1042-00001 · Brightfield Cloud Services Inc · Closing

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Contract analysis Extract to table

[sheet: Closing Checklist]

Item No.

CLOSING CHECKLIST

Brightfield Cloud Services Inc. — $35,000,000 Senior Secured Term Loan

Borrower: Brightfield Cloud Services Inc.

Lender / Administrative Agent: Pinnacle National Bank, N.A.

Collateral Agent: Meridian Whitcomb LLC

Guarantor: Solara Holdings Group LLC

Borrower's Counsel: Calderwood & Harkness LLP

Lender's Counsel: Wainwright & Pryor LLP

Signing Date: July 28, 2022	Closing / Funding Date: August 12, 2022
C&H Matter No.: 1042-00001	W&P Matter No.: 1042-00001	Pinnacle Credit Approval No.: TLG-2022-05118

LOAN DOCUMENTS

1	Loan Documents	Term Loan Agreement (Execution Version)	Senior secured term loan agreement dated July 28, 2022, among Brightfield Cloud Services Inc. (Borrower), Pinnacle National Bank, N.A. (Lender/Administrative Agent), and Meridian Whitcomb LLC (Collateral Agent); $35,000,000 principal; SOFR + 350 bps; maturity August 12, 2027; governed by New York law	Wainwright & Pryor LLP (initial draft); Calderwood & Harkness LLP (borrower markup)	August 12, 2022	August 12, 2022	Completed	Final form agreed July 22, 2022; signed July 28, 2022; effective at closing August 12, 2022
2	Loan Documents	Guaranty Agreement (Execution Version)	Unconditional, irrevocable guaranty of payment by Solara Holdings Group LLC in favor of Pinnacle National Bank, N.A., covering all obligations under the Term Loan Agreement including full $35,000,000 principal, interest, fees, costs, and expenses; no cap; governed by New York law	Wainwright & Pryor LLP (initial draft); Calderwood & Harkness LLP (borrower/guarantor markup)	August 12, 2022	August 12, 2022	Completed	Signed by David Kessler as Authorized Representative of Solara Holdings Group LLC
3	Loan Documents	Security Agreement (Execution Version)	Security agreement by Brightfield Cloud Services Inc. in favor of Meridian Whitcomb LLC as Collateral Agent for the benefit of Pinnacle; first-priority perfected security interest in substantially all assets of BCS including accounts receivable, inventory, equipment, intellectual property, deposit accounts, and equity interests in subsidiaries (limited to 65% of voting stock of foreign subsidiaries); governed by New York law	Wainwright & Pryor LLP (initial draft); Calderwood & Harkness LLP (borrower markup)	August 12, 2022	August 12, 2022	Completed

CERTIFICATES

4	Certificates	Officer's Certificate — Brightfield Cloud Services Inc.	Certificate executed by Marcus Elliston, CEO of BCS, confirming (i) all representations and warranties are true and correct in all material respects as of closing, (ii) no Default or Event of Default has occurred or is continuing, (iii) no material adverse change since December 31, 2021, and (iv) use of proceeds as set forth in the Term Loan Agreement	Calderwood & Harkness LLP (draft); Brightfield Cloud Services Inc. (execution)	August 12, 2022	August 12, 2022	Completed
5	Certificates	Secretary's Certificate — Brightfield Cloud Services Inc.	Certificate executed by Jerome Hartwell, General Counsel and Secretary of BCS, attaching certified copies of: (i) Certificate of Incorporation (Delaware), (ii) Bylaws, (iii) board resolutions authorizing execution and delivery of loan documents and borrowing of $35,000,000, and (iv) incumbency certificate for Marcus Elliston (CEO), Priya Ramanathan (CFO), and Jerome Hartwell (GC/Secretary) with specimen signatures	Calderwood & Harkness LLP (draft); Brightfield Cloud Services Inc. (execution)	August 12, 2022	August 12, 2022	Completed
6	Certificates	Pro Forma Compliance Certificate	Certificate executed by Priya Ramanathan, CFO of BCS, demonstrating pro forma compliance with all financial covenants at closing: Total Funded Debt $35,000,000; TTM EBITDA $12,800,000; Total Leverage Ratio 2.73x (max permitted 3.50x); est. Year 1 interest expense ~$2,026,500 (all-in rate 5.79%); Interest Coverage Ratio ~6.32x (min required 3.00x); unrestricted cash in excess of $5,000,000 minimum liquidity requirement	Calderwood & Harkness LLP (draft); Brightfield Cloud Services Inc. (execution)	August 12, 2022	August 12, 2022	Completed	Gives effect to $35M term loan funding and $8.2M Ridgeline payoff

LEGAL OPINIONS

7	Legal Opinions	Borrower's Counsel Legal Opinion — Calderwood & Harkness LLP	Opinion letter addressed to Pinnacle National Bank, N.A. and Meridian Whitcomb LLC; opines on BCS due organization and good standing in Delaware, qualification in TX, AZ, CA, VA; due authorization, execution, delivery, and enforceability of Term Loan Agreement, Guaranty, and Security Agreement; no conflicts with organizational documents or applicable law; no governmental consents required	Calderwood & Harkness LLP	August 12, 2022	August 12, 2022	Completed	Signed by Ian Blackwood, Responsible Partner
8	Legal Opinions	Lender's Counsel Opinion — Wainwright & Pryor LLP	Limited enforceability opinion delivered to Pinnacle National Bank, N.A. with respect to the loan documents	Wainwright & Pryor LLP	August 12, 2022	August 12, 2022	Completed	Lead Partner: Gregory Fontaine; Lead Associate: Rachel Subramaniam

