CONFIDENTIAL — INTERNAL MEMORANDUM
CALDERWOOD & HARKNESS LLP 399 Park Avenue, 31st Floor, New York, NY 10022 1750 K Street NW, Suite 800, Washington, DC 20006
June 12, 2023
TO: Beatrice Holloway, Responsible Partner, Mergers & Acquisitions (New York) James Prentice, Billing Partner, Mergers & Acquisitions (New York)
FROM: Office of the General Counsel, Calderwood & Harkness LLP — Conflicts Department
RE: Conflict of Interest Check — Representation of Halcyon Semiconductor Aktiengesellschaft in Connection with the Proposed Acquisition of Marlowe Asset Management Photonics Inc.
MATTER NO.: 1032-00004
PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT This memorandum is protected by the attorney-client privilege and the work product doctrine. It is intended solely for internal use by the addressees and authorized personnel within Calderwood & Harkness LLP. Do not distribute, copy, or disclose any portion of this memorandum without the prior written authorization of the Office of the General Counsel.
1. Purpose and Scope of Memorandum
This memorandum documents the results of a comprehensive conflict of interest check conducted across all Calderwood & Harkness LLP ("C&H" or the "Firm") offices worldwide in connection with the proposed representation of Halcyon Semiconductor Aktiengesellschaft ("HSAG"), a publicly traded German semiconductor company listed on the XETRA electronic trading platform under the ticker symbol HLC, headquartered at Industriestraße 44, 01099 Dresden, Saxony, Federal Republic of Germany. HSAG proposes to acquire one hundred percent (100%) of the outstanding equity of Marlowe Asset Management Photonics Inc. ("VPI"), a Delaware C-corporation headquartered at 7400 Ridgeline Parkway, Colorado Springs, Colorado 80919 (the "Proposed Acquisition" or the "Transaction").
The scope of the proposed engagement encompasses multiple workstreams, including but not limited to: (a) mergers and acquisitions advisory in connection with the negotiation and closing of the definitive Stock Purchase Agreement; (b) the preparation, filing, and prosecution of a mandatory joint voluntary notice to the Committee on Foreign Investment in the United States ("CFIUS"), including review, investigation, and negotiation of any National Security Agreement or mitigation measures; (c) intellectual property due diligence and related transactional support; and (d) export control compliance analysis and government contracts review, including assessment of International Traffic in Arms Regulations ("ITAR"), Export Administration Regulations ("EAR"), and related regulatory requirements applicable to VPI's operations and customer base.
The conflict check was initiated on June 10, 2023, immediately following preliminary engagement discussions between the Firm and HSAG's General Counsel, Stefan Lohse, and was completed and updated on June 11, 2023. This memorandum memorializes the results of the conflict check as of the date hereof. The screening encompassed all parties to the Transaction, their known affiliates, principals, officers, directors, adverse parties, financial advisors, lenders, insurers, escrow agents, accounting and tax advisors, opposing counsel, co-counsel, compliance monitors, and all other known transaction participants as identified through engagement intake materials, the draft Stock Purchase Agreement, the commitment letter for the acquisition financing, and preliminary diligence materials provided by HSAG's in-house legal team.
The purpose of this memorandum is to enable the Responsible Partner and the Billing Partner to confirm that the Firm may ethically undertake the proposed representation, consistent with the New York Rules of Professional Conduct (22 NYCRR Part 1200), the District of Columbia Rules of Professional Conduct, and the Firm's internal conflict-of-interest policies and procedures. This memorandum further serves as a permanent record of the conflict check in the Firm's conflicts files.
2. Description of the Proposed Engagement
2.1 Transaction Overview
HSAG proposes to acquire one hundred percent (100%) of the outstanding equity of VPI for a purchase price of approximately $1.42 billion on an all-cash, cash-free/debt-free basis, with a normalized net working capital target of $34.6 million (the "Base Purchase Price"). In addition to the Base Purchase Price, the Transaction includes an earnout provision pursuant to which the Sellers may receive up to $85 million in additional consideration upon the achievement of certain post-closing revenue and EBITDA milestones over a two-year period following the closing date (the "Earnout Consideration"). The maximum aggregate consideration payable in the Transaction, inclusive of the Base Purchase Price and the Earnout Consideration, is therefore $1.505 billion.
