1041-00003 · Solara Digital Infrastructure LP · Financing

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SOLVENCY CERTIFICATE

Delivered pursuant to Section 4.02(f) of the Credit Agreement, dated as of July 9, 2024 (the "Credit Agreement"), among Cloudium Technologies plc (as Borrower), Meridian Atlantic Bank, N.A. (as Administrative Agent), Ironclad Capital Markets LLC (as Co-Arranger), and the lenders party thereto

Also delivered pursuant to Section 7.03(d) of the Agreement and Plan of Merger, dated as of January 22, 2024 (the "Merger Agreement"), among Cloudium Technologies plc, Stratos Merger Sub Inc., and Solara Digital Infrastructure Fund VI LP

Date: July 9, 2024

Section 1. Recitals and Introduction

The undersigned, Sienna Whitfield, is the duly appointed Chief Financial Officer of Cloudium Technologies plc (the "Company"), in her capacity as Chief Financial Officer of the surviving entity following the consummation of the Merger (as defined below). The undersigned is authorized by the Board of Directors of the Company to execute and deliver this Solvency Certificate on behalf of the Company.

This Solvency Certificate is being delivered in connection with the closing, on the date hereof, of the transactions (the "Transactions") contemplated by:

(a) the Merger Agreement, pursuant to which Stratos Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of Solara Digital Infrastructure Fund VI LP, a Delaware limited partnership (the "Buyer"), merged with and into Cloudium Technologies plc, with Cloudium Technologies plc surviving the Merger as a wholly owned subsidiary of the Buyer (the "Merger"); and

(b) the Credit Agreement, providing for (i) a senior secured Term Loan B facility in an aggregate principal amount of $3,740,000,000 (the "Term Loan B Facility"), bearing interest at a rate per annum equal to Adjusted Term SOFR plus 3.25%, and maturing on July 9, 2031, and (ii) a senior secured Revolving Credit Facility in an aggregate commitment amount of $500,000,000 (the "Revolving Credit Facility"), bearing interest at a rate per annum equal to Adjusted Term SOFR plus 2.75%, and maturing on July 9, 2029, in each case with Meridian Atlantic Bank, N.A. acting as Administrative Agent thereunder.

This Solvency Certificate is being delivered to Meridian Atlantic Bank, N.A. ("Meridian"), in its capacity as Administrative Agent under the Credit Agreement, on behalf of itself and the lenders party thereto (collectively, the "Lenders"), and to Solara Digital Infrastructure Fund VI LP, in its capacity as the Buyer under the Merger Agreement.

The undersigned is duly authorized to deliver this Solvency Certificate on behalf of the Company and has made such investigations and inquiries as she has deemed necessary and appropriate for the purposes hereof, including a thorough review of the financial condition, assets, liabilities (including contingent liabilities), business operations, and business prospects of the Company and its Subsidiaries (taken as a whole), after giving pro forma effect to the Transactions as if the Transactions had been consummated immediately prior to the delivery of this Solvency Certificate.

Section 2. Definitions

As used in this Solvency Certificate, the following terms shall have the meanings set forth below:

"Closing Date" means July 9, 2024.

"Company" means Cloudium Technologies plc, a public limited company incorporated under the laws of England and Wales (Company No. 09734521), with its registered office at 45 Broadwick Street, London W1F 0DB, United Kingdom, and its United States headquarters located at 600 Townsend Street, Suite 800, San Francisco, California 94103, in its capacity as the surviving entity in the Merger.

"Credit Agreement" has the meaning ascribed to such term in the introductory paragraph of this Solvency Certificate.

"Debts" means all liabilities of the Company and its Subsidiaries (taken as a whole), whether matured or unmatured, liquidated or unliquidated, absolute, fixed, or contingent, calculated in accordance with applicable federal and state laws governing determinations of the insolvency of debtors, and consistent with generally accepted accounting principles in the United States ("GAAP").

"Fair Value" means the amount at which the aggregate assets, both tangible and intangible, of the Company and its Subsidiaries (taken as a whole) would change hands between a willing buyer and a willing seller, within a commercially reasonable period of time, each having reasonable knowledge of the relevant facts, with neither being under any compulsion to act.

"Identified Contingent Liabilities" means those contingent liabilities of the Company and its Subsidiaries (taken as a whole) that are identified, as of the Closing Date, as reasonably likely to become actual liabilities, taking into account the probability of occurrence and the estimated amount thereof, computed in accordance with GAAP (including, without limitation, the provisions of Accounting Standards Codification Topic 450 — Contingencies ("ASC 450")).

"Merger" has the meaning ascribed to such term in Section 1 of this Solvency Certificate.

"Merger Agreement" has the meaning ascribed to such term in the introductory paragraph of this Solvency Certificate.

"Present Fair Salable Value" means the amount that could be obtained by an independent willing seller from an independent willing buyer if the aggregate assets of the Company and its Subsidiaries (taken as a whole) were sold with reasonable promptness in an arm's-length transaction under present conditions for the sale of assets of comparable business enterprises, and in light of anticipated future business and economic conditions.

"Stated Liabilities" means the recorded liabilities (including contingent liabilities that would be recorded in accordance with GAAP) of the Company and its Subsidiaries (taken as a whole), as of the Closing Date after giving pro forma effect to the Transactions.

"Subsidiaries" means the direct and indirect subsidiaries of the Company, including, without limitation:

(a) Cloudium Technologies UK Ltd. (Company No. 11287456), a private limited company incorporated in England and Wales;

(b) Cloudium Technologies India Pvt. Ltd., a private limited company incorporated in Bangalore, Karnataka, India; and

(c) Cloudium Solutions GmbH, a Gesellschaft mit beschränkter Haftung (limited liability company) incorporated in Berlin, Germany,

together with all other direct and indirect subsidiaries of the Company as of the Closing Date.

