1042-00004
· Lone Star Trust Company · Closing
closing-funds-flow-memo.xlsx
DOCUMENT
M&A / Corporate
[sheet: Cover & Summary]
| Field | Value |
| Document Title | Closing Funds Flow Memorandum |
| Matter | Acquisition of Codelaunch Labs, Inc. by Brightfield Cloud Services Inc. |
| Matter No. | 1042-00004 |
| Prepared By | Ryan Kowalski, Lead Associate / Megan Chu, Working Associate — Calderwood & Harkness LLP |
| Reviewed By | Beatrice Holloway, Responsible Partner — Calderwood & Harkness LLP |
| Firm Address | 2000 McKinney Avenue, Suite 3400, Dallas, TX 75201 |
| Date | July 22, 2023 |
| Closing Date / Effective Time | July 22, 2023 |
| Transaction | Forward merger of BCS DevTools Merger Sub, Inc. with and into Codelaunch Labs, Inc. under DGCL § 251; Merger Sub surviving as wholly owned subsidiary of BCS |
| Aggregate Merger Consideration | $22,000,000 |
| Buyer | Brightfield Cloud Services Inc. (EIN: 81-2045783; DE file no. 5928174) |
| Buyer Address | 4200 Westgrove Boulevard, Suite 1100, Irving, TX 75038 |
| Target | Codelaunch Labs, Inc. (EIN: 84-3291057; DE file no. 7834219) |
| Target Address | 1607 East 6th Street, Suite 300, Austin, TX 78702 |
| Merger Sub | BCS DevTools Merger Sub, Inc. (EIN: 93-1748206; DE file no. 7916483) |
| Stockholder Representative | Naveen Subramaniam |
| Paying Agent | Pinnacle National Bank, N.A. |
| Escrow Agent | Lone Star Trust Company, N.A. |
| Escrow Account Ref. | LSTC-ESC-2023-004417 |
| Governing Law | Delaware |
| CONFIDENTIAL | Attorney Work Product — Privileged and Confidential |
[sheet: Sources of Funds]
| Line Item | Source Entity | Description | Amount | Notes |
| 1 | Brightfield Cloud Services Inc. | Cash on hand — available balance sheet cash | $5,375,000 | Amount confirmed by BCS Treasury; residual after revolver draw |
| 2 | Granite Harbor Bank, N.A. | Draw on existing revolving credit facility ($75,000,000 committed revolver) | $15,225,000 | Post-closing drawn balance: $28,400,000 (includes this acquisition draw plus prior draws) |
| TOTAL SOURCES | $20,600,000 | Must equal Total Uses |
[sheet: Uses of Funds]
| Line No. | Category | Payee / Recipient | Description | Amount | Wire Destination | Notes |
| CLOSING CASH CONSIDERATION | Per-share closing cash: $1.65 × 10,000,000 shares | $16,500,000 | Subtotal — Stockholder Payments | |||
| 1 | Stockholder Payment | Naveen Subramaniam | 2,800,000 shares × $1.65/share (28%) | $4,620,000 | Via Pinnacle National Bank, N.A. (Paying Agent) | Co-Founder & CEO; Stockholder Representative |
| 2 | Stockholder Payment | Elise Thornberry | 2,400,000 shares × $1.65/share (24%) | $3,960,000 | Via Pinnacle National Bank, N.A. (Paying Agent) | Co-Founder & CTO |
| 3 | Stockholder Payment | Marcus Okonkwo | 1,800,000 shares × $1.65/share (18%) | $2,970,000 | Via Pinnacle National Bank, N.A. (Paying Agent) | Co-Founder & VP Engineering |
| 4 | Stockholder Payment | Ridgeway Ventures Fund II, LP | 2,200,000 shares × $1.65/share (22%) | $3,630,000 | Via Pinnacle National Bank, N.A. (Paying Agent) | Series A investor |
| 5 | Stockholder Payment | Angel / Option Holders (various) | 800,000 shares × $1.65/share (8%) | $1,320,000 | Via Pinnacle National Bank, N.A. (Paying Agent) | Various angel investors and exercised-option holders; individual wire breakdown per Letter of Transmittal |
| ESCROW DEPOSIT | $2,200,000 | Subtotal — Escrow | ||||
| 6 | Escrow Deposit | Lone Star Trust Company, N.A. | Indemnification escrow per Escrow Agreement; Account Ref. LSTC-ESC-2023-004417 | $2,200,000 | Wire to Lone Star Trust Company, N.A., 500 West 5th Street, Suite 800, Austin, TX 78701 | Release date: January 22, 2025 (18 months post-Closing), absent pending claims; subject to indemnification cap of $7,700,000 (35% of deal value) |
| ADVISORY & TRANSACTION FEES | $1,900,000 | Subtotal — Fees & Expenses | ||||
