1

    AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 24, 2001.

                                                     REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------

                                    FORM S-4
                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933
                            ------------------------

                              CALAVO GROWERS, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                                                            
           CALIFORNIA                          0600                          33-0945304
  (STATE OR OTHER JURISDICTION     (PRIMARY STANDARD INDUSTRIAL           (I.R.S. EMPLOYER
      OF INCORPORATION OR          CLASSIFICATION CODE NUMBER)          IDENTIFICATION NO.)
         ORGANIZATION)

                                              
             2530 RED HILL AVENUE                              EGIDIO CARBONE, JR.
       SANTA ANA, CALIFORNIA 92705-5542          VICE PRESIDENT, FINANCE AND CORPORATE SECRETARY
                (949) 223-1111                                CALAVO GROWERS, INC.
  (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE                 2530 RED HILL AVENUE
 NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S           SANTA ANA, CALIFORNIA 92705-5542
         PRINCIPAL EXECUTIVE OFFICES)                            (949) 223-1111
                                                     (NAME, ADDRESS, INCLUDING ZIP CODE, AND
                                                                    TELEPHONE
                                                    NUMBER, INCLUDING AREA CODE, OF AGENT FOR
                                                                    SERVICE)

                                    COPY TO:
                                 MARC L. BROWN
                     TROY & GOULD PROFESSIONAL CORPORATION
                       1801 CENTURY PARK EAST, 16TH FLOOR
                       LOS ANGELES, CALIFORNIA 90067-2367
                                 (310) 789-1269

     APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
                                    PUBLIC:
  As soon as practicable after this Registration Statement becomes effective.

     If the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, please check the following box.  [ ]

     If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering.  [ ]

     If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.  [ ]

                        CALCULATION OF REGISTRATION FEE

- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
     TITLE OF EACH CLASS OF                              PROPOSED MAXIMUM      PROPOSED MAXIMUM
           SECURITIES                AMOUNT TO BE         OFFERING PRICE          AGGREGATE             AMOUNT OF
        TO BE REGISTERED              REGISTERED            PER SHARE           OFFERING PRICE      REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------------
                                                                                       
Common Stock, par value $0.001
  per share.....................     10,000,000(1)           $1.72(2)           $17,200,000(2)        $4,300.00(3)
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------

(1) Based upon an estimate of the maximum number of shares of the capital stock
    of Calavo Growers of California that will be exchanged for shares of the
    common stock of Calavo Growers, Inc. in the merger described herein.

(2) Calculated in accordance with Rule 457(f)(2) under the Securities Act based
    upon the book value as of February 28, 2001 of the shares of the capital
    stock of Calavo Growers of California to be exchanged in the merger
    described herein.

(3) Calculated by multiplying the proposed maximum aggregate offering price by
    .00025.

                            ------------------------

     THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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                          CALAVO GROWERS OF CALIFORNIA
                              CALAVO GROWERS, INC.
                              2530 RED HILL AVENUE
                          SANTA ANA, CALIFORNIA 92705
                                 (949) 223-1111
                           -------------------------

                        INFORMATION STATEMENT/PROSPECTUS

To the shareholders of Calavo Growers of California:

     The Board of Directors unanimously recommends the conversion of Calavo
Growers of California ("CALAVO") from a California nonprofit cooperative
association into a California for-profit corporation called Calavo Growers, Inc.
("NEW CALAVO"). After the conversion, New Calavo will conduct Calavo's business
and will own all of Calavo's assets. However, the business will be conducted on
a for-profit basis rather than on a nonprofit cooperative basis.

     To accomplish the conversion, Calavo will merge into New Calavo, which is a
newly organized California corporation. Each share of Calavo's preferred or
common stock that is outstanding on the effective date of the merger will be
exchanged for one share of the common stock of New Calavo. The common stock of
New Calavo will not be listed on a securities exchange or the Nasdaq stock
market. A copy of the merger agreement is attached as Appendix A to this
Information Statement/Prospectus and is incorporated into this document.

     The conversion and the merger agreement require the approval of Calavo's
shareholders and lenders. You may vote if you owned shares of Calavo stock as of
the close of business on             , 2001, which has been fixed by the Board
of Directors as the record date for determining the shareholders who are
entitled to vote on the merger.

     Please vote by completing and mailing the enclosed ballot in the envelope
provided. Please deliver your ballot to Calavo by             , 2001. If you
fail to return a completed ballot, the effect will be the same as a vote against
the conversion. You may vote only by using the enclosed ballot.

     WE STRONGLY URGE YOU TO REVIEW THIS ENTIRE INFORMATION
STATEMENT/PROSPECTUS, INCLUDING THE "RISK FACTORS" SECTION BEGINNING ON PAGE 6.
WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT
FROM THE INFORMATION CONTAINED IN THIS INFORMATION STATEMENT/PROSPECTUS.

     CALAVO'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
IN FAVOR OF THE CONVERSION OF CALAVO INTO A FOR-PROFIT CORPORATION BY VOTING IN
FAVOR OF THE CONVERSION AND THE MERGER AGREEMENT.

     NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES TO BE ISSUED IN THE
MERGER OR DETERMINED IF THIS INFORMATION STATEMENT/ PROSPECTUS IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

     This Information Statement/Prospectus is dated             , 2001 and is
being mailed to shareholders on or about that date.

                                          Sincerely,

                                          Lee Cole
                                          Chairman, Chief Executive Officer and
                                          President
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                               TABLE OF CONTENTS

                                                              PAGE
                                                              ----
                                                           
Where You Can Find More Information.........................   ii
Forward-Looking Statements..................................   ii
Questions and Answers About the Conversion..................    1
Summary.....................................................    3
Risk Factors................................................    6
The Conversion..............................................    9
Transfers of Shares of New Calavo Common Stock After the
  Conversion................................................   13
New Calavo's Business, Management and Common Stock..........   15
Comparison of the Rights of Calavo's and New Calavo's
  Shareholders..............................................   17
Selected Condensed Consolidated Financial Data..............   21
Unaudited Pro Forma Condensed Combined Financial
  Statements................................................   22
Business of Calavo..........................................   27
Management's Discussion and Analysis of Financial Condition
  and Results of Operations.................................   37
Management of Calavo........................................   43
Security Ownership of Certain Beneficial Owners and
  Management................................................   47
Legal Matters...............................................   48
Experts.....................................................   48
Index to Financial Statements...............................  F-1
Appendix A: Agreement and Plan of Merger and Reorganization
Appendix B: Articles of Incorporation of Calavo Growers,
  Inc.
Appendix C: Bylaws of Calavo Growers, Inc.
Appendix D: Marketing Agreement for Calavo Growers, Inc.
Appendix E: January 2001 Amendment to the Bylaws of Calavo
  Growers of California

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                      WHERE YOU CAN FIND MORE INFORMATION

     Following the conversion, New Calavo will file annual, quarterly and
special reports and proxy statements with the Securities and Exchange Commission
(the "SEC"). You may read and copy any reports, proxy statements and other
documents that the company files with the SEC at the SEC's public reference room
at 450 Fifth Street, N.W., Washington, D.C. 20549 and at regional public
reference rooms in New York, New York and Chicago, Illinois. Please call the SEC
at 1-800-SEC-0330 for further information on the operation of the public
reference rooms. The reports, proxy statements and any other documents that New
Calavo files with the SEC will also be available from commercial document
retrieval services and at the SEC's web site (http://www.sec.gov). In addition,
New Calavo intends to furnish its shareholders with annual reports containing
financial statements audited by an independent certified accounting firm.

     New Calavo has filed with the SEC a Registration Statement on Form S-4 that
registers the offer and sale of the common stock that will be issued in
connection with the merger between Calavo and New Calavo. This Information
Statement/Prospectus is a part of that Registration Statement. As allowed by the
SEC's rules, this Information Statement/Prospectus does not contain all of the
information that you can find in the Registration Statement or all of the
exhibits to the Registration Statement.

     YOU SHOULD RELY ONLY ON THE INFORMATION THAT IS CONTAINED IN THIS
INFORMATION STATEMENT/PROSPECTUS. WE HAVE NOT AUTHORIZED ANY OTHER PERSON TO
PROVIDE YOU WITH DIFFERENT INFORMATION. IF ANYONE PROVIDES YOU WITH DIFFERENT OR
INCONSISTENT INFORMATION, YOU SHOULD NOT RELY ON IT. FURTHERMORE, INFORMATION
THAT IS CONTAINED ON CALAVO'S WEB SITE DOES NOT CONSTITUTE A PART OF THIS
DOCUMENT. WE ARE NOT MAKING AN OFFER TO SELL THESE SECURITIES IN ANY
JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED. YOU SHOULD ASSUME THAT
THE INFORMATION CONTAINED IN THIS INFORMATION STATEMENT/PROSPECTUS IS ACCURATE
ONLY AS OF THE DATE ON THE FRONT COVER OF THIS DOCUMENT. OUR BUSINESS, FINANCIAL
CONDITION, RESULTS OF OPERATIONS AND PROSPECTS MAY HAVE CHANGED SINCE THAT DATE.

                           FORWARD-LOOKING STATEMENTS

     We make forward-looking statements in this Information Statement/Prospectus
that represent our expectations or beliefs about future events and financial
performance. Forward-looking statements are identifiable by words such as
"believe," "anticipate," "expect," "intend," "plan," "will," "may" and other
similar expressions. In addition, any statements that refer to expectations,
projections or other characterizations of future events or circumstances are
forward-looking statements. Forward-looking statements are subject to known and
unknown risks and uncertainties, including those described under "Risk Factors"
and elsewhere in this document. In light of these risks, uncertainties and
assumptions, the forward-looking events discussed in this document might not
occur. In addition, actual results could differ materially from those suggested
by the forward-looking statements, and therefore you should not place undue
reliance on the forward-looking statements. We undertake no obligation to
publicly update or revise any forward-looking statements, whether as a result of
new information, future events or otherwise.

                                        ii
   5

                   QUESTIONS AND ANSWERS ABOUT THE CONVERSION

Q. Why has Calavo's Board of Directors proposed converting the cooperative from
   a nonprofit corporation into a California for-profit corporation?

A. In order to maintain its status as an agricultural cooperative, Calavo must
   conduct a majority of its business with members. Calavo will not satisfy this
   requirement in 2001 and probably will not satisfy this requirement in
   subsequent years. To satisfy the requirement, Calavo would need to
   restructure its corporate organization into two separate businesses. In the
   Board's view, this would weaken the cooperative. Conversion to a for-profit
   corporation may also enable Calavo to raise equity capital by issuing stock.

Q. How will the conversion occur?

A. Calavo will merge into New Calavo, which will assume ownership of all of
   Calavo's business and assets on the effective date of the merger. The merger
   will not change Calavo's day-to-day operations.

Q. What vote is required to approve the conversion?

A. The conversion must be approved by a majority of all common shareholders,
   voting separately as a class, and by a majority of the outstanding shares of
   preferred stock, voting separately as a class. However, the Board of
   Directors will not elect to proceed with the conversion unless a substantial
   majority of Calavo's shareholders approve the conversion. In addition,
   completion of the conversion is contingent upon receiving approvals from
   Calavo's lenders and upon satisfying several other conditions specified in
   the merger agreement.

Q. Will I receive a stock certificate in the new company?

A. No. Calavo uses a "certificateless" system that does not involve the issuance
   of traditional stock certificates. However, you will receive an announcement
   of the completion of the conversion and a written statement setting forth the
   number of shares of stock held by you in New Calavo. You do not need to
   return any stock certificates or other evidence of ownership in order to
   establish your stock ownership rights in New Calavo.

Q. Will I incur taxes as a result of the conversion?

A. Subject to the limitations and assumptions described in this Information
   Statement/Prospectus, Calavo and its shareholders are not expected to incur
   federal income taxes as a result of the merger of Calavo into New Calavo.
   Your tax basis in the New Calavo stock that you receive in the merger will be
   the same as the tax basis in your Calavo stock.

Q. If I vote against the merger, can I require Calavo to repurchase my shares
   for cash?

A. No. Dissenters' rights and appraisal rights are not available. If the
   conversion occurs, each Calavo shareholder will receive shares in New Calavo
   even if he or she voted against the transaction.

Q. How do I know if this is a fair transaction? Did the Board of Directors
   receive an appraisal of the company or a "fairness opinion"?

A. The Board did not see any need to obtain an appraisal or a fairness opinion.
   No shareholders are being cashed out, and each shareholder will receive the
   same number of shares in New Calavo that he or she owns in Calavo. The
   interests of Calavo's shareholders in New Calavo are not being diluted
   through the merger, and the net book value of New Calavo will be the same as
   the net book value of Calavo on the effective date of the conversion.

Q. Who will own Calavo after the conversion?

A. Immediately after the conversion, each current shareholder will have an
   ownership interest in New Calavo that equals the shareholder's ownership
   interest in Calavo. The ownership interests of the

                                        1
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   shareholders are subject to change after the conversion based upon trades in
   New Calavo's common stock by shareholders and additional stock issuances that
   may be made by New Calavo.

Q. Can I continue to sell shares of stock after the conversion? And to whom?

A. The existing mechanism for transferring shares will be retained. New Calavo's
   stock will not be listed on a securities exchange or the Nasdaq stock market.
   However, shareholders will be able to engage in privately negotiated purchase
   and sale transactions. New Calavo will distribute lists of shareholders who
   have indicated an interest in purchasing or selling shares.

   After the conversion of Calavo to for-profit status, a grower who markets
   avocados through New Calavo will no longer be required to own shares in the
   corporation. Also, sales of shares to non-growers will be permitted. However,
   New Calavo will have a right of first refusal to purchase all shares that a
   shareholder proposes to sell. The right of first refusal will be exercisable
   for the same purchase price that is offered by the prospective buyer.

Q. Who will control New Calavo?

A. Under the current cooperative structure, each member has only one vote. Each
   shareholder of New Calavo will have a number of votes equal to the number of
   shares owned by the shareholder.

Q. How will the directors of New Calavo be elected?

A. The ten current directors of Calavo will serve as the initial directors of
   New Calavo. Each year, directors of New Calavo will be elected by the
   shareholders to serve a one-year term. The incumbent Board will have
   discretion to nominate a director from each district based upon the current
   ten-district format. A shareholder will not be limited to voting for a
   director from his or her district as in the current system. Each shareholder
   will be entitled to vote on a cumulative basis for all of the director
   positions that are to be filled each year. Under cumulative voting, each
   share of common stock is entitled to a number of votes equal to the number of
   directors to be elected, and a shareholder may cast all of his or her votes
   for a single candidate or may allocate the votes among two or more of the
   directors to be elected on a basis determined by the shareholder.

Q. What will happen to the value of my shares?

A. That is impossible to predict with any certainty. Based upon the financial
   performance of the company and its dividend payments (if any), the value of
   your shares in New Calavo may increase or decrease. There is currently no
   assurance that the value of your shares in Calavo will increase.

Q. How will dividends be paid?

A. New Calavo's net income will be available for distribution to the
   shareholders each year on a per share basis. There will be no patronage
   dividends based upon the volume of avocados delivered by each shareholder.
   The Board of Directors will continue to have discretion to determine the size
   of any dividends based upon its assessment of the financial needs of the
   company.

Q. What will happen to my marketing agreement with Calavo?

A. The existing marketing agreement with Calavo will terminate on the effective
   date of the conversion. Please sign and return the marketing agreement with
   New Calavo that is enclosed with this Information Statement/Prospectus. New
   Calavo will continue to accept all of your avocados, subject to limitations
   imposed by the character, quantity or marketability of the fruit and the
   other conditions of the current marketing agreement. The marketing agreement
   with New Calavo will be renewable on an annual basis. You should review the
   new marketing agreement for additional details.

Q. How will I be paid for my avocados?

A. The Board of Directors will set a packing and marketing fee on a periodic
   basis. The packing and marketing fee will cover New Calavo's costs and will
   include a profit to New Calavo. The fruit will continue to be "pooled," and
   the net proceeds will be paid to growers.

                                        2
   7

                                    SUMMARY

     THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS DOCUMENT AND DOES
NOT CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU. IN ORDER TO
UNDERSTAND THE TRANSACTION FULLY, YOU SHOULD READ THIS ENTIRE INFORMATION
STATEMENT/PROSPECTUS, INCLUDING THE ATTACHED APPENDICES.

CALAVO

     Calavo is a nonprofit cooperative association that is organized under the
California Food and Agricultural Code. Its primary purpose is to pack, process
and market avocados delivered by its members on a nonprofit cooperative basis.
Calavo has approximately 1,560 members, each of whom is required to own shares
of Calavo's common stock.

     Calavo has operated as a cooperative in accordance with the applicable
provisions of the Internal Revenue Code of 1986, as amended, governing
cooperatives. Among other things, Calavo has delivered to each member an annual
"patronage dividend" that is based primarily upon the quantity of avocados
delivered by the member during the year and that represents a return to the
member of his or her pro rata share of Calavo's net proceeds of marketing
avocados on behalf of members. Calavo also does business with nonmembers of the
cooperative on a for-profit basis. Any dividends that the Board of Directors
elects to distribute from profits on nonmember business are distributed to each
shareholder based upon the number of shares that he or she owns rather than upon
the volume of the member's business with Calavo.

NEW CALAVO

     New Calavo was incorporated on January 5, 2001 under the California General
Corporation Law. It is currently a wholly owned subsidiary of Calavo and was
formed for the purpose of merging with Calavo. Its business operations will
commence on the effective date of the merger, and it will be taxed under
Subchapter C of the Internal Revenue Code. Unlike Calavo, New Calavo is a
"for-profit" corporation that is not intended to be operated on a nonprofit
cooperative basis. Among other things, New Calavo will be entitled to receive
and retain a profit from the marketing agreements that it enters into with
shareholders.

BUSINESS ADDRESS

     The address of the principal executive office of Calavo and New Calavo is
2530 Red Hill Avenue, Santa Ana, California, 92705, and the telephone number of
each corporation is (949) 223-1111.

CONVERSION OF CALAVO TO FOR-PROFIT STATUS BY A MERGER

     CALAVO'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS CONVERTING CALAVO INTO A
CALIFORNIA FOR-PROFIT CORPORATION. TO ACCOMPLISH THE CONVERSION, CALAVO WILL
MERGE INTO NEW CALAVO, AND NEW CALAVO WILL THEREAFTER CONDUCT CALAVO'S BUSINESS
OPERATIONS. CALAVO'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE IN FAVOR OF THE MERGER AND THE MERGER AGREEMENT.

ISSUANCE OF NEW CALAVO COMMON STOCK

     The conversion will become effective on the date that a merger agreement is
filed with the California Secretary of State. Each share of Calavo preferred
stock and common stock that is outstanding on the effective date of the
conversion will be exchanged for one share of New Calavo common stock.

SHAREHOLDER APPROVAL REQUIRED

     The conversion cannot occur without the approval of a majority of Calavo's
common shareholders, voting separately as a class, and by a majority of the
outstanding shares of preferred stock.

                                        3
   8

SHAREHOLDERS ENTITLED TO VOTE

     You can vote if you owned shares of Calavo stock as of             , 2001,
which is the record date established by the Board of Directors for determining
shareholders entitled to vote. You should vote by completing and mailing the
enclosed ballot and delivering it to Calavo in the enclosed envelope no later
than             , 2001 (or such later date as the Board of Directors may
establish and announce in its sole discretion). As of the record date, there are
               holders of common stock who are entitled to vote on the merger,
and there are                holders of preferred stock who are entitled to vote
on the merger.

     A shareholder may vote only by completing and mailing the enclosed ballot.
A shareholders' meeting to consider and vote on the conversion will not be held.

CONVERSION CONDITIONS

     The completion of the conversion is subject to the satisfaction of several
closing conditions, including obtaining shareholder approval and the consents of
Calavo's lenders. Even if shareholder approval is obtained, Calavo's Board of
Directors will elect not to proceed with the conversion unless a substantial
majority of Calavo's shareholders approve the conversion.

NO DISSENTERS' RIGHTS

     Under California law, you have no right to demand an appraisal of your
Calavo shares in connection with the conversion and to receive a cash payment
for the fair value of your shares. Even if you vote against the merger, you will
receive shares in New Calavo if the conversion is completed.

POST-CONVERSION TRANSFERS OF SHARES

     As is the case with Calavo's stock, a public trading market will not exist
for New Calavo's common stock since the stock will not be listed on a securities
exchange or the Nasdaq stock market. However, you will be able to buy and sell
shares of New Calavo common stock in transactions that you negotiate with other
shareholders and with non-shareholders who are interested in becoming
shareholders. Each purchase and sale of stock must satisfy any applicable
federal and state securities registration exemptions, and New Calavo will have a
right of first refusal to purchase all shares that a shareholder proposes to
sell, exercisable at the price offered by the proposed purchaser.

     Calavo distributes to its shareholders lists of other shareholders who have
indicated an interest in purchasing or selling shares of stock. New Calavo will
continue this practice after the conversion. New Calavo will not otherwise
assist its shareholders in negotiating or completing stock transactions.

POST-CONVERSION MANAGEMENT AND BUSINESS OPERATIONS

     The ten current directors of Calavo will serve as the initial directors of
New Calavo. Beginning at the first annual shareholders' meeting, directors of
New Calavo will be elected for one-year terms. It is anticipated that the
officers, employees, day-to-day business operations, properties and production
facilities of New Calavo will be similar to those of Calavo.

MARKETING AGREEMENT

     Your existing marketing agreement with Calavo will be terminated on the
effective date of the conversion. You will need to sign a new marketing
agreement. Please complete, sign and return to New Calavo the new marketing
agreement that is enclosed with this Information Statement/Prospectus.

                                        4
   9

DIFFERENCES IN THE RIGHTS OF SHAREHOLDERS

     In many respects, your rights as a shareholder of New Calavo will be
similar to your rights as a shareholder of Calavo. However, there will be
important differences, including the following:

     - Each Calavo common shareholder is currently entitled to only one vote,
       regardless of the number of shares that he or she owns. Preferred
       shareholders are currently not entitled to vote on any matters except on
       specific matters expressly required by law such as the proposed
       conversion. As a New Calavo shareholder, you will have a number of votes
       equal to the number of shares that you own.

     - Each Calavo common shareholder is currently limited to voting for a
       director from his or her district, and preferred shareholders are not
       entitled to vote in the election of directors. As a New Calavo
       shareholder, you will be entitled to cast votes on a cumulative basis for
       all of the director positions that are to be filled each year.

     - Currently, if you terminate your membership in Calavo, you are required
       to sell your common stock to other members or to convert the common stock
       into preferred stock that is redeemable by Calavo at $1.00 per share.
       This requirement will not apply after the conversion. If you terminate
       your marketing agreement with New Calavo, you will be entitled to retain
       your shares of common stock.

FEDERAL INCOME TAX CONSEQUENCES

     Subject to the limitations and assumptions described in this Information
Statement/Prospectus under "The Conversion -- Material Federal Income Tax
Consequences," it is anticipated that neither Calavo nor its shareholders will
incur federal income taxes as a result of the merger of Calavo into New Calavo.
IN VIEW OF THE INDIVIDUAL NATURE OF FEDERAL AND STATE TAX LAW, YOU ARE ADVISED
TO CONSULT WITH YOUR INCOME TAX ADVISER REGARDING THE SPECIFIC TAX CONSEQUENCES
TO YOU FROM THE MERGER.

FINANCIAL INFORMATION

     New Calavo will not commence business operations until the effective date
of its merger with Calavo. Financial information regarding Calavo is contained
in the sections of this Information Statement/ Prospectus entitled "Selected
Condensed Consolidated Financial Data," "Unaudited Pro Forma Condensed Combined
Financial Statements" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and in the consolidated financial
statements and related notes thereto that are included elsewhere in this
Information Statement/Prospectus.

COPIES OF THE MERGER AGREEMENT AND NEW CALAVO'S ORGANIZATIONAL DOCUMENTS

     WE HAVE ATTACHED TO THIS INFORMATION STATEMENT/PROSPECTUS COPIES OF (1) THE
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION BETWEEN CALAVO AND NEW CALAVO,
(2) NEW CALAVO'S ARTICLES OF INCORPORATION, (3) NEW CALAVO'S BYLAWS, (4) THE
FORM OF MARKETING AGREEMENT THAT WILL BE USED BY NEW CALAVO, AND (5) A RECENT
AMENDMENT TO CALAVO'S BYLAWS. THESE DOCUMENTS ARE INCORPORATED BY REFERENCE INTO
THIS INFORMATION STATEMENT/PROSPECTUS, AND WE RECOMMEND THAT YOU REVIEW EACH OF
THE DOCUMENTS.

                                        5
   10

                                  RISK FACTORS

     YOU SHOULD CONSIDER THE RISKS DESCRIBED BELOW IN EVALUATING WHETHER OR NOT
TO APPROVE THE MERGER OF CALAVO INTO NEW CALAVO. YOU SHOULD ALSO REVIEW THE
ENTIRE INFORMATION STATEMENT/PROSPECTUS.

                        RISKS RELATED TO THE CONVERSION

TAX-FREE TREATMENT FOR THE CONVERSION IS NOT ASSURED.

     The merger of Calavo into New Calavo is intended to qualify as a nontaxable
transaction for both Calavo and its shareholders, but nontaxable treatment
cannot be assured. Although Calavo has received a legal opinion that the merger
is a nontaxable transaction, the opinion is not binding upon the Internal
Revenue Service.

COOPERATIVE TAX TREATMENT WILL BE UNAVAILABLE AFTER THE CONVERSION.

     Subchapter T of the Internal Revenue Code provides that, as a cooperative,
Calavo does not pay taxes on member-based income as long as it distributes or
allocates the income to the members in proportion to their use or patronage of
the cooperative within eight and one-half months after the end of the
cooperative's tax year. Members agree to take this income into their taxable
income even if the income is not distributed to them. Calavo pays normal
corporate taxes on all nonmember-based income.

     New Calavo will be taxed at corporate rates on its entire net income,
including net income that is derived from business done by New Calavo with its
growers. Distributions by New Calavo to its shareholders will generally be taxed
to the shareholders as corporate dividends. However, shareholders will not be
taxed on income that is not distributed to them by New Calavo. The amount paid
by New Calavo to a grower for fruit delivered by the grower will be taxed to the
grower, which is not a change to current practice.

     As a cooperative, Calavo is entitled to satisfy all or a portion of its
equity capital requirements by retaining for several years a portion of the
proceeds that are otherwise distributable to its members. Calavo does not pay
taxes on these retained amounts. After the conversion, New Calavo will be
required to pay taxes on any income that it withholds as retained earnings in
order to satisfy its equity needs.

     There is no historical basis for predicting the impact on Calavo's
profitability of converting to a for-profit corporation, particularly in light
of the different tax treatment that will be accorded to a for-profit
corporation.

DIVIDENDS TO SHAREHOLDERS ARE NOT GUARANTEED AFTER THE CONVERSION.

     During the preceding three years, Calavo has distributed to its
shareholders substantially all of its net income from business conducted on a
for-profit basis with nonmembers. After the conversion, New Calavo may determine
that it is advisable to retain all or a substantial portion of its income in
order to satisfy capital needs, to support the company's growth and to satisfy
more restrictive dividend limitations that may be imposed by lenders. There is
no assurance that New Calavo will pay dividends after the conversion or that any
dividends that are paid will equal or exceed the previous years' dividends.

NEW CALAVO'S ABILITY TO OBTAIN A SUFFICIENT SUPPLY OF AVOCADOS MAY BE AFFECTED
BY THE CONVERSION.

     As a cooperative, Calavo is entitled to require each of its
shareholder-members to enter into a marketing agreement that obligates the
shareholder-member to deliver all of his or her avocados to Calavo. Mandatory
marketing agreements help to ensure the cooperative with an adequate supply of
avocados. If a member terminates his or her marketing agreement with Calavo and
thereby relinquishes membership in Calavo, any of the former member's common
stock that is not sold to other members is converted into preferred stock that
is redeemable by Calavo at $1.00 per share. The desire of members to

                                        6
   11

avoid the conversion of their common stock into redeemable preferred stock may
contribute to their willingness to maintain marketing agreements with Calavo.

     After the conversion, New Calavo will be unable to require its shareholders
to enter into marketing agreements. This may impact New Calavo's ability to
obtain an adequate supply of avocados. A shareholder will be entitled to retain
his or her common stock in New Calavo even if the shareholder does not elect to
enter into a marketing agreement with New Calavo or even if the shareholder
subsequently elects to terminate the marketing agreement. The ability of New
Calavo to secure marketing agreements with growers, including growers who are
shareholders, will depend upon the competitiveness of the terms that it offers
and the quality of its services.

THE LIMITED ANTITRUST EXEMPTION PROVIDED TO COOPERATIVES WILL NOT BE AVAILABLE
TO NEW CALAVO.

     Federal and California laws provide limited relief to agricultural
cooperatives from certain aspects of the antitrust and unfair competition laws.
For example, the members of a cooperative are allowed to agree on a collective
sales price for their products; a cooperative's marketing agreements with
members are not considered an illegal restraint of trade; and a cooperative may
under certain circumstances achieve monopoly power in a given market.

     As a non-cooperative, New Calavo will not be entitled to the benefit of
these laws. Calavo's Board of Directors has determined that, in light of the
increased competition faced by Calavo from other growers, these exemptions from
the antitrust and unfair competition laws probably would not be of great benefit
to Calavo even if it retained its cooperative status. However, there is no
assurance that Calavo is not relinquishing a valuable protection under these
laws by converting to a for-profit corporation.

NEW CALAVO'S SHARES WILL HAVE NO PUBLIC TRADING MARKET.

     As is the case with Calavo's stock, a public trading market will not exist
for the common stock of New Calavo since the stock will not be listed on a
securities exchange or the Nasdaq stock market. The Board of Directors may
determine at a subsequent date to list New Calavo's stock on a stock exchange or
the Nasdaq stock market, but there is no assurance that such listing will ever
occur. As a result, you should not assume that your shares of New Calavo stock
will be more marketable than your shares of Calavo stock or that the New Calavo
stock is more likely to appreciate in value. However, the existing mechanism for
buying and selling shares of stock will be maintained after the conversion.

NON-GROWERS COULD GAIN CONTROL OF NEW CALAVO IF THEY PURCHASE LARGE NUMBERS OF
SHARES.

     Holders of Calavo common stock must be members of Calavo who have entered
into marketing agreements with the cooperative, and each member is entitled to
only one vote. As a result, control of the cooperative by its members is
assured.

     Ownership of New Calavo common stock is not limited to growers who have
entered into marketing agreements with New Calavo, and each shareholder is
entitled to a number of votes equal to the number of shares that are owned by
the shareholder. New Calavo will be entitled to issue shares of common stock to
non-growers, and any such stock issuances will dilute the proportionate equity
ownership interests of shareholders who have marketing agreements with New
Calavo. Shareholders will be entitled to retain their common stock after they
have ceased to sell avocados to New Calavo, and shareholders will be entitled to
sell their stock to purchasers who do not market avocados through New Calavo.

     The Bylaws of New Calavo provide the corporation with a right of first
refusal to purchase the stock that a shareholder proposes to transfer to another
person, although there is no assurance that the corporation will elect to
exercise that right or have the funds with which to pay for the shares. The
Bylaws state that no person or entity may own more than twenty percent of New
Calavo's stock and that transfers of stock to competitors of New Calavo are
prohibited, but there is no assurance that these provisions can prevent persons
who do not market avocados through New Calavo from obtaining an undesirable
degree of control over the corporation.

                                        7
   12

DIRECTORS AND EXECUTIVE OFFICERS WHO OWN NEW CALAVO STOCK AND ALSO MARKET
AVOCADOS THROUGH NEW CALAVO MAY HAVE A CONFLICT OF INTEREST IN ESTABLISHING AN
APPROPRIATE PACKING AND MARKETING FEE UNDER THE MARKETING AGREEMENTS.

     Directors and executive officers who own New Calavo stock will have a
personal financial interest in maximizing the profitability of New Calavo for
its shareholders by, among other things, setting a high packing and marketing
fee under the marketing agreements with growers. However, directors and
executive officers who also market avocados through New Calavo will have a
personal financial interest in maximizing growers' profits by setting a low
packing and marketing fee under the marketing agreements. Whether a director's
or an executive officer's personal financial interest will be best served by a
high or low packing and marketing fee may depend upon the relative percentage of
New Calavo stock versus avocado acreage that is owned by the director or
executive officer. This potential conflict of interest exists under Calavo's
current operations as a nonprofit cooperative association.

                       RISKS RELATED TO CALAVO'S BUSINESS

INCREASING COMPETITION MAY ADVERSELY AFFECT NEW CALAVO.

     The market for avocados is highly competitive. Recently, there have been
significant plantings of avocados in Mexico, Chile, New Zealand and others parts
of the world. In particular, avocados grown by Mexican growers who are not
members of Calavo are lower-priced than avocados grown by Calavo's members.
Competition from foreign-based growers is likely to increase in future years,
and there is no assurance that New Calavo will be able to enter into marketing
agreements with those growers. Although there are currently restrictions on the
times and states where Mexican avocados may be imported into the United States,
there are ongoing requests from Mexican governmental authorities to relax these
time and location restrictions. In addition, New Calavo's results of operations
may be adversely affected by numerous other factors over which New Calavo will
have little or no control, including prevailing market prices for its products,
the weather, growing conditions, government regulations and capital expenses.

CALAVO IS SUBJECT TO THE RISKS OF DOING BUSINESS INTERNATIONALLY.

     Calavo conducts a substantial amount of business with growers and customers
who are located outside the United States. It purchases avocados from foreign
growers, sells fresh avocados and processed avocado products to foreign
customers and operates a packinghouse and a processing plant in Mexico. For
additional information about Calavo's international business operations, see
"Business of Calavo."

     Calavo's international operations are subject to a number of inherent
risks, including:

     - Local economic and political conditions, including disruptions in trading
       and capital markets;

     - Restrictive foreign governmental actions, such as restrictions on
       transfers of funds and trade protection measures, including export duties
       and quotas and customs duties and tariffs;

     - Changes in legal or regulatory requirements affecting foreign investment,
       loans, taxes, imports and exports; and

     - Currency exchange rate fluctuations which, depending upon the nature of
       the changes, may make Calavo's products more expensive compared to
       foreign-grown products or may increase Calavo's cost of obtaining
       foreign-sourced products.

                                        8
   13

                                 THE CONVERSION

PROPOSED CONVERSION OF CALAVO TO FOR-PROFIT STATUS

     Calavo's Board of Directors unanimously recommends the conversion of Calavo
from a nonprofit cooperative association that is organized under the California
Food and Agricultural Code into a for-profit corporation that is organized under
the California General Corporation Law.

MERGER OF CALAVO INTO NEW CALAVO

     To accomplish the conversion, Calavo will merge into New Calavo, which is a
newly formed corporation organized under the California General Corporation Law.
It is currently a wholly owned subsidiary of Calavo and was formed for the
purpose of merging with Calavo. On the effective date of the merger, New Calavo
will assume ownership of all of Calavo's business and assets, and all of
Calavo's shareholders will receive shares of New Calavo common stock. New Calavo
will be taxed under Subchapter C of the Internal Revenue Code and, unlike
Calavo, New Calavo will operate as a "for-profit" corporation rather than as a
nonprofit cooperative association.

RECORD DATE FOR VOTING

     Only holders of record of Calavo's preferred stock or common stock as of
the close of business on             , 2001, which has been established by the
Board of Directors as the record date, are entitled to vote on the conversion.

     As of the record date, there are                holders of common stock who
are entitled to vote, and there are                holders of preferred stock
who are entitled to vote. As of the record date, all ten of Calavo's directors
own shares of common stock and are therefore entitled to cast a total of ten
votes, and none of Calavo's executive officers (excluding the Chief Executive
Officer, who is also a director) owns shares of common stock or preferred stock.
Calavo's directors collectively own approximately 16.8% of the outstanding
shares of Calavo common stock.

METHOD OF VOTING

     To vote on the proposed conversion, you must use the mail ballot
accompanying this Information Statement/Prospectus. It is the only ballot that
you will receive, and a shareholders' meeting to consider and vote on the
conversion will not be held. If you wish to vote, you should complete, sign and
deliver the ballot to Calavo in the enclosed envelope no later than
            , 2001 (or such later date as the Board of Directors may establish
and announce in its sole discretion) in order for the ballot to be counted.

VOTE REQUIRED; EFFECT OF A FAILURE TO VOTE

     The conversion cannot occur without the approval of a majority of Calavo's
common shareholders, voting separately as a class, and by a majority of the
outstanding shares of preferred stock, voting separately as a class. A
shareholder's failure to vote has the same effect as a vote against the
conversion.

REVOCABILITY OF BALLOTS

     Any shareholder who delivers a completed and signed ballot to Calavo has
the power to revoke it by filing with the Calavo Corporate Secretary a written
instrument that revokes the ballot. However, a ballot cannot be revoked after
the date that Calavo has received from its shareholders a sufficient number of
ballots to approve the conversion.

BOARD OF DIRECTORS' RECOMMENDATION

     CALAVO'S BOARD OF DIRECTORS HAS UNANIMOUSLY DETERMINED THAT THE CONVERSION
IS IN THE BEST INTERESTS OF CALAVO AND ITS SHAREHOLDERS. THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE IN FAVOR OF THE CONVERSION OF
CALAVO INTO A FOR-PROFIT CORPORATION.
                                        9
   14

SOLICITATION EXPENSES

     Calavo will bear the entire cost of the solicitation of ballots in favor of
the conversion. In addition to solicitation by mail, Calavo's directors,
officers and other employees may, without additional compensation, solicit
ballots personally, by telephone, by facsimile or by other means.

REASONS FOR THE CONVERSION

     In order to maintain its status as an agricultural cooperative under
applicable laws, Calavo must conduct a majority of its business with members.
Calavo will not satisfy this requirement in 2001 and probably will not satisfy
this requirement in subsequent years. To satisfy the requirement, Calavo would
need to restructure its corporate organization into two separate businesses. In
the Board's view, this would weaken the cooperative. Primarily as a result of
the Board of Directors' determination that Calavo will soon lose its status as a
nonprofit agricultural cooperative, the Board of Directors has determined that
Calavo should now formally convert to a for-profit corporation organized under
the California General Corporation Law.

     Under Calavo's Bylaws and applicable law, holders of the cooperative's
common stock must be members of Calavo who have entered into marketing
agreements with Calavo. The Board of Directors believes that this requirement
may limit Calavo's ability to attract equity capital from third parties who do
not market avocados, and that the requirement may limit the ability of Calavo's
members to obtain the full value of their equity investment in Calavo since they
are not permitted to sell their stock to nonmembers of Calavo. Conversion to a
for-profit corporation may enable Calavo to raise equity capital by issuing
stock to third parties who are not marketers of agricultural products. For
example, it is possible that common stock could be issued to joint venture
partners and in connection with the acquisition of businesses that will enhance
the value of Calavo.

     As a for-profit corporation, Calavo will be able to grant to its officers
and selected employees stock options and other rights to acquire shares of its
common stock. The Board of Directors believes that this will allow management to
participate in the growth of the corporation and provide management with added
incentives to operate the corporation in a manner that increases the value of
the shareholders' equity interests. The Board of Directors believes that equity
incentives are a component of management compensation at many corporations, and
that allowing management to have an equity interest in Calavo will enable the
corporation to attract and retain qualified officers and employees.

     The Board of Directors did not see any need to obtain an appraisal or a
fairness opinion. No shareholders are being cashed out, and each shareholder
will receive the same number of shares in New Calavo that he or she owns in
Calavo. The economic interests of Calavo's shareholders in New Calavo are not
being diluted through the merger, and the net book value of New Calavo will be
the same as the net book value of Calavo on the effective date of the
conversion.

AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

     The terms and conditions of the conversion are set forth in an Agreement
and Plan of Merger and Reorganization (the "MERGER AGREEMENT") between Calavo
and New Calavo, a copy of which is attached as Appendix A and incorporated
herein. You are advised to read the Merger Agreement in order to understand the
conversion fully. The following summary of the Merger Agreement discusses only
selected provisions of the Merger Agreement.

     EFFECTIVE DATE OF THE MERGER. The conversion will become effective on the
date that a short-form version of the Merger Agreement is filed with the
California Secretary of State. Calavo will file this document as soon as
practicable after shareholder approval is obtained. However, even if shareholder
approval is obtained, Calavo's Board of Directors intends to exercise its right
under the Merger Agreement and applicable law not to proceed with the conversion
unless a substantial majority of Calavo's shareholders approve the conversion.

                                        10
   15

     ISSUANCE OF SHARES OF THE COMMON STOCK OF NEW CALAVO. On the effective date
of the conversion, each outstanding share of the preferred stock and common
stock of Calavo automatically will be converted into one share of New Calavo
common stock, and the 100 shares of the common stock of New Calavo that are
currently owned by Calavo will be cancelled. As a result, Calavo's shareholders
will own all of the common stock of New Calavo in the same proportion that they
own Calavo's outstanding stock on the effective date of the merger. New Calavo
will advise its shareholders that the conversion has occurred and will deliver
to them statements regarding the number of shares of common stock that they own
in New Calavo.

     EFFECT OF THE MERGER. On the effective date of the merger, Calavo will be
merged into New Calavo, and Calavo will cease to exist. New Calavo will be the
surviving corporation, and it will succeed to all of the business, assets and
liabilities of Calavo. The directors, officers and employees of Calavo will
remain in the same positions with New Calavo as of the effective date of the
merger.

     CONDITIONS TO CONSUMMATION OF THE CONVERSION. The obligations of Calavo and
New Calavo to consummate the conversion are subject to the satisfaction or
waiver, where permissible, of the following conditions:

     - Calavo's shareholders shall have approved the conversion and the Merger
       Agreement.

     - The Registration Statement on Form S-4 that has been filed with the SEC
       regarding the conversion shall have become effective under the Securities
       Act of 1933 and shall not be subject to any stop order suspending its
       effectiveness or to any proceeding seeking a stop order.

     - All permits, consents and approvals that are required from the California
       Department of Corporations and other applicable state securities
       regulatory authorities regarding the offer and sale of shares of New
       Calavo common stock in the conversion shall have been obtained.

     - Calavo shall have obtained all necessary consents to the conversion from
       its lenders and any other parties whose consents are required under
       contracts to which Calavo is a party.

     - There shall not be in effect any judgment, regulation, order or
       injunction of any court or governmental authority that prohibits the
       conversion.

     AMENDMENT AND TERMINATION OF THE MERGER AGREEMENT. The Merger Agreement may
be amended by a writing executed by Calavo and New Calavo. However, after
approval of Calavo's shareholders has been obtained, shareholder approval of the
amendment is required if the amendment changes any of the principal terms of the
Merger Agreement.

     Calavo's Board of Directors is authorized to terminate the Merger Agreement
(and thereby terminate the conversion) at any time prior to the effective date
of the conversion, whether before or after shareholder approval.

NO DISSENTERS' RIGHTS

     Under California law, Calavo's shareholders have no right to demand an
appraisal of their Calavo shares in connection with the conversion and to
receive a cash payment for the fair value of their shares. Even if a shareholder
votes against the merger, he or she will receive shares in New Calavo if the
conversion is completed.

MARKETING AGREEMENTS

     In January 2001, the Board of Directors amended Section 7.08 of Calavo's
Bylaws to provide that Calavo's marketing agreement with each member will
terminate automatically on the effective date of Calavo's merger into New
Calavo. A copy of the amendment is attached to this Information Statement/
Prospectus as Appendix E. If you desire to market avocados through New Calavo
after the conversion, you must complete, sign and return to New Calavo the new
marketing agreement that is enclosed with this Information Statement/Prospectus.

                                        11
   16

MATERIAL FEDERAL INCOME TAX CONSEQUENCES

     The following discussion summarizes the material federal income tax
consequences of the merger of Calavo into New Calavo that are generally
applicable to holders of Calavo stock. This discussion does not deal with all
aspects of federal income taxation that may be relevant to particular
shareholders, such as persons who acquired shares of such stock in compensatory
transactions (that is, upon the exercise of employee stock options or pursuant
to employee stock purchase plans or arrangements), dealers in securities,
foreign persons, tax-exempt organizations, cooperative associations,
shareholders who do not hold such stock as a "capital asset" as defined in the
Internal Revenue Code of 1986, as amended (the "INTERNAL REVENUE CODE"), and
persons subject to the alternative minimum tax. In addition, this discussion
does not address the tax consequences of transactions effectuated prior to or
after the merger. Moreover, this discussion does not address any state, local or
foreign tax or other considerations.

     IN VIEW OF THE SUMMARY NATURE OF THIS DISCUSSION AND THE INDIVIDUAL NATURE
OF FEDERAL INCOME AND OTHER TAX CONSEQUENCES OF THE MERGER, YOU ARE STRONGLY
ADVISED TO CONSULT WITH YOUR OWN TAX ADVISER AS TO THE SPECIFIC TAX CONSEQUENCES
TO YOU FROM THE MERGER (INCLUDING, WITHOUT LIMITATION, THE APPLICABILITY AND
EFFECT OF FOREIGN, STATE AND LOCAL TAX LAWS AND OF CONSTRUCTIVE OWNERSHIP
RULES).

     The following discussion is based upon provisions of the Internal Revenue
Code, regulations, administrative rulings and judicial decisions presently in
effect, all of which are subject to change (possibly with retroactive effect) or
to different interpretations. Neither party to the merger has sought a ruling
from the Internal Revenue Service (the "IRS") with respect to any tax
consequences of the merger. Consequently, the IRS is not precluded from adopting
positions contrary to those discussed herein or otherwise advanced by the
parties to the merger, including holders of Calavo stock. In addition, there is
no assurance that future legislative, judicial or administrative changes or
interpretations will not adversely affect the accuracy of the following
discussion. Any such changes or interpretations could be applied retroactively
and could affect the tax consequences of the merger to holders of Calavo stock.

     Troy & Gould Professional Corporation, counsel to Calavo, has rendered an
opinion to the effect that, on the basis of certain facts existing and
representations made as of the effective date of the merger, the merger and the
exchange of shares incident to the merger will qualify for non-recognition
treatment for federal income tax purposes. This opinion will not, however, be
binding on the IRS.

     Subject to the limitations and assumptions referred to therein, the opinion
of Troy & Gould Professional Corporation that the merger will qualify for
non-recognition treatment under the Internal Revenue Code means the following:

          (a) Neither Calavo nor New Calavo will recognize gain or loss in the
     merger;

          (b) No gain or loss will be recognized by holders of Calavo stock upon
     their receipt of New Calavo common stock in the merger;

          (c) The aggregate tax basis of the New Calavo common stock received in
     the merger by the holders of Calavo stock will be the same as the aggregate
     tax basis of the Calavo stock exchanged therefor; and

          (d) The holding period of the New Calavo common stock received in the
     merger will include the period for which the Calavo stock surrendered in
     exchange therefor was held, provided that the Calavo stock was held as a
     capital asset at the time of the merger.

ACCOUNTING TREATMENT

     The merger will be treated in a manner similar to a "pooling of interests"
under accounting principles generally accepted in the United States in which no
gain, loss or goodwill is recognized as a result of the transaction.

                                        12
   17

                       TRANSFERS OF SHARES OF NEW CALAVO
                       COMMON STOCK AFTER THE CONVERSION

TRANSFERS OF CALAVO STOCK PRIOR TO THE CONVERSION

     A public trading market does not exist for the common or preferred stock of
Calavo. The stock is not listed on a securities exchange or the Nasdaq stock
market. Outstanding shares of the common or preferred stock may be transferred
only if federal and state securities registration exemptions are satisfied.
Calavo distributes to its shareholders lists of shareholders who have indicated
an interest in purchasing or selling shares of stock, and the purchasing and
selling shareholders then privately negotiate the terms of the transaction.

     For each fiscal quarter during the three fiscal years ended October 31,
2000 and for the fiscal quarter ended January 31, 2001, the following table sets
forth information about purchases and sales of Calavo common stock that occurred
among Calavo's shareholders. The table does not contain any express or implied
representation about the value of the Calavo common stock or about the prices at
which New Calavo common stock may be purchased and sold after the conversion.

                                              NUMBER OF      NUMBER OF              RANGE
              PERIOD COVERED                 TRANSACTIONS     SHARES      HIGH     AVERAGE     LOW
              --------------                 ------------    ---------    -----    -------    -----
                                                                               
1997 - 1998
11/1 - 1/31................................       17            87,518    $2.75     $1.27     $1.00
2/1 - 4/30.................................       17            45,971     2.00      1.29      1.00
5/1 - 7/31.................................        5            13,156     1.35      1.04      1.00
8/1 - 10/31................................       20            95,654     1.50      1.23      0.75
                                                 ---         ---------              -----
Summary....................................       59           242,299              $1.24
                                                 ===         =========              =====
1998 - 1999
11/1 - 1/31................................       35           213,162     1.50     $1.09      1.00
2/1 - 4/30.................................       44           244,638     1.50      1.30      0.95
5/1 - 7/31.................................       26           235,258     1.50      1.26      1.00
8/1 - 10/31................................       19           399,446     1.50      1.38      1.00
                                                 ---         ---------              -----
Summary....................................      124         1,092,504              $1.28
                                                 ===         =========              =====
1999 - 2000
11/1 - 1/31................................       19            92,645     1.50     $1.24      1.00
2/1 - 4/30.................................       42           327,385     1.98      1.46      1.00
5/1 - 7/31.................................       22            59,004     1.70      1.23      1.00
8/1 - 10/31................................       17           102,396     1.50      1.50      1.00
                                                 ---         ---------              -----
Summary....................................      100           581,430              $1.41
                                                 ===         =========              =====
2000 - 2001
11/1 - 1/31................................        8            93,828     3.00     $1.37      1.00
                                                 ===         =========              =====

NO PUBLIC TRADING MARKET FOR NEW CALAVO STOCK

     A public trading market will not exist for the shares of New Calavo common
stock that are issued in the merger to Calavo's shareholders. New Calavo does
not have any present intention of listing the shares on a securities exchange or
the Nasdaq stock market.

LISTS OF POTENTIAL PURCHASERS AND SELLERS OF NEW CALAVO STOCK

     After the conversion, New Calavo will maintain a list of shareholders who
have notified it that they are interested in selling some of their shares of
common stock and a list of shareholders who have notified New Calavo that they
are interested in purchasing additional shares of common stock from
shareholders.

                                        13
   18

In its discretion, and if permitted by applicable law, New Calavo may include on
the list of potential purchasers non-shareholders who have advised the company
that they are interested in purchasing shares. The lists will contain (a) the
interested potential buyers' and sellers' names, (b) information regarding how
the buyers and sellers may be contacted, and (c) if supplied by the buyer or
seller, the number of shares that he or she is interested in buying or selling.

     On a periodic basis, (a) New Calavo will distribute the lists of potential
sellers to persons who have indicated an interest in purchasing stock, and (b)
New Calavo will distribute the list of potential buyers to shareholders who have
indicated an interest in selling stock. The lists will contain information about
the prices at which shares of common stock have been traded or issued during
prior quarters, but the lists will not contain any recommendation by New Calavo
about the current value of its stock.

     The lists will be accompanied by the following statements: (a) New Calavo
is not a registered national securities exchange, securities information
processor, broker, dealer, investment adviser or clearing agency; (b) the lists
merely set forth the names of persons who are interested in buying or selling
specified numbers of shares of common stock, and there is no assurance that any
transaction will occur as to any particular number of shares or at any
particular price; (c) the historical price information contained in the lists
may not reflect the current value of the common stock; (d) each transaction must
be executed by the buyer and seller without New Calavo's assistance or
involvement; and (e) each transaction must be conducted by the buyer and seller
in accordance with applicable federal securities laws, including antifraud
provisions and registration or exemption requirements.

     Buyers and sellers will be entitled to use the lists for the purpose of
entering into privately negotiated transactions with each other. Neither New
Calavo nor its officers or employees will (a) participate in the sale
negotiations, (b) match or otherwise solicit buyers and sellers, (c) receive any
commissions or fees with respect to these transactions, (d) act as an
intermediary in the transfer of funds from the buyer to the seller in connection
with any transaction, (e) arrange financing for the buyer, or (f) make any
recommendation regarding the advisability of the transaction or the value of the
common stock.

RIGHT OF FIRST REFUSAL IN FAVOR OF NEW CALAVO; OTHER TRANSFER RESTRICTIONS

     ARTICLE VI OF NEW CALAVO'S BYLAWS CONTAINS CERTAIN RESTRICTIONS ON THE
TRANSFERABILITY OF ALL SHARES OF NEW CALAVO COMMON STOCK. THE FOLLOWING IS A
SUMMARY OF CERTAIN PROVISIONS OF ARTICLE VI. YOU SHOULD REVIEW ARTICLE VI IN ITS
ENTIRETY IN ORDER TO UNDERSTAND THE RESTRICTIONS TO WHICH YOUR SHARES WILL BE
SUBJECT.

     Before any shares of New Calavo common stock that are owned by any
shareholder may be sold, assigned or otherwise transferred, the shares must
first be offered to New Calavo. The transferring shareholder must give New
Calavo at least thirty days' prior written notice of the proposed transfer, and
the notice must describe the terms of the proposed transfer. The transferee does
not need to be an existing shareholder of New Calavo or a grower who markets
avocados through New Calavo. A transfer of stock to a shareholder's family
members or to a family trust is not subject to the right of first refusal.

     New Calavo will have the right to elect to purchase all of the shares that
are the subject of the proposed transfer. The right of first refusal must be
exercised by New Calavo, if at all, within thirty days after its receipt of the
transfer notice from the shareholder. Subject to certain exceptions, New Calavo
will purchase the shares for the same purchase price and other payment terms
that are described in the transfer notice if it elects to exercise its right of
first refusal.

     If New Calavo does not elect to purchase the shares that are the subject of
the proposed transfer, the shares may be transferred to the proposed transferee.
However, New Calavo has the right to require representation certificates and
other appropriate evidence from the transferring shareholder and the transferee
regarding compliance with applicable federal and state securities registration
exemptions. Also, (a) no person, entity or group is permitted by the Bylaws to
own more than twenty percent of the total outstanding shares of New Calavo
stock, and (b) the Bylaws prohibit the transfer of shares to competitors of New
Calavo. Shares that are transferred by a shareholder will remain subject to the
right of first refusal

                                        14
   19

and other transfer restrictions of the Bylaws, and certificates and written
statements that evidence the common stock will bear appropriate restrictive
legends that refer to these transfer restrictions.

               NEW CALAVO'S BUSINESS, MANAGEMENT AND COMMON STOCK

BUSINESS OF NEW CALAVO

     New Calavo was incorporated on January 5, 2001 for the purpose of merging
with Calavo. New Calavo is a for-profit corporation that is organized under the
California General Corporation Law.

     New Calavo currently has no business operations. On the effective date of
its merger with Calavo, New Calavo will acquire all of Calavo's assets and
business and will assume all of its liabilities. Thereafter, New Calavo will
carry on Calavo's business operations, although New Calavo will have the right
and authority to engage in other business operations if it so determines. For a
description of Calavo's business, see "Business of Calavo." For information
about Calavo's results of operations, see "Selected Condensed Consolidated
Financial Data" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the consolidated financial statements (including
the notes thereto) of Calavo that are included in this Information
Statement/Prospectus.

     Unlike Calavo, New Calavo will not operate on a nonprofit cooperative
basis. Calavo's primary purpose is to pack, process and market avocados produced
by its members at the highest possible sales price and to perform those services
for the mutual benefit of its members on a nonprofit cooperative basis at cost
(after allowing for the expenses of operation and maintenance of necessary
reserves). New Calavo's primary purpose will be to maximize profits for its
shareholders and to enhance the value of its shareholders' investment in the
corporation. Although most of New Calavo's shareholders probably will continue
to market avocados through the corporation, the marketing of avocados through
the corporation will no longer be a requirement for ownership of common stock,
and some shareholders will not be marketers of avocados.

     Except for earnings that are attributable to business that is conducted
with nonmembers on a for-profit basis, Calavo distributes earnings to members
according to their utilization of the cooperative's services, which is
determined primarily by the volume of the avocados that they deliver to Calavo.
By contrast, all earnings that New Calavo may elect to distribute to
shareholders in the form of dividends will be distributed based upon the number
of shares that are owned by each shareholder rather than upon the amount of
business that he or she does with the corporation. For additional information
regarding the differences in the rights of Calavo's and New Calavo's
shareholders as a result of the conversion, see "Comparison of the Rights of
Calavo's and New Calavo's Shareholders."

DESCRIPTION OF NEW CALAVO STOCK

     COMMON STOCK

     The authorized capital stock of New Calavo consists of 100,000,000 shares
of common stock with a par value of $0.001 per share. As of the date of this
Information Statement/Prospectus, Calavo owns all 100 of the outstanding shares
of New Calavo common stock. As of             , 2001,           shares of Calavo
preferred stock were issued and outstanding, and           shares of Calavo
common stock were issued and outstanding. Assuming that Calavo does not
repurchase any shares or issue any additional shares prior to the effective date
of its merger into New Calavo, there will be                issued and
outstanding shares of New Calavo common stock as of the effective date of the
conversion, all of which will be fully paid and non-assessable. All 100 shares
of New Calavo common stock that are owned by Calavo will be cancelled in the
merger.

     Holders of New Calavo common stock are entitled to one vote per share on
all matters to be voted upon by shareholders, provided that shareholders have
cumulative voting rights in the election of directors. Holders of shares of
common stock are entitled to receive on a pro rata basis such dividends, if any,
as

                                        15
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may be declared from time to time by New Calavo's Board of Directors in its
discretion from funds legally available for that use.

     Holders of shares of New Calavo common stock are also entitled to share on
a pro rata basis in any distribution to shareholders upon the liquidation,
dissolution or winding up of New Calavo. Shareholders do not have preemptive
rights to subscribe to any additional stock issuances by New Calavo, and
shareholders do not have the right to require the redemption of their shares or
the conversion of their shares into any other class of New Calavo's stock.

     Shares of common stock are subject to certain rights of first refusal and
transfer restrictions that are imposed by New Calavo's Bylaws. See "Transfers of
Shares of New Calavo Common Stock After the Conversion."

     PREFERRED STOCK

     New Calavo's Articles of Incorporation do not authorize the issuance of
shares of preferred stock. Any amendment of the Articles of Incorporation to
provide for the issuance of preferred stock would require shareholder approval.

     TRANSFER AGENT AND REGISTRAR

     Unless it elects in the future to list its common stock on a securities
exchange or the Nasdaq stock market, New Calavo anticipates that it will serve
as the transfer agent and registrar for its common stock.

DIRECTORS OF NEW CALAVO

     The ten persons who currently serve as the directors of Calavo are also
serving as the initial directors of New Calavo and will continue to do so after
the conversion. For information regarding the current directors of Calavo and
their compensation, see "Management of Calavo." New Calavo anticipates that it
will continue Calavo's policy of compensating directors for attending board and
committee meetings and of reimbursing their expenses of attending the meetings.

     Beginning with the first annual meeting of New Calavo's shareholders and
continuing at every annual shareholders' meeting thereafter, all of New Calavo's
directors will be elected by the shareholders to serve one-year terms.

EXECUTIVE OFFICERS OF NEW CALAVO

     New Calavo's Board of Directors has appointed Calavo's existing executive
officers to serve as New Calavo's executive officers in the same positions that
they currently hold. For additional information regarding the executive
officers, see "Management of Calavo -- Executive Officers." Each of New Calavo's
executive officers will serve at the discretion of the Board of Directors,
subject to the terms of any employment agreement that he or she may subsequently
enter into with the corporation. New Calavo does not presently anticipate that
it will enter into employment agreements with any of its officers or other
employees. On the effective date of the conversion, all employees of Calavo will
automatically become employees of New Calavo.

SECURITY OWNERSHIP OF NEW CALAVO'S DIRECTORS AND EXECUTIVE OFFICERS

     On the effective date of the conversion, each of Calavo's directors and
executive officers who owns shares of Calavo common stock will receive an equal
number of shares of New Calavo common stock in exchange for the shares of Calavo
stock. For information regarding the stock ownership of the directors and
executive officers, see "Security Ownership of Certain Beneficial Owners and
Management."

                                        16
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EXECUTIVE COMPENSATION

     New Calavo has not paid any compensation to its executive officers. For
information regarding the compensation of Calavo's executive officers (each of
whom is also an executive officer of New Calavo), see "Management of
Calavo -- Executive Compensation." During the period after the conversion, New
Calavo's Board of Directors will review the compensation of the corporation's
executive officers and determine whether any adjustments to the basis for
determining the compensation or the amount of the compensation are appropriate
in light of the financial performance of the corporation and other relevant
factors.

POST-CONVERSION STOCK ISSUANCES

     After the conversion, New Calavo will have the right, without obtaining
shareholder approval, to issue shares of common stock to existing shareholders,
to persons who elect to enter into marketing agreements with the corporation, to
officers and employees of the corporation and to third parties, including
persons who do not market avocados through New Calavo. The Articles of
Incorporation of New Calavo state that the issuance by New Calavo of any shares
of stock or options or other rights to acquire stock requires the approval of at
least seventy-five percent of New Calavo's directors. Any issuances of stock
after the conversion may dilute the proportionate equity interests of existing
shareholders.

     Shortly after the conversion, and subject to compliance with applicable
federal and state securities laws, New Calavo intends to offer certain of its
employees an opportunity to purchase an as-yet undetermined number of shares of
common stock at a purchase price that will not be less than the fair market
value of the stock as of the date that the purchase rights are granted. The
proposed offer of stock to employees is subject to the Board of Directors' right
to amend any of its proposed terms or to determine not to proceed with the
transaction.

                    COMPARISON OF THE RIGHTS OF CALAVO'S AND
                           NEW CALAVO'S SHAREHOLDERS

     Upon completion of the conversion, the shareholders of Calavo will cease
being members and shareholders of a California nonprofit cooperative
association. On the effective date of the conversion, they will become
shareholders of New Calavo, which is a California for-profit corporation.

     The following is a summary of the material differences between the rights
of Calavo's shareholders and the rights of New Calavo's shareholders effective
upon the conversion. The summary does not purport to be a comprehensive
discussion of these material differences, and the summary does not discuss the
rights of Calavo's shareholders that will remain the same or substantially the
same after the conversion. Furthermore, the identification of the differences
summarized below is not intended to suggest that other important differences do
not exist.

     YOU ARE ADVISED TO REVIEW NEW CALAVO'S ARTICLES OF INCORPORATION AND
BYLAWS, WHICH ARE ATTACHED TO THIS INFORMATION STATEMENT/PROSPECTUS AS
APPENDICES B AND C, RESPECTIVELY. YOU ARE ALSO ADVISED TO REVIEW THE COPY OF
CALAVO'S ARTICLES OF INCORPORATION AND BYLAWS THAT HAS PREVIOUSLY BEEN PROVIDED
TO YOU. YOU MAY WITHOUT CHARGE OBTAIN ANOTHER COPY OF CALAVO'S ARTICLES OF
INCORPORATION AND BYLAWS BY WRITING THE CORPORATE SECRETARY, GENE CARBONE, AT
2530 RED HILL AVENUE, SANTA ANA, CALIFORNIA 92705 OR BY CALLING HIM AT (949)
223-1111.

GOVERNING CALIFORNIA LAW

     The California Food and Agricultural Code governs the organization and
operation of a nonprofit agricultural cooperative such as Calavo. The California
General Corporation Law also governs the operation of Calavo except where its
provisions are in conflict or inconsistent with the express provisions of the
California Food and Agricultural Code.

                                        17
   22

     New Calavo's organization and operation are governed by the California
General Corporation Law, and the California Food and Agricultural Code is not
applicable to New Calavo.

CORPORATE PURPOSE

     Calavo's Articles of Incorporation and Bylaws state the cooperative's
primary purpose is to pack, process and market agricultural products produced by
its members and to return to the members the proceeds of sale, less expenses, on
the basis of the quantity or value or both of the products marketed for its
members. The Articles of Incorporation and Bylaws also state that Calavo is a
nonprofit cooperative association, and the Bylaws state that the value of its
business with nonmembers may not exceed the value of its business with members.

     New Calavo's Articles of Incorporation state that the corporation's purpose
is to engage in any lawful act or activity for which a corporation may be
organized under the California General Corporation Law other than the banking or
trust company business or the practice of certain professions. This provision
gives New Calavo more flexibility in its business operations, although New
Calavo anticipates that its primary purpose probably will remain the marketing
of agricultural products. New Calavo's Articles of Incorporation do not state
that it will operate on a nonprofit basis for the benefit of its members.
Instead, it will operate as a for-profit corporation for the benefit of its
shareholders, whether or not they market products through the corporation. Also,
New Calavo is not limited to conducting a majority of its business with members.

MEMBERS

     Calavo's Bylaws provide for the admission of "members" to the cooperative.
A member must produce and deliver avocados to Calavo and must own shares of
Calavo's common stock. Every member must enter into a marketing agreement with
Calavo, the primary terms of which are contained in the Bylaws. Pursuant to the
marketing agreement, the member agrees to deliver all of his or her avocados to
Calavo, and Calavo agrees to market the avocados on behalf of the member. The
Bylaws also address the circumstances under which membership may be terminated.

     New Calavo's Bylaws do not contain any concept of membership in the
corporation that is based upon an agreement to deliver avocados to the
corporation. The Bylaws do not contain a marketing agreement, and they do not
discuss the terms and conditions upon which New Calavo will market avocados.
Instead, any shareholder who desires to market avocados through New Calavo must
sign a marketing agreement, a form of which is attached to this Information
Statement/Prospectus as Appendix D. A grower who markets avocados through New
Calavo is not required to own shares of New Calavo common stock.

AUTHORIZED CAPITAL

     Calavo is authorized by its Articles of Incorporation to issue up to
10,000,000 shares of preferred stock and up to 10,000,000 shares of common
stock. New Calavo is authorized by its Articles of Incorporation to issue up to
100,000,000 shares of common stock but is not authorized to issue preferred
stock.

STOCK OWNERSHIP

     Calavo's Articles of Incorporation and Bylaws state that only a member who
markets avocados through Calavo is entitled to own Calavo common stock. Upon
termination of membership, the former member's common stock that is not sold to
other members is converted into preferred stock that is redeemable by Calavo at
$1.00 per share. No shares of common or preferred stock may be transferred by a
shareholder without the consent of Calavo's Board of Directors.

     Ownership of New Calavo common stock is not limited to growers who have
entered into marketing agreements with the corporation, and a grower is not
required to sell or convert his or her common stock upon termination of a
marketing agreement with New Calavo. Non-growers are entitled to own common

                                        18
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stock, and the Board of Directors does not have the right to approve transfers
of shares other than to competitors of the corporation. However, New Calavo does
have a right of first refusal to purchase all shares that a shareholder proposes
to sell; the right is exercisable for the purchase price offered by the buyer.
See "Transfers of Shares of New Calavo Common Stock After the Conversion."

VOTING RIGHTS

     Calavo's Articles of Incorporation and Bylaws state that each holder of
common stock is entitled to only one vote regardless of the number of shares
that he or she owns. Except as required by applicable law, holders of preferred
stock do not have any voting rights.

     New Calavo's Bylaws state that each holder of common stock is entitled to a
number of votes equal to the number of shares that he or she owns. Furthermore,
shareholders have cumulative voting rights in the election of directors. In an
election of directors pursuant to cumulative voting, each share of common stock
is entitled to a number of votes equal to the number of directors to be elected.
A shareholder may cast all of his or her votes for a single candidate or may
allocate the votes among two or more of the directors to be elected on a basis
determined by the shareholder. For example, if 10 directors are to be elected
and a shareholder owns 100 shares of stock, the shareholder could give one
candidate all 1,000 of the shareholder's votes or the shareholder could
apportion the 1,000 votes among two or more of the director nominees.

ELECTION OF DIRECTORS

     Calavo's Bylaws provide that the cooperative's territory will be divided
into between seven and twelve districts, and that one director will be elected
from each district. Under certain circumstances, an additional director may be
elected from the two largest districts. Each member of Calavo is assigned to a
district, and the member votes for a director from his or her district but not
from other districts. Each director serves a two-year term and must be a member
of the district from which he or she is elected. Because directors serve
staggered terms, only one-half of the total authorized directors are elected
each year. Currently, there are ten directors, each of whom is from a different
district. The Bylaws also authorize the election by the directors of up to three
directors-at-large, but there are currently no directors-at-large.

     New Calavo's Bylaws provide that the authorized number of directors will be
not less than eight nor more than fifteen, and that that Board of Directors will
determine the number of directors within that range. Currently, the authorized
number of directors is ten. Although the incumbent Board is authorized to create
districts for administrative purposes and to nominate a slate of directors
consisting of a nominee from each district, directors will not be elected on a
district basis. Instead, each shareholder is entitled to cast votes on a
cumulative basis for all of the director positions that are to be filled each
year, and a shareholder will not be limited to voting for a director from his or
her district. All directors serve one-year terms and will be elected at each
annual shareholders' meeting. Only persons who market California-grown avocados
through New Calavo are authorized to serve as directors.

SPECIAL MEETINGS OF SHAREHOLDERS

     Calavo is required by its Bylaws to hold a special meeting of shareholders
upon the request of at least twenty percent of the holders of common stock. New
Calavo's Bylaws require a special meeting to be held upon the request of
shareholders whose combined holdings comprise at least ten percent of the
outstanding common stock.

DIVIDENDS

     Distributions that are made on an annual basis by Calavo to its members
from the net proceeds on sales of members' avocados are referred to as patronage
dividends and are distributed to members based primarily upon the quantity of
avocados delivered by each member during the fiscal year without regard to the
number of shares of common stock that are owned by the member. Under Subchapter
T of the
                                        19
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Internal Revenue Code, which applies to agricultural cooperatives, Calavo does
not pay taxes on the patronage dividends that are distributed to members.
Calavo's members are taxed on the distributions.

     By contrast, dividends that Calavo elects to distribute to shareholders
based upon its earnings from business that is conducted with nonmembers on a
for-profit basis are distributed to each shareholder based upon the number of
shares of common or preferred stock that he or she owns rather than upon the
amount of business conducted by the shareholder with the cooperative. Calavo
pays normal corporate taxes on these earnings, and its shareholders pay taxes
upon their receipt of the dividends.

     As a for-profit corporation, New Calavo will be taxed under Subchapter C of
the Internal Revenue Code. New Calavo will not have the ability to deliver
patronage dividends to growers who have entered into marketing agreements with
the corporation. All earnings that New Calavo elects in its discretion to
deliver to shareholders in the form of dividends will be distributed based upon
the number of shares that are owned by each shareholder rather than upon the
amount of business that the shareholder does with the corporation. New Calavo
will be taxed on these earnings, and shareholders will then be taxed upon their
receipt of the dividends.

REVOLVING FUNDS

     As a cooperative, Calavo is entitled under its Articles of Incorporation
and Bylaws to satisfy all or a portion of its capital needs by withholding for
several years a portion of the proceeds from marketing avocados that are
otherwise distributable to its members. Assuming satisfaction of certain
requirements, Calavo does not pay taxes on these retained amounts, which are
referred to as retains or revolving funds. Instead, the cooperative's members
agree to take this income into their taxable income.

     Pursuant to a recapitalization that was completed in January 1997, Calavo's
members exchanged their revolving fund credits for Calavo common stock. The
revolving fund credits that were held by former members and by members who did
not consent to the recapitalization were also converted into common stock after
the credits were purchased by consenting Calavo members. Subsequent to the
recapitalization, the use of revolving funds has not been an important source of
financing by Calavo.

     New Calavo's Articles of Incorporation and Bylaws do not provide for the
corporation's creation of a revolving fund from proceeds that are otherwise
payable to growers who are parties to marketing agreements with the corporation.
New Calavo will be required to pay taxes on any income that it withholds as
retained earnings.

                                        20
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                 SELECTED CONDENSED CONSOLIDATED FINANCIAL DATA

     The following selected condensed consolidated financial data for each of
the years in the five-year period ended October 31, 2000 are derived from
Calavo's audited consolidated financial statements. The following selected
condensed consolidated financial data for the three-month periods ended January
31, 2000 and January 31, 2001, respectively, are derived from Calavo's unaudited
consolidated financial statements. The unaudited consolidated financial
statements have been prepared on the same basis as the audited consolidated
financial statements included herein and, in the opinion of management, include
all adjustments (consisting only of normal recurring accruals) necessary for a
fair presentation of the operating results for the periods. The results of
operations for the three months ended January 31, 2001 are not necessarily
indicative of results to be achieved for the full fiscal year. You should read
the financial information presented below along with the consolidated financial
statements and related notes thereto that are included elsewhere in this
Information Statement/Prospectus. For a narrative explanation of certain of the
following financial information, see "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

                                                                                            THREE MONTHS
                                           FISCAL YEAR ENDED OCTOBER 31,                  ENDED JANUARY 31,
                             ----------------------------------------------------------   -----------------
                               1996         1997         1998        1999        2000      2000      2001
                             --------     --------     --------    --------    --------   -------   -------
                                                (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                                                               
STATEMENT OF OPERATIONS
  DATA:
  Net sales................  $147,866     $151,189     $152,194    $181,480    $225,869   $40,000   $40,449
  Operating proceeds.......    85,647       85,284       82,441      96,563     112,273    15,670    12,863
  Tax provision
    (benefit)..............     1,209         (319)         730        (408)      2,162       594       456
  Net income from nonmember
    products...............     1,444          266        1,648         884       4,764     1,319       909
BALANCE SHEET DATA AS OF
  END OF PERIOD:
  Working capital..........    12,217       10,503       11,626      10,254      13,929     9,721     7,406
  Total assets.............    36,114       34,115       33,887      46,442      46,485    45,254    46,552
  Short-term debt..........     1,178        2,525          475       9,148       9,486     8,169    12,901
  Long-term debt...........     4,249        3,468        4,794       4,331       3,820     4,419     3,544
  Shareholders' equity/
    members' interest......    16,382       16,147       17,518      17,577      22,435    17,839    17,134
CASH FLOWS FROM:
  Operations...............     3,865         (844)       1,464      (6,338)(1)    2,978    1,454     1,102
  Investing................    (1,482)        (786)      (3,284)(2)   (1,523)    (1,685)     (289)     (802)
  Financing................    (1,414)        (445)         167       6,917(2)   (1,259)   (2,078)   (1,770)
Weighted-Average
Shares Outstanding.........     9,623(3)     9,594(3)     9,605       9,572       9,849     9,839     9,936
Basic and Diluted Net
  Income Per Share from
  Nonmember Products.......  $   0.15(3)  $   0.03(3)  $   0.17    $   0.09    $   0.48   $  0.13   $  0.09
Dividends Per Share........  $   0.10(3)  $   0.05(3)  $   0.17    $   0.12    $   0.50
Net Book Value Per Share...  $   1.66(3)  $   1.64(3)  $   1.77    $   1.78    $   2.28

- -------------------------
(1) Reflects increased accounts receivable, which is a result of increased sales
    in fiscal 1999 of member and imported avocado products.

(2) Reflects the purchase of Calavo's California headquarters building in fiscal
    1998 and the opening of a packinghouse in Mexico with financing completed in
    fiscal 1999.

(3) In January 1997, Calavo converted its capital structure by exchanging member
    revolving fund credits for shares of common stock. The share information as
    of and for the fiscal years ended October 31, 1997 and 1996 is presented on
    a pro forma basis. This pro forma share information was prepared assuming
    that the number of shares outstanding prior to the conversion was equal to
    the initial number of shares issued in the January 1997 recapitalization.

                                        21
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          UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

     The following Unaudited Pro Forma Condensed Combined Financial Statements
for New Calavo give effect to the merger with Calavo. The historical financial
information set forth below has been derived from, and is qualified by reference
to, the consolidated financial statements of Calavo and the financial statements
of New Calavo and should be read in conjunction with those financial statements
and notes thereto included elsewhere herein. The Unaudited Pro Forma Condensed
Combined Statement of Operations for the fiscal year ended October 31, 2000
gives effect to the merger with Calavo as if it had occurred on November 1,
1999, and the Unaudited Pro Forma Condensed Combined Statement of Operations for
the three months ended January 31, 2001 gives effect to the merger as if it had
occurred on November 1, 2000. The Unaudited Pro Forma Condensed Combined Balance
Sheet as of January 31, 2001 gives effect to the merger with Calavo as if it had
occurred on January 31, 2001.

     Under the terms of the merger, each share of Calavo common stock and
preferred stock will be exchanged for one share of New Calavo common stock. The
merger with Calavo will be accounted for in a manner similar to a pooling of
interests. Accordingly, the assets and liabilities subsequent to the merger will
be presented at Calavo's historical cost and no goodwill will be recorded.

     The Unaudited Pro Forma Condensed Combined Financial Statements should be
read in conjunction with (i) Management's Discussion and Analysis of Financial
Condition and Results of Operations and the historical financial statements and
notes to financial statements of Calavo and New Calavo which are included
elsewhere in this Information Statement/Prospectus, and (ii) the selected
historical financial data appearing elsewhere in this Information
Statement/Prospectus. The Unaudited Pro Forma Condensed Combined Financial
Statements are provided for informational purposes only and do not purport to
present the combined financial position or results of operations of Calavo and
New Calavo had the merger assumed therein occurred on the dates specified, nor
are they necessarily indicative of the results of operations that may be
expected in the future.

                                        22
   27

              UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
                             AS OF JANUARY 31, 2001
                                 (IN THOUSANDS)

                                                HISTORICAL      HISTORICAL     PRO FORMA         PRO
                                               NEW CALAVO(1)    CALAVO(1)     ADJUSTMENTS       FORMA
                                               -------------    ----------    -----------     ---------
                                                                                  
ASSETS
Cash and cash equivalents....................     $   --         $    22        $    --        $    22
Accounts receivable, net.....................         --          17,793             --         17,793
Inventories, net.............................         --          10,874             --         10,874
Prepaid expenses and other current assets....         --           1,632             --          1,632
Loan to growers..............................         --           1,603             --          1,603
Income taxes receivable......................         --             459             --            459
Deferred income taxes........................         --             537             --            537
                                                  ------         -------        -------        -------
  Total current assets.......................         --          32,920             --         32,920
Property, plant and equipment, net...........         --           9,303             --          9,303
Investments held to maturity.................         --           1,590             --          1,590
Other assets.................................         --           2,739             --          2,739
                                                  ------         -------        -------        -------
                                                  $   --         $46,552        $    --        $46,552
                                                  ======         =======        =======        =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Payable to members...........................     $   --         $ 8,122        $(8,122)(2)    $    --
Trade accounts payable and accrued
  expenses...................................         --           4,491          8,122(2)      12,613
Short-term borrowings........................         --          12,400             --         12,400
Current portion of long-term obligations.....         --             501             --            501
                                                  ------         -------        -------        -------
  Total current liabilities..................         --          25,514             --         25,514
Long-term obligations, less current
  portion....................................         --           3,544             --          3,544
Deferred income taxes........................         --             360             --            360
                                                  ------         -------        -------        -------
  Total long-term liabilities................         --           3,904             --          3,904
Shareholders' equity:
Redeemable preferred stock...................         --              47            (47)(3)         --
Common stock.................................          1           9,909             (1)(4)
                                                                                 (9,909)(3)
                                                                                     10(3)          10
Additional paid-in capital...................         --             178          9,946(3)      10,124
Retained earnings............................         --           7,000             --          7,000
Receivable from shareholder..................         (1)             --              1(4)          --
                                                  ------         -------        -------        -------
  Total shareholders' equity.................         --          17,134             --         17,134
                                                  ------         -------        -------        -------
                                                  $   --         $46,552        $    --        $46,552
                                                  ======         =======        =======        =======

See accompanying notes to Unaudited Pro Forma Condensed Combined Financial
Statements.

                                        23
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         UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
                          YEAR ENDED OCTOBER 31, 2000
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

                                            HISTORICAL      HISTORICAL     PRO FORMA
                                           NEW CALAVO(1)    CALAVO(1)     ADJUSTMENTS       PRO FORMA
                                           -------------    ----------    -----------       ---------
                                                                                
Net sales................................     $   --        $ 225,869      $     --         $225,869
Cost of sales............................         --               --       105,347(5)
                                                                                292(5)
                                                                             92,230(6)       197,869
                                                                           --------         --------
Gross margin.............................         --               --            --           28,000
Operating expense........................         --          112,934       (92,230)(6)       20,704
                                              ------        ---------      --------         --------
Operating income/operating proceeds and
  nonmember gross profit.................         --          112,935       105,639            7,296
Other expense............................         --              370            --              370
Decrease in members' fresh fruit
  inventories............................         --             (292)          292(5)            --
                                              ------        ---------      --------         --------
Income before provision for income
  taxes..................................         --          112,273       105,347            6,926
Income tax provision.....................         --            2,162            --            2,162
Net proceeds distributed to members......         --         (105,347)      105,347(5)            --
                                                            ---------      --------         --------
Net income...............................     $   --        $   4,764      $     --         $  4,764
                                              ======        =========      ========         ========
Basic and diluted net income per share...     $   --        $    0.48      $     --         $   0.48
                                              ======        =========      ========         ========
Basic and diluted weighted average
  shares.................................         --            9,849            --            9,849
                                              ======        =========      ========         ========

See accompanying notes to Unaudited Pro Forma Condensed Combined Financial
Statements.

                                        24
   29

         UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
                      THREE MONTHS ENDED JANUARY 31, 2001
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

                                             HISTORICAL      HISTORICAL     PRO FORMA
                                            NEW CALAVO(1)    CALAVO(1)     ADJUSTMENTS       PRO FORMA
                                            -------------    ----------    -----------       ---------
                                                                                 
Net sales.................................     $   --         $ 40,449      $      --        $ 40,449
Cost of sales.............................         --               --         11,498(5)
                                                                               (1,471)(5)
                                                                               24,687(6)       34,714
                                               ------                       ---------        --------
Gross margin..............................         --               --             --           5,735
Operating expense.........................         --           28,933        (24,687)(6)       4,246
                                               ------         --------      ---------        --------
Operating income/operating proceeds and
  nonmember gross profit..................         --           11,516         10,027           1,489
Other expense.............................         --              124             --             124
Increase in members' fresh fruit
  inventories.............................         --            1,471         (1,471)(5)          --
                                               ------         --------      ---------        --------
Income before provision for income
  taxes...................................         --           12,863         11,498           1,365
Income tax provision......................         --              456             --             456
Net proceeds distributed to members.......         --          (11,498)        11,498
                                               ------         --------      ---------        --------
Net income................................     $   --         $    909      $      --        $    909
                                               ======         ========      =========        ========
Basic and diluted net income per share....     $   --         $   0.09                       $   0.09
                                               ======         ========                       ========
Basic and diluted weighted average
  shares..................................         --            9,936                          9,936
                                               ======         ========                       ========

See accompanying notes to Unaudited Pro Forma Condensed Combined Financial
information.

                                        25
   30

    NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

     Pro forma adjustments for the unaudited pro forma condensed combined
balance sheet as of January 31, 2001 and the statements of operations for the
year ended October 31, 2000 and the three months ended January 31, 2001 are as
follows:

     (1) Calavo reports its financial information on the basis of an October 31
         fiscal year. New Calavo was incorporated on January 5, 2001. The
         Unaudited Pro Forma Condensed Combined Financial Statements for the
         fiscal year ended October 31, 2000 and the three months ended January
         31, 2001 include Calavo's historical results of operations for the
         fiscal year ended October 31, 2000 and the three months ended January
         31, 2001 respectively, and do not include any operations of New Calavo
         as its operations will not commence until after the proposed merger is
         consummated. The Unaudited Pro Forma Condensed Combined Balance Sheet
         includes the historical balance sheets of Calavo and New Calavo as of
         January 31, 2001.

     (2) Represents the reclassification of a payable to a growers balance
         maintained by Calavo as an agricultural cooperative to a trade accounts
         payable as a commercial corporation.

     (3) Represents the exchange of 9,867,000 and 47,000 shares of Calavo common
         and preferred stock (par value $1.00) for 9,904,000 shares of New
         Calavo common stock (par value $0.001) and the corresponding increase
         in additional paid-in capital.

     (4) Represents the forgiveness of a note receivable from New Calavo's
         parent and the cancellation of all shares of New Calavo common stock.

     (5) Represents the reclassification of proceeds distributed to growers and
         other related accounts maintained by Calavo as an agricultural
         cooperative to cost of goods sold consistent with operations as a
         commercial corporation.

     (6) Represents certain costs and expenses presented by Calavo in accordance
         with industry standards for agricultural cooperatives and reclassifies
         such amounts as cost of goods sold.

                                        26
   31

                               BUSINESS OF CALAVO

OVERVIEW

     Calavo is a nonprofit cooperative association that is organized under the
California Food and Agricultural Code. It was founded in 1924 to market avocados
grown in California by its members. The growing area stretches from San Diego to
the north of Santa Barbara, with the majority of the growing areas located
approximately 100 miles north and south of Los Angeles.

     The Hass variety of avocados represents about 85% of current plantings. The
Hass variety is available from December through November, with peak production
in the May to September months.

     The avocados are harvested and then delivered to a packinghouse where they
are cooled, graded, sized and packed. The avocados are then stored in a
temperature-controlled warehouse until they are shipped to customers. Customers
consist of the major supermarket chains in the United States and Canada and
certain other foreign countries and of food service distributors who supply the
away-from-home market such as restaurants, fast food chains, hospitals and other
institutions. Calavo markets its products through its own sales force for the
fresh avocado market and uses a broker network for its processed products.

     Calavo sources avocados from Chile and New Zealand under consignment
marketing agreements. It earns a marketing commission for sales made to its
customers. Papayas from Hawaii are also sold on a commission basis.

     Calavo purchases avocados in Mexico for its fresh and processed businesses.
Calavo has one packinghouse in Mexico for packing and shipping avocados to the
United States, Canada, Asia and Europe. Avocados are also processed in Mexico by
first removing the skin and seed, and then are made into a pulp. The pulp is
shipped to a processing plant in California where it is further processed and
packaged. The product is then frozen for storage with shipment to warehouses and
ultimately to its customers. The product has an extended storage life compared
to the short storage life of the fresh product.

     The market for avocados is worldwide. The United States market receives
most of Calavo's U.S. production. In recent years, U.S. production has been
reduced due to weather and disease or pest conditions. When U.S. production is
reduced, imports come into the market and fill the void. In recent years, the
U.S. market has also been restricted due to high domestic prices.

     Calavo's cost structure is geared to handle larger crops than it has
processed in the last several years. Calavo has aggressively recruited and
procured an additional percentage of the California avocados crop in recent
years, especially from nonmembers.

     The California avocado market is highly competitive. There are over forty
handlers of fresh avocados, all of whom place purchase quotations into a daily
price quoting marketplace. The competition is both for the growers and for the
food buyers at the retail and food service companies.

     Avocados are not differentiated at the consumer level since there is
limited branding of the product. The industry operates under a California
marketing order whereby all growers fund a generic advertising and promotion
program. There is no brand crediting. The only label on the avocados is
"California Grown," with an industry-wide PLU label used for scanning purposes
on the fruit and with Calavo marking the PLU label with its name. The packaging
container does show the packer's name on the container, but the container
normally does not appear in the store display area.

     Calavo's sales effort for fresh avocados is handled out of its Santa Ana,
California office with four regional sales offices in key United States markets.
The processed avocado sales effort is handled by a nationwide broker network
controlled by six salaried regional managers. California growers are serviced
out of two packinghouses with regional field managers handling the daily harvest
planning, delivery and grower relations. Calavo's logistics, accounting and
information services are also headquartered in its Santa Ana, California office.

                                        27
   32

     Members' fruit is pooled on a weekly basis, which means that all fruit
received during a week is aggregated into one homogeneous commodity. The fruit
is tracked through the packaging cycle, and the sales proceeds for each week are
allocated to the applicable week's delivery of avocados. The proceeds are paid
to the growers once each month with all of the fruit received in a given week
receiving the same return by variety, grade and size.

     Most of the fruit is sold on a weekly basis. At the time of payout, the
avocados that are not yet invoiced are estimated for payout purposes. Over a
number of years, this payout system has closely tracked actual proceeds. Any
errors in calculation are absorbed by Calavo.

     A packing retain is withheld when the avocados are delivered by charging a
packing fee against the estimated sales proceeds. If this packing retain is more
than the actual cost of operations, the excess is refunded to the members on the
basis of the pounds of fruit delivered by each member. If there is a deficit, it
is recovered in the following year. Generally, a refund has been made to the
members since Calavo is conservative in setting its retain rate. Competitive
pressures act as a control on setting the lowest possible retain since growers
might deliver avocados to a competitive marketer if the retain is too high. Upon
the conversion of Calavo to a for-profit corporation, a refundable retain will
not be charged against the sales proceeds since Calavo will cease operating as a
cooperative.

     Members of Calavo sign a marketing agreement to deliver all of their fruit
to the cooperative for one year. This term is renewed on an annual basis unless
either party gives written notice to terminate during a prescribed period each
year.

     The processed avocado segment has experienced major competition from
Mexican-based producers in recent years. Mexican producers have a slight
advantage over United States producers in fruit procurement costs. However,
since the avocados must be processed and then delivered to the United States,
Calavo does not believe that this has given Mexican producers a major cost
advantage.

     Calavo's marketing strength has been its quality, innovation, year-round
product availability, strategically located warehouses and market relationships.
Calavo does heavy brand support of its processed products with consumer
advertising and trade promotions.

BUSINESS SEGMENTS

     IDENTIFICATION OF SEGMENTS

     Calavo's business has three segments:

     - Member avocados, which includes all operations that involve the
       distribution of avocados delivered primarily by members under marketing
       agreements;

     - Nonmember perishable products, which includes the distribution of
       nonmembers' fresh avocados imported primarily from Chile, Mexico and New
       Zealand and the distribution of Hawaiian-grown papayas and which is done
       on a consignment and purchased basis; and

     - Processed avocados, which includes frozen avocado pulp products mainly
       produced at Calavo's plants.

     MEMBER AVOCADOS

     There are approximately 1,560 growers who deliver their avocados to Calavo
on a member basis. This fruit is paid on a consignment basis with an estimated
packing and marketing charge deducted from the sales proceeds. There are
approximately 180 growers who deliver avocados to Calavo on a nonmember basis.
They are paid the same rate as Calavo's members. However, the nonmembers do not
vote on corporate matters and are not shareholders of Calavo. Members must own
shares of Calavo common stock.

     Calavo also purchases avocados at an agreed price. Calavo takes the full
market risk on these transactions. The commodity is delivered to a Calavo
packinghouse where it is graded, sized and packed into shipping containers for
delivery to Calavo's customers. It is important for Calavo to be able to

                                        28
   33

estimate the total size of the crop and to have that commodity move through the
distribution system in an orderly manner. This is done through a field team that
maintains direct contact with growers and farm managers to coordinate harvest
plans and that gives feedback to the marketing group. The sales effort is
coordinated through the Santa Ana, California office where list prices are
published for a direct sales force to solicit orders. Calavo maintains
additional offices in the States of Washington, Illinois and New Jersey.

     Sales are made to a diverse group of supermarket chains, wholesalers, food
service suppliers and other direct users. The recent consolidation in the
supermarket and food service segments has led to fewer but bigger buyers.
Limited sales are made through the "dot com" distribution method, which will
probably increase over the near term.

     Calavo's largest 5 customers represent 12.5% of all fresh product sales and
the largest 25 customers represent 43.9% of all sales. The sales force sells the
member avocados and nonmember perishable products to the same customer base.

     Calavo has a market share of 37.0% of California avocados. This percentage
has increased in recent years from 30.0% as a result of areas recovering from
weather and pest problems and new membership additions.

     The cost structure of Calavo is heavily weighted to fixed expenses. When
the volume increases, this overhead is spread over more pounds, which yields a
lower operating cost.

     NONMEMBER PERISHABLE PRODUCTS

     This area has experienced significant growth over the last several years.
The Chilean volume has increased due to larger plantings and lower crop sizes in
California. This has created market opportunities for the Chilean crop, which is
harvested towards the end of the California crop season. Calavo has a 23.5%
share of Chilean imports into the United States.

     Mexican avocados have been allowed to enter the United States market since
1998. They are marketed in the 19 northeastern states from November 1 to the end
of February. Calavo has a history of dealing in Mexican produce. With the border
being opened, a major investment was made in Mexico to build a packinghouse in
the growing area. The success of this portion is dependent upon securing a
reliable, high quality supply of avocados at a reasonable cost. Recently, the
Mexican growers and government have restricted the supply of avocados for export
to the United States in order to obtain higher field prices. Calavo is dependent
upon securing a sufficient volume of fruit to support its investment in the
packing operation. Calavo also exports Mexican avocados to Japan, Canada and
Europe. Calavo has a 20.0% share of the avocados exported from Mexico.

     Advances have been made to several Mexican growers to secure their fruit
for the season. If they do not deliver this fruit, it may be difficult for
Calavo to obtain repayment of the advances. Total advances to Mexican growers as
of October 31, 2000 were $1,088,000.

     New Zealand has recently started to export avocados into the United States.
New Zealand avocados compete with the Chilean and Mexican fruit for shelf space.
Calavo's share of the avocados imported from New Zealand into the United States
is 40.0%.

     Papayas, packed by a company that is owned by Calavo's Chairman of the
Board and Chief Executive Officer, are shipped to the United States for sale to
Calavo's customers. The crop has been restricted due to disease problems in
Hawaii. There is also significant competition from Mexico in this product line.

     Calavo marketed mangos until 1999, when Calavo discontinued that product
due to profitability issues.

     PROCESSED AVOCADOS

     Calavo pioneered the freezing of the avocado in the 1960's and early
1970's. The process involves a ripening, seed removal and pulp extraction
operation. The pulp is packaged in plastic or metal containers

                                        29
   34

for sale to the food service industry and retail supermarket trade. Sales
declined over the last several years due mainly to Mexican-based processors
entering the market. In prior years, Calavo used California fruit to create the
pulp. With restricted supplies, Calavo had to process Mexican fruit in order to
remain competitive in the market place. Because Mexican processors had access to
lower-priced fruit, Calavo made a decision in 1995 to build a Mexican processing
plant, which put it on a more competitive fruit-sourcing basis.

     Sales of processed avocados are made to the food service sector and the
retail supermarket sector. The sales are made by a commissioned broker network
that is managed by Calavo's regional sales managers. The largest 5 customers
represent 24.3% of all sales, and the largest 25 customers represent 49.3% of
sales.

SALES INFORMATION BY BUSINESS SEGMENT

     For each of Calavo's three business segments, Note 13 to the Consolidated
Financial Statements that are included in this Information Statement/Prospectus
sets forth detailed information regarding sales, costs and income for each of
the years in the three-year period ended October 31, 2000.

     The following table sets forth sales, costs and income information for each
of Calavo's three business segments for each fiscal quarter during the two
fiscal years ended October 31, 2000 and for the fiscal quarter ended January 31,
2001.

                                MEMBER AVOCADOS
                                 (IN THOUSANDS)

                                                FISCAL YEAR ENDED OCTOBER 31, 1999
                                  --------------------------------------------------------------
                                  11/1 - 1/31   2/1 - 4/30   5/1 - 7/31   8/1 - 10/31    TOTAL
                                  -----------   ----------   ----------   -----------   --------
                                                                                 
Sales...........................    $ 8,408      $30,384      $43,729       $29,038     $111,559
Costs(1)........................      3,223        4,227        4,727         4,012       16,189
Tax (benefit)(2)................         --           --           --           (21)         (21)
Change in inventory.............      1,569        1,786         (136)       (2,523)         696
Distributed.....................      7,997       26,206       38,672        23,215       96,090
                                    -------      -------      -------       -------     --------
Excess distribution (deficit) to
  growers.......................    $(1,243)     $ 1,737      $   194       $  (691)    $     (3)

                                                                                                   QUARTER ENDED
                                                                                                    JANUARY 31,
                                                FISCAL YEAR ENDED OCTOBER 31, 2000                     2001
                                  --------------------------------------------------------------   -------------
                                  11/1 - 1/31   2/1 - 4/30   5/1 - 7/31   8/1 - 10/31    TOTAL      11/1 - 1/31
                                  -----------   ----------   ----------   -----------   --------   -------------
                                                                                 
Sales...........................    $14,327      $38,052      $44,565       $26,723     $123,667      $14,255
Costs(1)........................      2,915        4,775        5,329         4,989       18,008        4,228
Tax(2)..........................          1           --           --            19           20            1
Change in inventory.............      2,346          437       (1,191)       (1,884)        (292)       1,471
Distributed.....................     14,808       32,826       36,785        20,948      105,367       12,799
                                    -------      -------      -------       -------     --------      -------
Excess distribution (deficit) to
  growers.......................    $(1,051)     $   888      $ 1,260       $(1,117)    $    (20)     $(1,301)

                                        30
   35

                         NONMEMBER PERISHABLE PRODUCTS
                                 (IN THOUSANDS)

                                                FISCAL YEAR ENDED OCTOBER 31, 1999
                                  --------------------------------------------------------------
                                  11/1 - 1/31   2/1 - 4/30   5/1 - 7/31   8/1 - 10/31    TOTAL
                                  -----------   ----------   ----------   -----------   --------
                                                                         
Sales...........................    $15,801      $ 4,591      $ 2,274       $17,619     $ 40,285
Costs(1)........................     13,959        4,318        2,973        16,256       37,506
Gross margins...................      1,842          273         (699)        1,363        2,779
Other costs(1)..................      1,068          920          654         1,334        3,976
Tax (benefit)(2)................        173         (298)        (498)          (77)        (700)
                                    -------      -------      -------       -------     --------
Net income (loss)...............    $   601      $  (349)     $  (855)      $   106     $   (497)

                                                                                                   QUARTER ENDED
                                                                                                    JANUARY 31,
                                                FISCAL YEAR ENDED OCTOBER 31, 2000                     2001
                                  --------------------------------------------------------------   -------------
                                  11/1 - 1/31   2/1 - 4/30   5/1 - 7/31   8/1 - 10/31    TOTAL      11/1 - 1/31
                                  -----------   ----------   ----------   -----------   --------   -------------
                                                                                 
Sales...........................    $17,765      $ 9,934      $12,982       $28,777     $ 69,458      $18,617
Costs(1)........................     15,935        7,955       11,071        26,251       61,212       16,862
Gross margins...................      1,830        1,979        1,911         2,526        8,246        1,755
Other costs(1)..................      1,118        1,618        1,274         1,456        5,466        1,399
Tax(2)..........................        221           87          154           209          671          119
                                    -------      -------      -------       -------     --------      -------
Net income (loss)...............    $   491      $   274      $   483       $   861     $  2,109      $   237

                               PROCESSED AVOCADOS
                                 (IN THOUSANDS)

                                                FISCAL YEAR ENDED OCTOBER 31, 1999
                                  --------------------------------------------------------------
                                  11/1 - 1/31   2/1 - 4/30   5/1 - 7/31   8/1 - 10/31    TOTAL
                                  -----------   ----------   ----------   -----------   --------
                                                                         
Sales...........................    $ 6,420      $ 6,616      $ 8,231       $ 8,369     $ 29,636
Costs(1)........................      3,084        3,162        4,594         5,344       16,184
Gross margins...................      3,336        3,454        3,637         3,025       13,452
Other costs(1)..................      2,505        3,043        3,019         3,191       11,758
Tax (benefit)(2)................        186           90          136           (99)         313
                                    -------      -------      -------       -------     --------
Net income (loss)...............    $   645      $   321      $   482       $   (67)    $  1,381

                                                                                                   QUARTER ENDED
                                                                                                    JANUARY 31,
                                                FISCAL YEAR ENDED OCTOBER 31, 2000                     2001
                                  --------------------------------------------------------------   -------------
                                  11/1 - 1/31   2/1 - 4/30   5/1 - 7/31   8/1 - 10/31    TOTAL      11/1 - 1/31
                                  -----------   ----------   ----------   -----------   --------   -------------
                                                                                 
Sales...........................    $ 7,908      $ 7,767      $ 8,676       $ 8,393     $ 32,744      $ 7,577
Costs(1)........................      4,092        3,116        3,121         4,466       14,795        3,520
Gross margins...................      3,816        4,651        5,555         3,927       17,949        4,057
Other costs(1)..................      2,616        3,477        3,637         4,093       13,823        3,048
Tax (benefit)(2)................        372          418          684            (3)       1,471          337
                                    -------      -------      -------       -------     --------      -------
Net income (loss)...............    $   828      $   756      $ 1,234       $  (163)    $  2,655      $   672

                                        31
   36

                                    COMBINED
                                 (IN THOUSANDS)

                                                FISCAL YEAR ENDED OCTOBER 31, 1999
                                  --------------------------------------------------------------
                                  11/1 - 1/31   2/1 - 4/30   5/1 - 7/31   8/1 - 10/31    TOTAL
                                  -----------   ----------   ----------   -----------   --------
                                                                         
Sales...........................    $30,629      $41,591      $54,234       $55,026     $181,480
Costs(1)........................     17,043        7,480        7,567        21,600       53,690
Gross margins...................     13,586       34,111       46,667        33,426      127,790
Other costs(1)..................      6,796        8,190        8,400         8,537       31,923
Tax (benefit)(2)................        359         (208)        (362)         (197)        (408)
Change in inventory.............      1,569        1,786         (136)       (2,523)         696
Distributed.....................      7,997       26,206       38,672        23,215       96,090
Excess distribution (deficit) to
  growers(3)....................     (1,243)       1,737          194          (691)           3
                                    -------      -------      -------       -------     --------
Net income (loss) from nonmember
  products......................    $ 1,246      $   (28)     $  (373)      $    39     $    884

                                                                                                   QUARTER ENDED
                                                                                                    JANUARY 31,
                                                FISCAL YEAR ENDED OCTOBER 31, 2000                     2001
                                  --------------------------------------------------------------   -------------
                                  11/1 - 1/31   2/1 - 4/30   5/1 - 7/31   8/1 - 10/31    TOTAL      11/1 - 1/31
                                  -----------   ----------   ----------   -----------   --------   -------------
                                                                                 
Sales...........................    $40,000      $55,753      $66,223       $63,893     $225,869      $40,449
Costs(1)........................     20,027       11,071       14,192        30,717       76,007       20,382
Gross margins...................     19,973       44,682       52,031        33,176      149,862       20,067
Other costs(1)..................      6,649        9,870       10,240        10,538       37,297        8,675
Tax(2)..........................        594          506          837           225        2,162          456
Change in inventory.............      2,346          437       (1,191)       (1,884)        (292)       1,471
Distributed.....................     14,808       32,826       36,785        20,948      105,367       12,799
Excess distribution (deficit) to
  growers(3)....................     (1,051)         888        1,260        (1,117)         (20)      (1,301)
                                    -------      -------      -------       -------     --------      -------
Net income (loss) from nonmember
  products......................    $ 1,319      $ 1,029      $ 1,718       $   698     $  4,764      $   909

- -------------------------
(1) Costs and other costs include costs which can be identified by segment and
    costs which are allocated using a five-year sales factor. The allocated
    costs are general and administrative costs.

(2) Non-specific expenses are allocated using a one-year sales allocation factor
    for purposes of computing taxable income, which yields a different
    allocation of such costs than the five-year method used for financial
    statement purposes. The effective tax rate is applied to each quarter.

(3) Transferred to retained earnings at the end of the fiscal year.

                                        32
   37

SALES BY PRODUCT CATEGORY

     The following table sets forth sales by product category for each of the
years in the five-year period ended October 31, 2000.

                                                   FISCAL YEAR ENDED OCTOBER 31,
                                      --------------------------------------------------------
                                        1996        1997        1998        1999        2000
                                      --------    --------    --------    --------    --------
                                                         (IN THOUSANDS)(1)
                                                                       
California avocados -- members......  $ 96,915    $ 99,723    $ 91,461    $107,357    $117,878
California avocados -- nonmembers...        --          --          --       3,405      23,057
Chilean avocados....................     7,137       8,881      13,531      18,355      20,538
Mexican avocados....................     2,444       3,276       6,828      11,240      13,802
New Zealand avocados................        --          --          --       1,273       3,672
Miscellaneous purchased avocados....        68         435       1,290       1,154       1,094
Papayas.............................     3,271       2,129       2,624       1,981       2,061
Mangos..............................        11         535       1,150           4          --
Others..............................       199          36          71          --          --
Processed -- food service...........    19,261      19,442      20,363      21,261      27,225
Processed -- retail & club..........    11,188      10,065       8,351       8,375       5,519
Processed -- miscellaneous..........         2          56          10          --          --
                                      --------    --------    --------    --------    --------
Total sales -- F.O.B. ..............  $140,496    $144,578    $145,679    $174,405    $214,846
Freight and other charges(2)........     7,370       6,611       6,515       7,075      11,023
                                      --------    --------    --------    --------    --------
  Total sales.......................  $147,866    $151,189    $152,194    $181,480    $225,869
                                      ========    ========    ========    ========    ========

- -------------------------
(1) Fresh sales products are reported in F.O.B. dollars, which is the cost to
    customers for the packed products before freight, storage and handling costs
    and other add-on costs to customers. Processed products are reported in
    delivered pricing as the products have freight costs built into the price
    quoted to the customers.

(2) These charges change as the volume increases or decreases.

     The following table sets forth the percentage of total sales contributed by
each product category for each of the years in the five-year period ended
October 31, 2000.

                                                       FISCAL YEAR ENDED OCTOBER 31,
                                             -------------------------------------------------
                                             1996       1997       1998       1999       2000
                                             -----      -----      -----      -----      -----
                                                                          
California avocados -- members.............   69.0%      69.0%      62.8%      61.6%      54.9%
California avocados -- nonmembers..........     --         --         --        2.0       10.7
Chilean avocados...........................    5.1        6.1        9.3       10.5        9.6
Mexican avocados...........................    1.7        2.3        4.7        6.4        6.4
New Zealand avocados.......................    0.0         --         --        0.7        1.7
Miscellaneous purchased avocados...........    0.1        0.3        0.9        0.7        0.5
Papayas....................................    2.3        1.5        1.8         --         --
Mangos.....................................     --        0.4        0.8         --         --
Others.....................................    0.1         --         --         --         --
Processed -- food service..................   13.7       13.4       14.0       12.2       12.7
Processed -- retail & club.................    8.0        7.0        5.7        4.8        2.6
Processed -- miscellaneous.................     --         --         --         --         --
                                             -----      -----      -----      -----      -----
  Total sales..............................  100.0%     100.0%     100.0%     100.0%     100.0%
                                             =====      =====      =====      =====      =====

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AVOCADOS DELIVERED BY CALAVO'S CALIFORNIA MEMBERS

     The following table sets forth the quantity of avocados delivered by
Calavo's California members for each of the years in the five-year period ended
October 31, 2000.

                                                       FISCAL YEAR ENDED OCTOBER 31,
                                             -------------------------------------------------
                                              1996       1997       1998      1999      2000
                                             -------    -------    ------    ------    -------
                                                         (IN THOUSANDS OF POUNDS)
                                                                        
    Pounds.................................  117,038    104,159    91,698    82,235    119,248

FOREIGN AND DOMESTIC SALES INFORMATION

     The following table sets forth information regarding Calavo's domestic and
foreign sales for each of the years in the three-year period ended October 31,
2000.

                                                      FISCAL YEAR ENDED OCTOBER 31,
                                                     --------------------------------
                                                       1998        1999        2000
                                                     --------    --------    --------
                                                              (IN THOUSANDS)
                                                                    
United States......................................  $146,107    $170,899    $212,595
Canada.............................................     1,136       3,437       4,091
Asia...............................................     3,371       3,110       6,608
Europe.............................................     1,580       4,034       2,575

SEASONAL AVAILABILITY OF PRODUCTS

     The availability of products during the course of each year is as follows:

                 PRODUCT                                 AVAILABILITY
                 -------                                 ------------
                                        
California avocados......................  All year
Chilean avocados.........................  August to January
Mexican avocados.........................  July to June
New Zealand avocados.....................  August to December
Papayas..................................  All year
Processed products.......................  All year, with production scheduled to
                                           bridge the low availability months of
                                           August and September

PATENTS AND TRADEMARKS

     There are no patents or trademarks on Calavo's products other than the
Calavo name and related brand names.

WORKING CAPITAL REQUIREMENTS

     For most of Calavo's fresh and processed products, payments must be made to
growers and other suppliers in advance of Calavo's collection of receivables
from the sale of the products. This generally requires seasonal borrowings by
Calavo. Crop loans and other advances by Calavo to growers also require seasonal
borrowings by Calavo.

BACKLOG

     Customers do not order products significantly in advance of the shipment of
the products. Customers typically order perishable products two to ten days in
advance of shipment, and they typically order processed products one to thirty
days in advance of shipment.

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   39

RESEARCH AND DEVELOPMENT

     Calavo does not conduct a material amount of research and development, and
the cooperative has not incurred material expenses for research and development
during recent years. As a normal function, however, Calavo does continuously
attempt to refine the quality of its processed avocado products.

COMPLIANCE WITH GOVERNMENT REGULATIONS

     In California, the State Department of Food and Agriculture oversees the
production of avocados and conducts tests for fruit quality and packaging
standards. All packages are stamped with the state seal as meeting standards.
The United States Department of Agriculture regulates imported products. All
imports are subject to USDA review. Various states have some oversight as to
weights and measures and quality issues. Furthermore, Calavo's operations at its
packinghouses and processing facilities are subject to various federal, state,
local and foreign laws and regulations relating to environmental matters. Calavo
believes that it is in material compliance with all laws and regulations that
govern its business operations.

EMPLOYEES

     As of December 31, 2000, Calavo had 450 employees, 222 of whom were located
in the United States and 228 of whom were located in Mexico. None of Calavo's
United States employees is covered by a collective bargaining agreement.
Approximately 195 of Calavo's Mexican employees are represented by a union.
Calavo believes that its relations with employees are very good.

     The following is a summary of the number of "salaried" and "hourly"
employees as of October 31, 2000.

                          LOCATION                            SALARIED    HOURLY
                          --------                            --------    ------
                                                                    
United States...............................................    100        121
Mexico......................................................     33        195
                                                                ---        ---
TOTAL.......................................................    133        316
                                                                ===        ===

     Agriculture is a seasonal industry. However, avocados have a wider window
of production than most perishable commodities and, as a result, hourly
personnel are more constant during the year compared to other products.

PRODUCTION AND OFFICE FACILITIES

     Calavo owns its corporate headquarters building in Santa Ana, California.
The building was purchased in 1997. Calavo also owns two packinghouses and one
processing facility in California and leases one packinghouse and one processing
facility in Mexico.

     Calavo's two California packinghouses handle the fresh avocados delivered
by growers. The Temecula, California facility was built in 1985 and has been
improved in capacity and efficiency since 1985. The Santa Paula, California
facility was purchased in 1955 and has had recent improvements to equal the
Temecula facility. The combined annual capacity of the two packinghouses is over
200 million pounds under normal workweek operations.

     The Santa Paula, California processing facility was built in 1975 and had a
major expansion in 1988. The facility includes a storage freezer.

     The Mexicali, Mexico processing plant was built to Calavo's specifications
by the owner and is leased by Calavo through 2005. The annual capacity is in
excess of 11 million pounds of product per year. The Uruapan, Mexico
packinghouse was built to Calavo's specifications by the same owner and is
leased by Calavo through 2008. The annual capacity is in excess of 50 million
pounds.

     Calavo believes that its facilities are sufficient to meet projected needs
without major capital expenditures, assuming that state of the art methods do
not radically change. Since improvements in food

                                        35
   40

processing technology are made on an ongoing basis, however, capital
expenditures may be required in the future.

     Calavo has made significant investments in its two Mexican facilities. As
of October 31, 2000, the net book value of the facilities' property, plant and
equipment was as follows:

                                                         MEXICALI    URUAPAN    COMBINED
                                                         --------    -------    --------
                                                                 (IN THOUSANDS)
                                                                       
Cost basis.............................................   $2,525     $1,737      $4,262
Accumulated depreciation...............................    2,066        471       2,537
Net Book Value at October 31, 2000.....................      459      1,266       1,725

LEGAL PROCEEDINGS

     From time to time, Calavo is subject to legal proceedings that are
incidental to its business. Calavo is not currently subject to any legal
proceedings that could have a material adverse effect upon its financial
position or results of operations.

                                        36
   41

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     THE FOLLOWING DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS. THESE
STATEMENTS ARE SUBJECT TO RISKS AND UNCERTAINTIES, INCLUDING THOSE DISCUSSED
UNDER "RISK FACTORS," THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM
THOSE ANTICIPATED. THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH
CALAVO'S CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES THERETO THAT ARE
INCLUDED ELSEWHERE IN THIS INFORMATION STATEMENT/PROSPECTUS.

FISCAL YEAR ENDED OCTOBER 31, 2000 COMPARED TO FISCAL YEAR ENDED OCTOBER 31,
1999.

     NET SALES

     Net sales increased by 24.5% from $181.5 million to $225.9 million.

     Member Avocados and Nonmember Perishable Products Segments. This segment
was impacted by a strong consumer demand for avocados. Historically, increased
supply translates into lower sales dollars, which did not prove to be the case
in fiscal 2000. The higher fresh avocado prices stimulated additional imports of
Chilean, Mexican and New Zealand avocados. Calavo is a major distributor of
these imports. The sales increase included the results of an aggressive
recruiting of avocados grown by nonmembers.

     Processed Products Segment. Net sales of processed products increased by
10.5% from $29.6 million to $32.7 million. This increase was driven by strong
food service sales which offset reduced sales of retail and club store products.

     COST OF PRODUCT

     The cost of product includes the processing and packing costs and payments
to nonmember growers for their fresh fruit. On a consolidated basis, the cost of
product increased by 38.0% by moving from $62.1 million to $85.7 million.

     Member Avocados and Nonmember Perishable Products Segments. The total
California avocado pounds increased by 45.0% year-to-year to 119.2 million
pounds. The increased volume of pounds handled resulted in a proportionate
increase in packing, storage and freight costs. In addition, the cost of
avocados procured from Mexico, Chile and New Zealand, which is included in the
cost of product, declined slightly as a percent of sales and was favorably
impacted by an increase in volume.

     Processed Products Segment. Cost of product decreased by 8.6% from $16.2
million to $14.8 million. A reduction in the acquisition cost of fruit was the
major reason for the cost reduction.

     SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     Marketing and distribution costs increased by 6.2% with the major increase
in nonmember and processed costs due to volume increases. Freight and handling
costs increased by 33.6% which was also a result of volume increases. General
and administrative costs increased by 34.3%. This was primarily attributable to
an additional provision of $0.7 million for doubtful accounts recorded in
connection with the bankruptcy of Ameriserve, one of the largest food service
distributors in the United States. In addition, during fiscal year 2000, Calavo
completed an upgrade in its financial reporting and operating systems which is
being amortized over its useful life. An ongoing upgrade of its order processing
and inventory management information systems continues into the subsequent year.

     INTEREST

     Net interest costs increased by 28.5% from $0.319 million to $0.410 million
in fiscal 2000. The increase was primarily due to higher daily borrowings for
working capital and the financing of certain capital projects. The working
capital needs are driven by the timing differences between the payment of
advances and costs of avocados and the collection of sales proceeds on an
increasing volume of avocados.

                                        37
   42

     PROVISION FOR INCOME TAXES

     Calavo is subject to income taxes for all business activities other than
the marketing and distribution of member products. Calavo had pretax income of
$5.7 million in fiscal 2000 compared to taxable loss of $1.3 million during
fiscal 1999. The provision for taxes was $2.2 million compared to a tax benefit
of $0.4 million in the prior year. The effective tax rate for fiscal 2000 of
37.0% differs from statutory rates due primarily to state and foreign taxes and
the benefit of lower federal brackets.

     NET PROCEEDS DISTRIBUTED

     Proceeds distributed by Calavo include payments to members for avocados
delivered (member returns) and a dividend declared by the Board of Directors
relating to the operations of the nonmember perishable products and processed
products segments. Payments to members for avocados delivered increased by 9.7%
year-to-year from $96.1 million to $105.4 million. In addition, Calavo's
dividend from its nonmember segments increased 317.0% year-to-year from $1.2
million, or $0.12 per share, to $5.0 million, or $0.50 per share. The $0.50 per
share dividend was distributed in January 2001.

FISCAL YEAR ENDED OCTOBER 31, 1999 COMPARED TO FISCAL YEAR ENDED OCTOBER 31,
1998

     NET SALES

     Net sales increased in each of Calavo's three operating segments by 19.2%
from $152.2 million to $181.5 million.

     Member Avocados and Nonmember Perishable Products Segments. The increase in
sales was primarily attributable to a 43.6% year-to-year increase in nonmember
fruit sales. In particular, Calavo experienced a 67.0% increase in imported
avocados from Mexico and Chile and began procuring avocados from New Zealand.
The United States market has become increasingly attractive to foreign-based
avocado growers, due to the reduced California crop size and continued strong
consumer demand.

     Processed Products Segment. Net sales increased by 3.2% year-to-year from
$28.7 million to $29.6 million. The processed segment experienced strong sales
performance in its food service product lines offsetting weaker sales from its
retail and club store product lines. During fiscal 1999, the processed products
segment also experienced increased competition in its retail product line with
several Mexican-based producers entering the market with aggressively priced
products. Management believes that the entry of additional Mexican-based
producers is a trend that is expected to continue.

     COST OF PRODUCT

     The cost of product includes processing and packing costs and payments to
nonmember growers for their fruit. On a consolidated basis, Calavo's cost of
product increased year-to-year by 27.4% from $48.8 million to $62.2 million.

     Member Avocados and Nonmember Perishable Products Segments. Total pounds of
member avocados decreased by 10.4% from 91.7 million pounds to 82.2 million
pounds. The decreased volume resulted in a proportionate decrease in packing,
storage and freight costs. The cost of procuring avocados from Mexican growers
increased by $6.4 million during fiscal 1999 which represented the first year of
year-round operations of Calavo's Uruapan, Mexico packing plant. The first
year's operation of the Mexican plant resulted in an increase of 800.0% in
avocados packed.

     Processed Products Segment. Cost of product for processing increased by
10.9% year-to-year from $14.6 million to $16.2 million. The increase relates to
the increased sales volume and a small rise in fruit costs from fiscal 1998.

     SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     General and administrative expenses increased 36.0% year-to-year from $3.4
million to $4.6 million. The increase was primarily attributable to the
write-off of $0.6 million of costs incurred in the

                                        38
   43

implementation of a management information system when that project was
abandoned. In addition, Calavo paid increased bonuses of $0.7 million to its
employees in connection with improved operating results. These increases in
general and administrative expenses were offset by a 5.0% year-to-year decline
in marketing and distribution costs from $14.4 million to $13.7 million as a
result of lower processed retail product sales volume.

     INTEREST

     Net interest costs increased from $0.055 million to $0.319 million. The
increase in interest was primarily attributable to higher daily borrowing for
working capital and the financing of certain capital projects. The increased
working capital requirements related principally to higher short-term borrowings
to finance the increased sales volume of California and foreign-grown avocados.
Calavo's fiscal 1999 results also include interest charges relating to loans
secured to finance the equipping of the Uruapan, Mexico packinghouse and a full
year of interest on a loan secured to finance the purchase and to improve
Calavo's corporate headquarters facility.

     INCOME TAX BENEFIT

     Calavo is subject to income taxes for all business activities other than
the marketing and distribution of member products. Calavo incurred a taxable
loss of $1.3 million during fiscal 1999 as compared to taxable income of $1.9
million during fiscal 1998. The income tax benefit of $0.4 million for fiscal
1999 compares to a provision of $0.7 million for fiscal 1998. The effective tax
rate for fiscal 1999 of 48.0% differs from statutory rates due primarily to
state and foreign taxes and the benefit of lower federal brackets.

     NET PROCEEDS DISTRIBUTED

     Proceeds distributed by Calavo include payments to members for avocados
delivered (member returns) and a dividend declared by the Board of Directors
relating to the operations of the nonmember perishable products and processed
products segments. Payments to members for avocados delivered increased by 22.2%
year-to-year from $78.6 million to $96.1 million. In addition, Calavo's dividend
from its nonmember segments decreased 25% from $1.6 million to $1.2 million, or
from $0.17 per share to $0.12 per share in fiscal 1999.

THREE MONTHS ENDED JANUARY 31, 2001 COMPARED TO THREE MONTHS ENDED JANUARY 31,
2000

     NET SALES

     Net sales increased by 1.0% from $40.0 million to $40.4 million.

     Member Avocados and Nonmember Perishable Products Segments. The California
crop is at a low level of harvest in the first quarter of each year. The 2000/01
crop size is forecasted by Calavo to be about 50.0% larger than the prior year's
size. Sales of California avocados were flat compared to the prior year's first
quarter, with more volume offset by lower average selling prices.

     The Chilean, Mexican and other nonmember product sales increased by 4.8%.
The sales of New Zealand fruit decreased as this fruit moved into the market
earlier than last year.

     Processed Products Segment. Sales decreased by 4.2% from the prior year's
first quarter. Sales to the food service market increased, but this was more
than offset by a decline in retail and club store market sales.

                                        39
   44

     COST OF PRODUCT

     Total cost of product increased $0.9 million from $21.7 million to $22.6
million, or 4.4%.

     Member Avocados and Nonmember Perishable Products Segments. Costs of member
avocados increased in proportion to the crop delivery increase of 53.0%. Several
areas had period-to-period increases, with grower incentive programs up by
$0.250 million.

     Costs of nonmember products increased by 5.8% in the cost of fruit and
packing costs. This was slightly ahead of sales growth of 4.8%. Freight and
handling costs increased by 32.9% with the increased volume being shipped.

     Processed Products Segment. Processed product costs decreased by 14.0% with
lower costs of fruit being the major cost reduction, a trend that is not
anticipated to continue for the balance of the year. Promotional costs increased
significantly, with major increases in the highly competitive food service
product line. Freight and handling costs increased by 160%.

     SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     General and administrative costs had an increase of 52%. The incentive
bonus payout in December was above the prior year. This was partially offset by
higher miscellaneous income being received in the first quarter of 2001.

     INTEREST

     Net interest costs declined by $0.018 million. This was the result of a
later than normal payout of the year-end dividend which normally is paid in
December. This year, the payment was made almost 30 days later.

     The grower loan program had a higher level of participation than last year,
which resulted in higher interest income to Calavo. This offset higher interest
costs.

     PROVISION FOR INCOME TAXES

     Calavo had pretax income of $1.9 million in the first quarter from the
nonmember and processed segments. This was down from $1.3 million in the prior
year's first quarter. An effective tax rate of 34.0% is being used in fiscal
2001. The effective tax rate differs from the statutory rates due primarily to
state and foreign taxes and the benefit of lower federal brackets.

     NET PROCEEDS DISTRIBUTED

     Members received proceeds in excess of available dollars due to the use of
a level operating charge based on the full year's projected volume. It is normal
for Calavo to operate at a deficit in the first quarter of each fiscal year as
this is the low volume period for avocado harvesting in California. The
nonmember and processed net income is retained during the year and is available
for distribution by Calavo upon finalization of its year-end operating results.

LIQUIDITY AND CAPITAL RESOURCES

     Working capital increased from $10.3 million as of October 31, 1999 to
$13.9 million as of October 31, 2000 before payment of the nonmember perishable
products and processed products segment dividend. The current ratio improved
from 1.4:1.0 as of October 31, 1999 to 1.7:1.0 as of October 31, 2000. Working
capital decreased from $13.9 million as of October 31, 2000 to $6.8 million as
of January 31, 2001 primarily as a result of the payment of the dividend in
January 2001, prepaid promotion expenses, capital projects and long-term debt
reductions.

     Cash provided by operating activities in fiscal 2000 was $3.0 million
compared to cash used of $6.4 million for fiscal 1999. Fiscal 2000 operating
cash flow reflects the nonmember income of $4.8 million

                                        40
   45

and non-cash charges for depreciation and amortization of $1.7 million offset by
a net working capital decrease of $3.5 million.

     Cash used in operating activities for fiscal 1999 resulted principally from
an increase in accounts receivable which more than offset nonmember net income
and an increase in trade and member payables. Cash provided in fiscal 1998 by
operating activities approximated the nonmember-member net income.

     Investing activities used $1.7 million in fiscal 2000, compared to $1.5
million in fiscal 1999. Capital expenditures for fiscal 2000 were $1.3 million,
which was the same amount as in fiscal 1999.

     Cash used in financing activities was $1.3 million during fiscal 2000 as
compared to $6.9 million provided by financing activities during fiscal 1999.
During fiscal 2000, proceeds from additional borrowings of $1.6 million were
offset by the payment of dividends of $1.2 million and payments of long-term
obligations of $1.8 million. During fiscal 1999, proceeds from additional
borrowings of $8.7 million and issuance of capital stock of $0.4 million were
offset by a payment of dividends of $1.6 million and payments of long-term
obligations of $0.5 million.

     Management believes that cash flows from operations and additional
borrowings will be sufficient to satisfy Calavo's future capital expenditures,
nonmember recruitment, working capital and other financing requirements for at
least the next twelve months. Calavo will continue to evaluate nonmember grower
recruitment opportunities and additional capital expenditures to expand each of
the business segments. In order to finance such growth, New Calavo may seek to
obtain borrowings or issue additional shares of common stock. There can be no
assurance that financing for such growth will be available on favorable terms,
or at all.

     As of October 31, 2000, Calavo had outstanding borrowings of $9.0 million
under working capital lines of credit with two banks and had a total of $17.5
million of available credit under these lines of credit. The consent of the
lenders to the merger with New Calavo is required under the lines of credit. For
additional information regarding the terms of Calavo's credit facilities, see
Notes 6 and 7 to the Consolidated Financial Statements that are included in this
Information Statement/Prospectus.

     As of October 31, 2000, Calavo had approximately $0.350 million of material
commitments for capital expenditures, which related to the purchase of
additional field bins for grower deliveries and for an expansion to existing
avocado ripening facilities. As of January 31, 2001, there were $2.4 million of
projected capital projects which had not been funded by external sources.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Calavo's financial instruments include cash and cash equivalents and United
States government bonds with a maturity date of August 15, 2005. The government
bonds are held in an irrevocable trust to be used solely for the satisfaction of
scheduled payments of interest and principal relating to Calavo's industrial
development revenue bonds. As these securities are intended to be held until
maturity, they are being carried on the balance sheet at October 31, 2000 at
$1.590 million representing their amortized cost. The market value of these
securities as of October 31, 2000 approximated $1.604 million.

     Calavo was not a party to any derivative financial instruments during
fiscal 2000. Calavo does not intend to use derivative instruments for
speculative or trading purposes.

IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

     Calavo does not presently engage in hedging activities. In addition, Calavo
has reviewed its agreements with third parties and has determined that it has no
derivative instruments and that none of its agreements contained embedded
derivative instruments as of October 31, 2000. Accordingly, the adoption of
Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities," as amended by SFAS No. 137,
"Accounting for Derivative Instruments and Hedging Activities -- Deferral of the
Effective Date of FASB Statement No. 133," and

                                        41
   46

SFAS No. 138, "Accounting for Derivative Instruments and Hedging Activities,"
did not have a material impact on Calavo's consolidated financial statements.

     In December, 1999, the SEC issued Staff Accounting Bulletin (SAB) No. 101,
"Revenue Recognition in Financial Statements." SAB No. 101 summarized the SEC
staff's views regarding the application of accounting principles generally
accepted in the United States to revenue recognition in financial statements.
The application of SAB No. 101 did not have a material impact on Calavo's
consolidated financial statements.

                                        42
   47

                              MANAGEMENT OF CALAVO

DIRECTORS

     The following table identifies Calavo's current directors and sets forth
certain information concerning them, including their districts and terms of
office. Each director is a member of Calavo and markets avocados through the
cooperative. Each of the following persons also serves as a director of New
Calavo and will continue to do so after the conversion. Beginning with the first
annual meeting of New Calavo's shareholders and continuing at every annual
shareholders' meeting thereafter, all of New Calavo's directors will be elected
to serve one-year terms. See "Comparison of the Rights of Calavo's and New
Calavo's Shareholders -- Election of Directors."

                                                                                  TERM
                      NAME AND ADDRESS                        AGE    DISTRICT    EXPIRES
                      ----------------                        ---    --------    -------
                                                                        
Lecil E. Cole...............................................  61         1        2001
  1750 Orcutt Road
  Santa Paula, CA 93060
Edward P. Smith.............................................  70         2        2002
  29363 Gordon Hill Road
  Valley Center, CA 92082
George H Barnes.............................................  68         3        2001
  31510 Laurel Ridge
  Valley Center, CA 92082
Fred J. Ferrazzano..........................................  67         4        2002
  3101 Foxhall Glen
  Escondido, CA 92029-6826
Roy V. Keenan...............................................  65         5        2001
  P.O. Box 205
  Temecula, CA 92593
Alva V. Snider..............................................  85         6        2002
  3410 Alta Vista
  Fallbrook, CA 92028
Scott Van Der Kar...........................................  46         7        2001
  7017 Shepard Mesa Drive
  Carpinteria, CA 93013
J. Link Leavens.............................................  49         8        2002
  P.O. Box 4278
  Ventura, CA 93007
Dorcas H. Thille............................................  69         9        2001
  14053 Foothill Road
  Santa Paula, CA 93060
John M. Hunt................................................  43        10        2002
  P. O. Box 1343
  Goleta, CA 93116

     Lecil E. Cole. Mr. Cole has been a member of the Board of Directors since
February 1982 and serves as Calavo's Chairman, Chief Executive Officer and
President. He is also a former executive of Safeway Stores, the past Chairman of
Central Coast Federal Land Bank and the Chairman and President of Hawaiian Sweet
Inc. and Tropical Hawaiian Products, Inc. Mr. Cole farms a total of 4,430 acres
in California and Hawaii on which avocados, papayas and cattle are produced and
raised.

     Edward P. Smith. Mr. Smith has been a member of the Board of Directors
since February 1997. He is a retired engineering manager with Interstate
Electronics Corp.

                                        43
   48

     George H. Barnes. Mr. Barnes has been a member of the Board of Directors
since January 2000. He has been a real estate broker with Matthews & O'Donnell
since 1995.

     Fred J. Ferrazzano. Mr. Ferrazzano has been a member of the Board of
Directors since August 1985. He has been the President and Chief Executive
Officer of Ferrazzano Farms, Inc. since 1973 and the President and Chief
Executive Officer of Westbridge Estates, Inc. since 1989. He is a retired
Commander in the United States Navy and has a degree in engineering science from
the United States Naval Postgraduate School.

     Roy V. Keenan. Mr. Keenan has been a member of the Board of Directors since
February 1994 and an avocado grower since 1981. He is a retired Vice President
of a building contractor firm and has a master's degree in aeronautics and
astronautics from the Massachusetts Institute of Technology.

     Alva V. Snider. Mr. Snider has been a member of the Board of Directors
since February 1987. He has been the owner and manager of a ten-acre avocado and
specialty crop grove since 1968. He is a retired manager of Shell Chemical Corp
and has a master's degree in organic chemistry from Oregon State University.

     Scott Van Der Kar. Mr. Van Der Kar has been a member of the Board of
Directors since February 1994. He is a manager of Van Der Kar Family Farms. He
is a member of the boards of the California Cherimoya Association, the Santa
Barbara County Farm Bureau and the Santa Barbara County Workforce Investment
Board. He has a bachelor's degree in farm management from California Polytechnic
State University, San Luis Obispo.

