CONFIDENTIAL TREATMENT REQUESTED
CREDIT AGREEMENT —
SENIOR SECURED CREDIT FACILITIES
Prepared by: Winthrop & Hale LLP, 901 New York Avenue NW, Washington, DC 20001; Lead Partner: Christine Novak
Matter No.: 1041-00003
Distribution: CONFIDENTIAL — — FOR DISCUSSION PURPOSES ONLY
Parties: Among Cloudium Technologies plc (as Borrower), the Lenders from time to time party hereto, Meridian Atlantic Bank, N.A. (as Administrative Agent), and Ironclad Capital Markets LLC (as Co-Arranger)
IMPORTANT NOTICE: This Credit Agreement — Draft (this "Draft Credit Agreement") is provided for discussion purposes only. This Draft Credit Agreement is not intended to constitute, and shall not be deemed to constitute, a binding obligation, agreement, or commitment on the part of any party hereto, including Solara Digital Infrastructure Fund VI LP, Meridian Atlantic Bank, N.A., Ironclad Capital Markets LLC, or any of their respective affiliates. All terms and conditions set forth herein are preliminary, indicative, and subject to: (i) the negotiation and execution of definitive loan documentation, (ii) completion of due diligence satisfactory to the lenders and their counsel, (iii) receipt of all required internal credit and investment committee approvals, and (iv) negotiation and execution of definitive loan documentation. Final terms will be governed exclusively by the definitive Credit Agreement and related documentation.
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ARTICLE I — DEFINITIONS AND INTERPRETATION
Section 1.01 — Defined Terms
The following is an alphabetical list of the principal defined terms used in this Credit Agreement. All definitions are subject to modification in the context of the preparation and negotiation of the definitive documentation.
Borrower (Post-Closing): Cloudium Technologies plc (as the surviving corporation in the Merger, as defined below), a public limited company incorporated under the laws of England and Wales, Company No. 09734521 (the "Borrower"). U.S. headquarters: 600 Townsend Street, Suite 800, San Francisco, CA 94103; registered office: 45 Broadwick Street, London W1F 0DB, United Kingdom. It is currently anticipated that the Borrower will be re-domesticated to a United States jurisdiction following the Closing Date. Alternatively, the parties may determine, prior to the Closing Date, to designate a newly formed Delaware entity as the Borrower in lieu of Cloudium Technologies plc; such determination to be made in consultation with tax counsel and subject to lender consent. Any such restructuring shall not adversely affect the collateral package or the credit profile of the credit facilities.
Sponsor: Solara Digital Infrastructure Fund VI LP, a Delaware limited partnership ("Fund VI"). Fund VI is a 2022 vintage fund with $12.4 billion in committed capital. The general partner of Fund VI is Solara Fund VI GP LLC, a Delaware limited liability company. Fund VI is managed by Solara Digital Infrastructure LP and its affiliates.
Parent / Equity Holder: Solara Digital Infrastructure LP ("Solara" or "SDILP"), a Delaware limited partnership, with its principal office located at 1200 Market Street, Suite 3400, Wilmington, Delaware 19801. Solara manages approximately $38 billion in assets under management across multiple fund vintages and co-investment vehicles focused on digital infrastructure, enterprise software, and technology-enabled services.
"Acquisition" means the acquisition of 100% of the issued and outstanding share capital of Cloudium Technologies plc ("Cloudium" or the "Company"), a company incorporated under the laws of England and Wales, listed on the Nasdaq Global Select Market under the ticker symbol "CLDM." Cloudium is a cloud-based enterprise software company providing infrastructure-as-a-service and platform-as-a-service solutions to enterprise customers globally. The Company's U.S. headquarters are located at 600 Townsend Street, Suite 800, San Francisco, California 94103, and its registered office is at 45 Broadwick Street, London W1F 0DB, United Kingdom. The Acquisition is effected via the reverse triangular merger of Stratos Merger Sub Inc. with and into Cloudium, with Cloudium surviving as a wholly owned subsidiary of Fund VI, pursuant to the Merger Agreement dated January 22, 2024.
"Merger Agreement" means that certain Agreement and Plan of Merger dated January 22, 2024, among Cloudium Technologies plc, Stratos Merger Sub Inc., and Solara Digital Infrastructure Fund VI LP. Fund VI intends to acquire 100% of the issued and outstanding share capital of Cloudium Technologies plc (the "Acquisition") pursuant to the definitive Agreement and Plan of Merger (the "Merger Agreement") among Fund VI, Stratos Merger Sub Inc. (a Delaware corporation and wholly owned subsidiary of Fund VI, formed for the purpose of effecting the Merger) ("Merger Sub"), and Cloudium. The Acquisition will be structured as a reverse triangular merger under the Delaware General Corporation Law (the "DGCL"), whereby Merger Sub will merge with and into Cloudium, with Cloudium surviving the Merger as a wholly owned subsidiary of Fund VI (the "Merger"). Upon consummation of the Merger, each outstanding share of Cloudium common stock (other than shares held by dissenting shareholders, shares cancelled in the Merger, and shares subject to rollover arrangements) will be converted into the right to receive the per-share Merger Consideration in cash.
