Contract analysis

I. Acknowledgment and Framing I write on behalf of our client, Apex Surgical Innovations, Inc. ("Apex"), in response to your without-prejudice settlement proposal letter dated May 22, 2025, transmitted on behalf of your clients, Solstice Biomedical Devices Ltd. and Solstice Biomedical, Inc. (collectively, "Solstice"). We acknowledge receipt of that letter and appreciate the effort reflected in its preparation. Apex i

II. Background Context and Apex's Litigation Position As context for the terms set forth herein, we briefly summarize the posture of the litigation and Apex's assessment of its case. Apex commenced this action on May 9, 2024, asserting claims of patent infringement against Solstice under 35 U.S.C. § 271(a). The complaint, as amended, alleges infringement of three utility patents: U.S. Patent No. 9,814,237 (the "'237

III. Response to Solstice's Proposal — Overview Apex acknowledges and appreciates the general structural framework proposed in your May 22 letter, which contemplates a license-and-dismissal settlement comprising the following elements: (a) a lump-sum payment by Solstice to Apex for past damages attributable to the sale of accused products during the damages period; (b) a running royalty payable by Solstice to Apex fo

IV. Lump-Sum Payment — Apex's Revised Terms A. Amount. We acknowledge that Solstice's May 22 proposal included a lump-sum payment figure that was intended to address Apex's past damages claims. However, Apex views the proposed amount as materially below what is appropriate given the scope and strength of Apex's infringement and damages positions. As noted above, Apex's damages expert has calculated reasonable royalty

V. Running Royalty — Apex's Revised Terms A. Royalty Rate Apex acknowledges that Solstice proposed a running royalty rate in its May 22 letter. However, the rate proposed by Solstice is, in Apex's view, below what is justified by the value of the intellectual property at issue and the established royalty benchmarks in the surgical device industry. Apex counterproposal a running royalty of 3.75% of Net Sales of Licens

VI. License Grant — Apex's Revised Terms A. Scope. Apex is prepared to grant Solstice a non-exclusive, non-transferable, worldwide license under the '237 Patent, the '884 Patent, and the '105 Patent, together with any continuations, continuations-in-part, divisionals, or reissues of any of the foregoing (collectively, the "Licensed Patents"), subject to the terms and conditions set forth herein and in the Definitive

VII. Covenant Not to Sue — Apex's Revised Terms In addition to the patent license described in Section VI, Apex is prepared to provide Solstice with a covenant not to sue covering the Apex Trocar Patent Family, which comprises fourteen (14) issued U.S. utility patents and six (6) pending continuation applications, all directed to laparoscopic trocar technology. The covenant not to sue is intended to provide Solstice

VIII. Most-Favored Licensee Provision Your May 22 letter requested the inclusion of a most-favored licensee clause. Apex is willing to include such a provision, provided it is carefully and precisely defined to avoid unintended consequences. Specifically, Apex proposes the following: if, at any time during the term of the Patent License Agreement, Apex enters into a license agreement with any third party for the Lice

IX. Mutual Release and Dismissal Apex agrees to the entry of a full mutual release of all claims, counterclaims, cross-claims, and defenses asserted or that could have been asserted by either party in Case No. 1:24-cv-00587-RGA, effective upon the terms and conditions set forth in the Definitive Settlement Agreement. The release shall extend to all predecessors, successors, affiliates, subsidiaries, officers, directo

X. Confidentiality All terms and conditions of the settlement, including the existence and substance of this counterproposal, the financial terms of the Definitive Settlement Agreement, the royalty rate, the lump-sum payment amounts, and all related correspondence and communications between the parties, shall be subject to mutual confidentiality obligations to be set forth in the Definitive Settlement Agreement. Neit

XI. Governing Law and Dispute Resolution The Definitive Settlement Agreement, the Patent License Agreement, the Covenant Not to Sue, and all related agreements and exhibits shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to its conflict-of-laws principles. Any dispute arising under or in connection with the Definitive Settlement Agreement, the Patent License Agr

XII. Definitive Documentation and Timeline Apex is committed to resolving this matter promptly and efficiently. To that end, Apex expects the following definitive agreements and related documents to be negotiated, finalized, and fully executed no later than June 16, 2025:

1. Settlement Agreement and Mutual Release;

2. Patent License Agreement (to be appended as Exhibit A);

3. Covenant Not to Sue (to be appended as Exhibit B);

4. List of Licensed Patents and Pending Applications (to be appended as Exhibit C);

5. Form of Royalty Report (to be appended as Exhibit D);

6. Form of Stipulation of Dismissal with Prejudice (to be appended as Exhibit E);

7. Agreed Joint Public Statement (to be appended as Exhibit F);

8. Escrow Agreement with Tidewater Fiduciary Services, Inc.; and

9. Side Letter regarding the Most-Favored Licensee notification protocol. Apex proposes the following drafting protocol: upon agreement on principal terms (whether through acceptance of this counterproposal or through further negotiation resulting in an agreed term sheet), Calderwood & Harkness shall prepare and circulate the initial draft of the Definitive Settlement Agreement, incorporating the agreed terms. Hargro

XIII. Conditions and Reservations Apex reiterates that this counterproposal is made without prejudice to all of Apex's rights, claims, positions, and remedies in Case No. 1:24-cv-00587-RGA and in any other proceeding. Nothing in this letter constitutes or shall be construed as an admission regarding: (a) the merits or viability of Solstice's defenses, including its non-infringement positions, invalidity contentions,

XIV. Closing Apex has made this counterproposal in good faith and with a genuine desire to resolve this matter efficiently and on terms that appropriately recognize the value of Apex's intellectual property portfolio. The terms set forth herein represent significant concessions from the damages and relief that Apex believes it would obtain at trial, and they are offered in the spirit of pragmatic compromise. I invite