1032-00002 · Client 1032 · Court Filings

declaration-gallagher-iso-ex-parte.docx DOCUMENT Litigation

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UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA

I, Patrick Gallagher, declare as follows:

I. INTRODUCTION AND DECLARANT'S IDENTIFICATION

1. I am a lead associate in the Litigation (General) practice group at Calderwood & Harkness LLP, located at 777 South Figueroa Street, Suite 4200, Los Angeles, California 90017. I am a member in good standing of the State Bar of California (Bar No. 328714), and I am admitted to practice before the United States District Court for the Central District of California. I submit this declaration in support of Petitioner Halcyon Semiconductor AG's ("Halcyon" or "Petitioner") ex parte application for a temporary restraining order ("TRO") and order to show cause re preliminary injunction.

2. I am the lead associate attorney for Halcyon in this matter, which is designated as Calderwood & Harkness LLP matter number 1032-00002. The engagement team working on this matter includes Linda Osei, Responsible Partner; Theodore Langston, Billing Partner; and Simone Laroche, Working Associate. All members of the engagement team are attorneys at Calderwood & Harkness LLP.

3. I have personal knowledge of the facts stated in this declaration, or I am informed of them based on my review of documents maintained in our firm's files, communications with Halcyon's in-house legal and finance teams, public records, commercial databases, and other sources described herein. If called as a witness, I could and would competently testify to the matters set forth in this declaration.

4. The purpose of this declaration is to provide the Court with evidence in support of Halcyon's ex parte application for a TRO and order to show cause re preliminary injunction to prevent Respondents Meridian Dynamics Inc. ("Meridian") and Derek Calloway ("Calloway") (collectively, "Respondents") from transferring, encumbering, concealing, or dissipating assets pending confirmation and enforcement of a $47,300,000 arbitration award (the "Award"), plus post-award interest accruing at 10% per annum under California Civil Code Section 3289 from August 22, 2025, until the date of payment in full. The grounds for this application, and the evidence supporting it, are set forth in detail below.

II. BACKGROUND OF THE UNDERLYING DISPUTE AND ARBITRATION AWARD

A. The Distribution Agreement

5. Halcyon Semiconductor AG is a German Aktiengesellschaft (stock corporation) registered under HRB 241873 with the Amtsgericht München (Munich Commercial Register). Halcyon is headquartered at Leopoldstraße 180, 80804 Munich, Germany. Halcyon's shares are publicly traded on the SIX Swiss Exchange under the ticker symbol "HSAG" (ISIN: DE000A2QRFX7).

6. Halcyon specializes in the design, manufacture, and sale of high-performance power management integrated circuits ("PMICs"), marketed under its Series HX-400 through HX-900 product lines, and silicon carbide ("SiC") switching modules, marketed under its Series SC-200 through SC-500 product lines. These products serve the automotive, industrial, and renewable-energy sectors, and Halcyon is recognized as a leading supplier of these components in the global semiconductor market.

7. For the fiscal year ending December 31, 2024, Halcyon reported consolidated revenue of approximately €2.14 billion. Approximately 28% of that revenue — roughly $599.2 million at applicable exchange rates — was derived from the North American market. The North American market is therefore of critical strategic and financial importance to Halcyon's business.

8. Respondent Meridian Dynamics Inc. is a Delaware corporation (Employer Identification Number: 83-2047561). Meridian's registered agent is located at 1209 Orange Street, Wilmington, Delaware 19801. Meridian's principal place of business is at 2750 Barranca Parkway, Suite 400, Irvine, California 92606. Meridian is a specialty electronics components distributor. It was founded in 2009 by Respondent Derek Calloway, who serves as its Chief Executive Officer and holds 62% of the outstanding common stock, and by Janet Shin, who serves as its Chief Operating Officer, holds 23% of the outstanding common stock, and oversees logistics, warehousing, and supply-chain operations. For the fiscal year ending December 31, 2024, Meridian reported approximately $312 million in revenue.

9. On September 28, 2016, Halcyon and Meridian entered into an Exclusive Distribution Agreement (the "Distribution Agreement"), with an effective date of January 1, 2017, and a ten-year term expiring on December 31, 2026. Under the Distribution Agreement, Meridian was appointed as Halcyon's exclusive North American distributor for Halcyon's PMIC and SiC product lines. The Distribution Agreement contained numerous material provisions governing the parties' rights and obligations, including, but not limited to, the following:

(a) Section 3.2 — Minimum Purchase Commitments: Meridian was required to meet escalating annual minimum purchase commitments, starting at $28 million in Year 1 (2017) and increasing to $72 million in Year 8 (2024). These minimums were designed to ensure Meridian maintained an adequate sales effort on behalf of Halcyon and to guarantee Halcyon a baseline revenue stream from the North American channel.

(b) Section 4.6 — Authorized Channels: Meridian was required to sell Halcyon products only through authorized channels and to approved end-users. The provision expressly prohibited Meridian from diverting Halcyon products to unauthorized resellers, gray-market channels, or brokers without Halcyon's prior written consent.

(c) Section 7.2 — Non-Compete: During the term of the Distribution Agreement and for a period of twelve months following its termination, Meridian was prohibited from distributing, marketing, or selling products that directly competed with Halcyon's PMIC and SiC product lines in North America without Halcyon's prior written consent.

(d) Section 12.4 — Personal Guaranty: Derek Calloway, as the controlling shareholder and CEO of Meridian, personally guaranteed certain obligations of Meridian under the Distribution Agreement, including payment obligations and liability for breach of the non-compete and authorized-channel provisions. The personal guaranty was capped at $10 million.

(e) Section 14.1 — Governing Law: The Distribution Agreement was governed by the laws of the State of California.

(f) Section 14.3 — Arbitration Clause: Any dispute arising out of or relating to the Distribution Agreement was to be resolved by final and binding arbitration administered by the International Centre for Dispute Resolution of the American Arbitration Association ("AAA/ICDR") in accordance with its International Arbitration Rules, with the arbitration seated in Los Angeles, California.

(g) Section 14.5 — Prevailing-Party Fee-Shifting: The prevailing party in any arbitration or litigation arising out of the Distribution Agreement was entitled to recover its reasonable attorneys' fees and costs from the non-prevailing party.

B. Meridian's Breaches

10. Beginning approximately in the second quarter of 2023 (around May 2023), Halcyon discovered that Meridian had committed multiple material breaches of the Distribution Agreement. Specifically, Halcyon's investigation revealed the following:

(a) Violation of Non-Compete (§7.2): Meridian had entered into a side distribution arrangement with Solaris Chip Technologies Ltd., a United Kingdom-based semiconductor manufacturer that is a direct competitor of Halcyon in the PMIC and SiC markets. Under this side arrangement, Meridian was distributing Solaris products to North American customers, in direct violation of Section 7.2's non-compete covenant. This side arrangement was not disclosed to Halcyon and was discovered only through information provided by mutual customers and industry contacts.

(b) Failure to Meet Minimum Purchase Commitments (§3.2): Meridian failed to meet its 2023 minimum purchase commitment of $65 million. Meridian's total purchases of Halcyon products for 2023 amounted to only approximately $41.7 million, representing a shortfall of $23.3 million, or approximately 35.8% below the contractually required minimum. This marked the first time since the inception of the Distribution Agreement that Meridian failed to meet its minimum purchase commitment, and the magnitude of the shortfall was stark.

(c) Diversion to Gray-Market Resellers (§4.6): Meridian diverted Halcyon products — primarily PMIC components from the HX-600 and HX-800 series — to unauthorized gray-market resellers, resulting in the sale of Halcyon products outside of approved distribution channels. These unauthorized sales caused significant price erosion in the North American market and required Halcyon to expend substantial resources on channel remediation, including customer communications, pricing adjustments, and warranty-tracking measures to mitigate the effects of the gray-market diversion.

11. On November 3, 2023, Halcyon issued a formal written notice of default to Meridian, identifying each of the foregoing breaches and demanding that Meridian cure the defaults within the ninety-day cure period provided under Section 10.2 of the Distribution Agreement. Meridian did not cure any of the identified defaults within the cure period. Accordingly, the Distribution Agreement was terminated for cause, effective March 15, 2024.

