Contract analysis

I. Executive Summary The purpose of this memorandum is to recommend the optimal blocker entity architecture for the proposed Pinnacle Continuation Vehicle LP ("PCV" or the "CV") to accommodate two distinct categories of investors who require structural insulation from adverse U.S. federal income tax consequences arising from direct participation in a domestic limited partnership: (a) U.S. tax-exempt limited partners

1. PCV Domestic blocker Inc. — a Delaware C-corporation to be formed for the benefit of U.S. tax-exempt investors (Meridian Public Employees' Retirement System and Ashford University Endowment); and

2. PCV International Holdings Ltd. — a Cayman Islands exempted company, electing corporate classification under Treas. Reg. § 301.7701-3 (Form 8832), to be formed for the benefit of non-U.S. investors (Sovereign Capital Partners (Cayman) Ltd.). The total capital to be routed through these two blocker entities is $250 million, representing approximately 23.3% of the total CV capitalization of $1.074 billion. This amou

II. Background and Transaction Overview A. The Continuation Vehicle Pinnacle Venture Fund II LP ("Fund II") is a Delaware limited partnership (EIN: 84-3291067) formed for the purpose of making venture capital investments in early-stage and growth-stage technology companies. Fund II is managed by Pinnacle Capital Management LLC (EIN: 82-6140538), a Delaware limited liability company headquartered at 2100 Sand Hill Roa

III. The Need for blocker Structures A. UBTI Concerns for Tax-Exempt Investors Organizations that qualify for exemption from U.S. federal income tax under Section 501(a) of the Code — including pension funds qualifying under Section 401(a) (such as Meridian) and educational and charitable organizations qualifying under Section 501(c)(3) (such as Ashford) — are generally exempt from U.S. federal income tax on their in

Section 1446 Withholding. Under Section 1446, a partnership that has income effectively connected with a U.S. trade or business is required to withhold tax on the allocable share of such income attributable to its foreign partners. The withholding rate is 21% for corporate foreign partners and the highest applicable rate for non-corporate foreign partners. Without a blocker, the CV would be required to withhold on So

IV. Proposed Domestic blocker Structure — PCV Domestic blocker Inc. A. Entity Selection and Formation We recommend the formation of a single domestic blocker entity with the following characteristics: Entity Name: PCV Domestic blocker Inc. Entity Type: Delaware C-corporation Jurisdiction of Formation: State of Delaware EIN: To be applied for upon formation (Form SS-4 to be filed with the Internal Revenue Service) Def

V. Proposed Offshore blocker Structure — PCV International Holdings Ltd. A. Entity Selection and Formation For the non-U.S. investor, Sovereign Capital Partners (Cayman) Ltd., we recommend the formation of an offshore blocker entity with the following characteristics: Entity Name: PCV International Holdings Ltd. Entity Type: Cayman Islands exempted company Jurisdiction of Formation: Cayman Islands EIN: Not applicable

Section 1446 Withholding. The CV will be required to withhold tax under Section 1446 on the Offshore blocker's allocable share of ECI. This withholding, at the 21% rate applicable to corporate foreign partners, will be creditable against the Offshore blocker's U.S. corporate income tax liability on Form 1120-F. The imposition of Section 1446 withholding at the CV/Blocker level is a cash-flow timing consideration but

VI. Corporate-Level Tax Leakage Analysis A. Federal Corporate Tax on blocker Income The principal economic cost of the blocker structure is the corporate-level income tax imposed on each blocker entity's allocable share of CV income. Both PCV Domestic blocker Inc. and PCV International Holdings Ltd. will be subject to U.S. federal corporate income tax at the rate of 21% on all income allocated to them from the CV, in

VII. Capitalization and Governance of blocker Entities A. PCV Domestic blocker Inc. Capital Structure. We recommend that PCV Domestic blocker Inc. adopt a simple authorized capital structure consisting of a single class of common stock. Unless Meridian and Ashford require different economic or liquidation preferences — for example, if one investor requires a senior claim on distributions in a downside scenario — a si

VIII. Interaction with Section 704(c) Allocations and Built-In Gain A. Impact of Remedial Method on blocker Investors The companion Section 704(c) Allocation Methodology Memo, being prepared by Leila Nazari of this office, recommends the adoption of the remedial allocation method under Treas. Reg. § 1.704-3(d) for the $1.202 billion of aggregate built-in gain on the three portfolio company interests contributed from