Contract analysis

ARTICLE I — DEFINITIONS AND INTERPRETATION

Section 1.01 — Defined Terms As used in this Agreement, the following terms shall have the meanings set forth below: "Affiliate" means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person. For purposes of this definition, "control" (including the terms "controlling," "controlled by," and "under common control with") means th

Section 1.02 — Rules of Interpretation For purposes of this Agreement, the following rules of interpretation shall apply: (a) Accounting terms not specifically defined herein shall have the meanings assigned to them under GAAP, as in effect from time to time, applied on a basis consistent with the preparation of the financial statements referred to in Section 5.05. (b) References to "Sections," "Articles," "Exhibits,

Section 1.03 — UCC Terms Terms used but not defined herein that are defined in the Uniform Commercial Code as in effect from time to time in the State of New York (the "UCC") shall have the respective meanings assigned to them therein. To the extent that the definition of any term used herein is inconsistent with the definition of such term in the UCC, the definition set forth in this Agreement shall control.

Section 2.01 — Commitment; Loan Subject to the terms and conditions set forth herein and in reliance upon the representations and warranties of the Borrower contained herein, the Lender agrees to make a single term loan (the "Loan") to the Borrower on the Funding Date in the aggregate principal amount of Twenty Million Dollars ($20,000,000). The Loan is a subordinated secured mezzanine term loan. Once repaid in whole

Section 2.02 — Funding (a) Funding Date. The Lender shall fund the Loan on the Funding Date, which shall be April 23, 2021, or such later date as the Lender may agree in writing; provided that all conditions precedent to funding set forth in Article IV shall have been satisfied or waived by the Lender on or prior to the Funding Date. (b) Method of Funding. On the Funding Date, the Lender shall disburse the net procee

Section 2.03 — Interest (a) Cash Pay Interest. The outstanding principal balance of the Loan (including all capitalized PIK Interest theretofore added to the principal balance) shall bear interest at the Cash Pay Rate of eight percent (8.00%) per annum. Cash Pay Interest shall accrue from the Funding Date and shall be payable in cash quarterly in arrears on each Interest Payment Date, commencing on June 30, 2021. For

Section 2.04 — Repayment of Principal The entire outstanding principal balance of the Loan, together with all accrued and unpaid interest thereon (including, without limitation, all capitalized PIK Interest), all premiums, fees, costs, expenses, and all other Obligations, shall be due and payable in full on the Maturity Date, May 7, 2026. There shall be no scheduled amortization of the principal of the Loan prior to

Section 2.05 — Origination Fee The Borrower shall pay to the Lender an origination fee equal to $400,000 (representing two percent (2.00%) of the original principal amount of the Loan) on the Closing Date. The Origination Fee shall be fully earned upon execution of this Agreement and shall be non-refundable when paid, regardless of any subsequent prepayment, acceleration, or termination of the Loan or this Agreement.

Section 2.06 — Voluntary Prepayment (a) Right to Prepay. The Borrower may prepay the Loan in whole or in part at any time, subject to the terms and conditions of this Section 2.06 and the Intercreditor Agreement. (b) Notice. Any voluntary prepayment shall be made upon not less than thirty (30) days' prior written notice to the Lender (which notice shall be irrevocable once given), substantially in the form of Exhibit

Section 2.07 — Mandatory Prepayment (a) Change of Control. Upon the occurrence of a Change of Control, the Borrower shall prepay the Loan in full at a price equal to one hundred three percent (103%) of the outstanding principal balance of the Loan (including all capitalized PIK Interest) as of the date of such prepayment, plus all accrued and unpaid Cash Pay Interest and PIK Interest to the date of such prepayment, p

Section 2.08 — Application of Payments All payments received by the Lender (whether voluntary, mandatory, or upon acceleration) shall be applied in the following order of priority: (a) first, to the payment of all fees, costs, expenses, and indemnification obligations then due and payable under this Agreement and the other Loan Documents; (b) second, to the payment of all accrued and unpaid Cash Pay Interest; (c) thi

Section 2.09 — Subordination (a) Subordination of Obligations. The Obligations are subordinated in right of payment and lien priority to the Senior Debt, in each case pursuant to, and as more fully set forth in, the Intercreditor Agreement. The Lender hereby acknowledges and agrees that, as between the Lender and the Senior Agent, the terms and conditions of the Intercreditor Agreement shall govern the relative right

Section 3.01 — Use of Proceeds (a) The Borrower shall use one hundred percent (100%) of the proceeds of the Loan solely to fund Capital Expenditures related to the Expansion Project at the Borrower's manufacturing facility located at 4510 Harshman Road, Dayton, OH 45424, consisting of: (i) the construction and build-out of a new approximately 62,000 square foot coating line, with an estimated cost of approximately $1

