1032-00007 · Client 1032 · Settlement

settlement-agreement-redline.docx DOCUMENT Litigation

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CALDERWOOD & HARKNESS LLP 1301 K Street NW, Suite 1100 Washington, D.C. 20005

PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT — DRAFT NOT FOR DISTRIBUTION OUTSIDE CALDERWOOD & HARKNESS SETTLEMENT TEAM

REDLINE MARKUP — MARCH 10, 2026

ADMINISTRATIVE SETTLEMENT AGREEMENT

between

THE UNITED STATES DEPARTMENT OF JUSTICE, NATIONAL SECURITY DIVISION

and

HALCYON SEMICONDUCTOR INC.

and

HALCYON SEMICONDUCTOR AG

Reference No. NSD-CES-2025-04871

Explanatory Note: The following reflects Calderwood & Harkness LLP's markup of the DOJ's draft dated March 3, 2026. C&H additions are shown as . C&H deletions of DOJ draft language are shown as . Internal commentary for C&H use only appears in {curly braces, italicized} and must be removed before transmission to DOJ.

RECITALS

WHEREAS, the Counterintelligence and Export Control Section ("CES") of the National Security Division ("NSD") of the United States Department of Justice ("DOJ" or "the Department") has conducted an inquiry designated Reference No. NSD-CES-2025-04871 (the "Inquiry") into certain exports and re-exports of items subject to the Export Administration Regulations ("EAR"), 15 C.F.R. Parts 730–774, by Halcyon Semiconductor Inc. ("HSI"), a Delaware corporation with its principal place of business at 4700 Great America Parkway, Suite 300, San Jose, California 95054, and Halcyon Semiconductor AG ("HSAG"), an Aktiengesellschaft organized under the laws of Switzerland with its principal office at Semperstrasse 15, 01069 Dresden, Germany (HSI and HSAG, collectively, "Halcyon" or "the Company"); and

WHEREAS, the Inquiry focused on seventeen (17) shipments of HCA-9100 series analog-to-digital converter chipsets, classified under Export Control Classification Number ("ECCN") 3A001, routed through Archipelago Component Solutions Pte. Ltd. ("Archipelago"), the Company's authorized distributor in Singapore, to entities in the People's Republic of China ("PRC") between March 12, 2024 and August 19, 2025; and

{C&H Note: Changed "two" to "certain" to avoid implying that the settlement addresses both Zhonghe and Lansheng as violative end users. "Two" creates a textual linkage between the two entities that could be read to suggest both are implicated in the Violations. "Certain" is factually accurate and neutral.}

WHEREAS, the Company acknowledges that three (3) shipments of HCA-9100 series analog-to-digital converter chipsets were made to Zhonghe Microelectronics Co., Ltd. ("Zhonghe"), located in Shenzhen, People's Republic of China, on or about June 27, 2025, July 15, 2025, and August 3, 2025, after Zhonghe was added to the Entity List (Supplement No. 4 to Part 744 of the EAR) on June 14, 2025, without the required license from the Bureau of Industry and Security ("BIS") of the U.S. Department of Commerce, in apparent violation of 15 C.F.R. § 744.11 (collectively, the "Violations"); and

WHEREAS, ; and

{C&H Note: Critical redline. DOJ's draft language implied the Lansheng shipments involved violations. Our investigation found no basis for a § 744.21 violation. Cannot admit to Lansheng violations. Redline preserves DOJ's ability to reference Lansheng as factual context but eliminates any finding or admission of wrongdoing. This is a non-negotiable position.}

WHEREAS, DOJ NSD/CES acknowledges that the Company cooperated with the Inquiry , including by:

(a) filing a Voluntary Self-Disclosure ("VSD") with the BIS Office of Export Enforcement on November 4, 2025 (Reference No. OEE-VSD-2025-00319);

(b) producing in response to the Department's voluntary request for information;

(d) engaging an independent compliance consultant, Ashford Pennington LLC, for a comprehensive review of the Company's export compliance program;

and

{C&H Note: Strengthened cooperation language from "to a satisfactory degree" to "substantially and in an exemplary manner" — consistent with DOJ's oral acknowledgment of "substantial cooperation" during the February 18, 2026 call with Kolb and Weir. Added specificity on production volumes and dates to memorialize the record. This language is important for the cooperation-credit narrative and for any future BIS proceeding.}

WHEREAS, DOJ NSD/CES has determined that the Violations were ; and

{C&H Note: DOJ's "systemic compliance failures" characterization is too broad and pejorative. This language could be cited against the Company in collateral proceedings, including the pending securities class action (Halcyon Semiconductor Inc. v. Keating, N.D. Cal. No. 5:26-cv-00341), customer disputes (Northstar contract contains compliance-representation warranties), and by proxy advisory firms. Our redline specifies the actual root causes, which are narrow and technical, and avoids language that could be used as an admission of pervasive compliance dysfunction.}

WHEREAS, the Company has undertaken remedial measures, including: halting all shipments to Zhonghe; implementing dual restricted-party screening procedures at both the order-entry and ship-confirmation stages; upgrading its automated screening platform to support multi-language and multi-script matching capabilities; retaining an independent compliance consultant to review and enhance its export compliance program; and adding additional trade compliance personnel to its export controls team; and

{C&H Note: This recital was NOT in DOJ's draft. Added by C&H. Including the OFAC negative finding in the settlement agreement provides a clear record that this matter was limited to EAR violations and did not involve OFAC-administered sanctions. This is important for (i) the Company's banking relationships, particularly with Lodestar National Bank, whose compliance group requested written confirmation that OFAC programs were not implicated; (ii) the Company's D&O and E&O insurance carriers, who have inquired about sanctions exposure; and (iii) customer representations under compliance warranties in supply agreements.}

WHEREAS, the parties desire to resolve the matters described herein ; and

{C&H Note: Made explicit the no-criminal-prosecution and no-denial commitments. DOJ's draft language "without further proceedings" was vague and could be interpreted narrowly. We need unambiguous language that this resolution forecloses criminal prosecution and denial orders. This is consistent with DOJ's oral representations during the resolution-in-principle discussions.}

NOW, THEREFORE, in consideration of the mutual covenants, agreements, and undertakings set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

ARTICLE I — DEFINITIONS

Section 1.1 — "Agreement" means this Administrative Settlement Agreement, including all recitals, articles, and sections hereof.

Section 1.2 — "BIS" means the Bureau of Industry and Security of the United States Department of Commerce.

Section 1.3 — "Company" means Halcyon Semiconductor Inc. and Halcyon Semiconductor AG, jointly and severally.

Section 1.4 — "Compliance Monitor" means the independent compliance monitor appointed pursuant to Article IV of this Agreement.

Section 1.5 — "Effective Date" means the date of the last signature affixed to this Agreement.

Section 1.6 — "Enhanced Compliance Period" means the period of three (3) years commencing on the Effective Date.

Section 1.7 — "Monitor Term" means the period of months commencing on the Effective Date .

