MEMORANDUM
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
TO: Calderwood & Harkness LLP Conflicts Committee
FROM: Oliver Mackenzie, Responsible Partner, Mergers & Acquisitions Harrison Wexford, Billing Partner, Mergers & Acquisitions
DATE: May 20, 2023 (Updated: November 30, 2023)
RE: Conflicts Check — Proposed Representation of Halcyon Semiconductor Aktiengesellschaft in Connection with Acquisition of Vectris Photonics, Inc.
ENGAGEMENT NO.: 1032-00005
This memorandum is protected by the attorney-client privilege, the work product doctrine, and the common interest privilege. It is intended solely for use by the Conflicts Committee of Calderwood & Harkness LLP and authorized personnel. Distribution outside the firm is prohibited without the express written consent of the Conflicts Committee Chair.
I. Purpose and Summary
The purpose of this memorandum is to document the results of the firm's conflicts-of-interest search conducted in connection with the proposed engagement of Calderwood & Harkness LLP ("the Firm" or "C&H") to represent Halcyon Semiconductor Aktiengesellschaft ("Halcyon" or "HSAG") in its proposed acquisition of Vectris Photonics, Inc. ("Vectris") for approximately $800,000,000 in an all-cash reverse triangular merger (the "Transaction").
This memorandum was initially prepared on May 20, 2023, in connection with the opening of the engagement. The initial conflicts search was completed prior to the engagement being formally opened on May 22, 2023, and no work was performed on the matter until the Conflicts Committee granted clearance. The memorandum was subsequently updated on November 30, 2023, upon the termination of the Agreement and Plan of Merger (the "Merger Agreement") between Halcyon, Halcyon Acquisition Sub, Inc. ("Merger Sub"), and Vectris, to document any conflicts that arose during the course of the engagement and to confirm final clearance status in connection with the closing of the matter file.
Conclusion: Based on the searches described herein, conflicts clearance is confirmed. No disqualifying conflicts of interest have been identified under the New York Rules of Professional Conduct, Rules 1.7 or 1.9, or under the Firm's internal conflicts policies. Certain informational items have been noted for monitoring purposes, as described more fully in Sections V and VI below. As of the November 30, 2023 update, no new conflicts arose during the engagement, and the matter is cleared for closing.
II. Engagement Overview
The following provides a summary of the engagement parameters relevant to the conflicts analysis.
Client: Halcyon Semiconductor Aktiengesellschaft, an Aktiengesellschaft organized under the laws of the Federal Republic of Germany, registered with the Munich commercial register (Handelsregister des Amtsgerichts München) under registration number HRB 178254. Halcyon is publicly traded on the Frankfurt Stock Exchange (FSE: HSAG) and on the Nasdaq Global Select Market through American Depositary Receipts (ADR ticker: HCYN). The company is headquartered at Halcyon-Platz 1, 81739 München, Germany. Halcyon is a global manufacturer of advanced semiconductor components and integrated circuit solutions, with operations in Germany, the United States, South Korea, and Taiwan.
Client Contacts:
• Dr. Luisa Hartmann, General Counsel, Halcyon Semiconductor AG
• Dr. Katarina Breuer, Chief Executive Officer (Vorstandsvorsitzende), Halcyon Semiconductor AG
• Markus Ellinger, Chief Financial Officer (Finanzvorstand), Halcyon Semiconductor AG
Nature of Engagement: The Firm has been engaged to represent Halcyon in all aspects of the proposed acquisition of Vectris Photonics, Inc., a Delaware C-corporation specializing in photonic integrated circuit technology for data center and telecommunications applications. The scope of the engagement encompasses due diligence coordination and review, negotiation and drafting of the definitive Merger Agreement and all ancillary transaction documents (including the Voting and Support Agreements, the Commitment Letter, employment and non-competition agreements, and escrow agreements), preparation and filing of all regulatory and antitrust filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act") and the European Union Merger Regulation (Council Regulation (EC) No. 139/2004) ("EUMR"), antitrust defense and advocacy before the U.S. Department of Justice Antitrust Division and the European Commission Directorate-General for Competition, and any related litigation, dispute resolution, or termination proceedings arising from or in connection with the Transaction.
Engagement Team:
• Oliver Mackenzie — Responsible Partner, Mergers & Acquisitions
• Harrison Wexford — Billing Partner, Mergers & Acquisitions
• Howard Bellamy — Specialist Partner, Antitrust & Competition
• Derek Okonkwo — Lead Associate, Mergers & Acquisitions
• Tiffany Rosenthal — Working Associate, Mergers & Acquisitions
Fee Arrangement: The engagement is structured on an hourly-rate basis at the Firm's standard rates for partners, counsel, and associates. A soft fee cap of $6,500,000 has been negotiated for all M&A transactional work, exclusive of antitrust and regulatory work. Antitrust and regulatory work, led by Howard Bellamy, will be billed separately on an hourly basis with no fee cap, given the inherent unpredictability of regulatory review timelines and scope. Billing arrangements are memorialized in the engagement letter dated May 22, 2023.
III. Parties Searched
The following parties were identified for inclusion in the conflicts search. The list reflects all parties known at the time of the initial search (May 20, 2023), supplemented by parties added in connection with subsequent supplemental searches as noted.
