MEMORANDUM

MEMORANDUM
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
To: Sophie Tremblay, Lead Associate, Banking & Finance
From: Daniel Obi, Working Associate, Banking & Finance
Date: October 28, 2022
Re: UCC, Tax Lien, and Judgment Search Results — Greenfield Agricultural Partners LLC et al. Matter No. 1020-00001 (Billing Code: GAPABF-2022)
Client: Greenfield Agricultural Partners LLC
Matter: $80,000,000 Senior Secured Asset-Based Revolving Credit Facility — Heartland Commerce Bank, N.A. as Administrative Agent
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I. Purpose and Scope
The purpose of this memorandum is to summarize the results of Uniform Commercial Code ("UCC") financing statement searches, federal and state tax lien searches, and judgment and litigation searches conducted in connection with the proposed $80,000,000 senior secured asset-based revolving credit facility (the "Proposed Facility" or the "HCB Facility") to be provided by a lending syndicate led by Heartland Commerce Bank, N.A. ("HCB"), acting as Administrative Agent and Collateral Agent, to Greenfield Agricultural Partners LLC and certain of its subsidiaries (collectively, the "Loan Parties"). This memorandum has been prepared by Calderwood & Harkness LLP ("C&H") in its capacity as counsel to HCB in connection with the Proposed Facility.
The searches described herein were conducted for the purpose of confirming the current lien landscape against each proposed Loan Party and identifying any existing encumbrances, security interests, liens, or adverse claims that must be terminated, released, subordinated, or otherwise addressed in order to permit the Collateral Agent to obtain first-priority perfected security interests in the collateral package contemplated by the Credit Agreement and the related Security Documents. The results presented below are intended to inform the lien release and payoff mechanics, the new filing strategy, and the closing conditions for the Proposed Facility.
The following four entities were identified as the Loan Parties and were the subject of the searches described in this memorandum:
1.  Greenfield Agricultural Partners LLC ("GAP") — 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. GAP is the primary operating entity and the proposed Borrower under the HCB Facility.
2.  Greenfield Holdings Corp. ("Holdings") — a Delaware corporation, EIN 82-5047391, Delaware Secretary of State File No. 7291538, with its registered office located at 1209 Orange Street, Wilmington, Delaware 19801 (c/o National Corporate Services Inc.). Holdings is the parent holding company and sole member of GAP. Holdings is a proposed Guarantor under the HCB Facility and will pledge its 100% membership interest in GAP as collateral.
3.  Greenfield Grain Storage LLC ("GGS") — an Iowa limited liability company, EIN 84-2093417, with its principal place of business located at 4100 Grand Prairie Boulevard, Suite 310, Des Moines, Iowa 50309. GGS is a wholly owned subsidiary of GAP and owns and operates fourteen (14) grain elevator facilities across the State of Iowa. GGS is a proposed Subsidiary Guarantor under the HCB Facility.
4.  Greenfield Crop Inputs Inc. ("GCI") — an Illinois corporation, EIN 37-6182049, Illinois Secretary of State File No. 08294731, with its principal place of business located at 780 Commerce Drive, Bloomington, Illinois 61701. GCI is a wholly owned subsidiary of GAP and operates the crop-input distribution business, including the sale and distribution of seed, fertilizer, and crop protection chemicals. GCI is a proposed Subsidiary Guarantor under the HCB Facility and is a significant contributor to the accounts receivable borrowing base.
Searches were also conducted under all known prior names, trade names, and assumed business names (d/b/a names) for each entity. Based on our review of organizational documents, good standing certificates, and representations from Greenfield's General Counsel, Nina Vasquez, no prior names or trade names were identified for any of the Loan Parties. Each entity has operated exclusively under its current legal name since its respective date of organization.
II. Search Jurisdictions and Methodology
A. UCC Financing Statement Searches
UCC financing statement searches were conducted at the filing offices that constitute the proper offices for central filing under Article 9 of the Uniform Commercial Code for each debtor's jurisdiction of organization, as well as at certain local (county-level) recording offices and additional state offices where the Loan Parties maintain operations. Under the "debtor's location" rule set forth in UCC Section 9-301, the law of the jurisdiction in which a debtor is organized governs perfection and priority of security interests in most types of personal property collateral. Accordingly, the central filing office of each debtor's state of organization is the primary office for UCC financing statement searches.
The following UCC financing statement searches were conducted:
(i) Iowa Secretary of State — This office was searched with respect to GAP and GGS, both of which are Iowa limited liability companies. Under Iowa Code Section 554.9301 et seq., the Iowa Secretary of State is the proper filing office for the filing of financing statements against Iowa-organized debtors to perfect security interests in personal property collateral (other than as-extracted collateral, timber to be cut, and fixtures, for which local filing may also be required).
(ii) Delaware Secretary of State — This office was searched with respect to Holdings, which is a Delaware corporation. Under 6 Del. C. § 9-301, the Delaware Secretary of State is the proper filing office for the filing of financing statements against Delaware-organized debtors.
(iii) Illinois Secretary of State — This office was searched with respect to GCI, which is an Illinois corporation. Under 810 ILCS 5/9-301, the Illinois Secretary of State is the proper filing office for the filing of financing statements against Illinois-organized debtors.
In addition to the central filing searches described above, the following local (county-level) UCC searches were conducted:
(iv) Polk County, Iowa Recorder — This office was searched for any UCC fixture filings or other local filings against GAP and GGS, both of which maintain their headquarters in Polk County, Iowa (Des Moines).
(v) McLean County, Illinois Recorder — This office was searched for any UCC fixture filings or other local filings against GCI, which maintains its headquarters in McLean County, Illinois (Bloomington).
Finally, a supplemental search was conducted at the Indiana Secretary of State. GAP operates a significant farming operation across multiple states, managing approximately 82,000 acres of agricultural land in Iowa, Illinois, and Indiana. Given GAP's substantial operating presence in Indiana, the Indiana Secretary of State was searched for any fixture filings or filings that may have been made against GAP in Indiana, even though Indiana is not GAP's jurisdiction of organization and a financing statement filed in Indiana would not be the proper method of perfection for most categories of GAP's personal property collateral.
The search period covered all active (non-lapsed, non-terminated) financing statements as of the date of search. In addition, lapsed and terminated filings for the prior five-year period were reviewed to identify any historical filings that might be relevant to the lien analysis, including any filings that may have been improperly terminated or that may suggest the existence of relationships or transactions not otherwise disclosed.
