Brewster Heights Packing & Orchards - Chapter 11 DIP Terms

DIP Terms

Borrower(s)

• Brewster Heights Packing and Orchards, LP and its direct and indirect subsidiaries identified as signing parties to the DIP Term Sheet, as Borrowers, including Gebbers Orchards, Inc., Gebbers Farms Inc., C&M II, LLC, D&E Storage, LLC, Northco, LLC, P&G Orchards, LLC, Repo, LLC, TJF Properties, LLC, Westco Orchards, LLC, Westco Sales, Inc., and such other entities as agreed to
• The jointly administered Debtors in the Chapter 11 Cases comprise thirteen entities; in addition to those named above, the Debtor group includes Eastco, LLC (Case No. 26-01139) and GF SA, LLC (Case No. 26-01142), which are not separately named as Borrowers in the DIP Term Sheet
• The Chapter 11 Cases are jointly administered under Lead Case No. 26-01136 in the U.S. Bankruptcy Court for the Eastern District of Washington

Lender

• Sandton Capital Solutions Master Fund VI, LP and/or one or more of its affiliated funds and accounts, as DIP Lender

DIP Commitments

• $72.0 million senior secured, superpriority debtor-in-possession term loan facility (the "Total Commitment Amount"), comprised of:
  • Initial Draw: up to $20.0 million, immediately available for draw upon Bankruptcy Court approval and entry of the Interim DIP Order
  • Additional Draws: up to $52.0 million in the aggregate, available upon entry of the Final DIP Order
    • Each Additional Draw to be in a minimum funded amount of $5.0 million and subject to a 7-day advance notice
    • The aggregate funded amount of all Additional Draws may not exceed $52.0 million
• On an interim basis, the Debtors are authorized to enter into and borrow under the DIP Facility up to $25 million during the interim period, including an interim draw of $20 million, and the Court found that financing up to $25 million is essential to the Debtors' estates through the Final Hearing
• The DIP Lender committed to provide the financing in accordance with the DIP Loan Term Sheet dated May 11, 2026

Amortization

• None

Cash Collateral

• The Debtors are not authorized to use, collect, transfer, dissipate, or encumber cash collateral arising from the BMO Prepetition Collateral (the "BMO Cash Collateral") absent BMO's prior written consent or order of the Court

Interest Rate

• PIK Interest: 12.5% per annum on the outstanding Principal Amount, added to the Principal Amount monthly and not counted against draw limits
  • The Borrower may elect to pay any portion of the PIK interest in cash on a monthly basis
• Cash Interest: None
• Default Rate Increase: 3.0% (the PIK interest rate increases by 3.0% during the occurrence and continuance of an Event of Default)

Fees

• Issuance Fee: 2.0% of the amount of the Initial Draw and each Additional Draw, earned and payable on the date of each draw; capitalized and added to the Principal Amount but not counted against draw limits
• Exit Fee: 2.0% multiplied by the repaid Principal Amount, payable on the earlier to occur of any Prepayment Date and Repayment Date
• Renewal Fee: 1.0% of the Total Commitment Amount as of the Repayment Date, payable if the DIP Loan is not repaid in full on or before the Maturity Date and extending the Repayment Date by an additional three months; capitalized and added to the Principal Amount at the time of extension and not counted against draw limits
  • Borrowers are entitled to no more than one three-month extension period at the Maturity Date
• Unused Fee: 2.0% per annum on the undrawn outstanding Total Commitment Amount, added to the Principal Amount monthly and not counted against draw limits
• Minimum Multiple of Invested Capital: a cash fee at exit such that the Lender's multiple of invested capital for each draw (the Initial Draw and each Additional Draw individually), exclusive of any fees, shall be no less than 1.125x

