DRAFT — CONFIDENTIAL
December 10, 2023
Calderwood & Harkness LLP 599 Lexington Avenue New York, New York 10022
Prepared by Calderwood & Harkness LLP as counsel to Solara Digital Infrastructure Fund VI LP for review and negotiation with the Commitment Parties. This draft is subject to revision and does not constitute a binding commitment.
VIA EMAIL AND HAND DELIVERY
Meridian Atlantic Bank, N.A. 383 Madison Avenue New York, New York 10179
Attention: Graham Whitaker, Managing Director, Leveraged Finance
Ironclad Capital Markets LLC 200 West Street New York, New York 10282
Attention: Samuel Diaz, Director, Leveraged Finance
Re: Commitment Letter — Senior Secured Credit Facilities in Connection with the Acquisition of Cloudium Technologies plc
Matter No. 1041-00003
Ladies and Gentlemen:
Solara Digital Infrastructure Fund VI LP ("Fund VI"), a Delaware limited partnership (EIN: 87-4523190), acting through its general partner, Solara Fund VI GP LLC, a Delaware limited liability company, hereby requests that Meridian Atlantic Bank, N.A., a national banking association ("Meridian Atlantic"), and Ironclad Capital Markets LLC, a Delaware limited liability company ("Ironclad," and together with Meridian Atlantic, the "Commitment Parties," and each individually, a "Commitment Party"), commit to provide the senior secured credit facilities described herein and in the Summary of Terms and Conditions attached hereto as Exhibit A (the "Term Sheet"), on the terms and subject to the conditions set forth in this commitment letter (together with the Term Sheet, the Conditions Annex attached hereto as Exhibit B, and the provisions regarding SOFR attached hereto as Exhibit C, this "Commitment Letter").
Fund VI intends to acquire (the "Acquisition") all of the outstanding common stock of Cloudium Technologies plc ("Cloudium" or the "Target"), a public limited company incorporated under the laws of England and Wales (Company No. 09734521), whose common shares are listed on the Nasdaq Global Select Market under the ticker symbol "CLDM." The Acquisition is to be structured as a reverse triangular merger under the Delaware General Corporation Law (the "DGCL"), pursuant to which Stratos Merger Sub Inc. ("Merger Sub"), a Delaware corporation and a direct wholly owned subsidiary of Fund VI formed for purposes of effecting the Acquisition, will merge with and into Cloudium, with Cloudium surviving the merger as a direct wholly owned subsidiary of Fund VI (the "Merger"). The Acquisition values Cloudium at an aggregate total enterprise value of approximately Six Billion Eight Hundred Million Dollars ($6,800,000,000), representing per-share merger consideration of approximately $36.92 per share based on 184,200,000 shares of Cloudium common stock outstanding as of the date hereof. The merger consideration will consist entirely of cash, except with respect to shares of Cloudium common stock subject to rollover agreements (the "Rollover Agreements") to be entered into by Jonathan Hargrove, Chief Executive Officer of Cloudium, and Pinnacle Growth Ventures LLC, a Delaware limited liability company, who have agreed to contribute, or cause the contribution of, their respective shares of Cloudium common stock to Fund VI in exchange for equity interests in Fund VI or its direct or indirect parent entity.
The Acquisition is expected to be consummated pursuant to an Agreement and Plan of Merger (the "Merger Agreement"), to be entered into among Cloudium Technologies plc, Stratos Merger Sub Inc., and Solara Digital Infrastructure Fund VI LP, the execution of which is currently anticipated to occur on or about January 22, 2024. Osprey Bancroft & Co. is acting as financial advisor to Solara and its affiliates in connection with the Acquisition. Winthrop & Hale LLP (Christine Novak, lead partner) is acting as legal counsel to the Commitment Parties in connection with the Facilities and the transactions contemplated hereby.
The Acquisition, the Merger, the execution, delivery, and performance of the Merger Agreement and the Rollover Agreements, the incurrence of the Facilities, the repayment of existing indebtedness of Cloudium, and the payment of all related fees, premiums, expenses, and transaction costs are collectively referred to herein as the "Transactions."
In consideration of the mutual agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
Section 1. The Facilities
1.1 Term Loan B Facility
Subject to the terms and conditions of this Commitment Letter, the Commitment Parties hereby agree to provide to the Borrower (as defined below), on the Closing Date (as defined below), a senior secured first lien term loan facility in an aggregate principal amount of Three Billion Seven Hundred Forty Million Dollars ($3,740,000,000) (the "Term Loan B Facility" or "TLB"). The Term Loan B Facility shall mature on the date that is seven (7) years after the Closing Date. Based on the anticipated closing of the Acquisition during the first half of calendar year 2024, the indicative maturity date of the Term Loan B Facility is expected to fall during the first half of calendar year 2031; the precise maturity date shall be confirmed based on the actual Closing Date. The Term Loan B Facility shall bear interest at a rate per annum equal to Term SOFR (as defined in Exhibit C hereto) plus 325 basis points (3.25%), and shall amortize in an amount equal to 1.0% of the original principal amount per annum, payable in equal quarterly installments of 0.25% of the original principal amount (i.e., $9,350,000 per quarter). The Term Loan B Facility shall be funded in full on the Closing Date. Other terms and conditions of the Term Loan B Facility are set forth in the Term Sheet attached hereto as Exhibit A.
1.2 Revolving Credit Facility
Subject to the terms and conditions of this Commitment Letter, the Commitment Parties hereby agree to provide to the Borrower, on the Closing Date, a senior secured first lien revolving credit facility with aggregate commitments in the amount of Five Hundred Million Dollars ($500,000,000) (the "Revolving Credit Facility" or the "Revolver," and together with the Term Loan B Facility, the "Facilities"). The Revolving Credit Facility shall mature on the date that is five (5) years after the Closing Date. The Revolving Credit Facility shall bear interest at a rate per annum equal to Term SOFR plus 275 basis points (2.75%) on drawn amounts, and shall be subject to a commitment fee of 0.375% per annum on undrawn commitments. The Revolving Credit Facility shall not be drawn at closing (i.e., $0 of revolving loans shall be outstanding on the Closing Date) and shall be made available following the Closing Date for working capital needs and general corporate purposes of the Borrower and its subsidiaries. The Revolving Credit Facility shall include customary sub-facilities for letters of credit and swingline loans, with sub-limits to be agreed upon and set forth in the definitive Credit Agreement. Other terms and conditions of the Revolving Credit Facility are set forth in the Term Sheet attached hereto as Exhibit A.