PAYOFF AND LIEN RELEASES

9	Payoff / Lien Releases	Payoff Letter — Ridgeline Commercial Bank	Payoff letter from Ridgeline Commercial Bank confirming total payoff amount of $8,237,422 ($8,200,000 outstanding principal + $37,422 estimated accrued interest through August 12, 2022) for the $15,000,000 senior secured revolving credit facility dated October 15, 2020; confirms that upon receipt of payoff proceeds, all liens on BCS assets will be released	Ridgeline Commercial Bank (Renata Vasquez, VP, Commercial Lending)	August 12, 2022	August 12, 2022	Completed	Wire to Ridgeline per funds flow memorandum
10	Payoff / Lien Releases	UCC-3 Termination Statement — Ridgeline Commercial Bank (Delaware)	UCC-3 termination statement to be filed with the Delaware Secretary of State terminating Ridgeline's UCC-1 financing statement against BCS	Ridgeline Commercial Bank	August 12, 2022	August 12, 2022	Completed	To be filed by Ridgeline upon receipt of payoff proceeds
11	Payoff / Lien Releases	UCC-3 Termination Statement — Ridgeline Commercial Bank (Texas)	UCC-3 termination statement to be filed with the Texas Secretary of State terminating Ridgeline's UCC-1 financing statement against BCS	Ridgeline Commercial Bank	August 12, 2022	August 12, 2022	Completed	To be filed by Ridgeline upon receipt of payoff proceeds

UCC FILINGS

12	UCC Filings	UCC-1 Financing Statement — Delaware Secretary of State	UCC-1 financing statement filed against Brightfield Cloud Services Inc. (Debtor) in favor of Meridian Whitcomb LLC as Collateral Agent (Secured Party); filed with the Delaware Secretary of State (state of organization)	Calderwood & Harkness LLP	August 12, 2022	August 12, 2022	Completed	BCS incorporated in Delaware; Delaware Registered Agent: Capitol Registered Agents LLC, 1209 Orange Street, Wilmington, DE 19801
13	UCC Filings	UCC-1 Financing Statement — Texas Secretary of State	UCC-1 financing statement filed against Brightfield Cloud Services Inc. (Debtor) in favor of Meridian Whitcomb LLC as Collateral Agent (Secured Party); filed with the Texas Secretary of State (chief executive office state)	Calderwood & Harkness LLP	August 12, 2022	August 12, 2022	Completed	BCS headquarters: 4200 Lone Star Parkway, Suite 800, Austin, TX 78731

DEPOSIT ACCOUNT CONTROL AGREEMENTS

14	DACAs	Deposit Account Control Agreement — BCS Operating Account at Pinnacle National Bank, N.A.	DACA for BCS operating account (Acct. No. 7841-0029-3356) at Pinnacle National Bank, N.A., granting Collateral Agent (Meridian Whitcomb LLC) control over the deposit account	Calderwood & Harkness LLP (draft); Pinnacle National Bank, N.A. / Meridian Whitcomb LLC	August 12, 2022	August 12, 2022	Completed	Account established at closing
15	DACAs	Deposit Account Control Agreements — Other BCS Operating Accounts	DACAs for all other BCS deposit accounts as required under the Security Agreement	Calderwood & Harkness LLP	August 12, 2022	August 12, 2022	Completed

INSURANCE

16	Insurance	Evidence of Property & Casualty Insurance	Certificate of insurance from Northbrook Indemnity Insurance Co. confirming property and casualty coverage with minimum $50,000,000 per occurrence; naming Pinnacle National Bank, N.A. as loss payee / additional insured	Ashford & Crane Insurance Brokerage LLC / Brightfield Cloud Services Inc.	August 12, 2022	August 12, 2022	Completed	Carrier: Northbrook Indemnity Insurance Co.; Broker: Ashford & Crane Insurance Brokerage LLC, Houston, TX
17	Insurance	Evidence of Cyber Liability Insurance	Certificate of insurance from Northbrook Indemnity Insurance Co. confirming cyber liability coverage with minimum $10,000,000 per occurrence; naming Pinnacle National Bank, N.A. as additional insured	Ashford & Crane Insurance Brokerage LLC / Brightfield Cloud Services Inc.	August 12, 2022	August 12, 2022	Completed	Carrier: Northbrook Indemnity Insurance Co.
18	Insurance	Evidence of D&O Insurance	Certificate of insurance from Crosshaven Specialty Underwriters, Inc. confirming directors and officers liability coverage with minimum $15,000,000 aggregate	Ashford & Crane Insurance Brokerage LLC / Brightfield Cloud Services Inc.	August 12, 2022	August 12, 2022	Completed	Carrier: Crosshaven Specialty Underwriters, Inc.

FINANCIAL STATEMENTS

19	Financial Statements	Audited Financial Statements — FY 2020	Audited financial statements of Brightfield Cloud Services Inc. for the fiscal year ended December 31, 2020	Brightfield Cloud Services Inc. / Hartfield & Associates CPAs, PLLC (Neil Calderon, CPA, Engagement Partner)	August 12, 2022	August 12, 2022	Completed
20	Financial Statements	Audited Financial Statements — FY 2021	Audited financial statements of Brightfield Cloud Services Inc. for the fiscal year ended December 31, 2021; FY 2021 revenue: $48,300,000 (SaaS: $31,400,000; Hardware: $16,900,000); FY 2021 EBITDA: $12,800,000	Brightfield Cloud Services Inc. / Hartfield & Associates CPAs, PLLC	August 12, 2022	August 12, 2022	Completed	Auditor: Hartfield & Associates CPAs, PLLC, 9400 North Capital of Texas Highway, Suite 220, Austin, TX 78759

