1032-00005 · Whitfield, Prager & Loomis LLP · Termination

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CALDERWOOD & HARKNESS LLP Attorneys at Law

599 Lexington Avenue, 38th Floor New York, New York 10022

Telephone: (212) 848-4000 Facsimile: (212) 848-4800

November 30, 2023

Matter Reference: 1032-00005

By Hand Delivery, Email, and Overnight Courier

Vectris Photonics, Inc. 4750 Ridgepoint Drive, Suite 300 San Jose, California 95134

Attention: Rebecca Lau, General Counsel & Corporate Secretary

With a copy to:

Whitfield, Prager & Loomis LLP 2600 Sand Hill Road, Suite 250 Menlo Park, California 94025

Attention: Catherine Whitfield

With a copy to:

Whitfield, Prager & Loomis LLP 51 West 52nd Street New York, New York 10019

Attention: Catherine Whitfield

Re: Notice of Termination of Agreement and Plan of Merger, dated as of August 10, 2023 (the "Merger Agreement"), among Halcyon Semiconductor Aktiengesellschaft ("Halcyon" or "HSAG"), Halcyon Acquisition Sub, Inc. ("Merger Sub"), and Vectris Photonics, Inc. ("Vectris" or the "Company")

Dear Ms. Lau:

This letter constitutes formal written notice of termination of the above-referenced Agreement and Plan of Merger, dated as of August 10, 2023, among Halcyon Semiconductor Aktiengesellschaft, Halcyon Acquisition Sub, Inc., and Vectris Photonics, Inc. (the "Merger Agreement"). This notice is delivered by Halcyon Semiconductor Aktiengesellschaft, on behalf of itself and Halcyon Acquisition Sub, Inc. (collectively, the "Halcyon Parties"), to Vectris Photonics, Inc. Termination is made pursuant to Section 8.1(d) of the Merger Agreement (the "Antitrust Termination Right"), for the reasons set forth in detail below. All capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Merger Agreement.

This notice is delivered in accordance with the notice provisions of Section 9.2 of the Merger Agreement, by hand delivery, email transmission, and nationally recognized overnight courier service. This notice is being given on behalf of Halcyon following authorization by the Supervisory Board (Aufsichtsrat) of Halcyon Semiconductor Aktiengesellschaft at its duly convened meeting held on November 20, 2023, chaired by Prof. Dr. Friedrich Wendt, at which a quorum of the members of the Supervisory Board was present and at which the Supervisory Board resolved, by the requisite majority of its members, to authorize the Management Board (Vorstand) of Halcyon to exercise the Antitrust Termination Right under Section 8.1(d) of the Merger Agreement.

1. Background of the Merger Agreement

On August 10, 2023, Halcyon Semiconductor Aktiengesellschaft (a German stock corporation (Aktiengesellschaft), registered in the commercial register (Handelsregister) of the Munich Local Court (Amtsgericht München) under HRB 178254, with its registered headquarters at Halcyon-Platz 1, 81739 München, Germany), Halcyon Acquisition Sub, Inc. (a Delaware corporation, Secretary of State File No. 7634291, and a wholly owned subsidiary of Halcyon formed solely for the purpose of effectuating the transactions contemplated by the Merger Agreement), and Vectris Photonics, Inc. (a Delaware corporation, Secretary of State File No. 5918437) entered into the Merger Agreement.

The Merger Agreement contemplated a reverse triangular merger under Sections 251 and 252 of the Delaware General Corporation Law (the "DGCL"), pursuant to which Merger Sub would merge with and into Vectris (the "Merger"), with Vectris surviving the Merger as a wholly owned subsidiary of Halcyon. In connection with the Merger, each outstanding share of common stock, par value $0.001 per share, of Vectris (other than Excluded Shares and Dissenting Shares, each as defined in the Merger Agreement) would be converted into the right to receive aggregate cash consideration of $800,000,000, representing approximately $13.70 per share of Vectris common stock on a fully diluted basis, without interest and subject to any applicable withholding taxes.

The consummation of the Merger was subject to, among other conditions, the satisfaction or waiver of the conditions set forth in Article VII of the Merger Agreement. Among such conditions, Section 7.1(b) of the Merger Agreement established the Antitrust Condition, which required the receipt of all required antitrust and competition law approvals necessary for the lawful consummation of the Merger. As specifically enumerated in Section 7.1(b) and Schedule 7.1(b) of the Merger Agreement, the required antitrust approvals included, without limitation: (i) the expiration or early termination of the waiting period (including any extension thereof) applicable to the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and the rules and regulations promulgated thereunder; and (ii) clearance of the proposed concentration under Council Regulation (EC) No. 139/2004 of January 20, 2004 on the control of concentrations between undertakings (the "EU Merger Regulation" or "EUMR"), including either a decision by the European Commission pursuant to Article 6(1)(b) of the EUMR that the concentration is compatible with the internal market or, following a Phase II investigation, a decision pursuant to Article 8(1) or Article 8(2) of the EUMR declaring the concentration compatible with the internal market (with or without conditions or obligations).

2. Regulatory Proceedings and Failure of the Antitrust Condition

2.1 HSR Act Filing and DOJ Second Request

In accordance with Section 6.4(a) of the Merger Agreement (the "Regulatory Efforts" covenant), each of Halcyon and Vectris filed their respective Premerger Notification and Report Forms under the HSR Act with the Federal Trade Commission (the "FTC") and the Antitrust Division of the United States Department of Justice (the "DOJ") on August 18, 2023. Based on the date of filing, the initial statutory waiting period of thirty (30) days under Section 7A(b)(1)(B) of the HSR Act was scheduled to expire at 11:59 p.m. Eastern Time on September 18, 2023 (unless earlier terminated by the reviewing agency).

