

14.21

Acknowledgements

40

 

 

iv

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

 

 

FRESHREALM, LLC

SEVENTH AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

This Seventh Amended and Restated Limited Liability Company Agreement (as it may
subsequently be amended from time to time in accordance with the terms hereof,
this “Agreement,” unless as to any provision it is otherwise specified) is
entered into effective as of February 27, 2019 (the “Effective Date”), by and
among FreshRealm, LLC, a Delaware limited liability company (the “Company”), and
the Members (as defined herein) signatory hereto from time to time.  This
Agreement governs the internal affairs of the Company and the authority of its
Members.  All of the matters set forth in this Agreement are to be considered
the “internal affairs” of the Company.  The Members, to the fullest extent
possible, waive the application of the laws of any jurisdiction other than
Delaware.

RECITALS

WHEREAS, the Company and the Members entered into that certain Amended and
Restated Limited Liability Company Agreement of the Company, having an effective
date as of July 31, 2013, as amended by Amendment No. 1, dated as of October 30,
2013, and Amendment No. 2, dated as of March 1, 2014, as further amended by the
Second Amended and Restated Limited Liability Company Agreement dated as of
April 30, 2014, and as further amended by the Third Amended and Restated Limited
Liability Company Agreement dated as of July 31, 2014, as further amended by the
Fourth Amended and Restated Limited Liability Company Agreement, effective as of
November 1, 2014, as further amended by the Fifth Amended and Restated Limited
Liability Company Agreement, effective as of August 1, 2016, and as further
amended by the Sixth Amended and Restated Limited Liability Company Agreement
effective as of April 18, 2017, as well as the First Amendment thereto,
effective as of July 31, 2018 (collectively, the “Original Agreement”); and

WHEREAS, the Company has elected to be classified as a corporation for U.S.
federal income tax purposes with an effective date of December 16, 2018 (the
“Conversion”); and

WHEREAS, the Company and its Members in connection with the Conversion wish to
amend in certain respects and restate in its entirety the Original Agreement as
set forth in this Agreement;

NOW, THEREFORE, in reliance on the foregoing recitals and for good and valuable
consideration, the Members hereby amend and restate the Original Agreement in
its entirety as follows:

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

 

 

ARTICLE I

DEFINITIONS

Capitalized terms used but not otherwise defined herein shall have the following
meanings as well as any other meanings for capitalized terms that are set forth
elsewhere in this Agreement:

“Action” means any action, claim, complaint, petition, investigation, suit or
other proceeding, whether administrative, civil or criminal, in law or in
equity, or before any arbitrator or Governmental Entity.

“Additional Member” means a Person admitted to the Company as a Member pursuant
to Section 4.2.

“Affiliate” of any particular Person means any other Person controlling,
controlled by or under common control with such particular Person.

“Agreement” has the meaning set forth in the above Recitals.

“Applicable ROFR Rightholders” has the meaning set forth in Section 11.2(a).

“Approved Sale” has the meaning set forth in Section 11.3(a).

“Award Agreement” has the meaning set forth in Section 3.4(a).

“Board” has the meaning set forth in Section 7.1(a).

“Business Opportunity” has the meaning set forth in Section 9.4.

“Calavo” means Calavo Growers, Inc., a California corporation.

“Calavo Director” has the meaning set forth in Section 7.1(b).

“Capital Contributions” means any cash, cash equivalents, promissory obligations
or the Fair Market Value of other property which a Member contributes or is
deemed to have contributed to the Company with respect to any Unit pursuant to
Article V.

“Cause” means, in the context of a basis for termination of a Service Provider’s
employment with, or service as a non-employee to, the Company, “Cause” as
defined in any employment agreement or consulting agreement between the Service
Provider and the Company or, if there is no such agreement, the following:

(i)         The Service Provider breaches any obligation, duty or agreement in
any material respect under any employment-related or consulting-related
agreement with the Company, which breach is not cured or corrected within ten
days after written notice thereof from the Company; or

(ii)        The Service Provider violates any provision of this Agreement; or

2

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

 

 

(iii)      The Service Provider commits any act of personal dishonesty,
undisclosed conflict of interest, fraud, or breach of trust involving the
Company or any of its customers or suppliers; or

(iv)       The Service Provider is convicted of, or pleads guilty or nolo
contendere with respect to, a felony under federal or applicable state law,
other than a traffic offense that does not involve serious bodily injury to a
third person; or

(v)        The Service Provider is grossly negligent in the performance of
services to the Company, or otherwise engages in any act of willful misconduct;
or

(vi)       The Service Provider commits continued and repeated substantive
violations of specific written directions of the Board and/or the Person to whom
the Service Provider reports, which directions are consistent with the Service
Provider’s position and title, or continued and repeated substantive failure to
perform duties assigned by the Board and/or the Person to whom the Service
Provider reports; provided that no discharge shall be deemed for Cause under
this subsection unless the Service Provider first receives written notice from
the Company advising him of the specific acts or omissions alleged to constitute
violations of written directions or a material failure to perform his duties,
and such violations or material failure continue after he shall have had a
reasonable opportunity to correct the acts or omissions so complained of; or

(vii)      The Service Provider (A) obstructs or impedes, (B) endeavors to
influence, obstruct or impede, or (C) fails to materially cooperate with, any
investigation authorized by the Board or any governmental or self-regulatory
entity, provided that the failure to waive attorney-client privilege relating to
communications with the Service Provider’s own attorney in connection with an
investigation shall not constitute “Cause.”

“Certificate” has the meaning set forth in Section 2.6.

“Certificated Units” has the meaning set forth in Section 11.6.

“Chief Executive Officer” has the meaning set forth in Section 7.3.

“Code” means the United States Internal Revenue Code of 1986, as amended from
time to time.

“Company” has the meaning set forth in the introductory paragraph of this
Agreement.

“Company Interest Rate” has the meaning set forth in Section 6.2(c).

“Company Option Period” has the meaning set forth in Section 11.2(d).

“Company ROFR Exercise Notice” has the meaning set forth in Section 11.2(d).

“Competitor” means, with respect to the Company, any Person engaged or proposing
to engage in any business related to the business of selling food shipped at
between 33 and 44 degrees Fahrenheit directly to consumers using overnight or
expedited delivery services such as

3

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

 

 

FedEx, UPS, USPS, Uber, Instacart, Google Shopping Express, Task Rabbit and
similar delivery service providers.

“Confidential Information” has the meaning set forth in Section 9.1.

“Control” means, without limitation, the possession, directly or indirectly, of
the power to direct the management and policies of a Person whether through the
ownership of voting securities, by contract or otherwise, and each of the terms
“controlling” and “controlled by” has a correlative meaning.

“Co-Packers” means Caito Foods Service, Inc., F&S Produce Company, Inc. and Cut
Fruit, LLC.

“Delaware Act” means the Delaware Limited Liability Company Act, 6 Del.L. §
18-101, et seq., as it may be amended from time to time, and any successor to
the Delaware Act.

“Director” means an individual designated as a member of the Board.

“Disability” means any sickness, physical or mental disability or other
condition which permanently and materially impairs a Service Provider’s ability
to perform his duties as a Service Provider to the Company.

“Distribution” means each distribution with respect to Units made by the Company
to a Member, whether in cash, property or Equity Securities of the Company and
whether by liquidating distribution, redemption, repurchase or otherwise;
provided that none of the following shall be a Distribution: (i) any redemption
by the Company of any Equity Securities of the Company in connection with the
termination of employment or service of an employee or consultant of the
Company, (ii) any recapitalization or exchange of Equity Securities of the
Company, and any subdivision (by split or otherwise) or any combination (by
reverse split or otherwise) of any outstanding Equity Securities, or (iii) any
reasonable fees, other remuneration or expense reimbursement paid to any Member
in such Member’s capacity as an employee, officer, consultant or other provider
of services to the Company (including payments pursuant to Section 14.19).

“Effective Date” has the meaning set forth in the introductory paragraph of this
Agreement.

“Equity Securities” has the meaning set forth in Section 3.5.

“Fair Market Value” of any asset as of any date means the purchase price that a
willing buyer having all relevant knowledge would pay a willing seller for such
asset in an arm’s length transaction, as determined in good faith by the Board
based on such factors as the Board, in the exercise of its reasonable business
judgment, considers relevant.

“Fiscal Period” means any interim accounting period within a Taxable Year
established by the Board.

4

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

 

 

“Fiscal Quarter” means each calendar quarter ending January 31, April 30, July
31 and October 31, or such other quarterly accounting period that may be
established by the Board.

“Fiscal Year” has the meaning set forth in Section 8.2.

“Fresh Benefit” has the meaning set forth in Section 9.4.

“GAAP” means U.S. generally accepted accounting principles.

“Good Reason” means: (i) a material reduction in the scope of a Service
Provider’s duties or responsibilities, which reduction has (a) not been approved
for proper business purposes by the Board, and (b) is not remedied by the
Company within twenty days after notification to the Company containing a
reasonably detailed description of such reduction; (ii) the Company’s reduction
of the Service Provider’s annual base salary by more than thirty percent other
than in conjunction with a termination of his employment or service for Cause;
or (iii) the Company’s breach of any material obligation owed to the Service
Provider under any employment or consultant agreement with the Company, which
breach is not cured within twenty days after written notification to the
Company.

“Governmental Entity” means the United States of America or any other nation,
any state or other political subdivision thereof, or any entity exercising
executive, legislative, judicial, regulatory or administrative functions of
government.

“Impermanence” means Impermanence, LLC, a Delaware limited liability company
formed by Peter Hajas, Michael R. Lippold, and other investors and members of
the Company’s management.

“Impermanence Interests” has the meaning set forth in Section 11.2(a).

“Incentive Plan” has the meaning set forth in Section 3.4(a).

“Indebtedness” means at a particular time, without duplication, (i) any
indebtedness for borrowed money or issued in substitution for or exchange of
indebtedness for borrowed money, (ii) any indebtedness evidenced by any note,
bond, debenture or other debt security, or with respect to which the assets or
properties of the Company are secured, (iii) any indebtedness for the deferred
purchase price of property or services with respect to which a Person is liable,
contingently or otherwise, as obligor or otherwise (other than trade payables
and other current liabilities incurred in the ordinary course of business), (iv)
any leases capitalized or required to be capitalized in accordance with
generally accepted accounting principles, (v) all indebtedness under guaranties,
endorsements, assumptions, or other contractual obligations, including any
letters of credit, or the obligations in respect of, or to purchase or otherwise
acquire, indebtedness of others, or by which a Person assures a creditor against
loss (including contingent reimbursement obligations with respect to letters of
credit), and (vi) interest, penalties, fees, charges or other obligations with
respect to any of the foregoing.

“Indemnified Person” has the meaning set forth in Section 4.9(a).

5

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

 

 

“Initial Member” means each Person whose name is listed on the signature pages
of the Original Agreement and who previously executed and delivered the Original
Agreement or a counterpart thereof.

 “Inventions” has the meaning set forth in Section 9.3.

“Initial Units” has the meaning set forth in Section 3.2.

“Line of Credit Agreement” has the meaning set forth in Section 5.6(b).

“Majority Member” has the meaning set forth in Section 11.4(f).

“Member” means (i) each Initial Member, (ii) Impermanence, (iii) each Co-Packer
whose name is listed on the signature pages of this Agreement as of the
Effective Date, but only if such Co-Packer has executed and delivered this
Agreement or a counterpart thereof, and (iv) any Person admitted to the Company
as a Substituted Member or Additional Member; but only for so long as any such
Person described in this sentence is shown on the Company’s books and records as
the owner of one or more Units.

“Member ROFR Exercise Notice” has the meaning set forth in Section 11.2(d).

“Minority Member” has the meaning set forth in Section 11.4(f).

“Non-Calavo Director” has the meaning set forth in Section 7.1(b).

“Offering Member” has the meaning set forth in Section 11.2(a).

“Offering Member Notice” has the meaning set forth in Section 11.2(c).

“Offered Units” has the meaning set forth in Section 11.2(a).

“Original Agreement” has the meaning set forth in the above Recitals.

“Other Business” has the meaning set forth in Section 9.4.

“Percentage Interest” means, with respect to any Member as of any date, the
ratio (expressed as a percentage) of the number of Units held by such Member on
such date to the aggregate Units held by all Members on such date.  Units may or
may not include Profits Interests Units depending on the terms and conditions of
their Award Agreement.  The Percentage Interest of each Member immediately after
the Effective Date (assuming the execution and delivery of this Agreement by
each Person listed on the signature pages of this Agreement) shall be set forth
on Schedule A which shall be updated and attached hereto within no more than
fourteen (14) business days following the Effective Date.

“Permitted Transferee” means (i) with respect to any Member who is a natural
person, such Member’s spouse and descendants (whether natural or adopted) and
any trust that is and at all times remains solely for the benefit of the Member
and/or the Member’s spouse and/or descendants, (ii) with respect to any Member
which is an entity, any entity controlled by such

6

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

 

 

Member, (iii) any Person who is already a Member of the Company on the date of
Transfer, (iv) in connection with Calavo, the officers and directors of Calavo
as of the Effective Date, and (v) in connection with Impermanence, the holders
of membership interests in Impermanence as of the Effective Date.

“Person” means an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization, association or other entity or a Governmental
Entity.

“Profits Interest” has the meaning set forth in Section 3.4(a).

