Nina, Trish,
Thank you for the call last week. This email confirms our understanding of Trish's instruction, communicated on November 18, and provides a comprehensive status summary so that you have a clear picture of where things stand as we pause the engagement. I have organized this by topic for ease of reference.
**1. Confirmation of Pause**
We confirm receipt of Greenfield's instruction to pause all drafting and negotiation work on the proposed $80,000,000 senior secured asset-based revolving credit facility (Calderwood & Harkness Matter No. 1020-00001), with Heartland Commerce Bank, N.A. serving as Administrative Agent. We understand that this pause is prompted by Prairie National Bank, N.A.'s delivery on November 14, 2022 of a renewal proposal for a $65,000,000 revolving credit facility on what we understand to be improved terms relative to the existing PNB arrangement.
We fully respect and support your evaluation of the PNB renewal proposal. To the extent it would be useful for us to assist in reviewing or comparing the PNB terms, we stand ready to do so.
**2. Status of Credit Agreement Negotiations**
C&H delivered our third markup of the Credit Agreement on November 1, 2022, redlining KBW's third draft dated October 28, 2022. That markup was accompanied by an issues list identifying the remaining open items, which at the time of the pause included the following:
- Definition and scope of "Material Adverse Change" (MAC) - Cure rights mechanics - Minimum excess availability covenant ($5,000,000 at all times) - Timing for delivery of insurance endorsements - Distribution covenant (trailing twelve-month FCCR test of 1.15:1.00; pro forma excess availability requirement of ≥ 20% of the borrowing base) - Change of control provision (51% Lindstrom Family Trust ownership threshold at the Holdings level) - Capital expenditure limitation ($8,000,000 per fiscal year with a 50% carryforward of unused amounts, subject to a $12,000,000 cap in any single fiscal year)
Richard Whitfield and Lauren Chisholm at KBW had not yet responded to our third markup, and no fourth draft was in circulation. The third negotiation call, held on November 10, 2022, covered collateral-related matters — including DACAs, insurance assignments, and preliminary findings from the Pryor & Associates field examination — but did not resolve the remaining open Credit Agreement points listed above.
**3. Status of Ancillary Loan Documents**
On November 4, 2022, C&H delivered initial drafts of the following ancillary documents:
- **Security Agreement** — granting a first-priority security interest in substantially all personal property of Greenfield Agricultural Products, Inc., Greenfield Grain Storage LLC, and Greenfield Crop Inputs Inc. to HCB as Collateral Agent - **Guaranty Agreement** — by Greenfield Holdings Corp., GGS, and GCI in favor of Agent and Lenders - **Pledge Agreement** — covering 100% of the membership interests in GGS and 100% of the capital stock of GCI - **Form Mortgage (Iowa)** — covering Polk County and eight additional Iowa counties (grain elevator sites and headquarters) - **Form Mortgage (Illinois)** — covering McLean County (GCI's Bloomington distribution center at 780 Commerce Drive) - **Form Deposit Account Control Agreement** - **Form Assignment of Insurance** — assigning crop insurance and property/casualty proceeds under Northstar Mutual Insurance Company policies, with Redwood Insurance Group, Inc. as broker
We were in the process of preparing a third-round markup of these ancillary documents to conform them to the evolving Credit Agreement terms. That markup is partially completed and has been set aside in its current state. KBW had not yet delivered comments on our initial drafts.
**4. Status of Diligence and Collateral Work**
The following diligence and collateral work streams had been completed or were substantially advanced at the time of the pause:
- **UCC search summary and lien analysis memorandum** — completed. The memorandum identifies existing PNB UCC filings (Iowa Secretary of State Filing Nos. 2018-0041729 and 2018-0041730, both filed April 2, 2018) and analyzes the termination and release requirements in connection with the contemplated payoff of the PNB facility. - **Collateral description and perfection memorandum** — completed. This memorandum outlines all required perfection steps, including UCC-1 filings in Iowa, Illinois, Indiana, and Delaware; mortgage recordings; DACA execution; insurance endorsements; and delivery of pledged equity certificates. - **Real property collateral schedule** — completed. The schedule covers 14 grain elevator sites and 3 distribution centers with an aggregate appraised value of $64,800,000. - **Insurance compliance checklist** — completed. Includes a gap analysis measured against the proposed Credit Agreement insurance requirements. - **Entity authorization and good standing memorandum** — completed for all Loan Parties (GAP, Holdings, GGS, and GCI). - **Pryor & Associates field examination** — substantially completed on November 7, 2022. We have not yet received the final written report from Pryor, although preliminary findings were discussed on the November 10 call. - **Preliminary closing checklist** — last updated November 10, 2022. Most items were reflected as partially complete or in progress. - **Borrower's counsel legal opinion outline and draft officer's certificate** — prepared but remain in draft form.
**5. Implications for HCB Commitment and Upfront Fee Obligations**
A few practical points worth noting as you evaluate your path forward:
Under the agreed term sheet dated September 9, 2022, HCB's commitment — along with the syndicate commitments of Meridian Agricultural Credit Corporation ($25,000,000) and Tallgrass Capital Fund II, LP ($15,000,000) — was subject to completion of satisfactory documentation and satisfaction of closing conditions. No binding commitment to fund exists absent executed definitive documentation. The term sheet does not contain a "break-up" or "work" fee payable by Greenfield. The upfront fee of $400,000 (0.50% of the $80,000,000 total commitment) was structured as payable at closing and therefore has not been triggered.
That said, we would recommend that Greenfield promptly communicate the pause directly to Gregory Thorn at HCB in order to maintain the relationship in good standing. This is particularly important given the possibility that Greenfield may wish to revisit the HCB facility, or a similar syndicated structure, in the future. HCB has incurred its own costs during this process — including KBW's legal fees and the Pryor & Associates field examination expenses. While those costs are not Greenfield's direct obligation absent a closing, maintaining transparency with HCB is advisable from a relationship standpoint.
**6. Calderwood & Harkness Billing and Engagement Status**
Our work on the matter is paused effective today. By way of summary:
- Total fees incurred through the pause date are approximately **$247,830** (reflecting approximately 370 hours across the engagement team). - Of that amount, **$198,264** has been collected to date. - The remaining balance of **$49,566** is outstanding. - A final invoice and detailed billing summary will follow under separate cover.
The engagement letter dated August 29, 2022 remains in effect. We will place the matter in dormant status unless and until we receive further instruction from Greenfield. All work product — including markups, memoranda, diligence materials, and the closing checklist — will be preserved in our files and can be reactivated promptly if Greenfield elects to resume the HCB facility or pursue a similar transaction.
**7. Next Steps and Availability**
Nina, Trish — it has been a pleasure working with you and the broader Greenfield team on this matter. Sophie and I remain available to assist you in any way as you evaluate the PNB renewal terms or consider other financing alternatives. If it would be helpful, we are happy to prepare a comparative analysis of PNB's renewed proposal against the HCB terms — you may recall the comparative term analysis memo we prepared earlier in the process, and we could build on that framework.
Wishing you and the team well as you wind down the harvest season. Please do not hesitate to reach out if there is anything we can do.
Best regards,
**Ian Blackwood** Partner, Banking & Finance Calderwood & Harkness LLP 150 North Michigan Avenue, Suite 3600 Chicago, Illinois 60601 T: (312) 555-4280 iblackwood@calderwoodharkness.com
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