PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGED ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP One Liberty Plaza, 42nd Floor New York, NY 10006 Tel: (212) 555-8200
Fax: (212) 555-8201
MEMORANDUM
January 30, 2026
Matter No.: 1032-00003
To: Vivienne St. Claire, Responsible Partner, Capital Markets Robert Adeyemi, Billing Partner, Capital Markets
From: Claire Dempsey, Lead Associate, Capital Markets Audrey Zhou, Working Associate, Capital Markets
Re: Halcyon Semiconductor AG — US ADR IPO: Lock-Up and Selling Shareholder Structuring Considerations
I. Executive Summary
This memorandum analyzes the contractual lock-up arrangements, selling shareholder structuring, Regulation S flowback considerations, and Rule 144 applicability in connection with the proposed initial public offering in the United States (the "IPO" or the "Offering") by Halcyon Semiconductor Aktiengesellschaft, a German stock corporation organized under the laws of the Federal Republic of Germany ("Halcyon," "HSAG," or the "Company"), of American Depositary Shares ("ADSs"), each representing two ordinary shares (Stammaktien), no par value, of Halcyon, pursuant to a Level III American Depositary Receipt program (the "ADR Program"). The ADSs will trade at a ratio of one ADS to two ordinary shares (the "ADS Ratio"). The Offering will be registered on a Form F-1 registration statement under the Securities Act of 1933, as amended (the "Securities Act"), and the ADSs are expected to be listed on the Nasdaq Global Select Market under the ticker symbol "HCYN."
The Offering targets aggregate gross proceeds of approximately $900,000,000 on the base deal, comprising (i) 15,000,000 primary ADSs representing 30,000,000 newly issued ordinary shares to be offered by Halcyon and (ii) 6,400,000 secondary ADSs representing 12,800,000 existing ordinary shares to be offered by two selling shareholders: Rheintal Industrieholding GmbH ("Rheintal"), a Wendt family holding company organized in Düsseldorf, Germany, which will sell 8,500,000 ordinary shares (4,250,000 ADSs), and Kestrel Capital Partners AG ("Kestrel"), a European technology-focused investment fund organized in Glenrock Assurance, Switzerland, which will sell 4,300,000 ordinary shares (2,150,000 ADSs). The target pricing date for the Offering is July 1, 2026, with closing and settlement expected on July 6, 2026, on a T+2 basis. The underwriters will have a 30-day option to purchase up to 3,210,000 additional ADSs (the "Overallotment Option" or "Greenshoe") to cover overallotments, exercisable through July 31, 2026.
The lock-up period will be 180 calendar days from the pricing date, commencing on July 1, 2026 and expiring on December 28, 2026. Westbridge Securities LLC ("Westbridge"), the lead left bookrunner and representative of the several underwriters, will serve as the lock-up consent agent and will have sole authority to grant waivers or early releases from the lock-up restrictions.
This memorandum addresses the following principal topics in connection with the Offering:
(A) the structure and scope of the 180-day lock-up agreements, including the company lock-up, selling shareholder lock-up, and officer and director lock-ups, together with key drafting considerations and carve-outs;
(B) the selling shareholder secondary offering mechanics, including share deposit procedures, the custody and power of attorney arrangements, selling shareholder representations and warranties, and German law coordination matters;
(C) Regulation S flowback risks arising from the concurrent offshore offering and the operational mitigants available through the Deposit Agreement and the underwriting agreement, including the treatment of flowback risk during and after the 40-day distribution compliance period;
(D) the applicability of Rule 144 under the Securities Act to the selling shareholders and to Halcyon's officers and directors following the expiration of the lock-up period, including affiliate versus non-affiliate analysis for each significant holder and the volume, manner of sale, and filing requirements applicable to affiliate sales; and
(E) the lock-up consent and waiver mechanics, including the authority of Westbridge to grant waivers, public disclosure requirements under Nasdaq rules, and partial release considerations.
This memorandum follows the organizational meeting held on January 22, 2026 and reflects the commencement of due diligence on January 27, 2026. The analysis below is based on the current transaction structure as described by the working group and is subject to revision as the offering terms are finalized.
II. Background — Offering Structure and Key Parties
A. Halcyon Semiconductor AG — The Issuer
Halcyon Semiconductor Aktiengesellschaft is a German stock corporation (Aktiengesellschaft) incorporated and existing under the laws of the Federal Republic of Germany, registered with the commercial register (Handelsregister) of the local court (Amtsgericht) of Munich under registration number HRB 217458. Halcyon's registered office is in Munich, Germany. The Company is a leading European designer and manufacturer of advanced semiconductor components for automotive, industrial, and Internet-of-Things applications.
Halcyon's ordinary shares (Stammaktien), no par value, are currently admitted to trading on the Frankfurt Stock Exchange (Frankfurter Wertpapierbörse) under the ticker symbol "HCY" in the Prime Standard segment of the Regulated Market (Regulierter Markt), which imposes enhanced transparency obligations including quarterly financial reporting, adherence to the German Corporate Governance Code, and English-language disclosure requirements.
As of the date of this memorandum, Halcyon has 215,000,000 ordinary shares outstanding. Following the issuance of 30,000,000 new ordinary shares in the primary portion of the Offering, the Company will have 245,000,000 ordinary shares outstanding (assuming no exercise of the Overallotment Option).
