1032-00004 · Client 1032 · NSA Negotiation

national-security-agreement-execution.docx DOCUMENT M&A / Corporate

58 / 79 ← → ✕

Contract analysis Extract to table

NATIONAL SECURITY AGREEMENT

NSA Docket Reference: NSA-2024-0019

CFIUS Case No.: CFIUS-023-07-3841

Execution Version

January 19, 2024

PARTIES

HALCYON SEMICONDUCTOR AKTIENGESELLSCHAFT, an Aktiengesellschaft organized under the laws of the Federal Republic of Germany ("HSAG" or the "Acquiror"),

HALCYON US HOLDINGS INC., a corporation organized under the laws of the State of Delaware ("Buyer"),

Marlowe Asset Management PHOTONICS INC., a corporation organized under the laws of the State of Delaware ("VPI" or the "Company"),

and

THE UNITED STATES OF AMERICA, acting through the U.S. Department of the Treasury ("Treasury"), the U.S. Department of Defense ("DoD"), and the U.S. Department of Energy ("DOE") (collectively, the "Government Parties" or the "U.S. Government").

Entered into pursuant to 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. Parts 800 and 802.

Right-click to update Table of Contents

RECITALS

WHEREAS:

A. The Transaction. Halcyon Semiconductor Aktiengesellschaft ("HSAG") is a publicly traded semiconductor company organized as an Aktiengesellschaft under the laws of the Federal Republic of Germany, listed on the Frankfurt Stock Exchange (XETRA: HLC), and headquartered at Industriestraße 44, 01099 Dresden, Saxony, Germany. As of June 1, 2023, HSAG had a market capitalization of approximately €14.8 billion, reported fiscal year 2022 revenue of €6.12 billion, and earnings before interest, taxes, depreciation, and amortization ("EBITDA") of €1.37 billion. In anticipation of the Transaction described herein, HSAG caused the formation of Halcyon US Holdings Inc. ("Buyer"), a Delaware corporation, on June 5, 2023, with its registered agent at National Registered Agents of Delaware, 160 Greentree Drive, Suite 101, Dover, DE 19904, for the sole purpose of serving as the acquisition vehicle for the Transaction. On June 10, 2023, Buyer entered into a Stock Purchase Agreement (the "SPA") with the stockholders of Marlowe Asset Management Photonics Inc. ("VPI") to acquire one hundred percent (100%) of the outstanding equity interests of VPI for a base purchase price of One Billion Four Hundred Twenty Million Dollars ($1,420,000,000) on a cash-free, debt-free basis with a normalized net working capital target of Thirty-Four Million Six Hundred Thousand Dollars ($34,600,000). The maximum aggregate consideration payable under the SPA is One Billion Five Hundred Five Million Dollars ($1,505,000,000), which includes up to Eighty-Five Million Dollars ($85,000,000) in earnout payments, comprised of Fifty Million Dollars ($50,000,000) contingent upon calendar year 2024 government-contract revenue milestones and Thirty-Five Million Dollars ($35,000,000) contingent upon calendar year 2025 government-contract revenue milestones. The consideration under the SPA is payable one hundred percent (100%) in cash at closing, with Seventy-One Million Dollars ($71,000,000) (representing five percent (5%) of the base purchase price) to be held in escrow with Pinnacle Trust Company, N.A. for a period of eighteen (18) months following the closing of the Transaction (the "Transaction").

B. Marlowe Asset Management Photonics Inc. VPI is a Delaware C-corporation, incorporated on February 14, 2009, and headquartered at 7400 Ridgeline Parkway, Colorado Springs, CO 80919. VPI designs and manufactures advanced gallium-nitride ("GaN") power amplifier chips used in defense radar systems, satellite communications platforms, and 5G telecommunications infrastructure. VPI operates a 45,000 square-foot GaN-on-silicon-carbide ("GaN-on-SiC") fabrication facility located at 9200 Innovation Boulevard, Albuquerque, NM 87113, which holds a Facility Security Clearance ("FCL") at the SECRET level, assigned CAGE Code 7VK92. VPI holds both classified and unclassified contracts with the U.S. Department of Defense and other U.S. Government agencies. As of the date hereof, VPI maintains fourteen (14) active DoD contracts (as both prime contractor and subcontractor) with an aggregate backlog of approximately One Hundred Ninety-Three Million Dollars ($193,000,000), including contracts with the U.S. Army Program Executive Office for intelligence, Electronic Warfare, and Sensors ("PEO IEW&S"), the U.S. Air Force Research Laboratory ("AFRL"), the Missile Defense Agency ("MDA"), the Naval Sea Systems Command ("NAVSEA") (through a subcontract arrangement with Ironclad Defense Systems Inc.), and the Department of Homeland Security Science and Technology Directorate ("DHS S&T"). VPI's products include defense articles controlled under Category XI(a)(3) of the United States Munitions List administered pursuant to the International Traffic in Arms Regulations ("ITAR"), as well as dual-use components classified under Export Control Classification Numbers ("ECCNs") 3A001, 3A991, and 3E001 under the Export Administration Regulations ("EAR"). VPI has been registered with the Directorate of Defense Trade Controls ("DDTC") since 2011 under Registration No. M-24817 and currently holds three (3) active DSP-5 export licenses. VPI employs four hundred eighty-six (486) individuals, of whom two hundred twelve (212), representing approximately 43.6% of the total workforce, hold active U.S. government personnel security clearances. VPI's intellectual property portfolio includes forty-seven (47) U.S. patents granted and twelve (12) pending patent applications relating to GaN epitaxial growth processes, high-electron-mobility transistor ("HEMT") design architectures, and millimeter-wave ("mmWave") power amplifier topologies. VPI also maintains thirty-one (31) registered internal trade secrets, primarily encompassing proprietary GaN epitaxial recipes and die-level reliability screening processes. Of VPI's patent portfolio, twenty-three (23) patents were developed under U.S. government-funded contracts and are subject to government license rights and march-in authority under 35 U.S.C. § 203. For fiscal year 2022, VPI reported revenue of Two Hundred Eighty-Seven Million Four Hundred Thousand Dollars ($287,400,000) and EBITDA of Sixty-One Million Two Hundred Thousand Dollars ($61,200,000).

C. HSAG's Existing U.S. Operations. In addition to the Transaction, HSAG currently maintains operations in the United States through its wholly owned subsidiary, Halcyon US Inc., located at 11501 Alterra Parkway, Suite 300, Austin, TX 78758. Halcyon US Inc. operates as a fabless semiconductor design center employing approximately three hundred twenty (320) individuals and does not perform any classified work. HSAG also operates a subsidiary in the People's Republic of China, Halcyon Semiconductor (Shanghai) Co., Ltd., which generated revenue of approximately $81.4 million in fiscal year 2022, representing approximately 1.3% of HSAG's total consolidated revenue. Halcyon Semiconductor (Shanghai) Co., Ltd. engages exclusively in the design and distribution of consumer-grade power management integrated circuits and does not conduct any GaN semiconductor, defense-related, or dual-use semiconductor activities.

D. CFIUS Filing and Review. On July 14, 2023, HSAG, Buyer, and VPI filed a joint voluntary notice with the Committee on Foreign Investment in the United States ("CFIUS") pursuant to 31 C.F.R. § 800.501, notifying CFIUS of the Transaction. CFIUS accepted the joint voluntary notice on July 21, 2023, thereby commencing a forty-five (45)-day review period under 50 U.S.C. § 4565(b)(1)(E). Following completion of the initial review, CFIUS initiated a forty-five (45)-day investigation on September 4, 2023, pursuant to 50 U.S.C. § 4565(b)(2). On October 20, 2023, CFIUS communicated preliminary national security concerns to the parties. Thereafter, the Parties and the U.S. Government entered into negotiations to develop mitigation measures that would address the identified national security concerns and permit the Transaction to proceed.

E. Purpose. This National Security Agreement (this "Agreement") sets forth the terms and conditions under which the Transaction may proceed while addressing identified risks to the national security of the United States. The obligations and restrictions contained herein have been designed to mitigate the national security concerns identified by CFIUS arising from the acquisition of VPI, a company possessing critical GaN semiconductor fabrication capabilities, classified facility security clearances, and significant government contract relationships, by a foreign acquiror. Upon execution of this Agreement and the satisfaction of its conditions, CFIUS has determined that there are no unresolved national security concerns with respect to the Transaction, and a safe-harbor letter will be issued to the parties pursuant to 50 U.S.C. § 4565(b)(1)(D).

F. Counsel. In connection with the negotiation and execution of this Agreement, HSAG and Buyer are represented by Calderwood & Harkness LLP, with offices at 399 Park Avenue, 31st Floor, New York, NY 10022 and 1750 K Street NW, Suite 800, Washington, DC 20006. VPI is represented by Wethersfield & Gale LLP, with offices at 2000 Pennsylvania Avenue NW, Suite 600, Washington, DC 20006.

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

ARTICLE I — DEFINITIONS

Section 1.1 — Definitions. Unless otherwise defined in the body of this Agreement, all capitalized terms used herein shall have the meanings ascribed to them in Annex A (Definitions), which is incorporated herein by reference and constitutes an integral part of this Agreement. To the extent that a term is defined both in the body of this Agreement and in Annex A, the definition in the body of this Agreement shall control.

Section 1.2 — Key Defined Terms. Without limiting the generality of Section 1.1, the following key defined terms are used throughout this Agreement and are defined in Annex A as follows:

(a) "Acquiror" means Halcyon Semiconductor Aktiengesellschaft.

(b) "Agreement" means this National Security Agreement, including all Annexes hereto, as may be amended from time to time in accordance with Section 16.4.

(c) "Buyer" means Halcyon US Holdings Inc., a Delaware corporation formed as the acquisition vehicle for the Transaction.

(d) "CFIUS" means the Committee on Foreign Investment in the United States, as established and operating pursuant to 50 U.S.C. § 4565 and 31 C.F.R. Parts 800 and 802.

(e) "CFIUS Case Number" means CFIUS-023-07-3841.

(f) "Classified Information" means information that has been determined pursuant to Executive Order 13526 (or any predecessor or successor executive order) to require protection against unauthorized disclosure in the interest of the national security of the United States.

(g) "Closing" means the consummation of the Transaction under the SPA, including the transfer of one hundred percent (100%) of the outstanding equity of VPI to Buyer.

(h) "Company" means Marlowe Asset Management Photonics Inc., a Delaware corporation.

(i) "Controlled Technical Data" means technical data controlled under the ITAR (22 C.F.R. Parts 120–130) or the EAR (15 C.F.R. Parts 730–774), including but not limited to information required for the design, development, production, manufacture, assembly, operation, repair, testing, maintenance, or modification of defense articles or dual-use items.

(j) "DCSA" means the Defense Counterintelligence and Security Agency (formerly the Defense Security Service), the principal agency responsible for industrial security oversight and the administration of the National Industrial Security Program.

(k) "Facility Security Clearance" or "FCL" means the security clearance held by VPI's Albuquerque, New Mexico fabrication facility at the SECRET level, CAGE Code 7VK92, as issued and maintained under the National Industrial Security Program.

(l) "Facility Security Officer" or "FSO" means the individual designated by VPI as responsible for the administration of facility security in accordance with 32 C.F.R. Part 117 and DCSA requirements; as of the date hereof, Col. (Ret.) Bryce Hendrickson.

(m) "FOCI" means Foreign Ownership, Control, or Influence, as that concept is defined and applied under 32 C.F.R. Part 117 and DCSA guidance.

(n) "Government Parties" means the U.S. Department of the Treasury, the U.S. Department of Defense, and the U.S. Department of Energy, each acting on behalf of the United States of America.

(o) "Government Security Committee" or "GSC" means the committee established pursuant to Article IV of this Agreement.

(p) "HSAG Designees" means the two (2) members of the VPI board of directors designated by HSAG pursuant to Article III, Section 3.4 of this Agreement.

(q) "Key Personnel" means Dr. Nathan Trevorrow, Marissa Sung-Avila, and Col. (Ret.) Bryce Hendrickson, as further described in Article IX, Section 9.1.

(r) "Monitoring Agency" means DCSA, in its capacity as the agency responsible for oversight of VPI's FCL and FOCI mitigation compliance.

(s) "National Industrial Security Program" or "NISP" means the program established by Executive Order 12829 for the protection of classified information released to or generated by contractors, licensees, and grantees of the United States Government.

(t) "NSA Docket Reference" means NSA-2024-0019.

(u) "Party" and "Parties" mean, individually or collectively, HSAG, Buyer, VPI, and the U.S. Government (acting through the Government Parties), as the context requires.

