Contract analysis

I. Purpose of This Letter The purpose of this letter is to advise Halcyon Semiconductor Aktiengesellschaft ("HSAG") that the Committee on Foreign Investment in the United States ("CFIUS" or the "Committee") has initiated a formal 45-day investigation of the proposed acquisition by HSAG of one hundred percent (100%) of the outstanding equity of Marlowe Asset Management Photonics Inc. ("VPI"), assigned CFIUS Case No. C

II. Background and Procedural History to Date Before turning to the substance of the investigation, it is useful to summarize the key procedural milestones in this matter to date, as context for the discussion that follows. Stock Purchase Agreement. HSAG and VPI executed a definitive Stock Purchase Agreement (the "SPA") on June 10, 2023, providing for HSAG's acquisition of all of the outstanding capital stock of VPI

III. Explanation of the Investigation Process A. Statutory and Regulatory Framework The CFIUS process is governed by Section 721 of the Defense Production Act of 1950, as amended by the Foreign Investment Risk Review Modernization Act of 2018 ("FIRRMA"), codified at 50 U.S.C. § 4565, and the implementing regulations promulgated thereunder at 31 C.F.R. Part 800. Under this statutory framework, when CFIUS receives a vo

IV. Possible Outcomes of the Investigation The investigation phase may result in one of several outcomes, which we discuss in order of likelihood based on our analysis of this transaction and our experience in comparable semiconductor-sector CFIUS proceedings. A. Clearance Without Conditions CFIUS may conclude, following the investigation, that the proposed transaction does not present unresolved national security co

V. Implications for Transaction Timeline The initiation of the CFIUS investigation has direct implications for the anticipated closing timeline of the acquisition, which we summarize here. As you are aware, the SPA provides that CFIUS clearance is a condition to the obligation of the parties to consummate the closing of the transaction (SPA §7.1(c)). Accordingly, closing cannot occur until CFIUS has either issued a c

VI. Recommended Approach and Next Steps In light of the foregoing, we recommend that HSAG take the following steps in the coming weeks to position itself for a successful outcome in the CFIUS investigation. A. Preparation for Additional Information Requests As noted above, HSAG should anticipate receiving at least one additional Request for Information from CFIUS during the investigation phase, and should be prepared

VII. Fee and Budget Update For your information and that of HSAG's financial management, we provide the following update on the matter budget. The engagement remains within the phased budget previously agreed upon by the parties: Fees are being applied against the $250,000 retainer previously provided by HSAG. Monthly invoices are being issued and directed to the attention of Billing Partner James Prentice at Calderw

VIII. Conclusion and Availability In closing, we wish to reassure HSAG that the initiation of a CFIUS investigation is a standard and expected procedural step in a transaction of this nature. This is particularly so for a transaction involving a target company that maintains classified defense programs, produces ITAR- and EAR-controlled technologies, holds a facility security clearance under the NISP, and is being ac