1037-00007 · Solstice Biomedical Devices Ltd · Engagement

engagement-letter-sbd.docx DOCUMENT M&A / Corporate

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CALDERWOOD & HARKNESS LLP Counselors at Law

599 Lexington Avenue, 36th Floor New York, NY 10022, United States Tel: +1 (212) 554-8000

February 9, 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

Dear Ms. Gallagher:

1. Purpose and Engagement Overview

Calderwood & Harkness LLP ("C&H," "we," or the "Firm") is pleased to confirm the terms on which we have been engaged by Solstice Biomedical Devices Ltd. ("Solstice," "SBD," or the "Company," CRO No. 587241) to provide US and cross-border tax advisory services as described more fully in this letter (this "Engagement Letter"). This Engagement Letter governs the engagement opened under C&H internal matter number 1037-00007. The effective date of the engagement is the date on which this Engagement Letter is duly executed by both parties as set forth in Section 13 below.

We appreciate the confidence that the Board of Directors and management of Solstice have placed in our Firm, and we look forward to working with you and your team on the matters described herein. The terms and conditions contained in this Engagement Letter, together with the Standard Terms and Conditions of Engagement attached hereto as Schedule A (which are incorporated herein by reference), constitute the entire agreement between C&H and the Company with respect to this engagement and supersede all prior discussions, understandings, or agreements, whether oral or written, relating to the subject matter hereof.

2. Scope of Engagement

2.1 Description of Services

The Firm has been retained to prepare and deliver a should-level tax opinion letter (the "Opinion") addressing whether the proposed intercompany transfer of SBD's core intellectual property portfolio from Solstice Medical Technologies Inc. ("SMT Inc.," a Delaware C-corporation, EIN 84-3291507, Delaware File No. 7482916) to Solstice IP Holdings Designated Activity Company ("SIP Holdings" or "SIPH," CRO No. 714538), a newly incorporated Irish designated activity company and wholly owned subsidiary of SBD, will be respected as a bona fide arm's-length transaction under both United States and Irish tax law.

The intellectual property portfolio that is the subject of the proposed transfer (the "IP Portfolio") consists principally of patents, trade secrets, know-how, engineering drawings, manufacturing process documentation, and proprietary software algorithms relating to SBD's "NaviPulse" catheter guidance platform and "ClearVue" intra-operative cardiac imaging system. The IP Portfolio comprises forty-seven (47) granted United States utility patents and twelve (12) pending United States patent applications, together with all associated intangible assets, including but not limited to trade secrets, unpatented inventions, technical data packages, regulatory dossiers (to the extent transferable), and goodwill specifically attributable to the foregoing intellectual property.

The Opinion will specifically address each of the following issues, in each case as applied to the facts of the proposed transaction as summarized in Section 2.4 below:

(a) IRC § 367(d) — Outbound Transfers of Intangible Property. Whether the outbound transfer of the IP Portfolio from SMT Inc. (a United States person) to SIP Holdings (a foreign corporation) triggers deemed annual royalty inclusions under Section 367(d) of the Internal Revenue Code of 1986, as amended (the "Code"), and the advisability and availability of a useful-life election under Treasury Regulation § 1.367(d)-1T(c)(3) as an alternative to the default application of deemed royalty payments over the useful life of the transferred intangibles.

(b) IRC § 482 — Arm's-Length Standard. Whether the proposed purchase price for the IP Portfolio and the arm's-length royalty rate under the license-back arrangement described in Section 2.4 below satisfy the arm's-length standard set forth in Section 482 of the Code and the Treasury Regulations promulgated thereunder, including but not limited to the "commensurate with income" requirement of Section 482 and the provisions of Treasury Regulation §§ 1.482-1 through 1.482-9 applicable to transfers and licenses of intangible property.

(c) IRC § 951A — Global Intangible Low-Taxed Income (GILTI). Whether royalty income earned by SIP Holdings constitutes "tested income" subject to the global intangible low-taxed income provisions of Section 951A of the Code, including analysis of the availability of the qualified business asset investment ("QBAI") exception under Section 951A(d) and the high-tax exclusion election under Treasury Regulation § 1.951A-2(c)(7).

(d) IRC § 952 — Subpart F Income. Whether royalty income received by SIP Holdings from SMT Inc. or other related persons constitutes "foreign personal holding company income" within the meaning of Section 954(c) of the Code and, accordingly, "Subpart F income" under Section 952 of the Code, taking into account any applicable exceptions, including the same-country exception and the active licensing exception under Section 954(c)(2)(A) and the high-tax exception under Section 954(b)(4).

(e) IRC § 59A — Base Erosion and Anti-Abuse Tax (BEAT). Whether royalty payments made by SMT Inc. to SIP Holdings under the license-back arrangement constitute "base erosion payments" within the meaning of Section 59A(d) of the Code and whether SMT Inc.'s "base erosion percentage" exceeds the statutory threshold, and if so, the consequences thereof for the calculation of the "modified taxable income" and the resulting base erosion minimum tax amount.

(f) US-Ireland Income Tax Treaty, Article 12 (Royalties). Whether the royalty payments from SMT Inc. to SIP Holdings are eligible for a reduction of the United States withholding tax rate to zero percent (0%) under Article 12 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"), and whether SIP Holdings qualifies as a "resident" of Ireland entitled to Treaty benefits under Article 23 (Limitation on Benefits) of the US-Ireland Treaty, including analysis of the ownership and base erosion test, the active trade or business test, and the derivative benefits test.

(g) Section 291A TCA 1997 — Irish Capital Allowances for Specified Intangible Assets. Whether the transferred IP Portfolio qualifies as a "specified intangible asset" within the meaning of Section 291A of the Taxes Consolidation Act 1997 ("TCA 1997"), thereby entitling SIP Holdings to claim capital allowances (tax depreciation) for Irish corporation tax purposes at the prescribed rate, and the interaction of such capital allowances with the 80% cap on aggregate allowances introduced by Finance Act 2017.

(h) Irish Transfer Pricing Compliance. Whether the proposed transaction, including the intercompany purchase price, royalty rates, and the terms of the intercompany loan described in Section 2.4, complies with the Irish transfer pricing rules as amended by the Finance Act 2019 (which adopted the 2017 OECD Transfer Pricing Guidelines), including the requirement for contemporaneous transfer pricing documentation under Part 35A TCA 1997.

2.2 Opinion Standard

The Opinion will be rendered at a "should" level of confidence. A "should" opinion means that, in C&H's professional judgment, the position described therein has a greater than fifty percent (50%) likelihood of being sustained on the merits if properly raised and challenged by the relevant taxing authority — that is, the Internal Revenue Service (the "IRS") in the case of United States federal income tax matters, or the Irish Revenue Commissioners ("Irish Revenue") in the case of Irish tax matters — in an administrative or judicial proceeding. The "should" standard reflects a level of confidence that is greater than a "more likely than not" standard but less than a "will" standard (which would require a confidence level in excess of approximately ninety percent).

The Company should understand and acknowledge that a "should" opinion is not a guarantee of any particular outcome. It represents C&H's best professional judgment as to the probable treatment of the transactions under applicable law as of the date of the Opinion, but it is possible that contrary positions exist and that a court, the IRS, Irish Revenue, or any other governmental authority or administrative body could reach a conclusion different from the conclusions set forth in the Opinion. The issuance of a "should" opinion does not assure that penalties would not be asserted in the event of a challenge, although a taxpayer who has reasonably relied upon a "should" opinion from qualified tax counsel may, depending on the circumstances, have a basis for asserting a reasonable cause defense against certain accuracy-related penalties under Section 6662 of the Code.

