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CALDERWOOD & HARKNESS LLP

PRIVILEGED AND CONFIDENTIAL

ATTORNEY-CLIENT PRIVILEGED

ATTORNEY WORK PRODUCT

This memorandum and all attachments are protected by the attorney-client privilege and constitute attorney work product. This memorandum is intended solely for the use of the Supervisory Board and Audit Committee of Halcyon Semiconductor AG and their authorized advisors. Any dissemination, distribution, or copying of this memorandum or its contents to any unauthorized person is strictly prohibited. If you have received this memorandum in error, please contact Calderwood & Harkness LLP immediately and destroy all copies.

MEMORANDUM

TO: Supervisory Board and Audit Committee, Halcyon Semiconductor AG (via Marcus Friedl, General Counsel)

FROM: Howard Quinn, Conrad Ashby

DATE: March 12, 2026

RE: DOJ NSD Inquiry — Status Update and Anticipated Resolution (Reference No. NSD-CES-2025-04871)

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I. PURPOSE

This memorandum provides the Supervisory Board and Audit Committee of Halcyon Semiconductor AG ("HSAG" or the "Company") with a comprehensive update on the status of the inquiry by the U.S. Department of Justice, National Security Division, Counterintelligence and Export Control Section ("DOJ NSD/CES") concerning shipments of HCA-9100 series analog-to-digital converter ("ADC") chipsets classified under Export Control Classification Number ("ECCN") 3A001. The DOJ inquiry is referenced under case number NSD-CES-2025-04871.

As the Board is aware, the inquiry concerns seventeen shipments of HCA-9100 series ADC chipsets routed through Archipelago Component Solutions Pte. Ltd., a Singapore-incorporated distributor ("Archipelago"), to two entities located in the People's Republic of China ("PRC"): Zhonghe Microelectronics Co., Ltd., based in Shenzhen ("Zhonghe"), and Lansheng Harborline Technologies Technologies Ltd., based in Chengdu ("Lansheng"). These seventeen shipments occurred between March 12, 2024 and August 19, 2025 and had an aggregate commercial value of approximately $6.83 million. Of this total, approximately $4.41 million was attributable to eleven shipments to Zhonghe, and approximately $2.42 million was attributable to six shipments to Lansheng.

The purpose of this memorandum is threefold. First, it provides a detailed factual and procedural update on developments since our last written report to the Board in January 2026. Second, it summarizes the terms of the anticipated resolution that has been agreed in principle with DOJ NSD/CES on February 24, 2026, and the draft settlement agreement that was circulated by DOJ on March 3, 2026 (for which Calderwood & Harkness circulated a redline markup on March 10, 2026). Third, it requests that the Supervisory Board and/or Audit Committee authorize the execution of the settlement agreement on terms substantially consistent with those described herein, and delegate related signatory and disclosure authority to the General Counsel and other designated officers.

We believe this matter is positioned for a favorable resolution and respectfully urge prompt Board action to preserve the current negotiating posture and timeline with DOJ.

II. BACKGROUND SUMMARY

For the convenience of Board and Audit Committee members who may not have reviewed prior reporting on this matter, we provide the following summary of the inquiry's origin and procedural history.

Origin of the Inquiry. On October 9, 2025, the DOJ NSD/CES issued a voluntary request for information to Halcyon Semiconductor Inc. ("HSI"), the Company's wholly owned U.S. subsidiary, located at 4700 Great America Parkway, Suite 300, San Jose, California 95054. The request sought documents and information concerning HSI's sales and distribution of HCA-9100 series ADC chipsets to PRC-based end users through third-party distribution channels, with particular focus on Archipelago Component Solutions Pte. Ltd. as an intermediary.

Engagement of Outside Counsel. HSI's in-house legal team immediately escalated the matter to the General Counsel. Calderwood & Harkness LLP was engaged on October 11, 2025, and formally entered its appearance with DOJ NSD/CES on October 14, 2025. Since that date, Calderwood & Harkness has served as lead outside counsel for both HSAG and HSI in connection with this matter. Our principal points of contact at DOJ have been Senior Trial Attorney Adrienne Kolb and Trial Attorney Jonathan Weir.

Core DOJ Concern — Post-Entity-List Zhonghe Shipments. The primary focus of the DOJ inquiry has been three shipments of HCA-9100 series ADC chipsets to Zhonghe Microelectronics Co., Ltd. that occurred after Zhonghe was added to the Bureau of Industry and Security ("BIS") Entity List on June 14, 2025. Specifically, these shipments were dated June 27, 2025, July 15, 2025, and August 3, 2025 (referred to internally as Shipments #9, #10, and #11, respectively). Because Zhonghe appeared on the Entity List as of June 14, 2025, any export, reexport, or in-country transfer of items subject to the Export Administration Regulations ("EAR") to Zhonghe required a license from BIS. No such license was obtained for any of the three shipments. DOJ's theory is that these three shipments constitute potential violations of 15 C.F.R. § 744.11, which prohibits exports or reexports to Entity List parties without a BIS license.

Secondary DOJ Theory — Lansheng Military End-Use Provisions. DOJ has also raised a secondary theory concerning the six shipments to Lansheng Harborline Technologies Technologies Ltd. DOJ's theory is that these shipments may implicate the military end-use provisions of the EAR, specifically § 744.21, which prohibits the export, reexport, or in-country transfer of specified items when the exporter knows, or is informed by BIS, that the items are intended for a "military end use" or a "military end user" in certain countries, including the PRC. DOJ has indicated that this theory is based in part on classified intelligence that has not been shared with the Company or its counsel. As discussed in Section III below, our investigation found no evidence supporting this theory, and DOJ has ultimately agreed not to pursue it as a basis for any penalty or admission of violation.

Product Specifications. The products at issue are HSAG's HCA-9100 series ADC chipsets. These are high-performance analog-to-digital converters with sampling rates exceeding 3.6 giga-samples per second ("Gsps"). Due to their performance characteristics, these chipsets are classified under ECCN 3A001, which captures certain types of electronic components that are controlled for national security and other reasons. The HCA-9100 series has both commercial and military/dual-use applications, including electronic warfare, signals intelligence, radar, and advanced telecommunications systems.

Distribution Channel. All seventeen shipments at issue followed a common distribution pathway. The chipsets were fabricated at HSAG's semiconductor fabrication facility in Dresden, Germany. They were then shipped to Archipelago Component Solutions Pte. Ltd.'s warehouse facility in Singapore, from which Archipelago distributed them to the PRC-based end users (Zhonghe in Shenzhen and Lansheng in Chengdu). Archipelago served as an authorized distributor under a distribution agreement with HSI. The use of Archipelago as an intermediary is a standard industry practice for distribution of semiconductor components in the Asia-Pacific region and was not, in itself, indicative of any intent to circumvent export controls.

III. KEY MILESTONES SINCE LAST UPDATE (JANUARY 2026)

Since our last written update to the Board, which was provided in January 2026, the following significant milestones have occurred.

A. Completion of the Internal Investigation

Calderwood & Harkness completed its internal investigation of the facts and circumstances surrounding all seventeen shipments at issue. A comprehensive findings memorandum was delivered to General Counsel Marcus Friedl on January 28, 2026. The investigation was extensive in scope and involved the following principal activities:

• Review of approximately 42,000 documents and 1.2 terabytes of structured data extracted from HSAG's Brightmoor Solutions ("SAP GTS") system, including order records, shipping documentation, compliance screening logs, customer records, Entity List screening outputs, and internal communications.

• Fourteen interviews of Company personnel across HSAG (Dresden) and HSI (San Jose), including representatives from trade compliance, sales, order management, logistics, and information technology.

• Three interviews of Archipelago Component Solutions Pte. Ltd. personnel, conducted through Singapore local counsel in accordance with applicable Singapore data protection and employment law requirements.

The principal findings of the investigation are summarized below:

Post-Entity-List Zhonghe Shipments (Shipments #9, #10, #11). The investigation confirmed that the three post-Entity-List Zhonghe shipments constitute apparent violations of 15 C.F.R. § 744.11. These were the only violations identified in the investigation. Critically, however, the investigation found that these violations were non-willful in nature. No Company personnel had actual knowledge of Zhonghe's Entity List designation at the time of the relevant shipments, and no evidence was found of any intent to evade or circumvent export controls.

The root cause of the violations was a combination of three interconnected systemic failures:

(i) Third-Party Screening Database Update Delay. Sentinel Compliance Data Services Ltd. ("Sentinel"), an Edinburgh, UK-based provider of restricted-party screening data, failed to update the restricted-party screening database used by Archipelago's trade compliance system to reflect Zhonghe's June 14, 2025 Entity List designation until June 26, 2025 — a delay of twelve calendar days (nine business days). This delay exceeded the five-business-day update service level agreement ("SLA") between Sentinel and Archipelago by four business days. As a result, Shipment #9, which was processed on June 27, 2025, was screened against a database that had only been updated the prior day, and the order itself had been pre-approved on June 13, 2025 — one day before the Entity List designation took effect.

(ii) Failure to Re-Screen at Ship-Confirm Stage. HSI's and Archipelago's trade compliance procedures did not require re-screening of customer and end-user records at the ship-confirm stage for orders that had been pre-approved during order entry. Shipment #9 had been pre-approved on June 13, 2025 — one day before Zhonghe's Entity List designation. Because there was no re-screening protocol at the time of shipment, the order was released for shipment on June 27, 2025 without any check against the updated screening database. Had a re-screening been performed, it would have flagged the Zhonghe Entity List entry (which had been loaded into Sentinel's database the prior day).

