SUMMARY OF TERMS AND CONDITIONS
$80,000,000 Senior Secured Asset-Based Revolving Credit Facility
Agreed Term Sheet
September 9, 2022
This Summary of Terms and Conditions (this "Term Sheet") sets forth the principal terms of a proposed $80,000,000 senior secured asset-based revolving credit facility (the "Facility") to be provided by the Lenders identified herein to Greenfield Agricultural Partners LLC, an Iowa limited liability company (the "Borrower" or "GAP"). This Term Sheet is for discussion purposes only and does not constitute a commitment to lend by any party hereto. Any binding commitment by the Lenders to provide the Facility shall be subject to, among other things: (i) the execution and delivery of mutually satisfactory definitive loan documentation; (ii) the satisfactory completion of all due diligence, including a field examination and inventory appraisal by Pryor & Associates LLC; and (iii) the receipt of all necessary internal credit approvals of each Lender. Unless otherwise indicated, capitalized terms used but not defined herein shall have the meanings assigned to such terms in the definitive Credit Agreement.
Borrower: Greenfield Agricultural Partners LLC, an Iowa limited liability company, with its principal executive offices located at 4100 Grand Prairie Boulevard, Suite 300, Des Moines, Iowa 50309.
Administrative Agent / Collateral Agent / Sole Lead Arranger / Sole Bookrunner: Heartland Commerce Bank, National Association ("HCB" or the "Agent"), with its principal offices located at 200 South Wacker Drive, 40th Floor, Chicago, Illinois 60606.
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I. PARTIES
Borrower
Greenfield Agricultural Partners LLC, an Iowa limited liability company (the "Borrower" or "GAP"), with its principal executive offices located at 4100 Grand Prairie Boulevard, Suite 300, Des Moines, Iowa 50309. The Borrower is engaged in the business of grain merchandising, grain storage, and the wholesale distribution of crop inputs (including seed, fertilizer, and crop protection chemicals) across Iowa, Illinois, Indiana, and surrounding states. The Borrower is the primary operating entity within the Greenfield family of companies and is the obligor with respect to all borrowings under the Facility.
Guarantors
Each of the following entities shall guarantee the obligations of the Borrower under the Facility and the related Loan Documents (each, a "Guarantor" and, collectively, the "Guarantors"):
(a) Greenfield Holdings Corp., a Delaware corporation ("Holdings"), the parent guarantor and sole member of the Borrower. Holdings is a holding company with no independent operations or material assets other than its 100% membership interest in GAP.
(b) Greenfield Grain Storage LLC, an Iowa limited liability company ("GGS"), a subsidiary guarantor, wholly owned by the Borrower. GGS owns and operates fourteen (14) grain elevator facilities and two (2) regional distribution centers located throughout the State of Iowa.
(c) Greenfield Crop Inputs Inc., an Illinois corporation ("GCI"), a subsidiary guarantor, wholly owned by the Borrower. GCI owns and operates one (1) regional distribution center located in Bloomington, Illinois and conducts the wholesale crop-input distribution operations of the Greenfield enterprise in Illinois and Indiana.
The Borrower and the Guarantors are collectively referred to herein as the "Loan Parties" and each individually as a "Loan Party."
Administrative Agent and Collateral Agent
Heartland Commerce Bank, National Association ("HCB" or the "Agent"), with its principal offices located at 200 South Wacker Drive, 40th Floor, Chicago, Illinois 60606, shall serve as the administrative agent and collateral agent for the Lenders under the Facility. In its capacity as Administrative Agent, HCB shall perform such duties and exercise such powers as are customarily performed and exercised by administrative agents in asset-based lending facilities of this nature, including maintaining the register of Lenders, administering the Borrowing Base, and coordinating field examinations and appraisals. In its capacity as Collateral Agent, HCB shall hold all security interests and liens granted by the Loan Parties for the ratable benefit of the Lenders.
Sole Lead Arranger and Sole Bookrunner
Heartland Commerce Bank, National Association shall act as the Sole Lead Arranger and Sole Bookrunner with respect to the syndication and arrangement of the Facility.
Lenders
The following institutions shall serve as Lenders under the Facility, with the respective commitments and pro rata shares set forth below:
Each Lender's commitment is several and not joint. No Lender shall be responsible for the failure of any other Lender to fund its pro rata share of any borrowing under the Facility.
II. FACILITY
Type
The Facility shall consist of a senior secured asset-based revolving credit facility (the "ABL Revolver" or the "Facility"), pursuant to which the Lenders shall make revolving loans and other financial accommodations to the Borrower as described herein, subject in all cases to the terms and conditions of the definitive Credit Agreement and the other Loan Documents.
