NATIONAL SECURITY AGREEMENT — DRAFT
CFIUS INITIAL DRAFT — NOVEMBER 3, 2023
CALDERWOOD & HARKNESS LLP — ANNOTATED COPY ATTORNEY WORK PRODUCT / PRIVILEGED
CFIUS Case No.: CFIUS-023-07-3841
NSA Docket Reference: NSA-2024-0019
Parties:
1. Halcyon Semiconductor Aktiengesellschaft ("HSAG")
2. Halcyon US Holdings Inc.
3. Marlowe Asset Management Photonics Inc. ("VPI")
4. The United States of America, acting through the U.S. Department of the Treasury, the U.S. Department of Defense, and the U.S. Department of Energy
Date of CFIUS Draft Circulation: November 3, 2023
Annotation Legend:
All margin annotations in this document are internal Calderwood & Harkness LLP attorney work product. Annotations are identified by the initials of the commenting attorney as follows:
• [PA] — Margaret "Peggy" Ashworth, Of Counsel, National Security & CFIUS Practice, Washington, DC Office
• [DC] — Lt. Col. (Ret.) David Caruso, Senior Counsel, Government Contracts & Export Controls Practice, Washington, DC Office
DISTRIBUTION — INTERNAL CALDERWOOD & HARKNESS LLP TEAM ONLY
This annotated document is distributed solely to the following members of the Calderwood & Harkness LLP team working on CFIUS Case No. CFIUS-023-07-3841:
• Beatrice Holloway, Partner
• James Prentice, Partner
• Margaret "Peggy" Ashworth, Of Counsel
• Lt. Col. (Ret.) David Caruso, Senior Counsel
• Priya Venkataraman, Associate
• Kenneth Morales, Associate
• Omar Siddiqui, Associate
• Christy Bauer, Associate
Calderwood & Harkness LLP Offices:
• 1750 K Street NW, Suite 800, Washington, DC 20006 (Lead CFIUS Team)
• 399 Park Avenue, 31st Floor, New York, NY 10022
CONFIDENTIAL TREATMENT REQUESTED — This document constitutes attorney work product and is protected by the attorney-client privilege and work product doctrine. This document is prepared in anticipation of litigation and regulatory proceedings. Any unauthorized disclosure, distribution, or reproduction of this document or any portion thereof is strictly prohibited.
INTRODUCTORY ANNOTATION MEMORANDUM
November 4, 2023
MEMORANDUM
FROM: Margaret "Peggy" Ashworth, Of Counsel
TO: Calderwood & Harkness LLP CFIUS Team — Beatrice Holloway, James Prentice, David Caruso, Priya Venkataraman, Kenneth Morales, Omar Siddiqui, Christy Bauer
RE: Initial CFIUS Draft National Security Agreement — CFIUS Case No. CFIUS-023-07-3841 (Halcyon Semiconductor AG / Marlowe Asset Management Photonics Inc.) — Annotated Review and Counterproposal Guidance
Team,
The Committee on Foreign Investment in the United States circulated the attached initial draft National Security Agreement on November 3, 2023, at approximately 4:15 p.m. Eastern. This draft follows CFIUS's communication of four preliminary national security concerns on October 20, 2023, which were addressed in my memorandum of October 21, 2023, and discussed at our team strategy meeting on October 23, 2023.
I have reviewed the full draft and prepared the annotations contained herein, in coordination with David Caruso, who has provided his comments focusing on government contracts, export controls, and facility security provisions. My annotations focus on governance, third-party monitor provisions, penalty structures, and overall CFIUS precedent analysis based on our survey of twelve comparable semiconductor-sector NSAs executed between 2019 and 2023.
The annotations in this document are organized to identify the following categories of provisions:
(a) Provisions that are overreaching relative to precedent and should be strongly opposed or substantially narrowed in our buyer's redline;
(b) Provisions that require negotiation or narrowing but reflect reasonable government interests that can be accommodated with appropriate modifications;
(c) Provisions that are acceptable or standard and may be accepted as drafted or with minor conforming changes; and
(d) Recommended counterproposals for each substantive provision requiring modification, intended for incorporation into our first buyer's redline, which is due for submission before the November 9, 2023 negotiation session with the CFIUS Staff Chairperson and agency representatives.
This annotated draft should be read in conjunction with the Internal Negotiation Strategy Memo (circulated separately on October 25, 2023) and the NSA Issues Matrix (updated November 1, 2023), which together identify our team's eight priority negotiation issues. The annotations herein are keyed to those eight priority issues where applicable.
David and I are available to discuss any of the annotations at the team's convenience. I recommend we schedule a working session no later than Monday, November 6, 2023, to finalize our positions and begin drafting the buyer's redline, which should be completed and circulated internally for review by close of business on November 7, 2023.
Margaret "Peggy" Ashworth Of Counsel, National Security & CFIUS Practice Calderwood & Harkness LLP 1750 K Street NW, Suite 800 Washington, DC 20006 Tel: (202) 555-3840 pashworth@calderwoodharkness.com
NATIONAL SECURITY AGREEMENT
CFIUS Case No. CFIUS-023-07-3841 NSA Docket Reference NSA-2024-0019
INITIAL DRAFT — NOVEMBER 3, 2023 FOR DISCUSSION PURPOSES ONLY — NOT FOR EXECUTION
This NATIONAL SECURITY AGREEMENT (this "Agreement" or "NSA") is entered into as of the date last set forth on the signature pages hereto (the "Effective Date"), by and among:
(1) HALCYON SEMICONDUCTOR AKTIENGESELLSCHAFT, an Aktiengesellschaft organized and existing under the laws of the Federal Republic of Germany, registered with the Amtsgericht Dresden under HRB 28416, having its principal offices at Industriestraße 44, 01099 Dresden, Saxony, Germany, LEI 5299007KXQ2M4GHILZ38, XETRA ticker symbol HLC (hereinafter referred to as the "Acquiror" or "HSAG");
(2) HALCYON US HOLDINGS INC., a corporation organized and existing under the laws of the State of Delaware, with its registered agent at 160 Greentree Drive, Suite 101, Dover, Delaware 19904, EIN 93-2841067 (hereinafter referred to as the "Acquisition Vehicle");
(3) Marlowe Asset Management PHOTONICS INC., a corporation organized and existing under the laws of the State of Delaware, having its principal offices at 7400 Ridgeline Parkway, Colorado Springs, Colorado 80919, EIN 26-4371885 (hereinafter referred to as the "Acquired Business" or "VPI"); and
(4) THE UNITED STATES OF AMERICA, acting through the U.S. Department of the Treasury, the U.S. Department of Defense, and the U.S. Department of Energy (collectively, the "Monitoring Agencies," and each individually, a "Monitoring Agency").
