Contract analysis

I. Executive Summary The purpose of this memorandum is to present the Board of Directors of Solstice Biomedical Devices Ltd. ("Solstice" or the "Company") with a comprehensive assessment of the litigation risks, damages exposure, and settlement landscape in Apex Surgical Innovations, Inc. v. Solstice Biomedical, Inc., Case No. 1:24-cv-00587-RGA (D. Del.) (the "Litigation"), and to request formal authorization to nego

II. Background of the Litigation A. Parties Plaintiff — Apex Surgical Innovations, Inc. Apex Surgical Innovations, Inc. ("Apex") is a Delaware corporation with its principal office located at 1220 North Market Street, Suite 550, Wilmington, Delaware 19801. Founded in 2006, Apex is a specialty surgical device company with approximately 1,100 employees and estimated fiscal year 2023 revenue of approximately $312 millio

III. Claim Construction Results and Impact on Case Strength The December 6, 2024 Claim Construction Order is a pivotal development in this Litigation. In patent cases, claim construction — the process by which the Court determines the meaning and scope of the asserted patent claims — frequently determines the trajectory of the case. The Board should understand both the favorable and unfavorable aspects of the Court's

IV. Assessment of Defenses This section presents Calderwood & Harkness's assessment of Solstice's defenses on a claim-by-claim and product-by-product basis, incorporating the impact of the claim construction ruling, the expert discovery record, and the anticipated posture at trial. A. Non-Infringement PE-5000 Series. As discussed above, the PE-5000 Series has a strong non-infringement position following the Court's f

V. Damages Exposure Analysis A. Apex's Damages Position Apex's damages expert, Hugh Danaher of Keystone Valuation Advisors LLC, submitted his expert report on February 14, 2025, claiming total reasonable royalty damages of $31.8 million through a Georgia-Pacific analysis. See Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970). Danaher's analysis proceeds as follows: • Royalty Base: Danaher

VI. Cost-to-Complete Through Trial A. Fees and Costs Incurred to Date As of approximately March 2025, Calderwood & Harkness's total fees and costs billed in connection with this Litigation are approximately $2.3 million. Based on work currently in progress and anticipated billing through June 1, 2025, total billed fees and costs are trending toward approximately $2,847,319.42. A breakdown of the principal cost catego

VII. Mediation Outcome and Settlement Landscape A. March 17, 2025 Mediation On March 17, 2025, the parties participated in a full-day mediation session at Amberstone ADR Services, 1000 West Street, Suite 200, Wilmington, Delaware 19801. The mediation was conducted before the Honorable Margaret Forsythe (Ret.), a former United States Magistrate Judge for the District of Delaware with extensive experience in patent lit

VIII. Recommended Settlement Parameters A. Proposed Settlement Structure Based on the foregoing analysis, Calderwood & Harkness recommends that the Board authorize the negotiation of a settlement structured as follows: License-and-Dismissal Agreement. The core of the proposed settlement is a non-exclusive, worldwide patent license from Apex to Solstice under the '237, '884, and '105 Patents — including all continuati

IX. Process and Timeline Calderwood & Harkness recommends the following process and timeline for pursuing a settlement within the authorized parameters:

1. Board Approval (March 2025). The Board grants the requested settlement authority at the March 2025 board meeting, authorizing Calderwood & Harkness to negotiate within the parameters described in Section VIII.

2. Filing of Motion for Summary Judgment (April 1, 2025). Calderwood & Harkness will file a Motion for Summary Judgment of Non-Infringement as to the PE-5000 Series on or before April 1, 2025. This filing serves a dual purpose: it advances a meritorious legal argument that could narrow the scope of the case, and it demonstrates the strength of Solstice's defenses, thereby creating additional pressure on Apex to negot

3. Re-Engagement with Apex (April–May 2025). Following the summary judgment filing, Calderwood & Harkness will re-engage with Apex through its counsel at Hargrove, Tate & Bennington LLP with a revised