1032-00004 · Client 1032 · Engagement & Administration

engagement-letter-amendment-1.docx DOCUMENT M&A / Corporate

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PRIVILEGED & CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION

CALDERWOOD & HARKNESS LLP Attorneys at Law

399 Park Avenue, 31st Floor New York, New York 10022 Telephone: (212) 558-4000 Facsimile: (212) 558-3588 www.calderwoodharkness.com

New York · Washington, DC · London · Frankfurt · Hong Kong · Tokyo

June 20, 2023

VIA EMAIL AND FEDEX

Stefan Lohse, LL.M. General Counsel / Chefjustitiar Halcyon Semiconductor Aktiengesellschaft Industriestraße 44 01099 Dresden, Saxony Germany

Re: Amendment No. 1 to Engagement Letter dated June 12, 2023 — Expansion of Scope to Include intellectual Property and Export Control Diligence in Connection with the Acquisition of Marlowe Asset Management Photonics Inc.

Our Matter No. 1032-00004

Dear Mr. Lohse:

We are writing to confirm the agreement between Calderwood & Harkness LLP and Halcyon Semiconductor Aktiengesellschaft to expand the scope of our engagement in the above-referenced matter. This letter constitutes Amendment No. 1 to the engagement letter between our firm and your company described below.

1. Background and Recitals

This Amendment No. 1 (this "Amendment") amends and supplements the Engagement Letter dated June 12, 2023 (the "Original Engagement Letter") between Calderwood & Harkness LLP ("C&H" or the "Firm") and Halcyon Semiconductor Aktiengesellschaft ("HSAG" or the "Client").

Pursuant to the Original Engagement Letter, C&H was engaged to represent HSAG in connection with the voluntary joint filing with the Committee on Foreign Investment in the United States ("CFIUS"), the initial 45-day review of the proposed transaction, any subsequent investigation period under Section 721 of the Defense Production Act of 1950, as amended, and the negotiation of any mitigation agreement, in each case arising from HSAG's proposed acquisition of one hundred percent (100%) of the outstanding equity interests of Marlowe Asset Management Photonics Inc. ("VPI"), a Delaware corporation headquartered at 7400 Ridgeline Parkway, Colorado Springs, Colorado 80919 (the "Transaction").

The Stock Purchase Agreement governing the Transaction (the "SPA") was executed on June 10, 2023, by and among HSAG, VPI, and the Sellers identified therein, with a contemplated closing conditioned upon, among other things, the receipt of CFIUS clearance.

Following the pre-filing consultation held with the U.S. Department of the Treasury, Office of Investment Security on June 19, 2023, and the subsequent internal assessment conducted by the C&H engagement team in coordination with HSAG's internal legal and compliance teams, both parties have agreed that it is advisable to expand the scope of C&H's engagement to encompass intellectual property diligence and export control analysis in support of the CFIUS filing and related regulatory workstreams. The pre-filing consultation underscored the likelihood that CFIUS will focus particular attention on VPI's government-funded patent portfolio, its defense-article classifications under the International Traffic in Arms Regulations ("ITAR"), and the potential implications of foreign ownership on VPI's facility security clearance and its active defense contracts. Accordingly, the expanded scope described herein is intended to ensure that these critical areas are addressed comprehensively in the voluntary joint notice and in any responsive submissions to CFIUS during the review or investigation phases.

All capitalized terms used but not otherwise defined in this Amendment shall have the meanings ascribed to them in the Original Engagement Letter. This Amendment is entered into pursuant to Section 12.3 of the Original Engagement Letter, which provides that the scope of the engagement may be expanded or modified by mutual written agreement of the parties.

2. Expanded Scope of Engagement

The scope of C&H's engagement is hereby expanded to include the additional workstreams described in Sections 2.1 through 2.4 below.

2.1 intellectual Property Diligence

C&H will conduct a comprehensive review and analysis of VPI's intellectual property portfolio, with particular emphasis on the aspects of VPI's IP that are likely to be material to the CFIUS review process and any resulting mitigation framework. VPI's patent portfolio consists of forty-seven (47) granted U.S. patents and twelve (12) pending U.S. patent applications, spanning VPI's gallium nitride ("GaN") high-electron-mobility transistor ("HEMT") technology, millimeter-wave ("mmWave") amplifier designs, and related semiconductor fabrication processes. C&H's IP diligence work will focus on, but not be limited to, the following:

(a) Patent Portfolio Summary and Valuation Considerations. Preparation of a structured summary of VPI's patent portfolio, including patent family mapping, prosecution history summaries, remaining patent life analysis, and a qualitative assessment of the portfolio's strategic value as it pertains to potential CFIUS mitigation measures, including restrictions on technology transfer, licensing limitations, and carve-out or hold-separate arrangements.

(b) Government-Funded intellectual Property and Bayh-Dole Compliance. Identification of all inventions and patents that were developed in whole or in part with funding from the United States Government, and analysis of the rights retained by the Government in such subject inventions under the Bayh-Dole Act (35 U.S.C. §§ 200–212), the implementing regulations at 37 C.F.R. Part 401, and applicable DFARS clauses, including DFARS 252.227-7038 (Patent Rights—Ownership by the Contractor (Large Business)). This analysis will include an assessment of the Government's march-in rights, the scope of the Government's nonexclusive, nontransferable, irrevocable, paid-up license to practice each subject invention, and any manufacturing-preference requirements under 35 U.S.C. § 204 that may restrict the manufacture of products embodying such inventions outside the United States.

(c) Government License Rights in Subject Inventions. Analysis of the nature and scope of the Government's license rights in subject inventions developed under VPI's existing and historical government contracts, including a determination of whether any inventions may be subject to unlimited rights, government purpose rights, or limited rights under the applicable DFARS data rights clauses.

(d) IP Transfer Restrictions Under Mitigation Instruments. Assessment of the types of intellectual property transfer restrictions and technology access limitations that may be imposed under any National Security Agreement ("NSA"), Special Security Agreement ("SSA"), or Technology Control Plan ("TCP") that CFIUS may require as a condition of clearance. This assessment will draw upon precedent mitigation agreements in the semiconductor and defense-technology sectors and will inform the Firm's negotiation strategy with respect to any proposed mitigation framework.

