PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP 150 North Michigan Avenue, Suite 3600 Chicago, Illinois 60601
INTERNAL MEMORANDUM
TO: Ian Blackwood, Responsible Partner, Banking & Finance Sophie Tremblay, Lead Associate, Banking & Finance
FROM: Daniel Obi, Working Associate, Banking & Finance
DATE: November 4, 2022
RE: Collateral Description and Perfection Steps — Proposed $80,000,000 Senior Secured Asset-Based Revolving Credit Facility — Greenfield Agricultural Partners LLC
MATTER NO.: 1020-00001
BILLING CODE: GAPABF-2022
I. PURPOSE AND SUMMARY
The purpose of this memorandum is to outline all actions required to perfect the first-priority security interest of Heartland Commerce Bank, National Association ("HCB"), acting as Collateral Agent for the benefit of the Lenders (HCB, Meridian Agricultural Credit Corporation, and Tallgrass Capital Fund II, LP), in the collateral package securing the proposed $80,000,000 senior secured asset-based revolving credit facility (the "Facility") to be extended to Greenfield Agricultural Partners LLC ("GAP").
Borrower. The Borrower under the Facility is Greenfield Agricultural Partners LLC, an Iowa limited liability company, EIN 47-3918265, Iowa Secretary of State Filing No. 622847, with its principal place of business and headquarters located at 4100 Grand Prairie Boulevard, Suite 300, Des Moines, Iowa 50309.
Guarantors / Grantors. The obligations of GAP under the Facility will be guaranteed by, and secured by liens on the assets of, the following entities (each a "Guarantor" and, together with GAP, the "Loan Parties" or "Grantors"):
• Greenfield Holdings Corp. ("Holdings"), a Delaware corporation, EIN 82-5047391, Delaware Secretary of State File No. 7291538, with its registered agent address at 1209 Orange Street, Wilmington, Delaware 19801. Holdings is the sole member and parent entity of GAP and serves as a guarantor of the obligations under the Facility.
• Greenfield Grain Storage LLC ("GGS"), an Iowa limited liability company, EIN 84-2093417, with its principal place of business at 4100 Grand Prairie Boulevard, Suite 310, Des Moines, Iowa 50309. GGS is a wholly owned subsidiary of GAP and operates the grain elevator facilities that constitute a significant portion of the collateral base.
• Greenfield Crop Inputs Inc. ("GCI"), an Illinois corporation, EIN 37-6182049, Illinois Secretary of State File No. 08294731, with its principal place of business at 780 Commerce Drive, Bloomington, Illinois 61701. GCI is a wholly owned subsidiary of GAP and operates the crop-input distribution business.
Collateral Agent. HCB, in its capacity as Collateral Agent, is located at 200 South Wacker Drive, 40th Floor, Chicago, Illinois 60606. HCB acts as Collateral Agent on behalf of itself and the other Lenders (Meridian Agricultural Credit Corporation and Tallgrass Capital Fund II, LP).
Refinancing of Existing PNB Facility. The existing $55,000,000 revolving credit facility with Prairie National Bank, N.A. ("PNB"), entered into pursuant to a Revolving Credit Agreement dated April 1, 2018, is to be refinanced and repaid in full at or prior to the closing of the Facility. As of September 30, 2022, the outstanding balance under the existing PNB facility was approximately $38,750,000. The existing PNB facility has a scheduled maturity date of March 31, 2023. All existing PNB liens — including UCC-1 financing statements filed with the Iowa Secretary of State and mortgages recorded in ten (10) county recording jurisdictions across Iowa and Illinois — must be released and terminated as a condition precedent to the closing of the Facility. Receipt by HCB of a payoff letter from PNB confirming payoff amounts and release mechanics is a closing condition.
Summary of Perfection Mechanisms. The perfection of HCB's first-priority security interest in the collateral package securing the Facility will require the following actions:
(a) filing of UCC-1 financing statements with the applicable state filing offices for each Grantor;
(b) recording of mortgage instruments in each county in which mortgaged real property is located;
(c) execution and delivery of deposit account control agreements ("DACAs") with respect to all deposit accounts of the Loan Parties;
(d) endorsement of insurance policies naming HCB as loss payee, additional insured, and mortgagee, as applicable, and execution and delivery of an assignment of insurance proceeds;
(e) delivery of pledged equity interests (stock certificates and/or membership interest certificates, as applicable), together with executed stock powers and membership interest powers in blank, to HCB as Collateral Agent; and
(f) such additional filings and actions as may be required for specific collateral types, including fixtures filings, motor vehicle title lien notations, intellectual property filings with the U.S. Patent and Trademark Office, and control agreements over commodity accounts.
