Contract analysis

I. Purpose and Executive Summary The purpose of this memorandum is to set forth the comprehensive project plan, work streams, deliverable milestones, responsible team members, and coordination framework for the bilateral Advance Pricing Agreement ("APA") and contemporaneous transfer pricing documentation engagement on behalf of Halcyon Semiconductor AG ("HSAG") and Halcyon Semiconductor Inc. ("HSI"). This engagement

II. Engagement Team and Roles A. Calderwood & Harkness LLP — Internal Team The following C&H attorneys have been assigned to this engagement. All time entries are to be recorded under billing code HSAG-TP-2025, and hourly rates are as set forth in the executed engagement letter. B. Client Contacts The following individuals at HSAG and HSI have been identified as the primary client contacts for this engagement. All da

III. Scope of Covered Transactions The bilateral APA will cover three categories of controlled transactions between HSAG and HSI. The following is a brief summary of each transaction category, the relevant intercompany agreement, the financial magnitude of the transaction, and the proposed transfer pricing methodology. A more detailed analysis of each transaction will be developed through Work Streams 1 and 2 and inc

IV. Work Stream Structure The engagement is organized into six discrete work streams distributed across three phases. The following provides an overview of this structure, which is described in detail in Sections V through X below. Phase 1A — Functional & Economic Analysis • Work Stream 1: Functional Analysis • Work Stream 2: Economic Analysis and Benchmarking Phase 1B — Contemporaneous TP Documentation • Work Stream

V. Work Stream 1 — Functional Analysis A. Deliverables The following deliverables will be produced under Work Stream 1:

1. Functional Analysis Interview Protocol — A standardized questionnaire template designed for use in conducting structured interviews with key personnel of HSI and HSAG, covering functions performed, assets employed, and risks assumed by each entity.

2. Functional Analysis Memorandum — HSI — A comprehensive memorandum documenting the functions, assets, and risks of HSI in connection with the three categories of covered intercompany transactions.

3. Functional Analysis Memorandum — HSAG (Manufacturing & IP) — A comprehensive memorandum documenting the functions, assets, and risks of HSAG as the complex, IP-rich principal entity, with a focus on its manufacturing, research and development, and IP ownership activities. B. Scope of Work The functional analysis is the foundational component of the engagement, as it provides the factual basis for method selection,

VI. Work Stream 2 — Economic Analysis and Benchmarking A. Deliverables The following deliverables will be produced under Work Stream 2:

1. Industry Analysis Memorandum — Global Semiconductor Industry — A comprehensive analysis of the global semiconductor industry, including competitive dynamics, market segmentation, cyclicality, capital intensity, R&D investment trends, and economic conditions relevant to the benchmarking period.

2. Benchmarking Study — Tangible Goods (CPM/TNMM Analysis) — A full benchmarking study identifying and screening comparable North American semiconductor distributors and computing arm's-length operating margin ranges for HSI's tangible goods distribution activities.

3. Benchmarking Study — Royalty (CUT Analysis) — A benchmarking study identifying and screening comparable uncontrolled license agreements for semiconductor intellectual property and computing arm's-length royalty rate ranges.

4. CSA Documentation Addendum — A documentation addendum covering HSI's anticipated benefit share analysis, summary of the PCT valuation methodology and results, and analysis of the arm's-length character of HSI's cost-sharing contributions.

5. Supplemental Economic Analysis — Sensitivity Testing — A supplemental analysis prepared for Phase 2 negotiation support purposes, testing the robustness of the benchmarking results under alternative assumptions and methodologies. B. Scope of Work All benchmarking and quantitative economic analyses will be performed by Meridian Economics GmbH, under the direction and review of C&H. Dr. Annika Breitner (Managing Dir

VII. Work Stream 3 — Contemporaneous Transfer Pricing Documentation A. Deliverables The following deliverables will be produced under Work Stream 3:

1. Master File (OECD BEPS Action 13) — FY 2024 — Group-level transfer pricing documentation for the Halcyon group.

2. US Local File — HSI (FY 2024) — Entity-level contemporaneous transfer pricing documentation for HSI for the most recent fiscal year.

3. US Local File — HSI (FY 2023) — Rollback documentation for the first rollback year.

4. US Local File — HSI (FY 2022) — Rollback documentation for the earliest covered rollback year.

5. IRC §6662(e) Penalty Protection Statement — Statement asserting reasonable cause and good faith, to be attached to each Local File. B. Scope of Work Master File. The Master File will be prepared in compliance with the OECD BEPS Action 13 standards and German GAufzV requirements. It will provide group-level transfer pricing documentation covering the Halcyon group's organizational structure, including the four prin

VIII. Work Stream 4 — APA Application A. Deliverables The following deliverables will be produced under Work Stream 4:

1. Pre-Filing Memorandum to IRS APMA — Anonymous submission requesting a pre-filing conference.

2. Pre-Filing Conference Preparation Memorandum — Internal, privileged strategy memorandum in advance of the pre-filing conference.

