Document:

exv10w1

 

Exhibit 10.1

Loan No. 3789055-101

TERM REVOLVING CREDIT AGREEMENT

          THIS TERM REVOLVING CREDIT AGREEMENT (“Agreement”) is entered into as of June 7, 2007,
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 Agreement, FCW
agrees to make advances to the Company during the period set forth below in an aggregate principal
amount not to exceed $20,000,000.00 (the “Commitment”). The 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 February 7, 2007, in the principal amount of $15,000,000.00. Furthermore, the Commitment
also evidences an additional loan advance(s) to the extent the Commitment under this 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 purchase and
installation of capital items and other corporate needs of the Company.

     SECTION 4. Term. The term of the Commitment shall be from the date hereof, up to and
including February 1, 2012.

     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, 12, 24, 36 or 48 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, 12, 24, 36 or 48 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

 

 

	 	 	 
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	 	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.

          (3) Fixed Rate. At a fixed rate per annum to be quoted by FCW and CoBank in its sole
discretion in each instance. Under this option, rates may be fixed on such balances and for such
periods, as may be agreeable to FCW and CoBank in its sole discretion in each instance, provided
that: (1) the minimum fixed period shall be 1 years; (2) amounts may be fixed in increments of
$100,000.00 or multiples thereof; and (3) the maximum number of fixes in place at any one time
shall be 10.

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
variable rate option to one of the fixed rate options. Upon the expiration of any fixed rate
period, interest shall automatically accrue at the variable 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 CoBank 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, 2012 (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

 

 

	 	 	 
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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.

     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 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 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) Agreement. A duly executed copy of this 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 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

 

 

	 	 	 
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          (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) Agreement. The Company represents and warrants to FCW that as of the date of this
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 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 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
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”).

 

 

	 	 	 
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          (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.

          (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

 

 

	 	 	 
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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.

               (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).

 

 

	 	 	 
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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 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 $10,000,000.00 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.

 

 

	 	 	 
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          (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
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 beginning January 31, 2008

          (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.

     SECTION 18. Events of Default. Each of the following shall constitute an “Event of Default”
under this 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 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

 

 

	 	 	 
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	AGREEMENT NO. 3789055-101

	 	Page 10

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.

          (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. Material Adverse
Change means any event, occurrence or circumstance that has a material negative effect on (i) the
business, operations, property, financial condition or prospects of the Company, or (ii) the
validity or enforcement of any of the Loan Documents or the rights or

 

 

	 	 	 
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remedies of the Lenders hereunder, or (iii) the ability of the Company to perform its
obligations under any of the Loan Documents.

     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 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 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

 

 

	 	 	 
	Calavo Growers, Inc.
	 	 
	AGREEMENT NO. 3789055-101

	 	Page 12

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 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 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
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
	 	 

 

 

	 	 	 
	Calavo Growers, Inc.
	 	 
	AGREEMENT NO. 3789055-101

	 	Page 13

     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 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 Agreement or any other Loan Document.

     SECTION 25. Effectiveness and Severability. This Agreement shall continue in effect until:
(i) all indebtedness and obligations of the Company under this 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 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 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 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 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 Agreement to be executed by their duly
authorized officers as of the date shown above.

 

 

	 	 	 
	Calavo Growers, Inc.
	 	 
	AGREEMENT NO. 3789055-101

	 	Page 14

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	FARM CREDIT WEST, PCA	 	 	 	CALAVO GROWERS, INC., a California Corporation	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	/s/ James Neeley	 	 	 	By:	 	/s/ Arthur J. Bruno	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 	James Neeley	 	 	 	 	 	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	 	 

 

 

	 	 	 
	Calavo Growers, Inc.

	 	Agreement No. 3789055-101

EXHIBIT A

PROMISSORY NOTE

$20,000,000.00

June 7, 2007

          FOR VALUE RECEIVED, on the Maturity Date as set forth in that certain Term Revolving Credit
Agreement dated June 7, 2007, or in any amendments thereto (the “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 Agreement, the principal amount of TWENTY MILLION DOLLARS
($20,000,000.00). 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 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 February 7, 2007, in
the principal amount of $15,000,000.00. Furthermore, this note also evidences an additional loan
advance(s) to the extent the note exceeds the renewed unpaid balance(s) last referred to above.

