Document:

exv10w1

 

Exhibit 10.1

MEMBERSHIP INTEREST PURCHASE AGREEMENT

[LA Office Purchase]

     This MEMBERSHIP INTEREST PURCHASE AGREEMENT (this “Agreement”) is made and entered
into this 26th day of January, 2006 (the “Signing Date”), by and among ARN TELLEM (herein
called the “Buyer”), SFX SPORTS GROUP, INC. (herein called “Seller”), a Delaware
corporation and SFX SPORTS GROUP, LLC (herein called the “Company”), a Delaware limited
liability company.

RECITALS:

     A. The Seller and Buyer own all of the issued and outstanding membership interests (the
“Member Interests”) of Company; and

     B. The Seller desires to sell to Buyer, and Buyer desires to acquire from the Seller, all of
the Member Interests owned by the Seller (herein called the “Seller Member Interests”), in
consideration of the payment by Buyer of the purchase price provided for herein, all upon the terms
and subject to the conditions hereinafter set forth.

AGREEMENT

     In consideration of the premises and of the respective representations, warranties, covenants
and agreements of the parties contained herein, it is hereby agreed as follows:

1. Definitions. As used in this Agreement, each of the following terms has the meaning
provided below:

     1.1 “Adjustment Statement” means the Adjustment Statement attached hereto as
Exhibit “A”.

     1.2 “Adjustment Up Amount” means the sum total amount of all of the following as of
the Closing Date:

     (a) the Company’s cash on hand, if any, as listed on the Adjustment Statement;

     (b) the amount of expenses paid by the Company for operations of the business of the LA
Assets attributable to periods of time on or after January 1, 2006 through the Signing Date,
including without limitation, those expenses itemized as “January Expenses” in the
Adjustment Statement; and

     (c) the Company’s prepaid expenses and advances as listed on the Adjustment Statement.

     1.3 “Adjustment Down Amount” means the sum total amount of all of the following as of
the Closing Date:

     (a) the Company’s accounts payable or unpaid ordinary operating expenses of the Company
to the extent properly attributable in accordance with GAAP to periods of time prior to the
Closing Date, as set forth on the Adjustment Statement; and

     (b) revenues received by the Company prior to the Closing Date that relate to the LA
Assets, but only to the extent such revenues are properly attributable in accordance with
GAAP to periods of time after the Closing Date, as listed on the Adjustment Statement.

 

 

     1.4 “Affiliate” means, with respect to any Person, any other Person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or is under common
control with, such Person.

     1.5 “Applicable Law” means any statute, law, rule or regulation or any judgment,
order, writ, injunction or decree of any governmental entity to which a specified person or
property is subject.

     1.6 “Applicable Sport” means all sports other than basketball and baseball.

     1.7 “Distributed Assets” means all of the Company’s properties, contracts, agreements,
receivables, deposits, furniture, fixtures, equipment, trade names, trademarks, licenses, client
relationships and other assets other than the LA Assets. The Pelinka Assets, the Old Basketball
Receivables, the Old Baseball Receivables, one-half of the 05 Basketball Receivables and the
Retained Basketball Tickets are part of the Distributed Assets.

     1.8 “Distribution Agreement” means that certain Distribution Agreement in the form of
Exhibit “B” attached hereto which will be signed by the Company prior to the Closing for
the purpose of assigning and distributing the Distributed Assets to the Seller.

     1.9 “Encumbrances” means liens, charges, pledges, options, mortgages, deeds of trust,
security interests, claims, restrictions (whether on voting, sale, transfer, disposition or
otherwise), licenses, sublicenses, easements and other encumbrances of every type and description,
whether imposed by law, agreement, understanding or otherwise.

     1.10 “Equity Agreement” means that certain Letter Agreement executed and entered into
by and between Buyer and Seller and dated January 28, 2005 regarding the creation of the Company
and the issuance of a profits interest in the Company to the Buyer on and subject to the terms
provisions and conditions contained therein.

     1.11 “GAAP” means generally accepted accounting principles, consistently applied.

     1.12 “LA Agents" means those sports agents listed on Schedule 1.12 attached hereto.

     1.13 “LA Assets" means, except for the Pelinka Assets, the following:

     (a) All of the client contracts and client relationships with clients of the Company
that are principally served by any one or more of the LA Agents and all papers, documents,
notes, files and records that relate to such clients and such client relationships,
including but not limited to those contracts listed on Schedule 1.13(a);

     (b) All furniture, fixtures, equipment and other tangible assets located in the LA
Office as of the date of the execution of this Agreement, including but not limited to those
listed on Schedule 1.13(b) (but specifically excluding the Retained Basketball
Tickets);

     (c) The notes and interest receivable owed by certain employees of the Company to
Seller or Seller’s affiliates as listed on Schedule 1.13(c) attached hereto
(“Agent Notes”);

     (d) The Company’s leasehold estate in the LA Office created pursuant to that certain
Office Lease between Duesenberg Investment Company, as landlord, and Seller, as tenant,
which has been previously assigned by Seller to the Company;

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     (e) Any goodwill or other similar intangible assets to the extent relating to, or
derived from, the sports agency practice in the LA Office (but specifically excluding the
Company’s names, trade names, trademarks and the goodwill associated therewith);

     (f) All of the Company’s rights and interests under employment agreements with any of
the LA Agents;

     (g) The (i) prepaid expenses listed on Schedule 1.13(g) attached hereto and (ii) the
Prepaid Expenses and Advances listed under the “Adjustment Up” heading on the Adjustment
Statement; and

     (h) All of the Company’s accounts receivables that are owed by clients of the Company
that are principally served by any one or more of the LA Agents other than the Old Baseball
Receivables, Old Basketball Receivables, receivables associated with the Pelinka Assets and
1/2 of the 05 Basketball Receivables.

     1.14 “LA Office” means the Company’s leased space located on the third floor of Topa
Plaza, 11911 San Vicente Boulevard, Los Angeles, California 90049 and containing approximately
5,043 rentable square feet and commonly known as Suite 320 and Suite 325.

     1.15 “Old Baseball Receivables” means the Company’s accounts receivable owed by
baseball clients principally serviced by the LA Agents and originally invoiced on or before
December 31, 2005, including, without limitation, those accounts receivable listed on Schedule
1.15, less any amounts collected by the Company prior to the Closing Date. The amount of the
Old Baseball Receivables shown on Schedule 1.15 are net of any consulting fees that may be
payable on account of the corresponding item.

     1.16 “Old Basketball Receivables” means the Company’s accounts receivable owed by
basketball clients principally serviced by the LA Agents and originally invoiced on or before
December 31, 2005, including, without limitation, those accounts receivable listed on Schedule
1.16, less any amounts collected by the Company prior to the Closing Date. The amount of the
Old Basketball Receivables shown on Schedule 1.16 are net of any consulting fees that may
be payable on account of the corresponding item.

     1.17 “Pelinka Assets” means the following:

     (a) All of the client contracts and client relationships with, and all accounts
receivables owed by, clients of the Company that are principally served by Rob Pelinka and
all papers, documents, notes, files and records that relate to such clients and such client
relationships;

     (b) All furniture, fixtures, equipment and other tangible assets located in the LA
Office as of the date of the execution of this Agreement that are used exclusively by Rob
Pelinka, even if any such assets are included in the lists attached as Schedule
1.13(b), including, without limitation, (i) any computers, laptops, blackberries and
similar items issued to and used by Pelinka, and (ii) any furniture used exclusively by
Pelinka; and

     (c) All of the Company’s rights and interests under its employment agreement with Rob
Pelinka.

     1.18 “Person” means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, enterprise, unincorporated organization or governmental
entity.

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     1.19 “Tax” or “Taxes” means any and all taxes, assessments, imposts, charges,
duties, withholdings, fees, levies and other similar charges of any kind whatsoever, and any
interest, penalties, additions to tax and additional amounts, that are imposed, assessed or levied
by any government or any political subdivision, agency, commission or authority thereof or any
taxing authority.

     1.20 “Tax Return” means any return, report, declaration, claim for refund or credit,
or information return or statement relating to Taxes, including any schedules or attachments
thereto, and including any amendments or supplements thereto.

     1.21 “‘05 Basketball Receivables” means the Company’s accounts receivable attributable
to the 2005 portion of the 2005-2006 basketball season listed on Schedule 1.21. The amount
of the ‘05 Basketball Receivables shown on Schedule 1.21 are net of any consulting fees
that may be payable on account of the corresponding item.

     1.22 “Retained Basketball Tickets” means the (i) the season tickets listed on
Schedule 1.22 for the remaining games in the Los Angeles Clippers and Los Angeles Lakers
2005-2006 season and (ii) the right to purchase such season tickets in subsequent years.

2. Purchase and Sale.

     2.1 Purchase and Sale. Subject to the terms and conditions of this Agreement, at the
Closing, Seller shall sell and deliver to Buyer, and Buyer shall purchase from the Seller, all of
the Seller Member Interests, free and clear of all Encumbrances.

     2.2 Further Assurances. After the Closing, the Seller will execute and deliver, or
cause to be executed and delivered, such other instruments of conveyance, assignment, transfer and
delivery and will take such other actions as Buyer may reasonably request in order to (i) more
effectively transfer, convey, assign and deliver the Seller Member Interests to Buyer and (ii)
cause any LA Assets that may have inadvertently remained titled in the name of Seller (or any of
its Affiliates) to be assigned to the Company.