On September 15, 2023, three days prior to the expiration of the initial waiting period, the DOJ Antitrust Division issued a Request for Additional Information and Documentary Material (a "Second Request") to Halcyon, pursuant to 16 C.F.R. § 803.20. The Second Request required substantial additional document production and data submissions relating to, among other things, Halcyon's product portfolios in silicon photonics, co-packaged optics, and pluggable optical transceiver modules, including detailed customer transaction data, internal strategic planning documents, competitive assessments, and communications with customers and suppliers. Pursuant to Section 7A(e)(2) of the HSR Act, the issuance of the Second Request extended the waiting period indefinitely, such that the waiting period would not expire until thirty (30) days after Halcyon's substantial compliance with the Second Request. Halcyon received no corresponding indication from the FTC, and the DOJ confirmed that it was the agency that had assumed primary investigative responsibility over the proposed transaction.

Halcyon devoted considerable resources to complying with the Second Request, including the collection, review, and production of approximately 1.2 million documents and voluminous transactional data sets. Throughout this process, Halcyon and its counsel engaged in ongoing discussions with the staff of the DOJ Antitrust Division regarding the scope and timing of the investigation. Halcyon cooperated fully with the DOJ's review at all stages.

2.2 EUMR Notification and Phase II Investigation

In parallel with the U.S. regulatory process, Halcyon filed a Form CO notification with the European Commission, Directorate-General for Competition, on August 25, 2023, pursuant to Article 4 of the EU Merger Regulation. The notification was assigned Case No. M.11247 — Halcyon / Vectris. Halcyon engaged constructively with the European Commission throughout the pre-notification and Phase I review periods, including by participating in multiple state-of-play meetings and responding to requests for information issued by the Commission pursuant to Article 11 of the EUMR.

On October 6, 2023, the European Commission adopted a decision pursuant to Article 6(1)(c) of the EU Merger Regulation, determining that the proposed concentration raised serious doubts as to its compatibility with the internal market and the functioning of the EEA Agreement. The Commission accordingly opened an in-depth investigation (a "Phase II investigation") into the proposed concentration. The Commission's statement of objections and preliminary competitive assessment indicated that its principal concerns centered on the horizontal overlap between Halcyon's and Vectris's product lines in the EEA market for co-packaged optics ("CPO") chiplets sold to European cloud operators and hyperscale data center operators. In particular, the Commission expressed concerns that the combined entity would hold an aggregate share of supply of approximately 38% in the relevant EEA market for CPO chiplets, with the nearest competitor holding a significantly smaller share, and that the proposed transaction would eliminate an important competitive constraint in a market characterized by high barriers to entry, significant customer switching costs, and a limited number of qualified suppliers.

The Phase II investigation remains pending as of the date of this notice. The statutory deadline for the Commission's Phase II decision, subject to extensions under Article 10(3) of the EUMR, extends well beyond the Outside Date of the Merger Agreement, and there has been no indication from the Commission that clearance of the proposed concentration could reasonably be expected to be obtained within a timeframe consistent with the Outside Date or any extension thereof.

2.3 DOJ Civil Antitrust Complaint

On October 30, 2023, the United States of America, acting through the Department of Justice, Antitrust Division, filed a civil antitrust complaint in the United States District Court for the District of Columbia, captioned United States of America v. Halcyon Semiconductor Aktiengesellschaft and Vectris Photonics, Inc., Case No. 1:23-cv-03187 (D.D.C.) (the "DOJ Action"). The civil complaint was accompanied by a motion for a temporary restraining order and a preliminary injunction seeking to enjoin the consummation of the Merger pending a full trial on the merits.

The DOJ's complaint alleges that the proposed Merger would substantially lessen competition in the purported relevant market for silicon photonics transceiver modules for hyperscale data center interconnects in the United States, in violation of Section 7 of the Clayton Antitrust Act of 1914, as amended (15 U.S.C. § 18). Specifically, the DOJ alleges that the combined Halcyon-Vectris entity would control approximately 47% of the relevant domestic market, comprising Halcyon's approximately 19% share and Vectris's approximately 28% share, and that the elimination of head-to-head competition between Halcyon and Vectris in this market would result in higher prices, reduced innovation, and diminished quality for U.S. hyperscale customers. The DOJ further alleges that high barriers to entry — including the capital-intensive nature of silicon photonics fabrication, long qualification cycles with major hyperscale customers, and extensive intellectual property portfolios held by incumbent suppliers — would prevent timely and sufficient entry or expansion by other competitors to counteract the anticompetitive effects of the proposed Merger.

The DOJ seeks a permanent injunction pursuant to Section 15 of the Clayton Act (15 U.S.C. § 25) to block the consummation of the Merger. The filing of the DOJ Action represents an express determination by the United States government to challenge the proposed Merger in federal court.

2.4 Proposed Remedies Rejected

Halcyon submits that it has made good-faith and diligent efforts to obtain antitrust clearance for the proposed Merger, as required by Section 6.4 of the Merger Agreement. In connection with such efforts, on October 20, 2023 — prior to the filing of the DOJ Action — Halcyon submitted a detailed proposed structural remedy (divestiture package) to the DOJ Antitrust Division. The proposed remedy contemplated the divestiture of certain of Halcyon's existing product lines and related assets in the silicon photonics transceiver module segment to a qualified third-party purchaser, with the objective of addressing the DOJ's identified competitive concerns while preserving the core strategic rationale of the proposed transaction.

Notwithstanding the submission of Halcyon's proposed remedy package, and notwithstanding Halcyon's willingness to engage in further discussions regarding the scope and terms of potential divestitures, the DOJ proceeded to file the civil antitrust complaint described in Section 2.3 above on October 30, 2023. The DOJ did not accept Halcyon's proposed divestiture package and did not, at any point prior to the filing of the complaint, indicate that any structural or behavioral remedy would be sufficient to resolve its competitive concerns.

In addition, as noted above, the European Commission's Phase II investigation under the EUMR remains pending, with no indication that clearance could be obtained within a reasonable timeframe. Halcyon has not received any communication from the Commission suggesting that the Commission would be prepared to grant clearance, whether unconditionally or subject to conditions and obligations, within the period contemplated by the Merger Agreement.