Total Commitment
The aggregate principal amount of revolving commitments available under the Facility shall be Eighty Million Dollars ($80,000,000) (the "Total Commitment").
Availability
Borrowings under the Facility shall be available at any time during the term of the Facility, subject at all times to the Borrowing Base (as defined in Section V below) and the other terms and conditions set forth herein and in the definitive Credit Agreement. Revolving loans may be borrowed, repaid, and reborrowed at any time prior to the Maturity Date, subject to the satisfaction of the applicable conditions to borrowing set forth in the Credit Agreement. All outstanding revolving loans, together with all accrued and unpaid interest, fees, and other obligations, shall be due and payable in full on the Maturity Date.
Sub-Facilities
The Facility shall include the following sub-facilities, each of which shall be part of, and not in addition to, the Total Commitment:
(a) Letter of Credit Sub-Facility. A sub-facility for the issuance of standby and commercial letters of credit in an aggregate face amount at any time outstanding not to exceed Ten Million Dollars ($10,000,000) (the "LC Sub-Facility"). Heartland Commerce Bank, National Association shall serve as the issuing bank (the "Issuing Bank") under the LC Sub-Facility. Letters of credit shall have a term not to exceed one (1) year (but may be automatically renewable), and no letter of credit shall have an expiration date later than five (5) business days prior to the Maturity Date. The issuance of each letter of credit shall be subject to the satisfaction of customary conditions, including availability under the Borrowing Base, and shall reduce availability under the Facility dollar-for-dollar by the face amount of each outstanding letter of credit.
(b) Swingline Sub-Facility. A sub-facility for same-day swingline advances in an aggregate principal amount at any time outstanding not to exceed Five Million Dollars ($5,000,000) (the "Swingline Sub-Facility"). Heartland Commerce Bank, National Association shall serve as the swingline lender (the "Swingline Lender") under the Swingline Sub-Facility. Swingline loans shall be Base Rate loans and shall be repaid in full within five (5) business days of being incurred, unless earlier refinanced by a revolving loan borrowing. Each swingline advance shall reduce availability under the Facility dollar-for-dollar and shall be subject to the Borrowing Base.
III. PURPOSE
The proceeds of the Facility shall be used solely for the following purposes:
(i) Refinancing of Existing Facility. To refinance and repay in full the existing $55,000,000 revolving credit facility with Prairie National Bank, National Association (the "Existing Facility"), pursuant to that certain Revolving Credit Agreement dated as of April 1, 2018, as amended, among the Borrower, Prairie National Bank, National Association, as administrative agent and lender, and the other parties thereto, including all outstanding principal (estimated at $38,750,000 as of September 30, 2022), together with all accrued and unpaid interest, fees, prepayment premiums (if any), breakage costs, and other amounts due and owing thereunder.
(ii) Seasonal Working Capital. To fund seasonal working capital needs of the Borrower and its subsidiaries, including, without limitation, the purchase of seed, fertilizer, crop protection chemicals, and other crop inputs necessary for the Borrower's agricultural operations and distribution business.
(iii) General Corporate Purposes. For general corporate purposes of the Borrower and its subsidiaries, in each case consistent with the terms and conditions of the definitive Credit Agreement.
(iv) Transaction Costs. To pay fees, costs, and expenses incurred in connection with the negotiation, documentation, closing, and administration of the Facility, including legal fees, agent fees, upfront fees, appraisal costs, and other customary closing costs.
No proceeds of the Facility shall be used, directly or indirectly, for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System) or for any purpose that would violate applicable law, including anti-corruption laws and sanctions.
IV. MATURITY
The Facility shall mature and terminate on the date that is four (4) years from the Closing Date (the "Maturity Date"). The anticipated Closing Date is in October 2022, and the anticipated Maturity Date is accordingly in October 2026. All outstanding revolving loans (including any swingline loans), together with all accrued and unpaid interest, fees, letter of credit obligations, and all other amounts owing under the Facility, shall be immediately due and payable in full on the Maturity Date. On the Maturity Date, all commitments of the Lenders under the Facility shall automatically and permanently terminate, and all letters of credit then outstanding shall have been either cash collateralized in full or backstopped to the satisfaction of the Issuing Bank.
