Contract analysis

Section 1.1 — Definitions. Unless otherwise defined in the body of this Agreement, all capitalized terms used herein shall have the meanings ascribed to them in Annex A (Definitions), which is incorporated herein by reference and constitutes an integral part of this Agreement. To the extent that a term is defined both in the body of this Agreement and in Annex A, the definition in the body of this Agreement shall con

Section 1.2 — Key Defined Terms. Without limiting the generality of Section 1.1, the following key defined terms are used throughout this Agreement and are defined in Annex A as follows: (a) "Acquiror" means Halcyon Semiconductor Aktiengesellschaft. (b) "Agreement" means this National Security Agreement, including all Annexes hereto, as may be amended from time to time in accordance with Section 16.4. (c) "Buyer" mea

Section 1.3 — Additional Definitions. Annex A contains additional definitions relating to clearance levels, export control regimes, regulatory bodies, compliance terminology, and other technical and legal terms used throughout this Agreement. In the event of any conflict between a definition in this Article I and Annex A, the definition in this Article I shall control.

Section 1.4 — Rules of Construction. Unless the context otherwise requires: (a) words importing the singular include the plural and vice versa; (b) references to "including" or "includes" mean including without limitation; (c) references to any law, statute, regulation, or executive order include any amendments, modifications, or successor provisions thereto; and (d) references to "days" mean calendar days unless "bu

ARTICLE II — SCOPE AND EFFECTIVENESS

Section 2.1 — Scope. This Agreement applies to HSAG, Buyer, VPI, and their respective subsidiaries, affiliates, successors, and assigns in connection with the Transaction and the ongoing operations of VPI following the Closing. The obligations and restrictions set forth herein cover all VPI operations, facilities, personnel, government contracts, intellectual property, technology, and associated assets, whether exist

Section 2.2 — Effective Date. This Agreement shall become effective upon the Closing of the Transaction (the "Effective Date"). The anticipated Closing date is February 9, 2024. The obligations of HSAG, Buyer, and VPI under this Agreement, except as otherwise provided in Section 2.3, are conditioned upon the Closing occurring in accordance with the terms and conditions of the SPA. In the event that the SPA is termina

Section 2.3 — Binding Obligations Pre-Closing. Notwithstanding Section 2.2, the following preparatory obligations are binding upon the Parties as of the date of execution of this Agreement (January 19, 2024) and must be completed prior to or contemporaneous with the Closing: (a) HSAG shall identify and propose to the Government Parties the name of the independent Security Director to be appointed to the VPI board of

Section 2.4 — Superseding Effect. This Agreement supersedes any and all prior understandings, commitments, representations, proposals, term sheets, draft mitigation agreements, and correspondence made by or among the Parties during the CFIUS review and investigation process (CFIUS Case No. CFIUS-023-07-3841), except to the extent that any such prior understanding or commitment is expressly incorporated herein by refe

ARTICLE III — BOARD OF DIRECTORS COMPOSITION

Section 3.1 — Reconstitution of VPI Board. Upon the Closing, the board of directors of VPI (the "VPI Board") shall be reconstituted to consist of exactly five (5) members, as follows: (a) Three (3) Security Board Members, appointed in accordance with the qualifications and procedures set forth in Section 3.2 and Section 3.3 of this Article; and (b) Two (2) HSAG Designees, appointed in accordance with Section 3.4 of t

Section 3.2 — Security Board Member Qualifications. Each Security Board Member must satisfy all of the following qualifications at the time of appointment and at all times during his or her service on the VPI Board: (a) Each Security Board Member must be a citizen of the United States of America. (b) Each Security Board Member must hold, or be eligible to obtain and willing to apply for, a U.S. government personnel s

Section 3.3 — Initial Security Board Members. The following individuals have been reviewed and are hereby approved by the Government Parties as initial Security Board Members of VPI, effective as of the Closing: (a) Col. (Ret.) Bryce Hendrickson, USAF — currently serving as Vice President of Government Programs and Facility Security Officer of VPI; holder of an active TS/SCI clearance; U.S. citizen. (b) Adrienne Dela

Section 3.4 — HSAG Designees. HSAG may designate two (2) members of the VPI Board (the "HSAG Designees"), subject to the following restrictions: (a) HSAG Designees may not hold, access, or receive any Classified Information or information relating to classified programs conducted by or on behalf of VPI. (b) HSAG Designees may not access any areas designated as classified within VPI facilities, including but not limit