{C&H Note: DOJ draft had 24 months. Our negotiation position per the resolution-in-principle framework discussed at the February 18, 2026 session is 18 months. Added flexibility for Monitor start date — selection from DOJ-approved candidate list may take time, and we should not lose monitor-term runway to administrative delays in the selection process. Monitor clock should not start running before the monitor is actually in place and working.}

Section 1.8 — "Violations" has the meaning set forth in the recitals to this Agreement.

ARTICLE II — CIVIL MONETARY PENALTY

Section 2.1 — Penalty Amount. The Company shall pay a civil administrative penalty in the amount of Three Million Two Hundred Fifty Thousand Dollars ($3,250,000) (the "Penalty") to the United States.

Section 2.2 — Payment Terms. The Penalty shall be paid by wire transfer in immediately available funds to the within calendar days of the Effective Date. DOJ NSD/CES shall provide wire transfer instructions to the Company or its counsel no later than five (5) business days after the Effective Date.

{C&H Note: DOJ proposed 30 days. We are requesting 60 days to allow for internal treasury approval processes at HSAG and currency conversion (EUR to USD). HSAG's treasury operations are headquartered in Glenrock Assurance and require Supervisory Board-level authorization (Aufsichtsrat) for expenditures of this nature under HSAG's Articles of Association. Additionally, EUR/USD conversion for a payment of this magnitude requires advance booking with HSAG's banking counterparties. If DOJ pushes back hard, we can accept 45 days. Also specified that the receiving account must be designated "in writing" — prevents disputes over oral instructions.}

{C&H Note: Paragraph NOT in DOJ's draft. Added to memorialize mitigation credits in the agreement itself, creating a binding record of the factors that reduced the penalty from what it otherwise would have been. This protects the Company if DOJ or BIS later characterizes the Company as a "repeat offender" or if mitigation factors become relevant in collateral proceedings (e.g., securities litigation damages analysis, insurance coverage disputes). It also serves as precedent documentation for any future compliance events.}

{C&H Note: Deleted DOJ's version which included base penalty arithmetic ($330,947 × 3 = $992,841). We are not objecting to the arithmetic itself, but including the calculation methodology in the agreement invites second-guessing and could be cited in future enforcement actions (by DOJ or BIS) as a "benchmark" for penalty calculations involving ECCN 3A001 items. Our replacement paragraph 2.3 references mitigating factors without locking in arithmetic or establishing a formula. Will discuss deletion with DOJ — they may insist on some form of penalty calculation narrative, in which case we should propose moving it to a side letter rather than the agreement itself.}

ARTICLE III — NO CRIMINAL PROSECUTION; NO DENIAL OF EXPORT PRIVILEGES

{C&H Note: The entirety of Article III is new. It was not in DOJ's draft. These provisions are essential client requirements consistent with DOJ's oral commitments made during the resolution-in-principle discussions on February 18, 2026. We expect pushback on Section 3.1 (DOJ may want to limit the employee protection to "based on information known to the Department as of the Effective Date") and on Section 3.3 (DOJ may argue they cannot contractually bind OFAC). We have negotiating room on both points but should lead with the broader formulations.}

ARTICLE IV — COMPLIANCE UNDERTAKINGS

Section 4.1 — Independent Compliance Monitor.

(a) Monitor Selection. Within days of the Effective Date, the Company shall retain an independent compliance monitor (the "Compliance Monitor") selected from . DOJ NSD/CES shall provide the candidate list to the Company within fifteen (15) days of the Effective Date. In the event the Company objects to a candidate, DOJ NSD/CES shall propose a replacement candidate within ten (10) business days of receiving such objection.

{C&H Note: (i) Extended selection period from 30 to 45 days — 30 days is unrealistically tight given the need to conduct conflicts checks, negotiate engagement terms, and obtain HSAG Supervisory Board authorization for the monitor engagement; (ii) required minimum 3 / maximum 5 candidates (DOJ's draft said only "three," leaving no flexibility if one candidate has a conflict); (iii) added objection right for reasonable cause — this is now standard in modern NPA/DPA/settlement monitor frameworks. See DOJ's 2024 Revised Monitor Selection Memorandum.}

(b) Monitor Mandate. The Compliance Monitor shall be tasked with assessing and monitoring the Company's compliance with the EAR and related U.S. export control regulations, with particular focus on: (i) restricted-party screening processes, including database maintenance and update protocols; (ii) order management and ship-confirmation procedures, including controls at each stage of the order-to-delivery cycle; (iii) distributor oversight, including due diligence and audit procedures applicable to Archipelago Component Solutions Pte. Ltd. and any other authorized distributors handling items classified under ECCN 3A001; and (iv) export compliance training programs for relevant personnel.

(c) Monitor Term and Reporting. The Monitor Term shall be months. During the Monitor Term, the Compliance Monitor shall provide written reports to DOJ NSD/CES and the Company, each such report to be delivered within thirty (30) days following the end of the applicable reporting period. Each report shall describe the Compliance Monitor's assessment of the Company's compliance program, identify any deficiencies or areas for improvement, and make recommendations for remediation.

{C&H Note: (i) Reduced from 24 to 18 months per resolution-in-principle framework discussed with DOJ on February 18, 2026; (ii) changed from quarterly to semi-annual reporting to reduce cost and administrative burden. Quarterly reporting is onerous and inconsistent with the non-willful, non-egregious nature of the Violations. For reference, monitor costs are estimated at $1.8–2.4M for 18 months — quarterly reporting would increase that estimate by approximately 20–25% due to additional report preparation and review cycles.}

(d) Monitor Costs. All costs and expenses associated with the retention and activities of the Compliance Monitor, including the Compliance Monitor's fees, travel expenses, and any costs of outside experts or consultants retained by the Compliance Monitor, shall be borne by the Company.

{C&H Note: Added to limit the monitor's authority and protect confidentiality of monitor reports. Without this provision, the monitor could effectively function as a shadow regulator with directive authority over business operations, and monitor reports could be obtained through FOIA requests. The confidentiality protection is essential — monitor reports will contain commercially sensitive information about the Company's customers, distribution channels, and internal processes.}

Section 4.2 — Annual Export Compliance Audits.

During the Enhanced Compliance Period, the Company shall cause an annual audit of its export compliance program to be conducted by a qualified independent third party . Each audit shall assess the Company's compliance with the EAR and the terms of this Agreement. Written reports of each annual audit shall be provided to DOJ NSD/CES and the Company within days of the completion of each audit.

Section 4.3 — Automated Restricted-Party Screening.

automated restricted-party screening for all shipments of items classified under ECCN 3A001 (and any successor classification) to end users or consignees in the PRC, the Russian Federation, and all countries designated as EAR Country Group D:1 or D:5, . Such screening shall check all parties to each transaction — including end users, consignees, intermediate consignees, and any other parties identified in the applicable export documentation — against the Entity List (Supplement No. 4 to Part 744 of the EAR), the Unverified List (Supplement No. 6 to Part 744 of the EAR), the Denied Persons List, and the Military End-User List (Supplement No. 7 to Part 744 of the EAR), and shall employ multi-language and multi-script matching capabilities sufficient to identify matches involving Chinese-language, Cyrillic, and other non-Latin character sets.

