1041-00004 · Solara Digital Infrastructure LP · Financing

debt-commitment-letter-review-memo.docx DOCUMENT M&A / Corporate

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MEMORANDUM

PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT

TO: James Prentice, Responsible Partner (Mergers & Acquisitions), Calderwood & Harkness LLP Claire Nakamura, Partner & Head of Software Investing, Solara Digital Infrastructure LP

FROM: Andrew Fitzpatrick, Lead Associate (Mergers & Acquisitions), Calderwood & Harkness LLP

DATE: February 17, 2026

RE: Review of Debt Commitment Letter — Ironclad National Bank, N.A. (Reference CL-INB-2026-0214) — Project Trident

Matter No.: 1041-00004

I. Executive Summary

This memorandum sets forth our analysis of the debt commitment letter dated February 14, 2026 (reference CL-INB-2026-0214) (the "Commitment Letter") delivered by Ironclad National Bank, N.A. ("Ironclad" or "INB") to Solara Digital Infrastructure LP ("Solara") in connection with the proposed acquisition (the "Acquisition") of one hundred percent (100%) of the issued and outstanding shares of common stock of Meridian FleetWorks, Inc. ("MFW" or the "Target") for an aggregate purchase price of Three Hundred Fifty Million Dollars ($350,000,000) (the "Purchase Price"). The Acquisition is internally referred to as Project Trident.

The Commitment Letter provides for a One Hundred Seventy-Five Million Dollar ($175,000,000) senior secured credit facility (the "Credit Facility") comprising: (i) a One Hundred Twenty-Five Million Dollar ($125,000,000) Term Loan A (the "TLA"); and (ii) a Fifty Million Dollar ($50,000,000) Revolving Credit Facility (the "RCF" and, together with the TLA, the "Facilities"). Ridgeline Commercial Lending Corp. ("Ridgeline") participates as a co-lender with respect to Fifty Million Dollars ($50,000,000) of the TLA tranche. Ironclad will serve as Lead Arranger, Sole Bookrunner, and Administrative Agent for the Credit Facility. Lenders' counsel is Cascade & Whitfield LLP, located at 51 West 52nd Street, New York, New York 10019, with Jonathan Mayer serving as lead partner on the engagement.

Overall Assessment. The Commitment Letter is substantially customary for a middle-market leveraged acquisition financing of this type and size. The fundamental economic terms — including the facility structure, interest rate benchmarks, amortization schedule, and maturity — are within the range of market terms we have observed in comparable sponsor-backed software and technology-enabled services acquisitions completed in the fourth quarter of 2025 and early 2026. The Commitment Letter incorporates a favorable "certain funds" or "SunGard" construct that provides Solara with meaningful financing certainty, which is critical for the enforceability of Solara's purchase obligation under the Stock Purchase Agreement (the "SPA") to be negotiated with MFW's stockholders.

However, several provisions warrant negotiation or clarification before Solara should accept the Commitment Letter. In particular:

• The Commitment Letter contains a market material adverse change ("Market MAC") condition that is broader than current market practice for sponsored acquisitions and could afford Ironclad an inappropriate "out" from its funding obligations based on general market disruption unrelated to MFW's business performance.

• The flex provisions embedded in the confidential fee letter grant Ironclad significant latitude to increase pricing, impose original issue discount, reallocate portions of the TLA to a higher-cost second-lien or mezzanine tranche, and impose a SOFR floor — collectively representing a potential increase in borrowing costs of several million dollars.

• Certain conditions precedent to funding, particularly the condition requiring the SPA to be "not materially adverse to the interests of the lenders," are subjective and could give Ironclad undue leverage during the SPA negotiation process.

Our specific recommendations for negotiation are summarized in Section XIV of this memorandum. We recommend scheduling a call with Claire Nakamura, Viktor Sorensen (Solara Operating Partner), and Owen Prescott at Cobalt Ridge Partners LLC to discuss negotiation strategy prior to delivering a markup of the Commitment Letter to Ironclad and Cascade & Whitfield LLP.

II. Overview of Commitment Letter Terms

A. Parties. The following parties are identified in the Commitment Letter:

Solara Fleet Holdings LLC (the "Borrower") has not yet been formed. It will be organized as a Delaware limited liability company and will serve as the acquisition vehicle through which Solara Fund III, LP will acquire all of the outstanding equity of MFW. The Commitment Letter contemplates that the Borrower will be the sole obligor under the Credit Facility, with MFW becoming a guarantor and pledgor of collateral upon consummation of the Acquisition. We note that the Commitment Letter references both Solara Digital Infrastructure LP and Solara Fund III, LP as potential guarantors; the scope of the sponsor guaranty (if any) will need to be confirmed during credit agreement negotiations. It is typical in sponsor-backed transactions for the fund vehicle (here, Solara Fund III, LP) to provide an equity commitment letter rather than a guaranty of the debt obligations; we should confirm that Ironclad does not expect a direct guaranty from Solara Digital Infrastructure LP at the management company level.

B. Facility Structure

The Credit Facility is structured as a two-tranche senior secured facility with a total commitment of One Hundred Seventy-Five Million Dollars ($175,000,000). The key terms of each tranche are summarized below.

Term Loan A ("TLA"):

• Commitment Amount: $125,000,000 in aggregate, comprising (i) $75,000,000 committed by Ironclad and (ii) $50,000,000 committed by Ridgeline as co-lender.

• Maturity: Five (5) years from the Closing Date. Based on the current target closing date of April 30, 2026, the estimated maturity date is April 30, 2031.

• Amortization: Quarterly amortization at a rate of five percent (5.0%) per annum of the original principal amount of the TLA. This results in annual amortization of $6,250,000 ($125,000,000 × 5.0%) and quarterly amortization payments of $1,562,500. The remaining outstanding principal balance of the TLA will be due and payable as a bullet payment at maturity. Assuming no voluntary or mandatory prepayments, the balloon payment at maturity would be approximately $93,750,000 (i.e., $125,000,000 less five years of annual amortization at $6,250,000 per year, or $31,250,000 in aggregate scheduled amortization). This amortization rate is within the range of market for a middle-market TLA (typically 2.5%–7.5% per annum).

• Interest Rate: Term SOFR (Secured Overnight Financing Rate) plus 400 basis points (4.00%) per annum.

• Funding: The TLA is expected to be fully funded at the Closing of the Acquisition. The full $125,000,000 will be drawn on the Closing Date and applied, together with the equity contribution from Solara Fund III, LP, to finance the Purchase Price and related transaction costs.

Revolving Credit Facility ("RCF"):

• Commitment Amount: $50,000,000, committed entirely by Ironclad. Ridgeline does not participate in the RCF tranche.

• Maturity: Five (5) years from the Closing Date, co-terminus with the TLA. Estimated maturity date of April 30, 2031.

• Interest Rate: Term SOFR plus 375 basis points (3.75%) per annum. The 25 basis point differential between the TLA spread (400 bps) and the RCF spread (375 bps) is customary, reflecting the undrawn nature and revolving feature of the RCF.

• Commitment Fee: 0.50% per annum on the daily average undrawn amount of the RCF. If the RCF remains fully undrawn, the annual commitment fee would be $250,000 ($50,000,000 × 0.50%). This commitment fee rate is within market range (typically 0.25%–0.50% for facilities of this size).

• Funding: The RCF is expected to be undrawn at the Closing Date. It will be available for borrowing post-closing for working capital needs, general corporate purposes of the Borrower and its subsidiaries, and permitted acquisitions (as will be defined in the definitive credit agreement).

The aggregate Ironclad commitment across both tranches is $125,000,000 ($75,000,000 TLA + $50,000,000 RCF), and the Ridgeline commitment is $50,000,000 (TLA only). The combined lender commitments total $175,000,000.

C. Fees. The Commitment Letter and the accompanying confidential fee letter (the "Fee Letter") set forth the following fee arrangements:

Arrangement Fee. A one-time arrangement fee of 1.50% of the aggregate commitments under the Credit Facility, resulting in an arrangement fee of $2,625,000 ($175,000,000 × 1.50%). The arrangement fee is payable in full at the Closing Date. This fee level is within the customary range for middle-market leveraged acquisition financings (typically 1.00%–2.00% of total commitments).

Commitment Fee on Undrawn RCF. As noted above, a commitment fee of 0.50% per annum is payable on the daily average undrawn balance of the RCF. This fee accrues from the Closing Date and is payable quarterly in arrears.

Administrative Agent Fee. The Fee Letter provides for an annual administrative agent fee payable to Ironclad in its capacity as Administrative Agent. The specific amount of the administrative agent fee is set forth in the Fee Letter and is designated as confidential. Based on our experience with facilities of comparable size and complexity, we expect the annual agent fee to be in the range of $75,000 to $100,000 per annum. This is standard.

Fee Letter Terms. The Fee Letter contains the arrangement fee, administrative agent fee, and certain additional fee provisions (including the flex provisions discussed in Section VI below). The terms of the Fee Letter are designated as confidential and may not be disclosed to third parties (including MFW or its advisors) without Ironclad's consent. The confidentiality of fee letter terms is customary practice. We have reviewed the Fee Letter and address the flex provisions — which represent the most material component of the Fee Letter — in detail in Section VI.

D. Security and Guarantees

The Commitment Letter requires the following collateral and guarantee arrangements:

Security Interests. The Credit Facility will be secured by a first-priority perfected lien on substantially all assets of: (i) Solara Fleet Holdings LLC (the Borrower); and (ii) Meridian FleetWorks, Inc. (the Target), which will become an obligor under the Credit Facility upon consummation of the Acquisition. The collateral package encompasses, without limitation, accounts receivable, inventory, equipment, intellectual property, contract rights, deposit accounts, securities accounts, and general intangibles.

Equity Pledges. The Borrower will pledge one hundred percent (100%) of the equity interests of MFW held by the Borrower to the Administrative Agent for the benefit of the Lenders. Additionally, to the extent MFW has any domestic subsidiaries, the equity interests of such domestic subsidiaries will be pledged.

Guarantees. The payment and performance obligations of the Borrower under the Credit Facility will be guaranteed by: (i) MFW (as a guarantor, following the Closing); and (ii) any domestic subsidiaries of MFW (if any exist at or after the Closing). The Commitment Letter is silent on whether Solara Fund III, LP or Solara Digital Infrastructure LP will provide a guaranty; as noted above, a direct guaranty from the sponsor or fund is atypical in sponsor-backed transactions, and we should confirm that Ironclad does not expect one.

Certain Funds / SunGard Alignment. The Commitment Letter references collateral and guarantee principles that are consistent with a "certain funds" or "SunGard" construct, meaning that the delivery and perfection of collateral is a condition to funding only to the extent consistent with the limited conditions precedent framework. Specifically, the Commitment Letter provides that the perfection of security interests through filings (UCC-1 financing statements, stock certificate delivery with stock powers) must be completed on or prior to the Closing Date, but failure to perfect in jurisdictions other than the state of organization of the Borrower and MFW will not be a condition to initial funding (with a post-closing period for perfection in other jurisdictions). This is a favorable provision and consistent with market practice. We discuss the SunGard provisions in greater detail in Section VII below.

Customary Exclusions. The Commitment Letter provides for customary exclusions from the collateral package, including: (a) certain leasehold interests to the extent a landlord consent or waiver would be required; (b) immaterial or de minimis assets below a threshold to be agreed in the credit agreement; (c) excluded deposit accounts and securities accounts (to be defined); and (d) assets the granting of a security interest in which would violate applicable law or the terms of contractual arrangements with third parties (subject to customary anti-assignment override provisions under the UCC).

E. Interest Rate Details

The following summarizes the interest rate and benchmark provisions of the Commitment Letter:

SOFR Benchmark. The reference rate for the Credit Facility is Term SOFR, as published by the CME Group (Chicago Mercantile Exchange) Benchmark Administration Limited. The Commitment Letter provides for customary fallback provisions in the event that Term SOFR becomes unavailable or is no longer representative, consistent with the Alternative Reference Rates Committee (ARRC) recommended fallback language. Fallback waterfall provisions would be set forth in the definitive credit agreement and are expected to reference Daily Simple SOFR, then a benchmark rate to be selected by the Administrative Agent in consultation with the Borrower.

Applicable Spreads. The TLA carries a spread of 400 basis points (4.00%) over Term SOFR. The RCF carries a spread of 375 basis points (3.75%) over Term SOFR. These spreads are fixed in the Commitment Letter, subject to the flex provisions discussed in Section VI.