1.3 Total Committed Facilities
The aggregate amount of the commitments under the Facilities is Four Billion Two Hundred Forty Million Dollars ($4,240,000,000), consisting of $3,740,000,000 in respect of the Term Loan B Facility and $500,000,000 in respect of the Revolving Credit Facility.
Section 2. Commitments
2.1 Several Commitments
The commitments of the Commitment Parties hereunder are several and not joint. Each Commitment Party's obligation to fund its respective commitment under the Facilities on the Closing Date is independent of the obligation of any other Commitment Party. Meridian Atlantic hereby commits to provide its pro rata share of the Facilities, as such pro rata share shall be set forth in a separate fee letter of even date herewith among the Commitment Parties and Fund VI (the "Fee Letter"). Ironclad hereby commits to provide its pro rata share of the Facilities, as such pro rata share shall be set forth in the Fee Letter. In no event shall either Commitment Party be liable for the failure of the other Commitment Party to fund its respective commitment. Each Commitment Party's individual commitment allocation, and the related fee arrangements, shall be as specified in the Fee Letter.
2.2 Roles. In connection with the Facilities, the Commitment Parties shall serve in the following capacities:
(a) Meridian Atlantic Bank, N.A. shall serve as (i) Lead Arranger and Sole Bookrunner in respect of the Facilities, (ii) Administrative Agent under the Credit Agreement (as defined below), and (iii) Collateral Agent under the Guarantee and Collateral Agreement (as defined below).
(b) Ironclad Capital Markets LLC shall serve as (i) Co-Arranger and (ii) Joint Bookrunner in respect of the Facilities.
Fund VI may, from time to time, designate additional arrangers, bookrunners, co-managers, or other titled roles in connection with the syndication of the Facilities; provided, however, that (x) any such designation shall be subject to the prior written consent of Meridian Atlantic (which consent shall not be unreasonably withheld, conditioned, or delayed), and (y) the economics (including fees and compensation) and roles of Meridian Atlantic and Ironclad shall not be reduced, modified, or otherwise adversely affected without the prior written consent of the affected Commitment Party. The titles and roles described above shall be reflected in the definitive Credit Agreement and in any information memorandum, lender presentation, or other syndication material prepared in connection with the Facilities.
Section 3. Use of Proceeds
The proceeds of the Facilities, together with the equity contribution from Fund VI and rollover equity from the Rollover Parties, shall be applied as follows:
3.1 Term Loan B Proceeds
The proceeds of the Term Loan B Facility ($3,740,000,000), together with (i) the equity contribution from Fund VI in an aggregate amount of $2,832,888,096 (the "Equity Contribution") and (ii) rollover equity contributions in an aggregate amount of $616,055,952 (consisting of approximately $142,814,544 from Jonathan Hargrove and approximately $473,241,408 from Pinnacle Growth Ventures LLC) (the "Rollover Equity"), shall be used to:
(a) Finance the Cash Merger Consideration. Pay the aggregate cash merger consideration of $6,183,944,048 payable to holders of Cloudium common stock (other than holders who are party to the Rollover Agreements) in connection with the consummation of the Merger;
(b) Repay Existing Indebtedness. Repay in full all outstanding indebtedness of Cloudium and its subsidiaries under that certain Credit Agreement, dated as of March 15, 2021 (as amended, restated, supplemented, or otherwise modified from time to time), among Cloudium Technologies plc, as borrower, the lenders from time to time party thereto, and Atlas Commercial Lending Corp., as administrative agent (the "Existing Credit Agreement"), in an aggregate amount of approximately $820,000,000, consisting of (i) approximately $620,000,000 in outstanding term loans and (ii) approximately $200,000,000 in drawn revolving loans, together with all accrued and unpaid interest, fees, premiums (if any), and other amounts payable thereunder (the "Existing Indebtedness Repayment"); and
(c) Pay Transaction Costs. Pay fees, premiums, expenses, and other transaction costs incurred in connection with the Acquisition, the Facilities, and the other Transactions, in an aggregate estimated amount of approximately $185,000,000 (the "Transaction Expenses").
3.2 Revolving Credit Facility
The Revolving Credit Facility shall be available for working capital and general corporate purposes of the Borrower and its subsidiaries following the Closing Date. The Revolving Credit Facility shall not be drawn upon on the Closing Date, and no revolving loans shall be outstanding as of the Closing Date.
3.3 Sources and Uses
Set forth below is a summary of the anticipated sources and uses of funds in connection with the Transactions:
Sources of Funds
Uses of Funds
Note: The foregoing sources and uses are estimates based on information available as of the date hereof and are subject to adjustment. The Revolving Credit Facility is listed as a source reflecting available capacity only; no revolving loans will be funded on the Closing Date.
Section 4. Conditions Precedent to Closing and Funding
4.1 Limited Conditionality / SunGard Provisions
The conditions to the initial funding of the Term Loan B Facility and the availability of the Revolving Credit Facility on the date of the consummation of the Merger (the "Closing Date") shall be limited to the conditions expressly set forth in this Section 4 and in the Conditions Annex attached hereto as Exhibit B. The Commitment Parties hereby acknowledge and agree that, other than the conditions expressly set forth in this Section 4 and in Exhibit B, no other conditions to funding shall exist, whether express or implied. The foregoing is intended to be consistent with, and shall be interpreted in accordance with, the principles articulated in In re Sungard Data Systems, Inc. and the customary "certain funds" or "SunGard" provisions utilized in leveraged acquisition commitment letters. The Commitment Parties further agree that the terms and conditions of the definitive Credit Agreement and related documentation shall be in a form such that they do not impair the availability of the Facilities on the Closing Date if the conditions set forth in this Section 4 and Exhibit B have been satisfied (or waived by the Commitment Parties in their sole discretion).
