What does a platform investor pay if it fails to close?
Before closing, Applied Digital may not solicit or discuss a competing transaction, and must tell Macquarie about any approach. If Macquarie breaches, or fails to close once Applied Digital is ready, Applied Digital may terminate and Macquarie pays an $11.25m termination fee as liquidated damages. The fee is Applied Digital’s sole remedy against Macquarie, though it may seek specific performance before terminating. It cannot have both. For in-house teams: a reverse termination fee caps the investor’s exposure, so the sponsor should weigh it against the cost of a failed closing.
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What the filed contracts say
Contract
What the filed wording says
Macquarie–Applied Digital unit purchase agreement
Before closing the sponsor may not solicit or discuss a competing deal, and must tell the investor about any approach.
Macquarie–Applied Digital unit purchase agreement
If the investor breaches or fails to close when the sponsor is ready, it pays an $11.25m termination fee as liquidated damages.
Macquarie–Applied Digital unit purchase agreement
The fee is the sponsor’s sole remedy against the investor, subject to specific performance before termination.
Macquarie–Applied Digital unit purchase agreement
The sponsor cannot have both specific performance and the fee.
The filed wording
5.15 No Shop. During the Interim Period, the Issuer and APLD shall not, and shall cause their Affiliates and its and their respective Representatives not to, directly or indirectly (i) solicit, initiate or knowingly encourage, or knowingly take other action intended to facilitate, any Competing Transaction or any inquiries or the making of any proposal that constitutes or would reasonably be expected to lead to a Competing Transaction or (ii) enter into, continue or otherwise participate in any discussions with respect to pricing or negotiations regarding, or furnish to any Person any non-public information with respect to, any Competing Transaction. During the Interim Period, the Issuer and APLD shall promptly notify the Purchaser in writing if any Person makes any proposal, offer, inquiry or contact with respect to any Competing Transaction and shall provide the Purchaser with the material terms thereof.
Macquarie preferred equity in Applied Digital’s HPC platform: amended and restated unit purchase agreement (up to $450m), section 5.15 · Applied Digital 8-K, Exhibit 10.1
Each extract is quoted from the contract as filed with the SEC, checked against the filed text when it was added; “…” marks words left out. Filers redact commercial terms, so a [***] or [*] is the filer's, not ours. The summaries describe the wording, not how a court would read it, and each contract's defined terms and other clauses can change the effect. General information drawn from public filings. It is not legal advice on any transaction, and using this page does not create a lawyer-client relationship. Views are personal.
InfraCompute Weekly
The week in compute finance, read from the filings.
Deals, terms and the clauses behind them, for the people financing data centres, GPU clouds and the power behind them. By Randeep Bubbra.
