1020-00001 · Client 1020 · Transaction Documents/Negotiation Notes

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MEMORANDUM — PRIVILEGED AND CONFIDENTIAL / ATTORNEY WORK PRODUCT

TO: Ian Blackwood, Stephanie Okafor, Sophie Tremblay

FROM: Daniel Obi

DATE: October 21, 2022

RE: Negotiation Call Summary — October 21, 2022 Greenfield Agricultural Partners LLC — $80,000,000 Senior Secured ABL Revolving Credit Facility

Matter No.: 1020-00001 Billing Code: GAPABF-2022

1. Overview and Call Logistics

On Friday, October 21, 2022, at 2:00 p.m. Central Time, the parties participated in a telephone conference call lasting approximately ninety (90) minutes to discuss and negotiate key outstanding provisions in the Credit Agreement for the proposed $80,000,000 senior secured asset-based revolving credit facility (the "Facility") among Greenfield Agricultural Partners LLC, an Iowa limited liability company ("GAP" or the "Borrower"), the Guarantors party thereto, the Lenders party thereto (consisting of Heartland Commerce Bank, N.A. ("HCB") with a commitment of $40,000,000, Meridian Agricultural Credit Corporation ("Meridian") with a commitment of $25,000,000, and Tallgrass Capital Fund II, LP ("Tallgrass") with a commitment of $15,000,000), and HCB as Administrative Agent and Collateral Agent.

The following individuals participated in the call:

Calderwood & Harkness LLP ("C&H") — Borrower's Counsel:

• Ian Blackwood, Responsible Partner

• Sophie Tremblay, Lead Associate

Greenfield Agricultural Partners LLC — Borrower:

• Patricia "Trish" Calloway, Chief Financial Officer

• Nina Vasquez, General Counsel and Corporate Secretary

Kessler, Brandt & Whitfield LLP ("KBW") — Lender's Counsel:

• Richard Whitfield, Partner (lead counsel for HCB)

• Lauren Chisholm, Senior Associate

Heartland Commerce Bank, N.A. — Administrative Agent:

• Gregory Thorn, Managing Director, Agribusiness Lending

• Allison Kuo, Vice President, ABL Structuring

This was the second negotiation call between the parties. The first call took place on October 3, 2022, and focused primarily on borrowing base methodology, advance rates applicable to eligible inventory and eligible accounts, and the establishment of availability reserves (including reserves for seasonal fluctuations in grain and commodity prices). A summary of the October 3 call was previously circulated to the engagement team under separate cover.

The call followed delivery of KBW's second draft of the Credit Agreement on October 7, 2022, and C&H's second markup of the same on October 14, 2022. The principal purpose of the call was to discuss and, to the extent possible, resolve outstanding covenant-level issues — including the springing fixed charge coverage ratio covenant, distribution and restricted payments provisions, the change of control definition, capital expenditure limitations, investment and acquisition baskets, additional indebtedness baskets, and commodity hedging restrictions — before KBW prepares and circulates a third draft of the Credit Agreement.

The discussion and outcomes of the call are summarized below by topic.

2. Springing Fixed Charge Coverage Ratio Covenant

2.1 HCB's Initial Position

Richard Whitfield opened the discussion on financial covenants by noting that the second draft of the Credit Agreement reflects HCB's proposed springing Fixed Charge Coverage Ratio ("FCCR") covenant, which requires the Borrower to maintain a Fixed Charge Coverage Ratio of not less than 1.10 to 1.00, tested on a trailing twelve-month (TTM) basis, but only during a "Trigger Period." The Trigger Period, as defined in KBW's second draft, commences on any date when the Borrower's Excess Availability falls below the greater of (a) 12.5% of the then-applicable Borrowing Base and (b) $10,000,000, and continues until the date on which Excess Availability has equaled or exceeded such threshold for thirty (30) consecutive calendar days.

Whitfield stated that the 1.10x FCCR level is consistent with market standards for seasonal agricultural asset-based lending facilities and that HCB's credit committee views this ratio as a floor — not subject to further negotiation downward. Gregory Thorn added that the Trigger Period threshold, structured as the greater-of test with a 12.5% percentage of the Borrowing Base and a $10,000,000 fixed-dollar floor, was already borrower-friendly in HCB's view, noting that comparable facilities in HCB's agribusiness portfolio typically employ a 15% of Borrowing Base threshold. Thorn characterized the 12.5% threshold as a concession already made at the term sheet stage.

2.2 Greenfield's Counter-Position

Trish Calloway raised a concern regarding the practical application of the Trigger Period threshold during the Borrower's seasonal trough periods. Calloway referenced GAP's internal financial projections, which estimate a trough-period Borrowing Base of approximately $42.4 million in April 2023, corresponding to the post-harvest marketing period and pre-planting season when eligible inventory levels are at their lowest point. Calloway noted that 12.5% of a $42.4 million Borrowing Base would be approximately $5.3 million; because the greater-of test includes a $10,000,000 fixed-dollar floor, the $10 million floor would be the operative threshold during the trough period. This means that in practical terms, GAP would be required to maintain at least $10 million of Excess Availability against a $42.4 million Borrowing Base — effectively a 23.6% Excess Availability requirement during the trough period, which is nearly double the ostensible 12.5% threshold.

Nina Vasquez asked whether the Trigger Period definition could be simplified by using a single fixed-dollar threshold rather than the greater-of test, thereby eliminating the disproportionate impact of the $10 million floor during trough periods. Vasquez noted that a fixed-dollar threshold would provide certainty and predictability to the Borrower's treasury management team.

Ian Blackwood expanded on this point, arguing that if the Borrowing Base dips to its seasonal trough level, the $10 million floor effectively converts the 12.5% test into a 23.6% test, which is overly punitive and inconsistent with the commercial intent of a springing covenant designed to apply only in genuinely distressed circumstances. Blackwood stated that C&H's position, as reflected in the October 14 markup, is that the Trigger Period should be triggered only when Excess Availability falls below the greater of (a) 10% of the Line Cap (i.e., 10% of $80,000,000, or $8,000,000) and (b) a fixed dollar threshold of $8,000,000. Because both prongs of this alternative greater-of test converge at $8,000,000, the test effectively functions as a single fixed-dollar threshold of $8 million. Blackwood argued that tying the percentage prong to the Line Cap rather than the Borrowing Base eliminates the seasonal whipsaw effect and provides a stable, predictable trigger point throughout the year.

2.3 Resolution / Status

After extended discussion lasting approximately twenty minutes on this issue, HCB indicated a willingness to consider a compromise on the Trigger Period threshold but was not prepared to agree to a revised formulation on the call. Thorn stated that he would take C&H's proposal — using a threshold of 10% of the Line Cap ($8,000,000), or alternatively a flat $8,000,000 fixed-dollar threshold — back to HCB's credit committee for review and discussion. Thorn noted that any movement from HCB's current position would require credit committee approval, and he expected to have a response within the following week.

The parties agreed that the FCCR ratio itself would remain at 1.10 to 1.00. There was no dispute regarding the coverage ratio level, and both sides confirmed that this aspect of the covenant is settled. Whitfield confirmed that any agreed changes to the Trigger Period threshold would be reflected in the third draft of the Credit Agreement, which KBW plans to deliver on October 28, 2022.

Status: Open — awaiting HCB credit committee response on Trigger Period threshold. The FCCR ratio of 1.10:1.00 is agreed.

3. Distribution / Restricted Payments Covenant

3.1 HCB's Proposed Conditions

The discussion next turned to the Restricted Payments covenant set forth in Section 7.06 of KBW's second draft of the Credit Agreement. As currently drafted, distributions by the Borrower to Greenfield Holdings Corp. ("Holdings") and upstream equity holders are classified as Restricted Payments and are permitted only if all three of the following conditions are satisfied at the time of and after giving effect to such distribution:

(a) No Default or Event of Default exists or would result from the making of such Restricted Payment;

(b) Pro forma Excess Availability, after giving effect to the proposed Restricted Payment, is at least 20% of the then-applicable Borrowing Base; and

(c) The Borrower's pro forma trailing twelve-month Fixed Charge Coverage Ratio, after giving effect to the proposed Restricted Payment, is at least 1.15 to 1.00.

Whitfield noted that these conditions are designed to ensure that distributions are made only when the Borrower has demonstrated both adequate liquidity (through the Excess Availability test) and sufficient debt service capacity (through the FCCR test), and that the 1.15x FCCR threshold for distributions is intentionally set above the 1.10x springing FCCR covenant level to reflect the voluntary, discretionary nature of distributions as compared to the mandatory character of the springing covenant.

3.2 Greenfield's Position

Calloway responded that the 1.15x FCCR condition for distributions is more restrictive than the 1.10x springing FCCR covenant, effectively creating a dual-test regime that limits management flexibility in ways that were not contemplated at the term sheet stage. Calloway stated that requiring a pro forma FCCR of 1.15x for every distribution, in addition to the 20% Excess Availability threshold, places an undue burden on GAP's ability to make routine distributions — particularly given the Borrower's ownership structure.

Nina Vasquez elaborated on this point, explaining the ownership structure of Holdings. Greenfield Holdings Corp. is owned 62% by the Lindstrom Family Trust, 28% by Calloway-Foss Investments LP, and 10% by a management equity plan. GAP is structured as a pass-through entity for federal income tax purposes. As a result, Holdings and its equity holders rely on regular distributions from GAP to fund their respective federal and state income tax obligations arising from GAP's pass-through income allocations. In addition, the management equity plan includes vesting-related distribution obligations that require periodic cash payments to management participants. Vasquez emphasized that the inability to make timely tax distributions could create personal tax liability issues for the equity holders, including members of the Lindstrom family and management equity plan participants, and would be commercially unacceptable.

Ian Blackwood proposed a carve-out for tax distributions. Specifically, C&H's position is that distributions made solely to fund the federal and state income tax liabilities of equity holders attributable to GAP's pass-through income allocations should be permitted without satisfying conditions (b) (the Excess Availability test) and (c) (the FCCR test) described above. Tax distributions would be subject only to the condition that no Event of Default exists at the time of such distribution. Blackwood argued that this carve-out is standard in ABL facilities extended to pass-through entities and reflects the reality that tax distributions are not discretionary in the same sense as other distributions — equity holders have a legal obligation to pay their taxes, and failure to make tax distributions could result in personal hardship or, in the case of the Lindstrom Family Trust, potential trust administration complications.

