Contract analysis

I. Executive Summary The purpose of this memorandum is to analyze whether the proposed reverse triangular merger structure by which Solara Digital Infrastructure Fund VI LP ("Fund VI") proposes to acquire Cloudium Technologies plc ("Cloudium" or the "Target") qualifies as a tax-free reorganization under Section 368(a)(2)(E) of the Internal Revenue Code of 1986, as amended (the "Code"), and, in particular, to address

II. Factual Background and Transaction Structure A. Parties. Solara Digital Infrastructure LP. The sponsor of the proposed Transaction is Solara Digital Infrastructure LP, a Delaware limited partnership with its principal offices at 1200 Market Street, Suite 3400, Wilmington, Delaware 19801. The general partner of Solara Digital Infrastructure LP is Solara Digital GP LLC, a Delaware limited liability company. Solara

III. Legal Framework — Section 368(a)(2)(E) Reverse Triangular Merger A. Statutory Requirements

Section 368(a)(2)(E) of the Code provides a specific form of tax-free reorganization applicable to reverse triangular mergers. Under this provision, a transaction qualifies as a reorganization if the following conditions are satisfied: (i) A subsidiary corporation (the "Merger Sub") merges into the target (here, Cloudium), with the target surviving the merger; (ii) After the merger, the surviving corporation (Cloudiu

Section 368(a)(2)(E) requires that, after the merger, the surviving corporation hold "substantially all" of its own properties and the properties of the merged subsidiary. The IRS has provided guidance on the "substantially all" standard in Revenue Ruling 77-37, 1977-1 C.B. 568, which provides that a corporation will be deemed to hold "substantially all" of a transferor's properties if it holds: (a) At least 90% of t

IV. Application to the Proposed Transaction A. Continuity of Interest Analysis Applying the COI framework set forth in Section III.B above to the proposed Transaction, the relevant figures are as follows: The calculation is straightforward: $616,055,952 ÷ $6,800,000,000 = approximately 9.06%. This percentage is far below the 40% minimum threshold that has been generally accepted as the floor for continuity of interes

V. Alternative Tax-Deferred Structures for Rollover Equity Because the Transaction does not qualify as a tax-free reorganization under Section 368(a)(2)(E), we must look to alternative provisions of the Code that may provide non-recognition treatment for the rollover equity contributions by Jonathan Hargrove and Pinnacle Growth Ventures LLC. Two primary alternatives are available, depending on the entity classificati

Section 368(c) defines "control" as the ownership of stock possessing at least 80% of the total combined voting power of all classes of stock entitled to vote, and at least 80% of the total number of shares of all other classes of stock of the corporation. The term "property" for purposes of Section 351 includes shares of stock in another corporation (such as Cloudium shares). Services do not constitute "property" fo

VI. Tax Treatment of Non-Rolling Shareholders The non-rolling shareholders of Cloudium — constituting the vast majority of Cloudium's stockholder base — will receive $36.92 per share in cash in the Merger. The U.S. federal income tax treatment of these shareholders is straightforward. Gain or Loss Recognition. Each non-rolling shareholder will recognize capital gain or loss on the exchange of Cloudium shares for cash

VII. Cross-Border Considerations (Summary) The Transaction involves a target company incorporated in England and Wales with substantial operations in the United Kingdom, India, and Germany. A comprehensive analysis of the cross-border tax implications is beyond the scope of this memorandum, and a separate memorandum addressing the UK tax implications of the Transaction is expected to be distributed by December 12, 20

VIII. Impact on Purchase Price Allocation and Section 338 Elections The characterization of the Transaction as a taxable acquisition (rather than a tax-free reorganization) raises the question of whether the buyer should consider making a Section 338 election to achieve a stepped-up tax basis in the Target's underlying assets.

Section 338(h)(10) Election. A Section 338(h)(10) election may be made jointly by the buyer and the seller of a target that is either (a) a member of a selling consolidated group filing a consolidated federal income tax return or (b) an S corporation. In the present Transaction, Cloudium Technologies plc is not a member of any U.S. consolidated group (it is an English public limited company), and it is not an S corpo

Section 338(g) Election. A Section 338(g) election may be made unilaterally by the purchasing corporation with respect to any "qualified stock purchase" — i.e., an acquisition of at least 80% of the total combined voting power and 80% of the total value of the stock of a target within a 12-month period. If the Merger is consummated as described, Fund VI (or the entity treated as the purchaser for U.S. federal income

IX. Structuring Recommendations Based on the analysis set forth in this memorandum, we recommend the following structuring steps:

1. Do not rely on Section 368(a)(2)(E) reorganization treatment. The stock consideration in the proposed Transaction constitutes only approximately 9.06% of the total merger consideration, which is far below the minimum 40% continuity of interest threshold required for a transaction to qualify as a tax-free reorganization under Section 368(a)(2)(E). There is no reasonable basis on which to take the position that the

2. Structure the rollover equity contribution as a Section 351 exchange (if the post-closing parent entity is a corporation) or a Section 721 contribution (if the post-closing parent entity is a partnership or LLC taxed as a partnership). Either provision can provide tax-deferred treatment for the rollover equity participants — Jonathan Hargrove and Pinnacle Growth Ventures LLC — on their exchange of Cloudium shares

3. Ensure the Rollover Agreements provide for simultaneous closing. The rollover contribution must occur at the effective time of the Merger (currently planned for 11:59 PM Eastern Time on the closing date) as a single integrated step with the closing of the Merger. Temporal separation between the closing of the Merger and the consummation of the rollover contribution would increase the risk that the IRS or a court c

4. Avoid boot in the rollover. The rollover participants should receive solely equity interests — common stock of the corporate parent (in a Section 351 structure) or partnership or membership interests in the partnership or LLC parent (in a Section 721 structure) — and should not receive any cash, promissory notes, preferred returns with guaranteed distribution features, or other non-equity property at the time of t

5. Section 704(c) / Section 704(b) allocations (if partnership structure). If the post-closing holding entity is a partnership or LLC classified as a partnership, the partnership or operating agreement must include appropriate Section 704(c) allocation provisions to ensure that the built-in gain attributable to the contributed Cloudium equity is allocated to the respective contributing partners (Hargrove and Pinnacle

6. IRS Form W-9 / W-8BEN-E collection. We recommend that the deal team initiate the collection of IRS Forms W-9 (for U.S. persons) and W-8BEN-E (for non-U.S. entities) from the rollover participants and key stockholders well in advance of the closing date, in order to ensure compliance with applicable withholding and information-reporting obligations. We recommend that the deal team establish and maintain a tracker o