B. Federal Tax Lien Searches
Federal tax lien searches were conducted at the county-level recording offices in which notices of federal tax liens would be filed by the Internal Revenue Service ("IRS") under 26 U.S.C. § 6323 and the applicable state designation statutes. Under federal law, a notice of federal tax lien is filed in the office designated by the state in which the taxpayer's property is situated, which in most states (including Iowa, Delaware, and Illinois) is the office of the county recorder in the county of the taxpayer's principal place of business (for personal property of entities) or principal residence (for individuals). The following federal tax lien searches were conducted:
(i) Polk County, Iowa Recorder — Searched for federal tax lien notices filed against GAP and GGS, both of which maintain their principal place of business in Polk County, Iowa.
(ii) New Castle County, Delaware Recorder — Searched for federal tax lien notices filed against Holdings, which maintains its registered office in New Castle County, Delaware (Wilmington).
(iii) McLean County, Illinois Recorder — Searched for federal tax lien notices filed against GCI, which maintains its principal place of business in McLean County, Illinois (Bloomington).
Each search covers all outstanding and unreleased notices of federal tax lien as of the date of search.
C. State Tax Lien Searches
State tax lien searches were conducted at the applicable state and county filing offices for each Loan Party, as well as at the Indiana Secretary of State for GAP given its Indiana operating presence. The following state tax lien searches were conducted:
(i) Iowa Secretary of State and Polk County, Iowa — Searched for state tax lien notices filed against GAP and GGS.
(ii) Delaware Secretary of State — Searched for state tax lien notices (including Delaware franchise tax liens) filed against Holdings. We note that confirmation of Holdings' current Delaware franchise tax payment status should be separately obtained in connection with the good standing and compliance certificate workstream.
(iii) Illinois Secretary of State and McLean County, Illinois — Searched for state tax lien notices filed against GCI.
(iv) Indiana Secretary of State — Searched for state tax lien notices filed against GAP in Indiana, given its significant operating presence in that state.
D. Judgment and Litigation Searches
Judgment and litigation searches were conducted at the applicable state and federal courts for each Loan Party, including courts located in each entity's principal place of business and, for GAP, in Indiana given its operating presence there. The following judgment and litigation searches were conducted:
(i) Polk County, Iowa District Court — Searched for pending judgments and litigation involving GAP and GGS.
(ii) United States District Court, Southern District of Iowa — Searched for pending judgments and litigation involving GAP and GGS.
(iii) New Castle County, Delaware Superior Court — Searched for pending judgments and litigation involving Holdings.
(iv) United States District Court, District of Delaware — Searched for pending judgments and litigation involving Holdings.
(v) McLean County, Illinois Circuit Court — Searched for pending judgments and litigation involving GCI.
(vi) United States District Court, Central District of Illinois — Searched for pending judgments and litigation involving GCI.
(vii) Indiana state and federal courts — Searched for pending judgments and litigation involving GAP, including searches at the Marion County Superior Court and the United States District Court for the Southern District of Indiana.
E. Search Providers and Dates
All UCC, tax lien, and judgment searches described in this memorandum were conducted by Penrose Software, a Vireo Enterprises business ("Penrose Software"), pursuant to search requests submitted by C&H. Penrose Software is a nationally recognized provider of UCC and public record search services and has been retained by C&H on numerous prior transactions.
The searches were conducted on the following dates:
•  Iowa Secretary of State (UCC, state tax lien): October 12, 2022
•  Delaware Secretary of State (UCC, state tax lien): October 11, 2022
•  Illinois Secretary of State (UCC, state tax lien): October 12, 2022
•  Indiana Secretary of State (UCC, state tax lien): October 13, 2022
•  Polk County, Iowa Recorder (UCC fixture, federal tax lien): October 14, 2022
•  McLean County, Illinois Recorder (UCC fixture, federal tax lien): October 14, 2022
•  New Castle County, Delaware Recorder (federal tax lien): October 13, 2022
•  Polk County, Iowa District Court (judgment): October 14, 2022
•  U.S. District Court, Southern District of Iowa (judgment): October 14, 2022
•  New Castle County, Delaware Superior Court (judgment): October 13, 2022
•  U.S. District Court, District of Delaware (judgment): October 13, 2022
•  McLean County, Illinois Circuit Court (judgment): October 14, 2022
•  U.S. District Court, Central District of Illinois (judgment): October 14, 2022
•  Indiana state and federal courts (judgment): October 15, 2022
Important Note: The search results summarized in this memorandum are current only as of the respective dates of search set forth above. Search results may not reflect filings or recordings made after the date of search, filings that were pending or in process at the applicable filing office on the date of search, or filings in jurisdictions not covered by the searches. All searches should be updated (bring-down searches) within ten (10) to fifteen (15) days prior to the anticipated closing date of the HCB Facility to confirm that no intervening filings, liens, or judgments have been recorded. See Section X (Open Items and Recommendations) below.
III. Search Results — UCC Financing Statements
A. Greenfield Agricultural Partners LLC (GAP)
1. Iowa Secretary of State
Two (2) active UCC-1 financing statements were identified against GAP at the Iowa Secretary of State, both filed by Prairie National Bank, National Association ("PNB"). The details of each filing are set forth below.
Filing No. 2018-0041729
Debtor: Greenfield Agricultural Partners LLC, 4100 Grand Prairie Boulevard, Suite 300, Des Moines, Iowa 50309
Secured Party: Prairie National Bank, National Association, 600 Locust Street, Suite 1500, Des Moines, Iowa 50309
Date Filed: April 2, 2018
Collateral Description: "All assets of the Debtor, whether now owned or hereafter acquired, including but not limited to all accounts, inventory, equipment, general intangibles, instruments, chattel paper, deposit accounts, documents, letter of credit rights, commercial tort claims, investment property, and all proceeds and products thereof."
Continuation Statements/Amendments: No continuation statements or amendments have been filed as of the date of search (October 12, 2022). The original five-year lapse date for this financing statement is April 2, 2023. Under Iowa Code Section 554.9515, a continuation statement may be filed within six months before the lapse date, meaning the earliest permissible date for filing a continuation statement is October 2, 2022. As of the search date, the window for filing a continuation statement had only recently opened, and it is possible that PNB intends to file a continuation statement in connection with any renewal of its existing facility. Based on discussions with Greenfield's General Counsel, Nina Vasquez, PNB has indicated its intention to file a continuation statement in early 2023 upon the renewal of the existing PNB credit agreement, though this has not yet been confirmed in writing by PNB.