In connection with the Offering, Halcyon will file a Registration Statement on Form F-1 with the U.S. Securities and Exchange Commission (the "SEC") under the Securities Act to register the ADSs to be offered and sold in the United States. The ADSs are expected to be listed on the Nasdaq Global Select Market under the ticker symbol "HCYN." Halcyon qualifies as a "foreign private issuer" as defined in Rule 3b-4 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and intends to report on foreign private issuer forms, filing annual reports on Form 20-F and furnishing current reports on Form 6-K.
B. Selling Shareholders
The Offering includes a secondary component in which two selling shareholders will offer an aggregate of 12,800,000 existing ordinary shares (represented by 6,400,000 ADSs) to the public.
1. Rheintal Industrieholding GmbH. Rheintal Industrieholding GmbH is a limited liability company (Gesellschaft mit beschränkter Haftung) organized under the laws of Germany, with its registered office at Königsallee 60, 40212 Düsseldorf, Germany. Rheintal serves as the principal holding vehicle of the Wendt family and is managed by Margarethe Wendt, who serves as sole Managing Director (Geschäftsführerin). Ms. Wendt is the sister of Dr. Friedrich Wendt, who serves as Chief Executive Officer (Vorstandsvorsitzender) of Halcyon.
Prior to the Offering, Rheintal holds 47,945,000 ordinary shares of Halcyon, representing approximately 22.3% of the total outstanding ordinary shares. In the Offering, Rheintal will sell 8,500,000 ordinary shares, which will be represented by 4,250,000 ADSs. Following the Offering, and assuming no exercise of the Overallotment Option, Rheintal will retain 39,445,000 ordinary shares, representing approximately 16.1% of the post-Offering outstanding ordinary shares (39,445,000 ÷ 245,000,000).
The familial relationship between Margarethe Wendt and Dr. Friedrich Wendt is a material related-party consideration that will require prominent disclosure in the prospectus. Additionally, Rheintal's reduction in ownership from approximately 22.3% to approximately 16.1% will cross below the 20% notification threshold under the German Securities Trading Act (Wertpapierhandelsgesetz, "WpHG"), triggering a mandatory notification to the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, "BaFin") and to Halcyon, as discussed further in Section V.E below.
2. Kestrel Capital Partners AG. Kestrel Capital Partners AG is a stock corporation (Aktiengesellschaft) organized under the laws of Switzerland, with its registered office at Bahnhofstrasse 36, 8001 Glenrock Assurance, Switzerland. Kestrel is a European technology-focused investment fund managed by Henrik Sørensen, who serves as Managing Partner. Kestrel invests in growth-stage and pre-IPO European technology companies, with a particular emphasis on semiconductor, advanced materials, and deep-tech enterprises.
Prior to the Offering, Kestrel holds 20,855,000 ordinary shares of Halcyon, representing approximately 9.7% of the total outstanding ordinary shares. In the Offering, Kestrel will sell 4,300,000 ordinary shares, which will be represented by 2,150,000 ADSs. Following the Offering, and assuming no exercise of the Overallotment Option, Kestrel will retain 16,555,000 ordinary shares, representing approximately 6.8% of the post-Offering outstanding ordinary shares (16,555,000 ÷ 245,000,000).
Kestrel's reduction in ownership from approximately 9.7% to approximately 6.8% will cross below the 10% notification threshold under the WpHG, likewise triggering a mandatory notification obligation to BaFin and to Halcyon.
C. Underwriting Syndicate
The following investment banks will serve as underwriters for the Offering:
Lead Left Bookrunner / Representative of the Underwriters:
Westbridge Securities LLC 383 Madison Avenue New York, NY 10179
Attention: Jonathan Hartwell, Managing Director, Global Equity Capital Markets
Westbridge will serve as the lead left bookrunner, the representative of the several underwriters for purposes of the underwriting agreement, and the lock-up consent agent with sole authority to waive or modify the lock-up restrictions.
Joint Bookrunners:
Pinnacle Morgan & Co., Inc. 200 Park Avenue New York, NY 10166
Attention: Sarah Okonkwo
Andover Barcliffe Group Inc. 1251 Avenue of the Americas New York, NY 10020
Attention: David Reinhardt
Co-Manager:
Northpointe Capital LLC 140 Broadway New York, NY 10005
Attention: Lisa Cheng
Underwriters' U.S. Counsel:
Varen & Kessler LLP 51 West 52nd Street New York, NY 10019
Attention: Martin Ashford, Partner
D. Other Key Parties
ADR Depositary:
Meridian Trust Company, N.A. 101 Barclay Street New York, NY 10286
Attention: Patricia Novak
Meridian Trust Company, N.A. will serve as the depositary bank under the Deposit Agreement and will be responsible for the issuance and cancellation of ADSs, the receipt and custody of ordinary shares deposited with the German custodian, and the administration of the ADR Program.
Transfer Agent / ADS Registrar:
Crestfield Transfer Services Inc. 6201 15th Avenue Brooklyn, NY 11219
Attention: Angela Moretti
German Counsel to Halcyon:
Bähr Stein Rechtsanwälte PartGmbB Bockenheimer Landstraße 20 60323 Frankfurt am Main, Germany
Attention: Dr. Christoph Maurelban
German Counsel to Underwriters:
Prumvane Thornton LLP Neue Mainzer Straße 52 60311 Frankfurt am Main, Germany
Attention: Dr. Stefan Braun
E. Post-Offering Capitalization Summary
The following table summarizes Halcyon's capitalization immediately before and after the Offering:
The Halcyon Employee Stock Ownership Trust (the "ESOT") holds 6,665,000 ordinary shares, representing approximately 3.1% of pre-Offering shares and approximately 2.7% of post-Offering shares. The ESOT is administered by a trustee whose identity is to be confirmed in due diligence; the treatment of ESOT shares under the lock-up arrangements is discussed in Section III.D below.
