Contract analysis

I. Purpose and Introduction This firm, Calderwood & Harkness LLP, represents Vantage Mobility Systems Corp. ("VMS") as defense counsel of record in the above-referenced patent infringement action pending before the Honorable Judge J. Rodney Gilstrap in the United States District Court for the Eastern District of Texas. The purpose of this letter is twofold: first, to advise Northbridge Specialty Insurance Company ("N

II. Background of the Litigation Pinnacle Innovations LLC is a Texas limited liability company organized under the laws of the State of Texas and operating as a non-practicing entity — that is, Pinnacle does not manufacture, sell, or otherwise commercialize products or services embodying the patented technology. Rather, Pinnacle's principal business activity consists of the acquisition and assertion of patent rights

III. Summary of Defense Assessment and Settlement Rationale Throughout the course of the litigation, VMS's defense team has maintained a careful and ongoing assessment of the merits and risks of the case. In forming our settlement recommendation, we relied in significant part on the analysis of VMS's retained defense technical expert, Dr. Franklin Yeoh of Greystone Technical Consulting LLC. Dr. Yeoh holds a Ph.D. in

IV. Settlement Terms Following arms-length negotiations conducted over the course of several weeks between counsel for VMS and counsel for Pinnacle, the parties have reached agreement on the following material terms. These terms are set forth in the enclosed draft Settlement Agreement and Mutual Release (the "Settlement Agreement"), a copy of which is enclosed for Northbridge's review and consent. The principal terms

1. Settlement Payment. VMS shall pay to Pinnacle a lump-sum settlement payment in the amount of Three Hundred Eighty-Five Thousand Dollars ($385,000.00). The settlement payment is non-refundable and not subject to any contingency, offset, or reduction.

2. Payment Deadline. The settlement payment shall be due and payable within thirty (30) calendar days after the full execution of the Settlement Agreement by both parties.

3. Covenant Not to Sue. Pinnacle shall grant to VMS, its affiliates, successors, assigns, customers, distributors, and end users a perpetual, irrevocable covenant not to sue under U.S. Patent No. 9,847,312 B2 and all patents and patent applications in the Pinnacle portfolio as of the effective date of the Settlement Agreement. The covenant runs with the patents and shall be binding on Pinnacle's successors and assign

4. Mutual General Releases. Each party shall grant to the other party a mutual general release of all claims, counterclaims, demands, and causes of action arising from or related to the litigation, including all claims that were asserted or could have been asserted in the action.

5. No License Grant. The Settlement Agreement provides for a covenant-not-to-sue structure and does not include any license grant, express or implied, under any patent or other intellectual property right. This distinction is noted for purposes of clarity with respect to any applicable coverage provisions.

6. No Admission. Neither party makes any admission of liability, infringement, validity, invalidity, or enforceability of any patent, or any other wrongdoing, by entering into the Settlement Agreement.

7. Confidentiality. The amount and specific terms of the Settlement Agreement shall be maintained as confidential by both parties. The parties may, however, disclose the existence of a settlement (as distinct from its terms) in regulatory filings, financial statements, or as otherwise required by law or agreement.

8. Dismissal. Within fourteen (14) days of confirmation of receipt of the settlement payment, the parties shall file a joint stipulation of dismissal with prejudice of all claims and counterclaims in the action, pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(ii).

9. Fees and Costs. Each party shall bear its own attorneys' fees, costs, and expenses incurred in connection with the litigation and the settlement. We believe these terms are favorable to VMS and consistent with Northbridge's interests as VMS's liability insurer. In particular, the covenant-not-to-sue structure (rather than a license), the absence of any admission of liability or infringement, and the mutual release

V. Insurance Coverage Analysis and Indemnity Request We now turn to the application of the insurance coverage to the proposed settlement and VMS's formal request for indemnity funding from Northbridge. The applicable policy is Northbridge Specialty Insurance Company Commercial General Liability Policy No. NSI-CGL-2024-08821 (the "Policy"), with the intellectual Property Infringement Defense sublimit endorsement. The

VI. Reservation of Rights We acknowledge and have reviewed the reservation of rights set forth in Northbridge's coverage confirmation letter dated February 12, 2025. We understand that Northbridge confirmed coverage for the defense of the '312 Patent action subject to, among other things, reservations regarding the applicability of certain policy exclusions and conditions, including but not limited to the expected-or

VII. Enclosures Enclosed with this letter, please find the following documents for Northbridge's review:

1. Draft Settlement Agreement and Mutual Release between Pinnacle Innovations LLC and Vantage Mobility Systems Corp., dated as of May 2025 (marked "DRAFT — SUBJECT TO INSURER REVIEW AND CONSENT"), for Northbridge's review and consent.

2. Copy of written consent of Ridgeline Capital Partners Fund IV, LP, dated May 22, 2025, approving the proposed settlement in accordance with Section 7.04(c) of the VMS Operating Agreement. A fully executed copy of the Settlement Agreement will be provided to Northbridge promptly upon execution by both parties.

VIII. Request for Response and Contact Information We respectfully request that Ms. Whitcomb, or the appropriate Northbridge representative, confirm Northbridge's agreement to fund the $310,000 indemnity payment and provide any comments, questions, or requested revisions regarding the enclosed draft Settlement Agreement at Northbridge's earliest convenience. We are mindful of the parties' mutual interest in finalizin