PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT This memorandum is protected by the attorney-client privilege, the work product doctrine, and all other applicable privileges. It is intended solely for the use of the addressees identified herein. Any unauthorized review, use, disclosure, or distribution is strictly prohibited.
MEMORANDUM
TO: James Prentice, Responsible Partner, Calderwood & Harkness LLP Claire Nakamura, Partner & Head of Software Investing, Solara Digital Infrastructure LP
FROM: Andrew Fitzpatrick, Lead Associate, Calderwood & Harkness LLP
DATE: February 15, 2026
RE: Analysis of Draft Letter of Intent — Proposed Acquisition of Meridian FleetWorks, Inc. (Project Trident)
Matter No.: 1041-00004
LOI Reference: LOI-MFW-2026-0218
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I. Executive Summary
This memorandum presents our analysis of the draft Letter of Intent (the "Draft LOI") received on approximately February 12, 2026, from Hawthorne Kinsey & Alcott LLP ("HKA") — lead partner Rachel Greenwald; associate counsel Timothy Cho — on behalf of Meridian FleetWorks, Inc. ("MFW"), a Delaware corporation headquartered at 8750 Westpark Drive, Suite 600, McLean, Virginia 22102. The Draft LOI was provided in connection with the proposed acquisition by our client, Solara Digital Infrastructure LP ("Solara" or "Buyer"), or its designated affiliate, of 100% of all issued and outstanding shares of common stock and Series A Preferred Stock of MFW (the "Transaction"). The Transaction is internally referred to by the parties and their respective advisors as "Project Trident."
The Draft LOI contemplates a stock purchase of all issued and outstanding equity interests in MFW for an aggregate purchase price of $350,000,000, on a cash-free, debt-free basis with a customary net working capital adjustment. Redstone Arbor Capital LLC (Managing Director Priya Chandrasekaran) is acting as MFW's exclusive financial advisor in connection with the Transaction, having managed the process since the initial outreach in late 2025. Cobalt Ridge Partners LLC (Managing Director Owen Prescott) is advising Solara as Buyer's financial advisor and has been instrumental in the valuation analysis and financing structuring to date.
Overall Assessment. The Draft LOI is generally consistent with market terms for a private-equity-led acquisition transaction of this size and type in the vertical SaaS sector. The economic terms align with the indications of interest submitted by Solara during Phase 2 of the process, and the structural framework is conventional. That said, certain provisions warrant substantive markup or clarification, as detailed in the sections that follow. The Draft LOI also omits several provisions that, while not unusual for a preliminary indication, should be included or referenced before execution in order to protect Solara's interests and establish an appropriate framework for definitive agreement negotiation.
Key Recommendations. Our principal recommendations, each of which is discussed at length below, are as follows:
1. Tighten exclusivity language — The exclusivity provision should be broadened in scope to bind individual shareholders, should include an automatic extension mechanism, and should expressly preserve injunctive relief and specific performance remedies for breach.
2. Clarify deposit refundability mechanics — The circumstances under which the $2,500,000 exclusivity deposit is refundable or forfeitable should be enumerated with specificity, and the term "willful breach" should be defined consistent with Delaware jurisprudence.
3. Confirm NWC peg methodology — The $5,800,000 net working capital target requires validation against underlying monthly balance sheet data, and the NWC definition must address treatment of deferred subscription revenue, a critical issue for SaaS businesses.
4. Address timeline feasibility concerns — Several key milestone dates in the Draft LOI are aggressive, particularly the March 15 diligence completion deadline and March 31 target SPA execution date; these should be characterized as targets rather than hard cutoffs.
5. Specify HSR filing obligations — The Draft LOI correctly identifies the HSR filing requirement, but cooperation obligations, filing timing, and fee allocation should be made more specific.
6. Ensure adequate flexibility in Buyer's designation of acquisition vehicle — The Draft LOI should expressly permit Solara to designate Solara Fleet Holdings LLC (a newly formed Delaware limited liability company to be organized as a wholly-owned subsidiary of Solara Fund III, LP) as the direct purchaser of the MFW shares without requiring seller consent or constituting a modification of the LOI.
Each of these recommendations, together with a number of additional observations and suggestions, is addressed in detail in the body of this memorandum.
II. Transaction Overview as Reflected in the Draft LOI
Set forth below is a summary of the principal terms of the Transaction as described in the Draft LOI, together with supplemental information developed through our preliminary diligence review and discussions with the Cobalt Ridge team.
A. Transaction Structure
The Draft LOI contemplates a stock purchase structure pursuant to which Solara (or its designated affiliate) will acquire 100% of all issued and outstanding shares of the common stock and Series A Preferred Stock of MFW. Based on our review of MFW's capitalization table (as provided in the Phase 2 data room), MFW's fully diluted capitalization is comprised of the following:
Of the 650,000 outstanding options, 480,000 are vested and 170,000 are unvested. The weighted-average exercise price across all outstanding options is $8.50 per share. The options were granted under the MFW 2016 Stock Incentive Plan, which we understand has been administered by MFW's board of directors since its adoption. The treatment of these options in the Transaction is discussed further in Section X.B below.
B. Purchase Price and Implied Valuation
The aggregate purchase price for 100% of the issued and outstanding equity of MFW is $350,000,000, on a cash-free, debt-free basis with a customary net working capital adjustment. This implies a per-share price of $35.00 on a fully diluted basis (calculated as $350,000,000 ÷ 10,000,000 fully diluted shares).
