CONFIDENTIAL
MERIDIAN ATLANTIC BANK, N.A. 383 Madison Avenue New York, NY 10179
January 22, 2024
Solara Digital Infrastructure Fund VI LP 1200 Market Street, Suite 3400 Wilmington, Delaware 19801
Attention: Marcus Elliston, Founder & Managing Partner
Priya Narasimhan, Co-Managing Partner & Chief Investment Officer
Re: Commitment Letter — Senior Secured Credit Facilities in connection with the Acquisition of Cloudium Technologies plc
CONFIDENTIAL
Ladies and Gentlemen:
I. INTRODUCTION
Solara Digital Infrastructure Fund VI LP ("Fund VI" or "you"), a Delaware limited partnership, has advised Meridian Atlantic Bank, N.A. ("Meridian Atlantic") and Ironclad Capital Markets LLC ("Ironclad" and, together with Meridian Atlantic, the "Commitment Parties," "we," or "us") that Fund VI intends, through Stratos Merger Sub Inc. ("Merger Sub"), a Delaware corporation and wholly owned subsidiary of Fund VI (incorporated on January 8, 2024, Delaware Secretary of State File No. 7923841), to consummate the acquisition (the "Acquisition") of Cloudium Technologies plc ("Cloudium" or the "Target"), a public limited company incorporated under the laws of England and Wales (Companies House Company No. 09734521) and listed on the Nasdaq Global Select Market under the ticker symbol "CLDM."
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 as a wholly owned subsidiary of Fund VI (the "Merger"). The total enterprise value of the Acquisition is approximately $6,800,000,000 (Six Billion Eight Hundred Million Dollars). The per-share merger consideration will be approximately $36.92 per share of Cloudium common stock, based on 184,200,000 shares of Cloudium common stock issued and outstanding as of the date hereof. The merger consideration shall be payable in cash, except for shares subject to rollover agreements with (a) Jonathan Hargrove, Chief Executive Officer of Cloudium, who will roll over 50% of his 7,736,400 shares (representing approximately $142,814,544 in rollover equity), and (b) Pinnacle Growth Ventures LLC, which will roll over 60% of its 21,367,200 shares (representing approximately $473,241,408 in rollover equity), resulting in total rollover equity of approximately $616,055,952.
The Acquisition will be effected pursuant to that certain Agreement and Plan of Merger (the "Merger Agreement"), dated as of the date hereof, among Cloudium Technologies plc, Stratos Merger Sub Inc., and Solara Digital Infrastructure Fund VI LP. In connection with the Acquisition, the existing indebtedness of Cloudium in the aggregate principal amount of approximately $820,000,000, consisting of (i) $620,000,000 outstanding under an existing term loan facility and (ii) $200,000,000 drawn under an existing revolving credit facility, in each case under that certain credit agreement, dated as of March 15, 2021, by and among Cloudium Technologies plc, as borrower, the lenders party thereto from time to time, and Atlas Commercial Lending Corp., as administrative agent, will be repaid in full at the closing of the Acquisition (the "Refinancing"). Estimated transaction expenses, including advisory fees, legal fees, financing fees, accounting fees, regulatory filing fees, and other customary costs, are approximately $185,000,000.
The Acquisition, the Refinancing, the funding of the Facilities (as defined below), and the payment of related fees and expenses are collectively referred to herein as the "Transactions."
Sources and Uses
The following table sets forth an estimated summary of sources and uses of funds in connection with the Transactions:
Sources:
Uses:
In connection with the foregoing, the Commitment Parties are pleased to advise Fund VI of their commitment to provide the credit facilities described herein, and to confirm the terms of their engagement as described herein, in each case on the terms and subject to the conditions set forth in this letter (together with the annexes, exhibits, and schedules attached hereto, this "Commitment Letter").
II. COMMITMENT
A. Term Loan B Facility
Subject to the terms and conditions set forth herein, Meridian Atlantic Bank, N.A. and Ironclad Capital Markets LLC hereby severally (and not jointly) commit to provide, or cause to be provided, a senior secured first lien term loan B facility (the "Term Loan B Facility") in an aggregate principal amount of Three Billion Seven Hundred Forty Million Dollars ($3,740,000,000). Meridian Atlantic shall serve as lead arranger, sole bookrunner, and administrative agent for the Term Loan B Facility. Ironclad shall serve as co-arranger and joint bookrunner for the Term Loan B Facility. The initial commitment allocation with respect to the Term Loan B Facility shall be as follows, subject in each case to reduction in connection with the syndication of the Facilities as contemplated by Section IX hereof:
B. Revolving Credit Facility
Subject to the terms and conditions set forth herein, Meridian Atlantic Bank, N.A. and Ironclad Capital Markets LLC hereby severally (and not jointly) commit to provide, or cause to be provided, a senior secured first lien revolving credit facility (the "Revolving Credit Facility" and, together with the Term Loan B Facility, the "Facilities") in an aggregate principal amount of Five Hundred Million Dollars ($500,000,000). Meridian Atlantic shall serve as lead arranger, sole bookrunner, and administrative agent for the Revolving Credit Facility. Ironclad shall serve as co-arranger and joint bookrunner for the Revolving Credit Facility. The initial commitment allocation with respect to the Revolving Credit Facility shall be as follows, subject in each case to reduction in connection with the syndication of the Facilities as contemplated by Section IX hereof:
For the avoidance of doubt, the Revolving Credit Facility will not be drawn at the closing of the Transactions.