Status: Active
Analysis: This filing constitutes a blanket all-assets lien covering substantially all personal property of GAP, whether now owned or hereafter acquired, including all Article 9 collateral categories. This filing was made in connection with the existing $55,000,000 revolving credit facility between GAP, as borrower, and PNB, as lender and secured party, pursuant to a Credit Agreement dated as of April 1, 2018 (as amended from time to time, the "PNB Credit Agreement"). This blanket filing would, if valid and perfected, give PNB a first-priority security interest in substantially all of GAP's personal property, including accounts, inventory (including grain inventory), equipment, general intangibles (including contract rights under farm lease agreements), and investment property (including GAP's equity interests in its subsidiaries, GGS and GCI). This filing must be terminated as a condition precedent to closing of the HCB Facility.
Filing No. 2018-0041730
Debtor: Greenfield Agricultural Partners LLC, 4100 Grand Prairie Boulevard, Suite 300, Des Moines, Iowa 50309
Secured Party: Prairie National Bank, National Association, 600 Locust Street, Suite 1500, Des Moines, Iowa 50309
Date Filed: April 2, 2018
Collateral Description: "All crops growing or to be grown on real property owned or leased by Debtor in the State of Iowa, and all proceeds thereof; all warehouse receipts, whether negotiable or non-negotiable, issued by any grain elevator or warehouse facility owned or operated by Debtor, and all grain and other agricultural products represented thereby, and all proceeds thereof."
Continuation Statements/Amendments: No continuation statements or amendments have been filed as of the date of search (October 12, 2022). The continuation analysis is identical to that described above with respect to Filing No. 2018-0041729, as both filings share the same original filing date and, therefore, the same five-year lapse date of April 2, 2023.
Status: Active
Analysis: This filing is a supplemental filing to the blanket all-assets filing described above (Filing No. 2018-0041729) and was designed to provide additional specificity with respect to PNB's security interest in crop collateral and warehouse receipts. This type of supplemental crop-specific filing is common in agricultural lending transactions and is often used to provide additional notice to third parties — particularly grain elevators, warehouse operators, and other agricultural intermediaries — of the secured party's interest in crops and grain. Although the blanket filing (Filing No. 2018-0041729) arguably covers the same collateral by virtue of its all-assets description, the supplemental crop filing provides belt-and-suspenders protection for the secured party, particularly in light of the unique priority rules applicable to agricultural liens under UCC Section 9-322(g) and the specific provisions of the Iowa grain indemnity fund and warehouse receipt statutes. This filing must be terminated as a condition precedent to closing of the HCB Facility, along with Filing No. 2018-0041729.
No other UCC-1 financing statements, UCC-3 amendments, or UCC-3 continuation statements were found against GAP at the Iowa Secretary of State.
2. Polk County, Iowa Recorder
No UCC fixture filings or other local UCC filings were found against GAP at the Polk County, Iowa Recorder. We note that real property mortgage liens recorded by PNB against GAP in connection with the existing PNB Credit Agreement are recorded at the Polk County Recorder and various other county recorders throughout Iowa. These mortgage filings are not UCC filings and are addressed separately in Section VII.B (Real Property Encumbrances — Cross-Reference) below and in the Real Property Collateral Schedule and Collateral Description and Perfection Memorandum being prepared by C&H in connection with this transaction.
3. Indiana Secretary of State
No UCC financing statements were found against GAP at the Indiana Secretary of State. Although GAP maintains a significant operating presence in Indiana (managing a substantial portion of its approximately 82,000-acre farming operation in that state), no party appears to have filed a UCC financing statement against GAP in Indiana. This is consistent with the applicable filing rules, as Indiana is not GAP's jurisdiction of organization and a financing statement filed in Indiana would not perfect a security interest in GAP's personal property (other than fixtures, timber to be cut, or as-extracted collateral related to Indiana real property) under UCC Section 9-301.
B. Greenfield Holdings Corp. (Holdings)
1. Delaware Secretary of State
No UCC financing statements were found against Greenfield Holdings Corp. at the Delaware Secretary of State.
Analysis: Holdings is the parent holding company and sole member of GAP. Its primary asset is its 100% membership interest in GAP. The absence of any UCC filings against Holdings is consistent with the organizational structure of the Greenfield enterprise group and with representations made by Greenfield's management and General Counsel. Holdings does not have any existing secured indebtedness at the Holdings level, and no party has filed a financing statement to perfect a security interest in Holdings' assets, including its membership interest in GAP. For the Proposed Facility, a new UCC-1 financing statement will be filed against Holdings with the Delaware Secretary of State to perfect the Collateral Agent's security interest in Holdings' pledge of its 100% membership interest in GAP.
C. Greenfield Grain Storage LLC (GGS)
1. Iowa Secretary of State
No UCC financing statements were found specifically naming GGS as debtor at the Iowa Secretary of State.
Analysis: GGS is a wholly owned subsidiary of GAP. GGS owns and operates fourteen (14) grain elevator facilities throughout Iowa, holds significant grain inventory (estimated at approximately $18,000,000 in value based on the most recent field examination data as of September 2022), and owns substantial equipment at the elevator sites, including grain handling equipment, drying systems, conveyors, scales, and rolling stock. GGS is also the named obligor on certain utility contracts and equipment leases.
The absence of a separate PNB filing against GGS as a named debtor raises an important question regarding the scope of PNB's existing collateral package. The blanket filing by PNB against GAP (Filing No. 2018-0041729) covers "all assets of the Debtor," which by its terms applies only to GAP as the named debtor. Under well-established principles of UCC Article 9, a financing statement filed against a parent entity does not, without more, perfect a security interest in assets owned by a subsidiary entity. GGS is a separate legal entity with its own assets, and a security interest in GGS's assets would need to be granted by GGS (as debtor) and perfected by a separate financing statement naming GGS as debtor, filed with the Iowa Secretary of State (GGS's jurisdiction of organization).
