CALDERWOOD & HARKNESS LLP Attorneys at Law
599 Lexington Avenue New York, New York 10022 Telephone: (212) 455-7200 Facsimile: (212) 455-7201 www.calderwoodharkness.com
July 12, 2024
Matter No.: 1041-00003
VIA OVERNIGHT COURIER AND EMAIL
Laura Ng Vice President, Escrow Services Cobalt Trust Company 100 Wall Street New York, New York 10005
cc: Harrison Wexford, Partner, Calderwood & Harkness LLP Tiffany Rosenthal, Lead Associate, Calderwood & Harkness LLP Marcus Elliston, Founder & Managing Partner, Solara Digital Infrastructure LP Priya Narasimhan, Co-Managing Partner & Chief Investment Officer, Solara Digital Infrastructure LP Douglas Pemberton, Stockholder Representative
From: Tiffany Rosenthal, Calderwood & Harkness LLP
Re: Escrow Release Calendar and Instructions — Indemnity Escrow Fund Established in Connection with the Acquisition of Cloudium Technologies plc by Solara Digital Infrastructure Fund VI LP
Dear Ms. Ng:
1. Introduction and Purpose
Calderwood & Harkness LLP serves as outside legal counsel to Solara Digital Infrastructure LP and its affiliated acquisition vehicle, Solara Digital Infrastructure Fund VI LP ("Fund VI"), in connection with the recently completed acquisition of Cloudium Technologies plc, a Delaware corporation ("Cloudium"), pursuant to that certain Agreement and Plan of Merger, dated as of January 22, 2024 (the "Merger Agreement"), by and among Cloudium Technologies plc, Stratos Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of Fund VI ("Merger Sub"), and Solara Digital Infrastructure Fund VI LP, a Delaware limited partnership. The merger closed on July 9, 2024, and the Certificate of Merger was duly filed with the Secretary of State of the State of Delaware at 11:59 p.m. Eastern Time on that date (the "Closing" and such date, the "Closing Date").
The purpose of this memorandum is to set forth the escrow release calendar, calculation mechanics, and procedural instructions for Cobalt Trust Company ("Cobalt Trust" or the "Escrow Agent") in its capacity as Escrow Agent under that certain Escrow Agreement, dated as of January 22, 2024 (effective as of the Closing), by and among Solara Digital Infrastructure Fund VI LP, Cobalt Trust Company, and Douglas Pemberton, in his capacity as the Stockholder Representative acting on behalf of the former stockholders of Cloudium Technologies plc (the "Escrow Agreement").
This memorandum is intended to serve as a clear and comprehensive reference guide for Cobalt Trust Company regarding the timing, amounts, conditions, and procedures for each scheduled escrow release, including detailed instructions concerning the treatment of pending indemnification claims. We have prepared this document to facilitate orderly and timely administration of the escrow fund over the coming eighteen (18) months and beyond, to the extent any claims remain outstanding following the final scheduled release date.
We respectfully request that Cobalt Trust Company review this memorandum and confirm receipt at your earliest convenience. Should you have any questions or require any clarification with respect to the instructions set forth herein, please do not hesitate to contact the undersigned or Andrew Fitzpatrick of this firm, whose contact information is provided in Section 11 below.
2. Background and Key Transaction Parameters
2.1 Transaction Overview
The acquisition of Cloudium Technologies plc by Fund VI was structured as a reverse triangular merger, in which Stratos Merger Sub Inc., a Delaware corporation formed solely for the purpose of effectuating the merger, merged with and into Cloudium Technologies plc, with Cloudium surviving the merger as a wholly owned subsidiary of Fund VI. As a result of the merger, each outstanding share of Cloudium common stock (other than shares held by Cloudium as treasury shares, shares owned by Fund VI or any of its subsidiaries, and dissenting shares) was converted into the right to receive a portion of the aggregate merger consideration, subject to adjustment and the escrow holdback described herein.
The key financial terms of the transaction are as follows:
• Aggregate Deal Value: $6,800,000,000 (Six Billion Eight Hundred Million Dollars)
• Per-Share Merger Consideration: Approximately $36.92 per share, based on 184,200,000 shares of Cloudium common stock issued and outstanding immediately prior to the Effective Time
• Governing Law: The Merger Agreement is governed by the laws of the State of Delaware, without regard to conflicts of law principles
The merger was approved by the stockholders of Cloudium Technologies plc at a special meeting held on June 14, 2024, and all regulatory approvals, including clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, were obtained prior to the Closing Date. No conditions to closing remained unsatisfied or unwaived as of the Closing Date.
