Contract analysis

I. Executive Summary The purpose of this memorandum is to analyze in detail the U.S. federal, state, and cross-border tax implications of the proposed acquisition by Solstice Biomedical, Inc. ("SBI"), a wholly owned Delaware subsidiary of Solstice Biomedical Devices Ltd. (Ireland; CRO No. 648217) ("Solstice" or the "Parent"), of one hundred percent (100%) of the outstanding common stock and vested options of Meridian

II. Transaction Structure Overview A. Parties and Ownership Chain The Transaction involves a multi-layered corporate structure spanning Ireland and the United States. The ownership chain and principal parties are as follows: Ultimate Parent (Buyer). Solstice Biomedical Devices Ltd. is an Irish private limited company registered under the Companies Act 2014, headquartered at Solstice House, 14 Fitzwilliam Place, Dubli

III. Section 338(h)(10) Election Analysis A. Statutory Framework Overview of IRC Section 338 Generally. Section 338 of the Code provides an elective mechanism by which a purchasing corporation that makes a "qualified stock purchase" ("QSP") of a target may elect to treat the stock purchase as an asset acquisition for U.S. federal income tax purposes. A QSP is defined under Section 338(d)(3) as the acquisition by a pu

Section 338(g) Election. Under a unilateral Section 338(g) election, the purchasing corporation alone elects to treat the stock purchase as a deemed asset acquisition. The consequence is a "double tax": the target ("old target") is treated as having sold all of its assets at fair market value, recognizing corporate-level gain, and the selling shareholders separately recognize gain on the stock sale. The two levels of

Section 338(h)(10) Election. Under the joint Section 338(h)(10) election, the purchasing corporation and the selling shareholders jointly elect to recharacterize the transaction. The stock sale is disregarded, and instead the target is treated as having sold all of its assets in a single deemed transaction at the close of the acquisition date for the "aggregate deemed sale price" ("ADSP"), followed by a deemed distri

IV. Impact on Meridian's Net Operating Loss Carryforwards A. Current NOL Position During the course of our tax due diligence review—conducted jointly by Leonard Cross (Calderwood & Harkness LLP) and Eleanor Voss (Brindoval & Albright LLP), in coordination with Meridian's independent auditors, Dunfield & Associates, P.C. (led by Howard Dunfield, CPA)—we confirmed that, as of the close of fiscal year 2023, Meridian had

Section 382 Annual Limitation. Following an ownership change, the target's ability to use pre-change NOLs is limited to an annual ceiling (the "Section 382 limitation"), calculated as the product of the fair market value of the target's equity immediately before the ownership change multiplied by the applicable long-term tax-exempt rate published by the IRS. Estimated Section 382 annual limitation: $220,000,000 (equi

V. State and Local Tax Considerations A. Pennsylvania Meridian is headquartered in King of Prussia, Pennsylvania, and operates its primary manufacturing facility in Exton, Pennsylvania. As such, Meridian has substantial nexus with the Commonwealth and is subject to the Pennsylvania Corporate Net Income Tax ("CNIT"). The current CNIT rate is 8.99%, though we note that recent legislation enacted in Pennsylvania provide

VI. Irish Holding Company Considerations A. Overview of Solstice Group Structure Following the closing, the Solstice group's U.S. holding structure will be as follows: Solstice Biomedical Devices Ltd. (Ireland, ultimate parent) will own 100% of SBI (Delaware), which in turn will own 100% of Meridian (or "new" Meridian, post-Section 338(h)(10) Election) (Delaware). This Irish-to-U.S. holding structure raises several c

Section 163(j) Interest Deduction Limitation. The $130,000,000 Term Loan A from Tidewater Atlantic Bank, N.A. will generate significant annual interest expense. At the anticipated rate of SOFR plus 2.25% (assuming a SOFR rate in the range of 5.0–5.5%, resulting in an all-in rate of approximately 7.25–7.75%), annual interest expense on the Term Loan A alone is estimated at approximately $9.4–10.1 million. Under IRC Se

VII. Transfer Pricing Implications A. Intercompany Transactions Following the closing, Meridian will operate as a wholly owned subsidiary of SBI, which is in turn wholly owned by Solstice (Ireland). This three-tier corporate structure creates the potential—and, in many cases, the commercial necessity—for intercompany transactions between the U.S. and Irish entities. The principal categories of anticipated intercompan

1. Management Services and Corporate Overhead Charges. Solstice (Ireland) provides centralized management services, including strategic planning, human resources support, regulatory affairs coordination, and financial reporting oversight, to its global subsidiaries. It is anticipated that Solstice will charge SBI/Meridian a management services fee to compensate for these services. 2. intellectual Property Licensing.

3. Intercompany Sale/Distribution Arrangements. If Meridian's products are distributed through Solstice's global distribution network—for example, through Solstice's European and Asia-Pacific subsidiaries—the intercompany pricing of products transferred between entities must comply with transfer pricing rules.

4. Intercompany Financing. If Solstice provides loans to SBI (in addition to or in lieu of the equity contribution), the terms of such financing—including the interest rate, tenor, and security—must reflect arm's-length terms. B. Arm's-Length Standard All intercompany transactions between the Solstice group's Irish and U.S. entities must comply with the arm's-length standard as articulated in IRC Section 482 (for U.S

1. Engage transfer pricing economists (either within Brindoval & Albright LLP's transfer pricing practice or through a dedicated transfer pricing advisory firm) to prepare a comprehensive benchmarking study for all anticipated intercompany transactions within twelve (12) months of closing.

2. Establish intercompany agreements prior to the commencement of any intercompany charges. These agreements should include, at a minimum, a management services agreement (between Solstice and SBI/Meridian), and, if applicable, an IP license agreement and cost-sharing agreement. Each agreement should document the services or rights provided, the compensation methodology, and the arm's-length basis for the pricing.

3. Coordinate with Solstice's Irish tax advisors on the Irish transfer pricing implications, including compliance with the Finance Act 2019 rules and any documentation requirements under Irish law.

4. Update CbCR filings to reflect the addition of Meridian to the Solstice group.

VIII. Section 338(h)(10) Election — Procedural Requirements A. IRS Form 8023 The Section 338(h)(10) Election is effectuated by filing IRS Form 8023 (Elections Under Section 338 for Corporations Making Qualified Stock Purchases). The following procedural requirements apply: • The form must be signed by the purchasing corporation (SBI) and by the selling shareholders. Under the terms of the SPA, Dr. Marcus Ellsworth, i

1. Election Covenant. A binding covenant requiring the Buyer and Sellers to jointly make the Section 338(h)(10) Election by filing IRS Form 8023 within the applicable deadline.

2. Cooperation. Mutual cooperation obligations requiring the parties to provide all information, execute all documents, and take all actions reasonably necessary to effectuate the election and to prepare and file Forms 8023 and 8883.

3. ADSP/AGUB Allocation. A covenant requiring the parties to agree on the ADSP and AGUB allocation among asset classes within ninety (90) days following closing. The allocation must be consistent with the residual method under Section 1060 and must be based on a formal purchase price allocation study (to be conducted by a nationally recognized valuation firm engaged by the Buyer with reasonable input from the Sellers