Contract analysis

I. Executive Summary Calderwood & Harkness LLP has been engaged by Halcyon Semiconductor Aktiengesellschaft ("HSAG") in connection with HSAG's proposed acquisition of 100% of the outstanding equity of Marlowe Asset Management Photonics Inc. ("VPI") for $1.42 billion through its wholly-owned Delaware subsidiary, Halcyon US Holdings Inc. ("Halcyon US Holdings"). This memorandum addresses a discrete but critical regulat

II. Background A. The Transaction HSAG, a German Aktiengesellschaft with its principal offices at Industriestraße 44, 01099 Dresden, Saxony, Germany (XETRA: HLC; market capitalization approximately €14.8 billion as of June 1, 2023; fiscal year 2022 revenue of €6.12 billion), is acquiring 100% of the outstanding equity interests of VPI. HSAG is a leading European semiconductor company specializing in compound semicond

III. Legal Framework — ITAR Licensing and Change of Ownership A. ITAR DSP-5 Licensing Authority The Arms Export Control Act ("AECA"), 22 U.S.C. § 2778, authorizes the President to control the export of defense articles and defense services enumerated on the United States Munitions List. The President has delegated this authority to the Secretary of State, who exercises it through the Directorate of Defense Trade Cont

IV. Analysis — Impact on Each DSP-5 License A. License 1 — GaN HEMT Power Amplifier Modules to United Kingdom (DDTC License No. 05-2019-M-48732) Current Status: License 1 is active, with a renewal application pending before DDTC. VPI has been making regular exports under this license throughout 2023, with the most recent shipment on August 3, 2023. The license is currently within its four-year validity period but is

V. Amendment Filing Procedures A. Timing. Amendment requests should be filed with DDTC as early as practicable to minimize the duration of the compliance gap described in Section VI below. We recommend the following approach: The three DSP-5 amendment requests should be filed concurrently with, or within one week after, the ITAR § 122.4(a) change-of-ownership notification to DDTC. Filing the amendment requests in clo

1. Updated corporate ownership information. The amendment must identify the new ownership chain: HSAG (ultimate parent, Germany) → Halcyon US Holdings Inc. (intermediate holding company, Delaware) → VPI (licensee, Delaware/Colorado). The amendment should include HSAG's corporate details (jurisdiction of incorporation, principal office address, registration numbers, stock exchange listing) and Halcyon US Holdings' cor

2. Description of the transaction and its effect on VPI's ITAR-registered status. The amendment should provide a concise description of the acquisition, including the execution date of the SPA, the purchase price (to the extent not commercially sensitive), and the anticipated closing date. The amendment should explain that VPI will continue to operate as a separate U.S. legal entity following the acquisition and will

3. Confirmation that VPI will continue to operate as a U.S. entity with U.S. management for export-control purposes. This is a critical element of the amendment. The application should confirm that VPI's day-to-day operations, including all export-related functions, will continue to be managed by U.S. persons; that VPI's empowered official will remain a U.S. person; and that VPI's ITAR compliance program will operate

4. Reference to the CFIUS review and anticipated NSA, including TCP provisions. The amendment should reference CFIUS Case No. CFIUS-023-07-3841 and describe the anticipated NSA and TCP provisions in sufficient detail to give DDTC confidence that the U.S. government is imposing a comprehensive mitigation framework on the transaction. If the NSA has been executed by the time the amendment is filed, a copy (or relevant

5. Updated organizational charts. The amendment should include corporate organizational charts showing VPI's pre- and post-transaction ownership structure, consistent with Exhibit D to the CFIUS joint voluntary notice. The charts should identify all entities in the ownership chain, their jurisdictions of incorporation, and the percentage of ownership at each level.

6. Updated certifications from VPI's empowered official. The empowered official must certify that all information in the amendment request is accurate and complete; that VPI will comply with all conditions of the amended license; and that VPI's ITAR compliance program is adequate to ensure ongoing compliance with the terms of the license and applicable ITAR requirements.

