1037-00007 · Solstice Biomedical Devices Ltd · Closing

closing-letter.docx DOCUMENT M&A / Corporate

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CALDERWOOD & HARKNESS LLP Attorneys at Law

599 Lexington Avenue, 36th Floor New York, NY 10022, United States

Telephone: +1 (212) 554-7000 Facsimile: +1 (212) 554-7001 www.calderwoodharkness.com

April 30, 2024

VIA EMAIL AND INTERNATIONAL COURIER

Ms. Fiona Gallagher Chief Financial Officer Solstice Biomedical Devices Ltd. Unit 14, Corrib Technology Park Headford Road, Galway, H91 XR72 Ireland

Re: Engagement Closing — Tax Opinion on IP Migration Structure Matter No.: 1037-00007 Client: Solstice Biomedical Devices Ltd. (CRO No. 587241)

Dear Ms. Gallagher:

1. Purpose of This Letter

I am writing to you in my capacity as Billing Partner in the Tax Department of Calderwood & Harkness LLP ("Calderwood & Harkness" or the "Firm") to confirm the formal closure of the above-referenced engagement, effective as of April 30, 2024 (engagement status: Closed — Completed). This letter serves as the Firm's official record of engagement closure and provides a summary of the scope, team, coordination activities, reliance matters, and administrative items associated with the engagement for your records.

As you are aware, the Firm delivered the final should-level tax opinion letter (the "Opinion") on April 26, 2024, executed by Sylvia Hartwell, Responsible Partner (Tax), and addressed to the Board of Directors of Solstice Biomedical Devices Ltd. ("SBD" or the "Company"). The Opinion was transmitted to you and to Dr. Cathal Morrissey, Chief Executive Officer and Founder, via encrypted electronic delivery on April 26, 2024, and wet-ink executed originals were dispatched to SBD's registered office in Galway via international courier on the same date. We have confirmed receipt of those originals by your office on April 29, 2024.

With the delivery of the Opinion and the completion of all remaining engagement tasks, the Firm considers its obligations under the engagement to have been fully discharged. The purpose of this letter is to memorialize the closure of the engagement and to address certain administrative and forward-looking matters for your reference.

2. Summary of Engagement Scope

Calderwood & Harkness was engaged by SBD pursuant to the engagement letter dated February 9, 2024 (the "Engagement Letter"), countersigned by you on behalf of SBD on February 11, 2024, to deliver a should-level tax opinion regarding the proposed intercompany migration of SBD's intellectual property portfolio (the "IP Portfolio") from Solstice Medical Technologies Inc. ("SMT Inc."), a Delaware corporation (EIN: 84-3291507; Delaware Secretary of State File No. 7482916) and wholly owned US subsidiary of SBD, to Solstice IP Holdings Designated Activity Company ("SIP Holdings"), an Irish designated activity company (CRO No. 714538) newly formed as a wholly owned subsidiary of SBD for purposes of the transaction (the "IP Migration Transaction" or the "Transaction").

2.1 Description of the IP Portfolio

The IP Portfolio that is the subject of the Transaction comprises the following categories of intellectual property:

• Forty-seven (47) granted United States utility patents covering the mechanical, electrical, software, and systems-level innovations underlying SBD's proprietary medical device platforms;

• Twelve (12) pending United States patent applications, including both original applications and continuation-in-part applications relating to next-generation product features;

• Associated trade secrets, including proprietary manufacturing processes, chemical formulations for catheter coatings, and sensor calibration algorithms;

• Technical know-how, including engineering drawings, manufacturing process documentation, quality control protocols, and supplier qualification data; and

• Proprietary software algorithms relating to the "NaviPulse" catheter guidance platform and the "ClearVue" intra-operative cardiac imaging system.

2.2 Independent Valuation

The IP Portfolio was independently valued at $214.5 million fair market value (valuation date: December 31, 2023) by Whitmore Valuation Advisors LLC ("Whitmore"), a nationally recognized independent valuation firm, under project reference WVA-2023-1187. Whitmore employed an income approach utilizing a discounted cash flow methodology, applying a weighted average cost of capital ("WACC") of 13.5%. The valuation considered, among other factors, projected revenue streams attributable to the IP Portfolio over the remaining useful life of the constituent patents, technology obsolescence risk, competitive market dynamics within the interventional cardiology and cardiac imaging device markets, and the regulatory approval status of the underlying products in the United States, European Union, and other key jurisdictions.

2.3 Transaction Structure

The Transaction is structured as follows:

(a) IP Acquisition. SIP Holdings acquires the entirety of the IP Portfolio from SMT Inc. for a purchase price of $214.5 million, reflecting the independently determined fair market value.

(b) Funding. The acquisition is funded through a combination of (i) an intercompany loan from SBD to SIP Holdings in the principal amount of €180.0 million, bearing interest at a fixed rate of 3.75% per annum, with a ten (10)-year term maturing on March 1, 2034, and (ii) a shareholder capital contribution from SBD to SIP Holdings in the amount of €16.7 million. The aggregate euro-denominated funding of approximately €196.7 million corresponds to the $214.5 million purchase price at the applicable exchange rate of approximately €1 = $1.09.

(c) License-Back to SMT Inc. SIP Holdings licenses the IP Portfolio back to SMT Inc. pursuant to an intercompany license agreement at an arm's-length royalty rate of 8.0% of net sales. Based on SMT Inc.'s audited fiscal year 2023 revenue of $189.2 million, the projected Year 1 royalty payment is approximately $15.136 million.

(d) Rest-of-World Licenses. SIP Holdings grants separate licenses to other SBD group entities for rest-of-world territories at arm's-length royalty rates ranging from 4.0% to 6.5% of net sales, depending on the territory, the scope of the licensed rights, and the functions, assets, and risks assumed by the respective licensee entities.

(e) Contract R&D Services. SMT Inc. performs ongoing contract research and development services for SIP Holdings under a contract R&D services agreement, at a remuneration of cost plus an 8.0% mark-up, reflecting the routine nature of the R&D services provided and the allocation of entrepreneurial risk to SIP Holdings as the IP owner.

2.4 Target Effective Date

The target effective date for the IP transfer and license-back was March 1, 2024, and we understand from SBD's advisors that the Transaction was implemented on that date in accordance with the agreed-upon documentation.

