1041-00003 · Solara Digital Infrastructure LP · SEC/Proxy

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CALDERWOOD & HARKNESS LLP 599 Lexington Avenue New York, New York 10022

MEMORANDUM

CONFIDENTIAL — ATTORNEY WORK PRODUCT / PRIVILEGED

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I. Introduction and Purpose

Calderwood & Harkness LLP ("C&H"), as counsel to Solara Digital Infrastructure LP ("SDILP") and Solara Digital Infrastructure Fund VI LP ("Fund VI" or the "Buyer"), has reviewed the preliminary proxy statement on Schedule 14A (the "Preliminary Proxy" or the "Proxy Statement") filed by Cloudium Technologies plc ("Cloudium" or the "Company") with the U.S. Securities and Exchange Commission (the "SEC") on or about March 18, 2024. The Preliminary Proxy was prepared by Cloudium's outside legal counsel, Ridgeway Phelps & Sato LLP (Catherine Answorth, Partner, New York office; Alistair Fenn, Partner, London office), and relates to the special meeting of stockholders of Cloudium (the "Special Meeting") to be held for the purpose of approving and adopting the 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.

The purpose of this memorandum is to identify comments, corrections, and areas requiring additional or revised disclosure from the perspective of buyer's counsel, in order to ensure (a) the accuracy of the descriptions of the transaction, the Merger Agreement, and the related transaction documents contained in the Preliminary Proxy, (b) compliance with applicable SEC rules under Section 14(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), Rule 14a-9 thereunder, and Regulation M-A, and (c) the protection of Solara's interests in connection with the public disclosure of the merger and the related transaction documents. These comments are not intended to address the overall adequacy or completeness of the Preliminary Proxy from the perspective of the Company's disclosure obligations — that responsibility rests with the Company and its counsel — but rather to flag issues that are material to Solara's position as the acquiring party and that, if inaccurate, could give rise to liability, reputational risk, or complications in the consummation of the merger.

Under Section 6.3(a) of the Merger Agreement, Cloudium has covenanted that it will provide Solara and its counsel a reasonable opportunity to review and comment on the Proxy Statement and any amendments thereto prior to filing with the SEC, and that it will consider in good faith any comments provided by Solara and its counsel. Accordingly, the comments set forth herein should be compiled and transmitted to Ridgeway Phelps & Sato LLP (Catherine Answorth) in coordination with the deal team at the earliest practicable date. Target's counsel retains primary responsibility for the preparation, filing, and dissemination of the Proxy Statement, but C&H's review is intended to exercise Solara's contractual review rights and to ensure that the descriptions of Solara's obligations, the financing arrangements, and the buyer-side transaction documents are accurate and complete.

This memorandum should be read in conjunction with the following separate C&H memoranda, which address related but distinct compliance issues:

• Schedule 13E-3 Compliance Memorandum (dated March 20, 2024): addressing the going-private transaction aspects of the merger and the filing obligations under Rule 13e-3 and Schedule 13E-3.

• Section 14(a) Compliance Memorandum (dated April 10, 2024, forthcoming): addressing in greater detail the compliance of the Proxy Statement with Section 14(a) of the Exchange Act, Rule 14a-9, and related SEC guidance.

II. Executive Summary of Key Comments

We have organized our comments into the following categories, corresponding to the principal sections and topics of the Preliminary Proxy:

(A) Cover Letter and Summary Term Sheet

(B) Description of the Merger and the Merger Agreement

(D) Risk Factors

(E) Financial Information

(F) Interests of Directors and Officers

(G) Rollover and Voting/Support Agreements

(H) Financing

(I) Regulatory Approvals

(J) Indemnification, Escrow, and R&W Insurance

(K) Appraisal Rights

(L) Legal Descriptions and Defined Terms

(M) Exhibits and Annexes

Overall Assessment. The Preliminary Proxy is substantially complete and covers the principal elements of the transaction in a manner generally consistent with SEC requirements and current market practice for proxy statements in connection with going-private merger transactions. However, our review has identified several inaccuracies, omissions, and areas where additional precision is needed, as detailed in the sections that follow. These range from technical corrections (e.g., entity name inconsistencies, defined-term mismatches with the Merger Agreement) to substantive disclosure issues (e.g., incomplete description of the material adverse effect definition carveouts, potential mischaracterization of the scope of the fairness opinion, incomplete disclosure of certain director and officer interests).

Priority Comments. Comments that we consider to be of the highest priority are flagged with a [HIGH] designation throughout this memorandum. These high-priority comments are separately consolidated in Section XIX below for ease of reference and tracking.

III. Cover Letter and Summary Term Sheet Comments

A. Special Meeting Details

1. Meeting Date, Time, and Location. The Preliminary Proxy currently leaves the date, time, and location of the Special Meeting in brackets (i.e., "[●]"), which is appropriate for a preliminary proxy filing. We note for the record that the Special Meeting is expected to be held on or about May 20, 2024. For purposes of the Preliminary Proxy, these fields should remain designated as "to be determined." In the definitive proxy statement (the "Definitive Proxy"), these fields must be completed with the final date, time, and location as determined by the Cloudium board of directors. We further note, for internal tracking purposes only, that the Special Meeting ultimately occurred on May 20, 2024, with approximately 82.4% of shares voting in favor of adoption of the Merger Agreement, but this information is not relevant to the Preliminary Proxy and should not be included therein.

2. Record Date. The record date for the determination of stockholders entitled to notice of and to vote at the Special Meeting should be clearly stated in the Preliminary Proxy. We note that the record date appears to have been set by the Cloudium board, but the Preliminary Proxy is ambiguous as to whether the record date has been finalized or remains subject to confirmation. The record date should be verified for consistency with the resolutions adopted by the Cloudium board of directors authorizing the Special Meeting. If the record date has been set at the time of the Preliminary Proxy filing, it should be clearly disclosed; if not yet set, the Preliminary Proxy should clearly indicate that it will be included in the Definitive Proxy.

B. Summary of Merger Consideration

3. Per-Share Merger Consideration. The per-share merger consideration should be stated as approximately $36.92 per share in cash, without interest and less any applicable withholding taxes. This figure is derived from the aggregate equity value of $6,800,000,000 divided by 184,200,000 shares of Cloudium common stock outstanding as of the signing date of the Merger Agreement (January 22, 2024). We note that the Preliminary Proxy references the per-share consideration in multiple locations, and the figure should be verified for consistency throughout. In particular, we request that target's counsel confirm that the Preliminary Proxy accurately reflects the treasury-share adjustment (if any) and the rounding convention used to arrive at the headline aggregate equity value of $6,800,000,000. Any variance between the mathematically precise quotient ($6,800,000,000 ÷ 184,200,000 = $36.9163…) and the rounded per-share figure stated in the Merger Agreement and the Preliminary Proxy should be clearly explained or reconciled.

4. Treatment of Rollover Shares. The Preliminary Proxy should clearly state that the merger consideration is payable in cash, except for shares subject to the Rollover Agreements (as defined and described in Section IX below), which will be converted into equity interests in the surviving entity. We request that target's counsel confirm that this distinction is clearly and accurately presented in the Summary Term Sheet and in the body of the Preliminary Proxy, using language such as "cash, except for shares subject to the Rollover Agreements" or substantially similar formulation consistent with the Merger Agreement.

5. Aggregate Deal Value. The aggregate deal value of $6,800,000,000 should be consistently referenced throughout the Preliminary Proxy. We have identified at least two instances in the draft where different formulations are used (e.g., "approximately $6.8 billion" versus "$6,800,000,000"). While these are not materially inconsistent, best practice counsels in favor of consistent usage of the precise dollar figure throughout. In addition, we note that the implied enterprise value to last-twelve-months ("LTM") EBITDA multiple is approximately 16.8x, based on LTM EBITDA of $405,000,000 for the fiscal year ended September 30, 2023. If the Preliminary Proxy discusses valuation metrics or multiples in any section (including in the summary of the fairness opinion or the background of the merger), this multiple should be accurately disclosed and sourced.

C. Recommendation of the Board

6. Board Recommendation. The Preliminary Proxy should clearly state that the Cloudium board of directors (chaired by Douglas Pemberton, independent director) has unanimously determined that the Merger Agreement and the transactions contemplated thereby, including the merger, are fair to and in the best interests of Cloudium and its stockholders, and unanimously recommends that Cloudium stockholders vote "FOR" the proposal to adopt the Merger Agreement. We request confirmation that this language is present in the Summary Term Sheet and is consistent with the language of the board resolutions.

7. Reference to Fairness Opinion. The summary section should reference the fact that the Cloudium board received a fairness opinion from Veridian Partners LLC (Monica Pressler, Managing Director) on January 21, 2024, to the effect that, as of such date and based on and subject to the assumptions, qualifications, and limitations set forth therein, the per-share merger consideration to be received by the holders of Cloudium common stock (other than rollover stockholders and their affiliates) was fair, from a financial point of view, to such holders. This reference in the summary should cross-reference the more detailed discussion and the full text of the fairness opinion included elsewhere in the Proxy Statement.

IV. Description of the Merger and the Merger Agreement

A. Structure of the Merger

8. Reverse Triangular Merger. The Preliminary Proxy should accurately describe the merger structure as a reverse triangular merger in which Stratos Merger Sub Inc. will merge with and into Cloudium Technologies plc, with Cloudium surviving the merger as a wholly owned subsidiary of Solara Digital Infrastructure Fund VI LP. This description should be verified against the Merger Agreement (specifically, Article I) to ensure consistency. We note that the reverse triangular structure was selected, in part, to preserve the continuity of Cloudium's contracts and permits, and while it is not necessary to disclose the strategic rationale for the structure, the description itself must be precise.

9. Merger Sub Formation. The Preliminary Proxy should state that Merger Sub (Stratos Merger Sub Inc.) was incorporated on January 8, 2024, in the State of Delaware, under DE File No. 7923841, as a wholly owned subsidiary of Fund VI, formed solely for the purpose of effectuating the merger. Merger Sub has not conducted any business operations, has no assets other than nominal capitalization, and has no liabilities other than those incidental to its formation and the transactions contemplated by the Merger Agreement. We request that target's counsel verify that this description is accurately included in the Preliminary Proxy.

10. Governing Law. The Preliminary Proxy should identify that the merger will be effected under the Delaware General Corporation Law (the "DGCL"), as the reverse triangular merger is governed by Delaware law by virtue of the incorporation of Merger Sub and the election made in the Merger Agreement. We note that Cloudium itself is incorporated under the laws of England and Wales, and the Preliminary Proxy should address the interaction between Delaware merger law and English company law to the extent relevant (see also Section XIII below regarding appraisal rights).

11. Effective Time. The effective time of the merger should be described as the time at which the Certificate of Merger is duly filed with the Secretary of State of the State of Delaware (or such later time as may be agreed by the parties and specified in the Certificate of Merger). This description should be consistent with Section 1.3 of the Merger Agreement.

B. Merger Consideration and Treatment of Shares

12. Categories of Shares. The Preliminary Proxy should accurately and completely describe the treatment of each category of shares of Cloudium common stock in the merger. Specifically, the Proxy Statement should describe the following:

(i) Non-Rolling Stockholders. Each share of Cloudium common stock held by stockholders other than the rollover stockholders (Jonathan Hargrove and Pinnacle Growth Ventures LLC) will be converted, at the effective time of the merger, into the right to receive $36.92 per share in cash, without interest and less any applicable withholding taxes.

(ii) Rollover Shares. Shares subject to the Rollover Agreements will be treated as follows: (a) Jonathan Hargrove will roll over 50% of his 7,736,400 shares (i.e., 3,868,200 shares), representing approximately $142,814,544 in implied value at the per-share merger consideration, into equity interests in the surviving entity; and (b) Pinnacle Growth Ventures LLC will roll over 60% of its 21,367,200 shares (i.e., 12,820,320 shares), representing approximately $473,241,408 in implied value at the per-share merger consideration, into equity interests in the surviving entity. The remaining non-rolled shares held by Hargrove and Pinnacle will be converted into the right to receive the cash merger consideration on the same terms as all other non-rolling stockholders.