4.2 Enumerated Conditions Precedent
The obligations of the Commitment Parties to fund the Term Loan B Facility and to make the Revolving Credit Facility available on the Closing Date are subject to the satisfaction (or waiver by Meridian Atlantic in its capacity as Administrative Agent, acting at the direction of the Commitment Parties) of each of the following conditions precedent:
(a) Acquisition Consummation. 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 as in effect on the date of execution thereof, without giving effect to any amendment, modification, waiver, supplement, or other change thereto that is materially adverse to the interests of the Lenders (as defined below) in their capacities as such, unless such amendment, modification, waiver, supplement, or other change has been consented to in writing by Meridian Atlantic (such consent not to be unreasonably withheld, conditioned, or delayed). For the avoidance of doubt, any reduction in the purchase price payable under the Merger Agreement shall be deemed not to be materially adverse to the interests of the Lenders so long as such reduction is allocated entirely to a reduction in the Equity Contribution and/or the Rollover Equity (and not to a reduction in the principal amount of the Term Loan B Facility).
(b) Execution of Definitive Documentation. The Borrower, the Guarantors, the Administrative Agent, and the Lenders shall have executed and delivered (i) a credit agreement (the "Credit Agreement") in form and substance consistent with the Term Sheet and this Commitment Letter and otherwise reasonably satisfactory to the Administrative Agent (subject to the "certain funds" concept described in Section 4.1), (ii) a guarantee and collateral agreement (the "Guarantee and Collateral Agreement") in form and substance consistent with the Term Sheet and this Commitment Letter and otherwise reasonably satisfactory to the Administrative Agent (subject to the "certain funds" concept), and (iii) such other definitive loan documents, security documents, and ancillary agreements as are customary for leveraged acquisition financings of this type and reasonably satisfactory to the Administrative Agent (collectively with the Credit Agreement and the Guarantee and Collateral Agreement, the "Loan Documents").
(c) Accuracy of Specified Representations. (i) The "Specified Acquisition Agreement Representations" shall be true and correct as of the Closing Date. The "Specified Acquisition Agreement Representations" are those representations and warranties made by Cloudium in the Merger Agreement that are material to the interests of the Lenders, but only to the extent that Fund VI (or Merger Sub) has the right (taking into account applicable cure periods) to decline to consummate the Acquisition as a result of a failure of such representations and warranties to be true and correct. (ii) The "Specified Representations" 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) as of the Closing Date. The "Specified Representations" are limited representations and warranties of the Borrower to be made in the Credit Agreement relating to (A) corporate existence, (B) corporate power and authority to enter into the Loan Documents, (C) the enforceability of the Loan Documents, (D) no conflict of the Loan Documents with the organizational documents of the Loan Parties, (E) Federal Reserve margin regulations, (F) the Investment Company Act of 1940, (G) compliance with the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the "USA PATRIOT Act"), the Beneficial Ownership Regulation (31 C.F.R. § 1010.230), the sanctions laws and regulations administered by the U.S. Department of the Treasury's Office of Foreign Assets Control ("OFAC"), the U.S. Department of State, the European Union, and the United Kingdom (collectively, "Sanctions"), (H) compliance with the Foreign Corrupt Practices Act of 1977, the U.K. Bribery Act 2010, and other applicable anti-corruption laws, and (I) solvency (subject to delivery of the solvency certificate described in clause (e) below).
(d) No Material Adverse Effect. Since the date of the Merger Agreement, no "material adverse effect" (as such term is defined in the Merger Agreement, including all carve-outs and exceptions contained therein) shall have occurred and be continuing. It is acknowledged that the Merger Agreement's definition of "material adverse effect" is anticipated to include carve-outs for (among other things) the effects of pandemics, public health emergencies, acts of war or terrorism, and changes in applicable law or regulation, and such carve-outs shall be given full effect for purposes of this condition.
(e) Solvency. The Administrative Agent shall have received a solvency certificate, in form and substance reasonably satisfactory to Meridian Atlantic, executed by the chief financial officer of the Borrower (i.e., the surviving entity following the Merger), certifying that, on the Closing Date, after giving pro forma effect to the Transactions (including the consummation of the Merger, the incurrence of the Facilities, the funding of the Term Loan B Facility, the Existing Indebtedness Repayment, the payment of all Transaction Expenses, and the payment of all fees and other amounts payable hereunder and under the Fee Letter on the Closing Date), the Borrower and its subsidiaries, on a consolidated basis, are Solvent. For purposes hereof, "Solvent" means, with respect to the Borrower and its subsidiaries on a consolidated basis, that as of the date of determination: (I) the sum of the assets, at a fair valuation, of the Borrower and its subsidiaries on a consolidated basis exceeds the sum of all liabilities, including contingent liabilities, of the Borrower and its subsidiaries on a consolidated basis; (II) the Borrower and its subsidiaries on a consolidated basis are able to pay their debts and obligations as they become due in the ordinary course of business; and (III) the Borrower and its subsidiaries on a consolidated basis do not have unreasonably small capital with which to conduct their business.
(f) Delivery of Financial Statements. The Commitment Parties shall have received (i) the audited consolidated balance sheets and related consolidated statements of income (loss), stockholders' equity, and cash flows of Cloudium for each of the three (3) most recently completed fiscal years ended at least ninety (90) days prior to the Closing Date, audited by Harwell & Dobson LLP, independent registered public accounting firm, together with the reports of Harwell & Dobson LLP thereon, and (ii) the unaudited consolidated balance sheet and related consolidated statements of income (loss) of Cloudium for each fiscal quarter ended at least forty-five (45) days prior to the Closing Date (other than the fourth fiscal quarter of any fiscal year), in each case, prepared in accordance with U.S. generally accepted accounting principles ("GAAP") applied on a consistent basis and, in the case of the unaudited financial statements, subject to the absence of footnotes and normal year-end audit adjustments. This condition shall be deemed satisfied to the extent such financial statements have been publicly filed by Cloudium with the U.S. Securities and Exchange Commission (the "SEC") and are available through the SEC's EDGAR system.
