Contract analysis

I. Executive Summary and Purpose This memorandum provides an internal analysis of the "Material Adverse Effect" definition (the "MAE Definition") as drafted in Section 1.1 of the initial draft Agreement and Plan of Merger (the "Merger Agreement") circulated to Ridgeway Phelps & Sato LLP, counsel to Cloudium Technologies plc ("Cloudium" or the "Company"), on December 1, 2023. The purpose of this memorandum is to equip

II. Text of the Proposed "Material Adverse Effect" Definition Set forth below is the complete text of the MAE Definition as drafted in Section 1.1 of the December 1, 2023 draft of the Merger Agreement, together with clause-by-clause annotations. Annotations appear in italicized text following the relevant clause and are identified by the prefix "[Annotation]." A clean copy of the full definition with margin annotatio

III. Market Precedent Comparison A. Methodology To benchmark the proposed MAE Definition against current market practice, we reviewed the MAE definitions in twelve (12) signed merger agreements from 2022–2023 involving large-cap enterprise software and SaaS acquisitions with enterprise values exceeding $3 billion. All agreements are publicly filed on SEC EDGAR. Supplemental data was drawn from proprietary deal databa

1. Universal carveouts. All 12 precedent transactions include carveouts for pandemics, war/terrorism, changes in law, stock-price changes, projection misses, transaction effects, and buyer-directed actions. The C&H draft is consistent with market on all of these dimensions.

2. Cyberattack placement. Nine of 12 precedent transactions include cyberattack within the war/terrorism carveout (as does the C&H draft); the remaining 3 have a standalone cyberattack carveout. Two of the 9 transactions that include cyberattack within the war/terrorism carveout added a qualifier excluding targeted cyberattacks on the company specifically — a more buyer-favorable formulation that we recommend Solara

4. Disproportionate-impact bring-back. All 12 precedent transactions include a disproportionate-impact bring-back for the general economic, industry, pandemic, war/terrorism, and changes-in-law carveouts. The C&H draft is consistent. However, only 2 of 12 include the "and geographies" language in the comparator group. The C&H draft's inclusion of "and geographies" is a buyer-favorable feature.

5. Missing carveouts. Two of 12 precedent transactions include a separate natural disaster / force majeure carveout, which the C&H draft does not include. Four of 12 include a separate sanctions / trade restrictions carveout. We recommend proactively adding both (subject to the disproportionate-impact bring-back) to demonstrate reasonableness and preempt target-counsel requests. Three of 12 include a separate credit-

6. Ability-to-close prong. Eleven of 12 precedent transactions include an ability-to-close prong (clause (ii) of the base definition). The C&H draft is consistent with the market majority.

7. Quantitative threshold. None of the 12 precedent transactions uses a quantitative threshold (e.g., a specified percentage decline in revenue or EBITDA) for the MAE definition itself. The standard remains qualitative throughout. C. Specific Precedent Points Pandemic Carveout. The market standard for the pandemic carveout is broad language encompassing both the disease event and all governmental responses thereto. T

IV. Interaction with Closing Condition A. Closing Condition — No MAE

Section 7.2(a) of the draft Merger Agreement conditions the obligations of Solara and Merger Sub to consummate the merger on the satisfaction (or waiver by Solara) of the following condition, among others: "Since the date of this Agreement, no Material Adverse Effect shall have occurred and be continuing as of the Closing Date." This is a standard formulation. The phrase "occurred and be continuing" requires that the

Section 7.2(b) of the draft Merger Agreement conditions closing on the accuracy of Cloudium's representations and warranties at signing and at closing (the "bring-down" condition). Many of Cloudium's representations and warranties in Article IV are qualified by the phrase "except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect." The interaction between the MAE

V. Interaction with Indemnification and R&W Insurance A. Indemnification

Article IX of the Merger Agreement provides for post-closing indemnification in favor of Solara and its affiliates (including the surviving company) for, among other things, breaches of Cloudium's representations and warranties in Article IV. The key indemnification parameters are as follows: Impact of MAE Carveouts on Indemnification. The breadth of the MAE carveouts directly affects the scope of indemnifiable breac

VI. Anticipated Target-Counsel Positions and Negotiation Strategy A. Expected Pushback from Ridgeway Phelps & Sato LLP Based on prior dealings with Catherine Answorth (lead M&A partner at Ridgeway Phelps & Sato LLP) and observed market trends, we anticipate the following requests in Ridgeway Phelps's markup of the MAE Definition:

1. Additional Carveouts Target counsel is likely to request the addition of carveouts for the following categories: (a) Natural Disasters / Force Majeure. Events such as earthquakes, hurricanes, floods, fires, tsunamis, volcanic eruptions, and other natural disasters or acts of God. Two of the 12 precedent transactions include such a carveout. This request has a reasonable market basis. (b) Sanctions / Trade Restrict

2. Broadening of Existing Carveouts Target counsel may seek to broaden existing carveouts in the following ways: (a) Expanding the pandemic carveout to include all public-health measures and responses by any governmental authority, regardless of whether the disproportionate-impact bring-back applies. This would effectively eliminate the bring-back for the pandemic carveout. (b) Expanding the changes-in-law carveout t

3. Narrowing the Disproportionate-Impact Bring-Back This is the most strategically significant area of anticipated pushback. Target counsel may seek to: (a) Narrow the comparator group from "other participants in the industries and geographies in which the Company and its Subsidiaries operate" to "direct competitors of the Company" or "companies of similar size and scope operating in the same industry." This would ma

4. Eliminating or Narrowing the Ability-to-Close Prong Target counsel may argue that clause (ii) of the base definition — the "ability to close" prong — is duplicative of the closing conditions set forth in Article VII and should be removed. The argument would be that regulatory blocks and legal impediments are already addressed through the specific closing conditions relating to governmental approvals (Section 7.1(b

1. Natural Disaster / Force Majeure Carveout Position: Acceptable, subject to the disproportionate-impact bring-back. We recommend proactively including a natural disaster / force majeure carveout in the next iteration of the draft, subject to the disproportionate-impact bring-back. This demonstrates reasonableness and preempts a predictable target-counsel request, which may generate goodwill that can be deployed on

2. Sanctions / Trade Restrictions Carveout Position: Acceptable, subject to the disproportionate-impact bring-back. Given Cloudium's international operations in the United States, United Kingdom, India, and Germany, a carveout for changes in sanctions and trade restrictions is reasonable. Cloudium's operations in these jurisdictions expose the Company to the sanctions regimes of multiple governmental authorities (inc

3. Credit-Rating Changes Carveout Position: Acceptable, with "symptom versus cause" proviso. Consistent with the stock-price carveout (clause (f)) and the projections carveout (clause (g)), a carveout for changes in credit ratings is acceptable provided it includes the standard proviso that the underlying cause of the rating change is not excluded. The proposed language is: "(l) any change in, or withdrawal of, any c

4. Seasonal Fluctuations Position: Resist. Cloudium is a SaaS business with a predominantly recurring revenue model. Annual recurring revenue was approximately $1,740,000,000 as of December 31, 2023 (estimated), representing approximately 107% of LTM revenue — reflecting the growing ARR base. SaaS subscription revenue is recognized ratably over the contract term and is not subject to significant seasonal variation. W

5. Narrowing the Disproportionate-Impact Comparator Group Position: Resist firmly. The comparator group — "other participants in the industries and geographies in which the Company and its Subsidiaries operate" — is the correct standard and must be retained. The reference to "industries" (plural) reflects Cloudium's multi-product business across cloud ERP, CRM, business intelligence, and SaaS, and ensures that the co

6. Eliminating the Ability-to-Close Prong Position: Resist.