V. BORROWING BASE
Formula
The maximum amount available for borrowing under the Facility at any time shall be the lesser of (a) the Total Commitment ($80,000,000) and (b) the Borrowing Base. The "Borrowing Base" shall be calculated as follows:
(A) Eighty-five percent (85%) of the face amount of Eligible Accounts Receivable;
plus
(B) Sixty-five percent (65%) of the Net Orderly Liquidation Value ("NOLV") of Eligible Crop Inventory, defined as harvested grain held in Borrower-owned or Borrower-leased grain elevators, as determined by the most recent inventory appraisal conducted by a field examiner acceptable to the Agent (initially, Pryor & Associates LLC);
plus
(C) Seventy percent (70%) of the lower of cost or market value of Eligible Crop-Input Inventory, defined as seed, fertilizer, crop protection chemicals, and other crop inputs held by the Borrower or its subsidiaries at eligible locations;
plus
(D) Eighty percent (80%) of the market value of Eligible Grain Warehouse Receipts, determined by reference to the Chicago Board of Trade ("CBOT") settlement prices for the applicable commodity (corn, soybeans, or wheat, as applicable) less the applicable local basis differential;
minus
(E) Availability Reserves (as defined below).
"Excess Availability" at any time shall mean the Borrowing Base minus the sum of (x) all outstanding revolving loans, (y) all outstanding swingline loans, and (z) the aggregate face amount of all outstanding letters of credit.
Availability Reserves
The Agent may, in its Permitted Discretion, impose and adjust availability reserves against the Borrowing Base from time to time to reflect such events, conditions, contingencies, or risks as the Agent deems appropriate to maintain the adequacy of the Borrowing Base as security for the obligations under the Facility. "Permitted Discretion" shall mean the exercise of commercially reasonable judgment by the Agent, exercised in good faith and consistent with the exercise of similar discretion by agents in comparable asset-based lending transactions.
The initial Availability Reserve shall be Three Million Five Hundred Thousand Dollars ($3,500,000) (negotiated down from an original proposal of $5,000,000 as reflected in the initial term sheet dated July 15, 2022). The Agent shall provide the Borrower with reasonable prior written notice of any increase in Availability Reserves, together with a reasonably detailed explanation of the basis for such increase, and shall afford the Borrower a reasonable opportunity to discuss any proposed increase prior to its implementation; provided, however, that in exigent circumstances (including, without limitation, circumstances involving fraud, material misrepresentation, or imminent impairment of collateral value), the Agent may implement reserve increases immediately without prior notice or discussion, with notice to be provided as promptly as practicable thereafter.
Eligibility Criteria (Summary)
The following is a summary of the principal eligibility criteria applicable to each category of Borrowing Base collateral. Detailed eligibility criteria shall be set forth in the definitive Credit Agreement and shall be in form and substance satisfactory to the Agent.
Eligible Accounts Receivable
An account receivable shall constitute an "Eligible Account" only if it satisfies each of the following criteria (and such other criteria as may be established by the Agent in the definitive Credit Agreement):
(a) The account is not more than ninety (90) days past the original invoice date;
(b) The account does not exceed a single account debtor concentration limit of fifteen percent (15%) of all Eligible Accounts (or twenty percent (20%) in the case of account debtors that maintain an investment-grade credit rating from S&P or Moody's);
(c) The account is not subject to cross-aging — accounts of any account debtor shall be excluded in their entirety if more than fifty percent (50%) of such account debtor's receivables are ineligible under the foregoing aging or other eligibility criteria;
(d) The account is not an inter-company receivable owing from any affiliate of the Borrower or any Loan Party;
(e) The account is not a government receivable, unless such account has been properly assigned to the Agent in accordance with the Federal Assignment of Claims Act or applicable state equivalent;
(f) The account is not a foreign receivable, unless such account is covered by an acceptable credit insurance policy from a carrier reasonably satisfactory to the Agent, covering at least ninety percent (90%) of the face amount of such account; and
(g) The account otherwise satisfies such additional eligibility criteria as may be set forth in the definitive Credit Agreement.
Eligible Crop Inventory
An item of crop inventory shall constitute "Eligible Crop Inventory" only if it satisfies each of the following criteria:
(a) The grain has been harvested and is stored in grain elevators or storage facilities that are owned or leased by the Borrower or GGS and that are covered by valid warehouse licenses issued by the applicable state authority;
(b) The grain has been appraised in the most recent NOLV appraisal conducted by Pryor & Associates LLC (or another appraisal firm acceptable to the Agent), and such appraisal has not been rendered stale or unreliable by subsequent events;
(c) The grain is not subject to outstanding warehouse receipts pledged to, or held by, any third party (other than the Agent or its bailee);
(d) The grain is not in transit; and
(e) The grain otherwise satisfies such additional eligibility criteria as may be set forth in the definitive Credit Agreement.
Eligible Crop-Input Inventory
An item of crop-input inventory shall constitute "Eligible Crop-Input Inventory" only if it satisfies each of the following criteria:
(a) The inventory is held at distribution centers or elevator sites that are owned or leased by the Borrower, GGS, or GCI;
(b) The inventory is not obsolete, damaged, or expired (including, without limitation, crop protection chemicals past their manufacturer-specified shelf life);
(c) The inventory is not held on consignment from a third party;
(d) The inventory is valued at the lower of cost (determined on a first-in, first-out ("FIFO") basis) or fair market value; and
(e) The inventory otherwise satisfies such additional eligibility criteria as may be set forth in the definitive Credit Agreement.