(g) Lien Searches / Payoff and Release. The Administrative Agent shall have received (i) customary UCC, tax lien, judgment lien, and intellectual property lien search results in each jurisdiction in which Cloudium or any of its domestic subsidiaries is organized or maintains assets, in form and substance reasonably satisfactory to the Administrative Agent, (ii) a payoff letter in customary form from Atlas Commercial Lending Corp., as administrative agent under the Existing Credit Agreement, setting forth the aggregate amount required to repay in full all obligations under the Existing Credit Agreement on the Closing Date and providing for the release of all liens and security interests securing such obligations upon receipt of the payoff amount, and (iii) UCC-3 financing statement amendments (terminations) and such other lien release documentation as may be necessary to release and terminate all security interests granted under the Existing Credit Agreement, in each case in form suitable for filing.
(h) Insurance. The Administrative Agent shall have received evidence, in form and substance reasonably satisfactory to the Administrative Agent, that insurance covering the Borrower and its subsidiaries is in full force and effect in such amounts, with such deductibles, and against such risks as are customarily maintained by companies of similar size engaged in similar businesses, and as required under the Credit Agreement, including, as applicable, lender's loss payable endorsements and additional insured endorsements naming the Collateral Agent as an additional insured or loss payee as its interest may appear.
(i) KYC / Beneficial Ownership. The Administrative Agent and each Commitment Party shall have received, at least ten (10) business days prior to the Closing Date (to the extent requested in writing at least thirteen (13) business days prior to the Closing Date), all documentation and other information regarding the Borrower, the Guarantors, and their respective beneficial owners that is required by applicable regulatory authorities under applicable "know-your-customer" and anti-money-laundering rules and regulations, including (without limitation) (I) the USA PATRIOT Act (Title III of Pub. L. 107-56, as amended), (II) the Beneficial Ownership Regulation (31 C.F.R. § 1010.230), (III) the Bank Secrecy Act (31 U.S.C. §§ 5311 et seq.), and (IV) applicable OFAC regulations. With respect to the Borrower, a Beneficial Ownership Certification in the form required by the Beneficial Ownership Regulation shall have been provided to each Commitment Party that so requests.
(j) Fees and Expenses. All fees, expenses, and other amounts due and payable on the Closing Date pursuant to this Commitment Letter, the Fee Letter, and the Credit Agreement (including the arrangement fees, upfront fees, and administrative agent fees, and including the reasonable and documented fees and disbursements of Winthrop & Hale LLP) shall have been paid in full (which amounts may, at the election of Fund VI, be funded from the proceeds of the Term Loan B Facility).
4.3 Limitation on Conditions
For the avoidance of doubt, and consistent with the "certain funds" / SunGard principles described in Section 4.1, the conditions set forth in Sections 4.2(a) through 4.2(j) above (and as restated in the Conditions Annex attached hereto as Exhibit B) are the sole and exclusive conditions to the obligation of the Commitment Parties to fund the Term Loan B Facility and to make the Revolving Credit Facility available on the Closing Date. No other conditions to closing or funding shall be implied or required, including, without limitation, (i) no condition based on the absence of a material adverse change in, or disruption to, the financial, banking, or capital markets (i.e., no "market MAC" condition), (ii) no condition based on the accuracy of representations and warranties other than the Specified Representations and the Specified Acquisition Agreement Representations, and (iii) no condition based on the absence of any default or event of default under the Credit Agreement other than a payment default on the Closing Date or as may arise solely from the breach of a Specified Representation. The Commitment Parties acknowledge and agree that the definitive Credit Agreement and other Loan Documents shall not contain any conditions to funding on the Closing Date beyond those set forth in this Section 4 and Exhibit B.
Section 5. Flex Provisions
5.1 Pricing Flex
The Commitment Parties reserve the right, exercisable by written notice to Fund VI at any time prior to the successful completion of the syndication of the Facilities, to increase the applicable interest rate spreads on the Term Loan B Facility and the Revolving Credit Facility by up to [●] basis points each, if reasonably determined by the Commitment Parties to be necessary to ensure a successful syndication of the Facilities to institutional and bank lenders on terms satisfactory to the Commitment Parties and Fund VI. In addition, the Commitment Parties may offer the Term Loan B Facility at an original issue discount ("OID") of up to [●]% of the par value thereof if reasonably determined to be necessary for successful syndication. The commitment fee on the Revolving Credit Facility may be increased by up to [●] basis points per annum on undrawn commitments. All pricing flex under this Section 5.1 shall be exercised only to the extent reasonably necessary for the successful syndication of the Facilities, and the Commitment Parties shall consult with Fund VI in good faith prior to the exercise of any such pricing flex.
5.2 Structure Flex
If the Commitment Parties reasonably determine that the successful syndication of the Facilities requires a modification to the capital structure, the Commitment Parties may reallocate up to $[●] of the aggregate principal amount of the Term Loan B Facility to one or more of the following: (a) a senior secured second lien term loan facility, (b) a senior unsecured notes facility (to be issued in a Rule 144A / Regulation S offering or a private placement), or (c) a senior secured notes facility (to be issued in a Rule 144A / Regulation S offering or a private placement), in each case with pricing, covenants, and other terms to be agreed upon by the Commitment Parties and Fund VI in good faith. Any such reallocation pursuant to this Section 5.2 shall not increase the total quantum of funded indebtedness of the Borrower and its subsidiaries on the Closing Date beyond the aggregate commitments of $4,240,000,000 contemplated by this Commitment Letter, and any such reallocation shall be on terms and conditions no less favorable to the Borrower, taken as a whole, than the terms and conditions of the Term Loan B Facility (except to the extent inherent in the nature of the reallocated facility). The Commitment Parties may also, in consultation with Fund VI, propose modifications to the covenants, mandatory prepayment provisions, or other terms of the Facilities (within agreed parameters) to the extent necessary to facilitate a successful syndication, subject to the limitation that no such modification shall impose conditions to funding on the Closing Date beyond those set forth in Section 4 hereof.