C. Several (Not Joint) Obligations
The commitments of each Commitment Party hereunder are several and not joint. The failure of either Commitment Party to fund its respective commitment in accordance with the terms of this Commitment Letter shall not relieve the other Commitment Party of its obligation to fund its respective commitment hereunder, nor shall it create any obligation of such other Commitment Party to fund the commitment of the defaulting Commitment Party. Neither Commitment Party shall be liable for any failure by the other Commitment Party to fulfill its funding obligations hereunder.
III. TITLES AND ROLES
The following titles and roles shall apply in connection with the Facilities:
• Meridian Atlantic Bank, N.A.: Lead Arranger, Sole Bookrunner, and Administrative Agent
• Ironclad Capital Markets LLC: Co-Arranger and Joint Bookrunner
The primary contacts for each Commitment Party are as follows:
Meridian Atlantic Bank, N.A.
Attention: Graham Whitaker, Managing Director, Leveraged Finance
383 Madison Avenue, New York, NY 10179 Telephone: (212) 555-7400
Email: graham.whitaker@meridianatlantic.com
Ironclad Capital Markets LLC
Attention: Samuel Diaz, Director, Leveraged Finance
200 West Street, New York, NY 10282 Telephone: (212) 555-3200
Email: samuel.diaz@ironclad-cm.com
The Commitment Parties reserve the right to appoint additional co-arrangers, co-managers, or bookrunners in connection with the syndication of the Facilities, with the prior consent of Fund VI (such consent not to be unreasonably withheld, conditioned, or delayed); provided, however, that (a) no such appointment shall reduce the commitments of the Commitment Parties without the prior written consent of the affected Commitment Party, (b) no such appointment shall increase the aggregate commitments in respect of the Facilities beyond the amounts set forth herein, and (c) the Lead Arranger shall retain its roles and the most senior titles in respect of the Facilities.
IV. TERMS AND CONDITIONS
The principal terms and conditions of the Facilities are set forth in Annex I attached hereto (the "Term Sheet") and are incorporated herein by reference. The following is a summary of certain material terms; in the event of any inconsistency between this summary and the Term Sheet, the Term Sheet shall control.
A. Term Loan B Facility
Borrower. The borrower under the Facilities (the "Borrower") shall be Cloudium Technologies plc (as the surviving corporation following the Merger) or a newly formed Delaware entity designated by Fund VI, as determined by Fund VI prior to the Closing Date in consultation with the Lead Arranger.
Guarantors. The obligations under the Facilities shall be guaranteed by Fund VI and by each direct and indirect material domestic subsidiary of the Borrower (collectively, the "Guarantors"), subject to customary exceptions for immaterial subsidiaries (i.e., subsidiaries that individually constitute less than 5.0% of consolidated total assets or consolidated total revenue), unrestricted subsidiaries (as designated from time to time in accordance with the Credit Agreement), foreign subsidiaries, and controlled foreign corporations ("CFCs") and CFC holding companies.
Administrative Agent. Meridian Atlantic Bank, N.A. shall serve as administrative agent for the Facilities (in such capacity, the "Administrative Agent").
Principal Amount. The Term Loan B Facility shall be in an aggregate principal amount of $3,740,000,000.
Maturity. The Term Loan B Facility shall mature on the date that is seven (7) years from the date on which the initial funding of the Facilities occurs (the "Closing Date"). For illustrative purposes, if the Closing Date occurs on July 9, 2024, the maturity date of the Term Loan B Facility would be July 9, 2031.
Interest Rate. Borrowings under the Term Loan B Facility shall bear interest, at the Borrower's option, at a rate per annum equal to (a) the Adjusted Term SOFR Rate (as defined in the Credit Agreement, to include a customary credit spread adjustment) for the applicable interest period, plus a margin of 325 basis points (3.25%), or (b) the Alternate Base Rate (as defined in the Credit Agreement, to be the highest of (i) the Federal Funds Rate plus 0.50%, (ii) the Administrative Agent's prime rate, and (iii) Adjusted Term SOFR for a one-month interest period plus 1.00%), plus a margin of 225 basis points (2.25%). Interest shall be payable at the end of each interest period (but no less frequently than quarterly). The Borrower may elect interest periods of one, three, or six months (or, if agreed by all relevant Lenders, twelve months or a customary shorter period). The Adjusted Term SOFR Rate shall be subject to a floor of 0.00% (or such other floor as may be determined during the syndication period, subject to the flex provisions set forth in the Fee Letter). Upon the occurrence and during the continuance of any Event of Default, all outstanding obligations under the Term Loan B Facility shall bear interest at an additional rate of 200 basis points (2.00%) per annum above the rate otherwise applicable (the "Default Rate").
