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CALDERWOOD & HARKNESS LLP Counselors at Law

1750 K Street NW, Suite 800 Washington, DC 20006 Telephone: (202) 555-7400 Facsimile: (202) 555-7401

Washington, DC · New York

February 9, 2024

VIA OVERNIGHT COURIER AND ELECTRONIC TRANSMISSION

Defense Counterintelligence and Security Agency Industrial Security Field Operations

ATTN: FOCI/Ownership Change Notifications

27130 Telegraph Road Quantico, VA 22134

Re: Notification of Change in Ownership — Marlowe Asset Management Photonics Inc.

CAGE Code: 7VK92 DUNS Number: 07-812-4493 EIN: 26-4371885 DDTC Registration No.: M-24817 Facility Clearance Level: SECRET CFIUS Case No.: CFIUS-023-07-3841 NSA Reference: NSA-2024-0019

Dear Sir or Madam:

I. Purpose and Introduction

This letter is submitted on behalf of Halcyon Semiconductor Aktiengesellschaft, a German Aktiengesellschaft ("HSAG"), and Marlowe Asset Management Photonics Inc., a Delaware C-corporation ("VPI"), by Calderwood & Harkness LLP, counsel to HSAG in connection with the above-referenced transaction. This notification has been prepared by Margaret "Peggy" Ashworth, Of Counsel in the firm's National Security & CFIUS Practice, and Lt. Col. (Ret.) David Caruso, Senior Counsel in the Government Contracts & Export Controls Practice, each of whom are available to address any questions DCSA may have regarding the matters described herein.

The purpose of this letter is to provide formal notification to the Defense Counterintelligence and Security Agency ("DCSA") that the previously anticipated change in ownership of VPI has been completed as of the date of this letter, February 9, 2024. As described more fully below, HSAG, acting through its wholly owned U.S. acquisition vehicle, Halcyon US Holdings Inc., has acquired one hundred percent (100%) of the outstanding equity interests of VPI.

VPI is a Delaware C-corporation, originally incorporated on February 14, 2009, under the laws of the State of Delaware. VPI is headquartered at 7400 Ridgeline Parkway, Colorado Springs, Colorado 80919, and maintains its classified facility at 9200 Innovation Boulevard, Albuquerque, New Mexico 87113. The Albuquerque facility is an approximately 45,000-square-foot gallium nitride on silicon carbide ("GaN-on-SiC") fabrication facility purpose-built for advanced compound semiconductor manufacturing. VPI holds a Facility Security Clearance ("FCL") at the SECRET level, assigned CAGE Code 7VK92, and is an active participant in the National Industrial Security Program.

This letter is submitted pursuant to the requirements of the National Industrial Security Program Operating Manual ("NISPOM"), 32 C.F.R. Part 117, for reporting changes in ownership, control, or influence affecting cleared contractor facilities. Specifically, this notification is made in accordance with NISPOM § 117.11(d), which requires cleared contractors and their successors to promptly report to DCSA any change in ownership or control that may affect the validity of an existing facility clearance or that may constitute Foreign Ownership, Control, or Influence ("FOCI"). We note that DCSA was previously apprised of the pendency of this transaction through informal consultations and through the CFIUS process described below.

II. Description of the Transaction

The Acquiring Entity. Halcyon Semiconductor Aktiengesellschaft is a publicly traded German corporation (Aktiengesellschaft) listed on the Frankfurt Stock Exchange under the ticker symbol XETRA: HLC. HSAG is headquartered at Industriestraße 44, 01099 Dresden, Saxony, Federal Republic of Germany. HSAG is a leading global manufacturer of compound semiconductor devices, power management integrated circuits, and radio-frequency components, with operations in twelve countries and approximately 14,600 employees worldwide. HSAG reported consolidated annual revenue of approximately €6.2 billion for its fiscal year ending December 31, 2023.

The U.S. Acquisition Vehicle. The acquisition of VPI was effected through Halcyon US Holdings Inc. ("Halcyon US Holdings"), a Delaware C-corporation bearing Employer Identification Number 93-2841067, formed on June 5, 2023, solely for the purpose of consummating the acquisition. Halcyon US Holdings is registered in the State of Delaware with a registered agent at 160 Greentree Drive, Suite 101, Dover, Delaware 19904. Halcyon US Holdings is a direct, wholly owned subsidiary of HSAG and, as of the closing date, serves as the direct parent entity of VPI in the post-closing corporate structure.

Transaction Structure and Consideration. Pursuant to a definitive Stock Purchase Agreement ("SPA") originally executed on June 10, 2023, by and among HSAG, Halcyon US Holdings (as Buyer), VPI, and the sellers of VPI's equity identified therein, Halcyon US Holdings has acquired one hundred percent (100%) of the outstanding shares of common stock of VPI. The closing of the acquisition occurred on February 9, 2024, in accordance with the terms and conditions of the SPA, as amended. The aggregate purchase price for the acquisition was $1.42 billion, payable in all-cash consideration, on a cash-free, debt-free basis, subject to customary post-closing adjustments based on a normalized net working capital target of $34.6 million. The purchase price was funded from a combination of HSAG's available cash on hand and a committed term loan facility provided by Adriatic Trust Bank and Cascade Capital Markets.

Prior Shareholders. Immediately prior to the closing, the outstanding equity of VPI was held by the following shareholders:

All of the foregoing shareholders have transferred their respective equity interests to Halcyon US Holdings at or prior to the closing, such that VPI is now a wholly owned indirect subsidiary of HSAG through the intermediate holding company, Halcyon US Holdings Inc.

HSAG's Existing U.S. Operations. HSAG maintains a pre-existing U.S. operating subsidiary, Halcyon US Inc. (EIN 81-3056429), which operates a fabless semiconductor design center located at 11501 Alterra Parkway, Suite 300, Austin, Texas 78758, employing approximately 320 individuals. Halcyon US Inc. does not hold a facility security clearance, does not perform classified work, and is not involved in the manufacture or export of defense articles or services regulated under the International Traffic in Arms Regulations ("ITAR"). The operations of Halcyon US Inc. are entirely separate from the operations of VPI, and no integration of the two entities' operations is contemplated that would alter VPI's classified program posture or facility security profile.

III. CFIUS Review and National Security Agreement

The acquisition of VPI by HSAG was subject to review by the Committee on Foreign Investment in the United States ("CFIUS") pursuant to Section 721 of the Defense Production Act of 1950, as amended, 50 U.S.C. § 4565, and the implementing regulations set forth at 31 C.F.R. Part 800. The transaction was identified as a "covered transaction" within the meaning of 31 C.F.R. § 800.213 because VPI constitutes a "TID U.S. business" as defined in 31 C.F.R. § 800.248, given VPI's production, design, testing, and manufacturing of critical technologies—specifically, gallium nitride compound semiconductors classified under Export Control Classification Number ("ECCN") 3A001 on the Commerce Control List—and its performance of classified and unclassified contracts with the U.S. Department of Defense.

Filing and Review Timeline. HSAG and VPI filed a voluntary joint notice with CFIUS on July 14, 2023, pursuant to 31 C.F.R. § 800.501. CFIUS accepted the filing as complete on July 21, 2023, thereby commencing the initial 45-day review period under 50 U.S.C. § 4565(b)(1)(E). During the initial review period, CFIUS identified certain national security considerations warranting further analysis. On September 4, 2023, CFIUS notified the parties that it had initiated a 45-day investigation of the transaction, as authorized by 50 U.S.C. § 4565(b)(2)(A). The investigation period, as extended by mutual agreement of the parties and CFIUS, continued through the negotiation of mitigation measures described below.

National Security Agreement. As a result of the CFIUS investigation, HSAG, Halcyon US Holdings Inc., VPI, and the United States of America—acting through the U.S. Department of the Treasury, the U.S. Department of Defense, and the U.S. Department of Energy (collectively, the "Monitoring Agencies")—negotiated a comprehensive National Security Agreement bearing reference number NSA-2024-0019. The final NSA was executed by all parties on January 19, 2024. The NSA sets forth binding obligations and conditions designed to mitigate any national security risks associated with the foreign acquisition of VPI, including detailed provisions regarding board governance, technology protection, cybersecurity, access restrictions, personnel continuity, and ongoing compliance monitoring.

CFIUS Clearance. Following execution of the NSA, CFIUS issued a clearance letter (commonly referred to as a "safe harbor" letter) on January 26, 2024, pursuant to 50 U.S.C. § 4565(b)(1)(D), confirming that the transaction, as mitigated by the terms and conditions of the NSA, does not present unresolved national security concerns and that CFIUS has concluded action with respect to the transaction. The issuance of this clearance letter constituted the final regulatory approval required for the closing of the acquisition.

NSA as SSA Equivalent. For purposes of FOCI mitigation under the NISPOM, the NSA (NSA-2024-0019) functions as a Special Security Agreement ("SSA") equivalent. The NSA incorporates the substantive protections and governance mechanisms required under an SSA, including the establishment of a Government Security Committee, the appointment of Security Board Members, a Technology Control Plan, and visitation and access restrictions, as described in further detail in Sections V, VI, and VII below. Accordingly, no separate SSA or other FOCI mitigation instrument is required to be executed between VPI and DCSA with respect to this transaction. DCSA has been designated as one of the Monitoring Agencies under the NSA for purposes related to facility security and cleared contractor oversight.

