Contract analysis

I. Executive Summary The purpose of this memorandum is to provide the Vorstand and the Aufsichtsrat of Halcyon Semiconductor Aktiengesellschaft ("Halcyon" or the "Company") with a comprehensive analysis of the options available to Halcyon in light of two significant adverse regulatory developments relating to its pending acquisition of Vectris Photonics, Inc. ("Vectris"): (i) the civil antitrust complaint filed by th

II. Background and Current Status of the Transaction A. Transaction Overview On August 10, 2023, Halcyon Semiconductor Aktiengesellschaft, a stock corporation organized under the laws of the Federal Republic of Germany, entered into the Agreement and Plan of Merger with Halcyon Acquisition Sub, Inc. ("Merger Sub"), a Delaware corporation and wholly owned subsidiary of Halcyon formed solely for purposes of the transac

III. Contractual Framework for Termination A. Outside Date

Section 8.1(b) of the Merger Agreement establishes the Outside Date, which is the date after which either party may terminate the Merger Agreement if the closing has not occurred, provided that the terminating party is not in material breach of its obligations. The original Outside Date is March 10, 2024, which is approximately 180 calendar days from the signing date of August 10, 2023. The Merger Agreement further p

Section 8.1(d) of the Merger Agreement grants either party the right to terminate the Merger Agreement if the required antitrust approvals cannot be obtained (the "Antitrust Termination Right"). The full text of Section 8.1(d) is reproduced in Appendix B to this memorandum. For purposes of this analysis, the key operative language provides, in relevant part, as follows: "This Agreement may be terminated at any time p

Section 9.4 of the Merger Agreement specifies that certain provisions survive the termination of the agreement. These include, but are not limited to: (i) Confidentiality Obligations (Section 6.5). The parties' mutual obligations of confidentiality with respect to non-public information exchanged in connection with the transaction survive termination and remain in effect in accordance with their terms. (ii) Non-Dispa

IV. Analysis of Option A — Litigate Through Trial A. Merits Assessment Based on C&H's comprehensive internal analysis, including the detailed Bellamy Memorandum dated November 1, 2023, our assessment is that the estimated likelihood of Halcyon prevailing against the DOJ at trial is below 35%. This probability estimate reflects our evaluation of the strength of the DOJ's case, the available defenses, the applicable le

V. Analysis of Option B — Negotiate Further Remedies A. Background on Remedy Proposals to Date On October 20, 2023, C&H submitted to the DOJ a detailed proposed structural remedy package on behalf of Halcyon. The proposed remedy consisted of the divestiture of Halcyon's existing U.S. silicon photonics product line to a third-party purchaser approved by the DOJ. The proposed divestiture package included the relevant m

VI. Analysis of Option C — Terminate Under Section 8.1(d) A. Mechanics Under this option, Halcyon would exercise the Antitrust Termination Right set forth in Section 8.1(d) of the Merger Agreement. The mechanics of termination are straightforward: (i) Halcyon, acting through its authorized representatives, delivers written notice of termination to Vectris in accordance with the notice provisions of Section 10.2 of th

VII. Recommendation Based on the foregoing analysis, Calderwood & Harkness LLP recommends that the Vorstand and the Aufsichtsrat of Halcyon Semiconductor Aktiengesellschaft authorize the termination of the Agreement and Plan of Merger dated August 10, 2023, among Halcyon Semiconductor Aktiengesellschaft, Halcyon Acquisition Sub, Inc., and Vectris Photonics, Inc., pursuant to Section 8.1(d) of the Merger Agreement (th

VIII. Proposed Next Steps Subject to the authorization of the Vorstand and the Aufsichtsrat, C&H proposes the following sequence of next steps to implement the termination:

1. Aufsichtsrat Meeting (Proposed: November 20, 2023). C&H will present this analysis to the full Aufsichtsrat and the Vorstand at a joint meeting to be convened on November 20, 2023. Oliver Mackenzie and Howard Bellamy will attend in person (or by secure videoconference, as appropriate) to present the Firm's analysis and answer questions from the Board. The Board will be asked to deliberate and vote on a resolution

2. Notice of Termination. Upon authorization by the Board, C&H will prepare and deliver the formal written notice of termination to Vectris Photonics, Inc. (attention: Rebecca Lau, General Counsel), with a copy to Whitfield, Prager & Loomis LLP (attention: Catherine Whitfield), in accordance with the notice provisions of Section 10.2 of the Merger Agreement. The notice will invoke Section 8.1(d) of the Merger Agreeme

3. Termination Agreement and Mutual Release. Following delivery of the notice of termination, C&H will prepare the initial draft of the Termination Agreement and Mutual Release and negotiate its terms with Whitfield, Prager & Loomis LLP on behalf of Vectris. The Termination Agreement will confirm the effective date of termination, establish the mechanics for payment of the Reverse Break-Up Fee (including designation

4. Reverse Break-Up Fee Payment. Halcyon will arrange for the wire transfer of $28,000,000 to Vectris's designated account by December 15, 2023, which falls within the 15 business day payment window spec