1007-00006 · Vantage Mobility Systems Corp · Diligence/Tax

section-338h10-election-memo.docx DOCUMENT M&A / Corporate

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PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

MEMORANDUM

FROM: Calderwood & Harkness LLP Sandra Tung, Partner, Mergers & Acquisitions Naomi Petersen, Lead Associate, Mergers & Acquisitions 1 International Place, Suite 4100 Boston, Massachusetts 02110

PREPARED IN COORDINATION WITH: Greystone & Callahan LLP Samuel Breck, Tax Partner 155 North Wacker Drive, Suite 3000 Chicago, Illinois 60606

TO: Vantage Mobility Systems Corp.

Attention: Derek Winslow, General Counsel

Janine Calloway, Chief Financial Officer Tara Nishimura, Vice President, Corporate Development

CC: Howard Trask, Managing Partner, Veltrano Capital GP IV LLC Oliver Mackenzie, Billing Partner, Calderwood & Harkness LLP

DATE: May 14, 2025

RE: Analysis of Joint Election Under IRC § 338(h)(10) — Acquisition of PulseLink Telematics, Inc. by Vantage Mobility Systems Corp.

MATTER NUMBER: 1001-00004

This memorandum is delivered concurrently with the delivery of the first draft of the Stock Purchase Agreement to Whitfield, Draper & Colón LLP, counsel to the Selling Stockholders.

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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) of the Internal Revenue Code of 1986, as amended (the "Code" or "IRC"), in connection with Vantage's proposed acquisition of one hundred percent (100%) of the outstanding capital stock of PulseLink for a cash purchase price of Thirty-Five Million Dollars ($35,000,000) (the "Purchase Price"), subject to customary post-closing adjustments (the "Acquisition" or the "Transaction").

The Transaction is structured as a stock purchase, pursuant to which Vantage will acquire all 7,480,000 issued and outstanding shares of common stock of PulseLink, a Delaware corporation with its principal place of business at 7120 Kellner Parkway, Dublin, Ohio 43017. PulseLink has no shares of preferred stock outstanding.

Recommendation. Based on the analysis set forth in this memorandum, which has been conducted jointly with Samuel Breck, Tax Partner, Greystone & Callahan LLP, we recommend that the parties proceed with the joint Section 338(h)(10) election as contemplated by the definitive Stock Purchase Agreement (the "SPA"). The election will convert the stock purchase into a deemed asset sale for federal income tax purposes, thereby providing Vantage with a stepped-up tax basis in PulseLink's assets. The stepped-up basis will generate significant future depreciation and amortization deductions over the applicable recovery periods, the net present value of which is estimated to be material to Vantage's after-tax return on the Acquisition. The incremental tax burden imposed on the Sellers as a consequence of the election — principally the recognition of ordinary income (rather than capital gain) on certain categories of deemed asset sale gain at the corporate level, followed by shareholder-level taxation on the deemed liquidating distribution — has been accounted for in the negotiated Purchase Price and is reflected in the allocation of economic risk set forth in the SPA's tax indemnification and escrow provisions.

The definitive SPA, which has a target signing date of June 6, 2025, and an anticipated closing date of June 13, 2025, expressly provides for the parties to make the joint Section 338(h)(10) election and sets forth the procedures for the allocation of the Purchase Price among PulseLink's assets for tax purposes. The SPA is governed by the laws of the State of Delaware; however, the election and the resulting tax consequences to the parties are governed exclusively by the Internal Revenue Code, the Treasury Regulations promulgated thereunder, and applicable state and local tax law.

The balance of this memorandum sets forth the legal framework governing the Section 338(h)(10) election, the computation and preliminary allocation of the adjusted grossed-up basis ("AGUB") in PulseLink's assets, the anticipated tax benefits to Vantage, the tax consequences to the Sellers, the interaction of the election with the SPA's indemnification framework, the applicable state tax considerations, the implementation requirements and filing obligations, and our assessment of key risk factors and open issues.

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 38-4127853. Vantage is a Tier-2 automotive supplier specializing in advanced driver-assistance systems ("ADAS"), connectivity modules, and vehicle electrification subsystems. For its fiscal year ended December 31, 2024, Vantage reported consolidated revenue of approximately $218,000,000. Vantage is a portfolio company of Veltrano Capital Partners Fund IV, L.P. (EIN 38-4298017), a Delaware limited partnership whose general partner is Veltrano Capital GP IV LLC, with its principal office at 600 Griswold Street, Suite 3400, Detroit, Michigan 48226. Howard Trask serves as Managing Partner of Veltrano Capital GP IV LLC and has been the Veltrano deal team lead on this Transaction.

Target. PulseLink Telematics, Inc. is a Delaware corporation (Delaware File Number 6174829) with its principal office at 7120 Kellner Parkway, Dublin, Ohio 43017. PulseLink's registered agent for service of process in Delaware is Capitol Registered Agents, Inc., at the address noted above, and its federal employer identification number is 31-6084291. PulseLink was founded in 2016 and is a provider of automotive telematics hardware and fleet-intelligence software-as-a-service ("SaaS") solutions. For its fiscal year ended December 31, 2024, PulseLink reported revenue of approximately $42,300,000 and Adjusted EBITDA of approximately $5,900,000. As of the date of this memorandum, PulseLink employs 137 full-time personnel, distributed across its Dublin, Ohio headquarters (89 employees), a 28-person engineering center operated through its Mexican subsidiary in Zapopan, Jalisco, Mexico, and 20 remote employees located in various U.S. states.

Selling Stockholders. The outstanding equity of PulseLink consists of 7,480,000 shares of common stock, par value $0.001 per share, out of a total of 10,000,000 shares authorized under PulseLink's Second Amended and Restated Certificate of Incorporation. No shares of preferred stock are outstanding. The Selling Stockholders, their respective share holdings, and their approximate pro rata percentages are as follows:

Graham Ellersick has been designated as the Sellers' Representative under the SPA and will act on behalf of all Selling Stockholders in connection with post-closing matters, including the purchase price allocation, indemnification claims, and the execution of the Section 338(h)(10) election.

Clearwater Ventures II, L.P. is a Delaware limited partnership that made its Series A investment in PulseLink in 2018. Lorena Fitzpatrick serves as Managing Director of Clearwater Ventures Management LLC, the general partner of Clearwater Ventures II, L.P.

Mexican Subsidiary. PulseLink owns one hundred percent (100%) of the equity interests in Soluciones PulseLink de México, S. de R.L. de C.V. (the "Mexican Subsidiary"), which is organized under the laws of Mexico and maintains its principal office at Av. Vallarta 6503, Piso 4, Col. Ciudad Granja, Zapopan, Jalisco 45010, Mexico. The Mexican Subsidiary operates a 28-person engineering center and provides engineering services to PulseLink pursuant to an intercompany Engineering Services Agreement. The entity classification of the Mexican Subsidiary for U.S. federal income tax purposes under the check-the-box regulations (Treasury Regulation § 301.7701-3) is a critical threshold issue for the Section 338(h)(10) analysis and is discussed further in Section IX.D and Section XIII.D below. The parties contemplate that the intercompany Engineering Services Agreement will be restructured following the closing of the Transaction to align with Vantage's global transfer-pricing policies.

B. Transaction Terms Relevant to Tax Analysis

The following is a summary of the material economic and structural terms of the Transaction as reflected in the draft SPA, to the extent relevant to the tax analysis set forth herein:

Purchase Price and Working Capital. Vantage will pay the Sellers aggregate cash consideration of $35,000,000, subject to a customary post-closing working-capital adjustment. The target net working capital ("Target NWC") under the SPA is $4,800,000. Based on management's preliminary estimates, PulseLink's estimated net working capital at closing is $5,040,000, representing an estimated excess of $240,000 over the Target NWC. If confirmed, this excess will be added to the cash consideration payable at closing, resulting in an estimated aggregate payment of approximately $35,240,000, subject to post-closing true-up within 60 business days of closing.

Implied Valuation. On the basis of the $35,000,000 Purchase Price and PulseLink's fiscal year 2024 Adjusted EBITDA of approximately $5,900,000, the Transaction implies an enterprise value-to-EBITDA multiple of approximately 5.9x.

Indemnification Structure. The SPA provides for post-closing indemnification of Vantage by the Sellers, subject to the following material parameters:

• General representations and warranties indemnification cap: twenty-two percent (22%) of the Purchase Price, or $7,700,000.

• Fundamental representations (including tax representations) indemnification cap: one hundred percent (100%) of the Purchase Price, or $35,000,000.

• Indemnification escrow: $3,850,000 deposited with Pinnacle Trust Company, N.A. (escrow account number PT-ESC-2025-06197) at closing, to be held for a period of eighteen (18) months (anticipated escrow release date: December 13, 2026).

• Indemnification basket: $262,500 (tipping basket; once the aggregate amount of Losses exceeds the basket, the Sellers are liable from the first dollar).

Financing. The Acquisition will be financed through a combination of equity and debt:

• Veltrano Capital Partners Fund IV, L.P.: equity contribution of $12,000,000;

• Vantage Mobility Systems Corp.: balance sheet cash of $2,000,000;

• Arbor National Bank, N.A.: senior secured credit facility in the aggregate amount of $24,500,000, consisting of (a) a Term Loan A in the principal amount of $19,500,000, bearing interest at SOFR plus 3.25% per annum, and (b) a revolving credit facility in the amount of $5,000,000, bearing interest at SOFR plus 3.00% per annum.

The aggregate financing of $38,500,000 exceeds the base Purchase Price by $3,500,000, providing a buffer for transaction costs, the working-capital adjustment, and initial post-closing working capital needs.

Tax Advisors and Auditors. Greystone & Callahan LLP (Samuel Breck, Tax Partner) is advising Vantage on the tax structuring of the Acquisition, including the Section 338(h)(10) election analysis. Mercer Peak Advisors LLC (Allison Tanaka, Managing Director) is serving as Vantage's financial advisor. PulseLink's independent auditor is Hargrove & Lindt CPAs LLP, Columbus, Ohio, which has prepared audited financial statements for PulseLink for fiscal years 2022 through 2024. The Sellers are represented by Whitfield, Draper & Colón LLP (Catherine Okafor, Partner; Michael Brannan, Associate), New York, New York.

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 consent of the selling shareholders. The consequence of a Section 338(g) election is a deemed sale of the target's assets at fair market value, but the gain on such deemed sale is recognized by the target as a wholly-owned subsidiary of the purchaser — in effect, the purchasing corporation bears the economic cost of the corporate-level tax on the deemed sale, which is layered on top of the purchase price already paid to the sellers for the stock. For this reason, unilateral Section 338(g) elections are relatively rare and are generally limited to circumstances involving targets with significant net operating loss carryforwards or foreign tax credit attributes that can offset the deemed sale gain.

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 critical distinction between a Section 338(g) election and a Section 338(h)(10) election is that, under the latter, the stock sale itself is disregarded for federal income tax purposes, and the tax consequences of the deemed asset sale are borne by the selling group or the S corporation shareholders rather than by the purchasing corporation. This treatment more closely aligns the economic substance of the transaction with its tax consequences and is frequently the preferred election where the parties can negotiate the sharing of the incremental tax cost.

Eligibility — Stand-Alone C Corporation Issue. A Section 338(h)(10) election is available in two circumstances: (1) where the target is a subsidiary member of a "selling consolidated group" (as defined in Treasury Regulation § 1.338(h)(10)-1(b)(2)), and (2) where the target is an S corporation. PulseLink is a C corporation for federal income tax purposes. PulseLink is not, and has never been, an S corporation. Furthermore, PulseLink is not a member of an affiliated group filing a consolidated federal income tax return — PulseLink is a stand-alone entity with no corporate parent.