Default Interest. In the event of a payment default or acceleration, overdue amounts will bear interest at the otherwise applicable rate plus an additional 200 basis points (2.00%) per annum (the "Default Rate").

SOFR Floor. The Commitment Letter does not specify a SOFR floor; that is, the minimum SOFR rate is implicitly zero. However, as discussed in Section VI, the flex provisions in the Fee Letter reserve Ironclad's right to impose a SOFR floor of up to 1.00%. The absence of a stated SOFR floor in the base case is favorable to the Borrower, as it means the Borrower benefits from the full extent of any decline in SOFR below current levels. The potential imposition of a SOFR floor through flex, however, is a concern, particularly in a potentially declining rate environment. As of the date of this memorandum, three-month Term SOFR is approximately 4.30%.

Interest Periods. The Borrower may elect interest periods of one (1), three (3), or six (6) months, in its discretion. This is standard. The credit agreement may also include a "daily SOFR" option for shorter-duration borrowings; this is to be negotiated.

Credit Spread Adjustment. The Commitment Letter does not reference a credit spread adjustment ("CSA") on top of Term SOFR. The inclusion or exclusion of a CSA was a transitional issue during the LIBOR-to-SOFR conversion but has largely been settled in the market; most new facilities originated since mid-2024 do not include a separate CSA. We do not expect this to be an issue.

III. Conditions Precedent to Funding

The Commitment Letter sets forth the conditions precedent that must be satisfied (or waived by Ironclad) prior to the initial funding of the Credit Facility on the Closing Date. These conditions are organized below by category, followed by our analysis and concerns.

A. Documentation Conditions

The following documentation must be executed and delivered as a condition to funding:

1. Definitive Credit Agreement. Execution and delivery of the definitive credit agreement (the "Credit Agreement"), in form and substance reasonably satisfactory to Ironclad and consistent in all material respects with the Commitment Letter and the summary term sheet annexed thereto as Exhibit A. The Credit Agreement will be accompanied by the related ancillary loan documents, including the security agreement, pledge agreement, intellectual property security agreements, and intercreditor or co-lender arrangements with Ridgeline, each in form and substance reasonably satisfactory to Ironclad.

2. Stock Purchase Agreement. Execution and delivery of the Stock Purchase Agreement (the "SPA") by and among the Borrower (or Solara Fund III, LP), the stockholders of MFW, and any other parties thereto. The SPA must be "in form and substance consistent in all material respects with the Letter of Intent dated February 18, 2026 (reference LOI-MFW-2026-0218) and not materially adverse to the interests of the lenders (without Ironclad's consent, which shall not be unreasonably withheld)." This language is discussed further in Section III.F below.

3. Equity Commitment Letter. Delivery of the equity commitment letter from Solara Fund III, LP to Solara Fleet Holdings LLC evidencing a firm commitment by Solara Fund III, LP to fund One Hundred Seventy-Five Million Dollars ($175,000,000) in equity to the Borrower on the Closing Date. The equity commitment letter must be in form and substance reasonably satisfactory to Ironclad.

4. Payoff Letter and Lien Releases. Receipt of a payoff letter and lien release documentation from Sentinel Commerce Bank, N.A. in respect of MFW's existing revolving line of credit, which has an outstanding balance of approximately $4,200,000 as of the date of the Commitment Letter. The payoff letter must confirm the aggregate payoff amount and provide for the release and termination of all liens securing MFW's obligations to Sentinel Commerce Bank upon receipt of the payoff amount. UCC-3 termination statements must be filed or delivered in escrow for filing promptly upon closing.

B. Customary Closing Conditions

The following additional closing conditions are specified in the Commitment Letter:

1. Accuracy of Specified Representations. The "Specified Representations" (as defined and discussed in Section IV.A below) made by the Borrower and the Guarantors in the Credit Agreement shall be true and correct in all material respects on and as of the Closing Date (except to the extent such representations speak to an earlier date, in which case they shall be true and correct in all material respects as of such earlier date).

2. No Borrower Material Adverse Effect. Since the date of the SPA, there shall not have occurred any event, condition, or circumstance that constitutes a "Material Adverse Effect" as defined in the SPA (the "SPA MAE"). This condition tracks the SPA's MAE definition rather than imposing a separate, independently defined MAE standard in the Credit Agreement — a structure commonly referred to as the "SPA MAE construct." This is discussed further in Section VII.

3. Absence of Default. No "Default" or "Event of Default" (as such terms will be defined in the Credit Agreement) shall have occurred and be continuing, or would result from the initial funding of the Credit Facility on the Closing Date.

4. Officer's Certificate. Receipt by Ironclad of an officer's certificate, executed by a duly authorized officer of the Borrower and each Guarantor, certifying as to the satisfaction of the conditions set forth in items (1) through (3) above, and attaching copies of organizational documents, resolutions, and incumbency certificates.

5. Evidence of Insurance. Delivery of evidence (certificates of insurance or binders) that the Borrower and MFW maintain insurance coverage in types, amounts, and with carriers reasonably satisfactory to Ironclad, naming the Administrative Agent as loss payee and/or additional insured as appropriate.

6. Legal Opinions. Receipt of legal opinions from: (a) Calderwood & Harkness LLP, as counsel to the Borrower, addressing customary matters including due organization, authorization, enforceability, no conflicts, and perfection of security interests (to the extent governed by the UCC); and (b) if required, local counsel in jurisdictions where the Borrower, MFW, or any Guarantor is organized or where material assets are located, addressing matters of local law.

7. Perfection of Security Interests. Evidence of the filing of UCC-1 financing statements in the applicable jurisdictions, delivery of stock certificates representing the equity interests of MFW endorsed in blank or accompanied by duly executed stock powers, and completion of such other actions as may be required to perfect the Administrative Agent's first-priority lien on the collateral.

8. Solvency Certificate. Delivery of a solvency certificate from the chief financial officer of the Borrower (or, if the Borrower does not have a CFO at closing, from an authorized officer of Solara Fleet Holdings LLC or Solara Fund III, LP), certifying that the Borrower and its subsidiaries (including MFW), on a consolidated basis and after giving effect to the Acquisition and the incurrence of the Credit Facility, are solvent. The form of solvency certificate will be attached to the Credit Agreement and is expected to address (a) fair value of assets exceeding liabilities, (b) ability to pay debts as they become due, and (c) adequate capitalization. This is a standard requirement.

C. Financial and Diligence Conditions

1. Audited Financial Statements. Receipt by Ironclad of audited financial statements of MFW for the fiscal years ended December 31, 2023, December 31, 2024, and December 31, 2025, in each case prepared in accordance with GAAP and audited by Glenmore Kessler & Associates PC (engagement partner: Linda Chowdhury, CPA). These audited financial statements must be accompanied by unqualified audit opinions. We note that the MFW FY 2025 audit (for the fiscal year ended December 31, 2025) may not be completed until late March or early April 2026, depending on Glenmore Kessler's engagement timeline. Given the target Closing Date of April 30, 2026, the availability of the FY 2025 audited financials should be confirmed with MFW's financial advisors and with Glenmore Kessler as soon as practicable.

2. Interim Financial Statements. Receipt by Ironclad of unaudited interim financial statements of MFW (consisting of a balance sheet, income statement, and cash flow statement) for any fiscal quarter ended more than forty-five (45) days prior to the Closing Date. If the Closing occurs on April 30, 2026, the most recently completed fiscal quarter would be Q1 2026 (ended March 31, 2026), but the 45-day lookback period means the Q1 2026 interim financials would not be required unless closing is delayed beyond May 15, 2026. The FY 2025 Q4 interim financials (for the quarter ended December 31, 2025) would be subsumed by the audited FY 2025 annual financials. This condition is standard and should not present timing issues absent a delay in the Closing Date.

3. Quality of Earnings. The Commitment Letter does not require an independent quality of earnings ("QofE") report as a condition to funding. We note that Whitmore Sandoval Group LLC is conducting a buy-side quality of earnings analysis for Solara's benefit in connection with the Acquisition diligence process, but the delivery of that report to Ironclad is not a condition to funding. This is a favorable provision; in some middle-market transactions, lenders condition funding on receipt of a satisfactory QofE report, which can create additional conditionality. The absence of such a condition here is consistent with the SunGard / certain funds framework.

4. HSR Clearance. Completion of the Hart-Scott-Rodino ("HSR") pre-merger notification process — either through early termination of the waiting period or expiration of the initial or extended waiting period — is a condition to closing under the SPA. Because the Commitment Letter's funding conditions are tied to the satisfaction of SPA closing conditions (through the SunGard construct), HSR clearance is effectively a condition to funding, but it is not separately stated as a standalone condition in the Commitment Letter. This approach is appropriate and avoids duplicative conditionality. The estimated HSR filing fee of $350,000 is Solara's obligation under the LOI.

D. Regulatory and Compliance Conditions

1. Governmental and Third-Party Approvals. Receipt of all governmental approvals and third-party consents required under the SPA as conditions to the closing of the Acquisition. This includes HSR clearance (as discussed above) and any other regulatory approvals that may be identified during the diligence process. Based on our preliminary analysis, no regulatory approvals beyond HSR are anticipated for the Acquisition, but this should be confirmed.

2. Know Your Customer / Anti-Money Laundering. Completion by Ironclad of its "know your customer" ("KYC") and anti-money laundering ("AML") compliance checks on the Borrower, the Guarantors, and their respective principals, beneficial owners, and authorized signatories. This is a regulatory requirement that cannot be waived and is standard in all commitment letters. Ironclad will require delivery of KYC documentation, including beneficial ownership certifications in compliance with 31 C.F.R. § 1010.230, organizational documents, government-issued identification for natural persons who are beneficial owners or control persons, and such other documentation as Ironclad's compliance department may reasonably request. We recommend that Solara begin compiling KYC documentation promptly to avoid any delay.

3. USA PATRIOT Act Compliance. Delivery by the Borrower and Guarantors of a certification of compliance with the requirements of the USA PATRIOT Act of 2001 (Title III of Pub. L. 107-56), including the customer identification program requirements thereunder. This is standard.

E. Other Conditions

1. Payment of Fees and Expenses. Payment of all fees and expenses due and payable under the Commitment Letter and Fee Letter on or prior to the Closing Date, including the arrangement fee of $2,625,000. Ironclad may, at the Borrower's request, fund such fees and expenses from the initial TLA borrowing proceeds, though this must be reflected in the sources and uses and the funds flow memorandum.

2. Equity Contribution. Funding of the equity contribution by Solara Fund III, LP to Solara Fleet Holdings LLC "contemporaneously with or prior to" the initial borrowing under the TLA. This language creates ambiguity as to whether the equity must be funded before the debt (i.e., equity-first) or may be funded simultaneously. We discuss this issue in Section III.F below.

3. Pro Forma Capitalization Table and Sources and Uses. Delivery of a pro forma capitalization table and a sources and uses schedule reflecting the final terms of the Acquisition, the Credit Facility, the equity contribution, and all transaction costs and adjustments. This is a standard and ministerial condition that is satisfied at or immediately prior to closing.

F. Analysis and Concerns

We have identified the following concerns with respect to the conditions precedent:

SPA Approval Condition. The condition requiring the SPA to be "not materially adverse to the interests of the lenders" is subjective and potentially problematic. Under this standard, Ironclad could assert that virtually any provision of the SPA that it views as unfavorable — including provisions relating to indemnification, escrow terms, earn-out mechanics, non-compete obligations, or transition services — is "materially adverse to the interests of the lenders" and use this as leverage to demand changes to the SPA or, in the worst case, as a basis to decline funding. While the Commitment Letter qualifies this right by providing that Ironclad's consent to SPA changes "shall not be unreasonably withheld," the subjective nature of the standard creates unnecessary risk.

We recommend narrowing this condition to specify an enumerated list of SPA provisions that require lender consent, limited to those provisions that could materially affect the Lenders' position. Specifically, we suggest that lender consent be required only for changes to: (i) the aggregate Purchase Price; (ii) the definition of Material Adverse Effect in the SPA; (iii) conditions to the Borrower's obligations to close the Acquisition; (iv) the indemnification cap and survival periods; (v) any post-closing purchase price adjustment mechanics that could increase the aggregate consideration; and (vi) any provisions that would impose material obligations on the Borrower or MFW after the Closing that are not reflected in the financial projections delivered to Ironclad. All other provisions of the SPA should be within Solara's sole discretion to negotiate with MFW's stockholders and their counsel, Hawthorne Kinsey & Alcott LLP.