3. Summary of Tax Issues Addressed in the Opinion

The Opinion addresses the following US federal income tax, treaty, and Irish tax issues at a should-level confidence (i.e., the relevant tax treatment "should" be sustained if challenged, reflecting a degree of confidence that is greater than "more likely than not" but less than "will"):

3.1 IRC § 367(d) — Outbound Transfer of Intangible Property

The Opinion analyzes the application of Internal Revenue Code ("IRC") § 367(d) to the outbound transfer of the IP Portfolio from SMT Inc. (a domestic corporation) to SIP Holdings (a foreign corporation). Under § 367(d), the transfer of intangible property by a US person to a foreign corporation in connection with a transaction described in § 332, 351, 354, 356, or 361 is treated as a sale of the property in exchange for payments contingent upon the productivity, use, or disposition of such property. The Opinion addresses the built-in gain of $203.2 million ($214.5 million fair market value minus $11.3 million adjusted US tax basis), the deemed annual royalty inclusion mechanism applicable to SMT Inc. over the useful life of the transferred intangibles, and the useful-life election considerations, taking into account the 12.8-year weighted-average remaining useful life of the patent portfolio as determined by Whitmore. The Opinion also considers the interaction of § 367(d) with the actual royalty payments received by SIP Holdings under the license-back arrangement.

3.2 IRC § 482 — Transfer Pricing / Arm's-Length Standard

The Opinion addresses whether the $214.5 million purchase price for the IP Portfolio and the 8.0% royalty rate under the license-back agreement satisfy the arm's-length standard under IRC § 482 and the accompanying Treasury Regulations. In particular, the Opinion analyzes compliance with the "commensurate with income" ("CWI") requirement of § 482, which provides the Internal Revenue Service ("IRS") with authority to make periodic adjustments to ensure that the compensation received in connection with the transfer or licensing of intangible property is commensurate with the income attributable to the intangible. The Opinion considers the benchmarking analysis prepared by Whitmore, which identified a range of comparable uncontrolled royalty rates supporting the 8.0% rate.

3.3 IRC § 951A — Global Intangible Low-Taxed Income (GILTI)

The Opinion analyzes whether the royalty income earned by SIP Holdings as a controlled foreign corporation ("CFC") constitutes "tested income" for purposes of the GILTI provisions under IRC § 951A. The Opinion addresses the availability of the qualified business asset investment ("QBAI") exception under § 951A(d), which permits a CFC to reduce its tested income by a deemed return on its tangible depreciable assets, and evaluates whether the high-tax exclusion under § 951A(c)(2)(A)(i)(III) and Treas. Reg. § 1.951A-2(c)(7) may be available to SIP Holdings based on the anticipated effective Irish tax rate applicable to SIP Holdings' income.

3.4 IRC § 952 — Subpart F Income

The Opinion addresses whether royalty income received by SIP Holdings constitutes "foreign personal holding company income" ("FPHCI") under IRC § 952(a)(2) and § 954(c)(1)(A), and whether any exceptions to FPHCI treatment (including the active trade or business exception, the same-country exception, and the look-through rule under § 954(c)(6)) may be available with respect to royalty payments received from related parties.

3.5 IRC § 59A — Base Erosion and Anti-Abuse Tax (BEAT)

The Opinion analyzes whether royalty payments from SMT Inc. to SIP Holdings constitute "base erosion payments" within the meaning of IRC § 59A(d) and whether SMT Inc. is an "applicable taxpayer" subject to the BEAT. The Opinion notes that the BEAT base erosion percentage for SMT Inc. is 8.66%, computed as the $15.136 million annual royalty deduction divided by $174.8 million in total deductions (as confirmed by Lattimore & Stern CPAs LLP based on SMT Inc.'s fiscal year 2023 federal income tax return), which exceeds the 3.0% statutory threshold for non-bank taxpayers under § 59A(e)(1)(B). The Opinion provides advisory guidance regarding the need for ongoing monitoring of the BEAT base erosion percentage in future taxable years, particularly as the royalty payments increase in line with SMT Inc.'s projected revenue growth.

3.6 US-Ireland Income Tax Treaty — Article 12 (Royalties)

The Opinion addresses the application of Article 12 (Royalties) of the Convention Between the Government of the United States of America and the Government of Ireland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital Gains (the "US-Ireland Treaty"), which provides for a reduction of the US withholding tax rate on royalties to 0% where the beneficial owner of the royalties is a resident of Ireland within the meaning of the Treaty. The Opinion analyzes SIP Holdings' qualification as a Treaty-eligible resident under the Limitation on Benefits ("LOB") article of the US-Ireland Treaty (Article 23), including the ownership and base erosion test, the active trade or business test, and the derivative benefits test.

3.7 Section 291A TCA 1997 — Irish Capital Allowances on Specified Intangible Assets

The Opinion addresses the qualification of the transferred IP Portfolio as "specified intangible assets" within the meaning of Section 291A of the Taxes Consolidation Act 1997 ("TCA 1997") as amended, and the availability of annual capital allowances (tax depreciation) to SIP Holdings in respect of the cost of acquiring the IP Portfolio. The Opinion notes that, based on the euro-denominated cost of the IP Portfolio of approximately €196.8 million, and applying the statutory amortization period of fifteen (15) years under Section 291A, SIP Holdings should be entitled to annual capital allowances of approximately €13.12 million per annum, subject to the relevant cap linked to 80% of the trading income attributable to the specified intangible assets.

3.8 Irish Transfer Pricing — Finance Act 2019 Amendments

The Opinion addresses the arm's-length compliance of the Transaction from an Irish tax perspective, taking into account the amendments to the Irish transfer pricing rules introduced by the Finance Act 2019 (effective for chargeable periods commencing on or after January 1, 2020), which aligned Ireland's transfer pricing framework with the 2017 OECD Transfer Pricing Guidelines. The Opinion considers the intercompany loan terms, the royalty rates, and the contract R&D services mark-up in the context of these updated Irish rules.