Eligible Grain Warehouse Receipts
A grain warehouse receipt shall constitute an "Eligible Grain Warehouse Receipt" only if it satisfies each of the following criteria:
(a) The warehouse receipt is a negotiable warehouse receipt issued by a licensed public warehouse acceptable to the Agent;
(b) The warehouse receipt has been properly endorsed to the Agent or is held by a bailee pursuant to a bailee agreement in form and substance satisfactory to the Agent;
(c) The warehouse receipt is valued at the CBOT settlement price for the applicable commodity (corn, soybeans, or wheat) for the relevant delivery month, less the applicable local basis differential as determined by reference to market data sources acceptable to the Agent; and
(d) The warehouse receipt otherwise satisfies such additional eligibility criteria as may be set forth in the definitive Credit Agreement.
Borrowing Base Certificate
The Borrower shall deliver to the Agent a Borrowing Base Certificate in form and substance satisfactory to the Agent, as follows:
(a) Monthly Reporting. During periods in which no Trigger Period (as defined in Section XIII below) is in effect, the Borrower shall deliver a Borrowing Base Certificate on a monthly basis, no later than the fifteenth (15th) business day following the end of each calendar month, reflecting the Borrowing Base as of the last day of such calendar month.
(b) Weekly Reporting During Trigger Period. During any Trigger Period, the Borrower shall deliver a Borrowing Base Certificate on a weekly basis, no later than the third (3rd) business day following the end of each calendar week (Friday), reflecting the Borrowing Base as of such Friday.
Each Borrowing Base Certificate shall be certified by the Chief Financial Officer or Controller of the Borrower as being true, correct, and complete in all material respects as of the date indicated therein.
Field Examinations and Appraisals
The Agent may conduct field examinations and inventory appraisals of the Borrower and its subsidiaries at any time and from time to time, subject to the following:
(a) Frequency. The Agent may conduct up to two (2) field examinations per fiscal year, at the Borrower's expense, provided that the aggregate cost of such examinations payable by the Borrower shall not exceed $50,000 per examination (i.e., $100,000 per fiscal year in the aggregate). During any Trigger Period, the Agent may conduct additional field examinations at the Borrower's expense without limitation as to number or cost.
(b) Initial Field Examination. An initial field examination and inventory appraisal shall be conducted by Pryor & Associates LLC (or another firm acceptable to the Agent) prior to the Closing Date, and the results thereof shall be satisfactory to the Agent in its sole discretion.
(c) Annual NOLV Appraisal. An NOLV appraisal of all Eligible Crop Inventory shall be conducted at least once per fiscal year by Pryor & Associates LLC or another appraisal firm acceptable to the Agent, at the Borrower's expense. Additional NOLV appraisals may be required during a Trigger Period or upon the occurrence of events that, in the Agent's Permitted Discretion, warrant an updated appraisal.
VI. PRICING
Interest Rate
Revolving loans under the Facility shall bear interest, at the Borrower's option, at either (x) Term SOFR plus the Applicable Margin or (y) the Base Rate plus the Applicable Margin minus 1.00%, in each case as more fully described below.
SOFR-Based Loans. Revolving loans bearing interest at Term SOFR (each, a "SOFR Loan") shall bear interest at a rate per annum equal to Term SOFR for the applicable interest period, plus the Applicable Margin, determined quarterly based on Average Daily Excess Availability during the immediately preceding fiscal quarter, as set forth in the pricing grid below:
The initial Applicable Margin shall be set at Tier 2 (SOFR + 2.25% per annum) and shall remain at such level until the first full fiscal quarter following the Closing Date, at which point the Applicable Margin shall be adjusted based on the Average Daily Excess Availability during such first full fiscal quarter. Thereafter, the Applicable Margin shall be adjusted quarterly.
Base Rate Loans
Revolving loans bearing interest at the Base Rate (each, a "Base Rate Loan") shall bear interest at a rate per annum equal to the Base Rate plus the Applicable Margin for SOFR Loans minus 1.00%. The "Base Rate" shall be defined as the highest of (a) the Agent's prime rate, (b) the Federal Funds Rate plus 0.50%, and (c) Term SOFR for a one-month interest period plus 1.00%. Swingline loans shall bear interest at the Base Rate plus the applicable spread.
Default Rate. Upon the occurrence and during the continuance of any Event of Default, all outstanding obligations under the Facility (including principal, interest, fees, and other amounts) shall bear interest at a rate equal to the otherwise applicable rate plus 2.00% per annum (the "Default Rate"). The Default Rate shall apply automatically upon the occurrence of any Event of Default under Section XIV(e) (Bankruptcy/Insolvency) and upon written notice from the Agent to the Borrower for all other Events of Default.
