EXHIBIT E
Products and Services Subject to U.S. Government Regulation
Filed as part of the Joint Voluntary Notice under 31 C.F.R. § 800.501
CFIUS Case No. CFIUS-023-07-3841
July 14, 2023
Transaction: Acquisition of 100% of the outstanding equity of Marlowe Asset Management Photonics Inc. ("VPI") by Halcyon US Holdings Inc. ("Buyer"), an indirect wholly owned subsidiary of Halcyon Semiconductor Aktiengesellschaft ("HSAG").
Prepared by: Calderwood & Harkness LLP Counsel to HSAG 1750 K Street NW, Suite 800 Washington, DC 20006
In coordination with: Wethersfield & Gale LLP Counsel to VPI 2000 Pennsylvania Avenue NW, Suite 600 Washington, DC 20006
BUSINESS CONFIDENTIAL — This document contains proprietary and export-controlled information. Not for public release. The contents of this Exhibit include information subject to the International Traffic in Arms Regulations (22 C.F.R. Parts 120–130) and the Export Administration Regulations (15 C.F.R. Parts 730–774). Unauthorized disclosure, dissemination, or reproduction of the information contained herein may result in civil and criminal penalties under applicable federal law. This document is provided solely for the use of the Committee on Foreign Investment in the United States and its constituent agencies in connection with the review of the transaction described herein.
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I. Introduction and Purpose
This Exhibit E provides a comprehensive listing and description of all products, services, and technical data designed, manufactured, or otherwise provided by Marlowe Asset Management Photonics Inc. ("VPI") that are subject to regulation under U.S. export control laws and regulations, including the International Traffic in Arms Regulations ("ITAR," 22 C.F.R. Parts 120–130), administered by the Directorate of Defense Trade Controls ("DDTC") of the U.S. Department of State, and the Export Administration Regulations ("EAR," 15 C.F.R. Parts 730–774), administered by the Bureau of Industry and Security ("BIS") of the U.S. Department of Commerce. This Exhibit is submitted as part of the Joint Voluntary Notice filed by Halcyon Semiconductor Aktiengesellschaft ("HSAG") and VPI with the Committee on Foreign Investment in the United States ("CFIUS") pursuant to 31 C.F.R. § 800.501 in connection with the proposed acquisition of 100% of the outstanding equity of VPI by Halcyon US Holdings Inc. ("Buyer"), an indirect wholly owned subsidiary of HSAG.
VPI is a corporation organized and existing under the laws of the State of Delaware, having been incorporated on February 14, 2009. VPI is headquartered at 7400 Ridgeline Parkway, Colorado Springs, Colorado 80919, and operates a manufacturing facility located at 9200 Innovation Boulevard, Albuquerque, New Mexico 87113. VPI's core business involves the design and manufacture of advanced gallium-nitride ("GaN") power amplifier chips and modules used in defense radar systems, military and commercial satellite communications systems, electronic warfare platforms, and fifth-generation ("5G") wireless telecommunications infrastructure. VPI is a recognized leader in the development of GaN-on-silicon-carbide ("GaN-on-SiC") high-electron-mobility transistor ("HEMT") technology, with particular expertise in epitaxial growth processes, device-level design and fabrication, and monolithic microwave integrated circuit ("MMIC") architectures operating across a broad range of radio frequency and millimeter-wave ("mmWave") bands.
As of the date of this Exhibit, VPI holds forty-seven (47) granted U.S. patents and twelve (12) pending U.S. patent applications relating to GaN epitaxial growth processes, HEMT device design and optimization, and mmWave power amplifier architectures. These patents and patent applications represent a substantial portfolio of intellectual property, a significant portion of which was developed under U.S. government-funded contracts and is subject to government rights provisions under 35 U.S.C. §§ 200–212 and the Defense Federal Acquisition Regulation Supplement ("DFARS") clause 252.227-7038. The controlled nature of these technologies under ITAR and EAR is described in detail in the sections that follow.
VPI currently employs a total of four hundred eighty-six (486) persons across its Colorado Springs headquarters and Albuquerque manufacturing facility. Of these, two hundred twelve (212) employees hold active U.S. government personnel security clearances, ranging from the SECRET level to the TS/SCI level. The substantial proportion of cleared personnel within VPI's workforce reflects the company's deep involvement in classified defense programs and its critical role as a supplier of key enabling technologies for U.S. national security applications. Additional information regarding VPI's cleared workforce is provided in Exhibit G to this Notice.
This Exhibit is organized into the following sections for ease of review:
(A) ITAR-controlled defense articles and defense services, including VPI's DDTC registration, USML classifications, controlled technical data, and controlled defense services (Section II);
(B) EAR-classified items, including dual-use semiconductor products and technologies classified under the Commerce Control List ("CCL") (Section III);
(C) Active export licenses held by VPI, including ITAR DSP-5 licenses and EAR license status (Section IV);
(D) VPI's Facility Security Clearance, classified contract work, and cleared personnel (Section V);
(E) Government contracts regulatory framework, including applicable FAR and DFARS clauses and cybersecurity compliance status (Section VI);
(F) Other regulatory registrations and authorizations, including VPI's export compliance program infrastructure (Section VII);
(G) Impact of the proposed transaction on VPI's regulatory status, including required notifications, license amendments, FOCI mitigation, and government contract considerations (Section VIII); and
(H) Attachments and cross-references to other exhibits filed as part of this Notice (Section IX).
The information presented in this Exhibit has been compiled based on a thorough review of VPI's export control records, product classification files, licensing records, government contract files, and compliance program documentation, and has been prepared by Calderwood & Harkness LLP, counsel to HSAG, in coordination with Wethersfield & Gale LLP, counsel to VPI.
II. International Traffic in Arms Regulations (ITAR) — Controlled Defense Articles and Defense Services
A. DDTC Registration
VPI has been registered with the U.S. Department of State, Directorate of Defense Trade Controls ("DDTC"), as a manufacturer and exporter of defense articles and furnisher of defense services since 2011. VPI's registration covers the manufacture, export, temporary import, and brokering of defense articles and the furnishing of defense services within the scope of the United States Munitions List ("USML"), as set forth in 22 C.F.R. Part 121.