(e) Trade Secret Management Program Review. Review of VPI's internal trade secret management program, including its policies, procedures, and controls for the protection of proprietary GaN epitaxial growth recipes, die-level reliability screening processes, process design kits ("PDKs"), and other confidential technical information. This review will assess the adequacy of VPI's trade secret protections in light of both the Defend Trade Secrets Act (18 U.S.C. § 1836) and any anticipated CFIUS mitigation requirements relating to the segregation and protection of sensitive technologies.

(f) Freedom-to-Operate Analysis. A freedom-to-operate analysis and survey of third-party patents potentially implicated by VPI's GaN HEMT and mmWave amplifier product lines, including an assessment of non-infringement positions, potential design-around opportunities, and any existing cross-license agreements or covenants not to sue that may affect VPI's operational freedom in the relevant technology space. This analysis will be conducted to a level of detail sufficient to inform the CFIUS submission and, as applicable, the Client's broader transaction diligence.

(g) iEdison Reporting Compliance. Confirmation of VPI's compliance with the iEdison Invention Reporting System requirements for all government-funded inventions, including verification that all subject inventions have been timely disclosed to the relevant funding agencies, that elections of title have been properly filed, and that patent filing deadlines have been met, in accordance with 37 C.F.R. § 401.14.

2.2 Export Control Analysis

C&H will conduct a detailed analysis of VPI's export control compliance posture and regulatory status, with a particular focus on the implications of the change of ownership resulting from the Transaction. The export control analysis will include, but not be limited to, the following:

(a) Product Classification Review. Review of VPI's product and technology classifications under both the International Traffic in Arms Regulations ("ITAR"), 22 C.F.R. Parts 120–130, and the Export Administration Regulations ("EAR"), 15 C.F.R. Parts 730–774. VPI currently manufactures and sells certain defense articles classified under Category XI(a)(3) of the United States Munitions List ("USML"), as well as commercial and dual-use items classified under Export Control Classification Numbers ("ECCNs") 3A001, 3A991, and 3E001 on the Commerce Control List ("CCL"). C&H will verify the accuracy and completeness of VPI's self-classifications, identify any items that may require commodity jurisdiction determinations or classification requests, and assess whether any reclassification may be warranted in light of recent amendments to the USML and CCL.

(b) DDTC Registration and Change-of-Ownership Notification. Analysis of VPI's registration with the Directorate of Defense Trade Controls ("DDTC") of the U.S. Department of State (Registration No. M-24817), and an assessment of the change-of-ownership notification requirements under ITAR § 122.4(a). C&H will advise on the timing, content, and procedural requirements of the required notification to DDTC and will prepare or review the draft notification for submission in coordination with VPI's counsel.

(c) Impact on Active Export Licenses. Assessment of the impact of the Transaction on VPI's three (3) active DSP-5 export licenses, which authorize the export of ITAR-controlled defense articles to NATO ally end-users in the United Kingdom and Australia. This assessment will address whether the change of ownership will require the amendment, modification, or reissuance of such licenses, and will evaluate any interim authorization mechanisms that may be available to ensure continuity of supply during the transition period.

(d) Post-Closing Reclassification Review. Identification of items, technologies, or technical data that may require reclassification review following the closing of the Transaction due to potential changes in end-use, end-user, or ultimate destination arising from HSAG's ownership structure, including any subsidiaries, affiliates, or joint venture partners of HSAG that may have access to VPI's controlled technologies.

(e) Integration of Export Control and CFIUS Mitigation Requirements. Coordination of export control compliance analysis with CFIUS mitigation requirements, including the development of recommendations for any Technology Control Plan ("TCP") or similar instrument that may be required as a component of a National Security Agreement. C&H will work to ensure that the TCP framework is consistent with VPI's ongoing export control obligations and does not create conflicting compliance requirements.

2.3 Government Contracts Support

C&H will provide government contracts analysis in support of the CFIUS process and the broader Transaction, including the following:

(a) FAR Novation Analysis. Analysis of the novation requirements applicable to VPI's fourteen (14) active contracts with the U.S. Department of Defense under Federal Acquisition Regulation ("FAR") 42.12, including assessment of the aggregate contract backlog of approximately $193 million. C&H will advise on the procedural requirements for obtaining novation agreements from the responsible contracting officers, the timing and sequencing of novation requests relative to the CFIUS process, and any interim operating arrangements that may be required to ensure continuity of contract performance pending completion of the novation process.

(b) Foreign Ownership Disclosure. Assessment of HSAG's disclosure obligations under DFARS 252.209-7002 (Disclosure of Ownership or Control by a Foreign Government), including a determination of whether HSAG or any of its direct or indirect shareholders constitutes a "foreign government" within the meaning of the clause, and preparation of the required disclosures for submission to the applicable contracting officers.

(c) Facility Security Clearance Transition. Analysis of the Facility Security Clearance ("FCL") transition requirements under the regulations and guidance of the Defense Counterintelligence and Security Agency ("DCSA") for VPI's cleared facility located in Albuquerque, New Mexico (CAGE Code 7VK92), which currently holds a SECRET-level FCL. C&H will advise on the requirements for maintaining VPI's FCL under foreign ownership, including the potential need for a proxy agreement, voting trust, or special security agreement under NISPOM 32 C.F.R. Part 117, and will coordinate this analysis with the CFIUS mitigation workstream.

2.4 Clarification Regarding Scope

For the avoidance of doubt, the expanded scope described in Sections 2.1 through 2.3 above supplements, and does not replace or supersede, the CFIUS filing and mitigation scope described in the Original Engagement Letter. The expanded scope encompasses the preparation of legal memoranda, analyses, summaries, and advisory communications related to the foregoing areas as they pertain to the CFIUS process, including without limitation: (i) the voluntary joint notice to be filed with CFIUS and the supporting documentary exhibits thereto; (ii) responses to any Requests for Information ("RFIs") issued by CFIUS during the review or investigation periods; (iii) the negotiation of any National Security Agreement, Special Security Agreement, Technology Control Plan, or other mitigation instrument; and (iv) coordination with the Client and VPI's counsel on regulatory submissions and compliance planning related to the foregoing.