F. Offering Economics
The following table summarizes the principal economic terms of the Offering as currently contemplated:
The Overallotment Option permits the underwriters, exercisable for a period of 30 calendar days from the pricing date, to purchase up to 3,210,000 additional ADSs (representing 15% of the base deal) at the public offering price, less the underwriting discount. If the Overallotment Option is exercised in full, the maximum aggregate offering size would be approximately 24,610,000 ADSs, with maximum gross proceeds of approximately $1,034,812,600 at the assumed midpoint price. The source of the ADSs issuable upon exercise of the Overallotment Option (i.e., whether from newly issued primary shares, additional secondary shares from the selling shareholders, or a combination thereof) remains an open item requiring resolution with Westbridge and the Company, as discussed further in Section V.F below.
III. Lock-Up Agreements — Structure and Scope
A. Overview. The lock-up arrangements in connection with the Offering will involve three categories of signatories, each subject to substantially similar restrictions on the transfer and disposition of Halcyon securities during the 180-day period following the pricing of the Offering:
(i) Halcyon Semiconductor AG (the Company), whose lock-up obligations will be set forth in the underwriting agreement between the Company, the selling shareholders, and the several underwriters (the "Underwriting Agreement");
(ii) Selling shareholders (Rheintal Industrieholding GmbH and Kestrel Capital Partners AG), each of which will execute a separate lock-up letter agreement in favor of Westbridge as representative of the underwriters; and
(iii) Officers and directors of Halcyon (members of the Vorstand and Aufsichtsrat), each of whom will execute individual lock-up letter agreements in favor of Westbridge.
The lock-up beneficiary and consent agent will be Westbridge Securities LLC, in its capacity as representative of the several underwriters. The lock-up period will run for 180 calendar days from the pricing date, which, based on the target pricing date of July 1, 2026, would result in a lock-up expiration date of December 28, 2026.
The lock-up arrangements will be documented in two principal instruments: (a) the Underwriting Agreement, which will contain the Company's lock-up covenant as a standalone provision, and (b) individual lock-up letter agreements (each, a "Lock-Up Agreement" or "Lock-Up Letter") executed by each selling shareholder, officer, and director, addressed to and delivered in favor of Westbridge. The execution and delivery of all Lock-Up Agreements will be a condition precedent to the closing of the Offering under the Underwriting Agreement. The Lock-Up Agreements will be governed by, and construed in accordance with, the laws of the State of New York, consistent with the governing law provision of the Underwriting Agreement.
B. Company Lock-Up
Halcyon will covenant in the Underwriting Agreement that, during the lock-up period, without the prior written consent of Westbridge, the Company will not, directly or indirectly:
(a) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right, or warrant for the sale of, or otherwise transfer or dispose of, any ordinary shares, ADSs, or any securities convertible into, or exercisable or exchangeable for, ordinary shares or ADSs (including, without limitation, ordinary shares or ADSs that may be deemed to be beneficially owned by the Company in accordance with the rules and regulations of the SEC);
(b) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of ordinary shares or ADSs, whether any such transaction described in clause (a) or (b) above is to be settled by delivery of ordinary shares, ADSs, or other securities, in cash, or otherwise; or
(c) file or cause to be filed any registration statement with the SEC relating to the offering of any ordinary shares, ADSs, or any securities convertible into, or exercisable or exchangeable for, ordinary shares or ADSs, other than (I) a registration statement on Form S-8 (or any successor form) relating to employee benefit plans or equity compensation plans described in the prospectus, and (II) any required post-effective amendment to the Registration Statement on Form F-1 filed in connection with the Offering.
The Company lock-up will be subject to the following customary exceptions, which will permit the Company to issue shares in specified circumstances without triggering a violation of the lock-up:
(i) ordinary shares issued pursuant to existing employee benefit plans or the ESOT, in each case as described in the prospectus included in the Registration Statement;
(ii) ordinary shares issued upon the exercise of options or warrants, or the settlement of restricted stock units, outstanding as of the pricing date and described in the prospectus; and
(iii) ordinary shares issued as consideration in connection with bona fide acquisitions of businesses, assets, or technologies, or in connection with strategic joint ventures or partnerships, provided that each recipient of such shares executes and delivers a Lock-Up Agreement covering such shares for the remainder of the lock-up period, and provided further that the aggregate number of ordinary shares issued pursuant to this exception does not exceed 5% of the total ordinary shares outstanding immediately after the closing of the Offering.
These exceptions are standard in US IPO lock-up practice and provide the Company with the operational flexibility necessary to administer its equity compensation programs and to pursue strategic transactions during the lock-up period without compromising the protective purpose of the lock-up for investors and the underwriters.
C. Selling Shareholder Lock-Up
Each of Rheintal Industrieholding GmbH and Kestrel Capital Partners AG will execute a separate Lock-Up Agreement in the form of a letter addressed to Westbridge Securities LLC, as representative of the several underwriters. The selling shareholder Lock-Up Agreements will contain restrictions that are substantively parallel to the Company lock-up described above but tailored to the individual circumstances of each selling shareholder.