A. Client and Client Affiliates
1. Halcyon Semiconductor Aktiengesellschaft (and all known variants: "Halcyon," "HSAG," "Halcyon Semiconductor AG," "Halcyon Semi"); Frankfurt Stock Exchange ticker: HSAG; Nasdaq ADR ticker: HCYN; ISIN: US40582R1095 (ADR); CUSIP: 92553P108 (ADR); German commercial register: HRB 178254 (Amtsgericht München).
2. Halcyon Acquisition Sub, Inc. — A Delaware corporation, File No. 7634291, formed as a wholly-owned subsidiary of Halcyon for the sole purpose of effectuating the reverse triangular merger contemplated by the Transaction. Merger Sub was incorporated on June 12, 2023, with Markus Ellinger as its sole director. Note: This entity did not exist at the time of the initial conflicts search and was added to the conflicts database and re-searched upon its incorporation on June 12, 2023.
3. Dr. Katarina Breuer — Chief Executive Officer (Vorstandsvorsitzende), Halcyon Semiconductor AG.
4. Markus Ellinger — Chief Financial Officer (Finanzvorstand), Halcyon Semiconductor AG; sole director, Halcyon Acquisition Sub, Inc.
5. Dr. Luisa Hartmann — General Counsel (Chefsyndikus), Halcyon Semiconductor AG.
6. Prof. Dr. Friedrich Wendt — Chair of the Supervisory Board (Vorsitzender des Aufsichtsrats), Halcyon Semiconductor AG.
B. Target and Target Affiliates
1. Vectris Photonics, Inc. — A Delaware C-corporation, File No. 5918437, headquartered at 4750 Ridgepoint Drive, Suite 300, San Jose, California 95134. Vectris is a privately held developer and manufacturer of photonic integrated circuits and silicon photonics modules for high-speed data transmission applications.
2. Dr. Anand Raghavan — Founder, Chief Executive Officer, and Chair of the Board of Directors, Vectris Photonics, Inc. Dr. Raghavan holds approximately 18.2% of the outstanding common stock of Vectris.
3. Margaret "Maggie" Sørensen — President and Chief Operating Officer, Vectris Photonics, Inc.
4. Julian Tate — Chief Financial Officer, Vectris Photonics, Inc.
5. Rebecca Lau — General Counsel and Corporate Secretary, Vectris Photonics, Inc.
6. David Kwon — Independent Director, Board of Directors, Vectris Photonics, Inc.
7. Dr. Elena Mirescu — Independent Director, Board of Directors, Vectris Photonics, Inc.
C. Significant Shareholders of Target
1. Granite Peak Ventures Fund IV, L.P. — A Delaware limited partnership; holder of approximately 22.7% of the outstanding common stock of Vectris. Granite Peak is a technology-focused venture capital firm based in San Francisco, California.
2. Granite Peak Ventures Management IV, LLC — A Delaware limited liability company serving as the general partner of Granite Peak Ventures Fund IV, L.P.
3. Rhys Calloway — Managing Partner, Granite Peak Ventures; Board designee of Granite Peak to the Vectris Board of Directors.
4. Nordhaven Capital Partners III, L.P. — A Netherlands limited partnership (commanditaire vennootschap, or "CV"); holder of approximately 14.5% of the outstanding common stock of Vectris. Nordhaven is a European growth equity fund based in Amsterdam, the Netherlands.
5. Nordhaven Capital GP III, LLC — A Delaware limited liability company serving as the general partner of Nordhaven Capital Partners III, L.P.
6. Simone Achterberg — Managing Partner, Nordhaven Capital Partners; Board designee of Nordhaven to the Vectris Board of Directors.
7. Stonebridge Institutional Investors, L.P. — A Delaware limited partnership; holder of approximately 9.1% of the outstanding common stock of Vectris. Stonebridge is a diversified institutional investment platform.
8. Kenneth Morita — Portfolio Manager, Semiconductors Sector, Stonebridge Institutional Investors, L.P.
D. Opposing / Target's Counsel
1. Whitfield, Prager & Loomis LLP ("WPL") — Outside counsel to Vectris Photonics, Inc. in connection with the Transaction. WPL maintains offices at 2600 Sand Hill Road, Suite 250, Menlo Park, California 94025 and 51 West 52nd Street, New York, New York 10019.
2. Catherine Whitfield — Lead Mergers & Acquisitions Partner, Whitfield, Prager & Loomis LLP; lead transactional counsel for Vectris.
3. Douglas Prager — Antitrust Partner, Whitfield, Prager & Loomis LLP; antitrust counsel for Vectris.
E. Financial Advisors
1. Ridgeline Partners LLC — Financial advisor to Halcyon (the acquirer) in connection with the Transaction. Ridgeline is headquartered at 383 Madison Avenue, 25th Floor, New York, New York 10179.
2. Nathaniel Cross — Lead Managing Director, Ridgeline Partners LLC.
3. Priya Narayanan — Vice President, Ridgeline Partners LLC.
4. Clearwater Zanthor & Co., LLC — Financial advisor to Vectris (the target) in connection with the Transaction. Clearwater Zanthor maintains its principal office at 555 California Street, Suite 2800, San Francisco, California 94104.