"Administrative Agent" means Meridian Atlantic Bank, N.A., 383 Madison Avenue, New York, New York 10179.
"Co-Arranger" means Ironclad Capital Markets LLC, 200 West Street, New York, New York 10282.
"Debt Commitment Letter" means that certain Debt Commitment Letter dated January 22, 2024, among Meridian Atlantic Bank, N.A., Ironclad Capital Markets LLC, and Solara Digital Infrastructure Fund VI LP.
"Lenders' Counsel" means Winthrop & Hale LLP.
Total Enterprise / Deal Value: $6,800,000,000 (six billion eight hundred million dollars).
Per-Share Merger Consideration: Approximately $36.92 per share, based on 184,200,000 shares of Cloudium common stock outstanding as of the date hereof (subject to adjustment for any shares issued, cancelled, or repurchased prior to the Closing Date, including shares issued upon the exercise of vested options or settlement of restricted stock units).
Selected Financial Data:
Sources and Uses of Funds
The following table sets forth the anticipated sources and uses of funds in connection with the Acquisition. All amounts are estimates and are subject to adjustment based on final share count, working capital adjustments, and actual transaction expenses at the time of closing.
Uses of Funds
The existing indebtedness to be repaid at closing consists of the following obligations of Cloudium currently outstanding under that certain Credit Agreement, dated as of March 15, 2021, among Cloudium Technologies plc, as borrower, Atlas Commercial Lending Corp., as administrative agent, and the lenders party thereto: (a) approximately $620,000,000 in aggregate principal amount outstanding under a senior secured term loan facility, and (b) approximately $200,000,000 in aggregate principal amount drawn under a senior secured revolving credit facility. The change of control provisions of the existing Atlas Commercial Lending Corp. credit agreement require mandatory prepayment of all outstanding obligations thereunder upon consummation of the Acquisition. Payoff letters and UCC-3 termination statements (and equivalent release documentation in applicable foreign jurisdictions) shall be delivered at or prior to the Closing Date.
Sources of Funds
"Equity Contribution" means the cash equity contribution of $2,832,888,096 from Solara Digital Infrastructure Fund VI LP (including $425,000,000 from Solara Digital Co-Invest VI-A LP).
The equity contribution from Fund VI includes a co-investment of $425,000,000 from Solara Digital Co-Invest VI-A LP, a special purpose co-investment vehicle organized as a Delaware limited partnership and managed by affiliates of Solara. The Revolving Credit Facility will not be drawn at closing but will be available for working capital and general corporate purposes of the Borrower and its subsidiaries following the Closing Date.
Rollover Equity — Detail: Certain existing shareholders of Cloudium have agreed, or are expected to agree, to contribute a portion of their equity interests in Cloudium to Fund VI (or a holding vehicle designated by Fund VI) in exchange for equity interests in the post-closing holding structure, in lieu of receiving the cash Merger Consideration for such shares. The rollover equity consists of:
(a) Jonathan Hargrove (Chief Executive Officer of Cloudium): Mr. Hargrove will roll over 50% of his 7,736,400 shares of Cloudium common stock (i.e., 3,868,200 shares), with an implied value of approximately $142,814,544, based on the per-share Merger Consideration of approximately $36.92.
(b) Pinnacle Growth Ventures LLC: Pinnacle Growth Ventures LLC, an existing institutional shareholder of Cloudium, will roll over 60% of its 21,367,200 shares of Cloudium common stock (i.e., 12,820,320 shares), with an implied value of approximately $473,241,408, based on the per-share Merger Consideration of approximately $36.92.
The terms of the rollover arrangements will be set forth in one or more Rollover Agreements to be executed concurrently with the Merger Agreement. The aggregate implied value of the rollover equity is approximately $616,055,952.
"Closing Date" means the date on which all conditions precedent set forth in Article IV hereof are satisfied (or waived by the Administrative Agent in its discretion) and the initial funding of the Term Loan B Facility occurs concurrently with the consummation of the Acquisition. The targeted Closing Date is on or around June 30, 2024 (the outside date under the Merger Agreement). Note: Actual closing date to be determined.