 “Public Offering” means any sale, in an underwritten public offering registered
under the Securities Act, of any class or series of the Company’s (or any
successor’s) Equity Securities.

“Purchasing Rightholders” has the meaning set forth in Section 11.2(e).

“Restricted Period” has the meaning set forth in Section 9.2(a).

“ROFR Rightholder Option Period” has the meaning set forth in Section 11.2(d).

“Sale of the Company” means a sale of the outstanding Units or of the assets of
the Company by the holder(s) thereof to any Person (other than to the Company)
pursuant to which such Person or Persons acquires (i) at least two thirds of the
outstanding Units of the Company (whether by merger, consolidation, sale or
Transfer of Units or otherwise) or (ii) all or substantially all of the
Company’s assets determined on a consolidated basis.

“Schedule of Members” means the Schedule of Members, which, except as provided
in Section 3.2, shall identify the Percentage Interests, the number of Units
held by the Members and the Capital Contributions made by such Members for such
Units, which Schedule of Members the Board shall update upon the issuance of any
Units to any new Member, upon the Transfer of any Units to any new or existing
Member, upon the forfeiture of any Units, or in the manner described in Section
14.20 if any proposed Member does not execute and deliver this Agreement.

“Securities Act” means the Securities Act of 1933, as amended, and applicable
rules and regulations thereunder, and any successor to such statute, rules or
regulations.  Any reference herein to a specific section, rule or regulation of
the Securities Act shall be deemed to include any corresponding provisions of
future law.

“Securities Exchange Act” means the Securities Exchange Act of 1934, as amended,
and applicable rules and regulations thereunder, and any successor to such
statute, rules or regulations.  Any reference herein to a specific section, rule
or regulation of the Securities Exchange Act shall be deemed to include any
corresponding provisions of future law.

“Service Provider” means officers, employees, consultants or other service
providers of the Company.

"Statutory Conversion" means the conversion of the Company to a corporation
pursuant to Section 265 of the Delaware General Corporation Law.

7

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

 

 

“Subsidiary” means, with respect to any Person, any corporation, limited
liability company, partnership, association or business entity of which (i) if a
corporation, a majority of the total voting power of stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors thereof is at the time owned or controlled, directly or indirectly, by
that Person or one or more of the other Subsidiaries of that Person or a
combination thereof, or (ii) if a limited liability company, partnership,
association or other business entity (other than a corporation), a majority of
the partnership, membership or other similar ownership interest thereof is at
the time owned or controlled, directly or indirectly, by any Person or one or
more Subsidiaries of that Person or a combination thereof.  For purposes hereof,
a Person or Persons shall be deemed to have a majority ownership interest in a
limited liability company, partnership, association or other business entity
(other than a corporation) if such Person or Persons shall be allocated a
majority of limited liability company, partnership, association or other
business entity gains or losses or shall be or control any managing director or
general partner of such limited liability company, partnership, association or
other business entity.  For purposes hereof, references to a “Subsidiary” of any
Person shall be given effect only at such times that such Person has one or more
Subsidiaries, and, unless otherwise indicated, the term “Subsidiary” refers to a
Subsidiary of the Company.

“Substituted Member” means a Person that is admitted as a Member to the Company
pursuant to Section 4.1.

“Super-Majority Vote” means, with respect to a determination by the Members, the
affirmative vote at a meeting or by written consent of the holders of at least
seventy percent (70%) of the outstanding Units that are held by the Members as
of the record date for the meeting or the date of the consent.  All Units shall
have voting rights from and after the Effective Date.

“Tax” or “Taxes” means any federal, state, local or foreign income, gross
receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use,
transfer, registration, value added, excise, natural resources, severance,
stamp, occupation, premium, windfall profit, environmental, utility, customs,
duties, real property, personal property, capital stock, social security,
unemployment, disability, payroll, license, employee or other withholding, or
other tax, of any kind whatsoever, including any interest, penalties or
additions to tax or additional amounts in respect of the foregoing, in all cases
whether or not disputed.

“Taxable Year” means the Company’s accounting period for federal income tax
purposes determined pursuant to Section 10.2.

“Taxing Authority” has the meaning set forth in Section 6.2(b).

“Tax Representative” has the meaning set forth in Section 10.4(b).

“Transfer” means any sale, transfer, assignment, pledge, mortgage, exchange,
hypothecation, grant of a security interest or other direct or indirect
disposition or encumbrance of an interest whether with or without consideration,
whether voluntarily or involuntarily or by operation of law) or the acts
thereof.  The terms “Transferee,” “Transferred,” and other forms of the word
“Transfer” shall have correlative meanings.

8

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

 

 

“Treasury Regulations” means the income tax regulations promulgated under the
Code as in effect from time to time.

“Unit” means a unit held by a Member and representing an ownership interest in
the Company, and having the relative rights, powers and duties set forth in this
Agreement.

“Withholding Advances” has the meaning set forth in Section 6.2(b).

ARTICLE II

ORGANIZATIONAL MATTERS

2.1       Formation of Company.  The Company was formed on January 14, 2013,
pursuant to the provisions of the Delaware Act.

2.2       Limited Liability Company Agreement.  The Company and the Members
hereby execute this Agreement for the purpose of establishing the affairs of the
Company and the conduct of its business in accordance with the provisions of the
Delaware Act.  The rights, powers, duties, obligations and liabilities of the
Members shall be determined pursuant to the Delaware Act and this Agreement.  To
the extent that the rights, powers, duties, obligations and liabilities of any
Member are different by reason of any provision of this Agreement than they
would be under the Delaware Act in the absence of such provision, this Agreement
shall, unless expressly prohibited by the Delaware Act, control.

2.3       Name.  The name of the Company shall be “FreshRealm, LLC.” The Board
in its sole discretion may change the name of the Company at any time and from
time to time.  Notification of any such change shall be given to all
Members.  The Company’s business may be conducted under its name and/or any
other name or names deemed advisable by the Board.

2.4       Purpose.  The purpose of the Company is to engage in any lawful act or
activity for which limited liability companies may be formed under the Delaware
Act and to engage in any and all activities necessary or incidental thereto,
including, without limitation, activities relating to the marketing of food
products directly to consumers or other entities.

2.5       Principal Office.  The principal office of the Company shall be
located at 34 N. Palm St, Suite 100, Ventura, California 93001, or at such other
place as the Board may from time to time designate, and all business and
activities of the Company shall be deemed to have occurred at its principal
office.  The Company may maintain offices at such other place or places as the
Board deems advisable.  Notification of any such change shall be given to all
Members.

2.6       Registered Office; Registered Agent.  The registered office of the
Company shall be the office of the initial registered agent named in the
Certificate of Formation filed with the Secretary of State of Delaware on
January 14, 2013 (the “Certificate”) or such other office (which need not be a
place of business of the Company) as the Board may designate from time to time
in the manner provided by the Delaware Act and applicable law.  The registered
agent for service of process on the Company in the State of Delaware shall be
the initial registered agent named in the Certificate or such other Person or
Persons as the Board may designate from time to time in the manner provided by
the Delaware Act and applicable law.

9

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

 

 

2.7       Term.  The term of the Company commenced upon the filing of the
Certificate with the Secretary of State of Delaware in accordance with the
Delaware Act, and shall continue in existence until termination and dissolution
thereof in accordance with the provisions of Article XIII.

2.8       No Partnership.  The Members intend that the Company not be a
partnership (including a limited partnership) or joint venture, and that no
Member be a partner or joint venturer of any other Member by virtue of this
Agreement, for any purposes and neither this Agreement nor any other document
entered into by the Company or any Member relating to the subject matter hereof
shall be construed to suggest otherwise.  The Company has elected to be
classified as a corporation for U.S. federal income tax purposes with an
effective date as of December 16, 2018.  Accordingly, as of December 16, 2018,
the Company shall no longer be treated as a partnership for federal, state or
local income tax purposes.  Each Member and the Company shall file all tax
returns and shall otherwise take all tax and financial reporting positions in a
manner consistent with such treatment.

ARTICLE III

UNITS

3.1       Units Generally.  The Members’ ownership interest in the Company shall
be represented by issued and outstanding Units, which may be divided into one or
more types, classes or series.  Each type, class or series of Units shall have
the privileges, preferences, duties, liabilities, obligations and rights,
including voting rights, if any, set forth in this Agreement with respect to
such type, class or series.  Unless otherwise determined by the Board, the Units
issued hereunder will not be Certificated Units.  The Board shall maintain a
Schedule of Members and a record of each Member’s ownership interest in the
Company (which record, except for the Schedule of Members that is attached to
this Agreement as of the Effective Date of this Agreement, shall not be made
available to a Member who owns less than a 5.0% Percentage Interest as to any
other Member’s ownership interest in the Company, provided further that if a new
Member is admitted which is a food service, food supplier, food maker or food
packer, then such record of ownership interest shall be made available to the
Co-Packers), and shall update the Schedule of Members and such record, as
applicable, upon the issuance of any Units to any new Member, upon the Transfer
of any Units to any new or existing Member, and upon the forfeiture of any
Units. A copy of the Schedule of Members as of the Effective Date of this
Agreement is attached hereto as Schedule A.  As of the date hereof, the Board
and the Members have determined that Article 8 of the Uniform Commercial Code of
the State of Delaware (and the Uniform Commercial Code of any other applicable
jurisdiction) will not govern any Equity Securities.  The Board shall have the
sole authority to elect in writing to have any class or series of Equity
Securities be subject to Article 8 of the Uniform Commercial Code of the State
of Delaware (and the Uniform Commercial Code of any other applicable
jurisdiction); provided that any such election to have Article 8 of the Uniform
Commercial Code of the State of Delaware (and the Uniform Commercial Code of any
other applicable jurisdiction) shall not be effective until at least two days’
prior written notice of the same is provided to the Members, and shall not be
revocable once made, and the class or series of Equity Securities subject to
such election, if Units (i.e., not derivative securities), shall thereafter be
Certificated Units.  The ownership by a Member of any class or series of Units
shall entitle such Member to Distributions of cash and other property with
respect to such Units as set forth in Article VI hereof.

10

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

 

 

3.2       Authorization and Issuance of Units.  The Company is hereby authorized
to issue Units.  There are 3,580,379 Units (the “Initial Units”) issued and
outstanding to the Members in the amounts set forth on the Schedule of Members
opposite the names of the Members.  In any matters presented to the Members for
approval or consent pursuant to this Agreement or applicable law, each Member
shall be deemed to have one vote for each Unit held by such Member.  The Company
and the Members agree that, if any Units are intended to be issued to other
investors from time-to-time as provided in Section 3.5, then the Company is
authorized to sell and issue such unissued Units to such new investors selected
by the Board with such Capital Contributions as determined by the Board, as
provided in Section 3.5.

3.3       INTENTIONALLY DELETED.

 

3.4       Authorization to Issue Profits Interest Units.

(a)        Rule 701 Plan.  This Agreement is a Rule 701 plan pursuant to which
all Initial Units held by Initial Service Providers and all Units that
constitute solely an economic interest in the profits and appreciation of the
Company following the date of the issuance of such Units (a “Profits Interest”)
shall be issued and granted in compliance with the securities registration
exemption provided by Rule 701 of the Securities Act or another applicable
exemption (such plan as in effect from time to time, the “Incentive Plan”). All
Profits Interests that were issued prior to the Conversion were intended to
constitute "profits interests” in the Company within the meaning of IRS Revenue
Procedure 93-27.  In addition to the Initial Units authorized to be issued under
Section 3.2, the Board is hereby authorized to issue Profits Interest Units from
time to time, in such amounts as it sees fit to Service Providers as may be
authorized by the Board from time to time.    For the avoidance of doubt, all
Profits Interest Units shall be subject to the rights of the holders of Units to
drag along the holders of Profits Interest Units pursuant to Section 11.3.

3.5       Issuance of Additional Units and Interests.  The Board has the right
and power to cause the Company to authorize and issue (a) additional Units or
other interests in the Company (including to create and issue other classes or
series having different rights), (b) obligations, evidences of Indebtedness or
other securities or interests convertible or exchangeable into Units or other
interests in the Company, and (c) warrants, options or other rights to purchase
or otherwise acquire Units or other interests in the Company (collectively,
“Equity Securities,” which include the Units issued as of the date hereof);
provided, however, that (i) Members shall have no preemptive rights, and (ii) at
any time following the date hereof, the Company shall not issue Units to any
Person unless such Person shall have executed and delivered a counterpart or
joinder to this Agreement.  In such event, (A) the rights of Members in respect
of Units or interests of any class or series shall be diluted on a pro rata
basis based on holdings of such Units or other interests of such class or
series, including adjustments in Percentage Interests to accommodate the
dilutive effect, and (B) the Board shall have the right and power to amend the
Schedule of Members solely to reflect such additional issuances and dilution and
to make any such other amendments as it deems necessary or desirable to reflect
such additional issuances consistent with the foregoing (including the right and
power to amend this Agreement to increase the authorized number of Units of any
class or create a new class of Units and to add the terms of

11

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

 

 

such new class including economic and governance rights which may be different
from the Initial Units or any other outstanding Equity
Securities).  Notwithstanding any provision in this Agreement to the contrary
(including, without limitation, this Section 3.5,  Section 3.4, and Section
5.2), the Percentage Interest of Calavo shall at no time and under no
circumstances be reduced without the prior written consent of the Chief
Executive Officer of Calavo.