This presents a threshold eligibility question. The classic Section 338(h)(10) election, as described in the Treasury Regulations, applies to targets that are either S corporations or subsidiary members of a selling consolidated group. PulseLink, as a stand-alone C corporation, does not appear to satisfy either condition. Accordingly, the joint Section 338(h)(10) election as traditionally understood may be technically unavailable with respect to the Acquisition.

We recognize, however, that the draft SPA as prepared by this firm expressly contemplates a joint Section 338(h)(10) election and that the parties have reached commercial agreement on the treatment of the Transaction as a deemed asset sale for tax purposes, including the allocation of the resulting tax burden. The inclusion of this provision in the SPA reflects the understanding that the parties intend to achieve deemed-asset-sale treatment with respect to the Acquisition. If, upon further review and consultation with Greystone & Callahan LLP, it is determined that PulseLink's status as a stand-alone C corporation renders the Section 338(h)(10) election technically unavailable, several alternative structuring approaches exist that would achieve substantially equivalent tax results:

(a) Section 338(g) Election. Vantage could make a unilateral Section 338(g) election under IRC § 338(a). This would achieve the stepped-up basis for Vantage, but the corporate-level tax on the deemed asset sale gain would be borne by "New Target" (i.e., PulseLink as a subsidiary of Vantage post-closing), rather than by "Old Target" and the Sellers. Under a Section 338(g) election, the Sellers would recognize capital gain on the stock sale at the shareholder level, and PulseLink (now owned by Vantage) would recognize gain on the deemed asset sale at the corporate level. This effectively imposes a double tax: the Sellers pay shareholder-level capital gains tax, and PulseLink (as Vantage's subsidiary) pays corporate-level tax on the deemed asset sale gain. The economic cost of the corporate-level tax falls on Vantage, which significantly diminishes the net benefit of the step-up. For this reason, a Section 338(g) election is generally disfavored except in limited circumstances.

(b) Restructuring as an Asset Purchase. The parties could restructure the Transaction as a direct asset purchase, in which Vantage (or a newly formed acquisition subsidiary) acquires PulseLink's assets and assumes specified liabilities, and PulseLink thereafter distributes the net proceeds to its stockholders in liquidation. This structure achieves the same tax result as a Section 338(h)(10) election — corporate-level gain on the asset sale, followed by shareholder-level gain on the liquidating distribution — and provides Vantage with a cost basis in the acquired assets equal to the purchase price paid. However, an asset purchase introduces additional complexity, including the need for third-party consents to the transfer of contracts and permits, potential transfer tax exposure, and the loss of PulseLink's legal entity and its associated permits, licenses, and regulatory approvals.

(c) Incorporation of Seller Holdco Entity. In certain transactions, the selling shareholders contribute their target company stock to a newly formed holding company prior to closing, which then sells the stock of the target as a member of its consolidated group, thereby enabling a Section 338(h)(10) election. This approach adds complexity and timing risk and would need to be evaluated for substance-over-form and step-transaction doctrine concerns.

Working Assumption. For purposes of the analysis that follows, this memorandum proceeds on the assumption that the Section 338(h)(10) election is properly available or that the parties will adopt an appropriate structuring alternative (most likely a direct asset purchase or a restructured closing mechanism) to achieve the intended deemed-asset-sale treatment. We refer to the intended tax treatment throughout this memorandum as the "Section 338(h)(10) Election" or the "Election," with the understanding that the precise mechanism may be refined in consultation with Greystone & Callahan LLP prior to signing. Regardless of the specific mechanism, the economic and tax analysis set forth herein — including the computation of AGUB, the purchase price allocation, the buyer step-up benefits, and the seller tax consequences — remains applicable.

B. Qualified Stock Purchase

Assuming the Section 338(h)(10) Election is available (or the parties achieve equivalent treatment through an alternative structure), the Acquisition must satisfy the requirements of a "qualified stock purchase" ("QSP") as defined in IRC § 338(d)(3).

A QSP requires that the purchasing corporation acquire stock of the target possessing at least eighty percent (80%) of the total combined voting power of all classes of stock entitled to vote and at least eighty percent (80%) of the total value of all outstanding stock of the target, during a "12-month acquisition period" as defined in IRC § 338(d)(3)(B).

The Acquisition satisfies the QSP requirements as follows:

• Vantage is acquiring all 7,480,000 issued and outstanding shares of PulseLink common stock, which constitute one hundred percent (100%) of the total voting power and one hundred percent (100%) of the total value of all outstanding stock of PulseLink. The common stock is the only class of PulseLink equity that is issued and outstanding; there are no outstanding shares of preferred stock, no convertible securities, no warrants, and no other instruments treated as stock for purposes of Section 338(d)(3).

• The acquisition of all shares will occur in a single closing on the anticipated closing date of June 13, 2025, well within the 12-month acquisition period.

• Vantage has not previously acquired any PulseLink stock. The entire acquisition will occur on the closing date.

Accordingly, the Acquisition constitutes a QSP, and this threshold requirement for the Election is satisfied.

C. Effect of the Election — Deemed Asset Sale

When a valid Section 338(h)(10) Election is made, the consequences for federal income tax purposes are as follows:

Disregard of Stock Sale. The sale of PulseLink's stock by the Selling Stockholders to Vantage is disregarded. No gain or loss is recognized by the Selling Stockholders on the stock sale itself. Similarly, no gain or loss is recognized by Vantage on the stock purchase.

Deemed Asset Sale by Old Target. Instead, PulseLink, in its capacity as "Old Target" under the Treasury Regulations, is treated as having sold all of its assets to an unrelated party in a single transaction at fair market value on the "deemed sale date," which is the closing date. Old Target recognizes gain or loss on this deemed asset sale as if the sale had actually occurred. The character of the gain or loss (ordinary income, Section 1231 gain, or capital gain) is determined under the general rules applicable to dispositions of the specific asset categories.

Adjusted Grossed-Up Basis (AGUB). "New Target" — the reconstituted PulseLink in the hands of Vantage following the deemed sale — is treated as a new corporation that has purchased the assets of Old Target. New Target takes a basis in each asset equal to the asset's allocable portion of the AGUB, as computed under IRC § 338(b) and allocated under the residual method prescribed by IRC § 338(b)(5) and § 1060.

Deemed Liquidation. Following the deemed asset sale, Old Target is treated as having distributed the proceeds (net of the federal and state income tax liabilities arising from the deemed sale) to its shareholders in a complete liquidation. The Selling Stockholders recognize gain (or loss) under IRC § 331 on the deemed liquidating distribution, measured by the difference between the amount deemed received and each stockholder's adjusted tax basis in his, her, or its PulseLink stock.

The net effect of the Election is to replace a single-level tax on capital gain (which would apply in a straight stock sale) with a two-level tax: (1) a corporate-level tax on the gain from the deemed asset sale, and (2) a shareholder-level tax on the gain from the deemed liquidating distribution. However, the corporate-level tax reduces the amount available for deemed distribution, partially offsetting the shareholder-level gain. The benefit to Vantage is the stepped-up basis, which generates future tax deductions that would not be available in a straight stock purchase.

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 percent (100%) of the target's stock in a single transaction, the "grossed-up basis of recently purchased stock" is equal to the purchase price paid for the stock (including any adjustments, such as the working-capital true-up). The liabilities of Old Target include all liabilities of PulseLink as of the closing date that are assumed by the Buyer or to which PulseLink's assets are subject, including the tax liabilities arising from the deemed asset sale itself.

Based on the information available as of the date of this memorandum, the preliminary computation of AGUB is as follows:

The assumed liabilities of approximately $2,700,000 include accounts payable, accrued expenses, deferred revenue, and other current liabilities of PulseLink as of the estimated closing date. This figure is preliminary and is subject to change based on the final balance sheet delivered at closing and the post-closing working-capital true-up.

For purposes of the preliminary allocation analysis in Section V below, we have used an approximate AGUB of $37,700,000 (based on the base Purchase Price of $35,000,000 plus assumed liabilities of $2,700,000, without adjustment for the estimated NWC excess). The final AGUB will be determined following the closing and completion of the working-capital adjustment.

B. Allocation of AGUB Under IRC § 338 and § 1060 / Residual Method

The AGUB is allocated among the assets of PulseLink using the residual method prescribed by IRC § 338(b)(5) and § 1060, as implemented through the seven-class hierarchy set forth in Treasury Regulation § 1.338-6. Under the residual method, AGUB is allocated first to Class I assets (cash and cash equivalents), then to Class II assets (actively traded personal property), then to Class III assets (accounts receivable, mortgages, and credit card receivables), then to Class IV assets (inventory), then to Class V assets (all other tangible and intangible assets not included in Classes I through IV, VI, or VII), then to Class VI assets (Section 197 intangible assets other than goodwill and going concern value), and finally, the residual amount is allocated to Class VII assets (goodwill and going concern value).

The allocation must be consistent between the Buyer and the Sellers. Pursuant to Section [●] of the SPA, the parties are required to agree on the final allocation within one hundred twenty (120) days following the closing date. In the event the parties are unable to agree, the allocation dispute will be submitted for resolution to Calloway Price & Associates LLP, an independent accounting firm located in Chicago, Illinois, designated in the SPA as the "Independent Accounting Firm." Both the Buyer and the Sellers are required to file their respective federal and state income tax returns in a manner consistent with the agreed-upon allocation.

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 of PulseLink's assets and liabilities, and it is preliminary and subject to finalization within one hundred twenty (120) days following the closing date, as provided in the SPA. The final allocation will be supported by a third-party valuation study prepared by a qualified independent appraisal firm to be engaged by Vantage.

The preliminary allocation reflects the application of the residual method under Treasury Regulation § 1.338-6 and the allocation of AGUB across the seven prescribed asset classes.

B. Allocation by Asset Class

Class I — Cash and Cash Equivalents. PulseLink's cash and cash equivalents as of the estimated closing date are not separately stated for purposes of this allocation, as they are included within the working capital of the business. The working-capital adjustment mechanism in the SPA effectively causes cash to be reflected in the overall Purchase Price adjustment rather than as a separately allocated asset class. To the extent PulseLink holds cash at closing, such cash will be allocated to Class I at face value.

Class II — Actively Traded Personal Property (Certificates of Deposit, Government Securities, Foreign Currency). PulseLink does not hold material quantities of actively traded personal property, certificates of deposit, government securities, or foreign currency positions. Accordingly, no material allocation is made to Class II assets.

Class III — Accounts Receivable, Mortgages, Credit Card Receivables. PulseLink's accounts receivable and other Class III assets are included within the tangible asset allocation at their face value, less applicable reserves for doubtful accounts. As of PulseLink's most recently available financial statements, the accounts receivable balance net of reserves was approximately $6,200,000. This amount is subsumed within the Class V tangible asset allocation described below, as the residual method requires that the aggregate allocation to Classes I through V be determined before any allocation is made to Classes VI and VII.

Class IV — Inventory. PulseLink maintains inventory consisting primarily of telematics hardware components, work-in-process units, and finished goods. The estimated fair market value of inventory at closing is approximately $1,800,000. This amount is included within the aggregate Class V tangible asset allocation below.

Class V — All Other Tangible and Intangible Assets Not Included in Classes I–IV, VI, or VII. Aggregate allocation to tangible assets (Classes I through V): $8,200,000.

The tangible assets of PulseLink to which AGUB is allocated under Classes I through V include the following principal categories:

• Machinery and Equipment. Telematics hardware manufacturing equipment, surface-mount technology (SMT) assembly lines, automated optical inspection (AOI) equipment, and testing and quality-assurance apparatus located at PulseLink's Dublin, Ohio facility. Estimated fair market value: approximately $3,400,000.

• Computer Hardware and IT Infrastructure. Servers, workstations, network equipment, and data center infrastructure supporting PulseLink's SaaS platform and internal operations. Estimated fair market value: approximately $1,200,000.

