Exhibit 10.14
LINE OF CREDIT AGREEMENT
          THIS LINE OF CREDIT AGREEMENT (“Line of Credit Agreement”) is entered
into as of August 17, 2005, between FARM CREDIT WEST, PCA, Visalia, California
(“FCW”) and CALAVO GROWERS, INC., Santa Paula, California (the “Company”).
     SECTION 1.     The Credit Facility. On the terms and conditions set forth
in this Line of Credit Agreement, FCW agrees to make advances to the Company
during the period set forth below in an aggregate principal amount not to exceed
$12,000,000.00 (the “Commitment”). The Line of Credit Agreement and Commitment
is executed, delivered and accepted not in payment of but for the purpose of
amending, restating and replacing the following described obligations, and
renewing any unpaid balance(s) evidenced thereby: Note dated January 22, 2004,
in the principal amount of $12,000,000.00. Furthermore, the Commitment also
evidences an additional loan advance(s) to the extent the Commitment under this
Line of Credit Agreement exceeds the renewed unpaid balance(s) referred to
above.
     SECTION 2.     Sale of Interest. The Company acknowledges that FCW has the
option to participate all or a portion of the Commitment with one or more
lenders, including CoBank, ACB (“CoBank”). All advances hereunder shall be made
by CoBank as agent for FCW and all repayments by the Company hereunder shall be
made to CoBank as agent for FCW.
     SECTION 3.     Purpose. The purpose of the Commitment is to finance the
ongoing operating needs of the Company.
     SECTION 4.     Term. The term of the Commitment shall be from the date
hereof, up to and including February 1, 2007.
     SECTION 5.     Availability. Subject to the provisions of Section 25,
advances will be made available on any day on which FCW, CoBank, and the Federal
Reserve Banks are open for business upon the telephonic or written request of
the Company. Requests for advances must be received no later than 12:00 Noon,
Company’s local time, on the date the advance is desired. Advances will be made
available by CoBank by wire transfer of immediately available funds to such
account or accounts as may be authorized by the Company. The Company shall
furnish to CoBank a duly completed and executed copy of a CoBank Delegation and
Wire and Electronic Transfer Authorization Form, and CoBank shall be entitled to
rely on (and shall incur no liability to the Company in acting on) any request
or direction furnished in accordance with the terms thereof.
     SECTION 6.     Interest and Fees.
          (A)     Interest. The Company agrees to pay interest on the unpaid
balance of the Commitment in accordance with the following interest rate option:

 