Organization of this Memorandum. This memorandum is organized as follows: Section II provides an overview of the collateral package. Section III sets forth a detailed description of each category of collateral. Section IV addresses existing liens and the release and termination requirements applicable to the PNB liens. Sections V through IX describe the specific perfection actions required for each type of collateral — personal property (UCC filings), real property (mortgage recordings), deposit accounts (DACAs), insurance (endorsements and assignments), and pledged equity interests. Section X addresses additional perfection considerations, including fixtures filings, motor vehicle title liens, intellectual property filings, commodity accounts, and letter-of-credit rights. Section XI provides a comprehensive pre-closing action item checklist with responsible parties and target dates. Sections XII and XIII address coordination with lender's counsel and open items requiring follow-up. Section XIV provides a cross-reference list of related transaction documents.
II. OVERVIEW OF COLLATERAL PACKAGE
The collateral package securing the Facility is described in the following principal transaction documents, each in draft form as of the date of this memorandum:
• Security Agreement — Calderwood & Harkness LLP draft dated November 4, 2022, to be executed by each Grantor (GAP, GGS, and GCI) in favor of HCB as Collateral Agent;
• Pledge Agreement — Calderwood & Harkness LLP draft dated November 4, 2022, to be executed by GAP in favor of HCB as Collateral Agent, governing the pledge of equity interests in GGS and GCI;
• Mortgage, Assignment of Leases and Rents, and Security Agreement — Form (Iowa) — Calderwood & Harkness LLP draft dated November 4, 2022, to be executed by GAP and/or GGS, as applicable, in favor of HCB as Collateral Agent;
• Mortgage, Assignment of Leases and Rents, and Security Agreement — Form (Illinois) — Calderwood & Harkness LLP draft dated November 4, 2022, to be executed by GCI in favor of HCB as Collateral Agent;
• Deposit Account Control Agreement — Form — Calderwood & Harkness LLP draft dated November 4, 2022, to be executed among each applicable Loan Party (as account holder), the applicable depository bank (PNB or HCB), and HCB as Collateral Agent; and
• Assignment of Insurance — Form — Calderwood & Harkness LLP draft dated November 4, 2022, to be executed by each applicable Loan Party in favor of HCB as Collateral Agent.
Scope of Security Interest. The Security Agreement grants to HCB, as Collateral Agent, a first-priority perfected security interest in substantially all assets of GAP and each Subsidiary Guarantor (GGS and GCI). The security interest extends to all existing and after-acquired personal property of each Grantor, subject to certain customary excluded assets as set forth in the Security Agreement (which exclusions are not expected to be material to the collateral package). Holdings grants a similar security interest in its assets under the Security Agreement.
Equity Pledge. Under the Pledge Agreement, GAP pledges to HCB as Collateral Agent (a) one hundred percent (100%) of the membership interests in GGS held by GAP, and (b) one hundred percent (100%) of the issued and outstanding shares of capital stock in GCI held by GAP. The pledge of equity interests in the Borrower's subsidiaries provides the Collateral Agent with the ability to exercise remedies at the entity level, including the right to foreclose upon and dispose of the equity interests in GGS and GCI upon the occurrence and during the continuance of an Event of Default.
Real Property Liens. The mortgage instruments grant to HCB as Collateral Agent first-priority mortgage liens on all owned real property of the Loan Parties, consisting of fourteen (14) grain elevator sites, three (3) regional distribution centers, and the Borrower's headquarters facility (which is co-located with GGS's headquarters). The aggregate appraised value of the mortgaged real property is approximately $64,800,000, based on appraisals conducted in connection with the Facility. The mortgage instruments also include an assignment of rents and leases and a security agreement covering fixtures located on the mortgaged premises.
Insurance Assignments. The Assignment of Insurance assigns to HCB as Collateral Agent the right to receive crop insurance proceeds under policies issued by Northstar Mutual Insurance Company, as well as property/casualty insurance proceeds and business interruption insurance proceeds, in each case to the extent relating to the collateral. Insurance endorsements naming HCB as loss payee, additional insured, and mortgagee are required as conditions precedent to closing.
III. DETAILED COLLATERAL DESCRIPTION BY CATEGORY
Set forth below is a detailed description of each category of collateral included in the collateral package, together with relevant information regarding the nature of the collateral, applicable advance rates under the borrowing base, and estimated values. Unless otherwise indicated, the descriptions below correspond to the collateral descriptions set forth in the draft Security Agreement.
A. Accounts Receivable
The collateral includes all accounts, payment intangibles, and rights to payment of each Grantor (GAP, GGS, and GCI), whether now owned or hereafter acquired, and all proceeds thereof. This category encompasses all trade receivables arising from the ordinary course business operations of the Loan Parties, including:
(a) receivables arising from GCI's crop-input distribution business, including sales of seed, fertilizer, and crop protection chemicals to farmers, cooperatives, and other agricultural end-users;
(b) receivables arising from GAP's and GGS's grain sales operations, including receivables from grain merchandising, elevator operations, and bulk commodity sales to food processors, ethanol plants, and export channels; and
(c) receivables arising from GAP's contract farming operations, including amounts due under production contracts and custom farming agreements.