| 7 | Seller Advisory Fee | Ashburn Park Capital LLC | Seller's investment bank advisory fee (3% of $22,000,000) | $660,000 | Wire to Ashburn Park Capital LLC, 200 West 6th Street, Suite 600, Austin, TX 78701 | Per engagement letter between Codelaunch and Ashburn Park; payable from deal proceeds at Closing; contact: Tara Novak, Managing Director |
| 8 | Buyer Legal Fees (est.) | Calderwood & Harkness LLP | Buyer's outside counsel fees and expenses (estimated) | $425,000 | Wire to Calderwood & Harkness LLP, 2000 McKinney Avenue, Suite 3400, Dallas, TX 75201 | Final invoice to follow; estimate based on engagement scope |
| 9 | Seller Legal Fees (est.) | Caldwell, Raines & Fitch LLP | Seller's/target's outside counsel fees and expenses (estimated) | $310,000 | Wire to Caldwell, Raines & Fitch LLP, 600 Congress Avenue, Suite 2200, Austin, TX 78701 | Payable from seller proceeds; contact: Geoffrey Aldrich |
| 10 | Accounting / Diligence Advisory (est.) | Kerrigan & Pryce LLP | Buyer's financial diligence advisor fees (estimated) | $175,000 | Wire to Kerrigan & Pryce LLP, 1700 Pacific Avenue, Suite 1500, Dallas, TX 75201 | Final invoice to follow |
| 11 | R&W Insurance Premium (est.) | Pinnacle Investors Specialty Insurance Company | Buy-side R&W insurance premium; Policy No. CSI-RWI-2023-07841 | $240,000 | Per Ashgrove Equity Partners Risk Advisors, Inc. (broker; contact: Philip Graves) | ~3% of $8,000,000 policy limit; $550,000 self-insured retention; paid by BCS |
| 12 | DE Secretary of State Filing Fee | State of Delaware | Certificate of Merger filing fee (filed July 18, 2023) | $2,000 | Paid via counsel | Nominal amount |
| 13 | Miscellaneous Closing Costs (est.) | Various | Transfer taxes, courier, UCC searches, good standing certificates, etc. | $88,000 | Various | Estimates; actual amounts TBD |
| TOTAL USES | $20,600,000 | Must equal Total Sources |
[sheet: Stockholder Detail]
| Stockholder | Role | Shares Held | Ownership % | Per-Share Closing Cash | Closing Cash Payment | Per-Share Escrow Holdback | Escrow Holdback Amount | Per-Share Max Earnout | Max Earnout Amount | Earnout Eligible? | Earnout Allocation % | Total Maximum Consideration |
| Naveen Subramaniam | Co-Founder & CEO; Stockholder Rep. | 2,800,000 | 28.00% | $1.65 | $4,620,000 | $0.22 | $616,000 | $0.33 | $1,320,000 | Yes — Founder Earnout Participant | 40.00% | $6,556,000 |
| Elise Thornberry | Co-Founder & CTO | 2,400,000 | 24.00% | $1.65 | $3,960,000 | $0.22 | $528,000 | $0.33 | $1,131,570 | Yes — Founder Earnout Participant | 34.29% | $5,619,570 |
| Marcus Okonkwo | Co-Founder & VP Engineering | 1,800,000 | 18.00% | $1.65 | $2,970,000 | $0.22 | $396,000 | $0.33 | $848,430 | Yes — Founder Earnout Participant | 25.71% | $4,214,430 |
| Ridgeway Ventures Fund II, LP | Series A Investor | 2,200,000 | 22.00% | $1.65 | $3,630,000 | $0.22 | $484,000 | N/A | $0 | No | N/A | $4,114,000 |
| Angel / Option Holders (various) | Various | 800,000 | 8.00% | $1.65 | $1,320,000 | $0.22 | $176,000 | N/A | $0 | No | N/A | $1,496,000 |
| TOTAL | 10,000,000 | 100.00% | $16,500,000 | $2,200,000 | $3,300,000 | $22,000,000 |
[sheet: Earnout Summary]
| Item | Detail |
| Earnout Status at Closing | NOT funded at Closing; payable post-Closing upon milestone achievement |
| Maximum Earnout Consideration | $3,300,000 (15% of $22,000,000 aggregate merger consideration) |
| Earnout Period | 24 months from Closing Date (July 22, 2023 through July 22, 2025) |
| Milestone 1 | 50% of earnout ($1,650,000): Codelaunch platform reaches ≥200 enterprise customer accounts by July 22, 2024 |
| Milestone 2 | 50% of earnout ($1,650,000): Codelaunch platform generates ≥$8,000,000 ARR during 24-month earnout period, measured by July 22, 2025 |
| Current ARR (at Signing) | ~$4,800,000 |
| Earnout Recipients | Naveen Subramaniam (40.00% = $1,320,000 max); Elise Thornberry (34.29% ≈ $1,131,570 max); Marcus Okonkwo (25.71% ≈ $848,430 max) |