In addition to the tax distribution carve-out, C&H proposed reducing the Excess Availability threshold for non-tax Restricted Payments from 20% of the Borrowing Base to 15% of the Borrowing Base. Blackwood noted that 15% is a more common threshold in comparable ABL facilities and would provide the Borrower with greater flexibility to make distributions during periods when the Borrowing Base is at seasonal peaks.

3.3 HCB's Response

Thorn agreed in principle to a tax distribution carve-out, acknowledging that it is market-standard for ABL facilities extended to pass-through entities. Thorn stated that HCB has included similar carve-outs in other credit facilities in its agribusiness portfolio and does not view the tax distribution carve-out as a significant credit risk concern, provided it is appropriately structured and limited in scope.

Whitfield indicated that the tax distribution carve-out, as reflected in the third draft, would be limited to distributions in an amount not to exceed the product of (i) the maximum combined federal and state marginal income tax rate applicable to an individual or corporate taxpayer (whichever is higher) and (ii) the net taxable income of GAP allocable to the relevant equity holder for the applicable tax period. The carve-out would still require that no Event of Default exists at the time of the distribution.

On the Excess Availability threshold for non-tax Restricted Payments, Allison Kuo pushed back, stating that the 20% threshold is necessary to maintain an adequate liquidity cushion within the borrowing base structure, particularly given the seasonal volatility in GAP's eligible inventory and eligible accounts. Kuo stated that HCB's ABL structuring group views 20% as the appropriate floor for ABL facilities of this size and complexity, but acknowledged that HCB might be willing to move to 17.5% of the Borrowing Base as a compromise. However, Kuo stated that HCB is unwilling to reduce the threshold below 17.5%.

On the FCCR condition for distributions, Whitfield stated that the 1.15x ratio is appropriate and should be maintained. Whitfield explained that the springing FCCR covenant (at 1.10x) applies only during a Trigger Period — i.e., when the Borrower is already in a stressed liquidity position — and is designed to serve as a backstop. The distribution FCCR condition, by contrast, applies to voluntary, discretionary payments and should therefore impose a higher standard to ensure that distributions do not impair the Borrower's ability to service its obligations. Whitfield noted that the 50-basis-point differential between the two tests (1.15x vs. 1.10x) is modest and consistent with the approach taken in comparable facilities. There was no further discussion on this point, and the 1.15x FCCR condition for non-tax distributions appears to be settled.

Status: Partially resolved — tax distribution carve-out agreed in principle (to be limited to the maximum combined marginal tax rate applied to allocable income, subject to no Event of Default condition only); Excess Availability threshold remains open (GAP/C&H at 15% of Borrowing Base, HCB/KBW at 20%, with HCB indicating willingness to move to 17.5% — a potential compromise at 17.5% appears likely); FCCR condition of 1.15:1.00 for non-tax distributions appears settled.

4. Change of Control Provision

4.1 KBW's Proposed Definition

Whitfield introduced the Change of Control discussion by summarizing the definition as set forth in KBW's second draft. Under the current draft, a "Change of Control" is deemed to occur upon the happening of either of the following events:

(a) The Lindstrom Family Trust ceases to own, directly or indirectly, at least 51% of the issued and outstanding equity interests of Greenfield Holdings Corp.; or

(b) Marcus J. Lindstrom ceases to serve as Chief Executive Officer of the Borrower, and such change is not consented to in writing by the Administrative Agent.

A Change of Control constitutes an Event of Default under the Credit Agreement, triggering acceleration rights, the right to terminate Commitments, and the right to exercise remedies against the Collateral.

4.2 Greenfield's Position

Vasquez stated that the 51% ownership threshold for the Lindstrom Family Trust's direct or indirect ownership of Holdings is acceptable to GAP. The Lindstrom Family Trust currently holds 62% of Holdings' equity, and there are no plans to dilute the Trust's ownership below 51% in the foreseeable future. Accordingly, this prong of the Change of Control definition is not in dispute.

However, Vasquez objected to the key-man provision in clause (b), which ties the Change of Control definition to Marcus Lindstrom's continued service as CEO. Vasquez argued that treating a change in the CEO position as an automatic Event of Default is overly restrictive, commercially unreasonable, and disproportionate in its consequences. Vasquez noted that while Marcus Lindstrom is a valued leader and a central figure in GAP's operations, the automatic triggering of an Event of Default upon his departure — whether voluntary, due to health reasons, retirement, or otherwise — would create significant risk for the Borrower and its equity holders. Such a provision effectively gives HCB the ability to accelerate the entire Facility and foreclose on the Collateral in response to an event (CEO departure) that may have no bearing whatsoever on the Borrower's ability to repay the Facility.

Ian Blackwood proposed that the key-man provision be restructured as a notice requirement coupled with a cure period. Specifically, C&H proposes that if Marcus Lindstrom ceases to serve as CEO of the Borrower for any reason, GAP would be required to deliver prompt written notice to the Administrative Agent and would have ninety (90) days following such cessation to appoint a replacement CEO who is reasonably acceptable to the Administrative Agent. During the 90-day cure period, no Event of Default would be deemed to have occurred solely as a result of Lindstrom's departure. Only if GAP fails to appoint a reasonably acceptable replacement within the 90-day period would a Change of Control be deemed to have occurred and an Event of Default triggered.

Trish Calloway reinforced this position by noting that GAP has a deep and capable management team. Calloway referenced Raymond Foss, who serves as Vice President of Operations and has been with GAP for over fifteen years. Calloway stated that an automatic Event of Default triggered by a single individual's departure from the CEO role would create unnecessary and disproportionate risk to the enterprise, particularly given the breadth of management talent within the organization. Calloway emphasized that the Lenders' security package — which includes first-priority security interests in substantially all of GAP's assets, including inventory, accounts receivable, equipment, and real property — provides the Lenders with ample credit protection independent of any particular individual's continued involvement.

4.3 HCB's Response

Thorn acknowledged that an automatic Event of Default triggered solely by the key-man's departure is "aggressive" and stated that HCB is open to discussing a cure period mechanism. However, Thorn emphasized that HCB views Marcus Lindstrom's industry expertise — which spans approximately thirty years in agricultural commodities trading, procurement, and operations — as a critical credit factor in the Lenders' decision to extend the Facility. Thorn stated that Lindstrom's relationships with grain counterparties, his understanding of seasonal market dynamics, and his track record of managing GAP through commodity price cycles were all important elements of HCB's credit analysis.

Whitfield proposed a middle ground. Under KBW's proposed compromise, a Change of Control would be triggered if Marcus Lindstrom ceases to serve as CEO and a replacement reasonably acceptable to the Required Lenders (defined as Lenders holding more than 50% of the aggregate Commitments) is not appointed within sixty (60) days after such cessation. During the 60-day cure period, no Event of Default would be deemed to exist solely by reason of Lindstrom's departure.

There was brief discussion regarding whether the approval standard for the replacement CEO should reference the "Administrative Agent" (as C&H proposed) or the "Required Lenders" (as KBW proposed). C&H's preference is for Agent approval, which would require only HCB's consent in its capacity as Administrative Agent and would be a more streamlined approval process. KBW's preference is for Required Lenders approval, which would require the affirmative consent of Lenders holding more than 50% of the aggregate Commitments — currently, this would require the approval of at least two of the three Lenders (HCB at $40M, Meridian at $25M, and Tallgrass at $15M). Whitfield noted that the Required Lenders standard is more protective of the Lender group as a whole and prevents a situation in which the Agent unilaterally approves a replacement CEO over the objections of the other Lenders.

The cure period length (60 days per KBW vs. 90 days per C&H) and the approval standard (Agent vs. Required Lenders) remain open.

Status: Partially resolved — the 51% Lindstrom Family Trust ownership threshold is agreed; the key-man provision structure (cure period with replacement approval) is agreed in concept, but the cure period length (60 days vs. 90 days) and the approval standard (Agent vs. Required Lenders) remain open and are to be resolved in the third draft and subsequent discussions.

5. Capital Expenditure Limitation

5.1 KBW's Proposed Cap

The discussion next turned to the Capital Expenditure limitation set forth in Section 7.11 of KBW's second draft. As currently drafted, the Credit Agreement limits the Borrower's aggregate Capital Expenditures to $8,000,000 per fiscal year. The provision permits a 50% carryforward of unused amounts from the immediately preceding fiscal year, provided that total Capital Expenditures in any single fiscal year (including carryforward amounts) may not exceed $12,000,000.

5.2 Greenfield's Position

Calloway stated that the $8,000,000 annual base cap is generally workable for GAP's current operational needs, which include routine equipment purchases, technology upgrades, and facility maintenance. However, Calloway noted that GAP's management team has been evaluating potential grain elevator upgrades and capacity expansion projects at certain of GAP's storage and handling facilities, particularly the Marshalltownalltown and Cedar Rapids elevator complexes. These projects, if undertaken, could require Capital Expenditures of up to $10,000,000 in a single fiscal year.

C&H proposed two alternative approaches:

Alternative 1: Increase the base Capital Expenditure cap to $10,000,000 per fiscal year, with a 50% carryforward of unused amounts from the immediately preceding fiscal year permitted, subject to a maximum of $15,000,000 in any single fiscal year.

Alternative 2: Maintain the $8,000,000 base cap but increase the single-year maximum (including carryforward amounts) from $12,000,000 to $14,000,000, thereby providing the Borrower with greater headroom in years when significant capital projects are undertaken.

Blackwood noted that either alternative would provide GAP with the flexibility to pursue the elevator upgrade and capacity expansion projects without requiring an amendment to the Credit Agreement, which would entail additional time, expense, and the risk of lender holdout in a multi-lender facility.

5.3 HCB's Response

Kuo stated that the $8,000,000 base cap reflects the assumptions used in HCB's internal credit model for the Facility and that increasing the base cap to $10,000,000 would require the credit committee to re-approve the credit model with revised assumptions. Kuo indicated that seeking such re-approval at this stage of the transaction would likely delay the closing timeline and is not something HCB's credit team would be inclined to support.

