do-tail-policy-instructions-letter.docx

1037-00006 · Solstice Biomedical Devices Ltd · Insurance

do-tail-policy-instructions-letter.docx DOCUMENT M&A / Corporate

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CALDERWOOD & HARKNESS LLP Attorneys at Law 590 Lexington Avenue, 35th Floor New York, New York 10022 Telephone: (212) 884-7200 Facsimile: (212) 884-7201 www.calderwoodharkness.com

Matter No. 1037-00006

October 28, 2024

Via Electronic Mail and Sundial Data Systems

Allison Trent Senior Vice President, Management Liability Caldwell Risk Advisors, Inc. 101 Federal Street, Suite 1500 Boston, Massachusetts 02110

Re: Directors' and Officers' Liability Tail (Run-Off) Insurance Policy — Meridian Surgical Technologies, Inc. (Delaware File No. 5819734; EIN 84-3192057); Acquisition by Solstice Biomedical, Inc.

Dear Ms. Trent:

We write on behalf of our clients, Solstice Biomedical Devices Ltd., an Irish private limited company (CRO No. 648217), and its wholly owned Delaware subsidiary, Solstice Biomedical, Inc. (collectively, "Solstice" or the "Buyer"), in connection with the Buyer's acquisition of one hundred percent (100%) of the outstanding capital stock of Meridian Surgical Technologies, Inc., a Delaware corporation ("Meridian" or the "Company"). This firm, Calderwood & Harkness LLP, serves as transactional counsel to the Buyer in this matter.

The acquisition is governed by that certain Stock Purchase Agreement, dated as of August 20, 2024 (the "SPA"), by and among Solstice Biomedical, Inc., as Buyer, Meridian Surgical Technologies, Inc., the Sellers named therein (collectively, the "Sellers"), and Dr. Marcus Ellsworth, in his capacity as the Sellers' Representative. As set forth in the SPA, the closing of the transaction (the "Closing") is scheduled to occur on October 31, 2024 (the "Closing Date").

Pursuant to Section 7.04(b) of the SPA, the Buyer is obligated to cause to be obtained, and to prepay in full the premium for, a six (6)-year directors' and officers' liability tail (run-off) insurance policy (the "D&O Tail Policy") for the benefit of Meridian's pre-Closing directors and officers. This letter constitutes our formal instruction to Caldwell Risk Advisors, Inc. ("Caldwell") in connection with the binding of that D&O Tail Policy on behalf of the Buyer and sets forth the required policy specifications, premium payment logistics, delivery requirements, and related matters. We respectfully request your prompt attention to each of the items described herein in order to ensure timely execution of this critical Closing deliverable.

1. Instruction to Bind the D&O Tail Policy

We hereby formally instruct Caldwell Risk Advisors, Inc., acting in its capacity as the Buyer's and the Company's insurance broker of record, to bind the six (6)-year directors' and officers' liability tail (run-off) insurance policy with Northbridge Specialty Insurance Co. (the "Carrier"), effective as of the Closing Date, October 31, 2024.

The D&O Tail Policy shall be bound on terms and conditions no less favorable in the aggregate than the existing directors' and officers' liability insurance policy currently maintained by Meridian (Policy No. NBI-ML-2022-07843, effective through November 15, 2024) (the "Existing Policy"), which was placed through Caldwell and underwritten by the same Carrier. The D&O Tail Policy shall provide continuous, uninterrupted run-off coverage with respect to claims arising from acts, errors, omissions, misstatements, misleading statements, neglect, or breaches of duty occurring at any time prior to and through the Closing Date, inclusive. There shall be no gap in coverage between the effective date of the D&O Tail Policy and the termination or non-renewal of the Existing Policy as a result of the change-of-control transaction.

We understand, based on the preliminary indications that Caldwell has obtained from Northbridge Specialty Insurance Co. in the weeks preceding this instruction, that the Carrier is prepared to bind coverage on the terms outlined herein. We respectfully request that Caldwell take all steps necessary to formalize the binding of the D&O Tail Policy in accordance with the specifications set forth below.

2. Policy Specifications and Required Terms

The D&O Tail Policy shall conform to the following specifications and contain the following required terms:

2.1 Carrier. The D&O Tail Policy shall be issued by Northbridge Specialty Insurance Co., a stock insurance company organized and existing under the laws of the State of Illinois, with its principal offices located at 233 South Wacker Drive, Suite 5400, Chicago, Illinois 60606 (NAIC No. 38474). We understand that Northbridge Specialty Insurance Co. currently maintains an A.M. Best rating of A (Excellent), Financial Size Category IX, and we request that Caldwell confirm that this rating remains in effect as of the date of binding. In the event of any material change in the Carrier's financial condition or ratings prior to binding, Caldwell shall notify us immediately.

2.2 Named Insured and Covered Persons

The D&O Tail Policy shall name the following as the Named Insured and Covered Persons:

(a) Entity Named Insured. Meridian Surgical Technologies, Inc., a Delaware corporation, with its principal office at 780 Keystone Boulevard, Suite 200, King of Prussia, Pennsylvania 19406.