3. Closing; Purchase Price.

     3.1 Closing Date. The closing of the transactions provided for in this Agreement (the
“Closing”) shall take place at the law offices of Gardere Wynne Sewell LLP, 1000 Louisiana,
Suite 3400, Houston, Texas 77002 on the Signing Date but will be effective as of January 1, 2006
(the “Closing Date”).

     3.2 Purchase Price. Subject to the adjustments specified in Section 3.3 hereof, the
consideration to be paid by Buyer to Seller for the Seller Member Interests shall be the cash sum
of $12,000,000.

     3.3 Cash Purchase Price Adjustments. Buyer and the Seller agree that the amount of
cash required to be paid by Buyer to Seller at Closing as specified in Section 3.2 hereof will be
(i) increased by the Adjustment Up Amount and (ii) decreased by the Adjustment Down Amount as set
forth on the Adjustment Statement (such amount, as so adjusted, being herein called the “Cash
Purchase Price”).

     3.4 Bonus Payments and Agent Note Balance.

     (a) Within ten (10) business days after the Signing Date, Seller shall pay
discretionary bonuses in the amounts and to the individuals listed on Schedule
3.4(a), less, in each case, applicable withholding.

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     (b) Effective as of the Closing Date, Seller will offset the principal and outstanding
interest due on the Agent Notes by the amounts of the contractual bonuses to be paid for
2005, less withholding, as set forth on Schedule 3.4(b), resulting in principal and
interest outstanding due on the Agent Notes of $704,961.48 (the “Tentative Agent Note
Balance”).

     (c) Pau Gasol has prepaid $500,000 of his fees (“Prepaid Basketball Fees”) for
the 2005-06 season and a portion of the 2006-2007 season, of which $75,000 is attributable
to 2005. The parties have agreed to apply the Prepaid Basketball Fees as follows:

     (i) $37,500 of the Prepaid Basketball Fees have been retained by Seller as its
revenue.

     (ii) $37,500 of the Prepaid Basketball Fees have been retained by Seller but
applied as a reduction in the Tentative Agent Note Balance.

     (iii) The remaining $425,000 of the Prepaid Basketball Fees have been retained
by Seller but applied as a reduction in the Tentative Agent Note Balance.

     (d) As a result of the payment of a prepaid expense by Joe Johnson of $67,000, Seller
shall apply such sum against the Tentative Agent Note Balance.

     (e) As a result of the adjustments to the Tentative Agent Note Balance referenced in
Section 3.4(c)(ii) and (iii) and Section 3.4(d) hereof, the resulting balance of the Agent
Notes is $175,461.48 (the “Agent Note Balance”).

     3.5 Receivables.

     (a) Billing and Collection of Receivables.

     (i) Consistent with past practice, the Company, as Seller’s agent, shall bill,
and shall exercise commercially reasonable efforts to collect, the Old Basketball
Receivables, the Old Baseball Receivables and the Seller’s one-half (1/2) of the ‘05
Basketball Receivables.

     (ii) The Company shall not forgive or reduce any of the Old Baseball
Receivables or Old Basketball Receivables without the prior written consent of
Seller. If such Old Basketball Receivables and Old Baseball Receivables are not all
collected in full by December 31, 2006, then (i) Company’s right to collect any such
remaining unpaid Old Baseball Receivables and Old Basketball Receivables, as
Seller’s agent, shall be terminated upon Seller’s request and (ii) Company and Buyer
shall each be thereafter obligated to provide reasonable assistance to Seller with
regard to the collection of all such assigned unpaid Receivables. Seller consents
to the reductions in the Old Basketball Receivables payable by clients Tracey
McGrady and Jermaine O’Neal as described in Schedule 3.5(a)(ii).

     (iii) The Company shall not forgive or reduce any of the ‘05 Basketball
Receivables without the prior written consent of Seller; provided that no consent
shall be required if (i) the Company reduces receivables as a result of a player’s
suspension in proportion to the salary lost and fines paid as a result of such
suspension, (ii) the Company’s reduction also applies in like manner to the
2006-2007 basketball season or (iii) the Company pays Seller its share of the ‘05
Basketball Receivables as if such receivable had not been forgiven or reduced.

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     (b) Reporting and Payment to Seller for Old Receivables. Commencing on
February 10, 2006, and continuing on the 10th day of every month thereafter, the
Company shall (i) remit to Seller 100% of the payments attributable to the Old Baseball
Receivables and Old Basketball Receivables received by the Company during the prior month
and (ii) deliver to Seller a summary statement reflecting the payments received with respect
to the Old Baseball Receivables and Old Basketball Receivables during such month and the
remaining unpaid balance of all such Old Baseball Receivables and Old Basketball Receivables
as of the end of such month.

     (c) Reporting and Payment to Seller for ‘05 Basketball Receivables.

     (i) On January 10, 2007, the Company shall (x) provide to Seller a summary
statement reflecting the payments received with respect to the ‘05 Basketball
Receivables through December 31, 2006 and the remaining unpaid balance of all such
‘05 Basketball Receivables as of December 31, 2006 and (y) remit to Seller the
following amounts:

     (A) 50% of the payments attributable to the ‘05 Basketball
Receivables received by Company through December 31, 2006; plus

     (B) the lesser of (x) the Agent Note Balance and (y) 50% of
the payments attributable to the ‘05 Basketball Receivables received by
Company through December 31, 2006.

The Agent Note Balance will be reduced by the amount of payments made to the Seller
pursuant to clause (B), and the Company will retain any portion of the payments
attributable to the ‘05 Basketball Receivables received by Company through December
31, 2006 to the extent such amounts exceed the Company’s remittance obligations in
this Section 3.5(c)(i).

     (ii) Commencing on February 10, 2007, and continuing on the 10th day
of every month thereafter, for so long as any of the ‘05 Basketball Receivables
remain outstanding and unpaid, the Company shall (x) provide to Seller a summary
statement reflecting the payments received with respect to the ‘05 Basketball
Receivables during the prior month and the remaining unpaid balance of all such ‘05
Basketball Receivables as of the end of such month and (y) remit to Seller the
following amounts:

     (A) 50% of the payments attributable to the ‘05 Basketball
Receivables received by Company during the prior month; plus

     (B) the lesser of (x) the then Agent Note Balance, if any,
and (y) 50% of the payments attributable to the ‘05 Basketball Receivables
received by Company during the prior month.

The Agent Note Balance will be reduced by the amount, if any, of payments made to
the Seller pursuant to clause (B), and the Company will retain any portion of the
payments attributable to the ‘05 Basketball Receivables received by Company during
the prior month to the extent such amounts exceed the Company’s remittance
obligations in this Section 3.5(c)(ii).

     (iii) Any remaining Agent Note Balance as of September 30, 2007 shall be paid
in a single lump sum amount by Buyer to Seller on or before October 15, 2007.

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     3.6 Jalen Rose. The Seller has retained, as part of the Distributed Assets, the
client contract with Jalen Rose. The Seller shall bill, and shall exercise commercially reasonable
efforts to collect, the Jalen Rose receivable pursuant to his contract and shall remit to Company,
within 10 business days of receipt, 25% of the fees payable by Rose pursuant to Rose’s contract in
consideration for Company’s services and assistance with regard to the client relationship with
Jalen Rose. Each of Seller and Company shall be free to pursue the right to represent Jalen Rose
in regard to any future contract negotiations without any contractual obligation hereunder to the
other party.

4. Representations and Warranties.

     4.1 Representations and Warranties of Seller. The Seller represents and warrants to
Buyer as of the date hereof as follows:

     (a) Authorization and Validity of Agreement. The Seller has the power and
authority to consummate the transactions contemplated hereby, including the execution,
delivery and performance of this Agreement by the Seller. This Agreement has been duly
executed and delivered by the Seller and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms.

     (b) No Approvals or Notices Required; No Conflict with Instruments. The
execution, delivery and performance of this Agreement by the Seller and the consummation by
the Seller of the transactions contemplated hereby (i) will not violate (with or without the
giving of notice or the lapse of time or both) or require any consent, approval, filing or
notice under, any provision of any Applicable Law and (ii) will not require any consent or
approval under, result in the creation of any Encumbrance on the Seller Member Interests
under, conflict with, or result in the breach or termination of any provision of, or
constitute a default under, or result in the acceleration of the performance of the
obligations of the Seller under the charter or bylaws of the Seller or any indenture,
mortgage, deed of trust, lease, licensing agreement, contract, instrument or other agreement
to which the Seller or any of its assets is a party or by which the Seller is bound or
affected.

     (c) Certain Fees. The Seller has not employed any broker or finder or incurred
any other liability for any brokerage fees, commissions or finders’ fees in connection with
the transactions contemplated hereby.

     (d) Seller Member Interests. The Seller Member Interests have been duly
authorized and validly issued. The Seller Member Interests constitute all of the issued and
outstanding Member Interests in the Company (other than the profit interests granted to
Buyer pursuant to the Equity Agreement). The Seller is the record and beneficial owner of,
and upon consummation of the transactions contemplated hereby, Buyer will acquire, good,
valid and marketable title to, the Seller Member Interests, free and clear of all
Encumbrances. The Seller Member Interests are transferable and assignable to Buyer as
contemplated by this Agreement without the waiver of any right of first refusal or the
consent of any other party being obtained, and there exists no preferential right of
purchase in favor of any person with respect to the Seller Member Interests.

     4.2 Representations and Warranties of Buyer. Buyer represents and warrants to the
Seller as of the date hereof, as follows:

     (a) Validity of Agreement. This Agreement has been duly executed and delivered
by Buyer and constitutes a legal, valid and binding obligation of Buyer, enforceable against
Buyer in accordance with its terms.