(iii) Character-Encoding Mismatch. Shipments #10 (July 15, 2025) and #11 (August 3, 2025) occurred after Sentinel's database had been updated. However, these shipments cleared Archipelago's restricted-party screening system due to a character-encoding mismatch between Zhonghe's simplified Chinese trade name (中和微电子有限公司), which was stored in Archipelago's customer records, and the romanized transliteration of that name as it appeared on the BIS Entity List. Archipelago's screening system was not configured to perform cross-script matching or transliteration-aware fuzzy matching, and accordingly the system failed to flag the match between the customer record and the Entity List entry. This is a known limitation of many commercial screening platforms and has been identified by industry groups and BIS itself as an area of particular concern in the Asia-Pacific distribution context.

Pre-Entity-List Zhonghe Shipments (Shipments #1–#8). The investigation confirmed that the eight Zhonghe shipments that occurred prior to the June 14, 2025 Entity List designation — spanning from March 2024 through May 2025 — were lawful. At the time of these shipments, Zhonghe was not on the Entity List, and no license was required for exports of ECCN 3A001 items to Zhonghe.

Lansheng Shipments (Shipments #12–#17). With respect to the six Lansheng shipments, the investigation found no evidence that any Company or Archipelago personnel had knowledge or reason to know that the items were intended for a "military end use" or a "military end user" as defined in EAR § 744.21. No "is informed" notice was ever received from BIS with respect to Lansheng or any items shipped to Lansheng. Lansheng was not and is not on the Entity List, the Unverified List, the Military End-User List, or any other restricted-party list maintained by BIS. Accordingly, the investigation concluded that there is no demonstrable violation of EAR § 744.21 with respect to any of the Lansheng shipments.

OFAC Analysis. All PRC end users, their principals, officers, directors, and known shareholders were screened against the Office of Foreign Assets Control ("OFAC") Specially Designated Nationals and blocked Persons List ("SDN List"), the Sectoral Sanctions Identifications List ("SSI List"), and the Non-SDN Chinese Military-Industrial Complex Companies List ("NS-CMIC List"). All screenings returned negative results. The investigation identified no OFAC violations.

B. Employee Proffers

On January 13, 2026, two HSI employees provided voluntary proffers to DOJ at Calderwood & Harkness's Washington, D.C. office. The employees were Ryan Oshiro, Director of Asia-Pacific Sales at HSI, and Janet Liang, Trade Compliance Analyst at HSI. Both proffers were conducted in the presence of Calderwood & Harkness counsel and individual counsel for each employee.

The substance of both proffers was consistent with the findings of Calderwood & Harkness's internal investigation. Mr. Oshiro provided an account of the commercial relationship with Zhonghe and Lansheng, including the role of Archipelago as a distribution intermediary. Ms. Liang described HSI's compliance screening procedures, the reliance on Archipelago's screening for downstream transactions, and the absence of any re-screening protocol at the ship-confirm stage. Both employees confirmed the absence of any willful or intentional conduct. We understand from DOJ's subsequent communications that the proffers were viewed favorably and contributed to DOJ's assessment that the violations were non-willful.

C. Document Productions to DOJ

Calderwood & Harkness completed two document productions to DOJ during the period covered by this update. The first production, made on November 18, 2025, consisted of approximately 14,200 documents, including order records, shipping documentation, compliance screening logs, internal communications, and corporate policies and procedures. The second production, made on December 9, 2025, consisted of approximately 6,800 documents, including Archipelago Component Solutions' internal records. The Archipelago documents were produced under a Singapore-counsel protocol developed by our Singapore correspondent firm, to address Singapore Personal Data Protection Act ("PDPA") requirements and potential issues under the Singapore Evidence Act.

In total, approximately 21,000 documents were produced to DOJ across the two productions.

D. Voluntary Self-Disclosure

On November 4, 2025, Calderwood & Harkness, on behalf of HSI, filed a voluntary self-disclosure ("VSD") with the BIS Office of Export Enforcement ("OEE") covering the three post-Entity-List Zhonghe shipments. The VSD was assigned Reference No. OEE-VSD-2025-00319. The filing of the VSD was a strategically important step, as BIS and DOJ policies afford significant mitigating credit to parties that make timely, comprehensive, and accurate voluntary self-disclosures of apparent export control violations. We believe the VSD has been instrumental in DOJ's willingness to resolve this matter administratively rather than through a criminal disposition.

E. Ashford Pennington Phase I Compliance Assessment

On February 5, 2026, Ashford Pennington LLC, an independent export compliance consulting firm, delivered its Phase I compliance assessment report. The assessment was conducted by Dr. Miriam Hecht, a former Deputy Assistant Secretary at BIS and a recognized authority on export compliance program design.

Dr. Hecht's assessment identified a number of compliance program deficiencies that were consistent with the findings of Calderwood & Harkness's internal investigation. In particular, the assessment identified the following areas of concern:

• Over-reliance on third-party distributor screening, without adequate oversight or verification by HSI's own trade compliance function;

• Absence of a re-screening protocol at the ship-confirm stage for pre-approved orders;

• Inadequate SLA monitoring with respect to Sentinel Compliance Data Services, including no mechanism for verifying timeliness or accuracy of screening database updates;

• The character-encoding deficiency in Archipelago's screening system, which prevented cross-script matching of Chinese-language trade names against romanized Entity List entries;

• Absence of real-time Entity List monitoring — the Company's compliance system relied on periodic (rather than continuous) database updates;

• Insufficient compliance staffing at HSI, with only one full-time trade compliance analyst (Ms. Liang) responsible for all EAR compliance screening for the Asia-Pacific region.

Dr. Hecht's report included detailed recommendations for remediation, many of which have already been implemented or are in the process of implementation. Phase II of the Ashford Pennington engagement, which involves ongoing implementation support and validation, is expected to continue through mid-2026.

F. Resolution-in-Principle with DOJ

Following several rounds of substantive discussions between Calderwood & Harkness and DOJ, a resolution-in-principle framework was agreed on February 24, 2026. The key terms of this framework are described in Section IV below.

G. Draft Settlement Agreement

On March 3, 2026, DOJ circulated a draft administrative settlement agreement reflecting the resolution-in-principle terms. Calderwood & Harkness reviewed the draft, consulted with HSAG's General Counsel and with Kessler Pratt & Whitfield LLP (German/EU counsel), and circulated a redline markup to DOJ on March 10, 2026. The principal areas of markup related to (i) the scope of the release and covenant not to prosecute, (ii) the compliance monitor selection process and the Company's objection rights, (iii) the specificity of the compliance undertakings, (iv) cooperation obligations and protections for privilege and foreign data privacy, and (v) advance notice provisions for any public disclosure by DOJ, which are critical to HSAG's MAR Article 17 compliance obligations. A call with DOJ to discuss the redline is scheduled for March 13, 2026.

IV. ANTICIPATED RESOLUTION TERMS

Set forth below is a summary of the anticipated resolution terms, as reflected in the resolution-in-principle framework agreed on February 24, 2026 and the draft settlement agreement circulated by DOJ on March 3, 2026. These terms remain subject to finalization of the settlement agreement language, which is the subject of ongoing negotiations.

We note that the terms described above represent a strong outcome in the context of current DOJ enforcement practice in the export controls space. The administrative-settlement disposition, the absence of criminal charges, the absence of a denial order, and the substantial penalty reduction are each individually significant, and collectively they represent a resolution that compares very favorably to recent public settlements in comparable matters.

V. TOTAL ESTIMATED ALL-IN COST

The following table summarizes the total estimated all-in cost of this matter to the Company, encompassing the civil monetary penalty, professional fees, compliance monitor costs, and the costs of implementing and maintaining the compliance undertakings over the three-year Enhanced Compliance Period.

At the current EUR/USD exchange rate of approximately 1.08, the total estimated all-in cost equals approximately €9.4 million to €10.8 million.

Several observations are in order regarding the financial significance of these figures:

• HSAG's materiality threshold for financial reporting purposes is €15 million. The total estimated all-in cost of approximately €9.4 million to €10.8 million falls below this threshold.

• The $3.25 million civil penalty (approximately €3.0 million) and the total professional fees of approximately $3.7 million to $4.3 million (approximately €3.4 million to €4.0 million) are individually well below the materiality threshold. However, when these amounts are combined with the compliance implementation costs (monitor, audits, technology, personnel, and training), the total approaches the materiality threshold, and the Board should be mindful of this in evaluating the aggregate financial impact.

• For additional context, HSAG's consolidated revenue for fiscal year 2024 was €4.27 billion. The total estimated all-in cost of approximately €9.4 million to €10.8 million represents approximately 0.22% to 0.25% of consolidated revenue — a de minimis percentage. HSI's FY 2024 revenue was approximately $1.14 billion, representing approximately 22% of HSAG's consolidated revenue. The civil penalty and the majority of the professional fees relate primarily to HSI's operations and the distribution channel managed out of HSI's San Jose office.

VI. FINANCIAL REPORTING AND DISCLOSURE CONSIDERATIONS

A. IAS 37 Contingency Disclosure

Calderwood & Harkness has coordinated with HSAG's external auditor, Pinnacle Ridgeway Partners (lead audit partner Graham Sinclair, Glenrock Assurance office), regarding the appropriate treatment of this matter under IAS 37 (Provisions, Contingent Liabilities and Contingent Assets).

Based on our discussions with Mr. Sinclair and his team, the following conclusions have been reached regarding IAS 37 treatment:

• The $3.25 million civil monetary penalty constitutes a probable obligation with a reliably estimable amount. Once the settlement agreement is executed, this amount should be recognized as a provision on HSAG's balance sheet in accordance with IAS 37.14.

