exv10w14



 





Exhibit 10.14




Loan No. 3789055-101




LINE OF CREDIT AGREEMENT




     THIS LINE OF CREDIT AGREEMENT (''Line of Credit Agreement”) is entered
into as of October 5, 2006, 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
August 17, 2005, 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, 2010.



     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:



 









 









			
	LINE OF CREDIT AGREEMENT NO. 3789055-101
	 	Page 2






     (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



 







 





			
	LINE OF CREDIT AGREEMENT NO. 3789055-101
	 	Page 3






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.



     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, 2010 (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




 









 








			
	LINE OF CREDIT AGREEMENT NO. 3789055-101
	 	Page 4





the check all as set forth in the Servicing Agreement between
Borrower, FCW, and CoBank in form attached hereto as Exhibit B.




     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:




 









 








			
	LINE OF CREDIT AGREEMENT NO. 3789055-101
	 	Page 5






     (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.



     (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.



 









 





			
	LINE OF CREDIT AGREEMENT NO. 3789055-101
	 	Page 6






     (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.



     (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.




 









 








			
	LINE OF CREDIT AGREEMENT NO. 3789055-101
	 	Page 7






          (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.




          (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)(l), 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:




 









 








			
	LINE OF CREDIT AGREEMENT NO. 3789055-101
	 	Page 8






          (A) Borrowings. Create, incur, assume, or allow to exist, directly
or indirectly, any
indebtedness or liability for borrowed money (including trade or barkers’
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
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:




 









 








			
	LINE OF CREDIT AGREEMENT NO. 3789055-101
	 	Page 9






          (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
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 Defaultt’ 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
l5(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.





 










 





			
	LINE OF CREDIT AGREEMENT NO. 3789055-101
	 	Page 10






          (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.




          (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



 









 





			
	LINE OF CREDIT AGREEMENT NO. 3789055-101
	 	Page 11





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
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).




 









 








			
	LINE OF CREDIT AGREEMENT NO. 3789055-101
	 	Page 12






     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”.



     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



 









 





			
	LINE OF CREDIT AGREEMENT NO. 3789055-101
	 	Page 13





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.



     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 Neeley
	 	By:
	 	/s/ Arthur J. Bruno	 	 	 	 
	 

	 	 
	 	 	 	 Arthur J. Bruno	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Title:

	 	Sr. Vice President
 

	 	Title:
	 	Chief Operating Officer, Chief

Financial Officer & Corporate

Secretary	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Scott H. Runge	 	 	 	 
	 

	 	 	 	 	 	Scott H. Runge	 	 	 	 
	 

	 	 	 	Title
	 	Treasurer	 	 	 	 







 









 








PROMISSORY
NOTE




			
	$12,000,000.00
	 	October 5, 2006






     
FOR VALUE RECEIVED, on the Maturity Date as set forth in that certain
Line of Credit Agreement dated October 5, 2006, or in any amendments
thereto (the “Line of Credit Agreement”), the undersigned
promises to pay to the order of Farm Credit West, PCA (the “Payee”), or
order, at the place and in the manner set forth in the Line of Credit
Agreement, the principal amount of TWELVE MILLION DOLLARS
($12,000,000.00). The undersigned promises to pay interest on the
principal amount hereof remaining unpaid from time to time from the date
hereon until the date of payment in full, payable as provided below under
“Repayment Terms”.



     
This note is given for advances to be made by Payee to the
undersigned from time to time in accordance with the terms and conditions
of the Line of Credit Agreement, all the terms and conditions of which are
incorporated herein by reference. Advances, accrued interest, and payments
shall be posted by the Payee upon an appropriate accounting record, shall
be prima facie evidence as to all such amounts and shall be binding on the
undersigned absent manifest error. The total of such advances may not
exceed the face amount of this note. This note 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 August 27, 2006, in the principal
amount of $12,000,000.00. Furthermore, this note also evidences an
additional loan advance(s) to the extent the note under exceeds the renewed
unpaid balance(s) referred to above.