2.2 Acquisition Structure
The acquisition will be effected through Halcyon US Holdings Inc. ("Halcyon US Holdings"), a newly formed Delaware C-corporation organized and existing under the laws of the State of Delaware, formed on June 5, 2023, for the sole purpose of serving as the acquisition vehicle in this Transaction. Halcyon US Holdings' registered agent is National Registered Agents of Delaware, located at 160 Greentree Drive, Suite 101, Dover, Delaware 19904. The Employer Identification Number assigned to Halcyon US Holdings is 93-2841067. Upon consummation of the Transaction, VPI will become a wholly owned subsidiary of Halcyon US Holdings, which in turn is a wholly owned subsidiary of HSAG.
2.3 Transaction Documentation
The Stock Purchase Agreement (the "SPA") was executed by the parties on June 10, 2023. The SPA contemplates customary representations, warranties, covenants, indemnification provisions, and closing conditions, including without limitation the receipt of CFIUS clearance or the expiration or termination of the applicable CFIUS review period without action.
2.4 Target Company Description
VPI is a fabless and fab-lite semiconductor company that designs and manufactures advanced gallium-nitride ("GaN") power amplifier chips and related integrated circuit products. VPI's products are utilized in a range of applications, including defense radar systems, satellite communications platforms, and fifth-generation ("5G") wireless infrastructure. VPI holds both classified and unclassified contracts with the United States Department of Defense ("DoD") and maintains a facility security clearance at the SECRET level, administered through the Defense Counterintelligence and Security Agency ("DCSA"). VPI manufactures and supplies components controlled under the International Traffic in Arms Regulations ("ITAR"), 22 C.F.R. Parts 120–130, and the Export Administration Regulations ("EAR"), 15 C.F.R. Parts 730–774, including items listed on the United States Munitions List ("USML") and the Commerce Control List ("CCL"). VPI is registered with the Directorate of Defense Trade Controls ("DDTC") of the U.S. Department of State (DDTC Registration No. M-24817).
Given the defense and national security implications of VPI's operations, the Transaction triggers a mandatory CFIUS filing under Section 721 of the Defense Production Act of 1950, as amended (50 U.S.C. § 4565), and the implementing regulations at 31 C.F.R. Part 800 (as amended by the Foreign Investment Risk Review Modernization Act of 2018 ("FIRRMA") and the 2020 CFIUS Regulations).
2.5 Scope of Calderwood & Harkness LLP Engagement
Calderwood & Harkness LLP will serve as buyer's counsel with primary responsibility for the following workstreams:
(a) CFIUS Filing and Review. Preparation and filing of the mandatory joint voluntary notice to CFIUS; management of the CFIUS review and investigation process; negotiation of any National Security Agreement ("NSA") or other mitigation measures required by CFIUS as a condition to clearance; and coordination with HSAG's German counsel and the Sellers' counsel on CFIUS-related matters.
(b) intellectual Property Due Diligence. Review and assessment of VPI's intellectual property portfolio, including patents, trade secrets, proprietary design libraries, software, and related IP assets; analysis of IP ownership, licensing, encumbrances, and freedom-to-operate considerations; and preparation of IP-related schedules and disclosures for the SPA.
(c) Export Control and Government Contracts Analysis. Review of VPI's ITAR and EAR compliance programs, export licenses, technical assistance agreements ("TAAs"), and manufacturing license agreements ("MLAs"); assessment of VPI's government contracts portfolio, including classified and unclassified prime contracts and subcontracts; analysis of novation, assignment, and change-of-control requirements under applicable government contracts; and assessment of any National Industrial Security Program ("NISP") implications, including facility clearance requirements.
(d) Ancillary M&A Support. As needed, support for the broader M&A workstream in connection with closing conditions, regulatory approvals, and related transactional matters.
2.6 Proposed Engagement Team
The following attorneys have been identified as the proposed engagement team for this matter:
3. Parties Screened
The following is a comprehensive listing of all entities and individuals screened in connection with this conflict check. The parties are organized by category and include all known transaction participants as identified through the engagement intake materials, the executed SPA, financing commitment letters, and preliminary diligence materials.