Closing Date Leverage
The following table summarizes the projected leverage profile of the Borrower on the Closing Date, on both an unadjusted and pro forma basis:
The leverage profile at closing is consistent with market precedents for sponsor-backed acquisitions of subscription-based software companies, where elevated closing leverage is customary in light of the predictability and recurring nature of the target's revenue streams, favorable free cash flow conversion characteristics, and the availability of identified cost savings and operational synergies.
Section 1.02 — Rules of Interpretation
Standard interpretation provisions shall apply, including references to GAAP, rounding, accounting terms, times of day (New York time), and currency (U.S. dollars unless otherwise specified).
Section 1.03 — Accounting Terms
Section 1.04 — Rounding
Standard rounding provisions for ratio calculations.
Section 1.05 — Times of Day
All references to times of day are Eastern Time.
Section 1.06 — Letter of Credit Amounts
U.S. dollar equivalents for multi-currency letters of credit.
Section 1.07 — Pro Forma and Other Calculations
Section 1.08 — Classification of Loans and Borrowings
Classification of loans as SOFR Loans or Base Rate Loans.
Section 1.09 — Divisions
Standard LLC division provisions.
Section 1.10 — Consolidated Adjusted EBITDA — Definition
See below for the full definition. This section is separately stated due to the complexity of the definition.
ARTICLE II — THE CREDIT FACILITIES
Section 2.01 — Term Loan B Commitments
Type: Senior Secured Term Loan B Facility (the "Term Loan B" or the "Term Loan B Facility").
Aggregate Principal Amount: $3,740,000,000 (three billion seven hundred forty million dollars).
Each Lender severally agrees to make a term loan to the Borrower on the Closing Date in the amount of such Lender's Term Loan B Commitment. Term Loan B Commitments are not revolving and may not be reborrowed once repaid.
Lenders: Meridian Atlantic Bank, N.A. (in its capacity as Lead Arranger, Sole Bookrunner, and Administrative Agent) and Ironclad Capital Markets LLC (in its capacity as Co-Arranger and Joint Bookrunner) (collectively, the "Arrangers"), together with a syndicate of institutional lenders to be identified and assembled through a primary syndication process to be conducted by the Arrangers following execution of the definitive Debt Commitment Letter. The composition of the final lender syndicate shall be subject to the consent of the Borrower (which consent shall not be unreasonably withheld, conditioned, or delayed) with respect to any proposed lender that is included on the disqualified lender list maintained by the Borrower.
Lenders' Counsel: Winthrop & Hale LLP, 901 New York Avenue NW, Washington, DC 20001 (lead partner: Christine Novak; London office: 125 Old Broad Street, London EC2N 1AR, United Kingdom). Winthrop & Hale LLP will serve as primary counsel to the Administrative Agent and the Arrangers in connection with the preparation of the definitive Credit Agreement, and all ancillary loan documentation.
Section 2.09(a) — Term Loan B Maturity and Amortization
The Term Loan B Facility will mature on the date that is seven (7) years after the Closing Date. If the Closing Date occurs on or around the currently scheduled outside date under the Merger Agreement of June 30, 2024, the maturity date would be approximately June 30, 2031. The actual maturity date will be determined based on the actual Closing Date. [Note to draft: Actual closing targeted on or around July 9, 2024; maturity date to be determined based on actual Closing Date.]
Section 2.10(a) — Term Loan B Interest Rate
Borrowings under the Term Loan B Facility shall bear interest at a rate per annum equal to:
Adjusted Term SOFR (as published by the Federal Reserve Bank of New York or its successor administrator, and as adjusted for a customary credit spread adjustment in accordance with market convention) plus 325 basis points (3.25%).
The following additional terms apply to the interest rate on the Term Loan B Facility:
(a) SOFR Floor: The Term SOFR component of the interest rate shall be subject to a floor of 0.50% per annum (i.e., if the applicable Term SOFR rate is less than 0.50%, the Term SOFR rate shall be deemed to be 0.50% for purposes of calculating interest).
(b) Interest Periods: The Borrower may select interest periods of one (1), three (3), or six (6) months at its election, subject to customary provisions regarding the availability of such interest periods and coordination with the payment dates.
