**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.**, SantaPaula, California (the “Company”).     **SECTION 1.**     **The Credit Facility.**On the terms and conditions set forth in this Line of CreditAgreement, FCW agrees to make advances to the Company during the period set forth below in anaggregate principal amount not to exceed $12,000,000.00 (the “Commitment”). The Line of CreditAgreement and Commitment is executed, delivered and accepted not in payment of but for the purposeof amending, restating and replacing the following described obligations, and renewing any unpaidbalance(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 theextent 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 participateall or a portion of the Commitment with one or more lenders, including CoBank, ACB (“CoBank”). Alladvances hereunder shall be made by CoBank as agent for FCW and all repayments by the Companyhereunder shall be made to CoBank as agent for FCW.     **SECTION 3.**     **Purpose.**The purpose of the Commitment is to finance the ongoing operating needsof the Company.     **SECTION 4.**     **Term.**The term of the Commitment shall be from the date hereof, up to andincluding February 1, 2007.     **SECTION 5.**     **Availability.**Subject to the provisions of Section 25, advances will be madeavailable on any day on which FCW, CoBank, and the Federal Reserve Banks are open for business uponthe telephonic or written request of the Company. Requests for advances must be received no laterthan 12:00 Noon, Company’s local time, on the date the advance is desired. Advances will be madeavailable by CoBank by wire transfer of immediately available funds to such account or accounts asmay be authorized by the Company. The Company shall furnish to CoBank a duly completed andexecuted copy of a CoBank Delegation and Wire and Electronic Transfer Authorization Form, andCoBank shall be entitled to rely on (and shall incur no liability to the Company in acting on) anyrequest 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 inaccordance with the following interest rate option:
 

 

Page 2               **(1)**     **7-Day LIBOR Index Rate.**At a rate (rounded upward to the nearest 1/100th% andadjusted for reserves required on “Eurocurrency Liabilities” (as hereinafter defined) for bankssubject to “FRB Regulation D” (as hereinafter defined) or required by any other federal law orregulation) per annum equal at all times to 100 basis points (1.00%) above the annual rate quotedby 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 vendorlisted on BBA’s official website on the first U.S. Banking Day (as hereinafter defined) in eachweek with such rate to change weekly on such day. The rate shall be reset automatically, withoutthe necessity of notice being provided to the Company or any other party, on the first U.S. BankingDay of each succeeding week and each change in the rate shall be applicable to all balances subjectto this option and information about the then current rate shall be made available upon telephonicrequest. For purposes hereof (a) “U.S. Banking Day” shall mean a day on which CoBank is open forbusiness, 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) “EurocurrencyLiabilities” 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, 12CFR Part 204, as amended.               **(2)**     **LIBOR.**At a fixed rate per annum equal to “LIBOR” (as hereinafter defined) plus100 basis points (1%). Under this option: (1) rates may be fixed for “Interest Periods” (ashereinafter defined) of 1, 2, 3, 6, 9 or 12 months as selected by the Company; (2) amounts may befixed in increments of $100,000.00 or multiples thereof; (3) the maximum number of fixes in placeat any one time shall be 10; and (4) rates may only be fixed on a “Banking Day” (as hereinafterdefined) on 3 Banking Days’ prior written notice. For purposes hereof: (a) “LIBOR” shall mean therate (rounded upward to the nearest sixteenth) and adjusted for reserves required on “EurocurrencyLiabilities” (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 forthe offering of U.S. dollar deposits in the London interbank market for the Interest Perioddesignated by the Company; as published by Bloomberg or another major information vendor listed onBBA’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 banksare open for business in New York City and London, England; (c) “Interest Period” shall mean aperiod commencing on the date this option is to take effect and ending on the numericallycorresponding day in the next calendar month or the month that is 2, 3, 6, 9 or 12 monthsthereafter, as the case may be; provided, however, that: (i) in the event such ending day is not aBanking Day, such period shall be extended to the next Banking Day unless such next Banking Dayfalls 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 lastBanking Day in the relevant month; (d) “Eurocurrency Liabilities” shall have meaning as set forthin “FRB Regulation D”; and (e) “FRB Regulation D” shall mean Regulation D as promulgated by theBoard of Governors of the Federal Reserve System, 12 CFR Part 204, as amended.