          Repayment Terms: The undersigned shall pay to Payee, Fifty-five (55) monthly interest only
payments, in the amount billed, beginning on July 01, 2007; 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,
2012. Payments, other than those required as specified in this Section or in the 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, 2012 (“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 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

 

 

	 	 	 
	Calavo Growers, Inc.

	 	Agreement No. 3789055-101
	 

	 	Page 2

enforce any of such holder’s rights hereunder, including reasonable attorneys’ fees and
disbursements, whether or not an action is filed in connection therewith.

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 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

 

 

	 	 	 
	Calavo Growers, Inc.

	 	Agreement No. 3789055-101

EXHIBIT B 

SERVICING AGREEMENT

June 7, 2007

Pursuant to Section 9 of the Term Revolving Credit Agreement dated June 7, 2007
(“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 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.

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

	 	/s/ James K. Neeley
 

James K. Neeley, Sr. Vice
President
	 	 	 	By:
	 	/s/ Arthur J. Bruno
 

	 	 
	 

	 	 	 	 	 	By:
	 	/s/ Scott H. Runge
 

	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	CoBank, ACB	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Edward Nishioexv4w3

 

Exhibit 4.3

SPECTRA ENERGY PARTNERS, LP

PHANTOM UNIT AWARD AGREEMENT

Grantee: __________________

[Note: This form of Agreement must be modified, as necessary, for each individual grant of
Phantom Units. Certain terms may be added or deleted as appropriate to customize the Agreement for
a particular Grantee.]

     1. Grant of Phantom Units with DERs. As of the Grant Date (identified in Section
11 below), Spectra Energy Partners, GP, LLC (the “Company”), hereby grants ___
(___) Phantom Units (“Phantom Units”) and tandem Distribution Equivalent Rights (“DERs”) to the
Grantee identified above, subject to the terms and conditions of this agreement (the “Agreement”)
and the Spectra Energy Partners, LP Long-Term Incentive Plan (the “Plan”). The Plan is hereby
incorporated in its entirety into this Agreement by reference. This Agreement is an Award
Agreement as described in the Plan.

     2. Definitions. All capitalized terms used herein shall have the meanings set forth
in the Plan unless otherwise specifically defined herein.

     3. Phantom Unit Agreement Term. This Agreement shall commence on the Grant Date
(identified in Section 11) and terminate without further action on the date that all the
Phantom Units under the Agreement are either fully paid, expire, or are forfeited, in accordance
with the terms and conditions of the Plan and the Agreement.

     4. Fair Market Value per Phantom Unit. The Fair Market Value (“FMV”) of a Phantom
Unit is determined on the Vesting Date (as defined in Section 11). The FMV of each Phantom
Unit on its Vesting Date is equal to the FMV of one Common Unit of the Partnership (“Unit”). All
determinations of FMV shall be made in accordance with the terms of the Plan.

     5. Distribution Equivalent Rights. Payments with respect to any DER subject to this
Agreement shall be credited by the Company to a bookkeeping account in the Grantee’s name as soon
as practicable each time that cash distributions are made by the Partnership with respect to Units
before the DER expires hereunder. Grantee shall be entitled to payment for the DERs credited to the
bookkeeping account in a cash lump sum payment at the same time that payment is made for the
related Phantom Unit in accordance with Section 8.

     6. Vesting. Subject to Section 7, all the Phantom Units subject to this
Agreement shall vest in accordance with the Vesting Schedule set forth in Section 11.

     7. Termination of Employment.

     7.1 Termination of Employment due to Cause. In the event of termination of the Grantee’s
Employment for Cause, all of the vested (to the extent not already paid) and non-vested
Phantom Units held by the Grantee as of the Employment termination

 

 

date shall immediately expire, terminate and become forfeited, and shall not be paid to
any extent. No further action is needed to effectuate the forfeiture of all the Grantee’s
Phantom Units due to a termination of Employment for Cause.