The implied valuation multiples, based on MFW's financial data as reflected in the Phase 2 information memorandum prepared by Redstone Arbor Capital and supplemented by our preliminary quality of earnings review, are as follows:
These multiples are generally consistent with recent comparable transactions in the fleet management and vertical SaaS sectors, though we note that the EBITDA multiple is at the higher end of the range, reflecting the recurring revenue profile and growth trajectory of MFW's business. Cobalt Ridge Partners has prepared a separate valuation benchmarking analysis that we understand has been provided to Claire Nakamura and the Solara investment committee.
C. Buyer Designation
The Draft LOI identifies the buyer as "Solara Digital Infrastructure LP or its designated affiliate." Based on our discussions with the Solara deal team, the intended acquisition vehicle is Solara Fleet Holdings LLC, a Delaware limited liability company to be newly formed as a wholly-owned subsidiary of Solara Fund III, LP (EIN 84-6239017). Solara Fund III, LP, the investment fund from which the equity commitment will be drawn, has $1.85 billion in committed capital and is currently in its active investment period.
We note that the Draft LOI should expressly permit this designation without requiring seller consent or constituting a material modification to the agreement. This issue is addressed further in Section X.D below.
D. Equity Rollover
The Draft LOI provides that Garrett Holliday, Co-Founder and Chief Executive Officer of MFW, who holds 2,800,000 shares of common stock and 400,000 shares of Series A Preferred Stock (representing approximately 32.0% of fully diluted equity), will roll over approximately $25,000,000 in equity value into the post-acquisition entity. This rollover represents approximately 7.14% of the aggregate deal value ($25,000,000 ÷ $350,000,000). The rollover will take the form of a contribution of MFW shares in exchange for a membership interest in Solara Fleet Holdings LLC, intended to be treated as a tax-deferred transaction under Section 721 of the Internal Revenue Code. The mechanics and governance terms of the rollover are addressed further in Section X.C below.
The net effect of the rollover is to reduce the aggregate cash consideration payable to the selling shareholders at closing to approximately $325,000,000 ($350,000,000 less $25,000,000 rollover), subject to the net working capital adjustment, escrow holdback, and other adjustments to be specified in the definitive Stock Purchase Agreement (the "SPA").
E. Financing
The Draft LOI states that Buyer intends to finance the Transaction through a combination of equity and debt as follows:
(i) Equity Contribution: $175,000,000 equity contribution from Solara Fund III, LP; and
(ii) Debt Financing: $175,000,000 senior secured credit facility from Ironclad National Bank, N.A. (commitment letter reference CL-INB-2026-0214, dated February 14, 2026), with Ridgeline Commercial Lending Corp. as co-lender. The commitment letter has been executed and is in effect, subject to customary conditions (including execution of a definitive SPA, accuracy of representations, absence of a material adverse change, and completion of satisfactory diligence).
The 50/50 equity-to-debt ratio implies a post-closing leverage of approximately 11.8× EBITDA ($175,000,000 ÷ $14,800,000), which is at the upper boundary of typical leverage ratios for SaaS acquisitions. We understand that the senior secured facility includes a term loan tranche and a revolving credit facility, the details of which will be reviewed separately once the full commitment letter and summary of terms are made available. Cascade & Whitfield LLP (Jonathan Mayer) has been engaged as lenders' counsel.
F. Governing Law
The Draft LOI specifies Delaware as the governing law, which is appropriate and expected given that both Solara and MFW are Delaware entities. Delaware's well-developed body of corporate and commercial law provides a predictable framework for resolving any disputes that may arise under the LOI or the definitive SPA.
G. Key Sellers
Based on MFW's capitalization table, the principal selling shareholders are as follows:
Notably, the three largest holders — Pinnacle Bluff Ventures LLC, Garrett Holliday, and Diana Vasquez-Park — collectively hold approximately 84.0% of MFW's fully diluted equity. This concentration is relevant to the exclusivity analysis (Section IV.B below), as well as the requirement for stockholder support agreements and closing mechanics.
III. Analysis of Binding vs. Non-Binding Provisions
A. Non-Binding Provisions
Consistent with customary practice for letters of intent in private M&A transactions, the Draft LOI states that all substantive terms of the proposed Transaction — including the purchase price, transaction structure, representations and warranties, covenants, indemnification, conditions to closing, and termination provisions — are non-binding upon the parties and are subject to the negotiation and execution of a definitive Stock Purchase Agreement between the parties. The Draft LOI expressly provides that no obligation to consummate the Transaction arises from the LOI itself, and that neither party shall have any liability to the other for failure to enter into or consummate the Transaction, except as expressly provided with respect to the binding provisions described in Section III.B below.
This treatment is market standard and appropriate. We recommend, however, confirming that the language is unambiguous on the following points: (i) neither the LOI nor any negotiations conducted in connection therewith create any legally enforceable obligation to close the Transaction, (ii) either party may terminate negotiations at any time prior to execution of a definitive SPA (subject to the binding exclusivity and other obligations described below), and (iii) no agreement in principle on any particular term constitutes a binding commitment with respect to that term until the definitive SPA is fully executed and delivered.
We note that the Draft LOI identifies a target execution date for the definitive SPA of March 31, 2026. This date, like the other milestone dates referenced in the Draft LOI, should be characterized as a non-binding target, as discussed in Section VIII below.
B. Binding Provisions
The Draft LOI identifies four provisions as binding and enforceable obligations of the parties, which survive execution of the LOI and are independently actionable:
1. Exclusivity — MFW agrees to an exclusive dealing period during which it will not solicit or entertain competing proposals. This provision is analyzed in detail in Section IV below.