 

Page 3          The Company shall select the applicable rate option at the time it requests a loan hereunderand may, subject to the limitations set forth above, elect to convert balances bearing interest atthe 7-Day LIBOR Index Rate option to the LIBOR rate option. Upon the expiration of anyfixed rate period, interest shall automatically accrue at the 7-Day LIBOR Index Rateoption provided for above unless the amount fixed is repaid or fixed for an additional period inaccordance with the terms hereof. Notwithstanding the foregoing, rates may not be fixed in such amanner as to cause the Company to have to break any fixed rate balance in order to pay anyinstallment of principal. All elections provided for herein shall be made telephonically or inwriting and must be received by 12:00 Noon Company’s local time. Interest shall be calculated onthe actual number of days each loan is outstanding on the basis of a year consisting of 360 daysand shall be payable monthly in arrears by the 20th day of the following month or on such other dayin 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 payto 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 outstandingadvances plus issued and outstanding letters of credit divided by the total available amount of theCommitment), payable quarterly in arrears by the 20th day following each quarter. Such fee shallbe payable for each quarter (or portion thereof) occurring during the original or any extended termof the Commitment.     **SECTION 7.**     **Repayment and Maturity.**The unpaid principal balance of the Commitment shallmature 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 beevidenced 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, theinterest accrued thereon, and all payments made with respect thereto, and such record shall, absentproof of manifest error, be conclusive evidence of the outstanding principal and interest on theloans. All payments shall be made by wire transfer of immediately available funds, by check, or byautomated clearing house or other similar cash handling processes as specified by separateagreement between the Company and CoBank. Wire transfers shall be made to ABA No. 307088754 foradvice to and credit of CoBank (or to such other account as CoBank may direct by notice). TheCompany shall give CoBank telephonic notice no later than 12:00 Noon Company’s local time of itsintent to pay by wire and funds received after 3:00 p.m. Company’s local time shall be credited onthe next business day. Checks shall be mailed to CoBank, Department 167, Denver, Colorado80291-0167 (or to such other place as CoBank may direct by notice). Credit for payment by checkwill not be given until the later of: (a) the day on which CoBank receives immediately availablefunds; or (b) the next business day after receipt of the check all as set forth in the ServicingAgreement between Borrower, FCW, and CoBank in form attached hereto as Exhibit B.

 

Page 4     **SECTION 10.**     **Capitalization.**The Company has purchased a $1,000.00 stock investment underFCW’s capitalization plan. The Company understands that FCW’s stock is at risk and that anyreference 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 inaccordance with the provisions of FCW’s bylaws and its practices and procedures related topatronage distribution and as set forth in Section 27.     **SECTION 12.**     **Security.**The Company’s obligations under this Line of Credit Agreement and theNote shall be secured by a statutory first lien on all equity which the Company may now own orhereafter 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 tothe condition precedent that FCW receive, in form and content satisfactory to FCW, each of thefollowing:          **(A)**     **Line of Credit Agreement.**A duly executed copy of this Line of Credit Agreement and allinstruments and documents contemplated hereby.          **(B)**     **Evidence of Authority.**Such certified board resolutions, evidence of incumbency, andother evidence that FCW may require that this Line of Credit Agreement and the Note have been dulyauthorized 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 compliancewith Section 15(C) hereof          **(E)**     **Event of Default.**That no “Event of Default” (as defined in Section 18 hereof) or eventwhich with the giving of notice and/or the passage of time would become an Event of Defaulthereunder (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 dateof this Line of Credit Agreement:               (**1)**     **Compliance.**The Company and, to the extent contemplated hereunder, each “Subsidiary” (asdefined below), is in compliance with all of the terms of this Line of Credit Agreement, and noEvent of Default or Potential Default exists hereunder.