3.6       Purchase of Units.  Subject to the terms of this Agreement, the Board
may cause the Company to purchase or otherwise acquire Units; provided that this
provision shall not in and of itself obligate any Member to sell any Units to
the Company.  So long as any such Units are owned by or on behalf of the
Company, such Units will not be considered outstanding for any purpose.

ARTICLE IV

MEMBERS; RIGHTS AND OBLIGATIONS OF MEMBERS

4.1       Substituted Members.  In connection with the Transfer of Units of a
Member permitted under the terms of this Agreement, the Transferee shall become
a Substituted Member on the later of (a) the effective date of such Transfer,
and (b) the date on which the Board approves such Transferee as a Substituted
Member, and such admission shall be shown on the books and records of the
Company.

4.2       Additional Members.  A Person may be admitted to the Company as an
Additional Member only as contemplated under Article III and only upon
furnishing to the Board (a) a letter of acceptance, in form satisfactory to the
Board, of all the terms and conditions of this Agreement, including the power of
attorney granted in Section 14.1, and (b) such other documents or instruments as
may be necessary or appropriate to effect such Person’s admission as a
Member.  Such admission shall become effective on the date on which the Board
determines in its sole discretion that such conditions have been satisfied and
when any such admission is shown on the books and records of the Company.

4.3       Representations and Warranties of Members.  By execution and delivery
of this Agreement or a joinder to this Agreement, as applicable, except as
otherwise provided in this Section 4.4, each of the Members, whether admitted as
of the date hereof or otherwise, represents and warrants to the Company and the
other Members and acknowledges that:

(a)        The Units have not been registered under the Securities Act or the
securities laws of any other jurisdiction, are issued in reliance upon federal
and state exemptions for transactions not involving a public offering and cannot
be disposed of unless (i) they are subsequently registered or exempted from
registration under the Securities Act and (ii) the provisions of this Agreement
have been complied with;

(b)        Other than the Members who are Initial Service Providers, such Member
is an “accredited investor” within the meaning of Rule 501 promulgated under the
Securities Act, as amended by Section 413(a) of the Dodd-Frank Wall Street
Reform and Consumer Protection Act, and agrees that he or it will not take any
action that could have an adverse effect on the availability of the exemption
from registration provided by Rule 501 promulgated under the Securities Act with
respect to the offer and sale of the Units;

12

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

 

 

(c)        Such Member’s Units are being acquired for his or its own account
solely for investment and not with a view to resale or distribution thereof;

(d)        Such Member has conducted his or its own independent review and
analysis of the business, operations, assets, liabilities, results of
operations, financial condition and prospects of the Company and such Member
acknowledges that it has been provided adequate access to the personnel,
properties, premises and records of the Company for such purpose;

(e)        The determination of such Member to acquire Units has been made by
such Member independent of any other Member, and neither the Company nor Calavo
has made any statements to such Member as to the advisability of such
acquisition or as to the business, operations, assets, liabilities, results of
operations, financial condition and prospects of the Company;

(f)        Such Member has such knowledge and experience in financial and
business matters and is capable of evaluating the merits and risks of an
investment in the Company and making an informed decision with respect thereto;

(g)        Such Member is able to bear the economic and financial risk of an
investment in the Company for an indefinite period of time, is able to bear the
economic risk and lack of liquidity of an investment in the Company, and is able
to bear the risk of loss of such Member’s entire investment in the Company;

(h)        Such Member understands that the operations, financial condition and
results of operations of the Company are subject to numerous risks and
uncertainties and that there is no guarantee that an investment in the Company
will be profitable;

(i)         The execution, delivery and performance of this Agreement have been
duly authorized by such Member and do not require such Member to obtain any
consent or approval that has not been obtained and do not contravene or result
in a default in any material respect under any provision of any law or
regulation applicable to such Member or other governing documents or any
agreement or instrument to which such Member is a party or by which such Member
is bound;

(j)         Neither the issuance of any Units to any Member nor any provision
contained herein will entitle the Member to remain in the employment of the
Company or affect the right of the Company to terminate the Member’s employment
at any time for any reason, other than as otherwise provided in such Member’s
employment agreement or other similar agreement with the Company, if applicable;
and

(k)        Such Member who is an Initial Service Provider is and has been
providing the Company with bona fide services and was permitted to purchase his
Initial Units in light of those services and not for any other reason, such as
being a customer or supplier of the Company.

4.4       Limitation of Liability.  Except as otherwise provided in the Delaware
Act, by applicable law or expressly in this Agreement, no Member will be
obligated personally for any

13

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

 

 

debt, obligation or liability of the Company or other Members, whether arising
in contract, tort or otherwise, including, but not limited to, any loans to the
Company from any Member, solely by reason of being a Member.  Notwithstanding
anything contained herein to the contrary, the failure of the Company to observe
any formalities or requirements relating to the exercise of its powers or
management of its business and affairs under this Agreement or the Delaware Act
shall not be grounds for imposing personal liability on any of the Members for
liabilities of the Company.

4.5       Lack of Authority.  No Member in its capacity as such has the
authority or power to act for or on behalf of the Company in any manner, to do
any act that would be (or could be construed as) binding on the Company or to
make any expenditures on behalf of the Company, and the Members hereby consent
to the exercise by the Board of the powers conferred on it by law and this
Agreement.

4.6       Members’ Right to Act.  For situations for which the approval of the
Members (rather than the approval of the Board on behalf of the Members) is
required by this Agreement or by applicable law, the Members shall act by
Super-Majority Vote through meetings and written consents as described in this
Section 4.6.  The actions by the Members permitted hereunder may be taken at a
meeting called by the Board or Members holding at least fifty percent of the
aggregate number of outstanding Units on at least five days’ prior written
notice to the other Members, which notice shall state the purpose or purposes
for which such meeting is being called.  The actions taken by the Members
entitled to vote or consent at any meeting (as opposed to by written consent),
however called and noticed, shall be as valid as though taken at a meeting duly
held after regular call and notice if (but not until), either before, at or
after the meeting, the Members entitled to vote or consent as to whom the
meeting was improperly held sign a written waiver of notice or a consent to the
holding of such meeting or an approval of the minutes thereof.  The actions by
the Members entitled to vote or consent may be taken by vote of the Members
entitled to vote or consent at a meeting, or by written consent (without a
meeting) so long as a Super-Majority Vote is obtained.  Prompt notice of the
action so taken without a meeting shall be given to those Members entitled to
vote or consent who have not consented in writing.  Any action taken pursuant to
such written consent of the Members shall have the same force and effect as if
taken by the Members at a meeting thereof.

4.7       No Right of Partition.  No Member shall have the right to seek or
obtain partition by court decree or operation of law of any Company property, or
the right to own or use particular or individual assets of the Company.

4.8       Indemnification.

(a)        Indemnification of Directors.  Each Person who was or is made a party
or is threatened to be made a party to or is otherwise involved in any action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he is or was a Director shall be indemnified and held
harmless by the Company to the fullest extent authorized by the Delaware Act, as
the same exists or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the Delaware Act to
provide broader indemnification rights than such law permitted the Delaware Act
to provide prior to such amendment), against all expense, liability and loss
(including attorneys’ fees, judgments, fines,

14

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

 

 

and amounts paid in settlement) reasonably incurred or suffered by each Person
entitled to receive indemnification hereunder (each an “Indemnified Person”) in
connection therewith.

(b)        Right to Advancement of Expenses.  The rights to indemnification
conferred in Section 4.8(a) shall include the right to be paid by the Company
the expenses (including attorneys’ fees) incurred in defending any such
proceeding in advance of its final disposition.  The rights to indemnification
and to the advancement of expenses conferred in Sections 4.8(a) and 4.8(b) shall
be contract rights and such rights shall continue as to an Indemnified Person
who has ceased to be a Director and shall inure to the benefit of the
Indemnified Person’s heirs, executors, administrators, successors and
assigns.  Any repeal or modification of any of the provisions of this Section
4.8 shall not adversely affect any right or protection of an Indemnified Person
existing at the time of such repeal or modification.

(c)        Indemnification of Service Providers.  The Company may, to the extent
authorized from time to time by the Board, grant rights of indemnification and
advancement of expenses to any Service Provider or other Persons, including any
Member, to the fullest extent of the provisions of this Section 4.8 with respect
to the indemnification and advancement of expenses of Directors.

(d)        The right to indemnification and the advancement of expenses
conferred in this Section 4.8 shall not be exclusive of any other right which
any Person may have or hereafter acquire under any statute, agreement, law, vote
of the Board or otherwise.

(e)        The Board may determine to have the Company maintain insurance, at
the Company’s expense, to protect any Person against any expense, liability or
loss relating to the Company or its business whether or not the Company would
have the power to indemnify such Person against such expense, liability or loss
under the provisions of this Section 4.8.

(f)        Notwithstanding anything contained herein to the contrary (including
in this Section 4.8), any indemnity by the Company relating to the matters
covered in this Section 4.8 shall be provided out of and to the extent of
Company assets only and neither the Board nor any other Member (unless such
Member otherwise agrees in writing or is found in a final decision by a court of
competent jurisdiction to have personal liability on account thereof) shall have
personal liability on account thereof or shall be required to make additional
Capital Contributions to help satisfy such indemnity of the Company (except as
expressly provided herein).

(g)        Savings Clause.  If this Section 4.8 or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Company shall nevertheless indemnify and hold harmless each Indemnified Person
and other Person authorized by the Board to be indemnified pursuant to this
Section 4.8 to the fullest extent required by any applicable portion of this
Section 4.8 that shall not have been invalidated.

(h)        Survival.  The provisions of this Section 4.8 shall survive the
dissolution, liquidation, winding up and termination of the Company.

15

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

 

 

ARTICLE V

CAPITAL CONTRIBUTIONS

5.1       Initial Cash Capital Contributions.  Each Member has made a Capital
Contribution in cash to the Company in the amount set forth opposite such
Member’s name on the Schedule of Members and has received or shall receive Units
with respect to each such Member’s Capital Contribution, as set forth on the
Schedule of Members (as such Schedule may be amended by the Board to reflect any
additional issuances of Units after the Effective Date).

5.2       Additional Capital Contributions.  No Member shall make any additional
Capital Contributions to the Company unless agreed to by the Board.  If at any
time, or from time to time, the Board determines the Company has inadequate
capital to accomplish its business objectives and goals, the Board may in its
sole discretion issue and sell Equity Securities, from time to time, as
contemplated in Section 3.5, to existing Members or to third parties, and any
such third party may be admitted to the Company as an Additional Member with a
new class of Units, as applicable, in accordance with Article III, and the
individual ownership interest in the Company of each of the Members shall be
reduced, as applicable, on a pro rata basis to accommodate any dilutive effect.

5.3       Capital Accounts.

Capital Accounts.  Prior to the effectiveness of the Conversion, the Company
maintained a separate capital account for each Member according to the rules of
Treasury Regulation Section 1.704-1(b)(2)(iv).  From and after the effectiveness
of the Conversion, the Capital Accounts will no longer be used.

5.4       No Withdrawal.  No Person shall be entitled to withdraw any part of
such Person’s Capital Contributions or to receive any Distribution from the
Company, except as expressly provided herein.

5.5       Loans from Members.  The Board is authorized to permit loans from
Members to the Company on such terms as it determines are appropriate.  Loans by
Members to the Company shall not be considered Capital Contributions.  The
amount of any such loans shall be a debt of the Company to such Member and shall
be payable or collectible in accordance with the terms and conditions upon which
such loans are made.

5.6       Distributions In-Kind.  To the extent that the Company distributes
property in-kind to the Members, the Company shall be treated as making a
distribution equal to the Fair Market Value of such property for purposes of
Section 6.1 and such property shall be treated as if it were sold for an amount
equal to its Fair Market Value (or such other amount as is required to be used
by the Code or applicable Treasury Regulation) and any resulting gain or loss
shall be allocated to the Members’ Capital Accounts in accordance with Sections
6.3 through 6.5.

16

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

 

 

ARTICLE VI

DISTRIBUTIONS

6.1       Distributions.

(a)        General.  Subject to the limitation set forth in the last sentence of
this Section 6.1(a),  Section 6.1(b) and Section 6.1(c), the Board shall have
sole discretion regarding the amounts and timing of Distributions to Members,
including to decide to forego payment of Distributions in order to provide for
the retention and establishment of reserves of, or payment to third parties of,
such funds as it deems necessary with respect to the reasonable business needs
of the Company (which needs may include the payment or the making of provision
for the payment when due of the Company’s obligations, including, but not
limited to, present and anticipated debts and obligations, capital needs and
expenses, the payment of any management or administrative fees and expenses, and
reasonable reserves for contingencies).  Notwithstanding any provision to the
contrary contained in this Agreement, the Company shall not make any
Distribution to Members if such Distribution would violate § 18-607 of the
Delaware Act or other applicable law.

(b)        Priority of Distributions.  All Distributions determined to be made
by the Board pursuant to Section 6.1(a) shall be made to the Members pro rata,
pari passu in accordance with their respective Percentage Interests, provided,
however, that (i) Profits Interest Units shall be excluded in determining
Percentage Interests unless the terms and conditions of their particular Award
Agreement have been met for treatment as Units entitled to Distributions and
(ii) that each Member who is an Initial Service Provider authorizes and directs
the Company to first apply any and all Distributions to such Member against such
Member’s Promissory Note until the Promissory Note is paid in full.