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     (b) No Approvals or Notices Required; No Conflict with Instruments. The
execution, delivery and performance of this Agreement by Buyer and the consummation by him
of the transactions contemplated hereby (i) will not violate (with or without the giving of
notice or the lapse of time or both), or require any consent, approval, filing or notice
under any provision of any Applicable Law and (ii) will not require any consent or approval
under, conflict with, or result in the breach or termination of any provision of, or
constitute a default under, or result in the acceleration of the performance of the
obligations of Buyer, under any indenture, mortgage, deed of trust, lease, licensing
agreement, contract, instrument or other agreement to which Buyer is a party or by which
Buyer or any of his assets or properties is bound or affected.

     (c) Certain Fees. Buyer has not employed any broker or finder or incurred any
other liability for any brokerage fees, commissions or finders’ fees in connection with the
transactions contemplated hereby.

     (d) Buyer’s Familiarity with Company Business. Buyer, as an executive officer
of the Company, has full knowledge of the legal, financial and operational status of the
Company and its business operations and has had the opportunity to review all of the
information of the Company that he considers necessary or appropriate for deciding upon the
acquisition of the Seller Member Interests. Buyer, in connection with this acquisition has
not been induced by, and has not relied upon, (i) any representation, warranty, statement or
agreement, whether express or implied, and whether made in writing or orally, of Seller, or
any of its respective directors, officers, employees, Affiliates, stockholders, partners,
agents, advisors or representatives (collectively, “Related Persons”) other than
those expressly set forth in this Agreement or (ii) any other information (including
presentations, projections, forecasts, budgets and estimates) provided or made available to
Buyer or any of his Related Persons prior to or concurrently with the execution of this
Agreement.

     (e) Buyer’s Acknowledgment of the Distribution Agreement. Buyer specifically
acknowledges that (i) the Distributed Assets will be assigned by the Company to the Seller
for no consideration prior to the Closing, and (ii) by acquiring the Seller Member
Interests, Buyer will not be acquiring any direct or indirect ownership in the Distributed
Assets.

5. Other Covenants Relating to this Transaction.

     5.1 Company Employees. Attached hereto as Schedule 5.1 is a list of those
employees who currently work for the Company in the LA Office (“LA Employees”). The Seller
and Buyer mutually agree as follows with respect to the LA Employees:

     (a) LA Employees. Buyer will cause the Company to continue to employ all of
the LA Employees after the Closing Date with at least the salary as each such LA Employee is
currently employed by the Company.

     (b) Ongoing Obligations to the LA Employees. Buyer acknowledges that, from and
after the Closing, (A) all LA Employees will cease to participate in all of the Clear
Channel employee benefit plans and (B) the Company shall be solely responsible for (i)
establishing and thereafter maintaining its own employee benefit plans for the LA Employees
at the Company’s sole cost and expense and (ii) paying and discharging all salary, wages,
severance costs, benefits and claims (including workers compensation or other similar
benefits and claims) arising out of or relating to the employment of the Continued Employees
after the Closing Date, including, without limitation, the following:

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     (i) all liabilities for accrued vacation, holiday, sick leave, salary
continuation or short-term disability benefits;

     (ii) the payment of accrued payments or bonuses under any annual or long-term
management or employee incentive or bonus plans, programs or arrangements; and

     (iii) any retirement plan and non-qualified deferred compensation plan arising
out of or relating to the employment of the Company Employees.

     (c) Health Insurance and COBRA. Seller shall continue to provide, or cause to
be provided, for all of the LA Employees the currently provided health and hospitalization
plan through January 31, 2006. Buyer will cause the Company to obtain and maintain from and
after February 1, 2006 a health and hospitalization plan for the LA Employees. The Seller
shall not provide any continuation health coverage pursuant to the Consolidated Omnibus
Reconciliation Act of 1985 (also known as “COBRA”) to any of the Company Employees.

     (d) Indemnity Related to LA Employees. Buyer shall indemnify, defend and hold
the Seller harmless from and against any claim, demand or cause of action that may be
brought by any LA Employee against the Seller (or its Affiliates) arising as a result of the
transactions contemplated herein or after the Closing Date to the extent relating to such LA
Employee’s employment relationship with the Company.

     5.2 Indemnities for Operational Obligations. On and subject to the other specific
covenants and agreements contained herein, (i) Buyer shall indemnify, defend and hold Seller
harmless from and against any claim, demand or cause of action that may be brought against Seller
to the extent arising from a failure of the Company to pay any of its debts, liabilities,
contractual obligations or other operating obligations that relate to the LA Assets (including
without limitation, all obligations and liabilities under the office lease for the LA Office)
arising, or related to periods, after the Closing Date and (ii) Seller shall indemnify, defend and
hold Buyer and Company harmless from and against any claim, demand or cause of action that may be
brought against Buyer or Company to the extent arising from a failure of the Company to pay any of
its debts, liabilities, contractual obligations or other operating obligations that relate to the
LA Assets arising, or related to periods, prior to the Closing Date (including without limitation,
contribution obligations to the Company’s retirement plans for the LA Employees accrued on or
before the Closing Date, which will be made by Seller as required by the retirement plans and
consistent with past practices).

     5.3 Seller’s Indemnity of Buyer for Distributed Asset Obligations. On and subject to
the other specific covenants and agreements contained herein, Seller shall indemnify, defend and
hold Buyer and the Company harmless from and against any claim, demand or cause of action that may
be brought against Buyer or the Company to the extent related to or arising from any matter related
to the Distributed Assets.

     5.4 Certain Tax Matters. The Seller shall cause to be prepared and filed all Tax
Returns for the Company for all periods ending on or prior to the Closing Date, which are filed
after the Closing Date. Seller shall reimburse Buyer for any Taxes of the Company to the extent
attributable to any periods on or before the Closing Date within five (5) days after payment by
Buyer or the Company of such Taxes, including, without limitation, any Taxes attributable to the
distribution of the Distributed Assets pursuant to the Distribution Agreement. Notwithstanding the
foregoing, and for the avoidance of doubt, Seller shall assume responsibility for, and indemnify
Buyer and Company against, all Taxes relating to periods prior to the Closing Date, including but
not limited to the disputed 2003 City of Los Angeles Business Taxes. Buyer shall permit the Seller
to review and comment on each Tax Return that covers any period of time which begins prior to the
Closing Date and ends after the Closing Date prior to filing, and Buyer

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shall give due consideration to all comments reasonably provided by the Seller in connection
with such Tax Returns.

     5.5 Mutual No-Solicit and Non-Compete Agreement.

     (a) For a period of two years following the Closing Date, (i) Buyer covenants to
refrain, and cause the Company to refrain, from actively inducing or soliciting any of the
employees, agents and clients of Seller from leaving Seller and (ii) Seller covenants to
refrain from actively inducing or soliciting the Company’s employees, agents and clients
from leaving Buyer or the Company. In addition to the foregoing, Buyer covenants to cause,
for a period of two years following the Closing Date, any of the Company’s successors or
assigns in which Buyer owns an interest or by which Buyer is employed to refrain from
actively inducing or soliciting any of the Seller’s clients that are currently being
principally served by Rob Pelinka.

     (b) Buyer further covenants and agrees with Seller as follows:

     (i) Buyer agrees to refrain, and to cause the Company to refrain, from using or
exploiting, at any time following the Closing Date, without regard to the 2 year
limitation in Section 5.5(b)(ii) below, any of Seller’s confidential information and
trade secrets related to the Distributed Assets to which Buyer gained access prior
to the Closing. Confidential Information and trade secrets shall not include (A)
information which is or becomes generally available to the public other than as a
result of a disclosure by (i) Buyer or at Buyer’s insistence or direction or (ii)
any other person who directly or indirectly receives such information from Buyer,
(B) information concerning business opportunities that have not advanced beyond the
mere conceptual planning stages at the time of the Closing or (C) information
relating to clients who leave Seller after the Closing (subject to the rights of the
clients in any such information).

     (ii) Buyer covenants to refrain from, and to cause the Company to refrain from,
pursuing or engaging in, for two (2) years following the Closing Date, any specific,
identifiable and discrete proprietary business opportunity

     (A) with respect to opportunities involving acquisitions of
third parties, that Seller and the third party are actively pursuing (beyond
mere conceptual planning) at the time of the Closing; and

     (B) (including, any business opportunity substantially
similar thereto), with respect to non-acquisition or non-third party
opportunities, that Seller is actively pursuing (beyond mere conceptual
planning) at the time of the Closing.

Notwithstanding the foregoing provisions, a pre-existing sports or entertainment
agency with which Buyer may become affiliated after the Closing Date will not be
prevented from pursuing any business opportunity that is generally available to the
public provided that Buyer does not disclose any of Seller’s confidential
information with respect to such opportunity.

     (iii) Buyer covenants to refrain from, and to cause the Company to refrain
from, providing representation services for professional athletes in any Applicable
Sport at any time within two (2) years following the Closing Date; provided,
however, this restriction will not preclude Buyer (or the Company) from (i)
acting as an owner, partner, executive, investor or in any general management or
consulting position with a pre-

10

 

existing sports or entertainment agency or business as long as Buyer is not
involved, directly or indirectly, in the day-to-day business activities of agents
that represent professional athletes in any Applicable Sport or (ii) engaging in
limited representation of professional football players so long as Buyer, in an
agency or business in which he is the majority owner, does not start a “football
practice” with agents who devote a substantial part of their time and efforts to the
representation of football players.

