ABHILASH M. RAVAL Partner 55 Hudson Yards I New York, NY 10001-2163 T: 212.530.5123 araval@milbank.com I milbank.com
Exhibit 99.1
Milbank
XXXXXXXX X. XXXXX
Partner
00 Xxxxxx Xxxxx X Xxx Xxxx, XX 00000-2163
T: 212.530.5123
xxxxxx@xxxxxxx.xxx I xxxxxxx.xxx
CONFIDENTIAL
October 2, 2022
VIA U.S. MAIL
Greenrose Holding Company, Inc.
000 Xxxxxxxx
Amityville, NY 11701
Attn: Xxxxxxx Xxxxxxx
| Re: | Credit Agreement - Notice of Default |
Dear Xx. Xxxxxxx:
We write on behalf of DXR Finance, LLC (“DXR Finance” or “Agent”) in reference to the Credit Agreement, dated November 26, 2021 (“Credit Agreement”), by and among Greenrose Holding Company Inc., formerly known as Greenrose Acquisition Corp., as Borrower (the “Borrower”), the lenders identified on the signature pages of the Credit Agreement (“Lenders”), and DXR Finance, as agent for the Lenders. Except as otherwise specified herein, capitalized terms used in this letter have the meanings given to them in the Loan Documents, as that term is defined in the Credit Agreement.
We write to notify Borrower that certain Events of Default under the Loan Documents have occurred and are continuing, including without limitation, the following (“Specified Defaults”):
| (i) | an Event of Default pursuant to Section 4.13, Schedule 4.13, and Section 8.1(b)(iv) of the Credit Agreement as a result of Xxxxxxxxx’x issuance of a non-interest-bearing promissory note to Imperial Capital, LLC on April 13, 2022, in the face amount of $10,500,000 and maturing October 15, 2023; |
| (ii) | an Event of Default pursuant to Section 5.1, Schedule 5.1, and Section 8.1(b)(i) of the Credit Agreement, as a result of Greenrose’s failure to deliver its annual financial statements for the fiscal year ending December 31, 2021, within ninety (90) days after the end of the fiscal year; |
| (iii) | an Event of Default pursuant to Section 5.1, Schedule 5.1, and Section 8.1(b)(i) of the Credit Agreement, as a result of the failure to provide the financial statements for the quarter ended June 30, 2022, within the required time period; |
| (iv) | an Event of Default pursuant to Section 5.1, Schedule 5.1, and Section 8.1(b)(i) of the Credit Agreement, as a result of the failure to provide a compliance certificate for the quarter ended June 30, 2022; |
MILBANK LLP
NEW YORK I LOS ANGELES I WASHINGTON,
D.C. I SAO PAULO I FRANKFURT
LONDON I MUNICH I BEIJING I HONG KONG I SEOUL I SINGAPORE I TOKYO.
| Greenrose Holding Company, Inc. | CONFIDENTIAL |
| Attn: Xxxxxxx Xxxxxxx | October 2, 2022 |
| Page 2 |
| (v) | an Event of Default pursuant to Section 5.1, Schedule 5.1, and Section 8.1(b)(i) of the Credit Agreement, as a result of the qualified opinion of auditors as to the Borrower’s ability to continue as a going concern; |
| (vi) | Events of Default pursuant to Sections 7.1, 7.2, 7.3, and 8.1(b)(i) of the Credit Agreement, as a result of the Borrower’s failure to maintain requisite adjusted EBITDA, net leverage ratio and secured net leverage ratio, as of June 30, 2022; |
| (vii) | an Event of Default pursuant to Sections 5.14 and 8.1(b)(ii) of the Credit Agreement as a result of the failure to hold a meeting to review the financial results of the company after the close of the fiscal year ending December 31, 2021, and the fiscal quarter ending March 30, 2022; |
| (viii) | an Event of Default pursuant to Sections 6.1 and 8.1(b)(i) of the Credit Agreement as a result of the issuance by Xxxxxxxxx of indebtedness in favor of Imperial Capital LLC; and |
| (ix) | an Event of Default pursuant to Section 5.1, Schedule 5.1, and Section 8.1(b)(i) of the Credit Agreement, as a result of the failure to deliver a certificate or other notice to the Agent of the above events of default. |
Additionally, the Borrower failed to make the interest payment due September 30, 2022, which shall constitute an Event of Default pursuant to Sections 2.4 and 8.1(a) of the Credit Agreement if such payment is not made within five Business Days of the due date (the “Impending Default”).