• Professional fees that have already been incurred or are committed under existing engagement arrangements should be accrued in the period in which the services were rendered or the commitment was made.

• The total estimated all-in cost of approximately €9.4 million to €10.8 million falls below HSAG's €15 million materiality threshold. However, in Mr. Sinclair's view, the matter warrants footnote disclosure as a contingent liability in HSAG's consolidated financial statements, given the nature of the underlying conduct (export control violations), the involvement of a U.S. government enforcement agency, and the potential reputational and business implications.

For additional financial context relevant to investor assessment:

• HSAG's consolidated revenue for FY 2024 was €4.27 billion. The total estimated all-in cost represents approximately 0.22% to 0.25% of consolidated revenue.

• HSI's FY 2024 revenue was approximately $1.14 billion, representing approximately 22% of HSAG consolidated revenue. Because the civil penalty and the majority of the professional fees relate primarily to HSI's operations, investors may view the cost in relation to HSI's standalone revenue.

• HSAG's PRC revenue for FY 2024 was approximately €612 million, representing approximately 14.3% of consolidated revenue. While the resolution of this matter does not directly impair HSAG's ability to continue selling into the PRC market (given the absence of a denial order), the matter may be relevant to investor assessment of ongoing PRC-related business risk, particularly in light of the evolving U.S. export control landscape.

B. MAR Article 17 — Ad-Hoc Disclosure (Frankfurt Stock Exchange)

HSAG is listed on the Frankfurt Stock Exchange (XETRA ticker: HCA) and is accordingly subject to the ad-hoc disclosure obligations under Article 17 of the EU Market Abuse Regulation (Regulation (EU) No. 596/2014, "MAR"). Article 17 requires that an issuer publicly disclose, as soon as possible, inside information that directly concerns the issuer, unless the conditions for a legitimate delay of disclosure are satisfied.

Our current assessment, developed in consultation with Kessler Pratt & Whitfield LLP (Dr. Tobias Engel) and Braxton Merritt LLP (Elena Voss), is as follows:

• Given that the total estimated all-in cost of approximately €9.4 million to €10.8 million is below HSAG's €15 million materiality threshold, the settlement, standing alone, is unlikely to have a significant effect on the price of HSAG's financial instruments. On this basis, an ad-hoc notice is likely not required at this time.

• However, we defer to the definitive assessment of Kessler Pratt & Whitfield LLP and Braxton Merritt LLP on this question, as the analysis involves considerations of German and EU securities law that are outside the scope of Calderwood & Harkness's engagement.

There is one critical caveat that the Board should be aware of. If DOJ issues a public press release upon execution of the settlement agreement — which is the expected practice in matters of this nature — an ad-hoc notice will be required simultaneously to avoid selective disclosure. A DOJ press release would likely constitute the public disclosure of inside information, and HSAG would be obligated to issue a corresponding ad-hoc notice without delay.

To address this timing concern, Calderwood & Harkness's March 10, 2026 redline of the draft settlement agreement includes a provision requiring DOJ to provide the Company with at least five (5) business days' advance notice of any public disclosure, including any press release, statement, or other public communication regarding the settlement. This advance-notice provision is specifically designed to allow HSAG sufficient time to prepare and issue a MAR Article 17 ad-hoc notice simultaneously with any DOJ public disclosure.

We strongly recommend that a coordination protocol among Braxton Merritt LLP (Elena Voss), Kessler Pratt & Whitfield LLP (Dr. Tobias Engel), Calderwood & Harkness, and HSAG's investor relations and communications teams be established well in advance of the settlement execution date, so that all parties are prepared to act promptly in the event of a DOJ press release.

C. SEC Regulation FD

HSAG's American Depositary Receipts ("ADRs") are not traded on a U.S. exchange and HSAG does not file periodic reports with the U.S. Securities and Exchange Commission. Accordingly, Regulation FD (Fair Disclosure) does not directly apply to HSAG.

However, there is a related U.S. reporting consideration. HSI is a borrower under a $300 million revolving credit agreement with Lodestar National Bank (Relationship Manager: Danielle Osborne). Section 6.02(b) of the credit agreement requires HSI to provide prompt notice to the administrative agent of any litigation, investigation, or proceeding that could reasonably be expected to have a Material Adverse Effect (as defined in the credit agreement).

In compliance with this obligation, HSI delivered a material-litigation notice to Lodestar National Bank on November 1, 2025, promptly following the engagement of Calderwood & Harkness. That notice stated that the monetary penalty exposure in connection with the DOJ inquiry was unlikely to exceed $5.5 million, which was DOJ's preliminary indication at that time. The resolved penalty amount of $3.25 million is well within that estimate and falls comfortably below the Material Adverse Effect threshold under the credit agreement.

An update notice to Lodestar National Bank should be delivered upon execution of the settlement agreement, confirming the final terms and the total estimated financial exposure. We do not anticipate that the resolution will trigger any default, event of default, or other adverse covenant consequence under the credit agreement.

D. Coordination with Professional Advisors

The disclosure considerations described above involve the intersection of multiple legal regimes (U.S., German, and EU) and require careful coordination among the Company's professional advisors. The following firms are engaged and coordinating on the relevant issues:

• Braxton Merritt LLP (Elena Voss, Partner): Coordinating on U.S. and German securities disclosure obligations, including the MAR Article 17 ad-hoc disclosure analysis and the preparation of any required disclosure notices.

• Kessler Pratt & Whitfield LLP (Dr. Tobias Engel, Partner): Advising on the MAR Article 17 analysis from a German-law perspective and coordinating with Germany's Federal Office for Economic Affairs and Export Control (Bundesamt für Wirtschaft und Ausfuhrkontrolle, "BAFA") on parallel German and EU export control compliance considerations. Dr. Engel's team has also provided analysis of any potential implications under EU Regulation 2021/821 (the EU Dual-Use Regulation) and the German Foreign Trade and Payments Act (Außenwirtschaftsgesetz, "AWG").

• Pinnacle Ridgeway Partners (Graham Sinclair, Lead Audit Partner, Glenrock Assurance): Consulted on IAS 37 contingency treatment and footnote disclosure requirements for HSAG's FY 2025 consolidated financial statements.

Calderwood & Harkness is serving as the central coordinating point among these advisors with respect to the sequencing and content of disclosures in connection with the settlement.

VII. BOARD AUTHORIZATION REQUESTED

In light of the foregoing, the Supervisory Board and/or Audit Committee of Halcyon Semiconductor AG is respectfully requested to authorize the following actions:

1. Settlement Authority. Authorization for the execution of the administrative settlement agreement with DOJ NSD/CES on terms substantially consistent with those described in Section IV of this memorandum, with the civil monetary penalty not to exceed $3,500,000. This ceiling provides $250,000 of negotiating room above the current $3,250,000 convergence figure, to accommodate potential minor adjustments during the finalization of the settlement agreement language. Any civil monetary penalty amount in excess of $3,500,000 would require the Company to seek additional Board authorization before execution.

2. Compliance Monitor Engagement. Authority to retain an independent compliance monitor for a term of up to eighteen (18) months from the DOJ-approved candidate list, at an estimated cost of $800,000 to $1,200,000, with all costs to be borne by the Company. The compliance monitor engagement will be subject to the selection and objection procedures set forth in the settlement agreement.

3. Signatory Designation. Designation of the following individuals as authorized signatories for the settlement agreement:

• For HSAG: Marcus Friedl, General Counsel

• For HSI: Derek Tran, President

4. Disclosure Authorization. Authorization for the General Counsel, in consultation with Calderwood & Harkness LLP, Braxton Merritt LLP, and Kessler Pratt & Whitfield LLP, to determine the timing and content of any required public disclosure in connection with the settlement, including:

(a) Any MAR Article 17 ad-hoc notice required to be filed with the Frankfurt Stock Exchange;

(b) Any update notice to Lodestar National Bank under Section 6.02(b) of the revolving credit agreement; and

We recommend that the Board adopt a resolution authorizing these actions at its next scheduled meeting or, if timing requires, by written consent in lieu of a meeting. A draft resolution consistent with the foregoing authorizations can be provided upon request.

VIII. ANTICIPATED TIMELINE

The following timeline sets forth the anticipated sequence of events from the current date through the conclusion of the Enhanced Compliance Period.

We note that this timeline is subject to change based on the pace of settlement agreement negotiations with DOJ and the availability of the Board for a formal resolution. We will keep the General Counsel apprised of any developments that may affect the anticipated timeline.

IX. ASSESSMENT AND CONCLUSION

In the considered judgment of Calderwood & Harkness, this is a strong outcome for the Company. We highlight the following key points:

• No criminal prosecution. The settlement agreement includes an explicit commitment that no criminal prosecution will be brought against HSAG, HSI, or any individual employees. This is of paramount importance. A criminal charge, even one ultimately resolved through a plea agreement or acquittal, would have had severe and potentially irreversible consequences for HSAG's global business, including potential debarment from government contracts, reputational harm, and the loss of customer and partner confidence.

• No denial of export privileges. DOJ has not sought and will not seek a temporary or permanent denial order against HSAG or HSI. A denial order would have been catastrophic to HSAG's global semiconductor business, as it would have effectively barred the Company from exporting any item subject to the EAR — including products far beyond the HCA-9100 series at issue in this matter. The absence of a denial order preserves the Company's ability to continue its worldwide operations without interruption.

• No OFAC implications. Both Calderwood & Harkness's independent analysis and DOJ's own assessment confirmed that no OFAC violations exist in connection with this matter. No referral to OFAC has been or will be made. This eliminates a significant category of potential financial and operational risk.