Thorn offered a compromise proposal consisting of three elements:

(i) Maintain the base Capital Expenditure cap at $8,000,000 per fiscal year;

(ii) Maintain the 50% carryforward mechanism, but increase the single-year maximum from $12,000,000 to $13,000,000 (inclusive of carryforward amounts); and

(iii) Add a separate basket of $2,000,000 per fiscal year for "maintenance Capital Expenditures" that would not count toward the $8,000,000 base cap or the single-year maximum. Maintenance Capital Expenditures would be defined as Capital Expenditures incurred solely for the purpose of maintaining, repairing, or replacing existing assets (as opposed to acquiring new assets or expanding capacity).

Blackwood acknowledged that the maintenance Capital Expenditure basket concept has merit but cautioned that the definition of "maintenance Capital Expenditures" could be contentious and difficult to administer in practice. Blackwood noted, for example, that replacing a grain dryer at an existing elevator could be characterized as either maintenance (replacing existing equipment) or expansion (if the replacement unit has greater capacity than the unit it replaces). Blackwood asked KBW to include a proposed definition of "maintenance Capital Expenditures" in the third draft of the Credit Agreement so that C&H could evaluate the scope and administrability of the concept. Whitfield agreed to include a proposed definition.

Status: Open — the base Capital Expenditure cap of $8,000,000 per fiscal year appears agreed; the 50% carryforward mechanism is agreed; the single-year maximum remains open ($12,000,000 per KBW's current draft vs. $13,000,000 per HCB's compromise proposal, with C&H open to discussing amounts in the $13,000,000 to $14,000,000 range); the maintenance Capital Expenditure basket of $2,000,000 per year is under discussion, with the definition to be proposed by KBW in the third draft.

6. Investment and Acquisition Basket

6.1 KBW's Proposed Terms

Whitfield summarized the Permitted Investments provisions in Section 7.03 of KBW's second draft. The draft permits the Borrower to make Investments (including acquisitions and other investments not otherwise specifically permitted) in an aggregate amount not to exceed $5,000,000 per fiscal year. There is no carryforward of unused amounts from one fiscal year to the next. Acquisitions are subject to the following additional conditions:

(a) No Default or Event of Default exists or would result from such acquisition;

(b) Pro forma compliance with all financial covenants set forth in the Credit Agreement after giving effect to the acquisition;

(c) Pro forma Excess Availability, after giving effect to the acquisition, is at least 15% of the then-applicable Borrowing Base; and

(d) Delivery of an updated borrowing base certificate giving effect to the assets and liabilities of the acquired entity or business.

6.2 Greenfield's Position

Calloway stated that the $5,000,000 annual basket is adequate for GAP's near-term investment plans, which are focused primarily on organic growth and operational improvements. However, Calloway requested the addition of a carryforward mechanism — specifically, 50% of unused amounts from the immediately preceding fiscal year, subject to a cap — to provide flexibility in the event that GAP identifies a strategic acquisition opportunity that exceeds the $5,000,000 annual limit in a given year.

Vasquez raised a structural question regarding intercompany investments among existing Loan Parties. GAP's corporate structure includes two wholly-owned subsidiaries: Greenfield Grain Storage LLC ("GGS") and Greenfield Commodities Inc. ("GCI"), both of which are Guarantors and Loan Parties under the Credit Agreement. Vasquez asked whether intercompany investments among GAP, GGS, and GCI — such as intercompany loans, capital contributions, or other transfers — would count toward the $5,000,000 annual basket. C&H's position, as articulated by Vasquez, is that intercompany investments among Loan Parties should be freely permitted without limitation and should not count toward the $5,000,000 basket, as such investments do not diminish the aggregate collateral pool available to the Lenders. Funds transferred from one Loan Party to another remain within the credit group and continue to be subject to the Lenders' first-priority security interests.

Blackwood also flagged a consistency issue regarding the pro forma Excess Availability condition for acquisitions. As currently drafted in KBW's second draft, acquisitions require pro forma Excess Availability of at least 15% of the Borrowing Base, whereas the distribution covenant requires pro forma Excess Availability of at least 20% of the Borrowing Base (with the parties negotiating a potential reduction to 15% or 17.5%). Blackwood stated that the Excess Availability threshold for acquisitions should reference the same percentage threshold as ultimately agreed upon in the distribution covenant, in order to maintain internal consistency within the Credit Agreement and avoid confusion.

6.3 HCB's Response

Whitfield agreed that intercompany investments among Loan Parties should be excluded from the $5,000,000 annual basket and treated as Permitted Investments without dollar limitation. Whitfield stated that this approach is consistent with standard ABL practice and that KBW would include the appropriate carve-out in the Permitted Investments definition in the third draft.

On the carryforward mechanism, Thorn was noncommittal. Thorn stated that he would need to discuss the carryforward request with HCB's credit committee and could not agree to it on the call. Thorn noted that HCB's general preference is to avoid carryforward provisions in investment baskets, as they can result in the accumulation of significant unused capacity over multiple years, potentially enabling a large acquisition that was not contemplated at the time the Facility was structured.

The acquisition conditions set forth in KBW's second draft were largely agreed as proposed, subject to the conforming change noted by Blackwood regarding the Excess Availability threshold. The parties agreed that the Excess Availability threshold for acquisitions would be conformed to whatever percentage threshold is ultimately agreed upon in the context of the distribution covenant.

Status: Partially resolved — the $5,000,000 per fiscal year investment basket is agreed; the exclusion of intercompany Loan Party investments from the basket is agreed; the carryforward request remains open pending HCB credit committee input; acquisition conditions are agreed as proposed, subject to conforming the Excess Availability threshold to the distribution covenant threshold once that is settled.

7. Additional Indebtedness Baskets

7.1 Discussion. The parties engaged in a brief discussion regarding the Permitted Indebtedness baskets set forth in Section 7.02 of KBW's second draft. As currently drafted, the Credit Agreement includes, among other permitted indebtedness carve-outs, the following baskets:

(a) A basket for unsecured Indebtedness in an aggregate outstanding principal amount not to exceed $3,000,000 at any time; and

(b) A basket for purchase money Indebtedness and Capitalized Lease Obligations in an aggregate outstanding principal amount not to exceed $1,500,000 at any time.

Calloway expressed the view that both baskets are tight given the scale of GAP's operations. Calloway noted that as of June 30, 2022, GAP had total assets of $289.6 million and that GAP's annual revenue was $347.2 million for fiscal year 2021, with projected revenue of $391.5 million for fiscal year 2022. In the context of an enterprise of this size, Calloway argued that an unsecured debt basket of $3,000,000 and a purchase money / capital lease basket of $1,500,000 are unduly restrictive and could hamper GAP's ability to enter into routine operating leases, equipment financing arrangements, and other customary business transactions.

C&H proposed increasing the unsecured Indebtedness basket to $5,000,000 and the purchase money / Capitalized Lease Obligation basket to $3,000,000.

Kuo stated that HCB would consider a modest increase in both baskets but not to the levels proposed by C&H. Kuo noted that HCB's ABL structuring team views the indebtedness baskets as an important mechanism for limiting the Borrower's overall leverage and ensuring that the Facility remains the primary source of external financing. Kuo suggested $4,000,000 for the unsecured Indebtedness basket and $2,000,000 for the purchase money / Capitalized Lease Obligation basket as a potential landing zone.

No agreement was reached on the call. The parties agreed that KBW would include its proposed landing zone numbers in the third draft for C&H's review, and the issue would be addressed in the next round of negotiations.

Status: Open — to be resolved in the third draft markup. Current positions are: C&H proposes $5M unsecured / $3M PM-capital lease; KBW/HCB proposes $3M unsecured (may increase to $4M) / $1.5M PM-capital lease (may increase to $2M).

8. Commodity Hedging Negative Pledge

8.1 KBW's Proposed Restriction

Whitfield introduced the commodity hedging provisions, which are set forth in Section 7.09 of KBW's second draft. As currently drafted, the Credit Agreement restricts the Borrower from entering into commodity hedging transactions (including futures contracts, options, and swap agreements) in respect of anticipated production volumes in excess of 80% of the Borrower's anticipated production for any given crop year without the prior written consent of the Administrative Agent. In addition, all commodity hedging counterparties must be either (a) Lenders or affiliates of Lenders, or (b) counterparties specifically approved in writing by the Administrative Agent.

8.2 Greenfield's Position

Calloway explained that GAP's commodity hedging program is a core component of the company's risk management strategy and has been instrumental in maintaining stable margins and cash flows through volatile commodity price cycles. Calloway noted that GAP typically hedges between 60% and 75% of its anticipated corn and soybean production, depending on market conditions, price levels, and management's forward outlook. Calloway stated that the 80% cap, while not an immediate constraint at current hedging levels, could limit GAP's flexibility in periods of elevated price risk.

Vasquez raised a separate concern regarding the counterparty restriction. Vasquez noted that limiting hedging counterparties to Lenders and their affiliates is overly restrictive and inconsistent with GAP's existing hedging program. GAP currently maintains hedging relationships with several counterparties that are not Lenders or affiliates of Lenders, and GAP's hedging activities include positions cleared through the Chicago Board of Trade (CBOT). Requiring prior Administrative Agent consent for each non-Lender counterparty would be administratively burdensome and could impair GAP's ability to execute hedges in a timely manner in fast-moving commodity markets.

C&H proposed the following revisions:

(a) Increase the hedging cap from 80% to 85% of anticipated production;

(b) Expand the universe of permitted hedging counterparties to include (i) Lenders and affiliates of Lenders, (ii) counterparties that maintain an investment-grade credit rating (BBB- / Baa3 or above) from at least one nationally recognized statistical rating organization, and (iii) regulated exchanges and clearinghouses (such as CBOT and CME Group); and

(c) Replace the prior Administrative Agent consent requirement with a quarterly reporting requirement, pursuant to which the Borrower would deliver to the Administrative Agent a summary of its outstanding hedging positions, counterparties, and notional amounts on a quarterly basis as part of its regular compliance reporting.

