Contract analysis

I. Executive Summary This memorandum has been prepared by Calderwood & Harkness LLP, in coordination with Greystone & Callahan LLP, to analyze whether Vantage Mobility Systems Corp. (EIN 38-4127853) ("Vantage" or the "Buyer") and the selling stockholders (collectively, the "Sellers") of PulseLink Telematics, Inc. (EIN 31-6084291) ("PulseLink" or the "Target") should jointly make an election under Section 338(h)(10) o

II. Background and Transaction Overview A. The Parties Buyer. Vantage Mobility Systems Corp. is a Delaware corporation (Delaware File Number 5493017) headquartered at 4800 Innovation Drive, Auburn Hills, Michigan 48326. Vantage's registered agent for service of process in Delaware is Capitol Registered Agents, Inc., 1209 Orange Street, Wilmington, Delaware 19801, and its federal employer identification number is 38-4

III. Legal Framework — IRC § 338(h)(10) Election A. Statutory and Regulatory Basis

Section 338 of the Internal Revenue Code provides a mechanism by which a purchasing corporation that makes a "qualified stock purchase" of a target may elect to treat the stock purchase as an asset acquisition for federal income tax purposes. The general election under Section 338(a) (commonly referred to as a "Section 338(g) election") permits the purchasing corporation to make the election unilaterally, without the

Section 338(h)(10), and the Treasury Regulations promulgated thereunder at Treasury Regulation § 1.338(h)(10)-1, provides an alternative and more commonly utilized mechanism. Under Section 338(h)(10), the purchasing corporation and the "selling consolidated group" (or, in the case of an S corporation target, the selling S corporation shareholders) may jointly elect to treat the stock sale as a deemed asset sale. The

IV. Computation of Adjusted Grossed-Up Basis (AGUB) A. Formula. The AGUB for the assets of "New Target" is computed under IRC § 338(b) and Treasury Regulation § 1.338-5. The AGUB is generally calculated as follows: AGUB = Grossed-Up Basis of Recently Purchased Stock + Liabilities of Old Target + Other Relevant Items In the context of a Section 338(h)(10) Election where the purchasing corporation acquires one hundred

V. Preliminary Purchase Price Allocation A. Overview of Methodology The preliminary purchase price allocation set forth below has been prepared by Mercer Peak Advisors LLC (Allison Tanaka, Managing Director), in consultation with Samuel Breck of Greystone & Callahan LLP and with input from PulseLink's management and Hargrove & Lindt CPAs LLP. The allocation is based on management's estimates of the fair market values

VI. Tax Benefits to Vantage (Buyer) — Step-Up Analysis A. Depreciation and Amortization Benefits The principal tax benefit of the Section 338(h)(10) Election to Vantage is the stepped-up basis in PulseLink's assets, which generates future depreciation and amortization deductions that reduce Vantage's taxable income over the applicable recovery periods. Without the Election. In a straight stock purchase without the El

Section 197 Intangible Assets (Class VI): $18,500,000. All identified intangible assets allocated to Class VI — including customer relationships, developed technology, trade names and trademarks, non-compete agreements, and assembled workforce — qualify as "Section 197 intangibles" under IRC § 197(d) and are amortized ratably over a 15-year period beginning on the date of acquisition (i.e., the closing date). The ann

VII. Tax Consequences to Sellers A. Deemed Asset Sale at Corporate Level (Old Target) Under the Section 338(h)(10) Election, PulseLink (as "Old Target") is deemed to sell all of its assets in a single transaction at fair market value on the closing date. Old Target recognizes gain or loss on the deemed asset sale, determined by reference to the difference between the AGUB allocated to each asset class and Old Target'

VIII. Straddle Period Tax Allocation A. Closing-of-the-Books Method The SPA provides that for any taxable period of PulseLink that includes but does not end on the closing date (a "Straddle Period"), the allocation of income, gain, deduction, loss, and credit between the pre-closing portion and the post-closing portion of such Straddle Period shall be determined using the closing-of-the-books method. Under this metho