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PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP 599 Lexington Avenue New York, NY 10022

MEMORANDUM

Matter No.: 1041-00003

January 8, 2024

TO:

Harrison Wexford, Responsible Partner, Mergers & Acquisitions

Marcus Elliston, Founder & Managing Partner, Solara Digital Infrastructure LP

Priya Narasimhan, Co-Managing Partner & Chief Investment Officer, Solara Digital Infrastructure LP

FROM:

Tiffany Rosenthal, Lead Associate, Mergers & Acquisitions

Andrew Fitzpatrick, Working Associate, Mergers & Acquisitions

RE:

Cloudium Technologies plc — Survey of Material Contracts Containing Change of Control Provisions Triggered by the Proposed Merger

REVIEWED BY: Harrison Wexford

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I. Executive Summary

This memorandum surveys all material contracts of Cloudium Technologies plc ("Cloudium" or the "Company") that contain change of control provisions that would be triggered by the proposed reverse triangular merger (the "Merger") between Stratos Merger Sub Inc. ("Merger Sub"), a newly formed Delaware corporation and wholly owned subsidiary of Solara Digital Infrastructure Fund VI LP ("Fund VI"), and Cloudium, with Cloudium surviving the Merger as a wholly owned subsidiary of Fund VI (the "Surviving Corporation"). The purpose of this memorandum is to identify contractual provisions that require affirmative action — whether in the form of prepayment, consent solicitation, or waiver procurement — prior to or contemporaneously with the closing of the Merger, and to assess the associated risks and recommend appropriate courses of action.

Transaction Overview. The proposed transaction is a take-private acquisition of Cloudium by Fund VI at a total enterprise value of approximately $6,800,000,000, implying a per-share price of approximately $36.92. The transaction is structured as a reverse triangular merger under the Delaware General Corporation Law (the "DGCL"), pursuant to which Merger Sub will merge with and into Cloudium, and Cloudium will survive the Merger as a wholly owned subsidiary of Fund VI. Upon consummation of the Merger, all outstanding shares of Cloudium common stock (other than rollover shares held by Jonathan Hargrove, the Company's Chief Executive Officer, representing approximately 4.2% of the outstanding equity, and shares held by Pinnacle Growth Equity Partners LP ("Pinnacle"), representing approximately 11.6% of the outstanding equity, each of which will be converted into equity interests in the Surviving Corporation or a parent entity thereof pursuant to rollover arrangements) will be converted into the right to receive the per-share merger consideration in cash. The Merger Agreement (in near-final draft form as of the date of this memorandum, with an anticipated execution date of January 22, 2024, and public announcement on January 23, 2024) governs the terms and conditions of the transaction.

Material Finding. The Merger constitutes a "change of control" (or analogous defined event) under multiple material contracts of Cloudium and its subsidiaries. Our review has identified three categories of material contracts containing change of control provisions: (A) credit and financing agreements, (B) key customer agreements, and (C) technology license agreements. Within these categories, three specific material contracts require affirmative action prior to or at the closing of the Merger:

1. Credit Agreement with Atlas Commercial Lending Corp. The existing Credit Agreement dated March 15, 2021 (the "Atlas Credit Agreement"), under which Cloudium has approximately $820,000,000 of outstanding indebtedness, contains a mandatory prepayment obligation triggered upon a change of control. The entire outstanding balance must be repaid at or prior to closing.

2. Master SaaS Agreement with Aegis Federal Solutions Inc. The Master SaaS Agreement (the "Aegis Agreement") with Aegis Federal Solutions Inc. ("Aegis Federal"), which accounts for approximately $84,000,000 in annual recurring revenue ("ARR"), requires the prior written consent of Aegis Federal before any change of control of Cloudium becomes effective. Failure to obtain such consent entitles Aegis Federal to terminate the agreement upon 60 days' written notice.

3. Technology License Agreement with Helix Data Systems GmbH. The Technology License Agreement (the "Helix License") with Helix Data Systems GmbH ("Helix Data"), under which Cloudium licenses proprietary data-integration middleware technology embedded in its core product architecture, grants Helix Data a termination right exercisable upon 90 days' written notice following a change of control of Cloudium. Loss of the Helix License would necessitate costly and time-consuming re-engineering of Cloudium's core products.

Recommended Actions. We recommend the following actions in connection with the foregoing contracts: (i) mandatory prepayment of all outstanding indebtedness under the Atlas Credit Agreement at closing, to be funded from the proceeds of the new $3,740,000,000 Term Loan B commitment from Meridian Atlantic Bank, N.A. and Ironclad Capital Markets LLC; (ii) procurement of the prior written consent of Aegis Federal Solutions Inc. under the Aegis Agreement promptly following the signing and public announcement of the Merger Agreement; and (iii) procurement of a written waiver or confirmation from Helix Data Systems GmbH that it will not exercise its termination right under the Helix License following the closing of the Merger.

Merger Agreement Cross-Reference. As discussed in greater detail in Section V below, the draft Merger Agreement (circulated December 1, 2023, and currently under negotiation) includes, as conditions to closing, the receipt of the specified third-party consents from Aegis Federal and Helix Data and the completion of the payoff of the Atlas Credit Agreement. The relevant closing conditions, representations and warranties, indemnification provisions, and disclosure schedule requirements are analyzed in Section V.

II. Scope and Methodology

Scope of Review. This memorandum is based upon a comprehensive review of all material contracts disclosed by Cloudium in the virtual data room maintained by Penrose Data Systems (the "Data Room"), to which Calderwood & Harkness LLP ("C&H") was granted access on September 18, 2023. The Data Room is organized into 14 primary folders and 87 subfolders, containing over 2,400 documents as of the date of this memorandum. Our review focused on contracts contained in the following Data Room folders: Folder 3 (Material Contracts — Commercial), Folder 4 (Financing Agreements), Folder 6 (Technology and intellectual Property Agreements), and Folder 8 (Government and Regulated Industry Contracts).

Our review was supplemented by information and documents obtained through the following additional sources:

(a) Management responses to the Preliminary Due Diligence Request List, dated September 10, 2023, which included specific requests for identification and copies of all contracts containing change of control, assignment, or similar provisions;

(b) Management responses to the Supplemental Due Diligence Request List — Regulatory and Government Contracts, dated October 15, 2023, which included targeted requests regarding the Aegis Federal relationship and government contracting implications;

(c) Discussions with Cloudium management during the management presentation held on October 2, 2023, at Cloudium's London offices, attended by Jonathan Hargrove (CEO), Sienna Whitfield (CFO), and Nadia Chowdhury (General Counsel), during which management provided context regarding the Company's key contractual relationships and known change of control sensitivities; and

(d) Subsequent Q&A sessions conducted via secure videoconference on October 19, 2023, November 3, 2023, and December 8, 2023, during which follow-up questions regarding specific contract provisions were addressed by Ms. Chowdhury and members of the Cloudium legal team.

Methodology. Our review focused on identifying contracts containing "change of control," "change in control," "change of ownership," or similar defined terms, as well as provisions that may be functionally equivalent to change of control triggers (including, without limitation, assignment-by-operation-of-law provisions, successor-entity restrictions, and indirect ownership change clauses). Each identified contract was reviewed to determine (i) the precise definition of the triggering event, (ii) whether the proposed Merger would constitute such a triggering event, (iii) the contractual consequences of the triggering event (e.g., mandatory prepayment, consent requirement, termination right, renegotiation right, or increased pricing), and (iv) the recommended course of action to mitigate any associated risk.

Coordination with Company's Counsel. We coordinated our review with Ridgeway Phelps & Sato LLP ("RPS"), counsel to Cloudium in connection with the Merger, specifically with Catherine Answorth (Lead M&A Partner, New York office) and Alistair Fenn (Lead UK Corporate Partner, London office). RPS has been responsible for preparing the Cloudium disclosure schedules to the Merger Agreement, and we have shared our findings with RPS to ensure consistency between the disclosure schedules and this memorandum. We have also coordinated with RPS regarding the factual accuracy of certain descriptions of the contracts analyzed herein.

Entity Coverage. The review encompasses contracts entered into by Cloudium Technologies plc and each of its key subsidiaries, including:

(i) Cloudium Technologies UK Ltd. (Company No. 11287456; registered at 45 Broadwick Street, London W1F 0DB, United Kingdom), which serves as Cloudium's principal operating subsidiary in the United Kingdom and employs approximately 1,200 individuals;

(ii) Cloudium Technologies India Pvt. Ltd. (registered in Bangalore, Karnataka, India), which serves as Cloudium's principal engineering and development center and employs approximately 2,800 individuals; and

(iii) Cloudium Solutions GmbH (registered in Berlin, Germany), which serves as Cloudium's principal European sales and professional services subsidiary and employs approximately 400 individuals.

In conducting our review, we treated contracts entered into by any subsidiary of Cloudium as contracts of the Company for purposes of this analysis, consistent with the definition of "Material Contract" in the draft Merger Agreement, which encompasses contracts of the Company and its subsidiaries.

Limitations. This memorandum focuses on material contracts, defined for purposes of this analysis as contracts with an annual value of $5,000,000 or more (for customer and vendor contracts) or any financing agreement, regardless of amount. Contracts containing change of control provisions with annual contract values below the $5,000,000 de minimis threshold have been separately cataloged in the Data Room index (see Appendix B) but are not analyzed in detail in this memorandum. Based on our review, such sub-materiality contracts do not, individually or in the aggregate, present material risk to the transaction. This memorandum also does not address employment agreements or equity compensation arrangements that contain change of control provisions, which are addressed separately in the Supplemental Due Diligence Request List — Employee Benefits and Compensation, dated October 22, 2023, and the forthcoming Benefits and Compensation Due Diligence Memorandum being prepared by the C&H executive compensation team.

III. Contract-by-Contract Analysis

A. Existing Credit Agreement — Atlas Commercial Lending Corp.

1. Contract Identification

The following table sets forth the key identifying information for the Atlas Credit Agreement:

The Atlas Credit Agreement is the Company's primary source of external debt financing and represents the single largest financial obligation of Cloudium and its subsidiaries. The credit facilities were originally arranged in connection with the Company's acquisition of Stratosphere Analytics Inc. in March 2021 and have been amended twice since inception — first, to modify certain financial covenants in September 2022, and second, to transition the interest rate benchmark from LIBOR to SOFR in February 2023.

2. Change of Control Definition

Section 1.01 of the Atlas Credit Agreement defines "Change of Control" broadly to include any transaction or series of transactions resulting in any of the following:

(a) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than (I) management of the Borrower identified on Schedule 1.01(a) to the Credit Agreement (which includes Jonathan Hargrove, CEO, and certain other senior executives) and their respective affiliates (the "Management Investors"), and (II) any "Permitted Holder" (defined as any holder of 5% or more of the voting equity interests of the Borrower as of the Closing Date, together with such holder's affiliates — which, as of the Closing Date, included Pinnacle Growth Equity Partners LP), acquiring direct or indirect "beneficial ownership" (as defined in Rule 13d-3 under the Exchange Act) of more than 50% of the aggregate ordinary voting power represented by the issued and outstanding voting equity interests of the Borrower;

(b) the Borrower ceasing to own, directly or indirectly, 100% of the equity interests in each "Material Subsidiary" (as defined in the Credit Agreement); or

(c) a merger, consolidation, or similar transaction involving the Borrower in which the stockholders of the Borrower immediately prior to such transaction hold less than 50% of the aggregate ordinary voting power of the surviving or resulting entity.

Application to the Proposed Merger. The proposed reverse triangular merger squarely falls within limb (a) and limb (c) of the Change of Control definition. With respect to limb (a), upon consummation of the Merger, Fund VI — which is neither a Management Investor nor a Permitted Holder as defined in the Credit Agreement — will acquire beneficial ownership of 100% of the equity interests of Cloudium (through the merger of Merger Sub with and into Cloudium), subject only to the rollover equity to be retained by Hargrove (approximately 4.2%) and Pinnacle (approximately 11.6%). Even accounting for the rollover equity, Fund VI's beneficial ownership will far exceed the 50% threshold. With respect to limb (c), the Merger is a merger transaction in which the stockholders of Cloudium immediately prior to the Merger will not hold any continuing equity in the Surviving Corporation (other than the rollover participants), and therefore the existing public stockholders will hold less than 50% of the voting power of the surviving entity. Accordingly, the Merger will constitute a "Change of Control" under the Atlas Credit Agreement.

