PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT

PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT
MEMORANDUM
TO: Linda Osei, Responsible Partner, Litigation (General), Calderwood & Harkness LLP
FROM: Patrick Gallagher, Lead Associate, Litigation (General), and Simone Laroche, Working Associate, Litigation (General), Calderwood & Harkness LLP
DATE: October 28, 2025
RE: Enforcement Strategy and Asset Analysis — Halcyon Semiconductor AG v. Meridian Dynamics Inc. and Derek Calloway; Case No. 2:25-cv-08742-RGK-PLA (C.D. Cal.); AAA/ICDR Case No. 01-24-0003917
MATTER NO.: 1032-00002
CLIENT: Halcyon Semiconductor AG
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I. Executive Summary
This memorandum analyzes the enforcement landscape and recommends a comprehensive collection strategy for the $47,300,000 AAA Final Award dated August 22, 2025, together with post-award interest accruing at the rate of 10% per annum pursuant to California Civil Code § 3289, entered against Meridian Dynamics Inc. ("Meridian") and Derek Calloway ("Calloway") (collectively, the "Judgment Debtors"). The purpose of this memorandum is to equip the team with a detailed understanding of the assets available for recovery, the priority issues that complicate collection, and the procedural steps necessary to maximize Halcyon Semiconductor AG's ("Halcyon" or the "Client") recovery in an efficient and timely manner.
Our principal conclusion is that while Meridian's reported total assets of approximately $187,000,000 as of December 31, 2024 nominally exceed the Award amount by a comfortable margin, the enforcement calculus is substantially complicated by three factors: (1) Brindoval National Bank's ("Brindoval") first-priority security interest on substantially all of Meridian's personal property, granted pursuant to a $45,000,000 revolving credit facility; (2) the illiquidity of certain significant asset classes, particularly inventory and real property, which cannot be rapidly converted to cash at full book value; and (3) the demonstrated risk of asset dissipation during the pendency of the confirmation proceedings, as evidenced by Meridian's adversarial posture and refusal to satisfy the Award voluntarily.
Based on our analysis, we recommend the following actions, which are described in greater detail in the body of this memorandum:
1.  Pursue expedited confirmation and entry of judgment. The petition to confirm the Award has been filed; we must defend vigorously against Meridian's anticipated cross-motion to vacate and press for prompt resolution.
2.  Seek prejudgment attachment or a temporary restraining order for asset preservation. Given the risk of dissipation, immediate asset-preservation relief is warranted and should be sought on an ex parte or expedited basis.
3.  Enforce against Meridian's real property. The Ontario, California distribution center (appraised at approximately $34,000,000) is not encumbered by Brindoval's personal-property lien and represents the single most valuable asset available for first-priority recovery.
4.  Pursue Calloway's personal guaranty. Calloway personally guaranteed certain obligations under the Distribution Agreement up to a cap of $10,000,000. Enforcement against Calloway's personal assets should proceed in parallel with enforcement against Meridian.
5.  Domesticate any judgment in Delaware. Meridian is a Delaware corporation, and domestication of the California federal judgment in Delaware will provide additional enforcement leverage.
6.  Evaluate third-party discovery regarding Meridian's current financial position and any recent transfers. The available financial data is nearly ten months old, and the Client's enforcement strategy must be informed by current information.
Regarding post-award interest: At the contractual rate of 10% per annum applied to the $47,300,000 principal amount, interest accrues at the rate of approximately $12,958.90 per day, or approximately $4,730,000 per year, running from August 22, 2025 until payment in full. By the time confirmation and entry of judgment are obtained — likely in early 2026 — the total amount owed will have increased by approximately $2.0 million to $2.8 million in interest alone. Every day of delay in enforcement increases Halcyon's exposure to collection risk while simultaneously increasing the total recovery amount.
II. Background and Procedural Posture
A. The Award
On August 22, 2025, a unanimous three-member panel of the American Arbitration Association / International Centre for Dispute Resolution ("AAA/ICDR") issued a Final Award (the "Award") in AAA/ICDR Case No. 01-24-0003917 in favor of Halcyon Semiconductor AG and against Meridian Dynamics Inc. and Derek Calloway. The arbitration panel was composed of the Honorable Gerald M. Osterhaus (Retired), Presiding Arbitrator; Professor Diane K. Sørensen, Claimant's Party-Appointed Arbitrator; and Victor R. Taniguchi, Esq., Respondent's Party-Appointed Arbitrator. The Award was unanimous — a significant fact that substantially undermines any vacatur challenge based on claims of evident partiality, as all three arbitrators, including Respondent's own party-appointed arbitrator, concurred in the result.
The $47,300,000 Award is comprised of four components, as follows:
Lost Profits (Remaining Term: Approximately 2.8 Years) — $31,800,000. This component, which represents the largest element of the Award, reflects the net present value of projected lost margins over the unexpired term of the Distribution Agreement (March 15, 2024 through December 31, 2026). The Panel adopted the damages model prepared by Dr. Renata Moss of Pinnacle Forensic Advisory LLC, Halcyon's damages expert, which calculated projected margins based on historical performance, contracted minimum purchase volumes, market growth rates for the relevant semiconductor product categories, and Halcyon's established pricing schedule. Dr. Moss applied a discount rate of 8.5% to arrive at the net present value of the future margin stream. The Panel found Dr. Moss's methodology reliable and well-supported, and rejected the competing analysis offered by Meridian's damages expert, who had proposed significantly lower projections based on an artificially depressed baseline period and an inflated discount rate.
Shortfall Damages (2023 Minimum Purchase Deficit) — $9,200,000. Under Section 5.2 of the Distribution Agreement, Meridian committed to minimum annual purchase volumes of $65,000,000 for calendar year 2023. Meridian's actual purchases for the period totaled only $41,700,000, resulting in a shortfall of $23,300,000. Halcyon's lost margin on this shortfall, calculated at Halcyon's established average margin of 39.5% on sales to Meridian, amounts to approximately $9,200,000. The Panel found that Meridian's failure to meet its contractual minimum constituted a material breach.