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               (1)     7-Day LIBOR Index Rate. At a rate (rounded upward to the
nearest 1/100th% and adjusted for reserves required on “Eurocurrency
Liabilities” (as hereinafter defined) for banks subject to “FRB Regulation D”
(as hereinafter defined) or required by any other federal law or regulation) per
annum equal at all times to 100 basis points (1.00%) above the annual rate
quoted by the British Bankers Association (the “BBA”) at 11:00 a.m. London time
for the offering of seven (7) day of U.S. dollars deposits, as published by
Bloomberg or another major information vendor listed on BBA’s official website
on the first U.S. Banking Day (as hereinafter defined) in each week with such
rate to change weekly on such day. The rate shall be reset automatically,
without the necessity of notice being provided to the Company or any other
party, on the first U.S. Banking Day of each succeeding week and each change in
the rate shall be applicable to all balances subject to this option and
information about the then current rate shall be made available upon telephonic
request. For purposes hereof (a) “U.S. Banking Day” shall mean a day on which
CoBank is open for business, dealings in U.S. dollar deposits are being carried
out in the London interbank market, and banks are open for business in New York
City and London, England; (b) “Eurocurrency Liabilities” shall have meaning as
set forth in “FRB Regulation D”; and (c) “FRB Regulation D” shall mean
Regulation D as promulgated by the Board of Governors of the Federal Reserve
System, 12 CFR Part 204, as amended.
               (2)     LIBOR. At a fixed rate per annum equal to “LIBOR” (as
hereinafter defined) plus 100 basis points (1%). Under this option: (1) rates
may be fixed for “Interest Periods” (as hereinafter defined) of 1, 2, 3, 6, 9 or
12 months as selected by the Company; (2) amounts may be fixed in increments of
$100,000.00 or multiples thereof; (3) the maximum number of fixes in place at
any one time shall be 10; and (4) rates may only be fixed on a “Banking Day” (as
hereinafter defined) on 3 Banking Days’ prior written notice. For purposes
hereof: (a) “LIBOR” shall mean the rate (rounded upward to the nearest
sixteenth) and adjusted for reserves required on “Eurocurrency Liabilities” (as
hereinafter defined) for banks subject to “FRB Regulation D” (as herein defined)
or required by any other federal law or regulation) quoted by the British
Bankers Association (the “BBA”) at 11:00 a.m. London time 2 Banking Days before
the commencement of the Interest Period for the offering of U.S. dollar deposits
in the London interbank market for the Interest Period designated by the
Company; as published by Bloomberg or another major information vendor listed on
BBA’s official website; (b) “Banking Day” shall mean a day on which CoBank is
open for business, dealings in U.S. dollar deposits are being carried out in the
London interbank market, and banks are open for business in New York City and
London, England; (c) “Interest Period” shall mean a period commencing on the
date this option is to take effect and ending on the numerically corresponding
day in the next calendar month or the month that is 2, 3, 6, 9 or 12 months
thereafter, as the case may be; provided, however, that: (i) in the event such
ending day is not a Banking Day, such period shall be extended to the next
Banking Day unless such next Banking Day falls in the next calendar month, in
which case it shall end on the preceding Banking Day; and (ii) if there is no
numerically corresponding day in the month, then such period shall end on the
last Banking Day in the relevant month; (d) “Eurocurrency Liabilities” shall
have meaning as set forth in “FRB Regulation D”; and (e) “FRB Regulation D”
shall mean Regulation D as promulgated by the Board of Governors of the Federal
Reserve System, 12 CFR Part 204, as amended.

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          The Company shall select the applicable rate option at the time it
requests a loan hereunder and may, subject to the limitations set forth above,
elect to convert balances bearing interest at the 7-Day LIBOR Index Rate option
to the LIBOR rate option. Upon the expiration of any fixed rate period, interest
shall automatically accrue at the 7-Day LIBOR Index Rate option provided for
above unless the amount fixed is repaid or fixed for an additional period in
accordance with the terms hereof. Notwithstanding the foregoing, rates may not
be fixed in such a manner as to cause the Company to have to break any fixed
rate balance in order to pay any installment of principal. All elections
provided for herein shall be made telephonically or in writing and must be
received by 12:00 Noon Company’s local time. Interest shall be calculated on the
actual number of days each loan is outstanding on the basis of a year consisting
of 360 days and shall be payable monthly in arrears by the 20th day of the
following month or on such other day in such month as FCW shall require in a
written notice to the Company.
          (B)     Commitment Fee. In consideration of the Commitment, the
Company agrees to pay to FCW a commitment fee on the average daily unused
portion of the Commitment at the rate of 0.15% per annum (calculated on a
360 day basis based on utilization, which is defined as outstanding advances
plus issued and outstanding letters of credit divided by the total available
amount of the Commitment), payable quarterly in arrears by the 20th day
following each quarter. Such fee shall be payable for each quarter (or portion
thereof) occurring during the original or any extended term of the Commitment.
     SECTION 7.     Repayment and Maturity. The unpaid principal balance of the
Commitment shall mature and be due and payable on February 1, 2007 (the
“Maturity Date”).
     SECTION 8.     Promissory Note. The Company’s obligation to repay the
Commitment shall be evidenced by a promissory note in the form attached hereto
as Exhibit A (“Note”).
     SECTION 9.     Manner and Time of Payment. CoBank shall maintain a record
of all loans, the interest accrued thereon, and all payments made with respect
thereto, and such record shall, absent proof of manifest error, be conclusive
evidence of the outstanding principal and interest on the loans. All payments
shall be made by wire transfer of immediately available funds, by check, or by
automated clearing house or other similar cash handling processes as specified
by separate agreement between the Company and CoBank. Wire transfers shall be
made to ABA No. 307088754 for advice to and credit of CoBank (or to such other
account as CoBank may direct by notice). The Company shall give CoBank
telephonic notice no later than 12:00 Noon Company’s local time of its intent to
pay by wire and funds received after 3:00 p.m. Company’s local time shall be
credited on the next business day. Checks shall be mailed to CoBank, Department
167, Denver, Colorado 80291-0167 (or to such other place as CoBank may direct by
notice). Credit for payment by check will not be given until the later of:
(a) the day on which CoBank receives immediately available funds; or (b) the
next business day after receipt of the check all as set forth in the Servicing
Agreement between Borrower, FCW, and CoBank in form attached hereto as
Exhibit B.