The key details of VPI's DDTC registration are as follows:
DDTC Registration Number: M-24817
Registrant Name: Marlowe Asset Management Photonics Inc.
Registrant Address: 7400 Ridgeline Parkway, Colorado Springs, CO 80919
Date of Initial Registration: 2011
Current Registration Status: Active and in good standing. The most recent renewal of VPI's registration has been confirmed, and a copy of the current registration certificate is provided as Attachment E-1 to this Exhibit.
Designated Empowered Official: Col. (Ret.) Bryce Hendrickson, USAF (Ret.), Vice President of Government Programs and Facility Security Officer. Col. Hendrickson has served in this role since 2016 and is responsible for the overall management and supervision of VPI's ITAR compliance activities, including the execution of all DDTC license applications, the management of controlled technical data, and the oversight of VPI's export compliance program.
VPI's DDTC registration has been maintained without lapse since its initial filing. VPI has complied with all annual renewal requirements, has timely submitted all notifications of material changes to its registration information, and has not been the subject of any debarment proceedings, consent agreements, or civil or criminal penalties in connection with its registration or its activities as a registered manufacturer and exporter under the ITAR. The registration encompasses VPI's activities at both its Colorado Springs headquarters and its Albuquerque manufacturing facility.
B. USML Category XI — Military Electronics
1. Primary Classification: Category XI(a)(3)
VPI's principal defense articles fall within Category XI(a)(3) of the United States Munitions List, which covers electronic equipment or systems specifically designed or modified for military use, including, but not limited to, electronic warfare systems, radar systems, and related components and subsystems. VPI's GaN-based power amplifier products have been classified under this category based on their design characteristics, performance parameters, and intended military applications. These products are specifically designed for integration into military radar, satellite communications, and electronic warfare platforms and possess performance characteristics that are tailored to meet the stringent requirements of defense applications, including operation under extreme environmental conditions, resistance to radiation effects, and compliance with applicable military specifications and standards.
The following product families are classified as ITAR Category XI(a)(3) defense articles:
(i) GaN-on-SiC High-Power Amplifier Modules for Defense Radar Applications.
Product Designation: VPI-PA-Series, comprising models VPI-PA-200, VPI-PA-400, and VPI-PA-800.
Description: The VPI-PA-Series consists of multi-stage GaN-on-silicon-carbide (SiC) power amplifier modules operating in S-band (2–4 GHz) and X-band (8–12 GHz) frequency ranges. These modules are specifically designed for integration into active electronically scanned array ("AESA") radar systems. Each module incorporates VPI's proprietary GaN HEMT device technology, advanced thermal management structures, and integrated impedance matching networks optimized for pulsed radar operation. The VPI-PA-200 model delivers a nominal output power of 200 watts in continuous wave (CW) mode, while the VPI-PA-400 and VPI-PA-800 models deliver 400 watts and 800 watts, respectively, in pulsed mode with duty cycles tailored for defense radar waveforms. The modules are fabricated using VPI's proprietary GaN-on-SiC epitaxial growth process at the Albuquerque facility and are qualified to MIL-PRF-38534 (hybrid microcircuits) and MIL-STD-883 (test methods for microelectronics) standards.
Defense Application: The VPI-PA-Series modules serve as the core transmit/receive ("T/R") module components for military phased-array radar systems. These modules are currently integrated into or in development for integration into the following defense radar systems: (a) the AN/TPS-80 Ground/Air Task-Oriented Radar ("G/ATOR"), a multi-mission radar system employed by the United States Marine Corps for air defense, air surveillance, ground weapon locating, and air traffic control missions; and (b) next-generation missile defense radar systems under development for the Missile Defense Agency ("MDA"), designed to provide ballistic missile detection, tracking, discrimination, and fire control capabilities.
Active Government Contracts: The VPI-PA-Series is supplied under the following U.S. government contracts:
(a) U.S. Army CERDEC Contract: VPI serves as a prime contractor to the U.S. Army Communications-Electronics Research, Development, and Engineering Center ("CERDEC") for the design, development, and production of GaN HEMT power amplifier modules for the AN/TPS-80 radar system. The remaining contract backlog as of the date of this Exhibit is approximately $52.3 million. This contract is performed at VPI's Albuquerque facility and involves classified work at the SECRET level.
(b) Missile Defense Agency Contract: VPI serves as a prime contractor to the Missile Defense Agency for the development and production of GaN-based T/R modules for integration into next-generation missile defense radar systems. The remaining contract backlog as of the date of this Exhibit is approximately $38.9 million. This contract involves classified work at the SECRET level and, for certain portions, at the TS/SCI level, and is performed exclusively at VPI's Albuquerque facility.
Related Patents: The VPI-PA-Series products incorporate technology covered by two principal patent families owned by VPI:
(a) HEMT Gate Structure Optimization Patent Family: U.S. Patent Nos. 10,XXX,101 through 10,XXX,119 (a total of nineteen (19) granted patents), with earliest priority dates in 2015. This patent family covers VPI's proprietary gate structure designs for GaN HEMT devices, including innovations in gate recess engineering, field plate geometry, and passivation layer structures that enhance power density, gain, and reliability at elevated operating temperatures. Several of these patents were developed under U.S. government-funded research contracts and are subject to government rights under 35 U.S.C. §§ 200–212 and DFARS 252.227-7038.
(b) GaN-on-SiC Epitaxial Growth Process Patent Family: U.S. Patent Nos. 9,XXX,001 through 9,XXX,008 (a total of eight (8) granted patents), with earliest priority dates in 2012. This patent family covers VPI's proprietary metal-organic chemical vapor deposition ("MOCVD") processes for growing high-quality GaN epitaxial layers on semi-insulating SiC substrates, including innovations in nucleation layer engineering, buffer layer design for reduced defect density, and controlled doping profiles that enhance electron mobility and breakdown voltage in the resulting HEMT structures. These patents form the foundation of VPI's manufacturing process capabilities and represent core trade secrets of the company.
(ii) mmWave Power Amplifier Modules for Military Satellite Communications.
Product Designation: VPI-SAT-Series, comprising models VPI-SAT-K and VPI-SAT-Ka.