4. Engagement Team

The following Calderwood & Harkness professionals were assigned to this engagement:

The engagement was formally opened in the Firm's matter management system on February 12, 2024, following receipt of the countersigned Engagement Letter and completion of the Firm's conflicts clearance and client intake procedures. The engagement is formally closed as of April 30, 2024.

5. Coordination with Other Advisors

In connection with the engagement, Calderwood & Harkness coordinated with the following third-party professional advisors retained by SBD. The Firm's coordination with these advisors was necessary to ensure that the Opinion was rendered on a complete and accurate factual record, and that the US tax analysis was consistent with the Irish tax, corporate law, valuation, and audit workstreams being conducted in parallel by SBD's broader advisory team.

5.1 Harrington & Cahill, Chartered Tax Advisors

42 Fitzwilliam Square East, Dublin 2, D02 TK83, Ireland Contact: Niamh O'Sullivan, Tax Partner

Harrington & Cahill served as SBD's Irish tax advisors and was responsible for Irish tax compliance matters, the preparation of all filings with the Irish Revenue Commissioners in connection with the Transaction, the preparation and submission of the Section 291A capital allowances claim on behalf of SIP Holdings, and the preparation of Irish transfer pricing documentation in compliance with the Finance Act 2019 requirements.

5.2 Dalton Byrne & Partners, Solicitors

7 Earlsfort Terrace, Dublin 2, D02 PY98, Ireland Contact: Séamus Dalton, Managing Partner

Dalton Byrne & Partners provided Irish corporate law advice in connection with the Transaction, including advice on the formation and constitutional documents of SIP Holdings as a designated activity company, the preparation and execution of the IP assignment documentation and the intercompany license agreements, and all required notifications to the Irish Revenue Commissioners and the Companies Registration Office.

5.3 Lattimore & Stern CPAs LLP

155 Federal Street, Suite 1400, Boston, MA 02110, United States Contact: David Lattimore, CPA, Partner

Lattimore & Stern CPAs LLP served as the US federal and state tax compliance advisors for SMT Inc. and provided certain factual data relied upon in the Opinion, including confirmation of SMT Inc.'s fiscal year 2023 total deductions of $174.8 million used in the BEAT base erosion percentage analysis, as well as confirmation of the adjusted US tax basis of the IP Portfolio of $11.3 million.

5.4 Whitmore Valuation Advisors LLC

900 Third Avenue, 18th Floor, New York, NY 10022 Contact: Marcus Whitmore, ASA, Managing Director

Whitmore Valuation Advisors LLC prepared the independent IP valuation and the transfer pricing benchmarking study relied upon in the Opinion. Whitmore's draft valuation report (dated January 29, 2024, under project reference WVA-2023-1187) established the $214.5 million fair market value of the IP Portfolio and the arm's-length royalty rate range supporting the 8.0% rate applied in the license-back agreement.

5.5 Pemberton Hale LLP

One Custom House Quay, Dublin 1, D01 Y6H7, Ireland Contact: Aisling Brennan, Audit Partner

Pemberton Hale LLP serves as the statutory auditors of the SBD group. The Firm relied upon certain financial data from SBD's audited consolidated financial statements for the fiscal year ended December 31, 2023, as audited by Pemberton Hale, including SBD consolidated revenue of €347.6 million and EBITDA of €78.4 million (representing a margin of approximately 22.5%).

Please note that Calderwood & Harkness has not independently verified the work product, analyses, conclusions, or representations of any of the foregoing advisors. The Firm has relied upon their respective analyses and representations as described in the Opinion, and the accuracy of the Opinion is, in relevant part, dependent upon the accuracy and completeness of the information and analyses provided by those advisors.

6. Reliance and Limitations

The Opinion dated April 26, 2024 is subject to the assumptions, qualifications, and limitations expressly set forth therein, including but not limited to the following:

(a) Factual Assumptions and Representations. The Opinion relies upon the Factual Assumptions and Representations Letter dated March 8, 2024, signed by Fiona Gallagher, Chief Financial Officer, and Dr. Cathal Morrissey, Chief Executive Officer and Founder, on behalf of SBD (the "Representations Letter"). The Representations Letter sets forth certain factual assumptions and representations regarding the business operations, organizational structure, financial condition, and intended conduct of the SBD group entities that are material to the conclusions reached in the Opinion. If any of the facts set forth in the Representations Letter are or become inaccurate, incomplete, or misleading, the conclusions of the Opinion could be adversely affected.

(b) Valuation Report. The Opinion relies upon the draft IP valuation report of Whitmore Valuation Advisors LLC dated January 29, 2024 (project reference WVA-2023-1187). The Firm has not independently verified the valuation methodology, assumptions, projections, or conclusions contained in the Whitmore report.

(c) Beneficiaries of the Opinion. The Opinion is rendered solely for the benefit of Solstice Biomedical Devices Ltd. and its Board of Directors, including Pinnacle Growth Equity Partners Fund III, L.P. ("Pinnacle GEP III") in its capacity as board-represented majority shareholder holding 62.3% of SBD's issued and outstanding share capital. The Opinion should not be relied upon by any third party, and should not be used for any purpose other than the Transaction described therein, without the prior written consent of Calderwood & Harkness LLP.

(d) Governing Law. The Opinion is based on US federal income tax law (including the Internal Revenue Code, Treasury Regulations, published IRS guidance, and relevant judicial authorities), the US-Ireland Income Tax Treaty, and relevant Irish tax law (including the Taxes Consolidation Act 1997 as amended and applicable Revenue Commissioners guidance), in each case as in effect on the date of the Opinion. The Opinion does not address any subsequent changes in law, regulations, treaties, or administrative or judicial interpretations that may occur after April 26, 2024, including any retroactive changes.

(e) State and Local Taxes. The Opinion does not address any US state or local income tax, franchise tax, or other tax consequences of the Transaction except as expressly stated therein.

7. Pinnacle GEP III Board Approval

We note for completeness that the Opinion confirms that Pinnacle Growth Equity Partners Fund III, L.P. (Jonathan Whitfield, Managing Partner) obtained and documented board-level approval for the IP Migration Transaction in accordance with SBD's shareholders' agreement and corporate governance framework. This approval was required because the Transaction value of $214.5 million (approximately €196.8 million at the applicable exchange rate of €1 = $1.09) exceeds the €10 million threshold for material intercompany transactions requiring Pinnacle board-level consent, as set forth in the SBD shareholders' agreement dated June 14, 2021, as amended. We understand that the relevant board resolution was passed on February 28, 2024, and that a certified copy of the board resolution was included in the closing binder prepared by Dalton Byrne & Partners.

