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THIRD-PARTY COMPLIANCE MONITOR AGREEMENT

Entered into in connection with National Security Agreement NSA-2024-0019

CFIUS Case No. CFIUS-023-07-3841

Effective Date: January 19, 2024

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THIRD-PARTY COMPLIANCE MONITOR AGREEMENT

This Third-Party Compliance Monitor Agreement (this "Agreement") is entered into as of January 19, 2024 (the "Effective Date"), co-terminus with the execution date of the National Security Agreement referenced herein, by and among the following parties:

HALCYON SEMICONDUCTOR AKTIENGESELLSCHAFT ("HSAG" or the "Company"), an Aktiengesellschaft organized and existing under the laws of the Federal Republic of Germany, registered in the commercial register (Handelsregister) of the Amtsgericht Dresden under HRB 28416, with its principal office at Industriestraße 44, 01099 Dresden, Saxony, Germany;

HALCYON US HOLDINGS INC. ("Halcyon US Holdings"), a corporation organized and existing under the laws of the State of Delaware, with its registered office at 160 Greentree Drive, Suite 101, Dover, DE 19904 (EIN: 93-2841067);

Marlowe Asset Management PHOTONICS INC. ("VPI"), a corporation organized and existing under the laws of the State of Delaware, with its principal office at 7400 Ridgeline Parkway, Colorado Springs, CO 80919 (EIN: 26-4371885);

WHITMORE COMPLIANCE GROUP LLC ("Monitor" or "WCG"), a limited liability company organized and existing under the laws of the State of Delaware, with its principal office at 1300 Crystal Drive, Suite 710, Arlington, VA 22202;

(each, a "Party" and collectively, the "Parties").

RECITALS

WHEREAS, HSAG, acting through its wholly-owned indirect subsidiary Halcyon US Holdings, is acquiring one hundred percent (100%) of the outstanding equity interests of VPI, a United States company that designs and manufactures advanced gallium-nitride (GaN) power amplifier chips used in defense radar systems, satellite communications platforms, and fifth-generation (5G) wireless telecommunications infrastructure (the "Transaction");

WHEREAS, VPI holds both classified and unclassified contracts with the United States Department of Defense, maintains a Facility Security Clearance at the SECRET level under the National Industrial Security Program (CAGE Code: 7VK92), is registered with the Directorate of Defense Trade Controls of the United States Department of State (Registration No. M-24817), and designs, develops, manufactures, and exports products, technical data, and defense services subject to 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;

WHEREAS, the Transaction constitutes a "covered transaction" within the meaning of Section 721 of the Defense Production Act of 1950, as amended (50 U.S.C. § 4565), and the regulations promulgated thereunder at 31 C.F.R. Part 800, and was the subject of a voluntary joint notice filed by HSAG and VPI with the Committee on Foreign Investment in the United States ("CFIUS") on July 14, 2023, and assigned CFIUS Case No. CFIUS-023-07-3841;

WHEREAS, CFIUS concluded its review and investigation of the Transaction pursuant to 31 C.F.R. Part 800, and the parties to the Transaction and the United States Government, acting through the United States Department of the Treasury (Office of Investment Security), the United States Department of Defense, and the United States Department of Energy (collectively, the "CFIUS Monitoring Agencies"), executed a National Security Agreement dated January 19, 2024, bearing reference number NSA-2024-0019 (the "NSA"), setting forth certain obligations, conditions, and mitigation measures to address the national security risks identified by CFIUS in connection with the Transaction;

WHEREAS, Section 7.1 of the NSA requires HSAG to appoint, at HSAG's sole cost and expense, a third-party compliance monitor approved by CFIUS (the "Monitor") to conduct ongoing compliance monitoring, annual comprehensive compliance audits, ad hoc targeted reviews, and incident investigations with respect to the obligations set forth in the NSA, its annexes, and any supplementary agreements or directives issued by the CFIUS Monitoring Agencies;

WHEREAS, WCG was submitted by HSAG for consideration as the third-party compliance monitor and was formally approved by CFIUS on December 8, 2023, following a thorough vetting process conducted by the CFIUS Monitoring Agencies;

WHEREAS, Gerald Whitmore, the principal and managing member of WCG, is a former official of the Federal Bureau of Investigation's Counterintelligence Division, with more than twenty-five (25) years of experience in national security matters, and currently holds an active Top Secret / Sensitive Compartmented Information (TS/SCI) security clearance issued by the United States Government;

WHEREAS, the Parties wish to set forth the terms and conditions of WCG's engagement as the third-party compliance monitor under the NSA, including the scope of monitoring services, access rights, reporting obligations, compensation, independence requirements, and related matters;

NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

ARTICLE I — DEFINITIONS

Section 1.1 — Defined Terms. As used in this Agreement, the following terms shall have the meanings set forth below. All capitalized terms used but not otherwise defined in this Agreement shall have the meanings ascribed to them in the NSA, including those terms defined in NSA Annex A (Definitions).

(a) "Ad Hoc Review" means a targeted review of one or more specific areas of NSA compliance, initiated by the Monitor pursuant to its own determination, at the request of any CFIUS Monitoring Agency, or at the request of the Government Security Committee, and conducted outside the scope and schedule of the Annual Compliance Audit.

(b) "Agreement" means this Third-Party Compliance Monitor Agreement, including all exhibits attached hereto, as the same may be amended, supplemented, or modified from time to time in accordance with Section 15.4.

(c) "Annual Compliance Audit" means the comprehensive annual review of HSAG's, Halcyon US Holdings', and VPI's compliance with all provisions, obligations, conditions, and requirements of the NSA, conducted by WCG in accordance with Article IV of this Agreement and the procedures set forth in Exhibit B.

(d) "Annual Compliance Report" means the written report prepared by WCG following each Annual Compliance Audit, as described in Section 4.4 and prepared in accordance with the template set forth in NSA Annex E.

(e) "CFIUS" means the Committee on Foreign Investment in the United States, an interagency committee chaired by the United States Department of the Treasury, as established under Section 721 of the Defense Production Act of 1950, as amended.

(f) "CFIUS Monitoring Agencies" means the Defense Counterintelligence and Security Agency ("DCSA"), the United States Department of the Treasury (Office of Investment Security), the United States Department of Defense, and the United States Department of Energy, acting individually or collectively in their capacity as monitoring and enforcement agencies under the NSA.

(g) "Classified Facility" means VPI's facility located at 9200 Innovation Boulevard, Albuquerque, NM 87113, consisting of approximately forty-five thousand (45,000) square feet of gallium-nitride-on-silicon-carbide (GaN-on-SiC) fabrication space, and specifically including clean room Sections C-7, C-8, C-9, C-10, C-11, and C-12, which have been accredited by DCSA for the processing, storage, and handling of classified information at the SECRET level.

(h) "Controlled Technical Data" means all technical data, technology, software, and related information that is subject to export controls under ITAR (including, without limitation, items classified under United States Munitions List Category XI(a)(3)) or under EAR (including, without limitation, items classified under Export Control Classification Numbers ("ECCNs") 3A001, 3A991, and 3E001), as well as any technical data designated as controlled by the Technology Control Plan.

(i) "Effective Date" has the meaning set forth in the preamble to this Agreement.

(j) "Government Security Committee" or "GSC" means the committee of the Board of Directors of VPI composed of the three (3) Security Board Members, as established and constituted pursuant to Section 4.2 of the NSA, which has exclusive authority over classified and ITAR-controlled programs, personnel security matters, and facility security matters of VPI.

(k) "Incident" means any actual or suspected (i) breach of any obligation, condition, or requirement of the NSA, (ii) unauthorized access to classified information or Controlled Technical Data by any person, including without limitation any HSAG employee, agent, or representative, (iii) cybersecurity incident that is reportable under the NSA, including any unauthorized intrusion, data exfiltration, or compromise of VPI IT systems, or (iv) any other event or circumstance that, in the reasonable judgment of the Monitor, the CFIUS Monitoring Agencies, or the GSC, may constitute a threat to the national security of the United States in connection with the Transaction.

(l) "Key Personnel" means (i) Dr. Nathan Trevorrow, Chief Executive Officer of VPI, (ii) Marissa Sung-Avila, President and Chief Operating Officer of VPI, and (iii) Col. (Ret.) Bryce Hendrickson, Vice President of Government Programs and Facility Security Officer of VPI, each of whom is subject to the personnel retention requirements set forth in Section 5.4 of the NSA.

(m) "Monitor Personnel" means Gerald Whitmore and any and all employees, subcontractors, consultants, or agents of WCG who are assigned to perform services under this Agreement, as identified in Exhibit A or as supplemented from time to time with prior notice to the Parties and, where security clearances are required, with appropriate clearance verification.

(n) "NISPOM" means the National Industrial Security Program Operating Manual, 32 C.F.R. Part 117, as amended from time to time, which governs the protection of classified information disclosed to or possessed by contractors.

(o) "NSA" means the National Security Agreement dated January 19, 2024, bearing reference number NSA-2024-0019, executed by and among HSAG, Halcyon US Holdings, VPI, and the United States Government (acting through the CFIUS Monitoring Agencies), including all annexes, appendices, and supplements thereto, as the same may be amended from time to time.

(p) "Party" and "Parties" have the meanings set forth in the preamble to this Agreement.

(q) "Security Board Members" means the three (3) members of the Board of Directors of VPI who are United States citizens and who hold or are eligible to hold Top Secret / Sensitive Compartmented Information (TS/SCI) security clearances, including the independent Security Director appointed pursuant to Section 4.3 of the NSA, each of whom serves on the Government Security Committee.

(r) "Technology Control Plan" or "TCP" means the technology control plan set forth in NSA Annex B, which establishes the policies, procedures, and controls governing access to, use of, and transfer of VPI technical data, technology, and Controlled Technical Data, and which is designed to prevent unauthorized disclosure of such information to non-U.S. persons and to HSAG and its non-U.S. affiliates.

(s) "Transaction" means the acquisition by HSAG, acting through Halcyon US Holdings, of one hundred percent (100%) of the outstanding equity interests of VPI, as described in the recitals to this Agreement and as reviewed by CFIUS under CFIUS Case No. CFIUS-023-07-3841.

ARTICLE II — APPOINTMENT AND TERM

Section 2.1 — Appointment. HSAG, Halcyon US Holdings, and VPI hereby appoint WCG as the third-party compliance monitor under the NSA, and WCG hereby accepts such appointment, subject to the terms and conditions set forth in this Agreement. WCG shall serve as the sole third-party compliance monitor under the NSA unless and until replaced in accordance with Article X.

Section 2.2 — Effective Date. This Agreement shall be effective as of January 19, 2024, co-terminus with the execution date of the NSA.

Section 2.3 — Initial Term. The initial term of this Agreement shall be three (3) years from the Effective Date, commencing on January 19, 2024 and expiring on January 19, 2027 (the "Initial Term"), unless earlier terminated in accordance with Article X.

Section 2.4 — Renewal. Upon the expiration of the Initial Term, this Agreement shall automatically renew for successive periods of one (1) year each (each, a "Renewal Term" and, together with the Initial Term, the "Term"), unless (a) terminated in accordance with Article X, (b) the NSA has expired or been terminated, or (c) CFIUS Monitoring Agencies have directed the replacement of WCG. Each renewal shall be subject to continued CFIUS approval, which may be confirmed by the absence of an objection from the CFIUS Monitoring Agencies within thirty (30) days following written notice of renewal provided by HSAG to the CFIUS Monitoring Agencies.

Section 2.5 — Relationship to NSA. This Agreement is entered into pursuant to, and is governed by, the requirements of the NSA. The obligations set forth in this Agreement are intended to supplement, implement, and effectuate the monitoring and compliance requirements of the NSA. In the event of any conflict, inconsistency, or ambiguity between any provision of this Agreement and any provision of the NSA (including its annexes), the terms and provisions of the NSA shall control and prevail.

Section 2.6 — CFIUS Approval. WCG's appointment as the third-party compliance monitor was approved by CFIUS on December 8, 2023, following a vetting process conducted by the CFIUS Monitoring Agencies. Any replacement of WCG as the third-party compliance monitor, whether by reason of termination, resignation, removal, or otherwise, must receive prior written approval from the CFIUS Monitoring Agencies before such replacement becomes effective, and no replacement shall be deemed authorized until such approval has been obtained.

