[sheet: Cover]

Field	Value
Document Title	Funds Flow Memorandum
Transaction	Acquisition of ProShield Industrial Coatings Product Line
Buyer	Crestline Packaging Solutions LLC
Seller	Voss Chemical Industries, Inc.
Closing Date	January 20, 2023
Prepared By	Calderwood & Harkness LLP
Lead Associate	Ryan Kowalski
Working Associate	Megan Chu
Responsible Partner	Harrison Wexford
Billing Partner	Beatrice Holloway
C&H Matter No.	1006-00007
APA Execution Date	November 28, 2022
Governing Law	State of New York
Confidentiality Notice	This memorandum is confidential and is prepared solely for the purpose of coordinating the flow of funds at Closing. Distribution is limited to authorized parties and their counsel.
Note — Earnout	Earnout payments of up to $3,500,000 are contingent on post-closing performance during the Earnout Period (January 17, 2023 – January 16, 2025) and are NOT funded at Closing. Any earnout payment will be due within 60 days after the end of the Earnout Period (i.e., by March 17, 2025).
Note — Working Capital	Estimated net working capital at Closing is $1,850,000 vs. Target NWC of $1,800,000. Dollar-for-dollar true-up to be completed within 90 days post-Closing (by April 20, 2023). Any adjustment payment will be made separately.

[sheet: Sources of Funds]

Line No.	Source Entity	Description	Reference / Agreement	Amount
1	Kestrel Capital Partners Fund III, LP	Equity contribution via capital call to fund	Equity Commitment Letter; GP: Cobalt Ridge Partners Management III, LLC	$6,000,000.00
2	Great Lakes Commerce Bank, N.A.	Incremental Term Loan C draw under existing senior secured credit facility	Third Amendment to Credit Agreement, dated December 19, 2022 (original Credit Agreement dated March 15, 2021)	$12,500,000.00
TOTAL SOURCES	$18,500,000.00

[sheet: Uses of Funds]

Line No.	Payee	Description / Purpose	Reference	Amount
1	Voss Chemical Industries, Inc.	Upfront cash purchase price consideration per APA Section [●]	APA dated November 28, 2022; EIN: 16-2847103	$14,500,000.00
2	Pinnacle Trust Company (as Escrow Agent)	Indemnification escrow deposit per Escrow Agreement	Escrow Agreement dated January 12, 2023; Ref. No. PT-2023-00418; Trust Officer: Rachel Underwood	$2,000,000.00
3	Coventry Mutual Insurance Co.	Buyer-side representations & warranties insurance premium	R&W Policy No. CMI-RW-2023-0042; Binder dated November 22, 2022; Underwriter: Gail Emerson; Policy Limit: $9,000,000	$198,000.00
4	Calderwood & Harkness LLP	Buyer's counsel legal fees and disbursements	Matter No. 1006-00007; 1114 Avenue of the Americas, 32nd Floor, New York, NY 10036	$875,000.00
5	Halcyon Chartered Accountants LLP	Buyer's accounting/tax due diligence advisory fees	Engagement Partner: Martin Szabo, CPA; 1301 East 9th Street, Suite 2400, Cleveland, OH 44114	$185,000.00
6	Northbridge Environmental Consulting Group LLC	Phase I environmental site assessment fees	Project Manager: Aaron Lindquist, P.E.; Report delivered November 4, 2022	$42,000.00
7	Crestline Packaging Solutions LLC	Retained by Buyer — working capital reserves, miscellaneous transaction expenses, and closing adjustments	Wire to CPS operating account; balance of sources less identified uses	$700,000.00
TOTAL USES	$18,500,000.00

[sheet: Wire Instructions]