An executed copy of the National Security Agreement (NSA-2024-0019), including Annexes A through F, is enclosed with this letter for DCSA's records. A copy of the CFIUS clearance letter dated January 26, 2024, is also enclosed.

IV. Maintenance of Facility Security Clearance

VPI will maintain its existing Facility Security Clearance at the SECRET level. The facility clearance was initially granted to VPI and has been continuously maintained since that time. CAGE Code 7VK92 remains unchanged. The facility clearance pertains to VPI's classified facility located at 9200 Innovation Boulevard, Albuquerque, New Mexico 87113. There has been no change in the physical security infrastructure, classified storage capabilities, intrusion detection systems, or access control mechanisms at the Albuquerque facility as a result of the closing of the transaction. All existing physical security measures, including the Sensitive Compartmented Information Facility ("SCIF") areas, alarmed perimeter systems, and classified material storage vaults, remain intact and operational in accordance with NISPOM requirements and the terms of the NSA.

Active Government Contracts. VPI continues to perform on fourteen (14) active U.S. Department of Defense and other U.S. government contracts—including both prime contracts and subcontracts—with an aggregate remaining backlog of approximately $193 million as of the closing date. VPI's government customer base includes, among others:

• The U.S. Army Program Executive Office for intelligence, Electronic Warfare & Sensors ("PEO IEW&S"), for advanced GaN-based radar transmit/receive modules under Contract No. W56KGZ-22-C-0044;

• The U.S. Air Force Research Laboratory ("AFRL"), for next-generation high-power amplifier development under Contract No. FA8650-21-C-1327;

• The Missile Defense Agency ("MDA"), for GaN power amplifier components supporting the Long Range Discrimination Radar ("LRDR") modernization program under Contract No. HQ0147-23-C-0081;

• A subcontract to Ironclad Defense Systems Inc. (the prime contractor to USN Naval Sea Systems Command ("NAVSEA")) for shipboard electronic warfare systems, under Subcontract No. IDS-VP-2022-0193 (referencing prime contract N00024-20-C-5312); and

• The U.S. Department of Homeland Security, Science and Technology Directorate ("DHS S&T"), for border surveillance sensor components under Contract No. 70RSAT23C00000041.

Products and Export Classifications. VPI's products include defense articles controlled under the International Traffic in Arms Regulations, specifically United States Munitions List ("USML") Category XI(a)(3) (military electronics, including microwave monolithic integrated circuits ("MMICs") specifically designed for military applications), as well as dual-use semiconductor components classified under Export Administration Regulations ("EAR") ECCN 3A001 (microprocessor microcircuits, microcomputer microcircuits, and microcontroller microcircuits), ECCN 3A991 (electronic devices not controlled by 3A001), and ECCN 3E001 (technology for the development or production of items controlled by 3A001).

Cleared Personnel. As of the closing date, 212 of VPI's 486 total employees hold active U.S. government personnel security clearances, representing approximately 43.6% of the workforce. These clearances range from CONFIDENTIAL through TOP SECRET/SCI, depending on the individual's program access requirements. No disruption to classified program performance is anticipated as a result of the change in ownership. All cleared personnel have been briefed on the change of ownership and the applicability of the NSA, and all such personnel will continue to perform their respective duties without interruption.

V. Continuing Facility Security Officer

Colonel (Retired) Bryce Hendrickson, United States Air Force, continues to serve as VPI's Facility Security Officer ("FSO") and has served in that capacity since 2018. Col. Hendrickson holds an active TOP SECRET/SCI security clearance, which has been continuously maintained. Col. Hendrickson also holds the position of Vice President, Government Programs at VPI, and has been designated as the proxy holder and security officer under the terms of the NSA. In his capacity as FSO and proxy holder, Col. Hendrickson has exclusive operational authority over all matters relating to VPI's classified programs, facility security, and personnel security, subject to the oversight of the Government Security Committee described in Section VI below.

Pursuant to the personnel continuity provisions set forth in Section 7 of the NSA (NSA-2024-0019), Col. Hendrickson is required to remain in his position as FSO and VP, Government Programs for a minimum period of twenty-four (24) months following the closing date (i.e., through at least February 9, 2026). Any replacement of Col. Hendrickson in either capacity prior to the expiration of this period must be approved in advance by the Government Security Committee and by DCSA, in consultation with the CFIUS Monitoring Agencies. This personnel continuity requirement applies equally to Dr. Nathan Trevorrow, who will continue to serve as Chief Executive Officer of VPI, and to Marissa Sung-Avila, who will continue to serve as President and Chief Operating Officer of VPI. The NSA requires that any proposed replacement for any of these three key management personnel be a U.S. citizen who holds, or is eligible to obtain, the requisite security clearances for the position.

Col. Hendrickson may be contacted directly regarding all facility security and classified program matters at the address and contact information set forth in Section XII below.

VI. Reconstituted Board of Directors and Government Security Committee

Pursuant to the governance provisions of the NSA (NSA-2024-0019, Section 5 and Annex C), VPI's board of directors has been reconstituted effective as of the closing date, February 9, 2024, to ensure that adequate safeguards are in place to protect classified information and to prevent unauthorized access to, or transfer of, classified or export-controlled information to foreign persons or entities.

Board Composition. The reconstituted board of directors of VPI consists of five (5) members, divided into two categories:

Security Board Members (three members, each of whom is a United States citizen and holds or is eligible for a TOP SECRET/SCI security clearance):

1. Col. (Ret.) Bryce Hendrickson — Security Board Member and FSO/Proxy Holder. Col. Hendrickson holds an active TS/SCI clearance. As described above, Col. Hendrickson serves as VP, Government Programs and FSO at VPI and has been designated as the proxy holder under the NSA.

2. Adrienne Delacroix — Security Board Member and independent director. Ms. Delacroix holds an active SECRET security clearance. Ms. Delacroix has served as an independent member of VPI's board of directors since 2019 and will continue in that capacity on the reconstituted board. Ms. Delacroix previously served as Deputy Assistant Secretary of Defense for Industrial Policy and currently serves as a senior advisor to multiple defense-technology companies.

3. An independent Security Director, as identified in the letter submitted by Calderwood & Harkness LLP to CFIUS on behalf of HSAG on November 17, 2023, proposing Security Board Member candidates. The identity of this individual has been communicated to DCSA separately through secure channels, and DCSA's concurrence with this appointment has been requested.

HSAG Designees (two members, appointed by HSAG to represent the shareholder interest):

4. An HSAG-designated director.

5. An HSAG-designated director.

The two HSAG Designees may not hold, seek, or access U.S. government security clearances and may not access any classified or ITAR-controlled information, materials, or facilities of VPI. The HSAG Designees are entitled to receive only unclassified, non-export-controlled business and financial information from VPI, subject to the restrictions and procedures set forth in the Technology Control Plan (NSA Annex B).

Government Security Committee. A Government Security Committee ("GSC") has been established, composed of the three Security Board Members identified above. The GSC has been duly constituted and has held its initial organizational meeting as of the closing date. The GSC has exclusive authority and responsibility over all of the following matters:

• All classified contracts, programs, and related activities performed by VPI;

• All matters relating to ITAR-controlled defense articles, defense services, and technical data;

• Personnel security, including the granting, denying, or revoking of access to classified information;

• Facility security, including physical security, information security, and cybersecurity for classified systems;

• Compliance with the NSA, the NISPOM, the ITAR, and the EAR as they relate to classified and export-controlled activities;

• Oversight of the Facility Security Officer and the Technology Control Plan; and

• Communication with DCSA and other U.S. government agencies regarding security matters.

The GSC charter is set forth in NSA Annex C (Governance Provisions & Security Board Charter), a copy of which has been previously provided to DCSA in connection with the CFIUS process. The GSC charter provides that decisions of the GSC are not subject to the approval, ratification, or veto of the HSAG Designees or of HSAG or Halcyon US Holdings Inc. The GSC reports directly to the CFIUS Monitoring Agencies with respect to NSA compliance and to DCSA with respect to facility security matters.

VII. FOCI Mitigation and NSA as SSA Equivalent

Foreign Parent Profile. HSAG is a publicly traded German corporation. As of the date hereof, based on HSAG's most recent public filings with the Bundesanstalt für Finanzdienstleistungsaufsicht ("BaFin") and its annual report for fiscal year 2023, no German federal or state government entity holds a direct or indirect ownership interest in HSAG. HSAG's shares are widely held by institutional and retail investors. HSAG's German commercial register number is HRB 28416 (Amtsgericht Dresden), and its Legal Entity Identifier (LEI) is 5299007KXQ2M4GHILZ38.