8.3 HCB's Response

Thorn stated that the 80% hedging cap is firm. Thorn explained that HCB's credit committee views the 80% threshold as an important safeguard to ensure that GAP retains at least 20% of its unhedged production exposure, which allows GAP to participate in upside price movements and prevents a scenario in which the Borrower's entire production is locked into forward positions at prices that may prove unfavorable relative to spot market conditions at the time of delivery. Thorn noted that HCB has seen situations in its portfolio where borrowers that were over-hedged faced margin call liquidity issues when commodity prices moved sharply against their hedge positions, and that the 80% cap is designed to mitigate this risk.

On the counterparty restriction, Whitfield indicated that HCB is willing to show flexibility. Whitfield stated that KBW would revise the hedging counterparty provision in the third draft to permit hedging transactions with counterparties that maintain an investment-grade credit rating from a nationally recognized statistical rating organization, subject to a requirement that the Borrower notify the Administrative Agent of any new hedging counterparty within a reasonable period (e.g., five business days) after entering into a hedging transaction with such counterparty. This would be a notification requirement rather than a consent requirement. Whitfield noted that regulated exchanges and clearinghouses would also be included as permitted counterparties.

On the reporting frequency, Kuo pushed back on quarterly reporting and suggested monthly reporting of hedging positions. Kuo proposed that the hedging position summary be delivered monthly as part of the borrowing base certificate, rather than as a separate quarterly report. Kuo noted that monthly reporting would provide HCB's ABL monitoring team with more current information regarding the Borrower's hedging exposure and would align with the frequency of borrowing base certificate delivery (which is monthly under the Credit Agreement). Blackwood noted C&H's preference for quarterly reporting to minimize the administrative burden on the Borrower but acknowledged that monthly reporting as part of the borrowing base certificate may be acceptable if the format is streamlined.

Status: Partially resolved — the 80% hedging cap appears settled (HCB firm); the expansion of permitted counterparties to include investment-grade counterparties with Administrative Agent notification (rather than consent) is likely agreed, subject to drafting; the reporting frequency (monthly as proposed by HCB vs. quarterly as proposed by C&H) remains open.

9. Other Items Discussed

9.1 Field Examination Update

Thorn provided an update on the field examination being conducted by Pryor & Associates LLC ("Pryor"), the independent collateral examination firm retained by HCB in connection with the Facility. Thorn reported that Thomas Pryor and his team commenced the on-site field examination at GAP's corporate headquarters in Des Moines, Iowa, and at select grain elevator and storage sites on October 17, 2022. Pryor's team is expected to complete the on-site portion of the examination by approximately November 7, 2022, with a written field examination report to follow within two to three weeks of completion of the on-site work.

Kuo noted that the findings of the field examination will inform the final determination of borrowing base eligibility criteria and advance rates. In particular, Pryor's examination will evaluate the integrity of GAP's inventory tracking systems, the condition and marketability of grain held in storage, the collectibility and aging of accounts receivable, and the adequacy of GAP's internal controls and reporting systems. Kuo stated that if the field examination reveals any material issues — such as discrepancies between GAP's reported inventory quantities and physical counts, or concerns regarding the quality or condition of stored grain — HCB may seek adjustments to the advance rates or the imposition of additional reserves, which would be reflected in a subsequent draft of the Credit Agreement or in a side letter.

Calloway confirmed that GAP is cooperating fully with Pryor's field examination team and that Raymond Foss, GAP's Vice President of Operations, is serving as the primary operational liaison to the Pryor team. Calloway stated that Foss has been facilitating Pryor's access to elevator sites, inventory records, and operational personnel, and that GAP does not anticipate any issues arising from the examination.

The parties confirmed the field examination fee structure: the annual field examination fee is capped at $50,000 per examination, with two (2) examinations per calendar year at the Borrower's expense during periods when no Trigger Period is in effect. During a Trigger Period, additional field examinations may be conducted at the Borrower's expense without a cap on the number of examinations or the per-examination fee. This fee structure is consistent with the terms set forth in the term sheet dated August 12, 2022.

9.2 Timing and Next Steps

Whitfield confirmed that KBW will deliver the third draft of the Credit Agreement to C&H by October 28, 2022. The third draft will incorporate the resolutions reached on this call, including the agreed provisions regarding the FCCR ratio level, the tax distribution carve-out, the Lindstrom Family Trust ownership threshold, the CapEx base cap and carryforward mechanism, the investment basket amount, the intercompany Loan Party exclusion, the hedging cap, and the hedging counterparty expansion. The third draft will also include KBW's proposed language on the open items discussed on this call, including the Trigger Period threshold, the Excess Availability threshold for distributions, the key-man cure period and approval standard, the CapEx single-year maximum and maintenance CapEx basket definition, the investment basket carryforward, the indebtedness basket amounts, and the hedging reporting frequency.

C&H will deliver its markup of the third draft promptly upon receipt. Sophie Tremblay noted that C&H anticipates being able to turn the markup within five to seven business days of receipt of the third draft.

Tremblay also noted that C&H is in the process of preparing initial drafts of the ancillary loan documents, including the Security Agreement, the Guaranty Agreement, the Pledge Agreement, and form Mortgage instruments covering GAP's owned real property in Iowa and Illinois. C&H anticipates delivering these drafts to KBW and HCB in early November 2022.

The parties discussed a target closing date of late November 2022 for the Facility. However, all participants acknowledged that this timeline is aggressive given the number of open items remaining in the Credit Agreement, the pending field examination (which is not expected to be completed until approximately November 7), and the need to negotiate and finalize the ancillary documents. Thorn stated that HCB would work in good faith to maintain the late November target but cautioned that any delays in resolving the open items or any material findings from the field examination could push the closing into December.

Calloway noted that GAP's existing revolving credit facility with Prairie National Bank ("PNB") — a $55,000,000 revolving credit facility bearing interest at SOFR plus 2.75% — matures on March 31, 2023. This maturity date provides some runway for the Facility closing, but Calloway expressed a strong preference for closing the HCB Facility before year-end 2022 in order to provide certainty of financing for the upcoming 2023 planting season and to avoid any overlap issues with the PNB facility.

10. Summary of Open Items and Action Items

Open Items. The following table summarizes the status of each topic discussed on the call:

Action Items.

1. HCB (Thorn): Present the Trigger Period threshold proposal (10% of Line Cap / $8M fixed threshold) to HCB's credit committee and revert to C&H and GAP with the credit committee's response. Target response date: on or before October 26, 2022.

2. KBW (Whitfield / Chisholm): Deliver the third draft of the Credit Agreement to C&H by October 28, 2022, incorporating all agreed changes from this call and proposing language on all open items, including the maintenance Capital Expenditure definition, key-man cure period and approval standard, indebtedness basket amounts, investment carryforward mechanism, and hedging reporting format.

3. C&H (Tremblay / Obi): Prepare and deliver a markup of the third draft Credit Agreement promptly upon receipt, with a target turnaround of five to seven business days.

4. C&H (Tremblay / Obi): Finalize initial drafts of the Security Agreement, Guaranty Agreement, Pledge Agreement, and form Mortgage instruments and deliver to KBW and HCB in early November 2022.

5. GAP (Foss): Continue coordinating with Pryor & Associates LLC on the field examination; ensure continued access to facilities, records, and personnel through the anticipated completion date of approximately November 7, 2022.

6. All Parties: Schedule the next negotiation call following delivery of the third draft Credit Agreement and C&H's markup — tentatively the week of November 7–11, 2022. Tremblay to coordinate scheduling with Chisholm.

Prepared by: Daniel Obi, Working Associate, Calderwood & Harkness LLP

Reviewed by: Sophie Tremblay, Lead Associate, Calderwood & Harkness LLP

Distribution: Internal — Calderwood & Harkness engagement team only (Ian Blackwood, Stephanie Okafor, Sophie Tremblay, Daniel Obi)

CONFIDENTIALITY NOTICE: This memorandum is protected by the attorney-client privilege and constitutes attorney work product. It has been prepared by counsel for the exclusive use of the Calderwood & Harkness LLP engagement team in connection with the representation of Greenfield Agricultural Partners LLC. This memorandum is not intended for distribution to any person or entity outside of Calderwood & Harkness LLP, including the client, without the prior approval of the Responsible Partner. Any unauthorized disclosure, copying, or distribution of this memorandum or its contents is strictly prohibited.

Topic	GAP / C&H Position	HCB / KBW Position	Status
Springing FCCR — ratio	1.10:1.00	1.10:1.00	Agreed
Springing FCCR — Trigger Period threshold	10% of Line Cap ($8M) or fixed $8M	Greater of 12.5% of BB or $10M	Open — HCB to consult credit committee
Distribution — no Default condition	Agreed	Agreed	Agreed
Distribution — Excess Availability test	≥ 15% of Borrowing Base	≥ 20% of BB (may move to 17.5%)	Open
Distribution — FCCR test	1.15:1.00	1.15:1.00	Agreed
Distribution — tax distribution carve-out	Yes, subject to no Event of Default condition only	Yes, at max combined marginal tax rate, subject to no Event of Default	Agreed in principle
Change of Control — LFT 51% ownership	Agreed	Agreed	Agreed
Change of Control — key-man (Lindstrom)	90-day cure, Agent approval	60-day cure, Required Lenders approval	Open
CapEx — base cap	$8M per fiscal year	$8M per fiscal year	Agreed
CapEx — carryforward	50% of unused	50% of unused	Agreed
CapEx — single-year maximum	$12M (C&H open to $13M–$14M)	$12M (may move to $13M)	Open
CapEx — maintenance CapEx basket	Under discussion	$2M per year proposed by HCB	Open — definition to be drafted by KBW
Investment / acquisition basket	$5M per fiscal year	$5M per fiscal year	Agreed
Intercompany Loan Party investments	Excluded from basket	Excluded from basket	Agreed
Investment carryforward	Requested (50% of unused, capped)	Under consideration	Open
Unsecured debt basket	$5M	$3M (may move to $4M)	Open
PM / capital lease basket	$3M	$1.5M (may move to $2M)	Open
Commodity hedging cap	85% of anticipated production	80% of anticipated production	Settled at 80%
Hedging counterparties	Expanded to include investment-grade counterparties	Agreed, with Agent notification (not consent)	Likely agreed
Hedging reporting frequency	Quarterly	Monthly (with BB certificate)	Open