Description: The VPI-SAT-Series consists of monolithic microwave integrated circuit ("MMIC") power amplifiers operating in the K-band (18–26.5 GHz) and Ka-band (26.5–40 GHz) frequency ranges. These devices are designed specifically for military satellite communication ("MILSATCOM") terminal applications, where they provide the high-power, high-efficiency, and broadband amplification required for reliable beyond-line-of-sight ("BLOS") communications in contested electromagnetic environments. The VPI-SAT-K model operates in the K-band with a nominal output power of 20 watts per MMIC die, while the VPI-SAT-Ka model operates in the Ka-band with a nominal output power of 10 watts per MMIC die. Both models are fabricated on VPI's proprietary 0.15 μm GaN-on-SiC MMIC process and are designed to meet the stringent linearity, efficiency, and reliability requirements of military satellite uplink transmitter applications. The devices are qualified to MIL-PRF-38534 Class K standards and have been tested for radiation hardness to levels consistent with military satellite communication requirements.
Defense Application: The VPI-SAT-Series devices are integrated into ground-based and airborne satellite communication terminals used by U.S. military forces for beyond-line-of-sight communications, including tactical terminals employed by forward-deployed military units and airborne platforms requiring secure, high-bandwidth satellite connectivity for intelligence, surveillance, and reconnaissance ("ISR") missions. These terminals operate within the Wideband Global SATCOM ("WGS") and Advanced Extremely High Frequency ("AEHF") satellite constellations, among others. The VPI-SAT-Series devices are supplied to U.S. military prime contractors for integration into terminal systems.
Related Patents: The VPI-SAT-Series products incorporate technology covered by the following patent family:
mmWave Broadband Matching Network Patent Family: U.S. Patent Nos. 11,XXX,201 through 11,XXX,220 (a total of twenty (20) granted patents), with earliest priority dates in 2018. This patent family covers VPI's proprietary broadband impedance matching network designs for mmWave MMIC power amplifiers, including innovations in distributed matching topologies, on-chip bias tee structures, and novel output combining architectures that enable high power-added efficiency across wide fractional bandwidths in the K-band and Ka-band. These matching network designs are critical to achieving the performance levels required for military satellite communication applications and represent significant advances over the prior art in mmWave GaN MMIC design.
(iii) Electronic Warfare (EW) Amplifier Subsystems.
Product Designation: VPI-EW-Series.
Description: The VPI-EW-Series consists of broadband GaN power amplifier subsystems specifically designed for electronic countermeasure ("ECM") and electronic support measure ("ESM") applications. These subsystems incorporate VPI's proprietary wideband GaN HEMT devices with advanced multi-octave bandwidth amplifier topologies to achieve the extremely broad instantaneous bandwidth coverage required for electronic warfare missions. The VPI-EW-Series subsystems cover frequency ranges spanning from 2 GHz to 18 GHz in a single subsystem package, with output power levels sufficient for effective jamming of threat radar and communications systems. The subsystems include integrated power conditioning, thermal management, and built-in test ("BIT") functionality, and are designed for integration into rack-mounted or pod-mounted electronic warfare suites. The devices are qualified to MIL-STD-810 for environmental stress screening and MIL-STD-461 for electromagnetic compatibility.
Defense Application: The VPI-EW-Series amplifier subsystems serve as jammer and receiver front-end components for airborne and ground-based electronic warfare platforms. These subsystems are designed to provide both reactive and pre-emptive jamming capabilities against a wide range of threat emitters, as well as sensitive receiver front-end amplification for electronic support and signals intelligence applications. The VPI-EW-Series is currently supplied under subcontract to Ironclad Defense Systems Inc., which serves as the prime contractor to the U.S. Navy Naval Sea Systems Command ("NAVSEA") for a surface electronic warfare system modernization program. The remaining contract backlog for VPI's subcontract work on this program, as of the date of this Exhibit, is approximately $34.1 million. This contract involves classified work at the SECRET level.
2. ITAR-Controlled Technical Data
VPI possesses and controls substantial quantities of technical data related to the defense articles described above, as that term is defined under 22 C.F.R. § 120.33 of the ITAR. Under the ITAR, "technical data" means information required for the design, development, production, manufacture, assembly, operation, repair, testing, maintenance, or modification of defense articles, including information in the form of blueprints, drawings, photographs, plans, instructions, or documentation. The categories of controlled technical data maintained by VPI include, but are not limited to, the following:
(a) Design Specifications: Detailed design documentation for all VPI-PA-Series, VPI-SAT-Series, and VPI-EW-Series defense articles, including circuit schematics, layout files, electromagnetic simulation models, mechanical drawings, and thermal analysis reports.
(b) Performance Parameters: Measured and simulated performance data for all defense articles, including power output, gain, efficiency, linearity, noise figure, bandwidth, and reliability parameters, as well as environmental test data (temperature, vibration, shock, humidity, altitude, and radiation exposure).
(c) Manufacturing Process Documentation: Detailed process flow documents, work instructions, and process control specifications for GaN epitaxial growth (MOCVD recipes), device fabrication (photolithography, etching, metallization, passivation, via formation, and wafer thinning), and module assembly and packaging processes.
(d) Test and Qualification Data: Comprehensive test and qualification reports for military-specification components, including data generated during qualification testing to MIL-PRF-38534, MIL-STD-883, MIL-STD-810, and MIL-STD-461, as well as ongoing lot acceptance test data and reliability monitoring data.
(e) Software Source Code: Source code for amplifier control systems, built-in test algorithms, and digital pre-distortion ("DPD") firmware used in VPI's defense article products. This software is specifically designed for use with VPI's defense articles and constitutes technical data under the ITAR.
In addition to the foregoing, VPI maintains thirty-one (31) registered internal trade secrets that are primarily related to proprietary GaN epitaxial growth recipes, die-level reliability screening processes, and advanced HEMT device design methodologies. These trade secrets constitute controlled technical data under the ITAR insofar as they relate to defense articles listed on the USML. VPI's trade secret protection program includes physical access controls, information security measures, confidentiality agreements with employees and contractors, and compartmentalized access protocols that limit exposure of specific trade secrets to only those personnel with a demonstrated need-to-know.