2.3 Limitations on Scope

The scope of our engagement is limited to the matters described in Section 2.1 above. In particular, and without limiting the generality of the foregoing:

(a) The Opinion will not address state or local tax consequences for any United States jurisdiction (including, without limitation, California franchise tax, New York State or City income or franchise tax, or any other state or local income, franchise, or similar tax), other than as may be incidentally referenced in the course of analyzing the federal income tax issues described above.

(b) The Opinion will not constitute advice with respect to Irish stamp duty (whether under the Stamp Duties Consolidation Act 1999 or otherwise), Irish value-added tax ("VAT"), or customs duties. The Company acknowledges that those matters fall within the scope of the Company's Irish tax and legal advisors.

(c) The Opinion will not address matters of securities law, corporate governance, employment law, antitrust or competition law, data privacy, regulatory compliance (including FDA or EU MDR regulatory matters), or any other legal or compliance matters outside the defined US and cross-border tax scope described herein.

In connection with the preparation of the Opinion, we will coordinate with, but will not duplicate the work of, the following advisors to the Company:

(i) Irish Tax Advisors: Harrington & Cahill, Chartered Tax Advisors, Galway and Dublin, led by Niamh O'Sullivan, Tax Partner, who are responsible for advising the Company on Irish domestic tax matters, including Irish corporation tax, stamp duty, VAT, and the preparation of Irish transfer pricing documentation;

(ii) Statutory Auditors: Pemberton Hale LLP, Chartered Accountants, Dublin, led by Aisling Brennan, Audit Partner, who serve as the statutory auditors of SBD and its group entities;

(iii) US Tax Return Preparer: Lattimore & Stern CPAs LLP, New York, led by David Lattimore, CPA, who are responsible for the preparation of the US federal and state income tax returns of SMT Inc.; and

(iv) Irish Corporate and IP Solicitors: Dalton Byrne & Partners, Solicitors, Galway, led by Séamus Dalton, Managing Partner, who are advising on the corporate and intellectual property law aspects of the proposed transaction, including the drafting of the asset purchase agreement, the license-back agreement, and the formation documents for SIP Holdings.

The Opinion will rely upon the independent intellectual property valuation and transfer-pricing benchmarking analysis prepared by Whitmore Valuation Advisors LLC ("WVA"), project reference WVA-2023-1187, led by Marcus Whitmore, ASA (Accredited Senior Appraiser), Managing Director. We will review the WVA valuation report for consistency with the legal and economic assumptions underlying our analysis, but we will not independently verify, audit, or reperform the valuation, the discount rate determination, the revenue and profit projections, or any of the financial modeling underlying the WVA report. Our Opinion will expressly state that it relies upon the WVA report and that it is conditioned on the accuracy and completeness of the WVA report.

2.4 Transaction Description (Summary)

The Opinion will be based upon the following four-step transaction structure, as described to us by the Company and its advisors. The Opinion will be conditioned on the transaction being consummated in all material respects as described below:

Step 1 — IP Acquisition. SIP Holdings will acquire the entire IP Portfolio from SMT Inc. at a purchase price of $214,500,000 (two hundred fourteen million five hundred thousand US dollars), representing the fair market value of the IP Portfolio as determined by WVA using an income-approach discounted cash flow methodology with a weighted average cost of capital ("WACC") of 13.5% and an IP valuation date of December 31, 2023. The purchase price will be funded by: (a) an intercompany loan from SBD to SIP Holdings in the principal amount of €180,000,000 (approximately $196,200,000 at the average exchange rate of €1.00 = $1.09), bearing a fixed interest rate of 3.75% per annum, repayable over a ten (10) year term with a maturity date of March 1, 2034 (the "Intercompany Loan"); and (b) SIP Holdings equity consisting of €1,000 in ordinary share capital plus a shareholder capital contribution from SBD to SIP Holdings of €16,700,000 (approximately $18,203,000 at the same exchange rate).

Step 2 — License-Back to SMT Inc. Immediately following the IP acquisition, SIP Holdings will enter into an exclusive License-Back Agreement with SMT Inc. granting SMT Inc. the right to exploit the IP Portfolio in the United States and Canada (the "North American Territory") at an arm's-length royalty rate of 8.0% of net sales (as defined in the License-Back Agreement) attributable to products and services incorporating or derived from the IP Portfolio.

Step 3 — Rest-of-World Licenses. SIP Holdings will enter into separate License Agreements with SBD and other group entities (including but not limited to Solstice Biomedical GmbH (Germany), Solstice Medical Japan K.K. (Japan), and Solstice Biomedical (Shanghai) Co., Ltd. (China)) for the exploitation of the IP Portfolio in the rest-of-world territories at arm's-length royalty rates ranging from 4.0% to 6.5% of net sales, with the specific rate for each territory determined by reference to the WVA transfer-pricing benchmarking analysis and reflecting differences in market size, competitive conditions, and distributor functions and risks.

Step 4 — Contract R&D Services. SMT Inc. will continue to perform contract research and development services for SIP Holdings under a Cost-Plus R&D Services Agreement at a transfer price equal to the fully loaded cost of performing such services plus a mark-up of 8.0%, consistent with the OECD Transfer Pricing Guidelines for transactions involving contract research and development.

The target effective date for the IP transfer and the commencement of the license-back arrangement is March 1, 2024.

3. Staffing

The following C&H attorneys will be principally responsible for the conduct of this engagement:

Sylvia Hartwell will have overall responsibility for the engagement and for the content and conclusions of the Opinion. Ms. Hartwell is a member of C&H's International Tax Group and has extensive experience advising multinational clients on cross-border IP transactions, GILTI and Subpart F planning, and tax treaty matters.

Leonard Cross will serve as the Billing Partner and will be responsible for billing, budgetary matters, and ongoing client relationship management. Mr. Cross should be the Company's primary point of contact for any questions or concerns relating to invoicing, fees, or the overall client relationship.

Leila Nazari will be responsible for the day-to-day management of the engagement, including coordinating information requests, drafting research memoranda, and preparing the initial and successive drafts of the Opinion. Ms. Nazari will serve as the Company's primary day-to-day contact on substantive matters.

Robert Jansen will provide research and drafting support to Ms. Nazari and will assist in the analysis of specific technical issues as directed by Ms. Hartwell and Ms. Nazari.

Other C&H attorneys, tax professionals, or paraprofessionals may be involved in the engagement from time to time as the need arises. The Company will be notified of any material changes to the staffing of the engagement team, including any change in the identity of the Responsible Partner or the Lead Associate.

4. Fees and Billing Arrangements

4.1 Hourly Rates

Services rendered in connection with this engagement will be billed on an hourly basis at C&H's standard 2024 blended rates, as follows:

The foregoing rates reflect C&H's standard rates for 2024. While C&H's standard billing rates are generally subject to annual adjustment effective January 1 of each year, the rates stated above will remain in effect for the duration of this engagement and will not be increased, provided that the engagement is completed or terminated on or before December 31, 2024. If the engagement extends beyond December 31, 2024, the parties will discuss in good faith the application of any adjusted rates for work performed after that date.

4.2 Rate Cap

Notwithstanding the hourly rate structure described above, total professional fees for the engagement shall not exceed $385,000 (three hundred eighty-five thousand US dollars) (the "Rate Cap"), exclusive of disbursements and out-of-pocket expenses described in Section 4.4 below. The Rate Cap applies solely to professional fees for attorney time and does not limit the Company's obligation to reimburse C&H for disbursements and expenses.

If, in the course of the engagement, it becomes apparent that the Rate Cap may be reached before the completion of the engagement and delivery of the Opinion, C&H will promptly notify the Company in writing and the parties will discuss in good faith an appropriate adjustment to the Rate Cap, if any. C&H will not be obligated to continue providing services after the Rate Cap has been reached unless the parties have agreed in writing to an increase in the Rate Cap.