Gray-Market Diversion Damages — $4,100,000. The Panel credited Halcyon's evidence that Meridian had engaged in unauthorized diversion of Halcyon products into gray-market channels, in violation of the territorial restrictions set forth in Section 7.1 of the Distribution Agreement. This diversion caused measurable price erosion in Halcyon's authorized channels and necessitated significant channel remediation expenditures. Dr. Moss's damages analysis quantified these losses at $4,100,000, incorporating both the direct price erosion impact and the documented remediation costs incurred by Halcyon.
Attorneys' Fees and Arbitration Costs — $2,200,000. Section 14.5 of the Distribution Agreement contains a prevailing-party fee-shifting provision entitling the substantially prevailing party to recover its reasonable attorneys' fees and costs incurred in connection with any dispute arising under the Agreement. The Panel found Halcyon to be the substantially prevailing party and awarded 100% fee allocation to Meridian. The $2,200,000 award represents Halcyon's documented fees and costs through the close of the arbitration hearing.
Post-Award Interest. The Award provides for the accrual of post-award interest at the rate of 10% per annum pursuant to California Civil Code § 3289, which governs interest on damages arising from breach of a written contract where the contract itself does not specify a different rate. Interest runs from August 22, 2025 — the date of the Award — until payment in full.
B. Current Proceedings
Halcyon filed its Petition to Confirm Arbitration Award on October 14, 2025, in the United States District Court for the Central District of California, Case No. 2:25-cv-08742-RGK-PLA, before the Honorable Robert G. Kendrick. The matter was assigned to the court pursuant to the forum-selection clause in Section 14.2 of the Distribution Agreement, which designates the Central District of California as the exclusive forum for any judicial proceedings arising out of or relating to the Agreement, including any proceedings to confirm, vacate, or modify an arbitral award.
Meridian is represented in the confirmation proceedings by Whitfield, Carruthers & Payne LLP ("WCP"), with Raymond Whitfield serving as lead partner and Alana Choi as senior associate. By letter dated September 5, 2025, Mr. Whitfield, writing on behalf of Meridian, declined to satisfy the Award voluntarily, characterizing the Award as the product of a "fundamentally flawed proceeding" and asserting that Meridian intended to challenge the Award on all available grounds. In subsequent communications, WCP has signaled Meridian's intent to file a cross-motion to vacate the Award under 9 U.S.C. § 10(a)(2) (evident partiality of the arbitrators) and 9 U.S.C. § 10(a)(4) (arbitrators exceeded their powers). Under the Court's scheduling order, Meridian's cross-motion is due November 13, 2025.
We assess the vacatur challenge as extremely unlikely to succeed. The standard for vacatur under Section 10 of the Federal Arbitration Act is exceedingly narrow, and the Ninth Circuit has consistently held that courts may not review the merits of an arbitral award. The "evident partiality" ground requires a showing of a specific, undisclosed relationship between an arbitrator and a party that creates a reasonable impression of partiality — a high bar that Meridian is unlikely to clear, particularly where the Award was unanimous and Respondent's own party-appointed arbitrator concurred. The "exceeded powers" ground is similarly narrow and requires a showing that the arbitrators acted in manifest disregard of the law or issued an award that does not draw its essence from the parties' agreement. We will address the vacatur challenge in detail in a separate memorandum.
Notwithstanding our confidence in the ultimate outcome of the confirmation proceedings, the pendency of Meridian's cross-motion introduces delay that increases the risk of asset dissipation. This risk is a central driver of our recommendation that Halcyon pursue immediate asset-preservation relief.
C. Judgment Debtors
Meridian Dynamics Inc. Meridian is a corporation organized and existing under the laws of the State of Delaware, Employer Identification Number 83-2047561, with its principal place of business at 2750 Barranca Parkway, Suite 400, Irvine, California 92606. Meridian maintains a registered agent for service of process at 1209 Orange Street, Wilmington, Delaware 19801. Meridian is a specialty electronics distribution company that reported approximately $312,000,000 in revenue for fiscal year 2024. Meridian distributes semiconductor components and related products from multiple manufacturers, including (until the termination of the Distribution Agreement) Halcyon's product lines. Meridian's operations are concentrated in Southern California, with its primary distribution center located in Ontario, California.
Derek Calloway. Calloway is the Chief Executive Officer, founder, and majority shareholder of Meridian, holding approximately 62% of the company's outstanding shares. Calloway personally guaranteed certain obligations of Meridian arising under the Distribution Agreement, pursuant to Section 12.4 thereof, up to a cap of $10,000,000. Calloway was named as a respondent in the arbitration proceeding, and the Award was entered against him jointly and severally with Meridian, subject to the $10,000,000 guaranty cap. Calloway's personal assets — including his equity interest in Meridian, any personal real property, and other holdings — are therefore independently available to satisfy a portion of the Award, as discussed in Section V below.
III. Analysis of Meridian's Asset Base
A. Overview of Meridian's Financial Position
As of December 31, 2024, Meridian reported total assets of approximately $187,000,000, according to the company's most recent publicly available financial disclosures. Total revenue for fiscal year 2024 was approximately $312,000,000. These figures suggest a company of meaningful scale, with assets that nominally exceed the Award amount by a ratio of approximately 4:1.
However, several important caveats apply to this analysis. First, and most fundamentally, these financial statements are now nearly ten months old. The intervening period has seen the loss of the Halcyon distribution relationship — which, based on the minimum purchase commitments in the Distribution Agreement and historical purchasing patterns, accounted for a material portion of Meridian's revenue base. The loss of the Halcyon product lines may have caused a significant contraction in Meridian's operations, revenue, and corresponding asset levels. Receivables and inventory associated with Halcyon products would have declined as those products were sold through or returned, and it is unclear whether Meridian has been able to replace the lost Halcyon business with alternative product lines.
Second, the reported asset figure of $187,000,000 represents book value, which may differ materially from realizable or liquidation value. As discussed below, certain significant asset categories — particularly inventory and real property — would be subject to substantial discounts in a forced-sale context. Third, the gross asset figure does not account for liabilities, including the Brindoval revolving credit facility, trade payables, and other obligations that would need to be satisfied before or concurrently with any distribution to Halcyon as a judgment creditor.