3. Basis for Termination Under Section 8.1(d)

Section 8.1(d) of the Merger Agreement provides, in relevant part:

"This Agreement may be terminated at any time prior to the Effective Time by written notice from either Parent or the Company to the other party if (i) any Governmental Authority of competent jurisdiction shall have enacted, issued, promulgated, enforced, or entered any Order or Law permanently restraining, enjoining, or otherwise prohibiting the consummation of the Merger, and such Order or Law shall have become final and non-appealable, or (ii) the Required Antitrust Approvals (as defined in Section 7.1(b)) shall not have been obtained and, in the reasonable judgment of the terminating party, cannot reasonably be expected to be obtained prior to the Outside Date (as the same may be extended pursuant to Section 8.1(c)); provided, however, that the right to terminate this Agreement pursuant to this Section 8.1(d) shall not be available to any party whose breach of Section 6.4 (Regulatory Efforts) has been the proximate cause of the failure to obtain the Required Antitrust Approvals."

Based on the facts and circumstances described herein, Halcyon hereby terminates the Merger Agreement pursuant to Section 8.1(d)(ii) thereof, on the following grounds:

The Required Antitrust Approvals Have Not Been Obtained and Cannot Reasonably Be Expected to Be Obtained. As set forth in detail in Section 2 above, the Antitrust Condition set forth in Section 7.1(b) of the Merger Agreement has not been satisfied. Neither the HSR Act clearance nor the EUMR clearance has been obtained. To the contrary, the DOJ has filed a civil antitrust complaint in federal court seeking to permanently enjoin the consummation of the Merger, and the European Commission has opened a Phase II in-depth investigation into the proposed concentration and has expressed serious doubts regarding its compatibility with the internal market. In Halcyon's reasonable judgment, in light of (a) the pendency of the DOJ Action and the DOJ's stated intention to seek a permanent injunction blocking the Merger, (b) the DOJ's rejection of Halcyon's proposed structural remedy, (c) the pendency of the European Commission's Phase II investigation with no indication that clearance will be forthcoming, and (d) the realistic timelines for resolution of the DOJ Action and the Commission's investigation, the Required Antitrust Approvals cannot reasonably be expected to be obtained prior to the Outside Date (March 10, 2024), including any automatic extension thereof to June 10, 2024 under Section 8.1(c) of the Merger Agreement.

Halcyon Has Not Been the Proximate Cause of the Failure to Obtain the Required Antitrust Approvals. Halcyon has complied in all material respects with its obligations under Section 6.4 of the Merger Agreement (the Regulatory Efforts covenant). Among other things, Halcyon timely filed the required HSR Act notifications and the EUMR Form CO notification, cooperated fully with the DOJ's investigation (including devoting substantial resources to compliance with the Second Request), engaged constructively with the European Commission throughout the Phase I and Phase II review process, and submitted a good-faith structural remedy proposal to the DOJ in an effort to resolve the identified competitive concerns. Halcyon has not been the proximate cause of the failure to obtain the Required Antitrust Approvals, and accordingly the proviso to Section 8.1(d) does not apply to Halcyon's exercise of the Antitrust Termination Right.

Halcyon Is Exercising the Antitrust Termination Right Prior to the Outside Date. Halcyon notes that the Outside Date under the Merger Agreement is March 10, 2024, with a possible automatic ninety (90)-day extension to June 10, 2024 if the antitrust approvals contemplated by Section 7.1(b) are the sole Closing Condition that remains unsatisfied or unwaived as of the Outside Date. Notwithstanding that the Outside Date has not yet occurred, Halcyon is exercising its termination right under Section 8.1(d)(ii) on the date hereof, as Section 8.1(d)(ii) permits termination at any time prior to the Effective Time upon a reasonable determination that the Required Antitrust Approvals cannot reasonably be expected to be obtained prior to the Outside Date (as the same may be extended). The circumstances described herein amply support that determination.

Termination Is Effective Immediately. The termination of the Merger Agreement is effective immediately upon delivery of this notice in accordance with Section 9.2 of the Merger Agreement.

4. Reverse Break-Up Fee

Pursuant to Section 8.3(b) of the Merger Agreement, upon termination of the Merger Agreement by Halcyon pursuant to Section 8.1(d), Halcyon is obligated to pay to Vectris the Reverse Termination Fee (as defined in the Merger Agreement) in the amount of Twenty-Eight Million Dollars ($28,000,000) (such amount representing 3.5% of the aggregate Merger Consideration of $800,000,000).

Halcyon hereby acknowledges its obligation to pay the Reverse Termination Fee to Vectris in connection with the termination effected by this notice. Halcyon confirms that the Reverse Termination Fee shall be paid by wire transfer of immediately available funds in United States dollars to the bank account designated by Vectris in writing (or, if no such account has been designated, to the account set forth in the payment instructions previously provided by Vectris to Halcyon) no later than December 15, 2023, in accordance with the terms and conditions set forth in Section 8.3(b) of the Merger Agreement.

Halcyon further notes, and the parties acknowledge, that the Reverse Termination Fee constitutes the sole and exclusive remedy of Vectris, Merger Sub, and their respective affiliates, successors, and assigns against Halcyon and Merger Sub with respect to the termination of the Merger Agreement pursuant to Section 8.1(d), as expressly provided in Section 8.3(c) of the Merger Agreement. Pursuant to Section 8.3(c), upon payment of the Reverse Termination Fee in full, none of Halcyon, Merger Sub, or any of their respective affiliates, directors, officers, employees, stockholders, agents, or representatives shall have any further liability or obligation to Vectris or any of its affiliates arising out of or in connection with the Merger Agreement or the transactions contemplated thereby, except as otherwise expressly provided in the surviving provisions of the Merger Agreement referenced in Section 5 below.