ARTICLE III — SCOPE OF MONITORING SERVICES

Section 3.1 — General Scope. WCG shall monitor HSAG's, Halcyon US Holdings', and VPI's compliance with all obligations, conditions, requirements, and restrictions set forth in the NSA, including, without limitation, the annexes and supplements thereto. The monitoring services to be performed by WCG shall include, but shall not be limited to, the specific areas of compliance oversight specified in Sections 3.2 through 3.9 of this Article III. WCG shall exercise independent professional judgment in determining the appropriate scope, methods, and frequency of monitoring activities, subject to the minimum requirements set forth in this Agreement and the NSA.

Section 3.2 — Board Governance and GSC Compliance. WCG shall monitor compliance with the corporate governance requirements of the NSA, including the following:

(a) Verification that the reconstituted Board of Directors of VPI is comprised of five (5) members, consisting of three (3) Security Board Members who are United States citizens and who hold or are eligible to hold TS/SCI security clearances (including the independent Security Director) and two (2) designees of HSAG;

(b) Verification that the Government Security Committee has been duly constituted and maintains exclusive authority over all classified and ITAR-controlled programs, personnel security decisions, facility security matters, and related national security matters of VPI, as required by Section 4.2 of the NSA;

(c) Confirmation that HSAG designees on the VPI Board of Directors do not hold, access, or seek access to any classified information, classified programs, or classified facilities of VPI;

(d) Review of GSC and Board of Directors meeting minutes, agendas, resolutions, voting records, and supporting materials to verify that the governance structure and decision-making processes are functioning in accordance with the NSA; and

(e) Assessment of the independence and effectiveness of the Security Board Members and the independent Security Director in carrying out their responsibilities under the NSA.

Section 3.3 — Technology Control Plan (TCP) Compliance. WCG shall monitor adherence to the Technology Control Plan set forth in NSA Annex B, including the following:

(a) Verification that no VPI ITAR- or EAR-controlled technical data, technology, or defense articles have been transferred, disclosed, or made available to any non-U.S. person, including any HSAG employee, agent, or affiliate, without prior authorization from the appropriate United States Government authority (i.e., the Directorate of Defense Trade Controls for ITAR-controlled items or the Bureau of Industry and Security for EAR-controlled items);

(b) Review of information-sharing procedures, protocols, and practices between VPI and HSAG and its affiliates, including any technical assistance agreements, manufacturing license agreements, or other arrangements that may involve the transfer or disclosure of Controlled Technical Data;

(c) Audit of access logs, technology transfer request records, export license applications and approvals, and related compliance documentation to verify adherence to applicable ITAR and EAR requirements;

(d) Verification of VPI's continued compliance with its registration with the Directorate of Defense Trade Controls (Registration No. M-24817), including timely renewal and accurate reporting of all registerable activities; and

(e) Verification of the accuracy and currency of VPI's EAR self-classifications, including with respect to ECCNs 3A001, 3A991, and 3E001, and review of any commodity jurisdiction determinations or advisory opinions obtained by VPI during the applicable monitoring period.

Section 3.4 — Facility Security and Access Controls. WCG shall monitor compliance with the facility security and access control requirements of the NSA, including the following:

(a) Verification of compliance with NSA Annex F (Facility Access Procedures) governing all visits by HSAG personnel (including employees, agents, consultants, and representatives of HSAG and its non-U.S. affiliates) to any VPI facility;

(b) Verification that HSAG personnel do not access classified areas of the Classified Facility, including clean room Sections C-7 through C-12 at 9200 Innovation Boulevard, Albuquerque, NM 87113, without prior written approval from both DCSA and the Government Security Committee, and that any such access, if approved, is conducted under appropriate escort and security protocols;

(c) Review of visitor logs, badge access records, escort documentation, and facility access request forms for all HSAG personnel visits to VPI facilities, including the Colorado Springs headquarters and the Albuquerque Classified Facility;

(d) Confirmation that VPI maintains its Facility Security Clearance at the SECRET level (CAGE Code: 7VK92) in good standing with DCSA, and that VPI has not experienced any adverse security actions, suspension, or revocation proceedings;

(e) Verification that Col. (Ret.) Bryce Hendrickson continues to serve as VPI's Facility Security Officer ("FSO") in accordance with NISPOM requirements, or that any replacement FSO has been approved by both the Government Security Committee and DCSA in accordance with the NSA; and

(f) Assessment of the adequacy and effectiveness of physical security measures at all VPI facilities, including perimeter controls, intrusion detection systems, access control mechanisms, and closed-circuit television monitoring.

Section 3.5 — Cybersecurity Compliance. WCG shall monitor compliance with the cybersecurity requirements of the NSA, including the following:

(a) Verification of compliance with NSA Annex D, which requires VPI to maintain cybersecurity controls consistent with the National Institute of Standards and Technology Special Publication 800-171 (NIST SP 800-171), Revision 2 or any successor revision, for the protection of Controlled Unclassified Information ("CUI");

(b) Verification that VPI conducts annual third-party penetration testing of its information technology systems and networks, and review of the results, findings, and remediation plans arising from each such penetration test;

(c) Confirmation that VPI's information technology systems and networks are physically and logically separated from HSAG's global network, and that there exists no shared cloud infrastructure, shared data repositories, shared authentication systems, or other interconnection between VPI IT systems and HSAG IT systems;

(d) Review of cybersecurity incident response records, including logs of all cybersecurity incidents (whether actual or suspected), and confirmation that all reportable incidents have been reported to DCSA within seventy-two (72) hours as required by Section 8.3 of the NSA; and

(e) Assessment of the adequacy of VPI's cybersecurity policies, procedures, training programs, and incident response plans in light of the evolving threat landscape and the sensitivity of VPI's classified and controlled programs.

Section 3.6 — Data Segregation. WCG shall monitor the physical and logical separation of VPI's information technology systems and data from HSAG's global network and information infrastructure, including the following:

(a) Audit and review of VPI's network architecture, including network diagrams, system topology documentation, firewall configurations, and virtual private network ("VPN") access controls, to verify that no unauthorized connections exist between VPI and HSAG systems;

(b) Review of access control lists, user account management procedures, and role-based access controls to verify that no HSAG personnel (other than those specifically authorized under the NSA and the TCP) have access to VPI IT systems, data stores, or network resources;

(c) Review of data-flow diagrams and data transfer logs to verify that no VPI data, including Controlled Technical Data, classified information, or proprietary trade secret information, is being transmitted to or stored on HSAG systems or any cloud infrastructure shared with HSAG; and

(d) Verification that any business systems integration (e.g., enterprise resource planning, financial reporting, or human resources systems) between VPI and HSAG is limited to non-sensitive, non-controlled business information and does not create any pathway for the unauthorized transfer of Controlled Technical Data or classified information.

Section 3.7 — Personnel Continuity. WCG shall monitor compliance with the Key Personnel retention requirements of the NSA, including the following:

(a) Verification that each Key Personnel member — specifically, Dr. Nathan Trevorrow (CEO), Marissa Sung-Avila (President and COO), and Col. (Ret.) Bryce Hendrickson (VP Government Programs / FSO) — remains employed by VPI in their respective positions for a minimum period of twenty-four (24) months following the closing of the Transaction (i.e., through at least February 9, 2026), or that any departure has been addressed in accordance with Section 5.4(c) of the NSA;

(b) Periodic review of the employment status of each Key Personnel member, including verification of continued active employment, any changes in title, responsibilities, or reporting structure, and any indications of planned departure or constructive termination;

(c) In the event of the departure, termination, or incapacitation of any Key Personnel member, verification that any proposed replacement has received prior approval from both the Government Security Committee and DCSA, and that the replacement possesses qualifications, experience, and security clearance eligibility commensurate with the requirements of the position; and

(d) Assessment of whether the departure or replacement of any Key Personnel member has had, or is reasonably likely to have, an adverse effect on VPI's ability to comply with the NSA or to maintain its classified programs and government contracts.

Section 3.8 — Pre-Notification of Material Changes. WCG shall monitor compliance with the pre-notification requirements of the NSA, including the following:

(a) Verification that HSAG provides written notice to CFIUS at least thirty (30) calendar days prior to any material change to VPI's business, operations, or organizational structure, including, without limitation, any proposed divestiture of VPI assets or business lines, entry into new foreign subcontracts, changes to cleared personnel, relocation of facilities, or modifications to the scope of classified programs;

(b) Review of all notifications submitted by HSAG to CFIUS under the pre-notification provisions of the NSA, and assessment of the completeness, accuracy, and timeliness of each such notification; and

(c) Identification and reporting to the CFIUS Monitoring Agencies of any material changes that have occurred, or are planned to occur, for which the required pre-notification has not been timely submitted.

Section 3.9 — Government Contracts and Export Control Compliance. WCG shall monitor VPI's government contracts and export control compliance, including the following:

(a) Monitoring of the continuity, performance, and compliance status of VPI's fourteen (14) active contracts with the United States Department of Defense, which represent an aggregate contract backlog of approximately one hundred ninety-three million dollars ($193,000,000) as of the Effective Date;

(b) Review of the status of all novation actions required under Federal Acquisition Regulation ("FAR") 42.12 for contracts that require novation as a result of the Transaction, including verification that all necessary novation agreements have been executed or are in the process of being negotiated with the contracting officers;

(c) Monitoring of compliance with Defense Federal Acquisition Regulation Supplement ("DFARS") clause 252.209-7002 (Disclosure of Ownership or Control by a Foreign Government), including verification that all required disclosures have been made accurately and timely;

(d) Review of the status of VPI's three (3) active DSP-5 export licenses, including verification that the licenses remain valid, that all conditions and provisos are being satisfied, and that any amendments required as a result of the Transaction or changes in circumstances have been timely submitted to the Directorate of Defense Trade Controls; and

(e) Monitoring of VPI's overall export compliance program, including compliance with ITAR recordkeeping requirements (22 C.F.R. § 122.5), EAR recordkeeping requirements (15 C.F.R. Part 762), and any voluntary disclosure obligations.

ARTICLE IV — ANNUAL COMPLIANCE AUDIT

Section 4.1 — Timing. WCG shall conduct a comprehensive Annual Compliance Audit covering all obligations, conditions, and requirements of the NSA. The first Annual Compliance Audit shall be completed, and the corresponding Annual Compliance Report submitted, no later than January 19, 2025 (one year from the Effective Date). Subsequent Annual Compliance Audits shall be conducted on an annual basis, with the Annual Compliance Report due on or before each anniversary of the Effective Date throughout the Term of this Agreement.

Section 4.2 — Audit Plan. Not less than thirty (30) calendar days prior to the commencement of each Annual Compliance Audit, WCG shall prepare and submit a detailed annual audit plan (the "Audit Plan") to the CFIUS Monitoring Agencies and the Government Security Committee. The Audit Plan shall describe the proposed scope, methodology, timeline, and resource allocation for the forthcoming audit, including the identification of specific compliance areas to be examined, the schedule for site visits, the anticipated document requests, and the personnel to be interviewed. The CFIUS Monitoring Agencies may provide comments, suggestions, or directives regarding the Audit Plan, and WCG shall incorporate all reasonable directives received from the CFIUS Monitoring Agencies.

Section 4.3 — Audit Scope. Each Annual Compliance Audit shall cover all areas specified in Article III, Sections 3.2 through 3.9, and shall include, at a minimum, the following activities:

(a) Review of all corporate governance documents, including VPI's certificate of incorporation, bylaws, board resolutions, committee charters, and related organizational documents, as well as all Board of Directors and Government Security Committee meeting minutes, agendas, resolutions, and supporting materials for the period under review;

(b) Physical inspection of VPI facilities, including both the Colorado Springs headquarters at 7400 Ridgeline Parkway, Colorado Springs, CO 80919 and the Albuquerque Classified Facility at 9200 Innovation Boulevard, Albuquerque, NM 87113, subject to the requirement that all Monitor Personnel accessing the Classified Facility hold appropriate security clearances as specified in Section 6.4;

(c) Review and assessment of VPI's information technology systems architecture, network topology, and cybersecurity controls, including evaluation of NIST SP 800-171 compliance, penetration testing results, vulnerability assessments, and cybersecurity incident response capabilities;

(d) Review of all technology transfer records, export compliance documentation, ITAR and EAR classification records, DSP-5 export license files, export license applications, voluntary disclosures, and Technology Control Plan implementation records;

(e) In-person or secure video interviews with Key Personnel, including Dr. Nathan Trevorrow (CEO), Marissa Sung-Avila (President and COO), and Col. (Ret.) Bryce Hendrickson (VP Government Programs / FSO), as well as interviews with Security Board Members, the independent Security Director, and selected VPI and HSAG employees as determined by WCG to be relevant to the audit;

(f) Review of all visitor logs, facility access records, badge access data, escort documentation, and facility access request forms for the period under review, with particular attention to any visits by HSAG personnel or other non-U.S. persons;

(g) Review of all Incident reports, including reports of actual or suspected NSA breaches, unauthorized access events, cybersecurity incidents, and any other reportable events, and assessment of the adequacy and timeliness of reporting and remediation;

(h) Assessment of the implementation and effectiveness of the Technology Control Plan, including review of TCP training records, TCP acknowledgment forms, and TCP compliance testing results; and

(i) Review of personnel security records and clearance status for VPI's two hundred and twelve (212) cleared employees, including verification of active clearances, periodic reinvestigation status, and adverse information reporting compliance.