Equity Contribution Timing. The condition requiring the equity contribution to be funded "contemporaneously with or prior to" the initial TLA borrowing introduces ambiguity. If "prior to" is interpreted literally, Ironclad could insist that the full $175,000,000 equity contribution from Solara Fund III, LP be funded into the Borrower before Ironclad funds the TLA. In practice, simultaneous funding is the market standard — equity and debt proceeds flow on the same day through a funds flow mechanism coordinated by counsel and the escrow agent (here, Northgate Escrow Services LLC). We recommend clarifying this language to state that "the equity contribution and the initial borrowing under the TLA shall be funded simultaneously on the Closing Date in accordance with a funds flow memorandum agreed by the parties."

FY 2025 Audit Availability. The condition requiring delivery of audited financial statements for FY 2023, FY 2024, and FY 2025 is standard. However, the FY 2025 audit by Glenmore Kessler & Associates PC may not be finalized until late March or early April 2026, depending on the audit engagement timeline and MFW's year-end close process. Given the target Closing Date of April 30, 2026, there should be adequate time, but we recommend confirming the expected delivery date of the FY 2025 audited financials with MFW management and with Glenmore Kessler. If there is any risk of delay, we may need to negotiate a grace period or alternative condition (e.g., delivery of unaudited FY 2025 financials with the audited financials delivered within a post-closing period, though this would be unusual and disfavored by Ironclad).

IV. Representations and Warranties

A. Specified Representations (Limited Condition)

The Commitment Letter adopts a "Specified Representations" construct, which is a critical feature of the certain funds / SunGard framework. Under this approach, the Lenders' obligation to fund on the Closing Date is conditioned only on the accuracy of a limited, enumerated set of representations and warranties in the Credit Agreement (the "Specified Representations"), rather than on the accuracy of all representations and warranties. This is significant because it means that Ironclad cannot refuse to fund based on a representation breach that does not relate to the core ability of the Borrower to enter into the Credit Facility and incur the indebtedness thereunder.

The Specified Representations referenced in the Commitment Letter are generally described (rather than exhaustively listed) and are expected to include the following, which is consistent with market practice:

• Organization and existence of the Borrower and Guarantors under the laws of their respective jurisdictions of formation;

• Corporate power and authority of the Borrower and Guarantors to enter into the Credit Agreement and the other loan documents and to consummate the transactions contemplated thereby;

• Due authorization, execution, delivery, and enforceability of the loan documents against the Borrower and Guarantors;

• No conflict between the loan documents and the organizational documents of the Borrower and Guarantors;

• Solvency of the Borrower and its subsidiaries on a consolidated basis after giving effect to the Acquisition and the incurrence of the Credit Facility;

• Compliance with Federal Reserve Board margin regulations (Regulations T, U, and X);

• The Borrower is not required to register as an "investment company" under the Investment Company Act of 1940;

• Compliance with the USA PATRIOT Act, OFAC sanctions programs, and applicable anti-corruption laws (including the Foreign Corrupt Practices Act);

• Use of loan proceeds consistent with the stated purpose (financing the Acquisition and related costs); and

• Creation and perfection of security interests in the collateral (subject to the limited closing-date perfection requirements discussed in Section II.D).

This construct is favorable to Solara and is essential for providing financing certainty. By limiting the representations that must be accurate at closing to the Specified Representations, the SunGard framework ensures that Ironclad cannot use a breach of a broader representation (e.g., accuracy of the Borrower's financial statements, absence of litigation, compliance with environmental laws) as a basis to refuse funding. Broader representations will be included in the Credit Agreement and will be relevant for covenant compliance and events of default after closing, but their accuracy is not a condition to the initial funding.

B. SPA Representations

In addition to the Specified Representations, the Commitment Letter provides that the Credit Agreement will include representations and warranties that are "substantially consistent with" the representations made by MFW's stockholders (or MFW itself) in the SPA. These SPA-mirrored representations will be brought down to the Closing Date, but — critically — the accuracy of the SPA-mirrored representations is not a condition to funding. Only the Specified Representations must be accurate at closing for the Lenders' funding obligation to arise.

This approach is customary and appropriate. The SPA representations are included in the Credit Agreement primarily for two reasons: (i) to create ongoing compliance obligations after closing (a breach of a Credit Agreement representation could constitute an Event of Default), and (ii) to ensure that the Credit Agreement representations reflect the business-specific representations that Solara has negotiated and obtained from MFW in the SPA. The distinction between Specified Representations (which must be accurate for initial funding) and SPA-mirrored representations (which are relevant post-closing) is well-established in the leveraged finance market and we do not identify any issues with this approach.

C. Analysis. Our primary recommendation with respect to representations and warranties is as follows:

Exhaustive Listing of Specified Representations. The Commitment Letter currently references the Specified Representations in general terms rather than providing an exhaustive list. While the categories of Specified Representations referenced are customary, we recommend requesting that the Commitment Letter term sheet be amended to include a complete and exhaustive enumeration of each Specified Representation. This will prevent any later attempt by Ironclad or Cascade & Whitfield LLP to expand the scope of the Specified Representations during Credit Agreement negotiation by arguing that the Commitment Letter contemplated a broader set. An exhaustive listing creates a clear and enforceable baseline.

Additionally, during the Credit Agreement drafting process, we should carefully review each Specified Representation as drafted by Cascade & Whitfield LLP to ensure that no representation has been framed more broadly than necessary. For example, the "creation and perfection of security interests" representation should be limited to the security interests that are required to be perfected on the Closing Date, consistent with the limited perfection requirements discussed in Section II.D.

V. Covenants (Summary from Term Sheet)

The Commitment Letter is accompanied by a summary term sheet that outlines the anticipated covenants to be included in the Credit Agreement. Many of the covenant provisions are designated as "to be agreed" or "consistent with market precedent for facilities of this type and size." The following is a summary of the covenant framework, with our preliminary analysis.

A. Financial Covenants

The term sheet references the following financial covenants, each of which will be tested on a quarterly basis commencing with the first full fiscal quarter after the Closing Date:

Maximum Total Leverage Ratio. The Credit Agreement will include a maximum total leverage ratio covenant, requiring that the ratio of Total Funded Debt to EBITDA (or Adjusted EBITDA, as defined in the Credit Agreement) not exceed specified levels. The specific covenant levels are designated as "TBD" in the term sheet and will be negotiated in connection with the Credit Agreement.

We note a significant preliminary concern with respect to this covenant. Based on the financial information available to us, MFW's reported EBITDA for the twelve months ended December 31, 2025 was approximately $14,800,000. With an initial TLA draw of $125,000,000, the initial leverage ratio would be approximately 8.4x ($125,000,000 ÷ $14,800,000). This level of leverage is well above the typical covenant threshold for a traditional total leverage test in a middle-market credit facility (which typically ranges from 4.0x to 5.0x for the initial year, stepping down to 3.5x to 4.5x over the term of the facility).

The high implied leverage ratio reflects the nature of MFW's business as a software-as-a-service ("SaaS") platform with high recurring revenue and strong gross margins but moderate current profitability. MFW has an annual recurring revenue ("ARR") of approximately $62,000,000 and a gross margin of approximately 78%, which are attractive metrics for a SaaS business and suggest that the business has significant growth potential and operating leverage that is not fully captured by a trailing EBITDA metric.

Accordingly, we recommend that the financial covenant framework be structured to accommodate MFW's SaaS profile, potentially through one or more of the following approaches:

• Adjusted EBITDA with Add-Backs: Defining "EBITDA" or "Adjusted EBITDA" to include customary add-backs for stock-based compensation, one-time restructuring and integration costs, capitalized software development costs, and other non-cash or non-recurring charges that depress reported EBITDA. This is standard practice and could bring the leverage ratio to a more manageable level.

• ARR-Based Metrics: Incorporating an ARR-based leverage ratio (Total Funded Debt / ARR) or an ARR-based liquidity test as a supplement to or replacement for the traditional EBITDA-based leverage ratio. On an ARR basis, the initial leverage ratio would be approximately 2.0x ($125,000,000 ÷ $62,000,000), which is a more representative metric for a high-growth SaaS business.

• Revenue-Based Covenant: In lieu of or in addition to a leverage ratio, including a minimum revenue or minimum ARR covenant that reflects the growth trajectory of the business.

• Covenant Holiday: Negotiating a covenant holiday for the first two to four quarters after closing, during which no financial covenants are tested, to allow time for integration and growth plan execution.

The selection and calibration of financial covenants will be a critical workstream during the Credit Agreement negotiation and should be discussed with Ironclad at the earliest opportunity.

Minimum Fixed Charge Coverage Ratio. The term sheet references a minimum fixed charge coverage ratio ("FCCR") covenant, but the specific ratio level is designated as "TBD." The FCCR is typically defined as the ratio of (EBITDA – Capital Expenditures – Taxes) to (Debt Service, including scheduled principal and interest payments). The appropriate FCCR level will depend on the financial covenant framework selected and MFW's projected cash flows.

Minimum Liquidity. The term sheet references a minimum liquidity covenant, requiring that the Borrower maintain a minimum level of unrestricted cash and/or availability under the RCF at all times. The specific threshold is designated as "TBD." A minimum liquidity covenant is common in SaaS-oriented credit facilities and can serve as an alternative or supplement to leverage-based covenants.

B. Negative Covenants

The term sheet anticipates that the Credit Agreement will include standard negative covenants restricting the ability of the Borrower and its subsidiaries to take certain actions without the Lenders' consent. These negative covenants are expected to include:

• Limitations on Indebtedness: Restrictions on incurring additional indebtedness, subject to customary exceptions and permitted baskets (including baskets for capital leases, purchase money indebtedness, intercompany loans, and a general basket in an amount to be agreed).

• Limitations on Liens: Restrictions on granting liens on assets, subject to customary permitted liens (including liens securing permitted indebtedness, statutory liens, and a general lien basket).

• Limitations on Restricted Payments: Restrictions on dividends, distributions, and other restricted payments to equity holders, subject to customary exceptions (including tax distributions to partners/members and a general restricted payment basket).

• Limitations on Investments: Restrictions on investments, loans, and advances, subject to customary permitted investments baskets.

• Limitations on Asset Sales: Restrictions on dispositions of assets outside the ordinary course of business, subject to customary exceptions and mandatory prepayment obligations from net proceeds of asset sales.

• Limitations on Affiliate Transactions: Restrictions on transactions with affiliates, subject to customary exceptions for arm's-length transactions and management fee payments to Solara.

• Limitations on Fundamental Changes: Restrictions on mergers, consolidations, and changes to the Borrower's or MFW's organizational documents without Lender consent.

• Limitations on Restricted Subsidiaries: Provisions governing the designation and treatment of restricted and unrestricted subsidiaries.

The specific thresholds, baskets, and exceptions for each negative covenant will be negotiated in the Credit Agreement. We will review these provisions carefully to ensure that the Borrower retains sufficient operational and financial flexibility for MFW's business, including the flexibility to make add-on acquisitions, invest in product development, and manage working capital.

C. Affirmative Covenants

The term sheet anticipates standard affirmative covenants requiring the Borrower and its subsidiaries to:

• Deliver annual audited and quarterly unaudited financial statements, together with compliance certificates;

• Maintain insurance in types and amounts reasonably satisfactory to the Administrative Agent;

• Maintain properties and assets in good working order;

• Pay taxes and other obligations when due;

• Preserve corporate existence and material rights and privileges;

• Comply with applicable laws in all material respects;

• Provide notice of Events of Default, material litigation, and material adverse changes; and

• Permit inspections and audits by the Administrative Agent (subject to customary limitations on frequency and notice).

These affirmative covenants are standard and we do not anticipate significant negotiation issues. We will review the specific provisions in the Credit Agreement to ensure that reporting requirements are reasonable and aligned with MFW's financial reporting capabilities and timeline.

VI. Flex Provisions

A. Description. The Fee Letter contains a confidential "market flex" provision (the "Flex Provision") that grants Ironclad the right to modify certain terms of the Credit Facility if Ironclad determines, in its reasonable judgment, that changes are advisable to ensure the successful syndication of the Facility to other financial institution lenders. Flex provisions are standard in commitment letters for syndicated facilities but represent a significant source of potential additional cost and structural risk for the Borrower and Sponsor. The Flex Provision includes the following components:

Pricing Flex. Ironclad has the right to increase the applicable SOFR spread on the TLA by up to 50 basis points (from SOFR + 400 bps to SOFR + 450 bps) and to increase the applicable SOFR spread on the RCF by up to 50 basis points (from SOFR + 375 bps to SOFR + 425 bps). The pricing flex may be exercised in whole or in part and is not subject to any conditions other than Ironclad's reasonable judgment that the increase is advisable for syndication purposes.