(iii) Dissenting Stockholders. Shares held by stockholders who properly exercise and do not withdraw their appraisal rights under Section 262 of the DGCL will not be converted into the right to receive the merger consideration, and such stockholders will instead be entitled to receive payment of the fair value of their shares as determined in accordance with DGCL § 262 (see Section XIII below).

13. Total Rollover Equity. The Preliminary Proxy should confirm that the total rollover equity amounts to approximately $616,055,952 in implied value (comprising Hargrove's approximately $142,814,544 and Pinnacle's approximately $473,241,408). This figure should be verified for consistency with the Rollover Agreements, the Equity Commitment Letter, and the sources-and-uses analysis.

14. Cash Consideration to Non-Rolling Stockholders. The Preliminary Proxy should verify and disclose that the total cash merger consideration payable to non-rolling stockholders is approximately $6,183,944,048 (i.e., $6,800,000,000 aggregate equity value minus approximately $616,055,952 in rollover equity). This figure should be reconciled with the Letter of Transmittal procedures and the paying agent arrangements.

C. No-Shop Provision and Fiduciary Out

15. [HIGH] No-Shop Provision. The Preliminary Proxy must accurately describe the no-shop provision contained in Section 6.4 of the Merger Agreement. The no-shop became effective as of the execution and delivery of the Merger Agreement on January 22, 2024. Subject to the fiduciary-out exception described below, the no-shop prohibits Cloudium and its subsidiaries, representatives, and advisors from, among other things, (a) soliciting, initiating, or knowingly encouraging or facilitating any inquiry, proposal, or offer that constitutes or could reasonably be expected to lead to an Acquisition Proposal (as defined in the Merger Agreement), (b) entering into, continuing, or participating in any discussions or negotiations with any third party regarding an Acquisition Proposal, (c) providing any non-public information or data to any third party in connection with an Acquisition Proposal, or (d) entering into any letter of intent, memorandum of understanding, merger agreement, acquisition agreement, or similar agreement with respect to an Acquisition Proposal. We request that target's counsel confirm that the description of the no-shop provision in the Preliminary Proxy is complete, accurate, and consistent with the terms of Section 6.4 of the Merger Agreement, and that no material terms or conditions have been omitted or misstated.

16. Fiduciary Out. The Preliminary Proxy should accurately describe the fiduciary-out exception, which permits the Cloudium board of directors to consider, and ultimately accept, an unsolicited Superior Proposal (as defined in the Merger Agreement) under specified conditions, including the requirement that the board determine in good faith, after consultation with its outside legal counsel and financial advisor, that the failure to take such action would be inconsistent with the directors' fiduciary duties under applicable law. The description should include the procedural requirements (e.g., notice periods, matching rights, and the obligation to negotiate in good faith with Solara before terminating the Merger Agreement in favor of a Superior Proposal). We request that these elements be verified against Section 6.4(c) of the Merger Agreement.

17. Termination Fees. The Preliminary Proxy should clearly and accurately disclose the following termination fees:

(a) Company Termination Fee: $221,000,000 (representing approximately 3.25% of the aggregate deal value), payable by Cloudium to Fund VI upon the termination of the Merger Agreement in specified circumstances, including (i) termination by Cloudium in order to accept a Superior Proposal, and (ii) termination by Fund VI following a change of recommendation by the Cloudium board.

(b) Reverse Termination Fee: $374,000,000 (representing approximately 5.5% of the aggregate deal value), payable by Fund VI to Cloudium upon the termination of the Merger Agreement in specified circumstances, including failure by Buyer to consummate the closing when required under the Merger Agreement (subject to the limited guarantee described in Section X.B below).

We request that these amounts and the circumstances triggering payment be verified against Sections 8.3 and 8.4 of the Merger Agreement.

D. Termination Provisions

18. Termination Triggers. The Preliminary Proxy should describe all termination triggers set forth in Article VIII of the Merger Agreement, including:

(a) Mutual written consent of the parties;

(b) Failure to obtain stockholder approval at the Special Meeting (or any adjournment or postponement thereof);

(c) Failure to consummate the merger by the outside date (initially June 30, 2024, as set forth in Section 8.1(b)(i) of the Merger Agreement), subject to automatic extension under specified circumstances;

(d) Issuance of a final, non-appealable order or injunction by a court of competent jurisdiction or governmental authority permanently enjoining or prohibiting the merger;

(e) Breach by any party of representations, warranties, covenants, or agreements that would result in the failure of the applicable closing conditions, subject to notice and cure periods;

(f) Termination by Cloudium in connection with a Superior Proposal (subject to payment of the Company Termination Fee); and

(g) Termination by Fund VI following a change of recommendation by the Cloudium board.

We request that the foregoing list be verified against the Merger Agreement and that the Preliminary Proxy accurately describes each termination right without omission.

19. Limited Guarantee. The Preliminary Proxy should disclose the Limited Guarantee, dated January 22, 2024, from Solara Fund VI GP LLC (the general partner of Fund VI) in favor of Cloudium. The Limited Guarantee guarantees the payment obligations of Fund VI in respect of the reverse termination fee and certain other liabilities, up to a maximum aggregate amount of $246,000,000, comprising the $221,000,000 reverse termination fee obligation (noting that the guarantee amount corresponds to the Company Termination Fee amount, not the Reverse Termination Fee amount, unless otherwise structured) plus $25,000,000 in respect of enforcement costs. We note a potential discrepancy: the limited guarantee amount of $246,000,000 ($221,000,000 + $25,000,000) should be reconciled with the reverse termination fee of $374,000,000. If the limited guarantee does not cover the full reverse termination fee, this distinction must be clearly disclosed. We request that target's counsel confirm the structure and confirm that the Preliminary Proxy accurately describes the scope and limitations of the Limited Guarantee.

E. Material Adverse Effect Definition

20. [HIGH] MAE Definition Carveouts. The description of the "Material Adverse Effect" definition (as defined in Section 1.1 of the Merger Agreement) in the Preliminary Proxy must accurately state all agreed-upon carveouts. Based on our review of the executed Merger Agreement, the MAE definition expressly carves out the following from the determination of whether a material adverse effect has occurred: (i) effects arising out of or relating to pandemics, epidemics, or public health emergencies (including COVID-19 and any variants thereof, and any governmental responses thereto), (ii) effects arising out of or relating to war, armed hostilities, terrorism, or military action, and (iii) effects arising out of or relating to changes in applicable law or the interpretation thereof. These are the three principal carved-out categories as negotiated by the parties. We request that target's counsel verify that the Preliminary Proxy accurately states these carveouts and does not (a) misstate additional carveouts beyond what is contained in the executed Merger Agreement, or (b) omit any agreed carveouts. Any discrepancy between the Preliminary Proxy and the Merger Agreement on this point could give rise to a material misstatement.

21. Cross-Reference to Internal Materials. For the purpose of verifying the accuracy of the MAE description, we cross-reference C&H's internal annotated redline of the MAE definition (prepared by Tiffany Rosenthal, dated December 22, 2023), which tracks the evolution of the MAE definition through the negotiation process. This internal document is not for production or disclosure but should be consulted to ensure consistency.

F. Representations and Warranties

22. Fair Summary. The Preliminary Proxy should provide a fair and balanced summary of the key representations and warranties made by each party in the Merger Agreement. Cloudium's representations and warranties are set forth in Article IV of the Merger Agreement and cover, among other things, corporate organization and standing, capitalization, authority and enforceability, financial statements, absence of undisclosed liabilities, compliance with law, intellectual property, material contracts, employee benefits, tax matters, environmental matters, insurance, and the absence of brokers' fees (other than Veridian Partners LLC). The representations and warranties of the Buyer and Merger Sub are set forth in Article V and cover, among other things, corporate organization and standing, authority and enforceability, sufficiency of funds, the absence of information provided by the Buyer that would cause the Proxy Statement to contain a material misstatement, and the absence of brokers' fees (other than Osprey Bancroft & Co.). We request that target's counsel verify that the summaries of both sets of representations and warranties are accurate, fairly balanced, and do not overstate or understate the scope of the representations.

23. Survival Period. The survival period for the representations and warranties is 18 months post-closing. Assuming a closing date of July 9, 2024, the representations and warranties would expire on or about January 9, 2026. This survival period should be disclosed in connection with the indemnification provisions discussed in Section XII below. We request that the Preliminary Proxy consistently reference this survival period where relevant.

G. Interim Operating Covenants

24. Section 6.1 Operating Restrictions. The Preliminary Proxy should fairly summarize the restrictions on Cloudium's conduct of business between signing and closing, as set forth in Section 6.1 of the Merger Agreement. These restrictions require Cloudium to conduct its business in the ordinary course of business, consistent with past practice, and include specific limitations on, among other things, capital expenditures (subject to specified thresholds), hiring of new employees above certain compensation levels, entry into or amendment of material contracts, incurrence of indebtedness, declarations or payment of dividends or distributions, issuance of equity securities, and dispositions of material assets, in each case subject to specified exceptions and to the requirement that Cloudium obtain the prior written consent of Fund VI for actions outside the ordinary course. We request that target's counsel verify that the summary is fair and accurate.

25. Waiver Letter. We note for internal purposes that, on April 29, 2024, the parties executed a waiver letter in respect of the $12,000,000 hosting agreement between Cloudium and a third-party provider, which otherwise would have required consent under Section 6.1. This waiver post-dates the Preliminary Proxy and need not be referenced therein. However, for purposes of the Definitive Proxy review, we note that the waiver may require disclosure to the extent it constitutes a material amendment or waiver of a covenant under the Merger Agreement.

H. Conditions to Closing

26. Material Closing Conditions. The Preliminary Proxy should accurately disclose all material conditions to the obligations of the parties to consummate the merger, as set forth in Article VII of the Merger Agreement. These conditions include:

(i) Stockholder approval — adoption of the Merger Agreement by the affirmative vote of the holders of a majority of the outstanding shares of Cloudium common stock entitled to vote thereon;

(ii) HSR Act clearance — expiration or early termination of the waiting period applicable to the merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act");

(iii) UK CMA clearance — clearance of the merger by the UK Competition and Markets Authority (the "CMA"), either by a decision not to refer the merger for a Phase 2 investigation or by unconditional clearance;

(iv) Absence of injunction — no order, injunction, or decree issued by any court of competent jurisdiction or governmental authority restraining, enjoining, or prohibiting the consummation of the merger shall be in effect;

(v) Accuracy of representations — the representations and warranties of each party shall be true and correct (subject to applicable materiality and Material Adverse Effect qualifiers) as of the closing date as though made on and as of such date (or, in the case of representations made as of a specific date, as of such date);

(vi) Compliance with covenants — each party shall have performed and complied in all material respects with its covenants and agreements under the Merger Agreement required to be performed or complied with prior to or at the closing; and

(vii) Delivery of closing deliverables — each party shall have delivered to the other parties all certificates, instruments, documents, and other deliverables required to be delivered at or prior to the closing.

We request that target's counsel confirm that all material closing conditions are accurately disclosed and that no conditions have been omitted or misstated.

V. Fairness Opinion

27. Full Text of Fairness Opinion. The Preliminary Proxy should include the full text of the fairness opinion delivered by Veridian Partners LLC to the Cloudium board of directors on January 21, 2024, either in the body of the Proxy Statement or as an annex thereto. Inclusion of the full text is customary and expected in a proxy statement for a going-private transaction. We request confirmation that the full text has been or will be included.

28. Identification of Veridian Partners. The Preliminary Proxy should correctly identify Veridian Partners LLC as the financial advisor that delivered the fairness opinion, including its principal office address (50 Rockefeller Plaza, New York, New York 10020) and the name of the responsible professional (Monica Pressler, Managing Director). We have noted one instance in the Preliminary Proxy where "Veridian Partners" is spelled as "Veridion Partners" — this typographical error should be corrected.

29. Scope, Assumptions, and Limitations. The Preliminary Proxy should accurately disclose the scope, assumptions, qualifications, and limitations of the fairness opinion, including, without limitation, Veridian Partners' reliance on publicly available information and information provided by Cloudium management, its assumption that the financial analyses and projections furnished by Cloudium management were reasonably prepared on a basis reflecting the best currently available estimates and judgments of management, and its disclaimers regarding the absence of any independent verification of such information. The customary limitations and disclaimers contained in the fairness opinion should be reproduced or fairly summarized.