5. Diane Okoro — Lead Managing Director, Clearwater Zanthor & Co., LLC.
F. Financing Parties
1. Meridian Atlantic Bank, N.A. — Administrative agent and lead arranger for the $500,000,000 senior secured term loan commitment provided to Halcyon in connection with the Transaction. Meridian Atlantic's principal office is located at 270 Park Avenue South, New York, New York 10003. Note: Meridian Atlantic was added to the conflicts search on August 8, 2023, when the debt financing commitment was finalized.
2. Sandra Feeney — Lead Banker, Leverage Finance Group, Meridian Atlantic Bank, N.A.
3. Kalder & Eames LLP — Outside financing counsel to Meridian Atlantic Bank in connection with the commitment letter and related credit documentation for the Transaction. Kalder & Eames maintains its principal office at 1 World Financial Center, Suite 3100, New York, New York 10281. Note: Added to the search on August 8, 2023.
4. Philip Strand — Lead Partner, Banking & Finance Practice, Kalder & Eames LLP.
G. Escrow Agent
1. Ironclad National Bank, N.A. — Escrow agent for the Transaction, responsible for holding the escrow amount and disbursing funds in accordance with the terms of the Escrow Agreement. Ironclad's principal office is located at One Liberty Plaza, 165 Broadway, New York, New York 10006.
2. Thomas Hargreaves — Escrow Officer, Corporate Trust Division, Ironclad National Bank, N.A.
H. Auditors and Accounting Firms
1. Thornbury Wight LLP — Independent registered public accounting firm serving as auditor to Halcyon Semiconductor AG. Thornbury Wight maintains offices at Theatinerstraße 15, 80333 München, Germany and 7 Times Square, New York, New York 10036.
2. Gavin Ashmore — Lead Engagement Partner, Thornbury Wight LLP (Halcyon audit).
3. Linden Ross & Co., LLP — Independent registered public accounting firm serving as auditor to Vectris Photonics, Inc. Linden Ross maintains its principal office at 50 Fremont Street, Suite 1600, San Francisco, California 94105.
4. Christine Park — Lead Engagement Partner, Linden Ross & Co., LLP (Vectris audit).
I. Insurance Parties
1. Atlas Transactional Insurance Group, Inc. — Insurance broker engaged by Halcyon to procure representations and warranties insurance (R&W insurance) for the Transaction.
2. Martin Cavallo — Broker Contact, Atlas Transactional Insurance Group, Inc.
3. Pinnacle Specialty Underwriters, Ltd. — R&W insurance carrier providing the buyer-side representations and warranties insurance policy for the Transaction. Pinnacle is based at 30 St Mary Axe, London EC3A 8BF, United Kingdom.
4. Fiona Brennan — Underwriter Contact, Pinnacle Specialty Underwriters, Ltd.
J. Registered Agents
1. Pinnacle Corporate Services, Inc. — Registered agent for Halcyon Acquisition Sub, Inc. in the State of Delaware. Located at 1209 Orange Street, Wilmington, Delaware 19801.
2. Capitol Corporate Services, LLC — Registered agent for Vectris Photonics, Inc. in the State of Delaware. Located at 800 N. King Street, Suite 400, Wilmington, Delaware 19801.
IV. Search Methodology
The Firm's electronic conflicts management database, ConflictsCheck (version 7.4.2, Pinnacle Solutions), was queried using the full legal names, short-form names, common abbreviations, ticker symbols, known aliases, and individual names of all parties and key personnel listed in Section III above. Each entity was searched using both exact match and fuzzy match algorithms to capture potential alternative spellings, transliterations, and commonly used abbreviations. Individual names were searched using first name, last name, and commonly used nicknames or professional designations (e.g., "Maggie Sørensen" as well as "Margaret Sørensen").
In addition to the electronic database search, the following supplementary procedures were performed:
• Cross-referencing all identified parties against the Firm's active and closed matter database for current and former representations within the prior five-year period (May 2018 through the date of each search).
• Review of lateral hire declarations for all members of the engagement team, with particular attention to any prior representations by engagement team members at their former firms that may have involved any of the parties identified in Section III.
• Manual review of publicly available information, including SEC filings, press releases, and corporate registry records, to identify any related parties, subsidiaries, or affiliates that may not have been captured in the initial party list.
• Consultation with practice group leaders in the Firm's Mergers & Acquisitions, Antitrust & Competition, Banking & Finance, Capital Markets, and Private Equity practices to identify any informal relationships or pending business development efforts involving the listed parties.
All searches were conducted by the Conflicts Department under the supervision of the Conflicts Committee, in accordance with the procedures set forth in the Calderwood & Harkness Conflicts Policy (revised January 2023).
Search Dates:
• May 20, 2023 — Initial comprehensive search of all parties listed in Section III.A through Section III.E and Section III.H through Section III.J.
• June 12, 2023 — Supplemental search upon the incorporation of Halcyon Acquisition Sub, Inc. (Delaware File No. 7634291) on June 12, 2023. The Merger Sub entity and its sole director (Markus Ellinger, already searched) were added to the conflicts database.