2. Confidentiality — The Draft LOI incorporates by reference the Mutual Non-Disclosure Agreement executed on January 8, 2026 between Solara and MFW (the "NDA"). The NDA governs the treatment and protection of confidential information exchanged between the parties in connection with the Transaction. We recommend confirming that the NDA's terms remain adequate for the current phase of the Transaction, including with respect to information shared with third-party advisors, lenders, and insurers. A separate NDA review memorandum is being prepared by Naomi Petersen, and we will circulate her analysis under separate cover.
3. Governing Law — Delaware, as discussed in Section II.F above. This provision is appropriate and should be accepted.
4. Expense Reimbursement — Under certain circumstances, Buyer agrees to reimburse MFW's documented out-of-pocket transaction expenses up to a cap of $750,000. This provision is analyzed in detail in Section VI below.
Additional Binding Provisions — Recommendations. We have identified two binding provisions that the Draft LOI does not currently include but that should be added in the markup:
(a) Public Announcements / Press Releases. The Draft LOI is silent on the subject of public disclosures. Given the sensitivity of the Transaction and the potential impact of premature disclosure on MFW's customer relationships, employee retention, and competitive position, we strongly recommend adding a binding provision requiring mutual written consent prior to any public announcement, press release, or other public disclosure concerning the Transaction or the terms of the LOI. This is particularly important in light of MFW's relationships with enterprise fleet customers such as TerraLink Logistics, Inc., whose change-of-control consent may be implicated by public disclosure of the Transaction prior to the appropriate time.
(b) Return of Confidential Information. We recommend adding a binding provision requiring each party to return or destroy all confidential information of the other party (and certify such return or destruction in writing) upon termination of the exclusivity period or the LOI, whichever occurs first. While the NDA likely addresses this obligation to some extent, a standalone provision in the LOI provides an additional layer of contractual certainty, particularly if there is any ambiguity in the NDA's return/destruction provisions.
IV. Exclusivity Period
The exclusivity provision is, from Solara's perspective, the most commercially significant binding obligation in the Draft LOI. It provides Solara with the assurance that it will have a defined period of time in which to conduct diligence, negotiate the definitive SPA, and prepare for closing without the risk of being outbid or displaced by a competing buyer. Our analysis of the exclusivity provision is set forth below.
A. Duration
The Draft LOI provides for a 60-day exclusivity period commencing on the date of execution of the LOI. If the LOI is executed on or about February 18, 2026 (as currently targeted), the exclusivity period would run through approximately April 19, 2026.
Assessment. A 60-day exclusivity period is within the range of market norms for private M&A transactions of this size and complexity. Based on our experience and review of available market data, exclusivity periods in comparable transactions typically range from 45 to 90 days, with 60 days being a common middle ground. The 60-day duration is adequate given the proposed Transaction timeline, though we note that it is tight in light of the scope and complexity of the diligence effort that remains, the aggressive SPA execution timeline, and the HSR filing and waiting period requirements, all of which are discussed in detail in Section VIII below.
Recommendation. We recommend accepting the 60-day exclusivity period as proposed, subject to the negotiation of one of the following extension mechanisms:
Option A (Preferred): An automatic 15-day extension of the exclusivity period, from April 19, 2026 to approximately May 4, 2026, that is triggered if, as of the expiration date, the parties are engaged in active good-faith negotiations regarding the definitive SPA or any ancillary agreement, or if the parties have executed the definitive SPA and are awaiting satisfaction of conditions to closing (including HSR clearance).
Option B (Fallback): A unilateral extension right exercisable by Buyer upon delivery of written notice to MFW at least five (5) business days prior to the expiration of the initial 60-day period, extending exclusivity for an additional 15 days. This option is less favorable from MFW's perspective and may encounter resistance, but should be proposed in the alternative.
B. Scope of Exclusivity Covenant
The Draft LOI restricts MFW and its directors, officers, shareholders, and advisors (including, expressly, Redstone Arbor Capital LLC) from, directly or indirectly, soliciting, encouraging, negotiating, or entering into any discussions, negotiations, or agreements with any third party regarding any acquisition, merger, sale of substantially all assets, recapitalization, or similar transaction involving MFW or any material portion of its assets during the exclusivity period.
Assessment. The scope of the exclusivity covenant is generally appropriate and covers the principal categories of prohibited conduct. However, we have identified two areas where the scope should be clarified or expanded:
First, we recommend confirming that the exclusivity obligation extends to all shareholders of MFW individually, and not only to MFW as a corporate entity or its formal directors, officers, and advisors. This is particularly important given the concentrated ownership structure of MFW. As noted above, Pinnacle Bluff Ventures LLC (~34.0%), Garrett Holliday (~32.0%), and Diana Vasquez-Park (~18.0%) collectively hold approximately 84.0% of MFW's fully diluted equity. If the exclusivity covenant binds only MFW as an entity, individual shareholders could theoretically engage in preliminary discussions with third parties regarding a potential competing transaction without technically violating the LOI. Each of these three principal holders should be required to acknowledge and agree to be bound by the exclusivity covenant, either by countersigning the LOI or by executing a separate joinder or acknowledgment.
Second, we recommend adding an express obligation requiring MFW to promptly notify Solara in writing (within two business days) of any unsolicited inquiry, expression of interest, or proposal received from any third party during the exclusivity period regarding any transaction that would constitute a prohibited transaction under the exclusivity covenant. Such notification should include the identity of the third party and the material terms of the inquiry or proposal. This notification obligation serves a dual purpose: it provides Solara with real-time market intelligence and establishes an evidentiary record in the event of a later dispute regarding compliance with the exclusivity covenant.
