Contract analysis

I. Executive Summary This memorandum analyzes whether Halcyon Semiconductor Aktiengesellschaft's ("HSAG") proposed acquisition of 100% of the outstanding equity of Marlowe Asset Management Photonics Inc. ("VPI") triggers a mandatory declaration requirement under the regulations of the Committee on Foreign Investment in the United States ("CFIUS"), specifically 31 C.F.R. § 800.401, and, if so, whether the parties shou

II. Scope and Purpose This memorandum supplements the Preliminary CFIUS Jurisdiction Memorandum dated June 14, 2023 (the "Jurisdiction Memo"), which concluded that the proposed acquisition constitutes a "covered transaction" under 31 C.F.R. § 800.213 and, more specifically, a "covered control transaction" under 31 C.F.R. § 800.210. The Jurisdiction Memo established that HSAG's acquisition of 100% of VPI's outstanding

III. Background on the Transaction A. The Parties

1. Acquiror: Halcyon Semiconductor Aktiengesellschaft The acquiror is Halcyon Semiconductor Aktiengesellschaft ("HSAG"), a publicly traded German Aktiengesellschaft listed on the Frankfurt Stock Exchange (XETRA ticker: HLC), with its registered headquarters at Industriestraße 44, 01099 Dresden, Saxony, Federal Republic of Germany. HSAG is one of Europe's leading semiconductor companies, focused on power semiconductor

2. Acquisition Vehicle: Halcyon US Holdings Inc. The acquisition will be effected through Halcyon US Holdings Inc. ("Halcyon US Holdings"), a Delaware C-corporation formed on June 5, 2023, as a wholly owned direct subsidiary of HSAG. Halcyon US Holdings was formed for the sole purpose of serving as the acquisition vehicle in this transaction and has no prior operating history, assets, liabilities, or employees. Its r

3. Existing U.S. Operations of HSAG HSAG currently maintains existing operations in the United States through Halcyon US Inc. ("Halcyon US"), a wholly owned subsidiary incorporated in Delaware and headquartered in Austin, Texas. Halcyon US operates as a fabless semiconductor design center with approximately 320 employees focused on advanced driver-assistance systems ("ADAS") and industrial IoT sensor design. Importan

4. Target: Marlowe Asset Management Photonics Inc. The target is Marlowe Asset Management Photonics Inc. ("VPI"), a Delaware C-corporation originally incorporated on February 14, 2009, with its principal executive offices located at 7400 Ridgeline Parkway, Colorado Springs, Colorado 80919. VPI designs, develops, and manufactures advanced gallium-nitride ("GaN") power amplifier chips and monolithic microwave integrate

5. VPI's National-Security-Relevant Profile VPI presents a significant national security profile across multiple dimensions, each of which bears directly on the appropriate CFIUS filing approach and the anticipated scope of CFIUS review: Government Contracts. VPI currently holds 14 active DoD contracts (a combination of prime contracts and subcontracts) with an aggregate remaining contract backlog of approximately $1

IV. Legal Framework: CFIUS Filing Mechanisms A. Overview of Filing Options Under the CFIUS regulations codified at 31 C.F.R. Part 800, as substantially amended by the implementing regulations for the Foreign Investment Risk Review Modernization Act of 2018 ("FIRRMA"), Pub. L. No. 115-232, Title XVII, §§ 1701–1728, which became effective on February 13, 2020, parties to a covered transaction may notify CFIUS through o

1. Short-Form Declaration under 31 C.F.R. § 800.401 — a streamlined filing format limited to no more than five pages of narrative text (plus permissible attachments, including organizational charts and transaction diagrams), subject to a 30-calendar-day assessment period during which CFIUS evaluates the transaction and determines whether further review is warranted.