     J. Link Leavens. Mr. Leavens has been a member of the Board of Directors
since February 1987. He is the President of the Ventura County Resource
Conservation District and is a member of the Ventura County Agricultural Land
Trust. Mr. Leavens is a former President of the Ventura County Farm Bureau, and
he has a bachelor's degree in plant and soil science from California Polytechnic
State University, Pomona, and a master's degree in business administration from
California Lutheran University.

     Dorcas H. Thille. Mrs. Thille has been a member of the Board of Directors
since February 1986. She is the owner and manager of a 291-acre farm on which
avocados, lemons and vegetables are grown. She is a member of the boards of the
Saticoy Lemon Association, the Agricultural Issues Center and the Agricultural
Council of California.

     John M. Hunt. Mr. Hunt has been a member of the Board of Directors since
February 1993. He is the General Manager of Embarcadero Ranch and has a
bachelor's degree in plant soil science from California Polytechnic State
University, San Luis Obispo.

COMMITTEES OF THE BOARD

     Executive. The Executive Committee exercises the authority of the Board of
Directors when the Board is not in session, as permitted by law and by policy.
Its members are Messrs. Cole, Keenan, Leavens, Snider and Van Der Kar.

     Finance. The Finance Committee reviews Calavo's financial structure,
policies and procedures and internal controls. Its members are Messrs. Keenan,
Barnes, Hunt, Leavens and Snider.

     Grower Relations. The Grower Relations Committee reviews membership issues.
Its members are Mrs. Thille and Messrs. Barnes, Smith, Snider and Van Der Kar.

     Process. The Process Committee reviews the results and planning for the
processed segment of Calavo's business. Its members are Messrs. Leavens,
Ferrrazzano, Hunt, Keenan, Smith and Van Der Kar.

COMPENSATION OF DIRECTORS

     Each member of the Board of Directors receives a fee of $200 per Board
meeting and $100 per committee meeting plus a mileage reimbursement of $0.325
per mile for travel to and from meetings. The Chairman of the Board receives an
additional $100 per meeting.
                                        44
   49

EXECUTIVE OFFICERS

     The following table identifies Calavo's executive officers and sets forth
certain information concerning them. Each of the following persons also serves
in the same position as an executive officer of New Calavo and will continue to
do so after the conversion. Each executive officer of Calavo and New Calavo
serves at the discretion of the corporation's Board of Directors.

                NAME                   AGE                       POSITION
                ----                   ---                       --------
                                        
Lecil E. Cole........................  61     Chairman of the Board, Chief Executive Officer
                                              and President
Egidio Carbone, Jr. .................  60     Vice President, Finance and Corporate
                                              Secretary
Robert J. Wedin......................  52     Vice President, Sales & Fresh Marketing
Alan C. Ahmer........................  52     Vice President, Sales, Food Service/Retail
Avi Crane............................  47     Vice President, International
Gerard J. Watts......................  42     Vice President, General Manager, Calavo de
                                              Mexico

     Lecil E. Cole. Mr. Cole has served as Chairman of the Board since 1988 and
as Chief Executive Officer and President since February 1999. He is also a
grower and member of Calavo. For additional information regarding Mr. Cole, see
"Management of Calavo -- Directors."

     Egidio Carbone, Jr. Mr. Carbone has served as a Vice President and
Corporate Secretary of Calavo since 1980 and prior to that he was Treasurer and
Controller.

     Robert J. Wedin. Mr. Wedin has served as a Vice President of Calavo since
1993. He joined Calavo in 1973 at its Santa Barbara packinghouse.

     Alan C. Ahmer. Mr. Ahmer has served as a Vice President of Calavo since
1989. He joined Calavo in 1979 as a regional sales manager in the processed
products division.

     Avi Crane. Mr Crane joined Calavo in 1999 as a Vice President. Prior to
that he was employed by a competitor, Chiquita Brands, Inc., and by the
California Avocado Commission.

     Gerard J. Watts. Mr. Watts has been a Vice President of Calavo since 1992.
He joined Calavo in 1981 in its processed products division.

EXECUTIVE COMPENSATION

     The following table shows the compensation of Calavo's Chief Executive
Officer and four other most highly compensated executive officers for the fiscal
year ended October 31, 2000.

                           SUMMARY COMPENSATION TABLE

                                                    ANNUAL COMPENSATION(1)
                                                 ----------------------------       ALL OTHER
          NAME AND PRINCIPAL POSITION            YEAR     SALARY      BONUS      COMPENSATION(2)
          ---------------------------            ----    --------    --------    ---------------
                                                                     
Lecil E. Cole..................................  2000    $240,000    $100,000        $12,000
  Chairman, Chief Executive Officer and
     President
Egidio Carbone, Jr.............................  2000     164,496      36,037         17,257
  Vice President
Gerard J. Watts................................  2000     136,236      36,969          6,986
  Vice President
Robert J. Wedin................................  2000     136,956      20,000          8,139
  Vice President
Alan C. Ahmer..................................  2000     127,260      26,406          7,460
  Vice President

- -------------------------
(1) In accordance with SEC regulations, this table does not include perquisites
    and other personal benefits valued at the lesser of $50,000 or 10% of the
    total salary and bonus reported for the named
                                        45
   50

    executive officer. Amounts reported under Annual Compensation include
    amounts deferred by the named executive officers under Calavo's 401(k) plan.

(2) Amounts reported for Mr. Carbone under All Other Compensation include $7,873
    that Calavo contributed on his behalf to its 401(k) plan and $9,384 that
    Calavo accrued for his benefit under the supplemental executive retirement
    agreement described below. Amounts reported under All Other Compensation for
    every other named executive officer were contributed by Calavo to its 401(k)
    plan for the named executive officer.

EMPLOYEE BENEFITS

     Calavo provides a 401(k) plan for all employees. Salaried employees may
contribute an amount up to defined limits, and Calavo contributes 4% of base
salary plus a matching percentage up to a maximum of 6%. Amounts contributed by
Calavo vest at the rate of 25% per year.

     Hourly employees may contribute amounts to the plan, but Calavo does not
make matching contributions. Calavo contributes a fixed amount per hour worked
to a multiple employer trust for each such employee.

     Calavo maintains for all full-time employees health and medical insurance,
dental insurance, vision care, short-term and long-term disability and term life
insurance.

SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT

     Calavo has entered into a supplemental executive retirement agreement with
Mr. Carbone. Calavo has agreed to provide Mr. Carbone with a monthly payment
following his retirement equal to 20% of his final five-year average annual base
salary divided by 12 and reduced by an amount equal to his monthly social
security benefits.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS; COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION

     Each of Calavo's directors is a member of the cooperative and markets
avocados through Calavo pursuant to a marketing agreement that is identical to
the marketing agreements that Calavo has entered into with its other members.
Mr. Cole, Calavo's Chairman of the Board, Chief Executive Officer and President,
is involved in setting member pool proceeds on a monthly basis. He receives
normal crop proceeds at the same rate as other members and in the same weekly
pool.

     The Board of Directors, of which Mr. Cole is a member, determines the
compensation of Calavo's executive officers. However, Mr. Cole does not
participate in decisions of the Board regarding his compensation as an executive
officer.

     Mr. Cole is the owner of Tropical Hawaiian Products, Inc. Pursuant to a
marketing agreement, Calavo markets Tropical Hawaiian's papayas on a
non-exclusive consignment basis and remits monthly proceeds to Tropical Hawaiian
from the sale of the papayas. Mr. Cole is not involved in the calculation of the
monthly payments, although he does assist Calavo in setting the sales prices
that are charged to Calavo's customers for the papayas. Tropical Hawaiian also
markets papayas under its own brand name without the involvement of Calavo.
Calavo believes that the terms of its marketing agreement with Mr. Cole's
company are as favorable to Calavo as it could obtain in a contract with an
unaffiliated third party. During the fiscal year ended October 31, 2000,
Tropical Hawaiian received $2,062,394 of sales proceeds from Calavo.

                                        46
   51

         SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     With respect to each person known by Calavo to be the beneficial owner of
more than five percent of its common stock, each director of Calavo, each of the
executive officers named in the Summary Compensation Table presented above and
all of Calavo's directors and executive officers as a group, the following table
sets forth the number of shares of common stock beneficially owned as of January
31, 2001 by each such person or group and the percentage of the outstanding
shares of the common stock beneficially owned as of January 31, 2001 by each
such person or group. No such person or group owns any shares of Calavo
preferred stock. Unless otherwise indicated, each of the following shareholders
has, to Calavo's knowledge, sole voting and investment power with respect to the
shares beneficially owned, except to the extent that such authority is shared by
spouses under applicable law.

     On the effective date of the merger of Calavo into New Calavo, each of the
following persons and groups (together with every other shareholder of Calavo)
will acquire shares of New Calavo common stock that are equal in number to the
shares of Calavo common stock that are owned by such person or group as of the
effective date of the merger. At all times prior to the effective date of the
merger, Calavo will be the sole shareholder of New Calavo.

                                                              SHARES OF COMMON     PERCENT OF COMMON
                                                             STOCK BENEFICIALLY    STOCK BENEFICIALLY
                                                                OWNED AS OF           OWNED AS OF
                 NAME OF BENEFICIAL OWNER                     JANUARY 31, 2001      JANUARY 31, 2001
                 ------------------------                    ------------------    ------------------
                                                                             
Lecil E. Cole(1)...........................................        787,654                 7.9%
Edward P. Smith(2).........................................         28,792                 0.3
George H. Barnes...........................................          5,799                 0.1
Fred J. Ferrazzano.........................................        105,102                 1.1
Roy V. Keenan(3)...........................................        333,689                 3.4
Alva V. Snider(4)..........................................          8,884                 0.1
Scott Van Der Kar(5).......................................         40,507                 0.4
J. Link Leavens(6).........................................        198,823                 2.0
Dorcas H. Thille...........................................         19,044                 0.2
John M. Hunt(7)............................................        132,822                 1.3
Egidio Carbone, Jr.........................................              0                   0
Robert J. Wedin............................................              0                   0
Gerard J. Watts............................................              0                   0
Alan C. Ahmer..............................................              0                   0
All directors and executive officers as a group (15
  persons).................................................      1,661,116                16.8%

- -------------------------
(1) Mr. Cole's address is 1750 Orcutt Road, Santa Paula, California 93060.

(2) Information presented for Mr. Smith includes 28,792 shares held in a family
    trust and with respect to which Mr. Smith has voting and investment power as
    trustee.

(3) Information presented for Mr. Keenan includes 225,187 shares of common stock
    that are held in two trusts and with respect to which Mr. Keenan has voting
    and investment power as trustee.

(4) Information presented for Mr. Snider includes 8,884 shares held in a family
    trust and with respect to which Mr. Snider has voting and investment power
    as trustee.

(5) Information presented for Mr. Van Der Kar includes 40,507 shares held in a
    family trust and with respect to which Mr. Van Der Kar shares voting and
    investment power as a trustee.

(6) Information presented for Mr. Leavens includes 198,823 that are owned of
    record by a partnership of which Mr. Leaven is a partner. Mr. Leavens shares
    voting and investment power with respect to the shares.

                                        47
   52

(7) Information presented for Mr. Hunt includes 132,822 shares that are owned by
    his employer, Embarcadero Ranch. Mr. Hunt shares voting and investment power
    with respect to the shares.

     To Calavo's knowledge, there are two non-directors who each control more
than 2.0% of the outstanding shares of common stock. Hidden Valley Ranch owned
approximately 2.4% of the outstanding Calavo common stock as of January 31,
2001, and Chandler Ranch Company owned approximately 2.4% of the outstanding
common stock as of that date.

     Mr. Cole is the only executive officer who owns any shares of Calavo common
stock. George Hatfield, who is a non-executive officer of Calavo and is also a
grower-member of the cooperative, owned approximately 0.5% of the outstanding
Calavo common stock as of January 31, 2001. Several non-officer employees who
are also grower-members own small amounts of Calavo common stock. Shares of
Calavo common stock are owned by a large number of individuals, partnerships,
trusts and corporations, with the average shareholder owning approximately 6,400
shares or 0.06% of the total shares outstanding.

     As of the record date of             , 2001,                shares of
preferred stock were outstanding. Holders of Calavo preferred stock do not have
voting rights on any matter except as expressly required by law. The shares of
preferred stock are held by former members. Calavo has the right to redeem the
shares at $1.00 per share. The shares of preferred stock will be converted into
shares of New Calavo common stock on the effective date of the merger of Calavo
into New Calavo.

                                 LEGAL MATTERS

     Troy & Gould Professional Corporation has issued an opinion concerning the
validity of the shares of the common stock of New Calavo that will be issued
pursuant to the merger with Calavo and has also issued an opinion concerning
certain federal income tax consequences of the merger.

                                    EXPERTS

     The financial statements of Calavo Growers of California and subsidiaries
as of October 31, 2000 and 1999, and for each of the three years in the period
ended October 31, 2000, included in this Information Statement/Prospectus, and
the related financial statement schedule for each of the three years in the
period ended October 31, 2000, included elsewhere in the Registration Statement
on Form S-4, have been audited by Deloitte & Touche, LLP, independent auditors,
as stated in their reports appearing herein and elsewhere in the Registration
Statement. The balance sheet of Calavo Growers, Inc. as of January 31, 2001,
included in this Information Statement/Prospectus, has also been audited by
Deloitte & Touche, LLP, independent auditors, as stated in their report
appearing herein and elsewhere in the Registration Statement. Such financial
statements and financial statement schedule have been included herein and
elsewhere in the Registration Statement in reliance upon the reports of such
firm given upon their authority as experts in accounting and auditing.

                                        48
   53

                              CALAVO GROWERS, INC.

                          CALAVO GROWERS OF CALIFORNIA
                         INDEX TO FINANCIAL STATEMENTS

                                                              PAGE
                                                              ----
                                                           
FINANCIAL STATEMENT OF CALAVO GROWERS, INC.
  Independent Auditors' Report..............................  F-2
  Balance Sheet as of January 31, 2001......................  F-3
  Notes to Balance Sheet....................................  F-4
CONSOLIDATED FINANCIAL STATEMENTS OF CALAVO GROWERS OF
  CALIFORNIA AND SUBSIDIARIES
  Independent Auditors' Report..............................  F-5
  Consolidated Balance Sheets as of October 31, 2000 and
     1999, and January 31, 2001 (Unaudited).................  F-6
  Consolidated Statements of Operations and Member Proceeds
     for the Years Ended October 31, 2000, 1999 and 1998,
     and for the Three Months Ended January 31, 2001 and
     2000 (Unaudited).......................................  F-7
  Consolidated Statements of Shareholders' Equity for the
     Years Ended October 31, 2000, 1999 and 1998, and for
     the Three Months Ended January 31, 2001 and 2000
     (Unaudited)............................................  F-8
  Consolidated Statements of Cash Flows for the Years Ended
     October 31, 2000, 1999 and 1998, and for the Three
     Months Ended January 31, 2001 and 2000 (Unaudited).....  F-9
  Notes to Consolidated Financial Statements................  F-10

                                       F-1
   54

                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholder of
Calavo Growers, Inc.:

     We have audited the accompanying balance sheet of Calavo Growers, Inc. as
of January 31, 2001. This financial statement is the responsibility of the
Company's management. Our responsibility is to express an opinion on this
financial statement based on our audit.

     We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statement is free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statement. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

     In our opinion, such financial statement presents fairly, in all material
respects, the financial position of the Company as of January 31, 2001 in
conformity with accounting principles generally accepted in the United States of
America.

/s/ DELOITTE & TOUCHE LLP
- ---------------------------------------------------------

Costa Mesa, California
April 20, 2001

                                       F-2
   55

                              CALAVO GROWERS, INC.

                                 BALANCE SHEET
                                JANUARY 31, 2001

                                                           
ASSETS......................................................  $   --
                                                              ======
SHAREHOLDER'S EQUITY:
Common stock, par value $0.001 per share, 100,000,000 shares
  authorized, 100 shares issued.............................  $ 0.10
Receivable from parent company..............................   (0.10)
                                                              ------
  Total shareholder's equity................................  $   --
                                                              ======

The accompanying notes are an integral part of these financial statements.

                                       F-3
   56

                              CALAVO GROWERS, INC.

                             NOTES TO BALANCE SHEET
                                JANUARY 31, 2001

1. BACKGROUND OF ORGANIZATION

     Calavo Growers, Inc. (New Calavo) was incorporated on January 5, 2001 under
the California General Corporation Law, for the purpose of effectuating the
conversion of Calavo Growers of California and subsidiaries (Calavo) from a
nonprofit cooperative association that is organized under the California Food
and Agricultural Code to a corporation organized under the General Corporation
Law of California and subject to income taxes in accordance with Subchapter C of
the Internal Revenue Code. The conversion of Calavo will be achieved in
accordance with the terms of the Agreement and Plan of Merger and Reorganization
between Calavo Growers, Inc. and Calavo Growers of California, dated February
20, 2001 (the Agreement).

     For purposes of convenience this financial statement has been dated January
31, 2001. New Calavo has not conducted business or activity other than in
connection with the Agreement (related expenses are the responsibility of
Calavo).

2. SHAREHOLDER'S EQUITY

     The initial authorized capital stock of New Calavo consists of 100,000,000
shares of common stock, par value $0.001 per share. One hundred shares have been
issued and are outstanding. The shares were issued to Calavo and are unpaid.
Accordingly, through the conversion date New Calavo will remain a wholly owned
subsidiary of Calavo.

3. MERGER AND REORGANIZATION AGREEMENT

     The Agreement, which has been approved by the Board of Directors of each
company, calls for the holders of shares of common and preferred Calavo stock to
receive an equivalent number of shares of New Calavo common stock. Concurrent
with this exchange of securities, the original 100 shares of common stock held
by Calavo will be canceled and the related receivable will be forgiven. Finally,
New Calavo and Calavo will merge with New Calavo emerging as the surviving
entity assuming all rights and obligations of the business of Calavo.

     The Agreement is subject to approval by the grower members of Calavo, its
lenders, and the expiration of Calavo's Board of Directors' right to elect not
to proceed with the conversion.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     New Calavo will generally adopt all accounting policies of Calavo, with the
exception of those items specific to agricultural marketing cooperatives. Such
changes in accounting policies include the tax exempt status, which will cease,
inventory, which will be recorded at the lower of cost or market, and certain
line items on the statement of operations, which will be reclassed.

                                       F-4
   57

                          INDEPENDENT AUDITORS' REPORT

The Board of Directors
Calavo Growers of California
Santa Ana, California

     We have audited the accompanying consolidated balance sheets of Calavo
Growers of California and subsidiaries (Calavo or the Cooperative) as of October
31, 2000 and 1999, and the related consolidated statements of operations and
member proceeds, shareholders' equity, and cash flows for each of the three
years in the period ended October 31, 2000. These financial statements are the
responsibility of the Cooperative's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

     In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Calavo Growers of California
and subsidiaries as of October 31, 2000 and 1999, and the results of their
operations and their cash flows for each of the three years in the period ended
October 31, 2000, in conformity with accounting principles generally accepted in
the United States of America.

/s/ DELOITTE & TOUCHE LLP
- ---------------------------------------------------------

Costa Mesa, California
December 14, 2000, except for the second paragraph of
  Note 14 as to which the date is February 20, 2001

                                       F-5
   58

                 CALAVO GROWERS OF CALIFORNIA AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS

                                                                 OCTOBER 31,
                                                          -------------------------   JANUARY 31,
                                                             1999          2000          2001
                                                          -----------   -----------   -----------
                                                                                      (UNAUDITED)
                                                                             
ASSETS
Current Assets:
  Cash and cash equivalents.............................  $ 1,458,000   $ 1,492,000   $    22,000
  Accounts receivable, net of allowance for doubtful
     accounts of $69,000 (2001) (unaudited), $49,000
     (2000), and $2,500 (1999)..........................   22,321,000    21,632,000    17,793,000
  Inventories, net......................................    5,996,000     7,726,000    10,874,000
  Prepaid expenses and other current assets.............    2,356,000     1,326,000     1,632,000
  Loans to growers......................................       27,000     1,086,000     1,603,000
  Income taxes receivable...............................    1,161,000                     459,000
  Deferred income taxes.................................      868,000       537,000       537,000
                                                          -----------   -----------   -----------
     Total current assets...............................   34,187,000    33,799,000    32,920,000
Property, plant, and equipment, net.....................    9,508,000     9,044,000     9,303,000
Investments held to maturity............................    1,176,000     1,590,000     1,590,000
Other assets............................................    1,571,000     2,052,000     2,739,000
                                                          -----------   -----------   -----------
                                                          $46,442,000   $46,485,000   $46,552,000
                                                          ===========   ===========   ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
  Payable to members....................................  $ 6,762,000   $ 4,726,000   $ 8,122,000
  Trade accounts payable................................    2,438,000     2,867,000     1,283,000
  Accrued expenses......................................    4,405,000     2,791,000     3,208,000
  Short-term borrowings.................................    8,400,000     8,985,000    12,400,000
  Current portion of long-term obligations..............      748,000       501,000       501,000
  Dividend payable......................................    1,180,000
                                                          -----------   -----------   -----------
     Total current liabilities..........................   23,933,000    19,870,000    25,514,000
Long-Term Liabilities:
  Long-term obligations, less current portion...........    4,331,000     3,820,000     3,544,000
  Deferred income taxes.................................      601,000       360,000       360,000
                                                          -----------   -----------   -----------
     Total long-term liabilities........................    4,932,000     4,180,000     3,904,000
Commitments and Contingencies
Shareholders' Equity:
  Redeemable preferred stock, $1 par value; 10,000,000
     shares authorized; 47,000 shares issued and
     outstanding in 2001 and 2000.......................                     47,000        47,000
  Common stock, $1 par value; 10,000,000 shares
     authorized; 9,909,000 (2001) (unaudited), 9,867,000
     (2000), and 9,847,000 (1999) shares issued and
     outstanding........................................    9,847,000     9,867,000     9,909,000
  Additional paid-in capital............................      110,000       156,000       178,000
  Unallocated retained earnings.........................    7,621,000    12,365,000     7,000,000
  Treasury stock, 1,000 shares..........................       (1,000)
                                                          -----------   -----------   -----------
     Total shareholders' equity.........................   17,577,000    22,435,000    17,134,000
                                                          -----------   -----------   -----------
                                                          $46,442,000   $46,485,000   $46,552,000
                                                          ===========   ===========   ===========

The accompanying notes are an integral part of these consolidated financial
statements.
                                       F-6
   59

                 CALAVO GROWERS OF CALIFORNIA AND SUBSIDIARIES

           CONSOLIDATED STATEMENTS OF OPERATIONS AND MEMBER PROCEEDS

                                                                                                THREE MONTHS ENDED
                                                          YEAR ENDED OCTOBER 31,                    JANUARY 31,
                                                ------------------------------------------   -------------------------
                                                    1998           1999           2000          2000          2001
                                                ------------   ------------   ------------   -----------   -----------
                                                                                             (UNAUDITED)   (UNAUDITED)
                                                                                            
Net sales.....................................  $152,194,000   $181,480,000   $225,869,000   $40,000,000   $40,449,000
Costs and expenses:
  Processing and packing......................    48,769,000     62,154,000     85,696,000   21,683,000     22,628,000
  Marketing and distribution..................    14,432,000     13,701,000     14,549,000    2,728,000      2,711,000
  Freight and handling........................     4,621,000      4,892,000      6,534,000    1,114,000      2,059,000
  General and administrative..................     3,370,000      4,584,000      6,155,000    1,010,000      1,535,000
                                                ------------   ------------   ------------   -----------   -----------
    Total costs and expenses..................    71,192,000     85,331,000    112,934,000   26,535,000     28,933,000
                                                ------------   ------------   ------------   -----------   -----------
Operating proceeds and nonmember gross
  profit......................................    81,002,000     96,149,000    112,935,000   13,465,000     11,516,000
Gain on sale of facility......................     1,575,000
Interest income...............................       163,000         71,000        304,000       39,000         74,000
Interest expense..............................      (218,000)      (390,000)      (714,000)    (180,000)      (198,000)
Other income..................................        25,000         37,000         40,000
(Decrease) increase in members' fresh fruit
  inventories.................................      (106,000)       696,000       (292,000)   2,346,000      1,471,000
                                                ------------   ------------   ------------   -----------   -----------
Operating proceeds and nonmember income before
  income tax provision (benefit)..............    82,441,000     96,563,000    112,273,000   15,670,000     12,863,000
Income tax provision (benefit)................       730,000       (408,000)     2,162,000      594,000        456,000
                                                ------------   ------------   ------------   -----------   -----------
Net proceeds available for distribution and
  nonmember net income........................    81,711,000     96,971,000    110,111,000   15,076,000     12,407,000
Net proceeds distributed for member fruit.....   (78,597,000)   (96,090,000)  (105,367,000)  (14,808,000)  (12,799,000)
Receivable from members due to distributions
  in excess of available proceeds.............       (91,000)
Excess distribution to members................                        3,000         20,000    1,051,000      1,301,000
Appropriation for capital expenditures........    (1,375,000)
                                                ------------   ------------   ------------   -----------   -----------
Net income from nonmember products............  $  1,648,000   $    884,000   $  4,764,000   $1,319,000    $   909,000
                                                ============   ============   ============   ===========   ===========
Basic and diluted net income per share from
  nonmember products..........................  $       0.17   $       0.09   $       0.48   $     0.13    $      0.09
                                                ============   ============   ============   ===========   ===========
Weighted-average common shares outstanding,
  basic and diluted...........................     9,605,000      9,572,000      9,849,000    9,839,000      9,936,000
                                                ============   ============   ============   ===========   ===========

The accompanying notes are an integral part of these consolidated financial
statements.

                                       F-7
   60

                 CALAVO GROWERS OF CALIFORNIA AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

                                   PREFERRED STOCK         COMMON STOCK        ADDITIONAL   UNALLOCATED
                                   ----------------   ----------------------    PAID-IN      RETAINED     TREASURY
                                   SHARES   AMOUNT     SHARES       AMOUNT      CAPITAL      EARNINGS      STOCK        TOTAL
                                   ------   -------   ---------   ----------   ----------   -----------   --------   -----------
                                                                                             
Balance, November 1, 1997........      --   $    --   9,619,000   $9,619,000    $     --    $ 6,545,000   $(17,000)  $16,147,000
  Retirement of common stock and
    member privileges............                        (8,000)      (8,000)                                             (8,000)
  Issuance of treasury stock.....                                                                            4,000         4,000
  Appropriation for capital
    expenditures.................                                                             1,375,000                1,375,000
  Net income from nonmember
    products.....................                                                             1,648,000                1,648,000
  Dividend declared to
    shareholders.................                                                            (1,648,000)              (1,648,000)
                                   ------   -------   ---------   ----------    --------    -----------   --------   -----------
Balance, October 31, 1998........                     9,611,000    9,611,000                  7,920,000    (13,000)   17,518,000
  Retirement of common stock and
    member privileges............                       (59,000)     (59,000)                                            (59,000)
  Issuance of stock and
    reinstatement of members.....                       295,000      295,000     110,000                                 405,000
  Issuance of treasury stock.....                                                                           12,000        12,000
  Excess distribution to
    members......................                                                                (3,000)                  (3,000)
  Net income from nonmember
    products.....................                                                               884,000                  884,000
  Dividend declared..............                                                            (1,180,000)              (1,180,000)
                                   ------   -------   ---------   ----------    --------    -----------   --------   -----------
Balance, October 31, 1999........                     9,847,000    9,847,000     110,000      7,621,000     (1,000)   17,577,000
  Retirement of common stock and
    member privileges............                       (18,000)     (18,000)                                            (18,000)
  Issuance of stock and
    reinstatement of members.....                        85,000       85,000      46,000                                 131,000
  Issuance of treasury stock.....                                                                            1,000         1,000
  Excess distribution to
    members......................                                                               (20,000)                 (20,000)
  Conversion of common stock to
    preferred stock..............  47,000    47,000     (47,000)     (47,000)
  Net income from nonmember
    products.....................                                                             4,764,000                4,764,000
                                   ------   -------   ---------   ----------    --------    -----------   --------   -----------
Balance, October 31, 2000........  47,000    47,000   9,867,000    9,867,000     156,000     12,365,000               22,435,000
  Retirement of common stock and
    member privileges
    (unaudited)..................
  Issuance of stock and
    reinstatement of members
    (unaudited)..................                        42,000       42,000      22,000                                  64,000
  Excess distribution to members
    (unaudited)..................                                                            (1,301,000)              (1,301,000)
  Net income from nonmember
    products (unaudited).........                                                               909,000                  909,000
  Dividend declared to
    shareholders (unaudited).....                                                            (4,973,000)              (4,973,000)
                                   ------   -------   ---------   ----------    --------    -----------   --------   -----------
Balance, January 31, 2001
  (unaudited)....................  47,000   $47,000   9,909,000   $9,909,000    $178,000    $ 7,000,000   $          $17,134,000
                                   ======   =======   =========   ==========    ========    ===========   ========   ===========

The accompanying notes are an integral part of these consolidated financial
statements.

                                       F-8
   61

                 CALAVO GROWERS OF CALIFORNIA AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                                     THREE MONTHS ENDED
                                                                YEAR ENDED OCTOBER 31,                   JANUARY 31,
                                                        ---------------------------------------   -------------------------
                                                           1998          1999          2000          2000          2001
                                                        -----------   -----------   -----------   -----------   -----------
                                                                                                  (UNAUDITED)   (UNAUDITED)
                                                                                                 
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income from nonmember products....................  $ 1,648,000   $   884,000   $ 4,764,000   $ 1,319,000   $   909,000
Adjustments to reconcile net income from nonmember
  products to net cash provided by (used in) operating
  activities:
  Depreciation and amortization.......................    1,456,000     1,750,000     1,748,000       411,000       543,000
  Excess distribution to members......................                                             (1,051,000)   (1,301,000)
  Gain on sale of facility............................   (1,575,000)
  Provision for losses on accounts receivable.........       15,000        50,000       717,000       100,000        17,000
  (Gain) loss on disposal of property, plant, and
    equipment.........................................       (8,000)      351,000       (13,000)
  Effect on cash of changes in operating assets and
    liabilities:
    Accounts receivable...............................     (397,000)   (9,635,000)      (28,000)    3,664,000     3,822,000
    Inventories, net..................................    1,030,000        91,000    (1,730,000)   (3,700,000)   (3,148,000)
    Income taxes receivable...........................      283,000      (920,000)    1,161,000       551,000      (459,000)
    Deferred income taxes.............................      733,000      (510,000)       90,000
    Prepaid expenses and other assets.................    1,102,000    (3,305,000)      549,000        68,000      (993,000)
    Loans to growers..................................                    (27,000)   (1,059,000)     (861,000)     (517,000)
    Payable to members................................   (1,405,000)    2,462,000    (2,036,000)    3,842,000     3,396,000
    Trade accounts payable and accrued expenses.......   (1,418,000)    2,520,000    (1,185,000)   (2,889,000)   (1,167,000)
    Other long-term liabilities.......................                    (49,000)
                                                        -----------   -----------   -----------   -----------   -----------
      Net cash provided by (used in) operating
        activities....................................    1,464,000    (6,338,000)    2,978,000     1,454,000     1,102,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property, plant, and
  equipment...........................................    1,635,000        65,000        26,000
Acquisitions of property, plant, and equipment........   (4,873,000)   (1,324,000)   (1,297,000)     (289,000)     (802,000)
Purchases of investments..............................      (46,000)     (264,000)     (414,000)
                                                        -----------   -----------   -----------   -----------   -----------
      Net cash used in investing activities...........   (3,284,000)   (1,523,000)   (1,685,000)     (289,000)     (802,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividend to shareholders..............................     (480,000)   (1,648,000)   (1,180,000)   (1,180,000)   (4,973,000)
Proceeds (payments) from borrowings and issuance of
  debt................................................    1,435,000     8,673,000     1,585,000      (970,000)    3,415,000
Proceeds from issuance of capital stock...............                    405,000       131,000         5,000        64,000
Proceeds (payments) of long-term obligations..........   (2,159,000)     (463,000)   (1,758,000)       79,000      (276,000)
Retirement of common stock and member privileges......       (8,000)      (59,000)      (18,000)      (13,000)
Proceeds from the issuance of treasury stock..........        4,000        12,000         1,000         1,000
Retention of funds for capital expenditures...........    1,375,000
Excess distribution to members........................                     (3,000)      (20,000)
                                                        -----------   -----------   -----------   -----------   -----------
      Net cash provided by (used in) financing
        activities....................................      167,000     6,917,000    (1,259,000)   (2,078,000)   (1,770,000)
                                                        -----------   -----------   -----------   -----------   -----------
NET INCREASE (DECREASE) IN CASH AND CASH
  EQUIVALENTS.........................................   (1,653,000)     (944,000)       34,000      (913,000)   (1,470,000)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR..........    4,055,000     2,402,000     1,458,000     1,458,000     1,492,000
                                                        -----------   -----------   -----------   -----------   -----------
CASH AND CASH EQUIVALENTS, END OF YEAR................  $ 2,402,000   $ 1,458,000   $ 1,492,000   $   545,000   $    22,000
                                                        ===========   ===========   ===========   ===========   ===========
SUPPLEMENTAL INFORMATION --
  Cash paid during the year for:
    Interest..........................................  $   267,000   $   268,000   $   249,000   $   166,000   $   183,000
                                                        ===========   ===========   ===========   ===========   ===========
    Income taxes......................................  $   241,000   $   955,000   $   696,000   $             $ 1,000,000
                                                        ===========   ===========   ===========   ===========   ===========
NONCASH INVESTING AND FINANCING ACTIVITIES:
Declared nonpatronage dividends.......................  $ 1,648,000   $ 1,180,000   $        --   $             $
                                                        ===========   ===========   ===========   ===========   ===========
Conversion of common stock to preferred stock.........  $        --   $        --   $    47,000   $             $
                                                        ===========   ===========   ===========   ===========   ===========

The accompanying notes are an integral part of these consolidated financial
statements.

                                       F-9
   62

                 CALAVO GROWERS OF CALIFORNIA AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     General -- Calavo Growers of California and subsidiaries (Calavo or the
Cooperative) is an agricultural marketing cooperative association organized for
the purpose of processing and marketing avocados delivered by its members, and
processing and marketing nonmember products. The consolidated financial
statements include the accounts of Calavo Growers of California and its wholly
owned subsidiaries, Calavo Foods, Inc. (CFI); Calavo de Mexico S.A. de C.V.; and
Calavo Foods de Mexico S.A. de C.V. All intercompany accounts and transactions
have been eliminated.

     The Cooperative's customer base, to which credit is granted, includes food
distributors, produce wholesalers, supermarkets, and restaurants.

     The Cooperative conducts operations in Mexico at two different facilities
and is subject to certain concentration risks that are inherent in conducting
operations on an international basis.

     Basis of Presentation -- The accompanying consolidated financial statements
were prepared in accordance with accounting principles generally accepted in the
United States of America.

     Interim Financial Statements (Unaudited) -- The accompanying consolidated
balance sheet as of January 31, 2001, and the statements of operations and
member proceeds and cash flows for the three months ended January 31, 2000 and
2001, and the statement of shareholders' equity for the three months ended
January 31, 2001 and related notes thereto are unaudited, but in the opinion of
management, include all adjustments, consisting of normal recurring adjustments,
necessary for a fair presentation of results for these interim periods. The
results of operations for the three months ended January 31, 2001 are not
necessarily indicative of the results to be expected for the entire fiscal year.

     Cash and Cash Equivalents -- The Cooperative considers cash and cash
equivalents to be all highly liquid financial instruments purchased with an
original maturity date of three months or less.

     Inventories -- Members' fresh fruit inventories are valued at market value.
Other inventories are stated at the lower of cost on a weighted-average basis or
market.

     Loans to Growers -- The Cooperative sponsors a grower loan program. The
grower loan program generally provides for loans to be advanced to members
bearing interest at prime plus 2% and are repayable in a 12-month period. The
loans are secured by the members' avocado crop.

     Property, Plant, and Equipment -- Property, plant, and equipment are stated
at cost and depreciated over their estimated useful lives, ranging from three to
30 years, using the straight-line method. Leasehold improvements are stated at
cost and amortized over the lesser of their estimated useful lives or the term
of the lease, using the straight-line method.

     Long-Lived Assets -- The Cooperative accounts for the impairment and
disposition of long-lived assets in accordance with Statement of Financial
Accounting Standards (SFAS) No. 121, Accounting for the Impairment of Long-Lived
Assets and Long-Lived Assets to Be Disposed Of. In accordance with SFAS No. 121,
long-lived assets to be held are reviewed for events or changes in circumstances
which indicate that their carrying value may not be recoverable and at least
review such assets annually for any impairment. Management has evaluated its
long-lived assets, using estimates of undiscounted future cash flows, and has
not identified any impairment as of October 31, 2000.

     Investments -- The Cooperative accounts for its investments in debt
securities in accordance with SFAS No. 115, Accounting for Certain Investments
in Debt and Equity Securities. The Cooperative has classified all of its
investment portfolio as "held-to-maturity." In accordance with SFAS No. 115,
investments classified as held-to-maturity are carried at amortized cost.

                                       F-10
   63
                 CALAVO GROWERS OF CALIFORNIA AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

     Net Sales -- Sales from processed products are recorded when the product is
shipped and title passes. Fresh fruit sales are recorded when both the product
is shipped and the market price is known. Calavo provides for certain
promotional allowances at the time of shipment, based on the Cooperative's
historical experience.

     Costs and Expenses -- Costs of processing and packing include purchases of
nonmember products and products purchased and used in the processing and packing
operations. Costs of marketing and distribution include storage, brokerage,
promotion, and related costs.

     Use of Estimates -- The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and reported amounts of
revenues and expenses during the reporting periods. Actual results could differ
from those estimates.

     Income Taxes -- The Cooperative accounts for income taxes under the
provisions of SFAS No. 109, Accounting for Income Taxes. This statement requires
the recognition of deferred tax liabilities and assets for the future
consequences of events that have been recognized in the Cooperative's
consolidated financial statements or tax returns. Measurement of the deferred
items is based on enacted tax laws. In the event the future consequences of
differences between financial reporting bases and tax bases of the Cooperative's
assets and liabilities result in a deferred tax asset, SFAS No. 109 requires an
evaluation of the probability of being able to realize the future benefits
indicated by such asset. A valuation allowance related to a deferred tax asset
is recorded when it is more likely than not that some portion or all of the
deferred tax asset will not be realized.

     Member Avocado Proceeds -- Proceeds from the sale of avocados delivered by
members are allocated to members on the basis of their individual shares of the
established value of each avocado pool. This "pool basis" of accounting is
utilized for the determination of proceeds distributable to members. The
difference between net operating proceeds financial basis, as reported in the
accompanying financial statement, and net proceeds pool basis (available for
distribution), as reported to members, is the increase or decrease in members'
fresh fruit inventories between years.

     As approved by the Board of Directors, during the years ended October 31,
2000 and 1999, the Cooperative made distributions of $20,000 and $3,000 in
excess of proceeds available. The excess distribution was charged to retained
earnings.

     As approved by the Board of Directors, during the year ended October 31,
1997, the Cooperative made distributions of $91,000 in excess of proceeds
available. This amount was included in payables to members as a
contra-liability. During the year ended October 31, 1998, the Cooperative
recaptured $91,000 from available proceeds.

     Basic and Dilutive Net Income Per Common Share from Nonmember
Products -- The Cooperative presents "basic" earnings per share (which excludes
dilution) and "diluted" earnings per share in accordance with SFAS No. 128,
Earnings Per Share. Basic net income per share is computed by dividing net
income by the weighted-average number of shares of common stock outstanding. As
the nonvoting preferred stock participates in dividends on a basis equivalent to
common stock (Note 9), the outstanding preferred shares are included in the
weighted-average common shares outstanding. There are no potentially dilutive
securities outstanding at October 31, 2000, 1999, and 1998.

     Recent Accounting Pronouncements -- The Cooperative does not presently
engage in hedging activities. In addition, the Cooperative has reviewed its
agreements and has determined that it has no derivative instruments, nor do any
of its agreements contain embedded derivative instruments as of October 31,
2000. Accordingly, the adoption of SFAS No. 133, Accounting for Derivative
Instruments and

                                       F-11
   64
                 CALAVO GROWERS OF CALIFORNIA AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Hedging Activities, as amended by SFAS No. 137, Accounting for Derivative
Instruments and Hedging Activities -- Deferral of the Effective Date of FASB
Statement No. 133, and SFAS No. 138, Accounting for Certain Derivative
Instruments and Certain Hedging Activities, did not have a material impact on
the Cooperative's consolidated financial statements on November 1, 2000.

     In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin (SAB) No. 101, Revenue Recognition in Financial Statements.
SAB No. 101 summarizes the staff's view in applying accounting principles
generally accepted in the United States of America to revenue recognition in
financial statements. The application of SAB No. 101 did not have a material
impact on the Cooperative's consolidated financial statements.

     Comprehensive Income -- Comprehensive income is defined as all changes in a
company's net assets, except changes resulting from transactions with
shareholders. There was no difference between comprehensive income and net
income from nonmember products for the fiscal years ended October 31, 2000,
1999, and 1998.

     Reclassifications -- Certain items in the prior period financial statements
have been reclassified to conform to the current period presentation.

2. INVENTORIES

                                                         1999          2000
                                                      ----------    ----------
                                                              
Member:
  Packaging supplies................................  $  483,000    $  732,000
  Fresh fruit.......................................     989,000       697,000
                                                      ----------    ----------
                                                       1,472,000     1,429,000
Nonmember:
  Fresh fruit, packaging supplies, and
     ingredients....................................   1,220,000     1,431,000
  Finished goods....................................   3,304,000     4,866,000
                                                      ----------    ----------
                                                       4,524,000     6,297,000
                                                      ----------    ----------
                                                      $5,996,000    $7,726,000
                                                      ==========    ==========

     As of October 31, 2000 and 1999, the reserve for obsolescence is
approximately $29,000.

3. PROPERTY, PLANT, AND EQUIPMENT

                                                      1999            2000
                                                  ------------    ------------
                                                            
Land............................................  $  1,177,000    $  1,177,000
Buildings and improvements......................     9,257,000       9,516,000
Leasehold improvements..........................       417,000         165,000
Equipment.......................................    22,089,000      21,887,000
Software........................................       153,000         153,000
Construction in progress........................                         7,000
                                                  ------------    ------------
                                                    33,093,000      32,905,000
Less accumulated depreciation...................   (23,585,000)    (23,861,000)
                                                  ------------    ------------
                                                  $  9,508,000    $  9,044,000
                                                  ============    ============

                                       F-12
   65
                 CALAVO GROWERS OF CALIFORNIA AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

4. INVESTMENTS HELD-TO-MATURITY

     Investments are made in U.S. government bonds bearing interest at 6.2% with
a maturity date of August 15, 2005. The interest income generated from the bonds
is reinvested in a money market fund. The investments are held in an irrevocable
trust to be used solely for the satisfaction of scheduled payments of interest
and principal relating to the Industrial Development Revenue Bonds (Note 7).

                                                         1999          2000
                                                      ----------    ----------
                                                              
Cost................................................  $1,176,000    $1,590,000
                                                      ==========    ==========
Fair value..........................................  $1,164,000    $1,604,000
                                                      ==========    ==========

5. OTHER ASSETS

     During 1999, the Cooperative established a Grower Development Program
whereby the Cooperative may advance funds to new member producers in exchange
for the commitment by the new member producer to deliver to the Cooperative a
minimum volume of avocados. As of October 31, 2000, the Cooperative has a
secured advance of $2,000,000 on a cumulative basis to new members participating
in the Grower Development Program. Such advances are amortized over the
multiyear term of the agreement.

6. SHORT-TERM BORROWINGS

     The Cooperative maintains short-term borrowing agreements with various
banks. Under the terms of the various agreements, the Cooperative is advanced
funds for working capital purposes. Total credit available under the combined
short-term borrowing agreements was $26,500,000 and $9,100,000 at October 31,
2000 and 1999, with interest at a weighted-average rate of 7.58% and 6.21% at
October 31, 2000 and 1999. The Cooperative had outstanding borrowings of
$8,985,000 and $8,400,000 as of October 31, 2000 and 1999, under these
agreements. The short-term borrowing agreements contain certain financial
covenants with which the Cooperative was in compliance at October 31, 2000 and
1999.

7. LONG-TERM OBLIGATIONS

                                                         1999          2000
                                                      ----------    ----------
                                                              
Riverside County Variable Rate Demand Industrial
  Development Revenue Bonds, due in 2005, plus
  interest at variable rates (3.95% and 3.1% at
  October 31, 2000 and 1999, respectively)..........  $2,800,000    $2,800,000
Revolving term loans, noncollateralized, payable in
  variable annual installments through November
  2003, plus interest at variable rates (8.59% and
  6.84% at October 31, 2000 and 1999,
  respectively).....................................  $2,243,000    $1,459,000
Other...............................................      36,000        62,000
                                                      ----------    ----------
                                                       5,079,000     4,321,000
Less current portion................................    (748,000)     (501,000)
                                                      ----------    ----------
                                                      $4,331,000    $3,820,000
                                                      ==========    ==========

     The revolving term loans contain certain financial covenants with which the
Cooperative was in compliance at October 31, 2000 and 1999.

                                       F-13
   66
                 CALAVO GROWERS OF CALIFORNIA AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

     The Riverside County Variable Industrial Development Revenue Bonds (the
Bonds) are collateralized by property and equipment with a net book value of
$1,989,000 at October 31, 2000. The lending agreement contains certain financial
covenants with which the Cooperative was in compliance at October 31, 2000 and
1999. As required by the Bond's lending agreement, the Cooperative has posted a
$2,800,000 standby letter of credit from a bank, which matures on September 16,
2001 (Note 4).

     At October 31, 2000, annual debt payments are as follows:

                                       REVENUE      REVOLVING
                                         BOND          LOAN        OTHER       TOTAL
                                      ----------    ----------    -------    ----------
                                                                 
Year ending October 31:
  2001..............................  $       --    $  484,000    $17,000    $  501,000
  2002..............................                   484,000     18,000       502,000
  2003..............................                   376,000     17,000       393,000
  2004..............................                    50,000      5,000        55,000
  2005..............................   2,800,000        65,000      5,000     2,870,000
                                      ----------    ----------    -------    ----------
                                      $2,800,000    $1,459,000    $62,000    $4,321,000
                                      ==========    ==========    =======    ==========

8. EMPLOYEE BENEFIT PLANS

     The Cooperative has a defined contribution retirement plan for salaried
employees and makes contributions to a pension plan for hourly employees.
Expenses of the plans were $362,000 and $327,000 for the years ended October 31,
2000 and 1999, which are included in general and administrative expenses in the
accompanying financial statements.

     The Company sponsors a defined benefit plan for its top executives. Pension
expenses totaled $27,000, $54,000, and $64,000 for the years ended October 31,
2000, 1999, and 1998, which are included in general and administrative expenses
in the accompanying financial statements.

     Pension expense consists of the following components:

                                                         1998       1999       2000
                                                        -------    -------    -------
                                                                     
Service cost..........................................  $21,000    $19,000    $ 5,000
Interest cost.........................................   43,000     35,000     22,000
                                                        -------    -------    -------
  Total net periodic pension cost.....................  $64,000    $54,000    $27,000
                                                        =======    =======    =======

     The following is a reconciliation of the unfunded status of the plans
included in trade accounts payable and accrued expenses.

                                                       1998        1999        2000
                                                     --------    --------    --------
                                                                    
Projected benefit obligation.......................  $495,000    $439,000    $435,000
Unrecognized net gain..............................    65,000     107,000      88,000
                                                     --------    --------    --------
  Recorded pension liabilities.....................  $560,000    $546,000    $523,000
                                                     ========    ========    ========

     Significant assumptions used in the determination of pension expense
consist of the following:

                                                              1998    1999    2000
                                                              ----    ----    ----
                                                                     
Discount rate on projected benefit obligation...............  6.5%    8.0%    8.0%
Rate of future salary increases.............................  5.0%    5.0%    5.0%

                                       F-14
   67
                 CALAVO GROWERS OF CALIFORNIA AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. SHAREHOLDERS' EQUITY

     During 1996, the Cooperative's membership (the Members) voted to amend the
articles of incorporation and exchange their Revolving Fund Credits (RFCs) for
common stock in the Cooperative. Current Members were also given the option to
purchase former nonconsenting Member RFCs. These transactions were completed in
January 1997, resulting in the conversion of all RFCs to 9,623,000 shares of
common stock net of certain adjustments.

     All Members are required to hold common stock of the Cooperative and such
common stock is considered permanent equity of the Cooperative. Members are
allowed to transfer shares between other Members; however, once they cease to be
Members, they must sell their shares to other Members or exchange their shares
for preferred nonvoting stock. In fiscal year 2000, 47,000 preferred shares were
exchanged for common shares. The Cooperative, at its discretion, may redeem any
outstanding preferred nonvoting stock at $1 per share. Such preferred nonvoting
stock participates in dividends on a basis equivalent to common stock. Members
that own preferred shares may convert their shares to common stock on a
one-to-one basis. Nonmembers who own preferred stock shall not be entitled to
exercise such conversion privilege.

     The Board of Directors declared a dividend related to the year ended
October 31, 2000, subsequent to fiscal year end (Note 14).

     The Board of Directors approved payments of dividends of $1,180,000 and
$1,648,000 for the years ended October 31, 1999 and 1998, from the operations of
nonmember products. For the years ended October 31, 1999 and 1998, Calavo
stockholders shared in nonmember product dividends in proportion to their
ownership in Calavo stock.

10. COMMITMENTS AND CONTINGENCIES

     The Cooperative is committed to cash payments for some of its facilities
and certain equipment under noncancelable operating leases expiring at various
dates through 2007, as follows:

                                                        
2001.....................................................  $1,076,000
2002.....................................................   1,040,000
2003.....................................................     873,000
2004.....................................................     750,000
2005.....................................................     496,000
Thereafter...............................................     730,000
                                                           ----------
                                                           $4,965,000
                                                           ==========

     Rental expenses amounted to $1,155,000, $1,242,000, and $1,022,000 for the
years ended October 31, 2000, 1999, and 1998.

     Litigation -- The Cooperative is involved in litigation in the ordinary
course of business, none of which management believes will have a material
adverse impact on the Cooperative.

11. RELATED-PARTY TRANSACTIONS

     Sales of papaya, on behalf of an entity owned by the chairman of the Board
of Directors, amounted to $2,062,000, $1,897,000, and $2,624,000 for the years
ended October 31, 2000, 1999, and 1998, and $819,000 for the quarter ended
January 31, 2001 (unaudited), resulting in gross profits of $198,000, $200,000,
$236,000, and $60,000. Included in trade accounts payable and accrued expenses
were $235,000, $285,000, and $245,000 at October 31, 2000, 1999, and 1998, and
$230,000 at January 31, 2001 (unaudited), due to the above entity.

                                       F-15
   68
                 CALAVO GROWERS OF CALIFORNIA AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

12. INCOME TAXES

     The income tax provision (benefit) consists of the following for the year
ended October 31:

                                                     1998        1999          2000
                                                   --------    ---------    ----------
                                                                   
Current:
  Federal........................................  $(36,000)   $ (27,000)   $1,550,000
  State..........................................    33,000       (8,000)      522,000
  Foreign........................................                137,000
                                                   --------    ---------    ----------
     Total current...............................    (3,000)     102,000     2,072,000
Deferred.........................................   733,000     (510,000)       90,000
                                                   --------    ---------    ----------
     Total income tax provision (benefit)........  $730,000    $(408,000)   $2,162,000
                                                   ========    =========    ==========

     At October 31, 2000 and 1999, the Cooperative's gross deferred tax assets
totaled $537,000 and $868,000, while gross deferred tax liabilities totaled
$360,000 and $601,000. Deferred income tax assets and liabilities consist of the
tax effects of temporary differences related to the following at October 31:

                                                                1999         2000
                                                              ---------    ---------
                                                                     
Allowance for doubtful accounts.............................  $   1,000    $  76,000
Inventories.................................................    225,000      474,000
Deferred state taxes........................................      1,000      (13,000)
Net operating loss carryforwards............................    640,000
Other.......................................................      1,000
                                                              ---------    ---------
Current deferred income taxes...............................  $ 868,000    $ 537,000
                                                              =========    =========
Property, plant, and equipment..............................  $(641,000)   $(589,000)
Retirement benefits.........................................     40,000      229,000
                                                              ---------    ---------
Long-term deferred income taxes.............................  $(601,000)   $(360,000)
                                                              =========    =========

     The Cooperative is subject to income taxes for all business activities
other than the marketing and distribution of Member products. During the years
ended October 31, 2000 and 1998, the Cooperative incurred pretax income of
$5,715,000 and $1,912,000. During the year ended October 31, 1999, the
Cooperative incurred an operating loss of $1,257,000 for tax purposes.

     The following is a reconciliation (in thousands) of the Cooperative's
pretax book income for the years ended October 31:

                                                      1998        1999        2000
                                                    --------    --------    ---------
                                                                   
Operating proceeds and nonmember income before
  income tax provision (benefit)..................  $ 82,441    $ 96,563    $ 112,273
Net proceeds distributed for member fruit.........   (78,597)    (96,090)    (105,367)
Other nonspecific expense allocations.............    (1,932)     (1,730)      (1,191)
                                                    --------    --------    ---------
Pretax income (loss)..............................  $  1,912    $ (1,257)   $   5,715
                                                    ========    ========    =========

                                       F-16
   69
                 CALAVO GROWERS OF CALIFORNIA AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

     A reconciliation of the significant differences between the federal
statutory income tax rate and the effective income tax rate on pretax income
(loss) is as follows:

                                                              1998    1999    2000
                                                              ----    ----    ----
                                                                     
Federal statutory tax at 35%................................   35%     35%     35%
State taxes, net of federal effects.........................    6       4       5
Foreign income taxes in excess of (less than) U.S...........           11      (2)
Benefit of lower federal tax brackets.......................                   (1)
Nondeductible meals and entertainment.......................    1      (2)
Resolution of tax contingency...............................  (14)
Other.......................................................    1
                                                              ---      --      --
Provision (benefit) for income taxes........................   29%     48%     37%
                                                              ===      ==      ==

13. INFORMATION REGARDING THE COOPERATIVE'S OPERATIONS IN DIFFERENT SEGMENTS

     The Cooperative offers for sale a wide range of Member- and
nonmember-sourced food products. These products have been separated into three
principal segments of business based on the Cooperative's management structure
and information used by the president to measure performance and allocate
resources. The Member avocado segment includes all operations that involve the
distribution of Member avocados. The nonmember perishable product segment
includes both operations related to distribution of fresh avocados from
nonmembers and distribution of other nonavocado fruits. The processed products
segment represents all operations related to the purchase, manufacturing, and
distribution of processed avocado products. Those costs that can be specifically
identified with a particular product line are charged directly to that product
line. For the years ended October 31, 2000, 1999, and 1998, marketing and
distribution costs and general and administrative expenses were allocated based
on five-year average sales dollars. The Cooperative does not allocate specific
assets to these segments.

                                       F-17
   70
                 CALAVO GROWERS OF CALIFORNIA AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

     (All amounts are presented in thousands):

                                                  QUARTER ENDED JANUARY 31, 2001
                                          -----------------------------------------------
                                                      NONMEMBER
                                           MEMBER     PERISHABLE    PROCESSED
                                          AVOCADOS     PRODUCTS     PRODUCTS      TOTAL
                                          --------    ----------    ---------    --------
                                                            (UNAUDITED)
                                                                     
Net sales...............................  $ 14,255     $18,617       $7,577      $ 40,449
Costs and expenses:
  Processing and packing................     2,246      16,862        3,520        22,628
  Marketing and distribution............       548         369        1,794         2,711
  Freight and handling..................       322         767          970         2,059
  General and administrative............     1,145         194          196         1,535
                                          --------     -------       ------      --------
     Total costs and expenses...........     4,261      18,192        6,480        28,933
                                          --------     -------       ------      --------
Operating proceeds and nonmember gross
  profit................................     9,994         425        1,097        11,516
Interest income (expense)...............        33         (69)         (88)         (124)
Increase in Members' fresh fruit
  inventories...........................     1,471                                  1,471
                                          --------     -------       ------      --------
Operating proceeds and nonmember income
  before income tax provision...........    11,498         356        1,009        12,863
Income tax provision....................                   119          337           456
                                          --------     -------       ------      --------
Net proceeds available for distribution
  and nonmember net income..............    11,498         237          672        12,407
Net proceeds distributed for Member
  fruit.................................   (12,799)                               (12,799)
Excess distribution to members..........     1,301                                  1,301
                                          --------     -------       ------      --------
Net income from nonmember products......  $     --     $   237       $  672      $    909
                                          ========     =======       ======      ========

                                       F-18
   71
                 CALAVO GROWERS OF CALIFORNIA AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

     (All amounts are presented in thousands):

                                                    YEAR ENDED OCTOBER 31, 2000
                                         -------------------------------------------------
                                                      NONMEMBER
                                          MEMBER      PERISHABLE    PROCESSED
                                         AVOCADOS      PRODUCTS     PRODUCTS       TOTAL
                                         ---------    ----------    ---------    ---------
                                                                     
Net sales..............................  $ 123,667     $69,458       $32,744     $ 225,869
Costs and expenses:
  Processing and packing...............      9,689      61,212        14,795        85,696
  Marketing and distribution...........      2,504       1,467        10,578        14,549
  Freight and handling.................      1,759       3,138         1,637         6,534
  General and administrative...........      4,110         706         1,339         6,155
                                         ---------     -------       -------     ---------
     Total costs and expenses..........     18,062      66,523        28,349       112,934
                                         ---------     -------       -------     ---------
Operating proceeds and nonmember gross
  profit...............................    105,605       2,935         4,395       112,935
Interest income (expense)..............         54        (175)         (289)         (410)
Other income...........................                     20            20            40
Decrease in Members' fresh fruit
  inventories..........................       (292)                                   (292)
                                         ---------     -------       -------     ---------
Operating proceeds and nonmember income
  before income tax provision..........    105,367       2,780         4,126       112,273
Income tax provision...................         20         671         1,471         2,162
                                         ---------     -------       -------     ---------
Net proceeds available for distribution
  and nonmember net income.............    105,347       2,109         2,655       110,111
Net proceeds distributed for Member
  fruit................................   (105,367)                               (105,367)
Excess distribution to members.........         20                                      20
                                         ---------     -------       -------     ---------
Net income from nonmember products.....  $      --     $ 2,109       $ 2,655     $   4,764
                                         =========     =======       =======     =========

                                       F-19
   72
                 CALAVO GROWERS OF CALIFORNIA AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

     (All amounts are presented in thousands):

                                                  QUARTER ENDED JANUARY 31, 2000
                                          -----------------------------------------------
                                                      NONMEMBER
                                           MEMBER     PERISHABLE    PROCESSED
                                          AVOCADOS     PRODUCTS     PRODUCTS      TOTAL
                                          --------    ----------    ---------    --------
                                                            (UNAUDITED)
                                                                     
Net sales...............................  $ 14,327     $17,765       $7,908      $ 40,000
Costs and expenses:
  Processing and packing................     1,656      15,935        4,092        21,683
  Marketing and distribution............       464         339        1,925         2,728
  Freight and handling..................       164         577          373         1,114
  General and administrative............       612         143          255         1,010
                                          --------     -------       ------      --------
     Total costs and expenses...........     2,896      16,994        6,645        26,535
                                          --------     -------       ------      --------
Operating proceeds and nonmember gross
  profit................................    11,431         771        1,263        13,465
Interest expense, net...................       (19)        (59)         (63)         (141)
Increase in Members' fresh fruit
  inventories...........................     2,346                                  2,346
                                          --------     -------       ------      --------
Operating proceeds and nonmember income
  before income tax provision...........    13,758         712        1,200        15,670
Income tax provision....................         1         221          372           594
                                          --------     -------       ------      --------
Net proceeds available for distribution
  and nonmember net income..............    13,757         491          828        15,076
Net proceeds distributed for Member
  fruit.................................   (14,808)                               (14,808)
Excess distribution to members..........     1,051                                  1,051
                                          --------     -------       ------      --------
Net income from nonmember products......  $     --     $   491       $  828      $  1,319
                                          ========     =======       ======      ========

                                       F-20
   73
                 CALAVO GROWERS OF CALIFORNIA AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

     (All amounts are presented in thousands):

                                                     YEAR ENDED OCTOBER 31, 1999
                                           -----------------------------------------------
                                                       NONMEMBER
                                            MEMBER     PERISHABLE    PROCESSED
                                           AVOCADOS     PRODUCTS     PRODUCTS      TOTAL
                                           --------    ----------    ---------    --------
                                                                      
Net sales................................  $111,559     $40,285       $29,636     $181,480
Costs and expenses:
  Processing and packing.................     8,464      37,506        16,184       62,154
  Marketing and distribution.............     3,342         700         9,659       13,701
  Freight and handling...................     1,063       2,640         1,189        4,892
  General and administrative.............     3,261         505           818        4,584
                                           --------     -------       -------     --------
     Total costs and expenses............    16,130      41,351        27,850       85,331
                                           --------     -------       -------     --------
Operating proceeds and nonmember gross
  profit (loss)..........................    95,429      (1,066)        1,786       96,149
Interest expense, net....................       (96)       (131)          (92)        (319)
Other income.............................        37                                     37
Increase in Members' fresh fruit
  inventories............................       696                                    696
                                           --------     -------       -------     --------
Operating proceeds and nonmember income
  before income tax (benefit)
  provision..............................    96,066      (1,197)        1,694       96,563
Income tax (benefit) provision...........       (21)       (700)          313         (408)
                                           --------     -------       -------     --------
Net proceeds available for distribution
  and nonmember net income...............    96,087        (497)        1,381       96,971
Net proceeds distributed for Member
  fruit..................................   (96,090)                               (96,090)
Excess distribution to members...........         3                                      3
                                           --------     -------       -------     --------
Net income (loss) from nonmember
  products...............................  $     --     $  (497)      $ 1,381     $    884
                                           ========     =======       =======     ========

                                       F-21
   74
                 CALAVO GROWERS OF CALIFORNIA AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

     (All amounts are presented in thousands):

                                                     YEAR ENDED OCTOBER 31, 1998
                                            ----------------------------------------------
                                                        NONMEMBER
                                             MEMBER     PERISHABLE    PROCESSED
                                            AVOCADOS     PRODUCTS     PRODUCTS     TOTAL
                                            --------    ----------    ---------   --------
                                                                      
Net sales.................................  $ 95,418     $28,052       $28,724    $152,194
Costs and expenses:
  Processing and packing..................     9,404      24,774        14,591      48,769
  Marketing and distribution..............     3,447         806        10,179      14,432
  Freight and handling....................     1,281       2,120         1,220       4,621
  General and administrative..............     2,226         363           781       3,370
                                            --------     -------       -------    --------
     Total costs and expenses.............    16,358      28,063        26,771      71,192
                                            --------     -------       -------    --------
Operating proceeds and nonmember gross
  profit (loss)...........................    79,060         (11)        1,953      81,002
Gain on sale of facility..................     1,575                                 1,575
Interest (expense) income.................       (25)          9           (39)        (55)
Other income..............................        25                                    25
Decrease in Members' fresh fruit
  inventories.............................      (106)                                 (106)
                                            --------     -------       -------    --------
Operating proceeds and nonmember income
  before income tax provision (benefit)...    80,529          (2)        1,914      82,441
Income tax provision (benefit)............       466        (424)          688         730
                                            --------     -------       -------    --------
Net proceeds available for distribution
  and nonmember net income................    80,063         422         1,226      81,711
Net proceeds distributed for Member
  fruit...................................   (78,597)                              (78,597)
Receivable from Members due to
  distributions in excess of available
  proceeds (Note 1).......................       (91)                                  (91)
Appropriation for capital expenditures....    (1,375)                               (1,375)
                                            --------     -------       -------    --------
Net income from nonmember products........  $     --     $   422       $ 1,226    $  1,648
                                            ========     =======       =======    ========

     Long-lived assets attributed to geographic areas as of October 31 are as
follows:

                                               UNITED STATES      MEXICO      CONSOLIDATED
                                               -------------    ----------    ------------
                                                                     
2000.........................................   $10,358,000     $2,328,000    $12,686,000
1999.........................................   $ 9,761,000     $2,494,000    $12,255,000

                                       F-22
   75
                 CALAVO GROWERS OF CALIFORNIA AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

     The following table sets forth sales by product category for each year
ended October 31.

                                                       1998        1999        2000
                                                     --------    --------    --------
                                                              (IN THOUSANDS)
                                                                    
California avocados -- members.....................  $ 91,461    $107,357    $117,878
California avocados -- nonmembers..................                 3,405      23,057
Chilean avocados...................................    13,531      18,355      20,538
Mexican avocados...................................     6,828      11,240      13,802
New Zealand avocados...............................                 1,273       3,672
Miscellaneous purchased avocados...................     1,290       1,154       1,094
Papayas............................................     2,624       1,981       2,061
Mangos.............................................     1,150           4
Others.............................................        71
Processed -- food service..........................    20,363      21,261      27,225
Processed -- retail and club.......................     8,351       8,375       5,519
Processed -- miscellaneous.........................        10
                                                     --------    --------    --------
Total sales -- F.O.B. .............................   145,679     174,405     214,846
Freight and other charges..........................     6,515       7,075      11,023
                                                     --------    --------    --------
                                                     $152,194    $181,480    $225,869
                                                     ========    ========    ========

14. SUBSEQUENT EVENTS

     In December 2000, the Company declared a dividend in the amount of
approximately $4,973,000, which is expected to be paid in January 2001.

     On February 20, 2001, the Board of Directors unanimously voted to recommend
to the Cooperative's shareholders to convert from a California nonprofit
cooperative association into a California for-profit corporation called Calavo
Growers, Inc. (the Company). To accomplish the conversion, if approved, the
Cooperative will merge into the Company and all outstanding common and preferred
shares of the Cooperative will be exchanged for common stock of the Company.

                                       F-23
   76

                                                                      APPENDIX A

                AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

     This Agreement and Plan of Merger and Reorganization (the "Agreement") is
entered into as of February 20, 2001 between Calavo Growers of California
("Calavo"), a nonprofit cooperative association that is organized under the
California Food and Agricultural Code, and Calavo Growers, Inc. ("New Calavo"),
a corporation that is organized under the California General Corporation Law
(the "California Corporation Law").

                                    RECITALS

     A. Calavo's Board of Directors has determined that it is in the best
interests of Calavo and its shareholders to convert Calavo into a corporation
that is organized under and governed by the California Corporation Law. New
Calavo is a wholly owned subsidiary of Calavo, and Calavo has approved this
Agreement as the sole shareholder of New Calavo.

     B. The Boards of Directors of Calavo and New Calavo have approved this
Agreement and intend that this Agreement shall constitute a plan of
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1968, as amended. Pursuant to this Agreement, Calavo shall be merged into New
Calavo, and New Calavo shall continue as the surviving corporation.

     NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, Calavo and New Calavo hereby agree as follows:

     1. The Merger. At the Effective Time (as defined below), Calavo shall be
merged into New Calavo (the "Merger") upon the terms and conditions described in
this Agreement and in accordance with the California Corporation Law. The Merger
shall become effective on such date and at such time (jointly referred to herein
as the "Effective Time") as a short-form agreement of merger substantially in
the form of Exhibit A attached hereto and incorporated herein, together with all
officers' certificates that are required under the California Corporation Law,
are filed by Calavo and New Calavo with the California Secretary of State
pursuant to the California Corporation Law as promptly as practicable after the
satisfaction or waiver (where permissible) of the closing conditions that are
described below in Section 6.

     2. Effect of the Merger. At the Effective Time, the separate existence of
Calavo shall terminate, and New Calavo shall continue as the surviving
corporation. The Merger shall have the effect prescribed by the California
Corporation Law. Without limiting the generality of the preceding sentence, at
the Effective Time New Calavo automatically shall succeed to all of the rights
and properties of Calavo and shall be subject to all of the debts and
liabilities of Calavo in the same manner as if New Calavo had itself incurred
them.

     3. Articles of Incorporation and Bylaws of New Calavo. The Articles of
Incorporation and Bylaws of New Calavo that are in effect immediately prior to
the Effective Time shall remain in effect after the Merger unless and until they
are subsequently amended as provided by applicable law.

     4. Officers and Directors. Each officer and director of New Calavo shall
continue to hold office after the Merger until his or her successor is duly
elected or until his or her earlier death, resignation or removal.

     5. Conversion of Shares. At the Effective Time:

          (a) Each share of the preferred stock and common stock of Calavo that
     is outstanding immediately prior to the Effective Time automatically shall
     be converted into one share of the common stock of New Calavo without the
     necessity for further action on the part of the holder of such share; and

                                       A-1
   77

          (b) Each share of the common stock of New Calavo that is outstanding
     immediately prior to the Effective Time shall be cancelled without payment
     of any consideration therefor.

     6. Closing Conditions. The Merger shall occur as promptly as practicable
after the satisfaction of each of the following conditions, provided, however,
that any of the following conditions may be waived by a writing executed by
Calavo and New Calavo if and to the extent that such waiver is permitted by
applicable law:

          (a) This Agreement and the transactions contemplated hereby shall have
     been approved by Calavo's shareholders;

          (b) The Registration Statement on Form S-4 that has been filed with
     the Securities and Exchange Commission regarding the shares of common stock
     that New Calavo will issue in the Merger shall have become effective and
     shall not be subject to any stop order suspending its effectiveness or to
     any proceeding seeking a stop order;

          (c) All permits, consents and approvals that are required from the
     California Department of Corporations and other applicable state securities
     regulatory authorities regarding the offer and sale of New Calavo common
     stock in the Merger shall have been obtained;

          (d) Calavo shall have obtained all necessary consents to the Merger
     from its lenders and any other parties whose consents are required under
     contracts to which Calavo is a party; and

          (e) There shall not be in effect any judgment, regulation, order or
     injunction of any court or governmental authority that prohibits the
     Merger.

     7. Further Assurances. Calavo and New Calavo shall take such further
actions and execute such further documents as may be necessary or advisable in
order to carry out the terms of this Agreement.

     8. Amendment and Termination. This Agreement (including Exhibit A hereto)
may be amended by a writing executed by Calavo and New Calavo at any time prior
to the Effective Time. However, after the approval of Calavo's shareholders has
been obtained, no amendment of this Agreement that changes its principal terms
may be made without the further approval of such shareholders. This Agreement
may be terminated by action of the Board of Directors of Calavo at any time
prior to the Effective Time, whether before or after shareholder approval has
been obtained.

     9. Counterparts. This Agreement may be executed in two counterparts, each
of which shall be deemed an original but both of which shall constitute one and
the same instrument.

     10. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of California without giving
effect to the conflict of law principles of such state.

                                       A-2
   78

     IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.

                                          CALAVO GROWERS OF CALIFORNIA

                                          By:       /s/ LECIL E. COLE
                                            ------------------------------------
                                                       Lecil E. Cole
                                             Chairman, Chief Executive Officer
                                                        and President

                                          By:    /s/ EGIDIO CARBONE, JR.
                                            ------------------------------------
                                                    Egidio Carbone, Jr.
                                                Vice President, Finance and
                                                     Corporate Secretary

                                          CALAVO GROWERS, INC.

                                          By:       /s/ LECIL E. COLE
                                            ------------------------------------
                                                       Lecil E. Cole
                                             Chairman, Chief Executive Officer
                                                        and President

                                          By:    /s/ EGIDIO CARBONE, JR.
                                            ------------------------------------
                                                    Egidio Carbone, Jr.
                                                Vice President, Finance and
                                                     Corporate Secretary

                                       A-3
   79

                                   EXHIBIT A

                              AGREEMENT OF MERGER

     This Agreement of Merger (the "Agreement") is entered into as of February
20, 2001 between Calavo Growers of California, a nonprofit cooperative
association that is organized under the California Food and Agricultural Code
(the "Merging Corporation"), and Calavo Growers, Inc., a corporation that is
organized under the California General Corporation Law (the "Surviving
Corporation").

     1. The Merging Corporation shall be merged into the Surviving Corporation.
The effect of the merger and the effective time of the merger are as prescribed
by applicable law.

     2. At the effective time of the merger, (i) each outstanding share of the
preferred stock and common stock of the Merging Corporation shall be converted
into one share of the common stock of the Surviving Corporation, and (ii) each
outstanding share of the stock of the Surviving Corporation shall be cancelled
without payment of any consideration therefor.

     3. The Articles of Incorporation and Bylaws of the Surviving Corporation
that are in effect immediately prior to the effective time of the merger shall
remain in effect after the merger unless and until they are subsequently amended
as provided by applicable law.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement.

                                          CALAVO GROWERS OF CALIFORNIA

                                          By:       /s/ LECIL E. COLE
                                            ------------------------------------
                                                       Lecil E. Cole
                                             Chairman, Chief Executive Officer
                                                        and President

                                          By:    /s/ EGIDIO CARBONE, JR.
                                            ------------------------------------
                                                    Egidio Carbone, Jr.
                                                         Secretary

                                          CALAVO GROWERS, INC.

                                          By:       /s/ LECIL E. COLE
                                            ------------------------------------
                                                       Lecil E. Cole
                                             Chairman, Chief Executive Officer
                                                        and President

                                          By:    /s/ EGIDIO CARBONE, JR.
                                            ------------------------------------
                                                    Egidio Carbone, Jr.
                                                         Secretary

                                       A-4
   80

                                                                      APPENDIX B

                           ARTICLES OF INCORPORATION
                                       OF
                              CALAVO GROWERS, INC.

                                   ARTICLE I

     The name of this corporation is Calavo Growers, Inc. (the "Corporation").

                                   ARTICLE II

     The purpose of the Corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
California other than the banking business, the trust company business or the
practice of a profession permitted to be incorporated by the California
Corporations Code.

                                  ARTICLE III

     The name and address in the State of California of the Corporation's
initial agent for service of process is: Egidio Carbone; 2530 Red Hill Avenue;
Santa Ana, California 92705-5542.

                                   ARTICLE IV

     The Corporation is authorized to issue only one class of stock, which shall
be designated common stock with a par value of $0.001 per share. The total
number of shares that the Corporation is authorized to issue is One Hundred
Million (100,000,000).

                                   ARTICLE V

     (a) The liability of the directors of the Corporation for monetary damages
shall be eliminated to the fullest extent permissible under California law.

     (b) The Corporation is authorized to provide indemnification of its agents
(as such term is defined in Section 317 of the California Corporations Code),
whether by bylaw, agreement, vote of shareholders or disinterested directors, or
otherwise, to the fullest extent permissible under California law.

     (c) Any amendment of this Article V shall not adversely affect any right or
protection of an agent of the Corporation existing at the time of such
amendment.

                                   ARTICLE VI

     Each of the following actions shall require the approval of at least
seventy-five percent (75%) of the authorized number of directors that is set
forth or established in accordance with the Corporation's Bylaws:

          (a) The issuance by the Corporation of any shares of stock or of any
     options, warrants or other rights to acquire shares of stock;

          (b) The amendment of these Articles of Incorporation, provided,
     however, that any approval of the Corporation's shareholders that is
     required by applicable law shall also be obtained in order for such
     amendment to be effective; or

                                       B-1
   81

          (c) The adoption, amendment or repeal by the Corporation's Board of
     Directors of any Bylaws, provided, however, that the Corporation's
     shareholders shall also be entitled to adopt, amend or repeal Bylaws by the
     affirmative vote or written consent of a majority of the outstanding shares
     entitled to vote.

Dated: January 4, 2001                             /s/ MARC L. BROWN
                                          --------------------------------------
                                                      Marc L. Brown,
                                                       Incorporator

                                       B-2
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                                                                      APPENDIX C
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

                                     BYLAWS
                                       OF

                             CALAVO GROWERS, INC.,
                            A CALIFORNIA CORPORATION

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
   83

                               TABLE OF CONTENTS

                                                              PAGE
                                                              ----
                                                           
ARTICLE I -- OFFICES........................................   C-1
  Section 1.01  Principal Office............................   C-1
  Section 1.02  Other Offices...............................   C-1
ARTICLE II -- MEETINGS OF SHAREHOLDERS......................   C-1
  Section 2.01  Place of Meetings...........................   C-1
  Section 2.02  Annual Meetings.............................   C-1
  Section 2.03  Special Meetings............................   C-1
  Section 2.04  Adjourned Meetings and Notice Thereof.......   C-2
  Section 2.05  Entry of Notice of Delivery.................   C-2
  Section 2.06  Voting by Shareholders; Director
     Nominations; Cumulative Voting for Directors...........   C-2
  Section 2.07  Quorum......................................   C-3
  Section 2.08  Consent of Absentees........................   C-3
  Section 2.09  Action Without Meeting......................   C-3
  Section 2.10  Proxies.....................................   C-4
  Section 2.11  Districts...................................   C-4
ARTICLE III -- DIRECTORS....................................   C-4
  Section 3.01  Powers; Committees of Directors, Including
     Executive Committee and Nominating Committee...........   C-4
  Section 3.02  Number and Qualifications of Directors......   C-5
  Section 3.03  Election and Term of Office.................   C-6
  Section 3.04  Vacancies...................................   C-6
  Section 3.05  Place of Meeting............................   C-6
  Section 3.06  Organizational Meeting......................   C-6
  Section 3.07  Other Regular Meetings......................   C-7
  Section 3.08  Special Meetings............................   C-7
  Section 3.09  Notice of Adjournment.......................   C-7
  Section 3.10  Entry of Notice.............................   C-7
  Section 3.11  Waiver of Notice............................   C-7
  Section 3.12  Quorum......................................   C-7
  Section 3.13  Adjournment.................................   C-8
  Section 3.14  Action Without Meeting......................   C-8
  Section 3.15  Fees and Compensation.......................   C-8
ARTICLE IV -- OFFICERS......................................   C-8
  Section 4.01  Officers....................................   C-8
  Section 4.02  Elections...................................   C-8
  Section 4.03  Subordinate Officers........................   C-8
  Section 4.04  Removal and Resignation.....................   C-8
  Section 4.05  Vacancies...................................   C-8
  Section 4.06  Chairman of the Board.......................   C-9
  Section 4.07  Chief Executive Officer.....................   C-9
  Section 4.08  President...................................   C-9
  Section 4.09  Vice President..............................   C-9
  Section 4.10  Secretary...................................   C-9
  Section 4.11  Chief Financial Officer.....................   C-9
ARTICLE V -- MISCELLANEOUS..................................  C-10
  Section 5.01  Record Date.................................  C-10
  Section 5.02  Inspection of Corporate Records.............  C-10
  Section 5.03  Checks, Drafts and Notes....................  C-10
  Section 5.04  Seal........................................  C-10

                                        i
   84

                                                              PAGE
                                                              ----
                                                           
  Section 5.05  Financial Reports...........................  C-11
  Section 5.06  Execution of Documents......................  C-11
  Section 5.07  Certificates of Stock.......................  C-11
  Section 5.08  Representation of Shares of Other
     Corporations...........................................  C-12
  Section 5.09  Inspection of Bylaws........................  C-12
ARTICLE VI -- RESTRICTIONS ON TRANSFER OF SHARES............  C-12
  Section 6.01  Corporation's Right of First Refusal........  C-12
  Section 6.02  Notice to the Corporation of the Proposed
     Transfer...............................................  C-12
  Section 6.03  Purchase of Shares by the Corporation.......  C-13
  Section 6.04  Purchase Terms..............................  C-13
  Section 6.05  Closing of the Purchase.....................  C-13
  Section 6.06  Transfer of Shares to the Proposed
     Transferee.............................................  C-13
  Section 6.07  Transfers Not Subject to the Right of First
     Refusal................................................  C-14
  Section 6.08  Transfers of Shares in Violation of the
     Bylaws.................................................  C-14
  Section 6.09  Legends on Certificates.....................  C-14
  Section 6.10  Termination of the Right of First Refusal...  C-15
ARTICLE VII -- INDEMNIFICATION..............................  C-15
  Section 7.01  Indemnification of Directors................  C-15
  Section 7.02  Indemnification of Officers, Employees and
     Other Agents...........................................  C-15
  Section 7.03  Advance of Expenses.........................  C-15
  Section 7.04  Indemnification Not Exclusive...............  C-15
  Section 7.05  Insurance...................................  C-15
  Section 7.06  Conflicts...................................  C-16
  Section 7.07  Indemnification Agreements..................  C-16
  Section 7.08  Amendment, Repeal or Modification...........  C-16
ARTICLE VIII -- AMENDMENTS..................................  C-16
  Section 8.01  Power of Shareholders.......................  C-16
  Section 8.02  Power of Directors..........................  C-16

                                        ii
   85

                                     BYLAWS
                                       OF
                              CALAVO GROWERS, INC.

                              ARTICLE I -- OFFICES

     SECTION 1.01  Principal Office. The principal executive office of Calavo
Growers, Inc. (the "CORPORATION") is hereby fixed and located at 2530 Red Hill
Avenue, Santa Ana, California. The Board of Directors is hereby granted full
power and authority to change said principal office from one location to another
at any place or places where the Corporation is qualified to do business.

     SECTION 1.02  Other Offices. Branch or subordinate offices may at any time
be established by the Board of Directors at any place or places where the
Corporation is qualified to do business.

                     ARTICLE II -- MEETINGS OF SHAREHOLDERS

     SECTION 2.01  Place of Meetings. All meetings of shareholders shall be held
either at the principal executive office or at any other place within or without
the State of California which may be designated by the Board of Directors or by
the shareholders by obtaining written consent of all the persons entitled to
vote thereat.

     SECTION 2.02  Annual Meetings. An annual meeting of shareholders shall be
held each year on a date and at a time designated by the Board of Directors.

     Notice of each annual meeting shall be given to each shareholder entitled
to vote thereat, either personally or by first-class mail or other means of
written communication, charges prepaid, addressed to such shareholder at the
address appearing on the books of the Corporation for such shareholder or given
by such shareholder to the Corporation for the purpose of notice. If no such
address appears or is given, notice shall be deemed to have been given such
shareholder if sent by mail or other means of written communication addressed to
the place where the principal executive office of the Corporation is situated,
or if published at least once in some newspaper of general circulation in the
county in which said office is located.

     All such notices shall be delivered personally, or deposited in the mail or
sent by other means of written communication, to each shareholder entitled to
vote thereat, not less than ten (10) nor more than sixty (60) days before such
annual meeting, and shall specify the place, date and hour of such meeting and
those matters which the Board of Directors, at the time of the giving of such
notice, intends to present for action by the shareholders, including the names
of nominees intended at the time of such notice to be presented by the Board of
Directors for election to the Board of Directors. Such notice shall also state
the general nature of the business or proposal to be considered or acted upon at
such meeting before action may be taken at such meeting on:

          (a) A proposal to approve a contract or other transaction between the
     Corporation and one (1) or more directors or any corporation, firm or
     association in which one (1) or more directors has a material financial
     interest;

          (b) A proposal to amend the Articles of Incorporation;

          (c) A proposal to approve a reorganization of the Corporation;

          (d) A proposal to wind up and dissolve the Corporation; or

          (e) A proposal to approve a plan of distribution of the shares,
     obligations or securities of any other corporation, or assets other than
     money, which is not in accordance with the liquidation rights of any
     preferred shares as specified in the Articles of Incorporation, in the
     process of the winding up of the Corporation.

     SECTION 2.03  Special Meetings. Special meetings of the shareholders, for
any purpose or purposes whatsoever, may be called at any time by the Chairman of
the Board, the President, the Board of
                                       C-1
   86

Directors or by one (1) or more shareholders entitled to cast not less than ten
percent (10%) of the votes at the meeting. Upon request in writing to the
Chairman of the Board, the President, any Vice President or the Secretary by any
person, other than the Board of Directors, entitled to call a special meeting of
shareholders, such officer shall cause notice to be given forthwith, but in no
event later than twenty (20) days after receipt of the request, that a meeting
will be held at the time requested by the person or persons calling the meeting,
which time shall be not less than thirty-five (35) and not more than sixty (60)
days after receipt of the request. Except in special cases where other express
provision is made by statute and as set forth herein, notice of such special
meetings shall be given in the same manner as for annual meetings of
shareholders. Notices of any special meeting shall specify, in addition to the
place, date and hour of such meeting, the general nature of the business to be
transacted.

     SECTION 2.04  Adjourned Meetings and Notice Thereof. Any shareholders'
meeting, annual or special, whether or not a quorum is present, may be adjourned
from time to time by a vote of a majority of the shares, the holders of which
are either present in person or by proxy thereat, but in the absence of a
quorum, no other business may be transacted at any such meeting except as
provided in Section 2.07 of this Article.

     When any shareholders' meeting, either annual or special, is adjourned for
forty-five (45) days or less, the time and place of the adjourned meeting shall
be announced at the meeting at which the adjournment is taken. When any
shareholders' meeting, either annual or special, is adjourned for more than
forty-five (45) days, or if after the adjournment a new record date is fixed for
the adjourned meeting, notice of the adjourned meeting shall be given to each
shareholder of record entitled to vote at the adjourned meeting as in the case
of an original meeting. Except as aforesaid, it shall not be necessary to give
any notice of an adjournment or of the business to be transacted at an adjourned
meeting, and at the adjourned meeting the Corporation may transact any business
which might have been transacted at the original meeting.

     SECTION 2.05  Entry of Notice of Delivery. An affidavit executed by the
Secretary, any Assistant Secretary or any transfer agent to the effect that any
notice or report required to be given to a shareholder by law or these Bylaws
was duly given to such shareholder shall be sufficient evidence that such notice
or report was duly given to such shareholder. If any notice or report addressed
to a shareholder at the address of such shareholder appearing on the books of
the Corporation is returned to the Corporation by the United States Postal
Service marked to indicate that the United States Postal Service is unable to
deliver the notice or report to the shareholder at such address, all future
notices or reports shall be deemed to have been duly given without further
mailing if the same shall be available for the shareholder upon written demand
of the shareholder at the principal executive office of the Corporation for a
period of one (1) year from the date of the giving of the notice or report to
all other shareholders.

     SECTION 2.06  Voting by Shareholders; Director Nominations; Cumulative
Voting for Directors. Except as otherwise provided in the Articles of
Incorporation and in this Section, at all meetings of shareholders every
shareholder entitled to vote shall have the right to vote in person or by proxy
the number of shares standing in his or her name on the stock records of the
Corporation. Such vote may be given by viva voce or by ballot; provided,
however, that all elections for directors shall be by ballot upon demand made by
a shareholder at any election and before the voting begins.

     Nominations of persons for election to the Board of Directors may be made
at, or in advance of, each meeting of shareholders at which directors are to be
elected (i) by or at the direction of the incumbent Board of Directors and (ii)
by any shareholder of the Corporation who is entitled to vote at the meeting in
the election of directors by submitting the name of such candidate or candidates
in writing to the Secretary of the Corporation. Each director nominee must
satisfy the qualification requirements that are described in Section 3.02 of
these Bylaws, and all solicitations of proxies to be used in connection with the
election of directors must satisfy applicable federal and state securities laws
and regulations and other applicable laws and regulations.

     At each election of directors of the Corporation, if the candidate's name
or candidates' names have been placed in nomination prior to the voting, each
shareholder entitled to vote shall have the right to cast as many votes as shall
equal the number of votes to which his or her shares are normally entitled
                                       C-2
   87

multiplied by the number of directors to be elected, and he or she may cast all
of such votes for a single candidate or may distribute them among some or all of
the candidates as he or she sees fit. The candidates receiving the highest
number of affirmative votes up to the number of directors to be elected shall be
elected; provided, however, that such candidates must satisfy the qualification
requirements for directors that are described in Section 3.02 of these Bylaws.

     The affirmative vote of the majority of the shares represented and voting
at a duly held meeting at which a quorum is present (which shares voting
affirmatively also constitute at least a majority of the required quorum) shall
be the act of the shareholders, unless the vote of a greater number is required
by law or by the Articles of Incorporation or these Bylaws, and except as set
forth in Section 2.07 of this Article and at elections of directors as set forth
in this Section.

     SECTION 2.07  Quorum. The presence in person or by proxy of the holders of
a majority of the shares entitled to vote at any meeting shall constitute a
quorum for the transaction of business. The shareholders present at a duly
called or held meeting at which a quorum is present may continue to do business
until adjournment, notwithstanding the withdrawal of enough shareholders to
leave less than a quorum, if any action taken, other than adjournment, is
approved by at least a majority of the shares required to constitute a quorum.

     SECTION 2.08  Consent of Absentees. The proceedings and transactions of any
meeting of shareholders, either annual or special, however called and noticed
and wherever held, shall be as valid as though had at a meeting duly held after
regular call and notice, if a quorum be present either in person or by proxy and
if, either before or after the meeting, each of the persons entitled to vote,
not present in person or by proxy, signs a written waiver of notice, a consent
to the holding of such meeting or an approval of the minutes thereof. Neither
the business to be transacted at, nor the purpose of, any regular or special
meeting of shareholders need be specified in any written waiver of notice,
consent to the holding of the meeting or approval of the minutes thereof unless
otherwise provided in the Articles of Incorporation or these Bylaws, except for
the matters referred to in subparagraphs (a) through (e) of Section 2.02 of this
Article. All such waivers, consents or approvals shall be filed with the
corporate records or made a part of the minutes of the meeting.

     Attendance of a person at a meeting shall constitute a waiver of notice of
and presence at such meeting, except when the person objects at the beginning of
the meeting to the transaction of any business because the meeting is not
lawfully called or convened, and except that attendance at a meeting is not a
waiver of any right to object to the consideration of matters required by law to
be included in the notice but not so included, if such objection is expressly
made at the meeting.

     SECTION 2.09  Action Without Meeting. Any action which may be taken at any
annual or special meeting of the shareholders may be taken without a meeting and
without prior notice, if authorized by a written consent setting forth the
action so taken, signed by the holders of outstanding shares having not less
than the minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote thereon were
present and voted, and filed with the Secretary of the Corporation; provided,
however, that directors may not be elected by written consent except by
unanimous written consent of all shares entitled to vote for the election of
directors, except that a vacancy on the Board of Directors (other than a vacancy
created by removal of a director) not filled by the Board of Directors may be
filled by the written consent of a majority of the outstanding shares entitled
to vote. Any shareholder giving a written consent, such shareholder's
proxyholders, a transferee of the shares or a personal representative of such
shareholder or their respective proxyholders, may revoke any such consent by a
writing received by the Corporation prior to the time that written consents of
the number of shares required to authorize the proposed action have been filed
with the Secretary of the Corporation, but may not do so thereafter. Such
revocation shall be effective upon its receipt by the Secretary of the
Corporation.

     Unless the consents of all shareholders entitled to vote have been
solicited in writing and have been received, prompt notice shall be given, in
the same manner as for annual meetings of shareholders except as set forth in
this Section, to those shareholders entitled to vote who have not consented in
writing, of the
                                       C-3
   88

taking of any corporate action approved by shareholders without a meeting. Such
notice shall be given at least ten (10) days before the consummation of the
action authorized by such approval with respect to the following:

          (a) Approval of any transaction referred to in subparagraph (a), (c)
     or (e) of Section 2.02 of this Article; or

          (b) Approval required by law of the indemnification of any person.

     SECTION 2.10  Proxies. Every person entitled to vote or execute consents
shall have the right to do so either in person or by an agent or agents
authorized by a written proxy executed by such person or his or her duly
authorized agent; provided, however, that no such proxy shall be valid after the
expiration of eleven (11) months from the date of its execution unless otherwise
provided in the proxy.

     SECTION 2.11  Districts. For purposes of administering the Corporation, the
Board of Directors may divide the territory in which the Corporation has
shareholders into two (2) or more districts. The number of such districts may
correspond to the authorized number of directors of the Corporation. The
boundaries and number of the districts shall be determined by the Board of
Directors, which shall have authority to revise and redefine the number and
boundaries of the districts from time to time. If the Board of Directors
establishes such districts, it shall assign each shareholder to a district based
upon the district in which the shareholder (if a grower) has the largest acreage
or production and on other factors deemed relevant by the Board of Directors.

     The Board of Directors may establish policies and procedures for
informational meetings of the members of the various districts that shall be
held from time to time. However, any such meetings are not intended to function
as a substitute for the annual and special meetings of the Corporation's
shareholders that are discussed in these Bylaws. Furthermore, voting for
directors shall not be conducted on a district basis but shall instead be
conducted in the manner described in the preceding sections of this Article II.
In each such election, each shareholder shall be entitled to cast votes for the
number of directors that are to be elected and shall not be limited to voting
only for directors from his or her district.

     The determinations of the Board of Directors on all matters relating to the
Corporation's districts shall be final, binding and conclusive on all persons.

                            ARTICLE III -- DIRECTORS

     SECTION 3.01  Powers; Committees of Directors, Including Executive
Committee and Nominating Committee. Subject to limitations of the Articles of
Incorporation, of these Bylaws and of the California General Corporation Law as
to action to be authorized or approved by the shareholders or by the outstanding
shares, and subject to the duties of directors as prescribed by these Bylaws,
the business and affairs of the Corporation shall be managed and all corporate
powers shall be exercised by or under the direction of the Board of Directors.
Without prejudice to such general powers, but subject to the same limitations,
it is hereby expressly declared that the directors shall have the following
powers:

          (a) To select and remove all officers, agents and employees of the
     Corporation, prescribe such powers and duties for them as may not be
     inconsistent with law, with the Articles of Incorporation or these Bylaws,
     fix their compensation and require from them security for faithful service;

          (b) To conduct, manage and control the affairs and business of the
     Corporation, and to make such rules and regulations therefor not
     inconsistent with law, the Articles of Incorporation or these Bylaws, as
     they may deem best;

          (c) To change the principal office for the transaction of the business
     of the Corporation from one location to another within or without the State
     of California, as provided in Section 1.01 of Article I; to fix and locate
     from time to time one or more branch or subsidiary offices of the
     Corporation within or without the State of California, as provided in
     Section 1.02 of Article I; to designate any place within or without the
     State of California for the holding of any shareholders'

                                       C-4
   89

     meetings; and to adopt, make and use a corporate seal, to prescribe the
     form of certificates of stock and to alter the form of such seal and of
     such stock certificates from time to time as in their judgment they may
     deem best, provided such seal and such certificates shall at all times
     comply with the provisions of law;

          (d) To authorize the issue of stock of the Corporation from time to
     time, upon such terms as may be lawful, in consideration of money paid,
     labor done, services actually rendered to the Corporation or for its
     benefit or in its formation or reorganization, debts or securities
     cancelled, tangible or intangible property actually received either by the
     Corporation or by a wholly-owned subsidiary, or as a share dividend, or
     upon a stock split, reverse stock split, reclassification or conversion of
     outstanding shares into shares of another class, exchange of outstanding
     shares for shares of another class, or other change affecting outstanding
     shares;

          (e) To borrow money and incur indebtedness for the purposes of the
     Corporation and to cause to be executed and delivered therefor, in the
     corporate name, promissory notes, bonds, debentures, deeds of trust,
     mortgages, pledges, hypothecations or other evidences of debt and security
     therefor; and

          (f) To designate one or more committees and to appoint members and
     alternate members therefor, by resolution adopted by a majority of the
     authorized number of directors, each committee consisting of two (2) or
     more directors and any alternate directors as may be designated to replace
     any absent members at any meeting thereof, to serve at the pleasure of the
     Board of Directors and to delegate to any such committee any of the powers
     and authority of the Board of Directors in the management of the business
     and affairs of the Corporation, except the following powers: to approve any
     action which by law or by these Bylaws also requires shareholders' approval
     or approval of the outstanding shares, to fill vacancies on the Board of
     Directors or any committee thereof, to fix the compensation of directors
     for serving on the Board of Directors or any committee thereof, to amend or
     repeal bylaws or adopt new bylaws, to amend or repeal any resolution of the
     Board of Directors which by its express terms is not so amendable or
     repealable, to authorize a distribution to the shareholders of the
     Corporation (other than a dividend in shares of the Corporation) except at
     a rate or in a periodic amount or within a price range determined by the
     Board of Directors or to appoint other committees of the Board of Directors
     or the members thereof.

          Without limiting the generality of the preceding paragraph:

          There shall be an Executive Committee consisting of the Corporation's
     Chairman of the Board and four (4) other directors who shall be appointed
     by a majority of the authorized number of directors. The Executive
     Committee shall have all of the functions and powers of the Board of
     Directors that are delegated to it by the Board of Directors except as
     otherwise provided by law and subject to the direction and control of the
     Board of Directors.

          The Board of Directors may also appoint a Nominating Committee, which
     shall consist of two (2) or more directors, to assist it in the
     identification and nomination of candidates for election as directors. The
     Nominating Committee shall have the functions and powers that are delegated
     to it from time to time by the Board of Directors, although it shall remain
     subject to the direction and control of the Board of Directors. With the
     assistance of any such Nominating Committee that is appointed, the Board of
     Directors shall establish such rules and procedures for its selection of
     director nominees as it deems appropriate. Among other things, the Board of
     Directors shall have discretion to nominate a candidate from each district
     that is described in Section 2.11 of these Bylaws, although it shall not be
     obligated to follow such nomination procedure.

     SECTION 3.02  Number and Qualifications of Directors. The authorized number
of directors of the Corporation shall be not less than eight (8) nor more than
fifteen (15), and the exact number of directors within such limits shall be ten
(10) unless and until such exact number is changed from time to time, within
such specified limits, by a resolution which is duly adopted by the Board of
Directors or by the shareholders. The minimum and maximum number of directors
may be changed, or the Corporation may

                                       C-5
   90

implement a board structure that specifies a fixed number of directors without
minimum and maximum numbers, by amendment of the Articles of Incorporation or by
a bylaw amending this Section of these Bylaws duly adopted by the affirmative
vote or written consents of a majority of the outstanding shares entitled to
vote; provided, however, that no such amendment reducing the number of directors
to a number less than five (5) shall be adopted if the votes cast against its
adoption at a meeting, or the shares not consenting thereto in the case of
action by written consent, are equal to more than sixteen and two-thirds percent
(16 2/3%) of the outstanding shares entitled to vote.

     An individual shall be qualified to be elected as a director, and to
continue serving as a director, (i) only if he or she (or a corporation,
partnership, limited liability company or other entity which he or she controls)
is a party to a marketing agreement, consignment agreement or other similar
agreement with the Corporation pursuant to which he or she (or such corporation,
partnership, limited liability company or other entity) has agreed to deliver
California-grown avocados to the Corporation for processing and marketing, and
(ii) only if he or she (or such corporation, partnership, limited liability
company or other entity) is not in default under such agreement with the
Corporation. The preceding qualification for directors shall be inapplicable to
any directors who are elected by the holders of shares of the Corporation's
preferred stock (if a class or series of preferred stock is issued and
outstanding) voting separately as a class or series in the election of
directors.

     SECTION 3.03  Election and Term of Office. The directors shall be elected
at each annual meeting of the shareholders, but if any such annual meeting is
not held or the directors are not elected thereat, the directors may be elected
at any special meeting of the shareholders held for that purpose. Each director
shall hold office until the expiration of the term for which elected and until
his or her successor is elected and qualified or until he or she is removed from
office. No director may be removed prior to the expiration of his or her term of
office, except as permitted by law.

     SECTION 3.04  Vacancies. Vacancies in the Board of Directors, other than
those created by the removal of a director, may be filled by a majority of the
remaining directors, though less than a quorum, or by a sole remaining director,
and each director so elected shall hold office until his or her successor is
elected at an annual or special meeting of the shareholders.

     A vacancy or vacancies in the Board of Directors shall be deemed to exist
when any authorized position of director is not filled by a duly elected and
acting director, whether caused by the death, resignation or removal of any
director, increase in the authorized number of directors, failure of the
shareholders, at any annual or special meeting of shareholders at which any
director or directors are elected, to elect the full authorized number of
directors to be voted for at that meeting or otherwise.

     The shareholders may elect a director or directors at any time to fill any
vacancy or vacancies created by the removal of a director or not filled by the
directors. Any such election by written consent other than to fill a vacancy
created by removal (which shall require the unanimous written consent of all
shares entitled to vote for the election of directors) shall require the written
consent of a majority of the outstanding shares entitled to vote. If the
resignation of a director is given to take effect at a future time, the Board of
Directors or the shareholders shall have power to elect a successor to take
office when the resignation is to become effective.

     No reduction of the authorized number of directors shall have the effect of
removing any director prior to the expiration of his or her term of office.

     SECTION 3.05  Place of Meeting. Meetings of the Board of Directors or any
committee thereof shall be held at any place within or without the State of
California which has been designated in the notice of the meeting or, if not
stated in the notice or there is no notice, from time to time by resolution of
the Board of Directors or committee, as the case may be. In the absence of such
designation, meetings shall be held at the principal executive office of the
Corporation.

     SECTION 3.06  Organizational Meeting. Immediately following each annual
meeting of shareholders, the Board of Directors shall hold a regular meeting for
the purpose of organization, election of officers and the transaction of other
business. Notice of such meetings is hereby dispensed with.
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     SECTION 3.07  Other Regular Meetings. Other regular meetings of the Board
of Directors and regular meetings of committees of the Board of Directors shall
be held without call on such dates as may be fixed by the Board of Directors or
the committee, as the case may be. Notice of all such regular meetings of the
Board of Directors and committees thereof is hereby dispensed with.

     SECTION 3.08  Special Meetings. Special meetings of the Board of Directors
for any purpose or purposes may be called at any time by the Chairman of the
Board, by the President, by any Vice President, by the Secretary or by any two
(2) or more directors. Special meetings of any committee of the Board of
Directors for any purpose or purposes may be called at any time by the
President, by the Chairman or by any vice-chairman of the committee, by the
Secretary or by any two (2) or more members of the committee.

     Notice of the time and place of special meetings shall be delivered
personally to all directors or committee members as the case may be, either in
writing or orally or by telephone, or shall be sent to each such director by
first-class mail, facsimile, telegram or other electronic or voice mail message,
charges prepaid, addressed to him or her at his or her address as it is shown
upon the records of the Corporation or, if it is not shown on such records or is
not readily ascertainable, at the place in which the meetings of the directors
are regularly held. In case such notice is mailed, it shall be deposited with
the United States Postal Service in the place where the principal office of the
Corporation is located at least four (4) days prior to the time of the holding
of the meeting. In case such notice is delivered by facsimile, telegram or other
electronic or voice mail message or personally as above provided, it shall be
delivered at least forty-eight (48) hours prior to the time of the holding of
the meeting.

     Such notice need not specify the purpose of the special meeting. Such
mailing, telegraphing or personal delivery as above provided shall be due,
timely, legal and personal notice to such director.

     SECTION 3.09  Notice of Adjournment. Unless a directors' or committee
meeting has been adjourned for more than twenty-four (24) hours, notice of the
time and place of holding an adjourned meeting need not be given to absent
directors or committee members if the time and place be fixed at the meeting
adjourned. If the meeting has been adjourned for more than twenty-four (24)
hours, notice of such adjournment and the time and place of the adjourned
meeting shall be given prior to the time of the adjourned meeting to all
directors or committee members who were not present at the time of the
adjournment, in the same manner as provided in Section 3.08 of this Article for
special meetings of the Board of Directors or committee thereof.

     SECTION 3.10  Entry of Notice. Whenever any director has been absent from
any special meeting of the Board of Directors or committee thereof, an affidavit
executed by the Secretary or any Assistant Secretary to the effect that notice
has been duly given as required by law and these Bylaws shall be sufficient
evidence that due notice of such special meeting was given to such director.

     SECTION 3.11  Waiver of Notice. The transactions of any meeting of the
Board of Directors or committee thereof, however called and noticed and wherever
held, shall be as valid as though had at a meeting duly held after regular call
and notice, if a quorum be present and if, either before or after the meeting,
each of the directors or committee members not present, and each director or
committee member who is present but did not receive due notice thereof and
protests such lack of notice prior to such meeting or at its commencement, signs
a written waiver of notice, a consent to holding such meeting or an approval of
the minutes thereof. Such waiver of notice need not specify the purpose of the
meeting. All such waivers, consents or approvals shall be filed with the
Corporate records or made a part of the minutes of the meeting.

     SECTION 3.12  Quorum. A majority of the authorized number of directors on
the Board of Directors or any committee thereof shall be necessary to constitute
a quorum for the transaction of business by such Board or committee, as the case
may be. A meeting at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors or committee
members, if any action taken is approved by at least a majority of the required
quorum for such meeting. Subject to the foregoing sentence of this Section,
every act or decision done or made by a majority of the directors or committee

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members present at a meeting duly held at which a quorum is present shall be
regarded as the act of the Board of Directors or committee thereof, as the case
may be, unless a greater number is required by law, the Articles of
Incorporation or these Bylaws. Directors shall be deemed present at any meeting
of the Board of Directors or any committee thereof and may participate therein
if present through use of conference telephone or similar communications
equipment, so long as all directors participating in such meeting can hear one
another.

     SECTION 3.13  Adjournment. A majority of the directors or committee members
present, whether or not a quorum is present, may adjourn any directors' or
committee meeting to meet again at a stated time, place and hour.

     SECTION 3.14  Action Without Meeting. Any action required or permitted to
be taken by the Board of Directors or any committee thereof may be taken without
a meeting if all members of the Board of Directors or such committee shall
individually or collectively consent in writing to such action. Such written
consent or consents shall be filed with the minutes of the proceedings of the
Board of Directors or such committee, as the case may be. Such action by written
consent shall have the same force and effect as a unanimous vote of such
directors or committee members.

     SECTION 3.15  Fees and Compensation. Directors shall not receive any stated
salary for their services as directors but, by resolution of the Board of
Directors, a fixed fee, with or without expenses of attending, may be allowed
for attendance at each meeting. Nothing herein contained shall be construed to
preclude any director from serving the Corporation in any other capacity as an
officer, agent, employee or otherwise and receiving compensation therefor.

                             ARTICLE IV -- OFFICERS

     SECTION 4.01  Officers. The officers of the Corporation shall be the
Chairman of the Board, the Chief Executive Officer, the President, the Secretary
and the Chief Financial Officer.

     The Corporation may also have, at the discretion of the Board of Directors,
a Vice Chairman of the Board, one or more Vice Presidents, one or more Assistant
Secretaries, one or more Assistant Chief Financial Officers and such other
officers as may be appointed in accordance with the provisions of Section 4.03
of this Article. Officers other than the Chairman of the Board need not be
directors. One person may hold two or more offices.

     SECTION 4.02  Elections. The officers of the Corporation shall be chosen by
the Board of Directors and each shall hold his or her office until his or her
successor is appointed or until he or she resigns or is removed from office.

     SECTION 4.03  Subordinate Officers. The Board of Directors may appoint such
other officers as the business of the Corporation may require, each of whom
shall hold office for such period, have such authority and perform such duties
as are provided in these Bylaws or as the Board of Directors may from time to
time determine.

     SECTION 4.04  Removal and Resignation. Any officer may be removed, either
with or without cause, by a majority of the directors at the time in office, at
a regular or special meeting of the Board of Directors or, except in case of an
officer chosen by the Board of Directors, by any officer upon whom such power of
removal may be conferred by the Board of Directors.

     Any officer may resign at any time by giving written notice to the Board of
Directors, the Chief Executive Officer, the President or the Secretary of the
Corporation. Any such resignation shall take effect at the date of the receipt
of such notice or at any later time specified therein; and unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.

     SECTION 4.05  Vacancies. A vacancy in any office because of death,
resignation, removal or any other cause shall be filled by the Board of
Directors at a regular or special meeting.

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     SECTION 4.06  Chairman of the Board. The Chairman of the Board shall, if
present, preside at all meetings of the Board of Directors, and exercise and
perform such other powers and duties as may from time to time be assigned to him
or her by the Board of Directors or as prescribed by these Bylaws. The Board of
Directors may also designate one of its members as Vice Chairman of the Board.
The Vice Chairman of the Board shall, during the absence or inability to act as
the Chairman of the Board, have the powers and perform the duties of the
Chairman of the Board and shall have such other powers and perform such other
duties as may from time to time be assigned to him or her by the Board of
Directors or as prescribed by these Bylaws.

     SECTION 4.07  Chief Executive Officer. The Chief Executive Officer shall be
the general manager and chief executive officer of the Corporation and shall,
subject to the control of the Board of Directors, have general supervision,
direction and control of the business and affairs of the Corporation. He or she
shall preside at all meetings of the shareholders, and in the absence of the
Chairman or Vice Chairman of the Board, at all meetings of the Board of
Directors. He or she shall have the general powers and duties of management
usually vested in the office of chief executive officer of a corporation and
shall have such other powers and duties as may be prescribed by the Board of
Directors or these Bylaws. Unless and until otherwise determined by the Board of
Directors, the Chairman of the Board shall also serve as the Chief Executive
Officer.

     SECTION 4.08  President. The President shall, after the Chief Executive
Officer, have general supervision, direction and control of the business and
affairs of the Corporation, subject to the control of the Board of Directors and
the Chief Executive Officer. The President shall have such other powers and
duties as may be prescribed by the Board of Directors or these Bylaws.

     SECTION 4.09  Vice President. In the absence or disability of the
President, the Vice Presidents if there shall be any such officers, in order of
their rank as fixed by the Board of Directors or, if not ranked, the Vice
President designated by the Board of Directors shall perform all the duties of
the President, and when so acting, shall have all the powers of and be subject
to all the restrictions upon the President. The Vice Presidents shall have such
other powers and perform such other duties as from time to time may be
prescribed for them respectively by the Board of Directors or these Bylaws.

     SECTION 4.10  Secretary. The Secretary shall keep, or cause to be kept, a
book of minutes in written form at the principal executive office of the
Corporation, of all meetings of directors, committees of the Board of Directors
and shareholders, with the time and place of holding, whether regular or
special, and if special how authorized, the notice thereof given, the names of
those directors and shareholders present, the names of those present at
directors' or committee meetings, the number of shares present or represented at
shareholders' meetings and the proceedings thereof.

     The Secretary shall keep, or cause to be kept, at the principal executive
office or at the office of the Corporation's transfer agent or registrar of
shares, a share register, or a duplicate share register, in written form or in
any other form capable of being converted into written form, showing the names
of the shareholders and their addresses, and the number and classes of shares
held by each of them.

     The Secretary shall give or cause to be given notice of all meetings of
shareholders and the Board of Directors, as required by these Bylaws or by law
to be given, and he or she shall keep the seal of the Corporation in safe
custody and shall have such other powers and perform such other duties as may be
prescribed by the Board of Directors or these Bylaws.

     SECTION 4.11  Chief Financial Officer. The Chief Financial Officer shall
keep and maintain, or cause to be kept and maintained, in written form or in any
other form capable of being converted into written form, adequate and correct
books and records of account of the properties and business transactions of the
Corporation, including accounts of its assets, liabilities, receipts,
disbursements, gains, losses, capital, surplus and shares.

     The Chief Financial Officer shall deposit all monies and other valuables in
the name and to the credit of the Corporation with such depositories as may be
designated by the Board of Directors. He or she shall disburse the funds of the
Corporation as may be ordered by the Board of Directors and shall render to the
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President and directors, as required by Section 5.05 of Article V of these
Bylaws and at such other times as they may request, an account of all of his or
her transactions as Chief Financial Officer and of the financial condition of
the Corporation, and shall have such other powers and perform such other duties
as may be prescribed by the Board of Directors or these Bylaws.

                           ARTICLE V -- MISCELLANEOUS

     SECTION 5.01  Record Date. The Board of Directors may fix a time in the
future as a record date for the determination of the shareholders entitled to
notice of and to vote at any meeting of shareholders, or to receive any
dividend, distribution or allotment of rights, or to exercise rights in respect
of any other lawful action. The record date so fixed shall not be more than
sixty (60) nor less than ten (10) days prior to the date of the meeting, nor
more than sixty (60) days prior to any other action, for which it is fixed. When
a record date is so fixed, only shareholders of record at the close of business
on the record date shall be entitled to notice of and to vote at such meeting,
or to receive such dividend, distribution or allotment of rights, or to exercise
such rights, as the case may be, notwithstanding any transfer of any shares on
the books of the Corporation after the record date, except as otherwise provided
in the Articles of Incorporation or by agreement or by law. A determination of
shareholders of record entitled to notice of or to vote at a meeting of
shareholders shall apply to any adjournment of the meeting unless the Board of
Directors fixes a new record date for the adjourned meeting, but the Board of
Directors shall fix a new record date if the meeting is adjourned for more than
forty-five (45) days from the date set for the original meeting.

     SECTION 5.02  Inspection of Corporate Records. The record of shareholders,
the accounting books and records, and minutes of proceedings of the
shareholders, the Board of Directors and committees of the Board of Directors,
shall be open to inspection in written form upon the written demand of any
shareholder or holder of a voting trust certificate, at any reasonable time
during usual business hours, for a purpose reasonably related to his or her
interests as a shareholder or holder of a voting trust certificate. Such
inspection may be made in person or by an agent or attorney and shall include
the right to copy and make extracts. Demand of inspection shall be made in
writing upon the President, Secretary or Assistant Secretary of the Corporation.

     A shareholder or shareholders holding at least five percent (5%) in the
aggregate of the outstanding voting shares of the Corporation shall have an
absolute right to do either or both of the following: (i) inspect and copy the
record of shareholders' names and addresses and shareholdings during usual
business hours upon five (5) business days' prior written demand upon the
Corporation, or (ii) obtain from the transfer agent for the Corporation, if any,
upon written demand and upon the tender of its usual charges for such a list, a
list of the names and addresses of the shareholders who are entitled to vote for
the election of directors, and their shareholdings, as of the most recent record
date for which it has been compiled or as of a date specified by the shareholder
subsequent to the date of demand, which list shall be made available on or
before the later of five (5) business days after the demand is received or the
date specified therein as the date as of which the list is to be compiled.

     Every director shall have the absolute right at any reasonable time to
inspect in written form and copy all books, records and documents of every kind
and to inspect the physical properties of the Corporation and its subsidiary
corporations, domestic or foreign. Such inspection may be made in person or by
agent or attorney, and the right of inspection includes the right to copy and
make extracts.

     SECTION 5.03  Checks, Drafts and Notes. All checks, drafts or other orders
for payment of money, notes or other evidences of indebtedness issued in the
name of or payable to the Corporation shall be signed or endorsed by such person
or persons and in such manner as, from time to time, shall be determined by
resolution of the Board of Directors.

     SECTION 5.04  Seal. The Corporation shall have a common seal, and shall
have inscribed thereon the name of the Corporation, the date of its
incorporation and the word California.

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     SECTION 5.05  Financial Reports. The Chief Financial Officer shall prepare
and submit, or cause to be prepared and submitted, to the Board of Directors,
not later than one hundred twenty (120) days after the close of each fiscal year
of the Corporation, an annual report containing a balance sheet as of the end of
that fiscal year and an income statement and statement of changes in financial
position for that fiscal year, accompanied by the report thereon, if any, of any
independent accountants engaged by the Corporation or the certificate of an
authorized officer of the Corporation that the financial statements were
prepared without audit from the books and records of the Corporation. The
requirement of Section 1501 of the California Corporations Code that the Board
of Directors shall cause the annual report to be sent to the shareholders not
later than one hundred twenty (120) days after the close of the Corporation's
fiscal year and at least fifteen (15) days prior to the annual meeting of
shareholders is hereby expressly waived until such time as the Corporation has
one hundred (100) or more holders of record of its shares.

     A shareholder or shareholders holding at least five percent (5%) of the
outstanding shares of any class of the Corporation may make a written request to
the Corporation for an income statement of the Corporation for the three-month,
six-month or nine-month period of the current fiscal year ended more than thirty
(30) days prior to the date of the request and a balance sheet of the
Corporation as of the end of such period and, in addition, if no annual report
for the last fiscal year has been sent to shareholders, such annual report,
accompanied by the report thereon, if any, of any independent accountants
engaged by the Corporation or the certificate of an authorized officer of the
Corporation that such financial statements were prepared without audit from the
books and records of the Corporation. The annual report or statements so
requested shall be delivered or mailed to the person making the request within
thirty (30) days thereafter.

     A copy of each such annual, semi-annual, and quarterly financial statement
shall be kept on file for a period of twelve (12) months after delivery to the
Board of Directors, and shall be exhibited at all reasonable times to any
shareholder demanding an examination thereof or a copy shall be mailed to the
shareholder.

     SECTION 5.06  Execution of Documents. The Board of Directors, except as
these Bylaws or the Articles of Incorporation otherwise provide, may authorize
any officer or officers, or agent or agents, to enter into any contract or
execute any instrument in the name of and on behalf of the Corporation, and such
authority may be general or confined to specific instances; and unless so
authorized by the Board of Directors, no officer, agent, or employee shall have
any power or authority to bind the Corporation by any contract or agreement or
to pledge its credit to render it liable for any purpose or to any amount.

     SECTION 5.07  Certificates of Stock. A certificate or certificates for
shares of the capital stock of the Corporation shall be issued to each
shareholder when any such shares are fully paid. All such certificates shall be
signed by the Chairman of the Board or the President or a Vice President, and by
the Chief Financial Officer or an Assistant Chief Financial Officer, Secretary
or an Assistant Secretary, or shall be authenticated by facsimiles of such
signatures.

     Certificates for shares may be issued prior to full payment thereof, under
such restrictions and for such purposes as the Board of Directors or these
Bylaws may provide; provided, however, that any such certificates so issued
prior to full payment shall state the total amount of the consideration to be
paid therefor and the amount paid thereon, and such statement shall be
conspicuous.

     There shall also appear on each certificate, to the extent applicable,
statements: that the shares represented thereby are subject to restrictions upon
transfer, to an irrevocable proxy under Section 705(e) of the California
Corporations Code, or to restrictions upon voting rights contractually imposed
by the Corporation; that such shares are redeemable or assessable or subject to
conversion and the period for conversion, and any such statement that such
shares are subject to restrictions upon transfer or are assessable shall be
conspicuous. If the shares of the Corporation are classified or if any class of
shares has two or more series, there shall also appear on each certificate the
office or agency of the Corporation from which shareholders may obtain, upon
request and without charge, a statement of the rights, preferences, privileges
and restrictions granted to or imposed upon each class or series of shares
authorized to be issued and upon the holders thereof.
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     Notwithstanding the foregoing provisions of this Section 5.07, the Board of
Directors is entitled to elect to cause the Corporation to adopt a system of
issuance, recordation and transfer of its shares by electronic or other means
not involving any issuance of certificates, subject, however, to compliance with
Section 416 of the California Corporations Code and other applicable law
regarding such system.

     SECTION 5.08  Representation of Shares of Other Corporations. Subject to
the instructions and control of the Board of Directors, the Chief Executive
Officer, the President or any Vice President and the Secretary or Assistant
Secretary of the Corporation, acting jointly, are authorized to vote, represent
and exercise on behalf of the Corporation all rights incident to any and all
shares of any other corporation or corporations standing in the name of the
Corporation. The authority herein granted to said officers to vote or represent
on behalf of the Corporation any and all shares held by the Corporation in any
other corporation or corporations may be exercised either by such officers in
person or by any person authorized so to do by proxy or power of attorney duly
executed by said officers.

     SECTION 5.09  Inspection of Bylaws. The Corporation shall keep in its
principal executive office in the State of California, or if there be no such
office at its principal business office in such State, the original or a copy of
these Bylaws as amended to date, which shall be open to inspection by the
shareholders at all reasonable times during office hours. If the principal
executive office is outside such State and the Corporation has no principal
business office in such State, the Corporation shall upon the written request of
any shareholder, made in writing upon the President, Secretary or Assistant
Secretary of the Corporation, furnish to such shareholder a copy of these Bylaws
as amended to date.

                ARTICLE VI -- RESTRICTIONS ON TRANSFER OF SHARES

     SECTION 6.01  Corporation's Right of First Refusal. Before any shares of
the Corporation's stock that are owned by any shareholder of the Corporation may
be sold, assigned, pledged or otherwise transferred (whether voluntarily,
involuntarily, by operation of law, pursuant to a marital dissolution decree or
by gift or for consideration and including a transfer of any interest in any
such shares), the shares shall first be offered to the Corporation, which shall
have the right to purchase all (but not fewer than all) of the shares that are
proposed to be transferred on the terms and conditions proposed by the potential
purchaser and in accordance with the terms and conditions of this Article VI
(the "RIGHT OF FIRST REFUSAL").

     SECTION 6.02  Notice to the Corporation of the Proposed Transfer. Each time
that any shareholder of the Corporation (the "TRANSFERRING SHAREHOLDER")
proposes to sell, assign, pledge or otherwise transfer any shares of the
Corporation's stock in a transaction that is not a permitted transfer under
Section 6.07 of this Article, the Transferring Shareholder shall give the
Corporation at least thirty (30) days' prior written notice of the proposed
transfer (the "TRANSFER NOTICE"). Unless the Corporation agrees in writing to
another method of delivery, the Transfer Notice shall be delivered by registered
or certified mail, postage prepaid and return receipt requested, or delivered
personally to the Corporation's Secretary at the Corporation's principal
executive office specified in Section 1.01 of these Bylaws or to such other
principal executive office for the Corporation that the Board of Directors may
adopt and announce from time to time.

     The Transfer Notice shall set forth in reasonable detail the terms and
conditions of the proposed transfer, including, without limitation, (i) the
identity of the proposed transferee (who must in any case be a bona fide
transferee with respect to whom the transfer is permissible under applicable
federal and state securities laws), (ii) the number of shares proposed to be
transferred, (iii) the purchase price per share, (iv) the terms of payment, (v)
the date of the proposed transfer, and (vi) a statement by the Transferring
Shareholder that he or she has entered into a legally binding agreement (subject
to compliance with these Bylaws) with the proposed transferee with respect to
the transfer of the shares on the terms described in the Transfer Notice. The
Transferring Shareholder shall be liable to the Corporation if the Transfer
Notice contains any intentional or grossly negligent misstatements or omissions.

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     For purposes of this Article VI, a "transfer" of shares shall be deemed to
include a proposed transfer or issuance of more than fifty percent (50%) of the
outstanding stock or other equity ownership interests of any shareholder of the
Corporation that is a corporation, a partnership, a limited liability company or
another form of entity, and the Right of First Refusal shall apply to any such
proposed transaction. In that event, the Transferring Shareholder shall be
deemed to have offered to sell a number of shares of the Corporation's stock
equal to the number of shares owned by the Transferring Shareholder multiplied
by the percentage of the Transferring Shareholder's stock or other equity
ownership interests that are the subject of the proposed transaction.

     SECTION 6.03  Purchase of Shares by the Corporation. The Corporation shall
have the right, but not the obligation, to elect to purchase from the
Transferring Shareholder all, but not less than all, of the shares of stock that
the Transferring Shareholder proposes to transfer and that are described in the
Transfer Notice. Within thirty (30) days after its receipt of the Transfer
Notice, the Corporation shall notify the Transferring Shareholder in writing as
to whether the Corporation has elected to purchase all of the shares that are
described in the Transfer Notice. Failure by the Corporation to give a timely
notice shall be deemed an election not to purchase all of such shares. Delivery
by the Corporation of a timely purchase election shall constitute a binding
purchase agreement between the Transferring Shareholder and the Corporation. The
Corporation shall not be entitled to elect to purchase fewer than all of the
shares that are the subject of the proposed transfer. Notices by the Corporation
to the Transferring Shareholder shall be delivered in the manner specified in
Section 2.02 of these Bylaws.

     SECTION 6.04  Purchase Terms. Except as provided in this Section 6.04 or in
Section 6.05 of this Article, the Transferring Shareholder's shares that are the
subject of the proposed transfer shall be purchased by the Corporation for the
same purchase price and other payment terms that are described in the Transfer
Notice. If the Transfer Notice provides for the use of promissory notes or other
non-cash consideration, the Corporation at its option may specify that the
purchase price will be paid by it in cash in an amount equal to the Board of
Directors' good faith estimate of the present fair market value of such non-cash
consideration. If the Transfer Notice does not describe any purchase price for
the shares that the Transferring Shareholder proposes to transfer because the
transfer is a gift, an involuntary transfer or any other form of transfer that
does not involve a purchase price for the shares that are the subject of the
proposed transfer, the Corporation shall pay a cash purchase price equal to the
Board of Directors' good faith estimate of the present fair market value or book
value of such shares, whichever is greater.

     SECTION 6.05  Closing of the Purchase. The Corporation shall select the
date of the closing of the purchase and sale of the Transferring Shareholder's
shares of stock that are to be purchased as a result of the exercise of the
Right of First Refusal described in this Article by providing at least ten (10)
days' written notice thereof to the Transferring Shareholder, provided, however,
that the Corporation shall select a closing date that is no later than the
fortieth (40th) day after its receipt of the Transfer Notice from the
Transferring Shareholder unless the Corporation and the Transferring Shareholder
agree to extend the closing date.

     The Corporation shall deliver to the Transferring Shareholder a check in
the amount of the purchase price of the shares purchased by the Corporation.
However, if the transferee identified in the Transfer Notice from the
Transferring Shareholder proposes to deliver promissory notes or another form of
non-cash consideration and if the Corporation does not elect pursuant to Section
6.04 of this Article above to pay cash equal to the present fair market value of
such non-cash consideration, then the Corporation shall deliver such non-cash
consideration to the Transferring Shareholder. The Transferring Shareholder
shall execute and deliver any stock assignments and other instruments that may
be reasonably requested by the Corporation in order to complete the purchase and
sale of the Transferring Shareholder's shares of stock.

     SECTION 6.06  Transfer of Shares to the Proposed Transferee. If the
Corporation does not make a timely election to purchase all of the shares that
are the subject of the proposed transfer, or if the Corporation defaults on its
election to purchase such shares, the Transferring Shareholder shall have the
right to transfer such shares to the proposed transferee who is identified in
the Transfer Notice, provided that such transaction must be completed within
sixty (60) days after the Transferring Shareholder's

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delivery of the Transfer Notice to the Corporation. The shares must be
transferred on the terms described in the Transfer Notice, and the transferee of
such shares shall be bound by all of these Bylaws (including, without
limitation, this Article VI) with respect to the transferred shares. However,
the transfer shall not be made and shall be of no force or effect unless and
until (i) the Corporation has determined that the transfer will be made in
compliance with any and all applicable federal and state securities laws and
regulations and other applicable laws and regulations, including, without
limitation, the regulations of any national securities exchanges, the National
Association of Securities Dealers, Inc. and any other regulatory bodies having
jurisdiction over the shares and (ii) the Transferring Shareholder and the
proposed transferee, at their expense, have delivered to the Corporation any and
all investment representation certificates and other certificates, legal
opinions and instruments of conveyance, in form and substance satisfactory to
the Corporation, that may be requested by the Corporation for the purpose of
demonstrating that the transfer can be lawfully made without registration or
qualification under applicable federal and state securities laws and regulations
and in order to effect the transfer of the shares to the transferee.
Furthermore, notwithstanding anything to the contrary in these Bylaws: (a) no
individual, person, corporation, partnership, other entity or group within the
meaning of Section 13(d) of the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder may acquire or hold (directly
or indirectly) record or beneficial ownership of more than twenty percent (20%)
of the total outstanding shares of the Corporation's stock, as the term
"beneficial ownership" is used in Rule 13d-3 under the Securities Exchange Act
of 1934, as amended; (b) no shares may be transferred to any individual, person,
corporation, partnership or other entity or group that is described in clause
(a) of this sentence; and (c) without the prior written consent of the Board of
Directors, no shares may be transferred to any individual, person, corporation,
partnership, other entity or group that engages in a business that is in
competition with the Corporation's business.

     SECTION 6.07  Transfers Not Subject to the Right of First Refusal. The
Right of First Refusal shall not apply to a transfer of shares of stock (i) to a
member or members of the Transferring Shareholder's immediate family or (ii) to
an inter vivos trust established for the sole and exclusive benefit of the
Transferring Shareholder and/or a member or members of the Transferring
Shareholder's immediate family. The transferee(s) of such shares shall be bound
by all of these Bylaws (including, without limitation, this Article VI) with
respect to the transferred shares. Furthermore, within ten (10) days after the
effective date of such transfer, the Transferring Shareholder (or his or her
legal representative) shall advise the Secretary of the Corporation in writing
of the details of such transfer and shall provide written documentation to the
Corporation demonstrating that such transfer satisfies the terms and conditions
of this Section 6.07. For purposes of this Section 6.07, the term "immediate
family" means a shareholder's spouse, children, grandchildren, parents, brothers
and sisters.

     SECTION 6.08  Transfers of Shares in Violation of the Bylaws. Any sale or
other transfer of shares of the Corporation's stock (including any agreement to
sell or transfer shares) that is made in violation of the terms and conditions
of this Article VI shall be null and void for all purposes, and the Corporation
shall not be required to transfer on its books any shares that are the subject
of any such sale or transfer.

     SECTION 6.09  Legends on Certificates. All certificates that represent
shares of the Corporation's stock shall have endorsed thereon the following
legends:

          (a) "THE SHARES THAT ARE REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
     TO CERTAIN RESTRICTIONS ON TRANSFER AND RIGHTS OF FIRST REFUSAL AS SET
     FORTH IN THE BYLAWS OF THE CORPORATION. A COPY OF THE BYLAWS IS ON FILE AT
     THE PRINCIPAL BUSINESS OFFICE OF THE CORPORATION."

          (b) "THE SHARES THAT ARE REPRESENTED BY THIS CERTIFICATE MAY NOT BE
     SOLD, OFFERED FOR SALE, ASSIGNED, HYPOTHECATED OR OTHERWISE TRANSFERRED
     UNLESS SUCH TRANSFER IS REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF
     1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS COVERING SUCH SHARES
     OR UNLESS THE CORPORATION RECEIVES AN

                                       C-14
   99

     OPINION OF COUNSEL OR OTHER EVIDENCE SATISFACTORY TO THE CORPORATION TO THE
     EFFECT THAT SUCH REGISTRATION AND QUALIFICATION ARE NOT REQUIRED."

          (c) Any other legends required to be placed thereon by federal or
     state securities laws or authorities.

     SECTION 6.10  Termination of the Right of First Refusal. The Right of First
Refusal described in this Article VI shall terminate if and when the Board of
Directors or the Corporation's shareholders adopt an amendment to the Bylaws
which deletes this Article VI from the Bylaws or which otherwise terminates the
Right of First Refusal.

                         ARTICLE VII -- INDEMNIFICATION

     SECTION 7.01  Indemnification of Directors. The Corporation shall, to the
maximum extent permitted by applicable law but subject to the terms and
conditions of any indemnification agreement that may be entered into between the
director and the Corporation, indemnify each of its directors against expenses
(as defined in Section 317(a) of the California Corporations Code), judgments,
fines, settlements and other amounts actually and reasonably incurred by such
director in connection with any proceeding (as defined in Section 317(a) of the
California Corporations Code) arising by reason of the fact that such director
(i) is or was a director of the Corporation, (ii) was a director of the
Corporation's predecessor, Calavo Growers of California, a California nonprofit
cooperative association, or (iii) is or was serving at the request of the
Corporation as a director of another foreign or domestic corporation,
partnership, joint venture, trust or other enterprise. For purposes of this
Article VII, a "director" includes any person who is or was a director of the
Corporation.

