Contract analysis

I. Purpose and Executive Summary The purpose of this memorandum is to analyze the reporting covenant requirements set forth in the initial term sheet (the "Term Sheet") received from Brindoval National Bank, N.A. ("Brindoval") on March 21, 2026, with particular focus on the SaaS-specific operational metrics that Brindoval has proposed as part of the information covenant package. This analysis is intended to inform Ca

II. Background — Transaction and Borrower Profile A. Transaction Summary The Acquisition involves the purchase by Solara Digital Acquisition Holdings LLC, a newly formed Delaware limited liability company and wholly owned subsidiary of Solara Digital Infrastructure Fund IV LP ("Fund IV"), of 100% of the equity interests in Meridian Cloud Solutions Inc. Meridian is a Delaware corporation headquartered in Austin, Texas

III. Standard Financial Reporting Covenants — Analysis This Section addresses the standard (non-SaaS-specific) financial reporting requirements set forth in the Term Sheet. These requirements are consistent with market practice for sponsor-backed leveraged financings and require only targeted adjustments in the first markup. A. Annual Audited Financial Statements Term Sheet Requirement. The Term Sheet requires the Bo

IV. SaaS-Specific Reporting Requirements — Detailed Analysis This Section addresses the SaaS-specific operational metrics that Brindoval has proposed as part of the reporting covenant package. As discussed in the Executive Summary, these requirements represent the most significant negotiation points in the reporting framework and will require careful attention in the first markup. The overarching strategic objective

1. Term Sheet Requirement The Term Sheet requires the Borrower to deliver a monthly report of Annual Recurring Revenue and "related key SaaS metrics" within 30 days of each month-end. The Term Sheet does not define ARR or specify which "related key SaaS metrics" are to be included in the monthly report, which is a significant gap that must be addressed in the first markup.

2. Significance for This Transaction The ARR report is the single most important SaaS-specific reporting item in this transaction, and we should expect it to be the highest-priority item for the lender group. The reasons are as follows: First, as noted above, closing leverage is approximately 10.70x Debt/LTM Adjusted EBITDA — a level that is elevated by traditional leveraged finance standards. The lender group is not

3. Proposed ARR Definition Critical Recommendation. The precise definition of "Annual Recurring Revenue" is the single most important definitional issue in this transaction's reporting framework. An imprecise or overly broad ARR definition could lead to disputes between the Borrower and the lender group over calculation methodology, particularly in situations where ARR growth decelerates or where the Borrower seeks c

4. Delivery and Classification Delivery. The Term Sheet's proposed delivery period of 30 days following each month-end is achievable based on discussions with Meridian's CFO. Meridian's billing system (understood to be built on a Pinnacle Health IT-integrated subscription management platform) can generate ARR snapshots on a T+5 basis (i.e., five days after month-end). The 30-day period provides adequate time for revi

1. Description. Net Revenue Retention is a widely used SaaS metric that measures the percentage of recurring revenue retained from an existing customer cohort over a trailing twelve-month period, inclusive of expansion revenue (Upsells and cross-sells), contraction revenue (downgrades), and churned revenue (cancellations and non-renewals). NRR is calculated according to the following formula: NRR = (Beginning Period

2. Analysis and Recommendation NRR is a useful and well-understood credit health metric that provides the lender group with insight into the quality and durability of Meridian's recurring revenue base. Strong NRR indicates customer stickiness and organic growth potential within the existing customer base, both of which are central to the credit underwriting. We do not object to the inclusion of NRR in the reporting f

1. Gross Customer Churn Gross customer churn (sometimes referred to as "gross dollar churn" or "gross revenue churn") measures the total ARR lost from customer cancellations, non-renewals, and downgrades as a percentage of beginning-of-period ARR, excluding any offsetting expansion or upsell revenue from existing customers. Gross churn is typically reported on a trailing twelve-month basis to smooth out monthly varia

2. Net Customer Churn (Net Dollar Churn) Net customer churn (or net dollar churn) measures the net ARR change from existing customers — combining losses from cancellations, non-renewals, and downgrades with gains from upsells and cross-sells — as a percentage of beginning-of-period ARR. Net dollar churn is effectively the inverse expression of NRR: Net Dollar Churn = 1 − NRR Where NRR exceeds 100% (as is the case wit