2.2 Escrow Fund Details
In connection with the Closing, an indemnity escrow fund was established pursuant to the terms of the Escrow Agreement. The material terms of the escrow fund are summarized as follows:
• Escrow Amount: $544,000,000 (Five Hundred Forty-Four Million Dollars), representing eight percent (8%) of the aggregate deal value of $6,800,000,000. This amount was withheld from the aggregate merger consideration otherwise payable to the former Cloudium stockholders at Closing and deposited directly into the escrow account maintained by Cobalt Trust Company.
• Escrow Agent: Cobalt Trust Company, acting in its capacity as Escrow Agent under the Escrow Agreement.
• Escrow Funding: The escrow fund was funded via wire transfer on July 9, 2024 (the Closing Date). Calderwood & Harkness LLP has confirmed with Cobalt Trust Company that the wire transfer in the amount of $544,000,000 was received and credited to the escrow account on such date.
• Escrow Account: The escrow account has been established and is being maintained by Cobalt Trust Company in accordance with the terms and conditions of the Escrow Agreement.
• Purpose: The escrow fund secures the indemnification obligations of the former Cloudium stockholders under Article IX of the Merger Agreement. The escrow fund constitutes the first source of recovery available to Fund VI for indemnifiable losses arising out of breaches of representations, warranties, covenants, and agreements of Cloudium and its stockholders as set forth in the Merger Agreement.
2.3 Indemnification Framework Summary
For context and to assist Cobalt Trust Company in understanding the framework within which the escrow release mechanics operate, we provide the following summary of the indemnification provisions of the Merger Agreement. This summary is for informational purposes only, and the full terms of the indemnification provisions are set forth in Article IX of the Merger Agreement.
• General Indemnification Cap: The aggregate liability of the former Cloudium stockholders for indemnifiable losses under the Merger Agreement (other than with respect to Special Indemnities, as defined below) shall not exceed fifteen percent (15%) of the aggregate deal value, or $1,020,000,000 (One Billion Twenty Million Dollars). The escrow fund of $544,000,000 represents the first source of recovery within this overall cap.
• Escrow Fund as First Source: The escrow fund of $544,000,000 serves as the primary and first source of recovery available to Fund VI for the satisfaction of valid indemnification claims. Fund VI is not required to exhaust the escrow fund before pursuing other remedies, but as a practical matter, the escrow provides the most readily accessible mechanism for claim recovery.
• Basket / Deductible: The former Cloudium stockholders shall have no obligation to indemnify Fund VI unless and until the aggregate amount of all indemnifiable losses exceeds $51,000,000 (Fifty-One Million Dollars), representing seventy-five hundredths of one percent (0.75%) of the aggregate deal value. The basket operates as a "tipping basket," meaning that once aggregate losses exceed the $51,000,000 threshold, Fund VI shall be entitled to recover indemnifiable losses from the first dollar (i.e., from dollar one, not merely for the excess above the basket).
• De Minimis Threshold: Individual claims for losses in an amount less than $500,000 (Five Hundred Thousand Dollars) shall be excluded from the calculation of the basket and shall not be counted toward satisfaction of the $51,000,000 threshold. Such de minimis claims shall not be submitted through the escrow.
• Special Indemnities (Uncapped): Certain categories of losses are not subject to the general indemnification cap or the basket. These include losses arising out of or relating to: (a) fraud or intentional misrepresentation; (b) willful breach of any covenant or agreement; (c) tax indemnities set forth in Article VII of the Merger Agreement; and (d) certain specified litigation matters identified on Schedule 9.2(d) of the Merger Agreement. Claims for Special Indemnities may be asserted against the escrow fund, and to the extent the escrow fund is insufficient, directly against the former Cloudium stockholders (subject to the terms of the Merger Agreement).
• Survival Period: The representations and warranties of Cloudium set forth in the Merger Agreement shall survive the Closing for a period of eighteen (18) months following the Closing Date, expiring on January 9, 2026. The covenants and agreements of the parties that by their terms are to be performed after the Closing shall survive until fully performed. Representations and warranties relating to fraud, willful breach, and tax matters shall survive without time limitation.