SOFR Provisions
(a) Interest Periods. SOFR Loans shall be available with interest periods of one (1) month and three (3) months, as selected by the Borrower in each borrowing request. No interest period shall extend beyond the Maturity Date.
(b) SOFR Floor. Term SOFR shall be subject to a floor of 0.50% per annum. In no event shall Term SOFR for any interest period be deemed to be less than 0.50% per annum for purposes of calculating interest under the Facility.
(c) Benchmark Replacement. The definitive Credit Agreement shall contain customary SOFR successor rate and benchmark replacement provisions consistent with the ARRC-recommended "hardwired" approach, permitting the Agent, in consultation with the Borrower, to designate an alternative benchmark rate in the event that Term SOFR is no longer available or is deemed unrepresentative, together with customary benchmark replacement conforming changes, all as more fully set forth in the definitive Credit Agreement.
Fees
Unused Line Fee
The Borrower shall pay to the Agent, for the ratable account of the Lenders, an unused line fee equal to 0.375% per annum, calculated on the daily average unused portion of the Total Commitment during the applicable quarter. The unused portion of the Total Commitment shall be calculated as the Total Commitment minus the sum of (x) the aggregate outstanding principal amount of all revolving loans (including swingline loans) and (y) the aggregate undrawn face amount of all outstanding letters of credit (collectively, "LC Exposure"). The unused line fee shall be payable quarterly in arrears on the last business day of each fiscal quarter and on the Maturity Date, commencing with the first full fiscal quarter ending after the Closing Date.
Letter of Credit Fees
(a) LC Participation Fee. The Borrower shall pay to the Agent, for the ratable account of the Lenders (other than the Issuing Bank), a letter of credit participation fee equal to the Applicable Margin (as set forth in the pricing grid above) on the daily average aggregate undrawn face amount of all outstanding letters of credit during the applicable quarter. The LC Participation Fee shall be payable quarterly in arrears on the last business day of each fiscal quarter and on the Maturity Date.
(b) LC Fronting Fee. The Borrower shall pay directly to HCB, in its capacity as Issuing Bank, a fronting fee equal to 0.125% per annum on the daily average aggregate undrawn face amount of all outstanding letters of credit during the applicable quarter. The LC Fronting Fee shall be payable quarterly in arrears on the last business day of each fiscal quarter and on the Maturity Date.
(c) Issuance and Amendment Fees. Customary issuance, amendment, and negotiation fees shall be payable to the Issuing Bank at the time of issuance or amendment of each letter of credit, in amounts to be agreed upon in the definitive Credit Agreement.
Upfront Fee. The Borrower shall pay to the Agent, for allocation pro rata among the Lenders based on their respective commitments, an upfront fee equal to 0.50% of the Total Commitment, resulting in an aggregate upfront fee of Four Hundred Thousand Dollars ($400,000). The upfront fee shall be fully earned and non-refundable upon payment and shall be payable on the Closing Date. The allocation of the upfront fee among the Lenders shall be as follows:
Administrative Agent Fee
The Borrower shall pay to HCB, in its capacity as Administrative Agent, an administrative agent fee of Seventy-Five Thousand Dollars ($75,000) per annum, payable in quarterly installments of Eighteen Thousand Seven Hundred Fifty Dollars ($18,750) each, in advance on each January 1, April 1, July 1, and October 1 during the term of the Facility (pro rated for any partial quarter). The initial installment shall be payable on the Closing Date and shall cover the period from the Closing Date through the end of the then-current fiscal quarter.
VII. COLLATERAL
The obligations of the Borrower and the Guarantors under the Facility shall be secured by the following collateral:
Security Interest — Personal Property
A first-priority perfected security interest (subject only to Permitted Liens) in substantially all personal property assets of each Loan Party (other than Holdings, whose obligations are secured solely by its pledge of the membership interests in GAP as described below), including, without limitation, the following:
(a) All accounts receivable, whether now existing or hereafter arising, including the right to payment for goods sold or services rendered by any Loan Party;
(b) All inventory, whether now owned or hereafter acquired, including without limitation all harvested grain (corn, soybeans, wheat, and other commodities), all crop-input inventory (seed, fertilizer, crop protection chemicals, and other inputs), all warehouse receipts evidencing grain, and all raw materials, work-in-process, and finished goods;
(c) All equipment, whether now owned or hereafter acquired, including machinery, vehicles, fixtures, furniture, tools, and all attachments, accessories, and accessions thereto;
(d) All deposit accounts, whether now existing or hereafter opened, at any financial institution, subject to the execution and delivery of deposit account control agreements ("DACAs") as described below;
(e) All general intangibles, whether now owned or hereafter acquired, including payment intangibles, software, licenses, permits, contract rights, goodwill, and customer lists;
(f) All instruments, chattel paper (whether tangible or electronic), letter-of-credit rights, and supporting obligations;
(g) All documents, including warehouse receipts and bills of lading;
(h) All intellectual property, including trademarks, service marks, trade names, copyrights, patents, domain names, and all licenses and royalties related thereto;
(i) All commercial tort claims, to the extent identified and pledged in accordance with the terms of the Security Agreement from time to time; and
(j) All proceeds and products of any and all of the foregoing, whether in cash, negotiable instruments, other personal property, real property, or otherwise, including all insurance proceeds payable by reason of loss or damage to any of the foregoing collateral.