• Substantial penalty reduction. The civil monetary penalty of $3,250,000 represents a 40.9% reduction from DOJ's opening position of $5,500,000. This reduction reflects DOJ's recognition of the Company's cooperation, the non-willful nature of the violations, the voluntary self-disclosure, the absence of prior enforcement history, and the Company's affirmative remediation efforts.

• Lansheng shipments excluded from penalty calculation. The six Lansheng shipments are not a basis for any penalty, fine, or admission of violation. The release in the settlement agreement expressly covers all Lansheng-related conduct. This is an important concession, as DOJ's secondary theory regarding military end-use provisions had the potential to increase the Company's exposure significantly.

• Administrative settlement — not an NPA or DPA. The resolution takes the form of an administrative settlement agreement, rather than a criminal non-prosecution agreement or deferred prosecution agreement. This distinction is meaningful. An NPA or DPA would carry the stigma of a criminal-framework resolution and could have triggered collateral consequences under government contracting regulations, banking covenants, and the laws of other jurisdictions. An administrative settlement avoids these consequences.

We also note that DOJ acknowledged "substantial cooperation" by the Company in the course of the negotiations. This acknowledgment reflects the Company's timely filing of the voluntary self-disclosure on November 4, 2025, the prompt and comprehensive document productions totaling approximately 21,000 documents, and the voluntary employee proffers on January 13, 2026. The Company's cooperative posture was a critical factor in achieving the administrative-settlement disposition and the significant penalty reduction.

The compliance undertakings set forth in the settlement agreement — including the independent compliance monitor, annual compliance audits, automated restricted-party screening at both order-entry and ship-confirm stages, mandatory training, and periodic reporting — impose meaningful costs and operational obligations over the three-year Enhanced Compliance Period. However, these undertakings are broadly consistent with the enhancements that the Company would prudently implement regardless of the settlement outcome, in light of the compliance deficiencies identified by Calderwood & Harkness's internal investigation and Ashford Pennington's Phase I compliance assessment. In this sense, the compliance undertakings should be viewed not solely as settlement obligations, but also as an investment in the long-term strengthening of HSAG's export compliance program — an investment that will serve the Company well as the U.S. export control regulatory environment continues to evolve, particularly with respect to semiconductor technology and PRC-facing trade.

Finally, the total estimated all-in cost of approximately €9.4 million to €10.8 million falls below HSAG's €15 million materiality threshold for financial reporting purposes and represents approximately 0.22% to 0.25% of HSAG's FY 2024 consolidated revenue.

Calderwood & Harkness is available to present this update to the Supervisory Board or Audit Committee in person at HSAG's offices in Munich or Dresden, or by secure videoconference, at the Board's convenience. We recommend that such a presentation take place prior to the Board's formal action on the authorization request set forth in Section VII, so that Board members have the opportunity to ask questions and discuss the matter in detail.

We thank the Board and the Audit Committee for their continued attention to this matter, and we express our appreciation for the exemplary cooperation we have received from the General Counsel and the broader HSAG and HSI teams throughout this engagement.

Please do not hesitate to contact us with any questions or if you require any additional information.

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

Howard Quinn Partner Calderwood & Harkness LLP 1301 K Street NW, Suite 1100 Washington, D.C. 20005 T: (202) 555-0147

Conrad Ashby Partner Calderwood & Harkness LLP 1301 K Street NW, Suite 1100 Washington, D.C. 20005

PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED — ATTORNEY WORK PRODUCT This memorandum and all attachments are protected by the attorney-client privilege and constitute attorney work product prepared in anticipation of litigation and for the purpose of providing legal advice to the client. Unauthorized disclosure is prohibited.

Term	Detail
Form of resolution	Administrative settlement agreement (not a criminal Non-Prosecution Agreement or Deferred Prosecution Agreement).
Civil monetary penalty	$3,250,000. DOJ's opening position was $5,500,000. Calderwood & Harkness's counter-proposal was $1,800,000. The parties converged on $3,250,000 — a 40.9% reduction from DOJ's opening position.
Penalty calculation basis	Three post-Entity-List Zhonghe shipments only. BIS statutory base penalty of $330,947 per violation × 3 violations = $992,841 base penalty. Aggravating factors applied by DOJ included: military applicability of ECCN 3A001 products, PRC destination country, and volume/value of the shipments. Mitigating credits were applied for: voluntary self-disclosure (VSD), cooperation with DOJ, non-willful nature of violations, absence of any prior enforcement history, and affirmative remediation measures.
Criminal prosecution	None. The agreement includes an explicit commitment that no criminal prosecution will be brought against HSAG, HSI, or any individual employees in connection with the conduct at issue.
Denial of export privileges	None. DOJ has not sought and will not seek a temporary or permanent denial order against HSAG or HSI. This is a significant concession; a denial order would have been catastrophic to HSAG's global semiconductor business, effectively barring the Company from exporting any EAR-controlled items.
OFAC referral	None. DOJ has confirmed that no referral to OFAC has been or will be made in connection with this matter. OFAC SDN/SSI/NS-CMIC List screening confirmed negative for all PRC end users and their principals.
Independent compliance monitor	Eighteen-month term. The monitor will be selected from a DOJ-approved candidate list containing a minimum of three and a maximum of five candidates. The Company retains the right to object to any candidate for reasonable cause. The monitor will report semi-annually to both DOJ and the Company. All costs of the monitor will be borne by the Company.
Annual export compliance audits	Required for the duration of a three-year Enhanced Compliance Period, commencing upon execution of the settlement agreement. Audits will be conducted by an independent third party selected by the Company, subject to DOJ approval.
Automated restricted-party screening	Already implemented. The settlement agreement memorializes an ongoing obligation for automated restricted-party screening at both the order-entry stage and the ship-confirm stage for all shipments of ECCN 3A001-classified items to the PRC, Russia, and destinations in EAR Country Group D:1 and D:5.
Mandatory training	Annual training required for all personnel with responsibilities related to PRC-facing sales, order processing, distribution, logistics, or compliance functions.
Periodic reporting to DOJ	Quarterly compliance status reports for the first 12 months following execution; semi-annual reports thereafter through the end of the three-year Enhanced Compliance Period.
Lansheng	No admission of violation. Lansheng-related conduct is referenced in the recitals of the settlement agreement for context purposes only, as background for the compliance undertakings. The release in the agreement expressly covers all Lansheng-related conduct, providing the Company with full protection from future prosecution or enforcement action related to the Lansheng shipments.
Cooperation obligations	Ongoing cooperation obligations during the Enhanced Compliance Period, including production of documents and availability of personnel. The agreement includes protections for attorney-client privilege, attorney work product, and compliance with applicable foreign data privacy laws (including the EU General Data Protection Regulation and the Singapore PDPA).
Category	Estimated Amount
Civil monetary penalty	$3,250,000
Calderwood & Harkness LLP legal fees (entire matter, inception through resolution)	$2,800,000–$3,400,000
Ashford Pennington LLC (compliance consultant)	$655,000 ($475,000 Phase I fixed fee + estimated $180,000 Phase II at $650/hr)
Kessler Pratt & Whitfield LLP (German/EU counsel, Dr. Tobias Engel)	~€320,000 (~$346,000 at EUR/USD 1.08)
Independent compliance monitor (18 months)	$800,000–$1,200,000
Annual compliance audits (3 years)	$450,000–$750,000
Screening technology upgrade (one-time implementation)	$350,000
Screening technology upgrade (ongoing, 3 years × $85,000/yr)	$255,000
Additional compliance FTEs (2 positions, 3 years, fully loaded)	~$1,140,000 (2 FTEs × ~$190,000/yr fully loaded × 3 years)
Training program development and delivery (3 years, $120,000/yr)	~$360,000

Total estimated all-in cost	$10,151,000–$11,651,000
Date	Action
March 13, 2026	Calderwood & Harkness call with DOJ (Senior Trial Attorney Kolb and Trial Attorney Weir) to discuss the March 10, 2026 redline markup of the draft settlement agreement.
Mid-to-late March 2026	Finalization of settlement agreement language, incorporating agreed revisions from the March 13 call and any subsequent exchanges.
Week of March 17, 2026	Coordination call with Braxton Merritt LLP (Elena Voss) and Kessler Pratt & Whitfield LLP (Dr. Tobias Engel) to prepare and finalize the public disclosure coordination protocol, including preparation of a draft MAR Article 17 ad-hoc notice for immediate deployment upon any DOJ public disclosure.
Late March 2026	Board / Audit Committee resolution authorizing execution of the settlement agreement and related actions, as described in Section VII.
Early April 2026	Execution of the settlement agreement by the designated signatories for HSAG and HSI.
Early April 2026	Public announcement, if DOJ issues a press release. Simultaneous issuance of MAR Article 17 ad-hoc notice. Delivery of update notice to Lodestar National Bank.
Within 45 days of execution	Selection of independent compliance monitor from the DOJ-approved candidate list.
18 months post-execution (~October 2027)	Conclusion of the compliance monitor's term.
3 years post-execution (~April 2029)	Conclusion of the Enhanced Compliance Period, including the cessation of periodic reporting obligations and annual audit requirements.