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     SECTION 10.     Capitalization. The Company has purchased a $1,000.00 stock
investment under FCW’s capitalization plan. The Company understands that FCW’s
stock is at risk and that any reference to “FCW equities” or to “stock or
participation certificates required by Lender’s bylaws” in any document,
agreement or Loan Document shall mean the FCW stock investment described herein.
     SECTION 11.     Patronage. The Commitment is eligible for patronage under
the plan and in accordance with the provisions of FCW’s bylaws and its practices
and procedures related to patronage distribution and as set forth in Section 27.
     SECTION 12.     Security. The Company’s obligations under this Line of
Credit Agreement and the Note shall be secured by a statutory first lien on all
equity which the Company may now own or hereafter acquire in FCW. With the
exception of the security referenced in the preceding sentence, the Company’s
obligations under this Line of Credit Agreement and the Note shall be unsecured.
     SECTION 13.     Conditions Precedent. FCW’s obligation to make advances
hereunder is subject to the condition precedent that FCW receive, in form and
content satisfactory to FCW, each of the following:
          (A)     Line of Credit Agreement. A duly executed copy of this Line of
Credit Agreement and all instruments and documents contemplated hereby.
          (B)     Evidence of Authority. Such certified board resolutions,
evidence of incumbency, and other evidence that FCW may require that this Line
of Credit Agreement and the Note have been duly authorized and executed.
          (C)     Fees and Other Charges. All fees and other charges provided
for herein.
          (D)     Evidence of Insurance. Such evidence as FCW may require that
the Company is in compliance with Section 15(C) hereof
          (E)     Event of Default. That no “Event of Default” (as defined in
Section 18 hereof) or event which with the giving of notice and/or the passage
of time would become an Event of Default hereunder (a “Potential Default”),
shall have occurred and be continuing.
     SECTION 14.     Representations and Warranties.
          (A)     Line of Credit Agreement. The Company represents and warrants
to FCW that as of the date of this Line of Credit Agreement:
               (1)     Compliance. The Company and, to the extent contemplated
hereunder, each “Subsidiary” (as defined below), is in compliance with all of
the terms of this Line of Credit Agreement, and no Event of Default or Potential
Default exists hereunder.

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               (2)     Subsidiaries. The Company has the following Subsidiaries:
Calavo Foods, Inc. (CFI); Maui Fresh International, Inc.; Calavo de Mexico S.A.
de C.V.; and Calavo Foods de Mexico S.A. de C.V. . For purposes hereof, a
“Subsidiary” shall mean a corporation of which shares of stock having ordinary
voting power to elect a majority of the board of directors or other managers of
such corporation are owned, directly or indirectly, by the Company.
               (3)      Conflicting Agreements. This Line of Credit Agreement
and the Note (collectively, at any time, the “Loan Documents”), do not conflict
with, or require the consent of any party to, any other agreement to which the
Company is a party or by which it or its property may be bound or affected, and
do not conflict with any provision of the Company’s bylaws, articles of
incorporation, or other organizational documents.
               (4)     Compliance. The Company and, to the extent contemplated
hereunder, each Subsidiary, if any, is in compliance with all of the terms of
the Loan Documents.
               (5)      Binding Agreement. The Loan Documents create legal,
valid, and binding obligations of the Company which are enforceable in
accordance with their terms, except to the extent that enforcement may be
limited by applicable bankruptcy, insolvency, or similar laws affecting
creditors’ rights generally.
     SECTION 15.     Affirmative Covenants. Unless otherwise agreed to in
writing by FCW, while this Line of Credit Agreement is in effect, the Company
agrees to and with respect to Subsections 15(A) through 15(F) hereof, agrees to
cause each Subsidiary, if any, to:
          (A)     Corporate Existence, Licenses. (i) Preserve and keep in full
force and effect its existence and good standing in the jurisdiction of its
incorporation or formation; (ii) qualify and remain qualified to transact
business in all jurisdictions where such qualification is required; and
(iii) obtain and maintain all licenses, certificates, permits, authorizations,
approvals, and the like which are material to the conduct of its business or
required by law, rule, regulation, ordinance, code, order, and the like
(collectively, “Laws”).
          (B)     Compliance with Laws. Comply in all material respects with all
applicable Laws, including, without limitation, all Laws relating to
environmental protection. In addition, the Company agrees to cause all persons
occupying or present on any of its properties, and to cause each Subsidiary, if
any, to cause all persons occupying or present on any of its properties, to
comply in all material respects with all environmental protection Laws.
          (C)     Insurance. Maintain insurance with insurance companies or
associations acceptable to FCW in such amounts and covering such risks as are
usually carried by companies engaged in the same or similar business and
similarly situated, and make such increases in the type or amount of coverage as
FCW may request. At FCW’s request, all policies (or such other proof of
compliance with this Subsection as may be satisfactory to FCW) shall be
delivered to FCW.