(v) "Security Board Members" means the three (3) members of the VPI board of directors meeting the qualifications set forth in Article III, Section 3.2 of this Agreement.

(w) "Security Director" means the independent Security Board Member who serves as the chairperson of the GSC, as described in Article III, Section 3.2 and Article IV, Section 4.1.

(x) "SPA" means the Stock Purchase Agreement dated June 10, 2023, by and among Buyer, VPI, and the stockholders of VPI, as the same may be amended, supplemented, or modified from time to time.

(y) "Technology Control Plan" or "TCP" means the technology control plan set forth in Annex B to this Agreement, governing access to, use of, and transfer of VPI's controlled technical data, technology, and Classified Information.

(z) "Third-Party Monitor" or "Monitor" means Whitmore Compliance Group LLC, as designated in Article XI of this Agreement.

(aa) "Transaction" means the acquisition of one hundred percent (100%) of the outstanding equity of VPI by Buyer pursuant to the SPA.

Section 1.3 — Additional Definitions. Annex A contains additional definitions relating to clearance levels, export control regimes, regulatory bodies, compliance terminology, and other technical and legal terms used throughout this Agreement. In the event of any conflict between a definition in this Article I and Annex A, the definition in this Article I shall control.

Section 1.4 — Rules of Construction. Unless the context otherwise requires: (a) words importing the singular include the plural and vice versa; (b) references to "including" or "includes" mean including without limitation; (c) references to any law, statute, regulation, or executive order include any amendments, modifications, or successor provisions thereto; and (d) references to "days" mean calendar days unless "business days" are specified.

ARTICLE II — SCOPE AND EFFECTIVENESS

Section 2.1 — Scope. This Agreement applies to HSAG, Buyer, VPI, and their respective subsidiaries, affiliates, successors, and assigns in connection with the Transaction and the ongoing operations of VPI following the Closing. The obligations and restrictions set forth herein cover all VPI operations, facilities, personnel, government contracts, intellectual property, technology, and associated assets, whether existing as of the date hereof or acquired, developed, or created after the date hereof, to the extent they fall within the scope of the matters addressed by this Agreement. Without limiting the foregoing, this Agreement applies to all activities conducted at or in connection with VPI's Colorado Springs headquarters at 7400 Ridgeline Parkway, Colorado Springs, CO 80919 and VPI's Albuquerque fabrication facility at 9200 Innovation Boulevard, Albuquerque, NM 87113, as well as any future VPI facilities established during the term of this Agreement.

Section 2.2 — Effective Date. This Agreement shall become effective upon the Closing of the Transaction (the "Effective Date"). The anticipated Closing date is February 9, 2024. The obligations of HSAG, Buyer, and VPI under this Agreement, except as otherwise provided in Section 2.3, are conditioned upon the Closing occurring in accordance with the terms and conditions of the SPA. In the event that the SPA is terminated without the Closing having occurred, this Agreement shall be null and void and of no further force or effect, except that the confidentiality obligations set forth in Article XVI, Section 16.1 shall survive the termination of the SPA for a period of three (3) years following such termination.

Section 2.3 — Binding Obligations Pre-Closing. Notwithstanding Section 2.2, the following preparatory obligations are binding upon the Parties as of the date of execution of this Agreement (January 19, 2024) and must be completed prior to or contemporaneous with the Closing:

(a) HSAG shall identify and propose to the Government Parties the name of the independent Security Director to be appointed to the VPI board of directors pursuant to Article III, Section 3.3, and shall obtain Government Party and DCSA approval of such individual, in each case no later than seven (7) Business Days prior to the anticipated Closing date.

(b) HSAG and VPI shall engage the Monitor (Whitmore Compliance Group LLC) by executing an engagement letter in form and substance satisfactory to the Government Parties no later than five (5) Business Days prior to the anticipated Closing date.

(c) VPI, in coordination with HSAG and the Monitor, shall prepare and finalize the Technology Control Plan set forth in Annex B, including all implementation procedures and training schedules, such that the TCP can be fully implemented contemporaneously with the Closing.

(d) VPI shall prepare and submit to DCSA all documentation necessary for DCSA to approve the FOCI mitigation framework established by this Agreement.

(e) HSAG shall identify and submit to the Government Parties the names of its initial HSAG Designees for the VPI board of directors.

Section 2.4 — Superseding Effect. This Agreement supersedes any and all prior understandings, commitments, representations, proposals, term sheets, draft mitigation agreements, and correspondence made by or among the Parties during the CFIUS review and investigation process (CFIUS Case No. CFIUS-023-07-3841), except to the extent that any such prior understanding or commitment is expressly incorporated herein by reference. For the avoidance of doubt, this Agreement does not supersede the SPA or any ancillary agreements entered into in connection with the SPA, except to the extent of any direct conflict between the provisions of this Agreement and the provisions of the SPA, in which case the provisions of this Agreement shall prevail with respect to matters relating to national security, FOCI mitigation, and the subject matter addressed herein.

ARTICLE III — BOARD OF DIRECTORS COMPOSITION

Section 3.1 — Reconstitution of VPI Board. Upon the Closing, the board of directors of VPI (the "VPI Board") shall be reconstituted to consist of exactly five (5) members, as follows:

(a) Three (3) Security Board Members, appointed in accordance with the qualifications and procedures set forth in Section 3.2 and Section 3.3 of this Article; and

(b) Two (2) HSAG Designees, appointed in accordance with Section 3.4 of this Article.

The reconstitution of the VPI Board must occur simultaneously with the Closing. No other individuals may serve on the VPI Board during the term of this Agreement without the prior written consent of the Government Parties. The size of the VPI Board shall not be increased or decreased from five (5) members without the prior written consent of the Government Parties.

Section 3.2 — Security Board Member Qualifications. Each Security Board Member must satisfy all of the following qualifications at the time of appointment and at all times during his or her service on the VPI Board:

(a) Each Security Board Member must be a citizen of the United States of America.

(b) Each Security Board Member must hold, or be eligible to obtain and willing to apply for, a U.S. government personnel security clearance at the TOP SECRET/Sensitive Compartmented Information ("TS/SCI") level. Any Security Board Member who does not hold a TS/SCI clearance at the time of appointment must submit an application for such clearance within thirty (30) days of appointment and cooperate fully with the clearance investigation process.

(c) No Security Board Member may be a current or former employee, officer, director, consultant, or agent of HSAG or any HSAG affiliate (other than VPI), and no Security Board Member may have any financial interest in HSAG or any HSAG affiliate (other than VPI) that could reasonably be expected to impair his or her independence or judgment in matters relating to national security, except as otherwise specifically approved in writing by the Government Parties.

(d) At least one (1) Security Board Member must be an independent Security Director who has no prior affiliation with HSAG, Buyer, VPI, or any of their respective affiliates, subsidiaries, officers, directors, or employees. The Security Director shall serve as the chairperson of the Government Security Committee established under Article IV.

Section 3.3 — Initial Security Board Members. The following individuals have been reviewed and are hereby approved by the Government Parties as initial Security Board Members of VPI, effective as of the Closing:

(a) Col. (Ret.) Bryce Hendrickson, USAF — currently serving as Vice President of Government Programs and Facility Security Officer of VPI; holder of an active TS/SCI clearance; U.S. citizen.

(b) Adrienne Delacroix — to serve as Independent Director; holder of an active SECRET clearance, with eligibility for upgrade to TS/SCI (application to be submitted within thirty (30) days of appointment); U.S. citizen; no prior affiliation with HSAG or its affiliates.

(c) The third Security Board Member, who shall serve as the independent Security Director and chairperson of the GSC, shall be the individual identified in HSAG's proposal letter to CFIUS dated December 14, 2023, as reviewed and approved by the Government Parties. The identity of such individual shall be confirmed in writing to all Parties no later than seven (7) Business Days prior to the anticipated Closing date.

Section 3.4 — HSAG Designees. HSAG may designate two (2) members of the VPI Board (the "HSAG Designees"), subject to the following restrictions:

(a) HSAG Designees may not hold, access, or receive any Classified Information or information relating to classified programs conducted by or on behalf of VPI.

(b) HSAG Designees may not access any areas designated as classified within VPI facilities, including but not limited to clean room Sections C-7 through C-12 at the Albuquerque fabrication facility.

(c) HSAG Designees shall participate in VPI Board meetings only with respect to unclassified business matters, including general corporate governance, financial performance, budgets, commercial strategy, and other non-defense matters. HSAG Designees shall be excluded from any session or portion of a session of the VPI Board involving Classified Information, ITAR-controlled program matters, or any other matter within the exclusive purview of the Government Security Committee as set forth in Article IV.

(d) HSAG Designees are not required to hold U.S. government personnel security clearances and are not required to be U.S. citizens, but their identities must be disclosed to the Government Parties and DCSA in accordance with Section 3.5.

Section 3.5 — Replacement of Board Members. In the event of a vacancy among the Security Board Members, whether due to resignation, death, incapacity, removal, or any other cause, the following procedures shall apply:

(a) The vacancy must be filled within sixty (60) days of its occurrence with a replacement individual who meets all of the qualifications set forth in Section 3.2.

(b) The proposed replacement Security Board Member must be submitted to the Government Parties and DCSA for review and approval at least thirty (30) days before the anticipated date of appointment. The Government Parties and DCSA shall have the right to object to any proposed replacement on national security grounds, and any such objection shall be binding.

(c) In the event that the vacancy is for the Security Director position, the remaining two Security Board Members shall jointly exercise the functions of the GSC chairperson on an interim basis until a replacement Security Director is appointed.

(d) Any replacement of an HSAG Designee must be notified to the Government Parties and DCSA in writing at least ten (10) Business Days in advance of the anticipated appointment, including the identity, citizenship, and background information of the proposed replacement. HSAG Designee replacements are subject to the same restrictions set forth in Section 3.4.

Section 3.6 — Removal of Board Members. The removal of VPI Board members shall be subject to the following provisions:

(a) A Security Board Member may be removed from the VPI Board only with the prior written consent of the Government Parties. A request for removal must be submitted in writing to the Government Parties, setting forth the grounds for removal, and the Government Parties shall respond within thirty (30) days.

(b) HSAG retains the authority to remove and replace its own HSAG Designees at any time, subject to the notification requirements set forth in Section 3.5(d) of this Article.

(c) The Government Parties reserve the right to require the removal of any VPI Board member, including any HSAG Designee, if the Government Parties determine in their sole discretion that such individual's continued service poses a risk to national security.

ARTICLE IV — GOVERNMENT SECURITY COMMITTEE

Section 4.1 — Establishment. VPI shall establish a Government Security Committee (the "GSC") consisting of the three (3) Security Board Members appointed pursuant to Article III. The GSC shall be chaired by the Security Director. The GSC shall be established contemporaneously with the reconstitution of the VPI Board at Closing and shall remain in existence for the duration of this Agreement. The GSC shall operate as a standing committee of the VPI Board with the exclusive authority set forth in Section 4.2 of this Article.

Section 4.2 — Exclusive Authority of the GSC. The GSC shall have exclusive authority over the following matters, and the full VPI Board (including HSAG Designees) shall have no authority to make decisions, take actions, or receive information with respect to any of the following:

(a) All classified programs and contracts performed by or on behalf of VPI, including the management, oversight, and execution thereof.

(b) All matters relating to ITAR-controlled defense articles and technical data, including VPI products classified under ITAR Category XI(a)(3), export license applications, compliance decisions, and deemed export determinations.

(c) Personnel security decisions, including sponsorship of individuals for U.S. government personnel security clearances, adjudication recommendations, adverse actions relating to cleared personnel, and determinations regarding access to Classified Information.

(d) Facility security matters, including the maintenance and administration of VPI's Facility Security Clearance (CAGE Code 7VK92), all interactions and communications with DCSA, physical security measures at the Albuquerque fabrication facility (9200 Innovation Boulevard, Albuquerque, NM 87113), and compliance with 32 C.F.R. Part 117 and related NISP requirements.

(e) Negotiation, execution, and performance of new classified government contracts, including decisions regarding whether to bid on classified solicitations.

(f) Access determinations for VPI facilities and information under Article VIII, including the review and approval or denial of access requests from HSAG personnel.

(g) Implementation and oversight of the Technology Control Plan set forth in Annex B, including approval of any proposed cross-border information sharing or R&D collaboration between VPI and HSAG personnel.

(h) Cybersecurity incident response for matters involving Classified Information, Controlled Technical Data, or Controlled Unclassified Information, including the determination of incident severity, containment measures, forensic investigation, and reporting to DCSA and the Government Parties.

(i) Any other matter designated by the Government Parties or DCSA as within the GSC's purview, whether by written notice, regulation, or directive.