For all of these reasons, we strongly recommend pursuing post-judgment discovery (and, if warranted, pre-judgment third-party discovery under Federal Rule of Civil Procedure 69(a)(2) or applicable California provisions) to obtain current financial statements, bank records, and other asset information from both Meridian and Calloway. The enforcement strategy outlined in this memorandum is necessarily based on the best information currently available and will require refinement as additional data is obtained.
B. Accounts Receivable (~$52,000,000)
As of December 31, 2024, Meridian reported approximately $52,000,000 in accounts receivable. These trade receivables represent amounts owed to Meridian by its customers for products delivered and services rendered in the ordinary course of business.
From an enforcement perspective, accounts receivable represent a relatively liquid asset class — they are obligations payable in cash on defined terms and can be reached through writs of garnishment or execution served on Meridian's account debtors (i.e., the third-party customers that owe money to Meridian). Under California law, a judgment creditor may obtain a turnover order compelling the judgment debtor to assign receivables to the creditor, or may serve writs of garnishment directly on identified account debtors, requiring them to pay amounts owed to Meridian directly to the judgment creditor.
There are, however, two significant concerns with respect to this asset class:
First, and most critically, accounts receivable are personal property that falls squarely within the scope of Brindoval National Bank's first-priority security interest. Brindoval's security agreement covers "accounts" as defined under Article 9 of the Uniform Commercial Code, and Brindoval's UCC-1 financing statement, presumably filed with the Delaware Secretary of State, would have perfected its security interest prior in time to any judgment lien obtained by Halcyon. Accordingly, any levy or garnishment by Halcyon on Meridian's receivables would be subordinate to Brindoval's prior perfected lien. As a practical matter, this means that if Brindoval were to exercise its remedies — for example, by sweeping Meridian's receivables into a cash dominion account — Halcyon would recover nothing from this asset class until Brindoval's claim was fully satisfied.
Second, the reported receivables balance of $52,000,000 may have declined significantly in the approximately ten months since the balance sheet date. The loss of the Halcyon product line would have reduced the volume of outgoing shipments and, consequently, the volume of new receivables being generated. Additionally, normal collection activity in the intervening months would have converted existing receivables into cash (which is also personal property subject to Brindoval's lien) and replaced them with new receivables of potentially lesser volume. Without current financial data, we cannot estimate the present balance with any confidence.
C. Inventory (~$61,000,000)
As of December 31, 2024, Meridian reported approximately $61,000,000 in inventory. Meridian's inventory consists predominantly of specialty electronics components, including semiconductor devices, integrated circuits, passive components, and related products. While a substantial portion of this inventory historically consisted of Halcyon-manufactured products, Meridian also distributes products from other manufacturers, and the current inventory composition is unknown.
Inventory can be reached through a writ of execution, pursuant to which the levying officer seizes the inventory and conducts a forced sale (typically at public auction). However, enforcement against inventory presents several significant challenges:
(1) Brindoval's first-priority lien. Like accounts receivable, inventory is personal property subject to Brindoval's perfected security interest. Any recovery by Halcyon from inventory would be subordinate to Brindoval's claim.
(2) Liquidation discount. Forced-sale values for specialty electronics inventory are typically in the range of 20% to 40% of book value. The semiconductor distribution market is characterized by narrow product specifications, customer-specific configurations, and rapidly evolving product generations. Inventory that is fully saleable in the ordinary course of business may command only a fraction of its book value at a forced liquidation sale, where buyers face uncertainty about product condition, warranty coverage, and compatibility with their requirements.
(3) Obsolescence risk. Semiconductor components are subject to short product life cycles and rapid technological obsolescence. Inventory that was current and marketable as of the balance sheet date may have declined in value over the intervening ten months, particularly if it includes products tied to older technology nodes or platform generations that are being replaced by newer designs.
Given the combination of the Brindoval priority claim and the substantial liquidation discount, the net recovery available to Halcyon from Meridian's inventory is uncertain and potentially modest. Our ability to estimate this figure will improve once we have current information regarding: (a) the present inventory balance and composition; (b) the current outstanding balance under the Brindoval revolving credit facility; and (c) the actual forced-sale value of the relevant product categories.
D. Real Property — Ontario, California Distribution Center (~$34,000,000)
Meridian owns and operates a warehouse and distribution center located at 1480 East Fourth Street, Ontario, California 91764 (San Bernardino County). This property has been appraised at approximately $34,000,000, based on available market data and comparable industrial property transactions in the Inland Empire submarket. The facility serves as Meridian's primary hub for receiving, warehousing, and shipping product across the western United States.
This property is of critical strategic importance to Halcyon's enforcement efforts for one overriding reason: Brindoval's security interest covers personal property, not real property. Under Article 9 of the Uniform Commercial Code, security interests in personal property — accounts, inventory, equipment, general intangibles, and their proceeds — are governed by the UCC's filing and priority rules. Real property, by contrast, is outside the scope of UCC Article 9 and is governed by state real property law. Brindoval's blanket lien on Meridian's personal property does not extend to the Ontario distribution center.
The enforcement consequence is significant. Halcyon's judgment lien on the Ontario real property — created by recording an abstract of judgment in San Bernardino County pursuant to California Code of Civil Procedure § 697.310 — would likely enjoy first-priority status, subject only to any mortgage, deed of trust, or other real property encumbrance that may have been recorded against the property prior to or concurrently with Halcyon's judgment lien. If the property is unencumbered or only lightly encumbered by a mortgage, the Ontario distribution center represents the single most valuable asset available to Halcyon on a first-priority basis, potentially yielding $28,000,000 to $34,000,000 in recovery (before transaction costs associated with an execution sale).
We strongly recommend that the following steps be taken immediately with respect to the Ontario property:
(a) Title search. Commission a comprehensive title search through the San Bernardino County Recorder's Office to identify all existing encumbrances on the property, including mortgages, deeds of trust, mechanics' liens, tax liens, easements, and any other recorded interests. This information is essential to determining the priority of Halcyon's prospective judgment lien and the net equity available for recovery.
