Contract analysis

I. Purpose and Executive Summary This memorandum provides our initial assessment of the civil enforcement action filed by the State of Oregon, acting through Attorney General Diane Calloway, against Halcyon Semiconductor Americas Inc. ("Halcyon Americas" or the "Company") on April 17, 2023. The purpose of this memorandum is to orient in-house counsel to the claims asserted, evaluate the relative strengths and weaknes

II. Background — The Acquisition A. Transaction Overview On September 8, 2022, Halcyon Semiconductor AG, acting through its wholly owned U.S. subsidiary Halcyon Semiconductor Americas Inc. — a Delaware corporation (EIN 84-3921057) headquartered at 4500 Great America Parkway, Suite 300, Santa Clara, California 95054 — entered into an Agreement and Plan of Merger (the "Merger Agreement") to acquire one hundred percent

III. Summary of the AG's Complaint A. Parties and Procedural Posture The complaint was filed on April 17, 2023 by the State of Oregon, by and through Attorney General Diane Calloway, in the Circuit Court of the State of Oregon for the County of Multnomah. The case was assigned Case No. 23CV-18274 and is before the Honorable Robert Castañeda. We are not yet aware of Judge Castañeda's prior experience with antitrust ma

1. Injunctive relief under ORS 646.775, including, in the first instance, a mandatory divestiture of Meridian Photonics Inc. — that is, requiring Halcyon Americas to sell Meridian to an independent third-party purchaser approved by the AG's office. The complaint characterizes divestiture as the "most effective" remedy and the preferred form of relief.

2. Alternatively, behavioral injunctive relief, in the event the court determines that structural relief (divestiture) is not warranted or practicable. The AG's proposed behavioral remedies include: mandatory open licensing of Meridian's CPO-related patents on fair, reasonable, and non-discriminatory ("FRAND") terms; interoperability mandates requiring Halcyon to maintain Meridian's participation in OIF standards pro

3. Civil penalties under ORS 646.990, which authorizes penalties of up to $25,000 per violation of the Oregon Antitrust Act. The AG's complaint does not specify the number of alleged violations or the total penalty amount sought, but the statute's per-violation penalty structure, if applied broadly, could result in substantial aggregate penalties.

4. Costs of investigation and litigation, including the AG's attorney fees, expert fees, and other expenses incurred in connection with the investigation and prosecution of the case. The scope of the requested relief — particularly the divestiture remedy — underscores the high stakes of this litigation. A court-ordered divestiture of Meridian would require Halcyon to unwind a $2.15 billion transaction, find a suitabl

IV. Assessment of the AG's Claims — Likelihood of Success on the Merits In this section, we assess the relative strengths and weaknesses of the AG's claims on each of the principal legal and economic issues. Our assessment is necessarily preliminary and will be refined as we develop our factual record and consult with our economic expert. A. Strength of the AG's Product Market Definition The AG's case rises or falls

V. Defense Strategy — Federal Preemption and Motion to Dismiss A. Federal Preemption Argument Our lead argument on the motion to dismiss is that the AG's state-law antitrust challenge to the Meridian acquisition is preempted by the federal HSR Act review process. The legal and factual foundations for this argument are as follows. The HSR Act framework. The Hart-Scott-Rodino Antitrust Improvements Act of 1976, 15 U.S.