We note that while Hargrove and Pinnacle are, respectively, a Management Investor and a Permitted Holder, neither will individually or collectively hold more than 50% of the voting power of the Surviving Corporation following the Merger; therefore, the exceptions in the definition do not prevent the occurrence of a Change of Control.

3. Consequences of Change of Control

Section 7.03(a) of the Atlas Credit Agreement sets forth the consequences of a Change of Control event, as follows:

Mandatory Prepayment Obligation. Upon the occurrence of a Change of Control, the Borrower is required to offer to prepay all outstanding loans under the Credit Agreement — both the Term Loan A Facility and the Revolving Credit Facility — at par (100% of outstanding principal amount) plus all accrued and unpaid interest thereon through the date of prepayment, together with any applicable breakage costs under Section 3.05 of the Credit Agreement.

Acceleration Right. In the alternative, Section 8.01(g) of the Credit Agreement provides that a Change of Control constitutes an "Event of Default," and upon the occurrence and during the continuance of such Event of Default, the Administrative Agent may, upon the written direction of the Required Lenders (defined as lenders holding more than 50% of the outstanding commitments and loans), declare all outstanding loans and other obligations under the Credit Agreement to be immediately due and payable in full, without presentment, demand, protest, or other notice of any kind.

Practical Effect. The entire $820,000,000 of outstanding indebtedness — comprising $620,000,000 of term loan principal and $200,000,000 of revolving credit drawings — must be repaid at or prior to the closing of the Merger. There is no consent, waiver, or amendment mechanism available under the Atlas Credit Agreement as an alternative to prepayment upon a Change of Control. The mandatory prepayment and the Event of Default are automatic consequences of the Change of Control event, and the Credit Agreement does not contemplate any cure period or opportunity for the Borrower to seek lender consent in lieu of repayment.

Additionally, upon repayment of all outstanding obligations under the Atlas Credit Agreement, all revolving commitments will terminate, and all letters of credit (of which there are currently three outstanding letters of credit with an aggregate face amount of approximately $12,500,000) will need to be cash-collateralized, backstopped, or replaced.

4. Recommended Actions

We recommend the following actions with respect to the Atlas Credit Agreement:

(a) Payoff Letter. Obtain a payoff letter from Atlas Commercial Lending Corp. (as Administrative Agent) specifying the exact payoff amount as of the anticipated closing date, including outstanding principal, accrued and unpaid interest, any applicable breakage costs under Section 3.05, any administrative agent fees, and wire transfer instructions. The payoff letter should also address the treatment of outstanding letters of credit and confirm the aggregate amount required to cash-collateralize or otherwise backstop such letters of credit pending their expiration or replacement.

(b) Lien Release Package. Request that Atlas deliver, upon receipt of the payoff funds, a comprehensive lien release package, including (i) UCC-3 termination statements for all financing statements filed in connection with the Atlas Credit Agreement in all applicable jurisdictions (including Delaware, New York, the United Kingdom, India, and Germany), (ii) releases of all mortgages, deeds of trust, and other real property security instruments, if any, (iii) releases of all intellectual property security agreements, and (iv) payoff confirmation letters.

(c) Source of Repayment Funds. The payoff of the Atlas Credit Agreement will be funded from the proceeds of the new $3,740,000,000 Term Loan B facility to be provided by Meridian Atlantic Bank, N.A. (as Lead Arranger and Administrative Agent) and Ironclad Capital Markets LLC (as Co-Arranger) pursuant to the Debt Commitment Letter dated January 22, 2024 (the "Commitment Letter"). The Commitment Letter contemplates that a portion of the Term Loan B proceeds will be used to refinance existing indebtedness of Cloudium. The payoff of the Atlas Credit Agreement is consistent with this contemplated use of proceeds.

(d) Closing Funds Flow Coordination. The payoff of the Atlas Credit Agreement should be included as a line item in the Funds Flow Memorandum to be prepared in connection with closing, and the wire of payoff funds to Atlas should be coordinated with the overall closing funds flow to ensure simultaneous or near-simultaneous completion of all closing transactions.

(e) Timeline. The payoff letter should be requested from Atlas no later than 10 business days before the anticipated closing date. C&H will prepare and send a formal request letter to Atlas Commercial Lending Corp., directed to Victoria Regan, Managing Director, Loan Administration.

5. Risk Assessment

Risk Level: Low (Mechanical/Procedural). The payoff of the Atlas Credit Agreement is a standard closing condition in leveraged buyout transactions and is fully funded by the committed debt financing under the Commitment Letter. Provided that the Commitment Letter remains in full force and effect and the conditions to funding thereunder are satisfied, there is no material risk that the payoff cannot be completed.

Potential Complication — Breakage Costs and Prepayment Premium. We have reviewed the Atlas Credit Agreement for any yield maintenance, make-whole, or prepayment premium provisions that could increase the cost of repayment. Based on our review, the Atlas Credit Agreement contains a soft-call premium of 1.0% (applied to the principal amount being repriced) for repricing transactions occurring within six months of any amendment to the Credit Agreement. However, this soft-call provision is expressly limited to "Repricing Transactions" (defined in Section 1.01 as any amendment or refinancing that reduces the effective interest rate applicable to the Term Loan A Facility) and does not apply to a mandatory prepayment upon a Change of Control event. Accordingly, no prepayment premium is expected to apply to the payoff in connection with the Merger. However, we recommend confirming this conclusion with Atlas in the payoff letter request.

Potential Complication — Outstanding Letters of Credit. As noted above, there are currently three outstanding letters of credit under the Revolving Credit Facility with an aggregate face amount of approximately $12,500,000. These will need to be cash-collateralized, backstopped by letters of credit issued under the new Meridian facility, or replaced prior to or at closing. We recommend discussing the treatment of outstanding letters of credit with Meridian Atlantic Bank as part of the new facility documentation process.

B. Master SaaS Agreement — Aegis Federal Solutions Inc.

1. Contract Identification

The following table sets forth the key identifying information for the Aegis Agreement:

The Aegis Federal relationship is one of Cloudium's largest and most strategically significant single-customer relationships. The $84,000,000 in ARR represents approximately 4.8% of Cloudium's total ARR as of December 31, 2023, and Aegis Federal has been a Cloudium customer since 2019. The relationship has expanded significantly over time, with ARR growing from approximately $42,000,000 at inception to the current $84,000,000 — reflecting the addition of new modules, user seats, and professional services engagements pursuant to Amendment No. 1 (March 2021) and Amendment No. 2 (January 2023). Cloudium management views the Aegis Federal relationship as a flagship account in the government contracting vertical.

2. Change of Control Definition

Section 15.3(a) of the Aegis Agreement defines "Change of Control" to mean any of the following events:

(a) any merger, consolidation, or reorganization of the Provider (Cloudium) in which (i) the Provider is not the surviving entity, or (ii) the stockholders of the Provider immediately prior to such transaction do not retain a majority of the voting power of the surviving entity;

(b) a sale, transfer, or other disposition of all or substantially all of the Provider's assets to any person or group; or

(c) any person or group (other than persons who, as of the Effective Date, hold more than 10% of the outstanding voting securities of the Provider) acquiring beneficial ownership of more than 50% of the outstanding voting securities of the Provider.

Application to the Proposed Merger. The proposed reverse triangular merger triggers limbs (a)(ii) and (c) of the Change of Control definition. With respect to limb (a)(ii), although Cloudium will technically survive the Merger as the surviving corporation (and thus limb (a)(i) is not triggered), the stockholders of Cloudium immediately prior to the Merger will not retain a majority of the voting power of the surviving entity — Fund VI will hold 100% of the surviving entity's equity, subject to the rollover equity from Hargrove (approximately 4.2%) and Pinnacle (approximately 11.6%). Even if the rollover equity is considered, the pre-Merger public stockholders collectively will hold 0% of the voting power of the Surviving Corporation, and the rollover participants together will hold only approximately 15.8%, which is well below a majority. With respect to limb (c), Fund VI will acquire beneficial ownership of more than 50% of the outstanding voting securities of Cloudium, and Fund VI is not a person that held more than 10% of the outstanding voting securities as of the Effective Date of the Aegis Agreement (June 1, 2019).

We note that the Aegis Agreement's Change of Control definition includes an exception for persons who, as of the Effective Date, held more than 10% of the outstanding voting securities. Based on our review, Pinnacle held approximately 14.7% of Cloudium's outstanding voting securities as of June 1, 2019, and thus Pinnacle is an excepted person under the definition. However, because Fund VI — the entity that will acquire majority beneficial ownership — is not an excepted person, the exception does not prevent the occurrence of a Change of Control.

3. Consequences of Change of Control

Section 15.3(b) of the Aegis Agreement sets forth the consequences of a Change of Control event:

Written Consent Requirement. The Aegis Agreement requires the Provider (Cloudium) to obtain the prior written consent of the Customer (Aegis Federal) before any Change of Control becomes effective. Specifically, Section 15.3(b) provides:

"The Provider shall not consummate or permit to be consummated any Change of Control without the prior written consent of the Customer, which consent shall not be unreasonably withheld, conditioned, or delayed."

We note that the consent is subject to a "not unreasonably withheld, conditioned, or delayed" standard, which is favorable to Cloudium in the event of a dispute regarding Aegis Federal's willingness to consent. However, the determination of "reasonableness" in the context of a government contractor's evaluation of a change of control in a key SaaS provider may involve considerations specific to Aegis Federal's own regulatory and compliance obligations, which could expand the scope of what constitutes a "reasonable" basis for withholding consent.

Failure to Obtain Consent — Termination Right. Section 15.3(c) of the Aegis Agreement provides that if the Provider consummates a Change of Control without obtaining the prior written consent of the Customer, the Customer shall have the right to terminate the Aegis Agreement upon 60 days' prior written notice to the Provider. The relevant provision states:

"In the event that the Provider consummates a Change of Control without obtaining the Customer's prior written consent as required by Section 15.3(b), the Customer may, at its sole option, terminate this Agreement by providing the Provider with not less than sixty (60) days' prior written notice of termination."

Impact of Termination. Termination of the Aegis Agreement would result in the loss of $84,000,000 in ARR, representing approximately 4.8% of Cloudium's total ARR. This would constitute a material adverse impact on Cloudium's business, revenue base, and financial condition, and could trigger negative signaling effects in the government contracting customer vertical more broadly. Additionally, the loss of the Aegis Federal account could affect Cloudium's ability to win new government contracting customers, as Aegis Federal serves as a prominent reference account.

No Automatic Termination. Importantly, the Change of Control does not trigger automatic termination of the Aegis Agreement. Aegis Federal must affirmatively elect to exercise its termination right by delivering written notice. If Aegis Federal does not deliver a termination notice, the Aegis Agreement remains in full force and effect notwithstanding the occurrence of the Change of Control. However, reliance on Aegis Federal's inaction would be inconsistent with the contractual requirement to obtain prior written consent, and would leave Cloudium in technical breach of Section 15.3(b), which could have other adverse consequences (including, potentially, a claim by Aegis Federal for damages arising from the breach).

Potential Government Contract Implications. Given Aegis Federal's status as a United States government contractor, any change of control in a key subcontractor or SaaS provider may also implicate government contracting novation or notification requirements that apply to Aegis Federal in its relationships with its government agency customers. Under the Federal Acquisition Regulation ("FAR"), certain changes in the identity or ownership of a contractor's key subcontractors or suppliers may require notification to the contracting officer or, in some circumstances, may affect the contractor's eligibility to perform under existing contracts. While these obligations sit with Aegis Federal — and not directly with Cloudium — they could influence Aegis Federal's willingness to consent to the Change of Control or the timeline for obtaining such consent, as Aegis Federal may wish to consult with its contracting officers or government contracting compliance team before providing consent.