3. Additional Engagement Team Members

3.1 New Team Members

The following attorneys are hereby added to the C&H engagement team for this matter:

(a) Omar Siddiqui, Lead Associate, intellectual Property Practice Group, based in C&H's Washington, DC office located at 1750 K Street NW, Suite 800, Washington, DC 20006. Mr. Siddiqui will serve as the lead attorney for the intellectual property diligence workstream described in Section 2.1 above. Mr. Siddiqui is a registered patent attorney with the U.S. Patent and Trademark Office and holds a Bachelor of Science in Electrical Engineering from Purdue University. His practice focuses on patent portfolio strategy, IP due diligence in M&A transactions, and technology licensing, with particular experience in the semiconductor and defense-technology sectors.

(b) Christy Bauer, Working Associate, intellectual Property Practice Group, based in C&H's Washington, DC office located at 1750 K Street NW, Suite 800, Washington, DC 20006. Ms. Bauer will support the IP diligence workstream and will assist with the export control classification analysis described in Section 2.2 above. Ms. Bauer holds a Bachelor of Science in Materials Science and Engineering from the Georgia Institute of Technology and has experience in patent prosecution and freedom-to-operate analysis in the compound semiconductor space.

3.2 Continuing Team Members

The following team members, who were assigned under the Original Engagement Letter and the Staffing Memorandum dated June 14, 2023, continue on the engagement and remain responsible for their respective workstreams as previously described:

(a) Beatrice Holloway, Partner, Mergers & Acquisitions Practice Group, New York office — Responsible Partner for all aspects of the engagement.

(b) James Prentice, Partner, Mergers & Acquisitions Practice Group, New York office — Billing Partner for all engagement phases.

(c) Margaret "Peggy" Ashworth, Of Counsel, National Security & CFIUS Practice Group, Washington, DC office — Lead attorney for the CFIUS filing, review, and mitigation workstream.

(d) Lt. Col. (Ret.) David Caruso, Senior Counsel, Government Contracts & Export Controls Practice Group, Washington, DC office — Lead attorney for the government contracts and export control workstreams.

(e) Priya Venkataraman, Associate, International Trade & Sanctions Practice Group, Washington, DC office — Supporting attorney for CFIUS filing preparation and international trade analysis.

(f) Kenneth Morales, Associate, Corporate / M&A Practice Group, New York office — Supporting attorney for corporate and M&A transactional matters.

3.3 Team Coordination

Mr. Siddiqui will report to Ms. Holloway on all matters relating to overall matter management, strategic direction, and client communications. Mr. Siddiqui will coordinate directly with Ms. Ashworth and Mr. Caruso on the integration of intellectual property and export control findings into the CFIUS workstream, including the incorporation of IP and export control analysis into the voluntary joint notice, responses to CFIUS RFIs, and any mitigation negotiations. Ms. Bauer will report to Mr. Siddiqui on all work assignments and deliverables within the IP and export control workstreams.

Mr. Prentice continues as the billing partner for all phases of the engagement, including the expanded scope described in this Amendment, and will serve as the primary point of contact for all billing and fee-related inquiries.

4. Fee Arrangements

4.1 Hourly Rates for New Team Members

The hourly rates applicable to the new team members added under this Amendment are as follows:

These rates are consistent with the rate structure set forth in Section 5 of the Original Engagement Letter, which provides for the following standard billing rates for this engagement: partners at $1,450 per hour; of counsel at $1,250 per hour; senior counsel at $1,150 per hour; and associates at $850 to $975 per hour, depending on seniority. The foregoing rates are subject to annual adjustment in accordance with the Firm's standard rate adjustment practices, as described in the Original Engagement Letter.

4.2 CFIUS Fee Cap

The CFIUS fee cap of Three Million Eight Hundred Thousand Dollars ($3,800,000) (exclusive of disbursements and out-of-pocket expenses), as established in Section 5.2 of the Original Engagement Letter, remains unchanged and in full force and effect.

Time billed by Mr. Siddiqui and Ms. Bauer for work falling within the CFIUS scope — that is, intellectual property and export control analysis performed in direct support of the CFIUS filing, the 45-day review, any subsequent investigation, responses to CFIUS Requests for Information, and the negotiation of any National Security Agreement, Special Security Agreement, Technology Control Plan, or other mitigation instrument — shall count toward the $3,800,000 CFIUS fee cap.

For the avoidance of doubt, intellectual property and export control diligence work that is ancillary to or independent from the CFIUS workstream shall be billed separately and shall not count against the CFIUS fee cap. Examples of such work include, without limitation: (i) standalone freedom-to-operate analysis conducted for the Client's general business purposes; (ii) general patent portfolio assessment or valuation work not specifically directed to the CFIUS submission or mitigation framework; (iii) post-closing export compliance advisory services not arising from CFIUS mitigation obligations; and (iv) advice on DDTC registration or export license amendment matters that would be required irrespective of the CFIUS process. The Firm will exercise reasonable professional judgment in allocating time entries between the CFIUS and non-CFIUS workstreams and will provide the Client with a monthly summary of such allocations for review and discussion.

4.3 Estimated Total Fees

Based on the expanded scope described in this Amendment and the work remaining under the Original Engagement Letter, the estimated total fees for all phases of the engagement — encompassing the M&A transaction support, intellectual property diligence, CFIUS filing and mitigation, export control analysis, and government contracts advisory — remain at Five Million Two Hundred Thousand Dollars ($5,200,000), as previously communicated to the Client in the Firm's fee estimate dated June 14, 2023. This estimate is provided for budgetary and planning purposes only and does not constitute a guarantee or cap on total fees, except with respect to the CFIUS fee cap described in Section 4.2 above. Actual fees may vary depending on the complexity and duration of the CFIUS review process, the scope and nature of any mitigation requirements, and any unforeseen issues that may arise during the course of the engagement.

4.4 Retainer. The retainer of Two Hundred Fifty Thousand Dollars ($250,000) previously deposited by the Client in connection with the Original Engagement Letter remains in the Firm's client trust account and continues to be drawn against monthly billings in accordance with Section 5.4 of the Original Engagement Letter. No additional retainer deposit is required in connection with this Amendment.