C. The Arbitration and Award

12. On April 8, 2024, Halcyon filed a Demand for Arbitration with the AAA/ICDR, initiating arbitration proceedings against Meridian and Calloway. The arbitration was assigned AAA/ICDR Case No. 01-24-0003917.

13. On June 19, 2024, a three-member arbitral tribunal was constituted in accordance with the AAA/ICDR International Arbitration Rules. The tribunal consisted of the following arbitrators:

(a) Presiding Arbitrator: The Honorable Gerald M. Osterhaus (Ret.), a former United States District Judge appointed by agreement of the parties;

(b) Claimant's Party-Appointed Arbitrator: Professor Diane K. Sørensen, a professor of international commercial law and experienced arbitrator; and

(c) Respondent's Party-Appointed Arbitrator: Victor R. Taniguchi, Esq., a partner at a national law firm with extensive experience in commercial arbitration.

14. The evidentiary hearing was conducted over a total of seven hearing days: October 14 through October 18, 2024 (five consecutive hearing days), and November 4 through November 5, 2024 (two additional hearing days). During the hearing, the tribunal received live witness testimony, expert testimony, and extensive documentary evidence from both sides. The parties submitted post-hearing briefs and proposed findings of fact and conclusions of law.

15. On August 22, 2025, the tribunal issued a unanimous Final Award in favor of Halcyon and against Meridian and Calloway (the "Award"). The Award was signed by all three arbitrators. The tribunal awarded Halcyon a total of $47,300,000 in damages, comprising the following components:

(a) Lost Profits (Remaining 2.8-Year Term): $31,800,000. The tribunal credited the damages model presented by Halcyon's expert, Dr. Renata Moss, CFA, Managing Director at Pinnacle Forensic Advisory LLC, who calculated the net present value of Halcyon's projected lost profits over the remaining 2.8 years of the Distribution Agreement's term (from March 15, 2024, through December 31, 2026). Dr. Moss applied an 8.5% discount rate, which the tribunal found to be reasonable and well-supported. The tribunal found that Meridian's breaches, and in particular its violation of the non-compete covenant and its failure to maintain required purchase volumes, caused Halcyon to lose the benefit of the exclusive distribution relationship for the remainder of the contract term.

(b) Shortfall Damages (2023 Minimum Purchase Deficit): $9,200,000. The tribunal calculated shortfall damages based on Meridian's failure to meet the $65 million minimum purchase commitment for 2023. The shortfall of $23.3 million was multiplied by Halcyon's average margin of 39.5% on products sold through Meridian, yielding shortfall damages of approximately $9,200,000. The tribunal found that this amount represented a reasonable measure of Halcyon's lost margin attributable to Meridian's failure to purchase the contractually required minimum volume.

(c) Gray-Market Diversion Damages: $4,100,000. The tribunal awarded $4,100,000 for damages caused by Meridian's diversion of Halcyon products to unauthorized gray-market resellers in violation of Section 4.6. This amount reflected both the price erosion caused by gray-market sales and Halcyon's documented costs for channel remediation measures.

(d) Attorneys' Fees and Arbitration Costs: $2,200,000. Pursuant to the prevailing-party fee-shifting provision in Section 14.5 of the Distribution Agreement, the tribunal allocated 100% of Halcyon's reasonable attorneys' fees and arbitration costs to Meridian, in the amount of $2,200,000.

16. The Award further provides for post-award interest at the rate of 10% per annum from August 22, 2025, until the date of payment in full, pursuant to California Civil Code Section 3289.

17. A true and correct copy of the Final Award dated August 22, 2025, is attached hereto as Exhibit A and was previously filed with the Court in connection with Halcyon's Petition to Confirm Arbitration Award.

D. Post-Award Posture

18. On September 5, 2025, the law firm of Whitfield, Carruthers & Payne LLP ("WCP"), acting as counsel for Meridian and Calloway, sent a letter to Halcyon's prior counsel, on behalf of Meridian, expressly refusing to satisfy the Award. In that letter, lead partner Raymond Whitfield and senior associate Alana Choi stated that Meridian would not voluntarily pay any portion of the Award and signaled Meridian's intent to file a motion to vacate the Award under 9 U.S.C. § 10 of the Federal Arbitration Act. The grounds for the anticipated motion to vacate, as described in the WCP letter, include: (a) alleged evident partiality of Presiding Arbitrator Osterhaus under 9 U.S.C. § 10(a)(2); and (b) the allegation that the tribunal exceeded its powers under 9 U.S.C. § 10(a)(4). Halcyon believes these challenges are meritless, but notes them here to provide context for Meridian's litigation posture and its apparent strategy of delay.

19. In light of Meridian's refusal to satisfy the Award and its stated intention to challenge the Award in court, Halcyon retained Calderwood & Harkness LLP as its counsel on September 30, 2025.

20. On October 14, 2025, Halcyon, through Calderwood & Harkness LLP, filed a Petition to Confirm Arbitration Award in this Court, which was assigned Case No. 2:25-cv-08742-RGK-PLA and designated to the Honorable Robert G. Kendrick. The Petition seeks confirmation of the Award in its entirety, including the principal amount of $47,300,000, post-award interest at 10% per annum from August 22, 2025, and entry of judgment thereon.

21. Meridian's cross-motion to vacate the Award, as signaled in WCP's September 5, 2025 letter, is due on November 13, 2025.

22. As of the date of this declaration, the Award remains entirely unsatisfied. No payment of any kind — whether of principal, interest, or any other amount — has been made by Meridian or Calloway to Halcyon in connection with the Award.

III. MERIDIAN'S CORPORATE STRUCTURE AND KEY PRINCIPALS

23. Derek Calloway is the founder, Chief Executive Officer, and holder of 62% of the outstanding common stock of Meridian Dynamics Inc. As a result, Calloway exercises effective control over Meridian's business operations, corporate governance, and financial decisions. As described above, Calloway personally guaranteed certain obligations under the Distribution Agreement up to a cap of $10 million pursuant to Section 12.4 of the Distribution Agreement. Calloway was named as a respondent in the underlying arbitration and is a potential judgment debtor in these proceedings.

24. Janet Shin is the co-founder and Chief Operating Officer of Meridian. Ms. Shin holds 23% of Meridian's outstanding common stock and oversees the company's logistics, warehousing, and supply-chain operations. While Ms. Shin is not a named respondent in this action, her role as COO gives her significant operational authority over assets that are relevant to the enforcement of the Award.

25. The remaining 15% of Meridian's outstanding equity is held by other shareholders whose identities are not further specified in the corporate records and financial disclosures that declarant has reviewed to date.

26. Meridian's registered agent for service of process in Delaware is located at 1209 Orange Street, Wilmington, Delaware 19801. Meridian's principal place of business is at 2750 Barranca Parkway, Suite 400, Irvine, California 92606. Meridian also operates a warehouse and distribution center at 1480 East Fourth Street, Ontario, California 91764. All three locations are relevant to the identification and preservation of Meridian's assets.

IV. MERIDIAN'S ASSET BASE AND FINANCIAL CONDITION

A. Overview of Meridian's Balance Sheet

27. Based on my review of Meridian's most recently available financial disclosures for the fiscal year ending December 31, 2024, Meridian reported the following key financial figures:

(a) Total Revenue: Approximately $312 million.

(b) Total Assets: Approximately $187 million.

(d) Inventory: Approximately $61 million.

(e) Real Property (Warehouse/Distribution Center): The warehouse and distribution center at 1480 East Fourth Street, Ontario, California 91764, was appraised at approximately $34 million.

(f) Other Assets: The remaining assets, comprising the balance of approximately $40 million, include cash and cash equivalents, equipment, intangible assets, and other items reflected on Meridian's balance sheet.

28. True and correct copies of relevant excerpts from Meridian's financial disclosures for fiscal year 2024 are attached hereto as Exhibit B.

29. While Meridian's total asset base of approximately $187 million may appear superficially adequate to satisfy the $47.3 million Award (plus accrued interest), a closer examination of the composition of those assets and the existing claims against them reveals a materially more constrained picture, as described below.

B. Brindoval National Bank Senior Secured Revolving Credit Facility

30. On August 12, 2022, Meridian entered into a revolving credit facility with Brindoval National Bank, a commercial bank headquartered at 4100 MacArthur Boulevard, Suite 100, Newport Beach, California 92660 (the "Brindoval Facility"). The Brindoval Facility provides for revolving credit in the principal amount of up to $45 million.