 

Page 5               **(2)**     **Subsidiaries.**The Company has the following Subsidiaries: Calavo Foods, Inc. (CFI); MauiFresh International, Inc.; Calavo de Mexico S.A. de C.V.; and Calavo Foods de Mexico S.A. deC.V. . For purposes hereof, a “Subsidiary” shall mean a corporation of which shares ofstock having ordinary voting power to elect a majority of the board of directors or other managersof such corporation are owned, directly or indirectly, by the Company.               **(3)      Conflicting Agreements.**This Line of Credit Agreement and the Note (collectively, at anytime, the “Loan Documents”), do not conflict with, or require the consent of any party to, anyother agreement to which the Company is a party or by which it or its property may be bound oraffected, and do not conflict with any provision of the Company’s bylaws, articles ofincorporation, or other organizational documents.               **(4)**     **Compliance.**The Company and, to the extent contemplated hereunder, each Subsidiary, ifany, 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 theCompany which are enforceable in accordance with their terms, except to the extent that enforcementmay be limited by applicable bankruptcy, insolvency, or similar laws affecting creditors’ rightsgenerally.     **SECTION 15.**     **Affirmative Covenants.**Unless otherwise agreed to in writing by FCW, while thisLine 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 itsexistence and good standing in the jurisdiction of its incorporation or formation; (ii) qualify andremain qualified to transact business in all jurisdictions where such qualification is required;and (iii) obtain and maintain all licenses, certificates, permits, authorizations, approvals, andthe 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, theCompany agrees to cause all persons occupying or present on any of its properties, and to causeeach Subsidiary, if any, to cause all persons occupying or present on any of its properties, tocomply in all material respects with all environmental protection Laws.          **(C)**     **Insurance.**Maintain insurance with insurance companies or associations acceptable to FCWin such amounts and covering such risks as are usually carried by companies engaged in the same orsimilar business and similarly situated, and make such increases in the type or amount of coverageas FCW may request. At FCW’s request, all policies (or such other proof of compliance with thisSubsection as may be satisfactory to FCW) shall be delivered to FCW.

 

Page 6          **(D)**     **Property Maintenance.**Maintain all of its property that is necessary to or useful in theproper 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 entrieswill be made in accordance with generally accepted accounting principles (“GAAP”) consistentlyapplied.          **(F)**     **Inspection.**Permit FCW or its agents, upon reasonable notice and during normal businesshours or at such other times as the parties may agree, to examine its properties, books, andrecords, 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 daysafter the end of each fiscal year of the Company occurring during the term hereof, annualconsolidated and consolidating financial statements of the Company and its consolidatedSubsidiaries, if any, prepared in accordance with GAAP consistently applied. Such financialstatements shall: (a) be audited by independent certified public accountants selected by theCompany and acceptable to FCW; (b) be accompanied by a report of such accountants containing anopinion 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, astatement 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 daysafter the end of each fiscal quarter, a consolidated balance sheet of the Company and itsconsolidated Subsidiaries, if any, as of the end of such quarter, a consolidated statement ofincome for the Company and its consolidated Subsidiaries, if any, for such period and for theperiod year to date, and such other interim statements as FCW may specifically request, allprepared in reasonable detail and in comparative form in accordance with GAAP consistently appliedand 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 anEvent of Default or a Potential Default.               **(4)**     **Notice of Non-Environmental Litigation.**Promptly after the commencement thereof, noticeof the commencement of all actions, suits, or proceedings before any court, arbitrator, orgovernmental department, commission, board, bureau, agency, or instrumentality affecting theCompany 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 operationsof the Company or any such Subsidiary.