Amortization. The Term Loan B Facility shall amortize in equal quarterly installments in an aggregate annual amount equal to 1.00% of the original principal amount of the Term Loan B Facility (i.e., quarterly installments of $9,350,000), with the remaining outstanding principal balance payable in full at maturity. The first amortization payment shall be due on the last day of the first full fiscal quarter ending after the Closing Date.
Ticking Fee. A ticking fee shall accrue at a rate of 0.25% per annum on the undrawn commitments in respect of the Term Loan B Facility, commencing on the date that is 90 days after the date of this Commitment Letter (i.e., April 22, 2024) and continuing to accrue through the earlier of (x) the Closing Date and (y) the date on which the commitments in respect of the Term Loan B Facility are terminated in accordance with the terms hereof. The ticking fee shall be payable on the Closing Date (or, if earlier, the date of termination of the commitments).
Voluntary Prepayments. The Borrower may prepay the Term Loan B Facility, in whole or in part, at any time, in minimum principal amounts and upon notice periods to be agreed, without premium or penalty, subject to (i) customary SOFR breakage costs and (ii) for the period of six (6) months following the Closing Date, a soft-call premium of 1.00% (i.e., 101% of the principal amount prepaid) applicable solely to any repricing transaction (i.e., any prepayment with the proceeds of, or any amendment resulting in, new term loans with a lower effective interest rate margin).
Mandatory Prepayments. The Term Loan B Facility shall be subject to mandatory prepayment from:
(i) Asset Sales. 100% of the net cash proceeds received by the Borrower or any of its restricted subsidiaries from asset sales or other dispositions of property (other than in the ordinary course of business), subject to customary reinvestment rights (with a reinvestment period of 18 months, or 24 months if a binding commitment to reinvest has been entered into within 18 months) and a de minimis threshold of $10,000,000 per transaction (or $25,000,000 in the aggregate during any fiscal year);
(ii) Debt Issuances. 100% of the net cash proceeds received by the Borrower or any of its restricted subsidiaries from the incurrence of any indebtedness not otherwise permitted under the Credit Agreement; and
(iii) Excess Cash Flow. Commencing with the first full fiscal year ending after the Closing Date, 50% of Excess Cash Flow (as defined in the Credit Agreement), stepping down to (A) 25% of Excess Cash Flow if the Total Net Leverage Ratio as of the last day of the relevant fiscal year is less than or equal to 5.50:1.00 and (B) 0% of Excess Cash Flow if the Total Net Leverage Ratio as of the last day of the relevant fiscal year is less than or equal to 4.50:1.00, in each case subject to a de minimis basket of $10,000,000.
Collateral. The obligations under the Facilities shall be secured by a first-priority perfected security interest (subject to permitted liens) in substantially all tangible and intangible assets of the Borrower and the Guarantors, including but not limited to:
(i) 100% of the equity interests of each direct and indirect domestic subsidiary of the Borrower;
(ii) 65% of the voting equity interests and 100% of the non-voting equity interests of each first-tier foreign subsidiary of the Borrower and the Guarantors, including without limitation Cloudium Technologies UK Ltd. (Companies House Company No. 11287456), Cloudium Technologies India Pvt. Ltd., and Cloudium Solutions GmbH;
(iii) all patents, trademarks, copyrights, and other intellectual property of the Borrower and the Guarantors;
(iv) all accounts receivable;
(v) all inventory;
(vi) all equipment; and
(vii) all deposit accounts and securities accounts;
in each case subject to customary exceptions and exclusions (including, without limitation, exceptions for leasehold interests, equity interests in unrestricted subsidiaries, equity interests in immaterial subsidiaries, assets to the extent the grant of a security interest therein would violate applicable law or regulation or require governmental or third-party consent not obtained after commercially reasonable efforts, and assets subject to contractual anti-assignment provisions that are enforceable under applicable law (other than to the extent that such anti-assignment provisions are rendered ineffective under the Uniform Commercial Code)).
Financial Covenants (Term Loan B). None. The Term Loan B Facility shall be structured on a "covenant-lite" basis, with no financial maintenance covenants applicable to the Term Loan B Facility. Financial covenants shall be applicable solely through the Revolving Credit Facility, as described below.
B. Revolving Credit Facility
Principal Amount / Capacity. The Revolving Credit Facility shall be in an aggregate principal amount of $500,000,000.
Maturity. The Revolving Credit Facility shall mature on the date that is five (5) years from the Closing Date. For illustrative purposes, if the Closing Date occurs on July 9, 2024, the maturity date of the Revolving Credit Facility would be July 9, 2029.