OID Flex. Ironclad has the right to impose an original issue discount ("OID") on the TLA of up to 2.00%. If the full OID flex is exercised, the net proceeds of the TLA to the Borrower would be reduced by $2,500,000 ($125,000,000 × 2.00%), meaning the Borrower would receive only $122,500,000 in cash from the TLA while remaining obligated to repay the full $125,000,000 principal amount. Alternatively, Solara Fund III, LP would need to fund the $2,500,000 shortfall from additional equity. An OID effectively increases the yield to lenders without increasing the stated coupon rate.

Structure Flex. Ironclad has the right to reallocate up to $25,000,000 of the TLA commitment to a second-lien or mezzanine tranche. A reallocation to a subordinated tranche would carry higher pricing (typically SOFR + 600–800 bps or more for a second-lien facility in the current market) and could involve different covenant, prepayment, and intercreditor terms. This structure flex could fundamentally change the capital structure of the financing and increase the blended cost of debt.

SOFR Floor Flex. Ironclad has the right to impose a SOFR floor of up to 1.00% on the Credit Facility. A SOFR floor establishes a minimum reference rate, regardless of the actual level of Term SOFR. In a declining rate environment, a SOFR floor prevents the Borrower from benefiting from interest rate decreases below the floor level. As of the date of this memorandum, Term SOFR (three-month) is approximately 4.30%, so a 1.00% floor would not have an immediate impact. However, if rates decline (as the Federal Reserve's current forward guidance suggests is possible over the medium term), a 1.00% SOFR floor could result in materially higher interest expense than would otherwise apply.

B. Analysis and Concerns

The Flex Provisions represent significant potential additional cost to Solara and should be a central focus of the Commitment Letter negotiation. We set forth below our analysis of the financial impact of each flex component and our recommended negotiation positions.

Pricing Flex Impact. If the full 50 bps pricing flex on the TLA is exercised, the incremental annual interest cost would be approximately $625,000 ($125,000,000 × 0.50%). On the RCF, if drawn to the full $50,000,000, the incremental annual interest cost would be approximately $250,000 ($50,000,000 × 0.50%). In the aggregate, the pricing flex represents up to $875,000 per annum in additional interest expense. Relative to MFW's EBITDA of approximately $14,800,000, the TLA pricing flex alone would consume approximately 4.2% of annual EBITDA — a meaningful impact on cash flow available for debt service, capital expenditures, and growth investments.

OID Flex Impact. The 2.00% OID flex represents a one-time reduction in net proceeds (or additional equity requirement) of $2,500,000. When amortized over the five-year term of the TLA, this equates to approximately $500,000 per year in effective additional cost. On a yield-to-maturity basis, the OID increases the all-in yield to TLA lenders by approximately 40–45 basis points, depending on prepayment assumptions.

Structure Flex Impact. The right to reallocate up to $25,000,000 from the TLA (SOFR + 400 bps) to a second-lien tranche (which could carry pricing of SOFR + 650–800 bps or more) would increase the blended cost of debt and introduce intercreditor complexity. Assuming a reallocation of $25,000,000 to a second-lien tranche at SOFR + 700 bps (an illustrative rate), the incremental annual interest cost on the reallocated amount would be approximately $750,000 ($25,000,000 × 3.00% incremental spread). Additionally, a second-lien tranche would typically have more restrictive covenant terms (or, alternatively, covenant-lite terms with fewer protections for the Borrower), different prepayment mechanics, and would require an intercreditor agreement that could complicate future refinancing or amendment transactions.

SOFR Floor Flex Impact. The impact of a 1.00% SOFR floor is scenario-dependent and would be felt primarily in a declining rate environment. If Term SOFR were to decline to, for example, 2.00% during the term of the Credit Facility, a 1.00% SOFR floor would not provide relief because the actual SOFR rate (2.00%) would still exceed the floor (1.00%). However, if Term SOFR were to decline to 0.50%, the floor would lock in a minimum rate of 1.00%, resulting in an effective 50 bps of additional cost on the entire Credit Facility. On $125,000,000 of TLA, a 50 bps differential would represent approximately $625,000 per year. While the current rate environment makes this scenario appear unlikely in the near term, the Credit Facility has a five-year term and rate conditions could change significantly.

Recommendations. We recommend the following negotiating positions with respect to the Flex Provisions:

1. Pricing Flex: Negotiate a reduction from 50 bps to 25 bps on both the TLA and the RCF. A 25 bps pricing flex is more consistent with current market practice for sponsor-backed middle-market transactions with a creditworthy sponsor such as Solara. If Ironclad insists on retaining a 50 bps flex, propose a compromise at 37.5 bps or tie the flex exercise to a specific syndication timeline (e.g., flex may be exercised only if the facility is not fully subscribed within 30 days of launch).

2. OID Flex: Negotiate a cap reduction from 2.00% to 1.00%, reducing the maximum OID from $2,500,000 to $1,250,000. An OID of 2.00% is at the high end of market for a first-lien TLA facility.

3. Structure Flex: Strongly recommend eliminating the structure flex entirely. The ability to reallocate $25,000,000 (20% of the TLA) to a subordinated tranche is unusually broad and could materially alter the economics and structure of the financing in a manner that was not contemplated by Solara's investment committee when the transaction was approved. If elimination is not achievable, propose capping the structure flex at $10,000,000 and requiring that any reallocation to a second-lien tranche be priced at no more than SOFR + 650 bps.

4. SOFR Floor Flex: Negotiate elimination of the SOFR floor flex entirely. If Ironclad insists, propose a maximum SOFR floor of 0.50% rather than 1.00%.

The combined maximum cost impact of the Flex Provisions, if all were exercised to their full extent, is summarized in Appendix B.

VII. SunGard / Certain Funds Provisions

A. Description. The Commitment Letter incorporates "certain funds" or "SunGard" provisions, named after the landmark SunGard Data Systems leveraged buyout, which established the market standard for limiting conditions to funding in acquisition financings. The SunGard construct is critical to ensuring that committed financing will be available at the closing of the Acquisition and that the conditions to debt funding are closely aligned with the conditions to closing under the SPA. This alignment is essential because Solara, as the buyer under the SPA, needs assurance that if the SPA closing conditions are satisfied, the debt financing will also be available — without such assurance, Solara faces the risk of being obligated to close the Acquisition under the SPA without the committed financing to do so, potentially resulting in a breach of the SPA and significant damages to MFW's stockholders.

The key elements of the SunGard construct in the Commitment Letter are as follows:

• Limited Funding Conditions: The Lenders' obligation to fund the Credit Facility on the Closing Date is conditioned solely on: (a) the accuracy of the Specified Representations (as discussed in Section IV.A); (b) execution and delivery of the SPA and the definitive Credit Agreement; (c) the absence of a payment default or bankruptcy event of default with respect to the Borrower; (d) receipt of the funds flow memorandum agreed among the parties; and (e) satisfaction of the customary closing deliverables described in Section III.B above.

• SPA MAE Construct: The Commitment Letter does not include an independent "material adverse change" or "material adverse effect" condition defined by reference to the Lenders' own standard. Instead, the MAE condition in the Commitment Letter is a pass-through of the SPA's MAE definition — that is, the Lenders' obligation to fund is subject to there not having occurred a "Material Adverse Effect" as defined in the SPA. If the SPA MAE condition is satisfied (i.e., no MAE has occurred as defined in the SPA), the Lenders cannot assert a separate MAE-based refusal to fund. This is a critical protection for Solara.

• No Due Diligence Out: The Commitment Letter does not contain a condition permitting the Lenders to decline funding based on the results of due diligence or the receipt of additional information about MFW or its business. All information conditions are limited to the delivery of specified financial statements and closing deliverables.

B. Analysis. The SunGard construct in the Commitment Letter is favorable to Solara and is essential for a leveraged acquisition where the buyer needs financing certainty in order to commit to a purchase obligation in the SPA. Without a SunGard framework, the SPA would need to include a financing contingency (which would weaken Solara's competitive position vis-à-vis other potential acquirers and would likely be resisted by MFW's stockholders and their counsel at Hawthorne Kinsey & Alcott LLP) or Solara would assume the risk of a financing failure.

We note the following analytical points:

SPA MAE Alignment. The effectiveness of the SPA MAE pass-through depends on the definition of "Material Adverse Effect" in the SPA. If the SPA MAE is defined broadly (e.g., covering any material adverse change in the business, financial condition, results of operations, or prospects of MFW), the pass-through provides strong protection to Solara, as the Lenders can invoke the MAE condition only to the same extent that Solara itself could invoke the MAE closing condition in the SPA. Conversely, if the SPA MAE is defined narrowly (e.g., with extensive carve-outs that limit the types of events constituting an MAE), the Lenders' MAE condition would be correspondingly narrow. We recommend that the SPA MAE definition be drafted with careful attention to the commitment letter pass-through, and that the MAE definition in the SPA include customary carve-outs for, among other things, general economic conditions, industry conditions, changes in law, and pandemic-related impacts, while preserving the Borrower's ability to invoke the MAE condition in genuinely adverse circumstances.

Interaction with Market MAC. As discussed in Section VIII, the Commitment Letter also contains a separate "market MAC" condition that is not tied to the SPA and could operate independently of the SunGard framework. This is a significant concern, as the market MAC could effectively circumvent the SunGard protections by providing Ironclad with an independent basis to decline funding based on market conditions rather than business-specific developments. We address this in detail in Section VIII.

Adequacy of the SunGard Framework. Overall, the SunGard provisions in the Commitment Letter are substantially consistent with market practice for sponsor-backed acquisitions. The limited funding conditions, the SPA MAE pass-through, and the absence of a due diligence out collectively provide Solara with a strong degree of financing certainty. The primary area of concern — the market MAC condition — is addressed separately below.

VIII. Market MAC Condition

A. Description. In addition to the SunGard / certain funds provisions described in Section VII, the Commitment Letter includes a "market material adverse change" condition (the "Market MAC Condition"). The Market MAC Condition provides that Ironclad's obligations under the Commitment Letter are subject to there not occurring, after the date of the Commitment Letter (February 14, 2026), any of the following:

(a) a material adverse change in the loan syndication market, the financial markets, or the capital markets generally;

(b) a material disruption of, or material adverse change in, the conditions in the primary market for syndicated credit facilities; or

(c) any event, circumstance, or condition that, individually or in the aggregate, would make the syndication of the Credit Facility impracticable.

If any of the foregoing events occurs, Ironclad may decline to fund the Credit Facility, notwithstanding that all other conditions to funding have been satisfied. The Market MAC Condition is a standalone condition that operates independently of and in addition to the SPA MAE pass-through discussed in Section VII.

B. Analysis and Concerns

The Market MAC Condition is, in our view, the single most significant issue in the Commitment Letter and the highest-priority negotiation point. Our concerns are as follows:

Breadth of the Condition. The Market MAC Condition is drafted broadly, encompassing "material adverse change in the loan syndication market, the financial markets, or the capital markets generally." Under this language, Ironclad could potentially decline to fund based on a general decline in equity market indices, widening of credit spreads across the leveraged loan market, or a reduction in syndication activity — even if MFW's business is performing as expected, the SPA closing conditions are satisfied, and the specific Credit Facility could be syndicated successfully (albeit perhaps on less favorable terms). The use of the word "impracticable" (as opposed to "impossible") in clause (c) further broadens the condition, as "impracticable" suggests something more than merely difficult but does not require absolute impossibility.

Inconsistency with Post-2008 Market Practice. Broad market MAC conditions were common in commitment letters prior to the 2008 financial crisis, but the market standard for sponsored acquisition financings has evolved significantly since then. In the post-2008 period, and particularly since 2012–2015, the prevailing market practice for commitment letters in sponsor-backed transactions has been to either: (i) eliminate the market MAC condition entirely; or (ii) narrow it to reference only extreme and specific market disruptions (e.g., the closure of the primary syndication markets, the declaration of a banking moratorium by federal or state authorities, or the occurrence of a systemic financial crisis comparable to the 2008 financial crisis). The broad market MAC condition in the Commitment Letter is a departure from this trend and places Ironclad's commitment below the standard that a top-tier sponsor such as Solara should expect.