     5.6 Change of Company’s Name. Buyer covenants and agrees with the Seller that, from
and after the Closing, the Company will cease to conduct business using the trade names “SFX”,
“Clear Channel”, “CC”, “CCE” or any confusingly similar name or portion thereof. In furtherance of
the foregoing, Buyer authorizes the Seller to prepare and file with the Delaware Secretary of
State, between the date hereof and the Closing Date, such documents as may be necessary to change
the name of the Company to “Tellem & Associates, LLC”.

     5.7 Malpractice Claims. Notwithstanding Section 5.2 hereof, the parties hereto agree
as follows:

     (a) Seller shall indemnify, defend and hold Buyer and the Company harmless from and
against any claim, demand or cause of action (“Claim”) that may be brought by a
client of the Company against Buyer or the Company asserting negligence or malpractice in
the representation of such client on or before the Closing Date.

     (b) Buyer and Company shall indemnify, defend and hold Seller (and its affiliates)
harmless from and against any Claim that may be brought by a client of the Company or the
Buyer against Seller (or its affiliates) asserting negligence or malpractice in the
representation of such client after the Closing Date.

     5.8 Audit Rights. Seller shall have the right upon reasonable advance notice, at its
expense, to review Buyer’s financial books and accounting records during the Company’s normal
business hours with respect to the Old Basketball Receivables, Old Baseball Receivables, and ‘05
Basketball Receivables for the limited purpose of determining whether payments to Buyer have been
made pursuant to such receivables.

     5.9 Discontinuation of IT Services. Buyer and Company acknowledge and understand
that, effective as of the Signing Date, the Seller and its affiliated companies will cease to
provide those computer and other intellectual technology services and functions previously provided
to the Company and the LA Employees, including, without limitation, computer network maintenance
and access, email service and internet access. Buyer and Company shall be responsible for
providing their own email service, computer network, internet access and similar services and
functions from and after the Signing Date.

     5.10 Rob Pelinka. Rob Pelinka has elected to remain employed by the Seller although
he is an agent currently employed by the Company in the LA Office. The parties each hereby agree
as follows with regard to Rob Pelinka:

     (a) As soon as reasonably practicable following the Signing Date, the Seller will
relocate Pelinka’s office to another location outside of the LA Office.

     (b) The Buyer and the Company will permit Seller to have access to the LA Office after
the Signing Date to the extent necessary to retrieve and remove any of the Pelinka Assets.

11

 

     (c) As soon as reasonably practicable following the Signing Date, Buyer will (i) sign
such documents as may be necessary to remove himself as the “agent of record” for Maggette,
Stevenson and Vujacic and (ii) cause Thad Foucher to sign such documents as may be necessary
to remove himself as “agent of record” for Wallace. Buyer represents, warrants and
covenants to Seller that none of him, Foucher or the Company shall have any right to receive
or retain any fees with respect to past services rendered to Maggette, Stevenson, Vujacic or
Wallace.

     (d) As soon as reasonably practicable following the Signing Date, Seller will cause Rob
Pelinka to sign such documents as may be necessary to remove himself as the “agent of
record” for Fred Hoiberg and Jamaal Maglorie.

     (e) Upon request of Seller, Company and Buyer will hereafter execute such instruments
of assignment or other documents or forms as may be reasonably necessary to transfer
ownership and title to the Retained Basketball Tickets for all subsequent seasons into the
name of Seller (or its designee or assigns).

6. Documents to Be Delivered at Closing.

     6.1 Seller’s Deliveries. At the Closing, the Seller shall deliver or cause to be
delivered to Buyer the following:

     (a) A duly executed Assignment of Membership Interest whereby Seller assigns, transfers
and conveys to Buyer all of Seller’s right, title and interest in and to the Seller Member
Interests;

     (b) A release signed by Seller in favor of the Company and Buyer, whereby Seller, on
its own behalf and on behalf of all of its Affiliates, releases any and all claims, demands
and causes of action that any such party may have against the Company and Buyer (excluding
only the rights and obligations created by this Agreement and the Assignment Agreement);

     (c) An originally signed copy of the Assignment Agreement signed on behalf of the
Company and Seller; and

     (d) Bill of Sale in the form attached as Exhibit “D”.

     6.2 Buyer’s Deliveries. At the Closing, Buyer shall deliver or cause to be delivered
to Seller the following:

     (a) The Cash Purchase Price in immediately available funds by wire transfer to an
account designated by the Seller;

     (b) A release signed by Buyer and the Company, in favor of Seller and its Affiliates,
whereby Buyer and the Company, for themselves and each of their respective Affiliates,
release any and all claims, demands and causes of action that any such party may have
against the Seller or any Affiliate of the Seller (excluding only the rights and obligations
created pursuant to this Agreement and the Assignment Agreement); and

     (c) A letter of resignation signed by Buyer and in a form approved by the Seller in
which Buyer (i) resigns any positions or offices that he may hold with Seller or any
Affiliate of Seller (other than the Company) and (ii) releases Seller and its Affiliates
(other than the Company) from any and all obligations, responsibilities or liabilities to
Buyer under any employment agreement (written or oral).

12

 

7. Miscellaneous.

     7.1 Payment of Certain Fees and Expenses. Each of the parties hereto shall pay the
fees and expenses incurred by it in connection with the negotiation, preparation, execution and
performance of this Agreement, including, without limitation, brokers’ fees, attorneys’ fees and
accountants’ fees.

     7.2 Notices. All notices, requests, demands and other communications which are
required or may be given under this Agreement shall be in writing and shall be deemed to have been
duly given if delivered personally or mailed, first class mail, postage prepaid, return receipt
requested, as follows:

     (a) If to the Seller:

Clear Channel Entertainment

9348 Civic Center Drive, 4th Floor

Beverly Hills, California 90210

Attention: Alan Ridgeway

Facsimile No: (310) 867-7001

with a copy to:

Gardere Wynne Sewell, LLP

1000 Louisiana, Suite 3400

Houston, Texas 77002

Attention: Michael F. Rogers

Facsimile No.: (713) 276-6769

     (b) If to Buyer:

Arn Tellem

c/o Wasserman Media Group, LLC

12100 W. Olympic Blvd., Suite 400

Los Angeles, CA 90064

with a copy to:

Munger Tolles & Olson LLP

355 South Grand Avenue, 35th Floor

Los Angeles, California 90071-1560

Attention: Rob Knauss

Facsimile: (213) 683-5137

or to such other address as either party shall have specified by notice in writing to the other
party. All such notices, requests, demands and communications shall be deemed to have been
received on the date of delivery.

     7.3 Entire Agreement. This Agreement (including the Exhibits and Schedules hereto)
constitutes the entire agreement between the parties hereto and supersedes all prior agreements and
understandings, oral and written, between the parties hereto with respect to the subject matter
hereof.

13

 

     7.4 Binding Effect; Benefit. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective permitted heirs, personal representatives,
successors and assigns. Nothing in this Agreement, expressed or implied, is intended to confer on
any person other than the parties hereto or their respective heirs, personal representatives,
successors and assigns, any rights, remedies, obligations or liabilities under or by reason of this
Agreement. The representations, warranties, covenants and agreements contained in this Agreement
shall survive and continue in full force and effect from and after the Closing.

     7.5 Amendment; Waiver. This Agreement may be amended, supplemented or otherwise
modified only by a written instrument executed by the parties hereto and duly signed by its
respective legal representatives. No waiver by any party of any of the provisions hereof shall be
effective unless explicitly set forth in writing and executed by the party so waiving or his or her
personal representative. Except as provided in the preceding sentence, no action taken pursuant to
this Agreement, including without limitation, any investigation by or on behalf of any party, shall
be deemed to constitute a waiver by the party taking such action of compliance with any
representations, warranties, covenants, or agreements contained herein, and in any documents
delivered or to be delivered pursuant to this Agreement and in connection with the Closing
hereunder. The waiver by any party hereto of a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any subsequent breach.

     7.6 Section Headings; Index. The section headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of this Agreement.

     7.7 Severability. If any provision of this Agreement shall be declared by any court
of competent jurisdiction to be illegal, void or unenforceable, all other provisions of this
Agreement shall not be affected and shall remain in full force and effect.

     7.8 Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original and all of which together shall be deemed to be one and
the same instrument.

     7.9 Applicable Law. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Delaware.

     7.10 Dispute Resolution. Any dispute, difference or question (“Dispute”)
between Buyer and Seller (“Disputing Parties”) shall be resolved in accordance with the
following dispute resolution procedures:

     (a) Good Faith Negotiations. The Disputing Parties shall endeavor, in good
faith, to resolve the Dispute through negotiations. If the Parties fail to resolve the
Dispute within a reasonable time, each Party shall nominate a senior officer or officers of
its management to meet at any mutually agreed location to resolve the Dispute.

     (b) Mediation. In the event that the negotiations do not result in a mutually
acceptable resolution, either Disputing Party may require that the Dispute shall be referred
to mediation in Los Angeles. One mediator shall be appointed by the agreement of the
Parties. The mediator shall be suitably qualified person having no direct or personal
interest in the outcome of the Dispute. Mediation shall be held within thirty (30) days of
referral to mediation. In the event the Disputing Parties are unable to agree on a
mediator, the Parties agree to the appointment of a mediator pursuant to the Commercial
Mediation Rules of the American Arbitration Association.