China Subsidiary Disclosure. HSAG maintains a subsidiary in the People's Republic of China—Halcyon Semiconductor (Shanghai) Co., Ltd.—which generated revenue of approximately $81.4 million in HSAG's most recently completed fiscal year, representing approximately 1.3% of HSAG's total consolidated revenue. Halcyon Semiconductor (Shanghai) Co., Ltd. is engaged solely in the design and sale of consumer-grade power management integrated circuits for the Chinese domestic market and does not engage in any GaN semiconductor manufacturing, defense-related activities, or dual-use semiconductor activities. The existence and scope of this Chinese subsidiary were fully disclosed to CFIUS during the review process and are addressed in the risk mitigation provisions of the NSA. The NSA specifically prohibits any transfer of VPI technology, technical data, or business information to Halcyon Semiconductor (Shanghai) Co., Ltd. or to any other HSAG entity located in a country of concern, as defined in the NSA.

FOCI Mitigation Framework. The NSA (NSA-2024-0019) comprehensively addresses all Foreign Ownership, Control, or Influence concerns arising from the acquisition. The NSA functions as a Special Security Agreement equivalent for purposes of FOCI mitigation under the NISPOM, and no separate FOCI mitigation plan, Voting Trust Agreement, Proxy Agreement, or SSA beyond the NSA is required to be executed. The key FOCI mitigation measures mandated by the NSA include, but are not limited to, the following:

Board Governance. As described in Section VI above, VPI's board has been reconstituted to include three Security Board Members constituting a majority of the board, with a Government Security Committee holding exclusive authority over all classified, ITAR-controlled, and facility security matters. The HSAG Designees are excluded from any decision-making authority with respect to such matters.

Technology Control Plan (NSA Annex B). A comprehensive Technology Control Plan ("TCP") has been implemented, which strictly prohibits the transfer, disclosure, or provision of access to any ITAR-controlled technical data, EAR-controlled technology, or classified information to non-U.S. persons—including HSAG personnel, directors, or affiliates—without prior authorization from the appropriate U.S. government agency (i.e., DDTC for ITAR-controlled items, BIS for EAR-controlled items, and the relevant contracting agency for classified information). The TCP prescribes detailed procedures for the handling, marking, storage, transmission, and destruction of controlled technical data, and designates a Technology Control Officer responsible for day-to-day TCP implementation.

Visitation and Access Restrictions. HSAG personnel, including HSAG executives, directors, employees, contractors, and agents, may not access VPI's classified facilities at the Albuquerque location, including specifically the fabrication clean room Sections C-7 through C-12, without prior written approval from both the Government Security Committee and DCSA. Any approved visit must be conducted in accordance with NISPOM visitor control procedures and the specific access protocols set forth in NSA Annex B. Unclassified areas of the VPI facility may be accessed by HSAG personnel only in accordance with the TCP and subject to escort requirements.

Data Segregation. VPI's information technology systems, networks, servers, and data storage infrastructure are physically and logically separated from HSAG's global corporate network. VPI maintains its own independent IT environment, including dedicated servers, email systems, engineering workstations, and classified processing systems. No shared cloud infrastructure, virtual private network connections, or data links exist between VPI's IT systems and HSAG's global network. Any future proposals to establish data connectivity between VPI and HSAG systems for unclassified business purposes must be reviewed and approved by the GSC and by the CFIUS Monitoring Agencies.

Cybersecurity Requirements (NSA Annex D). VPI is required to maintain compliance with the cybersecurity standards set forth in the National Institute of Standards and Technology Special Publication 800-171 (NIST SP 800-171), Protecting Controlled Unclassified Information in Nonfederal Systems and Organizations. In addition, VPI must undergo annual third-party penetration testing of its classified and unclassified networks, conducted by an independent cybersecurity firm approved by the GSC. Any cybersecurity incident affecting VPI's classified or controlled unclassified information systems must be reported to DCSA within seventy-two (72) hours of detection, in accordance with the incident reporting procedures set forth in NSA Annex D. These cybersecurity obligations are in addition to any applicable requirements under DFARS 252.204-7012 (Safeguarding Covered Defense Information and Cyber Incident Reporting).

VIII. Third-Party Compliance Monitor

Pursuant to Section 9 of the NSA, a third-party compliance monitor has been appointed to provide independent oversight of HSAG's and VPI's compliance with the terms and conditions of the NSA.

Appointed Monitor. Whitmore Compliance Group LLC, located at 1300 Crystal Drive, Suite 710, Arlington, Virginia 22202, has been appointed as the third-party compliance monitor. Whitmore Compliance Group is led by its principal, Gerald Whitmore, a former supervisory special agent and section chief in the Federal Bureau of Investigation's Counterintelligence Division. Mr. Whitmore holds an active TOP SECRET/SCI security clearance and has extensive experience in counterintelligence, foreign investment security, and CFIUS compliance monitoring.

Selection and Approval. The selection of Whitmore Compliance Group LLC as the third-party compliance monitor was proposed by HSAG, reviewed by the CFIUS Monitoring Agencies, and formally approved by CFIUS on December 8, 2023. The approval was based on the firm's qualifications, independence, relevant experience, and the clearance status of its principal and key staff members.

Monitoring Agreement and Compensation. A monitoring agreement has been executed among Whitmore Compliance Group LLC, HSAG, Halcyon US Holdings Inc., VPI, and the CFIUS Monitoring Agencies, in connection with and as required by the NSA. The annual fee for monitoring services is $1.2 million, payable on a quarterly basis in four equal installments of $300,000 per quarter. The monitoring fee is payable by HSAG and is subject to adjustment based on the Consumer Price Index ("CPI") at each annual anniversary of the NSA's effective date. The costs of the compliance monitor are borne entirely by HSAG and may not be charged to VPI or to any U.S. government contract.

Scope of Monitoring. Whitmore Compliance Group will conduct annual comprehensive compliance audits of HSAG's, Halcyon US Holdings Inc.'s, and VPI's adherence to all provisions of the NSA, including the Technology Control Plan, board governance requirements, cybersecurity obligations, visitation and access restrictions, data segregation measures, and personnel continuity requirements. The compliance monitor will prepare and submit annual compliance reports to the CFIUS Monitoring Agencies, including DCSA in its capacity as a designated Monitoring Agency under the NSA. The first annual compliance audit is due by January 19, 2025 (i.e., the first anniversary of the NSA's effective date).

DCSA as Monitoring Agency. DCSA has been designated as a Monitoring Agency under the NSA with respect to matters relating to VPI's facility security clearance, industrial security, and cleared contractor compliance. DCSA will receive copies of all annual compliance reports prepared by Whitmore Compliance Group and will have the right to conduct its own inspections, audits, and reviews of VPI's security posture in accordance with NISPOM procedures.

IX. Export Control Registrations and Notifications

DDTC Registration. VPI has been registered with the U.S. Department of State, Directorate of Defense Trade Controls ("DDTC"), since 2011, under DDTC Registration Number M-24817. VPI's registration encompasses the manufacture, export, and brokering of defense articles and defense services classified under the United States Munitions List, including specifically USML Category XI (military electronics).

Change-of-Ownership Notification to DDTC. A change-of-ownership notification is being filed with DDTC concurrently with this letter, pursuant to ITAR § 122.4(a), which requires registrants to notify DDTC within five (5) days of any material change affecting the registrant, including a change in ownership or control. The DDTC notification will include the identity of the new parent entity, the post-closing corporate structure, and a description of the NSA and its FOCI mitigation provisions.

Active Export Licenses. VPI currently holds three (3) active DSP-5 permanent export licenses, each authorizing the export of specific GaN semiconductor components to NATO ally end-users in the United Kingdom and the Commonwealth of Australia. License amendments to reflect the change in ownership of VPI, as required by ITAR § 123.22, are being prepared and will be submitted to DDTC in the near term. Until such amendments are approved, VPI will continue to operate under the existing licenses to the extent permitted by ITAR.

EAR Classifications. VPI's primary Export Administration Regulations classifications for its commercial and dual-use product lines include ECCN 3A001 (microprocessor microcircuits, microcomputer microcircuits, and related microwave and millimeter-wave components), ECCN 3A991 (electronic devices not controlled by 3A001), and ECCN 3E001 (technology for the development or production of items controlled by 3A001). VPI maintains an active export compliance program and has appointed a dedicated Export Compliance Officer who reports to the GSC on all export-related matters.

intellectual Property. VPI's intellectual property portfolio includes forty-seven (47) issued U.S. patents and twelve (12) pending U.S. patent applications covering VPI's proprietary GaN-on-SiC epitaxial growth processes, device architectures, packaging techniques, and related manufacturing methodologies. Twenty-three (23) of these issued patents were developed, in whole or in part, under U.S. government-funded contracts and are subject to government rights provisions under the Bayh-Dole Act, 35 U.S.C. §§ 200–212, and the relevant DFARS clauses, including DFARS 252.227-7038 (Patent Rights—Ownership by the Contractor). VPI has complied with all invention disclosure and election-of-title obligations under these provisions, and the change in ownership does not affect the U.S. government's existing rights in such inventions.