Scope of Restriction. Each selling shareholder will agree that, during the 180-day lock-up period commencing on the pricing date (July 1, 2026) and ending on December 28, 2026, without the prior written consent of Westbridge, such selling shareholder will not, directly or indirectly:
(a) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right, or warrant for the sale of, lend, or otherwise transfer or dispose of, any ordinary shares, ADSs, or any securities convertible into, or exercisable or exchangeable for, ordinary shares or ADSs, that are beneficially owned by such selling shareholder (including, without limitation, ordinary shares or ADSs that may be acquired after the pricing date);
(b) enter into any swap, hedge, short sale, or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any ordinary shares or ADSs beneficially owned by such selling shareholder; or
(c) make any demand for, or exercise any right with respect to, the registration of any ordinary shares or ADSs, or any securities convertible into or exercisable or exchangeable for ordinary shares or ADSs.
Rheintal Retained Shares. Following the completion of the Offering (assuming no exercise of the Overallotment Option), Rheintal will retain 39,445,000 ordinary shares, representing approximately 16.1% of post-Offering ordinary shares. All 39,445,000 retained shares will be subject to the 180-day lock-up.
Kestrel Retained Shares. Following the completion of the Offering (assuming no exercise of the Overallotment Option), Kestrel will retain 16,555,000 ordinary shares, representing approximately 6.8% of post-Offering ordinary shares. All 16,555,000 retained shares will be subject to the 180-day lock-up.
Special Considerations — Rheintal. Because Rheintal is a family holding company of the Wendt family, controlled by Margarethe Wendt (sister of the Company's CEO, Dr. Friedrich Wendt), particular care must be taken in drafting the Rheintal Lock-Up Agreement to ensure that the restrictions capture not only direct transfers by Rheintal itself but also any indirect transfers to family members, family trusts, charitable entities controlled by the Wendt family, or other vehicles through which the economic ownership of Halcyon shares might be transferred or reallocated. We recommend that the Rheintal Lock-Up Agreement expressly provide that the restrictions apply to any transfer of ordinary shares or ADSs to any member of the Wendt family (by blood or marriage), to any trust or estate for the benefit of any such family member, or to any entity directly or indirectly controlled by any such family member, except that a carve-out should be provided for bona fide estate planning transfers where the transferee executes a joinder agreement agreeing to be bound by the terms of the Lock-Up Agreement for the remainder of the lock-up period.
Special Considerations — Kestrel. Because Kestrel is an institutional investment fund, the lock-up should expressly cover distributions of Halcyon ordinary shares or ADSs to Kestrel's limited partners, fund investors, or affiliated vehicles. In the absence of such a provision, Kestrel could technically circumvent the lock-up by distributing in-kind shares to its investors, who would then be free to sell on the open market. We recommend a customary carve-out permitting pro rata in-kind distributions to limited partners or fund investors, but only if each recipient agrees in writing to be bound by the terms of the Lock-Up Agreement for the remainder of the lock-up period.
D. Officer and Director Lock-Up
Each member of the Vorstand (Management Board) and the Aufsichtsrat (Supervisory Board) of Halcyon will execute an individual Lock-Up Agreement in the same form as the selling shareholder Lock-Up Agreements, subject to certain additional carve-outs appropriate for executive compensation arrangements.
Covered Individuals. Based on the information provided to date, the following individuals are expected to execute Lock-Up Agreements:
Vorstand (Management Board):
• Dr. Friedrich Wendt — Chief Executive Officer (Vorstandsvorsitzender)
• Katarina Dalmqvist — Chief Financial Officer
• Dr. Marcus Helder — Chief Technology Officer
• Ingrid Baumann — Chief Operating Officer
• Wilhelm Ostermann — General Counsel
Aufsichtsrat (Supervisory Board):
• Prof. Dr. Anneliese Voss — Chair
• Additional Supervisory Board members to be confirmed upon completion of due diligence
Scope of Restriction. Each officer and director will agree that, during the 180-day lock-up period, without the prior written consent of Westbridge, such officer or director will not, directly or indirectly, offer, sell, pledge, transfer, hedge, or otherwise dispose of any ordinary shares, ADSs, or derivative securities of Halcyon that are beneficially owned by such officer or director, on the same terms as described in Section III.C above.
Carve-Outs. The officer and director Lock-Up Agreements will include the following customary exceptions to the transfer restrictions:
(i) Estate planning transfers. Transfers of ordinary shares or ADSs as bona fide gifts or for estate planning purposes, including transfers to a trust for the benefit of the officer or director or his or her immediate family members, provided that the transferee executes a written agreement to be bound by the terms of the Lock-Up Agreement for the remainder of the lock-up period, and provided further that no filing under Section 16(a) of the Exchange Act or other public filing or announcement is required or voluntarily made in connection with such transfer during the lock-up period (other than a filing on Form 4 required to be made after the expiration of the lock-up period).
(ii) Transfers by operation of law. Transfers of ordinary shares or ADSs pursuant to a court order, a qualified domestic relations order, or by operation of law (such as by intestate succession), provided that the transferee agrees to be bound by the terms of the Lock-Up Agreement for the remainder of the lock-up period.
(iii) Establishment of 10b5-1 trading plans. The establishment of a written trading plan meeting the requirements of Rule 10b5-1(c)(1) under the Exchange Act, provided that (a) no sales of ordinary shares, ADSs, or derivative securities are effected under such plan during the lock-up period, and (b) no public filing, announcement, or other disclosure of the establishment of such plan is made during the lock-up period (unless such filing or announcement is required by applicable law or regulation).