{C&H Note: (i) Changed to present tense because dual-screening was implemented in October 2025, prior to the settlement — making this a forward-looking obligation would be inaccurate and could imply the Company has not yet remediated; (ii) added explicit ship-confirm re-screening requirement since the failure to re-screen at the ship-confirmation stage was the proximate root cause of the Violations.}

Section 4.4 — Training.

The Company shall provide mandatory export compliance training to all employees with sales, order processing, distribution, logistics, or compliance responsibilities involving end users or consignees in the PRC, the Russian Federation, and EAR Country Group D:1/D:5 countries. Such training shall be conducted , and shall cover, at a minimum, the Entity List, the Unverified List, the Denied Persons List, the Military End-User List, applicable license requirements under the EAR, red-flag indicators of potential diversion or prohibited end use, . The Company shall maintain records of all training sessions, including attendance records and training materials, for a period of not less than five (5) years.

Section 4.5 — Periodic Reporting.

During the Enhanced Compliance Period, the Company shall provide written reports to DOJ NSD/CES. Each report shall include, at a minimum:

(a) the status of compliance program enhancements undertaken by the Company;

(b) any new potential EAR violations identified by the Company during the applicable reporting period, including a description of the circumstances of each potential violation, the Company's investigation and findings, and any remedial actions taken;

(c) any material changes in the Company's organizational structure, distribution channels, or compliance personnel since the prior report; and

(d) the results of any Compliance Monitor reports or annual compliance audits completed during the applicable reporting period.

{C&H Note: Changed quarterly to semi-annual, consistent with the monitor reporting redline in Section 4.1(c). The Company should not be required to report more frequently than the monitor. If DOJ insists on quarterly, our fallback position is quarterly for the first year and semi-annual thereafter.}

ARTICLE V — ADMISSIONS AND COOPERATION

Section 5.1 — Admissions. The Company admits that it committed the Violations as described in the recitals to this Agreement.

{C&H Note: Essential. Without this carve-out, the general admission of Violations could be read to encompass Lansheng — particularly given that the recitals reference both Zhonghe and Lansheng. The carve-out creates an unambiguous textual firewall. This is a non-negotiable position.}

Section 5.2 — Ongoing Cooperation. The Company agrees to continue cooperating fully with DOJ NSD/CES in connection with any ongoing or future investigation arising from or relating to the conduct described in this Agreement, including making documents and witnesses available upon reasonable request by DOJ NSD/CES.

{C&H Note: Standard cooperation-obligation limitations. DOJ's draft had an unqualified cooperation clause, which is not acceptable and is inconsistent with settled practice in multi-jurisdictional settlements. The FADP/GDPR/PIPL carve-out is particularly important given the volume of data stored on HSAG's Dresden and Glenrock Assurance servers. Expect DOJ will accept this with minor modifications — they have agreed to similar provisions in recent settlement agreements (see Vertex microsystems (2025) and Arion Technologies (2024)).}

ARTICLE VI — BREACH AND REMEDIES

Section 6.1 — Notice and Cure. If DOJ NSD/CES determines that the Company has materially breached any term or condition of this Agreement, DOJ NSD/CES shall provide written notice to the Company specifying the nature of the alleged breach in reasonable detail. The Company shall have calendar days from receipt of such notice to cure the breach (the "Cure Period"). If the Company believes in good faith that the alleged breach has been cured within the Cure Period, the Company shall provide DOJ NSD/CES with a written certification to that effect, together with supporting documentation. DOJ NSD/CES shall respond in writing within thirty (30) days of receiving such certification, either confirming that the breach has been cured or specifying the reasons why DOJ NSD/CES believes the cure is insufficient.

Section 6.2 — Remedies for Uncured Breach. If, following the expiration of the Cure Period, DOJ NSD/CES determines in good faith that a material breach has not been cured, DOJ NSD/CES may, at its sole discretion, pursue one or more of the following remedies:

(a) extend the Enhanced Compliance Period by up to ;

(b) extend the Monitor Term by up to months;

{C&H Note: (i) Extended cure period from 30 to 60 days — 30 days is insufficient for a global company operating across multiple jurisdictions to investigate, remediate, and document the cure of a compliance-related breach; (ii) reduced maximum extension periods — two additional years on the Enhanced Compliance Period is disproportionate, one year is sufficient; twelve additional months on the monitor term is excessive given the 18-month base, six months is appropriate; (iii) deleted "additional monetary penalties" — the Penalty is the Penalty, and a breach provision should not become a revenue mechanism for the government. If DOJ wants the ability to impose additional financial consequences, they can seek those through a formal enforcement proceeding; (iv) limited criminal referral to breach-related conduct, not re-opening settled Violations — without this limitation, the no-prosecution commitment in Article III would be illusory.}

ARTICLE VII — RELEASE

Section 7.1 — Scope of Release. Upon the Company's full satisfaction of all terms and obligations of this Agreement, including payment of the Penalty in full and completion of the Enhanced Compliance Period, DOJ NSD/CES hereby releases and forever discharges the Company, together with its parents, subsidiaries, affiliates, and their respective current and former directors, officers, and employees acting in their capacities as such, from all civil and administrative claims, actions, or proceedings arising from or relating to the Violations .

{C&H Note: Extended the release to expressly include the Lansheng shipments. Without this language, DOJ could theoretically revisit Lansheng in a separate enforcement action after the Enhanced Compliance Period ends, notwithstanding the settlement. The release must cover all conduct that was the subject of the Inquiry — not just the three admitted Violations. This is a non-negotiable position and is logically connected to the Lansheng carve-out in Recital 4 and Section 5.1: if we are not admitting violations regarding Lansheng, the quid pro quo is that DOJ releases those claims as well.}

Section 7.2 — Release Carve-Outs. The release set forth in Section 7.1 does not extend to:

(a) ;

(b) any false statements made to, or obstruction of justice directed at, DOJ NSD/CES or any other governmental authority by the Company or its agents in connection with this Agreement or the Inquiry; or

{C&H Note: DOJ's original carve-out for "any conduct not described in this Agreement" is overbroad — it effectively makes the release meaningless because it would preserve DOJ's ability to pursue claims based on any conduct that was not literally "described" in the agreement, even if DOJ knew about the conduct at the time. Our redline limits the carve-out to conduct "not known to DOJ NSD/CES as of the Effective Date" — this provides DOJ with appropriate protection against concealed violations or after-discovered conduct while giving the Company genuine finality for all known conduct.}

ARTICLE VIII — GENERAL PROVISIONS

Section 8.1 — Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the United States of America.

Section 8.2 — Entire Agreement. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior negotiations, representations, understandings, and agreements, whether written or oral, between the parties relating to the subject matter of this Agreement.

Section 8.3 — Amendments. This Agreement may not be amended, modified, or supplemented except by a written instrument signed by all parties hereto.

Section 8.4 — Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute one and the same instrument. Execution and delivery of this Agreement by facsimile or electronic transmission (including PDF) shall be deemed effective as original execution and delivery.