(b) Covered Persons. All natural persons who served as directors, officers, or members of the board of directors of Meridian at any time prior to and through the Closing Date of October 31, 2024, including, without limitation, each of the following individuals:

(i) Dr. Marcus Ellsworth — Founder, Chief Executive Officer, and Director (Chairman of the Board);

(ii) Catherine Pryor — President, Chief Operating Officer, and Director;

(iii) David Hensley — Chief Financial Officer;

(iv) Dr. Raj Subramanian — Chief Technology Officer;

(v) Linda Fontaine — Vice President, Quality and Regulatory Compliance;

(vi) Gregory Ashford — Director (designee of Pennfield Growth Partners, LP);

(vii) Diana Whitfield — Director (designee of Pennfield Growth Partners, LP);

(viii) Dr. Eleanor Vickers — Independent Director; and

(ix) Samuel Nakamura — Board Observer (designee of Arch Hill Ventures Fund II, LLC).

With respect to Mr. Nakamura, we note that his role has been that of a board observer rather than a formal director or officer. Notwithstanding this distinction, the SPA contemplates that coverage under the D&O Tail Policy shall extend to board observers to the extent that such coverage was provided under the Existing Policy. We request that Caldwell expressly confirm with the Carrier that coverage will be extended to Mr. Nakamura in his capacity as a board observer, including coverage for any claims alleging that his participation in board meetings or access to board materials gave rise to fiduciary or quasi-fiduciary duties. If the Carrier's standard form does not extend coverage to board observers, we request that an endorsement be obtained to provide such coverage, and we ask that any additional premium associated with such endorsement be quoted promptly so that it may be incorporated into the Closing funds flow.

A complete list of all individuals who have served as directors or officers of Meridian from the date of its incorporation through the Closing Date, together with their respective dates of service, will be made available upon request.

2.3 Policy Period

The D&O Tail Policy shall have an extended reporting period (i.e., the tail or run-off period) of six (6) years, commencing at 12:01 a.m. Eastern Time on October 31, 2024, and expiring at 11:59 p.m. Eastern Time on October 31, 2030 (the "Policy Period"). This six-year Policy Period is consistent with the requirements of Section 7.04(b) of the SPA and is intended to align with the applicable statutes of limitations and statutes of repose governing potential claims against the Covered Persons.

2.4 Coverage Limits

The D&O Tail Policy shall provide the following limits of liability:

• Per Occurrence Limit: $10,000,000 (ten million dollars)

• Aggregate Limit: $10,000,000 (ten million dollars)

These limits shall be inclusive of defense costs unless the policy form provides for defense costs in addition to the stated limits, in which case we would welcome that broader coverage. To the extent that the limits set forth above are consistent with or no less favorable than the limits under the Existing Policy, no further approval is required. If the Carrier proposes limits that differ from those described above, please notify us immediately.

2.5 Coverage Scope

The D&O Tail Policy shall provide coverage on a claims-made basis for claims first made against any Covered Person during the Policy Period for wrongful acts occurring at any time prior to and through the Closing Date. For these purposes, "wrongful acts" shall include, without limitation, any actual or alleged act, error, misstatement, misleading statement, omission, neglect, or breach of duty committed or allegedly committed by a Covered Person in his or her capacity as a director, officer, or board observer of Meridian.

Coverage shall extend to:

(a) defense costs, including attorneys' fees, expert witness fees, and other costs and expenses incurred in the defense or investigation of covered claims;

(b) settlements, including amounts paid to resolve or compromise covered claims, subject to the Carrier's prior written consent where required by the policy terms; and

(c) judgments, including final, non-appealable judgments or awards entered against any Covered Person in connection with covered claims.

The policy shall include Side A coverage (direct coverage for individual directors and officers where the Company is unable or unwilling to indemnify), Side B coverage (reimbursement of the Company for indemnification payments made to directors and officers), and, to the extent included in the Existing Policy, Side C or entity coverage. We understand that, given the nature of a tail policy issued in connection with a change-of-control transaction, the primary focus of coverage will be on Side A and Side B protections for the benefit of the pre-Closing directors and officers.

2.6 Premium. The total premium for the D&O Tail Policy shall be $385,000 (three hundred eighty-five thousand dollars), inclusive of all taxes, fees, and broker commissions. This premium amount is consistent with the quotation provided by Northbridge Specialty Insurance Co. through Caldwell and communicated to this firm by electronic mail on October 15, 2024 (the "Premium Quotation"). The premium shall be prepaid by the Buyer in a single lump-sum payment on the Closing Date, October 31, 2024. The premium shall be non-refundable and fully earned upon binding, and no portion of the premium shall be subject to return, cancellation, or adjustment at any time during the Policy Period, regardless of whether Meridian or any successor entity ceases operations, merges, dissolves, or undergoes any further change of control.

3. Premium Payment Instructions

The premium of $385,000 will be wired on the Closing Date, October 31, 2024, as part of the consolidated closing funds flow. The D&O Tail Policy premium has been included as a separate, identified line item in the Closing funds flow memorandum prepared by Calderwood & Harkness LLP and reviewed by the parties and their respective counsel.

We request that Caldwell provide complete wire transfer instructions at the earliest practicable time, and in any event no later than October 29, 2024, so that the wire instructions may be incorporated into the final Closing funds flow. Specifically, please confirm whether the premium payment should be directed:

(a) to Northbridge Specialty Insurance Co. directly; or

(b) to Caldwell Risk Advisors, Inc.'s agency premium trust account, for subsequent remittance to the Carrier.