Interest Rate. Borrowings under the Revolving Credit Facility shall bear interest, at the Borrower's option, at a rate per annum equal to (a) the Adjusted Term SOFR Rate for the applicable interest period, plus a margin of 275 basis points (2.75%), or (b) the Alternate Base Rate, plus a margin of 175 basis points (1.75%). Upon the occurrence and during the continuance of any Event of Default, all outstanding obligations under the Revolving Credit Facility shall bear interest at the Default Rate (i.e., an additional 200 basis points per annum above the rate otherwise applicable).
Commitment Fee. An unused commitment fee of 0.375% per annum shall accrue on the average daily undrawn and uncancelled portion of the Revolving Credit Facility commitments, payable quarterly in arrears, commencing on the Closing Date.
Letters of Credit. The Revolving Credit Facility shall include a sublimit of $100,000,000 for the issuance of standby and commercial letters of credit. Meridian Atlantic Bank, N.A. shall serve as the initial issuing bank for letters of credit. A fronting fee of 0.125% per annum on the face amount of each outstanding letter of credit shall be payable to the issuing bank. In addition, a participation fee equal to the applicable margin for revolving loans shall be payable on the daily average face amount of all outstanding letters of credit, shared ratably among the revolving credit lenders (other than the issuing bank).
Swingline Loans. The Revolving Credit Facility shall include a sublimit of $50,000,000 for swingline loans. Meridian Atlantic Bank, N.A. shall serve as the initial swingline lender. Swingline loans shall bear interest at the Alternate Base Rate plus the applicable margin for revolving loans.
Financial Covenant. The Revolving Credit Facility shall include a springing financial maintenance covenant, tested only at the end of each fiscal quarter during which the revolving credit utilization (including outstanding letters of credit, but excluding cash-collateralized letters of credit and undrawn letters of credit to the extent backstopped by cash deposits) exceeds 40% of the total revolving credit commitment (i.e., $200,000,000 based on a $500,000,000 revolving credit commitment). The financial maintenance covenant shall require that the First Lien Net Leverage Ratio (to be defined in the Credit Agreement) as of the last day of such fiscal quarter shall not exceed 5.00:1.00. This covenant shall be for the exclusive benefit of the revolving credit lenders and shall not provide a cross-default to the Term Loan B Facility, except in the case of acceleration of the Revolving Credit Facility.
Availability. The Revolving Credit Facility shall be available for borrowings from and after the Closing Date. No borrowings under the Revolving Credit Facility shall be made on or as of the Closing Date.
V. CERTAIN ADDITIONAL TERMS APPLICABLE TO BOTH FACILITIES
A. Total Net Leverage Covenants (Incurrence-Based)
The Credit Agreement shall include incurrence-based leverage tests applicable to the Borrower's ability to incur incremental debt, make restricted payments, and make investments. The incurrence-based Total Net Leverage Ratio covenant shall be as follows:
• At closing: Total Net Leverage Ratio shall not exceed 6.50:1.00 for incurrence purposes;
• After the first anniversary of the Closing Date: stepping down to 6.00:1.00;
• After the second anniversary of the Closing Date: stepping down to 5.50:1.00;
• After the third anniversary of the Closing Date and at all times thereafter: stepping down to 5.00:1.00.
For purposes of calculating the Total Net Leverage Ratio on a pro forma basis, "Adjusted EBITDA" (as defined in the Credit Agreement) shall include projected run-rate cost synergies and cost savings in an aggregate amount not to exceed $110,000,000, provided that (i) such synergies are reasonably expected to be realized within 24 months following the applicable date of determination, (ii) such synergies are certified by a responsible officer of the Borrower, and (iii) the add-back for synergies is subject to customary limitations (including the requirement that such synergies be factually supportable and reasonably identifiable).
B. Closing Date Leverage Calculation (Illustrative)
For illustrative purposes, the following sets forth the anticipated leverage profile as of the Closing Date:
• Total term loan debt at closing: $3,740,000,000
• Last twelve months ("LTM") EBITDA of the Target: approximately $405,000,000
• Total leverage (unadjusted): $3,740,000,000 ÷ $405,000,000 = approximately 9.24x
• Projected closing date cash on balance sheet: approximately $180,000,000
• Total net leverage (unadjusted): ($3,740,000,000 − $180,000,000) ÷ $405,000,000 = approximately 8.79x
• Pro forma Adjusted EBITDA (including $110,000,000 run-rate synergies): $515,000,000
• Total net leverage (pro forma adjusted): ($3,740,000,000 − $180,000,000) ÷ $515,000,000 = approximately 6.91x
The pro forma adjusted total net leverage of approximately 6.91x is within the 6.50:1.00 incurrence covenant level, giving effect to the additional EBITDA credit attributable to run-rate synergies, and reflects the leverage profile expected at closing. For the avoidance of doubt, compliance with the incurrence-based leverage covenant is not a condition to the initial funding of the Facilities on the Closing Date.