2. Full Voluntary Joint Notice under 31 C.F.R. § 800.501 — a comprehensive filing (typically ranging from 50 to more than 100 pages of narrative, plus extensive exhibits and attachments), subject to a 45-calendar-day initial review period, which may be extended by an additional 45-calendar-day investigation period if CFIUS determines that further review is necessary to assess the national security implications of the

Section 800.401(b) of the CFIUS regulations establishes a mandatory filing obligation for certain covered transactions involving "TID U.S. businesses" — that is, U.S. businesses that produce, design, test, manufacture, fabricate, or develop one or more "critical technologies," as that term is defined in 31 C.F.R. § 800.215, or that otherwise meet the criteria for a TID U.S. business under 31 C.F.R. § 800.248 (which e

1. Clear the transaction — CFIUS concludes that the transaction does not present national security concerns and notifies the parties that no further action is required. Notably, however, CFIUS does not issue a safe-harbor letter in connection with a declaration clearance.

2. Request a full voluntary notice — CFIUS determines that the information provided in the declaration is insufficient to permit a complete assessment and requests that the parties file a full voluntary joint notice under § 800.501. This is the most common outcome for declarations involving transactions with significant national security dimensions.

3. Notify the parties that CFIUS is unable to conclude action — CFIUS informs the parties that it cannot determine whether the transaction raises national security concerns based on the declaration alone and requests that the parties file a full voluntary notice.

4. Initiate a unilateral review — CFIUS determines, based on the declaration, that the transaction may raise national security concerns and initiates a review of the transaction under its own authority, without requiring the parties to file a voluntary notice. Critical Limitation: No Safe-Harbor Letter. The most significant limitation of the short-form declaration process is that, even in the event CFIUS clears a tra

1. Clearance with safe-harbor letter — CFIUS concludes that the transaction does not present unresolved national security concerns and issues a safe-harbor letter, confirming that CFIUS has completed all action with respect to the transaction and that the transaction is protected from future CFIUS review under 50 U.S.C. § 4565(b)(1)(D), absent material misrepresentation or omission in the notice.

2. Clearance with mitigation (National Security Agreement) — CFIUS concludes that the transaction presents national security concerns that can be adequately mitigated through binding commitments by the parties. CFIUS negotiates a National Security Agreement ("NSA") — sometimes referred to as a mitigation agreement, security agreement, or CFIUS agreement — that imposes conditions on the transaction and ongoing obligat

3. Referral to the President — In rare cases, CFIUS is unable to resolve the national security concerns through mitigation and refers the transaction to the President of the United States for a final decision on whether to block or unwind the transaction under 50 U.S.C. § 4565(d). Presidential action is extremely rare, with only a handful of publicly known instances. Safe-Harbor Protection. The critical advantage of

V. Application to the HSAG/VPI Transaction A. Why the Mandatory Declaration Requirement Is Triggered As established in Section IV.B above, VPI is a TID U.S. business that produces, designs, tests, manufactures, fabricates, and develops "critical technologies" controlled under both the ITAR (USML Category XI(a)(3)) and the EAR (ECCN 3A001, 3A991, 3E001). HSAG is a "foreign person" within the meaning of 31 C.F.R. § 800

1. Complexity of VPI's Classified and Controlled Programs. VPI holds a Facility Security Clearance at the SECRET level (CAGE Code: 7VK92) for its Albuquerque, New Mexico fabrication facility. The Albuquerque facility includes classified clean room Sections C-7 through C-12, where classified fabrication, testing, and development work is performed pursuant to applicable NISPOM requirements and classified contract speci

2. ITAR/EAR Regulatory Complexity. VPI's product portfolio straddles two of the most significant U.S. export control regimes: the ITAR and the EAR. VPI's defense-specific GaN power amplifier modules are controlled under USML Category XI(a)(3) as defense articles, while its dual-use GaN semiconductor components are classified under EAR ECCN 3A001, 3A991, and 3E001. This dual-regime profile creates a complex regulatory