(c)        Acknowledgment of Tax Advances.  The Members acknowledge that the
Company may have made certain Tax Advances (as defined in the Original
Agreement), and that, pursuant to the Original Agreement, any such Tax Advances
received by a Member will continue to be treated as advances on Distributions to
be received by the recipient of such Tax Advance pursuant to Section 6.1(b), and
shall reduce, dollar-for-dollar, the amount otherwise distributable to such
Member pursuant to Section 6.1(b) (including pursuant to Section 13.2).

(d)        If the Company has loaned money to a Member or to a Member’s
Affiliate (including, without limitation, a corporation, limited liability
company or other entity controlled by the Member), the Company shall be entitled
to apply all or a portion of a Distribution that is otherwise payable to the
Member to the repayment of the principal and accrued interest that is due and
payable on such loan and, in such event, the Member shall not receive the
portion of the Distribution that is applied to the repayment of such loan.

6.2       Tax Withholding; Withholding Advances.

(a)        Tax Withholding.  If requested by the Board, each Member shall, if
legally able to do so, deliver to the Board:

17

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

 

 

 

(i)         an affidavit in form satisfactory to the Board that the applicable
Member (or its members, as the case may be) is not subject to withholding under
the provisions of any federal, state, local, foreign or other applicable law;

(ii)        any certificate that the Board may reasonably request with respect
to any such laws; and/or

(iii)      any other form or instrument reasonably requested by the Board
relating to any Member’s status under such law.

If a Member fails or is unable to deliver to the Board the affidavit described
in Section 6.2(a)(i), the Board may withhold amounts from such Member in
accordance with Section 6.2(b).

(b)        Withholding Advances.  The Company is hereby authorized at all times
to make payments (“Withholding Advances”) with respect to each Member in amounts
required to discharge any obligation of the Company (as determined by the Board
based on the advice of legal or tax counsel to the Company) to withhold or make
payments to any federal, state, local or foreign taxing authority (a “Taxing
Authority”) with respect to any Distribution to such Member and to withhold the
same from Distributions to such Member.  Any funds withheld from a Distribution
by reason of this Section 6.2(b) shall nonetheless be deemed Distributed to the
Member in question for all purposes under this Agreement.

(c)        Repayment of Withholding Advances.  Any Withholding Advance made by
the Company to a Taxing Authority on behalf of a Member and not simultaneously
withheld from a Distribution to that Member shall, with interest thereon
accruing from the date of payment at a rate equal to the prime rate published in
the Wall Street Journal on the date of payment plus two percent per annum (the
“Company Interest Rate”):

(i)         be promptly repaid to the Company by the Member on whose behalf the
Withholding Advance was made; or

(ii)        with the consent of the Board, be repaid by reducing the amount of
the next succeeding Distribution or Distributions to be made to such Member
(which reduction amount shall be deemed to have been Distributed to the Member.

Interest shall cease to accrue from the time the Member on whose behalf the
Withholding Advance was made repays such Withholding Advance (and all accrued
interest) by either method of repayment described above.

(d)        Indemnification.  Each Member hereby agrees to indemnify and hold
harmless the Company and the other Members from and against any liability with
respect to taxes, interest or penalties which may be asserted by reason of the
Company’s failure to deduct and withhold tax on amounts Distributable or
allocable to such Member.  The provisions of this Section 6.2(d) and the
obligations of a Member pursuant to Section 6.2(c) shall survive the
termination, dissolution, liquidation and winding up of the Company and the
withdrawal of such Member from the Company or Transfer of its Units.  The
Company may pursue and enforce all rights and remedies it may have against each
Member under this Section 6.2(d), including bringing a lawsuit to collect
repayment with interest of any Withholding Advances.

18

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

 

 

(e)        Overwithholding.  Neither the Company nor the Board shall be liable
for any excess taxes withheld in respect of any Distribution.  In the event of
an overwithholding, a Member’s sole recourse shall be to apply for a refund from
the appropriate Taxing Authority.

6.3       Survival of Certain Provisions.  The Members acknowledge that the
provisions governing book and tax allocations contained in Sections 6.3-6.7 of
the Original Agreement shall continue to apply with respect to all tax years
ending on or prior to December 16, 2018.

6.4       Indemnification and Reimbursement for Payments on Behalf of a
Member.  Except as otherwise provided in Sections 4.5 and 7.5, if the Company is
required by law to make any payment to a Governmental Entity that is
specifically attributable to a Member or a Member’s status as such (including
federal withholding taxes, state personal property taxes, and state
unincorporated business taxes), then such Member shall indemnify and contribute
to the Company in full the entire amount paid (including interest, penalties and
related expenses).  The Board may offset Distributions to which a Person is
otherwise entitled under this Agreement against such Person’s obligation to
indemnify the Company under this Section 6.8.  A Member’s obligation to
indemnify and make contributions to the Company under this Section 6.8 shall
survive the termination, dissolution, liquidation and winding up of the Company,
and for purposes of this Section 6.8, the Company shall be treated as continuing
in existence.  The Company may pursue and enforce all rights and remedies it may
have against each Member under this Section 6.8, including instituting a lawsuit
to collect such indemnification and contribution with interest at the applicable
statutory rate.

ARTICLE VII

MANAGEMENT

7.1       Board of Directors.

(a)        Board’s Power, Authority and Duties.  The Board of Directors of the
Company (the “Board”) shall be the governing body of the Company and shall be
responsible for the management, operation and control of the business and
affairs of the Company.  The Board shall constitute the “manager” of the Company
for purposes of the Delaware Act, and the Board shall have, and is hereby
granted, the full and complete power, authority and sole discretion for, on
behalf of and in the name of the Company, to take such actions as it may in its
sole discretion deem necessary or advisable to carry out any and all of the
objectives and purposes of the Company, subject only to the terms of this
Agreement.  However, no individual member of the Board shall have the authority
to act on his own as a “manager” of the Company for purposes of the Delaware
Act.

(b)        Authorized Number of Directors; Initial Directors; Removal of
Directors; Vacancies.  The authorized number of Directors shall be six, with
Calavo having the right to appoint three Directors (the “Calavo Directors”) and
with all Members other than Calavo having the right to, collectively, appoint
three Directors (the “Non-Calavo Directors”).  The three initial Calavo
Directors appointed by Calavo are Lecil E. Cole, Steven Hollister and Kathleen
M. Holmgren.  The three initial Non-Calavo Directors appointed by all other
Members are Peter Hajas, Kenneth Catchot and Michael R. Lippold.  Each Director
shall remain in office until his death, resignation or earlier removal from
office by Calavo (in the case of a Calavo Director) or

19

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

 

 

by the Members other than Calavo (in the case of a Non-Calavo Director).  Calavo
and the other Members shall each shall have the right and power to remove one or
more of their respective designees at any time and for any reason or no
specified reason and appoint a new Director(s).  Any Director may resign at any
time upon notice to the Board.  Any vacancy occurring in the Board shall be
filled at any time by the Member or Members who have the right to appoint such
Director(s) in accordance with this Section 7.1(b).  The Members other than
Calavo shall agree among themselves upon the manner in which they may remove
their designated Directors and appoint new Directors, and Calavo and the Company
are authorized to rely upon written notices from Impermanence regarding the
removal and replacement of such Directors.  The resignation, withdrawal or
removal of a Director who is also a Member shall not, itself, affect the
Director’s rights as a Member, if applicable, and shall not constitute a
withdrawal of a Member.

(c)        Chairman of the Board.  The Board, by the affirmative vote or written
consent of a majority of the authorized number of Directors described in Section
7.1(b), shall from time to time select a Director to serve as the Chairman of
the Board.  Peter Hajas shall continue to serve as the Chairman of the Board
beginning as of the Effective Date, provided that the Board has the right and
power to designate at any time another Director to serve as the Chairman of the
Board.  The Board shall from time to time determine and specify the powers,
duties and responsibilities that shall be given to the Chairman of the Board.

(d)        Meetings of the Board.

(i)         Generally.  The Board shall meet at such times and at such places
(including meetings by conference calls) as are determined from time to time by
the Chairman of the Board or by at least two other Directors on at least twelve
hours’ notice to each Director, either personally, by telephone, by facsimile,
by e-mail or by mail, unless all of the Directors agree to meet on shorter
notice.

(ii)        Quorum; Action by the Board; Remote Participation.  A majority of
the authorized number of Directors specified in Section 7.1(b) shall constitute
a quorum for the transaction of business of the Board.  At all times when the
Board is conducting business at a meeting of the Board, a quorum of the Board
must be present at such meeting.  The affirmative vote of a majority of the
authorized number of Directors shall be required to take action at a Board
meeting and shall constitute valid and binding action by the Board.  One or more
Directors may participate in a meeting of the Board by means of conference
telephone or other electronic technology by means of which all Persons
participating in the meeting can hear each other.  Participation in a meeting
pursuant to this subsection (ii) shall constitute presence in person at the
meeting.

(e)        Action by Written Consent.  Notwithstanding anything herein to the
contrary, any action of the Board may be taken without a meeting if a written
consent of a majority of the authorized number of Directors specified in Section
7.1(b) shall approve such action. Such consent shall have the same force and
effect as a vote at a meeting where a quorum was present and may be stated as
such in any document or instrument filed with the Secretary of State of
Delaware.

20

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

 

 

(f)        Compensation; No Employment.

(i)         Directors shall receive such compensation, if any, for their
services in such capacity as may be designated by the Board, from time to
time.  In addition, each Director shall be reimbursed for his reasonable
out-of-pocket expenses incurred in the performance of his duties as a Director,
pursuant to such policies as from time to time are established by the
Board.  Nothing contained in this Section 7.1(f) shall be construed to preclude
any Director from serving the Company or Calavo in any other capacity and
receiving reasonable compensation for such services.

(ii)        This Agreement does not, and is not intended to, confer upon any
Director any rights with respect to continued employment by the Company or
Calavo, and nothing herein should be construed to have created any employment
agreement with any Director.

7.2       Delegation of Authority.  The Board may, from time to time, delegate
to one or more Persons such authority and duties as the Board may deem
advisable.  Any delegation pursuant to this Section 7.2 may be revoked at any
time by the Board in its sole discretion.

7.3       Chief Executive Officer.  The Company shall have a Chief Executive
Officer (the “Chief Executive Officer”), who shall be appointed by the
Board.  Subject to such powers, duties and responsibilities, if any, as may be
given by the Board to the Chairman of the Board, the Chief Executive Officer
shall be responsible for the day-to-day management, business and affairs of the
Company and shall perform all duties incidental to his office which may be
required by law and all such other duties as are properly required of him by the
Board.  The Chief Executive Officer shall be subject to the control of the
Board.  Michael R.  Lippold shall be the Company’s Chief Executive Officer
beginning as of the Effective Date and shall serve in that capacity until his
death, resignation or earlier removal and replacement at any time by the
Board.  The Board shall approve the Chief Executive Officer’s compensation and
perquisites.

7.4       Other Officers, Employees and Consultants.  The Company shall have
such other officers, employees and consultants as the Board determines from time
to time are necessary or advisable, and such officers and employees shall have
any such titles as the Board determines are necessary or advisable.  The Board
shall approve the compensation and perquisites of each of such officers,
employees and consultants or may elect to grant that authority to the Chief
Executive Officer with respect to some or all of such officers, employees or
consultants.  Each such officer, employee and consultant shall have such power,
authority and duties as are assigned to him from time to time by the Chief
Executive Officer or the Board.  In absence of an express statement of powers
and authority of an officer, each officer shall have the power and authority
normally and customarily vested in such officers of a corporation.  Any number
of offices may be held by the same person and no officer need be a
Member.  Except for the Chief Executive Officer, who shall report directly to
the Board, each officer, employee and consultant shall report directly to the
Chief Executive Officer or to another person or persons designated by the Chief
Executive Officer, provided that the Board has the right and power to designate
that any such officer, employee or consultant shall instead report directly to
the Board or to the Chief Executive Officer.  The Board has the right and power
to remove at any time and replace any

21

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

 

 

officer, employee or consultant of the Company, and any such removal may be made
by the Board for any reason or for no specified reason.

7.5       Limitation of Liability.  Except as otherwise provided herein or in
any agreement entered into by such Person and the Company, and to the maximum
extent permitted by the Delaware Act, no present or former member of the Board
shall be liable to the Company or to any other Member for any act or omission
performed or omitted by such Person in good faith in his capacity as a member of
the Board; provided that such limitation of liability shall not apply to the
extent the act or omission was attributable to such Person’s gross negligence,
willful misconduct or knowing violation of law or this Agreement or any other
agreement with the Company.  The Board shall be entitled to rely upon the advice
of legal counsel, independent public accountants and other experts, including
financial advisors, and any act of or failure to act by the Board in good faith
reliance on such advice shall in no event subject the Board or any of its
Affiliates, employees, agents or representatives to liability to the Company or
any Member.

ARTICLE VIII

BOOKS, RECORDS, ACCOUNTING AND REPORTS

8.1       Records and Accounting.  The Company shall keep, or cause to be kept,
appropriate books and records with respect to the Company’s business, including
all books and records necessary to provide any information, lists and copies of
documents required to be provided pursuant to the Delaware Act and other
applicable laws.  Any holder of at least ten percent of the then-outstanding
Units shall be entitled to full access to the Company’s books and records at any
time during normal business hours.  All matters concerning (a) the determination
of the relative amount of allocations and distributions among the Members
pursuant to Articles V and VI, and (b) accounting procedures and determinations,
and other determinations not specifically and expressly provided for by the
terms of this Agreement, shall be determined by the Board, whose determination
shall be final and conclusive as to all of the Members absent manifest clerical
error.

