Contract analysis

I. Executive Summary This memorandum analyzes the scope, mechanics, and enforceability of the financing cooperation obligations imposed on Cloudium Technologies plc ("Cloudium" or the "Company") under Section 6.14 of the Agreement and Plan of Merger dated January 22, 2024 (the "Merger Agreement"), among Cloudium Technologies plc, Stratos Merger Sub Inc. ("Merger Sub"), and Solara Digital Infrastructure Fund VI LP ("F

II. Background and Transaction Context A. The Transaction The transaction contemplated by the Merger Agreement is a reverse triangular merger under the General Corporation Law of the State of Delaware (the "DGCL"). Merger Sub, a Delaware corporation incorporated on January 8, 2024 (Delaware File No. 7923841), is a wholly owned subsidiary of Fund VI formed solely for the purpose of effecting the merger. At the Effecti

III. Section 6.14 — Detailed Analysis of Financing Cooperation Obligations A. Overview and Structure of Section 6.14

Section 6.14 of the Merger Agreement is titled "Financing Cooperation" and is situated within Article VI (Covenants). As drafted, Section 6.14 imposes a series of specific obligations on the Company to use "commercially reasonable efforts" to cooperate with and assist Buyer in connection with the arrangement of the Debt Financing (as defined in the Merger Agreement) and any Permitted Financing Alternative (as defined

1. Financial Information and Data. Section 6.14(a) obligates Cloudium to furnish, and to cause its subsidiaries to furnish, to Buyer, the arrangers (Meridian Atlantic Bank, N.A. and Ironclad Capital Markets LLC), and their respective advisors and representatives, certain financial information and data reasonably requested in connection with the Debt Financing. The specific financial information deliverables include t

2. Management Participation in Lender Presentations and Road Shows. Section 6.14(b) obligates Cloudium to make its senior management team available to participate in various presentations, meetings, and due diligence sessions in connection with the marketing and syndication of the debt financing. Specifically, the covenant requires Cloudium's senior management — including CEO Jonathan Hargrove, CFO Sienna Whitfield,

3. Execution of Borrower-Side Documents. Section 6.14(c) obligates Cloudium to execute and deliver, or to use commercially reasonable efforts to cause to be executed and delivered, certain borrower-side documents in connection with the debt financing. The documents that Cloudium is required to cooperate with respect to include: (i) The Credit Agreement and related loan documents. At closing, Cloudium (as the survivin

4. Comfort Letters and Auditor Cooperation. Section 6.14(d) obligates Cloudium to use commercially reasonable efforts to cause its independent registered public accounting firm, Harwell & Dobson LLP, to provide customary comfort letters in connection with the debt financing. The comfort letters required include: (i) Cold comfort letters addressed to the arrangers (Meridian Atlantic Bank, N.A. and Ironclad Capital Mar

5. Cooperation with Rating Agency Process. Section 6.14(e) requires Cloudium to reasonably cooperate in connection with Buyer's efforts to obtain corporate and instrument credit ratings from one or more rating agencies for the debt financing. The rating process is a standard component of leveraged loan syndications and typically involves engagement with one or both of the major credit rating agencies (S&P Global Rati

6. Legal and Regulatory Cooperation. Section 6.14(f) requires Cloudium to furnish information and documents reasonably necessary for the arrangers and prospective lenders to satisfy their regulatory compliance requirements, including: (i) KYC (Know Your Customer) documentation, including entity formation documents (certificates of incorporation, articles of association, certificates of good standing), organizational

7. Corporate Actions and Authorizations. Section 6.14(g) obligates Cloudium to take all corporate actions reasonably requested by Buyer to permit the consummation of the debt financing at closing. These corporate actions include: (i) Board resolutions of the surviving entity authorizing the execution, delivery, and performance of the Credit Agreement, the Guarantee and Collateral Agreement, and related loan documents

Section 6.14 customarily provides that such corporate authorizations need only be effective at or following the consummation of the merger and are not required to be adopted prior to closing. During the interim period, Cloudium's obligation is to cooperate in the preparation of the forms of resolution and to take such preliminary steps as may be necessary to ensure that the required corporate authorizations can be ob

8. Cooperation with Marketing Materials. Section 6.14(h) requires Cloudium to cooperate in the preparation of customary marketing materials for the debt syndication. These marketing materials include: (i) The Confidential Information Memorandum ("CIM"), which is the principal marketing document distributed to prospective lenders in a syndicated loan transaction. The CIM typically contains a detailed description of th

IV. Protections and Limitations on Cooperation Obligations A. "Commercially Reasonable Efforts" Standard The financing cooperation covenant in Section 6.14 is qualified by a "commercially reasonable efforts" standard. This means that Cloudium is required to use commercially reasonable efforts to cooperate with and assist Buyer in connection with the debt financing, but is not required to guarantee the success of the

Section 6.14 provides that all cooperation activities required of Cloudium must be conducted "at reasonable times and upon reasonable prior notice" and shall not "unreasonably interfere" with the ongoing business operations of Cloudium and its subsidiaries. This limitation recognizes that Cloudium is a large, operationally complex enterprise with approximately 6,800 employees globally, and that its senior management

Section 6.14 expressly provides that no obligation under the financing cooperation covenant shall require Cloudium or any of its directors, officers, or employees to: (i) Execute any agreement, certificate, instrument, or other document that would be effective prior to the consummation of the merger; (ii) Incur any personal liability in connection with the debt financing; or (iii) Pay any fees, expenses, commitment f

Section 6.14 contains two important protective provisions relating to costs and liabilities incurred by Cloudium in connection with the financing cooperation: Expense Reimbursement. Buyer (Fund VI) is obligated to promptly reimburse Cloudium for all reasonable and documented out-of-pocket costs and expenses incurred by Cloudium and its subsidiaries in connection with the financing cooperation. This includes, without

Section 6.14 provides that all non-public information furnished by Cloudium to the arrangers, prospective lenders, and their respective advisors in connection with the financing cooperation process is subject to customary confidentiality restrictions. The arrangers and prospective lenders will be required to execute confidentiality or non-disclosure undertakings prior to receiving any non-public information from Clou

V. Interplay with Other Merger Agreement Provisions A. Closing Conditions (Article VII) The Merger Agreement does not contain a financing condition. That is, Buyer's obligation to consummate the merger under Sections 7.1 and 7.2 is not conditioned upon Buyer's receipt of the debt financing committed under the DCL or any other financing. This is standard in private equity-backed public company acquisitions and reflect

Section 6.14 must be read in conjunction with Section 6.1 of the Merger Agreement, which sets forth the interim operating covenants that restrict Cloudium's operations during the period between signing and closing. The interim operating covenants are designed to preserve the value of Cloudium's business and prevent Cloudium from taking actions outside the ordinary course of business without Buyer's prior written cons

VI. Practical Considerations and Recommendations A. Monitoring and Compliance Tracking We recommend establishing a comprehensive financing cooperation compliance tracker to monitor Cloudium's compliance with its obligations under Section 6.14 throughout the interim period. The compliance tracker should be maintained by the Calderwood & Harkness deal team and should track, at a minimum, the following categories of inf