30. [HIGH] No Benefit to Solara. The Preliminary Proxy must not suggest or imply that the fairness opinion delivered by Veridian Partners LLC was delivered for the benefit of Solara, Fund VI, Merger Sub, or any of their respective affiliates. The fairness opinion was delivered solely to the Cloudium board of directors for its use and benefit in connection with its evaluation of the merger and should not be relied upon by any other person or for any other purpose. We request that target's counsel confirm that the Preliminary Proxy contains appropriate language to this effect and does not contain any statement that could be construed as extending the scope or benefit of the fairness opinion beyond the Cloudium board.

31. Fees and Compensation. The Preliminary Proxy should disclose the fees payable to Veridian Partners LLC in connection with the engagement, including any fees contingent upon the consummation of the merger, any opinion fee, any transaction fee, and any expense reimbursement arrangements. Disclosure of the contingent nature of any fees is particularly important in the context of Section 14(a) and Schedule 13E-3 compliance.

32. Financial Analyses Summary. The Preliminary Proxy includes a summary of the financial analyses performed by Veridian Partners in connection with the delivery of its fairness opinion, including (a) a comparable public companies analysis, (b) a comparable transactions analysis, (c) a discounted cash flow analysis, and (d) a premiums paid analysis. We request that target's counsel confirm that these summaries are consistent with the materials presented by Veridian Partners to the Cloudium board and the underlying analyses, and that no material analysis has been omitted from the summary. Any material deviation between the summary in the Preliminary Proxy and the presentation materials should be identified and reconciled.

VI. Risk Factors

A. Transaction-Specific Risks

33. Comprehensive Risk Disclosure. The Preliminary Proxy should include risk factors that adequately address the following transaction-specific risks. We request that target's counsel verify that each of the following risk factors is adequately addressed in the Preliminary Proxy:

(a) Risk of Non-Consummation. The risk that the merger may not be consummated due to failure to obtain required regulatory approvals, failure to obtain stockholder approval, failure of one or more closing conditions, or other circumstances, and the potential adverse effects on Cloudium's business, stock price, and relationships with employees, customers, and suppliers if the merger is not consummated.

(b) Interim Period Risks. The risks associated with the pending period between the signing of the Merger Agreement (January 22, 2024) and the closing of the merger, during which Cloudium is subject to interim operating covenants that restrict the Company's flexibility to pursue business opportunities, make capital investments, or respond to competitive developments without the prior written consent of Fund VI.

(c) Third-Party Claims and Litigation. The risk of third-party claims or litigation challenging the merger, including potential stockholder class actions, appraisal proceedings, or regulatory challenges.

(d) Loss of Key Personnel and Relationships. The risk of loss of key employees, customers, or suppliers due to the announcement of the merger or uncertainty about the future direction of the Company under new ownership.

(e) Adequacy of Consideration. The risk that the per-share merger consideration of $36.92 per share may not fully reflect the long-term intrinsic value of Cloudium, particularly in light of the Company's growth trajectory, recurring revenue base, and market position in the cloud infrastructure sector.

(f) Appraisal Proceedings. The risk of appraisal proceedings under DGCL § 262, including the possibility that a court could determine that the fair value of Cloudium common stock exceeds the per-share merger consideration.

(g) Change-of-Control Contract Risks. The potential impact of the "change of control" triggered by the merger on key contracts. In particular, we note that the following material contracts contain change-of-control provisions that could be implicated by the merger:

• The Master SaaS Agreement with Aegis Federal Solutions Inc. (representing approximately $84,000,000 in annual recurring revenue), which contains a change-of-control provision permitting Aegis to terminate or renegotiate the agreement upon a change of control of Cloudium; and

• The Technology License Agreement with Helix Data Systems GmbH, which contains a change-of-control provision with similar termination or renegotiation rights.

The Preliminary Proxy should specifically identify these contracts and the potential impact of the change-of-control provisions on Cloudium's business and revenue, unless doing so is prohibited by confidentiality provisions in the contracts themselves (in which case, the risk should be described in general terms).

(h) Financing Risks. Although the Buyer's obligation to close the merger is not conditioned on obtaining financing (i.e., there is no financing condition), the Preliminary Proxy should describe the committed debt financing arrangements ($4,240,000,000 from Meridian Atlantic Bank, N.A. and Ironclad Capital Markets LLC) and the risks associated therewith, including the risk that the lenders may fail to fund and the potential consequences thereof.

B. General Risks

34. Staleness of General Risk Factors. We request that the general risk factors included in the Preliminary Proxy (i.e., risk factors relating to Cloudium's business, industry, and financial condition that are not specific to the merger) be reviewed for staleness or inapplicability in the context of a merger proxy. Risk factors that were included in Cloudium's most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q and that are incorporated by reference into the Preliminary Proxy should be reviewed to ensure that they remain current and are not misleading in the merger context.

35. No Cross-Contamination. We also request confirmation that there is no cross-contamination of risk factors from unrelated Cloudium business risks that could be misleading in the merger context. For example, risk factors relating to Cloudium's long-term growth prospects, competitive positioning, or product development pipeline may be appropriate in the context of an annual report but could be misleading in a merger proxy to the extent they suggest that stockholders face ongoing business risks that will not be borne by stockholders following the merger (since non-rolling stockholders will receive cash and will no longer hold equity interests in the Company).

VII. Financial Information

36. Consistency with Audited Financial Statements. All financial data presented in the Preliminary Proxy should be verified for consistency with Cloudium's audited consolidated financial statements for the fiscal year ended September 30, 2023, as audited by Harwell & Dobson LLP (engagement partner: Martin Chisholm). Any financial data sourced from unaudited interim financial statements or management estimates should be clearly identified as such.

37. LTM Revenue and EBITDA. The Preliminary Proxy references LTM revenue of $1,620,000,000 and LTM EBITDA of $405,000,000 in various locations. These figures should be verified for accuracy, and the source and measurement period should be clearly identified (i.e., the twelve-month period ended September 30, 2023, corresponding to Cloudium's most recently completed fiscal year). To the extent that the LTM period differs from the audited fiscal year (e.g., if an LTM period through December 31, 2023, is used in any context), the source and basis for the figures should be clearly identified.

38. Annual Recurring Revenue. If the Preliminary Proxy discloses Cloudium's annual recurring revenue ("ARR"), which we understand to have been approximately $1,740,000,000 as of December 31, 2023, the Preliminary Proxy should clearly identify the source of this figure, the date as of which it is measured, and the methodology used to calculate it. ARR is a non-GAAP metric and should be accompanied by appropriate cautionary disclosures.

39. Projections and Forward-Looking Information. To the extent that any projections or forward-looking financial information prepared by Cloudium management were provided to Veridian Partners LLC or to Osprey Bancroft & Co. (Solara's financial advisor; Damien Harlow, Managing Director) in connection with the transaction, and such projections are disclosed or summarized in the Preliminary Proxy, the disclosure must be accompanied by appropriate cautionary language and disclaimers as required by Item 1015 of Regulation M-A. In particular, the Preliminary Proxy should state that the projections were not prepared with a view toward public disclosure or compliance with published guidelines of the SEC or the American Institute of Certified Public Accountants, that they are inherently subject to significant uncertainty, and that actual results may differ materially from the projected results. The Preliminary Proxy should also state the purpose for which the projections were prepared (e.g., for use by the financial advisors in connection with their respective financial analyses) and the material assumptions underlying the projections.

40. Cross-Consistency of Financial Figures. We request that target's counsel verify the consistency of all financial figures as presented in the various sections of the Preliminary Proxy, including the narrative discussion of the background of the merger, the summary of the fairness opinion, the discussion of the Cloudium board's reasons for the merger, and any annexed financial tables or schedules. Any inconsistency between financial figures cited in different sections of the Preliminary Proxy should be identified and corrected.

VIII. Interests of Directors and Officers in the Merger

41. [HIGH] Differing Interests. This section of the Preliminary Proxy is among the most important from a disclosure perspective, as it must accurately and completely disclose all interests of Cloudium's directors and executive officers in the merger that differ from, or are in addition to, the interests of Cloudium's stockholders generally. Under Item 1014 of Regulation M-A and applicable SEC guidance, the Preliminary Proxy must provide sufficient disclosure for stockholders to understand the potential conflicts of interest that may have influenced the board's recommendation. We have identified the following specific interests that must be disclosed:

(a) Jonathan Hargrove (Chief Executive Officer). Mr. Hargrove holds approximately 4.2% of the outstanding shares of Cloudium common stock (7,736,400 shares). Pursuant to the Rollover Agreement dated January 22, 2024, Mr. Hargrove will roll over 50% of his shares (approximately 3,868,200 shares), representing approximately $142,814,544 in implied value at the per-share merger consideration, into equity interests in the surviving entity, thereby retaining a continuing economic interest in the post-merger company alongside Solara. The remaining 50% of his shares (approximately 3,868,200 shares) will be converted into the right to receive the cash merger consideration of $36.92 per share (approximately $142,814,544 in aggregate). In addition, Mr. Hargrove is subject to a Non-Competition and Non-Solicitation Agreement in connection with the merger, the terms and duration of which should be disclosed. Mr. Hargrove's dual role as CEO and rollover investor creates a potential conflict of interest that must be clearly disclosed.

(b) Sienna Whitfield (Chief Financial Officer). The Preliminary Proxy should disclose Ms. Whitfield's equity holdings in Cloudium (if any), the treatment of any outstanding equity awards (stock options, restricted stock units, performance stock units) held by Ms. Whitfield in the merger, any change-of-control provisions in her employment agreement (including any acceleration of vesting, severance payments, or other benefits triggered by the merger), and the fact that she is subject to a Non-Competition and Non-Solicitation Agreement in connection with the merger.

(c) Nadia Chowdhury (General Counsel and Corporate Secretary). The Preliminary Proxy should disclose Ms. Chowdhury's equity holdings in Cloudium (if any), the treatment of any outstanding equity awards held by Ms. Chowdhury in the merger, and any change-of-control provisions in her employment agreement (including any acceleration of vesting, severance payments, or other benefits triggered by the merger).

(d) Douglas Pemberton (Independent Board Chair). Mr. Pemberton has been appointed as the Stockholder Representative under the Stockholder Representative Agreement dated January 22, 2024. In this capacity, Mr. Pemberton will act as the representative of the former Cloudium stockholders in connection with post-closing matters, including the administration of the escrow, the resolution of indemnification claims, and related matters. The Preliminary Proxy should disclose this appointment, the scope of Mr. Pemberton's authority as Stockholder Representative, and any compensation he will receive in connection with this role. Mr. Pemberton's dual role as independent board chair (responsible for recommending the merger to stockholders) and Stockholder Representative (responsible for post-closing matters) should be clearly disclosed.

(e) Pinnacle Growth Ventures LLC (Evelyn Carmichael, Managing Member). Pinnacle holds approximately 11.6% of the outstanding shares of Cloudium common stock (21,367,200 shares). Pursuant to the Rollover Agreement dated January 22, 2024, Pinnacle will roll over 60% of its shares (approximately 12,820,320 shares), representing approximately $473,241,408 in implied value at the per-share merger consideration, into equity interests in the surviving entity. Evelyn Carmichael, the Managing Member of Pinnacle, holds two seats on the Cloudium board of directors. The Preliminary Proxy should clearly disclose Pinnacle's dual role as a significant stockholder rolling over a substantial portion of its equity into the surviving entity and as a board member (through Ms. Carmichael) responsible for recommending the merger to stockholders. This creates a potential conflict of interest that must be fully and clearly disclosed.

42. Change-of-Control Acceleration of Equity Awards. The Preliminary Proxy should disclose the treatment of all outstanding equity awards (stock options, restricted stock units, and performance stock units) held by Cloudium's directors and executive officers in connection with the merger, including (a) whether vesting will accelerate upon the closing of the merger (single-trigger or double-trigger), (b) the aggregate value of accelerated equity awards, and (c) the per-share exercise price or conversion ratio applicable to each category of award.

43. Golden Parachute Compensation. The Preliminary Proxy must include the tabular disclosure required by Item 402(t) of Regulation S-K and Rule 14a-21(c) under the Exchange Act (the "golden parachute" advisory vote disclosure), setting forth the compensation that each named executive officer of Cloudium may receive in connection with the merger, including cash severance, equity award acceleration, continued health and welfare benefits, and any tax gross-up or similar payments. The non-binding advisory vote on golden parachute compensation should be included as a separate proposal in the Proxy Statement.

