Amended and Restated Limited Liability Company Agreement of FreshRealm, LLC	12 Months Ended
Oct. 31, 2013
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Amended and Restated Limited Liability Company Agreement of FreshRealm, LLC	17. Amended and Restated Limited Liability Company Agreement of FreshRealm, LLC Effective July 31, 2013, Calavo and certain noncontrolling members have entered into an Amended and Restated Limited Liability Company Agreement (the “Agreement”) of FreshRealm, LLC (FreshRealm). The purpose of FreshRealm is to engage in activities relating to the marketing of food products directly to consumers or other entities. FreshRealm’s technology platform is currently being developed and is expected to allow participants such as traditional retailers, large and small enterprises, communities and food banks to enter into a platform resembling a national fresh food cooperative. FreshRealm is expected to serve as a way to connect participants to a network of regional fresh food producers. Pursuant to this Agreement, in 2013 FreshRealm issued approximately 1.3 million units, with Calavo owning approximately 71.5% of FreshRealm for a capital contribution of $0.9 million. The noncontrolling members, representing the remaining 28.5% ownership, contributed either cash (totaling approximately $0.1 million) or a full-recourse promissory note payable to Calavo (totaling approximately $0.3 million) in exchange for their units. Each full-recourse promissory note described above will be due and payable in full on May 1, 2016, with interest at 4% per annum, also due and payable on May 1, 2016. If, prior to May 1, 2016, FreshRealm terminates an employee’s employment for cause, as defined, or the employee terminates his employment other than (A) for good reason, as defined, or (B) as a result of the employee’s death or disability, notwithstanding whether prior to such date the employee repaid his note in full, then all of the employee’s units will be transferred to Calavo. Members have limited voting rights. In any matters presented to the members for approval, each member will have one vote for each unit held by such member. For situations for which the approval of the members is required, the members shall act by majority vote. Members may make loans to FreshRealm with the consent of the board of directors of FreshRealm (the “Board”). The Board approved loans of up to $3,000,000 from Calavo to FreshRealm under the Line of Credit and Security Agreement between Calavo and FreshRealm. At October 31, 2013, FreshRealm has borrowed $1.7 million under this line of credit, which is eliminated in consolidation. Subject to certain limitations, the Board has the sole discretion regarding the amounts and timing of distributions to members. After making tax distributions required for a given fiscal year, all distributions will be made to the members pro rata, pari passu in accordance with their respective percentage interests, except FreshRealm will first apply distributions (other than tax distributions) to each member who is an employee against such member’s promissory note until the promissory note is paid in full. FreshRealm’s losses and income that are determined for accounting purposes will also be allocated for each fiscal year, including for the full 2013 fiscal year, to the members in accordance with the allocation principles for net loss and net income. As a result, a $0.6 million loss has been allocated to the noncontrolling members as of October 31, 2013. See additional discussion below. FreshRealm started operating as a development stage company in the second quarter of 2013. As of October 31, 2013, planned, principal operations have not commenced. As a result, FreshRealm has no sales or cost of sales. When principal operations commence, FreshRealm is expected to become our fourth segment. FreshRealm has incurred $1.9 million of expenses related to its development as of October 31, 2013, which are included in selling, general and administrative expenses. Of the $1.9 million in selling, general and administrative expenses, $1.3 million has been attributed to Calavo and a $0.6 million loss has been attributed to the noncontrolling members. See Note 2 for further information related to noncontrolling interests.

17. Amended and Restated Limited Liability Company Agreement of FreshRealm, LLC

Effective July 31, 2013, Calavo and certain noncontrolling members have entered into an Amended and Restated Limited Liability Company Agreement (the “Agreement”) of FreshRealm, LLC (FreshRealm).

The purpose of FreshRealm is to engage in activities relating to the marketing of food products directly to consumers or other entities. FreshRealm’s technology platform is currently being developed and is expected to allow participants such as traditional retailers, large and small enterprises, communities and food banks to enter into a platform resembling a national fresh food cooperative. FreshRealm is expected to serve as a way to connect participants to a network of regional fresh food producers.

Pursuant to this Agreement, in 2013 FreshRealm issued approximately 1.3 million units, with Calavo owning approximately 71.5% of FreshRealm for a capital contribution of $0.9 million. The noncontrolling members, representing the remaining 28.5% ownership, contributed either cash (totaling approximately $0.1 million) or a full-recourse promissory note payable to Calavo (totaling approximately $0.3 million) in exchange for their units. Each full-recourse promissory note described above will be due and payable in full on May 1, 2016, with interest at 4% per annum, also due and payable on May 1, 2016. If, prior to May 1, 2016, FreshRealm terminates an employee’s employment for cause, as defined, or the employee terminates his employment other than (A) for good reason, as defined, or (B) as a result of the employee’s death or disability, notwithstanding whether prior to such date the employee repaid his note in full, then all of the employee’s units will be transferred to Calavo.

Members have limited voting rights. In any matters presented to the members for approval, each member will have one vote for each unit held by such member. For situations for which the approval of the members is required, the members shall act by majority vote.

Members may make loans to FreshRealm with the consent of the board of directors of FreshRealm (the “Board”). The Board approved loans of up to $3,000,000 from Calavo to FreshRealm under the Line of Credit and Security Agreement between Calavo and FreshRealm. At October 31, 2013, FreshRealm has borrowed $1.7 million under this line of credit, which is eliminated in consolidation.

Subject to certain limitations, the Board has the sole discretion regarding the amounts and timing of distributions to members. After making tax distributions required for a given fiscal year, all distributions will be made to the members pro rata, pari passu in accordance with their respective percentage interests, except FreshRealm will first apply distributions (other than tax distributions) to each member who is an employee against such member’s promissory note until the promissory note is paid in full.

FreshRealm’s losses and income that are determined for accounting purposes will also be allocated for each fiscal year, including for the full 2013 fiscal year, to the members in accordance with the allocation principles for net loss and net income. As a result, a $0.6 million loss has been allocated to the noncontrolling members as of October 31, 2013. See additional discussion below.

FreshRealm started operating as a development stage company in the second quarter of 2013. As of October 31, 2013, planned, principal operations have not commenced. As a result, FreshRealm has no sales or cost of sales. When principal operations commence, FreshRealm is expected to become our fourth segment. FreshRealm has incurred $1.9 million of expenses related to its development as of October 31, 2013, which are included in selling, general and administrative expenses. Of the $1.9 million in selling, general and administrative expenses, $1.3 million has been attributed to Calavo and a $0.6 million loss has been attributed to the noncontrolling members. See Note 2 for further information related to noncontrolling interests.