Contract analysis

I. PURPOSE AND BACKGROUND This memorandum memorializes the substance and key outcomes of the informal pre-filing consultation held on the afternoon of Monday, June 19, 2023, between representatives of Halcyon Semiconductor Aktiengesellschaft ("HSAG") and Marlowe Asset Management Photonics Inc. ("VPI") and staff from the U.S. Department of the Treasury, Office of Investment Security ("OIS"), in connection with HSAG's

II. MEETING LOGISTICS A. Date, Time, and Format The pre-filing consultation took place on June 19, 2023, from approximately 2:00 PM to 3:45 PM Eastern Daylight Time (EDT), for a total duration of approximately one hour and forty-five minutes. The meeting was conducted in person at the offices of the U.S. Department of the Treasury, Office of Investment Security, located at 1500 Pennsylvania Avenue NW, Washington, DC.

III. PRESENTATION SUMMARY Calderwood & Harkness LLP and Wethersfield & Gale LLP delivered a joint briefing to Treasury OIS staff using a 22-slide presentation deck prepared specifically for the pre-filing consultation (referenced separately as the "Pre-Filing Briefing Presentation," dated June 19, 2023, and maintained in the matter file at Document ID 1032-00004-PF-001). The presentation was designed to provide a com

1. Reconstitution of VPI Board of Directors: Following closing, VPI's board of directors would be reconstituted to include designated Security Board Members who are United States citizens holding (or eligible to hold) active U.S. government security clearances. The Security Board Members would be selected jointly by HSAG and CFIUS (or the monitoring agency) and would serve in their capacity as fiduciaries of VPI with

2. Establishment of a Government Security Committee ("GSC"): A Government Security Committee would be established within VPI's board governance structure, composed exclusively of Security Board Members. The GSC would have exclusive authority over all matters relating to classified and ITAR-controlled programs, personnel security decisions for cleared employees, facility security, export compliance, and relationships

3. Technology Control Plan ("TCP"): HSAG would implement a comprehensive Technology Control Plan governing the flow of information between VPI and HSAG and its non-U.S. affiliates. The TCP would establish clear boundaries regarding what technical data, trade secrets, and proprietary information may be shared with HSAG (limited to uncontrolled commercial business information) and would prohibit any transfer of classif

4. Retention of Key VPI Personnel: HSAG would commit to retaining key VPI management personnel, including Col. (Ret.) Bryce Hendrickson as Facility Security Officer, for a minimum transition period to be agreed upon. The retention of experienced, cleared personnel was presented as essential to maintaining continuity of VPI's security and compliance programs.

5. IT System Segregation: HSAG would implement physical and logical separation of VPI's information technology systems from HSAG's global enterprise network. VPI's classified and unclassified networks, email systems, engineering platforms, and data repositories would be maintained on separate, independent infrastructure with no connectivity to HSAG systems outside of specifically authorized and monitored channels for

6. Third-Party Compliance Monitor: HSAG expressed its willingness to engage a CFIUS-approved third-party compliance monitor to oversee adherence to the terms of any NSA or mitigation agreement, conduct periodic audits, and report to the monitoring agency.

7. Maintenance of Facility Security Clearance: HSAG would commit to maintaining VPI's existing Facility Security Clearance at the SECRET level at the Albuquerque facility (CAGE Code 7VK92), including cooperation with DCSA in transitioning VPI's FOCI status to the appropriate mitigation framework. Treasury staff listened to the mitigation framework presentation without providing substantive feedback on its adequacy. T

IV. TREASURY OIS PRELIMINARY QUESTIONS AND AREAS OF CONCERN Following the joint presentation, Treasury OIS staff posed a substantial number of questions and identified several areas where they indicated that more detailed information and analysis would be expected in the formal joint voluntary notice. The Q&A session lasted approximately fifty minutes and covered a broad range of topics. The questions and concerns ra

V. ASSESSMENT OF TREASURY'S POSTURE Based on our observations during the June 19, 2023 pre-filing consultation, the engagement team's overall assessment of Treasury's posture and the likely trajectory of the CFIUS review is as follows: Overall Tone and Engagement. Treasury staff were professional, well-prepared, and substantively engaged throughout the meeting. The tone of the meeting was constructive and business-li

VI. ACTION ITEMS FOR NOTICE PREPARATION Based on the pre-filing consultation and the areas of focus identified by Treasury, the following action items have been identified for the notice preparation workstream. Each item is assigned to a specific team member with a target completion deadline. All deadlines are firm absent prior authorization from the undersigned or Beatrice Holloway. A. Information Requests to HSAG

1. HSAG China Operations Summary. Prepare a comprehensive written summary of all HSAG operations in the People's Republic of China, focusing on Halcyon Semiconductor (Shanghai) Co., Ltd. The summary must include: revenue breakdown by product line and customer segment; complete product line descriptions; customer list (with identification of any government, military, or state-owned enterprise customers); employee coun

2. HSAG Enterprise Cybersecurity Documentation. Obtain HSAG's enterprise cybersecurity program documentation, including: ISO 27001 certificate and scope statement; most recent external information security audit reports; cybersecurity incident history for the past five (5) years (including dates, nature, scope, remediation, and notification to regulators or affected parties); data protection and data classification p