Section 4.4 — Audit Report. Following the completion of each Annual Compliance Audit, WCG shall prepare a comprehensive written Annual Compliance Report in accordance with the template and format set forth in NSA Annex E (Annual Compliance Report Template). Each Annual Compliance Report shall include, at a minimum, the following:

(a) An executive summary of the audit scope, methodology, and key findings;

(b) A detailed description of all monitoring and audit activities conducted during the period under review;

(c) Findings of fact with respect to each area of NSA compliance examined, organized by compliance category corresponding to Sections 3.2 through 3.9 of this Agreement;

(d) Identification and description of any deficiencies, violations, or areas of non-compliance observed, including an assessment of the severity, root cause, and potential national security implications of each deficiency;

(e) Observations regarding areas of potential concern or risk, even where no deficiency has been identified;

(f) Recommended corrective actions for each identified deficiency, including proposed timelines for remediation;

(g) Status of corrective actions previously recommended in prior Annual Compliance Reports, ad hoc review reports, or incident investigation reports;

(h) An overall compliance assessment, including a statement as to whether, in the professional judgment of the Monitor, HSAG, Halcyon US Holdings, and VPI are in substantial compliance with the NSA; and

(i) Any other matters that WCG, in its independent professional judgment, believes should be brought to the attention of the CFIUS Monitoring Agencies.

Section 4.5 — Report Distribution. Annual Compliance Reports shall be submitted simultaneously to the following recipients:

(a) The CFIUS Monitoring Agencies, including the Defense Counterintelligence and Security Agency (DCSA), the United States Department of the Treasury (Office of Investment Security), the United States Department of Defense, and the United States Department of Energy, at the addresses and through the transmission methods directed by the CFIUS Monitoring Agencies;

(b) The Government Security Committee of VPI, c/o Col. (Ret.) Bryce Hendrickson, GSC Chair, at VPI's principal office at 7400 Ridgeline Parkway, Colorado Springs, CO 80919;

(c) HSAG General Counsel, Stefan Lohse, at HSAG's principal office at Industriestraße 44, 01099 Dresden, Saxony, Germany; and

(d) A copy to buyer's counsel, Calderwood & Harkness LLP, Attention: Margaret "Peggy" Ashworth, 1750 K Street NW, Suite 800, Washington, DC 20006.

Reports provided to recipients under clauses (c) and (d) above shall be redacted to remove any classified information or information that cannot be shared with non-cleared recipients, and an unclassified summary shall be provided in lieu thereof as necessary.

Section 4.6 — Report Timeline. The Annual Compliance Audit process shall adhere to the following timeline:

(a) WCG shall provide a draft of the Annual Compliance Report to HSAG (through General Counsel Stefan Lohse) and VPI (through the Government Security Committee) for a factual accuracy review, which review period shall not exceed ten (10) business days from the date of delivery of the draft report;

(b) HSAG and VPI may submit written comments to WCG identifying any factual inaccuracies or requesting clarification of factual matters; provided, however, that WCG retains sole and exclusive authority over all conclusions, findings, assessments, opinions, and recommendations contained in the Annual Compliance Report, and neither HSAG, Halcyon US Holdings, nor VPI shall have any right to approve, modify, veto, or otherwise influence the substantive content of the report;

(c) WCG shall consider any factual accuracy comments received and, to the extent WCG determines that any corrections are warranted, shall incorporate such corrections into the final report; and

(d) The final Annual Compliance Report shall be submitted to all recipients identified in Section 4.5 within sixty (60) calendar days of the commencement of the Annual Compliance Audit.

ARTICLE V — AD HOC REVIEWS AND INCIDENT INVESTIGATIONS

Section 5.1 — Ad Hoc Reviews. WCG may conduct Ad Hoc Reviews at any time during the Term of this Agreement, based on any one or more of the following circumstances:

(a) A request from any CFIUS Monitoring Agency directing or recommending a targeted review of one or more specific areas of NSA compliance;

(b) A request from the Government Security Committee of VPI identifying a specific area of concern and requesting WCG's review;

(c) WCG's own independent determination, based on information obtained through ongoing monitoring activities, third-party reports, open-source intelligence, or any other source, that circumstances warrant a targeted review of one or more specific areas of NSA compliance; or

(d) Information received by WCG from any source, including anonymous or confidential sources, suggesting actual or potential non-compliance with any provision of the NSA.

Ad Hoc Reviews may be narrow in scope, addressing a single compliance area, or may encompass multiple areas depending on the circumstances giving rise to the review. WCG shall have sole discretion to determine the appropriate scope, methodology, and duration of each Ad Hoc Review, subject to any specific directives received from the CFIUS Monitoring Agencies.

Section 5.2 — Incident Investigations. Upon becoming aware of any actual or suspected Incident (as defined in Section 1.1(k)), WCG shall promptly initiate an investigation. Each incident investigation shall include the following:

(a) Immediate Notification. WCG shall provide immediate written notification to the CFIUS Monitoring Agencies within forty-eight (48) hours of WCG becoming aware of the actual or suspected Incident, including a preliminary description of the Incident, the date and time of discovery, the nature and scope of the potential violation, and any immediate remedial actions taken or recommended;

(b) On-Site Inspection. WCG shall conduct on-site inspections of any VPI or HSAG facility as necessary to investigate the Incident, including examination of physical spaces, equipment, and security systems relevant to the Incident;

(c) Personnel Interviews. WCG shall conduct interviews with all VPI, Halcyon US Holdings, and HSAG personnel who may have knowledge of or involvement in the Incident, including Key Personnel, FSO, IT staff, security personnel, and any other individuals identified as relevant during the course of the investigation;

(d) Records Review. WCG shall review all records, documents, electronic data, communications, access logs, system logs, and other information relevant to the Incident, including any materials voluntarily produced by HSAG, Halcyon US Holdings, or VPI and any materials obtained through WCG's access rights under Article VI;

(e) Written Incident Investigation Report. WCG shall prepare and submit a written incident investigation report within thirty (30) calendar days of the commencement of the investigation. The incident investigation report shall include a detailed description of the Incident, the investigative methodology employed, findings of fact, an assessment of the cause and severity of the Incident, an evaluation of national security implications, and recommended corrective actions. If the complexity or scope of an investigation requires additional time, WCG shall provide interim written status reports to the CFIUS Monitoring Agencies at not less than two-week intervals until the final report is completed.

Section 5.3 — Cooperation with Government Investigations. WCG shall fully cooperate with any investigation conducted by the CFIUS Monitoring Agencies or any other United States Government agency relating to compliance with the NSA or to potential violations of law arising from the Transaction. Such cooperation shall include, without limitation, providing the CFIUS Monitoring Agencies with access to all Monitor work papers, audit files, interview notes, correspondence, and communications generated in the course of WCG's monitoring activities, subject to any applicable attorney-client privilege or work product protections that may be asserted by any Party (provided that WCG itself shall not assert any privilege to withhold information from the CFIUS Monitoring Agencies).

Section 5.4 — Remediation Tracking. WCG shall establish and maintain a formal remediation tracking process to monitor and verify the implementation of all corrective actions recommended in any Ad Hoc Review report, incident investigation report, or Annual Compliance Report. WCG shall track each recommended corrective action through to completion, documenting the status, progress, and effectiveness of remediation efforts. The status of all outstanding corrective actions shall be reported in each Quarterly Status Report (per Section 9.1(e)) and in each subsequent Annual Compliance Report.

ARTICLE VI — ACCESS RIGHTS

Section 6.1 — Unrestricted Access. HSAG, Halcyon US Holdings, and VPI shall provide WCG and Monitor Personnel with full, prompt, and unrestricted access to the following, as reasonably necessary for WCG to perform its monitoring, auditing, and reporting obligations under this Agreement and the NSA:

(a) All VPI facilities, including the Colorado Springs headquarters at 7400 Ridgeline Parkway, Colorado Springs, CO 80919, and the Albuquerque Classified Facility at 9200 Innovation Boulevard, Albuquerque, NM 87113 (including clean room Sections C-7 through C-12), subject to the requirement that all Monitor Personnel accessing the Classified Facility or classified areas thereof hold appropriate United States Government security clearances at or above the level of the classified information to be accessed (it being acknowledged that Gerald Whitmore holds an active TS/SCI security clearance);

(b) All books, records, documents, correspondence, memoranda, agreements, contracts, reports, financial statements, and electronic data and records of VPI and Halcyon US Holdings that are relevant to NSA compliance, including without limitation corporate governance documents, board and committee minutes, employment records, security files, and compliance program documentation;

(c) All personnel of VPI, Halcyon US Holdings, and, to the extent necessary, HSAG, for the purpose of conducting interviews, obtaining explanations and clarifications, and gathering information relevant to NSA compliance;

(d) All Board of Directors and Government Security Committee meeting minutes, agendas, resolutions, voting records, presentations, and supporting materials;

(e) All information technology systems, network architecture documentation, system configuration records, cybersecurity audit reports, penetration testing reports, vulnerability assessment results, and incident logs maintained by or on behalf of VPI;

(f) All export control records, technology transfer logs and request forms, ITAR and EAR classification files, commodity jurisdiction determination records, DSP-5 export license documentation (including applications, approvals, provisos, and amendment records), and related export compliance documentation; and

(g) All government contract files, including contract instruments, modifications, task orders, delivery orders, novation agreements, contracting officer correspondence, contract performance reports, and Defense Contract Audit Agency ("DCAA") audit reports.

Section 6.2 — HSAG Facilities. WCG shall have reasonable access to HSAG facilities, including without limitation the offices of Halcyon US Inc. at 11501 Alterra Parkway, Suite 300, Austin, TX 78758, and HSAG's headquarters at Industriestraße 44, 01099 Dresden, Saxony, Germany, to the extent reasonably necessary for WCG to verify data segregation, network separation, and compliance with technology transfer restrictions imposed by the NSA and the Technology Control Plan. Such access shall be coordinated with HSAG General Counsel Stefan Lohse and shall be subject to reasonable scheduling accommodations, provided that HSAG shall not unreasonably delay or restrict such access.

Section 6.3 — No Obstruction. HSAG, Halcyon US Holdings, and VPI shall not obstruct, impede, delay, or interfere with WCG's exercise of its access rights under this Article VI. Any delay, denial, or restriction of access by HSAG, Halcyon US Holdings, or VPI shall be reported by WCG immediately to the CFIUS Monitoring Agencies. HSAG, Halcyon US Holdings, and VPI shall instruct all of their respective employees, officers, directors, agents, and contractors to cooperate fully with WCG and Monitor Personnel in the performance of monitoring activities.

Section 6.4 — Clearance Requirements for Monitor Personnel. All Monitor Personnel who require access to classified information or classified facilities in connection with the performance of monitoring services under this Agreement must hold appropriate United States Government security clearances at or above the level of the classified information or facility to be accessed. Gerald Whitmore's active TS/SCI security clearance is acknowledged and confirmed as of the Effective Date. WCG shall ensure that additional Monitor Personnel assigned to activities requiring access to classified information or facilities are appropriately cleared prior to accessing such information or facilities, and shall provide evidence of such clearances to VPI's Facility Security Officer and the CFIUS Monitoring Agencies upon request.

Section 6.5 — Notice of Visits. WCG shall provide reasonable advance written notice of not less than five (5) business days for scheduled site visits to VPI or HSAG facilities, except in the case of incident investigations or other circumstances in which WCG determines, in its sole professional judgment, that immediate access is warranted to protect the integrity of an investigation or to address an urgent national security concern. In such cases, WCG shall provide as much advance notice as is practicable under the circumstances and shall promptly notify the CFIUS Monitoring Agencies of the basis for any unscheduled or short-notice visit.