• August 8, 2023 — Supplemental search upon the finalization of the debt financing commitment. Meridian Atlantic Bank, N.A., Sandra Feeney, Kalder & Eames LLP, and Philip Strand were added to the party list and searched.
• November 30, 2023 — Updated search of all parties upon the termination of the Merger Agreement, conducted in connection with the closing of the matter file and the preparation of this update memorandum.
V. Search Results
A. Current Representations
The following sets forth the results of the conflicts search with respect to each party identified in Section III, organized by entity or individual:
1. Halcyon Semiconductor AG. No current representations by Calderwood & Harkness for or adverse to Halcyon were identified prior to this engagement. The Firm has not previously represented Halcyon in any capacity. This engagement represents a new client relationship for the Firm. Standard new-client intake procedures were followed, including Know Your Client (KYC) and anti-money laundering (AML) verification, which were completed satisfactorily on May 21, 2023.
2. Vectris Photonics, Inc. No current representations by the Firm for or adverse to Vectris were identified. The Firm has not previously represented Vectris in any capacity. No former representation of Vectris was identified in the prior five-year search window.
3. Granite Peak Ventures. The Firm's private equity practice (not involving any member of the current engagement team) represented Granite Peak Ventures Management III, LLC (a predecessor fund vehicle to Granite Peak Ventures Management IV, LLC, the general partner of the fund that holds the 22.7% stake in Vectris) in a portfolio company financing matter (Matter No. 1032-00005, Responsible Partner: Jonathan Caldwell). That matter involved the negotiation of a mezzanine credit facility for a Granite Peak portfolio company unrelated to Vectris or the semiconductor industry. The matter was closed in February 2021, and no ongoing attorney-client relationship exists between the Firm and any Granite Peak entity. No adverse interest has been identified. In the current Transaction, Granite Peak is a selling stockholder in the target. The Transaction is expected to be beneficial to all Vectris stockholders, including Granite Peak, as they will receive the per-share merger consideration. Granite Peak is not an adverse party to Halcyon. Additionally, the former representation involved a different fund vehicle (Fund III management company) than the entity holding shares in Vectris (Fund IV). No conflict exists under Rule 1.7 or Rule 1.9.
4. Nordhaven Capital Partners. No current or prior representations by the Firm for or adverse to Nordhaven Capital Partners III, L.P., Nordhaven Capital GP III, LLC, or Simone Achterberg were identified. No conflict.
5. Stonebridge Institutional Investors. The Firm's capital markets practice represented an issuer (a technology company unrelated to Vectris or the semiconductor industry) in a secondary public offering in which Stonebridge Institutional Investors, L.P. was one of several selling shareholders (Matter No. 1032-00005, Responsible Partner: Andrew Delacroix). The Firm represented the issuer, not Stonebridge. The Firm did not enter into any attorney-client relationship with Stonebridge, and no confidential information of Stonebridge was received by the Firm in that engagement. The matter was closed in September 2022. No current relationship with Stonebridge exists, and no adverse interest has been identified. No conflict.
6. Meridian Atlantic Bank, N.A. The Firm's banking and finance practice currently represents Meridian Atlantic Bank, N.A. as lender's counsel in an unrelated syndicated credit facility for a portfolio of commercial real estate assets (Matter No. 1032-00005, Responsible Partner: Elizabeth Farnham). That representation is ongoing and involves a wholly separate transaction, client contact, and subject matter from the present engagement.
In the present Transaction, Meridian Atlantic serves as the administrative agent and lead arranger for the $500,000,000 senior secured term loan commitment that provides a portion of the acquisition financing for Halcyon. Meridian Atlantic's interests in the Transaction are aligned with those of Halcyon: both parties seek the successful consummation of the merger. Separate counsel — Kalder & Eames LLP (Philip Strand, Lead Partner) — represents Meridian Atlantic in connection with the financing documentation for this Transaction. The Firm does not represent Meridian Atlantic in this Transaction.
Informational Item — Flagged for Monitoring: Although no material adverse interest currently exists between Halcyon and Meridian Atlantic, the Conflicts Committee has noted that a potential conflict could emerge if any dispute were to arise between Halcyon and Meridian Atlantic regarding the terms, enforcement, or performance of the commitment letter (including, without limitation, disputes regarding the ticking fee, flex provisions, funding conditions, or material adverse effect determinations). In such a scenario, the Firm would be in the position of representing one client (Halcyon) in a matter adverse to another current client (Meridian Atlantic), which would give rise to a concurrent conflict under Rule 1.7(a). The Conflicts Committee has directed that a standard ethical screen be maintained, consisting of the following measures:
(a) The engagement teams for the Halcyon matter (1032-00005) and the Meridian Atlantic matter (1032-00005) have been informed of the concurrent representation.
(b) No member of either engagement team shall share confidential information relating to one client with the other engagement team.
(c) If any dispute arises or is reasonably anticipated between Halcyon and Meridian Atlantic in connection with the financing for this Transaction, the matter shall be immediately escalated to the Conflicts Committee for reassessment, which may result in a requirement for informed written consent from both clients or withdrawal from one of the representations.
