CONFIDENTIAL TREATMENT REQUESTED

CONFIDENTIAL TREATMENT REQUESTED
INDICATIVE TERM SHEET — CONFIDENTIAL
Proposed Asset-Based Revolving Credit Facility
January 28, 2022
Ridgeline Internal Deal ID: ABL-2022-0417
Prepared by:
Ridgeline National Bank, National Association 200 Tryon Street Charlotte, NC 28202
Transmitted via:
Whitfield Ames LLP Catherine Royce, Partner Benjamin Nakamura, Associate 1585 Broadway, 34th Floor New York, NY 10036
Primary Contact:
Jonathan Kershaw, Senior Vice President, Asset-Based Lending Ridgeline National Bank, National Association Telephone: (704) 555-8200
Email: jonathan.kershaw@ridgelinebank.com
IMPORTANT NOTICE: This term sheet is for discussion purposes only and does not constitute a commitment to lend or an offer to enter into any financing arrangement. Any commitment by Ridgeline National Bank, National Association to provide the financing described herein is subject to, among other things, satisfactory completion of due diligence (including business, financial, legal, and collateral due diligence), internal credit committee approval, negotiation and execution of definitive documentation in form and substance satisfactory to Ridgeline National Bank, National Association and its counsel, and such other conditions as Ridgeline National Bank, National Association may require in its sole discretion. This term sheet is confidential and may not be disclosed to any third party without the prior written consent of Ridgeline National Bank, National Association, except to the Borrower's officers, directors, equity holders, and professional advisors who have a need to know and who agree to maintain the confidentiality hereof.
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Section 1: Parties
1.1 Borrower
Meridian Consumer Brands LLC, a limited liability company duly organized and existing under the laws of the State of Delaware (the "Borrower").
Principal Office: 401 West 33rd Street, Suite 1200, New York, NY 10001
Employer Identification Number (EIN): 84-3291057
State of Organization: Delaware
Organizational ID: To be confirmed during due diligence
The Borrower is a consumer products company engaged in the manufacture, marketing, and distribution of branded consumer goods. The Borrower is currently majority-owned by Brindoval Partners Fund III, LP, a Delaware limited partnership (the "Sponsor").
1.2 Guarantors
The obligations of the Borrower under the Facility shall be unconditionally guaranteed on a joint and several basis by each of the following (collectively, the "Guarantors"):
(a) All existing and future direct and indirect domestic subsidiaries of the Borrower (whether now existing or hereafter formed or acquired), in each case to the extent permitted by applicable law and the organizational documents of such subsidiaries (the "Subsidiary Guarantors").
(b) Brindoval Partners Fund III, LP (the "Sponsor"), in the form of either (i) a limited recourse guarantee in an amount, scope, and form to be negotiated and agreed between the Lender and the Sponsor, or (ii) an equity contribution letter or equity commitment letter in form and substance satisfactory to the Lender, the terms and conditions of which shall be discussed and agreed upon during the documentation phase (the "Sponsor Support"). The parties acknowledge that the nature, extent, and conditions of the Sponsor Support are subject to further negotiation and mutual agreement. 
Each Guarantor shall execute and deliver a guaranty agreement in form and substance satisfactory to the Lender and its counsel as a condition precedent to the Closing.
1.3 Administrative Agent and Sole Lender
Ridgeline National Bank, National Association ("Ridgeline," the "Lender," or the "Administrative Agent").
Headquarters: 200 Tryon Street, Charlotte, NC 28202
Charter: National banking association organized under the laws of the United States of America
Ridgeline shall serve as sole lender and administrative agent under the Facility. As of the date of this term sheet, it is not anticipated that additional lenders will participate in the Facility; provided, however, that the Lender reserves the right to syndicate or sell participations in the Facility following the Closing, subject to the terms and conditions set forth in Section 12.2 below.
1.4 Lender's Counsel
Whitfield Ames LLP
1585 Broadway, 34th Floor New York, NY 10036
Catherine Royce, Partner, Finance & Restructuring Benjamin Nakamura, Associate
Whitfield Ames LLP shall serve as counsel to the Lender in connection with the negotiation, documentation, and closing of the Facility, and in connection with any post-closing amendments, waivers, or enforcement actions related thereto. All fees and expenses of Lender's counsel shall be for the account of the Borrower as set forth in Section 4.6 and Section 12.3 below.
Section 2: Facility Overview
2.1 Type of Facility
Senior secured asset-based revolving credit facility (the "ABL Revolver" or the "Facility"). The Facility shall be a revolving credit facility, permitting the Borrower to borrow, repay, and re-borrow amounts from time to time during the term of the Facility, subject at all times to the limitations set forth herein, including the Borrowing Base and the Commitment Amount.
2.2 Commitment Amount
The aggregate revolving credit commitment under the Facility (the "Commitment Amount") shall be Forty Million Dollars ($40,000,000).
The Borrower may request an increase in the Commitment Amount, subject to the Lender's approval in its sole discretion, applicable regulatory requirements, and such terms and conditions as the Lender may require. No assurance is given that any such increase will be available or approved.
2.3 Purpose
The proceeds of the Facility shall be used solely for the following purposes:
(a) To fund the ongoing working capital needs of the Borrower and its subsidiaries in the ordinary course of business;
(b) To finance seasonal inventory build-outs and related working capital fluctuations;
(c) For general corporate purposes of the Borrower and its subsidiaries; and
(d) To pay fees and expenses incurred in connection with the Facility.
2.4 Availability
Revolving credit availability under the Facility (the "Availability") shall at all times be subject to the lesser of:
(a) the Commitment Amount (i.e., $40,000,000); and
(b) the Borrowing Base (as defined and calculated in Section 3 below), as reflected in the most recently delivered borrowing base certificate, as adjusted from time to time to reflect any reserves established by the Lender.
The amount by which the Availability exceeds the aggregate outstanding revolving loans and other credit extensions under the Facility at any time is referred to herein as "Excess Availability." Excess Availability is a key metric for purposes of certain financial covenants, distribution baskets, and trigger provisions described in this term sheet.
2.5 Maturity Date
The Facility shall mature on the date that is four (4) years from the date of closing of the Facility (the "Closing Date"). The anticipated Closing Date is during the second quarter of 2022 (Q2 2022), resulting in an anticipated maturity date during the second quarter of 2026 (Q2 2026) (the "Maturity Date"). On the Maturity Date, all outstanding obligations under the Facility shall be due and payable in full, and all commitments shall terminate.