     For purposes of this Agreement, “Cause” means the termination of the Grantee’s
Employment by the Company or an Affiliate by reason of (i) the conviction of the Grantee by
a court of competent jurisdiction as to which no further appeal can be taken of a crime
involving moral turpitude or a felony; (ii) the commission by the Grantee of a material act
of fraud upon the Company or an Affiliate, or any customer or supplier thereof; (iii) the
misappropriation of any funds or property of the Company or an Affiliate, or any customer or
supplier thereof; (iv) the willful and continued failure by the Grantee to perform the
material duties assigned to him that is not cured to the reasonable satisfaction of the
Company or an Affiliate within 30 days after written notice of such failure is provided to
Grantee by the Company or an Affiliate (or by their delegate); (v) the engagement by the
Grantee in any direct and material conflict of interest with the Company or an Affiliate
without compliance with the Company’s or Affiliate’s conflict of interest policy, if any,
then in effect; or (vi) the engagement by the Grantee, without the written approval of the
Company or an Affiliate, in any material activity which competes with the business of the
Company or Affiliate or which would result in a material injury to the business, reputation
or goodwill of the Company or Affiliate.

     For purposes of this Agreement, “Employment” means that the Grantee is employed as an
Employee or engaged as a Director (as such terms are defined in the Plan). All
determinations regarding Employment, and termination of Employment, shall be made by the
Committee in its discretion. In this regard, neither the transfer of the Grantee from
Employment by the Company or Partnership to Employment by any Affiliate, nor the transfer of
the Grantee from Employment by an Affiliate to Employment by the Company or Partnership,
shall be considered to be a termination of Employment of the Grantee. Moreover, the
Employment of Grantee shall not be deemed to have been terminated because of an approved
leave of absence from active Employment on account of temporary illness, authorized
vacation, or granted for reasons of professional advancement, education, or health, or
during any period required to be treated as leave of absence by virtue of any applicable
law, personnel policy or written agreement. The term “Employment” also includes current
membership on the Board by a Director.

     7.2 Involuntary Termination of Employment due to Death or Disability. If Grantee’s
Employment is terminated due to death or Disability, then all outstanding, non-vested
Phantom Units shall immediately become 100% vested on the termination of Employment date,
which shall be the Vesting Date.

     For purposes of this Agreement, “Disability” means that either the Grantee:

	 	(i)	 	is unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period
of not less than 12 months; or

2

 

	 	(ii)	 	is, by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than three months under an
accident and health plan covering employees of the Company or the Affiliate
that is the Grantee’s employer.

     7.3 Termination of Employment due to Retirement. If Grantee’s Employment terminates at a
time when Grantee is eligible for an immediately payable early or normal retirement benefit
under the Spectra Energy Retirement Cash Balance Plan or under another qualified retirement
plan of the Company or an Affiliate, which plan the Committee, or its delegatee, in its sole
discretion, determines to be the functional equivalent of the Spectra Energy Retirement Cash
Balance Plan, the number of Phantom Units and tandem DERs to which the Grantee shall have a
right to payment hereunder shall be prorated to reflect the number of whole and partial
months of the period beginning on the Date of Grant and ending with the third (3rd)
anniversary of the Grant Date during which such Employment continued while Grantee was
entitled to payment of salary, and the remaining Phantom Units shall be forfeited. Grantee
shall be considered to have “retired” but Grantee’s Employment shall be considered to
continue, with continued vesting under Section 11.4, (i) unless the Committee or its
delegatee, in its sole discretion, determines that (A) Grantee is in violation of any
obligation identified in the following paragraph or (B) the termination of Grantee’s
Employment is for Cause, in which case all Phantom Units not previously vested shall be
forfeited, or (ii) unless the Grantee dies, in which case the Phantom Units subject to the
provisions of this Section 7.3 shall vest in accordance with Section 11.4.

     In consideration of the continued vesting opportunity provided under this Section
7.3 following the termination of Grantee’s continuous Employment, if Grantee is
considered “retired”, Grantee agrees that during the period beginning with such termination
of Employment and ending with the third anniversary of the Grant Date (the “Restricted
Period”), Grantee shall not (i) without the prior written consent of the Company or an
Affiliate, or its delegatee, become employed by, serve as a principal, partner, or member of
the board of directors of, or in any similar capacity with, or otherwise provide service to,
any competitor of the Company or an Affiliate, or (ii) violate any of Grantee’s other
noncompetition obligations, or any of Grantee’s nonsolicitation or nondisclosure
obligations, to the Company or any Affiliate. The noncompetition obligations of clause (i)
of the preceding sentence shall be limited in scope and effective only to competition with
the Company or any Affiliate in the businesses of: gathering, processing or transmission of
natural gas, resale or arranging for the purchase or for the resale, brokering, marketing,
or trading of natural gas, electricity or derivatives thereof; energy management and the
provision of energy solutions; gathering, compression, treating, processing, fractionation,
transportation, trading, marketing of natural gas components, including natural gas liquids;
sales and marketing of electric power and natural gas, domestically and abroad; and any
other business in which the Company and its Affiliates are engaged at the termination of
Grantee’s continuous Employment; and within the following geographical areas (i) any country
in the world where the Company and its Affiliates have at least US$25 million in capital
deployed as of termination of Grantee’s continuous Employment; (ii) the continent of

