Contract analysis

I. Executive Summary This memorandum analyzes the regulatory requirements for maintaining Marlowe Asset Management Photonics Inc.'s ("VPI") registration with the Directorate of Defense Trade Controls ("DDTC"), U.S. Department of State, following the proposed acquisition of 100% of VPI's outstanding equity by Halcyon US Holdings Inc. ("Halcyon US"), a Delaware C-corporation that is wholly owned by Halcyon Semiconducto

II. Background A. The Transaction Halcyon Semiconductor AG ("HSAG"), a German Aktiengesellschaft (public stock corporation) headquartered at Industriestraße 44, 01099 Dresden, Saxony, Federal Republic of Germany, is acquiring 100% of the outstanding equity of Marlowe Asset Management Photonics Inc. ("VPI"), a Delaware C-corporation incorporated on February 14, 2009, and headquartered at 7400 Ridgeline Parkway, Colora

III. ITAR Registration Requirements — Legal Framework A. Overview of ITAR Registration Under 22 C.F.R. Part 122 The International Traffic in Arms Regulations, codified at 22 C.F.R. Parts 120–130, implement the Arms Export Control Act ("AECA"), 22 U.S.C. §§ 2751 et seq., and govern the export and temporary import of defense articles and defense services, as well as the brokering of defense articles. Part 122 of the IT

Section 122.4(a) of the ITAR (22 C.F.R. § 122.4(a)) imposes an affirmative obligation on DDTC registrants to notify DDTC of any material change in the information previously provided at the time of registration or in connection with the most recent registration renewal. The regulation provides, in relevant part, that a registrant must notify DDTC of any change that is material to the registration, and specifically id

IV. Foreign Ownership Considerations Under ITAR A. ITAR § 120.15 — Definition of "Foreign Person" The ITAR defines "foreign person" at 22 C.F.R. § 120.15 to include, among others, any corporation or other entity organized under the laws of a foreign country. HSAG, as a corporation organized under the laws of the Federal Republic of Germany, is unambiguously a "foreign person" within the meaning of the ITAR. This clas

V. Coordination with the National Security Agreement and Technology Control Plan A. NSA Framework (NSA-2024-0019) The National Security Agreement, which is currently being negotiated between the transaction parties (HSAG, Halcyon US Holdings Inc., and VPI) and the U.S. Government (represented by the Departments of the Treasury, Defense, and Energy), is expected to be executed on or about January 19, 2024, and is anti

VI. Coordination with VPI's Active DSP-5 Licenses VPI currently holds three (3) active DSP-5 export licenses authorizing the permanent export of specified ITAR Category XI(a)(3) defense articles to end users in the United Kingdom and Australia. These licenses support VPI's deliveries under cooperative defense programs with two of the United States' closest allies. The continuation of these licenses is important to VP

VII. Coordination with Government Contracts and Facility Security Clearance A. FAR 42.12 Novation Requirements The change in VPI's ownership triggers novation and successor-in-interest considerations under Federal Acquisition Regulation ("FAR") Subpart 42.12 for a number of VPI's active government contracts. Our review of VPI's fourteen (14) active DoD contracts (prime and subcontract) has identified eight (8) contra

VIII. Personnel Continuity Considerations The continuity of VPI's key personnel is a central element of the overall compliance and regulatory continuity strategy. The NSA requires that three key VPI personnel — Dr. Nathan Trevorrow (CEO), Marissa Sung-Avila (President and COO), and Colonel (Ret.) Bryce Hendrickson (VP Government Programs and FSO) — remain employed by VPI for a minimum of twenty-four (24) months follo

IX. Recommended Timeline and Action Items A. Pre-Closing Preparation The following action items should be completed prior to the targeted closing date of February 9, 2024:

1. Draft ITAR § 122.4(a) Notification Letter. David Caruso and Priya Venkataraman will prepare a draft of the ITAR § 122.4(a) notification letter, including all supporting documentation identified in Section III.D above. Target completion of initial draft: December 15, 2023. Target completion of final draft (incorporating comments from all stakeholders): January 31, 2024.

2. Coordinate with VPI Outside Counsel. Coordinate with Wethersfield & Gale LLP (Harrison Whitfield, Sandra Niehaus, and Tobias Kwan), who represent VPI in connection with the transaction, to obtain all VPI-side information required for the notification, including current registration details, officer information, facility information, and any historical DDTC correspondence relevant to the notification.

3. Confirm VPI's Current Registration Status and Renewal Date. Contact DDTC to confirm VPI's current registration status, the date of the most recent renewal, and the next renewal