8. Future Developments and Continuing Matters

Calderwood & Harkness's representation of SBD in connection with this matter has concluded as of the date of this letter. The Firm has no obligation to update the Opinion, supplement its analysis, or monitor changes in applicable law, regulations, treaties, administrative guidance, or judicial interpretations subsequent to April 26, 2024.

Notwithstanding the foregoing, the Firm remains available to assist SBD and its advisors with future developments that may arise in connection with the IP Migration Transaction or related matters, including but not limited to the following:

(a) Any IRS examination, audit, inquiry, or information document request relating to the IP transfer, the § 367(d) deemed royalty inclusions, the § 482 arm's-length pricing of the intercompany royalty payments and the IP purchase price, or the BEAT base erosion payments and applicable taxpayer status of SMT Inc.;

(b) Any inquiry, audit, or compliance check by the Irish Revenue Commissioners concerning the Section 291A capital allowances claim filed by SIP Holdings, the Irish transfer pricing documentation, or the economic substance of SIP Holdings in Ireland;

(c) Periodic reassessment of the "commensurate with income" standard under § 482 in future taxable years, particularly as actual royalty income received by SIP Holdings deviates (positively or negatively) from the revenue projections underlying the Whitmore valuation and the benchmarking study;

(d) Any changes to the US-Ireland Income Tax Treaty, including amendments to the Limitation on Benefits provisions of Article 23, or any changes to the US or Irish domestic implementing legislation that may affect the availability of the 0% withholding rate on royalty payments;

(e) Any changes in applicable US or Irish tax law, including potential legislative developments relating to the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (Pillar One and Pillar Two), that may affect the overall tax efficiency or compliance posture of the IP Migration Transaction structure; and

(f) Any restructuring, amendment, or termination of the intercompany agreements entered into in connection with the Transaction.

Any such future engagement would be subject to a separate engagement letter, conflicts clearance, and fee arrangement. SBD should consult with its Irish tax advisors at Harrington & Cahill, Chartered Tax Advisors, and its US tax compliance advisors at Lattimore & Stern CPAs LLP regarding implementation filings, annual compliance obligations, and ongoing reporting requirements arising from the Transaction.

9. File Retention Policy

In accordance with Calderwood & Harkness LLP's document retention policy (as set forth in Section 12 of the Engagement Letter), the Firm will retain the engagement file for this matter for a period of ten (10) years from the date of this letter — that is, through April 30, 2034 — after which the file may be destroyed or disposed of in accordance with the Firm's standard records management procedures without further notice to SBD. The engagement file includes the Firm's internal work papers, research memoranda, draft and final versions of the Opinion, correspondence, and electronic records associated with the engagement.

SBD should retain its own copies of all opinion letters, research memoranda, factual summaries, and supporting documentation provided by the Firm during the course of the engagement. In the event of a future IRS examination or Revenue Commissioners inquiry, SBD's own files will be an important resource, and the Firm cannot guarantee the availability of its files beyond the retention period specified above.

Any original documents provided by SBD or its advisors to Calderwood & Harkness during the engagement — including original executed agreements, corporate resolutions, and other instruments — have been or will be returned to SBD under separate cover. If you have not received any such original documents within thirty (30) days of the date of this letter, please contact me promptly so that we may arrange for their return.

10. Final Invoice

A final invoice and fee summary for Matter No. 1037-00007 accompanies this letter under separate cover. The final invoice reflects professional fees and disbursements incurred through the close of the engagement on April 30, 2024. Total professional fees for the engagement are within the rate cap of $385,000, exclusive of disbursements, as specified in Section 7 of the Engagement Letter dated February 9, 2024. Disbursements include, among other items, charges for international courier services, online legal research databases, and document production.

Payment terms are as set forth in the Engagement Letter: net thirty (30) days from the date of invoice. Any questions regarding the final invoice or the fee summary should be directed to me at the contact information set forth below.

11. Acknowledgments and Closing

On behalf of the entire Calderwood & Harkness team, I would like to express our sincere appreciation for the opportunity to serve Solstice Biomedical Devices Ltd. and its Board of Directors on this important and complex matter. It has been a privilege to work with you, Dr. Morrissey, and your broader advisory team on the IP Migration Transaction, and we are pleased that the engagement has been completed on schedule and within the agreed fee parameters.

Should you have any questions regarding the Opinion, this engagement closing letter, or any future matters in which we may be of assistance, please do not hesitate to contact us. For billing and administrative inquiries, please contact me directly. For substantive tax questions relating to the Opinion or the IP Migration Transaction, please contact Sylvia Hartwell.

Leonard Cross — Billing and Administrative Inquiries Telephone: +1 (212) 554-7148

Email: lcross@calderwoodharkness.com

Sylvia Hartwell — Substantive Tax Questions Telephone: +1 (212) 554-7203

Email: shartwell@calderwoodharkness.com

We look forward to the possibility of working with Solstice Biomedical Devices Ltd. and the broader SBD group on future matters.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Leonard Cross Partner, Tax Department Calderwood & Harkness LLP

Direct Telephone: +1 (212) 554-7148 Direct Facsimile: +1 (212) 554-7149

Email: lcross@calderwoodharkness.com

cc: (via email)

Dr. Cathal Morrissey, Chief Executive Officer, Solstice Biomedical Devices Ltd. Sylvia Hartwell, Partner, Calderwood & Harkness LLP Leila Nazari, Senior Associate, Calderwood & Harkness LLP Niamh O'Sullivan, Tax Partner, Harrington & Cahill, Chartered Tax Advisors David Lattimore, CPA, Partner, Lattimore & Stern CPAs LLP

Encl.: Final Invoice and Fee Summary (Matter No. 1037-00007)

Role	Name	Title
Responsible Partner	Sylvia Hartwell	Partner, Tax Department
Billing Partner	Leonard Cross	Partner, Tax Department
Lead Associate	Leila Nazari	Senior Associate, Tax Department
Working Associate	Robert Jansen	Associate, Tax Department