X. Government Contract Novation

Formal novation proceedings under Federal Acquisition Regulation ("FAR") Subpart 42.12 are being initiated with respect to eight (8) of VPI's fourteen (14) active government contracts that require novation due to the change in ownership. The novation requirement arises because VPI's status as a wholly owned subsidiary of a foreign parent entity constitutes a change in the legal identity of the contractor for purposes of FAR 42.1204. The remaining six (6) contracts either do not require novation (e.g., due to the continuation of VPI as the contracting entity without a change in its legal name or organizational form) or are subcontracts for which the prime contractor will be notified of the change in accordance with applicable subcontract terms.

Contracting officers at the relevant procuring agencies—including U.S. Army PEO IEW&S, the U.S. Air Force Research Laboratory, the Missile Defense Agency, the Naval Sea Systems Command (through the prime contractor, Ironclad Defense Systems Inc.), and the Department of Homeland Security Science and Technology Directorate—are being notified separately of the change in ownership and the commencement of novation proceedings. VPI and Halcyon US Holdings Inc. will submit novation packages to the cognizant Administrative Contracting Officer, including the executed SPA, the novation agreement, and evidence of the successor entity's technical and financial capability to perform the contracts.

In addition, foreign ownership disclosures required under DFARS 252.209-7002 (Disclosure of Ownership or Control by a Foreign Government) will be made to all contracting officers for VPI's active government contracts. While HSAG is not owned or controlled by a foreign government, the regulation requires disclosure of the foreign ownership of the contractor, which will be provided.

VPI intends to continue performing without interruption on all active government contracts during the pendency of the novation process. No change in VPI's technical capabilities, workforce, or manufacturing capacity has occurred or is anticipated as a result of the transaction, and VPI remains fully capable of meeting all contractual delivery schedules and performance requirements.

XI. Pre-Notification Obligations Going Forward

Pursuant to Section 11 of the NSA (NSA-2024-0019), HSAG is required to provide written notice to CFIUS and to DCSA (in its capacity as a Monitoring Agency) no fewer than thirty (30) days before any material change to VPI's business, operations, or organizational structure. Material changes requiring pre-notification include, but are not limited to:

• Any divestiture, merger, consolidation, or restructuring involving VPI or any VPI business unit;

• The entry into any new subcontract or teaming arrangement with a foreign person or entity;

• Any changes to cleared personnel, including the departure or replacement of the FSO, CEO, President/COO, or any Security Board Member;

• Any proposed changes to VPI's classified facility, including relocation, expansion, or closure;

• Any material changes to VPI's IT infrastructure or cybersecurity posture that could affect the data segregation or network separation requirements of the NSA; and

• Any new or proposed investments by HSAG in other U.S. businesses engaged in classified work or the production of critical technologies.

HSAG acknowledges and understands its ongoing obligation to provide such pre-notification in a timely manner and to refrain from effecting any such material change without the required advance notice and, where applicable, the prior approval of the CFIUS Monitoring Agencies and/or the GSC.

HSAG further acknowledges that a violation of the NSA may result in the imposition of civil penalties of up to $250,000 per violation per day, the issuance of injunctive or other equitable relief by a court of competent jurisdiction, or the mandated divestiture of VPI by HSAG, as provided in NSA Section 12.3 and as authorized by 50 U.S.C. § 4565(l)(3). HSAG has represented that it has implemented internal compliance policies and procedures to ensure timely and complete compliance with all NSA obligations.

XII. Contact Information

For questions or communications relating to VPI's facility security, personnel security, and classified programs, please contact:

Col. (Ret.) Bryce Hendrickson, USAF Vice President, Government Programs / Facility Security Officer Marlowe Asset Management Photonics Inc. 9200 Innovation Boulevard Albuquerque, NM 87113 Telephone: (505) 555-8200 Secure Telephone: (505) 555-8201

Email: b.hendrickson@vanguardphotonics.com

For questions or communications relating to the NSA, CFIUS compliance, and legal matters, please contact:

Margaret "Peggy" Ashworth Of Counsel, National Security & CFIUS Practice Calderwood & Harkness LLP 1750 K Street NW, Suite 800 Washington, DC 20006 Telephone: (202) 555-7412

Email: mashworth@calderwoodharkness.com

Lt. Col. (Ret.) David Caruso Senior Counsel, Government Contracts & Export Controls Practice Calderwood & Harkness LLP 1750 K Street NW, Suite 800 Washington, DC 20006 Telephone: (202) 555-7438

Email: dcaruso@calderwoodharkness.com

For questions or communications relating to the third-party compliance monitor, please contact:

Gerald Whitmore Principal Whitmore Compliance Group LLC 1300 Crystal Drive, Suite 710 Arlington, VA 22202 Telephone: (703) 555-2100

Email: gwhitmore@whitmorecompliancegroup.com

XIII. Enclosures

The following documents are enclosed herewith and are submitted for DCSA's records and review:

1. Executed National Security Agreement (NSA-2024-0019), dated January 19, 2024, including Annexes A through F (Annex A — Definitions; Annex B — Technology Control Plan; Annex C — Governance Provisions & Security Board Charter; Annex D — Cybersecurity Requirements; Annex E — Reporting Obligations; Annex F — Penalties and Enforcement Provisions);

2. CFIUS Clearance Letter (Safe Harbor), dated January 26, 2024 (CFIUS Case No. CFIUS-023-07-3841);

3. Third-Party Compliance Monitor Agreement with Whitmore Compliance Group LLC, dated January 19, 2024;

4. VPI Post-Closing Board Resolution reflecting the reconstituted five-member board of directors and establishment of the Government Security Committee, adopted February 9, 2024;

5. Halcyon US Holdings Inc. Board Resolution authorizing the consummation of the acquisition and execution of the NSA, adopted February 8, 2024;

6. Updated organizational chart showing the post-closing corporate structure (HSAG → Halcyon US Holdings Inc. → VPI), with identification of all intermediate entities; and

7. VPI Facility Security Officer designation confirmation for Col. (Ret.) Bryce Hendrickson, executed by the VPI Board of Directors, dated February 9, 2024.

We respectfully request that DCSA review this notification and the enclosed materials and confirm the continuation of VPI's Facility Security Clearance at the SECRET level, CAGE Code 7VK92, under the FOCI mitigation framework established by the NSA. We remain available to provide any additional information that DCSA may require and to arrange an in-person briefing at DCSA's convenience.

We appreciate DCSA's attention to this matter and look forward to continuing the cooperative relationship between VPI and DCSA.

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

Margaret "Peggy" Ashworth Of Counsel National Security & CFIUS Practice

By: ________

Lt. Col. (Ret.) David Caruso Senior Counsel Government Contracts & Export Controls Practice

On behalf of Halcyon Semiconductor Aktiengesellschaft and Marlowe Asset Management Photonics Inc.

cc (via email and overnight courier):

U.S. Department of the Treasury, Office of Investment Security

ATTN: CFIUS Monitoring, Case No. CFIUS-023-07-3841

1500 Pennsylvania Avenue NW, Washington, DC 20220

U.S. Department of Defense Office of the Under Secretary of Defense for Acquisition and Sustainment

ATTN: CFIUS Co-Lead Agency Coordination

3010 Defense Pentagon, Washington, DC 20301

U.S. Department of Energy Office of intelligence and Counterintelligence

ATTN: CFIUS Co-Lead Agency Coordination

1000 Independence Avenue SW, Washington, DC 20585

Stefan Lohse, Esq. General Counsel Halcyon Semiconductor Aktiengesellschaft Industriestraße 44, 01099 Dresden, Saxony, Germany

Dr. Nathan Trevorrow Chief Executive Officer Marlowe Asset Management Photonics Inc. 7400 Ridgeline Parkway, Colorado Springs, CO 80919

Col. (Ret.) Bryce Hendrickson, USAF Facility Security Officer Marlowe Asset Management Photonics Inc. 9200 Innovation Boulevard, Albuquerque, NM 87113

Harrison Whitfield, Esq. Wethersfield & Gale LLP (Counsel to VPI and the Selling Shareholders)

Gerald Whitmore Principal Whitmore Compliance Group LLC 1300 Crystal Drive, Suite 710, Arlington, VA 22202

Beatrice Holloway, Esq. Calderwood & Harkness LLP 1750 K Street NW, Suite 800, Washington, DC 20006

CONFIDENTIAL — This letter and the enclosed materials contain sensitive business information, export-controlled technical information references, and information subject to the terms and conditions of National Security Agreement NSA-2024-0019. Distribution is restricted to the addressee, the individuals and entities identified in the cc block, and authorized personnel of the U.S. government agencies identified herein. Unauthorized disclosure, reproduction, or distribution is prohibited.