 

Page 7               **(5)**     **Notice of Environmental Litigation.**Promptly after receipt thereof, notice of the receiptof all pleadings, orders, complaints, indictments, or any other communication alleging a conditionthat may require the Company or any Subsidiary to undertake or to contribute to a cleanup or otherresponse under environmental Laws, or which seek penalties, damages, injunctive relief, or criminalsanctions related to alleged violations of such Laws, or which claim personal injury or propertydamage 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 ofincorporation (or like documents), copies of all such changes, certified by the Company’sSecretary.               **(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 reasonablyrequest, including but not limited to copies of all pleadings, notices, and communications referredto in Subsections 15(G)(4) and (5) above.               **(8)**     **Financial Certificate.**Together with each set of financial statements furnished to FCWpursuant 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 forthin Section 17 hereof are required to be tested, a certificate of an officer or employee of theCompany acceptable to FCW setting forth calculations showing compliance with each of the financialcovenants that require compliance at the end of the period for which the statements are beingfurnished.          **(H)**     **Certain Organizational Changes.**Provide FCW with prior notice (and as early aspracticable) 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 agreementwill not be unreasonably withheld, while this Line of Credit Agreement is in effect, the Companywill not:          **(A)**     **Borrowings.**Create, incur, assume, or allow to exist, directly or indirectly, anyindebtedness or liability for borrowed money (including trade or bankers’ acceptances), letters ofcredit, 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 ordinarycourse 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 anamount 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

 

Page 8amount not to exceed $5,000,000.00 at any one time outstanding; and (vii) capitalized leasesexisting 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 otherencumbrance of any kind upon any of its property, real or personal (collectively, “Liens”). Theforegoing restrictions shall not apply to: (i) Liens in favor of FCW or CoBank; (ii) Liens fortaxes, assessments, or governmental charges that are not past due; (iii) Liens and deposits underworkers’ compensation, unemployment insurance, and social security Laws; (iv) Liens and deposits tosecure 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 thatsecure obligations that are not past due; and (vi) easements, rights-of-way, restrictions, andother similar encumbrances which, in the aggregate, do not materially interfere with theoccupation, use, and enjoyment of the property or assets encumbered thereby in the normal course ofits 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 purchaseagreement, or any other agreement designed to ensure any creditor against loss), for or on accountof the obligation of any person or entity, except by the endorsement of negotiable instruments fordeposit 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 substantiallydifferent 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 ofCredit Agreement is in effect:          **(A)**     **Working Capital.**The Company will maintain, on a consolidated basis, current assets inexcess of current liabilities of at least Fifteen Million Dollars ($15,000,000), measured on aquarterly basis.          **(B)**     **Tangible Net Worth.**The Company will maintain, on a consolidated basis, a “Tangible NetWorth” 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 (includingleaseholds and leasehold improvements and reserves against assets but excluding goodwill, patents,trademarks, trade names, organization expense, unamortized debt discount and expense, capitalizedor deferred research and development costs, deferred

 

Page 9marketing expenses, and other like intangibles, and monies due from affiliates, officers,directors, employees, shareholders, members or managers) less total liabilities, includingbut not limited to accrued and deferred income taxes, but excluding the non-current portion ofSubordinated Liabilities. “Subordinated Liabilities” means liabilities subordinated to theBorrower’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 HundredThousand Dollars ($7,500,000.00). “EBITDA” means net income, less income or plus loss fromdiscontinued operations and extraordinary items, plus income taxes, plus interest expense,plus depreciation, depletion, and amortization. This covenant will be calculated at the end ofeach reporting period for which FCW requires financial statements, using the results of thetwelve-month period ending with that reporting period. The current portion of long-term liabilitieswill 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 theCompany herein or in the Note, application, agreement, certificate, or other document related to orfurnished in connection with this Line of Credit Agreement or the Note, shall prove to have beenfalse 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, anySubsidiary should fail to perform or comply with Sections 15(A) through 15(G)(2), and 15(G)(6) andsuch failure continues for 15 days after written notice thereof shall have been delivered by FCW tothe Company.          **(D)**     **Other Covenants and Agreements.**The Company or, to the extent required hereunder, anySubsidiary should fail to perform or comply with any other covenant or agreement contained hereinor 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 indefault 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 anyindebtedness to any other person or entity for borrowed money or any long-term obligation for thedeferred purchase price of property (including any capitalized lease), or any other event occurswhich, under any agreement or instrument relating to such indebtedness or obligation, has theeffect of accelerating or permitting the acceleration of such indebtedness or obligation, whetheror not such indebtedness or obligation is actually accelerated or the right to accelerate isconditioned on the giving of notice, the passage of time, or otherwise.