4.5 Billing Partner and Invoicing

Mr. Prentice continues as the billing partner for this engagement. All invoices will be rendered monthly and will be addressed to the attention of Stefan Lohse, General Counsel, Halcyon Semiconductor Aktiengesellschaft, at the address set forth in the addressee block above. Invoices will be transmitted electronically to the billing email address designated by the Client, with hard copies forwarded by international courier upon request. Payment terms remain net thirty (30) days from the date of invoice, as set forth in the Original Engagement Letter.

5. Relationship to Other Counsel

The Client has informed C&H that Wethersfield & Gale LLP (Harrison Whitfield, lead partner) serves as counsel to VPI and the Sellers in connection with the Transaction. C&H will coordinate with Wethersfield & Gale LLP as necessary on joint filing materials and shared diligence requests submitted to CFIUS, particularly with respect to VPI's intellectual property portfolio information, export control classification records, government contract files, and related documentation. Such coordination will be conducted in a manner consistent with the respective privilege and confidentiality obligations of each party's counsel.

The Client has further informed C&H that Schilling Frey Rechtsanwälte (Prof. Dr. Ulrich Schilling, lead partner, Berlin) serves as German counsel to HSAG and is advising on certain aspects of the Transaction under German and European Union law. C&H may consult with Schilling Frey Rechtsanwälte as necessary on cross-border intellectual property matters to the extent they involve questions of German law, EU regulatory considerations, or the interaction between U.S. and EU export control regimes. Any such consultation will be coordinated through the Client.

C&H's engagement under the Original Engagement Letter and this Amendment does not include rendering advice on German law, European Union law, or the laws of any jurisdiction outside the United States. The Client acknowledges that C&H is not qualified to practice law in any jurisdiction outside the United States and that the Client should rely on its local counsel for advice on the laws of other jurisdictions.

6. Confidentiality and Privilege

All work product, communications, memoranda, analyses, and advice generated by C&H under this Amendment are subject to the confidentiality and attorney-client privilege provisions set forth in Section 9 of the Original Engagement Letter, which are incorporated herein by reference. The Client and the Firm reaffirm their mutual obligations under those provisions.

The parties acknowledge the particular sensitivity of the information that will be shared with C&H in connection with the expanded scope of this engagement. VPI maintains classified program information in connection with certain Department of Defense contracts, ITAR-controlled technical data relating to its defense articles, and proprietary trade secrets relating to its GaN epitaxial growth processes and die-level reliability screening methodologies. C&H team members will handle all such information in strict accordance with applicable security protocols, including the requirements of the National Industrial Security Program Operating Manual ("NISPOM"), the ITAR, and the Firm's internal information security policies and procedures. Access to classified information will be limited to C&H personnel who hold the requisite U.S. Government security clearances and who have a need-to-know for the specific classified program at issue.

The Client is advised that Mr. Siddiqui and Ms. Bauer do not currently hold active U.S. Government personnel security clearances. Accordingly, their access to VPI information will be limited to unclassified materials, including unclassified patent filings, public patent databases, unclassified technical specifications, and other materials that do not contain classified national security information. In the event that access to classified information becomes necessary for the IP or export control workstreams, the Firm will coordinate with DCSA to initiate the appropriate clearance process, and in the interim, Mr. Caruso and other cleared members of the engagement team will handle any classified materials and provide direction to Mr. Siddiqui and Ms. Bauer on an unclassified basis.

7. Continuing Effect of Original Engagement Letter

All terms and conditions of the Original Engagement Letter dated June 12, 2023, including without limitation the provisions relating to the scope of the CFIUS engagement (Section 2), conflicts of interest (Section 3), fee arrangements (Section 5), disbursements (Section 6), termination (Section 7), limitation of liability (Section 8), confidentiality and privilege (Section 9), dispute resolution (Section 10), governing law (Section 11), and general provisions (Section 12), that are not expressly modified or supplemented by this Amendment No. 1 shall remain in full force and effect and shall apply to the expanded scope of engagement described herein.

In the event of any conflict or inconsistency between the terms of the Original Engagement Letter and the terms of this Amendment No. 1, the terms of this Amendment No. 1 shall control to the extent of such conflict or inconsistency.

This Amendment No. 1, together with the Original Engagement Letter, constitutes the entire agreement between C&H and HSAG with respect to the engagement described herein and supersedes all prior and contemporaneous discussions, negotiations, and agreements, whether written or oral, relating to the subject matter of this Amendment.

8. Effective Date

This Amendment No. 1 shall be effective as of June 20, 2023, and shall remain in effect for the duration of the engagement as described in the Original Engagement Letter, as supplemented by this Amendment, unless earlier terminated in accordance with Section 7 of the Original Engagement Letter.

We would be grateful if you would confirm your agreement to the terms of this Amendment by signing and returning one copy of this letter to the undersigned. A duplicate original is enclosed for your records. We look forward to continuing to work with you and the HSAG team on this important transaction.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Name: Beatrice Holloway

Title: Partner, Mergers & Acquisitions

Calderwood & Harkness LLP 399 Park Avenue, 31st Floor New York, New York 10022

ACKNOWLEDGED AND AGREED:

HALCYON SEMICONDUCTOR AKTIENGESELLSCHAFT

By: ________

Name: Stefan Lohse, LL.M.

Title: General Counsel / Chefjustitiar

Halcyon Semiconductor Aktiengesellschaft Industriestraße 44, 01099 Dresden, Saxony, Germany

Date: ________

cc: James Prentice, Billing Partner, Calderwood & Harkness LLP (New York) cc: Margaret "Peggy" Ashworth, Of Counsel, Calderwood & Harkness LLP (Washington, DC) cc: Omar Siddiqui, Associate, Calderwood & Harkness LLP (Washington, DC) cc: Dr. Maximilian Ehrhardt, Chief Executive Officer, Halcyon Semiconductor AG (for information) cc: Katarina Brückner, Chief Financial Officer, Halcyon Semiconductor AG (for information)

Enclosures:

Enclosure 1: Copy of the Original Engagement Letter dated June 12, 2023 (for reference) Enclosure 2: Updated team roster with contact information for all engagement team members

Attorney	Title	Office	Hourly Rate
Omar Siddiqui	Lead Associate	Washington, DC	$975 per hour
Christy Bauer	Working Associate	Washington, DC	$850 per hour