C. Remedies for Breach
The Draft LOI provides that, in the event of a breach of the exclusivity covenant by MFW, Solara shall be entitled to (i) terminate the LOI and (ii) receive return of the exclusivity deposit together with reimbursement of Solara's documented out-of-pocket expenses incurred in connection with the Transaction up to a cap of $750,000.
Assessment. While return of the deposit and expense reimbursement provide a minimum floor of protection, these remedies may be inadequate to compensate Solara for the full scope of damages arising from a breach of exclusivity — particularly if the breach occurs at an advanced stage of diligence and SPA negotiation, when Solara will have committed substantial resources to the Transaction. We note that Calderwood & Harkness's fee arrangement for this matter includes a fee cap of $2,750,000 (exclusive of disbursements), and that total advisor costs (legal, accounting, insurance, and financial advisory) could be significantly higher if a breach occurs after material diligence investment.
Recommendations. We recommend the following additions to the remedies provision:
(i) Add a liquidated damages provision specifying that, in the event of a material breach of the exclusivity covenant by MFW (including any breach that results in MFW entering into a competing transaction within six months of the date of such breach), MFW shall pay to Solara a liquidated damages amount equal to $3,500,000 (approximately 1.0% of the Transaction value), in addition to return of the exclusivity deposit. We recognize that MFW may resist a liquidated damages provision, and we are prepared to negotiate an appropriate amount.
(ii) In the alternative, or in addition, add an express reservation of rights for Solara to seek injunctive relief and specific performance in the Court of Chancery of the State of Delaware for any breach or threatened breach of the exclusivity covenant, with an acknowledgment by MFW that monetary damages alone would be insufficient to compensate Solara for such breach and that Solara would suffer irreparable harm in the absence of injunctive relief.
(iii) Remove or raise the $750,000 cap on reimbursable expenses in the context of an exclusivity breach, as distinguished from a simple buyer termination without cause. The expense reimbursement cap discussed in Section VI below is appropriate as a buyer termination fee, but should not serve as the sole measure of damages for seller misconduct.
V. Exclusivity Deposit Mechanics and Refundability
A. Deposit Amount and Timing
The Draft LOI requires Solara to deposit $2,500,000 (the "Exclusivity Deposit") with Northgate Escrow Services LLC, located at 100 Summer Street, Suite 800, Boston, Massachusetts 02110, within five (5) business days of the execution of the LOI. If the LOI is executed on February 18, 2026 (a Wednesday), the Exclusivity Deposit would be due on or before February 25, 2026 (the following Wednesday). The Exclusivity Deposit is to be held by Northgate Escrow in an interest-bearing account pending the outcome of the Transaction.
The Exclusivity Deposit of $2,500,000 represents approximately 0.71% of the aggregate purchase price of $350,000,000. This amount is modest relative to the deal value and is within the range of customary practice for exclusivity deposits in transactions of this size, which typically range from 0.5% to 2.0% of the transaction value. We do not recommend seeking a reduction in the deposit amount.
B. Refundability Conditions
The Draft LOI provides that the Exclusivity Deposit is "fully refundable to Buyer if the Transaction does not close, except in the case of Buyer's willful breach of this Letter of Intent's binding provisions." This provision, while directionally correct, is imprecise in several important respects and could give rise to disputes in the event the Transaction does not proceed to closing.
Critical Issue: "Willful Breach" Undefined. The term "willful breach" is not defined in the Draft LOI. Under Delaware law, the concept of "willful breach" has been the subject of substantial judicial interpretation, most notably in the context of reverse termination fees in public company mergers. The Delaware Court of Chancery and the Delaware Supreme Court have generally interpreted "willful breach" to mean a deliberate act or deliberate failure to act, taken with actual knowledge that such act or failure to act constitutes a breach of the relevant agreement. See, e.g., Hexion Specialty Chemicals, Inc. v. Huntsman Corp., 965 A.2d 715 (Del. Ch. 2008). Without a clear definition in the LOI, there is a risk that the parties may disagree over whether a particular failure by Solara to perform constitutes a "willful breach" triggering forfeiture of the deposit, as opposed to a good-faith inability to close or a termination for a legitimate reason.
Recommendation. We strongly recommend inserting a definition of "willful breach" in the LOI that is consistent with the Delaware jurisprudential standard, as follows:
"Willful Breach" shall mean a material breach of this Letter of Intent that is a consequence of an act or failure to act undertaken by the breaching party with actual knowledge (or with knowledge that a reasonable person in the breaching party's position would have had) that the taking of such act, or the failure to take such act, would constitute or result in a breach of such party's obligations under this Letter of Intent.
In addition, we recommend that the LOI enumerate with specificity the circumstances under which the Exclusivity Deposit is refundable and the circumstances under which it is forfeitable, as follows:
Refundable upon:
(i) Mutual written agreement of the parties to terminate the LOI or the Transaction;
(ii) Expiration of the exclusivity period without execution of a definitive Stock Purchase Agreement, regardless of the reason;
(iii) Failure of a condition to closing in the definitive SPA (including, without limitation, failure to obtain HSR clearance or required third-party consents) that is not attributable to Buyer's willful breach;
(iv) Seller's breach of any binding provision of the LOI; or
(v) Buyer's termination of the LOI for cause (i.e., due to a material adverse effect, seller's breach, or discovery of a material diligence issue).
Forfeitable only upon:
(vi) Buyer's willful breach (as defined above) of a binding provision of the LOI.