Section 4.3 — GSC Operating Procedures. The GSC shall observe the following operating procedures:

(a) The GSC shall meet no less frequently than quarterly, with additional meetings convened as necessary to address urgent matters, at the call of the Security Director or any two GSC members.

(b) A quorum of the GSC shall consist of two (2) of its three (3) members. GSC decisions shall require a majority vote of the GSC members present at a duly convened meeting, provided a quorum exists.

(c) Minutes of all GSC meetings shall be prepared and maintained by the Security Director or his or her designee. Such minutes shall be retained for a minimum of seven (7) years and shall be made available to the Monitor and, upon request, to the Government Parties and DCSA.

(d) HSAG Designees shall not attend GSC meetings unless specifically invited by the GSC chairperson for a particular unclassified agenda item, and then only with the prior approval of the GSC chairperson. Under no circumstances shall HSAG Designees be present during any discussion of Classified Information, ITAR-controlled matters, or any other matter within the exclusive purview of the GSC. Separate agendas and minutes shall be maintained for any joint session involving HSAG Designees.

(e) The GSC may establish subcommittees, appoint advisors, and engage outside consultants as it deems necessary, provided that all such individuals meet the applicable clearance and citizenship requirements.

Section 4.4 — GSC Reporting. The GSC shall comply with the following reporting obligations:

(a) The GSC shall provide the Government Parties with a semi-annual written report summarizing its activities, decisions, security-relevant developments, and the status of compliance with the matters within its purview. The first semi-annual report shall be due within one hundred eighty (180) days of the Effective Date, and subsequent reports shall be due every six (6) months thereafter.

(b) The GSC shall immediately report to the Government Parties and DCSA any actual or suspected compromise of Classified Information or Controlled Technical Data, any unauthorized access to classified facilities or controlled information, and any other security incident that could affect VPI's FCL or the national security of the United States.

(c) The GSC shall cooperate fully with the Monitor in the preparation of the annual compliance reports required under Article XI and shall provide the Monitor with all information and access necessary for the Monitor to assess compliance with the matters within the GSC's purview.

ARTICLE V — FACILITY SECURITY CLEARANCE AND FOCI MITIGATION

Section 5.1 — Maintenance of FCL. VPI shall maintain its existing Facility Security Clearance at the SECRET level, CAGE Code 7VK92, at its Albuquerque, New Mexico fabrication facility located at 9200 Innovation Boulevard, Albuquerque, NM 87113. The 45,000 square-foot GaN-on-SiC fabrication facility shall continue to operate under the National Industrial Security Program ("NISP") established by Executive Order 12829, and VPI shall comply with all applicable provisions of 32 C.F.R. Part 117, the National Industrial Security Program Operating Manual ("NISPOM"), and all DCSA instructions, directives, and guidance relating to the maintenance of the FCL. VPI shall take all actions necessary to ensure uninterrupted maintenance of its FCL, including timely submission of all required reports, notifications, and documentation to DCSA. HSAG shall ensure that VPI has access to sufficient financial resources, personnel, and infrastructure to maintain its FCL at all times during the term of this Agreement.

Section 5.2 — FOCI Mitigation. The Parties acknowledge that the Transaction will result in VPI being subject to Foreign Ownership, Control, or Influence ("FOCI") within the meaning of 32 C.F.R. Part 117, by virtue of HSAG's status as a foreign parent entity organized under the laws of the Federal Republic of Germany. This Agreement shall serve as the equivalent of a Special Security Agreement ("SSA") for purposes of FOCI mitigation under the NISP, and the combined effect of the board governance provisions set forth in Article III, the Government Security Committee provisions set forth in Article IV, the Technology Control Plan set forth in Article VI and Annex B, and the access restrictions set forth in Article VIII shall collectively constitute the FOCI mitigation framework required under 32 C.F.R. Part 117 and applicable DCSA guidance. No separate FOCI mitigation plan, proxy agreement, or voting trust agreement shall be required beyond the provisions of this Agreement, unless otherwise directed by DCSA or the Government Parties. HSAG, as the foreign parent of VPI, expressly acknowledges and accepts the FOCI mitigation requirements imposed by this Agreement and agrees to comply fully with all such requirements.

Section 5.3 — Facility Security Officer. Col. (Ret.) Bryce Hendrickson shall continue to serve as VPI's Facility Security Officer ("FSO") following the Closing. Any change in the individual serving as FSO requires the prior approval of the GSC and advance notification to DCSA in accordance with 32 C.F.R. Part 117. The FSO shall report directly to the GSC on all security matters, including but not limited to FCL maintenance, DCSA inspections and assessments, personnel security clearance processing, classified material handling, and physical security of VPI's classified facilities. The FSO shall not report to or receive direction from HSAG or any HSAG Designee on any security matter.

Section 5.4 — Coordination with DCSA. VPI shall cooperate fully with DCSA in all matters relating to the FCL, including periodic security inspections, vulnerability assessments, security reviews, and any special inquiries or investigations initiated by DCSA. HSAG shall cause VPI to provide DCSA with timely and complete access to all facilities, personnel, records, and information requested by DCSA in connection with its oversight responsibilities. HSAG shall further ensure that VPI has sufficient resources, including qualified security personnel, appropriate physical security infrastructure, and necessary information technology systems, to maintain the FCL and comply with all NISP requirements throughout the term of this Agreement.

ARTICLE VI — TECHNOLOGY CONTROL PLAN

Section 6.1 — Implementation. HSAG, Buyer, and VPI shall implement the Technology Control Plan (the "TCP") set forth in Annex B to this Agreement. The TCP shall be fully implemented prior to or contemporaneous with the Closing. Each Party shall designate an individual responsible for ensuring implementation of the TCP within its respective organization, and VPI shall designate a TCP Compliance Officer in accordance with Section B.6 of Annex B. HSAG and VPI shall certify in writing to the Government Parties and the Monitor that the TCP has been fully implemented no later than five (5) Business Days following the Closing.

Section 6.2 — Scope of TCP. The TCP governs all access to, use of, and transfer of the following categories of VPI information, technology, and materials:

(a) VPI technical data controlled under the International Traffic in Arms Regulations ("ITAR"), 22 C.F.R. Parts 120–130, including defense articles classified under ITAR Category XI(a)(3) of the United States Munitions List and any associated technical data as defined in 22 C.F.R. § 120.10.

(b) VPI technology and technical data controlled under the Export Administration Regulations ("EAR"), 15 C.F.R. Parts 730–774, including items classified under Export Control Classification Numbers 3A001 (electronic devices and components), 3A991 (electronic devices and components not controlled by 3A001), and 3E001 (technology for the development or production of items controlled by 3A001).

(c) VPI trade secrets, comprising thirty-one (31) registered internal trade secrets, primarily encompassing proprietary GaN epitaxial growth recipes, die-level reliability screening processes, HEMT channel engineering parameters, and related manufacturing process know-how.

(d) Classified Information generated under or in connection with VPI's government contracts, including information classified at the SECRET level and any other classification level at which VPI may generate or receive information during the term of this Agreement.

Section 6.3 — Prohibition on Unauthorized Transfer. No Controlled Technical Data, ITAR-controlled defense articles or technical data, EAR-controlled technology or technical data, or Classified Information may be transferred, disclosed, or made accessible to any non-U.S. person (including HSAG personnel who are not U.S. persons as defined under ITAR 22 C.F.R. § 120.15 and EAR 15 C.F.R. § 772.1) without prior written authorization from the applicable U.S. Government agency. Specifically:

(a) ITAR-controlled defense articles and technical data may not be exported, reexported, retransferred, or otherwise disclosed to any non-U.S. person without a valid license or other authorization from the Directorate of Defense Trade Controls ("DDTC") of the U.S. Department of State.

(b) EAR-controlled technology and technical data may not be exported, reexported, or transferred to any non-U.S. person without a valid license or license exception from the Bureau of Industry and Security ("BIS") of the U.S. Department of Commerce.

(c) Classified Information may not be disclosed to any person not authorized to receive it by the relevant classification authority and in accordance with 32 C.F.R. Part 117.

This prohibition extends to all forms of disclosure, including oral disclosures, electronic transmissions (including email, file transfer, cloud-based sharing, and remote access), physical delivery or transfer of tangible media or materials, visual inspections of equipment, facilities, or documents, and any other means of communication, whether direct or indirect.

Section 6.4 — ITAR/EAR Compliance Integration. VPI shall maintain its existing export compliance program and integrate the requirements of the TCP into its compliance policies and procedures. Without limiting the foregoing:

(a) VPI's DDTC registration (Registration No. M-24817) shall be maintained in full force and effect and shall be updated to reflect the change in ownership of VPI pursuant to ITAR § 122.4(a) no later than thirty (30) days following the Closing.

(b) VPI's three (3) active DSP-5 export licenses shall be reviewed and amended, as required, to reflect the ownership change, and VPI shall submit all necessary amendment applications to DDTC within forty-five (45) days following the Closing.

(c) VPI shall designate an Empowered Official as defined under ITAR 22 C.F.R. § 120.25, who shall be a U.S. citizen, a U.S. person, and an employee of VPI, and who shall have the authority to sign export license applications and manage VPI's ITAR compliance program.

(d) VPI shall maintain all EAR compliance records in accordance with 15 C.F.R. § 762.2 and shall conduct an annual export compliance self-assessment, the results of which shall be reported to the GSC and the Monitor.

Section 6.5 — Intellectual Property Protections. The transfer, licensing, assignment, or other disposition of VPI intellectual property, including the forty-seven (47) granted U.S. patents, twelve (12) pending patent applications, and thirty-one (31) registered trade secrets, to any HSAG entity or any other non-U.S. person shall be subject to the restrictions set forth in the TCP. In addition:

(a) The twenty-three (23) patents developed under U.S. government-funded contracts are subject to government license rights under the applicable contract clauses, march-in authority under 35 U.S.C. § 203, and domestic manufacturing preference requirements under DFARS 252.227-7038. Any transfer, licensing, assignment, or sublicensing of such patents to any non-U.S. entity, including HSAG or its affiliates, requires prior notification to the applicable U.S. Government contracting officer and, to the extent required by the applicable contract terms or by law, prior government approval.

(b) Cross-border research and development collaboration between VPI personnel and HSAG personnel is permitted only for unclassified, non-ITAR-controlled, non-EAR-controlled matters. Any proposed cross-border R&D collaboration must be submitted to the TCP Compliance Officer for review and to the GSC for concurrence prior to initiation. The GSC shall evaluate each proposed collaboration to ensure that no controlled technical data, defense articles, or dual-use technology will be disclosed to non-U.S. persons in the course of the collaboration.

(c) VPI shall maintain a register of all intellectual property transfers, licenses, and disclosures made to HSAG entities or other non-U.S. persons, and such register shall be made available to the Monitor and, upon request, to the Government Parties and DCSA.

Section 6.6 — TCP Amendments. Any amendments, modifications, or waivers to the TCP shall require the prior written approval of the Government Parties. Proposed amendments shall be submitted in writing to the Government Parties, with copies to DCSA and the Monitor, and the Government Parties shall have thirty (30) days from receipt to review and respond. No amendment to the TCP shall take effect until the Government Parties have provided their written approval.

ARTICLE VII — CYBERSECURITY REQUIREMENTS

Section 7.1 — NIST SP 800-171 Compliance. VPI shall implement and maintain compliance with all one hundred ten (110) security requirements set forth in NIST Special Publication 800-171 Revision 2, "Protecting Controlled Unclassified Information in Nonfederal Systems and Organizations," for all VPI information systems, networks, and platforms that process, store, or transmit Controlled Unclassified Information ("CUI"), Controlled Technical Data, or any other controlled information. VPI shall maintain a current System Security Plan ("SSP") and a Plan of Action and Milestones ("POA&M") documenting its compliance posture, and shall update such documents as necessary to reflect changes in VPI's IT environment or emerging threats. The detailed cybersecurity requirements are set forth in Annex D to this Agreement.

Section 7.2 — Data Segregation. VPI's information technology systems, including all networks, servers, data storage systems, email systems, collaboration platforms, domain controllers, enterprise resource planning systems, and all other IT infrastructure, shall be physically and logically separated from the HSAG global network and from all IT systems operated by or on behalf of HSAG or any HSAG affiliate. Without limiting the foregoing:

(a) There shall be no shared cloud infrastructure, including public cloud, private cloud, or hybrid cloud environments, between VPI and any HSAG entity.

(b) VPI shall maintain its own dedicated IT infrastructure, including but not limited to separate domain controllers, email servers (including both internal and external email systems), enterprise applications, backup systems, and disaster recovery systems.

(d) VPI shall employ dedicated IT staff who are U.S. persons and who do not report to HSAG IT management.