(iv) Option exercises. The exercise of options to acquire ordinary shares or ADSs granted under Halcyon's equity compensation plans, provided that the underlying shares received upon such exercise remain subject to the terms of the Lock-Up Agreement for the remainder of the lock-up period and that no sale, transfer, or other disposition of such shares occurs during the lock-up period.
(v) Tax withholding sales. Sales of ordinary shares or ADSs to the Company or on the open market solely to cover tax withholding obligations arising in connection with the vesting of restricted share units, performance share units, or other equity-based compensation, provided that (a) such sales are limited to the minimum number of shares necessary to satisfy the applicable tax withholding obligation, and (b) no public announcement or Form 4 filing is voluntarily made in connection with such sales during the lock-up period (other than any filing required by applicable law or regulation within the required time period).
ESOT Shares. The Halcyon Employee Stock Ownership Trust holds 6,665,000 ordinary shares, representing approximately 3.1% of pre-Offering shares and approximately 2.7% of post-Offering shares. These shares represent a potentially significant source of selling pressure if they are not subject to the lock-up. We recommend that the ESOT trustee (whose identity is to be confirmed) be required to execute a Lock-Up Agreement covering the ESOT shares for the full 180-day lock-up period. Failure to lock up the ESOT shares could create market overhang and would be inconsistent with market practice for IPOs involving significant employee ownership vehicles. The ESOT Lock-Up Agreement should include an exception permitting distributions of shares to employees under the terms of the ESOT plan documents, provided that each receiving employee who is subject to his or her own individual Lock-Up Agreement (i.e., officers and directors) remains bound by such agreement, and provided further that any employee who is not otherwise subject to a Lock-Up Agreement agrees to be bound by a lock-up for the remainder of the 180-day period.
E. Lock-Up Mechanics — Key Drafting Considerations
The following additional drafting and procedural considerations apply to the Lock-Up Agreements:
Form of Lock-Up Letter. The Lock-Up Agreements will be in the form of individual letters executed by each signatory and addressed to Westbridge Securities LLC, as representative of the several underwriters. We will prepare a master form of Lock-Up Agreement and circulate it to Westbridge and Varen & Kessler LLP (underwriters' counsel) for comment. Separate forms may be prepared for (a) officers and directors, (b) Rheintal (tailored for family transfer provisions), and (c) Kestrel (tailored for fund distribution provisions), although the substantive restrictions should be materially consistent across all forms.
Delivery Requirement. The execution and delivery of all Lock-Up Agreements by each person identified on the lock-up signatory list will be a condition precedent to the obligation of the underwriters to close the Offering under the Underwriting Agreement. Section of the Underwriting Agreement (conditions to closing) will provide that the underwriters shall have received, on or prior to the closing date, executed Lock-Up Agreements from each of the persons listed on Schedule thereto. We recommend that collection of executed Lock-Up Agreements begin no later than the filing of the preliminary prospectus (the "red herring") and be completed prior to the commencement of the roadshow.
Cross-Reference to Underwriting Agreement. Each Lock-Up Agreement will reference the Underwriting Agreement and the Offering to which it relates, and will provide that the restrictions thereunder will automatically terminate upon (i) the expiration of the 180-day lock-up period, (ii) the date on which the Underwriting Agreement is terminated prior to closing, or (iii) written notice from Westbridge to the signatory that the lock-up restrictions are being waived.
Governing Law and Dispute Resolution. Each Lock-Up Agreement will be governed by the laws of the State of New York, without regard to principles of conflicts of laws. Consistent with the Underwriting Agreement, the Lock-Up Agreements will include consent to the exclusive jurisdiction of the federal and state courts located in the Borough of Manhattan, City of New York.
IV. Lock-Up Consent and Waiver Mechanics
A. Consent Authority
Westbridge Securities LLC, in its capacity as lead left bookrunner and representative of the several underwriters, will have the sole and exclusive authority to waive, release, or consent to the early termination of any or all of the lock-up restrictions set forth in the Lock-Up Agreements and the company lock-up covenant in the Underwriting Agreement. This authority will be vested exclusively in Westbridge, and Westbridge will not be contractually required to consult with the other members of the underwriting syndicate (Pinnacle Morgan & Co., Inc., Andover Barcliffe Group Inc., or Northpointe Capital LLC) prior to granting any such waiver, release, or consent.
As a practical matter, however, market practice and industry custom generally lead the representative to consult informally with the other bookrunners before granting significant waivers, particularly where the early release involves a substantial number of shares or a prominent insider whose sales could materially impact the trading market for the ADSs. The decision whether to consult, and the weight given to any views expressed by syndicate members, remains entirely within Westbridge's discretion.
B. Conditions for Waiver
Westbridge may, in its sole and absolute discretion, release any or all of the securities subject to any Lock-Up Agreement, at any time during the lock-up period, with or without prior notice to the Company or to other locked-up parties. There are no contractual conditions or prerequisites to the grant of a waiver; the Lock-Up Agreements will provide that Westbridge's consent may be granted or withheld "in its sole discretion."
Notwithstanding this broad discretion, in practice, waivers are typically considered and granted in the context of the following types of circumstances:
(i) Material corporate events. Extraordinary merger and acquisition transactions in which Halcyon or a significant shareholder is required to deliver shares as consideration, or in which a third party makes a tender offer or exchange offer for Halcyon shares, may necessitate an early release of lock-up restrictions to facilitate the transaction. In such circumstances, Westbridge will evaluate whether the proposed transaction is in the interests of the market and the offering participants before granting a waiver.