4. Recommended Actions

We recommend the following actions with respect to the Aegis Agreement:

(a) Initiate Consent Solicitation. Outreach to Aegis Federal Solutions Inc. should be initiated promptly after the signing and public announcement of the Merger Agreement, which is anticipated to occur on January 22–23, 2024. The timing of the outreach should be coordinated with Cloudium management to ensure that the initial communication to Aegis Federal is delivered by the appropriate relationship contact at Cloudium (in coordination with Nadia Chowdhury, General Counsel, and the Cloudium account team responsible for the Aegis Federal relationship) and is accompanied by appropriate messaging regarding the strategic rationale for the transaction and the anticipated continuity of service.

(b) Coordinate with Cloudium's Counsel. C&H should coordinate with RPS (Catherine Answorth) on the consent solicitation process, including the timing, form, and substance of communications with Aegis Federal, to ensure consistency with the Company's disclosure obligations and public communications regarding the Merger.

(c) Prepare Form of Written Consent. C&H should prepare a form of written consent for Aegis Federal's review and execution. The consent should be drafted to cover the specific transaction contemplated by the Merger Agreement and should include appropriate representations by Cloudium regarding the continuity of services, data security, and key personnel following the closing of the Merger.

(d) Consider Assurances. In connection with the consent solicitation, consider whether any specific assurances regarding the following topics need to be provided to Aegis Federal to facilitate its consent: (i) continuity of service levels and support; (ii) retention of key personnel involved in the Aegis Federal account; (iii) data security and data residency commitments, particularly given the government contracting context; (iv) non-assignment of the Aegis Agreement or the Provider's obligations thereunder; and (v) the identity and background of Solara Digital Infrastructure LP and Fund VI.

(e) Closing Condition. The consent of Aegis Federal should be listed as a required closing deliverable in the Merger Agreement closing conditions (Section 7.01(d) of the draft Merger Agreement) and should be added to the Master Closing Checklist with responsible parties and target completion dates.

Management Assessment. As of the date of this memorandum, Cloudium management has indicated that its relationship with Aegis Federal is strong and that it does not anticipate difficulty obtaining the required consent. Mr. Hargrove specifically noted during the October 2, 2023, management presentation that the Cloudium account team has a "highly collaborative" relationship with senior leadership at Aegis Federal and that Aegis Federal has recently expanded its use of Cloudium's platform (as reflected in Amendment No. 2, executed in January 2023). While this assessment is encouraging, it remains preliminary and should be monitored throughout the consent solicitation process. The views of Aegis Federal's legal and compliance teams — who may have different considerations than the business relationship team — are not yet known.

5. Risk Assessment

Risk Level: Medium. While Cloudium management is confident in its ability to obtain the required consent, the loss of the Aegis Agreement ($84,000,000 ARR) would be material to Cloudium's business and financial condition. The following risk factors have been identified:

(i) Government Contracting Compliance. Aegis Federal's internal approval process for consenting to a change of control in a key SaaS provider may require involvement of its government contracting compliance team, contracting officers, or even agency-level review. This could introduce delays or conditions that are difficult to predict or control.

(ii) Negotiation Leverage. The consent requirement gives Aegis Federal potential negotiation leverage, which it could use to seek more favorable commercial terms (e.g., pricing reductions, enhanced service levels, additional professional services at no cost) as a condition of consent. Cloudium and Solara should be prepared for the possibility that the consent comes with commercial strings attached.

(iii) Timeline Risk. If the consent process takes longer than anticipated, it could delay the closing of the Merger or require the parties to evaluate whether to waive the consent condition (which would leave Cloudium in technical breach of Section 15.3(b) and expose it to the termination right).

Mitigation. Early engagement with Aegis Federal (promptly after signing/announcement), provision of robust assurances regarding service continuity and data security, and inclusion of the Aegis Federal consent as a specific closing condition in the Merger Agreement will mitigate these risks. Additionally, the "not unreasonably withheld, conditioned, or delayed" standard in Section 15.3(b) provides Cloudium with a contractual basis to challenge any unreasonable refusal to consent.

C. Technology License Agreement — Helix Data Systems GmbH

1. Contract Identification

The following table sets forth the key identifying information for the Helix License:

The Helix License is one of the most strategically significant technology agreements in Cloudium's portfolio. The Fendrox Technology serves as the backbone of the data integration layer within Cloudium's core ERP and BI products, enabling seamless data exchange between Cloudium's cloud-native platform and the range legacy on-premises systems, databases, and data formats used by Cloudium's enterprise customers. The Fendrox Technology is deeply embedded in Cloudium's product architecture — it is referenced in over 2,400 API calls within the Cloudium platform and is used by substantially all of Cloudium's enterprise customers as part of their initial implementation and ongoing operations.

Cloudium management has confirmed, in response to due diligence inquiries, that replacing the Fendrox Technology with a proprietary or alternative third-party solution would require an estimated 18 to 24 months of engineering effort and an estimated cost of $45,000,000 to $65,000,000, taking into account engineering personnel, testing, customer migration, and associated disruption costs. During the management presentation on October 2, 2023, Mr. Hargrove described the Fendrox Technology as "mission-critical infrastructure" for the Cloudium platform.

2. Change of Control Definition

Section 12.1 of the Helix License defines "Change of Control" (Kontrollwechsel) to mean any of the following events:

(a) a direct or indirect change in the beneficial ownership of more than 50% of the voting securities (Stimmrechte) of the Licensee (Cloudium), whether in a single transaction or a series of related transactions;

(b) a merger, consolidation, or reorganization (Verschmelzung, Konsolidierung oder Umstrukturierung) of the Licensee in which (i) the Licensee does not survive as a legal entity, or (ii) the stockholders of the Licensee immediately prior to such transaction do not hold a majority of the voting power (Stimmrechtsmehrheit) of the surviving entity; or

(c) a sale, transfer, or other disposition of all or substantially all of the Licensee's assets (wesentliche Vermögensgegenstände) to any third party.

Application to the Proposed Merger. The proposed reverse triangular merger triggers limbs (a) and (b)(ii) of the Change of Control definition. With respect to limb (a), Fund VI will acquire direct beneficial ownership of 100% of the voting securities of Cloudium (through the merger of Merger Sub with and into Cloudium), subject only to the rollover equity from Hargrove and Pinnacle. This constitutes a change in beneficial ownership of more than 50% of the voting securities. With respect to limb (b)(ii), although Cloudium survives the Merger (and thus limb (b)(i) is not triggered), the stockholders of Cloudium immediately prior to the Merger will not hold a majority of the voting power of the surviving entity, as discussed in the analysis of the Aegis Agreement above.

We note that the Helix License's Change of Control definition includes the concept of "indirect" changes in beneficial ownership, which is drafted broadly enough to capture the Merger even if a technical argument could be made that the direct ownership of Cloudium passes from its public stockholders to Fund VI through the merger mechanics rather than through a direct acquisition.

3. Consequences of Change of Control

Section 12.2 of the Helix License sets forth the consequences of a Change of Control event:

Termination Right. The Helix License contains a termination-for-change-of-control clause: upon the occurrence of a Change of Control of the Licensee, the Licensor (Helix Data) has the right to terminate the Helix License by providing 90 days' prior written notice to the Licensee. The relevant provision states:

"In the event of a Change of Control of the Licensee, the Licensor shall have the right, exercisable at its sole discretion, to terminate this Agreement by providing the Licensee with not less than ninety (90) days' prior written notice of termination, such notice to be delivered within one hundred eighty (180) days following the Licensor's receipt of written notice of the Change of Control from the Licensee or, if no such notice is provided, within one hundred eighty (180) days following the date on which the Licensor first becomes aware of the Change of Control."

No Prior Consent Mechanism. Unlike the Aegis Agreement, the Helix License does not expressly require the Licensee to obtain the Licensor's prior written consent before a Change of Control becomes effective. Instead, the Helix License grants Helix Data an affirmative post-closing termination right. There is no contractual obligation on Cloudium to obtain Helix Data's approval before consummating the Merger. The Change of Control itself is not a breach of the Helix License; rather, it triggers an option for Helix Data to elect to terminate.

Practical Effect. Although the termination right is post-closing in nature, the practical risk is significant. Following the closing of the Merger, Helix Data would have 180 days from receipt of written notice of the Change of Control (or from actual knowledge of the Change of Control) to deliver a termination notice, and the termination would become effective 90 days after delivery of such notice. This means that, in the worst-case scenario, the Helix License could be terminated as early as approximately 90 days after the Merger closes (if Helix Data delivers its termination notice promptly after closing) or as late as approximately 270 days after closing (if Helix Data waits until the end of the 180-day notice delivery period). In either case, the termination would be materially disruptive to Cloudium's business.

Wind-Down Period. Section 12.3 of the Helix License provides that, in the event of a termination pursuant to Section 12.2, the Licensee shall have a 180-day wind-down period (the "Transition Period") following the effective date of termination to transition off the Fendrox Technology. During the Transition Period, the Licensee retains a limited, non-exclusive license to continue using the Fendrox Technology solely for the purpose of completing the transition to an alternative technology solution. The license fee continues to accrue during the Transition Period.

Aggregate Impact. Termination of the Helix License would require Cloudium to undertake a wholesale re-engineering of its data integration layer — an effort that management estimates would take 18 to 24 months and cost $45,000,000 to $65,000,000. Even with the 180-day Transition Period, there would be a significant gap between the end of the Transition Period and the completion of the re-engineering effort, during which Cloudium's product functionality could be materially impaired. This risk is compounded by the potential for customer disruption and reputational harm in the market.

4. Recommended Actions

We recommend the following actions with respect to the Helix License:

(a) Pre-Closing Engagement with Helix Data. Notwithstanding the absence of a contractual obligation to obtain prior consent, we strongly recommend engaging with Helix Data Systems GmbH prior to closing to obtain either: (i) a written waiver of the termination-for-change-of-control right under Section 12.2 of the Helix License, pursuant to which Helix Data would irrevocably waive its right to terminate the Helix License in connection with the Merger; or (ii) a written confirmation (in the form of a side letter or standalone agreement) that Helix Data does not intend to exercise its termination right following the Merger.

(b) Coordination with Company's Counsel. C&H should coordinate with RPS (including Alistair Fenn in the London office, given Helix Data's German jurisdiction) on the outreach strategy and the form of waiver or confirmation letter. The outreach should be sensitive to the cross-border and cultural dynamics of the Cloudium–Helix Data relationship, and consideration should be given to having the initial outreach conducted by representatives of Cloudium Solutions GmbH (Cloudium's Berlin-based subsidiary, which employs approximately 400 individuals and maintains ongoing working relationships with German technology partners, including Helix Data) rather than by US-based legal counsel.

(c) Local Counsel Involvement. Consider retaining German local counsel to advise on the enforceability and interpretation of the Change of Control and termination provisions under German law, and to assist in drafting the waiver or confirmation letter in a manner consistent with German legal requirements. The Helix License is governed by German law, and Section 17.1 provides for exclusive jurisdiction in the courts of Frankfurt am Main.

(d) Form of Waiver/Confirmation Letter. C&H should prepare a draft form of waiver or confirmation letter for Helix Data's review and execution. The waiver should be drafted broadly to cover (i) the specific Change of Control resulting from the Merger, (ii) any subsequent changes in the indirect ownership of Cloudium resulting from changes in Fund VI's investor base or Solara's management structure, and (iii) any future internal reorganizations of Cloudium or its subsidiaries following the Merger.

(e) Closing Condition. The Helix Data waiver or confirmation should be included as a required third-party consent in the Merger Agreement closing conditions (Section 7.01(d) of the draft Merger Agreement) and should be added to the Master Closing Checklist with responsible parties and target completion dates.

(f) Alternative Protective Measure — Indemnity. Given the significance of the Helix License and the inherent uncertainty associated with a post-closing termination right (which may be exercised even if Helix Data provides informal assurances prior to closing), we recommend negotiating for a special indemnity or specific representation in the Merger Agreement covering the Helix License. This indemnity should protect Fund VI and the Surviving Corporation against losses arising from (i) the failure to obtain the Helix Data waiver prior to closing, (ii) the exercise by Helix Data of its termination right following closing, or (iii) any re-engineering, migration, or remediation costs incurred as a result of the loss of the Fendrox Technology. The special indemnity should be structured as an uncapped obligation, outside the general indemnification framework, given the potentially significant magnitude of the losses at stake.