GAP's operations span three states — Iowa, Illinois, and Indiana — and receivables originate in all three states. The geographic distribution of receivables is relevant to the determination of proper UCC filing jurisdictions and the scope of lien searches, although the central filing system under Article 9 of the Uniform Commercial Code provides that the filing jurisdiction for UCC-1 financing statements is determined by the location of the debtor (i.e., the debtor's jurisdiction of organization) rather than the location of the receivables.
Under the proposed borrowing base formula, eligible accounts receivable are advanced at a rate of eighty-five percent (85%) of their face amount, subject to customary eligibility criteria (including concentration limits, aging requirements, cross-aging provisions, and exclusions for foreign receivables, affiliate receivables, and disputed or contra accounts). Based on information provided by GAP and the preliminary field examination conducted by Pryor & Associates LLC, the estimated eligible accounts receivable are as follows:
• At peak (October 2022): approximately $42,300,000
• At trough (April 2023): approximately $19,700,000
The significant seasonal variation in accounts receivable reflects the harvest-driven business cycle of GAP's grain sales operations, with peak receivable generation occurring during the fall harvest season (September through November) and lower receivable levels during the spring planting season.
B. Inventory
The collateral includes all inventory of each Grantor, whether now owned or hereafter acquired, including all raw materials, work-in-process, finished goods, and goods held for sale or lease, and all proceeds and products thereof. Inventory is further subcategorized as follows for borrowing base purposes:
1. Crop Inventory (Harvested Grain)
This subcategory includes all harvested grain (corn, soybeans, and specialty grains, including but not limited to oats, grain sorghum, and identity-preserved varieties) held in owned or leased grain elevators operated by GGS. GGS currently operates fourteen (14) grain elevator facilities across Iowa, with aggregate licensed storage capacity in excess of 30,000,000 bushels.
Crop inventory is a borrowing base component with an advance rate of sixty-five percent (65%) of net orderly liquidation value ("NOLV") as determined by Pryor & Associates LLC, the independent field examiner and appraiser engaged by HCB for purposes of the Facility. The NOLV determination takes into account prevailing commodity market prices (based on Chicago Board of Trade settlement prices, less applicable local basis), quality and condition of stored grain, storage and handling costs, and estimated time to liquidate the inventory in an orderly manner.
Estimated eligible crop inventory values are as follows:
• NOLV at peak (September–November): approximately $78,100,000
• NOLV at trough (March–April): approximately $8,200,000
Peak seasonal inventory overall (including ineligible inventory) is estimated at $125,000,000 to $145,000,000 during the September through November harvest period, reflecting the massive influx of grain from farmer deliveries during harvest. This extreme seasonality is characteristic of Midwestern grain elevator operations and is a primary driver of the revolving nature of the Facility.
2. Crop-Input Inventory
This subcategory includes all seed, fertilizer (including anhydrous ammonia, urea, and blended fertilizer products), and crop protection chemicals (herbicides, insecticides, and fungicides) held by GCI at its three (3) regional distribution centers and by GAP at various field locations. Crop-input inventory follows an inverse seasonal pattern relative to crop inventory — inputs are stockpiled during the late fall and winter months in advance of the spring planting season (March through May) and are drawn down as they are sold and applied during planting.
Crop-input inventory is a borrowing base component with an advance rate of seventy percent (70%) of the lower of cost or market value. Estimated eligible crop-input inventory values are as follows:
• At peak (February–March, ahead of planting season): approximately $31,600,000
• At trough (July–August, after planting season application): approximately $18,400,000
The inverse seasonal pattern of crop-input inventory relative to crop inventory provides a degree of natural diversification in the borrowing base, partially offsetting the seasonal trough in crop inventory availability during the spring months.
3. Grain Warehouse Receipts
This subcategory includes all warehouse receipts evidencing grain stored at GAP/GGS-operated elevator facilities, whether issued by GAP, GGS, or any related entity in the capacity of a licensed warehouse operator. Warehouse receipts represent obligations of the warehouse operator to deliver specified quantities and grades of grain to the holder of the receipt and are a standard instrument in the grain storage industry.
Grain warehouse receipts are a borrowing base component with an advance rate of eighty percent (80%) of market value (determined by reference to the Chicago Board of Trade ("CBOT") settlement price for the applicable commodity, less the applicable local basis differential). Estimated eligible warehouse receipt values are as follows:
• At peak (September–November): approximately $12,000,000
• At trough (March–April): approximately $2,100,000
Warehouse receipts represent a distinct category from crop inventory because they may be held by third-party depositors (farmers who have deposited grain with the elevator for storage) rather than by GAP or GGS as owners of the grain. Only warehouse receipts that represent grain owned by a Loan Party (or receipts pledged by third-party depositors under separate arrangements, if applicable) would be eligible for inclusion in the borrowing base. The field examination by Pryor & Associates LLC has addressed the proper categorization and ownership of warehouse receipts.