C. Incremental Facilities
The Credit Agreement shall permit the Borrower to request uncommitted incremental term loan facilities and/or incremental revolving credit commitments in an aggregate principal amount equal to the sum of (a) the greater of (x) $750,000,000 and (y) 100% of consolidated EBITDA for the most recently ended four-fiscal-quarter period for which financial statements are available (the "Free-and-Clear Basket"), plus (b) additional amounts subject to compliance (on a pro forma basis, after giving effect to the incurrence of such incremental debt and the application of proceeds therefrom) with a Total Net Leverage Ratio not exceeding the closing date leverage ratio (net of any step-down that has occurred by such date). Incremental facilities shall be on terms and conditions to be agreed between the Borrower and the lenders providing such incremental commitments, subject to the following: for a period of twelve (12) months following the Closing Date, any incremental term loans incurred with an effective interest rate margin greater than the applicable margin for the Term Loan B Facility by more than 50 basis points shall trigger a "most favored nation" adjustment (the "MFN Provision") requiring an automatic increase in the applicable margin for the Term Loan B Facility to a level that is 50 basis points less than the applicable margin for such incremental term loans, subject to customary exclusions (including exclusions for term loans in different currencies and term loans with a maturity date more than two years later than the maturity date of the Term Loan B Facility).
D. Negative Covenants
The Credit Agreement shall contain negative covenants customary for leveraged acquisition financings of this type and size, including limitations on the ability of the Borrower and its restricted subsidiaries to:
(i) incur additional indebtedness (subject to builder baskets, grower baskets, and ratio-based exceptions);
(ii) grant additional liens on their assets (subject to customary permitted liens);
(iii) make restricted payments (including dividends, distributions, and redemptions of equity interests), subject to available amounts baskets, grower baskets, and ratio-based exceptions;
(iv) make investments, loans, and advances (subject to permitted investments baskets and ratio-based exceptions);
(v) consummate mergers, consolidations, or other fundamental changes (subject to customary exceptions);
(vi) sell, transfer, or otherwise dispose of assets (subject to customary exceptions, fair market value requirements, and reinvestment rights);
(vii) enter into transactions with affiliates (subject to fair market value and arm's-length requirements and customary carve-outs for transactions between the Borrower and its restricted subsidiaries, management compensation arrangements, and other customary exceptions); and
(viii) enter into agreements that restrict the ability of restricted subsidiaries to pay dividends or make distributions to the Borrower (subject to customary exceptions).
The specific basket levels, threshold amounts, and ratio-based exception parameters shall be consistent with recent large-cap sponsor acquisition precedent and shall be negotiated in good faith during the documentation process.
E. Affirmative Covenants
The Credit Agreement shall contain affirmative covenants customary for leveraged acquisition financings of this type and size, including, without limitation:
(i) delivery of audited annual consolidated financial statements of the Borrower and its subsidiaries within 120 days after the end of each fiscal year, audited by Harwell & Dobson LLP (or another independent registered public accounting firm of national standing), together with an unqualified audit opinion (except for qualifications related to upcoming maturity dates);
(ii) delivery of unaudited quarterly consolidated financial statements of the Borrower and its subsidiaries within 60 days after the end of each of the first three fiscal quarters of each fiscal year;
(iii) delivery of compliance certificates within the time periods required for the delivery of financial statements, certifying compliance with the financial covenants (to the extent applicable) and the absence of any Default or Event of Default (or describing any such Default or Event of Default and the actions being taken with respect thereto);
(iv) prompt notice (and in any event within five (5) business days) of the occurrence of any Default or Event of Default, any material litigation or governmental proceeding, and any ERISA event that could reasonably be expected to result in a material liability;
(v) maintenance of adequate insurance with financially sound insurers in accordance with prudent business practices;
(vi) maintenance of properties, franchises, and intellectual property in good working order;
(vii) payment of taxes and other obligations (subject to customary good-faith contest exceptions);
(viii) compliance with applicable laws and regulations (including environmental laws and ERISA);
(ix) maintenance of books and records; and
(x) permitting reasonable lender visits, inspections, and audits (subject to limitations on frequency during periods when no Event of Default exists).
F. Events of Default
The Credit Agreement shall contain events of default customary for leveraged acquisition financings of this type and size, including, without limitation:
(i) failure to make payments of principal, interest, fees, or other amounts when due (with customary grace periods for interest and fees of five (5) business days);
(ii) failure to comply with covenants (with cure periods of thirty (30) days for affirmative covenants, where applicable);
(iii) material inaccuracy of representations and warranties when made;
(iv) cross-default and cross-acceleration to other material indebtedness (with a threshold to be agreed, expected to be $75,000,000);
(v) bankruptcy, insolvency, or similar proceedings with respect to the Borrower or any material subsidiary;
(vi) entry of one or more material judgments in excess of a threshold to be agreed (expected to be $75,000,000) not covered by insurance or indemnification and not discharged, stayed, or bonded within sixty (60) days;
(vii) one or more ERISA events that could reasonably be expected to result in aggregate liability in excess of a threshold to be agreed;
(viii) invalidity of any material loan document;
(ix) actual or asserted invalidity of any material security interest or guaranty; and
(x) change of control (as defined below).