Line No.	Payee	Receiving Bank Name	Receiving Bank Address	ABA Routing Number	Account Number	Account Name / Beneficiary	Reference / Memo	Amount	Contact Person	Contact Phone
1	Voss Chemical Industries, Inc.	First Niagara National Trust Bank	726 Exchange Street, Buffalo, NY 14210	021-209-XXX	XXXX-XXXX-4871	Voss Chemical Industries, Inc.	CPS/VCI Asset Purchase — Closing Payment	$14,500,000.00	Frederick G. Voss	(716) 555-0134
2	Pinnacle Trust Company (Escrow Agent)	Pinnacle Trust Company	40 Wall Street, 16th Floor, New York, NY 10005	021-000-XXX	XXXX-XXXX-0418	Pinnacle Trust Company — Escrow Account PT-2023-00418	CPS/VCI Indemnification Escrow — PT-2023-00418	$2,000,000.00	Rachel Underwood, Trust Officer	(212) 555-0287
3	Coventry Mutual Insurance Co.	Atlantic Federal Savings Bank	100 Federal Street, Boston, MA 02110	011-401-XXX	XXXX-XXXX-7790	Coventry Mutual Insurance Co. — Premium Account	R&W Policy CMI-RW-2023-0042 Premium	$198,000.00	Gail Emerson, Underwriter	(617) 555-0319
4	Calderwood & Harkness LLP	Manhattan Commercial Bank, N.A.	375 Park Avenue, New York, NY 10152	021-100-XXX	XXXX-XXXX-5512	Calderwood & Harkness LLP — IOLTA / Operating Account	Matter No. 1006-00007 — CPS/VCI Closing	$875,000.00	Beatrice Holloway, Billing Partner	(212) 555-0461
5	Halcyon Chartered Accountants LLP	Great Lakes Commerce Bank, N.A.	127 Public Square, Cleveland, OH 44114	041-200-XXX	XXXX-XXXX-3306	Halcyon Chartered Accountants LLP	CPS — ProShield Due Diligence Advisory	$185,000.00	Martin Szabo, CPA	(216) 555-0198
6	Northbridge Environmental Consulting Group LLC	Great Lakes Commerce Bank, N.A.	127 Public Square, Cleveland, OH 44114	041-200-XXX	XXXX-XXXX-8847	Northbridge Environmental Consulting Group LLC	CPS — Phase I ESA Invoice	$42,000.00	Aaron Lindquist, P.E.	(440) 555-0222
7	Crestline Packaging Solutions LLC	Great Lakes Commerce Bank, N.A.	127 Public Square, Cleveland, OH 44114	041-200-XXX	XXXX-XXXX-9401	Crestline Packaging Solutions LLC — Operating Account	Working Capital Reserve / Transaction Expenses	$700,000.00	Sandra K. Nair, CFO	(216) 555-0375

[sheet: Reconciliation & Notes]

Item

RECONCILIATION

Total Sources of Funds	$18,500,000.00
Total Uses of Funds	$18,500,000.00
Net Difference (must be zero)	$0.00

PURCHASE PRICE RECONCILIATION

Upfront Cash at Closing (wire to Seller)	$14,500,000.00
Indemnification Escrow (Pinnacle Trust Company)	$2,000,000.00
Earnout Target (contingent — not funded at Closing)	$1,500,000.00
Base Purchase Price	$18,000,000.00
Maximum Earnout (contingent — not funded at Closing)	$3,500,000.00
Maximum Total Consideration (if full earnout achieved)	$20,000,000.00

FINANCING RECONCILIATION

Equity Contribution — Kestrel Capital Partners Fund III, LP	$6,000,000.00
Debt — Great Lakes Commerce Bank, N.A. Term Loan C	$12,500,000.00
Total Financing	$18,500,000.00
Excess over Base Purchase Price (for transaction costs & reserves)	$500,000.00

KEY NOTES

Escrow Release	Escrow of $2,000,000 to be released to Seller on January 20, 2024 (12 months post-Closing), net of pending or resolved indemnification claims. Escrow Agent: Pinnacle Trust Company (Ref. PT-2023-00418).
Earnout — Not Funded at Closing	Volume-based earnout of up to $3,500,000 payable based on gallons of ProShield-branded coatings shipped during Earnout Period (Jan. 17, 2023 – Jan. 16, 2025). Threshold: 2,400,000 gallons ($0); Target: 3,000,000 gallons ($1,500,000); Stretch/Max: 3,800,000 gallons ($3,500,000). Rate: $2.50/gallon. Payment due by March 17, 2025 (60 days after Earnout Period end). Disputes resolved by Halcyon Chartered Accountants LLP as independent accountant.
Working Capital Adjustment	Estimated NWC at Closing: $1,850,000; Target NWC: $1,800,000. Dollar-for-dollar true-up. Final Closing balance sheet to be prepared by Buyer; true-up deadline: April 20, 2023 (90 days post-Closing). Any adjustment payment to be wired separately.
R&W Insurance	Buyer-side policy issued by Coventry Mutual Insurance Co.; Policy No. CMI-RW-2023-0042; Policy Limit: $9,000,000; Retention: $450,000 (split 50/50 — $225,000 Seller / $225,000 Buyer). Binder dated November 22, 2022. Premium of $198,000 paid by Buyer at Closing.
Transition Services Agreement	TSA fee of $35,000/month for up to 6 months post-Closing (max $210,000 total). Service Provider: Voss Chemical Industries, Inc. Expiration: July 20, 2023. TSA fees to be paid monthly post-Closing and are not included in this funds flow.
Facility Lease	Buyer is entering into a new direct lease with Niagara Industrial Realty LLC for the Tonawanda, NY manufacturing facility (42,000 sq ft at $14.50/sq ft = $609,000/yr). Lease payments are post-Closing obligations and not included in this funds flow.
Indemnification Terms	Cap: $4,500,000 (25% of $18,000,000 base purchase price). Basket: $180,000 (1% tipping basket). Survival: 12 months general reps (to Jan. 20, 2024); 36 months fundamental reps (to Jan. 20, 2026).
HSR Filing	Not required — deal value below Hart-Scott-Rodino size-of-transaction threshold.
Lender Consent	Third Amendment to Credit Agreement with Great Lakes Commerce Bank, N.A. dated December 19, 2022 (original Credit Agreement dated March 15, 2021). Consent obtained for incremental Term Loan C borrowing.
Actual vs. Target Closing Date	Target Closing Date per APA: January 16, 2023. Actual Closing Date: January 20, 2023.