31. The Brindoval Facility is secured by a first-priority lien on substantially all of Meridian's personal property, including but not limited to all accounts, accounts receivable, inventory, equipment, general intangibles, instruments, chattel paper, deposit accounts, and proceeds thereof, pursuant to a security agreement of the same date (the "Brindoval Security Agreement"). Brindoval National Bank filed a UCC-1 financing statement with the Delaware Secretary of State, thereby perfecting its first-priority security interest in Meridian's personal property.

32. True and correct copies of the UCC-1 financing statement filed by Brindoval National Bank with the Delaware Secretary of State, and relevant excerpts from the publicly available loan documents associated with the Brindoval Facility, are attached hereto as Exhibit C.

33. The existence of the Brindoval Facility and its first-priority lien is of critical significance to Halcyon's ability to enforce the Award. Upon confirmation of the Award and entry of judgment, any judgment lien obtained by Halcyon would be subordinate to Brindoval's prior perfected security interest with respect to all of Meridian's personal property. This substantially narrows the pool of assets effectively available for satisfaction of the Award.

34. To illustrate the practical impact: Meridian's total personal-property assets — consisting primarily of accounts receivable (approximately $52 million) and inventory (approximately $61 million), totaling approximately $113 million — are subject to Brindoval's first-priority blanket lien in the amount of up to $45 million. After accounting for Brindoval's priority claim, only approximately $68 million in personal property would theoretically be available to satisfy Halcyon's judgment. This cushion, while nominally adequate, is at severe risk of being eroded or eliminated if Meridian continues to dissipate, transfer, or further encumber its assets as described in Section V below.

C. Real Property

35. Meridian's warehouse and distribution center at 1480 East Fourth Street, Ontario, California 91764, is appraised at approximately $34 million. Based on my review of the Brindoval Security Agreement and the UCC-1 financing statement, it appears that Brindoval's security interest covers personal property and does not extend to Meridian's real property. Accordingly, the Ontario warehouse may represent one of Meridian's most significant unencumbered assets.

36. However, as described in greater detail in Section V below, declarant has identified recent activity suggesting that Meridian may be exploring a sale, refinancing, or other transaction involving this real property, which would further diminish the assets available for enforcement of the Award.

V. EVIDENCE OF POTENTIAL ASSET DISSIPATION

37. Since my engagement on this matter, I have conducted an extensive investigation into Respondents' financial activities in the period following the issuance of the Award on August 22, 2025. This investigation has included review of public records (including UCC filings with the Delaware and California Secretaries of State, county recorder records, and court filings), commercial databases, industry publications, and information provided by Halcyon's in-house personnel and industry contacts. The findings of this investigation, described below, reveal a troubling pattern of conduct by Respondents that is consistent with a deliberate effort to dissipate, transfer, and encumber assets to frustrate enforcement of the Award.

A. Recent UCC Filings Indicating Additional Encumbrances

38. My investigation of UCC filings with the Delaware Secretary of State and the California Secretary of State reveals that, within the past sixty days — that is, after the Award was issued on August 22, 2025 — new UCC-1 financing statements have been filed against Meridian by at least one additional creditor beyond Brindoval National Bank. Additionally, UCC-3 amendment statements have been filed reflecting modifications to existing financing arrangements.

39. The filing of new UCC-1 financing statements during this period suggests that Meridian may be obtaining new secured financing or encumbering previously unencumbered assets. The timing of these filings is particularly concerning: they were made after the issuance of the Award and after Meridian's counsel, WCP, sent the September 5, 2025 letter expressly refusing to pay the Award. This temporal proximity supports a reasonable inference that Meridian is seeking to place assets beyond the reach of Halcyon's anticipated judgment — either by granting new security interests that would prime or compete with Halcyon's eventual judgment lien, or by drawing down additional secured credit to extract cash from the business.

40. True and correct copies of the recently filed UCC-1 financing statements and UCC-3 amendments identified through my investigation are attached hereto as Exhibit D.

41. The timing and nature of these filings — occurring in the immediate wake of a $47.3 million award and a stated refusal to pay — are highly suspicious and support an inference of intent to frustrate enforcement. A debtor's post-judgment (or, in this case, post-award) efforts to grant additional security interests in its assets are a recognized indicator of asset dissipation that courts have relied upon in granting injunctive relief to preserve the status quo.

B. Indications of Accelerated Inventory Liquidation

42. Through industry sources and publicly available information, I have learned that Meridian has been conducting accelerated sales of inventory at below-market prices in the weeks following the issuance of the Award. Specifically, I have obtained information from multiple industry contacts and published industry reports indicating that Meridian has offered bulk lots of semiconductor components — including remaining Halcyon product inventory as well as competing product lines from Solaris Chip Technologies Ltd. and other manufacturers — at discounts of approximately 25% to 35% below prevailing market prices. These offers have been made to multiple buyers in the North American electronics distribution market.

43. This fire-sale approach to inventory liquidation is inconsistent with Meridian's ordinary course of business. During the period from 2017 through early 2024, Meridian typically sold semiconductor components through its established channel at or near prevailing market prices, with discounts limited to standard volume-based pricing tiers. The sudden willingness to sell large quantities of inventory at steep discounts, particularly in the period immediately following the Award, is a marked departure from Meridian's historical practices.

44. An accelerated liquidation of inventory at below-market prices is consistent with an effort to convert assets to cash. Cash, unlike inventory sitting in a warehouse, can more easily be moved between accounts, transferred to third parties, or concealed. The conversion of relatively illiquid assets (inventory) to highly liquid assets (cash) in the context of an impending enforcement action is a well-recognized red flag for asset dissipation.

45. Copies of communications and industry-source reports regarding Meridian's below-market inventory sales are attached hereto as Exhibit E.

C. Transfer of Funds

46. My investigation has uncovered indications that Meridian and/or Calloway have transferred significant funds out of Meridian's operating accounts in the period since the Award was issued on August 22, 2025.

47. Based on bank-account information obtained through review of publicly available court records from prior litigation involving Meridian, as well as commercial databases, there are indications of unusual outbound wire transfers from Meridian's primary operating accounts. The volume and timing of these transfers — occurring in the weeks following the Award — are inconsistent with Meridian's typical patterns of cash disbursement as reflected in its historical financial disclosures. While I do not have access to Meridian's complete bank records (which would require discovery or subpoena), the information available to me at this time is sufficient to raise serious concerns about the movement of funds out of Meridian's accounts.

48. Additionally, I have identified indications that Calloway may have caused Meridian to make personal transfers or distributions to him as a shareholder, potentially reducing his personal exposure under the $10 million personal guaranty set forth in Section 12.4 of the Distribution Agreement. If Calloway is extracting cash or other assets from Meridian — whether through dividends, distributions, management fees, or other mechanisms — this would simultaneously diminish Meridian's asset base and potentially shield those funds in Calloway's personal accounts, where they may be more difficult to reach.

49. A summary of the investigative findings regarding fund transfers by Meridian and/or Calloway, together with supporting documentation, is attached hereto as Exhibit F.

D. Real Property Concerns

50. My investigation has identified indications that Meridian may be exploring a sale or refinancing of the Ontario, California warehouse property located at 1480 East Fourth Street, Ontario, California 91764. As noted above, this property is appraised at approximately $34 million and is believed to be one of Meridian's most significant unencumbered assets — potentially the single largest asset that is not subject to Brindoval National Bank's first-priority blanket lien on personal property.

51. A transfer or further encumbrance of this real property would materially impair Halcyon's ability to enforce the $47.3 million Award. If the Ontario property were sold, the sale proceeds could be dissipated or moved beyond the reach of Halcyon. If the property were refinanced or further encumbered, the resulting mortgage or lien would reduce or eliminate the equity available to satisfy Halcyon's judgment.

52. Any available documentation regarding real property listing activity, refinancing inquiries, or other transactions involving the Ontario warehouse property is attached hereto as Exhibit G.

E. Calloway's Personal Assets and Guaranty Exposure

53. As set forth above, Calloway personally guaranteed certain obligations under the Distribution Agreement up to a cap of $10 million pursuant to Section 12.4 of the Distribution Agreement. Calloway is therefore a potential judgment debtor in these proceedings for up to $10 million, in addition to any amounts recoverable from Meridian.