It is possible that PNB intended its blanket lien on GAP to cover all assets used in the Greenfield enterprise, including assets held in GGS's name, but such an approach would create a gap in PNB's perfection to the extent GGS holds title to assets in its own name. Alternatively, PNB may have relied primarily on its recorded mortgages on the grain elevator facilities (which would encumber real property and fixtures) and may not have intended to take a separate personal property security interest in GGS's accounts, inventory, and equipment. We recommend confirming the scope of PNB's intended collateral coverage with PNB's counsel and with Greenfield's General Counsel, Nina Vasquez, as part of the payoff and release process. This analysis is relevant to the HCB transaction because it may affect the priority analysis and the scope of the PNB release that should be obtained.
Regardless of the state of PNB's perfection with respect to GGS's assets, new UCC-1 financing statements will be filed against GGS with the Iowa Secretary of State in connection with the HCB Facility, and GGS will grant a security interest in substantially all of its assets pursuant to the Security Agreement.
2. Polk County, Iowa Recorder
No UCC fixture filings were found against GGS at the Polk County, Iowa Recorder.
D. Greenfield Crop Inputs Inc. (GCI)
1. Illinois Secretary of State
No UCC financing statements were found against Greenfield Crop Inputs Inc. at the Illinois Secretary of State.
Analysis: GCI is a wholly owned subsidiary of GAP and operates the crop-input distribution business, including the sale and distribution of seed, fertilizer, and crop protection chemicals across Iowa, Illinois, and Indiana. GCI is a significant contributor to the accounts receivable borrowing base for the Proposed Facility, with approximately $22,000,000 in eligible accounts receivable as of September 30, 2022, according to preliminary borrowing base data provided by Greenfield's management.
The absence of a separate PNB filing against GCI as a named debtor raises the same concerns described above with respect to GGS. GCI is a separate legal entity organized under the laws of Illinois, and a financing statement filed against GAP in Iowa does not perfect a security interest in GCI's own assets. A separate financing statement naming GCI as debtor, filed with the Illinois Secretary of State, would be required to perfect a security interest in GCI's personal property. The absence of such a filing by PNB creates a potential gap in PNB's collateral coverage.
For the Proposed Facility, new UCC-1 financing statements will be filed against GCI with the Illinois Secretary of State to perfect the Collateral Agent's security interest in GCI's personal property assets, including accounts receivable, crop-input inventory, equipment, and all other Article 9 collateral.
2. McLean County, Illinois Recorder
No UCC fixture filings were found against GCI at the McLean County, Illinois Recorder.
IV. Search Results — Federal Tax Liens
A. Greenfield Agricultural Partners LLC (GAP)
Polk County, Iowa Recorder: No notices of federal tax lien were found against GAP. Based on these search results, there are no outstanding federal tax obligations of GAP that have given rise to a filed notice of federal tax lien.
B. Greenfield Holdings Corp. (Holdings)
New Castle County, Delaware Recorder: No notices of federal tax lien were found against Holdings. Based on these search results, there are no outstanding federal tax obligations of Holdings that have given rise to a filed notice of federal tax lien.
C. Greenfield Grain Storage LLC (GGS)
Polk County, Iowa Recorder: No notices of federal tax lien were found against GGS. Based on these search results, there are no outstanding federal tax obligations of GGS that have given rise to a filed notice of federal tax lien.
D. Greenfield Crop Inputs Inc. (GCI)
McLean County, Illinois Recorder: No notices of federal tax lien were found against GCI. Based on these search results, there are no outstanding federal tax obligations of GCI that have given rise to a filed notice of federal tax lien.
V. Search Results — State Tax Liens
A. Greenfield Agricultural Partners LLC (GAP)
Iowa Secretary of State and Polk County, Iowa: No state tax lien notices were found against GAP. Based on these search results, there are no outstanding Iowa state tax obligations of GAP that have given rise to a filed notice of state tax lien.
B. Greenfield Holdings Corp. (Holdings)
Delaware Secretary of State: No state tax lien notices were found against Holdings. Based on these search results, there are no outstanding Delaware state tax obligations of Holdings that have given rise to a filed notice of state tax lien. We note, however, that the absence of a state tax lien filing does not conclusively establish that Holdings is current on all Delaware franchise tax obligations. Holdings' Delaware franchise tax payment status should be separately confirmed through the good standing certificate and compliance workstream, and we recommend requesting a tax clearance certificate from the Delaware Division of Revenue as part of the closing deliverables.
C. Greenfield Grain Storage LLC (GGS)
Iowa Secretary of State and Polk County, Iowa: No state tax lien notices were found against GGS. Based on these search results, there are no outstanding Iowa state tax obligations of GGS that have given rise to a filed notice of state tax lien.
D. Greenfield Crop Inputs Inc. (GCI)
Illinois Secretary of State and McLean County, Illinois: No state tax lien notices were found against GCI. Based on these search results, there are no outstanding Illinois state tax obligations of GCI that have given rise to a filed notice of state tax lien.
E. Indiana — GAP Operating Presence
Indiana Secretary of State: No state tax lien notices were found against GAP in Indiana. Based on these search results, there are no outstanding Indiana state tax obligations of GAP that have given rise to a filed notice of state tax lien.
VI. Search Results — Judgments and Litigation
A. Greenfield Agricultural Partners LLC (GAP)
Polk County, Iowa District Court: No pending judgments or litigation were found against GAP.
United States District Court, Southern District of Iowa: No pending judgments or litigation were found against GAP.
Indiana state and federal courts (Marion County Superior Court and U.S. District Court, Southern District of Indiana): No pending judgments or litigation were found against GAP.
B. Greenfield Holdings Corp. (Holdings)
New Castle County, Delaware Superior Court: No pending judgments or litigation were found against Holdings.
United States District Court, District of Delaware: No pending judgments or litigation were found against Holdings.
C. Greenfield Grain Storage LLC (GGS)
Polk County, Iowa District Court: No pending judgments or litigation were found against GGS.
United States District Court, Southern District of Iowa: No pending judgments or litigation were found against GGS.
D. Greenfield Crop Inputs Inc. (GCI)
McLean County, Illinois Circuit Court: No pending judgments or litigation were found against GCI.
United States District Court, Central District of Illinois: No pending judgments or litigation were found against GCI.