7. Kalder & Eames LLP. No representations by the Firm for or adverse to Kalder & Eames LLP were identified. No conflict. The Firm has appeared on the same side of transactions and opposite Kalder & Eames on various occasions; no ongoing disputes or adverse matters exist.
8. Whitfield, Prager & Loomis LLP. No current representations by the Firm adverse to Whitfield, Prager & Loomis LLP were identified. The Firm has appeared opposite WPL in prior transactions and litigation matters, which is customary in the ordinary course of practice. No ongoing disputes or adverse matters between the Firm and WPL exist. No conflict.
9. Ridgeline Partners LLC. No current or prior representations by the Firm for or adverse to Ridgeline Partners LLC, Nathaniel Cross, or Priya Narayanan were identified. No conflict.
10. Clearwater Zanthor & Co., LLC. The Firm represented an unrelated client (a healthcare company) in a strategic acquisition transaction in which Clearwater Zanthor served as financial advisor to the opposing party (the target) (Matter No. 1032-00005, Responsible Partner: Marissa Fontaine). The Firm did not represent Clearwater Zanthor in that transaction and did not enter into any attorney-client relationship with Clearwater Zanthor. The matter was closed in April 2022. No current relationship with Clearwater Zanthor exists. In the present Transaction, Clearwater Zanthor serves as financial advisor to Vectris (the target). This posture does not create a conflict — the Firm did not receive any confidential information of Clearwater Zanthor in the prior engagement, and Clearwater Zanthor is not a client of the Firm. No conflict.
11. Ironclad National Bank, N.A. No current representations by the Firm for or adverse to Ironclad National Bank, N.A. were identified. Ironclad serves as escrow agent in the Transaction, a neutral administrative role that does not create an adversarial posture with respect to any party. No conflict.
12. Thornbury Wight LLP. No current representations by the Firm for or adverse to Thornbury Wight LLP or Gavin Ashmore were identified. Thornbury Wight serves as the independent auditor for Halcyon; its interests are aligned with those of the Firm's client. No conflict.
13. Linden Ross & Co., LLP. No current or prior representations by the Firm for or adverse to Linden Ross & Co., LLP or Christine Park were identified. No conflict.
14. Atlas Transactional Insurance Group, Inc. / Pinnacle Specialty Underwriters, Ltd. No current or prior representations by the Firm for or adverse to Atlas Transactional Insurance Group, Inc., Martin Cavallo, Pinnacle Specialty Underwriters, Ltd., or Fiona Brennan were identified. No conflict.
15. Individual Officers and Directors. Searches conducted against all named individuals — including Dr. Katarina Breuer, Markus Ellinger, Dr. Luisa Hartmann, Prof. Dr. Friedrich Wendt, Dr. Anand Raghavan, Margaret "Maggie" Sørensen, Julian Tate, Rebecca Lau, David Kwon, Dr. Elena Mirescu, Rhys Calloway, Simone Achterberg, Kenneth Morita, Nathaniel Cross, Priya Narayanan, Diane Okoro, Sandra Feeney, Philip Strand, Thomas Hargreaves, Gavin Ashmore, Christine Park, Martin Cavallo, Fiona Brennan, Catherine Whitfield, and Douglas Prager — returned no conflicts. The Firm has not previously represented any of these individuals in a personal or professional capacity, and no adverse representations against any of these individuals were identified.
B. Former Representations
No former representations were identified that would create a material conflict under the New York Rules of Professional Conduct (Rules 1.7 and 1.9) with respect to any party listed in Section III, other than the closed matters noted in Section V.A above. Specifically:
• 1032-00005 (Granite Peak Ventures Management III, LLC — portfolio company financing; closed February 2021): Former representation of a predecessor fund management entity. No substantially related matter; no adverse interest. See analysis in Section V.A.3 above.
• 1032-00005 (Secondary offering involving Stonebridge as selling shareholder; closed September 2022): No attorney-client relationship with Stonebridge. See analysis in Section V.A.5 above.
• 1032-00005 (Meridian Atlantic Bank — syndicated credit facility; ongoing): This is a current concurrent representation, not a former representation. Addressed in Section V.A.6 above and Section VI.B.1 below.
• 1032-00005 (Transaction opposite Clearwater Zanthor as opposing advisor; closed April 2022): No attorney-client relationship with Clearwater Zanthor. See analysis in Section V.A.10 above.
No other former representations involving any party listed in Section III were identified within the five-year search window.
C. Engagement Team Personal Conflicts
Each member of the engagement team was asked to certify whether he or she has any personal conflict of interest with respect to any of the parties identified in Section III. The results are as follows:
• Oliver Mackenzie (Responsible Partner): No personal conflicts disclosed. Mr. Mackenzie has certified in writing that he has no financial interest in, familial relationship with, or prior professional relationship with any party to the Transaction.
• Harrison Wexford (Billing Partner): No personal conflicts disclosed. Mr. Wexford has certified in writing that he has no financial interest in, familial relationship with, or prior professional relationship with any party to the Transaction.
