Contract analysis

I. EXECUTIVE SUMMARY This memorandum analyzes the no-shop and fiduciary-out provisions contained in Section 6.4 of the Agreement and Plan of Merger (the "Merger Agreement") among Cloudium Technologies plc, a public limited company incorporated under the laws of England and Wales ("Cloudium" or the "Company"), Stratos Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of Solara Digital Infrastructure

II. BACKGROUND ON DEAL STRUCTURE AND PARTIES A. Transaction Structure The Merger is structured as a reverse triangular merger under the General Corporation Law of the State of Delaware (the "DGCL"). Stratos Merger Sub Inc. was incorporated on January 8, 2024, under the laws of the State of Delaware (Delaware File No. 7923841) as a direct wholly owned subsidiary of Solara Digital Infrastructure Fund VI LP. At the effe

III. OVERVIEW OF SECTION 6.4 AS DRAFTED BY CALDERWOOD & HARKNESS (DECEMBER 1, 2023 INITIAL DRAFT) This Section provides a detailed overview of Section 6.4 as set forth in the Initial Draft circulated by this firm on December 1, 2023. Each subsection is analyzed separately below, with a description of the key drafting choices and their strategic rationale. A. Section 6.4(a) — No-Shop / No-Solicitation Covenant

Section 6.4(a) of the Initial Draft imposes a comprehensive no-solicitation covenant on the Company and its subsidiaries (including Cloudium Technologies UK Ltd., Cloudium Technologies India Pvt. Ltd., Cloudium Solutions GmbH, and all other direct and indirect subsidiaries of the Company). The covenant applies to the Company, its subsidiaries, and their respective directors, officers, employees, and Representatives (

Section 6.4(c) of the Initial Draft addresses the Board's recommendation and the circumstances under which an Adverse Recommendation Change may be made. Affirmative Recommendation Covenant. The Board is required to include in the proxy statement distributed to the Company's stockholders a recommendation that the stockholders vote in favor of the Merger (the "Company Board Recommendation"). This covenant reflects the

Section 6.4(d) establishes the procedural requirements that the Board must satisfy before making an Adverse Recommendation Change or terminating the Merger Agreement to enter into a Superior Proposal. Notice Requirement. Before taking any such action, the Company must provide Solara with written notice (the "Match Notice") at least four (4) business days in advance. The Match Notice must: (i) state that the Board int

Section 6.4(e) provides a cross-reference to Article VIII (Termination) of the Merger Agreement. Specifically, if the Company terminates the Merger Agreement pursuant to Section 8.1(d)(ii) (termination by the Company to enter into a Superior Proposal), the Company is required to pay to Solara, concurrently with such termination, a termination fee equal to 3.25% of the aggregate deal value, or $221,000,000 (the "Termi

IV. ANALYSIS OF RIDGEWAY PHELPS & SATO MARK-UP (DECEMBER 18, 2023) This Section provides a detailed analysis of each material change proposed by RPS in the Mark-Up. For each change, we describe the nature of the revision, assess its strategic implications, and provide our recommended response. A. Changes to "Acquisition Proposal" Definition

1. Threshold Reduction from 20% to 15%. RPS has proposed lowering the percentage threshold in the definition of "Acquisition Proposal" from 20% to 15%. That is, any proposal for a merger, acquisition of shares, or acquisition of assets involving 15% or more of the Company's consolidated revenues, net income, total assets, or outstanding shares would constitute an Acquisition Proposal subject to the no-solicitation co

2. Addition of "Recapitalization" and "Liquidation." RPS has also proposed adding "recapitalization" and "liquidation" to the list of alternative transaction types in clause (a) of the Acquisition Proposal definition, such that the definition would encompass any proposal for "a merger, consolidation, share exchange, recapitalization, liquidation, business combination, or similar transaction." C&H Analysis and Recomme

3. Referral Proviso. RPS has inserted a proviso in Section 6.4(a) that would expressly permit the Company's officers and directors to refer unsolicited inquiries regarding potential Acquisition Proposals to the Board, and that such referral shall not constitute a violation of the no-solicitation covenant. The language proposed by RPS reads: "provided, however, that any director or officer of the Company may refer any