     SECTION 7.02  Indemnification of Officers, Employees and Other Agents. In
addition to the indemnification that is required to be provided to directors of
the Corporation under Section 7.01 of this Article, the Corporation shall have
the power, to the extent and in the manner permitted by applicable law, to
indemnify each of its officers, employees and other agents against expenses,
judgments, fines, settlements and other amounts actually and reasonably incurred
in connection with any proceeding arising by reason of the fact that such person
is or was an officer, employee or other agent of the Corporation. For purposes
of this Article VII, an "employee," "officer" or "agent" of the Corporation
includes any person (i) who is or was an officer, employee or other agent of the
Corporation, (ii) who is or was serving at the request of the Corporation as a
director, officer, employee or other agent of another foreign or domestic
corporation, partnership, joint venture, trust or other enterprise, or (iii) who
was an officer, employee or other agent of Calavo Growers of California or of
another enterprise at the request of Calavo Growers of California.

     SECTION 7.03  Advance of Expenses. Attorneys' fees and other expenses
incurred in defending any proceeding may be advanced by the Corporation prior to
the final disposition of such proceeding upon receipt of an undertaking by or on
behalf of the indemnified party to repay such amounts if it shall ultimately be
determined that the indemnified party is not entitled to be indemnified as
authorized or provided by this Article VII.

     SECTION 7.04  Indemnification Not Exclusive. The indemnification authorized
or provided by this Article VII shall not be deemed exclusive of any other
rights to which those seeking indemnification may be entitled under any Bylaw,
agreement, vote of shareholders or directors or otherwise, both as to action in
an official capacity and as to action in another capacity while holding such
office. The rights to indemnification hereunder shall continue as to a person
who has ceased to be a director, officer, employee or other agent and shall
inure to the benefit of the heirs, executors and administrators of such person.

     SECTION 7.05  Insurance. The Corporation shall have the power to purchase
and maintain insurance on behalf of any person who is or was a director,
officer, employee or other agent of the Corporation against any liability
asserted against or incurred by such person in such capacity or arising out of
that

                                       C-15
   100

person's status as such, whether or not the Corporation would have the power to
indemnify that person against such liability under the provisions of this
Article VII.

     SECTION 7.06  Conflicts. No indemnification or advance shall be made under
this Article VII, except where such indemnification or advance is mandated by
law or the order, judgment or decree of any court of competent jurisdiction, in
any circumstance where it appears:

          (a) That it would be inconsistent with a provision of the
     Corporation's Articles of Incorporation, these Bylaws, a resolution of the
     shareholders or an agreement in effect at the time of the accrual of the
     alleged cause of action asserted in the proceeding in which the expenses
     were incurred or other amounts were paid which prohibits or otherwise
     limits indemnification; or

          (b) That it would be inconsistent with any condition expressly imposed
     by a court in approving a settlement.

     SECTION 7.07  Indemnification Agreements. Notwithstanding anything to the
contrary in this Article VII, the Corporation is authorized to enter into a
contract with any director, officer, employee or other agent of the Corporation
(or with any person who is or was serving at the request of the Corporation as a
director, officer, employee or other agent of another corporation, partnership,
joint venture, trust or other enterprise, including employee benefit plans, or
any person who was a director, officer, employee or agent of a corporation which
was a predecessor corporation of the Corporation or of another enterprise at the
request of such predecessor corporation) which provides for indemnification
rights equivalent to or, if the Board of Directors so determines and to the
extent permitted by applicable law, greater than those provided for in this
Article VII.

     SECTION 7.08  Amendment, Repeal or Modification. No amendment, repeal or
modification of any provision of this Article VII shall adversely affect any
right or protection of any director, officer, employee or other agent of the
Corporation which exists at the time of such amendment, repeal or modification.

                           ARTICLE VIII -- AMENDMENTS

     SECTION 8.01  Power of Shareholders. New Bylaws may be adopted or these
Bylaws may be amended or repealed by the affirmative vote or written consent of
a majority of the outstanding shares entitled to vote, except as may be
specifically set forth in the Articles of Incorporation or these Bylaws to the
contrary.

     SECTION 8.02  Power of Directors. Subject to the right of the shareholders
as provided in Section 8.01 of this Article to adopt, amend or repeal these
Bylaws, Bylaws other than a Bylaw or amendment thereof changing the authorized
number of directors may be adopted, amended or repealed by the affirmative vote
of at least seventy-five percent (75%) of the authorized number of directors.
The adoption of a resolution by the Board of Directors that fixes the exact
number of directors within the authorized range of directors specified in
Section 3.02 of these Bylaws shall not be considered an amendment of these
Bylaws.

                                       C-16
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                                                                      APPENDIX D

                              CALAVO GROWERS, INC.

                              MARKETING AGREEMENT

GROWER'S NAME
GROWER'S ADDRESS
GROWER'S TAXPAYER I.D. NUMBER
GROWER'S ELECTION: ____ MONTHLY OR ____ WEEKLY POOL
EFFECTIVE DATE OF AGREEMENT
GROVE LOCATION
NUMBER OF TREES ____________

     This Marketing Agreement (the "Agreement") is entered into by and between
the above-named grower (the "Grower") and Calavo Growers, Inc. ("Calavo"), a
California corporation whose address is 2530 Red Hill Avenue, Santa Ana,
California 92705-5542. The effective date of this Agreement is specified above.
However, if this Agreement is being executed by the parties prior to the merger
of Calavo Growers of California, a California nonprofit cooperative association,
into Calavo, the effective date of this Agreement will be the date on which the
merger occurs. Calavo will advise the Grower of the date of the merger, and
neither party will have any obligations under this Agreement until the merger
occurs.

     The Grower represents that it is the producer of California avocados.
Calavo desires to pack and market these avocados. The following terms are hereby
agreed upon by both parties:

     1. Delivery

     The Grower will deliver to Calavo all of the avocados grown by the Grower
on the grove listed above and on all other land now or hereafter owned by the
Grower or in the Grower's possession as tenant, except avocados that are
retained for the Grower's personal use or consumption and except avocados of
such varieties that Calavo notifies the Grower are not economical to handle
because of the character, quantity or marketability of the fruit. Except as
described in the preceding sentence, Calavo will market, when and where
feasible, all of the avocados grown by the Grower.

     Delivery of the avocados will be made at the Grower's expense and risk of
loss and at the time and place and in the manner reasonably specified by the
Grower, including, without limitation, through the Grower's right to require
Calavo to obtain possession of the avocados at the Grower's grove. Title to the
avocados will pass to Calavo only on the date that it obtains actual possession
of the avocados.

     Calavo has the right to inspect the Grower's groves for crop estimating and
harvesting purposes during reasonable hours. The Grower will assist Calavo in
preparing an annual crop forecast. Calavo has full control of grading, sizing
and weight standards. The Grower will comply with all applicable laws and
regulations regarding the production, harvesting and delivery of the avocados.

     2. Term

     The term of this Agreement will be for one year from the effective date and
will automatically renew on a year-to-year basis unless either party gives
written notice of termination of this Agreement at least thirty days prior to
the applicable anniversary of the effective date. Calavo may also terminate this
Agreement upon written notice to the Grower if the Grower is in breach of this
Agreement and fails to correct the breach within ten days after receipt of
written notice of the breach from Calavo. If the Grower engages in a bona fide
sale or lease to a third party of the grove(s) that is subject to this
Agreement, this Agreement will terminate as to such grove(s) on the effective
date of the sale or lease if (i) the Grower provides Calavo with satisfactory
written evidence of the bona fide nature of the sale or lease and (ii) all of
the Grower's obligations hereunder have been satisfied prior to the sale or
lease (including the obligation to deliver all avocados harvested prior to the
sale or lease). Subject to the preceding sentence,
                                       D-1
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this Agreement is binding upon the successors and assigns of the Grower and
Calavo, although neither party has the right to assign its obligations to
another person or entity. No termination of this Agreement will release either
party from liability for breaches of this Agreement, and the provisions
described below in Sections 4 and 7 to 9 will survive the termination of this
Agreement.

     3. Marketing

     Calavo will receive, pack, market and sell the avocados delivered by the
Grower, at such prices and terms, in such form, and at such times as in its
judgment and discretion it deems best, and will pay the Grower as payment in
full the net proceeds received from the marketing of the avocados less a packing
and marketing fee established by its Board of Directors. The packing and
marketing fee will include, but is not limited to, the costs of receiving,
processing, manufacturing, handling, transporting, advertising, promoting, and
other costs of marketing and administrative costs, and will also include a
profit to Calavo. The avocados may be pooled in one or more pools established by
the Board of Directors and will not be identified to the Grower once they are
graded. Packing and marketing of the avocados will be under the exclusive
control of Calavo.

     4. Liens

     Calavo is hereby given a first lien upon all sales proceeds as security for
any and all amounts of any nature owed by the Grower to Calavo, and Calavo may
offset amounts due Calavo against amounts owed to the Grower under this
Agreement. Such rights of Calavo will not be barred by the running of any
statute of limitations, and such rights may be subordinated by appropriate
written instructions when authorized by the Board of Directors in its sole
discretion. The Grower will execute and deliver any documents requested by
Calavo to implement or perfect its rights under this Agreement.

     5. Labor

     Calavo will have no control whatsoever over the labor relations policies or
conduct or direction of labor relations of the Grower, nor will the Grower have
any control over Calavo's labor policies.

     6. Consignment

     The Grower acknowledges that Calavo may reconsign the avocados to another
party.

     7. Notices; Entire Agreement; Severability

     All notices to either the Grower or Calavo will be delivered in writing,
either personally, by facsimile transmission or by registered, certified or
express mail, return receipt requested, postage prepaid, to the address for such
party specified above or to such other address as the party may from time to
time advise the other party, and will be deemed given and received as of actual
personal delivery, on the first business day after the date of delivery shown on
any such facsimile transmission or upon the third business day after deposit in
the U.S. Mail if registered, certified or express mail is used, as the case may
be.

     This Agreement constitutes the entire agreement of the Grower and Calavo
regarding the subject matter hereof and supersedes all prior agreements and
understandings pertaining to such subject matter. This Agreement may be amended
only by a writing signed by the Grower and Calavo.

     If any provision of this Agreement is determined by a duly appointed
arbitrator or a court of competent jurisdiction to be invalid or unenforceable,
the remaining provisions of this Agreement shall continue in full force and
effect.

     8. Remedies for Grower's Breach

     The Grower's failure to deliver avocados as required by this Agreement will
result in injury to Calavo, and it would be extremely difficult and
impracticable to fix the amount of damages that Calavo will incur. Therefore,
the Grower agrees to pay to Calavo, upon Calavo's demand, the following amounts
as liquidated
                                       D-2
   103

damages for all avocados that are withheld, delivered, sold, consigned or
otherwise marketed by or for the Grower other than in accordance with the terms
of this Agreement:

          (a) $1,000; plus

          (b) An amount equal to Calavo's packing and marketing fee per pound of
     avocados that is in effect as of the date of the Grower's breach of this
     Agreement, multiplied by the pounds of avocados that were withheld,
     delivered, sold, consigned or otherwise marketed by or for the Grower other
     than in accordance with the terms of this Agreement.

     The foregoing right to recover liquidated damages is in addition to all
other remedies available to Calavo under applicable law including, without
limitation, the right to obtain injunctive relief, and all such remedies are
cumulative and not exclusive.

     9. Governing Law; Enforcement of Agreement

     This Agreement is governed by the internal laws of the State of California.
All disputes concerning this Agreement will be settled by arbitration, before
one arbitrator, in accordance with the commercial arbitration rules of the
American Arbitration Association then in effect. The arbitrator will be selected
in accordance with such commercial arbitration rules. A party is entitled to
initiate an arbitration proceeding if a dispute cannot be resolved amicably
within ten days after the other party has been notified of the existence of the
dispute. The arbitrator is authorized to grant injunctive relief and/or specific
performance in addition to monetary relief. The arbitrator hereby is instructed
to interpret and enforce this Agreement in accordance with its terms. All
arbitration proceedings will be held in Los Angeles, California. Notwithstanding
the foregoing, each party is entitled to bring an action for temporary or
preliminary injunctive relief at any time in any court of competent jurisdiction
in order to prevent immeasurable and irreparable injury that might result from a
breach of this Agreement that occurs prior to the conclusion of an arbitration
proceeding.

     The award of the arbitrator in any arbitration proceeding will be final and
may be enforced in any court of competent jurisdiction, and an action to compel
arbitration may be brought in any court of competent jurisdiction. The
unsuccessful party to any arbitration proceeding or to any court action that is
permitted by this Agreement will pay to the successful party all costs and
expenses, including, without limitation, reasonable attorneys' fees and the fees
of the arbitrator, incurred therein by the successful party. EACH PARTY AGREES
THAT ALL RIGHTS TO A TRIAL BY A JURY OF ANY CLAIM CONCERNING THIS AGREEMENT ARE
ABSOLUTELY AND FOREVER WAIVED.

DATED:  ________________________________  CALAVO GROWERS, INC.

                                          By:

                                          Title:

                                          [Name of Grower]

                                          By:

                                          Title:

                                       D-3
   104

                                                                      APPENDIX E

                          CALAVO GROWERS OF CALIFORNIA

                                BYLAWS AMENDMENT
                      RESOLUTION OF THE BOARD OF DIRECTORS

     RESOLVED, that the Bylaws of Calavo Growers of California hereby are
amended by adding the following paragraph to Section 7.08 of the Bylaws:

     (c) Notwithstanding anything to the contrary in these Bylaws, (i) the
         Association's Marketing Agreement with each member automatically shall
         terminate on the effective date of the Association's merger with Calavo
         Growers, Inc., a California corporation, and (ii) the membership of
         each member in the Association automatically shall terminate on the
         effective date of the merger. The effective date of the merger shall be
         the date that an agreement of merger between the Association and Calavo
         Growers, Inc. is filed with the Secretary of State of the State of
         California.

                                       E-1
   105

                                    PART II

                   INFORMATION NOT REQUIRED IN THE PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS

     Sections 204 and 317 of the California General Corporation Law authorize
the registrant, Calavo Growers, Inc., to indemnify, subject to the terms and
conditions set forth therein, its directors, officers, employees and other
agents against expenses, judgments, fines, settlements and other amounts that
they may incur in connection with pending, threatened or completed legal actions
or proceedings that are based upon their service as directors, officers,
employees or other agents of the registrant or that are based upon their service
as directors, officers, employees or other agents of certain other specified
entities, including the registrant's predecessor corporation, Calavo Growers of
California. The California General Corporation Law also provides that the
registrant is entitled to purchase indemnification insurance on behalf of any
such director, officer, employee or agent.

     Article VII of the registrant's Bylaws requires the indemnification by the
registrant of each of its directors to the maximum extent permitted by law.
Article VII of the registrant's Bylaws authorizes, but does not require, the
registrant to indemnify its officers, employees and other agents against the
expenses, judgments, fines, settlements and other amounts that are described in
the preceding paragraph.

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

     (a) EXHIBITS

     A list of exhibits that are included as part of this registration statement
is set forth in the Index to Exhibits that immediately precedes such exhibits.

     (b) FINANCIAL STATEMENT SCHEDULES

     The following financial statement schedule is filed with Part II of this
registration statement:

        Schedule II -- Valuation and Qualifying Accounts

     All other schedules have been omitted from this registration statement
because they are not applicable or because the information required by any
applicable schedule is included in the consolidated financial statements or the
notes thereto.

     (c) REPORT, OPINION OR APPRAISAL

     Not applicable.

ITEM 22. UNDERTAKINGS

     (a) The undersigned registrant hereby undertakes:

          (1) To file, during any period in which offers or sales are being
     made, a post-effective amendment to this registration statement:

             (i) To include any prospectus required by Section 10(a)(3) of the
        Securities Act of 1933;

             (ii) To reflect in the prospectus any facts or events arising after
        the effective date of this registration statement (or the most recent
        post-effective amendment thereof) which, individually or in the
        aggregate, represent a fundamental change in the information set forth
        in the registration statement; and

             (iii) To include any material information with respect to the plan
        of distribution not previously disclosed in the registration statement
        or any material change to such information in the registration
        statement.

                                       II-1
   106

          (2) That, for the purpose of determining any liability under the
     Securities Act of 1933, each such post-effective amendment shall be deemed
     to be a new registration statement relating to the securities offered
     therein, and the offering of such securities at that time shall be deemed
     to be the initial bona fide offering thereof.

          (3) To remove from registration by means of a post-effective amendment
     any of the securities being registered which remain unsold at the
     termination of the offering.

     (b) The undersigned registrant hereby undertakes that, prior to any public
reoffering of the securities registered hereunder through use of a prospectus
which is a part of this registration statement by any person or party who is
deemed to be an underwriter within the meaning of Rule 145(c), such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form.

     (c) The undersigned registrant undertakes that every prospectus (i) that is
filed pursuant to paragraph (b) immediately preceding, or (ii) that purports to
meet the requirements of Section 10(a)(3) of the Securities Act of 1933 and is
used in connection with an offering of securities subject to Rule 415, will be
filed as a part of an amendment to the registration statement and will not be
used until such amendment is effective, and that, for purposes of determining
any liability under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.

     (d) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

     (e) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this Form S-4 within one business day of receipt of
such request and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.

     (f) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.

                                       II-2
   107

                                   SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Santa Ana, State of
California, on April 23, 2001.

                                          CALAVO GROWERS, INC.

                                          By:       /s/ LECIL E. COLE
                                            ------------------------------------
                                                       Lecil E. Cole
                                            Chairman of the Board of Directors,
                                                Chief Executive Officer and
                                                          President

                               POWER OF ATTORNEY

     Each person whose signature appears below hereby constitutes and appoints
Lecil E. Cole and Egidio Carbone, Jr., and each of them, as his or her true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any and all amendments (including post-effective
amendments) to this registration statement and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or either of them, or
their or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.

     Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on April 23, 2001.

                 SIGNATURE                                         TITLE
                 ---------                                         -----

             /s/ LECIL E. COLE                   Chairman of the Board of Directors, Chief
- --------------------------------------------     Executive Officer and President (Principal
               Lecil E. Cole                                 Executive Officer)

          /s/ EGIDIO CARBONE, JR.                  Vice President, Finance and Corporate
- --------------------------------------------         Secretary (Principal Financial and
            Egidio Carbone, Jr.                             Accounting Officer)

            /s/ GEORGE H. BARNES                                  Director
- --------------------------------------------
              George H. Barnes

           /s/ FRED J. FERRAZZANO                                 Director
- --------------------------------------------
             Fred J. Ferrazzano

              /s/ JOHN M. HUNT                                    Director
- --------------------------------------------
                John M. Hunt

             /s/ ROY V. KEENAN                                    Director
- --------------------------------------------
               Roy V. Keenan

            /s/ J. LINK LEAVENS                                   Director
- --------------------------------------------
              J. Link Leavens

                                       II-3
   108

                 SIGNATURE                                         TITLE
                 ---------                                         -----
                                             
            /s/ EDWARD P. SMITH                                   Director
- --------------------------------------------
              Edward P. Smith

             /s/ ALVA V. SNIDER                                   Director
- --------------------------------------------
               Alva V. Snider

            /s/ DORCAS H. THILLE                                  Director
- --------------------------------------------
              Dorcas H. Thille

           /s/ SCOTT VAN DER KAR                                  Director
- --------------------------------------------
             Scott Van Der Kar

                                       II-4
   109

                                                                     SCHEDULE II

                          CALAVO GROWERS OF CALIFORNIA

                       VALUATION AND QUALIFYING ACCOUNTS

                                                   BALANCE                                      BALANCE
                                                    11/1                                         10/31
                                   FISCAL YEAR    BEGINNING    ADDITIONS(1)    DEDUCTIONS(2)      END
                                   -----------    ---------    ------------    -------------    -------
                                                                                 
Bad Debt Allowances..............    1997/98       $26,000       $ 15,000        $ 38,000       $ 3,000
                                     1998/99         3,000         50,000          51,000         2,000
                                     1999/00         3,000        715,000         669,000        49,000
Reserve for Inventory
  Obsolescence...................    1997/98       $17,000       $ 29,000        $ 17,000       $29,000
                                     1998/99        29,000             --              --        29,000
                                     1999/00        29,000             --              --        29,000

- -------------------------
(1) Charged to costs and expenses

(2) Writeoff of assets

                                       II-5
   110

                    INDEPENDENT AUDITORS' REPORT ON SCHEDULE

To the Board of Directors of
Calavo Growers of California

     We have audited the accompanying consolidated balance sheets of Calavo
Growers of California and subsidiaries (Calavo or the Cooperative) as of October
31, 2000 and 1999, and the related consolidated statements of operations and
member proceeds, shareholders' equity, and cash flows, for each of the three
years in the period ended October 31, 2000 and have issued our report thereon
dated December 14, 2000, except for the second paragraph of Note 14 as to which
the date is February 20, 2001, included elsewhere in this Registration
Statement. Our audits also included the financial statement schedule listed in
Item 21 of this Registration Statement. This financial statement schedule is the
responsibility of the Cooperative's management. Our responsibility is to express
an opinion based on our audits. In our opinion, such financial statement
schedule, when considered in relation to the basic financial statements taken as
a whole, presents fairly in all material respects the information set forth
therein.

/s/ DELOITTE & TOUCHE LLP
- --------------------------------------

Costa Mesa, California
December 14, 2000, except for the
second Paragraph of Note 14, as to
which the date is February 20, 2001.

                                       II-6
   111

                               INDEX TO EXHIBITS

EXHIBIT
NUMBER                            DESCRIPTION
- -------                           -----------
       
 2.1      Agreement and Plan of Merger and Reorganization dated as of
          February 20, 2001 between Calavo Growers, Inc. and Calavo
          Growers of California.
 3.1      Articles of Incorporation of Calavo Growers, Inc.
 3.2      Bylaws of Calavo Growers, Inc.
 5.1      Form of opinion of Troy & Gould Professional Corporation
          with respect to the securities being registered (executed
          copy to be filed by amendment).
 8.1      Form of opinion of Troy & Gould Professional Corporation
          with respect to certain tax matters (executed copy to be
          filed by amendment).
10.1      Form of Marketing Agreement for Calavo Growers, Inc.
10.2      Marketing Agreement dated as of April 1, 1996 between
          Tropical Hawaiian Products, Inc., a Hawaiian corporation,
          and Calavo Growers of California.
10.3      Lease Agreement (undated) between Tede S.A. de C.V., a
          Mexican corporation, and Calavo Foods de Mexico, S.A. de
          C.V., a Mexican corporation, including attached Guaranty of
          Calavo Growers of California dated October 25, 1994.
10.4      Lease Agreement dated as of November 21, 1997, between Tede
          S.A. de C.V., a Mexican corporation, and Calavo de Mexico,
          S.A. de C.V., a Mexican corporation, including attached
          Guaranty of Calavo Growers of California dated December 16,
          1996.
10.5      Lease Intended as Security dated as of September 1, 2000
          between Banc of America Leasing & Capital, LLC, a Delaware
          limited liability company, and Calavo Growers of California.
10.6      Business Loan Agreement dated as of April 20, 1999 between
          Bank of America National Trust and Savings Association and
          Calavo Growers of California.
10.7      Amendment No. 2 to Business Loan Agreement (undated) between
          Bank of America N.A. (formerly Bank of America National
          Trust and Savings Association) and Calavo Growers of
          California.
10.8      Loan Agreement dated as of September 1, 1985 between the
          Riverside County Industrial Development Authority and Calavo
          Growers of California relating to variable rate demand
          industrial development revenue bonds.
10.9      Reimbursement Agreement dated as of September 1, 1985
          between Security Pacific National Bank and Calavo Growers of
          California.
10.10     Amendment No. Two to Reimbursement Agreement dated as of
          August 22, 1995 between Bank of America National Trust and
          Savings Association (as successor to Security Pacific
          National Bank) and Calavo Growers of California.
10.11     Amendment No. Three to Reimbursement Agreement dated as of
          October 18, 2000 between Bank of America, N.A. (formerly
          Bank of America National Trust and Savings Association) and
          Calavo Growers of California.
10.12     Master Loan Agreement dated as of June 15, 2000 between
          CoBank, ACB and Calavo Growers of California, including
          attached Revolving Credit Supplement dated June 15, 2000
          between CoBank, ACB and Calavo Growers of California.
10.13     Calavo Supplemental Executive Retirement Agreement dated
          March 11, 1989 between Egidio Carbone, Jr. and Calavo
          Growers of California.
10.14     Amendment to the Calavo Growers of California Supplemental
          Executive Retirement Agreement dated November 9, 1993
          between Egidio Carbone, Jr. and Calavo Growers of
          California.
21.1      Subsidiaries of Calavo Growers of California.
23.1      Consents of Troy & Gould Professional Corporation (included
          in the opinions filed as Exhibits 5.1 and 8.1).
23.2      Consent of Deloitte & Touche LLP.
24.1      Powers of Attorney to execute amendments to this
          Registration Statement (included on the signature pages of
          this Registration Statement).
99.1      Form of Ballot of Calavo Growers of California.

   112

EXHIBIT
NUMBER                            DESCRIPTION
- -------                           -----------
       
99.2      Restated Articles of Incorporation of Calavo Growers of
          California.
99.3      Bylaws (including Marketing Agreement) of Calavo Growers of
          California, as amended to date.

   1

                                                                  EXHIBIT 2.1

                AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

     This Agreement and Plan of Merger and Reorganization (the "Agreement") is
entered into as of February 20, 2001 between Calavo Growers of California
("Calavo"), a nonprofit cooperative association that is organized under the
California Food and Agricultural Code, and Calavo Growers, Inc. ("New Calavo"),
a corporation that is organized under the California General Corporation Law
(the "California Corporation Law").

                                    RECITALS

     A. Calavo's Board of Directors has determined that it is in the best
interests of Calavo and its shareholders to convert Calavo into a corporation
that is organized under and governed by the California Corporation Law. New
Calavo is a wholly owned subsidiary of Calavo, and Calavo has approved this
Agreement as the sole shareholder of New Calavo.

     B. The Boards of Directors of Calavo and New Calavo have approved this
Agreement and intend that this Agreement shall constitute a plan of
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1968, as amended. Pursuant to this Agreement, Calavo shall be merged into New
Calavo, and New Calavo shall continue as the surviving corporation.

     NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, Calavo and New Calavo hereby agree as follows:

     1. The Merger. At the Effective Time (as defined below), Calavo shall be
merged into New Calavo (the "Merger") upon the terms and conditions described in
this Agreement and in accordance with the California Corporation Law. The Merger
shall become effective on such date and at such time (jointly referred to herein
as the "Effective Time") as a short-form agreement of merger substantially in
the form of Exhibit A attached hereto and incorporated herein, together with all
officers' certificates that are required under the California Corporation Law,
are filed by Calavo and New Calavo with the California Secretary of State
pursuant to the California Corporation Law as promptly as practicable after the
satisfaction or waiver (where permissible) of the closing conditions that are
described below in Section 6.

     2. Effect of the Merger. At the Effective Time, the separate existence of
Calavo shall terminate, and New Calavo shall continue as the surviving
corporation. The Merger shall have the effect prescribed by the California
Corporation Law. Without limiting the generality of the preceding sentence, at
the Effective Time New Calavo automatically shall succeed to all of the rights
and properties of Calavo and shall be subject to all of the debts and
liabilities of Calavo in the same manner as if New Calavo had itself incurred
them.

     3. Articles of Incorporation and Bylaws of New Calavo. The Articles of
Incorporation and Bylaws of New Calavo that are in effect immediately prior to
the Effective Time shall remain in effect after the Merger unless and until they
are subsequently amended as provided by applicable law.

     4. Officers and Directors. Each officer and director of New Calavo shall
continue to hold office after the Merger until his or her successor is duly
elected or until his or her earlier death, resignation or removal.

     5. Conversion of Shares. At the Effective Time:

          (a) Each share of the preferred stock and common stock of Calavo that
     is outstanding immediately prior to the Effective Time automatically shall
     be converted into one share of the common stock of New Calavo without the
     necessity for further action on the part of the holder of such share; and

                                       1
   2

          (b) Each share of the common stock of New Calavo that is outstanding
     immediately prior to the Effective Time shall be cancelled without payment
     of any consideration therefor.

     6. Closing Conditions. The Merger shall occur as promptly as practicable
after the satisfaction of each of the following conditions, provided, however,
that any of the following conditions may be waived by a writing executed by
Calavo and New Calavo if and to the extent that such waiver is permitted by
applicable law:

          (a) This Agreement and the transactions contemplated hereby shall have
     been approved by Calavo's shareholders;

          (b) The Registration Statement on Form S-4 that has been filed with
     the Securities and Exchange Commission regarding the shares of common stock
     that New Calavo will issue in the Merger shall have become effective and
     shall not be subject to any stop order suspending its effectiveness or to
     any proceeding seeking a stop order;

          (c) All permits, consents and approvals that are required from the
     California Department of Corporations and other applicable state securities
     regulatory authorities regarding the offer and sale of New Calavo common
     stock in the Merger shall have been obtained;

          (d) Calavo shall have obtained all necessary consents to the Merger
     from its lenders and any other parties whose consents are required under
     contracts to which Calavo is a party; and

          (e) There shall not be in effect any judgment, regulation, order or
     injunction of any court or governmental authority that prohibits the
     Merger.

     7. Further Assurances. Calavo and New Calavo shall take such further
actions and execute such further documents as may be necessary or advisable in
order to carry out the terms of this Agreement.

     8. Amendment and Termination. This Agreement (including Exhibit A hereto)
may be amended by a writing executed by Calavo and New Calavo at any time prior
to the Effective Time. However, after the approval of Calavo's shareholders has
been obtained, no amendment of this Agreement that changes its principal terms
may be made without the further approval of such shareholders. This Agreement
may be terminated by action of the Board of Directors of Calavo at any time
prior to the Effective Time, whether before or after shareholder approval has
been obtained.

     9. Counterparts. This Agreement may be executed in two counterparts, each
of which shall be deemed an original but both of which shall constitute one and
the same instrument.

     10. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of California without giving
effect to the conflict of law principles of such state.

                                       2
   3

     IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.

                                          CALAVO GROWERS OF CALIFORNIA

                                          By:       /s/ LECIL E. COLE
                                            ------------------------------------
                                                       Lecil E. Cole
                                             Chairman, Chief Executive Officer
                                                        and President

                                          By:    /s/ EGIDIO CARBONE, JR.
                                            ------------------------------------
                                                    Egidio Carbone, Jr.
                                                Vice President, Finance and
                                                     Corporate Secretary

                                          CALAVO GROWERS, INC.

                                          By:       /s/ LECIL E. COLE
                                            ------------------------------------
                                                       Lecil E. Cole
                                             Chairman, Chief Executive Officer
                                                        and President

                                          By:    /s/ EGIDIO CARBONE, JR.
                                            ------------------------------------
                                                    Egidio Carbone, Jr.
                                                Vice President, Finance and
                                                     Corporate Secretary

                                       3
   4

                                   EXHIBIT A

                              AGREEMENT OF MERGER

     This Agreement of Merger (the "Agreement") is entered into as of February
20, 2001 between Calavo Growers of California, a nonprofit cooperative
association that is organized under the California Food and Agricultural Code
(the "Merging Corporation"), and Calavo Growers, Inc., a corporation that is
organized under the California General Corporation Law (the "Surviving
Corporation").

     1. The Merging Corporation shall be merged into the Surviving Corporation.
The effect of the merger and the effective time of the merger are as prescribed
by applicable law.

     2. At the effective time of the merger, (i) each outstanding share of the
preferred stock and common stock of the Merging Corporation shall be converted
into one share of the common stock of the Surviving Corporation, and (ii) each
outstanding share of the stock of the Surviving Corporation shall be cancelled
without payment of any consideration therefor.

     3. The Articles of Incorporation and Bylaws of the Surviving Corporation
that are in effect immediately prior to the effective time of the merger shall
remain in effect after the merger unless and until they are subsequently amended
as provided by applicable law.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement.

                                          CALAVO GROWERS OF CALIFORNIA

                                          By:       /s/ LECIL E. COLE
                                            ------------------------------------
                                                       Lecil E. Cole
                                             Chairman, Chief Executive Officer
                                                        and President

                                          By:    /s/ EGIDIO CARBONE, JR.
                                            ------------------------------------
                                                    Egidio Carbone, Jr.
                                                         Secretary

                                          CALAVO GROWERS, INC.

                                          By:       /s/ LECIL E. COLE
                                            ------------------------------------
                                                       Lecil E. Cole
                                             Chairman, Chief Executive Officer
                                                        and President

                                          By:    /s/ EGIDIO CARBONE, JR.
                                            ------------------------------------
                                                    Egidio Carbone, Jr.
                                                         Secretary

                                       4
   1

                                                                 EXHIBIT 3.1

                           ARTICLES OF INCORPORATION
                                       OF
                              CALAVO GROWERS, INC.

                                   ARTICLE I

     The name of this corporation is Calavo Growers, Inc. (the "Corporation").

                                   ARTICLE II

     The purpose of the Corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
California other than the banking business, the trust company business or the
practice of a profession permitted to be incorporated by the California
Corporations Code.

                                  ARTICLE III

     The name and address in the State of California of the Corporation's
initial agent for service of process is: Egidio Carbone; 2530 Red Hill Avenue;
Santa Ana, California 92705-5542.

                                   ARTICLE IV

     The Corporation is authorized to issue only one class of stock, which shall
be designated common stock with a par value of $0.001 per share. The total
number of shares that the Corporation is authorized to issue is One Hundred
Million (100,000,000).

                                   ARTICLE V

     (a) The liability of the directors of the Corporation for monetary damages
shall be eliminated to the fullest extent permissible under California law.

     (b) The Corporation is authorized to provide indemnification of its agents
(as such term is defined in Section 317 of the California Corporations Code),
whether by bylaw, agreement, vote of shareholders or disinterested directors, or
otherwise, to the fullest extent permissible under California law.

     (c) Any amendment of this Article V shall not adversely affect any right or
protection of an agent of the Corporation existing at the time of such
amendment.

                                   ARTICLE VI

     Each of the following actions shall require the approval of at least
seventy-five percent (75%) of the authorized number of directors that is set
forth or established in accordance with the Corporation's Bylaws:

          (a) The issuance by the Corporation of any shares of stock or of any
     options, warrants or other rights to acquire shares of stock;

          (b) The amendment of these Articles of Incorporation, provided,
     however, that any approval of the Corporation's shareholders that is
     required by applicable law shall also be obtained in order for such
     amendment to be effective; or

                                       1
   2

          (c) The adoption, amendment or repeal by the Corporation's Board of
     Directors of any Bylaws, provided, however, that the Corporation's
     shareholders shall also be entitled to adopt, amend or repeal Bylaws by the
     affirmative vote or written consent of a majority of the outstanding shares
     entitled to vote.

                                                  /s/ MARC L. BROWN
Dated: January 4, 2001                    --------------------------------------
                                                      Marc L. Brown,
                                                       Incorporator

                                       2
   1

                                                                     EXHIBIT 3.2

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

                                     BYLAWS
                                       OF

                             CALAVO GROWERS, INC.,
                            A CALIFORNIA CORPORATION

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
   2

                               TABLE OF CONTENTS

                                                              PAGE
                                                              ----
                                                           
ARTICLE I -- OFFICES........................................   1
  Section 1.01  Principal Office............................   1
  Section 1.02  Other Offices...............................   1
ARTICLE II -- MEETINGS OF SHAREHOLDERS......................   1
  Section 2.01  Place of Meetings...........................   1
  Section 2.02  Annual Meetings.............................   1
  Section 2.03  Special Meetings............................   1
  Section 2.04  Adjourned Meetings and Notice Thereof.......   2
  Section 2.05  Entry of Notice of Delivery.................   2
  Section 2.06  Voting by Shareholders; Director
                Nominations; Cumulative Voting
                for Directors...............................   2
  Section 2.07  Quorum......................................   3
  Section 2.08  Consent of Absentees........................   3
  Section 2.09  Action Without Meeting......................   3
  Section 2.10  Proxies.....................................   4
  Section 2.11  Districts...................................   4
ARTICLE III -- DIRECTORS....................................   4
  Section 3.01  Powers; Committees of Directors, Including
                Executive Committee and Nominating
                Committee...................................   4
  Section 3.02  Number and Qualifications of Directors......   5
  Section 3.03  Election and Term of Office.................   6
  Section 3.04  Vacancies...................................   6
  Section 3.05  Place of Meeting............................   6
  Section 3.06  Organizational Meeting......................   6
  Section 3.07  Other Regular Meetings......................   7
  Section 3.08  Special Meetings............................   7
  Section 3.09  Notice of Adjournment.......................   7
  Section 3.10  Entry of Notice.............................   7
  Section 3.11  Waiver of Notice............................   7
  Section 3.12  Quorum......................................   7
  Section 3.13  Adjournment.................................   8
  Section 3.14  Action Without Meeting......................   8
  Section 3.15  Fees and Compensation.......................   8
ARTICLE IV -- OFFICERS......................................   8
  Section 4.01  Officers....................................   8
  Section 4.02  Elections...................................   8
  Section 4.03  Subordinate Officers........................   8
  Section 4.04  Removal and Resignation.....................   8
  Section 4.05  Vacancies...................................   8
  Section 4.06  Chairman of the Board.......................   9
  Section 4.07  Chief Executive Officer.....................   9
  Section 4.08  President...................................   9
  Section 4.09  Vice President..............................   9
  Section 4.10  Secretary...................................   9
  Section 4.11  Chief Financial Officer.....................   9
ARTICLE V -- MISCELLANEOUS..................................  10
  Section 5.01  Record Date.................................  10
  Section 5.02  Inspection of Corporate Records.............  10
  Section 5.03  Checks, Drafts and Notes....................  10
  Section 5.04  Seal........................................  10

                                        i
   3

                                                              PAGE
                                                              ----
                                                           
  Section 5.05  Financial Reports...........................  11
  Section 5.06  Execution of Documents......................  11
  Section 5.07  Certificates of Stock.......................  11
  Section 5.08  Representation of Shares of Other
                Corporations................................  12
  Section 5.09  Inspection of Bylaws........................  12
ARTICLE VI -- RESTRICTIONS ON TRANSFER OF SHARES............  12
  Section 6.01  Corporation's Right of First Refusal........  12
  Section 6.02  Notice to the Corporation of the Proposed
                Transfer....................................  12
  Section 6.03  Purchase of Shares by the Corporation.......  13
  Section 6.04  Purchase Terms..............................  13
  Section 6.05  Closing of the Purchase.....................  13
  Section 6.06  Transfer of Shares to the Proposed
                Transferee..................................  13
  Section 6.07  Transfers Not Subject to the Right of First
                Refusal.....................................  14
  Section 6.08  Transfers of Shares in Violation of the
                Bylaws......................................  14
  Section 6.09  Legends on Certificates.....................  14
  Section 6.10  Termination of the Right of First Refusal...  15
ARTICLE VII -- INDEMNIFICATION..............................  15
  Section 7.01  Indemnification of Directors................  15
  Section 7.02  Indemnification of Officers, Employees and
                Other Agents................................  15
  Section 7.03  Advance of Expenses.........................  15
  Section 7.04  Indemnification Not Exclusive...............  15
  Section 7.05  Insurance...................................  15
  Section 7.06  Conflicts...................................  16
  Section 7.07  Indemnification Agreements..................  16
  Section 7.08  Amendment, Repeal or Modification...........  16
ARTICLE VIII -- AMENDMENTS..................................  16
  Section 8.01  Power of Shareholders.......................  16
  Section 8.02  Power of Directors..........................  16

                                        ii
   4

                                     BYLAWS
                                       OF
                              CALAVO GROWERS, INC.

                              ARTICLE I -- OFFICES

     SECTION 1.01  Principal Office. The principal executive office of Calavo
Growers, Inc. (the "Corporation") is hereby fixed and located at 2530 Red Hill
Avenue, Santa Ana, California. The Board of Directors is hereby granted full
power and authority to change said principal office from one location to another
at any place or places where the Corporation is qualified to do business.

     SECTION 1.02  Other Offices. Branch or subordinate offices may at any time
be established by the Board of Directors at any place or places where the
Corporation is qualified to do business.

                     ARTICLE II -- MEETINGS OF SHAREHOLDERS

     SECTION 2.01  Place of Meetings. All meetings of shareholders shall be held
either at the principal executive office or at any other place within or without
the State of California which may be designated by the Board of Directors or by
the shareholders by obtaining written consent of all the persons entitled to
vote thereat.

     SECTION 2.02  Annual Meetings. An annual meeting of shareholders shall be
held each year on a date and at a time designated by the Board of Directors.

     Notice of each annual meeting shall be given to each shareholder entitled
to vote thereat, either personally or by first-class mail or other means of
written communication, charges prepaid, addressed to such shareholder at the
address appearing on the books of the Corporation for such shareholder or given
by such shareholder to the Corporation for the purpose of notice. If no such
address appears or is given, notice shall be deemed to have been given such
shareholder if sent by mail or other means of written communication addressed to
the place where the principal executive office of the Corporation is situated,
or if published at least once in some newspaper of general circulation in the
county in which said office is located.

     All such notices shall be delivered personally, or deposited in the mail or
sent by other means of written communication, to each shareholder entitled to
vote thereat, not less than ten (10) nor more than sixty (60) days before such
annual meeting, and shall specify the place, date and hour of such meeting and
those matters which the Board of Directors, at the time of the giving of such
notice, intends to present for action by the shareholders, including the names
of nominees intended at the time of such notice to be presented by the Board of
Directors for election to the Board of Directors. Such notice shall also state
the general nature of the business or proposal to be considered or acted upon at
such meeting before action may be taken at such meeting on:

          (a) A proposal to approve a contract or other transaction between the
     Corporation and one (1) or more directors or any corporation, firm or
     association in which one or more directors has a material financial
     interest;

          (b) A proposal to amend the Articles of Incorporation;

          (c) A proposal to approve a reorganization of the Corporation;

          (d) A proposal to wind up and dissolve the Corporation; or

          (e) A proposal to approve a plan of distribution of the shares,
     obligations or securities of any other corporation, or assets other than
     money, which is not in accordance with the liquidation rights of any
     preferred shares as specified in the Articles of Incorporation, in the
     process of the winding up of the Corporation.

     SECTION 2.03  Special Meetings. Special meetings of the shareholders, for
any purpose or purposes whatsoever, may be called at any time by the Chairman of
the Board, the President, the Board of

                                       1
   5

Directors or by one or more shareholders entitled to cast not less than ten
percent (10%) of the votes at the meeting. Upon request in writing to the
Chairman of the Board, the President, any Vice President or the Secretary by any
person, other than the Board of Directors, entitled to call a special meeting of
shareholders, such officer shall cause notice to be given forthwith, but in no
event later than twenty (20) days after receipt of the request, that a meeting
will be held at the time requested by the person or persons calling the meeting,
which time shall be not less than thirty-five (35) and not more than sixty (60)
days after receipt of the request. Except in special cases where other express
provision is made by statute and as set forth herein, notice of such special
meetings shall be given in the same manner as for annual meetings of
shareholders. Notices of any special meeting shall specify, in addition to the
place, date and hour of such meeting, the general nature of the business to be
transacted.

     SECTION 2.04  Adjourned Meetings and Notice Thereof. Any shareholders'
meeting, annual or special, whether or not a quorum is present, may be adjourned
from time to time by a vote of a majority of the shares, the holders of which
are either present in person or by proxy thereat, but in the absence of a
quorum, no other business may be transacted at any such meeting except as
provided in Section 2.07 of this Article.

     When any shareholders' meeting, either annual or special, is adjourned for
forty-five (45) days or less, the time and place of the adjourned meeting shall
be announced at the meeting at which the adjournment is taken. When any
shareholders' meeting, either annual or special, is adjourned for more than
forty-five (45) days, or if after the adjournment a new record date is fixed for
the adjourned meeting, notice of the adjourned meeting shall be given to each
shareholder of record entitled to vote at the adjourned meeting as in the case
of an original meeting. Except as aforesaid, it shall not be necessary to give
any notice of an adjournment or of the business to be transacted at an adjourned
meeting, and at the adjourned meeting the Corporation may transact any business
which might have been transacted at the original meeting.

     SECTION 2.05  Entry of Notice of Delivery. An affidavit executed by the
Secretary, any Assistant Secretary or any transfer agent to the effect that any
notice or report required to be given to a shareholder by law or these Bylaws
was duly given to such shareholder shall be sufficient evidence that such notice
or report was duly given to such shareholder. If any notice or report addressed
to a shareholder at the address of such shareholder appearing on the books of
the Corporation is returned to the Corporation by the United States Postal
Service marked to indicate that the United States Postal Service is unable to
deliver the notice or report to the shareholder at such address, all future
notices or reports shall be deemed to have been duly given without further
mailing if the same shall be available for the shareholder upon written demand
of the shareholder at the principal executive office of the Corporation for a
period of one (1) year from the date of the giving of the notice or report to
all other shareholders.

     SECTION 2.06  Voting by Shareholders; Director Nominations; Cumulative
Voting for Directors. Except as otherwise provided in the Articles of
Incorporation and in this Section, at all meetings of shareholders every
shareholder entitled to vote shall have the right to vote in person or by proxy
the number of shares standing in his or her name on the stock records of the
Corporation. Such vote may be given by viva voce or by ballot; provided,
however, that all elections for directors shall be by ballot upon demand made by
a shareholder at any election and before the voting begins.

     Nominations of persons for election to the Board of Directors may be made
at, or in advance of, each meeting of shareholders at which directors are to be
elected (i) by or at the direction of the incumbent Board of Directors and (ii)
by any shareholder of the Corporation who is entitled to vote at the meeting in
the election of directors by submitting the name of such candidate or candidates
in writing to the Secretary of the Corporation. Each director nominee must
satisfy the qualification requirements that are described in Section 3.02 of
these Bylaws, and all solicitations of proxies to be used in connection with the
election of directors must satisfy applicable federal and state securities laws
and regulations and other applicable laws and regulations.

     At each election of directors of the Corporation, if the candidate's name
or candidates' names have been placed in nomination prior to the voting, each
shareholder entitled to vote shall have the right to cast as many votes as shall
equal the number of votes to which his or her shares are normally entitled
                                       2
   6

multiplied by the number of directors to be elected, and he or she may cast all
of such votes for a single candidate or may distribute them among some or all of
the candidates as he or she sees fit. The candidates receiving the highest
number of affirmative votes up to the number of directors to be elected shall be
elected; provided, however, that such candidates must satisfy the qualification
requirements for directors that are described in Section 3.02 of these Bylaws.

     The affirmative vote of the majority of the shares represented and voting
at a duly held meeting at which a quorum is present (which shares voting
affirmatively also constitute at least a majority of the required quorum) shall
be the act of the shareholders, unless the vote of a greater number is required
by law or by the Articles of Incorporation or these Bylaws, and except as set
forth in Section 2.07 of this Article and at elections of directors as set forth
in this Section.

     SECTION 2.07  Quorum. The presence in person or by proxy of the holders of
a majority of the shares entitled to vote at any meeting shall constitute a
quorum for the transaction of business. The shareholders present at a duly
called or held meeting at which a quorum is present may continue to do business
until adjournment, notwithstanding the withdrawal of enough shareholders to
leave less than a quorum, if any action taken, other than adjournment, is
approved by at least a majority of the shares required to constitute a quorum.

     SECTION 2.08  Consent of Absentees. The proceedings and transactions of any
meeting of shareholders, either annual or special, however called and noticed
and wherever held, shall be as valid as though had at a meeting duly held after
regular call and notice, if a quorum be present either in person or by proxy and
if, either before or after the meeting, each of the persons entitled to vote,
not present in person or by proxy, signs a written waiver of notice, a consent
to the holding of such meeting or an approval of the minutes thereof. Neither
the business to be transacted at, nor the purpose of, any regular or special
meeting of shareholders need be specified in any written waiver of notice,
consent to the holding of the meeting or approval of the minutes thereof unless
otherwise provided in the Articles of Incorporation or these Bylaws, except for
the matters referred to in subparagraphs (a) through (e) of Section 2.02 of this
Article. All such waivers, consents or approvals shall be filed with the
corporate records or made a part of the minutes of the meeting.

     Attendance of a person at a meeting shall constitute a waiver of notice of
and presence at such meeting, except when the person objects at the beginning of
the meeting to the transaction of any business because the meeting is not
lawfully called or convened, and except that attendance at a meeting is not a
waiver of any right to object to the consideration of matters required by law to
be included in the notice but not so included, if such objection is expressly
made at the meeting.

     SECTION 2.09  Action Without Meeting. Any action which may be taken at any
annual or special meeting of the shareholders may be taken without a meeting and
without prior notice, if authorized by a written consent setting forth the
action so taken, signed by the holders of outstanding shares having not less
than the minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote thereon were
present and voted, and filed with the Secretary of the Corporation; provided,
however, that directors may not be elected by written consent except by
unanimous written consent of all shares entitled to vote for the election of
directors, except that a vacancy on the Board of Directors (other than a vacancy
created by removal of a director) not filled by the Board of Directors may be
filled by the written consent of a majority of the outstanding shares entitled
to vote. Any shareholder giving a written consent, such shareholder's
proxyholders, a transferee of the shares or a personal representative of such
shareholder or their respective proxyholders, may revoke any such consent by a
writing received by the Corporation prior to the time that written consents of
the number of shares required to authorize the proposed action have been filed
with the Secretary of the Corporation, but may not do so thereafter. Such
revocation shall be effective upon its receipt by the Secretary of the
Corporation.

     Unless the consents of all shareholders entitled to vote have been
solicited in writing and have been received, prompt notice shall be given, in
the same manner as for annual meetings of shareholders except as set forth in
this Section, to those shareholders entitled to vote who have not consented in
writing, of the
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taking of any corporate action approved by shareholders without a meeting. Such
notice shall be given at least ten (10) days before the consummation of the
action authorized by such approval with respect to the following:

          (a) Approval of any transaction referred to in subparagraph (a), (c)
     or (e) of Section 2.02 of this Article; or

          (b) Approval required by law of the indemnification of any person.

     SECTION 2.10  Proxies. Every person entitled to vote or execute consents
shall have the right to do so either in person or by an agent or agents
authorized by a written proxy executed by such person or his or her duly
authorized agent; provided, however, that no such proxy shall be valid after the
expiration of eleven (11) months from the date of its execution otherwise
provided in the proxy.

     SECTION 2.11  Districts. For purposes of administering the Corporation, the
Board of Directors may divide the territory in which the Corporation has
shareholders into two (2) or more districts. The number of such districts may
correspond to the authorized number of directors of the Corporation. The
boundaries and number of the districts shall be determined by the Board of
Directors, which shall have authority to revise and redefine the number and
boundaries of the districts from time to time. If the Board of Directors
establishes such districts, it shall assign each shareholder to a district based
upon the district in which the shareholder (if a grower) has the largest acreage
or production and on other factors deemed relevant by the Board of Directors.

     The Board of Directors may establish policies and procedures for
informational meetings of the members of the various districts that shall be
held from time to time. However, any such meetings are not intended to function
as a substitute for the annual and special meetings of the Corporation's
shareholders that are discussed in these Bylaws. Furthermore, voting for
directors shall not be conducted on a district basis but shall instead be
conducted in the manner described in the preceding sections of this Article II.
In each such election, each shareholder shall be entitled to cast votes for the
number of directors that are to be elected and shall not be limited to voting
only for directors from his or her district.

     The determinations of the Board of Directors on all matters relating to the
Corporation's districts shall be final, binding and conclusive on all persons.

                            ARTICLE III -- DIRECTORS

     SECTION 3.01  Powers; Committees of Directors, Including Executive
Committee and Nominating Committee. Subject to limitations of the Articles of
Incorporation, of these Bylaws and of the California General Corporation Law as
to action to be authorized or approved by the shareholders or by the outstanding
shares, and subject to the duties of directors as prescribed by these Bylaws,
the business and affairs of the Corporation shall be managed and all corporate
powers shall be exercised by or under the direction of the Board of Directors.
Without prejudice to such general powers, but subject to the same limitations,
it is hereby expressly declared that the directors shall have the following
powers:

          (a) To select and remove all officers, agents and employees of the
     Corporation, prescribe such powers and duties for them as may not be
     inconsistent with law, with the Articles of Incorporation or these Bylaws,
     fix their compensation and require from them security for faithful service;

          (b) To conduct, manage and control the affairs and business of the
     Corporation, and to make such rules and regulations therefor not
     inconsistent with law, the Articles of Incorporation or these Bylaws, as
     they may deem best;

          (c) To change the principal office for the transaction of the business
     of the Corporation from one location to another within or without the State
     of California, as provided in Section 1.01 of Article I; to fix and locate
     from time to time one or more branch or subsidiary offices of the
     Corporation within or without the State of California, as provided in
     Section 1.02 of Article I; to designate any place within or without the
     State of California for the holding of any shareholders'

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     meetings; and to adopt, make and use a corporate seal, to prescribe the
     form of certificates of stock and to alter the form of such seal and of
     such stock certificates from time to time as in their judgment they may
     deem best, provided such seal and such certificates shall at all times
     comply with the provisions of law;

          (d) To authorize the issue of stock of the Corporation from time to
     time, upon such terms as may be lawful, in consideration of money paid,
     labor done, services actually rendered to the Corporation or for its
     benefit or in its formation or reorganization, debts or securities
     cancelled, tangible or intangible property actually received either by the
     Corporation or by a wholly-owned subsidiary, or as a share dividend, or
     upon a stock split, reverse stock split, reclassification or conversion of
     outstanding shares into shares of another class, exchange of outstanding
     shares for shares of another class, or other change affecting outstanding
     shares;

          (e) To borrow money and incur indebtedness for the purposes of the
     Corporation and to cause to be executed and delivered therefor, in the
     corporate name, promissory notes, bonds, debentures, deeds of trust,
     mortgages, pledges, hypothecations or other evidences of debt and security
     therefor; and

          (f) To designate one or more committees and to appoint members and
     alternate members therefor, by resolution adopted by a majority of the
     authorized number of directors, each committee consisting of two (2) or
     more directors and any alternate directors as may be designated to replace
     any absent members at any meeting thereof, to serve at the pleasure of the
     Board of Directors and to delegate to any such committee any of the powers
     and authority of the Board of Directors in the management of the business
     and affairs of the Corporation, except the following powers: to approve any
     action which by law or by these Bylaws also requires shareholders' approval
     or approval of the outstanding shares, to fill vacancies on the Board of
     Directors or any committee thereof, to fix the compensation of directors
     for serving on the Board of Directors or any committee thereof, to amend or
     repeal bylaws or adopt new bylaws, to amend or repeal any resolution of the
     Board of Directors which by its express terms is not so amendable or
     repealable, to authorize a distribution to the shareholders of the
     Corporation (other than a dividend in shares of the Corporation) except at
     a rate or in a periodic amount or within a price range determined by the
     Board of Directors or to appoint other committees of the Board of Directors
     or the members thereof.

          Without limiting the generality of the preceding paragraph:

          There shall be an Executive Committee consisting of the Corporation's
     Chairman of the Board and four (4) other directors who shall be appointed
     by a majority of the authorized number of directors. The Executive
     Committee shall have all of the functions and powers of the Board of
     Directors that are delegated to it by the Board of Directors except as
     otherwise provided by law and subject to the direction and control of the
     Board of Directors.

          The Board of Directors may also appoint a Nominating Committee, which
     shall consist of two (2) or more directors, to assist it in the
     identification and nomination of candidates for election as directors. The
     Nominating Committee shall have the functions and powers that are delegated
     to it from time to time by the Board of Directors, although it shall remain
     subject to the direction and control of the Board of Directors. With the
     assistance of any such Nominating Committee that is appointed, the Board of
     Directors shall establish such rules and procedures for its selection of
     director nominees as it deems appropriate. Among other things, the Board of
     Directors shall have discretion to nominate a candidate from each district
     that is described in Section 2.11 of these Bylaws, although it shall not be
     obligated to follow such nomination procedure.

     SECTION 3.02  Number and Qualifications of Directors. The authorized number
of directors of the Corporation shall be not less than eight (8) nor more than
fifteen (15), and the exact number of directors within such limits shall be ten
(10) unless and until such exact number is changed from time to time, within
such specified limits, by a resolution which is duly adopted by the Board of
Directors or by the shareholders. The minimum and maximum number of directors
may be changed, or the Corporation may

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implement a board structure that specifies a fixed number of directors without
minimum and maximum numbers, by amendment of the Articles of Incorporation or by
a bylaw amending this Section of these Bylaws duly adopted by the affirmative
vote or written consents of a majority of the outstanding shares entitled to
vote; provided, however, that no such amendment reducing the number of directors
to a number less than five (5) shall be adopted if the votes cast against its
adoption at a meeting, or the shares not consenting thereto in the case of
action by written consent, are equal to more than sixteen and two-thirds percent
(16 2/3%) of the outstanding shares entitled to vote.

     An individual shall be qualified to be elected as a director, and to
continue serving as a director, (i) only if he or she (or a corporation,
partnership, limited liability company or other entity which he or she controls)
is a party to a marketing agreement, consignment agreement or other similar
agreement with the Corporation pursuant to which he or she (or such corporation,
partnership, limited liability company or other entity) has agreed to deliver
California-grown avocados to the Corporation for processing and marketing, and
(ii) only if he or she (or such corporation, partnership, limited liability
company or other entity) is not in default under such agreement with the
Corporation. The preceding qualification for directors shall be inapplicable to
any directors who are elected by the holders of shares of the Corporation's
preferred stock (if a class or series of preferred stock is issued and
outstanding) voting separately as a class or series in the election of
directors.

     SECTION 3.03  Election and Term of Office. The directors shall be elected
at each annual meeting of the shareholders, but if any such annual meeting is
not held or the directors are not elected thereat, the directors may be elected
at any special meeting of the shareholders held for that purpose. Each director
shall hold office until the expiration of the term for which elected and until
his or her successor is elected and qualified or until he or she is removed from
office. No director may be removed prior to the expiration of his or her term of
office, except as permitted by law.

     SECTION 3.04  Vacancies. Vacancies in the Board of Directors, other than
those created by the removal of a director, may be filled by a majority of the
remaining directors, though less than a quorum, or by a sole remaining director,
and each director so elected shall hold office until his or her successor is
elected at an annual or special meeting of the shareholders.

     A vacancy or vacancies in the Board of Directors shall be deemed to exist
when any authorized position of director is not filled by a duly elected and
acting director, whether caused by the death, resignation or removal of any
director, increase in the authorized number of directors, failure of the
shareholders, at any annual or special meeting of shareholders at which any
director or directors are elected, to elect the full authorized number of
directors to be voted for at that meeting or otherwise.

     The shareholders may elect a director or directors at any time to fill any
vacancy or vacancies created by the removal of a director or not filled by the
directors. Any such election by written consent other than to fill a vacancy
created by removal (which shall require the unanimous written consent of all
shares entitled to vote for the election of directors) shall require the written
consent of a majority of the outstanding shares entitled to vote. If the
resignation of a director is given to take effect at a future time, the Board of
Directors or the shareholders shall have power to elect a successor to take
office when the resignation is to become effective.

     No reduction of the authorized number of directors shall have the effect of
removing any director prior to the expiration of his or her term of office.

     SECTION 3.05  Place of Meeting. Meetings of the Board of Directors or any
committee thereof shall be held at any place within or without the State of
California which has been designated in the notice of the meeting or, if not
stated in the notice or there is no notice, from time to time by resolution of
the Board of Directors or committee, as the case may be. In the absence of such
designation, meetings shall be held at the principal executive office of the
Corporation.

     SECTION 3.06  Organizational Meeting. Immediately following each annual
meeting of shareholders, the Board of Directors shall hold a regular meeting for
the purpose of organization, election of officers and the transaction of other
business. Notice of such meetings is hereby dispensed with.

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     SECTION 3.07  Other Regular Meetings. Other regular meetings of the Board
of Directors and regular meetings of committees of the Board of Directors shall
be held without call on such dates as may be fixed by the Board of Directors or
the committee, as the case may be. Notice of all such regular meetings of the
Board of Directors and committees thereof is hereby dispensed with.

     SECTION 3.08  Special Meetings. Special meetings of the Board of Directors
for any purpose or purposes may be called at any time by the Chairman of the
Board, by the President, by any Vice President, by the Secretary or by any two
(2) or more directors. Special meetings of any committee of the Board of
Directors for any purpose or purposes may be called at any time by the
President, by the Chairman or by any vice-chairman of the committee, by the
Secretary or by any two (2) or more members of the committee.

     Notice of the time and place of special meetings shall be delivered
personally to all directors or committee members as the case may be, either in
writing or orally or by telephone, or shall be sent to each such director by
first-class mail, facsimile, telegram or other electronic or voice mail message,
charges prepaid, addressed to him or her at his or her address as it is shown
upon the records of the Corporation or, if it is not shown on such records or is
not readily ascertainable, at the place in which the meetings of the directors
are regularly held. In case such notice is mailed, it shall be deposited with
the United States Postal Service in the place where the principal office of the
Corporation is located at least four (4) days prior to the time of the holding
of the meeting. In case such notice is delivered by facsimile, telegram or other
electronic or voice mail message or personally as above provided, it shall be
delivered at least forty-eight (48) hours prior to the time of the holding of
the meeting.

     Such notice need not specify the purpose of the special meeting. Such
mailing, telegraphing or personal delivery as above provided shall be due,
timely, legal and personal notice to such director.

     SECTION 3.09  Notice of Adjournment. Unless a directors' or committee
meeting has been adjourned for more than twenty-four (24) hours, notice of the
time and place of holding an adjourned meeting need not be given to absent
directors or committee members if the time and place be fixed at the meeting
adjourned. If the meeting has been adjourned for more than twenty-four (24)
hours, notice of such adjournment and the time and place of the adjourned
meeting shall be given prior to the time of the adjourned meeting to all
directors or committee members who were not present at the time of the
adjournment, in the same manner as provided in Section 3.08 of this Article for
special meetings of the Board of Directors or committee thereof.

     SECTION 3.10  Entry of Notice. Whenever any director has been absent from
any special meeting of the Board of Directors or committee thereof, an affidavit
executed by the Secretary or any Assistant Secretary to the effect that notice
has been duly given as required by law and these Bylaws shall be sufficient
evidence that due notice of such special meeting was given to such director.

     SECTION 3.11  Waiver of Notice. The transactions of any meeting of the
Board of Directors or committee thereof, however called and noticed and wherever
held, shall be as valid as though had at a meeting duly held after regular call
and notice, if a quorum be present and if, either before or after the meeting,
each of the directors or committee members not present, and each director or
committee member who is present but did not receive due notice thereof and
protests such lack of notice prior to such meeting or at its commencement, signs
a written waiver of notice, a consent to holding such meeting or an approval of
the minutes thereof. Such waiver of notice need not specify the purpose of the
meeting. All such waivers, consents or approvals shall be filed with the
Corporate records or made a part of the minutes of the meeting.

     SECTION 3.12  Quorum. A majority of the authorized number of directors on
the Board of Directors or any committee thereof shall be necessary to constitute
a quorum for the transaction of business by such Board or committee, as the case
may be. A meeting at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors or committee
members, if any action taken is approved by at least a majority of the required
quorum for such meeting. Subject to the foregoing sentence of this Section,
every act or decision done or made by a majority of the directors or committee

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members present at a meeting duly held at which a quorum is present shall be
regarded as the act of the Board of Directors or committee thereof, as the case
may be, unless a greater number is required by law, the Articles of
Incorporation or these Bylaws. Directors shall be deemed present at any meeting
of the Board of Directors or any committee thereof and may participate therein
if present through use of conference telephone or similar communications
equipment, so long as all directors participating in such meeting can hear one
another.

     SECTION 3.13  Adjournment. A majority of the directors or committee members
present, whether or not a quorum is present, may adjourn any directors' or
committee meeting to meet again at a stated time, place and hour.

     SECTION 3.14  Action Without Meeting. Any action required or permitted to
be taken by the Board of Directors or any committee thereof may be taken without
a meeting if all members of the Board of Directors or such committee shall
individually or collectively consent in writing to such action. Such written
consent or consents shall be filed with the minutes of the proceedings of the
Board of Directors or such committee, as the case may be. Such action by written
consent shall have the same force and effect as a unanimous vote of such
directors or committee members.

     SECTION 3.15  Fees and Compensation. Directors shall not receive any stated
salary for their services as directors but, by resolution of the Board of
Directors, a fixed fee, with or without expenses of attending, may be allowed
for attendance at each meeting. Nothing herein contained shall be construed to
preclude any director from serving the Corporation in any other capacity as an
officer, agent, employee or otherwise and receiving compensation therefor.

                             ARTICLE IV -- OFFICERS

     SECTION 4.01  Officers. The officers of the Corporation shall be the
Chairman of the Board, the Chief Executive Officer, the President, the Secretary
and the Chief Financial Officer.

     The Corporation may also have, at the discretion of the Board of Directors,
a Vice Chairman of the Board, one or more Vice Presidents, one or more Assistant
Secretaries, one or more Assistant Chief Financial Officers and such other
officers as may be appointed in accordance with the provisions of Section 4.03
of this Article. Officers other than the Chairman of the Board need not be
directors. One person may hold two or more offices.

     SECTION 4.02  Elections. The officers of the Corporation shall be chosen by
the Board of Directors and each shall hold his or her office until his or her
successor is appointed or until he or she resigns or is removed from office.

     SECTION 4.03  Subordinate Officers. The Board of Directors may appoint such
other officers as the business of the Corporation may require, each of whom
shall hold office for such period, have such authority and perform such duties
as are provided in these Bylaws or as the Board of Directors may from time to
time determine.

     SECTION 4.04  Removal and Resignation. Any officer may be removed, either
with or without cause, by a majority of the directors at the time in office, at
a regular or special meeting of the Board of Directors or, except in case of an
officer chosen by the Board of Directors, by any officer upon whom such power of
removal may be conferred by the Board of Directors.

     Any officer may resign at any time by giving written notice to the Board of
Directors, the Chief Executive Officer, the President or the Secretary of the
Corporation. Any such resignation shall take effect at the date of the receipt
of such notice or at any later time specified therein; and unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.

     SECTION 4.05  Vacancies. A vacancy in any office because of death,
resignation, removal or any other cause shall be filled by the Board of
Directors at a regular or special meeting.

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     SECTION 4.06  Chairman of the Board. The Chairman of the Board shall, if
present, preside at all meetings of the Board of Directors, and exercise and
perform such other powers and duties as may from time to time be assigned to him
or her by the Board of Directors or as prescribed by these Bylaws. The Board of
Directors may also designate one of its members as Vice Chairman of the Board.
The Vice Chairman of the Board shall, during the absence or inability to act as
the Chairman of the Board, have the powers and perform the duties of the
Chairman of the Board and shall have such other powers and perform such other
duties as may from time to time be assigned to him or her by the Board of
Directors or as prescribed by these Bylaws.

     SECTION 4.07  Chief Executive Officer. The Chief Executive Officer shall be
the general manager and chief executive officer of the Corporation and shall,
subject to the control of the Board of Directors, have general supervision,
direction and control of the business and affairs of the Corporation. He or she
shall preside at all meetings of the shareholders, and in the absence of the
Chairman or Vice Chairman of the Board, at all meetings of the Board of
Directors. He or she shall have the general powers and duties of management
usually vested in the office of chief executive officer of a corporation and
shall have such other powers and duties as may be prescribed by the Board of
Directors or these Bylaws. Unless and until otherwise determined by the Board of
Directors, the Chairman of the Board shall also serve as the Chief Executive
Officer.

     SECTION 4.08  President. The President shall, after the Chief Executive
Officer, have general supervision, direction and control of the business and
affairs of the Corporation, subject to the control of the Board of Directors and
the Chief Executive Officer. The President shall have such other powers and
duties as may be prescribed by the Board of Directors or these Bylaws.

     SECTION 4.09  Vice President. In the absence or disability of the
President, the Vice Presidents if there shall be any such officers, in order of
their rank as fixed by the Board of Directors or, if not ranked, the Vice
President designated by the Board of Directors shall perform all the duties of
the President, and when so acting, shall have all the powers of and be subject
to all the restrictions upon the President. The Vice Presidents shall have such
other powers and perform such other duties as from time to time may be
prescribed for them respectively by the Board of Directors or these Bylaws.

     SECTION 4.10  Secretary. The Secretary shall keep, or cause to be kept, a
book of minutes in written form at the principal executive office of the
Corporation, of all meetings of directors, committees of the Board of Directors
and shareholders, with the time and place of holding, whether regular or
special, and if special how authorized, the notice thereof given, the names of
those directors and shareholders present, the names of those present at
directors' or committee meetings, the number of shares present or represented at
shareholders' meetings and the proceedings thereof.

     The Secretary shall keep, or cause to be kept, at the principal executive
office or at the office of the Corporation's transfer agent or registrar of
shares, a share register, or a duplicate share register, in written form or in
any other form capable of being converted into written form, showing the names
of the shareholders and their addresses, and the number and classes of shares
held by each of them.

     The Secretary shall give or cause to be given notice of all meetings of
shareholders and the Board of Directors, as required by these Bylaws or by law
to be given, and he or she shall keep the seal of the Corporation in safe
custody and shall have such other powers and perform such other duties as may be
prescribed by the Board of Directors or these Bylaws.

     SECTION 4.11  Chief Financial Officer. The Chief Financial Officer shall
keep and maintain, or cause to be kept and maintained, in written form or in any
other form capable of being converted into written form, adequate and correct
books and records of account of the properties and business transactions of the
Corporation, including accounts of its assets, liabilities, receipts,
disbursements, gains, losses, capital, surplus and shares.

     The Chief Financial Officer shall deposit all monies and other valuables in
the name and to the credit of the Corporation with such depositories as may be
designated by the Board of Directors. He or she shall disburse the funds of the
Corporation as may be ordered by the Board of Directors and shall render to the

                                       9
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President and directors, as required by Section 5.05 of Article V of these
Bylaws and at such other times as they may request, an account of all of his or
her transactions as Chief Financial Officer and of the financial condition of
the Corporation, and shall have such other powers and perform such other duties
as may be prescribed by the Board of Directors or these Bylaws.

                           ARTICLE V -- MISCELLANEOUS

     SECTION 5.01  Record Date. The Board of Directors may fix a time in the
future as a record date for the determination of the shareholders entitled to
notice of and to vote at any meeting of shareholders, or to receive any
dividend, distribution or allotment of rights, or to exercise rights in respect
of any other lawful action. The record date so fixed shall not be more than
sixty (60) nor less than ten (10) days prior to the date of the meeting, nor
more than sixty (60) days prior to any other action, for which it is fixed. When
a record date is so fixed, only shareholders of record at the close of business
on the record date shall be entitled to notice of and to vote at such meeting,
or to receive such dividend, distribution or allotment of rights, or to exercise
such rights, as the case may be, notwithstanding any transfer of any shares on
the books of the Corporation after the record date, except as otherwise provided
in the Articles of Incorporation or by agreement or by law. A determination of
shareholders of record entitled to notice of or to vote at a meeting of
shareholders shall apply to any adjournment of the meeting unless the Board of
Directors fixes a new record date for the adjourned meeting, but the Board of
Directors shall fix a new record date if the meeting is adjourned for more than
forty-five (45) days from the date set for the original meeting.

     SECTION 5.02  Inspection of Corporate Records. The record of shareholders,
the accounting books and records, and minutes of proceedings of the
shareholders, the Board of Directors and committees of the Board of Directors,
shall be open to inspection in written form upon the written demand of any
shareholder or holder of a voting trust certificate, at any reasonable time
during usual business hours, for a purpose reasonably related to his or her
interests as a shareholder or holder of a voting trust certificate. Such
inspection may be made in person or by an agent or attorney and shall include
the right to copy and make extracts. Demand of inspection shall be made in
writing upon the President, Secretary or Assistant Secretary of the Corporation.

     A shareholder or shareholders holding at least five percent (5%) in the
aggregate of the outstanding voting shares of the Corporation shall have an
absolute right to do either or both of the following: (i) inspect and copy the
record of shareholders' names and addresses and shareholdings during usual
business hours upon five (5) business days' prior written demand upon the
Corporation, or (ii) obtain from the transfer agent for the Corporation, if any,
upon written demand and upon the tender of its usual charges for such a list, a
list of the names and addresses of the shareholders who are entitled to vote for
the election of directors, and their shareholdings, as of the most recent record
date for which it has been compiled or as of a date specified by the shareholder
subsequent to the date of demand, which list shall be made available on or
before the later of five (5) business days after the demand is received or the
date specified therein as the date as of which the list is to be compiled.

     Every director shall have the absolute right at any reasonable time to
inspect in written form and copy all books, records and documents of every kind
and to inspect the physical properties of the Corporation and its subsidiary
corporations, domestic or foreign. Such inspection may be made in person or by
agent or attorney, and the right of inspection includes the right to copy and
make extracts.

     SECTION 5.03  Checks, Drafts and Notes. All checks, drafts or other orders
for payment of money, notes or other evidences of indebtedness issued in the
name of or payable to the Corporation shall be signed or endorsed by such person
or persons and in such manner as, from time to time, shall be determined by
resolution of the Board of Directors.

     SECTION 5.04  Seal. The Corporation shall have a common seal, and shall
have inscribed thereon the name of the Corporation, the date of its
incorporation and the word California.

                                       10
   14

     SECTION 5.05  Financial Reports. The Chief Financial Officer shall prepare
and submit, or cause to be prepared and submitted, to the Board of Directors,
not later than one hundred twenty (120) days after the close of each fiscal year
of the Corporation, an annual report containing a balance sheet as of the end of
that fiscal year and an income statement and statement of changes in financial
position for that fiscal year, accompanied by the report thereon, if any, of any
independent accountants engaged by the Corporation or the certificate of an
authorized officer of the Corporation that the financial statements were
prepared without audit from the books and records of the Corporation. The
requirement of Section 1501 of the California Corporations Code that the Board
of Directors shall cause the annual report to be sent to the shareholders not
later than one hundred twenty (120) days after the close of the Corporation's
fiscal year and at least fifteen (15) days prior to the annual meeting of
shareholders is hereby expressly waived until such time as the Corporation has
one hundred (100) or more holders of record of its shares.

     A shareholder or shareholders holding at least five percent (5%) of the
outstanding shares of any class of the Corporation may make a written request to
the Corporation for an income statement of the Corporation for the three-month,
six-month or nine-month period of the current fiscal year ended more than thirty
(30) days prior to the date of the request and a balance sheet of the
Corporation as of the end of such period and, in addition, if no annual report
for the last fiscal year has been sent to shareholders, such annual report,
accompanied by the report thereon, if any, of any independent accountants
engaged by the Corporation or the certificate of an authorized officer of the
Corporation that such financial statements were prepared without audit from the
books and records of the Corporation. The annual report or statements so
requested shall be delivered or mailed to the person making the request within
thirty (30) days thereafter.

     A copy of each such annual, semi-annual, and quarterly financial statement
shall be kept on file for a period of twelve (12) months after delivery to the
Board of Directors, and shall be exhibited at all reasonable times to any
shareholder demanding an examination thereof or a copy shall be mailed to the
shareholder.

     SECTION 5.06  Execution of Documents. The Board of Directors, except as
these Bylaws or the Articles of Incorporation otherwise provide, may authorize
any officer or officers, or agent or agents, to enter into any contract or
execute any instrument in the name of and on behalf of the Corporation, and such
authority may be general or confined to specific instances; and unless so
authorized by the Board of Directors, no officer, agent, or employee shall have
any power or authority to bind the Corporation by any contract or agreement or
to pledge its credit to render it liable for any purpose or to any amount.

     SECTION 5.07  Certificates of Stock. A certificate or certificates for
shares of the capital stock of the Corporation shall be issued to each
shareholder when any such shares are fully paid. All such certificates shall be
signed by the Chairman of the Board or the President or a Vice President, and by
the Chief Financial Officer or an Assistant Chief Financial Officer, Secretary
or an Assistant Secretary, or shall be authenticated by facsimiles of such
signatures.

     Certificates for shares may be issued prior to full payment thereof, under
such restrictions and for such purposes as the Board of Directors or these
Bylaws may provide; provided, however, that any such certificates so issued
prior to full payment shall state the total amount of the consideration to be
paid therefor and the amount paid thereon, and such statement shall be
conspicuous.

     There shall also appear on each certificate, to the extent applicable,
statements: that the shares represented thereby are subject to restrictions upon
transfer, to an irrevocable proxy under Section 705(e) of the California
Corporations Code, or to restrictions upon voting rights contractually imposed
by the Corporation; that such shares are redeemable or assessable or subject to
conversion and the period for conversion, and any such statement that such
shares are subject to restrictions upon transfer or are assessable shall be
conspicuous. If the shares of the Corporation are classified or if any class of
shares has two or more series, there shall also appear on each certificate the
office or agency of the Corporation from which shareholders may obtain, upon
request and without charge, a statement of the rights, preferences, privileges
and restrictions granted to or imposed upon each class or series of shares
authorized to be issued and upon the holders thereof.

                                       11
   15

     Notwithstanding the foregoing provisions of this Section 5.07, the Board of
Directors is entitled to elect to cause the Corporation to adopt a system of
issuance, recordation and transfer of its shares by electronic or other means
not involving any issuance of certificates, subject, however, to compliance with
Section 416 of the California Corporations Code and other applicable law
regarding such system.

     SECTION 5.08  Representation of Shares of Other Corporations. Subject to
the instructions and control of the Board of Directors, the Chief Executive
Officer, the President or any Vice President and the Secretary or Assistant
Secretary of the Corporation, acting jointly, are authorized to vote, represent
and exercise on behalf of the Corporation all rights incident to any and all
shares of any other corporation or corporations standing in the name of the
Corporation. The authority herein granted to said officers to vote or represent
on behalf of the Corporation any and all shares held by the Corporation in any
other corporation or corporations may be exercised either by such officers in
person or by any person authorized so to do by proxy or power of attorney duly
executed by said officers.

     SECTION 5.09  Inspection of Bylaws. The Corporation shall keep in its
principal executive office in the State of California, or if there be no such
office at its principal business office in such State, the original or a copy of
these Bylaws as amended to date, which shall be open to inspection by the
shareholders at all reasonable times during office hours. If the principal
executive office is outside such State and the Corporation has no principal
business office in such State, the Corporation shall upon the written request of
any shareholder, made in writing upon the President, Secretary or Assistant
Secretary of the Corporation, furnish to such shareholder a copy of these Bylaws
as amended to date.

                ARTICLE VI -- RESTRICTIONS ON TRANSFER OF SHARES

     SECTION 6.01  Corporation's Right of First Refusal. Before any shares of
the Corporation's stock that are owned by any shareholder of the Corporation may
be sold, assigned, pledged or otherwise transferred (whether voluntarily,
involuntarily, by operation of law, pursuant to a marital dissolution decree or
by gift or for consideration and including a transfer of any interest in any
such shares), the shares shall first be offered to the Corporation, which shall
have the right to purchase all (but not fewer than all) of the shares that are
proposed to be transferred on the terms and conditions proposed by the potential
purchaser and in accordance with the terms and conditions of this Article VI
(the "Right of First Refusal").

     SECTION 6.02  Notice to the Corporation of the Proposed Transfer. Each time
that any shareholder of the Corporation (the "Transferring Shareholder")
proposes to sell, assign, pledge or otherwise transfer any shares of the
Corporation's stock in a transaction that is not a permitted transfer under
Section 6.07 of this Article, the Transferring Shareholder shall give the
Corporation at least thirty (30) days' prior written notice of the proposed
transfer (the "Transfer Notice"). Unless the Corporation agrees in writing to
another method of delivery, the Transfer Notice shall be delivered by registered
or certified mail, postage prepaid and return receipt requested, or delivered
personally to the Corporation's Secretary at the Corporation's principal
executive office specified in Section 1.01 of these Bylaws or to such other
principal executive office for the Corporation that the Board of Directors may
adopt and announce from time to time.

     The Transfer Notice shall set forth in reasonable detail the terms and
conditions of the proposed transfer, including, without limitation, (i) the
identity of the proposed transferee (who must in any case be a bona fide
transferee with respect to whom the transfer is permissible under applicable
federal and state securities laws), (ii) the number of shares proposed to be
transferred, (iii) the purchase price per share, (iv) the terms of payment, (v)
the date of the proposed transfer, and (vi) a statement by the Transferring
Shareholder that he or she has entered into a legally binding agreement (subject
to compliance with these Bylaws) with the proposed transferee with respect to
the transfer of the shares on the terms described in the Transfer Notice. The
Transferring Shareholder shall be liable to the Corporation if the Transfer
Notice contains any intentional or grossly negligent misstatements or omissions.

                                       12
   16

     For purposes of this Article VI, a "transfer" of shares shall be deemed to
include a proposed transfer or issuance of more than fifty percent (50%) of the
outstanding stock or other equity ownership interests of any shareholder of the
Corporation that is a corporation, a partnership, a limited liability company or
another form of entity, and the Right of First Refusal shall apply to any such
proposed transaction. In that event, the Transferring Shareholder shall be
deemed to have offered to sell a number of shares of the Corporation's stock
equal to the number of shares owned by the Transferring Shareholder multiplied
by the percentage of the Transferring Shareholder's stock or other equity
ownership interests that are the subject of the proposed transaction.

     SECTION 6.03  Purchase of Shares by the Corporation. The Corporation shall
have the right, but not the obligation, to elect to purchase from the
Transferring Shareholder all, but not less than all, of the shares of stock that
the Transferring Shareholder proposes to transfer and that are described in the
Transfer Notice. Within thirty (30) days after its receipt of the Transfer
Notice, the Corporation shall notify the Transferring Shareholder in writing as
to whether the Corporation has elected to purchase all of the shares that are
described in the Transfer Notice. Failure by the Corporation to give a timely
notice shall be deemed an election not to purchase all of such shares. Delivery
by the Corporation of a timely purchase election shall constitute a binding
purchase agreement between the Transferring Shareholder and the Corporation. The
Corporation shall not be entitled to elect to purchase fewer than all of the
shares that are the subject of the proposed transfer. Notices by the Corporation
to the Transferring Shareholder shall be delivered in the manner specified in
Section 2.02 of these Bylaws.

     SECTION 6.04  Purchase Terms. Except as provided in this Section 6.04 or in
Section 6.05 of this Article, the Transferring Shareholder's shares that are the
subject of the proposed transfer shall be purchased by the Corporation for the
same purchase price and other payment terms that are described in the Transfer
Notice. If the Transfer Notice provides for the use of promissory notes or other
non-cash consideration, the Corporation at its option may specify that the
purchase price will be paid by it in cash in an amount equal to the Board of
Directors' good faith estimate of the present fair market value of such non-cash
consideration. If the Transfer Notice does not describe any purchase price for
the shares that the Transferring Shareholder proposes to transfer because the
transfer is a gift, an involuntary transfer or any other form of transfer that
does not involve a purchase price for the shares that are the subject of the
proposed transfer, the Corporation shall pay a cash purchase price equal to the
Board of Directors' good faith estimate of the present fair market value or book
value of such shares, whichever is greater.

     SECTION 6.05  Closing of the Purchase. The Corporation shall select the
date of the closing of the purchase and sale of the Transferring Shareholder's
shares of stock that are to be purchased as a result of the exercise of the
Right of First Refusal described in this Article by providing at least ten (10)
days' written notice thereof to the Transferring Shareholder, provided, however,
that the Corporation shall select a closing date that is no later than the
fortieth (40th) day after its receipt of the Transfer Notice from the
Transferring Shareholder unless the Corporation and the Transferring Shareholder
agree to extend the closing date.

     The Corporation shall deliver to the Transferring Shareholder a check in
the amount of the purchase price of the shares purchased by the Corporation.
However, if the transferee identified in the Transfer Notice from the
Transferring Shareholder proposes to deliver promissory notes or another form of
non-cash consideration and if the Corporation does not elect pursuant to Section
6.04 of this Article above to pay cash equal to the present fair market value of
such non-cash consideration, then the Corporation shall deliver such non-cash
consideration to the Transferring Shareholder. The Transferring Shareholder
shall execute and deliver any stock assignments and other instruments that may
be reasonably requested by the Corporation in order to complete the purchase and
sale of the Transferring Shareholder's shares of stock.

     SECTION 6.06  Transfer of Shares to the Proposed Transferee. If the
Corporation does not make a timely election to purchase all of the shares that
are the subject of the proposed transfer, or if the Corporation defaults on its
election to purchase such shares, the Transferring Shareholder shall have the
right to transfer such shares to the proposed transferee who is identified in
the Transfer Notice, provided that such transaction must be completed within
sixty (60) days after the Transferring Shareholder's

                                       13
   17

delivery of the Transfer Notice to the Corporation. The shares must be
transferred on the terms described in the Transfer Notice, and the transferee of
such shares shall be bound by all of these Bylaws (including, without
limitation, this Article VI) with respect to the transferred shares. However,
the transfer shall not be made and shall be of no force or effect unless and
until (i) the Corporation has determined that the transfer will be made in
compliance with any and all applicable federal and state securities laws and
regulations and other applicable laws and regulations, including, without
limitation, the regulations of any national securities exchanges, the National
Association of Securities Dealers, Inc. and any other regulatory bodies having
jurisdiction over the shares and (ii) the Transferring Shareholder and the
proposed transferee, at their expense, have delivered to the Corporation any and
all investment representation certificates and other certificates, legal
opinions and instruments of conveyance, in form and substance satisfactory to
the Corporation, that may be requested by the Corporation for the purpose of
demonstrating that the transfer can be lawfully made without registration or
qualification under applicable federal and state securities laws and regulations
and in order to effect the transfer of the shares to the transferee.
Furthermore, notwithstanding anything to the contrary in these Bylaws: (a) no
individual, person, corporation, partnership, other entity or group within the
meaning of Section 13(d) of the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder may acquire or hold (directly
or indirectly) record or beneficial ownership of more than twenty percent (20%)
of the total outstanding shares of the Corporation's stock, as the term
"beneficial ownership" is used in Rule 13d-3 under the Securities Exchange Act
of 1934, as amended; (b) no shares may be transferred to any individual, person,
corporation, partnership or other entity or group that is described in clause
(a) of this sentence; and (c) without the prior written consent of the Board of
Directors, no shares may be transferred to any individual, person, corporation,
partnership, other entity or group that engages in a business that is in
competition with the Corporation's business.

     SECTION 6.07  Transfers Not Subject to the Right of First Refusal. The
Right of First Refusal shall not apply to a transfer of shares of stock (i) to a
member or members of the Transferring Shareholder's immediate family or (ii) to
an inter vivos trust established for the sole and exclusive benefit of the
Transferring Shareholder and/or a member or members of the Transferring
Shareholder's immediate family. The transferee(s) of such shares shall be bound
by all of these Bylaws (including, without limitation, this Article VI) with
respect to the transferred shares. Furthermore, within ten (10) days after the
effective date of such transfer, the Transferring Shareholder (or his or her
legal representative) shall advise the Secretary of the Corporation in writing
of the details of such transfer and shall provide written documentation to the
Corporation demonstrating that such transfer satisfies the terms and conditions
of this Section 6.07. For purposes of this Section 6.07, the term "immediate
family" means a shareholder's spouse, children, grandchildren, parents, brothers
and sisters.

     SECTION 6.08  Transfers of Shares in Violation of the Bylaws. Any sale or
other transfer of shares of the Corporation's stock (including any agreement to
sell or transfer shares) that is made in violation of the terms and conditions
of this Article VI shall be null and void for all purposes, and the Corporation
shall not be required to transfer on its books any shares that are the subject
of any such sale or transfer.

     SECTION 6.09  Legends on Certificates. All certificates that represent
shares of the Corporation's stock shall have endorsed thereon the following
legends:

          (a) "THE SHARES THAT ARE REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
     TO CERTAIN RESTRICTIONS ON TRANSFER AND RIGHTS OF FIRST REFUSAL AS SET
     FORTH IN THE BYLAWS OF THE CORPORATION. A COPY OF THE BYLAWS IS ON FILE AT
     THE PRINCIPAL BUSINESS OFFICE OF THE CORPORATION."

          (b) "THE SHARES THAT ARE REPRESENTED BY THIS CERTIFICATE MAY NOT BE
     SOLD, OFFERED FOR SALE, ASSIGNED, HYPOTHECATED OR OTHERWISE TRANSFERRED
     UNLESS SUCH TRANSFER IS REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF
     1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS COVERING SUCH SHARES
     OR UNLESS THE CORPORATION RECEIVES AN

                                       14
   18

     OPINION OF COUNSEL OR OTHER EVIDENCE SATISFACTORY TO THE CORPORATION TO THE
     EFFECT THAT SUCH REGISTRATION AND QUALIFICATION ARE NOT REQUIRED."

          (c) Any other legends required to be placed thereon by federal or
     state securities laws or authorities.

     SECTION 6.10  Termination of the Right of First Refusal. The Right of First
Refusal described in this Article VI shall terminate if and when the Board of
Directors or the Corporation's shareholders adopt an amendment to the Bylaws
which deletes this Article VI from the Bylaws or which otherwise terminates the
Right of First Refusal.

                         ARTICLE VII -- INDEMNIFICATION

     SECTION 7.01  Indemnification of Directors. The Corporation shall, to the
maximum extent permitted by applicable law but subject to the terms and
conditions of any indemnification agreement that may be entered into between the
director and the Corporation, indemnify each of its directors against expenses
(as defined in Section 317(a) of the California Corporations Code), judgments,
fines, settlements and other amounts actually and reasonably incurred by such
director in connection with any proceeding (as defined in Section 317(a) of the
California Corporations Code) arising by reason of the fact that such director
(i) is or was a director of the Corporation, (ii) was a director of the
Corporation's predecessor, Calavo Growers of California, a California nonprofit
cooperative association, or (iii) is or was serving at the request of the
Corporation as a director of another foreign or domestic corporation,
partnership, joint venture, trust or other enterprise. For purposes of this
Article VII, a "director" includes any person who is or was a director of the
Corporation.

     SECTION 7.02  Indemnification of Officers, Employees and Other Agents. In
addition to the indemnification that is required to be provided to directors of
the Corporation under Section 7.01 of this Article, the Corporation shall have
the power, to the extent and in the manner permitted by applicable law, to
indemnify each of its officers, employees and other agents against expenses,
judgments, fines, settlements and other amounts actually and reasonably incurred
in connection with any proceeding arising by reason of the fact that such person
is or was an officer, employee or other agent of the Corporation. For purposes
of this Article VII, an "employee," "officer" or "agent" of the Corporation
includes any person (i) who is or was an officer, employee or other agent of the
Corporation, (ii) who is or was serving at the request of the Corporation as a
director, officer, employee or other agent of another foreign or domestic
corporation, partnership, joint venture, trust or other enterprise, or (iii) who
was an officer, employee or other agent of Calavo Growers of California or of
another enterprise at the request of Calavo Growers of California.

     SECTION 7.03  Advance of Expenses. Attorneys' fees and other expenses
incurred in defending any proceeding may be advanced by the Corporation prior to
the final disposition of such proceeding upon receipt of an undertaking by or on
behalf of the indemnified party to repay such amounts if it shall ultimately be
determined that the indemnified party is not entitled to be indemnified as
authorized or provided by this Article VII.

     SECTION 7.04  Indemnification Not Exclusive. The indemnification authorized
or provided by this Article VII shall not be deemed exclusive of any other
rights to which those seeking indemnification may be entitled under any Bylaw,
agreement, vote of shareholders or directors or otherwise, both as to action in
an official capacity and as to action in another capacity while holding such
office. The rights to indemnification hereunder shall continue as to a person
who has ceased to be a director, officer, employee or other agent and shall
inure to the benefit of the heirs, executors and administrators of such person.

     SECTION 7.05  Insurance. The Corporation shall have the power to purchase
and maintain insurance on behalf of any person who is or was a director,
officer, employee or other agent of the Corporation against any liability
asserted against or incurred by such person in such capacity or arising out of
that

                                       15
   19

person's status as such, whether or not the Corporation would have the power to
indemnify that person against such liability under the provisions of this
Article VII.

     SECTION 7.06  Conflicts. No indemnification or advance shall be made under
this Article VII, except where such indemnification or advance is mandated by
law or the order, judgment or decree of any court of competent jurisdiction, in
any circumstance where it appears:

          (a) That it would be inconsistent with a provision of the
     Corporation's Articles of Incorporation, these Bylaws, a resolution of the
     shareholders or an agreement in effect at the time of the accrual of the
     alleged cause of action asserted in the proceeding in which the expenses
     were incurred or other amounts were paid which prohibits or otherwise
     limits indemnification; or

          (b) That it would be inconsistent with any condition expressly imposed
     by a court in approving a settlement.

     SECTION 7.07  Indemnification Agreements. Notwithstanding anything to the
contrary in this Article VII, the Corporation is authorized to enter into a
contract with any director, officer, employee or other agent of the Corporation
(or with any person who is or was serving at the request of the Corporation as a
director, officer, employee or other agent of another corporation, partnership,
joint venture, trust or other enterprise, including employee benefit plans, or
any person who was a director, officer, employee or agent of a corporation which
was a predecessor corporation of the Corporation or of another enterprise at the
request of such predecessor corporation) which provides for indemnification
rights equivalent to or, if the Board of Directors so determines and to the
extent permitted by applicable law, greater than those provided for in this
Article VII.

     SECTION 7.08  Amendment, Repeal or Modification. No amendment, repeal or
modification of any provision of this Article VII shall adversely affect any
right or protection of any director, officer, employee or other agent of the
Corporation which exists at the time of such amendment, repeal or modification.

                           ARTICLE VIII -- AMENDMENTS

     SECTION 8.01  Power of Shareholders. New Bylaws may be adopted or these
Bylaws may be amended or repealed by the affirmative vote or written consent of
a majority of the outstanding shares entitled to vote, except as may be
specifically set forth in the Articles of Incorporation or these Bylaws to the
contrary.

     SECTION 8.02  Power of Directors. Subject to the right of the shareholders
as provided in Section 8.01 of this Article to adopt, amend or repeal these
Bylaws, Bylaws other than a Bylaw or amendment thereof changing the authorized
number of directors may be adopted, amended or repealed by the affirmative vote
of at least seventy-five percent (75%) of the authorized number of directors.
The adoption of a resolution by the Board of Directors that fixes the exact
number of directors within the authorized range of directors specified in
Section 3.02 of these Bylaws shall not be considered an amendment of these
Bylaws.

                                       16
   1

                                                                     EXHIBIT 5.1

              [Letterhead of Troy & Gould Professional Corporation]

                              _______________, 2001

Calavo Growers of California
Calavo Growers, Inc.
2530 Red Hill Avenue
Santa Ana, CA 92705

        Re:     Registration Statement on Form S-4 (Registration No. 333-     )

Ladies and Gentlemen:

        We have acted as counsel to Calavo Growers of California, a nonprofit
cooperative association organized under the California Food and Agricultural
Code ("Calavo"), and Calavo Growers, Inc., a California corporation ("New
Calavo"), in connection with (i) a Registration Statement on Form S-4,
Registration No. 333-______ (the "Registration Statement"), that was filed by
New Calavo on April __, 2001 with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Securities
Act"), and (ii) an Agreement and Plan of Merger and Reorganization dated as of
February 20, 2001 (the "Merger Agreement") between Calavo and New Calavo. Among
other things, the Registration Statement and the Merger Agreement contemplate
the issuance by New Calavo of up to 10,000,000 shares (the "Shares") of its
common stock, $0.001 par value per share, in exchange for the outstanding shares
of the preferred stock and common stock of Calavo upon the merger of Calavo into
New Calavo. As used in this opinion, the term Registration Statement includes
all amendments to the Registration Statement that have been filed by New Calavo
with the Commission on or before the date hereof. This opinion is being given to
you pursuant to your request.

        As a basis for rendering our opinions expressed herein, we have reviewed
originals or copies of originals, certified or otherwise identified to our
satisfaction, of (i) the Registration Statement, (ii) the Merger Agreement,
(iii) New Calavo's Articles of Incorporation and Bylaws, each as amended to
date, (iv) resolutions of New Calavo's Board of Directors pertaining to the
issuance of the Shares, the Registration Statement, the Merger Agreement and
related matters, and (v) such other certificates of public officials,
certificates of officers of Calavo and New Calavo and other documents as we have
considered necessary or appropriate as a basis for rendering our opinions.

        As to questions of fact relevant to our opinions expressed herein, we
have relied (without any independent investigation or inquiry by us) upon
certificates and statements of Calavo, New Calavo, officers of Calavo and New
Calavo, public officials and others. Furthermore, in order to render our
opinions, we have made and relied upon such customary assumptions as we have
deemed necessary or appropriate. Among other things and in addition to any other
assumptions that are described in this opinion, we have made and are relying
upon the following assumptions, all without any investigation or inquiry by us:

   2

Calavo Growers of California
Calavo Growers, Inc.
__________, 2001
Page 2

        A. All signatures on documents reviewed by us are genuine; all documents
submitted to us as originals are authentic; and all documents submitted to us as
copies conform to the originals of such documents, and such originals are
authentic.

        B. All factual representations and other statements regarding factual
matters that are contained in the certificates of officers of Calavo and New
Calavo that we have examined are true and correct, and all factual
representations and other statements regarding factual matters by New Calavo or
Calavo that are contained in the Registration Statement or the Merger Agreement
are true and correct.

        We have made such investigations of law as we have deemed necessary or
appropriate as a basis for rendering the opinions expressed herein, although we
have not examined any laws other than the laws of the State of California.
Accordingly, we express no opinion with respect to the laws of any other
jurisdiction, and we assume no responsibility with respect to the application or
effect of the laws of any other jurisdiction.

        This opinion is limited to the opinions expressly stated herein and does
not include any implied opinions. The opinions expressed herein are rendered as
of the date of this opinion. We do not undertake to advise you of matters that
may come to our attention subsequent to the date hereof and that may affect the
opinions expressed herein, including, without limitation, future changes in
applicable law.

        Based upon and subject to all of the foregoing and any and all other
qualifications, limitations and assumptions that are set forth below, we are of
the opinion that the Shares, when issued and delivered in accordance with the
terms and conditions of the Registration Statement and the Merger Agreement,
will be validly issued, fully paid and nonassessable.

        We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" in the information statement/prospectus that forms part of the
Registration Statement. By giving you this opinion and consent, we do not
thereby admit that we are within the category of persons whose consent is
required under Section 7 of the Securities Act or the rules and regulations of
the Commission promulgated thereunder.

                                       Very truly yours,

                                       TROY & GOULD
                                       Professional Corporation
   1

                                                                     EXHIBIT 8.1

              [Letterhead of Troy & Gould Professional Corporation]

                               ____________, 2001

Calavo Growers of California
Calavo Growers, Inc.
2530 Red Hill Avenue
Santa Ana, CA 92705

        Re:     Merger - Material Federal Income Tax Consequences

Ladies and Gentlemen:

        We have acted as counsel to Calavo Growers of California, a nonprofit
cooperative association organized under the California Food and Agricultural
Code ("Calavo"), and Calavo Growers, Inc., a California corporation ("New
Calavo"), in connection with (i) a Registration Statement on Form S-4,
Registration No. 333-______ (the "Registration Statement"), that was filed by
New Calavo on April __, 2001 with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Securities
Act"), and (ii) an Agreement and Plan of Merger and Reorganization dated as of
February 20, 2001 (the "Merger Agreement") between Calavo and New Calavo. Among
other things, the Registration Statement and the Merger Agreement contemplate
the issuance by New Calavo of up to 10,000,000 shares of its common stock in
exchange for the outstanding shares of the preferred stock and common stock of
Calavo upon the merger of Calavo into New Calavo (the "Merger"). As used in this
opinion, the term Registration Statement includes all amendments to the
Registration Statement that have been filed by New Calavo with the Commission on
or before the date hereof. You have requested our opinion regarding the material
federal income tax consequences of the Merger.

        As a basis for rendering our opinions expressed herein, we have reviewed
originals or copies of originals, certified or otherwise identified to our
satisfaction, of (i) the Registration Statement, (ii) the Merger Agreement, and
(iii) such other certificates of public officials, certificates of officers of
Calavo and New Calavo and other documents as we have considered necessary or
appropriate as a basis for rendering our opinions. As to questions of fact
relevant to our opinions expressed herein, we have relied (without any
independent investigation or inquiry by us) upon certificates and statements of
Calavo, New Calavo, officers of Calavo and New Calavo, public officials and
others.

        In order to render our opinions, we have made and relied upon such
customary assumptions as we have deemed necessary or appropriate. Among other
things and in addition to any other assumptions that are described in this
opinion, we have made and are relying upon the following assumptions, all
without any investigation or inquiry by us:

   2

Calavo Growers of California
Calavo Growers, Inc.
____________, 2001
Page 2

        A. All signatures on documents reviewed by us are genuine; all documents
submitted to us as originals are authentic; and all documents submitted to us as
copies conform to the originals of such documents, and such originals are
authentic.

        B. All factual representations and other statements regarding factual
matters that are contained in the certificates of officers of Calavo and New
Calavo that we have examined are true and correct, and all factual
representations and other statements regarding factual matters by New Calavo or
Calavo that are contained in the Registration Statement or the Merger Agreement
are true and correct.

        C. The Merger will be consummated in accordance with the terms and
conditions of the Merger Agreement, which will not be modified in any respect
prior to the consummation of the Merger. The Registration Statement accurately
describes (i) the business, financial condition and capitalization of Calavo and
New Calavo, (ii) the business purpose of the Merger, and (iii) all other
material facts of the Merger.

        As a basis for rendering the opinions expressed herein, we have
considered and relied upon the applicable provisions of the Internal Revenue
Code of 1986, as amended (the "CODE"), the Treasury regulations promulgated
thereunder, published administrative rulings and judicial decisions and such
other authorities as we have deemed appropriate. We express no opinion with
respect to the laws of any jurisdiction other than the federal laws of the
United States to the extent specifically set forth below, and we assume no
responsibility with respect to the application or effect of the laws of any
other jurisdiction.

        This opinion is limited to the opinions expressly stated herein and does
not include any implied opinions. Except as specifically set forth below, we
express no opinion as to any federal, state, local or foreign tax consequences
of the Merger or otherwise.

        The opinions expressed herein are rendered as of the date hereof. We do
not undertake to advise you of matters that may come to our attention subsequent
to the date hereof and that may affect the opinions expressed herein, including,
without limitation, future changes in applicable law. The statutory provisions,
regulations, interpretations and other authorities on which we have based our
opinions are subject to change, possibly with retroactive effect, and any
material change which is made after the date hereof in any of such statutory
provisions, regulations, interpretations or other authorities could affect the
conclusions stated herein. In addition, there can be no assurance that positions
contrary to our opinions expressed herein will not be taken by the Internal
Revenue Service.

   3

Calavo Growers of California
Calavo Growers, Inc.
____________, 2001
Page 3

        Based upon and subject to all of the foregoing and any and all other
qualifications, limitations and assumptions that are set forth below, we are of
the opinion that:

        1. The Merger will qualify for non-recognition treatment under the Code,
with the following federal income tax consequences:

                (a) Neither Calavo nor New Calavo will recognize gain or loss in
the Merger;

                (b) No gain or loss will be recognized by holders of Calavo
stock upon their receipt of New Calavo common stock in the Merger;

                (c) The aggregate tax basis of the New Calavo common stock
received in the Merger by the holders of Calavo stock will be the same as the
aggregate tax basis of the Calavo stock exchanged therefor; and

                (d) The holding period of the New Calavo common stock received
in the Merger will include the period for which the Calavo stock surrendered in
exchange therefor was held, provided that the Calavo stock was held as a capital
asset at the time of the Merger.

        2. The discussion that is set forth under the caption "The Conversion --
Material Federal Income Tax Consequences" in the information
statement/prospectus (the "PROSPECTUS") that forms part of the Registration
Statement is a correct description of the material federal income tax
consequences of the Merger, subject to the qualifications and limitations
described therein and in this opinion.

        We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to our firm under the captions "The
Conversion -- Material Federal Income Tax Consequences" and "Legal Matters" in
the Prospectus. By giving you this opinion and consent, we do not thereby admit
that we are within the category of persons whose consent is required under
Section 7 of the Securities Act or the rules and regulations of the Commission
promulgated thereunder.

                                       Very truly yours,

                                       TROY & GOULD
                                       Professional Corporation
   1

                                                                 EXHIBIT 10.1

                              CALAVO GROWERS, INC.

                              MARKETING AGREEMENT

GROWER'S NAME ____________________________________________________
GROWER'S ADDRESS _________________________________________________
GROWER'S TAXPAYER I.D. NUMBER ____________________________________
GROWER'S ELECTION: ____ MONTHLY OR ____ WEEKLY POOL
EFFECTIVE DATE OF AGREEMENT ______________________________________
GROVE LOCATION ___________________________________________________
NUMBER OF TREES ____________

     This Marketing Agreement (the "Agreement") is entered into by and between
the above-named grower (the "Grower") and Calavo Growers, Inc. ("Calavo"), a
California corporation whose address is 2530 Red Hill Avenue, Santa Ana,
California 92705-5542. The effective date of this Agreement is specified above.
However, if this Agreement is being executed by the parties prior to the merger
of Calavo Growers of California, a California nonprofit cooperative association,
into Calavo, the effective date of this Agreement will be the date on which the
merger occurs. Calavo will advise the Grower of the date of the merger, and
neither party will have any obligations under this Agreement until the merger
occurs.

     The Grower represents that it is the producer of California avocados.
Calavo desires to pack and market these avocados. The following terms are hereby
agreed upon by both parties:

1. Delivery

     The Grower will deliver to Calavo all of the avocados grown by the Grower
on the grove listed above and on all other land now or hereafter owned by the
Grower or in the Grower's possession as tenant, except avocados that are
retained for the Grower's personal use or consumption and except avocados of
such varieties that Calavo notifies the Grower are not economical to handle
because of the character, quantity or marketability of the fruit. Except as
described in the preceding sentence, Calavo will market, when and where
feasible, all of the avocados grown by the Grower.

     Delivery of the avocados will be made at the Grower's expense and risk of
loss and at the time and place and in the manner reasonably specified by the
Grower, including, without limitation, through the Grower's right to require
Calavo to obtain possession of the avocados at the Grower's grove. Title to the
avocados will pass to Calavo only on the date that it obtains actual possession
of the avocados.

     Calavo has the right to inspect the Grower's groves for crop estimating and
harvesting purposes during reasonable hours. The Grower will assist Calavo in
preparing an annual crop forecast. Calavo has full control of grading, sizing
and weight standards. The Grower will comply with all applicable laws and
regulations regarding the production, harvesting and delivery of the avocados.

2. Term

     The term of this Agreement will be for one year from the effective date and
will automatically renew on a year-to-year basis unless either party gives
written notice of termination of this Agreement at least thirty days prior to
the applicable anniversary of the effective date. Calavo may also terminate this
Agreement upon written notice to the Grower if the Grower is in breach of this
Agreement and fails to correct the breach within ten days after receipt of
written notice of the breach from Calavo. If the Grower engages in a bona fide
sale or lease to a third party of the grove(s) that is subject to this
Agreement, this Agreement will terminate as to such grove(s) on the effective
date of the sale or lease if (i) the Grower provides Calavo with satisfactory
written evidence of the bona fide nature of the sale or lease and (ii) all of
the Grower's obligations hereunder have been satisfied prior to the sale or
lease (including the obligation to deliver all avocados harvested prior to the
sale or lease). Subject to the preceding sentence,
                                       1
   2

this Agreement is binding upon the successors and assigns of the Grower and
Calavo, although neither party has the right to assign its obligations to
another person or entity. No termination of this Agreement will release either
party from liability for breaches of this Agreement, and the provisions
described below in Sections 4 and 7 to 9 will survive the termination of this
Agreement.

3. Marketing

     Calavo will receive, pack, market and sell the avocados delivered by the
Grower, at such prices and terms, in such form, and at such times as in its
judgment and discretion it deems best, and will pay the Grower as payment in
full the net proceeds received from the marketing of the avocados less a packing
and marketing fee established by its Board of Directors. The packing and
marketing fee will include, but is not limited to, the costs of receiving,
processing, manufacturing, handling, transporting, advertising, promoting, and
other costs of marketing and administrative costs, and will also include a
profit to Calavo. The avocados may be pooled in one or more pools established by
the Board of Directors and will not be identified to the Grower once they are
graded. Packing and marketing of the avocados will be under the exclusive
control of Calavo.

4. Liens

     Calavo is hereby given a first lien upon all sales proceeds as security for
any and all amounts of any nature owed by the Grower to Calavo, and Calavo may
offset amounts due Calavo against amounts owed to the Grower under this
Agreement. Such rights of Calavo will not be barred by the running of any
statute of limitations, and such rights may be subordinated by appropriate
written instructions when authorized by the Board of Directors in its sole
discretion. The Grower will execute and deliver any documents requested by
Calavo to implement or perfect its rights under this Agreement.

5. Labor

     Calavo will have no control whatsoever over the labor relations policies or
conduct or direction of labor relations of the Grower, nor will the Grower have
any control over Calavo's labor policies.

6. Consignment

     The Grower acknowledges that Calavo may reconsign the avocados to another
party.

7. Notices; Entire Agreement; Severability

     All notices to either the Grower or Calavo will be delivered in writing,
either personally, by facsimile transmission or by registered, certified or
express mail, return receipt requested, postage prepaid, to the address for such
party specified above or to such other address as the party may from time to
time advise the other party, and will be deemed given and received as of actual
personal delivery, on the first business day after the date of delivery shown on
any such facsimile transmission or upon the third business day after deposit in
the U.S. Mail if registered, certified or express mail is used, as the case may
be.

     This Agreement constitutes the entire agreement of the Grower and Calavo
regarding the subject matter hereof and supersedes all prior agreements and
understandings pertaining to such subject matter. This Agreement may be amended
only by a writing signed by the Grower and Calavo.

     If any provision of this Agreement is determined by a duly appointed
arbitrator or a court of competent jurisdiction to be invalid or unenforceable,
the remaining provisions of this Agreement shall continue in full force and
effect.

8. Remedies for Grower's Breach

     The Grower's failure to deliver avocados as required by this Agreement will
result in injury to Calavo, and it would be extremely difficult and
impracticable to fix the amount of damages that Calavo will incur. Therefore,
the Grower agrees to pay to Calavo, upon Calavo's demand, the following amounts
as liquidated
                                       2
   3

damages for all avocados that are withheld, delivered, sold, consigned or
otherwise marketed by or for the Grower other than in accordance with the terms
of this Agreement:

          (a) $1,000; plus

          (b) An amount equal to Calavo's packing and marketing fee per pound of
     avocados that is in effect as of the date of the Grower's breach of this
     Agreement, multiplied by the pounds of avocados that were withheld,
     delivered, sold, consigned or otherwise marketed by or for the Grower other
     than in accordance with the terms of this Agreement.

     The foregoing right to recover liquidated damages is in addition to all
other remedies available to Calavo under applicable law including, without
limitation, the right to obtain injunctive relief, and all such remedies are
cumulative and not exclusive.

9. Governing Law; Enforcement of Agreement

     This Agreement is governed by the internal laws of the State of California.
All disputes concerning this Agreement will be settled by arbitration, before
one arbitrator, in accordance with the commercial arbitration rules of the
American Arbitration Association then in effect. The arbitrator will be selected
in accordance with such commercial arbitration rules. A party is entitled to
initiate an arbitration proceeding if a dispute cannot be resolved amicably
within ten days after the other party has been notified of the existence of the
dispute. The arbitrator is authorized to grant injunctive relief and/or specific
performance in addition to monetary relief. The arbitrator hereby is instructed
to interpret and enforce this Agreement in accordance with its terms. All
arbitration proceedings will be held in Los Angeles, California. Notwithstanding
the foregoing, each party is entitled to bring an action for temporary or
preliminary injunctive relief at any time in any court of competent jurisdiction
in order to prevent immeasurable and irreparable injury that might result from a
breach of this Agreement that occurs prior to the conclusion of an arbitration
proceeding.

     The award of the arbitrator in any arbitration proceeding will be final and
may be enforced in any court of competent jurisdiction, and an action to compel
arbitration may be brought in any court of competent jurisdiction. The
unsuccessful party to any arbitration proceeding or to any court action that is
permitted by this Agreement will pay to the successful party all costs and
expenses, including, without limitation, reasonable attorneys' fees and the fees
of the arbitrator, incurred therein by the successful party. EACH PARTY AGREES
THAT ALL RIGHTS TO A TRIAL BY A JURY OF ANY CLAIM CONCERNING THIS AGREEMENT ARE
ABSOLUTELY AND FOREVER WAIVED.

DATED:  ________________________________  CALAVO GROWERS, INC.

                                          By:
                                             -------------------------------

                                          Title:
                                             -------------------------------

                                          [Name of Grower]

                                          By:
                                             -------------------------------

                                          Title:
                                             -------------------------------

                                       3
   1
                                                                    EXHIBIT 10.2

                               MARKETING AGREEMENT

      This agreement made as of the first day of April, 1996 by and between
TROPICAL HAWAIIAN PRODUCTS, INC., a Hawaiian corporation whose address is PO Box
210, Keaau, Hawaii, 96749 (hereinafter called "THP"), and CALAVO GROWERS OF
CALIFORNIA, a California corporation, whose address is 15661 Red Hill Avenue,
Tustin, California 92680 (hereinafter called "Calavo").

      WHEREAS THP is engaged in the growing and packing of papaya in the Puna
district of the Island of Hawaii,

      WHEREAS Calavo is engaged in the receiving and packing of various food
products and in marketing these products and certain processed food products in
the United States of America and elsewhere, and

      WHEREAS THP and Calavo desire to enter into a papaya marketing agreement
(hereinafter "Agreement"), and Calavo desires to license THP to employ the
Calavo trademark on papaya to be marketed by Calavo for THP hereunder.

      NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements herein contained, THP and Calavo agree as follows:

      Article 1. APPOINTMENT. THP hereby appoints Calavo to be a non-exclusive
marketer of its papaya in the territory set forth in Article 2 below, subject to
the terms and conditions herein contained, and Calavo accepts such appointment.
THP intends to market in the same market areas under its brand name and will not
interfere with Calavo's customer base.

      Article 2. TERRITORY. The territory covered by this Agreement is the
continental United States of America, Canada and Europe.

      Article 3. TERM. The term of this Agreement shall be for a period of five
(5) years commencing on the first day of April, 1996 and shall continue on a
year-to-year basis unless either party gives the other six (6) months prior
written notice of its intention to terminate the Agreement. For purposes of this
Agreement, the fiscal year shall be deemed to be from November 1 until October
31.

      Article 4. PRICES AND TERMS.

      4.1 QUANTITY. THP agrees to provide on consignment to Calavo a minimum
      sufficient to meet Calavo's marketing needs of its export grade production
      not sold in State of Hawaii from the Puna district of the Island of
      Hawaii, subject to the following paragraph, destined for the geographical
      marketing area defined in Article 2, above.

      4.2 MARKETING. Calavo will use its best efforts to market such papaya at
      such prices and terms as are reasonably satisfactory and profitable to THP
      and shall return to THP the FOB Hilo price less Calavo's marketing
      commission pertaining thereto.

      4.3 PRICE. For purposes of this Agreement, the FOB Hilo price is defined
      as the gross sales proceeds less the deduction for Calavo's actual costs,
      without markup, for transportation and, when necessary, warehousing,
      insurance, handling and palletization from the proceeds of papaya sold by
      Calavo on a basis other than FOB port of entry. Proceeds shall include any
      credits issued to customers by Calavo in compensation for unsatisfactory
      papaya. Calavo may use its warehouse facilities to store product in which
      case THP agrees to Calavo's billing rate as its "actual cost."

      4.4 MARKETING COMMISSION. Calavo shall be entitled to deduct from the FOB
      Hilo price a marketing commission for that volume of THP papaya marketed
      by it under any label or brand controlled by THP or any label or brand
      owned or controlled by Calavo.

   2

                                                                          Page 2

      Article 5. PAYMENT AND YEAR-END ACCOUNTING

      5.1 PAYMENTS. Calavo shall provide to THP a summary showing the
      distribution of all papaya sold including the port of entry, volume, sales
      price, distribution costs and such other information as required to carry
      out this Agreement. Payment to THP for the total net proceeds due THP for
      the reported period shall accompany the summary. Calavo shall make
      available to persons designated in writing by THP all records of Calavo
      which are used in the preparation of the monthly summary and payment to
      THP. Said records will be made available at least once each month at
      Calavo's principal place of business. Payment dates are shown on Exhibit
      A.

      5.2 YEAR-END ACCOUNTING. At the end of each fiscal year, Calavo shall make
      available to THP a written final accounting of all THP papaya delivered to
      and marketed by Calavo, said accounting to include a physical inventory of
      all papaya in storage.

      5.3 YEAR-END PAYMENTS. Any payments due either Calavo or THP pursuant to
      this Agreement shall be made not later than thirty (30) days following the
      completion of the annual audit of the fiscal year with respect to which
      such payments are due.

      5.4 ADVANCES. Calavo will advance the estimated value, less deductions, of
      the unsold units made available to Calavo by the last Saturday of each
      calendar month. The advance will be recovered with the next settlement
      payment. If there are insufficient funds available to recover the advance
      amount, THP will refund the balance upon demand.

      Interest will be deducted at the rate charged by CoBank to Calavo for its
      seasonal term loans for the applicable advance period. Interest charges
      will be for one calendar month.

      The advance will be included in the regular monthly payment.

      Article 6. RESTRICTIVE COVENANT. During the term of this Agreement, Calavo
      shall not engage in marketing or selling, directly or indirectly, of THP
      papaya in the state of Hawaii unless requested by THP in writing.

      Article 7. CANCELLATION. either party may cancel this Agreement at any
      time and for any reason upon providing to the other party six (6) months
      prior written notice.

      Article 8. RESPONSIBILITIES OF THP. THP shall be responsible for growing,
      preparation for market and delivery of papaya, loaded into containers or
      individual cases as specified by Calavo, to the air or ocean carrier. THP
      shall approve the design of, and be responsible for procurement of,
      packaging material. THP shall be responsible for all losses due to arrival
      of unsatisfactory fruit at Calavo's customers when such arrival results
      from the unsatisfactory condition of fruit on delivery.

      Article 9. RESPONSIBILITIES OF CALAVO. Calavo shall be responsible for
      arranging for and payment of transportation from ports of entry to its
      mainland warehouse facilities to customers' addresses and for pricing
      schedules, invoicing of customers and collection of accounts receivable.
      Calavo shall be responsible for all bad debts arising from Calavo's sale
      of fresh papaya. Calavo shall be responsible for advertising, promotion
      and all other appropriate marketing functions and shall perform these with
      diligence. Calavo shall be the sole judge of the quality and quantity of
      these marketing functions, and no liability shall be incurred by THP in
      connection with any of these functions.

      Article 10. DELIVERY, CUSTODY AND CONTROL. All papaya delivered by THP for
      sale will be produced, prepared and delivered in condition to meet quality
      standards reasonably satisfactory to Calavo. Such fruit as delivered will,
      moreover, be of such quality and condition as is necessary to satisfy
      federal food and drug laws and regulations, and any similar laws or
      regulations which may from time to time apply to the product delivered. No
      papaya delivered by THP to Calavo hereunder will, when delivered, be
      adulterated or misbranded within the meaning of the Federal Food, Drug and
      Cosmetic Act of 1938, as amended, and that such products will not be
      produced or delivered to Calavo in violation of Section 404 of said act.
      Fruit quality is a condition precedent for this Agreement.

   3

                                                                          Page 3

      Custody and control of papaya shall pass from THP to Calavo upon delivery
      to and receipt by the air or ocean carrier.

      Article 11. MARKETING COOPERATION. The parties recognize that close
      cooperation is essential to the success of this Agreement and each shall
      accord to the other a high degree of cooperation in scheduling the
      production, handling and distribution of papaya marketed hereunder.

      Calavo shall provide to THP, quarterly, an updated 12 month papaya sales
      projection. THP will use its best efforts to arrange its production
      schedules to meet these sales requirements. The parties shall work out
      between themselves an information system to provide THP with order data to
      enable THP to schedule its production activities efficiently. THP, in
      turn, will provide fiscal year projected production information to Calavo
      by month. In addition, THP will provide to Calavo updated production
      forecasts in a timely manner.

      Article 12. EXCUSE OF PERFORMANCE. The performance of this Agreement on
      the parts of THP and Calavo shall be excused for any contingency beyond
      their control, similar or dissimilar to strikes, labor controversies,
      fires, war, acts of God or the elements, embargoes, governmental orders or
      restrictions as to the growing, sale or delivery of papaya, inability to
      secure transportation, strikes or lockouts or stoppage of work in the
      plants of THP or Calavo which prevent orderly operation, or inability for
      any other reason not due to gross negligence or misconduct of THP or
      Calavo to fulfill their respective performances under this Agreement. Said
      excuse of performance shall continue only for the duration of said
      contingency.

      Article 13. TRADEMARK

      13.1 LICENSE. All papaya marketed hereunder shall be marketed under the
      Calavo mark. Accordingly, Calavo grants to THP the right to use the
      trademark "Calavo" on, and only on, papaya delivered by THP to Calavo
      hereunder.

      13.2 INSPECTION. THP will permit duly authorized representatives of Calavo
      to inspect the premises of THP where papaya are produced, processed and/or
      packaged at all reasonable times and upon advance written notice to THP.
      Further, THP shall, upon written request of Calavo, submit to Calavo or to
      its duly authorized representatives samples of papaya which it intends to
      deliver for sale under the trademark for the purpose of ascertaining or
      determining compliance with reasonable standards of quality established
      from time to time by Calavo.

      13.3 USE OF TRADEMARK. THP shall not use the trademark in connection with
      papaya delivered and sold hereunder in a manner harmful to Calavo's
      ownership of the trademark. THP shall provide Calavo with samples of all
      literature, packages, labels and labeling prepared by THP and using
      Calavo's trademark, none of which shall be used without Calavo's prior
      consent. When using the trademark under this Agreement, THP shall
      undertake to comply substantially with all laws pertaining to trademarks
      in force in countries where the papaya is sold.

      13.4 REGISTRATION OF LICENSE. If the law requires, Calavo shall make
      application to register THP as a Permitted User or Registered User of the
      trademark and, if necessary, THP shall undertake to join in such
      application and to execute and such documents as may be necessary to
      implement such application.

      13.5 EXTENT OF LICENSE. The right granted in this Article 13 shall be
      nonexclusive and shall not be transferable without Calavo's prior written
      consent.

      13.6 MAINTENANCE OF TRADEMARK. Calavo will use its best efforts to
      register and maintain, or cause to be registered and maintained, the
      trademark to enable THP's papaya to be distributed and sold under the
      trademark as provided herein.

      13.7 TERMINATION. Upon termination of this Agreement (regardless of how
      terminated), all rights of THP with respect to the Calavo trademark shall
      thereby immediately terminate. THP shall execute such documents and shall
      take such actions as Calavo may reasonable require to confirm the
      termination of THP's interest in said trademark.

   4

                                                                          Page 4

      Article 14. INSURANCE. Each party shall obtain and keep in effect product
      liability insurance naming the other party as additional insured which
      covers liabilities arising from the growing, packaging, marketing and
      selling of papaya with liability limits of not less than one million
      dollars ($1,000,000.00).

      Article 15. INDEMNIFICATION. Except as otherwise provided herein, THP and
      Calavo each will indemnify, defend and hold the other harmless from any
      and all claims, actions, damages, liabilities, costs and expenses,
      including reasonable attorneys' fees and expenses, arising out of the
      performance of their respective obligations under this Agreement.

      Article 16. IMMEDIATE TERMINATION. In the event of the filing of a
      petition by or against either party for its adjudication as a bankrupt or
      for any reorganization or arrangement of the party under any bankruptcy,
      insolvency or similar law, which within thirty (30) days of the filing
      thereof has not been dismissed, or any assignment made for the benefit of
      either party's creditors, this Agreement shall immediately become void and
      unenforceable, and no further rights or liabilities shall accrue to either
      party hereunder.

      Article 17. SUCCESSORS AND ASSIGNS. This Agreement shall be binding on the
      successors and assigns of either party, but shall not be assigned by
      either party hereto without the prior written consent of the other party.

      Article 18. MODIFICATION. No termination hereof or modification or waiver
      of any of the provisions herein contained, or any future representations,
      promises or conditions in connection with the subject matter hereof, shall
      be binding upon either THP or Calavo unless made in writing and signed on
      the parties' behalf by their duly authorized representatives.

      Article 19. ARBITRATION. Any dispute under this Agreement shall be settled
      by arbitration in Los Angeles, California pursuant to the rules, then
      prevailing, of the American Arbitration Association.

      Article 20. CONSTRUCTION AND INTERPRETATION. This Agreement shall be
      governed by and interpreted and construed in accordance with the laws of
      and applicable to the State of California.

      Article 21. NOTICE. All notices required of THP or Calavo shall be sent by
      mail to the parties' above-listed addresses.

      Article 22. INTEGRATION AND EFFECT. this Agreement represent and
      integrates all of the terms and conditions and representations made by
      either party and supersedes any other contract heretofore entered into or
      discussed by the parties hereto.

      IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
      and year first above written.

TROPICAL HAWAIIAN PRODUCTS, INC.        CALAVO GROWERS OF CALIFORNIA
FEDERAL ID # 77-0272980                 FEDERAL ID # 95-0591900

By  /s/ LECIL E. COLE                     By   /s/ ALLEN J. VANGELOS
  ------------------------------             -----------------------------------

Date    4-8-96                          Date    4/9/96
    ----------------------------             -----------------------------------

                                          By   /s/ EGIDIO CARBONE
                                             -----------------------------------

                                        Date     4/9/96
                                             -----------------------------------

   5

                   MARKETING AGREEMENT BETWEEN CALAVO AND THP

                                    EXHIBIT A

DETAIL:

1.      Payment shall be by wire transfer to THP's bank account as follows:

        a. Sales from the first day of the month to the last day of the month,
payment will be made no later than ten (10) days after cut off.

            Account Number
                              ------------------------------

            Bank Name
                         ------------------------------

            Bank Address
                            ---------------------------

                            ---------------------------

            ABA Number
                          ----------------------------

2.      Payment for all Calavo marketed fruit will be made as follows:

        a. Customer Invoiced Amount (C & F)

        b. Less: Freight and Charges to Port of Entry or Customer

        c. Less: Cooling/Conditioning Charge @ 30 cents/Box

        d. Equals: FOB Hilo

        e. Less: Commission @ 10% (FOB Hilo)

        f. Net Due to THP

        g. Plus: Cooling/Conditioning Charge

        h. Less: Repacking, Inspection, Etc. Fees Incurred

        i. Gross Proceeds to THP

3.      Rebate from United Airlines based upon volume discount will be paid to
        THP when the credit is utilized less 10% commission based on detail
        supplied by carrier. Travel credits will be used 60% THP, 40% Calavo;
        it is understood and agreed that all travel credit used by Calavo will
        be for the promotion of papayas. THP will deliver sufficient volumes to
        qualify for "minimum guarantees" as detailed in United Airlines Cargo
        Agreement.

4.      THP will reimburse Calavo for all advertising and promotion expenses.
        THP will approve all programs by the first of each quarter. Calavo will
        deduct the cost from each settlement and deliver supporting
        documentation with each deduction.

   1
                                                                    EXHIBIT 10.3

LEASE AGREEMENT ENTERED INTO BY AND BETWEEN TEDE S.A. DE C.V., (HEREINAFTER
REFERRED TO AS "TEDE"), HEREIN REPRESENTED BY MR. MARIO TERAN DEL RIO, AND BY
CALAVO FOODS DE MEXICO, S.A. DE C.V. (HEREINAFTER REFERRED TO AS THE "COMPANY"),
HEREIN REPRESENTED BY MR. EVERETT J. TAYLOR, PURSUANT TO THE FOLLOWING RECITALS
AND CLAUSES:

                                   RECITALS:

I. - TEDE hereby declares that:

A. It is a company organized and existing under the Mexican General Corporation
Law, as per Public Instrument No. 22,582, executed before attorney LIC.
GONZALO GONZALEZ ALVAREZ, Public Notary No. 6 of the city of Mexicali, Baja
California, Mexico, having its corporate object the development and operation
of an industrial Park in the city of Mexicali, Baja California, Mexico.

B. MR. MARIO TERAN DEL RIO is its attorney-in-fact, as it appears in Public
Instrument No. 22,582/Vol.262, executed before attorney GONZALO GONZALEZ
ALVAREZ, Public Notary No. 6 of the city of Mexicali, Baja California, Mexico.

C. TEDE'S registration number at the Federal Registry of Taxpayers is:
TED-781027-R72.

D. The address at which it has its principal place of business is: CARRETERA
UNION MARAN #1001, PARQUE INDUSTRIAL MARAN, MEXICALI, BAJA CALIFORNIA, MEXICO.

E. TEDE has established an Industrial Development, hereinafter referred to as
the Maran Industrial Park, as more specifically shown and illustrated on in
Exhibit "A", which is attached hereto and made a part hereof.

F. The parties desire to enter into a Lease of part of lot number 9, located
in the Industrial Park and of certain Improvements that will be constructed on
the land. The land and the Improvements together shall hereinafter be referred
to as the Leased Property as shown in block diagram referred to as Exhibit "B",
which is attached hereto and made a part hereof. TEDE also states that there
are no existing liens other than non-delinquent taxes or existing mortgages.

G. That it has previously applied for and obtained financial loans through
Mexican and Foreign Banking and Lending Institutions, with which funds,
building and Improvements located in the Industrial Park, were constructed.

H. That TEDE is authorized to use the land described on Recital I.F., and is
duly authorized by its owner, Maran de Mexicali, S.A. de C.V., from which Mario
Teran del Rio is the President and attorney-in-fact as it appears in Public
Instrument No. 12,578/Vol. 198, executed before attorney GONZALO GONZALEZ
ALVAREZ, Public Notary No. 6 of the city of Mexicali, Baja California, Mexico,
and has the right to use the property without obtaining consent of another
party.
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II.--COMPANY hereby declares that:

A. It is a company organized under the Mexican General Corporation Law as per
Public Instrument No. 29,034 executed on 26-09, 1994 before attorney F. Diaz
Ceballos Notary Public No. 4 of the city of Mexicali, Baja California, Mexico.

B. Mr. Everett Jerome Taylor verifies his capacity as attorney in-fact of
COMPANY as per Public Instrument No. 29,034 executed on 26-09, 1994 before
attorney F. Diaz Ceballos, Notary Public No. 4 of the city of Mexicali, Baja
California, Mexico.

C. COMPANY'S registration number at the Federal Registry of Taxpayers is:
CFM-940926-K48.

D. The address at which it has its principal place of business is: CALLE
ELECTRA #1099, PARQUE INDUSTRIAL MARAN, MEXICALI, B.C., Mexico.

E. That it wishes to enter into a Lease Agreement on the Land and Improvements
described on Recital I.F. described herein above. The land area is 103,983.79
FT(SQUARED) (ONE HUNDRED AND THREE THOUSAND NINE HUNDRED AND EIGHTY THREE POINT
SEVENTY NINE SQUARE FEET). The covered area is 53,311 FT(SQUARED) (FIFTY THREE
THOUSAND THREE HUNDRED AND ELEVEN SQUARE FEET), including 3,000 FT(SQUARED)
(THREE THOUSAND SQUARE FEET) OF MAIN OFFICE/LUNCHROOM/RESTROOM AREAS. The Lessee
agrees to the layout and distribution illustration described and shown on
building layout labeled Exhibit "C", which forms an integral part of this Lease
Agreement.

F. TEDE hereby authorizes COMPANY, to partially occupy the Leased Property as
of November 15, 1994, without this implying acceptance of Improvements, so that
COMPANY may initiate installation of its equipment in the Leased Property, and
also obligates to have the Leased Property and Improvements operational by
December 15, 1994.