C. Equipment
The collateral includes all equipment of each Grantor, whether now owned or hereafter acquired, including, without limitation:
(a) farming equipment, including tractors, combines, planters, sprayers, tillage equipment, and related attachments and implements;
(b) grain handling equipment, including grain dryers, conveyors, augers, scales, and sampling equipment;
(c) elevator machinery, including bucket elevators, grain legs, distributors, spouting systems, and aeration equipment;
(d) rolling stock, including trucks, trailers, semi-trailers, and other transportation equipment used in grain hauling and crop-input distribution operations; and
(e) distribution center equipment, including forklifts, pallet racking systems, loading dock equipment, and warehouse management technology.
Equipment is not a component of the borrowing base under the proposed Facility structure; however, it is included in the "all assets" lien granted under the Security Agreement. The inclusion of equipment in the collateral package provides the Collateral Agent with additional recovery value in a liquidation scenario and ensures that the Collateral Agent's security interest extends to all tangible personal property of the Grantors.
Certain items of equipment — particularly grain handling equipment and elevator machinery that is permanently affixed to real property — may constitute "fixtures" under applicable state law. The perfection implications of fixture collateral are discussed in Section X.A below.
D. Deposit Accounts
The collateral includes all deposit accounts of each Grantor, whether now maintained or hereafter opened, including operating accounts, payroll accounts, tax escrow accounts, reserve accounts, and any other demand deposit, savings, or similar accounts. All deposit accounts are subject to deposit account control agreements ("DACAs") as described in Section VII of this memorandum.
The Loan Parties currently maintain their primary operating accounts at PNB in Des Moines, Iowa. It is anticipated that certain accounts will be transitioned to HCB following the closing of the Facility, and DACAs will be required for both PNB-held accounts (if any are retained) and HCB-held accounts. The specific accounts, account numbers, and approximate balances are to be provided by Trish Calloway, Chief Financial Officer of GAP, and are addressed further in Section VII below.
E. General Intangibles, Instruments, Chattel Paper, and Supporting Obligations
The collateral includes all of the following categories of personal property of each Grantor:
(a) General Intangibles. All general intangibles, whether now owned or hereafter acquired, including contract rights (including rights under supply agreements, distribution agreements, and customer contracts), intellectual property (including trademarks, trade names, service marks, patents, copyrights, trade secrets, and domain names), licenses, permits (including grain warehouse operator licenses, pesticide applicator permits, and environmental permits), goodwill, and all other intangible personal property.
(b) Instruments. All instruments, whether now held or hereafter acquired, including promissory notes, drafts, and any other writing evidencing a right to payment of money.
(c) Chattel Paper. All chattel paper, whether tangible or electronic, including any writing that evidences both a monetary obligation and a security interest in or a lease of specific goods.
(d) Letter-of-Credit Rights. All letter-of-credit rights, whether now owned or hereafter acquired, including rights to payment or performance under any letter of credit of which any Grantor is a beneficiary.
(e) Supporting Obligations. All supporting obligations, whether now existing or hereafter arising, including guarantees, letters of credit, and other secondary obligations that support the payment or performance of any of the foregoing collateral.
(f) Commercial Tort Claims. All commercial tort claims, to the extent identified and specifically described in a supplement to the Security Agreement. The Security Agreement requires each Grantor to promptly notify the Collateral Agent of any commercial tort claim in excess of $100,000 and to execute a supplement to the Security Agreement describing such claim. As of the date of this memorandum, no commercial tort claims have been identified by any Grantor.
F. Proceeds
The collateral includes all proceeds (both cash and non-cash) of all of the foregoing collateral categories, including all insurance proceeds, and all products of inventory. The inclusion of proceeds ensures that the Collateral Agent's security interest continues in any property received by a Grantor upon the sale, exchange, collection, or other disposition of collateral, including money, checks, deposit accounts, general intangibles, and any other property.
G. Equity Interests (Pledge Agreement)
The following equity interests are pledged under the Pledge Agreement dated November 4, 2022:
(a) GGS Membership Interests. One hundred percent (100%) of the membership interests in Greenfield Grain Storage LLC held by GAP. GGS is a wholly owned subsidiary of GAP, and the pledge of these interests is essential to ensuring the Collateral Agent's ability to exercise entity-level remedies with respect to the grain storage operations and the real property held by GGS.
(b) GCI Capital Stock. One hundred percent (100%) of the issued and outstanding shares of capital stock in Greenfield Crop Inputs Inc. held by GAP. GCI is a wholly owned subsidiary of GAP, and the pledge of these shares provides the Collateral Agent with entity-level control over the crop-input distribution operations.
The pledge of equity interests is governed by the separate Pledge Agreement and is subject to the perfection requirements described in Section IX of this memorandum. Note that Holdings is a guarantor under the Facility, and its assets are subject to the security interest granted under the Security Agreement, but Holdings' equity interest in GAP is not directly pledged under the Pledge Agreement. Rather, Holdings provides an upstream guaranty of GAP's obligations, and the security interest in Holdings' assets (including its membership interest in GAP) is covered by the "all assets" collateral description in the UCC-1 financing statement to be filed against Holdings in Delaware.