• Buyer-Side Representations and Warranties Insurance: Fund VI has obtained a buyer-side representations and warranties insurance policy from Northfield Assurance Ltd. (Policy No. NFA-TRI-2024-00487), with a policy limit of $680,000,000 (Six Hundred Eighty Million Dollars). The R&W insurance policy sits above the escrow fund, meaning that Fund VI must first seek recovery from the escrow before accessing coverage under the R&W insurance policy. The retention under the R&W insurance policy is equal to the escrow amount of $544,000,000. Notably, the R&W insurance policy includes a retention drop-down feature: if no indemnification claims are pending as of twelve (12) months following the Closing Date (i.e., July 9, 2025), the retention shall drop from $544,000,000 to $272,000,000, aligning with the reduced escrow balance following the First Escrow Release.
• Stockholder Representative: Douglas Pemberton, who served as Independent Board Chair of the Cloudium Technologies plc board of directors prior to the Closing, has been designated as the Stockholder Representative. Mr. Pemberton is authorized to act on behalf of the former Cloudium stockholders with respect to all matters relating to indemnification under the Merger Agreement, including the receipt and response to Claim Notices, the negotiation and resolution of indemnification claims, and the delivery of Joint Written Instructions to the Escrow Agent.
2.4 Parties to the Escrow Agreement
The parties to the Escrow Agreement are as follows:
• Solara Digital Infrastructure Fund VI LP (referred to in the Escrow Agreement and herein as the "Buyer" or "Purchaser"), a Delaware limited partnership; Employer Identification Number (EIN): 87-4523190; principal office address: c/o Solara Digital Infrastructure LP, 1200 Market Street, Suite 3400, Wilmington, Delaware 19801.
• Cobalt Trust Company (referred to in the Escrow Agreement and herein as the "Escrow Agent"), a New York-chartered trust company; principal office address: 100 Wall Street, New York, New York 10005.
• Douglas Pemberton, in his capacity as the Stockholder Representative, acting for and on behalf of the former stockholders of Cloudium Technologies plc, at the address set forth in the Escrow Agreement.
3. Escrow Release Calendar
3.1 Summary Table of Escrow Release Dates
The following table summarizes the key dates and scheduled amounts for each escrow release event under the Escrow Agreement. All amounts are subject to adjustment for Pending Claims as described in greater detail in Sections 3.2 and 3.3 below.
Each of the above dates and amounts is discussed in detail below, together with the applicable adjustment mechanics and procedural steps.
3.2 First Escrow Release — July 9, 2025
Release Date. The first scheduled release from the escrow fund (the "First Escrow Release") shall occur on July 9, 2025 (the "First Release Date"), being the date that is exactly twelve (12) calendar months following the Closing Date of July 9, 2024. We note for Cobalt Trust Company's planning purposes that July 9, 2025 falls on a Wednesday, which is a business day.
Scheduled Release Amount. The scheduled release amount for the First Escrow Release is $272,000,000 (Two Hundred Seventy-Two Million Dollars), which represents fifty percent (50%) of the original escrow deposit of $544,000,000. This amount was established by the parties in the Escrow Agreement to reflect a balanced approach to the gradual release of indemnification security over the eighteen-month survival period.
Adjustment for Pending Claims. The actual amount released on the First Release Date shall be calculated as follows:
First Release Amount = $272,000,000 minus the Pending Claims Amount as of the First Release Date
For purposes of this memorandum and the Escrow Agreement, "Pending Claims" means the aggregate dollar amount of all indemnification claims that:
(a) have been asserted by Fund VI pursuant to Article IX of the Merger Agreement by delivery of a Claim Notice (as defined in Section 4.1 below) to the Stockholder Representative and the Escrow Agent prior to the applicable release date; and
(b) have not been finally resolved (whether by mutual agreement of Fund VI and the Stockholder Representative, binding arbitration award, or final, non-appealable court order) as of the applicable release date.
The "Pending Claims Amount" means the aggregate dollar amount of all Pending Claims. For the avoidance of doubt, the amount retained in escrow for each Pending Claim shall be equal to the full claimed amount set forth in the applicable Claim Notice for each unresolved claim — that is, one hundred percent (100%) of the stated claim amount. The Escrow Agent shall not discount, estimate, or otherwise adjust the stated claim amount for purposes of calculating the Pending Claims Amount; the full face amount of each Pending Claim shall be retained until the claim is finally resolved.
