CALDERWOOD & HARKNESS LLP Attorneys at Law 1250 Avenue of the Americas, 38th Floor New York, New York 10020
Telephone: (212) 554-7200 Facsimile: (212) 554-7201 www.calderwoodharkness.com
April 5, 2024
Via Email and Sundial Data Systems
Declan Harrington, Esq. General Counsel & Company Secretary Solstice Biomedical Devices Ltd. Unit 14, Clarion Business Park Sandyford, Dublin D18 X4F2 Ireland
Copy to: Siobhán Mulcahy, Head of Global Compliance, Solstice Biomedical Devices Ltd., Unit 14, Clarion Business Park, Sandyford, Dublin D18 X4F2, Ireland
Re: Engagement Letter — US Sales & Marketing Compliance Review in Connection with the Planned US Commercial Launch of the Pulsar™ CRM System Matter No. 1037-00003
Dear Declan:
Thank you for selecting Calderwood & Harkness LLP (the "Firm," "we," "our," or "C&H") to represent Solstice Biomedical Devices Ltd. ("Solstice," "SBD," or the "Company") in connection with the matters described in this letter. We are pleased to have the opportunity to work with you and the broader Solstice team on this important initiative, and we are confident that our Healthcare & Life Sciences Practice Group is well positioned to provide the guidance and support you need as you prepare for the US commercial launch of the Pulsar™ CRM System.
The purpose of this engagement letter is to confirm the terms and conditions of our engagement for the comprehensive US sales-and-marketing compliance review that the Company has asked us to undertake in connection with the planned US commercial launch of the Pulsar™ CRM System, as more fully described herein. This letter should be referenced as Matter No. 1037-00003, and we ask that you use this matter number on all correspondence, invoices, and related communications pertaining to this engagement.
We ask that an authorized signatory of the Company review this letter carefully, execute the acknowledgment and acceptance on the final page, and return a signed copy to us at the address above (or by email to the undersigned) to confirm the engagement and authorize us to commence work. We are prepared to begin promptly upon receipt of the executed letter.
This engagement letter is organized into the following sections for ease of reference:
1. CLIENT IDENTIFICATION
The client in this engagement is Solstice Biomedical Devices Ltd., a private limited company organized and existing under the laws of Ireland, with its registered office at Unit 14, Clarion Business Park, Sandyford, Dublin D18 X4F2, Ireland.
For purposes of this engagement, the Firm's representation extends to Solstice Biomedical Devices Ltd. and its wholly owned US subsidiary, Solstice Biomedical Inc., a corporation organized under the laws of the State of Delaware (Delaware Division of Corporations File No. 7924813), with its principal offices at 200 Harborview Drive, Suite 1100, Boston, Massachusetts 02210 (Employer Identification Number: 93-4718206), which was incorporated on January 22, 2024. To the extent that the work described in Section 2 below involves matters directly relating to the activities, operations, or obligations of Solstice Biomedical Inc., such work shall be deemed to be performed on behalf of both Solstice Biomedical Devices Ltd. and Solstice Biomedical Inc. as co-clients in this engagement.
It is important to clarify at the outset that the Firm does not, by virtue of this engagement, represent any other affiliates, subsidiaries, parent entities, officers, directors, shareholders, members, employees, agents, or other related entities or persons of the Company, unless the Firm expressly agrees to such representation in a separate written agreement.
Without limiting the generality of the foregoing, the Firm specifically does not represent any of the following persons or entities in connection with this engagement or otherwise:
(a) Alder Peak Ventures, LP, the lead investor in the Company's Series C preferred equity financing round;
(b) Ascendant Distribution Solutions LLC ("ADS"), the Company's exclusive US distributor pursuant to the Distribution Agreement dated March 15, 2024;
(c) Meridian Consulting Group LLC ("Meridian"), the healthcare compliance consulting firm independently retained by SBD to assist with the design and implementation of SBD's compliance program;
(d) Pinnacle Auditing & Advisory LLP, the Company's statutory auditors;
(e) Northbridge National Bank, N.A., the lender under the Company's revolving credit facility; or
(f) Any individual officer or director of the Company, Solstice Biomedical Inc., or any related entity in their personal capacity.
If, at any point during the engagement, the Company would like us to extend our representation to any additional person or entity, we would be happy to discuss such a request and, if appropriate, enter into a supplemental engagement letter.