AUTHORIZED SIGNATORIES

Buyer — Crestline Packaging Solutions LLC	Thomas R. Ellison, CEO; Sandra K. Nair, CFO; Derek Amato, General Counsel
Seller — Voss Chemical Industries, Inc.	Frederick G. Voss, President (62% Shareholder); Elena M. Voss, VP Operations (38% Shareholder)
Buyer's Counsel — Calderwood & Harkness LLP	Harrison Wexford, Responsible Partner
Seller's Counsel — Langford, Crewe & Cascade Insurance Brokers	Patricia Okonkwo, Lead Partner
Buyer's Lender — Great Lakes Commerce Bank, N.A.	Douglas Fenn, Senior Vice President
Escrow Agent — Pinnacle Trust Company	Rachel Underwood, Trust Officer
Sponsor — Kestrel Capital Partners Fund III, LP	Julian H. Prescott, Managing Partner (Cobalt Ridge Partners Management III, LLC, as General Partner)

[sheet: Cover]
Field | Value
Document Title | Funds Flow Memorandum
Transaction | Acquisition of ProShield Industrial Coatings Product Line
Buyer | Crestline Packaging Solutions LLC
Seller | Voss Chemical Industries, Inc.
Closing Date | January 20, 2023
Prepared By | Calderwood & Harkness LLP
Lead Associate | Ryan Kowalski
Working Associate | Megan Chu
Responsible Partner | Harrison Wexford
Billing Partner | Beatrice Holloway
C&H Matter No. | 1006-00007
APA Execution Date | November 28, 2022
Governing Law | State of New York
Confidentiality Notice | This memorandum is confidential and is prepared solely for the purpose of coordinating the flow of funds at Closing. Distribution is limited to authorized parties and their counsel.
Note — Earnout | Earnout payments of up to $3,500,000 are contingent on post-closing performance during the Earnout Period (January 17, 2023 – January 16, 2025) and are NOT funded at Closing. Any earnout payment will be due within 60 days after the end of the Earnout Period (i.e., by March 17, 2025).
Note — Working Capital | Estimated net working capital at Closing is $1,850,000 vs. Target NWC of $1,800,000. Dollar-for-dollar true-up to be completed within 90 days post-Closing (by April 20, 2023). Any adjustment payment will be made separately.
[sheet: Sources of Funds]
Line No. | Source Entity | Description | Reference / Agreement | Amount
1 | Kestrel Capital Partners Fund III, LP | Equity contribution via capital call to fund | Equity Commitment Letter; GP: Cobalt Ridge Partners Management III, LLC | $6,000,000.00
2 | Great Lakes Commerce Bank, N.A. | Incremental Term Loan C draw under existing senior secured credit facility | Third Amendment to Credit Agreement, dated December 19, 2022 (original Credit Agreement dated March 15, 2021) | $12,500,000.00
TOTAL SOURCES | $18,500,000.00
[sheet: Uses of Funds]
Line No. | Payee | Description / Purpose | Reference | Amount
1 | Voss Chemical Industries, Inc. | Upfront cash purchase price consideration per APA Section [●] | APA dated November 28, 2022; EIN: 16-2847103 | $14,500,000.00
2 | Pinnacle Trust Company (as Escrow Agent) | Indemnification escrow deposit per Escrow Agreement | Escrow Agreement dated January 12, 2023; Ref. No. PT-2023-00418; Trust Officer: Rachel Underwood | $2,000,000.00
3 | Coventry Mutual Insurance Co. | Buyer-side representations & warranties insurance premium | R&W Policy No. CMI-RW-2023-0042; Binder dated November 22, 2022; Underwriter: Gail Emerson; Policy Limit: $9,000,000 | $198,000.00
4 | Calderwood & Harkness LLP | Buyer's counsel legal fees and disbursements | Matter No. 1006-00007; 1114 Avenue of the Americas, 32nd Floor, New York, NY 10036 | $875,000.00