Recommendation Regarding Return Timeframe. The Draft LOI does not specify a timeframe within which the Exclusivity Deposit must be returned to Solara upon the occurrence of a refundability trigger. We recommend specifying that Northgate Escrow shall return the Exclusivity Deposit (together with all accrued interest thereon) to Solara within five (5) business days following the date on which the applicable refundability event occurs, upon receipt of joint written instructions from the parties (or, in the case of a dispute, upon resolution of such dispute pursuant to the dispute resolution provisions of the escrow agreement).
C. Wire Instructions and Escrow Authorization
Upon execution of the LOI, Calderwood & Harkness will prepare and transmit to Northgate Escrow Services LLC a letter setting forth the wire transfer instructions for the Exclusivity Deposit, together with appropriate authorization and direction to Northgate Escrow regarding the terms of its custody. We will coordinate with Solara's treasury function to ensure that the wire is initiated promptly following LOI execution, with a target delivery date of no later than February 25, 2026.
VI. Expense Reimbursement Cap
The Draft LOI provides that, in the event Buyer terminates the LOI "without cause," Buyer shall reimburse MFW for its documented out-of-pocket transaction expenses incurred in connection with the Transaction, up to a cap of $750,000.
A. Analysis of "Without Cause" Termination
The term "without cause" is not defined in the Draft LOI. This ambiguity could create disagreement between the parties regarding the circumstances that trigger (or do not trigger) the reimbursement obligation. For example, if Buyer terminates the LOI due to the discovery of a material diligence issue — such as the independent contractor classification risk identified in our preliminary review, or the sales tax nexus exposure of $800,000 to $1,400,000 flagged by Whitmore Sandoval — it is not clear whether such termination would constitute a termination "without cause" (triggering the reimbursement obligation) or a termination "for cause" (in which no reimbursement is owed).
Recommendation. We recommend defining "without cause" to mean a termination by Buyer for convenience — that is, a decision by Buyer to discontinue pursuit of the Transaction in the absence of any breach by Seller, any failure of a condition, or any material adverse effect or material diligence finding. Conversely, the following terminations should be expressly excluded from the "without cause" category and should not trigger any reimbursement obligation:
(i) Buyer's termination due to Seller's material breach of any binding provision of the LOI;
(ii) Buyer's termination due to the discovery of a material misrepresentation or omission in information provided by MFW or its advisors during the diligence process;
(iii) Buyer's termination due to the occurrence of a material adverse change in MFW's business, financial condition, or results of operations;
(iv) Buyer's termination due to the failure of a condition to closing (including HSR clearance or required third-party consents); or
(v) Mutual termination by the parties.
B. Adequacy of the $750,000 Cap
The $750,000 expense reimbursement cap is reasonable relative to the overall deal size and is consistent with market practice for transactions of this nature. We note for context that MFW's total estimated transaction expenses are approximately $12,000,000, which includes the Redstone Arbor Capital success fee of $6,125,000 (1.75% of the $350,000,000 purchase price) and Hawthorne Kinsey & Alcott's estimated legal fees. The $750,000 cap therefore represents only approximately 6.25% of MFW's total estimated transaction expenses, limiting Solara's exposure to a fraction of the Seller-side costs.
C. Additional Recommendations
Exclusive Remedy. We recommend confirming in the LOI markup that the expense reimbursement obligation, together with the return of the Exclusivity Deposit, constitutes Buyer's sole and exclusive monetary liability under the LOI in the event of a termination without cause. This language prevents any argument that MFW could seek additional damages, such as expectation damages, consequential damages, or lost-opportunity costs, arising from Buyer's decision not to proceed with the Transaction.
No Survival Post-SPA. We recommend specifying that the expense reimbursement obligation terminates upon execution of the definitive SPA. Once the SPA is signed, the rights and obligations of the parties will be governed exclusively by the SPA, and the LOI's expense reimbursement provision should have no continuing effect.
Resist Reciprocal Obligation. We anticipate that MFW or HKA may propose a reciprocal expense reimbursement obligation, requiring MFW to reimburse Solara's transaction expenses in the event of a seller-side termination. While a reciprocal provision may appear balanced on its surface, we recommend resisting it, as any such obligation could create a disincentive for MFW to terminate the LOI in circumstances where the Seller's continued engagement is not in Solara's interest (e.g., where the Seller is proceeding in bad faith or where diligence findings have fundamentally undermined the value proposition). Buyer's termination right should remain unencumbered and free of any economic offset.
VII. Net Working Capital Peg Methodology
A. Target NWC
The Draft LOI specifies a target net working capital ("NWC") of $5,800,000 (the "NWC Target"). The Draft LOI states that this target is based on the trailing twelve-month average of MFW's net working capital as of December 31, 2025, which is MFW's fiscal year end. The purchase price is to be adjusted on a dollar-for-dollar basis for deviations above or below the NWC Target, with an upward adjustment if closing NWC exceeds the target and a downward adjustment if closing NWC falls below the target.
B. Analysis and Recommendations
The NWC adjustment mechanism is one of the most commercially significant provisions in any acquisition, and the definition of NWC and the methodology for calculating the NWC Target are frequently among the most heavily negotiated terms in the definitive SPA. Our recommendations regarding the NWC provisions in the LOI and the work required in connection with the definitive SPA are as follows:
1. Request Underlying Data. We recommend requesting from MFW and HKA the detailed NWC calculation supporting the $5,800,000 target, together with the underlying monthly balance sheet data for the twelve-month period from January 2025 through December 2025. This data should be included in the virtual data room (which is hosted on Thackeray Solutions under the Project Trident code name) and should be reviewed as a priority item as part of Whitmore Sandoval Group LLC's quality of earnings analysis. The engagement lead at Whitmore Sandoval is Daniel Ostroff, CPA, who has been briefed on the NWC analysis requirements and is prepared to begin work upon receipt of the data.