                                    CLAUSES:

I. SCOPE OF LEASE AGREEMENT.

On the express terms and conditions set forth hereinafter, the scope of this
Lease Agreement is as follows: TEDE hereby Leases to COMPANY and COMPANY hereby
Leases from TEDE the land in the Industrial Park as described on Exhibit "B",
which is attached hereto and made a part hereof, and the Improvements as more
specifically described hereinafter in this Lease Agreement, as shown on Exhibit
"D" of this Contract.

II. CONSTRUCTION BY TEDE.

A. TEDE will construct on the Land, at TEDE'S sole expense, in good and
workmanlike manner, certain Improvements which shall hereinafter be referred to
as the Improvements. Said

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Improvements will be made in accordance with plans and specifications which
have been mutually approved by TEDE and COMPANY and such approval is hereby
acknowledged by the parties, as shown on Exhibits C & D.

TEDE shall deliver the premises complete and ready for occupancy 55 (Fifty five
days) working days (excluding acts of God) after the signing of this lease
Agreement, pursuant with recital II.F. and free of any construction related
liens.

B. TEDE will perform all construction with respect to the Improvements in
accordance with all laws, ordinances, regulations, and orders of governmental
authorities, and Industrial Park Regulations which are attached hereto as
Exhibit "E".

C. TEDE has constructed and installed Improvements serving the Leased Property,
including street pavements, curbs and gutters, street lighting & utilities,
including sanitary sewers, storm drainage, electricity, telephone and water
services within the streets or adjacent to the Leased Property, pursuant to the
Building plans and all requirements of the competent governmental agency that
has jurisdiction over the Leased Property.

III. INSTALLATIONS BY COMPANY.

A. COMPANY may, at its expense, install on the Leased Property, such trade
fixtures, equipment and furniture as it may deem necessary, provided that such
items are installed and are removable without damage to the structural integrity
of the Improvements. Said trade fixtures, equipment and furniture shall remain
the COMPANY'S property and, unless COMPANY is in default hereunder, shall be
removed by COMPANY upon expiration of the term hereof, or earlier termination of
this lease. COMPANY may also install temporary Improvements in the interior of
the Improvements upon the Leased Property, provided that such Improvements are
installed and are removable without damage to the structure of the building.
Such Improvements shall remain the property of the COMPANY and, unless COMPANY
is in default hereunder, shall be removed by COMPANY upon expiration of the term
hereof or earlier termination of this Lease. COMPANY shall repair, at its sole
expense, all damage caused by the installation or removal of trade fixtures,
equipment, furniture or temporary Improvements.

B. COMPANY shall perform all installations in accordance with all laws,
ordinances, regulations, order of governmental authorities, and the Industrial
Park Regulations which are attached hereto as Exhibit "E".

IV. LEASE TERM AND COMMENCEMENT DATE.

A. Lease Agreement. This Lease Agreement shall be effective from the date of
execution hereof until the same is terminated as provided hereinafter.

B. Term. The term of this Lease shall commence upon TEDE'S completion of the
Improvements listed on Exhibits C & D, with compliance with all necessary
governmental approval for occupation and COMPANY'S receipt of such Improvements
and the Leased Property, said term

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   4
shall end on the first full "Lease Term" (as said term is hereinafter defined).
In the event TEDE does not deliver the improvements and impairs the COMPANY'S
operation and/or installation of the equipment, on or before December 15, 1994,
then COMPANY may terminate this lease agreement.

C. Term. The term "Lease Term" as used herein shall mean a period of ten (10)
consecutive years, obligatory for both parties. The first Lease Term shall
begin on the date of commencement of the term hereof, provided that the date of
commencement of such term shall occur on the first day of a calendar month; if
this is not the case, then the first Lease Term shall commence upon the first
day of the immediately succeeding calendar month, following the date of
commencement of such term.

In the case of a succeeding Lease Term, if any, it shall commence on the
anniversary date of the first Lease Term. The COMPANY shall have the right to
terminate this agreement at the end of the fifth year, by means of presenting
TEDE a written notice no less than 6 month previous to the end of the 60th
(sixtieth) month and no later than the start of the 61st month. Furthermore, if
the first early termination option is not exercised, then the COMPANY shall have
a second option to terminate that must be exercised by presenting a written
notice to TEDE no less than 90 days prior to the end of the 96th month and no
later than the start of the 97 month.

V. RENT.

A. Lease. As initial monthly base rent for the Lease of the Land and the
Improvements during the Lease Term, COMPANY shall pay to TEDE at the address of
TEDE stated above, the monthly sum of $21,846.84 (TWENTY ONE THOUSAND EIGHT
HUNDRED FORTY SIX DOLLARS AND 84 CENTS U.S.CY.). The rent shall be paid during
the first 3 (three) days of each calendar month. Any payment made after this
period will be subject to remedies available to TEDE as described in clause
XIX.2.

1. The base rent shall be adjusted on the third year, using the cumulative
increment in the Consumer Price Index for all Urban consumers (National index)
from the first two years of the Lease Term. After this first adjustment, the
rent shall be adjusted annually at the start of each succeeding Lease Year (4th
year), using the cumulative increment for the previous year from which the
adjustment is made.

B. COMPANY will pay the rent provided for in the above paragraph "A", in pesos,
Mexican Currency, at the rate of exchange in the free foreign market on the
date such sums are due and payable, or in U.S. Dollars. TEDE'S option must be
in compliance with Mexico's laws of Foreign Exchange.

The foregoing will not be considered to impede or hinder TEDE'S possibilities
and rights under Clause XII (Twelve) to negotiate or assign this agreement to
Mexican, United States or other Foreign Banking or Lending Institutions.

                                       4
   5
C.   Building Expansion. If the building is expanded during the initial term of
the Lease Agreement, the following additional charge will be made on top of the
monthly rent stated on Clause V.A. of this Lease Agreement: As additional
monthly rent for the Expansion of the building during the initial Lease Term,
COMPANY shall pay to TEDE at the address of TEDE stated above, the additional
rent equivalent for the then current lease rate per square foot of covered area
per month, at the time that the expansion is completed. The lease rate will be
applicable only to the improvements made by TEDE in addition to the original
improvements described on exhibit D.

D.   Liquidated Damages. In the event this Lease Agreement is terminated by TEDE
due to a default of COMPANY prior to or during the first (1st) six (6) months of
the Lease Term, TEDE shall be entitled to keep and retain as liquidated damages,
all sums paid or deposited by COMPANY, as prepaid rent or as a security deposit,
in addition to any other rights of TEDE as provided for herein.

E.   Setoff. The payment of any rent due under this Lease, shall not be withheld
or reduced for any reason whatsoever, except as provided for herein, and COMPANY
agrees to assert any claim, demand, or other right against TEDE only by an
independent proceeding, except as provided for herein.

F.   Option to renew. TEDE hereby grants to COMPANY an option to renew the term
of this lease for two additional periods (Option terms) of 5 (Five) years each.
Each option term will be binding for TEDE and optional for COMPANY. Once COMPANY
exercises option to renew, the 5 (five) year option term will be obligatory for
both parties. Each option to renew for an additional 5 (five) years may be
exercised by COMPANY by giving written notice at least ninety (90) days prior to
the end of the first Lease Term, or any extension thereof that may be granted by
TEDE.

G.   Advanced termination of Lease Term. In the event that COMPANY is prevented
from using the Leased Property, as provided herein, as a consequence of any act
of the United States or Mexican authorities, be it administrative, executive or
judicial, which results in the appropriation, forcible purchase, or surrender
in any manner of the assets of COMPANY, or may otherwise result in the
prevention of CALAVO FOODS INC. or COMPANY of doing business in Mexico, or
subject to significantly increased costs, not due to CALAVO FOODS INC., or
COMPANY'S fault, including taxes of operating or doing business in Mexico,
imposed by either the United States or Mexican government, then, and in such
event, COMPANY shall have the right to give TEDE notice of termination of this
Lease. Said notice must be issued and delivered to TEDE no less than 2 months
in advance to the vacancy of the premises. COMPANY may also give such notice of
termination of this Lease in the event that, due to negligence, wrongful or
unlawful acts of TEDE, COMPANY is prevented from the quiet, peaceful and
interrupted enjoyment of the Leased Property. This clause shall be effective
after the end of the 5th (Fifth) consecutive Lease Year.

VI.  USE.

The Leased Property shall be used and occupied for any lawful industrial
purpose, including the

                                       5

   6

processing of avocado or other food products, not in violation of the
Industrial Park Regulations attached hereto as Exhibit "E", such processing
activity is not in violation of the Industrial Park regulations, or any other
contractual restrictions. COMPANY shall promptly and adequately comply with all
laws, regulations, ordinances and orders of all governmental authorities
affecting the Leased Property, and its cleanliness, safety, hygiene and labor
facilities applicable to the COMPANY'S use of the Leased Property, including
and specially those of a sanitary and environmental nature. COMPANY shall not
perform or omit any actions that may damage the Leased Property (ordinary wear
and tear accepted), or be a nuisance, or menace to the other occupants of the
Industrial Park.

COMPANY shall be exclusively liable for any and all damages, fines or other
costs originated by its failure to abide by the above referred provisions.
COMPANY receives the Leased Property free of any pollutants or contamination in
the soil or its improvements and in the same conditions shall deliver it back
to TEDE upon termination hereof. COMPANY shall take all clean-up actions and be
liable for all costs incurred thereof. This clause shall survive termination of
this agreement.

VII. INSURANCE

A. Fire and other Insurance. During the Lease Term, COMPANY, at its sole
expense, shall obtain and maintain in full force an insurance policy covering
the greater amount of either N$3,875,000 New Pesos Mexican Currency (THREE
MILLION EIGHT HUNDRED AND SEVENTY FIVE THOUSAND NEW PESOS) or $1,250,000 U.S.
Dollars (ONE MILLION TWO HUNDRED AND FIFTY THOUSAND DOLLARS U.S. Cy), as
insurance for fire, lightning, falling aircraft, smoke, windstorm, earthquake,
hail, vehicle damage, volcanic eruption, strikes, civil commotion, vandalism,
riots, malicious mischief, and flood insurance, on the Leased Property. The
insurance amount shall be adjusted annually by TEDE, to reflect changes in the
property values, and the insurance policy coverage must be modified accordingly
by the COMPANY. TEDE shall be named the COMPANY'S beneficiary on this policy.

B. Comprehensive Liability Insurance. During the Lease Term, COMPANY shall, at
its own expense, obtain and maintain in full force a policy of comprehensive
liability insurance including property damage, that insures both COMPANY and
TEDE (and such other agents and employees of TEDE, TEDE'S subsidiaries or
affiliates, or TEDE'S assignees or any nominee of TEDE holding any interest in
the Leased Property, including without limitation, the holders of any mortgage
encumbering the Leased Property) against liability for injury to persons and
property and for death of any persons occurring in or about the Leased Property.

The liability insurance shall be in the amount of no less than $1,000,000 U.S.
dollars (ONE MILLION DOLLARS U.S. Cy.), or its equivalent in Mexican Currency.

C. Business Interruption and other insurance. COMPANY shall also obtain and
maintain annual Business Interruption insurance in the amount of the annual
rent provided for herein in favor of TEDE. COMPANY shall be responsible for
maintaining insurance on all of COMPANY'S own property. Except for insurance
upon COMPANY'S property, TEDE or its appointee shall be

                                       6
   7
named the COMPANY'S beneficiary of any and all proceeds from any and such
policy or policies, as TEDE'S interest may be.

D. Form and Delivery of Policies. Each insurance policy referred to in the
preceding paragraphs shall be in a form approved by the Department of Finance
and Public Credit and written with one or more companies licensed to exercise
insurance in Mexicali, Baja California, Mexico, and the policies shall provide
that it shall not be subject to cancellation or change, except after at least
30 (Thirty) days prior notice to TEDE. The policies, or duly executed
certificates for them, together with copies of receipts for payment of the
premiums thereof, shall be delivered to TEDE prior to the Commencement Date of
the Lease Term, as provided in Clause IV hereof.

All documents verifying the renewal of such policies shall be delivered to TEDE
at least 30 (Thirty) days prior to the expiration of the term of such coverage.
Prior to the Commencement Date of the Lease Term, each party shall procure and
maintain such insurance covering its own liability and property as each deems
appropriate.

E. Both parties mutually release the other from, and waive subrogation with
respect to responsibility due to damage or loss of their respective properties,
which damages or losses are covered by the insurance policies herein above
described, regardless if the amount of insurance is not sufficient to cover the
losses, provided that the policy then in effect, complied with the requirements
listed on Clause VII.A. of this Lease Agreement.

VII. TAXES AND ASSESSMENTS.

Property taxes are paid by TEDE and with the exception of the income tax and
asset tax imposed on TEDE, which shall be borne by TEDE, COMPANY shall pay all
taxes and assessments of every kind which are or may be levied at any time
during the Lease Term against the Leased Property, the Lease Agreement or the
COMPANY, including but not limited to, Value Added Tax (IVA), gross sales tax
and all such taxes and assessments, levied by any federal, state or municipal
government, or any other governmental authority.

All such taxes and assessments shall be paid by the COMPANY, and receipt
showing the payment of such taxes and assessments delivered to TEDE at least
ten (10) days before such taxes and assessments become delinquent.

COMPANY also agrees to pay all taxes and assessments of every kind levied upon
any and all personal property of COMPANY, its successors and assigns, whether
same shall be or may become alien upon the Leased Property. All such taxes and
assessments shall be paid by COMPANY before the same become delinquent. In the
event that this contract is recorded at the Public Registry of Property, the
COMPANY shall pay all costs of such recordation, including, but not limited to,
notary fees, charges, and taxes required in connection therewith.

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   8
IX. WARRANTY, REPAIRS, ALTERATIONS AND IMPROVEMENTS.
A. TEDE,
1. If, at any time during the term of the initial Lease, or extension thereof,
after receipt of written notice from COMPANY, TEDE at its expense, shall with
minimum interference with COMPANY'S normal use of the Leased Property,
diligently proceed to repair any structural defects or manufacturing defect in
the roof or exterior bearing walls, foundations and production area floor
drains, including normal use, wear and damage.

TEDE shall not be liable for any damages, and shall not be obligated to make
any repairs, caused by any negligent act or omissions of COMPANY, its
employees, agents, invitees, or contractors. TEDE shall have no other
obligation to maintain or repair any other portion of the Leased Property. TEDE
shall not be liable to COMPANY for any damage resulting from TEDE'S failure to
make any repairs, unless COMPANY has notified TEDE of the need for such
repairs, and TEDE has failed to commence such repairs within five (5) working
days after said notice has been given and failed to complete the same in a
diligent manner.

2. If TEDE fails to make the repairs described in Clause IX, "A", COMPANY may,
but shall not be required to, make or cause such repairs, to be made, and TEDE
shall, on demand, immediately pay to the COMPANY the actual cost of the repair,
or at COMPANY'S option, it may deduct from the due rent the cost of such
repairs, upon presenting to TEDE a receipt of such expenses. COMPANY may
exercise this option, provided that TEDE has not reimbursed COMPANY the above
referred cost within 10 (ten) calendar days.

B. COMPANY,
1. COMPANY, at its expense, shall keep and maintain in good order and repair,
except for normal use and wear, all of the Leased Property, except for those
obligations of TEDE stated in paragraph "A", 1, of this Clause including but
not limited to, all plumbing, sewage and other utility facilities that are
within the Leased Property, as well as fixtures, partitions, walls (interior
and exterior, including painting as often as necessary), floors, ceilings,
sinks, all air conditioning, cooling, heating and similar equipment or systems,
doors, windows, plate glass and all other repairs of every kind and character
to the Leased Property. COMPANY at its expense, shall repair all leaks except
those caused by structural or manufacturing defects. The plumbing facilities
shall not be used for any purpose other than that for which they were
constructed. The expense of any breakage, stoppage or damage resulting from a
violation of this provision, shall be paid by the COMPANY.

COMPANY shall store all trash only temporarily within the Leased Property, and
shall arrange for the regular pickup of trash at COMPANY'S expense. COMPANY
shall not burn any trash of any kind in or about the Leased Property or the
Industrial Park.

2. COMPANY shall have the right at its discretion, to make alterations and
improvements to the Leased Property, in the understanding that prior written
consent of TEDE will be required if the proposed improvement or alteration
exceeds a cost of US$10,000 Dollars or if it affects the structural integrity
of the Leased Property.

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   9
The installation of outside metal sheds or coverings is strictly prohibited,
unless written authorization is granted by TEDE.

3. COMPANY shall keep the Leased Property free and clear of all encumbrances
and liens arising out of acts or omissions of COMPANY including those arising
out of construction done or ordered by COMPANY. However, if by reason of any
work performed, materials furnished or obligations incurred by COMPANY with any
third party, or any other act or omission by COMPANY, TEDE is made liable or
involved in litigation, COMPANY shall hold harmless and indemnify TEDE
including any cost and expenses, and reasonable attorney's fees incurred by
reason thereof. Should COMPANY fail fully to discharge any such encumbrances of
liens within thirty (30) days after the date it has been instituted or fail to
provide a bond acceptable to TEDE in the event of a contest, TEDE, at its
option, may pay all or any part thereof. If TEDE pays any such lien or
encumbrances or any part thereof, COMPANY shall, on demand, immediately pay
TEDE the amount so paid, together with interest at the rate of twenty (20%)
percent per annum from the date of payment.

No lien or encumbrance of any character whatsoever created by an act or
omission by COMPANY shall in any way attach or affect the rights of TEDE on the
Leased Property.

X. UTILITY SERVICES.

During the term of this Lease Agreement, COMPANY shall promptly pay for any and
all public and other utilities and related services furnished to the Leased
Property, including but not limited to water, gas, electricity and telephone
charges.

XI. RIGHT-OF-WAY.

TEDE is hereby granted a right-of-way upon, without undue interference to the
COMPANY'S operation and prior 24-hr notice, where possible, over and under
the Leased Property for ingress, egress, installations, replacing, repairing
and maintaining all utilities, including but not limited to water, gas,
telephones and all electricity and any television or radio antenna system
serving the Leased Property. By virtue of this right-of-way it shall be
expressly permissible for providing the electrical and/or telephone company to
erect and maintain the necessary poles and other required equipment on the
Leased Property; provided that in exercising any right TEDE may have under this
Clause.

XII. ASSIGNMENT AND SUBLETTING.

A. COMPANY shall have the right, upon prior written consent of TEDE, to use or
transfer this Lease Agreement or any interest therein or permit the use of the
Leased Property by any individual, corporation or entity. COMPANY also has the
right to Sublease all or part of the Leased Property, provided, however, that in
the event of any such assignment, transfer or Sublease, COMPANY shall remain
fully liable for all of its obligations under this Lease

                                       9
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Agreement. Subleasing will not constitute a waiver for the COMPANY to the rights
and obligations acquired in this Lease Agreement. Any profits made by the
COMPANY, while subletting, will be retained by COMPANY.

B. TEDE shall have the right to assign and reassign, from time to time, any or
all of the rights and obligations of TEDE in this Lease Agreement or any
interest therein, without COMPANY'S consent, provided that no such assignment
or reassignment shall impair any of the rights of COMPANY herein and provided
further that TEDE shall remain liable for all of its obligations under this
Lease Agreement. In the event of such assignment or reassignment, COMPANY shall
not diminish or withhold, unless otherwise agreed upon herein, any of the rents
payable hereunder by asserting claims against such assignee, any defense,
setoff, or counter claims which COMPANY may have against TEDE or any of its
affiliates.

XIII. SUBORDINATION.

During the term of this Lease Agreement, TEDE shall have the right to encumber
its interest in the Leased Property or in this Lease Agreement for any purpose
it deems convenient and COMPANY shall and hereby does subordinate its interest
in this Lease Agreement and in the Leased Property to such encumbrance.
However, in the event such encumbrance is foreclosed or judicially enforced,
the one who holds the encumbrance shall agree to respect this Lease Agreement
and accept the performance by COMPANY of its obligations hereunder.

COMPANY shall execute any agreement which may be required by TEDE in
confirmation of such subordination and submit whatever public financial data
may normally be requested by any trust, insurance company, bank or other
recognized lending institution.

Once that TEDE shall have notified COMPANY in writing that the former has
assigned its interest in this Lease Agreement to any lending institution as
security for a debt or other obligation of TEDE, TEDE shall not have the power
to amend this Lease Agreement so as to reduce the rent, decrease the term or
modify or negate any substantial obligation without the written consent of such
lending institution. Such obligation shall continue until the lending
institution shall have notified COMPANY in writing that such assignment has
been terminated, on the understanding that if TEDE fails to obtain such lending
institution's approval to carry out the foregoing, the amendment of the term
above mentioned shall have no effect whatsoever against such lending
institution.

In addition, if the lending institution notifies the COMPANY in writing
requiring the payment of rents hereunder directly to such lending institution
or its representative, then COMPANY shall be obligated to pay to such lending
institution or its representative each subsequent monthly rental coming due
under this Lease Agreement (together with any unpaid rent then past due), until
the date on which such lending institution notifies COMPANY authorizing payment
of rent to TEDE or other party entitled thereto.

COMPANY understands and agrees that except for the security deposit mentioned
in Clause

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XXVII of this Lease Agreement, TEDE may not collect any rent more than one (1)
month in advance and COMPANY, at the request of TEDE shall provide a statement
that no such advanced payment has been made, such document shall be binding
upon COMPANY as against the lending institution to which this Lease Agreement
may be assigned. In addition, the lending institution shall not be bound to
recognize those payments made to TEDE after the COMPANY has received notice
requiring payments to be made to such lending institution.

XIV. ACCESS TO LEASED PROPERTY.

Without undue interference to COMPANY's operation, TEDE or its authorized
representative shall have the right to enter the Leased Property during all
COMPANY business hours and in emergencies at all times, to inspect the Leased
Property and to make repairs, additions or alterations to the Leased Property
during all COMPANY's business hours. For a period commencing ninety (90) days
prior to the termination of this Lease Agreement or any extension thereof, TEDE
shall have access to the Leased Property during all COMPANY business hours for
the purpose of exhibiting it to prospective clients and may post usual for sale
or for lease signs upon the Leased Property. Except in case of emergency, TEDE
shall give notice to COMPANY before entering the Leased Property and COMPANY
shall have the right to accompany any representatives of TEDE and prospective
clients. TEDE herein states and obligates itself to not divulge or reveal to
third parties any proprietary information of COMPANY or industrial process used
by COMPANY.

XV.  DAMAGE OR DESTRUCTION.

A. Total. In the event that whole or a substantial part of the Leased Property
be damaged or destroyed by fire, act of nature or any other cause, so as to
make COMPANY unable to continue the operation of its business, TEDE, shall,
within 10 (ten) calendar days from such destruction, determine whether the
Leased Property can be restored within 3 (three) months and notify COMPANY of
said determination. If TEDE determines that the Leased Property cannot be
restored within 3 (Three) months, either TEDE or COMPANY shall have the right
and option to immediately terminate this Lease Agreement, by advising the other
thereof by written notice. If TEDE determines that the Leased Property can be
restored within said 3 (Three) months, TEDE shall, at its own expense, proceed
diligently to reconstruct TEDE's Improvements and in such event, TEDE shall
accept in lieu of rent during the period when COMPANY is substantially deprived
of the use of the Leased Property, any rental insurance proceeds which may be
payable pursuant to rental insurance provided for herein above.

B. Partial. In the event of partial damage caused to the Leased Property, TEDE
shall repair the Leased Property. During the period required for such repair
work of TEDE's Improvements, the rental payable hereunder by COMPANY shall be
equitably prorated to the interferences with COMPANY's use and possession of
the Leased Property occasioned by such damage and repair. All of the
determinations made by TEDE under this clause shall be reasonably made and in
good faith.

                                       11
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XVI. LIMITATION OF LIABILITY.

Except for intentional or negligent acts or omissions of TEDE, its agents or
employees, TEDE shall not be liable to COMPANY or to any other person whatsoever
for any loss or damage of any kind or nature caused by the intentional or
negligent acts or omissions of COMPANY or other occupants of the Industrial Park
or of adjacent property, or the public, or other causes beyond the control of
TEDE, including but not limited to failure to furnish or any interruption of any
utility or other services in or about the Leased Property.

COMPANY recognizes that additions, replacements and repairs to the Industrial
Park will be made from time to time, provided that the same shall not
substantially interfere with COMPANY's use and enjoyment of the Leased Property.

XVII. INDEMNIFICATION.

COMPANY agrees to indemnify and save TEDE harmless from any and all claims for
damages or losses of any kind or nature whatsoever, arising from negligent acts
or omission of COMPANY or its contractors, licensees, agents, invitees, or
employees, or arising from any accident, injury or damage whatsoever caused to
any person or property occurring in or about the Leased property, or the areas
adjoining the Leased Property and against all cost and expenses, including
attorneys' fees, incurred thereby.

TEDE agrees to indemnify and hold COMPANY harmless from any claim, demand or
action relation to or arising out of the presence of any hazardous material, on,
in or emanating from the Leased Property as of the date of Commencement of the
Lease Term.

TEDE agrees to indemnify and to hold COMPANY harmless from any claim, demand or
action deriving from injury or damage to COMPANY or its agents or employees and
from any and all liability for injury to third parties or damage to the property
of third parties arising from any negligent act or omission of TEDE, its agents,
contractees or employees while on or in the vicinity of the Leased Premises.
Furthermore TEDE indemnifies and holds COMPANY harmless from any liability
arising or derived from services performed in connection with any construction
or repairs to the Leased Property, made during the Lease Term by TEDE, TEDE's
employees, agents or by third parties contracted by TEDE. Consequently TEDE
warrants and guarantees that, to the best of TEDE's knowledge, the third parties
or employees of TEDE shall fully comply with all pertinent construction and
social security regulations, tax and labor laws and any other applicable laws or
regulations.

XVIII. NOTICES.

All notices under this Lease Agreement shall be forwarded to the addresses
mentioned in the Recitals above or such other addresses as may from time to time
be furnished by the parties hereto. Said notices shall be in writing and shall
be deemed given ten (10) days after the date of mailing thereof. Duplicate
notices shall be sent by certified airmail, postage prepaid or registered

                                       12
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mail, to such additional addresses as may from time to time be requested in
writing by the parties hereto.

XIX. COMPANY'S DEFAULT

Each of the following shall be a default of COMPANY:

     1. Vacation or abandonment of the Leased Property for more than 5 working
     days;

     2. Failure to pay any installment of rental due and payable hereunder upon
     the date when said payment is due, said failure continuing for a period of
     ten (10) days after written notice of such default;

     3. Default in the performance of any of COMPANY's covenants agreements or
     obligations hereunder, except default in the payment of any installment of
     rent, continuing for fifteen (15) days after written notice thereof is
     given from TEDE to COMPANY, without commencing to diligently cure the
     default, or with respect to a default which cannot be cured within such 15
     days, COMPANY having not commenced to cure such default and thereafter
     proceeding diligently to cure such default;

     4. A general assignment by COMPANY for the benefit of creditors;

     5. The filing of a voluntary petition in bankruptcy by COMPANY or the
     filing of an involuntary petition by COMPANY's creditors, said petition
     remaining undischarged for a period of sixty (60) days;

     6. The appointment of a Receiver to take possession of substantially all of
     COMPANY's assets or of this Leasehold, such attachment, execution or other
     seizure remaining undismissed or undischarged for a period of thirty (30)
     days after the levy thereof.

     7. Attachment, execution or other judicial seizure of substantially all of
     COMPANY's assets or this Leasehold, such attachment, execution or other
     seizure remaining undismissed or undischarged for a period of thirty (30)
     days after the levy thereof.

Upon occurrence of any one of the foregoing COMPANY's defaults, TEDE shall have
the right, at its option and in addition to other rights or remedies granted by
law, to do either of the following:

     A. Immediately rescind this Lease Agreement and eject COMPANY from the
     Leased Property.

     B. Claim specific performance. In the case of default as specified above,
     TEDE shall, in addition to all other remedies, have the right to declare
     and collect the entire unpaid balance of rent to the end of the last lease
     year of the existing Lease Term or extension

                                       13
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     thereof then in effect and also declare all other sums due to TEDE,
     immediately due and payable, plus interest at the rate of twenty percent
     (20%) per annum on said sums from the date of such declaration until paid
     in full.

In the event that the Land and the Improvements covered under this Lease
Agreement are Leased to another tenant during the remainder of the initial term
or extension thereof, and the COMPANY pre-pays the rent unpaid balance as a
result of this clause, TEDE shall promptly refund to COMPANY that portion of
rent paid by COMPANY pursuant to this paragraph which is allocable to the period
of the Lease Term during which the Leased Property was leased to another tenant
or otherwise used in a beneficial manner as well as any other allocable sums
paid by COMPANY to TEDE, less any loss or damage incurred by TEDE as a result of
COMPANY's default, or;

If such rent or other sums due to TEDE have not been paid by COMPANY, TEDE shall
add such amount(s) to COMPANY's unpaid balance of rent stated clause XIX B.

XX. RIGHT TO CURE DEFAULTS.

In the event of COMPANY's breach or default of any term or provision herein,
TEDE may, without any obligation to do so at any time after ten (10) days
written notice, cure such breach or default or make repairs to the Leased
Property for the account and at the expense of COMPANY.

If TEDE, by reason of such breach or default, provided TEDE is the prevailing
party in the event of a dispute, pays any money or is compelled to incur any
expense including attorneys' fees, the sums so paid or incurred by TEDE, with
all interest, cost and damages, shall be paid by COMPANY to TEDE on the first
day of the month following the incurring of such expenses. If any installment of
rent or any other payment is not paid promptly when due, it shall bear interest
of twenty percent (20%) per annum from the date on which it becomes due until
paid; but this provision is not intended to relieve COMPANY from any defaults in
the making of any payment at the time and in the manner herein specified.

The foregoing interest, expenses and damages shall be recoverable from COMPANY
by exercise of TEDE's remedies herein above set forth. Efforts by TEDE to
mitigate the damage caused by COMPANY's breach of this Lease shall not be
constructed to be a waiver to TEDE's right to recover damages under this Clause
XX. Nothing in this Clause affects the right of TEDE of indemnification by
COMPANY in accordance with Clause XVII herein above for liability arising prior
to the termination of this Lease for personal injuries or property damage.

XXI WAIVER.

In the event TEDE or COMPANY does not compel the other to comply with any of the
obligations hereunder, such action or omission shall not be constructed as a
waiver of a subsequent breach of the same or any other provision. Any consent or
approval shall not be deemed to waive or render unnecessary the consent or
approval of any subsequent or similar act by COMPANY or TEDE.

                                       14
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XXII. CERTIFICATES.

COMPANY shall, within ten (10) days of receipt of a written request made by
TEDE, deliver to TEDE a statement in writing, certifying that this Lease
Agreement is unmodified and in full force and effect (or if there have been
modifications that the same are in full force and effect as modified); the dates
to which the rent and any other charges have been paid in advance and, if that
is the case, that TEDE's Improvements have been satisfactorily completed. It is
intended that any such statement may be relied upon by any person, prospective
purchaser or lending institution interested in the Leased Property.

XXIII. HOLDING OVER.

If COMPANY should remain in possession of the Leased Property after the
expiration of this contract, COMPANY shall pay MARAN a monthly penalty
equivalent to 2 (Two) months rent as of the expiration date of the Lease
Agreement until COMPANY has delivered to TEDE the Leased Property or executed a
new Lease Agreement. This provision shall not be construed as granting any right
to COMPANY to remain in possession of the Leased Property after the expiration
of the Lease Term. COMPANY shall indemnify TEDE against any loss or liability
resulting from delay by COMPANY in surrendering the Leased Property, if such
loss or liability is founded on said delay. The parties agree that COMPANY shall
quit and surrender the Leased Property at the expiration of this Lease
Agreement, waiving the right provided by law.

XXIV. SURRENDER.

On the last day of the term of this Lease Agreement or the sooner termination
thereof, pursuant to other provisions hereof, COMPANY shall quit and surrender
the Leased Property, clean, in good conditions (normal wear and tear excepted)
together with all alterations, additions and Improvements that may have been
made in the same except furniture, machinery, fixtures and equipment owned by
COMPANY. Upon the termination of this Lease Agreement, COMPANY shall immediately
remove all of its property from the Leased Property. Any furniture or fixtures
not removed shall be deemed abandoned by COMPANY. COMPANY shall immediately
repair any and all damage caused to Leased Property in the removal of COMPANY'S
property.

XXV. QUIET ENJOYMENT.

TEDE Agrees that the COMPANY upon paying the rent and all other charges provided
for herein and upon complying with all of the terms and provisions of this Lease
Agreement, shall lawfully and quietly occupy and enjoy the Leased Property
during the Lease Term.

XXVI. ATTORNMENT.

COMPANY shall in the event any proceedings are brought for the foreclosure of or
in the event of exercise of the power of sale under any mortgage or Trust Deed
made by TEDE, its successors or assigns, encumbering the Leased Property or any
part thereof, if so requested, attorn to the

                                       15
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purchaser upon such foreclosure or sale and recognize such purchaser as the
Lessor under this lease.

XXVII. SECURITY DEPOSIT.

COMPANY, upon execution of this Lease Agreement, shall deposit the equivalent
of 3 (three) month's rent which will serve as the security deposit for the full
and timely performance of each term, provisions and obligations, including the
payment of rent. TEDE may, in addition to all other rights, use or retain the
whole or any of this security for the payment of any rent in default or for any
other sum due and payable to TEDE. Should COMPANY fully and timely perform with
all the obligations of this Contract, this Security Deposit or any of the
balance of the Security Deposit shall be refunded in full upon the expiration
of this Lease Agreement or any extension thereof. COMPANY shall not be entitled
to any interest on the security deposit.

XXVIII. HAZARDOUS MATERIALS

TEDE certifies that neither the land nor the building to be constructed thereon
contain hazardous substances as of the commencement of the Lease Term. The
COMPANY shall deliver to TEDE the leased property free of any hazardous
substances in the soil or in the improvements, in excess of the levels at which
applicable laws require remediation.

XXIX. MISCELLANEOUS.

A. This document contains all of the agreements and conditions made between the
parties and may not be modified orally or in any manner other than by a written
agreement signed by the authorized representatives of the parties.

B. If any term, covenant, condition or provision of this Lease, or the
application thereof to any person or circumstance, shall to any extent be held
by a court of competent jurisdiction, to be invalid, void or enforceable, the
remainder of the terms, covenants, conditions and provisions of this Lease or
the application thereof to any person or circumstance, shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.

C. In the event that either party should bring an action against the other
party for the possession of the Leased Property or for the recovery of any sum
due hereunder or because of the breach or default of any covenant in this Lease
Agreement, the prevailing party shall have the right to collect from the other
party its costs and expenses including attorney's fees.

D. Every payment and performance required by this Lease Agreement shall be paid
and performed precisely on the date specified for such payment or performance
and no delay or extension thereof shall be permitted.

E. The titles and subtitles in these Clauses of this document shall have no
effect on the interpretation of the terms and provisions contained in the Lease
Agreement.

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F. The parties agree that this Lease Agreement shall be governed by the Laws of
the State of Baja California, Mexico. For everything pertaining to the
interpretation and compliance of this Lease Agreement, the parties thereby
expressly submit themselves to the jurisdiction of the Civil Courts of the city
of Mexicali, State of Baja California, waiving any other jurisdiction which
might be applicable by reason of their present of future domiciles or otherwise.

G. This Lease Agreement shall be executed in English and Spanish. However, in
the event of a dispute or an inconsistency regarding interpretation or meaning
of this Lease Agreement, the English version shall prevail.

H. Whenever the prior consent of either party, written or otherwise is
required as a condition for any act by the other party under this Lease
Agreement, or when the right of any one party is dependent on the other party
determining that something is acceptable, such party agrees not to unreasonably
withhold such consent, or determination of acceptability.

I. Each party shall execute such further documents as shall be requested by the
other party, but only to the extent that the effect of said documents is to
give legal effect to right and obligations stated forth in this Lease Agreement.

J. Submission of this instrument for examination or signing by COMPANY does not
constitute a reservation of or option to Lease and it is not effective as a
Lease or otherwise until execution and delivery by both TEDE and COMPANY.

K. This Lease and each of its covenants and conditions shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
assigns, subject to the provisions hereof. Whenever in this Lease a reference
is made to TEDE, such reference shall be deemed to the person in whom the
interest of the Lessor hereunder shall be vested. Any successor or assignee of
COMPANY who accepts an assignment or the benefit of this Lease and enters into
possession or enjoyment hereunder shall thereby assume and agree to perform and
be bound by the covenants and conditions thereof.

L. COMPANY hereby covenants to TEDE, and TEDE relies upon said covenant as a
material inducement to enter into this Lease, that COMPANY will deliver to
TEDE, concurrently with the execution and delivery hereof a Guaranty of this
lease in the form attached hereto as Exhibit "F", executed by
__________________ or any other Guarantor as may be acceptable to TEDE.

IN WITNESS WHEREOF, the parties have executed this Lease Agreement in the City
of Mexicali, Baja California, Mexico, on _____ day of _______, 199__.

/s/ MARIO TERAN DEL RIO
- -----------------------------           ---------------------------------------
(LESSOR)                                                                (LESSEE)

WITNESS:                                WITNESS:
        ---------------------                   --------------------------------

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                                                                       EXHIBIT A

                                  PARCELA 88-A

                                  [BLUEPRINT]

   19
                                                                       EXHIBIT B

                                  PARCELA 88-A

                                  [BLUEPRINT]
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                                                                       EXHIBIT C
                                 BLOCK DIAGRAM

                                   [DIAGRAM]

                             MARAN INDUSTRIAL PARK
                      CALAVO FOODS DE MEXICO, S.A. DE C.V.
   21
                                                                     EXHIBIT "E"

THIS EXHIBIT FORMS INTEGRAL PART OF THE LEASE AGREEMENT HELD BETWEEN TEDE, S.A.
DE C.V. AND (LESSEE), S.A. DE C.V. DATED _________________, 199_.

                             RULES AND REGULATIONS

                             MARAN INDUSTRIAL PARK

                                R E C I T A L S

1) The MARAN INDUSTRIAL PARK main activity is the leasing of facilities,
construction of buildings and industry plants for the national and foreign
industry and maquiladoras.

2) The regulations and ordinances shall be observed by lessors and lessees,
owners of installations and all the occupants that for some reason shall be
using the facilities of MARAN INDUSTRIAL PARK.

3) The construction of buildings for industrial use, the infrastructure and all
occupants that shall be using the facilities of MARAN INDUSTRIAL PARK.

4) The purpose of this Ordinance is to regulate the activities in MARAN
INDUSTRIAL PARK to maintain the good order and harmony among the occupants,
preserve the environment and architectural concepts; and protect the property
and amenities of the PARK.

To comply with the above mentioned, we have the following:

                                 C L A U S E S

FIRST - Use of the installations.

M.L.P. shall be used and occupied for the establishment of any national or
foreign industry, maquiladora, warehouse of raw materials and finished
products, in accordance with written agreements in each case and the
development plan of the PARK. Service areas shall be allocated to assist the
companies already established in M.I.P., landscaping and recreational areas for
the workers, employees and the executives of these mentioned companies.

SECOND - Prohibitions.

The occupants of M.I.P. shall not perform or omit any acts that may damage the
buildings nor affect the development of the PARK. Thus, the following actions
shall be restricted:

a) Underground constructions, awnings, apartments, tents or dwellings for
   living purposes.

b) The development of agricultural activities.

c) The opening of stores to sell retail, except those expressively permitted by
the PARK.

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d) The storage of the materials out doors or outside of the buildings.

e) The handling of hazardous or explosive materials shall not be permitted
without a written consent from M.I.P. and shall be authorized by the government
and environmental officials.

f) The excessive emission of bad odors, dust, smoke and noise. There shall be
permitted only the necessary when a construction is being made, and alterations
or improvements are taking place to the existing buildings, and for short
periods of time and without causing nuisances to the other occupants nor the
installations of the PARK. The burn of any kind of trash shall not be
permitted.

g) Any kind of activity within the M.I.P. that may damage the property, its
cleanliness and safety shall not be permitted.

THIRD - Parking Area.
a) The parking spaces shall be used by the employees and the transportation
trucks of each facility for their normal activities. There shall one parking
space every 140 sq. meters in the production area and warehouses; and one
parking space every 35 sq. meters for the office area.

b) The repair and maintenance areas shall be constructed within the facilities.
Thus, shall not be permitted the repairing of automobiles in the parking spaces
nor the streets of M.I.P.

c) The streets of M.I.P. shall not be used for parking nor loading and
unloading.

d) The parking area shall not be used for storage of materials, accessories, raw
materials nor equipment. There shall be free passage for pedestrians along the
sidewalks.

FOURTH - Service Areas.
Each building shall have a service area, which in accordance with the lease
agreement, shall be assigned for a specific purpose and not in violation of the
regulations of M.I.P. Each service area shall be delimited by a fence with
entrances and exits for a free circulation along the streets of M.I.P.

FIFTH - Warehouses.
The spaces assigned for storage shall be kept out of sight and the storage of
any kind of materials and equipment outside of this area shall not be
permitted. The occupants of the facility shall be responsible that the stored
materials shall not cause any damage to the other occupants nor the
constructions of M.I.P.

SIXTH - Electric Installations and Air Conditioning Equipment.
All electrical installations and air conditioning equipment shall be placed
without causing damage to the structural integrity of the buildings of M.I.P.

SEVENTH - Signs.
Signs and advertisements shall be installed in the spaces provided for that
purpose. Any change of place for their installation shall require a written
approval of M.I.P.

EIGHT - Waste and Trash Containers.
Trash of any kind shall be placed in special containers and the occupants
shall arrange for the regular pickup of trash at its own expense.

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NINTH - Construction of New Buildings.
The construction of new industrial buildings shall be at M.I.P. expense, unless
an existent mutual agreement. Said new buildings shall be constructed in
accordance with the plans and specifications of M.I.P. in the provided spaces.

TENTH - Alterations to the Existent Buildings.
There shall not be permitted any alterations to the existent buildings of the
leased property unless a written consent from M.I.P. is issued, and the Lessee
shall furnish the following information:

      a) Blue prints and specifications of the alteration to be made and shall
      be of good quality and resistant to fire.

      b) A list of materials to be used for these alterations or construction
      and shall be of good quality and resistant to fire.

      c) These alterations shall be performed in accordance with the laws and
      regulations of the government authorities of the State of Baja California.

      d) Once the authorized license for construction has been obtained, it
      shall be turned to M.I.P. along with the blue prints and projects sealed
      and approved by the official authorities.

ELEVENTH - Fire Precautions.
The occupants shall have in the occupied buildings an alarm system to detect
fires as well as the necessary equipment for the prevention and extinction of
any fire, and shall be in accordance to the laws and regulations of the fire
department. This system shall be specially requested when inflammable products
are to be handled or stored.

TWELFTH - Health Protection.
The occupants of each building shall have special care to keep in good health
and moral behavior within their installations, and shall have special devices
to prevent contagious or infectious ailments to affect their personnel.

THIRTEENTH
The rules and regulations in this Ordinance are mandatory to all the occupants
of MARAN INDUSTRIAL PARK and the violation to any of them shall cause a
violation of the Lease agreement between the Lessor and the Lessee.

/s/ MARIO TERAN DEL RIO
- -----------------------                              --------------------------
(LESSOR)                                                               (LESSEE)

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                                  EXHIBIT "F"

                                G U A R A N T Y

WHEREAS, TEDE, S.A. DE C.V., a Mexican corporation (hereinafter, referred to as
"LESSOR") is owner of certain real property in the city of Mexicali, B.C.
Mexico; and Calavo Foods de Mexico, S.A. de C.V.

WHEREAS, this Guaranty is given by Calavo Growers of California hereinafter
referred to as "GUARANTOR") to induce LESSOR to enter into a Lease Agreement,
with Calavo Foods de Mexico, S.A. de C.V., a Mexican corporation (hereinafter
referred to as "LESSEE"), as stated in corresponding Lease Agreement held
between LESSOR and LESSEE, dated ________________ (Hereinafter referred to as
the "Lease Agreement").

NOW, THEREFORE, in consideration of the foregoing, it is agreed:

1. OBLIGATION OF THE GUARANTOR. The GUARANTOR unconditionally guarantees to
LESSOR, its successor and assignees, the prompt, full and complete payment and
performance to LESSOR of all the conditions, covenants, obligations,
liabilities and agreements, of LESSEE as set forth in the Lease Agreement or
any extension thereof between LESSOR and LESSEE. This Guaranty extends to and
includes any and all interest due or liable to become due, together with all
attorney's fees, costs and expenses of collection incurred by LESSOR in
connection with any matter covered by this guaranty. The GUARANTOR's address is:

Calavo Growers of California
15661 Red Hill Avenue
Tustin, CA 92680
(714) 259-1166

2. TERM OF GUARANTY. The liability of the GUARANTOR shall continue until
payment is made and performance given pursuant to every obligation of the
LESSEE now due or hereafter to become due in accordance with the terms of the
Lease Agreement or any extension thereof, between LESSOR and LESSEE, and until
payment is made of any loss or damage incurred by LESSOR with respect to any
matter conserved by this Guaranty shall be irrevocable. Nothing contained
herein shall impose upon GUARANTOR any greater or different liability than is
or may be imposed on said LESSEE under the Lease Agreement except to pay LESSOR
attorney's fees, costs and expenses of collection incurred in proceeding
against GUARANTOR Hereunder.

3. CONSENT TO LESSOR ACTS. The GUARANTOR consents, without affecting the
GUARANTOR'S liability to LESSOR hereunder, That LESSOR may, without notice to
our consent of the GUARANTOR, upon such terms as it may deem advisable, to the
following:

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     a. Extend, in whole or in part, by renewal or otherwise, any time of
     payment or performance on the part of LESSEE, provided for in the Lease
     Agreement;

     b. Release, surrender, exchange, modify, impair, or extend any period or
     duration, or any time for performance, or payment on the part of LESSEE,
     required by the Lease Agreement; and

     c. Settle or compromise any claim of LESSOR against LESSEE or against any
     other person, firm or corporation whose obligation is held by LESSOR as
     security to LESSOR under the Lease Agreement.

The GUARANTOR hereby confirms and affirms any such extension, renewal, release,
surrender, exchange, modification, impairment, settlement or compromise and all
acts shall be binding upon GUARANTOR who hereby waives all defense,
counterclaims or offsets which GUARANTOR might have solely by reason thereof.

4. WAIVER OF GUARANTOR. GUARANTOR Waives:

     a. Notice of acceptance of this Guaranty by:

     b. Notice of presentment, notice of nonperformance, notice of dishonor and
     notices of existence, creation or incurring of new or additional
     indebtedness or obligations, demands for payment or performance or protest
     of any obligations of LESSEE of LESSOR under the Lease Agreement;

     c. Notice of the failure of any person, firm or corporation to pay to
     LESSOR any indebtedness held by LESSOR as collateral security for any
     obligation of LESSEE to LESSOR under the Lease Agreement;

     d. Any right to require LESSOR to (i) proceed against LESSEE (ii) proceed
     against or exhaust any security or other lien or right of or held by LESSOR
     from LESSEE; or (ii) pursue any other remedy in the power of LESSOR
     whatsoever;

     e. Any defense, offsets or claims whatsoever; which LESSEE may have against
     LESSOR;

     f. Any defenses, offsets or claims arising from any governmental action or
     intervention which wholly or partially frustrates any or all of the
     purposes for which the Lease Agreement was entered into;

     g. Any defects in the perfection of the assignment pledge of the rents by
     failure to record the Lease Agreement or any instrument or assignment and
     pledge in the public Registry under Mexican Law.

5. REPRESENTATIONS BY GUARANTOR. GUARANTOR represents and warrants that at the
time of execution and delivery of this Guaranty, nothing exists to impair the
effectiveness of

                                       22
   26
the liability of GUARANTOR to LESSOR hereunder, or the immediate taking effect
of this Guaranty as the sole Agreement between the GUARANTOR and LESSOR with
respect to guaranteeing all of LESSEE's obligations to LESSOR under the Lease
Agreement.

GUARANTOR further represents and warrants the GUARANTOR is authorized to
execute and deliver this Guaranty and that the person executing this guaranty
is authorized to execute the same for and on behalf of GUARANTOR.

6. REMEDY OF LESSOR. In the event of any default on the part of LESSEE as
defined in the Lease Agreement, LESSOR may at its option proceed in the first
instance against GUARANTOR, jointly and severally, to collect any obligation
covered by this Guaranty, without first proceeding against LESSEE or any other
person, firm or corporation without first resorting to any property at any time
held by LESSOR as collateral security.

7. MODIFICATION OF AGREEMENT. The whole of this guaranty is herein set forth
and there is no verbal or other written agreement and no understanding or
custom affecting the terms hereof. This Guaranty can be remedied only by a
written instrument signed by the party to be charged therewith.

8. NON-WAIVER BY LESSOR. The liability of GUARANTOR under this guaranty shall
not be affected by the insolvency of LESSEE or LESSOR, at any time or by the
acceptance by LESSOR of security, notes, acceptance, drafts or checks or by
assignment, foreclosure or the other dispositions thereof by LESSOR presenting
or proving for allowance any secure or unsecured claim or demands or by LESSOR
acceptance to any compositions, planed reorganization, settlement, compromise,
divided payment or distribution; and GUARANTOR shall not be entitled to claim
any right in or benefit by reason of any such composition, plan or
reorganization, settlement, compromise, divided, payment or distribution, or in
by reason of any security held by LESSOR, of the proceeds to other dispositions
thereof; unless and until all of said obligations, liabilities and indebtedness,
together with interest, attorney's fees and costs due to LESSOR under this
Guaranty or under the Lease Agreements, shall have paid in full. Nothing
contained in this Agreement shall alter any of the right or remedies of LESSOR
against LESSEE. GUARANTOR authorizes LESSOR, without notice or demand and which
affecting the liability of GUARANTOR hereunder, from time to time to:

     a. Renew, compromise, extend, accelerate, or otherwise change the time for
     payment of, or otherwise change the terms of the indebtedness or any part
     thereof under the Lease Agreements, including increase or decrease of any
     amounts due thereunder or any rate of interests specified therein;

     b. Take and hold security for the payment of this Guaranty or the
     indebtedness guaranteed, and exchange, enforce, waive, release, any such
     security;

     c. Apply such security and direct the order or manner of sale thereof, as
     LESSOR in its discretion may determined and;

                                       23
   27
     d. Release or substitute any one or more of LESSEE or GUARANTOR may assign
     this Guaranty in whole or in part. GUARANTOR may assign this guaranty in
     whole or in part, provided that GUARANTOR shall remain liable for its
     obligations hereunder unless released therefrom by LESSOR or its
     successors and provided further that GUARANTOR shall first give LESSOR
     sixty (60) days prior written notice.

9. APPLICABLE LAW. This Guaranty is made in the State of California and the
rights and obligations of GUARANTOR hereunder shall be constructed and enforced
in accordance with the laws of the State of California. It is hereby expressly
understood and agreed by GUARANTOR that in the event a dispute arise as to the
performance of the obligations of GUARANTOR pursuant to this guaranty, any
action relating to this guaranty agreement shall be instituted and prosecuted
in the United States District Court for the Central District of California and
each party hereby waives the right to change of venue.

10. MISCELLANEOUS PROVISIONS. GUARANTOR agrees to pay to LESSOR a reasonable
attorney's fee and all other costs and expenses which may be incurred by LESSOR
in the collection or efforts to collect the indebtedness owed by LESSEE to
LESSOR pursuant to the Lease Agreement or in collection or efforts to collect
or enforcement at the sums due under this guaranty, provide that if GUARANTOR
is the prevailing party in any action or proceeding to enforce this Guaranty or
collects any amounts allegedly due hereunder; LESSOR should pay GUARANTOR a
reasonable attorney's fee and other costs and expenses which may be incurred by
GUARANTOR.

The paragraph headings of this guaranty are not part of this guaranty and shall
have no effect upon the construction and interpretation of any part hereof and
are inserted herein for convenience only.

In the event that any provisions hereof or any portion of any provisions hereof
shall be deemed to be invalid or unenforceable, such invalidity or
unenforceability shall not affect any other portion of said provisions or any
other provisions herein. All remedies herein conferred upon LESSOR shall be
cumulative and no one exclusive of any other remedy conferred herein or by law
or equity. Time is of the essence in the performance of each and every
obligation herein imposed.

GUARANTOR represents and warrants that it has all requisite power and authority
to enter into this Guaranty agreement and that neither the execution or
delivery of this Agreement or the consummation hereof nor the performance of
the terms hereof will conflict with or result in a breach of the terms,
conditions or provisions of or constitute a default under or result in the
creation of any lien pursuant to any other agreement of instrument under which
GUARANTOR is obligated.

11. ACKNOWLEDGMENT OF ASSIGNMENT. In the event this Guaranty is assigned to a
bank or other lending institution, the GUARANTOR shall furnish to such entity a
letter stating that the GUARANTOR acknowledges receipt of notice of an
assignment by LESSOR of said Guaranty;

                                       24
   28
that said guaranty is in full force and effect; that no changes to the guaranty
as originally executed have been made; that the GUARANTOR will not enter into
any modification of this guaranty without first obtaining prior written
approval thereof from said lender; that said lender may rely solely upon the
guaranty with respect to the lender's right to receive the rents in accordance
with the terms of the Lease Agreement; and that all payments made thereafter
shall be made to the lender or its assigns at such times not in conflict with
those permissible under the Lease Agreement, at such places or in U.S. Dollars
as directed by the lender or its assigns.

12. NOTICE OR DEFAULT. Notwithstanding any provision to the contrary herein
expressed or implied, no claim of default on the part of LESSEE or on the part
of GUARANTOR shall be made hereunder unless and until notice of such defaults
has been given to LESSEE as provided in the Lease Agreement and a copy thereof
mail to GUARANTOR by first class certified mail, postage prepaid at that
address shown on paragraph 1 of this Guaranty.

13. SUCCESSORS BOUND. This Guaranty is binding, jointly severally upon
GUARANTOR and its legal representatives and successors and shall inure to the
benefit of LESSOR, its legal representatives, successors, and assigns.

IN WITNESS THEREOF, GUARANTOR has signed this Agreement in the city of Tustin,
California, United States of America, on the 25 day of the month of October,
1994.

     By:  /s/ CHARLES REDMAN
        -------------------------------
     Its: Vice President
         ------------------------------
     ATTESTED

     By: /s/ EGIDIO CARBONE
        -------------------------------

     Its: Vice President
        -------------------------------

/s/ MARIO TERAN DEL RIO
- ---------------------------------------    -------------------------------------
LESSOR                                                                    LESSEE

                                       25
   29
                                   EXHIBIT D
THIS EXHIBIT FORMS AN INTEGRAL PART OF THE LEASE AGREEMENT HELD BETWEEN TEDE,
S.A. DE C.V. (TEDE) AND CALAVO FOODS DE MEXICO, S.A. DE C.V. (COMPANY), DATED
______________, 1994.

1. GENERAL DIMENSIONS AND AREAS

Lot size                103,983 sf
Building size           50,311 sf
Main office/lunch       3,000 sf
room/restrooms area

2. CONSTRUCTION MATERIALS AND ENGINEERING SPECIFICATIONS

Frame type:         Steel, rigid frame 3/8" web and 1/2" flanges

Roof material:      Galvanized steel

Wall construction:  Colored concrete block on front wall, steel side & back
                    walls made with brick & block skirting.

Minimum clearance:  26'3" - Center columns (Z-Plane)
                    22'10" - Eave

Roof insulation:    1" Spray-on Polyurethane foam or expanded polystyrene

Floors:             5" Thick, 3000 PSI concrete, fiber and 3/8" re-bar mesh
                    reinforcements

Column spacing:     72'2" Horizontally (X-Plane)
                    26'3" Vertically (Y-Plane)

Water distribution: 2" Pipe distributed on the perimeter of building per Calavo
                    requirements.

Drains:             Located on the following areas:
                    * Receive/wash area
                    * Sorting area
                    * Process room
                    * On the exterior part of the building (refuse band
                      cleaning)
                    All drains are made of plastic "vinylester" suitable for
                    food processing operation

Electrical:         TEDE will provide the first 500 KVA hook-up fees. Any
                    additional requirements shall be paid by COMPANY. 1,200 KVA
                    are available on the lot.
   30
Transformer:           TEDE will furnish a 500 KVA transformer to be used by
                       COMPANY for the installation of COMPANY'S substation.

Sewer:                 All production area drains will be installed on a
                       separate circuit from the rest of the building, for
                       monitoring purposes.

Roll-up door:          One 14' W x 16' H on receiving area, Two 10' x 10' on
                       shipping

Plenum exhaust:        Two (2) located on center of building for exhausting
                       stale air from top of cold rooms and improve system
                       efficiency.

Interior illumination: Metal Halide HID lamps for cold rooms and aisles. 40 foot
                       candles.

                       Sorting area & process room equipped with 4 tube
                       fluorescent lamps to provide a minimum of 80 foot candles
                       at desktop height. Also, all troffers complete with
                       covers to prevent debris to fall into rooms, according to
                       food preparation guidelines

Exterior illumination: Wall mounted high pressure sodium lamps and fixtures

Receiving docks:       2 truck capacity, gentle slope, equipped with sump pump

Shipping docks:        2 truck capacity, gentle slope, equipped with sump pump
                       and dock seals, located next to product holding room.

Storage room:          Included, 16' x 30'

3. COLD ROOM CONSTRUCTION

The following R-Factors will be applied to the cold room construction. Oriented
strand board (OSB) Panels will be used. Waterproof interior walls and floors are
included only on the sorting/process areas.

                                                 (sf)
                    (ft)     (ft)      (ft)      ROOM           R-FACTOR   R-FACTOR   R-FACTOR
                  LENGTH    WIDTH    HEIGHT      AREA    WALL INSULATION       ROOF       ROOF
                  ------    -----    ------      ----    ---------------   --------   --------
                                                                 
Receiving Cooler 1    36       48        20     1,728            16.68        29.19          0
Receiving Cooler 2    36       48        20     1,728            16.68        29.19          0
Ripening rooms (5)    30       54        26     8,100            16.68        20.85          0
Pre-Process Cooler    40       48        20     1,920            16.68        29.19          0
Sorting area       75.01    66.55        26     4,992            16.68        20.85          0
Process Room       75.01    79.61        20     5,972            16.68        20.85          0
Holding Room       24.57    43.56        20     1,070            20.85        29.19      16.68
                                               ------
                                               25,510

   31

4. MAIN OFFICE/LUNCHROOM/RESTROOMS
Wall construction:      Brick exterior wall to eliminate repainting, interior
                        partitions made according to Calavo's specs.

Air conditioning:       Standard. 12.5 ton system

Restrooms:              90 employees capacity, 25% male, 75% female

Cafeteria:              Up to 1,500 sf in area, as required by Calavo.

Exterior lighting:      13 pivoting head lamps

Flooring(1st.floor):    Ceramic tile

Flooring(2nd.floor):    High traffic carpeting

Exterior windows:       Tinted to reduce load on A/C System

Phone lines:            Four (4) included. Additional lines available upon
                        request. 30 day maximum lead-time.

5. EXTERIOR AREAS
Security:               Guard shack included. With inter-office
                        communication conduit.

Landscaping:            Low maintenance vegetation suitable for Mexicali's
                        climate.

Fencing:                Ornamental iron fence on the front part of the building,
                        chain link fence on the sides. Brick wall at the rear.

Sewer test area:        Included. To test production area effluents.
                        Independent of the rest of the sewer system.

Refuse area P/U:        Surrounded with concrete screen block, to blend in with
                        rest of building. Equipped with drains for easy
                        cleaning.

Parking:                According to code

ACCEPTED:

- -------------------------
CALAVO FOODS DE MEXICO, S.A. DE C.V.(LESSEE)

/s/ MARIO TERAN DEL RIO
- -------------------------
TEDE, S.A. DE C.V.(LESSOR)
   32
                                 MEXICALI, B.C.

                                     [MAP]

   1
                                                                    EXHIBIT 10.4

                                LEASE AGREEMENT

THIS LEASE AGREEMENT ("LEASE") IS MADE AND ENTERED INTO AS OF NOVEMBER 21, 1997
BY AND BETWEEN TEDE, S.A. DE C.V., A MEXICAN CORPORATION ("TEDE"), AND CALAVO
DE MEXICO, S.A. DE C.V., A MEXICAN CORPORATION ("COMPANY"), WITH REFERENCE TO
THE FOLLOWING FACTS:

                                    Recitals

     A.   TEDE hereby declares that:

          1.   TEDE is a corporation organized and existing under the Mexican
General Corporation Law, as per Public Instrument No. 22,582, granted before
Licenciado Gonzalo Gonzalez Alvarez, Public Notary No. 6 of the City of
Mexicali, Baja, California, Mexico. The corporate purpose of TEDE is the
purchase, ownership and lease of real property;

          2.   Mr. Mario Teran Del Rio is the attorney-in-fact for TEDE, as set
forth in Public Instrument No. 22,582, granted before Licenciado Gonzalo
Gonzalez Alvarez, Public Notary No. 6 of the City of Mexicali, Baja,
California, Mexico;

          3.   TEDE'S registration number at the Federal Registry of Taxpayers
is: TED-781027-R72;

          4.   TEDE'S principal place of business is: CARRETERA UNION MARAN
#2701-F, PARQUE INDUSTRIAL MARAN;

          5.   On or about August 28, 1997, TEDE entered into a Promise of Sale
with Mrs. Victoria Alvarez Armas Viuda de Barragan for the purchase of that
certain real property containing approximately 40,468 square meters as more
particularly described on EXHIBIT A attached hereto and incorporated herein (the
"REAL PROPERTY"). The Real Property is located within a larger lot containing
27-31-58 hectares, in the land known as "Quirindavara," located in the outskirts
of the City of Uruapan, Michoacan. Pursuant to said Promise of Sale, TEDE, as
Buyer, and Mrs. Alvarez, as Seller, will enter into that certain agreement for
the purchase and sale of the Real Property) the "PURCHASE AGREEMENT") upon the
execution of this Lease and will thereafter complete the transactions
contemplated therein within fifteen (15) days after the date hereof; and

          6.   Upon purchasing land, TEDE represents and warrants that the Real
Property is free of any existing liens, taxes, mortgages, leases, adverse
claims or other encumbrances.

     B.   Company hereby declares that:

          1.   Company is a corporation organized and existing under the
Mexican General Corporation Law, as per Public Instrument No. ____, granted
before Luis Valdez Anguiano, Public Notary No. 28 of the City of Guadalajara,
Mexico;

          2.   ___________________ is the attorney-in-fact for Company, as set
forth in Public Instrument No. ______, granted before _________________, Public
Notary No. ________ of the City of __________________, Mexico;

          3.   Company's registration number at the Federal Registry of
Taxpayer CME 940415L35; and

                                       1

   2
          4.   Company's Principal place of business is: ______________________.

     C.   The Real Property is comprised of two parcels, described as follows:

          1.   A parcel ("PARCEL A") containing approximately 17,806 square
meters (4.4 acres) located in the ______________ portion of the Real Property,
upon which TEDE shall construct certain improvements as set forth in EXHIBIT C
and EXHIBIT D attached hereto and made a part hereof (the "IMPROVEMENTS"); and

          2.   A parcel ("PARCEL B") containing approximately 22,662 square
meters (5.6 acres) located in the ______________ portion of the Real Property.

Parcel A, Parcel B and the Improvements are described more particularly on
EXHIBITS B, C AND D attached hereto and made a part hereof. Parcel A, Parcel B
and the Improvements are referred to collectively as the "LEASED PROPERTY" and
are sometimes referred to individually as a "PARCEL."

                                       2
   3
                                   Agreement

     A. LEASE OF LEASED PROPERTY. In consideration of the rent and the
covenants and agreements made herein, TEDE leases to Company and Company leases
from TEDE the Leased Property.

     B. COMMENCEMENT AND TERMINATION.

        1. The commencement date as to each Parcel shall be as set forth herein:

           a. Parcel A and Parcel B. The "REAL PROPERTY COMMENCEMENT DATE"
shall be the date upon which TEDE delivers to Company: (i) evidence reasonably
satisfactory to Company that the purchase of the Real Property by TEDE has been
completed, which evidence shall consist of a copy of the ownership deed
executed with a notary public and duly recorded with the local registry of
public records and commerce of the City of Uruapan, Michoacan and the letter
referred to in Section B.1.a.(iii) below, (ii) a copy of this Lease executed
with a notary public and duly recorded with the local registry of public
records and commerce of the City Uruapan, Michoacan, and (iii) a letter
addressed to Company from legal counsel in Mexico that they have performed a
title search going back a sufficient time period so that the buyer can rely on
receiving clear and unobstructed title to the Real Property and Company can
rely on receiving clear and unobstructed title to the leasehold granted by this
Lease and to the options also granted by this Lease to extend the term of the
leasehold and to purchase the Leased Property; and

           b. Improvements. The "IMPROVEMENTS COMMENCEMENT DATE" shall be the
date on which all of the following have been accomplished:

              (1) The Improvements have been completed in accordance with the
plans and specifications set forth in Exhibit C and Exhibit D hereto, and with
any Change Orders (as hereinafter defined) agreed to in writing by the parties,
and with all applicable governmental laws and regulations,

              (2) All necessary governmental approvals for occupation of the
Leased Property have been issued; and

              (3) Company has accepted and approved the Improvements, which
acceptance and approval shall be given provided the conditions listed in
Sections B.1.b.(1) and B.1.b.(2), above, have been satisfied.

The Real Property Commencement Date and the Improvements Commencement Date are
each sometimes referred to individually as a "COMMENCEMENT DATE."

        2. Unless earlier terminated in accordance with the provisions hereof,
this Lease shall terminate as to each of the Parcels as set forth below:

           a. The term of this Lease with respect to Parcel A and the
Improvements shall expire on the date which is ten (10) years following the
Improvements Commencement Date. The date on which this Lease terminates as to
Parcel A and the Improvements shall be referred to as the "PARCEL A TERMINATION
DATE."

           b. The initial term of this Lease with respect to Parcel B shall
expire on the date which is five (5) years following the Real Property
Commencement Date. The date on which this Lease terminates as to Parcel B shall
be referred to as the "PARCEL B TERMINATION DATE."

                                       3
   4
The Parcel A Termination Date and the Parcel B Termination Date are sometime
each referred to as a "TERMINATION DATE." The period between the Real Property
Commencement Date and the Improvements Commencement Date shall be referred to
as the "PARCEL A TERM." The period between the Improvements Commencement Date
and the Parcel A Termination Date shall be referred to as the "IMPROVEMENTS
TERM." The period between the Real Property Commencement Date and the Parcel B
Termination Date shall be referred to as the "PARCEL B TERM." The Parcel A
Term, the Parcel B Term and the Improvements Term are each sometimes referred
to as a "TERM."

          3.   Parcel B Extensions.

               In the event Parcel B is improved by agreement of the parties
hereto during the Parcel B Term, Company shall have an option to extend the
Parcel B Termination Date to the Parcel A Termination Date. Thereafter, Company
shall have an option to renew this Lease as to Parcel B, as improved, for two
(2) additional five (5) year periods. Company may exercise this option by
delivering to TEDE written notice of its intent to do so not later than one
hundred eighty (180) days prior to the Parcel B Termination Date or, if Company
has exercised its options as described in this Section, the Parcel A Termination
Date or the end of any succeeding Option Period, as applicable.

     C.   POSSESSION.

          1.   Delivery Date. Provided this Lease is executed on or before
November 12, 1997, and subject to TEDE purchasing the property described in
recital A.5 by November 28, 1997, TEDE shall deliver possession of the Leased
Property complete and ready for occupancy not later than July 10, 1998. If this
Lease is not executed as of November 12, 1997, the delivery date shall be
automatically extended by one day for each day that elapses between November
12, 1997 and the date of execution hereof. The date on which possession of the
Leased Property is scheduled to be delivered to Company pursuant to this
Section C.1 hereof shall be referred to herein as the "DELIVERY DATE." TEDE
will deliver to Company complete Final Drawings by January 5, 1998. Company
will execute these drawings, as corrected by Company, no later than 5 days
after being delivered by TEDE to Company.

          2.   Occupancy Prior to Delivery Date. In order that the Leased
Premises will be ready for occupancy by Company no later than the Delivery
Date, TEDE hereby authorizes Company to occupy portions of the Leased Property
on and after June 15, 1998, for the sole purpose of installing equipment,
fixtures and improvements. Company's occupation of the Leased Property under
this paragraph shall not constitute acceptance by Company of the Improvements.

          3.   Delay in Delivery. If for any reason TEDE cannot deliver
possession of the Leased Property as of the Delivery Date, TEDE shall pay to
Company as liquidated damages for such delay the amount of Three Thousand Two
Hundred United States Dollars (US $3,200) for each day that elapses between the
Delivery Date and the Improvements Commencement Date, provided, however, that
no liquidated damages shall be payable by TEDE for delays unavoidably resulting
from Acts of God, such as torrential rains or hurricanes.

     D.   CONSTRUCTION OF IMPROVEMENTS.

          1.   Parcel A Improvements. TEDE shall construct, solely within the
property limits of the Leased Property, and to the extent of the related
appendices the following improvements: street pavements, curbs and gutters,
street lighting and utilities, including a solution to provide sanitary sewers
storm drainage, electricity, telephone and water services

                                       4
   5
within the streets or adjacent to the Leased Property, pursuant to the
_________________ plans and all requirements of the competent governmental
agency that has jurisdiction over the Real Property. TEDE shall commence
construction no later than the Real Property Commencement Date, and shall
proceed with reasonable diligence to cause the Improvements to be Substantially
Completed no later than June 15, 1998 (provided that such date shall be
extended by one day for each day that elapses between November 12, 1997 and the
date of execution hereof). The Improvements shall be deemed to be
"SUBSTANTIALLY COMPLETED" when they have been completed in accordance with
Exhibits C and D hereto, and with any Change Orders agreed to in writing by the
parties, except for finishing details, minor omissions, decorations and
mechanical adjustments of the type normally found on an architectural "punch
list," all of which TEDE shall complete or correct no later than the Delivery
Date.

               Company shall appoint its own personnel in order to verify the
biweekly progress of the construction and that such construction is being
executed in accordance with the agreed specifications. In case the Company does
not make objections to concluded construction within a fifteen day period, it
shall be understood that said construction is executed in compliance with
agreed specifications.

               Within seven (7) days after the Improvements are Substantially
Complete, TEDE and Company shall inspect the Improvements and jointly prepare a
"punch list" of agreed items of construction remaining to be completed. TEDE
shall complete the items set forth in the punch list as soon as reasonably
possible. Company shall cooperate with and accommodate TEDE and its workers in
completing the items on the punch list.

               Company shall not be allowed to start operations until the
building has been delivered and Company has issued an acceptance certificate.

               TEDE shall complete the Improvements as defined in this Lease at
its sole cost and expense no later than the Delivery Date. Any additions or
changes to the Improvements (as defined herein) that result in increased costs
and that are requested and approved by Company ("CHANGE ORDERS") shall be the
responsibility of Company. Company shall pay to TEDE such increased costs
within three (3) days after Company receives and approves the Change Order and
the additional costs set forth therein. Prior to executing any Change Order,
the parties shall agree in writing regarding any extension or modification of
the Delivery Date that may be required as a result of any such Change Order. In
the event that any Change Order results in a decrease in the cost of
constructing the Improvements, such decrease shall benefit Company to the
extent such decrease can be offset against any corresponding increase in cost
resulting from any other Change Order. Any Change Order which would increase
costs by Ten Thousand United States Dollars (US $10,000) or less shall be
approved in writing by Gerard Watts. Any Change Order which would increase
costs by more than Ten Thousand United States Dollars (US $10,000) shall be
approved in writing by Ron Bennett. Copies of all Change Orders will be
supplied to Bruce Spurrell in a timely manner.

          2.   Refrigeration System. TEDE shall pay up to an amount of US Cy
(US $315,000) THREE HUNDRED FIFTEEN THOUSAND DOLLARS 00/00 UNITED STATES OF
AMERICA CURRENCY) in the purchase and installation of refrigeration equipment
required for the Improvements pursuant to specifications approved by Company on
the understanding that it shall be Company's responsibility to perform at its
expense the project design and required capacity study as well as the election
of the supplier of such equipment, also being in charge of covering and
programming its maintenance and pursuing any corresponding warranty claims from
suppliers and other service performers involved in works for the adequate
installation and operation of such equipment.

          3.   Parcel B Improvements. During the term of this Lease, TEDE and

                                       5
   6
Company may agree in writing that TEDE will construct and install certain
improvements on Parcel B ("PARCEL B IMPROVEMENTS").

          4. Standards. All on-site and off-site improvements constructed
pursuant to this Lease shall comply with the plans and specifications therefor
as agreed by the parties, and with the laws, ordinances, regulations, orders
and requirements of all Governmental Agencies. TEDE warrants and guarantees
that TEDE, its contractors, representatives and employees shall comply fully
with all pertinent construction, social security, tax and labor laws, and all
other applicable laws and regulations.

       E. RENT.

          1. Payment of Rent. Company shall pay TEDE Rent in advance at the
address listed in Recital A.4 hereof, or as directed by TEDE, no later than the
third day of each month of the Term. If a Term shall commence on a day other
than the first day of a month, the Rent for that first month shall be prorated
on a per diem basis and shall be paid within three (3) days of the Commencement
Date of such Term. Rent shall be payable in the national currency of the USA.

          2. Amount of Rent Payable Monthly.

             a. During the Parcel A Term, Company shall pay to Tede Rent with
respect to Parcel A in the amount of Five Thousand Four and 26/100 United
States Dollars (US $5,004.26), plus value added tax ("PARCEL A RENT"), monthly.

             b. Commencing on the Improvements Commencement Date, but in no
event earlier than June 15, 1998, and ending on the Parcel A Termination Date,
Company shall pay to TEDE Rent with respect to Parcel A and the Improvements in
the amount of thirty-eight Thousand Three Hundred ninety-six and 26/100 United
States Dollars (US $38,396.26), plus value added tax ("IMPROVED PARCEL A
RENT"), monthly.

             c. Commencing on the Real Property Commencement Date and ending on
the Parcel B Termination Date (as it may be extended), Company shall pay to
TEDE Rent with respect to Parcel B in the amount of Two Thousand Six Hundred
Three and 74/100 United States Dollars (US $2,603.74), plus value added tax
("PARCEL B RENT"), monthly.

The rent payable with respect to any Parcel hereunder is referred to as "RENT."

          3. Adjustments to Rent.

             a. Periodic Adjustments.

                (1) Improved Parcel A. On the third anniversary of the Real
Property Commencement Date, the Improved Parcel A Rent shall be adjusted by the
cumulative percentage increase in the United States Consumer Price Index All
Items and Major Group Figures for All Urban Consumers ("CPI") during the two
years period ending with the second month preceding such anniversary.
Thereafter, on each succeeding anniversary of the Parcel A Commencement Date,
the Improved Parcel A Rent shall be adjusted by the percentage increase in the
CPI during the one year period ending with the second month preceding such
anniversary, provided, however, that in no event shall the Improved Parcel A
Rent be increased under this Section E.3.a.(1) by more than Five Percent (5%)
per annum.

                (2) Parcel B. On the second anniversary of the Real Property
Commencement Date, the Parcel B Rent shall be adjusted by the cumulative
percentage

                                       6

   7
increase in the United States Consumer Price Index All Items and Major Group
Figures for All Urban Consumers ("CPI") during the first year period ending
with the second month preceding such anniversary. Thereafter, on each
succeeding anniversary of the Parcel B Commencement Date, the Parcel B Rent
shall be adjusted by the percentage increase in the CPI during the one year
period ending with the second month preceding such anniversary, provided,
however, that in no event shall the Parcel B Rent be increased under this
Section E.3.a.(1) by more than Five Percent (5%) per annum.

          b. Expansion of Parcel A Building. In the event the total floor area
of the primary permanent building located on Parcel A is increased so as to
exceed the total floor area of such building described on Exhibit C hereto,
i.e., 62,640 square feet, the Improved Parcel A Rent shall be increased for
each additional square foot of floor space by the then-current Rent Rate under
this Lease for each square foot of floor space of said building as shown on
Exhibit C.

          c. Parcel B Improvements. In the event Parcel B is improved by
agreement of the parties hereto, the Parcel B Rent shall be increased upon
completion of all Parcel B Improvements, including all related off-site
improvements, by the total square footage of the primary building to be located
on Parcel B, multiplied by the then-current Rent under this Lease for each
square foot of floor space of the building on Parcel A.

       4. No Advance Rent. Except for the Security Deposit as hereinafter
described, TEDE may not collect any Rent more than one (1) month in advance of
the date on which it is due and payable hereunder.

     F. SECURITY DEPOSIT. Company shall deposit with TEDE upon execution of this
Lease a Security Deposit in the amount of the sum of the Improved Parcel A Rent
plus the Parcel B Rent for one and a half months as security for Company's
faithful performance of Company's obligations hereunder with respect to Parcel A
and the Improvements, and Parcel B, respectively. If Company fails to pay Rent
or other charges due hereunder, or otherwise defaults with respect to any
provision of this Lease, TEDE may use, apply or retain all or any portion of the
Security Deposit for the payment of any Rent or other charge in default or for
the payment of any other sum to which TEDE may become obligated by reason of
Company's default. At the Parcel B Termination Date, if Company has performed
all of Company's obligations hereunder with respect to Parcel B, the portion of
the Security Deposit attributable (on the basis of the relative amounts of Rent
payable for Parcel B and for Parcel A and the Improvements, if any, at the
Parcel B Termination Date) to Parcel B, or so much thereof as has not therefore
been applied by TEDE, shall be returned, without payment of interest for its
use, to Company after Company has vacated Parcel B, and complied with all its
obligations. At the Parcel A Termination Date, if Company has performed all of
Company's obligations hereunder with respect to Parcel A and the Improvements,
the portion of the Security Deposit attributable (in accordance with the
preceding sentence) to Parcel A and the Improvements, or so much thereof as has
not therefore been applied by TEDE, shall be returned, without payment of
interest for its use, to Company after Company has vacated Parcel A and the
Improvements.

     G. PERMITTED USES.

        1. The Leased Property may be used for any lawful industrial purpose,
including, without limitation, the processing of avocado and other food
products.

        2. Subject to Section H.2 hereof, Company shall comply, at Company's
expense, with all laws, ordinances, regulations and requirements of all
governmental agencies having jurisdiction over the Leased Property or Company's
use thereof ("GOVERNMENTAL AUTHORITIES"). Without limiting the generality of
the foregoing, Company shall comply with all

                                       7

   8
police, fire and sanitary regulations imposed by any Governmental Authority, and
shall observe and obey all other governmental requirements governing the conduct
of any business conducted in the Leased Property.

                3.      Company shall not use the Leased Property in any manner
that will constitute waste or nuisance or that is liable to cause injury to
others.

                4.      Quiet Enjoyment. Upon Company paying the Rent for the
Leased Property and complying with terms and conditions of this Lease, Company
shall have quiet possession of the Leased Property for the entire Term subject
to all of the provisions of this Lease.

        H.      MAINTENANCE, REPAIRS AND ALTERATIONS.

                1.      Company's Repair and Maintenance Obligations.

                        a.      Subject to Section H.2 hereof and except as
otherwise provided herein, Company shall, at its expense, keep in good order,
condition and repair (except for normal wear and tear) the Leased Property and
every part thereof, including any and all plumbing and sewage facilities,
heating, air conditioning, ventilating, fixtures, partitions, walls (interior
and exterior), floors, ceilings, sinks, roofs, interior and exterior doors,
windows and plate glass located within the Leased Property. Company shall not
be responsible for any damages, and shall not be responsible for any repairs,
caused by any negligent act or omission of TEDE, its employees, agents,
invitees, or contractors.

                        b.      Company shall maintain all rubbish and trash
areas on the Leased Property in a neat and orderly manner, and shall store
trash in such areas only temporarily. All rubbish and trash shall be regularly
removed from the Leased Property at Company's expense. Company shall not burn
any trash of any kind in or about the Leased Property.

                2.      TEDE's Repair Obligations.

                        a.      In the event of any structural or manufacturing
defect in any of the on-site or off-site improvements made by or for TEDE, TEDE
shall, at its expense, within five (5) days following notice thereof (or sooner
in the event of an emergency), promptly and diligently start to repair any such
defect. Except as provided herein, and subject to section H.1, TEDE shall have
no obligation to maintain or repair the Leased Property. TEDE shall make every
effort to minimize any disruption of Company's use of the Leased Property as a
result of any such defect or the repair thereof. TEDE shall not be responsible
for any damages, and shall not be responsible for any repairs, caused by any
negligent act or omission of Company, its employees, agents, invitees, or
contractors. TEDE shall not be responsible for any damage resulting from TEDE's
failure to make any repairs, unless Company has notified TEDE of the need for
such repairs, and TEDE has failed to commence and thereafter diligently
complete such repairs as required herein.

                        b.      In the event TEDE fails to make the repairs
required in paragraph H.2.a. above, Company may, but shall not be required, to
make such repairs or cause such repairs to be made. TEDE shall, on demand,
immediately pay to Company the actual cost of such repairs. In the event TEDE
does not pay such amounts to Company within twenty (20) days following Company's
demand, then, at the sole option of Company, Company may deduct from any Rent
then or thereafter due and owing to TEDE the cost of such repairs. Company shall
provide to TEDE evidence of all expenses for which it seeks reimbursements or on
account of which amounts have been deducted from the Rent.

                                       8
   9
                3.      Company's Installations, Alterations and Improvements.

                        a.      Installations. Company may, at its expense,
install on the Leased Property such trade fixtures, equipment and furniture as
it may deem necessary or desirable, provided that such items can be removed
without damage to the structural integrity of the Improvements. Said items
shall remain the property of Company, and, Company shall remove all such items
upon the expiration or earlier termination of this Lease. Company shall, at its
sole expense, repair all damage caused by the installation or removal of any
trade fixtures, equipment and furniture hereunder.

                        b.      Alterations and Improvements. Company may, at
its discretion, make any alterations or improvements it may deem necessary or
desirable in, on or about the Leased Property, provided that no such
alterations or improvements may be made without the prior written consent of
TEDE if such alteration or improvement (i) exceeds Ten Thousand United States
Dollars (US $10,000) in cost or (ii) affects the structural integrity of the
Improvements. Said alterations and improvements shall remain the property of
Company, and Company shall remove all such items upon the expiration or earlier
termination of this Lease. Company shall, at its sole expense, repair all
damage caused by the installation or removal of any alterations or improvements
hereunder.

                        c.      No Outside Sheds. Company may not install any
metal sheds or coverings on the exterior of the Improvements without the prior
written consent of TEDE.

                        d.      Compliance with Laws. Company shall perform all
installations, alterations and improvements in accordance with all applicable
laws, ordinances, regulations and orders of any Governmental Authority.

                        e.      Liens and Encumbrances. Company shall keep the
Leased Property free and clear of any and all liens and encumbrances arising out
of any acts or omissions of Company under this Section. Company shall defend,
indemnify and save harmless TEDE from and against any and all actions or
proceedings brought to enforce such liens and encumbrances (including reasonable
attorneys' fees and expenses). Company, at Company's sole expense, shall procure
the satisfaction or discharge of all such liens and encumbrances within thirty
(30) days after the filing thereof; provided, however, that if Company shall, in
good faith, contest the validity or amount of any such lien, claim or demand,
then Company shall, at its sole expense defend itself and TEDE against the same
and shall pay and satisfy any such adverse judgment that may be rendered thereon
before the enforcement thereof against the TEDE or the Leased Property, upon the
condition that if TEDE shall require, Company shall furnish to TEDE a bond
satisfactory to TEDE in an amount equal to such contested lien claim or demand
indemnifying TEDE against liability for the same and holding the Leased Property
free from the effect of such lien or encumbrance. If Company fails to discharge
any such lien or encumbrance or to provide a bond therefor as provided herein,
TEDE may, at its option, pay all or any part of such lien or encumbrance. In
such event, Company shall, on demand, pay to TEDE the amount so paid, together
with interest at the rate of twenty percent (20%) per annum from the date of
payment of such lien or encumbrance by TEDE through the date of payment by
Company to TEDE therefor. The provisions of this Section shall not apply to any
acts or omissions of Company arising as a result of the failure of TEDE to
perform its repair obligations set forth in Section H.2 hereof.

        I.      TAXES AND CHARGES.

                1.      Taxes on Company's Property. Company shall pay, at
least ten (10) days prior to delinquency, all income and other taxes
attributable to the conduct of Company's business and operations at the Leased
Property, including but not limited to the Value Added

                                       9
   10
Tax.

                2.      Leased Property Taxes. TEDE shall pay, at least ten
(10) days prior to delinquency, to the appropriate taxing authority any and all
property and other taxes attributable to the Leased Property and TEDE's income
derived from this Lease. TEDE shall not be responsible for any taxes
attributable to any personal property or assets of Company which may be located
at the Leased Property.

                3.      Utilities. Company shall promptly pay all charges for
all public and other utilities and related services furnished to the Leased
Property, including, but not limited to, water, gas, electricity and telephone
charges, including installation charges.

        J.      ASSIGNMENT AND SUBLETTING.

                1.      By Company. Company shall have the right, upon the
prior written consent of TEDE, which shall not be unreasonably withheld, to
assign or transfer this Lease or any interest herein, or to sublease Parcel A
and the Improvements to, or permit the use of Parcel A and the Improvements by,
any individual, corporation or entity. Company shall have the right to sublease
Parcel B or to permit the use of Parcel B by, any individual, corporation or
entity. Notwithstanding the foregoing, without TEDE's consent but upon ten (10)
days notice to TEDE, this Lease may be assigned, or Parcel A and the
improvements may be sublet, to any corporation which is a parent, subsidiary or
affiliate of Company. In the event of any assignment, transfer or sublease,
Company shall remain fully liable for all of its obligations under this Lease
or any extension of this Lease. Any and all proceeds to Company as a result of
the assignment, transfer or sublease of the Leased Property or any portion
thereof shall be the property of, and shall be retained by, Company.

                2.      By TEDE. TEDE shall have the right to assign and
reassign, from time to time, and transfer, from time to time, any or all of the
rights and obligations of TEDE in this Lease Agreement or any interest therein,
without Company's consent, provided that no such assignment or reassignment
shall impair any of the rights of Company herein and provided further that TEDE
shall remain liable for all its obligations under this Lease Agreement. In the
event of such assignment or reassignment, Company shall not diminish or
withhold, unless otherwise agreed upon herein, any of the rents payable
hereunder by asserting claims against such assignee, any defense, setoff, or
counter claims which Company may have against TEDE or any of its affiliates.

        K.      DEFAULTS BY COMPANY; REMEDIES.

                1.      Defaults by Company. The occurrence of any one or more
of the following events shall constitute a material default and breach of this
Lease by Company:

                        a.      The vacating or abandonment of the Leased
Property by Company.

                        b.      The failure by Company to make any payment of
Rent as and when due, where such failure shall continue for a period of ten
(10) days after written notice thereof from TEDE to Company.

                        c.      The failure by Company to perform obligations
required of Company within a reasonable time, but in no event later than 30
days after written notice by TEDE to Company, specifying wherein Company has
failed to perform such obligation; provided, however, that if the nature of
Company's obligation is such that more than 30 days are required for
performance then Company shall not be in default if Company commences
performance within such 30 day period and thereafter diligently prosecutes the
same to completion.

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               d. The making by Company of any general arrangement or assignment
for the benefit of creditors;

               e. The filing of a voluntary petition of bankruptcy by Company,
or the filing of an involuntary petition of bankruptcy by Company's creditors,
said petition remaining undischarged for a period of sixty (60) days;

               f. The appointment of a trustee or receiver to take possession of
substantially all of Company's assets located at the Leased Property or
Company's interest in this Lease, where possession is not restored to Company
within thirty (30) days;

               g. The attachment, execution or other judicial seizure of
substantially all of Company's assets located at the Leased Property or of
Company's interest in this Lease, where such seizure is not discharged within 30
days.

               h. The failure of Company to provide insurance during the Term of
this Lease as provided in Section T.

          2.   Remedies. In the event of any such material default or breach by
Company, TEDE shall have the right, at its option and in addition to other
rights and remedies granted by law, to do either of the following:

               a. Terminate this Lease, and re-enter and take possession of the
Leased Property; or

               b. Reaffirm this Lease and seek specific performance of the
terms, covenants, conditions and provisions of this Lease, in which case TEDE
shall have the right to declare and collect the entire unpaid balance of rent to
the end of the last lease year of the existing Term or extension thereof then in
effect and also declare all other sums due to TEDE, immediately due and payable,
plus interest at the rate of twenty percent (20%) per annum on said sums from
the date of such declaration until paid in full.

          3. [Intentionally Deleted]

          4. Mitigation of Damages. In the event TEDE re-enters the Leased
Property, TEDE shall be obligated to attempt in good faith to lease all or any
portion of the Leased Property to other prospective tenants, or otherwise to
make beneficial use of the Leased Property, during the remaining balance of the
term of this Lease. In the event TEDE re-leases all or some portion of the
Leased Property or otherwise makes beneficial use of the Leased Property, any
rents received from such other tenant and any value of such beneficial use shall
be offset against any damages otherwise due and owing by Company as a result of
a breach by Company hereunder. TEDE shall promptly refund to Company that
portion, in a month-to-month manner, or as it becomes paid to TEDE from the new
Lessee, any Rent pre-paid by Company which is allocable to the period during
which the Leased Property or any portion thereof was leased to another tenant or
otherwise used in a beneficial manner.

          5. TEDE's Right to Cure Defaults. In the event of a default hereunder
as described in Section K.1, TEDE may, without any obligation to do so, at any
time after ten (10) days following written notice of its intent to do so,
provided Company has not commenced to cure such default, cure such breach or
default for the account and at the expense of Company.

     L.   DEFAULT BY TEDE. TEDE shall not be in default unless TEDE fails to
perform obligations required of TEDE within a reasonable time, but in no event
later than 30 days after

                                       11

   12
written notice by Company to TEDE, specifying wherein TEDE has failed to
perform such obligation; provided, however, that if the nature of TEDE's
obligation is such that more than 30 days are required for performance then
TEDE shall not be in default if TEDE commences performance within such 30 day
period and thereafter diligently prosecutes the same to completion.

     M. LATE CHARGES. In the event any amount due and payable by one party to
the other hereunder has not been paid in accordance herewith, the owing party's
obligation to pay such amount shall bear interest at the rate of twenty percent
(20%) annually from the date such payment was due until the date such payment
is made by the owing party.

     N. SURRENDER; HOLDING OVER.

        1. Surrender. On the last day of the Term as to any Parcel, Company
shall quit such Parcel and shall surrender such Parcel to TEDE in the same
condition as received, ordinary wear and tear excepted, clear and free of
debris. Company shall repair any damage to such Parcel occasioned by the
installation or removal of its machinery, trade fixtures, furnishings,
equipment and improvements. Any furniture or fixtures which may be left in the
Leased Property upon Company's vacation thereof shall be deemed abandoned by
Company.

        2. Holding Over. If Company retains possession of any Parcel after the
applicable Termination Date, Company shall pay to TEDE Rent with respect to such
Parcel in an amount equal to one hundred twenty-five percent (125%) of the total
amount of Rent payable with respect to such Parcel hereunder, using as a base
the amount of rent, the amount paid by Company for the month immediately
preceding the Termination Date and, in addition thereto, shall pay TEDE for all
damages sustained by TEDE by reason of Company's retention of possession of such
Parcel until Company has delivered to TEDE such Parcel or until the parties
execute a new lease as to such Parcel. This Section shall not be construed as
granting Company any right to remain in possession of any Parcel after the
Termination Date with respect to any such Parcel.

     O. WAIVER OF DEFAULT. No waiver by TEDE or Company of any provision hereof
shall be deemed a waiver of any other provision hereof or of any subsequent
breach by the other party of the same or any other provision. Either party's
consent to, or approval of any act, shall not be deemed to waive or render
unnecessary the consent or approval of that party of any subsequent or similar
act by the other party.

     P. CERTIFICATE. Company shall, at any time upon not less than fifteen (15)
days' prior written notice from TEDE, execute, acknowledge and deliver to TEDE
a statement in writing (i) certifying that this Lease is unmodified and in full
force and effect (or, if modified, stating the nature of such modification and
certifying that this Lease, as so modified, is in full force and effect) and
the date to which the Rent is paid in advance, if any, and (ii) acknowledging
that there are not, to Company's knowledge, any uncured defaults on the part of
TEDE hereunder, or specifying such defaults if any are claimed. Any such
statement may be relied upon by any prospective purchaser or lending
institution interested in the Leased Property.

     Q. [Intentionally Deleted]

     R. SUBORDINATION; ATTORNMENT.

        1. Subordination. TEDE shall have the right to encumber its interest in
this Lease or the Leased Property for any purpose it deems appropriate. Company
hereby subordinates its interest in the Leased Property to any such
encumbrance, but only on the

                                       12
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condition that each encumbrancer first agrees in writing (in a form acceptable
to Company) that, in the event of a foreclosure of same or of any other such
action or proceeding for the enforcement thereof, or of any sale thereunder,
this Lease will not be barred, terminated, cut off or foreclosed, nor will the
rights and quiet possession of Company hereunder be disturbed if Company shall
not then be in material default in the payment of Rent or other sums and shall
not otherwise be in material default under the terms of this Lease.

            a. Company shall, within ten (10) days of receipt of a written
request made by TEDE, deliver to TEDE a statement in writing, certifying that
this Lease Agreement is unmodified and in full force and effect (or if there
have been modifications that the same are in full force and effect as modified);
the dates to which the rent and any other charges have been paid in advance and,
if that is the case, that TEDE's improvements have been satisfactorily
completed. It is intended that any such statement may be relied upon by any
person, prospective purchaser or lending institution interested in the Leased
Property.

            b. Upon notice to Company that TEDE has encumbered its interest
herein, no amendment of this Lease that would have the effect of reducing the
Rent, decreasing the Term or modifying or negating any substantial obligation
shall be effective against such encumbrancer unless such encumbrancer has agreed
to such amendment in writing. This limitation shall continue until such
encumbrancer delivers notice to Company that such encumbrance has been
terminated.

            c. In the event any such encumbrancer notifies Company in writing
that Company is thereafter required to pay monthly Rent hereunder to such
encumbrancer, then Company shall, without any duty of further inquiry, pay each
subsequent monthly Rent payment to such encumbrancer until such encumbrancer
authorizes Company to pay Rent hereunder to TEDE or another person entitled
thereto. The encumbrancer shall not be required to credit any payments made by
Company to TEDE following Company's receipt of notice requiring Rent payments to
be made to encumbrancer.

            d. In the event such encumbrance is foreclosed or judicially
enforced, the one who holds the encumbrance or the purchaser upon foreclosure or
at the sale under a power of sale shall agree to respect this Lease and accept
the performance by Company of its obligations hereunder. Company shall in the
event any proceedings are brought for the foreclosure of or in the event of
exercise of the power of sale under any mortgage or Trust Deed made by TEDE, its
successors or assigns, encumbering the Leased Property or any part thereof, if
so requested, attorn to the purchaser upon such foreclosure or sale and
recognize such purchaser as the Lessor under this Lease.

      S. TEDE'S ACCESS. TEDE and TEDE's authorized representatives shall have
the right to enter the Leased Property at reasonable times during Company's
regular business hours and in emergencies at all times for the purpose of
inspecting the same and making such alterations, repairs, improvements or
additions to the Leased Property or to the Improvements as TEDE may deem
necessary for the preservation of the structural integrity of the Improvements
and for compliance of the Leased Property with applicable requirements of
Governmental Authorities. For a period commencing one hundred twenty (120) days
prior to  the termination of this Lease as to any Parcel, TEDE shall have access
to such Parcel for the purpose of showing the same to prospective purchasers,
lender, or lessees, and TEDE shall have the right to post any ordinary "For
Sale" or "For Lease" signs upon such Parcel. Except in case of emergency, TEDE
shall give Company twenty-four (24) hours' notice before entering the Leased
Property, and Company shall have the right to accompany any representatives of
TEDE and any prospective purchasers, lenders, or lessees. TEDE hereby represents
and warrants to Company that none of TEDE, its representatives, employees and
agents, and any prospective purchasers, lenders, or lessees shall divulge or
reveal to any third party any

                                       13
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proprietary information of Company or any information regarding Company's
business or industrial processes.

     T.   INSURANCE.

          1.   Company shall maintain in full force and effect during the
entire Term, at its own cost and expense, the following policies of insurance
with respect to the Leased Property:

               a.   Comprehensive/Commercial General Liability Insurance
protecting both Company and TEDE with a combined single limit for bodily injury
and  property damages of not less than One Million United States Dollars (US
$1,000,000) per occurrence;

               b.   Standard fire, extended coverage and special extended
coverage insurance with loss payable to TEDE and any lender designated by TEDE,
including fire, lightning, falling aircraft, smoke, windstorm, earthquake,
hail, vehicle damage, volcanic eruption, strikes, civil commotion, vandalism,
riot, malicious mischief and flood endorsements, insuring the Leased Property.
Such insurance shall be in an amount equal to Three Million United States
Dollars (US $3,000,000), which amount shall be adjusted annually by Company
with the value approved by TEDE, to reflect then current property replacement
values.

               c.   Business interruption insurance with loss payable to TEDE
and/or any lender designated by TEDE, sufficient to cover, for a period not less
than one year, all rental obligations of Company under this Lease which would be
borne by or due from Company if the Leased Property and Company's business were
fully open and operating.

          2.   Form of Insurance. All insurance required to be carried by
Company under Section T.1 shall be in a form approved by the Department of
Finance and Public Credit, and shall be written with one or more companies
authorized to do business in Mexico. Each such policy shall contain a provision
whereby each insurer agrees to give TEDE at least 30 days prior written notice
in advance of any cancellation or lapse or the effective date of any reduction
in the amounts of insurance. On or before the Commencement Date, Company shall
furnish TEDE with certificates evidencing the aforesaid insurance coverage, and
renewal certificates shall be furnished to TEDE at least 30 days prior to the
expiration date of such insurance.

          3.   Other Insurance. Each party shall procure and maintain such
other insurance covering its own liability and property as it deems necessary
or desirable.

          4.   Waiver of Subrogation. Provided the insurance described in
Section T.1 above has been provided, TEDE and Company each hereby release and
relieve the other, and waive their entire right to recover damages against the
other, for loss or damage to its property arising out of the perils required
to be insured against herein. The effect of such releases and waivers is not
limited by the amount of insurance carried or required, or by any deductibles
applicable hereto. The parties agree to have their respective property damage
insurance carriers waive any right to subrogation that such companies may have
against Company or TEDE, as the case may be, so long as the insurance is not
invalidated thereby.

     U.   INDEMNITY.

          1.   By Company. Company hereby agrees to indemnify TEDE against and
save TEDE harmless from any and all claims, damages, losses and costs and any
and all expenses, including, without limitation, attorneys' fees, expenses and
costs, arising out of or in connection with any negligent act or omission of
Company or its contractors, licensees, agents, invitees or employees in
connection with Company's use or occupancy of the Leased Property. This Section
U.1. shall survive the termination or expiration of the Term or Article Y
hereof.

                                       14

   15
          2.   By TEDE. TEDE hereby agrees to indemnify Company against and save
Company harmless from any and all claims, damages, losses and costs and any and
all expenses, including, without limitation, attorneys' fees, expenses and
costs, arising out of or in connection with (i) any negligent act of omission of
TEDE or its contractors, licensees, agents, invitees or employees in connection
with the Leased Property, including, without limitation, negligent acts and
omissions of such persons while on or about the Leased Property, and negligent
acts or omissions of such persons in connection with any construction or repair
made by TEDE on or to the Leased Property after the date hereof, and (ii) any
hazardous material present in, on or emanating to or from the Leased Property as
of the Real Property Commencement Data. This Section U.2 shall survive the
termination or expiration of the Term or Article Y hereto.

          3.   Limitation of Liability. Except for intentional or negligent
acts and omissions of TEDE, its agents, contractors and employees, TEDE shall
not be liable for any loss or damage caused by the intentional or negligent
acts or omissions of the Company, of occupants of adjacent property, or of the
public, or by other causes beyond the reasonable control of TEDE, including,
without limitation, any interruption of any utility or other services to the
Leased Property.

          4.   Duration of Indemnity. The provisions of this Article shall
survive the termination of this Lease with respect to any damage, injury or
death occurring prior to such termination.

     V.   DAMAGE OR DESTRUCTION.

          1.   Total Destruction. In the event that all or a substantial part
of the Leased Property be damaged or destroyed by fire, act of nature or any
other cause, so as to make Company unable to continue the operation of its
business on the Leased Premises ("Total Destruction"), TEDE, shall, within 10
(ten) calendar days from such destruction, determine whether the Leased
Property can be  restored within 3 (three) months and notify Company of said
determination. If TEDE determines that the Leased Property cannot be restored
within 3 (three) months, either TEDE or Company shall have the right and option
to immediately terminate this Lease Agreement, by advising the other thereof by
written notice. If TEDE determines that the Leased Property can be restored
within said 3 (three) months, TEDE shall, at its own expense, proceed
diligently to reconstruct the Improvements and in such event, TEDE shall accept
in lieu of rent during the period when Company is substantially deprived of the
use of the Leased Property, any insurance proceeds which may be payable
pursuant to rental insurance provided for herein above. In the event TEDE
notifies Company that TEDE desires to terminate this Lease following such a
casualty, Company may, within thirty (30) days after such notice by TEDE,
notify TEDE that Company desires to exercise the option to purchase the Leased
Property under the terms and provisions of Article Y hereof. If Company
notifies TEDE of its desire to exercise the option, TEDE shall, at its own
expense, proceed diligently to restore the Leased Property. TEDE shall accept
in lieu of Rent during the period when Company is substantially deprived of the
use of the Leased Property, any rental insurance proceeds which may be payable
to TEDE hereunder.

          2.   Partial Destruction. In the event the Leased Property is
subject to a casualty that does not constitute Total Destruction, TEDE shall
repair the Leased Property as soon as reasonably possible and this Lease shall
continue in full force and effect, provided that during the period required for
such repairs, the Rent shall be prorated baed on the parties' good faith
determination of the proportion to which Company's use of the Leased Property
is impaired.

          3.   If TEDE shall be obligated to repair or restore the Leased
Property under the

                                       15
   16
provisions hereof and shall not address such repair or restoration within
twenty (20) days after such obligations shall accrue and thereafter diligently
pursue such repair or restoration to completion, Company may at Company's
option cancel and terminate this Lease by giving TEDE written notice of
Company's election to do so at any time prior to the commencement of such
repair or restoration. In such event this Lease shall terminate as of the date
of such notice. Nothing herein shall limit Company's other rights and remedies
hereunder and under applicable law for TEDE's breach.

     W.   RIGHTS OF WAY.

          1.   For TEDE. TEDE reserves to itself a right-of-way over and under
the Leased Property for installation, repair, replacement and maintenance of
all utilities, including, but not limited to, water, gas, telephone,
electricity, television or radio antenna system serving the Leased Property.
The right of way reserved hereunder shall include reasonable rights of ingress
and egress, and the right to erect and maintain required poles and other
facilities related to such utilities. The right-of-way reserved hereunder shall
not unduly interfere or hinder Company in its normal business operations.
Except in case of emergency, TEDE shall provide at least twenty-four hours'
prior notice of any entry by TEDE or its representatives onto the Leased
Property. TEDE shall consult Company prior to the placement of any poles or
other facilities on the Leased Property.

          2.   For Parcel B. In the event Company surrenders Parcel B to TEDE
without at the same time surrendering to TEDE Parcel A, Company shall permit an
easement over an area of at least 20 meters for access for Parcel B occupant,
as shown in Exhibit C.

     X.   LIMITATION OF TEDE'S LIABILITY. If TEDE becomes obligated to pay
Company a money judgment arising out of any failure by TEDE to perform or
observe any of the terms, covenants, conditions or provisions to be performed
or observed by TEDE hereunder, Company shall be limited for the satisfaction of
said money judgment solely from the assets of TEDE and no other property or
assets of the individual partners, directors, officers, or shareholders of TEDE
shall be subject to levy, execution or other enforcement procedure whatsoever
for the satisfaction of said judgment.

     Y.   OPTION TO PURCHASE. TEDE hereby grants to Company, as of the date
hereof and subject to the terms and conditions set forth herein, (a) the
exclusive right and option (hereinafter called the "PARCEL A OPTION") to
purchase Parcel A, including without limitation all improvements thereon and
all rights appurtenant thereto ("COMPLETED PARCEL A") for the Parcel A Purchase
Price, and (b) a separate exclusive right and option (hereinafter called the
"PARCEL B OPTION") to purchase Parcel B, including without limitation all
improvements thereon and all rights appurtenant thereto ("COMPLETED PARCEL B")
for the Parcel B Purchase Price, both upon the terms and conditions set forth
herein.

          1.   Term of the Option. The term ("Term") of each of the Parcel A
Option and the Parcel B Option shall commence on the Improvements Commencement
Date and shall expire on the expiration of the Term of this Lease with respect
to such Parcel as such Term may be extended. As provided elsewhere in this
Lease, the Term of this Lease and the options to extend and purchase are as
follows:

               a.   Parcel A - 10 year Lease Term with an option to purchase
exercisable only at the end of the term.

               b.   Parcel B - 5 year Lease Term with a conditional option to
extend the Lease Term for two consecutive 5-year periods and with an option to
purchase exercisable only at the end of the term.

                                       16
   17

     2. Consideration for the Option. TEDE acknowledges that this Lease is
sufficient consideration for the grant of the Option, and that Company would
not have entered into this Lease unless it included the Options described in
this Article.

     3. Purchase Price.

        a. The Parcel A Purchase Price shall be the greater of (1) Two Million
One Hundred One Thousand Nine Hundred Fifty and No/100 United States Dollars
(U.S. $2,101,950.00), and (2) Fair Market Value of Completed Parcel A
determined, $2,101,950 plus 25% of the increase in Fair Market Value over the
$2,101,950 of Completed Parcel A as of the date on which the Parcel A Option is
exercised.

         b. The Parcel B Purchase Price shall be the greater of (1) Three
Hundred Forty-Eight Thousand Six Hundred Sixty Four and No/100 United States
Dollars (U.S. $348,664.00), and (2) Fair Market Value of Completed Parcel B
determined, $348,664 plus 25% of the increase in Fair Market Value over the
$348,664 of Completed Parcel B as of the date on which the Parcel B Option is
exercised.

         c. The Fair Market Value of each Parcel shall be determined by a panel
of three Experts ("Experts") authorized by the National Banking Commission, one
of which shall be selected by each of TEDE and Company ("Company's Expert" and
"TEDE's Expert," respectively), and the third of which shall be agreed upon by
TEDE's Expert and Company's Expert. TEDE and Company shall appoint TEDE's
Expert and Company's Expert no later than fifteen (15) Business Days following
delivery by Company to TEDE of notice of Company's intent to exercise the
Option. Within fifteen (15) Business Days following the appointment of the
second of TEDE's Expert and the Company's Expert, TEDE's Expert and Company's
Expert shall appoint the third Expert. No later than thirty (30) days following
the appointment of the third Expert, each Expert shall complete its appraisal
of the Fair Market Value of the Property. Fair Market Value means the most
probable price which a property should bring in a competitive and open market
under all conditions requisite of a fair sale, the buyer and seller each acting
prudently and knowledgeably, and assuming the price is not affected by undue
stimulus. Implicit in this definition is the consummation of a sale as of a
specified date and passing of title from seller to buyer under the conditions
whereby:

               (1) Buyer and seller are typically motivated;

               (2) Both parties are well-informed or well advised, and acting
in what they consider their own best interests;

               (3) A reasonable time is allowed for exposure to the market;

               (4) Payment is made in terms of cash in U.S. dollars or in terms
of financial arrangements comparable thereto; and

               (5) The price represents the normal consideration for the
property sold unaffected by special or creative financing or sales concession
granted by anyone associated with the sale.

The determinations by the three Experts of the Fair Market Value of the
Property shall be compared, and the two determinations which are closes
together in amount shall be averaged. The resulting value shall be the Purchase
Price.

TEDE shall pay the cost of TEDE's Expert, Company shall pay the cost of
Company's Expert,

                                       17

   18
and TEDE and Company shall each pay half the cost of the third Expert.

     4.  Exercise of the Option.  Provided Company is not then in default under
this Lease, Company may exercise the Parcel A Option at any time within five
years prior to its expiration and may exercise the Parcel B Option at any time
within 5 years prior to its expiration, by giving written notice of exercise to
TEDE. The date upon which notice of exercise is given by Company is hereinafter
called the "EXERCISE DATE".

     5.  Investigation During Option Term.  Company shall have right, at any
time and from time to time during the Term of this Option, to conduct whatever
investigations Company thinks appropriate of the Completed Parcel A and
Completed Parcel B, including, without limitation: environmental assessments,
surveys, studies, inspections and investigations) (collectively, "INSPECTIONS")
of such Parcel as shall be deemed necessary, desirable or appropriate by
Company. These Inspections may include, but not be limited to, inspection of the
soils and geologic conditions and inspection for environmental substances,
materials and hazards.

     6.  Purchase and Sale.  Upon exercise of the Parcel A Option or the Parcel
B Option in accordance with Section Y.4 hereof, TEDE agrees to sell to Company,
and Company agrees to purchase from TEDE, Completed Parcel A or Completed Parcel
B, respectively, for the appropriate Purchase Price and upon the terms and
conditions set forth in this Agreement.

     7.  Closing.  The Closing of the purchase and sale shall take place
through an escrow with a third party. At the Closing, Company shall deliver to
TEDE the Purchase Price and TEDE shall deliver to Company the ownership deed
executed with a notary public and duly recorded with the local registry of
public records and commerce of the City of Uruapan, Michoacan and a letter
addressed to Company from legal counsel in Mexico that they have performed a
title search going back a sufficient time period so that Company can rely on
receiving clear and unobstructed title to the Parcel. The Closing shall occur
not later than thirty (30) days after the Exercise Date.

     8.  TEDE's Covenants.  TEDE covenants and agrees as follows:

          a.  TEDE will not do, or suffer to be done, anything that would
adversely affect Completed Parcel A or Completed Parcel B, the uses to which
the Parcels may be put, or the value of the Parcels.

          b.  TEDE shall maintain the Parcels in good condition and repair
during the term of the Option, to the extent that it is not Company's
obligation under this Lease to so maintain and repair the Property.

     9.  TEDE's Representations and Warranties.  If Company becomes aware that
any of TEDE's representations or warranties has been materially breached or is
materially misleading, then Company may, in addition to its other rights, at
its option, terminate this Article by providing TEDE with written notice within
five (5) Business Days of Company becoming aware of such breach or inaccuracy.
TEDE shall promptly notify Company in writing if TEDE becomes aware that any of
its representations or warranties was not or is no longer true and correct.

     Upon any termination of this Article pursuant to this Section Y.9, the
Parties shall have no further rights or obligations under this Article;
provided, however, that such termination shall not release any Party from any
indemnification obligation hereunder which expressly survives the termination
of this Article. The termination of this Article shall have no effect on the
validity of the remainder of this Lease.

                                       18

   19
      TEDE hereby represents and warrants to Company, as of the date hereof and
as of the Close of Escrow:

            a. TEDE has incurred no obligation, contingent or otherwise, for any
broker's, agent's or finder's commission or fee with respect to the matters
provided for in this Section. TEDE shall indemnify, defend and hold Company
harmless from and against any claim based on any alleged fact inconsistent with
the foregoing warranty and representation contained in this Section Y.9.

            b. TEDE shall not, prior to the expiration of the Option, sell,
lease or otherwise transfer, or offer to sell, lease or otherwise transfer, any
existing or future interest it may have in the Completed Parcel A or Completed
Parcel B or any part thereof, to anyone other than Company.

            c. This Section and all agreements, instruments and documents herein
provided to be executed or to be caused to be executed by TEDE on or before the
Close of Escrow will be duly authorized, executed and delivered by and be
binding upon TEDE, and TEDE has the capacity and authority to enter into this
Article and consummate the transactions herein provided.

            d. TEDE's purchase of the Real Property shall meet with all Mexican
federal and state environmental regulations and standards. In addition, TEDE
shall comply with all such regulations and standards in its work and activities
on the Real Property.

            e. There are no actions, suits or proceedings pending before any
court or governmental department, commission, board, bureau, agency or
instrumentality which would materially and adversely affect the current use or
value of the Parcels.

            f. There will be no service contracts relating to the Parcels as of
the Close of Escrow.

      10. Company's Representatives and Warranties. If, prior to closing, TEDE
becomes aware that any of Company's representations or warranties has been
materially breached by Company or is materially incorrect, or that any
information or document provided by or on behalf of Company to TEDE is
materially incorrect, then TEDE shall have the right to terminate this Article
by providing Company with written notice within five (5) Business Days of TEDE
becoming aware of such material breach or inaccuracy. Company shall promptly
notify TEDE in writing if Company becomes aware on or before the Closing that
any of its representatives or warranties was not or is no longer true and
correct.

      Upon any termination of this Article pursuant to this Section Y.10, (a)
Company shall promptly be refunded all other sums deposited into Escrow by
Company and any interest accrued on any such sums, (b) Company shall pay any
Escrow or Title Company termination fees, and (c) the Parties shall have no
further rights or obligations under this Article; provided, however, that such
termination shall not release any Party from any indemnification obligation
hereunder which expressly survives the termination of this Article. The
termination of this Article shall have no effect on the validity of the
remainder of this Lease.

      Company hereby represents and warrants to TEDE, as of the date hereof, the
Closing Date and the Close of Escrow:

            a. Company has incurred no obligation, contingent or otherwise, for
any broker's, agent's or finder's commission or fee with respect to the matters
provided for in

                                       19
   20
this Article. Company shall indemnify, defend and hold TEDE harmless from and
against any claim based on any alleged fact inconsistent with the foregoing
warranty and representation contained in this Section Y.10.a.

               b. This Article and all agreements, instruments and documents
herein provided to be executed or to be caused to be executed by Company are
and at the Close of Escrow will be duly authorized, executed and delivered by
and binding upon Company, and consummate the transactions herein provided and
nothing prohibits or restricts the right or ability of Company to close the
transactions contemplated hereunder.

           11. [Intentionally Deleted]

           12. Survival of Warranties. The covenants, representations and
warranties of Parties shall survive the recordation of the Deed and the Close
of Escrow, but shall not exceed the term of this Lease.

           13. Indemnification. The following indemnification provisions apply
only to this Article:

               a. Company shall indemnify, defend and hold TEDE and TEDE's
affiliates, officers, directors, employees, representatives and agents harmless
from and against any and all obligations, liabilities, claims, liens,
encumbrances, losses, damages, costs or expenses (collectively, "Claims")
incurred by TEDE to third parties that result from any breach of any of
Company's representations or warranties or any default by Company under this
Article; provided, however, that TEDE's damages recoverable hereunder shall be
limited to those damages, costs and expenses actually incurred by TEDE, and
shall not include consequential damages, punitive damages, lost profits or
similar items.

               b. TEDE shall indemnify, defend and hold Company and Company's
affiliates, officers, directors, employees, representatives and agents harmless
from and against any and all Claims incurred by Company to third parties that
result from any breach of any of TEDE's representations or warranties or any
default by TEDE under this Article; provided, however, that Company's damages
recoverable hereunder shall be limited to those damages, costs and expenses
actually incurred by Company, and shall not include consequential damages,
punitive damages, lost profits or similar items.

               c. Each indemnity provided for under this Article shall cover
the costs and expenses of the indemnitee, including, without limitation,
reasonable attorneys' fees and expenses, related to any claims, actions, suits
or judgments incident to any of the matters covered by such indemnity. The
Parties shall cooperate fully with each other to make available to each other
any books, records, documents, or other pertinent information within its
control which is necessary or pertinent to the defense of any Claims.

           14. Casualty and Condemnation. The following casualty and
condemnation provisions apply only to this Article. TEDE shall promptly notify
Company of any casualty or any condemnation proceeding affecting a portion of
Completed Parcel A and Completed Parcel B, the Property and occurring or
commencing prior to the Close of Escrow for such Parcel. If, prior to the Close
of Escrow, any portion of such Parcel is taken or proposed to be taken by
eminent domain, either permanently or temporarily, or any material portion of
such Parcel is damaged, Company may elect to: (i) terminate this Article with
respect to such Parcel; or (ii) keep this Article in full force and effect, in
which case, except as set forth in the following paragraph and provided that
the Close of Escrow occurs, Company shall be entitled to any condemnation award
or compensation and any insurance proceeds from such condemnation or

                                       20
   21
casualty relating to such Parcel and the Purchase Price for such Parcel shall
not be reduced or adjusted in any manner. Such election shall be made by
delivering notice of such election to TEDE and to Escrow Holder within ten (10)
Business Days of such casualty or the receipt of notice of the commencement of
a condemnation proceeding. Company's failure to elect either (i) or (ii) above
within the specified time period shall be deemed to be an election of the
action in (ii) above. In the event such casualty or condemnation occurs within
ten days before the Closing Date, the Closing Date shall be extended for a
reasonable period of time to allow Company to make its election.

                In the event of a "TEMPORARY CONDEMNATION", which shall be
defined as any condemnation or taking which affects a Parcel or a portion
thereof for two (2) years of less, TEDE shall be entitled to any condemnation
award attributable to periods prior to the Closing Date, and Company's Rent and
other obligations during such periods shall be reduced proportionally for the
temporary loss of use.

                In the event of a permanent condemnation or casualty affecting
a Parcel prior to the Close of Escrow, any awards or proceeds therefrom
received by TEDE prior to the Close of Escrow shall be delivered to Escrow
Holder and remain in Escrow until the Close of Escrow. If the Close of Escrow
does not occur, TEDE shall be entitled to retain all condemnation awards and
insurance proceeds.

                Upon any termination of this Article pursuant to this Section
Y.14, (a) Company shall promptly be refunded all sums deposited into Escrow by
Company, and any interest accrued on any such sums, (b) the Parties shall share
equally any Escrow or Title Company termination fees, and (c) the Parties shall
have no further rights or obligations under this Article; provided, however,
that such termination shall not release any party from liability for any breach
of this Article occurring prior to such termination and shall not release any
Party from any indemnification obligation hereunder which expressly survives the
termination of this Article. The termination of this Article shall have no
effect on the validity of the remainder of this Lease.

        Z.      MISCELLANEOUS.

                1.      Notices. Any notice required or permitted to be given
hereunder shall be in writing and be delivered by certified mail. Either party
may by notice to the other specify a different address for notice purposes. A
copy of all notices required or permitted to be given to TEDE hereunder shall
be concurrently transmitted to such party or parties at such addresses as TEDE
may from time to time hereafter designate by notice to Company. Any notice
given by mail shall be deemed given ten (10) days after the date of mailing
thereof.

                2.      Integration; Amendments. This Lease contains all
agreements of the parties with respect to any matter mentioned herein. This
Lease may be modified in writing only, signed by the parties in interest at the
time of the modification.

                3.      Recording. In the event this Lease is recorded at the
Public registry of Property, Company shall pay all costs of such recordation,
including, without limitation, notary fees, charges and taxes required in
connection therewith.

                4.      Attorney's Fees. If either party brings an action to
obtain possession of the Leased Property, enforce the terms hereof or declare
rights hereunder, the prevailing party in any such action shall be entitled to
its reasonable attorney's fees and expenses to be paid by the losing party.

                5.      Cumulative Remedies. No remedy or election hereunder
shall be deemed exclusive but shall, wherever possible, be cumulative with all
other remedies at law or in equity.

                                       21
   22
                6.      Binding Effect. Subject to any provisions hereof
restricting assignment or subletting by Company and subject to the provisions of
Article X, this Lease shall bind the parties, their personal representatives,
successors and assigns.

                7.      Choice of Law. This Lease shall be governed by the laws
of Michoacan, Mexico.

                8.      Language. This Lease shall be executed in English and
Spanish. However, in the event of a dispute or an inconsistency regarding
interpretation or meaning of this Lease, the Spanish version shall prevail.

                9.      Consent Not to Be Unreasonably Withheld. Whenever the
prior consent or approval of either party, written or otherwise is required as
a condition for an act by the other party hereunder, such consent or approval
shall not be unreasonably withheld.

                10.     Further Documents. The parties agree to execute such
further documents and writings as may be reasonably required to effectuate the
intent hereof.

                11.     Severability. A determination by a court of competent
jurisdiction that any provision of this Lease or any part thereof is illegal or
unenforceable shall not cancel or invalidate the remainder of such provision or
this Lease, which shall remain in full force and effect.

                12.     Guaranty. Concurrently with the execution and delivery
hereof, Company shall deliver to TEDE a Guaranty of this Lease in the form of
EXHIBIT F attached hereto and made a part hereof executed by Calavo Growers of
California. Company acknowledges that the delivery of such Guaranty constitutes
a material inducement for TEDE's willingness to enter into this Lease.

                13.     TEDE certifies that the land is free of any
contaminants or pollutants and COMPANY accepts both Parcels A & B in clean
conditions, and Company agrees to return it in the same manner to TEDE at the
end of this Lease or any extension thereof.

        IN WITNESS WHEREOF, TEDE and Company have executed or caused to be
executed this Lease as of the date first written above.

"TEDE"                                  "COMPANY"

/s/ MARIO TERAN DEL RIO                 CALAVO DE MEXICO, S.A. DE C.V.
- -----------------------                 LESSEE
Mario Teran Del Rio
TEDE, S.A. DE C.V.
LESSOR
                                        By /s/ RONALD G. BENNETT       11/21/97
                                          -------------------------------------
                                          Ronald G. Bennett

                                        By /s/ EGIDIO CARBONE          11/24/97
                                          -------------------------------------
                                          Egidio Carbone

                                        By /s/ GERARD J. WATTS         11/21/97
                                          -------------------------------------
                                          Gerard J. Watts

                                       22
   23
                                   ANEXO "B"

                    SECCION "A"                   SECCION "B"

                 AREA = 17,806.00 M2         AREA = 22,662.00 M2
                     (4.4 Acres)                  (5.6 Acres)

                      Area Total de Predio = 40,468.00 m2
                                  (Acres = 10)

   24
                                    Anexo "A"

                                [GRAPHIC - MAP]

   25
                                   Anexo "B"

                                [GRAPHIC -- MAP]
   26
                                   Anexo "C"

                                [GRAPHIC -- MAP]

   27
                                                                      EXHIBIT D.

PROJECT: CALAVO DE MEXICO
LOCATION: URUAPAN, MICHOACAN, MEXICO.

                            BUILDING SPECIFICATIONS

- --------------------------------------------------------------------------------
            ITEM                                  REMARKS
- --------------------------------------------------------------------------------
                                
PRODUCTION BUILDING
- --------------------------------------------------------------------------------
PAD (EARTHWORKS)                   40 CM PEBBLE TYPE MATERIAL OVER NATURAL SOIL.
                                   INCLUDE A 20 CM TREATMENT OF THE NATURAL
                                   SOIL. (THIS STRUCTURE MAY CHANGE ACCORDING TO
                                   SOILS STUDY OF THE SITE).
- --------------------------------------------------------------------------------
FOUNDATION                         REINFORCED CONCRETE.
- --------------------------------------------------------------------------------
CONCRETE FLOORS                    5" CONCRETE (3000 PSI) WITH STEEL
                                   REINFORCEMENT. INCLUDES SATIN SEALER.
- --------------------------------------------------------------------------------
METAL STRUCTURE (FRAME)            30 FEET FRAME MINIMUM HEIGHT.
- --------------------------------------------------------------------------------
ROOF                               SINGLE METAL SHEET KR-18 TYPE 24 G.A. WITH
                                   FIBER GLASS BLANKET.
- --------------------------------------------------------------------------------
INSULATION FACTOR ROOF             R-19, EXCEPT ON PRE-COOLER AREA (R-30).
- --------------------------------------------------------------------------------
SKYLIGHTS                          ACRYLIC TYPE. INCLUDED ON APPROX. 10% OF
                                   ROOF AREA.
- --------------------------------------------------------------------------------
CAT-WALK ON ROOF                   970 FEET.
- --------------------------------------------------------------------------------
PERIMETRAL MASONRY WALLS           CONCRETE BLOCK, 4' HEIGHT.
- --------------------------------------------------------------------------------
PERIMETRAL METAL WALLS             DOUBLE METAL SHEET 26 G.A. WITH 6" FIBER
                                   GLASS INSULATION.
- --------------------------------------------------------------------------------
INSULATION FACTOR ON WALLS         R-19
- --------------------------------------------------------------------------------
PARTITIONS                         DOUBLE METAL SHEETS 26 G.A. WITH 6" FIBER
                                   GLASS INSULATION.
- --------------------------------------------------------------------------------
ILLUMINATION LEVEL                 40 FOOT CANDLE ILLUMINATION ON PRODUCTION
                                   AREA WITH METAL HALIDE 400 W LAMPS.
- --------------------------------------------------------------------------------
GENERAL VENTILATION                6 UNITS (SWAMP COOLERS), 21,000 CFM EACH.
- --------------------------------------------------------------------------------
DRIVER & SECURITY AREA             INCLUDED. RESTROOMS INCLUDED.
- --------------------------------------------------------------------------------
SPECIAL DOORS:
   METAL ROLL-UP DOOR 9'*10'       8 UNITS. (7 TRUCK RAMPS + 1 SHOP AREA).
- --------------------------------------------------------------------------------
   METAL ROLL-UP DOOR 10'*12'      4 UNITS. (2 PRE-COOLERS ENTRANCE + 1 MACHINE
                                   ROOM + 1 EXIT TO REAR CANOPY).
- --------------------------------------------------------------------------------
   FREEZER DOOR 10'*10'            6 UNITS. (2 PRE-COOLER + 4 SHIPPING COOLER).
- --------------------------------------------------------------------------------
   HIGH-SPEED DOOR 10'*12'         6 UNITS. (4 ENTRANCE TO PRE-COOLER
- --------------------------------------------------------------------------------

   28

- --------------------------------------------------------------------------------
                                
                                   AREAS + 2 EXIT TO REAR CANOPY).
- --------------------------------------------------------------------------------
   EMERGENCY DOORS 4'*7'           3 UNITS.
- --------------------------------------------------------------------------------
TRUCK RAMPS:
   DOCK LEVELERS                   7 UNITS. (TRUCK RAMPS).
- --------------------------------------------------------------------------------
   DOCK SHELTERS                   7 UNITS. (TRUCK RAMPS).
- --------------------------------------------------------------------------------
ELECTRICAL SUBSTATION 500 KVA      INCLUDED, 480 V.
- --------------------------------------------------------------------------------
ELECTRICAL MAIN BREAKER            INCLUDED. POWER ELECTRICAL DISTRIBUTION NOT
                                   INCLUDED.
- --------------------------------------------------------------------------------
MEZZANINE SHOP AND STAIR           INCLUDED.
- --------------------------------------------------------------------------------
FIRE SYSTEM                        LOOP WITH HOSES AND CABINETS ACCORDING TO
                                   LOCAL FIRE DEPARTMENT.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
OFFICES, MAIN ENTRANCE, LUNCH
AREA AND RESTROOMS:
- --------------------------------------------------------------------------------
WALLS                              MASONRY BLOCKS + BRICKS ON EXTERIOR FACADES.
- --------------------------------------------------------------------------------
ROOF                               REINFORCED CONCRETE.
- --------------------------------------------------------------------------------
FLOORING                           CERAMIC TILE INCLUDED.
- --------------------------------------------------------------------------------
VIEW OF PRODUCTION AREA FROM       INCLUDED.
OFFICES
- --------------------------------------------------------------------------------
PHONE LINES                        PREPARATION FOR INSTALLING PHONE LINES INTO
                                   OFFICES.
- --------------------------------------------------------------------------------
ROOF INSULATION                    INCLUDED. R11 FACTOR.
- --------------------------------------------------------------------------------
WINDOWS                            TINTED EXTERIOR WINDOWS.
- --------------------------------------------------------------------------------
HVAC                               INCLUDED.
- --------------------------------------------------------------------------------
OFFICE RESTROOMS                   INCLUDED. BASED ON MAXIMUM OCCUPANCY LEVELS
                                   FOR OFFICES.
- --------------------------------------------------------------------------------
PRODUCTION RESTROOMS               RESTROOMS FOR 150 PEOPLE ACCORDING NATIONAL
                                   PLUMBING CODE.
- --------------------------------------------------------------------------------
DOORS                              INCLUDED. ACCORDING TO SPACES REQUIREMENTS.
- --------------------------------------------------------------------------------
CANOPY AREAS:
- --------------------------------------------------------------------------------
CANOPY AREAS                       REAR AND FRONT AREAS. COVER WITH SINGLE METAL
                                   SHEET. REINFORCED CONCRETE 6" INCHES ON
                                   FLOOR.
- --------------------------------------------------------------------------------
EXTERIOR AREA:
- --------------------------------------------------------------------------------
CAR PARKING                        ASPHALT PAVEMENT. TO 40 (MID-SIZE CAR SPACES
                                   OR 19,375 SQFT.
- --------------------------------------------------------------------------------
MANEUVERING AREA                   REINFORCED CONCRETE 6 INCHES FLOOR, 3000 PSI.
                                   AROUND TRUCK RAMPS (10,430 SQFT.)
- --------------------------------------------------------------------------------
LANDSCAPE                          LANDSCAPING (GARDENING) IN THE FRONT PART OF
                                   THE BUILDING OR 7,890 SQFT.
- --------------------------------------------------------------------------------
ORNAMENTAL FENCE                   MARAN STYLE FENCE, 600 FEET ON MAIN FACADE.
- --------------------------------------------------------------------------------
ILLUMINATION EXTERIOR              10 UNITS OF 400 W HIGH PRESSURE SODIUM
                                   WALL-PACK.
- --------------------------------------------------------------------------------
CONCRETE CONNECTING RAMPS          INCLUDED (7 UNITS).
- --------------------------------------------------------------------------------

   29
                              EXHIBIT D SUPPLEMENT

Subject:  Changes to Building Specifications

Security Area (Guard Shack)   -    Intercom system with security, entrance,
                                   entrance to storage area with automatic
                                   locking system between security, main
                                   entrance, and storage entrance accessed by
                                   office.

General Ventilation           -    Include exhaust fans to equalize the
                                   positive air pressure.
                              -    exhaust fans will compensate for the air
                                   pressure delivered by the swamp cooler so
                                   that the overall pressure in the plant is
                                   positive, but not excessive per our original
                                   statement.

HVAC                          -    Shipping and driver area requires HVAC, but
                                   production restroom do not require HVAC.
                                   ALL restrooms require venting.

Fencing                       -    Chain link with razor wire installed the
                                   perimeter of the 4.6 acres to compliment
                                   the Maran style fence as previously
                                   discussed.

Electronic Gates              -    Entrance and storage accessed from guard
                                   shack.

Truck Wells                   -    Dock area

Sidewalks                     -    Concrete

Drainage                      -    strategically located in interior including
                                   all coolers and machine room and exterior.

Striping                      -    parking lot

                                     Page 1

   30
                                  EXHIBIT "F"

                                G U A R A N T Y

WHEREAS, TEDE, S,A. DE C.V., a Mexican corporation (hereinafter, referred to as
"LESSOR") is owner of certain real property in the city of Uruapan, Michoacan
and CALAVO DE MEXICO, S.A. de C.V.,

WHEREAS, this Guaranty is given by CALAVO GROWERS OF CALIFORNIA (hereinafter
referred to as "GUARANTOR") to induce LESSOR to enter into a Lease Agreement,
with CALAVO DE MEXICO, S.A. de C.V. a Mexican corporation (hereinafter referred
to as "LESSEE"), as stated in corresponding Lease Agreement held between LESSOR
and LESSEE, dated November 21, 1997 (Hereinafter referred to as the "Lease
Agreement").

