Priya, Viktor —
I hope the weekend is treating you well. Below is our weekly progress report on the $200,000,000 Senior Secured Term Loan Facility for the acquisition of Meridian Cloud Solutions Inc. (Matter No. 1041-00002). We had a productive week and I'm pleased to report meaningful progress on several fronts.
**1. Summary of April 10 Negotiation Call**
We held a negotiation call yesterday (April 10) with all key parties in attendance: our team (myself and Lisa Morrow), Broadwick & Thayer (Catherine Hartwell and James Okoro, lender's counsel), Brindoval National Bank (Thomas Wilder and Sandra Fleischer), and Solara (Priya and Derek). We reached agreement on several priority items:
- **EBITDA Add-Back Cap:** Agreed at 25% of LTM Adjusted EBITDA. This was a key priority for us and we secured our position in full. - **ECF Sweep — Netting of Voluntary Prepayments:** Brindoval agreed that voluntary prepayments will be netted against the Excess Cash Flow sweep obligation. The ECF sweep remains at 50%, stepping down to 25% at Total Net Leverage ≤ 4.50x and to 0% at ≤ 3.50x, tested annually beginning with the fiscal year ending December 31, 2026. - **Market Flex Compromise:** We agreed to cap Brindoval's market flex rights at +37.5 bps on the interest rate spread and +37.5 bps on OID — reduced from Brindoval's initial proposal of +50 bps on each. Base pricing remains at Adjusted Term SOFR + 475 bps with a SOFR floor of 1.00% (plus 10 bps credit spread adjustment) and 2.00% OID. - **Remaining Items:** Items still to be papered into the final term sheet include refinements to the SaaS-specific reporting covenant language (monthly ARR reporting within 30 days of month-end, net revenue retention, and customer churn metrics) and final conforming edits.
**2. Status of Open Term Sheet Issues**
Following yesterday's call, the number of substantive open points has been significantly narrowed. Lisa and Marcus Leung are preparing the final clean version of the term sheet reflecting all agreed changes, and we expect to circulate the execution-ready term sheet early next week. All core economic and structural terms are now settled:
- Facility Amount: $200,000,000 - Borrower: Solara Digital Acquisition Holdings LLC - Maturity: 7 years (targeting June 30, 2033) - Amortization: 1.0% per annum ($500,000 per quarter) - Financial Covenant: Springing Total Net Leverage covenant at 7.50x, tested only if revolving facility drawn > 35% (covenant-lite) - Voluntary Prepayment: 101% soft call for first 12 months, at par thereafter - Collateral: First-priority lien on substantially all assets of Borrower, Meridian, and material domestic subsidiaries, including equity pledges (100% domestic / 65% first-tier foreign), IP, receivables, equipment, and deposit accounts
**3. Commitment Letter and Fee Letter — Next Steps**
As you know, Broadwick & Thayer circulated Brindoval's initial draft commitment letter and fee letter alongside the term sheet process. We have completed our internal analysis of both documents, including a detailed market flex and conditionality analysis prepared by our team. Our key focus areas in the commitment letter markup are:
- Narrowing the Material Adverse Effect definition and aligning carve-outs with the acquisition agreement - Ensuring closing conditions are limited-conditionality / SunGard-compliant, consistent with what will be reflected in the Meridian purchase agreement - Conforming the market flex provisions to the +37.5 bps / +37.5 bps compromise agreed on yesterday's call - Limiting specified representations to those customary for sponsor-backed SaaS acquisitions
On the fee letter, our comments will address the 1.50% arrangement fee ($3,000,000), $500,000 structuring fee, and 2.00% OID ($4,000,000), including fee payment timing, confidentiality provisions, fee reduction mechanics if the facility amount is reduced, and MFN protections against fees offered to syndication participants.
We plan to deliver our markup of both the commitment letter and fee letter to Broadwick & Thayer early next week, with the goal of resolving all open points and achieving concurrent execution of the term sheet, commitment letter, and fee letter by **April 18, 2026**.