(c) Default Rate: Upon the occurrence and during the continuance of any Event of Default, the interest rate on all outstanding obligations under the Term Loan B Facility shall be increased by an additional 2.00% per annum above the rate otherwise applicable (the "Default Rate"). The Default Rate shall apply
Section 2.11(a) — Ticking Fee
A ticking fee shall accrue on the undrawn Term Loan B commitments at a rate of 0.25% per annum, calculated on the aggregate amount of undrawn commitments. The ticking fee shall:
(a) Commence on the date that is ninety (90) days after the date of execution of the Merger Agreement (i.e., if the Merger Agreement is executed on January 22, 2024, the ticking fee shall commence accruing on April 22, 2024);
(b) Be payable quarterly in arrears; and
(c) Cease accruing upon the earlier of (i) the funding of the Term Loan B on the Closing Date and (ii) the termination of the Term Loan B commitments (whether by expiration of the outside date, termination of the Merger Agreement, or otherwise).
Section 2.09(a) — Amortization
The Term Loan B Facility shall amortize at a rate equal to 1.00% per annum of the original aggregate principal amount thereof, payable in equal quarterly installments. Each quarterly amortization payment shall be equal to 0.25% of the original aggregate principal amount, which equals $9,350,000 per quarter (based on an original principal amount of $3,740,000,000). Amortization payments shall commence on the last business day of the first full fiscal quarter following the Closing Date. The entire remaining outstanding principal balance of the Term Loan B shall be due and payable on the maturity date.
Original Issue discount (OID)
The Term Loan B is expected to be issued at a discount to par value. The specific original issue discount is to be determined based on market conditions at the time of pricing and syndication, and is subject to the market flex provisions to be included in the Fee Letter dated January 22, 2024. The current expectation, based on preliminary market feedback, is that the OID will be in the range of 99.50 to 99.75 cents on the dollar (i.e., a discount of 25 to 50 basis points). The final OID will be set at the time of pricing, in consultation between the Arrangers and the Sponsor.
Section 2.02 — Revolving Credit Commitments
Type: Senior Secured Revolving Credit Facility (the "Revolving Facility" or the "Revolving Credit Facility").
Aggregate Commitment Amount: $500,000,000 (five hundred million dollars).
Drawn at Closing: $0. The Revolving Credit Facility is not expected to be drawn at the Closing Date. The Revolving Facility will be available for working capital needs, general corporate purposes, and permitted acquisitions of the Borrower and its restricted subsidiaries following the Closing Date.
Lenders: The Revolving Credit Facility will be provided by the same syndicate of lenders providing the Term Loan B Facility, or a subset thereof as determined through the syndication process. Meridian Atlantic Bank, N.A. shall serve as the Administrative Agent for the Revolving Facility.
Section 2.09(b) — Revolving Credit Facility Maturity
The Revolving Credit Facility will mature on the date that is five (5) years after the Closing Date. Based on an assumed Closing Date of approximately June 30, 2024, the maturity date for the Revolving Facility would be approximately June 30, 2029. [Note to draft: Actual closing targeted on or around July 9, 2024; maturity date to be determined based on actual Closing Date.]
Section 2.10(b) — Revolving Credit Facility Interest Rate
Borrowings under the Revolving Credit Facility shall bear interest at a rate per annum equal to:
Adjusted Term SOFR (as published by the Federal Reserve Bank of New York or its successor administrator, and as adjusted for a customary credit spread adjustment in accordance with market convention) plus 275 basis points (2.75%).
The following additional terms apply:
(a) SOFR Floor: 0.00% (i.e., no floor on the SOFR component for the Revolving Credit Facility).
(b) Interest Periods: The Borrower may select interest periods of one (1), three (3), or six (6) months at its election, subject to customary provisions regarding the availability of such interest periods and coordination with payment dates.
(c) Default Rate: Upon the occurrence and during the continuance of any Event of Default, an additional 2.00% per annum above the otherwise applicable rate.
Section 2.04 and Section 2.05 — Sub-Facilities
The Revolving Credit Facility shall include the following sub-facilities:
(a) Letter of Credit Sub-Facility: A sub-limit of $75,000,000 shall be available for the issuance of standby and commercial letters of credit by the issuing bank (initially, Meridian Atlantic Bank, N.A., or such other issuing bank as may be designated). Letters of credit shall reduce availability under the Revolving Facility on a dollar-for-dollar basis. The maximum term of any letter of credit shall not exceed twelve (12) months (subject to auto-renewal provisions).
(b) Swingline Loan Sub-Facility: A sub-limit of $50,000,000 shall be available for same-day and overnight swingline borrowings from the swingline lender (initially, Meridian Atlantic Bank, N.A.). Swingline loans shall reduce availability under the Revolving Facility on a dollar-for-dollar basis and shall be repaid within a customary period (not to exceed seven (7) business days, unless converted into a revolving borrowing).