5. Risk Assessment

Risk Level: Medium-High. The Helix License presents the highest risk among the three material contracts analyzed in this memorandum, for the following reasons:

(i) Post-Closing Termination Right. The termination right is exercisable post-closing without any requirement for prior consent, meaning there is inherent uncertainty regarding Helix Data's intentions even if informal assurances are obtained prior to closing. A written waiver would significantly reduce this risk, but there can be no assurance that Helix Data will agree to provide one.

(ii) Strategic Dependency. The Fendrox Technology is deeply embedded in Cloudium's core product architecture. The dependency is not merely contractual but technical — the Helix middleware is integrated at the code level, and its replacement would require a fundamental re-engineering of the data integration layer. This elevates the impact of any termination well beyond the direct cost of the license fee.

(iii) Competitor Risk. Helix Data may have strategic reasons to exercise its termination right if it views the post-Merger Cloudium as a less desirable licensee — for example, if Fund VI's investment thesis contemplates entering markets or developing products that compete with Helix Data's own offerings, or if Helix Data has relationships with competitors of Cloudium and would prefer to redirect its technology licensing to a competitor.

(iv) Timing. Even in the best case, the 180-day Transition Period is insufficient to complete the estimated 18- to 24-month re-engineering effort, creating a gap during which Cloudium's product functionality could be impaired.

Mitigation. The following mitigation measures are recommended: (a) seek a binding written waiver from Helix Data prior to closing; (b) include the Helix Data waiver as a closing condition in the Merger Agreement; (c) negotiate for a special indemnity in the Merger Agreement covering losses arising from the loss of the Helix License; and (d) as part of post-closing integration planning, consider negotiating a long-term license renewal, an expanded license, or a buyout of the Fendrox Technology (i.e., an outright acquisition of the relevant intellectual property from Helix Data) to eliminate the ongoing dependency and termination risk.

IV. Summary of Other Contracts Reviewed

A. Contracts with Change of Control Provisions Below Materiality Threshold

In addition to the three material contracts analyzed in detail in Section III above, our review identified approximately 12 additional contracts of Cloudium and its subsidiaries that contain change of control provisions of various types. Each of these contracts has an annual contract value below the $5,000,000 de minimis threshold established for purposes of this memorandum and, accordingly, is not analyzed in detail herein.

These sub-materiality contracts are primarily composed of:

(a) Minor reseller agreements with regional value-added resellers and channel partners, typically containing provisions that permit the counterparty to terminate upon a change of control of Cloudium or to reassign exclusivity rights;

(b) Data center hosting agreements with third-party colocation and hosting providers, containing provisions that require notification to the provider upon a change of control or, in certain cases, grant the provider a termination right;

(c) Software license agreements with third-party tool and utility providers (including development tools, monitoring software, and testing frameworks), containing anti-assignment provisions that may be implicated by a change of control but are typically limited to assignments of the agreement rather than changes in ownership of the licensee entity; and

(d) Professional services agreements with consulting firms and implementation partners, containing provisions that permit the counterparty to terminate upon a change of control or that require the counterparty's consent to assignment.

These contracts are cataloged in a separate appendix (see Appendix B below) and in the Data Room index. Based on our review, these contracts do not, individually or in the aggregate, present material risk to the transaction. The aggregate annual value of these sub-materiality contracts is approximately $18,700,000, and the change of control provisions in these contracts are generally less restrictive than those found in the three material contracts analyzed above. Nevertheless, we recommend that these contracts be included in the disclosure schedules to the Merger Agreement to ensure comprehensive disclosure.

B. Contracts Reviewed That Do Not Contain Change of Control Provisions

Our review also encompassed a substantial number of Cloudium's material contracts that do not contain change of control provisions or that contain provisions triggered only by assignment (rather than by a change in the ownership structure of a contracting party). Notably, many of Cloudium's material customer agreements (other than the Aegis Agreement) do not contain change of control provisions. This is attributable in part to Cloudium's standard commercial terms, which do not include a change of control clause, and in part to the fact that many of Cloudium's enterprise customer agreements were negotiated on the basis of Cloudium's standard form and do not include customer-specific provisions addressing change of control.

We also note that the reverse triangular merger structure was selected in part to avoid triggering anti-assignment provisions contained in certain Cloudium contracts. Because Cloudium will survive the Merger as the same legal entity (the same Delaware corporation, with the same state of incorporation, the same EIN, and the same contractual counterparty identity), the Merger does not constitute an "assignment" of Cloudium's contracts by operation of law. This is a well-established principle under Delaware law and under the laws of most jurisdictions, and the use of the reverse triangular merger structure was recommended in the Preliminary Structuring Memorandum prepared by C&H, dated October 18, 2023, in part for this reason. Contracts that contain anti-assignment provisions but do not contain change of control provisions are generally not triggered by the Merger.

Employment Agreements. We note that the employment agreements with Jonathan Hargrove (CEO), Sienna Whitfield (CFO), and certain other members of Cloudium's senior management team contain change of control provisions that provide for, among other things, accelerated vesting of equity awards and enhanced severance benefits upon a qualifying termination of employment in connection with a change of control. These provisions are addressed separately in the Supplemental Due Diligence Request List — Employee Benefits and Compensation, dated October 22, 2023, and the forthcoming Benefits and Compensation Due Diligence Memorandum being prepared by the C&H executive compensation team (Samantha Holt, Partner). The employment-related change of control provisions are not covered in this memorandum.

V. Merger Agreement Implications

The findings set forth in this memorandum have direct implications for several provisions of the Merger Agreement, which is currently in near-final draft form (circulated December 1, 2023) and under active negotiation between C&H (on behalf of Fund VI and Merger Sub) and RPS (on behalf of Cloudium). The key Merger Agreement implications are summarized below.

Closing Conditions. The draft Merger Agreement includes, as a condition to the obligations of Fund VI and Merger Sub to consummate the Merger (Section 7.01(d)), the receipt of certain specified third-party consents, including:

(i) the prior written consent of Aegis Federal Solutions Inc. under Section 15.3(b) of the Aegis Agreement; and

(ii) a written waiver from Helix Data Systems GmbH of its termination right under Section 12.2 of the Helix License (or, in the alternative, a written confirmation from Helix Data that it does not intend to exercise such termination right in connection with the Merger).

The payoff of the Atlas Credit Agreement is addressed separately in the closing conditions as a condition to funding of the Debt Commitment Letter and is cross-referenced in Section 7.01(b) of the draft Merger Agreement (relating to the absence of any default under the Company's existing financing arrangements at closing).

We recommend confirming that the specific language of the closing conditions in the Merger Agreement accurately reflects the consent and waiver requirements identified in this memorandum. In particular, the closing condition relating to the Helix License should be drafted to require either a binding waiver or a binding confirmation (not merely an informal indication of intent), and should specify that such waiver or confirmation must be in form and substance reasonably satisfactory to Fund VI.

Representations and Warranties. Article IV of the draft Merger Agreement contains the representations and warranties of Cloudium (the "Seller's Representations"). The Seller's Representations include, at Section 4.12 (Material Contracts), a representation that:

(a) each Material Contract is valid, binding, and enforceable in accordance with its terms, subject to customary enforceability exceptions;

(b) neither the Company nor any of its subsidiaries is in material breach or default under any Material Contract;

(c) no event has occurred that, with the giving of notice or the lapse of time (or both), would constitute a material breach or default under any Material Contract; and

(d) the execution, delivery, and performance of the Merger Agreement and the consummation of the transactions contemplated thereby will not (with or without notice or lapse of time, or both) result in any material breach or default under, or give rise to any right of termination, cancellation, acceleration, or modification of, any Material Contract, except as set forth in the applicable disclosure schedule.

The three contracts analyzed in this memorandum — the Atlas Credit Agreement, the Aegis Agreement, and the Helix License — should each be identified in the disclosure schedules corresponding to Section 4.12(d), as the Merger will trigger change of control provisions under each contract that give rise to mandatory prepayment obligations, consent requirements, or termination rights. The disclosure schedules should describe, for each contract, the specific change of control provision, the consequence of the triggering event, and the required action.

Indemnification. Breaches of the Material Contracts representation in Section 4.12 of the Merger Agreement are subject to the general indemnification framework set forth in Article IX of the draft Merger Agreement, which includes the following key terms:

Special Indemnity Consideration. Given the strategic significance of the Aegis Agreement and the Helix License, and the potentially significant magnitude of losses that could arise from the failure to obtain the required consent or waiver (or from the post-closing exercise of a termination right), we recommend evaluating whether a special indemnity should be negotiated for losses arising from these contracts. A special indemnity would operate outside the general indemnification framework — that is, it would not be subject to the 15% cap, the 0.75% basket, or the 18-month survival period — and would provide Fund VI with enhanced protection against the specific risks identified in this memorandum. In particular:

(i) With respect to the Aegis Agreement, a special indemnity could cover the loss of ARR and associated damages in the event that Aegis Federal terminates the agreement following the Merger due to the failure to obtain consent.

(ii) With respect to the Helix License, a special indemnity could cover re-engineering, migration, and remediation costs (estimated at $45,000,000 to $65,000,000) and associated business disruption in the event that Helix Data exercises its termination right following the Merger.

The negotiation of special indemnities is subject to ongoing discussion between C&H and RPS, and we will provide further advice on this topic as the Merger Agreement negotiations progress.

VI. Recommended Next Steps and Action Items

Based on the analysis set forth in this memorandum, we recommend the following next steps and action items. Each action item is assigned to a responsible attorney, with coordination partners identified where applicable.

1. Atlas Commercial Lending Corp. — Credit Agreement Payoff

Request a payoff letter from Atlas Commercial Lending Corp. (directed to Victoria Regan, Managing Director, Loan Administration) no later than 10 business days before the anticipated closing date. The payoff letter should specify the exact payoff amount (including principal, accrued interest, breakage costs, letter of credit cash-collateralization requirements, and any other amounts owed) and wire transfer instructions. Coordinate the payoff with the closing funds flow and include the payoff as a line item in the Funds Flow Memorandum. Confirm that Atlas will deliver UCC-3 termination statements, intellectual property security releases, and a comprehensive lien release package upon receipt of the payoff funds. Coordinate with Meridian Atlantic Bank, N.A. (Graham Whitaker, Managing Director, Leveraged Finance) and Winthrop & Hale LLP (Christine Novak, Partner, Banking & Finance) regarding the funding of the new Term Loan B facility and the timing of the payoff relative to the drawdown of new credit facility proceeds.

Responsible: Andrew Fitzpatrick (C&H), with coordination from Meridian Atlantic Bank and Winthrop & Hale LLP.

2. Aegis Federal Solutions Inc. — Consent Solicitation

Initiate the consent solicitation process promptly after the signing and public announcement of the Merger Agreement (anticipated January 22–23, 2024). Prepare a form of written consent for Aegis Federal's review and execution. Coordinate with Cloudium's General Counsel (Nadia Chowdhury) and the Cloudium account team on the timing and messaging of the initial outreach to Aegis Federal. Coordinate with RPS (Catherine Answorth) on disclosure and communications consistency. Consider what assurances regarding continuity of service, key personnel, and data security may be required to facilitate Aegis Federal's consent. Monitor Cloudium management's assessment of the relationship and promptly report any developments that could affect the likelihood of obtaining consent.

Responsible: Tiffany Rosenthal (C&H).