GOOD STANDING AND ORGANIZATIONAL DOCUMENTS

21	Good Standing	Good Standing Certificate — BCS (Delaware)	Certificate of good standing for Brightfield Cloud Services Inc. from the Delaware Secretary of State (state of incorporation)	Calderwood & Harkness LLP / Brightfield Cloud Services Inc.	August 12, 2022	August 12, 2022	Completed	EIN: 84-3291057
22	Good Standing	Good Standing Certificate — BCS (Texas)	Certificate of good standing / certificate of existence for Brightfield Cloud Services Inc. from the Texas Secretary of State (headquarters state)	Calderwood & Harkness LLP / Brightfield Cloud Services Inc.	August 12, 2022	August 12, 2022	Completed
23	Good Standing	Good Standing Certificate — BCS (Arizona)	Certificate of good standing for Brightfield Cloud Services Inc. from the Arizona Corporation Commission (state of qualification — Phoenix data center)	Calderwood & Harkness LLP / Brightfield Cloud Services Inc.	August 12, 2022	August 12, 2022	Completed
24	Good Standing	Good Standing Certificate — BCS (California)	Certificate of good standing for Brightfield Cloud Services Inc. from the California Secretary of State (state of qualification)	Calderwood & Harkness LLP / Brightfield Cloud Services Inc.	August 12, 2022	August 12, 2022	Completed
25	Good Standing	Good Standing Certificate — BCS (Virginia)	Certificate of good standing for Brightfield Cloud Services Inc. from the Virginia State Corporation Commission (state of qualification)	Calderwood & Harkness LLP / Brightfield Cloud Services Inc.	August 12, 2022	August 12, 2022	Completed
26	Good Standing	Good Standing Certificate — Solara Holdings Group LLC (Delaware)	Certificate of good standing for Solara Holdings Group LLC from the Delaware Secretary of State	Calderwood & Harkness LLP / Solara Holdings Group LLC	August 12, 2022	August 12, 2022	Completed	EIN: 83-2047619

FUNDS FLOW AND DISBURSEMENT

27	Funds Flow	Funds Flow Memorandum	Detailed memorandum dated August 12, 2022, setting forth disbursement of $35,000,000 in term loan proceeds from Pinnacle National Bank, N.A. (ABA 021-405-887): (1) $8,237,422 to Ridgeline Commercial Bank (payoff); (2) $350,000 upfront fee to Pinnacle; (3) $11,500,000 to BCS Dallas data center project account; (4) $9,800,000 to BCS Phoenix data center project account; (5) $3,500,000 to BCS hardware procurement account; (6) $1,612,578 to BCS operating account (Acct. No. 7841-0029-3356 at Pinnacle)	Calderwood & Harkness LLP	August 12, 2022	August 12, 2022	Completed	Total disbursements: $35,000,000
28	Funds Flow	Wire Transfer Instructions	Confirmed wire transfer instructions for all payees listed in the funds flow memorandum	Calderwood & Harkness LLP / Brightfield Cloud Services Inc. / Pinnacle National Bank, N.A.	August 12, 2022	August 12, 2022	Completed

GUARANTOR DELIVERABLES

29	Guarantor Deliverables	Solara Holdings Group LLC — Resolutions / Authorizations	Certified resolutions or written consent of the sole member of Solara Holdings Group LLC authorizing execution and delivery of the Guaranty Agreement; authorized representative: David Kessler, Managing Director	Calderwood & Harkness LLP / Solara Holdings Group LLC	August 12, 2022	August 12, 2022	Completed	Manager: Solara Capital Partners Fund III, LP
30	Guarantor Deliverables	Solara Holdings Group LLC — Certificate of Formation / Operating Agreement	Certified copies of the Certificate of Formation and Operating Agreement (or relevant excerpts) of Solara Holdings Group LLC	Calderwood & Harkness LLP / Solara Holdings Group LLC	August 12, 2022	August 12, 2022	Completed	Delaware LLC; registered agent: Capitol Registered Agents LLC, 1209 Orange Street, Wilmington, DE 19801

MISCELLANEOUS

31	Miscellaneous	Closing Confirmation Letter	Letter from Calderwood & Harkness LLP to Brightfield Cloud Services Inc. (attn: Jerome Hartwell) confirming successful closing, funding, satisfaction of all conditions precedent, and post-closing obligations	Calderwood & Harkness LLP (Ian Blackwood)	August 12, 2022	August 12, 2022	Completed	Notes first quarterly amortization payment of $87,500 due November 12, 2022; maturity August 12, 2027
32	Miscellaneous	Internal Deal Summary Memorandum	C&H internal memorandum summarizing key terms, negotiation outcomes, and risk items; prepared by Sophie Tremblay and Daniel Obi, reviewed by Ian Blackwood	Calderwood & Harkness LLP (internal)	July 29, 2022	July 29, 2022	Completed	For internal C&H records only; not a closing deliverable to lender

[sheet: Key Contacts]