5. Surviving Provisions

Pursuant to Section 8.2 of the Merger Agreement, the termination of the Merger Agreement shall not relieve any party of liability for any Willful Breach (as defined in the Merger Agreement) of the Merger Agreement occurring prior to such termination. In addition, Section 8.2 provides that certain provisions of the Merger Agreement shall survive the termination thereof and shall continue in full force and effect in accordance with their respective terms. The surviving provisions include, without limitation, the following:

(a) Section 6.5 (Confidentiality), including the parties' obligations regarding the treatment of Confidential Information (as defined therein) and the return or destruction of materials containing Confidential Information;

(b) Section 6.8 (Non-Disparagement), including the mutual covenant of the parties to refrain from making disparaging or defamatory statements regarding the other party, its affiliates, or their respective officers, directors, or employees;

(c) Section 6.10 (Cooperation), including the parties' obligation to cooperate in good faith with respect to matters arising out of the Merger Agreement, including regulatory proceedings and third-party inquiries;

(d) Section 8.2 (Effect of Termination), setting forth the provisions governing the consequences of termination;

(e) Section 8.3 (Termination Fees and Remedies), setting forth the parties' rights and obligations with respect to the payment of termination fees and the limitation of remedies following termination; and

(f) Article IX (General Provisions), including, without limitation:

(i) Section 9.2 (Notices), governing the manner and method of delivery of notices and communications under the Merger Agreement;

(ii) Section 9.6 (Governing Law), providing that the Merger Agreement and all disputes arising out of or relating thereto shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to any choice-of-law or conflict-of-law rules or provisions that would cause the application of the laws of any other jurisdiction;

(iii) Section 9.10 (Jurisdiction), providing for the exclusive jurisdiction of the Court of Chancery of the State of Delaware (or, if such court declines to accept jurisdiction, any state or federal court of competent jurisdiction sitting in the State of Delaware) over any litigation arising out of or relating to the Merger Agreement; and

(iv) such other provisions of Article IX as are, by their terms, intended to survive termination, including Section 9.4 (Entire Agreement), Section 9.5 (Third-Party Beneficiaries), Section 9.7 (Waiver of Jury Trial), and Section 9.11 (Specific Performance).

Halcyon confirms its intention to comply with all surviving obligations under the Merger Agreement and expects Vectris to do the same.

6. Reservation of Rights

Halcyon expressly reserves all rights and remedies available to it under the Merger Agreement, under any Termination Agreement and Mutual Release to be entered into by the parties (if any), and under applicable law, whether at law or in equity. Nothing contained in this notice shall be construed as a waiver of, or limitation upon, any rights, claims, or defenses that Halcyon or Merger Sub may have or may hereafter acquire under the Merger Agreement, under the surviving provisions thereof, or otherwise, including any rights to seek enforcement of the surviving obligations or to defend against any claims that may be asserted by Vectris or any other party.

For the avoidance of doubt, this notice shall not constitute, and shall not be deemed to constitute, an admission of any breach or default by Halcyon or Merger Sub under the Merger Agreement, or an admission of any liability or obligation of Halcyon or Merger Sub to Vectris or any other party, except as expressly set forth herein with respect to the payment of the Reverse Termination Fee. Halcyon expressly denies any such breach, default, or liability except as expressly acknowledged herein.

7. Request for Confirmation and Cooperation

Halcyon respectfully requests that Vectris promptly confirm receipt of this notice by written communication directed to the undersigned counsel at the address set forth above, or by email to the email addresses set forth in Section 9.2 of the Merger Agreement.

In addition, Halcyon requests that the parties and their respective counsel promptly enter into a Termination Agreement and Mutual Release (the "Termination Agreement") to memorialize the termination of the Merger Agreement and the terms of the parties' respective surviving obligations, including the payment of the Reverse Termination Fee and the mutual release of claims arising out of or relating to the Merger Agreement and the transactions contemplated thereby (other than claims arising under the surviving provisions). The undersigned counsel at Calderwood & Harkness LLP will be in contact with Catherine Whitfield and her colleagues at Whitfield, Prager & Loomis LLP regarding the form and substance of such Termination Agreement and the arrangements for payment of the Reverse Termination Fee, including wire transfer instructions and confirmation procedures.

Finally, Halcyon notes that it will separately notify the European Commission of the withdrawal of the EUMR notification in Case No. M.11247 — Halcyon / Vectris, pursuant to Article 6(1)(a) of the EU Merger Regulation. Halcyon will coordinate with Vectris and its counsel as necessary regarding any notifications, filings, or actions required in connection with the DOJ Action (Case No. 1:23-cv-03187 (D.D.C.)), including the filing of any joint stipulation of dismissal or other appropriate submission to the United States District Court for the District of Columbia. Halcyon expects the cooperation of Vectris in connection with the orderly wind-down of regulatory proceedings and related matters in accordance with the surviving obligations under the Merger Agreement.

We are available to discuss any aspect of this notice at your earliest convenience.

Very truly yours,

HALCYON SEMICONDUCTOR AKTIENGESELLSCHAFT

By: ________

Name: Dr. Katarina Breuer

Title: Chief Executive Officer (Vorstandsvorsitzende)

Date: November 30, 2023

HALCYON ACQUISITION SUB, INC.

By: ________

Name: Markus Ellinger

Title: Sole Director

Date: November 30, 2023

Prepared by Calderwood & Harkness LLP, counsel to Halcyon Semiconductor Aktiengesellschaft

cc:

Oliver Mackenzie, Esq., Calderwood & Harkness LLP, 599 Lexington Avenue, 38th Floor, New York, NY 10022

Howard Bellamy, Esq., Calderwood & Harkness LLP, 1333 New Hampshire Avenue NW, Suite 700, Washington, DC 20036

Dr. Luisa Hartmann, General Counsel, Halcyon Semiconductor AG, Halcyon-Platz 1, 81739 München, Germany

Markus Ellinger, Chief Financial Officer, Halcyon Semiconductor AG, Halcyon-Platz 1, 81739 München, Germany

Catherine Whitfield, Esq., Whitfield, Prager & Loomis LLP, 2600 Sand Hill Road, Suite 250, Menlo Park, CA 94025

Douglas Prager, Esq., Whitfield, Prager & Loomis LLP, 2600 Sand Hill Road, Suite 250, Menlo Park, CA 94025

Dr. Anand Raghavan, Chief Executive Officer, Vectris Photonics, Inc., 4750 Ridgepoint Drive, Suite 300, San Jose, CA 95134

