CALDERWOOD & HARKNESS LLP 599 Lexington Avenue New York, NY 10022 Tel: (212) 558-4000
Fax: (212) 558-3588
www.calderwoodharkness.com
Matter No. 1041-00003
April 29, 2024
VIA EMAIL AND OVERNIGHT COURIER
Cloudium Technologies plc 45 Broadwick Street London W1F 0DB United Kingdom
Attention: Nadia Chowdhury, General Counsel
With a copy to:
Cloudium Technologies plc — US Headquarters 600 Townsend Street, Suite 800 San Francisco, CA 94103
cc: Ridgeway Phelps & Sato LLP Attention: Catherine Answorth 375 Park Avenue New York, NY 10152
Re: Waiver of Certain Pre-Closing Covenants under the Agreement and Plan of Merger, dated as of January 22, 2024 (the "Merger Agreement"), among Cloudium Technologies plc, a public limited company incorporated under the laws of England and Wales (the "Company"), Stratos Merger Sub Inc., a Delaware corporation ("Merger Sub"), and Solara Digital Infrastructure Fund VI LP, a Delaware limited partnership ("Parent")
Dear Ms. Chowdhury:
We write on behalf of our client, Solara Digital Infrastructure Fund VI LP, a Delaware limited partnership ("Parent"), in connection with the above-referenced Merger Agreement. The purpose of this letter agreement (this "Letter Agreement") is to set forth the terms and conditions upon which Parent is willing to grant, and hereby does grant, a limited waiver of certain interim operating covenants set forth in the Merger Agreement, as more fully described below.
1. Recitals and Background
A. The Company, Merger Sub, and Parent entered into that certain Agreement and Plan of Merger, dated as of January 22, 2024 (as may be amended, supplemented, or otherwise modified from time to time in accordance with its terms, the "Merger Agreement"), pursuant to which, among other things, Merger Sub will merge with and into the Company in a reverse triangular merger (the "Merger"), with the Company surviving the Merger as a wholly owned subsidiary of Parent.
B. Pursuant to the terms and conditions of the Merger Agreement, the aggregate merger consideration payable in connection with the Merger is approximately Six Billion Eight Hundred Million Dollars ($6,800,000,000), representing a per-share merger consideration of Thirty-Six Dollars and Ninety-Two Cents ($36.92) per share of the Company's ordinary shares (the "Merger Consideration"), subject to such adjustments and other terms as are set forth in the Merger Agreement.
C. Section 6.1 of the Merger Agreement sets forth certain interim operating covenants that restrict the Company's conduct of business during the period between the date of the Merger Agreement and the earlier of the Effective Time or the termination of the Merger Agreement in accordance with its terms (the "Interim Period"). Among other restrictions, Section 6.1 provides that, during the Interim Period, the Company shall, and shall cause each of its subsidiaries to, operate the business in the ordinary course of business consistent with past practice and, except as expressly contemplated by the Merger Agreement, shall not take, or agree or commit to take, certain specified actions without the prior written consent of Parent (which consent, as set forth in the Merger Agreement, shall not be unreasonably withheld, conditioned, or delayed).
D. In particular, Section 6.1(b)(xii) of the Merger Agreement requires that the Company obtain Parent's prior written consent before entering into, amending, or modifying any contract that (i) involves aggregate payments by the Company or any of its subsidiaries in excess of Ten Million Dollars ($10,000,000), (ii) has a term exceeding twenty-four (24) months that is not cancelable without penalty on not more than ninety (90) days' notice, or (iii) is otherwise outside the ordinary course of business consistent with past practice, in each case other than contracts of a type and on terms described in Section 6.1(b)(xii) of the Company Disclosure Letter.
E. By letter dated April 22, 2024, the Company, acting through Nadia Chowdhury, General Counsel of the Company, and through its outside counsel, Ridgeway Phelps & Sato LLP, acting on the Company's behalf through Catherine Answorth, partner, formally requested Parent's consent under Section 6.1(b)(xii) of the Merger Agreement for the Company to enter into a hosting and cloud infrastructure services agreement (the "Proposed Hosting Agreement") with a third-party hosting services provider identified therein, in connection with the Company's ongoing cloud-infrastructure operations. In connection with such request, the Company provided to Parent and its advisors a summary term sheet setting forth the material terms and conditions of the Proposed Hosting Agreement and a substantially final draft of the Proposed Hosting Agreement.