3. HSAG Global Corporate Organizational Chart. Obtain a detailed corporate organizational chart showing HSAG's complete global subsidiary structure, including all direct and indirect subsidiaries (U.S. and non-U.S.), with jurisdiction of organization, ownership percentages, and identification of any minority interests or joint venture structures. The chart should separately identify entities with operations in the PR

4. Prior CFIUS and Regulatory Interactions. Confirm with Stefan Lohse: (a) whether HSAG has ever been party to any prior CFIUS notice, declaration, or review (believed to be no, but must be confirmed in writing); (b) whether HSAG has any other pending U.S. regulatory reviews relevant to the Proposed Transaction (HSR, DDTC, BIS, etc.); and (c) what non-U.S. foreign direct investment screening and/or antitrust reviews

5. IT System Segregation Plan. Request from HSAG's IT department a detailed plan and timeline for IT system segregation of VPI from HSAG's global enterprise network post-closing. The plan must address: network architecture and firewall configurations; email systems (including whether VPI will maintain a separate email domain and mail server infrastructure); ERP systems; engineering design platforms (CAD, EDA tools, s

6. VPI NIST SP 800-171 Compliance Assessment. Obtain VPI's current NIST SP 800-171 compliance self-assessment score (as reported in the Supplier Performance Risk System, if applicable), the date of VPI's most recent assessment, the most recent external cybersecurity audit report, and VPI's incident reporting protocols (including DFARS 252.204-7012 reporting procedures). Assigned to: Lt. Col. (Ret.) David Caruso, to c

7. VPI Government Contracts Portfolio. Obtain a complete listing of VPI's fourteen (14) active government contracts, including for each contract: contract number; contracting agency; contract type (firm fixed-price, cost-plus, time-and-materials, etc.); total contract value; remaining backlog; period of performance (including options); classification level; prime or subcontract designation; identity of prime contract

8. VPI FOCI Documentation. Obtain any existing FOCI-related documentation maintained by VPI, including any existing Special Security Agreement, proxy agreement, or other FOCI mitigation instrument with DCSA, and any prior correspondence between VPI and DCSA regarding foreign ownership or influence. Assigned to: Peggy Ashworth. Deadline: June 30, 2023.

9. VPI Cleared Personnel Breakdown. Obtain an anonymized breakdown of VPI's 212 cleared employees by clearance level (SECRET, TOP SECRET, TS/SCI), by program or contract affiliation, and by function (engineering, management, manufacturing, quality assurance, security, etc.). Assigned to: Lt. Col. (Ret.) David Caruso. Deadline: June 30, 2023.

10. VPI Export Compliance Program Documentation. Obtain VPI's complete export compliance program documentation, including: ITAR compliance manual; EAR compliance procedures; empowered official designation letter(s); export compliance training records and curriculum; Technology Control Plan (if any existing plan is in place); screening procedures for customers, end-users, and foreign persons; and records of any volunt

11. Exhibit B — Business Description of Marlowe Asset Management Photonics Inc. Draft the Exhibit B business description for VPI, covering corporate history, organizational structure, products and services, government programs, financial overview, key personnel, facilities, and intellectual property. This exhibit should incorporate the information gathered from Action Items 6–10 above. Assigned to: Lt. Col. (Ret.) Da

12. Exhibit C — Business Description of Halcyon Semiconductor AG. Draft the Exhibit C business description for HSAG, covering corporate history, organizational structure, global operations, products and services, financial overview, key personnel, and — critically — an enhanced disclosure of HSAG's China operations informed by the comprehensive China operations summary prepared under Action Item 1. Assigned to: Kenne

13. Exhibit D — Organizational Charts & Corporate Structure. Draft Exhibit D presenting detailed organizational charts showing HSAG's and VPI's corporate structures both pre-closing and post-closing, including all subsidiaries, the intermediate holding company (HUSH), and the relationship of VPI to HSAG's global corporate family. Assigned to: Kenneth Morales. Deadline: July 1, 2023.

14. Exhibit E — Products & Services Subject to U.S. Government Regulation. Draft Exhibit E providing a comprehensive description of VPI's products and services that are subject to U.S. government regulation, including ITAR-controlled defense articles (USML Category XI(a)(3)), EAR-controlled dual-use items (ECCN 3A001), products subject to DDTC registration and licensing requirements, and any items subject to other re

15. Exhibit G — Personnel with U.S. Government Security Clearances. Draft Exhibit G providing an anonymized summary of VPI personnel holding U.S. government security clearances, organized by clearance level, functional area, and program affiliation. Assigned to: Lt. Col. (Ret.) David Caruso. Deadline: July 3, 2023.

16. Supplemental Exhibit — HSAG Cybersecurity Program Overview. Prepare a comprehensive supplemental exhibit presenting HSAG's enterprise cybersecurity program, including certifications, policies, incident history, and the proposed post-closing IT segregation plan for VPI. Assigned to: Lt. Col. (Ret.) David Caruso. Deadline: July 7, 2023.

17. Supplemental Exhibit — HSAG China Operations Summary. Prep