1041-00002 · Solara Digital Infrastructure LP · Internal Memoranda & Analysis

internal-memo-sponsor-guaranty-analysis.docx DOCUMENT M&A / Corporate

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PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

MEMORANDUM

TO: Philip Hartmann, Responsible Partner, Banking & Finance

FROM: Lisa Morrow, Lead Associate, Banking & Finance Marcus Leung, Working Associate, Banking & Finance

DATE: March 27, 2026

RE: Sponsor Guaranty — Scope and Limitations; Solara Digital Infrastructure LP Guaranty in Connection with the $200,000,000 Senior Secured Term Loan Facility for the Acquisition of Meridian Cloud Solutions Inc.

Matter No.: 1041-00002 Client No.: CL-081273

REVIEWED BY: Philip Hartmann

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I. Executive Summary

This memorandum analyzes the limited recourse sponsor guaranty to be provided by Solara Digital Infrastructure LP ("Solara" or "SDILP"), a Delaware limited partnership, in connection with the $200,000,000 senior secured term loan facility (the "Facility") to be arranged by Brindoval National Bank, N.A. ("Brindoval") to finance the acquisition (the "Acquisition") of Meridian Cloud Solutions Inc. ("Meridian" or the "Target"). The purpose of this memorandum is to assess the appropriate scope, structure, and limitations of the sponsor guaranty, to identify areas of likely negotiation with lender's counsel, and to provide recommendations on the negotiating positions that Calderwood & Harkness LLP should advance on behalf of Solara.

The Borrower under the Facility is Solara Digital Acquisition Holdings LLC ("Acquisition Sub"), a newly formed Delaware limited liability company and wholly owned subsidiary of Solara Digital Infrastructure Fund IV LP ("Fund IV"). Acquisition Sub was organized solely for the purpose of consummating the Acquisition and will serve as the direct or indirect holding company for Meridian following the closing of the transaction.

The term sheet received from Brindoval on March 21, 2026 (the "Term Sheet") contemplates that Solara Digital Infrastructure LP will provide a "limited recourse sponsor guaranty" in connection with the Facility. The Term Sheet, however, does not further specify the scope, dollar limits, temporal parameters, or specific carve-out events that would trigger sponsor liability. Broadwick & Thayer LLP ("Broadwick & Thayer"), acting through Catherine Hartwell as lead partner and James Okoro as senior associate, serves as lender's counsel and will negotiate the definitive guaranty terms during the credit documentation phase.

Summary Recommendation. The sponsor guaranty should be strictly limited in scope to customary "bad boy" carve-outs and certain narrow guaranty obligations that are consistent with well-established market practice for private equity sponsor-backed acquisition financings. Specifically, we recommend that the guaranty cover only the following categories of obligations: (i) losses arising from actual fraud or willful misconduct by the sponsor, (ii) losses arising from voluntary bankruptcy filings directed by the sponsor or sponsor interference with lender remedies, (iii) breaches of certain fundamental representations made by the sponsor, (iv) in limited circumstances, post-closing deliverable obligations, and (v) if Brindoval insists, narrowly tailored environmental indemnities subject to a low dollar cap appropriate for a SaaS business. We further recommend negotiating specific dollar caps on each category of guaranteed obligation, temporal limitations on the survival of guaranty claims, and structural protections to prevent expansion of the guaranty scope through subsequent amendments to the credit agreement. These recommendations are discussed in detail in Sections IV and V below.

Key Conclusion. A full recourse sponsor guaranty — under which Solara would guarantee the payment and performance obligations of the Borrower under the credit agreement generally — would be far outside market norms for institutional private equity sponsor-backed acquisition financings. Such an arrangement would fundamentally alter the risk allocation that underpins the transaction economics, would be inconsistent with the limited-partnership structure of Solara and the expectations of its limited partners, and would subject Solara's broader fund-level assets (approximately $4.8 billion in total assets under management) to claims arising from a single portfolio investment. The guaranty should guarantee only specifically enumerated obligations arising from sponsor conduct (or, in limited cases, from specifically defined triggering events), and should not extend to the payment or performance obligations of the Borrower under the credit agreement generally.

II. Transaction Background

A. Transaction Structure Overview

Solara, acting through Fund IV (which has $1.65 billion in committed capital, of which approximately $740 million has been deployed as of March 2026), is acquiring 100% of the issued and outstanding equity interests of Meridian from the Target's existing shareholders. Solara is a leading mid-market private equity firm focused on digital infrastructure, enterprise software, and technology-enabled services. The firm has approximately $4.8 billion in total assets under management across three flagship funds (Fund II, Fund III, and Fund IV), in addition to certain co-investment vehicles.

The existing shareholders of Meridian consist of the following:

• Ashford Ventures Partners LLC — Holding approximately 52% of Meridian's outstanding equity. Grant Ashworth serves as Managing Partner of Ashford Ventures. Ashford Ventures originally led the Series B investment in Meridian in 2018 and subsequently participated in the Series C round and a secondary transaction.

• Jason Tremblay — Founder and Chief Executive Officer of Meridian, holding approximately 28% of the outstanding equity. Mr. Tremblay founded Meridian in 2015 and has served as CEO since inception.

• Management and Employees — Holding the remaining approximately 20% of the outstanding equity through a combination of direct holdings and vested stock options.

The total enterprise value of Meridian has been agreed at $315,000,000, representing a purchase price multiple of approximately 16.84x LTM Adjusted EBITDA of $18.7 million. While this multiple is elevated relative to historical norms for leveraged buyouts generally, it is within the range observed in recent acquisitions of high-growth, recurring-revenue SaaS platforms, particularly those with strong net revenue retention metrics and a clear pathway to margin expansion. Meridian's last twelve months' annual recurring revenue ("ARR") of $62.4 million, growing at approximately 27% year-over-year, supports the premium valuation.

The sources and uses of funds for the Acquisition are as follows:

Sources:

Uses:

In addition to the equity contribution from Fund IV, Jason Tremblay has agreed to roll over $20,000,000 of his equity proceeds into equity of Acquisition Sub, aligning his interests with those of Solara as the controlling sponsor. Mr. Tremblay's rollover equity will be structured as a common equity interest in Acquisition Sub, subject to customary vesting and transfer restrictions to be documented in the equity holders' agreement.

The key credit metrics at closing are as follows:

• Closing Leverage (Debt / LTM Adjusted EBITDA): Approximately 10.70x ($200,000,000 / $18,700,000)

• Closing Leverage (Debt / ARR): Approximately 3.21x ($200,000,000 / $62,400,000)

• Equity Contribution as % of Enterprise Value: Approximately 41.3% ($130,000,000 / $315,000,000)

The elevated EBITDA leverage of approximately 10.70x is within the higher end of the market range for high-growth SaaS platforms, where lenders increasingly underwrite to ARR-based and revenue-based metrics rather than traditional cash flow multiples. The Debt/ARR ratio of approximately 3.21x is within the range commonly observed in recent SaaS-focused leveraged financings, and the 27% year-over-year ARR growth provides a basis for meaningful deleveraging over the term of the Facility. The substantial equity contribution of approximately 41.3% of enterprise value provides a significant first-loss cushion for the lender group.

B. Facility Structure

The Facility is structured as a senior secured term loan with the following key economic and structural terms, as set forth in the Term Sheet dated March 21, 2026:

The credit agreement execution-ready draft is targeted for May 22, 2026, with a signing date of June 16, 2026, and a closing date of June 30, 2026. These dates are subject to confirmation with Brindoval and alignment with the acquisition agreement timeline being managed by Alderton Paige LLP.

C. Relevant Parties for Guaranty Analysis

For purposes of the guaranty analysis set forth in this memorandum, the relevant parties and their roles are as follows:

Sponsor Guarantor: Solara Digital Infrastructure LP, a Delaware limited partnership (EIN 84-3291057; DE SOS File No. 7294185). The general partner of Solara is Solara Digital GP LLC, a Delaware limited liability company. The co-founders and managing partners of Solara are Viktor Strand and Nadia Okafor. The general counsel of Solara is Priya Vasudeva, and the chief financial officer is Derek Raines. Solara is the entity identified in the Term Sheet as the sponsor guarantor and is the entity that will execute the sponsor guaranty agreement.

Borrower: Solara Digital Acquisition Holdings LLC, a Delaware limited liability company formed for the purpose of consummating the Acquisition.

Fund: Solara Digital Infrastructure Fund IV LP, a Delaware limited partnership and the direct or indirect parent of Acquisition Sub. Fund IV is the vehicle through which the $130,000,000 equity contribution will be funded.

Target (Post-Closing Guarantor): Meridian Cloud Solutions Inc., a Delaware corporation (EIN 82-1647530; DE SOS File No. 6038472). Following the closing of the Acquisition, Meridian and each of its material domestic subsidiaries will accede to the credit agreement as guarantors and pledge their assets as collateral.

Lender's Counsel: Broadwick & Thayer LLP. The lead partner is Catherine Hartwell, and the senior associate is James Okoro. Broadwick & Thayer will prepare the initial draft of the credit agreement and related loan documents, including the sponsor guaranty, unless we succeed in circulating our draft first (see Section VIII.B below for our recommended strategy on this point).

III. Market Practice for PE Sponsor Guaranties in Acquisition Financings

A. General Market Context

In sponsor-backed leveraged buyout and acquisition financings, it is well-established market practice that the private equity sponsor — whether structured as the management company, the general partner entity, or the fund-level limited partnership — does not provide a full recourse guaranty of the borrower's payment and performance obligations under the credit facility. This is a foundational principle of leveraged finance structuring and reflects the fundamental economic bargain between sponsors, lenders, and limited partners.

The core structuring principle is as follows: the sponsor's economic exposure in any given portfolio investment is limited to its equity investment in the acquisition vehicle, and the sponsor does not put its broader platform, fund-level assets, or other portfolio company interests at risk to support the credit of a single investment. Lenders in leveraged acquisition financings rely on the creditworthiness of the target business, the strength of the collateral package (typically a first-priority lien on substantially all assets of the borrower, the target, and its subsidiaries), and the downstream guarantees provided by the target and its subsidiaries. The sponsor's balance sheet is not the source of credit support for the facility.

This principle is not merely a matter of negotiating convention but reflects deeper structural realities of the private equity fund model. Private equity funds are organized as limited partnerships in which limited partners (institutional investors such as pension funds, endowments, insurance companies, and sovereign wealth funds) commit capital based on the understanding that their exposure to any single investment is limited to the capital committed and drawn for that investment. If a sponsor were to provide full recourse guaranties of portfolio company indebtedness, the sponsor's fund-level assets — which include uncalled capital commitments, management fee streams, carried interest entitlements, and interests in other portfolio companies — would be exposed to claims arising from any single portfolio company default. This would fundamentally undermine the risk diversification that is central to the limited partnership fund structure and would be inconsistent with the representations made to limited partners in the fund's private placement memorandum and limited partnership agreement.

A full recourse sponsor guaranty would effectively convert a non-recourse or limited-recourse acquisition financing into a balance sheet loan against the sponsor. This would have significant adverse consequences for Solara, including: (i) potential triggering of cross-default provisions in other portfolio company financings if the guaranty were to be classified as indebtedness of the sponsor, (ii) potential violation of covenants in the Fund IV limited partnership agreement restricting guaranties of portfolio company obligations, (iii) adverse accounting treatment requiring consolidation of the guaranteed indebtedness on Solara's balance sheet for fund reporting purposes, and (iv) reputational consequences in the institutional limited partner community, where full recourse sponsor guaranties are viewed as a sign of distress or credit weakness.

For all of these reasons, the sponsor guaranty in the Brindoval financing should be structured as a narrow, limited-recourse instrument, consistent with the market practice described in Section III.B below.