• Furniture, Fixtures, and Leasehold Improvements. Office furniture, fixtures, and tenant improvements at PulseLink's leased premises at 7120 Kellner Parkway, Dublin, Ohio. PulseLink does not own real property; the Dublin, Ohio office is leased from Kellner Park Holdings LLC pursuant to a commercial lease agreement providing for monthly rent of $38,500, with a lease expiration date of August 31, 2029. Estimated fair market value of leasehold improvements: approximately $850,000.

• Accounts Receivable (net). Approximately $6,200,000, as noted above.

• Inventory. Approximately $1,800,000, as noted above.

• Other Tangible Personal Property. Vehicles, tools, and miscellaneous tangible assets. Estimated fair market value: approximately $250,000.

• Assets of the Mexican Subsidiary. To the extent that Soluciones PulseLink de México, S. de R.L. de C.V. is treated as a disregarded entity for U.S. federal income tax purposes under the check-the-box regulations (Treasury Regulation § 301.7701-3), its assets would be treated as assets of PulseLink and would be included in the AGUB allocation. The Mexican Subsidiary's assets consist primarily of computer hardware, office furniture, and leasehold improvements at its Zapopan, Jalisco facility, with an estimated aggregate value of approximately $500,000. If the Mexican Subsidiary is instead treated as a regarded entity (i.e., a separate corporation or partnership), PulseLink's ownership interest in the Mexican Subsidiary would itself be an asset allocated among the seven classes, and the Mexican Subsidiary's individual assets would not be directly included in the AGUB allocation. The entity classification of the Mexican Subsidiary is discussed further in Section XIII.D below.

The aggregate amount of $8,200,000 allocated to Classes I through V represents the estimated fair market value of all tangible and near-tangible assets of PulseLink (and, potentially, the Mexican Subsidiary) as of the anticipated closing date.

Class VI — Section 197 Intangible Assets (Other Than Goodwill and Going Concern Value). Aggregate allocation to Class VI intangible assets: $18,500,000.

The identified intangible assets of PulseLink include the following principal categories, each of which constitutes a "Section 197 intangible" within the meaning of IRC § 197(d):

Customer Relationships. A significant portion of the Class VI allocation is attributable to PulseLink's established customer relationships, particularly its long-term supply agreements with original equipment manufacturers ("OEMs") and fleet management companies. The principal customer relationships contributing value include:

• Meridian Automotive Group, Inc. — PulseLink supplies embedded telematics control units to Meridian under a multi-year supply agreement generating annual revenue of approximately $12,400,000. The current agreement expires December 31, 2027. Meridian is PulseLink's largest customer, representing approximately 29.3% of fiscal year 2024 revenue.

• Trident Motor Corporation. — PulseLink supplies V2X connectivity modules and related telematics hardware to Trident under a supply agreement generating annual revenue of approximately $8,700,000. The current agreement expires June 30, 2026, with a renewal option for an additional two-year term. Trident represents approximately 20.6% of fiscal year 2024 revenue.

• Cascade Fleet Solutions LLC. — PulseLink provides its FleetIQ® analytics platform to Cascade under a SaaS subscription agreement generating annual recurring revenue of approximately $3,100,000. The current term expires March 31, 2027, with automatic annual renewals thereafter.

The customer relationship intangible reflects the value of PulseLink's established business relationships with these and other customers, including the probability of contract renewals and the expected future revenue streams attributable to the existing customer base.

Developed Technology and Proprietary Software. PulseLink's core competitive advantage resides in its proprietary technology portfolio, including:

• PulseCore® Embedded Telematics Control Unit (TCU) Technology. The PulseCore® platform is PulseLink's flagship hardware technology, integrating cellular connectivity, GPS tracking, and on-board diagnostics into a compact embedded module designed for integration into OEM vehicle platforms.

• FleetIQ® Analytics Platform. FleetIQ® is PulseLink's SaaS-based fleet intelligence platform, providing real-time vehicle tracking, predictive maintenance analytics, driver behavior scoring, and geofence management capabilities. The FleetIQ® codebase and underlying software architecture represent a significant intangible asset.

• V2X Data Bridge Module Technology. PulseLink has developed proprietary vehicle-to-everything (V2X) communication technology enabling real-time data exchange between vehicles and infrastructure systems.

• Proprietary Embedded Firmware. PulseLink's embedded firmware, developed in-house, controls the core functionality of its telematics hardware products and is integral to the PulseCore® and V2X platforms.

intellectual Property. PulseLink's intellectual property portfolio includes four (4) issued United States utility patents relating to telematics hardware technology and two (2) pending U.S. patent applications. The value of these patents is reflected in the developed technology allocation.

Trade Names and Trademarks. PulseLink holds twelve (12) registered United States trademarks, including the PulseCore® and FleetIQ® marks, which are well-recognized within the automotive telematics industry. PulseLink also owns the internet domain name www.pulselinktelematics.com and associated digital properties. The trade name and trademark intangible reflects the brand equity and market recognition associated with these marks.

Non-Compete Agreements. The SPA requires each Selling Stockholder holding five percent (5%) or more of PulseLink's outstanding shares to execute a non-competition and non-solicitation agreement with a restrictive period of two (2) years following the closing date. The restricted parties are Graham Ellersick, Priya Chandrasekaran, Nathan Vosburg, and Clearwater Ventures II, L.P. (and its affiliates). The value attributable to these non-compete agreements is included in the Class VI allocation and will be amortized over the 15-year period applicable to Section 197 intangibles (notwithstanding the 2-year restrictive period), consistent with IRC § 197(d)(1)(E).

Workforce in Place / Assembled Workforce. PulseLink's 137-person workforce represents a significant intangible asset, reflecting the cost and difficulty that would be incurred to recruit, hire, and train a comparable workforce. The workforce includes specialized telematics hardware engineers, embedded software developers, SaaS platform architects, quality assurance specialists, and experienced sales and account management personnel. Key personnel retention arrangements that will be implemented at closing include:

• Graham Ellersick: Two-year employment agreement with annual base compensation of $340,000.

• Priya Chandrasekaran: Three-year retention agreement providing for a retention bonus of $180,000, payable fifty percent (50%) at twelve months post-closing and fifty percent (50%) at twenty-four months post-closing.

• Nathan Vosburg: Two-year employment agreement with annual base compensation of $260,000.

The assembled workforce intangible is a Section 197 intangible and will be amortized over 15 years.

Class VII — Goodwill and Going Concern Value. Allocation to Class VII (residual): approximately $11,000,000.

The residual amount of AGUB, after allocation to Classes I through VI, is allocated to goodwill and going concern value under the residual method. Goodwill represents the value of PulseLink's business as a going concern in excess of the aggregate fair market value of its identifiable tangible and intangible assets. Goodwill includes factors such as PulseLink's market position in the automotive telematics sector, its established customer base, its reputation for product quality and reliability, and the synergies expected to be realized by Vantage from the Acquisition.

The preliminary computation of the Class VII residual is as follows:

AGUB (approximate): $37,700,000 Less: Class I–V Tangible Assets: ($8,200,000) Less: Class VI Identified Intangibles: ($18,500,000) Class VII Goodwill (residual): approximately $11,000,000

This computation is preliminary and subject to adjustment based on the final Purchase Price (including the working-capital true-up), the final determination of assumed liabilities, and the results of the independent appraisal. Using the simplified calculation from the base Purchase Price perspective: $35,000,000 (Purchase Price) minus $8,200,000 (tangible assets) minus $18,500,000 (identified intangibles) plus $2,700,000 (assumed liabilities included in AGUB) equals $11,000,000.

C. Summary Allocation Table

The following table summarizes the preliminary allocation of AGUB among the asset classes:

The allocation is presented on a basis consistent with the Purchase Price payable by Vantage to the Sellers. The AGUB (which includes assumed liabilities) totals approximately $37,700,000 and equals the sum of the asset class allocations: $8,200,000 + $18,500,000 + $11,000,000 = $37,700,000.

D. Finalization Procedures

As noted above, the SPA requires the parties to agree on the final purchase price allocation within one hundred twenty (120) days following the closing date. The anticipated timeline for finalization is as follows:

• Closing Date: June 13, 2025 (anticipated).

• 120-Day Allocation Deadline: Approximately October 11, 2025.

• Independent Appraisal: Vantage will engage a qualified independent appraisal firm (through Mercer Peak Advisors LLC or a separate valuation firm) promptly following closing to prepare a formal purchase price allocation study. The appraisal will provide the evidentiary support for the allocation across the seven asset classes and will be particularly important for the Class VI intangible asset valuations.

• Dispute Resolution: In the event the parties are unable to agree on the allocation within the 120-day period, the dispute will be submitted to Calloway Price & Associates LLP (Chicago, Illinois), the Independent Accounting Firm designated in the SPA, for binding resolution in accordance with the dispute resolution procedures set forth in the SPA.

Both the Buyer and the Sellers are required to file IRS Form 8594 (Asset Acquisition Statement Under Section 1060) with their respective federal income tax returns for the taxable year that includes the closing date, reporting the agreed-upon allocation. Consistent reporting is mandatory; any inconsistency between the parties' filings may trigger IRS scrutiny and potential adjustment.

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 Election, Vantage acquires the stock of PulseLink and takes a cost basis in the stock equal to the Purchase Price. However, PulseLink's assets retain their existing tax basis (i.e., PulseLink's historical cost basis, reduced by accumulated depreciation and amortization). Because PulseLink's internally developed intangible assets (customer relationships, developed technology, goodwill) were created by PulseLink rather than acquired, they have a zero or nominal tax basis. The tangible assets have been substantially depreciated over the years since PulseLink's founding in 2016. Consequently, without the Election, Vantage would have minimal remaining depreciation and amortization deductions available with respect to PulseLink's assets.

With the Election. With the Election, "New Target" (PulseLink in the hands of Vantage) receives a stepped-up basis in each asset class equal to the allocated portion of the AGUB. The future depreciation and amortization deductions generated by the step-up are summarized below:

Tangible Assets (Classes I–V): $8,200,000. The stepped-up basis in PulseLink's tangible personal property will be depreciated under the Modified Accelerated Cost Recovery System ("MACRS") over the applicable class lives, which are generally 5 years for computer equipment and certain manufacturing equipment and 7 years for furniture, fixtures, and general-purpose machinery. Leasehold improvements are depreciated over the lesser of the remaining lease term or 15 years (or may qualify for shorter recovery under applicable provisions). The tangible asset step-up may also be eligible for bonus depreciation under IRC § 168(k), subject to the phase-down schedule currently in effect. Under the Consolidated Appropriations Act and the Tax Cuts and Jobs Act, as amended, the bonus depreciation percentage for qualified property placed in service after December 31, 2026, is scheduled to decrease by twenty percent (20%) per year. For property placed in service in calendar year 2025, the applicable bonus depreciation rate is forty percent (40%). The availability and rate of bonus depreciation should be confirmed at the time of closing and may be affected by legislative developments between now and the closing date.

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 annual amortization deduction attributable to the Class VI step-up is calculated as follows:

$18,500,000 ÷ 15 years = approximately $1,233,333 per year

Goodwill and Going Concern Value (Class VII): approximately $11,000,000. Goodwill is also a Section 197 intangible and is amortized ratably over 15 years. The annual amortization deduction attributable to the Class VII step-up is calculated as follows:

$11,000,000 ÷ 15 years = approximately $733,333 per year

Total Annual Section 197 Amortization (Class VI + Class VII):

$1,233,333 + $733,333 = approximately $1,966,667 per year for 15 years

Over the full 15-year amortization period, the aggregate Section 197 amortization deductions from the step-up in intangible assets and goodwill will total approximately $29,500,000 ($18,500,000 + $11,000,000), representing a substantial tax shield that would not be available absent the Election.