(e) Data segregation measures shall be documented in a written data segregation plan, which shall be maintained as part of the TCP documentation and shall be subject to annual verification by the Monitor as part of the annual compliance audit.

Section 7.3 — Penetration Testing. VPI shall conduct annual third-party penetration testing of its IT systems, networks, and applications. The scope of penetration testing shall include all VPI systems that process, store, or transmit CUI, Controlled Technical Data, or Classified Information, as well as the interfaces and boundaries between VPI systems and any external networks. Penetration testing shall be conducted by a qualified third-party firm that is independent of both VPI and HSAG, and the results of each penetration test shall be reported to the GSC, the Monitor, and, upon request, to the Government Parties and DCSA. VPI shall remediate all critical and high-severity findings identified in penetration testing within thirty (30) days of the issuance of the penetration testing report, and shall document all remediation actions.

Section 7.4 — Incident Reporting. VPI shall report any cybersecurity incident affecting information systems that handle Classified Information, Controlled Technical Data, CUI, or other controlled information to DCSA within seventy-two (72) hours of discovery. Simultaneous notification shall be provided to the GSC, the Monitor, and the Government Parties. For purposes of this Section, "cybersecurity incident" includes, without limitation, unauthorized access to VPI information systems, data exfiltration or unauthorized disclosure of controlled information, malware infections, denial-of-service attacks, ransomware events, insider threats, loss or theft of computing devices or storage media containing controlled information, and any other event that compromises or potentially compromises the confidentiality, integrity, or availability of VPI's controlled information or information systems. VPI shall preserve all forensic evidence relating to any cybersecurity incident and shall cooperate fully with any investigation conducted by DCSA, the Government Parties, or law enforcement authorities.

Section 7.5 — Ongoing Obligations. VPI shall maintain cybersecurity policies, procedures, and training programs consistent with current DoD, DCSA, and NIST requirements, and shall update such policies and procedures as necessary to address evolving threats and regulatory changes. Annual cybersecurity awareness training shall be provided to all VPI employees, with specialized training provided to IT staff and personnel handling controlled information. Annual cybersecurity assessment reports, including the results of penetration testing, vulnerability scanning, and NIST SP 800-171 compliance assessments, shall be included in the Monitor's annual compliance report under Article XI.

ARTICLE VIII — FACILITY ACCESS AND VISITATION RESTRICTIONS

Section 8.1 — Classified Facility Access. HSAG personnel, including HSAG Designees on the VPI Board, HSAG executives, employees, consultants, agents, and any other individual acting on behalf of HSAG or any HSAG affiliate, may not access VPI's classified facilities, including specifically the Albuquerque fabrication facility clean room Sections C-7 through C-12, without prior written approval from both DCSA and the GSC. Access requests must comply with the following procedures:

(a) Access requests must be submitted in writing to the GSC at least fifteen (15) Business Days in advance of the proposed visit.

(b) Each access request must include the full legal name, nationality, citizenship, security clearance status (if any), employer, title, and the specific purpose of the visit for each individual for whom access is requested.

(c) The GSC shall forward the access request to DCSA for review and approval. Access shall not be granted unless both the GSC and DCSA have provided written approval.

(d) Access to classified areas is presumptively denied for all HSAG personnel. Exceptions may be granted only in extraordinary circumstances and only with the dual approval of both the GSC and DCSA.

Section 8.2 — Unclassified Facility Access. HSAG personnel may access unclassified areas of VPI facilities, including the Colorado Springs headquarters at 7400 Ridgeline Parkway, Colorado Springs, CO 80919 and the unclassified portions of the Albuquerque facility (areas outside clean room Sections C-7 through C-12), subject to the following conditions:

(a) Advance notice of at least five (5) Business Days must be provided to the GSC, specifying the names, affiliations, and purposes of visit for all HSAG personnel who will be visiting.

(b) All HSAG visitors must be escorted at all times by a VPI employee designated by the FSO or the GSC.

(d) HSAG visitors are prohibited from entering classified areas, controlled information storage areas, or areas housing TCP-restricted systems, and shall not access or view any Controlled Technical Data, ITAR-controlled defense articles, or Classified Information during their visit.

(e) Detailed facility access procedures are set forth in Annex F to this Agreement.

Section 8.3 — Prohibited Items. HSAG personnel visiting any VPI facility may not bring electronic devices, including laptops, smartphones, tablets, cameras, audio recording devices, video recording devices, USB storage devices, or any other electronic equipment, into classified areas of VPI facilities unless specifically approved in writing by the FSO on a case-by-case basis. All visitors to VPI facilities, regardless of the area being visited, shall be subject to the visitor log requirements established by the FSO in accordance with VPI's facility security procedures.

Section 8.4 — Government Access. The Government Parties, DCSA, and the Monitor shall have unrestricted access to all VPI facilities, personnel, records, IT systems, and any other information relevant to compliance with this Agreement, upon reasonable notice. For the avoidance of doubt, access by the Government Parties, DCSA, and the Monitor does not require the consent or approval of HSAG, Buyer, VPI, the GSC, or any other person or entity. Emergency access by the Government Parties and DCSA without advance notice is addressed in Annex F, Section F.6.

ARTICLE IX — PERSONNEL CONTINUITY AND REQUIREMENTS

Section 9.1 — Key Personnel Retention. The following individuals are designated as "Key Personnel" under this Agreement and must remain employed by VPI, in the capacities set forth below, for a minimum of twenty-four (24) months following the Closing:

(a) Dr. Nathan Trevorrow — Founder, Chief Executive Officer, and Board Chair of VPI; holder of an active TS/SCI clearance.

(b) Marissa Sung-Avila — President and Chief Operating Officer of VPI; holder of an active SECRET clearance.

(c) Col. (Ret.) Bryce Hendrickson — Vice President of Government Programs and Facility Security Officer of VPI; holder of an active TS/SCI clearance.

HSAG shall not terminate, reassign, constructively cause the departure of, materially alter the responsibilities of, or materially reduce the compensation of any Key Personnel without the prior written approval of the GSC and DCSA. For purposes of this Section, "constructively cause the departure of" includes any action or series of actions by HSAG, Buyer, or VPI that would reasonably be expected to cause a Key Personnel individual to resign, including but not limited to material reduction in title, authority, or compensation; relocation of the individual's principal place of work outside the state in which he or she currently works; or creation of a hostile or untenable working environment.

Section 9.2 — Replacement of Key Personnel. In the event that any Key Personnel individual departs VPI voluntarily, retires, becomes permanently disabled, dies, or is otherwise unable to continue employment for reasons beyond the reasonable control of HSAG, the following requirements shall apply:

(a) The replacement individual must be a citizen of the United States of America.

(b) The replacement individual must hold, or be eligible to obtain and willing to apply for, a U.S. government personnel security clearance at the same level as the departing Key Personnel individual (i.e., TS/SCI for Dr. Trevorrow and Col. Hendrickson; SECRET or above for Ms. Sung-Avila).

(c) The proposed replacement must be submitted to the GSC and DCSA for review and approval prior to appointment. The GSC and DCSA shall review the proposed replacement within fifteen (15) Business Days of submission.

(d) A qualified replacement must be appointed within ninety (90) days of the departure of the Key Personnel individual. During any interim period, the GSC shall designate an acting replacement who meets the requirements of clauses (a) and (b) above.

Section 9.3 — Cleared Personnel. HSAG shall maintain VPI's cleared workforce at levels sufficient to perform VPI's classified government contracts without interruption. As of the date of this Agreement, VPI employs two hundred twelve (212) individuals holding active U.S. government personnel security clearances. Any material reduction in VPI's cleared personnel, defined as a reduction of more than ten percent (10%) of the total cleared workforce (i.e., more than twenty-one (21) cleared individuals) within any twelve (12)-month period, requires prior notification to the GSC and the Government Parties at least thirty (30) days before the reduction is implemented. The notification shall include the reasons for the reduction, the specific cleared positions being eliminated, and the anticipated impact on VPI's ability to perform its classified government contracts. The Government Parties reserve the right to object to any material reduction in cleared personnel that, in the Government Parties' sole judgment, would impair VPI's ability to perform its classified government contracts.

Section 9.4 — Background Screening. All HSAG personnel who interact with VPI or access VPI facilities, whether classified or unclassified areas, shall undergo background screening consistent with VPI's existing security policies and procedures, as approved by the FSO. Such background screening shall be completed prior to the individual's first interaction with VPI or visit to any VPI facility. VPI shall maintain records of all background screenings conducted under this Section, and such records shall be available for review by the Monitor and, upon request, by DCSA and the Government Parties.

ARTICLE X — GOVERNMENT CONTRACTS

Section 10.1 — Contract Performance Continuity. HSAG shall ensure that VPI continues to perform all existing government contracts, including both prime contracts and subcontracts, without interruption, delay, or degradation of performance quality. VPI's government contract backlog of approximately One Hundred Ninety-Three Million Dollars ($193,000,000) shall be maintained and performed in accordance with all applicable contract terms, conditions, and delivery schedules. Without limiting the foregoing, VPI shall continue to perform the following contracts, among others:

(a) U.S. Army CERDEC (Communications-Electronics Research, Development and Engineering Center) — GaN HEMT modules for the AN/TPS-80 Ground/Air Task-Oriented Radar (G/ATOR) program, with approximately $52.3 million in remaining contract value.

(b) U.S. Air Force Research Laboratory ("AFRL") — Next-generation mmWave power amplifier development and qualification, with approximately $41.7 million in remaining contract value.

(c) Missile Defense Agency ("MDA") — GaN-based transmit/receive (T/R) modules for missile defense radar systems, with approximately $38.9 million in remaining contract value.

(d) Subcontract to Ironclad Defense Systems Inc. (prime contractor: U.S. Navy NAVSEA) — GaN power amplifier subsystems for naval electronic warfare platforms, with approximately $34.1 million in remaining contract value.

(e) Department of Homeland Security Science and Technology Directorate ("DHS S&T") — Border surveillance RF components, with approximately $26.0 million in remaining contract value.

HSAG shall provide VPI with the financial resources, personnel support, and corporate infrastructure necessary to ensure uninterrupted performance of all government contracts. HSAG shall not direct, cause, or permit VPI to terminate, default upon, or materially modify any government contract without the prior approval of the GSC and, to the extent required by applicable law or contract terms, the relevant U.S. Government contracting officer.

Section 10.2 — Novation and Notifications. VPI and Buyer shall complete novation agreements in accordance with Federal Acquisition Regulation ("FAR") Subpart 42.12 for all government contracts that require novation as a result of the change in ownership of VPI. Novation requests shall be submitted to the applicable contracting officers promptly following the Closing, and VPI shall use its best efforts to obtain all necessary novation approvals within one hundred twenty (120) days of the Closing. VPI shall comply with DFARS 252.209-7002 (Disclosure of Ownership or Control by a Foreign Government) by providing timely and complete disclosure of HSAG's foreign ownership to all relevant contracting officers, and shall comply with any additional disclosure or notification requirements imposed by the applicable contract terms or by law.

Section 10.3 — New Government Contracts. VPI may continue to pursue and enter into new government contracts during the term of this Agreement. New classified government contracts shall be subject to the oversight and approval of the GSC in accordance with Article IV, Section 4.2(e). Any new contract, subcontract, teaming arrangement, joint venture, or other business relationship involving a foreign government, foreign person, foreign entity, or foreign-owned organization must be reported to the Government Parties and DCSA within fifteen (15) Business Days of execution. The Government Parties reserve the right to review and, if necessary, impose conditions on any such arrangement that the Government Parties determine could affect the national security of the United States or the effectiveness of the mitigation measures established by this Agreement.

ARTICLE XI — THIRD-PARTY COMPLIANCE MONITOR

Section 11.1 — Appointment. Whitmore Compliance Group LLC, with offices at 1300 Crystal Drive, Suite 710, Arlington, VA 22202, is hereby designated as the Third-Party Compliance Monitor (the "Monitor") under this Agreement. The Monitor's principal is Gerald Whitmore, a former Deputy Assistant Director of the Federal Bureau of Investigation's Counterintelligence Division, who holds an active personnel security clearance at the TS/SCI level. The selection of the Monitor was reviewed and approved by the Government Parties on December 8, 2023, following submission by HSAG of proposed monitor candidates and the Government Parties' evaluation of each candidate's qualifications, independence, clearance status, and relevant experience.