4.3 Estimated Hours and Fees

Based on our current understanding of the scope and complexity of the engagement, we estimate that the professional fees for the engagement will be as follows. This estimate is provided for informational and budgeting purposes only and does not constitute a cap, guarantee, or fixed-fee arrangement:

Actual fees may vary from the foregoing estimates depending on a number of factors, including the complexity of issues encountered during the course of research and analysis, the need for additional analysis of issues not presently anticipated, the responsiveness and completeness of third-party advisors and the Company in providing requested materials and information, and the extent of revisions required to drafts of the Opinion. We will endeavor to keep the Company informed of any significant deviation from the foregoing estimate.

4.4 Disbursements and Expenses

In addition to professional fees, the Company will be responsible for reimbursement of all reasonable out-of-pocket disbursements and expenses incurred by C&H in connection with the engagement, including but not limited to:

• Legal research database charges (e.g., Westmark Data Systems, Sundial Solutions, Tidewater Technologies, Granite Harbor Solutions, and similar services);

• Filing fees, if any;

• Photocopying and document production costs at C&H's standard rate of $0.25 per page;

• Courier and delivery charges (Severin Partners LLC, Tarrant & Co., Halcyon Partners LLC, and similar carriers);

• Travel expenses, if applicable (including airfare, ground transportation, lodging, and meals), which will be incurred only with the Company's prior approval for travel outside the New York metropolitan area; and

• Costs of external translators, if any, required for review of Irish-language regulatory materials or other foreign-language documents.

Disbursements and out-of-pocket expenses are not subject to the Rate Cap described in Section 4.2 above.

4.5 Billing and Payment

Invoices for professional fees and disbursements will be rendered on a monthly basis, in arrears, for services performed and expenses incurred during the preceding calendar month. Each invoice will include a reasonably detailed description of the services rendered and the disbursements incurred, itemized by timekeeper and date.

All invoices are due and payable within thirty (30) days of the invoice date. Invoices will be addressed to:

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

Payment shall be made in United States dollars by wire transfer to C&H's designated bank account, the details of which will be set forth on each invoice and are also provided in Schedule B attached hereto. C&H reserves the right to charge interest on overdue invoices at a rate of 1.0% per month (12.0% per annum), or the maximum rate permitted by applicable law, whichever is less, calculated from the date the invoice becomes past due.

5. Client Representations and Assumptions

The Opinion will be based on, and will expressly rely upon, factual representations and information provided to us by the Company, its officers (including Dr. Cathal Morrissey, Founder and Chief Executive Officer, and Fiona Gallagher, Chief Financial Officer), and the Company's other professional advisors identified in Section 2.3 above. The accuracy and completeness of such factual information is essential to the soundness of the conclusions in the Opinion.

Prior to the delivery of the Opinion, we will request that the Company provide a signed Factual Assumptions and Representations Letter (the "Representations Letter") in a form to be prepared by C&H, confirming the accuracy and completeness of the factual predicates upon which the Opinion relies. The Representations Letter will address, among other things, the corporate structure and ownership of the SBD group, the terms of the proposed transaction, the nature and characteristics of the IP Portfolio, the business activities and substance of SIP Holdings (including its expected employees, office space, decision-making authority, and functions performed), the financial projections underlying the WVA valuation, and such other factual matters as we deem relevant to the Opinion.

We will not independently verify, audit, or investigate the accuracy of any factual information provided to us, including but not limited to financial data, revenue and profit projections, the intellectual property valuation and transfer-pricing benchmarking analysis prepared by Whitmore Valuation Advisors LLC, organizational and ownership information, the terms of intercompany agreements, and representations regarding the business activities and substance of SIP Holdings. We will assume, for purposes of the Opinion, that all factual information provided to us is true, correct, and complete in all material respects.

If any factual representation, assumption, or predicate upon which the Opinion is based proves to be inaccurate, incomplete, or misleading in any material respect, the conclusions of the Opinion may no longer be valid, and C&H reserves the right to modify, supplement, or withdraw the Opinion in whole or in part, without liability to the Company. The Company agrees to promptly notify C&H if it becomes aware of any material change in the facts or circumstances relevant to the Opinion, whether before or after the delivery of the Opinion.

6. Confidentiality

C&H will maintain the confidentiality of all information provided by the Company, its officers, directors, employees, and other professional advisors in connection with this engagement (collectively, "Confidential Information"), and will not disclose Confidential Information to any person or entity other than C&H attorneys and professionals working on the engagement, except as may be required by C&H's professional and legal obligations. Such obligations include, without limitation, any obligation to disclose information pursuant to applicable law, regulation, subpoena, court order, or regulatory requirement, or as required by the New York Rules of Professional Conduct or other applicable rules of professional responsibility.

The Opinion, when delivered, will be addressed to and will be for the sole benefit of the Board of Directors of Solstice Biomedical Devices Ltd. The Opinion may not be relied upon by, disclosed to, furnished to, quoted, or referred to by any third party, or used for any purpose other than the purpose for which it is rendered, without the prior written consent of C&H.

Notwithstanding the foregoing, the Company may, without C&H's prior written consent, disclose the Opinion (or a copy thereof) to the following persons and entities, solely for the purposes indicated:

(a) Pinnacle Growth Equity Partners Fund III, L.P. (the majority shareholder of SBD, holding approximately 62.3% of SBD's issued and outstanding ordinary share capital, acting through its general partner, Pinnacle Growth Equity Advisors III LLC), to the extent required for the purpose of obtaining board or investor approval of the proposed transaction in accordance with SBD's constitutional documents and shareholder arrangements; and

(b) The Company's other professional advisors listed in Section 2.3 above (Harrington & Cahill, Pemberton Hale LLP, Lattimore & Stern CPAs LLP, and Dalton Byrne & Partners), solely for the purpose of enabling such advisors to perform their respective advisory functions in connection with the proposed transaction.

Any disclosure permitted under this Section 6 shall be on the express condition that the recipient acknowledges that the Opinion was prepared for the benefit of the Board of Directors of SBD and that C&H assumes no duty or liability to the recipient in connection with the Opinion.

7. Conflicts of Interest

C&H has conducted a conflicts check in accordance with the Firm's standard conflict-of-interest review procedures. The conflicts check was completed on February 11, 2024, and included a review of the Firm's client and matter databases for any current or prior engagements involving any of the following parties to or participants in the proposed transaction:

• Solstice Biomedical Devices Ltd. (CRO No. 587241)

• Solstice Medical Technologies Inc. (Delaware File No. 7482916; EIN 84-3291507)

• Solstice IP Holdings Designated Activity Company (CRO No. 714538)

• Pinnacle Growth Equity Partners Fund III, L.P.

• Pinnacle Growth Equity Advisors III LLC (general partner of Pinnacle Growth Equity Partners Fund III, L.P.)

• Morrissey Family Holdings Unlimited Company (CRO No. 492103)

• Dr. Cathal Morrissey (individually)

• Fiona Gallagher (individually)

• Jonathan Whitfield (individually)

Based on the results of our conflicts review, no conflicts of interest have been identified with respect to any of the foregoing parties. C&H does not currently represent, and has not within the preceding three (3) years represented, any of the foregoing parties or any adverse party in any matter related to the proposed transaction.

If a conflict of interest arises during the course of the engagement, whether actual or potential, C&H will promptly notify the Company in writing and will take appropriate steps in accordance with the applicable rules of professional responsibility, including the New York Rules of Professional Conduct, which may include seeking an informed consent waiver from affected clients or, if the conflict cannot be waived, withdrawing from the engagement.