B. Present Value of Tax Benefit

The value of the stepped-up basis deductions must be assessed on a present-value basis, reflecting the time value of the tax savings over the applicable recovery periods. At a combined federal and state effective tax rate of approximately twenty-five percent (25%) (reflecting the 21% federal corporate income tax rate plus an estimated blended state effective rate of approximately 4%), the annual tax shield from Section 197 amortization alone is estimated as follows:

$1,966,667 × 25% = approximately $491,667 per year

Over 15 years, the undiscounted aggregate tax savings from Section 197 amortization would total approximately $7,375,000 ($491,667 × 15). Additional tax savings will be generated by the depreciation of the tangible asset step-up ($8,200,000) over the applicable MACRS recovery periods, including any accelerated benefits from bonus depreciation.

The net present value of the total step-up tax benefit (tangible assets, intangible assets, and goodwill) over the applicable recovery periods will be calculated by Greystone & Callahan LLP using a discount rate appropriate to Vantage's weighted average cost of capital. Preliminary estimates suggest that the net present value of the step-up tax benefit is meaningful — likely in the range of $5,000,000 to $7,000,000, depending on the discount rate applied and the extent to which bonus depreciation accelerates the tangible asset deductions. This benefit is a central component of the value proposition of the Acquisition for Vantage and Veltrano Capital and supports the rationale for incurring the incremental complexity and transaction costs associated with the Election.

C. Impact on Financing and Debt Service

The increased depreciation and amortization deductions resulting from the step-up will reduce Vantage's taxable income in each year of the recovery periods, thereby increasing Vantage's after-tax cash flow. The incremental after-tax cash flow is significant in the context of the Acquisition's financing structure, as the annual tax savings of approximately $491,667 from Section 197 amortization alone will contribute to Vantage's ability to service the Arbor National Bank, N.A. senior secured credit facility.

The Term Loan A of $19,500,000 (SOFR + 3.25%) will require substantial annual principal and interest payments. The revolving credit facility of $5,000,000 (SOFR + 3.00%) provides additional liquidity but may also require periodic servicing. The tax savings from the step-up will improve Vantage's debt service coverage ratio and may enhance compliance with financial covenants in the credit agreement, including leverage and interest coverage ratio tests. Janine Calloway and the Vantage finance team should incorporate the step-up tax benefits into Vantage's post-closing financial projections and debt service models.

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's adjusted tax basis in the corresponding assets.

Character of Gain. The character of the gain recognized by Old Target on the deemed asset sale varies by asset category:

• Ordinary Income. Gain attributable to the sale of inventory (Class IV) is ordinary income. Gain attributable to accounts receivable in excess of basis is ordinary income. Depreciation recapture under IRC § 1245 (for tangible personal property) and IRC § 1250 (for real property, if any) generates ordinary income to the extent of prior depreciation deductions.

• Section 1231 Gain / Capital Gain. Gain on the deemed sale of tangible personal property used in PulseLink's trade or business (to the extent not recaptured as ordinary income) is Section 1231 gain, which is treated as long-term capital gain if PulseLink's net Section 1231 gains exceed its net Section 1231 losses for the taxable year (subject to the five-year lookback rule). Gain on the deemed sale of capital assets is capital gain.

• Ordinary Income on Intangible Assets. Significant ordinary income will arise from the deemed sale of intangible assets — including customer relationships, developed technology, trade names, non-compete agreements, assembled workforce, and goodwill — that have a zero or nominal existing tax basis because they were internally created by PulseLink rather than acquired in a prior transaction. While the sale of self-created goodwill and certain other intangibles by a corporation generates capital gain under the general rules, the allocation to certain asset categories (such as non-compete agreements and accounts receivable) may give rise to ordinary income.

Corporate-Level Tax. Old Target will be subject to federal corporate income tax at the rate of twenty-one percent (21%) on the gain from the deemed asset sale, plus applicable Ohio state income taxes. The aggregate corporate-level tax liability is estimated to be substantial, given the significant spread between the AGUB allocated to PulseLink's assets and the relatively low existing tax basis of those assets (particularly the internally developed intangibles and goodwill). Greystone & Callahan LLP will prepare a detailed computation of the estimated corporate-level tax liability upon finalization of the purchase price allocation.

B. Deemed Liquidation — Shareholder Level

Following the deemed asset sale, Old Target is treated as distributing the net proceeds — after payment (or provision for payment) of the corporate-level tax liabilities arising from the deemed sale — to its shareholders in a complete liquidation under IRC § 331.

Each Selling Stockholder recognizes gain (or loss) on the deemed liquidating distribution equal to the difference between (i) the amount deemed received by such stockholder (i.e., the stockholder's pro rata share of the net after-tax deemed sale proceeds) and (ii) such stockholder's adjusted tax basis in his, her, or its PulseLink stock.

Character. The gain recognized on the deemed liquidation is generally treated as gain from the sale or exchange of stock under IRC § 331(a), which is long-term capital gain for any stockholder who has held the PulseLink stock for more than one year as of the closing date.

Key Shareholder Analysis. The following summarizes the anticipated shareholder-level tax treatment for the principal Selling Stockholders:

• Graham Ellersick (3,290,000 shares / 43.98%). Mr. Ellersick is PulseLink's founder and has held his shares since the company's inception in 2016. His adjusted tax basis in the shares is expected to be nominal (par value of $0.001 per share, or $3,290 in aggregate, plus any additional basis from capital contributions). Mr. Ellersick will recognize substantial long-term capital gain on the deemed liquidation distribution. At a 43.98% pro rata share, Mr. Ellersick's gross deemed distribution (before corporate-level tax reduction) would be approximately $15,393,000 ($35,000,000 × 43.98%). The net amount after accounting for his pro rata share of the corporate-level tax liability will be reduced, but the resulting long-term capital gain will nevertheless be significant.

• Clearwater Ventures II, L.P. (1,870,000 shares / 25.00%). Clearwater's adjusted basis in its PulseLink shares reflects its Series A investment cost (the details of which will be confirmed through due diligence). As a limited partnership, Clearwater itself does not pay entity-level tax; the gain from the deemed liquidation will flow through to Clearwater's partners (including Managing Director Lorena Fitzpatrick) in accordance with the partnership agreement. Each partner will report the gain on his or her individual return, subject to the partner's holding period and basis.

• Priya Chandrasekaran (748,000 shares / 10.00%). Ms. Chandrasekaran, PulseLink's CTO, has held her shares since at least 2016. Her basis is expected to be low, and she will recognize predominantly long-term capital gain on the deemed liquidation distribution.

• Nathan Vosburg (374,000 shares / 5.00%). Mr. Vosburg, PulseLink's COO, has held his shares for a period expected to exceed one year. His basis is expected to be low, resulting in long-term capital gain treatment.

• Remaining Angel and Employee Holders (1,198,000 shares / 16.02%). The character and amount of gain recognized by the remaining holders will depend on each individual's holding period and adjusted tax basis in the shares. For employee holders who acquired shares upon the exercise of stock options, the basis will reflect the exercise price paid, and the holding period will be measured from the date of exercise (or, for incentive stock options meeting the holding period requirements of IRC § 422, from the date of grant, subject to alternative minimum tax implications).

C. Double Tax vs. Single-Level Tax (Comparison to No Election)

It is important to understand the incremental tax cost imposed on the Sellers by the Election in comparison to a straight stock sale without the Election.

Without the Election. In a straight stock sale, the Selling Stockholders would recognize gain on the sale of their PulseLink stock, measured by the difference between the Purchase Price received and each stockholder's adjusted tax basis in the stock. The gain would generally be long-term capital gain (taxed at a maximum federal rate of 20%, plus the 3.8% net investment income tax, for a combined maximum federal rate of 23.8%). There would be no corporate-level tax, because a stock sale does not trigger recognition of gain at the corporate level. This is a single level of tax.

With the Election. As described above, the Election imposes two levels of tax: (1) corporate-level tax at 21% on the deemed asset sale gain (plus applicable state taxes), and (2) shareholder-level capital gains tax on the deemed liquidation distribution (at rates up to 23.8% federal). The corporate-level tax reduces the net amount available for deemed distribution, which in turn reduces the shareholder-level gain. The aggregate tax burden under the Election is higher than the single-level capital gains tax that would apply to a straight stock sale.

Negotiated Treatment. The additional tax cost to the Sellers resulting from the Election has been a central component of the purchase price negotiations between the parties. The $35,000,000 Purchase Price reflects the parties' agreement regarding the allocation of the incremental tax burden. Specifically, the Purchase Price was negotiated to compensate the Sellers for the additional tax cost they will bear as a result of consenting to the Election, taking into account the value of the step-up to Vantage. In effect, a portion of the tax benefit realized by Vantage through the step-up has been shared with the Sellers through a higher purchase price than would have been agreed upon in a straight stock sale without the Election.

The SPA's tax indemnification provisions assign all pre-closing tax liabilities of PulseLink — including the corporate-level tax arising from the deemed asset sale — to the Sellers. This allocation is consistent with the economic understanding between the parties and with the structure of the Election, under which Old Target (and its shareholders) bear the economic consequences of the deemed sale. The indemnification escrow of $3,850,000 provides Vantage with a source of recovery for any pre-closing tax liabilities that may arise post-closing, including liabilities relating to the deemed asset sale.

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 method, the taxable year of PulseLink is treated as if it consisted of two separate taxable years: one ending at the close of business on the closing date (the "Pre-Closing Period") and one beginning on the day after the closing date (the "Post-Closing Period"). The books and records of PulseLink are deemed to be "closed" as of the end of the closing date, and items of income, gain, deduction, loss, and credit that are economically attributable to events occurring on or before the closing date are allocated to the Pre-Closing Period, while items attributable to events occurring after the closing date are allocated to the Post-Closing Period.

This approach ensures that the tax liabilities associated with PulseLink's pre-closing operations are properly allocated to the Sellers, and that Vantage bears only the tax liabilities arising from PulseLink's post-closing operations. The closing-of-the-books method is the most precise and equitable method of straddle-period allocation and is standard in acquisitions of this type.

Exception for Periodic Items. The SPA recognizes that certain items — such as property taxes, franchise taxes, periodic license fees, and similar items that accrue ratably over the course of a taxable period — cannot be specifically identified to the Pre-Closing Period or the Post-Closing Period based on a closing of the books. For these items, the SPA provides that they shall be allocated between the Pre-Closing Period and the Post-Closing Period on a pro rata per-diem basis, based on the number of days in each period relative to the total number of days in the Straddle Period.

B. Responsibility for Pre-Closing Tax Liabilities

The SPA assigns responsibility for all pre-closing tax liabilities of PulseLink to the Sellers, acting through the Sellers' Representative (Graham Ellersick). Pre-closing tax liabilities include, without limitation:

(a) all taxes of PulseLink attributable to the Pre-Closing Period (including the deemed asset sale taxes arising from the Section 338(h)(10) Election);

(b) all taxes of PulseLink for any taxable period ending on or before the closing date;

(d) the pre-closing portion of any Straddle Period taxes, as allocated under the closing-of-the-books method or the per-diem method, as applicable.