Organization	Role	Contact Name	Title	Phone	Email	Address
Brightfield Cloud Services Inc.	Borrower — CEO	Marcus Elliston	Chief Executive Officer	(512) 555-0147	melliston@brightfieldcloud.com	4200 Lone Star Parkway, Suite 800, Austin, TX 78731
Brightfield Cloud Services Inc.	Borrower — CFO	Priya Ramanathan	Chief Financial Officer	(512) 555-0163	pramanathan@brightfieldcloud.com	4200 Lone Star Parkway, Suite 800, Austin, TX 78731
Brightfield Cloud Services Inc.	Borrower — General Counsel / Secretary	Jerome Hartwell	General Counsel and Secretary	(512) 555-0189	jhartwell@brightfieldcloud.com	4200 Lone Star Parkway, Suite 800, Austin, TX 78731
Solara Holdings Group LLC	Guarantor — Authorized Representative	David Kessler	Managing Director, Solara Capital Partners	(212) 555-0234	dkessler@solaracapital.com	200 Park Avenue South, 22nd Floor, New York, NY 10003
Solara Capital Partners	Sponsor — Managing Partner	Elaine Nakamura	Managing Partner	(212) 555-0241	enakamura@solaracapital.com	200 Park Avenue South, 22nd Floor, New York, NY 10003
Pinnacle National Bank, N.A.	Lender / Administrative Agent — Relationship Manager	Thomas Whitford	SVP, Technology Lending Group	(212) 555-0312	thomas.whitford@pinnaclenb.com	600 Lexington Avenue, 35th Floor, New York, NY 10022
Pinnacle National Bank, N.A.	Lender — Credit Officer	Angela Morreau	VP, Credit Risk	(212) 555-0318	angela.morreau@pinnaclenb.com	600 Lexington Avenue, 35th Floor, New York, NY 10022
Meridian Whitcomb LLC	Collateral Agent	Laura Desmond	VP, Agency Services	(212) 555-0425	ldesmond@meridianwhitcomb.com	100 Wall Street, 18th Floor, New York, NY 10005
Ridgeline Commercial Bank	Existing Lender (Payoff)	Renata Vasquez	VP, Commercial Lending	(512) 555-0571	rvasquez@ridgelinebank.com	1500 Congress Avenue, Suite 600, Austin, TX 78701
Wainwright & Pryor LLP	Lender's Counsel — Lead Partner	Gregory Fontaine	Partner, Banking & Finance	(212) 555-0633	gfontaine@wainwrightpryor.com	51 West 52nd Street, New York, NY 10019
Wainwright & Pryor LLP	Lender's Counsel — Lead Associate	Rachel Subramaniam	Associate, Banking & Finance	(212) 555-0641	rsubramaniam@wainwrightpryor.com	51 West 52nd Street, New York, NY 10019
Calderwood & Harkness LLP	Borrower's Counsel — Responsible Partner	Ian Blackwood	Partner, Banking & Finance	(212) 555-0715	iblackwood@calderwoodharkness.com	One Liberty Plaza, 42nd Floor, New York, NY 10006
Calderwood & Harkness LLP	Borrower's Counsel — Billing Partner	Stephanie Okafor	Partner, Banking & Finance	(212) 555-0722	sokafor@calderwoodharkness.com	One Liberty Plaza, 42nd Floor, New York, NY 10006
Calderwood & Harkness LLP	Borrower's Counsel — Lead Associate	Sophie Tremblay	Associate, Banking & Finance	(212) 555-0738	stremblay@calderwoodharkness.com	One Liberty Plaza, 42nd Floor, New York, NY 10006
Calderwood & Harkness LLP	Borrower's Counsel — Working Associate	Daniel Obi	Associate, Banking & Finance	(512) 555-0744	dobi@calderwoodharkness.com	300 West 6th Street, Suite 2100, Austin, TX 78701
Hartfield & Associates CPAs, PLLC	Independent Auditor	Neil Calderon, CPA	Engagement Partner	(512) 555-0856	ncalderon@hartfieldcpa.com	9400 North Capital of Texas Highway, Suite 220, Austin, TX 78759
Ashford & Crane Insurance Brokerage LLC	Insurance Broker	Margaret Hensley	Senior Account Executive	(713) 555-0492	mhensley@ashfordcrane.com	2800 Post Oak Boulevard, Suite 1400, Houston, TX 77056

[sheet: Key Dates]

Date	Event / Milestone	Notes
October 15, 2020	Ridgeline revolving credit facility originally dated	$15,000,000 commitment; lender: Ridgeline Commercial Bank
October 2020	Solara Capital Partners acquisition of BCS	Enterprise value: $95,000,000; acquired via Solara Fund III (fund size: $1,200,000,000; vintage 2019)
December 31, 2021	FY 2021 year-end; MAC reference date	FY 2021 Revenue: $48.3M; EBITDA: $12.8M; Total Debt: $8.2M (Ridgeline revolver)
May 23, 2022	Matter opened; C&H engagement commenced	C&H Matter No. 1042-00001; Responsible Partner: Ian Blackwood
May 30, 2022	Initial term sheet received from Pinnacle	Pinnacle Credit Approval No. TLG-2022-05118
June 14, 2022	First draft of Term Loan Agreement circulated by W&P	W&P Matter No. 1042-00001
June 28, 2022	BCS markup of Term Loan Agreement returned by C&H
July 5, 2022	Financial covenant negotiation calls commenced
July 18, 2022	Financial covenant negotiation calls concluded	Final covenants: max leverage 3.50x, min interest coverage 3.00x, min liquidity $5M, max capex $18M
July 22, 2022	Final form of all documents agreed
July 28, 2022	Signing date	Originally anticipated as both signing and closing date
August 12, 2022	Actual closing / funding date	$35,000,000 funded; Ridgeline payoff of $8,237,422 completed; all conditions precedent satisfied
November 12, 2022	First quarterly amortization payment due	$87,500 ($35M × 1.00% / 4 quarters)
August 12, 2027	Maturity date	5 years from closing; balloon payment of remaining principal due