R&W Insurance Retention Drop-Down. The parties note, for informational purposes, that the buyer-side representations and warranties insurance policy issued by Northfield Assurance Ltd. (Policy No. NFA-TRI-2024-00487) contains a retention drop-down provision. Specifically, if no indemnification claims are pending as of July 9, 2025 (the date that is twelve months following the Closing Date), the retention under the R&W insurance policy shall automatically drop from $544,000,000 to $272,000,000. This drop-down aligns the R&W insurance retention with the reduced escrow balance following the First Escrow Release. Cobalt Trust Company has no obligations with respect to the R&W insurance policy, but we include this information for completeness so that all parties understand the interrelationship between the escrow and the insurance program.
Distribution of Released Funds. Funds released on the First Release Date shall be distributed to the Stockholder Representative (Douglas Pemberton) for the account of the former Cloudium stockholders, to be further distributed by the Stockholder Representative to the former stockholders on a pro rata basis in accordance with their respective merger consideration entitlements, as set forth in the letter of transmittal and allocation schedule delivered in connection with the Closing.
3.3 Second / Final Escrow Release — January 9, 2026
Release Date. The second and final scheduled release from the escrow fund (the "Final Escrow Release") shall occur on January 9, 2026 (the "Final Release Date"), being the date that is exactly eighteen (18) calendar months following the Closing Date of July 9, 2024. The Final Release Date also coincides with the expiration of the survival period for the general representations and warranties of Cloudium under Article IX of the Merger Agreement. We note for planning purposes that January 9, 2026 falls on a Friday, which is a business day.
Scheduled Release Amount. The scheduled release amount for the Final Escrow Release shall be the entire remaining balance of the escrow fund as of the Final Release Date, less the aggregate Pending Claims Amount as of that date. The remaining balance of the escrow fund as of the Final Release Date will be a function of the following:
(a) the original escrow deposit of $544,000,000;
(b) minus the amount actually released to the Stockholder Representative on the First Release Date (July 9, 2025);
(c) minus any amounts previously disbursed from the escrow fund to Fund VI in satisfaction of resolved indemnification claims between the Closing Date and the Final Release Date;
(d) minus the Pending Claims Amount as of January 9, 2026 (i.e., the aggregate stated amount of all indemnification claims that remain unresolved as of that date);
(e) plus any accrued and undistributed investment income on the escrow fund (as described in Section 6 below).
Scenario: No Pending Claims and No Prior Claim Disbursements. If, as of the Final Release Date, there are no Pending Claims outstanding and no amounts have been previously disbursed from the escrow fund in satisfaction of indemnification claims, the remaining balance released at the Final Release Date will be $272,000,000 (plus any accrued investment income), representing the second half of the original escrow deposit.
Scenario: Pending Claims Outstanding. If there are Pending Claims still outstanding as of the Final Release Date, the portion of the escrow fund attributable to such Pending Claims shall be retained by Cobalt Trust Company and shall not be released on the Final Release Date. Instead, such amounts shall continue to be held in escrow until each such Pending Claim is finally resolved. Upon resolution of each Pending Claim:
(i) If the claim is sustained in whole or in part (whether by agreement, arbitration award, or court order), the applicable portion of the retained escrow amount shall be disbursed to Fund VI in the amount determined by the resolution; and
(ii) If the claim is denied, withdrawn, or otherwise resolved in favor of the Stockholder Representative, the applicable portion of the retained escrow amount (or the excess over the sustained amount, if partially sustained) shall be released to the Stockholder Representative.
All such post-Final Release Date disbursements shall be made in accordance with Section 3.2 of the Escrow Agreement, upon receipt by Cobalt Trust Company of Joint Written Instructions signed by both Fund VI and the Stockholder Representative, or a final, non-appealable court or arbitral order, as applicable.
Tail Provisions. Any amounts retained in escrow beyond January 9, 2026 on account of Pending Claims shall continue to be held by Cobalt Trust Company in accordance with the terms of the Escrow Agreement until all such Pending Claims have been finally resolved and all remaining funds have been disbursed to the appropriate parties. The escrow shall not terminate, and Cobalt Trust Company's duties as Escrow Agent shall not cease, until all Pending Claims have been resolved and all remaining funds (including any accrued investment income) have been distributed in full, and Cobalt Trust Company has delivered a final accounting statement to all parties as described in Section 8.5 below.