5.3 Consultation. All flex provisions set forth in this Section 5 shall be exercised in good faith consultation with Fund VI and its counsel, Calderwood & Harkness LLP. Fund VI shall have the right to reject any exercise of flex under this Section 5 that would result in the all-in yield on the Term Loan B Facility (calculated to include the applicable interest rate margin, OID (calculated based on a four-year average life), and SOFR floor, but excluding any commitment fees, arrangement fees, upfront fees, or unused line fees) exceeding an agreed-upon cap (the "Yield Cap"), which Yield Cap shall be negotiated and documented in the Fee Letter. No exercise of flex shall become effective without the written confirmation of both Commitment Parties.
Section 6. Fees
The fees payable in connection with the Facilities shall be as set forth in a separate fee letter of even date herewith among the Commitment Parties and Fund VI (the "Fee Letter"), the terms of which are incorporated herein by reference. Without limiting the generality of the foregoing:
(a) Arrangement and Upfront Fees. Arrangement fees, upfront fees, and any OID in respect of the Term Loan B Facility shall be as set forth in the Fee Letter and shall be earned and payable on the Closing Date.
(b) Revolving Credit Facility Commitment Fee. A commitment fee of 0.375% per annum shall accrue on the average daily undrawn amount of the Revolving Credit Facility, commencing on the Closing Date and payable quarterly in arrears.
(c) Ticking Fee. If the Closing Date has not occurred within ninety (90) days after the date of execution of the Merger Agreement, a ticking fee of 0.25% per annum shall accrue on the aggregate undrawn commitments of the Commitment Parties in respect of the Term Loan B Facility, commencing on the ninety-first (91st) day following the date of the Merger Agreement (i.e., if the Merger Agreement is executed on January 22, 2024, such ticking fee is anticipated to commence on or about April 22, 2024) and continuing until the earlier of (x) the Closing Date and (y) the Termination Date. The ticking fee shall be payable on the Closing Date or the Termination Date, as applicable, and shall be in addition to any other fees payable hereunder or under the Fee Letter.
(d) Administrative Agent Fees. Administrative Agent fees payable to Meridian Atlantic in its capacity as Administrative Agent shall be as set forth in a separate agency fee letter among the Borrower and Meridian Atlantic (the "Agency Fee Letter").
(e) Non-Refundability. All fees payable under this Commitment Letter, the Fee Letter, and the Agency Fee Letter, once paid, shall be non-refundable, and shall not be subject to reduction by way of setoff, counterclaim, or otherwise.
Section 7. Syndication
7.1 Syndication Strategy
The Commitment Parties intend to syndicate the Facilities to a group of financial institutions and other institutional lenders (each, a "Lender" and collectively, the "Lenders") reasonably acceptable to the Commitment Parties and Fund VI. The Commitment Parties shall manage all aspects of the syndication in consultation with Fund VI, including (without limitation) the selection of Lenders, the allocation of commitments among Lenders, the timing and structure of the syndication process, and the negotiation of terms of the syndication. Fund VI agrees to use commercially reasonable efforts to assist the Commitment Parties in completing a successful syndication of the Facilities, including by (a) ensuring that senior management and representatives of Fund VI and, following the execution of the Merger Agreement, of Cloudium, participate in and make themselves available for lender presentations, meetings, and conference calls at such times and places as are reasonably requested by the Commitment Parties, (b) assisting in the preparation of a confidential information memorandum (the "CIM"), bank information memorandum, lender presentation materials, and other customary marketing materials, and (c) cooperating in the preparation of all other documents, information, and materials reasonably requested by the Commitment Parties in connection with the syndication.
7.2 Cooperation. Fund VI acknowledges that the Merger Agreement is anticipated to contain customary financing cooperation obligations of the Target (currently expected to be set forth in Section 6.14 of the Merger Agreement) and its subsidiaries, directors, officers, employees, auditors, and advisors, including obligations to (a) provide financial and other information reasonably necessary for the preparation of the CIM and other syndication materials, (b) participate in lender meetings, presentations, road shows, and due diligence sessions, (c) cause Harwell & Dobson LLP, Cloudium's independent registered public accounting firm, to deliver customary comfort letters (including "negative assurance" and "circle-up" comfort letters) to the Commitment Parties and the Lenders, and (d) cooperate with the preparation and filing of all UCC financing statements, intellectual property filings, and other perfection documents. Fund VI agrees to use commercially reasonable efforts to cause Cloudium and its subsidiaries, officers, employees, and advisors (including Harwell & Dobson LLP) to comply with and perform such financing cooperation obligations promptly and in good faith, and Fund VI shall, to the extent within its control, exercise its rights under the Merger Agreement to enforce such obligations against the Target.
7.3 Clear Market
Fund VI agrees that, during the period commencing on the date of this Commitment Letter and ending on the earlier of (x) the date on which the Commitment Parties notify Fund VI in writing that a successful syndication of the Facilities has been completed and (y) [●] days after the Closing Date (such period, the "Syndication Period"), neither Fund VI nor the Borrower nor any of their respective subsidiaries or affiliates shall, directly or indirectly, syndicate, place, arrange, issue, incur, or enter into any debt financing (whether in the form of bank loans, notes, bonds, or other debt instruments) for the credit or account of the Borrower or any of its subsidiaries without the prior written consent of Meridian Atlantic (not to be unreasonably withheld, conditioned, or delayed). The foregoing restriction shall not apply to (a) existing indebtedness of the Borrower or its subsidiaries as of the date hereof (other than the Existing Credit Agreement, which shall be repaid in full on the Closing Date), (b) trade payables, commercial paper, or other ordinary-course payables incurred in the ordinary course of business, (c) capital leases and purchase money obligations incurred in the ordinary course of business, (d) intercompany indebtedness among the Borrower and its subsidiaries, and (e) other indebtedness that constitutes "permitted indebtedness" under the Credit Agreement and does not interfere with the syndication of the Facilities.
7.4 Information. Fund VI shall provide, and shall cause the Borrower and its subsidiaries to provide, all information reasonably requested by the Commitment Parties in connection with the syndication of the Facilities, including (without limitation) financial projections, business plans, operating budgets, due diligence materials, and responses to prospective Lender inquiries. All such information shall be accurate and complete in all material respects as of the date provided and shall not contain any material misstatement of fact or omit to state any material fact necessary to make the statements contained therein not misleading in light of the circumstances under which such statements were made. Fund VI acknowledges that the Commitment Parties may share such information (including any CIM and other marketing materials) with prospective Lenders and their advisors, subject to customary confidentiality undertakings.