Each of HSAG, the Acquisition Vehicle, VPI, and the United States of America is sometimes referred to herein individually as a "Party" and collectively as the "Parties."
> [PA] Annotation: The identification of the Parties is acceptable and accurately reflects the transaction structure. Two observations: > > First, the draft refers to HSAG's LEI (5299007KXQ2M4GHILZ38) and XETRA ticker symbol (HLC) — we should confirm these are accurate and current for the final execution copy. Priya, please verify the LEI against the GLEIF database and confirm the XETRA ticker has not changed. > > Second, and more importantly, the draft omits Halcyon US Inc. (Austin, TX, EIN 81-3056429) as a party. Halcyon US Inc. is HSAG's existing U.S. subsidiary with approximately 320 employees conducting fabless semiconductor design work. Certain Technology Control Plan obligations (Section 5) will necessarily implicate Halcyon US Inc. personnel and operations, particularly the information barrier and gatekeeper provisions. The omission of Halcyon US Inc. may be intentional by CFIUS to keep the scope of the NSA narrow to the transacting entities, but we should flag this for two reasons: (a) if CFIUS later seeks to extend NSA obligations to Halcyon US Inc. by interpretation, HSAG will argue that the entity is not a party and therefore not bound; and (b) conversely, if Halcyon US Inc. personnel interact with VPI data without being subject to the NSA, CFIUS may view this as a compliance gap. Recommend we raise this with the client for a strategic decision on whether to propose adding Halcyon US Inc. as a limited party (subject only to TCP-related obligations) or to preserve the current narrow scope.
SECTION 1: RECITALS AND PREAMBLE
1.1 Transaction Recitals
WHEREAS, the Acquiror, through the Acquisition Vehicle, has entered into that certain Stock Purchase Agreement, dated as of June 10, 2023 (the "SPA"), with VPI and its stockholders, pursuant to which the Acquisition Vehicle will acquire one hundred percent (100%) of the issued and outstanding equity interests of VPI for an aggregate base purchase price of One Billion Four Hundred Twenty Million Dollars ($1,420,000,000) in cash (the "Transaction");
WHEREAS, the Acquisition Vehicle was incorporated in the State of Delaware on June 5, 2023, for the sole purpose of effectuating the Transaction and is a wholly owned, direct subsidiary of the Acquiror;
WHEREAS, HSAG and VPI jointly submitted a voluntary notice of the Transaction to the Committee on Foreign Investment in the United States ("CFIUS" or the "Committee") on July 14, 2023, pursuant to Section 721 of the Defense Production Act of 1950, as amended (50 U.S.C. § 4565), and the regulations promulgated thereunder at Title 31, Code of Federal Regulations, Parts 800 and 802 (the "Regulations");
WHEREAS, the Committee accepted the joint voluntary notice and commenced its review of the Transaction on July 21, 2023, in accordance with 50 U.S.C. § 4565(b)(1)(A);
WHEREAS, following the initial forty-five (45) day review period, the Committee initiated a formal investigation of the Transaction on September 4, 2023, in accordance with 50 U.S.C. § 4565(b)(2);
WHEREAS, on October 20, 2023, the Committee communicated four (4) preliminary national security concerns to the Parties relating to the Transaction (the "Preliminary National Security Concerns");
> [PA] Annotation: The recitals are factually accurate as to the procedural history. One observation: the recitals reference only the base purchase price of $1.42 billion. They do not mention the earnout component (up to $85 million tied to CY2024 and CY2025 government-contract revenue milestones under SPA Section 2.5(b)) or the escrow holdback ($71 million, representing 5% of the base purchase price, held in escrow under SPA Section 2.6 for indemnification purposes). If VPI achieves the earnout milestones, the maximum aggregate transaction consideration reaches $1.505 billion. While the omission of the earnout from the NSA recitals is not a substantive issue for NSA purposes — the NSA operates independently of the purchase price — the recitals should be accurate as a matter of good practice. Recommend we note this for the final execution version but do not raise it in the November 9 session, as it could draw unwanted attention to the government-contract revenue milestones.
1.2 Purpose Recitals
WHEREAS, the Parties have determined that the national security risks identified during the Committee's review and investigation of the Transaction can be mitigated through the implementation of certain measures, conditions, and obligations set forth in this Agreement, thereby permitting the Transaction to proceed consistent with the national security interests of the United States;
WHEREAS, the Parties enter into this Agreement voluntarily and without compulsion, acknowledging that the terms and conditions set forth herein are intended to address the specific national security concerns identified by the Committee in connection with the Transaction;
WHEREAS, compliance with the terms and conditions of this Agreement is a condition precedent to the Committee's determination not to send a report to the President of the United States recommending that the President exercise authority under 50 U.S.C. § 4565(d) to suspend or prohibit the Transaction, and is a condition to the Committee's issuance of a safe-harbor determination with respect to the Transaction under 50 U.S.C. § 4565(b)(1)(D);
> [PA] Annotation: Standard purpose recitals. No objection. The language accurately reflects the legal framework and the voluntary nature of the NSA.
1.3 Statutory and Regulatory Authority
WHEREAS, this Agreement is entered into pursuant to the authority of the Committee under Section 721 of the Defense Production Act of 1950, as amended by the Foreign Investment Risk Review Modernization Act of 2018 ("FIRRMA"), Pub. L. No. 115-232, §§ 1701–1728 (codified at 50 U.S.C. § 4565); Executive Order 11858, as amended by Executive Order 13456 and Executive Order 14083; and the implementing regulations at 31 C.F.R. Parts 800 and 802;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
> [PA] Annotation: Standard citation of statutory and regulatory authority. No objection.
SECTION 2: DEFINITIONS
As used in this Agreement, the following terms shall have the meanings set forth below. Capitalized terms used but not defined in this Section 2 shall have the meanings ascribed to them elsewhere in this Agreement. A comprehensive glossary of defined terms is set forth in Annex A, which, when finalized, shall be incorporated by reference into this Section 2.