44. Indemnification and D&O Insurance Tail. The Preliminary Proxy should disclose the provisions of the Merger Agreement relating to indemnification of, and maintenance of directors' and officers' liability insurance for, Cloudium's current and former directors and officers following the closing of the merger. Specifically, Section 6.9 of the Merger Agreement provides for the continuation of indemnification obligations and the purchase of a "tail" directors' and officers' liability insurance policy with a coverage period of not less than six years following the effective time of the merger, on terms no less favorable than those in effect on the date of the Merger Agreement. The cost, coverage amount, and any material terms of the tail policy should be disclosed.

IX. Rollover and Voting/Support Agreements

A. Rollover Agreements

45. Summary of Rollover Agreements. The Preliminary Proxy should include an accurate summary of the Rollover Agreements entered into as of January 22, 2024, by Jonathan Hargrove and Pinnacle Growth Ventures LLC, respectively, with Fund VI and Merger Sub. The summary should describe the material terms of each Rollover Agreement, including the number and percentage of shares subject to rollover, the rollover percentages, the form of equity interests to be received in the surviving entity, and any lock-up, transfer restrictions, or governance rights applicable to the rollover equity.

46. Specific Rollover Amounts. The Preliminary Proxy should disclose the specific rollover percentages and implied dollar amounts for each rollover stockholder:

• Jonathan Hargrove: Rolling over 50% of 7,736,400 shares (approximately 3,868,200 shares), representing approximately $142,814,544 in implied value at the per-share merger consideration.

• Pinnacle Growth Ventures LLC: Rolling over 60% of 21,367,200 shares (approximately 12,820,320 shares), representing approximately $473,241,408 in implied value at the per-share merger consideration.

• Total Rollover: Approximately $616,055,952 in aggregate implied value.

These figures should be verified against the executed Rollover Agreements and the Equity Commitment Letter.

47. Filing Status. The Rollover Agreements should be filed as exhibits to the Proxy Statement or as annexes to the Merger Agreement exhibit. Alternatively, they may be incorporated by reference to prior filings (e.g., the Form 8-K filed in connection with the execution of the Merger Agreement). We request that target's counsel confirm the filing status and that appropriate cross-references are included in the Preliminary Proxy.

B. Voting/Support Agreements

48. Summary of Voting/Support Agreements. The Preliminary Proxy should accurately describe the Voting and Support Agreements (collectively, the "Support Agreements") entered into as of January 22, 2024, by each of Jonathan Hargrove and Pinnacle Growth Ventures LLC with Fund VI. The Support Agreements require each of Hargrove and Pinnacle to, among other things, (a) vote all of their shares of Cloudium common stock in favor of the adoption of the Merger Agreement at the Special Meeting, (b) vote against any competing proposal or any other action that could reasonably be expected to prevent, delay, or impede the consummation of the merger, and (c) not transfer, sell, pledge, encumber, or otherwise dispose of their shares prior to the closing of the merger (subject to limited exceptions).

49. Aggregate Committed Shares. The Support Agreements cover shares representing approximately 15.8% of the outstanding shares of Cloudium common stock (comprising Hargrove's 4.2% and Pinnacle's 11.6%). This aggregate percentage should be clearly disclosed in the Preliminary Proxy, as it is material to stockholders' understanding of the likelihood of obtaining stockholder approval.

50. Transfer Restrictions and Voting Obligations. The Preliminary Proxy should describe the transfer restrictions and voting obligations contained in the Support Agreements in sufficient detail for stockholders to understand the nature and scope of the commitments made by Hargrove and Pinnacle.

X. Financing

A. Debt Financing

51. Debt Commitment Letter. The Preliminary Proxy should accurately describe the committed debt financing for the merger, as set forth in the Debt Commitment Letter dated January 22, 2024 (the "Debt Commitment Letter"), from Meridian Atlantic Bank, N.A. (as lead arranger and administrative agent; principal office at 383 Madison Avenue, New York, New York) and Ironclad Capital Markets LLC (as co-arranger; principal office at 200 West Street, New York, New York), addressed to Fund VI and Merger Sub. The material terms of the committed debt financing are as follows:

• Total Committed Amount: $4,240,000,000, comprising:

• Term Loan B: $3,740,000,000 principal amount; 7-year maturity; interest rate of SOFR plus 325 basis points.

• Revolving Credit Facility: $500,000,000 in commitments; 5-year maturity; interest rate of SOFR plus 275 basis points.

• Ticking Fee: 0.25% per annum on undrawn Term Loan B commitments, commencing 90 days after the signing date of the Merger Agreement (i.e., April 22, 2024).

• Revolving Credit Facility Commitment Fee: 0.375% per annum on undrawn revolving commitments.

We request that target's counsel verify that the foregoing terms are accurately reflected in the Preliminary Proxy and that no material terms have been omitted or misstated.

52. No Financing Condition. The Preliminary Proxy should clearly and prominently state that the availability of the debt financing is not a condition to the Buyer's obligation to consummate the merger under the Merger Agreement. This disclosure is critical and should appear in both the Summary Term Sheet and the detailed discussion of the merger, as it is material to stockholders' assessment of the certainty of closing.

53. Financing Cooperation Covenant. The Preliminary Proxy should verify disclosure of the financing cooperation covenant set forth in Section 6.14 of the Merger Agreement, which obligates Cloudium to use commercially reasonable efforts to cooperate with Fund VI in connection with the arrangement of the debt financing, including by providing financial information, making management available for presentations, facilitating the preparation of offering documents, and taking other customary actions.

54. Lenders' Counsel. The Preliminary Proxy need not identify lenders' counsel (Winthrop & Hale LLP; Christine Novak, Partner). However, we request that target's counsel verify that no incorrect counsel identification appears in the Preliminary Proxy (e.g., that Winthrop & Hale is not inadvertently named as counsel to Solara or as counsel to Cloudium).

B. Equity Financing

55. Equity Commitment Letter. The Preliminary Proxy should accurately describe the Equity Commitment Letter dated January 22, 2024, from Fund VI to Merger Sub, pursuant to which Fund VI has committed to contribute (or cause to be contributed) to Merger Sub, at or prior to the closing of the merger, an aggregate amount of $2,832,888,096 in cash (the "Equity Commitment"), to be used by Merger Sub to fund a portion of the aggregate merger consideration and the payment of related fees and expenses. We request that the Preliminary Proxy accurately state this amount and describe the conditions to Fund VI's obligation to fund the Equity Commitment.

56. Limited Guarantee. As noted in Section IV.D above, the Preliminary Proxy should disclose the Limited Guarantee from Solara Fund VI GP LLC for an aggregate amount of $246,000,000, comprising $221,000,000 in respect of the Company Termination Fee (or reverse termination fee, as applicable) and $25,000,000 in respect of enforcement costs.

C. Sources and Uses

57. Sources and Uses Table. If the Preliminary Proxy includes a sources-and-uses table (which is customary in proxy statements for leveraged transactions), we request that target's counsel verify that the table reconciles as follows:

Sources:

Uses:

We request that target's counsel verify the accuracy of each line item and confirm that the sources and uses balance.

58. Existing Debt Repayment. In connection with the existing debt repayment line item, the Preliminary Proxy should disclose that Cloudium's existing credit agreement (dated March 15, 2021, with Atlas Commercial Lending Corp. as administrative agent) includes a change-of-control mandatory prepayment provision that will require the payoff of the outstanding $620,000,000 term loan and $200,000,000 drawn revolving credit facility at or prior to the closing of the merger, for an aggregate repayment of $820,000,000. We request that target's counsel verify this disclosure and confirm that the aggregate repayment amount is accurately stated.

XI. Regulatory Approvals

59. HSR Act. The Preliminary Proxy should accurately describe the pre-merger notification filing made by the parties under the HSR Act. The HSR filing was made on February 9, 2024, and the initial 30-day waiting period expired on March 11, 2024, without the issuance of a Second Request by the Federal Trade Commission or the Antitrust Division of the Department of Justice. As of the date of the Preliminary Proxy, HSR clearance has been obtained. We note that, to the extent the Preliminary Proxy was filed before the expiration of the waiting period, the status of the HSR filing should be updated in the Definitive Proxy to reflect that clearance has been obtained.

60. UK CMA. The Preliminary Proxy should describe the merger control filing made with the UK Competition and Markets Authority. A Merger Notice Form was submitted on February 12, 2024 (CMA Case No. ME/7184/24), initiating a Phase 1 review. We note that CMA clearance was received on April 3, 2024, on an unconditional basis. As this post-dates the Preliminary Proxy, the CMA clearance should be reflected in the Definitive Proxy. In the interim, the Preliminary Proxy should accurately describe the status of the CMA review as of its filing date.

61. CFIUS. The Preliminary Proxy should address the Committee on Foreign Investment in the United States ("CFIUS") to the extent relevant. We understand that the parties determined not to submit a voluntary notice to CFIUS, based on an analysis concluding that the transaction does not present an identified national-security nexus. If the Preliminary Proxy references CFIUS, we request that this determination be accurately disclosed.

62. EU Merger Regulation. We understand that no filing under the EU Merger Regulation (Council Regulation (EC) No. 139/2004) is required, as Cloudium's EU revenues fall below the applicable jurisdictional thresholds. If the Preliminary Proxy references the EU Merger Regulation, this determination should be accurately disclosed.

63. [HIGH] No Ongoing Regulatory Uncertainty. We request that target's counsel confirm that the Definitive Proxy does not suggest any ongoing regulatory uncertainty with respect to the merger if, by the time of the Definitive Proxy filing, all required regulatory clearances have been obtained. Any language in the Preliminary Proxy describing the regulatory process as ongoing or uncertain should be updated in the Definitive Proxy to reflect the actual status of the regulatory clearances.

XII. Indemnification, Escrow, and R&W Insurance

A. Indemnification Provisions

64. Indemnification Framework. The Preliminary Proxy should accurately summarize the indemnification framework set forth in Article IX of the Merger Agreement. The key parameters of the indemnification framework are as follows:

• General Indemnification Cap: 15% of the aggregate deal value = $1,020,000,000.

• Basket/Deductible: 0.75% of the aggregate deal value = $51,000,000. The basket operates as a tipping basket (i.e., once the aggregate amount of indemnifiable losses exceeds $51,000,000, the indemnifying party is liable for the full amount of losses from the first dollar, not merely the excess above $51,000,000).

• De Minimis Threshold: Individual claims with losses below $500,000 are excluded from the calculation of the basket (i.e., such claims do not count toward the $51,000,000 threshold and are not subject to indemnification).

• Survival Period: Representations and warranties survive for 18 months post-closing (expiring on or about January 9, 2026, assuming a closing date of July 9, 2024). Indemnification claims must be asserted prior to the expiration of the survival period.

• Special Indemnities (Uncapped): The following categories of losses are not subject to the general indemnification cap or the basket: (i) fraud, (ii) willful breach of the Merger Agreement, (iii) losses arising under the tax indemnity provisions, and (iv) losses arising from specified litigation matters.

We request that target's counsel verify that the foregoing summary is accurately reflected in the Preliminary Proxy and that no material terms of the indemnification framework have been omitted or misstated.

B. Escrow Arrangement

65. Escrow Amount and Terms. The Preliminary Proxy should disclose the escrow arrangement established in connection with the merger. Pursuant to the Escrow Agreement (entered into concurrently with the closing), $544,000,000 (representing 8% of the aggregate deal value) will be deposited into escrow with Cobalt Trust Company (100 Wall Street, New York, New York 10005; Laura Ng, Vice President) as escrow agent. The escrow funds will be available to satisfy indemnification claims by Buyer under the Merger Agreement. The escrow release schedule is as follows:

• First Release: 50% of the escrow ($272,000,000) will be released to the former stockholders at 12 months post-closing (i.e., on or about July 9, 2025), less the amount of any pending or unresolved indemnification claims.

• Final Release: The remaining escrow balance will be released to the former stockholders at 18 months post-closing (i.e., on or about January 9, 2026), less the amount of any pending or unresolved indemnification claims.