     Repayment
Terms: The undersigned shall pay to Payee, Thirty-nine (39)
monthly interest only payments, in the amount billed, beginning on
November 01, 2006; and One (1) installment of interest in the amount billed
plus principal of any amount necessary to pay the note in full on
February 1, 2010. Payments, other than those required as specified in this Section
or in the Line of Credit Agreement, may be made at any time and in any
amount during the term of this note, unless limited or prohibited herein
or unless otherwise required by FCW in writing. This note is due and
payable in full on February 1, 2010 (“Maturity Date”), at which time the
undersigned shall pay the unpaid principal balance and all accrued
interest in full. Any amount of principal hereof which is not paid when
due, whether at stated maturity, by acceleration or otherwise, shall bear
interest from the date when due until said principal is paid in full,
payable on demand, at a rate per annum set forth in the Line of Credit
Agreement.



     The makers or endorsers hereof hereby waive presentment for payment,
demand, protest, and notice of dishonor and nonpayment of this note, and
all defenses on the ground of delay or of any extension of time for the
payment hereof which may be hereafter given by the holder or holders hereof
to them or either of them or to anyone who has assumed the payment of this
note, and it is specifically agreed that the obligations of said makers or
endorsers shall not be in anyway affected or altered to the prejudice of
the holder or holders hereof by reason of the assumption of payment of the
same by any other person or entity.



     The undersigned hereby promises to pay all costs and expenses of any
rightful holder hereof incurred in collecting the undersigned’s
obligations hereunder or in enforcing or attempting to enforce any of such
holder’s rights hereunder, including reasonable attorneys’ fees and
disbursements, whether or not an action is filed in connection therewith.




 









 








Page 2




     
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF CALIFORNIA. REPRESENTATIVES OF FCW ARE NOT
AUTHORIZED TO MAKE ANY ORAL AGREEMENTS OR ASSURANCES. DO NOT SIGN THIS NOTE
IF YOU BELIEVE THAT THERE ARE ANY AGREEMENTS OR UNDERSTANDING BETWEEN YOU AND
FCW THAT ARE NOT SET FORTH IN WRITING IN THIS NOTE, THE LINE OF CREDIT
AGREEMENT OR OTHER LOAN DOCUMENTS EVIDENCING THE COMMITMENT.



	 	 	 	 	 
	 	CALAVO GROWERS, INC.

 	 
	 	By	 	/s/ Arthur J. Bruno	 
	 	 	 	Arthur J. Bruno,	 
	 	 	 	Chief Operating Officer, Chief
Financial

Officer & Corporate Secretary 	 
	 
	 
	 	By	 	/s/ Scott H. Runge	 
	 	 	 	Scott H. Runge, Treasurer	 
	 	 	 
	 



INDORSEMENT —
The within Note is hereby indorsed by the payee named
in the body of said Note as if the name of the payee were actually executed
under the indorsement.





PAY TO THE ORDER OF U.S. AgBANK, FCB, Wichita, Kansas





 









 








EXHIBIT A




PROMISSORY NOTE




			
	$12,000,000.00
	 	October 5, 2006






     FOR VALUE RECEIVED,
on the Maturity Date as set forth in that certain Line
of Credit Agreement dated October 5, 2006, or in any amendments thereto (the
“Line of Credit Agreement”), the undersigned promises to pay to the order of
Farm Credit West, PCA (the “Payee”), or order, at the place and in
the manner set forth in the Line of Credit Agreement, the principal amount of
TWELVE MILLION DOLLARS ($12,000,000.00). The undersigned promises to pay
interest on the principal amount hereof remaining unpaid from time to
time from the date hereon until the date of payment in full, payable as provided below
under “Repayment Terms”.