(b) Appraisal. Consider commissioning a current independent appraisal of the property to verify its market value. The $34,000,000 estimate is based on available data but has not been independently confirmed. An appraisal will also be relevant if execution sale proceedings are pursued, as the court may require evidence of fair market value in setting minimum bid amounts.
(c) Abstract of judgment. Immediately upon entry of judgment by the district court confirming the Award, record an abstract of judgment in San Bernardino County to create a judgment lien on the property. Concurrently, record abstracts in Orange County (where Meridian's principal office is located) and any other California counties where Meridian or Calloway may hold real property.
We note that real property execution is inherently slower than personal property execution. The process — from levy through publication of notice of sale, the required waiting periods, and the actual execution sale — typically requires 120 days or more. This timeline underscores the importance of commencing the process promptly upon entry of judgment and, in the interim, seeking attachment or other preservation relief to ensure that the property remains available for execution.
E. Other Potential Assets
Beyond accounts receivable, inventory, and the Ontario real property, Meridian holds additional assets that merit consideration, though each presents distinct challenges for enforcement:
Cash and cash equivalents. Meridian's financial disclosures do not separately break out cash and cash equivalent balances. Whatever cash Meridian holds in bank accounts is personal property subject to Brindoval's first-priority security interest, and any levy by Halcyon would be subordinate to Brindoval's claim. Moreover, cash balances fluctuate daily with business operations and may be substantially reduced by the time a levy is served. If, however, Meridian maintains bank accounts at institutions other than Brindoval, there may be an opportunity to serve a writ of execution or garnishment on those institutions, subject to Brindoval's priority claim.
Equipment and fixtures. Meridian's warehousing and logistics operations presumably involve significant equipment — racking systems, forklifts, conveyor systems, order-picking technology, and similar capital assets. This equipment is personal property subject to Brindoval's lien. In addition, warehouse and logistics equipment typically has low forced-sale value relative to its original cost, as such equipment is often custom-configured for particular facilities and use cases.
intellectual property and trade names. Meridian may hold registered trademarks (e.g., the "Meridian Dynamics" name and logo), customer lists, proprietary logistics software, and other intangible assets. While these assets fall within the scope of Brindoval's security interest as "general intangibles," their value in a forced-sale context is generally limited. Customer lists and distribution relationships are highly relationship-dependent and difficult to monetize in isolation. Software licenses may be non-transferable. Trade names have value principally as a going-concern attribute rather than as a standalone asset.
Remaining equity in personal property above Brindoval's lien. A rough calculation is instructive. If Meridian's total assets as of December 31, 2024 were approximately $187,000,000 and the Ontario real property accounts for approximately $34,000,000 of that total, then the aggregate book value of Meridian's personal property assets would be approximately $153,000,000. Brindoval's maximum exposure under the revolving credit facility is $45,000,000. If the full $45,000,000 has been drawn, the theoretical equity in personal property above Brindoval's claim would be approximately $108,000,000 in book value — more than sufficient to cover the Award.
However, this calculation is misleading for several reasons. First, the current asset balances are unknown and may have declined. Second, book value substantially overstates realizable value in a forced-sale context, particularly for inventory (20–40% of book, as noted above). Third, Meridian has other liabilities — trade payables, employee obligations, tax liabilities, and other claims — that would compete with Halcyon's judgment lien on an unsecured basis. Fourth, even if surplus equity exists, the mechanics of collecting it are complex and time-consuming, requiring writs of execution, levies, and forced sales at discount values. The personal property equity cushion is therefore a factor that supports overall collectability but should not be relied upon as a primary recovery source.
F. Asset Dissipation Concerns
The risk of asset dissipation is a serious concern that pervades this enforcement analysis. Meridian's refusal to satisfy the Award voluntarily, coupled with its decision to pursue a vacatur challenge on grounds that we assess as meritless, strongly suggests an adversarial posture designed to delay enforcement and preserve flexibility for strategic asset disposition. We identify the following specific indicators that warrant investigation:
(1) Accelerated inventory liquidation. Since the Award was issued on August 22, 2025, Meridian may have accelerated the sale of inventory at reduced margins or in bulk transactions, converting illiquid inventory into cash that can be more easily dissipated or transferred. Any unusual patterns of inventory liquidation during this period would be indicative of dissipation.
(2) Distributions to shareholders. Calloway, as the 62% majority shareholder and CEO, has the ability to authorize and effectuate distributions of Meridian's assets to himself and other shareholders. Any dividends, share repurchases, or other distributions since the date of the Award — or in anticipation of the Award — would reduce the assets available for enforcement and may constitute fraudulent transfers if made with actual or constructive intent to hinder, delay, or defraud creditors.
(3) Increased borrowings under the Brindoval facility. If Meridian has increased its drawdowns under the Brindoval revolving credit facility since the Award was issued, the effect would be to increase Brindoval's senior claim on personal property and correspondingly reduce the equity available to Halcyon as a junior lienholder. Any borrowing that is not justified by ordinary business needs may be indicative of a strategy to subordinate Halcyon's claim.
(4) Transfers to affiliates or insiders. Meridian may have transferred assets — inventory, receivables, equipment, or cash — to affiliated entities or insiders at below-market value. Any such transfers would be subject to avoidance as fraudulent transfers under applicable law.
We note in particular the role of Janet Shin, Meridian's Chief Operating Officer, co-founder, and 23% shareholder. Shin controls Meridian's logistics and warehousing operations. Any significant asset transfers — whether involving physical movement of inventory, reassignment of receivables, or disposition of equipment — would likely flow through the operations she oversees. Shin may also have personal liability exposure if she participated in or directed any fraudulent transfers.
The existence of these dissipation risks strongly supports our recommendation that Halcyon seek immediate asset-preservation relief, whether in the form of a prejudgment attachment, a temporary restraining order, or a preliminary injunction. This relief is discussed in Section VII below.