[sheet: Closing Checklist]
Item No. | Category | Document / Deliverable | Description | Responsible Party | Due Date | Date Completed | Status | Notes / Comments
CLOSING CHECKLIST
Brightfield Cloud Services Inc. — $35,000,000 Senior Secured Term Loan
Borrower: Brightfield Cloud Services Inc.
Lender / Administrative Agent: Pinnacle National Bank, N.A.
Collateral Agent: Meridian Whitcomb LLC
Guarantor: Solara Holdings Group LLC
Borrower's Counsel: Calderwood & Harkness LLP
Lender's Counsel: Wainwright & Pryor LLP
Signing Date: July 28, 2022 | Closing / Funding Date: August 12, 2022
C&H Matter No.: 1042-00001 | W&P Matter No.: 1042-00001 | Pinnacle Credit Approval No.: TLG-2022-05118
LOAN DOCUMENTS
1 | Loan Documents | Term Loan Agreement (Execution Version) | Senior secured term loan agreement dated July 28, 2022, among Brightfield Cloud Services Inc. (Borrower), Pinnacle National Bank, N.A. (Lender/Administrative Agent), and Meridian Whitcomb LLC (Collateral Agent); $35,000,000 principal; SOFR + 350 bps; maturity August 12, 2027; governed by New York law | Wainwright & Pryor LLP (initial draft); Calderwood & Harkness LLP (borrower markup) | August 12, 2022 | August 12, 2022 | Completed | Final form agreed July 22, 2022; signed July 28, 2022; effective at closing August 12, 2022
2 | Loan Documents | Guaranty Agreement (Execution Version) | Unconditional, irrevocable guaranty of payment by Solara Holdings Group LLC in favor of Pinnacle National Bank, N.A., covering all obligations under the Term Loan Agreement including full $35,000,000 principal, interest, fees, costs, and expenses; no cap; governed by New York law | Wainwright & Pryor LLP (initial draft); Calderwood & Harkness LLP (borrower/guarantor markup) | August 12, 2022 | August 12, 2022 | Completed | Signed by David Kessler as Authorized Representative of Solara Holdings Group LLC
3 | Loan Documents | Security Agreement (Execution Version) | Security agreement by Brightfield Cloud Services Inc. in favor of Meridian Whitcomb LLC as Collateral Agent for the benefit of Pinnacle; first-priority perfected security interest in substantially all assets of BCS including accounts receivable, inventory, equipment, intellectual property, deposit accounts, and equity interests in subsidiaries (limited to 65% of voting stock of foreign subsidiaries); governed by New York law | Wainwright & Pryor LLP (initial draft); Calderwood & Harkness LLP (borrower markup) | August 12, 2022 | August 12, 2022 | Completed
CERTIFICATES
4 | Certificates | Officer's Certificate — Brightfield Cloud Services Inc. | Certificate executed by Marcus Elliston, CEO of BCS, confirming (i) all representations and warranties are true and correct in all material respects as of closing, (ii) no Default or Event of Default has occurred or is continuing, (iii) no material adverse change since December 31, 2021, and (iv) use of proceeds as set forth in the Term Loan Agreement | Calderwood & Harkness LLP (draft); Brightfield Cloud Services Inc. (execution) | August 12, 2022 | August 12, 2022 | Completed
5 | Certificates | Secretary's Certificate — Brightfield Cloud Services Inc. | Certificate executed by Jerome Hartwell, General Counsel and Secretary of BCS, attaching certified copies of: (i) Certificate of Incorporation (Delaware), (ii) Bylaws, (iii) board resolutions authorizing execution and delivery of loan documents and borrowing of $35,000,000, and (iv) incumbency certificate for Marcus Elliston (CEO), Priya Ramanathan (CFO), and Jerome Hartwell (GC/Secretary) with specimen signatures | Calderwood & Harkness LLP (draft); Brightfield Cloud Services Inc. (execution) | August 12, 2022 | August 12, 2022 | Completed
6 | Certificates | Pro Forma Compliance Certificate | Certificate executed by Priya Ramanathan, CFO of BCS, demonstrating pro forma compliance with all financial covenants at closing: Total Funded Debt $35,000,000; TTM EBITDA $12,800,000; Total Leverage Ratio 2.73x (max permitted 3.50x); est. Year 1 interest expense ~$2,026,500 (all-in rate 5.79%); Interest Coverage Ratio ~6.32x (min required 3.00x); unrestricted cash in excess of $5,000,000 minimum liquidity requirement | Calderwood & Harkness LLP (draft); Brightfield Cloud Services Inc. (execution) | August 12, 2022 | August 12, 2022 | Completed | Gives effect to $35M term loan funding and $8.2M Ridgeline payoff
LEGAL OPINIONS
7 | Legal Opinions | Borrower's Counsel Legal Opinion — Calderwood & Harkness LLP | Opinion letter addressed to Pinnacle National Bank, N.A. and Meridian Whitcomb LLC; opines on BCS due organization and good standing in Delaware, qualification in TX, AZ, CA, VA; due authorization, execution, delivery, and enforceability of Term Loan Agreement, Guaranty, and Security Agreement; no conflicts with organizational documents or applicable law; no governmental consents required | Calderwood & Harkness LLP | August 12, 2022 | August 12, 2022 | Completed | Signed by Ian Blackwood, Responsible Partner