8. No Guarantee of Outcome; Tax Authority Challenge

The Company understands and acknowledges that the Opinion represents C&H's professional judgment as to the proper treatment of the proposed transaction under existing law as of the date of the Opinion. The applicable legal authorities on which the Opinion will be based include, but are not limited to, the Internal Revenue Code of 1986, as amended, the Treasury Regulations promulgated thereunder (including both final and temporary regulations), published IRS guidance (including Revenue Rulings, Revenue Procedures, and Notices), the US-Ireland Income Tax Treaty and the Technical Explanation thereof, the Taxes Consolidation Act 1997 (as amended), Irish Finance Acts, regulations and guidelines issued by the Irish Revenue Commissioners, and relevant judicial decisions of United States and Irish courts.

The Opinion does not constitute a guarantee that the IRS, the Irish Revenue Commissioners, or any court or administrative body will agree with the conclusions reached therein. Tax law is inherently complex, and reasonable minds may differ as to the application of the law to particular facts. It is possible that the IRS or Irish Revenue could take a position contrary to one or more of the conclusions in the Opinion, and there can be no assurance that such a position would not ultimately be sustained.

The Company further acknowledges that tax law is subject to change at any time, whether by legislation, regulation, judicial decision, or administrative action, including changes that are retroactive in effect. Any such change occurring after the date of the Opinion could adversely affect, or render inapplicable, one or more of the conclusions set forth in the Opinion. C&H undertakes no obligation to update or supplement the Opinion following its delivery to reflect subsequent changes in the law or in the factual circumstances underlying the Opinion, unless the parties separately agree in writing to an update engagement.

The Opinion does not provide any assurance that the Company, SMT Inc., SIP Holdings, or any other group entity will not be subject to audit, examination, or inquiry by the IRS, the Irish Revenue Commissioners, or any other taxing authority in connection with the proposed transaction or otherwise.

9. Pinnacle Growth Equity Partners Approval

The Company has informed C&H that, pursuant to the Shareholders' Agreement dated June 18, 2019 (as amended from time to time) among SBD, Pinnacle Growth Equity Partners Fund III, L.P. ("Pinnacle"), Morrissey Family Holdings Unlimited Company, and certain other shareholders of SBD, material intercompany transactions involving consideration in excess of €10,000,000 require the prior written approval of Pinnacle, acting through its designated representative on the Board of Directors of SBD, Jonathan Whitfield, Managing Partner of Pinnacle Growth Equity Advisors III LLC and non-executive director of SBD.

The Company represents and warrants that it will obtain such approval from Pinnacle prior to the effective date of the IP transfer (currently targeted for March 1, 2024). C&H's engagement and the delivery of the Opinion are not contingent upon the receipt of such approval; however, the Opinion will note that the receipt of such approval is a factual predicate to the consummation of the proposed transaction and that the conclusions of the Opinion are conditioned upon the transaction being consummated in accordance with its terms, including the satisfaction of all required corporate and shareholder approvals.

10. Termination

Either C&H or the Company may terminate this engagement at any time and for any reason (or for no reason) upon written notice to the other party. Written notice of termination may be delivered by email, courier, or registered mail to the addresses set forth herein (or such other address as may be designated by a party in writing).

In the event of termination, the Company will remain responsible for the payment of all professional fees and disbursements incurred through the date of termination, in accordance with the billing and payment terms set forth in Section 4, subject in all cases to the Rate Cap. Termination of the engagement will not relieve either party of obligations that, by their nature, survive termination, including obligations relating to confidentiality (Section 6) and governing law and dispute resolution (Section 12).

Upon termination, C&H will promptly return to the Company any original documents provided by the Company to C&H in connection with the engagement and will cooperate in the orderly transition of the matter to successor counsel or advisors designated by the Company. C&H may retain copies of all documents and work product in accordance with its document retention policy and applicable professional responsibility rules.

11. Document Retention

C&H will retain engagement files (including correspondence, memoranda, drafts, work papers, and the final Opinion) in accordance with the Firm's document retention policy, which generally provides for the retention of closed matter files for a period of not less than seven (7) years following the closure of the engagement. Upon the expiration of the retention period, C&H may, in its sole discretion and without further notice to the Company, destroy or dispose of the engagement files.

The Company is strongly encouraged to maintain its own complete copies of all materials provided to C&H and all materials received from C&H in connection with this engagement, including the final Opinion, all drafts, memoranda, correspondence, and supporting documentation. C&H shall have no liability for the loss or destruction of documents after the expiration of the retention period.

12. Governing Law and Dispute Resolution

This Engagement Letter, and any dispute, claim, or controversy arising out of, relating to, or in connection with this engagement or the services provided hereunder, shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflict-of-laws principles that would result in the application of the laws of any other jurisdiction.

Any dispute, claim, or controversy arising out of or relating to this Engagement Letter or the services provided hereunder, including any claim for breach of fiduciary duty, professional malpractice, or negligence, shall be resolved exclusively by binding arbitration in New York, New York, administered by the American Arbitration Association (the "AAA") in accordance with its Commercial Arbitration Rules then in effect. The arbitration shall be conducted by a single arbitrator selected in accordance with the AAA's rules. The arbitrator's decision shall be final and binding on the parties, and judgment on the award may be entered in any court of competent jurisdiction. Each party shall bear its own costs and attorneys' fees in connection with any arbitration, unless the arbitrator determines that the circumstances warrant a different allocation. The parties agree that the arbitration proceedings and all materials submitted in connection therewith shall be confidential.

13. Acceptance and Execution

We are grateful for the opportunity to serve Solstice Biomedical Devices Ltd. in connection with this important matter. If the foregoing terms are acceptable to the Company, we kindly request that you confirm your agreement by signing and dating the enclosed duplicate copy of this Engagement Letter in the space provided below and returning it to C&H at the address set forth above, or by email in PDF format to shartwell@calderwoodharkness.com and lcross@calderwoodharkness.com, at your earliest convenience.

This Engagement Letter may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. Execution and delivery of this Engagement Letter by electronic means (including PDF transmitted by email) shall be effective for all purposes.

We look forward to working with you, Dr. Morrissey, and the entire Solstice team on this transaction.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Name: Sylvia Hartwell

Title: Partner (Tax) — Responsible Partner

Date: ________

By: ________

Name: Leonard Cross

Title: Partner (Tax) — Billing Partner

Date: ________

ACCEPTED AND AGREED

SOLSTICE BIOMEDICAL DEVICES LTD. (CRO No. 587241)

By: ________

Name: Fiona Gallagher

Title: Chief Financial Officer

Date: February _, 2024

Enclosures

The following schedules are attached hereto and incorporated by reference into this Engagement Letter:

Schedule A: Standard Terms and Conditions of Engagement of Calderwood & Harkness LLP

Schedule B: Wire Transfer Instructions for Fee Payments

This Engagement Letter and all attachments hereto are confidential and are intended solely for the use of the addressee. Any unauthorized review, use, disclosure, or distribution is prohibited.