"Acquired Business" means Marlowe Asset Management Photonics Inc. and all of its direct and indirect subsidiaries, successors, and assigns, including without limitation all divisions, operating units, and business operations of VPI as of the Effective Date.
"Acquiror" means Halcyon Semiconductor Aktiengesellschaft, an Aktiengesellschaft organized under the laws of the Federal Republic of Germany, together with the Acquisition Vehicle and any other entity that is directly or indirectly controlled by HSAG that acquires any equity interest in or assets of the Acquired Business.
"Acquisition Vehicle" means Halcyon US Holdings Inc., a Delaware corporation and wholly owned subsidiary of the Acquiror formed for the purpose of effectuating the Transaction.
"Applicable Law" means all laws, statutes, regulations, rules, executive orders, and binding guidance of the United States of America, including without limitation the Defense Production Act, FIRRMA, the International Traffic in Arms Regulations ("ITAR"), the Export Administration Regulations ("EAR"), the National Industrial Security Program Operating Manual ("NISPOM"), and any successor regulations or guidance.
"Classified Information" means any information that has been determined, pursuant to Executive Order 13526, as amended, or any predecessor or successor order, to require protection against unauthorized disclosure in the interest of national security and that is so designated by a proper classification authority. The term includes information classified at the CONFIDENTIAL, SECRET, and TOP SECRET levels, as well as any Sensitive Compartmented Information ("SCI") and Special Access Program ("SAP") information.
"Controlled Technical Data" means any information, technical data, software, or technology that is: (a) classified as National Security Information; (b) controlled under the International Traffic in Arms Regulations (22 C.F.R. Parts 120–130), including without limitation defense articles and defense services within the scope of Category XI(a)(3) of the United States Munitions List; (c) controlled under the Export Administration Regulations (15 C.F.R. Parts 730–774), including without limitation items classified under Export Control Classification Numbers ("ECCNs") 3A001, 3A991, 3E001, and related ECCNs; or (d) any other proprietary technical information developed by, for, or on behalf of VPI that relates to the design, development, production, or testing of GaN-based semiconductor devices, HEMT architectures, mmWave power amplifier modules, or related compound semiconductor technologies.
> [PA] Annotation — "Controlled Technical Data": This definition is overbroad and represents a significant concern. Subsections (a) through (c) are appropriate — they capture information that is actually subject to U.S. export control or classification requirements. However, subsection (d) sweeps in any "proprietary technical information" developed by VPI, regardless of whether such information is subject to any export control regime. > > The practical effect of this drafting is substantial. VPI's product portfolio includes significant commercial, non-defense product lines — most notably its 5G infrastructure GaN power amplifier modules sold to commercial telecommunications OEMs (approximately $245 million of VPI's $410 million FY2023 revenue is attributable to commercial products). The design data for these commercial products is not controlled under ITAR or EAR (or, if controlled, falls within EAR99 or is otherwise eligible for License Exception). Under the current definition, however, all of this commercial technical data would be classified as "Controlled Technical Data" and would be subject to the Technology Control Plan (Section 5), the information barrier requirements, and the personnel vetting requirements (Section 4.3). > > This would make the TCP unworkable for VPI's commercial business lines and would prevent the technology synergies that are the commercial rationale for HSAG's $1.42 billion acquisition. Katarina Brückner and HSAG's engineering teams in Dresden would be unable to access any VPI design data — even for purely commercial, uncontrolled products — without triggering NSA compliance obligations. > > Recommended counterproposal: Narrow the definition by striking subsection (d) entirely, or alternatively, by limiting subsection (d) to proprietary technical information that is (i) developed under or in performance of a U.S. government contract, (ii) subject to government purpose rights or limited rights under DFARS 252.227-7013/7014, or (iii) directly related to products or technologies that are controlled under ITAR Category XI(a)(3) or EAR ECCNs 3A001/3A991/3E001. The TCP (Section 5) should be the sole mechanism for controlling actually controlled data, and the definitions should not artificially expand the scope of controlled data beyond what U.S. export control law requires.
"Critical Technology" means the gallium nitride ("GaN") power amplifier technology, high-electron-mobility transistor ("HEMT") designs, millimeter-wave ("mmWave") architectures, and related compound semiconductor technologies developed by or for VPI that are subject to export controls under ECCN 3A001, ECCN 3A991, ECCN 3E001, and/or ITAR Category XI(a)(3), as well as any enhancements, derivatives, or successor technologies thereof.
"Facility Security Clearance" or "FCL" means the personnel security clearance and facility clearance granted to VPI by the Defense Counterintelligence and Security Agency ("DCSA") at the SECRET level, under which VPI is authorized to access, store, and process classified information at its cleared facility, and any successor clearance held by VPI or any successor entity.
> [DC] Annotation — "Facility Security Clearance": The definition correctly references the SECRET level but should also specifically reference VPI's CAGE Code 7VK92 and DUNS Number 07-812-4493 for precision and to ensure accurate cross-referencing to DCSA records. These identifiers are critical for NISPOM purposes and should be stated in the definition to avoid any ambiguity about which facility and which clearance is at issue. > > Additionally, the definition refers to "any successor clearance" — this language should be clarified. It should be limited to successor clearances issued to VPI for the same facility located at 9200 Innovation Boulevard, Albuquerque, NM 87113. As drafted, the reference to "any successor clearance" could be interpreted to require HSAG to seek additional facility clearances at new or different locations, which is not the intent. If HSAG or VPI opens a new facility for classified work, that decision should be governed by Section 6.3 (Facility Modifications), not by an automatic extension of the FCL definition.
"Government Security Committee" or "GSC" means the committee of the Board of Directors of VPI established pursuant to Section 3.3 of this Agreement, composed exclusively of the Security Board Members, and vested with exclusive authority over the matters described in Section 3.3.
"Material Change" means any change in the business, operations, assets, personnel, or organizational structure of the Acquired Business that could reasonably be expected to affect the national security of the United States, including without limitation any divestiture of assets, any change in the nature or scope of VPI's government contracts, any material modification to VPI's facility or information technology infrastructure, any change to cleared personnel in positions requiring access to Classified Information or Controlled Technical Data, any new foreign subcontracting arrangement, any change to VPI's product lines, and any change to the Acquiror's ownership structure in which any person acquires beneficial ownership of five percent (5%) or more of HSAG's outstanding voting securities.