"Transactions" means, collectively:

(a) the Merger, consummated on July 9, 2024, with the Certificate of Merger filed with the Secretary of State of the State of Delaware effective at 11:59 PM Eastern Time on July 9, 2024;

(b) the incurrence of indebtedness under the Credit Agreement, including the initial draw of $3,740,000,000 under the Term Loan B Facility ($0 drawn under the Revolving Credit Facility at closing);

(c) the equity contribution of $2,832,888,096 by Solara Digital Infrastructure Fund VI LP (including the co-investment of $425,000,000 by Solara Digital Co-Invest VI-A LP, a Delaware limited partnership, as a subset of such equity contribution);

(d) the rollover of equity interests by Jonathan Hargrove (in an amount equal to approximately $142,814,544) and Pinnacle Growth Ventures LLC (in an amount equal to approximately $473,241,408), totaling rollover equity of approximately $616,055,952;

(e) the repayment in full of the Company's existing indebtedness in an aggregate principal amount of $820,000,000 (comprising $620,000,000 in outstanding term loans and $200,000,000 drawn under the revolving credit facility) under that certain Credit Agreement, dated as of March 15, 2021, by and among the Company, the lenders party thereto, and Atlas Commercial Lending Corp., as administrative agent, pursuant to and in accordance with the payoff letter dated July 5, 2024;

(f) the payment of estimated transaction expenses in the aggregate amount of approximately $185,000,000 (including, without limitation, advisory fees, legal fees, financing fees, and other closing costs);

(g) the funding of the indemnity escrow in the amount of $544,000,000 with Cobalt Trust Company, as escrow agent, pursuant to the Escrow Agreement dated as of July 9, 2024; and

(h) the payment of the aggregate merger consideration of approximately $6,800,000,000 (based on a per-share merger consideration of approximately $36.92 for 184,200,000 shares of the Company's common stock outstanding immediately prior to the effective time of the Merger, less rollover equity of approximately $616,055,952, resulting in aggregate cash merger consideration payable to non-rolling stockholders of approximately $6,183,944,048).

Capitalized terms used but not otherwise defined in this Solvency Certificate shall have the meanings ascribed to such terms in the Credit Agreement or the Merger Agreement, as applicable.

Section 3. Basis of Certification

In reaching the conclusions and certifications set forth in Section 4 below, the undersigned has, among other things:

(a) reviewed the Company's audited consolidated financial statements for the fiscal year ended September 30, 2023, as audited by Harwell & Dobson LLP, the Company's independent registered public accounting firm, including the consolidated balance sheet, the consolidated statements of operations, comprehensive income (loss), stockholders' equity, and cash flows, together with the notes thereto and the report of Harwell & Dobson LLP thereon;

(b) reviewed unaudited interim consolidated financial statements and management accounts of the Company and its Subsidiaries through the most recent practicable date prior to the Closing Date, including quarterly and monthly financial reports, trial balances, and internal management reporting packages;

(c) reviewed the Company's last twelve months ("LTM") revenue of $1,620,000,000 and LTM EBITDA (as adjusted) of $405,000,000, each for the fiscal year ended September 30, 2023, as well as annual recurring revenue ("ARR") of $1,740,000,000 as of December 31, 2023;

(d) reviewed the financial projections, forecasts, and business plans of the Company and its Subsidiaries prepared by the management of the Company, including five-year financial projections, monthly cash flow forecasts, and operating budgets;

(e) reviewed the sources and uses of funds for the Transactions, including:

(i) Sources of Funds:

(ii) Uses of Funds:

(f) reviewed the pro forma capitalization and indebtedness of the Company and its Subsidiaries after giving effect to the Transactions, including closing-date total net leverage of approximately 8.79x LTM EBITDA (calculated as net funded debt of approximately $3,560,000,000, being $3,740,000,000 of Term Loan B debt less approximately $180,000,000 of cash on hand, divided by LTM EBITDA of $405,000,000), or approximately 6.91x on a pro forma adjusted basis including management's estimate of run-rate cost synergies of $110,000,000 per annum expected to be achieved within 24 months following the Closing Date;

(g) considered the financial covenants set forth in the Credit Agreement, including (i) the Total Net Leverage Ratio covenant requiring the Company to maintain a Total Net Leverage Ratio not exceeding 6.50:1.00 (with scheduled step-downs to 6.00:1.00, 5.50:1.00, and 5.00:1.00 over a three-year period), and (ii) the springing First Lien Net Leverage Ratio covenant requiring the Company to maintain a First Lien Net Leverage Ratio not exceeding 5.00:1.00, tested only when the aggregate outstanding revolving loans and letters of credit (other than undrawn letters of credit up to $25,000,000) exceed 40% of the aggregate revolving commitments;

(h) reviewed the Company's cash and cash equivalents projected to be on hand at closing, in the amount of approximately $180,000,000;

(i) considered the availability of the $500,000,000 Revolving Credit Facility, which is undrawn at closing and available for working capital needs and general corporate purposes of the Company and its Subsidiaries, subject to the terms and conditions of the Credit Agreement;

(j) consulted with the financial advisors, accounting advisors, and other professional advisors to the Company and the Buyer, including Glenmore Thornton LLP (in respect of financial due diligence and tax advisory matters), and has reviewed the reports and findings made available to the undersigned by such advisors;

(k) reviewed the material contracts, customer agreements, vendor agreements, intellectual property portfolios, and other significant assets of the Company and its Subsidiaries, and assessed the value and contribution of such assets to the ongoing business operations of the Company;

(l) considered the competitive landscape, market position, and growth trajectory of the Company and its Subsidiaries within the cloud infrastructure and digital services industry; and

(m) reviewed such other documents, records, certificates, agreements, instruments, filings, and other information as the undersigned deemed relevant and appropriate for the purposes of delivering this Solvency Certificate.

Section 4. Solvency Certifications

Based upon and subject to the foregoing, and after giving pro forma effect to the Transactions as if the Transactions had been consummated immediately prior to the delivery of this Solvency Certificate, the undersigned hereby certifies, on behalf of the Company, as follows:

4.1 Fair Value Test (Balance Sheet Solvency)

Immediately after giving effect to the Transactions, the Fair Value and the Present Fair Salable Value of the aggregate assets (both tangible and intangible) of the Company and its Subsidiaries (taken as a whole) exceed the sum of their Stated Liabilities and Identified Contingent Liabilities. In reaching this conclusion, the undersigned has considered, among other things, the value of the Company's recurring revenue streams, customer relationships, proprietary technology and intellectual property, workforce, goodwill, brand value, and other intangible assets, as well as the Company's real and personal property, equipment, cash and cash equivalents, accounts receivable, and all other tangible assets, and has compared such values to the totality of the Company's recorded liabilities and identified contingent liabilities, in each case after giving pro forma effect to the Transactions.