Section 2.03 — Borrowing Procedures
Borrowing notice requirements shall apply: three (3) business days' prior notice for SOFR loans; one (1) business day's prior notice for Base Rate loans. Minimum borrowing amounts: $1,000,000 for revolving loans. Interest period elections: one (1), three (3), or six (6) months at the Borrower's election.
Section 2.06 — Funding of Borrowings
Standard mechanics for lender funding on borrowing dates.
Section 2.07 — Interest Elections
The Borrower shall have the right to elect and convert between SOFR and Base Rate, and to select interest periods.
Section 2.08 — Termination and Reduction of Commitments
The Borrower may voluntarily reduce or terminate unused revolving commitments, subject to minimum reduction amounts. Notices of reduction shall be irrevocable.
Section 2.12 — Interest and Fee Computation
Actual/360 day count convention for SOFR loans. Actual/365 (or 366) for Base Rate loans.
Section 2.13 — Inability to Determine Rates; SOFR Replacement
Benchmark transition provisions (SOFR to successor rate). Conforming changes authority for the Administrative Agent.
Section 2.14 — Increased Costs
Standard increased-costs provisions (reserve requirements, capital adequacy, etc.). The Borrower shall be obligated to compensate lenders for increased costs arising from changes in law.
Section 2.15 — Break Funding Payments
Customary SOFR breakage indemnification.
Section 2.16 — Taxes
(b) FATCA. FATCA withholding and information reporting provisions.
(c) Lender Tax Forms. W-9, W-8BEN-E, and other applicable forms; delivery by lenders on or prior to becoming a party.
Section 2.17 — Payments Generally; Pro Rata Treatment
All payments to the Administrative Agent for distribution. Pro rata sharing among lenders. Application of payments: interest before principal.
Section 2.18 — Mitigation Obligations; Replacement of Lenders
Section 2.19 — Incremental Facilities
See below for the detailed incremental facilities provisions.
Section 2.20 — Refinancing Facilities
ARTICLE III — REPRESENTATIONS AND WARRANTIES
The Credit Agreement will contain representations and warranties customary for sponsor-backed leveraged acquisition financings of this type and size. The representations and warranties to be made by the Borrower and each Guarantor (as of the Closing Date and, except as otherwise specified, as of the date of each borrowing under the Revolving Facility) shall include, without limitation, the following:
Section 3.01 — Organization; Corporate Power and Authority
Each of the Borrower and each Guarantor is duly organized, validly existing, and in good standing under the laws of its jurisdiction of organization, and has all requisite corporate or other organizational power and authority to own its properties, conduct its business, and perform its obligations under the loan documents. Specific entities: Cloudium Technologies plc (England and Wales, Company No. 09734521); Cloudium Technologies UK Ltd. (England and Wales, Company No. 11287456); Cloudium Technologies India Pvt. Ltd. (Karnataka, India); Cloudium Solutions GmbH (Berlin, Germany).
Section 3.02 — Authorization; Enforceability; No Conflicts
Section 3.03 — Financial Statements
Section 3.04 — No Material Adverse Change
Section 3.05 — Litigation
There is no pending or, to the knowledge of the Borrower, threatened action, suit, proceeding, or investigation by or before any court, arbitrator, or governmental authority that would reasonably be expected to have a Material Adverse Effect.
Section 3.06 — Compliance with Laws
The Borrower and each Guarantor are in compliance with all applicable laws, rules, and regulations, except where the failure to comply would not reasonably be expected to have a Material Adverse Effect.
Section 3.07 — Solvency
After giving effect to the Acquisition, the Merger, the incurrence of indebtedness under the credit facilities, the equity contribution, the repayment of the $820,000,000 Existing Indebtedness, and the other transactions contemplated hereby, the Borrower and its subsidiaries, on a consolidated basis, are Solvent. For purposes of this representation, "Solvent" means that (i) the fair value of the assets exceeds the total amount of liabilities (including contingent liabilities), (ii) the present fair saleable value of the assets is sufficient to pay the total amount of liabilities as they become due, (iii) the Borrower and its subsidiaries do not have unreasonably small capital, and (iv) the Borrower and its subsidiaries are able to pay their debts and liabilities as they become due. Solvency certificate to be delivered by the Chief Financial Officer (Sienna Whitfield) at Closing (form prepared by Calderwood & Harkness LLP).
Section 3.08 — Environmental Compliance
The Borrower and its subsidiaries are in compliance with all applicable environmental laws and regulations in all material respects, and no environmental condition exists that would reasonably be expected to result in material liability.
Section 3.09 — ERISA Compliance
No ERISA Event has occurred or is reasonably expected to occur that, individually or in the aggregate, would reasonably be expected to result in material liability. All employee benefit plans maintained by the Borrower and its ERISA Affiliates are in compliance with ERISA and the Internal Revenue Code in all material respects.