Twenty-three (23) of VPI's forty-seven (47) granted U.S. 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 DFARS clause 252.227-7038 (Patent Rights — Ownership by the Contractor (Large Business)). While VPI retains title to these inventions, the U.S. government holds a nonexclusive, nontransferable, irrevocable, paid-up license to practice or have practiced these inventions on behalf of the United States. The technical data embodied in these patents, including the specifications, drawings, and other technical information disclosed therein, is also subject to ITAR controls where the underlying articles are USML-listed defense articles. VPI has maintained appropriate markings and distribution controls on all patent-related technical data to ensure compliance with both ITAR and government rights obligations.
3. ITAR-Controlled Defense Services
VPI provides defense services, as defined under 22 C.F.R. § 120.32 of the ITAR, in connection with the defense articles described above. Under the ITAR, "defense services" include the furnishing of assistance (including training) to foreign persons, whether in the United States or abroad, in the design, development, engineering, manufacture, production, assembly, testing, repair, maintenance, modification, operation, demilitarization, destruction, processing, or use of defense articles. VPI's defense services activities include the following:
(a) Technical Assistance to U.S. Government Customers: VPI provides ongoing technical assistance to U.S. government program offices, prime contractors, and system integrators in connection with the integration and fielding of GaN amplifier modules and subsystems into military platforms. This technical assistance includes engineering consultations, design reviews, integration support, and field support for operational testing and evaluation.
(b) Engineering Support for System-Level Performance Optimization: VPI provides engineering support services to its defense customers for the optimization of system-level performance in radar, MILSATCOM, and electronic warfare applications. This includes the provision of detailed technical data, application notes, thermal modeling services, and electromagnetic compatibility analysis to enable effective integration of VPI's products into complex military systems.
(c) Failure Analysis and Reliability Testing Services: VPI operates a failure analysis laboratory at its Albuquerque facility and provides failure analysis and reliability testing services to U.S. government customers and defense prime contractors. These services include destructive and non-destructive evaluation of failed or degraded GaN devices, root cause analysis, accelerated life testing, and reliability prediction modeling.
All defense services provided by VPI are performed exclusively by U.S. persons (as defined in 22 C.F.R. § 120.62) at VPI's facilities in Colorado Springs, Colorado, and Albuquerque, New Mexico. VPI does not currently furnish defense services to any foreign persons or foreign governments, except as specifically authorized under the active DSP-5 licenses described in Section IV of this Exhibit.
C. USML Categories — Summary Table
The following table provides a summary of VPI's ITAR-controlled defense articles, technical data, and defense services by USML category and subcategory:
A more detailed classification table for all VPI product families, including model-level classifications and performance parameter summaries, is provided as Attachment E-2 to this Exhibit.
III. Export Administration Regulations (EAR) — Classified Items
A. Overview of EAR-Controlled Products
In addition to the ITAR-controlled defense articles described in Section II above, VPI designs and manufactures a range of dual-use semiconductor products and technologies that are classified under the Commerce Control List ("CCL") of the Export Administration Regulations. These dual-use products leverage VPI's core GaN technology platform but are designed and marketed for commercial applications, including fifth-generation ("5G") wireless telecommunications infrastructure, commercial satellite communications systems, and industrial radar and sensing applications. While these products are not specifically designed for military end use and do not appear on the United States Munitions List, they incorporate advanced semiconductor technologies that exceed the performance thresholds established by the CCL and are therefore subject to export controls administered by the Bureau of Industry and Security ("BIS") of the U.S. Department of Commerce.
VPI has self-classified the following products and technologies under the applicable Export Control Classification Numbers ("ECCNs") based on the technical parameters and capabilities of each item, in accordance with the classification criteria set forth in the relevant category of the CCL. VPI's self-classifications are based on a careful review of the applicable control parameters, including operating frequency, output power, efficiency, and other relevant performance metrics, and are consistent with VPI's understanding of BIS classification guidance and interpretive rulings. VPI has not sought formal commodity classification determinations from BIS for the items described below but is prepared to do so if requested by CFIUS or BIS.
B. ECCN 3A001 — Electronic Components
1. Classification Basis
Export Control Classification Number 3A001 covers certain types of electronic components, including microwave or millimeter wave devices and semiconductor devices, that exceed specified performance parameters set forth in the CCL. ECCN 3A001 is controlled for National Security ("NS") and Anti-Terrorism ("AT") reasons and requires an export license from BIS for shipments to a number of destinations, including countries in Country Groups D:1 (national security-controlled countries) and D:5 (U.S. arms-embargoed countries), subject to applicable license exceptions.
The following VPI product families are classified under ECCN 3A001:
(i) Commercial-Grade GaN HEMT Devices.
Product Designation: VPI-CG-Series, comprising various discrete device models designed for commercial 5G base station infrastructure applications.
Description: The VPI-CG-Series consists of discrete GaN high-electron-mobility transistor ("HEMT") devices designed and optimized for use in commercial 5G base station power amplifiers, including both macro cell and small cell configurations. These devices are fabricated using VPI's GaN-on-SiC process technology and are offered in standard commercial packaging formats (e.g., flange-mount, surface-mount, and bare die). The VPI-CG-Series devices operate across sub-6 GHz frequency bands (including the 3.3–3.8 GHz and 4.4–5.0 GHz bands commonly used in 5G deployments) and mmWave frequency bands (including the 24–28 GHz and 37–40 GHz bands). The devices deliver output power levels ranging from 10 watts to 100 watts depending on the specific model, frequency band, and operating mode.
Performance Parameters: The performance parameters of the VPI-CG-Series devices exceed the thresholds specified in ECCN 3A001 for controlled semiconductor devices, including thresholds related to maximum operating frequency, output power, and power-added efficiency. Specifically, the mmWave variants of the VPI-CG-Series deliver output power levels and operating frequencies that exceed the control thresholds set forth in ECCN 3A001.b.2 (microwave transistors) and related sub-entries.
Reason for Control: National Security (NS), Anti-Terrorism (AT).
Commercial Applications: 5G macro cell and small cell base stations, commercial wireless infrastructure, point-to-point microwave backhaul links.
(ii) Dual-Use GaN Power Amplifier Modules.
Product Designation: VPI-DU-Series.