B. Typical Scope of Sponsor Guaranty

Sponsor guaranties in acquisition financings are typically limited to the following categories of obligations, each of which represents a specific allocation of risk associated with sponsor conduct or sponsor-controlled events rather than with the ordinary credit risk of the portfolio company:

1. "Bad Boy" Acts / Fraud Carve-Outs. The most commonly accepted carve-out is for losses arising from intentional fraud, willful misconduct, or criminal acts by the sponsor or its controlled affiliates in connection with the transaction. This carve-out reflects the principle that, while a sponsor should not bear the ordinary business risk of a portfolio investment, it should bear responsibility for its own fraudulent or intentionally wrongful conduct. The definition of "fraud" in this context is a critical drafting issue, as discussed in Section IV.B.1 below.

2. Environmental Indemnities. In traditional leveraged finance transactions — particularly those involving real estate assets, manufacturing facilities, or other businesses with significant physical plant — sponsor guaranties routinely include a guaranty of the borrower's and target's environmental remediation and compliance obligations. The rationale is that environmental liabilities can be significant and may survive a foreclosure or bankruptcy of the borrower, thereby impairing the lender's collateral value. As discussed in Section IV.B.5 below, the applicability of this carve-out to a SaaS business such as Meridian is limited.

3. Certain Specific Representations. Sponsor guaranties frequently cover the accuracy of certain fundamental representations made by the sponsor in the loan documents, such as representations regarding the sponsor's due organization, authority and capacity to execute the guaranty, absence of conflicts, and enforceability. These representations are within the sponsor's sole knowledge and control, and it is reasonable for the sponsor to stand behind them.

4. Transfer Restrictions / SPE Covenants. In some transactions, particularly those involving single-purpose entity ("SPE") borrowers (as is the case here, where Acquisition Sub was formed solely for the purpose of the Acquisition), the sponsor guaranty covers compliance with the SPE covenants applicable to the borrower, such as requirements that the borrower maintain separateness from its affiliates, observe entity formalities, and not commingle assets. Breach of these covenants could undermine the lender's structural protections and potentially impair the lender's ability to exercise remedies against the borrower in isolation from the sponsor's other operations and entities.

5. Bankruptcy / Insolvency Carve-Outs. A particularly significant carve-out — and one that is the subject of frequent negotiation — involves "springing recourse" triggered by voluntary bankruptcy filings by the borrower or by sponsor interference with the lender's exercise of remedies. The theory is that a sponsor should not be able to use its control over the borrower to frustrate the lender's rights by directing the borrower to file for bankruptcy protection, colluding with third parties to initiate an involuntary bankruptcy case, or otherwise obstructing the lender's enforcement efforts. The scope and consequences of this carve-out (i.e., whether it triggers indemnification obligations or full recourse to the sponsor) vary significantly across transactions and are discussed in Section IV.B.2 below.

6. Post-Closing Obligations. Where the credit agreement imposes post-closing obligations on the borrower — for example, delivery of deposit account control agreements, landlord consents, intellectual property security agreements, or foreign subsidiary equity pledges within specified periods following closing — the sponsor may be asked to guaranty timely performance of these obligations. The rationale is that the lender is agreeing to fund at closing without having received the complete collateral package, and the sponsor's guaranty provides assurance that the outstanding items will be delivered.

Important Limitation: In all cases, the sponsor guaranty does not typically cover payment of principal, interest, fees, or other monetary obligations under the credit agreement, nor does it guaranty the borrower's compliance with financial covenants or operating covenants. These obligations are the province of the borrower and the downstream guarantors (i.e., the target and its subsidiaries), not the sponsor.

C. Trends in Sponsor-Backed SaaS/Technology Financings

The proposed Facility involves a SaaS acquisition at an elevated EBITDA leverage multiple (approximately 10.70x Debt/LTM Adjusted EBITDA), which places it within the higher end of the market range for leveraged financings of high-growth SaaS platforms. In recent quarters, the SaaS leveraged finance market has seen EBITDA multiples in the range of 7.0x to 13.0x, with higher multiples generally supported by strong ARR growth rates (typically >20% year-over-year), high net revenue retention (typically >110%), and demonstrated pathways to EBITDA margin expansion.

At these elevated leverage levels, lenders may seek broader sponsor support to mitigate the risk that the borrower's cash flows will be insufficient to service the debt during the early years of the investment. However, the market has generally resisted expansion of sponsor guaranties beyond the traditional limited recourse framework described above. Instead, lenders in high-leverage SaaS financings have addressed credit risk through a combination of the following structural mechanisms:

• Higher pricing: The proposed interest rate of Adjusted Term SOFR + 475 bps is at the wider end of the range for sponsor-backed term loans and reflects the elevated leverage and growth-equity characteristics of the transaction. This pricing compensates the lender for the incremental credit risk without requiring expanded sponsor recourse.

• Meaningful OID: The 2.00% original issue discount ($4,000,000) provides additional day-one yield protection for the lender and compensates for the risk of early prepayment or refinancing.

• Robust collateral packages: First-priority liens on substantially all assets — including, critically, the target's intellectual property (the core asset of a SaaS business), customer contracts, and deposit accounts — provide the lender with a meaningful recovery base in a downside scenario.

• Excess cash flow sweep mechanics: The tiered ECF sweep (75% / 50% / 25% / 0%) ensures mandatory deleveraging from free cash flow, which is particularly important in a high-growth SaaS business where cash flow generation is expected to accelerate as the business scales and margins expand.

• Financial covenant protections: The springing Total Net Leverage covenant at 7.50x provides an early warning mechanism if the business underperforms, while the springing nature of the covenant (triggered only when the revolving facility, if any, is drawn >35% of commitments) preserves operational flexibility for the borrower.

Additionally, the strong equity contribution in the proposed transaction — approximately $130,000,000, representing approximately 41.3% of the $315,000,000 enterprise value — provides a significant first-loss cushion for the lender group and aligns the sponsor's incentives with those of the lenders. This equity contribution is well within the range expected by institutional lenders in sponsor-backed SaaS financings and, together with the structural protections described above, provides a robust credit framework that does not require expansive sponsor recourse to be viable.

We note, however, that the elevated leverage will likely be cited by Brindoval's credit team — and in particular by credit officer Sandra Fleischer — as a basis for seeking broader guaranty coverage. Our analysis in Section IV below addresses how to respond to these expected arguments while maintaining the limited recourse framework.

IV. Analysis of Proposed Sponsor Guaranty Scope

A. Brindoval's Expected Position

Based on the initial Term Sheet received on March 21, 2026, the Term Sheet references "Solara Digital Infrastructure LP (as sponsor guarantor, limited recourse)" as a guarantor under the Facility but does not further specify the scope of the limited recourse guaranty. This is typical for indicative term sheets, which generally identify the sponsor guarantor and characterize the guaranty as "limited recourse" without delineating the specific carve-out events, dollar caps, or temporal limitations. The detailed terms of the sponsor guaranty are customarily negotiated during the definitive credit documentation phase.

We anticipate that Broadwick & Thayer, in connection with the preparation of the credit agreement execution-ready draft (targeted for May 22, 2026), will propose a separate sponsor guaranty agreement (as opposed to embedding the sponsor guaranty within the credit agreement itself). This is the standard approach and has the advantage of keeping the sponsor guaranty terms distinct from the downstream guaranty terms applicable to Meridian and its subsidiaries.

We further anticipate that Broadwick & Thayer will propose carve-out events that are broadly drafted and that Brindoval's coverage banker, Thomas Wilder, and credit officer, Sandra Fleischer, may seek to expand the guaranty scope beyond traditional market parameters. The elevated EBITDA leverage of approximately 10.70x provides a ready argument for Brindoval that additional sponsor credit support is warranted. Our negotiating strategy should anticipate these arguments and be prepared to demonstrate, with reference to comparable transactions and market data, that the proposed scope is consistent with market practice for SaaS acquisition financings at comparable leverage levels.

The following subsections address each category of guaranteed obligation in detail, setting forth both our recommended position and anticipated points of negotiation.

B. Recommended Guaranteed Obligations — Acceptable Scope

1. Bad Boy / Fraud Carve-Outs. The sponsor guaranty should cover losses directly resulting from the following categories of sponsor conduct:

(a) Actual fraud (not constructive fraud) by the sponsor or its controlled affiliates in connection with the transaction, including the making of the loan, the execution of the loan documents, and the performance of the sponsor's obligations thereunder;

(b) Intentional and material misrepresentation by the sponsor in the loan documents, including in the sponsor guaranty itself and in any certificate or other document delivered by the sponsor in connection with the closing; and

(c) Willful misconduct of the sponsor that directly causes material harm to the lender group, where "willful misconduct" is defined as an intentional act or omission undertaken by the sponsor with actual knowledge that such act or omission would constitute a breach of its obligations or would cause material harm to the lender group.

Recommendation — Definition of "Fraud." The definition of "fraud" is a critical drafting issue. We strongly recommend that "fraud" be defined narrowly as common law fraud with scienter — i.e., a knowing and intentional misrepresentation of a material fact, made with the intent to induce reliance, upon which the lender actually and justifiably relied, resulting in damages. This definition should expressly exclude constructive fraud, equitable fraud, negligent misrepresentation, and any theory of fraud that does not require a showing of scienter (i.e., knowledge of falsity and intent to deceive). The distinction is important because constructive fraud and negligent misrepresentation are lower-threshold claims that could be asserted in a wider range of circumstances and could expose the sponsor to liability for honest mistakes or good-faith disagreements about the accuracy of representations.

Recommendation — Dollar Cap. Market practice is mixed regarding whether the fraud carve-out is subject to a dollar cap. In the majority of comparable transactions we have reviewed (see Section VI below), the fraud carve-out is uncapped — reflecting the view that a party should not be permitted to limit in advance its liability for its own fraudulent conduct. We recommend accepting the market-standard position that the fraud carve-out is not subject to a dollar cap. However, for the willful misconduct carve-out, we recommend negotiating a dollar cap of $20,000,000, representing 10% of the Facility amount. This distinction recognizes that while intentional fraud should carry unlimited liability, willful misconduct — which may encompass a broader range of conduct — should be subject to a reasonable limitation.

2. Voluntary Bankruptcy / Insolvency Interference. The sponsor guaranty should cover losses arising from the following events:

(a) The sponsor causing or directing the Borrower or any downstream guarantor to file a voluntary petition for relief under Title 11 of the United States Code or any other applicable bankruptcy, insolvency, or similar debtor-relief statute;

(b) The sponsor colluding with third parties to file an involuntary petition against the Borrower or any downstream guarantor under Title 11 of the United States Code or any other applicable bankruptcy, insolvency, or similar debtor-relief statute; and

(c) The sponsor interfering with or obstructing the lender's exercise of remedies under the loan documents or applicable law, including by causing the Borrower to contest or delay foreclosure proceedings, by transferring or encumbering collateral in violation of the loan documents, or by taking any action designed to frustrate or impair the lender's ability to realize upon its collateral.

In certain market segments — particularly commercial real estate finance — these carve-outs are structured as "springing full recourse" triggers, meaning that the occurrence of a triggering event converts the entire facility from non-recourse or limited-recourse into full recourse against the sponsor, with the sponsor becoming liable for the full outstanding balance of the loan. In leveraged finance, the more common approach is to structure these carve-outs as indemnification obligations, under which the sponsor is liable for the actual losses caused by the triggering event rather than for the full outstanding balance of the facility.

Recommendation: We recommend accepting springing recourse (i.e., liability for the full amount of outstanding obligations at the time of the triggering event) for the narrow category of borrower-directed voluntary bankruptcy filings under clause (a) above. This is the most direct form of sponsor abuse — using control over the borrower to invoke bankruptcy protection against the lender's wishes — and springing full recourse is appropriate as a deterrent. However, for the broader categories of collusion with involuntary petitioners (clause (b)) and interference with remedies (clause (c)), we recommend that the sponsor's liability be limited to an indemnification obligation for actual losses directly caused by the sponsor's conduct, rather than a springing full recourse obligation. This distinction is important because involuntary petitions and claims of "interference with remedies" involve more ambiguous factual circumstances and are more susceptible to litigation risk.