F. The Proposed Hosting Agreement provides for hosting and cloud infrastructure services to be provided to the Company or one of its subsidiaries, with an aggregate financial commitment by the Company of Twelve Million Dollars ($12,000,000) over the term thereof. The Company has represented that the Proposed Hosting Agreement is necessary for the Company's continued cloud-infrastructure operations and is consistent with the Company's existing capital expenditure budget and operational requirements.
G. Parent has reviewed the summary term sheet and substantially final draft of the Proposed Hosting Agreement provided by the Company and has consulted with its financial and legal advisors with respect thereto. After due consideration, Parent has determined that granting the limited waiver described herein is consistent with Parent's interests and the successful consummation of the transactions contemplated by the Merger Agreement, and Parent is willing to grant such waiver on the terms and subject to the conditions set forth in this Letter Agreement.
2. Defined Terms
Capitalized terms used but not otherwise defined in this Letter Agreement shall have the respective meanings ascribed to such terms in the Merger Agreement. In addition, for purposes of this Letter Agreement, the following terms shall have the meanings set forth below:
"Company" means Cloudium Technologies plc, a public limited company incorporated under the laws of England and Wales, company number 09781234.
"Letter Agreement" means this letter agreement, dated as of April 29, 2024, including any exhibits or schedules hereto.
"Merger Agreement" means the Agreement and Plan of Merger, dated as of January 22, 2024, among the Company, Merger Sub, and Parent, as may be amended, supplemented, or otherwise modified from time to time in accordance with its terms.
"Merger Sub" means Stratos Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of Parent.
"Parent" means Solara Digital Infrastructure Fund VI LP, a Delaware limited partnership.
"Proposed Hosting Agreement" means the hosting and cloud infrastructure services agreement described in the Company's waiver request letter dated April 22, 2024, and the summary term sheet and substantially final draft agreement accompanying such request, by and between the Company (or one of its subsidiaries) and the counterparty identified therein, with an aggregate contract value not to exceed Twelve Million Dollars ($12,000,000).
3. Waiver
Subject to the terms and conditions of this Letter Agreement, Parent hereby waives the requirement under Section 6.1(b)(xii) of the Merger Agreement (and, to the extent applicable, any other provision of Section 6.1 of the Merger Agreement that would otherwise require Parent's prior written consent in connection with the Company's entry into the Proposed Hosting Agreement) that the Company obtain Parent's prior written consent before entering into the Proposed Hosting Agreement.
This waiver is limited solely to the Company's (or its applicable subsidiary's) entry into the Proposed Hosting Agreement on terms and conditions that are substantially consistent with the summary term sheet and substantially final draft agreement provided to Parent and its advisors on or about April 22, 2024. Without limiting the foregoing, this waiver is granted subject to and conditioned upon each of the following parameters being satisfied:
(a) Aggregate Financial Commitment. The aggregate financial commitment of the Company and its subsidiaries under the Proposed Hosting Agreement shall not exceed Twelve Million Dollars ($12,000,000) in the aggregate over the full term thereof, inclusive of all fees, expenses, service charges, and other amounts payable by the Company or any of its subsidiaries thereunder.
(b) Term. The initial term of the Proposed Hosting Agreement shall not exceed thirty-six (36) months from the effective date thereof (or such other term as was described in the materials provided to Parent on or about April 22, 2024), and the Proposed Hosting Agreement shall not contain any automatic renewal provision extending the term beyond such thirty-six (36) month period without the Company's or its subsidiary's affirmative election.
(c) Counterparty. The counterparty to the Proposed Hosting Agreement shall be the third-party hosting services provider identified in the Company's waiver request letter dated April 22, 2024, and the summary term sheet and draft agreement provided in connection therewith. No assignment or delegation of the counterparty's obligations under the Proposed Hosting Agreement to any other person shall be permitted without Parent's prior written consent.