3. Helix Data Systems GmbH — Waiver/Confirmation

Initiate discussions with Helix Data Systems GmbH regarding a written waiver of the termination-for-change-of-control right under Section 12.2 of the Helix License, or, in the alternative, a written confirmation that Helix Data does not intend to exercise such right in connection with the Merger. Coordinate with Cloudium management and RPS London (Alistair Fenn) on the outreach strategy, taking into account the German jurisdiction and the cross-border dynamics of the relationship. Consider involving Cloudium Solutions GmbH (

PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP 599 Lexington Avenue New York, NY 10022
MEMORANDUM
Matter No.: 1041-00003
January 8, 2024
TO:
Harrison Wexford, Responsible Partner, Mergers & Acquisitions
Marcus Elliston, Founder & Managing Partner, Solara Digital Infrastructure LP
Priya Narasimhan, Co-Managing Partner & Chief Investment Officer, Solara Digital Infrastructure LP
FROM:
Tiffany Rosenthal, Lead Associate, Mergers & Acquisitions
Andrew Fitzpatrick, Working Associate, Mergers & Acquisitions
RE:
Cloudium Technologies plc — Survey of Material Contracts Containing Change of Control Provisions Triggered by the Proposed Merger
REVIEWED BY: Harrison Wexford
Right-click to update Table of Contents
I. Executive Summary
This memorandum surveys all material contracts of Cloudium Technologies plc ("Cloudium" or the "Company") that contain change of control provisions that would be triggered by the proposed reverse triangular merger (the "Merger") between Stratos Merger Sub Inc. ("Merger Sub"), a newly formed Delaware corporation and wholly owned subsidiary of Solara Digital Infrastructure Fund VI LP ("Fund VI"), and Cloudium, with Cloudium surviving the Merger as a wholly owned subsidiary of Fund VI (the "Surviving Corporation"). The purpose of this memorandum is to identify contractual provisions that require affirmative action — whether in the form of prepayment, consent solicitation, or waiver procurement — prior to or contemporaneously with the closing of the Merger, and to assess the associated risks and recommend appropriate courses of action.
Transaction Overview. The proposed transaction is a take-private acquisition of Cloudium by Fund VI at a total enterprise value of approximately $6,800,000,000, implying a per-share price of approximately $36.92. The transaction is structured as a reverse triangular merger under the Delaware General Corporation Law (the "DGCL"), pursuant to which Merger Sub will merge with and into Cloudium, and Cloudium will survive the Merger as a wholly owned subsidiary of Fund VI. Upon consummation of the Merger, all outstanding shares of Cloudium common stock (other than rollover shares held by Jonathan Hargrove, the Company's Chief Executive Officer, representing approximately 4.2% of the outstanding equity, and shares held by Pinnacle Growth Equity Partners LP ("Pinnacle"), representing approximately 11.6% of the outstanding equity, each of which will be converted into equity interests in the Surviving Corporation or a parent entity thereof pursuant to rollover arrangements) will be converted into the right to receive the per-share merger consideration in cash. The Merger Agreement (in near-final draft form as of the date of this memorandum, with an anticipated execution date of January 22, 2024, and public announcement on January 23, 2024) governs the terms and conditions of the transaction.
Material Finding. The Merger constitutes a "change of control" (or analogous defined event) under multiple material contracts of Cloudium and its subsidiaries. Our review has identified three categories of material contracts containing change of control provisions: (A) credit and financing agreements, (B) key customer agreements, and (C) technology license agreements. Within these categories, three specific material contracts require affirmative action prior to or at the closing of the Merger:
1. Credit Agreement with Atlas Commercial Lending Corp. The existing Credit Agreement dated March 15, 2021 (the "Atlas Credit Agreement"), under which Cloudium has approximately $820,000,000 of outstanding indebtedness, contains a mandatory prepayment obligation triggered upon a change of control. The entire outstanding balance must be repaid at or prior to closing.
2. Master SaaS Agreement with Aegis Federal Solutions Inc. The Master SaaS Agreement (the "Aegis Agreement") with Aegis Federal Solutions Inc. ("Aegis Federal"), which accounts for approximately $84,000,000 in annual recurring revenue ("ARR"), requires the prior written consent of Aegis Federal before any change of control of Cloudium becomes effective. Failure to obtain such consent entitles Aegis Federal to terminate the agreement upon 60 days' written notice.
3. Technology License Agreement with Helix Data Systems GmbH. The Technology License Agreement (the "Helix License") with Helix Data Systems GmbH ("Helix Data"), under which Cloudium licenses proprietary data-integration middleware technology embedded in its core product architecture, grants Helix Data a termination right exercisable upon 90 days' written notice following a change of control of Cloudium. Loss of the Helix License would necessitate costly and time-consuming re-engineering of Cloudium's core products.
Recommended Actions. We recommend the following actions in connection with the foregoing contracts: (i) mandatory prepayment of all outstanding indebtedness under the Atlas Credit Agreement at closing, to be funded from the proceeds of the new $3,740,000,000 Term Loan B commitment from Meridian Atlantic Bank, N.A. and Ironclad Capital Markets LLC; (ii) procurement of the prior written consent of Aegis Federal Solutions Inc. under the Aegis Agreement promptly following the signing and public announcement of the Merger Agreement; and (iii) procurement of a written waiver or confirmation from Helix Data Systems GmbH that it will not exercise its termination right under the Helix License following the closing of the Merger.
Merger Agreement Cross-Reference. As discussed in greater detail in Section V below, the draft Merger Agreement (circulated December 1, 2023, and currently under negotiation) includes, as conditions to closing, the receipt of the specified third-party consents from Aegis Federal and Helix Data and the completion of the payoff of the Atlas Credit Agreement. The relevant closing conditions, representations and warranties, indemnification provisions, and disclosure schedule requirements are analyzed in Section V.
II. Scope and Methodology
Scope of Review. This memorandum is based upon a comprehensive review of all material contracts disclosed by Cloudium in the virtual data room maintained by Penrose Data Systems (the "Data Room"), to which Calderwood & Harkness LLP ("C&H") was granted access on September 18, 2023. The Data Room is organized into 14 primary folders and 87 subfolders, containing over 2,400 documents as of the date of this memorandum. Our review focused on contracts contained in the following Data Room folders: Folder 3 (Material Contracts — Commercial), Folder 4 (Financing Agreements), Folder 6 (Technology and intellectual Property Agreements), and Folder 8 (Government and Regulated Industry Contracts).
Our review was supplemented by information and documents obtained through the following additional sources:
(a) Management responses to the Preliminary Due Diligence Request List, dated September 10, 2023, which included specific requests for identification and copies of all contracts containing change of control, assignment, or similar provisions;
(b) Management responses to the Supplemental Due Diligence Request List — Regulatory and Government Contracts, dated October 15, 2023, which included targeted requests regarding the Aegis Federal relationship and government contracting implications;
(c) Discussions with Cloudium management during the management presentation held on October 2, 2023, at Cloudium's London offices, attended by Jonathan Hargrove (CEO), Sienna Whitfield (CFO), and Nadia Chowdhury (General Counsel), during which management provided context regarding the Company's key contractual relationships and known change of control sensitivities; and
(d) Subsequent Q&A sessions conducted via secure videoconference on October 19, 2023, November 3, 2023, and December 8, 2023, during which follow-up questions regarding specific contract provisions were addressed by Ms. Chowdhury and members of the Cloudium legal team.
Methodology. Our review focused on identifying contracts containing "change of control," "change in control," "change of ownership," or similar defined terms, as well as provisions that may be functionally equivalent to change of control triggers (including, without limitation, assignment-by-operation-of-law provisions, successor-entity restrictions, and indirect ownership change clauses). Each identified contract was reviewed to determine (i) the precise definition of the triggering event, (ii) whether the proposed Merger would constitute such a triggering event, (iii) the contractual consequences of the triggering event (e.g., mandatory prepayment, consent requirement, termination right, renegotiation right, or increased pricing), and (iv) the recommended course of action to mitigate any associated risk.
Coordination with Company's Counsel. We coordinated our review with Ridgeway Phelps & Sato LLP ("RPS"), counsel to Cloudium in connection with the Merger, specifically with Catherine Answorth (Lead M&A Partner, New York office) and Alistair Fenn (Lead UK Corporate Partner, London office). RPS has been responsible for preparing the Cloudium disclosure schedules to the Merger Agreement, and we have shared our findings with RPS to ensure consistency between the disclosure schedules and this memorandum. We have also coordinated with RPS regarding the factual accuracy of certain descriptions of the contracts analyzed herein.
Entity Coverage. The review encompasses contracts entered into by Cloudium Technologies plc and each of its key subsidiaries, including:
(i) Cloudium Technologies UK Ltd. (Company No. 11287456; registered at 45 Broadwick Street, London W1F 0DB, United Kingdom), which serves as Cloudium's principal operating subsidiary in the United Kingdom and employs approximately 1,200 individuals;
(ii) Cloudium Technologies India Pvt. Ltd. (registered in Bangalore, Karnataka, India), which serves as Cloudium's principal engineering and development center and employs approximately 2,800 individuals; and
(iii) Cloudium Solutions GmbH (registered in Berlin, Germany), which serves as Cloudium's principal European sales and professional services subsidiary and employs approximately 400 individuals.
In conducting our review, we treated contracts entered into by any subsidiary of Cloudium as contracts of the Company for purposes of this analysis, consistent with the definition of "Material Contract" in the draft Merger Agreement, which encompasses contracts of the Company and its subsidiaries.
Limitations. This memorandum focuses on material contracts, defined for purposes of this analysis as contracts with an annual value of $5,000,000 or more (for customer and vendor contracts) or any financing agreement, regardless of amount. Contracts containing change of control provisions with annual contract values below the $5,000,000 de minimis threshold have been separately cataloged in the Data Room index (see Appendix B) but are not analyzed in detail in this memorandum. Based on our review, such sub-materiality contracts do not, individually or in the aggregate, present material risk to the transaction. This memorandum also does not address employment agreements or equity compensation arrangements that contain change of control provisions, which are addressed separately in the Supplemental Due Diligence Request List — Employee Benefits and Compensation, dated October 22, 2023, and the forthcoming Benefits and Compensation Due Diligence Memorandum being prepared by the C&H executive compensation team.
III. Contract-by-Contract Analysis
A. Existing Credit Agreement — Atlas Commercial Lending Corp.
1. Contract Identification
The following table sets forth the key identifying information for the Atlas Credit Agreement:
The Atlas Credit Agreement is the Company's primary source of external debt financing and represents the single largest financial obligation of Cloudium and its subsidiaries. The credit facilities were originally arranged in connection with the Company's acquisition of Stratosphere Analytics Inc. in March 2021 and have been amended twice since inception — first, to modify certain financial covenants in September 2022, and second, to transition the interest rate benchmark from LIBOR to SOFR in February 2023.
2. Change of Control Definition
Section 1.01 of the Atlas Credit Agreement defines "Change of Control" broadly to include any transaction or series of transactions resulting in any of the following:
(a) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than (I) management of the Borrower identified on Schedule 1.01(a) to the Credit Agreement (which includes Jonathan Hargrove, CEO, and certain other senior executives) and their respective affiliates (the "Management Investors"), and (II) any "Permitted Holder" (defined as any holder of 5% or more of the voting equity interests of the Borrower as of the Closing Date, together with such holder's affiliates — which, as of the Closing Date, included Pinnacle Growth Equity Partners LP), acquiring direct or indirect "beneficial ownership" (as defined in Rule 13d-3 under the Exchange Act) of more than 50% of the aggregate ordinary voting power represented by the issued and outstanding voting equity interests of the Borrower;
(b) the Borrower ceasing to own, directly or indirectly, 100% of the equity interests in each "Material Subsidiary" (as defined in the Credit Agreement); or
(c) a merger, consolidation, or similar transaction involving the Borrower in which the stockholders of the Borrower immediately prior to such transaction hold less than 50% of the aggregate ordinary voting power of the surviving or resulting entity.
Application to the Proposed Merger. The proposed reverse triangular merger squarely falls within limb (a) and limb (c) of the Change of Control definition. With respect to limb (a), upon consummation of the Merger, Fund VI — which is neither a Management Investor nor a Permitted Holder as defined in the Credit Agreement — will acquire beneficial ownership of 100% of the equity interests of Cloudium (through the merger of Merger Sub with and into Cloudium), subject only to the rollover equity to be retained by Hargrove (approximately 4.2%) and Pinnacle (approximately 11.6%). Even accounting for the rollover equity, Fund VI's beneficial ownership will far exceed the 50% threshold. With respect to limb (c), the Merger is a merger transaction in which the stockholders of Cloudium immediately prior to the Merger will not hold any continuing equity in the Surviving Corporation (other than the rollover participants), and therefore the existing public stockholders will hold less than 50% of the voting power of the surviving entity. Accordingly, the Merger will constitute a "Change of Control" under the Atlas Credit Agreement.