In either case, please provide the following information in connection with the wire:

• Beneficiary name

• Beneficiary bank name and address

• ABA routing number

• Account number

• Reference or invoice number to be included in the wire instructions

• Any additional information required to ensure proper allocation of the payment

The wire will be initiated from Solstice Biomedical, Inc.'s designated funding account at Tidewater Atlantic Bank, N.A. Our client's treasury team has been placed on standby to execute the wire upon receipt of final, confirmed wire instructions and upon confirmation that the Closing is proceeding as scheduled.

4. Delivery of Policy and Binder

4.1 Binder / Binding Confirmation

Given the critical importance of the D&O Tail Policy as a Closing deliverable, we request that Caldwell deliver a written binder or binding confirmation (the "Binder") to the following recipients no later than 5:00 p.m. Eastern Time on October 30, 2024 — that is, the business day immediately preceding the scheduled Closing Date:

(a) Calderwood & Harkness LLP, 590 Lexington Avenue, 35th Floor, New York, New York 10022, Attention: Beatrice Holloway and Tiffany Rosenthal (email delivery to bholloway@calderwoodharkness.com and trosenthal@calderwoodharkness.com); and

(b) Patrick Lennox, General Counsel and Company Secretary, Solstice Biomedical Devices Ltd., Solstice House, 14 Fitzwilliam Place, Dublin 2, D02 YF82, Ireland (email delivery to plennox@solsticebiomedical.com).

The Binder should confirm, at a minimum, the Carrier, the Named Insured, the Covered Persons (by reference to the list set forth in Section 2.2 above or an attached schedule), the Policy Period, the coverage limits, the scope of coverage, and the premium amount. The Binder should further confirm that coverage is bound effective as of the Closing Date and that the formal policy will be issued in due course.

4.2 Formal Policy

The formal executed policy may follow within the customary time after binding. Upon issuance, copies of the executed D&O Tail Policy (including all endorsements, schedules, and declarations pages) shall be delivered to each of the following:

(a) Calderwood & Harkness LLP 590 Lexington Avenue, 35th Floor New York, New York 10022

Attention: Beatrice Holloway / Tiffany Rosenthal

(b) Solstice Biomedical Devices Ltd. Solstice House, 14 Fitzwilliam Place Dublin 2, D02 YF82, Ireland

Attention: Patrick Lennox, General Counsel & Company Secretary

Attention: Helena Byrne, EVP, Corporate Development & Strategy

(d) Dr. Marcus Ellsworth, Sellers' Representative c/o Meridian Surgical Technologies, Inc. 780 Keystone Boulevard, Suite 200 King of Prussia, Pennsylvania 19406

with a copy to:

Whitmore Crane & Pfeiffer LLP One Liberty Place 1650 Market Street, Suite 3600 Philadelphia, Pennsylvania 19103

Attention: Jonathan Whitmore

Delivery of copies to Dr. Ellsworth and to Sellers' counsel, Whitmore Crane & Pfeiffer LLP, is appropriate given that the Buyer's obligation to cause the D&O Tail Policy to be obtained and prepaid inures to the benefit of the pre-Closing directors and officers, and the Sellers' Representative should have a complete record of the coverage in place for the benefit of the individuals he represents.

5. Confirmation of No Material Exclusions or Limitations

A central requirement of the SPA is that the D&O Tail Policy be on terms no less favorable in the aggregate than the Existing Policy. Accordingly, we request that Caldwell provide a written confirmation, in connection with the delivery of the Binder, that the D&O Tail Policy does not contain any exclusions, limitations, conditions, or restrictions that are materially less favorable to the Covered Persons than those contained in the Existing Policy.

Without limiting the generality of the foregoing, we specifically request that Caldwell confirm whether the D&O Tail Policy excludes or limits coverage with respect to any of the following categories of claims:

(a) Claims Arising from Pending Litigation. As described more fully in Section 6 below, Meridian is currently a party to one pending litigation matter: Hartwell Orthopedic Solutions, Inc. v. Meridian Surgical Technologies, Inc., Civil Action No. 2:23-cv-04817, pending in the United States District Court for the Eastern District of Pennsylvania (the "Hartwell Litigation"). We request confirmation that the D&O Tail Policy does not contain a pending or prior litigation exclusion, or a "specific matter" exclusion, that would exclude or limit coverage for claims against the Covered Persons arising from, related to, or in connection with the Hartwell Litigation. If such an exclusion is standard under the Carrier's form, or if the underwriting process has resulted in the inclusion of such an exclusion, we request that Caldwell provide express disclosure of the scope and terms of any such exclusion immediately so that we may evaluate its impact and, if necessary, escalate the matter with our client and with Sellers' counsel.

(b) Change-of-Control Related Claims. Given that the D&O Tail Policy is being placed in direct connection with the acquisition of Meridian by the Buyer, we request confirmation that the policy does not exclude or limit coverage for claims related to the sale transaction itself, including claims alleging breaches of fiduciary duty, inadequacy of the sale price, self-dealing, conflicts of interest, or other wrongful acts arising from the negotiation, approval, or consummation of the change-of-control transaction.

(c) Regulatory Proceedings. Meridian operates in the medical device industry and is subject to regulation by the U.S. Food and Drug Administration ("FDA") and other governmental and regulatory bodies. We request confirmation that the D&O Tail Policy does not exclude or limit coverage for claims arising from or related to regulatory proceedings, investigations, or enforcement actions by the FDA or other governmental authorities, to the extent that such coverage was provided under the Existing Policy.