> [PA] Annotation — "Material Change": This definition is extremely broad and is one of our highest-priority negotiation issues. Several specific concerns: > > First, the general standard — "any change ... that could reasonably be expected to affect the national security of the United States" — is inherently subjective and effectively gives CFIUS veto power over routine business decisions. The "reasonably be expected to affect" standard is lower than "would materially affect" and could capture minor operational changes. > > Second, the enumerated examples are over-inclusive. "Any change to VPI's product lines" would require CFIUS notification for routine product development decisions — for example, if VPI decides to develop a new commercial 5G product or discontinue a low-margin commercial product line. These decisions have no national security implications. "Any change to cleared personnel positions" at any level would capture routine reassignments of the 212 cleared employees. > > Third, "any change to the Acquiror's ownership structure in which any person acquires beneficial ownership of five percent (5%) or more of HSAG's outstanding voting securities" would require notification for normal secondary-market trading activity in HSAG shares on the Frankfurt Stock Exchange (XETRA: HLC). HSAG's market capitalization is approximately €14.8 billion; 5% represents approximately €740 million in shares. While a 5% threshold is a meaningful ownership stake, HSAG has no control over secondary-market trading, and this provision could require CFIUS notification based on the activities of passive institutional investors who cross the 5% threshold through normal portfolio management. > > Recommended counterproposal: (a) Add a materiality threshold — change "could reasonably be expected to affect" to "would reasonably be expected to materially affect." (b) Narrow the enumerated examples to changes that involve classified programs, ITAR/EAR-controlled products, government contracts, or cleared personnel at the VP level and above. (c) Add specific carve-outs for ordinary-course personnel changes below a certain seniority level and for commercial (non-government) business activities. (d) For HSAG ownership changes, limit the trigger to changes in beneficial ownership that would constitute a "covered transaction" under 31 C.F.R. Part 800 or that involve persons from countries identified under 31 C.F.R. § 800.401 (i.e., countries of special concern to CFIUS).
"Monitoring Agencies" means the U.S. Department of the Treasury, the U.S. Department of Defense, and the U.S. Department of Energy, acting collectively in their capacity as the agencies designated by CFIUS to monitor compliance with this Agreement.
"Monitoring Agency" means, for purposes of day-to-day compliance monitoring and facility security oversight, the Defense Counterintelligence and Security Agency ("DCSA"), which shall serve as the primary point of contact for routine compliance matters under this Agreement.
"National Security Information" means information that has been classified at any level pursuant to Executive Order 13526, as amended, or any predecessor or successor order.
"Non-U.S. Person" means any person who is not a "U.S. person" as that term is defined in 22 C.F.R. § 120.62 (formerly § 120.15), including any foreign national, foreign government, or representative of a foreign government, but excluding any individual who is a citizen of the United States regardless of any additional nationalities held by such individual.
> [PA] Annotation — "Non-U.S. Person": The definition tracks the ITAR definition at 22 C.F.R. § 120.62 (updated citation per the January 2022 ITAR rewrite; formerly § 120.16). This is acceptable. The exclusion of U.S. citizens regardless of additional nationalities is important and correctly drafted — this ensures that Stefan Lohse (HSAG General Counsel), who is a German/U.S. dual citizen admitted in New York, would not be classified as a "Non-U.S. Person" despite his German nationality. We should confirm that no other HSAG personnel who may interact with VPI are similarly situated as dual citizens.
"Security Board Member" means a member of VPI's Board of Directors who satisfies the qualifications set forth in Section 3.1 of this Agreement, including the requirement that such individual be a citizen of the United States and hold or be eligible for a security clearance at the TOP SECRET/SCI level.
"Security Director" means the Security Board Member designated pursuant to Section 3.4 of this Agreement who serves as the independent director responsible for overseeing VPI's compliance with this Agreement and who has direct reporting obligations to the Monitoring Agencies.
"Technology Control Plan" or "TCP" means the comprehensive plan established pursuant to Section 5 and set forth in detail in Annex B, governing the protection of Controlled Technical Data, Classified Information, and Critical Technology from unauthorized disclosure to Non-U.S. Persons, including without limitation the physical, electronic, and procedural controls required to prevent unauthorized access to or transfer of such data.
"Third-Party Monitor" or "Monitor" means the independent third-party compliance monitor appointed pursuant to Section 8 of this Agreement.
"Transaction" has the meaning set forth in the recitals to this Agreement.
The foregoing defined terms are supplemented by the additional defined terms set forth in Annex A, which shall be incorporated by reference upon finalization. In the event of any inconsistency between the definitions in this Section 2 and those in Annex A, the definitions in this Section 2 shall control.
SECTION 3: BOARD GOVERNANCE AND GOVERNMENT SECURITY COMMITTEE
3.1 Board Reconstitution
(a) Effective as of the closing of the Transaction (the "Closing"), the Board of Directors of VPI (the "Board") shall be reconstituted to consist of five (5) members, as follows:
(i) Three (3) individuals who satisfy the qualifications for "Security Board Members" as set forth in this Section 3.1 (each, a "Security Board Member"); and
(ii) Two (2) individuals designated by the Acquiror (each, an "Acquiror Designee"), subject to the restrictions set forth in Section 3.2.
(b) Each Security Board Member must satisfy all of the following qualifications:
(i) Be a citizen of the United States of America;
(ii) Hold, or be eligible for and willing to obtain, a security clearance at the TOP SECRET/Sensitive Compartmented Information (TS/SCI) level, as determined by DCSA;
(iii) Have relevant experience in national security, defense technology, semiconductor industry operations, or government contracting;
(iv) Be approved by the Monitoring Agencies prior to appointment; and
(v) Not be an officer, director, employee, agent, or consultant of HSAG or any HSAG affiliate (other than VPI) at the time of appointment or at any time during the five (5) years prior to appointment.
(c) The initial Security Board Members shall be identified and approved prior to the Closing. The Parties shall cooperate to identify qualified candidates, and the Monitoring Agencies shall have final approval authority over the appointment of each Security Board Member.
(d) In the event of a vacancy among the Security Board Members, the remaining Security Board Members, in consultation with the Monitoring Agencies, shall identify a replacement who satisfies the qualifications set forth in Section 3.1(b). No vacancy shall remain unfilled for more than sixty (60) days.