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          (D)     Property Maintenance. Maintain all of its property that is
necessary to or useful in the proper conduct of its business in good working
condition, ordinary wear and tear excepted.
          (E)     Books and Records. Keep adequate records and books of account
in which complete entries will be made in accordance with generally accepted
accounting principles (“GAAP”) consistently applied.
          (F)     Inspection. Permit FCW or its agents, upon reasonable notice
and during normal business hours or at such other times as the parties may
agree, to examine its properties, books, and records, and to discuss its
affairs, finances, and accounts, with its respective officers, directors,
employees, and independent certified public accountants.
          (G)     Reports and Notices. Furnish to FCW:
               (1)     Annual Financial Statements. As soon as available, but in
no event more than 90 days after the end of each fiscal year of the Company
occurring during the term hereof, annual consolidated and consolidating
financial statements of the Company and its consolidated Subsidiaries, if any,
prepared in accordance with GAAP consistently applied. Such financial statements
shall: (a) be audited by independent certified public accountants selected by
the Company and acceptable to FCW; (b) be accompanied by a report of such
accountants containing an opinion thereon acceptable to FCW; (c) be prepared in
reasonable detail and in comparative form; and (d) include a balance sheet, a
statement of income, a statement of retained earnings, a statement of cash
flows, and all notes and schedules relating thereto.
               (2)     Interim Financial Statements. As soon as available, but
in no event more than 45 days after the end of each fiscal quarter, a
consolidated balance sheet of the Company and its consolidated Subsidiaries, if
any, as of the end of such quarter, a consolidated statement of income for the
Company and its consolidated Subsidiaries, if any, for such period and for the
period year to date, and such other interim statements as FCW may specifically
request, all prepared in reasonable detail and in comparative form in accordance
with GAAP consistently applied and certified by an authorized officer or
employee of the Company acceptable to FCW.
               (3)     Notice of Default. Promptly after becoming aware thereof,
notice of the occurrence of an Event of Default or a Potential Default.
               (4)     Notice of Non-Environmental Litigation. Promptly after
the commencement thereof, notice of the commencement of all actions, suits, or
proceedings before any court, arbitrator, or governmental department,
commission, board, bureau, agency, or instrumentality affecting the Company or
any Subsidiary which, if determined adversely to the Company or any such
Subsidiary, could have a material adverse effect on the financial condition,
properties, profits, or operations of the Company or any such Subsidiary.