CALDERWOOD & HARKNESS LLP
PRIVILEGED AND CONFIDENTIAL
ATTORNEY-CLIENT PRIVILEGED
ATTORNEY WORK PRODUCT
This memorandum and all attachments are protected by the attorney-client privilege and constitute attorney work product. This memorandum is intended solely for the use of the Supervisory Board and Audit Committee of Halcyon Semiconductor AG and their authorized advisors. Any dissemination, distribution, or copying of this memorandum or its contents to any unauthorized person is strictly prohibited. If you have received this memorandum in error, please contact Calderwood & Harkness LLP immediately and destroy all copies.
MEMORANDUM
TO: Supervisory Board and Audit Committee, Halcyon Semiconductor AG (via Marcus Friedl, General Counsel)
FROM: Howard Quinn, Conrad Ashby
DATE: March 12, 2026
RE: DOJ NSD Inquiry — Status Update and Anticipated Resolution (Reference No. NSD-CES-2025-04871)
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I. PURPOSE
This memorandum provides the Supervisory Board and Audit Committee of Halcyon Semiconductor AG ("HSAG" or the "Company") with a comprehensive update on the status of the inquiry by the U.S. Department of Justice, National Security Division, Counterintelligence and Export Control Section ("DOJ NSD/CES") concerning shipments of HCA-9100 series analog-to-digital converter ("ADC") chipsets classified under Export Control Classification Number ("ECCN") 3A001. The DOJ inquiry is referenced under case number NSD-CES-2025-04871.
As the Board is aware, the inquiry concerns seventeen shipments of HCA-9100 series ADC chipsets routed through Archipelago Component Solutions Pte. Ltd., a Singapore-incorporated distributor ("Archipelago"), to two entities located in the People's Republic of China ("PRC"): Zhonghe Microelectronics Co., Ltd., based in Shenzhen ("Zhonghe"), and Lansheng Harborline Technologies Technologies Ltd., based in Chengdu ("Lansheng"). These seventeen shipments occurred between March 12, 2024 and August 19, 2025 and had an aggregate commercial value of approximately $6.83 million. Of this total, approximately $4.41 million was attributable to eleven shipments to Zhonghe, and approximately $2.42 million was attributable to six shipments to Lansheng.
The purpose of this memorandum is threefold. First, it provides a detailed factual and procedural update on developments since our last written report to the Board in January 2026. Second, it summarizes the terms of the anticipated resolution that has been agreed in principle with DOJ NSD/CES on February 24, 2026, and the draft settlement agreement that was circulated by DOJ on March 3, 2026 (for which Calderwood & Harkness circulated a redline markup on March 10, 2026). Third, it requests that the Supervisory Board and/or Audit Committee authorize the execution of the settlement agreement on terms substantially consistent with those described herein, and delegate related signatory and disclosure authority to the General Counsel and other designated officers.
We believe this matter is positioned for a favorable resolution and respectfully urge prompt Board action to preserve the current negotiating posture and timeline with DOJ.
II. BACKGROUND SUMMARY
For the convenience of Board and Audit Committee members who may not have reviewed prior reporting on this matter, we provide the following summary of the inquiry's origin and procedural history.
Origin of the Inquiry. On October 9, 2025, the DOJ NSD/CES issued a voluntary request for information to Halcyon Semiconductor Inc. ("HSI"), the Company's wholly owned U.S. subsidiary, located at 4700 Great America Parkway, Suite 300, San Jose, California 95054. The request sought documents and information concerning HSI's sales and distribution of HCA-9100 series ADC chipsets to PRC-based end users through third-party distribution channels, with particular focus on Archipelago Component Solutions Pte. Ltd. as an intermediary.
Engagement of Outside Counsel. HSI's in-house legal team immediately escalated the matter to the General Counsel. Calderwood & Harkness LLP was engaged on October 11, 2025, and formally entered its appearance with DOJ NSD/CES on October 14, 2025. Since that date, Calderwood & Harkness has served as lead outside counsel for both HSAG and HSI in connection with this matter. Our principal points of contact at DOJ have been Senior Trial Attorney Adrienne Kolb and Trial Attorney Jonathan Weir.
Core DOJ Concern — Post-Entity-List Zhonghe Shipments. The primary focus of the DOJ inquiry has been three shipments of HCA-9100 series ADC chipsets to Zhonghe Microelectronics Co., Ltd. that occurred after Zhonghe was added to the Bureau of Industry and Security ("BIS") Entity List on June 14, 2025. Specifically, these shipments were dated June 27, 2025, July 15, 2025, and August 3, 2025 (referred to internally as Shipments #9, #10, and #11, respectively). Because Zhonghe appeared on the Entity List as of June 14, 2025, any export, reexport, or in-country transfer of items subject to the Export Administration Regulations ("EAR") to Zhonghe required a license from BIS. No such license was obtained for any of the three shipments. DOJ's theory is that these three shipments constitute potential violations of 15 C.F.R. § 744.11, which prohibits exports or reexports to Entity List parties without a BIS license.
Secondary DOJ Theory — Lansheng Military End-Use Provisions. DOJ has also raised a secondary theory concerning the six shipments to Lansheng Harborline Technologies Technologies Ltd. DOJ's theory is that these shipments may implicate the military end-use provisions of the EAR, specifically § 744.21, which prohibits the export, reexport, or in-country transfer of specified items when the exporter knows, or is informed by BIS, that the items are intended for a "military end use" or a "military end user" in certain countries, including the PRC. DOJ has indicated that this theory is based in part on classified intelligence that has not been shared with the Company or its counsel. As discussed in Section III below, our investigation found no evidence supporting this theory, and DOJ has ultimately agreed not to pursue it as a basis for any penalty or admission of violation.
Product Specifications. The products at issue are HSAG's HCA-9100 series ADC chipsets. These are high-performance analog-to-digital converters with sampling rates exceeding 3.6 giga-samples per second ("Gsps"). Due to their performance characteristics, these chipsets are classified under ECCN 3A001, which captures certain types of electronic components that are controlled for national security and other reasons. The HCA-9100 series has both commercial and military/dual-use applications, including electronic warfare, signals intelligence, radar, and advanced telecommunications systems.
Distribution Channel. All seventeen shipments at issue followed a common distribution pathway. The chipsets were fabricated at HSAG's semiconductor fabrication facility in Dresden, Germany. They were then shipped to Archipelago Component Solutions Pte. Ltd.'s warehouse facility in Singapore, from which Archipelago distributed them to the PRC-based end users (Zhonghe in Shenzhen and Lansheng in Chengdu). Archipelago served as an authorized distributor under a distribution agreement with HSI. The use of Archipelago as an intermediary is a standard industry practice for distribution of semiconductor components in the Asia-Pacific region and was not, in itself, indicative of any intent to circumvent export controls.
III. KEY MILESTONES SINCE LAST UPDATE (JANUARY 2026)
Since our last written update to the Board, which was provided in January 2026, the following significant milestones have occurred.
A. Completion of the Internal Investigation
Calderwood & Harkness completed its internal investigation of the facts and circumstances surrounding all seventeen shipments at issue. A comprehensive findings memorandum was delivered to General Counsel Marcus Friedl on January 28, 2026. The investigation was extensive in scope and involved the following principal activities:
• Review of approximately 42,000 documents and 1.2 terabytes of structured data extracted from HSAG's Brightmoor Solutions ("SAP GTS") system, including order records, shipping documentation, compliance screening logs, customer records, Entity List screening outputs, and internal communications.
• Fourteen interviews of Company personnel across HSAG (Dresden) and HSI (San Jose), including representatives from trade compliance, sales, order management, logistics, and information technology.
• Three interviews of Archipelago Component Solutions Pte. Ltd. personnel, conducted through Singapore local counsel in accordance with applicable Singapore data protection and employment law requirements.
The principal findings of the investigation are summarized below:
Post-Entity-List Zhonghe Shipments (Shipments #9, #10, #11). The investigation confirmed that the three post-Entity-List Zhonghe shipments constitute apparent violations of 15 C.F.R. § 744.11. These were the only violations identified in the investigation. Critically, however, the investigation found that these violations were non-willful in nature. No Company personnel had actual knowledge of Zhonghe's Entity List designation at the time of the relevant shipments, and no evidence was found of any intent to evade or circumvent export controls.
The root cause of the violations was a combination of three interconnected systemic failures:
(i) Third-Party Screening Database Update Delay. Sentinel Compliance Data Services Ltd. ("Sentinel"), an Edinburgh, UK-based provider of restricted-party screening data, failed to update the restricted-party screening database used by Archipelago's trade compliance system to reflect Zhonghe's June 14, 2025 Entity List designation until June 26, 2025 — a delay of twelve calendar days (nine business days). This delay exceeded the five-business-day update service level agreement ("SLA") between Sentinel and Archipelago by four business days. As a result, Shipment #9, which was processed on June 27, 2025, was screened against a database that had only been updated the prior day, and the order itself had been pre-approved on June 13, 2025 — one day before the Entity List designation took effect.
(ii) Failure to Re-Screen at Ship-Confirm Stage. HSI's and Archipelago's trade compliance procedures did not require re-screening of customer and end-user records at the ship-confirm stage for orders that had been pre-approved during order entry. Shipment #9 had been pre-approved on June 13, 2025 — one day before Zhonghe's Entity List designation. Because there was no re-screening protocol at the time of shipment, the order was released for shipment on June 27, 2025 without any check against the updated screening database. Had a re-screening been performed, it would have flagged the Zhonghe Entity List entry (which had been loaded into Sentinel's database the prior day).