> [PA] Annotation — Section 3.1: The requirement that all three Security Board Members hold or be eligible for TS/SCI clearances (Section 3.1(b)(ii)) is more restrictive than precedent. In our survey of twelve (12) recent semiconductor-sector NSAs executed between 2019 and 2023: > > - Only four (4) required TS/SCI for all security board members; > - Six (6) required SECRET or higher for all security board members, with TS/SCI required only for the Security Director or FSO designee; > - Two (2) required only SECRET clearance eligibility for all members. > > VPI currently has officers and directors with varying clearance levels. Specifically: Col. (Ret.) Bryce Hendrickson holds TS/SCI; Adrienne Delacroix holds SECRET; and Dr. Nathan Trevorrow holds TS/SCI. If the three current individuals serve as Security Board Members, the clearance requirement is met. However, for succession planning, requiring TS/SCI eligibility for the independent Security Director (and all future replacements) significantly narrows the candidate pool. The defense-semiconductor community is small, and the intersection of individuals who (a) hold TS/SCI, (b) have relevant semiconductor industry experience, (c) are independent of both HSAG and VPI, and (d) are willing to serve on a board with the obligations described in this NSA is extremely limited. > > Recommended counterproposal: Negotiate to require SECRET or higher clearance for at least one of the three Security Board Members, with TS/SCI required only for the Security Director and the member who will serve as (or designate) the Facility Security Officer. This approach is consistent with the majority position in recent precedent and is sufficient to protect the government's interests.
3.2 Acquiror Designee Restrictions
(a) The Acquiror Designees shall be subject to the following restrictions in connection with their service on the Board:
(i) No Acquiror Designee may hold, access, receive, or be provided with any Classified Information, Controlled Technical Data, or export-controlled information of any kind;
(ii) No Acquiror Designee may attend, participate in, or vote on any matter considered by the Government Security Committee or otherwise within the GSC's exclusive authority as set forth in Section 3.3;
(iii) No Acquiror Designee may communicate, transmit, or otherwise make available to any Non-U.S. Person any VPI business information of any kind without the prior written approval of the Government Security Committee; and
(iv) Each Acquiror Designee shall execute a non-disclosure agreement in a form approved by the Monitoring Agencies prior to assuming his or her seat on the Board.
(b) Nothing in this Section 3.2 shall prevent the Acquiror Designees from exercising their fiduciary duties as directors of VPI with respect to matters outside the GSC's exclusive authority, including without limitation approval of budgets, capital expenditure plans, commercial strategy, and non-classified business operations, subject to the restrictions set forth above.
> [PA] Annotation — Section 3.2(a)(iii): The prohibition on communicating "any VPI business information" to any Non-U.S. Person without prior GSC approval is overbroad and is a priority negotiation issue. HSAG is the one hundred percent (100%) owner of VPI. As the sole equity holder, HSAG has a legitimate — indeed, a legally compelled — need to access routine financial, commercial, and operational information from VPI for purposes of: > > - Consolidation of VPI's financial results into HSAG's IFRS-compliant consolidated financial statements; > - Reporting to HSAG's board of directors, supervisory board (Aufsichtsrat), and shareholders; > - Regulatory reporting to the German Federal Financial Supervisory Authority (BaFin) and the Frankfurt Stock Exchange; > - Management oversight and strategic planning; > - Tax compliance and transfer pricing documentation; and > - Debt covenant compliance reporting to HSAG's lenders (Meridian National Bank, Atlas Commercial Lending AG, Pacific Basin Credit Corp.) under the $900 million term loan credit agreement. > > As currently drafted, this provision would prevent Katarina Brückner (HSAG's Chief Financial Officer, a German citizen) from receiving VPI's quarterly financial reports, revenue data, or margin information without first obtaining GSC approval. It would prevent HSAG's FP&A team in Dresden from performing routine consolidation exercises. This is commercially unworkable and goes well beyond what is necessary to protect national security. > > Recommended counterproposal: Carve out non-controlled business and financial information from this restriction. The Technology Control Plan (Section 5) should be the sole mechanism for controlling technical data and export-controlled information. The board governance section should not create a duplicative, broader restriction that sweeps in purely financial and commercial information. Specifically, recommend adding a proviso: "provided, however, that this Section 3.2(a)(iii) shall not apply to (A) financial information (including revenue, costs, margins, balance sheet data, and tax information) required for HSAG's consolidated financial reporting, regulatory compliance, or debt covenant compliance; (B) non-technical commercial information (including customer lists, marketing materials, and pricing information) that does not constitute Controlled Technical Data; or (C) information that is publicly available."
3.3 Government Security Committee
(a) The Board shall establish, effective as of the Closing, a Government Security Committee (the "GSC") composed exclusively of the three (3) Security Board Members appointed pursuant to Section 3.1.
(b) The GSC shall have exclusive authority over the following matters, and the full Board may not act on or override any GSC determination with respect to such matters:
(i) All matters relating to classified programs performed by VPI, including the oversight, administration, and performance of all contracts, subcontracts, and other agreements involving access to or use of Classified Information;
(ii) All matters relating to ITAR-controlled programs, including compliance with VPI's DDTC Registration No. M-24817, the administration of all active DSP-5 export licenses, and decisions regarding future ITAR-controlled product development and production;
(iii) Personnel security decisions, including the granting, denial, suspension, or revocation of facility access for any individual, the nomination and processing of individuals for security clearances, and the approval of changes to personnel in positions requiring access to Classified Information or Controlled Technical Data (currently affecting approximately 212 of VPI's 486 employees);
(iv) Facility security decisions at VPI's cleared facility located at 9200 Innovation Boulevard, Albuquerque, New Mexico 87113, including decisions regarding physical access controls, alarm systems, intrusion detection, and SCIF operations;
(v) All decisions relating to VPI's Facility Security Clearance (CAGE Code 7VK92), including applications for clearance upgrades, responses to DCSA inquiries, and corrective actions in response to security violations; and
(vi) Oversight and management of VPI's fourteen (14) active Department of Defense contracts with an aggregate remaining backlog of approximately One Hundred Ninety-Three Million Dollars ($193,000,000).
(c) The GSC shall have the authority to override any decision of the full Board on any matter within the GSC's exclusive authority as described in Section 3.3(b). In the event of a conflict between a decision of the full Board and a determination of the GSC with respect to any matter within the GSC's exclusive authority, the GSC's determination shall control.