Role	Name	Position
Responsible Partner	Sylvia Hartwell	Partner (Tax)
Billing Partner	Leonard Cross	Partner (Tax)
Lead Associate	Leila Nazari	Senior Associate (Tax)
Working Associate	Robert Jansen	Associate (Tax)
Timekeeper	Rate
Partners (Sylvia Hartwell, Leonard Cross)	$1,150 per hour
Senior Associates (Leila Nazari)	$780 per hour
Associates (Robert Jansen)	$595 per hour
Timekeeper	Estimated Hours	Rate	Estimated Fees
Sylvia Hartwell (Partner)	45 hours	$1,150/hr	$51,750
Leonard Cross (Partner)	20 hours	$1,150/hr	$23,000
Leila Nazari (Senior Associate)	180 hours	$780/hr	$140,400
Robert Jansen (Associate)	120 hours	$595/hr	$71,400
Estimated Total	365 hours	$286,550

CALDERWOOD & HARKNESS LLP Counselors at Law
599 Lexington Avenue, 36th Floor New York, NY 10022, United States Tel: +1 (212) 554-8000 | Fax: +1 (212) 554-8001 www.calderwoodharkness.com
February 9, 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
Dear Ms. Gallagher:
1. Purpose and Engagement Overview
Calderwood & Harkness LLP ("C&H," "we," or the "Firm") is pleased to confirm the terms on which we have been engaged by Solstice Biomedical Devices Ltd. ("Solstice," "SBD," or the "Company," CRO No. 587241) to provide US and cross-border tax advisory services as described more fully in this letter (this "Engagement Letter"). This Engagement Letter governs the engagement opened under C&H internal matter number 1037-00007. The effective date of the engagement is the date on which this Engagement Letter is duly executed by both parties as set forth in Section 13 below.
We appreciate the confidence that the Board of Directors and management of Solstice have placed in our Firm, and we look forward to working with you and your team on the matters described herein. The terms and conditions contained in this Engagement Letter, together with the Standard Terms and Conditions of Engagement attached hereto as Schedule A (which are incorporated herein by reference), constitute the entire agreement between C&H and the Company with respect to this engagement and supersede all prior discussions, understandings, or agreements, whether oral or written, relating to the subject matter hereof.
2. Scope of Engagement
2.1 Description of Services
The Firm has been retained to prepare and deliver a should-level tax opinion letter (the "Opinion") addressing whether the proposed intercompany transfer of SBD's core intellectual property portfolio from Solstice Medical Technologies Inc. ("SMT Inc.," a Delaware C-corporation, EIN 84-3291507, Delaware File No. 7482916) to Solstice IP Holdings Designated Activity Company ("SIP Holdings" or "SIPH," CRO No. 714538), a newly incorporated Irish designated activity company and wholly owned subsidiary of SBD, will be respected as a bona fide arm's-length transaction under both United States and Irish tax law.
The intellectual property portfolio that is the subject of the proposed transfer (the "IP Portfolio") consists principally of patents, trade secrets, know-how, engineering drawings, manufacturing process documentation, and proprietary software algorithms relating to SBD's "NaviPulse" catheter guidance platform and "ClearVue" intra-operative cardiac imaging system. The IP Portfolio comprises forty-seven (47) granted United States utility patents and twelve (12) pending United States patent applications, together with all associated intangible assets, including but not limited to trade secrets, unpatented inventions, technical data packages, regulatory dossiers (to the extent transferable), and goodwill specifically attributable to the foregoing intellectual property.
The Opinion will specifically address each of the following issues, in each case as applied to the facts of the proposed transaction as summarized in Section 2.4 below:
(a) IRC § 367(d) — Outbound Transfers of Intangible Property. Whether the outbound transfer of the IP Portfolio from SMT Inc. (a United States person) to SIP Holdings (a foreign corporation) triggers deemed annual royalty inclusions under Section 367(d) of the Internal Revenue Code of 1986, as amended (the "Code"), and the advisability and availability of a useful-life election under Treasury Regulation § 1.367(d)-1T(c)(3) as an alternative to the default application of deemed royalty payments over the useful life of the transferred intangibles.
(b) IRC § 482 — Arm's-Length Standard. Whether the proposed purchase price for the IP Portfolio and the arm's-length royalty rate under the license-back arrangement described in Section 2.4 below satisfy the arm's-length standard set forth in Section 482 of the Code and the Treasury Regulations promulgated thereunder, including but not limited to the "commensurate with income" requirement of Section 482 and the provisions of Treasury Regulation §§ 1.482-1 through 1.482-9 applicable to transfers and licenses of intangible property.
(c) IRC § 951A — Global Intangible Low-Taxed Income (GILTI). Whether royalty income earned by SIP Holdings constitutes "tested income" subject to the global intangible low-taxed income provisions of Section 951A of the Code, including analysis of the availability of the qualified business asset investment ("QBAI") exception under Section 951A(d) and the high-tax exclusion election under Treasury Regulation § 1.951A-2(c)(7).
(d) IRC § 952 — Subpart F Income. Whether royalty income received by SIP Holdings from SMT Inc. or other related persons constitutes "foreign personal holding company income" within the meaning of Section 954(c) of the Code and, accordingly, "Subpart F income" under Section 952 of the Code, taking into account any applicable exceptions, including the same-country exception and the active licensing exception under Section 954(c)(2)(A) and the high-tax exception under Section 954(b)(4).
(e) IRC § 59A — Base Erosion and Anti-Abuse Tax (BEAT). Whether royalty payments made by SMT Inc. to SIP Holdings under the license-back arrangement constitute "base erosion payments" within the meaning of Section 59A(d) of the Code and whether SMT Inc.'s "base erosion percentage" exceeds the statutory threshold, and if so, the consequences thereof for the calculation of the "modified taxable income" and the resulting base erosion minimum tax amount.
(f) US-Ireland Income Tax Treaty, Article 12 (Royalties). Whether the royalty payments from SMT Inc. to SIP Holdings are eligible for a reduction of the United States withholding tax rate to zero percent (0%) under Article 12 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"), and whether SIP Holdings qualifies as a "resident" of Ireland entitled to Treaty benefits under Article 23 (Limitation on Benefits) of the US-Ireland Treaty, including analysis of the ownership and base erosion test, the active trade or business test, and the derivative benefits test.
(g) Section 291A TCA 1997 — Irish Capital Allowances for Specified Intangible Assets. Whether the transferred IP Portfolio qualifies as a "specified intangible asset" within the meaning of Section 291A of the Taxes Consolidation Act 1997 ("TCA 1997"), thereby entitling SIP Holdings to claim capital allowances (tax depreciation) for Irish corporation tax purposes at the prescribed rate, and the interaction of such capital allowances with the 80% cap on aggregate allowances introduced by Finance Act 2017.
(h) Irish Transfer Pricing Compliance. Whether the proposed transaction, including the intercompany purchase price, royalty rates, and the terms of the intercompany loan described in Section 2.4, complies with the Irish transfer pricing rules as amended by the Finance Act 2019 (which adopted the 2017 OECD Transfer Pricing Guidelines), including the requirement for contemporaneous transfer pricing documentation under Part 35A TCA 1997.
2.2 Opinion Standard
The Opinion will be rendered at a "should" level of confidence. A "should" opinion means that, in C&H's professional judgment, the position described therein has a greater than fifty percent (50%) likelihood of being sustained on the merits if properly raised and challenged by the relevant taxing authority — that is, the Internal Revenue Service (the "IRS") in the case of United States federal income tax matters, or the Irish Revenue Commissioners ("Irish Revenue") in the case of Irish tax matters — in an administrative or judicial proceeding. The "should" standard reflects a level of confidence that is greater than a "more likely than not" standard but less than a "will" standard (which would require a confidence level in excess of approximately ninety percent).
The Company should understand and acknowledge that a "should" opinion is not a guarantee of any particular outcome. It represents C&H's best professional judgment as to the probable treatment of the transactions under applicable law as of the date of the Opinion, but it is possible that contrary positions exist and that a court, the IRS, Irish Revenue, or any other governmental authority or administrative body could reach a conclusion different from the conclusions set forth in the Opinion. The issuance of a "should" opinion does not assure that penalties would not be asserted in the event of a challenge, although a taxpayer who has reasonably relied upon a "should" opinion from qualified tax counsel may, depending on the circumstances, have a basis for asserting a reasonable cause defense against certain accuracy-related penalties under Section 6662 of the Code.
2.3 Limitations on Scope
