Contract analysis

I. Introduction and Purpose Calderwood & Harkness LLP ("C&H"), as counsel to Solara Digital Infrastructure LP ("SDILP") and Solara Digital Infrastructure Fund VI LP ("Fund VI" or the "Buyer"), has reviewed the preliminary proxy statement on Schedule 14A (the "Preliminary Proxy" or the "Proxy Statement") filed by Cloudium Technologies plc ("Cloudium" or the "Company") with the U.S. Securities and Exchange Commission (

II. Executive Summary of Key Comments We have organized our comments into the following categories, corresponding to the principal sections and topics of the Preliminary Proxy: (A) Cover Letter and Summary Term Sheet (B) Description of the Merger and the Merger Agreement (C) Fairness Opinion (D) Risk Factors (E) Financial Information (F) Interests of Directors and Officers (G) Rollover and Voting/Support Agreements (

III. Cover Letter and Summary Term Sheet Comments A. Special Meeting Details

1. Meeting Date, Time, and Location. The Preliminary Proxy currently leaves the date, time, and location of the Special Meeting in brackets (i.e., "[●]"), which is appropriate for a preliminary proxy filing. We note for the record that the Special Meeting is expected to be held on or about May 20, 2024. For purposes of the Preliminary Proxy, these fields should remain designated as "to be determined." In the definiti

2. Record Date. The record date for the determination of stockholders entitled to notice of and to vote at the Special Meeting should be clearly stated in the Preliminary Proxy. We note that the record date appears to have been set by the Cloudium board, but the Preliminary Proxy is ambiguous as to whether the record date has been finalized or remains subject to confirmation. The record date should be verified for co

3. Per-Share Merger Consideration. The per-share merger consideration should be stated as approximately $36.92 per share in cash, without interest and less any applicable withholding taxes. This figure is derived from the aggregate equity value of $6,800,000,000 divided by 184,200,000 shares of Cloudium common stock outstanding as of the signing date of the Merger Agreement (January 22, 2024). We note that the Prelim

4. Treatment of Rollover Shares. The Preliminary Proxy should clearly state that the merger consideration is payable in cash, except for shares subject to the Rollover Agreements (as defined and described in Section IX below), which will be converted into equity interests in the surviving entity. We request that target's counsel confirm that this distinction is clearly and accurately presented in the Summary Term She

5. Aggregate Deal Value. The aggregate deal value of $6,800,000,000 should be consistently referenced throughout the Preliminary Proxy. We have identified at least two instances in the draft where different formulations are used (e.g., "approximately $6.8 billion" versus "$6,800,000,000"). While these are not materially inconsistent, best practice counsels in favor of consistent usage of the precise dollar figure thr

6. Board Recommendation. The Preliminary Proxy should clearly state that the Cloudium board of directors (chaired by Douglas Pemberton, independent director) has unanimously determined that the Merger Agreement and the transactions contemplated thereby, including the merger, are fair to and in the best interests of Cloudium and its stockholders, and unanimously recommends that Cloudium stockholders vote "FOR" the pro

7. Reference to Fairness Opinion. The summary section should reference the fact that the Cloudium board received a fairness opinion from Veridian Partners LLC (Monica Pressler, Managing Director) on January 21, 2024, to the effect that, as of such date and based on and subject to the assumptions, qualifications, and limitations set forth therein, the per-share merger consideration to be received by the holders of Clo

IV. Description of the Merger and the Merger Agreement A. Structure of the Merger

8. Reverse Triangular Merger. The Preliminary Proxy should accurately describe the merger structure as a reverse triangular merger in which Stratos Merger Sub Inc. will merge with and into Cloudium Technologies plc, with Cloudium surviving the merger as a wholly owned subsidiary of Solara Digital Infrastructure Fund VI LP. This description should be verified against the Merger Agreement (specifically, Article I) to e

9. Merger Sub Formation. The Preliminary Proxy should state that Merger Sub (Stratos Merger Sub Inc.) was incorporated on January 8, 2024, in the State of Delaware, under DE File No. 7923841, as a wholly owned subsidiary of Fund VI, formed solely for the purpose of effectuating the merger. Merger Sub has not conducted any business operations, has no assets other than nominal capitalization, and has no liabilities oth

10. Governing Law. The Preliminary Proxy should identify that the merger will be effected under the Delaware General Corporation Law (the "DGCL"), as the reverse triangular merger is governed by Delaware law by virtue of the incorporation of Merger Sub and the election made in the Merger Agreement. We note that Cloudium itself is incorporated under the laws of England and Wales, and the Preliminary Proxy should addre

11. Effective Time. The effective time of the merger should be described as the time at which the Certificate of Merger is duly filed with the Secretary of State of the State of Delaware (or such later time as may be agreed by the parties and specified in the Certificate of Merger). This description should be consistent with Section 1.3 of the Merger Agreement. B. Merger Consideration and Treatment of Shares