Description: The VPI-DU-Series consists of multi-chip module ("MCM") GaN power amplifiers designed for commercial satellite communication ground terminals and commercial radar applications, including weather radar, air traffic control radar, and marine navigation radar. These modules incorporate multiple GaN MMIC devices in a single hermetically sealed package with integrated power combining, bias sequencing, and thermal management. The VPI-DU-Series modules operate in C-band (4–8 GHz), X-band (8–12 GHz), Ku-band (12–18 GHz), and Ka-band (26.5–40 GHz) frequency ranges, depending on the specific model and application.
Dual-Use Considerations: While the VPI-DU-Series modules are designed and marketed for commercial applications, the underlying GaN MMIC technology and the performance characteristics of these modules (including output power, efficiency, bandwidth, and environmental robustness) are such that these items have both commercial and potential military end uses. Accordingly, VPI has classified the VPI-DU-Series under ECCN 3A001, and exports of these items are subject to the license requirements applicable to ECCN 3A001 items.
Reason for Control: National Security (NS), Anti-Terrorism (AT).
2. License Requirements under ECCN 3A001
Exports of items classified under ECCN 3A001 require a license from the Bureau of Industry and Security for destinations in Country Groups D:1 and D:5, among other destinations identified in the Commerce Country Chart (Supplement No. 1 to Part 738 of the EAR). Additionally, items classified under ECCN 3A001 are subject to enhanced controls for end users identified on the Entity List (Supplement No. 4 to Part 744 of the EAR), the Military End-Use / Military End-User restrictions set forth in 15 C.F.R. § 744.21, and the foreign direct product rules set forth in 15 C.F.R. § 734.9, as applicable.
VPI has not applied for or received any individual export licenses from BIS under ECCN 3A001. All commercial exports of VPI-CG-Series and VPI-DU-Series products to date have been made to destinations eligible for License Exception Strategic Trade Authorization ("STA") (15 C.F.R. § 740.20) or other applicable license exceptions. VPI's commercial customer base for EAR-controlled products is located exclusively in allied nations, including member states of the North Atlantic Treaty Organization ("NATO") and the nations of Australia, Japan, and the Republic of Korea — all of which are eligible destinations under License Exception STA. VPI has maintained detailed records of all exports made under License Exception STA, including consignee statements and end-use certifications, in accordance with the requirements of 15 C.F.R. § 740.20 and the general record-keeping requirements of 15 C.F.R. Part 762.
C. ECCN 3A991 — Electronic Devices and Components Not Controlled by 3A001
Product Designation: VPI-IND-Series.
Description: The VPI-IND-Series consists of lower-performance GaN and GaN-on-silicon ("GaN-on-Si") discrete devices and modules designed for industrial and commercial telecommunications applications. These products do not meet the performance thresholds that would bring them within the scope of ECCN 3A001 but are nonetheless controlled under ECCN 3A991, which covers electronic devices and components that are not specified in ECCN 3A001 but that are designed for certain commercial applications and exceed baseline performance parameters. The VPI-IND-Series includes devices operating at frequencies below 6 GHz with output power levels that fall below the ECCN 3A001 thresholds, as well as GaN-on-Si devices that utilize a lower-cost, lower-performance substrate technology compared to VPI's GaN-on-SiC platform.
Reason for Control: Anti-Terrorism (AT).
License Requirements: The license requirements for ECCN 3A991 items are limited. Most destinations are eligible for export under NLR ("No License Required") designations or applicable license exceptions. BIS licenses are required only for exports to embargoed destinations (e.g., Cuba, Iran, North Korea, Syria) and for transactions involving denied parties. VPI has exported VPI-IND-Series products to a range of commercial customers worldwide under NLR and applicable license exceptions, maintaining records of all such transactions in accordance with 15 C.F.R. Part 762.
D. ECCN 3E001 — Technology for Production of Items Controlled by 3A001
ECCN 3E001 controls "technology" (as defined in 15 C.F.R. § 772.1) that is "required" (as defined in the General Technology Note in Supplement No. 2 to Part 774 of the EAR) for the "development" or "production" of items controlled under ECCN 3A001. The term "technology" encompasses specific information necessary for the development, production, or use of a product, and may take the form of technical data (including blueprints, plans, diagrams, models, formulae, tables, engineering designs and specifications, manuals, and instructions written or recorded on other media or devices) or technical assistance (including instruction, skills, training, working knowledge, or consulting services).
VPI's proprietary technology related to GaN epitaxial growth processes, HEMT device fabrication, and MMIC design methodologies is classified under ECCN 3E001. This classification encompasses the following categories of controlled technology:
(a) GaN Epitaxial Growth Process Technology: VPI's proprietary MOCVD recipes, process parameters, growth rate models, defect density control methods, and in-situ monitoring techniques for the growth of high-quality GaN epitaxial layers on SiC substrates. This technology is the foundation of VPI's manufacturing capability and represents the company's most closely guarded trade secrets.
(b) HEMT Device Fabrication Technology: VPI's proprietary device fabrication process flows, including photolithography masks and process recipes, gate recess etch processes, ohmic contact formation techniques, field plate deposition methods, passivation layer processes, via formation and substrate thinning processes, and back-side metallization techniques.
(c) MMIC Design Methodologies: VPI's proprietary circuit design libraries, device models (including nonlinear device models, thermal models, and electromagnetic simulation models), layout design rules, and design-for-manufacturing guidelines for GaN MMIC power amplifiers. These design methodologies embody VPI's accumulated engineering know-how and enable the efficient design of high-performance MMIC power amplifiers across a wide range of frequency bands and power levels.
This technology is maintained as trade secrets and is documented in VPI's internal engineering databases, process control documents, and patent documentation. The technology classified under ECCN 3E001 is subject to the deemed export rules set forth in 15 C.F.R. § 734.13, which provide that a release of controlled technology to a foreign national within the United States is deemed to be an export to the foreign national's country of citizenship or permanent residence. VPI maintains a comprehensive Technology Control Plan ("TCP") for managing access to ECCN 3E001-controlled technology by any foreign national employees. As of the date of this Exhibit, VPI does not employ any foreign national personnel in positions that would provide access to ECCN 3E001-controlled technology; however, VPI's TCP establishes the procedures, access controls, and management oversight necessary to ensure compliance with deemed export requirements in the event that foreign national personnel are employed in the future.
