Contract analysis

I. Executive Summary This memorandum serves two related purposes. First, it summarizes the key takeaways from the pre-filing consultation that was held on June 19, 2023, with the U.S. Department of the Treasury, Office of Investment Security ("OIS"), regarding HSAG's proposed acquisition of VPI. Second, it sets forth a detailed preparation plan for the voluntary joint notice that we intend to file with the Committee

II. Summary of Pre-Filing Consultation — June 19, 2023 A. Meeting Logistics The pre-filing consultation was conducted in person at the U.S. Department of the Treasury, 1500 Pennsylvania Avenue NW, Washington, DC, on June 19, 2023. The meeting commenced at approximately 10:00 a.m. EDT and concluded at approximately 11:30 a.m. EDT, lasting approximately ninety minutes. The following individuals attended on behalf of HS

1. HSAG's China Operations Treasury staff devoted a significant portion of the meeting to questions about HSAG's China subsidiary, Halcyon Semiconductor (Shanghai) Co., Ltd. The line of questioning was detailed and specific, and it is clear that the China operations issue will be a focal point of the CFIUS review. Treasury's specific inquiries included the following: • Revenue: Treasury asked about the revenue attrib

2. Cybersecurity Architecture and IT Separation Treasury and DoD staff expressed significant concern regarding the risk of post-closing integration of VPI's information technology systems into HSAG's global IT network. This concern is well-founded: VPI maintains classified and controlled unclassified information on its IT systems, and any post-closing integration that would permit foreign access — whether through sha

3. Post-Closing Governance of Classified and Export-Controlled Programs The governance of VPI's classified programs and export-controlled activities under foreign ownership was the most extensively discussed topic during the pre-filing consultation. Treasury and DoD staff devoted approximately thirty minutes of the ninety-minute meeting to this subject, and it is evident that the proposed governance framework will be

4. Additional Areas of Inquiry In addition to the three primary areas described above, Treasury and the co-lead agency representatives raised a number of supplemental questions during the pre-filing consultation. These additional areas of inquiry are summarized below. Government Contract Continuity. Treasury asked about VPI's active DoD contracts, including the aggregate contract backlog and the identity of the contr

III. Refined Filing Timeline and Milestones A. Target Filing Date: July 14, 2023 Based on the information gathered during the pre-filing consultation and the scope of work required to prepare a comprehensive voluntary joint notice, we are targeting a filing date of July 14, 2023. This date is twenty-five calendar days from today (June 22, 2023), which provides adequate time for information gathering from HSAG and VPI

IV. Supplemental Information Requests — Action Items A. Information to Be Requested from HSAG (via Stefan Lohse) The following categories of information will be requested from HSAG through Stefan Lohse, General Counsel, in a formal information request letter to be transmitted on June 23, 2023. Mr. Lohse has been informed that we will be issuing this request, and he has indicated HSAG's commitment to a responsive and

1. China Operations Package This is the single most important information deliverable from HSAG. As described in Section II.B.1, Treasury's questions about HSAG's China operations were detailed and specific, and the notice must include granular disclosure on the following topics: • Full legal name, registered address, and organizational details of Halcyon Semiconductor (Shanghai) Co., Ltd., including date of incorpor

2. Cybersecurity Program Documentation Treasury and DoD's focus on cybersecurity requires us to include comprehensive cybersecurity disclosures in the notice. The following materials are needed from HSAG: • Copy of HSAG's ISO 27001 certification, including the scope of certification and the identity of the certifying body. • A summary of HSAG's enterprise cybersecurity framework, including governance structure, risk

3. Corporate Governance and Ownership The notice must include a complete description of HSAG's corporate governance and ownership structure. The following information is needed: • Complete HSAG ownership structure, confirming that HSAG is publicly traded on the Frankfurt Stock Exchange (XETRA: HLC), with no government ownership or control. Confirm the market capitalization as of June 1, 2023 (€14.8 billion, per publi

4. Post-Closing Integration Plans HSAG's post-closing plans for VPI are a central issue for the CFIUS review. The following information is needed: • A description of HSAG's plans for VPI operations post-closing, including whether any operational integration with Halcyon US Inc. (Austin, TX) is contemplated. • A description of HSAG's plans for technology integration — specifically, whether HSAG intends to incorporate

5. Financial Advisor Input We should coordinate with Ashgrove Capital Group (Philippe Beaumont, Managing Director) on any CFIUS-related materials that may be needed from the financial advisor's perspective. While the financial advisor is not typically a primary source of information for the CFIUS notice, there may be materials in Velthorn's files — such as the confidential information memorandum, management presentat

1. Government Contracts Detail The notice must include a comprehensive description of VPI's government contracts portfolio. The following information is needed: • Full list of all fourteen active DoD contracts (both prime contracts and subcontracts), including for each contract: the contract number, the contracting agency, the contract type (e.g., fixed-price, cost-plus), the total contract value, the remaining backl

2. Facility Security Clearance Documentation The notice must include a detailed description of VPI's facility security clearance and related security infrastructure. The following information is needed: • Current facility clearance level ("FCL"): SECRET, as adjudicated by DCSA. • CAGE Code: 7VK92. • FSO: Col. (Ret.) Bryce Hendrickson (TS/SCI clearance). • Physical details of the cleared facility: VPI's primary manufa