8.2       Fiscal Year.  The fiscal year (the “Fiscal Year”) of the Company shall
be January 1 to December 31, or such other annual accounting period as may be
established by the Board.

8.3       Reports.

(a)        The Company shall, upon the written request of any Member, deliver or
cause to be delivered to such Member with reasonable promptness, information and
financial data concerning the Company requested by the Member but only to the
extent the delivery of such information and data is expressly required by the
Delaware Act or is necessary for such Member to consummate a Transfer of Units
permitted by this Agreement; provided further that furnishing such information
and data shall not be financially burdensome on the Company or the Board, or
unreasonably time consuming for the employees of the Board or the Company.

(b)        Subject to the availability of information, the Company shall use
reasonable efforts to deliver or cause to be delivered, within ninety days after
the end of each Fiscal Year, to each Person who was a Member at any time during
such Fiscal Year all

22

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

 

 

information with respect to such Person’s Units which is necessary for the
preparation of such Person’s United States federal and state income tax returns.

(c)        The Company shall deliver to each holder of at least ten percent of
the then-outstanding Units monthly, quarterly and annual financial statements of
the Company within fifteen days, thirty days and sixty days, respectively, after
the end of each month, quarter or Fiscal Year.  Upon Calavo’s prior request, the
annual financial statements of the Company shall be audited by an accounting
firm reasonably approved by Calavo if the Company is not at such time
consolidated with Calavo for accounting purposes.  In addition, the Company
shall deliver to every other Member financial statements of the Company for each
Fiscal Year at the same time that the Company delivers such annual financial
statements to Members holding at least ten percent of the then-outstanding
Units.  Each Member must maintain the confidentiality of the financial
statements described in this paragraph, except to the extent that disclosure is
required under applicable provisions of the Securities Act or the Securities
Exchange Act or the rules and regulations thereunder.

ARTICLE IX

COVENANTS

9.1       Confidentiality.  Each Member recognizes and acknowledges that it has
and may in the future receive certain confidential and proprietary information
and trade secrets of the Company and its Affiliates that are not generally known
to the public, including, but not limited to, information concerning business
plans, financial statements and other information provided pursuant to this
Agreement, identifiable, specific and discrete business opportunities being
pursued by the Company, operating practices and methods, expansion plans,
strategic plans, marketing plans, contracts, customer and supplier lists or
other business documents which the Company treats as confidential, in any format
whatsoever (including oral, written, electronic or any other form or medium)
(collectively, “Confidential Information”).  Except as otherwise agreed to by
the Board, each Member agrees that it will not, and shall cause each of its
directors, officers, members, partners, employees and agents not to, during or
after the term of this Agreement, whether directly or indirectly through an
Affiliate or otherwise, take commercial or proprietary advantage of or profit
from any Confidential Information or disclose Confidential Information to any
Person for any reason or purpose whatsoever, except (i) to authorized Directors,
officers, representatives, agents and employees of the Company and as otherwise
may be proper in the course of performing such Member’s obligations, or
enforcing such Member’s rights, under this Agreement; (ii) to any bona fide
prospective purchaser of the equity or assets of such Member or its Affiliates
or the Units held by such Member or of the assets or Units of the Company, or
prospective merger partner of such Member or its Affiliates or of the Company,
provided that such prospective purchaser or merger partner agrees to be bound by
the provisions of this Section 9.1 or a comparable agreement; or (iii) as is
required to be disclosed by order of a court of competent jurisdiction,
administrative body or governmental body, or by subpoena, summons or legal
process, or by law, rule or regulation, provided that, to the extent permitted
by law, the Member required to make such disclosure shall provide to the Board
prompt notice of such disclosure.  For purposes of this Article IX,
“Confidential Information” shall not include any information which is disclosed
by the Company or Calavo in a prospectus or other documents for dissemination to
the public or otherwise becomes generally available to the public other than as
a result of disclosure by such Person or any other Person who receives the

23

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

 

 

information from such Person in breach of this Agreement or in breach of any
other confidentiality obligation that is owed to the Company or Calavo.  Neither
the preceding provisions of this Section 9.1 nor any other provision of this
Agreement shall be construed as prohibiting Calavo from disclosing any
Confidential Information or other information that it is required to disclose
under the Securities Act or the Securities Exchange Act, or the rules and
regulations thereunder, in connection with a report or other document that
Calavo files with the Securities and Exchange Commission.

9.2       Non-compete; Non-solicit.

(a)        Non-compete.  In light of each Member’s access to Confidential
Information and position of trust and confidence with the Company, each Member
hereby agrees that, so long as such Member owns Units (the “Restricted Period”),
such Member shall not (i) render services or give advice to, or affiliate with
(as employee, partner, consultant or otherwise), or (ii) directly or indirectly
through one or more of any of their respective Affiliates, own, manage, operate,
control or participate in the ownership, management, operation or control of,
any Competitor or any division or business segment of any Competitor or
otherwise directly or indirectly compete with the business conducted by the
Company; provided, that nothing in this Section 9.2(a) shall prohibit such
Member from acquiring or owning, directly or indirectly, up to 2% of the
aggregate voting securities of any Competitor that is a publicly traded Person;
and provided, further, that the restrictions of this Section 9.2 shall cease to
apply to a Service Provider who, within six months after a Sale of the Company
(other than a Statutory Conversion or any transaction, the sole purpose of which
is to change the Company's form to a corporation), ceases to be a Service
Provider of the Company by reason of (i) the Company’s termination of the
Service Provider’s employment with, or other service to, the Company without
Cause, or (ii) the Service Provider’s termination of his employment with, or
other service to, the Company for Good Reason.  With respect to the Co-Packers
in their capacity as Members, if a Co-Packer should not be able to comply with
this Section 9.2, such Co-Packer shall be allowed to sell or transfer its Units
as provided in Article XI hereof.  If such Co-Packer is unable, after using
commercially reasonable efforts, to secure a bona fide purchase offer for its
Units within 90 days of being notified that such Co-Packer is not in compliance
with this Section 9.2, and has not otherwise taken such actions as would be
necessary to permit such Co-Packer to regain compliance with this Section 9.2,
then the Company shall exercise its right to acquire such Co-Packer’s Units as
provided in the last sentence of Section 9.5 below.

(b)        Non-solicit of Employees.  In light of each Member’s access to
Confidential Information and position of trust and confidence with the Company,
each Member further agrees that, during the Restricted Period, he shall not,
directly or indirectly through one or more of any of their respective
Affiliates, hire or solicit, or encourage any other Person to hire or solicit,
any individual who has been employed by the Company within one year prior to the
date of such hiring or solicitation, or encourage any such individual to leave
such employment.  This Section 9.2(b) shall not prevent a Member from hiring or
soliciting any employee or former employee of the Company who responds to a
general solicitation that is a public solicitation of prospective employees and
not directed specifically to any Company employees.

(c)        Non-solicit of Customers.  In light of each Member’s access to
Confidential Information and position of trust and confidence with the Company,
each Member

24

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

 

 

further agrees that, during the Restricted Period, he shall not, directly or
indirectly through one or more of any of their respective Affiliates, solicit or
entice, or attempt to solicit or entice, any customers or suppliers of the
Company for purposes of diverting their business from the Company.

(d)        Blue Pencil.  If any court of competent jurisdiction determines that
any of the covenants set forth in this Article IX, or any part thereof, is
unenforceable because of the duration or geographic scope of such provision,
such court shall have the right and power to modify any such unenforceable
provision in lieu of severing such unenforceable provision from this Agreement
in its entirety, whether by rewriting the offending provision, deleting any or
all of the offending provision, adding additional language to this Article IX or
by making such other modifications as it deems warranted to carry out the intent
and agreement of the parties as embodied herein to the maximum extent permitted
by applicable law.  The parties hereto expressly agree that this Agreement as so
modified by the court shall be binding upon and enforceable against each of
them.

9.3       Inventions.  All processes, designs, technologies and inventions
relating to the business of the Company (collectively, “Inventions”), including
new contributions, improvements, ideas, discoveries, trademarks and trade names,
conceived, developed, invented, made or found by a Service Provider, alone or
with others, during his employment or consultancy with the Company, whether or
not patentable and whether or not conceived, developed, invented, made or found
on the Company’s time or with the use of the Company’s facilities or materials,
shall be the property of the Company and shall be promptly and fully disclosed
by the Service Provider to the Company.  The Service Providers shall perform all
necessary acts (including, without limitation, executing and delivering any
confirmatory assignments, documents or instruments requested by the Company) to
assign or otherwise to vest title to any such Inventions in the Company and to
enable the Company, at its sole expense, to secure and maintain patents or any
other rights for such Inventions.  As used in this Article IX, the term “the
business of the Company” shall mean whatever business the Company is conducting
at the relevant time.

9.4       Other Business Activities.  The parties hereto expressly acknowledge
and agree that, notwithstanding any other provision of this Agreement: (a) each
of Calavo, Fresh Benefit, Inc.  (“Fresh Benefit”), of which David Ominsky and
William Farrell III are officers and/or beneficial owners of equity securities,
and their respective Affiliates are permitted to have, and presently have or may
in the future have, investments or other business relationships, ventures,
agreements or arrangements with entities engaged in business that is not
directly competitive with the business of the Company (an “Other Business”); (b)
none of Calavo, Fresh Benefit or their respective Affiliates will be prohibited
by virtue of Calavo’s and Messrs.  Ominsky and Farrell III’s respective
investment in the Company from pursuing and engaging in any such activities; (c)
none of Calavo, Fresh Benefit or their respective Affiliates will be obligated
to inform the Company or any Member of any such opportunity, relationship or
investment (a “Business Opportunity”) or to present such Business Opportunity to
the Company, and the Company hereby renounces any interest in a Business
Opportunity and any expectancy that a Business Opportunity will be offered to
it; (d) nothing contained herein shall limit, prohibit or restrict any Director,
who is also a Calavo director, from serving on the board of directors or other
governing body or committee of any Other Business; and (e) the Members will not
acquire,

25

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

 

 

be provided with an option or opportunity to acquire, or be entitled to any
interest or participation in any Other Business as a result of the participation
therein of any of Calavo, Fresh Benefit or their respective Affiliates.  The
parties hereto expressly authorize and consent to the involvement of Calavo,
Fresh Benefit and/or their respective Affiliates in any Other Business.  The
parties hereto expressly waive, to the fullest extent permitted by applicable
law, any rights to assert any claim that such involvement breaches any fiduciary
or other duty or obligation owed by Calavo, David Ominsky or William Farrell III
to the Company or any Member or to assert that such involvement constitutes a
conflict of interest by Calavo, David Ominsky or William Farrell III with
respect to the Company or any Member.  Notwithstanding anything to the contrary
in this Section 9.4,  Sections 9.1,  9.2 and 9.3 shall remain in effect.

9.5       Violations.  If any Member breaches any provision of this Article IX,
or in the event that any such breach is threatened by any Member, in addition to
and without limiting or waiving any other remedies available to the Company at
law or in equity, the Company shall be entitled to immediate injunctive relief
in any court, domestic or foreign, having the capacity to grant such relief, to
restrain any such breach or threatened breach and to enforce the provisions of
this Article IX.  The parties hereto expressly acknowledge and agree that, among
the Company’s other rights and remedies, the Company shall not be required to
make any payments or distributions to a Member under this Agreement or under an
employment agreement or consulting agreement between a Member who is a Service
Provider and the Company if such Member violates any agreement or duty under
this Article IX.  The Company has a right to buy a breaching Member’s Units for
his or its cash Capital Contribution to the Company in respect of such Units.

ARTICLE X

TAX MATTERS

10.1     Preparation of Tax Returns.  The Company shall arrange for the
preparation and timely filing of all returns required to be filed by the
Company.  Each Member shall timely furnish to the Board all pertinent
information in its possession relating to Company operations that is necessary
to enable the Company’s income tax returns to be prepared and filed.

10.2     Tax Elections.  The Taxable Year shall be determined by the Board in
accordance with applicable laws.  The Board shall, in its sole discretion,
determine whether to make or revoke any available election pursuant to the
Code.  Each Member will upon request supply any information necessary to give
proper effect to such election.

10.3     The following provisions shall apply solely with respect to tax years
ending on or prior to December 16, 2018:

(a)        Tax Controversies.  The Tax Representative is authorized and required
to represent the Company (at the Company’s expense) in connection with all
examinations of the Company’s affairs by tax authorities, including resulting
administrative and judicial proceedings, and to expend Company funds for
professional services and reasonably incurred in connection therewith.  Each
Member agrees to cooperate with the Company and to do or refrain from doing any
or all things reasonably requested by the Company with respect to the conduct of
such proceedings;

26

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

 

 

(b)        Tax Representative.

(i)         All references throughout this Agreement to provisions of the Code
shall be to such provisions as enacted by the Bipartisan Budget Act of 2015, as
such provisions may subsequently be modified.

(ii)        Unless and until another Member is designated as the Company's
designated “partnership representative” within the meaning of Code Section 6223
(the “Tax Representative”), the existing Tax Matters Partner shall act as the
Tax Representative with sole authority to act on behalf of the Company for
purposes of Subchapter C of Chapter 63 of the Code and any comparable provisions
of state or local income tax laws.