H. Real Property (Mortgage Collateral)
The mortgage instruments grant to HCB as Collateral Agent first-priority mortgage liens on all owned real property of the Loan Parties. The mortgaged real property consists of the following:
(a) GAP Headquarters. 4100 Grand Prairie Boulevard, Suite 300, Des Moines, Iowa 50309, located in Polk County, Iowa. This property serves as the principal executive offices and administrative headquarters of GAP.
(b) GGS Headquarters. 4100 Grand Prairie Boulevard, Suite 310, Des Moines, Iowa 50309, located in Polk County, Iowa. GGS's headquarters are co-located with GAP at the same office complex, and the GGS headquarters space is a separate parcel or unit within the same building.
(c) Grain Elevator Sites. Fourteen (14) grain elevator facilities owned by GGS, located across Iowa in nine (9) counties total (including Polk County). The grain elevator sites are the core operational assets of GGS and represent the majority of the appraised value of the real property collateral.
(d) Regional Distribution Centers. Three (3) regional distribution centers, consisting of two (2) facilities in Iowa (owned by GAP and/or GGS, as applicable) and one (1) facility in Illinois owned by GCI, located at 780 Commerce Drive, Bloomington, Illinois 61701, in McLean County, Illinois.
The aggregate appraised value of all mortgaged real property is approximately $64,800,000, based on appraisals conducted in connection with the Facility. A separate Real Property Collateral Schedule (prepared by Daniel Obi) lists all seventeen (17) properties with their respective addresses, county recording jurisdictions, parcel identification numbers, and individual appraised values. The Real Property Collateral Schedule is in the process of being finalized and will be circulated upon completion.
The mortgage instruments include an assignment of rents and leases, which assigns to the Collateral Agent all right, title, and interest of the applicable mortgagor in and to all leases, rental agreements, and tenancies affecting the mortgaged premises, together with all rents, issues, and profits arising therefrom. This assignment provides the Collateral Agent with an additional source of recovery and the ability to collect rents directly from tenants following the occurrence and during the continuance of an Event of Default.
I. Insurance Proceeds (Assignment of Insurance)
The collateral package includes an assignment of insurance proceeds pursuant to the Assignment of Insurance prepared by Calderwood & Harkness LLP. The assignment covers the following categories of insurance proceeds:
(a) Crop Insurance Proceeds. All proceeds under crop insurance policies issued by Northstar Mutual Insurance Company, including crop revenue coverage, crop-hail insurance, and any other agricultural insurance products maintained by the Loan Parties.
(b) Property/Casualty Insurance Proceeds. All proceeds under property insurance and casualty insurance policies covering the personal property and real property of the Loan Parties, including coverage for fire, flood, windstorm, and other covered perils.
(c) Business Interruption Insurance Proceeds. All proceeds under business interruption insurance policies maintained by the Loan Parties.
The insurance program for the Loan Parties is arranged through Redwood Insurance Group, Inc. (broker), with Brian Templeton serving as the Account Executive. Redwood's office is located at 2500 Ingersoll Avenue, Des Moines, Iowa 50312. The primary carrier for the Loan Parties' insurance program is Northstar Mutual Insurance Company, located at 400 First Avenue NE, Cedar Rapids, Iowa 52401. The specific endorsements and actions required in connection with the insurance assignment are described in Section VIII of this memorandum.
IV. EXISTING LIENS — RELEASE AND TERMINATION REQUIREMENTS
As a condition precedent to the closing of the Facility and the establishment of HCB's first-priority liens on the collateral, all existing liens in favor of PNB must be released and terminated. The following subsections describe the existing PNB liens and the actions required to effect their release.
A. PNB UCC Financing Statements
PNB currently holds perfected security interests in the personal property of GAP, evidenced by the following UCC-1 financing statements filed with the Iowa Secretary of State:
(a) Filing No. 2018-0041729, filed April 2, 2018; and
(b) Filing No. 2018-0041730, filed April 2, 2018.
Both filings were made in connection with the existing $55,000,000 Revolving Credit Agreement dated April 1, 2018, between GAP (as borrower) and PNB (as lender and secured party). The outstanding balance under the existing PNB facility as of September 30, 2022, was approximately $38,750,000, and the facility has a scheduled maturity date of March 31, 2023.
Action Required. Calderwood & Harkness must coordinate with PNB to obtain UCC-3 termination statements for both of the above-referenced filings. The UCC-3 termination statements must be filed with the Iowa Secretary of State at or prior to the closing of the Facility, and evidence of filing must be delivered to HCB as a closing condition. The termination of these filings will be contingent upon the simultaneous payoff of all outstanding amounts under the existing PNB facility, and the mechanics of payoff and termination will be coordinated through a payoff letter to be delivered by PNB.
The primary contact at PNB for all matters relating to the refinancing, payoff, and release of existing liens is Janet Braddock, Senior Vice President, Agricultural Banking, Prairie National Bank, N.A., 600 Locust Street, Suite 1500, Des Moines, Iowa 50309. An initial conversation with Ms. Braddock regarding payoff and release logistics took place on October 28, 2022, and she has indicated PNB's willingness to cooperate with the refinancing process.