Mortgages — Real Property
First-priority mortgage liens on all owned real property of the Loan Parties (other than Holdings), including, without limitation, the following:
(a) Grain Elevator Facilities. Fourteen (14) grain elevator facilities owned by Greenfield Grain Storage LLC (GGS), located throughout the State of Iowa;
(b) Regional Distribution Centers. Three (3) regional distribution centers: one (1) owned by Greenfield Crop Inputs Inc. (GCI) in Bloomington, McLean County, Illinois, and two (2) owned by Greenfield Grain Storage LLC (GGS) in the State of Iowa;
(c) Headquarters. The Borrower's principal executive offices and headquarters facility located at 4100 Grand Prairie Boulevard, Des Moines, Polk County, Iowa 50309.
The aggregate appraised value of all mortgaged real property is approximately Sixty-Four Million Eight Hundred Thousand Dollars ($64,800,000), based on appraisals conducted within the twelve (12) months preceding the date hereof. Each mortgage shall include a collateral assignment of all rents and leases with respect to the applicable mortgaged property. The Borrower shall deliver to the Agent, at its expense, lender's title insurance policies (issued by a title company acceptable to the Agent) with respect to each mortgaged property, together with such surveys, environmental reports (Phase I environmental site assessments, and Phase II assessments where warranted), and other due diligence materials as the Agent may require.
Equity Pledge
(a) Pledge of GGS Membership Interests. GAP shall pledge to the Agent, for the ratable benefit of the Lenders, one hundred percent (100%) of its membership interests in Greenfield Grain Storage LLC.
(b) Pledge of GCI Stock. GAP shall pledge to the Agent, for the ratable benefit of the Lenders, one hundred percent (100%) of the issued and outstanding shares of capital stock of Greenfield Crop Inputs Inc.
Such pledges shall be evidenced by a Pledge Agreement in form and substance satisfactory to the Agent, accompanied by the delivery of original membership interest certificates or stock certificates, together with duly executed undated blank stock powers or assignment instruments.
Deposit Account Control Agreements
Deposit Account Control Agreements ("DACAs") shall be executed and delivered with respect to all operating deposit accounts maintained by the Loan Parties at any depository institution. As of the date hereof, the Loan Parties maintain operating deposit accounts at (a) Prairie National Bank, National Association (the "PNB Accounts"), which are to be either transitioned to HCB or subjected to DACAs in favor of the Agent prior to or concurrently with the Closing, and (b) Heartland Commerce Bank, National Association, with respect to which DACAs shall be executed on or prior to the Closing Date. Each DACA shall provide that the Agent may, upon the occurrence and during the continuance of an Event of Default or a Trigger Period (as applicable, to be negotiated in the definitive Credit Agreement), issue a notice of exclusive control directing the applicable depository bank to comply exclusively with instructions originated by the Agent with respect to the disposition of funds in such deposit account. The Loan Parties shall not maintain any deposit accounts at any depository institution that is not party to a DACA, unless permitted under the definitive Credit Agreement.
Insurance Assignments
(a) Crop Insurance. Collateral assignment to the Agent of all crop insurance proceeds under policies issued by Northstar Mutual Insurance Company or such other crop insurance carriers as are utilized by the Loan Parties from time to time. Such collateral assignment shall cover all federal crop insurance, revenue protection, and supplemental/private crop insurance policies maintained by the Loan Parties.
(b) Property and Casualty Insurance. Collateral assignment to the Agent of all property, casualty, and business interruption insurance proceeds payable with respect to any collateral or mortgaged property under the Facility, including insurance proceeds payable by reason of loss, damage, or destruction of grain, crop inputs, equipment, or real property.
(c) Loss Payee and Additional Insured. The Agent shall be named as loss payee (or mortgagee, as applicable) and additional insured on all applicable property, casualty, crop insurance, and business interruption insurance policies maintained by the Loan Parties. All insurance policies shall contain such endorsements as the Agent may require.