G. Change of Control
A "change of control" shall be deemed to occur if:
(i) Fund VI (together with its affiliates and any investment vehicle managed or advised by Solara Capital Group or any of its affiliates) shall at any time cease to own, directly or indirectly, at least 50.1% of the issued and outstanding voting equity interests of the Borrower;
(ii) a "change of control" or similar event (however denominated) occurs under any material subordinated or mezzanine indebtedness of the Borrower or any of its restricted subsidiaries; or
(iii) prior to the consummation of a Qualifying IPO (as to be defined in the Credit Agreement), any person or "group" (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934), other than Fund VI and its affiliates, shall at any time acquire, directly or indirectly, more than 35% of the issued and outstanding voting equity interests of the Borrower.
Upon the occurrence of a change of control, the Lenders shall have the right to require the Borrower to prepay all outstanding loans and terminate all commitments under the Facilities.
H. Representations and Warranties
The Credit Agreement shall contain representations and warranties customary for leveraged acquisition financings of this type. For purposes of the conditions to the initial funding on the Closing Date, the representations and warranties shall be limited to (a) those representations and warranties of the Target contained in the Merger Agreement that are material to the interests of the Lenders in their capacity as such, but only to the extent that Fund VI has the right to decline to consummate the Acquisition as a result of a breach of such representations and warranties (the "Specified Merger Agreement Representations"), and (b) customary credit agreement representations and warranties made by the Borrower and the Guarantors in the Credit Agreement (the "Specified Credit Agreement Representations"), including representations as to organizational status, authority, enforceability, no conflicts, compliance with laws, solvency, investment company status, use of proceeds, OFAC/anti-corruption, and accuracy of financial statements. Additional representations and warranties (beyond those required as conditions to initial funding) shall be brought down at each borrowing date.
VI. CONDITIONS PRECEDENT TO FUNDING
The conditions precedent to the initial funding of the Facilities on the Closing Date are set forth in full in Annex II attached hereto (the "Conditions Annex") and are incorporated herein by reference. The Conditions Annex is subject to the principles described below.
A. Certain Funds / SunGard Conditionality
The conditions to the initial funding of the Facilities on the Closing Date shall be limited to those expressly set forth in the Conditions Annex and shall not be subject to any conditions beyond those expressly set forth therein. This Commitment Letter is intended to provide "certain funds" or "SunGard" conditionality, such that the Commitment Parties' obligation to fund the Facilities on the Closing Date is subject solely to the satisfaction (or waiver) of the conditions expressly enumerated in the Conditions Annex. The provisions of the Conditions Annex, this Commitment Letter, and the Merger Agreement shall be interpreted in a manner consistent with this principle, and no implied conditions shall be read into the Conditions Annex or the Definitive Documentation.
B. Summary of Conditions
Without limiting the specific provisions of the Conditions Annex, the conditions to the initial funding of the Facilities on the Closing Date include, in summary form:
1. Execution and delivery of the Definitive Documentation;
2. Consummation of the Acquisition in all material respects in accordance with the Merger Agreement;
3. Accuracy of the Specified Merger Agreement Representations and Specified Credit Agreement Representations;
4. No "material adverse effect" (as defined in the Merger Agreement) with respect to the Target since the date of the Merger Agreement;
5. Delivery of required financial statements (audited and unaudited) and pro forma financial statements;
6. Delivery of a solvency certificate;
7. Funding of the equity contribution;
8. Repayment of existing Cloudium indebtedness and release of related liens;
9. Lien perfection and delivery of collateral documentation (subject to customary post-closing periods);
10. Delivery of customary legal opinions;
11. Compliance with KYC, USA PATRIOT Act, and Beneficial Ownership Regulation requirements;
12. Payment of fees and expenses; and
13. Delivery of a customary closing certificate.
C. No Other Conditions
Notwithstanding anything in this Commitment Letter, the Fee Letter, the Definitive Documentation, or any other document or agreement to the contrary, the only conditions to the initial funding of the Facilities on the Closing Date are those expressly set forth in the Conditions Annex. For the avoidance of doubt, there shall be no condition to initial funding related to the absence of litigation against any party, the accuracy of information provided to the Commitment Parties (other than as specifically set forth in the Conditions Annex), or the receipt of any regulatory approval or consent (it being understood that the condition requiring consummation of the Acquisition in accordance with the Merger Agreement subsumes any regulatory conditions to closing that are set forth in the Merger Agreement).
VII. SYNDICATION
A. Syndication Strategy
The Commitment Parties intend to syndicate the Facilities to a group of financial institutions and other institutional lenders reasonably acceptable to Fund VI and the Commitment Parties (the "Lenders") promptly following the date hereof. It is understood that the Commitment Parties' obligations to fund the Facilities on the Closing Date are not conditioned upon the successful syndication of the Facilities.