Maturity

• Lender is entitled to immediate repayment of all outstanding DIP Loan obligations on the earliest of (the "Repayment Date"):
  • The effective date of the plan of reorganization
  • The closing on a sale of all or substantially all of the Borrowers' assets (unless otherwise agreed to by the parties)
  • Nine months from the date of origination (the "Maturity Date"), subject to extension as described above (for a total of up to 12 months from the date of origination)
• The Lender will consider converting some or all of the DIP Loan to an exit financing facility in conjunction with a sale or an emergence from chapter 11, subject to terms agreeable to the Lender and the Lender's internal approvals

Prepayment

• The Borrower may prepay the DIP Loan in full or in part at any time (the "Prepayment Date")
• There is a mandatory repayment of the DIP Loan upon the sale of any assets, from the net proceeds thereof, unless otherwise agreed to by the parties

Use of Proceeds

• Fund operating expenses, portfolio company needs, restructuring costs, professional fees, and case administration costs
• Repayment of any pre-petition bridge loan facility
• Other general corporate purposes, as set forth in the DIP Budget agreed to by the Borrowers and the Lender, and by Prudential as a condition to its subordination
• The Debtors shall not make any Critical Vendor Payments (prepetition claims under any critical vendor, essential vendor, 503(b)(9), lien claimant, or similar program) or KERP Payments (key employee retention, incentive, bonus, retention, severance, transaction, sale, change-in-control, or similar program) without the prior written consent of the DIP Lender and the Prudential Secured Parties; provided that the Prudential Secured Parties' consent (only) shall be deemed given solely with respect to any such payment specifically identified by payee, amount, timing, and purpose in a DIP Budget approved in writing by the Prudential Secured Parties, or by order of the Court (the DIP Lender's separate written consent remains required)

Securities and Priorities

• "DIP Collateral" means substantially all existing and after-acquired real and personal property of the Debtors and all property of the estate, including cash and cash equivalents, deposit and securities accounts, accounts and other receivables, chattel paper, contract rights, crops, farm products, inventory, instruments, documents, securities, equipment, fixtures, real property interests, general intangibles, investment property, tax refunds, letter of credit rights, commercial tort claims, intellectual property, and all substitutions, accessions, and proceeds thereof, but excluding avoidance actions
• DIP Liens: effective upon entry of the Interim Order and subject to the Carve Out, valid, perfected, continuing, enforceable, non-avoidable first priority liens and security interests on the DIP Collateral pursuant to sections 364(c) and (d), priming all other liens on the DIP Collateral other than the Permitted Senior Liens (the "Primed Liens"), and effective and perfected without the need for any additional filings or documentation
  • The DIP Liens are pari passu with the Bridge Lender's Prepetition Secured Claim in the Bridge Lender's Prepetition Collateral, with the DIP Lender possessing the sole and exclusive right to administer the DIP Collateral before and after a default
  • The DIP Liens are of second or third priority, as applicable, solely with respect to the following Permitted Senior Liens:
    • BMO's first-priority security interests in the BMO Senior Collateral, consisting of, among other things, the 2025 Crop Collateral (harvested and growing apples, cherries, and other tree crops for the 2025 Crop Year, and related packaging, proceeds, and government payments), the related 2025 Crop Receivables, Marketing Agreement Payments under the AltaFresh marketing agreement, contract rights relating to the 2025 Crop Collateral (including the Apple House Grower Agreement), crop allotments and crop base rights, certain pledged equity interests (excluding the Debtors' equity in AltaFresh LLC d/b/a Chelan Fresh), the real property at 125 North Star Road, Brewster, WA and related fixtures and improvements, vehicles, rolling stock, farm machinery, and other equipment (excluding Prudential Senior Collateral), deposit accounts and cash, related intellectual property, and books and records and proceeds of the foregoing
    • Purchase money security interest liens ("PMSI Liens") held by any party holding a valid first priority, non-avoidable PMSI Lien on any equipment as of the Petition Date
    • Mortgage in favor of Happy Valley USA Credit III, LLC pursuant to Real Estate Term Loan 1, in the original principal amount of $4,200,000.00
    • Mortgage in favor of North Cascades National Bank pursuant to a Business Loan Agreement evidencing a commercial loan in the original principal amount of $1,400,000.00
• DIP Superpriority Claims: pursuant to section 364(c)(1) and subject to the Carve-Out, superpriority administrative expense claim status in each Borrower's case, with priority over any and all other claims against the Debtors (jointly and severally), now existing or hereafter arising, of any kind whatsoever, subject only to the Carve-Out