(d) Absence of Non-Standard Provisions. The Proposed Hosting Agreement, as executed, shall not contain any (i) change of control termination right (whether exercisable by the Company, its subsidiary, or the counterparty), (ii) exclusivity obligation restricting the Company's or any of its subsidiaries' ability to engage alternative hosting or cloud infrastructure services providers, (iii) non-compete or non-solicitation provision, (iv) most-favored-nation pricing provision, or (v) any other material non-standard provision or term not described in, or substantially consistent with, the materials provided to Parent on or about April 22, 2024.
This waiver shall become effective upon the execution and delivery of the Proposed Hosting Agreement by the Company or its applicable subsidiary and the counterparty thereto; provided, however, that such execution and delivery shall occur no later than thirty (30) days following the date of this Letter Agreement (i.e., no later than May 29, 2024). In the event that the Proposed Hosting Agreement is not executed and delivered by such date, this waiver shall automatically terminate and be of no further force or effect, and the Company shall be required to submit a new waiver request in accordance with the terms of the Merger Agreement if it thereafter wishes to enter into the Proposed Hosting Agreement or any similar agreement.
4. Limitations of Waiver
The waiver set forth in Section 3 of this Letter Agreement is strictly limited to the specific matter described herein — namely, the Company's entry into the Proposed Hosting Agreement on the terms and subject to the conditions described above — and shall not be construed as, or deemed to constitute, a waiver of:
(a) any other provision of Section 6.1 of the Merger Agreement, whether or not related to the subject matter of the Proposed Hosting Agreement, including without limitation any other subsection of Section 6.1(b) or any provision of Section 6.1(a) or Section 6.1(c) of the Merger Agreement;
(b) Parent's right to withhold or grant consent with respect to any other action, transaction, or matter requiring Parent's prior written consent under the Merger Agreement, whether under Section 6.1 or any other section thereof;
(c) any representation, warranty, covenant (other than as expressly waived herein), condition to closing, indemnification obligation, termination right, or any other term or provision of the Merger Agreement;
(d) any right, remedy, or claim of Parent, Merger Sub, or any of their respective affiliates under the Merger Agreement, at law, or in equity, with respect to any breach by the Company of any provision of the Merger Agreement (other than solely with respect to the limited waiver expressly granted herein); or
(e) any right of Parent to receive the full benefit of all representations, warranties, covenants, and agreements of the Company set forth in the Merger Agreement, as such provisions may relate to any matter other than the Proposed Hosting Agreement.
Nothing in this Letter Agreement shall constitute, or shall be deemed or construed to constitute, a course of dealing between Parent and the Company, or shall establish or be deemed to establish any custom, practice, or precedent with respect to the granting of waivers or consents under the Merger Agreement. The granting of this waiver shall not obligate Parent to grant any future waiver or consent, whether with respect to a similar matter or otherwise, and each future request for a waiver or consent under the Merger Agreement shall be evaluated by Parent on its own merits and in Parent's sole discretion (subject to any applicable standard set forth in the Merger Agreement).
Except as expressly set forth in this Letter Agreement, all terms, conditions, representations, warranties, covenants, and agreements contained in the Merger Agreement shall remain in full force and effect, unmodified, and are hereby ratified and confirmed in all respects.
5. Representations and Delivery of Executed Agreement
The Company hereby represents and warrants to Parent that the summary of the material terms and conditions of the Proposed Hosting Agreement previously provided by the Company to Parent and its counsel, Calderwood & Harkness LLP, including the summary term sheet dated on or about April 22, 2024, and the substantially final draft of the Proposed Hosting Agreement, is true, complete, and accurate in all material respects and does not omit any material term or condition that would be reasonably expected to be material to Parent's evaluation of the Proposed Hosting Agreement or the waiver request.
The Company further agrees that, promptly (and in any event within five (5) business days) following the execution and delivery of the Proposed Hosting Agreement by the Company or its applicable subsidiary and the counterparty thereto, the Company shall deliver (or cause to be delivered) to Parent, through Calderwood & Harkness LLP, a fully executed copy of the Proposed Hosting Agreement (together with all exhibits, schedules, annexes, and side letters, if any, entered into in connection therewith). In the event that the executed Proposed Hosting Agreement differs in any material respect from the summary term sheet and draft agreement previously provided to Parent, the Company shall promptly notify Parent in writing of any such differences, and Parent reserves the right to withdraw this waiver if any such differences are adverse to the interests of Parent or inconsistent with the terms upon which this waiver was granted.