3

 

North America; (iii) the United States of America and Canada; (iv) the states of (A)
Virginia, (B) Georgia, (C) Florida, (D)Texas, (E) California, (F) Massachusetts, (G)
Illinois, (H) Michigan, (I) New York, (J) Colorado, (K) Oklahoma and (L) Louisiana; and (v)
any state or states or province or provinces with respect to which was conducted a business
of the Company and its Affiliates, which business constituted at least 20% of Grantee’s
Employment as determined by the Company. The Company and Grantee intend the above
restrictions on competition in geographical areas to be entirely severable and independent,
and any invalidity or enforceability of this provision with respect to any one or more of
such restrictions, including geographical areas, shall not render this provision
unenforceable as applied to any one or more of the other restrictions, including
geographical areas. If any part of this provision is held to be unenforceable because of
the duration, scope or area covered, the Company and Grantee agree to modify such part, or
that the court making such holding shall have the power to modify such part, to reduce its
duration, scope or area, including deletion of specific words and phrases, i.e., “blue
penciling”, and in its modified, reduced or blue pencil form, such part shall become
enforceable and shall be enforced to the full extent applicable. Nothing in this
Section 7.3 shall be construed to prohibit Grantee being retained during the
Restricted Period in a capacity as an attorney licensed to practice law, or to restrict
Grantee providing advice and counsel in such capacity, in any jurisdiction where such
prohibition or restriction is contrary to law.

     7.4. Involuntary Termination by Company other than for Cause. If the Grantee’s
Employment is involuntarily terminated by the Company or an Affiliate for any reason other
than Cause, then (i) the number of Phantom Units and tandem DERs hereunder shall be prorated
to reflect the number of whole and partial months of Employment during the period beginning
on the Grant Date and ending with the third anniversary of the Grant Date, and the remaining
Phantom Units and DERs shall be forfeited, and (ii) the prorata number of Phantom Units and
DERs determined in accordance with clause (i) shall immediately become 100% vested as of the
Employment termination date, which shall be their Vesting Date.

     7.5 Termination of Employment for Other Reasons. If the Grantee’s Employment is terminated
for any reason, other than (i) involuntary termination with or without Cause or (ii) due to
Grantee’s death, Disability or retirement as described in Sections 7.2 and 7.3
hereof, before all the Phantom Units are 100% vested, all of the then non-vested,
outstanding Phantom Units held by the Grantee as of the Employment termination date shall
automatically expire and become forfeited, and no additional vesting shall occur on or
subsequent to the Employment termination date.

     7.6 Change in Control. All outstanding Phantom Units and tandem DERs shall become 100%
vested, if, following the occurrence of a Change in Control and before the second
anniversary of such occurrence, the Grantee’s Employment is involuntarily terminated for any
reason, except for Cause, death, Disability or Retirement, by the Company or Affiliate, or
its successor in interest following the Change in Control.

     For purposes of this Agreement, “Change in Control” means:

4

 

	 	(i)	 	any “person” or “group” within the meaning of those terms as
used in Sections 13(d) and 14(d)(2) of the Exchange Act, other than an
Affiliate, shall become the beneficial owner, by way of merger, consolidation,
recapitalization, reorganization or otherwise, of 50% or more of the combined
voting power of the equity interests in the Company or the Partnership;
	 
	 	(ii)	 	the limited partners of the Partnership approve, in one or a
series of transactions, a plan of complete liquidation of the Partnership;
	 
	 	(iii)	 	the sale or other disposition by either the Company or the
Partnership of all or substantially all of its assets in one or more
transactions to any Person other than the Company or an Affiliate; or
	 
	 	(iv)	 	a transaction resulting in a Person other than the Company or
an Affiliate being the general partner of the Partnership.