NOW, THEREFORE, in consideration of the foregoing, it is agreed:

1.  OBLIGATION OF THE GUARANTOR. The GUARANTOR unconditionally guarantees to
LESSOR, its successors and assignees, the prompt, full and complete payment and
performance to LESSOR of all the conditions, covenants, obligations,
liabilities and agreements, of LESSEE as set forth in the Lease Agreement or
any extension thereof between LESSOR and LESSEE. This Guaranty extends to and
includes any and all interest due or liable to become due, together with all
attorney's fees, costs and expenses of collection incurred by LESSOR in
connection with any matter covered by this guaranty. The GUARANTOR'S address is:

CALAVO GROWERS OF CALIFORNIA
2530 Red Hill Avenue
Santa Ana, CA. 92705-5542
PH. (714) 223-1111

2.  TERM OF GUARANTY. The liability of the GUARANTOR shall continue until
payment is made and performance given pursuant to every obligation of the
LESSEE now due or hereafter to become due in accordance with the terms of the
Lease Agreement or any extension thereof, between LESSOR and LESSEE, and until
payment is made of any loss or damage incurred by LESSOR with respect to any
matter conserved by this Guaranty shall be irrevocable. Nothing contained
herein shall impose upon GUARANTOR any greater or different liability than is
or may be imposed on said LESSEE under the Lease Agreement except to pay LESSOR
attorney's fees, costs and expenses of collection incurred in proceeding
against GUARANTOR Hereunder.

                                       26
   31
3. CONSENT TO LESSOR ACTS. The GUARANTOR consents, without affecting the
GUARANTOR's liability to LESSOR hereunder, That LESSOR may, without notice to
our consent of the GUARANTOR, upon such terms as it may deem advisable, to the
following:

     a. Extend, in whole or in part, by renewal or otherwise, any time of
     payment or performance on the part of LESSEE, provided for in the Lease
     Agreement;

     b. Release, surrender, exchange, modify, impair, or extend any period or
     duration, or any time for performance, or payment on the part of LESSEE,
     required by the Lease Agreement; and

     c. Settle or compromise any claim of LESSOR against LESSEE or against any
     other person, firm or corporation whose obligation is held by LESSOR as
     security to LESSOR under the Lease Agreement.

The GUARANTOR hereby confirms and affirms any such extension, renewal, release,
surrender, exchange, modification, impairment, settlement or compromise and all
acts shall be binding upon GUARANTOR who hereby waives all defense,
counterclaims or offsets which GUARANTOR might have solely by reason thereof.

4.  WAIVER OF GUARANTOR. GUARANTOR Waives:

     a. Notice of acceptance of this Guaranty by:

     b. Notice of presentment, notice of nonperformance, notice of dishonor and
     notices of existence, creation or incurring of new or additional
     indebtedness or obligations, demands for payment or performance or protest
     of any obligations of LESSEE or LESSOR under the Lease Agreement;

     c. Notice of the failure of any person, firm or corporation to pay to
     LESSOR any indebtedness held by LESSOR as collateral security for any
     obligation of LESSEE to LESSOR under the Lease Agreement;

     d. Any right to require LESSOR to (i) proceed against LESSEE (ii) proceed
     against or exhaust any security or other lien or right of or held by LESSOR
     from LESSEE; or (ii) pursue any other remedy in the power of LESSOR
     whatsoever;

     e. Any defense, offsets or claims whatsoever, which LESSEE may have
     against LESSOR;

                                       27

   32
          f. Any defenses, offsets or claims arising from any governmental
             action or intervention which wholly or partially frustrates any or
             all of the purposes for which the Lease Agreement was entered into;

          g. Any defects in the perfection of the assignment pledge of the rents
             by failure to record the Lease Agreement or any instrument or
             assignment and pledge in the public Registry under Mexican Law.

5.   REPRESENTATIONS BY GUARANTOR. GUARANTOR represents and warrants that at
the time of execution and delivery of this Guaranty, nothing exists to impair
the effectiveness of the liability of GUARANTOR to LESSOR hereunder, or the
immediate taking effect of this Guaranty as the sole Agreement between the
GUARANTOR and LESSOR with respect to guaranteeing all of LESSEE's obligations
to LESSOR under the Lease Agreement.

GUARANTOR further represents and warrants that GUARANTOR is authorized to
execute and deliver this Guaranty and that the person executing this guaranty
is authorized to execute the same for and on behalf of GUARANTOR.

As an inducement for LESSOR to enter into the Lease Agreement with LESSEE,
GUARANTOR agrees to provide LESSOR with GUARANTOR's financial information for
disclosure to LESSOR's bank or any lending institutions that is used by LESSOR
for assignment of the Lease Agreement. This financial information shall consist
of a balance sheet, cash-flow statement and any relative footnotes for the last
two fiscal periods, plus any additional information required by the LESSOR
financial institution. In addition, GUARANTOR must provide such statements
annually for the term of the Lease Agreement. All of the information provided
by the LESSOR must remain confidential between the involved parties.

6.   REMEDY OF LESSOR. In the event of any default on the part of LESSEE as
defined in the Lease Agreement, LESSOR may at its option proceed in the first
instance against GUARANTOR, jointly and severally, to collect any obligation
covered by this Guaranty, without first proceeding against LESSEE or any other
person, firm or corporation and without first resorting to any property at any
time held by LESSOR as collateral security.

7.   MODIFICATION OF AGREEMENT. The whole of this guaranty is herein set forth
and there is no verbal or other written agreement and no understanding or
custom affecting the terms hereof. This Guaranty can be remedied only by a
written instrument signed by the party to be charged therewith.

8.   NON-WAIVER BY LESSOR. The ability of GUARANTOR under this guaranty shall
not be affected by the insolvency of LESSEE or LESSOR, at any time or by

                                       28

   33
the acceptance by LESSOR of security, notes, acceptance, drafts or checks or by
assignment, foreclosure or the other dispositions thereof by LESSOR presenting
or proving for allowance any secure or unsecured claim or demands or by LESSOR
acceptance to any compositions, planned reorganization, settlement, compromise,
divided payment or distribution; and GUARANTOR shall not be entitled to claim
any right in or benefit by reason of any such composition, plan or
reorganization, settlement, compromise, divided payment or distribution, or in
by reason of any security held by LESSOR, or the proceeds or other dispositions
thereof; unless and until all of said obligations, liabilities and
indebtedness, together with interest, attorney's fees and costs due to LESSOR
under this Guaranty or under the Lease Agreements, shall have paid in full.
Nothing contained in this Agreement shall alter any of the right remedies of
LESSOR against LESSEE. GUARANTOR authorizes LESSOR, without notice or demand
and without affecting the liability of GUARANTOR hereunder, from time to time
to:

          a. Renew, compromise, extend, accelerate, or otherwise change the time
             for payment of, or otherwise change the terms of the indebtedness
             or any part thereof under the Lease Agreements, including increase
             or decrease of any amounts due thereunder or any rate of interests
             specified therein;

          b. Take and hold security for the payment of this Guaranty or the
             indebtedness guaranteed, and exchange, enforce, waive, release, any
             such security;

          c. Apply such security and direct the order or manner of sale thereof,
             as LESSOR in its discretion may determined and;

          d. Release or substitute any one or more of LESSEE or GUARANTOR may
             assign this Guaranty in whole or in part. GUARANTOR may assign this
             guaranty in whole or in part, provided that GUARANTOR shall remain
             liable for its obligations hereunder unless released therefrom by
             LESSOR or its successors and provided further that GUARANTOR shall
             first give LESSOR sixty (60) days prior written notice.

9.   APPLICABLE LAW. This Guaranty is made in the State of California and the
rights and obligations of GUARANTOR hereunder shall be constructed and enforced
in accordance with the laws of the State of California. It is hereby expressly
understood and agreed by GUARANTOR that in the event a dispute arise as to the
performance of the obligations of GUARANTOR pursuant to this guaranty, any
action relating to this guaranty agreement shall be instituted and prosecuted
in the United States District Court for the Central District of California and
each party hereby waives the right to change of venue.

                                       29

   34
10. MISCELLANEOUS PROVISIONS. GUARANTOR agrees to pay to LESSOR a reasonable
attorney's fee and all other costs and expenses which may be incurred by LESSOR
in the collection or efforts to collects the indebtedness owed by LESSEE to
LESSOR pursuant to the Lease Agreement or in collection or efforts to collect
or enforcement at the sums due under this guaranty, provide that if GUARANTOR
is the prevailing party in any action or proceeding to enforce this Guaranty or
collects any amounts allegedly due hereunder; LESSOR should pay GUARANTOR a
reasonable attorney's fee and other costs and expenses which may be incurred by
GUARANTOR.

The paragraph headings of this guaranty are not part of this guaranty and shall
have no effect upon the construction and interpretation of any part hereof and
are inserted herein for convenience only.

In the event that any provisions hereof or any portion of any provisions hereof
shall be deemed to be invalid or unenforceable; such invalidity or
unenforceability shall not affect any other portion of said provisions or any
other provisions herein. All remedies herein conferred upon LESSOR shall be
cumulative and no one exclusive of any other remedy conferred herein or by law
or equity. Time is of the essence in the performance of each and every
obligation herein imposed.

GUARANTOR represents and warrants that it has all requisite power and authority
to enter into this Guaranty agreement and that neither the execution or
delivery of this Agreement or the consummation hereof nor the performance of
the terms hereof will conflict with or result in a breach of the terms,
conditions or provisions of or constitute a default under or result in the
creation of any lien pursuant to any other agreement of instrument under which
GUARANTOR is obligated.

11. ACKNOWLEDGMENT OF ASSIGNMENT. In the event this Guaranty is assigned to a
bank or other lending institution, the GUARANTOR shall furnish to such entity a
letter stating that the GUARANTOR acknowledges receipt of notice of an
assignment by LESSOR of said Guaranty; that said guaranty is in full force and
effect; that no changes to the guaranty as originally executed have been made;
that the GUARANTOR will not enter into any modification of this guaranty
without first obtaining prior written approval thereof from said lender; that
said lender may rely solely upon the guaranty with respect to the lender's
right to receive the rents in accordance with the terms of the Lease Agreement;
and that all payments made thereafter shall be made to the lender or its
assigns at such times not in conflict with those permissible under the Lease
Agreement, at such places or in U. S. Dollars as directed by the lender or its
assigns.

12. NOTICE OR DEFAULT. Notwithstanding any provision to the contrary herein
expressed or implied, no claim of default on the part of LESSEE or on the part
of

                                       30
   35
GUARANTOR shall be made hereunder unless and until notice of such defaults has
been given to LESSEE as provided in the Lease Agreement and a copy thereof mail
to GUARANTOR by first class certified mail, postage prepaid at the address shown
on paragraph 1 of this Guaranty.

13.  SUCCESSORS BOUND.  This Guaranty is binding jointly severally upon
GUARANTOR and its legal representatives and successors and shall inure to the
benefit of LESSOR, its legal representatives, successors, and assigns.

IN WITNESS WHEREOF, GUARANTOR has signed this Agreement in the city of
Calexico, California, United States of America, on the 16th day of the month of
December, 1996.

LESSOR                                  GUARANTOR
TEDE, S.A. DE C.V.                      CALAVO GROWERS OF CALIFORNIA

MARIO TERAN DEL RIO                     RONALD G. BENNETT
PRESIDENT

/s/ MARIO TERAN DEL RIO                 /s/ RONALD G. BENNETT
- -----------------------------           --------------------------------
11/20/97                                11/20/97

                                        EGIDIO CARBONE

                                        /s/ EGIDIO CARBONE
                                        --------------------------------
                                        11/24/97

                                       31

   1

                                                                    Exhibit 10.5

BANK OF AMERICA

                           LEASE INTENDED AS SECURITY

                                                                   LEASE NUMBER
BANC OF AMERICA LEASING & CAPITAL, LLC                              00989-00300
- --------------------------------------------------------------------------------

THIS LEASE INTENDED AS SECURITY (this "Agreement") dated as of 9-1, 2000 between
BANC OF AMERICA LEASING & CAPITAL, LLC ("Lessor"), a Delaware limited liability
company having its chief executive office at 555 California St., 4th Floor, San
Francisco, CA 94104, and CALAVO GROWERS OF CALIFORNIA ("Lessee"), a California
corporation, having its chief executive office at 2350 Red Hill Avenue, Santa
Ana, CA 92705.

1. LEASE AGREEMENT; SCHEDULES. Subject to the terms and conditions hereof,
Lessor shall lease to Lessee, and Lessee shall lease from Lessor, the items of
personal property (collectively with all attachments and accessories thereto,
the "Units") described in one or more schedules (each, a "Schedule"; each
Schedule, together with this Agreement as it pertains thereto, a "Lease") which
incorporate by reference this Agreement. Each Schedule shall constitute a
separate and independent lease and contractual obligation of Lessee. Upon
delivery and acceptance by Lessee of each Unit, Lessee shall execute and deliver
the Schedule relating to the Unit, with all information required on the Schedule
fully completed, identifying and accepting the Unit.

2. TERM OF LEASE; RENTALS. The lease term with respect to any Unit shall consist
of an "Interim Term" (if any) and a "Base Term" as specified in the Schedule
covering such Unit. Lessee shall pay rent for the Interim Term ("Interim Rent")
and for the Base Term ("Base Rent") as specified in the applicable Schedule.

3. NET LEASE; DISCLAIMER OF WARRANTIES. EACH LEASE IS A NET LEASE. ALL COSTS,
EXPENSES AND OTHER LIABILITIES ASSOCIATED WITH THE UNITS SHALL BE BORNE SOLELY
BY LESSEE. LESSEE'S OBLIGATION TO PAY RENT AND ALL OTHER OBLIGATIONS UNDER ANY
LEASE ARE ABSOLUTE AND UNCONDITIONAL, AND NOT SUBJECT TO ANY ABATEMENT,
DEFERMENT, REDUCTION, SETOFF, DEFENSE, COUNTERCLAIM OR RECOUPMENT FOR ANY REASON
WHATSOEVER. NO LEASE SHALL TERMINATE, EXCEPT AS EXPRESSLY PROVIDED HEREIN, NOR
SHALL THE OBLIGATIONS OF LESSEE BE AFFECTED, BY REASON OF ANY DEFECT OR DAMAGE
TO, OR ANY DESTRUCTION, LOSS, THEFT, FORFEITURE, GOVERNMENTAL REQUISITION OR
OBSOLESCENCE OF ANY UNIT, REGARDLESS OF CAUSE. LESSEE ACKNOWLEDGES THAT LESSOR
IS NOT A MERCHANT OR MANUFACTURER, OR AGENT OF ANY SUCH PERSON, OR ENGAGED IN
THE SALE OR DISTRIBUTION OF THE UNITS, AND HAS NOT MADE, AND DOES NOT HEREBY
MAKE, ANY REPRESENTATION OR WARRANTY AS TO MERCHANTABILITY, PERFORMANCE,
CONDITION, FITNESS OR SUITABILITY FOR LESSEE'S PURPOSES OF ANY OF THE UNITS, OR
MAKE ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE UNITS. LESSOR
SHALL NOT BE LIABLE TO THE LESSEE FOR, NOR SHALL LESSEE'S OBLIGATIONS UNDER ANY
LEASE BE AFFECTED BY, ANY LOSS, CLAIM, LIABILITY, COST, DAMAGE OR EXPENSE OF ANY
KIND CAUSED, OR ALLEGED TO BE CAUSED, DIRECTLY OR INDIRECTLY, BY ANY UNIT, OR BY
ANY INADEQUACY OF THE UNIT FOR ANY PURPOSE, OR BY ANY DEFECT IN, THE USE OR
MAINTENANCE OF, ANY REPAIRS, SERVICING OR ADJUSTMENTS OF, OR ANY INTERRUPTION OR
LOSS OF SERVICE OR USE OF, ANY UNIT, OR ANY LOSS OF BUSINESS, PROFITS,
CONSEQUENTIAL OR OTHER DAMAGE OF ANY NATURE. Lessor hereby transfers and assigns
to Lessee, to the extent allowable by law, for and during the lease term of each
Schedule, a non-exclusive interest in the Unit warranties, if any, of the
manufacturer, and hereby authorizes Lessee, when there exists no Event of
Default, to enforce such warranties and to obtain at its own expense the
customary services furnished by the manufacturer in connection with the Units.

4. USE, MAINTENANCE, LOCATION. Lessee shall use, operate, protect and maintain
the Units in good operating order, repair, condition and appearance, and in
compliance with all applicable insurance policies, laws, ordinances, rules,
regulations and manufacturer's recommended procedures, and shall maintain
comprehensive records regarding the Units. The Units shall be used solely for
commercial or business purposes, and not for any consumer, personal, home, or
family purpose, and shall not be abandoned. Lessee shall not, through
modifications, alterations or otherwise, impair the value or originally intended
function of any Unit without Lessor's prior consent. Any replacement or
substitution of parts, improvements, upgrades, or additions to the Units made by
Lessee shall become subject to the Lease and title shall vest in Lessor, except
that if no Event of Default exists, Lessee may at its expense remove
improvements or additions provided by Lessee that can be readily removed without
impairing the value and function of the Unit. If requested by Lessor, Lessee
shall cause each Unit to be plainly marked to disclose Lessor's ownership, as
specified by Lessor. Lessee shall not change the location or base of any Unit
specified in its Schedule without Lessor's prior consent. Lessee shall notify
Lessor at least 30 days before changing the location of its chief executive
office.

5. LOSS AND DAMAGE. Lessee assumes all risk of, and shall promptly notify Lessor
of any occurrence of, any damage to or loss, theft, confiscation or destruction
of (together, "Casualty") each Unit from any cause whatsoever from the date the
Unit is shipped by the vendor or manufacturer or otherwise made available to
Lessee ("Shipment Date"). If any Unit suffers a Casualty from the Shipment Date
until the Acceptance Date, Lessee shall pay Lessor any sum required to be paid
under any Progress Payment Agreement entered into between Lessor and Lessee in
relation to such Unit. If any Unit suffers a Casualty on or after its Acceptance
Date, Lessee shall, if the Casualty is damage that is reparable in the judgment
of Lessor, at its own expense promptly place the same in good repair, condition
or working order, and if the Unit is lost, stolen, confiscated, destroyed or
damaged beyond repair ("Total Loss"), on the rent payment date following such
occurrence (or, if none, within 30 days) pay Lessor the Balance Due therefor,
together with all other amounts owing under the Lease with respect to the Unit.
The "Balance Due" for each Unit is, after the Acceptance Date and before the
Base Date for such Unit, Lessor's Cost in respect of such Unit, together with
all Interim Rent accrued to the date of payment and all other amounts owing
under the Lease, and thereafter, the sum of (i) the present value, as of such
payment date, of the entire unpaid balance of all Base Rent for such Unit that
would otherwise have accrued under the Lease from such payment date to the end
of its scheduled Base Term and (ii) the present value, as of such payment date,
of the Purchase Amount therefor as specified in the applicable Schedule, in each
case, discounted at the implicit

                                  Page 1 of 5
   2

rate for the Lease reasonably determined by Lessor. Upon such payment, (a) the
Lease of such Unit shall terminate and Lessee thereupon shall become entitled to
possession of such Unit and (b) Lessee shall become entitled to proceeds of
insurance maintained by Lessee. If less than all Units in the applicable
Schedule suffer Total Loss, the remaining Base Rent under the Schedule shall be
reduced as reasonably calculated by Lessor and notified to Lessee.

6. INSURANCE. Lessee, at its own expense, shall keep each Unit insured against
all risks for the value of the Unit and in no event for less than the Balance
Due for the Unit, and shall maintain public liability insurance against such
risks and for such amounts as Lessor may require. All such insurance shall be in
such form and with such companies as Lessor shall approve, shall specify Lessor
and Lessee as insureds and shall provide that such insurance may not be canceled
as to Lessor or altered in any way that would affect the interest of Lessor
without at least 30 days' prior written notice to Lessor (10 days' in the case
of nonpayment of premium). All insurance shall be primary, without right of
contribution from any other insurance carried by Lessor, shall contain waiver of
subrogation and "breach of warranty" provisions satisfactory to Lessor, shall
provide that all amounts payable by reason of loss or damage to the Units shall
be payable solely to Lessor, unless Lessor otherwise agrees, and shall contain
such other endorsements as Lessor may reasonably require. Lessee shall provide
Lessor with evidence satisfactory to Lessor of the required insurance upon the
execution of any Schedule and promptly upon any renewal of any required policy.

7. INDEMNITIES. (a) Lessee shall indemnify Lessor, its successors and assigns
and their respective officers, directors, employees, agents and affiliates
("Indemnified Persons") against all claims, liabilities, losses and expenses
whatsoever (except those directly and primarily caused by the Indemnified
Person's gross negligence or willful misconduct), including reasonable
attorneys' fees and allocated costs of internal counsel (together, "Attorney
Costs"), in any way relating to or arising out of this Agreement, the Units or
the Leases at any time, or the ordering, acquisition, rejection, installation,
possession, maintenance, use, ownership, condition, destruction, return, or
disposition of the Units, including such matters based in negligence and strict
liability in tort, environmental liability, statutory liability, or
infringement.

(b) Lessee shall pay or reimburse Lessor and its successors and assigns on
demand for, and indemnify and hold harmless Lessor from, all taxes, assessments,
fees and other governmental charges paid or required to be paid by Lessor or
Lessee in any way arising out of or related to the Units or the Leases, before,
during or after the lease term, including foreign, Federal, state, county and
municipal fees, taxes and assessments, and property, value-added, sales, use,
gross receipts, excise, stamp and documentary taxes, and all related penalties,
fines, additions to tax, and interest charges (together, "Impositions"),
excluding only Federal and state taxes based on Lessor's net income, unless such
taxes are in lieu of any Imposition Lessee would otherwise be required to pay
hereunder. Lessee shall timely pay any Imposition for which Lessee is primarily
responsible under law and any other Imposition not payable or not paid by
Lessor, but Lessee shall have no obligation to pay any such Imposition that
Lessee is contesting in good faith and by appropriate legal proceedings, the
nonpayment of which does not, in the opinion of Lessor, result in a material
risk of adverse effect on the title, property, use, disposition or other rights
of Lessor with respect to the Units. Lessee shall furnish on Lessor's request
proof of payment of any Imposition paid by Lessee.

8. RETURN OF UNITS. Upon any termination or expiration of the lease term with
respect to any Unit, subject to any Lessee purchase of the Unit pursuant to the
applicable Schedule, Lessee shall, at its own expense, prepare and adequately
protect the Unit for shipment and either surrender it to Lessor in place or, if
instructed by Lessor, ship the Unit to Lessor, freight and insurance pre-paid,
at a place reasonably designated by Lessor, in the condition required under
Section 4 hereof and under the applicable Schedule, and able to be put into
immediate service and to perform at manufacturer's rated levels (if any),
together with all related manuals, documents and records. If Lessee does not so
surrender or return a Unit to Lessor, in addition to all other rights and
remedies available, at Lessor's election, such Unit shall continue to be subject
to all the terms and conditions of the Lease, with rent and other charges
continuing to accrue and be payable under the Lease with respect to such Unit
until it is so surrendered or returned to Lessor, except that Base Rent shall
accrue, payable on demand, at the rate of 150% of the rate applicable in the
last period for which Base Rent was payable.

9. EARLY TERMINATION. (a) Upon any rent payment date relating to a Lease, and no
less than 30 days' irrevocable notice to Lessor, from and after the expiry of
one-half of the applicable Base Term, provided no Event of Default exists,
Lessee shall have the option to terminate the Lease with respect to all and not
less than all Units covered thereby by purchasing the Units "as is and where is"
without warranties or representations of any kind, express or implied, for a
purchase price equal to the Balance Due plus all other amounts owing with
respect to the Units, plus early termination charges in the amount set forth in
paragraph (b) below. The purchase price of the Units and any early termination
charge shall be paid in immediately available funds at the time of exercising
such option.

(b) Upon any termination of the Lease before the scheduled expiration of the
Base Term, due to the exercise of any early termination option, a Casualty or a
default, in addition to all other amounts to be paid by Lessee, Lessee shall pay
Lessor an amount (the "Make-Whole"), equal to the greater of (A) the amount (not
less than zero) that must be added thereto in order that the Make-Whole plus the
Balance Due on the early termination date is equal to the sum of the present
values (using discount rates per annum for each obligation equal to the Formula
Yield (as defined below) as of the early termination date of (x) all remaining
installments of Base Rent and (y) the Purchase Amount (collectively, the
"Discounted Payments"), or (B) an amount equal to 2% times the Balance Due.
"Formula Yield" for each obligation shall mean, as of any date of determination,
the rate, as published by Telerate Systems, Inc. or other source, for United
States Government Treasury obligations of maturities corresponding to the
weighted average life, rounded to the second decimal place, of the Discounted
Payments. If no maturity exactly corresponds to such rounded weighted average
life for such obligation, yields of the two most closely corresponding published
maturities shall be calculated pursuant to the foregoing sentence and the
Formula Yield shall be interpolated from such yields on a straight-line basis.

10. LESSEE REPRESENTATIONS AND AGREEMENTS. Lessee represents, warrants and
agrees as follows:

(a) Lessee has duly authorized the execution, delivery and performance of this
Agreement, each Schedule, and all other documents contemplated hereby, which
are, or upon signing, will be, binding on Lessee and do not contravene any other

                                  Page 2 of 5
   3

instrument or agreement to which Lessee is party.

(b) Lessor has and shall at all times continue to have a perfected security
interest in the Units and the other Collateral, subject to no prior liens or
security interests, to secure the obligations specified in Section 17(g) of this
Agreement.

11. PERSONAL PROPERTY. The Units shall remain personal property at all times,
notwithstanding the manner in which they may be attached or affixed to realty,
and title shall at all times continue in Lessor. Lessee shall obtain and record
such instruments and take such steps as may be necessary (a) to prevent any
person from acquiring any right or lien in or on any Unit, whether by reason of
such Unit being deemed to be attached to real or other property, or otherwise,
and (b) to ensure Lessor's right of access to and removal of the Unit, in
accordance with the Lease.

12. DEFAULT AND REMEDIES. (a) Each of the following is an "Event of Default"
hereunder and under any and all Leases then in effect: (1) Lessee fails to pay
within five days of the day when due any installment of rent or other sum owing
by Lessee under any Lease; (2) Lessee fails to maintain insurance in respect of
any Unit as required, or sells, leases, subleases, assigns, conveys, encumbers
or suffers to exist any lien or charge against, any Unit without Lessor's prior
consent, or any Unit is subjected to levy, seizure or attachment; (3) Lessee
fails to perform and comply with any other covenant or obligation under any
Lease, or any progress payment, assignment, security or other agreement related
to any Lease or Unit (together, "Related Agreements") and, if curable, such
failure continues for 30 days after written notice thereof by Lessor to Lessee,
(4) any representation, warranty or other written statement made to Lessor in
connection with this Agreement, any Lease, Related Agreement, or any guaranty,
by Lessee or any person providing such guaranty ("Guarantor"), including
financial statements, proves to have been incorrect in any material respect when
made; (5) Lessee (x) enters into any merger or consolidation with, or sells or
transfers all, substantially all or any substantial portion of its assets to, or
enters into any partnership or joint venture other than in the ordinary course
of business with, any entity, (y) dissolves, liquidates or ceases or suspends
the conduct of business, or ceases to maintain its existence, or (z) enters into
or suffers any transaction or series of transactions as a result of which Lessee
is directly or indirectly controlled by persons or entities not affiliates of
Lessee as of the date of this Agreement; (6) Lessee undertakes any general
assignment for the benefit of creditors or commences any voluntary case or
proceeding for relief under the Bankruptcy Code, or any other law for the relief
of debtors, or takes any action to authorize or implement any of the foregoing;
(7) the filing of any petition or application against Lessee under any law for
the relief of debtors, including proceedings under the Bankruptcy Code or for
the subjection of property of Lessee to the control of any court, receiver or
agency for the benefit of creditors if such petition or application is consented
to by Lessee or not dismissed within 60 days from the date of filing; (8) any
payment default or other event of default occurs under any other bilateral or
multi-lateral lease, or credit, or other agreement or instrument to which Lessee
and Lessor or any affiliate of Lessor are now or hereafter party; (9) any
payment default or other event of default occurs under any other lease, or
credit, or other agreement or instrument or any combination thereof to which
Lessee is now or hereafter party and under which there is outstanding (on a
present value basis for all future rent, in the case of leases), owing or
committed an aggregate amount greater than $100,000.00; (10) the repudiation of
or breach or default under any guaranty relating to any Lease; or (11) the
occurrence of any event described in clauses (5), (6), (7), (8) or (9) of this
Section with reference to "any Guarantor" in lieu of "Lessee", or any Guarantor
dies.

(b) Upon the occurrence of an Event of Default, and in addition to all other
rights and remedies provided herein or under law, all of which rights and
remedies are cumulative and not exclusive, Lessor may: (i) proceed by
appropriate court action or actions, either at law or in equity, to enforce
performance by Lessee of the applicable covenants under any or all Leases, and
(ii) terminate any and all Leases, whereupon (A) Lessee's right to retain
possession and use of the Units shall cease, (B) the aggregate Balance Due,
together with all other amounts owing under the Leases shall be immediately due
and payable, and (C) Lessor may pursue any and all remedies available to it
under applicable law, including as a secured party under the Uniform Commercial
Code. Lessor may also recover from Lessee all Attorney Costs in the amount of
15% of all amounts due on or after the time of such breach or default (but not
to exceed the amount actually incurred).

(c) The exercise or partial exercise of, or failure to exercise, any remedy
shall not restrict Lessor from further exercise of that remedy or any other
remedy otherwise available. To the extent permitted by applicable law, Lessee
waives any right to require Lessor to sell, release or otherwise use or dispose
of any Units or otherwise mitigate Lessor's damages, or that may otherwise limit
or modify any of Lessor's rights or remedies.

13. ASSIGNMENT, ETC. (a) Lessor (and any subsequent assignee) may assign or
transfer any or all of Lessor's interest in any Lease, Unit or rentals therefrom
without notice to Lessee. Lessee agrees that the rights of any assignee shall
not be affected by any breach or default of Lessor or of any prior assignee.
Lessee further agrees that (i) no such assignee shall be required to assume any
of the obligations of Lessor under any Lease except the obligation in respect of
the application of any insurance monies received by such assignee, as provided
above, and the obligation of non-interference as provided below, and (ii) any
assignee expressly assuming the obligations of Lessor shall thereupon be
responsible for Lessor's duties under the applicable Lease accruing after any
such assignment and Lessor shall be released from such duties. Lessor may
disclose to any potential or actual assignee or transferee any information
regarding Lessee, any Guarantor and their affiliates.

(b) LESSEE SHALL NOT ASSIGN, PLEDGE, HYPOTHECATE OR IN ANY WAY DISPOSE OF ALL OR
ANY PART OF ITS RIGHTS OR OBLIGATIONS UNDER ANY LEASE, OR ENTER INTO ANY
SUBLEASE OF ANY UNIT, WITHOUT LESSOR'S PRIOR CONSENT.

14. FINANCIAL AND OTHER DATA. (a) During the term of any Lease, Lessee shall (i)
maintain books and records in accordance with generally accepted accounting
principles ("GAAP") and prudent business practice, (ii) promptly and in no event
later than 120 days after each fiscal year end furnish Lessor annual audited
financial statements of Lessee and of any Guarantor, prepared in accordance with
GAAP consistently applied, together with an unqualified opinion of an
independent auditor, and (iii) at Lessor's request, furnish Lessor all other
financial information and reports reasonably requested by Lessor at any time,
including quarterly or other interim financial statements of Lessee and of any
Guarantor. Lessee shall furnish such other information as Lessor may reasonably
request at any time concerning Lessee, Guarantor and their respective affairs,
or any Unit. Lessee shall

                                  Page 3 of 5
   4

promptly notify Lessor of any Event of Default or event or circumstance which,
with notice, lapse of time or both, would be an Event of Default.

(b) Lessee represents and warrants that all information furnished and to be
furnished by Lessee or any Guarantor to Lessor is accurate, and that all
financial statements Lessee or any Guarantor has furnished and hereafter may
furnish to Lessor reasonably reflect and will reflect, as of their respective
dates, results of the operations and the financial condition of Lessee, such
Guarantor or other entity they purport to cover.

(c) Credit and other information regarding Lessee, any Guarantor or their
affiliates may be shared by Lessor with its affiliates and agents.

15. INSPECTION; NON-INTERFERENCE. (a) Lessor, its agents and employees shall
have the right to enter any property where any Unit is located and inspect any
Unit, together with its related books and records, at any reasonable time. Such
right shall not impose any obligation on Lessor.

(b) So long as no Event of Default exists, Lessor shall not, and each direct or
indirect assignee or transferee of Lessor agrees that it shall not, interfere
with the rights of use and enjoyment of the Units by Lessee.

16. OTHER CHARGES; APPLICATION. If Lessee fails to pay within ten days of the
date due any amount of regularly scheduled Interim Rent or Base Rent, Lessee
shall pay a late charge equal to five percent (5%) of the amount not timely
paid. Lessee shall pay interest at the per annum rate equal to the lesser of (a)
15% or (b) the highest rate permitted by applicable law ("Default Rate") on (i)
any sum other than regularly scheduled Interim Rent and Base Rent owing under
any Lease and not paid when due, and (ii) any Balance Due not paid when due.
Payments received under any Lease will be applied, first, to interest, fees and
other amounts owing, other than Interim Rent or Base Rent, then to Interim Rent
or Base Rent, in order of Acceptance Date.

17. MISCELLANEOUS. (a) Lessee's indemnity and reimbursement obligations,
including under Section 7, shall survive the termination or cancellation of any
Lease or this Agreement.

(b) At Lessor's request, Lessee shall execute, deliver, file, and record such
financing statements and other documents, agreements and instruments as Lessor
shall deem necessary or advisable to protect Lessor's interest in the Units and
to effectuate the purposes of any Lease and the Related Agreements. Lessee
hereby irrevocably appoints Lessor as Lessee's agent and attorney-in-fact for
Lessee, coupled with an interest, (i) to execute, deliver, file, or record any
such item, and to take such action for Lessee and in Lessee's name, place and
stead, and (ii) to enforce claims relating to the Units against insurers,
vendors and other persons, and to make, adjust, compromise, settle, and receive
payment under such claims; without any obligation to do so.

(c) Time is of the essence.

(d) The invalidity of any portion of this Agreement, any Schedule or Related
Agreement shall not affect the force and effect of the remaining valid portions
thereof. The term "including" is not limiting. The term "affiliate" includes any
entity controlling, controlled by or under common control with the referent
entity; "control" includes the ownership of 25% or more of the voting stock of
any entity. The term "guaranty" includes any guaranty, surety instrument,
indemnity, "keep-well" agreement, or other instrument or arrangement providing
third party credit support to Lessor relating to any Lease or Unit.

(e) This Agreement, the Schedules, the approval letter by Lessor dated N/A,
19__ in relation hereto and any replacement or successor letter thereto
(together, the "Approval Letter") and the Related Agreements, constitute the
entire agreement between the parties with respect to the leasing of the Units.
Any amendment to such documents must be made in writing and signed by the
parties hereto or thereto. Such documents may be executed in one or more
counterparts. Where multiple counterpart originals of any Schedule exist, only
the counterpart marked "Lessor's Copy" shall be deemed chattel paper and
evidence a monetary obligation of Lessee.

(f) All demands, notices, requests, consents, waivers and other communications
under the Agreement, any Lease, the Approval Letter, or any Related Agreement
shall be in writing and shall be deemed to have been duly given when personally
delivered or three business days after being deposited in the mail, first class
postage prepaid, or the business day after delivery to an express carrier,
charges prepaid, or when sent by facsimile transmission (with electronic
confirmation of receipt), addressed to each party at the address or fax number
set forth below the signature of such party on the signature page, or at such
other address or fax number as may hereafter be furnished in writing by such
party to the other.

(g) (i) To secure the payment and performance of its obligations under the Lease
relating to such Unit and the repayment of any advances, with interest and fees,
made by Lessor on account of the Unit, and (ii) as a separate grant of security,
to secure the payment and performance of its obligations under all other Leases
and all other lease, loan or other obligations owing by Lessee to Lessor, in
each case, now existing or hereafter arising, Lessee hereby grants to Lessor a
security interest in all Lessee's right, title and interest in and to each Unit,
together with (A) all attachments, accessories and accessions to, and
substitutions and replacements for, the Unit, (B) all rights to chattel paper
arising from the Unit, (C) all insurance, warranty and other claims against
third parties with respect to the Unit (including claims for rent upon any lease
of the Unit), (D) all software and other intellectual property rights used or
useful in connection therewith, (E) all proceeds of any of the foregoing,
including insurance proceeds, and (F) all books and records pertaining to any of
the foregoing, in each case, now existing or hereafter arising and including,
with respect to clause (ii) of this subsection, Units as to which Lessee has
satisfied its end of term purchase obligation under the applicable Schedule
(together, the "Collateral").

(h) To the extent specified in any Approval Letter, Lessee shall reimburse
Lessor upon demand for costs and expenses incurred by Lessor in connection with
the execution and delivery of this Agreement and the other documents
contemplated hereby.

                                  Page 4 of 5
   5

Lessee shall reimburse Lessor on demand for all costs and expenses, including
Attorney Costs, incurred in connection with any amendment of any Lease or
related document requested by Lessee, or any waiver.

(i) THIS AGREEMENT, EACH SCHEDULE AND (UNLESS OTHERWISE SPECIFIED THEREIN) THE
RELATED AGREEMENTS SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE INTERNAL
LAWS OF THE STATE OF GEORGIA, TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF
WHICH, AND THE FEDERAL COURTS LOCATED THEREIN, THE PARTIES HERETO SUBMIT.

(j) LESSOR AND LESSEE EACH WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM BROUGHT BY EITHER AGAINST THE OTHER ON ANY MATTER HOWEVER ARISING
OUT OF OR IN ANY WAY CONNECTED WITH ANY LEASE ON THE UNITS.

IN WITNESS WHEREOF, Lessor and Lessee have executed this Agreement as of the
date first above written.

                                            
BANC OF AMERICA LEASING & CAPITAL, LLC         CALAVO GROWERS OF CALIFORNIA
(Lessor)                                       (Lessee)

By: /s/ P. Wesley Yount III                    By:  /s/ Scott H. Runge        /s/ EGIDIO CARBONE
   -----------------------------------            -------------------------------------------------
Printed Name:  P. Wesley Yount III             Printed Name: Scott H. Runge       Egidio Carbone
             -------------------------                      ---------------------------------------

Title:   Vice President                        Title:  Treasurer                  Vice President
      --------------------------------               ----------------------------------------------

Address: 2059 Northlake Pkwy.                  Address:                           2530 Red Hill
        ------------------------------                 --------------------------------------------
        4th Floor                                                                 Santa Ana, Calif
        ------------------------------                 --------------------------------------------
        Tucker, GA 30084
        ------------------------------                 --------------------------------------------

Facsimile:   770-723-2121                      Facsimile:                         565-223-1112
          ----------------------------                   ------------------------------------------

                                  Page 5 of 5
   6

BANK OF AMERICA

                                          SCHEDULE TO LEASE         SCHEDULE
BANC OF AMERICA LEASING & CAPITAL, LLC    INTENDED AS SECURITY      NUMBER 001
- --------------------------------------------------------------------------------

This Schedule ("Schedule"), dated as of SEPTEMBER 1, 2000 between BANC OF
AMERICA LEASING & CAPITAL, LLC ("Lessor") and CALAVO GROWERS OF CALIFORNIA
("Lessee") is executed pursuant to Lease Intended as Security Number 00989-00300
dated SEPTEMBER 1, 2000 incorporated in this Schedule by this reference (the
"Lease Agreement"). Unless otherwise defined in this Schedule, capitalized terms
used in this Schedule have the respective meanings assigned to such terms in the
Lease Agreement. If any provision of this Schedule conflicts with any provision
of the Lease Agreement, the provisions contained in this Schedule shall prevail.
Lessee hereby authorizes Lessor to insert the serial numbers and other
identification data of the Units, dates, and other omitted factual matters or
descriptions in this Schedule.

1. DESCRIPTION OF UNITS. The Units subject to this Schedule ("Units"), which
have a cost to Lessor ("Lessor's Cost") in the aggregate of 42,331.05, inclusive
of taxes, shipping, installation and other related expenses, if any ("Soft
Costs"), are as follows:

                                                                                     LESSOR'S COST
                                                                                     -------------
 QUANTITY      DESCRIPTION                               SERIAL NUMBER            (INCLUDING SOFT COSTS)
 --------      -----------                               -------------            ----------------------
                                                                         
    12         Latitude CPIS500GT, 14.1 TFT. US                                          $35,936.16
    10         Advanced Port Replicator w/Monitor Stand                                    2,930.20
               Shipping & Handling                                                           420.00
               Capitalized Tax                                                             3,044.69

2. ACCEPTANCE. Lessee acknowledges and represents that the Units (a) have been
delivered to and received and inspected by Lessee, (b) are in good operating
order, repair, condition and appearance, (c) are of the manufacture, design and
capacity selected by Lessee and are suitable for the purposes for which the
Units are leased, and are acceptable and satisfactory to Lessee, (d) do not
require any additions or modifications to make them suitable for use, other than
ancillary modifications or additions normally made by lessees of similar assets,
and are available for use and lease by Lessee and Lessor, and (e) have been
irrevocably accepted as "Units" leased by Lessee under this Schedule as of the
date written below (the "Acceptance Date").

3. TERM. The term of the Lease for any Unit is for an "Interim Term" (if any)
beginning on the date of funding by Lessor as to the Unit, and continuing
through and including the day preceding the Base Date; and for a "Base Term" of
THIRTY-SIX (36) months, beginning on the first to occur of the 5th day of the
calendar month during or following the last date of funding as to the Units (the
"Base Date").

4. RENTAL. Interim Rent shall be due Lessor for each day in the Interim Term and
shall equal the daily equivalent of the initial Base Rent. Interim Rent shall be
payable on the Base Date. Base Rent shall be payable in advance in THIRTY-SIX
(36) consecutive monthly rental installments of $1,353.31 each, the first Base
Rent installment being payable on the Base Date and the remaining Base Rent
installments being payable on the same day of each succeeding month.

5. LOCATION OF UNITS. The Units will be located or, in the case of mobile
equipment, principally based at 2350 Red Hill Avenue. Santa Ana, CA 92705.

6. END OF TERM PURCHASE. At the end of the original Base Term, or within 15 days
thereafter, Lessee shall purchase the Units "as is and where is", without
representations or warranties of any kind, express or implied, for the cash
amount of one dollar ($1.00) ("Purchase Amount").

7. FURTHER REPRESENTATIONS AND AGREEMENTS. Lessee represents, warrants and
agrees as follows:

(a) All representations and warranties of Lessee contained in the Lease
Agreement are restated as of the Acceptance Date and are true and correct as of
such date.

(b) There has been no material adverse change in the operations, business,
properties or condition (financial or otherwise) ("Material Adverse Change") of
Lessee or any Guarantor since August 25, 2000. There is not pending against
Lessee any litigation, proceeding, dispute or claim that may result in a
Material Adverse Change as to Lessee or that may call into question or impair
Lessee's legal or other ability to enter into and perform its obligations under
this Lease.

(c) The operation and maintenance of any Unit in the ordinary course by Lessee
do not require the entry into any software or other intellectual property rights
agreement with any licensor or other person, except as disclosed to Lessor in
writing prior to the Acceptance Date.

   7

BANC OF AMERICA LEASING & CAPITAL, LLC         CALAVO GROWERS OF CALIFORNIA
(Lessor)                                       (Lessee)

                                             
By: /s/ P. Wesley Yount III                     By: /s/ Scott H. Runge       /s/ EGIDIO CARBONE
   -----------------------------------             ------------------------------------------------

Printed Name:  P. Wesley Yount III              Printed Name: Scott H. Runge     Egidio Carbone
             -------------------------                       --------------------------------------

Title:  Vice President                          Title: Treasurer                 Vice President
      --------------------------------                ---------------------------------------------

                                                Acceptance Date:              9/1/00
                                                                -----------------------------------

   1

                                                                    Exhibit 10.6

BANK OF AMERICA
================================================================================
                                                         BUSINESS LOAN AGREEMENT

This Agreement dated as of 4-20-99, ____, is between Bank of America National
Trust and Savings Association (the "Bank") and (the "Borrower").

1.      LINE OF CREDIT AMOUNT AND TERMS

1.1     LINE OF CREDIT AMOUNT.

(a)     During the availability period described below, the Bank will provide a
        line of credit to the Borrower. The amount of the line of credit (the
        "Commitment") is Three Million and 00/100 Dollars ($3,000,000.00).

(b)     This is a revolving line of credit providing for cash advances and
        letters of credit. During the availability period, the Borrower may
        repay principal amounts and reborrow them.

(c)     Each advance must be for at least One Hundred Thousand and 00/100
        Dollars ($100,000.00), or for the amount of the remaining available line
        of credit, if less.

(d)     The Borrower agrees not to permit the outstanding principal balance of
        advances under the line of credit plus the outstanding amounts of any
        letters of credit, including amounts drawn on letters of credit and not
        yet reimbursed, to exceed the Commitment.

1.2     AVAILABILITY PERIOD. The line of credit is available between the date of
        this Agreement and April 30, 2001 (the "Expiration Date") unless the
        Borrower is in default.

1.3     INTEREST RATE.

(a)     Unless the Borrower elects an optional interest rate as described below,
        the interest rate is the Bank's Reference Rate.

(b)     The Reference Rate is the rate of interest publicly announced from time
        to time by the Bank in San Francisco, California, as its Reference Rate.
        The Reference Rate is set by the Bank based on various factors,
        including the Bank's costs and desired return, general economic
        conditions and other factors, and is used as a reference point for
        pricing some loans. The Bank may price loans to its customers at, above,
        or below the Reference Rate. Any change in the Reference Rate shall take
        effect at the opening of business on the day specified in the public
        announcement of a change in the Bank's Reference Rate.

1.4     REPAYMENT TERMS.

(a)     The Borrower will pay interest on April 30, 1999, and then monthly
        thereafter until payment in full of any principal outstanding under this
        line of credit.

(b)     The Borrower will repay in full all principal and any unpaid interest or
        other charges outstanding under this line of credit no later than the
        Expiration Date. Any amount bearing interest at an optional interest
        rate (as described below) may be repaid at the end of the applicable
        interest period, which shall be no later than one hundred eighty (180)
        days after the Expiration Date.

1.5     OPTIONAL INTEREST RATES. Instead of the interest rate based on the
Bank's Reference Rate, the Borrower may elect the optional interest rates listed
below during interest periods agreed to by the Bank and the Borrower. The
optional interest rates shall be subject to the terms and conditions described
later in this Agreement. Any principal amount bearing interest at an optional
rate under this Agreement is referred to as a "Portion." The following optional
interest rates are available:

(a)     the IBOR Rate plus 0.75 percentage points.

1.6     LETTERS OF CREDIT.

(a)     This line of credit may be used for financing:

        (i)     commercial letters of credit with a maximum maturity of 180 days
                but not to extend more than 180 days beyond the Expiration Date.
                Each commercial letter of credit will require drafts payable at
                sight.

                                      - 1 -
   2

        (ii)    standby letters of credit with a maximum maturity not to extend
                beyond the Expiration Date.

        (iii)   The amount of letters of credit outstanding at any one time
                (including amounts drawn on letters of credit and not yet
                reimbursed) may not exceed Two Hundred Thousand and 00/100
                Dollars ($200,000.00).

(b)     The Borrower agrees:

        (i)     any sum drawn under a letter of credit may, at the option of the
                Bank, be added to the principal amount outstanding under this
                Agreement. The amount will bear interest and be due as described
                elsewhere in this Agreement.

        (ii)    if there is a default under this Agreement, to immediately
                prepay and make the Bank whole for any outstanding letters of
                credit.

        (iii)   the issuance of any letter of credit and any amendment to a
                letter of credit is subject to the Bank's written approval and
                must be in form and content satisfactory to the Bank and in
                favor of a beneficiary acceptable to the Bank.

        (iv)    to sign the Bank's form Application and Agreement for Commercial
                Letter of Credit or Application and Agreement for Standby Letter
                of Credit.

        (v)     to pay any issuance and/or other fees that the Bank notifies the
                Borrower will be charged for issuing and processing letters of
                credit for the Borrower.

        (vi)    to allow the Bank to automatically charge its checking account
                for applicable fees, discounts, and other charges.

2.      OPTIONAL INTEREST RATES

2.1     OPTIONAL RATES. Each optional interest rate is a rate per year. Interest
will be paid on the last day of each interest period, and on the last day of
each month during the interest period. At the end of any interest period, the
interest rate will revert to the rate based on the Reference Rate, unless the
Borrower has designated another optional interest rate for the Portion. No
Portion will be converted to a different interest rate during the applicable
interest period. Upon the occurrence of an event of default under this
Agreement, the Bank may terminate the availability of optional interest rates
for interest periods commencing after the default occurs.

2.2     IBOR RATE. The election of IBOR Rates shall be subject to the following
terms and requirements:

(a)     The interest period during which the IBOR Rate will be in effect will be
        no shorter than 30 days and no longer than one year. The last day of the
        interest period will be determined by the Bank using the practices of
        the offshore dollar inter-bank market.

(b)     Each IBOR Rate Portion will be for an amount not less than Five Hundred
        Thousand Dollars ($500,000).

(c)     The Borrower may not elect an IBOR Rate with respect to any principal
        amount which is scheduled to be repaid before the last day of the
        applicable interest period.

(d)     The "IBOR Rate" means the interest rate determined by the following
        formula, rounded upward to the nearest 1/100 of one percent. (All
        amounts in the calculation will be determined by the Bank as of the
        first day of the interest period.)

                IBOR Rate =             IBOR Base Rate
                                ---------------------------
                                (1.00 - Reserve Percentage)

        Where.

        (i)     "IBOR Base Rate" means the interest rate at which the Bank's
                Grand Cayman Branch, Grand Cayman, British West Indies, would
                offer U.S. dollar deposits for the applicable interest period to
                other major banks in the offshore dollar inter-bank market.

        (ii)    "Reserve Percentage" means the total of the maximum reserve
                percentages for determining the reserves to be maintained by
                member banks of the Federal Reserve System for Eurocurrency
                Liabilities, as defined in Federal Reserve Board Regulation D,
                rounded upward to the nearest 1/100 of one percent. The
                percentage will be expressed as a decimal, and will include, but
                not be limited to, marginal, emergency, supplemental, special,
                and other reserve percentages.

                                      - 2 -
   3

(e)     Each prepayment of an IBOR Rate Portion, whether voluntary, by reason of
        acceleration or otherwise, will be accompanied by the amount of accrued
        interest on the amount prepaid, and a prepayment fee as described below.
        A "prepayment" is a payment of an amount on a date earlier than the
        scheduled payment date for such amount as required by this Agreement.
        The prepayment fee shall be equal to the amount (if any) by which:

        (i)     the additional interest which would have been payable during the
                interest period on the amount prepaid had it not been prepaid,
                exceeds

        (ii)    the interest which would have been recoverable by the Bank by
                placing the amount prepaid on deposit in the domestic
                certificate of deposit market, the eurodollar deposit market, or
                other appropriate money market selected by the Bank for a period
                starting on the date on which it was prepaid and ending on the
                last day of the interest period for such Portion (or the
                scheduled payment date for the amount prepaid, if earlier).

(f)     The Bank will have no obligation to accept an election for an IBOR Rate
        Portion if any of the following described events has occurred and is
        continuing:

        (i)     Dollar deposits in the principal amount, and for periods equal
                to the interest period, of an IBOR Rate Portion are not
                available in the offshore dollar inter-bank market; or

        (ii)    the IBOR Rate does not accurately reflect the cost of an IBOR
                Rate Portion.

3.      FEES AND EXPENSES

3.1     FEES.

(a)     UNUSED COMMITMENT FEE. The Borrower agrees to pay a fee on any
        difference between the Commitment and the amount of credit it actually
        uses, determined by the weighted average credit outstanding during the
        specified period. The fee will be calculated at 0.25% per year, payable
        quarterly in arrears. This fee is due 15 days from the Bank's billing
        date.

(b)     WAIVER FEE. If the Bank, at its discretion, agrees to waive or amend any
        terms of this Agreement, the Borrower will, at the Bank's option, pay
        the Bank a fee for each waiver or amendment in an amount advised by the
        Bank at the time the Borrower requests the waiver or amendment. Nothing
        in this paragraph shall imply that the Bank is obligated to agree to any
        waiver or amendment requested by the Borrower. The Bank may impose
        additional requirements as a condition to any waiver or amendment.

3.2     REIMBURSEMENT COSTS.

(a)     The Borrower agrees to reimburse the Bank for any expenses it incurs in
        the preparation of this Agreement and any agreement or instrument
        required by this Agreement. Expenses include, but are not limited to,
        reasonable attorneys' fees, including any allocated costs of the Bank's
        in-house counsel.

4.      DISBURSEMENTS, PAYMENTS AND COSTS

4.1     TELEPHONE AND TELEFAX AUTHORIZATION.

(a)     The Bank may honor telephone or telefax instructions for advances or
        repayments or for the designation of optional interest rates and telefax
        requests for the issuance of letters of credit given by any one of the
        individuals authorized to sign loan agreements on behalf of the
        Borrower, or any other individual designated by any one of such
        authorized signers.

(b)     Advances will be deposited in and repayments will be withdrawn from the
        Borrower's account number 03724-02990, or such other of the Borrower's
        accounts with the Bank as designated in writing by the Borrower.

(c)     The Borrower indemnifies and excuses the Bank (including its officers,
        employees, and agents) from all liability, loss, and costs in connection
        with any act resulting from telephone or telefax instructions the Bank
        reasonably believes are made by any individual authorized by the
        Borrower to give such instructions. This indemnity and excuse will
        survive this Agreement's termination.

4.2     DIRECT DEBIT (PRE-BILLING). The Borrower agrees that the Bank will debit
the Borrower's deposit account number 03724-02990, or such other of the
Borrower's accounts with the Bank as designated in writing by the Borrower (the
"Designated Account") on the date each payment of principal and interest and any
fees from the Borrower becomes due (the "Due Date"). Approximately 10 days prior
to each Due Date, the Bank will mail to the Borrower a statement of the

                                     - 3 -
   4

amounts that are expected to be due on that Due Date, based on current
information (the "Billed Amount"). The Bank will debit the Designated Account
for the Billed Amount, regardless of the actual amount due on that date (the
"Accrued Amount"). If the Billed Amount debited to the Designated Account
differs from the Accrued Amount, the discrepancy will be added or subtracted
from the amount due on the next due date. Regardless of any such discrepancy,
interest will continue to accrue based on the actual amount of principal
outstanding without compounding. The Bank will not pay the Borrower interest on
any overpayment. If there are insufficient funds in the Designated Account on
the date the Bank enters any debit authorized by this Agreement, the debit will
be reversed.

4.3     BANKING DAYS. Unless otherwise provided in this Agreement, a banking day
is a day other than a Saturday or a Sunday on which the Bank is open for
business in California. For amounts bearing interest at an offshore rate (if
any), a banking day is a day other than a Saturday or a Sunday on which the Bank
is open for business in California and dealing in offshore dollars. All payments
and disbursements which would be due on a day which is not a banking day will be
due on the next banking day. All payments received on a day which is not a
banking day will be applied to the credit on the next banking day.

4.4     ADDITIONAL COSTS. The Borrower will pay the Bank, on demand, for the
Bank's costs or losses arising from any statute or regulation, or any request or
requirement of a regulatory agency which is applicable to all national banks or
a class of all national banks. The costs and losses will be allocated to the
loan in a manner determined by the Bank, using any reasonable method. The costs
include the following:

(a)     any reserve or deposit requirements; and

(b)     any capital requirements relating to the Bank's assets and commitments
        for credit.

4.5     INTEREST CALCULATION. Except as otherwise stated in this Agreement, all
interest and fees, if any, will be computed on the basis of a 360-day year and
the actual number of days elapsed. This results in more interest or a higher fee
than if a 365-day year is used. Installments of principal which are not paid
when due under this Agreement shall continue to bear interest until paid.

4.6     DEFAULT RATE. Upon the occurrence and during the continuation of any
default under this Agreement, principal amounts outstanding under this Agreement
will at the option of the Bank bear interest at a rate which is 2 percentage
point(s) higher than the rate of interest otherwise provided under this
Agreement. This will not constitute a waiver of any default.

4.7     INTEREST COMPOUNDING. At the Bank's sole option in each instance, any
interest, fees or costs which are not paid when due under this Agreement shall
bear interest from the due date at the Bank's Reference Rate plus 2 percentage
points. This may result in compounding of interest.

5.      CONDITIONS

The Bank must receive any documents and other items it may reasonably require,
including but not limited to the following items, in form and content acceptable
to the Bank, before it is required to extend any credit to the Borrower under
this Agreement.

5.1     AUTHORIZATIONS. Evidence that the execution, delivery and performance by
the Borrower and each guarantor of this Agreement and any instrument or
agreement required under this Agreement have been duly authorized.

5.2     GOVERNING DOCUMENTS. A copy of the Borrower's articles of incorporation.

5.3     GUARANTY. A guaranty signed by Calavo Foods, Inc. in the amount of Six
Million Dollars ($6,000,000).

6.      REPRESENTATIONS AND WARRANTIES

When the Borrower signs this Agreement, and until the Bank is repaid in full,
the Borrower makes the following representations and warranties. Each request
for an extension of credit constitutes a renewed representation:

6.1     ORGANIZATION OF BORROWER. The Borrower is a corporation duly formed and
existing under the laws of the state where organized.

6.2     AUTHORIZATION. This Agreement has been duly authorized and is
enforceable without conflict with any laws or any other obligation of the
Borrower.

                                      - 4 -
   5

6.3     GOOD STANDING. In each state in which the Borrower does business, it is
properly licensed, in good standing, and, where required, in compliance with
fictitious name statutes.

6.4     LAWSUITS. There is no lawsuit, tax claim or other dispute pending or
threatened against the Borrower which, if lost, would impair the Borrower's
financial condition or ability to repay the loan, except as have been disclosed
in writing to the Bank.

6.5     PERMITS, FRANCHISES. The Borrower possesses all permits, memberships,
franchises, contracts and licenses required and all trademark rights, trade name
rights, patent rights and fictitious name rights necessary to enable it to
conduct the business in which it is now engaged.

6.6     LOCATION OF BORROWER. The Borrower's place of business (or, if the
Borrower has more than one place of business, its chief executive office) is
located at the address listed under the Borrower's signature on this Agreement.

6.7     YEAR 2000 COMPLIANCE. The Borrower has conducted a comprehensive review
and assessment of the Borrower's systems and equipment applications and made
inquiry of the Borrowers key suppliers, vendors and customers with respect to
the "year 2000 problem" (that is, the inability of computers, as well as
embedded microchips in non-computing devices, to properly perform date-sensitive
functions with respect to certain dates prior to and after December 31, 1999).
Based on that review and inquiry, the Borrower does not believe the year 2000
problem, including costs of remediation, will result in a material adverse
change in the Borrower's business condition (financial or otherwise),
operations, properties or prospects, or ability to repay the credit. The
Borrower has developed adequate contingency plans to ensure uninterrupted and
unimpaired business operation in the event of a failure of its own or a third
party's systems or equipment due to the year 2000 problem, including those of
vendors, customers, and suppliers, as well as a general failure of or
interruption in its communications and delivery infrastructure.

7.      COVENANTS

The Borrower agrees, so long as credit is available under this Agreement and
until the Bank is repaid in full:

7.1     USE OF PROCEEDS. To use the proceeds of the credit only for working
capital for operations and seasonal requirements.

7.2     FINANCIAL INFORMATION. To provide the following financial information
and statements in form and content acceptable to the Bank, and such additional
information as requested by the Bank from time to time:

(a)     Within 90 days of the Borrower's fiscal year end, the Borrower's annual
        financial statements. These financial statements must be audited (with
        an opinion not qualified in any manner, including not qualified due to
        possible errors generated by financial reporting and related systems due
        to the year 2000 problem) by a Certified Public Accountant ("CPA")
        acceptable to the Bank. The statements shall be prepared on a
        consolidated basis.

(b)     Within 45 days of the period's end, the Borrower's quarterly financial
        statements. These financial statements may be Borrower prepared. The
        statements shall be prepared on a consolidated basis.

7.3     WORKING CAPITAL. To maintain on a consolidated basis current assets in
excess of current liabilities by at least Five Million Dollars ($5,000,000).
This covenant will be calculated at the end of each fiscal quarter, using fiscal
year-to-date results.

7.4     TANGIBLE NET WORTH. To maintain on a consolidated basis tangible net
worth equal to at least Twelve Million Dollars ($12,000,000).

"Tangible net worth" means the gross book value of the Borrower's assets
(excluding goodwill, patents, trademarks, trade names, organization expense,
treasury stock, unamortized debt discount and expense, capitalized or deferred
research and development costs, deferred marketing expenses, deferred
receivables, and other like intangibles) less total liabilities, including but
not limited to accrued and deferred income taxes, and any reserves against
assets. This covenant will be calculated at the end of each fiscal quarter,
using fiscal year-to-date results.

7.5     INDEBTEDNESS TO NET WORTH RATIO. To maintain on a consolidated basis a
ratio of Indebtedness to net worth not exceeding 1.50:1.00.

"Indebtedness" means (a) all indebtedness for borrowed money, (b) that portion
of obligations with respect to capital leases which is capitalized under GAAP,
(c) notes payable and drafts accepted representing extensions of credit, whether
or not representing obligations for borrowed money, (d) any obligations for the
purchase of property or services that is (i) deferred for more than six (6)
months, or (ii) evidenced by a note or similar instruments, and (e) all recourse
and all non-recourse indebtedness secured by any lien on any property or asset
of the Borrower (whether or not assumed by the Borrower). This ratio will be
calculated at the end of each fiscal quarter, using fiscal year-to-date results.

                                      - 5 -
   6

7.6     OTHER DEBTS. Not to have outstanding or incur any direct or contingent
liabilities (other than those to the Bank), or become liable for the liabilities
of others, without the Bank's written consent. This does not prohibit:

(a)     Acquiring goods, supplies, or merchandise on normal trade credit.

(b)     Endorsing negotiable instruments received in the usual course of
        business.

(c)     Obtaining surety bonds in the usual course of business.

(d)     Liabilities in existence on the date of this Agreement disclosed in
        writing to the Bank.

7.7     OTHER LIENS. Not to create, assume, or allow any security interest or
lien (including judicial liens) on property the Borrower now or later owns,
except:

(a)     Deeds of trust and security agreements in favor of the Bank.

(b)     Liens for taxes not yet due.

(c)     Liens outstanding on the date of this Agreement disclosed in writing to
        the Bank.

7.8     OUT OF DEBT PERIOD. To repay any advances in full, and not to draw any
additional advances on its revolving line of credit, for a period of at least 30
consecutive days in each line-year. "Line-year" means the Borrower's fiscal year
ending October 31, 1999, and each subsequent one-year period (if any). For the
purposes of this paragraph, "advances" does not include undrawn amounts of
outstanding letters of credit.

7.9     NOTICES TO BANK. To promptly notify the Bank in writing of:

(a)     any lawsuit over Three Hundred Thousand Dollars ($300,000) against the
        Borrower (or any guarantor).

(b)     any substantial dispute between the Borrower (or any guarantor) and any
        government authority.

(c)     any failure to comply with this Agreement.

(d)     any material adverse change in the Borrower's (or any guarantors)
        business condition (financial or otherwise), operations, properties or
        prospects, or ability to repay the credit.

(e)     any change in the Borrower's name, legal structure, place of business,
        or chief executive office if the Borrower has more than one place of
        business.

7.10    AUDITS. To allow the Bank and its agents to inspect the Borrower's
properties and examine, audit, and make copies of books and records at any
reasonable time. If any of the Borrower's properties, books or records are in
the possession of a third party, the Borrower authorizes that third party to
permit the Bank or its agents to have access to perform inspections or audits
and to respond to the Bank's requests for information concerning such
properties, books and records.

7.11    COMPLIANCE WITH LAWS. To comply with the laws (including any fictitious
name statute), regulations, and orders of any government body with authority
over the Borrower's business.

7.12    GENERAL BUSINESS INSURANCE. To maintain insurance as is usual for the
business it is in.

7.13    ADDITIONAL NEGATIVE COVENANTS. Not to, without the Bank's written
consent:

(a)     engage in any business activities substantially different from the
        Borrower's present business.

(b)     liquidate or dissolve the Borrower's business.

(c)     enter into any consolidation, merger, or other combination, or become a
        partner in a partnership, a member of a joint venture, or a member of a
        limited liability company.

(d)     sell, assign, lease, transfer or otherwise dispose of any assets for
        less than fair market value, or enter into any agreement to do so.

(e)     enter into any sale and leaseback agreement covering any of its fixed
        assets.

(f)     acquire or purchase a business or its assets.

                                      - 6 -
   7

7.14    BANK AS PRINCIPAL DEPOSITORY. To maintain the Bank as its principal
depository bank, including for the maintenance of business, cash management,
operating and administrative deposit accounts.

8.      HAZARDOUS WASTE INDEMNIFICATION

The Borrower will indemnify and hold harmless the Bank from any loss or
liability directly or indirectly arising out of the use, generation,
manufacture, production, storage, release, threatened release, discharge,
disposal or presence of a hazardous substance. This indemnity will apply whether
the hazardous substance is on, under or about the Borrower's property or
operations or property leased to the Borrower. The indemnity includes but is not
limited to attorneys' fees (including the reasonable estimate of the allocated
cost of in-house counsel and staff). The indemnity extends to the Bank, its
parent, subsidiaries and all of their directors, officers, employees, agents,
successors, attorneys and assigns. "Hazardous substances" means any substance,
material or waste that is or becomes designated or regulated as "toxic,"
"hazardous," "pollutant," or "contaminant" or a similar designation or
regulation under any federal, state or local law (whether under common law,
statute, regulation or otherwise) or judicial or administrative interpretation
of such, including without limitation petroleum or natural gas. This indemnity
will survive repayment of the Borrower's obligations to the Bank.

9.      DEFAULT

If any of the following events occurs, the Bank may do one or more of the
following: declare the Borrower in default, stop making any additional credit
available to the Borrower, and require the Borrower to repay its entire debt
immediately and without prior notice. If an event of default occurs under the
paragraph entitled "Bankruptcy," below, with respect to the Borrower, then the
entire debt outstanding under this Agreement will automatically be due
immediately.

9.1     FAILURE TO PAY. The Borrower fails to make a payment under this
Agreement when due.

9.2     FALSE INFORMATION. The Borrower (or any guarantor) has given the Bank
false or misleading information or representations.

9.3     BANKRUPTCY. The Borrower (or any guarantor) files a bankruptcy petition,
a bankruptcy petition is filed against the Borrower (or any guarantor) or the
Borrower (or any guarantor) makes a general assignment for the benefit of
creditors.

9.4     RECEIVERS. A receiver or similar official is appointed for the
Borrower's (or any guarantor's) business, or the business is terminated, or any
guarantor is liquidated or dissolved.

9.5     LAWSUITS. Any lawsuit or lawsuits are filed on behalf of one or more
trade creditors against the Borrower (or any guarantor) in an aggregate amount
of One Million Dollars ($1,000,000) or more in excess of any insurance coverage.

9.6     JUDGMENTS. Any judgments or arbitration awards are entered against the
Borrower (or any guarantor), or the Borrower (or any guarantor) enters into any
settlement agreements with respect to any litigation or arbitration, in an
aggregate amount of One Million Dollars ($1,000,000) or more in excess of any
insurance coverage.

9.7     GOVERNMENT ACTION. Any government authority takes action that the Bank
believes materially adversely affects the Borrower's (or any guarantor's)
financial condition or ability to repay.

9.8     MATERIAL ADVERSE CHANGE. A material adverse change occurs, or is
reasonably likely to occur, in the Borrower's (or any guarantor's) business
condition (financial or otherwise), operations, properties or prospects, or
ability to repay the credit.

9.9     CROSS-DEFAULT. Any default occurs under any agreement in connection with
any credit the Borrower (or any guarantor) or any of the Borrower's related
entities or affiliates has obtained from anyone else or which the Borrower (or
any guarantor) or any of the Borrower's related entities or affiliates has
guaranteed.

9.10    DEFAULT UNDER RELATED DOCUMENTS. Any guaranty, subordination agreement,
security agreement, deed of trust, or other document required by this Agreement
is violated or no longer in effect.

9.11    OTHER BANK AGREEMENTS. The Borrower (or any guarantor) fails to meet the
conditions of, or fails to perform any obligation under any other agreement the
Borrower (or any guarantor) has with the Bank or any affiliate of the Bank.

9.12    OTHER BREACH UNDER AGREEMENT. The Borrower fails to meet the conditions
of, or fails to perform any obligation under, any term of this Agreement not
specifically referred to in this Article. This includes any failure or
anticipated failure by the Borrower to comply with any financial covenants set
forth in this Agreement, whether such failure is evidenced by financial
statements delivered to the Bank or is otherwise known to the Borrower or the
Bank.

                                     - 7 -
   8

10.     ENFORCING THIS AGREEMENT; MISCELLANEOUS

10.1    GAAP. Except as otherwise stated in this Agreement, all financial
information provided to the Bank and all financial covenants will be made under
generally accepted accounting principles, consistently applied.

10.2    CALIFORNIA LAW. This Agreement is governed by California law.

10.3    SUCCESSORS AND ASSIGNS. This Agreement is binding on the Borrowers and
the Bank's successors and assignees. The Borrower agrees that it may not assign
this Agreement without the Bank's prior consent. The Bank may sell
participations in or assign this loan, and may exchange financial information
about the Borrower with actual or potential participants or assignees. If a
participation is sold or the loan is assigned, the purchaser will have the right
of set-off against the Borrower.

10.4    ARBITRATION.

(a)     This paragraph concerns the resolution of any controversies or claims
        between the Borrower and the Bank, including but not limited to those
        that arise from:

        (i)     This Agreement (including any renewals, extensions or
                modifications of this Agreement);

        (ii)    Any document, agreement or procedure related to or delivered in
                connection with this Agreement;

        (iii)   Any violation of this Agreement; or

        (iv)    Any claims for damages resulting from any business conducted
                between the Borrower and the Bank, including claims for injury
                to persons, property or business interests (torts).

(b)     At the request of the Borrower or the Bank, any such controversies or
        claims will be settled by arbitration in accordance with the United
        States Arbitration Act. The United States Arbitration Act will apply
        even though this Agreement provides that it is governed by California
        law.

(c)     Arbitration proceedings will be administered by the American Arbitration
        Association and will be subject to its commercial rules of arbitration.

(d)     For purposes of the application of the statute of limitations, the
        filing of an arbitration pursuant to this paragraph is the equivalent of
        the filing of a lawsuit, and any claim or controversy which may be
        arbitrated under this paragraph is subject to any applicable statute of
        limitations. The arbitrators will have the authority to decide whether
        any such claim or controversy is barred by the statute of limitations
        and, if so, to dismiss the arbitration on that basis.

(e)     If there is a dispute as to whether an issue is arbitrable, the
        arbitrators will have the authority to resolve any such dispute.

(f)     The decision that results from an arbitration proceeding may be
        submitted to any authorized court of law to be confirmed and enforced.

(g)     The procedure described above will not apply if the controversy or
        claim, at the time of the proposed submission to arbitration, arises
        from or relates to an obligation to the Bank secured by real property
        located in California. In this case, both the Borrower and the Bank must
        consent to submission of the claim or controversy to arbitration. If
        both parties do not consent to arbitration, the controversy or claim
        will be settled as follows:

        (i)     The Borrower and the Bank will designate a referee (or a panel
                of referees) selected under the auspices of the American
                Arbitration Association in the same manner as arbitrators are
                selected in Association-sponsored proceedings;

        (ii)    The designated referee (or the panel of referees) will be
                appointed by a court as provided in California Code of Civil
                Procedure Section 638 and the following related sections;

        (iii)   The referee (or the presiding referee of the panel) will be an
                active attorney or a retired judge; and

        (iv)    The award that results from the decision of the referee (or the
                panel) will be entered as a judgment in the court that appointed
                the referee, in accordance with the provisions of California
                Code of Civil Procedure Sections 644 and 645.

                                      - 8 -
   9

(h)     This provision does not limit the right of the Borrower or the Bank to:

        (i)     exercise self-help remedies such as setoff;

        (ii)    foreclose against or sell any real or personal property
                collateral; or

        (iii)   act in a court of law, before, during or after the arbitration
                proceeding to obtain:

                (A)     an interim remedy; and/or

                (B)     additional or supplementary remedies.

(i)     The pursuit of or a successful action for interim, additional or
        supplementary remedies, or the filing of a court action, does not
        constitute a waiver of the right of the Borrower or the Bank, including
        the suing party, to submit the controversy or claim to arbitration if
        the other party contests the lawsuit. However, if the controversy or
        claim arises from or relates to an obligation to the Bank which is
        secured by real property located in California at the time of the
        proposed submission to arbitration, this right is limited according to
        the provision above requiring the consent of both the Borrower and the
        Bank to seek resolution through arbitration.

(j)     If the Bank forecloses against any real property securing this
        Agreement, the Bank has the option to exercise the power of sale under
        the deed of trust or mortgage, or to proceed by judicial foreclosure.

10.5    SEVERABILITY; WAIVERS. If any part of this Agreement is not enforceable,
the rest of the Agreement may be enforced. The Bank retains all rights, even if
it makes a loan after default. If the Bank waives a default, it may enforce a
later default. Any consent or waiver under this Agreement must be in writing.

10.6    ATTORNEYS' FEES. The Borrower shall reimburse the Bank for any
reasonable costs and attorneys' fees incurred by the Bank in connection with the
enforcement or preservation of any rights or remedies under this Agreement and
any other documents executed in connection with this Agreement, and in
connection with any amendment, waiver, "workout" or restructuring under this
Agreement. In the event of a lawsuit or arbitration proceeding, the prevailing
party is entitled to recover costs and reasonable attorneys' fees incurred in
connection with the lawsuit or arbitration proceeding, as determined by the
court or arbitrator. In the event that any case is commenced by or against the
Borrower under the Bankruptcy Code (Title 11, United States Code) or any similar
or successor statute, the Bank is entitled to recover costs and reasonable
attorneys' fees incurred by the Bank related to the preservation, protection, or
enforcement of any rights of the Bank in such a case. As used in this paragraph,
"attorneys' fees" includes the allocated costs of the Bank's in-house counsel.

10.7    ONE AGREEMENT. This Agreement and any related security or other
agreements required by this Agreement, collectively:

(a)     represent the sum of the understandings and agreements between the Bank
        and the Borrower concerning this credit;

(b)     replace any prior oral or written agreements between the Bank and the
        Borrower concerning this credit; and

(c)     are intended by the Bank and the Borrower as the final, complete and
        exclusive statement of the terms agreed to by them.

In the event of any conflict between this Agreement and any other agreements
required by this Agreement, this Agreement will prevail.

10.8    INDEMNIFICATION. The Borrower will indemnify and hold the Bank harmless
from any loss, liability, damages, judgments, and costs of any kind relating to
or arising directly or indirectly out of (a) this Agreement or any document
required hereunder, (b) any credit extended or committed by the Bank to the
Borrower hereunder, and (c) any litigation or proceeding related to or arising
out of this Agreement, any such document, or any such credit. This indemnity
includes but is not limited to attorneys' fees (including the allocated cost of
in-house counsel). This indemnity extends to the Bank, its parent, subsidiaries
and all of their directors, officers, employees, agents, successors, attorneys,
and assigns. This indemnity will survive repayment of the Borrower's obligations
to the Bank. All sums due to the Bank hereunder shall be obligations of the
Borrower, due and payable immediately without demand.

10.9    PRIOR AGREEMENT SUPERSEDED. This Agreement supersedes the Business Loan
Agreement entered into as of April 11, 1995 between the Bank and the Borrower,
and any credit outstanding thereunder shall be deemed to be outstanding under
this Agreement.

                                      - 9 -
   10

This Agreement is executed as of the date stated at the top of the first page.

                                                   
BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION                CALAVO GROWERS OF CALIFORNIA

x /s/ BERTHA G. ROMERO                                x  /s/ EGIDIO CARBONE  Vice President
 --------------------------------------------------    ------------------------------------
By: Bertha G. Romero, Vice President                  By:

Address where notices to the Bank are to be sent:     x /s/ SCOTT H. RUNGE   Treasurer
                                                       ------------------------------------
San Gabriel Valley Commercial Banking Office #01463   By:
15625 E. Stafford St.
City of Industry, CA 91744                            Address for Notices:

                                                      2530 Red Hill Avenue
                                                      Santa Ana, CA 92705

                                     - 10 -

   1

                                                                    Exhibit 10.7

BANK OF AMERICA
================================================================================
                                                          AMENDMENT TO DOCUMENTS

                   AMENDMENT NO. 2 TO BUSINESS LOAN AGREEMENT

        This Amendment No. 2 (the "Amendment") dated as of
_______________________, ____, is between Bank of America, N.A. (the "Bank"),
formerly Bank of America NT & SA, and Calavo Growers of California (the
"Borrower").

                                    RECITALS

        A.      The Bank and the Borrower entered into a certain Business Loan
Agreement dated as of April 20, 1999, as previously amended (the "Agreement").

        B.      The Bank and the Borrower desire to further amend the Agreement.

                                    AGREEMENT

        1.      DEFINITIONS. Capitalized terms used but not defined in this
Amendment shall have the meaning given to them in the Agreement.

        2.      AMENDMENTS. The Agreement is hereby amended as follows:

                2.1     In Paragraph 7.6(e) of the Agreement, the amount "TWENTY
                        SIX MILLION FIVE HUNDRED THOUSAND DOLLARS ($26,500,000)"
                        is substituted for the amount "TWENTY THREE MILLION FIVE
                        HUNDRED THOUSAND DOLLARS ($23,500,000)."

        3.      REPRESENTATIONS AND WARRANTIES. When the Borrower signs this
Amendment, the Borrower represents and warrants to the Bank that: (a) there is
no event which is, or with notice or lapse of time or both would be, a default
under the Agreement except those events, if any, that have been disclosed in
writing to the Bank or waived in writing by the Bank, (b) the representations
and warranties in the Agreement are true as of the date of this Amendment as if
made on the date of this Amendment, (c) this Amendment is within the Borrower's
powers, has been duly authorized, and does not conflict with any of the
Borrower's organizational papers, and (d) this Amendment does not conflict with
any law, agreement, or obligation by which the Borrower is bound.

        4.      EFFECT OF AMENDMENT. Except as provided in this Amendment, all
of the terms and conditions of the Agreement shall remain in full force and
effect.

        This Amendment is executed as of the date stated at the beginning of
this Amendment.

BANK OF AMERICA, N.A.                    Calavo Growers of California

x     /s/ Eduardo Ordorica               x   /s/   EGIDIO CARBONE
 ------------------------------          -----------------------------------
By: Eduardo Ordorica                     By:  Egidio Carbone
    Assistant Vice President                  Vice President

                                         x
                                         -----------------------------------
                                         By:

                                     - 1 -
   1

                                                                    EXHIBIT 10.8

                                 LOAN AGREEMENT

                                     between

                RIVERSIDE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY

                                       and

                          CALAVO GROWERS OF CALIFORNIA

                          Dated as of September 1, 1985

This Loan Agreement and all right, title and interest of the Riverside County
Industrial Development Authority (the "Authority") in any payments or revenues
derived under this Loan Agreement (other than rights of the Authority under
Sections 4.4 and 8.2 hereof) have been assigned and pledged to First Interstate
Bank of California, as Trustee under an Indenture of Trust, dated as of
September 1, 1985, between the Authority and the Trustee, which secures the
Authority's Variable Rate Demand Industrial Development Revenue Bonds (Calavo
Growers of California Project) in the principal amount of $4,200,000.

                                            This instrument was prepared by:

                                              O'MELVENY & MYERS
                                              400 South Hope Street
                                              Los Angeles, California 90071-2899
                                              (213) 669-6000

   2

                                 LOAN AGREEMENT

                                TABLE OF CONTENTS

       (This Table of Contents is for convenience of reference only and is not a
part of this Loan Agreement.)

                                                                      PAGE
                                                                      ----
                                                                   
PARTIES                                                                 1

PREAMBLES                                                               1

ARTICLE I.      DEFINITIONS; RULES OF INTERPRETATION                    2

       Section 1.1.    Definitions                                      2
       Section 1.2.    Rules of Interpretation                         13
       Section 1.3.    Indenture Controls as to
                           Conflicting Provisions                      13

ARTICLE II.     REPRESENTATIONS AND WARRANTIES                         13

       Section 2.1.    Representations and Warranties
                           of Authority                                13
       Section 2.2.    Representations and Warranties
                           of Company                                  15
       Section 2.3.    Representations and Covenants
                           of Company and Authority with
                           Respect to Federal and California
                           Personal Income Tax Matters and
                           Capital Expenditures                        18
       Section 2.4.    Survival of Representations and
                           Warranties                                  21

ARTICLE III.    ISSUANCE OF THE BONDS; THE COMPANY LOAN                21

       Section 3.1.    Agreement to Issue the Bonds;
                           Application of Proceeds                     21
       Section 3.2.    Agreement to Make the
                           Company Loan                                21
       Section 3.3.    Disbursements from the
                           Construction Fund                           22
       Section 3.4.    Furnishing Documents to Trustee                 22
       Section 3.5.    Investment of Money                             23
       Section 3.6.    Special Arbitrage Covenants                     23
       Section 3.7.    No Federal Guarantee                            25

                                       i

   3

                                                                      PAGE
                                                                      ----
                                                                   
ARTICLE IV.     COMPANY LOAN REPAYMENT                                 25

       Section 4.1.    Provisions for Repayment of Loan                25
       Section 4.2.    Provisions for Payment of
                           Purchase Price                              26
       Section 4.3.    Credits                                         26
       Section 4.4.    Other Payment Obligations
                           of Company                                  27
       Section 4.5.    Mandatory Prepayment of the
                           Company Loan                                27
       Section 4.6.    Optional Prepayment of the
                           Company Loan                                27
       Section 4.7.    Letter of Credit                                29
       Section 4.8.    Authority Security Documents                    31
       Section 4.9.    Obligations Absolute and
                           Unconditional                               31

ARTICLE V.      THE PROJECT                                            32

       Section 5.1.    Company Covenants Concerning
                           the Project                                 32
       Section 5.2.    Establishment of
                           Completion Date                             33

ARTICLE VI.     COVENANT TO COMPLY WITH INDENTURE                      33

       Section 6.1.    Financing Statements; Further Assurances        33
       Section 6.2.    Payments Assigned and Pledged                   33
       Section 6.3.    Company's Performance Under Indenture           34

ARTICLE VII.    INSURANCE, DAMAGE, DESTRUCTION                         34
                AND CONDEMNATION

       Section 7.1.    Insurance                                       34
       Section 7.2.    Damage, Destruction and Condemnation            34
       Section 7.3.    Application of Net Proceeds                     35
       Section 7.4.    Insufficiency of Net Proceeds                   35
       Section 7.5.    Company-Owned Property                          35
       Section 7.6.    Title Insurance                                 36

ARTICLE VIII.   ADDITIONAL COVENANTS                                   36

       Section 8.1.    Maintenance and Operation
                           of Project; Taxes                           36
       Section 8.2.    Authority's Expenses; Release
                           and Indemnification                         36

                                       ii
   4

                                                                      PAGE
                                                                      ----
                                                                   
       Section 8.3.    Maintenance of Corporate Existence;
                           Qualification in the State                  37
       Section 8.4.    Requirement for Certain Notices                 38
       Section 8.5.    Cooperation                                     38
       Section 8.6.    Access to Books and Records                     38
       Section 8.7.    Compliance with Laws                            38
       Section 8.8.    Limitation on Assignment
                           of Loan Agreement                           38
       Section 8.9.    Wages                                           39

ARTICLE IX.     DEFAULTS AND REMEDIES                                  39

       Section 9.1.    Events of Default                               39
       Section 9.2.    Remedies on Default                             40
       Section 9.3.    No Remedy Exclusive                             41
       Section 9.4.    Attorneys' Fees and Expenses                    41
       Section 9.5.    No Implied Waiver                               41

ARTICLE X.      MISCELLANEOUS                                          41

       Section 10.1.   Term of this Loan Agreement                     41
       Section 10.2.   Notices                                         42
       Section 10.3.   Power of Authorized Company
                           Representative                              42
       Section 10.4.   Binding Effect                                  42
       Section 10.5.   Severability                                    43
       Section 10.6.   Amounts Remaining in Funds                      43
       Section 10.7.   Amendments, Changes and
                           Modifications                               43
       Section 10.8.   Execution in Counterparts                       43
       Section 10.9.   Captions                                        43
       Section 10.10.  Law Governing Construction
                           of Loan Agreement                           43
       Section 10.11.  No Rights Created in Third
                           Parties                                     43
       Section 10.12.  Benefit of the Owners of the Bonds              43
       Section 10.13.  Notice of Taxability                            43

SIGNATURES                                                             44

EXHIBIT "A"   -   PROJECT SUMMARY                                     A-1

EXHIBIT "B"   -   FUNDING REQUISITION                                 B-1

EXHIBIT "C"   -   COMPLETION CERTIFICATE                              C-1

EXHIBIT "D"   -   SPECIAL ARBITRAGE INSTRUCTIONS                      D-1

                                      iii
   5

              THIS LOAN AGREEMENT (the "Loan Agreement"), dated as of September
1, 1985, is by and between the RIVERSIDE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
(the "Authority"), a public, corporate instrumentality of the State of
California, and CALAVO GROWERS OF CALIFORNIA, (the "Company"), a company
organized and existing under the laws of the State of California;

                                  WITNESSETH:

              WHEREAS, the California Industrial Development Financing Act of
the State of California, California Government Code Sections 91500 et seq., as
amended (the "Act"), permits an industrial development authority to issue
revenue bonds for the purpose of financing the acquisition, construction and/or
rehabilitation of facilities, including both real and personal property suitable
for industrial uses such as assembling, fabricating, manufacturing, processing
or warehousing activities with respect to any products of agriculture, forestry,
mining or manufacture; and

              WHEREAS, the Authority is authorized by Ordinance No. 587, duly
adopted by the Board of Supervisors of the County of Riverside, California (the
"County"), on February 8, 1983, to exercise powers under the Act, including the
power to issue bonds for the purpose of acquiring, constructing, improving,
furnishing, equipping, repairing, reconstructing, and/or rehabilitating
facilities and to enter into and execute this Loan Agreement; and

              WHEREAS, the Authority, pursuant to a resolution, duly adopted on
March 5, 1985, accepted the Company's application for financial assistance and
published notice of such acceptance; and declared its intention to issue
approximately $4,200,000 of its Variable Rate Demand Industrial Development
Revenue Bonds (Calavo Growers of California Project) and to lend the proceeds
therefrom to the Company for the purpose of financing the acquisition,
construction and equipping of certain food packing house facilities in the
County, (the "Project") secured solely by payments to be made by the Company to
the Trustee for deposit into the Revenue Fund, and by an irrevocable letter of
credit (the "Letter of Credit") issued by Security Pacific National Bank, a
national banking association (the "Bank"), in favor of the Trustee for the
benefit of the Owners from time to time of the Bonds; and

              WHEREAS, the Board of Supervisors of the County, pursuant to a
resolution, duly adopted on March 26, 1985, after notice and public hearing, has
approved the issuance and sale of the Bonds for the purpose of financing the
Project; and

              WHEREAS, the Authority, pursuant to a resolution, duly adopted on
September 3, 1985, has approved the issuance and sale of its Variable Rate
Demand Industrial Development Revenue Bonds (Calavo Growers of California
Project) in the aggregate principal amount of $4,200,000 (the "Bonds") and the
loan of the proceeds from the sale of the Bonds to the Company to enable it to
acquire,

                                       1
   6

construct and equip the Project and to pay the costs of issuing the Bonds,
pursuant to the terms of this Loan Agreement; and

              WHEREAS, the California Industrial Development Financing Advisory
Commission has determined that the Project is in compliance with the criteria
set forth in, and that the issuance of the Bonds qualifies for issuance as
required by, Section 91531 of the Act; and

              WHEREAS, the Authority proposes to finance the Project by lending
to the Company the funds for the acquisition, construction and equipping thereof
and the Company desires to borrow such funds from the Authority and to acquire,
construct and equip the Project upon the terms and conditions set forth herein;
and

              WHEREAS, the Authority has determined that the acquisition,
construction and equipping of the Project is likely to result in employment
benefits, resource conservation benefits, consumer benefits, and/or production
of new or improved products or facilities; and

              WHEREAS, the Bonds will be issued under and secured by an
Indenture of Trust, dated as of September 1, 1985 (the "Indenture"), between the
Authority and First Interstate Bank, as Trustee (the "Trustee"), under the terms
of which the Authority will assign and pledge all of its right, title and
interest in this Loan Agreement (except as provided herein and therein) and all
payments under this Loan Agreement to the payment of the principal of, premium,
if any, and interest on the Bonds as the same become due;

              NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby and for and in consideration of the premises and the mutual covenants
herein contained, do hereby agree as follows:

                                    ARTICLE I

                      DEFINITIONS; RULES OF INTERPRETATION

              SECTION 1.1. DEFINITIONS. In addition to the words and terms
elsewhere defined herein, the following words and terms as used herein shall
have the following meanings unless the context or use clearly indicates another
or different meaning or intent, and any other words and terms defined in the
Indenture shall have the same meanings when used herein as assigned them in the
Indenture unless the context or use clearly indicates another or different
meaning or intent:

              "Act" means the California Industrial Development Financing Act,
California Government Code Sections 91500 et seq., as amended;

              "ACT OF BANKRUPTCY" means the filing of a petition in bankruptcy
(or other commencement of a bankruptcy or similar proceeding) by or against the

                                       2
   7

Company or by or against the Authority under any applicable bankruptcy,
insolvency, reorganization or similar law now or hereafter in effect;

              "ACT OF BANKRUPTCY OF BANK" means that the Bank has become
insolvent or has failed to pay its debts generally as such debts become due or
has admitted in writing its inability to pay any of its indebtedness or has
consented to or has petitioned or applied to any authority for the appointment
of a receiver liquidator, trustee or similar official for itself or for all or
any substantial part of its properties or assets or that any such trustee,
receiver, liquidator or similar official has been appointed or that insolvency,
reorganization, arrangement or liquidation proceedings (or similar proceedings),
have been instituted by or against the Bank;

              "ADJUSTABLE INTEREST RATE" means the interest rate determined at
the times and in the manner provided in Section 203 of the Indenture;

              "ADMINISTRATION EXPENSES" means the reasonable and necessary
expenses incurred by the Authority in the administration of this Loan Agreement,
the Indenture and the Intercreditor Agreement, including, without limitation,
fees and costs of attorneys, consultants and others, but excluding the
Trustee's, any Paying Agent's and Tender Agent's fees, overhead and similar
costs;

              "ANNUAL DEBT SERVICE" means, for any Bond Year, the sum on the
first day of such Bond Year of (i) the interest due in such Bond Year
(calculated in accordance with the Regulations) on Outstanding Bonds and Bonds
with respect to which all liability of the Authority has been discharged in
accordance with Article XII of the Indenture and (ii) the principal amount of
Outstanding Bonds and Bonds with respect to which all liability of the Authority
has been discharged in accordance with Article XII of the Indenture falling due
by their terms in such Bond Year.

              "APPLICABLE JURISDICTION" means the area within the political
boundaries of the County and all area within one-half mile of the Project
whether or not located within the political boundaries of the County;

              "AUTHORITY" means the Riverside County Industrial Development
Authority, a public, corporate instrumentality of the State of California duly
authorized and validly existing under the Act or any board, body, commission,
department or officer succeeding to the principal functions thereof or to whom
the powers conferred upon the Authority shall be given by law;

              "AUTHORITY SECURITY DOCUMENTS" means collectively, the First Deed
of Trust, the First Security Agreement, the First Financing Statement and the
First Fixture Filing;

              "AUTHORIZED BANK REPRESENTATIVE" means the person or persons
authorized to sign Funding Requisitions on behalf of the Bank;

                                       3
   8
              "AUTHORIZED COMPANY REPRESENTATIVE" means any one of the following
officers of the Company: Chairman of the Board, President, Vice President,
Treasurer or Assistant Treasurer, who is designated to act on behalf of the
Company by written certificate furnished to the Authority and the Trustee
containing the specimen signature of such designated officer and signed on
behalf of the Company by any other officer of the Company. Such certificate may
designate an alternate or alternates;

              "BANK" means Security Pacific National Bank, a national banking
association, acting as issuer of the Letter of Credit, or the issuer of a
Substitute Letter of Credit, if one has been issued as provided in Section 4.7
hereof;

              "BANK SECURITY DOCUMENTS" means, collectively, the Second Deed of
Trust, the Second Security Agreement, the Second Financing Statement and the
Second Fixture Filing;

              "BOND" OR BONDS" means the Variable Rate Demand Industrial
Development Revenue Bonds (Calavo Growers of California Project) of the
Authority referred to in Section 3.1 hereof and to be issued pursuant to the
Indenture;

              "BOND COUNSEL" means an attorney at law or a firm of attorneys,
acceptable to the Authority, the Trustee and the Bank, of nationally recognized
standing in matters pertaining to the tax exempt nature of interest on bonds
issued by states and their political subdivisions duly admitted to the practice
of law before the highest court of any state of the United States of America or
the District of Columbia;

              "BOND FUND" means the Bond Fund created by Section 302 of the
Indenture;

              "BONDHOLDER" OR "HOLDER OF BONDS" OR "OWNER OF BONDS" means the
Registered Owner of any Bond;

              "BOND ISSUANCE DATE" means the date of delivery of the Bonds,
being September 5, 1985;

              "BOND YEAR" means the period of twelve (12) consecutive months
ending on September 4 in any year during which Bonds are or will be Outstanding;
provided, however, the final Bond Year shall end on the date on which the last
Bond is paid or redeemed. For purposes of this definition, the term Outstanding
shall include Bonds with respect to which all liability of the Authority has
been discharged in accordance with Article XII of the Indenture.

              "BUSINESS DAY" means any day other than a Saturday, Sunday, a
legal holiday or a day on which banking institutions in the city in which the
Bank's principal office is located or in the city in which the principal
corporate trust office of the Trustee or any Paying Agent or Tender Agent is
located, are

                                       4
   9

authorized or obligated by law or executive order to close, and on which The New
York Stock Exchange is not closed;

              "CODE" means the Internal Revenue Code of 1954, as amended, and
any applicable regulations thereunder;

              "COMPANY" means Calavo Growers of California, a California
corporation, its successors and assigns, and any surviving, resulting or
transferee company as permitted under Section 8.3 hereof;

              COMPANY BONDS" means the Bonds purchased with the proceeds of a
draw on the Letter of Credit pursuant to Section 1301 or Section 1302 of the
Indenture which are registered in the name of the Company pursuant to Section
1310 of the Indenture.

              "COMPANY DOCUMENTS" means this Loan Agreement, the Authority
Security Documents, the Reimbursement Agreement, the Bank Security Documents,
the Remarketing Agreement and the Placement Agent Agreement;

              "COMPANY LOAN" means the loan originated by the Authority to the
Company in an amount equal to $4,200,000 for the purpose of financing the
acquisition, construction, improvement and equipping of the Project;

              "COMPLETION CERTIFICATE" means the certificate of completion to be
provided by the Company pursuant to the provisions of Section 5.2 hereof in the
form attached hereto as Exhibit B;

              "COMPLETION DATE" means the date of completion of the Project, as
certified in the Completion Certificate;

              "COMPUTATION DATE" means, for each Bond Year, the last scheduled
Interest Payment Date in such Bond Year.

              "CONSTRUCTION FUND" means the Construction Fund created by Section
302 of the Indenture;

              "CONVERSION DATE" means the Interest Payment Date on which the
Bonds begin to bear interest at the Fixed Interest Rate, as provided in Section
204 of the Indenture;

              "COUNSEL" means an attorney at law or a firm of attorneys duly
admitted to practice law before the highest court of any state of the United
States of America and who is not a full time employee, director, officer or
partner of the Authority or the Trustee or the Company;

              "COUNTY" means Riverside County, California;

              "DATE OF OFFICIAL ACTION" means March 5, 1985, the date on which
"a bond resolution or other similar official action was taken . . . with respect
to . . ." the Bonds as such phrase is used in Treasury Regulation Section
1.103-8(a)(5)(v);

                                       5
   10

              "DETERMINATION OF TAXABILITY" means any of the following events:
(i) the Company files a Supplemental Statement which indicates that it has
exceeded the maximum capital expenditures permitted under Section 103(b)(6)(D)
of the Code, or (ii) the Company gives a notice to the Authority and the Trustee
that it has exceeded or intends to exceed the maximum capital expenditures under
Section 103(b)(6)(D) of the Code, or (iii) the Company gives a notice to the
Authority and the Trustee that it has exceeded or intends to exceed the maximum
aggregate limit of outstanding tax-exempt industrial development bonds permitted
under Section 103(b)(15) of the Code, or (iv) the enactment of legislation, or a
judgment or order of a court of original jurisdiction or a final ruling or
decision of the Internal Revenue Service which determines that interest paid or
payable on any Bond is or was includable in the gross income of an Owner of the
Bonds for Federal income tax purposes under the Code (other than an Owner who is
a substantial user or related person within the meaning of Section 103(b) of the
Code), provided, however, that a ruling or decision of the Internal Revenue
Service shall be considered final only if no appeal or action for judicial
review has been filed and the time for filing such appeal or action has expired;

              "EARNINGS FUND" means the Earnings Fund created by Section 302 of
the Indenture.

              "EXCESS EARNINGS ACCOUNT" means the Excess Earnings Account
created by Section 302 of the Indenture.

              "EVENT OF DEFAULT" means one of the events described as an event
of default in Section 9.1 hereof;

              "FACILITIES" means property, both real and personal, or any
interests therein, suitable for industrial uses including, without limitation,
assembling, fabricating, manufacturing, processing or warehousing activities
with respect to any products of agriculture, forestry, mining or manufacture,
and includes any facilities incidental thereto;

              "FIRST DEED OF TRUST" means the First Deed of Trust and assignment
of Rents (Construction Trust Deed) with respect to the Project, of even date
herewith, executed by the Company, as trustor, to the Title Company, as trustee,
for the benefit of the Authority, as beneficiary;

              "FIRST FINANCING STATEMENT" means a UCC-1 financing statement
executed by the Company, as debtor pursuant to the First Security Agreement, and
naming the Authority as the secured party and the Trustee as the assignee of the
secured party;

              "FIRST FIXTURE FILING" means a fixture filing executed by the
Company, as debtor pursuant to the First Security Agreement, and naming the
Authority as the secured party and the Trustee as the assignee of the secured
party;

                                       6
   11

              "FIRST SECURITY AGREEMENT" means the First Security Agreement with
respect to the Project, of even date herewith, executed by the Company, as
debtor, in favor of the Authority, as secured party;

              "FIXED INTEREST RATE" means the interest rate in effect on the
Bonds from and after the Conversion Date as said rate is determined in
accordance with Section 204 of the Indenture;

              "FUNDING REQUISITION" means the requisition form requesting
disbursement of monies from the Construction Fund in the form attached hereto as
Exhibit C;

              "GENERAL EARNINGS ACCOUNT" means the General Earnings Account
created by Section 302 of the Indenture.

              "GOVERNMENT OBLIGATIONS" means any of the following which at the
time of investment are legal investments under the laws of the State for the
money proposed to be invested therein: direct obligations issued by the United
States Treasury or obligations unconditionally guaranteed as to the payment of
principal and interest by the full faith and credit of the United States of
America which may be permitted under Section 103(h)(3)(B)(v) of the Code and
regulations issued thereunder, or which, in the opinion of Bond Counsel, will
not impair the exemption from federal income taxation of the interest on the
Bonds;

              "GROSS PROCEEDS" shall have the meaning ascribed to such term in
the Regulations.

              "INDENTURE" means that certain Indenture of Trust, of even date
herewith, by and between the Authority and the Trustee, pursuant to which the
Bonds are authorized to be issued and the interests of the Authority in this
Loan Agreement and the revenues received by the Authority hereunder are to be
pledged and assigned as security for the payment of the principal of, premium,
if any, and interest on the Bonds, including any amendments and supplements
thereto;

              "INTERCREDITOR AGREEMENT" means that certain Intercreditor
Agreement of even date herewith among the Authority, the Trustee and the Bank,
as amended and supplemented from time to time;

              "INTEREST PAYMENT DATE" means, prior to the Conversion Date, the
first Business Day of each month, commencing October 1, 1985, and, after the
Conversion Date, March 1 and September 1 of each year;

              "INVESTMENT EXCESS" shall mean, for the applicable computation
period, (1) the aggregate amount of interest, profits and other income actually
earned on the investment of Gross Proceeds in Nonpurpose Obligations (other than
(i) Gross Proceeds held in the Excess Earnings Account of the Earnings Fund

                                       7
   12

and (ii) except as otherwise required by the Regulations, Gross Proceeds
invested in the Bond Fund), less (2) the aggregate amount that would have been
earned if such Gross Proceeds had been invested at a Yield equal to the Yield on
the Bonds.

              "LETTER OF CREDIT" means the irrevocable direct draw letter of
credit issued by the Bank to the Trustee as beneficiary, at the request of and
for the account of the Company in accordance with Section 4.7 hereof, or any
Substitute Letter of Credit;

              "MAXIMUM INTEREST RATE" means twelve percent (12%) per annum;

              "MOODY'S" means Moody's Investors Service, a corporation organized
and existing under the laws of the State of Delaware, its successors and their
assigns, and, if such corporation shall for any reason no longer perform the
function of a securities rating agency, "Moody's" shall be deemed to refer to
any other nationally recognized rating agency designated by the Authority with
the approval of the Company and the Bank;

              "NET PROCEEDS" means, with respect to any insurance proceeds or
any condemnation award, the amount remaining after deducting all expenses
(including attorneys' fees) incurred in the collection of such proceeds or award
from the gross proceeds thereof;

              "NONPURPOSE OBLIGATION" shall have the meaning ascribed to such
term in the Regulations.

              "OUTSTANDING," when used as of any particular time with reference
to Bonds, means all Bonds theretofore, or thereupon being, authenticated and
delivered by the Trustee under this Indenture except

              (1) Bonds theretofore cancelled by the Trustee or surrendered to
       the Trustee for cancellation;

              (2) Bonds with respect to which all liability of the Authority
       shall have been discharged in accordance with Article XII of the
       Indenture; and

              (3) Bonds for the transfer or exchange of or in lieu of or in
       substitution for which other Bonds shall have been authenticated and
       delivered by the Trustee pursuant to the Indenture.

              "PAYING AGENT" means the Trustee and any other bank or trust
company designated by the Authority pursuant to the Indenture to serve as a
paying agency or place of payment for the Bonds;

              "PERMITTED INVESTMENTS" means any of the following which at the
time are legal investments for the Authority under the laws of the State, and on
which the Company is not the obligor:

                                       8
   13

              (a) Government Obligations;

              (b) certificates of deposit or time deposits, or repurchase
       agreements with national or state banks, including the Trustee or its
       affiliates, or international banks with domestic United States
       operations, with capital, surplus and undivided profits of $50,000,000 or
       more, and certificates of deposit of federal savings and loan
       associations (including the certificates of deposit of any bank, savings
       and loan association or building and loan association acting as
       depository, custodian or trustee for any such bond proceeds);

              (c) commercial paper of "prime quality" approved by the Trustee
       and bearing a rating by a nationally recognized rating agency of "A-1",
       "P-1", "F-1" or any similar rating or better;

              (d) bills of exchange or time drafts drawn on and accepted by a
       commercial bank (i.e., banker's acceptances) which are eligible for
       purchase by the Federal Reserve System; or

              (e) obligations of a state, territory or possession of the United
       States or any political subdivision of the foregoing the interest on
       which is exempt from federal income taxation under Section 103(a) of the
       Code which bear a rating in either of the two highest rating categories
       of a nationally recognized rating agency;

              "PERSON" means a natural person, firm, partnership, association,
corporation, trust or public body;

              "PLACEMENT AGENT AGREEMENT" means the Placement Agent Agreement
dated as of September 1, 1985, by and among the Authority, the Company and
Security Pacific Capital Markets Group (Security Pacific National Bank) as
Placement Agent;

              "POST-CONVERSION LETTER OF CREDIT" means a Substitute Letter of
Credit issued by the Bank for the benefit of the Trustee on and after the
Conversion Date;

              "PRINCIPAL USER" means "principal user" as that term is used in
Section 103(b)(6) of the Code;

              "PROJECT" means the Facilities to be acquired, constructed and
equipped with the proceeds of the sale of the Bonds or the proceeds of any
payment by the Company pursuant to Section 5.1 hereof, which Facilities are more
fully described in the Project Summary attached hereto as Exhibit A;

                                       9
   14

              "PROJECT COSTS" means those costs incurred by the Company in
connection with the Project and in connection with the issuance of the Bonds
including, but not limited to, the following:

              (a) the cost of construction, improvement, repair, and
       reconstruction;

              (b) the cost of acquisition, including rights in land and other
       property, both real and personal and improved and unimproved, and
       franchises, and disposal rights;

              (c) the cost of demolishing, removing, or relocating any building
       or structures on lands so acquired, including the cost of acquiring any
       lands to which such buildings or structures may be moved or relocated;

              (d) the cost of machinery, equipment and furnishings, of
       engineering and architectural surveys, plans, and specifications, and of
       transportation and storage until the Project is operational;

              (e) the cost of agents or consultants, including, without
       limitation, legal, financial, engineering, accounting, and auditing,
       necessary or incident to the Project and of the determination as to the
       feasibility or practicability of undertaking the Project;

              (f) the cost of financing interest prior to, during, and for a
       reasonable period after completion of the Project, and reserves for
       principal and interest and for extensions, enlargements, additions,
       repairs, replacements, renovations and improvements;

              (g) the cost of acquiring or refinancing existing obligations
       incident to the undertaking and carrying out, including the financing of,
       the Project, and the reimbursement to any governmental entity or agency,
       or any company, of expenditures made by or on behalf of such entity,
       agency or company that are Project costs hereunder without regard to
       whether or not such expenditures may have been made before or after the
       adoption of a resolution of intention with respect to the Project by the
       Authority; and

              (h) the cost of making relocation assistance payments as provided
       by Chapter 16 (commencing with Section 7260) of Division 7 of Title 1 of
       the California Government Code.

              "PROJECT SUMMARY" means the Project Summary prepared by the
Company, a copy of which is attached hereto as Exhibit "A" and incorporated
herein by this reference;

              "QUALIFIED PROJECT COSTS" means the Project Costs (other than the
expenses incurred in connection with the issuance of the Bonds) incurred after
the Date of Official Action which are incurred in connection with the
acquisition, construction, reconstruction, or improvement of land or property
described

                                       10
   15

in Section 167 of the Code and are chargeable to the capital account of the
Company with respect to the Project for federal income tax and financial
accounting purposes, and shall not include working capital, the cost of
inventory, goodwill or other non-depreciable property other than land; provided,
however, that: (i) the Qualified Project Costs shall not include the costs of
acquiring land or any interest in land that will be used for agricultural
purposes; (ii) no more than 25% of the Qualified Project Costs shall be costs of
acquiring land other than agricultural land or any interest therein; and (iii)
any rehabilitation expenditures within the meaning of Section 103(b)(17)(C) of
the Code with respect to any building or equipment thereon shall equal or exceed
fifteen percent (15%) of that portion of the Project Costs to acquire such
building and equipment financed with the proceeds of the sale of the Bonds;

              "REBATE AMOUNT" shall mean, for the applicable computation period,
the Investment Excess for such period, plus the aggregate amount of all
interest, profits and other income earned on investments in the Excess Earnings
Account of the Earnings Fund during such period;

              "REGISTERED OWNER" means the person or persons in whose name or
names a Bond shall be registered on books of the Trustee kept for that purpose
in accordance with the terms of the Indenture;

              "REGULATIONS" shall mean the regulations of the United States
Department of the Treasury proposed or promulgated under Section 103(c)(6) of
the Code which by their terms are effective with respect to the Bonds;

              "REIMBURSEMENT AGREEMENT" means that certain Reimbursement
Agreement of even date herewith, by and between the Bank and the Company
providing for the issuance of the Letter of Credit, as amended and supplemented
from time to time;

              "REMARKETING AGENT" means the agent appointed in accordance with
the provisions of Section 1303 of the Indenture, initially Security Pacific
Capital Markets Group (Security Pacific National Bank);

              "REMARKETING AGREEMENT" means the Remarketing Agreement of even
date herewith among the Authority, the Company and the Remarketing Agent, as
amended and supplemented from time to time;

              "RELATED PERSON" means any "related person" as such term is
defined in Section 103(b)(6)(C) of the Code;

              "SEASONED FUNDS" means monies paid by the Company to the Trustee
for deposit into the Company Monies Account of the Revenue Fund or the Special
Redemption Account of the Bond Fund which monies shall have been held in the
Company Monies Account or the Special Redemption Account for at least 126
consecutive days, provided, that no Act of Bankruptcy shall have occurred during
such 126-day period and provided further, that no Act of Bankruptcy shall

                                       11
   16

have occurred during the 126-day period immediately preceding such deposit; the
Trustee shall be entitled to rely on the Company's failure to furnish the
Trustee with a certificate to the effect that an Act of Bankruptcy has occurred
as evidence that no such bankruptcy has occurred;

              "SECOND DEED OF TRUST" means the Second Deed of Trust and
Assignment of Rents (Construction Trust Deed) with respect to the Project, of
even date herewith, executed by the Company, as trustor, to the Title Company,
as trustee, for the benefit of the Bank, as beneficiary;

              "SECOND FINANCING STATEMENT" means the UCC-1 financing statement
executed by the Company, as debtor pursuant to the Second Security Agreement,
and naming the Bank as the secured party;

              "SECOND FIXTURE FILING" means the fixture filing executed by the
Company, as debtor pursuant to the Second Security Agreement, and naming the
Bank as the secured party;

              "SECOND SECURITY AGREEMENT" means the Second Security Agreement
with respect to the Project, of even date herewith, executed by the Company, as
debtor, in favor of the Bank, as secured party;

              "SPECIAL ARBITRAGE INSTRUCTIONS" means the Special Arbitrage
Instructions attached hereto as Exhibit D;

              "STATE" means the State of California;

              "SUBSIDIARY" means any company of which the Company owns, directly
or indirectly, more than fifty percent (50%) of the voting shares thereof or
otherwise controls;

              "SUBSTITUTE LETTER OF CREDIT" means a letter of credit delivered
to the Trustee in accordance with Section 4.7 of this Loan Agreement;

              "SUPPLEMENTAL STATEMENT" means any statement, supplemental
statement or other tax schedule or return or document filed with the Internal
Revenue Service (whether pursuant to Treasury Regulation Section
1.103-10(b)(2)(vi)(c) as the same may be amended or supplemented from time to
time, or otherwise);

              "TENDER AGENT" means Chemical Bank, a New York banking
corporation, acting in the capacity of Tender Agent under the Indenture;

              "TITLE COMPANY" means Ticor Title Insurance Company of California,
a California corporation;

              "TITLE POLICY" means an ALTA Loan Policy - 1970 with ALTA
Endorsement Form 1 Coverage (LP 10), issued by the Title Company, naming the

                                       12
   17

Trustee as the insured, with liability in the amount of the aggregate principal
amount of the Bonds, insuring the validity and priority of the lien of the First
Deed of Trust, as assigned by the Authority to the Trustee, subject only to such
other exceptions as are approved in writing by the Authority, and including CLTA
endorsements 100, 104.7, 111.5, 112.1, and 116.1, and such other endorsements as
the Authority may require;

              "TRUSTEE" means First Interstate Bank of California as trustee,
and any co-trustee or any successor trustee under the Indenture.

              "YIELD" shall have the meaning ascribed to such term in the
Regulations.

              SECTION 1.2. RULES OF INTERPRETATION. The definitions set forth in
Section 1.1 shall be equally applicable to both the singular and the plural
forms of the terms therein defined and shall cover all genders.

              "HEREIN," "HEREBY," "HEREUNDER," "HEREOF," "HEREINBEFORE,"
"HEREINAFTER" and other equivalent words refer to this Loan Agreement and not
solely to the particular Article, Section or subdivision hereof in which such
word is used.

              Reference herein to an Article number (e.g., Article IV) or a
Section number (e.g., Section 6.2) shall be construed to be a reference to the
designated Article number or Section number hereof unless the context or use
clearly indicates another or different meaning or intent.

              SECTION 1.3. INDENTURE CONTROLS AS TO CONFLICTING PROVISIONS. In
the event any of the provisions of this Loan Agreement (including the
definitions of terms herein) conflict in any respect with the provisions of the
Indenture and cannot be reconciled, the provisions of the Indenture shall
control.

                                   ARTICLE II

                         REPRESENTATIONS AND WARRANTIES

              SECTION 2.1. REPRESENTATIONS AND WARRANTIES OF AUTHORITY. As of
the date hereof and as of the Bond Issuance Date, the Authority hereby
represents and warrants as follows:

              (a) The Authority is a public, corporate instrumentality of the
       State, duly organized and validly existing under and pursuant to the Act,
       and the County has adopted an ordinance declaring the need for the
       Authority and that it shall function for the purposes expressed in the
       Act. The Authority agrees that it will do or cause to be done all things
       necessary to preserve and keep in full force and effect its existence.

              (b) Under the provisions of the Act, the Authority has the power
       and authority to enter into the transactions contemplated by this Loan
       Agreement, the Indenture, the Placement Agent Agreement, the

                                       13
   18

Remarketing Agreement, and the Intercreditor Agreement and to carry out its
obligations hereunder and thereunder, and it has complied with all provisions of
the Act in all matters relating to such transactions.

              (c) The Authority, by proper action, has authorized the execution
       and delivery of this Loan Agreement, the Indenture, the Placement Agent
       Agreement, the Remarketing Agreement and the Intercreditor Agreement, the
       sale, issuance, execution and delivery of the Bonds, and the performance
       of its obligations hereunder and thereunder.

              (d) The Project constitutes and will constitute a "project" within
       the meaning of the Act.

              (e) Neither the execution and delivery of the Bonds, this Loan
       Agreement, the Indenture, the Placement Agent Agreement, the Remarketing
       Agreement and the Intercreditor Agreement, the consummation of the
       transactions contemplated thereby and hereby, nor the fulfillment of or
       compliance with the terms and conditions or provisions of the Bonds, this
       Loan Agreement, the Indenture, the Placement Agent Agreement, the
       Remarketing Agreement, or the Intercreditor Agreement conflict with or
       result in the breach of any of the terms, conditions or provisions of any
       constitutional provision or statute of the State or of any agreement,
       instrument, judgment, order or decree to which the Authority is now a
       party or by which it is bound, or constitutes a default under any of the
       foregoing, or results in the creation or imposition of any prohibited
       lien, charge or encumbrance of any nature or upon any property or assets
       of the Authority under the terms of any instrument or agreement.

              (f) There is no action, suit, proceeding, inquiry or investigation
       pending or, to the best of the Authority's knowledge, after due
       investigation, threatened against the Authority by or before any court,
       governmental agency or public board or body which (i) affects or seeks to
       prohibit, restrain or enjoin the sale, issuance, execution, delivery or
       payment of the Bonds, or the loan of the proceeds from the sale of the
       Bonds to the Company, or (ii) affects or seeks to prohibit, restrain or
       enjoin the execution, delivery or performance of this Loan Agreement, the
       Indenture, the Bonds, the Placement Agent Agreement, the Remarketing
       Agreement or the Intercreditor Agreement; or (iii) affects or questions
       the organization, powers or authority of the Authority to carry out the
       transactions contemplated by the Bonds, this Loan Agreement, the
       Indenture, the Placement Agent Agreement, the Remarketing Agreement or
       the Intercreditor Agreement or the right of the officers of the Authority
       to hold their respective offices; or (iv) affects or questions the
       validity or enforceability of this Loan Agreement, the Indenture, the
       Placement Agent Agreement, the Remarketing Agreement, the Intercreditor
       Agreement or the Bonds; or (v) questions the tax-exempt status of the
       Bonds.

                                       14
   19

              (g) The Authority will not take or permit any action to be taken
       which results in the interest paid on the Bonds being included in the
       gross income of the holder thereof (other than a "substantial user" or
       "related person") for purposes of Federal or State income taxation.

              (h) To lend financial assistance to the Company for the purposes
       of acquiring, constructing and equipping the Project, the Authority
       proposes to issue the Bonds in the principal amount of $4,200,000
       following the execution and delivery of this Loan Agreement. The date,
       interest rate, date of maturity, redemption provisions and other
       pertinent provisions with respect to the Bonds are as set forth in the
       Indenture, and such provisions are hereby incorporated herein.

              (i) Simultaneously herewith, the Authority's rights, title,
       interests and duties in and under this Loan Agreement will be assigned
       and conveyed to the Trustee (with certain reservations and exceptions
       noted in the Indenture), without recourse, as security for payment of the
       principal of, premium, if any, and interest on the Bonds.

              (j) Notwithstanding anything contained herein to the contrary, any
       obligation the Authority may hereby incur for the payment of money shall
       not constitute an indebtedness of the County or the State and shall not
       constitute or give rise to a pecuniary liability of the County or the
       State or a charge against the general credit or taxing powers of the
       County or the State, but shall be payable solely from the revenues,
       proceeds and receipts derived from this Loan Agreement.

              SECTION 2.2. REPRESENTATIONS AND WARRANTIES OF COMPANY. As of the
date hereof and the Bond Issuance Date, the Company hereby represents and
warrants as follows:

              (a) The Company is a corporation duly incorporated, validly
       existing and in good standing under the laws of the state of California.

              (b) The Company has full corporate power and authority to carry on
       its business as now conducted and to enter into this Loan Agreement and
       the other Company Documents and to obtain the Letter of Credit, and the
       execution and delivery of this Loan Agreement and the other Company
       Documents have been duly authorized by proper corporate action. This Loan
       Agreement and the other Company Documents constitute valid and legally
       binding obligations of the Company.

              (c) No consent or approval of any trustee or holder of any
       indebtedness or obligation of the Company or any Subsidiary, and no
       consent, approval, permission, authorization, order or license of any
       governmental authority is required to be obtained by the Company for: (i)
       the execution and delivery of this Loan Agreement and the other Company
       Documents and any instrument or agreement required of the Company
       hereunder; (ii) the fulfillment of and compliance with the provisions
       hereof;

                                       15
   20

       and (iii) the acquisition, construction and equipping of the Project,
       except as may have been obtained and certified copies of which have been
       delivered to the Authority.

              (d) The Company is not subject to any charter, by-law or
       contractual limitation or provision of any nature whatsoever which in any
       way limits, restricts or prevents the Company from entering into this
       Loan Agreement or the other Company Documents or from performing any of
       its obligations hereunder or thereunder, except to the extent that such
       performance maybe limited by bankruptcy, insolvency, reorganization or
       other laws affecting creditors' rights generally. Neither the execution
       and delivery of this Loan Agreement or the other Company Documents, and
       the consummation of the transactions contemplated hereby and thereby, nor
       the fulfillment of or compliance with the provisions hereof and thereof
       conflicts with, violates or will result in a material breach of any
       charter or by-law of the Company, any of the terms, conditions or
       provisions of any indenture, instrument or agreement to which the Company
       is a party or by which the Company is bound, or any statute, rule or
       regulation, or any judgment, decree or order of any court or agency
       binding on the Company or constitutes a default under any of the
       foregoing which has not been waived or consented to in writing by the
       appropriate party or parties, or results in the creation or imposition of
       any lien, charge, security interest or encumbrance of any nature
       whatsoever upon any of the property or assets of the Company not
       permitted under the terms of any restriction, agreement, instrument,
       statute, governmental rule or regulation, court order, judgment or
       degree.

              (e) There is no action, suit, proceeding, inquiry or investigation
       by or before any court, governmental agency or public board or body
       pending or, to the best knowledge of the Company threatened against the
       Company which (i) affects or seeks to prohibit, restrain or enjoin the
       issuance, sale or delivery of the Bonds or the loaning of the proceeds of
       the Bonds to the Company or the execution and delivery of the Company
       Documents, (ii) affects or questions the validity or enforceability of
       the Bonds, the Indenture, the Letter of Credit or the Company Documents,
       (iii) questions the tax-exempt status of the Bonds or (iv) questions the
       power or authority of the Company to carry out the transactions
       contemplated by, or to perform its obligations under, the Company
       Documents or the powers of the Company to own, acquire, construct, equip
       or operate the Project.

              (f) The proposed issuance of the Bonds by the Authority and the
       making of the Company Loan to the Company to finance the Project Costs
       have induced the Company to acquire, construct and equip the Project.

              (g) The Company has complied or will comply with all legal
       requirements relating to the Project and the operation, repair and
       maintenance of the Project, including (i) the attainment of any rezoning
       or variances, building, development and other permits and approvals, and

                                       16
   21

       licenses and other entitlements for use, and (ii) securing the issuance
       of any certificates of need, convenience and necessity or other
       certificates or franchises, and has provided the Authority with
       satisfactory evidence of such compliance.

              (h) The Company will not use any of the funds provided by the
       Authority hereunder, or any other funds, nor will it permit any of the
       funds provided by the Authority hereunder, or any other funds, to be used
       in a manner which would impair the exemption of interest on the Bonds
       from Federal or State income taxation.

              (i) When duly executed, this Loan Agreement, the other Company
       Documents and all other agreements entered into by the Company
       contemplated herein or in the Indenture will be enforceable against the
       Company according to their terms, except as may be limited by bankruptcy,
       insolvency, reorganization or other laws affecting creditors' rights
       generally.

              (j) The information and documents concerning the Company submitted
       to the Authority in or with the Company's application for financing and
       any supplements thereto were true and complete on the date of submission
       and are true and complete in all material respects on the Bond Issuance
       Date.

              (k) The audited financial statements of the Company submitted to
       the Authority with the Company's application for financing present fairly
       the financial position of the Company as of the dates indicated and the
       results of its operations for the periods specified, and such financial
       statements have been prepared in conformity with generally accepted
       accounting principles consistently applied to the periods involved,
       except as otherwise stated in the notes accompanying such financial
       statements.

              (1) Any unaudited financial statements of the Company submitted to
       the Authority in connection with the Company's application for financing
       present fairly the financial position of the Company as of the dates
       indicated and the results of its operations for the periods specified,
       subject to year-end adjustments, and such financial statements have been
       prepared on a basis consistent with prior interim periods.

              (m) As to any expenditures which the Company has heretofore made
       for purposes of acquiring, constructing and equipping the Project for
       which it seeks reimbursement from the Company Loan, such expenditures
       were made in anticipation of issuance of the Bonds and reimbursement from
       the proceeds thereof.

              (n) Prior to the Date of Official Action no earnest money
       agreement had been entered into, no contract had been awarded or entered
       into (except the agreement with the architect for the Project), no
       purchase order had been issued, no on-site or off-site renovations or
       installation had

                                       17
   22

       commenced with respect to any component of the Project, and no other
       physical work at the Project site for the purpose of acquiring,
       constructing or equipping the Project or any such component thereof had
       been commenced.

              (o) As of September 1, 1985, no component of the Project has
       reached a degree of completion which would permit operation of the
       Project at substantially the level for which it is designed, and, as of
       the said date, no component of the Project was, in fact, in operation at
       such level.

              (p) Any certificate signed by the Authorized Company
       Representative and delivered pursuant to this Loan Agreement or the
       Indenture shall be deemed to be a representation and warranty by the
       Company as to the statements made therein.

              SECTION 2.3. REPRESENTATIONS AND COVENANTS OF COMPANY AND
AUTHORITY WITH RESPECT TO FEDERAL AND CALIFORNIA PERSONAL INCOME TAX MATTERS AND
CAPITAL EXPENDITURES. The Authority is issuing the Bonds pursuant to an election
made by it under Section 103(b)(6)(D) of the Code, and, prior to the issuance
and delivery of the Bonds, the Authority will have made all necessary filings in
order to effect such election in accordance with Section 8.11 hereof. It is the
intention of the parties hereto that the interest on the Bonds shall be exempt
from federal income taxation and California personal income taxation and to that
end the Authority and the Company covenant with each other and with the Trustee
as follows:

              (a) The Company warrants that, except in connection with the
       issuance of the Bonds, neither the Company nor any Related Person of the
       Company has entered or will enter into any contract, agreement or
       understanding providing for the issuance of obligations of any political
       subdivision, agency, authority, instrumentality or company of a public or
       quasi-public nature to acquire facilities in the Applicable Jurisdiction,
       the Principal User of which is to be Company or any such Related Person
       and which obligations are to be issued on or prior to the Bond Issuance
       Date;

              (b) The Authority warrants that, except in connection with the
       issuance of the Bonds, it has not entered into and will not enter into
       any contract, agreement or understanding providing for the issuance of
       obligations by the Authority to acquire facilities in the Applicable
       Jurisdiction the Principal User of which is to be the Company or any
       person which, to the knowledge of the Authority, is a Related Person of
       the Company, and which obligations are to be issued on or prior to the
       Bond Issuance Date;

              (c) The Company warrants that there have never been issued any
       bonds or other obligations with respect to "facilities" described in
       Section 103(b)(6) of the Code, the Principal User of which facilities is
       the Company or one or more Related Persons to the Company which are
       located in the Applicable Jurisdiction, and which bonds or other
       obligations would be

                                       18
   23

       taken into account in determining the face amount of the Bonds, as
       provided in Section 103(b)(6)(D)(ii) of the Code;

              (d) The Company warrants that neither the Company nor any Related
       Person of the Company is a party to or shall enter into any contract,
       agreement or commitment which would require them or any of them to make
       or cause to be made any capital expenditures with respect to "facilities"
       described in Section 103(b)(6)(E) of the Code which are located in the
       Applicable Jurisdiction which would cause the interest on the Bonds to be
       subject to federal income taxation;

              (e) The Company will file in a timely manner all Supplemental
       Statements required by Treasury Regulation Section 1.103-10(b)(2)(vi)(c)
       as amended or supplemented from time to time. The Company shall furnish
       to the Trustee, within thirty (30) days after the filing thereof, true
       and complete copies of all Supplemental Statements;

              (f) The Authority and the Company each agree to comply fully,
       during the term of this Loan Agreement, with all effective rules, rulings
       and regulations promulgated by the Department of the Treasury or the
       Internal Revenue Service, with respect to bonds or other obligations
       issued under Section 103(b)(6)(D) of the Code, so as to maintain the
       tax-exempt status of interest on the Bonds, including, without
       limitation, the requirements of Treasury Regulation Section
       1.103-10(b)(2)(vi), as amended or supplemented concerning the filing of
       Supplemental Statements;

              (g) The Company warrants that (i) there are no Principal Users of
       the Project other than the Company, and (ii) there are no Related Persons
       to the Company which must be considered as Principal Users of the Project
       or other facilities located in the Applicable Jurisdiction by virtue of
       Section 103(b)(6)(E) of the Code. The Company covenants that neither it
       nor any Related Person is a Principal User of any facilities other than
       the Project in the Applicable Jurisdiction which must be taken into
       account with respect to the Bonds for purposes of section 103(b)(6)(A) of
       the Code;

              (h) The Company warrants that at least 95% of the proceeds of the
       Bonds, after the payments of the costs of issuance of the Bonds, will be
       used to pay or reimburse the Company for Qualified Project Costs; and

              (i) As of the Bond Issuance Date, the Company warrants that within
       the three (3)-year period preceding the Bond Issuance Date, no costs
       which are chargeable, for federal income tax purposes, to the capital
       account of any Person have been paid or incurred with respect to the
       Project or other facilities, of which the Company or any Related Person
       is a Principal User, located in the Applicable Jurisdiction, other than
       costs to be paid or reimbursed with the proceeds of the Bonds or costs
       listed in the certificate of the Authorized Company Representative
       furnished to the Authority on the Bond Issuance Date. The Company further
       covenants and agrees that neither it nor any other person will pay or
       incur within the

                                       19
   24

       three (3)-year period immediately succeeding the Bond Issuance Date any
       costs (other than costs to be paid or reimbursed with the proceeds of the
       Bonds) which are chargeable for federal income tax purposes to the
       capital account of any Person (hereinafter referred to as "Capital
       Expenditures"), with respect to the Project, or other facilities of which
       the Company or any Related Person is a Principal User located in the
       Applicable Jurisdiction which, if added to the principal amount of the
       Bonds and all prior Capital Expenditure including, but not limited to
       costs listed in the certificate of the Authorized Company Representative
       furnished to the Authority on the Bond Issuance Date which are not paid
       or reimbursed with the proceeds of the Bonds, would exceed $10,000,000.

              (j) The Company covenants and agrees that it will not use or
       permit the use of any of the funds provided by the Authority pursuant to
       this Loan Agreement, or any other funds of the Company, directly or
       indirectly, or direct the Trustee to invest any funds held by it under
       the Indenture or this Loan Agreement, in such a manner as would cause the
       Bonds to be treated as federally guaranteed within the meaning of Section
       103(h) of the Code.

              (k) The Company warrants that there are no "test period
       beneficiaries" of the Project (as defined in Section 103(b)(15)(D) of the
       Code) other than the Company and that the total outstanding face amount
       of all tax-exempt industrial development bonds of any Person with respect
       to facilities used by the Company or by any Related Person to the Company
       as of the Bond Issuance Date is $30,000. The Company covenants that
       neither it nor any Related Person is or will become a user of any
       facilities (other than the Project) with respect to which there were
       outstanding tax-exempt industrial development bonds on the Bond Issuance
       Date, if such use will result in a violation of Code Section 103(b)(15).
       The Company further covenants that it will not cause or allow the use of
       the Project by any Person during the three year period commencing on the
       date the Project is placed in service if the use of the Project by such
       Person will cause the requirements of Section 103(b)(15) of the Code to
       be violated.

              (l) The Company warrants that there are no other obligations
       heretofore issued or to be issued by or on behalf of any state, territory
       or possession of the United States, or any political subdivision of any
       of the foregoing, or of the District of Columbia, which constitute
       "industrial development bonds" within the meaning Section 103(b)(2) of
       the Internal Revenue Code of 1954, as amended (the "Code"), and which
       have been or are to be sold (1) at substantially the same time as the
       Bonds, (2) at substantially the same interest rate as the rate of
       interest on the Bonds, (3) pursuant to a common plan of marketing with
       the marketing of the Bonds, and (4) which are payable directly or
       indirectly by the Company or from a common or pooled security which is
       also used or available to pay debt service on the Bonds.

                                       20
   25

              (m) The Company covenants and agrees that it will promptly notify
       the Authority and the Trustee if it exceeds or intends to exceed the
       maximum capital expenditures in the Applicable Jurisdication permitted by
       Section 103(b)(6)(D) of the Code, or the maximum aggregate amount of
       tax-exempt industrial development bonds permitted by Section 103(b)(15)
       of the Code.