Furthermore, we recommend that the bankruptcy carve-out be limited to events within the sponsor's actual control or direction. The guaranty should not be triggered by: (i) insolvency events that occur as a result of business deterioration rather than sponsor direction (e.g., a voluntary bankruptcy filing by the borrower's management without sponsor involvement), (ii) involuntary petitions filed by third parties without sponsor collusion, or (iii) actions taken by the borrower on the advice of independent legal counsel in connection with a bona fide restructuring process.

3. Certain Fundamental Representations. The sponsor guaranty should include a guaranty that the following fundamental representations made by the sponsor in the loan documents are true and accurate as of the closing date and as of each date on which they are deemed repeated:

(a) Due organization and valid existence — Solara Digital Infrastructure LP is duly organized, validly existing, and in good standing under the laws of the State of Delaware;

(b) Authority and capacity — The sponsor has all necessary partnership power and authority to execute, deliver, and perform its obligations under the sponsor guaranty and each other loan document to which it is a party, and the execution, delivery, and performance of such documents have been duly authorized by all necessary partnership action;

(c) No conflicts — The execution, delivery, and performance of the sponsor guaranty do not and will not conflict with or result in a breach of, or constitute a default under, the sponsor's organizational documents, any material agreement to which the sponsor is a party, or any applicable law, order, or decree;

(d) Enforceability — The sponsor guaranty constitutes the legal, valid, and binding obligation of the sponsor, enforceable against the sponsor in accordance with its terms, subject to customary enforceability exceptions (bankruptcy, insolvency, reorganization, and similar laws affecting creditors' rights generally, and general principles of equity); and

(e) No required governmental approvals — No governmental authorization, consent, approval, or filing is required for the sponsor's execution, delivery, and performance of the sponsor guaranty, other than those that have been obtained or made.

Recommendation: We recommend limiting the scope of the representation guaranty to the five fundamental representations enumerated above, all of which relate to the sponsor's own organization, authority, and capacity and are within the sponsor's sole knowledge and control. We should vigorously resist any attempt by Broadwick & Thayer to expand the representation guaranty to cover the borrower's or target's representations and warranties in the credit agreement. Those representations are separately guaranteed by the downstream guarantors (Meridian and its material domestic subsidiaries) and are secured by the collateral package. Having the sponsor guaranty extend to the borrower's or target's representations would effectively convert the limited recourse guaranty into a payment guaranty for representation and warranty breach claims, which is inconsistent with the intended limited recourse structure.

4. Post-Closing Deliverable Obligations. If the credit agreement contains post-closing covenants requiring the delivery of items within specified periods following the closing date — such as deposit account control agreements, intellectual property security agreements, landlord consents for leased properties, landlord estoppels, foreign subsidiary equity pledges, and evidence of insurance — the sponsor may be asked to guaranty the timely delivery of such items.

The rationale for this request is understandable: the lender is agreeing to fund the Facility at closing without having received the complete collateral package, and the sponsor's guaranty provides assurance that the borrower and its subsidiaries will complete the outstanding deliverables within the agreed timeframes. In our experience, this carve-out is increasingly common in leveraged acquisition financings where the closing timeline does not permit completion of all collateral perfection activities prior to funding.

Recommendation: This obligation is acceptable, subject to the following conditions:

(a) Reasonable cure period — The sponsor's guaranty obligation should not be triggered immediately upon the borrower's failure to deliver a post-closing item by the initial deadline. Instead, the sponsor should have the benefit of a reasonable cure period of 30 to 60 days beyond the initial deadline in which to cause the borrower to deliver the outstanding item before the sponsor's guaranty obligation becomes enforceable;

(b) Termination upon delivery — The sponsor's guaranty obligation with respect to any specific post-closing deliverable should terminate automatically upon actual delivery of the item, regardless of whether the delivery occurs before or after the applicable deadline. The guaranty is intended to ensure delivery, not to create an ongoing indemnification obligation;

(c) Delivery only — The guaranty should be of the delivery obligation only and should not extend to any indemnification obligation for losses arising from the failure to deliver. If a post-closing deliverable is not timely delivered and the lender suffers losses as a result (e.g., due to a lien priority issue arising from the absence of a deposit account control agreement), the lender's remedy should be against the borrower and the downstream guarantors under the credit agreement, not against the sponsor under the guaranty; and

(d) Dollar cap — The sponsor's aggregate liability for post-closing deliverable obligations should be subject to a dollar cap (we recommend $5,000,000, as discussed in Section V.B below).

5. Environmental Indemnities. In traditional leveraged finance transactions, particularly those involving real estate, manufacturing, energy, and other sectors with significant physical plant and environmental exposure, sponsor guaranties routinely include a guaranty of the borrower's and target's environmental remediation and compliance obligations. The rationale is that environmental liabilities — including liabilities arising under CERCLA, RCRA, and analogous state environmental laws — can be substantial, may survive a foreclosure or bankruptcy, and may attach to the property owner (or the entity that "arranged for" the disposal of hazardous substances) regardless of fault or prior knowledge.

However, the applicability of this carve-out to the present transaction is limited. Meridian is a cloud-native SaaS platform providing enterprise cloud solutions. The company has approximately 310 employees and operates out of leased office space in Austin, Texas. Meridian does not own any real property, does not operate manufacturing facilities, and does not generate, handle, store, transport, or dispose of hazardous materials in connection with its business operations. The company's environmental footprint is limited to its leased office space, and its data center operations are hosted by third-party cloud infrastructure providers (principally Ridgeway Industries and Crestline Systems) under standard service agreements.

Recommendation: We recommend pushing back strongly on the inclusion of environmental indemnities in the sponsor guaranty, on the ground that the environmental exposure of a SaaS business is de minimis and does not warrant sponsor-level credit support. If Brindoval nonetheless insists on inclusion of an environmental carve-out — which is possible given that some lenders include environmental carve-outs as a matter of standard form rather than transaction-specific analysis — we recommend limiting the obligation to the following:

(a) The environmental indemnity should cover only environmental conditions caused by the sponsor's or borrower's affirmative acts after the closing date, and should expressly exclude pre-existing environmental conditions, conditions caused by third parties, and conditions arising from off-site contamination;

(b) The environmental indemnity should apply only to properties owned (not leased) by the Borrower or any downstream guarantor. Given that Meridian does not currently own any real property and is not expected to acquire real property, this limitation effectively eliminates the carve-out unless the business model changes during the term of the Facility;

(c) The environmental indemnity should be subject to a dollar cap of $1,000,000, which reflects the minimal environmental risk profile of a SaaS business. This cap is significantly below the typical environmental indemnity caps observed in leveraged financings of real estate or manufacturing businesses (which are typically in the range of $5,000,000 to $25,000,000 or more); and

(d) The environmental indemnity should not be triggered until the aggregate amount of environmental losses exceeds a de minimis threshold of $100,000, below which the borrower and downstream guarantors bear the cost through the ordinary credit agreement indemnification provisions.

C. Obligations to Resist / Exclude

The following categories of obligations should be excluded from the sponsor guaranty under all circumstances. If Broadwick & Thayer proposes any of these items, we should resist firmly and be prepared to explain why each is inconsistent with market practice and the fundamental structure of the transaction.

1. Payment Guaranty of Facility Obligations. Under no circumstances should the sponsor guaranty cover the payment of principal ($200,000,000), interest (at the rate of Adjusted Term SOFR + 475 bps, with a SOFR floor of 1.00% and a CSA of 10 bps), fees (including the arrangement fee of $3,000,000 and the structuring fee of $500,000), or any other monetary obligations of the Borrower under the credit agreement. A payment guaranty — whether framed as a guaranty of payment, a guaranty of collection, or an indemnification obligation for the lender's failure to receive timely payment — would fundamentally transform the sponsor's role from a limited recourse guarantor to a primary obligor.

The payment obligations of the Borrower are guaranteed by the downstream guarantors — Meridian and each of its material domestic subsidiaries — which are the operating entities generating the cash flows from which the debt is to be serviced. The payment obligations are further secured by the first-priority collateral package described in Section II.B above. These protections provide the lender group with robust credit support for the payment obligations, and the addition of a sponsor-level payment guaranty is neither necessary nor appropriate.

Inclusion of a payment guaranty would fundamentally alter the risk allocation underlying the transaction. It would effectively convert the Facility from a non-recourse acquisition financing — in which the lender looks to the target business and the collateral for repayment — into a balance sheet loan against the sponsor. This would be inconsistent with the limited-partnership structure of Solara, the expectations of its limited partners (who invested on the understanding that their exposure to any single portfolio investment is limited to their committed capital), and the economics upon which the Acquisition was underwritten and approved by Fund IV's investment committee.

We note that a payment guaranty is virtually unheard of in institutional sponsor-backed acquisition financings and would represent a significant departure from market norms. If Brindoval raises this issue, we should be prepared to cite the absence of payment guaranties in the comparable transactions described in Section VI below.

2. Financial Covenant Performance Guaranty. The Term Sheet includes a springing Total Net Leverage covenant at 7.50x, tested quarterly only when the revolving credit facility (if any) is drawn more than 35% of commitments. The sponsor should not guaranty compliance with this financial covenant or indemnify the lenders for any losses arising from a breach thereof.

A financial covenant guaranty would convert what is essentially a covenant-lite structure — in which the financial covenant is springing and is expected to be tested only in distress scenarios — into a recourse obligation against the sponsor. The financial covenant exists to provide the lender with an early warning mechanism and the ability to exercise remedies if the borrower's financial performance deteriorates beyond a specified threshold. The remedy for a financial covenant breach is the exercise of contractual rights under the credit agreement (acceleration, enforcement of collateral, etc.), not recourse to the sponsor.

Moreover, financial covenant compliance depends on the operating performance of the target business, which is managed by Meridian's management team (led by Jason Tremblay as CEO) subject to the governance framework established in the equity holders' agreement. While Solara will exercise significant governance influence through its control of the Acquisition Sub board, the day-to-day operating decisions that drive financial performance are the responsibility of management. It would be inappropriate to impose guaranty liability on the sponsor for outcomes that are ultimately driven by the operating performance of the portfolio company.

3. Operating Covenant Compliance. The credit agreement will contain customary negative covenants applicable to the Borrower and the downstream guarantors, including limitations on: indebtedness, liens, restricted payments (including dividends and distributions), investments, asset sales, affiliate transactions, fundamental changes (mergers, consolidations, and dissolutions), and restrictive agreements. These covenants are designed to protect the lender's credit by restricting the borrower's and guarantors' ability to take actions that could impair the collateral or the enterprise value of the business.

These are borrower/guarantor obligations, and the sponsor should not guaranty compliance with operating covenants. The borrower and the downstream guarantors are the parties that are contractually bound by the negative covenants, and the lender's remedies for breach of these covenants run against the borrower and guarantors under the credit agreement. Adding a sponsor guaranty of operating covenant compliance would create duplicative liability and would expose the sponsor to claims arising from the ordinary course operation of the business.

4. Indemnification for Losses Arising from Target's Pre-Closing Liabilities. Any pre-closing liabilities of Meridian — including liabilities arising from tax matters, employment disputes, intellectual property infringement claims, data privacy violations, or other matters predating the closing of the Acquisition — should be addressed through the appropriate transaction documents. Specifically:

• The acquisition agreement (currently being negotiated by Alderton Paige LLP, with Richard Fontaine serving as lead partner) will contain representations, warranties, and indemnification provisions from the sellers (Ashford Ventures Partners LLC, Jason Tremblay, and management/employees) regarding pre-closing conditions and liabilities. The seller indemnification obligations are the primary mechanism for allocating pre-closing risk from the buyer to the sellers.