5 | Halcyon Chartered Accountants LLP | Buyer's accounting/tax due diligence advisory fees | Engagement Partner: Martin Szabo, CPA; 1301 East 9th Street, Suite 2400, Cleveland, OH 44114 | $185,000.00
6 | Northbridge Environmental Consulting Group LLC | Phase I environmental site assessment fees | Project Manager: Aaron Lindquist, P.E.; Report delivered November 4, 2022 | $42,000.00
7 | Crestline Packaging Solutions LLC | Retained by Buyer — working capital reserves, miscellaneous transaction expenses, and closing adjustments | Wire to CPS operating account; balance of sources less identified uses | $700,000.00
TOTAL USES | $18,500,000.00
[sheet: Wire Instructions]
Line No. | Payee | Receiving Bank Name | Receiving Bank Address | ABA Routing Number | Account Number | Account Name / Beneficiary | Reference / Memo | Amount | Contact Person | Contact Phone
1 | Voss Chemical Industries, Inc. | First Niagara National Trust Bank | 726 Exchange Street, Buffalo, NY 14210 | 021-209-XXX | XXXX-XXXX-4871 | Voss Chemical Industries, Inc. | CPS/VCI Asset Purchase — Closing Payment | $14,500,000.00 | Frederick G. Voss | (716) 555-0134
2 | Pinnacle Trust Company (Escrow Agent) | Pinnacle Trust Company | 40 Wall Street, 16th Floor, New York, NY 10005 | 021-000-XXX | XXXX-XXXX-0418 | Pinnacle Trust Company — Escrow Account PT-2023-00418 | CPS/VCI Indemnification Escrow — PT-2023-00418 | $2,000,000.00 | Rachel Underwood, Trust Officer | (212) 555-0287
3 | Coventry Mutual Insurance Co. | Atlantic Federal Savings Bank | 100 Federal Street, Boston, MA 02110 | 011-401-XXX | XXXX-XXXX-7790 | Coventry Mutual Insurance Co. — Premium Account | R&W Policy CMI-RW-2023-0042 Premium | $198,000.00 | Gail Emerson, Underwriter | (617) 555-0319
4 | Calderwood & Harkness LLP | Manhattan Commercial Bank, N.A. | 375 Park Avenue, New York, NY 10152 | 021-100-XXX | XXXX-XXXX-5512 | Calderwood & Harkness LLP — IOLTA / Operating Account | Matter No. 1006-00007 — CPS/VCI Closing | $875,000.00 | Beatrice Holloway, Billing Partner | (212) 555-0461
5 | Halcyon Chartered Accountants LLP | Great Lakes Commerce Bank, N.A. | 127 Public Square, Cleveland, OH 44114 | 041-200-XXX | XXXX-XXXX-3306 | Halcyon Chartered Accountants LLP | CPS — ProShield Due Diligence Advisory | $185,000.00 | Martin Szabo, CPA | (216) 555-0198
6 | Northbridge Environmental Consulting Group LLC | Great Lakes Commerce Bank, N.A. | 127 Public Square, Cleveland, OH 44114 | 041-200-XXX | XXXX-XXXX-8847 | Northbridge Environmental Consulting Group LLC | CPS — Phase I ESA Invoice | $42,000.00 | Aaron Lindquist, P.E. | (440) 555-0222
7 | Crestline Packaging Solutions LLC | Great Lakes Commerce Bank, N.A. | 127 Public Square, Cleveland, OH 44114 | 041-200-XXX | XXXX-XXXX-9401 | Crestline Packaging Solutions LLC — Operating Account | Working Capital Reserve / Transaction Expenses | $700,000.00 | Sandra K. Nair, CFO | (216) 555-0375
[sheet: Reconciliation & Notes]
Item | Detail
RECONCILIATION
Total Sources of Funds | $18,500,000.00
Total Uses of Funds | $18,500,000.00
Net Difference (must be zero) | $0.00
PURCHASE PRICE RECONCILIATION
Upfront Cash at Closing (wire to Seller) | $14,500,000.00
Indemnification Escrow (Pinnacle Trust Company) | $2,000,000.00
Earnout Target (contingent — not funded at Closing) | $1,500,000.00
Base Purchase Price | $18,000,000.00
Maximum Earnout (contingent — not funded at Closing) | $3,500,000.00
Maximum Total Consideration (if full earnout achieved) | $20,000,000.00
FINANCING RECONCILIATION
Equity Contribution — Kestrel Capital Partners Fund III, LP | $6,000,000.00