2. NWC Definition — Key Line Items. The NWC definition must clearly specify which current asset and current liability line items are included in and excluded from the calculation. Based on our experience with similar SaaS transactions, the following items warrant particular attention:
(a) Cash and Cash Equivalents: Should be excluded from NWC, consistent with the cash-free, debt-free purchase price construct.
(b) Indebtedness: All funded indebtedness (including the Sentinel Commerce Bank line of credit, discussed in Section X.E below) should be excluded from NWC and treated as a separate purchase price deduction.
(c) Deferred Revenue: This is the single most significant definitional issue for SaaS acquisitions. MFW's subscription-based business model generates substantial deferred revenue balances, as customers typically prepay for annual subscription periods. If deferred revenue (a current liability) is included in the NWC calculation, it will reduce NWC and potentially result in a downward purchase price adjustment at closing, even if the deferred revenue balance is consistent with (or lower than) the trailing twelve-month average. Conversely, if deferred revenue is excluded, the NWC balance will be higher, and the NWC Target may need to be reset accordingly.
The treatment of deferred subscription revenue can have a multi-million-dollar impact on the closing adjustment. We recommend that the parties explicitly agree, at the LOI stage or early in SPA negotiations, on whether deferred subscription revenue is included in or excluded from the NWC definition. Our preliminary recommendation is that deferred subscription revenue be excluded from the NWC calculation, with a separate mechanism to address any unusual fluctuations in deferred revenue at closing (e.g., a deferred revenue adjustment or a revenue run-rate representation).
(d) Deferred Implementation Revenue: MFW has approximately $5,500,000 in annual professional services and implementation revenue. The accounting treatment of deferred implementation revenue (which may be recognized over the implementation period under ASC 606) should be carefully analyzed and addressed in the NWC definition.
(e) Transaction Expenses: Unpaid transaction expenses of MFW (including advisory fees, legal fees, and other costs) should be excluded from NWC and treated as a separate purchase price deduction.
(f) Prepaid Software Licensing: MFW may carry prepaid balances related to third-party software licenses (including the Brindoval Data Solutions LLC cloud hosting agreement, which has an annual spend of approximately $2,100,000). The treatment of these prepaid balances in the NWC calculation should be confirmed.
3. GAAP Consistency. The NWC definition and calculation methodology should be prepared in accordance with U.S. GAAP, applied consistently with the accounting principles, policies, and practices used in the preparation of MFW's audited financial statements for the fiscal year ended December 31, 2025. Glenmore Kessler & Associates PC, MFW's independent auditor since fiscal year 2019 (engagement partner Linda Chowdhury, CPA), should be contacted to confirm the consistency of the NWC components with the audited financial statements and to identify any changes in accounting policies or estimates that may affect the NWC calculation.
4. Definitive SPA Provisions. While the detailed NWC mechanics will be negotiated in the context of the definitive SPA, we recommend flagging the following structural provisions for inclusion in the SPA at the earliest opportunity:
(i) A detailed NWC schedule, attached as an exhibit to the SPA, specifying each line item included in the NWC calculation and the accounting policies applicable to each line item;
(ii) An estimated closing NWC statement, to be delivered by Seller to Buyer no later than three (3) business days prior to the scheduled closing date;
(iii) A post-closing true-up mechanism, pursuant to which Buyer prepares a final closing NWC statement within 60 to 90 days following closing, with Seller having a review and objection period of 30 days;
(iv) A dispute resolution mechanism, providing that any unresolved disputes regarding the final NWC calculation shall be submitted to an independent accounting firm (to be mutually agreed upon in the SPA) for binding determination; and
(v) A collar or de minimis threshold for NWC adjustments (e.g., no adjustment if the deviation from the NWC Target is less than $150,000), to avoid disputes over immaterial amounts.
VIII. Transaction Timeline Feasibility
A. Key Milestones in Draft LOI
The Draft LOI sets forth the following key milestone dates for the Transaction:
Each of these milestones is assessed below.
B. Assessment of Diligence Timeline (LOI Signing to March 15, 2026)
The Draft LOI establishes March 15, 2026 as the deadline for Buyer's completion of its confirmatory due diligence review. This provides only 25 calendar days from the targeted LOI execution date of February 18, 2026 to the diligence completion deadline.
We note, however, that Calderwood & Harkness received access to the Phase 2 virtual data room on February 3, 2026 (the Phase 2 selection date), and our preliminary diligence review has been underway since that date. As of the date of this memorandum, our team has had approximately 12 days of VDR access, and the total period of VDR access before the March 15 deadline will be approximately 40 calendar days. While this is a more meaningful measure of available diligence time than the 25-day post-LOI period alone, the timeline remains aggressive given the breadth and complexity of the diligence workstreams involved.
Diligence Workstreams. The principal diligence workstreams for the Transaction, together with a summary of the key issues and responsible parties, are as follows:
(i) Corporate and Organizational: Review of MFW's certificate of incorporation, bylaws, board minutes, stockholder consents, capitalization records, and organizational documents. Lead: Andrew Fitzpatrick (C&H).
(ii) Material Contracts: Review of all contracts with a value in excess of $250,000 per annum, including customer agreements, vendor agreements, partnership agreements, and license agreements. Critical path item: TerraLink Logistics, Inc. Strategic Partnership Agreement (see Section X.A). Lead: Andrew Fitzpatrick / Naomi Petersen (C&H).