(d) The GSC shall meet no less frequently than quarterly and shall maintain minutes of all meetings, which shall be made available to the Monitoring Agencies and the Third-Party Monitor upon request.
(e) The GSC must approve any changes to cleared personnel positions, including new hires, reassignments, terminations, and promotions of any personnel who hold or require security clearances or who have access to Controlled Technical Data.
> [DC] Annotation — Section 3.3(b)(ii): The GSC's authority over "decisions related to VPI's DDTC registration" is ambiguous as drafted. Does this mean the GSC has authority only over ITAR compliance decisions — i.e., ensuring that VPI maintains its registration, complies with ITAR requirements, and properly administers its export licenses? Or does it extend to decisions about which products VPI develops that fall within the scope of ITAR — i.e., strategic decisions about whether VPI should pursue new ITAR-controlled product lines? > > The distinction matters enormously. If the GSC's authority extends to the latter, it would effectively give the GSC veto power over VPI's commercial product development strategy with respect to any product that touches ITAR. Since a significant portion of VPI's product portfolio involves technologies that are at least tangentially related to ITAR Category XI(a)(3), this could mean the GSC controls VPI's product roadmap. HSAG paid $1.42 billion for this business — it cannot accept a governance structure in which the commercial product strategy is controlled by an independent committee that does not report to the owner. > > Recommended counterproposal: Clarify that GSC authority under Section 3.3(b)(ii) is limited to regulatory compliance decisions under ITAR and EAR — i.e., ensuring that VPI maintains its DDTC registration, administers its export licenses correctly, and does not violate export control laws. Commercial business strategy decisions — including decisions about which products to develop, which markets to pursue, and which customers to serve — should remain within the authority of the full Board, subject to the TCP's controls on actual technology transfer.
> [DC] Annotation — Section 3.3(e): The requirement for GSC approval of "any changes to cleared personnel positions" is operationally burdensome. VPI has approximately 212 cleared employees out of a total workforce of 486. These employees span multiple levels of seniority, from entry-level engineers and technicians to senior vice presidents. Routine personnel actions — reassignments within the same program, lateral moves, promotions from engineer to senior engineer, and routine backfill of departed employees — occur regularly in any defense contractor's operations. > > Requiring formal GSC approval for every such change would create a bottleneck that slows routine operations. The GSC meets quarterly under Section 3.3(d); if a cleared engineer departs and VPI needs to reassign responsibilities, waiting for the next quarterly GSC meeting is impractical and harmful to program performance. > > Recommended counterproposal: Implement a tiered approach: (a) Prior GSC approval required for changes involving senior cleared personnel at the Vice President level and above, plus the FSO and any individual with access to TS/SCI or SAP information; (b) Advance notification (rather than prior approval) to the GSC and DCSA for changes involving cleared personnel below the VP level, with a five (5) business day notification period; and (c) Routine reporting (monthly summary) for all other cleared personnel actions. This approach protects the government's interests in senior personnel oversight while permitting VPI to operate efficiently.
3.4 Security Director
(a) One of the three Security Board Members shall be designated as the "Security Director." The Security Director shall serve as the chair of the GSC and shall be the primary point of contact between VPI and the Monitoring Agencies for all matters relating to compliance with this Agreement.
(b) The Security Director must satisfy the following independence requirements in addition to the qualifications set forth in Section 3.1(b):
(i) The Security Director shall not have been an officer, director, employee, agent, consultant, or advisor of HSAG, the Acquisition Vehicle, or any affiliate of HSAG (other than VPI) at any time during the five (5) years preceding the date of his or her appointment;
(ii) The Security Director shall not have any direct or indirect financial interest in HSAG or any HSAG affiliate (other than VPI), including without limitation any equity ownership, option grants, deferred compensation, or consulting arrangements, at the time of appointment or during the term of service;
(iii) The Security Director shall not be a family member (as defined in 17 C.F.R. § 229.404(a)) of any officer, director, or five percent (5%) stockholder of HSAG.
(c) The Security Director shall have a direct reporting obligation to the Monitoring Agencies with respect to any compliance concern, potential violation, or national security issue arising under this Agreement. The Security Director may communicate directly with the Monitoring Agencies without prior notification to or approval from HSAG, the Acquisition Vehicle, or any other Party.
(d) The compensation of the Security Director shall be determined by the GSC and shall be paid by VPI at market rates for comparable independent director positions at defense-sector companies of similar size.
> [PA] Annotation — Section 3.4(b)(i): The five (5) year look-back period for independence is excessive and inconsistent with both CFIUS precedent and broader corporate governance standards. Specific comparisons: > > - In our survey of twelve (12) semiconductor-sector NSAs, the look-back period for Security Director independence ranged from two (2) to three (3) years, with the majority at three (3) years; > - SEC rules for audit committee independence under Rule 10A-3 require a one (1) year look-back; > - NYSE and NASDAQ independence standards generally use a three (3) year look-back; > - SOX Section 301 does not specify a look-back period but focuses on current relationships. > > A five-year disqualification period will significantly narrow the pool of qualified candidates in the small defense-semiconductor community. Individuals who have any historical connection to HSAG — even a brief consulting engagement five years ago — would be disqualified, even if that engagement has no bearing on their current independence. > > Recommended counterproposal: Three (3) year look-back, consistent with the majority of comparable NSAs and NYSE independence standards for audit committee members. This provides adequate assurance of independence while maintaining a workable candidate pool.
SECTION 4: PERSONNEL PROVISIONS
4.1 Key Personnel Retention
(a) The following individuals (each, a "Key Person" and collectively, the "Key Personnel") shall remain employed by VPI in their current positions for a minimum period of thirty-six (36) months following the Closing (the "Retention Period"):
(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 designated Facility Security Officer of VPI.
(b) VPI and HSAG shall take all commercially reasonable steps to retain each Key Person during the Retention Period, including without limitation maintaining compensation and benefits at levels no less favorable than those in effect as of the date of this Agreement.
(c) In the event that any Key Person departs VPI's employment during the Retention Period, whether by resignation, termination, disability, death, or any other reason:
(i) HSAG and VPI shall provide written notice to the Monitoring Agencies and the GSC no fewer than sixty (60) calendar days prior to the effective date of any voluntary departure or planned termination. In the case of involuntary departure, death, or disability, notice shall be provided within five (5) business days of the event;
(ii) The GSC, in consultation with the Monitoring Agencies, shall identify and approve a replacement for the departing Key Person. No replacement may assume the Key Person's duties until approved by the Monitoring Agencies;
(iii) The replacement must possess a security clearance at a level equal to or higher than that held by the departing Key Person and must have comparable qualifications, experience, and expertise; and
(iv) The Monitoring Agencies shall have twenty (20) business days following receipt of a complete replacement nomination package to approve or object to the proposed replacement.