Interaction with SunGard Framework. The presence of a broad market MAC condition effectively undermines the SunGard / certain funds protections. The purpose of the SunGard framework is to provide the buyer with certainty that financing will be available at closing. If Ironclad can decline to fund based on general market conditions that are unrelated to MFW

MEMORANDUM
PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT
TO: James Prentice, Responsible Partner (Mergers & Acquisitions), Calderwood & Harkness LLP Claire Nakamura, Partner & Head of Software Investing, Solara Digital Infrastructure LP
FROM: Andrew Fitzpatrick, Lead Associate (Mergers & Acquisitions), Calderwood & Harkness LLP
DATE: February 17, 2026
RE: Review of Debt Commitment Letter — Ironclad National Bank, N.A. (Reference CL-INB-2026-0214) — Project Trident
Matter No.: 1041-00004
I. Executive Summary
This memorandum sets forth our analysis of the debt commitment letter dated February 14, 2026 (reference CL-INB-2026-0214) (the "Commitment Letter") delivered by Ironclad National Bank, N.A. ("Ironclad" or "INB") to Solara Digital Infrastructure LP ("Solara") in connection with the proposed acquisition (the "Acquisition") of one hundred percent (100%) of the issued and outstanding shares of common stock of Meridian FleetWorks, Inc. ("MFW" or the "Target") for an aggregate purchase price of Three Hundred Fifty Million Dollars ($350,000,000) (the "Purchase Price"). The Acquisition is internally referred to as Project Trident.
The Commitment Letter provides for a One Hundred Seventy-Five Million Dollar ($175,000,000) senior secured credit facility (the "Credit Facility") comprising: (i) a One Hundred Twenty-Five Million Dollar ($125,000,000) Term Loan A (the "TLA"); and (ii) a Fifty Million Dollar ($50,000,000) Revolving Credit Facility (the "RCF" and, together with the TLA, the "Facilities"). Ridgeline Commercial Lending Corp. ("Ridgeline") participates as a co-lender with respect to Fifty Million Dollars ($50,000,000) of the TLA tranche. Ironclad will serve as Lead Arranger, Sole Bookrunner, and Administrative Agent for the Credit Facility. Lenders' counsel is Cascade & Whitfield LLP, located at 51 West 52nd Street, New York, New York 10019, with Jonathan Mayer serving as lead partner on the engagement.
Overall Assessment. The Commitment Letter is substantially customary for a middle-market leveraged acquisition financing of this type and size. The fundamental economic terms — including the facility structure, interest rate benchmarks, amortization schedule, and maturity — are within the range of market terms we have observed in comparable sponsor-backed software and technology-enabled services acquisitions completed in the fourth quarter of 2025 and early 2026. The Commitment Letter incorporates a favorable "certain funds" or "SunGard" construct that provides Solara with meaningful financing certainty, which is critical for the enforceability of Solara's purchase obligation under the Stock Purchase Agreement (the "SPA") to be negotiated with MFW's stockholders.
However, several provisions warrant negotiation or clarification before Solara should accept the Commitment Letter. In particular:
• The Commitment Letter contains a market material adverse change ("Market MAC") condition that is broader than current market practice for sponsored acquisitions and could afford Ironclad an inappropriate "out" from its funding obligations based on general market disruption unrelated to MFW's business performance.
• The flex provisions embedded in the confidential fee letter grant Ironclad significant latitude to increase pricing, impose original issue discount, reallocate portions of the TLA to a higher-cost second-lien or mezzanine tranche, and impose a SOFR floor — collectively representing a potential increase in borrowing costs of several million dollars.
• Certain conditions precedent to funding, particularly the condition requiring the SPA to be "not materially adverse to the interests of the lenders," are subjective and could give Ironclad undue leverage during the SPA negotiation process.
Our specific recommendations for negotiation are summarized in Section XIV of this memorandum. We recommend scheduling a call with Claire Nakamura, Viktor Sorensen (Solara Operating Partner), and Owen Prescott at Cobalt Ridge Partners LLC to discuss negotiation strategy prior to delivering a markup of the Commitment Letter to Ironclad and Cascade & Whitfield LLP.
II. Overview of Commitment Letter Terms
A. Parties. The following parties are identified in the Commitment Letter:
Solara Fleet Holdings LLC (the "Borrower") has not yet been formed. It will be organized as a Delaware limited liability company and will serve as the acquisition vehicle through which Solara Fund III, LP will acquire all of the outstanding equity of MFW. The Commitment Letter contemplates that the Borrower will be the sole obligor under the Credit Facility, with MFW becoming a guarantor and pledgor of collateral upon consummation of the Acquisition. We note that the Commitment Letter references both Solara Digital Infrastructure LP and Solara Fund III, LP as potential guarantors; the scope of the sponsor guaranty (if any) will need to be confirmed during credit agreement negotiations. It is typical in sponsor-backed transactions for the fund vehicle (here, Solara Fund III, LP) to provide an equity commitment letter rather than a guaranty of the debt obligations; we should confirm that Ironclad does not expect a direct guaranty from Solara Digital Infrastructure LP at the management company level.
B. Facility Structure
The Credit Facility is structured as a two-tranche senior secured facility with a total commitment of One Hundred Seventy-Five Million Dollars ($175,000,000). The key terms of each tranche are summarized below.
Term Loan A ("TLA"):
• Commitment Amount: $125,000,000 in aggregate, comprising (i) $75,000,000 committed by Ironclad and (ii) $50,000,000 committed by Ridgeline as co-lender.
• Maturity: Five (5) years from the Closing Date. Based on the current target closing date of April 30, 2026, the estimated maturity date is April 30, 2031.
• Amortization: Quarterly amortization at a rate of five percent (5.0%) per annum of the original principal amount of the TLA. This results in annual amortization of $6,250,000 ($125,000,000 × 5.0%) and quarterly amortization payments of $1,562,500. The remaining outstanding principal balance of the TLA will be due and payable as a bullet payment at maturity. Assuming no voluntary or mandatory prepayments, the balloon payment at maturity would be approximately $93,750,000 (i.e., $125,000,000 less five years of annual amortization at $6,250,000 per year, or $31,250,000 in aggregate scheduled amortization). This amortization rate is within the range of market for a middle-market TLA (typically 2.5%–7.5% per annum).
• Interest Rate: Term SOFR (Secured Overnight Financing Rate) plus 400 basis points (4.00%) per annum.
• Funding: The TLA is expected to be fully funded at the Closing of the Acquisition. The full $125,000,000 will be drawn on the Closing Date and applied, together with the equity contribution from Solara Fund III, LP, to finance the Purchase Price and related transaction costs.
Revolving Credit Facility ("RCF"):
• Commitment Amount: $50,000,000, committed entirely by Ironclad. Ridgeline does not participate in the RCF tranche.
• Maturity: Five (5) years from the Closing Date, co-terminus with the TLA. Estimated maturity date of April 30, 2031.
• Interest Rate: Term SOFR plus 375 basis points (3.75%) per annum. The 25 basis point differential between the TLA spread (400 bps) and the RCF spread (375 bps) is customary, reflecting the undrawn nature and revolving feature of the RCF.
• Commitment Fee: 0.50% per annum on the daily average undrawn amount of the RCF. If the RCF remains fully undrawn, the annual commitment fee would be $250,000 ($50,000,000 × 0.50%). This commitment fee rate is within market range (typically 0.25%–0.50% for facilities of this size).
• Funding: The RCF is expected to be undrawn at the Closing Date. It will be available for borrowing post-closing for working capital needs, general corporate purposes of the Borrower and its subsidiaries, and permitted acquisitions (as will be defined in the definitive credit agreement).
The aggregate Ironclad commitment across both tranches is $125,000,000 ($75,000,000 TLA + $50,000,000 RCF), and the Ridgeline commitment is $50,000,000 (TLA only). The combined lender commitments total $175,000,000.
C. Fees. The Commitment Letter and the accompanying confidential fee letter (the "Fee Letter") set forth the following fee arrangements:
Arrangement Fee. A one-time arrangement fee of 1.50% of the aggregate commitments under the Credit Facility, resulting in an arrangement fee of $2,625,000 ($175,000,000 × 1.50%). The arrangement fee is payable in full at the Closing Date. This fee level is within the customary range for middle-market leveraged acquisition financings (typically 1.00%–2.00% of total commitments).
Commitment Fee on Undrawn RCF. As noted above, a commitment fee of 0.50% per annum is payable on the daily average undrawn balance of the RCF. This fee accrues from the Closing Date and is payable quarterly in arrears.
Administrative Agent Fee. The Fee Letter provides for an annual administrative agent fee payable to Ironclad in its capacity as Administrative Agent. The specific amount of the administrative agent fee is set forth in the Fee Letter and is designated as confidential. Based on our experience with facilities of comparable size and complexity, we expect the annual agent fee to be in the range of $75,000 to $100,000 per annum. This is standard.
Fee Letter Terms. The Fee Letter contains the arrangement fee, administrative agent fee, and certain additional fee provisions (including the flex provisions discussed in Section VI below). The terms of the Fee Letter are designated as confidential and may not be disclosed to third parties (including MFW or its advisors) without Ironclad's consent. The confidentiality of fee letter terms is customary practice. We have reviewed the Fee Letter and address the flex provisions — which represent the most material component of the Fee Letter — in detail in Section VI.
D. Security and Guarantees
The Commitment Letter requires the following collateral and guarantee arrangements:
Security Interests. The Credit Facility will be secured by a first-priority perfected lien on substantially all assets of: (i) Solara Fleet Holdings LLC (the Borrower); and (ii) Meridian FleetWorks, Inc. (the Target), which will become an obligor under the Credit Facility upon consummation of the Acquisition. The collateral package encompasses, without limitation, accounts receivable, inventory, equipment, intellectual property, contract rights, deposit accounts, securities accounts, and general intangibles.
Equity Pledges. The Borrower will pledge one hundred percent (100%) of the equity interests of MFW held by the Borrower to the Administrative Agent for the benefit of the Lenders. Additionally, to the extent MFW has any domestic subsidiaries, the equity interests of such domestic subsidiaries will be pledged.
Guarantees. The payment and performance obligations of the Borrower under the Credit Facility will be guaranteed by: (i) MFW (as a guarantor, following the Closing); and (ii) any domestic subsidiaries of MFW (if any exist at or after the Closing). The Commitment Letter is silent on whether Solara Fund III, LP or Solara Digital Infrastructure LP will provide a guaranty; as noted above, a direct guaranty from the sponsor or fund is atypical in sponsor-backed transactions, and we should confirm that Ironclad does not expect one.
Certain Funds / SunGard Alignment. The Commitment Letter references collateral and guarantee principles that are consistent with a "certain funds" or "SunGard" construct, meaning that the delivery and perfection of collateral is a condition to funding only to the extent consistent with the limited conditions precedent framework. Specifically, the Commitment Letter provides that the perfection of security interests through filings (UCC-1 financing statements, stock certificate delivery with stock powers) must be completed on or prior to the Closing Date, but failure to perfect in jurisdictions other than the state of organization of the Borrower and MFW will not be a condition to initial funding (with a post-closing period for perfection in other jurisdictions). This is a favorable provision and consistent with market practice. We discuss the SunGard provisions in greater detail in Section VII below.
Customary Exclusions. The Commitment Letter provides for customary exclusions from the collateral package, including: (a) certain leasehold interests to the extent a landlord consent or waiver would be required; (b) immaterial or de minimis assets below a threshold to be agreed in the credit agreement; (c) excluded deposit accounts and securities accounts (to be defined); and (d) assets the granting of a security interest in which would violate applicable law or the terms of contractual arrangements with third parties (subject to customary anti-assignment override provisions under the UCC).
E. Interest Rate Details
The following summarizes the interest rate and benchmark provisions of the Commitment Letter:
SOFR Benchmark. The reference rate for the Credit Facility is Term SOFR, as published by the CME Group (Chicago Mercantile Exchange) Benchmark Administration Limited. The Commitment Letter provides for customary fallback provisions in the event that Term SOFR becomes unavailable or is no longer representative, consistent with the Alternative Reference Rates Committee (ARRC) recommended fallback language. Fallback waterfall provisions would be set forth in the definitive credit agreement and are expected to reference Daily Simple SOFR, then a benchmark rate to be selected by the Administrative Agent in consultation with the Borrower.
Applicable Spreads. The TLA carries a spread of 400 basis points (4.00%) over Term SOFR. The RCF carries a spread of 375 basis points (3.75%) over Term SOFR. These spreads are fixed in the Commitment Letter, subject to the flex provisions discussed in Section VI.
Default Interest. In the event of a payment default or acceleration, overdue amounts will bear interest at the otherwise applicable rate plus an additional 200 basis points (2.00%) per annum (the "Default Rate").
SOFR Floor. The Commitment Letter does not specify a SOFR floor; that is, the minimum SOFR rate is implicitly zero. However, as discussed in Section VI, the flex provisions in the Fee Letter reserve Ironclad's right to impose a SOFR floor of up to 1.00%. The absence of a stated SOFR floor in the base case is favorable to the Borrower, as it means the Borrower benefits from the full extent of any decline in SOFR below current levels. The potential imposition of a SOFR floor through flex, however, is a concern, particularly in a potentially declining rate environment. As of the date of this memorandum, three-month Term SOFR is approximately 4.30%.