 

Page 10          **(G)**     **Judgments.**A judgment, decree, or order for the payment of money shall be renderedagainst the Company or any Subsidiary and either: (i) enforcement proceedings shall have beencommenced; (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 20consecutive days without being vacated, discharged, satisfied, or stayed pending appeal.          **(H)**     **Insolvency.**The Company or any Subsidiary shall: (i) become insolvent or shall generallynot, or shall be unable to, or shall admit in writing its inability to, pay its debts as they comedue; or (ii) suspend its business operations or a material part thereof or make an assignment forthe benefit of creditors; or (iii) apply for, consent to, or acquiesce in the appointment of atrustee, receiver, or other custodian for it or any of its property or, in the absence of suchapplication, 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 byFCW, in the Company’s financial condition, results of operation, or ability to perform itsobligations hereunder or under any instrument or document contemplated hereby.     **SECTION 19.**     **Remedies.**Upon the occurrence and during the continuance of an Event of Defaultor any Potential Default, FCW shall have no obligation to continue to extend credit to the Companyand 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 givingof notice or both would become an Event of Default. In addition, upon the occurrence and duringthe continuance of any Event of Default, FCW may, upon notice to the Company, terminate anycommitment and declare the entire unpaid principal balance of the loans, all accrued interestthereon, and all other amounts payable under this Line of Credit Agreement, all Supplements, andthe other Loan Documents to be immediately due and payable. Upon such a declaration, the unpaidprincipal 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 herebyexpressly waived by the Company. In addition, upon such an acceleration:          **(A)**     **Enforcement.**FCW may proceed to protect, exercise, and enforce such rights and remediesas may be provided by this Line of Credit Agreement, any other Loan Document or under Law. Eachand every one of such rights and remedies shall be cumulative and may be exercised from time totime, and no failure on the part of FCW to exercise, and no delay in exercising, any right orremedy shall operate as a waiver thereof, and no single or partial exercise of any right or remedyshall preclude any other or future exercise thereof, or the exercise of any other right. Withoutlimiting the foregoing, FCW may hold and/or set off and apply against the

 

Page 11Company’s obligations to FCW any cash collateral held by FCW, or any balances held by FCW for theCompany’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’sobligations 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 anypayment when due, then at FCW’s option in each instance, such payment shall bear interest from thedate due to the date paid at 2% per annum in excess of the rate(s) of interest that would otherwisebe in effect on that loan; and (ii) after the maturity of any loan (whether as a result ofacceleration or otherwise), the unpaid principal balance of such loan (including withoutlimitation, principal, interest, fees and expenses) shall automatically bear interest at 2% perannum in excess of the rate(s) of interest that would otherwise be in effect on that loan. Allinterest provided for herein shall be payable on demand and shall be calculated on the basis of ayear consisting of 365 days.     **SECTION 20.**     **Broken Funding Surcharge.**Notwithstanding any provision contained in the Notegiving the Company the right to repay any loan prior to the date it would otherwise be due andpayable, the Company agrees to provide three Business Days’ prior written notice for any prepaymentof a fixed rate balance and that in the event it repays any fixed rate balance prior to itsscheduled due date or prior to the last day of the fixed rate period applicable thereto (whethersuch payment is made voluntarily, as a result of an acceleration, or otherwise), the Company willpay to CoBank a surcharge in an amount equal to the greater of: (i) an amount which would resultin FCW being made whole (on a present value basis) for the actual or imputed funding lossesincurred by FCW as a result thereof; or (ii) $300.00. Notwithstanding the foregoing, in the eventany fixed rate balance is repaid as a result of the Company refinancing the loan with anotherlender or by other means, then in lieu of the foregoing, the Company shall pay to CoBank asurcharge in an amount sufficient (on a present value basis) to enable FCW to maintain the yield itwould have earned during the fixed rate period on the amount repaid. Such surcharges will becalculated in accordance with methodology established by FCW (a copy of which will be madeavailable to the Company upon request).     **SECTION 21.**     **Complete Agreement, Amendments.**This Line of Credit Agreement, the Note, and allother instruments and documents contemplated hereby and thereby, are intended by the parties to bea complete and final expression of their agreement. No amendment, modification, or waiver of anyprovision 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 thespecific purpose for which given. Additionally, any headings used in this Line of Credit Agreementare inserted only as a matter of convenience and for reference, and in no way define, limit ordescribe 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”.