B. PNB Mortgages
PNB also holds first-priority mortgage liens on substantially all of the owned real property of the Loan Parties, as security for the existing $55,000,000 revolving credit facility. The existing PNB mortgages are recorded in the following jurisdictions:
(a) Polk County, Iowa — covering the GAP/GGS headquarters at 4100 Grand Prairie Boulevard, Des Moines, Iowa;
(b) McLean County, Illinois — covering the GCI distribution center at 780 Commerce Drive, Bloomington, Illinois; and
(c) Eight (8) additional Iowa counties — covering the grain elevator sites and distribution center properties owned by GGS and GAP throughout Iowa.
In total, existing PNB mortgages are recorded in ten (10) county recording jurisdictions (nine Iowa counties and one Illinois county).
Action Required. Calderwood & Harkness must coordinate with PNB to obtain mortgage releases and/or mortgage satisfactions for each of the existing PNB mortgages, in form satisfactory for recording in each applicable county. The mortgage releases must be executed by an authorized officer of PNB, acknowledged before a notary public, and delivered to Calderwood & Harkness for recording in each applicable county at or prior to the closing of the Facility. The recording of the PNB mortgage releases must occur prior to or simultaneously with the recording of the new mortgage instruments in favor of HCB as Collateral Agent, in order to ensure that HCB obtains first-priority mortgage liens on the subject properties.
A payoff letter from PNB, specifying the exact payoff amount (including principal, accrued interest, fees, and any breakage or prepayment amounts), per diem interest, wire instructions, and the commitment by PNB to deliver executed UCC-3 termination statements and mortgage releases upon receipt of payoff funds, must be delivered to HCB as a closing condition. Calderwood & Harkness will coordinate with Ms. Braddock at PNB to request the payoff letter in advance of the anticipated closing date.
C. Additional Search Considerations
A comprehensive UCC, federal and state tax lien, and judgment search has been conducted for each Loan Party in its applicable jurisdictions of organization and operation. The results of these searches are set forth in the separate UCC Search Summary and Lien Analysis Memorandum (prepared by Daniel Obi), which will be circulated under separate cover upon finalization.
The search jurisdictions include:
• Iowa: UCC searches with the Iowa Secretary of State; federal and state tax lien searches; judgment searches in Polk County and each county in which real property collateral is located.
• Illinois: UCC searches with the Illinois Secretary of State; federal and state tax lien searches; judgment searches in McLean County.
• Indiana: UCC searches with the Indiana Secretary of State (although no separate Indiana entity exists, GAP operates in Indiana and Indiana-specific searches are prudent to identify any potential judgment or tax liens against GAP's Indiana operations); federal and state tax lien searches.
• Delaware: UCC searches with the Delaware Secretary of State (for Holdings); federal tax lien searches in the U.S. District Court for the District of Delaware; judgment searches in New Castle County.
Based on preliminary search results, no liens of record have been identified other than the PNB liens described above and certain liens that are expected to qualify as "Permitted Liens" under the proposed Credit Agreement (including statutory liens for taxes not yet due and payable, mechanics' liens, and carriers' liens arising in the ordinary course of business). The final search results and analysis will be set forth in the separate Lien Analysis Memorandum.
V. PERFECTION ACTIONS — PERSONAL PROPERTY (UCC FILINGS)
A. UCC-1 Financing Statement Filings
Under Article 9 of the Uniform Commercial Code, the proper filing office for a UCC-1 financing statement is determined by the location of the debtor. For a debtor that is a "registered organization" (such as a corporation or limited liability company organized under state law), the debtor is located in the state under whose law the organization is organized. Accordingly, the UCC-1 filing jurisdictions for each Grantor are as follows:
1. Greenfield Agricultural Partners LLC (Iowa LLC)
Filing Jurisdiction: Iowa Secretary of State, UCC Division, Lucas State Office Building, 321 East 12th Street, Des Moines, Iowa 50319.
Debtor Name: Greenfield Agricultural Partners LLC
Debtor Address: 4100 Grand Prairie Boulevard, Suite 300, Des Moines, Iowa 50309
Secured Party: Heartland Commerce Bank, National Association, as Collateral Agent
Secured Party Address: 200 South Wacker Drive, 40th Floor, Chicago, Illinois 60606
Collateral Description: All assets — broad-form collateral description referencing the Security Agreement dated as of the closing date. The collateral description on the UCC-1 financing statement will use the "all assets" super-generic description permitted under Iowa UCC § 554.9504, which provides that a financing statement sufficiently indicates the collateral it covers if it provides a description of the collateral pursuant to Section 554.9108 or indicates that the financing statement covers all assets or all personal property of the debtor.
Important Note: The debtor name on the UCC-1 financing statement must exactly match the legal name of the debtor as it appears on the public organic record filed with the Iowa Secretary of State — specifically, the Articles of Organization filed under Iowa SOS Filing No. 622847. Any deviation in the debtor name (including differences in capitalization, punctuation, spacing, or abbreviations) may render the filing seriously misleading under UCC § 9-506 and could impair the perfection of the security interest. The exact legal name should be confirmed by reference to the Iowa SOS online database or by obtaining a certified copy of GAP's Articles of Organization.
