Contract analysis

I. EXECUTIVE SUMMARY This memorandum summarizes the preliminary findings of the regulatory and compliance due diligence conducted by Calderwood & Harkness LLP ("C&H" or the "Firm") in connection with the proposed acquisition (the "Transaction") by Solara Fleet Holdings LLC ("Buyer"), a newly formed, wholly-owned subsidiary of Solara Fund III, LP (the "Fund"), which is itself a fund managed by Solara Digital Infrastru

II. HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT ANALYSIS A. Filing Requirement The Transaction is subject to the pre-merger notification requirements of the HSR Act (15 U.S.C. § 18a) and the implementing rules promulgated by the Federal Trade Commission (the "FTC") at 16 CFR Parts 801–803. The proposed acquisition constitutes the acquisition of one hundred percent (100%) of all issued and outstanding voting securiti

III. COMMITTEE ON FOREIGN INVESTMENT IN THE UNITED STATES (CFIUS) A. Applicability Analysis CFIUS is an interagency committee authorized to review transactions that could result in foreign control of, or certain foreign investment in, U.S. businesses, with a particular focus on transactions involving critical technology, critical infrastructure, or sensitive personal data of U.S. citizens. CFIUS's jurisdiction and au

IV. STATE REGULATORY APPROVALS AND LICENSING A. Industry-Specific Licensing MFW provides a software-as-a-service platform serving the fleet management and logistics industry. The Company does not itself operate as a motor carrier, freight broker, freight forwarder, or other regulated transportation entity. Accordingly, MFW does not hold, and is not required to hold, operating authority from the FMCSA or from any stat

V. DATA PRIVACY AND CYBERSECURITY COMPLIANCE A. Overview of MFW's Data Processing Activities MFW's platform collects, processes, transmits, and stores significant volumes of data in connection with its fleet management, route optimization, ELD compliance, and embedded payments services. The nature and sensitivity of this data make data privacy and cybersecurity compliance a material area of regulatory risk for the Tr

1. Comprehensive Data Privacy Representations and Warranties. The SPA should include detailed representations and warranties by MFW (and/or the Sellers) regarding compliance with all applicable federal, state, and international (to the extent applicable) privacy and data security laws, regulations, and industry standards. These representations should cover, at a minimum: (a) compliance with applicable privacy laws; (

2. Specific BIPA Representation. A targeted representation addressing MFW's collection and processing of biometric identifiers and biometric information, including confirmation of compliance with BIPA's notice, consent, and retention requirements, or disclosure of any non-compliance.

3. Disclosure Schedule — Data Privacy. The SPA should require a disclosure schedule itemizing: (a) all past data breaches or security incidents; (b) any regulatory inquiries, investigations, or enforcement actions related to data privacy or cybersecurity; (c) any consumer complaints related to data privacy or data security; and (d) any pending or threatened litigation related to privacy or data security matters.

4. R&W Insurance Coordination. We recommend discussing with Trident Peak Insurance Brokers Inc. (Megan Forsythe) and the underwriting team at Atlas Meridian Underwriters Ltd. whether the data privacy findings — particularly the BIPA exposure — should be specifically addressed in the R&W insurance policy, including whether BIPA-related claims will be covered, excluded, or subject to sub-limits or retentions.

VI. SALES AND USE TAX COMPLIANCE A. Background — SaaS Taxability The taxability of software-as-a-service products for state sales and use tax purposes is an area of significant complexity and ongoing evolution. The treatment of SaaS subscriptions varies markedly by state, with states generally falling into the following categories: (i) states that treat SaaS as a taxable sale of tangible personal property or a taxabl

1. Specific Tax Representations and Warranties. The SPA should include detailed representations and warranties by the Sellers regarding MFW's sales and use tax collection, remittance, and compliance obligations. These representations should address: (a) all jurisdictions in which MFW is registered to collect and remit sales tax; (b) all jurisdictions in which MFW has filed sales and use tax returns; (c) all jurisdict

2. Disclosure of Non-Compliance. The SPA should require the Sellers to disclose on the disclosure schedule all jurisdictions in which MFW has not collected or remitted sales tax despite having potential nexus, along with the Company's estimate of the resulting liability exposure.

3. Specific Indemnity / Purchase Price Adjustment. Given the estimated exposure of $800,000 to $1,400,000, we recommend considering one or more of the following mechanisms to allocate the pre-closing sales tax risk: (a) Special Indemnity. A specific indemnification obligation of the Sellers for pre-closing sales tax liabilities, potentially carved out from the general indemnification basket (i.e., the Sellers would b

4. Coordination on VDA Strategy. We recommend coordinating with Sylvia Hartwell and Daniel Ostroff at Whitmore Sandoval on whether a post-closing voluntary disclosure agreement strategy in the affected states would be advisable. VDA programs, offered by most states, allow taxpayers to come forward voluntarily to report and pay back taxes in exchange for reduced or waived penalties and, in some states, a limited lookb

5. Basket and Threshold Considerations. The estimated sales tax exposure of $800,000 to $1,400,000 should be factored into the negotiation of the general indemnification basket and threshold amounts in the SPA. If the general indemnification deductible is set at or above the estimated sales tax exposure, the practical effect would be to leave the buyer bearing the majority of the pre-closing sales tax risk. We recomm

VII. FMCSA ELECTRONIC LOGGING DEVICE (ELD) REGULATORY COMPLIANCE A. Regulatory Framework The Federal Motor Carrier Safety Administration, an agency within the United States Department of Transportation, promulgated the ELD mandate under 49 CFR Part 395, requiring commercial motor vehicle ("CMV") operators subject to hours-of-service ("HOS") regulations to use registered and compliant electronic logging devices to aut