ARTICLE VII — INDEPENDENCE

Section 7.1 — Monitor Independence. WCG is an independent contractor and shall at all times maintain its independence from HSAG, Halcyon US Holdings, and VPI. Nothing in this Agreement shall be construed to create an employer-employee relationship, partnership, joint venture, or agency relationship between WCG and any other Party. WCG shall determine the manner and means by which it performs the monitoring services required under this Agreement, subject only to the requirements of the NSA and the directives of the CFIUS Monitoring Agencies.

Section 7.2 — No Conflicts of Interest. WCG represents and warrants that, as of the Effective Date, neither WCG nor any Monitor Personnel has any direct or indirect financial interest in, employment relationship with, or material business relationship with HSAG, Halcyon US Holdings, VPI, or any of their respective affiliates, subsidiaries, directors, officers, employees, or major shareholders, including without limitation Ridgecrest Ventures Fund III, L.P. and Cascadian Capital Partners Growth Fund II, L.P. WCG shall promptly disclose in writing to all Parties and to the CFIUS Monitoring Agencies any actual or potential conflict of interest that may arise during the Term of this Agreement, including any new business relationship, financial interest, or personal relationship that could reasonably be perceived as impairing WCG's independence or objectivity.

Section 7.3 — Duty to Government. WCG acknowledges and agrees that, notwithstanding the fact that WCG's fees and expenses are paid by HSAG, WCG's primary duty and obligation under this Agreement and the NSA is to CFIUS and the CFIUS Monitoring Agencies. WCG's findings, conclusions, assessments, opinions, and recommendations shall be based solely on WCG's independent professional judgment and shall not be subject to the approval, modification, direction, or veto of HSAG, Halcyon US Holdings, or VPI. WCG shall exercise its monitoring responsibilities in a manner consistent with the national security interests of the United States.

Section 7.4 — No Management Authority. WCG shall have no authority to manage, direct, control, or make business decisions for VPI, Halcyon US Holdings, or HSAG. WCG's role is strictly limited to monitoring, auditing, investigating, and reporting on compliance with the NSA. WCG shall not participate in or attempt to influence the management or operations of VPI, Halcyon US Holdings, or HSAG, other than through the issuance of compliance findings, observations, and recommendations in its reports.

Section 7.5 — Annual Conflict Certification. WCG shall provide a written annual certification of independence and absence of conflicts of interest to the CFIUS Monitoring Agencies concurrently with the submission of each Annual Compliance Report. Such certification shall be executed by Gerald Whitmore and shall confirm that, during the preceding twelve-month period, (a) WCG and all Monitor Personnel have maintained their independence from HSAG, Halcyon US Holdings, VPI, and their respective affiliates, (b) no conflicts of interest have arisen (or, if any potential conflicts have arisen, a detailed description thereof has been provided), and (c) WCG's monitoring activities, findings, and recommendations have not been improperly influenced by any Party.

ARTICLE VIII — COMPENSATION

Section 8.1 — Annual Fee. In consideration of the monitoring services to be performed by WCG under this Agreement, HSAG shall pay WCG an annual monitoring fee of one million two hundred thousand United States dollars ($1,200,000) (the "Annual Fee"). The Annual Fee covers all monitoring activities within the scope of the Annual Compliance Audit as described in Articles III and IV, as well as WCG's general ongoing monitoring activities, including attendance at GSC and Board meetings, routine document reviews, periodic facility inspections, and the preparation and submission of Quarterly Status Reports.

Section 8.2 — Quarterly Payments. The Annual Fee shall be payable in four (4) equal quarterly installments of three hundred thousand United States dollars ($300,000) each. Quarterly installments shall be due and payable on the nineteenth (19th) day of each calendar quarter during the Term, as follows: April 19, July 19, October 19, and January 19. The first quarterly installment shall be due on April 19, 2024. Payments shall be made by wire transfer to the account designated by WCG, as set forth in Exhibit C.

Section 8.3 — CPI Adjustment. The Annual Fee shall be adjusted on each anniversary of the Effective Date (commencing on January 19, 2025) based on the percentage change in the United States Bureau of Labor Statistics Consumer Price Index for All Urban Consumers (CPI-U), U.S. City Average, All Items (not seasonally adjusted), for the twelve (12)-month period ending on the most recently published index prior to the applicable anniversary date, as compared to the CPI-U for the same month of the immediately preceding year. In no event shall the CPI adjustment result in a decrease of the Annual Fee below the initial amount of one million two hundred thousand United States dollars ($1,200,000) per annum. WCG shall provide written notice to HSAG of each CPI adjustment, together with supporting calculations, at least thirty (30) days prior to the first quarterly payment of the adjusted fee.

Section 8.4 — Additional Fees for Ad Hoc Reviews and Incident Investigations. Fees for Ad Hoc Reviews and incident investigations requested by CFIUS Monitoring Agencies, initiated by the Government Security Committee, or initiated by WCG pursuant to Section 5.1(c) or (d), to the extent that such activities are conducted beyond the scope of the Annual Compliance Audit, shall be billed on a time-and-materials basis at the following hourly rates:

WCG shall provide detailed invoices to HSAG for all Ad Hoc Review and incident investigation work, itemizing the personnel involved, hours expended, tasks performed, and total fees. Such additional fees shall be paid by HSAG within thirty (30) calendar days of receipt of WCG's invoice.

Section 8.5 — Expenses. HSAG shall reimburse WCG for all reasonable and documented out-of-pocket expenses incurred by WCG and Monitor Personnel in connection with the performance of monitoring services under this Agreement, including travel (economy or business class for flights exceeding four hours), lodging, ground transportation, meals, and related costs. All reimbursable expenses shall be documented with original receipts or other supporting documentation. Expenses exceeding twenty-five thousand United States dollars ($25,000) in any single calendar quarter require the prior written approval of HSAG, which approval shall not be unreasonably withheld, conditioned, or delayed. HSAG shall reimburse approved expenses within thirty (30) calendar days of receipt of WCG's itemized expense report.

Section 8.6 — Payment Obligation Borne by HSAG. All fees, expenses, and other amounts payable under this Agreement are the sole financial obligation of HSAG. VPI shall have no obligation to pay any Monitor fees, expenses, or other amounts under this Agreement. In the event that Halcyon US Holdings is designated as the paying entity for administrative convenience, HSAG shall guaranty and remain ultimately liable for all payment obligations.

Section 8.7 — Late Payments. Any payment not received by WCG on or before the applicable due date shall bear interest at the rate of one and one-half percent (1.5%) per month (or the maximum rate permitted by applicable law, if lower) from the due date until the date of actual payment. The accrual of late payment interest shall not constitute a waiver of any other rights or remedies available to WCG under this Agreement or applicable law.

Section 8.8 — No Linkage of Payment to Findings. HSAG's obligation to pay all fees, expenses, and other amounts under this Agreement is unconditional and absolute, and shall not be contingent upon, affected by, reduced on account of, or otherwise linked to WCG's findings, conclusions, assessments, or recommendations. No finding of compliance, non-compliance, or any other determination by WCG shall give rise to any right of HSAG to withhold, reduce, offset, or delay payment under this Agreement.

ARTICLE IX — REPORTING OBLIGATIONS

Section 9.1 — Reports to CFIUS Monitoring Agencies. WCG shall submit the following reports and communications directly to the CFIUS Monitoring Agencies:

(a) Annual Compliance Report. The Annual Compliance Report prepared in accordance with Article IV, submitted on or before each anniversary of the Effective Date;

(b) Ad Hoc Review Reports. Written reports following the completion of each Ad Hoc Review conducted pursuant to Section 5.1, submitted within the timeframe specified in the applicable Audit Plan or, if no timeframe is specified, within thirty (30) calendar days of the commencement of the review;

(c) Incident Investigation Reports. Written incident investigation reports prepared in accordance with Section 5.2(e), submitted within thirty (30) calendar days of the commencement of the investigation (or interim reports at two-week intervals for complex investigations);

(d) Immediate Notifications. Immediate written notifications of any actual or suspected material violation of the NSA, submitted within forty-eight (48) hours of WCG becoming aware of the violation or suspected violation; and

(e) Quarterly Status Summaries. Brief written Quarterly Status Reports summarizing monitoring activities conducted during the preceding calendar quarter, submitted within fifteen (15) calendar days of the end of each calendar quarter. The format and content of the Quarterly Status Reports shall follow the template set forth in Exhibit D.

Section 9.2 — Reports to HSAG and VPI. Copies of all reports and communications submitted by WCG to the CFIUS Monitoring Agencies under Section 9.1 shall be provided simultaneously to HSAG (through General Counsel Stefan Lohse) and VPI's Government Security Committee, except to the extent that classified information or information designated as restricted by the CFIUS Monitoring Agencies is contained therein and cannot be shared with non-cleared recipients. In such cases, WCG shall prepare and provide a redacted or unclassified summary to the affected recipient in lieu of the classified version.

Section 9.3 — Form of Reports. All reports, communications, and correspondence required under this Agreement shall be prepared and submitted in written English. All reports shall be submitted in both electronic format (encrypted PDF transmitted via approved secure channels) and hard copy format. Classified reports and communications shall be handled, stored, transmitted, and protected in strict accordance with applicable NISPOM requirements, the security procedures of VPI's Classified Facility, and any specific instructions issued by the CFIUS Monitoring Agencies or DCSA.

Section 9.4 — Record Retention. WCG shall retain all work papers, audit files, reports, correspondence, interview notes, supporting documentation, and all other records relating to the performance of monitoring activities under this Agreement for a period of not less than seven (7) years following the later of (a) the termination of this Agreement or (b) the expiration or termination of the NSA. All such records shall be maintained in a secure manner consistent with applicable NISPOM requirements and shall be made available to the CFIUS Monitoring Agencies upon request at any time during the retention period.

Section 9.5 — Direct Communication with CFIUS. WCG may communicate directly with the CFIUS Monitoring Agencies at any time, without prior notice to, consent of, or consultation with HSAG, Halcyon US Holdings, or VPI. This right of direct communication is fundamental to WCG's independence and its duty to the United States Government and shall not be curtailed, conditioned, or restricted in any manner by any Party.

ARTICLE X — TERM AND TERMINATION

Section 10.1 — Term. The initial term of this Agreement shall be three (3) years, commencing on January 19, 2024 and expiring on January 19, 2027, subject to automatic annual renewal as provided in Section 2.4. This Agreement is co-terminus with the NSA, and the Term shall not extend beyond the effective period of the NSA unless otherwise directed by the CFIUS Monitoring Agencies.

Section 10.2 — Termination by CFIUS. The CFIUS Monitoring Agencies may, in their sole discretion, direct the removal and replacement of WCG as the third-party compliance monitor at any time for cause, including without limitation WCG's material breach of this Agreement, material failure to perform its monitoring obligations, loss of required security clearances, conflicts of interest, or any other circumstances that, in the judgment of the CFIUS Monitoring Agencies, impair WCG's ability to serve effectively as the compliance monitor. Upon receipt of such direction, HSAG shall promptly take all actions necessary to effect the removal of WCG and the appointment of a replacement monitor approved by CFIUS.

Section 10.3 — Resignation by WCG. WCG may resign from its appointment as the third-party compliance monitor upon not less than ninety (90) calendar days' prior written notice to HSAG, VPI, and the CFIUS Monitoring Agencies. Notwithstanding the delivery of such notice, WCG's resignation shall not become effective, and WCG shall continue to perform all monitoring obligations under this Agreement, until a replacement monitor has been approved by CFIUS and formally engaged by HSAG under a successor monitoring agreement. WCG shall cooperate fully in the identification, vetting, and transition to a successor monitor as provided in Section 10.6.

Section 10.4 — Termination by HSAG. HSAG may seek to terminate WCG's appointment as the third-party compliance monitor only with the prior written approval of the CFIUS Monitoring Agencies, and only upon the basis of documented cause, including without limitation material breach of this Agreement by WCG, incapacity of Gerald Whitmore (to the extent no suitable replacement is available under Article XIII), or the existence of a conflict of interest that cannot be adequately remedied. Any request for termination by HSAG shall be submitted in writing to the CFIUS Monitoring Agencies and shall include a detailed statement of the grounds for the proposed termination and supporting documentation. WCG shall be provided with a reasonable opportunity to respond to the allegations. A replacement monitor must be approved by CFIUS before any termination under this Section 10.4 becomes effective.