CALDERWOOD & HARKNESS LLP Attorneys at Law
599 Lexington Avenue, 36th Floor New York, NY 10022, United States
Telephone: +1 (212) 554-7000 Facsimile: +1 (212) 554-7001 www.calderwoodharkness.com
April 30, 2024
VIA EMAIL AND INTERNATIONAL COURIER
Ms. Fiona Gallagher Chief Financial Officer Solstice Biomedical Devices Ltd. Unit 14, Corrib Technology Park Headford Road, Galway, H91 XR72 Ireland
Re: Engagement Closing — Tax Opinion on IP Migration Structure Matter No.: 1037-00007 Client: Solstice Biomedical Devices Ltd. (CRO No. 587241)
Dear Ms. Gallagher:
1. Purpose of This Letter
I am writing to you in my capacity as Billing Partner in the Tax Department of Calderwood & Harkness LLP ("Calderwood & Harkness" or the "Firm") to confirm the formal closure of the above-referenced engagement, effective as of April 30, 2024 (engagement status: Closed — Completed). This letter serves as the Firm's official record of engagement closure and provides a summary of the scope, team, coordination activities, reliance matters, and administrative items associated with the engagement for your records.
As you are aware, the Firm delivered the final should-level tax opinion letter (the "Opinion") on April 26, 2024, executed by Sylvia Hartwell, Responsible Partner (Tax), and addressed to the Board of Directors of Solstice Biomedical Devices Ltd. ("SBD" or the "Company"). The Opinion was transmitted to you and to Dr. Cathal Morrissey, Chief Executive Officer and Founder, via encrypted electronic delivery on April 26, 2024, and wet-ink executed originals were dispatched to SBD's registered office in Galway via international courier on the same date. We have confirmed receipt of those originals by your office on April 29, 2024.
With the delivery of the Opinion and the completion of all remaining engagement tasks, the Firm considers its obligations under the engagement to have been fully discharged. The purpose of this letter is to memorialize the closure of the engagement and to address certain administrative and forward-looking matters for your reference.
2. Summary of Engagement Scope
Calderwood & Harkness was engaged by SBD pursuant to the engagement letter dated February 9, 2024 (the "Engagement Letter"), countersigned by you on behalf of SBD on February 11, 2024, to deliver a should-level tax opinion regarding the proposed intercompany migration of SBD's intellectual property portfolio (the "IP Portfolio") from Solstice Medical Technologies Inc. ("SMT Inc."), a Delaware corporation (EIN: 84-3291507; Delaware Secretary of State File No. 7482916) and wholly owned US subsidiary of SBD, to Solstice IP Holdings Designated Activity Company ("SIP Holdings"), an Irish designated activity company (CRO No. 714538) newly formed as a wholly owned subsidiary of SBD for purposes of the transaction (the "IP Migration Transaction" or the "Transaction").
2.1 Description of the IP Portfolio
The IP Portfolio that is the subject of the Transaction comprises the following categories of intellectual property:
• Forty-seven (47) granted United States utility patents covering the mechanical, electrical, software, and systems-level innovations underlying SBD's proprietary medical device platforms;
• Twelve (12) pending United States patent applications, including both original applications and continuation-in-part applications relating to next-generation product features;
• Associated trade secrets, including proprietary manufacturing processes, chemical formulations for catheter coatings, and sensor calibration algorithms;
• Technical know-how, including engineering drawings, manufacturing process documentation, quality control protocols, and supplier qualification data; and
• Proprietary software algorithms relating to the "NaviPulse" catheter guidance platform and the "ClearVue" intra-operative cardiac imaging system.
2.2 Independent Valuation
The IP Portfolio was independently valued at $214.5 million fair market value (valuation date: December 31, 2023) by Whitmore Valuation Advisors LLC ("Whitmore"), a nationally recognized independent valuation firm, under project reference WVA-2023-1187. Whitmore employed an income approach utilizing a discounted cash flow methodology, applying a weighted average cost of capital ("WACC") of 13.5%. The valuation considered, among other factors, projected revenue streams attributable to the IP Portfolio over the remaining useful life of the constituent patents, technology obsolescence risk, competitive market dynamics within the interventional cardiology and cardiac imaging device markets, and the regulatory approval status of the underlying products in the United States, European Union, and other key jurisdictions.
2.3 Transaction Structure
The Transaction is structured as follows:
(a) IP Acquisition. SIP Holdings acquires the entirety of the IP Portfolio from SMT Inc. for a purchase price of $214.5 million, reflecting the independently determined fair market value.
(b) Funding. The acquisition is funded through a combination of (i) an intercompany loan from SBD to SIP Holdings in the principal amount of €180.0 million, bearing interest at a fixed rate of 3.75% per annum, with a ten (10)-year term maturing on March 1, 2034, and (ii) a shareholder capital contribution from SBD to SIP Holdings in the amount of €16.7 million. The aggregate euro-denominated funding of approximately €196.7 million corresponds to the $214.5 million purchase price at the applicable exchange rate of approximately €1 = $1.09.
(c) License-Back to SMT Inc. SIP Holdings licenses the IP Portfolio back to SMT Inc. pursuant to an intercompany license agreement at an arm's-length royalty rate of 8.0% of net sales. Based on SMT Inc.'s audited fiscal year 2023 revenue of $189.2 million, the projected Year 1 royalty payment is approximately $15.136 million.
(d) Rest-of-World Licenses. SIP Holdings grants separate licenses to other SBD group entities for rest-of-world territories at arm's-length royalty rates ranging from 4.0% to 6.5% of net sales, depending on the territory, the scope of the licensed rights, and the functions, assets, and risks assumed by the respective licensee entities.
(e) Contract R&D Services. SMT Inc. performs ongoing contract research and development services for SIP Holdings under a contract R&D services agreement, at a remuneration of cost plus an 8.0% mark-up, reflecting the routine nature of the R&D services provided and the allocation of entrepreneurial risk to SIP Holdings as the IP owner.
2.4 Target Effective Date
The target effective date for the IP transfer and license-back was March 1, 2024, and we understand from SBD's advisors that the Transaction was implemented on that date in accordance with the agreed-upon documentation.
3. Summary of Tax Issues Addressed in the Opinion
The Opinion addresses the following US federal income tax, treaty, and Irish tax issues at a should-level confidence (i.e., the relevant tax treatment "should" be sustained if challenged, reflecting a degree of confidence that is greater than "more likely than not" but less than "will"):