(iii)      If the Company qualifies to elect pursuant to Code Section 6221(b)
(or any successor provision) to have Subchapter C of Chapter 63 of the Code not
apply to any federal income tax audits and other proceedings, the Tax
Representative shall cause the Company to make such election.

(iv)       If any “partnership adjustment” (as defined in Code Section 6241(2))
is determined with respect to the Company, the Tax Representative shall promptly
notify the Members upon the receipt of a notice of final partnership adjustment,
and shall, within 30 days after the receipt of such notice, take such actions as
it deems reasonably necessary (including whether to file a petition in Tax
Court) to cause the Company to pay the amount of any such adjustment under Code
Section 6225, or make the election under Code Section 6226.

(v)        If any “partnership adjustment” (as defined in Code Section 6241(2))
is finally determined with respect to the Company, and the Tax Representative
has not caused the Company to make the election under Code Section 6226, then
(i) the Members shall take such actions requested by the Tax Representative,
including filing amended tax returns and paying any tax due in accordance with
Code Section 6225(c)(2); (ii) the Tax Representative shall use commercially
reasonable efforts to make any modifications available under Code Section
6225(c)(3), (4) and (5); and (iii) any “imputed underpayment” (as determined in
accordance with Code Section 6225) or partnership adjustment that does not give
rise to an imputed underpayment shall be apportioned among the Members of the
Company for the taxable year in which the adjustment is finalized in such manner
as may be necessary (as determined by the Tax Representative in good faith) so
that, to the maximum extent possible, the tax and economic consequences of the
partnership adjustment and any associated interest and penalties are borne by
the Members based upon the Units they held in the Company for the reviewed year.

(vi)       If any Subsidiary of the Company (i) pays any partnership adjustment
under Code Section 6225; (ii) requires the Company to file an amended tax return
and pay associated taxes to reduce the amount of a partnership adjustment
imposed on the Subsidiary, or (iii) makes an election under Code Section 6226,
the Tax Representative shall cause the Company to make the administrative
adjustment request provided for in Code Section 6227 consistent with the
principles and limitations set forth in Sections 10.3(b)(iv) through 10.3(b)(v)
above for partnership adjustments of the Company, and the Members shall take
such actions reasonably requested by the Tax Representative in furtherance of
such administrative adjustment request.

27

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

 

 

 

(vii)      The obligations of each Member or former Member under this
Section 10.3 shall survive the transfer or redemption by such Member of its
Units and the termination of this Agreement or the dissolution of the Company.

ARTICLE XI

TRANSFER OF UNITS

11.1     Transfers by Members.

(a)        No Member shall Transfer any interest in any Units other than (i) to
a Permitted Transferee, (ii) in connection with an Approved Sale or a Public
Offering, (iii) pursuant to and in compliance with this Article XI, except as
set forth in Section 11.2(h), (iv) to Calavo or other Members under Section 3.3
or (v) with the prior written consent of the Board, which consent may be
withheld in the Board’s sole discretion  Any Transfer or attempted Transfer in
violation of this Section 11.1(a) shall be void.

(b)        Except in connection with an Approved Sale, each Transferee of Units
or other interest(s) in the Company, including any beneficiary of a deceased
Service Provider whose Initial Units have vested pursuant to this Agreement,
shall, as conditions precedent to such Transfer, be admitted as a Member
pursuant to Section 4.1 and execute and deliver a counterpart or joinder to this
Agreement pursuant to which such Transferee shall agree to be bound by the
provisions of this Agreement.

11.2     Right of First Refusal.

(a)        Offered Units.  At any time prior to the consummation of a Public
Offering or an Approved Sale, and subject to the terms and conditions specified
in this Article XI (including, without limitation, Section 11.1), the Company,
first, and each Member holding Units other than Calavo, second, shall have a
right of first refusal if any Member other than Calavo (the “Offering Member”)
receives a bona fide offer that the Offering Member desires to accept to
Transfer all or any portion of the Units (the “Offered Units”) it or he owns,
provided that the foregoing shall not apply to Transfers to Permitted
Transferees.  As used herein, the term “Applicable ROFR Rightholders” shall
mean, in the case of a proposed Transfer of the Offered Units, all Members other
than Calavo and the Offering Member holding Units, and the term “Offering
Member” shall exclude Calavo.  In the event that Impermanence receives a bona
fide offer that Impermanence desires to accept to Transfer a majority of the
ownership interests of Impermanence (“Impermanence Interests”), so long as
Impermanence owns Units, the term (as used in this Section 11.2) (i) “Offered
Units” shall be deemed to refer to Impermanence Interests, and (ii) “Units”
shall refer to Impermanence Interests when the context requires; provided,
however, that notwithstanding anything to the contrary contained herein, the
right of first refusal provided under this Section 11.2 as to Impermanence Units
shall extend solely to the Applicable ROFR Rightholders (and not to the Company)
and the following provisions of this Section 11.2 shall be interpreted
accordingly.

(b)        Offering; Exceptions.  Each time the Offering Member receives an
offer for a Transfer of any of its or his Units, other than Transfers that (i)
are to Permitted Transferees, or (ii) are proposed to be made by a dragging
Member or required to be made by a Member

28

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

 

 

 

dragged along pursuant to Section 11.3 in connection with an Approved Sale or a
Public Offering, the Offering Member shall first make an offering of the Offered
Units to the Company, first, and the Applicable ROFR Rightholders, second, all
in accordance with the following provisions of this Section 11.2, prior to
Transferring such Offered Units to the proposed purchaser.

(c)        Offer Notice.

(i)         The Offering Member shall, within five business days of receipt of
the Transfer offer, give written notice (the “Offering Member Notice”) to the
Company and the Applicable ROFR Rightholders stating that it has received a
signed, bona fide offer for a Transfer of its or his Units and specifying: (A)
the number of Offered Units to be Transferred by the Offering Member; (B) the
proposed date, time and location of the closing of the Transfer, which shall not
be less than sixty business days from the date of the Offering Member Notice;
(C) the purchase price per Offered Unit (which shall be payable solely in cash)
and the other material terms and conditions of the Transfer; and (D) the name of
the Person who has offered to purchase such Offered Units.  The Offering Member
Notice shall be accompanied by a copy of the signed offer from the proposed
purchaser.

(ii)        The Offering Member Notice shall constitute the Offering Member’s
offer to Transfer the Offered Units to the Company and the Applicable ROFR
Rightholders, which offer shall be irrevocable until the end of the ROFR
Rightholder Option Period described in Section 11.2(d)(iii).

(iii)      By delivering the Offering Member Notice, the Offering Member
represents and warrants to the Company and each Applicable ROFR Rightholder
that: (A) the Offering Member has full right, title and interest in and to the
Offered Units; (B) the Offering Member has all the necessary power and authority
and has taken all necessary action to Transfer such Offered Units as
contemplated by this Section 11.2; (C) the Offered Units are free and clear of
any and all liens other than those arising as a result of or under the terms of
this Agreement; and (D) the Offered Units are the subject of a bona fide offer
from the proposed purchaser.

(d)        Exercise of Right of First Refusal.

(i)         Upon receipt of the Offering Member Notice, the Company and each
Applicable ROFR Rightholder shall have the right to purchase the Offered Units
in the following order of priority: first, the Company shall have the right to
purchase all or any portion of the Offered Units in accordance with the
procedures set forth in Section 11.2(d)(ii), and thereafter, the Applicable ROFR
Rightholders shall have the right to purchase the Offered Units, in accordance
with the procedures set forth in Section 11.2(d)(iii), to the extent the Company
does not exercise its right in full.  Notwithstanding the foregoing, the Company
and the Applicable ROFR Rightholders may only exercise their right to purchase
the Offered Units if, after giving effect to all elections made under this
Section 11.2(d), no less than all of the Offered Units will be purchased by the
Company and/or the Applicable ROFR Rightholders.

29

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

 

 

 

(ii)        The initial right of the Company to purchase any Offered Units shall
be exercisable with the delivery of a written notice (the “Company ROFR
Exercise  Notice”) by the Company to the Offering Member and the Applicable ROFR
Rightholders within ten business days of receipt of the Offering Member Notice
(the “Company Option Period”), stating the number (including where such number
is zero) of Offered Units the Company elects irrevocably to purchase on the
terms and respective purchase prices set forth in the Offering Member
Notice.  The Company ROFR Exercise Notice shall be binding upon delivery and
irrevocable by the Company.

(iii)      If the Company shall have indicated an intent to purchase any less
than all of the Offered Units, the Applicable ROFR Rightholders shall have the
right to purchase the remaining Offered Units not selected by the Company.  For
a period of fifteen business days following the receipt of a Company ROFR
Exercise Notice in which the Company has elected to purchase less than all the
Offered Units (such period, the “ROFR Rightholder Option Period”), each
Applicable ROFR Rightholder shall have the right to elect irrevocably to
purchase all or none of its Percentage Interest of the remaining Offered Units
by delivering a written notice to the Company and the Offering Member (a “Member
ROFR Exercise Notice”) specifying its desire to purchase its Percentage Interest
of the remaining Offered Units, on the terms and respective purchase prices set
forth in the Offering Member Notice.  In addition, each Applicable ROFR
Rightholder shall include in its Member ROFR Exercise Notice the number of
remaining Offered Units that it wishes to purchase if any other Applicable ROFR
Rightholders do not exercise their rights to purchase their entire Percentage
Interest of the remaining Offered Units.  Any Member ROFR Exercise Notice shall
be binding upon delivery and irrevocable by the Applicable ROFR Rightholder.

(iv)       The failure of the Company or any Applicable ROFR Rightholder to
deliver a Company ROFR Exercise Notice or Member ROFR Exercise Notice,
respectively, by the end of the Company Option Period or ROFR Rightholder Option
Period, respectively, shall constitute a waiver of their respective rights of
first refusal under this Section 11.2(d)(iv) with respect to the Transfer of
Offered Units, but shall not affect their respective rights with respect to any
future Transfers.

(e)        Allocation of Offered Units.  Upon the expiration of the ROFR
Rightholder Option Period, the Offered Units not selected for purchase by the
Company pursuant to Section 11.2(d)(ii) shall be allocated for purchase among
the Applicable ROFR Rightholders as follows:

(i)         First, to each Applicable ROFR Rightholder having elected to
purchase its entire Percentage Interest of such Units, such Applicable ROFR
Rightholder’s Percentage Interest of such Units; and

(ii)        Second, the balance, if any, not allocated under clause (i) above
(and not purchased by the Company pursuant to Section 11.2(d)(ii)), shall be
allocated to those Applicable ROFR Rightholders who set forth in their Member
ROFR Exercise Notices a number of Offered Units that exceeded their respective
Percentage Interest (the “Purchasing Rightholders”), in an amount, with respect
to each such Purchasing Rightholder, that is equal to the lesser of (A) the
number of Offered Units that such Purchasing Rightholder elected to

30

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

 

 

purchase in excess of its Percentage Interest; or (B) the product of (x) the
number of Offered Units not allocated under clause (i) (and not purchased by the
Company pursuant to Section 11.2(d)(ii)), multiplied by (y) a fraction, the
numerator of which is the number of Offered Units that such Purchasing
Rightholder was permitted to purchase pursuant to clause (i), and the
denominator of which is the aggregate number of Offered Units that all
Purchasing Rightholders were permitted to purchase pursuant to clause (i).

(iii)      The process described in clause (ii) shall be repeated until no
Offered Units remain or until such time as all Purchasing Rightholders have been
permitted to purchase all Offered Units that they desire to purchase.

(f)        Consummation of Sale.  In the event that the Company and/or the
Applicable ROFR Rightholders shall have, in the aggregate, exercised their
respective rights to purchase all and not less than all of the Offered Units,
then the Offering Member shall sell such Offered Units to the Company and/or the
Applicable ROFR Rightholders, and the Company and/or the Applicable ROFR
Rightholders, as the case may be, shall purchase such Offered Units, within
sixty days following the expiration of the ROFR Rightholder Option Period (which
period may be extended for a reasonable time not to exceed ninety days to the
extent reasonably necessary to obtain required approvals or consents from any
Governmental Authority).  Each Member shall take all actions as may be
reasonably necessary to consummate the sale contemplated by this Section
11.2(f), including, without limitation, entering into agreements and delivering
certificates and instruments and consents as may be deemed necessary or
appropriate.  At the closing of any sale and purchase pursuant to this Section
11.2(f), the Offering Member shall deliver to the Company and/or the
participating Applicable ROFR Rightholders certificates (if any) representing
the Offered Units to be sold, free and clear of any liens or encumbrances (other
than those contained in this Agreement), accompanied by evidence of transfer and
all necessary transfer taxes paid and stamps affixed, if necessary, against
receipt of the purchase price therefor from the Company and/or such Applicable
ROFR Rightholders by certified or official bank check or by wire transfer of
immediately available funds.

(g)        Sale to Proposed Purchaser.  In the event that the Company and/or the
Applicable ROFR Rightholders shall not have collectively elected to purchase all
of the Offered Units, then the Offering Member may Transfer all of such Offered
Units, at a price per Offered Unit not less than specified in the Offering
Member Notice and on other terms and conditions which are not materially more
favorable in the aggregate to the proposed purchaser than those specified in the
Offering Member Notice, but only to the extent that such Transfer occurs within
sixty days after expiration of the ROFR Rightholder Option Period.  Any Offered
Units not Transferred within such 60-day period will be subject to the
provisions of this Section 11.2 upon subsequent Transfer.