Section 8.5 — Notices. All notices, requests, demands, and other communications required or permitted under this Agreement shall be in writing and shall be delivered by hand, by nationally recognized overnight courier, or by registered or certified mail, return receipt requested, postage prepaid, to the following addresses (or to such other address as a party may designate by written notice in accordance with this Section):

For DOJ NSD/CES:

Adrienne Kolb Senior Trial Attorney Counterintelligence and Export Control Section National Security Division U.S. Department of Justice 950 Pennsylvania Avenue NW Washington, D.C. 20530

For the Company:

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

With a copy to:

Marcus Friedl General Counsel Halcyon Semiconductor AG Bahnhofstrasse 42 8001 Glenrock Assurance, Switzerland

Section 8.6 — Public Disclosure.

{C&H Note: Critical addition. HSAG is listed on the Frankfurt Stock Exchange and is subject to ad-hoc disclosure obligations under MAR Article 17 and the German Securities Trading Act (WpHG). If DOJ issues a press release before HSAG issues its own ad-hoc disclosure (Ad-hoc-Mitteilung), the Company could face a separate regulatory violation in Germany (BaFin enforcement), potential securities fraud exposure under German law, and derivative liability from the Company's failure to comply with its own continuous disclosure obligations. Five business days' advance notice is the minimum period needed for HSAG to prepare, review (including with German counsel at KPW), and publish a compliant ad-hoc disclosure. Coordinate with Braxton Merritt (C&H capital markets) and Klausner Petersen Wolf (KPW, Frankfurt counsel) on the disclosure protocol.}

Section 8.7 — No Third-Party Beneficiaries. This Agreement is not intended to, and does not, confer any rights or benefits on any person or entity other than the parties hereto. No person or entity other than the parties hereto may enforce any provision of this Agreement.

SIGNATURE PAGE

IN WITNESS WHEREOF, the parties hereto have executed this Administrative Settlement Agreement as of the dates set forth below.

UNITED STATES DEPARTMENT OF JUSTICE NATIONAL SECURITY DIVISION

By: ________

Name: Adrienne Kolb

Title: Senior Trial Attorney, Counterintelligence and Export Control Section

Date: ________

HALCYON SEMICONDUCTOR INC.

By: ________

Name: Derek Tran

Title: President

Date: ________

HALCYON SEMICONDUCTOR AG

By: ________

Name: Marcus Friedl

Title: General Counsel

Date: ________

APPROVED AS TO FORM:

CALDERWOOD & HARKNESS LLP

By: ________

Name: Howard Quinn

Title: Partner

Date: ________

INTERNAL C&H REDLINE SUMMARY For DOJ Discussion — Not for Transmission

Prepared by L. Donahue, Associate, Calderwood & Harkness LLP March 10, 2026

Priority Redlines (Non-Negotiable)

1. Article III (entire) — No-prosecution, no-denial, no-OFAC-referral commitments. DOJ's draft contained no explicit commitment against criminal prosecution, denial of export privileges, or OFAC referral. The entirety of Article III is new and must be included in the final agreement. These provisions reflect DOJ's oral commitments during the resolution-in-principle discussions and are essential to the Company's willingness to enter into this settlement. Without them, the settlement provides no meaningful finality.

2. Lansheng carve-out (Recitals ¶ 4 + Art. V § 5.1 + Art. VII § 7.1). The Company cannot admit to any violation regarding Lansheng. Our investigation found no basis for a § 744.21 military end-use violation. The carve-out must appear in three places: (i) the recitals, to establish that the Agreement does not include findings on Lansheng; (ii) Section 5.1, to create an explicit non-admission; and (iii) Section 7.1, to ensure the release covers Lansheng claims. These three provisions operate as an integrated package and should be negotiated as such.

3. Public disclosure advance notice (Art. VIII § 8.6). HSAG's MAR Article 17 obligations require this. A DOJ press release issued without advance notice could trigger a separate German regulatory violation. The five-business-day advance notice period is the minimum necessary. This is a legal compliance necessity, not a preference.

4. Monitor term: 18 months, not 24. Consistent with the resolution-in-principle framework. An 18-month term is proportionate to the nature and number of Violations (three shipments, non-willful, promptly remediated). Twenty-four months is appropriate only for willful or systemic violations.

Priority Redlines (Strongly Preferred But Negotiable)

5. Payment term: 60 days. Preferred position is 60 days; could accept 45 days. Cannot accept 30 days due to HSAG Supervisory Board approval requirements and EUR/USD conversion logistics.

6. Semi-annual reporting. Preferred position is semi-annual throughout the Enhanced Compliance Period. Fallback: quarterly for the first year, semi-annual for years two and three.

7. Cooperation limitations (Art. V § 5.3). These are standard limitations that DOJ has accepted in comparable recent settlements. Expect DOJ to accept with minor modifications, possibly adding a clause requiring the Company to notify DOJ of any foreign-law impediment before asserting it.

8. Breach remedies caps (Art. VI § 6.2). Expect pushback on the deletion of additional monetary penalties (former subclause (c)). Fallback position: agree to reinstate a capped additional penalty provision (e.g., not to exceed 50% of the original Penalty), but only upon a finding of willful breach, and only after an opportunity to be heard.

Expect DOJ to Push Back On

• Deletion of penalty arithmetic (former § 2.4). DOJ may view penalty-calculation transparency as important for institutional precedent and Congressional oversight. If they insist, propose moving the calculation to a side letter or appendix rather than the body of the agreement.

• Employee protection scope in § 3.1. DOJ will likely seek to limit the employee non-prosecution commitment to "based on information known to the Department as of the Effective Date" and may resist extending protection to former employees. Our position: the commitment should be based on the conduct described in the agreement, not limited to DOJ's current knowledge. Former employees must be covered — several key individuals have since departed the Company.

• Binding OFAC non-referral in § 3.3. DOJ will argue they cannot contractually bind a separate agency (OFAC). Our response: we are not asking DOJ to bind OFAC; we are asking DOJ to commit not to make a referral. DOJ controls its own referral decisions. If DOJ cannot commit, propose alternative language: "DOJ NSD/CES represents that, as of the Effective Date, it does not intend to make any referral to OFAC."

• Release scope covering Lansheng in § 7.1. DOJ may resist releasing claims related to Lansheng on the grounds that the Lansheng investigation is still open. Our position: if DOJ wants the Company to settle, it must provide finality on all conduct within the scope of the Inquiry. A settlement that leaves Lansheng claims live is not a settlement — it is a partial ceasefire. If DOJ is not prepared to release Lansheng claims, we need to understand what additional information or concessions DOJ requires.

Next Step.

• Quinn to schedule call with Kolb/Weir for March 13, 2026 to walk through the redline. Donahue to prepare comparison chart of key provisions for use on the call. Friedl (HSAG) to be available by phone for any real-time questions on Swiss law matters.