Interest Periods. The Borrower may elect interest periods of one (1), three (3), or six (6) months, in its discretion. This is standard. The credit agreement may also include a "daily SOFR" option for shorter-duration borrowings; this is to be negotiated.
Credit Spread Adjustment. The Commitment Letter does not reference a credit spread adjustment ("CSA") on top of Term SOFR. The inclusion or exclusion of a CSA was a transitional issue during the LIBOR-to-SOFR conversion but has largely been settled in the market; most new facilities originated since mid-2024 do not include a separate CSA. We do not expect this to be an issue.
III. Conditions Precedent to Funding
The Commitment Letter sets forth the conditions precedent that must be satisfied (or waived by Ironclad) prior to the initial funding of the Credit Facility on the Closing Date. These conditions are organized below by category, followed by our analysis and concerns.
A. Documentation Conditions
The following documentation must be executed and delivered as a condition to funding:
1. Definitive Credit Agreement. Execution and delivery of the definitive credit agreement (the "Credit Agreement"), in form and substance reasonably satisfactory to Ironclad and consistent in all material respects with the Commitment Letter and the summary term sheet annexed thereto as Exhibit A. The Credit Agreement will be accompanied by the related ancillary loan documents, including the security agreement, pledge agreement, intellectual property security agreements, and intercreditor or co-lender arrangements with Ridgeline, each in form and substance reasonably satisfactory to Ironclad.
2. Stock Purchase Agreement. Execution and delivery of the Stock Purchase Agreement (the "SPA") by and among the Borrower (or Solara Fund III, LP), the stockholders of MFW, and any other parties thereto. The SPA must be "in form and substance consistent in all material respects with the Letter of Intent dated February 18, 2026 (reference LOI-MFW-2026-0218) and not materially adverse to the interests of the lenders (without Ironclad's consent, which shall not be unreasonably withheld)." This language is discussed further in Section III.F below.
3. Equity Commitment Letter. Delivery of the equity commitment letter from Solara Fund III, LP to Solara Fleet Holdings LLC evidencing a firm commitment by Solara Fund III, LP to fund One Hundred Seventy-Five Million Dollars ($175,000,000) in equity to the Borrower on the Closing Date. The equity commitment letter must be in form and substance reasonably satisfactory to Ironclad.
4. Payoff Letter and Lien Releases. Receipt of a payoff letter and lien release documentation from Sentinel Commerce Bank, N.A. in respect of MFW's existing revolving line of credit, which has an outstanding balance of approximately $4,200,000 as of the date of the Commitment Letter. The payoff letter must confirm the aggregate payoff amount and provide for the release and termination of all liens securing MFW's obligations to Sentinel Commerce Bank upon receipt of the payoff amount. UCC-3 termination statements must be filed or delivered in escrow for filing promptly upon closing.
B. Customary Closing Conditions
The following additional closing conditions are specified in the Commitment Letter:
1. Accuracy of Specified Representations. The "Specified Representations" (as defined and discussed in Section IV.A below) made by the Borrower and the Guarantors in the Credit Agreement shall be true and correct in all material respects on and as of the Closing Date (except to the extent such representations speak to an earlier date, in which case they shall be true and correct in all material respects as of such earlier date).
2. No Borrower Material Adverse Effect. Since the date of the SPA, there shall not have occurred any event, condition, or circumstance that constitutes a "Material Adverse Effect" as defined in the SPA (the "SPA MAE"). This condition tracks the SPA's MAE definition rather than imposing a separate, independently defined MAE standard in the Credit Agreement — a structure commonly referred to as the "SPA MAE construct." This is discussed further in Section VII.
3. Absence of Default. No "Default" or "Event of Default" (as such terms will be defined in the Credit Agreement) shall have occurred and be continuing, or would result from the initial funding of the Credit Facility on the Closing Date.
4. Officer's Certificate. Receipt by Ironclad of an officer's certificate, executed by a duly authorized officer of the Borrower and each Guarantor, certifying as to the satisfaction of the conditions set forth in items (1) through (3) above, and attaching copies of organizational documents, resolutions, and incumbency certificates.
5. Evidence of Insurance. Delivery of evidence (certificates of insurance or binders) that the Borrower and MFW maintain insurance coverage in types, amounts, and with carriers reasonably satisfactory to Ironclad, naming the Administrative Agent as loss payee and/or additional insured as appropriate.
6. Legal Opinions. Receipt of legal opinions from: (a) Calderwood & Harkness LLP, as counsel to the Borrower, addressing customary matters including due organization, authorization, enforceability, no conflicts, and perfection of security interests (to the extent governed by the UCC); and (b) if required, local counsel in jurisdictions where the Borrower, MFW, or any Guarantor is organized or where material assets are located, addressing matters of local law.
7. Perfection of Security Interests. Evidence of the filing of UCC-1 financing statements in the applicable jurisdictions, delivery of stock certificates representing the equity interests of MFW endorsed in blank or accompanied by duly executed stock powers, and completion of such other actions as may be required to perfect the Administrative Agent's first-priority lien on the collateral.
8. Solvency Certificate. Delivery of a solvency certificate from the chief financial officer of the Borrower (or, if the Borrower does not have a CFO at closing, from an authorized officer of Solara Fleet Holdings LLC or Solara Fund III, LP), certifying that the Borrower and its subsidiaries (including MFW), on a consolidated basis and after giving effect to the Acquisition and the incurrence of the Credit Facility, are solvent. The form of solvency certificate will be attached to the Credit Agreement and is expected to address (a) fair value of assets exceeding liabilities, (b) ability to pay debts as they become due, and (c) adequate capitalization. This is a standard requirement.
C. Financial and Diligence Conditions
1. Audited Financial Statements. Receipt by Ironclad of audited financial statements of MFW for the fiscal years ended December 31, 2023, December 31, 2024, and December 31, 2025, in each case prepared in accordance with GAAP and audited by Glenmore Kessler & Associates PC (engagement partner: Linda Chowdhury, CPA). These audited financial statements must be accompanied by unqualified audit opinions. We note that the MFW FY 2025 audit (for the fiscal year ended December 31, 2025) may not be completed until late March or early April 2026, depending on Glenmore Kessler's engagement timeline. Given the target Closing Date of April 30, 2026, the availability of the FY 2025 audited financials should be confirmed with MFW's financial advisors and with Glenmore Kessler as soon as practicable.
2. Interim Financial Statements. Receipt by Ironclad of unaudited interim financial statements of MFW (consisting of a balance sheet, income statement, and cash flow statement) for any fiscal quarter ended more than forty-five (45) days prior to the Closing Date. If the Closing occurs on April 30, 2026, the most recently completed fiscal quarter would be Q1 2026 (ended March 31, 2026), but the 45-day lookback period means the Q1 2026 interim financials would not be required unless closing is delayed beyond May 15, 2026. The FY 2025 Q4 interim financials (for the quarter ended December 31, 2025) would be subsumed by the audited FY 2025 annual financials. This condition is standard and should not present timing issues absent a delay in the Closing Date.
3. Quality of Earnings. The Commitment Letter does not require an independent quality of earnings ("QofE") report as a condition to funding. We note that Whitmore Sandoval Group LLC is conducting a buy-side quality of earnings analysis for Solara's benefit in connection with the Acquisition diligence process, but the delivery of that report to Ironclad is not a condition to funding. This is a favorable provision; in some middle-market transactions, lenders condition funding on receipt of a satisfactory QofE report, which can create additional conditionality. The absence of such a condition here is consistent with the SunGard / certain funds framework.
4. HSR Clearance. Completion of the Hart-Scott-Rodino ("HSR") pre-merger notification process — either through early termination of the waiting period or expiration of the initial or extended waiting period — is a condition to closing under the SPA. Because the Commitment Letter's funding conditions are tied to the satisfaction of SPA closing conditions (through the SunGard construct), HSR clearance is effectively a condition to funding, but it is not separately stated as a standalone condition in the Commitment Letter. This approach is appropriate and avoids duplicative conditionality. The estimated HSR filing fee of $350,000 is Solara's obligation under the LOI.
D. Regulatory and Compliance Conditions
1. Governmental and Third-Party Approvals. Receipt of all governmental approvals and third-party consents required under the SPA as conditions to the closing of the Acquisition. This includes HSR clearance (as discussed above) and any other regulatory approvals that may be identified during the diligence process. Based on our preliminary analysis, no regulatory approvals beyond HSR are anticipated for the Acquisition, but this should be confirmed.
2. Know Your Customer / Anti-Money Laundering. Completion by Ironclad of its "know your customer" ("KYC") and anti-money laundering ("AML") compliance checks on the Borrower, the Guarantors, and their respective principals, beneficial owners, and authorized signatories. This is a regulatory requirement that cannot be waived and is standard in all commitment letters. Ironclad will require delivery of KYC documentation, including beneficial ownership certifications in compliance with 31 C.F.R. § 1010.230, organizational documents, government-issued identification for natural persons who are beneficial owners or control persons, and such other documentation as Ironclad's compliance department may reasonably request. We recommend that Solara begin compiling KYC documentation promptly to avoid any delay.
3. USA PATRIOT Act Compliance. Delivery by the Borrower and Guarantors of a certification of compliance with the requirements of the USA PATRIOT Act of 2001 (Title III of Pub. L. 107-56), including the customer identification program requirements thereunder. This is standard.
E. Other Conditions
1. Payment of Fees and Expenses. Payment of all fees and expenses due and payable under the Commitment Letter and Fee Letter on or prior to the Closing Date, including the arrangement fee of $2,625,000. Ironclad may, at the Borrower's request, fund such fees and expenses from the initial TLA borrowing proceeds, though this must be reflected in the sources and uses and the funds flow memorandum.
2. Equity Contribution. Funding of the equity contribution by Solara Fund III, LP to Solara Fleet Holdings LLC "contemporaneously with or prior to" the initial borrowing under the TLA. This language creates ambiguity as to whether the equity must be funded before the debt (i.e., equity-first) or may be funded simultaneously. We discuss this issue in Section III.F below.
3. Pro Forma Capitalization Table and Sources and Uses. Delivery of a pro forma capitalization table and a sources and uses schedule reflecting the final terms of the Acquisition, the Credit Facility, the equity contribution, and all transaction costs and adjustments. This is a standard and ministerial condition that is satisfied at or immediately prior to closing.
F. Analysis and Concerns
We have identified the following concerns with respect to the conditions precedent:
SPA Approval Condition. The condition requiring the SPA to be "not materially adverse to the interests of the lenders" is subjective and potentially problematic. Under this standard, Ironclad could assert that virtually any provision of the SPA that it views as unfavorable — including provisions relating to indemnification, escrow terms, earn-out mechanics, non-compete obligations, or transition services — is "materially adverse to the interests of the lenders" and use this as leverage to demand changes to the SPA or, in the worst case, as a basis to decline funding. While the Commitment Letter qualifies this right by providing that Ironclad's consent to SPA changes "shall not be unreasonably withheld," the subjective nature of the standard creates unnecessary risk.
We recommend narrowing this condition to specify an enumerated list of SPA provisions that require lender consent, limited to those provisions that could materially affect the Lenders' position. Specifically, we suggest that lender consent be required only for changes to: (i) the aggregate Purchase Price; (ii) the definition of Material Adverse Effect in the SPA; (iii) conditions to the Borrower's obligations to close the Acquisition; (iv) the indemnification cap and survival periods; (v) any post-closing purchase price adjustment mechanics that could increase the aggregate consideration; and (vi) any provisions that would impose material obligations on the Borrower or MFW after the Closing that are not reflected in the financial projections delivered to Ironclad. All other provisions of the SPA should be within Solara's sole discretion to negotiate with MFW's stockholders and their counsel, Hawthorne Kinsey & Alcott LLP.
Equity Contribution Timing. The condition requiring the equity contribution to be funded "contemporaneously with or prior to" the initial TLA borrowing introduces ambiguity. If "prior to" is interpreted literally, Ironclad could insist that the full $175,000,000 equity contribution from Solara Fund III, LP be funded into the Borrower before Ironclad funds the TLA. In practice, simultaneous funding is the market standard — equity and debt proceeds flow on the same day through a funds flow mechanism coordinated by counsel and the escrow agent (here, Northgate Escrow Services LLC). We recommend clarifying this language to state that "the equity contribution and the initial borrowing under the TLA shall be funded simultaneously on the Closing Date in accordance with a funds flow memorandum agreed by the parties."