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               (5)     Notice of Environmental Litigation. Promptly after
receipt thereof, notice of the receipt of all pleadings, orders, complaints,
indictments, or any other communication alleging a condition that may require
the Company or any Subsidiary to undertake or to contribute to a cleanup or
other response under environmental Laws, or which seek penalties, damages,
injunctive relief, or criminal sanctions related to alleged violations of such
Laws, or which claim personal injury or property damage to any person as a
result of environmental factors or conditions.
               (6)     Bylaws and Articles. Promptly after any change in the
Company’s bylaws or articles of incorporation (or like documents), copies of all
such changes, certified by the Company’s Secretary.
               (7)     Other Information. Such other information regarding the
condition or operations, financial or otherwise, of the Company or any
Subsidiary as FCW may from time to time reasonably request, including but not
limited to copies of all pleadings, notices, and communications referred to in
Subsections 15(G)(4) and (5) above.
               (8)     Financial Certificate. Together with each set of
financial statements furnished to FCW pursuant to Section 15(G)(1), and each
quarterly statement submitted pursuant to Section 15(G)(2) for a period
corresponding to a period for which one or more of the financial covenants set
forth in Section 17 hereof are required to be tested, a certificate of an
officer or employee of the Company acceptable to FCW setting forth calculations
showing compliance with each of the financial covenants that require compliance
at the end of the period for which the statements are being furnished.
          (H)     Certain Organizational Changes. Provide FCW with prior notice
(and as early as practicable) of any merger, consolidation reorganization under
a different provision of law, acquisition of all or a material part of the
assets of another organization, change of name, adoption of any trade name, or
creation of any Subsidiary, affiliate or material joint venture(s). For purposes
of this covenant, joint venture transaction(s), which alone or in the aggregate
exceed $1,000,000, are considered material.
     SECTION 16.     Negative Covenants. Unless otherwise agreed to in writing
by FCW, which agreement will not be unreasonably withheld, while this Line of
Credit Agreement is in effect, the Company will not:
          (A)     Borrowings. Create, incur, assume, or allow to exist, directly
or indirectly, any indebtedness or liability for borrowed money (including trade
or bankers’ acceptances), letters of credit, or the deferred purchase price of
property or services (including capitalized leases), except for: (i) debt to
FCW; (ii) accounts payable to trade creditors incurred in the ordinary course of
business; and (iii) current operating liabilities (other than for borrowed
money) incurred in the ordinary course of business; (iv) debt of the Company to
Bank of America in an amount not to exceed $12,000,000.00 and all extensions,
renewals, and refinancings thereof; (v) (vi) letters of credit issued by any
bank for the account of the Company in an aggregate face

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amount not to exceed $5,000,000.00 at any one time outstanding; and
(vii) capitalized leases existing on the date hereof existing from time to time.
          (B)     Liens. Create, incur, assume, or allow to exist any mortgage,
deed of trust, pledge, lien (including the lien of an attachment, judgment, or
execution), security interest, or other encumbrance of any kind upon any of its
property, real or personal (collectively, “Liens”). The foregoing restrictions
shall not apply to: (i) Liens in favor of FCW or CoBank; (ii) Liens for taxes,
assessments, or governmental charges that are not past due; (iii) Liens and
deposits under workers’ compensation, unemployment insurance, and social
security Laws; (iv) Liens and deposits to secure the performance of bids,
tenders, contracts (other than contracts for the payment of money), and like
obligations arising in the ordinary course of business as conducted on the date
hereof; (v) Liens imposed by Law in favor of mechanics, materialmen,
warehousemen, and like persons that secure obligations that are not past due;
and (vi) easements, rights-of-way, restrictions, and other similar encumbrances
which, in the aggregate, do not materially interfere with the occupation, use,
and enjoyment of the property or assets encumbered thereby in the normal course
of its business or materially impair the value of the property subject thereto.
          (C)     Transfer of Assets. Sell, transfer, lease, or otherwise
dispose of any of its assets, except in the ordinary course of business.
          (D)     Contingent Liabilities. Assume, guarantee, become liable as a
surety, endorse, contingently agree to purchase, or otherwise be or become
liable, directly or indirectly (including, but not limited to, by means of a
maintenance agreement, an asset or stock purchase agreement, or any other
agreement designed to ensure any creditor against loss), for or on account of
the obligation of any person or entity, except by the endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of the Company’s business.
          (E)     Change in Business. Engage in any business activities or
operations substantially different from or unrelated to the Company’s present
business activities or operations.
     SECTION 17.     Financial Covenants. Unless otherwise agreed to in writing,
while this Line of Credit Agreement is in effect:
          (A)     Working Capital. The Company will maintain, on a consolidated
basis, current assets in excess of current liabilities of at least Fifteen
Million Dollars ($15,000,000), measured on a quarterly basis.
          (B)     Tangible Net Worth. The Company will maintain, on a
consolidated basis, a “Tangible Net Worth” equal to at least Thirty-Two Million
Five Hundred Thousand Dollars ($32,500,000.00), measured on a quarterly basis.
“Tangible Net Worth” means the value of total assets (including leaseholds and
leasehold improvements and reserves against assets but excluding goodwill,
patents, trademarks, trade names, organization expense, unamortized debt
discount and expense, capitalized or deferred research and development costs,
deferred