3. Pre-Filing Conference Summary Memorandum — Internal memorandum documenting IRS APMA feedback and action items from the conference.

4. Formal APA Application — IRS Form 14661 and Supporting Narrative — The formal bilateral APA application submitted to IRS APMA.

5. APA Application — Economic Analysis Appendix — Summary and incorporation of Meridian's benchmarking results and CSA analysis.

6. APA Application — Legal Analysis Memorandum — Comprehensive legal analysis supporting the proposed transfer pricing methods and APA terms.

7. APA Application — Financial Data Appendix (Excel workbook) — Detailed financial data schedules supporting the application.

8. Cover Letter — APA Application Submission to IRS APMA — Transmittal letter enclosing the complete application package.

9. Coordination Letter to Kettner Pflüger (German Application) — Transmittal of the US application package to German counsel for coordination of the parallel German submission.

10. Power of Attorney — IRS Form 2848 — Authorization for C&H attorneys to represent HSI before the IRS. B. Scope of Work Pre-Filing Memorandum. An anonymous submission will be prepared and submitted to IRS APMA requesting a pre-filing conference in connection with a proposed bilateral APA. The Pre-Filing Memorandum will describe the taxpayer's industry (semiconductors), the nature and categories of covered transacti

IX. Work Stream 5 — APA Negotiation Support (Phase 2) A. Deliverables The following deliverables will be produced under Work Stream 5:

1. APA Negotiation Strategy Memorandum — Internal, privileged memorandum outlining negotiation strategy for discussions with IRS APMA and BZSt.

2. IRS Information Document Request (IDR) Response Template — Standardized framework for responding to anticipated IRS IDRs during APA examination.

3. Supplemental Economic Analysis — Sensitivity Testing — Cross-listed from Work Stream 2; prepared for Phase 2 negotiation support purposes.

4. Draft APA Agreement — Model Terms — Proposed bilateral APA agreement terms for discussion with the competent authorities.

5. Annual Compliance Report Template (Excel) — Template for annual compliance reports to be filed during the APA term. B. Scope of Work Negotiation Strategy Memorandum. Leonard Cross will prepare a privileged internal memorandum outlining the negotiation strategy for APA discussions with IRS APMA and, through the competent authority process, with BZSt. The memorandum will address: • Negotiation positions and concessi

X. Work Stream 6 — Intercompany Agreement Review and Drafting (Phase 3) A. Deliverables The following deliverables will be produced under Work Stream 6:

1. Review Memorandum — Existing Intercompany Agreements — Comprehensive analysis of existing intercompany agreements for consistency with proposed transfer pricing policies and APA positions.

2. Amended and Restated Master Intercompany Supply Agreement (draft) — Revised supply agreement incorporating APA-consistent pricing mechanisms.

3. Amended IP License Agreement (draft) — Revised license agreement reflecting the APA methodology and arm's-length royalty rate. B. Scope of Work Review Memorandum. Robert Jansen will conduct an initial review of the three existing intercompany agreements governing the covered transactions, and Leila Nazari will finalize the review memorandum. The agreements under review are: • Master Intercompany Supply Agreement (

XI. Consolidated Master Timeline The following table consolidates all deliverable milestones and key dates across the six work streams. This master timeline serves as the primary scheduling reference for the engagement and will be updated as necessary in response to developments in the project.

XII. Coordination Protocols Given the complexity and multi-jurisdictional nature of this engagement, effective coordination among the C&H team, German counsel, the economic consultant, the independent auditor, and the client is essential to the timely delivery of high-quality work product. The following protocols are established for each coordination relationship. A. Coordination with Kettner Pflüger Rechtsanwälte (G

XIII. Budget and Fee Management A. Phase 1 Fee Cap: $1,850,000 The Phase 1 fee cap of $1,850,000 covers all deliverables under Work Streams 1 through 4 and Work Stream 6, including functional analysis, benchmarking and economic analysis, contemporaneous transfer pricing documentation (Master File, US Local Files, and Penalty Protection Statement), the APA application (pre-filing memorandum, pre-filing conference, For

XIV. Risk Factors and Contingencies The following risk factors and contingencies have been identified in connection with this engagement. The C&H team will monitor these risks throughout the engagement and take appropriate mitigation measures as described below. IRS APMA Method Challenges. IRS APMA may request changes to the proposed transfer pricing methods or may insist on narrower arm's-length ranges than those pr