Section 11.2 — Monitor Independence. The Monitor shall act independently of HSAG, Buyer, and VPI in the performance of its monitoring responsibilities under this Agreement. The Monitor shall not accept direction from HSAG, Buyer, VPI, or any of their respe

NATIONAL SECURITY AGREEMENT
NSA Docket Reference: NSA-2024-0019
CFIUS Case No.: CFIUS-023-07-3841
Execution Version
January 19, 2024
PARTIES
HALCYON SEMICONDUCTOR AKTIENGESELLSCHAFT, an Aktiengesellschaft organized under the laws of the Federal Republic of Germany ("HSAG" or the "Acquiror"),
HALCYON US HOLDINGS INC., a corporation organized under the laws of the State of Delaware ("Buyer"),
Marlowe Asset Management PHOTONICS INC., a corporation organized under the laws of the State of Delaware ("VPI" or the "Company"),
and
THE UNITED STATES OF AMERICA, acting through the U.S. Department of the Treasury ("Treasury"), the U.S. Department of Defense ("DoD"), and the U.S. Department of Energy ("DOE") (collectively, the "Government Parties" or the "U.S. Government").
Entered into pursuant to 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. Parts 800 and 802.
Right-click to update Table of Contents
RECITALS
WHEREAS:
A. The Transaction. Halcyon Semiconductor Aktiengesellschaft ("HSAG") is a publicly traded semiconductor company organized as an Aktiengesellschaft under the laws of the Federal Republic of Germany, listed on the Frankfurt Stock Exchange (XETRA: HLC), and headquartered at Industriestraße 44, 01099 Dresden, Saxony, Germany. As of June 1, 2023, HSAG had a market capitalization of approximately €14.8 billion, reported fiscal year 2022 revenue of €6.12 billion, and earnings before interest, taxes, depreciation, and amortization ("EBITDA") of €1.37 billion. In anticipation of the Transaction described herein, HSAG caused the formation of Halcyon US Holdings Inc. ("Buyer"), a Delaware corporation, on June 5, 2023, with its registered agent at National Registered Agents of Delaware, 160 Greentree Drive, Suite 101, Dover, DE 19904, for the sole purpose of serving as the acquisition vehicle for the Transaction. On June 10, 2023, Buyer entered into a Stock Purchase Agreement (the "SPA") with the stockholders of Marlowe Asset Management Photonics Inc. ("VPI") to acquire one hundred percent (100%) of the outstanding equity interests of VPI for a base purchase price of One Billion Four Hundred Twenty Million Dollars ($1,420,000,000) on a cash-free, debt-free basis with a normalized net working capital target of Thirty-Four Million Six Hundred Thousand Dollars ($34,600,000). The maximum aggregate consideration payable under the SPA is One Billion Five Hundred Five Million Dollars ($1,505,000,000), which includes up to Eighty-Five Million Dollars ($85,000,000) in earnout payments, comprised of Fifty Million Dollars ($50,000,000) contingent upon calendar year 2024 government-contract revenue milestones and Thirty-Five Million Dollars ($35,000,000) contingent upon calendar year 2025 government-contract revenue milestones. The consideration under the SPA is payable one hundred percent (100%) in cash at closing, with Seventy-One Million Dollars ($71,000,000) (representing five percent (5%) of the base purchase price) to be held in escrow with Pinnacle Trust Company, N.A. for a period of eighteen (18) months following the closing of the Transaction (the "Transaction").
B. Marlowe Asset Management Photonics Inc. VPI is a Delaware C-corporation, incorporated on February 14, 2009, and headquartered at 7400 Ridgeline Parkway, Colorado Springs, CO 80919. VPI designs and manufactures advanced gallium-nitride ("GaN") power amplifier chips used in defense radar systems, satellite communications platforms, and 5G telecommunications infrastructure. VPI operates a 45,000 square-foot GaN-on-silicon-carbide ("GaN-on-SiC") fabrication facility located at 9200 Innovation Boulevard, Albuquerque, NM 87113, which holds a Facility Security Clearance ("FCL") at the SECRET level, assigned CAGE Code 7VK92. VPI holds both classified and unclassified contracts with the U.S. Department of Defense and other U.S. Government agencies. As of the date hereof, VPI maintains fourteen (14) active DoD contracts (as both prime contractor and subcontractor) with an aggregate backlog of approximately One Hundred Ninety-Three Million Dollars ($193,000,000), including contracts with the U.S. Army Program Executive Office for intelligence, Electronic Warfare, and Sensors ("PEO IEW&S"), the U.S. Air Force Research Laboratory ("AFRL"), the Missile Defense Agency ("MDA"), the Naval Sea Systems Command ("NAVSEA") (through a subcontract arrangement with Ironclad Defense Systems Inc.), and the Department of Homeland Security Science and Technology Directorate ("DHS S&T"). VPI's products include defense articles controlled under Category XI(a)(3) of the United States Munitions List administered pursuant to the International Traffic in Arms Regulations ("ITAR"), as well as dual-use components classified under Export Control Classification Numbers ("ECCNs") 3A001, 3A991, and 3E001 under the Export Administration Regulations ("EAR"). VPI has been registered with the Directorate of Defense Trade Controls ("DDTC") since 2011 under Registration No. M-24817 and currently holds three (3) active DSP-5 export licenses. VPI employs four hundred eighty-six (486) individuals, of whom two hundred twelve (212), representing approximately 43.6% of the total workforce, hold active U.S. government personnel security clearances. VPI's intellectual property portfolio includes forty-seven (47) U.S. patents granted and twelve (12) pending patent applications relating to GaN epitaxial growth processes, high-electron-mobility transistor ("HEMT") design architectures, and millimeter-wave ("mmWave") power amplifier topologies. VPI also maintains thirty-one (31) registered internal trade secrets, primarily encompassing proprietary GaN epitaxial recipes and die-level reliability screening processes. Of VPI's patent portfolio, twenty-three (23) patents were developed under U.S. government-funded contracts and are subject to government license rights and march-in authority under 35 U.S.C. § 203. For fiscal year 2022, VPI reported revenue of Two Hundred Eighty-Seven Million Four Hundred Thousand Dollars ($287,400,000) and EBITDA of Sixty-One Million Two Hundred Thousand Dollars ($61,200,000).
C. HSAG's Existing U.S. Operations. In addition to the Transaction, HSAG currently maintains operations in the United States through its wholly owned subsidiary, Halcyon US Inc., located at 11501 Alterra Parkway, Suite 300, Austin, TX 78758. Halcyon US Inc. operates as a fabless semiconductor design center employing approximately three hundred twenty (320) individuals and does not perform any classified work. HSAG also operates a subsidiary in the People's Republic of China, Halcyon Semiconductor (Shanghai) Co., Ltd., which generated revenue of approximately $81.4 million in fiscal year 2022, representing approximately 1.3% of HSAG's total consolidated revenue. Halcyon Semiconductor (Shanghai) Co., Ltd. engages exclusively in the design and distribution of consumer-grade power management integrated circuits and does not conduct any GaN semiconductor, defense-related, or dual-use semiconductor activities.
D. CFIUS Filing and Review. On July 14, 2023, HSAG, Buyer, and VPI filed a joint voluntary notice with the Committee on Foreign Investment in the United States ("CFIUS") pursuant to 31 C.F.R. § 800.501, notifying CFIUS of the Transaction. CFIUS accepted the joint voluntary notice on July 21, 2023, thereby commencing a forty-five (45)-day review period under 50 U.S.C. § 4565(b)(1)(E). Following completion of the initial review, CFIUS initiated a forty-five (45)-day investigation on September 4, 2023, pursuant to 50 U.S.C. § 4565(b)(2). On October 20, 2023, CFIUS communicated preliminary national security concerns to the parties. Thereafter, the Parties and the U.S. Government entered into negotiations to develop mitigation measures that would address the identified national security concerns and permit the Transaction to proceed.
E. Purpose. This National Security Agreement (this "Agreement") sets forth the terms and conditions under which the Transaction may proceed while addressing identified risks to the national security of the United States. The obligations and restrictions contained herein have been designed to mitigate the national security concerns identified by CFIUS arising from the acquisition of VPI, a company possessing critical GaN semiconductor fabrication capabilities, classified facility security clearances, and significant government contract relationships, by a foreign acquiror. Upon execution of this Agreement and the satisfaction of its conditions, CFIUS has determined that there are no unresolved national security concerns with respect to the Transaction, and a safe-harbor letter will be issued to the parties pursuant to 50 U.S.C. § 4565(b)(1)(D).
F. Counsel. In connection with the negotiation and execution of this Agreement, HSAG and Buyer are represented by Calderwood & Harkness LLP, with offices at 399 Park Avenue, 31st Floor, New York, NY 10022 and 1750 K Street NW, Suite 800, Washington, DC 20006. VPI is represented by Wethersfield & Gale LLP, with offices at 2000 Pennsylvania Avenue NW, Suite 600, Washington, DC 20006.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
ARTICLE I — DEFINITIONS
Section 1.1 — Definitions. Unless otherwise defined in the body of this Agreement, all capitalized terms used herein shall have the meanings ascribed to them in Annex A (Definitions), which is incorporated herein by reference and constitutes an integral part of this Agreement. To the extent that a term is defined both in the body of this Agreement and in Annex A, the definition in the body of this Agreement shall control.
Section 1.2 — Key Defined Terms. Without limiting the generality of Section 1.1, the following key defined terms are used throughout this Agreement and are defined in Annex A as follows:
(a) "Acquiror" means Halcyon Semiconductor Aktiengesellschaft.
(b) "Agreement" means this National Security Agreement, including all Annexes hereto, as may be amended from time to time in accordance with Section 16.4.
(c) "Buyer" means Halcyon US Holdings Inc., a Delaware corporation formed as the acquisition vehicle for the Transaction.
(d) "CFIUS" means the Committee on Foreign Investment in the United States, as established and operating pursuant to 50 U.S.C. § 4565 and 31 C.F.R. Parts 800 and 802.
(e) "CFIUS Case Number" means CFIUS-023-07-3841.
(f) "Classified Information" means information that has been determined pursuant to Executive Order 13526 (or any predecessor or successor executive order) to require protection against unauthorized disclosure in the interest of the national security of the United States.
(g) "Closing" means the consummation of the Transaction under the SPA, including the transfer of one hundred percent (100%) of the outstanding equity of VPI to Buyer.
(h) "Company" means Marlowe Asset Management Photonics Inc., a Delaware corporation.
(i) "Controlled Technical Data" means technical data controlled under the ITAR (22 C.F.R. Parts 120–130) or the EAR (15 C.F.R. Parts 730–774), including but not limited to information required for the design, development, production, manufacture, assembly, operation, repair, testing, maintenance, or modification of defense articles or dual-use items.
(j) "DCSA" means the Defense Counterintelligence and Security Agency (formerly the Defense Security Service), the principal agency responsible for industrial security oversight and the administration of the National Industrial Security Program.
(k) "Facility Security Clearance" or "FCL" means the security clearance held by VPI's Albuquerque, New Mexico fabrication facility at the SECRET level, CAGE Code 7VK92, as issued and maintained under the National Industrial Security Program.
(l) "Facility Security Officer" or "FSO" means the individual designated by VPI as responsible for the administration of facility security in accordance with 32 C.F.R. Part 117 and DCSA requirements; as of the date hereof, Col. (Ret.) Bryce Hendrickson.
(m) "FOCI" means Foreign Ownership, Control, or Influence, as that concept is defined and applied under 32 C.F.R. Part 117 and DCSA guidance.
(n) "Government Parties" means the U.S. Department of the Treasury, the U.S. Department of Defense, and the U.S. Department of Energy, each acting on behalf of the United States of America.
(o) "Government Security Committee" or "GSC" means the committee established pursuant to Article IV of this Agreement.
(p) "HSAG Designees" means the two (2) members of the VPI board of directors designated by HSAG pursuant to Article III, Section 3.4 of this Agreement.
(q) "Key Personnel" means Dr. Nathan Trevorrow, Marissa Sung-Avila, and Col. (Ret.) Bryce Hendrickson, as further described in Article IX, Section 9.1.
(r) "Monitoring Agency" means DCSA, in its capacity as the agency responsible for oversight of VPI's FCL and FOCI mitigation compliance.
(s) "National Industrial Security Program" or "NISP" means the program established by Executive Order 12829 for the protection of classified information released to or generated by contractors, licensees, and grantees of the United States Government.
(t) "NSA Docket Reference" means NSA-2024-0019.
(u) "Party" and "Parties" mean, individually or collectively, HSAG, Buyer, VPI, and the U.S. Government (acting through the Government Parties), as the context requires.
(v) "Security Board Members" means the three (3) members of the VPI board of directors meeting the qualifications set forth in Article III, Section 3.2 of this Agreement.
(w) "Security Director" means the independent Security Board Member who serves as the chairperson of the GSC, as described in Article III, Section 3.2 and Article IV, Section 4.1.
(x) "SPA" means the Stock Purchase Agreement dated June 10, 2023, by and among Buyer, VPI, and the stockholders of VPI, as the same may be amended, supplemented, or modified from time to time.
(y) "Technology Control Plan" or "TCP" means the technology control plan set forth in Annex B to this Agreement, governing access to, use of, and transfer of VPI's controlled technical data, technology, and Classified Information.
(z) "Third-Party Monitor" or "Monitor" means Whitmore Compliance Group LLC, as designated in Article XI of this Agreement.
(aa) "Transaction" means the acquisition of one hundred percent (100%) of the outstanding equity of VPI by Buyer pursuant to the SPA.
Section 1.3 — Additional Definitions. Annex A contains additional definitions relating to clearance levels, export control regimes, regulatory bodies, compliance terminology, and other technical and legal terms used throughout this Agreement. In the event of any conflict between a definition in this Article I and Annex A, the definition in this Article I shall control.