MEMORANDUM — PRIVILEGED AND CONFIDENTIAL / ATTORNEY WORK PRODUCT
TO: Ian Blackwood, Stephanie Okafor, Sophie Tremblay
FROM: Daniel Obi
DATE: October 21, 2022
RE: Negotiation Call Summary — October 21, 2022 Greenfield Agricultural Partners LLC — $80,000,000 Senior Secured ABL Revolving Credit Facility
Matter No.: 1020-00001 Billing Code: GAPABF-2022
1. Overview and Call Logistics
On Friday, October 21, 2022, at 2:00 p.m. Central Time, the parties participated in a telephone conference call lasting approximately ninety (90) minutes to discuss and negotiate key outstanding provisions in the Credit Agreement for the proposed $80,000,000 senior secured asset-based revolving credit facility (the "Facility") among Greenfield Agricultural Partners LLC, an Iowa limited liability company ("GAP" or the "Borrower"), the Guarantors party thereto, the Lenders party thereto (consisting of Heartland Commerce Bank, N.A. ("HCB") with a commitment of $40,000,000, Meridian Agricultural Credit Corporation ("Meridian") with a commitment of $25,000,000, and Tallgrass Capital Fund II, LP ("Tallgrass") with a commitment of $15,000,000), and HCB as Administrative Agent and Collateral Agent.
The following individuals participated in the call:
Calderwood & Harkness LLP ("C&H") — Borrower's Counsel:
•  Ian Blackwood, Responsible Partner
•  Sophie Tremblay, Lead Associate
Greenfield Agricultural Partners LLC — Borrower:
•  Patricia "Trish" Calloway, Chief Financial Officer
•  Nina Vasquez, General Counsel and Corporate Secretary
Kessler, Brandt & Whitfield LLP ("KBW") — Lender's Counsel:
•  Richard Whitfield, Partner (lead counsel for HCB)
•  Lauren Chisholm, Senior Associate
Heartland Commerce Bank, N.A. — Administrative Agent:
•  Gregory Thorn, Managing Director, Agribusiness Lending
•  Allison Kuo, Vice President, ABL Structuring
This was the second negotiation call between the parties. The first call took place on October 3, 2022, and focused primarily on borrowing base methodology, advance rates applicable to eligible inventory and eligible accounts, and the establishment of availability reserves (including reserves for seasonal fluctuations in grain and commodity prices). A summary of the October 3 call was previously circulated to the engagement team under separate cover.
The call followed delivery of KBW's second draft of the Credit Agreement on October 7, 2022, and C&H's second markup of the same on October 14, 2022. The principal purpose of the call was to discuss and, to the extent possible, resolve outstanding covenant-level issues — including the springing fixed charge coverage ratio covenant, distribution and restricted payments provisions, the change of control definition, capital expenditure limitations, investment and acquisition baskets, additional indebtedness baskets, and commodity hedging restrictions — before KBW prepares and circulates a third draft of the Credit Agreement.
The discussion and outcomes of the call are summarized below by topic.
2. Springing Fixed Charge Coverage Ratio Covenant
2.1 HCB's Initial Position
Richard Whitfield opened the discussion on financial covenants by noting that the second draft of the Credit Agreement reflects HCB's proposed springing Fixed Charge Coverage Ratio ("FCCR") covenant, which requires the Borrower to maintain a Fixed Charge Coverage Ratio of not less than 1.10 to 1.00, tested on a trailing twelve-month (TTM) basis, but only during a "Trigger Period." The Trigger Period, as defined in KBW's second draft, commences on any date when the Borrower's Excess Availability falls below the greater of (a) 12.5% of the then-applicable Borrowing Base and (b) $10,000,000, and continues until the date on which Excess Availability has equaled or exceeded such threshold for thirty (30) consecutive calendar days.
Whitfield stated that the 1.10x FCCR level is consistent with market standards for seasonal agricultural asset-based lending facilities and that HCB's credit committee views this ratio as a floor — not subject to further negotiation downward. Gregory Thorn added that the Trigger Period threshold, structured as the greater-of test with a 12.5% percentage of the Borrowing Base and a $10,000,000 fixed-dollar floor, was already borrower-friendly in HCB's view, noting that comparable facilities in HCB's agribusiness portfolio typically employ a 15% of Borrowing Base threshold. Thorn characterized the 12.5% threshold as a concession already made at the term sheet stage.
2.2 Greenfield's Counter-Position
Trish Calloway raised a concern regarding the practical application of the Trigger Period threshold during the Borrower's seasonal trough periods. Calloway referenced GAP's internal financial projections, which estimate a trough-period Borrowing Base of approximately $42.4 million in April 2023, corresponding to the post-harvest marketing period and pre-planting season when eligible inventory levels are at their lowest point. Calloway noted that 12.5% of a $42.4 million Borrowing Base would be approximately $5.3 million; because the greater-of test includes a $10,000,000 fixed-dollar floor, the $10 million floor would be the operative threshold during the trough period. This means that in practical terms, GAP would be required to maintain at least $10 million of Excess Availability against a $42.4 million Borrowing Base — effectively a 23.6% Excess Availability requirement during the trough period, which is nearly double the ostensible 12.5% threshold.
Nina Vasquez asked whether the Trigger Period definition could be simplified by using a single fixed-dollar threshold rather than the greater-of test, thereby eliminating the disproportionate impact of the $10 million floor during trough periods. Vasquez noted that a fixed-dollar threshold would provide certainty and predictability to the Borrower's treasury management team.
Ian Blackwood expanded on this point, arguing that if the Borrowing Base dips to its seasonal trough level, the $10 million floor effectively converts the 12.5% test into a 23.6% test, which is overly punitive and inconsistent with the commercial intent of a springing covenant designed to apply only in genuinely distressed circumstances. Blackwood stated that C&H's position, as reflected in the October 14 markup, is that the Trigger Period should be triggered only when Excess Availability falls below the greater of (a) 10% of the Line Cap (i.e., 10% of $80,000,000, or $8,000,000) and (b) a fixed dollar threshold of $8,000,000. Because both prongs of this alternative greater-of test converge at $8,000,000, the test effectively functions as a single fixed-dollar threshold of $8 million. Blackwood argued that tying the percentage prong to the Line Cap rather than the Borrowing Base eliminates the seasonal whipsaw effect and provides a stable, predictable trigger point throughout the year.
2.3 Resolution / Status
After extended discussion lasting approximately twenty minutes on this issue, HCB indicated a willingness to consider a compromise on the Trigger Period threshold but was not prepared to agree to a revised formulation on the call. Thorn stated that he would take C&H's proposal — using a threshold of 10% of the Line Cap ($8,000,000), or alternatively a flat $8,000,000 fixed-dollar threshold — back to HCB's credit committee for review and discussion. Thorn noted that any movement from HCB's current position would require credit committee approval, and he expected to have a response within the following week.
The parties agreed that the FCCR ratio itself would remain at 1.10 to 1.00. There was no dispute regarding the coverage ratio level, and both sides confirmed that this aspect of the covenant is settled. Whitfield confirmed that any agreed changes to the Trigger Period threshold would be reflected in the third draft of the Credit Agreement, which KBW plans to deliver on October 28, 2022.
Status: Open — awaiting HCB credit committee response on Trigger Period threshold. The FCCR ratio of 1.10:1.00 is agreed.
3. Distribution / Restricted Payments Covenant
3.1 HCB's Proposed Conditions
The discussion next turned to the Restricted Payments covenant set forth in Section 7.06 of KBW's second draft of the Credit Agreement. As currently drafted, distributions by the Borrower to Greenfield Holdings Corp. ("Holdings") and upstream equity holders are classified as Restricted Payments and are permitted only if all three of the following conditions are satisfied at the time of and after giving effect to such distribution:
(a) No Default or Event of Default exists or would result from the making of such Restricted Payment;
(b) Pro forma Excess Availability, after giving effect to the proposed Restricted Payment, is at least 20% of the then-applicable Borrowing Base; and
(c) The Borrower's pro forma trailing twelve-month Fixed Charge Coverage Ratio, after giving effect to the proposed Restricted Payment, is at least 1.15 to 1.00.
Whitfield noted that these conditions are designed to ensure that distributions are made only when the Borrower has demonstrated both adequate liquidity (through the Excess Availability test) and sufficient debt service capacity (through the FCCR test), and that the 1.15x FCCR threshold for distributions is intentionally set above the 1.10x springing FCCR covenant level to reflect the voluntary, discretionary nature of distributions as compared to the mandatory character of the springing covenant.
3.2 Greenfield's Position
Calloway responded that the 1.15x FCCR condition for distributions is more restrictive than the 1.10x springing FCCR covenant, effectively creating a dual-test regime that limits management flexibility in ways that were not contemplated at the term sheet stage. Calloway stated that requiring a pro forma FCCR of 1.15x for every distribution, in addition to the 20% Excess Availability threshold, places an undue burden on GAP's ability to make routine distributions — particularly given the Borrower's ownership structure.
Nina Vasquez elaborated on this point, explaining the ownership structure of Holdings. Greenfield Holdings Corp. is owned 62% by the Lindstrom Family Trust, 28% by Calloway-Foss Investments LP, and 10% by a management equity plan. GAP is structured as a pass-through entity for federal income tax purposes. As a result, Holdings and its equity holders rely on regular distributions from GAP to fund their respective federal and state income tax obligations arising from GAP's pass-through income allocations. In addition, the management equity plan includes vesting-related distribution obligations that require periodic cash payments to management participants. Vasquez emphasized that the inability to make timely tax distributions could create personal tax liability issues for the equity holders, including members of the Lindstrom family and management equity plan participants, and would be commercially unacceptable.
Ian Blackwood proposed a carve-out for tax distributions. Specifically, C&H's position is that distributions made solely to fund the federal and state income tax liabilities of equity holders attributable to GAP's pass-through income allocations should be permitted without satisfying conditions (b) (the Excess Availability test) and (c) (the FCCR test) described above. Tax distributions would be subject only to the condition that no Event of Default exists at the time of such distribution. Blackwood argued that this carve-out is standard in ABL facilities extended to pass-through entities and reflects the reality that tax distributions are not discretionary in the same sense as other distributions — equity holders have a legal obligation to pay their taxes, and failure to make tax distributions could result in personal hardship or, in the case of the Lindstrom Family Trust, potential trust administration complications.