If any of the above exclusions or limitations are present in the proposed D&O Tail Policy, or if any other exclusions or limitations exist that were not present in the Existing Policy, we request that Caldwell notify us immediately so that the matter can be escalated to the transaction team and, if necessary, to the Sellers' Representative and Sellers' counsel. Time is of the essence, and any issues relating to the scope of coverage must be identified and resolved well in advance of the Closing Date.

6. Background on Pending Litigation (For Underwriting Purposes)

For the benefit of the Carrier's underwriting review, and to ensure complete transparency in the binding process, we provide the following summary of the one pending litigation matter involving Meridian:

Case Caption: Hartwell Orthopedic Solutions, Inc. v. Meridian Surgical Technologies, Inc.

Court and Docket Number: United States District Court for the Eastern District of Pennsylvania, Civil Action No. 2:23-cv-04817

Nature of Claims: The plaintiff, Hartwell Orthopedic Solutions, Inc., has asserted claims of patent infringement against Meridian, alleging that certain of Meridian's minimally invasive surgical instrument products infringe one or more patents held by the plaintiff.

Current Status: Meridian has denied the allegations and has filed a motion for summary judgment, which remains pending before the Court. Discovery has been substantially completed.

Counsel for Meridian: Braddock & Lyle LLP, with lead counsel Deborah Lyle.

To our knowledge, there are no other pending or threatened claims, lawsuits, investigations, or proceedings against Meridian or any of its directors or officers that would be material to the underwriting of the D&O Tail Policy. If the Carrier requires additional information regarding the Hartwell Litigation or any other matter for underwriting or risk assessment purposes, Caldwell should coordinate such requests directly with the undersigned at Calderwood & Harkness LLP. We will work with Meridian's litigation counsel at Braddock & Lyle LLP to provide any reasonably requested supplemental information on a timely basis.

7. Coordination with Closing and Condition Precedent

We wish to emphasize that the binding of the D&O Tail Policy and the delivery of the Binder constitute a required Closing deliverable under Section 3.02(a)(ix) of the SPA. The Buyer's obligation to cause the D&O Tail Policy to be obtained and to prepay the full premium therefor is a covenant set forth in Section 7.04(b) of the SPA, which runs in favor of the Sellers and the pre-Closing directors and officers of Meridian. The binding of coverage and the delivery of the Binder are among the conditions to the obligations of the Sellers to consummate the Closing.

Accordingly, it is essential that all steps necessary to bind the D&O Tail Policy be completed, and that the Binder be delivered in the form and to the recipients described in Section 4.1 above, no later than 5:00 p.m. Eastern Time on October 30, 2024. Any delay in the binding of the D&O Tail Policy or the delivery of the Binder could jeopardize the Closing timeline and would have significant consequences for all parties to the transaction. We therefore respectfully request Caldwell's most urgent attention to this matter.

Should any issue arise that could impede or delay the binding of the D&O Tail Policy, including any additional underwriting questions, documentation requests from the Carrier, or disagreements regarding policy terms, we ask that Caldwell notify us immediately so that we may take appropriate remedial action.

8. Contact Information

The primary contacts at Calderwood & Harkness LLP for all matters relating to the binding, payment, and delivery of the D&O Tail Policy are as follows:

Beatrice Holloway, Partner (Responsible Attorney) Telephone: (212) 884-7244

Email: bholloway@calderwoodharkness.com

Tiffany Rosenthal, Lead Associate Telephone: (212) 884-7312

Email: trosenthal@calderwoodharkness.com

Natasha Grier, Paralegal (Document Coordination) Telephone: (212) 884-7489

Email: ngrier@calderwoodharkness.com

We respectfully request that Caldwell direct all communications regarding the binding of the D&O Tail Policy, including the delivery of the Binder, wire instructions, and any underwriting correspondence, to the above contacts. In addition, we ask that a copy of all such communications be provided to Patrick Lennox, General Counsel and Company Secretary, Solstice Biomedical Devices Ltd. (email: plennox@solsticebiomedical.com; telephone: +353 1 678 4200).

We appreciate Caldwell's diligent efforts in obtaining the Premium Quotation and in facilitating the placement of this important coverage. We look forward to receiving (i) your prompt confirmation that binding will proceed on the terms set forth herein, (ii) complete wire instructions for the premium payment, and (iii) the Binder no later than 5:00 p.m. Eastern Time on October 30, 2024. Please do not hesitate to contact any of the individuals identified in Section 8 above should you have any questions or require any additional information.

Thank you for your attention to this matter.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Beatrice Holloway Partner

Telephone: (212) 884-7244

Email: bholloway@calderwoodharkness.com

cc:

Patrick Lennox, General Counsel & Company Secretary, Solstice Biomedical Devices Ltd.

Helena Byrne, EVP, Corporate Development & Strategy, Solstice Biomedical Devices Ltd.

Tiffany Rosenthal, Calderwood & Harkness LLP

Jonathan Whitmore, Whitmore Crane & Pfeiffer LLP (Sellers' Counsel)

Enclosures/Attachments: None enclosed herewith. The following documents will be made available upon request:

1. Copy of the executed Stock Purchase Agreement, dated as of August 20, 2024, by and among Solstice Biomedical, Inc., Meridian Surgical Technologies, Inc., the Sellers named therein, and Dr. Marcus Ellsworth as Sellers' Representative.

2. List of all pre-Closing directors and officers of Meridian Surgical Technologies, Inc., together with their respective dates of service.

3. Summary of the existing D&O coverage terms under Meridian's current policy (Policy No. NBI-ML-2022-07843) for comparison to the proposed D&O Tail Policy.