The Facility shall not be subject to scheduled amortization. All outstanding revolving loans shall be repaid in full on the Maturity Date. The Borrower may optionally prepay outstanding revolving loans at any time without premium or penalty (other than the early termination fee described in Section 4.7 below, if applicable, and any applicable breakage costs associated with Term SOFR borrowings).
2.6 Governing Law
The Facility, the definitive credit agreement, and all related loan documents shall be governed by and construed in accordance with the laws of the State of New York, without regard to its conflict-of-law principles (other than Sections 5-1401 and 5-1402 of the New York General Obligations Law).
Section 3: Borrowing Base
3.1 Definition
The "Borrowing Base" at any time of determination shall be equal to the sum of:
(a) eighty-five percent (85%) of the aggregate amount of Eligible Receivables at such time (the "Receivables Component"); plus
(b) the lesser of (i)   of the Net Orderly Liquidation Value ("NOLV") of Eligible Inventory at such time, and (ii) a dollar cap to be mutually agreed upon by the Lender and the Borrower (the "Inventory Component");
minus the aggregate amount of any reserves established by the Lender from time to time in accordance with Section 3.7 below.
The Borrowing Base shall be calculated and reported by the Borrower on a monthly basis (or more frequently if required by the Lender during a cash dominion period or an Event of Default) in the form of a borrowing base certificate, in form and substance satisfactory to the Lender, delivered in accordance with the reporting requirements set forth herein.
3.2 Eligible Receivables
"Eligible Receivables" shall mean those accounts receivable of the Borrower that satisfy the Eligibility Criteria set forth in Section 3.3 below and are otherwise acceptable to the Lender in its reasonable credit judgment.
Based on preliminary information provided by the Borrower, the estimated pool of eligible receivables as of the date of this term sheet is approximately $38,000,000.
Applying the receivables advance rate of 85%, the estimated Receivables Component of the Borrowing Base is calculated as follows:
$38,000,000 × 85% = $32,300,000
The foregoing estimate is indicative only, based on data reviewed to date, and is subject to adjustment following the completion of the Lender's field examination, collateral audit, and due diligence.
3.3 Receivables Eligibility Criteria
To qualify as an Eligible Receivable, an account receivable must, at the time of determination, satisfy each of the following criteria (collectively, the "Receivables Eligibility Criteria"):
(a) The account receivable is owing by an account debtor that is organized or located in the United States of America;
(b) The account receivable is not more than ninety (90) days past the date of the original invoice;
(c) The account receivable is not subject to any  dispute, offset, counterclaim, credit, allowance, or defense  ;
(d) The account debtor is not the subject of any insolvency proceeding, bankruptcy proceeding, receivership, assignment for the benefit of creditors, or similar proceeding under applicable law, and is not otherwise insolvent or unable to pay its debts as they become due;
(e) Concentration Limit: No single account debtor shall represent more than   of the aggregate amount of total eligible receivables at any time of determination; provided that the Lender may, in its sole discretion, approve a higher concentration limit for account debtors that maintain an investment-grade credit rating (i.e., BBB- or higher by S&P or Baa3 or higher by Moody's);
(f) Cross-Aging Exclusion: If more than fifty percent (50%) of the aggregate amount of accounts receivable owing by any single account debtor are ineligible (whether by virtue of aging or any other eligibility criterion), then all accounts receivable from such account debtor shall be deemed ineligible;
(g) The account receivable is not an affiliate receivable or a receivable owing by any person or entity that is a related party, officer, director, member, or equity holder of the Borrower or any subsidiary thereof;
(h) The account receivable is not subject to any lien, security interest, encumbrance, or claim of any person or entity other than the first-priority security interest in favor of the Lender;
(i) The account receivable represents a bona fide obligation arising from the sale of goods or the provision of services by the Borrower in the ordinary course of the Borrower's business and is evidenced by an invoice delivered to the applicable account debtor; and
(j) Such other criteria as the Lender may reasonably determine from time to time, upon written notice to the  
3.4 Eligible Inventory
"Eligible Inventory" shall mean the inventory of the Borrower consisting of finished goods and raw materials held for sale in the ordinary course of business, valued at the lower of cost (determined on a first-in, first-out ("FIFO") basis) or market, that satisfies the Inventory Eligibility Criteria set forth in Section 3.5 below and is otherwise acceptable to the Lender in its reasonable credit judgment.
Based on preliminary information provided by the Borrower, the estimated pool of eligible inventory as of the date of this term sheet is approximately $54,000,000 at cost.
The preliminary estimate of the Net Orderly Liquidation Value ("NOLV") of eligible inventory, based on a preliminary NOLV rate of approximately 70% of cost, is as follows:
$54,000,000 × 70% = $37,800,000 (estimated NOLV)
The foregoing NOLV estimate is preliminary and indicative only. The actual NOLV will be determined by a comprehensive inventory appraisal to be conducted by Bellweather Appraisal Group LLC (or another appraisal firm acceptable to the Lender) prior to the Closing, and will be updated periodically during the term of the Facility as provided in the definitive documentation.
Applying the inventory advance rate of   of NOLV, the estimated Inventory Component of the Borrowing Base is calculated as follows:
$37,800,000 ×   =  
3.5 Inventory Eligibility Criteria
To qualify as Eligible Inventory, inventory must, at the time of determination, satisfy each of the following criteria (collectively, the "Inventory Eligibility Criteria"):
(a) The inventory is located in the continental United States at locations that have been disclosed to and approved by the Lender;
(b) The inventory is not  ;
(c) The inventory does not consist of work-in-process;
(d) The inventory is not consigned to or by any third party and is not held on a bill-and-hold basis;
(e) The inventory is not subject to any lien, security interest, encumbrance, or claim of any person or entity other than the first-priority security interest in favor of the Lender;
(f) With respect to inventory located at leased premises, a landlord waiver or, with respect to inventory held by a third-party bailee or warehouseman, a bailee letter, in each case in form and substance  ;
(g) The inventory has been appraised by an appraiser acceptable to the Lender, and the most recent appraisal is not more than twelve (12) months old (or such shorter period as the Lender may require). The initial appraisal shall be conducted by Bellweather Appraisal Group LLC (or another appraisal firm acceptable to the Lender) prior to the  
(h) Such other criteria as the Lender may reasonably determine from time to time, upon written notice to the  
3.6 Estimated Initial Borrowing Base
Based on the preliminary estimates set forth above, the estimated initial Borrowing Base as of the date hereof is as follows:
The estimated initial Borrowing Base of   exceeds the Commitment Amount of $40,000,000 by approximately   indicating substantial estimated cushion at the outset. The Borrower is expected to have immediate access to the full Commitment Amount of $40,000,000 at the Closing, subject to the satisfaction of all conditions precedent and the absence of any applicable reserves.