2. SCOPE OF ENGAGEMENT
2.1 Overview
The Company has engaged the Firm to conduct a comprehensive sales-and-marketing compliance review in connection with Solstice's first US commercial launch of the Pulsar™ CRM System (the "Product"), a Class II implantable cardiac rhythm monitor with integrated remote telemetry platform. The Product received clearance from the US Food and Drug Administration ("FDA") through the premarket notification (510(k)) process on February 9, 2024, under 510(k) Number K232847, Product Code MHX. The Company's target date for the US commercial launch of the Product is October 1, 2024.
The engagement will encompass a thorough review and analysis of SBD's planned US promotional materials, physician engagement programs, distributor arrangements, speaker programs, sales force compensation structures, and compliance program infrastructure, all as more fully described in Section 2.2 below. Our objective is to provide the Company with a comprehensive assessment of the legal and regulatory landscape governing the commercial promotion of the Product in the United States, to identify areas of risk, and to deliver actionable recommendations and template documentation designed to position SBD for a compliant and successful US market entry.
2.2 Specific Workstreams
The engagement will be organized into the following six workstreams, each of which is described in detail below and cross-referenced in Schedule B attached hereto:
(a) Federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)) and False Claims Act (31 U.S.C. §§ 3729–3733) Analysis
The federal Anti-Kickback Statute ("AKS") prohibits the knowing and willful offer, payment, solicitation, or receipt of remuneration to induce or reward the referral of items or services payable by federal healthcare programs. Violations of the AKS may also give rise to liability under the federal False Claims Act ("FCA"), which imposes civil penalties and treble damages for the submission of false or fraudulent claims to the government. Given the centrality of these statutes to the Company's US commercial activities, this workstream will include the following components:
(i) Distribution Agreement Review. Review and analysis of the Distribution Agreement between Solstice Biomedical Inc. and Ascendant Distribution Solutions LLC (Reference No. SBD-ADS-2024-0315, dated March 15, 2024) (the "ADS Distribution Agreement"), including the commission structure (18% commission on net US sales), provisions governing the appointment of sub-distributors (up to five authorized sub-distributors), pricing and discount provisions, compliance representations and warranties, training requirements, and termination provisions. Our analysis will focus on the AKS implications of the arrangement and the extent to which the agreement, as currently drafted, is structured to satisfy the requirements of the applicable AKS safe harbors, including the personal services and management contracts safe harbor (42 C.F.R. § 1001.952(d)) and the discount safe harbor (42 C.F.R. § 1001.952(h)).
(ii) Physician Consulting Agreements. Analysis of the Company's planned physician consulting agreements, pursuant to which SBD intends to retain up to thirty-five (35) Key Opinion Leader ("KOL") consultants in the fields of cardiac electrophysiology, interventional cardiology, and cardiac rhythm management. The planned hourly compensation rates range from $350 to $500 per hour, with an annual per-consultant cap of $12,000. We will assess the fair market value of the proposed compensation, the legitimate business need for the consulting services, and the structure and documentation of the arrangements in light of the AKS personal services safe harbor requirements and applicable OIG advisory opinions and guidance.
(iii) Speaker Programs. Analysis of the Company's planned speaker programs, which contemplate a total of one hundred eighty (180) programs in Year 1 of the US launch, consisting of one hundred twenty (120) live, in-person programs (at a per-program speaker honorarium of $1,500) and sixty (60) virtual programs (at a per-program speaker honorarium of $750). The annual per-speaker compensation cap is $18,000, and the estimated total Year-1 speaker program expenditure is approximately $225,000. We will evaluate the structure of these programs under the AKS, with particular attention to fair market value considerations, audience composition, needs assessments, content integrity, speaker selection criteria, and the Company's policies governing the frequency and location of programs.
(iv) Meal and Hospitality Policies. Review of SBD's meal and hospitality policies as applied to interactions with healthcare professionals in the United States. The Company has adopted a per-person, per-event cap of $150, which is intended to be consistent with the AdvaMed Code of Ethics on Interactions with US Health Care Professionals (2020 Revision). We will assess the adequacy of these policies and identify any areas where additional safeguards or limitations may be warranted.
(v) Sales Force Compensation Plan. Assessment of the US sales force compensation plan, including the compensation structure for territory managers. Territory manager base salaries range from $95,000 to $115,000, with variable compensation at plan of $72,000 (representing approximately 42–43% of total at-plan compensation). The plan includes a 2.0x accelerator multiplier on quarterly sales exceeding 120% of quarterly quota, with a median quarterly quota of $110,700 per territory manager. We will evaluate the compensation structure in light of AKS compliance considerations, including the applicability of the bona fide employee safe harbor (42 C.F.R. § 1001.952(i)) and the extent to which the compensation design presents any heightened risk profiles.