(d) The obligations of this Section 4.1 are in addition to, and not in lieu of, any retention arrangements between HSAG, VPI, and the Key Personnel under the SPA or any employment agreements.
> [PA] Annotation — Section 4.1(a): The thirty-six (36) month retention requirement is significantly beyond precedent and is one of our five "Strongly Oppose / Must Change" provisions. In our analysis of recent NSAs: > > - The standard range for key personnel retention periods is eighteen (18) to twenty-four (24) months; > - Only one (1) of twelve (12) surveyed semiconductor-sector NSAs required a retention period exceeding twenty-four (24) months (that case involved a thirty (30) month period for the FSO only); > - HSAG's own SPA contains retention provisions (SPA Section 6.14) requiring key employees to remain through the eighteen (18) month anniversary of Closing, with retention bonuses paid in tranches at months six (6), twelve (12), and eighteen (18). > > From a practical standpoint, mandating a thirty-six month lock-up raises several concerns: (a) Dr. Trevorrow and Ms. Sung-Avila may not agree to a three-year retention commitment, creating risk that the NSA imposes obligations the business cannot fulfill; (b) mandatory retention creates perverse incentives — employees who are forced to stay may become disengaged, and the threat of CFIUS penalties for their departure does not improve their performance; and (c) the thirty-six month period significantly exceeds what is necessary to ensure continuity — by month twenty-four, HSAG will have had ample time to develop internal talent and transition institutional knowledge. > > Recommended counterproposal: Twenty-four (24) months for all Key Personnel, consistent with industry practice and HSAG's commercial expectations. See also David's annotation below for a differentiated approach.
> [DC] Annotation — Section 4.1(a)(iii): Col. Hendrickson is the most critical Key Person from the government's perspective. He holds TS/SCI, serves as the designated FSO, manages all fourteen (14) active DoD contracts (aggregate backlog $193 million), and maintains the personal relationships with DCSA, contracting officers, and program managers that are essential to the government's supply chain interests. His departure during the transition period would create the most significant compliance and operational risk. > > Dr. Trevorrow and Ms. Sung-Avila, while important for business continuity, are less critical from a national security perspective — their roles involve corporate strategy and operations management, and their responsibilities could be transitioned to qualified successors within a reasonable period. > > Recommended counterproposal: Propose a differentiated retention structure: (a) Twenty-four (24) months for Dr. Trevorrow (CEO) and Ms. Sung-Avila (President/COO); and (b) Up to thirty (30) months for Col. Hendrickson (VP Government Programs / FSO). This approach focuses the extended retention on the individual whose role is most directly tied to the national security interests that the NSA is designed to protect. CFIUS may find this compromise palatable because it demonstrates HSAG's recognition of the FSO's critical importance while resisting an across-the-board thirty-six month requirement.
4.2 Facility Security Officer
(a) Col. (Ret.) Bryce Hendrickson shall be retained as VPI's designated Facility Security Officer ("FSO") in accordance with the requirements of the National Industrial Security Program Operating Manual ("NISPOM"), 32 C.F.R. Part 117.
(b) The FSO shall report directly to the Government Security Committee, and not to HSAG management, the Acquisition Vehicle, or any person or entity other than the GSC and the Monitoring Agencies. The FSO's performance evaluations, compensation determinations, and continuation of employment shall be determined exclusively by the GSC.
(c) The FSO shall have independent authority, exercised in his or her sole discretion, to:
(i) Deny physical access to any VPI facility to any individual, including HSAG personnel and Acquiror Designees, if the FSO determines that such access would pose a risk to the security of Classified Information, Controlled Technical Data, or VPI's Facility Security Clearance;
(ii) Suspend or recommend the suspension of any individual's security clearance pending investigation;
(iii) Report security incidents, potential compromises of Classified Information, and suspected violations of this Agreement directly to DCSA without prior notification to or approval from HSAG or any other Party; and
(iv) Implement emergency security measures as the FSO deems necessary to protect Classified Information or the integrity of VPI's FCL.
(d) VPI and HSAG shall provide the FSO with all resources, personnel, and budget necessary to fulfill the FSO's responsibilities under NISPOM and this Agreement.
> [DC] Annotation — Section 4.2(c)(i): The FSO's "independent authority to deny facility access" should be clarified in scope. As drafted, this authority appears to extend to all VPI facilities, which would include: > > - The classified Albuquerque facility at 9200 Innovation Boulevard (clean room Sections C-7 through C-12 and the associated SCIF); > - The unclassified areas of the Albuquerque facility (administrative offices, unclassified labs, cafeteria, etc.); and > - VPI's Colorado Springs headquarters at 7400 Ridgeline Parkway (entirely unclassified — houses business operations, commercial engineering, sales, marketing, and corporate functions). > > The FSO's independent authority to deny access should be limited to VPI's cleared facility — specifically, the classified Sections C-7 through C-12 of the Albuquerque clean room and the SCIF. Extending the FSO's unilateral access denial authority to the Colorado Springs HQ would allow the FSO to exclude HSAG management from visiting VPI's primary business office, which is unreasonable and unnecessary since no classified or ITAR-controlled work is performed at Colorado Springs. > > Recommended counterproposal: Limit the FSO's independent access denial authority to "any VPI facility or portion thereof at which Classified Information is stored, processed, or used, or at which work is performed under classified contracts or ITAR-controlled programs." This formulation covers the Albuquerque fab (Sections C-7 through C-12) without extending to unclassified facilities.
4.3 Personnel Vetting
(a) All individuals newly hired by VPI after the Closing who will have access to Controlled Technical Data (as defined in Section 2) shall be subject to a background investigation conducted by or under the authority of DCSA, in accordance with NISPOM requirements applicable to VPI's Facility Security Clearance level.
(b) No individual who is a Non-U.S. Person may be employed by VPI in any position that involves access to Classified Information or ITAR-controlled technical data without prior authorization from the relevant U.S. government authority, including without limitation an individual export license from DDTC (for ITAR-controlled data) or BIS (for EAR-controlled data), or a determination that such access is otherwise authorized under Applicable Law.