• The representations and warranties insurance policy to be obtained from Northvane Insurance Group Inc. ("Northvane R&W Policy") will provide an additional layer of protection for the buyer against losses arising from breaches of the sellers' representations and warranties, including breaches that may not be covered by the sellers' indemnification obligations due to caps, baskets, or survival limitations.

The sponsor guaranty is not the appropriate mechanism for addressing pre-closing liabilities of the target. Including pre-closing indemnification obligations in the sponsor guaranty would create confusion regarding the applicable risk allocation framework, could result in the lender seeking recourse against the sponsor for losses that should properly be borne by the sellers (through the acquisition agreement) or the R&W insurer (through the Northvane R&W Policy), and could undermine the negotiated indemnification structure of the acquisition agreement. We should ensure that the sponsor guaranty includes an express exclusion for any losses arising from pre-closing conditions, liabilities, or obligations of the target, regardless of when such losses are discovered or asserted.

V. Structural and Drafting Considerations

A. Identity of Guarantor Entity

The guarantor entity under the sponsor guaranty should be Solara Digital Infrastructure LP (EIN 84-3291057; DE SOS File No. 7294185) only. This is the entity identified in the Term Sheet as the sponsor guarantor, and it is the appropriate entity given its role as the management company and investment adviser for the Solara fund complex.

The following entities should not be named as guarantors under the sponsor guaranty, and we should resist any attempt by Broadwick & Thayer to add them:

• Solara Digital GP LLC — The general partner of Solara Digital Infrastructure LP. Adding the general partner as a co-guarantor would provide no incremental credit support to the lender (because the general partner's primary asset is its interest in Solara) and would create an additional entity with potential exposure to guaranty claims.

• Fund IV — Solara Digital Infrastructure Fund IV LP, the fund through which the equity contribution is being made. Adding Fund IV as a guarantor would expose the fund's assets — including committed but uncalled capital from limited partners — to guaranty claims, which is fundamentally inconsistent with the limited partnership fund structure and would likely require disclosure to and potentially consent from the Fund IV limited partners.

• Other Solara affiliates or portfolio companies — Any attempt to add other Solara entities or portfolio companies as guarantors should be rejected categorically. The sponsor guaranty is a fund-level obligation of Solara in its capacity as the sponsor of the Acquisition, not a cross-collateralization of the Solara platform.

Additionally, we should resist any attempt to add Viktor Strand, Nadia Okafor, or any other individual associated with Solara as a personal guarantor. Personal guaranties of individual principals are not market practice in institutional sponsor-backed acquisition financings. Personal guaranties are occasionally seen in smaller-scale transactions involving less-established sponsors or family-office-backed deals, but they are not appropriate for a transaction involving an institutional sponsor of Solara's scale and track record.

B. Dollar Caps and Limitations

We recommend the following dollar caps for each category of guaranteed obligation:

The distinction between the actual fraud cap (uncapped) and the willful misconduct cap ($20,000,000) reflects the different nature and severity of these categories of conduct. Actual fraud — a knowing and intentional misrepresentation with scienter — represents the most egregious form of sponsor misconduct and warrants unlimited liability. Willful misconduct, while intentional, encompasses a broader range of conduct and may involve situations where the harm to the lender was not the sponsor's primary objective. A $20,000,000 cap (10% of the Facility amount) provides meaningful exposure to deter misconduct while preventing an open-ended liability that could threaten the sponsor's broader operations.

The aggregate cap of $25,000,000 (excluding actual fraud) provides an overall ceiling on the sponsor's exposure across all guaranteed obligations other than fraud. This aggregate cap ensures that the sponsor's total liability under the guaranty is bounded and predictable, which is important for fund reporting and risk management purposes. The aggregate cap is approximately 12.5% of the Facility amount and approximately 19.2% of the equity contribution, which is within the range observed in comparable transactions.

We note that the voluntary bankruptcy carve-out, if structured as springing full recourse, would result in liability equal to the outstanding obligations at the time of the triggering event, which could exceed the aggregate cap. This is intentional: the springing full recourse nature of the bankruptcy carve-out serves as a powerful deterrent against sponsor-directed bankruptcy filings, and its effectiveness would be undermined by subjecting it to the aggregate cap. We recommend that the bankruptcy carve-out be excluded from the aggregate cap.

C. Temporal Limitations / Survival Periods

The sponsor guaranty should be subject to the following temporal limitations:

Overall Termination. The sponsor guaranty should terminate upon the earliest of:

(a) Payment in full of all obligations under the credit agreement (including all principal, interest, fees, and other amounts) and termination of all commitments thereunder;

(b) Release of all guarantor obligations under the credit agreement (i.e., the release of the downstream guaranties provided by Meridian and its subsidiaries, which would occur upon full repayment of the Facility); or

Carve-Out-Specific Survival Periods:

• Fundamental representation claims: 18 months following the closing date. This is consistent with the typical survival period for fundamental representations in M&A transactions and reflects the principle that representation claims should be brought within a reasonable period after closing. After the 18-month survival period, the sponsor's liability for fundamental representation breaches should terminate regardless of whether any claim has been asserted.

• Post-closing deliverable guaranty: Terminates upon actual delivery of the applicable post-closing item. If the item has not been delivered and no claim has been asserted within 12 months following the closing date, the guaranty with respect to that item should terminate.

• Fraud and bankruptcy carve-outs: Survive for the full term of the Facility (i.e., until payment in full and termination of all commitments). These carve-outs address the most serious forms of sponsor misconduct and should not be subject to shorter survival periods.

• Environmental indemnities (if applicable): Survive for the full term of the Facility, consistent with the long-tail nature of environmental liabilities. However, given the minimal environmental risk profile of the Meridian business, we do not view this as a significant exposure.

Recommendation — Post-Repayment Survival. We should resist any attempt by Broadwick & Thayer to have the sponsor guaranty survive beyond the date of full repayment of the Facility and termination of all commitments. Certain lenders take the position that the guaranty should survive for a specified period (e.g., 12 or 24 months) following full repayment to allow the lender to bring claims that may not have been discovered prior to repayment. This position is not widely accepted in the market and is inconsistent with the principle that the guaranty is ancillary to the credit facility and should terminate when the underlying obligations are satisfied.

D. Subrogation and Contribution Rights

The sponsor guaranty should include customary subordination of the sponsor's subrogation, contribution, reimbursement, and indemnification rights against the Borrower and the downstream guarantors until all obligations under the Facility are paid in full and all commitments are terminated. This provision ensures that the sponsor cannot, following a payment under the guaranty, step into the lender's shoes to assert claims against the Borrower or the downstream guarantors that would compete with the lender's own claims.

This is a standard provision in sponsor guaranties and downstream guaranties alike and is not typically the subject of significant negotiation. We do not anticipate that Broadwick & Thayer will seek to modify this provision, and we recommend accepting it in customary form.

E. Waiver Provisions

We expect Broadwick & Thayer to propose a broad set of waivers of guarantor defenses in the sponsor guaranty, consistent with their standard form. These waivers typically cover:

• Presentment, demand, protest, and notice of dishonor;

• Notice of acceptance of the guaranty, notice of any default under the credit agreement, and notice of any action taken by the lender in reliance on the guaranty;

• Defenses based on the statute of limitations;

• Defenses based on the doctrine of marshaling (i.e., the right to require the lender to exhaust its remedies against the Borrower and the collateral before seeking recourse against the sponsor);

• Defenses arising from any impairment of the lender's collateral, including any failure by the lender to perfect or maintain the perfection of its security interests;

• Defenses arising from any extension, renewal, or modification of the credit agreement without the sponsor's consent; and

• Any other defense that might otherwise be available to a guarantor under applicable law.

Recommendation: We recommend accepting the customary waivers of presentment, demand, protest, notice of dishonor, and statute of limitations defenses, as these are standard in guaranty agreements and would not materially prejudice the sponsor. However, we should resist the following waivers:

(a) Waiver of defenses based on the lender's own gross negligence or willful misconduct. The sponsor should retain the right to assert as a defense that the lender's own gross negligence or willful misconduct caused or contributed to the losses for which the lender seeks recovery under the guaranty. It would be inequitable to permit the lender to recover against the sponsor for losses that the lender itself caused through its own culpable conduct.

(b) Waiver of defenses arising from unauthorized modifications to the credit agreement. While we address this issue separately in Section V.F below (consent rights for material amendments), the waiver provisions should not eliminate the sponsor's right to assert a defense based on modifications to the credit agreement that materially increase the sponsor's guaranteed obligations without the sponsor's consent. The waiver of defenses based on modifications should be limited to modifications that do not materially increase the guaranteed obligations or that are made with the sponsor's prior written consent.

(c) Waiver of defenses arising from the lender's failure to mitigate. Under New York law, a party seeking damages generally has an obligation to take reasonable steps to mitigate its losses. The sponsor should not waive this defense, as it provides an important check on the lender's ability to assert inflated claims under the guaranty.

F. Amendment and Modification Protections

The sponsor guaranty should include a provision requiring the sponsor's prior written consent to any amendment, modification, supplement, or waiver of the credit agreement that would have the effect of:

(a) Increasing the principal amount of the Facility beyond $200,000,000, including through any incremental facility, accordion feature, or similar mechanism;

(b) Increasing the interest rate, applicable margin, default rate, or fees payable under the credit agreement;

(d) Expanding the definition of "Obligations" or "Guaranteed Obligations" in a manner that would increase the scope of the sponsor's guaranty;

(e) Adding new events of default or expanding existing events of default in a manner that would increase the likelihood of a carve-out event being triggered; or

(f) Otherwise materially increasing the guaranteed obligations or the sponsor's exposure under the guaranty.

Without such protections, the lender could — through amendments agreed solely between the lender and the Borrower — expand the sponsor's exposure under the guaranty without the sponsor's knowledge or consent. For example, if the credit agreement were amended to increase the Facility amount from $200,000,000 to $250,000,000 (through an accordion feature or incremental term loan), the sponsor's exposure under the bankruptcy carve-out (which is tied to outstanding obligations) would increase by $50,000,000 without the sponsor having agreed to bear this additional risk. The consent provision prevents this outcome and ensures that the sponsor retains control over the scope of its guaranty obligations.

We anticipate that Broadwick & Thayer may resist a broad consent provision on the ground that it could impede the Borrower's ability to amend the credit agreement in the ordinary course. To address this concern, we recommend structuring the consent provision to apply only to amendments that "materially increase the guaranteed obligations" — a formulation that excludes routine administrative amendments, technical corrections, and amendments that do not affect the scope of the guaranty.

G. Governing Law and Forum

Consistent with the credit agreement, the sponsor guaranty should be governed by the laws of the State of New York, without regard to principles of conflicts of law (other than Section 5-1401 of the New York General Obligations Law, which permits parties to a transaction involving not less than $250,000 to choose New York law as the governing law).

The sponsor guaranty should provide for exclusive jurisdiction in the federal and state courts located in the Borough of Manhattan, New York, New York. This is the same forum specified in the credit agreement and will ensure that any disputes arising under the sponsor guaranty are litigated in the same forum as disputes arising under the credit agreement.

The sponsor guaranty should include a waiver of the right to a jury trial. This is a standard provision in New York-law-governed commercial agreements and is routinely included in guaranty agreements. We recommend acceptance of this provision.