7. Reference to VPI's DDTC Registration No. M-24817. The amendment should confirm VPI's current ITAR registration status and reference the pending or approved § 122.4(a) change-of-ownership notification.

8. Confirmation that end-users, foreign consignees, quantities, and values remain unchanged. For each of the three licenses, the amendment should confirm that the only material change is to VPI's ownership structure and that all other terms and conditions of the license — including the identity of the foreign consignee, the end-user, the description and quantity of defense articles, the authorized value, and the auth

VI. Interim Compliance Measures A. Period of Concern The period between the closing of the acquisition (the date on which HSAG, through Halcyon US Holdings, assumes ownership of VPI) and DDTC's approval of the three DSP-5 license amendments creates a compliance gap during which VPI's existing DSP-5 licenses may not be valid for new exports. During this interim period, the licenses will reflect VPI's pre-transaction o

1. Pre-Closing Acceleration of Deliveries. To the extent commercially feasible and consistent with contract schedules and production timelines, VPI should accelerate any pending exports under the current DSP-5 licenses to complete them before the closing date, while VPI remains U.S.-owned and the licenses accurately reflect VPI's ownership structure. This acceleration strategy requires coordination with the foreign c

2. Suspension of New Exports Effective as of Closing. VPI should implement an internal compliance hold on all new exports under the three DSP-5 licenses, effective as of the closing date of the acquisition, pending receipt of DDTC-approved amendments. VPI's export compliance team, under Col. Hendrickson's supervision as FSO and empowered official, should issue a formal compliance directive to all relevant program man

3. Customer Notification. VPI should notify its UK and Australian customers and end-users of the potential for temporary export delays arising from the ownership transition and associated license amendment process. These notifications should be carefully drafted in consultation with counsel to accomplish two objectives: (i) providing sufficient information to allow the customers to plan for potential delivery delays,

4. Segregation of Pending Export Shipments. Any manufactured defense articles destined for export under the DSP-5 licenses that are not shipped before the closing date should be physically segregated and held in VPI's controlled inventory at the Colorado Springs or Albuquerque facilities, pending license amendment approval. The segregated items should be clearly labeled and tracked in VPI's inventory management syste

5. Technical Data Access Controls. For License 3, which authorizes the export of technical data to the UK, VPI should ensure that no new transmissions of ITAR-controlled technical data occur after the closing date until the license amendment is approved by DDTC. This measure is particularly important because the introduction of HSAG's foreign ownership creates additional deemed-export and retransfer concerns. Specifi

6. Alternative Authorization Assessment. As a contingency measure, VPI should evaluate whether any of the three license authorizations could alternatively be conducted under an existing ITAR exemption during the interim period. Potentially relevant exemptions include: • 22 C.F.R. § 126.4, which provides an exemption for exports to NATO governments and NATO agencies for official use. This exemption is narrow: it appli

VII. Coordination with CFIUS Process and NSA Provisions A. CFIUS Considerations The CFIUS review (Case No. CFIUS-023-07-3841) is evaluating, among other things, the risk that the transaction could result in the unauthorized transfer of ITAR-controlled technology — specifically, VPI's advanced GaN power amplifier designs and related technical data — to non-U.S. persons following the closing. VPI's ITAR-controlled prod

VIII. Risk Assessment and Recommendations A. Summary of Risks The following table summarizes the key risks associated with the DSP-5 license amendment process and the interim compliance gap, together with an assessment of likelihood, severity, and recommended mitigation measures: B. Recommendations. Based on the foregoing analysis, we recommend the following actions:

1. Immediate Action — Begin Preparing Amendment Applications. VPI should begin preparing the three DSP-5 amendment applications and all supporting documentation immediately, in parallel with the ongoing CFIUS review and NSA negotiation. The amendment applications are document-intensive, and early preparation will allow sufficient time for internal review, empowered official certification, and counsel review before fi