ARTICLE IV — CONDITIONS PRECEDENT TO FUNDING

Section 4.01 — Conditions Precedent The obligation of the Lender to fund the Loan on the Funding Date is subject to the satisfaction (or written waiver by the Lender) of each of the following conditions precedent on or prior to the Funding Date: (a) Execution and Delivery of Loan Documents. The Borrower and each other Loan Party shall have executed and delivered to the Lender each of the following Loan Documents, in

ARTICLE V — REPRESENTATIONS AND WARRANTIES The Borrower hereby represents and warrants to the Lender as of the Closing Date and as of the Funding Date as follows:

Section 5.01 — Organization and Good Standing (a) The Borrower is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Ohio, Ohio Secretary of State Filing No. 4217835. The Borrower has all requisite limited liability company power and authority to own, lease, and operate its properties and to carry on its business as presently conducted. (b) Crestline Coat

Section 5.02 — Authorization; Enforceability (a) The execution, delivery, and performance by the Borrower of this Agreement and each other Loan Document to which it is a party have been duly authorized by all necessary limited liability company action on the part of the Borrower, including approval by the board of managers (or equivalent governing body) of the Borrower. The execution, delivery, and performance by Cre

Section 5.03 — No Conflicts The execution, delivery, and performance by the Borrower and its Subsidiary of the Loan Documents to which each is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not (a) violate or conflict with the Operating Agreement, the Certificate of Formation, the articles of incorporation or bylaws of Crestline Coatings Inc., or any other organizat

Section 5.04 — Governmental Approvals No consent, approval, authorization, order, registration, filing, or qualification of or with any governmental authority is required for the execution, delivery, or performance of this Agreement or any other Loan Document by the Borrower or its Subsidiary, or for the consummation of the transactions contemplated hereby or thereby, except for (a) filings of UCC-1 financing stateme

Section 5.05 — Financial Statements (a) The Borrower has delivered to the Lender the audited consolidated financial statements of the Borrower and its Subsidiary for the fiscal year ended December 31, 2020, consisting of a consolidated balance sheet, consolidated statements of income, consolidated statements of members' equity, and consolidated statements of cash flows, in each case together with the notes thereto an

Section 5.06 — No Default No Default or Event of Default exists under this Agreement or any other Loan Document, and no Default or Event of Default will result from the making of the Loan or the application of the proceeds thereof. No default or event of default exists under the Senior Credit Agreement or any other material agreement to which the Borrower or its Subsidiary is a party.

Section 5.07 — Litigation There is no pending or, to the knowledge of the Borrower, threatened action, suit, investigation, arbitration, or proceeding (including any environmental, regulatory, or employment-related proceeding) before or by any court, governmental authority, arbitrator, or other tribunal against or affecting the Borrower or its Subsidiary that (a) involves any of the transactions contemplated by the L

Section 5.08 — Ownership and Subsidiaries (a) As of the Closing Date, seventy-eight percent (78%) of the membership interests of the Borrower are owned, directly or indirectly, by Ridgeway Capital Partners Fund III, L.P. The remaining twenty-two percent (22%) of the membership interests are held by members of management and the founders of the Borrower. The ownership structure is described in further detail in Schedu

Section 5.09 — Liens; Collateral (a) The Collateral is free and clear of all Liens other than Permitted Liens. The Borrower has good and marketable title to all of the Collateral, free and clear of any Lien, claim, or encumbrance, except for Permitted Liens. (b) Upon the filing of UCC-1 financing statements with the Ohio Secretary of State and the recording of the second-lien mortgage with the Montgomery County, Ohio

Section 5.10 — Intellectual Property The Borrower and its Subsidiary own or have valid licenses to use all intellectual property (including trademarks, service marks, trade names, copyrights, patents, and trade secrets) that is material to the conduct of their business as presently conducted, including, without limitation, trademarks and trade secrets related to proprietary coating formulations. No claim has been ass

Section 5.11 — Environmental Matters (a) The Borrower and its Subsidiary are in compliance with all Environmental Laws (as defined by applicable federal, state, and local statutes, regulations, and ordinances relating to the protection of the environment, human health, and safety) in all material respects. (b) There are no pending or, to the knowledge of the Borrower, threatened claims, actions, investigations, or pr

Section 5.12 — Tax Matters (a) The Borrower and its Subsidiary have filed (or caused to be filed) all material federal, state, and local tax returns required to be filed by them and have paid (or caused to be paid) all material taxes shown thereon to be due and payable, except where such taxes are being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accorda

Section 5.13 — ERISA (a) The Borrower and its Subsidiary are in compliance in all material respects with the applicable provisions of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and the Internal Revenue Code of 1986, as amended (the "Code"), with respect to each "employee benefit plan" (as defined in Section 3(3) of ERISA) maintained, sponsored, or contributed to by the Borrower or its