54. Calloway, as the 62% controlling shareholder and CEO of Meridian, is uniquely positioned to direct the dissipation of both corporate and personal assets. He has the authority to approve transfers of corporate funds, authorize the grant of new security interests in corporate assets, direct the sale of corporate property, and cause Meridian to make distributions to shareholders — including himself. The concentration of control in Calloway's hands, combined with his personal financial exposure as a guarantor, creates a powerful incentive for him to act to protect his own interests at the expense of Halcyon's right to enforce the Award.

55. When viewed in their totality, the facts set forth in this Section V — including the new UCC filings, the accelerated inventory liquidation at below-market prices, the unusual fund transfers, and the potential real property transactions — suggest a coordinated effort by Meridian and Calloway to render the Award uncollectible. These are not isolated events; they form a pattern of conduct that is consistent with a deliberate strategy to dissipate, transfer, and encumber assets in the period immediately following the issuance of the Award and in advance of Halcyon's enforcement efforts.

VI. RISK THAT THE AWARD WILL BE RENDERED UNCOLLECTIBLE ABSENT INJUNCTIVE RELIEF

A. The Award Amount Relative to Available Assets

56. The total Award is $47,300,000, plus post-award interest accruing at the rate of 10% per annum (approximately $4,730,000 per year, or approximately $12,959 per day) from August 22, 2025, until the date of payment in full, pursuant to California Civil Code Section 3289.

57. As of the date of this declaration, post-award interest has been accruing for approximately two months (from August 22, 2025 to late October 2025), adding approximately $788,000 to the total obligation. The total amount owed by Respondents thus currently stands at approximately $48,088,000 and continues to grow each day.

58. As described in Section IV above, Meridian's total assets of approximately $187 million may appear superficially adequate to satisfy the Award. However, when the Brindoval National Bank first-priority lien of up to $45 million on substantially all of Meridian's personal property is accounted for, the margin of available assets narrows considerably. After accounting for Brindoval's senior security interest, only approximately $68 million in personal property and approximately $34 million in real property (the Ontario warehouse) would theoretically be available — a total of approximately $102 million. While this amount still exceeds the Award, the evidence of ongoing dissipation, encumbrance, and transfer of assets, as described in Section V, demonstrates that this cushion is being actively eroded.

59. Further dissipation, encumbrance, or transfer of assets — whether through the granting of additional security interests, fire-sale inventory liquidation, outbound fund transfers, or the sale or refinancing of the Ontario warehouse — could rapidly reduce the available asset pool below the amount needed to satisfy the Award plus accrued interest. Given the pace at which Respondents appear to be acting, the risk is not merely theoretical but imminent.

B. Meridian's Demonstrated Unwillingness to Pay

60. Meridian has expressly and unequivocally refused to satisfy the Award, as evidenced by the September 5, 2025 letter from WCP on Meridian's behalf. This is not a case where a debtor has expressed a willingness to pay but needs time to arrange financing or liquidate assets in an orderly fashion. To the contrary, Meridian has stated that it will not pay and has signaled its intent to pursue a motion to vacate the Award under 9 U.S.C. § 10.

61. Meridian's anticipated motion to vacate, due on November 13, 2025, will delay the confirmation process and, in turn, delay Halcyon's ability to enforce the Award. Challenges to arbitration awards under 9 U.S.C. § 10 are subject to highly deferential standards of review, and Halcyon is confident that the Award will withstand scrutiny. Nevertheless, the litigation process takes time — potentially months — and during that time, Respondents will have the opportunity to continue dissipating assets unless restrained by the Court.

62. The combination of an express refusal to pay, litigation delay tactics, and contemporaneous asset dissipation creates an acute risk that the Award will become a hollow judgment. By the time the confirmation process is complete and Halcyon obtains a final judgment, Respondents may have succeeded in placing their assets beyond Halcyon's reach.

C. Absence of Alternative Remedies

63. If assets are dissipated, transferred, or encumbered during the pendency of the confirmation proceedings, Halcyon will be unable to recover the full amount of the Award. The injury caused by asset dissipation is, by its nature, irreparable. Once assets are transferred to third parties (particularly bona fide purchasers for value), moved to accounts in other jurisdictions, or consumed by additional secured creditors, they cannot be recovered through the ordinary collection process.

64. Monetary damages alone would be an insufficient remedy because the very injury at issue — the dissipation of the assets needed to satisfy the Award — is what makes collection impossible. A supplemental damages award for the act of dissipation would itself be uncollectible for the same reason: the assets would already be gone.

65. Injunctive relief is therefore the only adequate mechanism to preserve the status quo and protect Halcyon's right to enforce the Award. A temporary restraining order, followed by a preliminary injunction, will maintain the existing asset base and prevent Respondents from further diminishing it while the confirmation process proceeds.

VII. EXHIBITS IDENTIFIED AND ATTACHED

66. The following exhibits are attached to this declaration and incorporated herein by reference:

• Exhibit A: Final Award dated August 22, 2025, AAA/ICDR Case No. 01-24-0003917 (previously filed with the Petition to Confirm Arbitration Award).

• Exhibit B: Excerpts from Meridian Dynamics Inc. financial disclosures for the fiscal year ending December 31, 2024.

• Exhibit C: UCC-1 financing statement filed by Brindoval National Bank with the Delaware Secretary of State, and relevant excerpts from the security agreement dated August 12, 2022.

• Exhibit D: Recent UCC-1 financing statements and UCC-3 amendments filed against Meridian Dynamics Inc. with the Delaware Secretary of State and the California Secretary of State (post-Award).

• Exhibit E: Communications and industry-source reports regarding Meridian's below-market inventory liquidation activity.

• Exhibit F: Summary of investigative findings regarding fund transfers by Meridian Dynamics Inc. and/or Derek Calloway, with supporting documentation.

• Exhibit G: Documentation regarding potential sale or refinancing of the warehouse property located at 1480 East Fourth Street, Ontario, California 91764.

VIII. CONCLUSION AND PRAYER

67. Based on the foregoing, I respectfully submit that the evidence set forth in this declaration demonstrates a real and imminent risk that Respondents Meridian Dynamics Inc. and Derek Calloway are actively dissipating, transferring, and encumbering assets in a coordinated effort to frustrate enforcement of the $47,300,000 Award, plus accruing post-award interest. The pattern of conduct described herein — including the post-Award filing of new UCC financing statements, the accelerated liquidation of inventory at below-market prices, the unusual transfer of funds out of Meridian's operating accounts, the potential sale or refinancing of Meridian's Ontario warehouse, and Calloway's personal capacity to direct both corporate and personal asset movements — demonstrates a clear and present danger that the Award will be rendered uncollectible if Respondents are not restrained.

68. Absent the issuance of a temporary restraining order and a preliminary injunction, Halcyon faces irreparable harm in the form of a potentially uncollectible judgment. The harm to Halcyon from the denial of injunctive relief would be severe and irremediable. By contrast, Respondents will suffer no cognizable harm from an order merely requiring them to maintain the status quo with respect to their assets during the pendency of the confirmation proceedings.

69. I respectfully request that the Court grant Halcyon Semiconductor AG's ex parte application for a temporary restraining order and order to show cause re preliminary injunction, restraining Respondents Meridian Dynamics Inc. and Derek Calloway from transferring, encumbering, concealing, or dissipating assets pending confirmation and enforcement of the Award.

IX. VERIFICATION

I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct.

Executed at Los Angeles, California, on October 31, 2025.

________________________________________

Patrick Gallagher (SBN 328714) CALDERWOOD & HARKNESS LLP 777 South Figueroa Street, Suite 4200 Los Angeles, California 90017 Telephone: (213) 892-4100

Email: pgallagher@calderwoodharkness.com

Attorneys for Petitioner HALCYON SEMICONDUCTOR AG

HALCYON SEMICONDUCTOR AG, a German Aktiengesellschaft,	Case No. 2:25-cv-08742-RGK-PLA
Petitioner,	Hon. Robert G. Kendrick
v.	DECLARATION OF PATRICK GALLAGHER IN SUPPORT OF PETITIONER'S EX PARTE APPLICATION FOR TEMPORARY RESTRAINING ORDER AND ORDER TO SHOW CAUSE RE PRELIMINARY INJUNCTION

MERIDIAN DYNAMICS INC., a Delaware corporation; and DEREK CALLOWAY, an individual,

Respondents.

UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA
I, Patrick Gallagher, declare as follows:
I. INTRODUCTION AND DECLARANT'S IDENTIFICATION
1. I am a lead associate in the Litigation (General) practice group at Calderwood & Harkness LLP, located at 777 South Figueroa Street, Suite 4200, Los Angeles, California 90017. I am a member in good standing of the State Bar of California (Bar No. 328714), and I am admitted to practice before the United States District Court for the Central District of California. I submit this declaration in support of Petitioner Halcyon Semiconductor AG's ("Halcyon" or "Petitioner") ex parte application for a temporary restraining order ("TRO") and order to show cause re preliminary injunction.
2. I am the lead associate attorney for Halcyon in this matter, which is designated as Calderwood & Harkness LLP matter number 1032-00002. The engagement team working on this matter includes Linda Osei, Responsible Partner; Theodore Langston, Billing Partner; and Simone Laroche, Working Associate. All members of the engagement team are attorneys at Calderwood & Harkness LLP.
3. I have personal knowledge of the facts stated in this declaration, or I am informed of them based on my review of documents maintained in our firm's files, communications with Halcyon's in-house legal and finance teams, public records, commercial databases, and other sources described herein. If called as a witness, I could and would competently testify to the matters set forth in this declaration.
4. The purpose of this declaration is to provide the Court with evidence in support of Halcyon's ex parte application for a TRO and order to show cause re preliminary injunction to prevent Respondents Meridian Dynamics Inc. ("Meridian") and Derek Calloway ("Calloway") (collectively, "Respondents") from transferring, encumbering, concealing, or dissipating assets pending confirmation and enforcement of a $47,300,000 arbitration award (the "Award"), plus post-award interest accruing at 10% per annum under California Civil Code Section 3289 from August 22, 2025, until the date of payment in full. The grounds for this application, and the evidence supporting it, are set forth in detail below.
II. BACKGROUND OF THE UNDERLYING DISPUTE AND ARBITRATION AWARD
A. The Distribution Agreement
5. Halcyon Semiconductor AG is a German Aktiengesellschaft (stock corporation) registered under HRB 241873 with the Amtsgericht München (Munich Commercial Register). Halcyon is headquartered at Leopoldstraße 180, 80804 Munich, Germany. Halcyon's shares are publicly traded on the SIX Swiss Exchange under the ticker symbol "HSAG" (ISIN: DE000A2QRFX7).
6. Halcyon specializes in the design, manufacture, and sale of high-performance power management integrated circuits ("PMICs"), marketed under its Series HX-400 through HX-900 product lines, and silicon carbide ("SiC") switching modules, marketed under its Series SC-200 through SC-500 product lines. These products serve the automotive, industrial, and renewable-energy sectors, and Halcyon is recognized as a leading supplier of these components in the global semiconductor market.
7. For the fiscal year ending December 31, 2024, Halcyon reported consolidated revenue of approximately €2.14 billion. Approximately 28% of that revenue — roughly $599.2 million at applicable exchange rates — was derived from the North American market. The North American market is therefore of critical strategic and financial importance to Halcyon's business.
8. Respondent Meridian Dynamics Inc. is a Delaware corporation (Employer Identification Number: 83-2047561). Meridian's registered agent is located at 1209 Orange Street, Wilmington, Delaware 19801. Meridian's principal place of business is at 2750 Barranca Parkway, Suite 400, Irvine, California 92606. Meridian is a specialty electronics components distributor. It was founded in 2009 by Respondent Derek Calloway, who serves as its Chief Executive Officer and holds 62% of the outstanding common stock, and by Janet Shin, who serves as its Chief Operating Officer, holds 23% of the outstanding common stock, and oversees logistics, warehousing, and supply-chain operations. For the fiscal year ending December 31, 2024, Meridian reported approximately $312 million in revenue.
9. On September 28, 2016, Halcyon and Meridian entered into an Exclusive Distribution Agreement (the "Distribution Agreement"), with an effective date of January 1, 2017, and a ten-year term expiring on December 31, 2026. Under the Distribution Agreement, Meridian was appointed as Halcyon's exclusive North American distributor for Halcyon's PMIC and SiC product lines. The Distribution Agreement contained numerous material provisions governing the parties' rights and obligations, including, but not limited to, the following:
(a) Section 3.2 — Minimum Purchase Commitments: Meridian was required to meet escalating annual minimum purchase commitments, starting at $28 million in Year 1 (2017) and increasing to $72 million in Year 8 (2024). These minimums were designed to ensure Meridian maintained an adequate sales effort on behalf of Halcyon and to guarantee Halcyon a baseline revenue stream from the North American channel.
(b) Section 4.6 — Authorized Channels: Meridian was required to sell Halcyon products only through authorized channels and to approved end-users. The provision expressly prohibited Meridian from diverting Halcyon products to unauthorized resellers, gray-market channels, or brokers without Halcyon's prior written consent.
(c) Section 7.2 — Non-Compete: During the term of the Distribution Agreement and for a period of twelve months following its termination, Meridian was prohibited from distributing, marketing, or selling products that directly competed with Halcyon's PMIC and SiC product lines in North America without Halcyon's prior written consent.
(d) Section 12.4 — Personal Guaranty: Derek Calloway, as the controlling shareholder and CEO of Meridian, personally guaranteed certain obligations of Meridian under the Distribution Agreement, including payment obligations and liability for breach of the non-compete and authorized-channel provisions. The personal guaranty was capped at $10 million.
(e) Section 14.1 — Governing Law: The Distribution Agreement was governed by the laws of the State of California.
(f) Section 14.3 — Arbitration Clause: Any dispute arising out of or relating to the Distribution Agreement was to be resolved by final and binding arbitration administered by the International Centre for Dispute Resolution of the American Arbitration Association ("AAA/ICDR") in accordance with its International Arbitration Rules, with the arbitration seated in Los Angeles, California.
(g) Section 14.5 — Prevailing-Party Fee-Shifting: The prevailing party in any arbitration or litigation arising out of the Distribution Agreement was entitled to recover its reasonable attorneys' fees and costs from the non-prevailing party.
B. Meridian's Breaches
10. Beginning approximately in the second quarter of 2023 (around May 2023), Halcyon discovered that Meridian had committed multiple material breaches of the Distribution Agreement. Specifically, Halcyon's investigation revealed the following:
(a) Violation of Non-Compete (§7.2): Meridian had entered into a side distribution arrangement with Solaris Chip Technologies Ltd., a United Kingdom-based semiconductor manufacturer that is a direct competitor of Halcyon in the PMIC and SiC markets. Under this side arrangement, Meridian was distributing Solaris products to North American customers, in direct violation of Section 7.2's non-compete covenant. This side arrangement was not disclosed to Halcyon and was discovered only through information provided by mutual customers and industry contacts.
(b) Failure to Meet Minimum Purchase Commitments (§3.2): Meridian failed to meet its 2023 minimum purchase commitment of $65 million. Meridian's total purchases of Halcyon products for 2023 amounted to only approximately $41.7 million, representing a shortfall of $23.3 million, or approximately 35.8% below the contractually required minimum. This marked the first time since the inception of the Distribution Agreement that Meridian failed to meet its minimum purchase commitment, and the magnitude of the shortfall was stark.
(c) Diversion to Gray-Market Resellers (§4.6): Meridian diverted Halcyon products — primarily PMIC components from the HX-600 and HX-800 series — to unauthorized gray-market resellers, resulting in the sale of Halcyon products outside of approved distribution channels. These unauthorized sales caused significant price erosion in the North American market and required Halcyon to expend substantial resources on channel remediation, including customer communications, pricing adjustments, and warranty-tracking measures to mitigate the effects of the gray-market diversion.
11. On November 3, 2023, Halcyon issued a formal written notice of default to Meridian, identifying each of the foregoing breaches and demanding that Meridian cure the defaults within the ninety-day cure period provided under Section 10.2 of the Distribution Agreement. Meridian did not cure any of the identified defaults within the cure period. Accordingly, the Distribution Agreement was terminated for cause, effective March 15, 2024.
C. The Arbitration and Award
12. On April 8, 2024, Halcyon filed a Demand for Arbitration with the AAA/ICDR, initiating arbitration proceedings against Meridian and Calloway. The arbitration was assigned AAA/ICDR Case No. 01-24-0003917.
13. On June 19, 2024, a three-member arbitral tribunal was constituted in accordance with the AAA/ICDR International Arbitration Rules. The tribunal consisted of the following arbitrators:
(a) Presiding Arbitrator: The Honorable Gerald M. Osterhaus (Ret.), a former United States District Judge appointed by agreement of the parties;
(b) Claimant's Party-Appointed Arbitrator: Professor Diane K. Sørensen, a professor of international commercial law and experienced arbitrator; and
(c) Respondent's Party-Appointed Arbitrator: Victor R. Taniguchi, Esq., a partner at a national law firm with extensive experience in commercial arbitration.
14. The evidentiary hearing was conducted over a total of seven hearing days: October 14 through October 18, 2024 (five consecutive hearing days), and November 4 through November 5, 2024 (two additional hearing days). During the hearing, the tribunal received live witness testimony, expert testimony, and extensive documentary evidence from both sides. The parties submitted post-hearing briefs and proposed findings of fact and conclusions of law.
15. On August 22, 2025, the tribunal issued a unanimous Final Award in favor of Halcyon and against Meridian and Calloway (the "Award"). The Award was signed by all three arbitrators. The tribunal awarded Halcyon a total of $47,300,000 in damages, comprising the following components:
(a) Lost Profits (Remaining 2.8-Year Term): $31,800,000. The tribunal credited the damages model presented by Halcyon's expert, Dr. Renata Moss, CFA, Managing Director at Pinnacle Forensic Advisory LLC, who calculated the net present value of Halcyon's projected lost profits over the remaining 2.8 years of the Distribution Agreement's term (from March 15, 2024, through December 31, 2026). Dr. Moss applied an 8.5% discount rate, which the tribunal found to be reasonable and well-supported. The tribunal found that Meridian's breaches, and in particular its violation of the non-compete covenant and its failure to maintain required purchase volumes, caused Halcyon to lose the benefit of the exclusive distribution relationship for the remainder of the contract term.
(b) Shortfall Damages (2023 Minimum Purchase Deficit): $9,200,000. The tribunal calculated shortfall damages based on Meridian's failure to meet the $65 million minimum purchase commitment for 2023. The shortfall of $23.3 million was multiplied by Halcyon's average margin of 39.5% on products sold through Meridian, yielding shortfall damages of approximately $9,200,000. The tribunal found that this amount represented a reasonable measure of Halcyon's lost margin attributable to Meridian's failure to purchase the contractually required minimum volume.
(c) Gray-Market Diversion Damages: $4,100,000. The tribunal awarded $4,100,000 for damages caused by Meridian's diversion of Halcyon products to unauthorized gray-market resellers in violation of Section 4.6. This amount reflected both the price erosion caused by gray-market sales and Halcyon's documented costs for channel remediation measures.
(d) Attorneys' Fees and Arbitration Costs: $2,200,000. Pursuant to the prevailing-party fee-shifting provision in Section 14.5 of the Distribution Agreement, the tribunal allocated 100% of Halcyon's reasonable attorneys' fees and arbitration costs to Meridian, in the amount of $2,200,000.
16. The Award further provides for post-award interest at the rate of 10% per annum from August 22, 2025, until the date of payment in full, pursuant to California Civil Code Section 3289.
17. A true and correct copy of the Final Award dated August 22, 2025, is attached hereto as Exhibit A and was previously filed with the Court in connection with Halcyon's Petition to Confirm Arbitration Award.
D. Post-Award Posture
18. On September 5, 2025, the law firm of Whitfield, Carruthers & Payne LLP ("WCP"), acting as counsel for Meridian and Calloway, sent a letter to Halcyon's prior counsel, on behalf of Meridian, expressly refusing to satisfy the Award. In that letter, lead partner Raymond Whitfield and senior associate Alana Choi stated that Meridian would not voluntarily pay any portion of the Award and signaled Meridian's intent to file a motion to vacate the Award under 9 U.S.C. § 10 of the Federal Arbitration Act. The grounds for the anticipated motion to vacate, as described in the WCP letter, include: (a) alleged evident partiality of Presiding Arbitrator Osterhaus under 9 U.S.C. § 10(a)(2); and (b) the allegation that the tribunal exceeded its powers under 9 U.S.C. § 10(a)(4). Halcyon believes these challenges are meritless, but notes them here to provide context for Meridian's litigation posture and its apparent strategy of delay.
19. In light of Meridian's refusal to satisfy the Award and its stated intention to challenge the Award in court, Halcyon retained Calderwood & Harkness LLP as its counsel on September 30, 2025.
20. On October 14, 2025, Halcyon, through Calderwood & Harkness LLP, filed a Petition to Confirm Arbitration Award in this Court, which was assigned Case No. 2:25-cv-08742-RGK-PLA and designated to the Honorable Robert G. Kendrick. The Petition seeks confirmation of the Award in its entirety, including the principal amount of $47,300,000, post-award interest at 10% per annum from August 22, 2025, and entry of judgment thereon.
21. Meridian's cross-motion to vacate the Award, as signaled in WCP's September 5, 2025 letter, is due on November 13, 2025.
22. As of the date of this declaration, the Award remains entirely unsatisfied. No payment of any kind — whether of principal, interest, or any other amount — has been made by Meridian or Calloway to Halcyon in connection with the Award.
III. MERIDIAN'S CORPORATE STRUCTURE AND KEY PRINCIPALS
23. Derek Calloway is the founder, Chief Executive Officer, and holder of 62% of the outstanding common stock of Meridian Dynamics Inc. As a result, Calloway exercises effective control over Meridian's business operations, corporate governance, and financial decisions. As described above, Calloway personally guaranteed certain obligations under the Distribution Agreement up to a cap of $10 million pursuant to Section 12.4 of the Distribution Agreement. Calloway was named as a respondent in the underlying arbitration and is a potential judgment debtor in these proceedings.
24. Janet Shin is the co-founder and Chief Operating Officer of Meridian. Ms. Shin holds 23% of Meridian's outstanding common stock and oversees the company's logistics, warehousing, and supply-chain operations. While Ms. Shin is not a named respondent in this action, her role as COO gives her significant operational authority over assets that are relevant to the enforcement of the Award.
25. The remaining 15% of Meridian's outstanding equity is held by other shareholders whose identities are not further specified in the corporate records and financial disclosures that declarant has reviewed to date.
26. Meridian's registered agent for service of process in Delaware is located at 1209 Orange Street, Wilmington, Delaware 19801. Meridian's principal place of business is at 2750 Barranca Parkway, Suite 400, Irvine, California 92606. Meridian also operates a warehouse and distribution center at 1480 East Fourth Street, Ontario, California 91764. All three locations are relevant to the identification and preservation of Meridian's assets.
IV. MERIDIAN'S ASSET BASE AND FINANCIAL CONDITION
A. Overview of Meridian's Balance Sheet
27. Based on my review of Meridian's most recently available financial disclosures for the fiscal year ending December 31, 2024, Meridian reported the following key financial figures:
(a) Total Revenue: Approximately $312 million.
(b) Total Assets: Approximately $187 million.
(c) Accounts Receivable: Approximately $52 million.
(d) Inventory: Approximately $61 million.
(e) Real Property (Warehouse/Distribution Center): The warehouse and distribution center at 1480 East Fourth Street, Ontario, California 91764, was appraised at approximately $34 million.
(f) Other Assets: The remaining assets, comprising the balance of approximately $40 million, include cash and cash equivalents, equipment, intangible assets, and other items reflected on Meridian's balance sheet.
28. True and correct copies of relevant excerpts from Meridian's financial disclosures for fiscal year 2024 are attached hereto as Exhibit B.
29. While Meridian's total asset base of approximately $187 million may appear superficially adequate to satisfy the $47.3 million Award (plus accrued interest), a closer examination of the composition of those assets and the existing claims against them reveals a materially more constrained picture, as described below.
B. Brindoval National Bank Senior Secured Revolving Credit Facility
30. On August 12, 2022, Meridian entered into a revolving credit facility with Brindoval National Bank, a commercial bank headquartered at 4100 MacArthur Boulevard, Suite 100, Newport Beach, California 92660 (the "Brindoval Facility"). The Brindoval Facility provides for revolving credit in the principal amount of up to $45 million.
31. The Brindoval Facility is secured by a first-priority lien on substantially all of Meridian's personal property, including but not limited to all accounts, accounts receivable, inventory, equipment, general intangibles, instruments, chattel paper, deposit accounts, and proceeds thereof, pursuant to a security agreement of the same date (the "Brindoval Security Agreement"). Brindoval National Bank filed a UCC-1 financing statement with the Delaware Secretary of State, thereby perfecting its first-priority security interest in Meridian's personal property.
32. True and correct copies of the UCC-1 financing statement filed by Brindoval National Bank with the Delaware Secretary of State, and relevant excerpts from the publicly available loan documents associated with the Brindoval Facility, are attached hereto as Exhibit C.