• Howard Bellamy (Specialist Partner, Antitrust & Competition): No personal conflicts disclosed. Mr. Bellamy has certified in writing that he has no financial interest in, familial relationship with, or prior professional relationship with any party to the Transaction. Mr. Bellamy has previously appeared before the European Commission's Directorate-General for Competition and the U.S. Department of Justice Antitrust Division in unrelated matters; these prior appearances do not create any personal conflict.
• Derek Okonkwo (Lead Associate, M&A): No personal conflicts disclosed. Mr. Okonkwo has certified in writing that he has no financial interest in, familial relationship with, or other personal conflict with any party to the Transaction. Of note: Prior to joining Calderwood & Harkness in September 2021, Mr. Okonkwo was an associate at Whitfield, Prager & Loomis LLP ("WPL"), which serves as counsel to Vectris in this Transaction. Mr. Okonkwo has provided a written confirmation, dated May 20, 2023, stating that he did not work on any matter involving Halcyon Semiconductor AG, Vectris Photonics, Inc., or any party related to the Transaction during his tenure at WPL, and that he does not possess any confidential information regarding any such party obtained during his employment at WPL. Mr. Okonkwo's departure from WPL in September 2021 predates any involvement by WPL in this Transaction. Based on these representations, no ethical screen is required. See further analysis in Section VI.B.3 below.
• Tiffany Rosenthal (Working Associate, M&A): No personal conflicts disclosed. Ms. Rosenthal has certified in writing that she has no financial interest in, familial relationship with, or prior professional relationship with any party to the Transaction.
Copies of all engagement team conflict certifications are maintained in Appendix C to this memorandum and in the matter file.
VI. Analysis and Determination
A. Applicable Ethical Rules
The conflicts analysis set forth in this memorandum has been conducted in accordance with the following authorities:
• New York Rules of Professional Conduct, Rule 1.7 (Conflict of Interest: Current Clients). Rule 1.7(a) provides that, except as permitted by paragraph (b), a lawyer shall not represent a client if a reasonable lawyer would conclude that (1) the representation will involve the lawyer in representing differing interests, or (2) there is a significant risk that the lawyer's professional judgment on behalf of a client will be adversely affected by the lawyer's own financial, business, property, or other personal interests.
• New York Rules of Professional Conduct, Rule 1.9 (Duties to Former Clients). Rule 1.9(a) provides that a lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person's interests are materially adverse to the interests of the former client unless the former client gives informed consent, confirmed in writing.
• Calderwood & Harkness Conflicts Policy (revised January 2023). The Firm's internal conflicts policy sets forth procedures for identifying, analyzing, and resolving conflicts of interest. The policy requires a comprehensive conflicts search prior to the opening of any new engagement, supplemental searches upon the addition of new parties, and ongoing monitoring throughout the duration of the engagement. The policy also provides for escalation to the Conflicts Committee in cases involving concurrent representations, former client issues, or engagement team personal conflicts.
B. Potential Issues Identified and Disposition
Three informational items warranting further analysis were identified during the conflicts search process. Each is discussed in detail below.
1. Meridian Atlantic Bank, N.A. — Concurrent Representation
The Firm currently represents Meridian Atlantic Bank, N.A. in an unrelated syndicated credit facility (Matter No. 1032-00005, Responsible Partner: Elizabeth Farnham). In the present Transaction, Meridian Atlantic serves as the administrative agent and lead arranger for the $500,000,000 senior secured term loan commitment that provides a portion of Halcyon's acquisition financing.
Analysis: Under Rule 1.7(a)(1), a concurrent conflict exists when a lawyer represents two clients whose interests are "differing" in the same or related matters. Here, the two representations involve entirely different transactions and subject matters. The unrelated Meridian Atlantic matter involves commercial real estate lending, while the present engagement involves a semiconductor industry acquisition. The Firm does not represent Meridian Atlantic in the acquisition financing; separate counsel (Kalder & Eames LLP) represents Meridian Atlantic in connection with the commitment letter and related credit documentation.
Moreover, in the Transaction itself, the interests of Halcyon and Meridian Atlantic are aligned: both parties desire the successful consummation of the merger and the funding of the term loan commitment. There is no current adverse posture between the two entities.
However, the Conflicts Committee recognizes that a latent conflict could arise if a dispute were to develop between Halcyon and Meridian Atlantic — for example, if Meridian Atlantic were to seek to exercise its "market flex" provisions to modify the financing terms, if Halcyon were to challenge Meridian Atlantic's determination that a material adverse effect had occurred, or if a dispute were to arise regarding ticking fees, commitment termination, or funding conditions. In any such scenario, the Firm could find itself simultaneously representing one client (Halcyon, in the Transaction) and maintaining an ongoing representation of an adverse party (Meridian Atlantic, in the unrelated lending matter), creating a direct concurrent conflict under Rule 1.7(a).
Disposition: No disqualifying conflict currently exists. The Conflicts Committee has directed the implementation of a standard ethical screen, as described in Section V.A.6 above. Informational notice has been provided to both the Halcyon engagement team (Oliver Mackenzie, Harrison Wexford) and the Meridian Atlantic engagement team (Elizabeth Farnham). The Conflicts Committee will reassess the situation if any dispute arises or is reasonably anticipated between Halcyon and Meridian Atlantic. In such event, the Committee may require informed written consent from both clients under Rule 1.7(b) or, if consent is not obtainable, withdrawal from one of the representations.