(h)        Exception to Right of First Refusal.  Notwithstanding anything to the
contrary in this Article XI or in any other provision of this Agreement, Calavo
(i) may Transfer at any time after the Effective Date all or any portion of the
Units it owns, and (ii) is not obligated to provide the Company or any other
Member with the right of first refusal described in this Section 11.2 in
connection with any such Transfer.

31

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

 

 

11.3     Approved Sale; Drag Along Obligations; Tag Along Rights; Public
Offering.

(a)        If the Board approves a Sale of the Company (an “Approved Sale”) or
Statutory Conversion, each Member, on ten days’ written notice from the Board,
shall vote for, consent to and raise no objections against such Approved Sale or
Statutory Conversion.  If the Approved Sale is structured as a (i) merger or
consolidation, each Member holding Units shall waive any dissenters rights,
appraisal rights or similar rights in connection with such merger or
consolidation or (ii) sale of Units, each Member holding Units shall agree to
sell all of its or his Units and rights to acquire Units on the terms and
conditions approved by the Board.  Each Member holding Units shall take all
necessary or desirable actions in connection with the consummation of the
Approved Sale or Statutory Conversion as requested by the Board.

(b)        The obligations of each Member holding Units with respect to the
Approved Sale are subject to the satisfaction of the following conditions: (i)
the consideration payable upon consummation of such Approved Sale to all Members
shall be allocated among the Members as if distributed pursuant to Section
6.1(b) (except to the extent that Tax Advances required to have been made by the
Company pursuant to Section 6.1(c) have not been made, in which case such
consideration shall first be distributed in respect of all Tax Advances which
were not made as required by Section 6.1(c) and then in accordance with Section
6.1(b)); and (ii) upon the consummation of the Approved Sale, all of the Members
holding a particular class of Units shall receive the same amount of
consideration per Unit of such class (with any noncash consideration valued in
good faith by the Board), as reduced for any Member by the aggregate principal
amount plus all accrued and unpaid interest on any debt or other obligations of
such Member to the Company.

(c)        Notwithstanding anything in this Agreement to the contrary, in
connection with an Approved Sale, (i) no Member will be required to make
affirmative representations or warranties except as to such Member’s due power
and authority, non-contravention and ownership of Units, free and clear of all
liens, and (ii) each Member may be severally (and not jointly) obligated to join
on a pro rata basis in any customary indemnification obligation agreed to by the
Board in connection with such Approved Sale, except that each Member may be
fully liable for obligations that relate specifically to such Member, such as
indemnification with respect to representations and warranties given by such
Member regarding such Member’s title to and ownership of Units; provided that no
Member shall be obligated in connection with such Approved Sale to agree to
indemnify or hold harmless the Transferees with respect to any amount in excess
of the cash proceeds to which such Member is entitled in such Approved Sale or
to make indemnity payments in excess of the net cash proceeds paid to such
holder in connection with such Approved Sale; provided further that any escrow
of proceeds of any such transaction shall be withheld on a pro rata basis among
all Members.  Each Member shall enter into any customary indemnification or
contribution agreement reasonably requested by the Board to ensure compliance
with this Section 11.3(c) and the provisions of this Section 11.3(c) shall be
deemed complied with if the requirement for several liability is addressed
through such agreement, even if the purchase and sale agreement or merger
agreement related to the Approved Sale provides for joint and several liability.

(d)        If the Company or holders of a majority of the Units enter into any
negotiation or transaction for which Rule 506 (or any similar rule then in
effect) promulgated by

32

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

 

 

the Securities and Exchange Commission under the Securities Act may be available
with respect to such negotiation or transaction (including a merger,
consolidation or other reorganization), any Member who is not an “accredited
investor” under Rule 501 under the Securities Act shall, at the request of the
holders of a majority of the Units, appoint a “purchaser representative” (as
such term is defined in Rule 501 promulgated under the Securities Act)
designated by the Company and reasonably acceptable to the holders of a majority
of the Units.  If any Member so appoints a purchaser representative, the Company
shall pay the fees of such purchaser representative.  However, if any Member
declines to appoint the purchaser representative designated by the Company, such
Member shall appoint another purchaser representative (reasonably acceptable to
the holders of a majority of the Units), and such Member shall be responsible
for the fees of the purchaser representative so appointed.

(e)        Except as otherwise provided in Section 11.3(d), each Member
Transferring Units pursuant to this Section 11.3 shall pay a share of the
expenses incurred by the Members in connection with such Transfer on a pro rata
basis among all Transferring Members (including by reducing the portion of the
consideration to which such Member would be entitled in such Approved Sale).

(f)        In the event that Members owning a majority of the outstanding Units
of the Company (“Majority Members”) desire or propose to sell a majority of the
issued and outstanding Units of the Company for consideration but the foregoing
is not an Approved Sale, the Majority Members shall first notify the remaining
Members (the “Minority Members”) in writing of the proposed sale within at least
ten (10) business days prior to the closing of such sale and detail its
principal terms, including but not limited to the proposed price and purchaser.
Upon the Minority Members’ receipt of such notice, each Minority Member shall
have a period of fifteen (15) days within which to notify the Majority Members
in writing of his desire to sell to the prospective purchaser (or, at the
Majority Members’ option, to the Majority Members, who hereby agree to purchase
in the event they exercise such option and the proposed sale is consummated) the
Minority Members’ Units for the price and on the terms specified in the notice.
If a Minority Member elects to sell to the prospective purchaser (and the
Majority Members do not exercise the foregoing option to purchase), then the
Majority Members shall assign to the Minority Members making such election as
much of their interest in the agreement with the prospective purchaser as such
Minority Members shall be entitled to and shall accept hereunder (allocating in
accordance with each participating Member’s Percentage Interest). If, within
fifteen (15) days following their receipt of the notice from the Majority
Members, none of the Minority Members elects to sell such Minority Members'
Units to the prospective purchaser, the Majority Members shall have a period of
sixty (60) days thereafter to sell their Units to the prospective purchaser, but
only on terms and conditions no more favorable to the Majority Members than
those contained in the notice sent to the Minority Members.

(g)        In addition, if the Board approves a Public Offering, each Member
shall, and shall cause its representatives to, vote for, consent to (to the
extent it has any voting or consenting rights) and raise no objections against
any such transaction, and the Company, the Board and each Member shall take all
reasonable actions in connection with the consummation of any such transaction
as requested by the Board, including without limitation executing a market
stand-off agreement and lock-up agreement as may be required by the
representative of the underwriters.

33

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

 

 

(h)        In no manner shall this Section 11.3 be construed to grant to any
Member any dissenters’ rights or appraisal rights or give any Member any right
to vote in any transaction structured as a merger or consolidation (it being
understood that the Members have expressly waived rights under Section 18-210 of
the Delaware Act and any other dissenters rights, appraisal rights or similar
rights (if any) and have granted to the Board the sole right to approve or
consent to a merger or consolidation of the Company without approval or consent
of the Members).

11.4     Void Transfers.  Any Transfer by any Member of any Units or other
interest in the Company in contravention of this Agreement in any respect
(including the failure of the Transferee to execute and deliver a counterpart or
joinder to this Agreement) shall be void and ineffectual and shall not bind or
be recognized by the Company or any other party.  No purported assignee shall
have any right to any distributions of the Company.

11.5     Additional Restrictions on Transfer.  Notwithstanding any other
provisions of this Article XI, no Transfer of Units or any other interest in the
Company may be made unless in the opinion of counsel (who may be counsel for the
Company), reasonably satisfactory in form and substance to the Board and counsel
for the Company (which opinion may be waived, in whole or in part, at the sole
discretion of the Board), such Transfer would be exempt from registration under
the Securities Act.  Such opinion of counsel shall be delivered in writing to
the Company prior to the date of the Transfer.

11.6     Legend.  In the event that certificates representing the Units are
issued (“Certificated Units”), such certificates will bear the following legend:

“THE UNITS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR APPLICABLE STATE SECURITIES
LAWS (“STATE ACTS”) AND MAY NOT BE SOLD, ASSIGNED, PLEDGED OR TRANSFERRED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT OR STATE ACTS OR AN EXEMPTION FROM REGISTRATION THEREUNDER.  THE
TRANSFER OF THE UNITS REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE
CONDITIONS SPECIFIED IN A LIMITED LIABILITY COMPANY AGREEMENT, AS AMENDED AND
MODIFIED FROM TIME TO TIME, GOVERNING THE ISSUER AND BY AND AMONG CERTAIN
INVESTORS THEREIN.  A COPY OF SUCH CONDITIONS SHALL BE FURNISHED BY THE ISSUER
TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE.”

11.7     Transfer Fees and Expenses.  Except as provided in Sections 11.2 and
11.3, unless waived in writing by the Board in its sole discretion, the
Transferor and Transferee of any Units or other interest in the Company shall be
jointly and severally obligated to reimburse the Company for all reasonable
expenses (including attorneys’ fees and expenses) of any Transfer or proposed
Transfer, whether or not consummated.

34

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

 

 

ARTICLE XII

WITHDRAWAL AND RESIGNATION OF MEMBERS

12.1     Withdrawal and Resignation of Member.  No Member shall have the power
or right to withdraw or otherwise resign as a Member prior to the dissolution
and winding up of the Company pursuant to Article XIII without the prior written
consent of the Board (which consent may be withheld by the Board in its sole
discretion), except as otherwise expressly permitted by this Agreement.  Upon a
Transfer of all of a Member’s Units in a Transfer permitted by this Agreement,
such Member shall cease to be a Member.  Notwithstanding that payment on account
of a withdrawal may be made after the effective time of such withdrawal, any
completely withdrawing Member will not be considered a Member for any purpose
after the effective time of such complete withdrawal, and, in the case of a
partial withdrawal, such Member’s Capital Account (and corresponding voting and
other rights) shall be reduced for all other purposes hereunder upon the
effective time of such partial withdrawal.

ARTICLE XIII

DISSOLUTION AND LIQUIDATION

13.1     Dissolution.  The Company shall not be dissolved by the admission of
Additional Members or Substituted Members.  The Company shall dissolve, and its
affairs shall be wound up only upon the first to occur of the following:

(a)        Upon the approval at any time of the Board; or

(b)        The entry of a decree of judicial dissolution of the Company under
Section 35-5 of the Delaware Act or an administrative dissolution under Section
18-802 of the Delaware Act.

Except as otherwise set forth in this Article XIII, the Company is intended to
have perpetual existence.  The death, retirement, resignation, expulsion,
bankruptcy or dissolution of a Member or the occurrence of any other event that
terminates the continued membership of a Member in the Company shall not cause a
dissolution of the Company, and the Company shall continue in existence subject
to the terms and conditions of this Agreement.

13.2     Liquidation and Termination.  On the dissolution of the Company, the
Board shall act as liquidator or may appoint one or more representatives,
Members or other Persons as liquidator(s).  The liquidators shall pay, satisfy
or discharge from Company funds all of the debts, liabilities and obligations of
the Company (including all expenses incurred in liquidation) or otherwise make
adequate provision for payment and discharge thereof (including the
establishment of a cash fund for contingent liabilities in such amount and for
such term as the liquidators may reasonably determine) and proceed diligently to
wind up the affairs of the Company and make final distributions as provided
herein and in the Delaware Act.  The costs of liquidation shall be borne as a
Company expense.  The Fair Market Value (as determined by the liquidators) of
any remaining assets of the Company shall, following payment, satisfaction or
discharge of all liabilities as determined by the liquidators, be distributed as
liquidating Distributions to the holders of Units in the following order of
priority:

35

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

 

 

(a)        First, to the Members in accordance with their final positive Capital
Account balances as of immediately prior to the Conversion, as set forth on
Schedule 13.2; and

(b)        Then, to the Members in accordance with their Percentage Interests
(but for clarity, still subject to the terms of any Profits Interest Unit
agreements for applicable Members).

Until final distribution, the liquidators shall continue to operate the Company
properties with all of the power and authority of the Board.

13.3     Cancellation of Certificate.  On completion of the distribution of
Company assets as provided herein, the Company shall be terminated (and the
Company shall not be terminated prior to such time), and the Board (or such
other Person or Persons as the Delaware Act may require or permit) shall file a
certificate of cancellation with the Secretary of State of Delaware, cancel any
other filings made pursuant to this Agreement that are or should be canceled and
take such other actions as may be necessary to terminate the Company.  The
Company shall be deemed to continue in existence for all purposes of this
Agreement until it is terminated pursuant to this Section 13.3.

13.4     Reasonable Time for Winding Up.  A reasonable time shall be allowed for
the orderly winding up of the business and affairs of the Company and the
liquidation of its assets pursuant to Section 13.2 in order to minimize any
losses otherwise attendant upon such winding up.

13.5     Return of Capital.  The Board, Members or other liquidators shall not
be personally liable for the return of Capital Contributions or any portion
thereof to the Members (it being understood that any such return shall be made
solely from Company assets).