(d) Insurance Broker. The Loan Parties' insurance program is administered by Redwood Insurance Group, Inc. The Borrower shall cause Redwood Insurance Group, Inc. to deliver to the Agent certificates of insurance and applicable endorsements evidencing compliance with the foregoing requirements on or prior to the Closing Date and at each annual renewal thereafter.
VIII. GUARANTY
Each Guarantor (Holdings, GGS, and GCI) shall execute and deliver a joint and several guaranty (the "Guaranty") of all obligations of the Borrower under the Credit Agreement and the related Loan Documents, including, without limitation, all outstanding principal, accrued interest, fees, reimbursement obligations under letters of credit, indemnification obligations, and all other amounts from time to time owing by the Borrower to the Agent and the Lenders under the Loan Documents (collectively, the "Guaranteed Obligations").
The Guaranty shall be absolute, unconditional, and irrevocable, and shall not be subject to any defense, set-off, counterclaim, recoupment, or reduction of any kind based upon any circumstance that might constitute a legal or equitable discharge or defense of a guarantor or surety. The Guaranty shall include customary waivers, including, without limitation:
(a) Waiver of all suretyship defenses;
(b) Waiver of any right to require the Agent or the Lenders to proceed against the Borrower, any other Guarantor, or any collateral, or to pursue any other remedy, before proceeding against any Guarantor under the Guaranty;
(c) Waiver of any right of marshalling of assets;
(d) Waiver of any right of subrogation, contribution, or reimbursement against the Borrower or any other Guarantor until such time as all Guaranteed Obligations have been irrevocably paid in full in cash and all commitments under the Facility have been terminated; and
(e) Such other customary waivers and provisions as shall be set forth in the definitive Guaranty.
IX. CONDITIONS PRECEDENT TO CLOSING
The initial borrowing under the Facility and the obligation of the Lenders to fund such borrowing shall be subject to the prior satisfaction (or waiver by the Agent and the Required Lenders) of each of the following conditions precedent:
Documentation
(a) Execution and delivery by the applicable Loan Parties of the Credit Agreement, the Security Agreement, the Guaranty, the Pledge Agreement, the Mortgages (in form appropriate for recording in each applicable jurisdiction, including Iowa and Illinois), the Deposit Account Control Agreements, the Assignment of Insurance, and all other Loan Documents, in each case in form and substance satisfactory to the Agent and its counsel;
(b) Delivery of a favorable written legal opinion of Calderwood & Harkness LLP, counsel to the Borrower and the other Loan Parties, addressed to the Agent and each Lender, covering such matters as the Agent and its counsel may reasonably require, including due organization, authorization, enforceability, no conflicts, perfection of security interests, and such other matters as are customary in transactions of this nature;
(c) Delivery of a favorable written legal opinion of Kessler, Brandt & Whitfield LLP, counsel to the Agent, covering such matters as may be required by the Agent and the Lenders.
Corporate / Entity Deliverables
(a) Certified copies of the organizational documents of each Loan Party, including the operating agreement (in the case of GAP and GGS), articles of organization or articles of incorporation (as applicable), and certificates of formation or incorporation, together with all amendments thereto;
(b) Resolutions duly adopted by the board of directors, board of managers, or members (as applicable) of each Loan Party, authorizing the execution, delivery, and performance of the Loan Documents to which such Loan Party is a party, certified as true and correct by an authorized officer or manager of such Loan Party;
(c) Good standing certificates (or certificates of existence, as applicable) for each Loan Party issued by the Secretary of State of its jurisdiction of formation (Iowa, Delaware, and Illinois, as applicable) and each jurisdiction in which it is qualified to do business, dated no earlier than thirty (30) days prior to the Closing Date;
(d) Incumbency certificates identifying each officer or manager authorized to execute the Loan Documents on behalf of each Loan Party, together with specimen signatures; and
(e) An officer's certificate, signed by the Chief Executive Officer and the Chief Financial Officer of the Borrower, certifying as of the Closing Date (i) the accuracy of all representations and warranties set forth in the Credit Agreement, (ii) the absence of any Default or Event of Default, and (iii) the absence of any Material Adverse Change since June 30, 2022.