Carve-Out

• The DIP Liens, DIP Superpriority Claims, the Prepetition Liens, the Replacement Liens, and the Prepetition Superpriority Claims are subordinate only to the Carve Out, which equals the sum of:
  • All fees required to be paid to the Clerk of the Court and the U.S. Trustee under 28 U.S.C. section 1930(a), plus interest at the statutory rate
  • All reasonable and documented fees and expenses of a chapter 7 trustee under section 726(b), in an aggregate amount not to exceed $50,000
  • Allowed unpaid fees and expenses (the "Professional Fees") of Professional Persons retained by the Debtors under sections 327, 328, or 363, or by the Committee under sections 328 and 1103; provided that, upon a DIP Termination Event, Professional Fees incurred on and after the first business day following delivery of the Remedies Notice shall not exceed $250,000 in the aggregate
• No carve-out or other surcharge, lien, or charge shall be imposed against the BMO Collateral absent BMO's written consent

Milestones

• Adequate protection milestones (unless extended by BMO and the Prudential Secured Parties in writing); failure to satisfy any constitutes an immediate Event of Default not subject to any cure period:
  • Entry of a final adequate protection order in form and substance acceptable to BMO and the Prudential Secured Parties no later than July 2, 2026
  • Filing of a plan of reorganization and disclosure statement, or a motion to sell substantially all assets under section 363, no later than 90 days after the Petition Date (i.e., September 2, 2026)
  • Entry of an order confirming the Debtors' Plan or approving the Debtors' Sale Motion no later than 150 days after the Petition Date (i.e., November 1, 2026)
• DIP Facility bankruptcy milestones:
  • Entry of the interim order approving the DIP Facility no later than three business days after the Petition Date
  • Entry of the final DIP order no later than 35 calendar days after the Petition Date (i.e., July 9, 2026)
  • Filing of a bid procedures motion no later than 14 business days after the Petition Date, establishing a binding-bid deadline no later than 75 days after the Petition Date (i.e., August 18, 2026) and seeking approval of a stalking horse bid, if available, no later than 35 days prior to the bid deadline
  • Entry of the Bid Procedures Order no later than 35 days after the Petition Date
  • Commencement of an auction for all or substantially all of the Debtors' assets no later than 80 days after the Petition Date (i.e., August 23, 2026)
  • Entry of one or more sale orders approving the winning bid(s) no later than 85 days after the Petition Date (i.e., August 28, 2026)
  • Closing of the winning bid(s) no later than 120 days after the Petition Date (i.e., October 2, 2026)

Covenants

• Affirmative, negative, and other financial and operational covenants customary for transactions of this type, including:
  • Minimum cash balance in an amount to be mutually agreed (which may be funded from borrowed funds), effective upon entry of the Final DIP Order
  • Maximum capital expenditures
  • No dividends or other upstream payments or distributions, subject to specified exceptions
  • No change of control, except as permitted under applicable provisions of the Bankruptcy Code, including sections 363 and 1129
  • Maintenance of appropriate insurance, with the Lender added as additional insured, lender's loss payee, and/or mortgagee, as applicable
  • Limitations on additional debt, guarantees, and hedging arrangements, including subordination of all intercompany indebtedness
  • Limitations on liens and further negative pledges
  • Limitations on sales, transfers, and other dispositions of assets, except as permitted under the Bankruptcy Code
  • Limitations on loans and investments
  • Agreed-upon chapter 11 milestones, including confirmation of a plan of reorganization
  • Limitations on creating new subsidiaries or becoming a general partner in any partnership
• Cash flow milestone: the Borrowers shall be within 20% of their aggregate trailing rolling disbursements per the agreed DIP Budget (as approved by the Lender)