All estimates presented above are preliminary and indicative only, and are subject to adjustment following the completion of the Lender's field examination, inventory appraisal, collateral audit, and due diligence review.
3.7 Reserves
The Lender reserves the right to establish, adjust, increase, decrease, or eliminate availability reserves (collectively, "Reserves") from time to time in its   Reserves reduce the amount available under the Borrowing Base and may be established by the Lender for, among other things:
(a) Rent reserves with respect to inventory located at leased premises for which landlord waivers have not been obtained or are otherwise deemed insufficient by the Lender;
(b) Dilution reserves, reflecting the historical and projected dilution experience of the Borrower's accounts receivable (including chargebacks, credits, returns, allowances, and other non-cash reductions);
(c) Reserves for accrued and unpaid taxes, including priority tax claims that may prime the Lender's security interest;
(d) Reserves for customer deposits, gift card liabilities, and other obligations that may reduce the collectability of receivables;
(e) Bank product reserves related to any bank products (including credit cards, merchant services, or hedging arrangements) provided by the Lender or its affiliates; and
(f) Such other reserves as the Lender may determine to be appropriate to protect the Lender's interests in the collateral, to reflect changes in market conditions, or to address other risks identified during the term of the Facility.
The Lender shall provide the Borrower with   of the establishment or adjustment of any   with a reasonably detailed explanation of the basis therefor; provided that the Lender's obligation to provide such notice shall not be a condition to the effectiveness of any such Reserve.
Section 4: Interest Rate and Fees
4.1 Interest Rate
Revolving loans under the Facility shall bear interest at a rate per annum equal to:
Adjusted Term SOFR + Applicable Margin
For purposes of this term sheet:
(a) "Adjusted Term SOFR" means the Term SOFR rate as published by CME Group (or a successor administrator acceptable to the Lender) for an interest period of one (1) month, as adjusted for any applicable credit spread adjustment or convention adjustments as set forth in the definitive credit agreement, subject to the SOFR Floor.
(b) "SOFR Floor" means twenty-five basis points (0.25%) per annum. In no event shall the Adjusted Term SOFR rate used to calculate interest on any revolving loan be less than the SOFR Floor.
(c) "Applicable Margin" means:
(i) Two hundred basis points (2.00%) per annum; provided, however, that
(ii) the Applicable Margin shall be reduced to one hundred seventy-five basis points (1.75%) per annum if the average daily Excess Availability for the immediately preceding fiscal quarter exceeds fifty percent (50%) of the Commitment Amount (i.e., exceeds $20,000,000) (the "Step-Down Threshold"). The reduced Applicable Margin shall remain in effect for each subsequent fiscal quarter in which the Step-Down Threshold is satisfied as of the end of such quarter.
Interest shall be computed on the basis of a 360-day year for the actual number of days elapsed, and shall be payable monthly in arrears on the first business day of each calendar month. The definitive credit agreement shall contain customary provisions regarding interest periods, rate determination, benchmark replacement, and related matters.
4.2 Default Rate
Upon the occurrence and during the continuance of an Event of Default, all outstanding obligations under the Facility shall bear interest at a rate per annum equal to:
The otherwise applicable interest rate plus an additional two hundred basis points (2.00%) per annum.
The default rate shall be applied automatically upon the occurrence of an Event of Default, without the necessity of any notice or demand by the Lender. The default rate shall continue to apply until such Event of Default has been cured or waived in accordance with the terms of the definitive credit agreement.
4.3 Unused Line Fee
The Borrower shall pay to the Lender an unused line fee (the "Unused Line Fee") equal to thirty-seven and one-half basis points (0.375%) per annum, calculated on the daily average unused portion of the Commitment Amount (i.e., the Commitment Amount minus the daily average outstanding balance of revolving loans). The Unused Line Fee shall be payable monthly in arrears on the first business day of each calendar month and shall be computed on the basis of a 360-day year for the actual number of days elapsed.
4.4 Upfront Fee
The Borrower shall pay to the Lender a one-time upfront fee (the "Upfront Fee") equal to   of the Commitment Amount, calculated as follows:
$40,000,000 ×   =  
The Upfront Fee shall be fully earned on the Closing Date and shall be payable in full on the Closing Date. The Upfront Fee is non-refundable.
4.5 Field Examination and Appraisal Fees
All costs and expenses incurred by the Lender in connection with field examinations, inventory appraisals, collateral audits, and related diligence activities shall be borne solely by the Borrower. This includes, without limitation, the fees and expenses of the Lender's internal field examination personnel, as well as the fees and expenses of any third-party appraisers, auditors, or consultants engaged by the Lender.
The Lender shall be entitled to conduct:
(b) Unlimited field examinations during the continuance of an Event of  
The initial field examination and inventory appraisal shall be conducted prior to the Closing Date by Bellweather Appraisal Group LLC (or another firm acceptable to the Lender). The cost of the initial field examination and appraisal is estimated to be in the range of $35,000 to $55,000, depending on the scope and complexity of the engagement.
4.6 Lender's Counsel Fees
The Borrower shall reimburse the Lender for all reasonable and documented fees and out-of-pocket expenses of the Lender's counsel, Whitfield Ames LLP, incurred in connection with (a) the negotiation, documentation, and closing of the Facility, (b) any post-closing amendments, waivers, consents, or modifications to the loan documents, and (c) any enforcement actions or workout proceedings. Payment of such fees and expenses is a condition to closing and shall also be an ongoing obligation during the term of the  
4.7 Early Termination Fee
In the event that the Borrower terminates the Facility or permanently reduces the Commitment Amount to zero prior to the Maturity Date, the Borrower shall pay to the Lender an early termination fee (the "Early Termination Fee") calculated as follows:
(a) If terminated during Year 1 (the period from the Closing Date through the first anniversary of the Closing Date): 1.00% of the Commitment Amount (i.e., $400,000);
(b) If terminated during Year 2 (the period from the first anniversary of the Closing Date through the second anniversary of the Closing Date): 0.50% of the Commitment Amount (i.e., $200,000); and
(c) If terminated at any time after the second anniversary of the Closing Date: no Early Termination Fee shall be payable.