VI. Comparison to Precedent Transactions

A detailed comparable transaction analysis for the SaaS leveraged finance market is being separately prepared by the Banking & Finance team and will be circulated under separate cover. For purposes of this memorandum, we have reviewed the sponsor guaranty structures in five recent comparable SaaS acquisition financings from Q3 2025 through Q1 2026, summarized below:

Analysis. The precedent transactions demonstrate that the market for sponsor guaranties in SaaS acquisition financings is well-established and relatively consistent. In all five transactions, the sponsor guaranty was limited to specific carve-out events and did

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
MEMORANDUM
TO: Philip Hartmann, Responsible Partner, Banking & Finance
FROM: Lisa Morrow, Lead Associate, Banking & Finance Marcus Leung, Working Associate, Banking & Finance
DATE: March 27, 2026
RE: Sponsor Guaranty — Scope and Limitations; Solara Digital Infrastructure LP Guaranty in Connection with the $200,000,000 Senior Secured Term Loan Facility for the Acquisition of Meridian Cloud Solutions Inc.
Matter No.: 1041-00002 Client No.: CL-081273
REVIEWED BY: Philip Hartmann
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I. Executive Summary
This memorandum analyzes the limited recourse sponsor guaranty to be provided by Solara Digital Infrastructure LP ("Solara" or "SDILP"), a Delaware limited partnership, in connection with the $200,000,000 senior secured term loan facility (the "Facility") to be arranged by Brindoval National Bank, N.A. ("Brindoval") to finance the acquisition (the "Acquisition") of Meridian Cloud Solutions Inc. ("Meridian" or the "Target"). The purpose of this memorandum is to assess the appropriate scope, structure, and limitations of the sponsor guaranty, to identify areas of likely negotiation with lender's counsel, and to provide recommendations on the negotiating positions that Calderwood & Harkness LLP should advance on behalf of Solara.
The Borrower under the Facility is Solara Digital Acquisition Holdings LLC ("Acquisition Sub"), a newly formed Delaware limited liability company and wholly owned subsidiary of Solara Digital Infrastructure Fund IV LP ("Fund IV"). Acquisition Sub was organized solely for the purpose of consummating the Acquisition and will serve as the direct or indirect holding company for Meridian following the closing of the transaction.
The term sheet received from Brindoval on March 21, 2026 (the "Term Sheet") contemplates that Solara Digital Infrastructure LP will provide a "limited recourse sponsor guaranty" in connection with the Facility. The Term Sheet, however, does not further specify the scope, dollar limits, temporal parameters, or specific carve-out events that would trigger sponsor liability. Broadwick & Thayer LLP ("Broadwick & Thayer"), acting through Catherine Hartwell as lead partner and James Okoro as senior associate, serves as lender's counsel and will negotiate the definitive guaranty terms during the credit documentation phase.
Summary Recommendation. The sponsor guaranty should be strictly limited in scope to customary "bad boy" carve-outs and certain narrow guaranty obligations that are consistent with well-established market practice for private equity sponsor-backed acquisition financings. Specifically, we recommend that the guaranty cover only the following categories of obligations: (i) losses arising from actual fraud or willful misconduct by the sponsor, (ii) losses arising from voluntary bankruptcy filings directed by the sponsor or sponsor interference with lender remedies, (iii) breaches of certain fundamental representations made by the sponsor, (iv) in limited circumstances, post-closing deliverable obligations, and (v) if Brindoval insists, narrowly tailored environmental indemnities subject to a low dollar cap appropriate for a SaaS business. We further recommend negotiating specific dollar caps on each category of guaranteed obligation, temporal limitations on the survival of guaranty claims, and structural protections to prevent expansion of the guaranty scope through subsequent amendments to the credit agreement. These recommendations are discussed in detail in Sections IV and V below.
Key Conclusion. A full recourse sponsor guaranty — under which Solara would guarantee the payment and performance obligations of the Borrower under the credit agreement generally — would be far outside market norms for institutional private equity sponsor-backed acquisition financings. Such an arrangement would fundamentally alter the risk allocation that underpins the transaction economics, would be inconsistent with the limited-partnership structure of Solara and the expectations of its limited partners, and would subject Solara's broader fund-level assets (approximately $4.8 billion in total assets under management) to claims arising from a single portfolio investment. The guaranty should guarantee only specifically enumerated obligations arising from sponsor conduct (or, in limited cases, from specifically defined triggering events), and should not extend to the payment or performance obligations of the Borrower under the credit agreement generally.
II. Transaction Background
A. Transaction Structure Overview
Solara, acting through Fund IV (which has $1.65 billion in committed capital, of which approximately $740 million has been deployed as of March 2026), is acquiring 100% of the issued and outstanding equity interests of Meridian from the Target's existing shareholders. Solara is a leading mid-market private equity firm focused on digital infrastructure, enterprise software, and technology-enabled services. The firm has approximately $4.8 billion in total assets under management across three flagship funds (Fund II, Fund III, and Fund IV), in addition to certain co-investment vehicles.
The existing shareholders of Meridian consist of the following:
• Ashford Ventures Partners LLC — Holding approximately 52% of Meridian's outstanding equity. Grant Ashworth serves as Managing Partner of Ashford Ventures. Ashford Ventures originally led the Series B investment in Meridian in 2018 and subsequently participated in the Series C round and a secondary transaction.
• Jason Tremblay — Founder and Chief Executive Officer of Meridian, holding approximately 28% of the outstanding equity. Mr. Tremblay founded Meridian in 2015 and has served as CEO since inception.
• Management and Employees — Holding the remaining approximately 20% of the outstanding equity through a combination of direct holdings and vested stock options.
The total enterprise value of Meridian has been agreed at $315,000,000, representing a purchase price multiple of approximately 16.84x LTM Adjusted EBITDA of $18.7 million. While this multiple is elevated relative to historical norms for leveraged buyouts generally, it is within the range observed in recent acquisitions of high-growth, recurring-revenue SaaS platforms, particularly those with strong net revenue retention metrics and a clear pathway to margin expansion. Meridian's last twelve months' annual recurring revenue ("ARR") of $62.4 million, growing at approximately 27% year-over-year, supports the premium valuation.
The sources and uses of funds for the Acquisition are as follows:
Sources:
Uses:
In addition to the equity contribution from Fund IV, Jason Tremblay has agreed to roll over $20,000,000 of his equity proceeds into equity of Acquisition Sub, aligning his interests with those of Solara as the controlling sponsor. Mr. Tremblay's rollover equity will be structured as a common equity interest in Acquisition Sub, subject to customary vesting and transfer restrictions to be documented in the equity holders' agreement.
The key credit metrics at closing are as follows:
• Closing Leverage (Debt / LTM Adjusted EBITDA): Approximately 10.70x ($200,000,000 / $18,700,000)
• Closing Leverage (Debt / ARR): Approximately 3.21x ($200,000,000 / $62,400,000)
• Equity Contribution as % of Enterprise Value: Approximately 41.3% ($130,000,000 / $315,000,000)
The elevated EBITDA leverage of approximately 10.70x is within the higher end of the market range for high-growth SaaS platforms, where lenders increasingly underwrite to ARR-based and revenue-based metrics rather than traditional cash flow multiples. The Debt/ARR ratio of approximately 3.21x is within the range commonly observed in recent SaaS-focused leveraged financings, and the 27% year-over-year ARR growth provides a basis for meaningful deleveraging over the term of the Facility. The substantial equity contribution of approximately 41.3% of enterprise value provides a significant first-loss cushion for the lender group.
B. Facility Structure
The Facility is structured as a senior secured term loan with the following key economic and structural terms, as set forth in the Term Sheet dated March 21, 2026:
The credit agreement execution-ready draft is targeted for May 22, 2026, with a signing date of June 16, 2026, and a closing date of June 30, 2026. These dates are subject to confirmation with Brindoval and alignment with the acquisition agreement timeline being managed by Alderton Paige LLP.
C. Relevant Parties for Guaranty Analysis
For purposes of the guaranty analysis set forth in this memorandum, the relevant parties and their roles are as follows:
Sponsor Guarantor: Solara Digital Infrastructure LP, a Delaware limited partnership (EIN 84-3291057; DE SOS File No. 7294185). The general partner of Solara is Solara Digital GP LLC, a Delaware limited liability company. The co-founders and managing partners of Solara are Viktor Strand and Nadia Okafor. The general counsel of Solara is Priya Vasudeva, and the chief financial officer is Derek Raines. Solara is the entity identified in the Term Sheet as the sponsor guarantor and is the entity that will execute the sponsor guaranty agreement.
Borrower: Solara Digital Acquisition Holdings LLC, a Delaware limited liability company formed for the purpose of consummating the Acquisition.
Fund: Solara Digital Infrastructure Fund IV LP, a Delaware limited partnership and the direct or indirect parent of Acquisition Sub. Fund IV is the vehicle through which the $130,000,000 equity contribution will be funded.
Target (Post-Closing Guarantor): Meridian Cloud Solutions Inc., a Delaware corporation (EIN 82-1647530; DE SOS File No. 6038472). Following the closing of the Acquisition, Meridian and each of its material domestic subsidiaries will accede to the credit agreement as guarantors and pledge their assets as collateral.
Lender's Counsel: Broadwick & Thayer LLP. The lead partner is Catherine Hartwell, and the senior associate is James Okoro. Broadwick & Thayer will prepare the initial draft of the credit agreement and related loan documents, including the sponsor guaranty, unless we succeed in circulating our draft first (see Section VIII.B below for our recommended strategy on this point).
III. Market Practice for PE Sponsor Guaranties in Acquisition Financings
A. General Market Context
In sponsor-backed leveraged buyout and acquisition financings, it is well-established market practice that the private equity sponsor — whether structured as the management company, the general partner entity, or the fund-level limited partnership — does not provide a full recourse guaranty of the borrower's payment and performance obligations under the credit facility. This is a foundational principle of leveraged finance structuring and reflects the fundamental economic bargain between sponsors, lenders, and limited partners.
The core structuring principle is as follows: the sponsor's economic exposure in any given portfolio investment is limited to its equity investment in the acquisition vehicle, and the sponsor does not put its broader platform, fund-level assets, or other portfolio company interests at risk to support the credit of a single investment. Lenders in leveraged acquisition financings rely on the creditworthiness of the target business, the strength of the collateral package (typically a first-priority lien on substantially all assets of the borrower, the target, and its subsidiaries), and the downstream guarantees provided by the target and its subsidiaries. The sponsor's balance sheet is not the source of credit support for the facility.
This principle is not merely a matter of negotiating convention but reflects deeper structural realities of the private equity fund model. Private equity funds are organized as limited partnerships in which limited partners (institutional investors such as pension funds, endowments, insurance companies, and sovereign wealth funds) commit capital based on the understanding that their exposure to any single investment is limited to the capital committed and drawn for that investment. If a sponsor were to provide full recourse guaranties of portfolio company indebtedness, the sponsor's fund-level assets — which include uncalled capital commitments, management fee streams, carried interest entitlements, and interests in other portfolio companies — would be exposed to claims arising from any single portfolio company default. This would fundamentally undermine the risk diversification that is central to the limited partnership fund structure and would be inconsistent with the representations made to limited partners in the fund's private placement memorandum and limited partnership agreement.
A full recourse sponsor guaranty would effectively convert a non-recourse or limited-recourse acquisition financing into a balance sheet loan against the sponsor. This would have significant adverse consequences for Solara, including: (i) potential triggering of cross-default provisions in other portfolio company financings if the guaranty were to be classified as indebtedness of the sponsor, (ii) potential violation of covenants in the Fund IV limited partnership agreement restricting guaranties of portfolio company obligations, (iii) adverse accounting treatment requiring consolidation of the guaranteed indebtedness on Solara's balance sheet for fund reporting purposes, and (iv) reputational consequences in the institutional limited partner community, where full recourse sponsor guaranties are viewed as a sign of distress or credit weakness.
For all of these reasons, the sponsor guaranty in the Brindoval financing should be structured as a narrow, limited-recourse instrument, consistent with the market practice described in Section III.B below.
B. Typical Scope of Sponsor Guaranty
Sponsor guaranties in acquisition financings are typically limited to the following categories of obligations, each of which represents a specific allocation of risk associated with sponsor conduct or sponsor-controlled events rather than with the ordinary credit risk of the portfolio company:
1. "Bad Boy" Acts / Fraud Carve-Outs. The most commonly accepted carve-out is for losses arising from intentional fraud, willful misconduct, or criminal acts by the sponsor or its controlled affiliates in connection with the transaction. This carve-out reflects the principle that, while a sponsor should not bear the ordinary business risk of a portfolio investment, it should bear responsibility for its own fraudulent or intentionally wrongful conduct. The definition of "fraud" in this context is a critical drafting issue, as discussed in Section IV.B.1 below.
