Contract analysis

I. Opening and Purpose of Letter I am writing on behalf of the Calderwood & Harkness LLP ("C&H") engagement team in connection with the above-referenced bilateral Advance Pricing Agreement ("APA") matter. Our engagement team is led by Leonard Cross (Responsible Partner) and Sylvia Hartwell (Billing Partner), and I serve as the Lead Associate and primary day-to-day point of contact for this coordination. My colleague

II. Summary of US APA Application Filed with IRS APMA A. Filing Details The formal US APA application was filed on July 7, 2025 with the IRS APMA program, which is situated within the IRS Large Business & International ("LB&I") Division. The application was submitted in the form prescribed by Revenue Procedure 2015-41, 2015-35 I.R.B. 263, which governs the APA program and sets forth the requirements for APA requests,

III. Covered Transactions — Summary The bilateral APA covers three categories of intercompany transactions between HSAG and HSI. Below is a summary of each covered transaction, including the nature of the transaction, the governing intercompany agreement, and the relevant financial data for the most recent fiscal year (FY 2024). A. Tangible Goods (Wafer/Die Sales) — HSAG to HSI HSAG is a leading semiconductor manufac

IV. Proposed Transfer Pricing Methods — Alignment Between US and German Applications This section summarizes the transfer pricing methods proposed in the US APA application for each category of covered transaction. A central objective of this letter is to ensure that the German application to the BZSt presents methodologies that are fully consistent with those set forth in the US application, while using the terminol

V. Financial Data and Documentation Enclosed A. List of Enclosures (Physical and Electronic) The following documents are enclosed with this letter, both in physical form (via international courier) and in electronic form (via encrypted file transfer to the secure portal previously established between our firms):

1. Complete copy of the IRS Form 14661 (Advance Pricing Agreement Request) and supporting narrative, including all exhibits and schedules thereto.

2. Economic Analysis Appendix, comprising the benchmarking studies for the tangible goods transaction (CPM/TNMM analysis with 17 comparable North American semiconductor distributors) and the royalty transaction (CUT analysis with 8 comparable uncontrolled license agreements), as prepared by Meridian Economics GmbH.

3. Legal Analysis Memorandum, addressing the applicable legal framework under Internal Revenue Code Section 482, Treasury Regulations Sections 1.482-1 through 1.482-9, the OECD Transfer Pricing Guidelines (2022 edition), and Articles 9 and 25 of the US-Germany Treaty.

4. Financial Data Appendix (Microsoft Excel workbook), containing segmented financial data for HSI and HSAG, intercompany transaction schedules, and reconciliations to audited financial statements for the five-year period from FY 2020 through FY 2024.

5. CSA Documentation Addendum, including the PCT valuation summary prepared by Stonebridge Valuation Partners LLC (Marcus Reinhardt, Managing Director), the CSA agreement (as amended), and supporting financial projections and discount rate analyses.

6. Functional Analysis Memoranda for HSI and HSAG, describing the functions performed, assets employed, and risks assumed by each entity in connection with the covered intercompany transactions.

7. Industry Analysis Memorandum, providing an overview of the global semiconductor industry, market structure, competitive dynamics, and relevant economic conditions during the proposed APA term and rollback period.

8. Copy of the anonymous pre-filing memorandum submitted to IRS APMA on April 14, 2025, together with C&H's summary memorandum of the pre-filing conference held on May 19, 2025.

9. Executed IRS Form 2848 (Power of Attorney and Declaration of Representative). All electronic files have been uploaded to the Calderwood & Harkness / Kettner Pflüger shared secure portal under folder designation "HSAG-APA-2025-Filing." Access credentials for the portal remain unchanged from those previously communicated. B. Key HSI Financial Data (FY 2024, USD) The following table summarizes the key financial data

VI. German APA Application — Coordination Items A. Target Submission Date: August 15, 2025 As discussed among the teams, the target date for filing the German APA application with the BZSt is August 15, 2025. This timeline provides approximately five weeks from the date of this letter for the preparation, review, and finalization of the German application. We respectfully request that Kettner Pflüger confirm that thi

VII. Engagement Team Contacts and Communication Protocol A. Calderwood & Harkness LLP Engagement Team The C&H engagement team for this matter consists of the following individuals: All day-to-day coordination and substantive communications should be directed to Leila Nazari in the first instance. Leonard Cross and Sylvia Hartwell are available for partner-level discussions and strategic consultations as needed. B. Cl

1. Routing of Substantive Communications: All substantive communications regarding APA strategy, application content, competent authority responses, and negotiation positions shall be routed through Leila Nazari (C&H) and the designated Kettner Pflüger contact (presumed to be Dr. Tobias Kettner and/or Friederike Lang, pending confirmation).