CALDERWOOD & HARKNESS LLP Attorneys at Law 590 Lexington Avenue, 35th Floor New York, New York 10022 Telephone: (212) 884-7200 Facsimile: (212) 884-7201 www.calderwoodharkness.com
Matter No. 1037-00006
October 28, 2024
Via Electronic Mail and Sundial Data Systems
Allison Trent Senior Vice President, Management Liability Caldwell Risk Advisors, Inc. 101 Federal Street, Suite 1500 Boston, Massachusetts 02110
Re: Directors' and Officers' Liability Tail (Run-Off) Insurance Policy — Meridian Surgical Technologies, Inc. (Delaware File No. 5819734; EIN 84-3192057); Acquisition by Solstice Biomedical, Inc.
Dear Ms. Trent:
We write on behalf of our clients, Solstice Biomedical Devices Ltd., an Irish private limited company (CRO No. 648217), and its wholly owned Delaware subsidiary, Solstice Biomedical, Inc. (collectively, "Solstice" or the "Buyer"), in connection with the Buyer's acquisition of one hundred percent (100%) of the outstanding capital stock of Meridian Surgical Technologies, Inc., a Delaware corporation ("Meridian" or the "Company"). This firm, Calderwood & Harkness LLP, serves as transactional counsel to the Buyer in this matter.
The acquisition is governed by that certain Stock Purchase Agreement, dated as of August 20, 2024 (the "SPA"), by and among Solstice Biomedical, Inc., as Buyer, Meridian Surgical Technologies, Inc., the Sellers named therein (collectively, the "Sellers"), and Dr. Marcus Ellsworth, in his capacity as the Sellers' Representative. As set forth in the SPA, the closing of the transaction (the "Closing") is scheduled to occur on October 31, 2024 (the "Closing Date").
Pursuant to Section 7.04(b) of the SPA, the Buyer is obligated to cause to be obtained, and to prepay in full the premium for, a six (6)-year directors' and officers' liability tail (run-off) insurance policy (the "D&O Tail Policy") for the benefit of Meridian's pre-Closing directors and officers. This letter constitutes our formal instruction to Caldwell Risk Advisors, Inc. ("Caldwell") in connection with the binding of that D&O Tail Policy on behalf of the Buyer and sets forth the required policy specifications, premium payment logistics, delivery requirements, and related matters. We respectfully request your prompt attention to each of the items described herein in order to ensure timely execution of this critical Closing deliverable.
1. Instruction to Bind the D&O Tail Policy
We hereby formally instruct Caldwell Risk Advisors, Inc., acting in its capacity as the Buyer's and the Company's insurance broker of record, to bind the six (6)-year directors' and officers' liability tail (run-off) insurance policy with Northbridge Specialty Insurance Co. (the "Carrier"), effective as of the Closing Date, October 31, 2024.
The D&O Tail Policy shall be bound on terms and conditions no less favorable in the aggregate than the existing directors' and officers' liability insurance policy currently maintained by Meridian (Policy No. NBI-ML-2022-07843, effective through November 15, 2024) (the "Existing Policy"), which was placed through Caldwell and underwritten by the same Carrier. The D&O Tail Policy shall provide continuous, uninterrupted run-off coverage with respect to claims arising from acts, errors, omissions, misstatements, misleading statements, neglect, or breaches of duty occurring at any time prior to and through the Closing Date, inclusive. There shall be no gap in coverage between the effective date of the D&O Tail Policy and the termination or non-renewal of the Existing Policy as a result of the change-of-control transaction.
We understand, based on the preliminary indications that Caldwell has obtained from Northbridge Specialty Insurance Co. in the weeks preceding this instruction, that the Carrier is prepared to bind coverage on the terms outlined herein. We respectfully request that Caldwell take all steps necessary to formalize the binding of the D&O Tail Policy in accordance with the specifications set forth below.
2. Policy Specifications and Required Terms
The D&O Tail Policy shall conform to the following specifications and contain the following required terms:
2.1 Carrier. The D&O Tail Policy shall be issued by Northbridge Specialty Insurance Co., a stock insurance company organized and existing under the laws of the State of Illinois, with its principal offices located at 233 South Wacker Drive, Suite 5400, Chicago, Illinois 60606 (NAIC No. 38474). We understand that Northbridge Specialty Insurance Co. currently maintains an A.M. Best rating of A (Excellent), Financial Size Category IX, and we request that Caldwell confirm that this rating remains in effect as of the date of binding. In the event of any material change in the Carrier's financial condition or ratings prior to binding, Caldwell shall notify us immediately.
2.2 Named Insured and Covered Persons
The D&O Tail Policy shall name the following as the Named Insured and Covered Persons:
(a) Entity Named Insured. Meridian Surgical Technologies, Inc., a Delaware corporation, with its principal office at 780 Keystone Boulevard, Suite 200, King of Prussia, Pennsylvania 19406.
(b) Covered Persons. All natural persons who served as directors, officers, or members of the board of directors of Meridian at any time prior to and through the Closing Date of October 31, 2024, including, without limitation, each of the following individuals:
(i) Dr. Marcus Ellsworth — Founder, Chief Executive Officer, and Director (Chairman of the Board);
(ii) Catherine Pryor — President, Chief Operating Officer, and Director;
(iii) David Hensley — Chief Financial Officer;
(iv) Dr. Raj Subramanian — Chief Technology Officer;
(v) Linda Fontaine — Vice President, Quality and Regulatory Compliance;
(vi) Gregory Ashford — Director (designee of Pennfield Growth Partners, LP);
(vii) Diana Whitfield — Director (designee of Pennfield Growth Partners, LP);
(viii) Dr. Eleanor Vickers — Independent Director; and
(ix) Samuel Nakamura — Board Observer (designee of Arch Hill Ventures Fund II, LLC).