2. Environmental Indemnities. In traditional leveraged finance transactions — particularly those involving real estate assets, manufacturing facilities, or other businesses with significant physical plant — sponsor guaranties routinely include a guaranty of the borrower's and target's environmental remediation and compliance obligations. The rationale is that environmental liabilities can be significant and may survive a foreclosure or bankruptcy of the borrower, thereby impairing the lender's collateral value. As discussed in Section IV.B.5 below, the applicability of this carve-out to a SaaS business such as Meridian is limited.
3. Certain Specific Representations. Sponsor guaranties frequently cover the accuracy of certain fundamental representations made by the sponsor in the loan documents, such as representations regarding the sponsor's due organization, authority and capacity to execute the guaranty, absence of conflicts, and enforceability. These representations are within the sponsor's sole knowledge and control, and it is reasonable for the sponsor to stand behind them.
4. Transfer Restrictions / SPE Covenants. In some transactions, particularly those involving single-purpose entity ("SPE") borrowers (as is the case here, where Acquisition Sub was formed solely for the purpose of the Acquisition), the sponsor guaranty covers compliance with the SPE covenants applicable to the borrower, such as requirements that the borrower maintain separateness from its affiliates, observe entity formalities, and not commingle assets. Breach of these covenants could undermine the lender's structural protections and potentially impair the lender's ability to exercise remedies against the borrower in isolation from the sponsor's other operations and entities.
5. Bankruptcy / Insolvency Carve-Outs. A particularly significant carve-out — and one that is the subject of frequent negotiation — involves "springing recourse" triggered by voluntary bankruptcy filings by the borrower or by sponsor interference with the lender's exercise of remedies. The theory is that a sponsor should not be able to use its control over the borrower to frustrate the lender's rights by directing the borrower to file for bankruptcy protection, colluding with third parties to initiate an involuntary bankruptcy case, or otherwise obstructing the lender's enforcement efforts. The scope and consequences of this carve-out (i.e., whether it triggers indemnification obligations or full recourse to the sponsor) vary significantly across transactions and are discussed in Section IV.B.2 below.
6. Post-Closing Obligations. Where the credit agreement imposes post-closing obligations on the borrower — for example, delivery of deposit account control agreements, landlord consents, intellectual property security agreements, or foreign subsidiary equity pledges within specified periods following closing — the sponsor may be asked to guaranty timely performance of these obligations. The rationale is that the lender is agreeing to fund at closing without having received the complete collateral package, and the sponsor's guaranty provides assurance that the outstanding items will be delivered.
Important Limitation: In all cases, the sponsor guaranty does not typically cover payment of principal, interest, fees, or other monetary obligations under the credit agreement, nor does it guaranty the borrower's compliance with financial covenants or operating covenants. These obligations are the province of the borrower and the downstream guarantors (i.e., the target and its subsidiaries), not the sponsor.
C. Trends in Sponsor-Backed SaaS/Technology Financings
The proposed Facility involves a SaaS acquisition at an elevated EBITDA leverage multiple (approximately 10.70x Debt/LTM Adjusted EBITDA), which places it within the higher end of the market range for leveraged financings of high-growth SaaS platforms. In recent quarters, the SaaS leveraged finance market has seen EBITDA multiples in the range of 7.0x to 13.0x, with higher multiples generally supported by strong ARR growth rates (typically >20% year-over-year), high net revenue retention (typically >110%), and demonstrated pathways to EBITDA margin expansion.
At these elevated leverage levels, lenders may seek broader sponsor support to mitigate the risk that the borrower's cash flows will be insufficient to service the debt during the early years of the investment. However, the market has generally resisted expansion of sponsor guaranties beyond the traditional limited recourse framework described above. Instead, lenders in high-leverage SaaS financings have addressed credit risk through a combination of the following structural mechanisms:
• Higher pricing: The proposed interest rate of Adjusted Term SOFR + 475 bps is at the wider end of the range for sponsor-backed term loans and reflects the elevated leverage and growth-equity characteristics of the transaction. This pricing compensates the lender for the incremental credit risk without requiring expanded sponsor recourse.
• Meaningful OID: The 2.00% original issue discount ($4,000,000) provides additional day-one yield protection for the lender and compensates for the risk of early prepayment or refinancing.
• Robust collateral packages: First-priority liens on substantially all assets — including, critically, the target's intellectual property (the core asset of a SaaS business), customer contracts, and deposit accounts — provide the lender with a meaningful recovery base in a downside scenario.
• Excess cash flow sweep mechanics: The tiered ECF sweep (75% / 50% / 25% / 0%) ensures mandatory deleveraging from free cash flow, which is particularly important in a high-growth SaaS business where cash flow generation is expected to accelerate as the business scales and margins expand.
• Financial covenant protections: The springing Total Net Leverage covenant at 7.50x provides an early warning mechanism if the business underperforms, while the springing nature of the covenant (triggered only when the revolving facility, if any, is drawn >35% of commitments) preserves operational flexibility for the borrower.
Additionally, the strong equity contribution in the proposed transaction — approximately $130,000,000, representing approximately 41.3% of the $315,000,000 enterprise value — provides a significant first-loss cushion for the lender group and aligns the sponsor's incentives with those of the lenders. This equity contribution is well within the range expected by institutional lenders in sponsor-backed SaaS financings and, together with the structural protections described above, provides a robust credit framework that does not require expansive sponsor recourse to be viable.
We note, however, that the elevated leverage will likely be cited by Brindoval's credit team — and in particular by credit officer Sandra Fleischer — as a basis for seeking broader guaranty coverage. Our analysis in Section IV below addresses how to respond to these expected arguments while maintaining the limited recourse framework.
IV. Analysis of Proposed Sponsor Guaranty Scope
A. Brindoval's Expected Position
Based on the initial Term Sheet received on March 21, 2026, the Term Sheet references "Solara Digital Infrastructure LP (as sponsor guarantor, limited recourse)" as a guarantor under the Facility but does not further specify the scope of the limited recourse guaranty. This is typical for indicative term sheets, which generally identify the sponsor guarantor and characterize the guaranty as "limited recourse" without delineating the specific carve-out events, dollar caps, or temporal limitations. The detailed terms of the sponsor guaranty are customarily negotiated during the definitive credit documentation phase.
We anticipate that Broadwick & Thayer, in connection with the preparation of the credit agreement execution-ready draft (targeted for May 22, 2026), will propose a separate sponsor guaranty agreement (as opposed to embedding the sponsor guaranty within the credit agreement itself). This is the standard approach and has the advantage of keeping the sponsor guaranty terms distinct from the downstream guaranty terms applicable to Meridian and its subsidiaries.
We further anticipate that Broadwick & Thayer will propose carve-out events that are broadly drafted and that Brindoval's coverage banker, Thomas Wilder, and credit officer, Sandra Fleischer, may seek to expand the guaranty scope beyond traditional market parameters. The elevated EBITDA leverage of approximately 10.70x provides a ready argument for Brindoval that additional sponsor credit support is warranted. Our negotiating strategy should anticipate these arguments and be prepared to demonstrate, with reference to comparable transactions and market data, that the proposed scope is consistent with market practice for SaaS acquisition financings at comparable leverage levels.
The following subsections address each category of guaranteed obligation in detail, setting forth both our recommended position and anticipated points of negotiation.
B. Recommended Guaranteed Obligations — Acceptable Scope
1. Bad Boy / Fraud Carve-Outs. The sponsor guaranty should cover losses directly resulting from the following categories of sponsor conduct:
(a) Actual fraud (not constructive fraud) by the sponsor or its controlled affiliates in connection with the transaction, including the making of the loan, the execution of the loan documents, and the performance of the sponsor's obligations thereunder;
(b) Intentional and material misrepresentation by the sponsor in the loan documents, including in the sponsor guaranty itself and in any certificate or other document delivered by the sponsor in connection with the closing; and
(c) Willful misconduct of the sponsor that directly causes material harm to the lender group, where "willful misconduct" is defined as an intentional act or omission undertaken by the sponsor with actual knowledge that such act or omission would constitute a breach of its obligations or would cause material harm to the lender group.
Recommendation — Definition of "Fraud." The definition of "fraud" is a critical drafting issue. We strongly recommend that "fraud" be defined narrowly as common law fraud with scienter — i.e., a knowing and intentional misrepresentation of a material fact, made with the intent to induce reliance, upon which the lender actually and justifiably relied, resulting in damages. This definition should expressly exclude constructive fraud, equitable fraud, negligent misrepresentation, and any theory of fraud that does not require a showing of scienter (i.e., knowledge of falsity and intent to deceive). The distinction is important because constructive fraud and negligent misrepresentation are lower-threshold claims that could be asserted in a wider range of circumstances and could expose the sponsor to liability for honest mistakes or good-faith disagreements about the accuracy of representations.
Recommendation — Dollar Cap. Market practice is mixed regarding whether the fraud carve-out is subject to a dollar cap. In the majority of comparable transactions we have reviewed (see Section VI below), the fraud carve-out is uncapped — reflecting the view that a party should not be permitted to limit in advance its liability for its own fraudulent conduct. We recommend accepting the market-standard position that the fraud carve-out is not subject to a dollar cap. However, for the willful misconduct carve-out, we recommend negotiating a dollar cap of $20,000,000, representing 10% of the Facility amount. This distinction recognizes that while intentional fraud should carry unlimited liability, willful misconduct — which may encompass a broader range of conduct — should be subject to a reasonable limitation.
2. Voluntary Bankruptcy / Insolvency Interference. The sponsor guaranty should cover losses arising from the following events:
(a) The sponsor causing or directing the Borrower or any downstream guarantor to file a voluntary petition for relief under Title 11 of the United States Code or any other applicable bankruptcy, insolvency, or similar debtor-relief statute;
(b) The sponsor colluding with third parties to file an involuntary petition against the Borrower or any downstream guarantor under Title 11 of the United States Code or any other applicable bankruptcy, insolvency, or similar debtor-relief statute; and
(c) The sponsor interfering with or obstructing the lender's exercise of remedies under the loan documents or applicable law, including by causing the Borrower to contest or delay foreclosure proceedings, by transferring or encumbering collateral in violation of the loan documents, or by taking any action designed to frustrate or impair the lender's ability to realize upon its collateral.
In certain market segments — particularly commercial real estate finance — these carve-outs are structured as "springing full recourse" triggers, meaning that the occurrence of a triggering event converts the entire facility from non-recourse or limited-recourse into full recourse against the sponsor, with the sponsor becoming liable for the full outstanding balance of the loan. In leveraged finance, the more common approach is to structure these carve-outs as indemnification obligations, under which the sponsor is liable for the actual losses caused by the triggering event rather than for the full outstanding balance of the facility.
Recommendation: We recommend accepting springing recourse (i.e., liability for the full amount of outstanding obligations at the time of the triggering event) for the narrow category of borrower-directed voluntary bankruptcy filings under clause (a) above. This is the most direct form of sponsor abuse — using control over the borrower to invoke bankruptcy protection against the lender's wishes — and springing full recourse is appropriate as a deterrent. However, for the broader categories of collusion with involuntary petitioners (clause (b)) and interference with remedies (clause (c)), we recommend that the sponsor's liability be limited to an indemnification obligation for actual losses directly caused by the sponsor's conduct, rather than a springing full recourse obligation. This distinction is important because involuntary petitions and claims of "interference with remedies" involve more ambiguous factual circumstances and are more susceptible to litigation risk.
Furthermore, we recommend that the bankruptcy carve-out be limited to events within the sponsor's actual control or direction. The guaranty should not be triggered by: (i) insolvency events that occur as a result of business deterioration rather than sponsor direction (e.g., a voluntary bankruptcy filing by the borrower's management without sponsor involvement), (ii) involuntary petitions filed by third parties without sponsor collusion, or (iii) actions taken by the borrower on the advice of independent legal counsel in connection with a bona fide restructuring process.