**4. Commitment Letter Expiration and Timeline**
One item to flag for timeline management purposes: the commitment letter, once executed, will carry a 45-day expiration. Based on an April 18 execution date, that means expiration on **June 2, 2026** — ahead of our targeted closing date of June 30. We will need to ensure either (a) closing occurs before expiration or (b) an extension mechanism is negotiated into the commitment letter. We are building this into our markup.
For reference, the overall deal timeline remains as follows:
- Term sheet / commitment letter execution target: **April 18, 2026** - Due diligence period: **April 21 – May 30, 2026** - Credit agreement execution-ready draft target: **May 22, 2026** - Credit agreement signing target: **June 16, 2026** - Closing / funding target: **June 30, 2026**
**5. Coordination with Alderton Paige LLP**
Lisa sent a detailed coordination email to Richard Fontaine at Alderton Paige on April 9 regarding alignment of the financing conditions in the Meridian purchase agreement with the commitment letter conditionality. Key items under discussion include:
- Ensuring the purchase agreement's financing cooperation covenant from the seller (Ashford Ventures Partners LLC, Jason Tremblay, and other selling shareholders, represented by Kerrigan Ross & Associates LLP / Danielle Musgrave) is sufficiently robust to support the lender's due diligence requirements - Aligning SunGard closing conditions between the commitment letter and the purchase agreement so there is no gap that could allow the financing to fail while the acquisition obligation remains - Lisa attached a comparison chart of commitment letter conditions vs. purchase agreement closing conditions to Richard for his review (circulated separately)
I would recommend a brief coordination call among Calderwood & Harkness, Alderton Paige, and Solara's deal team (Priya and Derek) early next week to finalize the interplay between the two sets of documents. We will reach out to Richard's office to schedule.
**6. Syndication Preparation**
A brief update on syndication: Brindoval intends to syndicate the facility post-commitment. The anticipated breakdown is as follows:
- Brindoval National Bank: $75,000,000 hold position - Harborstone Capital Partners LLC (Elena Vasquez): $50,000,000 (indicated interest) - Pinnacle Ridge Credit Fund II LP (Andrew Kesselman): $40,000,000 (indicated interest) - Remaining $35,000,000 to be allocated among additional lenders
Brindoval has circulated a form lender NDA for syndication participants, which Marcus Leung is currently reviewing. We will share our comments with Priya and Derek before Solara provides consent to the form.
**7. Other Administrative Items**
- We are preparing the preliminary closing checklist and have commenced UCC and lien searches against Meridian (DE Secretary of State, File No. 6038472) and the Borrower entity (Solara Digital Acquisition Holdings LLC, DE Secretary of State, File No. 7531209, to be filed). Preliminary search results have identified existing UCC-1 filings against Meridian related to equipment lease financing that will need to be addressed (terminated or subordinated) at closing. We will provide further detail once the full search results are in hand. - The Certificate of Formation for Solara Digital Acquisition Holdings LLC is being finalized for filing with the Delaware Secretary of State. - Marcus will be sending an information request list to Maggie Cho (Meridian CFO) and Derek next week for closing deliverables, including organizational documents, insurance certificates, and existing lien documentation.
**8. Action Items Summary**
1. **Calderwood & Harkness** to circulate execution-ready term sheet — *target: early next week* 2. **Calderwood & Harkness** to deliver commitment letter and fee letter markups to Broadwick & Thayer — *target: early next week* 3. **Coordination call** with Alderton Paige — *to be scheduled for early next week* 4. **Lender NDA review comments** — Marcus Leung completing; will circulate to Priya and Derek before consent 5. **Information request list** to Meridian and Solara — *going out next week* 6. **All parties** targeting **April 18** for execution of term sheet, commitment letter, and fee letter
Please don't hesitate to call or email with any questions in the meantime. A more detailed update will follow once we finalize the commitment letter markup.
Best regards,
Philip Hartmann Partner, Banking & Finance Calderwood & Harkness LLP One Liberty Plaza, 44th Floor New York, NY 10006 T: (212) 555-4821 E: phartmann@calderwoodharkness.com