CALDERWOOD & HARKNESS LLP Attorneys at Law
599 Lexington Avenue, 38th Floor New York, New York 10022
Telephone: (212) 848-4000 Facsimile: (212) 848-4800
November 30, 2023
Matter Reference: 1032-00005
By Hand Delivery, Email, and Overnight Courier
Vectris Photonics, Inc. 4750 Ridgepoint Drive, Suite 300 San Jose, California 95134
Attention: Rebecca Lau, General Counsel & Corporate Secretary
With a copy to:
Whitfield, Prager & Loomis LLP 2600 Sand Hill Road, Suite 250 Menlo Park, California 94025
Attention: Catherine Whitfield
With a copy to:
Whitfield, Prager & Loomis LLP 51 West 52nd Street New York, New York 10019
Attention: Catherine Whitfield
Re: Notice of Termination of Agreement and Plan of Merger, dated as of August 10, 2023 (the "Merger Agreement"), among Halcyon Semiconductor Aktiengesellschaft ("Halcyon" or "HSAG"), Halcyon Acquisition Sub, Inc. ("Merger Sub"), and Vectris Photonics, Inc. ("Vectris" or the "Company")
Dear Ms. Lau:
This letter constitutes formal written notice of termination of the above-referenced Agreement and Plan of Merger, dated as of August 10, 2023, among Halcyon Semiconductor Aktiengesellschaft, Halcyon Acquisition Sub, Inc., and Vectris Photonics, Inc. (the "Merger Agreement"). This notice is delivered by Halcyon Semiconductor Aktiengesellschaft, on behalf of itself and Halcyon Acquisition Sub, Inc. (collectively, the "Halcyon Parties"), to Vectris Photonics, Inc. Termination is made pursuant to Section 8.1(d) of the Merger Agreement (the "Antitrust Termination Right"), for the reasons set forth in detail below. All capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Merger Agreement.
This notice is delivered in accordance with the notice provisions of Section 9.2 of the Merger Agreement, by hand delivery, email transmission, and nationally recognized overnight courier service. This notice is being given on behalf of Halcyon following authorization by the Supervisory Board (Aufsichtsrat) of Halcyon Semiconductor Aktiengesellschaft at its duly convened meeting held on November 20, 2023, chaired by Prof. Dr. Friedrich Wendt, at which a quorum of the members of the Supervisory Board was present and at which the Supervisory Board resolved, by the requisite majority of its members, to authorize the Management Board (Vorstand) of Halcyon to exercise the Antitrust Termination Right under Section 8.1(d) of the Merger Agreement.
1. Background of the Merger Agreement
On August 10, 2023, Halcyon Semiconductor Aktiengesellschaft (a German stock corporation (Aktiengesellschaft), registered in the commercial register (Handelsregister) of the Munich Local Court (Amtsgericht München) under HRB 178254, with its registered headquarters at Halcyon-Platz 1, 81739 München, Germany), Halcyon Acquisition Sub, Inc. (a Delaware corporation, Secretary of State File No. 7634291, and a wholly owned subsidiary of Halcyon formed solely for the purpose of effectuating the transactions contemplated by the Merger Agreement), and Vectris Photonics, Inc. (a Delaware corporation, Secretary of State File No. 5918437) entered into the Merger Agreement.
The Merger Agreement contemplated a reverse triangular merger under Sections 251 and 252 of the Delaware General Corporation Law (the "DGCL"), pursuant to which Merger Sub would merge with and into Vectris (the "Merger"), with Vectris surviving the Merger as a wholly owned subsidiary of Halcyon. In connection with the Merger, each outstanding share of common stock, par value $0.001 per share, of Vectris (other than Excluded Shares and Dissenting Shares, each as defined in the Merger Agreement) would be converted into the right to receive aggregate cash consideration of $800,000,000, representing approximately $13.70 per share of Vectris common stock on a fully diluted basis, without interest and subject to any applicable withholding taxes.
The consummation of the Merger was subject to, among other conditions, the satisfaction or waiver of the conditions set forth in Article VII of the Merger Agreement. Among such conditions, Section 7.1(b) of the Merger Agreement established the Antitrust Condition, which required the receipt of all required antitrust and competition law approvals necessary for the lawful consummation of the Merger. As specifically enumerated in Section 7.1(b) and Schedule 7.1(b) of the Merger Agreement, the required antitrust approvals included, without limitation: (i) the expiration or early termination of the waiting period (including any extension thereof) applicable to the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and the rules and regulations promulgated thereunder; and (ii) clearance of the proposed concentration under Council Regulation (EC) No. 139/2004 of January 20, 2004 on the control of concentrations between undertakings (the "EU Merger Regulation" or "EUMR"), including either a decision by the European Commission pursuant to Article 6(1)(b) of the EUMR that the concentration is compatible with the internal market or, following a Phase II investigation, a decision pursuant to Article 8(1) or Article 8(2) of the EUMR declaring the concentration compatible with the internal market (with or without conditions or obligations).
2. Regulatory Proceedings and Failure of the Antitrust Condition
2.1 HSR Act Filing and DOJ Second Request
In accordance with Section 6.4(a) of the Merger Agreement (the "Regulatory Efforts" covenant), each of Halcyon and Vectris filed their respective Premerger Notification and Report Forms under the HSR Act with the Federal Trade Commission (the "FTC") and the Antitrust Division of the United States Department of Justice (the "DOJ") on August 18, 2023. Based on the date of filing, the initial statutory waiting period of thirty (30) days under Section 7A(b)(1)(B) of the HSR Act was scheduled to expire at 11:59 p.m. Eastern Time on September 18, 2023 (unless earlier terminated by the reviewing agency).
On September 15, 2023, three days prior to the expiration of the initial waiting period, the DOJ Antitrust Division issued a Request for Additional Information and Documentary Material (a "Second Request") to Halcyon, pursuant to 16 C.F.R. § 803.20. The Second Request required substantial additional document production and data submissions relating to, among other things, Halcyon's product portfolios in silicon photonics, co-packaged optics, and pluggable optical transceiver modules, including detailed customer transaction data, internal strategic planning documents, competitive assessments, and communications with customers and suppliers. Pursuant to Section 7A(e)(2) of the HSR Act, the issuance of the Second Request extended the waiting period indefinitely, such that the waiting period would not expire until thirty (30) days after Halcyon's substantial compliance with the Second Request. Halcyon received no corresponding indication from the FTC, and the DOJ confirmed that it was the agency that had assumed primary investigative responsibility over the proposed transaction.