3.1 IRC § 367(d) — Outbound Transfer of Intangible Property
The Opinion analyzes the application of Internal Revenue Code ("IRC") § 367(d) to the outbound transfer of the IP Portfolio from SMT Inc. (a domestic corporation) to SIP Holdings (a foreign corporation). Under § 367(d), the transfer of intangible property by a US person to a foreign corporation in connection with a transaction described in § 332, 351, 354, 356, or 361 is treated as a sale of the property in exchange for payments contingent upon the productivity, use, or disposition of such property. The Opinion addresses the built-in gain of $203.2 million ($214.5 million fair market value minus $11.3 million adjusted US tax basis), the deemed annual royalty inclusion mechanism applicable to SMT Inc. over the useful life of the transferred intangibles, and the useful-life election considerations, taking into account the 12.8-year weighted-average remaining useful life of the patent portfolio as determined by Whitmore. The Opinion also considers the interaction of § 367(d) with the actual royalty payments received by SIP Holdings under the license-back arrangement.
3.2 IRC § 482 — Transfer Pricing / Arm's-Length Standard
The Opinion addresses whether the $214.5 million purchase price for the IP Portfolio and the 8.0% royalty rate under the license-back agreement satisfy the arm's-length standard under IRC § 482 and the accompanying Treasury Regulations. In particular, the Opinion analyzes compliance with the "commensurate with income" ("CWI") requirement of § 482, which provides the Internal Revenue Service ("IRS") with authority to make periodic adjustments to ensure that the compensation received in connection with the transfer or licensing of intangible property is commensurate with the income attributable to the intangible. The Opinion considers the benchmarking analysis prepared by Whitmore, which identified a range of comparable uncontrolled royalty rates supporting the 8.0% rate.
3.3 IRC § 951A — Global Intangible Low-Taxed Income (GILTI)
The Opinion analyzes whether the royalty income earned by SIP Holdings as a controlled foreign corporation ("CFC") constitutes "tested income" for purposes of the GILTI provisions under IRC § 951A. The Opinion addresses the availability of the qualified business asset investment ("QBAI") exception under § 951A(d), which permits a CFC to reduce its tested income by a deemed return on its tangible depreciable assets, and evaluates whether the high-tax exclusion under § 951A(c)(2)(A)(i)(III) and Treas. Reg. § 1.951A-2(c)(7) may be available to SIP Holdings based on the anticipated effective Irish tax rate applicable to SIP Holdings' income.
3.4 IRC § 952 — Subpart F Income
The Opinion addresses whether royalty income received by SIP Holdings constitutes "foreign personal holding company income" ("FPHCI") under IRC § 952(a)(2) and § 954(c)(1)(A), and whether any exceptions to FPHCI treatment (including the active trade or business exception, the same-country exception, and the look-through rule under § 954(c)(6)) may be available with respect to royalty payments received from related parties.
3.5 IRC § 59A — Base Erosion and Anti-Abuse Tax (BEAT)
The Opinion analyzes whether royalty payments from SMT Inc. to SIP Holdings constitute "base erosion payments" within the meaning of IRC § 59A(d) and whether SMT Inc. is an "applicable taxpayer" subject to the BEAT. The Opinion notes that the BEAT base erosion percentage for SMT Inc. is 8.66%, computed as the $15.136 million annual royalty deduction divided by $174.8 million in total deductions (as confirmed by Lattimore & Stern CPAs LLP based on SMT Inc.'s fiscal year 2023 federal income tax return), which exceeds the 3.0% statutory threshold for non-bank taxpayers under § 59A(e)(1)(B). The Opinion provides advisory guidance regarding the need for ongoing monitoring of the BEAT base erosion percentage in future taxable years, particularly as the royalty payments increase in line with SMT Inc.'s projected revenue growth.
3.6 US-Ireland Income Tax Treaty — Article 12 (Royalties)
The Opinion addresses the application of Article 12 (Royalties) of the Convention Between the Government of the United States of America and the Government of Ireland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital Gains (the "US-Ireland Treaty"), which provides for a reduction of the US withholding tax rate on royalties to 0% where the beneficial owner of the royalties is a resident of Ireland within the meaning of the Treaty. The Opinion analyzes SIP Holdings' qualification as a Treaty-eligible resident under the Limitation on Benefits ("LOB") article of the US-Ireland Treaty (Article 23), including the ownership and base erosion test, the active trade or business test, and the derivative benefits test.
3.7 Section 291A TCA 1997 — Irish Capital Allowances on Specified Intangible Assets
The Opinion addresses the qualification of the transferred IP Portfolio as "specified intangible assets" within the meaning of Section 291A of the Taxes Consolidation Act 1997 ("TCA 1997") as amended, and the availability of annual capital allowances (tax depreciation) to SIP Holdings in respect of the cost of acquiring the IP Portfolio. The Opinion notes that, based on the euro-denominated cost of the IP Portfolio of approximately €196.8 million, and applying the statutory amortization period of fifteen (15) years under Section 291A, SIP Holdings should be entitled to annual capital allowances of approximately €13.12 million per annum, subject to the relevant cap linked to 80% of the trading income attributable to the specified intangible assets.
3.8 Irish Transfer Pricing — Finance Act 2019 Amendments
The Opinion addresses the arm's-length compliance of the Transaction from an Irish tax perspective, taking into account the amendments to the Irish transfer pricing rules introduced by the Finance Act 2019 (effective for chargeable periods commencing on or after January 1, 2020), which aligned Ireland's transfer pricing framework with the 2017 OECD Transfer Pricing Guidelines. The Opinion considers the intercompany loan terms, the royalty rates, and the contract R&D services mark-up in the context of these updated Irish rules.
4. Engagement Team
The following Calderwood & Harkness professionals were assigned to this engagement:
The engagement was formally opened in the Firm's matter management system on February 12, 2024, following receipt of the countersigned Engagement Letter and completion of the Firm's conflicts clearance and client intake procedures. The engagement is formally closed as of April 30, 2024.
5. Coordination with Other Advisors