FY 2025 Audit Availability. The condition requiring delivery of audited financial statements for FY 2023, FY 2024, and FY 2025 is standard. However, the FY 2025 audit by Glenmore Kessler & Associates PC may not be finalized until late March or early April 2026, depending on the audit engagement timeline and MFW's year-end close process. Given the target Closing Date of April 30, 2026, there should be adequate time, but we recommend confirming the expected delivery date of the FY 2025 audited financials with MFW management and with Glenmore Kessler. If there is any risk of delay, we may need to negotiate a grace period or alternative condition (e.g., delivery of unaudited FY 2025 financials with the audited financials delivered within a post-closing period, though this would be unusual and disfavored by Ironclad).
IV. Representations and Warranties
A. Specified Representations (Limited Condition)
The Commitment Letter adopts a "Specified Representations" construct, which is a critical feature of the certain funds / SunGard framework. Under this approach, the Lenders' obligation to fund on the Closing Date is conditioned only on the accuracy of a limited, enumerated set of representations and warranties in the Credit Agreement (the "Specified Representations"), rather than on the accuracy of all representations and warranties. This is significant because it means that Ironclad cannot refuse to fund based on a representation breach that does not relate to the core ability of the Borrower to enter into the Credit Facility and incur the indebtedness thereunder.
The Specified Representations referenced in the Commitment Letter are generally described (rather than exhaustively listed) and are expected to include the following, which is consistent with market practice:
• Organization and existence of the Borrower and Guarantors under the laws of their respective jurisdictions of formation;
• Corporate power and authority of the Borrower and Guarantors to enter into the Credit Agreement and the other loan documents and to consummate the transactions contemplated thereby;
• Due authorization, execution, delivery, and enforceability of the loan documents against the Borrower and Guarantors;
• No conflict between the loan documents and the organizational documents of the Borrower and Guarantors;
• Solvency of the Borrower and its subsidiaries on a consolidated basis after giving effect to the Acquisition and the incurrence of the Credit Facility;
• Compliance with Federal Reserve Board margin regulations (Regulations T, U, and X);
• The Borrower is not required to register as an "investment company" under the Investment Company Act of 1940;
• Compliance with the USA PATRIOT Act, OFAC sanctions programs, and applicable anti-corruption laws (including the Foreign Corrupt Practices Act);
• Use of loan proceeds consistent with the stated purpose (financing the Acquisition and related costs); and
• Creation and perfection of security interests in the collateral (subject to the limited closing-date perfection requirements discussed in Section II.D).
This construct is favorable to Solara and is essential for providing financing certainty. By limiting the representations that must be accurate at closing to the Specified Representations, the SunGard framework ensures that Ironclad cannot use a breach of a broader representation (e.g., accuracy of the Borrower's financial statements, absence of litigation, compliance with environmental laws) as a basis to refuse funding. Broader representations will be included in the Credit Agreement and will be relevant for covenant compliance and events of default after closing, but their accuracy is not a condition to the initial funding.
B. SPA Representations
In addition to the Specified Representations, the Commitment Letter provides that the Credit Agreement will include representations and warranties that are "substantially consistent with" the representations made by MFW's stockholders (or MFW itself) in the SPA. These SPA-mirrored representations will be brought down to the Closing Date, but — critically — the accuracy of the SPA-mirrored representations is not a condition to funding. Only the Specified Representations must be accurate at closing for the Lenders' funding obligation to arise.
This approach is customary and appropriate. The SPA representations are included in the Credit Agreement primarily for two reasons: (i) to create ongoing compliance obligations after closing (a breach of a Credit Agreement representation could constitute an Event of Default), and (ii) to ensure that the Credit Agreement representations reflect the business-specific representations that Solara has negotiated and obtained from MFW in the SPA. The distinction between Specified Representations (which must be accurate for initial funding) and SPA-mirrored representations (which are relevant post-closing) is well-established in the leveraged finance market and we do not identify any issues with this approach.
C. Analysis. Our primary recommendation with respect to representations and warranties is as follows:
Exhaustive Listing of Specified Representations. The Commitment Letter currently references the Specified Representations in general terms rather than providing an exhaustive list. While the categories of Specified Representations referenced are customary, we recommend requesting that the Commitment Letter term sheet be amended to include a complete and exhaustive enumeration of each Specified Representation. This will prevent any later attempt by Ironclad or Cascade & Whitfield LLP to expand the scope of the Specified Representations during Credit Agreement negotiation by arguing that the Commitment Letter contemplated a broader set. An exhaustive listing creates a clear and enforceable baseline.
Additionally, during the Credit Agreement drafting process, we should carefully review each Specified Representation as drafted by Cascade & Whitfield LLP to ensure that no representation has been framed more broadly than necessary. For example, the "creation and perfection of security interests" representation should be limited to the security interests that are required to be perfected on the Closing Date, consistent with the limited perfection requirements discussed in Section II.D.
V. Covenants (Summary from Term Sheet)
The Commitment Letter is accompanied by a summary term sheet that outlines the anticipated covenants to be included in the Credit Agreement. Many of the covenant provisions are designated as "to be agreed" or "consistent with market precedent for facilities of this type and size." The following is a summary of the covenant framework, with our preliminary analysis.
A. Financial Covenants
The term sheet references the following financial covenants, each of which will be tested on a quarterly basis commencing with the first full fiscal quarter after the Closing Date:
Maximum Total Leverage Ratio. The Credit Agreement will include a maximum total leverage ratio covenant, requiring that the ratio of Total Funded Debt to EBITDA (or Adjusted EBITDA, as defined in the Credit Agreement) not exceed specified levels. The specific covenant levels are designated as "TBD" in the term sheet and will be negotiated in connection with the Credit Agreement.
We note a significant preliminary concern with respect to this covenant. Based on the financial information available to us, MFW's reported EBITDA for the twelve months ended December 31, 2025 was approximately $14,800,000. With an initial TLA draw of $125,000,000, the initial leverage ratio would be approximately 8.4x ($125,000,000 ÷ $14,800,000). This level of leverage is well above the typical covenant threshold for a traditional total leverage test in a middle-market credit facility (which typically ranges from 4.0x to 5.0x for the initial year, stepping down to 3.5x to 4.5x over the term of the facility).
The high implied leverage ratio reflects the nature of MFW's business as a software-as-a-service ("SaaS") platform with high recurring revenue and strong gross margins but moderate current profitability. MFW has an annual recurring revenue ("ARR") of approximately $62,000,000 and a gross margin of approximately 78%, which are attractive metrics for a SaaS business and suggest that the business has significant growth potential and operating leverage that is not fully captured by a trailing EBITDA metric.
Accordingly, we recommend that the financial covenant framework be structured to accommodate MFW's SaaS profile, potentially through one or more of the following approaches:
• Adjusted EBITDA with Add-Backs: Defining "EBITDA" or "Adjusted EBITDA" to include customary add-backs for stock-based compensation, one-time restructuring and integration costs, capitalized software development costs, and other non-cash or non-recurring charges that depress reported EBITDA. This is standard practice and could bring the leverage ratio to a more manageable level.
• ARR-Based Metrics: Incorporating an ARR-based leverage ratio (Total Funded Debt / ARR) or an ARR-based liquidity test as a supplement to or replacement for the traditional EBITDA-based leverage ratio. On an ARR basis, the initial leverage ratio would be approximately 2.0x ($125,000,000 ÷ $62,000,000), which is a more representative metric for a high-growth SaaS business.
• Revenue-Based Covenant: In lieu of or in addition to a leverage ratio, including a minimum revenue or minimum ARR covenant that reflects the growth trajectory of the business.
• Covenant Holiday: Negotiating a covenant holiday for the first two to four quarters after closing, during which no financial covenants are tested, to allow time for integration and growth plan execution.
The selection and calibration of financial covenants will be a critical workstream during the Credit Agreement negotiation and should be discussed with Ironclad at the earliest opportunity.
Minimum Fixed Charge Coverage Ratio. The term sheet references a minimum fixed charge coverage ratio ("FCCR") covenant, but the specific ratio level is designated as "TBD." The FCCR is typically defined as the ratio of (EBITDA – Capital Expenditures – Taxes) to (Debt Service, including scheduled principal and interest payments). The appropriate FCCR level will depend on the financial covenant framework selected and MFW's projected cash flows.
Minimum Liquidity. The term sheet references a minimum liquidity covenant, requiring that the Borrower maintain a minimum level of unrestricted cash and/or availability under the RCF at all times. The specific threshold is designated as "TBD." A minimum liquidity covenant is common in SaaS-oriented credit facilities and can serve as an alternative or supplement to leverage-based covenants.
B. Negative Covenants
The term sheet anticipates that the Credit Agreement will include standard negative covenants restricting the ability of the Borrower and its subsidiaries to take certain actions without the Lenders' consent. These negative covenants are expected to include:
• Limitations on Indebtedness: Restrictions on incurring additional indebtedness, subject to customary exceptions and permitted baskets (including baskets for capital leases, purchase money indebtedness, intercompany loans, and a general basket in an amount to be agreed).
• Limitations on Liens: Restrictions on granting liens on assets, subject to customary permitted liens (including liens securing permitted indebtedness, statutory liens, and a general lien basket).
• Limitations on Restricted Payments: Restrictions on dividends, distributions, and other restricted payments to equity holders, subject to customary exceptions (including tax distributions to partners/members and a general restricted payment basket).
• Limitations on Investments: Restrictions on investments, loans, and advances, subject to customary permitted investments baskets.
• Limitations on Asset Sales: Restrictions on dispositions of assets outside the ordinary course of business, subject to customary exceptions and mandatory prepayment obligations from net proceeds of asset sales.
• Limitations on Affiliate Transactions: Restrictions on transactions with affiliates, subject to customary exceptions for arm's-length transactions and management fee payments to Solara.
• Limitations on Fundamental Changes: Restrictions on mergers, consolidations, and changes to the Borrower's or MFW's organizational documents without Lender consent.
• Limitations on Restricted Subsidiaries: Provisions governing the designation and treatment of restricted and unrestricted subsidiaries.
The specific thresholds, baskets, and exceptions for each negative covenant will be negotiated in the Credit Agreement. We will review these provisions carefully to ensure that the Borrower retains sufficient operational and financial flexibility for MFW's business, including the flexibility to make add-on acquisitions, invest in product development, and manage working capital.
C. Affirmative Covenants
The term sheet anticipates standard affirmative covenants requiring the Borrower and its subsidiaries to:
• Deliver annual audited and quarterly unaudited financial statements, together with compliance certificates;
• Maintain insurance in types and amounts reasonably satisfactory to the Administrative Agent;
• Maintain properties and assets in good working order;
• Pay taxes and other obligations when due;
• Preserve corporate existence and material rights and privileges;
• Comply with applicable laws in all material respects;
• Provide notice of Events of Default, material litigation, and material adverse changes; and
• Permit inspections and audits by the Administrative Agent (subject to customary limitations on frequency and notice).
These affirmative covenants are standard and we do not anticipate significant negotiation issues. We will review the specific provisions in the Credit Agreement to ensure that reporting requirements are reasonable and aligned with MFW's financial reporting capabilities and timeline.
VI. Flex Provisions
A. Description. The Fee Letter contains a confidential "market flex" provision (the "Flex Provision") that grants Ironclad the right to modify certain terms of the Credit Facility if Ironclad determines, in its reasonable judgment, that changes are advisable to ensure the successful syndication of the Facility to other financial institution lenders. Flex provisions are standard in commitment letters for syndicated facilities but represent a significant source of potential additional cost and structural risk for the Borrower and Sponsor. The Flex Provision includes the following components:
Pricing Flex. Ironclad has the right to increase the applicable SOFR spread on the TLA by up to 50 basis points (from SOFR + 400 bps to SOFR + 450 bps) and to increase the applicable SOFR spread on the RCF by up to 50 basis points (from SOFR + 375 bps to SOFR + 425 bps). The pricing flex may be exercised in whole or in part and is not subject to any conditions other than Ironclad's reasonable judgment that the increase is advisable for syndication purposes.