2. Greenfield Holdings Corp. (Delaware Corporation)
Filing Jurisdiction: Delaware Secretary of State, Division of Corporations, John G. Townsend Building, 401 Federal Street, Suite 4, Dover, Delaware 19901.
Debtor Name: Greenfield Holdings Corp.
Debtor Address: 1209 Orange Street, Wilmington, Delaware 19801
Secured Party: Heartland Commerce Bank, National Association, as Collateral Agent
Secured Party Address: 200 South Wacker Drive, 40th Floor, Chicago, Illinois 60606
Collateral Description: All assets — broad-form collateral description referencing the Security Agreement.
Important Notes: Holdings is a guarantor under the Facility, and its assets serve as collateral under the Security Agreement. Although GAP is an LLC (not a subsidiary of Holdings in the traditional pledge structure), Holdings is GAP's sole member and the parent guarantor in the Facility structure. Holdings' equity interest in GAP (i.e., Holdings' membership interest in GAP as an Iowa LLC) is included in the "all assets" collateral description and will be perfected by this UCC-1 filing. However, the pledge of equity interests in GAP's subsidiaries (GGS and GCI) is governed by the separate Pledge Agreement executed by GAP (not Holdings), and the perfection of those pledges is described in Section IX below.
The exact legal name of Holdings must be confirmed by reference to the Delaware Secretary of State's records, Delaware SOS File No. 7291538.
3. Greenfield Grain Storage LLC (Iowa LLC)
Filing Jurisdiction: Iowa Secretary of State, UCC Division.
Debtor Name: Greenfield Grain Storage LLC
Debtor Address: 4100 Grand Prairie Boulevard, Suite 310, Des Moines, Iowa 50309
Secured Party: Heartland Commerce Bank, National Association, as Collateral Agent
Secured Party Address: 200 South Wacker Drive, 40th Floor, Chicago, Illinois 60606
Collateral Description: All assets — broad-form collateral description referencing the Security Agreement.
EIN: 84-2093417.
The exact legal name must be confirmed against the Iowa SOS records for GGS's Articles of Organization.
4. Greenfield Crop Inputs Inc. (Illinois Corporation)
Filing Jurisdiction: Illinois Secretary of State, Uniform Commercial Code Division, Howlett Building, 501 South Second Street, Room 350, Springfield, Illinois 62756.
Debtor Name: Greenfield Crop Inputs Inc.
Debtor Address: 780 Commerce Drive, Bloomington, Illinois 61701
Secured Party: Heartland Commerce Bank, National Association, as Collateral Agent
Secured Party Address: 200 South Wacker Drive, 40th Floor, Chicago, Illinois 60606
Collateral Description: All assets — broad-form collateral description referencing the Security Agreement.
Illinois SOS File No.: 08294731; EIN: 37-6182049.
The exact legal name must be confirmed against the Illinois SOS records for GCI's Articles of Incorporation.
B. UCC Filing Summary Table
The following table summarizes the UCC-1 financing statement filings to be made in connection with the Facility:
Total: Four (4) UCC-1 financing statements to be filed.
Note Regarding Indiana. GAP conducts business operations in Indiana, including grain purchasing, contract farming, and receivables origination. However, GAP does not have a separate Indiana entity organized under Indiana law. Because the proper filing jurisdiction for a UCC-1 financing statement is determined by the debtor's jurisdiction of organization (rather than the jurisdiction in which the debtor conducts business or in which the collateral is located), GAP's UCC-1 filing with the Iowa Secretary of State will cover all of GAP's personal property assets, including those located in or arising from operations in Indiana. No separate Indiana UCC-1 filing is required unless and until an Indiana entity is organized. If GAP forms an Indiana subsidiary in the future, a supplemental UCC-1 filing in Indiana would be required at that time.
Filing Timing and Priority. All UCC-1 financing statements should be filed promptly following execution of the Security Agreement and prior to or simultaneously with the closing of the Facility. To ensure that HCB obtains first-priority status, the filing of UCC-3 termination statements by PNB for the existing UCC filings (Iowa SOS Filing Nos. 2018-0041729 and 2018-0041730) must occur prior to or simultaneously with the new UCC-1 filings. As a practical matter, if the new UCC-1 filings are made simultaneously with the PNB UCC-3 termination filings at closing, the temporal priority of the new filings should be established by confirming that the PNB termination statements are filed and accepted by the Iowa Secretary of State prior to or at the same time as the new UCC-1 filings, or that the payoff and termination mechanics ensure that the PNB liens are released by operation of the payoff and do not remain as senior liens on the collateral.