Halcyon devoted considerable resources to complying with the Second Request, including the collection, review, and production of approximately 1.2 million documents and voluminous transactional data sets. Throughout this process, Halcyon and its counsel engaged in ongoing discussions with the staff of the DOJ Antitrust Division regarding the scope and timing of the investigation. Halcyon cooperated fully with the DOJ's review at all stages.
2.2 EUMR Notification and Phase II Investigation
In parallel with the U.S. regulatory process, Halcyon filed a Form CO notification with the European Commission, Directorate-General for Competition, on August 25, 2023, pursuant to Article 4 of the EU Merger Regulation. The notification was assigned Case No. M.11247 — Halcyon / Vectris. Halcyon engaged constructively with the European Commission throughout the pre-notification and Phase I review periods, including by participating in multiple state-of-play meetings and responding to requests for information issued by the Commission pursuant to Article 11 of the EUMR.
On October 6, 2023, the European Commission adopted a decision pursuant to Article 6(1)(c) of the EU Merger Regulation, determining that the proposed concentration raised serious doubts as to its compatibility with the internal market and the functioning of the EEA Agreement. The Commission accordingly opened an in-depth investigation (a "Phase II investigation") into the proposed concentration. The Commission's statement of objections and preliminary competitive assessment indicated that its principal concerns centered on the horizontal overlap between Halcyon's and Vectris's product lines in the EEA market for co-packaged optics ("CPO") chiplets sold to European cloud operators and hyperscale data center operators. In particular, the Commission expressed concerns that the combined entity would hold an aggregate share of supply of approximately 38% in the relevant EEA market for CPO chiplets, with the nearest competitor holding a significantly smaller share, and that the proposed transaction would eliminate an important competitive constraint in a market characterized by high barriers to entry, significant customer switching costs, and a limited number of qualified suppliers.
The Phase II investigation remains pending as of the date of this notice. The statutory deadline for the Commission's Phase II decision, subject to extensions under Article 10(3) of the EUMR, extends well beyond the Outside Date of the Merger Agreement, and there has been no indication from the Commission that clearance of the proposed concentration could reasonably be expected to be obtained within a timeframe consistent with the Outside Date or any extension thereof.
2.3 DOJ Civil Antitrust Complaint
On October 30, 2023, the United States of America, acting through the Department of Justice, Antitrust Division, filed a civil antitrust complaint in the United States District Court for the District of Columbia, captioned United States of America v. Halcyon Semiconductor Aktiengesellschaft and Vectris Photonics, Inc., Case No. 1:23-cv-03187 (D.D.C.) (the "DOJ Action"). The civil complaint was accompanied by a motion for a temporary restraining order and a preliminary injunction seeking to enjoin the consummation of the Merger pending a full trial on the merits.
The DOJ's complaint alleges that the proposed Merger would substantially lessen competition in the purported relevant market for silicon photonics transceiver modules for hyperscale data center interconnects in the United States, in violation of Section 7 of the Clayton Antitrust Act of 1914, as amended (15 U.S.C. § 18). Specifically, the DOJ alleges that the combined Halcyon-Vectris entity would control approximately 47% of the relevant domestic market, comprising Halcyon's approximately 19% share and Vectris's approximately 28% share, and that the elimination of head-to-head competition between Halcyon and Vectris in this market would result in higher prices, reduced innovation, and diminished quality for U.S. hyperscale customers. The DOJ further alleges that high barriers to entry — including the capital-intensive nature of silicon photonics fabrication, long qualification cycles with major hyperscale customers, and extensive intellectual property portfolios held by incumbent suppliers — would prevent timely and sufficient entry or expansion by other competitors to counteract the anticompetitive effects of the proposed Merger.
The DOJ seeks a permanent injunction pursuant to Section 15 of the Clayton Act (15 U.S.C. § 25) to block the consummation of the Merger. The filing of the DOJ Action represents an express determination by the United States government to challenge the proposed Merger in federal court.
2.4 Proposed Remedies Rejected
Halcyon submits that it has made good-faith and diligent efforts to obtain antitrust clearance for the proposed Merger, as required by Section 6.4 of the Merger Agreement. In connection with such efforts, on October 20, 2023 — prior to the filing of the DOJ Action — Halcyon submitted a detailed proposed structural remedy (divestiture package) to the DOJ Antitrust Division. The proposed remedy contemplated the divestiture of certain of Halcyon's existing product lines and related assets in the silicon photonics transceiver module segment to a qualified third-party purchaser, with the objective of addressing the DOJ's identified competitive concerns while preserving the core strategic rationale of the proposed transaction.
Notwithstanding the submission of Halcyon's proposed remedy package, and notwithstanding Halcyon's willingness to engage in further discussions regarding the scope and terms of potential divestitures, the DOJ proceeded to file the civil antitrust complaint described in Section 2.3 above on October 30, 2023. The DOJ did not accept Halcyon's proposed divestiture package and did not, at any point prior to the filing of the complaint, indicate that any structural or behavioral remedy would be sufficient to resolve its competitive concerns.
In addition, as noted above, the European Commission's Phase II investigation under the EUMR remains pending, with no indication that clearance could be obtained within a reasonable timeframe. Halcyon has not received any communication from the Commission suggesting that the Commission would be prepared to grant clearance, whether unconditionally or subject to conditions and obligations, within the period contemplated by the Merger Agreement.
3. Basis for Termination Under Section 8.1(d)
Section 8.1(d) of the Merger Agreement provides, in relevant part:
"This Agreement may be terminated at any time prior to the Effective Time by written notice from either Parent or the Company to the other party if (i) any Governmental Authority of competent jurisdiction shall have enacted, issued, promulgated, enforced, or entered any Order or Law permanently restraining, enjoining, or otherwise prohibiting the consummation of the Merger, and such Order or Law shall have become final and non-appealable, or (ii) the Required Antitrust Approvals (as defined in Section 7.1(b)) shall not have been obtained and, in the reasonable judgment of the terminating party, cannot reasonably be expected to be obtained prior to the Outside Date (as the same may be extended pursuant to Section 8.1(c)); provided, however, that the right to terminate this Agreement pursuant to this Section 8.1(d) shall not be available to any party whose breach of Section 6.4 (Regulatory Efforts) has been the proximate cause of the failure to obtain the Required Antitrust Approvals."
Based on the facts and circumstances described herein, Halcyon hereby terminates the Merger Agreement pursuant to Section 8.1(d)(ii) thereof, on the following grounds:
The Required Antitrust Approvals Have Not Been Obtained and Cannot Reasonably Be Expected to Be Obtained. As set forth in detail in Section 2 above, the Antitrust Condition set forth in Section 7.1(b) of the Merger Agreement has not been satisfied. Neither the HSR Act clearance nor the EUMR clearance has been obtained. To the contrary, the DOJ has filed a civil antitrust complaint in federal court seeking to permanently enjoin the consummation of the Merger, and the European Commission has opened a Phase II in-depth investigation into the proposed concentration and has expressed serious doubts regarding its compatibility with the internal market. In Halcyon's reasonable judgment, in light of (a) the pendency of the DOJ Action and the DOJ's stated intention to seek a permanent injunction blocking the Merger, (b) the DOJ's rejection of Halcyon's proposed structural remedy, (c) the pendency of the European Commission's Phase II investigation with no indication that clearance will be forthcoming, and (d) the realistic timelines for resolution of the DOJ Action and the Commission's investigation, the Required Antitrust Approvals cannot reasonably be expected to be obtained prior to the Outside Date (March 10, 2024), including any automatic extension thereof to June 10, 2024 under Section 8.1(c) of the Merger Agreement.
Halcyon Has Not Been the Proximate Cause of the Failure to Obtain the Required Antitrust Approvals. Halcyon has complied in all material respects with its obligations under Section 6.4 of the Merger Agreement (the Regulatory Efforts covenant). Among other things, Halcyon timely filed the required HSR Act notifications and the EUMR Form CO notification, cooperated fully with the DOJ's investigation (including devoting substantial resources to compliance with the Second Request), engaged constructively with the European Commission throughout the Phase I and Phase II review process, and submitted a good-faith structural remedy proposal to the DOJ in an effort to resolve the identified competitive concerns. Halcyon has not been the proximate cause of the failure to obtain the Required Antitrust Approvals, and accordingly the proviso to Section 8.1(d) does not apply to Halcyon's exercise of the Antitrust Termination Right.
Halcyon Is Exercising the Antitrust Termination Right Prior to the Outside Date. Halcyon notes that the Outside Date under the Merger Agreement is March 10, 2024, with a possible automatic ninety (90)-day extension to June 10, 2024 if the antitrust approvals contemplated by Section 7.1(b) are the sole Closing Condition that remains unsatisfied or unwaived as of the Outside Date. Notwithstanding that the Outside Date has not yet occurred, Halcyon is exercising its termination right under Section 8.1(d)(ii) on the date hereof, as Section 8.1(d)(ii) permits termination at any time prior to the Effective Time upon a reasonable determination that the Required Antitrust Approvals cannot reasonably be expected to be obtained prior to the Outside Date (as the same may be extended). The circumstances described herein amply support that determination.
Termination Is Effective Immediately. The termination of the Merger Agreement is effective immediately upon delivery of this notice in accordance with Section 9.2 of the Merger Agreement.
4. Reverse Break-Up Fee
Pursuant to Section 8.3(b) of the Merger Agreement, upon termination of the Merger Agreement by Halcyon pursuant to Section 8.1(d), Halcyon is obligated to pay to Vectris the Reverse Termination Fee (as defined in the Merger Agreement) in the amount of Twenty-Eight Million Dollars ($28,000,000) (such amount representing 3.5% of the aggregate Merger Consideration of $800,000,000).
Halcyon hereby acknowledges its obligation to pay the Reverse Termination Fee to Vectris in connection with the termination effected by this notice. Halcyon confirms that the Reverse Termination Fee shall be paid by wire transfer of immediately available funds in United States dollars to the bank account designated by Vectris in writing (or, if no such account has been designated, to the account set forth in the payment instructions previously provided by Vectris to Halcyon) no later than December 15, 2023, in accordance with the terms and conditions set forth in Section 8.3(b) of the Merger Agreement.
Halcyon further notes, and the parties acknowledge, that the Reverse Termination Fee constitutes the sole and exclusive remedy of Vectris, Merger Sub, and their respective affiliates, successors, and assigns against Halcyon and Merger Sub with respect to the termination of the Merger Agreement pursuant to Section 8.1(d), as expressly provided in Section 8.3(c) of the Merger Agreement. Pursuant to Section 8.3(c), upon payment of the Reverse Termination Fee in full, none of Halcyon, Merger Sub, or any of their respective affiliates, directors, officers, employees, stockholders, agents, or representatives shall have any further liability or obligation to Vectris or any of its affiliates arising out of or in connection with the Merger Agreement or the transactions contemplated thereby, except as otherwise expressly provided in the surviving provisions of the Merger Agreement referenced in Section 5 below.
5. Surviving Provisions
Pursuant to Section 8.2 of the Merger Agreement, the termination of the Merger Agreement shall not relieve any party of liability for any Willful Breach (as defined in the Merger Agreement) of the Merger Agreement occurring prior to such termination. In addition, Section 8.2 provides that certain provisions of the Merger Agreement shall survive the termination thereof and shall continue in full force and effect in accordance with their respective terms. The surviving provisions include, without limitation, the following:
(a) Section 6.5 (Confidentiality), including the parties' obligations regarding the treatment of Confidential Information (as defined therein) and the return or destruction of materials containing Confidential Information;
(b) Section 6.8 (Non-Disparagement), including the mutual covenant of the parties to refrain from making disparaging or defamatory statements regarding the other party, its affiliates, or their respective officers, directors, or employees;
(c) Section 6.10 (Cooperation), including the parties' obligation to cooperate in good faith with respect to matters arising out of the Merger Agreement, including regulatory proceedings and third-party inquiries;
(d) Section 8.2 (Effect of Termination), setting forth the provisions governing the consequences of termination;
(e) Section 8.3 (Termination Fees and Remedies), setting forth the parties' rights and obligations with respect to the payment of termination fees and the limitation of remedies following termination; and
(f) Article IX (General Provisions), including, without limitation:
(i) Section 9.2 (Notices), governing the manner and method of delivery of notices and communications under the Merger Agreement;
(ii) Section 9.6 (Governing Law), providing that the Merger Agreement and all disputes arising out of or relating thereto shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to any choice-of-law or conflict-of-law rules or provisions that would cause the application of the laws of any other jurisdiction;
(iii) Section 9.10 (Jurisdiction), providing for the exclusive jurisdiction of the Court of Chancery of the State of Delaware (or, if such court declines to accept jurisdiction, any state or federal court of competent jurisdiction sitting in the State of Delaware) over any litigation arising out of or relating to the Merger Agreement; and
(iv) such other provisions of Article IX as are, by their terms, intended to survive termination, including Section 9.4 (Entire Agreement), Section 9.5 (Third-Party Beneficiaries), Section 9.7 (Waiver of Jury Trial), and Section 9.11 (Specific Performance).
Halcyon confirms its intention to comply with all surviving obligations under the Merger Agreement and expects Vectris to do the same.
6. Reservation of Rights
Halcyon expressly reserves all rights and remedies available to it under the Merger Agreement, under any Termination Agreement and Mutual Release to be entered into by the parties (if any), and under applicable law, whether at law or in equity. Nothing contained in this notice shall be construed as a waiver of, or limitation upon, any rights, claims, or defenses that Halcyon or Merger Sub may have or may hereafter acquire under the Merger Agreement, under the surviving provisions thereof, or otherwise, including any rights to seek enforcement of the surviving obligations or to defend against any claims that may be asserted by Vectris or any other party.
For the avoidance of doubt, this notice shall not constitute, and shall not be deemed to constitute, an admission of any breach or default by Halcyon or Merger Sub under the Merger Agreement, or an admission of any liability or obligation of Halcyon or Merger Sub to Vectris or any other party, except as expressly set forth herein with respect to the payment of the Reverse Termination Fee. Halcyon expressly denies any such breach, default, or liability except as expressly acknowledged herein.
7. Request for Confirmation and Cooperation
Halcyon respectfully requests that Vectris promptly confirm receipt of this notice by written communication directed to the undersigned counsel at the address set forth above, or by email to the email addresses set forth in Section 9.2 of the Merger Agreement.
In addition, Halcyon requests that the parties and their respective counsel promptly enter into a Termination Agreement and Mutual Release (the "Termination Agreement") to memorialize the termination of the Merger Agreement and the terms of the parties' respective surviving obligations, including the payment of the Reverse Termination Fee and the mutual release of claims arising out of or relating to the Merger Agreement and the transactions contemplated thereby (other than claims arising under the surviving provisions). The undersigned counsel at Calderwood & Harkness LLP will be in contact with Catherine Whitfield and her colleagues at Whitfield, Prager & Loomis LLP regarding the form and substance of such Termination Agreement and the arrangements for payment of the Reverse Termination Fee, including wire transfer instructions and confirmation procedures.
Finally, Halcyon notes that it will separately notify the European Commission of the withdrawal of the EUMR notification in Case No. M.11247 — Halcyon / Vectris, pursuant to Article 6(1)(a) of the EU Merger Regulation. Halcyon will coordinate with Vectris and its counsel as necessary regarding any notifications, filings, or actions required in connection with the DOJ Action (Case No. 1:23-cv-03187 (D.D.C.)), including the filing of any joint stipulation of dismissal or other appropriate submission to the United States District Court for the District of Columbia. Halcyon expects the cooperation of Vectris in connection with the orderly wind-down of regulatory proceedings and related matters in accordance with the surviving obligations under the Merger Agreement.
We are available to discuss any aspect of this notice at your earliest convenience.
Very truly yours,
HALCYON SEMICONDUCTOR AKTIENGESELLSCHAFT
By: ________
Name: Dr. Katarina Breuer
Title: Chief Executive Officer (Vorstandsvorsitzende)
Date: November 30, 2023
HALCYON ACQUISITION SUB, INC.
By: ________
Name: Markus Ellinger
Title: Sole Director
Date: November 30, 2023
Prepared by Calderwood & Harkness LLP, counsel to Halcyon Semiconductor Aktiengesellschaft
cc:
Oliver Mackenzie, Esq., Calderwood & Harkness LLP, 599 Lexington Avenue, 38th Floor, New York, NY 10022
Howard Bellamy, Esq., Calderwood & Harkness LLP, 1333 New Hampshire Avenue NW, Suite 700, Washington, DC 20036
Dr. Luisa Hartmann, General Counsel, Halcyon Semiconductor AG, Halcyon-Platz 1, 81739 München, Germany
Markus Ellinger, Chief Financial Officer, Halcyon Semiconductor AG, Halcyon-Platz 1, 81739 München, Germany
Catherine Whitfield, Esq., Whitfield, Prager & Loomis LLP, 2600 Sand Hill Road, Suite 250, Menlo Park, CA 94025
Douglas Prager, Esq., Whitfield, Prager & Loomis LLP, 2600 Sand Hill Road, Suite 250, Menlo Park, CA 94025
Dr. Anand Raghavan, Chief Executive Officer, Vectris Photonics, Inc., 4750 Ridgepoint Drive, Suite 300, San Jose, CA 95134

CALDERWOOD & HARKNESS LLP Attorneys at Law

HALCYON SEMICONDUCTOR AKTIENGESELLSCHAFT

HALCYON ACQUISITION SUB, INC.

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