(vi) Safe Harbor Analysis and Remediation Recommendations. Identification and analysis of all applicable AKS safe harbors across the foregoing arrangements, including the personal services and management contracts safe harbor, the discount safe harbor, and the employee safe harbor. We will prepare a comprehensive risk assessment memorandum setting forth our findings and remediation recommendations for each identified area of risk.
(b) Physician Payments Sunshine Act (42 U.S.C. § 1320a-7h) / Open Payments Compliance
The Physician Payments Sunshine Act requires applicable manufacturers of drugs, devices, biologicals, and medical supplies covered under Medicare, Medicaid, or the Children's Health Insurance Program to report to the Centers for Medicare & Medicaid Services ("CMS") certain payments and other transfers of value made to covered recipients (physicians and teaching hospitals) and physician ownership and investment interests. This workstream will include:
(i) Analysis of SBD's reporting obligations under the CMS Open Payments program, including the determination of Solstice Biomedical Inc.'s status as an "applicable manufacturer" and the identification of all categories of reportable transfers of value.
(ii) Review of the applicable 2024 reporting thresholds: $12.49 per individual payment or other transfer of value and $100 in the aggregate per covered recipient per calendar year.
(iii) Assessment of estimated Year-1 reportable transfers of value, which the Company currently projects at approximately $650,000 in the aggregate, encompassing consulting fees, speaker honoraria, meals, travel reimbursements, and educational grants.
(iv) Assessment of the Company's data collection, tracking, and reporting systems, including the capabilities of any enterprise software or compliance management platforms currently in use or under evaluation, and recommendations for enhancements or supplemental tools.
(v) Guidance on the CMS Manufacturer ID registration process, noting that the Company plans to submit its application in June 2024.
(vi) Reporting deadline analysis, including confirmation that calendar year 2024 data must be submitted to CMS by March 31, 2025, and identification of applicable data review and dispute resolution windows.
(vii) Analysis of distributor pass-through reporting obligations, including the allocation of reporting responsibilities between Solstice Biomedical Inc. and Ascendant Distribution Solutions LLC with respect to any transfers of value made by ADS or its sub-distributors to covered recipients on behalf of or at the direction of the Company.
(c) FDA Promotional and Advertising Compliance
The FDA regulates the advertising and promotion of medical devices to ensure that promotional claims are truthful, not misleading, and consistent with the device's cleared indications for use. This workstream will include:
(i) Review of all draft US promotional materials, labeling, advertising, sales training presentations, detail aids, trade show materials, and website content for the Pulsar™ CRM System, as provided to the Firm by the Company.
(ii) Assessment of consistency of all promotional claims, messaging, and imagery with the Product's cleared indications for use, which are described in the 510(k) clearance as: continuous cardiac rhythm monitoring in adult patients (age 18 and older) with suspected or documented cardiac arrhythmias.
(iii) Off-label promotion risk analysis, including identification of any claims, data presentations, or promotional strategies that may be construed as promoting the Product for uses beyond the cleared indications, and recommendations for mitigating such risks.
(iv) Fair balance requirements, including assessment of the adequacy of risk disclosures, contraindications, warnings, and precautions included in promotional materials.
(v) Analysis of Form 2253 premarket notification of advertising obligations applicable to Class II devices under 21 C.F.R. Part 807, including the timing and procedural requirements for submissions to the FDA's Center for Devices and Radiological Health ("CDRH").
(vi) Recommendations for the establishment and operation of a Medical-Legal-Regulatory ("MLR") committee review process and associated standard operating procedures ("SOPs") to govern the review and approval of all US promotional materials on an ongoing basis.
(d) State Sales and Marketing Compliance Survey
A number of US states and jurisdictions have enacted laws and regulations imposing additional requirements on manufacturers of pharmaceutical products and medical devices with respect to the marketing and promotion of their products to healthcare professionals. This workstream will include a multi-state compliance survey covering the following twelve (12) jurisdictions:
California, Colorado, Connecticut, Louisiana, Maine, Massachusetts, Minnesota, Nevada, New Jersey, Oregon, Vermont, and Washington, D.C.