We note that while Hargrove and Pinnacle are, respectively, a Management Investor and a Permitted Holder, neither will individually or collectively hold more than 50% of the voting power of the Surviving Corporation following the Merger; therefore, the exceptions in the definition do not prevent the occurrence of a Change of Control.
3. Consequences of Change of Control
Section 7.03(a) of the Atlas Credit Agreement sets forth the consequences of a Change of Control event, as follows:
Mandatory Prepayment Obligation. Upon the occurrence of a Change of Control, the Borrower is required to offer to prepay all outstanding loans under the Credit Agreement — both the Term Loan A Facility and the Revolving Credit Facility — at par (100% of outstanding principal amount) plus all accrued and unpaid interest thereon through the date of prepayment, together with any applicable breakage costs under Section 3.05 of the Credit Agreement.
Acceleration Right. In the alternative, Section 8.01(g) of the Credit Agreement provides that a Change of Control constitutes an "Event of Default," and upon the occurrence and during the continuance of such Event of Default, the Administrative Agent may, upon the written direction of the Required Lenders (defined as lenders holding more than 50% of the outstanding commitments and loans), declare all outstanding loans and other obligations under the Credit Agreement to be immediately due and payable in full, without presentment, demand, protest, or other notice of any kind.
Practical Effect. The entire $820,000,000 of outstanding indebtedness — comprising $620,000,000 of term loan principal and $200,000,000 of revolving credit drawings — must be repaid at or prior to the closing of the Merger. There is no consent, waiver, or amendment mechanism available under the Atlas Credit Agreement as an alternative to prepayment upon a Change of Control. The mandatory prepayment and the Event of Default are automatic consequences of the Change of Control event, and the Credit Agreement does not contemplate any cure period or opportunity for the Borrower to seek lender consent in lieu of repayment.
Additionally, upon repayment of all outstanding obligations under the Atlas Credit Agreement, all revolving commitments will terminate, and all letters of credit (of which there are currently three outstanding letters of credit with an aggregate face amount of approximately $12,500,000) will need to be cash-collateralized, backstopped, or replaced.
4. Recommended Actions
We recommend the following actions with respect to the Atlas Credit Agreement:
(a) Payoff Letter. Obtain a payoff letter from Atlas Commercial Lending Corp. (as Administrative Agent) specifying the exact payoff amount as of the anticipated closing date, including outstanding principal, accrued and unpaid interest, any applicable breakage costs under Section 3.05, any administrative agent fees, and wire transfer instructions. The payoff letter should also address the treatment of outstanding letters of credit and confirm the aggregate amount required to cash-collateralize or otherwise backstop such letters of credit pending their expiration or replacement.
(b) Lien Release Package. Request that Atlas deliver, upon receipt of the payoff funds, a comprehensive lien release package, including (i) UCC-3 termination statements for all financing statements filed in connection with the Atlas Credit Agreement in all applicable jurisdictions (including Delaware, New York, the United Kingdom, India, and Germany), (ii) releases of all mortgages, deeds of trust, and other real property security instruments, if any, (iii) releases of all intellectual property security agreements, and (iv) payoff confirmation letters.
(c) Source of Repayment Funds. The payoff of the Atlas Credit Agreement will be funded from the proceeds of the new $3,740,000,000 Term Loan B facility to be provided by Meridian Atlantic Bank, N.A. (as Lead Arranger and Administrative Agent) and Ironclad Capital Markets LLC (as Co-Arranger) pursuant to the Debt Commitment Letter dated January 22, 2024 (the "Commitment Letter"). The Commitment Letter contemplates that a portion of the Term Loan B proceeds will be used to refinance existing indebtedness of Cloudium. The payoff of the Atlas Credit Agreement is consistent with this contemplated use of proceeds.
(d) Closing Funds Flow Coordination. The payoff of the Atlas Credit Agreement should be included as a line item in the Funds Flow Memorandum to be prepared in connection with closing, and the wire of payoff funds to Atlas should be coordinated with the overall closing funds flow to ensure simultaneous or near-simultaneous completion of all closing transactions.
(e) Timeline. The payoff letter should be requested from Atlas no later than 10 business days before the anticipated closing date. C&H will prepare and send a formal request letter to Atlas Commercial Lending Corp., directed to Victoria Regan, Managing Director, Loan Administration.
5. Risk Assessment
Risk Level: Low (Mechanical/Procedural). The payoff of the Atlas Credit Agreement is a standard closing condition in leveraged buyout transactions and is fully funded by the committed debt financing under the Commitment Letter. Provided that the Commitment Letter remains in full force and effect and the conditions to funding thereunder are satisfied, there is no material risk that the payoff cannot be completed.
Potential Complication — Breakage Costs and Prepayment Premium. We have reviewed the Atlas Credit Agreement for any yield maintenance, make-whole, or prepayment premium provisions that could increase the cost of repayment. Based on our review, the Atlas Credit Agreement contains a soft-call premium of 1.0% (applied to the principal amount being repriced) for repricing transactions occurring within six months of any amendment to the Credit Agreement. However, this soft-call provision is expressly limited to "Repricing Transactions" (defined in Section 1.01 as any amendment or refinancing that reduces the effective interest rate applicable to the Term Loan A Facility) and does not apply to a mandatory prepayment upon a Change of Control event. Accordingly, no prepayment premium is expected to apply to the payoff in connection with the Merger. However, we recommend confirming this conclusion with Atlas in the payoff letter request.
Potential Complication — Outstanding Letters of Credit. As noted above, there are currently three outstanding letters of credit under the Revolving Credit Facility with an aggregate face amount of approximately $12,500,000. These will need to be cash-collateralized, backstopped by letters of credit issued under the new Meridian facility, or replaced prior to or at closing. We recommend discussing the treatment of outstanding letters of credit with Meridian Atlantic Bank as part of the new facility documentation process.
B. Master SaaS Agreement — Aegis Federal Solutions Inc.
1. Contract Identification
The following table sets forth the key identifying information for the Aegis Agreement:
The Aegis Federal relationship is one of Cloudium's largest and most strategically significant single-customer relationships. The $84,000,000 in ARR represents approximately 4.8% of Cloudium's total ARR as of December 31, 2023, and Aegis Federal has been a Cloudium customer since 2019. The relationship has expanded significantly over time, with ARR growing from approximately $42,000,000 at inception to the current $84,000,000 — reflecting the addition of new modules, user seats, and professional services engagements pursuant to Amendment No. 1 (March 2021) and Amendment No. 2 (January 2023). Cloudium management views the Aegis Federal relationship as a flagship account in the government contracting vertical.
2. Change of Control Definition
Section 15.3(a) of the Aegis Agreement defines "Change of Control" to mean any of the following events:
(a) any merger, consolidation, or reorganization of the Provider (Cloudium) in which (i) the Provider is not the surviving entity, or (ii) the stockholders of the Provider immediately prior to such transaction do not retain a majority of the voting power of the surviving entity;
(b) a sale, transfer, or other disposition of all or substantially all of the Provider's assets to any person or group; or
(c) any person or group (other than persons who, as of the Effective Date, hold more than 10% of the outstanding voting securities of the Provider) acquiring beneficial ownership of more than 50% of the outstanding voting securities of the Provider.
Application to the Proposed Merger. The proposed reverse triangular merger triggers limbs (a)(ii) and (c) of the Change of Control definition. With respect to limb (a)(ii), although Cloudium will technically survive the Merger as the surviving corporation (and thus limb (a)(i) is not triggered), the stockholders of Cloudium immediately prior to the Merger will not retain a majority of the voting power of the surviving entity — Fund VI will hold 100% of the surviving entity's equity, subject to the rollover equity from Hargrove (approximately 4.2%) and Pinnacle (approximately 11.6%). Even if the rollover equity is considered, the pre-Merger public stockholders collectively will hold 0% of the voting power of the Surviving Corporation, and the rollover participants together will hold only approximately 15.8%, which is well below a majority. With respect to limb (c), Fund VI will acquire beneficial ownership of more than 50% of the outstanding voting securities of Cloudium, and Fund VI is not a person that held more than 10% of the outstanding voting securities as of the Effective Date of the Aegis Agreement (June 1, 2019).
We note that the Aegis Agreement's Change of Control definition includes an exception for persons who, as of the Effective Date, held more than 10% of the outstanding voting securities. Based on our review, Pinnacle held approximately 14.7% of Cloudium's outstanding voting securities as of June 1, 2019, and thus Pinnacle is an excepted person under the definition. However, because Fund VI — the entity that will acquire majority beneficial ownership — is not an excepted person, the exception does not prevent the occurrence of a Change of Control.
3. Consequences of Change of Control
Section 15.3(b) of the Aegis Agreement sets forth the consequences of a Change of Control event:
Written Consent Requirement. The Aegis Agreement requires the Provider (Cloudium) to obtain the prior written consent of the Customer (Aegis Federal) before any Change of Control becomes effective. Specifically, Section 15.3(b) provides:
"The Provider shall not consummate or permit to be consummated any Change of Control without the prior written consent of the Customer, which consent shall not be unreasonably withheld, conditioned, or delayed."
We note that the consent is subject to a "not unreasonably withheld, conditioned, or delayed" standard, which is favorable to Cloudium in the event of a dispute regarding Aegis Federal's willingness to consent. However, the determination of "reasonableness" in the context of a government contractor's evaluation of a change of control in a key SaaS provider may involve considerations specific to Aegis Federal's own regulatory and compliance obligations, which could expand the scope of what constitutes a "reasonable" basis for withholding consent.
Failure to Obtain Consent — Termination Right. Section 15.3(c) of the Aegis Agreement provides that if the Provider consummates a Change of Control without obtaining the prior written consent of the Customer, the Customer shall have the right to terminate the Aegis Agreement upon 60 days' prior written notice to the Provider. The relevant provision states:
"In the event that the Provider consummates a Change of Control without obtaining the Customer's prior written consent as required by Section 15.3(b), the Customer may, at its sole option, terminate this Agreement by providing the Provider with not less than sixty (60) days' prior written notice of termination."
Impact of Termination. Termination of the Aegis Agreement would result in the loss of $84,000,000 in ARR, representing approximately 4.8% of Cloudium's total ARR. This would constitute a material adverse impact on Cloudium's business, revenue base, and financial condition, and could trigger negative signaling effects in the government contracting customer vertical more broadly. Additionally, the loss of the Aegis Federal account could affect Cloudium's ability to win new government contracting customers, as Aegis Federal serves as a prominent reference account.
No Automatic Termination. Importantly, the Change of Control does not trigger automatic termination of the Aegis Agreement. Aegis Federal must affirmatively elect to exercise its termination right by delivering written notice. If Aegis Federal does not deliver a termination notice, the Aegis Agreement remains in full force and effect notwithstanding the occurrence of the Change of Control. However, reliance on Aegis Federal's inaction would be inconsistent with the contractual requirement to obtain prior written consent, and would leave Cloudium in technical breach of Section 15.3(b), which could have other adverse consequences (including, potentially, a claim by Aegis Federal for damages arising from the breach).
Potential Government Contract Implications. Given Aegis Federal's status as a United States government contractor, any change of control in a key subcontractor or SaaS provider may also implicate government contracting novation or notification requirements that apply to Aegis Federal in its relationships with its government agency customers. Under the Federal Acquisition Regulation ("FAR"), certain changes in the identity or ownership of a contractor's key subcontractors or suppliers may require notification to the contracting officer or, in some circumstances, may affect the contractor's eligibility to perform under existing contracts. While these obligations sit with Aegis Federal — and not directly with Cloudium — they could influence Aegis Federal's willingness to consent to the Change of Control or the timeline for obtaining such consent, as Aegis Federal may wish to consult with its contracting officers or government contracting compliance team before providing consent.
4. Recommended Actions
We recommend the following actions with respect to the Aegis Agreement:
(a) Initiate Consent Solicitation. Outreach to Aegis Federal Solutions Inc. should be initiated promptly after the signing and public announcement of the Merger Agreement, which is anticipated to occur on January 22–23, 2024. The timing of the outreach should be coordinated with Cloudium management to ensure that the initial communication to Aegis Federal is delivered by the appropriate relationship contact at Cloudium (in coordination with Nadia Chowdhury, General Counsel, and the Cloudium account team responsible for the Aegis Federal relationship) and is accompanied by appropriate messaging regarding the strategic rationale for the transaction and the anticipated continuity of service.