12. Categories of Shares. The Preliminary Proxy should accurately and completely describe the treatment of each category of shares of Cloudium common stock in the merger. Specifically, the Proxy Statement should describe the following: (i) Non-Rolling Stockholders. Each share of Cloudium common stock held by stockholders other than the rollover stockholders (Jonathan Hargrove and Pinnacle Growth Ventures LLC) will be

13. Total Rollover Equity. The Preliminary Proxy should confirm that the total rollover equity amounts to approximately $616,055,952 in implied value (comprising Hargrove's approximately $142,814,544 and Pinnacle's approximately $473,241,408). This figure should be verified for consistency with the Rollover Agreements, the Equity Commitment Letter, and the sources-and-uses analysis.

14. Cash Consideration to Non-Rolling Stockholders. The Preliminary Proxy should verify and disclose that the total cash merger consideration payable to non-rolling stockholders is approximately $6,183,944,048 (i.e., $6,800,000,000 aggregate equity value minus approximately $616,055,952 in rollover equity). This figure should be reconciled with the Letter of Transmittal procedures and the paying agent arrangements. C

16. Fiduciary Out. The Preliminary Proxy should accurately describe the fiduciary-out exception, which permits the Cloudium board of directors to consider, and ultimately accept, an unsolicited Superior Proposal (as defined in the Merger Agreement) under specified conditions, including the requirement that the board determine in good faith, after consultation with its outside legal counsel and financial advisor, that

17. Termination Fees. The Preliminary Proxy should clearly and accurately disclose the following termination fees: (a) Company Termination Fee: $221,000,000 (representing approximately 3.25% of the aggregate deal value), payable by Cloudium to Fund VI upon the termination of the Merger Agreement in specified circumstances, including (i) termination by Cloudium in order to accept a Superior Proposal, and (ii) terminat

18. Termination Triggers. The Preliminary Proxy should describe all termination triggers set forth in Article VIII of the Merger Agreement, including: (a) Mutual written consent of the parties; (b) Failure to obtain stockholder approval at the Special Meeting (or any adjournment or postponement thereof); (c) Failure to consummate the merger by the outside date (initially June 30, 2024, as set forth in Section 8.1(b)(

19. Limited Guarantee. The Preliminary Proxy should disclose the Limited Guarantee, dated January 22, 2024, from Solara Fund VI GP LLC (the general partner of Fund VI) in favor of Cloudium. The Limited Guarantee guarantees the payment obligations of Fund VI in respect of the reverse termination fee and certain other liabilities, up to a maximum aggregate amount of $246,000,000, comprising the $221,000,000 reverse ter

21. Cross-Reference to Internal Materials. For the purpose of verifying the accuracy of the MAE description, we cross-reference C&H's internal annotated redline of the MAE definition (prepared by Tiffany Rosenthal, dated December 22, 2023), which tracks the evolution of the MAE definition through the negotiation process. This internal document is not for production or disclosure but should be consulted to ensure cons

22. Fair Summary. The Preliminary Proxy should provide a fair and balanced summary of the key representations and warranties made by each party in the Merger Agreement. Cloudium's representations and warranties are set forth in Article IV of the Merger Agreement and cover, among other things, corporate organization and standing, capitalization, authority and enforceability, financial statements, absence of undisclose

23. Survival Period. The survival period for the representations and warranties is 18 months post-closing. Assuming a closing date of July 9, 2024, the representations and warranties would expire on or about January 9, 2026. This survival period should be disclosed in connection with the indemnification provisions discussed in Section XII below. We request that the Preliminary Proxy consistently reference this surviv

24. Section 6.1 Operating Restrictions. The Preliminary Proxy should fairly summarize the restrictions on Cloudium's conduct of business between signing and closing, as set forth in Section 6.1 of the Merger Agreement. These restrictions require Cloudium to conduct its business in the ordinary course of business, consistent with past practice, and include specific limitations on, among other things, capital expenditu

25. Waiver Letter. We note for internal purposes that, on April 29, 2024, the parties executed a waiver letter in respect of the $12,000,000 hosting agreement between Cloudium and a third-party provider, which otherwise would have required consent under Section 6.1. This waiver post-dates the Preliminary Proxy and need not be referenced therein. However, for purposes of the Definitive Proxy review, we note that the w

26. Material Closing Conditions. The Preliminary Proxy should accurately disclose all material conditions to the obligations of the parties to consummate the merger, as set forth in Article VII of the Merger Agreement. These conditions include: (i) Stockholder approval — adoption of the Merger Agreement by the affirmative vote of the holders of a majority of the outstanding shares of Cloudium common stock entitled to