3.1 Client and Client Affiliates
The following entities and individuals are identified as the prospective client and its affiliates:
(a) Halcyon Semiconductor Aktiengesellschaft (HSAG) — German commercial register number HRB 28416 (Amtsgericht Dresden); Legal Entity Identifier (LEI): 5299007KXQ2M4GHILZ38; publicly traded on the XETRA electronic trading platform under the ticker symbol HLC; headquarters at Industriestraße 44, 01099 Dresden, Saxony, Federal Republic of Germany.
(b) Halcyon US Holdings Inc. — Employer Identification Number (EIN): 93-2841067; Delaware C-corporation formed June 5, 2023; newly formed acquisition vehicle and wholly owned subsidiary of HSAG; registered agent: National Registered Agents of Delaware, 160 Greentree Drive, Suite 101, Dover, Delaware 19904.
(c) Halcyon US Inc. — EIN: 81-3056429; existing U.S. subsidiary of HSAG; located at 11501 Alterra Parkway, Suite 300, Austin, Texas 78758. This entity is HSAG's existing U.S. operational subsidiary and is not the acquisition vehicle but is included in the screening as a client affiliate.
(d) Dr. Maximilian Ehrhardt — Chief Executive Officer (Vorstandsvorsitzender), HSAG.
(e) Katarina Brückner — Chief Financial Officer (Finanzvorstand), HSAG.
(f) Stefan Lohse — General Counsel (Chefjustitiar), HSAG. Mr. Lohse holds an LL.M. from Georgetown University Law Center and is admitted to practice law in the State of New York and the Federal Republic of Germany.
3.2 Target Company and Its Principals
The following entities and individuals are identified as the target company and its officers, directors, and key personnel:
(a) Marlowe Asset Management Photonics Inc. (VPI) — EIN: 26-4371885; incorporated February 14, 2009, in the State of Delaware; CAGE Code: 7VK92; DUNS Number: 07-812-4493; DDTC Registration No. M-24817; headquarters at 7400 Ridgeline Parkway, Colorado Springs, Colorado 80919.
(b) Dr. Nathan Trevorrow — Founder, Chief Executive Officer, and Chairman of the Board of Directors, VPI.
(c) Marissa Sung-Avila — President and Chief Operating Officer, VPI.
(d) Derek Wainsborough — Chief Financial Officer, VPI.
(e) Col. (Ret.) Bryce Hendrickson — Vice President, Government Programs, and Facility Security Officer ("FSO"), VPI.
(f) Adrienne Delacroix — Independent Director, VPI Board of Directors.
3.3 Selling Shareholders and Their Affiliates
The following entities and individuals are identified as the selling shareholders in the Transaction and their respective affiliates:
(a) Dr. Nathan Trevorrow (and family trusts) — Approximately 22.4% ownership of the outstanding equity of VPI. Dr. Trevorrow is also the CEO and Board Chair of VPI, as noted in Section 3.2(b) above.
(b) Marissa Sung-Avila — Approximately 4.1% ownership of the outstanding equity of VPI. Ms. Sung-Avila is also the President and COO of VPI, as noted in Section 3.2(c) above.
(c) Ridgecrest Ventures Fund III, L.P. — Approximately 31.7% ownership of the outstanding equity of VPI. General partner: Ridgecrest Ventures Management LLC. Principal: Franklin Yee, Managing Partner. Address: 3300 Sand Hill Road, Suite 220, Menlo Park, California 94025.
(d) Franklin Yee — Managing Partner, Ridgecrest Ventures Management LLC; Board designee of Ridgecrest Ventures on the VPI Board of Directors.
(e) Cascadian Capital Partners Growth Fund II, L.P. — Approximately 24.3% ownership of the outstanding equity of VPI. General partner: Cascadian Capital Partners Management LLC. Principal: Olivia Hartmann, Managing Director. Address: 1201 Third Avenue, Suite 4400, Seattle, Washington 98101.
(f) Olivia Hartmann — Managing Director, Cascadian Capital Partners Management LLC; Board designee of Cascadian Capital Partners on the VPI Board of Directors.
(g) Employee option pool holders — Approximately 11.8% aggregate vested and/or exercised equity interests in VPI, held by various current and former employees of VPI. Individual option holders were not separately screened, as their identities have not yet been individually disclosed; a supplemental screening should be conducted if and when individual holder identities are provided.