Section 3.10 — Tax Matters
The Borrower and its subsidiaries have filed all material tax returns required to be filed and have paid all material taxes due and owing, except where contested in good faith by appropriate proceedings and for which adequate reserves have been established. Cloudium Technologies plc EIN (US taxpayer): 83-2196754; Solara Fund VI EIN: 87-4523190.
Section 3.11 — Intellectual Property
Section 3.12 — Use of Proceeds; Federal Reserve Regulations U and X
The proceeds of the credit facilities will be used solely for the purposes described herein: (i) fund the merger consideration ($6,183,944,048 to non-rolling shareholders), (ii) repay Existing Indebtedness ($820,000,000 to Atlas Commercial Lending Corp.), (iii) pay transaction expenses ($185,000,000), and (iv) for general corporate purposes. No part of the proceeds of the credit facilities will be used to purchase or carry "margin stock" (as defined in Regulation U of the Board of Governors of the Federal Reserve System), and the Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock. Revolving Facility proceeds: working capital and general corporate purposes post-closing.
Section 3.13 — Investment Company Act
Neither the Borrower nor any Guarantor is an "investment company" or a company "controlled by" an "investment company" within the meaning of the Investment Company Act of 1940, as amended.
Section 3.14 — PATRIOT Act; OFAC Sanctions; Anti-Corruption
Section 3.15 — Accuracy of Information
Section 3.16 — Insurance
Section 3.17 — Labor Matters
No strikes, lockouts, slowdowns, or work stoppages are pending or, to the knowledge of the Borrower, threatened against the Borrower or any subsidiary that would reasonably be expected to have a Material Adverse Effect. Approximately 6,800 employees globally (US, UK, India, Germany).
Section 3.18 — Collateral Matters; Perfection of Security Interests
The security interests granted under the Guarantee and Collateral Agreement and the other security documents create valid and enforceable first-priority perfected security interests (subject only to permitted liens) in the Collateral described therein, in favor of the Administrative Agent for the benefit of the secured parties.
Section 3.19 — Specified Acquisition Agreement Representations
ARTICLE IV — CONDITIONS PRECEDENT
Section 4.01 — Closing Conditions (Certain Funds / SunGard Conditionality)
The conditions precedent to the initial funding of the Term Loan B Facility and the establishment of the Revolving Credit Facility on the Closing Date shall be limited to those conditions customary for a "certain funds" or "SunGard"-style financing commitment. The parties acknowledge that the purpose of limiting the closing conditions is to provide the Borrower and the Sponsor with a high degree of certainty as to the availability of the committed financing on the Closing Date, subject only to the following conditions:
1. Consummation of the Acquisition. The Acquisition shall be consummated substantially concurrently with the initial funding of the Term Loan B Facility, in all material respects in accordance with the terms of the Merger Agreement, without giving effect to any amendment, modification, waiver, or consent with respect to any provision of the Merger Agreement that is materially adverse to the interests of the lenders, unless such amendment, modification, waiver, or consent has been approved by the Administrative Agent (such approval not to be unreasonably withheld, conditioned, or delayed).
2. Accuracy of Specified Representations and Warranties. The following representations and warranties shall be true and correct in all material respects (or, in the case of representations and warranties qualified by materiality or material adverse effect, in all respects) on and as of the Closing Date:
(a) Specified Acquisition Agreement Representations: Those representations and warranties made by Cloudium in the Merger Agreement that are conditions to the obligation of Fund VI (or Merger Sub) to consummate the Acquisition (i.e., the "bring-down" of the target's representations that must be satisfied for the buyer to be obligated to close under the Merger Agreement).
(b) Specified Borrower Representations: Certain customary representations and warranties of the Borrower to be made in the Credit Agreement, limited to: (i) organization and existence; (ii) due authorization, execution, delivery, and enforceability of the loan documents; (iii) no conflicts with organizational documents, applicable law, or material agreements; (iv) solvency (on a consolidated basis after giving effect to the Acquisition and the related transactions); (v) compliance with Federal Reserve Regulations U and X (margin regulations); (vi) non-status as an "investment company" under the Investment Company Act of 1940, as amended; (vii) compliance with the USA PATRIOT Act, OFAC sanctions programs, and anti-corruption laws (including the Foreign Corrupt Practices Act and the UK Bribery Act 2010); and (viii) use of proceeds.