33. The existence of the Brindoval Facility and its first-priority lien is of critical significance to Halcyon's ability to enforce the Award. Upon confirmation of the Award and entry of judgment, any judgment lien obtained by Halcyon would be subordinate to Brindoval's prior perfected security interest with respect to all of Meridian's personal property. This substantially narrows the pool of assets effectively available for satisfaction of the Award.
34. To illustrate the practical impact: Meridian's total personal-property assets — consisting primarily of accounts receivable (approximately $52 million) and inventory (approximately $61 million), totaling approximately $113 million — are subject to Brindoval's first-priority blanket lien in the amount of up to $45 million. After accounting for Brindoval's priority claim, only approximately $68 million in personal property would theoretically be available to satisfy Halcyon's judgment. This cushion, while nominally adequate, is at severe risk of being eroded or eliminated if Meridian continues to dissipate, transfer, or further encumber its assets as described in Section V below.
C. Real Property
35. Meridian's warehouse and distribution center at 1480 East Fourth Street, Ontario, California 91764, is appraised at approximately $34 million. Based on my review of the Brindoval Security Agreement and the UCC-1 financing statement, it appears that Brindoval's security interest covers personal property and does not extend to Meridian's real property. Accordingly, the Ontario warehouse may represent one of Meridian's most significant unencumbered assets.
36. However, as described in greater detail in Section V below, declarant has identified recent activity suggesting that Meridian may be exploring a sale, refinancing, or other transaction involving this real property, which would further diminish the assets available for enforcement of the Award.
V. EVIDENCE OF POTENTIAL ASSET DISSIPATION
37. Since my engagement on this matter, I have conducted an extensive investigation into Respondents' financial activities in the period following the issuance of the Award on August 22, 2025. This investigation has included review of public records (including UCC filings with the Delaware and California Secretaries of State, county recorder records, and court filings), commercial databases, industry publications, and information provided by Halcyon's in-house personnel and industry contacts. The findings of this investigation, described below, reveal a troubling pattern of conduct by Respondents that is consistent with a deliberate effort to dissipate, transfer, and encumber assets to frustrate enforcement of the Award.
A. Recent UCC Filings Indicating Additional Encumbrances
38. My investigation of UCC filings with the Delaware Secretary of State and the California Secretary of State reveals that, within the past sixty days — that is, after the Award was issued on August 22, 2025 — new UCC-1 financing statements have been filed against Meridian by at least one additional creditor beyond Brindoval National Bank. Additionally, UCC-3 amendment statements have been filed reflecting modifications to existing financing arrangements.
39. The filing of new UCC-1 financing statements during this period suggests that Meridian may be obtaining new secured financing or encumbering previously unencumbered assets. The timing of these filings is particularly concerning: they were made after the issuance of the Award and after Meridian's counsel, WCP, sent the September 5, 2025 letter expressly refusing to pay the Award. This temporal proximity supports a reasonable inference that Meridian is seeking to place assets beyond the reach of Halcyon's anticipated judgment — either by granting new security interests that would prime or compete with Halcyon's eventual judgment lien, or by drawing down additional secured credit to extract cash from the business.
40. True and correct copies of the recently filed UCC-1 financing statements and UCC-3 amendments identified through my investigation are attached hereto as Exhibit D.
41. The timing and nature of these filings — occurring in the immediate wake of a $47.3 million award and a stated refusal to pay — are highly suspicious and support an inference of intent to frustrate enforcement. A debtor's post-judgment (or, in this case, post-award) efforts to grant additional security interests in its assets are a recognized indicator of asset dissipation that courts have relied upon in granting injunctive relief to preserve the status quo.
B. Indications of Accelerated Inventory Liquidation
42. Through industry sources and publicly available information, I have learned that Meridian has been conducting accelerated sales of inventory at below-market prices in the weeks following the issuance of the Award. Specifically, I have obtained information from multiple industry contacts and published industry reports indicating that Meridian has offered bulk lots of semiconductor components — including remaining Halcyon product inventory as well as competing product lines from Solaris Chip Technologies Ltd. and other manufacturers — at discounts of approximately 25% to 35% below prevailing market prices. These offers have been made to multiple buyers in the North American electronics distribution market.
43. This fire-sale approach to inventory liquidation is inconsistent with Meridian's ordinary course of business. During the period from 2017 through early 2024, Meridian typically sold semiconductor components through its established channel at or near prevailing market prices, with discounts limited to standard volume-based pricing tiers. The sudden willingness to sell large quantities of inventory at steep discounts, particularly in the period immediately following the Award, is a marked departure from Meridian's historical practices.
44. An accelerated liquidation of inventory at below-market prices is consistent with an effort to convert assets to cash. Cash, unlike inventory sitting in a warehouse, can more easily be moved between accounts, transferred to third parties, or concealed. The conversion of relatively illiquid assets (inventory) to highly liquid assets (cash) in the context of an impending enforcement action is a well-recognized red flag for asset dissipation.
45. Copies of communications and industry-source reports regarding Meridian's below-market inventory sales are attached hereto as Exhibit E.
C. Transfer of Funds
46. My investigation has uncovered indications that Meridian and/or Calloway have transferred significant funds out of Meridian's operating accounts in the period since the Award was issued on August 22, 2025.
47. Based on bank-account information obtained through review of publicly available court records from prior litigation involving Meridian, as well as commercial databases, there are indications of unusual outbound wire transfers from Meridian's primary operating accounts. The volume and timing of these transfers — occurring in the weeks following the Award — are inconsistent with Meridian's typical patterns of cash disbursement as reflected in its historical financial disclosures. While I do not have access to Meridian's complete bank records (which would require discovery or subpoena), the information available to me at this time is sufficient to raise serious concerns about the movement of funds out of Meridian's accounts.
48. Additionally, I have identified indications that Calloway may have caused Meridian to make personal transfers or distributions to him as a shareholder, potentially reducing his personal exposure under the $10 million personal guaranty set forth in Section 12.4 of the Distribution Agreement. If Calloway is extracting cash or other assets from Meridian — whether through dividends, distributions, management fees, or other mechanisms — this would simultaneously diminish Meridian's asset base and potentially shield those funds in Calloway's personal accounts, where they may be more difficult to reach.
49. A summary of the investigative findings regarding fund transfers by Meridian and/or Calloway, together with supporting documentation, is attached hereto as Exhibit F.
D. Real Property Concerns
50. My investigation has identified indications that Meridian may be exploring a sale or refinancing of the Ontario, California warehouse property located at 1480 East Fourth Street, Ontario, California 91764. As noted above, this property is appraised at approximately $34 million and is believed to be one of Meridian's most significant unencumbered assets — potentially the single largest asset that is not subject to Brindoval National Bank's first-priority blanket lien on personal property.
51. A transfer or further encumbrance of this real property would materially impair Halcyon's ability to enforce the $47.3 million Award. If the Ontario property were sold, the sale proceeds could be dissipated or moved beyond the reach of Halcyon. If the property were refinanced or further encumbered, the resulting mortgage or lien would reduce or eliminate the equity available to satisfy Halcyon's judgment.
52. Any available documentation regarding real property listing activity, refinancing inquiries, or other transactions involving the Ontario warehouse property is attached hereto as Exhibit G.
E. Calloway's Personal Assets and Guaranty Exposure
53. As set forth above, Calloway personally guaranteed certain obligations under the Distribution Agreement up to a cap of $10 million pursuant to Section 12.4 of the Distribution Agreement. Calloway is therefore a potential judgment debtor in these proceedings for up to $10 million, in addition to any amounts recoverable from Meridian.