3. Foreign Ownership, Control, or Influence (FOCI) Implications. The acquisition of VPI by HSAG will result in VPI being owned and controlled by a German parent company, creating Foreign Ownership, Control, or Influence ("FOCI") considerations that directly affect VPI's ability to maintain its facility security clearance and to continue performing classified work under existing and future DoD contracts. Under the Nat

4. Near-Certainty of CFIUS Requesting a Full Notice. Based on Calderwood & Harkness's extensive experience representing parties before CFIUS and our analysis of recent semiconductor-sector transaction precedents (which is set forth in detail in the Comparative NSA Precedent Analysis memorandum currently in preparation), we believe it is virtually certain that CFIUS would request the parties to file a full voluntary n

5. No Safe-Harbor Protection from Declaration Alone. As discussed in Section IV.C above, a short-form declaration, even if CFIUS concludes its assessment without requesting a full notice (an outcome we consider extremely unlikely here), does not result in the issuance of a safe-harbor letter under 50 U.S.C. § 4565(b)(1)(D). The safe-harbor provision is available only upon CFIUS's completion of all action following a

6. SPA Closing Conditions. The Stock Purchase Agreement, executed on June 10, 2023, contains closing conditions at Section 7.1(c) that require CFIUS clearance as a condition precedent to the parties' obligations to consummate the transaction. "CFIUS Clearance" is defined in the SPA to include the receipt of written confirmation from CFIUS — specifically, a safe-harbor letter — that CFIUS has concluded all action with

1. Initiates the Formal Statutory Review Clock. Filing a full voluntary joint notice immediately triggers the 45-day statutory review period upon CFIUS acceptance of the notice, rather than the 30-day declaration assessment period. Given our conclusion that a declaration would almost certainly result in a request for a full notice, the declaration pathway would effectively require two sequential filing processes befo

2. Enables Comprehensive Presentation of Mitigation Proposals. The voluntary notice format provides the space and framework necessary for HSAG to present a comprehensive proposed mitigation framework from the outset of the filing. This is a significant strategic advantage. By proactively proposing specific mitigation measures in the notice — rather than waiting for CFIUS to identify concerns and propose its own mitig

3. Demonstrates Good Faith and Cooperation. Filing a full voluntary notice rather than the minimum mandatory declaration sends a clear and important signal to CFIUS that HSAG takes the national security review seriously and is fully committed to a cooperative and transparent engagement with the Committee. This posture is strategically significant for several reasons. First, HSAG is a German company — Germany is a clo

4. Satisfies the Mandatory Filing Obligation. Under 31 C.F.R. § 800.401(a), the filing of a voluntary notice under § 800.501 expressly satisfies the mandatory declaration requirement imposed by § 800.401(b). By filing a voluntary notice, the parties simultaneously (i) comply with the mandatory filing obligation and (ii) initiate the comprehensive review process necessary to achieve safe-harbor protection. The parties

5. Alignment with Anticipated CFIUS Outcome. Based on our precedent analysis and our assessment of the transaction's national security profile, we believe that the most likely outcome of the CFIUS review is clearance conditioned on the negotiation and execution of a National Security Agreement. As noted above, in the 12 recent semiconductor-sector precedent transactions surveyed, the substantial majority resulted in

VI. Timeline Comparison To illustrate the practical implications of the filing choice, the following sections present estimated timelines under each pathway. A. Short-Form Declaration Pathway (Estimated) Under the short-form declaration pathway, the estimated timeline from engagement opening to CFIUS clearance is approximately 8 to 9 months, based on the following sequential steps: This timeline reflects our assumpti

VII. Coordination with Seller's Counsel The CFIUS filing will be a joint submission by both HSAG and VPI, as required by 31 C.F.R. § 800.501(a). Accordingly, preparation of the Joint Voluntary Notice will require close coordination between buyer's counsel and seller's counsel. VPI and the selling shareholders are represented in this transaction by Wethersfield & Gale LLP, with Harrison Whitfield (Partner, National Se