(b) Coordinate with Cloudium's Counsel. C&H should coordinate with RPS (Catherine Answorth) on the consent solicitation process, including the timing, form, and substance of communications with Aegis Federal, to ensure consistency with the Company's disclosure obligations and public communications regarding the Merger.
(c) Prepare Form of Written Consent. C&H should prepare a form of written consent for Aegis Federal's review and execution. The consent should be drafted to cover the specific transaction contemplated by the Merger Agreement and should include appropriate representations by Cloudium regarding the continuity of services, data security, and key personnel following the closing of the Merger.
(d) Consider Assurances. In connection with the consent solicitation, consider whether any specific assurances regarding the following topics need to be provided to Aegis Federal to facilitate its consent: (i) continuity of service levels and support; (ii) retention of key personnel involved in the Aegis Federal account; (iii) data security and data residency commitments, particularly given the government contracting context; (iv) non-assignment of the Aegis Agreement or the Provider's obligations thereunder; and (v) the identity and background of Solara Digital Infrastructure LP and Fund VI.
(e) Closing Condition. The consent of Aegis Federal should be listed as a required closing deliverable in the Merger Agreement closing conditions (Section 7.01(d) of the draft Merger Agreement) and should be added to the Master Closing Checklist with responsible parties and target completion dates.
Management Assessment. As of the date of this memorandum, Cloudium management has indicated that its relationship with Aegis Federal is strong and that it does not anticipate difficulty obtaining the required consent. Mr. Hargrove specifically noted during the October 2, 2023, management presentation that the Cloudium account team has a "highly collaborative" relationship with senior leadership at Aegis Federal and that Aegis Federal has recently expanded its use of Cloudium's platform (as reflected in Amendment No. 2, executed in January 2023). While this assessment is encouraging, it remains preliminary and should be monitored throughout the consent solicitation process. The views of Aegis Federal's legal and compliance teams — who may have different considerations than the business relationship team — are not yet known.
5. Risk Assessment
Risk Level: Medium. While Cloudium management is confident in its ability to obtain the required consent, the loss of the Aegis Agreement ($84,000,000 ARR) would be material to Cloudium's business and financial condition. The following risk factors have been identified:
(i) Government Contracting Compliance. Aegis Federal's internal approval process for consenting to a change of control in a key SaaS provider may require involvement of its government contracting compliance team, contracting officers, or even agency-level review. This could introduce delays or conditions that are difficult to predict or control.
(ii) Negotiation Leverage. The consent requirement gives Aegis Federal potential negotiation leverage, which it could use to seek more favorable commercial terms (e.g., pricing reductions, enhanced service levels, additional professional services at no cost) as a condition of consent. Cloudium and Solara should be prepared for the possibility that the consent comes with commercial strings attached.
(iii) Timeline Risk. If the consent process takes longer than anticipated, it could delay the closing of the Merger or require the parties to evaluate whether to waive the consent condition (which would leave Cloudium in technical breach of Section 15.3(b) and expose it to the termination right).
Mitigation. Early engagement with Aegis Federal (promptly after signing/announcement), provision of robust assurances regarding service continuity and data security, and inclusion of the Aegis Federal consent as a specific closing condition in the Merger Agreement will mitigate these risks. Additionally, the "not unreasonably withheld, conditioned, or delayed" standard in Section 15.3(b) provides Cloudium with a contractual basis to challenge any unreasonable refusal to consent.
C. Technology License Agreement — Helix Data Systems GmbH
1. Contract Identification
The following table sets forth the key identifying information for the Helix License:
The Helix License is one of the most strategically significant technology agreements in Cloudium's portfolio. The Fendrox Technology serves as the backbone of the data integration layer within Cloudium's core ERP and BI products, enabling seamless data exchange between Cloudium's cloud-native platform and the range legacy on-premises systems, databases, and data formats used by Cloudium's enterprise customers. The Fendrox Technology is deeply embedded in Cloudium's product architecture — it is referenced in over 2,400 API calls within the Cloudium platform and is used by substantially all of Cloudium's enterprise customers as part of their initial implementation and ongoing operations.
Cloudium management has confirmed, in response to due diligence inquiries, that replacing the Fendrox Technology with a proprietary or alternative third-party solution would require an estimated 18 to 24 months of engineering effort and an estimated cost of $45,000,000 to $65,000,000, taking into account engineering personnel, testing, customer migration, and associated disruption costs. During the management presentation on October 2, 2023, Mr. Hargrove described the Fendrox Technology as "mission-critical infrastructure" for the Cloudium platform.
2. Change of Control Definition
Section 12.1 of the Helix License defines "Change of Control" (Kontrollwechsel) to mean any of the following events:
(a) a direct or indirect change in the beneficial ownership of more than 50% of the voting securities (Stimmrechte) of the Licensee (Cloudium), whether in a single transaction or a series of related transactions;
(b) a merger, consolidation, or reorganization (Verschmelzung, Konsolidierung oder Umstrukturierung) of the Licensee in which (i) the Licensee does not survive as a legal entity, or (ii) the stockholders of the Licensee immediately prior to such transaction do not hold a majority of the voting power (Stimmrechtsmehrheit) of the surviving entity; or
(c) a sale, transfer, or other disposition of all or substantially all of the Licensee's assets (wesentliche Vermögensgegenstände) to any third party.
Application to the Proposed Merger. The proposed reverse triangular merger triggers limbs (a) and (b)(ii) of the Change of Control definition. With respect to limb (a), Fund VI will acquire direct beneficial ownership of 100% of the voting securities of Cloudium (through the merger of Merger Sub with and into Cloudium), subject only to the rollover equity from Hargrove and Pinnacle. This constitutes a change in beneficial ownership of more than 50% of the voting securities. With respect to limb (b)(ii), although Cloudium survives the Merger (and thus limb (b)(i) is not triggered), the stockholders of Cloudium immediately prior to the Merger will not hold a majority of the voting power of the surviving entity, as discussed in the analysis of the Aegis Agreement above.
We note that the Helix License's Change of Control definition includes the concept of "indirect" changes in beneficial ownership, which is drafted broadly enough to capture the Merger even if a technical argument could be made that the direct ownership of Cloudium passes from its public stockholders to Fund VI through the merger mechanics rather than through a direct acquisition.
3. Consequences of Change of Control
Section 12.2 of the Helix License sets forth the consequences of a Change of Control event:
Termination Right. The Helix License contains a termination-for-change-of-control clause: upon the occurrence of a Change of Control of the Licensee, the Licensor (Helix Data) has the right to terminate the Helix License by providing 90 days' prior written notice to the Licensee. The relevant provision states:
"In the event of a Change of Control of the Licensee, the Licensor shall have the right, exercisable at its sole discretion, to terminate this Agreement by providing the Licensee with not less than ninety (90) days' prior written notice of termination, such notice to be delivered within one hundred eighty (180) days following the Licensor's receipt of written notice of the Change of Control from the Licensee or, if no such notice is provided, within one hundred eighty (180) days following the date on which the Licensor first becomes aware of the Change of Control."
No Prior Consent Mechanism. Unlike the Aegis Agreement, the Helix License does not expressly require the Licensee to obtain the Licensor's prior written consent before a Change of Control becomes effective. Instead, the Helix License grants Helix Data an affirmative post-closing termination right. There is no contractual obligation on Cloudium to obtain Helix Data's approval before consummating the Merger. The Change of Control itself is not a breach of the Helix License; rather, it triggers an option for Helix Data to elect to terminate.
Practical Effect. Although the termination right is post-closing in nature, the practical risk is significant. Following the closing of the Merger, Helix Data would have 180 days from receipt of written notice of the Change of Control (or from actual knowledge of the Change of Control) to deliver a termination notice, and the termination would become effective 90 days after delivery of such notice. This means that, in the worst-case scenario, the Helix License could be terminated as early as approximately 90 days after the Merger closes (if Helix Data delivers its termination notice promptly after closing) or as late as approximately 270 days after closing (if Helix Data waits until the end of the 180-day notice delivery period). In either case, the termination would be materially disruptive to Cloudium's business.
Wind-Down Period. Section 12.3 of the Helix License provides that, in the event of a termination pursuant to Section 12.2, the Licensee shall have a 180-day wind-down period (the "Transition Period") following the effective date of termination to transition off the Fendrox Technology. During the Transition Period, the Licensee retains a limited, non-exclusive license to continue using the Fendrox Technology solely for the purpose of completing the transition to an alternative technology solution. The license fee continues to accrue during the Transition Period.
Aggregate Impact. Termination of the Helix License would require Cloudium to undertake a wholesale re-engineering of its data integration layer — an effort that management estimates would take 18 to 24 months and cost $45,000,000 to $65,000,000. Even with the 180-day Transition Period, there would be a significant gap between the end of the Transition Period and the completion of the re-engineering effort, during which Cloudium's product functionality could be materially impaired. This risk is compounded by the potential for customer disruption and reputational harm in the market.
4. Recommended Actions
We recommend the following actions with respect to the Helix License:
(a) Pre-Closing Engagement with Helix Data. Notwithstanding the absence of a contractual obligation to obtain prior consent, we strongly recommend engaging with Helix Data Systems GmbH prior to closing to obtain either: (i) a written waiver of the termination-for-change-of-control right under Section 12.2 of the Helix License, pursuant to which Helix Data would irrevocably waive its right to terminate the Helix License in connection with the Merger; or (ii) a written confirmation (in the form of a side letter or standalone agreement) that Helix Data does not intend to exercise its termination right following the Merger.
(b) Coordination with Company's Counsel. C&H should coordinate with RPS (including Alistair Fenn in the London office, given Helix Data's German jurisdiction) on the outreach strategy and the form of waiver or confirmation letter. The outreach should be sensitive to the cross-border and cultural dynamics of the Cloudium–Helix Data relationship, and consideration should be given to having the initial outreach conducted by representatives of Cloudium Solutions GmbH (Cloudium's Berlin-based subsidiary, which employs approximately 400 individuals and maintains ongoing working relationships with German technology partners, including Helix Data) rather than by US-based legal counsel.
(c) Local Counsel Involvement. Consider retaining German local counsel to advise on the enforceability and interpretation of the Change of Control and termination provisions under German law, and to assist in drafting the waiver or confirmation letter in a manner consistent with German legal requirements. The Helix License is governed by German law, and Section 17.1 provides for exclusive jurisdiction in the courts of Frankfurt am Main.
(d) Form of Waiver/Confirmation Letter. C&H should prepare a draft form of waiver or confirmation letter for Helix Data's review and execution. The waiver should be drafted broadly to cover (i) the specific Change of Control resulting from the Merger, (ii) any subsequent changes in the indirect ownership of Cloudium resulting from changes in Fund VI's investor base or Solara's management structure, and (iii) any future internal reorganizations of Cloudium or its subsidiaries following the Merger.
(e) Closing Condition. The Helix Data waiver or confirmation should be included as a required third-party consent in the Merger Agreement closing conditions (Section 7.01(d) of the draft Merger Agreement) and should be added to the Master Closing Checklist with responsible parties and target completion dates.
(f) Alternative Protective Measure — Indemnity. Given the significance of the Helix License and the inherent uncertainty associated with a post-closing termination right (which may be exercised even if Helix Data provides informal assurances prior to closing), we recommend negotiating for a special indemnity or specific representation in the Merger Agreement covering the Helix License. This indemnity should protect Fund VI and the Surviving Corporation against losses arising from (i) the failure to obtain the Helix Data waiver prior to closing, (ii) the exercise by Helix Data of its termination right following closing, or (iii) any re-engineering, migration, or remediation costs incurred as a result of the loss of the Fendrox Technology. The special indemnity should be structured as an uncapped obligation, outside the general indemnification framework, given the potentially significant magnitude of the losses at stake.
5. Risk Assessment
