Contract analysis

I. Executive Summary The purpose of this memorandum is to summarize and analyze the commitment letter dated July 15, 2024 (the "Commitment Letter") from Tidewater Atlantic Bank, N.A. ("Tidewater") addressed to Solstice Biomedical, Inc. ("SBI"), the wholly owned Delaware subsidiary of Solstice Biomedical Devices Ltd. ("Solstice" or "SBD"), in connection with the proposed acquisition of 100% of the outstanding common s

II. Overview of Committed Facilities A. Term Loan A Facility The Term Loan A facility constitutes the primary source of debt financing for the Acquisition. The principal terms are summarized below. Borrower. The borrower under the Term Loan A facility is Solstice Biomedical, Inc., a Delaware corporation (Delaware File Number 7203841; EIN 93-4017625). SBI was formed on April 22, 2024, as the designated acquisition veh

III. Security and Guaranty Package A. Guaranty The Commitment Letter requires the following guaranty structure to support the obligations of SBI under the Facilities: upstream Guaranty. Solstice Biomedical Devices Ltd. (as the Irish parent of SBI) will provide an upstream guaranty of all obligations of SBI under the credit facilities, including principal, interest, fees, expenses, and all other amounts owing under th

IV. Conditions Precedent to Funding The Commitment Letter sets forth a number of conditions that must be satisfied (or waived by Tidewater) prior to the initial funding of Term Loan A and the availability of the Revolver. These conditions are organized below into four categories: documentation conditions, financial and diligence conditions, insurance and regulatory conditions, and other conditions. A. Documentation C

1. Definitive Loan Documents. Execution and delivery of the definitive credit agreement and all related loan documents, including security agreements (personal property), pledge agreements (equity interests), the guaranty agreement, and any intercreditor agreement if required, all in form and substance satisfactory to Tidewater (as administrative agent).

2. Stock Purchase Agreement. Delivery of the executed Stock Purchase Agreement for the Acquisition, in form and substance consistent with the draft of the SPA previously provided to Tidewater in connection with the commitment process. The SPA must not have been amended, waived, or modified in any manner that is material and adverse to the interests of Tidewater, without Tidewater's prior consent.

3. Escrow Agreement. Delivery of the fully executed Escrow Agreement among SBI (as Buyer), Dr. Marcus Ellsworth (as Sellers' Representative), and Keystone Escrow Services, Inc. (as Escrow Agent), establishing the Indemnity Escrow and the Earnout Escrow Reserve in the amounts described in the Sources and Uses summary.

4. Organizational Documents. Certified copies of the organizational documents (certificates of incorporation/formation, bylaws, operating agreements, and all amendments thereto) of SBI, Solstice Biomedical Devices Ltd., and Meridian (post-Acquisition). Good standing certificates (or equivalent) for each such entity from their respective jurisdictions of organization and each jurisdiction where they are qualified to d

5. Authorizing Resolutions. Certified copies of board resolutions (and, if required, shareholder resolutions) of SBI, Solstice Biomedical Devices Ltd., and Meridian (post-Acquisition) authorizing the execution, delivery, and performance of the loan documents and the consummation of the transactions contemplated thereby.

6. Incumbency Certificates. Officer incumbency certificates for SBI, Solstice Biomedical Devices Ltd., and Meridian, identifying the officers authorized to execute the loan documents and deliver notices and certifications on behalf of the respective entities.

7. Solvency Certificate. A solvency certificate executed by the Chief Financial Officer of SBI (or, if acceptable to Tidewater, by Conor Muldoon in his capacity as CFO of Solstice Biomedical Devices Ltd.) confirming the solvency of SBI and its subsidiaries (including Meridian) on a consolidated basis after giving effect to the Acquisition, the incurrence of the credit facilities, and the payment of all transaction co

8. Legal Opinions. Legal opinions from (a) Calderwood & Harkness LLP, as counsel to SBI (the borrower), addressing customary matters including due authorization, enforceability, no conflicts, and perfection of security interests under the Uniform Commercial Code, and (b) Irish counsel to Solstice Biomedical Devices Ltd. (as guarantor), addressing due authorization, enforceability under Irish law, and such other matte

1. Financial Statements. Receipt by Tidewater of: (a) the audited financial statements of Meridian for fiscal years 2021, 2022, and 2023, each audited by Dunfield & Associates, P.C. and prepared in accordance with U.S. generally accepted accounting principles ("GAAP"); and (b) unaudited interim financial statements of Meridian for the most recent fiscal quarter ending at least 45 days prior to the closing date (which

2. No Material Adverse Effect. Absence of any Material Adverse Effect ("MAE") with respect to Meridian between the signing of the SPA and the closing date. The definition of "Material Adverse Effect" for purposes of the Commitment Letter is expected to track the MAE definition in the SPA, subject to customary carve-outs.

