Contract analysis

I. EXECUTIVE SUMMARY The purpose of this memorandum is to consolidate and present the findings of the legal due diligence review conducted by Calderwood & Harkness LLP ("C&H" or "we") of Verdana Software, Inc. ("Verdana" or the "Company") in connection with the proposed $60,000,000 minority growth equity investment by Pinnacle Venture Fund II LP ("Pinnacle" or the "Fund") through the purchase of newly issued Series D

1. Significant Customer Concentration — Meridian Logistics Corp. Verdana's largest customer, Meridian Logistics Corp. ("Meridian"), represents approximately 24.9% of total ARR ($11.8 million of $47.3 million). The Meridian contract expires on December 31, 2023, and there is meaningful uncertainty regarding renewal, as Meridian has recently undergone a change in executive leadership and has issued a request for propos

2. Existing Credit Facility with Pacific Summit Bank, N.A. Verdana maintains a $10,000,000 revolving credit facility with Pacific Summit Bank, N.A. ("Pacific Summit Bank"), of which $6,200,000 was drawn as of March 31, 2022. The credit agreement contains negative covenants that may restrict the issuance of new preferred equity securities, including the Series D Preferred Stock, without the prior written consent of th

3. Capitalization Complexity Relating to ESOP Pool Expansion. Verdana has proposed expanding its employee stock option plan ("ESOP") pool by 5,000,000 shares prior to closing, which would materially affect Pinnacle's effective ownership percentage. The treatment of this expansion — whether calculated on a pre-money or post-money basis — remains a significant structural negotiation point.

4. Certain Employment and IP Matters. We have identified potential gaps in intellectual property assignment documentation with respect to certain early-stage contractors, which should be remediated prior to closing. Recommended conditions to closing are enumerated in detail in Section XII below.

II. CORPORATE ORGANIZATION AND GOOD STANDING A. Formation and Jurisdiction Verdana Software, Inc. was incorporated in the State of Delaware on March 14, 2016, under the Delaware General Corporation Law ("DGCL"). The original Certificate of Incorporation was filed with the Delaware Secretary of State and assigned File Number 6274913. Based on our review of the Company's corporate records, the original incorporator was

III. CAPITALIZATION A. Authorized Capital Stock Pursuant to the Current Charter (the Third Amended and Restated Certificate of Incorporation filed in connection with the Series C financing in February 2021), the Company is authorized to issue the following classes and series of capital stock: • Common Stock: An aggregate number of authorized shares of Common Stock, par value $0.001 per share, sufficient to accommodat

IV. MATERIAL CONTRACTS A. Overview Verdana operates a business-to-business ("B2B") software-as-a-service ("SaaS") platform marketed under the brand name "Verdana SCX." The Verdana SCX platform is an AI-powered supply chain optimization application designed for mid-market and enterprise-scale manufacturers, logistics companies, and distribution businesses. The platform is sold on a multi-year subscription basis, typic

V. INDEBTEDNESS AND CREDIT FACILITIES A. Pacific Summit Bank, N.A. — Revolving Credit Facility Verdana is party to a Revolving Credit and Security Agreement (the "Credit Agreement") with Pacific Summit Bank, N.A. ("Pacific Summit Bank" or the "Lender"), a national banking association with its principal offices at 350 California Street, San Francisco, California 94104. The material terms of the Credit Agreement, as id

VI. INTELLECTUAL PROPERTY A. Verdana SCX Platform Verdana's core product is the Verdana SCX platform, an AI-powered supply chain optimization SaaS application designed to help mid-market and enterprise manufacturers and logistics companies optimize inventory management, demand forecasting, supplier relationship management, logistics routing, and overall supply chain efficiency. The platform leverages proprietary arti

VII. LITIGATION AND LEGAL PROCEEDINGS We reviewed the Company's litigation docket, including any pending claims, threatened claims, demand letters, and government inquiries or enforcement actions. As part of this review, we consulted with Sandra Mikkelsen, General Counsel, and reviewed written representations provided by the Company and its counsel. Based on our review, no material pending or threatened litigation, a

VIII. REGULATORY AND COMPLIANCE MATTERS A. General Regulatory Environment Verdana operates a B2B SaaS platform serving mid-market and enterprise customers in the manufacturing, logistics, and distribution industries. The Company is not subject to industry-specific regulatory licensing or registration requirements, such as those applicable to financial services companies (e.g., broker-dealer registration, banking char

IX. EMPLOYMENT AND BENEFITS MATTERS A. Workforce Overview As of the date of this memorandum, Verdana employs approximately 310 individuals. The Company is headquartered in Portland, Oregon, where the majority of its employees are located. However, the Company also employs individuals in multiple other states, reflecting the increasingly distributed nature of its workforce, particularly following the expansion of remo