Douglas Pemberton, in his capacity as Stockholder Representa

CALDERWOOD & HARKNESS LLP 599 Lexington Avenue New York, New York 10022
MEMORANDUM
CONFIDENTIAL — ATTORNEY WORK PRODUCT / PRIVILEGED
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I. Introduction and Purpose
Calderwood & Harkness LLP ("C&H"), as counsel to Solara Digital Infrastructure LP ("SDILP") and Solara Digital Infrastructure Fund VI LP ("Fund VI" or the "Buyer"), has reviewed the preliminary proxy statement on Schedule 14A (the "Preliminary Proxy" or the "Proxy Statement") filed by Cloudium Technologies plc ("Cloudium" or the "Company") with the U.S. Securities and Exchange Commission (the "SEC") on or about March 18, 2024. The Preliminary Proxy was prepared by Cloudium's outside legal counsel, Ridgeway Phelps & Sato LLP (Catherine Answorth, Partner, New York office; Alistair Fenn, Partner, London office), and relates to the special meeting of stockholders of Cloudium (the "Special Meeting") to be held for the purpose of approving and adopting the 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.
The purpose of this memorandum is to identify comments, corrections, and areas requiring additional or revised disclosure from the perspective of buyer's counsel, in order to ensure (a) the accuracy of the descriptions of the transaction, the Merger Agreement, and the related transaction documents contained in the Preliminary Proxy, (b) compliance with applicable SEC rules under Section 14(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), Rule 14a-9 thereunder, and Regulation M-A, and (c) the protection of Solara's interests in connection with the public disclosure of the merger and the related transaction documents. These comments are not intended to address the overall adequacy or completeness of the Preliminary Proxy from the perspective of the Company's disclosure obligations — that responsibility rests with the Company and its counsel — but rather to flag issues that are material to Solara's position as the acquiring party and that, if inaccurate, could give rise to liability, reputational risk, or complications in the consummation of the merger.
Under Section 6.3(a) of the Merger Agreement, Cloudium has covenanted that it will provide Solara and its counsel a reasonable opportunity to review and comment on the Proxy Statement and any amendments thereto prior to filing with the SEC, and that it will consider in good faith any comments provided by Solara and its counsel. Accordingly, the comments set forth herein should be compiled and transmitted to Ridgeway Phelps & Sato LLP (Catherine Answorth) in coordination with the deal team at the earliest practicable date. Target's counsel retains primary responsibility for the preparation, filing, and dissemination of the Proxy Statement, but C&H's review is intended to exercise Solara's contractual review rights and to ensure that the descriptions of Solara's obligations, the financing arrangements, and the buyer-side transaction documents are accurate and complete.
This memorandum should be read in conjunction with the following separate C&H memoranda, which address related but distinct compliance issues:
• Schedule 13E-3 Compliance Memorandum (dated March 20, 2024): addressing the going-private transaction aspects of the merger and the filing obligations under Rule 13e-3 and Schedule 13E-3.
• Section 14(a) Compliance Memorandum (dated April 10, 2024, forthcoming): addressing in greater detail the compliance of the Proxy Statement with Section 14(a) of the Exchange Act, Rule 14a-9, and related SEC guidance.
II. Executive Summary of Key Comments
We have organized our comments into the following categories, corresponding to the principal sections and topics of the Preliminary Proxy:
(A) Cover Letter and Summary Term Sheet
(B) Description of the Merger and the Merger Agreement
(C) Fairness Opinion
(D) Risk Factors
(E) Financial Information
(F) Interests of Directors and Officers
(G) Rollover and Voting/Support Agreements
(H) Financing
(I) Regulatory Approvals
(J) Indemnification, Escrow, and R&W Insurance
(K) Appraisal Rights
(L) Legal Descriptions and Defined Terms
(M) Exhibits and Annexes
Overall Assessment. The Preliminary Proxy is substantially complete and covers the principal elements of the transaction in a manner generally consistent with SEC requirements and current market practice for proxy statements in connection with going-private merger transactions. However, our review has identified several inaccuracies, omissions, and areas where additional precision is needed, as detailed in the sections that follow. These range from technical corrections (e.g., entity name inconsistencies, defined-term mismatches with the Merger Agreement) to substantive disclosure issues (e.g., incomplete description of the material adverse effect definition carveouts, potential mischaracterization of the scope of the fairness opinion, incomplete disclosure of certain director and officer interests).
Priority Comments. Comments that we consider to be of the highest priority are flagged with a [HIGH] designation throughout this memorandum. These high-priority comments are separately consolidated in Section XIX below for ease of reference and tracking.
III. Cover Letter and Summary Term Sheet Comments
A. Special Meeting Details
1. Meeting Date, Time, and Location. The Preliminary Proxy currently leaves the date, time, and location of the Special Meeting in brackets (i.e., "[●]"), which is appropriate for a preliminary proxy filing. We note for the record that the Special Meeting is expected to be held on or about May 20, 2024. For purposes of the Preliminary Proxy, these fields should remain designated as "to be determined." In the definitive proxy statement (the "Definitive Proxy"), these fields must be completed with the final date, time, and location as determined by the Cloudium board of directors. We further note, for internal tracking purposes only, that the Special Meeting ultimately occurred on May 20, 2024, with approximately 82.4% of shares voting in favor of adoption of the Merger Agreement, but this information is not relevant to the Preliminary Proxy and should not be included therein.
2. Record Date. The record date for the determination of stockholders entitled to notice of and to vote at the Special Meeting should be clearly stated in the Preliminary Proxy. We note that the record date appears to have been set by the Cloudium board, but the Preliminary Proxy is ambiguous as to whether the record date has been finalized or remains subject to confirmation. The record date should be verified for consistency with the resolutions adopted by the Cloudium board of directors authorizing the Special Meeting. If the record date has been set at the time of the Preliminary Proxy filing, it should be clearly disclosed; if not yet set, the Preliminary Proxy should clearly indicate that it will be included in the Definitive Proxy.
B. Summary of Merger Consideration
3. Per-Share Merger Consideration. The per-share merger consideration should be stated as approximately $36.92 per share in cash, without interest and less any applicable withholding taxes. This figure is derived from the aggregate equity value of $6,800,000,000 divided by 184,200,000 shares of Cloudium common stock outstanding as of the signing date of the Merger Agreement (January 22, 2024). We note that the Preliminary Proxy references the per-share consideration in multiple locations, and the figure should be verified for consistency throughout. In particular, we request that target's counsel confirm that the Preliminary Proxy accurately reflects the treasury-share adjustment (if any) and the rounding convention used to arrive at the headline aggregate equity value of $6,800,000,000. Any variance between the mathematically precise quotient ($6,800,000,000 ÷ 184,200,000 = $36.9163…) and the rounded per-share figure stated in the Merger Agreement and the Preliminary Proxy should be clearly explained or reconciled.
4. Treatment of Rollover Shares. The Preliminary Proxy should clearly state that the merger consideration is payable in cash, except for shares subject to the Rollover Agreements (as defined and described in Section IX below), which will be converted into equity interests in the surviving entity. We request that target's counsel confirm that this distinction is clearly and accurately presented in the Summary Term Sheet and in the body of the Preliminary Proxy, using language such as "cash, except for shares subject to the Rollover Agreements" or substantially similar formulation consistent with the Merger Agreement.
5. Aggregate Deal Value. The aggregate deal value of $6,800,000,000 should be consistently referenced throughout the Preliminary Proxy. We have identified at least two instances in the draft where different formulations are used (e.g., "approximately $6.8 billion" versus "$6,800,000,000"). While these are not materially inconsistent, best practice counsels in favor of consistent usage of the precise dollar figure throughout. In addition, we note that the implied enterprise value to last-twelve-months ("LTM") EBITDA multiple is approximately 16.8x, based on LTM EBITDA of $405,000,000 for the fiscal year ended September 30, 2023. If the Preliminary Proxy discusses valuation metrics or multiples in any section (including in the summary of the fairness opinion or the background of the merger), this multiple should be accurately disclosed and sourced.
C. Recommendation of the Board
6. Board Recommendation. The Preliminary Proxy should clearly state that the Cloudium board of directors (chaired by Douglas Pemberton, independent director) has unanimously determined that the Merger Agreement and the transactions contemplated thereby, including the merger, are fair to and in the best interests of Cloudium and its stockholders, and unanimously recommends that Cloudium stockholders vote "FOR" the proposal to adopt the Merger Agreement. We request confirmation that this language is present in the Summary Term Sheet and is consistent with the language of the board resolutions.
7. Reference to Fairness Opinion. The summary section should reference the fact that the Cloudium board received a fairness opinion from Veridian Partners LLC (Monica Pressler, Managing Director) on January 21, 2024, to the effect that, as of such date and based on and subject to the assumptions, qualifications, and limitations set forth therein, the per-share merger consideration to be received by the holders of Cloudium common stock (other than rollover stockholders and their affiliates) was fair, from a financial point of view, to such holders. This reference in the summary should cross-reference the more detailed discussion and the full text of the fairness opinion included elsewhere in the Proxy Statement.
IV. Description of the Merger and the Merger Agreement
A. Structure of the Merger
8. Reverse Triangular Merger. The Preliminary Proxy should accurately describe the merger structure as a reverse triangular merger in which Stratos Merger Sub Inc. will merge with and into Cloudium Technologies plc, with Cloudium surviving the merger as a wholly owned subsidiary of Solara Digital Infrastructure Fund VI LP. This description should be verified against the Merger Agreement (specifically, Article I) to ensure consistency. We note that the reverse triangular structure was selected, in part, to preserve the continuity of Cloudium's contracts and permits, and while it is not necessary to disclose the strategic rationale for the structure, the description itself must be precise.
9. Merger Sub Formation. The Preliminary Proxy should state that Merger Sub (Stratos Merger Sub Inc.) was incorporated on January 8, 2024, in the State of Delaware, under DE File No. 7923841, as a wholly owned subsidiary of Fund VI, formed solely for the purpose of effectuating the merger. Merger Sub has not conducted any business operations, has no assets other than nominal capitalization, and has no liabilities other than those incidental to its formation and the transactions contemplated by the Merger Agreement. We request that target's counsel verify that this description is accurately included in the Preliminary Proxy.
10. Governing Law. The Preliminary Proxy should identify that the merger will be effected under the Delaware General Corporation Law (the "DGCL"), as the reverse triangular merger is governed by Delaware law by virtue of the incorporation of Merger Sub and the election made in the Merger Agreement. We note that Cloudium itself is incorporated under the laws of England and Wales, and the Preliminary Proxy should address the interaction between Delaware merger law and English company law to the extent relevant (see also Section XIII below regarding appraisal rights).
11. Effective Time. The effective time of the merger should be described as the time at which the Certificate of Merger is duly filed with the Secretary of State of the State of Delaware (or such later time as may be agreed by the parties and specified in the Certificate of Merger). This description should be consistent with Section 1.3 of the Merger Agreement.
B. Merger Consideration and Treatment of Shares
12. Categories of Shares. The Preliminary Proxy should accurately and completely describe the treatment of each category of shares of Cloudium common stock in the merger. Specifically, the Proxy Statement should describe the following:
(i) Non-Rolling Stockholders. Each share of Cloudium common stock held by stockholders other than the rollover stockholders (Jonathan Hargrove and Pinnacle Growth Ventures LLC) will be converted, at the effective time of the merger, into the right to receive $36.92 per share in cash, without interest and less any applicable withholding taxes.
(ii) Rollover Shares. Shares subject to the Rollover Agreements will be treated as follows: (a) Jonathan Hargrove will roll over 50% of his 7,736,400 shares (i.e., 3,868,200 shares), representing approximately $142,814,544 in implied value at the per-share merger consideration, into equity interests in the surviving entity; and (b) Pinnacle Growth Ventures LLC will roll over 60% of its 21,367,200 shares (i.e., 12,820,320 shares), representing approximately $473,241,408 in implied value at the per-share merger consideration, into equity interests in the surviving entity. The remaining non-rolled shares held by Hargrove and Pinnacle will be converted into the right to receive the cash merger consideration on the same terms as all other non-rolling stockholders.
(iii) Dissenting Stockholders. Shares held by stockholders who properly exercise and do not withdraw their appraisal rights under Section 262 of the DGCL will not be converted into the right to receive the merger consideration, and such stockholders will instead be entitled to receive payment of the fair value of their shares as determined in accordance with DGCL § 262 (see Section XIII below).