Section 8. Information and Confidentiality
8.1 Confidentiality. Each of the Commitment Parties agrees to treat as confidential all information provided to it by or on behalf of Fund VI, the Target, or their respective representatives in connection with the Acquisition and the Facilities, including, without limitation, the terms and conditions of this Commitment Letter, the Fee Letter, and any non-public financial, operational, technical, or business information provided in connection herewith (collectively, "Confidential Information"). The Commitment Parties shall not disclose any Confidential Information to any person or entity, except:
(i) to their respective affiliates and to the directors, officers, employees, agents, and advisors (including legal counsel, accountants, and financial advisors) of the Commitment Parties and their affiliates, in each case on a need-to-know basis and subject to their agreement to be bound by the provisions of this Section 8.1 (or to substantially similar confidentiality obligations);
(ii) to prospective Lenders, participants, and assignees and their advisors in connection with the syndication of the Facilities, subject to the execution and delivery by such persons of customary confidentiality undertakings (including "click-through" confidentiality agreements) in form and substance reasonably satisfactory to Fund VI;
(iii) to any federal, state, or foreign regulatory authority or self-regulatory organization having jurisdiction over a Commitment Party, or to any auditor or examiner of a Commitment Party, as may be required in connection with any examination, audit, or regulatory inquiry;
(iv) as may be required by applicable law, regulation, judicial process, or governmental order (including any subpoena or similar legal process), provided that, to the extent permitted by law, the disclosing Commitment Party shall provide prompt notice to Fund VI prior to any such disclosure so as to enable Fund VI to seek a protective order or other appropriate remedy; and
(v) to the extent that such information becomes publicly available other than as a result of a breach of this Section 8.1, or was in the possession of the Commitment Party prior to receipt from Fund VI on a non-confidential basis, or is independently developed by the Commitment Party without reference to Confidential Information.
Fund VI, for its part, agrees to treat as confidential the Fee Letter and all flex terms contained therein, and shall not disclose any such terms or conditions except (A) to its officers, directors, employees, members, partners, equity holders, and advisors (including Calderwood & Harkness LLP and Osprey Bancroft & Co.) on a need-to-know basis and subject to customary confidentiality obligations, (B) as may be required by applicable law or regulation, and (C) as may be necessary to enforce its rights hereunder.
8.2 Disclosure. Notwithstanding the foregoing, it is understood and agreed that (a) the existence of this Commitment Letter and the aggregate amount of the commitments hereunder may be disclosed in any public announcement, press release, proxy statement, prospectus, or SEC filing made by Fund VI, Cloudium, or any of their respective affiliates in connection with the Acquisition, and in the Merger Agreement (including as an exhibit or schedule thereto), provided that fee amounts, flex terms, and the Fee Letter shall be redacted from any such filing or disclosure to the extent permitted by applicable law and SEC rules and regulations, and (b) the Commitment Parties may, following the successful syndication of the Facilities, place customary "tombstone" advertisements in financial publications at their own expense.
Section 9. Indemnification and Expenses
9.1 Indemnification. Fund VI agrees to indemnify, defend, and hold harmless each Commitment Party, its affiliates, and each of their respective directors, officers, employees, agents, advisors, representatives, controlling persons (within the meaning of Section 15 of the Securities Act of 1933 or Section 20 of the Securities Exchange Act of 1934), successors, and assigns (each, an "Indemnified Person") from and against any and all losses, claims, damages, liabilities, costs, and expenses (including, without limitation, reasonable and documented fees and disbursements of one firm of legal counsel for all Indemnified Persons, taken as a whole, and, if reasonably necessary, one firm of local counsel in each relevant jurisdiction, and, in the case of a conflict of interest, one additional firm of counsel for each group of Indemnified Persons similarly situated) (collectively, "Losses"), in each case, arising out of, relating to, or in connection with (a) this Commitment Letter, the Fee Letter, or any other agreement or instrument contemplated hereby, (b) the Facilities or the Loan Documents, (c) the Acquisition, the Merger, or any other Transaction, (d) any use or proposed use of the proceeds of the Facilities, or (e) any claim, litigation, investigation, or proceeding relating to any of the foregoing, whether or not any Indemnified Person is a party thereto and whether or not such claim, litigation, investigation, or proceeding is brought by Fund VI, the Borrower, any of their affiliates, or any third party; provided, however, that no Indemnified Person shall be entitled to indemnification hereunder to the extent that any such Loss is determined by a final, non-appealable judgment of a court of competent jurisdiction to have resulted from (i) the gross negligence, bad faith, or willful misconduct of such Indemnified Person, (ii) a material breach by such Indemnified Person of its obligations under this Commitment Letter, or (iii) any dispute among Indemnified Persons that does not involve any act or omission of Fund VI, the Borrower, or any of their respective affiliates.
9.2 Expense Reimbursement
Fund VI agrees to reimburse the Commitment Parties, promptly upon demand, for all reasonable and documented out-of-pocket costs and expenses incurred in connection with the Facilities and the Transactions, including (without limitation):
(a) the fees and disbursements of Winthrop & Hale LLP (Christine Novak, lead partner, 901 New York Avenue NW, Washington, DC 20001), as legal counsel to the Commitment Parties, and of any local counsel retained by the Commitment Parties in connection with the Facilities;
(b) expenses incurred in connection with due diligence investigations, including appraisal costs, environmental assessment costs, lien searches, and title searches;
(c) syndication costs, including printing, distribution, and travel expenses incurred in connection with lender meetings, presentations, and road shows;
(d) filing and recording fees, UCC search costs, and other costs of perfecting the security interests contemplated by the Guarantee and Collateral Agreement; and
(e) all other reasonable and documented out-of-pocket costs and expenses of the Commitment Parties incurred in connection with the preparation, negotiation, execution, delivery, and administration of this Commitment Letter, the Fee Letter, the Credit Agreement, and the other Loan Documents.