     (c) Arbitration. In the event the Parties are unsuccessful in their mediation
of the Dispute, either Disputing Party may request that the Dispute be settled by
arbitration by an

14

 

arbitrator mutually acceptable to the Disputing Parties in an arbitration proceeding
conducted in the City of Los Angeles in accordance with the rules existing at the date
hereof of the American Arbitration Association. If the Disputing Parties hereto cannot
agree on an arbitrator within ten (10) business days of the initiation of the arbitration
proceeding, an arbitrator shall be selected for the Disputing Parties by the American
Arbitration Association. The Disputing Parties shall use their reasonable best efforts to
have the arbitral proceeding concluded and a judgment rendered by the arbitrator within
forty (40) business days of the initiation of the arbitration proceeding. The decision of
such arbitrator shall be final, and judgment upon the award rendered by the arbitration may
be entered in any court having jurisdiction thereof, and the costs (including, without
limitation, reasonable fees and expenses of counsel and experts for the Disputing Parties)
of such arbitration (including the costs to enforce or preserve the rights awarded in the
arbitration) shall be borne by the Disputing Party whom the decision of the arbitrator is
against. If the decision of the arbitrator is not clearly against one of the disputing
Parties or the decision of the arbitrator is against more than one Disputing Party on one or
more issues, the costs of such arbitration shall be determined solely by the arbitrator.
Notwithstanding the foregoing, Buyer may apply to any court of competent jurisdiction for
injunctive relief under Section 5 without breach of this arbitration provision.

     7.11 Jointly Drafted Document. Buyer and the Seller were both represented by separate
counsel during the drafting of this Agreement and such respective counsel has reviewed all
documents relevant hereto. This Agreement is a jointly drafted document and neither Buyer nor
Seller shall be deemed to have been the draftsman hereof.

     7.12 Confidentiality. Except for a press release approved and authorized in writing
by the Seller, neither party hereto shall make any promotional announcement or advertise or
otherwise disseminate any information regarding this Agreement or the subject matter hereof, except
that each party may disclose such matters (i) in connection with obtaining its legal or financial
advise with regard to the transactions described herein and (ii) as required by Applicable Law.

     7.13 References. All references in this Agreement to Sections, paragraphs and other
subdivisions refer to the Sections, paragraphs and other subdivisions of this Agreement unless
expressly provided otherwise. The words “this Agreement”, “herein”, “hereof”, “hereby”,
“hereunder” and words of similar import refer to this Agreement as a whole and not to any
particular subdivision unless expressly so limited. Whenever the words “include”, “includes” and
“including” are used in this Agreement, such words shall be deemed to be followed by the words
“without limitation”. Each reference herein to a Schedule, Exhibit or Annex refers to the item
identified separately in writing by the parties hereto as the described Schedule, Exhibit or Annex
to this Agreement. All Schedules, Exhibits and Annexes are hereby incorporated in and made a part
of this Agreement as if set forth in full herein.

     7.14 Parent Guaranty.

     (a) By joining in the execution of this Agreement, SFX Entertainment, Inc. (d/b/a Live
Nation) (“Guarantor”), the parent entity of Seller, irrevocable and unconditionally
guarantees to Buyer the full, complete and timely performance by Seller of any and all
obligations of Seller under this Agreement. This guaranty shall remain in full force and
effect so long as Seller shall have any obligations or liabilities hereunder. This guaranty
shall be deemed a continuing guaranty and the waivers of Guarantor herein shall remain in
full force and effect until the satisfaction in full of all of Seller’s obligations
hereunder. If any default shall occur by Seller in its performance or satisfaction of any
of its obligations hereunder, then Guarantor will itself perform or satisfy, or cause to be
performed or satisfied, such obligations immediately upon notice from Buyer specifying in
summary form the default. This guaranty is an absolute, unconditional and continuing
guaranty of payment and performance which shall remain in full

15

 

force and effect without respect to future changes in conditions, including any change
of law. Guarantor agrees that its obligations hereunder shall not be contingent upon the
exercise or enforcement by Buyer of whatever remedies it may have against Seller. To the
maximum extent permitted by law, Guarantor hereby waives: (i) notice of acceptance hereof;
(ii) notice of any adverse change in the financial condition of Seller or of any other fact
that might increase Guarantor’s risk hereunder; (iii) presentment, protest, demand, action
or delinquency in respect of any of Seller’s obligations hereunder and (iv) all suretyship
defenses.

     (b) If Guarantor should hereafter request that Seller be released from its remaining
obligations and liabilities under this Agreement, then Buyer will agree to so release Seller
conditioned upon Guarantor executing such instruments or agreements as may be reasonably
required by Buyer to evidence and confirm that Guarantor will thereafter be the direct
obligor of all of Seller’s obligations hereunder to the same extent and in the same manner
as if Guarantor had been the Seller hereunder.

[Remainder of this page is intentionally blank.]

16

 

     IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement on the
date first above written.

	 	 	 	 	 	 	 	 	 
	 	 	BUYER:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 	 	ARN TELLEM	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	COMPANY:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	SFX SPORTS GROUP, LLC	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Arn Tellem, Chief Executive Officer	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	SELLER:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	SFX SPORTS GROUP, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Name:	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 	 	 

     For the purposes set forth in Section 7.14, the undersigned joins in the execution of this
Agreement.

	 	 	 	 	 	 	 	 	 
	 	 	SFX ENTERTAINMENT, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 	 	 

17

 

LIST OF EXHIBITS

Exhibit “A” — Adjustment Statement

Exhibit “B” — Form of Distribution Agreement

Exhibit “D” – Form of Bill of Sale

 

 

LIST OF SCHEDULES

Schedule 1.12 – List of LA Agents

Schedule 1.13(a) – Client Contracts

Schedule 1.13(b) – FF&E

Schedule 1.13(c) – Agent Notes

Schedule 1.13(g) – Prepaid Expenses not included in Adjustment Up Amount

Schedule 1.15 – Old Baseball A/R

Schedule 1.16 – Old Basketball A/R

Schedule 1.21 – ‘05 Basketball A/R

Schedule 1.22 – Retained Basketball Tickets

Schedule 3.4(a) – Discretionary Bonus

Schedule 3.4(b) – Contractual Offsets

Schedule 3.5(a)(ii) – McGrady and O’Neal Fee Adjustments

Schedule 5.1 – List of LA Employeesexv10w14

 

Exhibit 10.14

LINE OF CREDIT AGREEMENT

          THIS LINE OF CREDIT AGREEMENT (“Line of Credit Agreement”) is entered into as of August 17,
2005, between FARM CREDIT WEST, PCA, Visalia, California (“FCW”) and CALAVO GROWERS, INC., Santa
Paula, California (the “Company”).

     SECTION 1.     The Credit Facility. On the terms and conditions set forth in this Line of Credit
Agreement, FCW agrees to make advances to the Company during the period set forth below in an
aggregate principal amount not to exceed $12,000,000.00 (the “Commitment”). The Line of Credit
Agreement and Commitment is executed, delivered and accepted not in payment of but for the purpose
of amending, restating and replacing the following described obligations, and renewing any unpaid
balance(s) evidenced thereby: Note dated January 22, 2004, in the principal amount of
$12,000,000.00. Furthermore, the Commitment also evidences an additional loan advance(s) to the
extent the Commitment under this Line of Credit Agreement exceeds the renewed unpaid balance(s)
referred to above.

     SECTION 2.     Sale of Interest. The Company acknowledges that FCW has the option to participate
all or a portion of the Commitment with one or more lenders, including CoBank, ACB (“CoBank”). All
advances hereunder shall be made by CoBank as agent for FCW and all repayments by the Company
hereunder shall be made to CoBank as agent for FCW.

     SECTION 3.     Purpose. The purpose of the Commitment is to finance the ongoing operating needs
of the Company.

     SECTION 4.     Term. The term of the Commitment shall be from the date hereof, up to and
including February 1, 2007.

     SECTION 5.     Availability. Subject to the provisions of Section 25, advances will be made
available on any day on which FCW, CoBank, and the Federal Reserve Banks are open for business upon
the telephonic or written request of the Company. Requests for advances must be received no later
than 12:00 Noon, Company’s local time, on the date the advance is desired. Advances will be made
available by CoBank by wire transfer of immediately available funds to such account or accounts as
may be authorized by the Company. The Company shall furnish to CoBank a duly completed and
executed copy of a CoBank Delegation and Wire and Electronic Transfer Authorization Form, and
CoBank shall be entitled to rely on (and shall incur no liability to the Company in acting on) any
request or direction furnished in accordance with the terms thereof.

     SECTION 6.     Interest and Fees.

          (A)     Interest. The Company agrees to pay interest on the unpaid balance of the Commitment in
accordance with the following interest rate option:

 

 

Page 2

               (1)     7-Day LIBOR Index Rate. At a rate (rounded upward to the nearest 1/100th% and
adjusted for reserves required on “Eurocurrency Liabilities” (as hereinafter defined) for banks
subject to “FRB Regulation D” (as hereinafter defined) or required by any other federal law or
regulation) per annum equal at all times to 100 basis points (1.00%) above the annual rate quoted
by the British Bankers Association (the “BBA”) at 11:00 a.m. London time for the offering of seven
(7) day of U.S. dollars deposits, as published by Bloomberg or another major information vendor
listed on BBA’s official website on the first U.S. Banking Day (as hereinafter defined) in each
week with such rate to change weekly on such day. The rate shall be reset automatically, without
the necessity of notice being provided to the Company or any other party, on the first U.S. Banking
Day of each succeeding week and each change in the rate shall be applicable to all balances subject
to this option and information about the then current rate shall be made available upon telephonic
request. For purposes hereof (a) “U.S. Banking Day” shall mean a day on which CoBank is open for
business, dealings in U.S. dollar deposits are being carried out in the London interbank market,
and banks are open for business in New York City and London, England; (b) “Eurocurrency
Liabilities” shall have meaning as set forth in “FRB Regulation D”; and (c) “FRB Regulation D”
shall mean Regulation D as promulgated by the Board of Governors of the Federal Reserve System, 12
CFR Part 204, as amended.

