Contract analysis

I. Executive Summary This memorandum summarizes the material terms and key negotiation points of the $35,000,000 senior secured term loan (the "Term Loan") to be provided by Pinnacle National Bank, N.A. ("Pinnacle" or the "Lender"), as sole lender and administrative agent, to Brightfield Cloud Services Inc. ("BCS" or the "Borrower"), a Delaware corporation headquartered at 4200 Lone Star Parkway, Suite 800, Austin, T

II. Transaction Parties A. Borrower The Borrower is Brightfield Cloud Services Inc., a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware. BCS's Employer Identification Number is 84-3291057. The company maintains its principal executive offices and headquarters at 4200 Lone Star Parkway, Suite 800, Austin, TX 78731. BCS's Delaware registered agent is Capitol Reg

III. Transaction Structure and Key Economic Terms A. Facility The Term Loan is structured as a senior secured term loan in the principal amount of $35,000,000. The facility is to be fully funded at closing in a single advance; there is no delayed draw feature and no revolving component. The Term Loan is the sole credit facility under the Agreement. The Agreement, together with all ancillary transaction documents, is

IV. Use of Proceeds The proceeds of the $35,000,000 Term Loan are to be applied as follows: The working capital residual of $1,612,578 will be deposited into BCS's primary operating account at Pinnacle (Account No. 7841-0029-3356). This account, along with all other BCS deposit accounts, will be subject to deposit account control agreements as required under the Security Agreement. Upon receipt of the payoff proceeds

V. Financial Covenants A. Maximum Total Leverage Ratio BCS is required to maintain a Maximum Total Leverage Ratio (defined as Total Funded Debt divided by Trailing Twelve-Month EBITDA) of not more than 3.50 to 1.00 (3.50x). This covenant is tested quarterly based on BCS's trailing twelve-month financial results delivered in connection with BCS's quarterly compliance certificates. The pro forma Total Leverage Ratio at

VI. Collateral and Security A. Collateral Package The Term Loan is secured by a first-priority perfected security interest in substantially all of the assets of BCS. The collateral package, as set forth in the Security Agreement dated July 28, 2022, includes the following categories of assets: (a) All accounts receivable, whether now existing or hereafter arising; (b) All inventory and equipment, including, without l

VII. Guaranty The obligations of BCS under the Term Loan Agreement are supported by an unconditional, irrevocable guaranty of payment (as distinguished from a guaranty of collection) executed by Solara Holdings Group LLC, the direct parent and 100% equity holder of BCS. The Guaranty Agreement was executed on July 28, 2022 and will become effective upon the closing and funding of the Term Loan. The key terms of the Gu

VIII. Representations and Warranties (Summary of Key Representations) The Term Loan Agreement contains extensive representations and warranties made by BCS, which are customary for a transaction of this nature. BCS has represented and warranted, among other things, the following (as of the signing date and to be reaffirmed at closing): (a) Organization and Good Standing. BCS is a corporation duly organized, validly e

IX. Affirmative Covenants (Summary) The Agreement contains the following principal affirmative covenants, which are customary for a senior secured term loan to a sponsor-backed borrower: (a) Financial Reporting. BCS shall deliver to Pinnacle (i) unaudited quarterly financial statements within forty-five (45) days after the end of each fiscal quarter, and (ii) audited annual financial statements (audited by Hartfield

X. Negative Covenants (Summary) The Agreement contains the following principal negative covenants: A. Indebtedness BCS shall not create, incur, assume, or suffer to exist any additional indebtedness in excess of $2,000,000 in aggregate principal amount, excluding permitted indebtedness. Permitted indebtedness includes, without limitation, (i) purchase money obligations and capital lease obligations in an aggregate am

XI. Events of Default The Agreement provides that each of the following events constitutes an "Event of Default": (a) Payment Default. BCS fails to pay (i) any installment of principal when due (no grace period) or (ii) any payment of interest, fees, or other amounts when due and such failure continues for a period of five (5) business days after written notice thereof. (b) Financial Covenant Breach. BCS fails to com

XII. Conditions Precedent to Funding The obligation of Pinnacle to fund the Term Loan on the closing date is subject to the satisfaction (or waiver by Pinnacle) of the following conditions precedent: (a) Transaction Documents. Execution and delivery of all transaction documents, including the Term Loan Agreement, the Guaranty Agreement, the Security Agreement, and all ancillary documents, each in form and substance s

XIII. Key Negotiation Points and Risk Items A. Financial Covenant Cure Mechanism The equity cure mechanism was the subject of significant and protracted negotiation between the parties over the period from June 28 through July 18, 2022. The negotiation proceeded as follows: Original Pinnacle/W&P Position: Pinnacle's initial draft of the Agreement (circulated by W&P on June 14, 2022) provided for a single equity cure