Debt — Great Lakes Commerce Bank, N.A. Term Loan C | $12,500,000.00
Total Financing | $18,500,000.00
Excess over Base Purchase Price (for transaction costs & reserves) | $500,000.00
KEY NOTES
Escrow Release | Escrow of $2,000,000 to be released to Seller on January 20, 2024 (12 months post-Closing), net of pending or resolved indemnification claims. Escrow Agent: Pinnacle Trust Company (Ref. PT-2023-00418).
Earnout — Not Funded at Closing | Volume-based earnout of up to $3,500,000 payable based on gallons of ProShield-branded coatings shipped during Earnout Period (Jan. 17, 2023 – Jan. 16, 2025). Threshold: 2,400,000 gallons ($0); Target: 3,000,000 gallons ($1,500,000); Stretch/Max: 3,800,000 gallons ($3,500,000). Rate: $2.50/gallon. Payment due by March 17, 2025 (60 days after Earnout Period end). Disputes resolved by Halcyon Chartered Accountants LLP as independent accountant.
Working Capital Adjustment | Estimated NWC at Closing: $1,850,000; Target NWC: $1,800,000. Dollar-for-dollar true-up. Final Closing balance sheet to be prepared by Buyer; true-up deadline: April 20, 2023 (90 days post-Closing). Any adjustment payment to be wired separately.
R&W Insurance | Buyer-side policy issued by Coventry Mutual Insurance Co.; Policy No. CMI-RW-2023-0042; Policy Limit: $9,000,000; Retention: $450,000 (split 50/50 — $225,000 Seller / $225,000 Buyer). Binder dated November 22, 2022. Premium of $198,000 paid by Buyer at Closing.
Transition Services Agreement | TSA fee of $35,000/month for up to 6 months post-Closing (max $210,000 total). Service Provider: Voss Chemical Industries, Inc. Expiration: July 20, 2023. TSA fees to be paid monthly post-Closing and are not included in this funds flow.
Facility Lease | Buyer is entering into a new direct lease with Niagara Industrial Realty LLC for the Tonawanda, NY manufacturing facility (42,000 sq ft at $14.50/sq ft = $609,000/yr). Lease payments are post-Closing obligations and not included in this funds flow.
Indemnification Terms | Cap: $4,500,000 (25% of $18,000,000 base purchase price). Basket: $180,000 (1% tipping basket). Survival: 12 months general reps (to Jan. 20, 2024); 36 months fundamental reps (to Jan. 20, 2026).
HSR Filing | Not required — deal value below Hart-Scott-Rodino size-of-transaction threshold.
Lender Consent | Third Amendment to Credit Agreement with Great Lakes Commerce Bank, N.A. dated December 19, 2022 (original Credit Agreement dated March 15, 2021). Consent obtained for incremental Term Loan C borrowing.
Actual vs. Target Closing Date | Target Closing Date per APA: January 16, 2023. Actual Closing Date: January 20, 2023.
AUTHORIZED SIGNATORIES
Buyer — Crestline Packaging Solutions LLC | Thomas R. Ellison, CEO; Sandra K. Nair, CFO; Derek Amato, General Counsel
Seller — Voss Chemical Industries, Inc. | Frederick G. Voss, President (62% Shareholder); Elena M. Voss, VP Operations (38% Shareholder)
Buyer's Counsel — Calderwood & Harkness LLP | Harrison Wexford, Responsible Partner
Seller's Counsel — Langford, Crewe & Cascade Insurance Brokers | Patricia Okonkwo, Lead Partner
Buyer's Lender — Great Lakes Commerce Bank, N.A. | Douglas Fenn, Senior Vice President
Escrow Agent — Pinnacle Trust Company | Rachel Underwood, Trust Officer
Sponsor — Kestrel Capital Partners Fund III, LP | Julian H. Prescott, Managing Partner (Cobalt Ridge Partners Management III, LLC, as General Partner)

[sheet: Cover]

RECONCILIATION

PURCHASE PRICE RECONCILIATION

FINANCING RECONCILIATION

KEY NOTES

AUTHORIZED SIGNATORIES

Record

Parties

Dates

Amounts