Section 1.4 — Rules of Construction. Unless the context otherwise requires: (a) words importing the singular include the plural and vice versa; (b) references to "including" or "includes" mean including without limitation; (c) references to any law, statute, regulation, or executive order include any amendments, modifications, or successor provisions thereto; and (d) references to "days" mean calendar days unless "business days" are specified.
ARTICLE II — SCOPE AND EFFECTIVENESS
Section 2.1 — Scope. This Agreement applies to HSAG, Buyer, VPI, and their respective subsidiaries, affiliates, successors, and assigns in connection with the Transaction and the ongoing operations of VPI following the Closing. The obligations and restrictions set forth herein cover all VPI operations, facilities, personnel, government contracts, intellectual property, technology, and associated assets, whether existing as of the date hereof or acquired, developed, or created after the date hereof, to the extent they fall within the scope of the matters addressed by this Agreement. Without limiting the foregoing, this Agreement applies to all activities conducted at or in connection with VPI's Colorado Springs headquarters at 7400 Ridgeline Parkway, Colorado Springs, CO 80919 and VPI's Albuquerque fabrication facility at 9200 Innovation Boulevard, Albuquerque, NM 87113, as well as any future VPI facilities established during the term of this Agreement.
Section 2.2 — Effective Date. This Agreement shall become effective upon the Closing of the Transaction (the "Effective Date"). The anticipated Closing date is February 9, 2024. The obligations of HSAG, Buyer, and VPI under this Agreement, except as otherwise provided in Section 2.3, are conditioned upon the Closing occurring in accordance with the terms and conditions of the SPA. In the event that the SPA is terminated without the Closing having occurred, this Agreement shall be null and void and of no further force or effect, except that the confidentiality obligations set forth in Article XVI, Section 16.1 shall survive the termination of the SPA for a period of three (3) years following such termination.
Section 2.3 — Binding Obligations Pre-Closing. Notwithstanding Section 2.2, the following preparatory obligations are binding upon the Parties as of the date of execution of this Agreement (January 19, 2024) and must be completed prior to or contemporaneous with the Closing:
(a) HSAG shall identify and propose to the Government Parties the name of the independent Security Director to be appointed to the VPI board of directors pursuant to Article III, Section 3.3, and shall obtain Government Party and DCSA approval of such individual, in each case no later than seven (7) Business Days prior to the anticipated Closing date.
(b) HSAG and VPI shall engage the Monitor (Whitmore Compliance Group LLC) by executing an engagement letter in form and substance satisfactory to the Government Parties no later than five (5) Business Days prior to the anticipated Closing date.
(c) VPI, in coordination with HSAG and the Monitor, shall prepare and finalize the Technology Control Plan set forth in Annex B, including all implementation procedures and training schedules, such that the TCP can be fully implemented contemporaneously with the Closing.
(d) VPI shall prepare and submit to DCSA all documentation necessary for DCSA to approve the FOCI mitigation framework established by this Agreement.
(e) HSAG shall identify and submit to the Government Parties the names of its initial HSAG Designees for the VPI board of directors.
Section 2.4 — Superseding Effect. This Agreement supersedes any and all prior understandings, commitments, representations, proposals, term sheets, draft mitigation agreements, and correspondence made by or among the Parties during the CFIUS review and investigation process (CFIUS Case No. CFIUS-023-07-3841), except to the extent that any such prior understanding or commitment is expressly incorporated herein by reference. For the avoidance of doubt, this Agreement does not supersede the SPA or any ancillary agreements entered into in connection with the SPA, except to the extent of any direct conflict between the provisions of this Agreement and the provisions of the SPA, in which case the provisions of this Agreement shall prevail with respect to matters relating to national security, FOCI mitigation, and the subject matter addressed herein.
ARTICLE III — BOARD OF DIRECTORS COMPOSITION
Section 3.1 — Reconstitution of VPI Board. Upon the Closing, the board of directors of VPI (the "VPI Board") shall be reconstituted to consist of exactly five (5) members, as follows:
(a) Three (3) Security Board Members, appointed in accordance with the qualifications and procedures set forth in Section 3.2 and Section 3.3 of this Article; and
(b) Two (2) HSAG Designees, appointed in accordance with Section 3.4 of this Article.
The reconstitution of the VPI Board must occur simultaneously with the Closing. No other individuals may serve on the VPI Board during the term of this Agreement without the prior written consent of the Government Parties. The size of the VPI Board shall not be increased or decreased from five (5) members without the prior written consent of the Government Parties.
Section 3.2 — Security Board Member Qualifications. Each Security Board Member must satisfy all of the following qualifications at the time of appointment and at all times during his or her service on the VPI Board:
(a) Each Security Board Member must be a citizen of the United States of America.
(b) Each Security Board Member must hold, or be eligible to obtain and willing to apply for, a U.S. government personnel security clearance at the TOP SECRET/Sensitive Compartmented Information ("TS/SCI") level. Any Security Board Member who does not hold a TS/SCI clearance at the time of appointment must submit an application for such clearance within thirty (30) days of appointment and cooperate fully with the clearance investigation process.
(c) No Security Board Member may be a current or former employee, officer, director, consultant, or agent of HSAG or any HSAG affiliate (other than VPI), and no Security Board Member may have any financial interest in HSAG or any HSAG affiliate (other than VPI) that could reasonably be expected to impair his or her independence or judgment in matters relating to national security, except as otherwise specifically approved in writing by the Government Parties.
(d) At least one (1) Security Board Member must be an independent Security Director who has no prior affiliation with HSAG, Buyer, VPI, or any of their respective affiliates, subsidiaries, officers, directors, or employees. The Security Director shall serve as the chairperson of the Government Security Committee established under Article IV.
Section 3.3 — Initial Security Board Members. The following individuals have been reviewed and are hereby approved by the Government Parties as initial Security Board Members of VPI, effective as of the Closing:
(a) Col. (Ret.) Bryce Hendrickson, USAF — currently serving as Vice President of Government Programs and Facility Security Officer of VPI; holder of an active TS/SCI clearance; U.S. citizen.
(b) Adrienne Delacroix — to serve as Independent Director; holder of an active SECRET clearance, with eligibility for upgrade to TS/SCI (application to be submitted within thirty (30) days of appointment); U.S. citizen; no prior affiliation with HSAG or its affiliates.
(c) The third Security Board Member, who shall serve as the independent Security Director and chairperson of the GSC, shall be the individual identified in HSAG's proposal letter to CFIUS dated December 14, 2023, as reviewed and approved by the Government Parties. The identity of such individual shall be confirmed in writing to all Parties no later than seven (7) Business Days prior to the anticipated Closing date.
Section 3.4 — HSAG Designees. HSAG may designate two (2) members of the VPI Board (the "HSAG Designees"), subject to the following restrictions:
(a) HSAG Designees may not hold, access, or receive any Classified Information or information relating to classified programs conducted by or on behalf of VPI.
(b) HSAG Designees may not access any areas designated as classified within VPI facilities, including but not limited to clean room Sections C-7 through C-12 at the Albuquerque fabrication facility.
(c) HSAG Designees shall participate in VPI Board meetings only with respect to unclassified business matters, including general corporate governance, financial performance, budgets, commercial strategy, and other non-defense matters. HSAG Designees shall be excluded from any session or portion of a session of the VPI Board involving Classified Information, ITAR-controlled program matters, or any other matter within the exclusive purview of the Government Security Committee as set forth in Article IV.
(d) HSAG Designees are not required to hold U.S. government personnel security clearances and are not required to be U.S. citizens, but their identities must be disclosed to the Government Parties and DCSA in accordance with Section 3.5.
Section 3.5 — Replacement of Board Members. In the event of a vacancy among the Security Board Members, whether due to resignation, death, incapacity, removal, or any other cause, the following procedures shall apply:
(a) The vacancy must be filled within sixty (60) days of its occurrence with a replacement individual who meets all of the qualifications set forth in Section 3.2.
(b) The proposed replacement Security Board Member must be submitted to the Government Parties and DCSA for review and approval at least thirty (30) days before the anticipated date of appointment. The Government Parties and DCSA shall have the right to object to any proposed replacement on national security grounds, and any such objection shall be binding.
(c) In the event that the vacancy is for the Security Director position, the remaining two Security Board Members shall jointly exercise the functions of the GSC chairperson on an interim basis until a replacement Security Director is appointed.
(d) Any replacement of an HSAG Designee must be notified to the Government Parties and DCSA in writing at least ten (10) Business Days in advance of the anticipated appointment, including the identity, citizenship, and background information of the proposed replacement. HSAG Designee replacements are subject to the same restrictions set forth in Section 3.4.
Section 3.6 — Removal of Board Members. The removal of VPI Board members shall be subject to the following provisions:
(a) A Security Board Member may be removed from the VPI Board only with the prior written consent of the Government Parties. A request for removal must be submitted in writing to the Government Parties, setting forth the grounds for removal, and the Government Parties shall respond within thirty (30) days.
(b) HSAG retains the authority to remove and replace its own HSAG Designees at any time, subject to the notification requirements set forth in Section 3.5(d) of this Article.
(c) The Government Parties reserve the right to require the removal of any VPI Board member, including any HSAG Designee, if the Government Parties determine in their sole discretion that such individual's continued service poses a risk to national security.
ARTICLE IV — GOVERNMENT SECURITY COMMITTEE
Section 4.1 — Establishment. VPI shall establish a Government Security Committee (the "GSC") consisting of the three (3) Security Board Members appointed pursuant to Article III. The GSC shall be chaired by the Security Director. The GSC shall be established contemporaneously with the reconstitution of the VPI Board at Closing and shall remain in existence for the duration of this Agreement. The GSC shall operate as a standing committee of the VPI Board with the exclusive authority set forth in Section 4.2 of this Article.
Section 4.2 — Exclusive Authority of the GSC. The GSC shall have exclusive authority over the following matters, and the full VPI Board (including HSAG Designees) shall have no authority to make decisions, take actions, or receive information with respect to any of the following:
(a) All classified programs and contracts performed by or on behalf of VPI, including the management, oversight, and execution thereof.
(b) All matters relating to ITAR-controlled defense articles and technical data, including VPI products classified under ITAR Category XI(a)(3), export license applications, compliance decisions, and deemed export determinations.
(c) Personnel security decisions, including sponsorship of individuals for U.S. government personnel security clearances, adjudication recommendations, adverse actions relating to cleared personnel, and determinations regarding access to Classified Information.
(d) Facility security matters, including the maintenance and administration of VPI's Facility Security Clearance (CAGE Code 7VK92), all interactions and communications with DCSA, physical security measures at the Albuquerque fabrication facility (9200 Innovation Boulevard, Albuquerque, NM 87113), and compliance with 32 C.F.R. Part 117 and related NISP requirements.
(e) Negotiation, execution, and performance of new classified government contracts, including decisions regarding whether to bid on classified solicitations.
(f) Access determinations for VPI facilities and information under Article VIII, including the review and approval or denial of access requests from HSAG personnel.
(g) Implementation and oversight of the Technology Control Plan set forth in Annex B, including approval of any proposed cross-border information sharing or R&D collaboration between VPI and HSAG personnel.
(h) Cybersecurity incident response for matters involving Classified Information, Controlled Technical Data, or Controlled Unclassified Information, including the determination of incident severity, containment measures, forensic investigation, and reporting to DCSA and the Government Parties.
(i) Any other matter designated by the Government Parties or DCSA as within the GSC's purview, whether by written notice, regulation, or directive.
Section 4.3 — GSC Operating Procedures. The GSC shall observe the following operating procedures:
(a) The GSC shall meet no less frequently than quarterly, with additional meetings convened as necessary to address urgent matters, at the call of the Security Director or any two GSC members.
(b) A quorum of the GSC shall consist of two (2) of its three (3) members. GSC decisions shall require a majority vote of the GSC members present at a duly convened meeting, provided a quorum exists.
(c) Minutes of all GSC meetings shall be prepared and maintained by the Security Director or his or her designee. Such minutes shall be retained for a minimum of seven (7) years and shall be made available to the Monitor and, upon request, to the Government Parties and DCSA.