2. Granite Peak Ventures — Former Client
The Firm formerly represented Granite Peak Ventures Management III, LLC (a predecessor fund management entity) in a portfolio company financing matter (Matter No. 1032-00005), which was closed in February 2021. In the present Transaction, Granite Peak Ventures Fund IV, L.P. holds 22.7% of the outstanding common stock of Vectris and will be a party to the Voting and Support Agreement, pursuant to which it will commit to vote its shares in favor of the merger.
Analysis: Under Rule 1.9(a), a former-client conflict arises when a lawyer represents a new client in the same or a substantially related matter in which the new client's interests are materially adverse to those of the former client. Here, the former representation involved a different Granite Peak entity (the Fund III management company, not the Fund IV limited partnership) in an entirely unrelated matter (a mezzanine credit facility for a portfolio company in a different industry). The present Transaction is not the "same or substantially related matter" as the former representation. Furthermore, the present representation is not materially adverse to Granite Peak's interests: the Transaction contemplates an all-cash acquisition at a premium to Vectris's implied valuation, which is expected to be beneficial to all Vectris stockholders, including Granite Peak. Granite Peak, as a selling stockholder, is not an adverse party to Halcyon; to the contrary, Granite Peak is committing to vote in favor of the merger.
Disposition: No conflict exists under Rule 1.9. No consent from Granite Peak is required. This item is noted for informational purposes only.
3. Derek Okonkwo — Former Association with Whitfield, Prager & Loomis LLP
Mr. Okonkwo, the lead associate on the engagement team, was previously employed as an associate at Whitfield, Prager & Loomis LLP ("WPL"), which serves as counsel to Vectris in the Transaction. Mr. Okonkwo departed WPL in September 2021, approximately twenty months before the commencement of this engagement.
Analysis: Under Rule 1.9(a) and the principles governing the imputation of conflicts arising from a lawyer's prior association with another firm, a conflict may arise if Mr. Okonkwo acquired confidential information relating to a party or matter at his former firm that is relevant to the current representation. Mr. Okonkwo has confirmed in a written declaration, dated May 20, 2023 (a copy of which is maintained in Appendix C), that: (i) he did not work on any matter involving Halcyon Semiconductor AG, Vectris Photonics, Inc., or any of their respective affiliates, officers, directors, or shareholders during his tenure at WPL; (ii) he has no confidential information regarding any such party obtained during his employment at WPL; and (iii) his departure from WPL predates any involvement by WPL in this Transaction. Based on these representations, which were reviewed and accepted by the Conflicts Committee, no conflict exists and no ethical screen is required. Mr. Okonkwo may participate fully in the engagement.
Disposition: No conflict. No screen required. Noted for informational purposes.
C. Clearance Determination
Based on the foregoing analysis, the Conflicts Committee hereby clears the engagement. No disqualifying conflict of interest exists under the New York Rules of Professional Conduct or the Firm's internal conflicts policies that would preclude Calderwood & Harkness LLP from representing Halcyon Semiconductor Aktiengesellschaft in connection with the proposed acquisition of Vectris Photonics, Inc.
The following informational items are noted for ongoing monitoring throughout the duration of the engagement:
(a) The concurrent representation of Meridian Atlantic Bank, N.A. in an unrelated lending matter (1032-00005), with the standard ethical screen measures described in Sections V.A.6 and VI.B.1 above;
(b) The former representation of Granite Peak Ventures Management III, LLC (1032-00005), noted for informational purposes; and
(c) Mr. Okonkwo's prior employment at Whitfield, Prager & Loomis LLP, noted for informational purposes.
The engagement team is directed to promptly notify the Conflicts Committee if any new party is added to the Transaction, if the identity of any counsel, advisor, or financing party changes, or if any circumstance arises that may give rise to a new or changed conflict of interest.
VII. November 30, 2023 — Update Upon Termination
This section documents developments that occurred during the course of the engagement and confirms the final conflicts clearance status in connection with the closing of the matter file.
Termination of the Merger Agreement. The Agreement and Plan of Merger, dated as of July 14, 2023, by and among Halcyon Semiconductor Aktiengesellschaft, Halcyon Acquisition Sub, Inc., and Vectris Photonics, Inc., was terminated on November 30, 2023, pursuant to Section 8.1(d) thereof (Termination by Either Party — Failure to Obtain Required Regulatory Approvals). The termination followed two significant regulatory developments:
• On October 6, 2023, the European Commission opened a Phase II in-depth investigation into the proposed concentration (Case No. M.11247 — Halcyon Semiconductor / Vectris Photonics), having concluded that the Transaction raised serious doubts as to its compatibility with the internal market, particularly with respect to the market for photonic integrated circuits for hyperscale data center interconnects.
• On October 30, 2023, the United States Department of Justice Antitrust Division filed a civil antitrust complaint in the United States District Court for the District of Columbia (Case No. 1:23-cv-03187, United States v. Halcyon Semiconductor AG and Vectris Photonics, Inc.), alleging that the proposed acquisition would substantially lessen competition in the market for silicon photonics transceivers in violation of Section 7 of the Clayton Act, 15 U.S.C. § 18.