     This note is given for advances to be made by Payee to the undersigned
from time to time in accordance with the terms and conditions of the Line of
Credit Agreement, all the terms and conditions of which are incorporated
herein by reference. Advances, accrued interest, and payments shall be posted
by the Payee upon an appropriate accounting record, shall be prima facie
evidence as to all such amounts and shall be binding on the undersigned
absent manifest error. The total of such advances may not exceed the face
amount of this note. This note 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 August 17, 2005, in the principal amount of
$12,000,000.00. Furthermore, this note also evidences an additional loan
advance(s) to the extent the note under exceeds the renewed unpaid balance(s)
referred to above.



     Repayment
Terms: The undersigned shall, pay to Payee, Thirty-nine (39)
monthly interest-only payments, in the amount billed, beginning on November
01, 2006; and One (1) installment of interest in the amount billed plus
principal of any amount necessary to pay the note in full on February 1,
2010. Payments, other than those required as specified in this Section or in
the Line of Credit Agreement, may be made at any time and in any amount
during the term of this note, unless limited or prohibited herein or unless
otherwise required by FCW in writing. This note is due and payable in full on
February 1, 2010 (“Maturity Date”), at which time the undersigned shall pay
the unpaid principal balance and all accrued interest in full. Any amount of
principal hereof which is not paid when due, whether at stated maturity, by
acceleration or otherwise, shall bear interest from the date when due until
said principal is paid in full, payable on demand, at a rate per annum set
forth in the Line of Credit Agreement.



     The
makers or endorsers hereof hereby waive presentment for payment,
demand, protest, and notice of dishonor and nonpayment of this note, and all
defenses on the ground of delay or of any extension of time for the payment
hereof which may be hereafter given by the holder or holders hereof to them
or either of them or to anyone who has assumed the payment of this note, and
it is specifically agreed that the obligations of said makers or endorsers
shall not be in anyway affected or altered to the prejudice of the holder or
holders hereof by reason of the assumption of payment of the same by any
other person or entity.



     The undersigned hereby promises to pay all costs and expenses of any
rightful holder hereof incurred in collecting the undersigned’s obligations
hereunder or in enforcing or attempting to enforce any of such holder’s
rights hereunder, including reasonable attorneys’ fees and disbursements,
whether or not an action is filed in connection therewith.



 









 





Page 2




THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF CALIFORNIA. REPRESENTATIVES OF FCW ARE NOT
AUTHORIZED TO MAKE ANY ORAL AGREEMENTS OR ASSURANCES. DO NOT SIGN THIS NOTE
IF YOU BELIEVE THAT THERE ARE ANY AGREEMENTS OR UNDERSTANDING BETWEEN YOU
AND FCW THAT ARE NOT SET FORTH IN WRITING IN THIS NOTE, THE LINE OF CREDIT
AGREEMENT OR OTHER LOAN DOCUMENTS EVIDENCING THE COMMITMENT.




INDORSEMENT — The within Note is hereby indorsed by the payee named in the body
of said Note as if the name of the payee were actually executed under the
indorsement.



PAY TO THE ORDER OF U.S. AgBANK, FCB, Wichita, Kansas





 









 








EXHIBIT B




SERVICING AGREEMENT




October 5, 2006



Pursuant to Section 9 of the Line
of Credit Agreement dated October 5, 2006
(“Line of Credit Agreement”) between Farm Credit West, PCA and CALAVO
GROWERS, Inc., a California Corporation, the undersigns acknowledges and
confirms the agreement to have CoBank, ACB perform the services as described
below:



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 Calavo Growers
(“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 pm. 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.




	 	 	 	 	 	 	 	 	 	 	 
	Farm Credit West, PCA	 	CALAVO GROWERS, INC.
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ James K. Neeley
	 	By:
	 	 /s/ Arthur Bruno	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	James K. Neeley, Sr. Vice President	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Scott Runge	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	CoBank, ACB	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Ed Nishio
	 	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	Edward H. Nishio, V.P.