Accordingly, the Company and its Subsidiaries (taken as a whole) are not "insolvent" on a balance-sheet basis as of the Closing Date after giving pro forma effect to the Transactions.

4.2 Ability to Pay Debts as They Become Due (Cash Flow Solvency)

Immediately after giving effect to the Transactions, the Company and its Subsidiaries (taken as a whole) will be able to pay their Debts as such Debts become due and payable in the ordinary course of business. In reaching this conclusion, the undersigned has taken into account, among other things:

(a) the timing and amounts of cash expected to be received by the Company and its Subsidiaries from their business operations, including contractual recurring revenues from existing customer arrangements (which, as of December 31, 2023, constitute ARR of approximately $1,740,000,000), as well as anticipated new business and renewals;

(b) the timing and amounts of cash expected to be required to pay the Debts of the Company and its Subsidiaries as they mature, including (i) scheduled principal amortization under the Term Loan B Facility (at a rate of 1.00% per annum of the original principal amount), (ii) interest payments on the Term Loan B Facility at a rate per annum equal to Adjusted Term SOFR plus 3.25%, (iii) interest payments on any amounts drawn under the Revolving Credit Facility at a rate per annum equal to Adjusted Term SOFR plus 2.75%, (iv) commitment fees on undrawn revolving commitments, (v) capital expenditures, (vi) operating expenses, (vii) tax obligations, and (viii) all other obligations of the Company and its Subsidiaries in the ordinary course of business;

(c) the availability of the $500,000,000 Revolving Credit Facility, which is fully undrawn at closing and which provides a significant source of additional liquidity for working capital and general corporate purposes; and

(d) projected cash and cash equivalents on hand of approximately $180,000,000 as of the Closing Date, after giving effect to the Transactions.

Accordingly, the Company and its Subsidiaries (taken as a whole) will be able to pay their Debts as such Debts become due and payable.

4.3 Capital Adequacy Test (Adequate Capital)

Immediately after giving effect to the Transactions, the Company and its Subsidiaries (taken as a whole) will have sufficient capital to carry on their businesses and all businesses in which they are about to engage, as contemplated on the Closing Date. The property and capital of the Company and its Subsidiaries (taken as a whole) are not unreasonably small in relation to the businesses being conducted by the Company and its Subsidiaries as of the Closing Date or the businesses contemplated to be conducted by the Company and its Subsidiaries following the Closing Date. In reaching this conclusion, the undersigned has considered the nature and scope of the Company's existing business operations, the capital expenditure requirements of such operations, the Company's planned growth initiatives, the adequacy of available liquidity (including operating cash flows, cash on hand, and availability under the Revolving Credit Facility), and the terms of the indebtedness incurred in connection with the Transactions.

4.4 No Intent to Hinder, Delay, or Defraud

The Company and its Subsidiaries have not incurred, and do not intend to incur, Debts beyond their ability to pay as such Debts become due and payable. Neither the Company nor any of its Subsidiaries has entered into the Transactions, or incurred the obligations arising therefrom, with the intent to hinder, delay, or defraud either present or future creditors of the Company or any of its Subsidiaries. The Transactions have been entered into for legitimate business purposes and in good faith.

Section 5. Assumptions and Qualifications

The certifications set forth in Section 4 above are given as of the Closing Date after giving pro forma effect to the Transactions and are based upon the financial information, projections, forecasts, assumptions, and other data available to the undersigned as of such date. The certifications are subject to the following assumptions and qualifications:

(a) The undersigned is not expressing any opinion as to the value of any individual asset or the amount of any individual liability of the Company or any of its Subsidiaries. The certifications set forth herein relate solely to the Company and its Subsidiaries taken as a whole on a consolidated basis.

(b) The financial projections, forecasts, and business plans reviewed by the undersigned in connection with this Solvency Certificate were prepared in good faith by the management of the Company based upon assumptions that the undersigned believes were reasonable at the time of preparation. No facts have come to the attention of the undersigned that would cause her to believe that such assumptions are unreasonable as of the date hereof.

(c) The undersigned is familiar with the businesses, assets, liabilities, and financial condition of the Company and its Subsidiaries and has taken into account in making the certifications set forth herein: (i) current business conditions and the present economic environment in which the Company and its Subsidiaries operate; (ii) the Company's historical financial performance, including historical revenue, EBITDA, cash flow, and operating trends; (iii) reasonably foreseeable future business and economic conditions, including the Company's growth trajectory, competitive position, and market dynamics within the cloud infrastructure and digital services industry; and (iv) the terms of the indebtedness incurred in connection with the Transactions, including interest rates, maturity dates, amortization schedules, and the financial covenants contained in the Credit Agreement.

(d) The views expressed herein are based upon the undersigned's analysis as set forth in Section 3 above and do not constitute a guarantee of future financial performance of the Company or any of its Subsidiaries. Actual results may vary materially from the projections and forecasts reviewed by the undersigned, and such variations may be caused by factors that are beyond the control of the Company or its management, including, without limitation, changes in general economic conditions, fluctuations in interest rates, changes in the competitive landscape, regulatory developments, and other unforeseen events.

(e) In determining Fair Value, Present Fair Salable Value, Stated Liabilities, Identified Contingent Liabilities, and Debts for the purposes of this Solvency Certificate, the undersigned has applied concepts and methodologies consistent with GAAP and with applicable federal and state laws governing the insolvency of debtors, including, without limitation, the Uniform Fraudulent Transfer Act (as adopted in relevant jurisdictions), the Uniform Voidable Transactions Act (as adopted in relevant jurisdictions), and Section 548 of the United States Bankruptcy Code (Title 11, United States Code).