3. Certain Fundamental Representations. The sponsor guaranty should include a guaranty that the following fundamental representations made by the sponsor in the loan documents are true and accurate as of the closing date and as of each date on which they are deemed repeated:
(a) Due organization and valid existence — Solara Digital Infrastructure LP is duly organized, validly existing, and in good standing under the laws of the State of Delaware;
(b) Authority and capacity — The sponsor has all necessary partnership power and authority to execute, deliver, and perform its obligations under the sponsor guaranty and each other loan document to which it is a party, and the execution, delivery, and performance of such documents have been duly authorized by all necessary partnership action;
(c) No conflicts — The execution, delivery, and performance of the sponsor guaranty do not and will not conflict with or result in a breach of, or constitute a default under, the sponsor's organizational documents, any material agreement to which the sponsor is a party, or any applicable law, order, or decree;
(d) Enforceability — The sponsor guaranty constitutes the legal, valid, and binding obligation of the sponsor, enforceable against the sponsor in accordance with its terms, subject to customary enforceability exceptions (bankruptcy, insolvency, reorganization, and similar laws affecting creditors' rights generally, and general principles of equity); and
(e) No required governmental approvals — No governmental authorization, consent, approval, or filing is required for the sponsor's execution, delivery, and performance of the sponsor guaranty, other than those that have been obtained or made.
Recommendation: We recommend limiting the scope of the representation guaranty to the five fundamental representations enumerated above, all of which relate to the sponsor's own organization, authority, and capacity and are within the sponsor's sole knowledge and control. We should vigorously resist any attempt by Broadwick & Thayer to expand the representation guaranty to cover the borrower's or target's representations and warranties in the credit agreement. Those representations are separately guaranteed by the downstream guarantors (Meridian and its material domestic subsidiaries) and are secured by the collateral package. Having the sponsor guaranty extend to the borrower's or target's representations would effectively convert the limited recourse guaranty into a payment guaranty for representation and warranty breach claims, which is inconsistent with the intended limited recourse structure.
4. Post-Closing Deliverable Obligations. If the credit agreement contains post-closing covenants requiring the delivery of items within specified periods following the closing date — such as deposit account control agreements, intellectual property security agreements, landlord consents for leased properties, landlord estoppels, foreign subsidiary equity pledges, and evidence of insurance — the sponsor may be asked to guaranty the timely delivery of such items.
The rationale for this request is understandable: the lender is agreeing to fund the Facility at closing without having received the complete collateral package, and the sponsor's guaranty provides assurance that the borrower and its subsidiaries will complete the outstanding deliverables within the agreed timeframes. In our experience, this carve-out is increasingly common in leveraged acquisition financings where the closing timeline does not permit completion of all collateral perfection activities prior to funding.
Recommendation: This obligation is acceptable, subject to the following conditions:
(a) Reasonable cure period — The sponsor's guaranty obligation should not be triggered immediately upon the borrower's failure to deliver a post-closing item by the initial deadline. Instead, the sponsor should have the benefit of a reasonable cure period of 30 to 60 days beyond the initial deadline in which to cause the borrower to deliver the outstanding item before the sponsor's guaranty obligation becomes enforceable;
(b) Termination upon delivery — The sponsor's guaranty obligation with respect to any specific post-closing deliverable should terminate automatically upon actual delivery of the item, regardless of whether the delivery occurs before or after the applicable deadline. The guaranty is intended to ensure delivery, not to create an ongoing indemnification obligation;
(c) Delivery only — The guaranty should be of the delivery obligation only and should not extend to any indemnification obligation for losses arising from the failure to deliver. If a post-closing deliverable is not timely delivered and the lender suffers losses as a result (e.g., due to a lien priority issue arising from the absence of a deposit account control agreement), the lender's remedy should be against the borrower and the downstream guarantors under the credit agreement, not against the sponsor under the guaranty; and
(d) Dollar cap — The sponsor's aggregate liability for post-closing deliverable obligations should be subject to a dollar cap (we recommend $5,000,000, as discussed in Section V.B below).
5. Environmental Indemnities. In traditional leveraged finance transactions, particularly those involving real estate, manufacturing, energy, and other sectors with significant physical plant and environmental exposure, sponsor guaranties routinely include a guaranty of the borrower's and target's environmental remediation and compliance obligations. The rationale is that environmental liabilities — including liabilities arising under CERCLA, RCRA, and analogous state environmental laws — can be substantial, may survive a foreclosure or bankruptcy, and may attach to the property owner (or the entity that "arranged for" the disposal of hazardous substances) regardless of fault or prior knowledge.
However, the applicability of this carve-out to the present transaction is limited. Meridian is a cloud-native SaaS platform providing enterprise cloud solutions. The company has approximately 310 employees and operates out of leased office space in Austin, Texas. Meridian does not own any real property, does not operate manufacturing facilities, and does not generate, handle, store, transport, or dispose of hazardous materials in connection with its business operations. The company's environmental footprint is limited to its leased office space, and its data center operations are hosted by third-party cloud infrastructure providers (principally Ridgeway Industries and Crestline Systems) under standard service agreements.
Recommendation: We recommend pushing back strongly on the inclusion of environmental indemnities in the sponsor guaranty, on the ground that the environmental exposure of a SaaS business is de minimis and does not warrant sponsor-level credit support. If Brindoval nonetheless insists on inclusion of an environmental carve-out — which is possible given that some lenders include environmental carve-outs as a matter of standard form rather than transaction-specific analysis — we recommend limiting the obligation to the following:
(a) The environmental indemnity should cover only environmental conditions caused by the sponsor's or borrower's affirmative acts after the closing date, and should expressly exclude pre-existing environmental conditions, conditions caused by third parties, and conditions arising from off-site contamination;
(b) The environmental indemnity should apply only to properties owned (not leased) by the Borrower or any downstream guarantor. Given that Meridian does not currently own any real property and is not expected to acquire real property, this limitation effectively eliminates the carve-out unless the business model changes during the term of the Facility;
(c) The environmental indemnity should be subject to a dollar cap of $1,000,000, which reflects the minimal environmental risk profile of a SaaS business. This cap is significantly below the typical environmental indemnity caps observed in leveraged financings of real estate or manufacturing businesses (which are typically in the range of $5,000,000 to $25,000,000 or more); and
(d) The environmental indemnity should not be triggered until the aggregate amount of environmental losses exceeds a de minimis threshold of $100,000, below which the borrower and downstream guarantors bear the cost through the ordinary credit agreement indemnification provisions.
C. Obligations to Resist / Exclude
The following categories of obligations should be excluded from the sponsor guaranty under all circumstances. If Broadwick & Thayer proposes any of these items, we should resist firmly and be prepared to explain why each is inconsistent with market practice and the fundamental structure of the transaction.
1. Payment Guaranty of Facility Obligations. Under no circumstances should the sponsor guaranty cover the payment of principal ($200,000,000), interest (at the rate of Adjusted Term SOFR + 475 bps, with a SOFR floor of 1.00% and a CSA of 10 bps), fees (including the arrangement fee of $3,000,000 and the structuring fee of $500,000), or any other monetary obligations of the Borrower under the credit agreement. A payment guaranty — whether framed as a guaranty of payment, a guaranty of collection, or an indemnification obligation for the lender's failure to receive timely payment — would fundamentally transform the sponsor's role from a limited recourse guarantor to a primary obligor.
The payment obligations of the Borrower are guaranteed by the downstream guarantors — Meridian and each of its material domestic subsidiaries — which are the operating entities generating the cash flows from which the debt is to be serviced. The payment obligations are further secured by the first-priority collateral package described in Section II.B above. These protections provide the lender group with robust credit support for the payment obligations, and the addition of a sponsor-level payment guaranty is neither necessary nor appropriate.
Inclusion of a payment guaranty would fundamentally alter the risk allocation underlying the transaction. It would effectively convert the Facility from a non-recourse acquisition financing — in which the lender looks to the target business and the collateral for repayment — into a balance sheet loan against the sponsor. This would be inconsistent with the limited-partnership structure of Solara, the expectations of its limited partners (who invested on the understanding that their exposure to any single portfolio investment is limited to their committed capital), and the economics upon which the Acquisition was underwritten and approved by Fund IV's investment committee.
We note that a payment guaranty is virtually unheard of in institutional sponsor-backed acquisition financings and would represent a significant departure from market norms. If Brindoval raises this issue, we should be prepared to cite the absence of payment guaranties in the comparable transactions described in Section VI below.
2. Financial Covenant Performance Guaranty. The Term Sheet includes a springing Total Net Leverage covenant at 7.50x, tested quarterly only when the revolving credit facility (if any) is drawn more than 35% of commitments. The sponsor should not guaranty compliance with this financial covenant or indemnify the lenders for any losses arising from a breach thereof.
A financial covenant guaranty would convert what is essentially a covenant-lite structure — in which the financial covenant is springing and is expected to be tested only in distress scenarios — into a recourse obligation against the sponsor. The financial covenant exists to provide the lender with an early warning mechanism and the ability to exercise remedies if the borrower's financial performance deteriorates beyond a specified threshold. The remedy for a financial covenant breach is the exercise of contractual rights under the credit agreement (acceleration, enforcement of collateral, etc.), not recourse to the sponsor.
Moreover, financial covenant compliance depends on the operating performance of the target business, which is managed by Meridian's management team (led by Jason Tremblay as CEO) subject to the governance framework established in the equity holders' agreement. While Solara will exercise significant governance influence through its control of the Acquisition Sub board, the day-to-day operating decisions that drive financial performance are the responsibility of management. It would be inappropriate to impose guaranty liability on the sponsor for outcomes that are ultimately driven by the operating performance of the portfolio company.
3. Operating Covenant Compliance. The credit agreement will contain customary negative covenants applicable to the Borrower and the downstream guarantors, including limitations on: indebtedness, liens, restricted payments (including dividends and distributions), investments, asset sales, affiliate transactions, fundamental changes (mergers, consolidations, and dissolutions), and restrictive agreements. These covenants are designed to protect the lender's credit by restricting the borrower's and guarantors' ability to take actions that could impair the collateral or the enterprise value of the business.
These are borrower/guarantor obligations, and the sponsor should not guaranty compliance with operating covenants. The borrower and the downstream guarantors are the parties that are contractually bound by the negative covenants, and the lender's remedies for breach of these covenants run against the borrower and guarantors under the credit agreement. Adding a sponsor guaranty of operating covenant compliance would create duplicative liability and would expose the sponsor to claims arising from the ordinary course operation of the business.
4. Indemnification for Losses Arising from Target's Pre-Closing Liabilities. Any pre-closing liabilities of Meridian — including liabilities arising from tax matters, employment disputes, intellectual property infringement claims, data privacy violations, or other matters predating the closing of the Acquisition — should be addressed through the appropriate transaction documents. Specifically:
• The acquisition agreement (currently being negotiated by Alderton Paige LLP, with Richard Fontaine serving as lead partner) will contain representations, warranties, and indemnification provisions from the sellers (Ashford Ventures Partners LLC, Jason Tremblay, and management/employees) regarding pre-closing conditions and liabilities. The seller indemnification obligations are the primary mechanism for allocating pre-closing risk from the buyer to the sellers.
• The representations and warranties insurance policy to be obtained from Northvane Insurance Group Inc. ("Northvane R&W Policy") will provide an additional layer of protection for the buyer against losses arising from breaches of the sellers' representations and warranties, including breaches that may not be covered by the sellers' indemnification obligations due to caps, baskets, or survival limitations.