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT CALDERWOOD & HARKNESS LLP

CALDERWOOD & HARKNESS LLP 1301 K Street NW, Suite 1100 Washington, D.C. 20005
PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT — DRAFT NOT FOR DISTRIBUTION OUTSIDE CALDERWOOD & HARKNESS SETTLEMENT TEAM
REDLINE MARKUP — MARCH 10, 2026
ADMINISTRATIVE SETTLEMENT AGREEMENT
between
THE UNITED STATES DEPARTMENT OF JUSTICE, NATIONAL SECURITY DIVISION
and
HALCYON SEMICONDUCTOR INC.
and
HALCYON SEMICONDUCTOR AG
Reference No. NSD-CES-2025-04871
Explanatory Note: The following reflects Calderwood & Harkness LLP's markup of the DOJ's draft dated March 3, 2026. C&H additions are shown as . C&H deletions of DOJ draft language are shown as . Internal commentary for C&H use only appears in {curly braces, italicized} and must be removed before transmission to DOJ.
RECITALS
WHEREAS, the Counterintelligence and Export Control Section ("CES") of the National Security Division ("NSD") of the United States Department of Justice ("DOJ" or "the Department") has conducted an inquiry designated Reference No. NSD-CES-2025-04871 (the "Inquiry") into certain exports and re-exports of items subject to the Export Administration Regulations ("EAR"), 15 C.F.R. Parts 730–774, by Halcyon Semiconductor Inc. ("HSI"), a Delaware corporation with its principal place of business at 4700 Great America Parkway, Suite 300, San Jose, California 95054, and Halcyon Semiconductor AG ("HSAG"), an Aktiengesellschaft organized under the laws of Switzerland with its principal office at Semperstrasse 15, 01069 Dresden, Germany (HSI and HSAG, collectively, "Halcyon" or "the Company"); and
WHEREAS, the Inquiry focused on seventeen (17) shipments of HCA-9100 series analog-to-digital converter chipsets, classified under Export Control Classification Number ("ECCN") 3A001, routed through Archipelago Component Solutions Pte. Ltd. ("Archipelago"), the Company's authorized distributor in Singapore, to   entities in the People's Republic of China ("PRC") between March 12, 2024 and August 19, 2025; and
{C&H Note: Changed "two" to "certain" to avoid implying that the settlement addresses both Zhonghe and Lansheng as violative end users. "Two" creates a textual linkage between the two entities that could be read to suggest both are implicated in the Violations. "Certain" is factually accurate and neutral.}
WHEREAS, the Company acknowledges that three (3) shipments of HCA-9100 series analog-to-digital converter chipsets were made to Zhonghe Microelectronics Co., Ltd. ("Zhonghe"), located in Shenzhen, People's Republic of China, on or about June 27, 2025, July 15, 2025, and August 3, 2025, after Zhonghe was added to the Entity List (Supplement No. 4 to Part 744 of the EAR) on June 14, 2025, without the required license from the Bureau of Industry and Security ("BIS") of the U.S. Department of Commerce, in apparent violation of 15 C.F.R. § 744.11 (collectively, the "Violations"); and
WHEREAS,  ; and
{C&H Note: Critical redline. DOJ's draft language implied the Lansheng shipments involved violations. Our investigation found no basis for a § 744.21 violation. Cannot admit to Lansheng violations. Redline preserves DOJ's ability to reference Lansheng as factual context but eliminates any finding or admission of wrongdoing. This is a non-negotiable position.}
WHEREAS, DOJ NSD/CES acknowledges that the Company cooperated with the Inquiry  , including by:
(a) filing a Voluntary Self-Disclosure ("VSD") with the BIS Office of Export Enforcement on November 4, 2025 (Reference No. OEE-VSD-2025-00319);
(b) producing  in response to the Department's voluntary request for information;
(c) making two (2) Company employees available for voluntary proffers on January 13, 2026; and
(d) engaging an independent compliance consultant, Ashford Pennington LLC, for a comprehensive review of the Company's export compliance program;
and
{C&H Note: Strengthened cooperation language from "to a satisfactory degree" to "substantially and in an exemplary manner" — consistent with DOJ's oral acknowledgment of "substantial cooperation" during the February 18, 2026 call with Kolb and Weir. Added specificity on production volumes and dates to memorialize the record. This language is important for the cooperation-credit narrative and for any future BIS proceeding.}
WHEREAS, DOJ NSD/CES has determined that the Violations were  ; and
{C&H Note: DOJ's "systemic compliance failures" characterization is too broad and pejorative. This language could be cited against the Company in collateral proceedings, including the pending securities class action (Halcyon Semiconductor Inc. v. Keating, N.D. Cal. No. 5:26-cv-00341), customer disputes (Northstar contract contains compliance-representation warranties), and by proxy advisory firms. Our redline specifies the actual root causes, which are narrow and technical, and avoids language that could be used as an admission of pervasive compliance dysfunction.}
WHEREAS, the Company has undertaken   remedial measures, including: halting all shipments to Zhonghe; implementing dual restricted-party screening procedures at both the order-entry and ship-confirmation stages; upgrading its automated screening platform to support multi-language and multi-script matching capabilities; retaining an independent compliance consultant to review and enhance its export compliance program; and adding additional trade compliance personnel to its export controls team; and
{C&H Note: This recital was NOT in DOJ's draft. Added by C&H. Including the OFAC negative finding in the settlement agreement provides a clear record that this matter was limited to EAR violations and did not involve OFAC-administered sanctions. This is important for (i) the Company's banking relationships, particularly with Lodestar National Bank, whose compliance group requested written confirmation that OFAC programs were not implicated; (ii) the Company's D&O and E&O insurance carriers, who have inquired about sanctions exposure; and (iii) customer representations under compliance warranties in supply agreements.}
WHEREAS, the parties desire to resolve the matters described herein  ; and
{C&H Note: Made explicit the no-criminal-prosecution and no-denial commitments. DOJ's draft language "without further proceedings" was vague and could be interpreted narrowly. We need unambiguous language that this resolution forecloses criminal prosecution and denial orders. This is consistent with DOJ's oral representations during the resolution-in-principle discussions.}
NOW, THEREFORE, in consideration of the mutual covenants, agreements, and undertakings set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I — DEFINITIONS
Section 1.1 — "Agreement" means this Administrative Settlement Agreement, including all recitals, articles, and sections hereof.
Section 1.2 — "BIS" means the Bureau of Industry and Security of the United States Department of Commerce.
Section 1.3 — "Company" means Halcyon Semiconductor Inc. and Halcyon Semiconductor AG, jointly and severally.
Section 1.4 — "Compliance Monitor" means the independent compliance monitor appointed pursuant to Article IV of this Agreement.
Section 1.5 — "Effective Date" means the date of the last signature affixed to this Agreement.
Section 1.6 — "Enhanced Compliance Period" means the period of three (3) years commencing on the Effective Date.
Section 1.7 — "Monitor Term" means the period of   months commencing on the Effective Date .
{C&H Note: DOJ draft had 24 months. Our negotiation position per the resolution-in-principle framework discussed at the February 18, 2026 session is 18 months. Added flexibility for Monitor start date — selection from DOJ-approved candidate list may take time, and we should not lose monitor-term runway to administrative delays in the selection process. Monitor clock should not start running before the monitor is actually in place and working.}
Section 1.8 — "Violations" has the meaning set forth in the recitals to this Agreement.
ARTICLE II — CIVIL MONETARY PENALTY
Section 2.1 — Penalty Amount. The Company shall pay a civil administrative penalty in the amount of Three Million Two Hundred Fifty Thousand Dollars ($3,250,000) (the "Penalty") to the United States.