Indemnification Escrow. The indemnification escrow of $3,850,000 held by Pinnacle Trust Company, N.A. (escrow account number PT-ESC-2025-06197) for a period of eighteen (18) months from the closing date (anticipated escrow release date: December 13, 2026) may serve as a source for indemnification claims relating to pre-closing tax liabilities, subject to the terms of the SPA. Vantage may submit claims against the escrow for pre-closing tax liabilities discovered during the escrow period, subject to the indemnification basket of $262,500 (tipping). The indemnification cap for general representations and warranties is $7,700,000 (22% of the Purchase P

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
MEMORANDUM
FROM: Calderwood & Harkness LLP Sandra Tung, Partner, Mergers & Acquisitions Naomi Petersen, Lead Associate, Mergers & Acquisitions 1 International Place, Suite 4100 Boston, Massachusetts 02110
PREPARED IN COORDINATION WITH: Greystone & Callahan LLP Samuel Breck, Tax Partner 155 North Wacker Drive, Suite 3000 Chicago, Illinois 60606
TO: Vantage Mobility Systems Corp.
Attention: Derek Winslow, General Counsel
Janine Calloway, Chief Financial Officer Tara Nishimura, Vice President, Corporate Development
CC: Howard Trask, Managing Partner, Veltrano Capital GP IV LLC Oliver Mackenzie, Billing Partner, Calderwood & Harkness LLP
DATE: May 14, 2025
RE: Analysis of Joint Election Under IRC § 338(h)(10) — Acquisition of PulseLink Telematics, Inc. by Vantage Mobility Systems Corp.
MATTER NUMBER: 1001-00004
This memorandum is delivered concurrently with the delivery of the first draft of the Stock Purchase Agreement to Whitfield, Draper & Colón LLP, counsel to the Selling Stockholders.
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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) of the Internal Revenue Code of 1986, as amended (the "Code" or "IRC"), in connection with Vantage's proposed acquisition of one hundred percent (100%) of the outstanding capital stock of PulseLink for a cash purchase price of Thirty-Five Million Dollars ($35,000,000) (the "Purchase Price"), subject to customary post-closing adjustments (the "Acquisition" or the "Transaction").
The Transaction is structured as a stock purchase, pursuant to which Vantage will acquire all 7,480,000 issued and outstanding shares of common stock of PulseLink, a Delaware corporation with its principal place of business at 7120 Kellner Parkway, Dublin, Ohio 43017. PulseLink has no shares of preferred stock outstanding.
Recommendation. Based on the analysis set forth in this memorandum, which has been conducted jointly with Samuel Breck, Tax Partner, Greystone & Callahan LLP, we recommend that the parties proceed with the joint Section 338(h)(10) election as contemplated by the definitive Stock Purchase Agreement (the "SPA"). The election will convert the stock purchase into a deemed asset sale for federal income tax purposes, thereby providing Vantage with a stepped-up tax basis in PulseLink's assets. The stepped-up basis will generate significant future depreciation and amortization deductions over the applicable recovery periods, the net present value of which is estimated to be material to Vantage's after-tax return on the Acquisition. The incremental tax burden imposed on the Sellers as a consequence of the election — principally the recognition of ordinary income (rather than capital gain) on certain categories of deemed asset sale gain at the corporate level, followed by shareholder-level taxation on the deemed liquidating distribution — has been accounted for in the negotiated Purchase Price and is reflected in the allocation of economic risk set forth in the SPA's tax indemnification and escrow provisions.
The definitive SPA, which has a target signing date of June 6, 2025, and an anticipated closing date of June 13, 2025, expressly provides for the parties to make the joint Section 338(h)(10) election and sets forth the procedures for the allocation of the Purchase Price among PulseLink's assets for tax purposes. The SPA is governed by the laws of the State of Delaware; however, the election and the resulting tax consequences to the parties are governed exclusively by the Internal Revenue Code, the Treasury Regulations promulgated thereunder, and applicable state and local tax law.
The balance of this memorandum sets forth the legal framework governing the Section 338(h)(10) election, the computation and preliminary allocation of the adjusted grossed-up basis ("AGUB") in PulseLink's assets, the anticipated tax benefits to Vantage, the tax consequences to the Sellers, the interaction of the election with the SPA's indemnification framework, the applicable state tax considerations, the implementation requirements and filing obligations, and our assessment of key risk factors and open issues.
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 38-4127853. Vantage is a Tier-2 automotive supplier specializing in advanced driver-assistance systems ("ADAS"), connectivity modules, and vehicle electrification subsystems. For its fiscal year ended December 31, 2024, Vantage reported consolidated revenue of approximately $218,000,000. Vantage is a portfolio company of Veltrano Capital Partners Fund IV, L.P. (EIN 38-4298017), a Delaware limited partnership whose general partner is Veltrano Capital GP IV LLC, with its principal office at 600 Griswold Street, Suite 3400, Detroit, Michigan 48226. Howard Trask serves as Managing Partner of Veltrano Capital GP IV LLC and has been the Veltrano deal team lead on this Transaction.
Target. PulseLink Telematics, Inc. is a Delaware corporation (Delaware File Number 6174829) with its principal office at 7120 Kellner Parkway, Dublin, Ohio 43017. PulseLink's registered agent for service of process in Delaware is Capitol Registered Agents, Inc., at the address noted above, and its federal employer identification number is 31-6084291. PulseLink was founded in 2016 and is a provider of automotive telematics hardware and fleet-intelligence software-as-a-service ("SaaS") solutions. For its fiscal year ended December 31, 2024, PulseLink reported revenue of approximately $42,300,000 and Adjusted EBITDA of approximately $5,900,000. As of the date of this memorandum, PulseLink employs 137 full-time personnel, distributed across its Dublin, Ohio headquarters (89 employees), a 28-person engineering center operated through its Mexican subsidiary in Zapopan, Jalisco, Mexico, and 20 remote employees located in various U.S. states.
Selling Stockholders. The outstanding equity of PulseLink consists of 7,480,000 shares of common stock, par value $0.001 per share, out of a total of 10,000,000 shares authorized under PulseLink's Second Amended and Restated Certificate of Incorporation. No shares of preferred stock are outstanding. The Selling Stockholders, their respective share holdings, and their approximate pro rata percentages are as follows:
Graham Ellersick has been designated as the Sellers' Representative under the SPA and will act on behalf of all Selling Stockholders in connection with post-closing matters, including the purchase price allocation, indemnification claims, and the execution of the Section 338(h)(10) election.
Clearwater Ventures II, L.P. is a Delaware limited partnership that made its Series A investment in PulseLink in 2018. Lorena Fitzpatrick serves as Managing Director of Clearwater Ventures Management LLC, the general partner of Clearwater Ventures II, L.P.
Mexican Subsidiary. PulseLink owns one hundred percent (100%) of the equity interests in Soluciones PulseLink de México, S. de R.L. de C.V. (the "Mexican Subsidiary"), which is organized under the laws of Mexico and maintains its principal office at Av. Vallarta 6503, Piso 4, Col. Ciudad Granja, Zapopan, Jalisco 45010, Mexico. The Mexican Subsidiary operates a 28-person engineering center and provides engineering services to PulseLink pursuant to an intercompany Engineering Services Agreement. The entity classification of the Mexican Subsidiary for U.S. federal income tax purposes under the check-the-box regulations (Treasury Regulation § 301.7701-3) is a critical threshold issue for the Section 338(h)(10) analysis and is discussed further in Section IX.D and Section XIII.D below. The parties contemplate that the intercompany Engineering Services Agreement will be restructured following the closing of the Transaction to align with Vantage's global transfer-pricing policies.
B. Transaction Terms Relevant to Tax Analysis
The following is a summary of the material economic and structural terms of the Transaction as reflected in the draft SPA, to the extent relevant to the tax analysis set forth herein:
Purchase Price and Working Capital. Vantage will pay the Sellers aggregate cash consideration of $35,000,000, subject to a customary post-closing working-capital adjustment. The target net working capital ("Target NWC") under the SPA is $4,800,000. Based on management's preliminary estimates, PulseLink's estimated net working capital at closing is $5,040,000, representing an estimated excess of $240,000 over the Target NWC. If confirmed, this excess will be added to the cash consideration payable at closing, resulting in an estimated aggregate payment of approximately $35,240,000, subject to post-closing true-up within 60 business days of closing.
Implied Valuation. On the basis of the $35,000,000 Purchase Price and PulseLink's fiscal year 2024 Adjusted EBITDA of approximately $5,900,000, the Transaction implies an enterprise value-to-EBITDA multiple of approximately 5.9x.
Indemnification Structure. The SPA provides for post-closing indemnification of Vantage by the Sellers, subject to the following material parameters:
• General representations and warranties indemnification cap: twenty-two percent (22%) of the Purchase Price, or $7,700,000.
• Fundamental representations (including tax representations) indemnification cap: one hundred percent (100%) of the Purchase Price, or $35,000,000.
• Indemnification escrow: $3,850,000 deposited with Pinnacle Trust Company, N.A. (escrow account number PT-ESC-2025-06197) at closing, to be held for a period of eighteen (18) months (anticipated escrow release date: December 13, 2026).
• Indemnification basket: $262,500 (tipping basket; once the aggregate amount of Losses exceeds the basket, the Sellers are liable from the first dollar).
Financing. The Acquisition will be financed through a combination of equity and debt:
• Veltrano Capital Partners Fund IV, L.P.: equity contribution of $12,000,000;
• Vantage Mobility Systems Corp.: balance sheet cash of $2,000,000;
• Arbor National Bank, N.A.: senior secured credit facility in the aggregate amount of $24,500,000, consisting of (a) a Term Loan A in the principal amount of $19,500,000, bearing interest at SOFR plus 3.25% per annum, and (b) a revolving credit facility in the amount of $5,000,000, bearing interest at SOFR plus 3.00% per annum.
The aggregate financing of $38,500,000 exceeds the base Purchase Price by $3,500,000, providing a buffer for transaction costs, the working-capital adjustment, and initial post-closing working capital needs.
Tax Advisors and Auditors. Greystone & Callahan LLP (Samuel Breck, Tax Partner) is advising Vantage on the tax structuring of the Acquisition, including the Section 338(h)(10) election analysis. Mercer Peak Advisors LLC (Allison Tanaka, Managing Director) is serving as Vantage's financial advisor. PulseLink's independent auditor is Hargrove & Lindt CPAs LLP, Columbus, Ohio, which has prepared audited financial statements for PulseLink for fiscal years 2022 through 2024. The Sellers are represented by Whitfield, Draper & Colón LLP (Catherine Okafor, Partner; Michael Brannan, Associate), New York, New York.
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 consent of the selling shareholders. The consequence of a Section 338(g) election is a deemed sale of the target's assets at fair market value, but the gain on such deemed sale is recognized by the target as a wholly-owned subsidiary of the purchaser — in effect, the purchasing corporation bears the economic cost of the corporate-level tax on the deemed sale, which is layered on top of the purchase price already paid to the sellers for the stock. For this reason, unilateral Section 338(g) elections are relatively rare and are generally limited to circumstances involving targets with significant net operating loss carryforwards or foreign tax credit attributes that can offset the deemed sale gain.
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 critical distinction between a Section 338(g) election and a Section 338(h)(10) election is that, under the latter, the stock sale itself is disregarded for federal income tax purposes, and the tax consequences of the deemed asset sale are borne by the selling group or the S corporation shareholders rather than by the purchasing corporation. This treatment more closely aligns the economic substance of the transaction with its tax consequences and is frequently the preferred election where the parties can negotiate the sharing of the incremental tax cost.
Eligibility — Stand-Alone C Corporation Issue. A Section 338(h)(10) election is available in two circumstances: (1) where the target is a subsidiary member of a "selling consolidated group" (as defined in Treasury Regulation § 1.338(h)(10)-1(b)(2)), and (2) where the target is an S corporation. PulseLink is a C corporation for federal income tax purposes. PulseLink is not, and has never been, an S corporation. Furthermore, PulseLink is not a member of an affiliated group filing a consolidated federal income tax return — PulseLink is a stand-alone entity with no corporate parent.
This presents a threshold eligibility question. The classic Section 338(h)(10) election, as described in the Treasury Regulations, applies to targets that are either S corporations or subsidiary members of a selling consolidated group. PulseLink, as a stand-alone C corporation, does not appear to satisfy either condition. Accordingly, the joint Section 338(h)(10) election as traditionally understood may be technically unavailable with respect to the Acquisition.