(f) This Solvency Certificate is being delivered by the undersigned solely in her capacity as Chief Financial Officer of the Company (as the surviving entity in the Merger), and nothing herein shall be construed to constitute a personal guarantee by the undersigned of any of the obligations of the Company or any of its Subsidiaries under the Credit Agreement, the Merger Agreement, or any other agreement, instrument, or document executed in connection with the Transactions. The undersigned shall have no personal liability in connection with this Solvency Certificate except to the extent arising from her own willful misconduct or fraud.

Section 6. Reliance and Beneficiaries

This Solvency Certificate is delivered to, and may be relied upon by, each of the following parties:

(a) Meridian Atlantic Bank, N.A., in its capacity as Administrative Agent under the Credit Agreement, on behalf of itself and the Lenders party thereto;

(b) Ironclad Capital Markets LLC, in its capacity as Co-Arranger under the Credit Agreement;

(d) Solara Digital Infrastructure Fund VI LP, in its capacity as Buyer under the Merger Agreement; and

(e) Calderwood & Harkness LLP, in its capacity as counsel to the Buyer.

This Solvency Certificate may not be relied upon by any other person or entity, or used, circulated, quoted, or otherwise referred to for any other purpose, without the prior written consent of the undersigned and the Company. Notwithstanding the foregoing, this Solvency Certificate may be disclosed to any regulatory authority or governmental body having jurisdiction over any of the parties listed above to the extent required by applicable law or regulation, and may be disclosed in connection with any litigation, proceeding, or investigation relating to the Transactions, in each case subject to customary confidentiality protections.

Section 7. Governing Law

This Solvency Certificate shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to any conflict-of-laws principles that would require or permit the application of the laws of any other jurisdiction. The choice of governing law herein is consistent with the governing law provisions of the Credit Agreement.

Signature

IN WITNESS WHEREOF, the undersigned has executed this Solvency Certificate as of the date first set forth above.

CLOUDIUM TECHNOLOGIES PLC (as the Surviving Entity)

By: ________

Name: Sienna Whitfield

Title: Chief Financial Officer

Date: July 9, 2024

ANNEX A

Pro Forma Sources and Uses of Funds (Cross-referencing the Final Funds Flow Memorandum dated July 8, 2024)

Sources of Funds

Uses of Funds

Note: The $544,000,000 indemnity escrow deposit with Cobalt Trust Company is funded from the merger consideration and is reflected in the aggregate consideration amount. Amounts may not sum precisely due to rounding. The sources and uses set forth herein are consistent with the Final Funds Flow Memorandum dated July 8, 2024, as prepared by Meridian Atlantic Bank, N.A. and agreed by the parties.

ANNEX B

Pro Forma Capitalization Table (As of the Closing Date, after giving effect to the Transactions)

Debt Capitalization

Equity Capitalization

Leverage Metrics

Note: The information set forth in this Annex B is provided for informational purposes only. The certifications set forth in Section 4 of this Solvency Certificate are not limited to the information set forth in this Annex B or in Annex A. Leverage metrics are calculated based on LTM EBITDA as reported for the fiscal year ended September 30, 2023, and do not reflect interim period financial results or adjustments other than as specifically noted. Run-rate cost synergies are management estimates and have not been independently verified.

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Source	Amount
Term Loan B Facility	$3,740,000,000
Equity contribution from Solara Digital Infrastructure Fund VI LP (including co-invest)	$2,832,888,096
Rollover equity (Hargrove and Pinnacle Growth Ventures LLC)	~$616,055,952
Total Sources	~$7,188,944,048
Use	Amount
Cash merger consideration (non-rolling stockholders)	~$6,183,944,048
Repayment of existing indebtedness	$820,000,000
Estimated transaction expenses	~$185,000,000
Indemnity escrow deposit	—
Total Uses	~$7,188,944,048
Source	Amount ($)
Term Loan B Facility (Meridian Atlantic Bank, N.A., as Administrative Agent)	3,740,000,000
Equity Contribution — Solara Digital Infrastructure Fund VI LP (including Solara Digital Co-Invest VI-A LP co-investment of $425,000,000)	2,832,888,096
Rollover Equity — Jonathan Hargrove	142,814,544
Rollover Equity — Pinnacle Growth Ventures LLC	473,241,408
Total Sources	7,188,944,048
Use	Amount ($)
Cash Merger Consideration (non-rolling stockholders) (~$36.92 per share x 184,200,000 shares, less rollover equity)	6,183,944,048
Repayment of Existing Term Loan (Atlas Commercial Lending Corp.)	620,000,000
Repayment of Existing Revolving Credit Facility (Atlas Commercial Lending Corp.)	200,000,000
Estimated Transaction Expenses (advisory, legal, financing, and other fees)	185,000,000
Indemnity Escrow Deposit (Cobalt Trust Company, as escrow agent)	—
Total Uses	7,188,944,048
Instrument	Committed Amount ($)	Drawn at Closing ($)	Maturity	Rate

Term Loan B Facility	3,740,000,000	3,740,000,000	July 9, 2031	SOFR + 325 bps
Revolving Credit Facility	500,000,000	0	July 9, 2029	SOFR + 275 bps
Total Funded Debt	3,740,000,000
Component	Amount ($)
Equity Contribution — Solara Digital Infrastructure Fund VI LP	2,832,888,096
Rollover Equity — Jonathan Hargrove	142,814,544
Rollover Equity — Pinnacle Growth Ventures LLC	473,241,408
Total Equity	3,448,944,048
Metric	Value
LTM EBITDA (FY ended September 30, 2023)	$405,000,000
Run-Rate Cost Synergies (estimated)	$110,000,000
Pro Forma Adjusted EBITDA (incl. synergies)	$515,000,000
Cash and Cash Equivalents at Closing	~$180,000,000
Total Funded Debt	$3,740,000,000
Net Funded Debt	~$3,560,000,000
Total Net Leverage (LTM EBITDA)	~8.79x
Total Net Leverage (Pro Forma Adjusted EBITDA, incl. synergies)	~6.91x
Undrawn Revolving Credit Facility Availability	$500,000,000
Total Liquidity at Closing (Cash + Undrawn Revolver)	~$680,000,000