2. Privilege Markings: All privileged communications shall be marked as "Privileged and Confidential — Attorney Work Product / Attorney-Client Communication" or the equivalent German-language designation, as appropriate.

3. Restrictions on Third-Party Sharing: No substantive APA strategy materials, application drafts, economic analyses, or legal memoranda shall be shared with third parties — including, without limitation, Gresham Whitfield LLP (auditors), Ridgeline National Bank (HSI's primary banking relationship), or any other non-counsel party — without prior written authorization from both C&H and Kettner Pflüger. This restrictio

4. Secure Communications: All electronic transmissions of APA-related materials shall utilize the encrypted secure portal previously established between our firms, or alternatively, encrypted email with AES-256 encryption or higher. Unencrypted transmission of substantive APA materials is strictly prohibited.

VIII. Requested Action Items for Kettner Pflüger To facilitate timely preparation and filing of the German APA application, and to ensure alignment with the US application, we respectfully request that Kettner Pflüger address the following action items:

1. Confirm Receipt of Enclosures — By July 15, 2025: Please confirm receipt of the enclosed US APA application package and all nine enclosures listed in Section V.A above, including both the physical courier package and the electronic files uploaded to the secure portal.

2. Confirm German Filing Deadline — At your earliest convenience: Please confirm that August 15, 2025 remains achievable as the German APA application submission date to the BZSt. If any circumstance may jeopardize this target, please advise immediately.

3. Provide Draft German Application Narrative — By August 1, 2025: Please provide a draft of the German APA application narrative to C&H for consistency review. The draft should include the proposed covered transactions description, transfer pricing methodology presentation, and any BZSt-specific disclosures or representations.

4. Confirm Methodological Alignment: Please confirm that the proposed transfer pricing methods — TNMM (for tangible goods), CUT (for royalties), and income method for CSA anticipated benefit shares — are acceptable and appropriate under German transfer pricing rules (§ 1 AStG, §§ 90(3) AO, GAufzV) and that no alternative or additional methods will be proposed in the German application that would create inconsistency

5. Advise on BZSt-Specific Filing Requirements: Please advise on any BZSt-specific filing requirements, fees, forms, or procedural steps that have not yet been addressed in our prior discussions, including any requirements specific to bilateral APA applications involving US competent authority counterparts.

6. Confirm German Local File Status: Please confirm the status of the HSAG-side German Local File for FY 2024 and the rollback years (FY 2022 and FY 2023), including the anticipated completion timeline and any coordination needed with C&H's Master File preparation.

7. Confirm Translation Requirements: Please advise whether the BZSt requires German-language translations of the financial appendices, benchmarking studies, and other supporting documentation, or whether English-language originals with German-language summaries will be sufficient.

8. Designate Point of Contact for Competent Authority Phase: Please formally designate the Kettner Pflüger point(s) of contact who will serve as the primary interlocutors during the competent authority negotiation phase following the filing of both applications. We would be grateful to receive responses to these action items in accordance with the indicated deadlines. If any of the requested deadlines present difficu

IX. Budget and Fee Matters For informational purposes, we set forth below a summary of the budget and fee arrangements applicable to this engagement, to the extent relevant to the coordination between our firms. Calderwood & Harkness LLP Engagement Fees: As set forth in the engagement letter between C&H and HSI dated February 10, 2025, C&H's total engagement fee cap for this matter is $2,825,000, structured as follow

X. Closing We wish to express our sincere appreciation for the close and effective collaboration between Calderwood & Harkness and Kettner Pflüger on this important bilateral APA matter. The Halcyon group's intercompany transactions are substantial and complex, and achieving a well-coordinated bilateral APA will provide significant certainty and tax risk mitigation for both HSAG and HSI over the coming years. We cann