The survey will address the following topics for each jurisdiction, as applicable:
(i) State registration and fee requirements applicable to medical device manufacturers conducting sales and marketing activities in the jurisdiction. Specific requirements identified to date include, without limitation: Vermont's manufacturer registration requirement (annual fee of $500); Massachusetts's annual fee of $2,000, together with the requirement to adopt and attest to compliance with the Pharmaceutical Research and Manufacturers of America ("PhRMA") Code on Interactions with Healthcare Professionals (or an equivalent industry code, such as the AdvaMed Code); and Minnesota's annual reporting requirements for manufacturer payments to healthcare practitioners.
(ii) California Fair Pricing Act (Health & Safety Code § 127685 et seq.) disclosure obligations, given that the Product's wholesale acquisition cost ("WAC") of $4,950 exceeds the applicable $2,500 threshold for required disclosures.
(iii) Aggregate spend reporting requirements, gift bans, entertainment restrictions, and marketing code adoption mandates applicable in each surveyed jurisdiction.
(iv) Preparation of jurisdiction-specific compliance action checklists, identifying each discrete action item, registration, filing, or policy adoption required prior to and following the October 1, 2024 commercial launch.
(e) Compliance Program Infrastructure
An effective compliance program is essential to mitigating the legal and regulatory risks associated with the US commercial launch. This workstream will include:
(i) Assessment of SBD's compliance program design against the US Department of Health and Human Services, Office of Inspector General ("OIG") General Compliance Program Guidance published in November 2023, and the OIG Compliance Program Guidance for Pharmaceutical Manufacturers published in April 2003, as adapted for medical device manufacturers.
(ii) Review and comment on the deliverables prepared by Meridian Consulting Group LLC, including the draft Code of Conduct, the proposed compliance program structure and organizational chart, and the training curriculum for US-based personnel.
(iii) Recommendations for the composition of the Company's Compliance Committee, reporting structures (including reporting lines from the US subsidiary to the parent), and the staffing and qualifications of the US compliance officer position.
(iv) Review of the Company's third-party compliance hotline arrangements, including the adequacy of anonymity protections, intake procedures, escalation protocols, and investigation workflows.
(v) Development of a monitoring and auditing framework, including recommendations for periodic internal audits, risk assessments, and key performance indicators.
(vi) Preparation of a comprehensive remediation action plan with a detailed implementation timeline, keyed to the October 1, 2024 commercial launch date, identifying all compliance program elements that must be in place prior to the commencement of commercial activities.
(f) Template Agreement Drafting
To support the Company's US commercial activities, the Firm will prepare the following template agreements and related documentation:
(i) A template physician consulting agreement for use in KOL engagements, including applicable exhibits (scope of work, compensation schedule, fair market value documentation, compliance certifications, and conflict-of-interest disclosure forms).
(ii) A template speaker program agreement, including compliance certifications, content integrity provisions, and slide deck use requirements.
(iii) Proposed amendments to the compliance provisions of the ADS Distribution Agreement (Reference No. SBD-ADS-2024-0315), designed to strengthen the compliance representations, warranties, and covenants; enhance audit rights; and clarify the allocation of Open Payments reporting responsibilities.
2.3 Scope Limitations and Exclusions
Notwithstanding the breadth of the foregoing workstreams, this engagement is limited to the matters described in Section 2.1 and Section 2.2 above. For the avoidance of doubt, the engagement does not include the following:
(i) Representation of the Company, Solstice Biomedical Inc., or any related person or entity in connection with any government investigation, enforcement action, whistleblower claim, qui tam action, or litigation of any kind;
(ii) intellectual property, patent, trademark, trade dress, or other IP-related matters pertaining to the Pulsar™ CRM System or any other Company product;
(iii) FDA regulatory submissions, 510(k) supplements, de novo requests, premarket approval applications, device listing activities, establishment registration, or Unique Device Identification ("UDI") compliance;
(iv) Corporate, tax, or securities advice related to Solstice Biomedical Inc., Solstice Biomedical Devices Ltd., or their respective corporate structures, capitalization, financing transactions, or equity arrangements;
(v) Employment law advice beyond the AKS-compliance aspects of the US sales force compensation structure as described in Section 2.2(a)(v) above;
(vi) European Union, Irish, or other non-US regulatory compliance, including compliance with the EU Medical Device Regulation (MDR 2017/745) or the Irish Health Products Regulatory Authority requirements;
(vii) Compliance with the Health Insurance Portability and Accountability Act of 1996 ("HIPAA"), the HITECH Act, or any other health information privacy or data protection law; and
(viii) Reimbursement strategy, coverage analysis, coding (Current Procedural Terminology or Healthcare Common Procedure Coding System), or Medicare or Medicaid payment policy matters.