Section 10.5 — Effect of NSA Termination. This Agreement shall automatically terminate upon the expiration or termination of the NS

THIRD-PARTY COMPLIANCE MONITOR AGREEMENT
Entered into in connection with National Security Agreement NSA-2024-0019
CFIUS Case No. CFIUS-023-07-3841
Effective Date: January 19, 2024
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THIRD-PARTY COMPLIANCE MONITOR AGREEMENT
This Third-Party Compliance Monitor Agreement (this "Agreement") is entered into as of January 19, 2024 (the "Effective Date"), co-terminus with the execution date of the National Security Agreement referenced herein, by and among the following parties:
HALCYON SEMICONDUCTOR AKTIENGESELLSCHAFT ("HSAG" or the "Company"), an Aktiengesellschaft organized and existing under the laws of the Federal Republic of Germany, registered in the commercial register (Handelsregister) of the Amtsgericht Dresden under HRB 28416, with its principal office at Industriestraße 44, 01099 Dresden, Saxony, Germany;
HALCYON US HOLDINGS INC. ("Halcyon US Holdings"), a corporation organized and existing under the laws of the State of Delaware, with its registered office at 160 Greentree Drive, Suite 101, Dover, DE 19904 (EIN: 93-2841067);
Marlowe Asset Management PHOTONICS INC. ("VPI"), a corporation organized and existing under the laws of the State of Delaware, with its principal office at 7400 Ridgeline Parkway, Colorado Springs, CO 80919 (EIN: 26-4371885);
WHITMORE COMPLIANCE GROUP LLC ("Monitor" or "WCG"), a limited liability company organized and existing under the laws of the State of Delaware, with its principal office at 1300 Crystal Drive, Suite 710, Arlington, VA 22202;
(each, a "Party" and collectively, the "Parties").
RECITALS
WHEREAS, HSAG, acting through its wholly-owned indirect subsidiary Halcyon US Holdings, is acquiring one hundred percent (100%) of the outstanding equity interests of VPI, a United States company that designs and manufactures advanced gallium-nitride (GaN) power amplifier chips used in defense radar systems, satellite communications platforms, and fifth-generation (5G) wireless telecommunications infrastructure (the "Transaction");
WHEREAS, VPI holds both classified and unclassified contracts with the United States Department of Defense, maintains a Facility Security Clearance at the SECRET level under the National Industrial Security Program (CAGE Code: 7VK92), is registered with the Directorate of Defense Trade Controls of the United States Department of State (Registration No. M-24817), and designs, develops, manufactures, and exports products, technical data, and defense services subject to 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;
WHEREAS, the Transaction constitutes a "covered transaction" within the meaning of Section 721 of the Defense Production Act of 1950, as amended (50 U.S.C. § 4565), and the regulations promulgated thereunder at 31 C.F.R. Part 800, and was the subject of a voluntary joint notice filed by HSAG and VPI with the Committee on Foreign Investment in the United States ("CFIUS") on July 14, 2023, and assigned CFIUS Case No. CFIUS-023-07-3841;
WHEREAS, CFIUS concluded its review and investigation of the Transaction pursuant to 31 C.F.R. Part 800, and the parties to the Transaction and the United States Government, acting through the United States Department of the Treasury (Office of Investment Security), the United States Department of Defense, and the United States Department of Energy (collectively, the "CFIUS Monitoring Agencies"), executed a National Security Agreement dated January 19, 2024, bearing reference number NSA-2024-0019 (the "NSA"), setting forth certain obligations, conditions, and mitigation measures to address the national security risks identified by CFIUS in connection with the Transaction;
WHEREAS, Section 7.1 of the NSA requires HSAG to appoint, at HSAG's sole cost and expense, a third-party compliance monitor approved by CFIUS (the "Monitor") to conduct ongoing compliance monitoring, annual comprehensive compliance audits, ad hoc targeted reviews, and incident investigations with respect to the obligations set forth in the NSA, its annexes, and any supplementary agreements or directives issued by the CFIUS Monitoring Agencies;
WHEREAS, WCG was submitted by HSAG for consideration as the third-party compliance monitor and was formally approved by CFIUS on December 8, 2023, following a thorough vetting process conducted by the CFIUS Monitoring Agencies;
WHEREAS, Gerald Whitmore, the principal and managing member of WCG, is a former official of the Federal Bureau of Investigation's Counterintelligence Division, with more than twenty-five (25) years of experience in national security matters, and currently holds an active Top Secret / Sensitive Compartmented Information (TS/SCI) security clearance issued by the United States Government;
WHEREAS, the Parties wish to set forth the terms and conditions of WCG's engagement as the third-party compliance monitor under the NSA, including the scope of monitoring services, access rights, reporting obligations, compensation, independence requirements, and related matters;
NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE I — DEFINITIONS
Section 1.1 — Defined Terms. As used in this Agreement, the following terms shall have the meanings set forth below. All capitalized terms used but not otherwise defined in this Agreement shall have the meanings ascribed to them in the NSA, including those terms defined in NSA Annex A (Definitions).
(a) "Ad Hoc Review" means a targeted review of one or more specific areas of NSA compliance, initiated by the Monitor pursuant to its own determination, at the request of any CFIUS Monitoring Agency, or at the request of the Government Security Committee, and conducted outside the scope and schedule of the Annual Compliance Audit.
(b) "Agreement" means this Third-Party Compliance Monitor Agreement, including all exhibits attached hereto, as the same may be amended, supplemented, or modified from time to time in accordance with Section 15.4.
(c) "Annual Compliance Audit" means the comprehensive annual review of HSAG's, Halcyon US Holdings', and VPI's compliance with all provisions, obligations, conditions, and requirements of the NSA, conducted by WCG in accordance with Article IV of this Agreement and the procedures set forth in Exhibit B.
(d) "Annual Compliance Report" means the written report prepared by WCG following each Annual Compliance Audit, as described in Section 4.4 and prepared in accordance with the template set forth in NSA Annex E.
(e) "CFIUS" means the Committee on Foreign Investment in the United States, an interagency committee chaired by the United States Department of the Treasury, as established under Section 721 of the Defense Production Act of 1950, as amended.
(f) "CFIUS Monitoring Agencies" means the Defense Counterintelligence and Security Agency ("DCSA"), the United States Department of the Treasury (Office of Investment Security), the United States Department of Defense, and the United States Department of Energy, acting individually or collectively in their capacity as monitoring and enforcement agencies under the NSA.
(g) "Classified Facility" means VPI's facility located at 9200 Innovation Boulevard, Albuquerque, NM 87113, consisting of approximately forty-five thousand (45,000) square feet of gallium-nitride-on-silicon-carbide (GaN-on-SiC) fabrication space, and specifically including clean room Sections C-7, C-8, C-9, C-10, C-11, and C-12, which have been accredited by DCSA for the processing, storage, and handling of classified information at the SECRET level.
(h) "Controlled Technical Data" means all technical data, technology, software, and related information that is subject to export controls under ITAR (including, without limitation, items classified under United States Munitions List Category XI(a)(3)) or under EAR (including, without limitation, items classified under Export Control Classification Numbers ("ECCNs") 3A001, 3A991, and 3E001), as well as any technical data designated as controlled by the Technology Control Plan.
(i) "Effective Date" has the meaning set forth in the preamble to this Agreement.
(j) "Government Security Committee" or "GSC" means the committee of the Board of Directors of VPI composed of the three (3) Security Board Members, as established and constituted pursuant to Section 4.2 of the NSA, which has exclusive authority over classified and ITAR-controlled programs, personnel security matters, and facility security matters of VPI.
(k) "Incident" means any actual or suspected (i) breach of any obligation, condition, or requirement of the NSA, (ii) unauthorized access to classified information or Controlled Technical Data by any person, including without limitation any HSAG employee, agent, or representative, (iii) cybersecurity incident that is reportable under the NSA, including any unauthorized intrusion, data exfiltration, or compromise of VPI IT systems, or (iv) any other event or circumstance that, in the reasonable judgment of the Monitor, the CFIUS Monitoring Agencies, or the GSC, may constitute a threat to the national security of the United States in connection with the Transaction.
(l) "Key Personnel" means (i) Dr. Nathan Trevorrow, Chief Executive Officer of VPI, (ii) Marissa Sung-Avila, President and Chief Operating Officer of VPI, and (iii) Col. (Ret.) Bryce Hendrickson, Vice President of Government Programs and Facility Security Officer of VPI, each of whom is subject to the personnel retention requirements set forth in Section 5.4 of the NSA.
(m) "Monitor Personnel" means Gerald Whitmore and any and all employees, subcontractors, consultants, or agents of WCG who are assigned to perform services under this Agreement, as identified in Exhibit A or as supplemented from time to time with prior notice to the Parties and, where security clearances are required, with appropriate clearance verification.
(n) "NISPOM" means the National Industrial Security Program Operating Manual, 32 C.F.R. Part 117, as amended from time to time, which governs the protection of classified information disclosed to or possessed by contractors.
(o) "NSA" means the National Security Agreement dated January 19, 2024, bearing reference number NSA-2024-0019, executed by and among HSAG, Halcyon US Holdings, VPI, and the United States Government (acting through the CFIUS Monitoring Agencies), including all annexes, appendices, and supplements thereto, as the same may be amended from time to time.
(p) "Party" and "Parties" have the meanings set forth in the preamble to this Agreement.
(q) "Security Board Members" means the three (3) members of the Board of Directors of VPI who are United States citizens and who hold or are eligible to hold Top Secret / Sensitive Compartmented Information (TS/SCI) security clearances, including the independent Security Director appointed pursuant to Section 4.3 of the NSA, each of whom serves on the Government Security Committee.
(r) "Technology Control Plan" or "TCP" means the technology control plan set forth in NSA Annex B, which establishes the policies, procedures, and controls governing access to, use of, and transfer of VPI technical data, technology, and Controlled Technical Data, and which is designed to prevent unauthorized disclosure of such information to non-U.S. persons and to HSAG and its non-U.S. affiliates.
(s) "Transaction" means the acquisition by HSAG, acting through Halcyon US Holdings, of one hundred percent (100%) of the outstanding equity interests of VPI, as described in the recitals to this Agreement and as reviewed by CFIUS under CFIUS Case No. CFIUS-023-07-3841.
ARTICLE II — APPOINTMENT AND TERM
Section 2.1 — Appointment. HSAG, Halcyon US Holdings, and VPI hereby appoint WCG as the third-party compliance monitor under the NSA, and WCG hereby accepts such appointment, subject to the terms and conditions set forth in this Agreement. WCG shall serve as the sole third-party compliance monitor under the NSA unless and until replaced in accordance with Article X.
Section 2.2 — Effective Date. This Agreement shall be effective as of January 19, 2024, co-terminus with the execution date of the NSA.
Section 2.3 — Initial Term. The initial term of this Agreement shall be three (3) years from the Effective Date, commencing on January 19, 2024 and expiring on January 19, 2027 (the "Initial Term"), unless earlier terminated in accordance with Article X.
Section 2.4 — Renewal. Upon the expiration of the Initial Term, this Agreement shall automatically renew for successive periods of one (1) year each (each, a "Renewal Term" and, together with the Initial Term, the "Term"), unless (a) terminated in accordance with Article X, (b) the NSA has expired or been terminated, or (c) CFIUS Monitoring Agencies have directed the replacement of WCG. Each renewal shall be subject to continued CFIUS approval, which may be confirmed by the absence of an objection from the CFIUS Monitoring Agencies within thirty (30) days following written notice of renewal provided by HSAG to the CFIUS Monitoring Agencies.
Section 2.5 — Relationship to NSA. This Agreement is entered into pursuant to, and is governed by, the requirements of the NSA. The obligations set forth in this Agreement are intended to supplement, implement, and effectuate the monitoring and compliance requirements of the NSA. In the event of any conflict, inconsistency, or ambiguity between any provision of this Agreement and any provision of the NSA (including its annexes), the terms and provisions of the NSA shall control and prevail.
Section 2.6 — CFIUS Approval. WCG's appointment as the third-party compliance monitor was approved by CFIUS on December 8, 2023, following a vetting process conducted by the CFIUS Monitoring Agencies. Any replacement of WCG as the third-party compliance monitor, whether by reason of termination, resignation, removal, or otherwise, must receive prior written approval from the CFIUS Monitoring Agencies before such replacement becomes effective, and no replacement shall be deemed authorized until such approval has been obtained.
ARTICLE III — SCOPE OF MONITORING SERVICES
Section 3.1 — General Scope. WCG shall monitor HSAG's, Halcyon US Holdings', and VPI's compliance with all obligations, conditions, requirements, and restrictions set forth in the NSA, including, without limitation, the annexes and supplements thereto. The monitoring services to be performed by WCG shall include, but shall not be limited to, the specific areas of compliance oversight specified in Sections 3.2 through 3.9 of this Article III. WCG shall exercise independent professional judgment in determining the appropriate scope, methods, and frequency of monitoring activities, subject to the minimum requirements set forth in this Agreement and the NSA.