Notwithstanding the foregoing, with respect to an Award that is subject to Code Section of
the Code and with respect to which a Change of Control will accelerate payment thereunder,
“Change of Control” shall mean a change in the ownership or effective control of the Company
or an Affiliate, or in the ownership of a substantial portion of the assets of the Company
or an Affiliate as defined in Code Section 409A and authoritative guidance issued
thereunder, but only to the extent inconsistent with the above definition, and only to the
minimum exact necessary to comply with Section 409A as determined by the Committee.

     8. Payment of Phantom Units upon Vesting Date. Payment for a Phantom Unit shall be
made to the Grantee as soon as practicable following the time such Phantom Unit becomes vested in
accordance with Section 6 prior to its expiration, but in no event later than 30 days
following the Vesting Date, except to the extent deferred by the Grantee in accordance with such
procedures as the Committee (or its delegate) may prescribe consistent with the requirements of
Code Section 409A. Payment shall be subject to withholding for all required taxes. Payment shall
be in the form of one (1) Unit for each full vested Phantom Unit, and any fractional vested Phantom
Unit shall not be payable unless and until subsequent vesting results in the full Phantom Unit
becoming vested; provided, however, the Committee may, in its sole discretion, direct that a cash
payment be made to Grantee in lieu of delivery of any such Unit or Units. Notwithstanding the
foregoing, to the extent that Grantee fails to timely tender to the Company or Affiliate sufficient
cash to satisfy withholding for tax requirements, the number of Units that would otherwise be paid
(valued at their FMV on the Vesting Date of the respective Phantom Unit, or if later, the date
payable) shall be reduced by the Committee (or its delegate), in its sole discretion, to fully
satisfy such requirements.

     9. Independent Legal and Tax Advice. The Company, its Affiliates, and their officers,
employees, agents and representatives, do not provide any tax or legal advice to Grantee or any
other person. The Grantee is encouraged to consult with a personal tax advisor and legal counsel.

5

 

     10. General.

     10.1 Nontransferability of Phantom Unit. The Phantom Units granted pursuant to this
Agreement cannot be transferred, assigned, pledged, or hypothecated in any respect, other
than by will or the laws of descent and distribution. If any attempt is made to transfer,
assign, pledge, hypothecate, or otherwise dispose of any rights under this Agreement
contrary to the provisions in this Agreement or the Plan, or upon the levy of any attachment
or similar process upon such rights, such rights shall immediately become null and void. No
right to any payment that may be provided hereunder to the Grantee shall be liable for, or
subject to, any debts, contracts, liabilities, damages, losses, or torts of the Grantee
unless and until actually paid to or on behalf of Grantee hereunder.

     10.2 No Guarantee of Employment. No award of Phantom Units shall confer upon Grantee any
right to continued Employment.

     10.3 Notices. All notices under this Agreement shall be mailed or delivered by hand to the
parties at their respective addresses set forth beneath their signatures below or at such
other address as may be designated in writing by either party to the other party, or to
their permitted transferees if applicable. Notices shall be effective upon receipt.

     10.4 Amendment and Termination. No amendment, modification or termination of this Agreement
shall be made at any time without the written consent of Grantee and the Company.

     10.5 Severability. In the event that any provision of this Agreement shall be held illegal,
invalid, or unenforceable for any reason, such provision shall be fully severable, but shall
not affect the remaining provisions of the Agreement, and the Agreement shall be construed
and enforced as if the illegal, invalid, or unenforceable provision had not been included
herein.

     10.6 Governing Law. The Agreement shall be construed in accordance with the laws of the
State of Delaware without regard to its conflict of law provisions, to the extent federal
law does not supersede and preempt Delaware law.

     10.7. Conflicts. In the event of any conflict between the terms and provisions of this
Agreement and the Plan, the Plan shall control. Capitalized terms used in this Agreement
but not defined herein shall have the meanings ascribed to such terms in the Plan unless the
context clearly requires otherwise.

     10.8. Restrictions. Grantee agrees that any Units acquired under this Agreement will
not be sold or otherwise disposed of in any manner which would constitute a violation of any
applicable federal or state securities laws. Grantee also agrees that (i) the certificates
representing the Units acquired under this Agreement may bear such legend or legends as the
Committee deems appropriate in order to assure compliance with applicable securities laws,
(ii) the Company may refuse to register the transfer of Units to be acquired under this
Agreement on the transfer records of the Partnership if such proposed transfer would, in the
opinion of counsel satisfactory to the Partnership, constitute a violation of any applicable
securities law, and (iii) the

6

 

Partnership may give related instructions to its transfer agent, if any, to stop the
registration of the transfer of Units to be acquired under this Agreement.