ARTICLE XIV

GENERAL PROVISIONS

14.1     Power of Attorney.

(a)        Each Member hereby constitutes and appoints the Board, with full
power of substitution, as its or his true and lawful agent and attorney-in-fact,
with full power and authority in its name, place and stead, to execute, swear
to, acknowledge, deliver, file and record in the appropriate public offices (i)
this Agreement, all certificates and other instruments and all amendments
thereof in accordance with the terms hereof which the Board deems appropriate or
necessary to form, qualify, or continue the qualification of, the Company as a
limited liability company in the State of Delaware and in all other
jurisdictions in which the Company may conduct business or own property; (ii)
all instruments which the Board deems appropriate or necessary to reflect any
amendment, change, modification or restatement of this Agreement in accordance
with its terms; (iii) all conveyances and other instruments or documents which
the Board deems appropriate or necessary to reflect the dissolution and
liquidation of the Company pursuant to the terms of this Agreement, including a
certificate of cancellation; and (iv) all instruments relating to the admission,
withdrawal or substitution of any Member pursuant to Article IV or XII.

36

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

 

 

(b)        The foregoing power of attorney is irrevocable and coupled with an
interest, and shall survive the death, disability, incapacity, dissolution,
bankruptcy, insolvency or termination of any Member and the Transfer of all or
any portion of his or its Units and shall extend to such Member’s heirs,
successors, assigns and personal representatives.

14.2     Amendments.  Subject to the right and power of the Board to amend this
Agreement to the limited extent expressly provided in the last sentence of this
Section 14.2, including in connection with the issuance of new or additional
Equity Securities, or any class or series thereof, this Agreement may be
amended, modified, or waived only by a Super-Majority Vote of the Units;
provided that: (a) if, after the Effective Date of this Agreement at least one
additional class of Units is issued by the Company, any such amendment,
modification, or waiver would adversely affect in any material respect the
rights, preferences or privileges of any class of Units relative to another
class of Units, such amendment, modification, or waiver shall also require the
affirmative vote of at least two-thirds of the outstanding Units of the class of
Units so adversely affected; (b) if any such amendment, modification or waiver
would materially change the rights or obligations as between members of the same
class of Units with respect to such Units (e.g.  grant some but not all Members
of a class certain material rights with respect to their Units), such amendment,
modification, or waiver shall also require the approval of at least eighty
percent of the outstanding Units of that class of Units and/or (c) if such
amendment, modification or waiver would require a Member to make a mandatory
capital contribution in the Company, or would otherwise subject a Member to
increased personal liability other than as provided in Section 4.5, then such
amendment, modification or waiver shall also require the approval of such
Member.  In connection with any amendment, modification or waiver, or other
approval hereunder, the Board will have no obligation to provide any information
to any Person unless the consent of such Person is required to be obtained in
order to effectuate such amendment, modification or waiver; and provided that
the Board shall be required to inform the holders of Units of the substance and
occurrence of any amendment.  Notwithstanding anything to the contrary in this
Agreement, the Board may, without the consent of any Member, amend the Schedule
of Members attached hereto to reflect the admission of any Member or Members,
the creation or issuance of any other Units or interests in the Company and the
corresponding adjustments to Percentage Interests or the making of any Capital
Contributions, and may amend the Schedule of Members and this Agreement in the
manner described in Section 14.20.

14.3     Title to Company Assets.  Company assets shall be deemed to be owned by
the Company as an entity, and no Member, individually or collectively, shall
have any ownership interest in such Company assets or any portion
thereof.  Legal title to any or all Company assets may be held in the name of
the Company or one or more nominees, as the Board may determine.  The Board
hereby declares and warrants that any Company assets for which legal title is
held in the name of any nominee shall be held in trust by such nominee for the
use and benefit of the Company in accordance with the provisions of this
Agreement.  All Company assets shall be recorded as the property of the Company
on its books and records, irrespective of the name in which legal title to such
Company assets is held.

14.4     Remedies.  Any Person having any rights under any provision of this
Agreement shall be entitled to enforce such rights specifically (without posting
a bond or other security), to recover damages by reason of any breach of any
provision of this Agreement and to exercise all other rights granted by law.

37

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

 

 

14.5     Successors and Assigns.  All covenants and agreements contained in this
Agreement shall bind and inure to the benefit of the parties hereto and their
respective heirs, executors, administrators, successors, legal representatives
and permitted assigns, whether so expressed or not.

14.6     Severability.  Whenever possible, each provision of this Agreement will
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or the effectiveness or validity of any provision in any
other jurisdiction, and this Agreement will be reformed, construed and enforced
in such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.

14.7     Execution.  This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.

14.8     Descriptive Headings; Interpretation.  The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a substantive
part of this Agreement.  Whenever required by the context, any pronoun used in
this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular form of nouns, pronouns and verbs shall include the
plural and vice versa.  The use of the words “including” or “include” in this
Agreement shall be by way of example rather than by limitation.  Reference to
any agreement, document or instrument means such agreement, document or
instrument as amended or otherwise modified from time to time in accordance with
the terms thereof, and if applicable hereof.  Wherever required by the context,
references to a Fiscal Year shall refer to a portion thereof.  The use of the
words “or,” “either” and “any” shall not be exclusive.  The parties hereto have
participated jointly in the negotiation and drafting of this Agreement.  In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties hereto, and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any of the provisions of this Agreement.  Wherever a
conflict exists between this Agreement and any other agreement, this Agreement
shall control but solely to the extent of such conflict.

14.9     Applicable Law.  This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware, without giving effect to any
choice of law or conflict of law rules or provisions (whether of the State of
Delaware or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Delaware.

14.10   Addresses and Notices.  All notices, demands or other communications to
be given or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be deemed to have been given or made when (a)
delivered personally to the recipient, (b) telecopied to the recipient (with
hard copy sent to the recipient by reputable overnight courier service (charges
prepaid) that same day) if telecopied before 2:00 p.m.  Los Angeles, California
time on a business day, and otherwise on the next business day, or (c) one
business day after being sent to the recipient by reputable overnight courier
service (charges prepaid).  Such notices, demands and other communications shall
be sent to the address for such recipient set

38

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

 

 

 

forth in the Company’s books and records (which shall initially be the addresses
set forth on the signature pages of this Agreement), or to such other address or
to the attention of such other person as the recipient party has specified by
prior written notice to the sending party.  Any notice to the Board or the
Company shall be deemed given if received by the Board at the principal office
of the Company designated pursuant to Section 2.5, with a copy delivered to
Calavo’s Chief Executive Officer at Calavo’s address set forth below its
signature on this Agreement.

14.11   Creditors.  None of the provisions of this Agreement shall be for the
benefit of or enforceable by any non-Member creditors of the Company or any of
its Affiliates, and no creditor who makes a loan to the Company or any of its
Affiliates may have or acquire (except pursuant to the terms of a separate
agreement executed by the Company in favor of such creditor) at any time as a
result of making the loan any direct or indirect interest in the Company other
than as a secured creditor.

14.12   Waiver.  No failure by any party to insist upon the strict performance
of any covenant, duty, agreement or condition of this Agreement or to exercise
any right or remedy consequent upon a breach thereof shall constitute a waiver
of any such breach or any other covenant, duty, agreement or condition.

14.13   Further Action.  The parties agree to execute and deliver all documents,
provide all information and take or refrain from taking such actions as may be
necessary or appropriate to achieve the purposes of this Agreement.

14.14   Offset.  Whenever the Company is to pay any sum to any Member, any
amounts that such Member owes to the Company under this Agreement may, to the
extent permitted pursuant to applicable law, be deducted from that owed sum
before such payment.

14.15   Entire Agreement.  This Agreement and those documents expressly referred
to herein and other documents dated as of even date herewith or of the Original
Agreement, including the Line of Credit Agreement, the Promissory Notes, the
Units Pledge and Security Agreements between Calavo and the Initial Service
Providers, and the Service Provider Agreement between the Company and David
Ominsky, embody the complete agreement and understanding among the parties and
supersede and preempt any prior understandings, agreements or representations by
or among the parties, written or oral, which may have related to the subject
matter hereof in any way.

14.16   Delivery by Facsimile or E-Mail.  This Agreement, the agreements
referred to herein, and each other agreement or instrument entered into in
connection herewith or therewith or contemplated hereby or thereby, and any
amendments hereto or thereto, to the extent signed and delivered by means of a
facsimile machine or e-mail, shall be treated in all manner and respects as an
original agreement or instrument and shall be considered to have the same
binding legal effect as if it were the original signed version thereof delivered
in person.  At the request of any party hereto or to any such agreement or
instrument, each other party hereto or thereto shall re-execute original forms
thereof and deliver them to all other parties.  No party hereto or to any such
agreement or instrument shall raise the use of a facsimile machine or e-mail to
deliver a signature or the fact that any signature or agreement or instrument
was transmitted or

39

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

 

 

communicated through the use of a facsimile machine or e-mail as a defense to
the formation or enforceability of a contract and each such party forever waives
any such defense.

14.17   Dispute Resolution.  Any Action seeking to enforce any provision of, or
based on any matter arising out of or in connection with, this Agreement or the
transactions contemplated by this Agreement may be brought against any of the
parties only in any federal or state court located in Los Angeles, California
and each of the parties hereto hereby consents to the exclusive jurisdiction of
such courts (and of the appropriate appellate courts) in any such Action and
waives any objection to venue laid therein.  Process in any such Action may be
served on any party anywhere in the world, whether within or without the State
of California.  Without limiting the generality of the foregoing, each party
hereto agrees that service of process upon such party at the address referred to
in Section 14.10, together with written notice of such service to such party,
shall be deemed effective service of process upon such party.

14.18   Survival.  Article IX and this Article XIV shall survive and continue in
full force in accordance with its terms notwithstanding any termination of this
Agreement or the dissolution of the Company.

14.19   Expenses.  The Company shall pay and hold Calavo harmless against
liability for the payment of the reasonable out-of-pocket expenses of Calavo
(including the reasonable fees and expenses of legal counsel or other advisors)
in connection with (a) start-up and organizational costs in connection with the
formation of the Company and the commencement of its business and operations and
(b) the preparation, negotiation and execution of this Agreement and each other
agreement executed in connection herewith and the consummation of the
transactions contemplated hereby.  Nothing in this Agreement shall require
reimbursement of expenses of any Member except as described in the preceding
sentence.

14.20   Effective Date.  This Agreement shall be in full force and effect, as of
February 27, 2019 following its execution and approval as provided for
herein.  In that connection, (a) the Percentage Interests set forth in Schedule
A assume that each party whose name is listed on the signature pages of this
Agreement as of the Effective Date has executed and delivered this Agreement,
and (b) the Board has the right and power, without the consent of any Member, to
make technical changes to this Agreement and to add references to any Additional
Member or Substituted Member approved for admission as provided in this
Agreement.

14.21   Acknowledgements.  Upon execution and delivery of a counterpart to this
Agreement or a joinder to this Agreement, each Member and Additional Member
shall be deemed to acknowledge to, and agree with, Calavo and every other Member
as follows:  (a) the determination of such Member or Additional Member to
acquire Units pursuant to this Agreement and any other agreement referenced
herein has been made by such Member or Additional Member independent of any
other Member and independent of any statements or opinions as to the
advisability of such purchase or as to the properties, business, prospects or
condition (financial or otherwise) of the Company which may have been made or
given by the Board or by any agent or employee of the Board; (b) the Board has
not acted as an agent of such Member or Additional Member in connection with
making its investment hereunder, and the Board shall not serve as an agent of
such Member or Additional Member in connection with monitoring its investment
hereunder; (c) TroyGould PC is not counsel to any Members other

40

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

 

 

than Calavo and is not representing and will not represent any other Member or
Additional Member in connection with this Agreement or any dispute which may
arise between Calavo, on the one hand, and any other Member or Additional
Member, on the other hand; (d) such Member or Additional Member will, if it
desires legal advice with respect to this Agreement, retain its own independent
counsel; and (e) TroyGould PC may represent Calavo in connection with any and
all matters contemplated hereby (including any dispute between Calavo, on the
one hand, and any other Member or Additional Member, on the other hand) and each
other Member or Additional Member waives any conflict of interest in connection
with such representation by TroyGould PC.

* * * * *

41

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

 

 

IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the Effective Date.

 

 

 

 

 

APPROVING MEMBERS

 

 

 

CALAVO GROWERS, INC.

 

 

 

By:

 

 

 

Name:   Lecil E. Cole

 

 

Title:     Chief Executive Officer and President

 

 

 

 

 

 

 

 

 

 

 

Lecil E. Cole, Individually

 

 

 

 

 

 

 

 

 

 

 

Kenneth Catchot, Individually and on behalf of

 

 

K. Catchot 2005 Family Trust.

 

 

 

 

 

 

 

 

 

 

 

Kathleen Holmgren, Individually and on behalf

 

 

of THE HOLMGREN FAMILTY TRUST OF 1996

 

 

 

 

 

 

 

 

IMPERMANENCE LLC

 

 

 

By:

 

 

 

Name:   Michael R. Lippold

 

 

Title:     Managing Member

 

42

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

 

 

 

 

 

 

 

 

 

 

Peter S. Hajas, Individually

 

 

 

 

 

 

 

 

 

 

 

Michael R. Lippold, Individually

 

 

 

 

 

COMPANY

 

 

 

 

 

FRESHREALM, LLC

 

 

 

 

By:

 

 

 

Name:   Michael R. Lippold

 

 

Title:     Chief Executive Officer

 

 

43

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

 

 

Schedule A Schedule of Members as of February 27, 2019

To be attached.

 

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

 

 

Schedule 13.2

To be attached.

[Remainder of page intentionally left blank]

 

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