              (n) Neither the Authority nor the Company shall use or direct or
       permit the use of any of the proceeds of the Bonds in such a manner as
       to, or take or omit to take any action which would, cause the Bonds to be
       "arbitrage bonds" within the meaning of Section 103(c) of the Code and
       applicable regulations thereunder.

              (o) The Authority shall have filed prior to the issuance of the
       Bonds, the election required pursuant to Treasury Regulations
       1.103-10(b)(2)(vi)(a) to have Section 103(b)(6) of the Code apply to the
       Bonds.

              (p) The Authority shall file or cause to be filed Internal Revenue
       Service Form 8038 as required by Code.

              SECTION 2.4. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties set forth in this Article II shall remain in full
force and effect at and shall survive delivery of the Bonds.

                                   ARTICLE III

                     ISSUANCE OF THE BONDS; THE COMPANY LOAN

              SECTION 3.1. AGREEMENT TO ISSUE THE BONDS; APPLICATION OF
PROCEEDS. The Authority agrees to sell, issue and cause to be delivered to the
purchasers thereof the Bonds for the purpose of making the Company Loan. The
Authority further agrees to deposit all proceeds received from said sale with
the Trustee in accordance with Section 303 of the Indenture. The Company hereby
approves the sale, issuance and delivery of the Bonds as described in the
Indenture.

              SECTION 3.2. AGREEMENT TO MAKE THE COMPANY LOAN. Subject to the
terms and conditions of this Loan Agreement and in reliance upon the
representations and warranties of the Company set forth herein, the Authority
hereby agrees to lend to the Company the sum of $4,200,000 (the "Company Loan"),
derived solely from the proceeds of the Bonds and the Company hereby agrees to
borrow said sum from the Authority pursuant to this Loan Agreement, which sum
shall be used by the Company exclusively for payment of Project Costs. The
obligation of the Authority to make the Company Loan as herein provided shall be
subject to the receipt by it of the proceeds of issuance and sale of the Bonds.

                                       21
   26

The Loan shall mature on August 29, 2005. The Loan shall bear interest on the
principal amount outstanding from time to time at the rate which at all times
equals the rate of interest on the Bonds, as established pursuant to the
Indenture. Interest shall be due and payable on the third Business Day
immediately preceding each Interest Payment Date as provided in Section 4.1
hereof.

              SECTION 3.3. DISBURSEMENTS FROM THE CONSTRUCTION FUND. Pursuant to
the terms of, and on the conditions set forth in the Indenture, the Authority
has authorized and directed the Trustee to disburse amounts in the General
Earnings Account and the Excess Earnings Account of the Earnings Fund and
amounts in the Construction Fund for the payment of Project Costs or to
reimburse the Company for any Project Costs incurred by it. Such disbursement
shall be made by the Trustee as follows:

              (a) prior to the Completion Date, the Trustee shall disburse to
       the Bank first from the Excess Earnings Account and the General Earnings
       Account of the Earnings Fund, then from the Construction Fund,
       immediately upon receipt by the Trustee of the proceeds of a draw upon
       the Letter of Credit representing a payment of interest on the Company
       Loan, an amount equal to the amount of such draw;

              (b) for payment of Project Costs other than interest on the
       Company Loan, the Trustee shall disburse funds first from the Excess
       Earnings Account and General Earnings Account in the Earnings Fund, then
       from the Construction Fund upon receipt of a Funding Requisition signed
       by the Authorized Company Representative, and approved by an Authorized
       Bank Representative in the form attached hereto as Exhibit B, with
       respect to each requested disbursement; and

              (c) in the event the Company elects to prepay the Company Loan
       pursuant to Section 4.6(a) hereof, the Trustee shall disburse to the Bank
       all amounts remaining on deposit in the Construction Fund, immediately
       upon receipt by the Trustee of the proceeds of a draw upon the Letter of
       Credit representing the amount of the prepayment.

              In making any disbursement from the Earnings Fund or the
Construction Fund pursuant to Subsection 3.3(b) hereof, the Trustee may rely on
any Funding Requisition delivered to it pursuant to this Section, and shall be
relieved of any liability with respect to the disbursement of funds pursuant to
any such Funding Requisition.

              Notwithstanding anything to the contrary contained herein, neither
the Authority nor the Company shall cause the proceeds of the Bonds to be used
in any manner which would result in the loss of the exemption from Federal
income taxation under Section 103(b)(6)(D) of the Code of the interest on the
Bonds.

              SECTION 3.4. FURNISHING DOCUMENTS TO TRUSTEE. The Company shall
prepare and submit to the Trustee the documents referred to in Section 3.3
hereof as required pursuant thereto, and such additional documentation with
respect to disbursements from the Earnings Fund or the Construction Fund as the
Trustee may reasonably request.

                                       22
   27

              SECTION 3.5. INVESTMENT OF MONEY. Except as otherwise provided in
this Loan Agreement or the Indenture, any money held in any Funds or Accounts at
any time held by the Trustee shall, in the manner provided in Article V of the
Indenture, be invested or reinvested by the Trustee at the written request of
and as directed by the Company, solely in Permitted Investments. Notwithstanding
the foregoing, all monies on deposit in the Special Redemption Account if
invested, shall be invested solely in obligations of a state, territory or
possession of the United States or any political subdivision of the foregoing,
the interest on which is exempt from federal income taxation under Section
103(a) of the Code, and all monies on deposit in the Bond Payment Account of the
Bond Fund and the Purchase Fund shall be held as cash or invested in Government
Obligations maturing at such time or times as said monies shall be needed for
the purposes for which they were deposited, but in no event shall such
Government Obligations have a maturity in excess of thirty (30) days.

              SECTION 3.6. SPECIAL ARBITRAGE COVENANTS.

              (a) The Company hereby covenants and represents to the Authority,
and, based upon said representations, the Authority and the Company jointly and
severally covenant with all purchasers and owners of the Bonds, that until the
last Bond shall have been paid or redeemed, the Authority and the Company will
comply with all requirements of Section 103(c)(6) of the Code and all applicable
Regulations. The Company and the Authority further specifically agree that:

              (1) The Company shall deposit or cause to be deposited with the
       Trustee, for credit to the General Earnings Account of the Earnings Fund,
       all interest, profits and other income attributable to the investment of
       Gross Proceeds in Nonpurpose Obligations (other than (i) Gross Proceeds
       paid to the Authority pursuant to Section 4.4 hereof and (ii) Gross
       Proceeds invested in the Excess Earnings Account.)

              (2) Except with respect to Gross Proceeds invested during an
       applicable temporary period, as expressly permitted under the
       Regulations, neither the Company nor the Authority, with respect to Gross
       Proceeds under its control, will allow Gross Proceeds of the Bonds in an
       amount greater than 150% of the Annual Debt Service for any Bond Year to
       be invested during such Bond Year in Nonpurpose Obligations with a Yield
       in excess of the Yield on the Bonds. The Company will make all
       computations required to ensure compliance with the foregoing investment
       limitation and will instruct the Trustee in writing with respect to any
       sale or disposition of Nonpurpose Obligations required to comply with
       such investment limitation.

              (3) On each Computation Date, the Company will compute the
       Investment Excess for the preceding twelve month period. Immediately
       thereafter, the Company will instruct the Trustee in writing to transfer
       such Investment Excess (to the extent not previously expended to pay
       Project Costs or debt service on the Bonds) from the General Earnings
       Account to the Excess Earnings Account of the Earnings Fund.

                                       23
   28

              (4) No later than twenty-nine (29) days from the fifth Computation
       Date and every fifth Computation Date thereafter, the Company will
       transfer to the Trustee for payment to the United States Government an
       amount that, when added to any amount held in the Excess Earnings Account
       on such date plus the amount of all prior payments under this Section
       3.6, equals at least 90% of the Rebate Amount for the period from the
       date of issuance through such Computation Date. No later than thirty (30)
       days after the day on which the last Bond is paid or redeemed, the
       Company will transfer to the Trustee for payment to the United States
       Government an amount that, when added to any amount held in the Excess
       Earnings Account on such date plus all prior payments under this Section
       3.6, equals 100% of the Rebate Amount for the period from the date of
       issuance through the retirement date.

              (5) Neither the Company nor the Authority will (i) invest Gross
       Proceeds or cause Gross Proceeds to be invested in Nonpurpose
       Obligations, if the Yield on such Nonpurpose Obligations would be less
       than the Yield that would have resulted from an arm's length transaction,
       or (ii) sell or otherwise dispose of or cause to be sold or otherwise
       disposed of Nonpurpose Obligations, if such sale or disposition would
       result in a smaller profit or larger loss than would have resulted from a
       sale at fair market value arrived at in an arm's length transaction.

              (6) No later than March 4, 1986, the Authority will expend (i) all
       Gross Proceeds received by it pursuant to Section 4.4 hereof, and (ii)
       all income, profits and other earnings attributable to the investment of
       such Gross Proceeds in Nonpurpose Obligations. The Authority will use its
       best efforts to appropriate an amount equal to the Investment Excess
       earned by the Authority from the investment of such Gross Proceeds in
       Nonpurpose Obligations and to pay such amount to the Company no later
       than five (5) days prior to the first date on which the Company is
       obligated to make a payment to the Trustee pursuant to Section 3.6(a)(3)
       hereof.

              (7) The Company and, as appropriate, the Authority will comply in
       all respects with the Special Arbitrage Instructions attached as Exhibit
       D hereto.

              (8) The Company shall retain all records with respect to the
       calculations required by Sections 3.6(a)(2) and 3.6(a)(3) hereof for at
       least six years after the date on which the principal of and interest on
       the Bonds has been paid in full, whether upon maturity, redemption or
       acceleration thereof.

              (9) The Company will value each Nonpurpose Obligation at its fair
       market value on and as of the date such obligation is acquired with Gross
       Proceeds or otherwise becomes a Nonpurpose Obligation.

                                       24
   29

              (b) Notwithstanding any provision of this Section 3.6, if the
Company shall provide to the Trustee and the Authority an opinion of Bond
Counsel that any action required by this Section 3.6 or the Special Arbitrage
Instructions is no longer required or that some further action is required to
maintain the exclusion from federal income tax of interest on the Bonds, the
Trustee and the Authority may rely conclusively on such opinion in complying
with the requirements of this Section 3.6 and the Special Arbitrage
Instructions, and the covenants hereunder shall be deemed modified to that
extent.

              (c) Notwithstanding any provision of this Section 3.6, if within
six months from the date of issuance of the Bonds, (i) the Company delivers to
the Authority and the Trustee a certification to the effect that all Gross
Proceeds of the Bonds (excluding amounts in the Bond Fund) have been expended
and that it is not anticipated that other Gross Proceeds will arise during the
term of the Bonds and (ii) the Trustee and the Authority no longer hold any
Gross Proceeds of the Bonds, the provisions of this Section 3.6 shall no longer
be deemed applicable and no action required by this Section 3.6 need be taken;
provided, however, that should Gross Proceeds (other than amounts in the Bond
Fund) arise at any time thereafter, the provisions of this Section 3.6 shall
apply to such Gross Proceeds. For purposes of this Subsection 3.6(c), the
Authority and the Trustee may request, receive and rely with acquittance on an
opinion of Bond Counsel to the effect that the Trustee and the Authority no
longer hold any Gross Proceeds of the Bonds.

              SECTION 3.7. NO FEDERAL GUARANTEE. Notwithstanding any other
provision of this Loan Agreement, all money held by the Trustee after September
1, 1988, in any of the funds or accounts established pursuant to the Indenture
shall, at the written direction of the Company, be (a) invested solely as part
of a bona fide debt service fund or of a reserve fund which meets the
requirements of Section 103(c)(4)(B) of the Code, or (b) invested solely in
Government Obligations, unless the Company shall have furnished the Trustee a
ruling of the Internal Revenue Service or an opinion of Bond Counsel to the
effect that a proposed investment will not cause the interest on the Bonds to be
subject to federal income taxation or California income taxation.

                                   ARTICLE IV

                             COMPANY LOAN REPAYMENT

              SECTION 4.1. PROVISIONS FOR REPAYMENT OF LOAN. The Company shall
repay the Company Loan and interest thereon by payments in immediately available
funds to the Trustee for deposit into the Revenue Fund as provided in Article
III of the Indenture on the date payment is due by 10:00 a.m. Los Angeles time
at its office in Los Angeles, California or at such other place within the
continental United States as the Trustee may direct in writing.

              The Company covenants and agrees to repay the Company Loan,
together with interest and premium, if any, thereon, in payments in an amount
which, together with other money available therefor under the Indenture, will be

                                       25
   30

sufficient to pay the interest, principal, and premium, if any, on the
Outstanding Bonds, which will become due on each respective payment date.

              Notwithstanding any payments made pursuant to the provisions of
this Loan Agreement, if, on any date when interest, principal, or premium, if
any, is to be paid, the balance in the Bond Fund available for such payment is
insufficient to make the required payments on such date, the Company shall make
an additional payment on such date in immediately available funds in the amount
of such deficiency.

              The obligation of the Company to make any payment hereunder with
respect to the Company Loan and the Bonds shall be deemed satisfied and
discharged to the extent of any Seasoned Funds applied by the Trustee to such
obligation pursuant to the terms of the Indenture, to the extent of any monies
applied by the Trustee to the payment of Company Bonds pursuant to the terms of
the Indenture, and to the extent of payments made by the Bank to the Trustee
under the Letter of Credit.

              SECTION 4.2. PROVISIONS FOR PAYMENT OF PURCHASE PRICE. The Company
shall pay, or cause to be paid, to the Trustee and the Tender Agent such amounts
as shall be necessary to enable the Trustee and the Tender Agent to pay the
purchase price of Bonds delivered for purchase pursuant to Sections 1301 and
1302 of the Indenture, such amounts to be paid by the Company to the Trustee and
the Tender Agent on the dates such payments pursuant to Sections 1301 and 1302
of the Indenture are to be made; provided, however, that the obligation of the
Company to make any such payment hereunder shall be reduced by the amount of any
money available for such payment under Subsection 1307(b)(i) of the Indenture;
and provided, further, that the obligation of the Company to make any payment
hereunder shall be deemed to be satisfied and discharged to the extent of the
corresponding payment made by the Bank under the Letter of Credit pursuant to
Section 4.7 hereof.

              SECTION 4.3. CREDITS. Anything herein to the contrary
notwithstanding, any monies held by the Trustee in the Company Bond Account in
the Bond Fund for the payment of principal of, premium, if any, and interest on
Company Bonds, any Seasoned Funds at any time held by the Trustee in the Special
Redemption Account and the Bond Payment Account in the Bond Fund for the payment
of principal of, premium, if any, and interest on the Bonds (other than Company
Bonds), and any Seasoned Funds on deposit in the Purchase Fund and any monies
delivered to the Trustee pursuant to Subsection 1307(b)(i) of the Indenture for
the payment of the purchase price of Bonds tendered for purchase pursuant to
Section 1301 or 1302 of the Indenture shall be credited against the next
succeeding payment referred to in Section 4.1 and 4.2 hereof and shall reduce
such payment to the extent such amount is in excess of any amount required for
payment of any principal or interest on the Bonds due but not yet paid or the
purchase price of Bonds; and, provided, further, that if the amount of Seasoned
Funds held by Trustee in the Special Redemption Account and the Bond Payment
Account in the Bond Fund should be sufficient to pay at the times required, the
principal of, premium, if any, and interest on the Bonds

                                       26
   31

(other than Company Bonds) then remaining unpaid and any other payments required
hereunder, the Company shall not be obligated to make any further payments
provided for in Section 4.1. or 4.2 hereof.

              SECTION 4.4. OTHER PAYMENT OBLIGATIONS OF COMPANY. The Company
shall make prompt payment of all amounts payable pursuant to this Loan Agreement
when and as such payments become due. In addition, until payment in full of the
Bonds shall have been made, the Company shall pay all Administration Expenses.

              The Company agrees to pay directly to the Trustee, until payment
in full of the Bonds shall have been made: the Ordinary Expenses and
Extraordinary Expenses of the Trustee for acting hereunder and under the
Indenture and the Intercreditor Agreement (including acting as paying agent and
registrar for the Bonds) as defined in the Indenture, the reasonable fees and
expenses of Trustee's Counsel, and any applicable fees of the California
Industrial Development Financing Advisory Commission and the Authority.

              SECTION 4.5. MANDATORY PREPAYMENT OF THE COMPANY LOAN. The Company
Loan is subject to mandatory prepayment in whole at a prepayment price equal to
the principal amount thereof, together with accrued interest to the date fixed
for redemption of the Bonds to be redeemed with such prepayment on the day
selected by the Trustee to redeem Bonds after the Trustee has received notice of
a Determination of Taxability.

              The Company's obligation to make any payments under this Section
4.5 shall be deemed satisfied and discharged to the extent of the corresponding
payment made by the Bank under the Letter of Credit. The Trustee shall deposit
and use prepayments of the Company Loan pursuant to this Section in accordance
with Section 306(A) of the Indenture.

              SECTION 4.6. OPTIONAL PREPAYMENT OF THE COMPANY LOAN.

              (a) In the event any monies remain in the Construction Fund on
February 1, 1986, the Company may, at its option, prepay the Company Loan in an
amount equal to the amount of monies remaining in the Construction Fund together
with accrued interest to the date on which Bonds will be redeemed with such
payment, on the third Business Day immediately preceding the first date for
which notice of redemption of Bonds to be redeemed with such prepayment can be
timely given, provided however, that in the event the amount of monies on
deposit in the Construction Fund is not an integral multiple of $5,000, such
prepayment shall be in an amount equal to the next greater integral multiple of
$5,000.

              (b) The Company may also, at its option, prepay the Company Loan
in whole or in part, in any integral multiple of $100,000 prior to the
Conversion Date, or in any integral multiple of $5,000 subsequent to the
Conversion Date from Net Proceeds of insurance or condemnation 126 days
immediately

                                       27
   32

preceding the date on which notice of redemption of Bonds to be redeemed with
such prepayment is given.

              (c) The Company, at its option, may prepay the Company Loan, prior
to the Conversion Date, in whole or in part (other than from Net Proceeds of
insurance or condemnation), in any integral multiple of $100,000, together with
accrued interest to the date on which Bonds will be redeemed with such payment,
126 days preceding the date on which notice of redemption of Bonds to be
redeemed with such prepayment is given.

              (d) The Company may also, at its option, prepay the Company Loan,
in whole or in part (other than from Net Proceeds of insurance or condemnation),
126 days preceding the date on which notice of redemption of Bonds to be
redeemed with such prepayment is given, in any integral multiple of $5,000, at
the prepayment prices set forth below, expressed as a percentage of the
principal amount prepaid, together with accrued interest to the redemption date:

       Redemption Date
       (Measured in terms of years                                  Prepayment
       following Conversion Date)                                     Prices
       --------------------------                                   ----------
                                                                 
       September 1 of the fifth year through
       the next succeeding August 31                                   103%

       September I of the sixth year through
       the next succeeding August 31                                   102

       September 1 of the seventh year through
       the next succeeding August 31                                   101

       September 1 of the eight year and
       thereafter                                                      100

              Except for prepayments made pursuant to Subsection 4.6(a) hereof,
which shall be made from the proceeds of a draw upon the Letter of Credit, any
optional prepayment of the principal of the Company Loan must be made by the
Company to the Trustee at least 126 days prior to the date on which the Trustee
mails notice of redemption of the Bonds to be redeemed with such prepayment,
unless the Bank shall have delivered to the Trustee its written consent to a
draw on the Letter of Credit for purposes of paying the principal amount of such
prepayment. Any prepayment premium on the Company Loan must be deposited by the
Company with the Trustee at least 126 days prior to the date on which the
Trustee mails notice of redemption of the Bonds to be redeemed with such
prepayment. The Trustee shall deposit and use prepayments of the Company Loan
pursuant to this Section 4.6 in accordance with Section 305(B) of the Indenture.
On the date of such payment, the Company shall give written notice to the
Authority, the Bank and the Trustee of the principal amount to be optionally
prepaid on the applicable redemption date. No optional prepayment

                                       28
   33

shall occur if an Act of Bankruptcy occurs within the 126-day period prior to
the date notice of redemption is mailed. In such event, the Trustee shall
deliver the funds of the Company furnished to it pursuant to this Section 4.6 to
the Bank.

              If, prior to the Conversion Date the principal amount of any
optional prepayment in part shall not be an integral multiple $100,000 in the
case of an optional prepayment (other than an optional prepayment pursuant to
Subsection 4.6(a) hereof) then the required principal amount of such prepayment
shall be deemed to be the next greater integral multiple of $100,000; provided,
further if, following any such prepayment there shall be Outstanding any Bond of
a denomination less than $500,000, then the required principal amount of any
optional prepayment shall be deemed to be not less than $500,000. If, subsequent
to the Conversion Date, or in the case of any optional prepayment pursuant to
Subsection 4.6(a) hereof, the principal amount of any optional prepayment in
part shall not be an integral multiple of $5,000, then the required principal
amount of such prepayment shall be deemed to be the next greater integral
multiple of $5,000, and any premium in connection with such prepayment shall be
calculated using such greater amount.

              SECTION 4.7. LETTER OF CREDIT.

              (a) To secure its obligations to repay the Company Loan and its
other obligations, agreements and covenants to be performed and observed
hereunder, the Company hereby agrees to obtain the Letter of Credit and to do
all things necessary to keep the Letter of Credit or Substitute Letter of Credit
in full force and effect until the Company Loan is repaid in full.

              (b) To satisfy the Company's obligations under Sections 4.1 and
4.2 hereof (other than with respect to Company Bonds), the Trustee shall and is
hereby directed by the Company to, draw upon the Letter of Credit as follows:

                            (i) to the extent Seasoned Funds in the Bond Fund,
              as described in Section 306 of the Indenture are not available to
              pay interest on the Bonds (other than Company Bonds), when due on
              any Interest Payment Date, the Trustee shall draw upon the Letter
              of Credit no later than 10:00 a.m. Los Angeles time on the fourth
              Business Day immediately preceding such Interest Payment Date;

                            (ii) to the extent Seasoned Funds in the Bond Fund
              as described in Section 306 of the Indenture are not available to
              pay principal of the Bonds (other than Company Bonds), when due
              (whether by reason of maturity redemption, acceleration or
              otherwise) the Trustee shall draw upon the Letter of Credit no
              later than 10:00 a.m. Los Angeles time on the fourth Business Day
              immediately preceding such maturity date or date fixed for
              redemption; and

                            (iii) to the extent monies described in Section
              1307(b)(i) and 1307(b)(ii) of the Indenture are not available to
              pay when due the principal of and accrued interest on Bonds
              tendered for purchase

                                       29
   34

              pursuant to Section 1301 or 1302 of the Indenture, the Trustee
              shall draw upon the Letter of Credit no later than 10:00 a.m. Los
              Angeles time on the fourth Business Day immediately preceding the
              purchase date with respect to such Bonds.

              In computing the amount of any drawing to pay interest on the
Company Loan pursuant to Subsection 4.7(b)(i) or 4.7(b)(iii) hereof, the Trustee
shall assume that interest on the Bonds will accrue at the Maximum Interest Rate
during any period for which the Remarketing Agent has not yet determined the
Adjustable Interest Rate pursuant to Section 203 of the Indenture.

              The Trustee shall immediately give telephonic or telegraphic
notice to the Company, the Authority, and the Bank upon failure of the Trustee
to receive the proceeds of any draw upon the Letter of Credit in accordance with
the terms of the Letter of Credit.

              (c) The Company may, at its election and with the consent of the
Bank, provide for one or more extensions of the Letter of Credit or provide a
Substitute Letter of Credit pursuant to Section 4.7(d) hereof. Any Substitute
Letter of Credit shall be delivered to the Trustee not less than thirty (30)
days prior to the expiration of the term of the Letter of Credit.

              (d) In the event that the Company shall deliver to the Trustee (i)
a Substitute Letter of Credit (A) that is effective from a date not later than
the date of the expiration of the Letter of Credit and extends to a period of
one year or integral multiple thereof from the date of such expiration, (B) that
has a stated amount equal to not less than the principal amount of the Bonds
Outstanding plus 46 days' interest thereon at the Maximum Interest Rate or, in
the case of a Post-Conversion Letter of Credit, a stated amount equal to the
principal amount of the Bonds Outstanding, plus 186 days' interest at the Fixed
Interest Rate, and, (C) that has terms relating to the ability of the Trustee to
make drawings thereunder that are substantially identical to those of the Letter
of Credit, (ii) an opinion of Bond Counsel stating that the delivery of such
Substitute Letter of Credit to the Trustee is authorized under this Loan
Agreement and that such Substitute Letter of Credit complies with the terms
hereof, (iii) opinions of Counsel in form and substance satisfactory to the
Trustee to the effect that (A) the Substitute Letter of Credit is the valid and
binding obligation of the Bank, enforceable against the Bank in accordance with
its terms, except insofar as its enforceability may be limited by any insolvency
or similar proceedings applicable to the Bank or by proceedings affecting
generally the rights of the Bank's creditors, and that (B) a payment on the
Bonds from the proceeds of a drawing on the Substitute Letter of Credit will not
constitute a voidable preference under the Federal Bankruptcy Code or under
other applicable laws and regulations in the event of a bankruptcy or insolvency
of any entity other than the Bank; and (iv) written evidence from Moody's to the
effect that such rating agency has reviewed the proposed Substitute Letter of
Credit and that the substitution of the proposed Substitute Letter of Credit for
the Letter of Credit will not, by itself, result in a reduction of its ratings
of the Bonds from those which then prevail, and if the administrative provisions
of such Substitute

                                       30
   35

Letter of Credit are reasonably satisfactory to the Trustee, acting in good
faith, the Trustee shall accept such Substitute Letter of Credit and promptly
surrender the Letter of Credit to the Bank for cancellation.

              SECTION 4.8 AUTHORITY SECURITY DOCUMENTS. To further secure its
obligations to repay the Company Loan and its other obligations, agreements and
covenants to be performed and observed hereunder the Company will execute and
deliver to the Authority concurrently herewith, the First Deed of Trust and the
First Fixture Filing, duplicate originals of which shall have been duly recorded
in the Official Records of the County, the First Security Agreement, and the
First Financing Statement, a duplicate original of which shall have been duly
filed in the Office of the California Secretary of State.

              SECTION 4.9. OBLIGATIONS ABSOLUTE AND UNCONDITIONAL. All of the
obligations of the Company under this Loan Agreement, including, but not limited
to, the obligations to make the payments required to be made under this Loan
Agreement and to perform and observe the other covenants, terms and conditions
applicable to it contained herein shall be absolute and unconditional and shall
not be subject to diminution by set-off, counterclaim, abatement or otherwise
until such time as the principal of and interest on the Bonds shall have been
paid fully or provision for the payment thereof shall have been made in
accordance with this Loan Agreement and the Indenture. The Company (a) will not
suspend or discontinue any payments required to be made under this Loan
Agreement except to the extent the same have been prepaid, (b) will perform and
observe all its other covenants, terms and conditions contained in this Loan
Agreement and (c) except as provided in Section 4.6 hereof, will not terminate
this Loan Agreement for any cause, including, without limiting the generality of
the foregoing, failure to complete the Project, any acts or circumstances that
may constitute failure of consideration, sale, loss, destruction or condemnation
of or damage to the Project or commercial frustration of purposes, any change in
the tax or other laws of the United States of America or of the State or any
political subdivision of either or any failure of the Authority to perform and
observe any covenant, term or condition whether express or implied, or any duty,
liability or obligation arising out of or in connection with this Loan
Agreement. The Company hereby waives to the extent permitted by law, any and all
rights which it may now have or which at any later time may be conferred upon
it, by statute or otherwise, to terminate or cancel, or to limit its liability,
except as provided in Section 4.6 hereof. Nothing contained in this Section
shall be construed to release the Authority from the performance of any of the
covenants, terms or conditions applicable to it contained herein; and in the
event the Authority should fail to perform any such covenant, term or condition
the Company may institute such action against the Authority as the Company may
deem necessary to compel such performance so long as such action does not result
in a breach of the covenants and conditions on the part of the Company contained
in this Section.

                                       31
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                                    ARTICLE V

                                   THE PROJECT

              SECTION 5.1. COMPANY COVENANTS CONCERNING THE PROJECT. (a) The
Company agrees that the acquisition, construction and equipping of the Project
will be completed with all reasonable dispatch and that it will exercise due
diligence in completing the Project, but if for any reason the Project is not
completed, there shall be no resulting liability on the part of the Authority
and no diminution in or postponement of the Company's obligation to make any
payments required under this Loan Agreement. The Company agrees to make,
execute, acknowledge and deliver, or cause to be made, executed, acknowledged
and delivered, any contracts, orders, receipts, writings and instructions with
any Persons and in general to do all things which it deems requisite or proper
to accomplish the timely completion of the Project.

              (b) The acquisition, construction, equipping and completion of the
Project shall be accomplished in accordance with the Project Summary, as amended
from time to time by the Company and approved by the Authority; provided,
however, that no material amendment shall be made in the Project Summary unless
there shall be filed with the Authority and the Trustee an opinion of Bond
Counsel satisfactory to the Trustee stating that such amendment and the
expenditure of money from the Construction Fund to pay Project Costs in
accordance with the Project Summary as amended will not change the nature of the
Project as a "project" within the meaning of the Act and will not impair the
exemption of the interest on the Bonds from Federal income taxation pursuant to
Section 103(b)(6)(D) of the Code.

              (c) In the event the monies in the Construction Fund and the
Earnings Fund available for payment of the Project Costs are insufficient to pay
the Project Costs in full, the Company agrees for the benefit of the Authority
and the Owners of the Bonds to complete the Project or to cause the Project to
be completed and to pay or cause to be paid that portion of the Project Costs in
excess of the money available therefor in the Construction Fund and the Earnings
Fund; provided that no such payment shall be made by the Company hereunder which
would result in the loss of the exemption from federal income taxation of
interest on the Bonds. In the case of any such amounts the Company proposes to
cause to be provided by others, the Company shall provide satisfactory evidence
to the Authority that such amounts will be provided when required to complete
the Project in a timely manner.

              The Authority disclaims any warranty, express or implied, that the
money which will be paid into the Construction Fund and the Earnings Fund will
be sufficient to pay all Project Costs. The Company agrees that if, after
exhaustion of the money in the Construction Fund and the Earnings Fund, it
should pay any portion of the Project Costs pursuant to the provisions of this
Section, it shall not be entitled to any reimbursement therefor from the
Authority, from the Trustee or from the owners of the Bonds, nor shall it be
entitled to any diminution in or postponement of its obligations, or any amounts
payable by it hereunder.

                                       32
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              SECTION 5.2. ESTABLISHMENT OF COMPLETION DATE. The Completion Date
shall be evidenced to the Trustee by a Certificate signed by the Authorized
Company Representative in the form attached hereto as Exhibit C. The Company
shall deliver the Completion Certificate to the Trustee as soon as practicable
after the completion of the Project.

              Upon receipt of the Completion Certificate, the Trustee shall
retain in the Construction Fund a sum equal to the amounts, if any, necessary
for the payment of Project Costs not then due and payable to the extent such
amounts are set forth and identified as such in the Completion Certificate; the
remaining amounts in the Project Fund shall immediately be transferred by
Trustee into the Special Redemption Account in the Bond Fund unless, in the
opinion of Bond Counsel another use of such funds will not impair the exemption
of interest on the Bonds from Federal or State income taxation. Amounts held in
the Special Redemption Account shall be invested at the written direction of the
Company solely in obligations of a state, territory or a possession of the
United States or any political subdivision of the foregoing, the interest on
which is exempt from federal income taxation under Section 103(a) of the Code.
Money in the Special Redemption Account shall be applied to make the principal
payments on or to redeem the Bonds at the earliest redemption date permitted by
the Indenture, and the Authority and the Company consent to any such redemption.
The Company shall pay any costs incurred with respect to such redemption,
including any premium required by the Indenture to be paid on such redemption.
Any amounts remaining in the Special Redemption Account as of the maturity date
of the Bonds may be used to make all or a portion of the principal payment due
on such date.

                                   ARTICLE VI

                        COVENANT TO COMPLY WITH INDENTURE

              SECTION 6.1. FINANCING STATEMENTS; FURTHER ASSURANCES. The Company
agrees to execute and file or cause to be executed and filed any and all
financing statements or amendments thereof or continuation statements necessary
to perfect and continue the perfection of the security interests granted in the
Indenture. The Company shall pay all costs of filing such instruments. The
Company further agrees to cause the Trustee to execute or join in the execution
of any such further or additional instruments and file or join in the filing
thereof at such time or times and in such place or places as may be necessary to
preserve the lien of the Indenture on the Trust Estate, or any part thereof,
subject to the provisions of Section 704 of the Indenture.

              SECTION 6.2. PAYMENTS ASSIGNED AND PLEDGED. The Company
understands and agrees that all payments required to be made to the Authority
under this Loan Agreement, and all right, title and interest of the Authority in
and to this Loan Agreement (other than the rights of the Authority pursuant to
Sections 4.4 and 8.2 hereof), are assigned and pledged to the Trustee under the
Indenture. The Company consents to such assignment and further agrees that all
payments under this Loan Agreement, unless otherwise specifically provided
herein, shall

                                       33
   38
be paid directly to the Trustee for the account of the Authority and shall be
applied as set forth herein and in the Indenture.

              SECTION 6.3. COMPANY'S PERFORMANCE UNDER INDENTURE. The Company
shall, for the benefit of the Owners of the Bonds and the Trustee, do and
perform all acts and things that are to be done or performed by it under the
terms of the Indenture.

                                  ARTICLE VII

                 INSURANCE, DAMAGE, DESTRUCTION AND CONDEMNATION

              SECTION 7.1. INSURANCE. The Company agrees that it will at its own
expense obtain and maintain extended insurance coverage with respect to the
Project insuring against loss or damage from such perils usually insured against
by businesses operating or owning like properties, and shall maintain public
liability insurance and all workmen's compensation or other similar insurance as
may be required by law. Prior to the Completion Date, the Company will at its
own expense maintain builders' risk or such other similar insurance. The Company
will cause the Trustee to be named as loss payee or as an additional insured
under such coverage.

              All such insurance shall be placed with generally recognized
responsible insurance companies organized under the laws of one of the states of
the United States and qualified to do business in the State. All policies of
fire and extended coverage insurance may be written with deductible amounts as
now provided in the existing policies of the Company or as may be from time to
time consistent with customary insurance practices in the industry.

              Upon execution and delivery of this Loan Agreement, and thereafter
not less thirty (30) days prior to the expiration dates of any policies, if
requested by the Authority, the Company shall deliver to the Authority
certificates issued by the respective insurers of the policies obtained by the
Company in accordance with this Section. If requested in writing by the
Authority, the Company shall furnish the Authority with a schedule of premium
payment dates and receipted bills or other evidence satisfactory to the
Authority of the payment when due of all premiums for all policies of insurance
at any time required to be maintained hereunder. Upon reasonable prior written
notice, the Company will permit the Authority or the Trustee to visit the
offices of the Company and inspect the Company's insurance records, including
all policies of insurance maintained pursuant to this Loan Agreement, and to
make copies of all or any part thereof.

              SECTION 7.2. DAMAGE, DESTRUCTION AND CONDEMNATION. If prior to
full payment of the Bonds (or provision for payment thereof in accordance with
the provisions of the Indenture) (a) the Project or any portion thereof are
destroyed (in whole or in part) or are damaged by fire or other casualty, or (b)
title to, or the temporary use of, the Project or any portion thereof shall be
taken under the exercise of the power of eminent domain by any governmental body
or by any

                                       34
   39

person, firm or company acting under governmental authority, the Company shall
nevertheless be obligated to continue to pay all amounts due hereunder, unless
such amounts are prepaid in accordance with Section 4.6 hereof.

              SECTION 7.3. APPLICATION OF NET PROCEEDS. The Net Proceeds, if
any, of any insurance and/or condemnation awards resulting from the damage,
destruction or condemnation of the Project or any portion thereof shall be
deposited and applied in one or more of the following ways as shall be elected
by the Company in a written notice to the Authority and the Trustee:

              (a) for credit to the Insurance and Condemnation Proceeds Account
       to be applied to the prompt repair, restoration, relocation, modification
       or improvement of the stage of completion of construction of the damaged,
       destroyed or condemned portion of the Project to enable such portion of
       the Project to accomplish the purposes that such portion of the Project
       was designed to accomplish prior to such damage or destruction or
       exercise of such power of eminent domain. Any balance of Net Proceeds
       remaining after such work has been completed shall be transferred by the
       Trustee to the Company Monies Account to be applied to the prepayment of
       the Company Loan pursuant to Section 4.6(b) hereof; or

              (b) for credit to the Company Monies Account to be applied to the
       prepayment of the Company Loan pursuant to Section 4.6(b) hereof.

              SECTION 7.4. INVESTMENT OF NET PROCEEDS. Any Net Proceeds held
pending repair, restoration or relocation shall be invested at the written
direction of the Company solely in obligations of a state, territory or a
possession of the United States or any political subdivision of the foregoing,
the interest on which is exempt from federal income taxation under Section
103(a) of the Code. Any earnings or profits on such investments shall be
considered part of the Net Proceeds.

              SECTION 7.5. INSUFFICIENCY OF NET PROCEEDS. If the Project or a
portion thereof is to be repaired, restored, relocated, modified or improved
pursuant to Section 7.3(a) hereof and if the Net Proceeds are insufficient to
pay the cost of such repair, restoration, relocation, modification or
improvement, the Company will nonetheless cause the work to be completed and
will pay or cause to be paid any cost in excess of the amount of the Net
Proceeds available therefor. The Authority shall have no obligation to complete
the Project or repair, restoration, relocation, modification or improvement of
the Project.

              SECTION 7.6. COMPANY-OWNED PROPERTY. The Company shall be entitled
to any condemnation award or insurance proceeds or portion thereof, in the full
amount remaining after deducting all expenses (including attorneys' fees)
incurred in the collection of such award or proceeds from the gross amount
thereof, for damages to, destruction of or takings of its own property not
included in the Project.

                                       35
   40

              SECTION 7.7 TITLE INSURANCE. The Company will obtain and cause to
be delivered to the Trustee on the Bond Issuance Date, the Title Policy. Any Net
Proceeds of title insurance shall be applied in accordance with Section 7.3
hereof.

                                  ARTICLE VIII

                              ADDITIONAL COVENANTS

              SECTION 8.1. MAINTENANCE AND OPERATION OF PROJECT; TAXES. The
Company will at its own expense maintain and operate the Project. The Company
will pay, or cause to be paid, all taxes levied with respect to the Project and
the income therefrom, including any assessments or other public charges secured
by liens upon the Project or the Company's interests therein.

              SECTION 8.2. AUTHORITY'S EXPENSES; RELEASE AND INDEMNIFICATION.
Whether or not the transactions contemplated by this Loan Agreement and the
Indenture are consummated, the Company shall:

              (a) hold the Authority harmless against, and pay, any liability
       for the payment of out-of-pocket expenses arising in connection with the
       transactions contemplated hereby, including the reasonable fees and
       expenses of the Authority's Counsel; and

              (b) protect and indemnify the Authority or the Trustee, its
       directors, officers, agents and employees from and against all liability,
       losses, damages, costs, expenses (including attorneys' fees), taxes,
       causes of action, suits, claims, demands and judgments of any nature of,
       from, by or on behalf of any Person arising in any manner from the
       transaction of which this Loan Agreement is part or arising in any manner
       in connection with the Project or the financing of the Project,
       including, without limiting the generality of the foregoing, those
       arising from (i) any work done in connection with, or the operation of
       the Project during the term of this Loan Agreement, (ii) any breach or
       default on the part of the Company in the performance of any of its
       obligations under this Loan Agreement or the Indenture, (iii) the Project
       or any part thereof, (iv) any violation of contract, agreement or
       restriction by the Company relating to the Project, this Loan Agreement
       or the Indenture, (v) any violation of law, ordinance or regulation
       affecting the Project or any part thereof or the ownership or occupancy
       or use thereof, or (vi) any untrue statement or alleged untrue statement
       of any material fact or the omission or alleged omission to state a
       material fact necessary to make the statements made not misleading in any
       statement, information or material furnished by the Company to the
       Authority, including, but not limited to, any statement, information or
       material furnished by the Company for inclusion in any disclosure
       document utilized by the Authority in connection with the sale of the
       Bonds; provided, however, that nothing herein shall be construed as
       requiring indemnity for any liability resulting from willful misconduct
       or gross

                                       36
   41

       negligence on the part of the Authority, its directors, officers, agents
       or employees, or as requiring indemnity for any liability resulting from
       willful misconduct or negligence on the part of the Trustee, its
       directors, officers, agents or employees.

              It is the intention of the parties that the Authority and the
Trustee, their directors, officers, agents and employees shall not incur
pecuniary liability by reason of the terms of this Loan Agreement, or of the
Indenture, or by reason of the undertakings required by the Authority or the
Trustee, as the case may be, its or their directors, officers, agents and
employees hereunder or thereunder in connection with the issuance of the Bonds,
the execution of the Indenture, the performance of any act by the Authority or
the Trustee, as the case may be, its or their directors, officers, agents and
employees required by this Loan Agreement or the Indenture, or the performance
of any act by the Authority or the Trustee, as the case may be, its or their
directors, officers, agents and employees requested by the Company or in any way
arising from the transaction of which this Loan Agreement and the Indenture are
a part or arising in any manner in connection with the Project or the financing
of the Project; nevertheless, if the Authority or the Trustee or any of its or
their directors, officers, agents or employees should incur any such pecuniary
liability, the Company shall indemnify and hold harmless Authority and/or the
Trustee, as the case may be, and its or their directors, officers, agents and
employees against all claims, costs and expenses incurred by them in connection
with any such claim or in connection with any action or proceeding brought in
connection with any action or proceeding brought thereon. The Authority and/or
the Trustee shall promptly notify the Company of any action or proceeding
brought in connection with any of the above, and the Authority and the Trustee
agree that they will not settle any such action or proceeding without the prior
written consent of Company which consent shall not be unreasonably withheld. The
Company shall, in its own name or in the name of the Authority and/or the
Trustee, be responsible for and control the defense of the Authority and/or the
Trustee, as the case may be, its or their directors, officers, agents and
employees in any such action or proceeding, and the Authority and the Trustee
agree to cooperate fully with the Company and to take all reasonable action
necessary, to the extent it might lawfully do so, to effect the substitution of
the Company for the Authority and/or the Trustee in such action or proceeding.
The provisions of this Section shall not apply to any claim or liability
resulting from any act of gross negligence, willful misconduct, bad faith, fraud
or deceit on the part of the Authority or its directors, officers, agents or
employees, or to any claim or liability resulting from any act of negligence,
willful misconduct, bad faith, fraud or deceit on the part of the Trustee or its
directors, officers, agents or employees.

              SECTION 8.3. MAINTENANCE OF CORPORATE EXISTENCE; QUALIFICATION IN
THE STATE. The Company shall, so long as the Bonds remain Outstanding, maintain
its corporate existence and qualification to do business in the State and shall
not dissolve or otherwise dispose of all or substantially all of its assets nor
merge into or consolidate with any other company or entity or permit one or more
other companies to consolidate or merge with it, except as provided below.

                                       37
   42

The Company may consolidate with or merge with another company incorporated and
existing under the laws of one of the states of the United States of America or
permit one or more other foreign or domestic companies to consolidate with or
merge with it, or sell or otherwise transfer to another domestic or foreign
company all or substantially all of its assets as an entirety and thereafter
dissolve; provided, it furnishes to the Authority and the Trustee an opinion of
Bond Counsel stating that such consolidation, merger, sale or transfer will not
adversely affect the exemption from federal income taxation of interest on the
Bonds, provided further, in the event the Company is not the surviving,
resulting or transferee company, as the case may be, that the surviving,
resulting or transferee company (a) assumes in writing all of the obligations of
the Company hereunder, and (b) is, or as soon as practicable becomes, qualified
to do business in the State.

              SECTION 8.4. REQUIREMENT FOR CERTAIN NOTICES. The Company shall
give prompt written notice to the Authority and the Trustee of (i) any Event of
Default or any event which, upon a lapse of time or notice or both, would become
an Event of Default; and (ii) the occurrence of a Determination of Taxability or
any event which upon a lapse of time or notice or both would result in a
Determination of Taxability.

              SECTION 8.5. COOPERATION. The Company agrees that it will perform,
on request of the Authority, such reasonable acts as may be necessary or
advisable to carry out the intent of this Loan Agreement or of the Indenture.

              SECTION 8.6. ACCESS TO BOOKS AND RECORDS. The Company shall
maintain adequate books, accounts and records in compliance with the regulations
of any governmental regulatory body having jurisdiction thereof. The Company
shall permit employees or agents of the Authority or the Trustee, at any
reasonable time and upon reasonable prior notice, to inspect the Company's
properties and to examine or audit the Company's books, accounts and records and
make copies and memoranda thereof.

              SECTION 8.7. COMPLIANCE WITH LAWS. The Company agrees that it will
at all times comply with, or cause to be complied with, all laws, statutes,
rules, regulations, orders and directions of any governmental authority having
jurisdiction over the Company or its business if a breach of any such law,
statute, rule, regulation, order, or direction would materially and adversely
affect the Project, except where contested in good faith and by proper
proceedings.

              SECTION 8.8. LIMITATION ON ASSIGNMENT OF LOAN AGREEMENT. Except as
provided in Section 8.3 hereof, and the Intercreditor Agreement, this Loan
Agreement, the Company's rights hereunder, the proceeds of the Loan and the use
thereof may not be assigned by the Company without the prior written consent of
the Authority. Any such assignment by the Company shall not relieve the Company
of primary liability for payments due under this Loan Agreement and of the
performance of all other obligations required under this Loan Agreement. In
addition, subject to the terms of the Intercreditor Agreement, any assignee or
transferee shall assume the obligations of the Company

                                       38
   43
hereunder to the extent of the interest assigned or transferred, and the Company
shall forthwith furnish or cause to be furnished to the Authority and the
Trustee a true and complete copy of all documents evidencing such assignment or
transfer and assumption of obligations.

              Subject to the provisions of the Intercreditor Agreement, the
Company covenants and agrees that it shall not, without the prior written
consent of the Authority and the Trustee, sell, lease, convey or encumber the
Project and any or all of its rights therein. Any such sale, lease conveyance or
encumbrance shall not relieve the Company of primary liability for payments due
under this Loan Agreement and of the performance of all other obligations under
this Loan Agreement. Notwithstanding the foregoing, the Authority and the
Trustee shall not consent to the sale, lease conveyance or encumbrance by the
Company of the Project or of any or all of its rights therein unless the Trustee
and the Authority shall have received an opinion of Bond Counsel stating that
such sale, lease conveyance or encumbrance will not adversely affect the
exemption from federal income taxation of interest on the Bonds.

              SECTION 8.9. WAGES. In accordance with Section 91533(1) of the
Act, the Company agrees that on any construction, improvement, reconstruction or
rehabilitation financed in whole or in part with proceeds of the Bonds all
workers employed in such work, exclusive of maintenance work, will be paid not
less than the general prevailing rate of per diem wages for work of a similar
character in the locality in which the work is performed, and not less than the
general prevailing rate of per diem wages for holiday and overtime work. Such
rates shall be as determined by the Director of the Department of Industrial
Relations of the State in accordance with the standards set forth in Section
1773 of the California Labor Code and Sections 1773.1, 1773.5, 1774 and 1776
(excepting subdivision (f)) of such Labor Code shall apply.

                                   ARTICLE IX

                              DEFAULTS AND REMEDIES

              SECTION 9.1. EVENTS OF DEFAULT. The following shall be "Events of
Default" under this Loan Agreement and the term "Event of Default" shall mean,
whenever it is used in this Loan Agreement, any one or more of the following
events:

              (a) failure by the Company to pay or cause to be paid when due the
       amounts required to be paid under this Loan Agreement and such failure
       for a period of three Business Days;

              (b) failure by the Company to observe and perform any covenant,
       condition or agreement on its part contained in Section 2.3 and 3.6
       hereof or of any other covenant with respect to the tax-exempt status of
       interest on the Bonds herein or any covenant, condition or agreement on
       its part with respect to the tax-exempt status of interest on the Bonds
       in any other

                                       39
   44

       document or instrument executed by the Company in connection herewith; or

              (c) any representation or warranty by the Company contained in
       Section 2.3 of this Loan Agreement or any related instruments or
       certificates relating to the tax-exempt status of interest on the Bonds
       is false or misleading in any material respect as of the date of the
       making or furnishing thereof.

              No default under Subsections 9.1(b) or (c) above shall constitute
an event of default until written notice of such default shall be given to the
Company by the Trustee or the Authority, and the Company shall have had thirty
(30) days after receipt of such notice to correct such default or cause such
default to be corrected, and shall not have corrected such default or caused
such default to be corrected within the applicable period unless the Trustee
shall agree to an extension of such time period or if the breach or failure is
such that it cannot be corrected within the applicable period, corrective action
is instituted by the Company within the applicable period and diligently pursued
until the default is corrected. The Authority and the Trustee shall send a copy
of any notice sent pursuant to this Section 9.1 to the Bank.

              SECTION 9.2. REMEDIES ON DEFAULT. Subject to the terms and
conditions of the Intercreditor Agreement, whenever any Event of Default
pursuant to Sections 9.1(a) hereof shall have happened and be continuing, the
Trustee shall, and whenever any other Event of Default shall have happened and
be continuing may (and upon the direction of the Owners of twenty-five percent
(25%) in aggregate principal amount of the Outstanding Bonds shall), take any
one or more of the following steps:

              (a) By written notice to the Company and the Bank declare an
       amount equal to (i) the then unpaid amount of the Company Loan plus (ii)
       all interest on the Company Loan then due and accrued to the date of
       redemption of the then Outstanding Bonds, plus (iii) unless actually
       being contested as specifically provided herein, any other amounts due
       hereunder, to be immediately due and payable, whereupon the same shall
       become immediately due and payable by the Company to the Trustee;

              (b) Have reasonable access to and inspect, examine and make copies
       of the books and records and any and all accounts, data and income tax
       and other tax returns of the Company during regular business hours of the
       Company if reasonably necessary in the opinion of the Trustee; and

              (c) Seek recovery under the Letter of Credit in an amount
       sufficient to pay the principal due on the Company Loan plus accrued
       interest thereon to the date of redemption of the then Outstanding Bonds.

              In addition, the Trustee may take whatever action at law or in
equity may appear necessary or desirable to collect any amounts then due and
thereafter to become due hereunder or to enforce the observance or

                                       40
   45
performance of any obligation, agreement or covenant of the Company under this
Loan Agreement.

              Any amounts collected pursuant to action taken under this Section,
after retention of the costs involved in such collection, shall be paid into the
Bond Fund and applied in accordance with the provisions of the Indenture, and
after payment in full of the Bonds and all other amounts payable under the
Indenture, and the payment of any costs occasioned by an Event of Default
hereunder, except as provided in Section 3.6 hereof, any excess money in the
Funds and Accounts held by the Trustee (other than money held for payment of the
Bonds) shall be paid to the Bank.

              SECTION 9.3. NO REMEDY EXCLUSIVE. No remedy herein conferred upon
or reserved to the Trustee is intended to be exclusive of any other available
remedy or remedies but each and every such remedy shall be cumulative and shall
be in addition to every other remedy herein or now or hereafter existing at law,
in equity or by statute. No delay or omission to exercise any right or power
accruing upon an Event of Default shall impair any such right or power or shall
be construed to be a waiver thereof (unless expressly waived by the Trustee),
but any such right or power may be exercised from time to time and as often as
may be deemed expedient. The Trustee and the Owners of the Bonds, subject to the
provisions of the Indenture, shall be entitled to the benefit of all agreements
herein contained.

              SECTION 9.4. ATTORNEYS' Fees and Expenses. Should an Event of
Default occur and the Trustee employ attorneys or incur other expenses for the
collection of amounts due hereunder or the enforcement of performance of any
obligation of the Company hereunder, the Company shall on demand pay to the
Trustee the reasonable fees and expenses of such attorneys and such other
reasonable expenses so incurred.

              SECTION 9.5. NO IMPLIED WAIVER. In the event any agreement,
covenant or condition contained in this Loan Agreement should be breached by
either party and thereafter waived by the other party, such waiver shall be
limited to the particular breach so waived and shall not be deemed to waive any
other breach hereunder.

                                    ARTICLE X

                                  MISCELLANEOUS

              SECTION 10.1. TERM OF THIS LOAN AGREEMENT. This Loan Agreement
shall remain in full force and effect from the date hereof until such time as
the Bonds shall have been fully paid, or provision made for such payment, and
the fees and expenses of the Trustee and any amounts due the Authority hereunder
or under the Indenture shall have been fully paid; provided, however, that this
Loan Agreement may be terminated, subject to the provisions of this paragraph,
by written notice from either party to the other prior to said date if the

                                       41
   46

Company shall prepay all amounts payable hereunder pursuant to and in accordance
with Sections 4.5 and 4.6 hereof.

              SECTION 10.2. NOTICES. Except as otherwise specifically provided
herein, all notices, approvals, consents, requests and other communications
hereunder shall be in writing and shall be deemed to have been given when such
writing is delivered or mailed by first class registered or certified mail,
postage prepaid, addressed as follows:

(a) If to the Company:            Calavo Growers of California
                                  P.O. Box 3486 Terminal Annex
                                  Los Angeles, California 90054

(b) If to the Authority:          Riverside County Industrial Development
                                  Authority
                                  3470 Twelfth Street
                                  Riverside, California 92501

(c) If to the Trustee:            First Interstate Bank of California
                                  707 Wilshire Boulevard, 10th Floor
                                  Los Angeles, California 90071
                                  Attention: Corporate Trust Department (W 10-2)

(d) If to the Bank:               Security Pacific National Bank
                                  333 South Hope Street
                                  Los Angeles, California 90071
                                  Attention: Walter L. Johnson

              A duplicate copy of each notice, certificate or other
communication given hereunder by either the Authority, the Company or the
Trustee to any one of the others shall also be given to all of the others. The
Authority, the Company and the Trustee may, by notice given hereunder, designate
any further or different addresses to which subsequent notices, certificates or
other communications shall be sent.

              SECTION 10.3. POWER OF AUTHORIZED COMPANY REPRESENTATIVE. Whenever
the Company's approval is required under the provisions of this Loan Agreement
or the Authority or the Trustee is required to take some action at the request
of the Company, the approval or request shall be made by the Authorized Company
Representative unless otherwise specified in this Loan Agreement. The Authority
and the Trustee shall be authorized to act on any such approval or request and
the Company shall have no complaint against the Authority or the Trustee that
such request was unauthorized.

              SECTION 10.4. BINDING EFFECT. This Loan Agreement shall inure to
the benefit of and shall be binding upon the Authority, the Company and their
respective successors and assigns.

                                       42
   47

              SECTION 10.5. SEVERABILITY. In the event any provision of this
Loan Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforceable any
other provision hereof.

              SECTION 10.6. AMOUNTS REMAINING IN FUNDS. Except as expressly
provided in Section 3.6 hereof, any amounts remaining in the Funds and Accounts
held by the Trustee upon expiration or sooner termination of and as provided in
this Loan Agreement, shall be paid by the Trustee to the Bank.

              SECTION 10.7. AMENDMENTS, CHANGES AND MODIFICATIONS. Except as
otherwise provided in this Loan Agreement or in the Indenture, subsequent to the
issuance of the Bonds and prior to their payment in full (or provision therefor
made in accordance with the Indenture), this Loan Agreement may not be amended,
changed, modified, altered or terminated except as provided in Article XI of the
Indenture.

              SECTION 10.8. EXECUTION IN COUNTERPARTS. This Loan Agreement may
be executed in several counterparts, each of which shall be an original and all
of which shall constitute but one and the same instrument.

              SECTION 10.9. CAPTIONS. The captions or headings in this Loan
Agreement are for convenience only and in no way define, limit or describe the
scope or intent of any provision of this Loan Agreement.

              SECTION 10.10. LAW GOVERNING CONSTRUCTION OF LOAN AGREEMENT. This
Loan Agreement shall be governed by and construed in accordance with the laws of
the State.

              SECTION 10.11. NO RIGHTS CREATED IN THIRD PARTIES. The terms of
this Loan Agreement are not intended to establish nor to create any rights in
any persons other than the Authority, the Company, the Trustee and the Owners of
the Bonds and the respective successors of each.

              SECTION 10.12. BENEFIT OF THE OWNERS OF THE BONDS. This Loan
Agreement is executed in part to induce the purchase by others of the Bonds to
be issued by the Authority, and accordingly all covenants and agreements on the
part of the Company and the Authority as set forth in this Loan Agreement are
hereby declared to be for the benefit of the Owners from time to time of the
Bonds.

              SECTION 10.13. NOTICE OF TAXABILITY. In the event the Trustee
receives written notice from any Owner of Bonds stating that (i) the Owner of
Bonds has been notified in writing by the Internal Revenue Service that it
proposes to include the interest on any Bonds in the gross income of such Owner
of Bonds for the reasons described herein or any other proceeding has been
instituted against such Owner of Bonds which may lead to a final decree,
judgment, or action as described herein, and (ii) such Owner of Bonds will
afford the Company the opportunity to contest the same, either directly or in
the name

                                       43
   48
of the Owner of Bonds, and file an action for judicial review then the Trustee
shall promptly give notice thereof to the Company, the Authority and the Bank.

              IN WITNESS WHEREOF, the Authority and the Company have caused this
Loan Agreement to be executed in their respective corporate names, all as of the
date first above written.

                                        RIVERSIDE COUNTY INDUSTRIAL
                                        DEVELOPMENT AUTHORITY

[SEAL]

                                        By  /s/ PATRICIA LARSON
                                          --------------------------------------
                                                Chairman

ATTEST:

By  /s/ GERALD A. MALONEY
  -------------------------------
  Secretary

                                        CALAVO GROWERS OF CALIFORNIA

                                        By  /s/ EGIDIO CARBONE
                                          --------------------------------------
                                        Its Vice President and Secretary

                                       44
   49

                                    EXHIBIT A

                                PROJECT SUMMARY

                                      A-1
   50

TEMECULA PROJECT
COST ESTIMATE AND TIME TABLE
REVISED 8/7/85

                                                                                               Original
                         Type                                Supplier         Cost              Budget           Finish
- -------------------------------------------------------      --------       --------           --------         --------
A)    Architecture                                           Kulweic        $117,584           $140,000         June
                                                                            --------           --------

B)    Building:                                              HMH

      1 - Earthwork                                                         $ 55,300                            June 30
      2 - Site Utilities                                                      33,900                            July 31
      3 - Storm Drain                                                          7,145                            August
      4 - Asphalt paving                                                     101,717                            Nov. 15
      5 - Chain link fence                                                    13,250                            Dec. 15
      6 - Landscape and Irrigation                                            27,855                            Dec. 21
      7 - Fine Grade and Fill Planters                                         5,000                            Nov. 30
      8 - Building and Site Concrete                                         653,211                            Oct. 31
      9 - Concrete floor seal                                                  1,625                            Nov. 15
     10 - Structural Steel                                                    65,689                            Oct. 31
     11 - Rough carpentry                                                     49,661                            Oct. 31
     12 - Panelized Roof                                                     171,998                            Sept. 30
     13 - Truss Joist                                                          6,000                            Oct. 15
     14 - Cabinet Work                                                         1,950                            Nov. 30
     15 - Thermal & Sound Insulation                                          10,611                            Oct. 31
     16 - Cooler Construction                                                264,856                            Oct. 25
     17 - Built up Roofing                                                    49,900                            Oct. 15
     18 - Flashing and Sheet Metal                                             8,250                            Oct. 15
     19 - Skylights and Roof Hatch                                             3,789                            Oct. 15
     20 - Sealants and Caulking                                                5,000                            Oct. 31
     21 - Doors, Frames and Hardware                                          11,000                            Nov. 15
     22 - Install Doors and Frames                                             2,240                            Nov. 15
     23 - Overhead Coiling Doors                                              26,000                            Nov. 15
     24 - Glass and Glazing                                                   14,234                            Nov. 21
     25 - Lath and Plaster                                                     8,500                            Oct. 31
     26 - Gypsum Drywall                                                      21,700                            Nov. 15
     27 - Ceramic Tile                                                        11,624                            Nov. 21
     28 - Acoustical Tile                                                      8,474                            Dec. 15
     29 - Carpet and Resilent Tile                                             9,474                            Dec. 15

   51

Temecula Project
Cost Estimate and Time Table
Revised 8/7/85

Page Two

                                                                                              Original
                         Type                                  Supplier         Cost            Budget        Finish
- ------------------------------------------------------         ----------   -----------       ---------       -------
                                                                                                  
     30 - Painting                                                          $   75,000                        Dec. 21
     31 - Toilet Partition                                                       2,559                        Dec. 15
     32 - Toilet Accessories                                                     2,921                        Dec. 15
     33 - Dock Equipment                                                         9,496                        Nov. 30
     34 - Plumbing                                                              63,600                        Dec. 21
     35 - HV & AC                                                              148,875                        Dec. 21
     36 - Fire Sprinklers                                                       92,000                        Dec. 15
     37 - Cooler Pads/Condensable Pipe                                           8,500                        Nov. 15
     38 - Electrical                                                           226,200                        Dec. 21
     39 - Light Pole Bases                                                       3,000                        Nov. 30
     40 - Interior Plenum Walls                                                 24,952                        Oct. 21
     41 - Super. and Misc. Job Expense                                          72,500                        Dec. 31
     42 - Overhead and profit                                                  130,894                        Dec. 31
                                                                            ----------       ----------
                          TOTAL                                             $2,510,778       $3,020,000
                                                                            ----------       ----------
C)    Refrigeration                                          Am. Refrig        328,702
                                                                            ----------
D)    Electrical                                                               135,000          135,000
E)    Utility Connections                                    SCE                 2,112               --
F)    Sizer Line                                             D. Waylan         277,622          233,180
G)    Bin Dump - Grading Line                                Packers Mfg       302,500          427,690
H)    Packing Tubs (100)                                                        77,910           71,250
I)    Packer Stands (30)                                                        14,278           22,800
J)    Scales                                                 Durand             14,000           14,000
K)    Forklifts (8)                                          Hyster            178,640          208,000
L)    5 Pallet forklift                                      Hyster             51,767           65,000
M)    Bin hoist                                                                  6,000            6,000
N)    Vibrator count fill                                                       10,000               --
      Pallet jacks (2)                                                           1,200            1,200
P)    Box former and sealer                                  Weyerhauser         N/C              N/C
Q)    Pallet Squeeze Converter                                                   5,000            8,600

   52

Temecula Project
Cost Estimate and Time Table
Revised 8/7/85

Page Two

                                                                                              Original
                         Type                                  Supplier         Cost            Budget        Finish
- ------------------------------------------------------         ----------   -----------       ---------       -------
                                                                                                  
R)    Shop Equipment                                                        $    7,000       $    7,000
S)    Office Equipment and Lunch Room                                           10,000           10,000
T)    Telephone system                                                          12,000           12,000
U)    Office Furniture                                                          15,000           15,000
V)    Computer                                               IBM                10,000           10,000
W)    Air Compressor                                                            11,000           13,000
X)    Bin Sanitizer                                          McGuire             7,500            7,500
Y)    Dry Matter Test Equipment                                                  6,000            6,000
Z)    Water Treatment System                                                     3,000            3,000
AA)   Day Coders                                             Menke               1,200            1,200
B)    Pack Station Stamps                                                        2,000            2,000
CC)   Freight                                                                    6,000               --
                                                                            ----------       ----------
          Sub-Total                                                         $4,109,793       $4,439,620
      Sales Tax                                                                 11,225           42,530
      Interest on Project                                                      248,500          248,500
      Contingency                                                              171,129               --
      Permits and Fees                                                          12,338
                                                                            ----------       ----------
      TOTAL CONSTRUCTION COST                                               $4,552,985       $4,730,650
                                                                            ==========       ==========

   53

                                   EXHIBIT B

                               FUNDING REQUISITION

Date:
     -------------------

                                                        Requisition No._________

1. Amount due and to be disbursed: $_______________________

2. The undersigned hereby represents that: (a) each obligation to which the
amount specified above relates has been properly incurred in connection with the
Project being financed with the proceeds of the Loan specified above (the
"Loan"), is a reimbursable Project Cost properly chargeable against the
Construction Fund and has not been the basis of any previous disbursement made
to or on behalf of the undersigned; (b) the expenditure of the amount specified
above, when added to all disbursements under previous requisitions under the
Loans, other than disbursements to pay the costs of issuing the Bonds, will
result in not less than 95% of all such disbursements having been used to pay or
reimburse the undersigned for amounts which are Qualified Project Costs; (c) the
expenditure of the amount specified above, when added to all disbursements to
the undersigned under all previous requisitions under the Loans, will result in
less than 25% of all such disbursements to the undersigned having been used to
acquire land or any interest therein; and (d) this disbursement is for the items
set forth on Exhibit 1 hereto.

3. The amount to be disbursed hereunder shall be deposited into
_____________________________________________.

Capitalized terms as used herein shall have the meanings given to them in the
Loan Agreement dated as of September 1, 1985, between the Riverside County
Industrial Development Authority and Calavo Growers of California ("Company").

                                        CALAVO GROWERS OF CALIFORNIA

                                        By:
                                            ------------------------------------
                                        Its:
                                            ------------------------------------

Disbursement Consented To:

SECURITY PACIFIC NATIONAL BANK

By:
   ---------------------------------
       Authorized Representative

                                      B-1
   54

                                   EXHIBIT C

                             COMPLETION CERTIFICATE

              The undersigned hereby certify that all portions of the Project
were substantially completed and available either for occupancy or use as of
_________________.

                                        CALAVO GROWERS OF CALIFORNIA

                                        By:
                                           -------------------------------------
                                               Company Representative

                                        [ARCHITECT OR ENGINEER]

                                        By:
                                           -------------------------------------

                                        [GENERAL CONTRACTOR]

                                        By:
                                           -------------------------------------

              The undersigned hereby certifies that:

              (1) the aggregate amount disbursed on the Company loan to date is
$_______________.

              (2) all amounts disbursed on the Company Loan have been applied to
pay or reimburse the undersigned for the payment on Project Costs and none of
the amounts disbursed on the Company Loan have been applied to pay or reimburse
any party for the payment of costs or expenses other than Project Costs; and

              (3) at least 95 percent of the amounts disbursed on the Company
Loan, less the amounts applied pursuant to the Indenture to pay for the costs of
issuing the Bonds, have been applied to pay or reimburse the Company for the
payment of Qualified Project Costs.

                                      C-1
   55

                                        CALAVO GROWERS OF CALIFORNIA

                                        By:
                                           -------------------------------------

                                               Company Representative

              The undersigned hereby certifies that to date $_________________
has been disbursed on the Company Loan.

                                        ----------------------------------------

                                        ---------------, as Trustee

                                        By:
                                           -------------------------------------
                                           Authorized Officer

                                      C-2
   56

                                    EXHIBIT D

                         SPECIAL ARBITRAGE INSTRUCTIONS

                                      D-1
   57

                         SPECIAL ARBITRAGE INSTRUCTIONS

              These instructions are delivered to Calavo Growers of California
(the "Company") and the Riverside County Industrial Development Authority (the
"Authority") in connection with the $4,200,000 aggregate face amount Riverside
County, Industrial Development Authority Variable Rate Demand Industrial
Development Revenue Bonds (Calavo Growers of California Project). The
instructions are designed to provide guidelines for compliance with the
provisions of Section 103(c)(6) of the Code, Sections 307 and 504 of the
indenture of trust between the Authority and Irving Trust Company (the
"Indenture") and Section 3.6 of the loan agreement between the Company and the
Authority dated as of August 1, 1985 (the "Loan Agreement"). All capitalized
terms used in these instructions and not defined herein shall have the meanings
ascribed to them by the Indenture or the Loan Agreement. The term "Regulations"
shall mean all regulations of the United States Department of the Treasury
promulgated or proposed under Section 103(c) of the Code which are applicable to
the Bonds.

       1. Significant Terms.

              Gross Proceeds. Gross Proceeds include (1) original proceeds (as
defined in Section 1.103-13(b)(2)(i) of the

   58
Regulations); (ii) investment proceeds (as defined in Section 1.103(b)(2)(ii) of
the Regulations); (iii) transferred proceeds (as defined in Section
1.103-14(e)(2)(ii) of the Regulations); (iv) all amounts held in any sinking
fund established under the Indenture (including any "afterborn" sinking fund);
(v) any securities or other obligations pledged as security for debt service on
the Bonds; (vi) amounts paid to the Authority as fees until expended by the
Authority; (vii) other amounts to be used to pay debt service on the Bonds; and
(viii) any amounts received as a result of investing any of the foregoing.

              Nonpurpose Obligations. A Nonpurpose Obligation is any security or
obligation in which Gross Proceeds are invested, other than (i) a tax-exempt
state or local governmental obligation described in Section 103(a) of the Code
and (ii) the Loan Agreement. Thus, for example, all investments in the
Construction Fund, the Revenue Fund, the Earnings Fund and the Bond Fund (unless
such investments are tax-exempt under Section 103(a)) will be Nonpurpose
Obligations. A Nonpurpose Obligation must be valued at fair market value on and
as of the date such obligation is acquired with Gross Proceeds or otherwise
becomes Gross Proceeds (e.g., by a pledge of such security or obligation to
secure the Bonds). Nonpurpose obligations need not be revalued unless required
by the Indenture. Securities or obligations not purchased with

                                       2
   59

Gross Proceeds may not be allocated to Nonpurpose Obligations.

              Yield. (a) In accordance with Section 1.103-13(c) of the
Regulations, the Yield on the Bonds and the Yield on Nonpurpose Obligations is
that yield which, when used in computing the present worth of all payments of
principal and interest paid or to be paid on the Bonds or Nonpurpose Obligation
during the computation period, produces an amount equal to the Purchase Price
(as defined below).

              (b) Bond Yield. For purposes of determining the Yield on the
Bonds, the Purchase Price is the initial offering price of the Bonds to the
public or, if privately placed, the price paid by the first buyer of the Bonds
or the acquisition cost of the first buyer.

              Prior to the Conversion Date, (i) for purposes of the Computation
of Investment Excess, the Yield on the Bonds shall be based on actual payments
of principal and interest for the applicable computation period (taking into
account any discount or premium on a constant yield to maturity basis); (ii) for
purposes of the Investment Limitation, the expected Yield on the Bonds shall be
computed on the date of issue, assuming an interest rate of __ percent per
annum, and shall be recomputed on the first day of each Bond Year

                                       3
   60

thereafter, assuming an interest rate equal to the weighted average rate of
interest paid on the Bonds for the preceding Bond Year. On the Conversion Date,
the expected Yield shall be computed for all purposes thereafter, taking into
account the actual yield to date and assuming no optional calls or redemptions;
however, in the event that there are any calls or optional redemptions after the
Conversion Date, the yield must be recomputed on the last Interest Payment Date
of any Bond Year in which such calls or redemptions occurs.

              (c) Nonpurpose Obligation Yield. For purposes of computing the
Yield on Nonpurpose Obligations, the Purchase Price is the fair market value of
the Nonpurpose Obligation determined as of the date on which such obligation
becomes a Nonpurpose Obligation. The expected Yield on a variable rate
Nonpurpose Obligation shall be computed on the date such obligation is acquired
or becomes a Nonpurpose Obligation and, for purposes of the Investment
Limitation, on the first day of each Bond Year thereafter, assuming an interest
rate equal to the weighted average rate of interest paid on such Nonpurpose
Obligation for the preceding year; provided, however, if acquired on its date of
issue, the expected Yield on a Nonpurpose Obligation shall be determined for the
first Bond Year as if such obligation bore interest at the initial

                                       4
   61

rate of interest applicable to such Nonpurpose Obligation on the date of issue.

2. Investment Limitation.

              Gross Proceeds Subject to the Limitation. Excluding Gross Proceeds
invested during an applicable temporary period, the amount of Gross Proceeds
invested in Nonpurpose Obligations with a Yield in excess of the Yield on the
Bonds may not exceed 150% of Annual Debt Service (the "Investment Limitation").
Because of the temporary period exception, the Investment Limitation will apply
only to Nonpurpose Obligations held in (i) a pledge fund, (ii) a reasonably
required reserve fund or (iii) an afterborn sinking fund. Although none of such
funds are anticipated at this time, a creation of any of such funds in the
future will necessitate compliance with the Investment Limitation.

              Annual Debt Service. For purposes of the Investment Limitation,
Annual Debt Service for each Bond Year is the sum of (1) all interest due on
outstanding Bonds (including Bonds that have been defeased) during such Bond
Year, (2) the principal amount of Bonds (including Bonds that have been
defeased) falling due by their terms during such Bond Year, and (3) the
aggregate amount of mandatory sinking fund payments required during such Bond
Year. Annual Debt Service

                                       5
   62
is computed on the first day of each Bond Year assuming, for the first Bond
Year, an interest rate of __ percent per annum and, for each Bond Year
thereafter commencing prior to the Conversion Date, an interest rate equal to
the weighted average rate of interest paid on the Bonds during the preceding
Bond Year. On and after the Conversion Date, Annual Debt Service for the current
Bond Year shall be recomputed to reflect the Fixed Interest Rate.

              The initial investment of Gross Proceeds subject to the Investment
Limitation must be made in compliance with the Investment Limitation.
Thereafter, on or prior to the first day of each Bond Year and on the Conversion
Date, the Company must determine the amount, if any, by which the fair market
value of Nonpurpose Obligations subject to the Investment Limitation and
invested at a Yield in excess of the Yield on the Bonds exceeds (or will exceed)
150% of Annual Debt Service as of such date. In the event of an excess, the
Company shall instruct the Trustee in writing (a) to sell or otherwise dispose
of Nonpurpose Obligations with a fair market value at least equal to such excess
no later than 30 days after the first day of the Bond Year or the Conversion
Date, whichever is applicable and (b) to reinvest the proceeds of such sale or
disposition in a manner that does not cause the Investment Limitation to be
exceeded; provided, however, the 30-day grace period shall not apply in any Bond

                                       6
   63

Year commencing after the Conversion Date, and all dispositions of excess
Nonpurpose Obligations after the Conversion Date must be made no later than the
first day of the applicable Bond Year.

              In the event of an unscheduled (i.e., optional) redemption of
Bonds, Annual Debt Service must be recomputed as of the date of such redemption.
If, upon such recomputation, the Investment Limitation is exceeded, the Company
must instruct the Trustee to sell or otherwise dispose of Nonpurpose Obligations
with a fair market value at least equal to the amount of such excess, no later
than 30 days after the date of such unscheduled redemption, and to reinvest the
proceeds of such sale or disposition manner that will not cause the Investment
Limitation to be exceeded.

              No Disposition in Case of Loss. Notwithstanding the foregoing,
Nonpurpose Obligations subject to the Investment Limitation need not be sold or
disposed of if such sale or disposition would result in a loss (an "Investment
Loss"). An Investment Loss would occur if the sale or disposition would result
in the realization of a loss for Federal income tax purposes in excess of the
Rebate Amount that would be due to the United States under Section 504 of the
Indenture, if such Rebate Amount (determined as if such sale or disposition had
not occurred) were due at the time of the proposed sale

                                       7
   64

or disposition. For purposes of the Investment Loss determination, all
Nonpurpose Obligations that have identical terms and provisions and that became
Nonpurpose Obligations at the same time must be treated as a single Nonpurpose
Obligation.

              Assuming that the Investment Limitation continues to be exceeded,
Nonpurpose Obligations that have been retained to avoid an Investment Loss must
be sold or disposed of no later than 30 days after the last Interest Payment
Date of any Bond Year if, as of such date, such Nonpurpose Obligations can be
sold or disposed of without incurring an Investment Loss.

3. Rebate Requirement.

              Computation of Investment Excess. On the last Interest Payment
Date of each Bond Year, the Company must compute the Investment Excess for the
preceding twelve month period. For purposes of that computation, the aggregate
amount of interest, profits and other income derived from investments in
Nonpurpose Obligations which are held in the Revenue Fund and the Bond Fund need
not be taken into account for any Bond Year in which such income is less than
$100,000; for any Bond Year in which the income on such funds is $100,000 or
more, the entire amount of such income must be

                                       8
   65

taken into account in computing Investment Excess for such Bond Year.

              The computation of Investment Excess must take into account all
income realized under Federal income tax accounting principles with respect to a
Nonpurpose Obligation, including gain or loss realized on a sale, exchange or
other disposition of any Nonpurpose Obligation (whether or not the person
earning such income is subject to Federal income tax). All transaction costs
incurred in acquiring, carrying, selling or redeeming Nonpurpose Obligations are
disregarded for this purpose and will not, therefore, reduce such gain or
increase such loss.

              Transfers to Excess Earnings Account. If, immediately following
payment of all interest and principal due on the Bonds on the last Interest
Payment Date of any Bond Year, any monies remain on deposit in the General
Earnings Account of the Earnings Fund, the Company shall instruct the Trustee to
transfer such monies, up to the annual amount of Investment Excess computed on
such date, to the Excess Earnings Account of the Earnings Fund.

              Computation of Rebate Amount. The Rebate Amount shall be computed
on the last Interest Payment Date of (i) the fifth Bond Year and (ii) every
fifth Bond Year

                                       9
   66

thereafter, and (ii) on the date the last Bond is paid or redeemed. Each such
computation shall be for the period from the date of issue through the date of
computation. The Rebate Amount includes the Investment Excess for the
computation period plus all interest, profits or other income earned on amounts
computed annually as Investment Excess and invested in the Excess Earnings
Account (whether or not invested in Nonpurpose Obligations). The final Rebate
Amount must (i) take into account any unrealized gain or loss on Nonpurpose
Obligations as of the date of retirement of the last Bond, and (ii) include all
earnings, if any, on investments in the Excess Earnings Account from the date of
retirement through the date of the final payment (excluding any gain on the
disposition of Nonpurpose Obligations to the extent such gain was taken into
account as unrealized gain in the final computation of Investment Excess).

4. Prohibited Payments.

              No transaction involving Gross Proceeds may be entered into if it
will result in (i) a Yield on Nonpurpose Obligations less than the Yield that
would have resulted from an arm's length transaction or (ii) a smaller profit or
larger loss on the disposition of a Nonpurpose Obligation than would have
resulted from an arm's length transaction.

                                       10
   67

To implement this prohibition, the following rules apply to the investment of
Gross Proceeds:

              Certificates of Deposit. (a) The purchase or sale of any
certificate of deposit issued by a commercial bank must be at the bona fide bid
price quoted by a dealer who maintains an active secondary market in such
certificates;

       (b) Where there is no active secondary market for a certificate of
deposit, it may be purchased or sold only (i) at a Yield equal to or greater
than the current yield on comparable obligations offered by the United States
Treasury, or (ii) after the Trustee or the Company has obtained a certificate
executed by a dealer who maintains an active secondary market in comparable
certificates, certifying that, based upon actual trades and the stability and
reputation of the issuer of the certificate, the certificate has Yield at least
as high as the yield on comparable obligations traded on an active secondary
market.

              Investment Contracts. Nonpurpose obligations may be purchased or
sold pursuant to an investment contract only if (i) the Trustee or the Company
has obtained at least three bids for such contract from persons other than the
Underwriter or other persons interested in the Bonds; (ii) the Trustee or the
Company has obtained a certificate of a duly

                                       11
   68

authorized officer of the successful bidder, certifying that, based on such
officer's reasonable expectations as of the contract date, Nonpurpose
Obligations will not be (a) purchased at a price in excess of their fair market
value, or (b) sold at a price less than their fair market value; and (iii) the
Yield on the investment contract is (a) at least equal to the highest Yield
offered by a disinterested bidder, and (b) at least equal to the Yield offered
on similar obligations under similar investment contracts.

                                       12
   1
MF85-530/VRPBC                                                      EXHIBIT 10.9
FILE NO. 772,349-157

================================================================================

                             REIMBURSEMENT AGREEMENT
             dated, for reference purposes, as of SEPTEMBER 1, 1985
                                     between

                         SECURITY PACIFIC NATIONAL BANK,
                         a National Banking Association
                                  (the "BANK")
                                       and

                          CALAVO GROWERS OF CALIFORNIA,
                            a California Corporation
                                 (the "COMPANY")

================================================================================

       This Agreement is executed in connection with the following Bonds:

Aggregate Principal Amount:         $4,200,000
Issuer:                             RIVERSIDE COUNTY INDUSTRIAL
                                    DEVELOPMENT AUTHORITY
Name of Bonds:                      VARIABLE RATE DEMAND
                                    INDUSTRIAL DEVELOPMENT REVENUE BONDS
                                    (CALAVO GROWERS OF CALIFORNIA PROJECT)

TRUSTEE:                            FIRST INTERSTATE BANK OF CALIFORNIA,
                                    A CALIFORNIA BANKING CORPORATION

- --------------------------------------------------------------------------------

The Bonds are to be backed by an irrevocable direct draw letter of credit to be
issued by the Bank for the account of the Company pursuant to this Agreement:

Letter of Credit No.: 100-0092 Dated: September 5, 1985

Initial Stated Amount of Letter of Credit: $4,267,661

================================================================================

   2

                               TABLE OF CONTENTS

                                                                              Page
                                                                              ----
                                                                           
SECTION 1.    DEFINITIONS AND INFORMATIONAL PROVISIONS                          1

       1.1    Certain Defined Terms                                             1
       1.2    Informational Provisions                                          4
       1.3    Additional Defined Terms                                          6
       1.4    Accounting Terms                                                  14
       1.5    Other Definitional Provisions                                     14

SECTION 2.    APPLICATION, REIMBURSEMENT AND OTHER PAYMENTS                     15

       2.1    Application for Letter of Credit                                  15
       2.2    Reinstatement of Letter of Credit                                 15
       2.3    Reimbursement for Draws Upon Letter of Credit                     15
       2.4    Fees                                                              16
       2.5    Allocation of Increased Costs                                     16
       2.6    Bank Expenses                                                     17
       2.7    Manner and Time of Payment                                        17
       2.8    Application of Funds                                              17
       2.9    Computation of Interest                                           17

SECTION 3.    CONDITIONS PRECEDENT TO THE ISSUANCE OF THE LETTER OF CREDIT      18

       3.1    Execution and Delivery of Closing Documents                       18
       3.2    Representations Correct; No Default                               20
       3.3    Other Requirements                                                20

SECTION 4.    COMPANY'S OBLIGATIONS UNCONDITIONAL                               21

SECTION 5.    REPRESENTATIONS AND WARRANTIES OF THE COMPANY                     21
       5.1    Organization, Powers and Good Standing                            21
       5.2    Authorization of Company Documents                                22
       5.3    Litigation; Adverse Facts                                         23
       5.4    Financial Condition                                               23
       5.5    Title to Properties; Liens                                        24
       5.6    Disclosure                                                        24
       5.7    Payment of Taxes                                                  24
       5.8    Trademarks, Copyrights and Patents                                24
       5.9    Securities Activities                                             24
       5.10   Government Regulations                                            24

                                       i.
   3

                                                                              Page
                                                                              ----
                                                                           
       5.11   Title to Property                                                 24
       5.12   Rights to Project Agreements, Permits and Licenses                25
       5.13   Legal Requirements                                                25
       5.14   Utilities, etc.                                                   25
       5.15   Commencement of Work                                              25
       5.16   Approved Budget                                                   25
       5.17   Other Related Documents                                           25

SECTION 6.    AFFIRMATIVE COVENANTS OF THE COMPANY                              25

       6.1    Maintenance of Existence, Etc.                                    26
       6.2    Maintenance of Insurance                                          26
       6.3    Payment of Taxes, Etc.                                            27
       6.4    Access and Reporting                                              28
       6.5    Additional Notices                                                30
       6.6    Maintenance of Properties                                         30
       6.7    Further Assurances                                                30
       6.8    Protection of Liens on Property                                   30
       6.9    Compliance with Legal Requirements                                30
       6.10   Payment of Indebtedness                                           30
       6.11   Appendices                                                        31
       6.12   Use of Disbursements                                              31
       6.13   Project Agreements, Permits and Licenses                          31
       6.14   Other Company Documents                                           31
       6.15   Financial Covenants                                               31
       6.16   Removal of Condition Subsequent                                   31

SECTION 7.    NEGATIVE COVENANTS OF THE COMPANY                                 32

       7.1    Type of Business                                                  32
       7.2    Other Indebtedness                                                32
       7.3    Liens and Encumbrances                                            32
       7.4    Loans and Investments                                             32
       7.5    Limitation on Contingent Liabilities;                             32
       7.6    Sale of Business; "Merger or Consolidation                        33
       7.7    Regulations G, T and U                                            32
       7.8    Amendment of Company Documents                                    33
       7.9    Disposition of Project                                            33
       7.10   Amendment of Bylaws                                               34

SECTION 8.    EVENTS OF DEFAULT                                                 34

       8.1    Required Deposits                                                 34
       8.2    Other Payments                                                    34
       8.3    Misrepresentation                                                 34
       8.4    Non-Satisfaction of Conditions to Disbursement                    34

                                      ii.
   4

                                                                              Page
                                                                              ----
                                                                           
       8.5    Injunction                                                        34
       8.6    Security Documents                                                35
       8.7    Indenture                                                         35
       8.8    Loan Agreement                                                    35
       8.9    Invalidity                                                        35
       8.10   Other Indebtedness                                                35
       8.11   Change in Financial Condition                                     35
       8.12   Involuntary Proceedings                                           35
       8.13   Voluntary Proceedings                                             35
       8.14   Dissolution                                                       36
       8.15   Judgments                                                         36
       8.16   Unauthorized Deviations, Defects, or Encroachments                36
       8.17   Work Stoppage                                                     36
       8.13   Expiration of Permits                                             36
       8.19   ERISA Defaults                                                    36
       8.20   Insolvency of General Contractor                                  36
       8.21   Insurance; Protection of Liens; Prohibited Transfers              37
       8.22   Breach of Other Covenants                                         37

SECTION 9.    REMEDIES                                                          37

       9.1    Notice to Trustee                                                 37
       9.2    Completion of Project; Power of Attorney                          38
       9.3    Accounts Receivable                                               38
       9.4    Set Off; Waiver of Set Off                                        38
       9.5    Defaults Under Other Documents                                    39
       9.6    Remedies Cumulative                                               39

SECTION 10.   OTHER ACTIONS BY BANK                                             39

       10.1   Right to Advance or Post Funds                                    39
       10.2   Cure by Disbursement                                              40
       10.3   Conversion at Election of Bank                                    40

SECTION 11.   NOTICES                                                           40

SECTION 12.   INDEMNIFICATION                                                   40

SECTION 13.   LIABILITY OF THE BANK                                             41

SECTION 14.   SUCCESSORS AND ASSIGNS                                            42

                                      iii.
   5

                                                                              Page
                                                                              ----
                                                                           
SECTION 15.   NO FURTHER COLLATERAL; AGREEMENT TO SHARE EQUALLY WITH TRUSTEE    42

SECTION 16.   MISCELLANEOUS PROVISIONS                                          43

       16.1   Permitted Contests                                                43
       16.2   Governing Law                                                     43
       16.3   Survival of Warranties                                            43
       16.4   Severability                                                      43
       16.5   Counterparts                                                      43
       16.6   Time of Essence                                                   43
       16.7   No Further Credits                                                44
       16.8   Headings                                                          44
       16.9   Independence of Covenants                                         44
       16.10  Waivers                                                           44
       16.11  Substitution of Letter of Credit                                  44

APPENDIX I - CONSTRUCTION COVENANTS AND DISBURSEMENT PROCEDURES
       - Schedule A: Payment Request

APPENDIX II - ERISA MATTERS

EXHIBITS

A - FORM OF LETTER OF CREDIT (Section 1.3)

        -   Annex A (Periodic Interest Demand With Reinstatement Request)

        -   Annex B (Principal and Interest Demand With Reinstatement Request)

        -   Annex C (Principal and Interest Demand Without Reinstatement
            Request)

        -   Annex D (Final Drawing)

        -   Annex E (Transfer Demand)

        -   Annex F (Surrender Certificate)

B - LETTER OF CREDIT APPLICATION (Section 1.3, Section 3.1)

C - AUTHORIZED REPRESENTATIVE CERTIFICATE (Section 1.3, Section 3.1)

D - LEGAL DESCRIPTION OF THE PROPERTY (Section 1.3)

E - APPROVALS, AUTHORIZATIONS AND CONSENTS (Section 3.1, Section 5.2)

F - FORM OF OPINION OF COUNSEL TO THE COMPANY (Section 3.1)

G - REQUIREMENTS RE COMPANY LOAN DOCUMENTS (Section 3.3)

H - ADDITIONAL ITEMS TO BE DELIVERED TO THE BANK (Section 3.3, Appendix I)

I - APPROVED BUDGET

J - SCHEDULE OF PROJECT PLANS

                                      iv.
   6

                             REIMBURSEMENT AGREEMENT

               THIS REIMBURSEMENT AGREEMENT, dated as of September 1, 1985, is
by and between CALAVO GROWERS OF CALIFORNIA, A CALIFORNIA CORPORATION (the
"COMPANY") and SECURITY PACIFIC NATIONAL BANK, A NATIONAL BANKING ASSOCIATION
(the "BANK").

               WHEREAS, pursuant to the Indenture of Trust of even date herewith
(the "INDENTURE"), by and between the Issuer and the Trustee, and the Loan
Agreement of even date herewith between the Issuer and the Company, the Issuer
has agreed to issue the Bonds (as hereinafter defined), and to loan to the
Company the proceeds of the sale of the Bonds to finance the development of a
packing, storage and distribution facility; and

               WHEREAS, as a condition precedent to the issuance of the Bonds
and the making of such loan to the Company, the Issuer has required that the
Company obtain and deliver to the Trustee, for the benefit of the holders of the
Bonds, an irrevocable letter of credit to secure payment of the Bonds; and

               WHEREAS, the Company has requested that the Bank issue its
irrevocable direct draw letter of credit to the Trustee substantially in the
form attached hereto as Exhibit A, and the Bank has agreed to issue such letter
of credit upon and subject to the terms and conditions hereinafter set forth.

               NOW, THEREFORE, in consideration of the foregoing recitals and
the covenants contained herein, and in order to induce the Bank to issue its
letter of credit, the parties agree as follows:

               SECTION 1. DEFINITIONS AND INFORMATIONAL PROVISIONS

               1.1 Certain Defined Terms. As used in this Agreement, the
        following terms shall have the indicated meanings:

               "Capital Budget" means all sources and use of capital funds, as
        determined in accordance with GAAP, as approved by the Company's Board
        of Directors.

               "Capital Expenditures" means all uses of capital funds, as
        determined in accordance with GAAP.

               "Capital Retains" means assessments or deductions from proceeds
        payable to members of the Company, for purposes of having members
        furnish capital funds, as determined in accordance with GAAP, to the
        Company, as approved by the Company's Board of Directors.

               "Change Order Aggregate Approval Amount" means $ 100,000.

               "Change Order Individual Approval Amount" means $25,000.

                                       1
   7

               "Company's Initial Equity" means the appraised value of the
        Property.

               "Contractor" means the Company and H.M.H. Construction, the
        general contractors for the Project, and any successors to either
        (subject to the Bank's approval of any such successors).

               "County" means Riverside, California, the county in which the
        Property is located.

               "Disbursement Account" means Account No. 001-036695 at the Bank,
        established pursuant to Paragraph A.2 of Appendix I (Construction
        Covenants and Disbursement Procedures).

               "Improvements" means the improvements to be constructed on the
        Property, a portion of the costs of which shall be paid for with the
        proceeds of the Company Loan, and which shall consist of a packing,
        storage and distribution facility, together with all parking facilities
        and other on-site and off-site improvements relating thereto, including
        curbs, landscaping and underground utilities, all in accordance with the
        Project Plans.

               "Initial Stated Amount" means the amount available to be drawn
        under the Letter of Credit as of the Date of Issuance, as set forth
        therein and on the cover page hereof. Such amount shall be the sum of
        the Aggregate Principal Amount of the Bonds plus 49 days' interest
        computed at the Maximum Bond Interest Rate.

               "Interest Expense" means the Company's operating expense on all
        of its Indebtedness.

               "Letter of Credit Administration Fee" means an annual
        administration fee with respect to the Letter of Credit equal to 1% of
        the Stated Amount of the Letter of Credit as of the date such
        administration fee is due, payable in accordance with Subsection 2.4.

               "Letter of Credit Negotiation Fee" means the sum of $100.00,
        which sum is to be paid to the Bank in accordance with Subsection 2.3
        upon the date of each drawing upon the Letter of Credit.

               "Letter of Credit Origination Fee" means an origination fee with
        respect to the Letter of Credit equal to 3/8ths of 1% of the Initial
        Stated Amount, payable in accordance with Subsection 2.4.

               "Maximum Bond Interest Rate" means the "Maximum Interest Rate" as
        that term is defined in the Indenture, which rate shall be 12% per
        annum, computed on the basis of actual days elapsed over a 365-day or
        366-day year, as the case may be.

                                       2
   8

               "Net Worth" means the excess of all of the Company's assets over
        all of its liabilities, as determined in accordance with GAAP
        consistently applied.

               "Operating Budget" means annual period expenses of the Company,
        as approved by the Company's Board of Directors.

               "Operating Retains" means assessments or deductions from proceeds
        payable to member's of the Company, to pay for expenses of the Company
        for handling members' products, as approved by the Company's Board of
        Directors.

               "Permitted Contingent Liabilities" means indebtedness or other
        obligations which the Company guarantees or is directly or indirectly
        responsible for (a) by endorsement, in the ordinary course of
        collection, of negotiable instruments; or (b) in the ordinary course of
        business, up to a maximum of $100,000.

               "Permitted Indebtedness" means (a) unsecured loans in an
        aggregate amount not exceeding $6,000,000; (b) secured loans in any
        amount, subject to Subsection 7.3; (c) the Company Loan; and (d)
        Indebtedness to the Bank.

               "Placement Agent" shall mean Security Pacific Capital Markets
        Group (Security Pacific National Bank) and such other parties, if any,
        as are named as "Placement Agent" in the Placement Agent Agreement.

               "Placement Agent Agreement" means the Placement Agent Agreement
        dated as of September 1, 1985 among the Issuer, the Company, and the
        Placement Agent.

               "Project Architect" means Kulwiec Group.

               "Reimbursement Account" means Account No. 100-099488 at the Bank,
        a custodial account established for the purpose of making the deposits
        required by Subsection 2.3(b).

               "Remarketing Agent" means Security Pacific Capital Markets Group
        (Security Pacific National Bank), or its successor, acting pursuant to
        Section 1304 of the Indenture and the Remarketing Agreement.

               "Remarketing Period Interest Rate" means a fluctuating interest
        rate equal at all times to one percent (1%) per annum in excess of the
        Prime Rate. (See Subsection 2.3(a).)

               "Required Commencement Date" means September 1, 1985.

               "Required Completion Date" means June 30, 1986, as such date may
        be extended in accordance with Paragraph B.1 of Appendix I (Construction
        Covenants and Disbursement Procedures).

                                       3
   9

               "Title Company" means Ticor Title Insurance Company of
        California, a California corporation.

               "Working Capital" means the excess of the Company's current
        assets over its current liabilities, as determined in accordance with
        GAAP consistently applied.

               1.2 Informational Provisions.

                (a)     Address of the Company's Chief Executive Office and
                        Principal Place of Business:

                        Calavo Growers of California
                        4833 Everett Avenue
                        Vernon, California 90058

                (b)     Company's U.S. employer identification number:

                        95-0591900

                (c)     Address for notices to the Company:

                        Calavo Growers of California
                        P. O. Box 3486 Terminal Annex
                        Los Angeles, California 90051
                        Attention: Corporate Secretary

                (d)     Character of the Company's business:

                        Packing, processing, and marketing California avocados
                        and other agricultural products

                (e)     Address for notices to the Bank:

                        Security Pacific National Bank
                        333 South Hope Street
                        Los Angles, California 90071
                        Attention: Walter L. Johnson (H32-4)

                                       4
   10

                (f)     Location of Trustee's principal corporate office:

                        First Interstate Bank of California
                        Corporate Trust Department
                        707 Wilshire Boulevard
                        Los Angeles, California 90017

                (g)     Bank Payment Address:

                        Security Pacific National Bank
                        333 South Hope Street
                        Los Angeles, California 90071
                        Attention: Corporate Note Department

                                       5
   11

               1.3 Additional Defined Terms. As used in this Agreement, the
following terms shall have the indicated meanings:

               "Adjustable Interest Rate" means the variable interest rate
        applicable to the Bonds until the Conversion Date, as determined from
        time to time in accordance with Section 203 of the Indenture.

               "Aggregate Principal Amount" means the aggregate principal amount
        of the Bonds to be issued by the Issuer, as set forth on the cover page
        hereof.

               "Agreed Rate" means a fluctuating interest rate equal at all
        times to 3.0% per annum in excess of the Prime Rate.

               "Agreement" or "Reimbursement Agreement" means this Reimbursement
        Agreement, including the cover page hereof and all of the exhibits,
        appendices and schedules attached hereto, all of which are incorporated
        herein by this reference and made a part hereof.

               "Approved Budget" means the budget for the Project approved by
        the Bank, as changed from time to time in accordance with this
        Agreement. As of the date hereof, the Approved Budget is as set forth in
        Exhibit I.

               "Authorized Representative of the Company" means the person or
        persons designated as such, with the Bank's consent, by written
        certificate furnished to the Bank, substantially in the form of Exhibit
        C or otherwise in form acceptable to the Bank, containing the specimen
        signatures of such person or persons, and signed on behalf of the
        Company by an authorized officer (if the Company is a corporation) or by
        a General Partner of the Company (if the Company is a partnership).

               "Bank" - See Recitals.

               "Bank Security Documents" means, collectively, the Second Deed of
        Trust, the Second Security Agreement, the Second Financing Statement,
        and the Second Fixture Filing.

               "Bank Title Policy" - See definition of "Title Policies."

               "Bond Counsel" means an attorney or firm of attorneys acceptable
        to the Bank and of nationally recognized standing in matters pertaining
        to the validity and enforceability of, and the tax-exempt nature of
        interest on, obligations issued by states and their political
        subdivisions.

               "Bond Interest Payment Date" means each "Interest Payment Date"
        with respect to the Bonds, as that term is defined in the Indenture.

               "Bondholders" means the owners of record of the Bonds as shown in
        the Bond registration books maintained by the Trustee.

                                       6
   12

               "Bonds" means those certain bonds described on the cover page
        hereof, to be issued by the Issuer in the Aggregate Principal Amount,
        and any bonds duly issued pursuant to the Indenture in exchange therefor
        or replacement thereof, including any temporary bonds issued pursuant to
        the Indenture.

               "Bond Trustee Title Policy" -- See definition of "Title
        Policies."

               "Business Day" means any day other than a Saturday, Sunday, legal
        holiday or day on which banking institutions in the city in which the
        Bank's principal office is located or in the city in which the principal
        corporate trust office of the Letter of Credit Beneficiary is located,
        are authorized or obligated by law or executive order to close.

               "Capital Lease" means any lease of any property (whether real,
        personal or mixed) required by GAAP to be accounted for as a capital
        lease on the balance sheet of the lessee.

               "Certification of Non-Foreign Status" means an affidavit, signed
        under penalty of perjury by an individual General Partner of the
        Company, by a responsible officer of a corporate General Partner of the
        Company (or of the Company, if the Company is a corporation), or by the
        trustee, executor, or equivalent fiduciary of any General Partner of the
        Company that is a trust or estate, stating (a) that the Company is not a
        "foreign corporation," "foreign partnership," "foreign trust," or
        "foreign estate," as those terms are defined in the Internal Revenue
        Code and the regulations promulgated thereunder, (b) the Company's U.S.
        employer identification number, and (c) the address of the Company's
        principal place of business. Such affidavit shall be consistent with the
        requirements of the regulations promulgated under Section 1445 of the
        Internal Revenue Code, and shall otherwise be in form and substance
        acceptable to the Bank.

               "Change Order" means any change in the Project Plans, the
        Construction Schedule, the Approved Budget, the General Contract, or any
        related subcontracts.

               "Company" -- See Recitals.

               "Company Bonds" means all Bonds at any time purchased with the
        proceeds of a draw on the Letter of Credit upon tender of each such Bond
        to the Trustee by the Bondholder pursuant to Section 1301 or Section
        1302 of the Indenture and registered in the name of the Company.

               "Company Documents" means, collectively, this Agreement, the Loan
        Agreement, the Issuer Security Documents, the Bank Security Document --
        the Placement Agent Agreement, the Remarketing Agreement, the Letter of
        Credit Application, and any other agreements, instruments, certificates,
        statements, or other documents executed by the Company in connection

                                       7
   13

        therewith, including all other documents described in Section 3 that
        are executed by the Company.

               "Company Loan" means the loan of Bond proceeds made by the Issuer
        to the Company pursuant to the Loan Agreement.

               "Construction Fund" means the special trust fund of that name
        established and maintained by the Trustee pursuant to Article III of the
        Indenture.

               "Construction Schedule" means the construction schedule for the
        Project showing the estimated periods of commencement and completion for
        all aspects of the Project, on a trade-by-trade basis, as approved by
        the Bank and as changed from time to time in accordance with this
        Agreement.

               "Contractual Obligation" of a person means any debt or equity
        security issued by that person, and any indenture, mortgage, deed of
        trust, contract, undertaking, instrument or agreement (written or oral)
        to which such person is a party or by which it is bound, or to which it
        or any of its assets is subject.

               "Conversion" means the establishment of a fixed interest rate for
        the Bonds pursuant to Section 204 of the Indenture.

               "Conversion Date" means the Bond Interest Payment Date after
        which the Bonds begin to bear interest at the Fixed Interest Rate
        pursuant to Section 204 of the Indenture.

               "Date of Issuance" means the date as of which the Letter of
        Credit is issued and delivered to the Letter of Credit Beneficiary.

               "Disbursement" means any disbursement by the Trustee or the Bank,
        pursuant to the Indenture, the Loan Agreement or this Agreement, for the
        payment or reimbursement of Project Costs, as described in Appendix I
        (Construction Covenants and Disbursement Procedures).

               "ERISA" means the Employee Retirement Income Security Act of
        1974, as amended.

               "Event of Default" See Section 8.

               "Expiration Date" means the date the Bank's obligations under the
        Letter of Credit expire as set forth therein.

               "Final Project Completion Date" has the meaning given to such
        term in Paragraph B.1 of Appendix I (Construction Covenants and
        Disbursement Procedures).

                                       8
   14

               "First Deed of Trust" means the First Deed of Trust and
        Assignment of Rents (Construction Trust Deed) with respect to the
        Project, of even date herewith, executed by the Company, as trustor, to
        the Title Company as trustee, for the benefit of the Issuer, as
        beneficiary.

               "First Financing Statement" means a UCC-1 financing statement
        executed by the Company, as debtor pursuant to the First Security
        Agreement, and naming the Issuer as the secured party and the Trustee as
        the assignee of the secured party.

               "First Fixture Filing" means a fixture filing executed by the
        Company, as debtor pursuant to the First Security Agreement, and naming
        the Issuer as the secured party and the Trustee as the assignee of the
        secured party.

               "First Security Agreement" means the First Security Agreement
        with respect to the Project, of even date herewith, executed by the
        Company, as debtor, in favor of the Issuer, as secured party.

               "Fixed Interest Rate" means the fixed interest rate applicable to
        the Bonds after the Conversion Date, as established pursuant to Section
        204 of the Indenture.

               "Funding Requisition" shall mean a requisition form, in the form
        attached to the Loan Agreement as Exhibit B, requesting disbursement of
        monies by the Trustee from the Construction Fund.

               "General Contract" shall mean a guaranteed maximum cost general
        construction contract between the Company and H.M.H. Construction, as
        the Contractor.

               "General Partner" of a partnership means each person that is now,
        or at any time hereafter becomes, a general partner of such partnership,
        as well as each General Partner of each such general partner (if such
        general partner is itself a partnership). For example, if (a) A is a
        general partner of B, (b) B is a general partner of C, and (c) C is a
        general partner of D, then A, B, and C are each "General Partners" of D
        for the purposes of this Agreement.

               "GAAP" means generally accepted accounting principles.

               "Indebtedness" of a person means (a) all indebtedness for
        borrowed money, (b) that portion of obligations with respect to capital
        leases which is capitalized under GAAP, (c) notes payable and drafts
        accepted representing extensions of credit, whether or not representing
        obligations for borrowed money, (d) any obligation for the purchase of
        property or services that is (i) deferred for more than six months, or
        (ii) evidenced by a note or similar instrument, and (e) all recourse and
        all non-recourse indebtedness

                                       9
   15

        secured by any Lien on any property or asset of such person (whether or
        not assumed by such person).

               "Indenture" means the Indenture of Trust of even date herewith
        between the Issuer and the Trustee pursuant to which the Bonds are to be
        issued, and any indentures supplemental thereto.

               "Intercreditor Agreement" means the Intercreditor Agreement of
        even date herewith, among the Bank, the Trustee and the Issuer.

               "Internal Revenue Code" means the Internal Revenue Code of 1954,
        as amended.

               "Issuer" means the entity identified as the Issuer on the cover
        page hereof, acting as issuer of the Bonds.

               "Issuer Security Documents" means the First Deed of Trust, the
        First Security Agreement, the First Financing Statement, and the First
        Fixture Filing.

               "L/C Documents" means this Agreement, the Bank Security Documents
        and any and all other agreements, instruments, certificates, or other
        documents now or hereafter given by the Company to the Bank pursuant
        thereto or in connection therewith, or given to evidence, guaranty, or
        secure any of the Company's obligations under the foregoing documents.

               "Legal Requirements" applicable to any property or person means
        (a) all decisions, statutes, ordinances, rulings, directions, rules,
        regulations, orders, writs, decrees, injunctions, permits, certificates,
        or other requirements of any court or other governmental or public
        entity in any way applicable to or affecting such property or such
        person or its business, operations, or assets, (b) all such person's
        bylaws and articles of incorporation or partnership, limited
        partnership, joint venture, trust or other form of business association
        agreement, and (c) all other Contractual Obligations of any nature
        applicable to or affecting such property or such person. As to the
        Property or the Project, such term includes, without limitation, all
        legal requirements relating to acquisition, development, ownership, use,
        occupancy, possession, operation, maintenance, alteration and repair of
        the Property or the Project, as well as all related permits, easements,
        covenants, restrictions and similar items.

               "Letter of Credit" means the letter of credit to be issued by the
        Bank to the Trustee as Letter of Credit Beneficiary on the Date of
        Issuance substantially in the form of Exhibit A, or such letter of
        credit as may at any time hereafter be issued by the Bank in
        substitution or replacement thereof.

               "Letter of Credit Application" means the Letter of Credit
        Application and Agreement attached hereto as Exhibit B.

                                       10
   16

               "Letter of Credit Beneficiary" means the Trustee or such other
        person as shall be entitled to draw upon the Letter of Credit pursuant
        to the terms thereof.

               "Lien" means any lien, mortgage, pledge, security interest,
        charge or encumbrance of any kind (including any conditional sale or
        other title retention agreement, any lease in the nature thereof, and
        any agreement to give any lien or security interest).

               "Loan Agreement" means the Loan Agreement of even date herewith
        among the Issuer and the Company, pursuant to which the Company Loan is
        made.

               "Memorandum of Assignment" means the Memorandum of Assignment of
        First Deed of Trust and Assignment of Rents of even date herewith,
        executed by the Issuer, as assignor, to the Trustee, as assignee.

               "Owner's Title Policy" - See definition of "Title Policies."

               "Participant" means any financial institution or other person now
        or hereafter directly or indirectly participating in the rights and
        obligations of the Bank under this Agreement and the Letter of Credit.

               "Paying Agent" means the Trustee and any other bank or trust
        company designated as a Paying Agent by or in accordance with the
        Indenture.

               "Payment Obligations" means all obligations of the Company to the
        Bank under Section 2.

               "Payment Request Documents" - See Subparagraph A.4(c) of Appendix
        I (Construction Covenants and Disbursement Procedures).

               "Potential Default" means any condition or event which, with the
        lapse of time or the giving of notice, or both, would constitute an
        Event of Default.

               "Prime Rate" means the floating commercial loan rate of interest
        announced from time to time by the Bank at its principal office as its
        "prime rate", with changes in such Prime Rate effective as of 12:01 a.m.
        on the effective date announced by the Bank for each change in its
        "prime rate."

               "Project" means the Property and the Improvements.

               "Project Agreements, Permits and Licenses" means the General
        Contract; all subcontracts; the Project Architect's Agreement and any
        and all contracts with any soils, electrical, mechanical and structural
        engineers and any other persons providing architectural, design, or
        engineering

                                       11
   17

        services for the Project; any property management agreements relating to
        the Project; and all other rights, licenses, permits, franchises,
        authorizations, approvals and agreements relating to acquisition,
        construction, use, occupancy or operation of the Project, including all
        grading, demolition, building and other governmental permits and use
        entitlements.

               "Project Architect's Agreement" means the agreement between the
        Company and the Project Architect.

               "Project Costs" means the costs of acquiring, constructing,
        improving and equipping the Project.

               "Project Plans" means the final plans and specifications for the
        Project, with evidence of appropriate governmental approvals shown
        thereon, as approved by the Bank in its sole discretion and as changed
        from time to time in accordance with this Agreement. As of the date of
        execution hereof, the Project Plans are those plans and specifications
        described in Exhibit K.

               "Property" means that certain real property on which the
        Improvements are to be constructed, as more particularly described in
        Exhibit D.

               "Related Documents" means, collectively, the Company Documents,
        the Bonds, the Indenture, the Intercreditor Agreement, the Letter of
        Credit, and any other agreement, instrument or other document relating
        to or executed in connection with the transactions contemplated by this
        Agreement, including all of the documents described in Section 3.

               "Remarketing Agreement" means the Remarketing Agent Agreement of
        even date herewith, among the Remarketing Agent, the Company and the
        Issuer.

               "Second Deed of Trust" means the Second Deed of Trust and
        Assignment of Rents (Construction Trust Deed) with respect to the
        Project, of even date herewith, executed by the Company, as trustor, to
        the Title Company, as trustee, for the benefit of the Bank, as
        beneficiary.

               "Second Financing Statement" shall mean the UCC-1 financing
        statement executed by the Company, as debtor pursuant to the Second
        Security Agreement, and naming the Bank as the secured party.

               "Second Fixture Filing" shall mean the fixture filing executed by
        the Company, as debtor pursuant to the Second Security Agreement, and
        naming the Bank as the secured party.

               "Second Security Agreement" means the Second Security Agreement
        with respect to the Project, of even date herewith, executed by the
        Company, as debtor, in favor of the Bank, as secured party.

                                       12
   18

               "Stated Amount" means the maximum amount available from time to
        time to be drawn under the Letter of Credit.

               "Subsidiary" of a person means any corporation, association or
        other business entity of which more than 50% of the total voting power
        of shares of stock entitled to vote in the election of directors,
        managers or trustees thereof is at the time owned or controlled,
        directly or indirectly, by that person, by one or more of the other
        Subsidiaries of that person, or by any combination thereof.

               "Survey" means a current survey of the Property prepared by a
        surveyor registered or licensed in the State of California, containing a
        legal description of the Property and a certification from the surveyor
        to the Bank and the Title Company that it was prepared in compliance
        with the standards of the American Land Title Association, and that the
        survey shows: (a) the location of the perimeter of the Property by
        courses and distances; (b) all easements (whether benefitting or
        burdening the Property), rights-of-way, and existing utility lines
        affecting the Property, whether recorded or disclosed by physical
        inspection; (c) the acreage of the Property; (d) any established
        building lines or other restrictions of record or established by any
        applicable zoning or building code or ordinance; (e) the lines and
        widths of the public streets abutting the Property; (f) all
        encroachments onto the Property and all encroachments by any buildings,
        structures or improvements located on the Property onto any easements
        and onto property adjacent to the Property, and the extent in feet and
        inches of any such encroachments; (g) all buildings, structures,
        improvements (whether completed or partially-constructed) and other
        physical matters on the Property which may affect the Property or title
        thereto, and the relationship of such buildings, structures,
        improvements and other physical matters by distances to the perimeter of
        the Property, established building lines and street lines; (h) that
        there exists adequate means of ingress and egress to and from the
        Property and that the Property does not serve any adjoining property for
        ingress, egress or any other purpose; and (i) if the Property is
        described as being on a filed map, a legend relating the survey to such
        map.

               "Title Policies" means, collectively, the Bank Title Policy, the
        Bond Trustee Title Policy, and the Owner's Title Policy, all of which
        are defined below, and none of which shall contain any survey exceptions
        or exceptions for rights of parties in possession, easements not of
        record, or unpaid installments of special assessments, or any other
        exceptions to coverage, except as expressly provided herein or as
        otherwise approved by the Bank in writing:

                      (a) the 'Bank Title Policy': an ALTA Loan Policy - 1970
               with ALTA Endorsement Form 1 Coverage (LP 10), issued by the
               Title Company, naming the Bank as the insured, with liability in
               the amount of the Initial Stated Amount, insuring the validity
               and priority of the lien of the Second Deed of Trust, subject
               only to the

                                       13
   19

               First Deed of Trust and such other exceptions as are approved in
               writing by the Bank, and including CLTA endorsements 100, 104.7,
               111.5, and 116.1, and such other endorsements as the Bank may
               require.

                      (b) the "Bond Trustee Title Policy": an ALTA Loan Policy
               1970 with ALTA Endorsement Form 1 Coverage (LP 10), issued by the
               Title Company, naming the Trustee as the insured, with liability
               in the amount of the aggregate principal amount of the Bonds,
               insuring the validity and priority of the lien of the First Deed
               of Trust, as assigned by the Issuer to the Trustee, subject only
               to such other exceptions as are approved in writing by the Bank,
               and including CLTA endorsements 100, 104.7, 111.5, 112:1, and
               116.1, and such other endorsements as the Bank may require.

                      (c) the "Owner's Title Policy": an ALTA Owner's Policy
               Form B - 1970, issued by the Title Company, naming the Company as
               the insured, with liability in the amount of the Initial Stated
               Amount, insuring that title to the Property is vested in the
               Company in fee simple absolute, subject only to the First Deed of
               Trust, the Second Deed of Trust, and such other exceptions as are
               approved in writing by the Bank, and including such endorsements
               as the Bank may require.

               "Treasury Regulation" means any of the regulations promulgated
        from time to time by the United States Department of the Treasury.

               "Trustee" means the party identified as the Trustee on the cover
        page hereof, acting as trustee for the Issuer and the Bondholders under
        the Indenture, or any successor to such party as Trustee under the
        Indenture.

               1.4 Accounting Terms. As used herein, all accounting terms not
otherwise defined shall have the meanings assigned to them under GAAP.

               1.5 Other Definitional Provisions. References to "Sections,"
"Subsections," "Paragraphs," "Subparagraphs," "Appendices," "Recitals" and
"Exhibits" shall be to Sections, Subsections, Paragraphs, Subparagraphs,
Appendices, Recitals, and Exhibits of this Agreement unless otherwise
specifically provided. Any of the terms defined in this Section 1 may be used in
singular or plural form. As used herein, the singular includes the plural, and
the masculine gender includes the feminine and neuter genders, and vice versa,
unless the context otherwise requires, and the word "person" shall include
individuals, governmental agencies, departments and entities, trusts,
corporations, partnerships, organizations, associations, and other entities.
Except as otherwise provided herein, references to any document or instrument
defined in this Section 1 are to such document or instrument as amended or
supplemented from time to time with the Bank's consent or as otherwise permitted
by this Agreement.

                                       14
   20

               SECTION 2. APPLICATION, REIMBURSEMENT AND OTHER PAYMENTS

               2.1 Application for Letter of Credit. The Company hereby applies
to the Bank for and authorizes and instructs the Bank to issue the Letter of
Credit in the Initial Stated Amount.

               2.2 Reinstatement of Letter of Credit. Immediately following any
drawing by the Letter of Credit Beneficiary upon the Letter of Credit pursuant
to a draft accompanied by a certification in the form of Annex A to the Letter
of Credit, the obligation of the Bank under the Letter of Credit shall
automatically be reinstated to the extent so provided in the Letter of Credit.
Immediately following reimbursement in full of the Bank for the amount of any
drawing by the Letter of Credit Beneficiary upon the Letter of Credit pursuant
to a draft accompanied by a certification in the form of Annex B to the Letter
of Credit, the obligation of the Bank under the Letter of Credit shall be
automatically reinstated to the extent so provided in the Letter of Credit.
Nothing in this Subsection 2.2 shall limit the Bank's rights under any other
provision of this Agreement or the other L/C Documents.

               2.3 Reimbursement for Draws Upon Letter of Credit. (a) The
Company hereby agrees (i) to reimburse the Bank, on each date that any amount is
drawn upon the Letter of Credit (except as otherwise provided in clause (iii)
below), for the amount drawn on such date, and to pay to the Bank the Letter of
Credit Negotiation Fee set forth in Subsection 1.1 on the date of each such
drawing; (ii) to pay to the Bank, on demand, interest at the Agreed Rate on any
and all amounts unpaid by the Company when due hereunder, from the date such
amounts become due until payment in full; and (iii) to reimburse the Bank,
within 90 days, for the amount of any draw upon the Letter of Credit pursuant to
a draft accompanied by a certification in the form of Annex B to the Letter of
Credit for the purchase price of Bonds tendered for purchase pursuant to Section
1301 OR 1302 OF THE Indenture (a "Purchase Draw"). The unreimbursed amount of
any such Purchase Draw shall bear interest at the Remarketing Period Interest
Rate from the date of such drawing until the date that reimbursement of the
principal amount of such Purchase Draw becomes due and payable hereunder, which
interest shall be payable in arrears on the first day of each calendar month and
on the date that reimbursement of the principal amount of such Purchase Draw is
due and payable. Notwithstanding the foregoing, in the event of any payment by
the Bank under the Letter of Credit against presentation of a sight draft or
certificate that does not substantially comply with the terms of the Letter of
Credit, where such payment constitutes gross negligence or willful misconduct
on the part of the Bank, then the Company shall not be liable to the Bank for
reimbursement of any portion of such payment that is not applied in accordance
with the terms of the Indenture.

               (b) In order to facilitate Company's reimbursement of the Bank
pursuant to Subsection 2.3(a), (i) on the same date that any amount is drawn
upon

                                       15
   21
the Letter of Credit to make a scheduled interest payment on the Bonds, the
Company shall deposit good and readily available funds into the Reimbursement
Account in a sum equal to the amount that will be due and payable as
reimbursement to the Bank under Subsection 2.3(a)(i) for the amount to be drawn
upon the Letter of Credit prior to such Bond Interest Payment Date, together
with the Letter of Credit Negotiation Fee payable in connection with such
drawing, and (11) on the same date that any amount is drawn upon Letter of
Credit in order to pay any principal payment on the Bonds that becomes due,
whether at maturity, by acceleration, notice of prepayment, or otherwise, the
Company shall deposit good and readily available funds into the Reimbursement
Account in a sum equal to the amount that will be due and payable as
reimbursement to the Bank under Subsection 2.3(a)(i) for the amount to be drawn
under the Letter of Credit prior to such principal payment date, together with
the Letter of Credit Negotiation Fee payable in connection with such drawing.
For the purpose of calculating such deposits, it shall be assumed that interest
on the Bonds will accrue at the Maximum Bond Interest Rate during any period for
which the Remarketing Agent has not yet determined the Adjustable Interest Rate
pursuant to Section 203 of the Indenture. The Company hereby authorizes and
directs the Bank to debit the Reimbursement Account following any payment by the
Bank under the Letter of Credit for the amount due and payable to the Bank
pursuant to Subsection 2.3(a). On or before the third Business Day following
each Bond Interest Payment Date, the Bank shall refund to the Company all
amounts in the Reimbursement Account in excess of amounts then owing to the Bank
under this Agreement (other than any amounts deposited pursuant to clause (ii)
of this Subsection 2.3(b) in connection with any Bond principal payment which
has not yet occurred). The amount of any disbursement received by the Bank from
the Trustee pursuant to Section 304. 307 or 1307 of the Indenture shall be
credited to the Company's obligations under this Section 2.3.

               2.4 Fees. The Company shall pay to the Bank:

                      (a) the Letter of Credit Origination Fee, which shall be
        payable on the Date of Issuance;

                      (b) the Letter of Credit Administration Fee, which shall
        be payable annually in advance on the Date of Issuance and on each
        anniversary of such date prior to the Expiration Date; and

                      (c) the Letter of Credit Negotiation Fee, which shall be
        payable together with each reimbursement for each draw on the Letter of
        Credit.

               2.5 Allocation of Increased Costs. If any past, present or future
legislative, administrative or judicial action has the direct or indirect effect
of imposing upon the Bank or any Participant any requirement or condition
regarding this Agreement or the Letter of Credit that directly or indirectly
increases the cost to the Bank or any Participant of issuing, maintaining or
honoring draws under the Letter of Credit, or the cost to any Participant of
participating in the Letter of Credit, over the cost thereof as of the date of
this

                                       16
   22

Agreement, the Bank shall so notify the Company and the Company shall pay to the
Bank on or before the due date or dates specified in the Bank's notice (which
due date or dates shall be at least three (3) Business Days after the Company
receives such notice) all additional amounts necessary to compensate the Bank or
any Participant for such additional costs. Any such costs not so paid by Company
when due shall bear interest at the Agreed Rate from the due date specified in
the Bank's notice until paid in full. The Bank shall deliver to the Company a
certificate showing the amount and manner of calculation of such increased
costs, and such certificate shall be conclusive (absent manifest error) as to
such amount. Without limiting the generality of the foregoing, if any premium is
imposed by the Federal Deposit Insurance Corporation or any reserve requirement
is imposed by the Comptroller of the Currency or the Board of Governors of the
Federal Reserve System in connection with the Letter of Credit, the cost to the
Bank and any Participants of such premium and/or reserve requirement shall be
payable by the Company as an additional cost in accordance with this Subsection.

               2.6 Bank Expenses. The Company shall pay to the Bank, within
three (3) Business Days after demand by the Bank, all costs, charges, fees and
expenses (including fees and expenses of in-house and outside counsel for the
Bank and of any in-house or outside appraisers) paid or incurred by the Bank in
connection with this Agreement or relating to the transactions contemplated
hereby, including without limitation any costs, charges, fees and expenses
incurred in connection with (a) the preparation and negotiation of this
Agreement and any other documents or instruments executed in connection
herewith; (b) the closing of the transactions contemplated by this Agreement; or
(c) the perfection, protection, exercise or enforcement of any of the Bank's
rights under any of the Related Documents.

               2.7 Manner and Time of Payment. Except as otherwise expressly
provided herein, all payments to the Bank by or on behalf of the Company under
this Agreement shall be made in immediately available funds to the Bank at its
office at the Bank Payment Address set forth in Subsection 1.2, by 2:00 p.m.,
Los Angeles time on the date such payment is due. Funds received after such time
shall be deemed to have been paid and received on the next succeeding Business
Day.

               2.8 Application of Funds. All payments received by the Bank from
or on behalf of Company hereunder or pursuant to any of the other Related
Documents shall be applied by the Bank to the payment of amounts then owing by
the Company to the Bank, in such order and manner as the Bank chooses in its
sole discretion. Any balance remaining after payment in full of all such amounts
shall be disbursed by the Bank to the Company or such other person or persons as
shall be legally entitled thereto.

               2.9 Computation of Interest. All interest payable hereunder shall
be computed on the basis of a 360-day year and the actual number of days elapsed
in the period during which such interest accrues. In computing the number of
day: during which interest accrues on any amount outstanding

                                       17
   23

hereunder, the first date from which interest is stated to accrue hereunder
shall be included and the date of payment of such amount to the Bank shall be
excluded.

               SECTION 3. CONDITIONS PRECEDENT TO THE ISSUANCE OF THE LETTER OF
CREDIT

               The Bank's obligation to issue the Letter of Credit and all other
obligations of the Bank hereunder are conditioned upon the satisfaction by the
Company of all of the following conditions:

               3.1 Execution and Delivery of Closing Documents. On or before the
Date of Issuance, the Bank shall have received and approved the following
documents, each of which shall be in form and substance satisfactory to the Bank
and duly executed (and acknowledged where necessary) and delivered by the
appropriate parties thereto:

               (a) The Letter of Credit Application, in the form of Exhibit B;

               (b) The Loan Agreement, the Indenture, and the Intercreditor
        Agreement;

               (c) The Placement Agent Agreement;

               (d) The Remarketing Agreement;

               (e) The First Deed of Trust, the First Fixture Filing, the
        Memorandum of Assignment, the Second Deed of Trust, and the Second
        Fixture Filing, duplicate originals of which shall have been duly
        recorded in the Official Records of the County;

               (f) The First Security Agreement and the Second Security
        Agreement;

               (g) The First Financing Statement and the Second Financing
        Statement, duplicate originals of which shall have been duly filed in
        the Office of the California Secretary of State and, if the Company's
        principal place of business is located in a state other than California,
        in the Office of the Secretary of State of that state or other
        appropriate place or places in that state;

               (h) Assignments to the Bank of the Project Plans and all Project
        Agreements, Permits, and Licenses, together with consents to such
        assignments where deemed appropriate by the Bank;

               (i) An opinion of Bond Counsel and a supplemental opinion of Bond
        Counsel, as required by the Placement Agent Agreement, in each case
        dated the Date of Issuance and addressed to the Bank or accompanied by a

                                       18
   24

        letter satisfactory to the Bank entitling the Bank, any Participants,
        and any successors or assigns of either to rely on such opinions to the
        same extent as if addressed to such persons (a "Reliance Letter");

               (j) An opinion of counsel for the Company dated the Date of
        Issuance and addressed to the Bank, substantially in the form of Exhibit
        F;

               (k) An opinion of counsel for the Trustee with respect to such
        matters as the Bank may request, dated the Date of Issuance and
        addressed to the Bank or accompanied by a Reliance Letter;

               (1) An opinion of counsel for the Issuer with respect to such
        matters as the Bank may request, dated the Date of Issuance and
        addressed to the Bank or accompanied by a Reliance Letter;

               (m) An opinion of O'Melveny & Myers, special counsel to the
        Bank, with respect to such matters as the Bank may request;

               (n) Each of the approvals, authorizations, and consents described
        in Exhibit E;

               (o) An "Authorized Representative Certificate," substantially in
        the form of Exhibit C;

               (p) A certificate signed by an Authorized Representative of the
        Company and dated the Date of Issuance, confirming the satisfaction of
        the conditions set forth in Subsection 3.2;

               (q) A Certification of Non-Foreign Status;

               (r) Authorizing resolutions of the Board of Directors of the
        Company;

               (s) The inducement resolution of the Issuer declaring the intent
        of the Issuer to issue Bonds to finance the Project; the resolution of
        the governmental body approving the issuance of the Bonds by the Issuer
        to finance the Project; the resolution of the Issuer authorizing the
        issuance of the Bonds; and the final resolution of the California
        Industrial Development Financing Advisory Commission approving the
        issuance of Bonds by the Issuer to finance the Project;

               (t) A certificate of representations and warranties by the
        Company relating to the tax-exempt status of the Bonds; and

               (u) Such other documents and instruments as the Bank may
        reasonably require.

                                       19
   25

               3.2 Representations Correct; No Default. On the Date of Issuance:

                      (a) the representations and warranties contained herein
        and in each written document delivered by the Company to the Bank in
        connection with this Agreement shall be true and correct on and as of
        the Date of Issuance to the same extent as though made on and as of such
        date;

                      (b) no Event of Default or Potential Default shall have
        occurred and be continuing and neither will result from the issuance of
        the Letter of Credit.

               3.3 Other Requirements. On the Date of Issuance:

                      (a) the Issuer shall have adopted and delivered to the
        Bank certified copies of resolutions, satisfactory to the Bank,
        authorizing the issuance of the Bonds and the execution, delivery and
        performance by the Issuer of the Loan Agreement, the Intercreditor
        Agreement and the Indenture, and on the Date of Issuance such
        resolutions shall be in full force and effect;

                      (b) the Trustee shall have accepted the trusts of the
        Indenture;

                      (c) all conditions precedent to the issuance of the Bonds
        (other than issuance of the Letter of Credit) shall have occurred;

                      (d) Moody's Investors Service shall have assigned a rating
        for the Bonds at least as high as the most recent rating assigned by
        such agency to other securities comparable to the Bonds secured by
        letters of credit issued by the Bank, and such rating shall not have
        been downgraded, suspended or withdrawn;

                      (e) the Bank shall have received all amounts required by
        this Agreement to be paid to the Bank on or before the Date of Issuance
        (or provision satisfactory to the Bank shall have been made for the
        payment thereof out of Bond proceeds on the Date of Issuance);

                      (f) the Bank shall have received and approved each of the
        items listed in Exhibit H, each of which (i) shall be dated on or before
        the Date of Issuance, ii) shall at the request of the Bank be brought
        current as of the Date of Issuance, and (iii) shall be in form and
        substance satisfactory to the Bank. For the purposes of this Section
        "such date", as used in Exhibit H, shall mean the Date of Issuance;

                      (g) the Loan Agreement and the Indenture shall be
        consistent with the requirements set forth in Exhibit G; and

                      (h) no legislation, rule, order or decree shall, in the
        opinion of counsel for the Bank, purport to prohibit or restrain the
        issuance of the Letter of Credit as provided in this Agreement.

                                       20

   26
        SECTION 4. COMPANY'S OBLIGATIONS UNCONDITIONAL

        The obligations of the Company under this Agreement shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with this Agreement (subject to any modifications, waivers or consents by the
Bank in accordance with the terms hereof) under any and all circumstances, and
shall not be affected by (a) any lack of validity or enforceability of any other
Related Documents; (b) any amendment of, or any waiver or consent with respect
to, all or any of the other Related Documents; (c) the existence of any claim,
set-off, defense or other rights which the Company may have at any time against
the Issuer, the Trustee, or any other person; (d) any breach of contract or
other dispute between the Company and any person; (e) any statement or document
presented under the Letter of Credit proving to be forged, fraudulent, untrue,
inaccurate, invalid or insufficient in any respect; (f) any payment by the Bank
under the Letter of Credit against presentation of a sight draft or certificate
which does not comply with the terms of the Letter of Credit (except as
otherwise expressly provided in Subsection 2.3(a) where such payment constitutes
gross negligence or willful misconduct of the Bank); (g) any delay, extension of
time, renewal, compromise or other indulgence or modification agreed to by the
Bank, with or without notice to or approval by the Company in respect of any of
the Company's indebtedness to the Bank under this Agreement; (h) any failure to
complete the Project; (i) any exchange, release or nonperfection of any lien or
security interest in any collateral pledged or otherwise provided to secure any
of the obligations contemplated herein or in any of the other Related Documents;
(j) any non-recourse nature of any of the Company's obligations under any of the
Related Documents; or (k) any other circumstance or event whatsoever, whether or
not similar to any of the foregoing. Notwithstanding the foregoing, nothing
contained in this Section shall be construed to release the Bank from the
performance of any of the covenants, undertakings or agreements of the Bank
contained in this Agreement, except as otherwise expressly provided herein or to
prevent the Company from enforcing any of the covenants, undertakings or
agreements of the Bank in this Agreement directly against the Bank by suit for
specific performance or claims for damages or a combination of the foregoing.

        SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY

        In order to induce the Bank to enter into this Agreement and to issue
the Letter of Credit, the Company represents and warrants to the Bank that the
following statements are true, correct and complete as of the date hereof and
will be correct as of the Date of Issuance and the date of each Disbursement:

        5.1 Organization, Powers and Good Standing.

        (a) Organization and Powers. The Company is a corporation, duly
incorporated, validly existing and in good standing under the laws of the State
of its incorporation, as set forth on the cover page hereof. The Company has all

                                       21
   27

requisite power and authority, rights and franchises to own and operate its
properties, to carry on its business as now conducted and as proposed to be
conducted, and to enter into and perform this Agreement and the other Company
Documents.

        (b) Good Standing. The Company has made all filings and is in good
standing in California and, if different, in the jurisdiction of its
organization or incorporation, as the case may be, and in each other
jurisdiction in which the character of the property it owns or the nature of the
business it transacts makes such filings necessary or where the failure to make
such filings could have a materially adverse effect on the business, operations,
assets or condition (financial or otherwise) of the Company. The address of the
Company's chief executive office and principal place of business is as set forth
in Subsection 1.2.

        (c) Non-Foreign Status. The Company is not a "foreign corporation,"
"foreign partnership," "foreign trust," or "foreign estate," as those terms are
defined in the Internal Revenue Code and the regulations promulgated thereunder.
The Company's U.S. employer identification number is as set forth in Subsection
1.2.

        5.2 Authorization of Company Documents.

        (a) Authorization. The execution, delivery and performance of the
Company Documents by the Company are within the Company's powers and have been
duly authorized by all necessary action by the Company, including the adoption
of any necessary bylaws or resolutions by the board of directors of the Company.

        (b) No Conflict. To the best of the Company's knowledge, after due
investigation, the execution, delivery and performance of the Company Documents
by the Company will not violate (i) the Company's articles of incorporation or
bylaws or (ii) any Legal Requirement affecting the Company, or any of its
properties, and will not result in or require the creation (except as provided
in or contemplated by this Agreement) of any Lien upon any of such properties.
The Company is not in violation of or default under any Legal Requirement which
affects the enforceability of the Company Documents, title to the Project, or
the ability of the Company to meet any of its obligations, including payment
obligations, under the Company Documents, and no condition exists that would,
with the giving of notice or lapse of time, or both, constitute such a violation
or default.

        (c) Governmental and Private Approvals. All governmental or regulatory
orders, consents, permits, authorizations and approvals required for
commencement and timely completion of the Project have been obtained. No
additional governmental or regulatory actions, filings or registrations with
respect to the Project, and, except as described in Exhibit E, no approvals,
authorizations or consents of any trustee or holder of any indebtedness or
obligation of the Company, or any other person, are required for the due

                                       22
   28

execution, delivery and performance by the Company of the Company Documents.

        (d) Binding Obligations. This Agreement and the other Company Documents
have been duly executed by the Company, and are legally valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and by general principles of equity.

        5.3 Litigation; Adverse Facts. Except as disclosed in writing to the
Bank, there is no action, suit, investigation, proceeding or arbitration
(whether or not purportedly on behalf of the Company) at law or in equity or
before or by any foreign or domestic court or other governmental entity (a
"Legal Action"), pending or, to the best of the Company's knowledge, threatened
against or affecting the Company or any of its assets which could reasonably be
expected to result in any material adverse change in the business, operations,
assets (including the Project) or condition (financial or otherwise) of the
Company or would materially adversely affect the Company's ability to perform
its obligations under the Related Documents. There is no asserted claim against
the Company in excess of $ 100,000. The Company is not (a) in violation of any
applicable law, which violation materially adversely affects or may materially
adversely affect the business, operations, assets (including the Project) or
condition (financial or otherwise) of the Company, or (b) subject to, or in
default with respect to, any Legal Requirement that would have a materially
adverse effect on the business, operations, assets (including the Project) or
condition (financial or otherwise) of the Company. There is no Legal Action
pending or, to the best of the Company's knowledge, threatened against or
affecting the Company questioning the validity or the enforceability of this
Agreement or any of the other Related Documents.

        5.4 Financial Condition. The most recent interim and annual financial
statements of the Company, copies of which have been delivered to the Bank,
fairly present the financial condition of the Company at the dates thereof, are
true and correct, and have been prepared in accordance with GAAP on a basis
consistently applied. Any other statements and data submitted in writing by the
Company to the Bank in connection with this Agreement are true and correct in
all material respects as of their dates. Since the dates of such financial
statements there have been no material changes in the business, operations,
assets, management, ownership or condition (financial or otherwise) of the
Company, other than changes in the ordinary course of business that have not
been materially adverse. Except as otherwise previously disclosed to the Bank in
writing in connection with this Agreement, the Company has no knowledge of any
liabilities, contingent or otherwise, of the Company, and no knowledge of any
material Contractual Obligations of the Company (other than those entered into
in the ordinary course of the Company's business) which might have a materially
adverse effect upon the Company's business, operations, assets, management, or
condition (financial or otherwise).

                                       23
   29

        5.5 Title to Properties; Liens. The Company has good, sufficient and
legal title to all properties and assets reflected in its most recent balance
sheet delivered to the Bank, except for assets disposed of in the ordinary
course of business since the date of such balance sheet. All of Company's
properties are free and clear of Liens, except as permitted hereunder.

        5.6 Disclosure. There is no fact known to the Company (other than
matters of a general economic nature) which materially adversely affects the
business, operations, assets or condition (financial or otherwise) of the
Company which has not been disclosed in this Agreement or in other documents,
certificates and written statements furnished to the Bank in connection
herewith.

        5.7 Payment of Taxes. All tax returns and reports of the Company
required to be filed by it have been timely filed, and all taxes, assessments,
fees and other governmental charges upon the Company and upon its properties,
assets, income and franchises which are due and payable have been paid when due
and payable, except to the extent such taxes are being contested in good faith
in accordance with Subsection 16.1, and the Bank has received written notice of
such contests. The Company knows of no proposed tax assessment against it that
would be material to the condition (financial or otherwise) of the Company, and
the Company has not contracted with any government entity in connection with
taxes.

        5.8 Trademarks, Copyrights and Patents. The Company possesses all
necessary trademarks, trade names, copyrights, patents, patent rights and
licenses to conduct its business as now operated, without any known conflict
with the valid trademarks, trade names, copyrights, patents and license rights
of others.

        5.9 Securities Activities. The Company is not engaged principally, or as
one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying any margin stock (as defined within
Regulations G, T and U of the Board of Governors of the Federal Reserve System),
and not more than twenty-five percent (25%) of the value of the Company's
assets consists of such margin stock.

        5.10 Government Regulations. The Company is not subject to regulation
under the Investment Company Act of 1940, the Federal Power Act, the Public
Utility Holding Company Act of 1935, the Interstate Commerce Act or to any
federal or state statute or regulation limiting its ability to incur
Indebtedness for money borrowed.

        5.11 Title to Property. The Company is the sole owner of, and has good
and marketable title to, the fee interest in the Property and all other real and
personal property described in the Bank Security Documents, free from any
adverse lien, security interest or encumbrance of any kind whatsoever, excepting
only (a) the Issuer Security Documents, (b) liens and security interests in
favor of the Bank, and (c) other matters which have been approved in writing by
the Bank.

                                       24
   30

        5.12 Rights to Project Agreements, Permits and Licenses. The Company is
the true owner of all rights in and to all existing Project Agreements, Permits
and Licenses, and will be the true owner of all rights in and to all future
Project Agreements, Permits and Licenses. The Company's interest in all
contracts included in the Project Agreements, Permits and Licenses is not
subject to any present claim, set-off or deduction other than in the ordinary
course of business.

        5.13 Legal Requirements. The Company has obtained and examined, or will
obtain and examine in a timely fashion, all Legal Requirements, affecting or
relating to the Project, including those relating to environmental quality. The
Project does not and will not violate any of such requirements. The Company is
not aware of any pending or threatened investigation by any state or federal
agency with respect to such Legal Requirements.

        5.14 Utilities, etc. Telephone services, gas, electric power, storm
sewers, sanitary sewer, potable water facilities, and all other utilities and
services necessary for the construction, operation and maintenance of the
Project are available to the Property, are adequate to serve the Project, and
are not subject to any conditions limiting the use of such utilities, other than
normal restrictions applicable to users generally and normal charges to the
utility supplier. All streets and easements necessary for the construction,
operation and maintenance of the Project are available to the boundaries of the
Property.

        5.15 Commencement of Work. On or prior to the Date of Official Action,
as defined in the Loan Agreement (i.e., March 5, 1985), neither the Company nor
anyone else on the Company's behalf shall have (a) commenced construction of the
Project, (b) purchased, contracted for or otherwise brought upon the Property
any materials specially fabricated for or otherwise to be incorporated into the
Project, or (c) made any oral or written contract, agreement or arrangement of
any kind other than the Project Architect's Agreement.

        5.16 Approved Budget. On a line-by-line and total basis the costs shown
in the Approved Budget are true, correct and complete, and represent the total
of all costs, expenses and fees which the Company expects to pay or may be or
become obligated to pay to construct, occupy, and operate the Project.

        5.17 Other Related Documents. Each of the representations and warranties
of the Company contained in any of the other Related Documents is true and
correct. All of such representations and warranties are incorporated herein by
this reference to the same extent as if made by the Company herein for the
benefit of the Bank.

        SECTION 6. AFFIRMATIVE COVENANTS OF THE COMPANY

        Until the later of the Expiration Date or payment in full of all amounts
due and owing or payable to the Bank under this Agreement and the

                                       25
   31

other L/C Documents, unless the Bank otherwise expressly consents in writing:

        6.1 Maintenance of Existence, Etc. The Company will (a) maintain and
preserve its existence and all rights and franchises material to its business;
(b) maintain its assets in good order and repair; (c) conduct its business in an
orderly manner without voluntary interruption; and (d) maintain its chief
executive office and principal place of business in the State in which it is
currently located, as set forth in Subsection 1.2.

        6.2 Maintenance of Insurance.

        (a) The Company shall at all times provide, maintain, keep in full force
    and effect or cause to be provided, maintained, and kept in full force and
    effect, at its own expense, policies of insurance in such form and amounts,
    with such deductibles, and covering such casualties, risks, perils and
    liabilities as are customarily carried by similar businesses, and issued by
    responsible insurance carriers. Without limiting the generality of the
    foregoing, such insurance shall include fire and extended coverage
    (including a builder's "all risks" completed value policy in the greater
    amount of the Initial Stated Amount or the replacement cost of the Project),
    broad form public liability coverage for not less than $3,000,000 (carried
    by the Company and by H.M.H. Construction during construction), property
    damage (including course of construction coverage of not less than
    $3,000,000), product liability, workers' compensation and employer's
    liability insurance. Further, without limiting the generality of the
    foregoing, the Company shall provide, maintain and keep in force, at its own
    expense, such additional insurance as is customarily required for projects
    of a similar nature or as may be reasonably required by the Bank from time
    to time in the event that the Project is exposed to hazards and risks with
    respect to which the Bank deems the existing insurance inadequate to
    properly protect its interests.

        (b) All policies of insurance required by the terms of this Agreement
    shall either have attached thereto a lender's loss payable endorsement for
    the benefit of the Bank and the Trustee in form satisfactory to the Bank and
    the Trustee or shall name the Bank and the Trustee as additional insureds
    and shall contain an endorsement or agreement by the insurer that any loss
    shall be payable in accordance with the terms of such policy notwithstanding
    any act or negligence of the Company or any party holding under the Company
    which might otherwise result in forfeiture of said insurance and the further
    agreement of the insurer waiving all rights of setoff, counterclaim and
    deduction against the Company.

        (c) After the Project has been completed and until repayment of the
    Bonds and the satisfaction of all obligations of the Company under this
    Agreement, the Company shall also provide from time to time at the written
    request of the Bank, but not more often than once annually, satisfactory
    evidence of the insurable value of the Project. Such evidence may be in the
    form of an insurance appraisal or valuation report prepared

                                       26
   32

    by an insurance company, agent or broker, professional appraiser, architect,
    engineer or contractor approved by the Bank. The Company shall bear the
    costs, if any, of such insurance appraisal or valuation report.

        (d) The Company shall immediately furnish to the Bank all certificates
    of insurance for each policy required hereunder setting forth the coverage,
    the limits of liability, the deductibles, if any, the name of the carrier,
    the policy number, and the period of coverage, which certificates shall have
    been executed by authorized officials of the companies issuing such
    insurance, or by agents or attorneys-in-fact authorized to issue said
    certificates (in which event each such certificate shall be accompanied by a
    notarized affidavit, agency agreement or power of attorney evidencing the
    authority of the signature to issue such certificate on behalf of the
    insurer named therein). Upon the Bank's written request, the Company shall
    deliver original policies and endorsements and renewals thereof to the Bank.
    If the Bank consents, the Company may provide any of the required insurance
    through blanket policies carried by the Company and covering more than one
    location, or by policies procured by a tenant or other party holding under
    the Company; provided, however, all such policies shall be in such form and
    amount, with such deductibles, and issued by such companies, as are
    satisfactory to the Bank.

        (e) At least thirty (30) days prior to the expiration of each required
    policy, the Company shall deliver to the Bank and the Trustee evidence
    satisfactory to the Bank and the Trustee of the insurance in form as
    required by this Agreement. All such policies shall contain a provision
    that, notwithstanding any contrary agreement between the Company and the
    insurance company, such policies will not be cancelled, allowed to lapse
    without renewal, surrendered or materially amended (which term shall include
    any reduction in the scope or limits of coverage) without at least thirty
    (30) days' prior written notice to the Bank and the Trustee. All consents
    and approvals of the Bank and the Trustee required by this Section 6.2 shall
    be given or withheld in the reasonable discretion of the Bank and the
    Trustee. If the Company fails to provide, maintain, and keep in force the
    policies of insurance required by this Agreement, the Bank may (but shall
    have no obligation to) procure such insurance, or single interest insurance
    for such risks covering the Bank's and the Trustee's interests, and the
    Company will pay all premiums therefor within three (3) Business Days after
    demand by the Bank; and until such payment is made by the Company, the
    amount of all such premiums, together with interest thereon at the Agreed
    Rate, shall be secured by the Second Deed of Trust.

        6.3 Payment of Taxes, Etc. The Company will pay (a) all taxes,
assessments and governmental charges upon it or any of its properties, income,
assets or franchises before any penalties or interest accrues; and (b) all other
sums due from it before penalties or interest accrues or Liens are imposed, in
each case except to the extent contested in good faith in accordance with
Subsection 16.1. The Company shall pay all government charges or taxes,
including interest or penalties, (except income, franchise or other similar
taxes)

                                       27
   33

payable in respect of the existence, execution or delivery of the Letter of
Credit by reason of any existing or future federal or state or local statute.

        6.4 Access and Reporting. The Company will permit the representatives of
the Bank at any time or from time to time, upon one day's notice, to inspect all
of its properties, books and records. The Company, at its expense, will furnish
or cause to be furnished to the Bank the following:

        (a) Notice of Default. As soon as possible, and in any event not later
    than five days after the occurrence of any Event of Default or Potential
    Default, a statement of an Authorized Representative of the Company
    describing the details of such Event of Default or Potential Default and any
    curative action the Company proposes to take;

        (b) Monthly Statements. As soon as available, and in any event not later
    than 45 days after the last day of each month during the term of this
    Agreement commencing with the month designated by the Bank, financial
    statements of the Company including a balance sheet and a profit and loss
    statement, as at the close of and for such month, all in reasonable detail
    and prepared in accordance with GAAP on a basis consistently applied; such
    statements to be accompanied by a certificate signed by an Authorized
    Representative of the Company to the effect that such statements fairly
    present the financial condition of the Company as at the date indicated and
    the results of operations for the period indicated, subject, however, to
    year-end audit adjustments;

        (c) Annual Statements. As soon as available, and in any event not later
    than 90 days after the close of each fiscal year of the Company, financial
    statements of the Company, including a profit and loss statement,
    reconciliation of capital accounts and a consolidated statement of changes
    in financial position of the Company as at the close of and for such fiscal
    year, all in reasonable detail, certified as provided in clause (b) above by
    an Authorized Representative of the Company and, upon request of the Bank,
    accompanied by the report of a firm of certified public accountants
    reasonably acceptable to the Bank, which opinion shall be unqualified or
    contain only such qualifications as (i) do not reflect a materially adverse
    change in the financial condition of the Company and (ii) are otherwise
    acceptable to the Bank;

        (d) Budgets. As soon as available, and in any event not later than 90
    days after the close of each fiscal year of the Company, copies of the
    projected annual Capital Budget and Operating Budget for the following year
    and, as soon as available, copies of all quarterly updates and reprojections
    of said budgets.

        (e) Tax Returns. If requested by the Bank, as soon as available, and in
    any event not later than at the time of filing with the Internal Revenue
    Service, the federal tax returns (and supporting schedules, if any) of the
    Company;

                                       28
   34
        (f) Supplemental Statements. As soon as available, and in any event not
    later than at the time of filing with the Internal Revenue Service, any
    statement, supplemental statement or other tax schedule or return or
    document filed with the Internal Revenue Service pursuant to Treasury
    Regulation Section 1.103-10(b)(2)(vi)(c) as the same may be amended or
    supplemented from time to time;

        (g) Certificate of Performance. Concurrently with delivery of each of
    the financial statements provided for in clauses (b) and (c) above, a
    certificate of an Authorized Representative of the Company stating that the
    Company has performed and observed each of its covenants contained in this
    Agreement and that no Event of Default or Potential Default has occurred or,
    if any such event has occurred, specifying its nature;

        (h) Audit Reports. Promptly upon receipt thereof, copies of all reports
    submitted to the Company by independent public accountants in connection
    with each annual, interim or special audit of the financial statements of
    the Company made by such accountants, including the comment letter submitted
    by such accountants to management in connection with their annual audit;

        (i) Proxy Statements. If requested by the Bank, promptly upon their
    becoming available, copies of (i) all financial statements, reports, and
    notices sent or made available generally by the Company to its members and
    (ii) all press releases and other statements made available generally by the
    Company to the public concerning material developments relating to or
    affecting the Project or the business of the Company.

        (j) Other L/C Documents. All other documents, certificates, statements,
    notices, and other information required to be furnished to the Bank pursuant
    to any of the L/C Documents, in the manner and at the times therein
    provided;

        (k) Notices, Certificates or Communications. Immediately upon giving or
    receipt thereof, copies of any notices, certificates or other communications
    given to or received from the Trustee or the Issuer pursuant to or in
    connection with any of the Related Documents, as well as any notices and
    other communications delivered to the Property or to the Company naming the
    Bank or the "Construction Lender" as addressee, or which could reasonably be
    deemed to affect the construction of the Project or the ability of the
    Company to perform its obligations to the Bank;

        (1) Certification of Non-Foreign Status. Promptly upon request of the
    Bank from time to time, a Certification of Non-Foreign Status, executed on
    or after the date of such request by the Bank; and

        (m) Other Information. Such other documents and information relating to
    the affairs of the Company and the Project as the Bank reasonably may
    request from time to time.

                                       29
   35

        6.5 Additional Notices. The Company will promptly give notice to the
Bank of (a) any fact or circumstance of which the Company becomes aware that may
render the Approved Budget inaccurate in any material respect; (b) any Lien
affecting the Project other than Liens expressly permitted hereby; (c) the
institution of any Legal Action involving a potential liability of the Company
in excess of $100,000 (describing the proceeding and the steps being taken with
respect thereto), and any material development or determination in any such
Legal Action, (d) any other event or condition which may materially adversely
affect the development or operation of the Project, and (e) any change or
contemplated change in (i) the location of the Company's executive headquarters
or principal place of business, (ii) the legal, trade, or fictitious business
names used by the Company or (iii) the nature of the Company's trade or
business.

        6.6 Maintenance of Properties. The Company will maintain all of its
properties in good working order and condition, ordinary wear and tear excepted.

        6.7 Further Assurances. At any time or from time to time upon the
request of the Bank, the Company will, at its expense, promptly execute,
acknowledge, and deliver such further documents and do such other acts and
things as shall be necessary or advisable, in the Bank's judgment, in order to
effect fully the purposes of this Agreement or of any of the other Related
Documents. The Company will pay all fees and expenses (including reasonable
attorneys fees) incurred by the Bank in connection therewith.

        6.8 Protection of Liens on Property. The Company will maintain (a) the
lien created by the Indenture and the lien created by the First Deed of Trust as
a first lien upon the Project; and (b) the lien created by the Second Deed of
Trust as a second lien upon the Project, subject to no additional Liens or
encumbrances other than title exceptions set forth in the Title Policies and
acceptable to the Bank.

        6.9 Compliance with Legal Requirements. The Company will comply and
cause others to comply in all material respects with all Legal Requirements
affecting the Project, and all other Legal Requirements the noncompliance with
which would have a material adverse effect on (a) the business, operations,
assets, or condition (financial or otherwise) of the Company or (b) the ability
of the Company to perform its obligations under the Related Documents.

        6.10 Payment of Indebtedness. The Company will (a) duly and punctually
pay or cause to be paid all principal of and interest on any Indebtedness of the
Company, (b) comply with and perform all conditions, terms and obligations of
the notes or other instruments or agreements evidencing or securing such
Indebtedness, (c) promptly inform the Bank of any default, or potential default,
under any such note, agreement, or instrument, and (d) forward to the Bank a

                                       30
   36

copy of any notice of default or notice of any potential default under any such
note, agreement or instrument.

        6.11 Appendices. The Company will duly, timely and diligently comply
with each and every term, covenant, condition and provision set forth in
Appendix I (Construction Covenants and Disbursement Procedures) and Appendix II
ERISA Matters).

        6.12 Use of Disbursements. The Company will use or cause to be used all
Disbursements solely for the purpose of paying Project Costs.

        6.13 Project Agreements, Permits and Licenses. To the extent not
heretofore delivered to the Bank pursuant to Section 3, the Company will furnish
to the Bank, as soon as available and if requested by the Bank, true and correct
copies of all Project Agreements, Permits and Licenses, together with
assignments thereof to the Bank and consents to such assignments where deemed
appropriate, all in form and substance acceptable to the Bank. The Company has
not assigned or granted, or will assign or grant, a security interest in any of
the Project Agreements, Permits and Licenses, other than to the Bank and the
Issuer or the Trustee.

        6.14 Other Company Documents. The Company shall comply in all respects
with all of the covenants contained in the other Company Documents, all of which
covenants are incorporated herein by this reference.

        6.15 Financial Covenants.

        (a) The Company shall maintain a ratio of Indebtedness to Net Worth of
not more than 1.00.1.00.

        (b) The Company shall maintain Working Capital o` not less than
$3,500,000.

        (c) Interest Expense shall be allocated against the Operating Budget and
such Operating Budget shall not exceed the Operating Retains.

        (d) Capital Expenditures shall be allocated against the Capital Budget
and the use of funds included in such Capital Budget shall not exceed the
sources of capital funds, which shall include the Capital Retains.

        6.16 Removal of Condition Subsequent. As soon as possible after
completion of construction o the Improvements; (a) the Company shall cause
Kaiser Development Company, a California corporation ("Kaiser"), the grantor
under that certain Corporation Grant Deed dated November 5, 1984, as amended by
that certain Correction of and Amendment to Corporation Grant Deed dated as of
November 5, 1984 (the "Grant Deed"), to execute and deliver to the Company a
certificate or other instrument (the "Certificate") in recordable form
evidencing and acknowledging completion of the Improvements and Kaiser's waiver
and release of its right of reentry pursuant to the Condition Subsequent

                                       31
   37

attached as Exhibit "B" to the Grant Deed (the "Condition Subsequent"); (b) the
Company shall cause the Certificate to be recorded in the Official Records of
the County Recorder of Riverside County, California; and (c) the Company shall
cause the Title Company to remove or endorse over the exception to coverage
under the Title Policies represented by the Condition Subsequent.

        SECTION 7. NEGATIVE COVENANTS OF THE COMPANY

        Until the later of the Expiration Date or payment in full of all amounts
due and owing or payable to the Bank under this Agreement and the other L/C
Documents, unless the Bank otherwise expressly consents in writing:

        7.1 Type of Business. The Company will not discontinue or make any
substantial change in the character of its business, as indicated in
Subparagraph (d) of Section 1.2.

        7.2 Other Indebtedness. The Company will not create, incur, assume,
guarantee, permit to exist, or otherwise become directly or indirectly liable
for any Indebtedness, except Permitted Indebtedness. Also, the Company will not
dispose, with or without recourse, of any accounts or notes receivable or any
sums due or to become due.

        7.3 Liens and Encumbrances. Subject to Subsection 16.1, the Company will
not create, incur, assume or permit to exist any Lien upon or on any of its
property or assets now owned or hereafter acquired in which the Bank has a
security interest pursuant to the Bank Security Documents or any related income
or profits other than (a) Liens for taxes, assessments or governmental charges
not yet due and payable; (b) Liens incurred in the ordinary course of business
in connection with workers' compensation, unemployment insurance or social
security obligations; (c) mechanics', workmen's, materialmen's, landlords',
carriers' or other similar liens arising in the ordinary course of business with
respect to obligations which are not due; and (d) Liens in favor of the Trustee
or the Bank. In this connection, the Company acknowledges that the existence of
junior encumbrances might require consents by junior lienholders to changes in
the construction financing in order to protect the security positions of the
Trustee and the Bank, and would impair the expeditious completion of the
Project, to the detriment of all parties. The Company will not pledge or place
liens upon its accounts receivable or its inventory, or both, in an aggregate
amount exceeding $6,000,000.

        7.4 Loans and Investments. The Company will not lend money, make
investments, or extend credit, other than in the ordinary course of its business
as presently conducted.

        7.5 Limitation on Contingent Liabilities. The Company will not
guarantee or otherwise become directly or indirectly responsible (including
under

                                       32
   38

an agreement to purchase any obligations, stock, assets, goods or services or to
supply or advance any funds, assets, goods or services) for any Indebtedness or
other obligation of any person, except for Permitted Contingent Liabilities.

        7.6 Sale of Business; Merger or Consolidation. The Company will not (a)
liquidate, dissolve, merge or consolidate, or begin any proceedings to do so; or
(b) sell, lease, assign or transfer any substantial part of its business or
assets, or any assets (including in sale-leaseback transactions) unless in the
ordinary course of business and the assets included are not necessary for its
business as conducted prior to such transfer.

        7.7 Regulations G, T and U. The Company will not use the proceeds of the
Company Loan, directly or indirectly, to purchase or carry any margin stock
(within the meaning of Regulations G, T and U of the Board of Governors of the
Federal Reserve System) or extend credit to others for such purpose.

        7.8 Amendment of Company Documents. Unless necessary, in the opinion of
Bond Counsel, to preserve the exemption of the interest on the Bonds from
federal income taxation, the Company will not enter into or consent to any
amendment, termination, modification or other alteration of any of the Company
Documents, or any assignment, transfer, pledge or hypothecation of any of its
rights thereunder.

        7.9 Disposition of Project. The Company will neither cause nor permit
(a) any "transfer" (as that term is defined in Section 1.19 of the Second Deed
of Trust) of all or any portion of the Project or any other property granted
under the Second Deed of Trust (collectively, the "Trust Estate"), or (b) any
change in the membership of the Company pursuant to which any one member would
hold 50% or more equity credits in the Company, in either case, without first
receiving the prior written consent of the Bank and obtaining an opinion of Bond
Counsel addressed to the Bank that such transfer shall not adversely affect the
exemption from federal income taxation of interest on the Bonds. Consent by the
Bank to one such transaction shall not be deemed to be a waiver of the Bank's
right to require its separate written consent to future or successive
transactions. The Bank may grant or deny such consent in its sole discretion,
and if such consent is given, any such transferee shall assume all of the
obligations of the transferor under this Agreement and the other Related
Documents and agree to be bound by all provisions contained in all such
documents, and the Company and such transferee shall comply in all other
respects with any requirements set forth in the Related Documents relating to
such transfer. Such assumption shall not, however, release the transferor or any
other party from any liability to the Bank under this Agreement or any other
Related Documents except as otherwise expressly agreed in writing by the Bank.
Section 1.19 of the Second Deed of Trust defines "transfer" as follows:

        "As used herein, a 'transfer' of the Trust Estate shall include (i) any
sale, agreement to sell, transfer or conveyance of the Trust Estate, or any
portion thereof or interest therein, whether voluntary, involuntary, by
operation

                                       33
   39

of law or otherwise, or the lease of all or any portion of the Premises: (ii)
the leasing of or permitting any other party to use or occupy any portion of the
Premises; (iii) the use of any part of the surface, or subsurface to a depth of
500 feet below the surface, of the Land for the prospecting for, drilling for,
production (including injection and other producing or withdrawal operations),
mining, extraction, storing or removal of any oil, gas or other minerals whether
from the Land or elsewhere; (iv) any transfer by way of security, including the
placing or the permitting of the placing of any mortgage, deed of trust,
assignment of rents or other security device on the Premises or any part thereof
(other than the First Deed of Trust and the First Security Agreement); and (vi)
the sale or offering of direct or indirect interests in Trustor through
syndication of limited partnership interests."

        7.10 Amendment of Bylaws. The Company will not amend, or permit
the amendment of, Section 8.08 of its Bylaws and, Marketing Agreement, as
amended May 6, 1982.

        SECTION 8. EVENTS OF DEFAULT

        Upon written notice to the Company (except for the occurrence of any of
the events described in Subsections 8.1, 8.2, 8.12 and 8.13, as to which no such
notice shall be required), the occurrence of any of the following events shall
be an "Event of Default" hereunder:

        8.1 Required Deposits. The Company shall fail to make, when due, any
deposit to the Reimbursement Account required by Subsection 2.3.

        8.2 Other Payments. The Company shall fail to pay when due any other
amount due to the Bank under this Agreement or under any of the other L/C
Documents.

        8.3 Misrepresentation. Any representation or warranty of the Company,
(a) contained in this Agreement or any of the other L/C Documents, (b) contained
in any certificate delivered in connection with the L/C Documents, or (c) made
to the Bank concerning the financial condition or creditworthiness of the
Company, shall prove to have been false or misleading in any material respect
when made.

        8.4 Non-Satisfaction of Conditions to Disbursement. The Company shall
fail to satisfy any applicable condition precedent to the Bank's consent to a
Disbursement, as set forth in Part A of Appendix I (Construction Covenants and
Disbursement Procedures), or else to resolve any such situation to the Bank's
satisfaction, for more than 30 days after written notice from the Bank.

        8.5 Injunction. An order or decree shall be entered in any court of
competent jurisdiction enjoining or restraining the development of the Project
or the consummation of the transactions contemplated by this Agreement, which
order or decree shall not be vacated within 30 days after it is entered.

                                       34
   40

        8.6 Security Documents. There shall occur an "Event of Default," as that
term is defined in any of the Bank Security Documents or in any of the Issuer
Security Documents.

        8.7 Indenture. There shall occur an "Event of Default," as that term is
defined in the Indenture.

        8.8 Loan Agreement. There shall occur an "Event of Default," as that
term is defined in the Loan Agreement.

        8.9 Invalidity. Any payment obligation of the Company under this
Agreement, or under Article IV of the Loan Agreement, shall at any time for any
reason cease to be valid and binding on the Company, or the validity or
enforceability thereof shall be contested or denied by the Company or any
governmental agency or authority.

        8.10 Other Indebtedness. The Company shall (a) fail to make any payment
of any Indebtedness either relating to the Project or exceeding $100,000 when
due (whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise) and such failure shall continue after the applicable grace period, if
any, specified in the agreement or instrument relating to such Indebtedness
where the effect of such failure is to accelerate or permit the acceleration of
such Indebtedness, or (b) otherwise breach any agreement or instrument relating
to any Indebtedness either relating to the Project or exceeding $100,000, where
the effect of such breach is to accelerate, or to permit the acceleration of,
the maturity of such Indebtedness.

        8.11 Change in Financial Condition. The Company shall become insolvent,
or there shall be a breach of any of the financial covenants contained in
Section 6.15.

        8.12 Involuntary Proceedings. Without the application or consent of the
Company, (a) a receiver, trustee, custodian or similar officer shall be
appointed for the Company, or for any substantial part of its property, or (b)
any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt,
dissolution, liquidation, or similar proceedings under the laws of any
jurisdiction shall be instituted (by petition, application, or otherwise)
against the Company; and such appointment or proceedings shall remain
undischarged or undismissed for a period of 60 days.

        8.13 Voluntary Proceedings. The Company shall (a) admit in writing its
inability to pay its debts when due, or (b) make an assignment for the benefit
of creditors, or (c) apply for or consent to the appointment of any receiver,
trustee, custodian, or similar officer for the Company, or for any substantial
part of its property, or (d) institute (by petition, application, or otherwise)
or consent to any bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, dissolution, liquidation, or similar proceedings under the
laws of any jurisdiction against the Company, or (e) approve or adopt any
resolution or otherwise authorize action to approve any of the foregoing.

                                       35
   41

        8.14 Dissolution. If the Company shall dissolve, or a verified complaint
for involuntary dissolution of the Company shall be filed in accordance with
Section 1800 of the California Corporations Code, or any order, judgment or
decree shall be entered which decrees the dissolution of the Company.

        8.15 Judgments. Any final, unappealable and uninsured money judgment or
judgments in the aggregate sum of $50,000 or more shall be rendered against the
Company or its assets, or any writ or warrant of attachment, or similar process
shall be entered or filed against the Company or any of its assets, and such
judgment, writ, warrant or process shall remain unsatisfied, unsettled,
unvacated, unbonded and unstayed for a period of 30 days or in any event later
than five Business Days prior to the date of any proposed sale thereunder.

        8.16 Unauthorized Deviations, Defects, or Encroachments. There shall
occur any material deviation from the Project Plans, without the prior written
approval of the Bank, except as specifically authorized in Paragraph B.2 of
Appendix I (Construction Covenants and Disbursement Procedures), or any
workmanship or materials shall appear defective, or there shall appear any
encroachment to which the Bank has not previously consented (collectively, an
"Unauthorized Deviation, Defect or Encroachment"); provided, however, that if
such Unauthorized Deviation, Defect or Encroachment is curable within 30 days
(or such longer period as the Bank shall have expressly approved in writing) and
does not relate, in the reasonable judgment of the Bank, to matters which are of
an emergency nature, it shall not constitute a default if corrective action
satisfactory to the Bank is commenced within five days after written notice from
the Bank, and such Unauthorized Deviation, Defect or Encroachment is in fact
cured within 30 days after such notice (or within such longer period as is
approved in writing by the Bank).

        8.17 Work Stoppage. Work on the Project shall cease for 10 or more
consecutive days prior to the Final Project Completion Date without the Bank's
written consent, for causes within the Company's control, except as contemplated
by the approved Construction Schedule.

        8.18 Expiration of Permits. The Company shall fail to keep in force and
effect any permit, license, consent or approval which is required or necessary
for the Company to carry on its business, the lack of which would have an
adverse effect on its business, or to construct or operate the Project; or the
Company shall fail to renew any other permit, license, consent, or approval
required under this Agreement within fifteen (15) days after the expiration
thereof.

        8.19 ERISA Defaults. The occurrence of any "ERISA Default", as that term
is defined in Section 1 of Appendix II (ERISA Matters).

        8.20 Insolvency of General Contractor. H.M.H. Construction shall become
bankrupt or insolvent, or H.M.H. Construction shall withdraw from the
construction of the Project and the Company shall fail to procure a general
construction contract with a new general contractor satisfactory to the Bank

                                       36
   42

within 30 days from the occurrence of such bankruptcy, insolvency, or
withdrawal.

        8.21 Insurance; Protection of Liens Prohibited Transfers. The Company
shall ail to perform or observe any term, covenant or condition contained in
Subsection 6.2 (relating to the maintenance of insurance), in Subsection 6.8
relating to protection of the Liens of the First and Second Deeds o Trust), or
in Subsection 7.9 (relating to prohibited transfers).

        8.22 Breach of Other Covenants. The Company shall fail to perform or
observe any term, covenant or condition contained in this Agreement or in any
other L/C Document, provided that if such failure is not an Event of Default
under any other Subsection of this Section 8, then it shall not constitute an
"Event of Defaults" under this Subsection 8.22 if the Company promptly notifies
the Bank of its intention to cure said default and in fact cures such default
within 30 days; and provided, further, that as to any default under Subsection
6.1 (Maintenance of Existence, Etc.), Subsection 6.4 (Access and Reporting), Sub
section 6.6 (Maintenance of Properties), or Subsection 6.7 (Further Assurances,
if such default is reasonably capable of being cured within an additional 30
days, then a single additional 30-day grace period shall be allowed so long as
the Company shall have acted and shall act continuously and diligently to cure
such default during the initial 30-day period and during such additional grace
period:

        SECTION 9. REMEDIES

        9.1 Notice to Trustee. Upon the occurrence of an Event of Default, the
Bank's obligation to consent to any further Disbursements shall terminate, and
the Bank shall, at its option, have the right to notify the Trustee of the
occurrence of such Event of Default and to request that the Trustee accelerate
the Company Loan and call all Bonds for redemption in accordance with Section
802 of the Indenture. Upon the occurrence of any Event of Default, whether or
not the Bank notifies the Trustee of such Event of Default and whether or not
the Trustee draws upon the Letter of Credit to redeem the Bonds as a result
thereof, (a) the Bank shall have the option to declare (i) all sums then owing
to the Bank hereunder or under any of the other L/C Documents, plus (ii) a sum
equal to the then Stated Amount of the Letter of Credit (which sum, upon receipt
thereof by the Bank, shall be held by the Bank as collateral security for the
reimbursement of any drawings under the Letter of Credit and the payment of any
other amounts due and payable hereunder or under any of the other L/C Documents
and as collateral security for the Trustee for the benefit of the Bondholders
for the repayment by the Company of principal and interest on the Bonds),
immediately due and payable by the Company to the Bank, without presentment,
demand, protest, or notice of any kind; provided that upon the occurrence of any
Event of Default described in Subsection 8.12 or Subsection 8.13, the
above-described sums shall automatically become immediately due and payable
without the necessity of any such declaration by the Bank; and (b) the Bank
shall have all the rights and remedies provided herein and in the other Related
Documents, including, without limitation, the right to enforce any Liens granted
under this Agreement, and the Bank Security Documents.

                                       37
   43

        9.2 Completion of Project; Power of Attorney. Upon the occurrence of an
Event of Default, the Bank shall have the right whether or not any foreclosure,
receivership or other proceedings shall have been commenced or completed) to
take possession of the Property and to complete the Project substantially in the
manner contemplated by the Project Plans, and to employ security personnel to
protect the Property and the Project from injury. All sums so expended by the
Bank shall be deemed to have been paid to the Company and secured by the Bank
Security Documents. Effective upon the occurrence of an Event of Default, (a)
the Company hereby assigns to the Bank all of the Company's rights, title and
interests in and to all Project Agreements, Permits and Licenses, provided,
however, that this assignment shall not impose upon the Bank any of the
Company's obligations under such agreements, permits or licenses, in the absence
of an affirmative written assumption of such obligations by the Bank; and (b)
the Company hereby constitutes and appoints the Bank as its true and lawful
attorney-in-fact, with full power of substitution, to complete the Project in
the name of the Company, and hereby empowers the Bank, as said attorney-in-fact,
(i) to use any of the funds of the Company, including any undisbursed portion of
the Company Loan and any funds of the Company which are then held by the Bank,
for the purpose of completing the Project; (ii) to make such additions, changes,
and corrections in the Project Plans as the Bank deems desirable to complete the
Project in an economically sound manner; (iii) to employ any contractors,
subcontractors, agents, architects and inspectors as the Bank deems desirable
for such purposes; (iv) to pay, settle, or compromise all existing bills and
claims which are or may be Liens against the Property or the Project, or as may
be necessary or desirable for the completion of the Project or clearance of
title; (v) to execute all applications and certificates in the name of the
Company as may be required by any of the Project Agreements, Permits and
Licenses; (vi) to prosecute, defend, or settle any or all actions or proceedings
in connection with the Project, and to take such action and require such
performance as the Bank deems necessary in connection with any payment or
performance bond, guaranty of completion or insurance policy; and (vii) to do
any and every other act in connection with the completion of the Project which
the Company might do on its own behalf. This power of attorney shall be deemed
to be a power coupled with an interest, and cannot be revoked.

        9.3 Accounts Receivable. Upon the occurrence of an Event of Default, the
Bank shall have the right, to the extent permitted by law, to impound and take
possession of books, records, notes and other documents evidencing the Company's
accounts, accounts receivable and other claims for payment of money, arising in
connection with the Project, to give notice to the obligors thereunder of the
Bank's interest therein, and to make direct collections on such accounts,
accounts receivable and claims.

        9.4 Set Off; Waiver of Set Off. Upon the occurrence of an Event of
Default, the Bank may, at any time and from time to time, without notice to the
Company or any other person (any such notice being expressly waived), set off
and appropriate and apply, against and on account of any obligations and
liabilities of the Company to the Bank arising under or connected with this
Agreement and the other L/C Documents, irrespective of whether or not the

                                       38
   44
 Bank shall have made any demand therefore, and although such obligations and
liabilities may be contingent or unmatured, any and all deposits (general or
special, including but not limited to Indebtedness evidenced by certificates of
deposit, whether matured or unmatured, but not including trust accounts) and any
other Indebtedness at any time held or owing by the Bank to or for the credit or
the account of the Company; provided, however, that the Bank waives any such
right, and any other similar right it may have at law or otherwise, during the
pendency of any bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, dissolution, liquidation, or similar proceedings against
the Company under the laws of any jurisdiction, to the extent that the exercise
of such rights during the pendency of such proceedings would result in the
Bank's being released, prevented or restrained from or delayed in fulfilling the
Bank's obligation under the Letter of Credit, and provided, further, that the
foregoing waiver agreement by the Bank shall terminate and be of no force and
effect if Moody's Investors Service shall have advised the Bank in writing that
the absence of such a waiver would not result in the lowering or suspension by
Moody's Investors Service of its rating of the Bonds.

        9.5 Defaults Under Other Documents. The Bank shall have the right to
cure any default under any of the Related Documents but shall have no obligation
to do so.

        9.6 Remedies Cumulative. All remedies of the Bank provided for in this
Agreement are cumulative and shall be in addition to any and all other rights
and remedies available under the Bank Security Documents or any other document
or by law or equity. No exercise by the Bank of any right or remedy shall in any
way constitute a cure or waiver of any Event of Default hereunder, or invalidate
any act done pursuant to any notice of default, or prejudice the Bank in the
exercise of any other right or remedy available to the Bank. No failure on the
part of the Bank to exercise, and no delay in exercising, any right or remedy
shall operate as a waiver or otherwise preclude enforcement of any of its rights
and remedies; nor shall any single or partial exercise of any right or remedy
preclude any further exercise thereof or of any other right or remedy. The Bank
need not resort to any particular right or remedy before exercising or enforcing
any other.

        SECTION 10. OTHER ACTIONS BY BANK

        The Bank, in addition to its other rights granted by this Agreement or
otherwise, shall have the following rights:

        10.1 Right to Advance or Post Funds. In the event of any default under
any of the Related Documents, or if the Bank at any time determines that an
event or condition exists which could endanger the timely completion of the
Project or impede the fulfillment or satisfaction of any condition or term of
this Agreement or any of the other Related Documents, the Bank may cure such
default, or advance funds for the account of the Company to correct such event
or condition, in such manner as the Bank deems proper, without prejudice to the

                                       39
   45

Company's rights, if any, to recover such funds from the party to whom paid.
Such advances may be pursuant to such agreements as the Bank deems proper, and
may include agreements to indemnify a title insurer against possible assertion
of lien claims or to pay disputed amounts to contractors if the Company is
unable or unwilling to pay them. All sums so advanced by the Bank to cure any
such default or to correct any such event or condition, or which are agreed to
be paid pursuant to any such agreement, shall be for the account of the Company,
shall be reimbursed to the Bank by the Company within three (3) Business Days
after demand (with interest at the Agreed Rate until date of reimbursement), and
shall be secured (along with such accrued interest) by the Bank Security
Documents. Nothing in this Agreement shall be construed as imposing under any
circumstances any obligation upon the Bank to complete the Project, to cure any
default of the Company under this Agreement or under any of the other Related
Documents, or otherwise to perform any of the Company's obligations hereunder or
thereunder.

        10.2 Cure by Disbursement. Upon the occurrence of (a) any Event of
Default or Potential Default curable by the payment of money, or (b) any other
matter described in Subsection 10.1, the Bank, without waiving any other right
the Bank may have against the Company, shall have the right to make such cure by
payment from the Disbursement Account or from any other funds deposited with the
Bank by or on behalf of the Company pursuant to this Agreement.

        10.3 Conversion at Election of Bank. At any time the Company fails to
pay to the Bank within 90 days following a Purchase Draw an amount equal to such
Purchase Draw plus accrued interest thereon at the Remarketing Period Interest
Rate to the date of payment, the Bank may elect to convert all of the Bonds then
outstanding to a Fixed Interest Rate, as provided in Section 204 of the
Indenture. Prior to the proposed Conversion Date, the Bank may rescind such
election as provided in Section 204(c) of the Indenture.

        SECTION 11. NOTICES

        All notices and other communications hereunder shall be in writing and
shall be delivered by hand, by prepaid telegram, or by registered or certified
U.S. mail, return receipt requested (postage prepaid), to the notice addresses
set forth in Subsection 1.2 or to such other addresses as the parties may
provide to one another in accordance with this Section. Such notices and other
communications shall, if sent by mail in accordance with this Section, be deemed
given two (2) Business Days after deposit in the U.S. mail, and if sent by any
other method, shall be effective only if and when received by the addressee.

        SECTION 12. INDEMNIFICATION

        In addition to its other obligations hereunder, the Company hereby
agrees to indemnify and hold harmless the Bank, its officers, directors,
employees and agents (collectively, the "Indemnitees") from and against any and
all

                                       40
   46

claims, damages, losses, liabilities, costs or expenses (including reasonable
fees and expenses of counsel) that the Indemnitees may incur (or that may be
claimed against the Indemnitees by any person) in connection with (a) any breach
by the Company of any representation, warranty or covenant made in or pursuant
to this Agreement; (b) any failure by the Company or the Issuer to comply with
applicable federal and state laws and regulations pertaining to the offer and
sale of the Bonds; or (c) the execution and delivery of, the transfer to a
successor trustee of, or the payment or failure to pay under, the Letter of
Credit; provided, however, that the foregoing provision shall not require the
Company to indemnify the Bank for any claims, damages, losses, liabilities,
costs or expenses to the extent, but only to the extent, caused by (i) the
willful misconduct or gross negligence of the Indemnitees in determining whether
a sight draft or certificate presented under the Letter of Credit substantially
complied with the terms of the Letter of Credit or (ii) the Bank's willful
failure to pay under the Letter of Credit after the presentation to it by the
Trustee or a successor trustee of a sight draft or certificate strictly
complying with the terms of the Letter of Credit.

        SECTION 13. LIABILITY OF THE BANK

        As to the Bank, the Company assumes all risks of the acts or omissions
of the Trustee and any other Letter of Credit Beneficiary with respect to its
use of the Letter of Credit; provided, however, this assumption is not intended
to, and shall not, preclude the Company from pursuing such rights and remedies
as it may have against the Trustee or any other Letter of Credit Beneficiary at
law or under any other agreement. Neither the Bank nor any of its officers,
directors, employees or agents shall be liable or responsible for: (a) the use
made of the Letter of Credit or for any acts or omissions of the Trustee or any
Letter of Credit Beneficiary; (b) the validity, sufficiency or genuineness of
any documents, or endorsements, even if such documents should in fact prove to
be in any or all respects invalid, insufficient, fraudulent or forged; (c)
payment by the Bank against presentation of documents which do not comply with
the terms of the Letter of Credit, including failure of any documents to bear
adequate reference to the Letter of Credit; or (d) any other circumstances in
making or failing to make payment under the Letter of Credit; provided, however,
the Company shall have a claim against the Bank, and the Bank shall be liable to
the Company, to the extent, but only to the extent, of any direct, as opposed to
consequential, damages suffered by the Company which the Company proves were
caused by acts or omissions of the Bank described in clauses (c)(i) and (c)(ii)
of Section 12. By way of amplification, the Bank may accept documents that
appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary. Subject
to the foregoing, the determination of whether a draft has been presented under
the Letter of Credit prior to the Expiration Date or whether a draft drawn under
the Letter of Credit or any accompanying document or instrument is in proper and
sufficient form shall be made by the Bank in its sole discretion, which
determination shall be conclusive and binding upon the Company. The Company
hereby waives any right to object to any payment made

                                       41
   47

under the Letter of Credit against a draft with accompanying documents in the
forms provided for in the Letter of Credit but varying in punctuation,
capitalization, spelling or similar matters of form.

        SECTION 14. SUCCESSORS AND ASSIGNS

        This Agreement is a continuing obligation and shall be binding upon the
Bank and the Company, and their respective successors, transferees and assigns,
and shall inure to the benefit of and be enforceable by the Bank and the Company
and their respective successors, transferees and assigns; provided, however,
that the Company may not assign all or any part of this Agreement without the
prior written consent of the Bank. The Bank, without the consent of the Company
or any other person, may assign, negotiate, pledge, hypothecate, or grant
participations in this Agreement or in any of its rights and security under this
Agreement and the other L/C Documents, so long as such action (a) does not
adversely affect any rating then borne by the Bonds, or subject them to
redemption, and (b) permits the Company to continue dealing solely with a single
person in connection with this Agreement. The Company shall accord full
recognition to any such assignment, and all rights and remedies of the Bank in
connection with the interest so assigned shall be as fully enforceable by such
assignee as they were by the Bank before such assignment. In connection with any
proposed assignment, the Bank may disclose to the proposed assignee any
information that the Company is required to deliver to the Bank pursuant to this
Agreement. If requested by the Company, the Bank shall provide in connection
with any such assignment an opinion of Bond Counsel to the effect that such
assignment, in and of itself, (1) will not cause interest on the Bonds to be
included in the gross income of the holders thereof for purposes of federal
income taxation and (2) will not constitute an event of default under any of the
Related Documents that would permit acceleration of the obligations of the
Company under the Company Loan or mandatory redemption of the Bonds.

        SECTION 15. NO FURTHER COLLATERAL; AGREEMENT TO SHARE EQUALLY WITH
TRUSTEE

        So long as there has not occurred and there is not continuing an Event
of Default or Potential Default and the Company remains in possession of the
Project and as the obligor under the Loan Agreement, the Bank will not procure
or require any additional collateral from the Company beyond that contemplated
by this Agreement to secure the obligations of the Company. If an Event of
Default or Potential Default shall occur, the Bank may require or procure
additional collateral from the Company, and such collateral shall be granted at
least equally and ratably to the Trustee in trust for the benefit and security
of the Bondholders and the Issuer, unless the acceptance of such additional
collateral without it being granted at least equally and ratably to the Trustee
would not result in the Bank's being released, prevented, restrained from or
delayed in fulfilling the Bank's obligations under the Letter of Credit;
provided, however, that the requirement that additional collateral be granted at
least

                                       42
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equally and ratably to the Trustee shall terminate and be of no further force
and effect if Moody's Investors Service advises in writing that such acceptance
by the Bank of additional collateral will not result in the lowering or
suspension by Moody's Investors Service of its rating of the Bonds.

        SECTION 16. MISCELLANEOUS PROVISIONS

        16.1 Permitted Contests. The Company shall have the right, before any
delinquency occurs, to contest or object in good faith to any claim, demand,
levy or assessment (other than in respect of Indebtedness or Contractual
Obligations of the Company under any of the Related Documents), by appropriate
legal proceedings which are not prejudicial to the Bank's rights, but this shall
not be deemed or construed as in any way relieving, modifying or providing any
extension of time with respect to the Company's covenant to pay and comply with
any such claim, demand, levy or assessment, unless the Company shall have given
prior written notice to the Bank of the Company's intent to so contest or object
thereto, and unless (i) the Company shall have demonstrated to the Bank's
satisfaction that such legal proceedings shall conclusively operate to prevent
enforcement prior to final determination of such proceedings, and (ii) the
Company shall have furnished such bond, surety, undertaking, or other security
in connection therewith as is requested by and satisfactory to the Bank.

        16.2 Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of California, without
regard to the principles of conflicts of laws.

        16.3 Survival of Warranties. All agreements, representations and
warranties made in this Agreement and in any related certificates shall survive
the execution and delivery of this Agreement and the issuance and expiration of
the Letter of Credit and the repayment of the Company Loan, and shall continue
until any and all sums payable under this Agreement, and all obligations which
are secured by the Second Deed of Trust, shall have been paid and performed in
full.

        16.4 Severability. Any provision of this Agreement 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 or affecting the validity or
enforceability of such provision in any other jurisdiction.

        16.5 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which
counterparts, when so executed and delivered, shall be deemed to be an original,
and all of which counterparts, taken together, shall constitute but one and the
same Agreement.

        16.6 Time of Essence. Time is of the essence of this Agreement and of
each provision in which time is an element.

                                       43
   49

        16.7 No Further Credits. The Bank shall not be obligated to issue any
further credits to cure any defaults under the Related Documents or otherwise,
or in any other manner to extend any financial consideration to the Company
except as expressly provided in this Agreement.

        16.8 Headings. Section and other headings in this Agreement are for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.

        16.9 Independence of Covenants. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any one of such covenants, the fact that it would be permitted by an
exception to, or be otherwise within the limitations of, another covenant shall
not avoid the occurrence of an Event of Default or Potential Default if such
action is taken or condition exists.

        16.10 Waivers. No waiver or consent under this Agreement shall be
effective unless it is in writing and signed by the party so waiving or
consenting. Each waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it was given.

        16.11 Substitution of Letter of Credit. The Company may not deliver to
the Trustee a Substitute Letter of Credit (as defined in the Indenture) until
the Company has discharged in full its Payment Obligations to the Bank.

                                       44
   50

        IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their respective duly authorized officers and
representatives as of the date first above written.

"Bank":                                     SECURITY PACIFIC NATIONAL BANK

                                            By: /s/ [SIGNATURE ILLEGIBLE]
                                                ---------------------------
                                                    Vice President

"Company":                                  CALAVO GROWERS OF CALIFORNIA

                                            By: /s/ EGIDIO CARBONE
                                                ---------------------------
                                                 Vice President - Finance

   51

                                   APPENDIX I
                                       TO
                             REIMBURSEMENT AGREEMENT

               CONSTRUCTION COVENANTS AND DISBURSEMENT PROCEDURES

        Part A: DISBURSEMENTS.

        A.1 Bank's Consent to Disbursements by the Trustee. Pursuant to Article
III of the Loan Agreement, Section 304 of the Indenture, and Section 3 of the
Intercreditor Agreement, the Trustee is to make disbursements from the
Construction Fund for the payment or reimbursement of Project Costs only upon
receipt of a Funding Requisition complying with the requirements set forth in
Section 3.3 of the Loan Agreement, duly executed by the Company and accompanied
by the Bank's written consent to such Disbursement. The Company shall complete,
execute, and forward to the Bank its Funding Requisition for each requested
Disbursement, together with a complete set of Payment Request Documents with
respect thereto, as described in Paragraph A.3 of this Appendix I. Provided that
the Company shall have satisfied all of the terms and conditions set forth below
with respect to such Disbursement, the Bank shall promptly forward such Funding
Requisition to the Trustee, together with the Bank's written consent thereto.

        The Bank's approval of a Funding Requisition shall not be construed as a
representation by the Bank that it has reviewed, considered, approved, or joined
in any of the representations of the Company contained therein. The Bank shall
not be required to give its consent to more than two Disbursements during each
calendar month.

        A.2 Disbursement Method. Each Disbursement from the Construction Fund
for the payment of Project Costs shall be made by the Trustee to the Bank for
the account of the Company, in such manner as the Bank may direct the Trustee.
Upon receipt of such an approved Disbursement from the Trustee, the Bank shall
promptly disburse such funds for the payment of the Project Costs described in
the approved Payment Request Documents for such Disbursement, by depositing such
funds into the Disbursement Account to cover checks drawn on such Disbursement
Account to pay such Project Costs, or to reimburse the Company therefor,
provided, however, that the Bank, at its sole option, may make Disbursements
directly to any contractors, subcontractors, laborers, materialmen, or other
persons providing services or materials to the Project (collectively,
"Claimants") by using the Bank's "Cashier's Check Method of Payment," i.e., by
issuing and delivering to the Company cashier's checks payable to such
Claimants, in accordance with a "Request for Cashier's Checks" which shall be
submitted by the Company and approved by the Bank as part of the Payment Request
Documents for such Disbursement.

                                       1
   52

        A.3 Conditions to Disbursements. The Bank's consent to any Disbursement
by the Trustee shall be subject to satisfaction of each of the following
conditions precedent:

        (a) Representations and Warranties Correct; No Default. As of the date
of such Disbursement, (i) the representations and warranties of the Company
contained in the Company Documents shall be correct as though made on and as of
that date, (ii) no Event of Default shall have occurred and be continuing and no
Potential Default shall exist on such date, and (iii) the Company shall have
performed and satisfied all of the terms and conditions imposed by the Loan
Agreement and the Indenture in connection with the making of such Disbursement
(other than submission to the Trustee of a Funding Requisition therefor approved
by the Bank).

        (b) Payment Request Documents. The Company shall have submitted to the
Bank, and the Bank shall have approved, the following documents (collectively,
the "Payment Request Documents") with respect to such Disbursement, each of
which shall be in form and substance satisfactory to the Bank and duly executed
by the appropriate parties:

                (i) a certificate, signed by an Authorized Representative of the
        Company, confirming the satisfaction of each of the conditions set forth
        in Subparagraph A.3(a) of this Appendix I;

                (ii) a "Payment Request," in duplicate, in the form of Schedule
        A attached hereto or in such other form as the Bank shall from time to
        time require, together with a report, certified as true and correct by
        an Authorized Representative of the Company, setting forth such details
        concerning construction of the Project as the Bank may require,
        including without limitation: (A) a detailed breakdown of all Project
        Costs, including an itemization of (1) all Project Costs accrued as of
        the date of such Payment Request, (2) all Project Costs accrued and
        unpaid as of such date, (3) all Project Costs projected to be necessary
        to complete the Project, and (4) the application of all past
        Disbursements; (B) a current construction progress schedule; (C) the
        Company's and the Contractor's cost breakdowns for the Project, itemized
        as to trade description and item and, if requested by the Bank, showing
        the name of each contractor and subcontractor, and including, without
        limitation, such indirect costs as real estate taxes, legal and
        accounting fees, insurance, architects' and engineers' fees, loan fees,
        interest during construction, and the Contractor's and the Company's
        overhead; and (D) all changes from the previous report which are known
        or reasonably anticipated by the Company;

                (iii) evidence of proper application of all past Disbursements,
        including without limitation the following, if required by the Bank: an
        unconditional partial waiver of lien, from the Contractor and each
        subcontractor, in form and substance satisfactory to the Bank, covering
        the full amount of all past Disbursements for direct construction costs
        through the date of the most recent Disbursement, and an unconditional
        final waiver of

                                       2
   53

        lien, in form and substance satisfactory to the Bank, from each
        subcontractor who, as of the most recent Disbursement, had completed the
        work covered by its subcontract, covering the full amount due each such
        subcontractor;

                (iv) if the Bank is requiring that Disbursements to Claimants be
        made by the Bank's Cashier's Check Method of Disbursement, a completed
        "Request for Cashier's Checks", in form and substance acceptable to the
        Bank;

                (v) if requested by the Bank, specific assignments to the Bank
        of all Project Agreements, Permits and Licenses for which such specific
        assignments shall not have previously been delivered to the Bank,
        together with signed consents to such assignments where deemed
        appropriate by the Bank;

                (vi) if any part of the Disbursement is for site preparation and
        grading, a certificate from the soils engineer for the Project that such
        work and all grading and site preparation then in process or completed
        is in compliance with the recommendations specified in such soils
        engineer's soils test report previously delivered to the Bank pursuant
        to Exhibit H;

                (vii) such title insurance endorsements to the Bond Trustee
        Title Policy and the Bank Title Policy as the Bank may require,
        including, without limitation, endorsements reflecting the date and the
        amount of the requested Disbursement and insuring the continued priority
        of the liens of the First Deed of Trust and the Second Deed of Trust
        over mechanics' and other liens, subject to no exceptions to title other
        than those which have been approved by the Bank;

                (viii) if installation of the Project foundations shall have
        been completed, (A) an updated survey of such foundations and the
        perimeter walls of the buildings to be constructed on the Property,
        prepared by a surveyor registered or licensed in the State of
        California, and (B) CLTA Endorsement 102.5 (foundation endorsement) to
        the Bond Trustee Title Policy and to the Bank Title Policy; and

                (ix) such other documents and information as the Bank may
        reasonably require, including, without limitation, invoices, purchase
        orders and lien releases from all Claimants covering the amount of each
        Disbursement thereto.

        (c) Delivery of Listed Items. The Bank shall have received and approved
each of the items described in Exhibit H. For the purposes of this Subparagraph
A.3(c), "such date", as used in Exhibit H, shall mean the date of submission of
the Payment Request Documents for such Disbursement.

                                       3
   54

        (d) Inspection by Bank. The work of construction shall be progressing or
shall have been completed to the Bank's satisfaction, based on the inspection
and findings of the Bank's inspector.

        (e) Stored Materials. The Bank shall have the right, in its sole
discretion, to withhold its consent to any Disbursement for materials purchased
or to be purchased but not yet installed or incorporated into the Project
("Stored Materials"). Without limiting the generality of the foregoing, the
Bank, as a condition to its consent to any requested Disbursement relating to
Stored Materials, may require that the Company supply the Bank with the
following:

                (i) Evidence satisfactory to the Bank that the Stored Materials
        requested are included within the coverage of the insurance policies
        required by Subsection 6.2;

                (ii) A certificate satisfactory to the Bank from the seller or
        fabricator of the Stored Materials that upon payment, ownership of the
        Stored Materials will vest in the Company free of liens and claims of
        third parties; and

                (iii) Evidence satisfactory to the Bank that the Stored
        Materials are stored on the Property and adequately protected from theft
        and damage, or, if not so stored, (A) evidence that the Stored Materials
        are stored in a bonded warehouse or storage yard approved by the Bank,
        which warehouse or yard has been notified that the Trustee and the Bank
        have a security interest in said Stored Materials, and (B) the original
        warehouse receipt.

        A.4 Insurance or Condemnation Proceeds.

        (a) Conditions. The Bank, in its sole discretion, may require insurance
or condemnation proceeds to be deposited in the Insurance and Condemnation
Proceeds Account of the Revenue Fund established by the Trustee for repair,
restoration or replacement of the Project. Any insurance or condemnation
proceeds on deposit in the Insurance and Condemnation Proceeds Account shall be
held by the Trustee as cash or invested in obligations of a state, territory or
possession of the United States or any political subdivision of the foregoing,
the interest of which is exempt from Federal income taxation pursuant to Section
103(a) of the Internal Revenue Code of 1954, as amended. Disbursements of such
proceeds shall be pursuant to the same procedures as set forth herein with
respect to original construction, but shall be subject to satisfaction of each
of the following additional conditions within a reasonable period after such
insurance or condemnation proceeds are received by the Bank or the Trustee:

                (i) Within 30 days after such insurance or condemnation proceeds
        are received by the Bank or the Trustee, the Company shall have
        submitted to the Bank and the Trustee in writing a certificate stating
        that the Company intends to commence restoration of the Project to a
        condition substantially the same as the condition of the Project

                                       4
   55

        immediately prior to the loss to which such insurance or condemnation
        proceeds relate, and that such restoration is reasonably expected to be
        completed in a timely fashion within six months of the commencement of
        construction;

                (ii) If the Bank determines, in its sole judgment, that the
        amount of available insurance or condemnation proceeds is insufficient
        to pay the costs of restoration of the Project, then Company shall
        deposit with the Bank, after the Bank's demand therefor, cash in the
        amount of such insufficiency as determined by the Bank, for disbursement
        prior to disbursement of any insurance or condemnation proceeds;

                (iii) The Bank and all applicable governmental authorities shall
        have approved the final plans and specifications for restoration of the
        Project;

                (iv) Company shall have delivered to the Bank (A) a budget of
        all costs of restoration of the Project (which, upon approval by the
        Bank, shall be the "Approved Budget" hereunder), (B) a Construction
        Schedule for the restoration of the Project, and (C) a construction
        contract for the restoration work in form and content, and with a
        contractor, acceptable to the Bank;

                (v) The Bank shall have determined that after the restoration
        work is completed (A) the value of the Project, as determined by the
        Bank in its sole discretion, will be not less than the original
        appraised value of the Project approved by the Bank, and (B) the Company
        will have income sufficient to pay all operating expenses and debt
        service;

                (vi) All of the conditions to Disbursements specified herein as
        applicable to the original construction of the Project shall have been
        met; and

                (vii) If the insurance or condemnation proceeds in question are
        in excess of 25% of the then-Stated Amount of the Letter of Credit, the
        Bank shall have elected, in its sole discretion, not to require that the
        amount of such insurance or condemnation proceeds be applied to the
        prepayment of the Company Loan in accordance with Section 4.6(b) of the
        Loan Agreement.

        (b) Redemption of Bonds. If (i) the Company shall fail to satisfy in a
timely manner the above-described conditions to the application of such
insurance or condemnation proceeds to the restoration of the Project, or (ii)
the insurance or condemnation proceeds in question are in excess of 25% of the
then stated Amount of the Letter of Credit, then the Bank shall have the right,
in its sole discretion, to require that the amount of all insurance or
condemnation proceeds be applied to the prepayment of the Company Loan in
accordance with Section 4.6(b) of the Loan Agreement. Notwithstanding anything
to the contrary contained in the Company Documents, in the event that the Bank
elects to

                                       5
   56

require that insurance or condemnation proceeds be applied to prepay the Company
Loan, or in the event that the Company elects to apply such proceeds to such
prepayment, the Company shall have no obligation to restore the Project to the
condition of the Project immediately prior to the loss to which such proceeds
relate.

        Part B: CONSTRUCTION OF THE IMPROVEMENTS

        B.1 Construction Period.

        The Company shall commence construction of the Project on or before the
Required Commencement Date and shall cause such construction to continue with
diligence and continuity in compliance with the Project Plans and the
Construction Schedule in order that the Project shall be "completed" on or
before the Required Completion Date, provided, however, that the Required
Completion Date may be extended for a period equal to proven delays caused by
fire, earthquake or other acts of God, acts of public enemies, riot,
insurrection, governmental regulation of the sale of materials and supplies or
the transportation thereof, strikes directly affecting the work of construction
or shortages of material or labor resulting directly from governmental control
or diversion, but in no event shall the Required Completion Date be extended for
such causes for more than a total of 45 days unless the Bank otherwise consents.
As used herein, the Project shall be deemed "completed" on the date that all of
the following conditions have been satisfied (the "Final Completion Date"):

                (i) The Project shall have been completed in accordance with the
        Project Plans and all Legal Requirements, and the Company shall have
        furnished to the Bank, at the Company's expense, a standard AIA form of
        Certificate of Project Completion, signed by the Project Architect,
        certifying that the Project has been completed in a good and workmanlike
        manner and in accordance with the Project Plans;

                (ii) A valid notice of completion shall have been recorded and
        the applicable lien periods shall have expired, or, in lieu thereof, the
        Bank shall have received and approved final lien waivers and releases,
        in form and substance satisfactory to the Bank, from all contractors,
        subcontractors, laborers and materialmen employed or furnishing
        materials in connection with the construction of the Project;

                (iii) All claims of lien and stop notices that may have been
        recorded or notice thereof served on the Bank, the Issuer or the Trustee
        shall have either been paid in full and released or the Company shall
        have posted a surety bond sufficient to discharge the same;

                (iv) The Company shall, at its expense, have delivered or caused
        the Title Company to deliver to the Bank and the Trustee the reissued
        Bond Trustee Title Policy and the reissued Bank Title Policy, as
        described in Exhibit H, which policies shall show no exceptions to title
        not

                                       6
   57

        then or previously approved by the Bank, and shall contain such
        endorsements previously attached to said Policies and such other
        endorsements as the Bank shall require, including, without limitation,
        CLTA endorsements 100 and 102.5;

                (v) The Company shall have delivered or caused to be delivered
        to the Bank a complete set of "as built" working drawings, as well as a
        copy of the "as-built" Survey prepared in connection with the reissuance
        of the Bond Trustee Title Policy and the Bank Title Policy;

                (vi) The Bank shall have received satisfactory evidence that no
        Uniform Commercial Code financing statements or fixture filings are
        recorded or filed in the Office of the California Secretary of State (or
        in the Office of the Secretary of State of the state in which the
        Company's principal business office is located, if other than
        California), or in the Official Records of the County, against the
        Company or the Company's interest in the Property or the Project, or
        which purport to cover any collateral described in the Second Security
        Agreement, except those which may have been filed in favor of the Bank
        and the Issuer or the Trustee in connection herewith;

                (vii) The Bank shall have received appropriate approvals from
        (A) all governmental authorities regarding completion of the Project,
        which approvals shall be evidenced by an irrevocable certificate for the
        permanent occupancy thereof to the extent such approval is a condition
        to the lawful use and occupancy of the Project; (B) the local board of
        fire underwriters or its equivalent; and (C) all other governmental
        authorities having jurisdiction over the contemplated uses, operation
        and occupancy of the Project;

                (viii) The Company shall have submitted to the Bank copies of
        all Project Agreements, Permits, and Licenses, and all insurance
        policies or certificates required under Subsection 6.2, to the extent
        not previously delivered to the Bank; and

                (ix) the Company shall have executed and delivered to the Bank
        three duplicate originals of a Completion Certificate (as defined in the
        Loan Agreement).

        B.2 Approval of Changes in Project Agreements and Approved Budget.

        (a) The Company shall strictly enforce all contracts and agreements
included in the Project Agreements, Permits and Licenses and shall not agree to
any material Change Order or any changes in the Approved Budget, except pursuant
to written Change Order and in accordance with this Paragraph B.2. Change Orders
which would result in a material change in the Project Plans, the Construction
Schedule or the General Contract (as determined by the Bank in its sole
discretion), or which (i) would increase or decrease Project Costs

                                       7
   58

by more than the Change Order Individual Approval Amount in the case of an
individual Change Order, or (ii) would cause the aggregate of all Change Orders
(whether proposed or executed) which have not been approved in writing by the
Bank to exceed the Change Order Aggregate Approval Amount, shall be submitted to
the Bank for its prior written approval on a form acceptable to the Bank,
accompanied by a copy of the contract to which such Change Order relates. Any
such Change Order must, prior to being effective, be duly approved by the Bank,
the Contractor, the Project Architect, the Bank's inspector, and such other
persons as the Bank requires. Notwithstanding the foregoing, the Project Plans
shall not be modified, amended or supplemented in any way which would (A)
detract from the scope or value of the Project or (B) violate any of the Related
Documents.

        (b) The Company acknowledges that the process of obtaining the
information and confirmations needed to put the Bank in a position to approve
Change Orders may cause delays, and the Company consents to reasonable delays
and agrees to cooperate diligently with the Bank in the gathering of the
information required. In addition, the Company acknowledges and agrees that the
Bank is under no duty to review, advise or inform the Company of, and the Bank's
approval or disapproval shall not constitute a warranty or representation about,
the quality or suitability of the Project Plans or any modification, amendment
or supplement thereto. All contracts relating to the Project shall, to the
extent reasonably possible, contain provisions implementing the provisions of
this Paragraph B.2.

        B.3 Purchase of Materials Under Conditional Sales Contract. Except as
expressly authorized by the Bank in writing, no materials, equipment, fixtures
or any other part of the Project, or articles of personal property placed in the
Project, shall be purchased, installed or affixed under any security agreement
or other arrangements however denominated whereby the right is reserved or
accrues to anyone to remove or to repossess any such item or to consider them
personal property after their incorporation in the work of construction or
whereby any person other than the Bank (and, so long as the Trustee retains an
interest in the Project as trustee, the Trustee) reserves, acquires or creates a
lien upon or security interest in such items; provided, However, that the
Company may utilize leased construction equipment in connection with the
construction of the Project.

        B.4 Inspection.

        (a) The Bank and its agents and representatives shall have the right:
(i) of free entry and access to the Project and to all sites away from the
Project where materials that are to be incorporated into the Project are stored;
(ii) at the Company's expense, to inspect all work done, labor performed and
materials furnished for use in the Project; (iii) to directly contact or
otherwise communicate with the Contractor and other Claimant to verify any
matters disclosed in any Payment Request Documents submitted to the Bank; and
(iv) to examine, copy and make extracts of, all books, records, accounting data,
subcontracts and other documents pertaining to the Company or the Project and

                                       8

   59

all contractors and subcontractors supplying goods or services in connection
with the construction of the Project. The Company shall cooperate with and shall
cause the Contractor and all subcontractors to cooperate with the Bank and its
agents and representatives. Said books, records, accounting data, subcontracts
and documents shall be made available to the Bank promptly upon written demand
therefor. The Bank shall use its agents and representatives in Riverside,
California, to inspect the Project. The Company shall require or cause its
contractors to require that all contracts relating to the Project contain an
acknowledgment of the foregoing inspection rights, except where such rights have
been waived by the Bank in writing.

               (b) The Company acknowledges that the Bank is under no duty to
supervise or to inspect the work of construction, the labor performed therefor,
the materials used therein or any books and records. The Company agrees that any
inspections by the Bank are for the sole purpose of preserving the Bank's rights
hereunder and that the Company is not entitled to rely upon the same with
respect to materials, workmanship, compliance with the Project Plans or
otherwise. The Company intends and agrees to conduct its own investigations and
inspections of the construction, the labor performed and materials supplied to
determine that the quality of the Project and all other requirements of the
construction are being performed in a manner satisfactory to the Company. The
Company agrees to immediately notify the Bank, in writing, should the same be in
any manner unsatisfactory. A failure to inspect the construction of the Project,
any part thereof or any books and records relating thereto, shall not constitute
a waiver of any of the Bank's rights hereunder. Inspection not followed by
notice of default shall not constitute a waiver of any default then existing;
nor shall it constitute an acknowledgment that there has been or will be
compliance with the Project Plans or that the construction is free from
defective materials or workmanship.

               B.5 Protection Against Claims.

               (a) The Company shall promptly discharge or cause to be
discharged any mechanics' or materialmen's liens or claims of lien filed or
otherwise asserted against the Property, the Project or any funds due the
Contractor and any proceedings for the enforcement thereof and shall promptly
discharge or cause to be discharged any stop notices received by the Bank the
Issuer, or the Trustee; provided, however, that so long as no proceedings shall
have been commenced for the enforcement of such claims or liens, the Company
shall have the right to contest in good faith and with reasonable diligence the
validity of any such liens or claims upon furnishing to the Title Company such
security or indemnity as the latter may require to induce it to issue its Title
Policies, or an interim endorsement thereto, insuring against all such claims or
liens and, provided further, that the Bank shall not be required to consent to
any further Disbursements until all such mechanics' or materialmen's liens or
claims of lien have been so insured against by the Title Company to the Bank's
satisfaction. In the case of stop notices, the Company shall have the right to
contest, in good faith and with reasonable diligence, the validity of any stop
notice, provided that the Company shall immediately file with the Bank and the

                                       9
   60

Trustee a bond in the form and amount required by law in order to release such
stop notice. The Bank shall have no obligation to consent to any further
Disbursements until all stop notices have been fully released or discharged.

               (b) If (i) the Company fails promptly to discharge or contest
liens, claims of lien or stop notices and provide the security or indemnity in
the manner provided in clause (a) above, or (ii) after having complied with the
provisions of clause (a) above there is an adverse conclusion to any such
contest and the Company does not cause any final judgment or decree to be
immediately satisfied and the lien or stop notice to be discharged, then the
Bank may, but shall not be required to, procure the release and discharge of any
such lien or stop notice and any judgment or decree thereon, and in furtherance
thereof may, in its sole discretion, effect any settlement or compromise or
furnish any security or indemnity as may be required by the Title Company. All
amounts expended by the Bank in connection with the provisions of this
Subparagraph B.5(b) shall, within three (3) Business Days after demand therefor,
be repaid by the Company, together with interest thereon at the Agreed Rate from
the date of such expenditure until the Bank has been repaid and, until paid,
said sums shall be secured by the Bank Security Documents. In settling,
compromising or arranging for the discharge of any liens or stop notices under
this Subparagraph B.5(b), the Bank shall not be required to establish or confirm
the validity or amount of the lien or stop notice.

               (c) The Company will designate the Bank and the Trustee as the
"Construction Lender" on any application for building permits for the Project in
accordance with California Civil Code Section 3097(i).

               B.6 Conformity with Project Plans. The Company agrees to
construct the Project in conformity in all material respects with the Project
Plans and the recommendations contained in the approved soils report for the
Project. If construction of the Project is not in conformity with the Project
Plans and such recommendations in any material respect, or if any materials or
workmanship on the Project shall appear to the Bank to be defective, or in the
event of any encroachment to which the Bank shall not have previously consented,
the Bank, in addition to its other rights and remedies, shall have the right (a)
to direct that the Company stop the work (or such portion thereof as the Bank
deems necessary) and repair, reconstruct or correct such matter in accordance
with the Project Plans and such recommendations, and (b) to withhold its consent
to all further Disbursements until the work is in satisfactory compliance with
the Project Plans and such recommendations, and any such defect or encroachment
is eliminated. After the issuance of any such direction by the Bank, no further
work, except work to correct the defect or encroachment, shall be done on the
Project without the prior written consent of the Bank until the work is in
satisfactory compliance with the Project Plans and such recommendations. Upon
notice from the Bank to the Company, or the Company's discovery irrespective of
such notice, that the work is not in conformity with the Project Plans and such
recommendations, the Company shall commence correcting the deviation, as
promptly as is practicable and in any event within five days after the notice,
and shall prosecute such work diligently to completion, which in no event shall
be

                                       10
   61

later than 30 days after such notice or discovery unless the Company shall
provide written notice to the Bank that the correction shall take longer and the
Bank shall consent thereto. If corrective action satisfactory to the Bank is not
commenced within five days after written demand therefor by the Bank, the Bank
shall have the right (but not the obligation or the duty) to undertake such
action at the Company's expense. Furthermore, if the Bank determines that the
corrective work is not proceeding satisfactorily, the Bank shall have the right
(but not the obligation or the duty), upon not less than five days' notice to
the Company, to take over such corrective work itself and prosecute it to
completion at the Company's expense.

               B.7 Encroachments. Except for off-site improvements designated in
the Project Plans, the Company agrees that the Project shall be constructed
entirely within the lot lines of the Property and will not encroach upon any
easements, right of way, any other real estate, building lines or set-back
requirements. The Company will furnish, from time to time upon demand,
satisfactory evidence of compliance with the requirements of this Paragraph B.7.

               B.8 Warranties. Upon request of the Bank, the Company shall
furnish or otherwise make available to the Bank copies of all warranties and
guaranties received from any laborer or supplier furnishing labor, materials,
equipment, fixtures or furnishings in connection with the Project.

               B.9 Authority to File Notices. The Company irrevocably appoints,
designates, and authorizes the Bank as its agent (said agency being coupled with
an interest) to file for record any notice of completion, cessation of labor, or
any other notice that the Bank deems necessary or desirable to protect its
rights and interests hereunder or under any of the other Related Documents.

               B.10 Signs. The Company shall erect a sign provided by the Bank
on the Property in a conspicuous location indicating that construction financing
is being secured by the Bank, which sign shall comply with all applicable zoning
ordinances and restrictive covenants. The Bank shall have the right to enter
onto the Property and to post such other signs and notices as the Bank deems
necessary or desirable to protect its rights and interests in the Project.

               B.11 Third-Party Consultants. After notice to the Company, the
Bank may hire such third-party consultants as it deems necessary, the costs of
which shall be paid by the Company in accordance with Subsection 2.6, to provide
the following services: (a) to review the Project Plans; (b) to review the final
construction cost breakdown and the Construction Schedule; (c) to conduct
compliance inspections with respect to the progress of construction of the
Project and to review each element of any request for Disbursement submitted by
the Company; and (d) to perform such other services as may from time to time, be
required by the Bank in connection with the administration of the transactions
contemplated hereby.

               B.12 Disclaimer by the Bank. The Bank shall not be liable to any
contractor, subcontractor, supplier, laborer, architect, engineer, or any other

                                       11
   62

person for services performed or materials supplied in connection with the
Project, or for any debts or claims accruing in favor of any such person against
the Company or others or against the Property or the Project. The Company is not
and shall not be an agent of the Bank for any purpose. The Bank is not a joint
venture partner with the Company or with any constituent partner or shareholder,
as the case may be, of the Company in any manner whatsoever. Prior to default by
the Company under this Agreement and the exercise by the Bank of the remedies
granted herein, the Bank shall not be deemed to be in privity of contract with
any contractor, subcontractor, or provider of services to the Project, nor shall
any payment of funds directly to any such person be deemed to create any third
party beneficiary status or recognition of same by the Bank. Approvals granted
by the Bank for any matter covered by this Agreement shall be narrowly construed
to cover only the parties and facts identified in any written approval, and
shall be solely for the benefit of the Company.

               B.13 Commissions and Brokerage Fee. The Company shall pay any and
all valid claims for any commission, broker's or finder's fee, or similar
charges in connection with the transactions contemplated hereby, and shall
indemnify and hold the Bank harmless from and against any and all claims,
whether or not valid, for any such commissions, fees or charges.

               B.14 Completion of Construction. For purposes of subdivision (6)
of Section 9313 of the California Commercial Code, "completion of the
construction" shall not be deemed to occur prior to completion of all work, and
installation or incorporation into the Improvements of all materials, for which
Disbursements are made hereunder.

                                       12
   63
                                   SCHEDULE A

                                     [LOGO]
                         SECURITY PACIFIC NATIONAL BANK

                                PAYMENT REQUEST

BORROWER                              DISBURSEMENT NO.          DATE
        -----------------------------                  --------     ------------
LOCATION                              OFFICE
        -----------------------------       ------------------------------------
        -----------------------------

- --------------------------------------------------------------------------------
                    ESTIMATED
ITEM               CONSTRUCTION  PREVIOUSLY                  TOTAL
 NO.   ITEM           COST        EARNED     THIS REQUEST   EARNED   UNDISBURSED
- --------------------------------------------------------------------------------
                                                   
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
   TOTAL AMOUNTS...$             $           $              $        $
- --------------------------------------------------------------------------------

   64

                                   APPENDIX II
                                       TO
                             REIMBURSEMENT AGREEMENT

                                  ERISA MATTERS

               Section 1: Definitions. (a) As used in this Appendix, the
following terms shall have the indicated meanings:

               "ERISA Affiliate" of a person means any trade or business
(whether or not incorporated) that is a member of a group of which such person
is a member and that is under common control with such person within the meaning
of the regulations promulgated under Section 414 of the Internal Revenue Code.

               "ERISA Default" means the occurrence of any of the following
events: (a) any Pension Plan maintained by the Company or any of its ERISA
Affiliates shall be terminated within the meaning of Title IV of ERISA, or a
trustee shall be appointed by an appropriate United States district court to
administer any Pension Plan, or the PBGC shall institute proceedings to
terminate any Pension Plan or to appoint a trustee to administer any Pension
Plan if as of the date thereof the Company's liability or any such ERISA
Affiliate's liability (after giving effect to the tax consequences thereof) to
the PBGC for unfunded guaranteed vested benefits under the Pension Plans exceeds
the then current value of assets accumulated in such Pension Plan by more than
$50,000 (or in the case of a termination involving the Company or any of its
ERISA Affiliates as a "substantial employer" (as defined in Section 4001(a)(2)
of ERISA) the withdrawing employer's proportionate share of such excess shall
exceed such amount); or (b) the Company or any of its ERISA Affiliates as
employer under a Multiemployer Plan shall have made a complete or partial
withdrawal from such Multiemployer Plan and the plan sponsor of such
Multiemployer Plan shall have notified such withdrawing employer that such
employer has incurred a withdrawal liability in an annual amount exceeding
$50,000.

               "Multiemployer Plan" means a "multiemployer plan" (as defined in
Section 4001(a)(3) of ERISA) maintained for employees of the Company or any
ERISA Affiliate of the Company.

               "PBGC" means the Pension Benefit Guarantee Corporation or any
successor established under ERISA.

               "Pension Plan" means any employee plan subject to the provisions
of Title IV of ERISA and maintained for employees of the Company or any ERISA
Affiliate of the Company, other than a Multiemployer Plan.

               "Termination Event" means (a) a "Reportable Event" described in
Section 4043 of ERISA and related regulations (other than a "Reportable Event"
not subject to the provision for 30-day notice to the PBGC under such

                                        1
   65

regulations), or (b) the withdrawal of the Company or any of its ERISA
Affiliates from a Pension Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA, or (c) the filing of a
notice of intent to terminate a Pension Plan or the treatment of a Pension Plan
amendment as a termination under Section 4041 or ERISA, or (d) the institution
of proceedings to terminate a Pension Plan by the PBGC, or (e) any other event
or condition that might constitute grounds under Section 4042 of ERISA for the
termination, or the appointment of trustee to administer, any Pension Plan.

               "Unfunded Liabilities" means, with respect to any Pension Plan,
the excess of the current value of the Pension Plan's benefits guaranteed under
ERISA over the current value of the Pension Plan's assets allocable to such
benefits.

               (b) As used in this Appendix, the term "accumulated funding
deficiency" has the meaning specified in Section 302 of ERISA and Section 412 of
the Internal Revenue Code, the term "accrued benefit" has the meaning specified
in Section 3 of ERISA and the term "current value" has the meaning specified in
Section 4062(b)(1)(A) of ERISA.

               Section 2: Representations and Warranties. In order to induce the
Bank to enter into this Agreement and to issue the Letter of Credit, the Company
represents and warrants to the Bank that as of the date hereof and as of the
Date of Issuance, the Company and each of its ERISA Affiliates is and will be in
compliance in all material respects with the applicable provisions of ERISA and
the regulations and published interpretations thereunder; no Termination Event
has occurred or is reasonably expected to occur with respect to any Pension
Plan; there is no Unfunded Liability with respect to any Pension Plan; neither
the Company nor any of its ERISA Affiliates makes any contribution to any
Multiemployer Plan and has withdrawn from any such Multiemployer Plan on or
after September 26, 1980.

               Section 3: Covenants of Company. Until the later of the
Expiration Date or payment in full of all amounts due and owing or payable to
the Bank under this Agreement and the other L/C Documents:

               3.1 Termination Events and Prohibited Transactions. Promptly upon
becoming aware of the occurrence of any (i) Termination Event, or (ii)
"prohibited transaction," as such term is defined in Section 4975 of the
Internal Revenue Code, in connection with any Pension Plan or any trust created
thereunder, the Company shall give written notice to the Bank specifying the
nature thereof, and, when known, any action taken or threatened by the Internal
Revenue Service or the PBGC with respect thereto;

               3.2 Other ERISA Notices. Upon request by the Bank, the Company
shall furnish the Bank with copies of (a) all notices received by the Company or
any of its ERISA Affiliates of the PBGC's intent to terminate any Pension Plan;
(b) each Schedule B (Actuarial Information) to the annual report (Form 5500
Series) filed by the Company or any of its ERISA Affiliates with the Internal

                                        2
   66

Revenue Service with respect to each Pension Plan; and (c) all notices received
by the Company or any of its ERISA Affiliates from a Multiemployer Plan sponsor
concerning the imposition or amount of withdrawal liability pursuant to Section
4202 of ERISA; and

               3.3 Negative Covenants. The Company will not, and will not permit
any of its ERISA Affiliates to (a) engage in any transaction in connection with
which the Company or any of its ERISA Affiliates could be subject to either a
civil penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by
Section 4975 of the Internal Revenue Code, in either case in an amount in excess
of $100,000; (b) fail to make full payment when due of all amounts which, under
the provisions of any Pension Plan, the Company or any of its ERISA Affiliates
is required to pay as contributions thereto, or permit to exist any accumulated
funding deficiency, whether or not waived, with respect to any Pension Plan in
an aggregate amount greater than $250,000; (c) permit the current value of all
vested benefits under all Pension Plans to exceed value of the assets of such
Pension Plans (excluding Pension Plans with assets greater than vested benefits)
allocable to such vested benefits by more than $250,000; or (d) fail to make any
payments in an aggregate amount greater than $250,000 to any Multiemployer Plan
that the Company or any of its ERISA Affiliates may be required to make under
any agreement relating to such Multiemployer Plan, or any law pertaining
thereto.

                                        3
   67

                                    EXHIBIT A

                         SECURITY PACIFIC NATIONAL BANK

                    IRREVOCABLE DIRECT DRAW LETTER OF CREDIT

                                September 5, 1985

                          Letter of Credit No. 100-0092

First Interstate Bank of California
707 Wilshire Boulevard
Los Angeles, California 90017
Attention: Corporate Trust Department (W10-2)

Ladies and Gentlemen:

               At the request and for the account of our customer, CALAVO
GROWERS OF CALIFORNIA, a California corporation, we (the "Bank") hereby
establish in your favor this Irrevocable Direct Draw Letter of Credit ("Letter
of Credit"). This Letter of Credit is issued to you as trustee (the "Trustee")
under that certain Indenture of Trust dated as of SEPTEMBER 1, 1985 (the
"Indenture"), for the benefit of the holders of the $4,200,000 VARIABLE RATE
DEMAND INDUSTRIAL DEVELOPMENT REVENUE BONDS (CALAVO GROWERS OF CALIFORNIA
PROJECT) (the "Bonds") issued by RIVERSIDE COUNTY INDUSTRIAL DEVELOPMENT
AUTHORITY (the "Issuer") pursuant to the Indenture. Subject to the terms and
conditions herein, this Letter of Credit authorizes you to draw on us an amount
not exceeding FOUR MILLION, TWO HUNDRED SIXTY-SEVEN THOUSAND, SIX HUNDRED
SIXTY-ONE United States Dollars (US $4,267,661) (the "Stated Amount"), of which
$4,200,000 shall be with respect to the principal of the Bonds, and $67,661
shall be with respect to 49 days' accrued interest on the Bonds at a rate of 12%
per annum.

               Subject to the other provisions of this Letter of Credit, you or
any duly authorized successor Trustee may obtain the funds available under this
Letter of Credit by presentment to us of your sight draft or drafts drawn on
Security Pacific National Bank, Los Angeles, California. Each draft presented to
us must be accompanied by your certification substantially in the form of one or
more of the Annexes described below, as may be applicable to the type of drawing
you are making. You must comply with all of the instructions in brackets in
preparing each such certification.

               1. Annex A (Periodic Interest Demand With Reinstatement Request).
        If you are demanding funds with respect to a scheduled interest payment
        on the Bonds (other than Company Bonds) in accordance with the
        Indenture, and such amount is to be reinstated immediately following the

                                      A-1
   68

        drawing, your draft or drafts should be accompanied by your Annex A
        certification.

               2. Annex B (Principal and Interest Demand with Reinstatement
        Request). If you demanding funds with respect to the payment of
        principal and interest in connection with a purchase of Bonds (other
        than Company Bonds) in accordance with Section 1302 of the indenture,
        and such amount is to be reinstated upon our being reimbursed for such
        drawing, your draft or drafts should be accompanied by your Annex B
        certification.

               3. Annex C (Principal and Interest Demand Without Reinstatement
        Request). If you are demanding funds with respect to the payment of
        principal and interest on the Bonds (other than Company Bonds) in
        connection with a purchase of Bonds in accordance with Section 1301 the
        Indenture, or a partial redemption of Bonds in accordance with the
        Indenture, which amount is not to be reinstated following the drawing,
        your draft or drafts should be accompanied by your Annex C
        certification.

               4. Annex D (Final Drawing). Any draft constituting your final
        drawing under-this Letter o Credit must be accompanied by your Annex D
        certification. Only one draft accompanied by an Annex D certification
        may be presented for payment against this Letter of Credit; upon any
        such presentation, no further draft may be drawn and presented
        hereunder.

               Your sight draft accompanied by your Annex A, B, C, or D
certification and presented in full compliance with this Letter of Credit at or
before 10:00 a.m., Los Angeles time (hereinafter referred to as "Local Time"),
on a Business Day (as defined below), will be honored by our payment to you or
your designee of the draft amount in immediately available funds, no later than
10:00 a.m., Local Time, on the next following Business Day. If we receive your
draft and the required annex(es) in full compliance with the terms and
conditions of this Letter of Credit after 10:00 a.m., Local Time, on a Business
Day, we shall honor your demand for payment no later than 10:00 a.m., Local
Time, on the second following Business Day.

               Each draft presented for payment against this Letter of Credit
and each accompanying certification must be dated the date of its presentation
to us, and may be presented only on a Business Day. As used in this Letter of
Credit, "Business Day" shall mean any day other than a Saturday, Sunday, legal
holiday or a day on which banking institutions in Los Angeles, California, or in
the city in which the principal corporate trust office of the Trustee is located
are authorized or required to close. Drafts must be marked conspicuously "Drawn
under Security Pacific National Bank Irrevocable Direct Draw Letter of Credit
No. 100-0092." The certifications you are required to submit to us along with
your draft or drafts should be prepared either (i) in the form of a letter on
your letterhead signed by your officer or (ii) in the form of a facsimile copy
of such a letter sent by one of your officers to the following number, as
applicable:

               Telecopier No. (213) 613-7084

                                      A-2
   69
Other than the foregoing provisions for communication by facsimile copy,
communications with respect to this Letter of Credit shall be in writing and
shall be addressed to us at Security Pacific National Bank, 333 South Hope
Street, Los Angeles, California 90071, Attention: World Corporate Group,
Corporate Note Department (H31-5), specifically referring to the number and
date of this Letter of Credit.

               If a demand for payment made by you hereunder does not, in any
instance, conform to the terms and conditions of this Letter of Credit, we shall
give you prompt notice that the purported negotiation was not effected in
accordance with this Letter of Credit, stating the reasons therefor and that we
are holding any documents at your disposal or are returning them to you, as we
may elect. Upon being notified that the purported negotiation was not effected
in conformity with this Letter of Credit, you may attempt to correct any such
nonconforming demand for payment if, and to the extent that, you as Trustee are
entitled (without regard to the provisions of this sentence) and able to do so.

               Drafts honored by us under this Letter of Credit shall not exceed
the Stated Amount available to you under this Letter of Credit, as such amount
may vary from time to time. Each draft honored by us will reduce the Stated
Amount available under this Letter of Credit. However, in the case of a draft or
drafts accompanied by your certification substantially in the form of Annex A
and presented in full compliance with the terms and conditions of this Letter of
Credit, the Stated Amount of this Letter of Credit shall, on the date each draft
is honored by us, automatically be reinstated by us, by an amount equal to the
amount of that drawing; after such reinstatement, the Stated Amount of this
Letter of Credit shall be the same as it was immediately prior to such drawing.
Upon our being reimbursed for the amount of any draft accompanied by your
certification substantially in the form of Annex B hereto honored by us, the
Stated Amount of this Letter of Credit shall be reinstated by us, by an amount
equal to the amount of that drawing; after such reinstatement, the Stated Amount
of the Letter of Credit shall be the same as it was immediately prior to such
drawing.

               By paying you an amount demanded in accordance with this Letter
of Credit, we make no representation as to the correctness of the amount
demanded or your calculations and representations on the certificates required
of you by this Letter of Credit.

               This Letter of Credit shall expire on the earliest of (i)
September 15, 1995, (ii) when any draft accompanied by your certification
substantially in the form of Annex D to this Letter of Credit is honored and
paid by us, (iii) the first Business Day immediately following the conversion of
the Bonds to a fixed interest rate, or (iv) the day on which this Letter of
Credit is surrendered by the Trustee to the Bank, accompanied by a certificate
substantially in the form of Annex F to this Letter of Credit.

                                      A-3
   70

               This Letter of Credit shall be governed by and construed in
accordance with the Uniform Customs and Practice for Documentary Credits (1983
Revisions), International Chamber of Commerce Publication 400, and, to the
extent not inconsistent therewith, the laws of the State of California.

               This Letter of Credit sets forth in full our undertaking, and
such undertaking shall not in any way be modified, amended, amplified or limited
by reference to any document, instrument or agreement referred to herein
(including, without limitation, the Bonds), except only the Annexes and drafts
referred to herein; and any such reference shall not be deemed to incorporate
herein by reference any document, instrument or agreement except for such
Annexes and drafts.

               Anything to the contrary in Article 45 of the Uniform Customs and
Practices notwithstanding, this Letter of Credit is intended to remain in full
force and effect until it expires in accordance with its terms. Any failure by
you or any successor Trustee to draw upon this Letter of Credit with respect to
a scheduled interest payment on the Bonds in accordance with the terms and
conditions of the Indenture shall not cause this Letter of Credit to be
unavailable for any future drawing in accordance with the terms and conditions
of the Indenture.

               Anything to the contrary in Article 54 of the Uniform Customs and
Practices notwithstanding, this Letter of Credit is transferable any number of
times, but only in the amount of the full unutilized balance hereof and not in
part. Transfer may be made to any person or entity whom you or any transferee
hereunder designate as a successor trustee under the Indenture. Transfer of the
available drawing under this Letter of Credit to such transferee shall be
effected by the presentation to us of this Letter of Credit accompanied by a
request designating your successor in the form of Annex E (Transfer Demand)
attached hereto, with the signature of the appropriate officer signing on your
behalf guaranteed by another one of your officers, and the payment of One
Thousand Dollars ($1,000) as a transfer fee. Upon presentation and payment, we
shall forthwith effect a transfer of this Letter of Credit to your designated
transferee.

                                      Very truly yours,

                                      SECURITY PACIFIC NATIONAL BANK

                                      A-4
   71

                        Annex A (Periodic Interest Demand
                           With Reinstatement Request

                         SECURITY PACIFIC NATIONAL BANK

                   Irrevocable Letter of Credit No. 100-00092

SECURITY PACIFIC NATIONAL BANK
333 SOUTH HOPE STREET
LOS ANGELES, CALIFORNIA 90071
ATTENTION:   WORLD CORPORATE GROUP
             CORPORATE NOTE DEPARTMENT (H31-5)

Re:     Drawing for Interest Due on
        Scheduled Interest Payment Date

Ladies and Gentlemen:

               We refer to your Letter of Credit No. 100-0092 (the "Letter of
Credit"). Any term which is defined in the Letter of Credit shall have the same
meaning when used herein. The undersigned, a duly authorized officer of
______________ [Insert name of Trustee] (the "Trustee" or "we"), hereby
certifies to you that:

        1.      We are the Trustee or a successor Trustee under the Indenture
                for the holders of $4,200,000 VARIABLE RATE DEMAND INDUSTRIAL
                DEVELOPMENT REVENUE BONDS (CALAVO GROWERS OF CALIFORNIA PROJECT)
                (the "Bonds"), issued by RIVERSIDE COUNTY INDUSTRIAL DEVELOPMENT
                AUTHORITY (the "Issuer").

        2.      We hereby make demand under the Letter of Credit, by our
                presentment of the sight draft accompanying this Certificate,
                for payment of $__________, representing accrued and unpaid
                interest to be paid on the Bonds (other than Company Bonds) with
                respect to a scheduled interest payment.

        3.      The amount of the draft accompanying this Certificate does not
                exceed the amount available on the date hereof to be drawn under
                the Letter of Credit in respect of interest accrued on the Bonds
                and was computed in accordance with the terms and conditions of
                the Bonds and the Indenture. The date specified in paragraph 4
                below is the date upon which the payment hereby demanded is
                required to be made under the terms and conditions of the Bonds
                and the Indenture. The Letter of Credit has not terminated prior
                to the time of the delivery of this Certificate and the
                accompanying draft.

                                                                         Annex A

                                       1
   72
                4.      We request that the payment hereby demanded be made no
                        later than 10:00 a.m., Los Angeles time ("Local Time"),
                        on ___________________[if this certificate and an
                        accompanying draft are delivered at or before 10:00
                        a.m., Local Time, then insert a date which is a Business
                        Day and is no earlier than the next Business Day
                        following the date those documents are delivered; if
                        this certificate and an accompanying draft are delivered
                        after 10:00 a.m., Local Time, insert a date which is a
                        Business Day and is no earlier than the second Business
                        Day following the date those documents are delivered].
                        Unless otherwise agreed to in a writing signed by you
                        and us, please [deposit/wire transfer] the amount hereby
                        demanded to our account number __________________
                        [insert account number] with
                        ______________________________________________ [insert
                        name and address of banking institution to receive
                        funds].

                5.      Please reinstate the Letter of Credit by the amount
                        specified in paragraph 2 of this Certificate; following
                        such reinstatement, the Stated Amount shall be the same
                        as it was immediately prior to this drawing.

               IN WITNESS WHEREOF, we have executed and delivered this
Certificate as Trustee as of the _________ day of __________, 19___.

                                        Very truly yours,

                                        [Insert name of Trustee]
                                        as Trustee

                                        By:____________________________________
                                                [Insert name and title
                                                of authorized officer]

                                                                         Annex A

                                       2
   73

                     Annex B (Principal and Interest Demand
                           With Reinstatement Request

                         SECURITY PACIFIC NATIONAL BANK

                    Irrevocable Letter of Credit No. 100-0092

SECURITY PACIFIC NATIONAL BANK
333 SOUTH HOPE STREET
LOS ANGELES, CALIFORNIA 90071
ATTENTION:   WORLD CORPORATE GROUP
             CORPORATE NOTE DEPARTMENT (H31-5)

Re:     Drawing for Purchase of Bonds

Ladies and Gentlemen:

               We refer to your Letter of Credit No. 100-0092 (the "Letter of
Credit"). Any term which is defined in the Letter of Credit shall have the same
meaning when used herein. The undersigned, a duly authorized officer of
_____________ [Insert name of Trustee] (the "Trustee" or "we"), hereby certifies
to you that:

        1.      We are the Trustee or a successor Trustee under the Indenture
                for the holders of $4,200,000 VARIABLE RATE DEMAND INDUSTRIAL
                DEVELOPMENT REVENUE BONDS (CALAVO GROWERS OF CALIFORNIA PROJECT)
                (the "Bonds"), issued by RIVERSIDE COUNTY INDUSTRIAL DEVELOPMENT
                AUTHORITY (the "Issuer").

        2.      We hereby make demand under the Letter of Credit, by our
                presentment of the sight draft accompanying this Certificate,
                for payment of $__________ of which $___________ shall be with
                respect to the principal of certain of the Bonds other than
                Company Bonds) and $_____________ shall be with respect to
                interest, if any, to be paid on the Bonds other than Company
                Bonds), which total amount represents the purchase price of
                certain of the Bonds, including any interest accrued thereon
                through the date of the purchase of such Bonds.

        3.      The amount of the draft accompanying this Certificate does not
                exceed the amount available on the date hereof to be drawn under
                the Letter of Credit and was computed in accordance with the
                terms and conditions of the Bonds and the Indenture. The date
                specified in paragraph 4 below is the date upon which the
                payment hereby demanded is required to be made under the terms
                and conditions of the Bonds and the Indenture. This Letter of
                Credit has not terminated prior to the time of delivery of this
                Certificate and the accompanying draft.

                                                                         Annex B

                                       1
   74

        4.      We request that the payment hereby demanded be made no later
                than 10:00 a.m., Los Angeles time ("Local Time"), on
                __________________ [if this certificate and accompanying draft
                are presented at or before 10:00 a.m., Local Time, on a Business
                Day, then insert a date which is a Business Day and is no
                earlier than the next Business Day following the date those
                documents are delivered; if this certificate and an accompanying
                draft are delivered after 10:00 a.m., Local Time, on a Business
                Day, then insert a date which is a Business Day and which is no
                earlier than the second Business Day following the date those
                documents are delivered]. Unless otherwise agreed to in a
                writing signed by you and us, please [deposit/wire transfer] the
                amount hereby demanded to our account number
                ____________________ [insert account number] with
                _______________________________________________ [insert name and
                address of banking institution to receive funds] .

        5.      Upon your being reimbursed in the amount specified in paragraph
                2 of this Certificate, please reinstate the Letter of Credit by
                the amount specified in paragraph 2 of this Certificate;
                following such reinstatement, the Stated Amount shall be the
                same as it was immediately prior to this drawing.

               IN WITNESS WHEREOF, we have executed and delivered this
Certificate as Trustee as of the _______ day of __________, 19____.

                                        Very truly yours,

                                        [Insert name of Trustee]
                                        as Trustee

                                        By:____________________________________
                                              [Insert name and title
                                              of authorized officer]

                                                                         Annex B

                                       2
   75

                     Annex C (Principal and Interest Demand
                         Without Reinstatement Request)

                         SECURITY PACIFIC NATIONAL BANK

                   Irrevocable Letter of Credit No. 1 00-0092

SECURITY PACIFIC NATIONAL BANK
333 SOUTH HOPE STREET
LOS ANGELES, CALIFORNIA 90071
ATTENTION:   WORLD CORPORATE GROUP
             CORPORATE NOTE DEPARTMENT (H31-5)

Re:     Drawing for Partial Redemption of the Bonds or
        Purchase of the Bonds Upon Conversion

Ladies and Gentlemen:

               We refer to your Letter of Credit No. 100-0092 (the "Letter of
Credit"). Any term which is defined in the Letter of Credit shall have the same
meaning when used herein. The undersigned, a duly authorized officer of
________________ [Insert name of Trustee] (the "Trustee" or "we"), hereby
certifies to you that:

        1.      We are the Trustee or a successor Trustee under the Indenture
                for the holders of $4,200,000 VARIABLE RATE DEMAND INDUSTRIAL
                DEVELOPMENT REVENUE BONDS (CALAVO GROWERS OF CALIFORNIA PROJECT)
                (the "Bonds"), issued by RIVERSIDE COUNTY INDUSTRIAL DEVELOPMENT
                AUTHORITY (the "Issuer").

        2.      We hereby make demand under the Letter of Credit for payment of
                $____________ , of which $___________ shall be with respect to
                the principal of certain of the Bonds (other than Company
                Bonds), and $___________ shall be with respect to interest, if
                any, to be paid on the Bonds (other than Company Bonds), which
                total amount is due either with respect to a purchase of the
                Bonds in accordance with Section 1301 of the Indenture or with
                respect to a partial redemption of the Bonds pursuant to the
                Indenture.

        3.      The amount of the draft accompanying this Certificate does not
                exceed the amount available on the date hereof to be drawn under
                the Letter of Credit and was computed in accordance with the
                terms and conditions of the Bonds and the Indenture. The date
                specified in paragraph 4 below is the date upon which the
                payment hereby demanded is required to be made under the terms
                and conditions of the Bonds and the Indenture. The Letter of
                Credit has not terminated prior to the time of the delivery of
                this Certificate and the accompanying draft.

                                                                         Annex C

                                       1
   76

        4.      We request that the payment hereby demanded be made no later
                than 10:00 a.m., Los Angeles time ("Local Time"), on
                ______________ [if this certificate and an accompanying draft
                are delivered at or before 10:00 a.m., Local Time, insert a date
                which is a Business Day and is no earlier than the next Business
                Day following the date those documents are delivered; if this
                certificate and an accompanying draft are delivered after 10:00
                a.m., Local Time, insert a date which is a Business Day and is
                no earlier than the second Business Day following the date those
                documents are delivered]. Unless otherwise agreed to in a
                writing signed by you and us, please [deposit/wire transfer] the
                amount hereby demanded to our account number __________________
                [insert account number] with
                _____________________________________________ [insert name and
                address of banking institution to receive funds].

        5.      Upon application of the amount with respect to principal of the
                Bonds set forth in paragraph 2 of this Certificate, there shall
                be outstanding $_____________ principal amount of the Bonds.

               IN WITNESS WHEREOF, we have executed and delivered this
Certificate as Trustee as of the _____ day of ___________, 19___.

                                        Very truly yours,

                                        [Insert name of Trustee]
                                        as Trustee

                                        By:____________________________________
                                               [Insert name and title
                                                of authorized officer]

                                                                         Annex C

                                       2
   77

                             Annex D (Final Drawing)

                         SECURITY PACIFIC NATIONAL BANK

                    Irrevocable Letter of Credit No. 100-0092

SECURITY PACIFIC NATIONAL BANK
333 SOUTH HOPE STREET
LOS ANGELES, CALIFORNIA 90071
ATTENTION:   WORLD CORPORATE GROUP
             CORPORATE NOTE DEPARTMENT (H31-5)

Re:     Final Drawing and Termination

Ladies and Gentlemen:

               We refer to your Letter of Credit No. 100-0092 (the "Letter of
Credit"). Any term which is defined in the Letter of Credit shall have the same
meaning when used herein. The undersigned, a duly authorized officer of
_________________ [Insert name of Trustee] (the "Trustee" or "we"), hereby
certifies to you that:

        1.      We are the Trustee or a successor Trustee under the Indenture
                for the holders of $4,200,000 VARIABLE RATE DEMAND INDUSTRIAL
                DEVELOPMENT REVENUE BONDS (CALAVO GROWERS OF CALIFORNIA PROJECT)
                (the "Bonds"), issued by RIVERSIDE COUNTY INDUSTRIAL DEVELOPMENT
                AUTHORITY (the "Issuer").

        2.      We hereby make demand for payment of $_____________, of which
                $____________ shall be with respect to the principal of the
                Bonds (other than Company Bonds), and $______________ shall be
                with respect to interest, if any, to be paid on the Bonds (other
                than Company Bonds).

        3.      This drawing is being made as a result of the maturity or
                redemption of all outstanding Bonds in accordance with the terms
                and conditions of the Bonds and the Indenture.

        4.      The amount of the draft accompanying this Certificate does not
                exceed the amount available on the date hereof to be drawn under
                the Letter of Credit and was computed in accordance with the
                terms and conditions of the Bonds and the Indenture. The date
                specified in paragraph 5 below is the date upon which the
                payment hereby demanded is required to be made under the terms
                and conditions of the Bonds and the Indenture. The Letter of
                Credit has not terminated prior to the delivery of this
                Certificate and the accompanying draft.

                                                                         Annex D

                                       1
   78

        5.      The sight draft accompanying this Certificate constitutes the
                final drawing under the Letter of Credit and upon payment of
                such draft, the Letter of Credit is cancelled. We request that
                the payment hereby demanded be made no later than 10:00 a.m.,
                Los Angeles time ("Local Time"), on ___________________ [if this
                certificate and an accompanying draft are delivered at or before
                10:00 a.m., Local Time, insert a date which is a Business Day
                and which is no earlier than the next Business Day following the
                date those documents are delivered; if this certificate and an
                accompanying draft are delivered after 10:00 a.m., Local Time,
                insert a date which is a Business Day and is no earlier than the
                second Business Day following the date these documents are
                delivered]. Please [deposit/wire transfer] the amount hereby
                demanded to our account number ___________________ [insert
                account number] with ___________________________ [insert name
                and address of banking institution to receive e funds].

               IN WITNESS WHEREOF, we have executed and delivered this
Certificate as Trustee as of the _____ day of ________, 19__.

                                        Very truly yours,

                                        [Insert name of Trustee]
                                        as Trustee

                                        By:____________________________________
                                               [Insert name and title
                                               of authorized officer]

                                                                         Annex D

                                       2
   79

                            Annex E (Transfer Demand)

                         SECURITY PACIFIC NATIONAL BANK

                    Irrevocable Letter of Credit No. 100-0092

SECURITY PACIFIC NATIONAL BANK
333 SOUTH HOPE STREET
LOS ANGELES, CALIFORNIA 90071
ATTENTION:   WORLD CORPORATE GROUP
             CORPORATE NOTE DEPARTMENT (H31-5)

Re:     Instruction to Transfer
        Letter of Credit No. 100-0092

Ladies and Gentlemen:

        For value received, the undersigned beneficiary (the "Transferor")
hereby irrevocably transfers to:

                        [Name of Transferee and Address]

(the "Transferee") all rights of the Transferor with respect to the
above-referenced Letter of Credit, including the right to draw under said Letter
of Credit in the amount of the full unutilized balance thereof. Said Transferee
has succeeded the Transferor as Trustee under that certain Indenture of Trust
dated as of SEPTEMBER 1, 1985, by and between RIVERSIDE COUNTY INDUSTRIAL
DEVELOPMENT AUTHORITY and First Interstate Bank of California, as Trustee (the
"Indenture") with respect to the $4,200,000 VARIABLE RATE DEMAND INDUSTRIAL
DEVELOPMENT REVENUE BONDS (CALAVO GROWERS OF CALIFORNIA PROJECT), issued by
RIVERSIDE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY.

               By virtue of this transfer, the Transferee shall have the sole
rights as beneficiary of said Letter of Credit, including sole rights relating
to any past or future amendments thereof, whether increases or extensions or
otherwise. All amendments are to be advised directly to the Transferee without
necessity of any consent of or notice to the Transferor.

               By its signature below, the Transferee acknowledges that it has
duly succeeded the Transferor as Trustee under the Indenture, and agrees to be
bound by the terms of the Indenture as if it were the original Trustee
thereunder.

                                                                         Annex E

                                       1
   80

               The Letter of Credit is returned herewith, and we ask you to
endorse the transfer on the reverse thereof and to forward it directly to the
Transferee with your customary notice of transfer. Also, please find enclosed
our payment of $1,000 as a transfer fee in accordance with the Letter of Credit.

                                           Very truly yours,

                                           [Insert name of Transferor]

                                           as Trustee

                                           By:_________________________________
                                                  [Insert name and title
                                                  of authorized officer]

SIGNATURE OF THE ABOVE PARTY,
DULY AUTHORIZED TO ACT ON BEHALF
OF (insert name of Trustee],
AUTHENTICATED BY:

_____________________________________
          Name and Title]

Acknowledged by
[insert name of Transferee]
as Transferee and successor Trustee

By:__________________________________
        [Insert name and title
        of authorized officer]

                                                                         Annex E

                                       2
   81

STATE OF _______________________  )
                                  ) ss.
COUNTY OF ______________________  )

               On [insert date] before me, the undersigned, a Notary Public in
and for said State, personally appeared [insert name], known to me to be the
[insert title] and [insert name], known to me to be the [insert title] of the
corporation that executed the within instrument, on behalf of the corporation
therein named, and acknowledged to me that such corporation executed the within
instrument pursuant to its bylaws or a resolution of its board of directors.

               WITNESS my hand and official seal.

[SEAL]

                                        _______________________________________
                                              [Notary Public's Signature]

                                        Acknowledged:

                                        Transferee

                                        By:____________________________________
                                                   [Name and title]

                                                                         Annex E

                                       3
   82

                        Annex F (Surrender Certificate)

                         SECURITY PACIFIC NATIONAL BANK

                   Irrevocable Letter of Credit No. 100-0092

SECURITY PACIFIC NATIONAL BANK
333 SOUTH HOPE STREET
LOS ANGELES, CALIFORNIA 90071
ATTENTION:    WORLD CORPORATE GROUP
              CORPORATE NOTE DEPARTMENT (H31-5)

Ladies and Gentlemen:

               We refer to your Letter of Credit No. 100-0092 (the "Letter of
Credit"). Any term which is defined in the Letter of Credit shall have the same
meaning when used herein. The undersigned, a duly authorized officer of [insert
name of Trustee] (the "Trustee" or "We"), hereby certifies to you that:

                1.      We are the Trustee or a successor trustee under the
                        Indenture for the holders of the $4,200,000 VARIABLE
                        RATE DEMAND INDUSTRIAL DEVELOPMENT REVENUE BONDS
                        (CALAVO GROWERS OF CALIFORNIA PROJECT) (the "Bonds"),
                        issued by RIVERSIDE COUNTY INDUSTRIAL DEVELOPMENT
                        AUTHORITY.

                2.      We hereby surrender the attached Letter of Credit to
                        you.

                3.      The Letter of Credit is hereby terminated in accordance
                        with its terms.

                4.      No payment is demanded of you in connection with this
                        surrender of the Letter of Credit.

               IN WITNESS WHEREOF, we have executed and delivered this
certificate as Trustee as of the _____ day of ________, 19__.

                                        Very truly yours,

                                        [Insert name of Trustee]
                                        as Trustee

                                        By:____________________________________
                                               [Insert name and title
                                               of authorized officer]

                                                                         Annex F

                                       1

   83
                                   EXHIBIT B

TO:  SECURITY PACIFIC NATIONAL BANK  [LOGO]                     LETTER OF CREDIT
     INTERNATIONAL BANKING GROUP                       APPLICATION AND AGREEMENT
                                                   |---------------------------|
                                                   |      FOR BANK USE ONLY    |
                                                   |---------------------------|
                                                   | UC NO.   CUSTOMER I.D. NO.|
                                                   |---------------------------|
                                                   | REVIEWED BY I.B.G.        |
                                                   |                           |
                                                   |---------------------------|

Date September 5, 1985
     -----------------

Please issue an irrevocable Standby Letter Of Credit and advise the beneficiary
by:

[ ] AIRMAIL (AML)    [X] MAIL (AML)    [ ] CABLE (CAB)

- ---------------BENEFICIARY-----------------------------APPLICANT ---------------
 First Interstate Bank of California    |    Calavo Growers of California,
 Corporate Trust Department             |     a California corporation
 707 Wilshire Boulevard                 |    4833 Everett Avenue
 Los Angeles, California 90017          |    Los Angeles, California 90058
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AMOUNT                         CURRENCY            EXPIRY DATE
 $4,267,661.00                 U.S. Dollars        See Attached Letter of Credit
- --------------------------------------------------------------------------------

Available by drafts drawn on Security Pacific National Bank at sight when
accompanied by the following documentation:

BENEFICIARY'S SIGNED CERTIFICATION STATING THAT:

                         SEE ATTACHED LETTER OF CREDIT

SPECIAL INSTRUCTIONS:    Issue the Letter of Credit in the form attached hereto.
                         This Letter of Credit application and Agreement is
                         governed by the terms and conditions of the
                         Reimbursement Agreement by and between the undersigned
                         and Security Pacific National Bank, dated as of
                         September 1, 1985.

This letter of credit expires at Security Pacific National Bank's issuing
office on the expiry date indicated above.
This Credit is subject to the Uniforms Customs and Practice for Documentary
Credits of the International Chamber of Commerce, in force.

- ----------------------------------------------------------------------------------------------------------------------------------
 B| Extension of the credit under customer's liability has | We, and each of us, agree that the terms and conditions set forth on
 A| been approved by an authorized lending officer of      | this and the reverse hereof are hereby a part of this application
 N| SECURITY PACIFIC NATIONAL BANK                         | and are accepted and agreed to by us.
 K|                                                        |
  |                                                        |
 U|-------------------------------------------------------------------------------------------------------------------------------
 S| OFFICE NAME                             | NO.  FEE     | FIRM NAME
 E| Corporate Banking                       | 100  1% p.a. | Calavo Growers of California
  |-------------------------------------------------------------------------------------------------------------------------------
 O| DEBIT DRAWINGS TO - OFFICE NAME         | ACCOUNT NO.  | AUTHORIZED SIGNATURE
 N| Corporate Note Dept.                    | 100-099488   | /s/ Egidio Carbone                     Vice President, Finance
 L|-------------------------------------------------------------------------------------------------------------------------------
 Y| APPROVING OFFICER'S SIGNATURE AND TITLE | OFFICER'S NO.| DIRECT INQUIRIES TO                    TELEPHONE NO.
  | /s/ [Illegible] AVP                     | 838          | Gene Carbone                           (213) 587-429[illegible]
- ----------------------------------------------------------------------------------------------------------------------------------
[BOTTOM OF FORM MISSING AND THEREFORE ILLEGIBLE]

   84
                ADDENDUM TO STANDBY LETTER OF CREDIT APPLICATION

                             AND SECURITY AGREEMENT

This Addendum is to that SECURITY PACIFIC NATIONAL BANK ("Bank") Standby Letter
of Credit Application and Agreement ("Application") executed by the undersigned
on September 5, 1985 in relation to a Letter of Credit in the amount of
$4,267,661.00 in favor of First Interstate Bank of California

The undersigned hereby agrees that the following is made a part of the
Application and their terms and conditions set forth below are accepted and
agreed to by the undersigned:

        "12. We hereby agree to pay you from time to time on demand a
        premium calculated by you as being: (A) the amount of Federal
        Deposit Insurance Corporation (FDIC) premium that you would have
        to pay on or in any way connected with the Credit or the
        Application on the assumption that the same are subject to FDIC
        insurance, and (B) the amount of reserves relating to or in any
        way connected with the Credit or the Application which you
        conclude are or may be required by the Board of Governors of the
        Federal Reserve System to be imposed."

Any terms defined in the Application and not defined herein shall have the same
meaning in the Application.

                                Calavo Growers, of California
                                --------------------------------------
                                Firm Name

                                /s/ Egidio Carbone         8/22/85
                                --------------------------------------
                                Authorized Signature(s)

                                Vice President - Finance
                                --------------------------------------
                                Title

   85

                                   EXHIBIT C

                          CALAVO GROWERS OF CALIFORNIA
                      AUTHORIZED REPRESENTATIVE CERTIFICATE

        CALAVO GROWERS OF CALIFORNIA, a California corporation (the "Company"),
hereby (a) authorizes each person named below to act for all purposes on
Company's behalf, as the Authorized Representative of the Company, under and
pursuant to that certain Reimbursement Agreement, dated as of September 1, 1985,
between Security Pacific National Bank, a national banking association (the
"Bank"), and the Company (the "Reimbursement Agreement"); (b) agrees that it
shall be bound by any and all actions taken and any and all documents executed
by any of such persons in connection with such Reimbursement Agreement; and (c)
certifies that the title and signature appearing beside each person's name below
is that person's true and correct title and signature.

        Name                      Title                     Signature
        ----                      -----                     ---------
                                              
- -----------------------   -----------------------   -------------------------

- -----------------------   -----------------------   -------------------------
 Scott H. Runge               Treasurer             /s/ SCOTT H. RUNGE
- -----------------------   -----------------------   -------------------------
 Egidio Carbone               Vice President        /s/ EGIDIO CARBONE
- -----------------------   -----------------------   -------------------------
 David Friestadt              President             /s/ DAVID FRIESTADT
- -----------------------   -----------------------   -------------------------

- -----------------------   -----------------------   -------------------------

        This Authorization shall remain in effect until the Company notifies the
Bank, in writing, of any change, provided that the designation of any other
person or persons as Authorized Representatives of the Company for purposes of
said Reimbursement Agreement shall be subject to the Bank's written approval.

Dated: September 5, 1985                     "Company":

                                             CALAVO GROWERS OF CALIFORNIA

                                             By: /s/ EGIDIO CARBONE
                                                 ----------------------------

   86
                                    EXHIBIT D
                               DESCRIPTION OF LAND

All that real property situated in the County of Riverside, Sate of California,
more particularly described as follows:

PARCEL 1:

Parcels 11 and 16 of Parcel Map 12549 in the County of Riverside, State of
California, as per map recorded in Book 74 Pages 84 through 89 of Parcel Maps,
in the Office of the County Recorder of said County.

PARCEL 2:

An easement for roadway and public utility purposes, along with slope easements
extending outside of this easement at the ratio of two (2) horizontal to one (1)
vertical and such drainage easements as necessary to accommodate the ultimate
roadway over that portion of Parcel 17 of Parcel Map 12549 in the County of
Riverside, State of California, as per map recorded in Book 74 Pages 84 through
89 of Parcel Maps, in the Office of the County Recorder of said County lying
Easterly of the following described line and its Northerly prolongation:

Beginning at the Southeasterly corner of said Parcel 17, thence along the
Southerly line, North 85 degrees 16'07" West 66.24 feet to the true point of
beginning; thence, North 06 degrees 56'07" West 504.44 feet to a point of the
boundary of Parcel 17, being South 37 degrees 04'13" West 0.50 feet from the
Northeasterly terminus of the course shown as; "North 37 degrees 04'13" East
105.16 feet" on the map of said Parcel.

   87

                                    EXHIBIT E

        Consents are required pursuant to the following loan agreements and have
been obtained:

        1. Loan Agreement dated as of June 21, 1985 between the Company and
Sacramento Bank for Cooperatives;

        2. Loan Agreement dated April 3, 1985 between the Company and Bank of
America National Trust and Savings Association.

   88

                                    EXHIBIT F

                    FORM OF OPINION OF COUNSEL TO THE COMPANY
               PURSUANT TO SECTION 3.1 OF REIMBURSEMENT AGREEMENT

                                                              [Date of Issuance]

Riverside County Industrial
   Development Authority
3470 Twelfth Street
Riverside, California 92501

Security Pacific National Bank
333 South Hope Street
Los Angeles, California 90071

Security Pacific Capital Markets Group
(Security Pacific National Bank)
333 South Hope Street
Los Angeles, California 90071

      Re:  $4,200,000 RIVERSIDE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY VARIABLE
           RATE DEMAND INDUSTRIAL DEVELOPMENT REVENUE BONDS (CALAVO GROWERS OF
           CALIFORNIA PROJECT)

Ladies and Gentlemen:

        This opinion is being delivered to you in connection with the issuance
of the above-referenced bonds (the "Bonds") by RIVERSIDE COUNTY INDUSTRIAL
DEVELOPMENT AUTHORITY (the "Issuer") pursuant to an Indenture of Trust dated as
of September 1, 1985 (the "Indenture") by and between the Issuer and First
Interstate Bank of California, as trustee (the "Trustee"), and a Loan Agreement
of even date therewith (the "Loan Agreement") by and between the Issuer and
CALAVO GROWERS OF CALIFORNIA, a California corporation (the "Company"). Pursuant
to the Loan Agreement, the proceeds of the sale of the Bonds are being loaned by
the Issuer to the Company to finance the construction of a packing house
facility (the "Project") in Riverside County, California. The Bonds are secured
by a letter of credit issued by Security Pacific National Bank (the "Bank") to
the Trustee, for the account of the Company, in the initial stated amount of
$____________ (the "Letter of Credit"), pursuant to that certain Reimbursement
Agreement dated as of September 1, 1985 (the "Reimbursement Agreement") by and
between the Bank and the Company. This opinion is delivered pursuant to Section
___ of the Indenture and Section 3.1 of the Reimbursement Agreement.

        We have been for many years (and currently are) general counsel for the
Company, and we have acted as counsel for the Company in connection with the
transactions contemplated by the Loan Agreement and the Reimbursement Agreement.

   89

        I. EXAMINATION OF DOCUMENTS.

                Our opinion expressed herein is based on our examination of and
reliance upon:

                A. Certified copies of the Articles of Incorporation and the
Bylaws of the Company as now in effect;

                B. A Certificate of Status of Domestic Corporation dated August
12, 1985, from the Secretary of State of California;

                C. [References to loan agreements with other lenders];

                D. A fully executed counterpart or original of the following
documents, each of which is dated as of September 1, 1985 (collectively, the
"Company Documents"):

                        1. The Loan Agreement executed by the Issuer and the
        Company;

                        2. The First Deed of Trust and Assignment of Rents
        (Construction Trust Deed) (the "First Deed of Trust") executed by the
        Company as trustor to Ticor Title Insurance Company of California (the
        "Title Company") as trustee, naming the Issuer as beneficiary and
        describing therein certain land and improvements (collectively, the
        "Real Property");

                        3. The First Security Agreement (the "First Security
        Agreement") executed by the Company as debtor, naming the Issuer as
        secured party and describing therein certain personal property and
        fixtures (the "Personal Property");

                        4. Duplicate originals of the Form UCC-1 Financing
        Statements (the "First Financing Statements") executed by the Company as
        debtor, naming the Issuer as secured party and describing therein the
        Personal Property;

                        5. The Reimbursement Agreement executed by the Bank and
        the Company;

                        6. The Second Deed of Trust and Assignment of Rents
        (Construction Trust Deed) (the "Second Deed of Trust") executed by the
        Company as trustor to the Title Company as trustee, naming the Bank as
        beneficiary and describing therein the Real Property;

                        7. The Second Security Agreement (the "Second Security
        Agreement") executed by the Company as debtor, naming the Bank as
        secured party and describing therein the Personal Property;

                                      -2-
   90

                        8. Duplicate originals of the Form UCC-1 Financing
        Statements (the "Second Financing statements") executed by the Company
        as debtor, naming the Bank as secured party and describing therein the
        Personal Property (collectively, together with the First Deed of Trust,
        the First Security Agreement, the First Financing Statements, the Second
        Dead of Trust and the Second Security Agreement, the "Security
        Documents");

                        9. The Placement Agent Agreement executed by the Issuer,
        the Company and Security Pacific Capital Markets Group (Security Pacific
        National Bank) as Placement Agent; and

                        10. The Remarketing Agreement executed by the Issuer,
        the Company and Security Pacific Capital Markets Group (Security Pacific
        National Bank) as Remarketing Agent;

                E. A fully executed counterpart or original of the following
documents, each of which is dated as of September 1, 1985:

                        1. The Indenture executed by the Issuer and the Trustee;

                        2. The Memorandum of Assignment of First Deed of Trust
        and Assignment of Rents, executed by the Issuer in favor of the Trustee
        with respect to the Issuer's interest as beneficiary under the First
        Deed of Trust; and

                        3. The Intercreditor Agreement executed by the Issuer,
        the Trustee and the Bank and consented to by the Company; and

                F. The information contained in the Placement Memorandum dated
______________________ (the "Placement Memorandum") under the headings "The
Project" and "The Company" (collectively, the "Designated Headings").

        II. OPINIONS.

                Based on our examination of and reliance upon the foregoing
documents, certificates and instruments, and such other documents, corporate
records and instruments as we have deemed necessary for purposes of this
opinion, and subject to the assumptions, exceptions and qualifications set forth
below, we are of the opinion that:

                1. The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of California, with all
necessary corporate power and authority to conduct its business as now
conducted, to own the Real Property,

                                      -3-
   91

to construct the Project, to incur indebtedness as contemplated by the Loan
Agreement and the Reimbursement Agreement and to execute, deliver and perform
its obligations under the company documents.

                2. The Company Documents have been duly authorized by all
necessary corporate action, have been duly executed and delivered by the Company
and constitute legally valid and enforceable obligations of the Company,
enforceable against the Company in accordance with their respective terms.

                3. The execution, delivery and performance by the Company of the
Company Documents do not and will not violate (i) any provisions of the
Company's Articles of Incorporation or Bylaws, (ii) any existing law, rule,
regulation, order, writ, injunction, decree or judgment known by us to be
applicable to the Company or (iii) any material contractual restriction known by
us to be applicable to the Company. Nor to our knowledge do they result in the
creation of any lien, charge or encumbrance upon any of the Company's
properties, except as contemplated by the Company Documents, or in the
acceleration of any indebtedness or contractual obligation of Company.

                4. To our knowledge, there are no actions, suits, proceedings,
inquiries or investigations by or before any court, governmental agency, public
board or body pending or threatened against the Company (i) which affect or seek
to prohibit, restrain or enjoin the issuance, placement or delivery of the Bonds
or the execution and delivery of any of the Company Documents or (ii) which
affect or question the validity or enforceability of any of the Company
Documents, the tax-exempt status of the Bonds or the Company's power to perform
its obligations under the Company Documents or to acquire, own, construct, equip
or operate the Project.