               (2)     LIBOR. At a fixed rate per annum equal to “LIBOR” (as hereinafter defined) plus
100 basis points (1%). Under this option: (1) rates may be fixed for “Interest Periods” (as
hereinafter defined) of 1, 2, 3, 6, 9 or 12 months as selected by the Company; (2) amounts may be
fixed in increments of $100,000.00 or multiples thereof; (3) the maximum number of fixes in place
at any one time shall be 10; and (4) rates may only be fixed on a “Banking Day” (as hereinafter
defined) on 3 Banking Days’ prior written notice. For purposes hereof: (a) “LIBOR” shall mean the
rate (rounded upward to the nearest sixteenth) and adjusted for reserves required on “Eurocurrency
Liabilities” (as hereinafter defined) for banks subject to “FRB Regulation D” (as herein defined)
or required by any other federal law or regulation) quoted by the British Bankers Association (the
“BBA”) at 11:00 a.m. London time 2 Banking Days before the commencement of the Interest Period for
the offering of U.S. dollar deposits in the London interbank market for the Interest Period
designated by the Company; as published by Bloomberg or another major information vendor listed on
BBA’s official website; (b) “Banking Day” shall mean a day on which CoBank is open for business,
dealings in U.S. dollar deposits are being carried out in the London interbank market, and banks
are open for business in New York City and London, England; (c) “Interest Period” shall mean a
period commencing on the date this option is to take effect and ending on the numerically
corresponding day in the next calendar month or the month that is 2, 3, 6, 9 or 12 months
thereafter, as the case may be; provided, however, that: (i) in the event such ending day is not a
Banking Day, such period shall be extended to the next Banking Day unless such next Banking Day
falls in the next calendar month, in which case it shall end on the preceding Banking Day; and (ii)
if there is no numerically corresponding day in the month, then such period shall end on the last
Banking Day in the relevant month; (d) “Eurocurrency Liabilities” shall have meaning as set forth
in “FRB 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.

 

Page 3

          The Company shall select the applicable rate option at the time it requests a loan hereunder
and may, subject to the limitations set forth above, elect to convert balances bearing interest at
the 7-Day LIBOR Index Rate option to the LIBOR rate option. Upon the expiration of any
fixed rate period, interest shall automatically accrue at the 7-Day LIBOR Index Rate
option provided for above unless the amount fixed is repaid or fixed for an additional period in
accordance with the terms hereof. Notwithstanding the foregoing, rates may not be fixed in such a
manner as to cause the Company to have to break any fixed rate balance in order to pay any
installment of principal. All elections provided for herein shall be made telephonically or in
writing and must be received by 12:00 Noon Company’s local time. Interest shall be calculated on
the actual number of days each loan is outstanding on the basis of a year consisting of 360 days
and shall be payable monthly in arrears by the 20th day of the following month or on such other day
in such month as FCW shall require in a written notice to the Company.

          (B)     Commitment Fee. In consideration of the Commitment, the Company agrees to pay
to FCW a commitment fee on the average daily unused portion of the Commitment at the rate of 0.15%
per annum (calculated on a 360 day basis based on utilization, which is defined as outstanding
advances plus issued and outstanding letters of credit divided by the total available amount of the
Commitment), payable quarterly in arrears by the 20th day following each quarter. Such fee shall
be payable for each quarter (or portion thereof) occurring during the original or any extended term
of the Commitment.

     SECTION 7.     Repayment and Maturity. The unpaid principal balance of the Commitment shall
mature and be due and payable on February 1, 2007 (the “Maturity Date”).

     SECTION 8.     Promissory Note. The Company’s obligation to repay the Commitment shall be
evidenced by a promissory note in the form attached hereto as Exhibit A (“Note”).

     SECTION 9.     Manner and Time of Payment. CoBank shall maintain a record of all loans, the
interest accrued thereon, and all payments made with respect thereto, and such record shall, absent
proof of manifest error, be conclusive evidence of the outstanding principal and interest on the
loans. All payments shall be made by wire transfer of immediately available funds, by check, or by
automated clearing house or other similar cash handling processes as specified by separate
agreement between the Company and CoBank. Wire transfers shall be made to ABA No. 307088754 for
advice to and credit of CoBank (or to such other account as CoBank may direct by notice). The
Company shall give CoBank telephonic notice no later than 12:00 Noon Company’s local time of its
intent to pay by wire and funds received after 3:00 p.m. Company’s local time shall be credited on
the next business day. Checks shall be mailed to CoBank, Department 167, Denver, Colorado
80291-0167 (or to such other place as CoBank may direct by notice). Credit for payment by check
will not be given until the later of: (a) the day on which CoBank receives immediately available
funds; or (b) the next business day after receipt of the check all as set forth in the Servicing
Agreement between Borrower, FCW, and CoBank in form attached hereto as Exhibit B.

 

Page 4

     SECTION 10.     Capitalization. The Company has purchased a $1,000.00 stock investment under
FCW’s capitalization plan. The Company understands that FCW’s stock is at risk and that any
reference to “FCW equities” or to “stock or participation certificates required by Lender’s bylaws”
in any document, agreement or Loan Document shall mean the FCW stock investment described herein.

     SECTION 11.     Patronage. The Commitment is eligible for patronage under the plan and in
accordance with the provisions of FCW’s bylaws and its practices and procedures related to
patronage distribution and as set forth in Section 27.

     SECTION 12.     Security. The Company’s obligations under this Line of Credit Agreement and the
Note shall be secured by a statutory first lien on all equity which the Company may now own or
hereafter acquire in FCW. With the exception of the security referenced in the preceding sentence,
the Company’s obligations under this Line of Credit Agreement and the Note shall be unsecured.

     SECTION 13.     Conditions Precedent. FCW’s obligation to make advances hereunder is subject to
the condition precedent that FCW receive, in form and content satisfactory to FCW, each of the
following:

          (A)     Line of Credit Agreement. A duly executed copy of this Line of Credit Agreement and all
instruments and documents contemplated hereby.

          (B)     Evidence of Authority. Such certified board resolutions, evidence of incumbency, and
other evidence that FCW may require that this Line of Credit Agreement and the Note have been duly
authorized and executed.

          (C)     Fees and Other Charges. All fees and other charges provided for herein.

          (D)     Evidence of Insurance. Such evidence as FCW may require that the Company is in compliance
with Section 15(C) hereof

          (E)     Event of Default. That no “Event of Default” (as defined in Section 18 hereof) or event
which with the giving of notice and/or the passage of time would become an Event of Default
hereunder (a “Potential Default”), shall have occurred and be continuing.

     SECTION 14.     Representations and Warranties.

          (A)     Line of Credit Agreement. The Company represents and warrants to FCW that as of the date
of this Line of Credit Agreement:

               (1)     Compliance. The Company and, to the extent contemplated hereunder, each “Subsidiary” (as
defined below), is in compliance with all of the terms of this Line of Credit Agreement, and no
Event of Default or Potential Default exists hereunder.

 

Page 5

               (2)     Subsidiaries. The Company has the following Subsidiaries: Calavo Foods, Inc. (CFI); Maui
Fresh International, Inc.; Calavo de Mexico S.A. de C.V.; and Calavo Foods de Mexico S.A. de
C.V. . For purposes hereof, a “Subsidiary” shall mean a corporation of which shares of
stock having ordinary voting power to elect a majority of the board of directors or other managers
of such corporation are owned, directly or indirectly, by the Company.

               (3)      Conflicting Agreements. This Line of Credit Agreement and the Note (collectively, at any
time, the “Loan Documents”), do not conflict with, or require the consent of any party to, any
other agreement to which the Company is a party or by which it or its property may be bound or
affected, and do not conflict with any provision of the Company’s bylaws, articles of
incorporation, or other organizational documents.

               (4)     Compliance. The Company and, to the extent contemplated hereunder, each Subsidiary, if
any, is in compliance with all of the terms of the Loan Documents.

               (5)      Binding Agreement. The Loan Documents create legal, valid, and binding obligations of the
Company which are enforceable in accordance with their terms, except to the extent that enforcement
may be limited by applicable bankruptcy, insolvency, or similar laws affecting creditors’ rights
generally.

     SECTION 15.     Affirmative Covenants. Unless otherwise agreed to in writing by FCW, while this
Line of Credit Agreement is in effect, the Company agrees to and with respect to Subsections 15(A)
through 15(F) hereof, agrees to cause each Subsidiary, if any, to:

          (A)     Corporate Existence, Licenses. (i) Preserve and keep in full force and effect its
existence and good standing in the jurisdiction of its incorporation or formation; (ii) qualify and
remain qualified to transact business in all jurisdictions where such qualification is required;
and (iii) obtain and maintain all licenses, certificates, permits, authorizations, approvals, and
the like which are material to the conduct of its business or required by law, rule, regulation,
ordinance, code, order, and the like (collectively, “Laws”).