Based on the foregoing results, no judgments, pending litigation, or other judicial liens were identified against any of the four Loan Parties in any of the jurisdictions searched. This is a favorable result from a collateral perspective, as there are no judgment liens that would need to be addressed or that could compete with the Collateral Agent's security interests.
VII. Summary of Existing Liens and Encumbrances
A. Table Summary
The following table summarizes all UCC financing statements, tax liens, and judgment liens identified in the searches described in this memorandum:
Federal Tax Liens: None found for any Loan Party in any jurisdiction searched.
State Tax Liens: None found for any Loan Party in any jurisdiction searched.
Judgments and Litigation: None found for any Loan Party in any jurisdiction searched.
The lien landscape for the Loan Parties is relatively clean, with the only identified encumbrances being the two PNB financing statements against GAP, both of which are filed in connection with the existing PNB Credit Agreement and both of which will be terminated as part of the refinancing contemplated by the HCB Facility.
B. Real Property Encumbrances (Cross-Reference)
This memorandum addresses UCC financing statement searches and related personal property lien searches. Existing recorded mortgage liens and other real property encumbrances in favor of PNB are not the subject of UCC search analysis but are noted here for cross-reference purposes.
Based on information provided by Greenfield's General Counsel and a preliminary review of county recorder indexes, PNB holds recorded mortgages and deeds of trust (as applicable by jurisdiction) on real property owned by GAP and GGS in the following counties:
•  Polk County, Iowa (GAP headquarters and adjacent warehouse facility)
•  Story County, Iowa (grain elevator sites)
•  Boone County, Iowa (grain elevator sites)
•  Hamilton County, Iowa (grain elevator sites)
•  Webster County, Iowa (grain elevator sites)
•  Wright County, Iowa (grain elevator sites)
•  Hardin County, Iowa (grain elevator sites)
•  Cerro Gordo County, Iowa (grain elevator sites)
•  Kossuth County, Iowa (grain elevator sites)
•  McLean County, Illinois (Bloomington distribution center)
These mortgages encumber a total of approximately seventeen (17) parcels of real property, consisting of fourteen (14) grain elevator sites and three (3) distribution centers, with an aggregate appraised value of approximately $64,800,000 based on the most recent appraisals. All of these mortgage liens must be released and satisfied upon payoff of the existing PNB facility. The mortgage release process is addressed in Section VIII.C below, and a comprehensive analysis of the real property collateral is set forth in the Real Property Collateral Schedule and Collateral Description and Perfection Memorandum being prepared separately by C&H.
VIII. Lien Release and Termination Analysis — Prairie National Bank, N.A.
A. Context
The existing PNB Credit Agreement, dated as of April 1, 2018, as amended from time to time, provides for a $55,000,000 revolving credit facility from PNB to GAP. As of September 30, 2022, the outstanding balance under the PNB Credit Agreement is approximately $38,750,000 in revolving loan principal, plus accrued and unpaid interest, fees, and expenses. The PNB Credit Agreement has a stated maturity date of March 31, 2023.
The Proposed Facility contemplates a full refinancing and payoff of all outstanding obligations under the PNB Credit Agreement as a condition precedent to closing. Specifically, Section 4.01 of the draft Credit Agreement for the HCB Facility includes, among other closing conditions, the requirement that (i) all outstanding indebtedness under the PNB Credit Agreement shall have been repaid in full, (ii) all commitments under the PNB Credit Agreement shall have been terminated, and (iii) all liens and security interests granted in favor of PNB under the PNB Credit Agreement and the related security documents shall have been released and terminated.
Upon receipt of payoff funds, PNB must release and terminate all of its liens and security interests in the Loan Parties' assets, including both its UCC financing statements (personal property) and its recorded mortgages (real property).
B. Required Terminations and Releases — UCC Filings
The following UCC-3 termination statements must be filed in connection with the payoff and release:
(i) UCC-3 Termination Statement — Filing No. 2018-0041729: PNB must file (or authorize Borrower or Borrower's counsel to file) a UCC-3 termination statement with the Iowa Secretary of State terminating its blanket all-assets financing statement against GAP. The UCC-3 termination statement must reference the original filing number (2018-0041729) and indicate that the filing is being terminated.
(ii) UCC-3 Termination Statement — Filing No. 2018-0041730: PNB must file (or authorize Borrower or Borrower's counsel to file) a UCC-3 termination statement with the Iowa Secretary of State terminating its supplemental crops and warehouse receipts financing statement against GAP. The UCC-3 termination statement must reference the original filing number (2018-0041730) and indicate that the filing is being terminated.
Timing: The UCC-3 termination statements should ideally be filed simultaneously with, or promptly following, the closing and funding of the HCB Facility and the payoff of the PNB facility. From a priority perspective, it is important that the PNB terminations be effective at or before the time the HCB UCC-1 financing statements are filed, so that the Collateral Agent's filings are first-in-time against GAP's personal property.
Escrow Alternative: As an alternative to simultaneous filing, PNB could deliver signed and completed UCC-3 termination statements to C&H (or to closing escrow) prior to or at closing, with instructions that such termination statements be filed immediately upon receipt and confirmation of payoff funds by PNB's wire desk. This escrow approach is standard practice in refinancing transactions and provides assurance to both the borrower and the incoming secured party that the existing filings will be terminated upon payoff. We recommend negotiating this escrow arrangement with PNB as part of the payoff process.
Under Iowa Code Section 554.9513, a secured party of record is required to file or send a termination statement within twenty (20) days after receiving a signed demand from the debtor, provided that there is no outstanding obligation secured by the financing statement. Failure by PNB to comply with this statutory obligation would expose PNB to liability under Iowa Code Section 554.9625. However, reliance on statutory termination rights is a backstop remedy only, and the preferred approach is to obtain PNB's contractual commitment (in the payoff letter) to file the termination statements within a specified timeframe.
C. Required Releases — Mortgages
In addition to the UCC-3 termination statements, PNB must deliver recordable mortgage releases or satisfactions of mortgage for all recorded mortgage liens in the counties identified in Section VII.B above. Based on the current lien records, a total of approximately ten (10) separate mortgage release or satisfaction documents will be required, covering mortgage recordings in the following counties:
•  Polk County, Iowa
•  Story County, Iowa
•  Boone County, Iowa
•  Hamilton County, Iowa
•  Webster County, Iowa
•  Wright County, Iowa
•  Hardin County, Iowa
•  Cerro Gordo County, Iowa
•  Kossuth County, Iowa
•  McLean County, Illinois
Each mortgage release or satisfaction document must be in recordable form and comply with the recording requirements of the applicable county, including notarization requirements, appropriate legal descriptions, and references to the original mortgage instrument number and recording information. Recording fees vary by county and will need to be confirmed with each county recorder's office. In Iowa, the recording fee for a mortgage release is typically a flat fee per document, while in Illinois, the fee structure may differ. We will prepare a schedule of estimated recording fees for the closing cost estimate.