Events of Default and Termination

• Events of Default include payment defaults, covenant defaults, and representation or warranty breaches, in addition to other customary events
• A "DIP Termination Event" means:
  • The occurrence of the Repayment Date
  • Any material breach of the Interim Order by the Debtors or an Event of Default under the DIP Term Sheet, including failure to timely achieve the Chapter 11 Milestones, material breach of any covenant, misuse of DIP Facility proceeds, or dismissal or conversion of any of the Chapter 11 Cases or appointment of a trustee
  • The acceleration of the DIP Obligations or termination of the DIP Facility
• Upon any sale of DIP Collateral, the proceeds shall be used to pay the DIP Obligations unless otherwise agreed by the DIP Lender; the Debtors' acceptance of an offer to sell DIP Collateral that would not pay the DIP Obligations in full constitutes a DIP Termination Event
• Absent the DIP Lender's express written consent, it constitutes a DIP Termination Event if any Variance Report reflects a negative variance of greater than 20% in the aggregate trailing rolling disbursements for a given week under the Interim DIP Budget

Remedies

• Upon a DIP Termination Event and delivery of written notice (the "Remedies Notice") to the Notice Parties (the "DIP Termination Declaration Date"), and subject to expiration of the Remedies Notice Period, the automatic stay is modified to permit the DIP Lender to, among other things: terminate, reduce, or restrict any remaining commitments; declare all DIP Obligations immediately due and payable; terminate, restrict, or reduce the DIP Facility; charge default interest; and terminate, restrict, or revoke the Debtors' ability to use cash DIP Collateral
• Remedies Notice Period: the five-business-day period following the DIP Termination Declaration Date, during which the Debtors may seek an emergency hearing (at which the Court may only consider whether an Event of Default has occurred or is continuing)
  • During this period, the Debtors may not receive further DIP Facility advances without the DIP Lender's consent but may continue to use DIP Collateral in accordance with the Interim DIP Budget solely to preserve going-concern value or to contest the default in good faith
• Following expiration of the Remedies Notice Period, unless the Court has entered an order finding that an Event of Default has not occurred or is not continuing, the DIP Lender may exercise all rights and remedies, and the automatic stay is automatically lifted

Adequate Protection

• The Prudential Secured Parties and BMO (collectively, the "Prepetition Secured Lenders") are provided adequate protection, by their consent to entry of the Interim Order, in the form of Replacement Liens on their respective Prepetition Collateral and, as applicable, Permitted Senior Liens, solely to the extent of any diminution in the value of their interests in the Prepetition Collateral (the "Diminution in Value")
• The relative priority of the BMO and Prudential liens and claims remains subject to the Amended and Restated Intercreditor Agreement dated as of September 10, 2025

Prudential Secured Parties

• As adequate protection for the Prudential Prepetition Obligations (not less than $162,340,000 as of the Petition Date):
  • Prudential Adequate Protection Liens: valid, perfected replacement security interests in and liens upon all of the DIP Collateral, subject and subordinate only to the DIP Liens, the DIP Superpriority Claims, the Carve-Out, and, with respect to assets subject to Permitted Senior Liens, such Permitted Senior Liens
  • Prudential 507(b) Claims: allowed superpriority administrative expense claims under section 507(b), junior to the DIP Superpriority Claims and the Carve-Out, pari passu with the BMO Superpriority Claim, and senior to all other administrative expenses, payable from all prepetition and postpetition property (excluding avoidance action claims and causes of action, but including, subject to entry of the Final Order, any proceeds or property recovered from such avoidance actions)
  • The Prudential Secured Parties shall not receive or retain any payments in respect of the Prudential 507(b) Claims until the DIP Obligations have been indefeasibly paid in cash in full and all DIP Facility commitments have been terminated

BMO Bank, N.A.