SOLVENCY CERTIFICATE
Delivered pursuant to Section 4.02(f) of the Credit Agreement, dated as of July 9, 2024 (the "Credit Agreement"), among Cloudium Technologies plc (as Borrower), Meridian Atlantic Bank, N.A. (as Administrative Agent), Ironclad Capital Markets LLC (as Co-Arranger), and the lenders party thereto
Also delivered pursuant to Section 7.03(d) of the Agreement and Plan of Merger, dated as of January 22, 2024 (the "Merger Agreement"), among Cloudium Technologies plc, Stratos Merger Sub Inc., and Solara Digital Infrastructure Fund VI LP
Date: July 9, 2024
Section 1. Recitals and Introduction
The undersigned, Sienna Whitfield, is the duly appointed Chief Financial Officer of Cloudium Technologies plc (the "Company"), in her capacity as Chief Financial Officer of the surviving entity following the consummation of the Merger (as defined below). The undersigned is authorized by the Board of Directors of the Company to execute and deliver this Solvency Certificate on behalf of the Company.
This Solvency Certificate is being delivered in connection with the closing, on the date hereof, of the transactions (the "Transactions") contemplated by:
(a) the Merger Agreement, pursuant to which Stratos Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of Solara Digital Infrastructure Fund VI LP, a Delaware limited partnership (the "Buyer"), merged with and into Cloudium Technologies plc, with Cloudium Technologies plc surviving the Merger as a wholly owned subsidiary of the Buyer (the "Merger"); and
(b) the Credit Agreement, providing for (i) a senior secured Term Loan B facility in an aggregate principal amount of $3,740,000,000 (the "Term Loan B Facility"), bearing interest at a rate per annum equal to Adjusted Term SOFR plus 3.25%, and maturing on July 9, 2031, and (ii) a senior secured Revolving Credit Facility in an aggregate commitment amount of $500,000,000 (the "Revolving Credit Facility"), bearing interest at a rate per annum equal to Adjusted Term SOFR plus 2.75%, and maturing on July 9, 2029, in each case with Meridian Atlantic Bank, N.A. acting as Administrative Agent thereunder.
This Solvency Certificate is being delivered to Meridian Atlantic Bank, N.A. ("Meridian"), in its capacity as Administrative Agent under the Credit Agreement, on behalf of itself and the lenders party thereto (collectively, the "Lenders"), and to Solara Digital Infrastructure Fund VI LP, in its capacity as the Buyer under the Merger Agreement.
The undersigned is duly authorized to deliver this Solvency Certificate on behalf of the Company and has made such investigations and inquiries as she has deemed necessary and appropriate for the purposes hereof, including a thorough review of the financial condition, assets, liabilities (including contingent liabilities), business operations, and business prospects of the Company and its Subsidiaries (taken as a whole), after giving pro forma effect to the Transactions as if the Transactions had been consummated immediately prior to the delivery of this Solvency Certificate.
Section 2. Definitions
As used in this Solvency Certificate, the following terms shall have the meanings set forth below:
"Closing Date" means July 9, 2024.
"Company" means Cloudium Technologies plc, a public limited company incorporated under the laws of England and Wales (Company No. 09734521), with its registered office at 45 Broadwick Street, London W1F 0DB, United Kingdom, and its United States headquarters located at 600 Townsend Street, Suite 800, San Francisco, California 94103, in its capacity as the surviving entity in the Merger.
"Credit Agreement" has the meaning ascribed to such term in the introductory paragraph of this Solvency Certificate.
"Debts" means all liabilities of the Company and its Subsidiaries (taken as a whole), whether matured or unmatured, liquidated or unliquidated, absolute, fixed, or contingent, calculated in accordance with applicable federal and state laws governing determinations of the insolvency of debtors, and consistent with generally accepted accounting principles in the United States ("GAAP").
"Fair Value" means the amount at which the aggregate assets, both tangible and intangible, of the Company and its Subsidiaries (taken as a whole) would change hands between a willing buyer and a willing seller, within a commercially reasonable period of time, each having reasonable knowledge of the relevant facts, with neither being under any compulsion to act.
"Identified Contingent Liabilities" means those contingent liabilities of the Company and its Subsidiaries (taken as a whole) that are identified, as of the Closing Date, as reasonably likely to become actual liabilities, taking into account the probability of occurrence and the estimated amount thereof, computed in accordance with GAAP (including, without limitation, the provisions of Accounting Standards Codification Topic 450 — Contingencies ("ASC 450")).
"Merger" has the meaning ascribed to such term in Section 1 of this Solvency Certificate.
"Merger Agreement" has the meaning ascribed to such term in the introductory paragraph of this Solvency Certificate.
"Present Fair Salable Value" means the amount that could be obtained by an independent willing seller from an independent willing buyer if the aggregate assets of the Company and its Subsidiaries (taken as a whole) were sold with reasonable promptness in an arm's-length transaction under present conditions for the sale of assets of comparable business enterprises, and in light of anticipated future business and economic conditions.
"Stated Liabilities" means the recorded liabilities (including contingent liabilities that would be recorded in accordance with GAAP) of the Company and its Subsidiaries (taken as a whole), as of the Closing Date after giving pro forma effect to the Transactions.
"Subsidiaries" means the direct and indirect subsidiaries of the Company, including, without limitation:
(a) Cloudium Technologies UK Ltd. (Company No. 11287456), a private limited company incorporated in England and Wales;
(b) Cloudium Technologies India Pvt. Ltd., a private limited company incorporated in Bangalore, Karnataka, India; and
(c) Cloudium Solutions GmbH, a Gesellschaft mit beschränkter Haftung (limited liability company) incorporated in Berlin, Germany,
together with all other direct and indirect subsidiaries of the Company as of the Closing Date.
"Transactions" means, collectively:
(a) the Merger, consummated on July 9, 2024, with the Certificate of Merger filed with the Secretary of State of the State of Delaware effective at 11:59 PM Eastern Time on July 9, 2024;
(b) the incurrence of indebtedness under the Credit Agreement, including the initial draw of $3,740,000,000 under the Term Loan B Facility ($0 drawn under the Revolving Credit Facility at closing);
