Contract analysis

I. EXECUTIVE SUMMARY This memorandum has been prepared by Calderwood & Harkness LLP in its capacity as transaction counsel to Solara Digital Infrastructure Fund VI LP ("Fund VI" or the "Buyer") to analyze the framework for allocating the $6,800,000,000 aggregate purchase price among asset classes in connection with Fund VI's acquisition of Cloudium Technologies plc ("Cloudium" or the "Target") via reverse triangular

II. BACKGROUND — TRANSACTION OVERVIEW A. Structure of the Acquisition The acquisition of Cloudium will be effected through a reverse triangular merger pursuant to the Agreement and Plan of Merger dated January 22, 2024 (the "Merger Agreement"), by and among Fund VI, Merger Sub, and Cloudium. Stratos Merger Sub Inc. is a Delaware corporation formed for the sole purpose of consummating the merger and is a direct wholly

III. APPLICABLE LEGAL FRAMEWORK A. Section 1060 of the Internal Revenue Code — Overview

Section 1060 of the Code governs the allocation of consideration in any "applicable asset acquisition." An applicable asset acquisition is defined under Section 1060(c) as any transfer of assets that constitutes a trade or business (as defined in Treasury Regulations § 1.1060-1(b)(2)) and with respect to which the transferee's basis in the acquired assets is determined wholly by reference to the consideration paid fo

Section 1060 mandates that both the buyer and the seller apply the same allocation methodology in determining gain or loss with respect to the transaction. Although the buyer and seller may ultimately disagree on the specific fair market values assigned to particular assets, each party is required to use the residual method and to report the allocation on IRS Form 8594 (Asset Acquisition Statement Under Section 1060)

Section 197 of the Code provides that the buyer of a trade or business may amortize certain acquired intangible assets (referred to as "Section 197 intangibles") ratably over a 15-year period on a straight-line basis, beginning with the month in which the intangible is acquired. The amortization deduction under Section 197 is the exclusive cost-recovery method for Section 197 intangibles; no other depreciation or amo

Section 197 intangibles, as defined in Section 197(d), include the following categories of assets, among others: (i) Goodwill; (ii) Going-concern value; (iii) Workforce in place (including its composition and terms and conditions, contractual or otherwise, of its employment); (iv) Business books and records, operating systems, and any other information base (including lists or other information with respect to curren

IV. DETERMINATION OF ADJUSTED PURCHASE PRICE FOR ALLOCATION PURPOSES A. Components of the Aggregate Deemed Sale Price The starting point for the purchase price allocation under Section 1060 is the determination of the total amount to be allocated among the acquired assets — referred to herein as the "Total Allocable Amount" or "Adjusted Purchase Price." The Total Allocable Amount is not simply the headline equity con

V. PROPOSED ALLOCATION AMONG ASSET CLASSES A. Methodology and Coordination with Glenmore Thornton LLP Glenmore Thornton LLP has been engaged by Fund VI to prepare independent fair market value appraisals of Cloudium's tangible and intangible assets for purposes of the purchase price allocation. The engagement is being led by Richard Okamura (Lead Partner, Transaction Tax) and Vanessa Liu (Lead Partner, Financial Due

VI. TAX AMORTIZATION AND DEPRECIATION CONSIDERATIONS A. Section 197 Amortization Schedule All intangible assets that qualify as Section 197 intangibles — including goodwill (Class VII), customer relationships, developed technology, trade names and trademarks, covenants not to compete, and other identified intangible assets in Classes V and VI — are amortizable on a straight-line basis over a 15-year period beginning

VII. CROSS-BORDER ALLOCATION CONSIDERATIONS The Cloudium acquisition involves the acquisition of a parent entity organized under the laws of England and Wales with operating subsidiaries in the United Kingdom, India, and Germany. While the purchase price allocation under Section 1060 is a U.S. federal income tax concept, the allocation of value to assets located in — or attributable to operations conducted in — forei