Any expansion of the scope of work beyond the matters described in this Section 2 must be agreed upon by the Firm and the Company in writing and may result in an adjustment to the fee estimate and fee cap set forth in Section 4 below.
3. ENGAGEMENT TEAM
The Firm has assembled a team with significant experience in healthcare regulatory and compliance matters to support this engagement. The members of the engagement team, their roles, and their current hourly billing rates are as follows:
Joel Strauss — Responsible Partner, Healthcare & Life Sciences Practice Group. Joel will provide strategic oversight for the engagement, review all substantive deliverables prior to delivery to the Company, and serve as the primary relationship partner. Joel has more than twenty years of experience advising medical device and pharmaceutical companies on sales and marketing compliance, government investigations, and regulatory matters. Joel's current billing rate is $1,175 per hour.
Miriam Calloway — Billing Partner, Healthcare & Life Sciences Practice Group. Miriam will handle all billing matters for the engagement and will also provide substantive input on selected workstreams, including the state law compliance survey and the compliance program infrastructure assessment. Miriam's current billing rate is $1,175 per hour.
Amy Whitfield — Lead Associate, Healthcare & Life Sciences Practice Group. Amy will manage the day-to-day work on the engagement, conduct legal research and analysis across all workstreams, draft memoranda and template agreements, and coordinate with client personnel and the broader engagement team. Amy has particular experience with the Anti-Kickback Statute, the Sunshine Act, and FDA promotional compliance. Amy's current billing rate is $685 per hour.
Sean Morrissey — Working Associate, Healthcare & Life Sciences Practice Group. Sean will support research, analysis, and drafting across all workstreams, with a particular focus on the state law compliance survey and the review of the ADS Distribution Agreement. Sean's current billing rate is $685 per hour.
A summary of the engagement team and current hourly rates is set forth in Schedule A attached hereto.
The Firm may, with advance notice to the Company, involve other attorneys or professional staff (including paralegals and legal assistants) as reasonably necessary to staff the engagement efficiently and to meet the anticipated timeline. The billing rates for any additional personnel will be communicated to the Company's primary contact in advance of the commencement of their work on the matter.
Primary Client Contacts. For purposes of day-to-day communications concerning the engagement, the Company's primary contacts will be:
• Declan Harrington, General Counsel & Company Secretary
• Siobhán Mulcahy, Head of Global Compliance
Additional Client Contacts. The following individuals have been identified by the Company as additional contacts with whom the Firm may communicate as relevant to specific workstreams:
• Marcus Reilly, Vice President, US Commercial Operations
• Dr. Nadia Farouk, Vice President, Medical Affairs
• Theresa Brennan, Director, US Regulatory Affairs
• Patrick Dunne, Director, US Marketing
The Company should notify the Firm promptly if there are any changes to the primary or additional contacts identified above.
4. FEES AND BILLING
4.1 Hourly Rates
All legal services rendered in connection with this engagement will be billed on an hourly basis at the Firm's current standard rates, which are as follows:
The Firm's standard hourly rates are subject to annual adjustment, which typically takes effect on January 1 of each calendar year. However, the Firm agrees that it will not adjust the rates set forth above during the term of this engagement, which is expected to conclude by mid-August 2024 as described in Section 5 below. In the event that the engagement extends beyond December 31, 2024, the Firm reserves the right to adjust rates in accordance with its standard annual rate adjustment process, provided that the Company will be given at least thirty (30) days' prior written notice of any such adjustment.
4.2 Fee Estimate and Cap
Based on the scope of work described in Section 2 above, the Firm estimates that the total professional fees for the engagement will be in the range of $245,000 to $310,000. This estimate is based on our current understanding of the scope, complexity, and volume of work involved and is subject to the assumptions and limitations described in this letter. The actual fees incurred may be higher or lower than the estimate, depending on range factors, including the volume and complexity of documents provided for review, the number and duration of meetings and conferences, the need for follow-up research or analysis, and the extent of revisions to deliverables.
To provide the Company with budgetary certainty, the Firm agrees to a fee cap of $325,000 for the scope of work described in Section 2. Total professional fees billed in connection with the engagement will not exceed this cap absent a written scope change agreement executed by both parties. If, during the course of the engagement, the Firm determines that the fee cap is likely to be reached before the completion of all workstreams, the Firm will promptly notify the Company and discuss options, which may include prioritization of remaining work, scope adjustments, or an agreed increase to the fee cap.