Section 3.2 — Board Governance and GSC Compliance. WCG shall monitor compliance with the corporate governance requirements of the NSA, including the following:
(a) Verification that the reconstituted Board of Directors of VPI is comprised of five (5) members, consisting of three (3) Security Board Members who are United States citizens and who hold or are eligible to hold TS/SCI security clearances (including the independent Security Director) and two (2) designees of HSAG;
(b) Verification that the Government Security Committee has been duly constituted and maintains exclusive authority over all classified and ITAR-controlled programs, personnel security decisions, facility security matters, and related national security matters of VPI, as required by Section 4.2 of the NSA;
(c) Confirmation that HSAG designees on the VPI Board of Directors do not hold, access, or seek access to any classified information, classified programs, or classified facilities of VPI;
(d) Review of GSC and Board of Directors meeting minutes, agendas, resolutions, voting records, and supporting materials to verify that the governance structure and decision-making processes are functioning in accordance with the NSA; and
(e) Assessment of the independence and effectiveness of the Security Board Members and the independent Security Director in carrying out their responsibilities under the NSA.
Section 3.3 — Technology Control Plan (TCP) Compliance. WCG shall monitor adherence to the Technology Control Plan set forth in NSA Annex B, including the following:
(a) Verification that no VPI ITAR- or EAR-controlled technical data, technology, or defense articles have been transferred, disclosed, or made available to any non-U.S. person, including any HSAG employee, agent, or affiliate, without prior authorization from the appropriate United States Government authority (i.e., the Directorate of Defense Trade Controls for ITAR-controlled items or the Bureau of Industry and Security for EAR-controlled items);
(b) Review of information-sharing procedures, protocols, and practices between VPI and HSAG and its affiliates, including any technical assistance agreements, manufacturing license agreements, or other arrangements that may involve the transfer or disclosure of Controlled Technical Data;
(c) Audit of access logs, technology transfer request records, export license applications and approvals, and related compliance documentation to verify adherence to applicable ITAR and EAR requirements;
(d) Verification of VPI's continued compliance with its registration with the Directorate of Defense Trade Controls (Registration No. M-24817), including timely renewal and accurate reporting of all registerable activities; and
(e) Verification of the accuracy and currency of VPI's EAR self-classifications, including with respect to ECCNs 3A001, 3A991, and 3E001, and review of any commodity jurisdiction determinations or advisory opinions obtained by VPI during the applicable monitoring period.
Section 3.4 — Facility Security and Access Controls. WCG shall monitor compliance with the facility security and access control requirements of the NSA, including the following:
(a) Verification of compliance with NSA Annex F (Facility Access Procedures) governing all visits by HSAG personnel (including employees, agents, consultants, and representatives of HSAG and its non-U.S. affiliates) to any VPI facility;
(b) Verification that HSAG personnel do not access classified areas of the Classified Facility, including clean room Sections C-7 through C-12 at 9200 Innovation Boulevard, Albuquerque, NM 87113, without prior written approval from both DCSA and the Government Security Committee, and that any such access, if approved, is conducted under appropriate escort and security protocols;
(c) Review of visitor logs, badge access records, escort documentation, and facility access request forms for all HSAG personnel visits to VPI facilities, including the Colorado Springs headquarters and the Albuquerque Classified Facility;
(d) Confirmation that VPI maintains its Facility Security Clearance at the SECRET level (CAGE Code: 7VK92) in good standing with DCSA, and that VPI has not experienced any adverse security actions, suspension, or revocation proceedings;
(e) Verification that Col. (Ret.) Bryce Hendrickson continues to serve as VPI's Facility Security Officer ("FSO") in accordance with NISPOM requirements, or that any replacement FSO has been approved by both the Government Security Committee and DCSA in accordance with the NSA; and
(f) Assessment of the adequacy and effectiveness of physical security measures at all VPI facilities, including perimeter controls, intrusion detection systems, access control mechanisms, and closed-circuit television monitoring.
Section 3.5 — Cybersecurity Compliance. WCG shall monitor compliance with the cybersecurity requirements of the NSA, including the following:
(a) Verification of compliance with NSA Annex D, which requires VPI to maintain cybersecurity controls consistent with the National Institute of Standards and Technology Special Publication 800-171 (NIST SP 800-171), Revision 2 or any successor revision, for the protection of Controlled Unclassified Information ("CUI");
(b) Verification that VPI conducts annual third-party penetration testing of its information technology systems and networks, and review of the results, findings, and remediation plans arising from each such penetration test;
(c) Confirmation that VPI's information technology systems and networks are physically and logically separated from HSAG's global network, and that there exists no shared cloud infrastructure, shared data repositories, shared authentication systems, or other interconnection between VPI IT systems and HSAG IT systems;
(d) Review of cybersecurity incident response records, including logs of all cybersecurity incidents (whether actual or suspected), and confirmation that all reportable incidents have been reported to DCSA within seventy-two (72) hours as required by Section 8.3 of the NSA; and
(e) Assessment of the adequacy of VPI's cybersecurity policies, procedures, training programs, and incident response plans in light of the evolving threat landscape and the sensitivity of VPI's classified and controlled programs.
Section 3.6 — Data Segregation. WCG shall monitor the physical and logical separation of VPI's information technology systems and data from HSAG's global network and information infrastructure, including the following:
(a) Audit and review of VPI's network architecture, including network diagrams, system topology documentation, firewall configurations, and virtual private network ("VPN") access controls, to verify that no unauthorized connections exist between VPI and HSAG systems;
(b) Review of access control lists, user account management procedures, and role-based access controls to verify that no HSAG personnel (other than those specifically authorized under the NSA and the TCP) have access to VPI IT systems, data stores, or network resources;
(c) Review of data-flow diagrams and data transfer logs to verify that no VPI data, including Controlled Technical Data, classified information, or proprietary trade secret information, is being transmitted to or stored on HSAG systems or any cloud infrastructure shared with HSAG; and
(d) Verification that any business systems integration (e.g., enterprise resource planning, financial reporting, or human resources systems) between VPI and HSAG is limited to non-sensitive, non-controlled business information and does not create any pathway for the unauthorized transfer of Controlled Technical Data or classified information.
Section 3.7 — Personnel Continuity. WCG shall monitor compliance with the Key Personnel retention requirements of the NSA, including the following:
(a) Verification that each Key Personnel member — specifically, Dr. Nathan Trevorrow (CEO), Marissa Sung-Avila (President and COO), and Col. (Ret.) Bryce Hendrickson (VP Government Programs / FSO) — remains employed by VPI in their respective positions for a minimum period of twenty-four (24) months following the closing of the Transaction (i.e., through at least February 9, 2026), or that any departure has been addressed in accordance with Section 5.4(c) of the NSA;
(b) Periodic review of the employment status of each Key Personnel member, including verification of continued active employment, any changes in title, responsibilities, or reporting structure, and any indications of planned departure or constructive termination;
(c) In the event of the departure, termination, or incapacitation of any Key Personnel member, verification that any proposed replacement has received prior approval from both the Government Security Committee and DCSA, and that the replacement possesses qualifications, experience, and security clearance eligibility commensurate with the requirements of the position; and
(d) Assessment of whether the departure or replacement of any Key Personnel member has had, or is reasonably likely to have, an adverse effect on VPI's ability to comply with the NSA or to maintain its classified programs and government contracts.
Section 3.8 — Pre-Notification of Material Changes. WCG shall monitor compliance with the pre-notification requirements of the NSA, including the following:
(a) Verification that HSAG provides written notice to CFIUS at least thirty (30) calendar days prior to any material change to VPI's business, operations, or organizational structure, including, without limitation, any proposed divestiture of VPI assets or business lines, entry into new foreign subcontracts, changes to cleared personnel, relocation of facilities, or modifications to the scope of classified programs;
(b) Review of all notifications submitted by HSAG to CFIUS under the pre-notification provisions of the NSA, and assessment of the completeness, accuracy, and timeliness of each such notification; and
(c) Identification and reporting to the CFIUS Monitoring Agencies of any material changes that have occurred, or are planned to occur, for which the required pre-notification has not been timely submitted.
Section 3.9 — Government Contracts and Export Control Compliance. WCG shall monitor VPI's government contracts and export control compliance, including the following:
(a) Monitoring of the continuity, performance, and compliance status of VPI's fourteen (14) active contracts with the United States Department of Defense, which represent an aggregate contract backlog of approximately one hundred ninety-three million dollars ($193,000,000) as of the Effective Date;
(b) Review of the status of all novation actions required under Federal Acquisition Regulation ("FAR") 42.12 for contracts that require novation as a result of the Transaction, including verification that all necessary novation agreements have been executed or are in the process of being negotiated with the contracting officers;
(c) Monitoring of compliance with Defense Federal Acquisition Regulation Supplement ("DFARS") clause 252.209-7002 (Disclosure of Ownership or Control by a Foreign Government), including verification that all required disclosures have been made accurately and timely;
(d) Review of the status of VPI's three (3) active DSP-5 export licenses, including verification that the licenses remain valid, that all conditions and provisos are being satisfied, and that any amendments required as a result of the Transaction or changes in circumstances have been timely submitted to the Directorate of Defense Trade Controls; and
(e) Monitoring of VPI's overall export compliance program, including compliance with ITAR recordkeeping requirements (22 C.F.R. § 122.5), EAR recordkeeping requirements (15 C.F.R. Part 762), and any voluntary disclosure obligations.
ARTICLE IV — ANNUAL COMPLIANCE AUDIT
Section 4.1 — Timing. WCG shall conduct a comprehensive Annual Compliance Audit covering all obligations, conditions, and requirements of the NSA. The first Annual Compliance Audit shall be completed, and the corresponding Annual Compliance Report submitted, no later than January 19, 2025 (one year from the Effective Date). Subsequent Annual Compliance Audits shall be conducted on an annual basis, with the Annual Compliance Report due on or before each anniversary of the Effective Date throughout the Term of this Agreement.
Section 4.2 — Audit Plan. Not less than thirty (30) calendar days prior to the commencement of each Annual Compliance Audit, WCG shall prepare and submit a detailed annual audit plan (the "Audit Plan") to the CFIUS Monitoring Agencies and the Government Security Committee. The Audit Plan shall describe the proposed scope, methodology, timeline, and resource allocation for the forthcoming audit, including the identification of specific compliance areas to be examined, the schedule for site visits, the anticipated document requests, and the personnel to be interviewed. The CFIUS Monitoring Agencies may provide comments, suggestions, or directives regarding the Audit Plan, and WCG shall incorporate all reasonable directives received from the CFIUS Monitoring Agencies.
Section 4.3 — Audit Scope. Each Annual Compliance Audit shall cover all areas specified in Article III, Sections 3.2 through 3.9, and shall include, at a minimum, the following activities:
(a) Review of all corporate governance documents, including VPI's certificate of incorporation, bylaws, board resolutions, committee charters, and related organizational documents, as well as all Board of Directors and Government Security Committee meeting minutes, agendas, resolutions, and supporting materials for the period under review;
(b) Physical inspection of VPI facilities, including both the Colorado Springs headquarters at 7400 Ridgeline Parkway, Colorado Springs, CO 80919 and the Albuquerque Classified Facility at 9200 Innovation Boulevard, Albuquerque, NM 87113, subject to the requirement that all Monitor Personnel accessing the Classified Facility hold appropriate security clearances as specified in Section 6.4;
(c) Review and assessment of VPI's information technology systems architecture, network topology, and cybersecurity controls, including evaluation of NIST SP 800-171 compliance, penetration testing results, vulnerability assessments, and cybersecurity incident response capabilities;
(d) Review of all technology transfer records, export compliance documentation, ITAR and EAR classification records, DSP-5 export license files, export license applications, voluntary disclosures, and Technology Control Plan implementation records;
(e) In-person or secure video interviews with Key Personnel, including Dr. Nathan Trevorrow (CEO), Marissa Sung-Avila (President and COO), and Col. (Ret.) Bryce Hendrickson (VP Government Programs / FSO), as well as interviews with Security Board Members, the independent Security Director, and selected VPI and HSAG employees as determined by WCG to be relevant to the audit;