3. Representations and Warranties. The representations and warranties contained in the definitive credit agreement must be substantially consistent with (and "no worse than") the representations and warranties in the SPA. At closing, only the "Specified Representations" (as defined in the Commitment Letter and discussed in detail in Section VI below) must be accurate — this is the "SunGard" or "certain funds" constru

4. Simultaneous Closing. Confirmation that the Acquisition is consummated simultaneously with the initial funding under the credit facilities, in accordance with the terms of the SPA, without any amendment, waiver, or modification that is material and adverse to the interests of Tidewater.

5. Payoff of Existing Debt. Receipt by Tidewater of a payoff letter from Ironclad Commercial Lending, LLC with respect to Meridian's existing $12,000,000 revolving credit facility (current outstanding balance approximately $7,341,822.16), together with evidence of the termination of such facility and the release of all liens securing the obligations thereunder. The payoff letter must include a commitment by Ironclad

1. Representations and Warranties Insurance. Evidence that Buyer has obtained the representations and warranties insurance ("RWI") policy from Ridgeline Mutual Insurance Company (Policy No. RMI-RWI-2024-08172) with aggregate coverage of $40,000,000, consistent with the terms described in the draft SPA. The RWI policy must name Tidewater (as administrative agent) as an additional insured or loss payee to the extent of

2. Property, Casualty, and Liability Insurance. Evidence of property, casualty, and comprehensive general liability insurance covering SBI, Meridian (post-closing), and the collateral, in amounts and with carriers satisfactory to Tidewater (acting reasonably). All property insurance policies must include a standard lender's loss payable endorsement naming Tidewater as loss payee, and all liability policies must name

3. No Legal Impediment. Confirmation that no legal impediment exists to the consummation of the Acquisition, including the absence of any injunction, restraining order, or other court or regulatory order or prohibition that would prevent or materially delay the closing of the Acquisition or the funding of the credit facilities.

4. HSR Act Compliance. With respect to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), it has been determined that the Acquisition does not require an HSR Act notification filing based on the applicable size-of-person test at the time of signing. No further action is required on this point. D. Other Conditions

1. Fees and Expenses. Payment of all fees and expenses owing to Tidewater under the Commitment Letter and Fee Letter as of the closing date, including the commitment fee, the administrative agent fee, ticking fees (if any), and reimbursement of Tidewater's reasonable and documented out-of-pocket expenses (including the fees and disbursements of Harrington & Locke LLP, as Tidewater's legal counsel).

2. Funds Flow Memorandum. Delivery of a funds flow memorandum, in form and substance approved by Tidewater, detailing the disbursement of Term Loan A proceeds and equity contribution funds on the closing date, including wire transfer instructions for each payee.

3. Lien Searches. Delivery of lien search results (UCC, federal and state tax lien, and judgment lien searches) in all relevant jurisdictions for SBI and Meridian, confirming that no liens exist on the assets of Meridian other than: (a) permitted liens to be defined in the definitive credit agreement, or (b) liens that will be released and terminated at or prior to closing (including all liens securing Meridian's exi

V. Representations and Warranties in the Credit Agreement The Commitment Letter specifies that the definitive credit agreement will contain representations and warranties customary for senior secured acquisition financings. Based on the Term Sheet, the anticipated representations include the following: (a) Organization, good standing, and qualification to do business in each jurisdiction where the nature of the busin

VI. "SunGard" Certain-Funds Conditionality The Commitment Letter contains a "certain funds" provision modeled on market precedent established in the SunGard transaction and subsequent acquisition financing practice. This provision is a critical borrower protection that limits the conditions to initial funding at closing, thereby ensuring that the financing commitment is robust and reliable. Under the certain-funds co

VII. Affirmative and Negative Covenants A. Affirmative Covenants (Key Provisions) The Commitment Letter contemplates that the definitive credit agreement will include affirmative covenants customary for senior secured acquisition financings. The key affirmative covenants are summarized below. Financial Reporting. SBI will be required to deliver: (a) annual audited consolidated financial statements of SBI and its subs

VIII. Financial Covenants The Commitment Letter specifies three maintenance-based financial covenants that will be tested quarterly throughout the life of the Facilities. The covenants and associated step-down schedules are as follows: Total Net Leverage Ratio. The maximum permitted Total Net Leverage Ratio (defined as the ratio of Consolidated Total Debt minus unrestricted cash and cash equivalents to Consolidated E

IX. Events of Default The Commitment Letter contemplates that the definitive credit agreement will include customary events of default, as well as certain events of default specific to healthcare and life sciences financings. The events of default are summarized below: (a) Payment Default. Failure to pay principal when due, or failure to pay interest, fees, or other amounts within five (5) business days of the date w