(h) Other angel investors — Approximately 5.7% aggregate equity interests in VPI, held by various individual angel investors. As with the employee option pool holders, individual angel investor identities have not yet been individually disclosed and were not separately screened.
3.4 Opposing Counsel
The following law firm and individual attorneys are identified as counsel to VPI and the Sellers in the Transaction:
(a) Wethersfield & Gale LLP — 2000 Pennsylvania Avenue NW, Suite 600, Washington, DC 20006 (counsel to VPI and the Sellers).
(b) Harrison Whitfield — Lead Partner, Government Contracts & National Security, Wethersfield & Gale LLP.
(c) Sandra Niehaus — Lead M&A Partner, Wethersfield & Gale LLP.
(d) Tobias Kwan — Senior Associate, Wethersfield & Gale LLP.
3.5 Client's Other Counsel
The following law firm and individual attorney are identified as HSAG's German counsel in the Transaction:
(a) Schilling Frey Rechtsanwälte — Friedrichstraße 68, 10117 Berlin, Federal Republic of Germany (German counsel to HSAG for corporate and M&A matters).
(b) Prof. Dr. Ulrich Schilling — Lead Partner, Corporate/M&A, Schilling Frey Rechtsanwälte.
3.6 Financial Advisors
The following entities and individuals are identified as the financial advisors to the parties in the Transaction:
(a) Ashgrove Capital Group — 450 Lexington Avenue, 38th Floor, New York, New York 10017 (financial advisor to HSAG). Principal: Philippe Beaumont, Managing Director.
(b) Ridgeway Bancorp LLC — 101 California Street, Suite 2800, San Francisco, California 94111 (financial advisor to VPI and the Sellers). Principal: Catherine Okafor, Managing Director.
3.7 Lenders and Financing Parties
The following entities and individuals are identified as the lenders and financing parties in connection with the acquisition financing:
(a) Meridian National Bank — 277 Park Avenue, New York, New York 10172 (administrative agent and lead arranger for the $900 million senior secured term loan facility for the acquisition). Credit contact: Thomas Nyström, Senior Vice President.
(b) Atlas Commercial Lending AG — Mainzer Landstraße 27, 60329 Frankfurt am Main, Federal Republic of Germany (co-lead arranger for the senior secured term loan facility). Credit contact: Dr. Frieda Baumann.
(c) Pacific Basin Credit Corp. — 555 California Street, Suite 3200, San Francisco, California 94104 (co-lead arranger for the senior secured term loan facility). Credit contact: Andrew Leung, Vice President.
(d) Rheinische Handelsbank AG — Taunusanlage 15, 60325 Frankfurt am Main, Federal Republic of Germany (existing revolving credit facility lender to HSAG; a €300 million draw on the existing revolving facility is anticipated in connection with the Transaction). Relationship manager: Helmut Krefeld.
3.8 Insurance and Escrow Parties
The following entities and individuals are identified as the insurance carriers, brokers, and escrow agent in the Transaction:
(a) Graystone Specialty Insurance Company — Representations and warranties ("R&W") insurer; policy limit of $142 million; policy number GSI-RW-2023-04821. Underwriter: Daniel Voss.
(b) Ashford Gallagher & Co. — R&W insurance broker (New York office). Broker: Patricia Noonan.
(c) Northbridge Mutual Insurance Company — Directors and officers ("D&O") tail insurance policy insurer for VPI's pre-closing directors and officers. Underwriter: Robert Fielding.
(d) Brindoval Title Guaranty Corp. — Title insurer in connection with VPI-owned real property. Agent: Samantha Ruiz.
(e) Pinnacle Trust Company, N.A. — 400 South LaSalle Street, Suite 1100, Chicago, Illinois 60605 (escrow agent for the indemnification escrow and the adjustment escrow under the SPA). Escrow officer: Lisa Trujillo.
3.9 Accounting and Tax Advisors
The following entities and individuals are identified as the accounting firms and tax advisors to the parties:
(a) Leinberger & Hess Wirtschaftsprüfungsgesellschaft — Bockenheimer Landstraße 42, 60323 Frankfurt am Main, Federal Republic of Germany (independent auditor and Wirtschaftsprüfer to HSAG). Engagement partner: Dr. Markus Hess.