3. Delivery of Customary Closing Documents. The Borrower shall have delivered (or caused to be delivered) to the Administrative Agent the following closing documents, in each case in form and substance reasonably satisfactory to the Administrative Agent:
(a) Duly executed counterparts of the Credit Agreement, the Guarantee and Collateral Agreement, and each other security document and ancillary loan document required to be delivered on the Closing Date;
(b) A solvency certificate, executed by the Chief Financial Officer of the surviving entity (Sienna Whitfield) (or such other senior financial officer as may be acceptable to the Administrative Agent), certifying that, after giving effect to the Acquisition, the Merger, the incurrence of indebtedness under the credit facilities, and the other transactions contemplated hereby, the Borrower and its subsidiaries, on a consolidated basis, are Solvent (as such term will be defined in the Credit Agreement). The form of the solvency certificate shall be prepared by Calderwood & Harkness LLP, counsel to the Sponsor;
(c) Officer's certificates, secretary's certificates (attaching copies of organizational documents, board or member resolutions, and incumbency information), and good standing certificates (or equivalent) for the Borrower and each Subsidiary Guarantor, issued by the appropriate governmental authorities in each entity's jurisdiction of organization;
(d) Legal opinions from Calderwood & Harkness LLP, as counsel to the Borrower, addressed to the Administrative Agent and the lenders, covering such matters as authorization, enforceability, no conflicts, and such other matters as are customary for transactions of this nature;
(e) Evidence of insurance coverage (including property, casualty, and liability insurance) satisfactory to the Administrative Agent, naming the Administrative Agent as additional insured and loss payee as its interests may appear, and including evidence of the representations and warranties insurance policy issued by Northfield Assurance Ltd., Policy No. NFA-TRI-2024-00487, in connection with the Acquisition;
(f) Payoff letters from Atlas Commercial Lending Corp. (as administrative agent under Cloudium's existing credit agreement), confirming the aggregate payoff amount and providing for the release of all liens and security interests upon receipt of such payoff amount, together with UCC-3 termination statements and intellectual property security interest release forms in recordable form;
(g) Such other customary closing documents, certificates, and instruments as may be reasonably requested by the Administrative Agent in connection with the closing of the credit facilities.
4. Payment of Fees and Expenses. All fees, premiums, expenses, and other amounts required to be paid on the Closing Date pursuant to the Credit Agreement, the Fee Letter, and any other loan documents shall have been paid (or arrangements for payment satisfactory to the Administrative Agent shall have been made), including without limitation: (a) the arrangement fees and upfront fees payable to the Arrangers as set forth in the Fee Letter; (b) the original issue discount on the Term Loan B; and (c) the legal fees and disbursements of Winthrop & Hale LLP as counsel to the Administrative Agent and the Arrangers.
5. Funds Flow Memorandum. The Borrower shall have delivered to the Administrative Agent, at least three (3) business days prior to the Closing Date, a funds flow memorandum setting forth in reasonable detail the sources and uses of all funds to be disbursed on the Closing Date, including wire transfer instructions and amounts for all payments to be made, in form and substance reasonably satisfactory to the Administrative Agent.
6. KYC / AML / Beneficial Ownership. The Administrative Agent and the lenders shall have received, at least ten (10) business days prior to the Closing Date, all documentation and information required under applicable "know your customer" rules, anti-money laundering regulations, the USA PATRIOT Act (Title III of Pub. L. 107-56), and the Beneficial Ownership Regulation (31 C.F.R. § 1010.230), to the extent such documentation and information has been reasonably requested by the Administrative Agent in writing at least fifteen (15) business days prior to the Closing Date.
7. No Company Material Adverse Effect. Since the date of the Merger Agreement, no "Company Material Adverse Effect" (as defined in the Merger Agreement) shall have occurred and be continuing as of the Closing Date.
8. No Injunction or Order. Since the date of the Merger Agreement, no temporary restraining order, preliminary or permanent injunction, or other order shall have been entered by any court of competent jurisdiction or any governmental authority of competent jurisdiction that prohibits, restrains, or enjoins the consummation of the Acquisition or the financing thereof, and no proceeding seeking any such order shall be pending before any such court or governmental authority.
For the avoidance of doubt, the conditions precedent to the initial funding shall not include any condition relating to (i) the absence of a default or event of default (other than a Payment Event of Default or Bankruptcy Event of Default, to the extent arising from the transactions contemplated hereby), (ii) the accuracy of representations and warranties other than the Specified Acquisition Agreement Representations and the Specified Borrower Representations described above, (iii) the delivery of any financial statements or projections other than those available to the Arrangers on or prior to the date hereof, or (iv) the completion of syndication.