| Employment Condition | Each Founder Earnout Participant must remain full-time employee of BCS through applicable milestone measurement date; voluntary departure or termination for Cause forfeits unpaid share (redistributed pro rata to remaining participants) |
| Good-Faith Operation Covenant | BCS covenants to operate Codelaunch product line in good faith and ordinary course; retains reasonable business discretion |
| Dispute Resolution | Any earnout milestone dispute subject to determination by independent accounting firm (Firth Corvinal CPAs LLP) whose determination shall be final and binding; costs split equally between parties |
[sheet: Wire Instructions]
| Line Ref. | Recipient | Role | Bank Name | Bank Address | ABA / Routing No. | Account No. | Account Name | Reference / Memo | Amount | Contact |
| W-1 | Pinnacle National Bank, N.A. (Paying Agent) | Paying Agent — for distribution to Codelaunch stockholders | Pinnacle National Bank, N.A. | 301 Commerce Street, Suite 100, Fort Worth, TX 76102 | [ABA to be provided] | [Acct to be provided] | Pinnacle National Bank, N.A. — Paying Agent Account — BCS / Codelaunch Merger | Closing Cash Consideration — Codelaunch Labs Merger | $16,500,000 | Pinnacle National Bank — Trust Department |
| W-2 | Lone Star Trust Company, N.A. (Escrow Agent) | Escrow Agent — indemnification escrow deposit | Lone Star Trust Company, N.A. | 500 West 5th Street, Suite 800, Austin, TX 78701 | [ABA to be provided] | LSTC-ESC-2023-004417 | Lone Star Trust Company, N.A. — Escrow Account — BCS / Codelaunch | Escrow Deposit — Agreement and Plan of Merger dated June 1, 2023 | $2,200,000 | Reginald Huang, VP, Escrow Services |
| W-3 | Ashburn Park Capital LLC | Seller's Investment Bank — advisory fee | Ashburn Park Capital LLC | 200 West 6th Street, Suite 600, Austin, TX 78701 | [ABA to be provided] | [Acct to be provided] | Ashburn Park Capital LLC — Operating Account | Advisory Fee — Codelaunch Labs, Inc. Merger | $660,000 | Tara Novak, Managing Director |
| W-4 | Pinnacle Investors Specialty Insurance Company | R&W Insurance Carrier — premium payment | [Insurance carrier bank TBD] | [Address TBD] | [ABA to be provided] | [Acct to be provided] | Pinnacle Investors Specialty Insurance Company | R&W Insurance Premium — Policy No. CSI-RWI-2023-07841 | $240,000 | Philip Graves, Ashgrove Equity Partners Risk Advisors, Inc. (broker) |
| W-5 | Calderwood & Harkness LLP | Buyer's Outside Counsel — legal fees | [Bank TBD] | 2000 McKinney Avenue, Suite 3400, Dallas, TX 75201 | [ABA to be provided] | [Acct to be provided] | Calderwood & Harkness LLP — Client Trust / Operating | Legal Fees — Matter No. 1042-00004 | $425,000 | Beatrice Holloway / James Prentice |
| W-6 | Caldwell, Raines & Fitch LLP | Seller's Outside Counsel — legal fees | [Bank TBD] | 600 Congress Avenue, Suite 2200, Austin, TX 78701 | [ABA to be provided] | [Acct to be provided] | Caldwell, Raines & Fitch LLP — Client Trust / Operating | Legal Fees — Codelaunch Labs, Inc. | $310,000 | Geoffrey Aldrich |
| W-7 | Kerrigan & Pryce LLP | Buyer's Accounting / Diligence Advisor — fees | [Bank TBD] | 1700 Pacific Avenue, Suite 1500, Dallas, TX 75201 | [ABA to be provided] | [Acct to be provided] | Kerrigan & Pryce LLP — Operating Account | Diligence Advisory Fees — BCS / Codelaunch | $175,000 | Kerrigan & Pryce LLP |
| W-8 | State of Delaware | DE Secretary of State — filing fee | [N/A — paid via counsel] | [N/A] | [N/A] | [N/A] | [N/A] | Certificate of Merger Filing Fee | $2,000 | Calderwood & Harkness LLP (on behalf of parties) |
| W-9 | Various | Miscellaneous closing costs | Various | Various | Various | Various | Various | Miscellaneous Closing Costs — BCS / Codelaunch Merger | $88,000 | Ryan Kowalski, Calderwood & Harkness LLP |
| TOTAL WIRES | $20,600,000 | Must equal Total Sources and Total Uses |