Following these developments, and after consultation between the parties, Halcyon and Vectris mutually agreed to terminate the Merger Agreement. In accordance with Section 8.2(b) of the Merger Agreement, Halcyon paid the $28,000,000 reverse break-up fee to Vectris on December 15, 2023, by wire transfer of immediately available funds.
Conflicts Status Upon Termination. No additional conflicts of interest arose during the course of the engagement. The Conflicts Committee confirms the following:
1. The Meridian Atlantic concurrent-representation issue (Section VI.B.1) is now moot with respect to this matter. The $500,000,000 senior secured term loan commitment letter was terminated on December 1, 2023, in connection with the termination of the Merger Agreement. No dispute arose between Halcyon and Meridian Atlantic Bank, N.A. at any time during the engagement with respect to the commitment letter, financing terms, or any other matter. The unrelated Meridian Atlantic matter (1032-00005) continues and is unaffected by the termination of the present engagement.
2. The Granite Peak former-representation issue (Section VI.B.2) did not develop into a conflict at any time during the engagement. Granite Peak Ventures Fund IV, L.P. executed the Voting and Support Agreement on July 14, 2023, and no dispute arose between Halcyon and Granite Peak.
3. The Derek Okonkwo — WPL issue (Section VI.B.3) did not develop into a conflict at any time during the engagement. No challenge or objection was raised by WPL, Vectris, or any other party regarding Mr. Okonkwo's participation in the engagement.
4. No litigation or dispute has been threatened between Halcyon and any other party searched in connection with this matter, including Vectris, any of its officers, directors, or shareholders, or any advisor or financing party, that would create a new or additional conflict of interest for the Firm. The reverse break-up fee was paid without dispute, and no claims for indemnification, breach of contract, or other remedies have been asserted by any party against any other party.
Matter Closing. The matter (1032-00005) is being closed in the Firm's matter management system. The conflicts database has been updated to reflect the matter as closed/terminated, with a closing date of November 30, 2023. All physical and electronic files will be retained in accordance with the Firm's document retention policy (ten years from the date of matter closing, subject to any applicable litigation hold).
VIII. Conclusion and Recommendation
Original Determination (May 20, 2023): Based on the comprehensive conflicts search and analysis described in this memorandum, the Conflicts Committee recommends clearance for Calderwood & Harkness LLP to accept the engagement to represent Halcyon Semiconductor Aktiengesellschaft in the proposed acquisition of Vectris Photonics, Inc. No disqualifying conflict of interest has been identified. Subject to ongoing monitoring of the Meridian Atlantic Bank concurrent representation and the informational items noted in Section VI above, no conflicts of interest preclude the representation. The engagement may be opened and work may commence upon formal Conflicts Committee approval.
Updated Determination (November 30, 2023): No conflicts of interest arose during the course of the engagement. All informational items previously identified for monitoring have been resolved without the emergence of any disqualifying conflict. The Meridian Atlantic concurrent-representation issue is moot. The Granite Peak former-representation issue did not develop into a conflict. Mr. Okonkwo's prior WPL employment did not create any conflict. The matter is cleared for closing. All relevant records shall be retained in accordance with the Firm's file retention policy, which requires a minimum retention period of ten years from the date of matter closing, unless extended by a litigation hold or other legal obligation.
IX. Approvals
Conflicts Committee Chair
By: ________
Name: Carolyn P. Ashford
Title: Chair, Conflicts Committee, Calderwood & Harkness LLP
Date of Initial Clearance: May 20, 2023 Date of Updated Clearance: November 30, 2023
Responsible Partner Acknowledgment
By: ________
Name: Oliver Mackenzie
Title: Partner, Mergers & Acquisitions, Calderwood & Harkness LLP
Date: ________
Billing Partner Acknowledgment
By: ________
Name: Harrison Wexford
Title: Partner, Mergers & Acquisitions, Calderwood & Harkness LLP
Date: ________
APPENDIX A — SEARCH TERMS USED
The following search terms were entered into the Firm's ConflictsCheck database in connection with the initial and supplemental conflicts searches described in Section IV of this memorandum.
Entity Names and Variants
Ticker Symbols, CUSIP, ISIN, and Registration Numbers
Individual Names. All individuals listed in Section III of this memorandum were searched by first name, last name, and known professional variations. A complete list of individuals searched is as follows: Dr. Katarina Breuer; Markus Ellinger; Dr. Luisa Hartmann; Prof. Dr. Friedrich Wendt; Dr. Anand Raghavan; Margaret Sørensen (also searched as "Maggie Sørensen" and "Margaret Sorensen"); Julian Tate; Rebecca Lau; David Kwon; Dr. Elena Mirescu; Rhys Calloway; Simone Achterberg; Kenneth Morita; Catherine Whitfield; Douglas Prager; Nathaniel Cross; Priya Narayanan; Diane Okoro; Sandra Feeney; Philip Strand; Thomas Hargreaves; Gavin Ashmore; Christine Park; Martin Cavallo; Fiona Brennan.