(iii) Character-Encoding Mismatch. Shipments #10 (July 15, 2025) and #11 (August 3, 2025) occurred after Sentinel's database had been updated. However, these shipments cleared Archipelago's restricted-party screening system due to a character-encoding mismatch between Zhonghe's simplified Chinese trade name (中和微电子有限公司), which was stored in Archipelago's customer records, and the romanized transliteration of that name as it appeared on the BIS Entity List. Archipelago's screening system was not configured to perform cross-script matching or transliteration-aware fuzzy matching, and accordingly the system failed to flag the match between the customer record and the Entity List entry. This is a known limitation of many commercial screening platforms and has been identified by industry groups and BIS itself as an area of particular concern in the Asia-Pacific distribution context.
Pre-Entity-List Zhonghe Shipments (Shipments #1–#8). The investigation confirmed that the eight Zhonghe shipments that occurred prior to the June 14, 2025 Entity List designation — spanning from March 2024 through May 2025 — were lawful. At the time of these shipments, Zhonghe was not on the Entity List, and no license was required for exports of ECCN 3A001 items to Zhonghe.
Lansheng Shipments (Shipments #12–#17). With respect to the six Lansheng shipments, the investigation found no evidence that any Company or Archipelago personnel had knowledge or reason to know that the items were intended for a "military end use" or a "military end user" as defined in EAR § 744.21. No "is informed" notice was ever received from BIS with respect to Lansheng or any items shipped to Lansheng. Lansheng was not and is not on the Entity List, the Unverified List, the Military End-User List, or any other restricted-party list maintained by BIS. Accordingly, the investigation concluded that there is no demonstrable violation of EAR § 744.21 with respect to any of the Lansheng shipments.
OFAC Analysis. All PRC end users, their principals, officers, directors, and known shareholders were screened against the Office of Foreign Assets Control ("OFAC") Specially Designated Nationals and blocked Persons List ("SDN List"), the Sectoral Sanctions Identifications List ("SSI List"), and the Non-SDN Chinese Military-Industrial Complex Companies List ("NS-CMIC List"). All screenings returned negative results. The investigation identified no OFAC violations.
B. Employee Proffers
On January 13, 2026, two HSI employees provided voluntary proffers to DOJ at Calderwood & Harkness's Washington, D.C. office. The employees were Ryan Oshiro, Director of Asia-Pacific Sales at HSI, and Janet Liang, Trade Compliance Analyst at HSI. Both proffers were conducted in the presence of Calderwood & Harkness counsel and individual counsel for each employee.
The substance of both proffers was consistent with the findings of Calderwood & Harkness's internal investigation. Mr. Oshiro provided an account of the commercial relationship with Zhonghe and Lansheng, including the role of Archipelago as a distribution intermediary. Ms. Liang described HSI's compliance screening procedures, the reliance on Archipelago's screening for downstream transactions, and the absence of any re-screening protocol at the ship-confirm stage. Both employees confirmed the absence of any willful or intentional conduct. We understand from DOJ's subsequent communications that the proffers were viewed favorably and contributed to DOJ's assessment that the violations were non-willful.
C. Document Productions to DOJ
Calderwood & Harkness completed two document productions to DOJ during the period covered by this update. The first production, made on November 18, 2025, consisted of approximately 14,200 documents, including order records, shipping documentation, compliance screening logs, internal communications, and corporate policies and procedures. The second production, made on December 9, 2025, consisted of approximately 6,800 documents, including Archipelago Component Solutions' internal records. The Archipelago documents were produced under a Singapore-counsel protocol developed by our Singapore correspondent firm, to address Singapore Personal Data Protection Act ("PDPA") requirements and potential issues under the Singapore Evidence Act.
In total, approximately 21,000 documents were produced to DOJ across the two productions.
D. Voluntary Self-Disclosure
On November 4, 2025, Calderwood & Harkness, on behalf of HSI, filed a voluntary self-disclosure ("VSD") with the BIS Office of Export Enforcement ("OEE") covering the three post-Entity-List Zhonghe shipments. The VSD was assigned Reference No. OEE-VSD-2025-00319. The filing of the VSD was a strategically important step, as BIS and DOJ policies afford significant mitigating credit to parties that make timely, comprehensive, and accurate voluntary self-disclosures of apparent export control violations. We believe the VSD has been instrumental in DOJ's willingness to resolve this matter administratively rather than through a criminal disposition.
E. Ashford Pennington Phase I Compliance Assessment
On February 5, 2026, Ashford Pennington LLC, an independent export compliance consulting firm, delivered its Phase I compliance assessment report. The assessment was conducted by Dr. Miriam Hecht, a former Deputy Assistant Secretary at BIS and a recognized authority on export compliance program design.
Dr. Hecht's assessment identified a number of compliance program deficiencies that were consistent with the findings of Calderwood & Harkness's internal investigation. In particular, the assessment identified the following areas of concern:
• Over-reliance on third-party distributor screening, without adequate oversight or verification by HSI's own trade compliance function;
• Absence of a re-screening protocol at the ship-confirm stage for pre-approved orders;
• Inadequate SLA monitoring with respect to Sentinel Compliance Data Services, including no mechanism for verifying timeliness or accuracy of screening database updates;
• The character-encoding deficiency in Archipelago's screening system, which prevented cross-script matching of Chinese-language trade names against romanized Entity List entries;
• Absence of real-time Entity List monitoring — the Company's compliance system relied on periodic (rather than continuous) database updates;
• Insufficient compliance staffing at HSI, with only one full-time trade compliance analyst (Ms. Liang) responsible for all EAR compliance screening for the Asia-Pacific region.
Dr. Hecht's report included detailed recommendations for remediation, many of which have already been implemented or are in the process of implementation. Phase II of the Ashford Pennington engagement, which involves ongoing implementation support and validation, is expected to continue through mid-2026.
F. Resolution-in-Principle with DOJ
Following several rounds of substantive discussions between Calderwood & Harkness and DOJ, a resolution-in-principle framework was agreed on February 24, 2026. The key terms of this framework are described in Section IV below.
G. Draft Settlement Agreement
On March 3, 2026, DOJ circulated a draft administrative settlement agreement reflecting the resolution-in-principle terms. Calderwood & Harkness reviewed the draft, consulted with HSAG's General Counsel and with Kessler Pratt & Whitfield LLP (German/EU counsel), and circulated a redline markup to DOJ on March 10, 2026. The principal areas of markup related to (i) the scope of the release and covenant not to prosecute, (ii) the compliance monitor selection process and the Company's objection rights, (iii) the specificity of the compliance undertakings, (iv) cooperation obligations and protections for privilege and foreign data privacy, and (v) advance notice provisions for any public disclosure by DOJ, which are critical to HSAG's MAR Article 17 compliance obligations. A call with DOJ to discuss the redline is scheduled for March 13, 2026.
IV. ANTICIPATED RESOLUTION TERMS
Set forth below is a summary of the anticipated resolution terms, as reflected in the resolution-in-principle framework agreed on February 24, 2026 and the draft settlement agreement circulated by DOJ on March 3, 2026. These terms remain subject to finalization of the settlement agreement language, which is the subject of ongoing negotiations.
We note that the terms described above represent a strong outcome in the context of current DOJ enforcement practice in the export controls space. The administrative-settlement disposition, the absence of criminal charges, the absence of a denial order, and the substantial penalty reduction are each individually significant, and collectively they represent a resolution that compares very favorably to recent public settlements in comparable matters.
V. TOTAL ESTIMATED ALL-IN COST
The following table summarizes the total estimated all-in cost of this matter to the Company, encompassing the civil monetary penalty, professional fees, compliance monitor costs, and the costs of implementing and maintaining the compliance undertakings over the three-year Enhanced Compliance Period.
At the current EUR/USD exchange rate of approximately 1.08, the total estimated all-in cost equals approximately €9.4 million to €10.8 million.
Several observations are in order regarding the financial significance of these figures:
• HSAG's materiality threshold for financial reporting purposes is €15 million. The total estimated all-in cost of approximately €9.4 million to €10.8 million falls below this threshold.
• The $3.25 million civil penalty (approximately €3.0 million) and the total professional fees of approximately $3.7 million to $4.3 million (approximately €3.4 million to €4.0 million) are individually well below the materiality threshold. However, when these amounts are combined with the compliance implementation costs (monitor, audits, technology, personnel, and training), the total approaches the materiality threshold, and the Board should be mindful of this in evaluating the aggregate financial impact.
• For additional context, HSAG's consolidated revenue for fiscal year 2024 was €4.27 billion. The total estimated all-in cost of approximately €9.4 million to €10.8 million represents approximately 0.22% to 0.25% of consolidated revenue — a de minimis percentage. HSI's FY 2024 revenue was approximately $1.14 billion, representing approximately 22% of HSAG's consolidated revenue. The civil penalty and the majority of the professional fees relate primarily to HSI's operations and the distribution channel managed out of HSI's San Jose office.
VI. FINANCIAL REPORTING AND DISCLOSURE CONSIDERATIONS
A. IAS 37 Contingency Disclosure
Calderwood & Harkness has coordinated with HSAG's external auditor, Pinnacle Ridgeway Partners (lead audit partner Graham Sinclair, Glenrock Assurance office), regarding the appropriate treatment of this matter under IAS 37 (Provisions, Contingent Liabilities and Contingent Assets).
Based on our discussions with Mr. Sinclair and his team, the following conclusions have been reached regarding IAS 37 treatment:
• The $3.25 million civil monetary penalty constitutes a probable obligation with a reliably estimable amount. Once the settlement agreement is executed, this amount should be recognized as a provision on HSAG's balance sheet in accordance with IAS 37.14.
• Professional fees that have already been incurred or are committed under existing engagement arrangements should be accrued in the period in which the services were rendered or the commitment was made.