Section 3.5 — Replacement of Board Members. In the event of a vacancy among the Security Board Members, whether due to resignation, death, incapacity, removal, or any other cause, the following procedures shall apply: (a) The vacancy must be filled within sixty (60) days of its occurrence with a replacement individual who meets all of the qualifications set forth in Section 3.2. (b) The proposed replacement Security

Section 3.6 — Removal of Board Members. The removal of VPI Board members shall be subject to the following provisions: (a) A Security Board Member may be removed from the VPI Board only with the prior written consent of the Government Parties. A request for removal must be submitted in writing to the Government Parties, setting forth the grounds for removal, and the Government Parties shall respond within thirty (30)

ARTICLE IV — GOVERNMENT SECURITY COMMITTEE

Section 4.1 — Establishment. VPI shall establish a Government Security Committee (the "GSC") consisting of the three (3) Security Board Members appointed pursuant to Article III. The GSC shall be chaired by the Security Director. The GSC shall be established contemporaneously with the reconstitution of the VPI Board at Closing and shall remain in existence for the duration of this Agreement. The GSC shall operate as

Section 4.2 — Exclusive Authority of the GSC. The GSC shall have exclusive authority over the following matters, and the full VPI Board (including HSAG Designees) shall have no authority to make decisions, take actions, or receive information with respect to any of the following: (a) All classified programs and contracts performed by or on behalf of VPI, including the management, oversight, and execution thereof. (b)

Section 4.3 — GSC Operating Procedures. The GSC shall observe the following operating procedures: (a) The GSC shall meet no less frequently than quarterly, with additional meetings convened as necessary to address urgent matters, at the call of the Security Director or any two GSC members. (b) A quorum of the GSC shall consist of two (2) of its three (3) members. GSC decisions shall require a majority vote of the GSC

Section 4.4 — GSC Reporting. The GSC shall comply with the following reporting obligations: (a) The GSC shall provide the Government Parties with a semi-annual written report summarizing its activities, decisions, security-relevant developments, and the status of compliance with the matters within its purview. The first semi-annual report shall be due within one hundred eighty (180) days of the Effective Date, and su

ARTICLE V — FACILITY SECURITY CLEARANCE AND FOCI MITIGATION

Section 5.1 — Maintenance of FCL. VPI shall maintain its existing Facility Security Clearance at the SECRET level, CAGE Code 7VK92, at its Albuquerque, New Mexico fabrication facility located at 9200 Innovation Boulevard, Albuquerque, NM 87113. The 45,000 square-foot GaN-on-SiC fabrication facility shall continue to operate under the National Industrial Security Program ("NISP") established by Executive Order 12829,

Section 5.2 — FOCI Mitigation. The Parties acknowledge that the Transaction will result in VPI being subject to Foreign Ownership, Control, or Influence ("FOCI") within the meaning of 32 C.F.R. Part 117, by virtue of HSAG's status as a foreign parent entity organized under the laws of the Federal Republic of Germany. This Agreement shall serve as the equivalent of a Special Security Agreement ("SSA") for purposes of

Section 5.3 — Facility Security Officer. Col. (Ret.) Bryce Hendrickson shall continue to serve as VPI's Facility Security Officer ("FSO") following the Closing. Any change in the individual serving as FSO requires the prior approval of the GSC and advance notification to DCSA in accordance with 32 C.F.R. Part 117. The FSO shall report directly to the GSC on all security matters, including but not limited to FCL maint

Section 5.4 — Coordination with DCSA. VPI shall cooperate fully with DCSA in all matters relating to the FCL, including periodic security inspections, vulnerability assessments, security reviews, and any special inquiries or investigations initiated by DCSA. HSAG shall cause VPI to provide DCSA with timely and complete access to all facilities, personnel, records, and information requested by DCSA in connection with

ARTICLE VI — TECHNOLOGY CONTROL PLAN

Section 6.1 — Implementation. HSAG, Buyer, and VPI shall implement the Technology Control Plan (the "TCP") set forth in Annex B to this Agreement. The TCP shall be fully implemented prior to or contemporaneous with the Closing. Each Party shall designate an individual responsible for ensuring implementation of the TCP within its respective organization, and VPI shall designate a TCP Compliance Officer in accordance w

