Contract analysis

I. Executive Summary The purpose of this memorandum is to analyze the most favored nation ("MFN") pricing provision as initially proposed in Section 7.4 of the first draft Master Services Agreement ("MSA") circulated on April 3, 2023, and as subsequently modified in the redline returned by Cedarpoint Systems Integration, Inc. ("Cedarpoint") on April 21, 2023 through its outside counsel, Whitfield Graves & Morrow LLP

1. Narrowing of the comparable customer definition — Cedarpoint proposes increasing the "comparable volume" threshold from ≥200 managed nodes to ≥300 managed nodes, which would dramatically reduce the pool of comparable customers and could render the MFN clause practically unenforceable.

2. Introduction of a mutual MFN concept — Cedarpoint proposes that Northgate Americas reciprocally warrant that it does not provide more favorable procurement terms to any other managed network services provider, a concept that is without precedent in comparable managed services transactions and would constrain Northgate Americas' procurement flexibility.

3. Adjustment to the pricing differential trigger — Cedarpoint proposes increasing the de minimis pricing differential threshold from >3% to >7%, which would permit Cedarpoint to maintain significantly above-market pricing before any remedial obligation arises.

4. Extension of credit and adjustment timelines — Cedarpoint proposes extending the retroactive credit period from 45 days to 90 days and the prospective adjustment period from 30 days to 60 days.

5. Limitations on audit scope — Cedarpoint proposes restricting MFN audits to a mutually agreed independent third-party auditor and limiting the audit scope to aggregate pricing data rather than per-unit pricing breakdowns. Overall Recommendation. We recommend that Northgate Americas maintain its position on the ≥200 managed nodes comparability threshold, the >3% pricing differential trigger, the 45-day retroactive c

II. Background and Contract Context A. Parties and Transaction Overview Customer/Licensee. Northgate Americas, Inc. is a Delaware corporation with its principal offices located at 1700 Market Street, Suite 2400, Philadelphia, Pennsylvania 19103 (EIN 84-3291067). Northgate Americas is a wholly owned subsidiary of Northgate Telecommunications PLC, a United Kingdom public limited company listed on the London Stock Excha

III. Calderwood & Harkness First Draft MFN Provision (Section 7.4) This section sets forth the key elements of the MFN pricing provision as drafted by Calderwood & Harkness in Section 7.4 of the first draft MSA circulated on April 3, 2023. The first draft provision was prepared to reflect market-standard MFN protections appropriate for a managed network services engagement of this scale and term length. Each element

IV. Analysis of Cedarpoint's April 21, 2023 Redline Proposals On April 21, 2023, Cedarpoint's counsel at Whitfield Graves & Morrow LLP transmitted a redline of the first draft MSA containing numerous proposed modifications across the agreement. This section analyzes the six principal changes proposed to the MFN provision in Section 7.4 and provides recommendations for each. A. Narrowing of "Comparable Volume" Definit

V. Interaction with Other MSA Provisions The MFN pricing clause does not operate in isolation. It interacts with several other provisions of the MSA, and the second draft should include appropriate clarifying language to ensure that these interactions are properly addressed. This section identifies four key areas of interaction and provides recommendations for clarifying the relationship between the MFN clause and ea

VI. Market Comparison and Precedent Analysis To provide context for the negotiating positions discussed in this memorandum, we conducted a review of comparable MFN provisions in managed network services and SD-WAN agreements. This review draws on Calderwood & Harkness's precedent database of negotiated technology and managed services agreements, supplemented by publicly available market data from industry publication

VII. Recommended Revisions for Second Draft (May 5, 2023) Based on the analysis set forth in this memorandum, we recommend the following revisions for incorporation into the second draft MSA to be circulated on May 5, 2023. These recommendations are organized by topic area and include both our primary position and, where appropriate, potential fallback positions. A. Comparable Volume Threshold Recommendation: Maintai

VIII. Risk Assessment While the MFN provision as recommended in this memorandum provides robust and market-standard pricing protection for Northgate Americas, several residual risks warrant acknowledgment and monitoring. A. Enforcement Risk The primary enforcement risk relates to the practical difficulty of obtaining sufficiently granular pricing data from Cedarpoint's other customer contracts during an MFN audit. Ev