IV. Brindoval National Bank Lien Priority Analysis
A. The Brindoval Facility
Brindoval National Bank is a nationally chartered bank headquartered at 4100 MacArthur Boulevard, Suite 100, Newport Beach, California 92660. Based on available information, Brindoval extended to Meridian a senior secured revolving credit facility in the principal amount of $45,000,000 (the "Brindoval Facility"), pursuant to a credit agreement and security agreement dated August 12, 2022. The Brindoval Facility is a standard asset-based lending arrangement under which Meridian may borrow against the value of its eligible accounts receivable and inventory, subject to borrowing base calculations and other customary conditions.
As security for the Brindoval Facility, Meridian granted Brindoval a first-priority lien on substantially all of Meridian's personal property. The collateral description in the security agreement is understood to encompass, at a minimum, the following categories of personal property as defined under UCC Article 9: accounts (including all trade receivables), inventory (including all goods held for sale or distribution), equipment (including all machinery, fixtures, and tangible personal property used in operations), general intangibles (including intellectual property, contract rights, and goodwill), chattel paper, instruments, investment property, deposit accounts, and all proceeds and products of the foregoing.
Brindoval's security interest was presumably perfected by the filing of a UCC-1 financing statement with the Delaware Secretary of State (as Delaware is Meridian's state of incorporation and therefore the appropriate filing jurisdiction under UCC § 9-301) on or about August 12, 2022. We have recommended UCC searches in both Delaware and California to confirm the existence, scope, and filing date of Brindoval's financing statements and to identify any other secured creditors that may have filed financing statements against Meridian.
B. Subordination Implications for Halcyon's Judgment Lien
Under the Uniform Commercial Code, as adopted in both Delaware and California, a perfected security interest that is prior in time generally has priority over a subsequently created judicial lien on the same collateral. See UCC § 9-317(a)(2) (a security interest is subordinate to the rights of a person who becomes a lien creditor before the security interest is perfected — but where the security interest was perfected first, as here, the security interest has priority). Halcyon's judgment lien on Meridian's personal property — which would arise upon entry of judgment and issuance of a writ of execution — would therefore be junior to Brindoval's prior perfected security interest as to all personal property collateral covered by the security agreement.
The practical consequences of this subordination are significant. If Meridian defaults on its obligations under the Brindoval Facility, Brindoval would be entitled to exercise its remedies under the security agreement and Article 9, including foreclosure on and disposition of substantially all of Meridian's personal property assets — accounts, inventory, equipment, and general intangibles — with the proceeds applied first to satisfy Brindoval's claim. Only surplus proceeds remaining after full satisfaction of Brindoval's secured claim would be available to Halcyon and other junior lien creditors. If the forced-sale value of the personal property is less than or equal to Brindoval's outstanding claim, Halcyon would recover nothing from personal property.
The current outstanding balance under the Brindoval Facility is unknown. The facility has a maximum commitment of $45,000,000, but the actual drawn balance may be substantially less — or, conversely, the full commitment may have been drawn, and Meridian may have made additional borrowings or modifications that are not reflected in publicly available records. Determining the current Brindoval balance is a high priority for our investigation and will inform the enforcement strategy going forward.
C. Real Property Carve-Out
A critical point bears emphasis: Brindoval's security agreement covers personal property. Real property — including the Ontario distribution center at 1480 East Fourth Street, Ontario, California 91764 — is not "personal property" under UCC Article 9, and the Ontario property is therefore outside the scope of Brindoval's security agreement and financing statement. UCC § 9-109(d)(11) expressly excludes the creation or transfer of an interest in real property from the scope of Article 9 (except as to fixtures, which are separately addressed and not at issue here with respect to the real property itself).
This distinction has profound enforcement implications. Halcyon's judgment lien on the Ontario real property — created by recording an abstract of judgment in San Bernardino County — would not be subordinate to Brindoval's personal-property security interest. Rather, the priority of Halcyon's real property judgment lien would be determined under California real property law and would be senior to all interests recorded after the date of Halcyon's abstract of judgment, subject only to any mortgage, deed of trust, or other encumbrance that was recorded against the property prior to Halcyon's judgment lien.
If the Ontario property is unencumbered by any prior mortgage or deed of trust — or is encumbered only by a relatively small mortgage — Halcyon would hold the senior lien position on a property valued at approximately $34,000,000. This represents by far the most promising avenue for first-priority recovery. However, it is entirely possible that Meridian has separately mortgaged the Ontario property to secure financing (whether from Brindoval or another lender), and the existence of any such encumbrance must be confirmed through a title search before we can rely on this analysis.
We are commissioning a comprehensive title search immediately and expect results within the coming days. If the title search confirms that the property is unencumbered or lightly encumbered, we will treat the Ontario real property as the centerpiece of the enforcement strategy.
D. Strategic Considerations vis-à-vis Brindoval
Several strategic considerations arise from the Brindoval lien structure:
Intercreditor negotiation. If Meridian is approaching a default under the Brindoval Facility — which is plausible given the loss of the Halcyon product line and potential operational contraction — Brindoval may have an interest in cooperating with Halcyon regarding lien subordination or intercreditor arrangements. In a distressed scenario, Brindoval might prefer to negotiate a consensual resolution that preserves the going-concern value of Meridian's business rather than pursuing a disruptive foreclosure. We assess this as unlikely in the near term — secured lenders rarely agree to subordinate their priority positions — but it is a possibility worth exploring, particularly if Brindoval's exposure is modest relative to the available collateral.
Surplus proceeds. If Brindoval exercises its foreclosure remedies and conducts a disposition of Meridian's personal property, any surplus proceeds after satisfaction of Brindoval's claim would be available to junior lien creditors, including Halcyon. Under UCC § 9-615(d), a secured party conducting a disposition must account for and pay over surplus proceeds to subordinate security interest holders and lien creditors in order of their priority. Halcyon should monitor for any Brindoval enforcement action and be prepared to assert its junior lien rights in any surplus proceeding.