PRIVILEGED & CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION
CALDERWOOD & HARKNESS LLP Attorneys at Law
399 Park Avenue, 31st Floor New York, New York 10022 Telephone: (212) 558-4000 Facsimile: (212) 558-3588 www.calderwoodharkness.com
New York · Washington, DC · London · Frankfurt · Hong Kong · Tokyo
June 20, 2023
VIA EMAIL AND FEDEX
Stefan Lohse, LL.M. General Counsel / Chefjustitiar Halcyon Semiconductor Aktiengesellschaft Industriestraße 44 01099 Dresden, Saxony Germany
Re: Amendment No. 1 to Engagement Letter dated June 12, 2023 — Expansion of Scope to Include intellectual Property and Export Control Diligence in Connection with the Acquisition of Marlowe Asset Management Photonics Inc.
Our Matter No. 1032-00004
Dear Mr. Lohse:
We are writing to confirm the agreement between Calderwood & Harkness LLP and Halcyon Semiconductor Aktiengesellschaft to expand the scope of our engagement in the above-referenced matter. This letter constitutes Amendment No. 1 to the engagement letter between our firm and your company described below.
1. Background and Recitals
This Amendment No. 1 (this "Amendment") amends and supplements the Engagement Letter dated June 12, 2023 (the "Original Engagement Letter") between Calderwood & Harkness LLP ("C&H" or the "Firm") and Halcyon Semiconductor Aktiengesellschaft ("HSAG" or the "Client").
Pursuant to the Original Engagement Letter, C&H was engaged to represent HSAG in connection with the voluntary joint filing with the Committee on Foreign Investment in the United States ("CFIUS"), the initial 45-day review of the proposed transaction, any subsequent investigation period under Section 721 of the Defense Production Act of 1950, as amended, and the negotiation of any mitigation agreement, in each case arising from HSAG's proposed acquisition of one hundred percent (100%) of the outstanding equity interests of Marlowe Asset Management Photonics Inc. ("VPI"), a Delaware corporation headquartered at 7400 Ridgeline Parkway, Colorado Springs, Colorado 80919 (the "Transaction").
The Stock Purchase Agreement governing the Transaction (the "SPA") was executed on June 10, 2023, by and among HSAG, VPI, and the Sellers identified therein, with a contemplated closing conditioned upon, among other things, the receipt of CFIUS clearance.
Following the pre-filing consultation held with the U.S. Department of the Treasury, Office of Investment Security on June 19, 2023, and the subsequent internal assessment conducted by the C&H engagement team in coordination with HSAG's internal legal and compliance teams, both parties have agreed that it is advisable to expand the scope of C&H's engagement to encompass intellectual property diligence and export control analysis in support of the CFIUS filing and related regulatory workstreams. The pre-filing consultation underscored the likelihood that CFIUS will focus particular attention on VPI's government-funded patent portfolio, its defense-article classifications under the International Traffic in Arms Regulations ("ITAR"), and the potential implications of foreign ownership on VPI's facility security clearance and its active defense contracts. Accordingly, the expanded scope described herein is intended to ensure that these critical areas are addressed comprehensively in the voluntary joint notice and in any responsive submissions to CFIUS during the review or investigation phases.
All capitalized terms used but not otherwise defined in this Amendment shall have the meanings ascribed to them in the Original Engagement Letter. This Amendment is entered into pursuant to Section 12.3 of the Original Engagement Letter, which provides that the scope of the engagement may be expanded or modified by mutual written agreement of the parties.
2. Expanded Scope of Engagement
The scope of C&H's engagement is hereby expanded to include the additional workstreams described in Sections 2.1 through 2.4 below.
2.1 intellectual Property Diligence
C&H will conduct a comprehensive review and analysis of VPI's intellectual property portfolio, with particular emphasis on the aspects of VPI's IP that are likely to be material to the CFIUS review process and any resulting mitigation framework. VPI's patent portfolio consists of forty-seven (47) granted U.S. patents and twelve (12) pending U.S. patent applications, spanning VPI's gallium nitride ("GaN") high-electron-mobility transistor ("HEMT") technology, millimeter-wave ("mmWave") amplifier designs, and related semiconductor fabrication processes. C&H's IP diligence work will focus on, but not be limited to, the following:
(a) Patent Portfolio Summary and Valuation Considerations. Preparation of a structured summary of VPI's patent portfolio, including patent family mapping, prosecution history summaries, remaining patent life analysis, and a qualitative assessment of the portfolio's strategic value as it pertains to potential CFIUS mitigation measures, including restrictions on technology transfer, licensing limitations, and carve-out or hold-separate arrangements.
(b) Government-Funded intellectual Property and Bayh-Dole Compliance. Identification of all inventions and patents that were developed in whole or in part with funding from the United States Government, and analysis of the rights retained by the Government in such subject inventions under the Bayh-Dole Act (35 U.S.C. §§ 200–212), the implementing regulations at 37 C.F.R. Part 401, and applicable DFARS clauses, including DFARS 252.227-7038 (Patent Rights—Ownership by the Contractor (Large Business)). This analysis will include an assessment of the Government's march-in rights, the scope of the Government's nonexclusive, nontransferable, irrevocable, paid-up license to practice each subject invention, and any manufacturing-preference requirements under 35 U.S.C. § 204 that may restrict the manufacture of products embodying such inventions outside the United States.
(c) Government License Rights in Subject Inventions. Analysis of the nature and scope of the Government's license rights in subject inventions developed under VPI's existing and historical government contracts, including a determination of whether any inventions may be subject to unlimited rights, government purpose rights, or limited rights under the applicable DFARS data rights clauses.
(d) IP Transfer Restrictions Under Mitigation Instruments. Assessment of the types of intellectual property transfer restrictions and technology access limitations that may be imposed under any National Security Agreement ("NSA"), Special Security Agreement ("SSA"), or Technology Control Plan ("TCP") that CFIUS may require as a condition of clearance. This assessment will draw upon precedent mitigation agreements in the semiconductor and defense-technology sectors and will inform the Firm's negotiation strategy with respect to any proposed mitigation framework.
(e) Trade Secret Management Program Review. Review of VPI's internal trade secret management program, including its policies, procedures, and controls for the protection of proprietary GaN epitaxial growth recipes, die-level reliability screening processes, process design kits ("PDKs"), and other confidential technical information. This review will assess the adequacy of VPI's trade secret protections in light of both the Defend Trade Secrets Act (18 U.S.C. § 1836) and any anticipated CFIUS mitigation requirements relating to the segregation and protection of sensitive technologies.