We recognize, however, that the draft SPA as prepared by this firm expressly contemplates a joint Section 338(h)(10) election and that the parties have reached commercial agreement on the treatment of the Transaction as a deemed asset sale for tax purposes, including the allocation of the resulting tax burden. The inclusion of this provision in the SPA reflects the understanding that the parties intend to achieve deemed-asset-sale treatment with respect to the Acquisition. If, upon further review and consultation with Greystone & Callahan LLP, it is determined that PulseLink's status as a stand-alone C corporation renders the Section 338(h)(10) election technically unavailable, several alternative structuring approaches exist that would achieve substantially equivalent tax results:
(a) Section 338(g) Election. Vantage could make a unilateral Section 338(g) election under IRC § 338(a). This would achieve the stepped-up basis for Vantage, but the corporate-level tax on the deemed asset sale gain would be borne by "New Target" (i.e., PulseLink as a subsidiary of Vantage post-closing), rather than by "Old Target" and the Sellers. Under a Section 338(g) election, the Sellers would recognize capital gain on the stock sale at the shareholder level, and PulseLink (now owned by Vantage) would recognize gain on the deemed asset sale at the corporate level. This effectively imposes a double tax: the Sellers pay shareholder-level capital gains tax, and PulseLink (as Vantage's subsidiary) pays corporate-level tax on the deemed asset sale gain. The economic cost of the corporate-level tax falls on Vantage, which significantly diminishes the net benefit of the step-up. For this reason, a Section 338(g) election is generally disfavored except in limited circumstances.
(b) Restructuring as an Asset Purchase. The parties could restructure the Transaction as a direct asset purchase, in which Vantage (or a newly formed acquisition subsidiary) acquires PulseLink's assets and assumes specified liabilities, and PulseLink thereafter distributes the net proceeds to its stockholders in liquidation. This structure achieves the same tax result as a Section 338(h)(10) election — corporate-level gain on the asset sale, followed by shareholder-level gain on the liquidating distribution — and provides Vantage with a cost basis in the acquired assets equal to the purchase price paid. However, an asset purchase introduces additional complexity, including the need for third-party consents to the transfer of contracts and permits, potential transfer tax exposure, and the loss of PulseLink's legal entity and its associated permits, licenses, and regulatory approvals.
(c) Incorporation of Seller Holdco Entity. In certain transactions, the selling shareholders contribute their target company stock to a newly formed holding company prior to closing, which then sells the stock of the target as a member of its consolidated group, thereby enabling a Section 338(h)(10) election. This approach adds complexity and timing risk and would need to be evaluated for substance-over-form and step-transaction doctrine concerns.
Working Assumption. For purposes of the analysis that follows, this memorandum proceeds on the assumption that the Section 338(h)(10) election is properly available or that the parties will adopt an appropriate structuring alternative (most likely a direct asset purchase or a restructured closing mechanism) to achieve the intended deemed-asset-sale treatment. We refer to the intended tax treatment throughout this memorandum as the "Section 338(h)(10) Election" or the "Election," with the understanding that the precise mechanism may be refined in consultation with Greystone & Callahan LLP prior to signing. Regardless of the specific mechanism, the economic and tax analysis set forth herein — including the computation of AGUB, the purchase price allocation, the buyer step-up benefits, and the seller tax consequences — remains applicable.
B. Qualified Stock Purchase
Assuming the Section 338(h)(10) Election is available (or the parties achieve equivalent treatment through an alternative structure), the Acquisition must satisfy the requirements of a "qualified stock purchase" ("QSP") as defined in IRC § 338(d)(3).
A QSP requires that the purchasing corporation acquire stock of the target possessing at least eighty percent (80%) of the total combined voting power of all classes of stock entitled to vote and at least eighty percent (80%) of the total value of all outstanding stock of the target, during a "12-month acquisition period" as defined in IRC § 338(d)(3)(B).
The Acquisition satisfies the QSP requirements as follows:
• Vantage is acquiring all 7,480,000 issued and outstanding shares of PulseLink common stock, which constitute one hundred percent (100%) of the total voting power and one hundred percent (100%) of the total value of all outstanding stock of PulseLink. The common stock is the only class of PulseLink equity that is issued and outstanding; there are no outstanding shares of preferred stock, no convertible securities, no warrants, and no other instruments treated as stock for purposes of Section 338(d)(3).
• The acquisition of all shares will occur in a single closing on the anticipated closing date of June 13, 2025, well within the 12-month acquisition period.
• Vantage has not previously acquired any PulseLink stock. The entire acquisition will occur on the closing date.
Accordingly, the Acquisition constitutes a QSP, and this threshold requirement for the Election is satisfied.
C. Effect of the Election — Deemed Asset Sale
When a valid Section 338(h)(10) Election is made, the consequences for federal income tax purposes are as follows:
Disregard of Stock Sale. The sale of PulseLink's stock by the Selling Stockholders to Vantage is disregarded. No gain or loss is recognized by the Selling Stockholders on the stock sale itself. Similarly, no gain or loss is recognized by Vantage on the stock purchase.
Deemed Asset Sale by Old Target. Instead, PulseLink, in its capacity as "Old Target" under the Treasury Regulations, is treated as having sold all of its assets to an unrelated party in a single transaction at fair market value on the "deemed sale date," which is the closing date. Old Target recognizes gain or loss on this deemed asset sale as if the sale had actually occurred. The character of the gain or loss (ordinary income, Section 1231 gain, or capital gain) is determined under the general rules applicable to dispositions of the specific asset categories.
Adjusted Grossed-Up Basis (AGUB). "New Target" — the reconstituted PulseLink in the hands of Vantage following the deemed sale — is treated as a new corporation that has purchased the assets of Old Target. New Target takes a basis in each asset equal to the asset's allocable portion of the AGUB, as computed under IRC § 338(b) and allocated under the residual method prescribed by IRC § 338(b)(5) and § 1060.
Deemed Liquidation. Following the deemed asset sale, Old Target is treated as having distributed the proceeds (net of the federal and state income tax liabilities arising from the deemed sale) to its shareholders in a complete liquidation. The Selling Stockholders recognize gain (or loss) under IRC § 331 on the deemed liquidating distribution, measured by the difference between the amount deemed received and each stockholder's adjusted tax basis in his, her, or its PulseLink stock.
The net effect of the Election is to replace a single-level tax on capital gain (which would apply in a straight stock sale) with a two-level tax: (1) a corporate-level tax on the gain from the deemed asset sale, and (2) a shareholder-level tax on the gain from the deemed liquidating distribution. However, the corporate-level tax reduces the amount available for deemed distribution, partially offsetting the shareholder-level gain. The benefit to Vantage is the stepped-up basis, which generates future tax deductions that would not be available in a straight stock purchase.
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 percent (100%) of the target's stock in a single transaction, the "grossed-up basis of recently purchased stock" is equal to the purchase price paid for the stock (including any adjustments, such as the working-capital true-up). The liabilities of Old Target include all liabilities of PulseLink as of the closing date that are assumed by the Buyer or to which PulseLink's assets are subject, including the tax liabilities arising from the deemed asset sale itself.
Based on the information available as of the date of this memorandum, the preliminary computation of AGUB is as follows:
The assumed liabilities of approximately $2,700,000 include accounts payable, accrued expenses, deferred revenue, and other current liabilities of PulseLink as of the estimated closing date. This figure is preliminary and is subject to change based on the final balance sheet delivered at closing and the post-closing working-capital true-up.
For purposes of the preliminary allocation analysis in Section V below, we have used an approximate AGUB of $37,700,000 (based on the base Purchase Price of $35,000,000 plus assumed liabilities of $2,700,000, without adjustment for the estimated NWC excess). The final AGUB will be determined following the closing and completion of the working-capital adjustment.
B. Allocation of AGUB Under IRC § 338 and § 1060 / Residual Method
The AGUB is allocated among the assets of PulseLink using the residual method prescribed by IRC § 338(b)(5) and § 1060, as implemented through the seven-class hierarchy set forth in Treasury Regulation § 1.338-6. Under the residual method, AGUB is allocated first to Class I assets (cash and cash equivalents), then to Class II assets (actively traded personal property), then to Class III assets (accounts receivable, mortgages, and credit card receivables), then to Class IV assets (inventory), then to Class V assets (all other tangible and intangible assets not included in Classes I through IV, VI, or VII), then to Class VI assets (Section 197 intangible assets other than goodwill and going concern value), and finally, the residual amount is allocated to Class VII assets (goodwill and going concern value).
The allocation must be consistent between the Buyer and the Sellers. Pursuant to Section [●] of the SPA, the parties are required to agree on the final allocation within one hundred twenty (120) days following the closing date. In the event the parties are unable to agree, the allocation dispute will be submitted for resolution to Calloway Price & Associates LLP, an independent accounting firm located in Chicago, Illinois, designated in the SPA as the "Independent Accounting Firm." Both the Buyer and the Sellers are required to file their respective federal and state income tax returns in a manner consistent with the agreed-upon allocation.
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 of PulseLink's assets and liabilities, and it is preliminary and subject to finalization within one hundred twenty (120) days following the closing date, as provided in the SPA. The final allocation will be supported by a third-party valuation study prepared by a qualified independent appraisal firm to be engaged by Vantage.
The preliminary allocation reflects the application of the residual method under Treasury Regulation § 1.338-6 and the allocation of AGUB across the seven prescribed asset classes.
B. Allocation by Asset Class
Class I — Cash and Cash Equivalents. PulseLink's cash and cash equivalents as of the estimated closing date are not separately stated for purposes of this allocation, as they are included within the working capital of the business. The working-capital adjustment mechanism in the SPA effectively causes cash to be reflected in the overall Purchase Price adjustment rather than as a separately allocated asset class. To the extent PulseLink holds cash at closing, such cash will be allocated to Class I at face value.
Class II — Actively Traded Personal Property (Certificates of Deposit, Government Securities, Foreign Currency). PulseLink does not hold material quantities of actively traded personal property, certificates of deposit, government securities, or foreign currency positions. Accordingly, no material allocation is made to Class II assets.
Class III — Accounts Receivable, Mortgages, Credit Card Receivables. PulseLink's accounts receivable and other Class III assets are included within the tangible asset allocation at their face value, less applicable reserves for doubtful accounts. As of PulseLink's most recently available financial statements, the accounts receivable balance net of reserves was approximately $6,200,000. This amount is subsumed within the Class V tangible asset allocation described below, as the residual method requires that the aggregate allocation to Classes I through V be determined before any allocation is made to Classes VI and VII.
Class IV — Inventory. PulseLink maintains inventory consisting primarily of telematics hardware components, work-in-process units, and finished goods. The estimated fair market value of inventory at closing is approximately $1,800,000. This amount is included within the aggregate Class V tangible asset allocation below.
Class V — All Other Tangible and Intangible Assets Not Included in Classes I–IV, VI, or VII. Aggregate allocation to tangible assets (Classes I through V): $8,200,000.
The tangible assets of PulseLink to which AGUB is allocated under Classes I through V include the following principal categories:
• Machinery and Equipment. Telematics hardware manufacturing equipment, surface-mount technology (SMT) assembly lines, automated optical inspection (AOI) equipment, and testing and quality-assurance apparatus located at PulseLink's Dublin, Ohio facility. Estimated fair market value: approximately $3,400,000.
• Computer Hardware and IT Infrastructure. Servers, workstations, network equipment, and data center infrastructure supporting PulseLink's SaaS platform and internal operations. Estimated fair market value: approximately $1,200,000.