VI. PERFECTION ACTIONS — REAL PROPERTY (MORTGAGE RECORDINGS)
A. Iowa Mortgages
Mortgage Form. The real property collateral in Iowa will be secured by the Mortgage, Assignment of Leases and Rents, and Security Agreement — Form (Iowa), dated November 4, 2022 (the "Iowa Mortgage"), prepared by Calderwood & Harkness LLP. The Iowa Mortgage is a comprehensive instrument that grants to the Mortgagee (a) a first-priority mortgage lien on the described real property, (b) an assignment of all leases, rental agreements, and rents relating to the property, and (c) a security agreement covering all fixtures, equipment, and personal property located on or used in connection with the property.
Mortgagor(s). The Mortgagor under each Iowa Mortgage will be Greenfield Agricultural Partners LLC and/or Greenfield Grain Storage LLC, as applicable, depending on which entity holds fee ownership of the particular parcel. Certain parcels are owned by GAP and others by GGS, and the Iowa Mortgage instruments must be tailored to reflect the correct owner/mortgagor for each property. The Real Property Collateral Schedule will identify the fee owner of each parcel.
Mortgagee. Heartland Commerce Bank, National Association, as Collateral Agent for the benefit of the Lenders.
Recording Jurisdictions. The Iowa Mortgages must be recorded in each Iowa county in which mortgaged real property is located. Based on the current property portfolio, the applicable Iowa recording jurisdictions are:
• Polk County — covering GAP headquarters (4100 Grand Prairie Boulevard, Suite 300), GGS headquarters (4100 Grand Prairie Boulevard, Suite 310), and any grain elevator sites or distribution centers located in Polk County; and
• Eight (8) additional Iowa counties — covering the remaining grain elevator sites and distribution centers operated by GGS and GAP throughout Iowa. The specific county names will be confirmed upon finalization of the Real Property Collateral Schedule.
Total Iowa county recordings: Nine (9) counties.
Execution and Recording Requirements. Each Iowa Mortgage must be (a) executed by an authorized officer or manager of the applicable Mortgagor (GAP or GGS), (b) acknowledged before a notary public in compliance with the acknowledgment requirements of Iowa Code Chapter 558, and (c) recorded with the County Recorder in the applicable county. The recording of the Iowa Mortgages establishes the Collateral Agent's priority with respect to subsequent lien creditors and purchasers.
Recording Fees and Documentary Stamp Taxes. Iowa does not impose a state mortgage recording tax. However, county recording fees are assessed by each County Recorder at the time of recording. Recording fees in Iowa are generally calculated on a per-page basis, with an additional fee for each legal description or parcel covered by the instrument. The exact fees will vary by county and will depend on the length and complexity of the mortgage instruments. An estimate of recording fees for all Iowa counties will be prepared once the Iowa Mortgages are in final form.
Coordination with PNB Releases. It is essential that all existing PNB mortgage satisfactions and releases be recorded in each applicable Iowa county prior to or simultaneously with the recording of the new Iowa Mortgages in favor of HCB. If the PNB releases and the new HCB mortgages are recorded simultaneously, the County Recorder should be instructed to record the PNB releases first, followed immediately by the new HCB mortgages, to ensure proper chain of title and first-priority lien status for HCB. Calderwood & Harkness will coordinate with PNB and local counsel (if applicable) to establish the recording sequence and confirm that the process is executed correctly in each county.
B. Illinois Mortgage
Mortgage Form. The real property collateral in Illinois will be secured by the Mortgage, Assignment of Leases and Rents, and Security Agreement — Form (Illinois), dated November 4, 2022 (the "Illinois Mortgage"), prepared by Calderwood & Harkness LLP. The Illinois Mortgage is substantially similar in structure to the Iowa Mortgage, adapted for Illinois recording requirements and applicable Illinois law.
Mortgagor. Greenfield Crop Inputs Inc. ("GCI"), as the fee owner of the Bloomington, Illinois distribution center property.
Mortgagee. Heartland Commerce Bank, National Association, as Collateral Agent for the benefit of the Lenders.
Recording Jurisdiction. McLean County, Illinois. The GCI distribution center is located at 780 Commerce Drive, Bloomington, Illinois 61701, within McLean County. The Illinois Mortgage must be recorded with the McLean County Recorder of Deeds.
Any additional Illinois properties (if any) should be confirmed from the Real Property Collateral Schedule. Based on current information, the only Illinois property in the collateral package is the Bloomington distribution center. If additional Illinois properties are identified, supplemental Illinois Mortgages may be required.
Recording Fees and Transfer Taxes. Illinois imposes county recording fees for mortgage recordings. Additionally, Illinois counties may assess a real estate transfer tax on certain instruments; however, mortgages generally are not subject to transfer taxes in Illinois (transfer taxes typically apply to deeds conveying title). The applicable recording fees for McLean County will be confirmed in advance of closing. The Illinois Mortgage must comply with Illinois recording format requirements, including those set forth in the Illinois Counties Code (55 ILCS 5/) and applicable local rules.
Coordination with PNB Release. The existing PNB mortgage recorded in McLean County must be released and satisfied, and the release must be recorded with the McLean County Recorder of Deeds, prior to or simultaneously with the recording of the new Illinois Mortgage in favor of HCB.