The fee cap set forth in this Section 4.2 applies exclusively to professional fees (i.e., fees for attorney and paralegal time) and does not include out-of-pocket expenses, which are addressed separately in Section 4.4 below.
4.3 Billing Procedures
The Firm will render invoices on a monthly basis, reflecting fees and expenses incurred during the preceding calendar month. Invoices are due and payable within thirty (30) days of the invoice date. All invoices will reference Matter No. 1037-00003 and will provide reasonable detail of the services performed, including the date of service, the name of the timekeeper, the number of hours expended, and a description of the work performed sufficient to permit the Company to evaluate the charges.
Invoices will be directed to:
Declan Harrington, Esq. General Counsel & Company Secretary Solstice Biomedical Devices Ltd. Unit 14, Clarion Business Park Sandyford, Dublin D18 X4F2, Ireland
Alternatively, invoices may be delivered electronically to an email address to be designated by the Company. The Company agrees to provide such email address promptly upon execution of this letter.
If the Company has any questions or concerns regarding an invoice, the Company should contact Miriam Calloway, Billing Partner, promptly so that any issues may be resolved in a timely manner. The Company's good-faith dispute of any portion of an invoice shall not affect the Company's obligation to pay the undisputed portion by the applicable due date.
4.4 Expenses
In addition to professional fees, the Company will reimburse the Firm for reasonable out-of-pocket expenses incurred in connection with the engagement. Such expenses may include, without limitation:
• Travel expenses, including economy-class airfare, standard hotel accommodations, ground transportation, and related travel costs (e.g., for meetings at the Company's US offices in Boston);
• Court fees, filing fees, or registration fees, if applicable;
• Legal research database charges (Westmark Data Systems, Sundial Solutions, or similar services), to the extent allocable to the engagement;
• Photocopying and document reproduction charges;
• Messenger, courier, and overnight delivery charges; and
• Other similar disbursements reasonably related to the engagement.
Any single expense item exceeding $1,000 will require advance approval from Declan Harrington or his designee before it is incurred by the Firm. The Firm will make reasonable efforts to minimize expenses and to choose cost-effective alternatives where available.
Out-of-pocket expenses are not subject to the fee cap set forth in Section 4.2 and will be billed separately on the Firm's monthly invoices.
4.5 Retainer
No retainer deposit is required at the commencement of this engagement.
5. ANTICIPATED TIMELINE
The Firm anticipates that the engagement will proceed according to the following general timeline, subject to adjustment based on the availability of client personnel, the volume and timing of document production, and other factors that may affect the pace of work:
Engagement Commencement: On or about April 8, 2024, upon execution of this letter by the Company.
Phase 1 — Document Collection and Initial Review (Weeks 1–4: approximately April 8 – May 3, 2024):
During this initial phase, the Firm will conduct kickoff meetings with SBD's US and Ireland-based teams, identify and collect all relevant documentation, and commence its initial review of the ADS Distribution Agreement, draft promotional materials, US sales force compensation plan, and physician engagement program documentation. The Firm will provide the Company with a comprehensive document request list within the first week of the engagement and will schedule kickoff meetings with the primary and additional client contacts identified in Section 3 above.
Phase 2 — Substantive Legal Analysis (Weeks 5–10: approximately May 6 – June 14, 2024):
During this phase, the Firm will conduct its substantive legal analysis across all workstreams and prepare draft memoranda addressing AKS/FCA compliance, Sunshine Act/Open Payments compliance, FDA promotional and advertising compliance, and the state law compliance survey. The Firm will also review the deliverables prepared by Meridian Consulting Group LLC during this phase. Draft memoranda will be circulated to the Company for review and comment as they are completed.
Phase 3 — Template Agreement Drafting (Weeks 11–14: approximately June 17 – July 12, 2024):
During this phase, the Firm will prepare the template physician consulting agreement (with exhibits), the template speaker program agreement, and proposed amendments to the ADS Distribution Agreement compliance provisions. Draft agreements will be circulated to the Company for review, and the Firm will incorporate the Company's comments.
Phase 4 — Final Deliverables (Weeks 15–18: approximately July 15 – August 9, 2024):
During this final phase, the Firm will prepare and deliver the final compliance framework report, the comprehensive remediation action plan with implementation timeline, and final versions of all memoranda, template agreements, and compliance checklists. All work product will be delivered in final form, incorporating the Company's comments and any revisions resulting from discussions during the engagement.
