Contract analysis

I. PURPOSE AND EXECUTIVE SUMMARY The purpose of this memorandum is to summarize the coverage acknowledgment and reservation-of-rights letter received from Halcyon Specialty Insurance Co. ("Halcyon" or the "Insurer"), dated approximately late May 2024, in response to the insurance coverage notification letter that this firm transmitted on behalf of our client, Solstice Biomedical Devices Ltd. ("Solstice" or "SBD"), on

II. BACKGROUND A. The Underlying Litigation On May 9, 2024, Apex Surgical Innovations, Inc. ("Apex"), a Delaware corporation (EIN: 51-0483762) with its principal office located at 1220 North Market Street, Suite 550, Wilmington, Delaware 19801, filed a civil complaint in the United States District Court for the District of Delaware. The case has been assigned to Chief Judge Richard G. Andrews and docketed as Case No.

1. U.S. Patent No. 9,814,237 (the "'237 Patent"), entitled "Locking Seal Assembly for Minimally Invasive Surgical Access Device," issued November 14, 2017, with an expiration date of June 22, 2035. Apex asserts infringement of Claims 1, 3, 7, and 12 of the '237 Patent.

2. U.S. Patent No. 10,271,884 (the "'884 Patent"), entitled "Retractable Blade Deployment Mechanism for Trocar Systems," issued April 30, 2019, with an expiration date of September 15, 2036. Apex asserts infringement of Claims 1, 2, 5, 9, and 14 of the '884 Patent.

3. U.S. Patent No. 10,932,105 (the "'105 Patent"), entitled "Integrated Insufflation Valve and Seal for Laparoscopic Trocar," issued March 2, 2021, with an expiration date of January 10, 2038. Apex asserts infringement of Claims 1, 4, and 8 of the '105 Patent. The named inventor on all three asserted patents is Dr. Raymond Szabo, who currently serves as Vice President of Engineering at Apex. The complaint asserts bot

III. SUMMARY OF HALCYON'S COVERAGE ACKNOWLEDGMENT A. Acknowledgment of Coverage In its letter, Halcyon has acknowledged that the lawsuit filed by Apex Surgical Innovations, Inc. against Solstice constitutes a covered "Claim" as that term is defined in the Policy. Halcyon's acknowledgment confirms that the filing of the complaint in Case No. 1:24-cv-00587-RGA satisfies the Policy's triggering conditions for the commen

IV. SUMMARY OF HALCYON'S RESERVATION OF RIGHTS Halcyon's coverage acknowledgment letter also sets forth a number of specific reservations of rights. These reservations do not constitute a denial of coverage; rather, they identify specific areas where Halcyon has preserved its right to limit, allocate, or potentially deny coverage based on the future development of the litigation or the application of specific policy

1. Dr. Miriam Ostrowski (Professor of Mechanical Engineering, Halford University) — retained as an invalidity and claim construction expert. Dr. Ostrowski's hourly rate is $750 per hour. She has been engaged to provide expert analysis on the prior art landscape, claim construction of the disputed claim terms, and invalidity opinions with respect to the asserted claims of the '237, '884, and '105 Patents.

2. Dr. Elena Marchetti / Pinnacle Economics Group LLC — anticipated to be retained as a damages expert later in the case, likely in connection with Daubert challenges to Apex's damages theories and the preparation of Solstice's responsive damages analysis. Dr. Marchetti's anticipated hourly rate is $850 per hour. Formal retention has not yet occurred but is expected as the case progresses toward expert discovery.

3. DataVault Litigation Solutions, LLC (Philadelphia, Pennsylvania) — engaged as the e-discovery vendor for this matter, responsible for document collection, processing, review platform hosting, and production management. DataVault's fees are billed on a per-gigabyte basis for processing and a monthly hosting fee for the review platform. Halcyon may require advance notification before Solstice or its counsel retains

V. PRACTICAL IMPLICATIONS AND RECOMMENDATIONS A. Fee and Cost Tracking Given Halcyon's reservation regarding counterclaim prosecution costs and its general reservation regarding invoice review and audit rights, it is essential that Calderwood & Harkness maintain detailed, contemporaneous time records that clearly distinguish between covered defense-side work and potentially non-covered counterclaim prosecution work.

VI. SUMMARY OF COVERAGE PARAMETERS The following table provides a quick-reference summary of the key policy terms and coverage parameters applicable to this matter:

VII. ACTION ITEMS The following action items should be completed in connection with the coverage acknowledgment and reservation of rights:

1. Circulate Memo. Circulate this memorandum to Marcus Delgado (Responsible Partner), Catherine Bloom (Billing Partner), and Christy Bauer (Lead Associate) for review and discussion.

2. Brief Client. Schedule a call or meeting with Eamon Rourke (General Counsel, Solstice) and Brendan Molloy (CFO, Solstice) to brief them on the coverage acknowledgment and the specific exclusions, with particular emphasis on: (a) the settlement payment exclusion and its implications for any potential resolution of the litigation; and (b) the $250,000 SIR obligation that Solstice must fund out of pocket before Halcy

3. Implement Billing Protocols. Work with Catherine Bloom to implement billing code protocols that clearly distinguish covered defense work from counterclaim prosecution work, in order to facilitate monthly invoice submissions to Halcyon and minimize allocation disputes.

4. Kendrick & Lau Coverage Inquiry. Submit Kendrick & Lau LLP invoices (totaling approximately $184,500) to Halcyon with a cover letter requesting confirmation that these fees qualify as covered defense costs under the Policy, given their direct support of the invalidity and non-infringement defenses.

5. Monthly Invoice Schedule. Establish a monthly invoice submission schedule to Halcyon (Sandra Keene, 185 Asylum Street, Hartford, CT 06103), with invoices to be submitted within fifteen (15) days of the close of each billing period.

6. Quarterly Reporting Calendar. Calendar quarterly reporting dates for the submission of litigation status updates to Halcyon, with the first quarterly report due on or about September 1, 2024.

7. SIR Monitoring. Track cumulative defense fees and costs against the $250,000 SIR and notify the client (Brendan Molloy and Eamon Rourke) and Halcyon (Sandra Keene) when the SIR threshold is reached.

8. File Management. File the original of Halcyon's Coverage Acknowledgment and Reservation of Rights Letter in the matter file (Matter No. 10294.0017) as a privileged document, along with this memorandum and the coverage notification letter.

VIII. ATTACHMENTS The following documents are referenced in this memorandum and are attached hereto: Attachment A: Copy of Calderwood & Harkness LLP's Insurance Coverage Notification Letter to Halcyon Specialty Insurance Co. (Sandra Keene, Claims Adjuster), dated May 13, 2024. Attachment B: Copy of Halcyon Specialty Insurance Co.'s Coverage Acknowledgment and Reservation of Rights Letter, received approximately late