(f) Review of all visitor logs, facility access records, badge access data, escort documentation, and facility access request forms for the period under review, with particular attention to any visits by HSAG personnel or other non-U.S. persons;
(g) Review of all Incident reports, including reports of actual or suspected NSA breaches, unauthorized access events, cybersecurity incidents, and any other reportable events, and assessment of the adequacy and timeliness of reporting and remediation;
(h) Assessment of the implementation and effectiveness of the Technology Control Plan, including review of TCP training records, TCP acknowledgment forms, and TCP compliance testing results; and
(i) Review of personnel security records and clearance status for VPI's two hundred and twelve (212) cleared employees, including verification of active clearances, periodic reinvestigation status, and adverse information reporting compliance.
Section 4.4 — Audit Report. Following the completion of each Annual Compliance Audit, WCG shall prepare a comprehensive written Annual Compliance Report in accordance with the template and format set forth in NSA Annex E (Annual Compliance Report Template). Each Annual Compliance Report shall include, at a minimum, the following:
(a) An executive summary of the audit scope, methodology, and key findings;
(b) A detailed description of all monitoring and audit activities conducted during the period under review;
(c) Findings of fact with respect to each area of NSA compliance examined, organized by compliance category corresponding to Sections 3.2 through 3.9 of this Agreement;
(d) Identification and description of any deficiencies, violations, or areas of non-compliance observed, including an assessment of the severity, root cause, and potential national security implications of each deficiency;
(e) Observations regarding areas of potential concern or risk, even where no deficiency has been identified;
(f) Recommended corrective actions for each identified deficiency, including proposed timelines for remediation;
(g) Status of corrective actions previously recommended in prior Annual Compliance Reports, ad hoc review reports, or incident investigation reports;
(h) An overall compliance assessment, including a statement as to whether, in the professional judgment of the Monitor, HSAG, Halcyon US Holdings, and VPI are in substantial compliance with the NSA; and
(i) Any other matters that WCG, in its independent professional judgment, believes should be brought to the attention of the CFIUS Monitoring Agencies.
Section 4.5 — Report Distribution. Annual Compliance Reports shall be submitted simultaneously to the following recipients:
(a) The CFIUS Monitoring Agencies, including the Defense Counterintelligence and Security Agency (DCSA), the United States Department of the Treasury (Office of Investment Security), the United States Department of Defense, and the United States Department of Energy, at the addresses and through the transmission methods directed by the CFIUS Monitoring Agencies;
(b) The Government Security Committee of VPI, c/o Col. (Ret.) Bryce Hendrickson, GSC Chair, at VPI's principal office at 7400 Ridgeline Parkway, Colorado Springs, CO 80919;
(c) HSAG General Counsel, Stefan Lohse, at HSAG's principal office at Industriestraße 44, 01099 Dresden, Saxony, Germany; and
(d) A copy to buyer's counsel, Calderwood & Harkness LLP, Attention: Margaret "Peggy" Ashworth, 1750 K Street NW, Suite 800, Washington, DC 20006.
Reports provided to recipients under clauses (c) and (d) above shall be redacted to remove any classified information or information that cannot be shared with non-cleared recipients, and an unclassified summary shall be provided in lieu thereof as necessary.
Section 4.6 — Report Timeline. The Annual Compliance Audit process shall adhere to the following timeline:
(a) WCG shall provide a draft of the Annual Compliance Report to HSAG (through General Counsel Stefan Lohse) and VPI (through the Government Security Committee) for a factual accuracy review, which review period shall not exceed ten (10) business days from the date of delivery of the draft report;
(b) HSAG and VPI may submit written comments to WCG identifying any factual inaccuracies or requesting clarification of factual matters; provided, however, that WCG retains sole and exclusive authority over all conclusions, findings, assessments, opinions, and recommendations contained in the Annual Compliance Report, and neither HSAG, Halcyon US Holdings, nor VPI shall have any right to approve, modify, veto, or otherwise influence the substantive content of the report;
(c) WCG shall consider any factual accuracy comments received and, to the extent WCG determines that any corrections are warranted, shall incorporate such corrections into the final report; and
(d) The final Annual Compliance Report shall be submitted to all recipients identified in Section 4.5 within sixty (60) calendar days of the commencement of the Annual Compliance Audit.
ARTICLE V — AD HOC REVIEWS AND INCIDENT INVESTIGATIONS
Section 5.1 — Ad Hoc Reviews. WCG may conduct Ad Hoc Reviews at any time during the Term of this Agreement, based on any one or more of the following circumstances:
(a) A request from any CFIUS Monitoring Agency directing or recommending a targeted review of one or more specific areas of NSA compliance;
(b) A request from the Government Security Committee of VPI identifying a specific area of concern and requesting WCG's review;
(c) WCG's own independent determination, based on information obtained through ongoing monitoring activities, third-party reports, open-source intelligence, or any other source, that circumstances warrant a targeted review of one or more specific areas of NSA compliance; or
(d) Information received by WCG from any source, including anonymous or confidential sources, suggesting actual or potential non-compliance with any provision of the NSA.
Ad Hoc Reviews may be narrow in scope, addressing a single compliance area, or may encompass multiple areas depending on the circumstances giving rise to the review. WCG shall have sole discretion to determine the appropriate scope, methodology, and duration of each Ad Hoc Review, subject to any specific directives received from the CFIUS Monitoring Agencies.
Section 5.2 — Incident Investigations. Upon becoming aware of any actual or suspected Incident (as defined in Section 1.1(k)), WCG shall promptly initiate an investigation. Each incident investigation shall include the following:
(a) Immediate Notification. WCG shall provide immediate written notification to the CFIUS Monitoring Agencies within forty-eight (48) hours of WCG becoming aware of the actual or suspected Incident, including a preliminary description of the Incident, the date and time of discovery, the nature and scope of the potential violation, and any immediate remedial actions taken or recommended;
(b) On-Site Inspection. WCG shall conduct on-site inspections of any VPI or HSAG facility as necessary to investigate the Incident, including examination of physical spaces, equipment, and security systems relevant to the Incident;
(c) Personnel Interviews. WCG shall conduct interviews with all VPI, Halcyon US Holdings, and HSAG personnel who may have knowledge of or involvement in the Incident, including Key Personnel, FSO, IT staff, security personnel, and any other individuals identified as relevant during the course of the investigation;
(d) Records Review. WCG shall review all records, documents, electronic data, communications, access logs, system logs, and other information relevant to the Incident, including any materials voluntarily produced by HSAG, Halcyon US Holdings, or VPI and any materials obtained through WCG's access rights under Article VI;
(e) Written Incident Investigation Report. WCG shall prepare and submit a written incident investigation report within thirty (30) calendar days of the commencement of the investigation. The incident investigation report shall include a detailed description of the Incident, the investigative methodology employed, findings of fact, an assessment of the cause and severity of the Incident, an evaluation of national security implications, and recommended corrective actions. If the complexity or scope of an investigation requires additional time, WCG shall provide interim written status reports to the CFIUS Monitoring Agencies at not less than two-week intervals until the final report is completed.
Section 5.3 — Cooperation with Government Investigations. WCG shall fully cooperate with any investigation conducted by the CFIUS Monitoring Agencies or any other United States Government agency relating to compliance with the NSA or to potential violations of law arising from the Transaction. Such cooperation shall include, without limitation, providing the CFIUS Monitoring Agencies with access to all Monitor work papers, audit files, interview notes, correspondence, and communications generated in the course of WCG's monitoring activities, subject to any applicable attorney-client privilege or work product protections that may be asserted by any Party (provided that WCG itself shall not assert any privilege to withhold information from the CFIUS Monitoring Agencies).
Section 5.4 — Remediation Tracking. WCG shall establish and maintain a formal remediation tracking process to monitor and verify the implementation of all corrective actions recommended in any Ad Hoc Review report, incident investigation report, or Annual Compliance Report. WCG shall track each recommended corrective action through to completion, documenting the status, progress, and effectiveness of remediation efforts. The status of all outstanding corrective actions shall be reported in each Quarterly Status Report (per Section 9.1(e)) and in each subsequent Annual Compliance Report.
ARTICLE VI — ACCESS RIGHTS
Section 6.1 — Unrestricted Access. HSAG, Halcyon US Holdings, and VPI shall provide WCG and Monitor Personnel with full, prompt, and unrestricted access to the following, as reasonably necessary for WCG to perform its monitoring, auditing, and reporting obligations under this Agreement and the NSA:
(a) All VPI facilities, including the Colorado Springs headquarters at 7400 Ridgeline Parkway, Colorado Springs, CO 80919, and the Albuquerque Classified Facility at 9200 Innovation Boulevard, Albuquerque, NM 87113 (including clean room Sections C-7 through C-12), subject to the requirement that all Monitor Personnel accessing the Classified Facility or classified areas thereof hold appropriate United States Government security clearances at or above the level of the classified information to be accessed (it being acknowledged that Gerald Whitmore holds an active TS/SCI security clearance);
(b) All books, records, documents, correspondence, memoranda, agreements, contracts, reports, financial statements, and electronic data and records of VPI and Halcyon US Holdings that are relevant to NSA compliance, including without limitation corporate governance documents, board and committee minutes, employment records, security files, and compliance program documentation;
(c) All personnel of VPI, Halcyon US Holdings, and, to the extent necessary, HSAG, for the purpose of conducting interviews, obtaining explanations and clarifications, and gathering information relevant to NSA compliance;
(d) All Board of Directors and Government Security Committee meeting minutes, agendas, resolutions, voting records, presentations, and supporting materials;
(e) All information technology systems, network architecture documentation, system configuration records, cybersecurity audit reports, penetration testing reports, vulnerability assessment results, and incident logs maintained by or on behalf of VPI;
(f) All export control records, technology transfer logs and request forms, ITAR and EAR classification files, commodity jurisdiction determination records, DSP-5 export license documentation (including applications, approvals, provisos, and amendment records), and related export compliance documentation; and
(g) All government contract files, including contract instruments, modifications, task orders, delivery orders, novation agreements, contracting officer correspondence, contract performance reports, and Defense Contract Audit Agency ("DCAA") audit reports.
Section 6.2 — HSAG Facilities. WCG shall have reasonable access to HSAG facilities, including without limitation the offices of Halcyon US Inc. at 11501 Alterra Parkway, Suite 300, Austin, TX 78758, and HSAG's headquarters at Industriestraße 44, 01099 Dresden, Saxony, Germany, to the extent reasonably necessary for WCG to verify data segregation, network separation, and compliance with technology transfer restrictions imposed by the NSA and the Technology Control Plan. Such access shall be coordinated with HSAG General Counsel Stefan Lohse and shall be subject to reasonable scheduling accommodations, provided that HSAG shall not unreasonably delay or restrict such access.
Section 6.3 — No Obstruction. HSAG, Halcyon US Holdings, and VPI shall not obstruct, impede, delay, or interfere with WCG's exercise of its access rights under this Article VI. Any delay, denial, or restriction of access by HSAG, Halcyon US Holdings, or VPI shall be reported by WCG immediately to the CFIUS Monitoring Agencies. HSAG, Halcyon US Holdings, and VPI shall instruct all of their respective employees, officers, directors, agents, and contractors to cooperate fully with WCG and Monitor Personnel in the performance of monitoring activities.
Section 6.4 — Clearance Requirements for Monitor Personnel. All Monitor Personnel who require access to classified information or classified facilities in connection with the performance of monitoring services under this Agreement must hold appropriate United States Government security clearances at or above the level of the classified information or facility to be accessed. Gerald Whitmore's active TS/SCI security clearance is acknowledged and confirmed as of the Effective Date. WCG shall ensure that additional Monitor Personnel assigned to activities requiring access to classified information or facilities are appropriately cleared prior to accessing such information or facilities, and shall provide evidence of such clearances to VPI's Facility Security Officer and the CFIUS Monitoring Agencies upon request.
Section 6.5 — Notice of Visits. WCG shall provide reasonable advance written notice of not less than five (5) business days for scheduled site visits to VPI or HSAG facilities, except in the case of incident investigations or other circumstances in which WCG determines, in its sole professional judgment, that immediate access is warranted to protect the integrity of an investigation or to address an urgent national security concern. In such cases, WCG shall provide as much advance notice as is practicable under the circumstances and shall promptly notify the CFIUS Monitoring Agencies of the basis for any unscheduled or short-notice visit.