The license requirements for ECCN 3E001 technology are the same as those applicable to the underlying ECCN 3A001 items for which the technology is required. Additionally, ECCN 3E001 technology is subject to enhanced controls for certain destinations and end users, including restrictions under the Entity List (Supplement No. 4 to Part 744) and the Military End-Use / Military End-User rules (15 C.F.R. § 744.21).
E. EAR-Classified Items — Summary Table
The following table provides a summary of VPI's EAR-classified items by ECCN, description, reason for control, and license-required destinations:
A detailed product-level classification table, including specific ECCN sub-entries and applicable control parameters for each VPI product model, is provided as Attachment E-2 to this Exhibit.
IV. Active Export Licenses
A. ITAR Licenses (DSP-5)
VPI currently holds three (3) active DSP-5 permanent export licenses issued by the Directorate of Defense Trade Controls, authorizing the export of ITAR-controlled defense articles and, in one case, technical data and defense services, to specified NATO allies. These licenses were obtained by VPI in the ordinary course of its business to support defense cooperation programs with close U.S. allies and were issued following full DDTC review, including end-use verification and required interagency consultations. A summary of each active DSP-5 license is provided in the table below:
All three DSP-5 licenses include standard DDTC provisos and conditions, including, but not limited to, restrictions on re-transfer and re-export to third countries, requirements for end-use monitoring, prohibitions on unauthorized disclosure of technical data to non-authorized persons, and reporting obligations for any changes in end-use or end-user. VPI has complied with all provisos and conditions attached to these licenses and has submitted all required post-export reports and notifications to DDTC.
VPI's compliance with the terms and conditions of these DSP-5 licenses is overseen by Col. (Ret.) Bryce Hendrickson in his capacity as the designated empowered official under 22 C.F.R. § 120.25. Col. Hendrickson personally reviews and approves all export shipments and technical data transfers made under these licenses, maintains detailed records of all authorized transactions, and conducts periodic audits to ensure ongoing compliance. Copies of the three active DSP-5 license approvals, redacted as necessary to protect classified content and proprietary information, are provided as Attachment E-3 to this Exhibit.
Note Regarding Change of Ownership: Under ITAR § 122.4(a), a registrant is required to notify DDTC within sixty (60) days of any change in the information previously furnished in the registration statement, including changes in ownership or control of the registrant. The proposed acquisition of VPI by HSAG through Halcyon US Holdings Inc. will constitute a change in ownership and control of VPI and will therefore necessitate notification to DDTC and amendment of VPI's DDTC registration to reflect the new ownership structure. In addition, the change of ownership will require amendment of all three active DSP-5 licenses to reflect the new foreign ownership of VPI, as the identity and nationality of the persons exercising ownership or control over the registrant/licensee is material to DDTC's licensing determinations. Calderwood & Harkness LLP and Wethersfield & Gale LLP have assessed the notification and amendment requirements under the ITAR and will coordinate the preparation and filing of all required notifications and license amendment requests with DDTC in connection with the closing of the proposed transaction. The parties anticipate that these filings will be made promptly following the completion of the CFIUS review process and, where possible, concurrently with the CFIUS process to minimize delays in the transition of regulatory authorizations.
B. EAR Licenses
VPI does not currently hold any individual export licenses issued by the Bureau of Industry and Security under the Export Administration Regulations. As described in Section III.B.2 above, all exports of EAR-controlled items made by VPI to date have been conducted under applicable license exceptions (primarily License Exception STA for exports of ECCN 3A001 items to allied-nation destinations) or under NLR designations for items classified under ECCN 3A991 or EAR99. VPI has maintained comprehensive records of all EAR-controlled exports, including documentation of the applicable license exception or NLR basis, end-user and end-use information, product descriptions and quantities, and shipping documentation, in accordance with the record-keeping requirements of 15 C.F.R. Part 762. These records are maintained for a minimum period of five (5) years from the date of export, consistent with the requirements of 15 C.F.R. § 762.6.
V. Facility Security Clearance and Classified Programs
A. Facility Security Clearance (FCL)
VPI holds a Facility Security Clearance ("FCL") at the SECRET level, issued by the Defense Counterintelligence and Security Agency ("DCSA"), formerly known as the Defense Security Service ("DSS"). The FCL authorizes VPI to access, receive, store, process, and generate classified information up to the SECRET level, and to perform classified contract work for the U.S. Department of Defense and other cleared federal agencies. The key details of VPI's FCL are as follows:
CAGE Code: 7VK92
Cleared Facility Location: 9200 Innovation Boulevard, Albuquerque, New Mexico 87113. This facility is VPI's primary manufacturing site and comprises approximately 45,000 square feet of cleanroom and laboratory space dedicated to GaN-on-SiC wafer fabrication, device processing, module assembly, and testing. The Albuquerque facility includes designated secure areas for the performance of classified work, as described further in Section V.C below.
Clearance Level: SECRET
Facility Security Officer (FSO): Col. (Ret.) Bryce Hendrickson, USAF (Ret.), Vice President of Government Programs and Facility Security Officer. Col. Hendrickson holds an active TS/SCI personnel security clearance and is responsible for the overall management and administration of VPI's industrial security program, including the protection of classified information and materials, the processing and management of personnel security clearances, the administration of visitor control procedures, and the conduct of security education and awareness training for all VPI employees.
VPI's FCL is maintained in accordance with the requirements of the National Industrial Security Program ("NISP"), as set forth in the National Industrial Security Program Operating Manual ("NISPOM," 32 C.F.R. Part 117) and implemented through VPI's internal Standard Practice Procedures ("SPPs"). VPI's FCL has been continuously maintained since its initial issuance, and VPI has received satisfactory ratings in all DCSA security vulnerability assessments conducted to date.
B. Cleared Personnel
VPI employs two hundred twelve (212) personnel who hold active U.S. government personnel security clearances, out of a total workforce of four hundred eighty-six (486) employees. This represents approximately 43.6% of VPI's total workforce. Clearances are held at the SECRET level and the TS/SCI level, with the specific distribution of clearances by level reflecting the requirements of VPI's classified programs and contracts.
