James,
I hope you're well. Attached please find the borrower's first markup of the term sheet for the $200,000,000 Senior Secured Term Loan Facility in connection with Solara Digital Acquisition Holdings LLC's acquisition of Meridian Cloud Solutions Inc.:
1. **Redline** (term-sheet-borrower-first-markup-redline.docx) — marked against the initial draft term sheet received from Brindoval National Bank, N.A. (via Broadwick & Thayer) on March 21, 2026; and
2. **Clean** (term-sheet-borrower-first-markup-clean.docx) — reflecting all proposed borrower changes.
The markup has been reviewed and approved by the borrower, Solara Digital Infrastructure LP.
Set forth below is a summary of our principal comments. This is intended to flag the key areas for discussion and is not exhaustive of every change reflected in the redline.
**Summary of Principal Comments**
1. **Definition of Adjusted EBITDA / Add-Backs.** The borrower proposes expanded add-back language to include cost savings, synergies, and pro forma adjustments customary for sponsor-backed SaaS acquisitions, subject to a cap on projected add-backs of 25% of LTM Adjusted EBITDA. Given Meridian's growth profile (27% YoY ARR growth, approximately 30% EBITDA margin) and the anticipated post-closing operational integration initiatives, getting this definition right is particularly important, and we believe the proposed formulation is well within market.
2. **Permitted Indebtedness and Lien Baskets.** The markup proposes expanded baskets for permitted indebtedness (including a general basket and incremental facility capacity) and corresponding lien baskets, reflecting market standards for sponsor-backed technology acquisitions of this size.
3. **Excess Cash Flow Sweep Mechanics.** The borrower proposes the following clarifications to the ECF sweep calculation:
- Netting of voluntary prepayments made during the applicable fiscal year against the ECF sweep amount; - Confirmation of step-down thresholds at 50% / 25% / 0% at Total Net Leverage of ≤ 4.50x and ≤ 3.50x, respectively; - Clarifications to the ECF definition regarding the treatment of capital expenditures and working capital adjustments; and - First ECF sweep applicable for the fiscal year ending December 31, 2026.
4. **Asset Sale Mandatory Prepayment / Reinvestment Period.** The borrower proposes a reinvestment period of 365 days plus a 180-day extension (365+180 days) for net cash proceeds from asset sales, with the $2,500,000 annual de minimis basket as proposed. We believe this is consistent with market practice for SaaS platform acquisitions where redeployment of proceeds into technology assets and infrastructure may require longer lead times.
5. **Voluntary Prepayment / Soft Call.** The borrower accepts the 101% soft call premium for the first 12 months post-closing (1.0% prepayment premium) and prepayment at par thereafter without premium or penalty, but proposes clarifying language regarding partial prepayments and application mechanics.
6. **Market Flex Provisions.** The borrower proposes that any spread increase under Brindoval's market flex rights be capped at +25 bps (versus the proposed +50 bps) and that any additional OID increase be capped at +25 bps (versus the proposed +50 bps). We recognize this is a key commercial point and would welcome the opportunity to discuss further.
7. **Springing Financial Covenant.** The borrower accepts the springing Total Net Leverage covenant at 7.50x, tested quarterly only when a revolving credit facility (if any) is drawn greater than 35% of commitments (covenant-lite structure for the term loan), but proposes equity cure rights and cure amount limitations consistent with sponsor-backed precedent.
8. **SaaS-Specific Reporting Covenants.** The borrower proposes the following refinements to the reporting covenant package:
- Monthly ARR and key SaaS metrics reports (within 30 days of month-end) — the borrower proposes that certain metrics (e.g., customer-level concentration data, pipeline metrics) be delivered on an "information only" basis rather than as formal covenants; - Flexibility for the borrower to apply its existing methodology for calculating ARR and related definitions (including net revenue retention and customer churn); and - Annual audited financials within 120 days, quarterly unaudited financials within 60 days, and annual budget within 60 days — accepted as proposed.
9. **Collateral Package — IP and Excluded Assets.** The borrower proposes limited exclusions from the collateral package for immaterial intellectual property and certain license agreements containing anti-assignment clauses, consistent with the SaaS business model. The borrower accepts the overall collateral structure as proposed: first-priority perfected security interest in substantially all assets, equity pledges of 100% of domestic subsidiaries and 65% of first-tier foreign subsidiaries, intellectual property, accounts receivable, equipment, and deposit accounts.
10. **Sponsor Guaranty — Scope.** The borrower proposes that the limited recourse guaranty by Solara Digital Infrastructure LP be narrowly tailored to "bad boy" acts and certain specific indemnities, consistent with market practice for PE sponsor guaranties. We would appreciate clarification on the intended scope of the guaranteed obligations under the current draft.
**Additional Notes**
The markup also includes conforming changes and minor drafting clarifications to interest rate provisions (Adjusted Term SOFR + 475 bps, SOFR floor of 1.00%, SOFR credit spread adjustment of 10 bps), amortization (1.0% per annum, $500,000 quarterly), default rate (+200 bps), maturity (7 years, targeting June 30, 2033), and OID (2.00%, resulting in net proceeds of $196,000,000). These economic terms are largely accepted as proposed.
The facility amount of $200,000,000 and the overall sources and uses are accepted. Brindoval's roles as Sole Lead Arranger, Sole Bookrunner, and Administrative Agent are accepted. Governing law (State of New York) and jurisdiction (federal and state courts, Borough of Manhattan) are likewise accepted.
**Proposed Call**
Given the number of open points, we think it would be productive to schedule a call early the week of March 30 or, if scheduling proves difficult, the week of April 6 to walk through the principal comments and identify areas of alignment. As all parties are aware, we are working toward execution of the term sheet and commitment letter by April 18, 2026, and we want to ensure we maintain momentum toward that target date.
James, could you circulate some proposed times that work for the Broadwick & Thayer and Brindoval teams? We will coordinate availability on our end with Phil and Priya.
Please don't hesitate to reach out in the interim if you have any questions or would like to discuss any of the comments in advance of the call.
Best regards,
Lisa
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**Lisa Morrow** Associate, Banking & Finance **Calderwood & Harkness LLP** One Liberty Plaza, 44th Floor New York, NY 10006 T: +1 (212) 558-4170 E: lmorrow@calderwoodharkness.com
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