Monitoring for acceleration. If Brindoval accelerates the Brindoval Facility — for example, upon a default by Meridian — the dynamics of the enforcement landscape could shift rapidly. An acceleration by Brindoval could trigger additional defaults under other Meridian obligations, precipitate an involuntary bankruptcy filing by Brindoval or other creditors, or prompt Meridian to file a voluntary petition for bankruptcy protection. We should monitor Brindoval's actions closely and be prepared to adjust our strategy accordingly.
Cross-collateralization and other Brindoval loans. We should investigate whether Brindoval has extended any other credit to Meridian beyond the $45,000,000 revolving facility — for example, a term loan secured by a deed of trust on the Ontario real property. If Brindoval holds both a personal property lien and a real property mortgage, the enforcement calculus changes materially. This is another reason the title search on the Ontario property is critical.
V. Derek Calloway Personal Guaranty
A. Scope and Terms of the Guaranty
Section 12.4 of the Distribution Agreement between Halcyon and Meridian provides that Derek Calloway personally guaranteed "certain obligations" of Meridian arising under the Agreement, subject to a cap of $10,000,000. The guaranty was executed contemporaneously with the Distribution Agreement and was a condition of Halcyon's agreement to enter into the distribution relationship with Meridian, reflecting the fact that Halcyon required personal accountability from Meridian's principal as additional security for Meridian's performance.
Calloway is the founder, Chief Executive Officer, and holder of approximately 62% of the outstanding equity interests in Meridian. He was named as a respondent in the arbitration and was given full opportunity to participate in and defend against the claims asserted by Halcyon. The Award was entered against Calloway jointly and severally with Meridian, subject to the $10,000,000 cap provided in the guaranty.
The $10,000,000 guaranty cap operates as a ceiling on Calloway's personal liability under the guaranty, not as a separate or additional obligation. Amounts recovered from Calloway under the guaranty reduce, dollar for dollar, the total amount owed by Meridian and Calloway under the Award. Thus, if the full $10,000,000 is recovered from Calloway, the remaining balance owed by Meridian would be reduced to $37,300,000 in principal (plus accumulated post-award interest on the full Award amount accrued prior to partial payment, and post-payment interest on the reduced balance).
B. Enforcement Strategy for the Personal Guaranty
Upon confirmation of the Award and entry of judgment against Calloway, Halcyon will be in a position to enforce the judgment against Calloway's personal assets up to the $10,000,000 guaranty cap. The following enforcement tools are available under California law:
Judgment debtor examination. California Code of Civil Procedure § 708.110 authorizes the court to order a judgment debtor to appear for examination regarding the debtor's assets and financial affairs. We recommend serving a notice of judgment debtor examination on Calloway promptly upon entry of judgment. This examination will provide Halcyon with comprehensive information about Calloway's personal financial position, including bank accounts, brokerage accounts, real property holdings, business interests, and other assets.
Writs of execution on personal property. Upon identification of Calloway's personal property assets (bank accounts, brokerage accounts, vehicles, etc.), Halcyon can obtain writs of execution directing the levying officer to seize and sell such property to satisfy the judgment.
Liens on personal real property. By recording an abstract of judgment in Orange County and any other California counties where Calloway owns real property, Halcyon can create judgment liens on Calloway's personal real property (residence, investment properties, etc.) and thereafter pursue execution sale.
Levy on Meridian shares. Calloway's 62% equity interest in Meridian represents a potentially significant asset, though its value is uncertain and dependent on the overall financial condition and prospects of Meridian. As Meridian is a corporation (rather than a limited liability company or partnership), Calloway's shares are personal property that can be reached through a levy on the shares under California Code of Civil Procedure § 700.130. Upon levy, the shares would be subject to a forced sale, and the proceeds would be applied to the judgment. We note, however, that the forced-sale value of a controlling interest in a privately held corporation facing a $47,300,000 judgment, a senior secured lender with a lien on substantially all personal property, and potential operational contraction is difficult to estimate and may be significantly below the pro rata book value of the company.
Potential personal assets. Based on our preliminary research, Calloway may hold the following categories of personal assets:
(1) Equity interest in Meridian. Calloway holds approximately 62% of the outstanding shares of Meridian. As noted, the valuation of this interest is uncertain but could be significant given Meridian's reported revenue of approximately $312,000,000 in FY2024.
(2) Personal real property. Calloway is believed to reside in Orange County, California. We recommend conducting real property searches in Orange County, Los Angeles County, San Bernardino County, Riverside County, San Diego County, and any other jurisdictions where Calloway may hold property to identify his personal residence and any investment properties.
(3) Personal bank and brokerage accounts. Post-judgment discovery will be necessary to identify Calloway's financial accounts. To the extent Calloway maintains accounts at institutions other than Brindoval, these may be reachable through writs of execution.
(4) Other business interests. Calloway may hold ownership interests in other business entities beyond Meridian. Post-judgment discovery and public records searches should be conducted to identify any such interests.
Recovery of the full $10,000,000 from Calloway would be a significant contribution to the overall enforcement effort, reducing the remaining balance to be collected from Meridian to $37,300,000 (plus interest). Even partial recovery from Calloway would be valuable and should be pursued diligently.
C. Fraudulent Transfer Exposure
If Calloway has recently transferred personal assets — to family members, trusts, shell entities, or others — for less than reasonably equivalent value and with actual or constructive intent to hinder, delay, or defraud creditors, Halcyon may pursue fraudulent transfer claims under California's Uniform Voidable Transactions Act ("UVTA"), codified at California Civil Code §§ 3439–3439.14. The UVTA provides two independent bases for avoidance:
(a) Actual fraud (Cal. Civ. Code § 3439.04(a)(1)): A transfer made with actual intent to hinder, delay, or defraud a creditor. The statute enumerates a series of "badges of fraud" — including transfers to insiders, retention of control, concealment, the existence of a pending or threatened claim, and inadequacy of consideration — that may support an inference of actual fraudulent intent.