(c) the equity contribution of $2,832,888,096 by Solara Digital Infrastructure Fund VI LP (including the co-investment of $425,000,000 by Solara Digital Co-Invest VI-A LP, a Delaware limited partnership, as a subset of such equity contribution);
(d) the rollover of equity interests by Jonathan Hargrove (in an amount equal to approximately $142,814,544) and Pinnacle Growth Ventures LLC (in an amount equal to approximately $473,241,408), totaling rollover equity of approximately $616,055,952;
(e) the repayment in full of the Company's existing indebtedness in an aggregate principal amount of $820,000,000 (comprising $620,000,000 in outstanding term loans and $200,000,000 drawn under the revolving credit facility) under that certain Credit Agreement, dated as of March 15, 2021, by and among the Company, the lenders party thereto, and Atlas Commercial Lending Corp., as administrative agent, pursuant to and in accordance with the payoff letter dated July 5, 2024;
(f) the payment of estimated transaction expenses in the aggregate amount of approximately $185,000,000 (including, without limitation, advisory fees, legal fees, financing fees, and other closing costs);
(g) the funding of the indemnity escrow in the amount of $544,000,000 with Cobalt Trust Company, as escrow agent, pursuant to the Escrow Agreement dated as of July 9, 2024; and
(h) the payment of the aggregate merger consideration of approximately $6,800,000,000 (based on a per-share merger consideration of approximately $36.92 for 184,200,000 shares of the Company's common stock outstanding immediately prior to the effective time of the Merger, less rollover equity of approximately $616,055,952, resulting in aggregate cash merger consideration payable to non-rolling stockholders of approximately $6,183,944,048).
Capitalized terms used but not otherwise defined in this Solvency Certificate shall have the meanings ascribed to such terms in the Credit Agreement or the Merger Agreement, as applicable.
Section 3. Basis of Certification
In reaching the conclusions and certifications set forth in Section 4 below, the undersigned has, among other things:
(a) reviewed the Company's audited consolidated financial statements for the fiscal year ended September 30, 2023, as audited by Harwell & Dobson LLP, the Company's independent registered public accounting firm, including the consolidated balance sheet, the consolidated statements of operations, comprehensive income (loss), stockholders' equity, and cash flows, together with the notes thereto and the report of Harwell & Dobson LLP thereon;
(b) reviewed unaudited interim consolidated financial statements and management accounts of the Company and its Subsidiaries through the most recent practicable date prior to the Closing Date, including quarterly and monthly financial reports, trial balances, and internal management reporting packages;
(c) reviewed the Company's last twelve months ("LTM") revenue of $1,620,000,000 and LTM EBITDA (as adjusted) of $405,000,000, each for the fiscal year ended September 30, 2023, as well as annual recurring revenue ("ARR") of $1,740,000,000 as of December 31, 2023;
(d) reviewed the financial projections, forecasts, and business plans of the Company and its Subsidiaries prepared by the management of the Company, including five-year financial projections, monthly cash flow forecasts, and operating budgets;
(e) reviewed the sources and uses of funds for the Transactions, including:
(i) Sources of Funds:
(ii) Uses of Funds:
(f) reviewed the pro forma capitalization and indebtedness of the Company and its Subsidiaries after giving effect to the Transactions, including closing-date total net leverage of approximately 8.79x LTM EBITDA (calculated as net funded debt of approximately $3,560,000,000, being $3,740,000,000 of Term Loan B debt less approximately $180,000,000 of cash on hand, divided by LTM EBITDA of $405,000,000), or approximately 6.91x on a pro forma adjusted basis including management's estimate of run-rate cost synergies of $110,000,000 per annum expected to be achieved within 24 months following the Closing Date;
(g) considered the financial covenants set forth in the Credit Agreement, including (i) the Total Net Leverage Ratio covenant requiring the Company to maintain a Total Net Leverage Ratio not exceeding 6.50:1.00 (with scheduled step-downs to 6.00:1.00, 5.50:1.00, and 5.00:1.00 over a three-year period), and (ii) the springing First Lien Net Leverage Ratio covenant requiring the Company to maintain a First Lien Net Leverage Ratio not exceeding 5.00:1.00, tested only when the aggregate outstanding revolving loans and letters of credit (other than undrawn letters of credit up to $25,000,000) exceed 40% of the aggregate revolving commitments;
(h) reviewed the Company's cash and cash equivalents projected to be on hand at closing, in the amount of approximately $180,000,000;
(i) considered the availability of the $500,000,000 Revolving Credit Facility, which is undrawn at closing and available for working capital needs and general corporate purposes of the Company and its Subsidiaries, subject to the terms and conditions of the Credit Agreement;
(j) consulted with the financial advisors, accounting advisors, and other professional advisors to the Company and the Buyer, including Glenmore Thornton LLP (in respect of financial due diligence and tax advisory matters), and has reviewed the reports and findings made available to the undersigned by such advisors;
(k) reviewed the material contracts, customer agreements, vendor agreements, intellectual property portfolios, and other significant assets of the Company and its Subsidiaries, and assessed the value and contribution of such assets to the ongoing business operations of the Company;
(l) considered the competitive landscape, market position, and growth trajectory of the Company and its Subsidiaries within the cloud infrastructure and digital services industry; and
(m) reviewed such other documents, records, certificates, agreements, instruments, filings, and other information as the undersigned deemed relevant and appropriate for the purposes of delivering this Solvency Certificate.
Section 4. Solvency Certifications
Based upon and subject to the foregoing, and after giving pro forma effect to the Transactions as if the Transactions had been consummated immediately prior to the delivery of this Solvency Certificate, the undersigned hereby certifies, on behalf of the Company, as follows:
4.1 Fair Value Test (Balance Sheet Solvency)
Immediately after giving effect to the Transactions, the Fair Value and the Present Fair Salable Value of the aggregate assets (both tangible and intangible) of the Company and its Subsidiaries (taken as a whole) exceed the sum of their Stated Liabilities and Identified Contingent Liabilities. In reaching this conclusion, the undersigned has considered, among other things, the value of the Company's recurring revenue streams, customer relationships, proprietary technology and intellectual property, workforce, goodwill, brand value, and other intangible assets, as well as the Company's real and personal property, equipment, cash and cash equivalents, accounts receivable, and all other tangible assets, and has compared such values to the totality of the Company's recorded liabilities and identified contingent liabilities, in each case after giving pro forma effect to the Transactions.
