Marcus,
With signing scheduled for tomorrow, January 22, I wanted to provide you with a comprehensive summary of (a) signing-day logistics and sequencing, (b) the status of all transaction documents, and (c) the remaining outstanding items to be resolved before or at signing. Tiffany Rosenthal and Andrew Fitzpatrick have been coordinating with all counterparties and advisors throughout the weekend, and I am pleased to report that we are in excellent shape.
I have also attached our signing-day document checklist, which Tiffany has been maintaining, identifying all documents to be executed tomorrow along with responsible parties and current execution status.
**1. Signing-Day Sequence / Mechanics**
The following documents are to be executed on January 22, 2024, in the sequence and manner described below:
- **Merger Agreement.** Agreement and Plan of Merger among Cloudium Technologies plc, Stratos Merger Sub Inc., and Solara Digital Infrastructure Fund VI LP. The execution version was finalized following the January 15, 2024 negotiation session in New York and final drafting over the past week. The agreement is governed by Delaware law and implements a reverse triangular merger structure, with Merger Sub merging with and into Cloudium, and Cloudium surviving as a wholly owned subsidiary of Fund VI.
- **Debt Commitment Letter.** Execution version from Meridian Atlantic Bank, N.A. and Ironclad Capital Markets LLC, committing $4,240,000,000 ($3,740,000,000 Term Loan B and $500,000,000 Revolving Credit Facility). To be executed concurrently with the Merger Agreement. The confidential Fee Letter will also be executed concurrently.
- **Equity Commitment Letter.** From Fund VI to Stratos Merger Sub Inc., committing $2,832,888,096 in cash equity. To be executed concurrently.
- **Limited Guarantee.** From Solara Fund VI GP LLC in favor of Cloudium, guaranteeing up to $246,000,000 ($221,000,000 reverse termination fee plus $25,000,000 enforcement costs). To be executed concurrently.
- **Rollover Agreements.** Two agreements: - (1) Jonathan Hargrove rolling over 50% of his 7,736,400 shares (~$142,814,544); and - (2) Pinnacle Growth Ventures LLC rolling over 60% of its 21,367,200 shares (~$473,241,408). - Total rollover equity: ~$616,055,952. Both to be executed concurrently.
- **Voting / Support Agreements.** Hargrove (4.2% of outstanding shares) and Pinnacle (11.6% of outstanding shares) each committing to vote in favor of the merger. To be executed concurrently.
- **Escrow Agreement.** Among Fund VI, Cobalt Trust Company (as escrow agent), and Douglas Pemberton (as Stockholder Representative). Executed at signing but effective at closing. Governs the $544,000,000 indemnity escrow (8% of $6.8B deal value).
- **Stockholder Representative Agreement.** Appointing Douglas Pemberton.
- **Non-Competition / Non-Solicitation Agreements.** To be executed by Jonathan Hargrove and Sienna Whitfield.
- **Disclosure Schedules.** Seller disclosure schedules compiled by Ridgeway Phelps & Sato. Our review comments have been addressed, and final versions will be attached to the Merger Agreement at execution.
All signature pages will be held in escrow by Calderwood & Harkness and Ridgeway Phelps & Sato and released simultaneously upon confirmation that all documents are in agreed form and fully executed. We anticipate that the Merger Agreement and all ancillary documents will be fully executed by end of business on January 22.
**2. Key Deal Terms — Summary Reminder**
For your quick reference, the headline terms are as follows:
- **Deal Value:** $6,800,000,000; per-share merger consideration of ~$36.92 (184,200,000 shares outstanding) - **Structure:** Reverse triangular merger under the DGCL; Cloudium survives - **Indemnification Cap:** 15% of deal value = $1,020,000,000 - **Escrow:** 8% of deal value = $544,000,000 deposited with Cobalt Trust Company at closing; 50% released at 12 months post-closing, remainder at 18 months (survival period expiry) - **Indemnity Basket:** 0.75% of deal value = $51,000,000 (tipping basket); de minimis threshold of $500,000 per claim - **No-Shop:** Effective from signing, subject to fiduciary-out exception - **Termination Fee (Cloudium):** 3.25% = $221,000,000 - **Reverse Termination Fee (Solara):** 5.5% = $374,000,000 - **MAE Definition:** Includes carveouts for pandemics, war, and changes in law — consistent with our negotiated position - **Change of Control Consents:** Required under the Aegis Federal Solutions Master SaaS Agreement ($84M ARR) and the Helix Data Systems Technology License Agreement, plus mandatory prepayment of $820,000,000 existing indebtedness under Cloudium's credit agreement with Atlas Commercial Lending Corp. — all to be obtained or satisfied prior to closing
**3. R&W Insurance Status**
The Northfield Assurance Ltd. policy (Policy No. NFA-TRI-2024-00487) was bound on January 19, 2024 — three days ahead of signing. Key terms:
- **Policy Limit:** $680,000,000 (10% of deal value) - **Retention:** $544,000,000 (equals escrow amount); 50% retention drop-down to $272,000,000 after 12 months if no pending claims - **Premium:** $13,600,000 (2.0% rate on limit), paid by Solara at binding - **Broker Fee:** $680,000 paid to Peregrine Advisory Group LLC (Timothy Gallagher) - **Subrogation:** Waived against Cloudium and its officers/directors except in cases of fraud - **No-Claims Declaration:** Due at closing
As a structural note, the R&W policy sits above the escrow. Solara's first recourse is to the indemnity escrow (and direct indemnification from rollover participants up to their respective caps), and then to the R&W policy for amounts above the retention.