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marketing expenses, and other like intangibles, and monies due from affiliates,
officers, directors, employees, shareholders, members or managers) less total
liabilities, including but not limited to accrued and deferred income taxes, but
excluding the non-current portion of Subordinated Liabilities. “Subordinated
Liabilities” means liabilities subordinated to the Borrower’s obligations to FCW
in a manner acceptable to FCW in its sole discretion.
          (C)     EBITDA. The Company will maintain an “EBITDA” of at least
Seven Million Five Hundred Thousand Dollars ($7,500,000.00). “EBITDA” means net
income, less income or plus loss from discontinued operations and extraordinary
items, plus income taxes, plus interest expense, plus depreciation, depletion,
and amortization. This covenant will be calculated at the end of each reporting
period for which FCW requires financial statements, using the results of the
twelve-month period ending with that reporting period. The current portion of
long-term liabilities will be measured as of the last day of the calculation
period.
     SECTION 18.     Events of Default. Each of the following shall constitute
an “Event of Default” under this Line of Credit Agreement:
          (A)     Payment Default. The Company should fail to make any payment
when due.
          (B)     Representations and Warranties. Any representation or warranty
made or deemed made by the Company herein or in the Note, application,
agreement, certificate, or other document related to or furnished in connection
with this Line of Credit Agreement or the Note, shall prove to have been false
or misleading in any material respect on or as of the date made or deemed made.
          (C)     Certain Affirmative Covenants. The Company or, to the extent
required hereunder, any Subsidiary should fail to perform or comply with
Sections 15(A) through 15(G)(2), and 15(G)(6) and such failure continues for
15 days after written notice thereof shall have been delivered by FCW to the
Company.
          (D)     Other Covenants and Agreements. The Company or, to the extent
required hereunder, any Subsidiary should fail to perform or comply with any
other covenant or agreement contained herein or in any other Loan Document or
shall use the proceeds of any loan for an unauthorized purpose.
          (E)     Cross-Default. The Company should, after any applicable grace
period, breach or be in default under the terms of any other agreement between
the Company and FCW.
          (F)     Other Indebtedness. The Company or any Subsidiary should fail
to pay when due any indebtedness to any other person or entity for borrowed
money or any long-term obligation for the deferred purchase price of property
(including any capitalized lease), or any other event occurs which, under any
agreement or instrument relating to such indebtedness or obligation, has the
effect of accelerating or permitting the acceleration of such indebtedness or
obligation, whether or not such indebtedness or obligation is actually
accelerated or the right to accelerate is conditioned on the giving of notice,
the passage of time, or otherwise.