4. Claim Notice and Disbursement Procedures
4.1 Assertion of Indemnification Claims (Claim Notices)
To assert an indemnification claim under Article IX of the Merger Agreement and to cause the Escrow Agent to retain funds in escrow with respect to such claim, Fund VI (or its authorized representative, Calderwood & Harkness LLP) shall deliver a written notice of claim (a "Claim Notice") to both the Stockholder Representative and the Escrow Agent. Each Claim Notice must be delivered in writing and in accordance with the notice provisions set forth in Section 7 below and Section 8 of the Escrow Agreement.
Each Claim Notice must include the following information:
(i) a reasonably detailed description of the claim and the facts and circumstances giving rise to the claimed indemnifiable loss;
(ii) identification of the specific representations, warranties, covenants, or agreements of Cloudium or the former Cloudium stockholders alleged to have been breached under the Merger Agreement, with reference to the applicable sections thereof;
(iii) the estimated dollar amount of losses claimed by Fund VI in connection with the claim (which amount shall be used to calculate the Pending Claims Amount for purposes of escrow release adjustments); and
(iv) copies of any supporting documentation, correspondence, third-party claims, or other materials reasonably available to Fund VI at the time of delivery of the Claim Notice that are relevant to the claim.
Timing of Claim Notices. Claim Notices with respect to breaches of general representations and warranties must be delivered to the Stockholder Representative and the Escrow Agent prior to the expiration of the applicable survival period — that is, no later than January 9, 2026 (eighteen months post-Closing). Claim Notices with respect to Special Indemnities (fraud, willful breach, tax indemnities, and specified litigation matters) are not subject to any time limitation and may be delivered at any time.
De Minimis Claims. Individual claims for losses in an amount less than $500,000 are excluded from the basket calculation under the Merger Agreement and shall not be submitted through the escrow mechanism. Fund VI acknowledges that such de minimis claims are not eligible for recovery from the escrow fund.
Tipping Basket. The tipping basket of $51,000,000 must be satisfied in the aggregate before any disbursement from the escrow fund may be made to Fund VI in respect of indemnification claims. Once the aggregate amount of indemnifiable losses (counting only individual claims at or above the $500,000 de minimis threshold) exceeds $51,000,000, Fund VI shall be entitled to recover from the first dollar of loss (not merely the excess above $51,000,000). Until such time as the basket is satisfied, Claim Notices may still be delivered and Pending Claims shall still be counted for purposes of escrow release adjustments, but no disbursement from escrow shall be made to Fund VI.
4.2 Response Period
Following delivery of a Claim Notice, the Stockholder Representative shall have thirty (30) calendar days from the date of receipt of such Claim Notice (the "Response Period") to deliver a written response to Fund VI (with a copy to the Escrow Agent) either:
(a) accepting the claim in whole or in part, including a specification of the amount accepted; or
(b) objecting to the claim in whole or in part, including a reasonably detailed statement of the grounds for such objection.
If the Stockholder Representative does not deliver a written response within the thirty (30)-day Response Period, the claim set forth in the applicable Claim Notice shall be deemed accepted by the Stockholder Representative in its entirety, and the Escrow Agent shall, upon receipt of a Joint Written Instruction from Fund VI (which may be delivered unilaterally in such circumstances, as expressly permitted by Section 4.3 of the Escrow Agreement), disburse the full claimed amount from the escrow fund to Fund VI.
4.3 Disbursement Upon Resolution
The procedures for disbursement from the escrow fund upon resolution of indemnification claims are as follows:
Agreed / Undisputed Claims. If the Stockholder Representative accepts a claim (or is deemed to have accepted a claim by reason of non-response within the Response Period), Fund VI and the Stockholder Representative (or Fund VI alone, in the case of a deemed acceptance) shall deliver a Joint Written Instruction to the Escrow Agent directing Cobalt Trust Company to disburse the agreed amount from the escrow fund to Fund VI. The Joint Written Instruction shall specify the amount to be disbursed and the wire transfer instructions for the receiving account.
Disputed Claims. If the Stockholder Representative delivers a timely objection to all or any portion of a claim, the disputed amount shall remain in the escrow fund as a Pending Claim pending resolution. Resolution may occur through any of the following mechanisms, as provided in the Merger Agreement:
(i) mutual written agreement between Fund VI and the Stockholder Representative;
(ii) mediation, if elected by either party pursuant to Section 9.8 of the Merger Agreement;
(iii) binding arbitration conducted in accordance with the rules of the American Arbitration Association, as provided in Section 9.9 of the Merger Agreement; or
(iv) final adjudication by a court of competent jurisdiction (the Delaware Court of Chancery or, if the Court of Chancery declines jurisdiction, the United States District Court for the District of Delaware).
