Revolving Credit Facility - Interactive Term Sheet

Transaction Summary

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Borrower

TechManufacturing Inc.

Guarantors

All material domestic subsidiaries of the Borrower

Facility Type

Senior Secured Revolving Credit Facility

Facility Amount

$50,000,000

Purpose

Working capital, general corporate purposes, permitted acquisitions, and letters of credit

Commitment and Availability

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Total Commitment

$50,000,000

Sublimits

Letters of Credit: $15,000,000
Swingline Loans: $5,000,000

Borrowing Base

Lesser of:

Total Commitment ($50M), or
85% of Eligible Accounts Receivable + 65% of Eligible Inventory

Availability Reserve

Lenders may establish reserves in their reasonable credit judgment

Maturity and Amortization

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Maturity Date

5 years from closing (January 14, 2031)

Amortization

None (bullet maturity)

Commitment Reduction

Borrower may voluntarily reduce commitments in minimum increments of $5,000,000

Interest Rate and Fees

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Interest Rate Options

1. SOFR Loans:

SOFR + Credit Spread
SOFR floor: 0.00%
Interest Period: 1, 3, or 6 months

2. Base Rate Loans:

Base Rate + Credit Spread
Base Rate = highest of: Prime Rate, Federal Funds Rate + 0.50%, 1-month SOFR + 1.00%

Credit Spread (based on Average Daily Availability)

Availability Level	SOFR Spread	Base Rate Spread
≥ 67% of Commitment	2.00%	1.00%
33% to < 67%	2.50%	1.50%
< 33%	3.00%	2.00%

Unused Commitment Fee

0.375% per annum if average utilization ≥ 50%
0.50% per annum if average utilization < 50%

Letter of Credit Fees

Fronting Fee: 0.125% per annum
LC Fee: Applicable SOFR spread

Administrative Agent Fee

$25,000 annually

Collateral and Security

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Collateral

First priority perfected security interest in substantially all assets:

Accounts receivable
Inventory
Equipment
Intellectual property
Deposit accounts
Investment property
Proceeds of the foregoing

Excluded Assets

Assets where granting a lien is prohibited by law or existing contract
Certain equity interests in foreign subsidiaries (limited to 65% of voting stock)
Assets where cost of perfection is excessive relative to benefit

Financial Covenants

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Fixed Charge Coverage Ratio

Test Trigger: Only when Availability falls below the greater of:

$7,500,000 (15% of Commitment), or
10% of the Borrowing Base

Requirement: Minimum 1.10:1.00

Testing: Monthly, as of last day of each month while springing

Minimum Availability

Maintain minimum availability of $5,000,000 (10% of Commitment) at all times

Affirmative Covenants

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The Borrower shall:

Provide monthly financial statements (within 30 days) and annual audited statements (within 90 days)
Deliver monthly borrowing base certificates (within 15 days)
Provide annual budgets and projections
Maintain insurance on all collateral
Maintain existence and material permits
Comply with all material laws
Pay taxes when due
Maintain properties in good condition
Provide notice of defaults, litigation, and material adverse changes

Negative Covenants

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Debt Limitations

Additional senior debt: Not permitted
Additional subordinated debt: Permitted up to $10,000,000
Capital leases and equipment financing: Permitted up to $5,000,000 annually

Lien Limitations

Senior liens: Only in favor of revolver lenders
Junior liens: Permitted to secure permitted subordinated debt

Acquisition and Investment Limitations

Permitted acquisitions up to $15,000,000 annually if:

Pro forma Fixed Charge Coverage Ratio ≥ 1.20:1.00
Pro forma Availability ≥ $10,000,000
Target operates in same or similar business

Restricted Payment Limitations

Dividends and distributions not permitted if:

Default or Event of Default exists or would result
Availability < $12,500,000 (25% of Commitment)
Fixed Charge Coverage Ratio < 1.15:1.00

Asset Sale Limitations

Asset sales outside ordinary course: Permitted up to $5,000,000 annually
Net proceeds must be used to repay revolver

Events of Default

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Standard Events of Default

Failure to pay principal, interest, or fees
Breach of covenants (with cure periods for certain covenants)
Material breach of representations and warranties
Cross-default to other debt exceeding $2,500,000
Bankruptcy or insolvency events
Judgments exceeding $2,500,000
ERISA events
Change of control
Material adverse change

Remedies

Upon event of default, lenders may:

Declare all amounts immediately due and payable
Terminate commitments
Exercise rights under security documents
Cash collateralize letters of credit

Additional Terms

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Mandatory Prepayments

Asset sale proceeds (subject to $5M annual basket)
Insurance/condemnation proceeds exceeding $1,000,000
Excess cash flow: None

Optional Prepayments

Permitted at any time without penalty

Borrowing Mechanics

Minimum borrowing: $500,000
Incremental amounts: $100,000
Notice: Same day for Base Rate, 3 business days for SOFR

Governing Law

New York