• The total estimated all-in cost of approximately €9.4 million to €10.8 million falls below HSAG's €15 million materiality threshold. However, in Mr. Sinclair's view, the matter warrants footnote disclosure as a contingent liability in HSAG's consolidated financial statements, given the nature of the underlying conduct (export control violations), the involvement of a U.S. government enforcement agency, and the potential reputational and business implications.
For additional financial context relevant to investor assessment:
• HSAG's consolidated revenue for FY 2024 was €4.27 billion. The total estimated all-in cost represents approximately 0.22% to 0.25% of consolidated revenue.
• HSI's FY 2024 revenue was approximately $1.14 billion, representing approximately 22% of HSAG consolidated revenue. Because the civil penalty and the majority of the professional fees relate primarily to HSI's operations, investors may view the cost in relation to HSI's standalone revenue.
• HSAG's PRC revenue for FY 2024 was approximately €612 million, representing approximately 14.3% of consolidated revenue. While the resolution of this matter does not directly impair HSAG's ability to continue selling into the PRC market (given the absence of a denial order), the matter may be relevant to investor assessment of ongoing PRC-related business risk, particularly in light of the evolving U.S. export control landscape.
B. MAR Article 17 — Ad-Hoc Disclosure (Frankfurt Stock Exchange)
HSAG is listed on the Frankfurt Stock Exchange (XETRA ticker: HCA) and is accordingly subject to the ad-hoc disclosure obligations under Article 17 of the EU Market Abuse Regulation (Regulation (EU) No. 596/2014, "MAR"). Article 17 requires that an issuer publicly disclose, as soon as possible, inside information that directly concerns the issuer, unless the conditions for a legitimate delay of disclosure are satisfied.
Our current assessment, developed in consultation with Kessler Pratt & Whitfield LLP (Dr. Tobias Engel) and Braxton Merritt LLP (Elena Voss), is as follows:
• Given that the total estimated all-in cost of approximately €9.4 million to €10.8 million is below HSAG's €15 million materiality threshold, the settlement, standing alone, is unlikely to have a significant effect on the price of HSAG's financial instruments. On this basis, an ad-hoc notice is likely not required at this time.
• However, we defer to the definitive assessment of Kessler Pratt & Whitfield LLP and Braxton Merritt LLP on this question, as the analysis involves considerations of German and EU securities law that are outside the scope of Calderwood & Harkness's engagement.
There is one critical caveat that the Board should be aware of. If DOJ issues a public press release upon execution of the settlement agreement — which is the expected practice in matters of this nature — an ad-hoc notice will be required simultaneously to avoid selective disclosure. A DOJ press release would likely constitute the public disclosure of inside information, and HSAG would be obligated to issue a corresponding ad-hoc notice without delay.
To address this timing concern, Calderwood & Harkness's March 10, 2026 redline of the draft settlement agreement includes a provision requiring DOJ to provide the Company with at least five (5) business days' advance notice of any public disclosure, including any press release, statement, or other public communication regarding the settlement. This advance-notice provision is specifically designed to allow HSAG sufficient time to prepare and issue a MAR Article 17 ad-hoc notice simultaneously with any DOJ public disclosure.
We strongly recommend that a coordination protocol among Braxton Merritt LLP (Elena Voss), Kessler Pratt & Whitfield LLP (Dr. Tobias Engel), Calderwood & Harkness, and HSAG's investor relations and communications teams be established well in advance of the settlement execution date, so that all parties are prepared to act promptly in the event of a DOJ press release.
C. SEC Regulation FD
HSAG's American Depositary Receipts ("ADRs") are not traded on a U.S. exchange and HSAG does not file periodic reports with the U.S. Securities and Exchange Commission. Accordingly, Regulation FD (Fair Disclosure) does not directly apply to HSAG.
However, there is a related U.S. reporting consideration. HSI is a borrower under a $300 million revolving credit agreement with Lodestar National Bank (Relationship Manager: Danielle Osborne). Section 6.02(b) of the credit agreement requires HSI to provide prompt notice to the administrative agent of any litigation, investigation, or proceeding that could reasonably be expected to have a Material Adverse Effect (as defined in the credit agreement).
In compliance with this obligation, HSI delivered a material-litigation notice to Lodestar National Bank on November 1, 2025, promptly following the engagement of Calderwood & Harkness. That notice stated that the monetary penalty exposure in connection with the DOJ inquiry was unlikely to exceed $5.5 million, which was DOJ's preliminary indication at that time. The resolved penalty amount of $3.25 million is well within that estimate and falls comfortably below the Material Adverse Effect threshold under the credit agreement.
An update notice to Lodestar National Bank should be delivered upon execution of the settlement agreement, confirming the final terms and the total estimated financial exposure. We do not anticipate that the resolution will trigger any default, event of default, or other adverse covenant consequence under the credit agreement.
D. Coordination with Professional Advisors
The disclosure considerations described above involve the intersection of multiple legal regimes (U.S., German, and EU) and require careful coordination among the Company's professional advisors. The following firms are engaged and coordinating on the relevant issues:
• Braxton Merritt LLP (Elena Voss, Partner): Coordinating on U.S. and German securities disclosure obligations, including the MAR Article 17 ad-hoc disclosure analysis and the preparation of any required disclosure notices.
• Kessler Pratt & Whitfield LLP (Dr. Tobias Engel, Partner): Advising on the MAR Article 17 analysis from a German-law perspective and coordinating with Germany's Federal Office for Economic Affairs and Export Control (Bundesamt für Wirtschaft und Ausfuhrkontrolle, "BAFA") on parallel German and EU export control compliance considerations. Dr. Engel's team has also provided analysis of any potential implications under EU Regulation 2021/821 (the EU Dual-Use Regulation) and the German Foreign Trade and Payments Act (Außenwirtschaftsgesetz, "AWG").
• Pinnacle Ridgeway Partners (Graham Sinclair, Lead Audit Partner, Glenrock Assurance): Consulted on IAS 37 contingency treatment and footnote disclosure requirements for HSAG's FY 2025 consolidated financial statements.
Calderwood & Harkness is serving as the central coordinating point among these advisors with respect to the sequencing and content of disclosures in connection with the settlement.
VII. BOARD AUTHORIZATION REQUESTED
In light of the foregoing, the Supervisory Board and/or Audit Committee of Halcyon Semiconductor AG is respectfully requested to authorize the following actions:
1. Settlement Authority. Authorization for the execution of the administrative settlement agreement with DOJ NSD/CES on terms substantially consistent with those described in Section IV of this memorandum, with the civil monetary penalty not to exceed $3,500,000. This ceiling provides $250,000 of negotiating room above the current $3,250,000 convergence figure, to accommodate potential minor adjustments during the finalization of the settlement agreement language. Any civil monetary penalty amount in excess of $3,500,000 would require the Company to seek additional Board authorization before execution.
2. Compliance Monitor Engagement. Authority to retain an independent compliance monitor for a term of up to eighteen (18) months from the DOJ-approved candidate list, at an estimated cost of $800,000 to $1,200,000, with all costs to be borne by the Company. The compliance monitor engagement will be subject to the selection and objection procedures set forth in the settlement agreement.
3. Signatory Designation. Designation of the following individuals as authorized signatories for the settlement agreement:
• For HSAG: Marcus Friedl, General Counsel
• For HSI: Derek Tran, President
4. Disclosure Authorization. Authorization for the General Counsel, in consultation with Calderwood & Harkness LLP, Braxton Merritt LLP, and Kessler Pratt & Whitfield LLP, to determine the timing and content of any required public disclosure in connection with the settlement, including:
(a) Any MAR Article 17 ad-hoc notice required to be filed with the Frankfurt Stock Exchange;
(b) Any update notice to Lodestar National Bank under Section 6.02(b) of the revolving credit agreement; and
(c) Any other disclosures required by applicable law or regulation.
We recommend that the Board adopt a resolution authorizing these actions at its next scheduled meeting or, if timing requires, by written consent in lieu of a meeting. A draft resolution consistent with the foregoing authorizations can be provided upon request.
VIII. ANTICIPATED TIMELINE
The following timeline sets forth the anticipated sequence of events from the current date through the conclusion of the Enhanced Compliance Period.
We note that this timeline is subject to change based on the pace of settlement agreement negotiations with DOJ and the availability of the Board for a formal resolution. We will keep the General Counsel apprised of any developments that may affect the anticipated timeline.
IX. ASSESSMENT AND CONCLUSION
In the considered judgment of Calderwood & Harkness, this is a strong outcome for the Company. We highlight the following key points:
• No criminal prosecution. The settlement agreement includes an explicit commitment that no criminal prosecution will be brought against HSAG, HSI, or any individual employees. This is of paramount importance. A criminal charge, even one ultimately resolved through a plea agreement or acquittal, would have had severe and potentially irreversible consequences for HSAG's global business, including potential debarment from government contracts, reputational harm, and the loss of customer and partner confidence.
• No denial of export privileges. DOJ has not sought and will not seek a temporary or permanent denial order against HSAG or HSI. A denial order would have been catastrophic to HSAG's global semiconductor business, as it would have effectively barred the Company from exporting any item subject to the EAR — including products far beyond the HCA-9100 series at issue in this matter. The absence of a denial order preserves the Company's ability to continue its worldwide operations without interruption.
• No OFAC implications. Both Calderwood & Harkness's independent analysis and DOJ's own assessment confirmed that no OFAC violations exist in connection with this matter. No referral to OFAC has been or will be made. This eliminates a significant category of potential financial and operational risk.