Fund VI agrees to use commercially reasonable efforts to assist the Commitment Parties in their syndication efforts, including without limitation:
(i) making available senior management and representatives of Fund VI and Cloudium for participation in bank meetings, lender presentations, one-on-one meetings with prospective lenders, and road shows (including virtual road shows), in each case at such times and places as may be reasonably requested by the Commitment Parties;
(ii) cooperating in the preparation of a confidential information memorandum (the "CIM"), a lender presentation, term sheets, and other customary marketing materials in connection with the syndication of the Facilities;
(iii) providing financial and other information reasonably requested by the Commitment Parties for the preparation of the CIM and other marketing materials, including historical and projected financial information, business plans, and such other information as is customary for leveraged acquisition financings of this type; and
(iv) obtaining, at Fund VI's expense, public corporate credit ratings (but not specific facility or instrument ratings) for the Borrower from each of Standard & Poor's Ratings Services and Moody's Investors Service, Inc. prior to the launch of syndication.
Until the earlier of (x) the achievement of a "Successful Syndication" (as defined in the Fee Letter) and (y) the date that is 90 days after the Closing Date, Fund VI agrees that it shall not, and shall not permit any of its controlled affiliates or subsidiaries to, syndicate, issue, arrange, or permit to be syndicated, issued, or arranged any debt financing for the Borrower or any of its subsidiaries (other than the Facilities and the indebtedness permitted to be incurred under the Facilities), without the prior written consent of the Lead Arranger (such consent not to be unreasonably withheld, conditioned, or delayed).
B. Lender Titles and Economics
The Commitment Parties reserve the right, with the consent of Fund VI (such consent not to be unreasonably withheld, conditioned, or delayed), to allocate portions of their respective commitments to other financial institutions and institutional lenders that are reasonably satisfactory to Fund VI and the Commitment Parties; provided, however, that no such allocation shall relieve the Commitment Parties of their obligations to fund their respective commitments hereunder unless and until the relevant allocated commitments have been accepted and assumed in writing by the relevant lender or lenders through executed joinder agreements or commitment letters. No lead arranger, bookrunner, or similar title shall be granted to any other institution without the prior written consent of each of Fund VI and the Commitment Parties.
VIII. FLEX PROVISIONS
Certain pricing, structural, and other terms of the Facilities may be modified by the Commitment Parties in accordance with the flex provisions set forth in that certain Fee Letter, dated as of the date hereof (the "Fee Letter"), between Meridian Atlantic Bank, N.A. and Ironclad Capital Markets LLC, on the one hand, and Solara Digital Infrastructure Fund VI LP, on the other hand, which is incorporated herein by reference solely for the purpose of describing the scope and limitations of the flex provisions. The flex provisions include, without limitation, the ability to:
(i) increase the interest rate spread on the Term Loan B Facility by up to 50 basis points (0.50%);
(ii) increase the original issue discount ("OID") applicable to the Term Loan B Facility by up to 100 basis points (1.00%);
(iii) modify amortization, mandatory prepayment, and financial covenant terms; and
(iv) reallocate all or a portion of the Term Loan B Facility to a senior secured first lien bridge facility or first lien notes offering, subject to the terms and conditions of the Fee Letter;
in each case, solely to the extent reasonably determined by the Commitment Parties (in consultation with Fund VI) to be necessary or advisable to facilitate the successful syndication of the Facilities. Any exercise of flex provisions shall be subject to, and limited by, the specific terms and conditions set forth in the Fee Letter, which is a separate confidential document executed simultaneously herewith.
IX. INFORMATION
Fund VI represents and warrants that (a) all written information (other than projections, estimates, pro forma financial information, and other forward-looking statements) that has been or will be furnished by or on behalf of Fund VI, Cloudium, or any of their respective representatives to the Commitment Parties or any prospective Lender in connection with the Transactions or the Facilities (the "Information") is, and when furnished will be, when taken as a whole, correct in all material respects and does not, and when furnished will not, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein not materially misleading in light of the circumstances under which such statements were made, and (b) all projections, estimates, pro forma financial information, and other forward-looking statements that have been or will be furnished by or on behalf of Fund VI, Cloudium, or any of their respective representatives to the Commitment Parties or any prospective Lender in connection with the Transactions or the Facilities have been, and when furnished will be, prepared in good faith based on assumptions believed by Fund VI (or the preparer thereof) to be reasonable at the time of preparation and delivery thereof (it being understood and agreed that such projections, estimates, and forward-looking statements are subject to significant uncertainties and contingencies, many of which are beyond the control of Fund VI and Cloudium, and that no assurance can be given that any particular projections or estimates will be realized, and that actual results may differ materially from any such projections or estimates).
Fund VI agrees to supplement and update the Information from time to time as necessary so that the representations and warranties set forth in this Section IX remain accurate in all material respects. Fund VI acknowledges and agrees that the Commitment Parties may share the Information with prospective Lenders in connection with the syndication of the Facilities, subject to the execution by each such prospective Lender of customary confidentiality undertakings.