(iii) intellectual Property: Review of MFW's IP portfolio, including patents (if any), trademarks, copyrights, trade secrets, and software ownership chain. We have identified a potential IP assignment gap involving three former independent contractors who performed development work for MFW during the 2015–2016 period and for whom executed IP assignment agreements have not yet been located in the VDR. This issue requires priority attention. Lead: Naomi Petersen (C&H).
(iv) Employment and Benefits: Review of employment agreements, employee benefit plans (including the MFW 2016 Stock Incentive Plan), independent contractor agreements, and compliance with employment laws. We have identified a preliminary concern regarding the classification of approximately 25 individuals currently engaged as independent contractors, several of whom may present misclassification risk under applicable federal and state standards. Lead: Andrew Fitzpatrick (C&H), with employment law support as needed.
(v) Real Estate and Leases: Review of leases for MFW's three office locations: McLean, Virginia (Westpark Corporate Center LP, landlord); Austin, Texas (Brazos Tower Management LLC, landlord); and Boise, Idaho (Clearwater Realty Holdings Inc., landlord). Lead: Naomi Petersen (C&H).
(vi) Regulatory and Compliance: Assessment of regulatory compliance, including HSR Act requirements (discussed in Section IX), data privacy laws (MFW processes fleet GPS data and driver-behavior data that may be subject to the Illinois Biometric Information Privacy Act ("BIPA") and the California Consumer Privacy Act ("CCPA"), among other state and federal privacy laws), and industry-specific regulations. Lead: Andrew Fitzpatrick (C&H), with data privacy specialist support.
(vii) Tax: Review of federal, state, and local tax compliance, including assessment of sales tax nexus exposure. Preliminary findings from Whitmore Sandoval Group LLC indicate potential sales tax nexus exposure of $800,000 to $1,400,000 across six to eight states where MFW has not been collecting or remitting sales tax on its software-as-a-service subscription revenue. Lead: Sylvia Hartwell (C&H Tax); Daniel Ostroff (Whitmore Sandoval).
(viii) Financial and Quality of Earnings: Comprehensive quality of earnings analysis, including review of revenue recognition practices, customer churn and retention metrics, ARR bridge, EBITDA adjustments, and NWC analysis. Lead: Daniel Ostroff (Whitmore Sandoval).
Calderwood & Harkness's comprehensive due diligence request list is being finalized and will be transmitted to HKA on or about February 19, 2026, the day following targeted LOI execution.
Assessment. The 25-day post-LOI diligence timeline (or 40 days total from initial VDR access) is aggressive but achievable, provided that MFW and HKA are responsive and timely in satisfying document requests and making management available for diligence calls and interviews. Delays in document production, particularly with respect to the IP assignment records, employment files, and tax records, could jeopardize the March 15 deadline.
Recommendations. We recommend the following modifications to the Draft LOI:
(a) Negotiate that the March 15, 2026 "diligence completion" deadline means the date by which Buyer expects, in good faith, to have substantially completed its confirmatory diligence review, and does not constitute a hard cutoff after which Buyer is precluded from requesting additional information or conducting further diligence. The deadline should be characterized as a target rather than a drop-dead date.
(b) Specify that Buyer's failure to complete diligence by March 15, 2026 does not constitute a termination event, does not give rise to any right of Seller to terminate the LOI, and does not affect the exclusivity period, which independently runs through April 19, 2026.
(c) Include an obligation on MFW to cooperate in good faith with Buyer's diligence process, including by providing timely responses to document requests, making management personnel available for interviews and calls, and facilitating access to third-party information sources (e.g., Glenmore Kessler & Associates PC for audit workpapers).
C. Assessment of SPA Execution Timeline (March 15 to March 31, 2026)
The Draft LOI contemplates a target SPA execution date of March 31, 2026, which would provide only 16 calendar days between the diligence completion deadline and SPA signing. During this period, the parties would need to accomplish the following:
(i) Finalize and resolve all outstanding diligence issues and confirm that no material findings preclude the Transaction;
(ii) Negotiate and finalize the definitive Stock Purchase Agreement, including all exhibits and schedules;
(iii) Negotiate and finalize all ancillary agreements, including:
• Escrow agreement with Northgate Escrow Services LLC;
• Stockholder support agreements from Pinnacle Bluff Ventures LLC, Garrett Holliday, and Diana Vasquez-Park (collectively representing ~84.0% of fully diluted equity);
• Rollover agreement documenting Holliday's $25,000,000 equity rollover;
• Restrictive covenant agreements (non-competition and non-solicitation) for Holliday and Vasquez-Park;
(iv) Prepare and deliver disclosure schedules;
(v) Obtain all required internal approvals, including Solara Fund III's limited partner advisory committee approval (if required under the fund's limited partnership agreement) and MFW's board and stockholder approvals; and
(vi) Finalize the R&W insurance policy terms with Atlas Meridian Underwriters Ltd.
Assessment. A 16-day period to accomplish all of the foregoing is very aggressive and would leave little room for any delays or protracted negotiations. Based on our experience with transactions of comparable complexity, the SPA negotiation process alone typically requires three to five weeks from circulation of the first draft to execution.
Recommendation. We strongly recommend that Calderwood & Harkness begin drafting the SPA immediately upon (or even prior to) execution of the LOI, with the goal of circulating a first draft to HKA within five to seven business days of LOI execution. This parallel-track approach will maximize the available time for SPA negotiation and minimize the risk that the March 31 target is missed.