• As adequate protection for the BMO Prepetition Obligations (BMO Prepetition Syndicate Obligations of not less than $56,456,440.61 and BMO Prepetition RE Obligations of not less than $6,569,000.08 as of the Petition Date):
  • BMO Adequate Protection Liens (the "BMO Replacement Liens"): valid, perfected replacement security interests in and liens upon all of the BMO Prepetition Collateral and BMO Postpetition Collateral of the same type, senior to all liens, claims, and interests in the BMO Senior Collateral; junior to the BMO Permitted Senior Liens, if any, and the DIP Liens on collateral other than the BMO Senior Collateral; and of equal priority to the BMO Prepetition Liens on the BMO Senior Collateral to the extent such liens continue in proceeds under section 552(b)
  • BMO Superpriority Claim: an allowed superpriority administrative expense claim under sections 503(b) and 507(b) if the adequate protection proves insufficient to protect against Diminution, subordinate to the DIP Superpriority Claim and pari passu with the Prudential 507(b) Claims
  • BMO Inventory AP Payments: payment to BMO of the net proceeds (gross receipts less customary, documented third-party sales/commission charges paid to non-insiders in the ordinary course and approved by BMO) generated from the packing and sale of the Debtors' produce inventory constituting BMO Inventory Collateral, with Apple House, AltaFresh d/b/a Chelan Fresh, and other applicable grower counterparties directed to continue remitting such net proceeds directly to BMO
  • Monthly adequate protection payments of $50,000 as compensation for the depreciation of BMO Collateral consisting of equipment, commencing July 1, 2026 and payable on the first calendar day of each month thereafter
  • Delivery of all interim, final, and modified DIP Budgets and other reports, and, beginning June 17, 2026, weekly separate identification of all activity relating to the BMO Inventory Collateral and balances in the BMO Segregated DIP Account
  • The BMO Prepetition Collateral consists of substantially all personal property of the BMO Obligors (accounts, chattel paper, instruments, inventory, equipment, deposit accounts, investment property, general intangibles, certain real estate, and proceeds), but excludes the "Excluded Crop" — i.e., crops now growing or hereafter grown, planted, or produced during the period beginning November 1, 2025 and thereafter, together with all accounts, cash, payment intangibles, and other products and proceeds of such crops
  • On or before July 2, 2026, BHPO shall obtain an order authorizing assumption under section 365 of the Apple House Packing Agreement (the Grower Contract dated February 11, 2026), and is authorized to and shall timely perform thereunder

Challenge Period

• The Debtors' Stipulations regarding the Prudential and BMO prepetition obligations and liens are binding on the Debtors and all parties in interest unless a Challenge is timely and properly filed by the following deadlines (the "Challenge Period"):
  • As to the Committee, 60 calendar days from the formation of the Committee
  • As to all other parties in interest, 60 calendar days after entry of the Interim Order
  • If the cases are converted to chapter 7 (or a trustee is appointed) prior to the end of the Challenge Period, the later of 60 calendar days after entry of the Interim Order or 30 calendar days after the trustee's appointment
  • As to BMO specifically, any Challenge to the BMO Prepetition Obligations or BMO Prepetition Liens must be commenced no later than 5:00 p.m. (Pacific Time) on the date 60 days after the Petition Date (the "BMO Challenge Deadline," i.e., August 3, 2026); if no committee is appointed and a trustee is appointed before that deadline, the trustee has the later of the BMO Challenge Deadline or 10 days after appointment
  • Any later date agreed to in writing by the Debtors, the DIP Lender, and the Prepetition Secured Lenders, or ordered by the Court for cause
• Absent a timely Challenge, the prepetition obligations and liens shall be deemed allowed, valid, perfected, enforceable, and non-avoidable for all purposes

Avoidance Actions

• The DIP Collateral excludes the Debtors' avoidance actions
• The Prepetition Secured Lenders' adequate protection claims have recourse to all prepetition and postpetition property, excluding claims and causes of action under sections 502(d), 544, 545, 547, 548, and 550 and any other avoidance actions, but including, subject to entry of the Final Order, any proceeds or property recovered from such avoidance actions