8 | Legal Opinions | Lender's Counsel Opinion — Wainwright & Pryor LLP | Limited enforceability opinion delivered to Pinnacle National Bank, N.A. with respect to the loan documents | Wainwright & Pryor LLP | August 12, 2022 | August 12, 2022 | Completed | Lead Partner: Gregory Fontaine; Lead Associate: Rachel Subramaniam
PAYOFF AND LIEN RELEASES
9 | Payoff / Lien Releases | Payoff Letter — Ridgeline Commercial Bank | Payoff letter from Ridgeline Commercial Bank confirming total payoff amount of $8,237,422 ($8,200,000 outstanding principal + $37,422 estimated accrued interest through August 12, 2022) for the $15,000,000 senior secured revolving credit facility dated October 15, 2020; confirms that upon receipt of payoff proceeds, all liens on BCS assets will be released | Ridgeline Commercial Bank (Renata Vasquez, VP, Commercial Lending) | August 12, 2022 | August 12, 2022 | Completed | Wire to Ridgeline per funds flow memorandum
10 | Payoff / Lien Releases | UCC-3 Termination Statement — Ridgeline Commercial Bank (Delaware) | UCC-3 termination statement to be filed with the Delaware Secretary of State terminating Ridgeline's UCC-1 financing statement against BCS | Ridgeline Commercial Bank | August 12, 2022 | August 12, 2022 | Completed | To be filed by Ridgeline upon receipt of payoff proceeds
11 | Payoff / Lien Releases | UCC-3 Termination Statement — Ridgeline Commercial Bank (Texas) | UCC-3 termination statement to be filed with the Texas Secretary of State terminating Ridgeline's UCC-1 financing statement against BCS | Ridgeline Commercial Bank | August 12, 2022 | August 12, 2022 | Completed | To be filed by Ridgeline upon receipt of payoff proceeds
UCC FILINGS
12 | UCC Filings | UCC-1 Financing Statement — Delaware Secretary of State | UCC-1 financing statement filed against Brightfield Cloud Services Inc. (Debtor) in favor of Meridian Whitcomb LLC as Collateral Agent (Secured Party); filed with the Delaware Secretary of State (state of organization) | Calderwood & Harkness LLP | August 12, 2022 | August 12, 2022 | Completed | BCS incorporated in Delaware; Delaware Registered Agent: Capitol Registered Agents LLC, 1209 Orange Street, Wilmington, DE 19801
13 | UCC Filings | UCC-1 Financing Statement — Texas Secretary of State | UCC-1 financing statement filed against Brightfield Cloud Services Inc. (Debtor) in favor of Meridian Whitcomb LLC as Collateral Agent (Secured Party); filed with the Texas Secretary of State (chief executive office state) | Calderwood & Harkness LLP | August 12, 2022 | August 12, 2022 | Completed | BCS headquarters: 4200 Lone Star Parkway, Suite 800, Austin, TX 78731
DEPOSIT ACCOUNT CONTROL AGREEMENTS
14 | DACAs | Deposit Account Control Agreement — BCS Operating Account at Pinnacle National Bank, N.A. | DACA for BCS operating account (Acct. No. 7841-0029-3356) at Pinnacle National Bank, N.A., granting Collateral Agent (Meridian Whitcomb LLC) control over the deposit account | Calderwood & Harkness LLP (draft); Pinnacle National Bank, N.A. / Meridian Whitcomb LLC | August 12, 2022 | August 12, 2022 | Completed | Account established at closing
15 | DACAs | Deposit Account Control Agreements — Other BCS Operating Accounts | DACAs for all other BCS deposit accounts as required under the Security Agreement | Calderwood & Harkness LLP | August 12, 2022 | August 12, 2022 | Completed
INSURANCE
16 | Insurance | Evidence of Property & Casualty Insurance | Certificate of insurance from Northbrook Indemnity Insurance Co. confirming property and casualty coverage with minimum $50,000,000 per occurrence; naming Pinnacle National Bank, N.A. as loss payee / additional insured | Ashford & Crane Insurance Brokerage LLC / Brightfield Cloud Services Inc. | August 12, 2022 | August 12, 2022 | Completed | Carrier: Northbrook Indemnity Insurance Co.; Broker: Ashford & Crane Insurance Brokerage LLC, Houston, TX
17 | Insurance | Evidence of Cyber Liability Insurance | Certificate of insurance from Northbrook Indemnity Insurance Co. confirming cyber liability coverage with minimum $10,000,000 per occurrence; naming Pinnacle National Bank, N.A. as additional insured | Ashford & Crane Insurance Brokerage LLC / Brightfield Cloud Services Inc. | August 12, 2022 | August 12, 2022 | Completed | Carrier: Northbrook Indemnity Insurance Co.
18 | Insurance | Evidence of D&O Insurance | Certificate of insurance from Crosshaven Specialty Underwriters, Inc. confirming directors and officers liability coverage with minimum $15,000,000 aggregate | Ashford & Crane Insurance Brokerage LLC / Brightfield Cloud Services Inc. | August 12, 2022 | August 12, 2022 | Completed | Carrier: Crosshaven Specialty Underwriters, Inc.
FINANCIAL STATEMENTS
19 | Financial Statements | Audited Financial Statements — FY 2020 | Audited financial statements of Brightfield Cloud Services Inc. for the fiscal year ended December 31, 2020 | Brightfield Cloud Services Inc. / Hartfield & Associates CPAs, PLLC (Neil Calderon, CPA, Engagement Partner) | August 12, 2022 | August 12, 2022 | Completed