(b) Arbor & Greenfield LLP — 1700 Lincoln Street, Suite 3200, Denver, Colorado 80203 (independent auditor to VPI). Engagement partner: Joan Greenfield.
(c) Pemberton Kline LLP — 51 Madison Avenue, 22nd Floor, New York, New York 10010 (transaction tax advisor to HSAG). Partner: Richard Pemberton.
3.10 Other Third Parties
The following entities and individuals are identified as other third parties involved in or relevant to the Transaction:
(a) Whitmore Compliance Group LLC — 1300 Crystal Drive, Suite 710, Arlington, Virginia 22202 (anticipated third-party CFIUS compliance monitor, expected to be designated in any National Security Agreement resulting from CFIUS review). Principal: Gerald Whitmore.
(b) Ironclad Defense Systems Inc. — Prime contractor on certain VPI subcontracts with the United States Navy, Naval Sea Systems Command ("NAVSEA"). Headquarters in Virginia (precise address to be confirmed through diligence).
3.11 Government Agencies (Non-Screened for Conflicts but Noted)
The following government agencies are identified for informational completeness as agencies that are or may become involved in the regulatory review and approval process for the Transaction. Consistent with the Firm's policies and applicable professional responsibility rules, government agencies are not screened for representational conflicts, as they do not constitute clients or adverse parties in the traditional sense. They are listed here solely for the purpose of documenting the full scope of the regulatory environment applicable to the Transaction:
(a) Committee on Foreign Investment in the United States ("CFIUS"), U.S. Department of the Treasury, Office of Investment Security.
(b) United States Department of Defense ("DoD").
(c) United States Department of Energy ("DOE").
(d) Defense Counterintelligence and Security Agency ("DCSA").
(e) Directorate of Defense Trade Controls ("DDTC"), U.S. Department of State.
(f) Bureau of Industry and Security ("BIS"), U.S. Department of Commerce.
4. Conflict Check Methodology
The conflict check documented in this memorandum was conducted in accordance with Calderwood & Harkness LLP's Conflicts of Interest Policy (revised January 2023) and the Firm's Procedures Manual for New Client and New Matter Intake (revised March 2023). The methodology employed is described below.
4.1 Electronic Database Search. The Firm's centralized electronic conflicts database (the "Conflicts Database"), which covers all C&H offices worldwide and contains records of all current client representations, matters closed within the past seven years, and prospective/pipeline matters, was searched using the following categories of search terms and variations:
(a) Full legal names of all entities and individuals listed in Section 3 above, including all known trade names, d/b/a names, and short-form names;
(b) Ticker symbols (including "HLC" for HSAG);
(c) Employer Identification Numbers (EINs), including 26-4371885 (VPI), 93-2841067 (Halcyon US Holdings), and 81-3056429 (Halcyon US Inc.);
(d) CAGE Code (7VK92), DUNS Number (07-812-4493), Legal Entity Identifier (5299007KXQ2M4GHILZ38), German commercial register number (HRB 28416), and DDTC Registration Number (M-24817);
(e) Names of all identified principals, officers, directors, key contacts, and individual attorneys at opposing counsel;
(f) Phonetic variations, common abbreviations, and alternative spellings (e.g., "Halcyon Semi," "Marlowe Asset Management Photonics," "VP Inc.," "HSAG," "VPI," "Trevorrow," "Ehrhardt," "Brueckner," "Brückner," and similar).
A complete log of all search terms employed is set forth in Appendix A to this memorandum.
4.2 Manual Office Checks. In addition to the electronic database search, the Conflicts Department conducted manual checks with the following C&H offices that maintain active practices in the semiconductor industry, CFIUS and national security, government contracts, or international trade:
(a) New York office;
(b) Washington, DC office;
(c) Any additional offices identified through the electronic search as potentially having relevant client relationships or matter histories.
These manual checks involved direct communications with the office managing partners and the relevant practice group leaders to confirm the absence of any relationships or engagements that might not be fully reflected in the Conflicts Database.
4.3 Practice Group Inquiries. Supplemental inquiries were circulated via the Firm's internal conflicts clearance system to all partners and of counsel in the following practice groups:
(a) Mergers & Acquisitions;
(b) National Security & CFIUS;
(c) Government Contracts & Export Controls;
(d) intellectual Property;
(e) International Trade & Sanctions.