          (B)     Compliance with Laws. Comply in all material respects with all applicable Laws,
including, without limitation, all Laws relating to environmental protection. In addition, the
Company agrees to cause all persons occupying or present on any of its properties, and to cause
each Subsidiary, if any, to cause all persons occupying or present on any of its properties, to
comply in all material respects with all environmental protection Laws.

          (C)     Insurance. Maintain insurance with insurance companies or associations acceptable to FCW
in such amounts and covering such risks as are usually carried by companies engaged in the same or
similar business and similarly situated, and make such increases in the type or amount of coverage
as FCW may request. At FCW’s request, all policies (or such other proof of compliance with this
Subsection as may be satisfactory to FCW) shall be delivered to FCW.

 

Page 6

          (D)     Property Maintenance. Maintain all of its property that is necessary to or useful in the
proper conduct of its business in good working condition, ordinary wear and tear excepted.

          (E)     Books and Records. Keep adequate records and books of account in which complete entries
will be made in accordance with generally accepted accounting principles (“GAAP”) consistently
applied.

          (F)     Inspection. Permit FCW or its agents, upon reasonable notice and during normal business
hours or at such other times as the parties may agree, to examine its properties, books, and
records, and to discuss its affairs, finances, and accounts, with its respective officers,
directors, employees, and independent certified public accountants.

          (G)     Reports and Notices. Furnish to FCW:

               (1)     Annual Financial Statements. As soon as available, but in no event more than 90 days
after the end of each fiscal year of the Company occurring during the term hereof, annual
consolidated and consolidating financial statements of the Company and its consolidated
Subsidiaries, if any, prepared in accordance with GAAP consistently applied. Such financial
statements shall: (a) be audited by independent certified public accountants selected by the
Company and acceptable to FCW; (b) be accompanied by a report of such accountants containing an
opinion thereon acceptable to FCW; (c) be prepared in reasonable detail and in comparative form;
and (d) include a balance sheet, a statement of income, a statement of retained earnings, a
statement of cash flows, and all notes and schedules relating thereto.

               (2)     Interim Financial Statements. As soon as available, but in no event more than 45 days
after the end of each fiscal quarter, a consolidated balance sheet of the Company and its
consolidated Subsidiaries, if any, as of the end of such quarter, a consolidated statement of
income for the Company and its consolidated Subsidiaries, if any, for such period and for the
period year to date, and such other interim statements as FCW may specifically request, all
prepared in reasonable detail and in comparative form in accordance with GAAP consistently applied
and certified by an authorized officer or employee of the Company acceptable to FCW.

               (3)     Notice of Default. Promptly after becoming aware thereof, notice of the occurrence of an
Event of Default or a Potential Default.

               (4)     Notice of Non-Environmental Litigation. Promptly after the commencement thereof, notice
of the commencement of all actions, suits, or proceedings before any court, arbitrator, or
governmental department, commission, board, bureau, agency, or instrumentality affecting the
Company or any Subsidiary which, if determined adversely to the Company or any such Subsidiary,
could have a material adverse effect on the financial condition, properties, profits, or operations
of the Company or any such Subsidiary.

 

Page 7

               (5)     Notice of Environmental Litigation. Promptly after receipt thereof, notice of the receipt
of all pleadings, orders, complaints, indictments, or any other communication alleging a condition
that may require the Company or any Subsidiary to undertake or to contribute to a cleanup or other
response under environmental Laws, or which seek penalties, damages, injunctive relief, or criminal
sanctions related to alleged violations of such Laws, or which claim personal injury or property
damage to any person as a result of environmental factors or conditions.

               (6)     Bylaws and Articles. Promptly after any change in the Company’s bylaws or articles of
incorporation (or like documents), copies of all such changes, certified by the Company’s
Secretary.

               (7)     Other Information. Such other information regarding the condition or operations,
financial or otherwise, of the Company or any Subsidiary as FCW may from time to time reasonably
request, including but not limited to copies of all pleadings, notices, and communications referred
to in Subsections 15(G)(4) and (5) above.

               (8)     Financial Certificate. Together with each set of financial statements furnished to FCW
pursuant to Section 15(G)(1), and each quarterly statement submitted pursuant to Section 15(G)(2)
for a period corresponding to a period for which one or more of the financial covenants set forth
in Section 17 hereof are required to be tested, a certificate of an officer or employee of the
Company acceptable to FCW setting forth calculations showing compliance with each of the financial
covenants that require compliance at the end of the period for which the statements are being
furnished.

          (H)     Certain Organizational Changes. Provide FCW with prior notice (and as early as
practicable) of any merger, consolidation reorganization under a different provision of law,
acquisition of all or a material part of the assets of another organization, change of name,
adoption of any trade name, or creation of any Subsidiary, affiliate or material joint venture(s).
For purposes of this covenant, joint venture transaction(s), which alone or in the aggregate exceed
$1,000,000, are considered material.

     SECTION 16.     Negative Covenants. Unless otherwise agreed to in writing by FCW, which agreement
will not be unreasonably withheld, while this Line of Credit Agreement is in effect, the Company
will not:

          (A)     Borrowings. Create, incur, assume, or allow to exist, directly or indirectly, any
indebtedness or liability for borrowed money (including trade or bankers’ acceptances), letters of
credit, or the deferred purchase price of property or services (including capitalized leases),
except for: (i) debt to FCW; (ii) accounts payable to trade creditors incurred in the ordinary
course of business; and (iii) current operating liabilities (other than for borrowed money)
incurred in the ordinary course of business; (iv) debt of the Company to Bank of America in an
amount not to exceed $12,000,000.00 and all extensions, renewals, and refinancings thereof; (v)
(vi) letters of credit issued by any bank for the account of the Company in an aggregate face

 

Page 8

amount not to exceed $5,000,000.00 at any one time outstanding; and (vii) capitalized leases
existing on the date hereof existing from time to time.

          (B)     Liens. Create, incur, assume, or allow to exist any mortgage, deed of trust, pledge, lien
(including the lien of an attachment, judgment, or execution), security interest, or other
encumbrance of any kind upon any of its property, real or personal (collectively, “Liens”). The
foregoing restrictions shall not apply to: (i) Liens in favor of FCW or CoBank; (ii) Liens for
taxes, assessments, or governmental charges that are not past due; (iii) Liens and deposits under
workers’ compensation, unemployment insurance, and social security Laws; (iv) Liens and deposits to
secure the performance of bids, tenders, contracts (other than contracts for the payment of money),
and like obligations arising in the ordinary course of business as conducted on the date hereof;
(v) Liens imposed by Law in favor of mechanics, materialmen, warehousemen, and like persons that
secure obligations that are not past due; and (vi) easements, rights-of-way, restrictions, and
other similar encumbrances which, in the aggregate, do not materially interfere with the
occupation, use, and enjoyment of the property or assets encumbered thereby in the normal course of
its business or materially impair the value of the property subject thereto.

          (C)     Transfer of Assets. Sell, transfer, lease, or otherwise dispose of any of its assets,
except in the ordinary course of business.

          (D)     Contingent Liabilities. Assume, guarantee, become liable as a surety, endorse,
contingently agree to purchase, or otherwise be or become liable, directly or indirectly
(including, but not limited to, by means of a maintenance agreement, an asset or stock purchase
agreement, or any other agreement designed to ensure any creditor against loss), for or on account
of the obligation of any person or entity, except by the endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of the Company’s business.

          (E)     Change in Business. Engage in any business activities or operations substantially
different from or unrelated to the Company’s present business activities or operations.

     SECTION 17.     Financial Covenants. Unless otherwise agreed to in writing, while this Line of
Credit Agreement is in effect:

          (A)     Working Capital. The Company will maintain, on a consolidated basis, current assets in
excess of current liabilities of at least Fifteen Million Dollars ($15,000,000), measured on a
quarterly basis.

          (B)     Tangible Net Worth. The Company will maintain, on a consolidated basis, a “Tangible Net
Worth” equal to at least Thirty-Two Million Five Hundred Thousand Dollars ($32,500,000.00),
measured on a quarterly basis. “Tangible Net Worth” means the value of total assets (including
leaseholds and leasehold improvements and reserves against assets but excluding goodwill, patents,
trademarks, trade names, organization expense, unamortized debt discount and expense, capitalized
or deferred research and development costs, deferred

 

Page 9

marketing expenses, and other like intangibles, and monies due from affiliates, officers,
directors, employees, shareholders, members or managers) less total liabilities, including
but not limited to accrued and deferred income taxes, but excluding the non-current portion of
Subordinated Liabilities. “Subordinated Liabilities” means liabilities subordinated to the
Borrower’s obligations to FCW in a manner acceptable to FCW in its sole discretion.

          (C)     EBITDA. The Company will maintain an “EBITDA” of at least Seven Million Five Hundred
Thousand Dollars ($7,500,000.00). “EBITDA” means net income, less income or plus loss from
discontinued operations and extraordinary items, plus income taxes, plus interest expense,
plus depreciation, depletion, and amortization. This covenant will be calculated at the end of
each reporting period for which FCW requires financial statements, using the results of the
twelve-month period ending with that reporting period. The current portion of long-term liabilities
will be measured as of the last day of the calculation period.

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

          (A)     Payment Default. The Company should fail to make any payment when due.

          (B)     Representations and Warranties. Any representation or warranty made or deemed made by the
Company herein or in the Note, application, agreement, certificate, or other document related to or
furnished in connection with this Line of Credit Agreement or the Note, shall prove to have been
false or misleading in any material respect on or as of the date made or deemed made.