Accordingly, the Company and its Subsidiaries (taken as a whole) are not "insolvent" on a balance-sheet basis as of the Closing Date after giving pro forma effect to the Transactions.
4.2 Ability to Pay Debts as They Become Due (Cash Flow Solvency)
Immediately after giving effect to the Transactions, the Company and its Subsidiaries (taken as a whole) will be able to pay their Debts as such Debts become due and payable in the ordinary course of business. In reaching this conclusion, the undersigned has taken into account, among other things:
(a) the timing and amounts of cash expected to be received by the Company and its Subsidiaries from their business operations, including contractual recurring revenues from existing customer arrangements (which, as of December 31, 2023, constitute ARR of approximately $1,740,000,000), as well as anticipated new business and renewals;
(b) the timing and amounts of cash expected to be required to pay the Debts of the Company and its Subsidiaries as they mature, including (i) scheduled principal amortization under the Term Loan B Facility (at a rate of 1.00% per annum of the original principal amount), (ii) interest payments on the Term Loan B Facility at a rate per annum equal to Adjusted Term SOFR plus 3.25%, (iii) interest payments on any amounts drawn under the Revolving Credit Facility at a rate per annum equal to Adjusted Term SOFR plus 2.75%, (iv) commitment fees on undrawn revolving commitments, (v) capital expenditures, (vi) operating expenses, (vii) tax obligations, and (viii) all other obligations of the Company and its Subsidiaries in the ordinary course of business;
(c) the availability of the $500,000,000 Revolving Credit Facility, which is fully undrawn at closing and which provides a significant source of additional liquidity for working capital and general corporate purposes; and
(d) projected cash and cash equivalents on hand of approximately $180,000,000 as of the Closing Date, after giving effect to the Transactions.
Accordingly, the Company and its Subsidiaries (taken as a whole) will be able to pay their Debts as such Debts become due and payable.
4.3 Capital Adequacy Test (Adequate Capital)
Immediately after giving effect to the Transactions, the Company and its Subsidiaries (taken as a whole) will have sufficient capital to carry on their businesses and all businesses in which they are about to engage, as contemplated on the Closing Date. The property and capital of the Company and its Subsidiaries (taken as a whole) are not unreasonably small in relation to the businesses being conducted by the Company and its Subsidiaries as of the Closing Date or the businesses contemplated to be conducted by the Company and its Subsidiaries following the Closing Date. In reaching this conclusion, the undersigned has considered the nature and scope of the Company's existing business operations, the capital expenditure requirements of such operations, the Company's planned growth initiatives, the adequacy of available liquidity (including operating cash flows, cash on hand, and availability under the Revolving Credit Facility), and the terms of the indebtedness incurred in connection with the Transactions.
4.4 No Intent to Hinder, Delay, or Defraud
The Company and its Subsidiaries have not incurred, and do not intend to incur, Debts beyond their ability to pay as such Debts become due and payable. Neither the Company nor any of its Subsidiaries has entered into the Transactions, or incurred the obligations arising therefrom, with the intent to hinder, delay, or defraud either present or future creditors of the Company or any of its Subsidiaries. The Transactions have been entered into for legitimate business purposes and in good faith.
Section 5. Assumptions and Qualifications
The certifications set forth in Section 4 above are given as of the Closing Date after giving pro forma effect to the Transactions and are based upon the financial information, projections, forecasts, assumptions, and other data available to the undersigned as of such date. The certifications are subject to the following assumptions and qualifications:
(a) The undersigned is not expressing any opinion as to the value of any individual asset or the amount of any individual liability of the Company or any of its Subsidiaries. The certifications set forth herein relate solely to the Company and its Subsidiaries taken as a whole on a consolidated basis.
(b) The financial projections, forecasts, and business plans reviewed by the undersigned in connection with this Solvency Certificate were prepared in good faith by the management of the Company based upon assumptions that the undersigned believes were reasonable at the time of preparation. No facts have come to the attention of the undersigned that would cause her to believe that such assumptions are unreasonable as of the date hereof.
(c) The undersigned is familiar with the businesses, assets, liabilities, and financial condition of the Company and its Subsidiaries and has taken into account in making the certifications set forth herein: (i) current business conditions and the present economic environment in which the Company and its Subsidiaries operate; (ii) the Company's historical financial performance, including historical revenue, EBITDA, cash flow, and operating trends; (iii) reasonably foreseeable future business and economic conditions, including the Company's growth trajectory, competitive position, and market dynamics within the cloud infrastructure and digital services industry; and (iv) the terms of the indebtedness incurred in connection with the Transactions, including interest rates, maturity dates, amortization schedules, and the financial covenants contained in the Credit Agreement.
(d) The views expressed herein are based upon the undersigned's analysis as set forth in Section 3 above and do not constitute a guarantee of future financial performance of the Company or any of its Subsidiaries. Actual results may vary materially from the projections and forecasts reviewed by the undersigned, and such variations may be caused by factors that are beyond the control of the Company or its management, including, without limitation, changes in general economic conditions, fluctuations in interest rates, changes in the competitive landscape, regulatory developments, and other unforeseen events.