The expense reimbursement obligations of Fund VI under this Section 9.2 shall survive the termination of this Commitment Letter and the commitments hereunder and shall not be subject to any cap or limitation except as may be expressly agreed in writing by the parties.
Section 10. Ticking Fee and Duration of Commitments
10.1 Ticking Fee
If the Closing Date has not occurred within ninety (90) days after the date of execution of the Merger Agreement, a ticking fee (the "Ticking Fee") of 0.25% per annum shall accrue on the aggregate undrawn commitments of the Commitment Parties in respect of the Term Loan B Facility ($3,740,000,000, or such lesser amount as may be in effect at such time after giving effect to any reduction in commitments pursuant to the terms of this Commitment Letter), from and after the ninety-first (91st) day following the date of execution of the Merger Agreement until the earlier of (x) the Closing Date and (y) the Termination Date (as defined below). The Ticking Fee shall be computed on the basis of a 360-day year for the actual number of days elapsed and shall be payable on the Closing Date or the Termination Date, as applicable. For the avoidance of doubt, if the Merger Agreement is executed on January 22, 2024, the Ticking Fee is anticipated to commence accruing on or about April 22, 2024. The Ticking Fee is in addition to, and not in lieu of, any other fees payable under this Commitment Letter, the Fee Letter, or the Agency Fee Letter.
10.2 Termination / Expiration
This Commitment Letter and the commitments of the Commitment Parties hereunder shall automatically terminate, without further action or notice by any party, on the earliest to occur of the following (the "Termination Date"):
(a) The Closing Date (at which point the commitments hereunder shall cease and the obligations of the Commitment Parties shall be satisfied by the funding of the Term Loan B Facility and the establishment of the Revolving Credit Facility under the Credit Agreement, and the Commitment Parties' commitments shall convert into funded loans and/or revolving commitments, as applicable, under the Credit Agreement);
(b) The termination of the Merger Agreement in accordance with its terms, whether by mutual agreement of the parties thereto, by the exercise of a termination right by any party thereto, or by operation of law;
(c) The consummation of the Acquisition without the use of the Facilities (including, for the avoidance of doubt, any consummation of the Acquisition utilizing alternative financing sources);
(d) The "Outside Date" (as defined in the Merger Agreement), which is currently expected to be June 30, 2024, as such date may be extended pursuant to the terms of the Merger Agreement.
Upon the occurrence of any termination event described in clauses (b), (c), or (d) above, all commitments of the Commitment Parties hereunder shall automatically and irrevocably terminate and no party hereto shall have any further obligation to any other party, except that the provisions of Section 8 (Confidentiality), Section 9 (Indemnification and Expenses), Section 13 (Governing Law and Jurisdiction), Section 14.5 (Survival), and the obligation to pay any Ticking Fee accrued through the Termination Date, shall survive such termination indefinitely (or, in the case of indemnification obligations, for the applicable statute of limitations period).
Section 11. Assignments
No party hereto may assign its rights or obligations under this Commitment Letter without the prior written consent of each other party hereto, and any purported assignment without such consent shall be null and void; provided, however, that:
(a) Each Commitment Party may, without the consent of Fund VI, assign all or a portion of its commitments under the Facilities to any affiliate of such Commitment Party; provided that no such assignment to an affiliate shall relieve the assigning Commitment Party of its obligations hereunder unless and until such affiliate has funded its assigned commitment in full on the Closing Date;
(b) Following the execution of the Merger Agreement, each Commitment Party may assign all or a portion of its commitments under the Facilities to prospective Lenders in connection with the syndication of the Facilities, subject to (i) Fund VI's consent with respect to the identity of each such prospective Lender (such consent not to be unreasonably withheld, conditioned, or delayed), (ii) Fund VI's right to designate certain persons or entities as "disqualified lenders" who shall not be eligible to receive assignments of commitments without the express consent of Fund VI (such list of disqualified lenders to be agreed upon by the parties), and (iii) the condition that the assigning Commitment Party shall retain such minimum commitment as may be agreed upon in the Fee Letter until the Closing Date; and
(c) On and after the Closing Date, assignments of loans and commitments under the Credit Agreement shall be governed by the terms and conditions of the Credit Agreement.
Section 12. Representations and Warranties of Fund VI
Fund VI hereby represents and warrants to each of the Commitment Parties, as of the date hereof and as of the date of execution of this Commitment Letter by Fund VI, as follows:
(a) Organization and Existence. Fund VI is a limited partnership duly organized, validly existing, and in good standing under the laws of the State of Delaware. Solara Fund VI GP LLC, a Delaware limited liability company, is the sole general partner of Fund VI and is duly authorized to act on behalf of Fund VI in all matters relating to this Commitment Letter and the Transactions.
(b) Authorization. The execution, delivery, and performance by Fund VI of this Commitment Letter and the Fee Letter, and the consummation of the transactions contemplated hereby and thereby, have been duly authorized by all necessary partnership and limited liability company action on the part of Fund VI and Solara Fund VI GP LLC, respectively. No further consent, approval, authorization, or other action by any partner, member, manager, or other person is required in connection with the execution and delivery of this Commitment Letter by Fund VI.
(c) Enforceability. This Commitment Letter constitutes the legal, valid, and binding obligation of Fund VI, enforceable against Fund VI in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and other similar laws affecting creditors' rights generally and to general principles of equity (regardless of whether enforcement is sought in equity or at law).
(d) No Conflict; Governmental Approvals. The execution, delivery, and performance by Fund VI of this Commitment Letter and the consummation of the transactions contemplated hereby do not and will not (i) violate any provision of the organizational documents of Fund VI or Solara Fund VI GP LLC, (ii) violate any law, rule, regulation, judgment, order, or decree applicable to Fund VI or Solara Fund VI GP LLC, or (iii) result in any breach of or constitute a default under any material agreement or instrument to which Fund VI or Solara Fund VI GP LLC is a party or by which any of their respective properties or assets may be bound. No consent, approval, authorization, license, or order of, or filing, registration, or qualification with, any governmental authority is required in connection with the execution and delivery of this Commitment Letter by Fund VI, other than (A) regulatory approvals required for the consummation of the Acquisition, including the filing of a notification under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and clearance by the United Kingdom Competition and Markets Authority (the "UK CMA"), and (B) such consents, approvals, or filings as may be required under applicable state securities or "blue sky" laws.