     10.9. Rights as Unitholder. Grantee or Grantee’s executor, administrator, heirs, or
legatees shall have the right to vote and receive distributions on Units and all the other
privileges of a unitholder of the Partnership only upon and from the date of issuance of a
Unit certificate in Grantee’s representing payment of a vested Phantom Unit.

     10.10. Insider Trading Policy. The terms of the Company’s Insider Trading Policy are
incorporated herein by reference. The timing of the delivery of any Units hereunder shall
be subject to such Policy in all respects.

     10.11. Binding Effect. This Agreement shall be binding upon and inure to the benefit
of any successor or successors of the Company and upon any person lawfully claiming under
Grantee following death or Disability.

     10.12. Entire Agreement. This Agreement constitutes the entire agreement of the
parties with regard to the subject matter hereof, and contains all the covenants, promises,
representations, warranties and agreements between the parties with respect to the Phantom
Units granted hereby. Without limiting the scope of the preceding sentence, all prior
understandings and agreements, if any, among the parties hereto relating to the subject
matter hereof are hereby null and void and of no further force and effect.

     11. Definitions and Other Terms. The following capitalized terms shall have those
meanings set forth opposite them:

     11.1. Grantee:                                          .

     11.2. Grant Date:                     , 2007.

     11.3. Vesting Date: The date upon which the Phantom Units become vested under the
Agreement pursuant to Sections 6 and 11.4.

     11.4. Vesting Schedule: Subject to the terms of the Plan, if the Grantee remains in
continuous Employment, the Phantom Units granted hereunder shall vest in accordance with the
following vesting schedule:

7

 

     [Option 1:

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Percentage of
	Vesting Date	 	 	 	 	 	Phantom Units Vesting
	Grant Date
	 	 	 	 	 	 	0	%
	 
	 	 	 	 	 	 	 	 
	Third Anniversary of Grant Date
	 	 	 	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 
	 
	 	Total	 	 	100	%
	 
	 	 	 	 	 	 	 	 

]

     [Option 2:

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Percentage of
	Vesting Date	 	 	 	 	 	Phantom Units Vesting
	First Anniversary of Grant Date
	 	 	 	 	 	 	331⁄3	%
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Second Anniversary of Grant Date
	 	 	 	 	 	 	331⁄3	%
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Third Anniversary of Grant Date
	 	 	 	 	 	 	331⁄3	%
	 
	 	 	 	 	 	 	 	 
	 
	 	Total	 	 	100	%
	 
	 	 	 	 	 	 	 	 

]

     12. Acceptance and Cancellation. Notwithstanding the foregoing, this Agreement is
subject to cancellation by the Company in its sole discretion unless the Grantee, by not later than
August 31, 2007, has signed a duplicate of this Agreement, in the space provided below, and
returned the signed duplicate to: Executive Compensation Department — Phantom Units (WO 1P16),
Spectra Energy Corp., P.O. Box 1642, Houston, TX 77521-1642, which, if and to the extent permitted
by the Executive Compensation Department, may be accomplished by electronic means.

[Signature page follows.]

8

 

     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on its behalf by a
duly authorized officer of the Company, and Grantee has hereunto executed this Agreement.

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	SPECTRA ENERGY PARTNERS GP, LLC	 	 
	 
	 	 	 	 	 	 
	By:

	 	 	 	Date:	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Name:
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Title:
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Address for Notices:	 	 	 	 
	 
	 	 	 	 	 	 
	5400 Westheimer Court	 	 	 	 
	Houston, Texas 77056	 	 	 	 
	 
	 	 	 	 	 	 
	Attention:
	 	 	 	 	 	 
	 

	 	 	 	 	 	 

Acceptance of Phantom Unit Award

     IN WITNESS WHEREOF Grantee has hereby accepted this Award agreed to be bound by the terms and
provisions of this Agreement and the Plan, and Grantee has hereunto executed this Agreement.

GRANTEE

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Signature:

	 	 	 	Date:	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Name:
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Address for Notices:	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 

9

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