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          (G)     Judgments. A judgment, decree, or order for the payment of
money shall be rendered against the Company or any Subsidiary and either:
(i) enforcement proceedings shall have been commenced; (ii) a Lien prohibited
under Section 10(B) hereof shall have been obtained; or (iii) such judgment,
decree, or order shall continue unsatisfied and in effect for a period of 20
consecutive days without being vacated, discharged, satisfied, or stayed pending
appeal.
          (H)     Insolvency. The Company or any Subsidiary shall: (i) become
insolvent or shall generally not, or shall be unable to, or shall admit in
writing its inability to, pay its debts as they come due; or (ii) suspend its
business operations or a material part thereof or make an assignment for the
benefit of creditors; or (iii) apply for, consent to, or acquiesce in the
appointment of a trustee, receiver, or other custodian for it or any of its
property or, in the absence of such application, consent, or acquiescence, a
trustee, receiver, or other custodian is so appointed; or (iv) commence or have
commenced against it any proceeding under any bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution, or liquidation Law of any
jurisdiction.
          (I)     Material Adverse Change. Any material adverse change occurs,
as reasonably determined by FCW, in the Company’s financial condition, results
of operation, or ability to perform its obligations hereunder or under any
instrument or document contemplated hereby.
     SECTION 19.     Remedies. Upon the occurrence and during the continuance of
an Event of Default or any Potential Default, FCW shall have no obligation to
continue to extend credit to the Company and may discontinue doing so at any
time without prior notice. For all purposes hereof, the term “Potential Default”
means the occurrence of any event which, with the passage of time or the giving
of notice or both would become an Event of Default. In addition, upon the
occurrence and during the continuance of any Event of Default, FCW may, upon
notice to the Company, terminate any commitment and declare the entire unpaid
principal balance of the loans, all accrued interest thereon, and all other
amounts payable under this Line of Credit Agreement, all Supplements, and the
other Loan Documents to be immediately due and payable. Upon such a declaration,
the unpaid principal balance of the loans and all such other amounts shall
become immediately due and payable, without protest, presentment, demand, or
further notice of any kind, all of which are hereby expressly waived by the
Company. In addition, upon such an acceleration:
          (A)     Enforcement. FCW may proceed to protect, exercise, and enforce
such rights and remedies as may be provided by this Line of Credit Agreement,
any other Loan Document or under Law. Each and every one of such rights and
remedies shall be cumulative and may be exercised from time to time, and no
failure on the part of FCW to exercise, and no delay in exercising, any right or
remedy shall operate as a waiver thereof, and no single or partial exercise of
any right or remedy shall preclude any other or future exercise thereof, or the
exercise of any other right. Without limiting the foregoing, FCW may hold and/or
set off and apply against the

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Company’s obligations to FCW any cash collateral held by FCW, or any balances
held by FCW for the Company’s account (whether or not such balances are then
due).
          (B)     Application of Funds. CoBank may apply all payments received
by it to the Company’s obligations to FCW in such order and manner as FCW may
elect in its sole discretion.
          In addition to the rights and remedies set forth above: (i) if the
Company fails to make any payment when due, then at FCW’s option in each
instance, such payment shall bear interest from the date due to the date paid at
2% per annum in excess of the rate(s) of interest that would otherwise be in
effect on that loan; and (ii) after the maturity of any loan (whether as a
result of acceleration or otherwise), the unpaid principal balance of such loan
(including without limitation, principal, interest, fees and expenses) shall
automatically bear interest at 2% per annum in excess of the rate(s) of interest
that would otherwise be in effect on that loan. All interest provided for herein
shall be payable on demand and shall be calculated on the basis of a year
consisting of 365 days.
     SECTION 20.     Broken Funding Surcharge. Notwithstanding any provision
contained in the Note giving the Company the right to repay any loan prior to
the date it would otherwise be due and payable, the Company agrees to provide
three Business Days’ prior written notice for any prepayment of a fixed rate
balance and that in the event it repays any fixed rate balance prior to its
scheduled due date or prior to the last day of the fixed rate period applicable
thereto (whether such payment is made voluntarily, as a result of an
acceleration, or otherwise), the Company will pay to CoBank a surcharge in an
amount equal to the greater of: (i) an amount which would result in FCW being
made whole (on a present value basis) for the actual or imputed funding losses
incurred by FCW as a result thereof; or (ii) $300.00. Notwithstanding the
foregoing, in the event any fixed rate balance is repaid as a result of the
Company refinancing the loan with another lender or by other means, then in lieu
of the foregoing, the Company shall pay to CoBank a surcharge in an amount
sufficient (on a present value basis) to enable FCW to maintain the yield it
would have earned during the fixed rate period on the amount repaid. Such
surcharges will be calculated in accordance with methodology established by FCW
(a copy of which will be made available to the Company upon request).
     SECTION 21.     Complete Agreement, Amendments. This Line of Credit
Agreement, the Note, and all other instruments and documents contemplated hereby
and thereby, are intended by the parties to be a complete and final expression
of their agreement. No amendment, modification, or waiver of any provision
hereof or thereof, and no consent to any departure by the Company herefrom or
therefrom, shall be effective unless approved by FCW and contained in a writing
signed by or on behalf of FCW, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. Additionally, any headings used in this Line of Credit Agreement are
inserted only as a matter of convenience and for reference, and in no way
define, limit or describe the scope or intent of any term or provision. As used
herein, the word “including” means “including without limitation” and/or
“including but not limited to”.