Each partner and of counsel was asked to review the list of parties and confirm whether they were aware of any current, former, or prospective client relationships, personal conflicts, financial interests, or other circumstances that could give rise to a conflict of interest or the appearance of a conflict of interest in connection with the proposed engagement.
4.4 Temporal Scope. The search encompassed the following categories of matters:
(a) All currently active client matters across all C&H offices;
(b) All matters closed within the past three years (i.e., closed on or after June 10, 2020); and
(c) All prospective or pipeline matters that have been entered into the Conflicts Database but for which engagement letters have not yet been executed or for which the representation has not yet formally commenced.
While the Conflicts Database retains records for a period of seven years following matter closure, the three-year lookback was deemed appropriate for purposes of identifying potentially disqualifying conflicts. The full seven-year archive was available for consultation and was reviewed in instances where the three-year search yielded results warranting further investigation.
4.5 Timing. The initial search was run on June 10, 2023. An updated search was run on June 11, 2023, to capture any new matter openings or client intake activities that may have occurred after the initial search. The results documented in this memorandum are current as of June 11, 2023, 6:00 p.m. Eastern Time.
4.6 Engagement Team Individual Checks. Separate individual conflict checks were conducted for each proposed member of the engagement team, including a review of each individual's personal financial interests, prior employment history, prior government service (if any), and any other circumstances that could give rise to a personal conflict of interest or a revolving-door issue under applicable ethics rules. These checks are summarized in Section 5.11 below.
5. Results of Conflict Check
The results of the conflict check, organized by category of party screened, are set forth below.
5.1 Client-Side Entities (HSAG and Affiliates)
A search of the Conflicts Database and supplemental practice group inquiries revealed no prior or current representation of Halcyon Semiconductor Aktiengesellschaft, Halcyon US Holdings Inc., or Halcyon US Inc. by any C&H office. These entities do not appear in the Conflicts Database as clients, adverse parties, or third parties in any matter.
Similarly, no prior or current representation of Dr. Maximilian Ehrhardt, Katarina Brückner, or Stefan Lohse was identified in any capacity. None of these individuals appear in the Conflicts Database in connection with any C&H matter.
Conclusion: No conflict. HSAG and its affiliates are new clients to the Firm.
5.2 Target Company (VPI) and Its Principals
A search of the Conflicts Database and supplemental practice group inquiries revealed no prior or current representation of Marlowe Asset Management Photonics Inc. by any C&H office. VPI does not appear in the Conflicts Database as a client, adverse party, or third party in any matter.
Similarly, no prior or current representation of any of VPI's officers, directors, or key personnel — specifically Dr. Nathan Trevorrow, Marissa Sung-Avila, Derek Wainsborough, Col. (Ret.) Bryce Hendrickson, or Adrienne Delacroix — was identified in any capacity. None of these individuals appear in the Conflicts Database in connection with any C&H matter.
Conclusion: No conflict. Neither VPI nor any of its identified principals have been represented by C&H or appeared as adverse parties in any C&H matter.
5.3 Selling Shareholders — Ridgecrest Ventures
A search of the Conflicts Database and supplemental practice group inquiries revealed no prior or current representation of Ridgecrest Ventures Fund III, L.P., Ridgecrest Ventures Management LLC, or Franklin Yee by any C&H office. None of these entities or individuals appear in the Conflicts Database in connection with any C&H matter.
As an additional precaution, the database search was expanded to include prior Ridgecrest Ventures fund vehicles, specifically Ridgecrest Ventures Fund I, L.P. and Ridgecrest Ventures Fund II, L.P. No matches were identified for any of these prior fund vehicles.
Conclusion: No conflict.
5.4 Selling Shareholders — Cascadian Capital Partners
A search of the Conflicts Database and supplemental practice group inquiries revealed no prior or current representation of Cascadian Capital Partners Growth Fund II, L.P., Cascadian Capital Partners Management LLC, or Olivia Hartmann by any C&H office. None of these entities or individuals appear in the Conflicts Database in connection with any C&H matter.
As an additional precaution, the database search was expanded to include prior Cascadian Capital Partners fund vehicles, including Cascadian Capital Partners Growth Fund I, L.P. and any other affiliated entities. No matches were identified for any of these entities.