Risk Level: Medium-High. The Helix License presents the highest risk among the three material contracts analyzed in this memorandum, for the following reasons:
(i) Post-Closing Termination Right. The termination right is exercisable post-closing without any requirement for prior consent, meaning there is inherent uncertainty regarding Helix Data's intentions even if informal assurances are obtained prior to closing. A written waiver would significantly reduce this risk, but there can be no assurance that Helix Data will agree to provide one.
(ii) Strategic Dependency. The Fendrox Technology is deeply embedded in Cloudium's core product architecture. The dependency is not merely contractual but technical — the Helix middleware is integrated at the code level, and its replacement would require a fundamental re-engineering of the data integration layer. This elevates the impact of any termination well beyond the direct cost of the license fee.
(iii) Competitor Risk. Helix Data may have strategic reasons to exercise its termination right if it views the post-Merger Cloudium as a less desirable licensee — for example, if Fund VI's investment thesis contemplates entering markets or developing products that compete with Helix Data's own offerings, or if Helix Data has relationships with competitors of Cloudium and would prefer to redirect its technology licensing to a competitor.
(iv) Timing. Even in the best case, the 180-day Transition Period is insufficient to complete the estimated 18- to 24-month re-engineering effort, creating a gap during which Cloudium's product functionality could be impaired.
Mitigation. The following mitigation measures are recommended: (a) seek a binding written waiver from Helix Data prior to closing; (b) include the Helix Data waiver as a closing condition in the Merger Agreement; (c) negotiate for a special indemnity in the Merger Agreement covering losses arising from the loss of the Helix License; and (d) as part of post-closing integration planning, consider negotiating a long-term license renewal, an expanded license, or a buyout of the Fendrox Technology (i.e., an outright acquisition of the relevant intellectual property from Helix Data) to eliminate the ongoing dependency and termination risk.
IV. Summary of Other Contracts Reviewed
A. Contracts with Change of Control Provisions Below Materiality Threshold
In addition to the three material contracts analyzed in detail in Section III above, our review identified approximately 12 additional contracts of Cloudium and its subsidiaries that contain change of control provisions of various types. Each of these contracts has an annual contract value below the $5,000,000 de minimis threshold established for purposes of this memorandum and, accordingly, is not analyzed in detail herein.
These sub-materiality contracts are primarily composed of:
(a) Minor reseller agreements with regional value-added resellers and channel partners, typically containing provisions that permit the counterparty to terminate upon a change of control of Cloudium or to reassign exclusivity rights;
(b) Data center hosting agreements with third-party colocation and hosting providers, containing provisions that require notification to the provider upon a change of control or, in certain cases, grant the provider a termination right;
(c) Software license agreements with third-party tool and utility providers (including development tools, monitoring software, and testing frameworks), containing anti-assignment provisions that may be implicated by a change of control but are typically limited to assignments of the agreement rather than changes in ownership of the licensee entity; and
(d) Professional services agreements with consulting firms and implementation partners, containing provisions that permit the counterparty to terminate upon a change of control or that require the counterparty's consent to assignment.
These contracts are cataloged in a separate appendix (see Appendix B below) and in the Data Room index. Based on our review, these contracts do not, individually or in the aggregate, present material risk to the transaction. The aggregate annual value of these sub-materiality contracts is approximately $18,700,000, and the change of control provisions in these contracts are generally less restrictive than those found in the three material contracts analyzed above. Nevertheless, we recommend that these contracts be included in the disclosure schedules to the Merger Agreement to ensure comprehensive disclosure.
B. Contracts Reviewed That Do Not Contain Change of Control Provisions
Our review also encompassed a substantial number of Cloudium's material contracts that do not contain change of control provisions or that contain provisions triggered only by assignment (rather than by a change in the ownership structure of a contracting party). Notably, many of Cloudium's material customer agreements (other than the Aegis Agreement) do not contain change of control provisions. This is attributable in part to Cloudium's standard commercial terms, which do not include a change of control clause, and in part to the fact that many of Cloudium's enterprise customer agreements were negotiated on the basis of Cloudium's standard form and do not include customer-specific provisions addressing change of control.
We also note that the reverse triangular merger structure was selected in part to avoid triggering anti-assignment provisions contained in certain Cloudium contracts. Because Cloudium will survive the Merger as the same legal entity (the same Delaware corporation, with the same state of incorporation, the same EIN, and the same contractual counterparty identity), the Merger does not constitute an "assignment" of Cloudium's contracts by operation of law. This is a well-established principle under Delaware law and under the laws of most jurisdictions, and the use of the reverse triangular merger structure was recommended in the Preliminary Structuring Memorandum prepared by C&H, dated October 18, 2023, in part for this reason. Contracts that contain anti-assignment provisions but do not contain change of control provisions are generally not triggered by the Merger.
Employment Agreements. We note that the employment agreements with Jonathan Hargrove (CEO), Sienna Whitfield (CFO), and certain other members of Cloudium's senior management team contain change of control provisions that provide for, among other things, accelerated vesting of equity awards and enhanced severance benefits upon a qualifying termination of employment in connection with a change of control. These provisions are addressed separately in the Supplemental Due Diligence Request List — Employee Benefits and Compensation, dated October 22, 2023, and the forthcoming Benefits and Compensation Due Diligence Memorandum being prepared by the C&H executive compensation team (Samantha Holt, Partner). The employment-related change of control provisions are not covered in this memorandum.
V. Merger Agreement Implications
The findings set forth in this memorandum have direct implications for several provisions of the Merger Agreement, which is currently in near-final draft form (circulated December 1, 2023) and under active negotiation between C&H (on behalf of Fund VI and Merger Sub) and RPS (on behalf of Cloudium). The key Merger Agreement implications are summarized below.
Closing Conditions. The draft Merger Agreement includes, as a condition to the obligations of Fund VI and Merger Sub to consummate the Merger (Section 7.01(d)), the receipt of certain specified third-party consents, including:
(i) the prior written consent of Aegis Federal Solutions Inc. under Section 15.3(b) of the Aegis Agreement; and
(ii) a written waiver from Helix Data Systems GmbH of its termination right under Section 12.2 of the Helix License (or, in the alternative, a written confirmation from Helix Data that it does not intend to exercise such termination right in connection with the Merger).
The payoff of the Atlas Credit Agreement is addressed separately in the closing conditions as a condition to funding of the Debt Commitment Letter and is cross-referenced in Section 7.01(b) of the draft Merger Agreement (relating to the absence of any default under the Company's existing financing arrangements at closing).
We recommend confirming that the specific language of the closing conditions in the Merger Agreement accurately reflects the consent and waiver requirements identified in this memorandum. In particular, the closing condition relating to the Helix License should be drafted to require either a binding waiver or a binding confirmation (not merely an informal indication of intent), and should specify that such waiver or confirmation must be in form and substance reasonably satisfactory to Fund VI.
Representations and Warranties. Article IV of the draft Merger Agreement contains the representations and warranties of Cloudium (the "Seller's Representations"). The Seller's Representations include, at Section 4.12 (Material Contracts), a representation that:
(a) each Material Contract is valid, binding, and enforceable in accordance with its terms, subject to customary enforceability exceptions;
(b) neither the Company nor any of its subsidiaries is in material breach or default under any Material Contract;
(c) no event has occurred that, with the giving of notice or the lapse of time (or both), would constitute a material breach or default under any Material Contract; and
(d) the execution, delivery, and performance of the Merger Agreement and the consummation of the transactions contemplated thereby will not (with or without notice or lapse of time, or both) result in any material breach or default under, or give rise to any right of termination, cancellation, acceleration, or modification of, any Material Contract, except as set forth in the applicable disclosure schedule.
The three contracts analyzed in this memorandum — the Atlas Credit Agreement, the Aegis Agreement, and the Helix License — should each be identified in the disclosure schedules corresponding to Section 4.12(d), as the Merger will trigger change of control provisions under each contract that give rise to mandatory prepayment obligations, consent requirements, or termination rights. The disclosure schedules should describe, for each contract, the specific change of control provision, the consequence of the triggering event, and the required action.
Indemnification. Breaches of the Material Contracts representation in Section 4.12 of the Merger Agreement are subject to the general indemnification framework set forth in Article IX of the draft Merger Agreement, which includes the following key terms:
Special Indemnity Consideration. Given the strategic significance of the Aegis Agreement and the Helix License, and the potentially significant magnitude of losses that could arise from the failure to obtain the required consent or waiver (or from the post-closing exercise of a termination right), we recommend evaluating whether a special indemnity should be negotiated for losses arising from these contracts. A special indemnity would operate outside the general indemnification framework — that is, it would not be subject to the 15% cap, the 0.75% basket, or the 18-month survival period — and would provide Fund VI with enhanced protection against the specific risks identified in this memorandum. In particular:
(i) With respect to the Aegis Agreement, a special indemnity could cover the loss of ARR and associated damages in the event that Aegis Federal terminates the agreement following the Merger due to the failure to obtain consent.
(ii) With respect to the Helix License, a special indemnity could cover re-engineering, migration, and remediation costs (estimated at $45,000,000 to $65,000,000) and associated business disruption in the event that Helix Data exercises its termination right following the Merger.
The negotiation of special indemnities is subject to ongoing discussion between C&H and RPS, and we will provide further advice on this topic as the Merger Agreement negotiations progress.
VI. Recommended Next Steps and Action Items
Based on the analysis set forth in this memorandum, we recommend the following next steps and action items. Each action item is assigned to a responsible attorney, with coordination partners identified where applicable.
1. Atlas Commercial Lending Corp. — Credit Agreement Payoff
Request a payoff letter from Atlas Commercial Lending Corp. (directed to Victoria Regan, Managing Director, Loan Administration) no later than 10 business days before the anticipated closing date. The payoff letter should specify the exact payoff amount (including principal, accrued interest, breakage costs, letter of credit cash-collateralization requirements, and any other amounts owed) and wire transfer instructions. Coordinate the payoff with the closing funds flow and include the payoff as a line item in the Funds Flow Memorandum. Confirm that Atlas will deliver UCC-3 termination statements, intellectual property security releases, and a comprehensive lien release package upon receipt of the payoff funds. Coordinate with Meridian Atlantic Bank, N.A. (Graham Whitaker, Managing Director, Leveraged Finance) and Winthrop & Hale LLP (Christine Novak, Partner, Banking & Finance) regarding the funding of the new Term Loan B facility and the timing of the payoff relative to the drawdown of new credit facility proceeds.
Responsible: Andrew Fitzpatrick (C&H), with coordination from Meridian Atlantic Bank and Winthrop & Hale LLP.
2. Aegis Federal Solutions Inc. — Consent Solicitation
Initiate the consent solicitation process promptly after the signing and public announcement of the Merger Agreement (anticipated January 22–23, 2024). Prepare a form of written consent for Aegis Federal's review and execution. Coordinate with Cloudium's General Counsel (Nadia Chowdhury) and the Cloudium account team on the timing and messaging of the initial outreach to Aegis Federal. Coordinate with RPS (Catherine Answorth) on disclosure and communications consistency. Consider what assurances regarding continuity of service, key personnel, and data security may be required to facilitate Aegis Federal's consent. Monitor Cloudium management's assessment of the relationship and promptly report any developments that could affect the likelihood of obtaining consent.
Responsible: Tiffany Rosenthal (C&H).
3. Helix Data Systems GmbH — Waiver/Confirmation
Initiate discussions with Helix Data Systems GmbH regarding a written waiver of the termination-for-change-of-control right under Section 12.2 of the Helix License, or, in the alternative, a written confirmation that Helix Data does not intend to exercise such right in connection with the Merger. Coordinate with Cloudium management and RPS London (Alistair Fenn) on the outreach strategy, taking into account the German jurisdiction and the cross-border dynamics of the relationship. Consider involving Cloudium Solutions GmbH (

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