Contract analysis

I. Executive Summary This memorandum sets forth our analysis of specific provisions in the existing revolving credit facility (the "Credit Facility") of Verdana Software, Inc. ("Verdana" or the "Company") with Pacific Summit Bank, N.A. ("Pacific Summit" or the "Bank") that may require lender consent or waiver in connection with the proposed issuance of Series D Preferred Stock (the "Series D") to Pinnacle Venture Fun

II. Background A. The Proposed Transaction Pinnacle Venture Fund II LP, a Delaware limited partnership whose general partner is Pinnacle Capital Management LLC, headquartered at 2400 Sand Hill Road, Suite 310, Menlo Park, California 94025 (the "Fund"), proposes to invest Sixty Million Dollars ($60,000,000) in Verdana Software, Inc., a Delaware C-corporation, headquartered at 1175 NW Couch Street, Suite 800, Portland,

III. Analysis of Consent-Triggering Provisions We have identified five categories of provisions in the credit agreement that may be triggered by the Proposed Transaction. Each is analyzed in detail below. A. Change of Control Provision The credit agreement contains a defined term for "Change of Control" and provides that the occurrence of a Change of Control constitutes an immediate Event of Default, entitling Pacifi

IV. Impact of Outstanding Draw and Covenant Compliance In assessing the likelihood that Pacific Summit will grant its consent to the Proposed Transaction, it is useful to consider the current status of the Credit Facility and Verdana's compliance with its financial covenants. A transaction that improves the borrower's financial position and enhances covenant compliance is, in our experience, significantly more likely

V. Recommended Approach to Obtaining Consent A. Timing. We recommend initiating the consent process with Pacific Summit promptly, ideally within the next two to four weeks. This recommendation is driven by the current exclusivity timeline: per the First Amendment to the Exclusivity Agreement dated July 8, 2022, the exclusivity period between Pinnacle and Verdana has been extended to August 15, 2022. While the parties

VI. Risk Assessment Summary The following table summarizes the key risk factors identified in this memorandum, together with our assessment of the likelihood that each provision is triggered by the Proposed Transaction, the severity of the consequences, and our recommended course of action.

VII. Recommendations Based on the foregoing analysis, we make the following recommendations:

1. Closing Condition. The Series D Preferred Stock Purchase Agreement should include, as a condition precedent to closing that is not subject to waiver by Pinnacle, the delivery of an affirmative consent letter from Pacific Summit Bank, N.A., in form and substance reasonably satisfactory to Pinnacle and its counsel, confirming that (a) the Proposed Transaction does not constitute a Change of Control or Event of Defau

2. Verdana Responsibility. The obligation to obtain the consent from Pacific Summit should rest with Verdana, as the borrower under the Credit Facility. The Series D Preferred Stock Purchase Agreement should include a representation and warranty by Verdana that it has obtained all necessary third-party consents, including but not limited to lender consents, as of the closing date, and that no consent, approval, autho

3. Timing of Engagement. We recommend that Calderwood & Harkness, through the undersigned, contact Rebecca Thornton at Langford Price & Associates LLP promptly to coordinate the consent process and request that Verdana initiate contact with Pacific Summit as soon as practicable. Given the current exclusivity deadline of August 15, 2022, and the estimated two-to-four-week consent timeline, the consent process should b

4. Due Diligence Follow-Up. As a priority diligence item, we must confirm whether Pacific Summit holds any warrants or other equity instruments of Verdana issued in connection with the Credit Facility. If such instruments exist, we must obtain copies of the warrant agreements, analyze the anti-dilution adjustment mechanics, and ensure that the anti-dilution consequences of the Series D issuance are addressed in the c

5. Transaction Document Drafting — Debt Consent Interaction. In drafting the Transaction Documents, we recommend that the definition of "Permitted Indebtedness" and the scope of Pinnacle's consent right over new indebtedness exceeding $5,000,000 be carefully crafted to address the interplay with the existing Credit Facility. Specifically, the Transaction Documents should: (a) grandfather the existing Credit Facility

VIII. Conclusion The proposed issuance of Series D Preferred Stock to Pinnacle Venture Fund II LP very likely triggers consent requirements under Verdana Software, Inc.'s existing revolving credit facility with Pacific Summit Bank, N.A. The primary triggers are the negative covenant restricting equity issuances — which is almost certainly implicated by the issuance of preferred stock carrying a significant liquidatio

IX. Contact Information and Next Steps The undersigned is available to discuss this memorandum and next steps at the convenience of the Pinnacle deal team. Contact Information: Andrew Fitzpatrick, Lead Associate Calderwood & Harkness LLP 101 Montgomery Street, Suite 3500 San Francisco, California 94104 Telephone: (415) 392-4871 Email: afitzpatrick@calderwoodharkness.com Proposed Next Steps:

1. Andrew Fitzpatrick to contact Rebecca Thornton at Langford Price & Associates LLP to coordinate the consent process, request confirmation regarding the existence of any Pacific Summit warrants, and request that Verdana's CFO Thomas Brightwell initiate outreach to Pacific Summit's relationship manager.

2. Calderwood & Harkness to prepare a draft consent letter for Pacific Summit Bank, N.A. reflecting the approvals and confirmations described in Section V.B of this memorandum, to be provided to Langford Price for use in the consent negotiation.

3. Calderwood & Harkness to incorporate the lender consent closing condition into the draft Series D Preferred Stock Purchase Agreement and to address the debt consent right / Credit Facility interaction issues in the Transaction Document drafts.

4. Andrew Fitzpatrick to circulate an updated diligence tracker to the Pinnacle deal team reflecting the outstanding items identified in this memorandum. Escalation Contacts: Harrison Wexford, Responsible Partner — (415) 392-4802 / hwexford@calderwoodharkness.com Beatrice Holloway, Billing Partner — (415) 392-4819 / bholloway@calderwoodharkness.com File Reference: Matter No. 1002-00004; Billing Client No. PIN-0042 Th