54. Calloway, as the 62% controlling shareholder and CEO of Meridian, is uniquely positioned to direct the dissipation of both corporate and personal assets. He has the authority to approve transfers of corporate funds, authorize the grant of new security interests in corporate assets, direct the sale of corporate property, and cause Meridian to make distributions to shareholders — including himself. The concentration of control in Calloway's hands, combined with his personal financial exposure as a guarantor, creates a powerful incentive for him to act to protect his own interests at the expense of Halcyon's right to enforce the Award.
55. When viewed in their totality, the facts set forth in this Section V — including the new UCC filings, the accelerated inventory liquidation at below-market prices, the unusual fund transfers, and the potential real property transactions — suggest a coordinated effort by Meridian and Calloway to render the Award uncollectible. These are not isolated events; they form a pattern of conduct that is consistent with a deliberate strategy to dissipate, transfer, and encumber assets in the period immediately following the issuance of the Award and in advance of Halcyon's enforcement efforts.
VI. RISK THAT THE AWARD WILL BE RENDERED UNCOLLECTIBLE ABSENT INJUNCTIVE RELIEF
A. The Award Amount Relative to Available Assets
56. The total Award is $47,300,000, plus post-award interest accruing at the rate of 10% per annum (approximately $4,730,000 per year, or approximately $12,959 per day) from August 22, 2025, until the date of payment in full, pursuant to California Civil Code Section 3289.
57. As of the date of this declaration, post-award interest has been accruing for approximately two months (from August 22, 2025 to late October 2025), adding approximately $788,000 to the total obligation. The total amount owed by Respondents thus currently stands at approximately $48,088,000 and continues to grow each day.
58. As described in Section IV above, Meridian's total assets of approximately $187 million may appear superficially adequate to satisfy the Award. However, when the Brindoval National Bank first-priority lien of up to $45 million on substantially all of Meridian's personal property is accounted for, the margin of available assets narrows considerably. After accounting for Brindoval's senior security interest, only approximately $68 million in personal property and approximately $34 million in real property (the Ontario warehouse) would theoretically be available — a total of approximately $102 million. While this amount still exceeds the Award, the evidence of ongoing dissipation, encumbrance, and transfer of assets, as described in Section V, demonstrates that this cushion is being actively eroded.
59. Further dissipation, encumbrance, or transfer of assets — whether through the granting of additional security interests, fire-sale inventory liquidation, outbound fund transfers, or the sale or refinancing of the Ontario warehouse — could rapidly reduce the available asset pool below the amount needed to satisfy the Award plus accrued interest. Given the pace at which Respondents appear to be acting, the risk is not merely theoretical but imminent.
B. Meridian's Demonstrated Unwillingness to Pay
60. Meridian has expressly and unequivocally refused to satisfy the Award, as evidenced by the September 5, 2025 letter from WCP on Meridian's behalf. This is not a case where a debtor has expressed a willingness to pay but needs time to arrange financing or liquidate assets in an orderly fashion. To the contrary, Meridian has stated that it will not pay and has signaled its intent to pursue a motion to vacate the Award under 9 U.S.C. § 10.
61. Meridian's anticipated motion to vacate, due on November 13, 2025, will delay the confirmation process and, in turn, delay Halcyon's ability to enforce the Award. Challenges to arbitration awards under 9 U.S.C. § 10 are subject to highly deferential standards of review, and Halcyon is confident that the Award will withstand scrutiny. Nevertheless, the litigation process takes time — potentially months — and during that time, Respondents will have the opportunity to continue dissipating assets unless restrained by the Court.
62. The combination of an express refusal to pay, litigation delay tactics, and contemporaneous asset dissipation creates an acute risk that the Award will become a hollow judgment. By the time the confirmation process is complete and Halcyon obtains a final judgment, Respondents may have succeeded in placing their assets beyond Halcyon's reach.
C. Absence of Alternative Remedies
63. If assets are dissipated, transferred, or encumbered during the pendency of the confirmation proceedings, Halcyon will be unable to recover the full amount of the Award. The injury caused by asset dissipation is, by its nature, irreparable. Once assets are transferred to third parties (particularly bona fide purchasers for value), moved to accounts in other jurisdictions, or consumed by additional secured creditors, they cannot be recovered through the ordinary collection process.
64. Monetary damages alone would be an insufficient remedy because the very injury at issue — the dissipation of the assets needed to satisfy the Award — is what makes collection impossible. A supplemental damages award for the act of dissipation would itself be uncollectible for the same reason: the assets would already be gone.
65. Injunctive relief is therefore the only adequate mechanism to preserve the status quo and protect Halcyon's right to enforce the Award. A temporary restraining order, followed by a preliminary injunction, will maintain the existing asset base and prevent Respondents from further diminishing it while the confirmation process proceeds.
VII. EXHIBITS IDENTIFIED AND ATTACHED
66. The following exhibits are attached to this declaration and incorporated herein by reference:
• Exhibit A: Final Award dated August 22, 2025, AAA/ICDR Case No. 01-24-0003917 (previously filed with the Petition to Confirm Arbitration Award).
• Exhibit B: Excerpts from Meridian Dynamics Inc. financial disclosures for the fiscal year ending December 31, 2024.
• Exhibit C: UCC-1 financing statement filed by Brindoval National Bank with the Delaware Secretary of State, and relevant excerpts from the security agreement dated August 12, 2022.
• Exhibit D: Recent UCC-1 financing statements and UCC-3 amendments filed against Meridian Dynamics Inc. with the Delaware Secretary of State and the California Secretary of State (post-Award).
• Exhibit E: Communications and industry-source reports regarding Meridian's below-market inventory liquidation activity.
• Exhibit F: Summary of investigative findings regarding fund transfers by Meridian Dynamics Inc. and/or Derek Calloway, with supporting documentation.
• Exhibit G: Documentation regarding potential sale or refinancing of the warehouse property located at 1480 East Fourth Street, Ontario, California 91764.
VIII. CONCLUSION AND PRAYER
67. Based on the foregoing, I respectfully submit that the evidence set forth in this declaration demonstrates a real and imminent risk that Respondents Meridian Dynamics Inc. and Derek Calloway are actively dissipating, transferring, and encumbering assets in a coordinated effort to frustrate enforcement of the $47,300,000 Award, plus accruing post-award interest. The pattern of conduct described herein — including the post-Award filing of new UCC financing statements, the accelerated liquidation of inventory at below-market prices, the unusual transfer of funds out of Meridian's operating accounts, the potential sale or refinancing of Meridian's Ontario warehouse, and Calloway's personal capacity to direct both corporate and personal asset movements — demonstrates a clear and present danger that the Award will be rendered uncollectible if Respondents are not restrained.
68. Absent the issuance of a temporary restraining order and a preliminary injunction, Halcyon faces irreparable harm in the form of a potentially uncollectible judgment. The harm to Halcyon from the denial of injunctive relief would be severe and irremediable. By contrast, Respondents will suffer no cognizable harm from an order merely requiring them to maintain the status quo with respect to their assets during the pendency of the confirmation proceedings.
69. I respectfully request that the Court grant Halcyon Semiconductor AG's ex parte application for a temporary restraining order and order to show cause re preliminary injunction, restraining Respondents Meridian Dynamics Inc. and Derek Calloway from transferring, encumbering, concealing, or dissipating assets pending confirmation and enforcement of the Award.
IX. VERIFICATION
I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct.
Executed at Los Angeles, California, on October 31, 2025.
________________________________________
Patrick Gallagher (SBN 328714) CALDERWOOD & HARKNESS LLP 777 South Figueroa Street, Suite 4200 Los Angeles, California 90017 Telephone: (213) 892-4100
Email: pgallagher@calderwoodharkness.com
Attorneys for Petitioner HALCYON SEMICONDUCTOR AG
HALCYON SEMICONDUCTOR AG, a German Aktiengesellschaft, | Case No. 2:25-cv-08742-RGK-PLA
Petitioner, | Hon. Robert G. Kendrick
v. | DECLARATION OF PATRICK GALLAGHER IN SUPPORT OF PETITIONER'S EX PARTE APPLICATION FOR TEMPORARY RESTRAINING ORDER AND ORDER TO SHOW CAUSE RE PRELIMINARY INJUNCTION
MERIDIAN DYNAMICS INC., a Delaware corporation; and DEREK CALLOWAY, an individual,
Respondents.