(d) HSAG Designees shall not attend GSC meetings unless specifically invited by the GSC chairperson for a particular unclassified agenda item, and then only with the prior approval of the GSC chairperson. Under no circumstances shall HSAG Designees be present during any discussion of Classified Information, ITAR-controlled matters, or any other matter within the exclusive purview of the GSC. Separate agendas and minutes shall be maintained for any joint session involving HSAG Designees.
(e) The GSC may establish subcommittees, appoint advisors, and engage outside consultants as it deems necessary, provided that all such individuals meet the applicable clearance and citizenship requirements.
Section 4.4 — GSC Reporting. The GSC shall comply with the following reporting obligations:
(a) The GSC shall provide the Government Parties with a semi-annual written report summarizing its activities, decisions, security-relevant developments, and the status of compliance with the matters within its purview. The first semi-annual report shall be due within one hundred eighty (180) days of the Effective Date, and subsequent reports shall be due every six (6) months thereafter.
(b) The GSC shall immediately report to the Government Parties and DCSA any actual or suspected compromise of Classified Information or Controlled Technical Data, any unauthorized access to classified facilities or controlled information, and any other security incident that could affect VPI's FCL or the national security of the United States.
(c) The GSC shall cooperate fully with the Monitor in the preparation of the annual compliance reports required under Article XI and shall provide the Monitor with all information and access necessary for the Monitor to assess compliance with the matters within the GSC's purview.
ARTICLE V — FACILITY SECURITY CLEARANCE AND FOCI MITIGATION
Section 5.1 — Maintenance of FCL. VPI shall maintain its existing Facility Security Clearance at the SECRET level, CAGE Code 7VK92, at its Albuquerque, New Mexico fabrication facility located at 9200 Innovation Boulevard, Albuquerque, NM 87113. The 45,000 square-foot GaN-on-SiC fabrication facility shall continue to operate under the National Industrial Security Program ("NISP") established by Executive Order 12829, and VPI shall comply with all applicable provisions of 32 C.F.R. Part 117, the National Industrial Security Program Operating Manual ("NISPOM"), and all DCSA instructions, directives, and guidance relating to the maintenance of the FCL. VPI shall take all actions necessary to ensure uninterrupted maintenance of its FCL, including timely submission of all required reports, notifications, and documentation to DCSA. HSAG shall ensure that VPI has access to sufficient financial resources, personnel, and infrastructure to maintain its FCL at all times during the term of this Agreement.
Section 5.2 — FOCI Mitigation. The Parties acknowledge that the Transaction will result in VPI being subject to Foreign Ownership, Control, or Influence ("FOCI") within the meaning of 32 C.F.R. Part 117, by virtue of HSAG's status as a foreign parent entity organized under the laws of the Federal Republic of Germany. This Agreement shall serve as the equivalent of a Special Security Agreement ("SSA") for purposes of FOCI mitigation under the NISP, and the combined effect of the board governance provisions set forth in Article III, the Government Security Committee provisions set forth in Article IV, the Technology Control Plan set forth in Article VI and Annex B, and the access restrictions set forth in Article VIII shall collectively constitute the FOCI mitigation framework required under 32 C.F.R. Part 117 and applicable DCSA guidance. No separate FOCI mitigation plan, proxy agreement, or voting trust agreement shall be required beyond the provisions of this Agreement, unless otherwise directed by DCSA or the Government Parties. HSAG, as the foreign parent of VPI, expressly acknowledges and accepts the FOCI mitigation requirements imposed by this Agreement and agrees to comply fully with all such requirements.
Section 5.3 — Facility Security Officer. Col. (Ret.) Bryce Hendrickson shall continue to serve as VPI's Facility Security Officer ("FSO") following the Closing. Any change in the individual serving as FSO requires the prior approval of the GSC and advance notification to DCSA in accordance with 32 C.F.R. Part 117. The FSO shall report directly to the GSC on all security matters, including but not limited to FCL maintenance, DCSA inspections and assessments, personnel security clearance processing, classified material handling, and physical security of VPI's classified facilities. The FSO shall not report to or receive direction from HSAG or any HSAG Designee on any security matter.
Section 5.4 — Coordination with DCSA. VPI shall cooperate fully with DCSA in all matters relating to the FCL, including periodic security inspections, vulnerability assessments, security reviews, and any special inquiries or investigations initiated by DCSA. HSAG shall cause VPI to provide DCSA with timely and complete access to all facilities, personnel, records, and information requested by DCSA in connection with its oversight responsibilities. HSAG shall further ensure that VPI has sufficient resources, including qualified security personnel, appropriate physical security infrastructure, and necessary information technology systems, to maintain the FCL and comply with all NISP requirements throughout the term of this Agreement.
ARTICLE VI — TECHNOLOGY CONTROL PLAN
Section 6.1 — Implementation. HSAG, Buyer, and VPI shall implement the Technology Control Plan (the "TCP") set forth in Annex B to this Agreement. The TCP shall be fully implemented prior to or contemporaneous with the Closing. Each Party shall designate an individual responsible for ensuring implementation of the TCP within its respective organization, and VPI shall designate a TCP Compliance Officer in accordance with Section B.6 of Annex B. HSAG and VPI shall certify in writing to the Government Parties and the Monitor that the TCP has been fully implemented no later than five (5) Business Days following the Closing.
Section 6.2 — Scope of TCP. The TCP governs all access to, use of, and transfer of the following categories of VPI information, technology, and materials:
(a) VPI technical data controlled under the International Traffic in Arms Regulations ("ITAR"), 22 C.F.R. Parts 120–130, including defense articles classified under ITAR Category XI(a)(3) of the United States Munitions List and any associated technical data as defined in 22 C.F.R. § 120.10.
(b) VPI technology and technical data controlled under the Export Administration Regulations ("EAR"), 15 C.F.R. Parts 730–774, including items classified under Export Control Classification Numbers 3A001 (electronic devices and components), 3A991 (electronic devices and components not controlled by 3A001), and 3E001 (technology for the development or production of items controlled by 3A001).
(c) VPI trade secrets, comprising thirty-one (31) registered internal trade secrets, primarily encompassing proprietary GaN epitaxial growth recipes, die-level reliability screening processes, HEMT channel engineering parameters, and related manufacturing process know-how.
(d) Classified Information generated under or in connection with VPI's government contracts, including information classified at the SECRET level and any other classification level at which VPI may generate or receive information during the term of this Agreement.
Section 6.3 — Prohibition on Unauthorized Transfer. No Controlled Technical Data, ITAR-controlled defense articles or technical data, EAR-controlled technology or technical data, or Classified Information may be transferred, disclosed, or made accessible to any non-U.S. person (including HSAG personnel who are not U.S. persons as defined under ITAR 22 C.F.R. § 120.15 and EAR 15 C.F.R. § 772.1) without prior written authorization from the applicable U.S. Government agency. Specifically:
(a) ITAR-controlled defense articles and technical data may not be exported, reexported, retransferred, or otherwise disclosed to any non-U.S. person without a valid license or other authorization from the Directorate of Defense Trade Controls ("DDTC") of the U.S. Department of State.
(b) EAR-controlled technology and technical data may not be exported, reexported, or transferred to any non-U.S. person without a valid license or license exception from the Bureau of Industry and Security ("BIS") of the U.S. Department of Commerce.
(c) Classified Information may not be disclosed to any person not authorized to receive it by the relevant classification authority and in accordance with 32 C.F.R. Part 117.
This prohibition extends to all forms of disclosure, including oral disclosures, electronic transmissions (including email, file transfer, cloud-based sharing, and remote access), physical delivery or transfer of tangible media or materials, visual inspections of equipment, facilities, or documents, and any other means of communication, whether direct or indirect.
Section 6.4 — ITAR/EAR Compliance Integration. VPI shall maintain its existing export compliance program and integrate the requirements of the TCP into its compliance policies and procedures. Without limiting the foregoing:
(a) VPI's DDTC registration (Registration No. M-24817) shall be maintained in full force and effect and shall be updated to reflect the change in ownership of VPI pursuant to ITAR § 122.4(a) no later than thirty (30) days following the Closing.
(b) VPI's three (3) active DSP-5 export licenses shall be reviewed and amended, as required, to reflect the ownership change, and VPI shall submit all necessary amendment applications to DDTC within forty-five (45) days following the Closing.
(c) VPI shall designate an Empowered Official as defined under ITAR 22 C.F.R. § 120.25, who shall be a U.S. citizen, a U.S. person, and an employee of VPI, and who shall have the authority to sign export license applications and manage VPI's ITAR compliance program.
(d) VPI shall maintain all EAR compliance records in accordance with 15 C.F.R. § 762.2 and shall conduct an annual export compliance self-assessment, the results of which shall be reported to the GSC and the Monitor.
Section 6.5 — Intellectual Property Protections. The transfer, licensing, assignment, or other disposition of VPI intellectual property, including the forty-seven (47) granted U.S. patents, twelve (12) pending patent applications, and thirty-one (31) registered trade secrets, to any HSAG entity or any other non-U.S. person shall be subject to the restrictions set forth in the TCP. In addition:
(a) The twenty-three (23) patents developed under U.S. government-funded contracts are subject to government license rights under the applicable contract clauses, march-in authority under 35 U.S.C. § 203, and domestic manufacturing preference requirements under DFARS 252.227-7038. Any transfer, licensing, assignment, or sublicensing of such patents to any non-U.S. entity, including HSAG or its affiliates, requires prior notification to the applicable U.S. Government contracting officer and, to the extent required by the applicable contract terms or by law, prior government approval.
(b) Cross-border research and development collaboration between VPI personnel and HSAG personnel is permitted only for unclassified, non-ITAR-controlled, non-EAR-controlled matters. Any proposed cross-border R&D collaboration must be submitted to the TCP Compliance Officer for review and to the GSC for concurrence prior to initiation. The GSC shall evaluate each proposed collaboration to ensure that no controlled technical data, defense articles, or dual-use technology will be disclosed to non-U.S. persons in the course of the collaboration.
(c) VPI shall maintain a register of all intellectual property transfers, licenses, and disclosures made to HSAG entities or other non-U.S. persons, and such register shall be made available to the Monitor and, upon request, to the Government Parties and DCSA.
Section 6.6 — TCP Amendments. Any amendments, modifications, or waivers to the TCP shall require the prior written approval of the Government Parties. Proposed amendments shall be submitted in writing to the Government Parties, with copies to DCSA and the Monitor, and the Government Parties shall have thirty (30) days from receipt to review and respond. No amendment to the TCP shall take effect until the Government Parties have provided their written approval.
ARTICLE VII — CYBERSECURITY REQUIREMENTS
Section 7.1 — NIST SP 800-171 Compliance. VPI shall implement and maintain compliance with all one hundred ten (110) security requirements set forth in NIST Special Publication 800-171 Revision 2, "Protecting Controlled Unclassified Information in Nonfederal Systems and Organizations," for all VPI information systems, networks, and platforms that process, store, or transmit Controlled Unclassified Information ("CUI"), Controlled Technical Data, or any other controlled information. VPI shall maintain a current System Security Plan ("SSP") and a Plan of Action and Milestones ("POA&M") documenting its compliance posture, and shall update such documents as necessary to reflect changes in VPI's IT environment or emerging threats. The detailed cybersecurity requirements are set forth in Annex D to this Agreement.
Section 7.2 — Data Segregation. VPI's information technology systems, including all networks, servers, data storage systems, email systems, collaboration platforms, domain controllers, enterprise resource planning systems, and all other IT infrastructure, shall be physically and logically separated from the HSAG global network and from all IT systems operated by or on behalf of HSAG or any HSAG affiliate. Without limiting the foregoing:
(a) There shall be no shared cloud infrastructure, including public cloud, private cloud, or hybrid cloud environments, between VPI and any HSAG entity.
(b) VPI shall maintain its own dedicated IT infrastructure, including but not limited to separate domain controllers, email servers (including both internal and external email systems), enterprise applications, backup systems, and disaster recovery systems.
(c) VPI shall maintain separate internet connections and security perimeters from those used by HSAG or any HSAG entity.
(d) VPI shall employ dedicated IT staff who are U.S. persons and who do not report to HSAG IT management.
(e) Data segregation measures shall be documented in a written data segregation plan, which shall be maintained as part of the TCP documentation and shall be subject to annual verification by the Monitor as part of the annual compliance audit.