(e) In determining Fair Value, Present Fair Salable Value, Stated Liabilities, Identified Contingent Liabilities, and Debts for the purposes of this Solvency Certificate, the undersigned has applied concepts and methodologies consistent with GAAP and with applicable federal and state laws governing the insolvency of debtors, including, without limitation, the Uniform Fraudulent Transfer Act (as adopted in relevant jurisdictions), the Uniform Voidable Transactions Act (as adopted in relevant jurisdictions), and Section 548 of the United States Bankruptcy Code (Title 11, United States Code).
(f) This Solvency Certificate is being delivered by the undersigned solely in her capacity as Chief Financial Officer of the Company (as the surviving entity in the Merger), and nothing herein shall be construed to constitute a personal guarantee by the undersigned of any of the obligations of the Company or any of its Subsidiaries under the Credit Agreement, the Merger Agreement, or any other agreement, instrument, or document executed in connection with the Transactions. The undersigned shall have no personal liability in connection with this Solvency Certificate except to the extent arising from her own willful misconduct or fraud.
Section 6. Reliance and Beneficiaries
This Solvency Certificate is delivered to, and may be relied upon by, each of the following parties:
(a) Meridian Atlantic Bank, N.A., in its capacity as Administrative Agent under the Credit Agreement, on behalf of itself and the Lenders party thereto;
(b) Ironclad Capital Markets LLC, in its capacity as Co-Arranger under the Credit Agreement;
(c) Winthrop & Hale LLP, in its capacity as counsel to the Administrative Agent and the Lenders;
(d) Solara Digital Infrastructure Fund VI LP, in its capacity as Buyer under the Merger Agreement; and
(e) Calderwood & Harkness LLP, in its capacity as counsel to the Buyer.
This Solvency Certificate may not be relied upon by any other person or entity, or used, circulated, quoted, or otherwise referred to for any other purpose, without the prior written consent of the undersigned and the Company. Notwithstanding the foregoing, this Solvency Certificate may be disclosed to any regulatory authority or governmental body having jurisdiction over any of the parties listed above to the extent required by applicable law or regulation, and may be disclosed in connection with any litigation, proceeding, or investigation relating to the Transactions, in each case subject to customary confidentiality protections.
Section 7. Governing Law
This Solvency Certificate shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to any conflict-of-laws principles that would require or permit the application of the laws of any other jurisdiction. The choice of governing law herein is consistent with the governing law provisions of the Credit Agreement.
Signature
IN WITNESS WHEREOF, the undersigned has executed this Solvency Certificate as of the date first set forth above.
CLOUDIUM TECHNOLOGIES PLC (as the Surviving Entity)
By: ________
Name: Sienna Whitfield
Title: Chief Financial Officer
Date: July 9, 2024
ANNEX A
Pro Forma Sources and Uses of Funds (Cross-referencing the Final Funds Flow Memorandum dated July 8, 2024)
Sources of Funds
Uses of Funds
Note: The $544,000,000 indemnity escrow deposit with Cobalt Trust Company is funded from the merger consideration and is reflected in the aggregate consideration amount. Amounts may not sum precisely due to rounding. The sources and uses set forth herein are consistent with the Final Funds Flow Memorandum dated July 8, 2024, as prepared by Meridian Atlantic Bank, N.A. and agreed by the parties.
ANNEX B
Pro Forma Capitalization Table (As of the Closing Date, after giving effect to the Transactions)
Debt Capitalization
Equity Capitalization
Leverage Metrics
Note: The information set forth in this Annex B is provided for informational purposes only. The certifications set forth in Section 4 of this Solvency Certificate are not limited to the information set forth in this Annex B or in Annex A. Leverage metrics are calculated based on LTM EBITDA as reported for the fiscal year ended September 30, 2023, and do not reflect interim period financial results or adjustments other than as specifically noted. Run-rate cost synergies are management estimates and have not been independently verified.
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Source | Amount
Term Loan B Facility | $3,740,000,000
Equity contribution from Solara Digital Infrastructure Fund VI LP (including co-invest) | $2,832,888,096
Rollover equity (Hargrove and Pinnacle Growth Ventures LLC) | ~$616,055,952
Total Sources | ~$7,188,944,048
Use | Amount
Cash merger consideration (non-rolling stockholders) | ~$6,183,944,048
Repayment of existing indebtedness | $820,000,000
Estimated transaction expenses | ~$185,000,000
Indemnity escrow deposit | —
Total Uses | ~$7,188,944,048
Source | Amount ($)
Term Loan B Facility (Meridian Atlantic Bank, N.A., as Administrative Agent) | 3,740,000,000
Equity Contribution — Solara Digital Infrastructure Fund VI LP (including Solara Digital Co-Invest VI-A LP co-investment of $425,000,000) | 2,832,888,096
Rollover Equity — Jonathan Hargrove | 142,814,544
Rollover Equity — Pinnacle Growth Ventures LLC | 473,241,408
Total Sources | 7,188,944,048
Use | Amount ($)
Cash Merger Consideration (non-rolling stockholders) (~$36.92 per share x 184,200,000 shares, less rollover equity) | 6,183,944,048
Repayment of Existing Term Loan (Atlas Commercial Lending Corp.) | 620,000,000
Repayment of Existing Revolving Credit Facility (Atlas Commercial Lending Corp.) | 200,000,000
Estimated Transaction Expenses (advisory, legal, financing, and other fees) | 185,000,000
Indemnity Escrow Deposit (Cobalt Trust Company, as escrow agent) | —
Total Uses | 7,188,944,048
Instrument | Committed Amount ($) | Drawn at Closing ($) | Maturity | Rate
Term Loan B Facility | 3,740,000,000 | 3,740,000,000 | July 9, 2031 | SOFR + 325 bps
Revolving Credit Facility | 500,000,000 | 0 | July 9, 2029 | SOFR + 275 bps
Total Funded Debt | 3,740,000,000
Component | Amount ($)
Equity Contribution — Solara Digital Infrastructure Fund VI LP | 2,832,888,096
Rollover Equity — Jonathan Hargrove | 142,814,544
Rollover Equity — Pinnacle Growth Ventures LLC | 473,241,408
Total Equity | 3,448,944,048
Metric | Value
LTM EBITDA (FY ended September 30, 2023) | $405,000,000
Run-Rate Cost Synergies (estimated) | $110,000,000
Pro Forma Adjusted EBITDA (incl. synergies) | $515,000,000
Cash and Cash Equivalents at Closing | ~$180,000,000
Total Funded Debt | $3,740,000,000
Net Funded Debt | ~$3,560,000,000
Total Net Leverage (LTM EBITDA) | ~8.79x
Total Net Leverage (Pro Forma Adjusted EBITDA, incl. synergies) | ~6.91x
Undrawn Revolving Credit Facility Availability | $500,000,000
Total Liquidity at Closing (Cash + Undrawn Revolver) | ~$680,000,000

SOLVENCY CERTIFICATE

ANNEX A

ANNEX B

Record

Parties

Dates

Amounts