13. Total Rollover Equity. The Preliminary Proxy should confirm that the total rollover equity amounts to approximately $616,055,952 in implied value (comprising Hargrove's approximately $142,814,544 and Pinnacle's approximately $473,241,408). This figure should be verified for consistency with the Rollover Agreements, the Equity Commitment Letter, and the sources-and-uses analysis.
14. Cash Consideration to Non-Rolling Stockholders. The Preliminary Proxy should verify and disclose that the total cash merger consideration payable to non-rolling stockholders is approximately $6,183,944,048 (i.e., $6,800,000,000 aggregate equity value minus approximately $616,055,952 in rollover equity). This figure should be reconciled with the Letter of Transmittal procedures and the paying agent arrangements.
C. No-Shop Provision and Fiduciary Out
15. [HIGH] No-Shop Provision. The Preliminary Proxy must accurately describe the no-shop provision contained in Section 6.4 of the Merger Agreement. The no-shop became effective as of the execution and delivery of the Merger Agreement on January 22, 2024. Subject to the fiduciary-out exception described below, the no-shop prohibits Cloudium and its subsidiaries, representatives, and advisors from, among other things, (a) soliciting, initiating, or knowingly encouraging or facilitating any inquiry, proposal, or offer that constitutes or could reasonably be expected to lead to an Acquisition Proposal (as defined in the Merger Agreement), (b) entering into, continuing, or participating in any discussions or negotiations with any third party regarding an Acquisition Proposal, (c) providing any non-public information or data to any third party in connection with an Acquisition Proposal, or (d) entering into any letter of intent, memorandum of understanding, merger agreement, acquisition agreement, or similar agreement with respect to an Acquisition Proposal. We request that target's counsel confirm that the description of the no-shop provision in the Preliminary Proxy is complete, accurate, and consistent with the terms of Section 6.4 of the Merger Agreement, and that no material terms or conditions have been omitted or misstated.
16. Fiduciary Out. The Preliminary Proxy should accurately describe the fiduciary-out exception, which permits the Cloudium board of directors to consider, and ultimately accept, an unsolicited Superior Proposal (as defined in the Merger Agreement) under specified conditions, including the requirement that the board determine in good faith, after consultation with its outside legal counsel and financial advisor, that the failure to take such action would be inconsistent with the directors' fiduciary duties under applicable law. The description should include the procedural requirements (e.g., notice periods, matching rights, and the obligation to negotiate in good faith with Solara before terminating the Merger Agreement in favor of a Superior Proposal). We request that these elements be verified against Section 6.4(c) of the Merger Agreement.
17. Termination Fees. The Preliminary Proxy should clearly and accurately disclose the following termination fees:
(a) Company Termination Fee: $221,000,000 (representing approximately 3.25% of the aggregate deal value), payable by Cloudium to Fund VI upon the termination of the Merger Agreement in specified circumstances, including (i) termination by Cloudium in order to accept a Superior Proposal, and (ii) termination by Fund VI following a change of recommendation by the Cloudium board.
(b) Reverse Termination Fee: $374,000,000 (representing approximately 5.5% of the aggregate deal value), payable by Fund VI to Cloudium upon the termination of the Merger Agreement in specified circumstances, including failure by Buyer to consummate the closing when required under the Merger Agreement (subject to the limited guarantee described in Section X.B below).
We request that these amounts and the circumstances triggering payment be verified against Sections 8.3 and 8.4 of the Merger Agreement.
D. Termination Provisions
18. Termination Triggers. The Preliminary Proxy should describe all termination triggers set forth in Article VIII of the Merger Agreement, including:
(a) Mutual written consent of the parties;
(b) Failure to obtain stockholder approval at the Special Meeting (or any adjournment or postponement thereof);
(c) Failure to consummate the merger by the outside date (initially June 30, 2024, as set forth in Section 8.1(b)(i) of the Merger Agreement), subject to automatic extension under specified circumstances;
(d) Issuance of a final, non-appealable order or injunction by a court of competent jurisdiction or governmental authority permanently enjoining or prohibiting the merger;
(e) Breach by any party of representations, warranties, covenants, or agreements that would result in the failure of the applicable closing conditions, subject to notice and cure periods;
(f) Termination by Cloudium in connection with a Superior Proposal (subject to payment of the Company Termination Fee); and
(g) Termination by Fund VI following a change of recommendation by the Cloudium board.
We request that the foregoing list be verified against the Merger Agreement and that the Preliminary Proxy accurately describes each termination right without omission.
19. Limited Guarantee. The Preliminary Proxy should disclose the Limited Guarantee, dated January 22, 2024, from Solara Fund VI GP LLC (the general partner of Fund VI) in favor of Cloudium. The Limited Guarantee guarantees the payment obligations of Fund VI in respect of the reverse termination fee and certain other liabilities, up to a maximum aggregate amount of $246,000,000, comprising the $221,000,000 reverse termination fee obligation (noting that the guarantee amount corresponds to the Company Termination Fee amount, not the Reverse Termination Fee amount, unless otherwise structured) plus $25,000,000 in respect of enforcement costs. We note a potential discrepancy: the limited guarantee amount of $246,000,000 ($221,000,000 + $25,000,000) should be reconciled with the reverse termination fee of $374,000,000. If the limited guarantee does not cover the full reverse termination fee, this distinction must be clearly disclosed. We request that target's counsel confirm the structure and confirm that the Preliminary Proxy accurately describes the scope and limitations of the Limited Guarantee.
E. Material Adverse Effect Definition
20. [HIGH] MAE Definition Carveouts. The description of the "Material Adverse Effect" definition (as defined in Section 1.1 of the Merger Agreement) in the Preliminary Proxy must accurately state all agreed-upon carveouts. Based on our review of the executed Merger Agreement, the MAE definition expressly carves out the following from the determination of whether a material adverse effect has occurred: (i) effects arising out of or relating to pandemics, epidemics, or public health emergencies (including COVID-19 and any variants thereof, and any governmental responses thereto), (ii) effects arising out of or relating to war, armed hostilities, terrorism, or military action, and (iii) effects arising out of or relating to changes in applicable law or the interpretation thereof. These are the three principal carved-out categories as negotiated by the parties. We request that target's counsel verify that the Preliminary Proxy accurately states these carveouts and does not (a) misstate additional carveouts beyond what is contained in the executed Merger Agreement, or (b) omit any agreed carveouts. Any discrepancy between the Preliminary Proxy and the Merger Agreement on this point could give rise to a material misstatement.
21. Cross-Reference to Internal Materials. For the purpose of verifying the accuracy of the MAE description, we cross-reference C&H's internal annotated redline of the MAE definition (prepared by Tiffany Rosenthal, dated December 22, 2023), which tracks the evolution of the MAE definition through the negotiation process. This internal document is not for production or disclosure but should be consulted to ensure consistency.
F. Representations and Warranties
22. Fair Summary. The Preliminary Proxy should provide a fair and balanced summary of the key representations and warranties made by each party in the Merger Agreement. Cloudium's representations and warranties are set forth in Article IV of the Merger Agreement and cover, among other things, corporate organization and standing, capitalization, authority and enforceability, financial statements, absence of undisclosed liabilities, compliance with law, intellectual property, material contracts, employee benefits, tax matters, environmental matters, insurance, and the absence of brokers' fees (other than Veridian Partners LLC). The representations and warranties of the Buyer and Merger Sub are set forth in Article V and cover, among other things, corporate organization and standing, authority and enforceability, sufficiency of funds, the absence of information provided by the Buyer that would cause the Proxy Statement to contain a material misstatement, and the absence of brokers' fees (other than Osprey Bancroft & Co.). We request that target's counsel verify that the summaries of both sets of representations and warranties are accurate, fairly balanced, and do not overstate or understate the scope of the representations.
23. Survival Period. The survival period for the representations and warranties is 18 months post-closing. Assuming a closing date of July 9, 2024, the representations and warranties would expire on or about January 9, 2026. This survival period should be disclosed in connection with the indemnification provisions discussed in Section XII below. We request that the Preliminary Proxy consistently reference this survival period where relevant.
G. Interim Operating Covenants
24. Section 6.1 Operating Restrictions. The Preliminary Proxy should fairly summarize the restrictions on Cloudium's conduct of business between signing and closing, as set forth in Section 6.1 of the Merger Agreement. These restrictions require Cloudium to conduct its business in the ordinary course of business, consistent with past practice, and include specific limitations on, among other things, capital expenditures (subject to specified thresholds), hiring of new employees above certain compensation levels, entry into or amendment of material contracts, incurrence of indebtedness, declarations or payment of dividends or distributions, issuance of equity securities, and dispositions of material assets, in each case subject to specified exceptions and to the requirement that Cloudium obtain the prior written consent of Fund VI for actions outside the ordinary course. We request that target's counsel verify that the summary is fair and accurate.
25. Waiver Letter. We note for internal purposes that, on April 29, 2024, the parties executed a waiver letter in respect of the $12,000,000 hosting agreement between Cloudium and a third-party provider, which otherwise would have required consent under Section 6.1. This waiver post-dates the Preliminary Proxy and need not be referenced therein. However, for purposes of the Definitive Proxy review, we note that the waiver may require disclosure to the extent it constitutes a material amendment or waiver of a covenant under the Merger Agreement.
H. Conditions to Closing
26. Material Closing Conditions. The Preliminary Proxy should accurately disclose all material conditions to the obligations of the parties to consummate the merger, as set forth in Article VII of the Merger Agreement. These conditions include:
(i) Stockholder approval — adoption of the Merger Agreement by the affirmative vote of the holders of a majority of the outstanding shares of Cloudium common stock entitled to vote thereon;
(ii) HSR Act clearance — expiration or early termination of the waiting period applicable to the merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act");
(iii) UK CMA clearance — clearance of the merger by the UK Competition and Markets Authority (the "CMA"), either by a decision not to refer the merger for a Phase 2 investigation or by unconditional clearance;
(iv) Absence of injunction — no order, injunction, or decree issued by any court of competent jurisdiction or governmental authority restraining, enjoining, or prohibiting the consummation of the merger shall be in effect;
(v) Accuracy of representations — the representations and warranties of each party shall be true and correct (subject to applicable materiality and Material Adverse Effect qualifiers) as of the closing date as though made on and as of such date (or, in the case of representations made as of a specific date, as of such date);
(vi) Compliance with covenants — each party shall have performed and complied in all material respects with its covenants and agreements under the Merger Agreement required to be performed or complied with prior to or at the closing; and
(vii) Delivery of closing deliverables — each party shall have delivered to the other parties all certificates, instruments, documents, and other deliverables required to be delivered at or prior to the closing.
We request that target's counsel confirm that all material closing conditions are accurately disclosed and that no conditions have been omitted or misstated.
V. Fairness Opinion
27. Full Text of Fairness Opinion. The Preliminary Proxy should include the full text of the fairness opinion delivered by Veridian Partners LLC to the Cloudium board of directors on January 21, 2024, either in the body of the Proxy Statement or as an annex thereto. Inclusion of the full text is customary and expected in a proxy statement for a going-private transaction. We request confirmation that the full text has been or will be included.
28. Identification of Veridian Partners. The Preliminary Proxy should correctly identify Veridian Partners LLC as the financial advisor that delivered the fairness opinion, including its principal office address (50 Rockefeller Plaza, New York, New York 10020) and the name of the responsible professional (Monica Pressler, Managing Director). We have noted one instance in the Preliminary Proxy where "Veridian Partners" is spelled as "Veridion Partners" — this typographical error should be corrected.
29. Scope, Assumptions, and Limitations. The Preliminary Proxy should accurately disclose the scope, assumptions, qualifications, and limitations of the fairness opinion, including, without limitation, Veridian Partners' reliance on publicly available information and information provided by Cloudium management, its assumption that the financial analyses and projections furnished by Cloudium management were reasonably prepared on a basis reflecting the best currently available estimates and judgments of management, and its disclaimers regarding the absence of any independent verification of such information. The customary limitations and disclaimers contained in the fairness opinion should be reproduced or fairly summarized.