6. Miscellaneous Provisions
6.1 Governing Law. This Letter Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. The parties hereto irrevocably consent to the jurisdiction and venue provisions set forth in Section 9.6 of the Merger Agreement with respect to any disputes arising out of or relating to this Letter Agreement, and such provisions are hereby incorporated by reference mutatis mutandis.
6.2 Counterparts. This Letter Agreement may be executed in one or more counterparts, each of which when so executed shall be deemed to be an original, and all of which taken together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Letter Agreement by facsimile, portable document format (.pdf), or other electronic transmission (including via Brightwater Software or similar electronic signature platform) shall be effective as delivery of a manually executed counterpart of this Letter Agreement.
6.3 Amendment and Modification. This Letter Agreement may not be amended, modified, supplemented, or waived except by a written instrument duly executed and delivered by each of Parent and the Company. No failure or delay by any party in exercising any right, power, or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power, or privilege.
6.4 Entire Agreement. This Letter Agreement, together with the Merger Agreement and the other transaction documents referenced therein (including the Company Disclosure Letter and any other ancillary agreements and documents delivered in connection therewith), constitutes the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes all prior agreements, understandings, negotiations, and discussions, whether oral or written, among the parties with respect to such subject matter. There are no representations, warranties, covenants, or agreements among the parties relating to the subject matter hereof other than those expressly set forth or referred to herein or in the Merger Agreement.
6.5 No Third-Party Beneficiaries. This Letter Agreement is entered into for the sole benefit of the parties hereto and their respective successors and permitted assigns, and nothing herein, express or implied, is intended to or shall confer upon any other person or entity (including any employee, creditor, stockholder, or equity holder of any party hereto) any legal or equitable right, benefit, remedy, or claim of any nature whatsoever under or by reason of this Letter Agreement.
7. Request for Countersignature
If the foregoing accurately reflects the understanding and agreement of the Company with respect to the matters set forth herein, please so indicate by executing and delivering the enclosed counterpart signature page of this Letter Agreement and returning a copy thereof to Calderwood & Harkness LLP, 599 Lexington Avenue, New York, NY 10022, Attention: Harrison Wexford (hwexford@calderwoodharkness.com), on or before May 6, 2024.
We trust the foregoing is satisfactory. Please do not hesitate to contact the undersigned if you have any questions regarding this Letter Agreement or any other matter relating to the transaction.
Very truly yours,
SOLARA DIGITAL INFRASTRUCTURE FUND VI LP
By: Solara Fund VI GP LLC, its general partner
By: ________
Name: Marcus Elliston
Title: Authorized Signatory
Date: April 29, 2024
Address for Notices:
Solara Digital Infrastructure Fund VI LP c/o Solara Fund VI GP LLC 1200 Market Street, Suite 3400 Wilmington, DE 19801
Attention: Marcus Elliston
With a copy (which shall not constitute notice) to:
Calderwood & Harkness LLP 599 Lexington Avenue New York, NY 10022
Attention: Harrison Wexford
Email: hwexford@calderwoodharkness.com
COUNTERSIGNATURE PAGE
ACKNOWLEDGED AND AGREED as of the date set forth below:
CLOUDIUM TECHNOLOGIES PLC
By: ________
Name: Jonathan Hargrove
Title: Chief Executive Officer
Date: ________
Address for Notices:
Cloudium Technologies plc 45 Broadwick Street London W1F 0DB United Kingdom
Attention: Nadia Chowdhury, General Counsel
With a copy to:
Cloudium Technologies plc — US Headquarters 600 Townsend Street, Suite 800 San Francisco, CA 94103
With a copy (which shall not constitute notice) to:
Ridgeway Phelps & Sato LLP 375 Park Avenue New York, NY 10152
Attention: Catherine Answorth
Prepared by: Calderwood & Harkness LLP Harrison Wexford, Responsible Partner Tiffany Rosenthal, Lead Associate Matter No. 1041-00003