20 | Financial Statements | Audited Financial Statements — FY 2021 | Audited financial statements of Brightfield Cloud Services Inc. for the fiscal year ended December 31, 2021; FY 2021 revenue: $48,300,000 (SaaS: $31,400,000; Hardware: $16,900,000); FY 2021 EBITDA: $12,800,000 | Brightfield Cloud Services Inc. / Hartfield & Associates CPAs, PLLC | August 12, 2022 | August 12, 2022 | Completed | Auditor: Hartfield & Associates CPAs, PLLC, 9400 North Capital of Texas Highway, Suite 220, Austin, TX 78759
GOOD STANDING AND ORGANIZATIONAL DOCUMENTS
21 | Good Standing | Good Standing Certificate — BCS (Delaware) | Certificate of good standing for Brightfield Cloud Services Inc. from the Delaware Secretary of State (state of incorporation) | Calderwood & Harkness LLP / Brightfield Cloud Services Inc. | August 12, 2022 | August 12, 2022 | Completed | EIN: 84-3291057
22 | Good Standing | Good Standing Certificate — BCS (Texas) | Certificate of good standing / certificate of existence for Brightfield Cloud Services Inc. from the Texas Secretary of State (headquarters state) | Calderwood & Harkness LLP / Brightfield Cloud Services Inc. | August 12, 2022 | August 12, 2022 | Completed
23 | Good Standing | Good Standing Certificate — BCS (Arizona) | Certificate of good standing for Brightfield Cloud Services Inc. from the Arizona Corporation Commission (state of qualification — Phoenix data center) | Calderwood & Harkness LLP / Brightfield Cloud Services Inc. | August 12, 2022 | August 12, 2022 | Completed
24 | Good Standing | Good Standing Certificate — BCS (California) | Certificate of good standing for Brightfield Cloud Services Inc. from the California Secretary of State (state of qualification) | Calderwood & Harkness LLP / Brightfield Cloud Services Inc. | August 12, 2022 | August 12, 2022 | Completed
25 | Good Standing | Good Standing Certificate — BCS (Virginia) | Certificate of good standing for Brightfield Cloud Services Inc. from the Virginia State Corporation Commission (state of qualification) | Calderwood & Harkness LLP / Brightfield Cloud Services Inc. | August 12, 2022 | August 12, 2022 | Completed
26 | Good Standing | Good Standing Certificate — Solara Holdings Group LLC (Delaware) | Certificate of good standing for Solara Holdings Group LLC from the Delaware Secretary of State | Calderwood & Harkness LLP / Solara Holdings Group LLC | August 12, 2022 | August 12, 2022 | Completed | EIN: 83-2047619
FUNDS FLOW AND DISBURSEMENT
27 | Funds Flow | Funds Flow Memorandum | Detailed memorandum dated August 12, 2022, setting forth disbursement of $35,000,000 in term loan proceeds from Pinnacle National Bank, N.A. (ABA 021-405-887): (1) $8,237,422 to Ridgeline Commercial Bank (payoff); (2) $350,000 upfront fee to Pinnacle; (3) $11,500,000 to BCS Dallas data center project account; (4) $9,800,000 to BCS Phoenix data center project account; (5) $3,500,000 to BCS hardware procurement account; (6) $1,612,578 to BCS operating account (Acct. No. 7841-0029-3356 at Pinnacle) | Calderwood & Harkness LLP | August 12, 2022 | August 12, 2022 | Completed | Total disbursements: $35,000,000
28 | Funds Flow | Wire Transfer Instructions | Confirmed wire transfer instructions for all payees listed in the funds flow memorandum | Calderwood & Harkness LLP / Brightfield Cloud Services Inc. / Pinnacle National Bank, N.A. | August 12, 2022 | August 12, 2022 | Completed
GUARANTOR DELIVERABLES
29 | Guarantor Deliverables | Solara Holdings Group LLC — Resolutions / Authorizations | Certified resolutions or written consent of the sole member of Solara Holdings Group LLC authorizing execution and delivery of the Guaranty Agreement; authorized representative: David Kessler, Managing Director | Calderwood & Harkness LLP / Solara Holdings Group LLC | August 12, 2022 | August 12, 2022 | Completed | Manager: Solara Capital Partners Fund III, LP
30 | Guarantor Deliverables | Solara Holdings Group LLC — Certificate of Formation / Operating Agreement | Certified copies of the Certificate of Formation and Operating Agreement (or relevant excerpts) of Solara Holdings Group LLC | Calderwood & Harkness LLP / Solara Holdings Group LLC | August 12, 2022 | August 12, 2022 | Completed | Delaware LLC; registered agent: Capitol Registered Agents LLC, 1209 Orange Street, Wilmington, DE 19801
MISCELLANEOUS
31 | Miscellaneous | Closing Confirmation Letter | Letter from Calderwood & Harkness LLP to Brightfield Cloud Services Inc. (attn: Jerome Hartwell) confirming successful closing, funding, satisfaction of all conditions precedent, and post-closing obligations | Calderwood & Harkness LLP (Ian Blackwood) | August 12, 2022 | August 12, 2022 | Completed | Notes first quarterly amortization payment of $87,500 due November 12, 2022; maturity August 12, 2027
32 | Miscellaneous | Internal Deal Summary Memorandum | C&H internal memorandum summarizing key terms, negotiation outcomes, and risk items; prepared by Sophie Tremblay and Daniel Obi, reviewed by Ian Blackwood | Calderwood & Harkness LLP (internal) | July 29, 2022 | July 29, 2022 | Completed | For internal C&H records only; not a closing deliverable to lender
[sheet: Key Contacts]
Organization | Role | Contact Name | Title | Phone | Email | Address