With respect to Mr. Nakamura, we note that his role has been that of a board observer rather than a formal director or officer. Notwithstanding this distinction, the SPA contemplates that coverage under the D&O Tail Policy shall extend to board observers to the extent that such coverage was provided under the Existing Policy. We request that Caldwell expressly confirm with the Carrier that coverage will be extended to Mr. Nakamura in his capacity as a board observer, including coverage for any claims alleging that his participation in board meetings or access to board materials gave rise to fiduciary or quasi-fiduciary duties. If the Carrier's standard form does not extend coverage to board observers, we request that an endorsement be obtained to provide such coverage, and we ask that any additional premium associated with such endorsement be quoted promptly so that it may be incorporated into the Closing funds flow.
A complete list of all individuals who have served as directors or officers of Meridian from the date of its incorporation through the Closing Date, together with their respective dates of service, will be made available upon request.
2.3 Policy Period
The D&O Tail Policy shall have an extended reporting period (i.e., the tail or run-off period) of six (6) years, commencing at 12:01 a.m. Eastern Time on October 31, 2024, and expiring at 11:59 p.m. Eastern Time on October 31, 2030 (the "Policy Period"). This six-year Policy Period is consistent with the requirements of Section 7.04(b) of the SPA and is intended to align with the applicable statutes of limitations and statutes of repose governing potential claims against the Covered Persons.
2.4 Coverage Limits
The D&O Tail Policy shall provide the following limits of liability:
• Per Occurrence Limit: $10,000,000 (ten million dollars)
• Aggregate Limit: $10,000,000 (ten million dollars)
These limits shall be inclusive of defense costs unless the policy form provides for defense costs in addition to the stated limits, in which case we would welcome that broader coverage. To the extent that the limits set forth above are consistent with or no less favorable than the limits under the Existing Policy, no further approval is required. If the Carrier proposes limits that differ from those described above, please notify us immediately.
2.5 Coverage Scope
The D&O Tail Policy shall provide coverage on a claims-made basis for claims first made against any Covered Person during the Policy Period for wrongful acts occurring at any time prior to and through the Closing Date. For these purposes, "wrongful acts" shall include, without limitation, any actual or alleged act, error, misstatement, misleading statement, omission, neglect, or breach of duty committed or allegedly committed by a Covered Person in his or her capacity as a director, officer, or board observer of Meridian.
Coverage shall extend to:
(a) defense costs, including attorneys' fees, expert witness fees, and other costs and expenses incurred in the defense or investigation of covered claims;
(b) settlements, including amounts paid to resolve or compromise covered claims, subject to the Carrier's prior written consent where required by the policy terms; and
(c) judgments, including final, non-appealable judgments or awards entered against any Covered Person in connection with covered claims.
The policy shall include Side A coverage (direct coverage for individual directors and officers where the Company is unable or unwilling to indemnify), Side B coverage (reimbursement of the Company for indemnification payments made to directors and officers), and, to the extent included in the Existing Policy, Side C or entity coverage. We understand that, given the nature of a tail policy issued in connection with a change-of-control transaction, the primary focus of coverage will be on Side A and Side B protections for the benefit of the pre-Closing directors and officers.
2.6 Premium. The total premium for the D&O Tail Policy shall be $385,000 (three hundred eighty-five thousand dollars), inclusive of all taxes, fees, and broker commissions. This premium amount is consistent with the quotation provided by Northbridge Specialty Insurance Co. through Caldwell and communicated to this firm by electronic mail on October 15, 2024 (the "Premium Quotation"). The premium shall be prepaid by the Buyer in a single lump-sum payment on the Closing Date, October 31, 2024. The premium shall be non-refundable and fully earned upon binding, and no portion of the premium shall be subject to return, cancellation, or adjustment at any time during the Policy Period, regardless of whether Meridian or any successor entity ceases operations, merges, dissolves, or undergoes any further change of control.
3. Premium Payment Instructions
The premium of $385,000 will be wired on the Closing Date, October 31, 2024, as part of the consolidated closing funds flow. The D&O Tail Policy premium has been included as a separate, identified line item in the Closing funds flow memorandum prepared by Calderwood & Harkness LLP and reviewed by the parties and their respective counsel.
We request that Caldwell provide complete wire transfer instructions at the earliest practicable time, and in any event no later than October 29, 2024, so that the wire instructions may be incorporated into the final Closing funds flow. Specifically, please confirm whether the premium payment should be directed:
(a) to Northbridge Specialty Insurance Co. directly; or
(b) to Caldwell Risk Advisors, Inc.'s agency premium trust account, for subsequent remittance to the Carrier.
In either case, please provide the following information in connection with the wire:
• Beneficiary name
• Beneficiary bank name and address
• ABA routing number
• Account number
• Reference or invoice number to be included in the wire instructions
• Any additional information required to ensure proper allocation of the payment
