Contract analysis

Section 1.1 — Defined Terms. As used in this Agreement, the following terms shall have the following meanings: "Accounts" means all accounts, accounts receivable, and rights to payment of a monetary obligation, whether or not earned by performance, including all rights to payment for goods sold, leased, licensed, assigned, or otherwise disposed of, or for services rendered or to be rendered, and all rights associated

Section 1.2 — Incorporation of Mezzanine Credit Agreement Definitions. All capitalized terms used in this Agreement and not otherwise defined herein shall have the respective meanings ascribed to such terms in the Mezzanine Credit Agreement. The rules of interpretation and construction set forth in the Mezzanine Credit Agreement shall apply to this Agreement, mutatis mutandis.

Section 1.3 — UCC Terms. Terms defined in the UCC that are used but not otherwise defined in this Agreement (including, without limitation, "account," "chattel paper," "commercial tort claim," "deposit account," "document," "electronic chattel paper," "equipment," "farm products," "fixture," "general intangible," "goods," "health-care-insurance receivable," "instrument," "inventory," "investment property," "letter-of

ARTICLE II — GRANT OF SECURITY INTEREST

Section 2.1 — Grant. As collateral security for the prompt and complete payment, performance, and observance of all Secured Obligations, each Grantor hereby grants to the Secured Party a continuing second-priority security interest in and lien upon all of the following property of such Grantor, whether now owned or existing or hereafter acquired or arising and wherever located (collectively, the "Collateral"): (a) Ac

Section 2.2 — Second-Priority Nature; Subordination. The security interests granted pursuant to this Article II are expressly second-priority security interests, and are in all respects subject and subordinate to the first-priority liens and security interests of Pinnacle Commercial Bank, N.A. under the Senior Credit Agreement dated as of September 12, 2019, and the related Senior Loan Documents. The rights and remed

Section 2.3 — Obligations Secured. The security interests granted herein secure the prompt and complete payment, performance, and observance of all Secured Obligations, including but not limited to the following: (a) The principal amount of Twenty Million Dollars ($20,000,000) under the Mezzanine Credit Agreement and the Mezzanine Promissory Note; (b) All interest on the Mezzanine Term Loan at the rate of ten and one

Section 2.4 — Real Property. In addition to the personal property Collateral described in Section 2.1 above, CPS shall grant a second-lien mortgage (the "Second Lien Mortgage") on the real property located at 4510 Harshman Road, Dayton, OH 45424 (the "Dayton Facility"), together with all buildings, improvements, fixtures, and appurtenances thereon, to be executed and delivered as a post-closing deliverable and record

ARTICLE III — REPRESENTATIONS AND WARRANTIES Each Grantor hereby represents and warrants to the Secured Party as of the date hereof and as of each date on which the representations and warranties are required to be reaffirmed under the Mezzanine Credit Agreement, as follows:

Section 3.1 — Organization and Good Standing. (a) CPS is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Ohio, with Ohio Secretary of State Filing No. 4217835. CPS has the requisite power and authority to own, lease, and operate its properties and to carry on its business as presently conducted and as proposed to be conducted. (b) CCI is a corporation

Section 3.2 — Authorization; No Conflict. (a) Each Grantor has full power and authority to execute, deliver, and perform its obligations under this Agreement. The execution, delivery, and performance of this Agreement by each Grantor has been duly authorized by all necessary action on the part of such Grantor, including all necessary member action (in the case of CPS) and all necessary shareholder and board of direct

Section 3.3 — Title to Collateral; Liens. (a) Each Grantor has good and marketable title to, or valid leasehold interests in, all of its Collateral, in each case free and clear of all liens, claims, security interests, encumbrances, and other charges or restrictions of any kind whatsoever, other than (i) Permitted Liens, (ii) the Senior Liens in favor of Pinnacle Commercial Bank, N.A., and (iii) the second-priority s

Section 3.4 — Location of Collateral. (a) All tangible Collateral of each Grantor, including all Equipment and Inventory, is located at 4510 Harshman Road, Dayton, OH 45424 (the Dayton Facility), except as otherwise described on Schedule III-A attached hereto. (b) Each Grantor's principal place of business and chief executive office is located at 4510 Harshman Road, Dayton, OH 45424. No Grantor has any other places o