Shareholder	Percentage of Outstanding Equity
Dr. Nathan Trevorrow and family trusts (The Trevorrow Family Trust u/a/d 03/12/2012 and The Trevorrow 2018 Irrevocable Trust)	22.4%
Marissa Sung-Avila	4.1%
Ridgecrest Ventures Fund III, L.P.	31.7%
Cascadian Capital Partners Growth Fund II, L.P.	24.3%
Employee stock option pool (vested and exercised at closing)	11.8%
Other angel investors and early-stage individual holders	5.7%

CALDERWOOD & HARKNESS LLP Counselors at Law
1750 K Street NW, Suite 800 Washington, DC 20006 Telephone: (202) 555-7400 Facsimile: (202) 555-7401
Washington, DC · New York
February 9, 2024
VIA OVERNIGHT COURIER AND ELECTRONIC TRANSMISSION
Defense Counterintelligence and Security Agency Industrial Security Field Operations
ATTN: FOCI/Ownership Change Notifications
27130 Telegraph Road Quantico, VA 22134
Re: Notification of Change in Ownership — Marlowe Asset Management Photonics Inc.
CAGE Code: 7VK92 DUNS Number: 07-812-4493 EIN: 26-4371885 DDTC Registration No.: M-24817 Facility Clearance Level: SECRET CFIUS Case No.: CFIUS-023-07-3841 NSA Reference: NSA-2024-0019
Dear Sir or Madam:
I. Purpose and Introduction
This letter is submitted on behalf of Halcyon Semiconductor Aktiengesellschaft, a German Aktiengesellschaft ("HSAG"), and Marlowe Asset Management Photonics Inc., a Delaware C-corporation ("VPI"), by Calderwood & Harkness LLP, counsel to HSAG in connection with the above-referenced transaction. This notification has been prepared by Margaret "Peggy" Ashworth, Of Counsel in the firm's National Security & CFIUS Practice, and Lt. Col. (Ret.) David Caruso, Senior Counsel in the Government Contracts & Export Controls Practice, each of whom are available to address any questions DCSA may have regarding the matters described herein.
The purpose of this letter is to provide formal notification to the Defense Counterintelligence and Security Agency ("DCSA") that the previously anticipated change in ownership of VPI has been completed as of the date of this letter, February 9, 2024. As described more fully below, HSAG, acting through its wholly owned U.S. acquisition vehicle, Halcyon US Holdings Inc., has acquired one hundred percent (100%) of the outstanding equity interests of VPI.
VPI is a Delaware C-corporation, originally incorporated on February 14, 2009, under the laws of the State of Delaware. VPI is headquartered at 7400 Ridgeline Parkway, Colorado Springs, Colorado 80919, and maintains its classified facility at 9200 Innovation Boulevard, Albuquerque, New Mexico 87113. The Albuquerque facility is an approximately 45,000-square-foot gallium nitride on silicon carbide ("GaN-on-SiC") fabrication facility purpose-built for advanced compound semiconductor manufacturing. VPI holds a Facility Security Clearance ("FCL") at the SECRET level, assigned CAGE Code 7VK92, and is an active participant in the National Industrial Security Program.
This letter is submitted pursuant to the requirements of the National Industrial Security Program Operating Manual ("NISPOM"), 32 C.F.R. Part 117, for reporting changes in ownership, control, or influence affecting cleared contractor facilities. Specifically, this notification is made in accordance with NISPOM § 117.11(d), which requires cleared contractors and their successors to promptly report to DCSA any change in ownership or control that may affect the validity of an existing facility clearance or that may constitute Foreign Ownership, Control, or Influence ("FOCI"). We note that DCSA was previously apprised of the pendency of this transaction through informal consultations and through the CFIUS process described below.
II. Description of the Transaction
The Acquiring Entity. Halcyon Semiconductor Aktiengesellschaft is a publicly traded German corporation (Aktiengesellschaft) listed on the Frankfurt Stock Exchange under the ticker symbol XETRA: HLC. HSAG is headquartered at Industriestraße 44, 01099 Dresden, Saxony, Federal Republic of Germany. HSAG is a leading global manufacturer of compound semiconductor devices, power management integrated circuits, and radio-frequency components, with operations in twelve countries and approximately 14,600 employees worldwide. HSAG reported consolidated annual revenue of approximately €6.2 billion for its fiscal year ending December 31, 2023.
The U.S. Acquisition Vehicle. The acquisition of VPI was effected through Halcyon US Holdings Inc. ("Halcyon US Holdings"), a Delaware C-corporation bearing Employer Identification Number 93-2841067, formed on June 5, 2023, solely for the purpose of consummating the acquisition. Halcyon US Holdings is registered in the State of Delaware with a registered agent at 160 Greentree Drive, Suite 101, Dover, Delaware 19904. Halcyon US Holdings is a direct, wholly owned subsidiary of HSAG and, as of the closing date, serves as the direct parent entity of VPI in the post-closing corporate structure.
Transaction Structure and Consideration. Pursuant to a definitive Stock Purchase Agreement ("SPA") originally executed on June 10, 2023, by and among HSAG, Halcyon US Holdings (as Buyer), VPI, and the sellers of VPI's equity identified therein, Halcyon US Holdings has acquired one hundred percent (100%) of the outstanding shares of common stock of VPI. The closing of the acquisition occurred on February 9, 2024, in accordance with the terms and conditions of the SPA, as amended. The aggregate purchase price for the acquisition was $1.42 billion, payable in all-cash consideration, on a cash-free, debt-free basis, subject to customary post-closing adjustments based on a normalized net working capital target of $34.6 million. The purchase price was funded from a combination of HSAG's available cash on hand and a committed term loan facility provided by Adriatic Trust Bank and Cascade Capital Markets.
Prior Shareholders. Immediately prior to the closing, the outstanding equity of VPI was held by the following shareholders:
All of the foregoing shareholders have transferred their respective equity interests to Halcyon US Holdings at or prior to the closing, such that VPI is now a wholly owned indirect subsidiary of HSAG through the intermediate holding company, Halcyon US Holdings Inc.
HSAG's Existing U.S. Operations. HSAG maintains a pre-existing U.S. operating subsidiary, Halcyon US Inc. (EIN 81-3056429), which operates a fabless semiconductor design center located at 11501 Alterra Parkway, Suite 300, Austin, Texas 78758, employing approximately 320 individuals. Halcyon US Inc. does not hold a facility security clearance, does not perform classified work, and is not involved in the manufacture or export of defense articles or services regulated under the International Traffic in Arms Regulations ("ITAR"). The operations of Halcyon US Inc. are entirely separate from the operations of VPI, and no integration of the two entities' operations is contemplated that would alter VPI's classified program posture or facility security profile.
III. CFIUS Review and National Security Agreement
The acquisition of VPI by HSAG was subject to review by the Committee on Foreign Investment in the United States ("CFIUS") pursuant to Section 721 of the Defense Production Act of 1950, as amended, 50 U.S.C. § 4565, and the implementing regulations set forth at 31 C.F.R. Part 800. The transaction was identified as a "covered transaction" within the meaning of 31 C.F.R. § 800.213 because VPI constitutes a "TID U.S. business" as defined in 31 C.F.R. § 800.248, given VPI's production, design, testing, and manufacturing of critical technologies—specifically, gallium nitride compound semiconductors classified under Export Control Classification Number ("ECCN") 3A001 on the Commerce Control List—and its performance of classified and unclassified contracts with the U.S. Department of Defense.
Filing and Review Timeline. HSAG and VPI filed a voluntary joint notice with CFIUS on July 14, 2023, pursuant to 31 C.F.R. § 800.501. CFIUS accepted the filing as complete on July 21, 2023, thereby commencing the initial 45-day review period under 50 U.S.C. § 4565(b)(1)(E). During the initial review period, CFIUS identified certain national security considerations warranting further analysis. On September 4, 2023, CFIUS notified the parties that it had initiated a 45-day investigation of the transaction, as authorized by 50 U.S.C. § 4565(b)(2)(A). The investigation period, as extended by mutual agreement of the parties and CFIUS, continued through the negotiation of mitigation measures described below.
National Security Agreement. As a result of the CFIUS investigation, HSAG, Halcyon US Holdings Inc., VPI, and the United States of America—acting through the U.S. Department of the Treasury, the U.S. Department of Defense, and the U.S. Department of Energy (collectively, the "Monitoring Agencies")—negotiated a comprehensive National Security Agreement bearing reference number NSA-2024-0019. The final NSA was executed by all parties on January 19, 2024. The NSA sets forth binding obligations and conditions designed to mitigate any national security risks associated with the foreign acquisition of VPI, including detailed provisions regarding board governance, technology protection, cybersecurity, access restrictions, personnel continuity, and ongoing compliance monitoring.
CFIUS Clearance. Following execution of the NSA, CFIUS issued a clearance letter (commonly referred to as a "safe harbor" letter) on January 26, 2024, pursuant to 50 U.S.C. § 4565(b)(1)(D), confirming that the transaction, as mitigated by the terms and conditions of the NSA, does not present unresolved national security concerns and that CFIUS has concluded action with respect to the transaction. The issuance of this clearance letter constituted the final regulatory approval required for the closing of the acquisition.
NSA as SSA Equivalent. For purposes of FOCI mitigation under the NISPOM, the NSA (NSA-2024-0019) functions as a Special Security Agreement ("SSA") equivalent. The NSA incorporates the substantive protections and governance mechanisms required under an SSA, including the establishment of a Government Security Committee, the appointment of Security Board Members, a Technology Control Plan, and visitation and access restrictions, as described in further detail in Sections V, VI, and VII below. Accordingly, no separate SSA or other FOCI mitigation instrument is required to be executed between VPI and DCSA with respect to this transaction. DCSA has been designated as one of the Monitoring Agencies under the NSA for purposes related to facility security and cleared contractor oversight.