The wire will be initiated from Solstice Biomedical, Inc.'s designated funding account at Tidewater Atlantic Bank, N.A. Our client's treasury team has been placed on standby to execute the wire upon receipt of final, confirmed wire instructions and upon confirmation that the Closing is proceeding as scheduled.
4. Delivery of Policy and Binder
4.1 Binder / Binding Confirmation
Given the critical importance of the D&O Tail Policy as a Closing deliverable, we request that Caldwell deliver a written binder or binding confirmation (the "Binder") to the following recipients no later than 5:00 p.m. Eastern Time on October 30, 2024 — that is, the business day immediately preceding the scheduled Closing Date:
(a) Calderwood & Harkness LLP, 590 Lexington Avenue, 35th Floor, New York, New York 10022, Attention: Beatrice Holloway and Tiffany Rosenthal (email delivery to bholloway@calderwoodharkness.com and trosenthal@calderwoodharkness.com); and
(b) Patrick Lennox, General Counsel and Company Secretary, Solstice Biomedical Devices Ltd., Solstice House, 14 Fitzwilliam Place, Dublin 2, D02 YF82, Ireland (email delivery to plennox@solsticebiomedical.com).
The Binder should confirm, at a minimum, the Carrier, the Named Insured, the Covered Persons (by reference to the list set forth in Section 2.2 above or an attached schedule), the Policy Period, the coverage limits, the scope of coverage, and the premium amount. The Binder should further confirm that coverage is bound effective as of the Closing Date and that the formal policy will be issued in due course.
4.2 Formal Policy
The formal executed policy may follow within the customary time after binding. Upon issuance, copies of the executed D&O Tail Policy (including all endorsements, schedules, and declarations pages) shall be delivered to each of the following:
(a) Calderwood & Harkness LLP 590 Lexington Avenue, 35th Floor New York, New York 10022
Attention: Beatrice Holloway / Tiffany Rosenthal
(b) Solstice Biomedical Devices Ltd. Solstice House, 14 Fitzwilliam Place Dublin 2, D02 YF82, Ireland
Attention: Patrick Lennox, General Counsel & Company Secretary
(c) Solstice Biomedical, Inc. 1200 Innovation Drive, Suite 400 Wilmington, Delaware 19801
Attention: Helena Byrne, EVP, Corporate Development & Strategy
(d) Dr. Marcus Ellsworth, Sellers' Representative c/o Meridian Surgical Technologies, Inc. 780 Keystone Boulevard, Suite 200 King of Prussia, Pennsylvania 19406
with a copy to:
Whitmore Crane & Pfeiffer LLP One Liberty Place 1650 Market Street, Suite 3600 Philadelphia, Pennsylvania 19103
Attention: Jonathan Whitmore
Delivery of copies to Dr. Ellsworth and to Sellers' counsel, Whitmore Crane & Pfeiffer LLP, is appropriate given that the Buyer's obligation to cause the D&O Tail Policy to be obtained and prepaid inures to the benefit of the pre-Closing directors and officers, and the Sellers' Representative should have a complete record of the coverage in place for the benefit of the individuals he represents.
5. Confirmation of No Material Exclusions or Limitations
A central requirement of the SPA is that the D&O Tail Policy be on terms no less favorable in the aggregate than the Existing Policy. Accordingly, we request that Caldwell provide a written confirmation, in connection with the delivery of the Binder, that the D&O Tail Policy does not contain any exclusions, limitations, conditions, or restrictions that are materially less favorable to the Covered Persons than those contained in the Existing Policy.
Without limiting the generality of the foregoing, we specifically request that Caldwell confirm whether the D&O Tail Policy excludes or limits coverage with respect to any of the following categories of claims:
(a) Claims Arising from Pending Litigation. As described more fully in Section 6 below, Meridian is currently a party to one pending litigation matter: Hartwell Orthopedic Solutions, Inc. v. Meridian Surgical Technologies, Inc., Civil Action No. 2:23-cv-04817, pending in the United States District Court for the Eastern District of Pennsylvania (the "Hartwell Litigation"). We request confirmation that the D&O Tail Policy does not contain a pending or prior litigation exclusion, or a "specific matter" exclusion, that would exclude or limit coverage for claims against the Covered Persons arising from, related to, or in connection with the Hartwell Litigation. If such an exclusion is standard under the Carrier's form, or if the underwriting process has resulted in the inclusion of such an exclusion, we request that Caldwell provide express disclosure of the scope and terms of any such exclusion immediately so that we may evaluate its impact and, if necessary, escalate the matter with our client and with Sellers' counsel.
(b) Change-of-Control Related Claims. Given that the D&O Tail Policy is being placed in direct connection with the acquisition of Meridian by the Buyer, we request confirmation that the policy does not exclude or limit coverage for claims related to the sale transaction itself, including claims alleging breaches of fiduciary duty, inadequacy of the sale price, self-dealing, conflicts of interest, or other wrongful acts arising from the negotiation, approval, or consummation of the change-of-control transaction.
(c) Regulatory Proceedings. Meridian operates in the medical device industry and is subject to regulation by the U.S. Food and Drug Administration ("FDA") and other governmental and regulatory bodies. We request confirmation that the D&O Tail Policy does not exclude or limit coverage for claims arising from or related to regulatory proceedings, investigations, or enforcement actions by the FDA or other governmental authorities, to the extent that such coverage was provided under the Existing Policy.
If any of the above exclusions or limitations are present in the proposed D&O Tail Policy, or if any other exclusions or limitations exist that were not present in the Existing Policy, we request that Caldwell notify us immediately so that the matter can be escalated to the transaction team and, if necessary, to the Sellers' Representative and Sellers' counsel. Time is of the essence, and any issues relating to the scope of coverage must be identified and resolved well in advance of the Closing Date.