          (C)     Certain Affirmative Covenants. The Company or, to the extent required hereunder, any
Subsidiary should fail to perform or comply with Sections 15(A) through 15(G)(2), and 15(G)(6) and
such failure continues for 15 days after written notice thereof shall have been delivered by FCW to
the Company.

          (D)     Other Covenants and Agreements. The Company or, to the extent required hereunder, any
Subsidiary should fail to perform or comply with any other covenant or agreement contained herein
or in any other Loan Document or shall use the proceeds of any loan for an unauthorized purpose.

          (E)     Cross-Default. The Company should, after any applicable grace period, breach or be in
default under the terms of any other agreement between the Company and FCW.

          (F)     Other Indebtedness. The Company or any Subsidiary should fail to pay when due any
indebtedness to any other person or entity for borrowed money or any long-term obligation for the
deferred purchase price of property (including any capitalized lease), or any other event occurs
which, under any agreement or instrument relating to such indebtedness or obligation, has the
effect of accelerating or permitting the acceleration of such indebtedness or obligation, whether
or not such indebtedness or obligation is actually accelerated or the right to accelerate is
conditioned on the giving of notice, the passage of time, or otherwise.

 

Page 10

          (G)     Judgments. A judgment, decree, or order for the payment of money shall be rendered
against the Company or any Subsidiary and either: (i) enforcement proceedings shall have been
commenced; (ii) a Lien prohibited under Section 10(B) hereof shall have been obtained; or (iii)
such judgment, decree, or order shall continue unsatisfied and in effect for a period of 20
consecutive days without being vacated, discharged, satisfied, or stayed pending appeal.

          (H)     Insolvency. The Company or any Subsidiary shall: (i) become insolvent or shall generally
not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they come
due; or (ii) suspend its business operations or a material part thereof or make an assignment for
the benefit of creditors; or (iii) apply for, consent to, or acquiesce in the appointment of a
trustee, receiver, or other custodian for it or any of its property or, in the absence of such
application, consent, or acquiescence, a trustee, receiver, or other custodian is so appointed; or
(iv) commence or have commenced against it any proceeding under any bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution, or liquidation Law of any jurisdiction.

          (I)     Material Adverse Change. Any material adverse change occurs, as reasonably determined by
FCW, in the Company’s financial condition, results of operation, or ability to perform its
obligations hereunder or under any instrument or document contemplated hereby.

     SECTION 19.     Remedies. Upon the occurrence and during the continuance of an Event of Default
or any Potential Default, FCW shall have no obligation to continue to extend credit to the Company
and may discontinue doing so at any time without prior notice. For all purposes hereof, the term
“Potential Default” means the occurrence of any event which, with the passage of time or the giving
of notice or both would become an Event of Default. In addition, upon the occurrence and during
the continuance of any Event of Default, FCW may, upon notice to the Company, terminate any
commitment and declare the entire unpaid principal balance of the loans, all accrued interest
thereon, and all other amounts payable under this Line of Credit Agreement, all Supplements, and
the other Loan Documents to be immediately due and payable. Upon such a declaration, the unpaid
principal balance of the loans and all such other amounts shall become immediately due and payable,
without protest, presentment, demand, or further notice of any kind, all of which are hereby
expressly waived by the Company. In addition, upon such an acceleration:

          (A)     Enforcement. FCW may proceed to protect, exercise, and enforce such rights and remedies
as may be provided by this Line of Credit Agreement, any other Loan Document or under Law. Each
and every one of such rights and remedies shall be cumulative and may be exercised from time to
time, and no failure on the part of FCW to exercise, and no delay in exercising, any right or
remedy shall operate as a waiver thereof, and no single or partial exercise of any right or remedy
shall preclude any other or future exercise thereof, or the exercise of any other right. Without
limiting the foregoing, FCW may hold and/or set off and apply against the

 

Page 11

Company’s obligations to FCW any cash collateral held by FCW, or any balances held by FCW for the
Company’s account (whether or not such balances are then due).

          (B)     Application of Funds. CoBank may apply all payments received by it to the Company’s
obligations to FCW in such order and manner as FCW may elect in its sole discretion.

          In addition to the rights and remedies set forth above: (i) if the Company fails to make any
payment when due, then at FCW’s option in each instance, such payment shall bear interest from the
date due to the date paid at 2% per annum in excess of the rate(s) of interest that would otherwise
be in effect on that loan; and (ii) after the maturity of any loan (whether as a result of
acceleration or otherwise), the unpaid principal balance of such loan (including without
limitation, principal, interest, fees and expenses) shall automatically bear interest at 2% per
annum in excess of the rate(s) of interest that would otherwise be in effect on that loan. All
interest provided for herein shall be payable on demand and shall be calculated on the basis of a
year consisting of 365 days.

     SECTION 20.     Broken Funding Surcharge. Notwithstanding any provision contained in the Note
giving the Company the right to repay any loan prior to the date it would otherwise be due and
payable, the Company agrees to provide three Business Days’ prior written notice for any prepayment
of a fixed rate balance and that in the event it repays any fixed rate balance prior to its
scheduled due date or prior to the last day of the fixed rate period applicable thereto (whether
such payment is made voluntarily, as a result of an acceleration, or otherwise), the Company will
pay to CoBank a surcharge in an amount equal to the greater of: (i) an amount which would result
in FCW being made whole (on a present value basis) for the actual or imputed funding losses
incurred by FCW as a result thereof; or (ii) $300.00. Notwithstanding the foregoing, in the event
any fixed rate balance is repaid as a result of the Company refinancing the loan with another
lender or by other means, then in lieu of the foregoing, the Company shall pay to CoBank a
surcharge in an amount sufficient (on a present value basis) to enable FCW to maintain the yield it
would have earned during the fixed rate period on the amount repaid. Such surcharges will be
calculated in accordance with methodology established by FCW (a copy of which will be made
available to the Company upon request).

     SECTION 21.     Complete Agreement, Amendments. This Line of Credit Agreement, the Note, and all
other instruments and documents contemplated hereby and thereby, are intended by the parties to be
a complete and final expression of their agreement. No amendment, modification, or waiver of any
provision hereof or thereof, and no consent to any departure by the Company herefrom or therefrom,
shall be effective unless approved by FCW and contained in a writing signed by or on behalf of FCW,
and then such waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given. Additionally, any headings used in this Line of Credit Agreement
are inserted only as a matter of convenience and for reference, and in no way define, limit or
describe the scope or intent of any term or provision. As used herein, the word “including” means
“including without limitation” and/or “including but not limited to”.

 

Page 12

     SECTION 22.     Applicable Law. Except to the extent governed by applicable federal law, this
Line of Credit Agreement and the Note shall be governed by and construed in accordance with the
laws of the State of California, without reference to choice of law doctrine.

     SECTION 23.     Notices. All notices hereunder shall be in writing and shall be deemed to be duly
given upon delivery if personally delivered or sent by telegram or facsimile transmission, or 3
days after mailing if sent by express, certified or registered mail, to the parties at the
following addresses (or such other address for a party as shall be specified by like notice):

	 	 	 
	If to FCW, as follows:

	 	If to the Company, as follows:
	 
	 	 
	Farm Credit West, PCA

	 	Calavo Growers, Inc.
	2929 W. Main Street, Suite A

	 	Attn: Vice President-Finance
	Visalia, CA 93291-5700

	 	1141-A Cummings Road
	 	 	Santa Paula, CA 93060
	Attention: James Neeley
	 	Fax No: (805) 921-3232
	Fax No.: 559-627-4728
	 	 

     SECTION 24.     Taxes and Expenses. To the extent allowed by law, the Company agrees to pay all
reasonable out-of-pocket costs and expenses (including the fees and expenses of counsel retained by
FCW) incurred by FCW in connection with the administration, collection, and enforcement of this
Line of Credit Agreement and the other Loan Documents, including, without limitation, all costs and
expenses incurred in perfecting, maintaining, determining the priority of, and releasing any
security for the Company’s obligations to FCW, and any stamp, intangible, transfer, or like tax
payable in connection with this Line of Credit Agreement or any other Loan Document.

     SECTION 25.     Effectiveness and Severability. This Line of Credit Agreement shall continue in
effect until: (i) all indebtedness and obligations of the Company under this Line of Credit
Agreement, the Note, and all other Loan Documents shall have been paid or satisfied; and (ii) FCW
has no commitment to extend credit to or for the account of the Company hereunder. Any provision
of this Line of Credit Agreement or any other Loan Document which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions hereof or thereof.

     SECTION 26.     Successors and Assigns. This Line of Credit Agreement, the Note, and the other
Loan Documents shall be binding upon and inure to the benefit of the Company and FCW and their
respective successors and assigns, except that the Company may not assign or transfer its rights or
obligations under this Line of Credit Agreement, the Note or any other Loan Document without the
prior written consent of FCW.

 

Page 13

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

          IN WITNESS WHEREOF, the parties have caused this Line of Credit Agreement to be executed by
their duly authorized officers as of the date shown above.

	 	 	 	 	 	 	 
	FARM CREDIT WEST, PCA	 	CALAVO GROWERS, INC., a California

Corporation
	 
	 	 	 	 	 	 
	By:

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

	 	 
	 	 	 	 
	 

	 	 	 	 	 	Arthur J. Bruno,
	Title:

	 	Vice-President
	 	Title:
	 	Chief Financial Officer & Secretary
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Scott H. Runge
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	Scott H. Runge,
	 

	 	 	 	Title
	 	Treasurer

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