The Early Termination Fee is intended to compensate the Lender for the commitment of capital and resources in connection with the Facility and shall be in addition to all other amounts payable by the Borrower under the loan documents.
Section 5: Collateral
5.1 ABL Priority Collateral (First-Priority Lien)
The obligations of the Borrower and the Guarantors under the Facility shall be secured by a first-priority perfected security interest (subject to customary permitted liens) in the following assets of the Borrower and each Guarantor (collectively, the "ABL Priority Collateral"):
(a) All accounts receivable, including all rights to payment arising from the sale of goods or the provision of services;
(b) All inventory, including all raw materials, work-in-process, finished goods, goods in transit, and supplies;
(c) All deposit accounts (other than  ;
(d) All supporting obligations, chattel paper (whether tangible or electronic), instruments, letter-of-credit rights, commercial tort claims (to the extent related to the foregoing), and general intangibles (including payment intangibles) in each case related to or arising from any of the foregoing;
(e) All books and records relating to any of the foregoing; and
(f) All proceeds (including insurance proceeds) and products of each of the foregoing, in whatever form.
The Lender's first-priority security interest in the ABL Priority Collateral shall be perfected by, among other things, the filing of UCC financing statements, the delivery of deposit account control agreements, and such other methods as may be required under applicable law to establish and maintain a first-priority perfected security interest.
5.2 Other Collateral (Second-Priority Lien)
The obligations of the Borrower and the Guarantors under the Facility shall also be secured by a second-priority perfected security interest in all other assets of the Borrower and each Guarantor not constituting ABL Priority Collateral (collectively, the "Term Loan Priority Collateral"), including, without limitation, intellectual property, equipment, real property interests (if any), equity interests in subsidiaries, and general intangibles not related to the ABL Priority Collateral.
The Lender's second-priority security interest in the Term Loan Priority Collateral shall be subordinate and junior to the first-priority security interest of Greystone Capital Finance LLC in such assets under the Existing Term Loan (as defined below). The relative priorities of the Lender and Greystone Capital Finance LLC with respect to the respective categories of collateral shall be governed by the intercreditor agreement described in Section 5.3 below.
5.3 Intercreditor Agreement
The Borrower currently has in place a first lien term loan facility (the "Existing Term Loan") with the following key terms:
Lender: Greystone Capital Finance LLC
Original Principal Amount: $75,000,000
Closing Date: December 15, 2019
Approximate Outstanding Balance: $61,500,000 (as of the date hereof)
Greystone Loan Reference: GCF-MCB-2019-1215
Maturity Date: December 2025
The respective priorities of the Facility and the Existing Term Loan with respect to the collateral securing each facility shall be governed by an intercreditor agreement (the "Intercreditor Agreement") to be entered into among the Lender, Greystone Capital Finance LLC, and the Borrower (and, to the extent required, the Guarantors). The Intercreditor Agreement shall be in form and substance   and shall reflect a customary ABL-first lien / term loan-second lien split-collateral intercreditor arrangement, including provisions addressing:
(a) The relative priority of liens on ABL Priority Collateral and Term Loan Priority Collateral;
(b) Limitations on the exercise of remedies by the junior lien holder with respect to the senior lien holder's collateral;
(c) Customary standstill, turnover, and waterfall provisions;
(d) Purchase option rights;
(e) DIP financing provisions;
(f) Restrictions on amendments to the respective credit agreements that would adversely affect the other party; and
(g) Such other terms and conditions as are customary in split-collateral intercreditor agreements for transactions of this type.
Negotiation, execution, and delivery of the Intercreditor Agreement is a condition precedent to the Closing of the Facility.
5.4 Deposit Account Control Agreements
As a condition to the Closing, the Borrower shall deliver to the Lender duly executed deposit account control agreements ("DACAs") in form and substance satisfactory to the Lender with respect to all   The DACAs shall grant the Lender "control" (within the meaning of Sections 9-104 and 9-106 of the Uniform Commercial Code) over such deposit accounts. The parties shall agree in the definitive documentation on the list of deposit accounts that are "excluded accounts" for which DACAs are not required (e.g., payroll accounts, tax escrow accounts, and accounts with de minimis balances).
5.5 Landlord Waivers / Bailee Letters
The Borrower shall use commercially reasonable efforts to deliver to the Lender duly executed landlord waivers and/or bailee letters, in form and substance   to the Lender, with respect to all   at which   Landlord waivers shall include, at a minimum, the landlord's acknowledgment of the Lender's security interest in the collateral, the landlord's waiver of any lien or claim on the collateral (or, at minimum, subordination of such lien to the Lender's lien), and the Lender's right to access the premises to inspect, recover, and/or dispose of collateral. Bailee letters shall contain substantially equivalent provisions with respect to third-party bailees, warehousemen, or processors.
The failure to obtain a landlord waiver or bailee letter with respect to any particular location may result in the Lender establishing a reserve against inventory at such location or excluding such inventory from the Borrowing Base.
Section 6: Conditions Precedent to Closing
The obligation of the Lender to close the Facility and to make any revolving loan or other credit extension thereunder shall be subject to the satisfaction (or waiver by the Lender in its sole discretion) of each of the following conditions precedent:
6.1 Due Diligence
Satisfactory completion, in the   of the Lender's business, financial, legal, and collateral due diligence with respect to the Borrower, the Guarantors, and their respective businesses, assets, liabilities, and financial condition. Due diligence shall include, without limitation, a review and approval of the following:
(a) Audited financial statements of the Borrower for fiscal year 2021, prepared by Pemberton & Locke CPAs LLP in accordance with generally accepted accounting principles ("GAAP");
(b) Interim (unaudited) financial statements of the Borrower for any period subsequent to the most recent audited financial statements;
(c) Historical accounts receivable aging reports, inventory reports, and accounts payable aging reports;
(d) Customer concentration analysis and account debtor creditworthiness;
(e) Review of material contracts, leases, supply agreements, and customer agreements;
(f) Lien search results and review of existing encumbrances on the Borrower's assets; and
(g) Such other due diligence as the Lender may deem necessary or appropriate.