6. Background on Pending Litigation (For Underwriting Purposes)
For the benefit of the Carrier's underwriting review, and to ensure complete transparency in the binding process, we provide the following summary of the one pending litigation matter involving Meridian:
Case Caption: Hartwell Orthopedic Solutions, Inc. v. Meridian Surgical Technologies, Inc.
Court and Docket Number: United States District Court for the Eastern District of Pennsylvania, Civil Action No. 2:23-cv-04817
Nature of Claims: The plaintiff, Hartwell Orthopedic Solutions, Inc., has asserted claims of patent infringement against Meridian, alleging that certain of Meridian's minimally invasive surgical instrument products infringe one or more patents held by the plaintiff.
Current Status: Meridian has denied the allegations and has filed a motion for summary judgment, which remains pending before the Court. Discovery has been substantially completed.
Counsel for Meridian: Braddock & Lyle LLP, with lead counsel Deborah Lyle.
To our knowledge, there are no other pending or threatened claims, lawsuits, investigations, or proceedings against Meridian or any of its directors or officers that would be material to the underwriting of the D&O Tail Policy. If the Carrier requires additional information regarding the Hartwell Litigation or any other matter for underwriting or risk assessment purposes, Caldwell should coordinate such requests directly with the undersigned at Calderwood & Harkness LLP. We will work with Meridian's litigation counsel at Braddock & Lyle LLP to provide any reasonably requested supplemental information on a timely basis.
7. Coordination with Closing and Condition Precedent
We wish to emphasize that the binding of the D&O Tail Policy and the delivery of the Binder constitute a required Closing deliverable under Section 3.02(a)(ix) of the SPA. The Buyer's obligation to cause the D&O Tail Policy to be obtained and to prepay the full premium therefor is a covenant set forth in Section 7.04(b) of the SPA, which runs in favor of the Sellers and the pre-Closing directors and officers of Meridian. The binding of coverage and the delivery of the Binder are among the conditions to the obligations of the Sellers to consummate the Closing.
Accordingly, it is essential that all steps necessary to bind the D&O Tail Policy be completed, and that the Binder be delivered in the form and to the recipients described in Section 4.1 above, no later than 5:00 p.m. Eastern Time on October 30, 2024. Any delay in the binding of the D&O Tail Policy or the delivery of the Binder could jeopardize the Closing timeline and would have significant consequences for all parties to the transaction. We therefore respectfully request Caldwell's most urgent attention to this matter.
Should any issue arise that could impede or delay the binding of the D&O Tail Policy, including any additional underwriting questions, documentation requests from the Carrier, or disagreements regarding policy terms, we ask that Caldwell notify us immediately so that we may take appropriate remedial action.
8. Contact Information
The primary contacts at Calderwood & Harkness LLP for all matters relating to the binding, payment, and delivery of the D&O Tail Policy are as follows:
Beatrice Holloway, Partner (Responsible Attorney) Telephone: (212) 884-7244
Email: bholloway@calderwoodharkness.com
Tiffany Rosenthal, Lead Associate Telephone: (212) 884-7312
Email: trosenthal@calderwoodharkness.com
Natasha Grier, Paralegal (Document Coordination) Telephone: (212) 884-7489
Email: ngrier@calderwoodharkness.com
We respectfully request that Caldwell direct all communications regarding the binding of the D&O Tail Policy, including the delivery of the Binder, wire instructions, and any underwriting correspondence, to the above contacts. In addition, we ask that a copy of all such communications be provided to Patrick Lennox, General Counsel and Company Secretary, Solstice Biomedical Devices Ltd. (email: plennox@solsticebiomedical.com; telephone: +353 1 678 4200).
We appreciate Caldwell's diligent efforts in obtaining the Premium Quotation and in facilitating the placement of this important coverage. We look forward to receiving (i) your prompt confirmation that binding will proceed on the terms set forth herein, (ii) complete wire instructions for the premium payment, and (iii) the Binder no later than 5:00 p.m. Eastern Time on October 30, 2024. Please do not hesitate to contact any of the individuals identified in Section 8 above should you have any questions or require any additional information.
Thank you for your attention to this matter.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Beatrice Holloway Partner
Telephone: (212) 884-7244
Email: bholloway@calderwoodharkness.com
cc:
Patrick Lennox, General Counsel & Company Secretary, Solstice Biomedical Devices Ltd.
Helena Byrne, EVP, Corporate Development & Strategy, Solstice Biomedical Devices Ltd.
Tiffany Rosenthal, Calderwood & Harkness LLP
Jonathan Whitmore, Whitmore Crane & Pfeiffer LLP (Sellers' Counsel)
Enclosures/Attachments: None enclosed herewith. The following documents will be made available upon request:
1. Copy of the executed Stock Purchase Agreement, dated as of August 20, 2024, by and among Solstice Biomedical, Inc., Meridian Surgical Technologies, Inc., the Sellers named therein, and Dr. Marcus Ellsworth as Sellers' Representative.
2. List of all pre-Closing directors and officers of Meridian Surgical Technologies, Inc., together with their respective dates of service.
3. Summary of the existing D&O coverage terms under Meridian's current policy (Policy No. NBI-ML-2022-07843) for comparison to the proposed D&O Tail Policy.

CALDERWOOD & HARKNESS LLP

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