The mortgage releases should be delivered by PNB to C&H at or prior to closing, either for immediate recording upon payoff or for deposit into closing escrow with instructions for recording upon confirmation of payoff. Given the number of counties involved, we recommend beginning the preparation of mortgage release documents well in advance of closing to avoid delays.
D. Payoff Letter Requirements
C&H should request a payoff letter from PNB at the earliest practicable date. The payoff letter should be addressed to GAP (as Borrower), HCB (as Administrative Agent and Collateral Agent for the HCB Facility), and C&H (as counsel to HCB). The payoff letter should be requested from PNB's designated contact, Janet Braddock, Senior Vice President, Agricultural Banking, Prairie National Bank, N.A., 600 Locust Street, Suite 1500, Des Moines, Iowa 50309.
The payoff letter must specify the following:
(a) The total outstanding principal balance, accrued and unpaid interest, accrued and unpaid fees (including any commitment fees, unused line fees, or administrative fees), and any reimbursable expenses or other amounts owed by GAP to PNB under the PNB Credit Agreement as of the anticipated closing date;
(b) The per diem interest accrual amount, to permit calculation of the exact payoff amount if closing occurs on a date other than the date specified in the payoff letter;
(c) Wire transfer instructions for the payment of payoff funds to PNB, including the name of the receiving bank, ABA routing number, account number, account name, and any required reference information;
(d) A confirmation that upon receipt of the payoff funds in immediately available funds, PNB will (i) file UCC-3 termination statements with the Iowa Secretary of State terminating Filing Nos. 2018-0041729 and 2018-0041730, (ii) deliver recordable mortgage releases or satisfactions of mortgage for all recorded mortgage liens in the counties identified above, and (iii) release and terminate all other liens, security interests, and encumbrances held by PNB in and to the assets of GAP and the other Loan Parties;
(e) An authorization for Borrower or Borrower's counsel (C&H or Greenfield's counsel, Velmoran, Bellows & Whitfield LLP) to file UCC-3 termination statements on behalf of PNB if PNB fails to file such termination statements within a specified period (e.g., ten (10) business days) following receipt of the payoff funds; and
(f) A statement of the effective date and expiration date of the payoff letter (payoff letters customarily expire after a specified period, typically fifteen (15) to thirty (30) days, after which a new payoff letter must be obtained).
The payoff letter should be coordinated among C&H, Greenfield's outside counsel at Velmoran, Bellows & Whitfield LLP (Richard Whitfield, Partner, and Lauren Chisholm, Associate), and HCB's internal counsel and deal team (Gregory Thorn, Senior Vice President, Structured Finance, and Allison Kuo, Vice President, Asset-Based Lending). The payoff amount and funds flow mechanics should be incorporated into the closing funds flow memorandum being prepared by C&H.
E. Intercreditor / Priority Considerations
Based on the search results described in this memorandum, no secured creditors other than PNB were identified with filed UCC financing statements, federal or state tax liens, or judgment liens against any of the Loan Parties. This is a favorable result for the proposed transaction, as it indicates that upon termination of the PNB filings and release of the PNB mortgages, HCB (as Collateral Agent) should be in a position to obtain first-priority perfected security interests in all personal property and real property collateral, subject to:
(a) the timely and proper filing of new UCC-1 financing statements against each Loan Party in the applicable filing offices;
(b) the timely and proper recording of new mortgages against the real property collateral in the applicable county recorders' offices;
(c) the execution and delivery of deposit account control agreements, insurance assignments, and other perfection documents as described in Section IX.B below; and
(d) the absence of any liens, security interests, or encumbrances that are not reflected in the public records, including but not limited to purchase money security interests, consignment interests, statutory agricultural liens, landlord liens, and mechanic's liens.
With respect to item (d) above, we strongly recommend that C&H confirm with Greenfield's management and General Counsel, Nina Vasquez, that there are no liens, security interests, or encumbrances affecting the Loan Parties' assets that would not appear in the public record searches conducted. Specifically, the following categories of potential encumbrances should be addressed:
•  Purchase money security interests in equipment: Confirm whether any equipment (including tractors, combines, sprayers, grain handling equipment, or other agricultural machinery) has been acquired subject to a purchase money security interest or equipment financing arrangement that has not been identified in the search results.
•  Consignment arrangements: Confirm whether any of the crop-input inventory (seed, fertilizer, crop protection chemicals) held by GCI is held on consignment from suppliers, as a true consignment would give the consignor a senior interest in the consigned goods if properly perfected under UCC Section 9-324.
•  Statutory agricultural liens: Under Iowa Code Chapter 570 and Chapter 570A, landlords and certain other agricultural creditors may hold statutory liens on crops and agricultural products that are not filed as UCC financing statements and would not appear in standard UCC searches. Additionally, the Iowa Grain Indemnity Fund (Iowa Code Chapter 203D) imposes certain obligations and potential liens in connection with grain storage operations.
•  Landlord liens on leased acreage: GAP leases approximately 82,000 acres of agricultural land from various landlords across Iowa, Illinois, and Indiana. Under Iowa law, a landlord has a statutory lien on crops grown on leased land to secure payment of rent (Iowa Code Section 570.1). Similar landlord lien statutes exist in Illinois and Indiana. These liens are generally statutory and self-perfecting, meaning they would not appear in UCC searches.
•  Mechanic's liens: Confirm whether any construction, repair, or improvement work has been performed on the real property collateral (including the grain elevator sites and distribution centers) that could give rise to mechanic's lien claims.
These issues should be addressed through representations and warranties in the Credit Agreement, officer's certificates at closing, and the ongoing field examination being conducted by Pryor & Associates LLC.