The scope of our engagement is limited to the matters described in Section 2.1 above. In particular, and without limiting the generality of the foregoing:
(a) The Opinion will not address state or local tax consequences for any United States jurisdiction (including, without limitation, California franchise tax, New York State or City income or franchise tax, or any other state or local income, franchise, or similar tax), other than as may be incidentally referenced in the course of analyzing the federal income tax issues described above.
(b) The Opinion will not constitute advice with respect to Irish stamp duty (whether under the Stamp Duties Consolidation Act 1999 or otherwise), Irish value-added tax ("VAT"), or customs duties. The Company acknowledges that those matters fall within the scope of the Company's Irish tax and legal advisors.
(c) The Opinion will not address matters of securities law, corporate governance, employment law, antitrust or competition law, data privacy, regulatory compliance (including FDA or EU MDR regulatory matters), or any other legal or compliance matters outside the defined US and cross-border tax scope described herein.
In connection with the preparation of the Opinion, we will coordinate with, but will not duplicate the work of, the following advisors to the Company:
(i) Irish Tax Advisors: Harrington & Cahill, Chartered Tax Advisors, Galway and Dublin, led by Niamh O'Sullivan, Tax Partner, who are responsible for advising the Company on Irish domestic tax matters, including Irish corporation tax, stamp duty, VAT, and the preparation of Irish transfer pricing documentation;
(ii) Statutory Auditors: Pemberton Hale LLP, Chartered Accountants, Dublin, led by Aisling Brennan, Audit Partner, who serve as the statutory auditors of SBD and its group entities;
(iii) US Tax Return Preparer: Lattimore & Stern CPAs LLP, New York, led by David Lattimore, CPA, who are responsible for the preparation of the US federal and state income tax returns of SMT Inc.; and
(iv) Irish Corporate and IP Solicitors: Dalton Byrne & Partners, Solicitors, Galway, led by Séamus Dalton, Managing Partner, who are advising on the corporate and intellectual property law aspects of the proposed transaction, including the drafting of the asset purchase agreement, the license-back agreement, and the formation documents for SIP Holdings.
The Opinion will rely upon the independent intellectual property valuation and transfer-pricing benchmarking analysis prepared by Whitmore Valuation Advisors LLC ("WVA"), project reference WVA-2023-1187, led by Marcus Whitmore, ASA (Accredited Senior Appraiser), Managing Director. We will review the WVA valuation report for consistency with the legal and economic assumptions underlying our analysis, but we will not independently verify, audit, or reperform the valuation, the discount rate determination, the revenue and profit projections, or any of the financial modeling underlying the WVA report. Our Opinion will expressly state that it relies upon the WVA report and that it is conditioned on the accuracy and completeness of the WVA report.
2.4 Transaction Description (Summary)
The Opinion will be based upon the following four-step transaction structure, as described to us by the Company and its advisors. The Opinion will be conditioned on the transaction being consummated in all material respects as described below:
Step 1 — IP Acquisition. SIP Holdings will acquire the entire IP Portfolio from SMT Inc. at a purchase price of $214,500,000 (two hundred fourteen million five hundred thousand US dollars), representing the fair market value of the IP Portfolio as determined by WVA using an income-approach discounted cash flow methodology with a weighted average cost of capital ("WACC") of 13.5% and an IP valuation date of December 31, 2023. The purchase price will be funded by: (a) an intercompany loan from SBD to SIP Holdings in the principal amount of €180,000,000 (approximately $196,200,000 at the average exchange rate of €1.00 = $1.09), bearing a fixed interest rate of 3.75% per annum, repayable over a ten (10) year term with a maturity date of March 1, 2034 (the "Intercompany Loan"); and (b) SIP Holdings equity consisting of €1,000 in ordinary share capital plus a shareholder capital contribution from SBD to SIP Holdings of €16,700,000 (approximately $18,203,000 at the same exchange rate).
Step 2 — License-Back to SMT Inc. Immediately following the IP acquisition, SIP Holdings will enter into an exclusive License-Back Agreement with SMT Inc. granting SMT Inc. the right to exploit the IP Portfolio in the United States and Canada (the "North American Territory") at an arm's-length royalty rate of 8.0% of net sales (as defined in the License-Back Agreement) attributable to products and services incorporating or derived from the IP Portfolio.
Step 3 — Rest-of-World Licenses. SIP Holdings will enter into separate License Agreements with SBD and other group entities (including but not limited to Solstice Biomedical GmbH (Germany), Solstice Medical Japan K.K. (Japan), and Solstice Biomedical (Shanghai) Co., Ltd. (China)) for the exploitation of the IP Portfolio in the rest-of-world territories at arm's-length royalty rates ranging from 4.0% to 6.5% of net sales, with the specific rate for each territory determined by reference to the WVA transfer-pricing benchmarking analysis and reflecting differences in market size, competitive conditions, and distributor functions and risks.
Step 4 — Contract R&D Services. SMT Inc. will continue to perform contract research and development services for SIP Holdings under a Cost-Plus R&D Services Agreement at a transfer price equal to the fully loaded cost of performing such services plus a mark-up of 8.0%, consistent with the OECD Transfer Pricing Guidelines for transactions involving contract research and development.
The target effective date for the IP transfer and the commencement of the license-back arrangement is March 1, 2024.
3. Staffing
The following C&H attorneys will be principally responsible for the conduct of this engagement:
Sylvia Hartwell will have overall responsibility for the engagement and for the content and conclusions of the Opinion. Ms. Hartwell is a member of C&H's International Tax Group and has extensive experience advising multinational clients on cross-border IP transactions, GILTI and Subpart F planning, and tax treaty matters.
Leonard Cross will serve as the Billing Partner and will be responsible for billing, budgetary matters, and ongoing client relationship management. Mr. Cross should be the Company's primary point of contact for any questions or concerns relating to invoicing, fees, or the overall client relationship.
Leila Nazari will be responsible for the day-to-day management of the engagement, including coordinating information requests, drafting research memoranda, and preparing the initial and successive drafts of the Opinion. Ms. Nazari will serve as the Company's primary day-to-day contact on substantive matters.
Robert Jansen will provide research and drafting support to Ms. Nazari and will assist in the analysis of specific technical issues as directed by Ms. Hartwell and Ms. Nazari.
Other C&H attorneys, tax professionals, or paraprofessionals may be involved in the engagement from time to time as the need arises. The Company will be notified of any material changes to the staffing of the engagement team, including any change in the identity of the Responsible Partner or the Lead Associate.
4. Fees and Billing Arrangements
4.1 Hourly Rates
Services rendered in connection with this engagement will be billed on an hourly basis at C&H's standard 2024 blended rates, as follows:
The foregoing rates reflect C&H's standard rates for 2024. While C&H's standard billing rates are generally subject to annual adjustment effective January 1 of each year, the rates stated above will remain in effect for the duration of this engagement and will not be increased, provided that the engagement is completed or terminated on or before December 31, 2024. If the engagement extends beyond December 31, 2024, the parties will discuss in good faith the application of any adjusted rates for work performed after that date.
4.2 Rate Cap
Notwithstanding the hourly rate structure described above, total professional fees for the engagement shall not exceed $385,000 (three hundred eighty-five thousand US dollars) (the "Rate Cap"), exclusive of disbursements and out-of-pocket expenses described in Section 4.4 below. The Rate Cap applies solely to professional fees for attorney time and does not limit the Company's obligation to reimburse C&H for disbursements and expenses.
If, in the course of the engagement, it becomes apparent that the Rate Cap may be reached before the completion of the engagement and delivery of the Opinion, C&H will promptly notify the Company in writing and the parties will discuss in good faith an appropriate adjustment to the Rate Cap, if any. C&H will not be obligated to continue providing services after the Rate Cap has been reached unless the parties have agreed in writing to an increase in the Rate Cap.
4.3 Estimated Hours and Fees
Based on our current understanding of the scope and complexity of the engagement, we estimate that the professional fees for the engagement will be as follows. This estimate is provided for informational and budgeting purposes only and does not constitute a cap, guarantee, or fixed-fee arrangement:
Actual fees may vary from the foregoing estimates depending on a number of factors, including the complexity of issues encountered during the course of research and analysis, the need for additional analysis of issues not presently anticipated, the responsiveness and completeness of third-party advisors and the Company in providing requested materials and information, and the extent of revisions required to drafts of the Opinion. We will endeavor to keep the Company informed of any significant deviation from the foregoing estimate.
4.4 Disbursements and Expenses
In addition to professional fees, the Company will be responsible for reimbursement of all reasonable out-of-pocket disbursements and expenses incurred by C&H in connection with the engagement, including but not limited to:
•  Legal research database charges (e.g., Westmark Data Systems, Sundial Solutions, Tidewater Technologies, Granite Harbor Solutions, and similar services);
•  Filing fees, if any;
•  Photocopying and document production costs at C&H's standard rate of $0.25 per page;
•  Courier and delivery charges (Severin Partners LLC, Tarrant & Co., Halcyon Partners LLC, and similar carriers);
•  Travel expenses, if applicable (including airfare, ground transportation, lodging, and meals), which will be incurred only with the Company's prior approval for travel outside the New York metropolitan area; and
•  Costs of external translators, if any, required for review of Irish-language regulatory materials or other foreign-language documents.
Disbursements and out-of-pocket expenses are not subject to the Rate Cap described in Section 4.2 above.
4.5 Billing and Payment
Invoices for professional fees and disbursements will be rendered on a monthly basis, in arrears, for services performed and expenses incurred during the preceding calendar month. Each invoice will include a reasonably detailed description of the services rendered and the disbursements incurred, itemized by timekeeper and date.
All invoices are due and payable within thirty (30) days of the invoice date. Invoices will be addressed to:
Ms. Fiona Gallagher Chief Financial Officer Solstice Biomedical Devices Ltd. Unit 14, Corrib Technology Park Headford Road, Galway, H91 XR72 Ireland
Payment shall be made in United States dollars by wire transfer to C&H's designated bank account, the details of which will be set forth on each invoice and are also provided in Schedule B attached hereto. C&H reserves the right to charge interest on overdue invoices at a rate of 1.0% per month (12.0% per annum), or the maximum rate permitted by applicable law, whichever is less, calculated from the date the invoice becomes past due.
5. Client Representations and Assumptions
The Opinion will be based on, and will expressly rely upon, factual representations and information provided to us by the Company, its officers (including Dr. Cathal Morrissey, Founder and Chief Executive Officer, and Fiona Gallagher, Chief Financial Officer), and the Company's other professional advisors identified in Section 2.3 above. The accuracy and completeness of such factual information is essential to the soundness of the conclusions in the Opinion.
Prior to the delivery of the Opinion, we will request that the Company provide a signed Factual Assumptions and Representations Letter (the "Representations Letter") in a form to be prepared by C&H, confirming the accuracy and completeness of the factual predicates upon which the Opinion relies. The Representations Letter will address, among other things, the corporate structure and ownership of the SBD group, the terms of the proposed transaction, the nature and characteristics of the IP Portfolio, the business activities and substance of SIP Holdings (including its expected employees, office space, decision-making authority, and functions performed), the financial projections underlying the WVA valuation, and such other factual matters as we deem relevant to the Opinion.
We will not independently verify, audit, or investigate the accuracy of any factual information provided to us, including but not limited to financial data, revenue and profit projections, the intellectual property valuation and transfer-pricing benchmarking analysis prepared by Whitmore Valuation Advisors LLC, organizational and ownership information, the terms of intercompany agreements, and representations regarding the business activities and substance of SIP Holdings. We will assume, for purposes of the Opinion, that all factual information provided to us is true, correct, and complete in all material respects.
If any factual representation, assumption, or predicate upon which the Opinion is based proves to be inaccurate, incomplete, or misleading in any material respect, the conclusions of the Opinion may no longer be valid, and C&H reserves the right to modify, supplement, or withdraw the Opinion in whole or in part, without liability to the Company. The Company agrees to promptly notify C&H if it becomes aware of any material change in the facts or circumstances relevant to the Opinion, whether before or after the delivery of the Opinion.
6. Confidentiality
C&H will maintain the confidentiality of all information provided by the Company, its officers, directors, employees, and other professional advisors in connection with this engagement (collectively, "Confidential Information"), and will not disclose Confidential Information to any person or entity other than C&H attorneys and professionals working on the engagement, except as may be required by C&H's professional and legal obligations. Such obligations include, without limitation, any obligation to disclose information pursuant to applicable law, regulation, subpoena, court order, or regulatory requirement, or as required by the New York Rules of Professional Conduct or other applicable rules of professional responsibility.
The Opinion, when delivered, will be addressed to and will be for the sole benefit of the Board of Directors of Solstice Biomedical Devices Ltd. The Opinion may not be relied upon by, disclosed to, furnished to, quoted, or referred to by any third party, or used for any purpose other than the purpose for which it is rendered, without the prior written consent of C&H.
Notwithstanding the foregoing, the Company may, without C&H's prior written consent, disclose the Opinion (or a copy thereof) to the following persons and entities, solely for the purposes indicated:
(a) Pinnacle Growth Equity Partners Fund III, L.P. (the majority shareholder of SBD, holding approximately 62.3% of SBD's issued and outstanding ordinary share capital, acting through its general partner, Pinnacle Growth Equity Advisors III LLC), to the extent required for the purpose of obtaining board or investor approval of the proposed transaction in accordance with SBD's constitutional documents and shareholder arrangements; and
(b) The Company's other professional advisors listed in Section 2.3 above (Harrington & Cahill, Pemberton Hale LLP, Lattimore & Stern CPAs LLP, and Dalton Byrne & Partners), solely for the purpose of enabling such advisors to perform their respective advisory functions in connection with the proposed transaction.
Any disclosure permitted under this Section 6 shall be on the express condition that the recipient acknowledges that the Opinion was prepared for the benefit of the Board of Directors of SBD and that C&H assumes no duty or liability to the recipient in connection with the Opinion.
7. Conflicts of Interest
C&H has conducted a conflicts check in accordance with the Firm's standard conflict-of-interest review procedures. The conflicts check was completed on February 11, 2024, and included a review of the Firm's client and matter databases for any current or prior engagements involving any of the following parties to or participants in the proposed transaction:
•  Solstice Biomedical Devices Ltd. (CRO No. 587241)
•  Solstice Medical Technologies Inc. (Delaware File No. 7482916; EIN 84-3291507)
•  Solstice IP Holdings Designated Activity Company (CRO No. 714538)
•  Pinnacle Growth Equity Partners Fund III, L.P.
•  Pinnacle Growth Equity Advisors III LLC (general partner of Pinnacle Growth Equity Partners Fund III, L.P.)
•  Morrissey Family Holdings Unlimited Company (CRO No. 492103)
•  Dr. Cathal Morrissey (individually)
•  Fiona Gallagher (individually)
•  Jonathan Whitfield (individually)
Based on the results of our conflicts review, no conflicts of interest have been identified with respect to any of the foregoing parties. C&H does not currently represent, and has not within the preceding three (3) years represented, any of the foregoing parties or any adverse party in any matter related to the proposed transaction.
If a conflict of interest arises during the course of the engagement, whether actual or potential, C&H will promptly notify the Company in writing and will take appropriate steps in accordance with the applicable rules of professional responsibility, including the New York Rules of Professional Conduct, which may include seeking an informed consent waiver from affected clients or, if the conflict cannot be waived, withdrawing from the engagement.
8. No Guarantee of Outcome; Tax Authority Challenge