Section 2.2 — Payment Terms. The Penalty shall be paid by wire transfer in immediately available funds to the   within   calendar days of the Effective Date. DOJ NSD/CES shall provide wire transfer instructions to the Company or its counsel no later than five (5) business days after the Effective Date.
{C&H Note: DOJ proposed 30 days. We are requesting 60 days to allow for internal treasury approval processes at HSAG and currency conversion (EUR to USD). HSAG's treasury operations are headquartered in Glenrock Assurance and require Supervisory Board-level authorization (Aufsichtsrat) for expenditures of this nature under HSAG's Articles of Association. Additionally, EUR/USD conversion for a payment of this magnitude requires advance booking with HSAG's banking counterparties. If DOJ pushes back hard, we can accept 45 days. Also specified that the receiving account must be designated "in writing" — prevents disputes over oral instructions.}
{C&H Note: Paragraph NOT in DOJ's draft. Added to memorialize mitigation credits in the agreement itself, creating a binding record of the factors that reduced the penalty from what it otherwise would have been. This protects the Company if DOJ or BIS later characterizes the Company as a "repeat offender" or if mitigation factors become relevant in collateral proceedings (e.g., securities litigation damages analysis, insurance coverage disputes). It also serves as precedent documentation for any future compliance events.}
{C&H Note: Deleted DOJ's version which included base penalty arithmetic ($330,947 × 3 = $992,841). We are not objecting to the arithmetic itself, but including the calculation methodology in the agreement invites second-guessing and could be cited in future enforcement actions (by DOJ or BIS) as a "benchmark" for penalty calculations involving ECCN 3A001 items. Our replacement paragraph 2.3 references mitigating factors without locking in arithmetic or establishing a formula. Will discuss deletion with DOJ — they may insist on some form of penalty calculation narrative, in which case we should propose moving it to a side letter rather than the agreement itself.}
ARTICLE III — NO CRIMINAL PROSECUTION; NO DENIAL OF EXPORT PRIVILEGES
{C&H Note: The entirety of Article III is new. It was not in DOJ's draft. These provisions are essential client requirements consistent with DOJ's oral commitments made during the resolution-in-principle discussions on February 18, 2026. We expect pushback on Section 3.1 (DOJ may want to limit the employee protection to "based on information known to the Department as of the Effective Date") and on Section 3.3 (DOJ may argue they cannot contractually bind OFAC). We have negotiating room on both points but should lead with the broader formulations.}
ARTICLE IV — COMPLIANCE UNDERTAKINGS
Section 4.1 — Independent Compliance Monitor.
(a) Monitor Selection. Within   days of the Effective Date, the Company shall retain an independent compliance monitor (the "Compliance Monitor") selected from  . DOJ NSD/CES shall provide the candidate list to the Company within fifteen (15) days of the Effective Date. In the event the Company objects to a candidate, DOJ NSD/CES shall propose a replacement candidate within ten (10) business days of receiving such objection.
{C&H Note: (i) Extended selection period from 30 to 45 days — 30 days is unrealistically tight given the need to conduct conflicts checks, negotiate engagement terms, and obtain HSAG Supervisory Board authorization for the monitor engagement; (ii) required minimum 3 / maximum 5 candidates (DOJ's draft said only "three," leaving no flexibility if one candidate has a conflict); (iii) added objection right for reasonable cause — this is now standard in modern NPA/DPA/settlement monitor frameworks. See DOJ's 2024 Revised Monitor Selection Memorandum.}
(b) Monitor Mandate. The Compliance Monitor shall be tasked with assessing and monitoring the Company's compliance with the EAR and related U.S. export control regulations, with particular focus on: (i) restricted-party screening processes, including database maintenance and update protocols; (ii) order management and ship-confirmation procedures, including controls at each stage of the order-to-delivery cycle; (iii) distributor oversight, including due diligence and audit procedures applicable to Archipelago Component Solutions Pte. Ltd. and any other authorized distributors handling items classified under ECCN 3A001; and (iv) export compliance training programs for relevant personnel.
(c) Monitor Term and Reporting. The Monitor Term shall be   months. During the Monitor Term, the Compliance Monitor shall provide   written reports to DOJ NSD/CES and the Company, each such report to be delivered within thirty (30) days following the end of the applicable reporting period. Each report shall describe the Compliance Monitor's assessment of the Company's compliance program, identify any deficiencies or areas for improvement, and make recommendations for remediation.
{C&H Note: (i) Reduced from 24 to 18 months per resolution-in-principle framework discussed with DOJ on February 18, 2026; (ii) changed from quarterly to semi-annual reporting to reduce cost and administrative burden. Quarterly reporting is onerous and inconsistent with the non-willful, non-egregious nature of the Violations. For reference, monitor costs are estimated at $1.8–2.4M for 18 months — quarterly reporting would increase that estimate by approximately 20–25% due to additional report preparation and review cycles.}
(d) Monitor Costs. All costs and expenses associated with the retention and activities of the Compliance Monitor, including the Compliance Monitor's fees, travel expenses, and any costs of outside experts or consultants retained by the Compliance Monitor, shall be borne by the Company.
{C&H Note: Added to limit the monitor's authority and protect confidentiality of monitor reports. Without this provision, the monitor could effectively function as a shadow regulator with directive authority over business operations, and monitor reports could be obtained through FOIA requests. The confidentiality protection is essential — monitor reports will contain commercially sensitive information about the Company's customers, distribution channels, and internal processes.}
Section 4.2 — Annual Export Compliance Audits.
During the Enhanced Compliance Period, the Company shall cause an annual audit of its export compliance program to be conducted by a qualified independent third party . Each audit shall assess the Company's compliance with the EAR and the terms of this Agreement. Written reports of each annual audit shall be provided to DOJ NSD/CES and the Company within   days of the completion of each audit.
Section 4.3 — Automated Restricted-Party Screening.
  automated restricted-party screening for all shipments of items classified under ECCN 3A001 (and any successor classification) to end users or consignees in the PRC, the Russian Federation, and all countries designated as EAR Country Group D:1 or D:5, . Such screening shall check all parties to each transaction — including end users, consignees, intermediate consignees, and any other parties identified in the applicable export documentation — against the Entity List (Supplement No. 4 to Part 744 of the EAR), the Unverified List (Supplement No. 6 to Part 744 of the EAR), the Denied Persons List, and the Military End-User List (Supplement No. 7 to Part 744 of the EAR), and shall employ multi-language and multi-script matching capabilities sufficient to identify matches involving Chinese-language, Cyrillic, and other non-Latin character sets.
{C&H Note: (i) Changed to present tense because dual-screening was implemented in October 2025, prior to the settlement — making this a forward-looking obligation would be inaccurate and could imply the Company has not yet remediated; (ii) added explicit ship-confirm re-screening requirement since the failure to re-screen at the ship-confirmation stage was the proximate root cause of the Violations.}