6.2 Field Examination and Appraisal
Satisfactory completion of a comprehensive field examination and inventory appraisal by Bellweather Appraisal Group LLC (or another appraisal firm acceptable to the Lender), confirming the collateral values, eligibility criteria, receivables quality, inventory composition and condition, and other matters reflected in the Borrowing Base. The field examination shall include, at a minimum, verification of accounts receivable, testing of inventory quantities and condition, review of the Borrower's internal controls and accounting systems, and assessment of cash management practices.
6.3 Definitive Documentation
Negotiation, execution, and delivery of all definitive loan documents in form and substance   including, without limitation:
(a) A definitive credit agreement;
(b) A security agreement (including intellectual property security agreement, if applicable);
(c) A guaranty agreement executed by each Guarantor;
(d) The Intercreditor Agreement with Greystone Capital Finance LLC;
(e) Promissory notes (if required by the Lender);
(f) Deposit account control agreements;
(g) Landlord waivers and bailee letters (to the extent required);
(h) A borrowing base certificate as of the Closing Date;
(i) A compliance certificate as of the Closing Date;
(j) The Sponsor Support documentation (limited recourse guarantee or equity contribution letter, as applicable); and
(k) Such other documents, instruments, and agreements as the Lender or its counsel may reasonably require.
6.4 Intercreditor Agreement
Execution and delivery of the Intercreditor Agreement among the Lender, Greystone Capital Finance LLC, and the Borrower (and, to the extent required, the Guarantors), in form and substance   The Intercreditor Agreement shall govern the relative priority of liens, exercise of remedies, and other matters related to the concurrent secured financings as described in Section 5.3 above.
6.5 Corporate and Organizational Documents
Delivery to the Lender of the following corporate and organizational documents:
(a) Certified copies of the certificate of formation (or other organizational documents) and operating agreement (or other governing documents) of the Borrower and each Guarantor;
(b) Good standing certificates (or certificates of existence) from the State of Delaware (or applicable state of organization) and each state in which the Borrower and each Guarantor is qualified to do business, in each case dated not more than thirty (30) days prior to the Closing Date;
(c) UCC lien search results from all jurisdictions in which the Borrower and each Guarantor is organized or has assets, confirming the absence of liens other than permitted liens;
(d) Resolutions of the board of managers (or equivalent governing body) of the Borrower and each Guarantor authorizing the execution, delivery, and performance of the loan documents;
(e) Incumbency certificates identifying the officers or authorized persons of the Borrower and each Guarantor who are authorized to execute the loan documents and related instruments on behalf of such entities; and
(f) Opinions of counsel to the Borrower and the Guarantors, covering such matters as the Lender and its counsel may reasonably require (including, without limitation, due authorization, enforceability, no conflicts, and perfection of security interests).
6.6 No Material Adverse Change
No material adverse change shall have occurred in the business, operations, financial condition, assets, properties, or   of the Borrower, any Guarantor, or any of their respective subsidiaries since the date of the most recent audited financial statements delivered to the Lender. For purposes of this condition, "material adverse change" shall have the meaning specified in the definitive credit agreement.
6.7 Insurance
Delivery to the Lender of evidence of insurance coverage in form, substance, amounts, and with carriers satisfactory to the Lender, including, without limitation:
(a) Property and casualty insurance covering the collateral;
(b) Commercial general liability insurance;
(c) Business interruption insurance; and
(d) Such other insurance coverage as the Lender may reasonably require.
All property and casualty insurance policies shall name the Lender as lender's loss payee, and all liability insurance policies shall name the Lender as additional insured.
6.8 Other Conditions
(a) Payment in full of all fees, costs, and expenses due and payable to the Lender and its counsel on or prior to the Closing Date, including the Upfront Fee and all accrued and documented legal fees;
(b) No litigation, arbitration, investigation, or regulatory proceeding shall be pending or threatened that would, in the Lender's reasonable judgment,  ;
(c) Receipt by the Lender of a solvency certificate executed by the chief financial officer (or equivalent officer) of the Borrower, confirming the solvency of the Borrower and its subsidiaries on a consolidated basis after giving effect to the transactions contemplated hereby;
(d) Evidence satisfactory to the Lender that all consents, approvals, and authorizations required in connection with the Facility have been obtained; and
(e) Such other conditions precedent as the Lender may reasonably require.
Section 7: Representations and Warranties
The definitive credit agreement shall contain representations and warranties by the Borrower and the Guarantors that are customary for asset-based revolving credit facilities of this nature, type, and size. Such representations and warranties shall include, without limitation, the following:
(a) Organization and Good Standing. The Borrower and each Guarantor is duly organized, validly existing, and in good standing under the laws of its state of organization and in each jurisdiction where the nature of its business or ownership of its properties requires such qualification.
(b) Power and Authority. The Borrower and each Guarantor has all requisite power and authority to execute, deliver, and perform its obligations under the loan documents.
(c) Due Authorization. The execution, delivery, and performance of the loan documents have been duly authorized by all necessary organizational action on the part of the Borrower and each Guarantor.
(d) No Conflicts. The execution, delivery, and performance of the loan documents will not conflict with or result in a breach of the organizational documents, any material agreement, or applicable law.
(e) Enforceability. The loan documents constitute the legal, valid, and binding obligations of the Borrower and each Guarantor, enforceable in accordance with their respective terms, subject to customary enforceability exceptions.
(f) Compliance with Laws. The Borrower and each Guarantor is in compliance with all applicable laws, rules, and regulations in all material respects.
(g) No Material Litigation. There is no litigation, arbitration, investigation, or regulatory proceeding pending or, to the Borrower's knowledge, threatened against the Borrower or any Guarantor that would reasonably be expected to result in a material adverse change.
(h) Financial Statements. The audited financial statements for fiscal year 2021, prepared by Pemberton & Locke CPAs LLP in accordance with GAAP, and all interim financial statements delivered to the Lender, present fairly in all material respects the financial condition and results of operations of the Borrower and its subsidiaries as of the dates and for the periods covered thereby.