In addition to the tax distribution carve-out, C&H proposed reducing the Excess Availability threshold for non-tax Restricted Payments from 20% of the Borrowing Base to 15% of the Borrowing Base. Blackwood noted that 15% is a more common threshold in comparable ABL facilities and would provide the Borrower with greater flexibility to make distributions during periods when the Borrowing Base is at seasonal peaks.
3.3 HCB's Response
Thorn agreed in principle to a tax distribution carve-out, acknowledging that it is market-standard for ABL facilities extended to pass-through entities. Thorn stated that HCB has included similar carve-outs in other credit facilities in its agribusiness portfolio and does not view the tax distribution carve-out as a significant credit risk concern, provided it is appropriately structured and limited in scope.
Whitfield indicated that the tax distribution carve-out, as reflected in the third draft, would be limited to distributions in an amount not to exceed the product of (i) the maximum combined federal and state marginal income tax rate applicable to an individual or corporate taxpayer (whichever is higher) and (ii) the net taxable income of GAP allocable to the relevant equity holder for the applicable tax period. The carve-out would still require that no Event of Default exists at the time of the distribution.
On the Excess Availability threshold for non-tax Restricted Payments, Allison Kuo pushed back, stating that the 20% threshold is necessary to maintain an adequate liquidity cushion within the borrowing base structure, particularly given the seasonal volatility in GAP's eligible inventory and eligible accounts. Kuo stated that HCB's ABL structuring group views 20% as the appropriate floor for ABL facilities of this size and complexity, but acknowledged that HCB might be willing to move to 17.5% of the Borrowing Base as a compromise. However, Kuo stated that HCB is unwilling to reduce the threshold below 17.5%.
On the FCCR condition for distributions, Whitfield stated that the 1.15x ratio is appropriate and should be maintained. Whitfield explained that the springing FCCR covenant (at 1.10x) applies only during a Trigger Period — i.e., when the Borrower is already in a stressed liquidity position — and is designed to serve as a backstop. The distribution FCCR condition, by contrast, applies to voluntary, discretionary payments and should therefore impose a higher standard to ensure that distributions do not impair the Borrower's ability to service its obligations. Whitfield noted that the 50-basis-point differential between the two tests (1.15x vs. 1.10x) is modest and consistent with the approach taken in comparable facilities. There was no further discussion on this point, and the 1.15x FCCR condition for non-tax distributions appears to be settled.
Status: Partially resolved — tax distribution carve-out agreed in principle (to be limited to the maximum combined marginal tax rate applied to allocable income, subject to no Event of Default condition only); Excess Availability threshold remains open (GAP/C&H at 15% of Borrowing Base, HCB/KBW at 20%, with HCB indicating willingness to move to 17.5% — a potential compromise at 17.5% appears likely); FCCR condition of 1.15:1.00 for non-tax distributions appears settled.
4. Change of Control Provision
4.1 KBW's Proposed Definition
Whitfield introduced the Change of Control discussion by summarizing the definition as set forth in KBW's second draft. Under the current draft, a "Change of Control" is deemed to occur upon the happening of either of the following events:
(a) The Lindstrom Family Trust ceases to own, directly or indirectly, at least 51% of the issued and outstanding equity interests of Greenfield Holdings Corp.; or
(b) Marcus J. Lindstrom ceases to serve as Chief Executive Officer of the Borrower, and such change is not consented to in writing by the Administrative Agent.
A Change of Control constitutes an Event of Default under the Credit Agreement, triggering acceleration rights, the right to terminate Commitments, and the right to exercise remedies against the Collateral.
4.2 Greenfield's Position
Vasquez stated that the 51% ownership threshold for the Lindstrom Family Trust's direct or indirect ownership of Holdings is acceptable to GAP. The Lindstrom Family Trust currently holds 62% of Holdings' equity, and there are no plans to dilute the Trust's ownership below 51% in the foreseeable future. Accordingly, this prong of the Change of Control definition is not in dispute.
However, Vasquez objected to the key-man provision in clause (b), which ties the Change of Control definition to Marcus Lindstrom's continued service as CEO. Vasquez argued that treating a change in the CEO position as an automatic Event of Default is overly restrictive, commercially unreasonable, and disproportionate in its consequences. Vasquez noted that while Marcus Lindstrom is a valued leader and a central figure in GAP's operations, the automatic triggering of an Event of Default upon his departure — whether voluntary, due to health reasons, retirement, or otherwise — would create significant risk for the Borrower and its equity holders. Such a provision effectively gives HCB the ability to accelerate the entire Facility and foreclose on the Collateral in response to an event (CEO departure) that may have no bearing whatsoever on the Borrower's ability to repay the Facility.
Ian Blackwood proposed that the key-man provision be restructured as a notice requirement coupled with a cure period. Specifically, C&H proposes that if Marcus Lindstrom ceases to serve as CEO of the Borrower for any reason, GAP would be required to deliver prompt written notice to the Administrative Agent and would have ninety (90) days following such cessation to appoint a replacement CEO who is reasonably acceptable to the Administrative Agent. During the 90-day cure period, no Event of Default would be deemed to have occurred solely as a result of Lindstrom's departure. Only if GAP fails to appoint a reasonably acceptable replacement within the 90-day period would a Change of Control be deemed to have occurred and an Event of Default triggered.
Trish Calloway reinforced this position by noting that GAP has a deep and capable management team. Calloway referenced Raymond Foss, who serves as Vice President of Operations and has been with GAP for over fifteen years. Calloway stated that an automatic Event of Default triggered by a single individual's departure from the CEO role would create unnecessary and disproportionate risk to the enterprise, particularly given the breadth of management talent within the organization. Calloway emphasized that the Lenders' security package — which includes first-priority security interests in substantially all of GAP's assets, including inventory, accounts receivable, equipment, and real property — provides the Lenders with ample credit protection independent of any particular individual's continued involvement.
4.3 HCB's Response
Thorn acknowledged that an automatic Event of Default triggered solely by the key-man's departure is "aggressive" and stated that HCB is open to discussing a cure period mechanism. However, Thorn emphasized that HCB views Marcus Lindstrom's industry expertise — which spans approximately thirty years in agricultural commodities trading, procurement, and operations — as a critical credit factor in the Lenders' decision to extend the Facility. Thorn stated that Lindstrom's relationships with grain counterparties, his understanding of seasonal market dynamics, and his track record of managing GAP through commodity price cycles were all important elements of HCB's credit analysis.
Whitfield proposed a middle ground. Under KBW's proposed compromise, a Change of Control would be triggered if Marcus Lindstrom ceases to serve as CEO and a replacement reasonably acceptable to the Required Lenders (defined as Lenders holding more than 50% of the aggregate Commitments) is not appointed within sixty (60) days after such cessation. During the 60-day cure period, no Event of Default would be deemed to exist solely by reason of Lindstrom's departure.
There was brief discussion regarding whether the approval standard for the replacement CEO should reference the "Administrative Agent" (as C&H proposed) or the "Required Lenders" (as KBW proposed). C&H's preference is for Agent approval, which would require only HCB's consent in its capacity as Administrative Agent and would be a more streamlined approval process. KBW's preference is for Required Lenders approval, which would require the affirmative consent of Lenders holding more than 50% of the aggregate Commitments — currently, this would require the approval of at least two of the three Lenders (HCB at $40M, Meridian at $25M, and Tallgrass at $15M). Whitfield noted that the Required Lenders standard is more protective of the Lender group as a whole and prevents a situation in which the Agent unilaterally approves a replacement CEO over the objections of the other Lenders.
The cure period length (60 days per KBW vs. 90 days per C&H) and the approval standard (Agent vs. Required Lenders) remain open.
Status: Partially resolved — the 51% Lindstrom Family Trust ownership threshold is agreed; the key-man provision structure (cure period with replacement approval) is agreed in concept, but the cure period length (60 days vs. 90 days) and the approval standard (Agent vs. Required Lenders) remain open and are to be resolved in the third draft and subsequent discussions.
5. Capital Expenditure Limitation
5.1 KBW's Proposed Cap
The discussion next turned to the Capital Expenditure limitation set forth in Section 7.11 of KBW's second draft. As currently drafted, the Credit Agreement limits the Borrower's aggregate Capital Expenditures to $8,000,000 per fiscal year. The provision permits a 50% carryforward of unused amounts from the immediately preceding fiscal year, provided that total Capital Expenditures in any single fiscal year (including carryforward amounts) may not exceed $12,000,000.
5.2 Greenfield's Position
Calloway stated that the $8,000,000 annual base cap is generally workable for GAP's current operational needs, which include routine equipment purchases, technology upgrades, and facility maintenance. However, Calloway noted that GAP's management team has been evaluating potential grain elevator upgrades and capacity expansion projects at certain of GAP's storage and handling facilities, particularly the Marshalltownalltown and Cedar Rapids elevator complexes. These projects, if undertaken, could require Capital Expenditures of up to $10,000,000 in a single fiscal year.
C&H proposed two alternative approaches:
Alternative 1: Increase the base Capital Expenditure cap to $10,000,000 per fiscal year, with a 50% carryforward of unused amounts from the immediately preceding fiscal year permitted, subject to a maximum of $15,000,000 in any single fiscal year.
Alternative 2: Maintain the $8,000,000 base cap but increase the single-year maximum (including carryforward amounts) from $12,000,000 to $14,000,000, thereby providing the Borrower with greater headroom in years when significant capital projects are undertaken.
Blackwood noted that either alternative would provide GAP with the flexibility to pursue the elevator upgrade and capacity expansion projects without requiring an amendment to the Credit Agreement, which would entail additional time, expense, and the risk of lender holdout in a multi-lender facility.
5.3 HCB's Response
Kuo stated that the $8,000,000 base cap reflects the assumptions used in HCB's internal credit model for the Facility and that increasing the base cap to $10,000,000 would require the credit committee to re-approve the credit model with revised assumptions. Kuo indicated that seeking such re-approval at this stage of the transaction would likely delay the closing timeline and is not something HCB's credit team would be inclined to support.
Thorn offered a compromise proposal consisting of three elements:
(i) Maintain the base Capital Expenditure cap at $8,000,000 per fiscal year;
