Contract analysis

I. Description of the Department of Justice Inquiry On October 9, 2025, HSI received a voluntary request for information (the "Request") from the United States Department of Justice ("DOJ"), National Security Division, Counterintelligence and Export Control Section. The DOJ reference number assigned to this matter is NSD-CES-2025-04871. The Request relates to certain shipments of semiconductor components classified u

II. Engagement of Counsel and Cooperation Posture HSI has retained Calderwood & Harkness LLP to represent it in connection with the DOJ inquiry and all related regulatory proceedings. The engagement became effective on October 11, 2025. The Calderwood & Harkness team assigned to this matter consists of Howard Quinn, Partner (Responsible Partner), Conrad Ashby, Partner (Billing Partner), Liam Donahue, Senior Associate

III. Retention of Independent Compliance Consultant In addition to the retention of outside counsel, HSI has engaged an independent compliance consultant, Ashford Pennington LLC, to conduct a comprehensive review of HSI's export compliance program, including its restricted-party screening procedures, end-user verification protocols, and distribution channel oversight controls. The engagement of Ashford Pennington LLC

IV. Voluntary Self-Disclosure HSI anticipates filing a voluntary self-disclosure ("VSD") with the Bureau of Industry and Security, Office of Export Enforcement, regarding the three Post-Listing Shipments to Zhonghe. The VSD is currently being prepared by Calderwood & Harkness in coordination with HSI's internal compliance team and Ashford Pennington LLC, and is expected to be filed on or about November 4, 2025. HSI b

V. Assessment of Exposure and Materiality Based on the information available at this time, and in light of the early stage of the inquiry, HSI does not believe that the DOJ inquiry will result in (a) a denial of HSI's export privileges, or (b) criminal prosecution of HSI or any of its officers, directors, or employees. HSI is evaluating the potential for a civil administrative resolution of this matter, which could i

VI. OFAC Confirmation HSI wishes to confirm that this matter does not involve any allegations related to economic sanctions programs administered by the Office of Foreign Assets Control ("OFAC") of the U.S. Department of the Treasury. The DOJ's inquiry is limited in scope to potential violations of the Export Administration Regulations administered by the Bureau of Industry and Security of the U.S. Department of Comm

VII. Compliance-with-Law Covenant HSI acknowledges that the Credit Agreement contains a covenant requiring the Borrower and its Subsidiaries to comply in all material respects with all applicable laws, rules, regulations, and orders, including, without limitation, applicable export control laws and regulations. HSI takes its obligations under this covenant seriously and is undertaking prompt and diligent steps to inv

VIII. Reservation of Rights and Disclaimer This notice is provided out of an abundance of caution and in satisfaction of HSI's obligations under Section 6.02(b) of the Credit Agreement. Nothing in this notice shall constitute, nor shall it be deemed to constitute, an acknowledgment, admission, or concession by HSI or HSAG that (a) a Material Adverse Effect has occurred or is reasonably expected to occur, (b) any Defa

IX. Availability for Discussion Calderwood & Harkness LLP is available to discuss this notice and the underlying matter at Lodestar National Bank's convenience. Please direct all inquiries to: Howard Quinn, Partner Calderwood & Harkness LLP 1301 K Street NW, Suite 1100 Washington, D.C. 20005 Telephone: (202) 555-0147 Email: hquinn@calderwoodharkness.com We would be pleased to arrange a call or in-person meeting with