The sponsor guaranty is not the appropriate mechanism for addressing pre-closing liabilities of the target. Including pre-closing indemnification obligations in the sponsor guaranty would create confusion regarding the applicable risk allocation framework, could result in the lender seeking recourse against the sponsor for losses that should properly be borne by the sellers (through the acquisition agreement) or the R&W insurer (through the Northvane R&W Policy), and could undermine the negotiated indemnification structure of the acquisition agreement. We should ensure that the sponsor guaranty includes an express exclusion for any losses arising from pre-closing conditions, liabilities, or obligations of the target, regardless of when such losses are discovered or asserted.
V. Structural and Drafting Considerations
A. Identity of Guarantor Entity
The guarantor entity under the sponsor guaranty should be Solara Digital Infrastructure LP (EIN 84-3291057; DE SOS File No. 7294185) only. This is the entity identified in the Term Sheet as the sponsor guarantor, and it is the appropriate entity given its role as the management company and investment adviser for the Solara fund complex.
The following entities should not be named as guarantors under the sponsor guaranty, and we should resist any attempt by Broadwick & Thayer to add them:
• Solara Digital GP LLC — The general partner of Solara Digital Infrastructure LP. Adding the general partner as a co-guarantor would provide no incremental credit support to the lender (because the general partner's primary asset is its interest in Solara) and would create an additional entity with potential exposure to guaranty claims.
• Fund IV — Solara Digital Infrastructure Fund IV LP, the fund through which the equity contribution is being made. Adding Fund IV as a guarantor would expose the fund's assets — including committed but uncalled capital from limited partners — to guaranty claims, which is fundamentally inconsistent with the limited partnership fund structure and would likely require disclosure to and potentially consent from the Fund IV limited partners.
• Other Solara affiliates or portfolio companies — Any attempt to add other Solara entities or portfolio companies as guarantors should be rejected categorically. The sponsor guaranty is a fund-level obligation of Solara in its capacity as the sponsor of the Acquisition, not a cross-collateralization of the Solara platform.
Additionally, we should resist any attempt to add Viktor Strand, Nadia Okafor, or any other individual associated with Solara as a personal guarantor. Personal guaranties of individual principals are not market practice in institutional sponsor-backed acquisition financings. Personal guaranties are occasionally seen in smaller-scale transactions involving less-established sponsors or family-office-backed deals, but they are not appropriate for a transaction involving an institutional sponsor of Solara's scale and track record.
B. Dollar Caps and Limitations
We recommend the following dollar caps for each category of guaranteed obligation:
The distinction between the actual fraud cap (uncapped) and the willful misconduct cap ($20,000,000) reflects the different nature and severity of these categories of conduct. Actual fraud — a knowing and intentional misrepresentation with scienter — represents the most egregious form of sponsor misconduct and warrants unlimited liability. Willful misconduct, while intentional, encompasses a broader range of conduct and may involve situations where the harm to the lender was not the sponsor's primary objective. A $20,000,000 cap (10% of the Facility amount) provides meaningful exposure to deter misconduct while preventing an open-ended liability that could threaten the sponsor's broader operations.
The aggregate cap of $25,000,000 (excluding actual fraud) provides an overall ceiling on the sponsor's exposure across all guaranteed obligations other than fraud. This aggregate cap ensures that the sponsor's total liability under the guaranty is bounded and predictable, which is important for fund reporting and risk management purposes. The aggregate cap is approximately 12.5% of the Facility amount and approximately 19.2% of the equity contribution, which is within the range observed in comparable transactions.
We note that the voluntary bankruptcy carve-out, if structured as springing full recourse, would result in liability equal to the outstanding obligations at the time of the triggering event, which could exceed the aggregate cap. This is intentional: the springing full recourse nature of the bankruptcy carve-out serves as a powerful deterrent against sponsor-directed bankruptcy filings, and its effectiveness would be undermined by subjecting it to the aggregate cap. We recommend that the bankruptcy carve-out be excluded from the aggregate cap.
C. Temporal Limitations / Survival Periods
The sponsor guaranty should be subject to the following temporal limitations:
Overall Termination. The sponsor guaranty should terminate upon the earliest of:
(a) Payment in full of all obligations under the credit agreement (including all principal, interest, fees, and other amounts) and termination of all commitments thereunder;
(b) Release of all guarantor obligations under the credit agreement (i.e., the release of the downstream guaranties provided by Meridian and its subsidiaries, which would occur upon full repayment of the Facility); or
(c) With respect to specific carve-outs, the expiration of the applicable survival period described below.
Carve-Out-Specific Survival Periods:
• Fundamental representation claims: 18 months following the closing date. This is consistent with the typical survival period for fundamental representations in M&A transactions and reflects the principle that representation claims should be brought within a reasonable period after closing. After the 18-month survival period, the sponsor's liability for fundamental representation breaches should terminate regardless of whether any claim has been asserted.
• Post-closing deliverable guaranty: Terminates upon actual delivery of the applicable post-closing item. If the item has not been delivered and no claim has been asserted within 12 months following the closing date, the guaranty with respect to that item should terminate.
• Fraud and bankruptcy carve-outs: Survive for the full term of the Facility (i.e., until payment in full and termination of all commitments). These carve-outs address the most serious forms of sponsor misconduct and should not be subject to shorter survival periods.
• Environmental indemnities (if applicable): Survive for the full term of the Facility, consistent with the long-tail nature of environmental liabilities. However, given the minimal environmental risk profile of the Meridian business, we do not view this as a significant exposure.
Recommendation — Post-Repayment Survival. We should resist any attempt by Broadwick & Thayer to have the sponsor guaranty survive beyond the date of full repayment of the Facility and termination of all commitments. Certain lenders take the position that the guaranty should survive for a specified period (e.g., 12 or 24 months) following full repayment to allow the lender to bring claims that may not have been discovered prior to repayment. This position is not widely accepted in the market and is inconsistent with the principle that the guaranty is ancillary to the credit facility and should terminate when the underlying obligations are satisfied.
D. Subrogation and Contribution Rights
The sponsor guaranty should include customary subordination of the sponsor's subrogation, contribution, reimbursement, and indemnification rights against the Borrower and the downstream guarantors until all obligations under the Facility are paid in full and all commitments are terminated. This provision ensures that the sponsor cannot, following a payment under the guaranty, step into the lender's shoes to assert claims against the Borrower or the downstream guarantors that would compete with the lender's own claims.
This is a standard provision in sponsor guaranties and downstream guaranties alike and is not typically the subject of significant negotiation. We do not anticipate that Broadwick & Thayer will seek to modify this provision, and we recommend accepting it in customary form.
E. Waiver Provisions
We expect Broadwick & Thayer to propose a broad set of waivers of guarantor defenses in the sponsor guaranty, consistent with their standard form. These waivers typically cover:
• Presentment, demand, protest, and notice of dishonor;
• Notice of acceptance of the guaranty, notice of any default under the credit agreement, and notice of any action taken by the lender in reliance on the guaranty;
• Defenses based on the statute of limitations;
• Defenses based on the doctrine of marshaling (i.e., the right to require the lender to exhaust its remedies against the Borrower and the collateral before seeking recourse against the sponsor);
• Defenses arising from any impairment of the lender's collateral, including any failure by the lender to perfect or maintain the perfection of its security interests;
• Defenses arising from any extension, renewal, or modification of the credit agreement without the sponsor's consent; and
• Any other defense that might otherwise be available to a guarantor under applicable law.
Recommendation: We recommend accepting the customary waivers of presentment, demand, protest, notice of dishonor, and statute of limitations defenses, as these are standard in guaranty agreements and would not materially prejudice the sponsor. However, we should resist the following waivers:
(a) Waiver of defenses based on the lender's own gross negligence or willful misconduct. The sponsor should retain the right to assert as a defense that the lender's own gross negligence or willful misconduct caused or contributed to the losses for which the lender seeks recovery under the guaranty. It would be inequitable to permit the lender to recover against the sponsor for losses that the lender itself caused through its own culpable conduct.
(b) Waiver of defenses arising from unauthorized modifications to the credit agreement. While we address this issue separately in Section V.F below (consent rights for material amendments), the waiver provisions should not eliminate the sponsor's right to assert a defense based on modifications to the credit agreement that materially increase the sponsor's guaranteed obligations without the sponsor's consent. The waiver of defenses based on modifications should be limited to modifications that do not materially increase the guaranteed obligations or that are made with the sponsor's prior written consent.
(c) Waiver of defenses arising from the lender's failure to mitigate. Under New York law, a party seeking damages generally has an obligation to take reasonable steps to mitigate its losses. The sponsor should not waive this defense, as it provides an important check on the lender's ability to assert inflated claims under the guaranty.
F. Amendment and Modification Protections
The sponsor guaranty should include a provision requiring the sponsor's prior written consent to any amendment, modification, supplement, or waiver of the credit agreement that would have the effect of:
(a) Increasing the principal amount of the Facility beyond $200,000,000, including through any incremental facility, accordion feature, or similar mechanism;
(b) Increasing the interest rate, applicable margin, default rate, or fees payable under the credit agreement;
(c) Extending the maturity date of the Facility beyond June 30, 2033;
(d) Expanding the definition of "Obligations" or "Guaranteed Obligations" in a manner that would increase the scope of the sponsor's guaranty;
(e) Adding new events of default or expanding existing events of default in a manner that would increase the likelihood of a carve-out event being triggered; or
(f) Otherwise materially increasing the guaranteed obligations or the sponsor's exposure under the guaranty.
Without such protections, the lender could — through amendments agreed solely between the lender and the Borrower — expand the sponsor's exposure under the guaranty without the sponsor's knowledge or consent. For example, if the credit agreement were amended to increase the Facility amount from $200,000,000 to $250,000,000 (through an accordion feature or incremental term loan), the sponsor's exposure under the bankruptcy carve-out (which is tied to outstanding obligations) would increase by $50,000,000 without the sponsor having agreed to bear this additional risk. The consent provision prevents this outcome and ensures that the sponsor retains control over the scope of its guaranty obligations.
We anticipate that Broadwick & Thayer may resist a broad consent provision on the ground that it could impede the Borrower's ability to amend the credit agreement in the ordinary course. To address this concern, we recommend structuring the consent provision to apply only to amendments that "materially increase the guaranteed obligations" — a formulation that excludes routine administrative amendments, technical corrections, and amendments that do not affect the scope of the guaranty.
G. Governing Law and Forum
Consistent with the credit agreement, the sponsor guaranty should be governed by the laws of the State of New York, without regard to principles of conflicts of law (other than Section 5-1401 of the New York General Obligations Law, which permits parties to a transaction involving not less than $250,000 to choose New York law as the governing law).
The sponsor guaranty should provide for exclusive jurisdiction in the federal and state courts located in the Borough of Manhattan, New York, New York. This is the same forum specified in the credit agreement and will ensure that any disputes arising under the sponsor guaranty are litigated in the same forum as disputes arising under the credit agreement.
The sponsor guaranty should include a waiver of the right to a jury trial. This is a standard provision in New York-law-governed commercial agreements and is routinely included in guaranty agreements. We recommend acceptance of this provision.
VI. Comparison to Precedent Transactions
A detailed comparable transaction analysis for the SaaS leveraged finance market is being separately prepared by the Banking & Finance team and will be circulated under separate cover. For purposes of this memorandum, we have reviewed the sponsor guaranty structures in five recent comparable SaaS acquisition financings from Q3 2025 through Q1 2026, summarized below:
Analysis. The precedent transactions demonstrate that the market for sponsor guaranties in SaaS acquisition financings is well-established and relatively consistent. In all five transactions, the sponsor guaranty was limited to specific carve-out events and did

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