Conclusion: No conflict.
5.5 Opposing Counsel — Wethersfield & Gale LLP
A search of the Conflicts Database and supplemental practice group inquiries confirmed that Calderwood & Harkness LLP and Wethersfield & Gale LLP have been both co-counsel and opposing counsel on various matters in the ordinary course of practice over the past several years. This is not unusual given that both firms maintain active practices in the areas of government contracts, national security, and corporate transactions, and regularly appear on the same or opposing sides of transactions and regulatory proceedings.
Importantly, the search confirmed that no currently pending matters exist in which Calderwood & Harkness LLP and Wethersfield & Gale LLP are adverse to one another. All prior instances of co-counsel or adversary relationships are in closed matters and do not give rise to any ongoing obligation or conflict.
No representation of Harrison Whitfield, Sandra Niehaus, or Tobias Kwan individually was identified in the Conflicts Database, and none of these individuals have been clients of C&H or appeared as adverse parties in any capacity other than as opposing counsel in prior matters.
Conclusion: No conflict. Prior co-counsel and adversary relationships between the two firms are noted for the record but do not create any conflict under the New York Rules of Professional Conduct, the District of Columbia Rules of Professional Conduct, or any other applicable professional responsibility rules. The existence of prior professional relationships between law firms on different matters is a commonplace feature of legal practice and does not, standing alone, give rise to a disqualifying or disclosable conflict.
5.6 Financial Advisors
A search of the Conflicts Database and supplemental practice group inquiries revealed no prior or current representation of Ashgrove Capital Group or Philippe Beaumont by any C&H office. These entities and individuals do not appear in the Conflicts Database in connection with any C&H matter.
Similarly, no prior or current representation of Ridgeway Bancorp LLC or Catherine Okafor was identified. These entities and individuals do not appear in the Conflicts Database in connection with any C&H matter.
Conclusion: No conflict.
5.7 Lenders and Financing Parties
(a) Meridian National Bank. A search of the Conflicts Database identified that Calderwood & Harkness LLP has represented Meridian National Bank in prior unrelated syndicated lending transactions. Specifically, C&H served as borrower's counsel on two prior transactions in which Meridian National Bank was a participant in the lending syndicate: (i) a 2020 revolving credit facility for a technology company (Matter No. 1032-00004, closed December 2020), and (ii) a 2021 term loan facility for an industrial conglomerate (Matter No. 1032-00004, closed August 2021). In both instances, C&H represented the borrower, not Meridian National Bank, and Meridian National Bank was one of several syndicate lenders.
In the current Transaction, Meridian National Bank is serving as administrative agent and lead arranger for the $900 million senior secured term loan facility being extended to HSAG (our prospective client) to fund a portion of the acquisition consideration. C&H's role is as counsel to HSAG, the borrower. Meridian National Bank is not a client of C&H in the current Transaction and is not a current client of C&H in any other matter. The prior borrower-side representations in which Meridian National Bank was a syndicate member do not give rise to a current client relationship with Meridian National Bank, and no adversity exists between C&H's representation of HSAG and Meridian National Bank's role as lender — HSAG and Meridian National Bank are on the same side of the credit transaction, with aligned interests in the consummation of the acquisition financing.
Conclusion: No conflict. The prior Meridian National Bank relationship is noted for informational purposes but does not give rise to a conflict of interest under any applicable professional responsibility rules.
(b) Atlas Commercial Lending AG. No prior or current representation of Atlas Commercial Lending AG or Dr. Frieda Baumann was identified in the Conflicts Database. These entities and individuals do not appear in any C&H matter.
Conclusion: No conflict.
(c) Pacific Basin Credit Corp. No prior or current representation of Pacific Basin Credit Corp. or Andrew Leung was identified in the Conflicts Database. These entities and individuals do not appear in any C&H matter.
Conclusion: No conflict.
(d) Rheinische Handelsbank AG. No prior or current representation of Rheinische Handelsbank AG or Helmut Krefeld was identified in the Conflicts Database. These entities and individuals do not appear in any C&H matter.
Conclusion: No conflict.