(i) Solvency. After giving effect to the transactions contemplated by the loan  
(j) Ownership of Collateral. The Borrower and each Guarantor has good and marketable title to the collateral, free and clear of all liens, security interests, and encumbrances, except for permitted liens.
(k) Title to Assets. The Borrower and each Guarantor has good and marketable title to all of its material assets, free and clear of all liens other than permitted liens.
(l) No Material Adverse Change. Since the date of the most recent audited financial statements, there has been no material adverse change in the business, operations, financial condition, assets, or   of the Borrower or any Guarantor.
(m) Tax Compliance. The Borrower and each Guarantor has filed all required tax returns and has paid all taxes due and payable (other than taxes being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP).
(n) ERISA Compliance. Each employee benefit plan of the Borrower and each Guarantor is in compliance with ERISA and the Internal Revenue Code in all material respects, and no ERISA event has occurred or is reasonably expected to occur.
(o) Environmental Compliance. The Borrower and each Guarantor is in compliance with all applicable environmental laws in all material respects, and no environmental liability has been asserted or is reasonably expected to be asserted that would result in a material adverse change.
(p) intellectual Property. The Borrower and each Guarantor owns or has the right to use all intellectual property necessary for the operation of its business.
(q) Accuracy of Borrowing Base Certificates. Each borrowing base certificate delivered to the Lender is true, complete, and accurate in all material respects as of the date thereof.
(r) Such other representations and warranties as may be customary for transactions of this type or as may be required by the Lender or its counsel.
Section 8: Affirmative Covenants
The definitive credit agreement shall contain affirmative covenants that are customary for asset-based revolving credit facilities of this nature. Such affirmative covenants shall include, without limitation, the following:
(a) Monthly Borrowing Base Certificates. The Borrower shall deliver to the Lender a borrowing base certificate, in form and substance satisfactory to the Lender, within twenty (20) business days after the end of each calendar month (or more frequently if required by the Lender during a cash dominion period or an Event of Default).
(b) Monthly Financial Statements. The Borrower shall deliver to the Lender unaudited monthly financial statements (including a balance sheet, income statement, and cash flow statement) within   after the end of each calendar month, certified by the Borrower's chief financial officer.
(c) Annual Audited Financial Statements. The Borrower shall deliver to the Lender annual audited financial statements (including a balance sheet, income statement, statement of cash flows, and notes thereto), prepared in accordance with GAAP and audited by Pemberton & Locke CPAs LLP (or another nationally or regionally recognized accounting firm acceptable to the Lender), within one hundred twenty (120) days after the end of each fiscal year, accompanied by an unqualified audit opinion.
(d) Annual Operating Budgets. The Borrower shall deliver to the Lender an annual operating budget and financial projections for the upcoming fiscal year within thirty (30) days prior to the commencement of each fiscal year (or within such other time period as may be agreed in the definitive documentation).
(e) Maintenance of Insurance. The Borrower and each Guarantor shall maintain insurance coverage in form, substance, amounts, and with carriers satisfactory to the Lender, with the Lender named as lender's loss payee and additional insured as applicable.
(f) Compliance with Laws. The Borrower and each Guarantor shall comply with all applicable laws, rules, regulations, and orders in all material respects.
(g) Payment of Taxes. The Borrower and each Guarantor shall pay all taxes, assessments, and governmental charges when due (other than taxes being contested in good faith by appropriate proceedings and for which adequate reserves have been established).
(h) Preservation of Existence and Properties. The Borrower and each Guarantor shall preserve and maintain its corporate or limited liability company existence, its rights, privileges, franchises, and material properties.
(i) Notification of Material Events. The Borrower shall promptly (and in any event within five (5) business days) notify the Lender in writing of (i) the occurrence of any Event of Default or any event that, with the giving of notice or the lapse of time or both, would constitute an Event of Default, (ii) any material litigation, arbitration, or regulatory proceeding, (iii) any material adverse change, and (iv) any other event or circumstance that could reasonably be expected to have a material adverse effect.
(j) Cooperation with Field Examinations and Appraisals. The Borrower shall cooperate fully with the Lender's field examiners, auditors, and appraisers, and shall provide access to the Borrower's books, records, premises, inventory, management, and personnel during normal business hours and upon reasonable prior notice.
(k) Maintenance of Deposit Accounts. The Borrower and each Guarantor shall maintain all material deposit accounts subject to deposit account control agreements in favor of the Lender.
(l) Cash Dominion. The definitive credit agreement shall include customary cash dominion provisions, structured as follows:
A "Cash Dominion Period" shall be triggered when Excess Availability falls below the greater of (i)   of the Borrowing Base and (ii)    (the "Cash Dominion Trigger"). During a Cash Dominion Period, all collections and other cash proceeds of collateral shall be applied on a daily basis to reduce outstanding revolving loans under the Facility. A Cash Dominion Period shall continue until Excess Availability exceeds the Cash Dominion Trigger for **thirty (30) consecutive  ** at which time the Cash Dominion Period shall cease and cash dominion shall revert to the Borrower's standard cash management arrangements (subject to being re-triggered if Excess Availability subsequently falls below the Cash Dominion Trigger).
Section 9: Negative Covenants
The definitive credit agreement shall contain negative covenants that are customary for asset-based revolving credit facilities of this nature. Such negative covenants shall include, without limitation, the following:
(a) Limitations on Indebtedness. The Borrower and its subsidiaries shall not create, incur, assume, or suffer to exist any indebtedness, other than (i) indebtedness under the Facility, (ii) the Existing Term Loan with Greystone Capital Finance LLC, (iii) purchase money indebtedness and capital lease obligations (subject to a basket to be agreed), and (iv) such other indebtedness as may be permitted under customary exceptions to be agreed in the definitive  
(b) Limitations on Liens. The Borrower and its subsidiaries shall not create, incur, assume, or suffer to exist any lien on any of their assets, other than (i) liens in favor of the Lender, (ii) liens in favor of Greystone Capital Finance LLC under the Existing Term Loan (subject to the Intercreditor Agreement), and (iii) customary permitted liens (including statutory liens, purchase money liens, and liens securing capital lease obligations, in each case subject to the Intercreditor Agreement and customary dollar thresholds). 