30. [HIGH] No Benefit to Solara. The Preliminary Proxy must not suggest or imply that the fairness opinion delivered by Veridian Partners LLC was delivered for the benefit of Solara, Fund VI, Merger Sub, or any of their respective affiliates. The fairness opinion was delivered solely to the Cloudium board of directors for its use and benefit in connection with its evaluation of the merger and should not be relied upon by any other person or for any other purpose. We request that target's counsel confirm that the Preliminary Proxy contains appropriate language to this effect and does not contain any statement that could be construed as extending the scope or benefit of the fairness opinion beyond the Cloudium board.
31. Fees and Compensation. The Preliminary Proxy should disclose the fees payable to Veridian Partners LLC in connection with the engagement, including any fees contingent upon the consummation of the merger, any opinion fee, any transaction fee, and any expense reimbursement arrangements. Disclosure of the contingent nature of any fees is particularly important in the context of Section 14(a) and Schedule 13E-3 compliance.
32. Financial Analyses Summary. The Preliminary Proxy includes a summary of the financial analyses performed by Veridian Partners in connection with the delivery of its fairness opinion, including (a) a comparable public companies analysis, (b) a comparable transactions analysis, (c) a discounted cash flow analysis, and (d) a premiums paid analysis. We request that target's counsel confirm that these summaries are consistent with the materials presented by Veridian Partners to the Cloudium board and the underlying analyses, and that no material analysis has been omitted from the summary. Any material deviation between the summary in the Preliminary Proxy and the presentation materials should be identified and reconciled.
VI. Risk Factors
A. Transaction-Specific Risks
33. Comprehensive Risk Disclosure. The Preliminary Proxy should include risk factors that adequately address the following transaction-specific risks. We request that target's counsel verify that each of the following risk factors is adequately addressed in the Preliminary Proxy:
(a) Risk of Non-Consummation. The risk that the merger may not be consummated due to failure to obtain required regulatory approvals, failure to obtain stockholder approval, failure of one or more closing conditions, or other circumstances, and the potential adverse effects on Cloudium's business, stock price, and relationships with employees, customers, and suppliers if the merger is not consummated.
(b) Interim Period Risks. The risks associated with the pending period between the signing of the Merger Agreement (January 22, 2024) and the closing of the merger, during which Cloudium is subject to interim operating covenants that restrict the Company's flexibility to pursue business opportunities, make capital investments, or respond to competitive developments without the prior written consent of Fund VI.
(c) Third-Party Claims and Litigation. The risk of third-party claims or litigation challenging the merger, including potential stockholder class actions, appraisal proceedings, or regulatory challenges.
(d) Loss of Key Personnel and Relationships. The risk of loss of key employees, customers, or suppliers due to the announcement of the merger or uncertainty about the future direction of the Company under new ownership.
(e) Adequacy of Consideration. The risk that the per-share merger consideration of $36.92 per share may not fully reflect the long-term intrinsic value of Cloudium, particularly in light of the Company's growth trajectory, recurring revenue base, and market position in the cloud infrastructure sector.
(f) Appraisal Proceedings. The risk of appraisal proceedings under DGCL § 262, including the possibility that a court could determine that the fair value of Cloudium common stock exceeds the per-share merger consideration.
(g) Change-of-Control Contract Risks. The potential impact of the "change of control" triggered by the merger on key contracts. In particular, we note that the following material contracts contain change-of-control provisions that could be implicated by the merger:
• The Master SaaS Agreement with Aegis Federal Solutions Inc. (representing approximately $84,000,000 in annual recurring revenue), which contains a change-of-control provision permitting Aegis to terminate or renegotiate the agreement upon a change of control of Cloudium; and
• The Technology License Agreement with Helix Data Systems GmbH, which contains a change-of-control provision with similar termination or renegotiation rights.
The Preliminary Proxy should specifically identify these contracts and the potential impact of the change-of-control provisions on Cloudium's business and revenue, unless doing so is prohibited by confidentiality provisions in the contracts themselves (in which case, the risk should be described in general terms).
(h) Financing Risks. Although the Buyer's obligation to close the merger is not conditioned on obtaining financing (i.e., there is no financing condition), the Preliminary Proxy should describe the committed debt financing arrangements ($4,240,000,000 from Meridian Atlantic Bank, N.A. and Ironclad Capital Markets LLC) and the risks associated therewith, including the risk that the lenders may fail to fund and the potential consequences thereof.
B. General Risks
34. Staleness of General Risk Factors. We request that the general risk factors included in the Preliminary Proxy (i.e., risk factors relating to Cloudium's business, industry, and financial condition that are not specific to the merger) be reviewed for staleness or inapplicability in the context of a merger proxy. Risk factors that were included in Cloudium's most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q and that are incorporated by reference into the Preliminary Proxy should be reviewed to ensure that they remain current and are not misleading in the merger context.
35. No Cross-Contamination. We also request confirmation that there is no cross-contamination of risk factors from unrelated Cloudium business risks that could be misleading in the merger context. For example, risk factors relating to Cloudium's long-term growth prospects, competitive positioning, or product development pipeline may be appropriate in the context of an annual report but could be misleading in a merger proxy to the extent they suggest that stockholders face ongoing business risks that will not be borne by stockholders following the merger (since non-rolling stockholders will receive cash and will no longer hold equity interests in the Company).
VII. Financial Information
36. Consistency with Audited Financial Statements. All financial data presented in the Preliminary Proxy should be verified for consistency with Cloudium's audited consolidated financial statements for the fiscal year ended September 30, 2023, as audited by Harwell & Dobson LLP (engagement partner: Martin Chisholm). Any financial data sourced from unaudited interim financial statements or management estimates should be clearly identified as such.
37. LTM Revenue and EBITDA. The Preliminary Proxy references LTM revenue of $1,620,000,000 and LTM EBITDA of $405,000,000 in various locations. These figures should be verified for accuracy, and the source and measurement period should be clearly identified (i.e., the twelve-month period ended September 30, 2023, corresponding to Cloudium's most recently completed fiscal year). To the extent that the LTM period differs from the audited fiscal year (e.g., if an LTM period through December 31, 2023, is used in any context), the source and basis for the figures should be clearly identified.
38. Annual Recurring Revenue. If the Preliminary Proxy discloses Cloudium's annual recurring revenue ("ARR"), which we understand to have been approximately $1,740,000,000 as of December 31, 2023, the Preliminary Proxy should clearly identify the source of this figure, the date as of which it is measured, and the methodology used to calculate it. ARR is a non-GAAP metric and should be accompanied by appropriate cautionary disclosures.
39. Projections and Forward-Looking Information. To the extent that any projections or forward-looking financial information prepared by Cloudium management were provided to Veridian Partners LLC or to Osprey Bancroft & Co. (Solara's financial advisor; Damien Harlow, Managing Director) in connection with the transaction, and such projections are disclosed or summarized in the Preliminary Proxy, the disclosure must be accompanied by appropriate cautionary language and disclaimers as required by Item 1015 of Regulation M-A. In particular, the Preliminary Proxy should state that the projections were not prepared with a view toward public disclosure or compliance with published guidelines of the SEC or the American Institute of Certified Public Accountants, that they are inherently subject to significant uncertainty, and that actual results may differ materially from the projected results. The Preliminary Proxy should also state the purpose for which the projections were prepared (e.g., for use by the financial advisors in connection with their respective financial analyses) and the material assumptions underlying the projections.
40. Cross-Consistency of Financial Figures. We request that target's counsel verify the consistency of all financial figures as presented in the various sections of the Preliminary Proxy, including the narrative discussion of the background of the merger, the summary of the fairness opinion, the discussion of the Cloudium board's reasons for the merger, and any annexed financial tables or schedules. Any inconsistency between financial figures cited in different sections of the Preliminary Proxy should be identified and corrected.
VIII. Interests of Directors and Officers in the Merger
41. [HIGH] Differing Interests. This section of the Preliminary Proxy is among the most important from a disclosure perspective, as it must accurately and completely disclose all interests of Cloudium's directors and executive officers in the merger that differ from, or are in addition to, the interests of Cloudium's stockholders generally. Under Item 1014 of Regulation M-A and applicable SEC guidance, the Preliminary Proxy must provide sufficient disclosure for stockholders to understand the potential conflicts of interest that may have influenced the board's recommendation. We have identified the following specific interests that must be disclosed:
(a) Jonathan Hargrove (Chief Executive Officer). Mr. Hargrove holds approximately 4.2% of the outstanding shares of Cloudium common stock (7,736,400 shares). Pursuant to the Rollover Agreement dated January 22, 2024, Mr. Hargrove will roll over 50% of his shares (approximately 3,868,200 shares), representing approximately $142,814,544 in implied value at the per-share merger consideration, into equity interests in the surviving entity, thereby retaining a continuing economic interest in the post-merger company alongside Solara. The remaining 50% of his shares (approximately 3,868,200 shares) will be converted into the right to receive the cash merger consideration of $36.92 per share (approximately $142,814,544 in aggregate). In addition, Mr. Hargrove is subject to a Non-Competition and Non-Solicitation Agreement in connection with the merger, the terms and duration of which should be disclosed. Mr. Hargrove's dual role as CEO and rollover investor creates a potential conflict of interest that must be clearly disclosed.
(b) Sienna Whitfield (Chief Financial Officer). The Preliminary Proxy should disclose Ms. Whitfield's equity holdings in Cloudium (if any), the treatment of any outstanding equity awards (stock options, restricted stock units, performance stock units) held by Ms. Whitfield in the merger, any change-of-control provisions in her employment agreement (including any acceleration of vesting, severance payments, or other benefits triggered by the merger), and the fact that she is subject to a Non-Competition and Non-Solicitation Agreement in connection with the merger.
(c) Nadia Chowdhury (General Counsel and Corporate Secretary). The Preliminary Proxy should disclose Ms. Chowdhury's equity holdings in Cloudium (if any), the treatment of any outstanding equity awards held by Ms. Chowdhury in the merger, and any change-of-control provisions in her employment agreement (including any acceleration of vesting, severance payments, or other benefits triggered by the merger).
(d) Douglas Pemberton (Independent Board Chair). Mr. Pemberton has been appointed as the Stockholder Representative under the Stockholder Representative Agreement dated January 22, 2024. In this capacity, Mr. Pemberton will act as the representative of the former Cloudium stockholders in connection with post-closing matters, including the administration of the escrow, the resolution of indemnification claims, and related matters. The Preliminary Proxy should disclose this appointment, the scope of Mr. Pemberton's authority as Stockholder Representative, and any compensation he will receive in connection with this role. Mr. Pemberton's dual role as independent board chair (responsible for recommending the merger to stockholders) and Stockholder Representative (responsible for post-closing matters) should be clearly disclosed.
(e) Pinnacle Growth Ventures LLC (Evelyn Carmichael, Managing Member). Pinnacle holds approximately 11.6% of the outstanding shares of Cloudium common stock (21,367,200 shares). Pursuant to the Rollover Agreement dated January 22, 2024, Pinnacle will roll over 60% of its shares (approximately 12,820,320 shares), representing approximately $473,241,408 in implied value at the per-share merger consideration, into equity interests in the surviving entity. Evelyn Carmichael, the Managing Member of Pinnacle, holds two seats on the Cloudium board of directors. The Preliminary Proxy should clearly disclose Pinnacle's dual role as a significant stockholder rolling over a substantial portion of its equity into the surviving entity and as a board member (through Ms. Carmichael) responsible for recommending the merger to stockholders. This creates a potential conflict of interest that must be fully and clearly disclosed.
42. Change-of-Control Acceleration of Equity Awards. The Preliminary Proxy should disclose the treatment of all outstanding equity awards (stock options, restricted stock units, and performance stock units) held by Cloudium's directors and executive officers in connection with the merger, including (a) whether vesting will accelerate upon the closing of the merger (single-trigger or double-trigger), (b) the aggregate value of accelerated equity awards, and (c) the per-share exercise price or conversion ratio applicable to each category of award.