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     SECTION 22.     Applicable Law. Except to the extent governed by applicable
federal law, this Line of Credit Agreement and the Note shall be governed by and
construed in accordance with the laws of the State of California, without
reference to choice of law doctrine.
     SECTION 23.     Notices. All notices hereunder shall be in writing and
shall be deemed to be duly given upon delivery if personally delivered or sent
by telegram or facsimile transmission, or 3 days after mailing if sent by
express, certified or registered mail, to the parties at the following addresses
(or such other address for a party as shall be specified by like notice):

     
If to FCW, as follows:
  If to the Company, as follows:
 
   
Farm Credit West, PCA
  Calavo Growers, Inc.
2929 W. Main Street, Suite A
  Attn: Vice President-Finance
Visalia, CA 93291-5700
  1141-A Cummings Road     Santa Paula, CA 93060
Attention: James Neeley
  Fax No: (805) 921-3232
Fax No.: 559-627-4728
   

     SECTION 24.     Taxes and Expenses. To the extent allowed by law, the
Company agrees to pay all reasonable out-of-pocket costs and expenses (including
the fees and expenses of counsel retained by FCW) incurred by FCW in connection
with the administration, collection, and enforcement of this Line of Credit
Agreement and the other Loan Documents, including, without limitation, all costs
and expenses incurred in perfecting, maintaining, determining the priority of,
and releasing any security for the Company’s obligations to FCW, and any stamp,
intangible, transfer, or like tax payable in connection with this Line of Credit
Agreement or any other Loan Document.
     SECTION 25.     Effectiveness and Severability. This Line of Credit
Agreement shall continue in effect until: (i) all indebtedness and obligations
of the Company under this Line of Credit Agreement, the Note, and all other Loan
Documents shall have been paid or satisfied; and (ii) FCW has no commitment to
extend credit to or for the account of the Company hereunder. Any provision of
this Line of Credit Agreement or any other Loan Document which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or thereof.
     SECTION 26.     Successors and Assigns. This Line of Credit Agreement, the
Note, and the other Loan Documents shall be binding upon and inure to the
benefit of the Company and FCW and their respective successors and assigns,
except that the Company may not assign or transfer its rights or obligations
under this Line of Credit Agreement, the Note or any other Loan Document without
the prior written consent of FCW.

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     SECTION 27.     Participations. From time to time, FCW may sell to one or
more banks, financial institutions or other lenders a participation in all or a
portion of the Commitment or other extensions of credit made pursuant to this
Line of Credit Agreement. However, no such participation shall relieve FCW of
any commitment made to the Company hereunder, or any obligation FCW may have to
pay patronage due the Company from FCW under the provisions of the bylaws of FCW
and its practices and procedures related to patronage distribution. In
connection with the foregoing, FCW may disclose information concerning the
Company and its Subsidiaries to any participant or prospective participant,
provided that such participant or prospective participant agrees to keep such
information confidential. Accordingly, all interests in the Commitment that is
included in a sale of participation interests shall not be entitled to patronage
distributions. A sale of participation interest may include certain voting
rights of the participants regarding the Commitment hereunder (including without
limitation the administration, servicing and enforcement thereof). FCW agrees to
give written notification to the Company of any sale of participation interests.
          IN WITNESS WHEREOF, the parties have caused this Line of Credit
Agreement to be executed by their duly authorized officers as of the date shown
above.

              FARM CREDIT WEST, PCA   CALAVO GROWERS, INC., a California
Corporation
 
           
By:
  /s/James K. Neeley   By:   /s/ Arthur J. Bruno
 
           
 
          Arthur J. Bruno,
Title:
  Vice-President   Title:   Chief Financial Officer & Secretary
 
           
 
           
 
      By:   /s/ Scott H. Runge
 
           
 
          Scott H. Runge,
 
      Title   Treasurer