The Company understands and acknowledges that the Opinion represents C&H's professional judgment as to the proper treatment of the proposed transaction under existing law as of the date of the Opinion. The applicable legal authorities on which the Opinion will be based include, but are not limited to, the Internal Revenue Code of 1986, as amended, the Treasury Regulations promulgated thereunder (including both final and temporary regulations), published IRS guidance (including Revenue Rulings, Revenue Procedures, and Notices), the US-Ireland Income Tax Treaty and the Technical Explanation thereof, the Taxes Consolidation Act 1997 (as amended), Irish Finance Acts, regulations and guidelines issued by the Irish Revenue Commissioners, and relevant judicial decisions of United States and Irish courts.
The Opinion does not constitute a guarantee that the IRS, the Irish Revenue Commissioners, or any court or administrative body will agree with the conclusions reached therein. Tax law is inherently complex, and reasonable minds may differ as to the application of the law to particular facts. It is possible that the IRS or Irish Revenue could take a position contrary to one or more of the conclusions in the Opinion, and there can be no assurance that such a position would not ultimately be sustained.
The Company further acknowledges that tax law is subject to change at any time, whether by legislation, regulation, judicial decision, or administrative action, including changes that are retroactive in effect. Any such change occurring after the date of the Opinion could adversely affect, or render inapplicable, one or more of the conclusions set forth in the Opinion. C&H undertakes no obligation to update or supplement the Opinion following its delivery to reflect subsequent changes in the law or in the factual circumstances underlying the Opinion, unless the parties separately agree in writing to an update engagement.
The Opinion does not provide any assurance that the Company, SMT Inc., SIP Holdings, or any other group entity will not be subject to audit, examination, or inquiry by the IRS, the Irish Revenue Commissioners, or any other taxing authority in connection with the proposed transaction or otherwise.
9. Pinnacle Growth Equity Partners Approval
The Company has informed C&H that, pursuant to the Shareholders' Agreement dated June 18, 2019 (as amended from time to time) among SBD, Pinnacle Growth Equity Partners Fund III, L.P. ("Pinnacle"), Morrissey Family Holdings Unlimited Company, and certain other shareholders of SBD, material intercompany transactions involving consideration in excess of €10,000,000 require the prior written approval of Pinnacle, acting through its designated representative on the Board of Directors of SBD, Jonathan Whitfield, Managing Partner of Pinnacle Growth Equity Advisors III LLC and non-executive director of SBD.
The Company represents and warrants that it will obtain such approval from Pinnacle prior to the effective date of the IP transfer (currently targeted for March 1, 2024). C&H's engagement and the delivery of the Opinion are not contingent upon the receipt of such approval; however, the Opinion will note that the receipt of such approval is a factual predicate to the consummation of the proposed transaction and that the conclusions of the Opinion are conditioned upon the transaction being consummated in accordance with its terms, including the satisfaction of all required corporate and shareholder approvals.
10. Termination
Either C&H or the Company may terminate this engagement at any time and for any reason (or for no reason) upon written notice to the other party. Written notice of termination may be delivered by email, courier, or registered mail to the addresses set forth herein (or such other address as may be designated by a party in writing).
In the event of termination, the Company will remain responsible for the payment of all professional fees and disbursements incurred through the date of termination, in accordance with the billing and payment terms set forth in Section 4, subject in all cases to the Rate Cap. Termination of the engagement will not relieve either party of obligations that, by their nature, survive termination, including obligations relating to confidentiality (Section 6) and governing law and dispute resolution (Section 12).
Upon termination, C&H will promptly return to the Company any original documents provided by the Company to C&H in connection with the engagement and will cooperate in the orderly transition of the matter to successor counsel or advisors designated by the Company. C&H may retain copies of all documents and work product in accordance with its document retention policy and applicable professional responsibility rules.
11. Document Retention
C&H will retain engagement files (including correspondence, memoranda, drafts, work papers, and the final Opinion) in accordance with the Firm's document retention policy, which generally provides for the retention of closed matter files for a period of not less than seven (7) years following the closure of the engagement. Upon the expiration of the retention period, C&H may, in its sole discretion and without further notice to the Company, destroy or dispose of the engagement files.
The Company is strongly encouraged to maintain its own complete copies of all materials provided to C&H and all materials received from C&H in connection with this engagement, including the final Opinion, all drafts, memoranda, correspondence, and supporting documentation. C&H shall have no liability for the loss or destruction of documents after the expiration of the retention period.
12. Governing Law and Dispute Resolution
This Engagement Letter, and any dispute, claim, or controversy arising out of, relating to, or in connection with this engagement or the services provided hereunder, shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflict-of-laws principles that would result in the application of the laws of any other jurisdiction.
Any dispute, claim, or controversy arising out of or relating to this Engagement Letter or the services provided hereunder, including any claim for breach of fiduciary duty, professional malpractice, or negligence, shall be resolved exclusively by binding arbitration in New York, New York, administered by the American Arbitration Association (the "AAA") in accordance with its Commercial Arbitration Rules then in effect. The arbitration shall be conducted by a single arbitrator selected in accordance with the AAA's rules. The arbitrator's decision shall be final and binding on the parties, and judgment on the award may be entered in any court of competent jurisdiction. Each party shall bear its own costs and attorneys' fees in connection with any arbitration, unless the arbitrator determines that the circumstances warrant a different allocation. The parties agree that the arbitration proceedings and all materials submitted in connection therewith shall be confidential.
13. Acceptance and Execution
We are grateful for the opportunity to serve Solstice Biomedical Devices Ltd. in connection with this important matter. If the foregoing terms are acceptable to the Company, we kindly request that you confirm your agreement by signing and dating the enclosed duplicate copy of this Engagement Letter in the space provided below and returning it to C&H at the address set forth above, or by email in PDF format to shartwell@calderwoodharkness.com and lcross@calderwoodharkness.com, at your earliest convenience.
This Engagement Letter may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. Execution and delivery of this Engagement Letter by electronic means (including PDF transmitted by email) shall be effective for all purposes.
We look forward to working with you, Dr. Morrissey, and the entire Solstice team on this transaction.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Name: Sylvia Hartwell
Title: Partner (Tax) — Responsible Partner
Date: ________
By: ________
Name: Leonard Cross
Title: Partner (Tax) — Billing Partner
Date: ________
ACCEPTED AND AGREED
SOLSTICE BIOMEDICAL DEVICES LTD. (CRO No. 587241)
By: ________
Name: Fiona Gallagher
Title: Chief Financial Officer
Date: February _, 2024
Enclosures
The following schedules are attached hereto and incorporated by reference into this Engagement Letter:
Schedule A: Standard Terms and Conditions of Engagement of Calderwood & Harkness LLP
Schedule B: Wire Transfer Instructions for Fee Payments
This Engagement Letter and all attachments hereto are confidential and are intended solely for the use of the addressee. Any unauthorized review, use, disclosure, or distribution is prohibited.
Role | Name | Position
Responsible Partner | Sylvia Hartwell | Partner (Tax)
Billing Partner | Leonard Cross | Partner (Tax)
Lead Associate | Leila Nazari | Senior Associate (Tax)
Working Associate | Robert Jansen | Associate (Tax)
Timekeeper | Rate
Partners (Sylvia Hartwell, Leonard Cross) | $1,150 per hour
Senior Associates (Leila Nazari) | $780 per hour
Associates (Robert Jansen) | $595 per hour
Timekeeper | Estimated Hours | Rate | Estimated Fees
Sylvia Hartwell (Partner) | 45 hours | $1,150/hr | $51,750
Leonard Cross (Partner) | 20 hours | $1,150/hr | $23,000
Leila Nazari (Senior Associate) | 180 hours | $780/hr | $140,400
Robert Jansen (Associate) | 120 hours | $595/hr | $71,400
Estimated Total | 365 hours | $286,550

CALDERWOOD & HARKNESS LLP Counselors at Law

VIA EMAIL AND INTERNATIONAL COURIER

CALDERWOOD & HARKNESS LLP

ACCEPTED AND AGREED

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