In connection with the engagement, Calderwood & Harkness coordinated with the following third-party professional advisors retained by SBD. The Firm's coordination with these advisors was necessary to ensure that the Opinion was rendered on a complete and accurate factual record, and that the US tax analysis was consistent with the Irish tax, corporate law, valuation, and audit workstreams being conducted in parallel by SBD's broader advisory team.
5.1 Harrington & Cahill, Chartered Tax Advisors
42 Fitzwilliam Square East, Dublin 2, D02 TK83, Ireland Contact: Niamh O'Sullivan, Tax Partner
Harrington & Cahill served as SBD's Irish tax advisors and was responsible for Irish tax compliance matters, the preparation of all filings with the Irish Revenue Commissioners in connection with the Transaction, the preparation and submission of the Section 291A capital allowances claim on behalf of SIP Holdings, and the preparation of Irish transfer pricing documentation in compliance with the Finance Act 2019 requirements.
5.2 Dalton Byrne & Partners, Solicitors
7 Earlsfort Terrace, Dublin 2, D02 PY98, Ireland Contact: Séamus Dalton, Managing Partner
Dalton Byrne & Partners provided Irish corporate law advice in connection with the Transaction, including advice on the formation and constitutional documents of SIP Holdings as a designated activity company, the preparation and execution of the IP assignment documentation and the intercompany license agreements, and all required notifications to the Irish Revenue Commissioners and the Companies Registration Office.
5.3 Lattimore & Stern CPAs LLP
155 Federal Street, Suite 1400, Boston, MA 02110, United States Contact: David Lattimore, CPA, Partner
Lattimore & Stern CPAs LLP served as the US federal and state tax compliance advisors for SMT Inc. and provided certain factual data relied upon in the Opinion, including confirmation of SMT Inc.'s fiscal year 2023 total deductions of $174.8 million used in the BEAT base erosion percentage analysis, as well as confirmation of the adjusted US tax basis of the IP Portfolio of $11.3 million.
5.4 Whitmore Valuation Advisors LLC
900 Third Avenue, 18th Floor, New York, NY 10022 Contact: Marcus Whitmore, ASA, Managing Director
Whitmore Valuation Advisors LLC prepared the independent IP valuation and the transfer pricing benchmarking study relied upon in the Opinion. Whitmore's draft valuation report (dated January 29, 2024, under project reference WVA-2023-1187) established the $214.5 million fair market value of the IP Portfolio and the arm's-length royalty rate range supporting the 8.0% rate applied in the license-back agreement.
5.5 Pemberton Hale LLP
One Custom House Quay, Dublin 1, D01 Y6H7, Ireland Contact: Aisling Brennan, Audit Partner
Pemberton Hale LLP serves as the statutory auditors of the SBD group. The Firm relied upon certain financial data from SBD's audited consolidated financial statements for the fiscal year ended December 31, 2023, as audited by Pemberton Hale, including SBD consolidated revenue of €347.6 million and EBITDA of €78.4 million (representing a margin of approximately 22.5%).
Please note that Calderwood & Harkness has not independently verified the work product, analyses, conclusions, or representations of any of the foregoing advisors. The Firm has relied upon their respective analyses and representations as described in the Opinion, and the accuracy of the Opinion is, in relevant part, dependent upon the accuracy and completeness of the information and analyses provided by those advisors.
6. Reliance and Limitations
The Opinion dated April 26, 2024 is subject to the assumptions, qualifications, and limitations expressly set forth therein, including but not limited to the following:
(a) Factual Assumptions and Representations. The Opinion relies upon the Factual Assumptions and Representations Letter dated March 8, 2024, signed by Fiona Gallagher, Chief Financial Officer, and Dr. Cathal Morrissey, Chief Executive Officer and Founder, on behalf of SBD (the "Representations Letter"). The Representations Letter sets forth certain factual assumptions and representations regarding the business operations, organizational structure, financial condition, and intended conduct of the SBD group entities that are material to the conclusions reached in the Opinion. If any of the facts set forth in the Representations Letter are or become inaccurate, incomplete, or misleading, the conclusions of the Opinion could be adversely affected.
(b) Valuation Report. The Opinion relies upon the draft IP valuation report of Whitmore Valuation Advisors LLC dated January 29, 2024 (project reference WVA-2023-1187). The Firm has not independently verified the valuation methodology, assumptions, projections, or conclusions contained in the Whitmore report.
(c) Beneficiaries of the Opinion. The Opinion is rendered solely for the benefit of Solstice Biomedical Devices Ltd. and its Board of Directors, including Pinnacle Growth Equity Partners Fund III, L.P. ("Pinnacle GEP III") in its capacity as board-represented majority shareholder holding 62.3% of SBD's issued and outstanding share capital. The Opinion should not be relied upon by any third party, and should not be used for any purpose other than the Transaction described therein, without the prior written consent of Calderwood & Harkness LLP.
(d) Governing Law. The Opinion is based on US federal income tax law (including the Internal Revenue Code, Treasury Regulations, published IRS guidance, and relevant judicial authorities), the US-Ireland Income Tax Treaty, and relevant Irish tax law (including the Taxes Consolidation Act 1997 as amended and applicable Revenue Commissioners guidance), in each case as in effect on the date of the Opinion. The Opinion does not address any subsequent changes in law, regulations, treaties, or administrative or judicial interpretations that may occur after April 26, 2024, including any retroactive changes.
(e) State and Local Taxes. The Opinion does not address any US state or local income tax, franchise tax, or other tax consequences of the Transaction except as expressly stated therein.
7. Pinnacle GEP III Board Approval
We note for completeness that the Opinion confirms that Pinnacle Growth Equity Partners Fund III, L.P. (Jonathan Whitfield, Managing Partner) obtained and documented board-level approval for the IP Migration Transaction in accordance with SBD's shareholders' agreement and corporate governance framework. This approval was required because the Transaction value of $214.5 million (approximately €196.8 million at the applicable exchange rate of €1 = $1.09) exceeds the €10 million threshold for material intercompany transactions requiring Pinnacle board-level consent, as set forth in the SBD shareholders' agreement dated June 14, 2021, as amended. We understand that the relevant board resolution was passed on February 28, 2024, and that a certified copy of the board resolution was included in the closing binder prepared by Dalton Byrne & Partners.
8. Future Developments and Continuing Matters