Financial Deliverables
(a) Audited consolidated financial statements of Greenfield Agricultural Partners LLC and its subsidiaries for the fiscal year ended December 31, 2021 (FY2021), audited by Ashford, Kline & Pearce LLP, including balance sheet, income statement, statement of cash flows, and statement of changes in members' equity, together with all notes thereto and the auditor's report thereon (unqualified). For reference, the Borrower's consolidated revenue for FY2021 was approximately $347,200,000;
(b) Interim unaudited consolidated financial statements of the Borrower and its subsidiaries through the most recently available fiscal quarter or month-end period preceding the Closing Date, certified by the Chief Financial Officer of the Borrower as fairly presenting the financial condition and results of operations of the Borrower and its subsidiaries as of and for the periods covered thereby (subject to normal year-end adjustments and the absence of footnotes);
(c) Pro forma financial projections for the Borrower and its subsidiaries for the fiscal years ending December 31, 2022 through December 31, 2026, prepared by management and in form and substance reasonably satisfactory to the Agent; and
(d) An initial Borrowing Base Certificate, calculated as of a date no earlier than five (5) business days prior to the Closing Date, in form and substance satisfactory to the Agent, demonstrating sufficient Excess Availability to fund the initial borrowing and the refinancing of the Existing Facility.
Diligence
(a) Satisfactory completion by Pryor & Associates LLC (or another firm acceptable to the Agent) of a field examination and inventory appraisal of the Borrower and its subsidiaries, with results satisfactory to the Agent in its sole discretion;
(b) Satisfactory results of Uniform Commercial Code, federal and state tax lien, and judgment lien searches conducted against each Loan Party and each of its predecessors in interest in the States of Iowa, Illinois, and Indiana and the State of Delaware (as the jurisdiction of formation of Holdings), reflecting no liens, encumbrances, or adverse filings other than Permitted Liens and liens to be released at Closing;
(c) Satisfactory review by the Agent and its counsel of environmental reports (Phase I environmental site assessments, and Phase II assessments where warranted), title commitments, and surveys for all mortgaged properties, reflecting no material environmental liabilities, title defects, or survey issues that would impair the Agent's security interest or lien priority; and
(d) Satisfactory review by the Agent of the Loan Parties' insurance program and delivery of all required insurance endorsements, certificates of insurance, and evidence of compliance with the insurance requirements set forth in Section VII above and in the definitive Credit Agreement.
Payoff / Existing Debt
(a) Delivery to the Agent of a payoff letter from Prairie National Bank, National Association ("PNB"), in form and substance satisfactory to the Agent, setting forth the aggregate amount required to repay in full all outstanding obligations under the Existing Facility (the $55,000,000 revolving credit agreement dated as of April 1, 2018, as amended), including principal, accrued interest, fees, breakage costs, and all other amounts owing thereunder, and providing for the release of all liens and security interests held by PNB upon receipt of such payoff amount;
(b) Evidence satisfactory to the Agent of the termination or release of all existing UCC financing statements filed by or on behalf of PNB against the Loan Parties, including Iowa Secretary of State Filing Nos. 2018-0041729 and 2018-0041730, and all mortgage liens held by PNB against the real property of the Loan Parties; and
(c) Evidence satisfactory to the Agent that all outstanding principal, interest, fees, and other amounts under the Existing Facility have been repaid in full and that all commitments thereunder have been terminated.
UCC and Mortgage Filings
(a) Filing of UCC-1 financing statements with the appropriate filing offices in the States of Iowa, Illinois, Indiana, and Delaware, naming the applicable Loan Party as debtor and the Agent as secured party, covering all personal property collateral described in Section VII above;
(b) Recording of mortgage documents in Polk County, Iowa (for the GAP headquarters and certain GGS properties), and in each additional Iowa county in which GGS-owned grain elevator facilities or distribution centers are located, as well as in McLean County, Illinois (for the GCI distribution center in Bloomington, Illinois); and
(c) Delivery of UCC and mortgage search results confirming the Agent's first-priority perfected security interest and mortgage lien position with respect to all collateral and mortgaged properties (subject only to Permitted Liens).
Other Conditions
(a) Payment of all fees and expenses owing on the Closing Date, including the upfront fee ($400,000), the initial administrative agent fee installment ($18,750, pro rated as applicable), and all legal fees and expenses of Kessler, Brandt & Whitfield LLP as counsel to the Agent;
(b) No Material Adverse Change shall have occurred since June 30, 2022;
(c) No litigation, investigation, or proceeding shall be pending or threatened against any Loan Party that could reasonably be expected to result in a Material Adverse Effect;
(d) Satisfactory completion by the Agent and each Lender of "know your customer" and anti-money laundering diligence with respect to each Loan Party, including verification of beneficial ownership information in accordance with the requirements of the USA PATRIOT Act, the Bank Secrecy Act, and applicable regulations of the Financial Crimes Enforcement Network;
(e) Delivery of evidence of flood insurance, to the extent required under the Flood Disaster Protection Act of 1973 (as amended) and applicable regulations, for any mortgaged property located in a special flood hazard area, as determined by reference to the most current flood insurance rate maps published by the Federal Emergency Management Agency; and
(f) Satisfaction of such other conditions as the Agent and the Required Lenders may reasonably require.