The cleared workforce is concentrated at VPI's Albuquerque manufacturing facility, where classified contract work is performed, although a number of cleared personnel are also based at VPI's Colorado Springs headquarters in management, engineering, and program management roles that require access to classified information. All cleared personnel have undergone background investigations conducted by DCSA (or its predecessor agency) and have been granted clearances in accordance with the Adjudicative Guidelines for Determining Eligibility for Access to Classified Information (Security Executive Agent Directive 4).
A separate anonymized summary of VPI's cleared personnel, broken down by clearance level and program affiliation, is provided in Exhibit G to this Notice. That summary does not identify individual cleared personnel by name but provides sufficient detail to enable the Committee to assess the scope and nature of VPI's cleared workforce.
C. Classified Contract Work
VPI performs classified work under several of its fourteen (14) active U.S. Department of Defense contracts, in its capacity as both a prime contractor and a subcontractor. All classified contract work is performed exclusively at VPI's Albuquerque facility (CAGE Code 7VK92) in designated secure work areas located in cleanroom Sections C-7 through C-12. These sections have been accredited by DCSA for the storage, processing, and generation of classified information and materials at the SECRET level, and certain portions have been accredited for TS/SCI-level work in connection with specific classified programs.
Key classified programs in which VPI participates include, but are not limited to:
(a) Missile Defense Agency Programs: VPI performs classified work in support of the Missile Defense Agency's next-generation ballistic missile defense radar programs, including the development and production of GaN-based T/R modules with performance characteristics that are classified at the SECRET and, for certain parameters, TS/SCI levels.
(b) AFRL Next-Generation Radar and Amplifier Programs: VPI participates in classified research and development programs sponsored by the U.S. Air Force Research Laboratory ("AFRL") focused on the development of advanced GaN power amplifier technologies for next-generation airborne and ground-based radar systems. These programs involve the development of novel device architectures and manufacturing processes that push the boundaries of GaN HEMT performance and are classified due to the sensitive nature of the performance targets and intended military applications.
All classified material generated, received, stored, or processed by VPI is handled in strict accordance with the National Industrial Security Program Operating Manual (NISPOM, 32 C.F.R. Part 117). VPI's security procedures include controlled access to classified work areas through two-person integrity controls and electronic access systems, secure storage of classified documents and materials in GSA-approved security containers, classified information systems accredited under the NISPOM, and comprehensive security education and awareness training for all cleared personnel. VPI maintains a robust insider threat program in accordance with NISPOM requirements and conducts regular self-inspections of its classified holdings and security procedures.
VI. Government Contracts Regulatory Framework
A. Overview
VPI currently holds fourteen (14) active contracts with U.S. government agencies, serving in the capacity of both a prime contractor and a subcontractor. These contracts have an aggregate remaining backlog of approximately $193 million as of the date of this Exhibit. VPI's government contracting activities span multiple defense and government agencies and reflect the company's role as a key supplier of advanced GaN power amplifier technologies for a range of critical defense applications. The following agencies are among VPI's principal contracting partners:
(a) U.S. Army Program Executive Office for intelligence, Electronic Warfare, and Sensors (PEO IEW&S): VPI serves as a prime contractor for the development and production of GaN power amplifier modules for Army tactical radar programs, including the AN/TPS-80 G/ATOR.
(b) U.S. Air Force Research Laboratory (AFRL): VPI participates in several AFRL-sponsored research and development programs focused on next-generation GaN device technologies and advanced power amplifier architectures for future military radar and communications systems.
(c) Missile Defense Agency (MDA): VPI serves as a prime contractor for the development and production of GaN-based T/R modules for missile defense radar applications.
(d) U.S. Navy Naval Sea Systems Command (NAVSEA): VPI serves as a subcontractor to Ironclad Defense Systems Inc. for the supply of broadband GaN amplifier subsystems for a Navy surface electronic warfare modernization program.
(e) Department of Homeland Security, Science and Technology Directorate (DHS S&T): VPI participates in DHS-sponsored research programs related to advanced sensor technologies for border security and critical infrastructure protection applications.
A detailed summary of all fourteen active government contracts, including contract numbers, contracting agencies, contract types, periods of performance, contract values, remaining backlog, and descriptions of work, is provided in Exhibit F to this Notice.
B. Applicable Government Contract Regulations
VPI's government contracts incorporate standard Federal Acquisition Regulation ("FAR") clauses and Defense Federal Acquisition Regulation Supplement ("DFARS") clauses, as required by the applicable contracting agencies and contract types. The following clauses are of particular relevance to the proposed transaction and to the regulatory matters addressed in this Exhibit:
(a) FAR 52.204-21 (Basic Safeguarding of Covered Contractor Information Systems): This clause imposes basic information security requirements on contractors that process, store, or transmit Federal Contract Information ("FCI") in their information systems. VPI has implemented the fifteen (15) basic safeguarding requirements specified in this clause across all information systems used in the performance of government contracts.
(b) DFARS 252.204-7012 (Safeguarding Covered Defense Information and Cyber Incident Reporting): This clause requires contractors to provide adequate security for Covered Defense Information ("CDI") processed, stored, or transmitted on covered contractor information systems. Compliance with this clause requires implementation of the security requirements specified in NIST Special Publication 800-171, as discussed in Section VI.C below. The clause also requires contractors to report cyber incidents to the DoD Cyber Crime Center (DC3) within seventy-two (72) hours of discovery.
(c) DFARS 252.209-7002 (Disclosure of Ownership or Control by a Foreign Government): This clause requires contractors to disclose to the contracting officer any interest in the contractor held by a foreign government or any entity controlled by a foreign government. Upon completion of the proposed acquisition, VPI will be an indirect subsidiary of HSAG, a publicly traded company organized under the laws of the Federal Republic of Germany. While HSAG is not controlled by a foreign government, the change in ownership to a foreign parent entity will trigger disclosure obligations under this clause for all of VPI's active government contracts. The required disclosures will be coordinated with each applicable contracting officer in connection with the transaction closing.
(d) DFARS 252.227-7038 (Patent Rights — Ownership by the Contractor (Large Business)): This clause governs the allocation of rights in inventions conceived or first actually reduced to practice in the performance of government contracts. Under this clause, VPI retains title to such inventions, subject to a nonexclusive, nontransferable, irrevocable, paid-up license in favor of the U.S. government. Twenty-three (23) of VPI's forty-seven (47) granted U.S. patents are subject to government rights under this clause and the Bayh-Dole Act.