Waivers

• Section 506(c): no costs or expenses of administration shall be charged against or recovered from the DIP Collateral (including Cash Collateral) or the Prepetition Secured Lenders without their prior written consent, and the Debtors and their estates waive any right to surcharge the BMO Collateral; this waiver is without prejudice to any provisions of the Final Order
• Marshaling: the equitable doctrine of marshaling, or any similar doctrine, shall not apply to the DIP Lender, the Prepetition Secured Lenders, or their collateral
• Section 552(b): the "equities of the case" exception shall not apply to the Prepetition Secured Lenders, and the Debtors waive any right to assert that the equities of the case require a different result with respect to the BMO Collateral

Releases

• Effective upon entry of the Interim Order, and subject to the Challenge Period, the Debtors and their estates absolutely, unconditionally, and irrevocably release the Prudential Released Parties from all claims and causes of action relating to the Prudential Prepetition Loan Documents, Obligations, Liens, and Collateral and the related prepetition relationship, except for any claim or liability determined by final, non-appealable order to have resulted from the bad faith, fraud, gross negligence, or willful misconduct of such party
• The Debtors stipulate that no claims or causes of action exist against the Prudential Secured Parties in their capacity as such
• The Definitive Documents will include usual and customary non-monetary terms, including releases of claims and causes of action, acknowledgements, and findings

Reporting

• Weekly Variance Reports to the DIP Lender and Prepetition Secured Lenders, in the same format as the Interim DIP Budget, due by 5:00 p.m. (Pacific Time) beginning June 17, 2026 and continuing weekly until termination of the Interim Order or entry of a Final Order
• Cash flow variance reporting provided weekly and updated DIP Budgets provided monthly
• Financial reporting generally provided by debtors in possession to their secured lenders in chapter 11 cases, and any reporting provided to other parties in interest

Expenses

• The Debtors are responsible for the DIP Lender's reasonable and documented out-of-pocket fees and expenses incurred to perform due diligence and to negotiate, prepare, document, manage, and enforce the DIP Facility and the Definitive Documents, regardless of whether the transactions are consummated
• A deposit of $80,000 (the "Expense Deposit") is payable upon acceptance of the Term Sheet and used for transaction and diligence expenses; the DIP Lender is authorized to apply the Expense Deposit to such fees and expenses
• Reasonable and documented fees and expenses of the Lender's legal counsel shall be paid timely in cash regardless of the DIP Budget

Exclusivity

• The Borrowers agree to negotiate exclusively with the Lender with respect to DIP financing and will not solicit or accept competing DIP financing bids during the tenure of the Term Sheet
• The Borrowers may engage in discussions with any party that approaches them with a financing or other transaction more favorable to the Borrowers than the terms of the Term Sheet, and remain free to explore a sale transaction or a financing transaction in lieu of a chapter 11 filing

Confidentiality

• Prior to the Borrowers' commencement of a chapter 11 case, the Borrowers shall not disclose the terms or conditions of the Term Sheet or any information about the transaction, except to specified parties (including their advisors and existing secured mortgage and operating lenders), as approved in advance in writing by the Lender, or as required by applicable law or order

Governing Law

• The law of the State of New York governs, without regard to conflict of law principles, and the Definitive Documents will be governed by New York law
• The parties agree to waive trial by jury and to the exclusive jurisdiction of the Bankruptcy Court and, if it does not have or abstains from jurisdiction, the state and federal courts located in the Eastern District of Washington

Final Hearing

• The Final Hearing to consider entry of the Final Order and final approval of the DIP Facility is scheduled for July 1, 2026, at 10:00 a.m. (Pacific Time) at the U.S. Bankruptcy Court for the Eastern District of Washington
• Objections to entry of the proposed Final Order must be filed and served on the Notice Parties no later than June 25, 2026