(ii) Maintain the 50% carryforward mechanism, but increase the single-year maximum from $12,000,000 to $13,000,000 (inclusive of carryforward amounts); and
(iii) Add a separate basket of $2,000,000 per fiscal year for "maintenance Capital Expenditures" that would not count toward the $8,000,000 base cap or the single-year maximum. Maintenance Capital Expenditures would be defined as Capital Expenditures incurred solely for the purpose of maintaining, repairing, or replacing existing assets (as opposed to acquiring new assets or expanding capacity).
Blackwood acknowledged that the maintenance Capital Expenditure basket concept has merit but cautioned that the definition of "maintenance Capital Expenditures" could be contentious and difficult to administer in practice. Blackwood noted, for example, that replacing a grain dryer at an existing elevator could be characterized as either maintenance (replacing existing equipment) or expansion (if the replacement unit has greater capacity than the unit it replaces). Blackwood asked KBW to include a proposed definition of "maintenance Capital Expenditures" in the third draft of the Credit Agreement so that C&H could evaluate the scope and administrability of the concept. Whitfield agreed to include a proposed definition.
Status: Open — the base Capital Expenditure cap of $8,000,000 per fiscal year appears agreed; the 50% carryforward mechanism is agreed; the single-year maximum remains open ($12,000,000 per KBW's current draft vs. $13,000,000 per HCB's compromise proposal, with C&H open to discussing amounts in the $13,000,000 to $14,000,000 range); the maintenance Capital Expenditure basket of $2,000,000 per year is under discussion, with the definition to be proposed by KBW in the third draft.
6. Investment and Acquisition Basket
6.1 KBW's Proposed Terms
Whitfield summarized the Permitted Investments provisions in Section 7.03 of KBW's second draft. The draft permits the Borrower to make Investments (including acquisitions and other investments not otherwise specifically permitted) in an aggregate amount not to exceed $5,000,000 per fiscal year. There is no carryforward of unused amounts from one fiscal year to the next. Acquisitions are subject to the following additional conditions:
(a) No Default or Event of Default exists or would result from such acquisition;
(b) Pro forma compliance with all financial covenants set forth in the Credit Agreement after giving effect to the acquisition;
(c) Pro forma Excess Availability, after giving effect to the acquisition, is at least 15% of the then-applicable Borrowing Base; and
(d) Delivery of an updated borrowing base certificate giving effect to the assets and liabilities of the acquired entity or business.
6.2 Greenfield's Position
Calloway stated that the $5,000,000 annual basket is adequate for GAP's near-term investment plans, which are focused primarily on organic growth and operational improvements. However, Calloway requested the addition of a carryforward mechanism — specifically, 50% of unused amounts from the immediately preceding fiscal year, subject to a cap — to provide flexibility in the event that GAP identifies a strategic acquisition opportunity that exceeds the $5,000,000 annual limit in a given year.
Vasquez raised a structural question regarding intercompany investments among existing Loan Parties. GAP's corporate structure includes two wholly-owned subsidiaries: Greenfield Grain Storage LLC ("GGS") and Greenfield Commodities Inc. ("GCI"), both of which are Guarantors and Loan Parties under the Credit Agreement. Vasquez asked whether intercompany investments among GAP, GGS, and GCI — such as intercompany loans, capital contributions, or other transfers — would count toward the $5,000,000 annual basket. C&H's position, as articulated by Vasquez, is that intercompany investments among Loan Parties should be freely permitted without limitation and should not count toward the $5,000,000 basket, as such investments do not diminish the aggregate collateral pool available to the Lenders. Funds transferred from one Loan Party to another remain within the credit group and continue to be subject to the Lenders' first-priority security interests.
Blackwood also flagged a consistency issue regarding the pro forma Excess Availability condition for acquisitions. As currently drafted in KBW's second draft, acquisitions require pro forma Excess Availability of at least 15% of the Borrowing Base, whereas the distribution covenant requires pro forma Excess Availability of at least 20% of the Borrowing Base (with the parties negotiating a potential reduction to 15% or 17.5%). Blackwood stated that the Excess Availability threshold for acquisitions should reference the same percentage threshold as ultimately agreed upon in the distribution covenant, in order to maintain internal consistency within the Credit Agreement and avoid confusion.
6.3 HCB's Response
Whitfield agreed that intercompany investments among Loan Parties should be excluded from the $5,000,000 annual basket and treated as Permitted Investments without dollar limitation. Whitfield stated that this approach is consistent with standard ABL practice and that KBW would include the appropriate carve-out in the Permitted Investments definition in the third draft.
On the carryforward mechanism, Thorn was noncommittal. Thorn stated that he would need to discuss the carryforward request with HCB's credit committee and could not agree to it on the call. Thorn noted that HCB's general preference is to avoid carryforward provisions in investment baskets, as they can result in the accumulation of significant unused capacity over multiple years, potentially enabling a large acquisition that was not contemplated at the time the Facility was structured.
The acquisition conditions set forth in KBW's second draft were largely agreed as proposed, subject to the conforming change noted by Blackwood regarding the Excess Availability threshold. The parties agreed that the Excess Availability threshold for acquisitions would be conformed to whatever percentage threshold is ultimately agreed upon in the context of the distribution covenant.
Status: Partially resolved — the $5,000,000 per fiscal year investment basket is agreed; the exclusion of intercompany Loan Party investments from the basket is agreed; the carryforward request remains open pending HCB credit committee input; acquisition conditions are agreed as proposed, subject to conforming the Excess Availability threshold to the distribution covenant threshold once that is settled.
7. Additional Indebtedness Baskets
7.1 Discussion.  The parties engaged in a brief discussion regarding the Permitted Indebtedness baskets set forth in Section 7.02 of KBW's second draft. As currently drafted, the Credit Agreement includes, among other permitted indebtedness carve-outs, the following baskets:
(a) A basket for unsecured Indebtedness in an aggregate outstanding principal amount not to exceed $3,000,000 at any time; and
(b) A basket for purchase money Indebtedness and Capitalized Lease Obligations in an aggregate outstanding principal amount not to exceed $1,500,000 at any time.
Calloway expressed the view that both baskets are tight given the scale of GAP's operations. Calloway noted that as of June 30, 2022, GAP had total assets of $289.6 million and that GAP's annual revenue was $347.2 million for fiscal year 2021, with projected revenue of $391.5 million for fiscal year 2022. In the context of an enterprise of this size, Calloway argued that an unsecured debt basket of $3,000,000 and a purchase money / capital lease basket of $1,500,000 are unduly restrictive and could hamper GAP's ability to enter into routine operating leases, equipment financing arrangements, and other customary business transactions.
C&H proposed increasing the unsecured Indebtedness basket to $5,000,000 and the purchase money / Capitalized Lease Obligation basket to $3,000,000.
Kuo stated that HCB would consider a modest increase in both baskets but not to the levels proposed by C&H. Kuo noted that HCB's ABL structuring team views the indebtedness baskets as an important mechanism for limiting the Borrower's overall leverage and ensuring that the Facility remains the primary source of external financing. Kuo suggested $4,000,000 for the unsecured Indebtedness basket and $2,000,000 for the purchase money / Capitalized Lease Obligation basket as a potential landing zone.
No agreement was reached on the call. The parties agreed that KBW would include its proposed landing zone numbers in the third draft for C&H's review, and the issue would be addressed in the next round of negotiations.
Status: Open — to be resolved in the third draft markup. Current positions are: C&H proposes $5M unsecured / $3M PM-capital lease; KBW/HCB proposes $3M unsecured (may increase to $4M) / $1.5M PM-capital lease (may increase to $2M).
8. Commodity Hedging Negative Pledge
8.1 KBW's Proposed Restriction
Whitfield introduced the commodity hedging provisions, which are set forth in Section 7.09 of KBW's second draft. As currently drafted, the Credit Agreement restricts the Borrower from entering into commodity hedging transactions (including futures contracts, options, and swap agreements) in respect of anticipated production volumes in excess of 80% of the Borrower's anticipated production for any given crop year without the prior written consent of the Administrative Agent. In addition, all commodity hedging counterparties must be either (a) Lenders or affiliates of Lenders, or (b) counterparties specifically approved in writing by the Administrative Agent.
8.2 Greenfield's Position
Calloway explained that GAP's commodity hedging program is a core component of the company's risk management strategy and has been instrumental in maintaining stable margins and cash flows through volatile commodity price cycles. Calloway noted that GAP typically hedges between 60% and 75% of its anticipated corn and soybean production, depending on market conditions, price levels, and management's forward outlook. Calloway stated that the 80% cap, while not an immediate constraint at current hedging levels, could limit GAP's flexibility in periods of elevated price risk.
Vasquez raised a separate concern regarding the counterparty restriction. Vasquez noted that limiting hedging counterparties to Lenders and their affiliates is overly restrictive and inconsistent with GAP's existing hedging program. GAP currently maintains hedging relationships with several counterparties that are not Lenders or affiliates of Lenders, and GAP's hedging activities include positions cleared through the Chicago Board of Trade (CBOT). Requiring prior Administrative Agent consent for each non-Lender counterparty would be administratively burdensome and could impair GAP's ability to execute hedges in a timely manner in fast-moving commodity markets.
C&H proposed the following revisions:
(a) Increase the hedging cap from 80% to 85% of anticipated production;
(b) Expand the universe of permitted hedging counterparties to include (i) Lenders and affiliates of Lenders, (ii) counterparties that maintain an investment-grade credit rating (BBB- / Baa3 or above) from at least one nationally recognized statistical rating organization, and (iii) regulated exchanges and clearinghouses (such as CBOT and CME Group); and
(c) Replace the prior Administrative Agent consent requirement with a quarterly reporting requirement, pursuant to which the Borrower would deliver to the Administrative Agent a summary of its outstanding hedging positions, counterparties, and notional amounts on a quarterly basis as part of its regular compliance reporting.
8.3 HCB's Response