Section 6.2 — Scope of TCP. The TCP governs all access to, use of, and transfer of the following categories of VPI information, technology, and materials: (a) VPI technical data controlled under the International Traffic in Arms Regulations ("ITAR"), 22 C.F.R. Parts 120–130, including defense articles classified under ITAR Category XI(a)(3) of the United States Munitions List and any associated technical data as defi

Section 6.3 — Prohibition on Unauthorized Transfer. No Controlled Technical Data, ITAR-controlled defense articles or technical data, EAR-controlled technology or technical data, or Classified Information may be transferred, disclosed, or made accessible to any non-U.S. person (including HSAG personnel who are not U.S. persons as defined under ITAR 22 C.F.R. § 120.15 and EAR 15 C.F.R. § 772.1) without prior written a

Section 6.4 — ITAR/EAR Compliance Integration. VPI shall maintain its existing export compliance program and integrate the requirements of the TCP into its compliance policies and procedures. Without limiting the foregoing: (a) VPI's DDTC registration (Registration No. M-24817) shall be maintained in full force and effect and shall be updated to reflect the change in ownership of VPI pursuant to ITAR § 122.4(a) no la

Section 6.5 — Intellectual Property Protections. The transfer, licensing, assignment, or other disposition of VPI intellectual property, including the forty-seven (47) granted U.S. patents, twelve (12) pending patent applications, and thirty-one (31) registered trade secrets, to any HSAG entity or any other non-U.S. person shall be subject to the restrictions set forth in the TCP. In addition: (a) The twenty-three (2

Section 6.6 — TCP Amendments. Any amendments, modifications, or waivers to the TCP shall require the prior written approval of the Government Parties. Proposed amendments shall be submitted in writing to the Government Parties, with copies to DCSA and the Monitor, and the Government Parties shall have thirty (30) days from receipt to review and respond. No amendment to the TCP shall take effect until the Government P

ARTICLE VII — CYBERSECURITY REQUIREMENTS

Section 7.1 — NIST SP 800-171 Compliance. VPI shall implement and maintain compliance with all one hundred ten (110) security requirements set forth in NIST Special Publication 800-171 Revision 2, "Protecting Controlled Unclassified Information in Nonfederal Systems and Organizations," for all VPI information systems, networks, and platforms that process, store, or transmit Controlled Unclassified Information ("CUI")

Section 7.2 — Data Segregation. VPI's information technology systems, including all networks, servers, data storage systems, email systems, collaboration platforms, domain controllers, enterprise resource planning systems, and all other IT infrastructure, shall be physically and logically separated from the HSAG global network and from all IT systems operated by or on behalf of HSAG or any HSAG affiliate. Without lim

Section 7.3 — Penetration Testing. VPI shall conduct annual third-party penetration testing of its IT systems, networks, and applications. The scope of penetration testing shall include all VPI systems that process, store, or transmit CUI, Controlled Technical Data, or Classified Information, as well as the interfaces and boundaries between VPI systems and any external networks. Penetration testing shall be conducted

Section 7.4 — Incident Reporting. VPI shall report any cybersecurity incident affecting information systems that handle Classified Information, Controlled Technical Data, CUI, or other controlled information to DCSA within seventy-two (72) hours of discovery. Simultaneous notification shall be provided to the GSC, the Monitor, and the Government Parties. For purposes of this Section, "cybersecurity incident" includes

Section 7.5 — Ongoing Obligations. VPI shall maintain cybersecurity policies, procedures, and training programs consistent with current DoD, DCSA, and NIST requirements, and shall update such policies and procedures as necessary to address evolving threats and regulatory changes. Annual cybersecurity awareness training shall be provided to all VPI employees, with specialized training provided to IT staff and personne

ARTICLE VIII — FACILITY ACCESS AND VISITATION RESTRICTIONS

Section 8.1 — Classified Facility Access. HSAG personnel, including HSAG Designees on the VPI Board, HSAG executives, employees, consultants, agents, and any other individual acting on behalf of HSAG or any HSAG affiliate, may not access VPI's classified facilities, including specifically the Albuquerque fabrication facility clean room Sections C-7 through C-12, without prior written approval from both DCSA and the G