Section 4.02 — Conditions to Each Revolving Facility Borrowing (Post-Closing)
Each borrowing under the Revolving Credit Facility after the Closing Date shall be subject to the following conditions precedent, each of which shall be satisfied (or waived by the Administrative Agent) as of the date of such borrowing and after giving effect thereto:
(a) The representations and warranties of the Borrower and each Guarantor set forth in the Credit Agreement shall be true and correct in all material respects (or, in the case of representations qualified by materiality or material adverse effect, in all respects) as of the date of such borrowing (except to the extent such representations relate to a specific earlier date, in which case they shall be true and correct in all material respects as of such earlier date);
(b) No Default or Event of Default shall have occurred and be continuing or would result from such borrowing; and
(c) The Borrower shall have delivered a duly executed borrowing notice to the Administrative Agent in accordance with the terms of the Credit Agreement (including as to timing and minimum borrowing amounts).
For the avoidance of doubt, compliance with the financial covenant set forth in Section 6.12 shall not be a condition precedent to any revolving borrowing. The financial covenant is
ARTICLE V — AFFIRMATIVE COVENANTS
The Credit Agreement will contain affirmative covenants customary for sponsor-backed leveraged acquisition financings of this type and size. The following is a summary of the principal affirmative covenants:
(a) Financial Statements. The Borrower shall deliver to the Administrative Agent (for distribution to the lenders):
(e) Maintenance of Properties, Insurance, Books and Records. The Borrower and its restricted subsidiaries shall maintain and preserve all of their material properties and assets in good working order and condition (ordinary wear and tear excepted), to the extent reasonably necessary for the proper conduct of their business.
(e-1) Insurance. The Borrower and its restricted subsidiaries shall maintain insurance coverage with financially sound and reputable insurance companies, in such amounts and covering such risks as are consistent with sound business practice and customary for companies of similar size in similar businesses, and shall name the Administrative Agent as additional insured and loss payee as its interests may appear.
(f) Compliance with Laws. The Borrower and its restricted subsidiaries shall comply with all applicable laws, rules, and regulations (including, without limitation, environmental laws, ERISA, anti-corruption laws, and sanctions and export control laws), except where the failure to comply would not reasonably be expected to have a Material Adverse Effect.
(h) KYC / Beneficial Ownership Information. The Borrower shall provide prompt updates to the Administrative Agent regarding any changes to the information previously provided in connection with the "know your customer" and beneficial ownership certification requirements, including any changes in the identity of beneficial owners (as defined in 31 C.F.R. § 1010.230).
(j) Maintenance of intellectual Property. The Borrower and its restricted subsidiaries shall take all commercially reasonable steps to maintain, protect, and defend their material intellectual property, including material trademarks, patents, copyrights, domain names, and trade secrets relating to Cloudium's SaaS platform, cloud infrastructure technology, and related proprietary software and algorithms, and shall not knowingly take any action (or fail to take any action) that would reasonably be expected to result in the abandonment, cancellation, or unenforceability of any material intellectual property rights.
(k) Books and Records. The Borrower and its restricted subsidiaries shall maintain proper books of record and account in which entries that are full, true, and correct in all material respects shall be made of all financial transactions and matters involving the assets and business of the Borrower and its subsidiaries, in conformity with GAAP and all applicable legal requirements.
(l) Use of Proceeds. Term Loan B proceeds: fund the Acquisition, repay Existing Indebtedness ($820,000,000), pay transaction expenses ($185,000,000). Revolving Facility proceeds: working capital and general corporate purposes post-closing.
ARTICLE VI — FINANCIAL COVENANTS
Section 6.12 — First Lien Net Leverage Ratio (Springing Maintenance Covenant — Revolving Facility Only)
The Credit Agreement shall include a single maintenance financial covenant applicable exclusively to the Revolving Credit Facility. The Term Loan B Facility shall be "covenant-lite" and shall not be subject to any maintenance financial covenant.
Covenant Level: As of the last day of any fiscal quarter in which the financial covenant is required to be tested, the First Lien Net Leverage Ratio shall not exceed 5.00:1.00.
Definition: The First Lien Net Leverage Ratio shall be calculated as follows:
First Lien Net Leverage Ratio = (First Lien Debt − Unrestricted Cash and Cash Equivalents (capped at $ )) ÷ Consolidated Adjusted EBITDA (for the trailing four consecutive fiscal quarters ending on such date)
Where:
• "First Lien Debt" means all funded indebtedness of the Borrower and its restricted subsidiaries that is secured by a first-priority lien on the Collateral (including, without limitation, the outstanding principal amount of the Term Loan B and any drawn amounts under the Revolving Credit Facility, and any incremental first lien debt incurred pursuant to the terms of the Credit Agreement).