An executed copy of the National Security Agreement (NSA-2024-0019), including Annexes A through F, is enclosed with this letter for DCSA's records. A copy of the CFIUS clearance letter dated January 26, 2024, is also enclosed.
IV. Maintenance of Facility Security Clearance
VPI will maintain its existing Facility Security Clearance at the SECRET level. The facility clearance was initially granted to VPI and has been continuously maintained since that time. CAGE Code 7VK92 remains unchanged. The facility clearance pertains to VPI's classified facility located at 9200 Innovation Boulevard, Albuquerque, New Mexico 87113. There has been no change in the physical security infrastructure, classified storage capabilities, intrusion detection systems, or access control mechanisms at the Albuquerque facility as a result of the closing of the transaction. All existing physical security measures, including the Sensitive Compartmented Information Facility ("SCIF") areas, alarmed perimeter systems, and classified material storage vaults, remain intact and operational in accordance with NISPOM requirements and the terms of the NSA.
Active Government Contracts. VPI continues to perform on fourteen (14) active U.S. Department of Defense and other U.S. government contracts—including both prime contracts and subcontracts—with an aggregate remaining backlog of approximately $193 million as of the closing date. VPI's government customer base includes, among others:
• The U.S. Army Program Executive Office for intelligence, Electronic Warfare & Sensors ("PEO IEW&S"), for advanced GaN-based radar transmit/receive modules under Contract No. W56KGZ-22-C-0044;
• The U.S. Air Force Research Laboratory ("AFRL"), for next-generation high-power amplifier development under Contract No. FA8650-21-C-1327;
• The Missile Defense Agency ("MDA"), for GaN power amplifier components supporting the Long Range Discrimination Radar ("LRDR") modernization program under Contract No. HQ0147-23-C-0081;
• A subcontract to Ironclad Defense Systems Inc. (the prime contractor to USN Naval Sea Systems Command ("NAVSEA")) for shipboard electronic warfare systems, under Subcontract No. IDS-VP-2022-0193 (referencing prime contract N00024-20-C-5312); and
• The U.S. Department of Homeland Security, Science and Technology Directorate ("DHS S&T"), for border surveillance sensor components under Contract No. 70RSAT23C00000041.
Products and Export Classifications. VPI's products include defense articles controlled under the International Traffic in Arms Regulations, specifically United States Munitions List ("USML") Category XI(a)(3) (military electronics, including microwave monolithic integrated circuits ("MMICs") specifically designed for military applications), as well as dual-use semiconductor components classified under Export Administration Regulations ("EAR") ECCN 3A001 (microprocessor microcircuits, microcomputer microcircuits, and microcontroller microcircuits), ECCN 3A991 (electronic devices not controlled by 3A001), and ECCN 3E001 (technology for the development or production of items controlled by 3A001).
Cleared Personnel. As of the closing date, 212 of VPI's 486 total employees hold active U.S. government personnel security clearances, representing approximately 43.6% of the workforce. These clearances range from CONFIDENTIAL through TOP SECRET/SCI, depending on the individual's program access requirements. No disruption to classified program performance is anticipated as a result of the change in ownership. All cleared personnel have been briefed on the change of ownership and the applicability of the NSA, and all such personnel will continue to perform their respective duties without interruption.
V. Continuing Facility Security Officer
Colonel (Retired) Bryce Hendrickson, United States Air Force, continues to serve as VPI's Facility Security Officer ("FSO") and has served in that capacity since 2018. Col. Hendrickson holds an active TOP SECRET/SCI security clearance, which has been continuously maintained. Col. Hendrickson also holds the position of Vice President, Government Programs at VPI, and has been designated as the proxy holder and security officer under the terms of the NSA. In his capacity as FSO and proxy holder, Col. Hendrickson has exclusive operational authority over all matters relating to VPI's classified programs, facility security, and personnel security, subject to the oversight of the Government Security Committee described in Section VI below.
Pursuant to the personnel continuity provisions set forth in Section 7 of the NSA (NSA-2024-0019), Col. Hendrickson is required to remain in his position as FSO and VP, Government Programs for a minimum period of twenty-four (24) months following the closing date (i.e., through at least February 9, 2026). Any replacement of Col. Hendrickson in either capacity prior to the expiration of this period must be approved in advance by the Government Security Committee and by DCSA, in consultation with the CFIUS Monitoring Agencies. This personnel continuity requirement applies equally to Dr. Nathan Trevorrow, who will continue to serve as Chief Executive Officer of VPI, and to Marissa Sung-Avila, who will continue to serve as President and Chief Operating Officer of VPI. The NSA requires that any proposed replacement for any of these three key management personnel be a U.S. citizen who holds, or is eligible to obtain, the requisite security clearances for the position.
Col. Hendrickson may be contacted directly regarding all facility security and classified program matters at the address and contact information set forth in Section XII below.
VI. Reconstituted Board of Directors and Government Security Committee
Pursuant to the governance provisions of the NSA (NSA-2024-0019, Section 5 and Annex C), VPI's board of directors has been reconstituted effective as of the closing date, February 9, 2024, to ensure that adequate safeguards are in place to protect classified information and to prevent unauthorized access to, or transfer of, classified or export-controlled information to foreign persons or entities.
Board Composition. The reconstituted board of directors of VPI consists of five (5) members, divided into two categories:
Security Board Members (three members, each of whom is a United States citizen and holds or is eligible for a TOP SECRET/SCI security clearance):
1. Col. (Ret.) Bryce Hendrickson — Security Board Member and FSO/Proxy Holder. Col. Hendrickson holds an active TS/SCI clearance. As described above, Col. Hendrickson serves as VP, Government Programs and FSO at VPI and has been designated as the proxy holder under the NSA.
2. Adrienne Delacroix — Security Board Member and independent director. Ms. Delacroix holds an active SECRET security clearance. Ms. Delacroix has served as an independent member of VPI's board of directors since 2019 and will continue in that capacity on the reconstituted board. Ms. Delacroix previously served as Deputy Assistant Secretary of Defense for Industrial Policy and currently serves as a senior advisor to multiple defense-technology companies.
3. An independent Security Director, as identified in the letter submitted by Calderwood & Harkness LLP to CFIUS on behalf of HSAG on November 17, 2023, proposing Security Board Member candidates. The identity of this individual has been communicated to DCSA separately through secure channels, and DCSA's concurrence with this appointment has been requested.
HSAG Designees (two members, appointed by HSAG to represent the shareholder interest):
4. An HSAG-designated director.
5. An HSAG-designated director.
The two HSAG Designees may not hold, seek, or access U.S. government security clearances and may not access any classified or ITAR-controlled information, materials, or facilities of VPI. The HSAG Designees are entitled to receive only unclassified, non-export-controlled business and financial information from VPI, subject to the restrictions and procedures set forth in the Technology Control Plan (NSA Annex B).
Government Security Committee. A Government Security Committee ("GSC") has been established, composed of the three Security Board Members identified above. The GSC has been duly constituted and has held its initial organizational meeting as of the closing date. The GSC has exclusive authority and responsibility over all of the following matters:
• All classified contracts, programs, and related activities performed by VPI;
• All matters relating to ITAR-controlled defense articles, defense services, and technical data;
• Personnel security, including the granting, denying, or revoking of access to classified information;
• Facility security, including physical security, information security, and cybersecurity for classified systems;
• Compliance with the NSA, the NISPOM, the ITAR, and the EAR as they relate to classified and export-controlled activities;
• Oversight of the Facility Security Officer and the Technology Control Plan; and
• Communication with DCSA and other U.S. government agencies regarding security matters.
The GSC charter is set forth in NSA Annex C (Governance Provisions & Security Board Charter), a copy of which has been previously provided to DCSA in connection with the CFIUS process. The GSC charter provides that decisions of the GSC are not subject to the approval, ratification, or veto of the HSAG Designees or of HSAG or Halcyon US Holdings Inc. The GSC reports directly to the CFIUS Monitoring Agencies with respect to NSA compliance and to DCSA with respect to facility security matters.
VII. FOCI Mitigation and NSA as SSA Equivalent
Foreign Parent Profile. HSAG is a publicly traded German corporation. As of the date hereof, based on HSAG's most recent public filings with the Bundesanstalt für Finanzdienstleistungsaufsicht ("BaFin") and its annual report for fiscal year 2023, no German federal or state government entity holds a direct or indirect ownership interest in HSAG. HSAG's shares are widely held by institutional and retail investors. HSAG's German commercial register number is HRB 28416 (Amtsgericht Dresden), and its Legal Entity Identifier (LEI) is 5299007KXQ2M4GHILZ38.