(e) Accuracy of Information. The information provided by or on behalf of Fund VI to the Commitment Parties in connection with the Acquisition and the Facilities is true, accurate, and complete in all material respects as of the date of delivery thereof and does not contain any material misstatement of fact or omit to state any material fact necessary to make the statements contained therein, in light of the circumstances under which they were made, not misleading.
Section 13. Governing Law and Jurisdiction
This Commitment Letter and the rights and obligations of the parties hereunder shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York, without regard to principles of conflict of laws that would result in the application of the laws of any other jurisdiction (other than Sections 5-1401 and 5-1402 of the New York General Obligations Law, which shall apply).
Each party hereto hereby irrevocably and unconditionally (a) submits to the exclusive jurisdiction of the Supreme Court of the State of New York sitting in the Borough of Manhattan, City of New York, and the United States District Court for the Southern District of New York, and any appellate court from any thereof, in any action, suit, or proceeding arising out of or relating to this Commitment Letter, the Fee Letter, or any transaction contemplated hereby or thereby, and agrees that all claims in respect of any such action, suit, or proceeding shall be heard and determined exclusively in such courts, (b) waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of venue of any such action, suit, or proceeding in any such court, and any claim that any such action, suit, or proceeding brought in any such court has been brought in an inconvenient forum, and (c) agrees that a final, non-appealable judgment in any such action, suit, or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.
EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING ARISING OUT OF OR RELATING TO THIS COMMITMENT LETTER, THE FEE LETTER, THE FACILITIES, OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY. EACH PARTY HERETO CERTIFIES THAT NO REPRESENTATIVE, AGENT, OR ATTORNEY OF ANY OTHER PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER.
Section 14. Miscellaneous
14.1 Amendments. No amendment, waiver, modification, supplement, or consent with respect to any provision of this Commitment Letter shall be effective unless the same shall be in writing and signed by Fund VI and each of the Commitment Parties. No failure or delay by any party hereto in exercising any right, power, or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power, or privilege. The rights and remedies of the parties hereto are cumulative and not exclusive of any rights or remedies that they would otherwise have under applicable law.
14.2 Counterparts. This Commitment Letter may be executed in one or more counterparts (including by facsimile or other electronic transmission, including by .pdf file or any electronic signature complying with the U.S. federal ESIGN Act of 2000 or the New York Electronic Signatures and Records Act), each of which shall be deemed an original, and all of which taken together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page of this Commitment Letter by facsimile, .pdf, or other electronic transmission shall be effective as delivery of a manually executed counterpart of this Commitment Letter.
14.3 Headings. The section headings and captions contained in this Commitment Letter are inserted for convenience of reference only and shall not affect the meaning, interpretation, or construction of any provision hereof.
14.4 Entire Agreement
This Commitment Letter, together with the Fee Letter, the Term Sheet attached hereto as Exhibit A, the Conditions Annex attached hereto as Exhibit B, and the provisions regarding SOFR attached hereto as Exhibit C, constitutes the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes all prior and contemporaneous discussions, negotiations, proposals, commitments, agreements (whether written or oral), and understandings relating to the Facilities and the other subject matter hereof. In the event of any conflict between the terms of this Commitment Letter and the terms of the Term Sheet, the terms of this Commitment Letter shall control.
14.5 Survival. The provisions of Section 8 (Information and Confidentiality), Section 9 (Indemnification and Expenses), Section 13 (Governing Law and Jurisdiction), and this Section 14.5 shall survive the termination or expiration of this Commitment Letter and the commitments hereunder, regardless of the reason for such termination. Without limiting the foregoing, the obligation of Fund VI to reimburse the Commitment Parties' expenses under Section 9.2 shall survive any termination of this Commitment Letter.
14.6 No Fiduciary Duty
Fund VI acknowledges and agrees that (a) each Commitment Party is acting solely in the capacity of an arm's-length contractual counterparty to Fund VI with respect to the Facilities and the transactions contemplated hereby (including in connection with determining the terms of the Facilities and the negotiation of the definitive documentation), and not as a financial advisor, agent, or fiduciary of Fund VI, the Borrower, or any of their respective affiliates, equity holders, creditors, or employees, (b) no Commitment Party has assumed any advisory, fiduciary, or similar obligation in favor of Fund VI or any other person in connection with the Facilities or the transactions contemplated hereby, and each party hereto waives and releases, to the fullest extent permitted by law, any claims that it may have against any Commitment Party with respect to any alleged breach of fiduciary duty in connection herewith, and (c) each Commitment Party and its affiliates may be engaged in a broad range of transactions that involve interests that differ from those of Fund VI and its affiliates, and no Commitment Party has any obligation to disclose any of such interests or transactions to Fund VI or its affiliates. Fund VI further acknowledges that it has been advised by its own legal, financial, and other advisors to the extent it has deemed appropriate and has not relied on any Commitment Party for such advice.
Section 15. Acceptance and Execution
This Commitment Letter is being delivered to Fund VI for its review and reflects the principal terms upon which the Commitment Parties are prepared to provide the Facilities, subject to the negotiation, execution, and delivery of definitive documentation on the terms and conditions described herein. This Commitment Letter is not intended to create any enforceable obligation on the part of any party hereto until it has been duly executed and delivered by all parties hereto.
Each of the Commitment Parties confirms that it is prepared to proceed on the basis set forth herein, subject to the resolution of the open points and bracketed items identified throughout this Commitment Letter and to the completion of satisfactory due diligence. The Commitment Parties request that Fund VI confirm its acceptance of this Commitment Letter and the Fee Letter by returning executed counterparts of each to Meridian Atlantic and Ironclad no later than [●], 2024 (the "Acceptance Deadline"). It is anticipated that the Acceptance Deadline will be on or before the date of execution of the Merger Agreement, which is currently targeted for January 22, 2024. If this Commitment Letter is not accepted by Fund VI by the Acceptance Deadline, the commitments set forth herein shall automatically terminate, without any further action or notice.
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