(f) Freedom-to-Operate Analysis. A freedom-to-operate analysis and survey of third-party patents potentially implicated by VPI's GaN HEMT and mmWave amplifier product lines, including an assessment of non-infringement positions, potential design-around opportunities, and any existing cross-license agreements or covenants not to sue that may affect VPI's operational freedom in the relevant technology space. This analysis will be conducted to a level of detail sufficient to inform the CFIUS submission and, as applicable, the Client's broader transaction diligence.
(g) iEdison Reporting Compliance. Confirmation of VPI's compliance with the iEdison Invention Reporting System requirements for all government-funded inventions, including verification that all subject inventions have been timely disclosed to the relevant funding agencies, that elections of title have been properly filed, and that patent filing deadlines have been met, in accordance with 37 C.F.R. § 401.14.
2.2 Export Control Analysis
C&H will conduct a detailed analysis of VPI's export control compliance posture and regulatory status, with a particular focus on the implications of the change of ownership resulting from the Transaction. The export control analysis will include, but not be limited to, the following:
(a) Product Classification Review. Review of VPI's product and technology classifications under both the International Traffic in Arms Regulations ("ITAR"), 22 C.F.R. Parts 120–130, and the Export Administration Regulations ("EAR"), 15 C.F.R. Parts 730–774. VPI currently manufactures and sells certain defense articles classified under Category XI(a)(3) of the United States Munitions List ("USML"), as well as commercial and dual-use items classified under Export Control Classification Numbers ("ECCNs") 3A001, 3A991, and 3E001 on the Commerce Control List ("CCL"). C&H will verify the accuracy and completeness of VPI's self-classifications, identify any items that may require commodity jurisdiction determinations or classification requests, and assess whether any reclassification may be warranted in light of recent amendments to the USML and CCL.
(b) DDTC Registration and Change-of-Ownership Notification. Analysis of VPI's registration with the Directorate of Defense Trade Controls ("DDTC") of the U.S. Department of State (Registration No. M-24817), and an assessment of the change-of-ownership notification requirements under ITAR § 122.4(a). C&H will advise on the timing, content, and procedural requirements of the required notification to DDTC and will prepare or review the draft notification for submission in coordination with VPI's counsel.
(c) Impact on Active Export Licenses. Assessment of the impact of the Transaction on VPI's three (3) active DSP-5 export licenses, which authorize the export of ITAR-controlled defense articles to NATO ally end-users in the United Kingdom and Australia. This assessment will address whether the change of ownership will require the amendment, modification, or reissuance of such licenses, and will evaluate any interim authorization mechanisms that may be available to ensure continuity of supply during the transition period.
(d) Post-Closing Reclassification Review. Identification of items, technologies, or technical data that may require reclassification review following the closing of the Transaction due to potential changes in end-use, end-user, or ultimate destination arising from HSAG's ownership structure, including any subsidiaries, affiliates, or joint venture partners of HSAG that may have access to VPI's controlled technologies.
(e) Integration of Export Control and CFIUS Mitigation Requirements. Coordination of export control compliance analysis with CFIUS mitigation requirements, including the development of recommendations for any Technology Control Plan ("TCP") or similar instrument that may be required as a component of a National Security Agreement. C&H will work to ensure that the TCP framework is consistent with VPI's ongoing export control obligations and does not create conflicting compliance requirements.
2.3 Government Contracts Support
C&H will provide government contracts analysis in support of the CFIUS process and the broader Transaction, including the following:
(a) FAR Novation Analysis. Analysis of the novation requirements applicable to VPI's fourteen (14) active contracts with the U.S. Department of Defense under Federal Acquisition Regulation ("FAR") 42.12, including assessment of the aggregate contract backlog of approximately $193 million. C&H will advise on the procedural requirements for obtaining novation agreements from the responsible contracting officers, the timing and sequencing of novation requests relative to the CFIUS process, and any interim operating arrangements that may be required to ensure continuity of contract performance pending completion of the novation process.
(b) Foreign Ownership Disclosure. Assessment of HSAG's disclosure obligations under DFARS 252.209-7002 (Disclosure of Ownership or Control by a Foreign Government), including a determination of whether HSAG or any of its direct or indirect shareholders constitutes a "foreign government" within the meaning of the clause, and preparation of the required disclosures for submission to the applicable contracting officers.
(c) Facility Security Clearance Transition. Analysis of the Facility Security Clearance ("FCL") transition requirements under the regulations and guidance of the Defense Counterintelligence and Security Agency ("DCSA") for VPI's cleared facility located in Albuquerque, New Mexico (CAGE Code 7VK92), which currently holds a SECRET-level FCL. C&H will advise on the requirements for maintaining VPI's FCL under foreign ownership, including the potential need for a proxy agreement, voting trust, or special security agreement under NISPOM 32 C.F.R. Part 117, and will coordinate this analysis with the CFIUS mitigation workstream.
2.4 Clarification Regarding Scope
For the avoidance of doubt, the expanded scope described in Sections 2.1 through 2.3 above supplements, and does not replace or supersede, the CFIUS filing and mitigation scope described in the Original Engagement Letter. The expanded scope encompasses the preparation of legal memoranda, analyses, summaries, and advisory communications related to the foregoing areas as they pertain to the CFIUS process, including without limitation: (i) the voluntary joint notice to be filed with CFIUS and the supporting documentary exhibits thereto; (ii) responses to any Requests for Information ("RFIs") issued by CFIUS during the review or investigation periods; (iii) the negotiation of any National Security Agreement, Special Security Agreement, Technology Control Plan, or other mitigation instrument; and (iv) coordination with the Client and VPI's counsel on regulatory submissions and compliance planning related to the foregoing.
3. Additional Engagement Team Members
3.1 New Team Members
The following attorneys are hereby added to the C&H engagement team for this matter:
(a) Omar Siddiqui, Lead Associate, intellectual Property Practice Group, based in C&H's Washington, DC office located at 1750 K Street NW, Suite 800, Washington, DC 20006. Mr. Siddiqui will serve as the lead attorney for the intellectual property diligence workstream described in Section 2.1 above. Mr. Siddiqui is a registered patent attorney with the U.S. Patent and Trademark Office and holds a Bachelor of Science in Electrical Engineering from Purdue University. His practice focuses on patent portfolio strategy, IP due diligence in M&A transactions, and technology licensing, with particular experience in the semiconductor and defense-technology sectors.
(b) Christy Bauer, Working Associate, intellectual Property Practice Group, based in C&H's Washington, DC office located at 1750 K Street NW, Suite 800, Washington, DC 20006. Ms. Bauer will support the IP diligence workstream and will assist with the export control classification analysis described in Section 2.2 above. Ms. Bauer holds a Bachelor of Science in Materials Science and Engineering from the Georgia Institute of Technology and has experience in patent prosecution and freedom-to-operate analysis in the compound semiconductor space.
3.2 Continuing Team Members
The following team members, who were assigned under the Original Engagement Letter and the Staffing Memorandum dated June 14, 2023, continue on the engagement and remain responsible for their respective workstreams as previously described:
(a) Beatrice Holloway, Partner, Mergers & Acquisitions Practice Group, New York office — Responsible Partner for all aspects of the engagement.
(b) James Prentice, Partner, Mergers & Acquisitions Practice Group, New York office — Billing Partner for all engagement phases.
(c) Margaret "Peggy" Ashworth, Of Counsel, National Security & CFIUS Practice Group, Washington, DC office — Lead attorney for the CFIUS filing, review, and mitigation workstream.
(d) Lt. Col. (Ret.) David Caruso, Senior Counsel, Government Contracts & Export Controls Practice Group, Washington, DC office — Lead attorney for the government contracts and export control workstreams.
(e) Priya Venkataraman, Associate, International Trade & Sanctions Practice Group, Washington, DC office — Supporting attorney for CFIUS filing preparation and international trade analysis.
(f) Kenneth Morales, Associate, Corporate / M&A Practice Group, New York office — Supporting attorney for corporate and M&A transactional matters.
3.3 Team Coordination
Mr. Siddiqui will report to Ms. Holloway on all matters relating to overall matter management, strategic direction, and client communications. Mr. Siddiqui will coordinate directly with Ms. Ashworth and Mr. Caruso on the integration of intellectual property and export control findings into the CFIUS workstream, including the incorporation of IP and export control analysis into the voluntary joint notice, responses to CFIUS RFIs, and any mitigation negotiations. Ms. Bauer will report to Mr. Siddiqui on all work assignments and deliverables within the IP and export control workstreams.
Mr. Prentice continues as the billing partner for all phases of the engagement, including the expanded scope described in this Amendment, and will serve as the primary point of contact for all billing and fee-related inquiries.
4. Fee Arrangements
4.1 Hourly Rates for New Team Members
The hourly rates applicable to the new team members added under this Amendment are as follows:
These rates are consistent with the rate structure set forth in Section 5 of the Original Engagement Letter, which provides for the following standard billing rates for this engagement: partners at $1,450 per hour; of counsel at $1,250 per hour; senior counsel at $1,150 per hour; and associates at $850 to $975 per hour, depending on seniority. The foregoing rates are subject to annual adjustment in accordance with the Firm's standard rate adjustment practices, as described in the Original Engagement Letter.
4.2 CFIUS Fee Cap
The CFIUS fee cap of Three Million Eight Hundred Thousand Dollars ($3,800,000) (exclusive of disbursements and out-of-pocket expenses), as established in Section 5.2 of the Original Engagement Letter, remains unchanged and in full force and effect.
Time billed by Mr. Siddiqui and Ms. Bauer for work falling within the CFIUS scope — that is, intellectual property and export control analysis performed in direct support of the CFIUS filing, the 45-day review, any subsequent investigation, responses to CFIUS Requests for Information, and the negotiation of any National Security Agreement, Special Security Agreement, Technology Control Plan, or other mitigation instrument — shall count toward the $3,800,000 CFIUS fee cap.
For the avoidance of doubt, intellectual property and export control diligence work that is ancillary to or independent from the CFIUS workstream shall be billed separately and shall not count against the CFIUS fee cap. Examples of such work include, without limitation: (i) standalone freedom-to-operate analysis conducted for the Client's general business purposes; (ii) general patent portfolio assessment or valuation work not specifically directed to the CFIUS submission or mitigation framework; (iii) post-closing export compliance advisory services not arising from CFIUS mitigation obligations; and (iv) advice on DDTC registration or export license amendment matters that would be required irrespective of the CFIUS process. The Firm will exercise reasonable professional judgment in allocating time entries between the CFIUS and non-CFIUS workstreams and will provide the Client with a monthly summary of such allocations for review and discussion.
4.3 Estimated Total Fees
Based on the expanded scope described in this Amendment and the work remaining under the Original Engagement Letter, the estimated total fees for all phases of the engagement — encompassing the M&A transaction support, intellectual property diligence, CFIUS filing and mitigation, export control analysis, and government contracts advisory — remain at Five Million Two Hundred Thousand Dollars ($5,200,000), as previously communicated to the Client in the Firm's fee estimate dated June 14, 2023. This estimate is provided for budgetary and planning purposes only and does not constitute a guarantee or cap on total fees, except with respect to the CFIUS fee cap described in Section 4.2 above. Actual fees may vary depending on the complexity and duration of the CFIUS review process, the scope and nature of any mitigation requirements, and any unforeseen issues that may arise during the course of the engagement.
4.4 Retainer.  The retainer of Two Hundred Fifty Thousand Dollars ($250,000) previously deposited by the Client in connection with the Original Engagement Letter remains in the Firm's client trust account and continues to be drawn against monthly billings in accordance with Section 5.4 of the Original Engagement Letter. No additional retainer deposit is required in connection with this Amendment.
4.5 Billing Partner and Invoicing
Mr. Prentice continues as the billing partner for this engagement. All invoices will be rendered monthly and will be addressed to the attention of Stefan Lohse, General Counsel, Halcyon Semiconductor Aktiengesellschaft, at the address set forth in the addressee block above. Invoices will be transmitted electronically to the billing email address designated by the Client, with hard copies forwarded by international courier upon request. Payment terms remain net thirty (30) days from the date of invoice, as set forth in the Original Engagement Letter.