Additionally, we recommend that the LOI markup characterize the March 31, 2026 SPA execution date as a non-binding target, with no consequences for either party's failure to meet it, other than the continued running of the exclusivity clock.
D. Assessment of Closing Timeline (March 31 to April 30, 2026)
The Draft LOI contemplates a target closing date of April 30, 2026, approximately 30 days after the target SPA execution date. During this period, the parties would need to accomplish the following:
(i) File HSR notification forms and observe the 30-day initial waiting period (unless early termination of the waiting period is granted by the FTC or DOJ, or unless a second request for additional information is issued);
(ii) Obtain the TerraLink Logistics, Inc. change-of-control consent (critical path item — see Section X.A);
(iii) Finalize the closing of the senior secured credit facility with Ironclad National Bank, N.A. and Ridgeline Commercial Lending Corp., including satisfaction of all conditions precedent in the commitment letter (CL-INB-2026-0214);
(iv) Bind the R&W insurance policy with Atlas Meridian Underwriters Ltd. (through Trident Peak Insurance Brokers Inc., account executive Megan Forsythe);
(v) Obtain payoff letters for existing indebtedness (including the Sentinel Commerce Bank line of credit);
(vi) Satisfy all other conditions precedent to closing specified in the SPA; and
(vii) Execute and deliver all closing deliverables.
HSR Timing. The HSR filing requirement presents the most significant timing risk for the closing timeline. If the HSR notification forms are filed on or shortly after SPA execution (i.e., in late March or early April 2026), the 30-day initial waiting period would extend into late April or early May 2026, potentially beyond the April 30 target closing date. Early termination of the HSR waiting period may be requested, but such termination is discretionary with the relevant agency and is not guaranteed. In recent practice, the average time for early termination grants has ranged from approximately 15 to 25 days, though processing times can vary significantly depending on the volume of filings and the agency's workload.
Assessment. The closing timeline is feasible but depends heavily on HSR clearance timing and the prompt resolution of the TerraLink consent requirement. If HSR early termination is not granted, or if the TerraLink consent process encounters delays, the April 30 target closing date may not be achievable. The outside date of June 30, 2026 provides a reasonable cushion to accommodate these potential delays.
E. Outside Date (June 30, 2026)
The Draft LOI establishes June 30, 2026 as the outside date for the closing of the Transaction. This date is approximately 91 days after the target closing date and approximately 132 days from the targeted LOI execution date.
Assessment. The June 30 outside date provides sufficient cushion to accommodate potential delays in HSR clearance (including a possible second request, though we consider this unlikely given the absence of obvious antitrust concerns in the fleet management vertical-SaaS space and the fact that Solara is a financial sponsor without competing portfolio companies in this sector — a point that will be confirmed during diligence), as well as delays in obtaining the TerraLink consent or finalizing the debt financing.
Recommendation. We recommend accepting June 30, 2026 as the outside date. We do not believe there is a need to push for an extension at this stage, though we note that the definitive SPA should include a mechanism for the mutual extension of the outside date by an additional 30 to 60 days in the event that the sole outstanding condition to closing is HSR clearance.
IX. HSR Filing Obligations
The aggregate transaction value of $350,000,000 exceeds the applicable Hart-Scott-Rodino Antitrust Improvements Act of 1976 (as amended) filing thresholds, and an HSR filing is required prior to the closing of the Transaction. The Draft LOI correctly identifies this requirement. Our analysis and recommendations are as follows:
Filing Fee. Based on the current HSR filing fee schedule, the estimated filing fee for a transaction valued at $350,000,000 is $350,000. The Draft LOI allocates the filing fee to Buyer, which is consistent with market practice in private equity-led acquisitions. We recommend accepting this allocation.
Filing Responsibility. The Draft LOI does not specify in detail the cooperation obligations of the parties with respect to the HSR filing process. We recommend that the definitive SPA include the following provisions: (i) each party shall be responsible for preparing and filing its own HSR notification form; (ii) each party shall cooperate in good faith with the other party in the preparation of its filing, including by providing necessary information and documents; and (iii) each party shall promptly respond to any requests for additional information or documents from the FTC or DOJ.
Timing. We recommend that the SPA require the parties to submit their respective HSR notification forms within ten (10) business days of the execution of the definitive SPA. This timing is critical to maximize the likelihood of obtaining HSR clearance (either through expiration of the 30-day waiting period or through early termination) prior to the April 30 target closing date — and well before the June 30 outside date.
No CFIUS Issues. All parties to the Transaction — Solara, Solara Fund III, MFW, and each of the selling shareholders — are domiciled in the United States. We do not anticipate that a filing with the Committee on Foreign Investment in the United States ("CFIUS") will be required or advisable.
No State Regulatory Approvals. Based on our preliminary review, MFW does not hold regulated licenses, permits, or authorizations in any state that would require state-level regulatory approval for the change of control. We will confirm this conclusion during the regulatory compliance workstream of our diligence review.
Antitrust Risk Assessment. We assess the antitrust risk associated with the Transaction as low. MFW operates in the fleet management SaaS market, which is fragmented and competitive, with numerous established competitors and new entrants. Solara is a financial sponsor (not a strategic acquirer) and does not currently hold portfolio companies in the fleet management or adjacent verticals — a point that will be confirmed during diligence to ensure there are no portfolio company overlap issues. Given these circumstances, we believe that early termination of the HSR waiting period should be requested and has a reasonable likelihood of being granted.
X. Additional Key Terms and Recommendations
A. Third-Party Consents