China Subsidiary Disclosure. HSAG maintains a subsidiary in the People's Republic of China—Halcyon Semiconductor (Shanghai) Co., Ltd.—which generated revenue of approximately $81.4 million in HSAG's most recently completed fiscal year, representing approximately 1.3% of HSAG's total consolidated revenue. Halcyon Semiconductor (Shanghai) Co., Ltd. is engaged solely in the design and sale of consumer-grade power management integrated circuits for the Chinese domestic market and does not engage in any GaN semiconductor manufacturing, defense-related activities, or dual-use semiconductor activities. The existence and scope of this Chinese subsidiary were fully disclosed to CFIUS during the review process and are addressed in the risk mitigation provisions of the NSA. The NSA specifically prohibits any transfer of VPI technology, technical data, or business information to Halcyon Semiconductor (Shanghai) Co., Ltd. or to any other HSAG entity located in a country of concern, as defined in the NSA.
FOCI Mitigation Framework. The NSA (NSA-2024-0019) comprehensively addresses all Foreign Ownership, Control, or Influence concerns arising from the acquisition. The NSA functions as a Special Security Agreement equivalent for purposes of FOCI mitigation under the NISPOM, and no separate FOCI mitigation plan, Voting Trust Agreement, Proxy Agreement, or SSA beyond the NSA is required to be executed. The key FOCI mitigation measures mandated by the NSA include, but are not limited to, the following:
Board Governance. As described in Section VI above, VPI's board has been reconstituted to include three Security Board Members constituting a majority of the board, with a Government Security Committee holding exclusive authority over all classified, ITAR-controlled, and facility security matters. The HSAG Designees are excluded from any decision-making authority with respect to such matters.
Technology Control Plan (NSA Annex B). A comprehensive Technology Control Plan ("TCP") has been implemented, which strictly prohibits the transfer, disclosure, or provision of access to any ITAR-controlled technical data, EAR-controlled technology, or classified information to non-U.S. persons—including HSAG personnel, directors, or affiliates—without prior authorization from the appropriate U.S. government agency (i.e., DDTC for ITAR-controlled items, BIS for EAR-controlled items, and the relevant contracting agency for classified information). The TCP prescribes detailed procedures for the handling, marking, storage, transmission, and destruction of controlled technical data, and designates a Technology Control Officer responsible for day-to-day TCP implementation.
Visitation and Access Restrictions. HSAG personnel, including HSAG executives, directors, employees, contractors, and agents, may not access VPI's classified facilities at the Albuquerque location, including specifically the fabrication clean room Sections C-7 through C-12, without prior written approval from both the Government Security Committee and DCSA. Any approved visit must be conducted in accordance with NISPOM visitor control procedures and the specific access protocols set forth in NSA Annex B. Unclassified areas of the VPI facility may be accessed by HSAG personnel only in accordance with the TCP and subject to escort requirements.
Data Segregation. VPI's information technology systems, networks, servers, and data storage infrastructure are physically and logically separated from HSAG's global corporate network. VPI maintains its own independent IT environment, including dedicated servers, email systems, engineering workstations, and classified processing systems. No shared cloud infrastructure, virtual private network connections, or data links exist between VPI's IT systems and HSAG's global network. Any future proposals to establish data connectivity between VPI and HSAG systems for unclassified business purposes must be reviewed and approved by the GSC and by the CFIUS Monitoring Agencies.
Cybersecurity Requirements (NSA Annex D). VPI is required to maintain compliance with the cybersecurity standards set forth in the National Institute of Standards and Technology Special Publication 800-171 (NIST SP 800-171), Protecting Controlled Unclassified Information in Nonfederal Systems and Organizations. In addition, VPI must undergo annual third-party penetration testing of its classified and unclassified networks, conducted by an independent cybersecurity firm approved by the GSC. Any cybersecurity incident affecting VPI's classified or controlled unclassified information systems must be reported to DCSA within seventy-two (72) hours of detection, in accordance with the incident reporting procedures set forth in NSA Annex D. These cybersecurity obligations are in addition to any applicable requirements under DFARS 252.204-7012 (Safeguarding Covered Defense Information and Cyber Incident Reporting).
VIII. Third-Party Compliance Monitor
Pursuant to Section 9 of the NSA, a third-party compliance monitor has been appointed to provide independent oversight of HSAG's and VPI's compliance with the terms and conditions of the NSA.
Appointed Monitor. Whitmore Compliance Group LLC, located at 1300 Crystal Drive, Suite 710, Arlington, Virginia 22202, has been appointed as the third-party compliance monitor. Whitmore Compliance Group is led by its principal, Gerald Whitmore, a former supervisory special agent and section chief in the Federal Bureau of Investigation's Counterintelligence Division. Mr. Whitmore holds an active TOP SECRET/SCI security clearance and has extensive experience in counterintelligence, foreign investment security, and CFIUS compliance monitoring.
Selection and Approval. The selection of Whitmore Compliance Group LLC as the third-party compliance monitor was proposed by HSAG, reviewed by the CFIUS Monitoring Agencies, and formally approved by CFIUS on December 8, 2023. The approval was based on the firm's qualifications, independence, relevant experience, and the clearance status of its principal and key staff members.
Monitoring Agreement and Compensation. A monitoring agreement has been executed among Whitmore Compliance Group LLC, HSAG, Halcyon US Holdings Inc., VPI, and the CFIUS Monitoring Agencies, in connection with and as required by the NSA. The annual fee for monitoring services is $1.2 million, payable on a quarterly basis in four equal installments of $300,000 per quarter. The monitoring fee is payable by HSAG and is subject to adjustment based on the Consumer Price Index ("CPI") at each annual anniversary of the NSA's effective date. The costs of the compliance monitor are borne entirely by HSAG and may not be charged to VPI or to any U.S. government contract.
Scope of Monitoring. Whitmore Compliance Group will conduct annual comprehensive compliance audits of HSAG's, Halcyon US Holdings Inc.'s, and VPI's adherence to all provisions of the NSA, including the Technology Control Plan, board governance requirements, cybersecurity obligations, visitation and access restrictions, data segregation measures, and personnel continuity requirements. The compliance monitor will prepare and submit annual compliance reports to the CFIUS Monitoring Agencies, including DCSA in its capacity as a designated Monitoring Agency under the NSA. The first annual compliance audit is due by January 19, 2025 (i.e., the first anniversary of the NSA's effective date).
DCSA as Monitoring Agency. DCSA has been designated as a Monitoring Agency under the NSA with respect to matters relating to VPI's facility security clearance, industrial security, and cleared contractor compliance. DCSA will receive copies of all annual compliance reports prepared by Whitmore Compliance Group and will have the right to conduct its own inspections, audits, and reviews of VPI's security posture in accordance with NISPOM procedures.
IX. Export Control Registrations and Notifications
DDTC Registration. VPI has been registered with the U.S. Department of State, Directorate of Defense Trade Controls ("DDTC"), since 2011, under DDTC Registration Number M-24817. VPI's registration encompasses the manufacture, export, and brokering of defense articles and defense services classified under the United States Munitions List, including specifically USML Category XI (military electronics).
Change-of-Ownership Notification to DDTC. A change-of-ownership notification is being filed with DDTC concurrently with this letter, pursuant to ITAR § 122.4(a), which requires registrants to notify DDTC within five (5) days of any material change affecting the registrant, including a change in ownership or control. The DDTC notification will include the identity of the new parent entity, the post-closing corporate structure, and a description of the NSA and its FOCI mitigation provisions.
Active Export Licenses. VPI currently holds three (3) active DSP-5 permanent export licenses, each authorizing the export of specific GaN semiconductor components to NATO ally end-users in the United Kingdom and the Commonwealth of Australia. License amendments to reflect the change in ownership of VPI, as required by ITAR § 123.22, are being prepared and will be submitted to DDTC in the near term. Until such amendments are approved, VPI will continue to operate under the existing licenses to the extent permitted by ITAR.
EAR Classifications. VPI's primary Export Administration Regulations classifications for its commercial and dual-use product lines include ECCN 3A001 (microprocessor microcircuits, microcomputer microcircuits, and related microwave and millimeter-wave components), ECCN 3A991 (electronic devices not controlled by 3A001), and ECCN 3E001 (technology for the development or production of items controlled by 3A001). VPI maintains an active export compliance program and has appointed a dedicated Export Compliance Officer who reports to the GSC on all export-related matters.