(b) Constructive fraud (Cal. Civ. Code § 3439.04(a)(2) and § 3439.05): A transfer made without receiving a reasonably equivalent value in exchange, where the debtor was insolvent at the time of the transfer or became insolvent as a result of the transfer, or where the debtor was engaged in a transaction for which the remaining assets were unreasonably small in relation to the transaction.
We recommend conducting comprehensive asset searches and property record reviews for Calloway and his immediate family members to identify any transfers made since the arbitration was commenced (or, ideally, since the dispute with Halcyon first arose). Any transfers identified should be analyzed for potential avoidance under the UVTA. If voidable transfers are identified, Halcyon may seek judicial orders setting aside the transfers and recovering the transferred assets or their value.
VI. Post-Award Interest Analysis
A. Statutory Rate and Accrual
The Award specifies that post-award interest accrues at the California statutory rate of 10% per annum, pursuant to California Civil Code § 3289. Section 3289 provides that interest on damages for breach of a written contract accrues from the date the damages are certain or can be made certain by calculation, and that the rate of interest is 10% per annum unless the contract itself specifies a different rate. The Distribution Agreement does not specify a different rate for post-breach interest, and the Panel accordingly applied the default statutory rate.
The interest runs from August 22, 2025 — the date the Award was issued — until payment in full. The calculations are straightforward:
From August 22, 2025 through the expected date of confirmation and entry of judgment — which, assuming Meridian's cross-motion to vacate is resolved and the Court rules in Halcyon's favor, could occur as early as January or February 2026 — interest will have accrued for approximately five to seven months. The following table illustrates the projected total amounts owed at various dates:
The compounding effect of the 10% interest rate is substantial. Every month of delay in collection costs Halcyon approximately $394,000 in foregone interest recovery (to the extent Meridian is unable to pay the growing total) and, conversely, increases Meridian's total liability by the same amount.
B. Post-Judgment Interest
Upon entry of a federal court judgment confirming the Award, the question arises whether the applicable post-judgment interest rate should be the federal rate under 28 U.S.C. § 1961 or the 10% contractual/award rate specified in the Award and under California Civil Code § 3289.
Under 28 U.S.C. § 1961, post-judgment interest on federal court judgments accrues at a rate equal to the weekly average one-year constant maturity Treasury yield as of the date the judgment is entered. As of the date of this memorandum, that rate is approximately 4.65% — significantly lower than the 10% rate provided in the Award.
The Ninth Circuit has addressed this issue on multiple occasions and has generally held that where an arbitration agreement or underlying contract specifies a particular interest rate, and the arbitral award applies that rate, the court should honor the contractual or award rate rather than substituting the lower federal rate. See, e.g., Ridgeway Capital Markets v. Stok & Assocs., P.A., 387 F. App'x 736, 738 (9th Cir. 2010) (applying contractual interest rate rather than federal rate); Westinghouse Credit Corp. v. D'Urso, 371 F.3d 96, 101–02 (2d Cir. 2004) (holding that the FAA requires courts to confirm an award in its entirety, including the specified interest rate). The rationale is that confirming the Award under the FAA means enforcing it as written, including the interest provisions.
Strategy: In the proposed order confirming the Award and entering judgment, we should expressly request that the judgment carry interest at the rate of 10% per annum as specified in the Award and pursuant to California Civil Code § 3289, rather than the lower federal post-judgment interest rate under 28 U.S.C. § 1961. We should be prepared to brief this issue if the Court raises it or if Meridian objects. Given the weight of authority in the Ninth Circuit, we are confident that the 10% rate will be applied, but the difference between 10% and approximately 4.65% on a principal amount of $47,300,000 is approximately $2,530,000 per year — a sum well worth litigating.
VII. Prejudgment Attachment Under California Law
A. Statutory Framework
California Code of Civil Procedure §§ 483.010 et seq. authorize a court to issue a right to attach order and a writ of attachment in actions on a contract where the claim is for a fixed or readily ascertainable amount not less than $500. The statute provides a mechanism for creditors to secure assets of the defendant during the pendency of litigation, thereby protecting the creditor against the risk that the defendant will dissipate or conceal assets before judgment is entered.
The $47,300,000 Award satisfies the threshold amount by many orders of magnitude. The claim is "readily ascertainable" because it has been reduced to a specific dollar amount in a Final Award issued by a duly constituted arbitral tribunal.
To obtain a right to attach order and a writ of attachment, the petitioner must establish, under California Code of Civil Procedure § 484.090, the following:
(1) The claim is one upon which an attachment may be issued (i.e., a claim arising from a commercial transaction, on a contract, for a fixed or ascertainable amount greater than $500);
(2) The petitioner has established the probable validity of the claim (i.e., it is more likely than not that the petitioner will obtain a judgment against the defendant on the claim);
(3) The attachment is not sought for a purpose other than the recovery on the claim; and
(4) The amount to be secured by the attachment is greater than zero.
Each of these elements is comfortably satisfied here. The claim arises from the Distribution Agreement (a commercial contract); the probable validity of the claim is established by the Award itself, which constitutes a final and binding determination by a neutral tribunal; the attachment is sought solely for recovery purposes; and the amount to be secured is $47,300,000 plus accruing interest.
B. Applicability in Confirmation Proceedings
An important threshold question is whether a petition to confirm an arbitration award constitutes a qualifying "claim" for attachment purposes under the California attachment statute. The statute is framed in terms of "actions" on a "claim" arising from a contract, and a petition to confirm an arbitration award is arguably not a traditional "action" in the sense contemplated by the attachment statute.
However, courts have treated petitions to confirm arbitration awards as functionally equivalent to contract claims for attachment purposes, particularly where the underlying dispute arose from a contractual relationship and the award addresses contractual damages. The petition seeks to reduce the Award to a judgment — an exercise that is ministerial in nature given the extremely narrow grounds for vacatur under 9 U.S.C. § 10. The existence of the Award provides overwhelming evidence of probable validity, as the petitioner has already obtained a favorable merits determination from a neutral tribunal. The narrow grounds for vacatur — evident partiality, corruption, and excess of authority — do not go to the merits of the underlying claim and are rarely sustained.