                5. To the extent that the security interests in the Personal
Property granted by the First and Second Security Agreements to the secured
parties thereunder may be perfected by filing financing statements pursuant to
the California Uniform Commercial Code (the "California Commercial Code"), the
security interests created by said agreements constitute perfected security
interests under said Code; subject, however, to the limitations set forth in
Section 9306 of said Code and the requirement that continuation statements be
filed in accordance with Section 9403 of said Code. Additional filings may also
be necessary if the Company changes its name or the jurisdiction in which its
chief executive office or any of the Personal Property is located. We call your
attention to, and the opinions expressed in this paragraph are limited by, the
fact that buyers or purchasers of the Personal Property may, in certain
circumstances, acquire it free of the secured parties' interests therein. We
also note that the law is not well developed in California with respect to the

                                      -4-
   92

specificity of description necessary to create a valid security interest in
personal property. To ensure beyond any doubt that a sufficient description has
been provided, the personal property intended to be subject to the security
interest should be identified by serial or identification numbers or by some
other method of specific identification. However, the more general description
of the personal property used in the First and Second Security Agreements and in
the First and Second Financing Statements is consistent with that commonly used
by major lenders in California and, although the matter is not free from doubt,
should be held by a California court to be sufficient to create a security
interest in the personal property described therein.

                6. To our knowledge, as of the date of the Placement Memorandum
and as of the date hereof, the information contained in the Placement Memorandum
under the Designated Headings does not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading in any material
respect.

        III. ASSUMPTIONS, EXCEPTIONS AND QUALIFICATIONS.

                Notwithstanding anything to the contrary contained herein, our
opinion expressed herein is subject to the qualifications set forth in paragraph
5 above and to the following assumptions, exceptions and qualifications:

                A. Our opinion is limited to the laws of the United States of
America and the laws of the State of California and its subdivisions, and we
assume no responsibility as to the applicability or the effect of the laws of
any other jurisdiction.

                B. Where our opinions set forth above are stated "to our
knowledge" or limited to matters "known by us," we have made no independent
investigation of factual matters, and the opinions expressed are therefore meant
to indicate only that in our role as general counsel to the Company, we are not
aware of any information inconsistent with such opinions.

                C. We have assumed the genuineness of all signatures (other than
those of the Company on the Company Documents) and the due authorization,
execution, and delivery of the Company Documents by the parties thereto (other
than the Company).

                D. In addition to the other exceptions and limitations set forth
herein, the opinions set forth in paragraph 2 above are subject to the
exceptions that the enforcement of the Company Documents may be limited by:

                                      -5-
   93

                        1. Bankruptcy, moratorium, insolvency, reorganization or
        other laws or judicial decisions relating to or limiting the rights of
        creditors generally;

                        2. The application of general principles of equity,
        regardless of whether such enforcement is sought in a proceeding in
        equity or at law;

                        3. With respect to rights of indemnity, limitations
        imposed by laws, judicial decisions or principles of public policy;

                        4. With respect to remedies for defaults by the Company,
        compliance with, and limitations imposed by, requirements of state law
        including, but not limited to, California Code of Civil Procedure
        Sections 726 and 580d, California Civil Code Sections 2924 et seq. and
        California Commercial Code Sections 9501 et seq.; and

                        5. Limitations based on laws, judicial decisions or
        public policy limiting a person's right to waive the benefits of
        statutory provisions or common law rights.

We further advise you that a California court may not strictly enforce certain
covenants contained in the Company Documents or allow acceleration of the
maturity of the indebtedness secured by the Security Documents if it concludes
that such enforcement or acceleration would not be reasonable under the then
existing circumstances. We believe, however, that acceleration would be
available, where permitted by the terms of the Company Documents, upon the
occurrence of a material breach by the Company of a material covenant.

                E. With respect to the opinions set forth in paragraph 5 above,
we have assumed that:

                        1. The First and Second Financing Statements have been
        duly filed in the Office of the California Secretary of State and in the
        Official Records of Riverside County, California;

                        2. The Company has "rights in the Personal Property, as
        that term is used in Section 9204 of the California Commercial Code;

                        3. The Personal Property is and will remain located in
        the State of California; and

                        4. No part of the Personal Property is subject to the
        provisions of Sections 9103(2) or 9302(3) of the California Commercial
        Code.

                                      -6-
   94

We express no opinion as to the reasonableness of the foregoing assumptions or
any other assumptions contained herein.

                F. We neither express nor imply any opinion with respect to:

                        1. The title to, or the perfection or priority of any
        lien on, any of the Real Property;

                        2. The title to, or the priority of any security
        interest in, any of the Personal Property;

                        3. Usury laws;

                        4. The application or effect of the Securities Act of
        1933, the Securities Exchange Act of 1934, the Trust Indenture Act of
        1939 or state securities laws, each as now in effect; or

                        5. The tax-exempt status of the Bonds.

                G. We neither express nor imply any opinion with respect to the
validity or enforceability of any provision of any Company Document which:

                        1. Permits any person, in the event of delinquency or
        default, to increase the rate of interest or to collect a late charge;

                        2. Prohibits the Company from further encumbering or
        transferring the Real Property or the Personal Property;

                        3. Permits the acceleration of the indebtedness secured
        by any of the Security Documents in the event of any breach of any such
        provision against further encumbrances or transfer by the Company;

                        4. Provides that failure to exercise or delays in
        exercising rights or remedies will not operate as a waiver of such
        rights or remedies;

                        5. Purports to grant a security interest in any
        governmental permits, licenses, certificates or authorizations which are
        not assignable under applicable law; or

                        6. Permits the acceleration of the indebtedness secured
        by any of the Security Documents upon the invalidation of any provision
        in any of the Company Documents relating to any payment obligation of
        the Company or upon the imposition on any beneficiary under the First
        Deed of Trust or the Second

                                      -7-
   95

        Deed of Trust of any future tax on the obligations secured thereby or
        the property described therein.

                H. We neither express nor imply any opinion as to the
availability or enforceability of the various self-help remedies provided in the
Company Documents (including, without limitation any right of entry onto the
Real Property, any right to take action on behalf of the Company or any right to
act in the Company's name and stead in connection with condemnation proceedings,
settlement of insurance claims or other legal proceedings) or as to the validity
or enforceability of any provision in any of the Company Documents which
constitutes a party thereto as the Company's attorney-in-fact.

                I. Under California law, enforcement of any provision in any of
the Company Documents may be subject to an implied covenant of good faith and
fair dealing, and, in particular, such implied covenant may require that any
party thereto not unreasonably withhold its consent whenever its consent may be
required and that such party act fairly under any provisions thereof which
entitle it to receive or apply in its discretion the proceeds of any insurance
policy covering the Real or Personal Property or any condemnation award with
respect thereto.

                J. Enforcement of the assignment of rents provision in the First
Deed of Trust or the Second Deed of Trust may require that the beneficiary
thereunder first take possession of the Real Property, either by itself or
through a court-appointed receiver (the appointment of which is subject to the
discretion of the court and in any event may be granted only if the beneficiary
can show waste or other impairment of its security). We neither express nor
imply any opinion regarding the efficacy of the language in such provision which
would exonerate the beneficiary from any responsibility or liability as a
"mortgagee-in-possession" where the beneficiary does not itself take possession
of the Real Property.

                This opinion is solely for the benefit of, and may be relied
upon only by, you and your respective successors-in-interest under the Company
Documents; copies of this opinion may not be delivered to any other person
without our prior written consent.

                                        Very truly yours,

                                      -8-
   96

                                    EXHIBIT G

                     REQUIREMENTS RE COMPANY LOAN DOCUMENTS
                              (Variable Rate Bonds)

                The Loan Agreement and the Indenture shall all be consistent
with the following requirements:

                (a) Except when necessary, in the opinion of Bond Counsel, to
        preserve the exemption of the interest on the Bonds from federal income
        taxation, any amendment, modification, or termination of any of such
        documents shall require the prior written consent of the Bank;

                (b) Upon delivery by the Bank to the Trustee of a written notice
        stating that an Event of Default has occurred under the Reimbursement
        Agreement and requesting that the Trustee redeem all of the Bonds, (i)
        all outstanding indebtedness of the Company under the Company Documents
        shall automatically become immediately due and payable, without
        presentment, demand, protest or notice of any kind to the Company or any
        other person, and (ii) the Trustee shall immediately call the Bonds for
        redemption; the Trustee shall mail such redemption notice to the
        Bondholders within two Business Days after receipt of such notice from
        the Bank, and such redemption notice shall fix a date for redemption not
        more than 10 days from the date the redemption notice is mailed;

                (c) Concurrently with the giving or receipt by the Issuer, the
        Trustee, or the Company of any notice, certificate or other
        communication in connection with the Indenture or the Loan Agreement the
        Bank shall be sent a copy of such notice, certificate or other
        communication;

                (d) Any notice given to the Trustee of a voluntary prepayment on
        the Company Loan other than from excess monies on deposit in the
        Construction Fund, in order to be effective, shall be accompanied by
        either (i) Company's funds in the amount to be prepaid, or (ii) the
        Bank's written consent to such voluntary prepayment;

                (e) Prior to the Completion Date (as defined in the Loan
        Agreement), the Trustee shall disburse to the Bank, from the Company
        Loan Fund, immediately upon receipt by the Trustee of the proceeds of
        each draw upon the Letter of Credit representing a payment of interest
        on the Company Loan, an amount equal to the amount of such draw; and

                (f) The rights of the Issuer or the Trustee to accelerate or
        require mandatory prepayment of the Company Loan and the Bonds shall be
        subject to the applicable provisions of the Intercreditor Agreement.

                                      G-1
   97

                                    EXHIBIT H

                  ADDITIONAL ITEMS TO BE DELIVERED TO THE BANK

                        The Bank shall have received and approved the following
items (which shall be certified copies of executed documents if the Bank so
requests:

                (1) An appraisal by the Bank's appraiser and/or an M.A.I.
        appraiser approved by the Bank showing the value of the Project, as
        completed in accordance with the Project Plans;

                (2) The Approved Budget;

                (3) A certificate from the project Architect stating that the
        Project Plans, and, upon completion of the Project, the Project and the
        anticipated use and occupancy thereof, will comply with all applicable
        zoning, subdivision and other laws, codes, ordinances, regulations and
        restrictive covenants affecting the Project, including, without
        limitation, those related to handicapped access;

                (4) A certificate from a licensed structural engineer stating
        that the Project as described in the Project Plans will be structurally
        sound and in conformity with applicable legal requirements regarding
        earthquake standards;

                (5) A complete set of the Project Plans described in Exhibit J;

                (6) A copy of the Project Architect's Agreement and of the
        Company's agreements with all other parties providing architectural,
        design or engineering services for the Project;

                (7) A copy of all inspection and test reports made by or for the
        Company or the Project Architect prior to such date;

                (8) A certified list from the Company of all construction
        contracts relating to the Project that the Company has executed or
        intends to execute, including the General Contract together with
        complete copies of all such contracts executed on or before such date,
        and such financial statements of the Contractor and such subcontractors
        as the Bank may require, including, without limitation, balance sheets
        and profit and loss statements: the copy of the General Contract
        delivered to the Bank shall include a schedule showing (i) all
        subcontracts awarded as of the date of delivery of the General Contract
        to the Bank, including names, types of work, subcontract amounts and
        percentage retainage provided in such subcontracts, and (ii) the amount
        of general conditions and an estimate of value for all subcontracts not
        awarded as of such date; not less than ninety percent (90%) of the
        amount budgeted for construction costs in the

                                      H-1
   98

        Approved Budget shall be represented by guaranteed maximum cost
        subcontracts executed and submitted to the Bank; the maximum amount of
        overhead and profit allowed to the Contractor under the General Contract
        shall be approved by the Bank, and overhead and profit allowed to the
        Contractor shall be approved by the Bank, and overhead and profit shall
        be payable under the General Contract in accordance with the percentage
        of completion of the contracted scope of work;

                (9) A copy of the standard form of subcontract to be used by the
        Contractor, which form must not prohibit an assignment of the
        subcontract to the Bank or require the subcontractor's consent thereto
        (all subcontracts for the Project shall be written on the form of
        subcontract approved by the Bank), and a copy of each subcontract
        executed on or before such date;

                (10) Copies of all executed Change Orders, and a list describing
        all material Change Orders contemplated or under negotiation as of such
        date;

                (11) All authorizations, including building permits, annexation
        agreements, plot plan approvals, subdivision approvals, environmental
        approvals (including an environmental impact report and a permit issued
        by the California Coastal Commission, if required under applicable law)
        sewer and water permits and zoning and land use entitlements which are
        necessary for the commencement and timely prosecution of the
        construction of the Project in accordance with the Project Plans and in
        accordance with all applicable building, environmental, subdivision,
        land use and zoning laws, including evidence that the Property consists
        of one or more legal and separate lots under the California Subdivision
        Map Act and for tax assessment purposes;

                (12) Copies of all other permits and all licenses, leases,
        franchises and agreements in existence as of such date which relate to
        the acquisition, development, use, management, operation or occupancy of
        the Project;

                (13) A current ALTA Preliminary Title Report covering the
        Property, issued by the Title Company, showing all exceptions to title,
        together with evidence satisfactory to the Bank that the Title Company
        is prepared to issue each of the Title Policies, and written
        confirmation addressed to the Trustee and the Bank that the Title
        Company will (a) upon completion of the foundations of the Improvements,
        issue CLTA Form 102.5 as an endorsement to each of the Title Policies,
        and (b) upon completion of the Project, rewrite and reissue the Bond
        Trustee Title Policy and the Bank Title Policy as ALTA Endorsement -Form
        1 Coverage based on an as-built survey to be provided by the Company,
        and including a CLTA Form 100 endorsement and such other endorsements as
        the Bank may request;

                (14) The Survey;

                                      H-2
   99

                (15) A search of the records of the Office of the Secretary of
        State of California and the Official Records of the County showing all
        Uniform Commercial Code financing statements and fixture filings against
        the Company and the Property or the Project or any part thereof or
        interest therein;

                (16) The certificates of insurance required under Subsection
        6.2;

                (17) The Construction Schedule;

                (18) A certification from the Company that, to the best of the
        Company's knowledge, no condemnation proceedings are pending or
        threatened which would impair in any way the full utilization of the
        Project;

                (19) A fully-executed set of Payment Request Documents (as
        defined in Appendix I (Construction Covenants and Disbursement
        Procedures)) for the amount of the first Disbursement;

                (20) Certified copies of the Company's articles of
        incorporation, bylaws, certificate of good standing from the Secretary
        of State of the State of California, and certificates of fictitious
        business name statements, if applicable, for the Company;

                (21) Evidence, which may be in the form of a letter from an
        insurance broker or municipal engineer, (a) as to whether the Property
        is located in an area designated by the U.S. Department of Housing and
        Urban Development as having special flood or mudslide hazards, and (b)
        as to whether the community in which the Property is located
        participates in a National Flood Insurance Program;

                (22) A soils test report prepared by a licensed soils engineer
        approved by the Bank, showing the locations of, and containing boring
        logs for, all borings, together with recommendations for the design of
        the foundations, paved areas and underground utilities for the Project;

                (23) Evidence reasonably acceptable to the Bank, which may be in
        the form of letters from local utility companies or local authorities,
        that (a) telephone service, gas, electric power, storm, sewer, sanitary
        sewer and water facilities are available to the Premises; (b) such
        utilities are adequate to serve the Project and exist at the boundary of
        the Project; and (c) no conditions exist to affect the Company's right
        to connect into and have unlimited use of such utilities except for the
        payment of a normal connection charge and except for the payment of
        subsequent charges for such services to the utility supplier;

                (24) Financial statements of the Company, including without
        limitation, a balance sheet, cash flow statement and a profit and loss
        statement for each of the three most recent fiscal years, certified by
        the chief

                                      H-3
   100

        financial officer of each such party, or at the Bank's request certified
        by a certified public accountant, and, if requested by the Bank, copies
        of all federal income tax returns and supporting schedules prepared or
        filed by the Company on or before such date, and for the three most
        recent fiscal years; and

                (25) Such other items as the Bank may reasonably require.

                                      H-4

   101
                                   EXHIBIT I

TEMECULA PROJECT
COST ESTIMATE AND TIME TABLE
REVISED 8/7/85

                                                                              ORIGINAL
         TYPE                              SUPPLIER              COST          BUDGET       FINISH
- --------------------------                 -------             --------       --------      ------
                                                                                
A)   Architecture                          Kulweic             $117,584       $140,000      June
                                                               --------       --------
B)   Building:                             HMH
     1 - Earthwork                                             $ 55,300                     June 30
     2 - Site Utilities                                          33,900                     July 31
     3 - Storm Drain                                              7,145                     August
     4 - Asphalt paving                                         101,717                     Nov. 15
     5 - Chain link fence                                        13,250                     Dec. 15
     6 - Landscape and Irrigation                                27,855                     Dec. 21
     7 - Fine Grade and Fill Planters                             5,000                     Nov. 30
     8 - Building and Site Concrete                             653,211                     Oct. 31
     9 - Concrete floor seal                                      1,625                     Nov. 15
    10 - Structural Steel                                        65,689                     Oct. 31
    11 - Rough carpentry                                         49,661                     Oct. 31
    12 - Panelized Roof                                         171,998                     Sept. 30
    13 - Truss Joist                                              6,000                     Oct. 15
    14 - Cabinet Work                                             1,950                     Nov. 30
    15 - Thermal & Sound Insulation                              10,611                     Oct. 31
    16 - Cooler Construction                                    264,856                     Oct. 25
    17 - Built up Roofing                                        49,900                     Oct. 15
    18 - Flashing and Sheet Metal                                 8,250                     Oct. 15
    19 - Skylights and Roof Hatch                                 3,789                     Oct. 15
    20 - Sealants and Caulking                                    5,000                     Oct. 31
    21 - Doors, Frames and Hardware                              11,000                     Nov. 15
    22 - Install Doors and Frames                                 2,240                     Nov. 15
    23 - Overhead Coiling Doors                                  26,000                     Nov. 15
    24 - Glass and Glazing                                       14,234                     Nov. 21
    25 - Lath and Plaster                                         8,500                     Oct. 31
    26 - Gypsum Drywall                                          21,700                     Nov. 15
    27 - Ceramic Tile                                            11,624                     Nov. 21
    28 - Acoustical Tile                                          8,474                     Dec. 15
    29 - Carpet and Resilent Tile                                 9,474                     Dec. 15

   102
Temecula Project
Cost Estimate and Time Table
Revised 8/7/85

Page Two

                                                                              Original
                   Type                         Supplier         Cost          Budget        Finish
- -------------------------------------------    ----------     ----------     -----------   ----------
                                                                               
     30 - Painting                                            $   75,000                     Dec. 21
     31 - Toilet Partition                                         2,559                     Dec. 15
     32 - Toilet Accessories                                       2,921                     Dec. 15
     33 - Dock Equipment                                           9,496                     Nov. 30
     34 - Plumbing                                                63,600                     Dec. 21
     35 - HV & AC                                                148,875                     Dec. 21
     36 - Fire Sprinklers                                         92,000                     Dec. 15
     37 - Cooler Pads/Condensable Pipe                             8,500                     Nov. 15
     38 - Electrical                                             226,200                     Dec. 21
     39 - Light Pole Bases                                         3,000                     Nov. 30
     40 - Interior Plenum Walls                                   24,952                     Oct. 21
     41 - Super. and Misc. Job Expense                            72,500                     Dec. 31
     42 - Overhead and profit                                    130,894                     Dec. 31
                                                              ----------     ----------
                                  TOTAL                       $2,510,778     $3,020,000
                                                              ----------     ----------

C)   Refrigeration                             Am. Refrig        328,702
                                                              ----------
D)   Electrical                                                  135,000        135,000

E)   Utility Connections                       SCE                 2,112             --

F)   Sizer Line                                D. Waylan         277,622        233,180

G)   Bin Dump - Grading Line                   Packers Mfg       302,500        427,690

H)   Packing Tubs (100)                                           77,910         71,250

I)   Packer Stands (30)                                           14,278         22,800

J)   Scales                                    Durand             14,000         14,000

K)   Forklifts (8)                             Hyster            178,640        208,000

L)   5 Pallet forklift                         Hyster             51,767         65,000

M)   Bin hoist                                                     6,000          6,000

N)   Vibrator count fill                                          10,000             --

O)   Pallet jacks (2)                                              1,200          1,200

P)   Box former and sealer                     Weyerhauser           N/C            N/C

Q)   Pallet Squeeze Converter                                      5,000          8,600

   103

Temecula Project
Cost Estimate and Time Table
Revised 8/7/85

Page Two

                                                                          Original
               Type                         Supplier         Cost          Budget       Finish
- -------------------------------           ------------    ----------     ----------    --------
                                                                           
R)   Shop Equipment                                       $    7,000     $    7,000
S)   Office Equipment and Lunch Room                          10,000         10,000
T)   Telephone system                                         12,000         12,000
U)   Office Furniture                                         15,000         15,000
V)   Computer                             IBM                 10,000         10,000
W)   Air Compressor                                           11,000         13,000
X)   Bin Sanitizer                        McGuire              7,500          7,500
Y)   Dry Matter Test Equipment                                 6,000          6,000
Z)   Water Treatment System                                    3,000          3,000
AA)  Day Coders                           Menke                1,200          1,200
BB)  Pack Station Stamps                                       2,000          2,000
CC)  Freight                                                   6,000             --
                                                          ----------     ----------
       Sub-Total                                          $4,109,793     $4,439,620
     Sales Tax                                                11,225         42,530
     Interest on Project                                     248,500        248,500
     Contingency                                             171,129             --
     Permits and Fees                                         12,338
                                                          ----------     ----------
     TOTAL CONSTRUCTION COST                              $4,552,985     $4,730,650
                                                          ==========     ==========

   104

                                   EXHIBIT J
                            PLANS AND SPECIFICATIONS
                           FOR NEW PACKING HOUSE FOR
                          CALAVO GROWERS OF CALIFORNIA
                 DATED MAY 15, 1985, PREPARED BY KULWIET GROUP,
                 WHOSE ADDRESS IS 330 NORTH WOOD ROAD, SUITE D,
               CAMARILLO, CALIFORNIA 93010 -- PROJECT NO. 8410051
               --------------------------------------------------

- - Cover Sheet No. C

- - Information Sheet No. 1

- - Topographic Survey No. C1

- - Grading Plan - Sheet No. 1 of 2 sheets for Parcels 11 & 16 - Parcel Map 12549,
  Revised 6-11-85

- - Grading Plan - Sheet 2 of 2 for Parcels 11 & 16 - Parcel Map 12549, Revised
  6-11-85

- - Site Plan - Sheet No. A1

- - Site Plan Details and Off-Site Wall Elevations - Sheet No. A2

- - Overall Floor Plan - Sheet No. A3

- - Overall Reflected Ceiling Plan - Sheet No. A4

- - Roof Plan - Sheet No. A5

- - Partial Floor Plan - Sheet No. A6

- - Partial Reflected Ceiling Plan - Sheet No. A7

- - Exterior Elevations - Sheet No. A8

- - Sections - Sheet No. A9

- - Sections - Sheet No. A10

- - Toilet Floor Plans Interior Elevations - Sheet No. A11

- - Room Finish, Door & Window Schedules - Sheet No. A12

- - Details - Sheet No. A13

- - Details - Sheet No. A14

- - Details - Sheet No. A14.5

- - Specifications - Sheets No. A15, A16, A17, A18

                                                                               1
   105
- - General Notes & Typical Details - No. S1

- - Off-Site Foundation Plan - No. S2

- - Foundation Plan - No. S3

- - Roof Framing Plan - No. S4

- - Panel Elevations - Panels 1 thru 38 - No. S5

- - Panel Elevations - Panels 39 thru 86 - No. S6

- - Panel Elevations - Panels 87 thru 108 and Sections - No. S7

- - Foundation Sections & Details - No. S8

- - Framing Sections & Details - No. S9

- - Details - No. S10

- - Singleline Diagram - No. E-1

- - Electrical Site Plan - No. E-2

- - Details - No. E-3

- - Lighting Plan - No. E-4

- - Power & Comm. Plan - No. E-5

- - Lighting Plan - No. E-6

- - Power & Comm. Plan - Offices, Lunchroom, Shipping Office, Drivers' Room and
   Shop Area - No. E-7

- - Lighting Schedule - Panel Schedule - No. E-8

- - Panel Schedules - No. E-9

- - Electrical Specs. - No. E-10

- - Cover Sheet - Symbols, etc. - No. MP-1

- - Building HVAC Layout - No. M-1

- - Office Areas HVAC - Layout - No. M-2

- - HVAC Roof Plan - No. M-3

- - Equipment Schedules - No. M-4

                                                                               2
   106
- - Details - No. MP-5

- - Mechanical Specs. - No. MP-6

- - Site Plan - No. P-1

- - Building Plumbing - Layout - No. P-2

- - Restroom Layout and Isometrics - No. P-3

- - Roof Drains - No. P-4

- - Planting Plan - No. L-1

- - Planting Plan - NO. L-2

- - Irrigation Plan - No. L-3

- - Irrigation Plan - No. L-4

- - Details & Specs. - No. L-5

                                                                               3
   1

                                                                   EXHIBIT 10.10

                  AMENDMENT NO. TWO TO REIMBURSEMENT AGREEMENT

        This Amendment No. Two to Reimbursement Agreement (the "Amendment")
dated as of 22nd of August 1995, is between BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION (the "Bank") and CALAVO GROWERS OF CALIFORNIA (the
"Company").

                                    RECITALS

        A. Security Pacific National Bank and the Company entered into a certain
Reimbursement Agreement dated as of September 1, 1988, as previously amended
(the "Agreement").

        B. The Bank is successor by merger to Security Pacific National Bank.

        C. The Bank and the Company desire to further amend the Agreement.

                                    AGREEMENT

        1. Definitions. Capitalized terms used but not defined in this Amendment
shall have the meaning given to them in the Agreement.

        2. Amendments. The Agreement is hereby amended as follows:

                2.1 Section 6.4(c) of the Agreement is amended by adding the
term "consolidated and consolidating" immediately before the term "financial
statements."

                2.2 Section 6.15(b) is amended by substituting the figure
"$5,000,000" for the figure "$3,500,000."

        3. Representations and Warranties. When the Company signs this
Amendment, the Company represents and warrants to the Bank that: (a) there is no
event which is, or with notice or lapse of time or both would be, a default
under the Agreement, (b) the representations and warranties in the Agreement are
true as of the date of this Amendment as if made on the date of this Amendment,
(c) this Amendment is within the Company's powers, has been duly authorized, and
does not conflict with any of the Company's organizational papers, and (d) this
Amendment does not conflict with any law, agreement, or obligation by which the
Company is bound.

        4. Conditions. This Amendment will be effective when the Bank receives
the following items, in form and content acceptable to the Bank:

                4.1 This Amendment executed by the Company.

                4.2 A guaranty executed by Calavo Foods, Inc. in the amount of
$5,850,395 along with evidence of the authority of Calavo Foods, Inc. to execute
such guaranty.

                                      -1-
   2
        5. Effect of Amendment. Except as provided in this Amendment, all of the
terms and conditions of the Agreement shall remain in full force and effect.

        This Amendment is executed as of the date stated at the beginning of
this Amendment.

                                      BANK OF AMERICA NATIONAL TRUST
                                      AND SAVINGS ASSOCIATION

                                      By
                                         --------------------------------

                                      Title
                                            -----------------------------

                                      CALAVO GROWERS OF CALIFORNIA

                                      By /s/ EGIDIO CARBONE
                                         --------------------------------

                                      Title  Vice President
                                            -----------------------------

                                      By /s/ SCOTT H. RUNGE
                                         --------------------------------

                                      Title Treasurer
                                            -----------------------------

                                      -2-

   1
                                                                   EXHIBIT 10.11

                 AMENDMENT NO. THREE TO REIMBURSEMENT AGREEMENT

     This Amendment No. Three to Reimbursement Agreement (this "Amendment")
dated as of 10/18, 2000, is between BANK OF AMERICA, N.A., formerly Bank of
America National Trust and Savings Association (the "Bank") and CALAVO GROWERS
OF CALIFORNIA (the "Company").

                                    RECITALS

     A.   Security Pacific National Bank and the Company entered into a certain
Reimbursement Agreement dated as of September 1, 1988, as previously amended
(the "Agreement").

     B.   The Bank is successor by merger to Security Pacific National Bank.

     C.   The Bank and the Company now desire to further amend the Agreement.

                                    AGREEMENT

     1.   Definitions. Capitalized terms used but not defined in this Amendment
shall have the meanings given to them in the Agreement.

     2.   Amendments. The Agreement is hereby amended as follows:

          2.1 In Section 1.1 of the Agreement, the definition of "Permitted
Indebtedness" is amended in full to read as follows:

          "'Permitted Indebtedness' means (a) liabilities incurred to acquire
     goods, supplies, or merchandise on normal trade credit; (b) liabilities for
     endorsing negotiable instruments received in the usual course of business;
     (c) liabilities incurred to obtain surety bonds in the usual course of
     business; (d) liabilities in existence on the date of this Agreement
     disclosed in writing to the Bank; (e) additional debts for business
     purposes which, together with the debts permitted under subparagraph (d)
     above, do not exceed a total principal amount of Twenty Six Million Five
     Hundred Thousand Dollars ($26,500,000) outstanding at any one time; and (f)
     indebtedness owing to the Bank."

          2.2  In Section 1.1. of the Agreement, the following definition of
"Tangible Net Worth" is added in alphabetical order:

                                     - 1 -

   2

          "'Tangible Net Worth' means Net Worth less intangible assets,
     including without limitation, goodwill, patents, trademarks, trade names,
     organization expense, treasury stock, unamortized debt discount and
     expense, capitalized or deferred research and development costs, deferred
     marketing expenses, and deferred receivables."

          2.3  The following is added to the Agreement as a new Section 6.15(e):

          "(e) The Company shall maintain a Tangible Net Worth of not less than
$12,000,000."

     3.   Representations and Warranties. When the Company signs this Amendment,
the Company represents and warrants to the Bank that: (a) there is no event
which is, or with notice or lapse of time or both would be, a default under the
Agreement, (b) the representations and warranties in the Agreement are true as
of the date of this Amendment as if made on the date of this Amendment, (c) this
Amendment is within the Company's powers, has been duly authorized, and does not
conflict with any of the Company's organizational papers, and (d) this Amendment
does not conflict with any law, agreement, or obligation by which the Company is
bound.

     4.   Conditions. This Amendment will be effective when the Bank receives
the following items, in form and content acceptable to the Bank:

          4.1  This Amendment executed by the Company.

     5.   Effect of Amendment. Except as provided in this Amendment, all of the
terms and conditions of the Agreement shall remain in full force and effect.

This Amendment is executed as of the date stated at the beginning of this
Amendment.

                                            BANK OF AMERICA, N.A.

                                            By: /s/ EDUARDO ORDORICA
                                            ------------------------
                                            Eduardo Ordorica
                                            Assistant Vice President

(Signatures continued on next page)

                                     - 2 -

   3

                                            CALAVO GROWERS OF CALIFORNIA

                                            By: /s/ EGIDIO CARBONE 11/17/00
                                                --------------------------------
                                                Egidio Carbone,
                                                Vice President Finance and
                                                Secretary

                                            BY: /s/ SCOTT H. RUNGE 11/20/00
                                                --------------------------------
                                                Scott H. Runge, Treasurer

                                     - 3 -
   1
                                                                   EXHIBIT 10.12

                                                                   MLA No. E118A

                              MASTER LOAN AGREEMENT

        THIS MASTER LOAN AGREEMENT is entered into as of June 15, 2000, between
COBANK, ACB ("CoBank") and CALAVO GROWERS OF CALIFORNIA, Santa Ana, California
(the "Company").

                                   BACKGROUND

        From time to time CoBank may make loans to the Company. In order to
reduce the amount of paperwork associated therewith, CoBank and the Company
would like to enter into a master loan agreement. For that reason, and in
consideration of CoBank making one or more loans to the Company, CoBank and the
Company agree as follows:

        SECTION 1. SUPPLEMENTS. In the event the Company desires to borrow from
CoBank and CoBank is willing to lend to the Company, or in the event CoBank and
the Company desire to consolidate any existing loans hereunder, the parties will
enter into a Supplement to this agreement (a "Supplement"). Each Supplement will
set forth the amount of the loan, the purpose of the loan, the interest rate or
rate options applicable to that loan, the repayment terms of the loan, and any
other terms and conditions applicable to that particular loan. Each loan will be
governed by the terms and conditions contained in this agreement and in the
Supplement relating to the loan.

        SECTION 2. AVAILABILITY. Loans will be made available on any day on
which CoBank and the Federal Reserve Banks are open for business upon the
telephonic or written request of the Company. Requests for loans must be
received no later than 12:00 noon Company's local time on the date the loan is
desired. Loans will be made available 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 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 3. REPAYMENT. The Company's obligation to repay each loan shall
be evidenced by the promissory note set forth in the Supplement relating to that
loan or by such replacement note as CoBank shall require. 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 or by
check. 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 latter of (a) the day on which CoBank receives immediately
available funds; or (b) the next business day after receipt of the check.

        SECTION 4. CAPITALIZATION. The Company agrees to purchase such equity in
CoBank as CoBank may from time to time require in accordance with its Bylaws.
However, the maximum amount of equity which the Company shall be obligated to
purchase in connection with any loan may not exceed the maximum amount permitted
by the Bylaws at the time the Supplement relating to that loan is entered into
or such loan is renewed or refinanced by CoBank.

   2

Master Loan Agreement (Long Form)                                            -2-

        SECTION 5. SECURITY. The company's obligations under this agreement, all
Supplements (whenever executed), and all instruments and documents contemplated
hereby or thereby, shall be secured by a statutory first lien on all equity
which the Company may now own or hereafter acquire in CoBank. Except for
CoBank's lien on the Company's equity in CoBank, the Company's obligations
hereunder and under each Supplement shall be unsecured.

        SECTION 6. CONDITIONS PRECEDENT.

        (A) CONDITIONS TO INITIAL SUPPLEMENT. CoBank's obligation to extend
credit under the initial Supplement hereto is subject to the conditions
precedent that CoBank receive, in form and substance satisfactory to CoBank,
each of the following:

            (i) THIS AGREEMENT, ETC. A duly executed copy of this agreement and
all instruments and documents contemplated hereby.

        (B) CONDITIONS TO EACH SUPPLEMENT. CoBank's obligation to extend credit
under each Supplement, including the initial Supplement, is subject to the
conditions precedent that CoBank receive, in form and content satisfactory to
CoBank, each of the following:

            (i) SUPPLEMENT. A duly executed copy of the Supplement and all
instruments and documents contemplated thereby.

            (ii) EVIDENCE OF AUTHORITY. Such certified board resolutions,
evidence of incumbency, and other evidence that CoBank may require that the
Supplement, all instruments and documents executed in connection therewith, and,
in the case of initial Supplement hereto, this agreement and all instruments and
documents executed in connection herewith, have been duly authorized and
executed.

            (iii) FEES AND OTHER CHARGES. All fees and other charges provided
for herein or in the Supplement.

            (iv) EVIDENCE OF PERFECTION, ETC. Such evidence as CoBank may
require that CoBank has a duly perfected first priority lien on all security for
the Company's obligations, and that the Company is in compliance with Section
8(D) hereof.

        (C) CONDITIONS TO EACH LOAN. CoBank's obligation under each Supplement
to make any loan to the Company thereunder is subject to the condition that no
"Event of Default" (as defined in Section 11 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 7. REPRESENTATIONS AND WARRANTIES.

        (A) THIS AGREEMENT. The Company represents and warrants to CoBank that
as of the date of this Agreement:

            (i) COMPLIANCE. The Company and, to the extent contemplated
hereunder, its Subsidiaries are in compliance with all of the terms of this
agreement, and no Event of Default or Potential Default exists hereunder.

   3

Master Loan Agreement (Long Form)                                            -3-

            (ii) SUBSIDIARIES. The Company has the following "Subsidiaries" (as
defined below): Calavo Foods, Inc. (CFI); 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.

        (B) EACH SUPPLEMENT. The execution by the Company of each Supplement
hereto shall constitute a representation and warranty to CoBank that:

            (i) APPLICATIONS. Each representation and warranty and all
information set forth in any application or other documents submitted in
connection with, or to induce CoBank to enter into, such Supplement, is correct
in all material respects as of the date of the Supplement.

            (ii) CONFLICTING AGREEMENTS, ETC. This agreement, the Supplements,
and all security and other instruments and documents relating hereto and thereto
(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.

            (iii) COMPLIANCE. The Company and, to the extent contemplated
hereunder, its Subsidiaries are in compliance with all of the terms of the Loan
Documents (including, without limitation, Section 8(A) of this agreement on
eligibility to borrow from CoBank).

            (iv) 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 8. AFFIRMATIVE COVENANTS. Unless otherwise agreed to in writing
by CoBank, while this agreement is in effect, the Company agrees to, and with
respect to Subsections 8 (B) through 8 (G) hereof, agrees to cause each
Subsidiary to:

        (A) ELIGIBILITY. Maintain its status as an entity eligible to borrow
from CoBank.

        (B) CORPORATE EXISTENCE, LICENSES. ETC. (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").

        (C) COMPLIANCE WITH LAWS. Comply in all material respects with all
applicable Laws, including, without limitation, all Laws relating to
environmental protection and any patron or member investment program that it may
have. In addition, the Company agrees to cause all persons occupying or present
on any of its properties, and to cause each Subsidiary to cause all persons
occupying or present on any of its properties, to comply in all material
respects with all environmental protection Laws.

        (D) INSURANCE. Maintain insurance with insurance companies or
associations acceptable to CoBank 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
CoBank may request. All such policies insuring any collateral for the Company's
obligations to CoBank shall have mortgagee or lender loss payable clauses or
endorsements in form and content acceptable to CoBank. At

   4

Master Loan Agreement (Long Form)                                            -4-

CoBank's request, all policies (or such other proof of compliance with this
Subsection as may be satisfactory to CoBank) shall be delivered to CoBank.

        (E) 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.

        (F) 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.

        (G) INSPECTION. Permit CoBank 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.

        (H) REPORTS AND NOTICES. Furnish to CoBank:

            (i) ANNUAL FINANCIAL STATEMENTS. As soon as available, but in no
event more than 120 days after the end of each fiscal year of the Company
occurring during the term hereof, annual consolidated financial statements of
the Company and its consolidated Subsidiaries prepared in accordance with GAAP
consistently applied. Such financial statements shall: (a) in the case of the
consolidated statements be audited by independent certified public accountants
selected by the Company and acceptable to CoBank; (b) in the case of the
consolidated statements be accompanied by a report of such accountants
containing an opinion thereon acceptable to CoBank; (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.

            (ii) INTERIM FINANCIAL STATEMENTS. As soon as available, but in no
event more than 45 days after the end of each month, a balance sheet of the
Company and its consolidated Subsidiaries as of the end of such month, a
statement of income for the Company and its consolidated Subsidiaries for such
period and for the period year to date, and such other interim statements as
CoBank may specifically request, all prepared in reasonable detail and in
comparative form in accordance with GAAP consistently applied.

            (iii) NOTICE OF DEFAULT. Promptly after becoming aware thereof,
notice of the occurrence of an Event of Default or a Potential Default.

            (iv) 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
its Subsidiaries which, if determined adversely to the Company or such
Subsidiaries, could have a material adverse effect on the financial condition,
properties, profits, or operations of the Company or such Subsidiaries.

            (v) NOTICE OF ENVIRONMENTAL LITIGATION, ETC. 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 its Subsidiaries 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.

            (vi) 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.

   5

Master Loan Agreement (Long Form)                                            -5-

            (vii) OTHER INFORMATION. Such other information regarding the
condition or operations, financial or, otherwise, of the Company or its
Subsidiaries as CoBank may from time to time reasonably request, including but
not limited to copies of all pleadings, notices, and communications referred to
in Subsections 8(H)(iv) and (v) above.

        SECTION 9. NEGATIVE COVENANTS. Unless otherwise agreed to in writing by
CoBank, while this agreement is in effect the Company will not, and will not
permit its Subsidiaries to:

        (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
CoBank; (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) indebtedness of the
Company under its member or patron investment program in an aggregate principal
amount not to exceed $1,000,000.00 at any one time outstanding; and (v) debt of
the Company to Bank of America in an amount not to exceed $3,000,000.00 and all
extensions, renewals, and refinancings thereof; (vi) debt of the Company to
Riverside County Variable Rate Demand Industrial Development Revenue Bonds in an
amount not to exceed $2,800,000.00 but no extensions renewals and refinancings
thereof; (vii) letters of credit issued by any bank for the account of the
Company in an aggregate face amount not to exceed $2,850,000.00 at any one time
outstanding; and (viii) 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 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;
and (vii) liens existing on the date hereof in favor of Riverside County
Variable Rate Demand Industrial Development Revenue Bonds to secure indebtedness
permitted hereunder.

        (C) MERGERS, ACQUISITIONS, ETC. Merge or consolidate with any other
entity or acquire all or a material part of the assets of any person or entity,
or form or create any new subsidiary or affiliate, or commence operations under
any other name, organization, or entity, including any joint venture.

        (D) TRANSFER OF ASSETS. Sell, transfer, lease, or otherwise dispose of
any of its assets, except in the ordinary course of business.

        (E) LOANS. Lend or advance money, credit, or property to any person or
entity, except for trade credit extended in the ordinary course of business.

        (F) 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

   6

Master Loan Agreement (Long Form)                                            -6-

endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of the Company's business.

        (G) 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 10. FINANCIAL COVENANTS. Unless otherwise agreed to in writing,
while this agreement is in effect:

        (A) LONG TERM DEBT TO EQUITY. The Company and its consolidated
Subsidiaries will have at the end of each fiscal year of the company, a ratio of
consolidated long-term debt (less the current portion thereof) to consolidated
equity (both as determined in accordance with GAAP consistently applied) of not
more than .50 to 1.

        SECTION 11. EVENTS OF DEFAULT. Each of the following shall constitute an
"Event of Default" under this agreement:

        (A) PAYMENT DEFAULT. The Company should fail to make any payment to, or
to purchase any equity in, CoBank when due.

        (B) REPRESENTATIONS AND WARRANTIES. Any representation or warranty made
or deemed made by the Company herein or in any Supplement, application,
agreement, certificate, or other document related to or furnished in connection
with this agreement or any Supplement, 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, its Subsidiaries should fail to perform or comply with
Sections 8(A) through 8(H)(ii), 8(H)(vi), 8(H)(vii), or any reporting covenant
set forth in any Supplement hereto, and such failure continues for 15 days after
written notice thereof shall have been delivered by CoBank to the Company.

        (D) OTHER COVENANTS AND AGREEMENTS. The Company or, to the extent
required hereunder, its Subsidiaries 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 CoBank.

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

        (G) JUDGMENTS. A judgment, decree, or order for the payment of money
shall be rendered against the Company or any Subsidiary and either: (i)
enforcement proceedings shall have been commenced; (ii) a Lien prohibited under
Section 9(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.

   7

Master Loan Agreement (Long Form)                                            -7-

        (H) INSOLVENCY, ETC. 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 CoBank, 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 12. REMEDIES. Upon the occurrence and during the continuance of
an Event of Default or any Potential Default, CoBank shall have no obligation to
continue to extend credit to the Company and may discontinue doing so at any
time without prior notice. For the purposes hereof, the term "Potential Default"
means the continuance 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, CoBank may, upon
notice to the Company, terminate any commitment and declare the entire unpaid
principal balance of the loans, all accrued interest thereon, and all other
amounts payable under this agreement, all Supplements, and the other Loan
Documents to be immediately due and payable. Upon such a declaration, the unpaid
principal balance of the loans and all such other amounts shall become
immediately due and payable, without protest, presentment, demand, or further
notice of any kind, all of which are hereby expressly waived by the Company. In
addition, upon such an acceleration:

        (A) ENFORCEMENT. CoBank may proceed to protect, exercise, and enforce
such rights and remedies as may be provided by this agreement, any other Loan
Document or under Law. Each and every one of such rights and remedies shall be
cumulative and may be exercised from time to time, and no failure on the part of
CoBank 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, CoBank may hold and/or set off
and apply against the Company's obligations to CoBank the proceeds of any equity
in CoBank, any cash collateral held by CoBank, or any balances held by CoBank
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 CoBank in such order and manner as CoBank may
elect in its sole discretion.

In addition to the rights and remedies set forth above: (i) if the Company fails
to purchase any equity in CoBank when required or fails to make any payment to
CoBank when due, then at Commands option in each instance, such payment shall
bear interest from the date due to the date paid at 4% 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 4% 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
360 days

        SECTION 13. BROKEN FUNDING SURCHARGE. Notwithstanding any provision
contained in any Supplement giving the Company the right to repay any loan prior
to the date it would otherwise be due and payable, the Company agrees that in
the event it repays any fixed rate balance prior to its scheduled due date or
   8

Master Loan Agreement (Long Form)                                            -8-

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 which would result in CoBank
being made whole (on a present value basis) for the actual or imputed funding
losses incurred by CoBank as a result thereof. 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 CoBank 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 CoBank (a copy of
which will be made available to the Company upon request).

        SECTION 14. COMPLETE AGREEMENT, AMENDMENTS. This agreement, all
Supplements, 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 CoBank and contained in a
writing signed by or on behalf of CoBank, and then such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given. In the event this agreement is amended or restated, each such
amendment or restatement shall be applicable to all Supplements hereto.

        SECTION 15. OTHER TYPES OF CREDIT. From time to time, CoBank may issue
letters of credit or extend other types of credit to or for the account of the
Company. In the event the parties desire to do so under the terms of this
agreement, such extensions of credit may be set forth in any Supplement hereto
and this agreement shall be applicable thereto.

        SECTION 16. APPLICABLE LAW. Except to the extent governed by applicable
federal law, this agreement and each Supplement shall be governed by and
construed in accordance with the laws of the State of Colorado, without
reference to choice of law doctrine.

        SECTION 17. 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 CoBank, as follows:                     If to the Company, as follows:

CoBank, ACB                                   Calavo Growers of California
Attn: Credit Information Services             ATTN: Vice President - Finance
5500 S. Quebec Street, P.O. Box 5101          Santa Ana, California 92799-6081
Denver, Colorado 80217                        FAX#: (949) 223-1112
FAX#: (303) 224-6101

        SECTION 18. 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 CoBank) incurred by CoBank in
connection with the origination, administration, collection, and enforcement of
this agreement and the other Loan Documents, including, without limitation, all
costs and expenses incurred in perfecting, maintaining, determining the priority
of, and releasing any security for the Company's obligations to CoBank, and any
stamp, intangible, transfer, or like tax payable in connection with this
agreement or any other Loan Document.

   9
Master Loan Agreement (Long Form)                                            -9-

        SECTION 19. EFFECTIVENESS AND SEVERABILITY. This agreement shall
continue in effect until: (i) all indebtedness and obligations of the Company
under this agreement, all Supplements, and all other Loan Documents shall have
been paid or satisfied; (ii) CoBank has no commitment to extend credit to or for
the account of the Company under any Supplement; and (iii) either party sends
written notice to the other terminating this agreement. Any provision of this
agreement or any other Loan Document which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof or thereof.

        SECTION 20. SUCCESSORS AND ASSIGNS. This agreement, each Supplement, and
the other Loan Documents shall be binding upon and inure to the benefit of the
Company and CoBank and their respective successors and assigns, except that the
Company may not assign or transfer its rights or obligations under this
agreement, any Supplement or any other Loan Document without the prior written
consent of CoBank.

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

CoBANK, ACB                                  CALAVO GROWERS OF CALIFORNIA

By:                                          By: /s/ EGIDIO CARBONE
    -----------------------------                ----------------------------
Title:                                       Title: Vice President
       --------------------------                   -------------------------
                                                    6/20/00

                                             By: /s/ S.H. RUNGE
                                                 ----------------------------
                                             Title: Treasurer
                                                    -------------------------
                                                    6/21/00

   10

                                                               Loan No. E118S01B

                           REVOLVING CREDIT SUPPLEMENT

        THIS SUPPLEMENT to the Master Loan Agreement dated June 15, 2000 (the
"MLA"), is entered into as of June 15, 2000 between COBANK, ACB ("CoBank") and
CALAVO GROWERS OF CALIFORNIA, Santa Ana, California (the "Company"), and amends
and restates the Supplement dated July 14, 1999 and numbered E118S01A.

        SECTION 1. THE REVOLVING CREDIT FACILITY. On the terms and conditions
set forth in the MLA and this Supplement, CoBank agrees to make loans to the
Company during the period set forth below in an aggregate principal amount not
to exceed $23,500,000.00 at any one time outstanding (the "Commitment"). Within
the limits of the Commitment, the Company may borrow, repay and reborrow.

        SECTION 2. PURPOSE. The purpose of the Commitment is to finance the
operating needs of the Company.

        SECTION 3. TERM. The term of the Commitment shall be from June 15, 2000
up to but not including April 1, 2001, or such later date as CoBank may, in its
sole discretion, authorize in writing. Notwithstanding the foregoing, the
Commitment shall be automatically extended for an additional year unless on or
before March 1 in any year (the "Notification Date"), either party receives
written notice from the other to the contrary. If on or before the Notification
Date, CoBank grants a short-term extension of the Commitment, then the
Notification Date shall be extended for a like period, and in the event neither
party receives written notice from the other to the contrary on or before such
extended Notification Date (or any further extension so granted), then the
Commitment shall be automatically extended for an additional year as provided
above. All annual extensions shall be measured from, and effective as of, the
anniversary date of April 1, in any year.

        SECTION 4. INTEREST. The Company agrees to pay interest on the unpaid
principal balance of the loans in accordance with one or more of the following
interest rate options, as selected by the Company:

        (A) VARIABLE RATE OPTION. At a rate per annum equal at all times to 1/4
of 1% below the rate of interest established by CoBank from time to time as its
National Variable Rate, which Rate is intended by CoBank to be a reference rate
and not its lowest rate. The National Variable Rate will change on the date
established by CoBank as the effective date of any change therein and CoBank
agrees to notify the Company promptly after any such change.

        (B) QUOTED RATE OPTION. At a fixed rate per annum to be quoted by CoBank
in its sole discretion in each instance. Under this option, rates may be fixed
on such balances and for such periods as may be agreeable to CoBank in its sole
discretion in each instance.

The Company shall select the applicable rate option at the time it requests a
loan hereunder and may, subject to the limitations set forth above, elect to
convert balances bearing interest at the variable rate option to one of the
fixed rate options. Upon the expiration of any fixed rate period, interest shall
automatically accrue at the variable rate option unless the amount fixed is
repaid or fixed for an additional period in accordance with the terms hereof.
Notwithstanding the foregoing, unless CoBank otherwise consents in its sole
discretion in each instance, rates may not be fixed for periods expiring after
the maturity date of the loans. In the event CoBank so consents and the
Commitment is not renewed, then each balance so fixed shall be due and payable
on the last day of its fixed rate period, and the promissory

   11

note set forth below shall be deemed amended accordingly. 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.

        SECTION 5. PROMISSORY NOTE. The Company promises to repay the unpaid
principal balance of the loans on the first CoBank business day following the
last day of the term of the Commitment. In addition to the above, the Company
promises to pay interest on the unpaid principal balance of the loans at the
times and in accordance with the provisions set forth in Section 4 hereof. This
note replaces and supersedes, but does not constitute payment of the
indebtedness evidenced by, the promissory note set forth in the Supplement being
amended and restated hereby.

        SECTION 6. COLLATERAL INSPECTIONS. Permit CoBank or its representatives,
agents or independent contractors, during normal business hours or at such other
times as CoBank and the Company may agree to: (a) inspect or examine the
Company's properties, books and records; (b) to make copies of the Company's
books and records; and (c) discuss the Company's affairs, finances and accounts
with its officers, employees and independent certified public accountants.
Without limiting the foregoing, the Company will permit CoBank, through an
employee of CoBank or through an independent third party contracted by CoBank,
to conduct on an annual basis a review of the collateral covered by the Security
Agreement. The Company further agrees to pay to CoBank a collateral inspection
fee (not to exceed $500.00 a day per reviewer) and reimburse CoBank all
reasonable costs and expenses incurred by CoBank in connection with such
collateral inspection reviews performed by CoBank employees or its agents.

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

CoBANK, ACB                                  CALAVO GROWERS OF CALIFORNIA

By:                                          By: /s/ EGIDIO CARBONE
    -----------------------------                ----------------------------
Title:                                       Title: Vice President
       --------------------------                   -------------------------
                                                    6/20/00

                                             By: /s/ S.H. RUNGE
                                                 ----------------------------
                                             Title: Treasurer
                                                    -------------------------
                                                    6/21/00

   12

                               NOTICE TO BORROWER

        THE FOLLOWING DISCLOSURE RELATES TO THE AT RISK NATURE OF THE EQUITY
INVESTMENT REQUIRED AS A CONDITION TO AN EXTENSION OF CREDIT. PLEASE READ THESE
MATERIALS CLOSELY WHEN EVALUATING THE PROPOSED CREDIT TERMS.

        You have received, or the bank has made available to you, the bank's
most recent annual report, the most recent quarterly report, a copy of the
Bylaws, and a copy of the current Capital Plan.

        As a condition to the extension of credit, borrowers are required to own
equity in the bank. Equity ownership requirements are established by the board
of directors from time to time as set forth in the Capital Plan. Currently the
Capital Plan requires each active stockholder to own a minimum investment of the
bank's capital of $1,000 or 2 percent of the loan, whichever is less. After this
minimum level is achieved, all future capitalization requirements will be made
through retained patronage earnings and no additional out-of-pocket equity
purchases beyond the initial investment will be required. Equity of owners whose
current investment is above target level will be available for retirement until
the target equity level is reached. The Capital Plan may be amended from time to
time by the board of directors. Such amendments may increase the amount of
capital required to be invested to maintain a loan.

        Equity will be retired and patronage distributions will be made in
accordance with the Bylaws and Capital Plan, as may be amended from time to
time. ALL EQUITY IN THE BANK: (1) IS RETIREABLE ONLY AT THE DISCRETION OF THE
BOARD OF DIRECTORS AND THEN ONLY IF MINIMUM CAPITAL STANDARDS ESTABLISHED BY LAW
ARE MET; AND (2) IS AN INVESTMENT IN THE BANK THAT IS AT RISK AND SHOULD NOT BE
CONSIDERED EQUIVALENT TO A COMPENSATING BALANCE. AT PRESENT, THE BANK MEETS ITS
MINIMUM CAPITAL STANDARDS AND KNOWS OF NO REASON WHY IT SHOULDN'T CONTINUE TO
MEET THOSE STANDARDS ON THE BANK'S NEXT EARNINGS DISTRIBUTION DATE.
   1
                                                                   EXHIBIT 10.13

               CALAVO SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT

        THIS AGREEMENT is made this 11 day of March, 1983 by and between Calavo
Growers of California, a California corporation (the "Company") and Egidio
Carbone (the "Executive") because the Company has adopted this Agreement as the
form of the Calavo Supplemental Executive Retirement Plan and because the
Company desires to secure the Executive's future services by providing
additional retirement compensation.

        The parties to this Agreement agree as follows:

        1. DEFINITIONS.

        1.1 Average Final Base Salary means the Executive's average annual
salary (excluding bonuses and other non-regular forms of compensation) over the
five year period ending on the January 31st next preceding the earlier of (i)
the Retirement Date, (ii) the date of the Executive's death, or (iii) the
termination of this Agreement.

        1.2 Beneficiary means the person or persons designated as such in
accordance with Section 4 of the Agreement.

        1.3 Death Benefit Eligibility Date means the date on which the Executive
has both attained age 55 and has completed at least 2 Years of Service.

        1.4 Disability means any cessation of the Executive's employment with
the Company as a result of a physical or mental condition which prevents the
Executive from performing the normal duties of his or her current employment.
The Company, in its complete and sole discretion, shall determine an Executive's
Disability. If the Executive makes application for disability benefits under the
Social Security Act, as now in effect or as hereafter amended, and qualifies for
such benefits, he shall be presumed to qualify as totally and permanently
disabled under this Plan. The Company may require that the Executive submit to
an examination, by a competent physician or medical clinic selected by the
Company, on an annual basis to confirm Disability. On the basis of such medical
evidence, the determination of the Company as to whether or not a condition of
total disability exists or continues shall be conclusive.

        1.5 Early Retirement means the Executive's Termination of Employment on
or after attaining age 62, having completed at least 7 Years of Service.

        1.6 Normal Retirement means the Executive's Termination of Employment on
or after attaining age 65, having completed at least 10 Years of Service.

                                   - l of 5 -

   2

Calavo Supplemental Executive Retirement Agreement

        1.7 Retirement Date means the date on which the Executive commences
Early or Normal Retirement.

        1.8 Termination of Employment means the Executive's ceasing to be
employed by the Company for any reason whatsoever, voluntary or involuntary,
other than by reason of Disability prior to qualification for Early Retirement
or death.

        1.9 Years of Service means the cumulative consecutive years of
continuous full-time employment with the Company in the capacity of Vice
President, beginning on the date the Executive begins service in such capacity,
and each anniversary thereafter.

        2. BENEFITS.

        2.1 Normal Retirement Benefit. Upon Normal Retirement, as long as the
Executive continues to comply with the conditions set forth in Section 3 below,
the Company will pay to the Executive during his life a monthly benefit,
commencing on the first day of the month following the Retirement Date, equal to
20% of the Executive's Average Final Base Salary divided by twelve and reduced
by an amount equal to the Social Security benefits which the Executive is
entitled to receive for the month in which the payment is made, excluding any
Social Security benefits paid on behalf of the Executive's spouse or dependents
(i.e. primary insurance benefits only). Such benefits will be paid as
compensation for services rendered prior to the Retirement Date.

        2.2 Early Retirement Benefit. Upon Early Retirement, as long as the
Executive continues to comply with the conditions set forth in Section 3 below,
the Company will pay to the Executive during his life a monthly benefit,
commencing on the first day of the month following the Retirement Date, equal to
the actuarially determined equivalent (as determined by the Company by using the
Pension Benefit Guarantee Corporation immediate interest rate as in effect on
the Retirement Date) of the Normal Retirement benefit of 20% of the Executive's
Average Final Base Salary divided by twelve. Such Benefit shall be further
reduced by an amount equal to the Social Security benefits, if any, which the
Executive is entitled to receive for the month in which the payment is made,
excluding any Social Security benefits paid on behalf of the Executives spouse
or dependents (i.e. primary insurance benefits only). Such benefits will be paid
as compensation for services rendered prior to the Retirement Date.

        2.3 Disability Benefit. If the Executive suffers Disability prior to
qualification for Early Retirement, the Executive shall continue to accrue Years
of Service for purposes of this Agreement during Disability until he qualifies
for Early Retirement

                                   - 2 of 5 -

   3

Calavo Supplemental Executive Retirement Agreement

except that in calculating Average Final Base Salary, the Years of Service
accrued during the Disability Period shall not be included.

        2.4 Pre-Retirement Death Benefit. In the event of the Executive's death
after the Death Benefit Eligibility Date and prior to the Retirement Date, the
Company will pay to the Beneficiary for 10 years a monthly benefit commencing on
the first day of the month following the Executive's death, equal to 10% of the
Executive's Average Final Base Salary divided by twelve.

        3. CONDITIONS RELATED TO BENEFITS.

        3.1 Requirement of Noncompetition. During the three year period
following the Retirement Date, the Executive agrees not to engage or participate
(as a partner, shareholder, director, officer, employee, agent, representative
or independent contractor, or in any other capacity calling for the making of an
investment or the performance of services) in any business which markets the
same commodities marketed by the Company or is otherwise competitive with the
business of the Company.

        3.2 Rights on Termination of Employment. Except as expressly provided in
this Plan, the Company will not be required or be liable to make any payments
under this Agreement subsequent to the Executive's Termination of Employment
with the Company.

        3.3 No Right to Company Assets. The benefits paid under this Agreement
will be paid from the general funds of the Company, and the Executive and his
beneficiaries will be no more than unsecured general creditors of the Company
with no special or prior right to any assets of the Company for payment of any
obligations hereunder.

        3.4 Amendment or Termination of Agreement. Prior to the Retirement Date,
the Company may amend, alter, modify or terminate the Agreement after giving the
Executive 60 days notice. If at the time of such notice, the Executive qualifies
for Early or Normal Retirement, the Executive may elect to retire during the 60
day notice period and if the Executive so elects the Company shall not
thereafter amend, alter, modify or terminate the Agreement. If the Company
terminates the Agreement prior to the Retirement Date and the Executive does not
elect or does not qualify for Early or Normal Retirement, the Company will pay
to the Executive upon termination of the Agreement an amount equal to 4% of the
Executive's Average Final Base Salary multiplied by that number of complete and
fractional years between the inception of this Agreement and the date of its
termination up to a maximum of 10 years.

                                   - 3 of 5 -
   4

Calavo Supplemental Executive Retirement Agreement

        3.5 Protective Provisions. The Executive will cooperate with the Company
by furnishing any and all information requested by the Company, in order to
facilitate the payment of benefits hereunder, taking such physical examinations
as the Company may deem necessary and taking such other actions as may be
requested by the Company. If the Executive refuses to so cooperate, the Company
will have no further obligation to the Executive under this Agreement. In the
event of the Executive's suicide during the first two years of this Agreement or
if the Executive makes any material misstatement of information or
non-disclosure of medical history, then no benefits will be payable to the
Executive under the Agreement, except that benefits may be payable in a reduced
amount in the Company's sole discretion.

        4. BENEFICIARY DESIGNATION.

        The Executive will have the right, at any time, to designate any person
or persons as Beneficiary (both primary and contingent) to whom payment of
benefits under this Agreement will be made in the event of the Executive's
death. The Beneficiary designation will be filed in writing with the Company
during the Executive's lifetime on a form prescribed by the Company.

        The filing of a Beneficiary designation will cancel all prior
Beneficiary designations. Any finalized divorce or marriage (other than a common
law marriage) of the Executive subsequent to the date of a Beneficiary
designation will revoke such designation, unless, in the case of divorce, the
previous spouse was not designated as Beneficiary and unless, in the case of
marriage, the Executive's new spouse has previously been designated as
Beneficiary. The spouse of a married Executive domiciled in a community property
jurisdiction must join in any designation of a Beneficiary other than the
spouse.

        If the Executive fails to designate a Beneficiary as provided above, or
if the Beneficiary designation is revoked by marriage, divorce, or otherwise,
without execution of a new designation, or if every person designated as
Beneficiary predeceases the Executive or dies prior to distribution of the
Executive's benefit, then the Company will direct the distribution of such
benefits to the Executive's estate.

        5. MISCELLANEOUS.

        5.1 Nonassignability. The benefits provided under this Agreement may not
be alienated, assigned, transferred, pledged or hypothecated by any person, at
any time, or to any person whatsoever. These benefits will be exempt from the
claims of

                                   - 4 of 5 -

   5

Calavo Supplemental Executive Retirement Agreement

creditors or other claimants and from all orders, decrees, levies, garnishment
or executions to the fullest extent allowed by law.

        5.2 Withholding. The Executive and any Beneficiary will make appropriate
arrangements with the Company for satisfaction of any federal, state or local
income tax withholding requirements and social security or other employee tax
requirements applicable to the payment of benefits under this Agreement. If no
other arrangements are made, the Company may provide, at its discretion, for
such withholding and tax payments as may be required.

        5.3 Applicable Law. This Agreement will be governed by the laws of
California except where preempted by the Employee Retirement Income Security Act
of 1974, as amended.

        The undersigned have entered into this Agreement as of the day and year
first above written.

                                             Calavo Growers of California

                                             By  /s/ LECIL E. COLE
                                                 -----------------------------
                                             Its Chairman of the Board
                                                 -----------------------------
                                              /s/ Egidio Carbone
                                             ---------------------------------
                                                      the "Executive"

                                   - 5 of 5 -
   1
                                                                   EXHIBIT 10.14

[CALAVO LOGO]

                                AMENDMENT TO THE

                          CALAVO GROWERS OF CALIFORNIA

                   SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT

THIS AGREEMENT is made effective November 9, 1993 by and between Calavo Growers
of California (the "Company") and Egidio Carbone (the "Executive"). The parties
agree that the Calavo Supplemental Executive Retirement Agreement (the "SERP"),
effective March 11, 1989 by and between the Company and the Executive, is hereby
amended as follows.

Paragraphs 2.1 and 2.2 of the SERP are hereby amended to insert the following
language prior to the last sentence of each Paragraph:

           In the alternative, the Executive may elect to receive the
           actuarially determined equivalent (as determined by the Company by
           using the Pension Benefit Guarantee Corporation immediate interest
           rate as in effect on the Retirement Date) of such life annuity, if
           the Executive is married on the retirement Date, in the form of a
           joint and survivor annuity over the life of the Executive and his/her
           spouse. Any election or change of election regarding the form of
           benefit must be made prior to the date on which the Executive attains
           age 61. The Company, in its sole discretion, may allow an Executive
           to change an election regarding the form of benefit after age 61 if
           the Company determines that there are extenuating circumstances
           justifying such change.

All other terms and provisions of the SERP shall continue with the same force
and effect and the notice of amendment required by paragraph 3.4 of the SERP is
hereby waived by the parties hereto.

The undersigned have entered into this Agreement as of the date written above.

EGIDIO CARBONE                               CALAVO GROWERS OF CALIFORNIA

Signature: /s/ EGIDIO CARBONE                By: /s/ LECIL E. COLE
           ------------------------------        ------------------------------

Date: 12/15/93                               Date: 12/14/93
      -----------------------------------          ----------------------------

   1

                                                                    EXHIBIT 21.1

                  SUBSIDIARIES OF CALAVO GROWERS OF CALIFORNIA

        The subsidiaries of Calavo Growers of California are listed below. Each
subsidiary is wholly owned by Calavo Growers of California.

        Name                                       Jurisdiction of Incorporation
        ----                                       -----------------------------
                                                
        Calavo Foods, Inc.                         California

        Calavo Growers, Inc.                       California

        Calavo de Mexico S.A. de C.V.              Mexico

        Calavo Foods de Mexico S.A. de C.V.        Mexico

   1

                                                                    EXHIBIT 23.2

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Registration Statement of Calavo Growers, Inc. on
Form S-4 of our report dated December 14, 2000, except for the second paragraph
of Note 14, as to which the date is February 20, 2001, on the financial
statements of Calavo Growers of California and subsidiaries as of October 31,
2000 and 1999 and for each of the three years in the period ended October 31,
2000, appearing in the Information Statement/Prospectus, which is part of this
Registration Statement, and of our report dated December 14, 2000 relating to
the financial statement schedule of Calavo Growers of California and
subsidiaries, appearing elsewhere in this Registration Statement.

We also consent to the use in this Registration Statement of Calavo Growers,
Inc. on Form S-4 of our report dated April 20, 2001 on the balance sheet of
Calavo Growers, Inc. as of January 31, 2001, appearing in the Information
Statement/Prospectus, which is part of this Registration Statement.

We also consent to the reference to us under the heading "Experts" in such
Information Statement/Prospectus.

/s/ DELOITTE & TOUCHE LLP

Costa Mesa, California
April 20, 2001

   1

                                                                    EXHIBIT 99.1
                                     BALLOT

                          CALAVO GROWERS OF CALIFORNIA

                     CONVERSION TO A FOR-PROFIT CORPORATION

     The undersigned is a shareholder of Calavo Growers of California ("CALAVO")
and has received and reviewed the Information Statement/Prospectus that
accompanies this Ballot, including, without limitation, the Agreement and Plan
of Merger and Reorganization (the "MERGER AGREEMENT") between Calavo and Calavo
Growers, Inc., a corporation organized under the California General Corporation
Law ("NEW CALAVO"). Pursuant to the Merger Agreement, Calavo will merge into New
Calavo, and shareholders of Calavo will become shareholders of New Calavo.

     The undersigned votes and consents as follows with respect to the Merger
Agreement and the proposed conversion of Calavo from a California nonprofit
cooperative association into a California for-profit corporation organized under
the California General Corporation Law on the terms and conditions described in
the Information Statement/Prospectus and the Merger Agreement:

                                                    
         [ ]  FOR                   [ ]  AGAINST                 [ ]  ABSTAIN

     Please mark, sign and date this Ballot and then return it in the enclosed
envelope no later than             , 2001 to Calavo's Corporate Secretary at
2530 Red Hill Avenue, Santa Ana, California 92705. If you are signing this
Ballot as a general partner, corporate or limited liability company officer,
attorney-in-fact, executor, administrator, trustee or guardian, please indicate
your title and send proper evidence of authority (e.g., certified resolutions,
copy of trust agreement, etc.). If shares are held by joint tenants, both
persons should sign this Ballot.

     This Ballot is subject to all of the terms and conditions described in the
Information Statement/Prospectus and the Merger Agreement. As described therein,
the Board of Directors has authority to elect not to proceed with the conversion
even if it is approved by Calavo's shareholders. This Ballot is solicited by
Calavo's Board of Directors and will be voted in the manner that you direct.

                                                      Dated: ----------, 2001

                                                      --------------------------
                                                             (Signature)

                                                      --------------------------
                                                             (Print Name)

                                                      --------------------------
                                                           (Print Title, if
                                                             Applicable)
   1
                                                                    EXHIBIT 99.2

                       RESTATED ARTICLES OF INCORPORATION
                                       OF
                          CALAVO GROWERS OF CALIFORNIA

                                   ARTICLE I
                                      NAME

The name of this association is CALAVO GROWERS OF CALIFORNIA (the
"Association").

                                   ARTICLE II
                                    PURPOSES

The primary purpose for which the Association is formed is to pack, process and
market agricultural products produced by its members and to return to its
members the proceeds of sale, less expenses, on the basis of the quantity or
value or both of such products marketed for its members. In carrying out its
primary purpose and as further incidental purposes, the Association shall have
every power, privilege, right and immunity now or hereafter authorized or
permitted by law to a corporation organized or existing pursuant to the
provisions of Chapter 1, Division 20, of the Food and Agricultural Code of the
State of California and all amendments thereto and all substitutions therefor
and all continuances thereof. Nothing herein contained shall be deemed to limit
the right or power of the Association to do any lawful act that the Board of
Directors shall determine.

                                  ARTICLE III
                                PRINCIPAL OFFICE

The principal office for the transaction of business of the Association is to
be located in Orange County, California.

                                   ARTICLE IV
                              PERIOD OF EXISTENCE

The Association shall have perpetual existence.

                                   ARTICLE V
                                   DIRECTORS

The number of directors of the Association shall be fifteen, provided that
Bylaws subsequently may be adopted or amended whereby a different number of
directors may be fixed, in which event the number of directors shall be as
provided in the Bylaws.

                                      -1-
   2
                                   ARTICLE VI
                       NONPROFIT COOPERATIVE ASSOCIATION

The Association is organized and exists as a nonprofit cooperative association
pursuant to the provisions of Chapter 1 of Division 20 of the Food and
Agricultural Code of the State of California.

                                  ARTICLE VII
                                    MEMBERS

The Association may admit such individuals, corporations, associations and other
entities as members as are permitted to be members under applicable law. As a
condition and evidence of membership, each member shall own one or more shares
of the Association's Common Stock, the minimum number of shares to be
established by the Board of Directors. The Association may establish such
additional conditions for membership as shall be fixed and determined by the
Board of Directors as provided in the Bylaws.

In the event that the membership of any member shall terminate for any reason,
such member shall not thereby become entitled to demand or receive any payment
from the Association but shall be entitled only to receive payment of any
interest in revolving fund credits and other allocated reserves as and when the
same would have been paid had he or she remained a member.

                                  ARTICLE VIII
                            AUTHORIZED CAPITAL STOCK

A.   CLASSES OF STOCK.

     The Association is authorized to issue two classes of stock to be
     designated, respectively, "Common Stock" and "Preferred Stock." The total
     number of shares of Common Stock that the Association is authorized to
     issue is 10,000,000, with a par value of $1.00 per share and an aggregate
     par value of $10,000,000. The total number of shares of Preferred Stock
     that the Association is authorized to issue is 10,000,000, with a par value
     of $1.00 per share and an aggregate par value of $10,000,000.

     The rights, preferences, privileges and restrictions granted to or imposed
     on the Common Stock and the Preferred Stock or their holders are described
     in the following provisions of this Article VIII.

B.   VOTING RIGHTS.

     Each holder of Common Stock shall be entitled to one vote on each matter
     that is submitted to a vote of shareholders, regardless of the number of
     shares of Common Stock or Preferred Stock that are owned by such holder.
     Preferred Stock shall have no voting rights on any matter.

                                      -2-
   3
C.   DIVIDENDS.

     Dividends may be paid on the Common Stock and the Preferred Stock when, if
     and as declared by the Association's Board of Directors out of any funds of
     the Association that are legally available for the payment of such
     dividends and that are attributable to earnings from business not conducted
     on a nonprofit cooperative basis with members of the Association or other
     patrons. Any and all dividends shall be declared and paid in equal amounts
     per share on each share of Common Stock and Preferred Stock.

D.   LIQUIDATION PREFERENCE.

     In the event of any voluntary or involuntary liquidation, dissolution or
     winding up of the Association, any assets that may remain after payment in
     full of the indebtedness of the Association, including, without limitation,
     that evidenced by any revolving fund credits, other allocated reserves and
     undistributed patronage earnings, shall be distributed as follows:

     1.   Each holder of Preferred Stock shall be entitled to receive, prior and
          in preference to any distribution of any assets of the Association to
          the holders of Common Stock by reason of their ownership of Common
          Stock, the amount of $1.00 for each share of Preferred Stock owned by
          such holder plus all previously declared but unpaid dividends on each
          such share.

     2.   The holders of Common Stock shall share in any remaining assets of the
          Association on a pro rata basis in accordance with the number of
          shares of Common Stock owned by each such holder.

E.   CONVERSION OF COMMON STOCK INTO PREFERRED STOCK.

     On the first anniversary of the termination of his or her membership in the
     Association for any reason, each share of Common Stock that a terminated
     member owns as of such date shall automatically be exchanged for and
     converted into one share of Preferred Stock issued by the Association
     without the payment of any consideration therefor by such terminated
     member. The Association and the terminated member shall execute and deliver
     any documents that the Board of Directors determines are necessary or
     appropriate in order to evidence such transaction.

F.   CONVERSION OF PREFERRED STOCK INTO COMMON STOCK.

     Any member of the Association who owns any shares of Preferred Stock may,
     at time prior to the Association's delivery to such member of written
     notice of its intent to redeem such shares pursuant to Section G of this
     Article VIII, give the Association written notice of his or her desire to
     exchange and convert some or all of such shares for an equal number of
     shares of Common Stock issued by the Association without the payment of any
     consideration therefor by such member. The Association and the member shall
     execute and deliver any documents that the Board of Directors

                                      -3-

   4
     determines are necessary or appropriate in order to evidence such exchange
     and conversion, and such transaction shall be deemed to have been completed
     as of the date that the member delivers to the Association all such
     documents as are required by the Association. A nonmember of the
     Association who owns shares of Preferred Stock shall not be entitled to
     exercise such exchange and conversion privilege.

G.   REDEMPTION OF PREFERRED STOCK.

     At its option, the Association may from time to time redeem any or all of
     the outstanding shares of Preferred Stock by paying in cash or by check
     $1.00 per share plus any and all previously declared but unpaid dividends
     on such share to and including the redemption date. The Association shall
     give each shareholder whose shares are being redeemed at least ten days'
     written notice of the redemption date and of the number of shares that are
     to be redeemed by the Association. If fewer than all outstanding shares of
     Preferred Stock are to be redeemed, the shares to be redeemed shall be
     selected on a prorated basis or on another basis approved by the Board of
     Directors in its discretion. Shares of Preferred Stock that have been
     called for redemption may not be transferred prior to the redemption date,
     and such shares shall not bear any dividends or have any other rights after
     their redemption. The Association and the holder of the redeemed Preferred
     Stock shall execute and deliver any documents that the Board of Directors
     determines are necessary or appropriate in order to evidence such
     redemption.

H.   OWNERSHIP AND TRANSFER RESTRICTIONS.

     The Association shall issue shares of Common Stock only to members of the
     Association. The Association may issue shares of Preferred Stock to members
     of the Association or to nonmembers of the Association. Except for the
     issuance of Preferred Stock to a terminated member in exchange for Common
     Stock pursuant to Section E of this Article VIII, the Association shall not
     issue any shares of Preferred Stock to members or nonmembers without the
     prior approval of a majority of the holders of its Common Stock.

     A shareholder may sell or otherwise transfer shares of Common Stock or
     Preferred Stock only to the Association or to members of the Association.
     In addition, except as otherwise expressly provided in these Restated
     Articles of Incorporation or in the Bylaws, no share of Common Stock or
     Preferred stock may be sold, assigned, alienated, encumbered or otherwise
     transferred, whether voluntarily or involuntarily or by operation of law or
     otherwise, without the consent of the Board of Directors. In order to
     secure any indebtedness owed to the Association by a holder of Common Stock
     or Preferred Stock, the Association shall have a lien on any dividends that
     are paid on Common Stock or Preferred Stock and the Association shall have
     a lien on any proceeds from the sale or other transfer of any shares of
     such stock. Transfers of Common Stock and Preferred Stock shall be subject
     to any additional limitations that may be set forth from time to time in
     the Bylaws.

                                      -4-
   5
1.   ADJUSTMENTS.

     If the number of outstanding shares of Common Stock is increased or
     decreased by reason of a recapitalization, stock dividend, stock split,
     reverse stock split or other similar transaction, an appropriate and
     proportionate adjustment shall be made to the number of then-outstanding
     shares of Preferred Stock. An appropriate and proportionate adjustment
     shall also be made to the amount of the liquidation preference described in
     Section D of this Article VIII and to the amount of the redemption price
     described in Section G of this Article VIII. The Board of Directors shall
     determine the adjustments to be made pursuant to the foregoing provisions,
     and its determination shall be final and conclusive.

                                   ARTICLE IX
                                REVOLVING FUNDS

To provide funds for corporate purposes, revolving funds and other allocated
reserves may be established by the Board of Directors in the manner provided in
the Bylaws by retains from proceeds otherwise payable to the members or by
other method of collection. Such revolving fund and other allocated reserve
credits shall not be deemed to evidence, create or establish any property
rights or interests in the Association. Such credits shall be payable at the
times and in the manner determined and provided in the Bylaws.

                                   ARTICLE X
                    LIABILITY OF DIRECTORS - INDEMNIFICATION

The liability of directors of the Association for monetary damages shall be
eliminated to the fullest extent permissible under California law. The
Association is authorized to provide indemnification of any director, officer
or other agent (as defined in Section 317 of the California Corporations Code)
for breach of duty to the Association and its shareholders through Bylaw
provisions, agreements, votes of shareholders or disinterested directors, or
otherwise, in excess of the indemnification expressly permitted by said Section
317, subject, however, to the limits on excess indemnification set forth in
Section 204 of the California Corporations Code.

                                      -5-
   1

                                                                    EXHIBIT 99.3

                                   BYLAWS OF
                          CALAVO GROWERS OF CALIFORNIA

                                   ARTICLE I
                                    GENERAL

SECTION 1.01      PURPOSES AND POWERS

Calavo Growers of California (the "Association") is a nonprofit cooperative
association organized under the provisions of Chapter 1 of Division 20 of the
Food and Agricultural Code of California. As provided in the Articles of
Incorporation, the primary purpose of the Association is to pack, process and
market avocados produced by its members and to perform such services at cost on
a nonprofit cooperative basis. The Association also has broad incidental
purposes and powers, which include but are not limited to purposes and powers
which enable it to:

      (a)   Engage in any activity in connection with the marketing, selling,
            preserving, picking, harvesting, drying, processing, manufacturing,
            canning, packing, grading, storing, handling, shipping,
            transporting, or utilization of any avocados and any other
            products produced or delivered to it by its members; or the
            manufacturing or marketing of the by-products thereof; or any
            activity in connection with the purchase, hiring, or use by its
            members of supplies, machinery or equipment, or in the financing of
            any such activities.

      (b)   Act as the agent or representative of any member or members in any
            of the above-mentioned activities.

      (c)   Levy assessments in the manner and in the amount hereinafter
            provided.

      (d)   Use or employ any of its facilities for any purpose, provided the
            proceeds arising from such use and employment shall go to reduce
            the cost of operation for its members.

      (e)   Do each and every thing necessary, suitable or proper for the
            accomplishment of any of the purposes or conducive to or expedient
            for the interest or benefit of the Association and contract
            accordingly; and, in addition, exercise and possess all powers,
            rights and privileges necessary or incidental to the purposes for
            which the Association is organized or to the activities in which it
            is engaged; and, in addition, any other rights, powers and
            privileges granted by the laws of California to ordinary
            corporations, except such as are inconsistent with Chapter 1 of
            Division 20 of the Food and Agricultural Code of California; and do
            any such thing anywhere.

      (f)   Delegate any or all of said purposes or powers through the
            appointment of an agent or agents or otherwise. Provided, however,
            that the products handled for or the services, machinery,
            equipment, supplies, or facilities furnished to nonmembers shall
            not exceed in value the products handled for or the services,
            machinery, equipment, supplies, or facilities furnished to members
            during the same period.

   2

                                   ARTICLE II
                              MEMBERS & ASSOCIATES

SECTION 2.01   ELIGIBILITY

     (a)  Any person engaged as a farmer in the production of avocados to be
          processed, marketed, or otherwise handled from time to time by or
          through the Association is eligible to apply for membership.

     (b)  As a condition of membership, each member shall own one or more
          shares of the common stock of the Association. The Board of Directors
          may establish such additional conditions for membership as it may
          from time to time deem desirable to promote the efficient and
          economical conduct of the business of the Association and its
          members, including but not limited to establishing a requirement of
          ownership of a minimum number of shares of the common stock of the
          Association. The Board shall have the right, in its absolute
          discretion, to refuse membership to any applicant which in its
          opinion does not meet the conditions so established.

SECTION 2.02   ADMISSION OF MEMBERS

Application for membership shall be in such form as may be adopted by the Board
of Directors. Upon acceptance of an application, the Board of Directors shall
issue a certificate of membership. Unless otherwise provided, a copy of the
completed membership application executed on behalf of the Association to
indicate acceptance shall constitute such membership certificate.

SECTION 2.03   OBLIGATION OF MEMBERS

Every person upon becoming a member of the Association by such act agrees to be
bound and to abide by all of the provisions of the Articles of Incorporation,
the Bylaws, any marketing agreement to which such member is a party, and any
rules and regulations of the Association, all as in effect at the time of
application for membership and as thereafter adopted or amended.

SECTION 2.04   CO-OWNERSHIP

Whenever an agricultural enterprise is owned by more than one person, whether
as co-tenants, joint tenants, partners, an unincorporated association,
community property of husband and wife, or otherwise, all those owning such
right may collectively be admitted to membership in the names of all of them,
or in such name, fictitious or otherwise, as they may have adopted or desire
for the transaction of their business or as their collective name. All such
co-owners collectively shall be deemed a single member possessing and enjoying
the rights of one member.

SECTION 2.05   PAYMENTS AND RIGHTS OF SURVIVORSHIP OF CO-OWNERS

     (a)  Whenever any amount is payable from the Association to co-owners, it
          may be paid to one or more or all of them at the Association's
          election. In the event of the death of a co-owner, any amount which
          was payable to the co-owners immediately prior to such death shall be
          payable to one or more or all surviving co-owners at the election of
          the Association. Payment in accordance with the foregoing shall
          constitute full satisfaction of the indebtedness of the Association.

                                      -2-

   3

     (b)  Death of one co-owner shall not terminate the membership of the
          surviving co-owners, and the surviving co-owners shall continue as
          one member unless and until the membership is otherwise terminated as
          hereinafter provided. The provisions of Section 2.08 below shall not
          apply in the case of death of less than all of the co-owners.

     (c)  The provisions of this Section and Section 2.04 apply and control the
          rights and liabilities of the Association to co-owners who are
          members, but are not intended to affect or establish any rights,
          liabilities, or relations of co-owners as between themselves.

SECTION 2.06   REPRESENTATION

If a member is other than a single natural individual, such member may be
represented and the right of voting and assenting may be exercised by any
individual, associate, officer, or manager or member thereof duly authorized in
writing filed with the Association. In the absence of such written
authorization, acceptance of membership shall constitute authorization for any
one of the co-owners who constitute a single member, or any officer or manager
of a corporation to represent such membership.

SECTION 2.07   TRANSFER OF MEMBERSHIP AND STOCK

     (a)  No membership, preferred or common stock of the Association, nor any
          membership right shall be assigned, transferred, alienated, or
          encumbered, either voluntarily or involuntarily or by operation of
          law or otherwise, without the consent of the Board of Directors. The
          Board of Directors may refuse any transfer which the Board determines
          is not in the best interests of the Association, and no member shall
          be entitled to compensation of any kind by reason of such refusal.
          Provided, however, that in the event of the death of a member, the
          membership shall be deemed transferred to the personal representative
          of such member and the personal representative shall continue to be
          bound by the deceased member's obligations, including the obligation
          of the member to deliver avocados to the Association, and shall be
          entitled to represent the estate as a member.

     (b)  In addition to the limitations and restrictions described in Section
          2.07(a), no member or other individual, person, corporation,
          partnership, entity or group within the meaning of Section 13(d) of
          the Securities Exchange Act of 1934 and the rules and regulations
          promulgated thereunder may hold (directly or indirectly) record or
          beneficial ownership of more than twenty percent of the total
          outstanding shares of the Association's preferred stock and the
          common stock, as the term "beneficial ownership" is used in Rule
          13d-3 under the Securities Exchange Act of 1934. Furthermore, shares
          of preferred stock or common stock may not be transferred by a
          shareholder to a nonmember. Shares of preferred stock and common
          stock, and the holders of such stock, shall have and be subject to
          such additional rights, preferences, privileges and restrictions
          (including transfer restrictions) as are from time to time provided
          for in the Articles of Incorporation.

                                      -3-
   4
SECTION 2.08   TERMINATION OF MEMBERSHIP

     Membership shall terminate upon occurrence of any of the following events:

     (a)  Termination of all marketing obligations by submission by the member
          to the Association or by the Association to the member of written
          notice or notices of termination of any and all Marketing Agreements
          pursuant to Section 7.08(b) of these Bylaws.

     (b)  Dissolution of the member, except as otherwise provided pursuant to
          Section 2.05 and 2.07 above.

     (c)  By a finding of the Board of Directors incorporated in a resolution
          duly adopted after reasonable notice and opportunity to be heard that
          the membership should be terminated for any one or more of the
          following reasons:

          (i)     That the member has ceased to be engaged in the production,
                  or is no longer a commercial grower, of agricultural products
                  handled by the Association,

          (ii)    That the member has failed to comply with the terms of these
                  Bylaws, or any marketing agreement, or any rules and
                  regulations of the Association; or,

          (iii)   That the member has ceased to own any shares of the common
                  stock of the Association or has ceased to own the minimum
                  number of shares of common stock established by the Board as
                  a condition of membership.

     (d)  The membership of each member who does not consent to exchange his or
          her revolving fund credits and property rights for shares of common
          stock pursuant to the terms and conditions of the Association's plan
          of recapitalization automatically shall terminate on the effective
          date of the recapitalization. The effective date of the
          recapitalization shall be the date that amendments to the Articles of
          Incorporation which create classes of preferred and common stock are
          filed with the Secretary of State of the State of California.
          Subsequent to the effective date of the recapitalization, the
          Marketing Agreement described in Section 7.01 with each such
          nonconsenting member automatically shall terminate as of the end of
          the month in which the next anniversary date of such member's
          membership occurs.

SECTION 2.09   EXPULSION

Any member may be expelled by a three-fourths (3/4) vote of the authorized
number of directors if termination of such membership is judged to be in the
best interests of other members. Before vote upon a proposal to expel any
member, such member shall be given notice and a fair and reasonable opportunity
to be heard at a regular or special meeting of the Board of Directors. Any
action of the Board hereunder shall be final and conclusive.

SECTION 2.10   RIGHTS ON TERMINATION

Persons whose membership in the Association has terminated for any reason,
including withdrawal or expulsion, shall be entitled only to payment on account
of their interest in the money and property of the Association in accordance
with the following procedure and principles:

                                      -4-

   5
They shall receive payment on account of revolving fund credits and other
allocated reserves, if any, at such times and in such order and manner as
though they continued to be members. They shall receive (i) the proceeds from
the sale of their common stock or preferred stock to other members or from
any discretionary redemption of preferred stock by the Association and (ii) any
dividends that the Association elects to pay on preferred and common stock. The
foregoing reflects the intention that the value of membership shall relate
solely to the right of the member to use the facilities and services on a
nonprofit cooperative basis, that no member shall have any right on termination
for any cause to receive from the Association any payment for any unrealized
appreciation in the value of tangible or intangible assets of the Association,
and that payment in the amounts and at the times determined as provided above
shall be deemed repurchase of the entire interest of the member at the full
value thereof.

SECTION 2.11   PROPERTY RIGHTS

The property rights and interest of members shall be determined and fixed in
accordance with the provisions set out in Article VIII of the Articles of
Incorporation.

SECTION 2.12   ASSOCIATE STATUS

The Board of Directors may admit to associate status nonmember producers of
avocados who enter into agreements to market avocados through the Association.
Associates shall not be entitled to vote or to own stock of the Association,
but the Board of Directors may provide for nonvoting participation by
associates in such meetings, communications and other functions as shall from
time to time be determined by the Board of Directors.

                                      -5-

   6
                                  ARTICLE III
                         MEMBERSHIP MEETINGS AND VOTING

SECTION 3.01   VOTING POWER OF MEMBERS

     (a)  The voting power of members shall be equal. Each member shall have one
          (1) vote without regard to the number of shares of stock of the
          Association standing on the books of the Association.

     (b)  Any member having avocado trees planted in orchards in more than one
          District, as hereinafter defined, shall be entitled to vote in the
          District specified in his application for membership; provided that if
          a member has more than one membership account the District specified
          in the earliest membership account or the largest acreage covered by
          multiple membership accounts of the same date shall control. On
          written request approved by the Board of Directors, a member may
          change such District to the District in which the member has the
          greatest production.

     (c)  Members shall not have the right to cumulate their votes.

     (d)  Following the termination of a member's membership in the Association
          for any reason, the terminated member shall execute and deliver to the
          Board of Directors an irrevocable proxy, in form and substance
          satisfactory to the Board of Directors, appointing the Board of
          Directors or its designee, with full power of substitution, as his or
          her proxy to vote or give written consent with respect to all shares
          of common stock owned by the terminated member on all matters that are
          voted upon by shareholders. The irrevocable proxy shall be executed
          and delivered promptly after receipt of a request for such proxy from
          the Board of Directors. Such irrevocable proxy shall continue in force
          and effect until the terminated member has transferred all of his or
          her shares of common stock to members, or converted such shares into
          shares of preferred stock, in accordance with the Articles of
          Incorporation and these Bylaws. Each member agrees that the proxy
          executed and delivered by him or her shall be coupled with an
          interest, shall be irrevocable and shall not be terminated by
          operation of law upon the occurrence of any event prior to the
          transfer or conversion of all of the member's shares of common stock
          described in the preceding sentence. Each member also agrees that the
          Association shall be entitled to pursue all applicable rights and
          remedies against him or her in the event that the member breaches the
          obligation described above to execute and deliver an irrevocable proxy
          upon a termination of membership.

SECTION 3.02    PLACE OF MEETINGS

All meetings of members, except District meetings, shall be held at the
principal office of the Association or at such other place as the Board of
Directors shall determine.

SECTION 3.03   ANNUAL MEETINGS OF ALL MEMBERS

The annual meeting of members shall be held between the first day of January
and the last day of March of each year, and at such time of day, as the Board
of Directors shall determine.

                                      -6-
   7
SECTION 3.04   SPECIAL MEETINGS OF ALL MEMBERS

Special meetings of members may be called by the Chairman of the Board, by a
majority of the Board of Directors, or by the written request of members
holding not less than twenty percent - (20%) of the voting power. Each such
call shall be in writing and shall state the time, place and purpose of such
meeting.

SECTION 3.05   DISTRICT MEETINGS FOR ELECTING DIRECTORS

A meeting of the members in each District, as hereinafter defined, shall be
held between the last day of October in the year prior to the years in which
the term of office of the director or directors for such District regularly
expires, and the first day of February in the following year, for the purpose
of electing a director or directors for such District. The date, time and place
of each such District meeting shall be fixed by the Board of Directors. Each
District may meet jointly with one or more other Districts at a location
reasonably accessible to the members entitled to attend such District meetings.

SECTION 3.06   SPECIAL DISTRICT MEETINGS

Special meetings of the members in any District may be called by the Chairman
of the Board, by a majority of the Board of Directors, or by the written
request of members holding not less than twenty percent (20%) of the voting
power in such District. Each such call shall be in writing and shall state the
time, place and purpose of such meeting.

SECTION 3.07   NOTICE OF MEETINGS

Notice of any meeting of members shall be mailed at least ten (10) days in
advance to all members entitled to vote at such meeting at their addresses
appearing upon the books of the Association. Such notice shall generally
describe the business to be transacted at the meeting and shall state the place,
day and time of such meeting.

SECTION 3.08   QUORUM

At any meeting of the members, the votes represented in person or by proxy and
being qualified to be cast shall constitute a quorum for all purposes,
including the election of directors, except when it is otherwise provided by
law.

SECTION 3.09   VOTING BY MAIL

Whenever authorized by these Bylaws or by the Board of Directors, a membership
vote may be conducted by mail without the necessity of a meeting. In the case
of the election of Directors, the candidate or candidates receiving the highest
number of votes cast by mail shall be deemed elected. In the case of all other
membership votes, to be effective, the total votes cast by mail shall be not
less than a majority of the voting power of the membership.

SECTION 3.10   PROXY VOTING

Each member shall have the right to vote at a membership meeting or assent in
writing, in person or by proxy, which proxy shall be in writing executed by the
member or his duly designated representative and filed with the Secretary of
the Association.

                                     - 7 -

   8
                                   ARTICLE IV
                               BOARD OF DIRECTORS

SECTION 4.01   NUMBER, QUALIFICATIONS AND TERM OF OFFICE

     (a)  There shall be one director for each District, as hereinafter defined,
          plus one additional director, or a total of two directors, for each
          District in which the product of the number of members times the
          number of members' trees is equal to, or greater than, twice the
          average product of the number of members times the number of members'
          trees in all Districts as determined on the first day of each fiscal
          year. There may also be three directors-at-large.

     (b)  Except for Director-at-Large, each Director shall be a member of the
          District from which he is elected.

     (c)  The term of office for a director shall be two (2) years from the
          effective date of his election and until his successor has been
          elected and has accepted office. The effective date of election of a
          director shall be the date of the annual meeting in the year in which
          elected. The term of office of directors from odd numbered Districts
          shall expire in odd numbered years, and of directors from even
          numbered Districts in even numbered years. The offices of the
          directors-at-large shall be designated as number 1, 2 and 3 and each
          such term of office shall expire in an odd or even numbered year
          depending upon the number of the office.

SECTION 4.02   DISTRICTS DEFINED

The territory in which the Association has members shall be divided into not
less than seven (7) nor more than twelve (12) districts. The boundaries and
number of said Districts shall be defined by the Board of Directors who may
revise, change and redefine the number and boundaries of said Districts from
time to time provided that the resulting number of directors from such
Districts shall be not less than seven (7) nor more than twelve (12). The Board
of Directors shall adopt, and the Secretary shall certify, a map showing the
boundaries of the Districts as thus defined. Said map shall be kept at the
principal office of the Association for the purposes of determining any
disputes concerning boundaries. The determination of the Board of Directors
shall be conclusive as to the territory included in any District.

SECTION 4.03   NOMINATION OF DIRECTORS

Candidates for the position of director for any District may be nominated in
the following ways:

The Board of Directors may appoint a nomination chairman for each district who
will select his committee from growers in his district. Their recommendation
will be presented to the members in attendance. Nominations may also be made by
members from the door. Candidates may be nominated by submitting their name to
the Secretary of the Association.

                                     - 8 -
   9
SECTION 4.04  ELECTION OF DIRECTORS

     (a)  Prior to the District meetings for electing directors for such
          Districts, the Board of Directors may select when not voting by mail
          for each District meeting from the members qualified to vote at such
          meeting, a chairman and a secretary respectively, who shall have
          charge of such meeting and such election. The candidate or candidates
          for director receiving the highest number of votes cast shall be
          deemed elected and shall serve until their successors are elected and
          the election is certified by the Board of Directors and ratified at
          the annual meeting of members. If the Board of Directors fails to
          select such District meeting officers or any officer selected by the
          Board fails or refuses to act, then the qualified voters at such
          meeting shall select one of themselves to fill such vacancy. Election
          may be made by mail ballot in which case the Secretary of the
          Association or other designated individual shall be responsible for
          tabulation of the results of ballots received.

     (b)  Immediately following each such District meeting, the said election
          officers shall certify in writing the result of such election. Such
          certificate shall be promptly transmitted, either by registered mail
          or personal delivery, to the Secretary of the Association at its
          principal office. The certificate shall show the names of the persons
          for whom votes were cast and the number of votes cast for each. With
          the certificate, there shall be transmitted all proxies used at the
          election. The certificate shall be preserved by the Association for
          at least five years thereafter.

     (c)  The Board of Directors shall, immediately following the District
          elections and prior to the annual meeting of members, meet and
          examine the returns made by the election officers of the several
          Districts and shall report the results of such District elections to
          the annual meeting of members at which meeting such results shall be
          ratified.

     (d)  In the event of any protest concerning the manner in which any
          District election shall have been held, the Board of Directors shall
          consider the same and determine such protest, and its action thereon
          shall be final. In the event the Board of Directors shall determine
          that the election in any particular District was not held
          substantially in the manner required by these Bylaws, it may, by
          resolution, order a new meeting and election to be held in said
          District, fix the time and place thereof and appoint the officers of
          such meeting and election. In the event of any special meeting and
          election, the Secretary shall mail notice in writing of such special
          meeting and election to each member qualified to vote in such
          District not less than five (5) days before the time fixed for the
          same, and such meeting and election shall be held in the manner
          herein before provided.

     (e)  Directors elected by members shall, prior to the annual meeting of
          members, meet and elect the director or directors at-large. The
          meeting of the directors for said purpose shall be held at the
          principal office of the Association at a time to be designated by the
          Chairman of the Board, or in his absence or failure to do so, the
          Vice-Chairman, or in his absence or failure to do so, the Secretary.
          Notice of the time of holding such meeting shall be mailed by the
          Secretary not less than five (5) days prior to such meeting. A
          majority of the directors elected by members shall constitute a
          quorum at such meeting. The names of the directors-at-large so
          elected shall be ratified by the members at the annual meeting.

                                      -9-
   10
SECTION 4.05  VACANCIES

     (a)  Vacancies on the Board of Directors may be filled by vote of a
          majority of the remaining directors, though less than a quorum. In
          filling a vacancy in the office of a director for any District, the
          new director shall be chosen from among the members in such District.
          Persons so elected shall hold office until their successors have been
          elected and have accepted office.

     (b)  Any director may be removed in the manner provided for by law.

     (c)  Any director who ceases to be a member, or who violates any contract
          with the Association in any particular, or who ceases to meet the
          requirements for eligibility of a director in any particular, shall
          cease to be a director as soon as the Board of Directors, by vote of
          two-thirds (2/3) of the authorized number of directors, makes such
          finding by resolution adopted after reasonable notice and opportunity
          to be heard.

     (d)  The members, at a duly called district meeting, may elect a director
          or directors at any time to fill any vacancy or vacancies not filled
          by the directors.

     (e)  No reduction of the authorized number of directors shall have the
          effect of removing any director prior to the expiration of his term
          of office.

SECTION 4.06  ORGANIZATIONAL MEETING

A meeting of the Board of Directors shall be held immediately following the
annual meeting of the membership, and at the same place, for the purpose of
organization of the Board of Directors, election of officers of the Association
and the transaction of any other business.

SECTION 4.07  REGULAR MEETINGS

In addition to the organizational meeting mentioned above, a regular meeting of
the Board of Directors shall be held monthly at such time and place as the
Board may determine.

SECTION 4.08  SPECIAL MEETINGS

A special meeting of the Board of Directors shall be held whenever called by
the Chairman of the Board, any Vice Chairman of the Board or by any two (2) of
the directors, or by action of the Board at a previously duly called meeting.
Any and all business may be transacted at a special meeting. Except when called
by action of the Board at a previous duly called meeting, all calls shall be in
writing, signed by the persons making the call, setting forth the date, time,
and place of the meeting, and addressed and delivered to the Secretary of the
Association.

SECTION 4.09  NOTICE OF MEETINGS

Notice of meetings may be given by mailing a copy of such notice to a director,
at the last known address of such director, at least four (4) days prior to the
time of the meeting. Notice may also be given at least forty-eight (48) hours
before the time set for the meeting by telegraph to a director at the last
known address of such director, or by telephone to a director or a responsible
person who the person telephoning believes in good faith will deliver such
notice to the director. Notice shall contain a statement of the date, time, and
place of the meeting and may be delivered in like

                                      -10-
   11
manner to all directors, or individual directors may be notified by some or any
of the methods provided for herein.

SECTION 4.10   QUORUM AND ACTION

A majority of the authorized number of directors shall be necessary to
constitute a quorum for the transaction of business. Every act or decision done
or made by a majority of the directors present at a meeting duly held at which
a quorum is present shall be regarded as the act of the Board of Directors,
unless a greater number be required by law.

SECTION 4.11   WAIVER OF NOTICE

When a quorum is present at a meeting of the Board of Directors, regardless of
how called and noticed, such meeting shall be considered for all purposes as a
meeting of the Board duly held after regular call and notice; provided,
however, that before or after the meeting every member of the Board not present
shall sign a written waiver of notice, consent to the holding of such meeting,
or an approval of the minutes thereof. Such waiver, consent, or approval shall
be made a part of the records of that meeting.

SECTION 4.12   ACTION WITHOUT A MEETING

Any action required or permitted to be taken by the Board of Directors may be
taken without a meeting if all members of the Board of Directors shall
individually or collectively consent in writing to such action; provided,
however, that such written consent or consents shall be filed with the minutes
of the proceedings of the Board of Directors.

SECTION 4.13   PARTICIPATION IN MEETINGS BY TELEPHONE

Directors may participate in any meeting of the Board through use of conference
telephones or similar communications equipment, so long as all directors
participating in such meeting can hear one another. Participation in a board
meeting pursuant to this Section shall constitute presence in person at such
meeting.

SECTION 4.14   COMPENSATION OF DIRECTORS

The directors shall receive no compensation for their services other than
reimbursement for necessary traveling expenses (transportation, meals and
lodging) and a reasonable per diem fixed by the Board of Directors for each day
necessary for traveling to and from and for attendance at meetings.

                                      -11-
   12
                                   ARTICLE V
                  POWERS AND DUTIES OF THE BOARD OF DIRECTORS

SECTION 5.01    GENERAL

Subject to the limitations of statutes of California, the Articles of
Incorporation, and the Bylaws relating to action which shall be authorized or
approved by the membership, all corporate powers shall be exercised by or under
the authority of the Board of Directors. Without limiting such general power or
powers expressly or impliedly vested in the Board of Directors by law or by
provisions of the Articles of Incorporation and Bylaws, it is hereby expressly
provided that the Board shall have the following powers:

        (a)     To select and remove all officers, agents, and employees of the
                Association, prescribe such powers and duties for them as may
                not be inconsistent with law, with the Articles of Incorporation
                or the Bylaws, fix their compensation, and require from them
                security for faithful service;

        (b)     To conduct, manage, and control the affairs and business of the
                Association, and to make and from time to time amend such rules
                and regulations therefore not inconsistent with law, the
                Articles of Incorporation or the Bylaws;

        (c)     To borrow money and incur indebtedness for the purposes of the
                Association, and to cause to be executed and delivered
                therefore, in the corporate name, promissory notes, bonds,
                debentures, deeds of trust, mortgages, pledges, hypothecations,
                or other evidence of debt and securities therefor;

        (d)     To appoint an Executive Committee and other committees, and to
                delegate to the Executive Committee any of the powers and
                authority of the Board in the management of the business and
                affairs of the Association, except as otherwise provided by law;

        (e)     To install a system of bookkeeping and auditing for the purpose
                of fully advising the membership from time to time, but at least
                annually, by means of an independently audited financial
                statement, concerning the receipts and disbursements and
                financial condition of the Association;

        (f)     To invest accumulated funds of the Association in United States
                treasury certificates, certificates of deposit or other
                obligations of banks or savings and loans, and commercial paper,
                corporate bonds and debentures, and in stocks or other
                obligations of any corporation or association engaged in any
                related activity or in the processing or marketing of any of the
                products handled by the Association and the acquisition of which
                the Board believes will enhance the Association's ability to
                market the members' products;

        (g)     To fix and determine the method, amount, manner, and time of all
                assessments or deductions to cover all charges and expenses of
                the Association, and to fix and determine the amount of
                contributions required by each member to the capital required to
                operate the Association and the method, amount, manner, and time
                of assessment or deduction of such contributions and the
                repayment thereof;

                                     - 12 -
   13
        (h)     To enter into, observe, comply with, and assent to or dissent
                from, on behalf of those members of the Association who do not
                themselves assent or dissent, any prorate or marketing order,
                commission or agreement, stabilization plan, allotment, or code
                relating to the growing, processing, or marketing of any
                agricultural products marketed by the Association and to bind
                all members thereto.

SECTION 5.02    EXECUTIVE COMMITTEE

        (a)     There shall be an Executive Committee consisting of the Chairman
                of the Board and four directors, who shall be appointed by the
                vote of a majority of the authorized number of directors from
                their own number at the meeting of the Board of Directors to be
                held immediately following the annual meeting of the members.
                The Board by the vote of a majority of the authorized number of
                directors may designate one or more directors, not duly elected
                members of the Executive Committee, to be present at any
                particular meeting of the Executive Committee, with authority to
                serve in the place of any absent member of the Executive
                Committee at such meeting. The Executive Committee shall have
                all the functions and powers of the Board of Directors delegated
                to it by said Board except as otherwise provided by law,
                subject, moreover, to the general direction and control of the
                Board of Directors. A majority of the Executive Committee shall
                constitute a quorum for the transaction of all business. The
                Executive Committee may, by resolution, fix such dates for
                holding regular meetings as it shall see fit.

        (b)     Notice of all regular meetings of the Executive Committee, as
                may be provided for by resolution as authorized above, is hereby
                dispensed with and need not be given to the members of the
                Executive Committee.

        (c)     Special meetings of the Executive Committee shall be held
                whenever called by the Chairman of the Board, or by the Board of
                Directors, or by any three members of the Executive Committee.
                Notice of each special meeting of the Executive Committee shall
                be given in the manner provided for in Section 4.09 of these
                Bylaws.

        (d)     Any and all business may be transacted at any special meeting of
                the Executive Committee. The Secretary shall keep full and
                correct minutes of all meetings of the Executive Committee and
                of all business transacted thereat.

SECTION 5.03    OTHER COMMITTEES

The Chairman shall nominate and the Board of Directors shall appoint such
nominees to such other committees as the Chairman deems appropriate.

                                     - 13 -

   14
                                   ARTICLE VI
                            OFFICERS AND MANAGEMENT

SECTION 6.01    CORPORATE OFFICERS

        (a)     The officers of the Association shall be a Chairman of the
                Board, a Vice Chairman of the Board, a President, a Vice
                President, a Secretary, and a Treasurer. The Board of Directors
                may also appoint additional vice chairmen of the Board,
                additional vice presidents, and one or more assistant
                Secretaries, assistant Treasurers, and such other officers as
                the Board of Directors may see fit in its discretion to
                designate. Any one or more of the above offices may be occupied
                by one person, except that one person shall not serve as both
                President and Secretary. The Chairman of the Board shall be a
                director elected by the members. The other officers may be, but
                need not be, directors or members.

SECTION 6.02    POWERS AND DUTIES

Subject at all times to the control and direction of the Board of Directors,
each officer shall have and exercise the powers and duties usual to the
office; provided, however, that the President shall be the chief executive
officer of the Association and, though subject to the general supervision of
the President, the senior financial officer of the Association shall be
directly responsible to the Board of Directors.

                                     - 14 -

   15

                                  ARTICLE VII
                              MARKETING AGREEMENT

SECTION 7.01   INTRODUCTION

This Article expresses terms of an agreement between each member as a patron and
the Association relating to the products which the member agrees to deliver to
the Association for processing and marketing. Each member agrees by executing an
Application for Membership and the Association agrees by acceptance of such
Application to be bound by these terms, as amended from time to time. The
provisions of this Article, together with all other relevant terms of the
Articles of Incorporation, the Bylaws, rules and regulations of the Board of
Directors, and any supplemental agreement or agreements, including the
Application for Membership, all as amended from time to time, shall together
constitute the terms of a Marketing Agreement.

SECTION 7.02   DELIVERY FOR MARKETING

     (a)  Each member hereby sells and conveys and agrees to deliver to the
          Association and the Association agrees to purchase for the account of
          and as the common agent of its members all of the avocados grown or
          produced upon land now or hereafter owned by him, or which is in his
          possession as tenant, or under contract to purchase, or otherwise,
          except such avocados as may be retained for personal use or
          consumption by the member and except avocados of such varieties as
          the Board of Directors determines may not be economically handled and
          marketed. The Board of Directors in its discretion may determine that
          one or more varieties may not be economically handled and marketed
          because of the character of the fruit or because they are produced in
          relatively small quantity, and in such event may give prior written
          notice to each member known to be supplying or growing such variety
          or varieties at the address appearing upon the books of the
          Association. Notice shall also be published in the newsletter or
          other periodical of the Association. Thereafter, the Association may
          decline to purchase, handle, or market all avocados of such variety
          or varieties. Determination by the Board of Directors that one or
          more varieties may not be economically handled and marketed shall be
          final and conclusive upon all parties.

     (b)  The obligation of each member to deliver avocados shall commence upon
          the acceptance of his application for membership; provided, however,
          that the Board of Directors may accept any member upon the condition
          that his obligation to deliver fruit shall commence at such time
          subsequent to the acceptance of his membership as the Board may
          determine at the time of such acceptance, such time to be mutually
          agreed upon by such member and the Association, noted in the minutes
          of the Board of Directors, and such member notified in writing
          thereof; in that event delivery of avocados hereunder shall commence
          at the time so determined, and such member shall thereafter be under
          the same obligations and duties as though the obligation to deliver
          said fruit commenced upon the acceptance of his membership.

     (c)  Whenever requested by the Association to do so, each member agrees to
          mail to the Association at its principal office an estimate of the
          yield of avocados, covered by this Marketing Agreement.

                                      -15-
   16

     (d)  The time, place, manner and quantity of delivery of avocados shall be
          directed by the Association in order to enable it to properly
          receive, pack, and market the products of all of its members. The
          Association shall have the right, at reasonable hours, to inspect
          members' groves for the purpose of crop estimate and inspection.

     (e)  Each member agrees to deliver its products to such place as the
          Association may designate. All handling and marketing of the products
          of members shall be under the full and exclusive control of the
          Association, and its agents, employees, and representatives, and the
          Association shall have the full and unqualified right to take title
          to such products and process, sell, or otherwise dispose of or
          transfer them, and to sue on, enforce, and compromise any rights and
          claims arising out of any transaction involving such products. No
          member shall have any rights or shall exercise any control by virtue
          of having furnished any products, other than as may be expressly
          provided in these Bylaws or in any agreement with the Association.

     (f)  If a member surrenders actual control of production of all or any
          portion of avocado production by virtue of a bona fide sale or bona
          fide lease of an orchard or orchards prior to commencement of
          harvest, the member shall be released from the future obligation to
          market avocados produced on the property which has been sold or
          leased, provided the member notifies the Association as to any such
          sale or lease in advance of entering into such sale or lease and
          furnishes evidence satisfactory to the Board of a bona fide
          transaction not entered into to evade the obligation of this
          Marketing Agreement. If the Board determines that the proposed sale
          or lease is not such a bona fide transaction, the Board may require
          either (i) that the purchaser or lessee be admitted as a member and
          continue to market the production through the Association, (ii) that
          the member continue to perform the obligations of the Marketing
          Agreement as to the production in question until termination of the
          membership and Marketing Agreement as elsewhere provided in the
          Bylaws, or (iii) that the entire membership of the member be
          terminated.

SECTION 7.03   MARKETING

The Association agrees to receive, pack, market and sell the avocados delivered
by members, at such prices and terms, in such form, and at such times as in its
judgment and discretion it deems best for the interests of all members, and to
pay to the members as payment in full the net proceeds received by the
Association from the marketing of members' products less the retains as
hereinafter provided, all as specified in these Bylaws and in the Association's
rules and regulations. The Association may, from time to time, also reduce or
eliminate the right and obligation to market products if the Board of Directors
determines that for reasons beyond the Association's control, the Association
cannot market the committed quantity of products on satisfactory terms. Any
such reduction shall be applied pro rata to all members who are parties to
Marketing Agreements covering such products.

SECTION 7.04   DETERMINATION, ALLOCATION AND PAYMENT OF NET PROCEEDS

     (a)  Net proceeds shall be determined by the Board of Directors by
          deducting from the gross proceeds cash advance payments to members,
          the costs of receiving, processing, manufacturing, handling, storing,
          transporting, advertising, and all other expenses of marketing.
          Expenses shall include, but not be limited to, all costs of
          administration, reasonable allowances for depreciation and bad debts,
          interest, and

                                      -16-
   17
          losses (to the extent hereinafter provided). Gross proceeds from
          avocados transferred to a subsidiary of the Association to be
          processed into products other than fresh avocados shall be the
          transfer price determined in good faith to be the prevailing market
          price for comparable avocados for processing at the time of transfer
          to the subsidiary. The Association may also retain amounts from such
          net proceeds for reserves or revolving funds created as hereinafter
          provided. If at the end of the fiscal year of the Association the sum
          of the costs and expenses to be deducted from gross proceeds shall
          prove to be in excess of the gross proceeds, the difference shall,
          upon demand therefore, be paid by the members to the Association in
          proportion to the quantity or value or both of products delivered to
          the Association by each member during such fiscal year.

     (b)  The net proceeds of the Association from business done with or for
          its members shall be determined by the Board of Directors within
          eight and one-half (8-1/2) months after the close of each fiscal year
          and shall be allocated among the members according to the quantity or
          value or both of products delivered by each member in such fiscal
          year. The Association shall be obligated to pay the net proceeds in
          cash or qualified or nonqualified written notices of allocation not
          later than eight and one-half (8-1/2) months after the close of each
          fiscal year.

     (c)  The Association may pool the products of members and associates in
          one or more pools pursuant to a pooling plan or plans to be
          prescribed by the Board of Directors. Any such plan shall specify the
          conditions of eligibility of products, the methods of operation and
          all rules and regulations in connection therewith. Such pools shall
          open and close at such time as the Board may prescribe and the time
          for closing may be advanced or extended. Net proceeds from any such
          pool may be separately distributed in conformity with the provisions
          of this Section 7.04.

SECTION 7.05   LIENS

Notwithstanding any other provision of these Bylaws, the Association shall have
a first lien upon all sums payable to the member or former member, as security
for the payment to the Association of all sums owing from such member at any
time, including any sum due as damages pursuant to any product purchase or
other agreement, and the Association shall have the right but not the
obligation to offset any such sum owing to the Association against any sum
payable to the member, including but not limited to any net proceeds, credits
standing on the books of the Association, ordinary or liquidating dividends
payable on common or preferred stock, and amounts payable on the sale,
redemption or other transfer of preferred or common stock. Such right of offset
shall not be barred by the running of any statute of limitation against the
indebtedness to be offset. Such right of the Association may be subordinated by
appropriate written instructions when authorized by the Board of Directors.
Members shall execute any documents required by the Association to implement or
perfect its rights under this Section.

SECTION 7.06   MEMBERS' LABOR RELATIONS

Anything contained in these Bylaws or any agreement between the Association and
its members notwithstanding, the Association shall have no control whatsoever
over the labor relations policies or conduct or direction of labor relations of
its individual members. Likewise, the individual members of the Association
shall have no control whatsoever over the labor relations policies or the
direction of labor relations of the Association and its employees.

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   18
SECTION 7.07   SPECIAL PROVISIONS FOR DELIVERY OF PRODUCTS

     (a)  The Association may make rules and regulations regarding handling and
          delivering of members' products and provide inspectors and graders to
          standardize, grade, and classify the products so delivered. The member
          agrees to observe and perform any such rules and regulations, to
          accept the grading and standards established by the Association, and
          to deliver products at such reasonable delivery dates and places as
          the Association may from time to time prescribe. The determination of
          the Association as to grade, standard, and classification, and
          differentials in prices, shall be conclusive.

     (b)  Should any member fail properly to harvest or deliver avocados to the
          Association, the Association may elect to do what may be necessary in
          that event, and may charge the cost thereof to such member, or may
          elect to decline acceptance of such avocados, and may decline
          acceptance of products not in the condition or not of the standard
          quality or grade as prescribed in the statutes of the State of
          California now in force or hereafter enacted and any rules or
          regulations made thereunder by any officer or governmental body having
          jurisdiction to make such rules and regulations, and may likewise
          decline to accept avocados not in conformity with such rules and
          regulations as may be adopted by the Board of Directors pursuant to
          these Bylaws with reference to the picking, grading, packing,
          transportation, shipment and delivery of products.

SECTION 7.08   TERMINATION OF MARKETING AGREEMENT

     (a)  The Marketing Agreement with each member shall continue in effect,
          subject to any legal limitations, unless terminated pursuant to
          Section 7.08(b) or unless membership is terminated pursuant to Section
          2.08 of these Bylaws.

     (b)  Any member of the Association, or the Association, may terminate the
          Marketing Agreement by delivering thirty (30) day written notice of
          termination to the other party during the first twelve-month (12)
          period from the date of the application or after the first
          twelve-month (12) period between the first and fifteenth days of the
          month in which said member's anniversary date occurs. The Marketing
          Agreement shall thereafter terminate as to said member on the last day
          of the month following such notice. For purposes hereof, the
          anniversary date of each member shall be the date of acceptance of
          such member's membership application pursuant to Section 2.02 of these
          Bylaws.

     (c)  Notwithstanding anything to the contrary in these Bylaws, (i) the
          Association's Marketing Agreement with each member automatically shall
          terminate on the effective date of the Association's merger with
          Calavo Growers, Inc., a California corporation, and (ii) the
          membership of each member in the Association automatically shall
          terminate on the effective date of the merger. The effective date of
          the merger shall be the date that an agreement of merger between the
          Association and Calavo Growers, Inc. is filed with the Secretary of
          State of the State of California.

SECTION 7.09   REMEDIES FOR MEMBER'S BREACH

     (a)  The failure to deliver products as required herein will result in
          injury to the Association, and it would be extremely difficult and
          impracticable to fix the amount of damages which the Association or
          its members would suffer. Therefore, each member expressly agrees to
          pay to the Association, upon demand of the Association, the following
          amounts as liquidated damages for all avocados withheld, delivered,
          sold, consigned, or marketed by or for said member other than in
          accordance with the terms of the member's Marketing Agreement with the
          Association.

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   19
          (i)   One thousand dollars ($1,000.00),

          (ii)  Plus the operating retain rate per pound prevailing at the time
                of such action or inaction,

          (iii) Plus forfeiture of any and all patronage dividends and
                nonpatronage dividends payable to such member by the Association
                at the time of such action or inaction and at any future time.

     (b)  If the Association prevails in any action brought by the Association
          against the member to enforce any provisions of the Marketing
          Agreement or to secure specific performance or to collect damages of
          any kind for any breach thereof, the member agrees to pay to the
          Association all costs of court, costs for bonds, and all other
          expenses arising out of or caused by the litigation, including
          reasonable attorneys' fees expended or incurred by the Association in
          any such proceeding, and all costs and expenses may be included in the
          judgment obtained in said action.

     (c)  The foregoing right to recover liquidated damages shall be in addition
          to all other remedies now or hereinafter available by law, but not
          limited to, the right to obtain an injunction, and said remedies shall
          be deemed cumulative and not exclusive.

SECTION 7.10   MARKETING AGREEMENTS WITH ASSOCIATES

The Association may enter into marketing agreements with nonmember producers as
associates to market avocados for such associates on terms which provide that
the associate will receive the same pool proceeds as members for comparable
varieties, sizes and grades received during the same time period, and on such
other terms approved by the Board as set out in separate marketing agreements
executed by each such associate. Provided, however, the volume of business with
associates shall be limited by Section 1.01(f) above.

                                      -19-
   20
                                  ARTICLE VIII
                                 REVOLVING FUND

SECTION 8.01   PURPOSE

The primary source of capital shall be the outstanding common and preferred
stock. In addition, the Association may create and maintain a revolving fund
for the purpose of having members furnish additional capital on an equitable
patronage basis to effectuate the purposes of the Association. It may also, from
time to time, create one or more additional allocated reserves for the same
purposes by retains from proceeds otherwise payable to the members or by other
method of collection, all as determined by the Board of Directors. The
revolving fund shall be revolved and other allocated reserves shall be redeemed
in such manner and at such times as the Board may determine.

SECTION 8.02   ADDITIONS TO REVOLVING FUND

Additions to the revolving fund shall be made by assessments or deductions from
the net proceeds otherwise payable on products delivered by the members to the
Association, as determined by the Board of Directors from time to time. Said
assessments or deductions shall be apportioned among the members on the basis
of the quantity or value or both, of products delivered by each of the members.

SECTION 8.03   REVOLVING FUND STATEMENT

Within eight and one-half (8-1/2) months after the close of each fiscal year,
the Association shall furnish each member with a statement showing the amount
of revolving fund and other allocated reserve credits standing on the books of
the Association in the name of such member and the amount thereof which accrued
during such fiscal year. In the event of a loss chargeable against revolving
fund credits pursuant to Section 8.09 hereof, the same shall be furnished to
all holders of revolving fund credits affected by such loss, whether or not
they were members during such fiscal year.

SECTION 8.04   REDEMPTION

Whenever the Board of Directors determines, in its sole discretion, that the
aggregate of all outstanding unpaid revolving fund credits exceeds the capital
needs of the Association, such excess and subsequent additions shall be used to
revolve out or redeem the oldest unpaid revolving fund credits. All such
credits from the same fiscal year shall have the same priority; and if funds
available are insufficient to pay all credits for a given fiscal year, a
prorata payment may be made against all credits for that year or payment may be
deferred until funds are available to pay in full all credits for such year.

SECTION 8.05   ASSIGNMENT OR TRANSFER

Revolving fund credits may be assigned or transferred at any time by execution
of a written assignment thereof, on a form to be provided by the Association,
and delivery thereof to the Secretary of the Association; provided, however,
that no such transfer shall be complete until entered upon the books of the
Association.

                                     - 20 -
   21
SECTION 8.06   NO ASSIGNMENT WHILE INDEBTED TO THE ASSOCIATION

No assignment or transfer of any revolving fund or other allocated reserve
credit, whether voluntary or involuntary, by act of law or otherwise, can be
made, nor will any purported assignment or transfer be of any effect against
the Association, or affect its right of setoff as long as the person whose
interest is to be assigned or transferred is indebted to the Association in any
manner or for anything, whether such indebtedness be liquidated or
unliquidated, due or not due; and the Association may withhold consent to and
refuse to recognize or be bound by any assignment or transfer (whether
voluntary or involuntary) as long as any indebtedness or liability exists,
whether due or not due, liquidated or unliquidated; and the Association shall
have and is given a prior lien upon and against the revolving fund or other
allocated reserve credits of any member or person to secure any indebtedness
or liability to the Association from such member or person with the right to
set off the same against any monies becoming payable in respect of said
credits. The Association may at any time set off against any of the revolving
fund or other allocated reserve credits of any person an equal amount of any
indebtedness of such person to the Association for which the Association is
given a lien, as aforesaid, whether due or not, and in such event indebtedness
on both sides in the same amount shall be deemed cancelled and satisfied.

SECTION 8.07   USE OF REVOLVING FUNDS

Monies contributed to the revolving fund or any allocated reserve by assessment
or retain may be commingled with and used for corporate purposes as all other
monies of the Association are used. Nothing herein contained shall be deemed to
require that any specific monies or funds be segregated or set apart, nor shall
any such fund be deemed a trust fund held for the owners of credits in such
fund.

SECTION 8.08   PRIORITY OF CREDIT HOLDERS

Credits in the revolving fund or allocated reserves and the rights of credit
holders shall be junior and subordinate to the rights of all creditors of the
Association.

SECTION 8.09   LOSSES

In the event of a loss to the Association from any cause whatsoever, the Board
of Directors may, if it finds such loss to be a substantial loss, in its sole
discretion charge all or any part of said loss in the manner it determines to
be equitable to any one or more of the following:

     (a)  Current corporate operating expenses;

     (b)  Future corporate operating expenses;

     (c)  Revolving fund and/or other allocated reserve credits for the fiscal
          year or years in which such loss was incurred, or to which it is
          attributable;

     (d)  All revolving fund and/or other allocated reserve credits for all
          years; and/or

     (e)  Unallocated reserves.

                                      -21-
   22

SECTION 8.10   DISSOLUTION

     (a)  In the event of dissolution or liquidation, all unpaid revolving fund
          credits and other allocated reserves shall be deemed due without
          regard to year of origin, subject to the priority of all creditors of
          the Association, and any residue that may remain after payment in
          full of all indebtedness and all such revolving fund credits and
          other allocated reserves shall be distributed among the holders of
          the Association's common stock and preferred stock in the manner
          specified in the Articles of Incorporation. In the event there are
          insufficient funds with which to redeem all such revolving fund
          credits and allocated reserves, payment thereof shall be on a prorata
          basis without regard to the date of origin.

     (b)  In the event the Association shall at any time determine to transfer
          the property and assets of the Association to a successor association
          and shall designate such association as the successor of the
          Association, then the transfer of said property and assets by the
          Association to such successor association shall not be considered a
          dissolution or liquidation within the meaning of the foregoing
          paragraph. Such successor association may be formed or exist under
          state or federal laws, provided only it shall be in substance a
          farmers' nonprofit cooperative marketing association. Such successor
          association may be an association formed or recognized for such
          purpose, or it may be formed by merger, consolidation, or any
          corporate reorganization. Property rights and interests of the
          members of the Association shall be recognized and preserved in an
          equitable manner in such successor association.

SECTION 8.11   COMPROMISING AND DISCOUNTING CREDITS

Notwithstanding any provision elsewhere in these Bylaws  contained, the Board
shall have the power from time to time, and at any time, to pay off or obtain a
release or satisfaction of one or more revolving fund or other allocated reserve
credits in either case as follows:

     (a)  To compromise or settle a dispute in respect of the credit or a
          dispute with the holder thereof;

     (b)  To obtain for the Association a discount for prior payment that the
          Board deems substantial.

                                      -22-
   23

                                   ARTICLE IX
                                 MISCELLANEOUS

SECTION 9.01   AMENDMENTS

These Bylaws may be amended by a vote or written assent of members representing
a majority of the votes of all the members, or by the Board of Directors at any
meeting of the Board by an affirmative vote of two-thirds (2/3) of the members
of the Board.

SECTION 9.02   CONSENT OF MEMBERS TO TAKE ALLOCATIONS INTO INCOME

     (a)  Each person who applies for and is accepted to membership in the
          Association shall, by such act alone, consent that the amount of any
          distributions or allocations which are made in qualified written
          notices of allocations or qualified per unit retain certificates (as
          defined in 26 U.S. Code Section 1388) and which are received by him
          from the Association, will be taken into income by him at their
          stated dollar amounts in the manner provided in 26 U.S. Code Section
          1385(a) in the taxable year in which such written notices of
          allocation or per-unit retain certificates are received by him. The
          intent and effect of this Section is that the full amount of any
          retain from amounts otherwise payable to the member by the
          Association which is allocated to the member as a revolving fund
          credit or other non-cash allocation will be treated by the member as
          representing cash distributions equal to the face amount of such
          allocations received in the taxable year when notice of such
          allocations is received, if such allocations are received in the form
          of qualified written notices of allocation or qualified per-unit
          retain certificates.

     (b)  The consent of each member pursuant to Section 9.02(a) of these
          Bylaws shall not extend to distributions or allocations which are
          made in written notices of allocation or per-unit certificates which
          are designated on the face thereof as "nonqualified."

SECTION 9.03   DISPOSITION OF UNCLAIMED PROPERTY

     (a)  Whenever a member or other person is entitled to receive a payment or
          allocation from the Association and the Association, after making
          reasonable efforts to do so, is unable to locate the person to whom
          such monies are payable or the one entitled to payment, within three
          (3) years after the same became payable, the Board of Directors may
          charge off the same as a liability on its books, the claim of any
          such person to any such monies shall thereby be extinguished, and
          thereupon the Association shall treat the amount of all such monies
          so charged off as incidental income to the Association in the year
          during which such monies are so charged off. In the event such monies
          have not been paid prior to the running of the statute of limitations
          of the State of California against any such claim, then such amounts
          shall, without further action by the Board of Directors, cease to be
          a liability of the Association and shall be treated as incidental
          income received during the year said statute of limitations shall
          have run.

                                      -23-

   24

     (b)  No such charge-off or termination of liability as herein provided
          shall occur, however, unless notice of monies due shall have been
          sent by certified or registered U.S. mail, postage prepaid, with
          return receipt requested, in the case of monies due in excess of
          $50.00, and by registered, certified, or ordinary mail in all other
          cases, to the person appearing from the books of the Association to
          be entitled to payment of such monies, at least thirty (30) days
          prior to such charge-off or termination.

SECTION 9.04   ANNUAL REPORT

The sending of the report referred to in Section 54204 of the Food and
Agricultural Code of the State of California is hereby expressly dispensed
with, but the Board of Directors shall continue to send to members an annual
report in the customary form.

SECTION 9.05   NO VESTED RIGHT IN BYLAWS

Any or all provisions of these Bylaws, whether originally or subsequently
adopted, regardless of their nature, whether regulatory or contractual,
including those relating to the marketing of products and the capital fund,
may, from time to time, be amended or repealed, and new or other provisions
adopted, and each member becomes such with knowledge of and consent to the
reserved right of amendment or repeal, and the exercise thereof; and no member
shall or does have any vested right in or to any provision hereof, or the
continuance thereof. Each member agrees that provisions of the general or like
nature or effect of those contained in the Bylaws are appropriate and necessary
for the efficient regulation of the business and the government and conduct of
a nonprofit cooperative association of the nature of the Association.

SECTION 9.06   INDEMNIFICATION

     (a)  Indemnification of Directors - The Corporation shall, to the maximum
          extent and in the manner permitted by the California Corporations
          Code (the "Code"), indemnify each of its directors against expenses
          (as defined in Section 317(a) of the Code), judgments, fines,
          settlements and other amounts actually and reasonably incurred in
          connection with any proceeding (as defined in Section 317(a) of the
          Code) arising by reason of the fact that such person is or was a
          director of the Corporation.

     (b)  Indemnification of Others - The Corporation shall have the power, to
          the extent and in the manner permitted by the Code, to indemnify each
          of its employees, officers and agents (other than directors) against
          expenses (as defined in Section 317(a) of the Code), judgments,
          fines, settlements and other amounts actually and reasonably incurred
          in connection with any proceeding (as defined in Section 317(a) of
          the Code) arising by reason of the fact that such person is or was an
          employee, officer or agent of the Corporation.

     (c)  Insurance Indemnification - The Corporation shall have the power to
          purchase and maintain insurance on behalf of any person who is or was
          a director, officer, employee or agent of the Corporation against any
          liability asserted against or incurred by such person in such
          capacity or arising out of that person's status as such, whether or
          not the Corporation would have the power to indemnify that person
          against such liability under the provisions of this Article.

                                      -24-