5.8 Insurance and Escrow Parties
A search of the Conflicts Database and supplemental practice group inquiries revealed no prior or current representation of any of the following insurance carriers, brokers, or the escrow agent involved in the Transaction:
(a) Graystone Specialty Insurance Company (R&W insurer) — no matches;
(b) Ashford Gallagher & Co. (R&W insurance broker) — no matches;
(c) Northbridge Mutual Insurance Company (D&O tail insurer) — no matches;
(d) Brindoval Title Guaranty Corp. (title insurer) — no matches;
(e) Pinnacle Trust Company, N.A. (escrow agent) — no matches.
Similarly, no prior or current representation of Daniel Voss, Patricia Noonan, Robert Fielding, Samantha Ruiz, or Lisa Trujillo was identified in any capacity.
Conclusion: No conflict.
5.9 Accounting and Tax Advisors
A search of the Conflicts Database and supplemental practice group inquiries revealed no prior or current representation of any of the following accounting firms or tax advisors involved in the Transaction:
(a) Leinberger & Hess Wirtschaftsprüfungsgesellschaft (HSAG auditor) — no matches;
(b) Arbor & Greenfield LLP (VPI auditor) — no matches;
(c) Pemberton Kline LLP (transaction tax advisor to HSAG) — no matches.
Similarly, no prior or current representation of Dr. Markus Hess, Joan Greenfield, or Richard Pemberton was identified in any capacity.
Conclusion: No conflict.
5.10 Other Third Parties
A search of the Conflicts Database and supplemental practice group inquiries revealed no prior or current representation of any of the following additional third parties identified in connection with the Transaction:
(a) Whitmore Compliance Group LLC (anticipated CFIUS compliance monitor) — no matches;
(b) Gerald Whitmore (principal of Whitmore Compliance Group) — no matches;
(c) Ironclad Defense Systems Inc. (prime contractor on VPI subcontract) — no matches;
(d) Schilling Frey Rechtsanwälte (German counsel to HSAG) — no matches;
(e) Prof. Dr. Ulrich Schilling (lead partner at Schilling Frey) — no matches.
Conclusion: No conflict.
5.11 Engagement Team Individual Checks
Individual conflict checks were conducted for each proposed member of the engagement team. These checks encompassed a review of each individual's personal financial interests (including publicly traded securities holdings as disclosed in the Firm's annual personal conflicts questionnaires), prior employment history, prior government service, and any other circumstances that could give rise to a personal conflict of interest, a revolving-door issue, or an appearance of impropriety. The results are as follows:
(a) Beatrice Holloway (Responsible Partner, M&A, New York) — No personal conflicts, financial interests, or prior relationships with any party to the Transaction were identified. Ms. Holloway has no prior government service.
(b) James Prentice (Billing Partner, M&A, New York) — No personal conflicts, financial interests, or prior relationships with any party to the Transaction were identified. Mr. Prentice has no prior government service.
(c) Margaret "Peggy" Ashworth (Of Counsel, National Security & CFIUS, Washington, DC) — No personal conflicts, financial interests, or prior relationships with any party to the Transaction were identified. Ms. Ashworth holds an inactive SECRET security clearance from prior U.S. government service at the U.S. Department of the Treasury, Office of Investment Security. Ms. Ashworth left government service in 2017. Her prior government position did not involve any matters related to HSAG, VPI, or any other party identified in this Transaction. Ms. Ashworth does not hold any active government employment or advisory role that would create a revolving-door conflict under 18 U.S.C. § 207 or the applicable ethics rules. Her inactive clearance status has been confirmed and does not restrict her participation in this engagement.
(d) Lt. Col. (Ret.) David Caruso (Senior Counsel, Government Contracts & Export Controls, Washington, DC) — No personal conflicts, financial interests, or prior relationships with any party to the Transaction were identified. Mr. Caruso holds an inactive SECRET security clearance from prior U.S. military service (U.S. Army, Judge Advocate General's Corps). Mr. Caruso retired from active military service in 2015. His prior government and military positions did not involve any matters related to HSAG, VPI, or any other party identified in this Transaction. Mr. Caruso does not hold any active government employment or advisory role that would create a revolving-door conflict under 18 U.S.C. § 207 or the applicable ethics rules.
(e) Priya Venkataraman (Associate, International Trade & Sanctions, Washington, DC) — No personal conflicts, financial interests, or prior relationships with any party to the Transaction were identified. Ms. Venkataraman has no prior government service.