**4. Financing Documents — Status**
- **Debt Commitment Letter:** Final execution version in hand. Graham Whitaker at Meridian Atlantic and Samuel Diaz at Ironclad have confirmed their authorized signatories are ready. - **Fee Letter:** Final and agreed. - **Equity Commitment Letter:** Final execution version; to be signed by Fund VI. - **Limited Guarantee:** Final execution version; to be signed by Fund VI GP. - **Co-Investment Agreement:** The Co-Investment Agreement for Solara Digital Co-Invest VI-A LP ($425,000,000 co-investment from Fund VI LPs) is also in final form for concurrent execution. - **Credit Agreement:** Actual Credit Agreement drafting will proceed post-signing with Winthrop & Hale LLP (Christine Novak) as lenders' counsel. The term sheet and commitment letter terms lock in the economics.
**5. Entity / Authorization Matters**
- Stratos Merger Sub Inc. was incorporated in Delaware on January 8, 2024 (DE File No. 7923841). Board consent and written consent of the sole stockholder (Fund VI) approving the Merger Agreement are ready for execution on January 22. - Resolutions of Solara Fund VI GP LLC (as GP of Fund VI) authorizing execution of the Merger Agreement, ECL, Limited Guarantee, and related documents are in final form for adoption on January 22. - EIN for Fund VI: 87-4523190.
**6. Public Announcement**
- The press release and Form 8-K (signing announcement) are in substantially final form. We prepared the 8-K draft for Cloudium and have coordinated with Catherine Answorth at Ridgeway Phelps & Sato. - The joint press release will be issued on January 23, 2024 (day after signing) before market open. - Cloudium's Nasdaq ticker: CLDM.
**7. Post-Signing Roadmap / Key Milestones**
The critical path items following signing are as follows:
- **HSR Filing:** Elaine Forsythe is finalizing the HSR Notification and Report Form for filing with the FTC and DOJ. Target filing date: February 9, 2024. Initial 30-day waiting period. - **UK CMA Filing:** Merger Notice to be submitted in coordination with Fiona McAllister at Albright & Kerr LLP. Target submission: February 12, 2024. A CMA Case No. will be assigned upon acceptance. - **CFIUS:** Based on Elaine's assessment (November 30, 2023 memo), no voluntary notice is recommended — Cloudium does not constitute a TID U.S. business. - **EU / Germany / India:** No filings required based on turnover thresholds and sector analysis. - **Proxy Statement:** Cloudium to prepare and file the proxy statement with the SEC. We will review for merger-related disclosures. Target filing date: approximately April 2024. - **Stockholder Vote:** Special meeting to be scheduled. The Hargrove and Pinnacle voting support agreements secure approximately 15.8% of outstanding shares in favor from the outset. - **Debt Financing:** Credit Agreement to be negotiated and executed in advance of closing. The ticking fee on undrawn Term Loan B commitments commences 90 days post-signing (April 22, 2024) at 0.25% per annum. - **Outside Date:** June 30, 2024 per the Merger Agreement. We are comfortable that the regulatory and stockholder approval timeline supports closing in advance of or by this date.
**8. Remaining Outstanding Items Before Signing**
The following items need to be finalized by tomorrow morning:
1. Confirm receipt of final executed Pinnacle rollover and voting/support agreement signature pages from Evelyn Carmichael. 2. Confirm Ridgeway Phelps has received Douglas Pemberton's signed Stockholder Representative Agreement. 3. Finalize and distribute Cloudium's disclosure schedules (Ridgeway Phelps to deliver final version by 9:00 AM ET). 4. Confirm Meridian Atlantic and Ironclad authorized signatory availability for the Debt Commitment Letter and Fee Letter. 5. Coordinate signature page escrow with Ridgeway Phelps (Catherine Answorth) and confirm simultaneous release protocol. 6. Obtain Hargrove's and Whitfield's signed non-compete/non-solicitation agreements.
**9. Next Steps / Availability**
I will be available by phone and email throughout the day tomorrow. Tiffany and Andrew will be in the office coordinating execution logistics and managing the signature-page process. I would suggest a brief call at 8:30 AM ET to confirm all outstanding items are resolved before we commence execution — please let me know if that time works for you and Priya.
Marcus, this transaction is in excellent shape for signing. It has been a pleasure working with you and the broader Solara team over these past several months since we kicked off in August, and I appreciate the consistently smooth collaboration. We are looking forward to getting this across the finish line tomorrow.
Best regards,
Harrison Wexford Partner
Attachment: Cloudium Acquisition — Signing-Day Document Checklist (01.22.2024)
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