(e) FAR 42.12 (Novation and Change-of-Name Agreements): FAR Subpart 42.12 establishes procedures for the recognition of successor entities following a change in a contractor's organizational identity, including changes resulting from mergers, acquisitions, and other corporate transactions. The acquisition of VPI by HSAG through Halcyon US Holdings Inc. may require the execution of novation agreements with the applicable contracting officers for certain of VPI's active government contracts, to the extent that the transaction results in a change in the legal identity of the contracting entity. Calderwood & Harkness LLP and Wethersfield & Gale LLP have assessed the novation requirements under FAR 42.12 and will coordinate the necessary filings with contracting officers in connection with the transaction closing.
C. Cybersecurity Compliance
VPI maintains compliance with the cybersecurity requirements applicable to its government contracts, including the requirements of NIST Special Publication 800-171 (Protecting Controlled Unclassified Information in Nonfederal Systems and Organizations), Revision 2, as required under DFARS 252.204-7012. VPI has conducted a comprehensive self-assessment of its compliance with the 110 security requirements specified in NIST SP 800-171 and has developed a System Security Plan ("SSP") and a Plan of Action and Milestones ("POA&M") to document its security posture and address any identified gaps.
VPI's NIST SP 800-171 self-assessment score is current and has been recorded in the Supplier Performance Risk System ("SPRS"), as required by DFARS 252.204-7019 (Notice of NIST SP 800-171 DoD Assessment Requirements) and DFARS 252.204-7020 (NIST SP 800-171 DoD Assessment Requirements). VPI's SPRS score reflects a level of compliance consistent with the security requirements applicable to the types of Covered Defense Information processed on VPI's information systems.
In addition, VPI is actively preparing for its Cybersecurity Maturity Model Certification ("CMMC") Level 2 assessment, which will be required under the forthcoming CMMC 2.0 rulemaking for all contractors that handle Covered Defense Information. VPI has engaged a third-party cybersecurity consultant to assist with gap analysis and remediation activities in preparation for the CMMC Level 2 assessment and anticipates achieving certification within the timeline established by the CMMC 2.0 implementation schedule.
VII. Other Regulatory Registrations and Authorizations
A. DUNS Number
VPI's Data Universal Numbering System ("DUNS") number, as assigned by Dunmore Enterprises, is:
DUNS Number: 07-812-4493
This DUNS number is used for all government contract registrations, System for Award Management ("SAM") filings, grant applications, and other federal reporting purposes.
B. Employer Identification Number
VPI's federal Employer Identification Number ("EIN"), as assigned by the Internal Revenue Service, is:
EIN: 26-4371885
C. System for Award Management (SAM)
VPI maintains an active registration in the System for Award Management ("SAM"), accessible at SAM.gov, as required for all entities doing business with the U.S. federal government. VPI's SAM registration is current and includes all required representations and certifications, including representations regarding organizational conflicts of interest, debarment and suspension, tax compliance, and other matters required under the FAR and DFARS. VPI updates its SAM registration annually, as required, and promptly notifies SAM of any material changes to its registration information.
D. ITAR / EAR Compliance Program
VPI maintains a comprehensive export compliance program designed to ensure compliance with the International Traffic in Arms Regulations, the Export Administration Regulations, and all other applicable U.S. export control laws and regulations. The export compliance program is overseen by Col. (Ret.) Bryce Hendrickson, who serves as both the designated empowered official under the ITAR and the export compliance officer for purposes of EAR compliance. The program encompasses the following elements:
(a) Written Export Compliance Procedures and Policies: VPI has adopted and maintains a written Export Compliance Program Manual that sets forth the company's policies and procedures for compliance with ITAR, EAR, and applicable sanctions regulations. The manual covers product classification, license determination, license application procedures, deemed export controls, technology control planning, end-user and end-use screening, record-keeping, reporting obligations, and voluntary disclosure procedures. A table of contents and executive summary of the Export Compliance Program Manual is provided as Attachment E-4 to this Exhibit.
(b) Designated Empowered Official (ITAR) and Export Compliance Officer (EAR): Col. (Ret.) Bryce Hendrickson serves as the designated empowered official under the ITAR (22 C.F.R. § 120.25) and as the export compliance officer for EAR-related matters. In these roles, Col. Hendrickson has the authority and responsibility to oversee all export-related activities, sign license applications and other DDTC and BIS filings, authorize exports and deemed exports, and ensure that all export transactions comply with applicable regulations.
(c) Employee Training: VPI conducts annual mandatory export compliance training for all employees who have access to controlled items, technical data, or technology. Training is tailored to the specific roles and responsibilities of participants and covers ITAR and EAR fundamentals, VPI-specific compliance procedures, classified information handling (for cleared personnel), deemed export awareness, red flag indicators, and reporting obligations. Training records are maintained for a minimum of five (5) years.
(d) Technology Control Plan: VPI maintains a Technology Control Plan ("TCP") that establishes the procedures and access controls for managing access to export-controlled technology by non-U.S. persons, including any foreign national employees, visitors, or subcontractors. The TCP implements the deemed export requirements of 15 C.F.R. § 734.13 and the ITAR requirements for controlling access to technical data.
(e) Record-Keeping: VPI maintains comprehensive records of all export-controlled transactions, including license applications, license approvals, export shipment records, technical data transfer records, deemed export records, end-user and end-use certifications, and compliance audit reports. Records are maintained in compliance with ITAR record-keeping requirements (22 C.F.R. § 122.5) and EAR record-keeping requirements (15 C.F.R. Part 762) for the periods specified by applicable regulations.
(f) Internal Audit Program: VPI conducts periodic internal audits of its export compliance program to assess the effectiveness of its policies and procedures, identify potential compliance gaps, and implement corrective actions. Internal audits are conducted at least annually and are supplemented by targeted reviews in response to specific compliance concerns or changes in regulatory requirements.
(g) Voluntary Disclosure Procedures: VPI's Export Compliance Program Manual includes procedures for the identification, investigation, and voluntary disclosure of potential violations of ITAR, EAR, or other applicable export control regulations. These proc