 

Page 12     **SECTION 22.**     **Applicable Law.**Except to the extent governed by applicable federal law, thisLine of Credit Agreement and the Note shall be governed by and construed in accordance with thelaws 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 dulygiven upon delivery if personally delivered or sent by telegram or facsimile transmission, or 3days after mailing if sent by express, certified or registered mail, to the parties at thefollowing 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-FinanceVisalia, CA 93291-5700 1141-A Cummings Road  Santa Paula, CA 93060Attention: James Neeley Fax No: (805) 921-3232Fax No.: 559-627-4728       **SECTION 24.**     **Taxes and Expenses.**To the extent allowed by law, the Company agrees to pay allreasonable out-of-pocket costs and expenses (including the fees and expenses of counsel retained byFCW) incurred by FCW in connection with the administration, collection, and enforcement of thisLine of Credit Agreement and the other Loan Documents, including, without limitation, all costs andexpenses incurred in perfecting, maintaining, determining the priority of, and releasing anysecurity for the Company’s obligations to FCW, and any stamp, intangible, transfer, or like taxpayable 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 ineffect until: (i) all indebtedness and obligations of the Company under this Line of CreditAgreement, the Note, and all other Loan Documents shall have been paid or satisfied; and (ii) FCWhas no commitment to extend credit to or for the account of the Company hereunder. Any provisionof this Line of Credit Agreement or any other Loan Document which is prohibited or unenforceable inany jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibitionor unenforceability without invalidating the remaining provisions hereof or thereof.     **SECTION 26.**     **Successors and Assigns.**This Line of Credit Agreement, the Note, and the otherLoan Documents shall be binding upon and inure to the benefit of the Company and FCW and theirrespective successors and assigns, except that the Company may not assign or transfer its rights orobligations under this Line of Credit Agreement, the Note or any other Loan Document without theprior written consent of FCW.

 

Page 13     **SECTION 27.**     **Participations.**From time to time, FCW may sell to one or more banks, financialinstitutions or other lenders a participation in all or a portion of the Commitment or otherextensions of credit made pursuant to this Line of Credit Agreement. However, no suchparticipation shall relieve FCW of any commitment made to the Company hereunder, or any obligationFCW may have to pay patronage due the Company from FCW under the provisions of the bylaws of FCWand its practices and procedures related to patronage distribution. In connection with theforegoing, FCW may disclose information concerning the Company and its Subsidiaries to anyparticipant or prospective participant, provided that such participant or prospective participantagrees to keep such information confidential. Accordingly, all interests in the Commitment that isincluded in a sale of participation interests shall not be entitled to patronage distributions. Asale of participation interest may include certain voting rights of the participants regarding theCommitment hereunder (including without limitation the administration, servicing and enforcementthereof). FCW agrees to give written notification to the Company of any sale of participationinterests.          **IN WITNESS WHEREOF**, the parties have caused this Line of Credit Agreement to be executed bytheir duly authorized officers as of the date shown above.       **FARM CREDIT WEST, PCA** **CALAVO GROWERS, INC., a CaliforniaCorporation**       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