intellectual Property. VPI's intellectual property portfolio includes forty-seven (47) issued U.S. patents and twelve (12) pending U.S. patent applications covering VPI's proprietary GaN-on-SiC epitaxial growth processes, device architectures, packaging techniques, and related manufacturing methodologies. Twenty-three (23) of these issued patents were developed, in whole or in part, under U.S. government-funded contracts and are subject to government rights provisions under the Bayh-Dole Act, 35 U.S.C. §§ 200–212, and the relevant DFARS clauses, including DFARS 252.227-7038 (Patent Rights—Ownership by the Contractor). VPI has complied with all invention disclosure and election-of-title obligations under these provisions, and the change in ownership does not affect the U.S. government's existing rights in such inventions.
X. Government Contract Novation
Formal novation proceedings under Federal Acquisition Regulation ("FAR") Subpart 42.12 are being initiated with respect to eight (8) of VPI's fourteen (14) active government contracts that require novation due to the change in ownership. The novation requirement arises because VPI's status as a wholly owned subsidiary of a foreign parent entity constitutes a change in the legal identity of the contractor for purposes of FAR 42.1204. The remaining six (6) contracts either do not require novation (e.g., due to the continuation of VPI as the contracting entity without a change in its legal name or organizational form) or are subcontracts for which the prime contractor will be notified of the change in accordance with applicable subcontract terms.
Contracting officers at the relevant procuring agencies—including U.S. Army PEO IEW&S, the U.S. Air Force Research Laboratory, the Missile Defense Agency, the Naval Sea Systems Command (through the prime contractor, Ironclad Defense Systems Inc.), and the Department of Homeland Security Science and Technology Directorate—are being notified separately of the change in ownership and the commencement of novation proceedings. VPI and Halcyon US Holdings Inc. will submit novation packages to the cognizant Administrative Contracting Officer, including the executed SPA, the novation agreement, and evidence of the successor entity's technical and financial capability to perform the contracts.
In addition, foreign ownership disclosures required under DFARS 252.209-7002 (Disclosure of Ownership or Control by a Foreign Government) will be made to all contracting officers for VPI's active government contracts. While HSAG is not owned or controlled by a foreign government, the regulation requires disclosure of the foreign ownership of the contractor, which will be provided.
VPI intends to continue performing without interruption on all active government contracts during the pendency of the novation process. No change in VPI's technical capabilities, workforce, or manufacturing capacity has occurred or is anticipated as a result of the transaction, and VPI remains fully capable of meeting all contractual delivery schedules and performance requirements.
XI. Pre-Notification Obligations Going Forward
Pursuant to Section 11 of the NSA (NSA-2024-0019), HSAG is required to provide written notice to CFIUS and to DCSA (in its capacity as a Monitoring Agency) no fewer than thirty (30) days before any material change to VPI's business, operations, or organizational structure. Material changes requiring pre-notification include, but are not limited to:
• Any divestiture, merger, consolidation, or restructuring involving VPI or any VPI business unit;
• The entry into any new subcontract or teaming arrangement with a foreign person or entity;
• Any changes to cleared personnel, including the departure or replacement of the FSO, CEO, President/COO, or any Security Board Member;
• Any proposed changes to VPI's classified facility, including relocation, expansion, or closure;
• Any material changes to VPI's IT infrastructure or cybersecurity posture that could affect the data segregation or network separation requirements of the NSA; and
• Any new or proposed investments by HSAG in other U.S. businesses engaged in classified work or the production of critical technologies.
HSAG acknowledges and understands its ongoing obligation to provide such pre-notification in a timely manner and to refrain from effecting any such material change without the required advance notice and, where applicable, the prior approval of the CFIUS Monitoring Agencies and/or the GSC.
HSAG further acknowledges that a violation of the NSA may result in the imposition of civil penalties of up to $250,000 per violation per day, the issuance of injunctive or other equitable relief by a court of competent jurisdiction, or the mandated divestiture of VPI by HSAG, as provided in NSA Section 12.3 and as authorized by 50 U.S.C. § 4565(l)(3). HSAG has represented that it has implemented internal compliance policies and procedures to ensure timely and complete compliance with all NSA obligations.
XII. Contact Information
For questions or communications relating to VPI's facility security, personnel security, and classified programs, please contact:
Col. (Ret.) Bryce Hendrickson, USAF Vice President, Government Programs / Facility Security Officer Marlowe Asset Management Photonics Inc. 9200 Innovation Boulevard Albuquerque, NM 87113 Telephone: (505) 555-8200 Secure Telephone: (505) 555-8201
Email: b.hendrickson@vanguardphotonics.com
For questions or communications relating to the NSA, CFIUS compliance, and legal matters, please contact:
Margaret "Peggy" Ashworth Of Counsel, National Security & CFIUS Practice Calderwood & Harkness LLP 1750 K Street NW, Suite 800 Washington, DC 20006 Telephone: (202) 555-7412
Email: mashworth@calderwoodharkness.com
Lt. Col. (Ret.) David Caruso Senior Counsel, Government Contracts & Export Controls Practice Calderwood & Harkness LLP 1750 K Street NW, Suite 800 Washington, DC 20006 Telephone: (202) 555-7438
Email: dcaruso@calderwoodharkness.com
For questions or communications relating to the third-party compliance monitor, please contact:
Gerald Whitmore Principal Whitmore Compliance Group LLC 1300 Crystal Drive, Suite 710 Arlington, VA 22202 Telephone: (703) 555-2100
Email: gwhitmore@whitmorecompliancegroup.com
XIII. Enclosures
The following documents are enclosed herewith and are submitted for DCSA's records and review:
1. Executed National Security Agreement (NSA-2024-0019), dated January 19, 2024, including Annexes A through F (Annex A — Definitions; Annex B — Technology Control Plan; Annex C — Governance Provisions & Security Board Charter; Annex D — Cybersecurity Requirements; Annex E — Reporting Obligations; Annex F — Penalties and Enforcement Provisions);
2. CFIUS Clearance Letter (Safe Harbor), dated January 26, 2024 (CFIUS Case No. CFIUS-023-07-3841);
3. Third-Party Compliance Monitor Agreement with Whitmore Compliance Group LLC, dated January 19, 2024;
4. VPI Post-Closing Board Resolution reflecting the reconstituted five-member board of directors and establishment of the Government Security Committee, adopted February 9, 2024;
5. Halcyon US Holdings Inc. Board Resolution authorizing the consummation of the acquisition and execution of the NSA, adopted February 8, 2024;
6. Updated organizational chart showing the post-closing corporate structure (HSAG → Halcyon US Holdings Inc. → VPI), with identification of all intermediate entities; and
7. VPI Facility Security Officer designation confirmation for Col. (Ret.) Bryce Hendrickson, executed by the VPI Board of Directors, dated February 9, 2024.
We respectfully request that DCSA review this notification and the enclosed materials and confirm the continuation of VPI's Facility Security Clearance at the SECRET level, CAGE Code 7VK92, under the FOCI mitigation framework established by the NSA. We remain available to provide any additional information that DCSA may require and to arrange an in-person briefing at DCSA's convenience.
We appreciate DCSA's attention to this matter and look forward to continuing the cooperative relationship between VPI and DCSA.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Margaret "Peggy" Ashworth Of Counsel National Security & CFIUS Practice
By: ________
Lt. Col. (Ret.) David Caruso Senior Counsel Government Contracts & Export Controls Practice
On behalf of Halcyon Semiconductor Aktiengesellschaft and Marlowe Asset Management Photonics Inc.
cc (via email and overnight courier):
U.S. Department of the Treasury, Office of Investment Security
ATTN: CFIUS Monitoring, Case No. CFIUS-023-07-3841
1500 Pennsylvania Avenue NW, Washington, DC 20220
U.S. Department of Defense Office of the Under Secretary of Defense for Acquisition and Sustainment
ATTN: CFIUS Co-Lead Agency Coordination
3010 Defense Pentagon, Washington, DC 20301
U.S. Department of Energy Office of intelligence and Counterintelligence
ATTN: CFIUS Co-Lead Agency Coordination
1000 Independence Avenue SW, Washington, DC 20585
Stefan Lohse, Esq. General Counsel Halcyon Semiconductor Aktiengesellschaft Industriestraße 44, 01099 Dresden, Saxony, Germany
Dr. Nathan Trevorrow Chief Executive Officer Marlowe Asset Management Photonics Inc. 7400 Ridgeline Parkway, Colorado Springs, CO 80919
Col. (Ret.) Bryce Hendrickson, USAF Facility Security Officer Marlowe Asset Management Photonics Inc. 9200 Innovation Boulevard, Albuquerque, NM 87113
Harrison Whitfield, Esq. Wethersfield & Gale LLP (Counsel to VPI and the Selling Shareholders)
Gerald Whitmore Principal Whitmore Compliance Group LLC 1300 Crystal Drive, Suite 710, Arlington, VA 22202
Beatrice Holloway, Esq. Calderwood & Harkness LLP 1750 K Street NW, Suite 800, Washington, DC 20006
CONFIDENTIAL — This letter and the enclosed materials contain sensitive business information, export-controlled technical information references, and information subject to the terms and conditions of National Security Agreement NSA-2024-0019. Distribution is restricted to the addressee, the individuals and entities identified in the cc block, and authorized personnel of the U.S. government agencies identified herein. Unauthorized disclosure, reproduction, or distribution is prohibited.
Shareholder | Percentage of Outstanding Equity
Dr. Nathan Trevorrow and family trusts (The Trevorrow Family Trust u/a/d 03/12/2012 and The Trevorrow 2018 Irrevocable Trust) | 22.4%
Marissa Sung-Avila | 4.1%
Ridgecrest Ventures Fund III, L.P. | 31.7%
Cascadian Capital Partners Growth Fund II, L.P. | 24.3%
Employee stock option pool (vested and exercised at closing) | 11.8%
Other angel investors and early-stage individual holders | 5.7%

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