IX. New Filing Requirements for the Proposed HCB Facility
A. UCC-1 Financing Statements to be Filed
In connection with the closing of the HCB Facility and the perfection of the Collateral Agent's security interests in the Loan Parties' personal property collateral, the following UCC-1 financing statements will need to be filed:
We should consider filing the UCC-1 financing statements in advance of closing (i.e., prior to the anticipated closing date) in order to establish priority in the event of any intervening filings by third parties. Pre-closing filing of UCC-1 financing statements is a common practice in asset-based lending transactions, particularly where significant collateral values are at stake. The effectiveness of the filings would be contingent on the actual closing and funding of the HCB Facility, and the Security Agreement should include appropriate provisions addressing the timing of the grant of security interests relative to the filing of financing statements. In the event that the transaction does not close, C&H would file UCC-3 termination statements to terminate the pre-filed UCC-1 financing statements.
The collateral descriptions for the UCC-1 financing statements should be reviewed and finalized in coordination with the drafting of the Security Agreement and the Collateral Description and Perfection Memorandum. The collateral descriptions used in the financing statements should be consistent with, but may be broader than, the collateral grant provisions of the Security Agreement, as is customary in asset-based lending transactions where a "supergeneric" collateral description (i.e., "all assets") is used in the financing statement and a more detailed collateral description is used in the security agreement.
B. Additional Perfection Steps (Cross-Reference)
In addition to the filing of UCC-1 financing statements, the following additional perfection steps will be required in connection with the HCB Facility. These items are addressed in greater detail in the Collateral Description and Perfection Memorandum being prepared separately by C&H, but are noted here for cross-reference and coordination purposes:
(i) Mortgage Recordings. New mortgages (or deeds of trust, as applicable) in favor of the Collateral Agent must be recorded in all counties in which the Loan Parties own real property constituting Mortgaged Properties under the Credit Agreement. Based on the current collateral package, mortgages will need to be recorded in Polk County, Iowa, eight (8) additional Iowa counties (Story, Boone, Hamilton, Webster, Wright, Hardin, Cerro Gordo, and Kossuth), and McLean County, Illinois, covering a total of approximately seventeen (17) parcels of real property, including fourteen (14) grain elevator sites and three (3) distribution centers, with an aggregate appraised value of approximately $64,800,000. Mortgage tax and recording fee implications should be assessed for each jurisdiction.
(ii) Deposit Account Control Agreements (DACAs). The Collateral Agent must obtain deposit account control agreements from each depository bank at which the Loan Parties maintain deposit accounts, in order to perfect the Collateral Agent's security interest in such deposit accounts under UCC Section 9-104. Based on information provided by Greenfield's management, the Loan Parties maintain deposit accounts at PNB (which will be transferred to HCB or another depository bank as part of the refinancing), Stonefield Commerce Bank (GCI operating accounts), and Ostrander Financial (GAP payroll and general operating accounts). DACAs must be negotiated and executed with each depository bank prior to closing.
(iii) Insurance Assignments. Assignments of insurance policies must be executed in favor of the Collateral Agent, directing that insurance proceeds (including crop insurance proceeds and property/casualty insurance proceeds) be payable to the Collateral Agent as loss payee and additional insured, as applicable. The Loan Parties' insurance program is administered by Redwood Insurance Group, Inc. (the insurance broker), with policies issued by Northstar Mutual Insurance Company. The insurance assignment forms and endorsements must be coordinated with Redwood Insurance Group and Northstar Mutual.
(iv) Delivery of Pledged Equity Certificates. The Collateral Agent must receive physical delivery of (a) membership interest certificates representing 100% of the membership interests in GGS, together with undated membership interest powers executed in blank, and (b) stock certificates representing 100% of the issued and outstanding capital stock of GCI, together with undated stock powers executed in blank. Delivery of these certificated securities is required to perfect the Collateral Agent's security interest by "control" under UCC Section 9-314 and by "possession" under UCC Section 9-313.
X. Open Items and Recommendations
Based on the search results and analysis set forth in this memorandum, the following open items and recommendations are identified for follow-up:
1. PNB Payoff Letter. C&H should request a payoff letter from Janet Braddock at PNB at the earliest practicable date. The payoff letter request should be coordinated with HCB's deal team (Gregory Thorn, Senior Vice President, Structured Finance, and Allison Kuo, Vice President, Asset-Based Lending) and with Greenfield's outside counsel at Velmoran, Bellows & Whitfield LLP (Richard Whitfield, Partner, and Lauren Chisholm, Associate) regarding payoff mechanics and funds flow. Given the anticipated closing timeline, we recommend sending the payoff letter request no later than November 15, 2022, with a request for a response within ten (10) business days.
2. PNB UCC Continuation Status. We recommend confirming whether PNB has filed or intends to file a continuation statement for Filing Nos. 2018-0041729 and 2018-0041730 before the original five-year lapse date of April 2, 2023. The earliest permissible date for filing a continuation statement was October 2, 2022, which has now passed. If PNB does not file a continuation statement and the HCB closing does not occur until after the lapse date, the PNB filings would lapse by operation of law under UCC Section 9-515(a), which would eliminate PNB's perfected status but could also create a window during which other creditors could file financing statements and obtain priority. Conversely, if the HCB closing occurs before the lapse date (as is currently anticipated), the PNB filings must be affirmatively terminated. In either case, the status of PNB's continuation filing should be monitored and confirmed as part of the closing preparation.
3. Subsidiary Lien Gaps. C&H should confirm with PNB's counsel and with Greenfield's General Counsel, Nina Vasquez, why no separate UCC financing statements exist against GGS or GCI as debtors. As discussed in Sections III.C and III.D above, the absence of separate filings against these subsidiary entities may represent a gap in PNB's perfection with respect to subsidiary-owned assets, or it may reflect PNB's intentional reliance on other collateral arrangements (e.g., mortgage liens on GGS's elevator sites). Understanding the scope of PNB's intended collateral coverage is important for purposes of (a) structuring the PNB release to ensure that all PNB liens (whether perfected or unperfected) are terminated, and (b) confirming that the Collateral Agent's new filings against GGS and GCI will establish first-priority status in those entities' assets.