ARTICLE VII — INDEPENDENCE
Section 7.1 — Monitor Independence. WCG is an independent contractor and shall at all times maintain its independence from HSAG, Halcyon US Holdings, and VPI. Nothing in this Agreement shall be construed to create an employer-employee relationship, partnership, joint venture, or agency relationship between WCG and any other Party. WCG shall determine the manner and means by which it performs the monitoring services required under this Agreement, subject only to the requirements of the NSA and the directives of the CFIUS Monitoring Agencies.
Section 7.2 — No Conflicts of Interest. WCG represents and warrants that, as of the Effective Date, neither WCG nor any Monitor Personnel has any direct or indirect financial interest in, employment relationship with, or material business relationship with HSAG, Halcyon US Holdings, VPI, or any of their respective affiliates, subsidiaries, directors, officers, employees, or major shareholders, including without limitation Ridgecrest Ventures Fund III, L.P. and Cascadian Capital Partners Growth Fund II, L.P. WCG shall promptly disclose in writing to all Parties and to the CFIUS Monitoring Agencies any actual or potential conflict of interest that may arise during the Term of this Agreement, including any new business relationship, financial interest, or personal relationship that could reasonably be perceived as impairing WCG's independence or objectivity.
Section 7.3 — Duty to Government. WCG acknowledges and agrees that, notwithstanding the fact that WCG's fees and expenses are paid by HSAG, WCG's primary duty and obligation under this Agreement and the NSA is to CFIUS and the CFIUS Monitoring Agencies. WCG's findings, conclusions, assessments, opinions, and recommendations shall be based solely on WCG's independent professional judgment and shall not be subject to the approval, modification, direction, or veto of HSAG, Halcyon US Holdings, or VPI. WCG shall exercise its monitoring responsibilities in a manner consistent with the national security interests of the United States.
Section 7.4 — No Management Authority. WCG shall have no authority to manage, direct, control, or make business decisions for VPI, Halcyon US Holdings, or HSAG. WCG's role is strictly limited to monitoring, auditing, investigating, and reporting on compliance with the NSA. WCG shall not participate in or attempt to influence the management or operations of VPI, Halcyon US Holdings, or HSAG, other than through the issuance of compliance findings, observations, and recommendations in its reports.
Section 7.5 — Annual Conflict Certification. WCG shall provide a written annual certification of independence and absence of conflicts of interest to the CFIUS Monitoring Agencies concurrently with the submission of each Annual Compliance Report. Such certification shall be executed by Gerald Whitmore and shall confirm that, during the preceding twelve-month period, (a) WCG and all Monitor Personnel have maintained their independence from HSAG, Halcyon US Holdings, VPI, and their respective affiliates, (b) no conflicts of interest have arisen (or, if any potential conflicts have arisen, a detailed description thereof has been provided), and (c) WCG's monitoring activities, findings, and recommendations have not been improperly influenced by any Party.
ARTICLE VIII — COMPENSATION
Section 8.1 — Annual Fee. In consideration of the monitoring services to be performed by WCG under this Agreement, HSAG shall pay WCG an annual monitoring fee of one million two hundred thousand United States dollars ($1,200,000) (the "Annual Fee"). The Annual Fee covers all monitoring activities within the scope of the Annual Compliance Audit as described in Articles III and IV, as well as WCG's general ongoing monitoring activities, including attendance at GSC and Board meetings, routine document reviews, periodic facility inspections, and the preparation and submission of Quarterly Status Reports.
Section 8.2 — Quarterly Payments. The Annual Fee shall be payable in four (4) equal quarterly installments of three hundred thousand United States dollars ($300,000) each. Quarterly installments shall be due and payable on the nineteenth (19th) day of each calendar quarter during the Term, as follows: April 19, July 19, October 19, and January 19. The first quarterly installment shall be due on April 19, 2024. Payments shall be made by wire transfer to the account designated by WCG, as set forth in Exhibit C.
Section 8.3 — CPI Adjustment. The Annual Fee shall be adjusted on each anniversary of the Effective Date (commencing on January 19, 2025) based on the percentage change in the United States Bureau of Labor Statistics Consumer Price Index for All Urban Consumers (CPI-U), U.S. City Average, All Items (not seasonally adjusted), for the twelve (12)-month period ending on the most recently published index prior to the applicable anniversary date, as compared to the CPI-U for the same month of the immediately preceding year. In no event shall the CPI adjustment result in a decrease of the Annual Fee below the initial amount of one million two hundred thousand United States dollars ($1,200,000) per annum. WCG shall provide written notice to HSAG of each CPI adjustment, together with supporting calculations, at least thirty (30) days prior to the first quarterly payment of the adjusted fee.
Section 8.4 — Additional Fees for Ad Hoc Reviews and Incident Investigations. Fees for Ad Hoc Reviews and incident investigations requested by CFIUS Monitoring Agencies, initiated by the Government Security Committee, or initiated by WCG pursuant to Section 5.1(c) or (d), to the extent that such activities are conducted beyond the scope of the Annual Compliance Audit, shall be billed on a time-and-materials basis at the following hourly rates:
WCG shall provide detailed invoices to HSAG for all Ad Hoc Review and incident investigation work, itemizing the personnel involved, hours expended, tasks performed, and total fees. Such additional fees shall be paid by HSAG within thirty (30) calendar days of receipt of WCG's invoice.
Section 8.5 — Expenses. HSAG shall reimburse WCG for all reasonable and documented out-of-pocket expenses incurred by WCG and Monitor Personnel in connection with the performance of monitoring services under this Agreement, including travel (economy or business class for flights exceeding four hours), lodging, ground transportation, meals, and related costs. All reimbursable expenses shall be documented with original receipts or other supporting documentation. Expenses exceeding twenty-five thousand United States dollars ($25,000) in any single calendar quarter require the prior written approval of HSAG, which approval shall not be unreasonably withheld, conditioned, or delayed. HSAG shall reimburse approved expenses within thirty (30) calendar days of receipt of WCG's itemized expense report.
Section 8.6 — Payment Obligation Borne by HSAG. All fees, expenses, and other amounts payable under this Agreement are the sole financial obligation of HSAG. VPI shall have no obligation to pay any Monitor fees, expenses, or other amounts under this Agreement. In the event that Halcyon US Holdings is designated as the paying entity for administrative convenience, HSAG shall guaranty and remain ultimately liable for all payment obligations.
Section 8.7 — Late Payments. Any payment not received by WCG on or before the applicable due date shall bear interest at the rate of one and one-half percent (1.5%) per month (or the maximum rate permitted by applicable law, if lower) from the due date until the date of actual payment. The accrual of late payment interest shall not constitute a waiver of any other rights or remedies available to WCG under this Agreement or applicable law.
Section 8.8 — No Linkage of Payment to Findings. HSAG's obligation to pay all fees, expenses, and other amounts under this Agreement is unconditional and absolute, and shall not be contingent upon, affected by, reduced on account of, or otherwise linked to WCG's findings, conclusions, assessments, or recommendations. No finding of compliance, non-compliance, or any other determination by WCG shall give rise to any right of HSAG to withhold, reduce, offset, or delay payment under this Agreement.
ARTICLE IX — REPORTING OBLIGATIONS
Section 9.1 — Reports to CFIUS Monitoring Agencies. WCG shall submit the following reports and communications directly to the CFIUS Monitoring Agencies:
(a) Annual Compliance Report. The Annual Compliance Report prepared in accordance with Article IV, submitted on or before each anniversary of the Effective Date;
(b) Ad Hoc Review Reports. Written reports following the completion of each Ad Hoc Review conducted pursuant to Section 5.1, submitted within the timeframe specified in the applicable Audit Plan or, if no timeframe is specified, within thirty (30) calendar days of the commencement of the review;
(c) Incident Investigation Reports. Written incident investigation reports prepared in accordance with Section 5.2(e), submitted within thirty (30) calendar days of the commencement of the investigation (or interim reports at two-week intervals for complex investigations);
(d) Immediate Notifications. Immediate written notifications of any actual or suspected material violation of the NSA, submitted within forty-eight (48) hours of WCG becoming aware of the violation or suspected violation; and
(e) Quarterly Status Summaries. Brief written Quarterly Status Reports summarizing monitoring activities conducted during the preceding calendar quarter, submitted within fifteen (15) calendar days of the end of each calendar quarter. The format and content of the Quarterly Status Reports shall follow the template set forth in Exhibit D.
Section 9.2 — Reports to HSAG and VPI. Copies of all reports and communications submitted by WCG to the CFIUS Monitoring Agencies under Section 9.1 shall be provided simultaneously to HSAG (through General Counsel Stefan Lohse) and VPI's Government Security Committee, except to the extent that classified information or information designated as restricted by the CFIUS Monitoring Agencies is contained therein and cannot be shared with non-cleared recipients. In such cases, WCG shall prepare and provide a redacted or unclassified summary to the affected recipient in lieu of the classified version.
Section 9.3 — Form of Reports. All reports, communications, and correspondence required under this Agreement shall be prepared and submitted in written English. All reports shall be submitted in both electronic format (encrypted PDF transmitted via approved secure channels) and hard copy format. Classified reports and communications shall be handled, stored, transmitted, and protected in strict accordance with applicable NISPOM requirements, the security procedures of VPI's Classified Facility, and any specific instructions issued by the CFIUS Monitoring Agencies or DCSA.
Section 9.4 — Record Retention. WCG shall retain all work papers, audit files, reports, correspondence, interview notes, supporting documentation, and all other records relating to the performance of monitoring activities under this Agreement for a period of not less than seven (7) years following the later of (a) the termination of this Agreement or (b) the expiration or termination of the NSA. All such records shall be maintained in a secure manner consistent with applicable NISPOM requirements and shall be made available to the CFIUS Monitoring Agencies upon request at any time during the retention period.
Section 9.5 — Direct Communication with CFIUS. WCG may communicate directly with the CFIUS Monitoring Agencies at any time, without prior notice to, consent of, or consultation with HSAG, Halcyon US Holdings, or VPI. This right of direct communication is fundamental to WCG's independence and its duty to the United States Government and shall not be curtailed, conditioned, or restricted in any manner by any Party.
ARTICLE X — TERM AND TERMINATION
Section 10.1 — Term. The initial term of this Agreement shall be three (3) years, commencing on January 19, 2024 and expiring on January 19, 2027, subject to automatic annual renewal as provided in Section 2.4. This Agreement is co-terminus with the NSA, and the Term shall not extend beyond the effective period of the NSA unless otherwise directed by the CFIUS Monitoring Agencies.
Section 10.2 — Termination by CFIUS. The CFIUS Monitoring Agencies may, in their sole discretion, direct the removal and replacement of WCG as the third-party compliance monitor at any time for cause, including without limitation WCG's material breach of this Agreement, material failure to perform its monitoring obligations, loss of required security clearances, conflicts of interest, or any other circumstances that, in the judgment of the CFIUS Monitoring Agencies, impair WCG's ability to serve effectively as the compliance monitor. Upon receipt of such direction, HSAG shall promptly take all actions necessary to effect the removal of WCG and the appointment of a replacement monitor approved by CFIUS.
Section 10.3 — Resignation by WCG. WCG may resign from its appointment as the third-party compliance monitor upon not less than ninety (90) calendar days' prior written notice to HSAG, VPI, and the CFIUS Monitoring Agencies. Notwithstanding the delivery of such notice, WCG's resignation shall not become effective, and WCG shall continue to perform all monitoring obligations under this Agreement, until a replacement monitor has been approved by CFIUS and formally engaged by HSAG under a successor monitoring agreement. WCG shall cooperate fully in the identification, vetting, and transition to a successor monitor as provided in Section 10.6.
Section 10.4 — Termination by HSAG. HSAG may seek to terminate WCG's appointment as the third-party compliance monitor only with the prior written approval of the CFIUS Monitoring Agencies, and only upon the basis of documented cause, including without limitation material breach of this Agreement by WCG, incapacity of Gerald Whitmore (to the extent no suitable replacement is available under Article XIII), or the existence of a conflict of interest that cannot be adequately remedied. Any request for termination by HSAG shall be submitted in writing to the CFIUS Monitoring Agencies and shall include a detailed statement of the grounds for the proposed termination and supporting documentation. WCG shall be provided with a reasonable opportunity to respond to the allegations. A replacement monitor must be approved by CFIUS before any termination under this Section 10.4 becomes effective.
Section 10.5 — Effect of NSA Termination. This Agreement shall automatically terminate upon the expiration or termination of the NS

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