Upon final resolution of a disputed claim, the prevailing determination (whether set forth in a settlement agreement, arbitration award, or court order) shall be transmitted to the Escrow Agent. Fund VI and the Stockholder Representative shall jointly deliver a Joint Written Instruction to Cobalt Trust Company reflecting the resolution and directing disbursement of the applicable amount. In the alternative, if the resolution is embodied in a final, non-appealable court or arbitral order, a certified copy of such order shall be delivered to Cobalt Trust Company, and Cobalt Trust Company shall disburse the funds in accordance with the terms of the order.
Form of Instructions. Cobalt Trust Company shall act only upon receipt of: (i) Joint Written Instructions signed by an authorized representative of each of Fund VI and the Stockholder Representative, or (ii) a final, non-appealable order of a court of competent jurisdiction or a final arbitration award. Cobalt Trust Company shall have no duty or obligation to investigate or verify the merits of any claim or the accuracy of any Joint Written Instruction or court order, and shall be entitled to rely conclusively on such instructions and orders.
Wire Instructions for Disbursement to Fund VI. Wire transfer instructions for disbursement of escrow funds to Fund VI shall be provided by Calderwood & Harkness LLP at the time of each disbursement request, or as pre-designated in Exhibit A to the Escrow Agreement. Any changes to the designated wire transfer instructions must be confirmed in writing by an authorized signatory of Fund VI.
Wire Instructions for Disbursement to Stockholder Representative. Wire transfer instructions for disbursement of released escrow funds to the Stockholder Representative (for further distribution to the former Cloudium stockholders) shall be as designated by Douglas Pemberton and currently on file with Cobalt Trust Company. Mr. Pemberton shall promptly notify Cobalt Trust Company and Calderwood & Harkness LLP of any changes to such wire transfer instructions.
5. Calculation Mechanics and Illustrative Examples
To assist Cobalt Trust Company and all parties in understanding the application of the escrow release mechanics described above, we provide the following three illustrative examples. These examples are simplified for clarity and do not account for accrued investment income on the escrow fund, which would be released proportionally with the principal at each release date.
5.1 Example A — No Pending Claims at Either Release Date
In this scenario, no indemnification claims are asserted by Fund VI during the eighteen-month survival period, or all claims that were asserted have been fully resolved prior to each release date. The escrow is released in full according to the original schedule.
In this scenario, the escrow terminates upon the Final Escrow Release on January 9, 2026, and Cobalt Trust Company's duties as Escrow Agent conclude upon delivery of a final accounting statement.
5.2 Example B — Pending Claims at First Release Date; No Pending Claims at Final Release Date
In this scenario, Fund VI has delivered a Claim Notice for a single indemnification claim in the amount of $30,000,000, and such claim remains unresolved as of the First Release Date (July 9, 2025). The claim is subsequently resolved in Fund VI's favor prior to the Final Release Date.
First Escrow Release (July 9, 2025):
• Scheduled release amount: $272,000,000
• Pending Claims Amount: $30,000,000 (one unresolved claim)
• Actual release amount: $272,000,000 − $30,000,000 = $242,000,000 released to the Stockholder Representative
• Escrow balance after First Release: $544,000,000 − $242,000,000 = $302,000,000 (consisting of $272,000,000 attributable to the second tranche and $30,000,000 retained for the Pending Claim)
Claim Resolution (September 2025, assumed):
• Assume the $30,000,000 claim is resolved in Fund VI's favor in full in September 2025, and Fund VI and the Stockholder Representative deliver a Joint Written Instruction directing Cobalt Trust Company to disburse $30,000,000 from the escrow fund to Fund VI.
• Escrow balance after disbursement: $302,000,000 − $30,000,000 = $272,000,000
Final Escrow Release (January 9, 2026):
• Remaining escrow balance: $272,000,000
• Pending Claims Amount: $0 (no unresolved claims)
• Actual release amount: $272,000,000 released to the Stockholder Representative
• Escrow balance after Final Release: $0
The escrow terminates at this point.
5.3 Example C — Pending Claims Extending Beyond Final Release Date
In this scenario, Fund VI has delivered Claim Notices for multiple indemnification claims totaling $75,000,000 in the aggregate, and such claims remain unresolved as of the Final Release Date (January 9, 2026). For purposes of this example, assume that no claims were pending at the First Release Date and the full $272,000,000 was released at that time.