4. Deletion of Return/Destruction Obligation. RPS has deleted the obligation in Section 6.4(a) requiring the Company to request the return or destruction of all confidential information previously furnished to any third party in connection with any potential Acquisition Proposal. RPS's stated rationale is that this obligation is impractical given the number of parties that may have received information during the pre

5. Standstill Release Provision. RPS has proposed a "soft" standstill release provision that would prevent the Company from enforcing any standstill agreement to the extent such agreement would prohibit a third party from making a confidential proposal to the Board. Specifically, RPS proposes that: "Notwithstanding anything in this Section 6.4(a) to the contrary, the Company shall not enforce, and shall not be requir

6. Fiduciary-Out Trigger Standard: "Reasonably Likely to Lead To" vs. "Could Reasonably Be Expected to Lead To." RPS has proposed replacing "reasonably likely to lead to a Superior Proposal" with "could reasonably be expected to lead to a Superior Proposal" as the standard for the Board's initial determination that an unsolicited Acquisition Proposal warrants engagement under the fiduciary-out. The difference between

7. Fiduciary Duty Determination Standard. RPS has made a parallel change to the fiduciary duty determination, replacing "would be reasonably likely to be inconsistent with the directors' fiduciary duties" with "would reasonably be expected to be inconsistent with the directors' fiduciary duties." This change tracks the same directional shift described above — from a higher "reasonably likely" standard to a lower "cou

8. Confidentiality Agreement Standard: "No Less Restrictive" vs. "Substantially Similar." RPS has proposed that the confidentiality agreement required for information sharing with a third-party proponent of an Acquisition Proposal need only be "substantially similar to" (rather than "no less restrictive than") the NDA between Solara and the Company. The distinction is meaningful: "no less restrictive" requires that t

9. Express Enumeration of "Identity and Track Record" as a Factor. RPS has added an express provision stating that the Board may consider "the identity and track record of the Person making the Acquisition Proposal" as a factor in its determination of whether an Acquisition Proposal constitutes or is reasonably likely to lead to a Superior Proposal. Specifically, RPS proposes adding the following parenthetical: "(inc

10. Threshold Reduction from 80% to 50%. RPS has proposed reducing the threshold in the Superior Proposal definition from 80% to 50% of the Company's shares, assets, consolidated revenues, net income, or total assets. Under this proposal, a competing transaction that would result in the acquisition of 50% (rather than 80%) of the Company could qualify as a Superior Proposal, potentially enabling the Board to terminat

11. Express Enumeration of "Certainty of Closing" and "Sources of Financing." RPS has proposed adding "certainty of closing" and "sources of financing" as expressly enumerated factors in the Board's determination of whether an Acquisition Proposal constitutes a Superior Proposal. The proposed language would expand the parenthetical to read: "(including legal, financial, regulatory, and timing considerations, certaint

12. Deletion of "Any Revised Proposal by Solara" from Initial Determination. RPS has proposed deleting the requirement that the Board take into account "any revised proposal by Solara" when making its initial determination of whether an Acquisition Proposal constitutes a Superior Proposal. Under the RPS Mark-Up, the consideration of Solara's potential revisions would be reserved for the formal match-right stage under

13. Deletion of "Material" Qualifier from Intervening Event Definition. RPS has proposed broadening the definition of "Intervening Event" by deleting the qualifier "material," such that the definition would read: "any event, development, or change in circumstances" rather than "any material event, development, or change in circumstances." This change would significantly expand the scope of events that could trigger t

14. Deletion of "or Reasonably Foreseeable" from Intervening Event Definition. RPS has also proposed deleting "or reasonably foreseeable" from the Intervening Event definition, such that the requirement would be only that the event was "not known" to the Board as of the date of the Merger Agreement, rather than "not known to, or reasonably foreseeable by" the Board. This change would lower the foreseeability bar sign