(c) VPI shall maintain and provide to the GSC and the Monitor a current roster of all employees with access to Controlled Technical Data, updated no less frequently than quarterly.
> [DC] Annotation — Section 4.3(a): The background investigation requirement for "all new VPI hires with access to Controlled Technical Data" is tied to the definition of "Controlled Technical Data" in Section 2. As noted in Peggy's annotation on that definition, if the definition retains the current overbroad subsection (d) — which captures any "proprietary technical information" developed by VPI — then this personnel vetting requirement would extend to virtually every engineer hired by VPI, including commercial engineers working on 5G products that are not export-controlled. > > DCSA-level background investigations are resource-intensive and time-consuming (typically four to six months for initial investigations). Imposing this requirement on commercial engineering hires would significantly impair VPI's ability to recruit and onboard talent for its non-defense business lines. > > Recommended counterproposal: If the "Controlled Technical Data" definition is narrowed per our recommendation (striking subsection (d) or limiting it to government-funded or export-controlled data), this provision becomes workable. If CFIUS insists on retaining the broad definition, then Section 4.3(a) should be limited to positions requiring access to data that is actually classified or actually controlled under ITAR/EAR — i.e., positions requiring security clearances or positions on ITAR-controlled programs. Commercial engineering positions should be subject to VPI's standard commercial background check process rather than DCSA investigations.
SECTION 5: TECHNOLOGY CONTROL PLAN
5.1 General Prohibition on Technology Transfer
(a) Neither VPI nor any person acting on behalf of VPI shall transfer, disclose, provide access to, or otherwise make available any Controlled Technical Data (as defined in Section 2) to any Non-U.S. Person, including without limitation any employee, officer, director, agent, consultant, or representative of HSAG or any HSAG affiliate, without prior written authorization from the appropriate U.S. government authority, as follows:
(i) For ITAR-controlled technical data: prior authorization from the Directorate of Defense Trade Controls ("DDTC") of the U.S. Department of State;
(ii) For EAR-controlled technical data: prior authorization from the Bureau of Industry and Security ("BIS") of the U.S. Department of Commerce; and
(iii) For Classified Information: prior authorization from the appropriate classification authority and DCSA.
(b) The prohibition set forth in Section 5.1(a) applies to, and encompasses, the following categories of VPI intellectual property and technical information:
(i) VPI's forty-seven (47) issued U.S. patents, including twenty-three (23) patents developed in whole or in part with government funding and subject to march-in rights under 35 U.S.C. § 203 and the provisions of DFARS 252.227-7038 (Patent Rights — Ownership by the Contractor);
(ii) VPI's twelve (12) pending U.S. patent applications;
(iii) VPI's thirty-one (31) registered trade secrets; and
(iv) All other technical data, know-how, processes, designs, specifications, test results, manufacturing data, and engineering drawings related to Critical Technology.
(c) Nothing in this Section 5 shall be construed to authorize any transfer of Controlled Technical Data that would otherwise be prohibited under ITAR, EAR, or any other Applicable Law. This Section 5 imposes obligations in addition to, and not in lieu of, the requirements of ITAR, EAR, and all other applicable export control and national security laws and regulations.
> [PA] Annotation — Section 5.1: The general prohibition in Section 5.1(a) is appropriate as applied to ITAR-controlled data, EAR-controlled data, and Classified Information. We do not object to requiring prior government authorization before transferring actually controlled information to Non-U.S. Persons — that is consistent with existing U.S. law. > > However, when combined with the overbroad "Controlled Technical Data" definition (which sweeps in purely commercial, non-controlled technical data under subsection (d)), the prohibition in Section 5.1(a) effectively creates a blanket prohibition on all technology sharing between VPI and HSAG, regardless of whether the technology is actually subject to export controls. > > This is fundamentally inconsistent with the commercial purpose of the Transaction. HSAG is paying $1.42 billion to acquire VPI. The acquisition rationale presented to HSAG's supervisory board (Aufsichtsrat) and shareholders is technology synergy — combining VPI's GaN HEMT manufacturing capabilities with HSAG's existing compound semiconductor design expertise to create a vertically integrated platform for both defense and commercial 5G markets. A blanket prohibition on technology sharing defeats this commercial purpose entirely and renders the acquisition uneconomical at the agreed purchase price. > > Recommended counterproposal — Tiered Approach: We should propose a three-tier framework: > > Tier 1 — Absolute Prohibition: ITAR-controlled data (Category XI(a)(3)), Classified Information, and SAP/SCI data. No transfer to any Non-U.S. Person under any circumstances without prior U.S. government authorization. Non-negotiable. > > Tier 2 — GSC Notification and Gatekeeper Approval: EAR-controlled data (ECCNs 3A001, 3A991, 3E001) that is licensable under existing EAR license exceptions or for which a license application has been or will be submitted. Transfer permitted only through the gatekeeper process described in Section 5.4, with advance notification to the GSC and a ten (10) business day review period. > > Tier 3 — No Restriction: Purely commercial, non-controlled technical data (EAR99 or otherwise not subject to export controls) that does not relate to classified programs or government contracts. This data should flow freely between VPI and HSAG for legitimate commercial purposes, subject only to standard commercial confidentiality protections. > > This tiered approach protects the government's legitimate national security interests in Tier 1 and Tier 2 data while preserving the commercial rationale for the Transaction. It is also more administrable than a blanket prohibition — the current draft would require VPI to treat every piece of engineering data as if it were classified, which creates compliance fatigue and increases the risk of inadvertent violations.
5.2 Physical and Electronic Access Controls
(a) VPI shall implement and maintain the following physical access controls at its cleared facility located at 9200 Innovation Boulevard, Albuquerque, New Mexico 87113:
(i) Badge-access systems restricting entry to classified work areas, specifically clean room Sections C-7 through C-12, to individuals who hold appropriate security clearances and have a verified need-to-know;
(ii) Controlled access points with card readers, biometric authentication, and security guard stations at all entrances to classified areas;
(iii) Intrusion detection systems, alarm monitoring, and closed-circuit video surveillance in accordance with NISPOM requirements;
(iv) Visitor management procedures requiring advance notification, escort, and sign-in/sign-out for all visitors to classified areas; and
(v) Comprehensive visitor logs maintained for all Non-U.S. Persons entering any VPI facility, whether classified