• Substantial penalty reduction. The civil monetary penalty of $3,250,000 represents a 40.9% reduction from DOJ's opening position of $5,500,000. This reduction reflects DOJ's recognition of the Company's cooperation, the non-willful nature of the violations, the voluntary self-disclosure, the absence of prior enforcement history, and the Company's affirmative remediation efforts.
• Lansheng shipments excluded from penalty calculation. The six Lansheng shipments are not a basis for any penalty, fine, or admission of violation. The release in the settlement agreement expressly covers all Lansheng-related conduct. This is an important concession, as DOJ's secondary theory regarding military end-use provisions had the potential to increase the Company's exposure significantly.
• Administrative settlement — not an NPA or DPA. The resolution takes the form of an administrative settlement agreement, rather than a criminal non-prosecution agreement or deferred prosecution agreement. This distinction is meaningful. An NPA or DPA would carry the stigma of a criminal-framework resolution and could have triggered collateral consequences under government contracting regulations, banking covenants, and the laws of other jurisdictions. An administrative settlement avoids these consequences.
We also note that DOJ acknowledged "substantial cooperation" by the Company in the course of the negotiations. This acknowledgment reflects the Company's timely filing of the voluntary self-disclosure on November 4, 2025, the prompt and comprehensive document productions totaling approximately 21,000 documents, and the voluntary employee proffers on January 13, 2026. The Company's cooperative posture was a critical factor in achieving the administrative-settlement disposition and the significant penalty reduction.
The compliance undertakings set forth in the settlement agreement — including the independent compliance monitor, annual compliance audits, automated restricted-party screening at both order-entry and ship-confirm stages, mandatory training, and periodic reporting — impose meaningful costs and operational obligations over the three-year Enhanced Compliance Period. However, these undertakings are broadly consistent with the enhancements that the Company would prudently implement regardless of the settlement outcome, in light of the compliance deficiencies identified by Calderwood & Harkness's internal investigation and Ashford Pennington's Phase I compliance assessment. In this sense, the compliance undertakings should be viewed not solely as settlement obligations, but also as an investment in the long-term strengthening of HSAG's export compliance program — an investment that will serve the Company well as the U.S. export control regulatory environment continues to evolve, particularly with respect to semiconductor technology and PRC-facing trade.
Finally, the total estimated all-in cost of approximately €9.4 million to €10.8 million falls below HSAG's €15 million materiality threshold for financial reporting purposes and represents approximately 0.22% to 0.25% of HSAG's FY 2024 consolidated revenue.
Calderwood & Harkness is available to present this update to the Supervisory Board or Audit Committee in person at HSAG's offices in Munich or Dresden, or by secure videoconference, at the Board's convenience. We recommend that such a presentation take place prior to the Board's formal action on the authorization request set forth in Section VII, so that Board members have the opportunity to ask questions and discuss the matter in detail.
We thank the Board and the Audit Committee for their continued attention to this matter, and we express our appreciation for the exemplary cooperation we have received from the General Counsel and the broader HSAG and HSI teams throughout this engagement.
Please do not hesitate to contact us with any questions or if you require any additional information.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
Howard Quinn Partner Calderwood & Harkness LLP 1301 K Street NW, Suite 1100 Washington, D.C. 20005 T: (202) 555-0147
Conrad Ashby Partner Calderwood & Harkness LLP 1301 K Street NW, Suite 1100 Washington, D.C. 20005
PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED — ATTORNEY WORK PRODUCT This memorandum and all attachments are protected by the attorney-client privilege and constitute attorney work product prepared in anticipation of litigation and for the purpose of providing legal advice to the client. Unauthorized disclosure is prohibited.
Term | Detail
Form of resolution | Administrative settlement agreement (not a criminal Non-Prosecution Agreement or Deferred Prosecution Agreement).
Civil monetary penalty | $3,250,000. DOJ's opening position was $5,500,000. Calderwood & Harkness's counter-proposal was $1,800,000. The parties converged on $3,250,000 — a 40.9% reduction from DOJ's opening position.
Penalty calculation basis | Three post-Entity-List Zhonghe shipments only. BIS statutory base penalty of $330,947 per violation × 3 violations = $992,841 base penalty. Aggravating factors applied by DOJ included: military applicability of ECCN 3A001 products, PRC destination country, and volume/value of the shipments. Mitigating credits were applied for: voluntary self-disclosure (VSD), cooperation with DOJ, non-willful nature of violations, absence of any prior enforcement history, and affirmative remediation measures.
Criminal prosecution | None. The agreement includes an explicit commitment that no criminal prosecution will be brought against HSAG, HSI, or any individual employees in connection with the conduct at issue.
Denial of export privileges | None. DOJ has not sought and will not seek a temporary or permanent denial order against HSAG or HSI. This is a significant concession; a denial order would have been catastrophic to HSAG's global semiconductor business, effectively barring the Company from exporting any EAR-controlled items.
OFAC referral | None. DOJ has confirmed that no referral to OFAC has been or will be made in connection with this matter. OFAC SDN/SSI/NS-CMIC List screening confirmed negative for all PRC end users and their principals.
Independent compliance monitor | Eighteen-month term. The monitor will be selected from a DOJ-approved candidate list containing a minimum of three and a maximum of five candidates. The Company retains the right to object to any candidate for reasonable cause. The monitor will report semi-annually to both DOJ and the Company. All costs of the monitor will be borne by the Company.
Annual export compliance audits | Required for the duration of a three-year Enhanced Compliance Period, commencing upon execution of the settlement agreement. Audits will be conducted by an independent third party selected by the Company, subject to DOJ approval.
Automated restricted-party screening | Already implemented. The settlement agreement memorializes an ongoing obligation for automated restricted-party screening at both the order-entry stage and the ship-confirm stage for all shipments of ECCN 3A001-classified items to the PRC, Russia, and destinations in EAR Country Group D:1 and D:5.
Mandatory training | Annual training required for all personnel with responsibilities related to PRC-facing sales, order processing, distribution, logistics, or compliance functions.
Periodic reporting to DOJ | Quarterly compliance status reports for the first 12 months following execution; semi-annual reports thereafter through the end of the three-year Enhanced Compliance Period.
Lansheng | No admission of violation. Lansheng-related conduct is referenced in the recitals of the settlement agreement for context purposes only, as background for the compliance undertakings. The release in the agreement expressly covers all Lansheng-related conduct, providing the Company with full protection from future prosecution or enforcement action related to the Lansheng shipments.
Cooperation obligations | Ongoing cooperation obligations during the Enhanced Compliance Period, including production of documents and availability of personnel. The agreement includes protections for attorney-client privilege, attorney work product, and compliance with applicable foreign data privacy laws (including the EU General Data Protection Regulation and the Singapore PDPA).
Category | Estimated Amount
Civil monetary penalty | $3,250,000
Calderwood & Harkness LLP legal fees (entire matter, inception through resolution) | $2,800,000–$3,400,000
Ashford Pennington LLC (compliance consultant) | $655,000 ($475,000 Phase I fixed fee + estimated $180,000 Phase II at $650/hr)
Kessler Pratt & Whitfield LLP (German/EU counsel, Dr. Tobias Engel) | ~€320,000 (~$346,000 at EUR/USD 1.08)
Independent compliance monitor (18 months) | $800,000–$1,200,000
Annual compliance audits (3 years) | $450,000–$750,000
Screening technology upgrade (one-time implementation) | $350,000
Screening technology upgrade (ongoing, 3 years × $85,000/yr) | $255,000
Additional compliance FTEs (2 positions, 3 years, fully loaded) | ~$1,140,000 (2 FTEs × ~$190,000/yr fully loaded × 3 years)
Training program development and delivery (3 years, $120,000/yr) | ~$360,000
Total estimated all-in cost | $10,151,000–$11,651,000
Date | Action
March 13, 2026 | Calderwood & Harkness call with DOJ (Senior Trial Attorney Kolb and Trial Attorney Weir) to discuss the March 10, 2026 redline markup of the draft settlement agreement.
Mid-to-late March 2026 | Finalization of settlement agreement language, incorporating agreed revisions from the March 13 call and any subsequent exchanges.
Week of March 17, 2026 | Coordination call with Braxton Merritt LLP (Elena Voss) and Kessler Pratt & Whitfield LLP (Dr. Tobias Engel) to prepare and finalize the public disclosure coordination protocol, including preparation of a draft MAR Article 17 ad-hoc notice for immediate deployment upon any DOJ public disclosure.
Late March 2026 | Board / Audit Committee resolution authorizing execution of the settlement agreement and related actions, as described in Section VII.
Early April 2026 | Execution of the settlement agreement by the designated signatories for HSAG and HSI.
Early April 2026 | Public announcement, if DOJ issues a press release. Simultaneous issuance of MAR Article 17 ad-hoc notice. Delivery of update notice to Lodestar National Bank.
Within 45 days of execution | Selection of independent compliance monitor from the DOJ-approved candidate list.
18 months post-execution (~October 2027) | Conclusion of the compliance monitor's term.
3 years post-execution (~April 2029) | Conclusion of the Enhanced Compliance Period, including the cessation of periodic reporting obligations and annual audit requirements.

CALDERWOOD & HARKNESS LLP

PRIVILEGED AND CONFIDENTIAL

ATTORNEY-CLIENT PRIVILEGED

ATTORNEY WORK PRODUCT

MEMORANDUM

I. PURPOSE

II. BACKGROUND SUMMARY

III. KEY MILESTONES SINCE LAST UPDATE (JANUARY 2026)

IV. ANTICIPATED RESOLUTION TERMS

V. TOTAL ESTIMATED ALL-IN COST

VI. FINANCIAL REPORTING AND DISCLOSURE CONSIDERATIONS

VII. BOARD AUTHORIZATION REQUESTED

VIII. ANTICIPATED TIMELINE

IX. ASSESSMENT AND CONCLUSION

CALDERWOOD & HARKNESS LLP

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