X. INDEMNIFICATION AND EXPENSES
A. Indemnification
Fund VI agrees to indemnify and hold harmless each of the Commitment Parties, their respective affiliates, and their respective directors, officers, employees, agents, advisors, representatives, successors, assigns, and controlling persons (within the meaning of the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended) (each, an "Indemnified Person") from and against any and all losses, claims, damages, liabilities, costs, and expenses (including, without limitation, reasonable and documented fees, disbursements, and other charges of (x) one primary firm of outside counsel for all Indemnified Persons taken as a whole and (y) if reasonably necessary, one local counsel in each relevant jurisdiction for all Indemnified Persons taken as a whole, and, in the case of an actual or reasonably perceived conflict of interest, one additional firm of counsel for each group of similarly situated Indemnified Persons affected by such conflict) that are incurred by or asserted against any Indemnified Person arising out of, in connection with, or as a result of (i) this Commitment Letter, the Fee Letter, the Facilities, the Definitive Documentation, or the Transactions, (ii) the use of proceeds of the Facilities, or (iii) any claim, litigation, investigation, or proceeding (whether or not any Indemnified Person is a party thereto) relating to any of the foregoing; provided, however, that no Indemnified Person shall be entitled to indemnification hereunder to the extent that any such losses, claims, damages, liabilities, costs, or expenses are determined by a court of competent jurisdiction in a final, non-appealable judgment to have resulted from the gross negligence, bad faith, or willful misconduct of such Indemnified Person. In no event shall any Indemnified Person or Fund VI be liable for any special, indirect, consequential, or punitive damages in connection with this Commitment Letter, the Fee Letter, or the Facilities (except to the extent that any Indemnified Person is required to pay special, indirect, consequential, or punitive damages to a third party in connection with a claim for which such Indemnified Person is otherwise entitled to indemnification hereunder).
B. Expenses
Regardless of whether the Closing Date occurs or any Definitive Documentation is executed and delivered, Fund VI agrees to reimburse the Commitment Parties for all reasonable and documented out-of-pocket costs and expenses incurred by them in connection with the Transactions, including, without limitation:
(i) all fees and disbursements of Winthrop & Hale LLP (901 New York Avenue NW, Washington, DC 20001; London office: 125 Old Broad Street, London EC2N 1AR), as counsel to the Commitment Parties, in connection with the negotiation, preparation, execution, and delivery of this Commitment Letter, the Fee Letter, the Definitive Documentation, and all related documents and transactions;
(ii) all reasonable and documented due diligence expenses, including third-party consultant fees and travel expenses;
(iii) all printing, reproduction, and distribution costs for the CIM, lender presentations, and other marketing materials;
(iv) all syndication expenses, including travel and entertainment expenses reasonably incurred in connection with bank meetings, road shows, and lender presentations; and
(v) all filing, recording, search, title insurance, and appraisal fees and expenses incurred in connection with the perfection of security interests in the Collateral.
Fund VI's obligations under this Section X shall survive the termination of this Commitment Letter and the repayment of all amounts owing under the Facilities.
XI. CONFIDENTIALITY
This Commitment Letter and the Fee Letter are for the exclusive benefit of Fund VI and the Commitment Parties and, except as set forth below, may not be disclosed to any third party or circulated or referred to publicly without the prior written consent of the Commitment Parties. Notwithstanding the foregoing, Fund VI may disclose this Commitment Letter (but not the Fee Letter, except as specifically set forth below):
(i) to its officers, directors, employees, members, partners, equityholders, attorneys (including Calderwood & Harkness LLP), accountants (including Glenmore Thornton LLP), financial advisors (including Osprey Bancroft & Co.), and other professional advisors, in each case on a confidential and need-to-know basis;
(ii) to Cloudium Technologies plc, its board of directors, and its advisors (including Ridgeway Phelps & Sato LLP and Veridian Partners LLC), to the extent required or reasonably advisable under the Merger Agreement or in connection with the consummation of the Transactions;
(iii) as required by applicable law, rule, or regulation, or by compulsory legal process (including pursuant to a subpoena or court order), provided that, to the extent permitted by applicable law, Fund VI shall use commercially reasonable efforts to notify the Commitment Parties promptly prior to any such disclosure;
(iv) in connection with any filing with the United States Securities and Exchange Commission (the "SEC") or any other governmental or regulatory authority that is required in connection with the Merger Agreement or the Transactions; provided, that the Fee Letter (and the specific economic and flex terms contained therein) may only be filed in redacted form, and any such redactions shall be in a manner reasonably satisfactory to the Commitment Parties; and
(v) to any regulatory authority having jurisdiction over Fund VI, its affiliates, or any of their respective portfolio companies or funds.
The existence of this Commitment Letter and the general terms hereof (but not the Fee Letter, the flex provisions, or the specific fee arrangements) may be disclosed in the public announcement of the Acquisition and in any proxy statement, information statement, or SEC filing required in connection with the Merger Agreement or the Transactions.