• Furniture, Fixtures, and Leasehold Improvements. Office furniture, fixtures, and tenant improvements at PulseLink's leased premises at 7120 Kellner Parkway, Dublin, Ohio. PulseLink does not own real property; the Dublin, Ohio office is leased from Kellner Park Holdings LLC pursuant to a commercial lease agreement providing for monthly rent of $38,500, with a lease expiration date of August 31, 2029. Estimated fair market value of leasehold improvements: approximately $850,000.
• Accounts Receivable (net). Approximately $6,200,000, as noted above.
• Inventory. Approximately $1,800,000, as noted above.
• Other Tangible Personal Property. Vehicles, tools, and miscellaneous tangible assets. Estimated fair market value: approximately $250,000.
• Assets of the Mexican Subsidiary. To the extent that Soluciones PulseLink de México, S. de R.L. de C.V. is treated as a disregarded entity for U.S. federal income tax purposes under the check-the-box regulations (Treasury Regulation § 301.7701-3), its assets would be treated as assets of PulseLink and would be included in the AGUB allocation. The Mexican Subsidiary's assets consist primarily of computer hardware, office furniture, and leasehold improvements at its Zapopan, Jalisco facility, with an estimated aggregate value of approximately $500,000. If the Mexican Subsidiary is instead treated as a regarded entity (i.e., a separate corporation or partnership), PulseLink's ownership interest in the Mexican Subsidiary would itself be an asset allocated among the seven classes, and the Mexican Subsidiary's individual assets would not be directly included in the AGUB allocation. The entity classification of the Mexican Subsidiary is discussed further in Section XIII.D below.
The aggregate amount of $8,200,000 allocated to Classes I through V represents the estimated fair market value of all tangible and near-tangible assets of PulseLink (and, potentially, the Mexican Subsidiary) as of the anticipated closing date.
Class VI — Section 197 Intangible Assets (Other Than Goodwill and Going Concern Value). Aggregate allocation to Class VI intangible assets: $18,500,000.
The identified intangible assets of PulseLink include the following principal categories, each of which constitutes a "Section 197 intangible" within the meaning of IRC § 197(d):
Customer Relationships. A significant portion of the Class VI allocation is attributable to PulseLink's established customer relationships, particularly its long-term supply agreements with original equipment manufacturers ("OEMs") and fleet management companies. The principal customer relationships contributing value include:
• Meridian Automotive Group, Inc. — PulseLink supplies embedded telematics control units to Meridian under a multi-year supply agreement generating annual revenue of approximately $12,400,000. The current agreement expires December 31, 2027. Meridian is PulseLink's largest customer, representing approximately 29.3% of fiscal year 2024 revenue.
• Trident Motor Corporation. — PulseLink supplies V2X connectivity modules and related telematics hardware to Trident under a supply agreement generating annual revenue of approximately $8,700,000. The current agreement expires June 30, 2026, with a renewal option for an additional two-year term. Trident represents approximately 20.6% of fiscal year 2024 revenue.
• Cascade Fleet Solutions LLC. — PulseLink provides its FleetIQ® analytics platform to Cascade under a SaaS subscription agreement generating annual recurring revenue of approximately $3,100,000. The current term expires March 31, 2027, with automatic annual renewals thereafter.
The customer relationship intangible reflects the value of PulseLink's established business relationships with these and other customers, including the probability of contract renewals and the expected future revenue streams attributable to the existing customer base.
Developed Technology and Proprietary Software. PulseLink's core competitive advantage resides in its proprietary technology portfolio, including:
• PulseCore® Embedded Telematics Control Unit (TCU) Technology. The PulseCore® platform is PulseLink's flagship hardware technology, integrating cellular connectivity, GPS tracking, and on-board diagnostics into a compact embedded module designed for integration into OEM vehicle platforms.
• FleetIQ® Analytics Platform. FleetIQ® is PulseLink's SaaS-based fleet intelligence platform, providing real-time vehicle tracking, predictive maintenance analytics, driver behavior scoring, and geofence management capabilities. The FleetIQ® codebase and underlying software architecture represent a significant intangible asset.
• V2X Data Bridge Module Technology. PulseLink has developed proprietary vehicle-to-everything (V2X) communication technology enabling real-time data exchange between vehicles and infrastructure systems.
• Proprietary Embedded Firmware. PulseLink's embedded firmware, developed in-house, controls the core functionality of its telematics hardware products and is integral to the PulseCore® and V2X platforms.
intellectual Property. PulseLink's intellectual property portfolio includes four (4) issued United States utility patents relating to telematics hardware technology and two (2) pending U.S. patent applications. The value of these patents is reflected in the developed technology allocation.
Trade Names and Trademarks. PulseLink holds twelve (12) registered United States trademarks, including the PulseCore® and FleetIQ® marks, which are well-recognized within the automotive telematics industry. PulseLink also owns the internet domain name www.pulselinktelematics.com and associated digital properties. The trade name and trademark intangible reflects the brand equity and market recognition associated with these marks.
Non-Compete Agreements. The SPA requires each Selling Stockholder holding five percent (5%) or more of PulseLink's outstanding shares to execute a non-competition and non-solicitation agreement with a restrictive period of two (2) years following the closing date. The restricted parties are Graham Ellersick, Priya Chandrasekaran, Nathan Vosburg, and Clearwater Ventures II, L.P. (and its affiliates). The value attributable to these non-compete agreements is included in the Class VI allocation and will be amortized over the 15-year period applicable to Section 197 intangibles (notwithstanding the 2-year restrictive period), consistent with IRC § 197(d)(1)(E).
Workforce in Place / Assembled Workforce. PulseLink's 137-person workforce represents a significant intangible asset, reflecting the cost and difficulty that would be incurred to recruit, hire, and train a comparable workforce. The workforce includes specialized telematics hardware engineers, embedded software developers, SaaS platform architects, quality assurance specialists, and experienced sales and account management personnel. Key personnel retention arrangements that will be implemented at closing include:
• Graham Ellersick: Two-year employment agreement with annual base compensation of $340,000.
• Priya Chandrasekaran: Three-year retention agreement providing for a retention bonus of $180,000, payable fifty percent (50%) at twelve months post-closing and fifty percent (50%) at twenty-four months post-closing.
• Nathan Vosburg: Two-year employment agreement with annual base compensation of $260,000.
The assembled workforce intangible is a Section 197 intangible and will be amortized over 15 years.
Class VII — Goodwill and Going Concern Value. Allocation to Class VII (residual): approximately $11,000,000.
The residual amount of AGUB, after allocation to Classes I through VI, is allocated to goodwill and going concern value under the residual method. Goodwill represents the value of PulseLink's business as a going concern in excess of the aggregate fair market value of its identifiable tangible and intangible assets. Goodwill includes factors such as PulseLink's market position in the automotive telematics sector, its established customer base, its reputation for product quality and reliability, and the synergies expected to be realized by Vantage from the Acquisition.
The preliminary computation of the Class VII residual is as follows:
AGUB (approximate): $37,700,000 Less: Class I–V Tangible Assets: ($8,200,000) Less: Class VI Identified Intangibles: ($18,500,000) Class VII Goodwill (residual): approximately $11,000,000
This computation is preliminary and subject to adjustment based on the final Purchase Price (including the working-capital true-up), the final determination of assumed liabilities, and the results of the independent appraisal. Using the simplified calculation from the base Purchase Price perspective: $35,000,000 (Purchase Price) minus $8,200,000 (tangible assets) minus $18,500,000 (identified intangibles) plus $2,700,000 (assumed liabilities included in AGUB) equals $11,000,000.
C. Summary Allocation Table
The following table summarizes the preliminary allocation of AGUB among the asset classes:
The allocation is presented on a basis consistent with the Purchase Price payable by Vantage to the Sellers. The AGUB (which includes assumed liabilities) totals approximately $37,700,000 and equals the sum of the asset class allocations: $8,200,000 + $18,500,000 + $11,000,000 = $37,700,000.
D. Finalization Procedures
As noted above, the SPA requires the parties to agree on the final purchase price allocation within one hundred twenty (120) days following the closing date. The anticipated timeline for finalization is as follows:
• Closing Date: June 13, 2025 (anticipated).
• 120-Day Allocation Deadline: Approximately October 11, 2025.
• Independent Appraisal: Vantage will engage a qualified independent appraisal firm (through Mercer Peak Advisors LLC or a separate valuation firm) promptly following closing to prepare a formal purchase price allocation study. The appraisal will provide the evidentiary support for the allocation across the seven asset classes and will be particularly important for the Class VI intangible asset valuations.
• Dispute Resolution: In the event the parties are unable to agree on the allocation within the 120-day period, the dispute will be submitted to Calloway Price & Associates LLP (Chicago, Illinois), the Independent Accounting Firm designated in the SPA, for binding resolution in accordance with the dispute resolution procedures set forth in the SPA.
Both the Buyer and the Sellers are required to file IRS Form 8594 (Asset Acquisition Statement Under Section 1060) with their respective federal income tax returns for the taxable year that includes the closing date, reporting the agreed-upon allocation. Consistent reporting is mandatory; any inconsistency between the parties' filings may trigger IRS scrutiny and potential adjustment.
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 Election, Vantage acquires the stock of PulseLink and takes a cost basis in the stock equal to the Purchase Price. However, PulseLink's assets retain their existing tax basis (i.e., PulseLink's historical cost basis, reduced by accumulated depreciation and amortization). Because PulseLink's internally developed intangible assets (customer relationships, developed technology, goodwill) were created by PulseLink rather than acquired, they have a zero or nominal tax basis. The tangible assets have been substantially depreciated over the years since PulseLink's founding in 2016. Consequently, without the Election, Vantage would have minimal remaining depreciation and amortization deductions available with respect to PulseLink's assets.
With the Election. With the Election, "New Target" (PulseLink in the hands of Vantage) receives a stepped-up basis in each asset class equal to the allocated portion of the AGUB. The future depreciation and amortization deductions generated by the step-up are summarized below:
Tangible Assets (Classes I–V): $8,200,000. The stepped-up basis in PulseLink's tangible personal property will be depreciated under the Modified Accelerated Cost Recovery System ("MACRS") over the applicable class lives, which are generally 5 years for computer equipment and certain manufacturing equipment and 7 years for furniture, fixtures, and general-purpose machinery. Leasehold improvements are depreciated over the lesser of the remaining lease term or 15 years (or may qualify for shorter recovery under applicable provisions). The tangible asset step-up may also be eligible for bonus depreciation under IRC § 168(k), subject to the phase-down schedule currently in effect. Under the Consolidated Appropriations Act and the Tax Cuts and Jobs Act, as amended, the bonus depreciation percentage for qualified property placed in service after December 31, 2026, is scheduled to decrease by twenty percent (20%) per year. For property placed in service in calendar year 2025, the applicable bonus depreciation rate is forty percent (40%). The availability and rate of bonus depreciation should be confirmed at the time of closing and may be affected by legislative developments between now and the closing date.
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 annual amortization deduction attributable to the Class VI step-up is calculated as follows:
$18,500,000 ÷ 15 years = approximately $1,233,333 per year
Goodwill and Going Concern Value (Class VII): approximately $11,000,000. Goodwill is also a Section 197 intangible and is amortized ratably over 15 years. The annual amortization deduction attributable to the Class VII step-up is calculated as follows:
$11,000,000 ÷ 15 years = approximately $733,333 per year
Total Annual Section 197 Amortization (Class VI + Class VII):
$1,233,333 + $733,333 = approximately $1,966,667 per year for 15 years
Over the full 15-year amortization period, the aggregate Section 197 amortization deductions from the step-up in intangible assets and goodwill will total approximately $29,500,000 ($18,500,000 + $11,000,000), representing a substantial tax shield that would not be available absent the Election.
B. Present Value of Tax Benefit