43. Golden Parachute Compensation. The Preliminary Proxy must include the tabular disclosure required by Item 402(t) of Regulation S-K and Rule 14a-21(c) under the Exchange Act (the "golden parachute" advisory vote disclosure), setting forth the compensation that each named executive officer of Cloudium may receive in connection with the merger, including cash severance, equity award acceleration, continued health and welfare benefits, and any tax gross-up or similar payments. The non-binding advisory vote on golden parachute compensation should be included as a separate proposal in the Proxy Statement.
44. Indemnification and D&O Insurance Tail. The Preliminary Proxy should disclose the provisions of the Merger Agreement relating to indemnification of, and maintenance of directors' and officers' liability insurance for, Cloudium's current and former directors and officers following the closing of the merger. Specifically, Section 6.9 of the Merger Agreement provides for the continuation of indemnification obligations and the purchase of a "tail" directors' and officers' liability insurance policy with a coverage period of not less than six years following the effective time of the merger, on terms no less favorable than those in effect on the date of the Merger Agreement. The cost, coverage amount, and any material terms of the tail policy should be disclosed.
IX. Rollover and Voting/Support Agreements
A. Rollover Agreements
45. Summary of Rollover Agreements. The Preliminary Proxy should include an accurate summary of the Rollover Agreements entered into as of January 22, 2024, by Jonathan Hargrove and Pinnacle Growth Ventures LLC, respectively, with Fund VI and Merger Sub. The summary should describe the material terms of each Rollover Agreement, including the number and percentage of shares subject to rollover, the rollover percentages, the form of equity interests to be received in the surviving entity, and any lock-up, transfer restrictions, or governance rights applicable to the rollover equity.
46. Specific Rollover Amounts. The Preliminary Proxy should disclose the specific rollover percentages and implied dollar amounts for each rollover stockholder:
• Jonathan Hargrove: Rolling over 50% of 7,736,400 shares (approximately 3,868,200 shares), representing approximately $142,814,544 in implied value at the per-share merger consideration.
• Pinnacle Growth Ventures LLC: Rolling over 60% of 21,367,200 shares (approximately 12,820,320 shares), representing approximately $473,241,408 in implied value at the per-share merger consideration.
• Total Rollover: Approximately $616,055,952 in aggregate implied value.
These figures should be verified against the executed Rollover Agreements and the Equity Commitment Letter.
47. Filing Status. The Rollover Agreements should be filed as exhibits to the Proxy Statement or as annexes to the Merger Agreement exhibit. Alternatively, they may be incorporated by reference to prior filings (e.g., the Form 8-K filed in connection with the execution of the Merger Agreement). We request that target's counsel confirm the filing status and that appropriate cross-references are included in the Preliminary Proxy.
B. Voting/Support Agreements
48. Summary of Voting/Support Agreements. The Preliminary Proxy should accurately describe the Voting and Support Agreements (collectively, the "Support Agreements") entered into as of January 22, 2024, by each of Jonathan Hargrove and Pinnacle Growth Ventures LLC with Fund VI. The Support Agreements require each of Hargrove and Pinnacle to, among other things, (a) vote all of their shares of Cloudium common stock in favor of the adoption of the Merger Agreement at the Special Meeting, (b) vote against any competing proposal or any other action that could reasonably be expected to prevent, delay, or impede the consummation of the merger, and (c) not transfer, sell, pledge, encumber, or otherwise dispose of their shares prior to the closing of the merger (subject to limited exceptions).
49. Aggregate Committed Shares. The Support Agreements cover shares representing approximately 15.8% of the outstanding shares of Cloudium common stock (comprising Hargrove's 4.2% and Pinnacle's 11.6%). This aggregate percentage should be clearly disclosed in the Preliminary Proxy, as it is material to stockholders' understanding of the likelihood of obtaining stockholder approval.
50. Transfer Restrictions and Voting Obligations. The Preliminary Proxy should describe the transfer restrictions and voting obligations contained in the Support Agreements in sufficient detail for stockholders to understand the nature and scope of the commitments made by Hargrove and Pinnacle.
X. Financing
A. Debt Financing
51. Debt Commitment Letter. The Preliminary Proxy should accurately describe the committed debt financing for the merger, as set forth in the Debt Commitment Letter dated January 22, 2024 (the "Debt Commitment Letter"), from Meridian Atlantic Bank, N.A. (as lead arranger and administrative agent; principal office at 383 Madison Avenue, New York, New York) and Ironclad Capital Markets LLC (as co-arranger; principal office at 200 West Street, New York, New York), addressed to Fund VI and Merger Sub. The material terms of the committed debt financing are as follows:
• Total Committed Amount: $4,240,000,000, comprising:
• Term Loan B: $3,740,000,000 principal amount; 7-year maturity; interest rate of SOFR plus 325 basis points.
• Revolving Credit Facility: $500,000,000 in commitments; 5-year maturity; interest rate of SOFR plus 275 basis points.
• Ticking Fee: 0.25% per annum on undrawn Term Loan B commitments, commencing 90 days after the signing date of the Merger Agreement (i.e., April 22, 2024).
• Revolving Credit Facility Commitment Fee: 0.375% per annum on undrawn revolving commitments.
We request that target's counsel verify that the foregoing terms are accurately reflected in the Preliminary Proxy and that no material terms have been omitted or misstated.
52. No Financing Condition. The Preliminary Proxy should clearly and prominently state that the availability of the debt financing is not a condition to the Buyer's obligation to consummate the merger under the Merger Agreement. This disclosure is critical and should appear in both the Summary Term Sheet and the detailed discussion of the merger, as it is material to stockholders' assessment of the certainty of closing.
53. Financing Cooperation Covenant. The Preliminary Proxy should verify disclosure of the financing cooperation covenant set forth in Section 6.14 of the Merger Agreement, which obligates Cloudium to use commercially reasonable efforts to cooperate with Fund VI in connection with the arrangement of the debt financing, including by providing financial information, making management available for presentations, facilitating the preparation of offering documents, and taking other customary actions.
54. Lenders' Counsel. The Preliminary Proxy need not identify lenders' counsel (Winthrop & Hale LLP; Christine Novak, Partner). However, we request that target's counsel verify that no incorrect counsel identification appears in the Preliminary Proxy (e.g., that Winthrop & Hale is not inadvertently named as counsel to Solara or as counsel to Cloudium).
B. Equity Financing
55. Equity Commitment Letter. The Preliminary Proxy should accurately describe the Equity Commitment Letter dated January 22, 2024, from Fund VI to Merger Sub, pursuant to which Fund VI has committed to contribute (or cause to be contributed) to Merger Sub, at or prior to the closing of the merger, an aggregate amount of $2,832,888,096 in cash (the "Equity Commitment"), to be used by Merger Sub to fund a portion of the aggregate merger consideration and the payment of related fees and expenses. We request that the Preliminary Proxy accurately state this amount and describe the conditions to Fund VI's obligation to fund the Equity Commitment.
56. Limited Guarantee. As noted in Section IV.D above, the Preliminary Proxy should disclose the Limited Guarantee from Solara Fund VI GP LLC for an aggregate amount of $246,000,000, comprising $221,000,000 in respect of the Company Termination Fee (or reverse termination fee, as applicable) and $25,000,000 in respect of enforcement costs.
C. Sources and Uses
57. Sources and Uses Table. If the Preliminary Proxy includes a sources-and-uses table (which is customary in proxy statements for leveraged transactions), we request that target's counsel verify that the table reconciles as follows:
Sources:
Uses:
We request that target's counsel verify the accuracy of each line item and confirm that the sources and uses balance.
58. Existing Debt Repayment. In connection with the existing debt repayment line item, the Preliminary Proxy should disclose that Cloudium's existing credit agreement (dated March 15, 2021, with Atlas Commercial Lending Corp. as administrative agent) includes a change-of-control mandatory prepayment provision that will require the payoff of the outstanding $620,000,000 term loan and $200,000,000 drawn revolving credit facility at or prior to the closing of the merger, for an aggregate repayment of $820,000,000. We request that target's counsel verify this disclosure and confirm that the aggregate repayment amount is accurately stated.
XI. Regulatory Approvals
59. HSR Act. The Preliminary Proxy should accurately describe the pre-merger notification filing made by the parties under the HSR Act. The HSR filing was made on February 9, 2024, and the initial 30-day waiting period expired on March 11, 2024, without the issuance of a Second Request by the Federal Trade Commission or the Antitrust Division of the Department of Justice. As of the date of the Preliminary Proxy, HSR clearance has been obtained. We note that, to the extent the Preliminary Proxy was filed before the expiration of the waiting period, the status of the HSR filing should be updated in the Definitive Proxy to reflect that clearance has been obtained.
60. UK CMA. The Preliminary Proxy should describe the merger control filing made with the UK Competition and Markets Authority. A Merger Notice Form was submitted on February 12, 2024 (CMA Case No. ME/7184/24), initiating a Phase 1 review. We note that CMA clearance was received on April 3, 2024, on an unconditional basis. As this post-dates the Preliminary Proxy, the CMA clearance should be reflected in the Definitive Proxy. In the interim, the Preliminary Proxy should accurately describe the status of the CMA review as of its filing date.
61. CFIUS. The Preliminary Proxy should address the Committee on Foreign Investment in the United States ("CFIUS") to the extent relevant. We understand that the parties determined not to submit a voluntary notice to CFIUS, based on an analysis concluding that the transaction does not present an identified national-security nexus. If the Preliminary Proxy references CFIUS, we request that this determination be accurately disclosed.
62. EU Merger Regulation. We understand that no filing under the EU Merger Regulation (Council Regulation (EC) No. 139/2004) is required, as Cloudium's EU revenues fall below the applicable jurisdictional thresholds. If the Preliminary Proxy references the EU Merger Regulation, this determination should be accurately disclosed.
63. [HIGH] No Ongoing Regulatory Uncertainty. We request that target's counsel confirm that the Definitive Proxy does not suggest any ongoing regulatory uncertainty with respect to the merger if, by the time of the Definitive Proxy filing, all required regulatory clearances have been obtained. Any language in the Preliminary Proxy describing the regulatory process as ongoing or uncertain should be updated in the Definitive Proxy to reflect the actual status of the regulatory clearances.
XII. Indemnification, Escrow, and R&W Insurance
A. Indemnification Provisions
64. Indemnification Framework. The Preliminary Proxy should accurately summarize the indemnification framework set forth in Article IX of the Merger Agreement. The key parameters of the indemnification framework are as follows:
• General Indemnification Cap: 15% of the aggregate deal value = $1,020,000,000.
• Basket/Deductible: 0.75% of the aggregate deal value = $51,000,000. The basket operates as a tipping basket (i.e., once the aggregate amount of indemnifiable losses exceeds $51,000,000, the indemnifying party is liable for the full amount of losses from the first dollar, not merely the excess above $51,000,000).
• De Minimis Threshold: Individual claims with losses below $500,000 are excluded from the calculation of the basket (i.e., such claims do not count toward the $51,000,000 threshold and are not subject to indemnification).
• Survival Period: Representations and warranties survive for 18 months post-closing (expiring on or about January 9, 2026, assuming a closing date of July 9, 2024). Indemnification claims must be asserted prior to the expiration of the survival period.
• Special Indemnities (Uncapped): The following categories of losses are not subject to the general indemnification cap or the basket: (i) fraud, (ii) willful breach of the Merger Agreement, (iii) losses arising under the tax indemnity provisions, and (iv) losses arising from specified litigation matters.
We request that target's counsel verify that the foregoing summary is accurately reflected in the Preliminary Proxy and that no material terms of the indemnification framework have been omitted or misstated.
B. Escrow Arrangement
65. Escrow Amount and Terms. The Preliminary Proxy should disclose the escrow arrangement established in connection with the merger. Pursuant to the Escrow Agreement (entered into concurrently with the closing), $544,000,000 (representing 8% of the aggregate deal value) will be deposited into escrow with Cobalt Trust Company (100 Wall Street, New York, New York 10005; Laura Ng, Vice President) as escrow agent. The escrow funds will be available to satisfy indemnification claims by Buyer under the Merger Agreement. The escrow release schedule is as follows:
• First Release: 50% of the escrow ($272,000,000) will be released to the former stockholders at 12 months post-closing (i.e., on or about July 9, 2025), less the amount of any pending or unresolved indemnification claims.
• Final Release: The remaining escrow balance will be released to the former stockholders at 18 months post-closing (i.e., on or about January 9, 2026), less the amount of any pending or unresolved indemnification claims.
Douglas Pemberton, in his capacity as Stockholder Representa

CALDERWOOD & HARKNESS LLP 599 Lexington Avenue New York, New York 10022

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