Please be advised that DXR Finance is considering its rights and remedies pursuant to the Loan Documents, including but not limited to, those identified in section 9.1 of the Credit Agreement. Please be further advised that the Agent and Lenders have not waived, and are not waiving, any default or Event of Default, including the Specified Defaults and the Impending Default, whether now existing or hereafter arising under any of the Loan Documents, or its respective rights, remedies, powers, privileges and defenses arising as a result thereof or otherwise, and no failure on the part of the Agent or Lenders to exercise and no delay in exercising any rights or remedies, including without limitation the right to take any enforcement actions, and no course of dealing with respect to any right, remedy, power, privilege or defense under any of the Loan Documents, at law or in equity or otherwise, arising as the result of any default or Event of Default (including the Specified Defaults and the Impending Default), whether now existing or hereafter arising under any of the Loan Documents, or the occurrence thereof or any other action by the Borrower and no acceptance of partial performance or partial payment by the Lenders or Agent, shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power, privilege or defense under any of the Loan Documents, at law, in equity or otherwise, preclude any other or further exercise thereof or the exercise of any other right, remedy, power, privilege or defense nor shall any failure to specify any default or Event of Default in this letter constitute any waiver of such default or Event of Default. The rights, remedies, powers, privileges and defenses provided for by any of the Loan Documents are cumulative, may be exercised separately, successively or concurrently at the sole discretion of the Lender, and are not exclusive of any rights, remedies, powers, privileges and defenses provided at law, in equity or otherwise, all of which are hereby expressly reserved.
MILBANK LLP
NEW YORK I LOS ANGELES I WASHINGTON,
D.C. I SAO PAULO I FRANKFURT
LONDON I MUNICH I BEIJING I HONG KONG I SEOUL I SINGAPORE I TOKYO
| Greenrose Holding Company, Inc. | CONFIDENTIAL |
| Attn: Xxxxxxx Xxxxxxx | October 2, 2022 |
| Page 3 |
Please be further advised that (i) no previous or future correspondence or discussions among the Borrower and its officers, directors, shareholders, employees, agents, affiliates subsidiaries and assigns, the Lenders or Agent or any other person regarding any default or Event of Default, whether now existing or hereafter arising under any of the Loan Documents, or the obligations owed by Borrower shall constitute a waiver, estoppel, agreement to forbear or limitation of the Lenders’ or Agent’s rights, remedies, powers, privileges and defenses under the any of the Loan Documents, applicable law or otherwise unless and until said action is evidenced by an express writing executed by authorized representatives of the Lenders or Agent and (ii) neither the delivery of this notice, nor the prior or future collection of any interest, principal or other amount by the Lenders or Agent with respect to any of the Loan Documents shall be construed to limit or waive the Lenders’ or Agent’s right to receive any and all other sums which are or may become due or payable under any of the Loan Documents or otherwise, including without limitation costs of collection, costs of enforcement and late payment charges.
| Sincerely, | |
| /s/Xxxxxxxx X Xxxxx | |
| Xxxxxxxx X. Xxxxx |
cc (via email):
Xxxxxxxxxx Xxxxxx LLP
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
New York, NY 10019
Attention: Xxxxxxxx Xxxxx
Email: Xxxxxxxx@xxxxxxx.xxx
Xxxxxx Xxxxxxx & Xxxxxx LLP
0000 Xxxxxxxx,
New York, NY 10018
Attention: Xxx Xxxxxxxx
Email: xxxxxxxxx@xxxxxxxxxxxxx.xxx
MILBANK LLP
NEW YORK I LOS ANGELES I WASHINGTON,
D.C. I SAO PAULO I FRANKFURT
LONDON I MUNICH I BEIJING I HONG KONG I SEOUL I SINGAPORE I TOKYO