Section 7.3 — Penetration Testing. VPI shall conduct annual third-party penetration testing of its IT systems, networks, and applications. The scope of penetration testing shall include all VPI systems that process, store, or transmit CUI, Controlled Technical Data, or Classified Information, as well as the interfaces and boundaries between VPI systems and any external networks. Penetration testing shall be conducted by a qualified third-party firm that is independent of both VPI and HSAG, and the results of each penetration test shall be reported to the GSC, the Monitor, and, upon request, to the Government Parties and DCSA. VPI shall remediate all critical and high-severity findings identified in penetration testing within thirty (30) days of the issuance of the penetration testing report, and shall document all remediation actions.
Section 7.4 — Incident Reporting. VPI shall report any cybersecurity incident affecting information systems that handle Classified Information, Controlled Technical Data, CUI, or other controlled information to DCSA within seventy-two (72) hours of discovery. Simultaneous notification shall be provided to the GSC, the Monitor, and the Government Parties. For purposes of this Section, "cybersecurity incident" includes, without limitation, unauthorized access to VPI information systems, data exfiltration or unauthorized disclosure of controlled information, malware infections, denial-of-service attacks, ransomware events, insider threats, loss or theft of computing devices or storage media containing controlled information, and any other event that compromises or potentially compromises the confidentiality, integrity, or availability of VPI's controlled information or information systems. VPI shall preserve all forensic evidence relating to any cybersecurity incident and shall cooperate fully with any investigation conducted by DCSA, the Government Parties, or law enforcement authorities.
Section 7.5 — Ongoing Obligations. VPI shall maintain cybersecurity policies, procedures, and training programs consistent with current DoD, DCSA, and NIST requirements, and shall update such policies and procedures as necessary to address evolving threats and regulatory changes. Annual cybersecurity awareness training shall be provided to all VPI employees, with specialized training provided to IT staff and personnel handling controlled information. Annual cybersecurity assessment reports, including the results of penetration testing, vulnerability scanning, and NIST SP 800-171 compliance assessments, shall be included in the Monitor's annual compliance report under Article XI.
ARTICLE VIII — FACILITY ACCESS AND VISITATION RESTRICTIONS
Section 8.1 — Classified Facility Access. HSAG personnel, including HSAG Designees on the VPI Board, HSAG executives, employees, consultants, agents, and any other individual acting on behalf of HSAG or any HSAG affiliate, may not access VPI's classified facilities, including specifically the Albuquerque fabrication facility clean room Sections C-7 through C-12, without prior written approval from both DCSA and the GSC. Access requests must comply with the following procedures:
(a) Access requests must be submitted in writing to the GSC at least fifteen (15) Business Days in advance of the proposed visit.
(b) Each access request must include the full legal name, nationality, citizenship, security clearance status (if any), employer, title, and the specific purpose of the visit for each individual for whom access is requested.
(c) The GSC shall forward the access request to DCSA for review and approval. Access shall not be granted unless both the GSC and DCSA have provided written approval.
(d) Access to classified areas is presumptively denied for all HSAG personnel. Exceptions may be granted only in extraordinary circumstances and only with the dual approval of both the GSC and DCSA.
Section 8.2 — Unclassified Facility Access. HSAG personnel may access unclassified areas of VPI facilities, including the Colorado Springs headquarters at 7400 Ridgeline Parkway, Colorado Springs, CO 80919 and the unclassified portions of the Albuquerque facility (areas outside clean room Sections C-7 through C-12), subject to the following conditions:
(a) Advance notice of at least five (5) Business Days must be provided to the GSC, specifying the names, affiliations, and purposes of visit for all HSAG personnel who will be visiting.
(b) All HSAG visitors must be escorted at all times by a VPI employee designated by the FSO or the GSC.
(c) All HSAG visitors must comply with visitor badge and sign-in/sign-out log requirements.
(d) HSAG visitors are prohibited from entering classified areas, controlled information storage areas, or areas housing TCP-restricted systems, and shall not access or view any Controlled Technical Data, ITAR-controlled defense articles, or Classified Information during their visit.
(e) Detailed facility access procedures are set forth in Annex F to this Agreement.
Section 8.3 — Prohibited Items. HSAG personnel visiting any VPI facility may not bring electronic devices, including laptops, smartphones, tablets, cameras, audio recording devices, video recording devices, USB storage devices, or any other electronic equipment, into classified areas of VPI facilities unless specifically approved in writing by the FSO on a case-by-case basis. All visitors to VPI facilities, regardless of the area being visited, shall be subject to the visitor log requirements established by the FSO in accordance with VPI's facility security procedures.
Section 8.4 — Government Access. The Government Parties, DCSA, and the Monitor shall have unrestricted access to all VPI facilities, personnel, records, IT systems, and any other information relevant to compliance with this Agreement, upon reasonable notice. For the avoidance of doubt, access by the Government Parties, DCSA, and the Monitor does not require the consent or approval of HSAG, Buyer, VPI, the GSC, or any other person or entity. Emergency access by the Government Parties and DCSA without advance notice is addressed in Annex F, Section F.6.
ARTICLE IX — PERSONNEL CONTINUITY AND REQUIREMENTS
Section 9.1 — Key Personnel Retention. The following individuals are designated as "Key Personnel" under this Agreement and must remain employed by VPI, in the capacities set forth below, for a minimum of twenty-four (24) months following the Closing:
(a) Dr. Nathan Trevorrow — Founder, Chief Executive Officer, and Board Chair of VPI; holder of an active TS/SCI clearance.
(b) Marissa Sung-Avila — President and Chief Operating Officer of VPI; holder of an active SECRET clearance.
(c) Col. (Ret.) Bryce Hendrickson — Vice President of Government Programs and Facility Security Officer of VPI; holder of an active TS/SCI clearance.
HSAG shall not terminate, reassign, constructively cause the departure of, materially alter the responsibilities of, or materially reduce the compensation of any Key Personnel without the prior written approval of the GSC and DCSA. For purposes of this Section, "constructively cause the departure of" includes any action or series of actions by HSAG, Buyer, or VPI that would reasonably be expected to cause a Key Personnel individual to resign, including but not limited to material reduction in title, authority, or compensation; relocation of the individual's principal place of work outside the state in which he or she currently works; or creation of a hostile or untenable working environment.
Section 9.2 — Replacement of Key Personnel. In the event that any Key Personnel individual departs VPI voluntarily, retires, becomes permanently disabled, dies, or is otherwise unable to continue employment for reasons beyond the reasonable control of HSAG, the following requirements shall apply:
(a) The replacement individual must be a citizen of the United States of America.
(b) The replacement individual must hold, or be eligible to obtain and willing to apply for, a U.S. government personnel security clearance at the same level as the departing Key Personnel individual (i.e., TS/SCI for Dr. Trevorrow and Col. Hendrickson; SECRET or above for Ms. Sung-Avila).
(c) The proposed replacement must be submitted to the GSC and DCSA for review and approval prior to appointment. The GSC and DCSA shall review the proposed replacement within fifteen (15) Business Days of submission.
(d) A qualified replacement must be appointed within ninety (90) days of the departure of the Key Personnel individual. During any interim period, the GSC shall designate an acting replacement who meets the requirements of clauses (a) and (b) above.
Section 9.3 — Cleared Personnel. HSAG shall maintain VPI's cleared workforce at levels sufficient to perform VPI's classified government contracts without interruption. As of the date of this Agreement, VPI employs two hundred twelve (212) individuals holding active U.S. government personnel security clearances. Any material reduction in VPI's cleared personnel, defined as a reduction of more than ten percent (10%) of the total cleared workforce (i.e., more than twenty-one (21) cleared individuals) within any twelve (12)-month period, requires prior notification to the GSC and the Government Parties at least thirty (30) days before the reduction is implemented. The notification shall include the reasons for the reduction, the specific cleared positions being eliminated, and the anticipated impact on VPI's ability to perform its classified government contracts. The Government Parties reserve the right to object to any material reduction in cleared personnel that, in the Government Parties' sole judgment, would impair VPI's ability to perform its classified government contracts.
Section 9.4 — Background Screening. All HSAG personnel who interact with VPI or access VPI facilities, whether classified or unclassified areas, shall undergo background screening consistent with VPI's existing security policies and procedures, as approved by the FSO. Such background screening shall be completed prior to the individual's first interaction with VPI or visit to any VPI facility. VPI shall maintain records of all background screenings conducted under this Section, and such records shall be available for review by the Monitor and, upon request, by DCSA and the Government Parties.
ARTICLE X — GOVERNMENT CONTRACTS
Section 10.1 — Contract Performance Continuity. HSAG shall ensure that VPI continues to perform all existing government contracts, including both prime contracts and subcontracts, without interruption, delay, or degradation of performance quality. VPI's government contract backlog of approximately One Hundred Ninety-Three Million Dollars ($193,000,000) shall be maintained and performed in accordance with all applicable contract terms, conditions, and delivery schedules. Without limiting the foregoing, VPI shall continue to perform the following contracts, among others:
(a) U.S. Army CERDEC (Communications-Electronics Research, Development and Engineering Center) — GaN HEMT modules for the AN/TPS-80 Ground/Air Task-Oriented Radar (G/ATOR) program, with approximately $52.3 million in remaining contract value.
(b) U.S. Air Force Research Laboratory ("AFRL") — Next-generation mmWave power amplifier development and qualification, with approximately $41.7 million in remaining contract value.
(c) Missile Defense Agency ("MDA") — GaN-based transmit/receive (T/R) modules for missile defense radar systems, with approximately $38.9 million in remaining contract value.
(d) Subcontract to Ironclad Defense Systems Inc. (prime contractor: U.S. Navy NAVSEA) — GaN power amplifier subsystems for naval electronic warfare platforms, with approximately $34.1 million in remaining contract value.
(e) Department of Homeland Security Science and Technology Directorate ("DHS S&T") — Border surveillance RF components, with approximately $26.0 million in remaining contract value.
HSAG shall provide VPI with the financial resources, personnel support, and corporate infrastructure necessary to ensure uninterrupted performance of all government contracts. HSAG shall not direct, cause, or permit VPI to terminate, default upon, or materially modify any government contract without the prior approval of the GSC and, to the extent required by applicable law or contract terms, the relevant U.S. Government contracting officer.
Section 10.2 — Novation and Notifications. VPI and Buyer shall complete novation agreements in accordance with Federal Acquisition Regulation ("FAR") Subpart 42.12 for all government contracts that require novation as a result of the change in ownership of VPI. Novation requests shall be submitted to the applicable contracting officers promptly following the Closing, and VPI shall use its best efforts to obtain all necessary novation approvals within one hundred twenty (120) days of the Closing. VPI shall comply with DFARS 252.209-7002 (Disclosure of Ownership or Control by a Foreign Government) by providing timely and complete disclosure of HSAG's foreign ownership to all relevant contracting officers, and shall comply with any additional disclosure or notification requirements imposed by the applicable contract terms or by law.
Section 10.3 — New Government Contracts. VPI may continue to pursue and enter into new government contracts during the term of this Agreement. New classified government contracts shall be subject to the oversight and approval of the GSC in accordance with Article IV, Section 4.2(e). Any new contract, subcontract, teaming arrangement, joint venture, or other business relationship involving a foreign government, foreign person, foreign entity, or foreign-owned organization must be reported to the Government Parties and DCSA within fifteen (15) Business Days of execution. The Government Parties reserve the right to review and, if necessary, impose conditions on any such arrangement that the Government Parties determine could affect the national security of the United States or the effectiveness of the mitigation measures established by this Agreement.
ARTICLE XI — THIRD-PARTY COMPLIANCE MONITOR
Section 11.1 — Appointment. Whitmore Compliance Group LLC, with offices at 1300 Crystal Drive, Suite 710, Arlington, VA 22202, is hereby designated as the Third-Party Compliance Monitor (the "Monitor") under this Agreement. The Monitor's principal is Gerald Whitmore, a former Deputy Assistant Director of the Federal Bureau of Investigation's Counterintelligence Division, who holds an active personnel security clearance at the TS/SCI level. The selection of the Monitor was reviewed and approved by the Government Parties on December 8, 2023, following submission by HSAG of proposed monitor candidates and the Government Parties' evaluation of each candidate's qualifications, independence, clearance status, and relevant experience.
Section 11.2 — Monitor Independence. The Monitor shall act independently of HSAG, Buyer, and VPI in the performance of its monitoring responsibilities under this Agreement. The Monitor shall not accept direction from HSAG, Buyer, VPI, or any of their respe

NATIONAL SECURITY AGREEMENT

PARTIES

RECITALS

WHEREAS:

Record

Parties

Dates

Amounts