Section 3.5 — Legal Name; Organizational Information. (a) The exact legal name, Employer Identification Number, state of organization, type of organization, and organizational identification number of each Grantor are as set forth on Schedule III-B attached hereto. No Grantor has changed its legal name, state of organization, organizational structure, or identity within the five (5) years preceding the date hereof, e

Section 3.6 — Accounts Receivable. (a) All Accounts of each Grantor represent bona fide obligations of the respective account debtors arising in the ordinary course of such Grantor's business for goods sold, leased, or licensed or services rendered or to be rendered by such Grantor. All statements made and all unpaid balances and other matters appearing in any invoice, account statement, or other writing delivered to

Section 3.7 — Intellectual Property. (a) Schedule II-A attached hereto sets forth a complete and accurate list of all registered Trademarks, trademark applications, and material unregistered trademarks and trade names owned by each Grantor as of the date hereof, together with all applicable registration and application numbers, registration dates, and filing jurisdictions. (b) Schedule II-B attached hereto sets forth

Section 3.8 — Subsidiaries. (a) CPS owns one hundred percent (100%) of the outstanding equity interests (consisting of all issued and outstanding shares of capital stock) of CCI. CCI has no subsidiaries and does not own any equity interests in any other person or entity. (b) The equity interests in CCI are subject to the Pledge Agreement dated as of April 22, 2021, pursuant to which CPS has pledged one hundred percen

Section 3.9 — No Material Adverse Effect. Since December 31, 2020, there has been no event, change, circumstance, condition, development, or occurrence that, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect on (a) the business, operations, assets, liabilities, condition (financial or otherwise), or prospects of any Grantor, (b) the ability of any Grantor to p

ARTICLE IV — COVENANTS Each Grantor covenants and agrees with the Secured Party that, from and after the date hereof until the termination of this Agreement in accordance with Section 8.4 hereof, such Grantor shall comply with the following covenants:

Section 4.1 — Maintenance of Collateral. Each Grantor shall maintain and preserve the Collateral in good condition and repair, ordinary wear and tear excepted, and shall make all necessary repairs, replacements, and improvements thereto that are necessary or appropriate to preserve the value and utility of the Collateral. Without limiting the generality of the foregoing, each Grantor shall maintain its Equipment in p

Section 4.2 — Defense of Title. Each Grantor shall defend its title to and interest in the Collateral against the claims and demands of all persons and entities, other than the holders of Permitted Liens and Senior Liens. Each Grantor shall promptly notify the Secured Party in writing of any event, claim, proceeding, or circumstance that could reasonably be expected to adversely affect the value of the Collateral or

Section 4.3 — Insurance. (a) Each Grantor shall maintain insurance on the Collateral with financially sound and reputable insurance companies or underwriters, in such amounts, with such deductibles, and covering such risks (including fire, theft, explosion, vandalism, casualty, and such other risks as are customarily insured against by companies engaged in the same or similar businesses) as are customary for similarl

Section 4.4 — Restrictions on Disposition. No Grantor shall sell, lease, transfer, assign, convey, or otherwise dispose of any Collateral, or agree to do any of the foregoing, except for the following: (a) sales of Inventory in the ordinary course of business for fair value on commercially reasonable terms, (b) dispositions of worn-out, damaged, or obsolete Equipment in the ordinary course of business where such Equi

Section 4.5 — Restrictions on Liens. No Grantor shall create, assume, incur, or permit to exist any lien, security interest, charge, or encumbrance on or with respect to any Collateral, other than (a) Permitted Liens, (b) Senior Liens in favor of Pinnacle Commercial Bank, N.A. under the Senior Credit Agreement, and (c) the second-priority security interests granted in favor of the Secured Party under this Agreement.