(ii) Margin call or financial distress. If a locked-up party has pledged ordinary shares as collateral for a loan (notwithstanding the pledging restriction in the Lock-Up Agreement), or if a locked-up party is experiencing financial distress that requires liquidation of Halcyon shares, Westbridge may, in limited circumstances, grant a partial or full waiver to prevent a disorderly disposition of shares.
(iii) Estate planning and tax-driven transfers. While the Lock-Up Agreements include carve-outs for certain estate planning transfers (as described in Section III.D above), more complex estate or tax planning transactions that do not fall within the express carve-outs may require a specific waiver from Westbridge. Examples include contributions of shares to charitable foundations, exchanges of shares in connection with family restructurings, or transfers in anticipation of changes in tax law.
(iv) Secondary offerings or block trades. In some cases, selling shareholders may seek to conduct a secondary offering or block trade of their retained shares before the expiration of the full 180-day lock-up period. Westbridge may facilitate such a transaction by granting a partial release, particularly if market conditions are favorable and the transaction can be structured to minimize disruption to the ADS trading market.
C. Public Disclosure of Waivers
The public disclosure of lock-up waivers is governed by a combination of Nasdaq listing standards, FINRA guidance, and SEC disclosure requirements. The following considerations apply:
Under Nasdaq rules and applicable FINRA guidance, if Westbridge agrees to release or waive lock-up restrictions for an officer, director, or significant shareholder, Halcyon may be required to publicly announce such release. Specifically, FINRA Rule 5131(d)(2) requires that the lead manager provide Halcyon with notice of an impending release or waiver of a lock-up at least three business days before the effective date of such release or waiver. Halcyon is then expected to announce the impending release or waiver through a press release, a current report on Form 6-K, or other appropriate disclosure mechanism at least two business days before the effective date.
We recommend the following approach to public disclosure of lock-up waivers:
(i) The prospectus should include disclosure stating that Westbridge may, in its sole discretion, release any party from its lock-up obligations at any time, with or without notice to the Company, and that any such release could result in sales of ordinary shares or ADSs that might adversely affect the market price of the ADSs.
(ii) The Lock-Up Agreements and the Underwriting Agreement should include a provision requiring Westbridge to notify Halcyon in writing at least three (3) business days prior to the effective date of any release or waiver that would require public disclosure under applicable Nasdaq rules, FINRA rules, or SEC regulations, in order to provide Halcyon with adequate time to prepare and file a Form 6-K or issue a press release.
(iii) The Company should have a pre-prepared template Form 6-K and press release available on a "shelf" basis so that, in the event Westbridge grants a waiver requiring public disclosure, the announcement can be disseminated within the required timeframe without undue delay.
D. Partial Releases
Westbridge may grant partial releases, meaning that Westbridge may release a portion of a locked-up party's shares from the lock-up restrictions while maintaining the restrictions on the balance. Partial releases are common in range scenarios, including:
(i) situations in which a selling shareholder seeks to conduct a follow-on secondary offering or block trade of a portion of its retained shares after a partial lock-up period has elapsed;
(ii) situations in which a locked-up party requires liquidity for a specific purpose but does not seek to dispose of its entire position; and
(iii) graduated or staggered release programs in which Westbridge agrees to release a specified percentage of locked-up shares on a phased basis (e.g., 25% at 90 days, 25% at 120 days, and the balance at 180 days), although such structured releases are less common in IPO lock-ups and are more typically seen in follow-on offering or SPAC-related contexts.
Any partial release should be documented in writing, specifying the number of shares being released, the identity of the locked-up party, and the date on which the release becomes effective. The remaining locked-up shares should continue to be subject to the full terms of the Lock-Up Agreement until the original expiration date.
V. Selling Shareholder Structuring
A. Mechanics of Secondary Share Sales
The secondary component of the Offering involves the sale by Rheintal and Kestrel of an aggregate of 12,800,000 existing ordinary shares of Halcyon, which will be converted into 6,400,000 ADSs for delivery to the underwriters at closing. The mechanics of this conversion require coordination among the selling shareholders, the German custodian, the depositary, the transfer agent, the Depository Trust Company ("DTC"), and the settlement infrastructure provided by Ashgrove Enterprises Banking AG.
The process will proceed as follows:
Step 1 — Custody Agreement and Power of Attorney. Each selling shareholder will execute a custody agreement and an irrevocable power of attorney in favor of designated attorneys-in-fact (to be determined) authorizing the delivery of the ordinary shares to the German custodian and the subsequent deposit of such shares with the depositary for the issuance of ADSs. The form of custody agreement and power of attorney will be prepared by this firm in coordination with Bähr Stein Rechtsanwälte and will be governed by German law insofar as it relates to the transfer of ordinary shares under German law, and by New York law insofar as it relates to the issuance of ADSs.
Step 2 — Delivery to German Custodian. Prior to the closing date (currently targeted for July 6, 2026), the selling shareholders will deliver their respective ordinary shares — 8,500,000 shares from Rheintal and 4,300,000 shares from Kestrel, for a total of 12,800,000 ordinary shares — to the German sub-custodian designated under the Deposit Agreement. The delivery will be effected through the book-entry settlement infrastructure of Ashgrove Enterprises Banking AG, which serves as the central securities depository for the Frankfurt Stock Exchange and the principal settlement platform for German equity securities.