Calderwood & Harkness's representation of SBD in connection with this matter has concluded as of the date of this letter. The Firm has no obligation to update the Opinion, supplement its analysis, or monitor changes in applicable law, regulations, treaties, administrative guidance, or judicial interpretations subsequent to April 26, 2024.
Notwithstanding the foregoing, the Firm remains available to assist SBD and its advisors with future developments that may arise in connection with the IP Migration Transaction or related matters, including but not limited to the following:
(a) Any IRS examination, audit, inquiry, or information document request relating to the IP transfer, the § 367(d) deemed royalty inclusions, the § 482 arm's-length pricing of the intercompany royalty payments and the IP purchase price, or the BEAT base erosion payments and applicable taxpayer status of SMT Inc.;
(b) Any inquiry, audit, or compliance check by the Irish Revenue Commissioners concerning the Section 291A capital allowances claim filed by SIP Holdings, the Irish transfer pricing documentation, or the economic substance of SIP Holdings in Ireland;
(c) Periodic reassessment of the "commensurate with income" standard under § 482 in future taxable years, particularly as actual royalty income received by SIP Holdings deviates (positively or negatively) from the revenue projections underlying the Whitmore valuation and the benchmarking study;
(d) Any changes to the US-Ireland Income Tax Treaty, including amendments to the Limitation on Benefits provisions of Article 23, or any changes to the US or Irish domestic implementing legislation that may affect the availability of the 0% withholding rate on royalty payments;
(e) Any changes in applicable US or Irish tax law, including potential legislative developments relating to the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (Pillar One and Pillar Two), that may affect the overall tax efficiency or compliance posture of the IP Migration Transaction structure; and
(f) Any restructuring, amendment, or termination of the intercompany agreements entered into in connection with the Transaction.
Any such future engagement would be subject to a separate engagement letter, conflicts clearance, and fee arrangement. SBD should consult with its Irish tax advisors at Harrington & Cahill, Chartered Tax Advisors, and its US tax compliance advisors at Lattimore & Stern CPAs LLP regarding implementation filings, annual compliance obligations, and ongoing reporting requirements arising from the Transaction.
9. File Retention Policy
In accordance with Calderwood & Harkness LLP's document retention policy (as set forth in Section 12 of the Engagement Letter), the Firm will retain the engagement file for this matter for a period of ten (10) years from the date of this letter — that is, through April 30, 2034 — after which the file may be destroyed or disposed of in accordance with the Firm's standard records management procedures without further notice to SBD. The engagement file includes the Firm's internal work papers, research memoranda, draft and final versions of the Opinion, correspondence, and electronic records associated with the engagement.
SBD should retain its own copies of all opinion letters, research memoranda, factual summaries, and supporting documentation provided by the Firm during the course of the engagement. In the event of a future IRS examination or Revenue Commissioners inquiry, SBD's own files will be an important resource, and the Firm cannot guarantee the availability of its files beyond the retention period specified above.
Any original documents provided by SBD or its advisors to Calderwood & Harkness during the engagement — including original executed agreements, corporate resolutions, and other instruments — have been or will be returned to SBD under separate cover. If you have not received any such original documents within thirty (30) days of the date of this letter, please contact me promptly so that we may arrange for their return.
10. Final Invoice
A final invoice and fee summary for Matter No. 1037-00007 accompanies this letter under separate cover. The final invoice reflects professional fees and disbursements incurred through the close of the engagement on April 30, 2024. Total professional fees for the engagement are within the rate cap of $385,000, exclusive of disbursements, as specified in Section 7 of the Engagement Letter dated February 9, 2024. Disbursements include, among other items, charges for international courier services, online legal research databases, and document production.
Payment terms are as set forth in the Engagement Letter: net thirty (30) days from the date of invoice. Any questions regarding the final invoice or the fee summary should be directed to me at the contact information set forth below.
11. Acknowledgments and Closing
On behalf of the entire Calderwood & Harkness team, I would like to express our sincere appreciation for the opportunity to serve Solstice Biomedical Devices Ltd. and its Board of Directors on this important and complex matter. It has been a privilege to work with you, Dr. Morrissey, and your broader advisory team on the IP Migration Transaction, and we are pleased that the engagement has been completed on schedule and within the agreed fee parameters.
Should you have any questions regarding the Opinion, this engagement closing letter, or any future matters in which we may be of assistance, please do not hesitate to contact us. For billing and administrative inquiries, please contact me directly. For substantive tax questions relating to the Opinion or the IP Migration Transaction, please contact Sylvia Hartwell.
Leonard Cross — Billing and Administrative Inquiries Telephone: +1 (212) 554-7148
Email: lcross@calderwoodharkness.com
Sylvia Hartwell — Substantive Tax Questions Telephone: +1 (212) 554-7203
Email: shartwell@calderwoodharkness.com
We look forward to the possibility of working with Solstice Biomedical Devices Ltd. and the broader SBD group on future matters.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Leonard Cross Partner, Tax Department Calderwood & Harkness LLP
Direct Telephone: +1 (212) 554-7148 Direct Facsimile: +1 (212) 554-7149
Email: lcross@calderwoodharkness.com
cc: (via email)
Dr. Cathal Morrissey, Chief Executive Officer, Solstice Biomedical Devices Ltd. Sylvia Hartwell, Partner, Calderwood & Harkness LLP Leila Nazari, Senior Associate, Calderwood & Harkness LLP Niamh O'Sullivan, Tax Partner, Harrington & Cahill, Chartered Tax Advisors David Lattimore, CPA, Partner, Lattimore & Stern CPAs LLP
Encl.: Final Invoice and Fee Summary (Matter No. 1037-00007)
Role | Name | Title
Responsible Partner | Sylvia Hartwell | Partner, Tax Department
Billing Partner | Leonard Cross | Partner, Tax Department
Lead Associate | Leila Nazari | Senior Associate, Tax Department
Working Associate | Robert Jansen | Associate, Tax Department

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