27. Full Text of Fairness Opinion. The Preliminary Proxy should include the full text of the fairness opinion delivered by Veridian Partners LLC to the Cloudium board of directors on January 21, 2024, either in the body of the Proxy Statement or as an annex thereto. Inclusion of the full text is customary and expected in a proxy statement for a going-private transaction. We request confirmation that the full text has

28. Identification of Veridian Partners. The Preliminary Proxy should correctly identify Veridian Partners LLC as the financial advisor that delivered the fairness opinion, including its principal office address (50 Rockefeller Plaza, New York, New York 10020) and the name of the responsible professional (Monica Pressler, Managing Director). We have noted one instance in the Preliminary Proxy where "Veridian Partners

29. Scope, Assumptions, and Limitations. The Preliminary Proxy should accurately disclose the scope, assumptions, qualifications, and limitations of the fairness opinion, including, without limitation, Veridian Partners' reliance on publicly available information and information provided by Cloudium management, its assumption that the financial analyses and projections furnished by Cloudium management were reasonably

31. Fees and Compensation. The Preliminary Proxy should disclose the fees payable to Veridian Partners LLC in connection with the engagement, including any fees contingent upon the consummation of the merger, any opinion fee, any transaction fee, and any expense reimbursement arrangements. Disclosure of the contingent nature of any fees is particularly important in the context of Section 14(a) and Schedule 13E-3 comp

32. Financial Analyses Summary. The Preliminary Proxy includes a summary of the financial analyses performed by Veridian Partners in connection with the delivery of its fairness opinion, including (a) a comparable public companies analysis, (b) a comparable transactions analysis, (c) a discounted cash flow analysis, and (d) a premiums paid analysis. We request that target's counsel confirm that these summaries are co

VI. Risk Factors A. Transaction-Specific Risks

33. Comprehensive Risk Disclosure. The Preliminary Proxy should include risk factors that adequately address the following transaction-specific risks. We request that target's counsel verify that each of the following risk factors is adequately addressed in the Preliminary Proxy: (a) Risk of Non-Consummation. The risk that the merger may not be consummated due to failure to obtain required regulatory approvals, failu

34. Staleness of General Risk Factors. We request that the general risk factors included in the Preliminary Proxy (i.e., risk factors relating to Cloudium's business, industry, and financial condition that are not specific to the merger) be reviewed for staleness or inapplicability in the context of a merger proxy. Risk factors that were included in Cloudium's most recent Annual Report on Form 10-K or Quarterly Repor

35. No Cross-Contamination. We also request confirmation that there is no cross-contamination of risk factors from unrelated Cloudium business risks that could be misleading in the merger context. For example, risk factors relating to Cloudium's long-term growth prospects, competitive positioning, or product development pipeline may be appropriate in the context of an annual report but could be misleading in a merger

36. Consistency with Audited Financial Statements. All financial data presented in the Preliminary Proxy should be verified for consistency with Cloudium's audited consolidated financial statements for the fiscal year ended September 30, 2023, as audited by Harwell & Dobson LLP (engagement partner: Martin Chisholm). Any financial data sourced from unaudited interim financial statements or management estimates should

37. LTM Revenue and EBITDA. The Preliminary Proxy references LTM revenue of $1,620,000,000 and LTM EBITDA of $405,000,000 in various locations. These figures should be verified for accuracy, and the source and measurement period should be clearly identified (i.e., the twelve-month period ended September 30, 2023, corresponding to Cloudium's most recently completed fiscal year). To the extent that the LTM period diffe

38. Annual Recurring Revenue. If the Preliminary Proxy discloses Cloudium's annual recurring revenue ("ARR"), which we understand to have been approximately $1,740,000,000 as of December 31, 2023, the Preliminary Proxy should clearly identify the source of this figure, the date as of which it is measured, and the methodology used to calculate it. ARR is a non-GAAP metric and should be accompanied by appropriate cauti

39. Projections and Forward-Looking Information. To the extent that any projections or forward-looking financial information prepared by Cloudium management were provided to Veridian Partners LLC or to Osprey Bancroft & Co. (Solara's financial advisor; Damien Harlow, Managing Director) in connection with the transaction, and such projections are disclosed or summarized in the Preliminary Proxy, the disclosure must be

40. Cross-Consistency of Financial Figures. We request that target's counsel verify the consistency of all financial figures as presented in the various sections of the Preliminary Proxy, including the narrative discussion of the background of the merger, the summary of the fairness opinion, the discussion of the Cloudium board's reasons for the merger, and any annexed financial tables or schedules. Any inconsistency

VIII. Interests of Directors and Officers in the Merger 41. [HIGH] Differing Interests. This section of the Preliminary Proxy is among the most important from a disclosure perspective, as it must accurately and completely disclose all interests of Cloudium's directors and executive officers in the merger that differ from, or are in addition to, the interests of Cloudium's stockholders generally. Under Item 1014 of Re