OID Flex. Ironclad has the right to impose an original issue discount ("OID") on the TLA of up to 2.00%. If the full OID flex is exercised, the net proceeds of the TLA to the Borrower would be reduced by $2,500,000 ($125,000,000 × 2.00%), meaning the Borrower would receive only $122,500,000 in cash from the TLA while remaining obligated to repay the full $125,000,000 principal amount. Alternatively, Solara Fund III, LP would need to fund the $2,500,000 shortfall from additional equity. An OID effectively increases the yield to lenders without increasing the stated coupon rate.
Structure Flex. Ironclad has the right to reallocate up to $25,000,000 of the TLA commitment to a second-lien or mezzanine tranche. A reallocation to a subordinated tranche would carry higher pricing (typically SOFR + 600–800 bps or more for a second-lien facility in the current market) and could involve different covenant, prepayment, and intercreditor terms. This structure flex could fundamentally change the capital structure of the financing and increase the blended cost of debt.
SOFR Floor Flex. Ironclad has the right to impose a SOFR floor of up to 1.00% on the Credit Facility. A SOFR floor establishes a minimum reference rate, regardless of the actual level of Term SOFR. In a declining rate environment, a SOFR floor prevents the Borrower from benefiting from interest rate decreases below the floor level. As of the date of this memorandum, Term SOFR (three-month) is approximately 4.30%, so a 1.00% floor would not have an immediate impact. However, if rates decline (as the Federal Reserve's current forward guidance suggests is possible over the medium term), a 1.00% SOFR floor could result in materially higher interest expense than would otherwise apply.
B. Analysis and Concerns
The Flex Provisions represent significant potential additional cost to Solara and should be a central focus of the Commitment Letter negotiation. We set forth below our analysis of the financial impact of each flex component and our recommended negotiation positions.
Pricing Flex Impact. If the full 50 bps pricing flex on the TLA is exercised, the incremental annual interest cost would be approximately $625,000 ($125,000,000 × 0.50%). On the RCF, if drawn to the full $50,000,000, the incremental annual interest cost would be approximately $250,000 ($50,000,000 × 0.50%). In the aggregate, the pricing flex represents up to $875,000 per annum in additional interest expense. Relative to MFW's EBITDA of approximately $14,800,000, the TLA pricing flex alone would consume approximately 4.2% of annual EBITDA — a meaningful impact on cash flow available for debt service, capital expenditures, and growth investments.
OID Flex Impact. The 2.00% OID flex represents a one-time reduction in net proceeds (or additional equity requirement) of $2,500,000. When amortized over the five-year term of the TLA, this equates to approximately $500,000 per year in effective additional cost. On a yield-to-maturity basis, the OID increases the all-in yield to TLA lenders by approximately 40–45 basis points, depending on prepayment assumptions.
Structure Flex Impact. The right to reallocate up to $25,000,000 from the TLA (SOFR + 400 bps) to a second-lien tranche (which could carry pricing of SOFR + 650–800 bps or more) would increase the blended cost of debt and introduce intercreditor complexity. Assuming a reallocation of $25,000,000 to a second-lien tranche at SOFR + 700 bps (an illustrative rate), the incremental annual interest cost on the reallocated amount would be approximately $750,000 ($25,000,000 × 3.00% incremental spread). Additionally, a second-lien tranche would typically have more restrictive covenant terms (or, alternatively, covenant-lite terms with fewer protections for the Borrower), different prepayment mechanics, and would require an intercreditor agreement that could complicate future refinancing or amendment transactions.
SOFR Floor Flex Impact. The impact of a 1.00% SOFR floor is scenario-dependent and would be felt primarily in a declining rate environment. If Term SOFR were to decline to, for example, 2.00% during the term of the Credit Facility, a 1.00% SOFR floor would not provide relief because the actual SOFR rate (2.00%) would still exceed the floor (1.00%). However, if Term SOFR were to decline to 0.50%, the floor would lock in a minimum rate of 1.00%, resulting in an effective 50 bps of additional cost on the entire Credit Facility. On $125,000,000 of TLA, a 50 bps differential would represent approximately $625,000 per year. While the current rate environment makes this scenario appear unlikely in the near term, the Credit Facility has a five-year term and rate conditions could change significantly.
Recommendations. We recommend the following negotiating positions with respect to the Flex Provisions:
1. Pricing Flex: Negotiate a reduction from 50 bps to 25 bps on both the TLA and the RCF. A 25 bps pricing flex is more consistent with current market practice for sponsor-backed middle-market transactions with a creditworthy sponsor such as Solara. If Ironclad insists on retaining a 50 bps flex, propose a compromise at 37.5 bps or tie the flex exercise to a specific syndication timeline (e.g., flex may be exercised only if the facility is not fully subscribed within 30 days of launch).
2. OID Flex: Negotiate a cap reduction from 2.00% to 1.00%, reducing the maximum OID from $2,500,000 to $1,250,000. An OID of 2.00% is at the high end of market for a first-lien TLA facility.
3. Structure Flex: Strongly recommend eliminating the structure flex entirely. The ability to reallocate $25,000,000 (20% of the TLA) to a subordinated tranche is unusually broad and could materially alter the economics and structure of the financing in a manner that was not contemplated by Solara's investment committee when the transaction was approved. If elimination is not achievable, propose capping the structure flex at $10,000,000 and requiring that any reallocation to a second-lien tranche be priced at no more than SOFR + 650 bps.
4. SOFR Floor Flex: Negotiate elimination of the SOFR floor flex entirely. If Ironclad insists, propose a maximum SOFR floor of 0.50% rather than 1.00%.
The combined maximum cost impact of the Flex Provisions, if all were exercised to their full extent, is summarized in Appendix B.
VII. SunGard / Certain Funds Provisions
A. Description. The Commitment Letter incorporates "certain funds" or "SunGard" provisions, named after the landmark SunGard Data Systems leveraged buyout, which established the market standard for limiting conditions to funding in acquisition financings. The SunGard construct is critical to ensuring that committed financing will be available at the closing of the Acquisition and that the conditions to debt funding are closely aligned with the conditions to closing under the SPA. This alignment is essential because Solara, as the buyer under the SPA, needs assurance that if the SPA closing conditions are satisfied, the debt financing will also be available — without such assurance, Solara faces the risk of being obligated to close the Acquisition under the SPA without the committed financing to do so, potentially resulting in a breach of the SPA and significant damages to MFW's stockholders.
The key elements of the SunGard construct in the Commitment Letter are as follows:
• Limited Funding Conditions: The Lenders' obligation to fund the Credit Facility on the Closing Date is conditioned solely on: (a) the accuracy of the Specified Representations (as discussed in Section IV.A); (b) execution and delivery of the SPA and the definitive Credit Agreement; (c) the absence of a payment default or bankruptcy event of default with respect to the Borrower; (d) receipt of the funds flow memorandum agreed among the parties; and (e) satisfaction of the customary closing deliverables described in Section III.B above.
• SPA MAE Construct: The Commitment Letter does not include an independent "material adverse change" or "material adverse effect" condition defined by reference to the Lenders' own standard. Instead, the MAE condition in the Commitment Letter is a pass-through of the SPA's MAE definition — that is, the Lenders' obligation to fund is subject to there not having occurred a "Material Adverse Effect" as defined in the SPA. If the SPA MAE condition is satisfied (i.e., no MAE has occurred as defined in the SPA), the Lenders cannot assert a separate MAE-based refusal to fund. This is a critical protection for Solara.
• No Due Diligence Out: The Commitment Letter does not contain a condition permitting the Lenders to decline funding based on the results of due diligence or the receipt of additional information about MFW or its business. All information conditions are limited to the delivery of specified financial statements and closing deliverables.
B. Analysis. The SunGard construct in the Commitment Letter is favorable to Solara and is essential for a leveraged acquisition where the buyer needs financing certainty in order to commit to a purchase obligation in the SPA. Without a SunGard framework, the SPA would need to include a financing contingency (which would weaken Solara's competitive position vis-à-vis other potential acquirers and would likely be resisted by MFW's stockholders and their counsel at Hawthorne Kinsey & Alcott LLP) or Solara would assume the risk of a financing failure.
We note the following analytical points:
SPA MAE Alignment. The effectiveness of the SPA MAE pass-through depends on the definition of "Material Adverse Effect" in the SPA. If the SPA MAE is defined broadly (e.g., covering any material adverse change in the business, financial condition, results of operations, or prospects of MFW), the pass-through provides strong protection to Solara, as the Lenders can invoke the MAE condition only to the same extent that Solara itself could invoke the MAE closing condition in the SPA. Conversely, if the SPA MAE is defined narrowly (e.g., with extensive carve-outs that limit the types of events constituting an MAE), the Lenders' MAE condition would be correspondingly narrow. We recommend that the SPA MAE definition be drafted with careful attention to the commitment letter pass-through, and that the MAE definition in the SPA include customary carve-outs for, among other things, general economic conditions, industry conditions, changes in law, and pandemic-related impacts, while preserving the Borrower's ability to invoke the MAE condition in genuinely adverse circumstances.
Interaction with Market MAC. As discussed in Section VIII, the Commitment Letter also contains a separate "market MAC" condition that is not tied to the SPA and could operate independently of the SunGard framework. This is a significant concern, as the market MAC could effectively circumvent the SunGard protections by providing Ironclad with an independent basis to decline funding based on market conditions rather than business-specific developments. We address this in detail in Section VIII.
Adequacy of the SunGard Framework. Overall, the SunGard provisions in the Commitment Letter are substantially consistent with market practice for sponsor-backed acquisitions. The limited funding conditions, the SPA MAE pass-through, and the absence of a due diligence out collectively provide Solara with a strong degree of financing certainty. The primary area of concern — the market MAC condition — is addressed separately below.
VIII. Market MAC Condition
A. Description. In addition to the SunGard / certain funds provisions described in Section VII, the Commitment Letter includes a "market material adverse change" condition (the "Market MAC Condition"). The Market MAC Condition provides that Ironclad's obligations under the Commitment Letter are subject to there not occurring, after the date of the Commitment Letter (February 14, 2026), any of the following:
(a) a material adverse change in the loan syndication market, the financial markets, or the capital markets generally;
(b) a material disruption of, or material adverse change in, the conditions in the primary market for syndicated credit facilities; or
(c) any event, circumstance, or condition that, individually or in the aggregate, would make the syndication of the Credit Facility impracticable.
If any of the foregoing events occurs, Ironclad may decline to fund the Credit Facility, notwithstanding that all other conditions to funding have been satisfied. The Market MAC Condition is a standalone condition that operates independently of and in addition to the SPA MAE pass-through discussed in Section VII.
B. Analysis and Concerns
The Market MAC Condition is, in our view, the single most significant issue in the Commitment Letter and the highest-priority negotiation point. Our concerns are as follows:
Breadth of the Condition. The Market MAC Condition is drafted broadly, encompassing "material adverse change in the loan syndication market, the financial markets, or the capital markets generally." Under this language, Ironclad could potentially decline to fund based on a general decline in equity market indices, widening of credit spreads across the leveraged loan market, or a reduction in syndication activity — even if MFW's business is performing as expected, the SPA closing conditions are satisfied, and the specific Credit Facility could be syndicated successfully (albeit perhaps on less favorable terms). The use of the word "impracticable" (as opposed to "impossible") in clause (c) further broadens the condition, as "impracticable" suggests something more than merely difficult but does not require absolute impossibility.
Inconsistency with Post-2008 Market Practice. Broad market MAC conditions were common in commitment letters prior to the 2008 financial crisis, but the market standard for sponsored acquisition financings has evolved significantly since then. In the post-2008 period, and particularly since 2012–2015, the prevailing market practice for commitment letters in sponsor-backed transactions has been to either: (i) eliminate the market MAC condition entirely; or (ii) narrow it to reference only extreme and specific market disruptions (e.g., the closure of the primary syndication markets, the declaration of a banking moratorium by federal or state authorities, or the occurrence of a systemic financial crisis comparable to the 2008 financial crisis). The broad market MAC condition in the Commitment Letter is a departure from this trend and places Ironclad's commitment below the standard that a top-tier sponsor such as Solara should expect.
Interaction with SunGard Framework. The presence of a broad market MAC condition effectively undermines the SunGard / certain funds protections. The purpose of the SunGard framework is to provide the buyer with certainty that financing will be available at closing. If Ironclad can decline to fund based on general market conditions that are unrelated to MFW

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