(c) Limitations on Investments. The Borrower and its subsidiaries shall not make or hold any investment (including loans, advances, capital contributions, and acquisitions of equity interests or debt obligations), other than customary permitted investments to be specified in the definitive  
(d) Limitations on Acquisitions. The Borrower and its subsidiaries shall not consummate any acquisition of any business, division, product line, or substantially all of the assets of any person or entity  
(e) Limitations on Asset Dispositions. The Borrower and its subsidiaries shall not sell, transfer, lease, or otherwise dispose of any material assets (other than sales of inventory in the ordinary course of business and other customary exceptions to be agreed), without the prior written consent of the  
(f) Limitations on Dividends and Distributions. The Borrower and its subsidiaries shall not declare, make, or pay any dividends or distributions (whether in cash, securities, or other property) to any equity holder or affiliate, unless, at the time of and immediately after giving effect to such dividend or   no  
(g) Limitations on Capital Expenditures. The Borrower and its subsidiaries shall not make or incur capital expenditures in excess of an annual cap  
(h) Limitations on Transactions with Affiliates. The Borrower and its subsidiaries shall not enter into or permit to exist any transaction or series of transactions with any affiliate (other than transactions on terms no less favorable to the Borrower than those obtainable in an arm's-length transaction with an unrelated third party), except as may be specifically permitted under the definitive documentation.
(i) Limitations on Amendments. The Borrower and its subsidiaries shall not amend, modify, or supplement their organizational documents or any material contract in any manner that would be materially adverse to the Lender or the Lender's interests under the loan documents, without the prior written consent of the Lender.
(j) Limitation on Changes to Fiscal Year. The Borrower shall not change its fiscal year without the prior written consent of the Lender.
(k) Springing Fixed Charge Coverage Ratio (FCCR). The Borrower shall maintain a minimum Fixed Charge Coverage Ratio ("FCCR") of   at all times during a Compliance Period (as defined below). The FCCR shall be tested only during a Compliance Period and shall be measured on a trailing twelve-month basis.
A "Compliance Period" shall be triggered when Excess Availability falls below the greater of (i)   of the Borrowing Base and (ii)   (the "FCCR Trigger"). Once triggered, the Compliance Period shall continue until Excess Availability exceeds the FCCR Trigger for thirty (30) consecutive days, at which time the Compliance Period shall cease and the FCCR shall no longer be tested (subject to being re-triggered if Excess Availability subsequently falls below the FCCR Trigger).
For purposes hereof, "Fixed Charge Coverage Ratio" shall mean the ratio of (A) Consolidated EBITDA minus unfinanced capital expenditures minus cash taxes paid minus dividends and distributions paid, to (B) the sum of scheduled principal payments on funded debt (including the Existing Term Loan with Greystone Capital Finance LLC), cash interest expense, and capital lease payments, in each case for the trailing twelve-month period ending on the last day of the most recently completed fiscal quarter. The components of the FCCR shall be defined in detail in the definitive credit agreement.
Section 10: Events of Default
The definitive credit agreement shall contain events of default that are customary for asset-based revolving credit facilities of this nature, type, and size. Such events of default (each, an "Event of Default") shall include, without limitation, the following:
(a) Non-Payment. Failure by the Borrower to pay (i) any principal of any revolving loan when due, (ii) any interest on any revolving loan within three (3) business days after the date when due, or (iii) any fee or other amount payable under the loan documents within five (5) business days after the date when due.
(b) Breach of Representations and Warranties. Any representation or warranty made or deemed made by the Borrower or any Guarantor in the loan documents or in any certificate, report, or other document delivered pursuant thereto is incorrect or misleading in any material respect as of the date made or deemed made.
(c) Breach of Covenants. Failure by the Borrower or any Guarantor to observe or perform any covenant contained in the loan documents, subject to (i) no cure period for financial covenants, negative covenants, and certain specified affirmative covenants (including borrowing base certificate delivery, cash dominion, and reporting covenants), and (ii) a cure period of thirty (30) days (or such other period as may be specified in the definitive documentation) for other affirmative  
(d) Cross-Default. The occurrence of a default or event of default under the Existing Term Loan with Greystone Capital Finance LLC (Greystone Loan Reference: GCF-MCB-2019-1215) or under any other indebtedness of the Borrower or any Guarantor in an aggregate principal amount exceeding   (the "Cross-Default Threshold"), if such default results in the acceleration of such indebtedness or enables the holders thereof to accelerate such indebtedness.
(e) Insolvency and Bankruptcy. The Borrower or any Guarantor (i) becomes insolvent or is unable to pay its debts as they become due, (ii) files a voluntary petition in bankruptcy or seeks relief under any applicable insolvency, reorganization, or debtor relief law, (iii) has an involuntary petition in bankruptcy filed against it that is not dismissed within sixty (60) days, (iv) makes a general assignment for the benefit of creditors, or (v) has a receiver, trustee, or custodian appointed with respect to all or a material portion of its assets.
(f) Judgment Defaults. One or more final, non-appealable judgments are entered against the Borrower or any Guarantor in an aggregate amount exceeding   (net of insurance coverage acknowledged in writing by the applicable insurer), and such judgments remain unsatisfied, unstayed, and undischarged for a period of sixty (60) consecutive days.
(g) Change of Control. The occurrence of a "Change of Control," which shall  
(h) ERISA Events. The occurrence of any ERISA event that could reasonably be expected to result in a material adverse change or a material liability of the Borrower or any Guarantor.
(i) Invalidity of Loan Documents or Security Interests. Any loan document ceases to be in full force and effect, or the validity or enforceability of any loan document is challenged or contested by the Borrower, any Guarantor, or any affiliate thereof, or any security interest granted in the collateral ceases to be a valid and perfected security interest with the priority contemplated hereby.
(j) Material Adverse Change. The occurrence of a material adverse change in the business, operations, financial condition, assets,   of the Borrower or any  
Upon the occurrence and during the continuance of an Event of Default, the Lender shall have the right to (i) terminate the commitments under the Facility, (ii) declare all outstanding obligations immediately due and payable, (iii) exercise all rights and remedies available under the loan documents, at law, and in equity, and (iv) apply the default rate of interest as described in Section 4.2 above. The foregoing remedies are cumulative and not exclusive.