3. Analysis and Recommendation The Term Sheet does not clearly distinguish between gross and net churn, referring generally to "customer churn metrics." We recommend resolving this ambiguity in the first markup as follows: Redundancy of Net Churn and NRR. Given that NRR inherently captures net dollar churn (NRR and net dollar churn are mathematical complements), reporting both NRR and net customer churn is duplicativ

1. Description. Average Contract Value represents the average annualized contract value across all active subscription customers, calculated as total ARR divided by the total number of active subscription customers as of the applicable measurement date: ACV = Total ARR ÷ Total Active Subscription Customers ACV is a useful trend indicator for lender monitoring because increasing ACV over time typically suggests succes

2. Analysis and Recommendation We recommend accepting ACV as a quarterly information-only deliverable, subject to the following: Classification. Information-only deliverable. ACV is a useful monitoring tool but is not an appropriate covenant metric. Delivery. Quarterly, within 60 days of each fiscal quarter-end, concurrent with the quarterly financial statements. We recommend resisting any request for monthly ACV del

1. Description. Lenders in SaaS acquisition financings typically request disclosure of customer concentration data, which provides visibility into the degree to which the borrower's revenue base is dependent on a small number of large customers. The most common format is a list of the top 10 or top 20 customers ranked by ARR contribution, expressed as a percentage of total ARR. Lenders may also request notification i

2. Analysis and Recommendation We recommend accepting customer concentration reporting as part of the information covenant package, subject to the following parameters: Classification. Information-only deliverable. Customer concentration data is a monitoring tool and should not be subject to covenant thresholds (e.g., there should be no covenant requiring that no single customer represent more than a specified percen

1. Metrics to Push Back On The Term Sheet references "related key SaaS metrics" in connection with the monthly ARR report and "other operational metrics as reasonably requested by the Administrative Agent" as a catch-all provision. These open-ended references create a risk that the lender group could, over the life of the Facility, request an expanding set of operational metrics that impose significant administrative

2. Recommendation. We recommend that the first markup limit SaaS-specific reporting to the following five categories, all classified as information-only deliverables: (a) Annual Recurring Revenue (monthly); (b) Net Revenue Retention (quarterly); (c) Gross Customer Churn (quarterly); (d) Average Contract Value (quarterly); and (e) Customer Concentration — Top 20 (quarterly) and threshold notifications (event-driven).

V. Summary Table — Recommended Reporting Framework The following table summarizes our recommended reporting framework for the first markup, incorporating all of the recommendations set forth in Sections III and IV above:

VI. Interaction with Other Facility Terms A. ECF Sweep Calculations Accurate and timely delivery of annual audited financial statements is the baseline requirement for Excess Cash Flow sweep calculations under the Facility. The ECF sweep applies annually, with the first sweep period covering the fiscal year ending December 31, 2026. The sweep percentages — 50%, stepping down to 25% at TNL equal to or less than 4.50:1

VII. Key Markup Positions for Term Sheet First Markup (March 28, 2026) Based on the analysis set forth in this memorandum, the following positions should be reflected in Calderwood & Harkness's first markup of the Term Sheet, due for delivery to Broadwick & Thayer LLP (James Okoro) on March 28, 2026:

1. ARR Definition. Insert bracketed language in the Term Sheet referencing "ARR as defined in the Credit Agreement" in lieu of any simplified or undefined reference to ARR. Prepare and attach a proposed ARR definition as an annex or exhibit to the Term Sheet markup, based on the definition set forth in Section IV.A.3 of this memorandum, so that Brindoval and its counsel can review the proposed formulation and provide

2. Classification of SaaS-Specific Metrics. Mark all SaaS-specific metrics — including ARR (monthly), NRR (quarterly), gross churn (quarterly), ACV (quarterly), and customer concentration (quarterly and event-driven) — as deliverables provided "for informational purposes only." Add express language that these metrics are not compliance-tested covenants and that failure to meet any particular level or threshold with r

3. Budget Delivery Period. Change the delivery period for the annual budget from 60 days to 75 days post-fiscal-year-end. Add language providing that the annual budget (a) shall be board-approved, (b) shall include projected i