Section 4.6 — Changes in Name, Location, or Structure. No Grantor shall (a) change its legal name, trade name, or any name under which it does business, (b) change its state of organization or jurisdiction of formation, (c) change its organizational structure or type of entity (including by merger, consolidation, conversion, or reorganization), (d) change its Employer Identification Number, or (e) change the location

Section 4.7 — Books and Records; Inspection. (a) Each Grantor shall keep and maintain at its chief executive office accurate and complete books and records relating to the Collateral, including records of all Accounts, Inventory, Equipment, and intellectual Property, in form and substance satisfactory to the Secured Party. (b) The Secured Party (and its agents, representatives, and advisors) shall have the right, upo

Section 4.8 — Collection of Accounts. (a) Until the occurrence and during the continuance of an Event of Default, each Grantor may, in the ordinary course of business and in accordance with prudent business practices, collect, compromise, and settle its Accounts, and may grant extensions, modifications, and adjustments with respect thereto, in each case on commercially reasonable terms. (b) Upon and after the occurre

Section 4.9 — Intellectual Property Covenants. Each Grantor shall: (a) maintain, preserve, and protect all material intellectual Property and take all actions reasonably necessary to maintain the validity, enforceability, and value of such intellectual Property, including paying all maintenance fees and filing all necessary renewals and extensions; (b) not abandon, cancel, or permit to lapse any material Trademark, T

Section 4.10 — Further Assurances. Each Grantor shall, at its own expense, execute and deliver to the Secured Party such further instruments, documents, and agreements, and take such further actions (including the filing of UCC financing statements, continuation statements, amendments, and termination statements, the execution and delivery of control agreements, and the making of appropriate entries in books and reco

Section 4.11 — Use of Proceeds. Proceeds of the Mezzanine Term Loan shall be used exclusively for capital expenditures related to the Dayton plant expansion project, consisting of the construction and build-out of a new approximately sixty-two thousand (62,000) square foot coating line facility and the acquisition and installation of packaging automation equipment, all as more particularly described in the Mezzanine

Section 5.1 — UCC Financing Statements. (a) Each Grantor hereby authorizes the Secured Party to prepare, execute (to the extent required by applicable law), and file UCC-1 financing statements (and any continuation statements, amendments, and assignments thereof) with the Ohio Secretary of State, naming such Grantor as debtor and the Secured Party as secured party, and describing the Collateral, in order to perfect t

Section 5.2 — Real Property Filings. CPS shall execute and deliver a recordable second-lien mortgage on the Dayton Facility (4510 Harshman Road, Dayton, OH 45424) in form and substance reasonably satisfactory to the Secured Party, to be recorded with the Montgomery County, Ohio Recorder's Office within thirty (30) days following the closing date (i.e., on or before May 22, 2021). CPS shall also deliver to the Secured

Section 5.3 — Control Agreements. (a) With respect to all Deposit Accounts maintained by any Grantor, such Grantor shall, within thirty (30) days following the closing date (or such longer period as the Secured Party may agree in writing), enter into deposit account control agreements in favor of the Secured Party with each financial institution at which such Deposit Accounts are maintained, in form and substance rea

Section 5.4 — Intellectual Property Filings. To the extent applicable and permitted by law, the Secured Party may file notices of security interest, assignments, or other documents with the United States Patent and Trademark Office and the United States Copyright Office (and any applicable state or foreign intellectual property registry) in order to perfect or provide notice of the security interests granted herein w

Section 5.5 — Delivery of Instruments and Chattel Paper. Each Grantor shall, promptly upon the request of the Secured Party, deliver to the Secured Party (or its designee) all Instruments and tangible Chattel Paper constituting Collateral, in each case endorsed in blank or to the order of the Secured Party, together with any necessary allonges or other endorsements, to the extent required for perfection by possession

ARTICLE VI — RIGHTS AND REMEDIES

Section 6.1 — Rights upon Event of Default. Upon the occurrence and during the continuance of an Event of Default (as defined in the Mezzanine Credit Agreement), the Secured Party shall have, in addition to all other rights and remedies granted to it under this Agreement and the other Loan Documents, all of the rights and remedies of a secured party under Article 9 of the UCC and under other applicable law, subject i

Section 6.2 — Sale of Collateral. (a) The Secured Party may sell the Collateral, or any part thereof, at one or more public or private sales, for cash, credit, or any combination thereof, and upon such other terms as the Secured Party may deem commercially reasonable. The Secured Party shall give each Grantor not less than ten (10) days' prior written notice of the time and place of any public sale or of the time aft

Section 6.3 — Application of Proceeds. (a) The Proceeds of any sale, collection, or other realization of the Collateral, or any part thereof, shall be applied by the Secured Party in the following order of priority: First, to the payment of all reasonable costs and expenses of the Secured Party incurred in connection with such sale, collection, or other realization, including all reasonable attorneys' fees, court cos