5. Relationship to Other Counsel
The Client has informed C&H that Wethersfield & Gale LLP (Harrison Whitfield, lead partner) serves as counsel to VPI and the Sellers in connection with the Transaction. C&H will coordinate with Wethersfield & Gale LLP as necessary on joint filing materials and shared diligence requests submitted to CFIUS, particularly with respect to VPI's intellectual property portfolio information, export control classification records, government contract files, and related documentation. Such coordination will be conducted in a manner consistent with the respective privilege and confidentiality obligations of each party's counsel.
The Client has further informed C&H that Schilling Frey Rechtsanwälte (Prof. Dr. Ulrich Schilling, lead partner, Berlin) serves as German counsel to HSAG and is advising on certain aspects of the Transaction under German and European Union law. C&H may consult with Schilling Frey Rechtsanwälte as necessary on cross-border intellectual property matters to the extent they involve questions of German law, EU regulatory considerations, or the interaction between U.S. and EU export control regimes. Any such consultation will be coordinated through the Client.
C&H's engagement under the Original Engagement Letter and this Amendment does not include rendering advice on German law, European Union law, or the laws of any jurisdiction outside the United States. The Client acknowledges that C&H is not qualified to practice law in any jurisdiction outside the United States and that the Client should rely on its local counsel for advice on the laws of other jurisdictions.
6. Confidentiality and Privilege
All work product, communications, memoranda, analyses, and advice generated by C&H under this Amendment are subject to the confidentiality and attorney-client privilege provisions set forth in Section 9 of the Original Engagement Letter, which are incorporated herein by reference. The Client and the Firm reaffirm their mutual obligations under those provisions.
The parties acknowledge the particular sensitivity of the information that will be shared with C&H in connection with the expanded scope of this engagement. VPI maintains classified program information in connection with certain Department of Defense contracts, ITAR-controlled technical data relating to its defense articles, and proprietary trade secrets relating to its GaN epitaxial growth processes and die-level reliability screening methodologies. C&H team members will handle all such information in strict accordance with applicable security protocols, including the requirements of the National Industrial Security Program Operating Manual ("NISPOM"), the ITAR, and the Firm's internal information security policies and procedures. Access to classified information will be limited to C&H personnel who hold the requisite U.S. Government security clearances and who have a need-to-know for the specific classified program at issue.
The Client is advised that Mr. Siddiqui and Ms. Bauer do not currently hold active U.S. Government personnel security clearances. Accordingly, their access to VPI information will be limited to unclassified materials, including unclassified patent filings, public patent databases, unclassified technical specifications, and other materials that do not contain classified national security information. In the event that access to classified information becomes necessary for the IP or export control workstreams, the Firm will coordinate with DCSA to initiate the appropriate clearance process, and in the interim, Mr. Caruso and other cleared members of the engagement team will handle any classified materials and provide direction to Mr. Siddiqui and Ms. Bauer on an unclassified basis.
7. Continuing Effect of Original Engagement Letter
All terms and conditions of the Original Engagement Letter dated June 12, 2023, including without limitation the provisions relating to the scope of the CFIUS engagement (Section 2), conflicts of interest (Section 3), fee arrangements (Section 5), disbursements (Section 6), termination (Section 7), limitation of liability (Section 8), confidentiality and privilege (Section 9), dispute resolution (Section 10), governing law (Section 11), and general provisions (Section 12), that are not expressly modified or supplemented by this Amendment No. 1 shall remain in full force and effect and shall apply to the expanded scope of engagement described herein.
In the event of any conflict or inconsistency between the terms of the Original Engagement Letter and the terms of this Amendment No. 1, the terms of this Amendment No. 1 shall control to the extent of such conflict or inconsistency.
This Amendment No. 1, together with the Original Engagement Letter, constitutes the entire agreement between C&H and HSAG with respect to the engagement described herein and supersedes all prior and contemporaneous discussions, negotiations, and agreements, whether written or oral, relating to the subject matter of this Amendment.
8. Effective Date
This Amendment No. 1 shall be effective as of June 20, 2023, and shall remain in effect for the duration of the engagement as described in the Original Engagement Letter, as supplemented by this Amendment, unless earlier terminated in accordance with Section 7 of the Original Engagement Letter.
We would be grateful if you would confirm your agreement to the terms of this Amendment by signing and returning one copy of this letter to the undersigned. A duplicate original is enclosed for your records. We look forward to continuing to work with you and the HSAG team on this important transaction.
Very truly yours,
CALDERWOOD & HARKNESS LLP
CALDERWOOD & HARKNESS LLP
By: ________
Name: Beatrice Holloway
Title: Partner, Mergers & Acquisitions
Calderwood & Harkness LLP 399 Park Avenue, 31st Floor New York, New York 10022
ACKNOWLEDGED AND AGREED:
HALCYON SEMICONDUCTOR AKTIENGESELLSCHAFT
By: ________
Name: Stefan Lohse, LL.M.
Title: General Counsel / Chefjustitiar
Halcyon Semiconductor Aktiengesellschaft Industriestraße 44, 01099 Dresden, Saxony, Germany
Date: ________
cc: James Prentice, Billing Partner, Calderwood & Harkness LLP (New York) cc: Margaret "Peggy" Ashworth, Of Counsel, Calderwood & Harkness LLP (Washington, DC) cc: Omar Siddiqui, Associate, Calderwood & Harkness LLP (Washington, DC) cc: Dr. Maximilian Ehrhardt, Chief Executive Officer, Halcyon Semiconductor AG (for information) cc: Katarina Brückner, Chief Financial Officer, Halcyon Semiconductor AG (for information)
Enclosures:
Enclosure 1: Copy of the Original Engagement Letter dated June 12, 2023 (for reference) Enclosure 2: Updated team roster with contact information for all engagement team members
Attorney | Title | Office | Hourly Rate
Omar Siddiqui | Lead Associate | Washington, DC | $975 per hour
Christy Bauer | Working Associate | Washington, DC | $850 per hour

PRIVILEGED & CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION

VIA EMAIL AND FEDEX

CALDERWOOD & HARKNESS LLP

CALDERWOOD & HARKNESS LLP

ACKNOWLEDGED AND AGREED:

HALCYON SEMICONDUCTOR AKTIENGESELLSCHAFT

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