Step 3 — Issuance of ADSs. Upon confirmation of receipt of the ordinary shares by the German custodian, Meridian Trust Company, N.A., as depositary under the Deposit Agreement, will issue 6,400,000 ADSs (at the ADS Ratio of 1 ADS = 2 ordinary shares) against the deposited ordinary shares. The ADSs will be issued in book-entry form through the facilities of DTC.
Step 4 — Delivery Through DTC. The 6,400,000 ADSs will be delivered through DTC to the accounts of the underwriters on the closing date, July 6, 2026, against payment of the aggregate purchase price in accordance with the Underwriting Agreement. Settlement will occur on a delivery-versus-payment basis.
Step 5 — Distribution of Net Proceeds. Upon settlement, the net proceeds of the secondary offering will be distributed to the selling shareholders. Based on the assumed midpoint offering price of approximately $42.06 per ADS and a gross underwriting discount of 3.50%, the net proceeds to the selling shareholders (on the base deal) will be approximately as follows:
The precise allocation of the underwriting discount between primary and secondary ADSs, and between the two selling shareholders, will be set forth in the Underwriting Agreement and is subject to final negotiation.
B. Selling Shareholder Representations and Warranties
Each selling shareholder will make representations and warranties in the Underwriting Agreement, addressed to the underwriters and the Company, covering the following matters:
(i) Title. Each selling shareholder has, and on the closing date will have, valid and marketable title to the ordinary shares to be sold by it in the Offering, free and clear of all liens, encumbrances, equities, charges, claims, security interests, restrictions on transfer, and other defects of title, and upon delivery of such shares to the German custodian and issuance of ADSs, the underwriters and the purchasers of ADSs will acquire good and valid title to such ADSs, free and clear of all such liens and encumbrances.
(ii) Authority. Each selling shareholder has full legal right, power, and authority to enter into the Underwriting Agreement and the related transaction documents (including the custody agreement and power of attorney), to sell and deliver the shares being sold by it, and to perform its obligations under the Underwriting Agreement. All necessary corporate, partnership, or other organizational approvals and authorizations have been obtained, and the execution, delivery, and performance of the Underwriting Agreement and the related documents do not violate any applicable law, regulation, or organizational document.
(iii) No registration rights violations. The sale of shares by such selling shareholder does not violate any registration rights agreement or other contractual arrangement to which such selling shareholder is a party or by which it or its shares are bound.
(iv) Accuracy of prospectus information. All information furnished by such selling shareholder for inclusion in the Registration Statement and the prospectus is true, correct, and complete in all material respects, and does not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
(v) FINRA affiliations. Each selling shareholder will represent either that it has no affiliation with any member firm of FINRA, or that it has disclosed all such affiliations in the selling shareholder questionnaire (discussed below), in compliance with FINRA Rule 5121 (Public Offerings of Securities with Conflicts of Interest) and related guidance.
C. Selling Shareholder Closing Certificates
On the closing date, each selling shareholder will deliver a closing certificate (the "Selling Shareholder Certificate") to the underwriters confirming the continuing accuracy and completeness of its representations and warranties as of the closing date and confirming its continuing authority to sell and deliver the shares. The Selling Shareholder Certificate will be a condition to closing under the Underwriting Agreement.
The Selling Shareholder Certificates will be executed as follows:
• Rheintal Industrieholding GmbH: Certificate executed by Margarethe Wendt, in her capacity as Managing Director (Geschäftsführerin) of Rheintal, confirming that all representations and warranties made by Rheintal in the Underwriting Agreement are true and correct as of the closing date, that all conditions to closing applicable to Rheintal have been satisfied, and that no event has occurred that would render any such representation or warranty untrue or incorrect.
• Kestrel Capital Partners AG: Certificate executed by Henrik Sørensen, in his capacity as Managing Partner of Kestrel, confirming the same matters described above with respect to Kestrel.
D. Selling Shareholder Questionnaires
Each selling shareholder will be required to complete a detailed selling shareholder questionnaire prior to the filing of the Registration Statement. The questionnaire will elicit information necessary for prospectus disclosure, including:
(i) beneficial ownership of Halcyon ordinary shares and ADSs (including shares held by affiliates and family members);
(ii) any material relationships between the selling shareholder and the Company, its officers, directors, or other affiliates, during the past three years;
(iii) any FINRA-related disclosures, including affiliations with FINRA member firms, underwriting compensation received, or participation in prior offerings;
(iv) intended use of proceeds from the sale (to the extent material);
(v) tax residency and status for withholding and reporting purposes; and
(vi) any other information required by the SEC's disclosure rules for selling shareholder tables and related-party disclosures.
Key Disclosure — Rheintal. The Rheintal questionnaire response will need to disclose that Rheintal is a Wendt family holding company controlled by Margarethe Wendt, who is the sister of Dr. Friedrich Wendt, the CEO of Halcyon. This familial relationship constitutes a related-party matter requiring disclosure in the "Principal and Selling Shareholders" section and potentially in the "Certain Relationships and Related Party Transactions" section of the prospectus. We should coordinate with the Company's German counsel and the Company's own disclosure counsel to ensure consistent and comprehensive disclosure of this relationship throughout the prospectus.