Anticipated Completion: Mid-August 2024, targeting delivery of all final deliverables well in advance of the October 1, 2024 planned US commercial launch date. This timeline is designed to allow the Company sufficient time to implement the remediation recommendations and put in place all necessary compliance program elements before commercial activities commence.
The foregoing timeline is an estimate and is subject to change based on the circumstances of the engagement. The Firm will keep the Company informed of the progress of the work and will promptly communicate any anticipated delays or adjustments to the schedule.
6. CONFIDENTIALITY
All information provided by the Company to the Firm in connection with this engagement will be treated as confidential and will not be disclosed to any third party without the Company's prior consent, except as required by law or as necessary to perform the services contemplated by this engagement. The Firm maintains appropriate physical, electronic, and procedural safeguards to protect confidential client information.
The Firm's work product, memoranda, and other communications prepared in connection with this engagement are subject to the attorney-client privilege and, where applicable, the attorney work product doctrine. The Company should take care to maintain the privileged nature of communications by limiting the distribution of the Firm's work product and communications to those individuals within the Company (and, where appropriate, Solstice Biomedical Inc.) who have a genuine need to know. The Company should clearly mark all communications forwarding or referencing the Firm's work product as "Privileged and Confidential — Attorney-Client Communication" or words to that effect.
The Company has authorized the Firm to receive and review deliverables prepared by Meridian Consulting Group LLC in connection with Meridian's engagement by SBD to assist with the design and implementation of SBD's compliance program. The Company should be aware, however, that communications between the Firm and Meridian (a non-attorney consultant) may not be protected by the attorney-client privilege to the same extent as direct attorney-client communications. The availability and scope of privilege protections for such communications will depend on a number of factors, including the nature of the communications, the purpose for which Meridian's work was performed, and the applicable jurisdiction. The Firm will advise the Company on appropriate protocols to preserve privilege to the greatest extent practicable, including recommendations regarding the direction and channeling of Meridian's work through counsel.
7. CONFLICTS OF INTEREST
The Firm has conducted a conflicts of interest check in accordance with its standard procedures and the applicable rules of professional conduct and confirms that, as of the date of this letter, it has identified no current conflict of interest that would preclude the Firm from undertaking this engagement.
Specifically, the Firm does not currently represent any of the following persons or entities in any matter adverse to Solstice Biomedical Devices Ltd. or Solstice Biomedical Inc.:
• Ascendant Distribution Solutions LLC
• Hadley, Ostrander & Paige LLP
• Meridian Consulting Group LLC
• Pinnacle Auditing & Advisory LLP
• Northbridge National Bank, N.A.
• Alder Peak Ventures, LP
• Clearpath Ethics Services Inc.
In the event that a potential conflict of interest arises during the course of the engagement, the Firm will promptly notify the Company in writing and will take appropriate steps, which may include seeking informed written consent and waiver from the affected parties or, if necessary, withdrawing from the engagement in whole or in part, in accordance with the applicable rules of professional conduct.
The Company acknowledges that Calderwood & Harkness LLP is a large, multi-practice law firm with a substantial healthcare and life sciences practice. The Firm currently represents, and will in the future represent, other clients in the healthcare and life sciences industries, including other medical device companies, pharmaceutical manufacturers, and healthcare providers. The Company agrees that such representations, standing alone, do not constitute a conflict of interest and do not preclude the Firm from undertaking or continuing this engagement, provided that no such representation involves direct adversity to the Company in a matter that is substantially related to this engagement.
8. DOCUMENT RETENTION
The Firm will maintain engagement files (including correspondence, memoranda, agreements, research materials, and other documents) in accordance with its standard document retention policy, a copy of which is available upon request. The Firm's document retention policy generally provides for the retention of closed-matter files for a period of seven (7) years following the conclusion of the engagement, after which files may be destroyed in the ordinary course without further notice to the Company.
Upon the conclusion of the engagement, the Firm will return to the Company all original documents provided by the Company in connection with the engagement. The Firm may retain copies of such documents, together with copies of the Firm's work product and internal files, in accordance with applicable ethical rules and the Firm's retention policy.
The Company is responsible for retaining its own copies of all documents and work product delivered by the Firm during and upon the conclusion of the engagement. The Company should not rely on the Firm as the sole repository for any document or work product.
9. TERMINATION
Either party may terminate this engagement at any time upon written notice to the other party. The Company's right to terminate is absolute and unconditional; the Firm's right to terminate is subject to its ethical obligations to avoid prejudice to the Company's interests and to comply with applicable rules of professional conduct governing withdrawal from representation.