Section 4.4 — Training.
The Company shall provide mandatory export compliance training to all employees with sales, order processing, distribution, logistics, or compliance responsibilities involving end users or consignees in the PRC, the Russian Federation, and EAR Country Group D:1/D:5 countries. Such training shall be conducted  , and shall cover, at a minimum, the Entity List, the Unverified List, the Denied Persons List, the Military End-User List, applicable license requirements under the EAR, red-flag indicators of potential diversion or prohibited end use, . The Company shall maintain records of all training sessions, including attendance records and training materials, for a period of not less than five (5) years.
Section 4.5 — Periodic Reporting.
During the Enhanced Compliance Period, the Company shall provide   written reports to DOJ NSD/CES. Each report shall include, at a minimum:
(a) the status of compliance program enhancements undertaken by the Company;
(b) any new potential EAR violations identified by the Company during the applicable reporting period, including a description of the circumstances of each potential violation, the Company's investigation and findings, and any remedial actions taken;
(c) any material changes in the Company's organizational structure, distribution channels, or compliance personnel since the prior report; and
(d) the results of any Compliance Monitor reports or annual compliance audits completed during the applicable reporting period.
{C&H Note: Changed quarterly to semi-annual, consistent with the monitor reporting redline in Section 4.1(c). The Company should not be required to report more frequently than the monitor. If DOJ insists on quarterly, our fallback position is quarterly for the first year and semi-annual thereafter.}
ARTICLE V — ADMISSIONS AND COOPERATION
Section 5.1 — Admissions. The Company admits that it committed the Violations as described in the recitals to this Agreement. 
{C&H Note: Essential. Without this carve-out, the general admission of Violations could be read to encompass Lansheng — particularly given that the recitals reference both Zhonghe and Lansheng. The carve-out creates an unambiguous textual firewall. This is a non-negotiable position.}
Section 5.2 — Ongoing Cooperation. The Company agrees to continue cooperating fully with DOJ NSD/CES in connection with any ongoing or future investigation arising from or relating to the conduct described in this Agreement, including making documents and witnesses available upon reasonable request by DOJ NSD/CES.
{C&H Note: Standard cooperation-obligation limitations. DOJ's draft had an unqualified cooperation clause, which is not acceptable and is inconsistent with settled practice in multi-jurisdictional settlements. The FADP/GDPR/PIPL carve-out is particularly important given the volume of data stored on HSAG's Dresden and Glenrock Assurance servers. Expect DOJ will accept this with minor modifications — they have agreed to similar provisions in recent settlement agreements (see Vertex microsystems (2025) and Arion Technologies (2024)).}
ARTICLE VI — BREACH AND REMEDIES
Section 6.1 — Notice and Cure. If DOJ NSD/CES determines that the Company has materially breached any term or condition of this Agreement, DOJ NSD/CES shall provide written notice to the Company specifying the nature of the alleged breach in reasonable detail. The Company shall have   calendar days from receipt of such notice to cure the breach (the "Cure Period"). If the Company believes in good faith that the alleged breach has been cured within the Cure Period, the Company shall provide DOJ NSD/CES with a written certification to that effect, together with supporting documentation. DOJ NSD/CES shall respond in writing within thirty (30) days of receiving such certification, either confirming that the breach has been cured or specifying the reasons why DOJ NSD/CES believes the cure is insufficient.
Section 6.2 — Remedies for Uncured Breach. If, following the expiration of the Cure Period, DOJ NSD/CES determines in good faith that a material breach has not been cured, DOJ NSD/CES may, at its sole discretion, pursue one or more of the following remedies:
(a) extend the Enhanced Compliance Period by up to  ;
(b) extend the Monitor Term by up to   months;
(c) refer the matter for criminal prosecution .
{C&H Note: (i) Extended cure period from 30 to 60 days — 30 days is insufficient for a global company operating across multiple jurisdictions to investigate, remediate, and document the cure of a compliance-related breach; (ii) reduced maximum extension periods — two additional years on the Enhanced Compliance Period is disproportionate, one year is sufficient; twelve additional months on the monitor term is excessive given the 18-month base, six months is appropriate; (iii) deleted "additional monetary penalties" — the Penalty is the Penalty, and a breach provision should not become a revenue mechanism for the government. If DOJ wants the ability to impose additional financial consequences, they can seek those through a formal enforcement proceeding; (iv) limited criminal referral to breach-related conduct, not re-opening settled Violations — without this limitation, the no-prosecution commitment in Article III would be illusory.}
ARTICLE VII — RELEASE
Section 7.1 — Scope of Release. Upon the Company's full satisfaction of all terms and obligations of this Agreement, including payment of the Penalty in full and completion of the Enhanced Compliance Period, DOJ NSD/CES hereby releases and forever discharges the Company, together with its parents, subsidiaries, affiliates, and their respective current and former directors, officers, and employees acting in their capacities as such, from all civil and administrative claims, actions, or proceedings arising from or relating to the Violations .
{C&H Note: Extended the release to expressly include the Lansheng shipments. Without this language, DOJ could theoretically revisit Lansheng in a separate enforcement action after the Enhanced Compliance Period ends, notwithstanding the settlement. The release must cover all conduct that was the subject of the Inquiry — not just the three admitted Violations. This is a non-negotiable position and is logically connected to the Lansheng carve-out in Recital 4 and Section 5.1: if we are not admitting violations regarding Lansheng, the quid pro quo is that DOJ releases those claims as well.}
Section 7.2 — Release Carve-Outs. The release set forth in Section 7.1 does not extend to:
(a)  ;
(b) any false statements made to, or obstruction of justice directed at, DOJ NSD/CES or any other governmental authority by the Company or its agents in connection with this Agreement or the Inquiry; or
(c) any material breach of this Agreement by the Company that remains uncured as provided in Section 6.1.
{C&H Note: DOJ's original carve-out for "any conduct not described in this Agreement" is overbroad — it effectively makes the release meaningless because it would preserve DOJ's ability to pursue claims based on any conduct that was not literally "described" in the agreement, even if DOJ knew about the conduct at the time. Our redline limits the carve-out to conduct "not known to DOJ NSD/CES as of the Effective Date" — this provides DOJ with appropriate protection against concealed violations or after-discovered conduct while giving the Company genuine finality for all known conduct.}
ARTICLE VIII — GENERAL PROVISIONS
Section 8.1 — Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the United States of America.
Section 8.2 — Entire Agreement. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior negotiations, representations, understandings, and agreements, whether written or oral, between the parties relating to the subject matter of this Agreement.
Section 8.3 — Amendments. This Agreement may not be amended, modified, or supplemented except by a written instrument signed by all parties hereto.
Section 8.4 — Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute one and the same instrument. Execution and delivery of this Agreement by facsimile or electronic transmission (including PDF) shall be deemed effective as original execution and delivery.