E. German Law Considerations
Coordination with Bähr Stein Rechtsanwälte (Dr. Christoph Maurelban), as German counsel to Halcyon, will be essential with respect to several German law matters arising from the selling shareholder structuring:
(i) Share Type and Transfer Mechanics. We must confirm whether Halcyon's ordinary shares are registered shares (Namensaktien) or bearer shares (Inhaberaktien), as the transfer mechanics differ materially. If the shares are registered shares, transfer requires an endorsement and notification to the Company for entry into the share register (Aktienregister). If the shares are bearer shares, transfer is effected by book-entry transfer through Ashgrove Enterprises without the need for endorsement or share register amendment. Given that Halcyon is listed on the Prime Standard of the Frankfurt Stock Exchange, it is likely that the shares are bearer shares held through the Ashgrove Enterprises system, but this must be confirmed.
(ii) Ashgrove Enterprises Settlement Procedures. The deposit of the selling shareholders' ordinary shares with the German sub-custodian will be effected through the Ashgrove Enterprises settlement infrastructure. Bähr Stein should confirm the operational timeline for Ashgrove Enterprises settlement, including the pre-matching, delivery, and confirmation procedures, to ensure that the deposit can be completed in sufficient time prior to the closing date for Meridian Trust to issue the corresponding ADSs.
(iii) Pre-emptive Rights. Under German stock corporation law (Aktiengesetz), existing shareholders have statutory pre-emptive rights (Bezugsrecht) with respect to new share issuances. The exclusion of pre-emptive rights (Bezugsrechtsausschluss) will be required for the 30,000,000 new primary shares to be issued in the Offering. We note that the pre-emptive rights issue applies only to the primary shares; the secondary shares being sold by Rheintal and Kestrel are existing shares and are not subject to pre-emptive rights. Bähr Stein should confirm that the necessary corporate approvals (Hauptversammlungsbeschluss or existing authorization from authorized capital / genehmigtes Kapital) are in place for the pre-emptive rights exclusion.
(iv) WpHG Major Shareholding Notifications. Under Sections 33 et seq. of the WpHG, holders of voting rights in companies listed on a German regulated market are required to notify BaFin and the company when their holdings cross specified thresholds. The applicable thresholds are 3%, 5%, 10%, 15%, 20%, 25%, 30%, 50%, and 75% of outstanding voting rights.
The following threshold crossings will be triggered by the Offering:
Both Rheintal and Kestrel will need to file notifications with BaFin and Halcyon promptly upon the completion of the Offering, specifying the date on which the threshold was crossed and the resulting percentage of voting rights held. Under Section 33(1) WpHG, the notification must be made "without undue delay" (unverzüglich) and in any event within four trading days after the date on which the shareholder becomes aware of or should have become aware of the crossing. Halcyon will then be required to publish the notification within three trading days of receipt. Bähr Stein should advise on the precise timing and form of these notifications.
F. Overallotment / Greenshoe — Selling Shareholder Participation
The underwriters will have an Overallotment Option to purchase up to 3,210,000 additional ADSs (representing 15% of the 21,400,000 ADSs offered in the base deal) at the public offering price, less the underwriting discount, exercisable for a period of 30 calendar days from the pricing date (i.e., through July 31, 2026). The Overallotment Option is a standard stabilization tool that permits the underwriters to cover overallotments effected in connection with the Offering.
A critical open item is the source of the Greenshoe ADSs. The Greenshoe can be sourced from one of three alternatives:
(a) Primary shares from Halcyon. The Company would issue up to 6,420,000 additional new ordinary shares (representing 3,210,000 ADSs at the ADS Ratio), resulting in further dilution to existing shareholders but maximizing the certainty of proceeds to the selling shareholders.
(b) Secondary shares from selling shareholders. Rheintal and/or Kestrel would sell additional existing ordinary shares into the Greenshoe, reducing their post-Offering holdings further but avoiding additional dilution to other shareholders.
(c) A combination. A split between primary and secondary shares, with the precise allocation to be negotiated.
We recommend discussing this issue with Westbridge and the Company at the earliest opportunity. In our experience with comparable Level III ADR IPOs, the most common structuring is to source the Greenshoe from the Company (primary shares), which provides the selling shareholders with certainty of proceeds and avoids the complexity of additional selling shareholder closing deliveries in connection with the Greenshoe exercise. However, the Company may prefer to limit dilution, and the selling shareholders may prefer to sell additional shares. This is a commercial decision that should be resolved during the initial round of term sheet negotiations.
If the Greenshoe is sourced in whole or in part from the selling shareholders, the selling shareholder Lock-Up Agreements and the Underwriting Agreement will need to be appropriately modified to account for the additional shares being sold, and the post-Offering ownership calculations in Section II.E will need to be updated accordingly.
VI. Regulation S Flowback Considerations
A. Background — Concurrent Regulation S Offering
The Offering contemplates a concurrent offering of ordinary shares (not ADSs) to investors outside the United States in reliance on Regulation S under the Securities Act (the "Regulation S Offering"). The Regulation S Offering will be conducted in coordination with the US registered offering and will be managed by the international affiliates of the underwriters. The ordinary shares sold in the Regulation S tranche will not be registered under the Securities Act, and such shares will be subject to the distribution compliance period and related transfer restrictions under Regulation S.
The Regulation S Offering is a standard component of a dual-tranche international equity offering and is designed to accommodate demand from non-US institutional investors who may prefer to acquire ordinary shares directly (for settlement through Ashgrove Enterprises or Thackeray Partners LLC) rather than ADSs (for settlement through DTC). The book-building process will be integrated across the US and international tranches, with a single order book managed by Westbridge and the other bookrunners.
B. Flowback Risk