3. ITAR/EAR Compliance Program Given Treasury's focus on export control compliance and the DDTC notification requirement, the following information is needed: • DDTC Registration No. M-24817 (registered since 2011). Confirm current registration status and the identity of the Empowered Official. • List of all VPI products classified under ITAR Category XI(a)(3), with descriptions and end-use applications. • List of al

4. Cleared Personnel Data The notice must include a summary of VPI's cleared personnel, consistent with classification and privacy constraints. The following information is needed: • An anonymized summary of VPI's 212 cleared employees, broken down by clearance level (SECRET and TS/SCI) and program affiliation. • Biographical information for key cleared personnel: • Dr. Nathan Trevorrow, CEO — TS/SCI clearance. Co-fo

5. Supply Chain Information DOE's questions about VPI's supply chain require us to include a detailed supply chain description in the notice. The following information is needed: • Identification of VPI's suppliers of SiC substrates, epitaxial materials (including GaN-on-SiC epitaxial wafers), and semiconductor packaging materials and services. • Country of origin for each critical material and component. • Identific

6. Intellectual Property The notice must include a comprehensive description of VPI's intellectual property portfolio. The following information is needed: • Complete patent portfolio list, including all forty-seven granted U.S. patents and twelve pending patent applications, with patent numbers, titles, filing dates, issue dates, and brief descriptions. • Identification of the twenty-three government-funded patents

7. Corporate Information The notice must include complete corporate information for VPI. The following information is needed: • Current shareholder table: • Current board composition: • Dr. Nathan Trevorrow (Chair) • Marissa Sung-Avila • Franklin Yee (Ridgecrest Ventures designee) • Olivia Hartmann (Cascadian Capital Partners designee) • Adrienne Delacroix (independent) • VPI EIN: 26-4371885 • VPI DUNS Number: 07-812

V. Notice Content Outline and Drafting Assignments A. Main Body of Joint Voluntary Notice — Section Assignments The main body of the Joint Voluntary Notice will be organized in accordance with the requirements of 31 C.F.R. § 800.501 and Treasury's published guidance for voluntary joint notices. The notice will consist of six principal sections, plus supporting exhibits. Drafting assignments for each section are as fo

Section 1: Information About the Transaction. This section will describe the proposed transaction in full, including: (a) a description of the 100% equity acquisition of VPI by HSAG; (b) the purchase price of $1.42 billion (all cash at closing, plus potential earnout consideration of up to $85 million); (c) the acquisition vehicle — Halcyon US Holdings Inc., a Delaware C-corporation formed on June 5, 2023 (EIN: 93-28

Section 2: Information About the Foreign Person (HSAG). This section will provide a complete corporate profile of HSAG, including: (a) corporate organization, ownership structure, and governance; (b) board and management composition; (c) global operations, with particular attention to HSAG's operations in allied and non-allied nations; (d) the comprehensive China operations disclosure regarding Halcyon Semiconductor

Section 3: Information About the U.S. Business (VPI). This section will provide a complete description of VPI's business, including: (a) corporate information and ownership; (b) products and services, including GaN-on-SiC semiconductor devices for defense and commercial applications; (c) customers, including DoD agencies and prime defense contractors; (d) government contracts, including the fourteen active DoD contra

Section 4: Transaction-Related Documents. This section will compile the SPA and all ancillary transaction documents, including the disclosure schedules, transition services agreement, and any other agreements relevant to the CFIUS analysis. Assigned to: Morales, coordinating with Holloway and the M&A team.

Section 5: Information Regarding National Security. This section will set forth HSAG's assessment of the national security considerations raised by the transaction and will describe the proposed mitigation framework in detail. This section is the most strategically important portion of the notice, as it provides the parties' affirmative case for why the transaction should be cleared subject to appropriate mitigation.

Section 6: Certifications. This section will include the certifications required under 31 C.F.R. § 800.502, to be executed by Dr. Maximilian Ehrhardt (on behalf of HSAG) and Dr. Nathan Trevorrow (on behalf of VPI). Each certification must attest, under penalty of perjury, that the information contained in the notice is true, correct, and complete to the best of the certifying officer's knowledge and belief. Assigned

VI. Coordination with Seller's Counsel — Wethersfield & Gale Peggy Ashworth will serve as the primary point of coordination with Harrison Whitfield at Wethersfield & Gale LLP (2000 Pennsylvania Avenue NW, Suite 600, Washington, DC 20006). Harrison Whitfield is leading Wethersfield & Gale's CFIUS engagement as part of that firm's representation of VPI and its shareholders in the transaction. The allocation of notice p

VII. Coordination with German Counsel Schilling Frey Rechtsanwälte, HSAG's German corporate counsel, must be consulted on several matters relevant to the CFIUS filing. The lead partner at Schilling Frey is Prof. Dr. Ulrich Schilling, whose offices are located at Friedrichstraße 68, 10117 Berlin, Germany. Peggy Ashworth will initiate this consultation no later than June 26, 2023. The specific matters on which Schillin

VIII. Proposed Mitigation Framework — Refinements Based on Treasury Feedback Based on the feedback received during the pre-filing consultation, we have refined our proposed mitigation framework as described below. This framework will be presented in Section 5 of the Joint Voluntary Notice as HSAG's proposal for addressing the national security considerations raised by the transaction. We expect that this framework wi