Thorn stated that the 80% hedging cap is firm. Thorn explained that HCB's credit committee views the 80% threshold as an important safeguard to ensure that GAP retains at least 20% of its unhedged production exposure, which allows GAP to participate in upside price movements and prevents a scenario in which the Borrower's entire production is locked into forward positions at prices that may prove unfavorable relative to spot market conditions at the time of delivery. Thorn noted that HCB has seen situations in its portfolio where borrowers that were over-hedged faced margin call liquidity issues when commodity prices moved sharply against their hedge positions, and that the 80% cap is designed to mitigate this risk.
On the counterparty restriction, Whitfield indicated that HCB is willing to show flexibility. Whitfield stated that KBW would revise the hedging counterparty provision in the third draft to permit hedging transactions with counterparties that maintain an investment-grade credit rating from a nationally recognized statistical rating organization, subject to a requirement that the Borrower notify the Administrative Agent of any new hedging counterparty within a reasonable period (e.g., five business days) after entering into a hedging transaction with such counterparty. This would be a notification requirement rather than a consent requirement. Whitfield noted that regulated exchanges and clearinghouses would also be included as permitted counterparties.
On the reporting frequency, Kuo pushed back on quarterly reporting and suggested monthly reporting of hedging positions. Kuo proposed that the hedging position summary be delivered monthly as part of the borrowing base certificate, rather than as a separate quarterly report. Kuo noted that monthly reporting would provide HCB's ABL monitoring team with more current information regarding the Borrower's hedging exposure and would align with the frequency of borrowing base certificate delivery (which is monthly under the Credit Agreement). Blackwood noted C&H's preference for quarterly reporting to minimize the administrative burden on the Borrower but acknowledged that monthly reporting as part of the borrowing base certificate may be acceptable if the format is streamlined.
Status: Partially resolved — the 80% hedging cap appears settled (HCB firm); the expansion of permitted counterparties to include investment-grade counterparties with Administrative Agent notification (rather than consent) is likely agreed, subject to drafting; the reporting frequency (monthly as proposed by HCB vs. quarterly as proposed by C&H) remains open.
9. Other Items Discussed
9.1 Field Examination Update
Thorn provided an update on the field examination being conducted by Pryor & Associates LLC ("Pryor"), the independent collateral examination firm retained by HCB in connection with the Facility. Thorn reported that Thomas Pryor and his team commenced the on-site field examination at GAP's corporate headquarters in Des Moines, Iowa, and at select grain elevator and storage sites on October 17, 2022. Pryor's team is expected to complete the on-site portion of the examination by approximately November 7, 2022, with a written field examination report to follow within two to three weeks of completion of the on-site work.
Kuo noted that the findings of the field examination will inform the final determination of borrowing base eligibility criteria and advance rates. In particular, Pryor's examination will evaluate the integrity of GAP's inventory tracking systems, the condition and marketability of grain held in storage, the collectibility and aging of accounts receivable, and the adequacy of GAP's internal controls and reporting systems. Kuo stated that if the field examination reveals any material issues — such as discrepancies between GAP's reported inventory quantities and physical counts, or concerns regarding the quality or condition of stored grain — HCB may seek adjustments to the advance rates or the imposition of additional reserves, which would be reflected in a subsequent draft of the Credit Agreement or in a side letter.
Calloway confirmed that GAP is cooperating fully with Pryor's field examination team and that Raymond Foss, GAP's Vice President of Operations, is serving as the primary operational liaison to the Pryor team. Calloway stated that Foss has been facilitating Pryor's access to elevator sites, inventory records, and operational personnel, and that GAP does not anticipate any issues arising from the examination.
The parties confirmed the field examination fee structure: the annual field examination fee is capped at $50,000 per examination, with two (2) examinations per calendar year at the Borrower's expense during periods when no Trigger Period is in effect. During a Trigger Period, additional field examinations may be conducted at the Borrower's expense without a cap on the number of examinations or the per-examination fee. This fee structure is consistent with the terms set forth in the term sheet dated August 12, 2022.
9.2 Timing and Next Steps
Whitfield confirmed that KBW will deliver the third draft of the Credit Agreement to C&H by October 28, 2022. The third draft will incorporate the resolutions reached on this call, including the agreed provisions regarding the FCCR ratio level, the tax distribution carve-out, the Lindstrom Family Trust ownership threshold, the CapEx base cap and carryforward mechanism, the investment basket amount, the intercompany Loan Party exclusion, the hedging cap, and the hedging counterparty expansion. The third draft will also include KBW's proposed language on the open items discussed on this call, including the Trigger Period threshold, the Excess Availability threshold for distributions, the key-man cure period and approval standard, the CapEx single-year maximum and maintenance CapEx basket definition, the investment basket carryforward, the indebtedness basket amounts, and the hedging reporting frequency.
C&H will deliver its markup of the third draft promptly upon receipt. Sophie Tremblay noted that C&H anticipates being able to turn the markup within five to seven business days of receipt of the third draft.
Tremblay also noted that C&H is in the process of preparing initial drafts of the ancillary loan documents, including the Security Agreement, the Guaranty Agreement, the Pledge Agreement, and form Mortgage instruments covering GAP's owned real property in Iowa and Illinois. C&H anticipates delivering these drafts to KBW and HCB in early November 2022.
The parties discussed a target closing date of late November 2022 for the Facility. However, all participants acknowledged that this timeline is aggressive given the number of open items remaining in the Credit Agreement, the pending field examination (which is not expected to be completed until approximately November 7), and the need to negotiate and finalize the ancillary documents. Thorn stated that HCB would work in good faith to maintain the late November target but cautioned that any delays in resolving the open items or any material findings from the field examination could push the closing into December.
Calloway noted that GAP's existing revolving credit facility with Prairie National Bank ("PNB") — a $55,000,000 revolving credit facility bearing interest at SOFR plus 2.75% — matures on March 31, 2023. This maturity date provides some runway for the Facility closing, but Calloway expressed a strong preference for closing the HCB Facility before year-end 2022 in order to provide certainty of financing for the upcoming 2023 planting season and to avoid any overlap issues with the PNB facility.
10. Summary of Open Items and Action Items
Open Items.  The following table summarizes the status of each topic discussed on the call:
Action Items.  
1.  HCB (Thorn): Present the Trigger Period threshold proposal (10% of Line Cap / $8M fixed threshold) to HCB's credit committee and revert to C&H and GAP with the credit committee's response. Target response date: on or before October 26, 2022.
2.  KBW (Whitfield / Chisholm): Deliver the third draft of the Credit Agreement to C&H by October 28, 2022, incorporating all agreed changes from this call and proposing language on all open items, including the maintenance Capital Expenditure definition, key-man cure period and approval standard, indebtedness basket amounts, investment carryforward mechanism, and hedging reporting format.
3.  C&H (Tremblay / Obi): Prepare and deliver a markup of the third draft Credit Agreement promptly upon receipt, with a target turnaround of five to seven business days.
4.  C&H (Tremblay / Obi): Finalize initial drafts of the Security Agreement, Guaranty Agreement, Pledge Agreement, and form Mortgage instruments and deliver to KBW and HCB in early November 2022.
5.  GAP (Foss): Continue coordinating with Pryor & Associates LLC on the field examination; ensure continued access to facilities, records, and personnel through the anticipated completion date of approximately November 7, 2022.
6.  All Parties: Schedule the next negotiation call following delivery of the third draft Credit Agreement and C&H's markup — tentatively the week of November 7–11, 2022. Tremblay to coordinate scheduling with Chisholm.
Prepared by: Daniel Obi, Working Associate, Calderwood & Harkness LLP
Reviewed by: Sophie Tremblay, Lead Associate, Calderwood & Harkness LLP
Distribution: Internal — Calderwood & Harkness engagement team only (Ian Blackwood, Stephanie Okafor, Sophie Tremblay, Daniel Obi)
CONFIDENTIALITY NOTICE: This memorandum is protected by the attorney-client privilege and constitutes attorney work product. It has been prepared by counsel for the exclusive use of the Calderwood & Harkness LLP engagement team in connection with the representation of Greenfield Agricultural Partners LLC. This memorandum is not intended for distribution to any person or entity outside of Calderwood & Harkness LLP, including the client, without the prior approval of the Responsible Partner. Any unauthorized disclosure, copying, or distribution of this memorandum or its contents is strictly prohibited.
Topic | GAP / C&H Position | HCB / KBW Position | Status
Springing FCCR — ratio | 1.10:1.00 | 1.10:1.00 | Agreed
Springing FCCR — Trigger Period threshold | 10% of Line Cap ($8M) or fixed $8M | Greater of 12.5% of BB or $10M | Open — HCB to consult credit committee
Distribution — no Default condition | Agreed | Agreed | Agreed
Distribution — Excess Availability test | ≥ 15% of Borrowing Base | ≥ 20% of BB (may move to 17.5%) | Open
Distribution — FCCR test | 1.15:1.00 | 1.15:1.00 | Agreed
Distribution — tax distribution carve-out | Yes, subject to no Event of Default condition only | Yes, at max combined marginal tax rate, subject to no Event of Default | Agreed in principle
Change of Control — LFT 51% ownership | Agreed | Agreed | Agreed
Change of Control — key-man (Lindstrom) | 90-day cure, Agent approval | 60-day cure, Required Lenders approval | Open
CapEx — base cap | $8M per fiscal year | $8M per fiscal year | Agreed
CapEx — carryforward | 50% of unused | 50% of unused | Agreed
CapEx — single-year maximum | $12M (C&H open to $13M–$14M) | $12M (may move to $13M) | Open
CapEx — maintenance CapEx basket | Under discussion | $2M per year proposed by HCB | Open — definition to be drafted by KBW
Investment / acquisition basket | $5M per fiscal year | $5M per fiscal year | Agreed
Intercompany Loan Party investments | Excluded from basket | Excluded from basket | Agreed
Investment carryforward | Requested (50% of unused, capped) | Under consideration | Open
Unsecured debt basket | $5M | $3M (may move to $4M) | Open
PM / capital lease basket | $3M | $1.5M (may move to $2M) | Open
Commodity hedging cap | 85% of anticipated production | 80% of anticipated production | Settled at 80%
Hedging counterparties | Expanded to include investment-grade counterparties | Agreed, with Agent notification (not consent) | Likely agreed
Hedging reporting frequency | Quarterly | Monthly (with BB certificate) | Open

MEMORANDUM — PRIVILEGED AND CONFIDENTIAL / ATTORNEY WORK PRODUCT

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