The value of the stepped-up basis deductions must be assessed on a present-value basis, reflecting the time value of the tax savings over the applicable recovery periods. At a combined federal and state effective tax rate of approximately twenty-five percent (25%) (reflecting the 21% federal corporate income tax rate plus an estimated blended state effective rate of approximately 4%), the annual tax shield from Section 197 amortization alone is estimated as follows:
$1,966,667 × 25% = approximately $491,667 per year
Over 15 years, the undiscounted aggregate tax savings from Section 197 amortization would total approximately $7,375,000 ($491,667 × 15). Additional tax savings will be generated by the depreciation of the tangible asset step-up ($8,200,000) over the applicable MACRS recovery periods, including any accelerated benefits from bonus depreciation.
The net present value of the total step-up tax benefit (tangible assets, intangible assets, and goodwill) over the applicable recovery periods will be calculated by Greystone & Callahan LLP using a discount rate appropriate to Vantage's weighted average cost of capital. Preliminary estimates suggest that the net present value of the step-up tax benefit is meaningful — likely in the range of $5,000,000 to $7,000,000, depending on the discount rate applied and the extent to which bonus depreciation accelerates the tangible asset deductions. This benefit is a central component of the value proposition of the Acquisition for Vantage and Veltrano Capital and supports the rationale for incurring the incremental complexity and transaction costs associated with the Election.
C. Impact on Financing and Debt Service
The increased depreciation and amortization deductions resulting from the step-up will reduce Vantage's taxable income in each year of the recovery periods, thereby increasing Vantage's after-tax cash flow. The incremental after-tax cash flow is significant in the context of the Acquisition's financing structure, as the annual tax savings of approximately $491,667 from Section 197 amortization alone will contribute to Vantage's ability to service the Arbor National Bank, N.A. senior secured credit facility.
The Term Loan A of $19,500,000 (SOFR + 3.25%) will require substantial annual principal and interest payments. The revolving credit facility of $5,000,000 (SOFR + 3.00%) provides additional liquidity but may also require periodic servicing. The tax savings from the step-up will improve Vantage's debt service coverage ratio and may enhance compliance with financial covenants in the credit agreement, including leverage and interest coverage ratio tests. Janine Calloway and the Vantage finance team should incorporate the step-up tax benefits into Vantage's post-closing financial projections and debt service models.
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's adjusted tax basis in the corresponding assets.
Character of Gain. The character of the gain recognized by Old Target on the deemed asset sale varies by asset category:
• Ordinary Income. Gain attributable to the sale of inventory (Class IV) is ordinary income. Gain attributable to accounts receivable in excess of basis is ordinary income. Depreciation recapture under IRC § 1245 (for tangible personal property) and IRC § 1250 (for real property, if any) generates ordinary income to the extent of prior depreciation deductions.
• Section 1231 Gain / Capital Gain. Gain on the deemed sale of tangible personal property used in PulseLink's trade or business (to the extent not recaptured as ordinary income) is Section 1231 gain, which is treated as long-term capital gain if PulseLink's net Section 1231 gains exceed its net Section 1231 losses for the taxable year (subject to the five-year lookback rule). Gain on the deemed sale of capital assets is capital gain.
• Ordinary Income on Intangible Assets. Significant ordinary income will arise from the deemed sale of intangible assets — including customer relationships, developed technology, trade names, non-compete agreements, assembled workforce, and goodwill — that have a zero or nominal existing tax basis because they were internally created by PulseLink rather than acquired in a prior transaction. While the sale of self-created goodwill and certain other intangibles by a corporation generates capital gain under the general rules, the allocation to certain asset categories (such as non-compete agreements and accounts receivable) may give rise to ordinary income.
Corporate-Level Tax. Old Target will be subject to federal corporate income tax at the rate of twenty-one percent (21%) on the gain from the deemed asset sale, plus applicable Ohio state income taxes. The aggregate corporate-level tax liability is estimated to be substantial, given the significant spread between the AGUB allocated to PulseLink's assets and the relatively low existing tax basis of those assets (particularly the internally developed intangibles and goodwill). Greystone & Callahan LLP will prepare a detailed computation of the estimated corporate-level tax liability upon finalization of the purchase price allocation.
B. Deemed Liquidation — Shareholder Level
Following the deemed asset sale, Old Target is treated as distributing the net proceeds — after payment (or provision for payment) of the corporate-level tax liabilities arising from the deemed sale — to its shareholders in a complete liquidation under IRC § 331.
Each Selling Stockholder recognizes gain (or loss) on the deemed liquidating distribution equal to the difference between (i) the amount deemed received by such stockholder (i.e., the stockholder's pro rata share of the net after-tax deemed sale proceeds) and (ii) such stockholder's adjusted tax basis in his, her, or its PulseLink stock.
Character. The gain recognized on the deemed liquidation is generally treated as gain from the sale or exchange of stock under IRC § 331(a), which is long-term capital gain for any stockholder who has held the PulseLink stock for more than one year as of the closing date.
Key Shareholder Analysis. The following summarizes the anticipated shareholder-level tax treatment for the principal Selling Stockholders:
• Graham Ellersick (3,290,000 shares / 43.98%). Mr. Ellersick is PulseLink's founder and has held his shares since the company's inception in 2016. His adjusted tax basis in the shares is expected to be nominal (par value of $0.001 per share, or $3,290 in aggregate, plus any additional basis from capital contributions). Mr. Ellersick will recognize substantial long-term capital gain on the deemed liquidation distribution. At a 43.98% pro rata share, Mr. Ellersick's gross deemed distribution (before corporate-level tax reduction) would be approximately $15,393,000 ($35,000,000 × 43.98%). The net amount after accounting for his pro rata share of the corporate-level tax liability will be reduced, but the resulting long-term capital gain will nevertheless be significant.
• Clearwater Ventures II, L.P. (1,870,000 shares / 25.00%). Clearwater's adjusted basis in its PulseLink shares reflects its Series A investment cost (the details of which will be confirmed through due diligence). As a limited partnership, Clearwater itself does not pay entity-level tax; the gain from the deemed liquidation will flow through to Clearwater's partners (including Managing Director Lorena Fitzpatrick) in accordance with the partnership agreement. Each partner will report the gain on his or her individual return, subject to the partner's holding period and basis.
• Priya Chandrasekaran (748,000 shares / 10.00%). Ms. Chandrasekaran, PulseLink's CTO, has held her shares since at least 2016. Her basis is expected to be low, and she will recognize predominantly long-term capital gain on the deemed liquidation distribution.
• Nathan Vosburg (374,000 shares / 5.00%). Mr. Vosburg, PulseLink's COO, has held his shares for a period expected to exceed one year. His basis is expected to be low, resulting in long-term capital gain treatment.
• Remaining Angel and Employee Holders (1,198,000 shares / 16.02%). The character and amount of gain recognized by the remaining holders will depend on each individual's holding period and adjusted tax basis in the shares. For employee holders who acquired shares upon the exercise of stock options, the basis will reflect the exercise price paid, and the holding period will be measured from the date of exercise (or, for incentive stock options meeting the holding period requirements of IRC § 422, from the date of grant, subject to alternative minimum tax implications).
C. Double Tax vs. Single-Level Tax (Comparison to No Election)
It is important to understand the incremental tax cost imposed on the Sellers by the Election in comparison to a straight stock sale without the Election.
Without the Election. In a straight stock sale, the Selling Stockholders would recognize gain on the sale of their PulseLink stock, measured by the difference between the Purchase Price received and each stockholder's adjusted tax basis in the stock. The gain would generally be long-term capital gain (taxed at a maximum federal rate of 20%, plus the 3.8% net investment income tax, for a combined maximum federal rate of 23.8%). There would be no corporate-level tax, because a stock sale does not trigger recognition of gain at the corporate level. This is a single level of tax.
With the Election. As described above, the Election imposes two levels of tax: (1) corporate-level tax at 21% on the deemed asset sale gain (plus applicable state taxes), and (2) shareholder-level capital gains tax on the deemed liquidation distribution (at rates up to 23.8% federal). The corporate-level tax reduces the net amount available for deemed distribution, which in turn reduces the shareholder-level gain. The aggregate tax burden under the Election is higher than the single-level capital gains tax that would apply to a straight stock sale.
Negotiated Treatment. The additional tax cost to the Sellers resulting from the Election has been a central component of the purchase price negotiations between the parties. The $35,000,000 Purchase Price reflects the parties' agreement regarding the allocation of the incremental tax burden. Specifically, the Purchase Price was negotiated to compensate the Sellers for the additional tax cost they will bear as a result of consenting to the Election, taking into account the value of the step-up to Vantage. In effect, a portion of the tax benefit realized by Vantage through the step-up has been shared with the Sellers through a higher purchase price than would have been agreed upon in a straight stock sale without the Election.
The SPA's tax indemnification provisions assign all pre-closing tax liabilities of PulseLink — including the corporate-level tax arising from the deemed asset sale — to the Sellers. This allocation is consistent with the economic understanding between the parties and with the structure of the Election, under which Old Target (and its shareholders) bear the economic consequences of the deemed sale. The indemnification escrow of $3,850,000 provides Vantage with a source of recovery for any pre-closing tax liabilities that may arise post-closing, including liabilities relating to the deemed asset sale.
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 method, the taxable year of PulseLink is treated as if it consisted of two separate taxable years: one ending at the close of business on the closing date (the "Pre-Closing Period") and one beginning on the day after the closing date (the "Post-Closing Period"). The books and records of PulseLink are deemed to be "closed" as of the end of the closing date, and items of income, gain, deduction, loss, and credit that are economically attributable to events occurring on or before the closing date are allocated to the Pre-Closing Period, while items attributable to events occurring after the closing date are allocated to the Post-Closing Period.
This approach ensures that the tax liabilities associated with PulseLink's pre-closing operations are properly allocated to the Sellers, and that Vantage bears only the tax liabilities arising from PulseLink's post-closing operations. The closing-of-the-books method is the most precise and equitable method of straddle-period allocation and is standard in acquisitions of this type.
Exception for Periodic Items. The SPA recognizes that certain items — such as property taxes, franchise taxes, periodic license fees, and similar items that accrue ratably over the course of a taxable period — cannot be specifically identified to the Pre-Closing Period or the Post-Closing Period based on a closing of the books. For these items, the SPA provides that they shall be allocated between the Pre-Closing Period and the Post-Closing Period on a pro rata per-diem basis, based on the number of days in each period relative to the total number of days in the Straddle Period.
B. Responsibility for Pre-Closing Tax Liabilities
The SPA assigns responsibility for all pre-closing tax liabilities of PulseLink to the Sellers, acting through the Sellers' Representative (Graham Ellersick). Pre-closing tax liabilities include, without limitation:
(a) all taxes of PulseLink attributable to the Pre-Closing Period (including the deemed asset sale taxes arising from the Section 338(h)(10) Election);
(b) all taxes of PulseLink for any taxable period ending on or before the closing date;
(c) all taxes arising from the pre-closing operations of PulseLink and the Mexican Subsidiary; and
(d) the pre-closing portion of any Straddle Period taxes, as allocated under the closing-of-the-books method or the per-diem method, as applicable.
Indemnification Escrow. The indemnification escrow of $3,850,000 held by Pinnacle Trust Company, N.A. (escrow account number PT-ESC-2025-06197) for a period of eighteen (18) months from the closing date (anticipated escrow release date: December 13, 2026) may serve as a source for indemnification claims relating to pre-closing tax liabilities, subject to the terms of the SPA. Vantage may submit claims against the escrow for pre-closing tax liabilities discovered during the escrow period, subject to the indemnification basket of $262,500 (tipping). The indemnification cap for general representations and warranties is $7,700,000 (22% of the Purchase P

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