Section 8.5 — Notices. All notices, requests, demands, and other communications required or permitted under this Agreement shall be in writing and shall be delivered by hand, by nationally recognized overnight courier, or by registered or certified mail, return receipt requested, postage prepaid, to the following addresses (or to such other address as a party may designate by written notice in accordance with this Section):
For DOJ NSD/CES:
Adrienne Kolb Senior Trial Attorney Counterintelligence and Export Control Section National Security Division U.S. Department of Justice 950 Pennsylvania Avenue NW Washington, D.C. 20530
For the Company:
Howard Quinn Partner Calderwood & Harkness LLP 1301 K Street NW, Suite 1100 Washington, D.C. 20005
With a copy to:
Marcus Friedl General Counsel Halcyon Semiconductor AG Bahnhofstrasse 42 8001 Glenrock Assurance, Switzerland
Section 8.6 — Public Disclosure.  
{C&H Note: Critical addition. HSAG is listed on the Frankfurt Stock Exchange and is subject to ad-hoc disclosure obligations under MAR Article 17 and the German Securities Trading Act (WpHG). If DOJ issues a press release before HSAG issues its own ad-hoc disclosure (Ad-hoc-Mitteilung), the Company could face a separate regulatory violation in Germany (BaFin enforcement), potential securities fraud exposure under German law, and derivative liability from the Company's failure to comply with its own continuous disclosure obligations. Five business days' advance notice is the minimum period needed for HSAG to prepare, review (including with German counsel at KPW), and publish a compliant ad-hoc disclosure. Coordinate with Braxton Merritt (C&H capital markets) and Klausner Petersen Wolf (KPW, Frankfurt counsel) on the disclosure protocol.}
Section 8.7 — No Third-Party Beneficiaries. This Agreement is not intended to, and does not, confer any rights or benefits on any person or entity other than the parties hereto. No person or entity other than the parties hereto may enforce any provision of this Agreement.
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have executed this Administrative Settlement Agreement as of the dates set forth below.
UNITED STATES DEPARTMENT OF JUSTICE NATIONAL SECURITY DIVISION
By: ________
Name: Adrienne Kolb
Title: Senior Trial Attorney, Counterintelligence and Export Control Section
Date: ________
HALCYON SEMICONDUCTOR INC.
By: ________
Name: Derek Tran
Title: President
Date: ________
HALCYON SEMICONDUCTOR AG
By: ________
Name: Marcus Friedl
Title: General Counsel
Date: ________
APPROVED AS TO FORM:
CALDERWOOD & HARKNESS LLP
By: ________
Name: Howard Quinn
Title: Partner
Date: ________
INTERNAL C&H REDLINE SUMMARY For DOJ Discussion — Not for Transmission
Prepared by L. Donahue, Associate, Calderwood & Harkness LLP March 10, 2026
Priority Redlines (Non-Negotiable)
1.  Article III (entire) — No-prosecution, no-denial, no-OFAC-referral commitments. DOJ's draft contained no explicit commitment against criminal prosecution, denial of export privileges, or OFAC referral. The entirety of Article III is new and must be included in the final agreement. These provisions reflect DOJ's oral commitments during the resolution-in-principle discussions and are essential to the Company's willingness to enter into this settlement. Without them, the settlement provides no meaningful finality.
2.  Lansheng carve-out (Recitals ¶ 4 + Art. V § 5.1 + Art. VII § 7.1). The Company cannot admit to any violation regarding Lansheng. Our investigation found no basis for a § 744.21 military end-use violation. The carve-out must appear in three places: (i) the recitals, to establish that the Agreement does not include findings on Lansheng; (ii) Section 5.1, to create an explicit non-admission; and (iii) Section 7.1, to ensure the release covers Lansheng claims. These three provisions operate as an integrated package and should be negotiated as such.
3.  Public disclosure advance notice (Art. VIII § 8.6). HSAG's MAR Article 17 obligations require this. A DOJ press release issued without advance notice could trigger a separate German regulatory violation. The five-business-day advance notice period is the minimum necessary. This is a legal compliance necessity, not a preference.
4.  Monitor term: 18 months, not 24. Consistent with the resolution-in-principle framework. An 18-month term is proportionate to the nature and number of Violations (three shipments, non-willful, promptly remediated). Twenty-four months is appropriate only for willful or systemic violations.
Priority Redlines (Strongly Preferred But Negotiable)
5.  Payment term: 60 days. Preferred position is 60 days; could accept 45 days. Cannot accept 30 days due to HSAG Supervisory Board approval requirements and EUR/USD conversion logistics.
6.  Semi-annual reporting. Preferred position is semi-annual throughout the Enhanced Compliance Period. Fallback: quarterly for the first year, semi-annual for years two and three.
7.  Cooperation limitations (Art. V § 5.3). These are standard limitations that DOJ has accepted in comparable recent settlements. Expect DOJ to accept with minor modifications, possibly adding a clause requiring the Company to notify DOJ of any foreign-law impediment before asserting it.
8.  Breach remedies caps (Art. VI § 6.2). Expect pushback on the deletion of additional monetary penalties (former subclause (c)). Fallback position: agree to reinstate a capped additional penalty provision (e.g., not to exceed 50% of the original Penalty), but only upon a finding of willful breach, and only after an opportunity to be heard.
Expect DOJ to Push Back On
•  Deletion of penalty arithmetic (former § 2.4). DOJ may view penalty-calculation transparency as important for institutional precedent and Congressional oversight. If they insist, propose moving the calculation to a side letter or appendix rather than the body of the agreement.
•  Employee protection scope in § 3.1. DOJ will likely seek to limit the employee non-prosecution commitment to "based on information known to the Department as of the Effective Date" and may resist extending protection to former employees. Our position: the commitment should be based on the conduct described in the agreement, not limited to DOJ's current knowledge. Former employees must be covered — several key individuals have since departed the Company.
•  Binding OFAC non-referral in § 3.3. DOJ will argue they cannot contractually bind a separate agency (OFAC). Our response: we are not asking DOJ to bind OFAC; we are asking DOJ to commit not to make a referral. DOJ controls its own referral decisions. If DOJ cannot commit, propose alternative language: "DOJ NSD/CES represents that, as of the Effective Date, it does not intend to make any referral to OFAC."
•  Release scope covering Lansheng in § 7.1. DOJ may resist releasing claims related to Lansheng on the grounds that the Lansheng investigation is still open. Our position: if DOJ wants the Company to settle, it must provide finality on all conduct within the scope of the Inquiry. A settlement that leaves Lansheng claims live is not a settlement — it is a partial ceasefire. If DOJ is not prepared to release Lansheng claims, we need to understand what additional information or concessions DOJ requires.
Next Step.  
•  Quinn to schedule call with Kolb/Weir for March 13, 2026 to walk through the redline. Donahue to prepare comparison chart of key provisions for use on the call. Friedl (HSAG) to be available by phone for any real-time questions on Swiss law matters.
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CALDERWOOD & HARKNESS LLP 1301 K Street NW, Suite 1100 Washington, D.C. 20005

ADMINISTRATIVE SETTLEMENT AGREEMENT

THE UNITED STATES DEPARTMENT OF JUSTICE, NATIONAL SECURITY DIVISION

HALCYON SEMICONDUCTOR INC.

HALCYON SEMICONDUCTOR AG

RECITALS

SIGNATURE PAGE

UNITED STATES DEPARTMENT OF JUSTICE NATIONAL SECURITY DIVISION

HALCYON SEMICONDUCTOR INC.

HALCYON SEMICONDUCTOR AG

APPROVED AS TO FORM:

CALDERWOOD & HARKNESS LLP

Record

Parties

Dates

Amounts