First Escrow Release (July 9, 2025):
• Scheduled release amount: $272,000,000
• Pending Claims Amount: $0
• Actual release amount: $272,000,000 released to the Stockholder Representative
• Escrow balance after First Release: $272,000,000
Final Escrow Release (January 9, 2026):
• Remaining escrow balance: $272,000,000
• Pending Claims Amount: $75,000,000 (multiple unresolved claims)
• Actual release amount: $272,000,000 − $75,000,000 = $197,000,000 released to the Stockholder Representative
• Escrow balance after Final Release: $75,000,000 (retained for Pending Claims)
Tail Period (Post-January 9, 2026):
• $75,000,000 remains in escrow, held by Cobalt Trust Company, pending resolution of each outstanding claim.
• As each individual claim is finally resolved, the amount attributable to that claim is disbursed to the appropriate party pursuant to a Joint Written Instruction or final court/arbitral order:
• If the claim is sustained: the applicable amount is disbursed to Fund VI.
• If the claim is denied or withdrawn: the applicable amount is released to the Stockholder Representative.
• If the claim is partially sustained: the sustained portion is disbursed to Fund VI, and the remainder is released to the Stockholder Representative.
• The escrow does not terminate until all Pending Claims have been finally resolved and all remaining funds have been distributed.
6. Interest and Escrow Fund Investment
Pursuant to Section 5 of the Escrow Agreement, the escrow fund shall be invested in eligible investments as agreed among the parties. The parties have agreed that, absent a contrary Joint Written Instruction, the escrow fund shall be invested in the following categories of eligible investments:
(a) money-market funds rated at least "AAAm" or "Aaa-mf" by Standard & Poor's or Moody's, respectively;
(b) direct obligations of the United States of America, or obligations the principal of and interest on which are unconditionally guaranteed by the United States of America, in each case having maturities of not more than ninety (90) days from the date of acquisition; and
(c) such other investments as may be directed by Joint Written Instruction of Fund VI and the Stockholder Representative.
Treatment of Investment Income. All interest, dividends, and other income earned on the escrow fund (collectively, "Investment Income") shall be held as part of the escrow fund and shall not be distributed separately from the principal. Investment Income shall be released proportionally with the principal at each release date. For the avoidance of doubt, when calculating the release amount at each release date, Investment Income accrued and attributable to the portion of the escrow being released shall be included in the disbursement to the Stockholder Representative or Fund VI, as applicable.
Tax Reporting. Cobalt Trust Company, as Escrow Agent, shall be responsible for issuing IRS Forms 1099 (or other applicable tax information reporting forms) with respect to Investment Income earned on the escrow fund. For federal income tax purposes, all interest and income earned on the escrow fund shall be treated as income of the former Cloudium stockholders (allocated pro rata among such stockholders in accordance with their respective merger consideration entitlements), unless the parties otherwise agree in writing and provide appropriate documentation to Cobalt Trust Company. For tax reporting purposes, the Employer Identification Number (EIN) of Cloudium Technologies plc (US taxpayer) is 83-2196754, and Cobalt Trust Company should reference this EIN in its tax reporting to the extent applicable. Cobalt Trust Company should consult its own tax advisors with respect to its reporting obligations and shall not be liable for any taxes due with respect to Investment Income.
7. Notices and Communications
7.1 Notice Addresses
All notices, Claim Notices, Joint Written Instructions, and other communications delivered in connection with the Escrow Agreement and the indemnification provisions of the Merger Agreement shall be addressed as follows:
To Solara Digital Infrastructure Fund VI LP (the Buyer):
Solara Digital Infrastructure Fund VI LP c/o Solara Digital Infrastructure LP 1200 Market Street, Suite 3400 Wilmington, Delaware 19801
Attention: Marcus Elliston, Founder & Managing Partner
with a required copy (which shall not constitute notice) to:
Calderwood & Harkness LLP 599 Lexington Avenue New York, New York 10022
Attention: Harrison Wexford, Partner
Tiffany Rosenthal, Lead Associate
To the Stockholder Representative:
Douglas Pemberton Stockholder Representative At the address set forth in Section 8.1 of the Escrow Agreement (on file with Cobalt Trust Company)
To Cobalt Trust Company (the Escrow Agent):
Cobalt Trust Company 100 Wall Street New York, New York 10005
Attention: Laura Ng, Vice President, Escrow Services
7.2 Form of Notice
All notices, Claim Notices, Joint Written Instructions, and other communications to the Escrow Agent must be in writing and delivered in accordance with Section 8 of the Escrow Agreement. Permissible methods of delivery include overnight courier service (e.g., Severin Partners LLC, Halcyon Partners LLC, or Tarrant & Co.) and hand delivery. Email alone is not sufficient for Claim Notices or Joint Written Instructions unless the Escrow Agreement expressly permits electronic delivery for such documents. Routine administrative communications (such as balance confirmations and status updates) may be exchanged by email among the parties, but all legally operative notices and instructions must comply with the formal notice provisions of the Escrow Agreement.