42. Change-of-Control Acceleration of Equity Awards. The Preliminary Proxy should disclose the treatment of all outstanding equity awards (stock options, restricted stock units, and performance stock units) held by Cloudium's directors and executive officers in connection with the merger, including (a) whether vesting will accelerate upon the closing of the merger (single-trigger or double-trigger), (b) the aggregate

43. Golden Parachute Compensation. The Preliminary Proxy must include the tabular disclosure required by Item 402(t) of Regulation S-K and Rule 14a-21(c) under the Exchange Act (the "golden parachute" advisory vote disclosure), setting forth the compensation that each named executive officer of Cloudium may receive in connection with the merger, including cash severance, equity award acceleration, continued health an

44. Indemnification and D&O Insurance Tail. The Preliminary Proxy should disclose the provisions of the Merger Agreement relating to indemnification of, and maintenance of directors' and officers' liability insurance for, Cloudium's current and former directors and officers following the closing of the merger. Specifically, Section 6.9 of the Merger Agreement provides for the continuation of indemnification obligatio

IX. Rollover and Voting/Support Agreements A. Rollover Agreements

45. Summary of Rollover Agreements. The Preliminary Proxy should include an accurate summary of the Rollover Agreements entered into as of January 22, 2024, by Jonathan Hargrove and Pinnacle Growth Ventures LLC, respectively, with Fund VI and Merger Sub. The summary should describe the material terms of each Rollover Agreement, including the number and percentage of shares subject to rollover, the rollover percentage

46. Specific Rollover Amounts. The Preliminary Proxy should disclose the specific rollover percentages and implied dollar amounts for each rollover stockholder: • Jonathan Hargrove: Rolling over 50% of 7,736,400 shares (approximately 3,868,200 shares), representing approximately $142,814,544 in implied value at the per-share merger consideration. • Pinnacle Growth Ventures LLC: Rolling over 60% of 21,367,200 shares (

47. Filing Status. The Rollover Agreements should be filed as exhibits to the Proxy Statement or as annexes to the Merger Agreement exhibit. Alternatively, they may be incorporated by reference to prior filings (e.g., the Form 8-K filed in connection with the execution of the Merger Agreement). We request that target's counsel confirm the filing status and that appropriate cross-references are included in the Prelimi

48. Summary of Voting/Support Agreements. The Preliminary Proxy should accurately describe the Voting and Support Agreements (collectively, the "Support Agreements") entered into as of January 22, 2024, by each of Jonathan Hargrove and Pinnacle Growth Ventures LLC with Fund VI. The Support Agreements require each of Hargrove and Pinnacle to, among other things, (a) vote all of their shares of Cloudium common stock in

49. Aggregate Committed Shares. The Support Agreements cover shares representing approximately 15.8% of the outstanding shares of Cloudium common stock (comprising Hargrove's 4.2% and Pinnacle's 11.6%). This aggregate percentage should be clearly disclosed in the Preliminary Proxy, as it is material to stockholders' understanding of the likelihood of obtaining stockholder approval.

50. Transfer Restrictions and Voting Obligations. The Preliminary Proxy should describe the transfer restrictions and voting obligations contained in the Support Agreements in sufficient detail for stockholders to understand the nature and scope of the commitments made by Hargrove and Pinnacle.

X. Financing A. Debt Financing

51. Debt Commitment Letter. The Preliminary Proxy should accurately describe the committed debt financing for the merger, as set forth in the Debt Commitment Letter dated January 22, 2024 (the "Debt Commitment Letter"), from Meridian Atlantic Bank, N.A. (as lead arranger and administrative agent; principal office at 383 Madison Avenue, New York, New York) and Ironclad Capital Markets LLC (as co-arranger; principal of

52. No Financing Condition. The Preliminary Proxy should clearly and prominently state that the availability of the debt financing is not a condition to the Buyer's obligation to consummate the merger under the Merger Agreement. This disclosure is critical and should appear in both the Summary Term Sheet and the detailed discussion of the merger, as it is material to stockholders' assessment of the certainty of closi

53. Financing Cooperation Covenant. The Preliminary Proxy should verify disclosure of the financing cooperation covenant set forth in Section 6.14 of the Merger Agreement, which obligates Cloudium to use commercially reasonable efforts to cooperate with Fund VI in connection with the arrangement of the debt financing, including by providing financial information, making management available for presentations, facilit

54. Lenders' Counsel. The Preliminary Proxy need not identify lenders' counsel (Winthrop & Hale LLP; Christine Novak, Partner). However, we request that target's counsel verify that no incorrect counsel identification appears in the Preliminary Proxy (e.g., that Winthrop & Hale is not inadvertently named as counsel to Solara or as counsel to Cloudium). B. Equity Financing