We are confident that the Court would find the attachment statute applicable to the confirmation proceeding, though this issue should be briefed carefully in the application.
C. Practical Considerations
From a practical standpoint, attachment is most valuable as a mechanism for encumbering Meridian's real property. An attachment lien on the Ontario distribution center would serve as a lis pendens-like device, providing notice to potential purchasers that the property is subject to a pending claim and effectively preventing Meridian from selling or further encumbering the property during the pendency of the confirmation proceedings. This protects Halcyon's ability to reach the property through execution after judgment.
For personal property, the practical value of attachment is more limited because any attachment lien would be subordinate to Brindoval's prior perfected security interest. An attachment lien on accounts receivable, inventory, or equipment would not displace Brindoval's priority claim and would provide Halcyon with only a junior lien position — the same position Halcyon would obtain through a post-judgment execution lien. The primary benefit of attachment on personal property would be to establish Halcyon's priority relative to other unsecured or judgment creditors that might seek to levy on Meridian's assets during the same period.
Attachment on Calloway's personal assets is also available and should be pursued. To the extent Calloway holds real property, bank accounts, or other assets that are not subject to any prior security interest, an attachment lien would provide Halcyon with first-priority access to those assets up to the $10,000,000 guaranty cap.
Alternative approach. We are separately preparing an ex parte application for a temporary restraining order and order to show cause regarding a preliminary injunction for asset preservation. A TRO/PI may be faster and more flexible than the statutory attachment procedure, as it does not require compliance with the specific procedural requirements of the attachment statute and can be tailored to address the specific dissipation risks identified in this memorandum. We recommend pursuing both tracks in parallel and deploying whichever mechanism is most effective under the circumstances.
D. Undertaking Requirement
California Code of Civil Procedure § 489.210 requires the petitioner seeking an attachment to file an undertaking (bond) in an amount not less than $10,000. The court has discretion to set the undertaking at a higher amount if it determines that the defendant may suffer damages in excess of $10,000 as a result of a wrongful attachment. Given the magnitude of the amounts at issue, the Court may set the undertaking at a level higher than the statutory minimum — potentially in the range of $50,000 to $250,000, depending on the scope of the attachment sought and the Court's assessment of the risk of wrongful attachment.
We recommend discussing the undertaking requirement with the Client in advance of filing the application so that Halcyon is prepared to post a bond promptly. The cost of the bond (typically 1–3% of the bond amount per year, paid to a surety company) is modest relative to the amounts at stake and should not deter the pursuit of attachment relief.
VIII. Judgment Domestication in Delaware
A. Rationale.  Meridian is a Delaware corporation with its registered agent located at 1209 Orange Street, Wilmington, Delaware 19801. While Meridian's principal operations and most of its identifiable tangible assets are located in California, domestication of the California federal judgment in Delaware provides several significant enforcement advantages.
First, Meridian may maintain bank accounts or other financial assets in Delaware or at institutions that are amenable to service of process in Delaware. Delaware is a major financial center, and many corporations maintain banking relationships with Delaware-based institutions. A domesticated judgment in Delaware would enable Halcyon to issue writs of execution and garnishment through the Delaware courts, reaching any accounts or assets held in Delaware.
Second, as Meridian's state of incorporation, Delaware is the jurisdiction in which Meridian's corporate existence is defined and regulated. A domesticated judgment may provide additional enforcement leverage — for example, by enabling Halcyon to pursue remedies against Meridian's corporate franchise or to interfere with Meridian's ability to conduct business through its Delaware charter if the judgment remains unsatisfied.
Third, domestication in Delaware establishes a judgment lien that may reach Meridian's interests in any Delaware-located property or receivables owed by Delaware-based entities. Given that Meridian operates in the specialty electronics distribution market — a market in which many suppliers and customers are headquartered in or maintain significant operations in Delaware — there may be garnishable receivables from Delaware-based account debtors.
Finally, domestication is a low-cost, low-effort procedure that provides additional optionality at minimal downside. There is no strategic reason to limit the enforcement footprint to California when domestication in Delaware is readily available.
B. Procedure.  Delaware has adopted the Uniform Enforcement of Foreign Judgments Act, codified at 10 Del. C. §§ 4781–4785. The procedure for registering a foreign judgment in Delaware is largely ministerial and can be accomplished within days of obtaining the California judgment:
(1) Obtain an authenticated copy of the California federal judgment (certified by the clerk of the U.S. District Court for the Central District of California).
(2) File the authenticated copy with the Prothonotary of the Delaware Superior Court in the appropriate county (likely New Castle County, where Meridian's registered agent is located).
(3) File an affidavit setting forth the name and last known address of the judgment debtor and the judgment creditor.
(4) Pay the applicable filing fee.
Upon filing, the California judgment is treated as a judgment of the Delaware Superior Court for all enforcement purposes. The Prothonotary issues notice to the judgment debtor, and the judgment becomes enforceable in Delaware after the expiration of the applicable notice period (typically 30 days), subject to any challenge by the judgment debtor on the limited grounds recognized under the statute (principally, that the judgment has been satisfied, vacated, or stayed).
C. Calloway Personal Assets in Delaware
In addition to domesticating the judgment against Meridian in Delaware, we should investigate whether Calloway holds any personal assets — bank accounts, brokerage accounts, real property, or interests in business entities — in Delaware or in other states beyond California. If Calloway maintains assets in Delaware, the domesticated judgment would enable enforcement against those assets. If Calloway holds assets in other jurisdictions (e.g., Nevada, New York, Florida, or other states), we should consider domesticating the judgment in those jurisdictions as well, pursuant to the applicable foreign judgment registration statutes in each state. Our personal asset searches for Calloway will be designed to identify the relevant jurisdictions.
IX. Summary of Recovery Scenarios
Based on the analysis set forth in this memorandum, we outline three illustrative recovery scenarios. These scenarios are intended to bracket the range of possible outcomes and to identify the key variables that will determine where within that range the actual recovery falls. All scenarios are subject to significant uncertainty and will be refined as additional information is obtained through the title search, UCC searches, personal asset searches, and post-j