Section 11: Reporting Requirements Summary
The Borrower shall deliver to the Lender each of the following reports and certificates during the term of the Facility, in each case in form and substance satisfactory to the Lender:
The Lender may, during a Cash Dominion Period or during the continuance of an Event of Default, require more frequent delivery of borrowing base certificates (including weekly or bi-weekly delivery) and such other reports and information as the Lender may reasonably request. The Borrower shall cooperate fully with all such requests.
Section 12: Miscellaneous / General Provisions
12.1 Documentation
All definitive loan documents, including the credit agreement, security agreement, guaranty, intercreditor agreement, and all ancillary documents, shall be prepared by the Lender's counsel, Whitfield Ames LLP, and shall be in form and substance   The Borrower and its counsel shall have a reasonable opportunity to review, comment upon, and negotiate the terms of the definitive documentation,  
12.2 Assignments and Participations
The Lender may, at any time, without the Borrower's consent:
(a) Sell participations in all or any portion of the Lender's rights and obligations under the Facility to one or more financial institutions or other investors; provided that the Lender shall remain the administrative agent and the Borrower's primary point of contact and the selling of participations shall not increase the costs to the Borrower or expand the Borrower's obligations. 
The Lender may assign all or any portion of its commitments and loans under the Facility with the Borrower's consent, which consent shall not be unreasonably withheld, delayed, or conditioned; provided that no consent of the Borrower shall be required during the existence and continuance of an Event of   Any such assignment shall be subject to the terms and conditions set forth in the definitive credit agreement and shall not relieve the assigning Lender of its obligations unless and until the assignee has assumed such obligations in accordance with the loan documents. 
12.3 Expenses and Indemnification
Expenses. The Borrower shall pay all reasonable and documented out-of-pocket costs and expenses incurred by the Lender and its counsel (Whitfield Ames LLP) in connection with (a) the due diligence, negotiation, documentation, and closing of the Facility, and (b) any post-closing amendments, waivers, consents, enforcement actions, or workout proceedings, in each case   Such costs and expenses shall include, without limitation, legal fees, appraisal fees, field examination fees, search fees, filing fees, recording fees, and travel expenses.
Indemnification. The Borrower shall indemnify, defend, and hold harmless the Lender, its affiliates, and their respective directors, officers, employees, agents, and representatives (collectively, the "Indemnified Parties") from and against any and all losses, claims, damages, liabilities, costs, and expenses (including reasonable attorneys' fees) arising out of or relating to the Facility, the loan documents, or the transactions contemplated thereby, except to the extent resulting from the gross negligence, willful misconduct, or bad faith of the applicable Indemnified Party as determined by a court of competent jurisdiction in a final, non-appealable judgment. The indemnification obligations of the Borrower shall survive the termination of the loan documents and the repayment of all obligations.
12.4 Governing Law and Jurisdiction
The Facility, the definitive credit agreement, and all related loan documents shall be governed by and construed in accordance with the laws of the State of New York, without regard to its conflict-of-law principles (other than Sections 5-1401 and 5-1402 of the New York General Obligations Law).
Each party shall irrevocably submit to the exclusive jurisdiction of the federal and state courts located in the Borough of Manhattan, City of New York, State of New York, for the purpose of any suit, action, or proceeding arising out of or relating to the Facility or any loan document, and each party irrevocably waives any objection to venue in such courts.
WAIVER OF JURY TRIAL. EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY SUIT, ACTION, OR PROCEEDING ARISING OUT OF OR RELATING TO THE FACILITY, ANY LOAN DOCUMENT, OR THE TRANSACTIONS CONTEMPLATED THEREBY. THIS WAIVER IS A MATERIAL INDUCEMENT FOR THE LENDER TO ENTER INTO THE FACILITY.
12.5 Confidentiality
This term sheet and all information exchanged between the parties in connection with the proposed Facility are confidential and shall not be disclosed to any third party without the prior written consent of the disclosing party, except (a) to the officers, directors, equity holders, employees, agents, counsel, accountants, and other professional advisors of the receiving party who have a need to know and who agree to maintain the confidentiality thereof, (b) as required by applicable law, regulation, or legal process (provided that the receiving party shall, to the extent permitted by law, provide prompt written notice to the disclosing party prior to such disclosure), and (c) to Greystone Capital Finance LLC and its counsel, to the extent necessary in connection with the negotiation of the Intercreditor Agreement. The confidentiality obligations set forth in this Section 12.5 shall survive the termination of this term sheet, whether or not the Facility  
Section 13: Indicative Timeline
The following timeline is indicative only and is subject to change based on the progress of due diligence, negotiation, and other factors. No assurance is given that the Facility will close within the timeline set forth below or at all.
The Borrower's prompt cooperation in providing information, access, and documentation requested by the Lender and its advisors will be essential to achieving the anticipated timeline.
Section 14: Key Contacts
Ridgeline National Bank, N.A.
Ridgeline National Bank, National Association 200 Tryon Street Charlotte, NC 28202
Lender's Counsel — Whitfield Ames LLP
Whitfield Ames LLP 1585 Broadway, 34th Floor New York, NY 10036
ACKNOWLEDGMENT AND DISCLAIMER
This Indicative Term Sheet is provided for discussion purposes only and is not a commitment by Ridgeline National Bank, National Association to provide financing or to enter into any binding obligation. Any commitment by Ridgeline National Bank, National Association to lend or to provide the Facility described herein is subject to, among other things, (i) satisfactory completion of due diligence (including business, financial, legal, and collateral due diligence) in the sole discretion of Ridgeline National Bank, National Association, (ii) internal credit committee approval by Ridgeline National Bank, National Association, (iii) negotiation, execution, and delivery of definitive documentation in form and substance satisfactory to Ridgeline National Bank, National Association and its counsel (Whitfield Ames LLP), and (iv) satisfaction of all conditions precedent set forth herein and in the definitive documentation. This term sheet supersedes all prior oral and written discussions and proposals between the parties with respect to the subject matter hereof. This term sheet may only be amended or modified in writing signed by both parties.
RIDGELINE NATIONAL BANK, NATIONAL ASSOCIATION
By: ________
Name: Jonathan Kershaw
Title: Senior Vice President, Asset-Based Lending
Date: January 28, 2022