Brightfield Cloud Services Inc. | Borrower — CEO | Marcus Elliston | Chief Executive Officer | (512) 555-0147 | melliston@brightfieldcloud.com | 4200 Lone Star Parkway, Suite 800, Austin, TX 78731
Brightfield Cloud Services Inc. | Borrower — CFO | Priya Ramanathan | Chief Financial Officer | (512) 555-0163 | pramanathan@brightfieldcloud.com | 4200 Lone Star Parkway, Suite 800, Austin, TX 78731
Brightfield Cloud Services Inc. | Borrower — General Counsel / Secretary | Jerome Hartwell | General Counsel and Secretary | (512) 555-0189 | jhartwell@brightfieldcloud.com | 4200 Lone Star Parkway, Suite 800, Austin, TX 78731
Solara Holdings Group LLC | Guarantor — Authorized Representative | David Kessler | Managing Director, Solara Capital Partners | (212) 555-0234 | dkessler@solaracapital.com | 200 Park Avenue South, 22nd Floor, New York, NY 10003
Solara Capital Partners | Sponsor — Managing Partner | Elaine Nakamura | Managing Partner | (212) 555-0241 | enakamura@solaracapital.com | 200 Park Avenue South, 22nd Floor, New York, NY 10003
Pinnacle National Bank, N.A. | Lender / Administrative Agent — Relationship Manager | Thomas Whitford | SVP, Technology Lending Group | (212) 555-0312 | thomas.whitford@pinnaclenb.com | 600 Lexington Avenue, 35th Floor, New York, NY 10022
Pinnacle National Bank, N.A. | Lender — Credit Officer | Angela Morreau | VP, Credit Risk | (212) 555-0318 | angela.morreau@pinnaclenb.com | 600 Lexington Avenue, 35th Floor, New York, NY 10022
Meridian Whitcomb LLC | Collateral Agent | Laura Desmond | VP, Agency Services | (212) 555-0425 | ldesmond@meridianwhitcomb.com | 100 Wall Street, 18th Floor, New York, NY 10005
Ridgeline Commercial Bank | Existing Lender (Payoff) | Renata Vasquez | VP, Commercial Lending | (512) 555-0571 | rvasquez@ridgelinebank.com | 1500 Congress Avenue, Suite 600, Austin, TX 78701
Wainwright & Pryor LLP | Lender's Counsel — Lead Partner | Gregory Fontaine | Partner, Banking & Finance | (212) 555-0633 | gfontaine@wainwrightpryor.com | 51 West 52nd Street, New York, NY 10019
Wainwright & Pryor LLP | Lender's Counsel — Lead Associate | Rachel Subramaniam | Associate, Banking & Finance | (212) 555-0641 | rsubramaniam@wainwrightpryor.com | 51 West 52nd Street, New York, NY 10019
Calderwood & Harkness LLP | Borrower's Counsel — Responsible Partner | Ian Blackwood | Partner, Banking & Finance | (212) 555-0715 | iblackwood@calderwoodharkness.com | One Liberty Plaza, 42nd Floor, New York, NY 10006
Calderwood & Harkness LLP | Borrower's Counsel — Billing Partner | Stephanie Okafor | Partner, Banking & Finance | (212) 555-0722 | sokafor@calderwoodharkness.com | One Liberty Plaza, 42nd Floor, New York, NY 10006
Calderwood & Harkness LLP | Borrower's Counsel — Lead Associate | Sophie Tremblay | Associate, Banking & Finance | (212) 555-0738 | stremblay@calderwoodharkness.com | One Liberty Plaza, 42nd Floor, New York, NY 10006
Calderwood & Harkness LLP | Borrower's Counsel — Working Associate | Daniel Obi | Associate, Banking & Finance | (512) 555-0744 | dobi@calderwoodharkness.com | 300 West 6th Street, Suite 2100, Austin, TX 78701
Hartfield & Associates CPAs, PLLC | Independent Auditor | Neil Calderon, CPA | Engagement Partner | (512) 555-0856 | ncalderon@hartfieldcpa.com | 9400 North Capital of Texas Highway, Suite 220, Austin, TX 78759
Ashford & Crane Insurance Brokerage LLC | Insurance Broker | Margaret Hensley | Senior Account Executive | (713) 555-0492 | mhensley@ashfordcrane.com | 2800 Post Oak Boulevard, Suite 1400, Houston, TX 77056
[sheet: Key Dates]
Date | Event / Milestone | Notes
October 15, 2020 | Ridgeline revolving credit facility originally dated | $15,000,000 commitment; lender: Ridgeline Commercial Bank
October 2020 | Solara Capital Partners acquisition of BCS | Enterprise value: $95,000,000; acquired via Solara Fund III (fund size: $1,200,000,000; vintage 2019)
December 31, 2021 | FY 2021 year-end; MAC reference date | FY 2021 Revenue: $48.3M; EBITDA: $12.8M; Total Debt: $8.2M (Ridgeline revolver)
May 23, 2022 | Matter opened; C&H engagement commenced | C&H Matter No. 1042-00001; Responsible Partner: Ian Blackwood
May 30, 2022 | Initial term sheet received from Pinnacle | Pinnacle Credit Approval No. TLG-2022-05118
June 14, 2022 | First draft of Term Loan Agreement circulated by W&P | W&P Matter No. 1042-00001
June 28, 2022 | BCS markup of Term Loan Agreement returned by C&H
July 5, 2022 | Financial covenant negotiation calls commenced
July 18, 2022 | Financial covenant negotiation calls concluded | Final covenants: max leverage 3.50x, min interest coverage 3.00x, min liquidity $5M, max capex $18M
July 22, 2022 | Final form of all documents agreed
July 28, 2022 | Signing date | Originally anticipated as both signing and closing date
August 12, 2022 | Actual closing / funding date | $35,000,000 funded; Ridgeline payoff of $8,237,422 completed; all conditions precedent satisfied
November 12, 2022 | First quarterly amortization payment due | $87,500 ($35M × 1.00% / 4 quarters)
August 12, 2027 | Maturity date | 5 years from closing; balloon payment of remaining principal due