Notices shall be deemed given and effective upon actual receipt by the intended recipient, or if sent by overnight courier, on the next business day following deposit with the courier service.
8. Action Items and Deadlines Summary
The following sets forth a comprehensive summary of the key action items and deadlines applicable to each party in connection with the escrow release calendar. We recommend that all parties calendar these dates and action items promptly.
8.1 Pre-First Release (Before July 9, 2025)
Calderwood & Harkness LLP / Fund VI:
• Maintain a running log and register of all Claim Notices delivered to the Stockholder Representative and the Escrow Agent, together with the current resolution status of each claim (pending, resolved, withdrawn, or partially resolved).
• Provide Cobalt Trust Company with an updated Pending Claims Report (in the form attached hereto as Appendix D) no later than ten (10) business days before July 9, 2025 — i.e., no later than June 25, 2025.
• Prepare the Joint Written Instruction for the First Escrow Release (in the form attached hereto as Appendix B) for execution by Fund VI and the Stockholder Representative.
Stockholder Representative (Douglas Pemberton):
• Confirm and, if necessary, update wire transfer instructions for receipt of released escrow funds, and provide such instructions to Cobalt Trust Company and Calderwood & Harkness LLP no later than ten (10) business days before July 9, 2025.
• Review and co-sign the Joint Written Instruction for the First Escrow Release.
Cobalt Trust Company:
• Confirm the escrow account balance, including both principal and accrued Investment Income, as of a date reasonably proximate to the First Release Date.
• Prepare for disbursement of the First Escrow Release amount on July 9, 2025 (or the next business day, if applicable).
• Confirm receipt of the Joint Written Instruction and verify the authorized signatories thereon.
8.2 First Release Date (July 9, 2025)
Calderwood & Harkness LLP and the Stockholder Representative:
• Deliver the fully executed Joint Written Instruction to Cobalt Trust Company specifying: (a) the release amount (equal to $272,000,000 less the Pending Claims Amount as of such date), and (b) wire transfer instructions for disbursement to the Stockholder Representative.
Cobalt Trust Company:
• Disburse the First Escrow Release amount by wire transfer on July 9, 2025. (Note: July 9, 2025 falls on a Wednesday, which is a business day; accordingly, no business day adjustment should be necessary.)
• Retain in escrow the Pending Claims Amount (if any), together with the remaining $272,000,000 second tranche.
• Deliver written confirmation of the disbursement to all parties (Fund VI, the Stockholder Representative, and Calderwood & Harkness LLP), including the amount disbursed, the remaining escrow balance, and the Pending Claims Amount retained.
8.3 Pre-Final Release (Before January 9, 2026)
Calderwood & Harkness LLP / Fund VI:
• Provide Cobalt Trust Company with an updated Pending Claims Report no later than ten (10) business days before January 9, 2026 — i.e., no later than December 24, 2025. (Note: December 24, 2025 falls on a Wednesday. Given that December 25, 2025 is a federal holiday, parties should coordinate to ensure timely delivery of the report.)
• Confirm the resolution status of all claims previously asserted, including any claims that were pending at the First Release Date and have since been resolved.
• Prepare the Joint Written Instruction for the Final Escrow Release (in the form attached hereto as Appendix C) for execution by Fund VI and the Stockholder Representative.
Stockholder Representative (Douglas Pemberton):
• Confirm and, if necessary, update wire transfer instructions for receipt of the Final Escrow Release.
• Review and co-sign the Joint Written Instruction for the Final Escrow Release.
Cobalt Trust Company:
• Confirm the escrow account balance, including both principal and accrued Investment Income, as of a date reasonably proximate to the Final Release Date.
• Prepare for disbursement of the Final Escrow Release amount on January 9, 2026.
8.4 Final Release Date (January 9, 2026)