Section 8.2 — Unclassified Facility Access. HSAG personnel may access unclassified areas of VPI facilities, including the Colorado Springs headquarters at 7400 Ridgeline Parkway, Colorado Springs, CO 80919 and the unclassified portions of the Albuquerque facility (areas outside clean room Sections C-7 through C-12), subject to the following conditions: (a) Advance notice of at least five (5) Business Days must be pro

Section 8.3 — Prohibited Items. HSAG personnel visiting any VPI facility may not bring electronic devices, including laptops, smartphones, tablets, cameras, audio recording devices, video recording devices, USB storage devices, or any other electronic equipment, into classified areas of VPI facilities unless specifically approved in writing by the FSO on a case-by-case basis. All visitors to VPI facilities, regardles

Section 8.4 — Government Access. The Government Parties, DCSA, and the Monitor shall have unrestricted access to all VPI facilities, personnel, records, IT systems, and any other information relevant to compliance with this Agreement, upon reasonable notice. For the avoidance of doubt, access by the Government Parties, DCSA, and the Monitor does not require the consent or approval of HSAG, Buyer, VPI, the GSC, or any

ARTICLE IX — PERSONNEL CONTINUITY AND REQUIREMENTS

Section 9.1 — Key Personnel Retention. The following individuals are designated as "Key Personnel" under this Agreement and must remain employed by VPI, in the capacities set forth below, for a minimum of twenty-four (24) months following the Closing: (a) Dr. Nathan Trevorrow — Founder, Chief Executive Officer, and Board Chair of VPI; holder of an active TS/SCI clearance. (b) Marissa Sung-Avila — President and Chief

Section 9.2 — Replacement of Key Personnel. In the event that any Key Personnel individual departs VPI voluntarily, retires, becomes permanently disabled, dies, or is otherwise unable to continue employment for reasons beyond the reasonable control of HSAG, the following requirements shall apply: (a) The replacement individual must be a citizen of the United States of America. (b) The replacement individual must hold

Section 9.3 — Cleared Personnel. HSAG shall maintain VPI's cleared workforce at levels sufficient to perform VPI's classified government contracts without interruption. As of the date of this Agreement, VPI employs two hundred twelve (212) individuals holding active U.S. government personnel security clearances. Any material reduction in VPI's cleared personnel, defined as a reduction of more than ten percent (10%) o

Section 9.4 — Background Screening. All HSAG personnel who interact with VPI or access VPI facilities, whether classified or unclassified areas, shall undergo background screening consistent with VPI's existing security policies and procedures, as approved by the FSO. Such background screening shall be completed prior to the individual's first interaction with VPI or visit to any VPI facility. VPI shall maintain reco

ARTICLE X — GOVERNMENT CONTRACTS

Section 10.1 — Contract Performance Continuity. HSAG shall ensure that VPI continues to perform all existing government contracts, including both prime contracts and subcontracts, without interruption, delay, or degradation of performance quality. VPI's government contract backlog of approximately One Hundred Ninety-Three Million Dollars ($193,000,000) shall be maintained and performed in accordance with all applicab

Section 10.2 — Novation and Notifications. VPI and Buyer shall complete novation agreements in accordance with Federal Acquisition Regulation ("FAR") Subpart 42.12 for all government contracts that require novation as a result of the change in ownership of VPI. Novation requests shall be submitted to the applicable contracting officers promptly following the Closing, and VPI shall use its best efforts to obtain all n

Section 10.3 — New Government Contracts. VPI may continue to pursue and enter into new government contracts during the term of this Agreement. New classified government contracts shall be subject to the oversight and approval of the GSC in accordance with Article IV, Section 4.2(e). Any new contract, subcontract, teaming arrangement, joint venture, or other business relationship involving a foreign government, foreig

ARTICLE XI — THIRD-PARTY COMPLIANCE MONITOR

Section 11.1 — Appointment. Whitmore Compliance Group LLC, with offices at 1300 Crystal Drive, Suite 710, Arlington, VA 22202, is hereby designated as the Third-Party Compliance Monitor (the "Monitor") under this Agreement. The Monitor's principal is Gerald Whitmore, a former Deputy Assistant Director of the Federal Bureau of Investigation's Counterintelligence Division, who holds an active personnel security clearan

Section 11.2 — Monitor Independence. The Monitor shall act independently of HSAG, Buyer, and VPI in the performance of its monitoring responsibilities under this Agreement. The Monitor shall not accept direction from HSAG, Buyer, VPI, or any of their respe