Contract analysis

I. Executive Summary The purpose of this memorandum is to provide a comprehensive analysis of all planned United States commercial arrangements of Solstice Biomedical Inc. ("Solstice US" or the "Company"), a Delaware corporation and wholly owned subsidiary of Solstice Biomedical Devices Ltd. ("Solstice Parent"), under the federal Anti-Kickback Statute ("AKS"), 42 U.S.C. § 1320a-7b(b), and the federal False Claims Act

1. The exclusive distribution agreement with Ascendant Distribution Solutions LLC ("ADS") (Agreement No. SBD-ADS-2024-0315, dated March 15, 2024);

2. Physician consulting agreements under the Key Opinion Leader ("KOL") program;

3. Physician speaker programs;

4. Territory manager and sales leadership compensation structures; and

5. Meal and hospitality practices associated with commercial activities. Overall Conclusion. Based on our review, it is our assessment that, with the implementation of the recommended structural safeguards and documented compliance controls detailed throughout this memorandum, each of the analyzed arrangements can be structured to fit within recognized AKS statutory safe harbors or, where safe harbor protection is no

II. Legal Framework This Section provides an overview of the principal federal statutes and regulatory guidance applicable to Solstice's planned US commercial arrangements. The legal framework set forth here informs the arrangement-specific analyses in Sections III through VIII. A. The Federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)) The federal Anti-Kickback Statute is codified at 42 U.S.C. § 1320a-7b(b). It

III. Analysis of the ADS Distribution Agreement A. Agreement Structure Solstice Biomedical Devices Ltd. has entered into an exclusive distribution agreement with Ascendant Distribution Solutions LLC ("ADS") for the distribution of the Pulsar™ CRM System throughout the United States. The key terms of the agreement, referenced herein as Agreement No. SBD-ADS-2024-0315, dated March 15, 2024, are as follows: Parties. The

1. Obtain Independent FMV Opinion. Solstice should retain a qualified healthcare valuation firm to prepare an independent fair market value opinion supporting the 18% commission rate. The FMV opinion should be completed before the October 1, 2024 commercial launch and should be retained in Solstice's compliance files.

2. Amend Compliance and Audit Provisions. Sections 7 (Compliance) and 12 (Audit Rights) of the agreement should be amended to incorporate the enhanced compliance provisions described in Sections III.C and III.D above. Proposed redline amendments to these sections will be provided under separate cover in the distributor compliance review memorandum.

3. Include Express AKS and FCA Compliance Representations and Warranties. The agreement should be amended to include express representations and warranties from ADS regarding compliance with the AKS, FCA, and applicable state anti-kickback and false claims statutes. These representations should survive termination of the agreement for a period of not less than six (6) years.

4. Add Sunshine Act Data-Collection and Reporting Obligations. ADS should be contractually required to collect and provide to Solstice all data necessary for Solstice to comply with its reporting obligations under the Physician Payments Sunshine Act (42 U.S.C. § 1320a-7h) and the implementing Open Payments regulations. This includes data on meals, hospitality, consulting fees, travel, and any other transfers of value

5. Include Compliance Training Requirements. The agreement should require all ADS personnel involved in marketing, selling, or distributing the Pulsar™ CRM System to complete AKS/FCA compliance training developed or approved by Solstice, with initial training to be completed before the commencement of distribution activities and annual refresher training thereafter.

6. Add Termination-for-Cause Provisions. The agreement should include a termination-for-cause provision that expressly permits Solstice to terminate the agreement (or require the termination of any sub-distributor appointment) in the event of a material AKS or FCA violation by ADS or any sub-distributor. The termination-for-cause provision should be exercisable by Solstice in its reasonable discretion and should not

IV. Analysis of Physician Consulting Agreements (KOL Program) A. Program Structure Solstice plans to engage up to thirty-five (35) physician consultants as Key Opinion Leaders ("KOLs") during the first year of the US commercial launch. The KOL program is designed to provide Solstice with clinical advisory input, product development feedback, market research insights, and support in the development of clinical trainin

1. Documented Legitimate Business Need Assessment. Before engaging each KOL consultant, Solstice should complete a written business need assessment that identifies the specific services to be provided, the business objective to be achieved, the qualifications that make the selected physician uniquely suited to provide the services, and the rationale for engaging this particular physician rather than an alternative ca

2. Written Records of Services Performed. Solstice should maintain contemporaneous written records of all services performed by each KOL consultant, including detailed time records, descriptions of work performed, copies of deliverables, meeting minutes, and any other documentation of the consultant's contribution. These records should be maintained for a minimum of six (6) years.

3. Annual Aggregate Compensation Report. Solstice should implement a centralized tracking system for all compensation and transfers of value to each physician across all programs—including consulting, speaking, meals, travel, and any other transfers of value. An annual aggregate compensation report should be generated for each physician and reviewed by the Compliance Committee.

4. Aggregate Compensation Cap. No physician should receive aggregate annual compensation from all Solstice programs exceeding $25,000, unless the Compliance Committee reviews and approves the exception in writing based on a documented, compelling business justification. This cap is designed to prevent the accumulation of financial relationships that could be perceived as inducements for referrals.

5. Annual FMV Benchmarking. Solstice should conduct an annual fair market value benchmarking review of KOL consulting hourly rates to confirm that the rate range of $350 to $500 per hour remains consistent with prevailing FMV. The benchmarking analysis should be documented and retained in the compliance files.

6. Template Consulting Agreement. The Template Consulting Agreement, to be delivered under separate cover, will include the following key provisions: (i) FMV compensation at the applicable hourly rate with the $12,000 annual cap; (ii) a written scope of services (Exhibit A) tailored to each engagement; (iii) compliance representations and warranties by the consultant; (iv) Sunshine Act disclosure acknowledgment; (v)

V. Analysis of Speaker Programs A. Program Structure Solstice plans to conduct a total of one hundred eighty (180) speaker programs during the first year of the US commercial launch, consisting of one hundred twenty (120) live, in-person programs and sixty (60) virtual programs. Speaker programs are a common tool in the medical device industry for disseminating clinical and educational content about a product's clear