In the event of termination by either party, the Company will remain responsible for payment of all professional fees and out-of-pocket expenses incurred through the effective date of termination. The Firm will render a final invoice reflecting all unbilled fees and expenses promptly following the effective date of termination.
Upon termination, the Firm will take reasonable steps to protect the Company's interests in connection with the transition of the matter, including cooperating with successor counsel (if any) and making available the Company's files and documents in a timely manner.
10. LIMITATION OF LIABILITY; NO GUARANTEE OF OUTCOME
The Firm will perform the services contemplated by this engagement letter in accordance with the applicable standard of professional care for attorneys practicing in the area of healthcare regulatory and compliance law.
The Company understands and acknowledges that this engagement involves the provision of legal advice and analysis, and that the Firm does not and cannot guarantee any particular regulatory, enforcement, or compliance outcome. The regulatory environment governing the US sales and marketing of medical devices is complex, evolving, and subject to interpretation by multiple federal and state agencies, including the Department of Justice, the Office of Inspector General, the FDA, CMS, and various state attorneys general and regulatory agencies. Compliance with the Anti-Kickback Statute, the False Claims Act, the Physician Payments Sunshine Act, FDA promotional requirements, the AdvaMed Code of Ethics, state marketing laws, and other applicable laws and industry standards requires ongoing, diligent attention and cannot be assured solely through the completion of this engagement. The Company acknowledges that the advice and deliverables provided by the Firm in connection with this engagement are based on the law and regulatory guidance in effect as of the date of delivery and are subject to change as statutes, regulations, and enforcement practices evolve.
11. GOVERNING LAW
This engagement letter shall be governed by and construed in accordance with the laws of the State of New York, without regard to its conflict-of-laws principles. Any dispute, claim, or controversy arising out of or relating to this engagement letter, or the breach, termination, enforcement, interpretation, or validity thereof, shall be subject to the exclusive jurisdiction of the state courts of the State of New York sitting in the County of New York, or the United States District Court for the Southern District of New York, and each party irrevocably consents to the personal jurisdiction of such courts and waives any objection to venue therein.
12. ENTIRE AGREEMENT; AMENDMENTS
This engagement letter constitutes the entire agreement between the Firm and the Company with respect to the engagement described herein and supersedes all prior and contemporaneous discussions, negotiations, proposals, understandings, and agreements, whether oral or written, relating to the subject matter hereof.
No amendment, modification, supplement, or waiver of any provision of this engagement letter shall be effective unless it is set forth in a written instrument duly executed by an authorized representative of each party.
We look forward to working with you and the entire Solstice team on this important matter. The Pulsar™ CRM System is an exciting product, and we are committed to helping the Company build a best-in-class compliance program to support a successful US commercial launch. Please do not hesitate to contact me with any questions about this letter or the engagement generally.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Joel Strauss Partner, Healthcare & Life Sciences Practice Group Direct Dial: (212) 554-7284
Email: jstrauss@calderwoodharkness.com
By: ________
Miriam Calloway Partner (Billing Partner), Healthcare & Life Sciences Practice Group Direct Dial: (212) 554-7319
Email: mcalloway@calderwoodharkness.com
ACKNOWLEDGMENT AND ACCEPTANCE
AGREED AND ACCEPTED on behalf of Solstice Biomedical Devices Ltd.:
By executing this engagement letter below, the undersigned confirms that he or she has the authority to bind Solstice Biomedical Devices Ltd. to the terms and conditions set forth herein, has read and understood the terms of this letter in their entirety, and agrees to be bound thereby.
SOLSTICE BIOMEDICAL DEVICES LTD.
By: ________
Name: Declan Harrington
Title: General Counsel & Company Secretary
Date: ________
SCHEDULE A
Engagement Team and Current Hourly Rates
The following individuals have been assigned to the engagement described in the accompanying engagement letter dated April 5, 2024 (Matter No. 1037-00003):
Paralegal and legal assistant time, if required, will be billed at $325 per hour. The Firm will notify the Company in advance of the involvement of any additional timekeepers not listed above.
The rates set forth in this Schedule A are the rates in effect as of the date of the engagement letter and will not be adjusted during the term of the engagement, as provided in Section 4.1 of the engagement letter.
SCHEDULE B
Detailed Scope of Work
This Schedule B provides a summary cross-reference to the specific workstreams described in Section 2.2 of the accompanying engagement letter dated April 5, 2024 (Matter No. 1037-00003):