4. Agricultural Liens and Statutory Liens. C&H should conduct supplemental diligence on potential statutory agricultural liens that may not appear in standard UCC or public record searches. This includes, without limitation, (a) grain indemnity fund liens under Iowa Code Chapter 203D, (b) landlord crop liens under Iowa Code Chapter 570 (and comparable provisions under Illinois and Indiana law), (c) seed liens under Iowa Code Chapter 570A, (d) custom cattle feedlot liens under Iowa Code Chapter 579A, and (e) mechanic's liens under Iowa Code Chapter 572. We recommend requesting specific representations from the Borrower (in the Credit Agreement and/or in officer's certificates delivered at closing) regarding the existence or non-existence of any such statutory liens, and confirming with Greenfield's management and General Counsel that all rent obligations to landlords are current and that no landlord lien claims have been asserted.
5. Consignment and Purchase Money Arrangements. C&H should confirm with Greenfield's management, particularly with respect to GCI's crop-input distribution business, whether any seed, fertilizer, or crop protection chemical suppliers hold purchase money security interests ("PMSIs") or consignment interests in crop-input inventory. Under UCC Section 9-324, a properly perfected PMSI in inventory has priority over a previously filed blanket security interest, provided the PMSI holder satisfies certain notice and filing requirements. Similarly, a properly perfected consignment interest has priority under UCC Section 9-324(b). If any such arrangements exist, they would need to be identified and evaluated in the context of the borrowing base and the Collateral Agent's priority analysis. The field examination currently being conducted by Pryor & Associates LLC may shed light on any such arrangements.
6. Update Searches Prior to Closing. All UCC, tax lien, and judgment searches should be updated (bring-down searches) within ten (10) to fifteen (15) days prior to the anticipated closing date of the HCB Facility. The purpose of bring-down searches is to confirm that no intervening UCC filings, tax liens, judgments, or other encumbrances have been filed or recorded against any of the Loan Parties since the date of the original searches. The bring-down search results should be reviewed by C&H and shared with HCB's deal team prior to closing. If the closing timeline extends significantly beyond the original search dates, interim searches may also be warranted.
7. Pryor & Associates Field Examination. C&H should coordinate with Pryor & Associates LLC (Thomas Pryor, Managing Partner, 1200 Prospect Avenue, Suite 700, Cleveland, Ohio 44115), which commenced its on-site field examination of Greenfield's operations on October 17, 2022, regarding any collateral-related findings that may affect the lien analysis. In particular, the field examination may identify (a) third-party goods stored in Greenfield's grain elevators (which may be subject to bailment arrangements or warehouse receipts held by third parties), (b) consigned inventory or goods held under purchase money arrangements, (c) equipment subject to leases or financing arrangements not previously disclosed, (d) discrepancies between the Loan Parties' books and records and the actual ownership of assets, and (e) any other matters that could affect the scope or priority of the Collateral Agent's security interests. The field examination report should be reviewed by C&H upon completion and any relevant findings should be incorporated into the updated lien analysis.
XI. Exhibits and Attachments
The following exhibits and attachments are appended to this memorandum:
Exhibit A: Copies of UCC-1 Financing Statement Filing No. 2018-0041729, filed by Prairie National Bank, National Association against Greenfield Agricultural Partners LLC with the Iowa Secretary of State on April 2, 2018, including all indexed information and any amendments or continuation statements.
Exhibit B: Copies of UCC-1 Financing Statement Filing No. 2018-0041730, filed by Prairie National Bank, National Association against Greenfield Agricultural Partners LLC with the Iowa Secretary of State on April 2, 2018, including all indexed information and any amendments or continuation statements.
Exhibit C: Full search reports from each jurisdiction, as prepared by Penrose Software and delivered to C&H, including the following:
(i) Iowa Secretary of State — UCC and state tax lien search reports for GAP and GGS
(ii) Delaware Secretary of State — UCC and state tax lien search report for Holdings
(iii) Illinois Secretary of State — UCC and state tax lien search report for GCI
(iv) Indiana Secretary of State — UCC and state tax lien search report for GAP
(v) Polk County, Iowa Recorder — UCC fixture filing, federal tax lien, and state tax lien search reports for GAP and GGS
(vi) McLean County, Illinois Recorder — UCC fixture filing and federal tax lien search reports for GCI
(vii) New Castle County, Delaware Recorder — Federal tax lien search report for Holdings
(viii) Polk County, Iowa District Court — Judgment and litigation search reports for GAP and GGS
(ix) U.S. District Court, Southern District of Iowa — Judgment and litigation search reports for GAP and GGS
(x) New Castle County, Delaware Superior Court — Judgment and litigation search report for Holdings
(xi) U.S. District Court, District of Delaware — Judgment and litigation search report for Holdings
(xii) McLean County, Illinois Circuit Court — Judgment and litigation search report for GCI
(xiii) U.S. District Court, Central District of Illinois — Judgment and litigation search report for GCI
(xiv) Indiana state and federal courts — Judgment and litigation search reports for GAP
Exhibit D: Summary chart of all search results by entity and jurisdiction, presented in tabular format for quick reference, including the entity name, jurisdiction searched, type of search conducted, date of search, and results (filings found or "clear").
XII. Approval and Distribution
Prepared by: Daniel Obi, Working Associate, Banking & Finance, Calderwood & Harkness LLP
Reviewed by: Sophie Tremblay, Lead Associate, Banking & Finance, Calderwood & Harkness LLP
Distribution: This memorandum is prepared for internal use by the C&H deal team only. Distribution to the client (Nina Vasquez, General Counsel, Greenfield Agricultural Partners LLC; Patricia Calloway, Chief Financial Officer, Greenfield Agricultural Partners LLC) is subject to prior approval by Ian Blackwood, Partner, Banking & Finance, Calderwood & Harkness LLP. This memorandum is protected by the attorney-client privilege and the attorney work product doctrine and should be treated as privileged and confidential. No portion of this memorandum should be disclosed to third parties without the prior written consent of the supervising partner.
Matter No.: 1020-00001
Billing Code: GAPABF-2022
This memorandum is a draft working document prepared by Calderwood & Harkness LLP in its capacity as counsel to Heartland Commerce Bank, N.A. in connection with the proposed $80,000,000 Senior Secured Asset-Based Revolving Credit Facility. The information contained herein is based on search results provided by Penrose Software and other publicly available information, and has not been independently verified by C&H except as specifically noted. This memorandum does not constitute a legal opinion and should not be relied upon as such. The search results and analysis presented herein are current only as of the dates of the respective searches and are subject to change. All searches should be updated prior to closing.
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