Contract analysis

Section 1.1 Defined Terms. As used in this Agreement, the following terms shall have the meanings set forth below: "Base Purchase Price" means Two Hundred Twenty Million Dollars ($220,000,000), as such amount may be subject to the adjustment mechanisms set forth in Section 2.5 of the Purchase Agreement. "Business Day" means any day other than a Saturday, a Sunday, or any other day on which banking institutions locate

Section 1.2 Incorporation by Reference. All capitalized terms used but not defined in this Agreement shall have the meanings ascribed to such terms in the Purchase Agreement. In the event of any conflict between the definitions set forth in this Agreement and those in the Purchase Agreement, the definitions set forth in this Agreement shall control solely for purposes of interpreting and construing this Agreement.

ARTICLE II — APPOINTMENT OF ESCROW AGENT; ESTABLISHMENT OF ESCROW ACCOUNTS

Section 2.1 Appointment. Buyer and the Sellers' Representative hereby appoint Keystone Escrow Services, Inc. as escrow agent for the purposes set forth in this Agreement, and the Escrow Agent hereby accepts such appointment, subject to and in accordance with the terms and conditions of this Agreement. The Escrow Agent shall hold, invest, and disburse the Escrow Funds solely in accordance with the provisions of this A

Section 2.2 Establishment of Accounts. The Escrow Agent shall establish and maintain two (2) separate accounts (or sub-accounts) as follows: (a) The Indemnity Escrow Account (Account No. KES-2024-IND-09183) at First Continental Trust Co., N.A., which shall be used exclusively to hold and disburse the Indemnity Escrow Amount in accordance with Article III of this Agreement. The Indemnity Escrow Account shall be mainta

Section 2.3 Deposits. On the Closing Date, Buyer shall cause to be deposited by wire transfer of immediately available funds in United States dollars: (a) Twenty-Six Million Four Hundred Thousand Dollars ($26,400,000) into the Indemnity Escrow Account in accordance with the wire instructions set forth on Schedule B hereto. This amount shall be withheld from the aggregate closing consideration otherwise payable to the

Section 2.4 Confirmation of Receipt. The Escrow Agent shall, promptly (and in any event within one (1) Business Day) following receipt of the wire transfers described in Section 2.3, confirm receipt of the Escrow Funds in writing (which may be by email) to both Buyer (at the notice address set forth in Article X) and the Sellers' Representative (at the notice address set forth in Article X), specifying the amounts re

ARTICLE III — DISBURSEMENT OF INDEMNITY ESCROW AMOUNT

Section 3.1 Indemnification Claims — Joint Written Instructions. (a) Upon the final resolution of any indemnification claim asserted under Article IX of the Purchase Agreement, whether by mutual agreement of Buyer and the Sellers' Representative, by final non-appealable order of a court of competent jurisdiction, or by written withdrawal of such claim, Buyer and the Sellers' Representative shall deliver a Joint Writt

Section 3.2 Scheduled Releases — First Release Date (October 31, 2025). (a) On the First Release Date, the Escrow Agent shall release and disburse to the Sellers' Representative (for distribution to the Sellers pro rata in accordance with their respective percentages set forth on Schedule 2.6(a) of the Purchase Agreement) an amount equal to fifty percent (50%) of the initial Indemnity Escrow Amount (i.e., Thirteen Mi

Section 3.3 Scheduled Releases — Second Release Date (October 31, 2026). (a) On the Second Release Date, the Escrow Agent shall release and disburse to the Sellers' Representative (for distribution to the Sellers pro rata) the entire remaining balance of the Indemnity Escrow Account, including all accrued interest and earnings thereon, reduced by: (i) an amount equal to the aggregate claimed amounts of all Pending Cl

Section 3.4 Release of Pending Claim Reserves. Upon the final resolution of any Pending Claim after the First Release Date or the Second Release Date, as applicable, whether by mutual agreement, final non-appealable court order, or withdrawal, Buyer and the Sellers' Representative shall promptly (and in any event within five (5) Business Days of such resolution) deliver a Joint Written Instruction to the Escrow Agent

Section 3.5 Sole Recourse. The Parties acknowledge and agree that: (a) With respect to any indemnification claims arising under Article IX of the Purchase Agreement that are not based on breaches of Fundamental Representations (as defined in the Purchase Agreement), the Indemnity Escrow Account shall constitute the Sellers' sole and exclusive source of recovery for the Buyer Indemnified Parties, subject to and withou

ARTICLE IV — DISBURSEMENT OF EARNOUT ESCROW RESERVE

Section 4.1 Purpose. The Earnout Escrow Reserve has been established to secure Buyer's obligation to make the earnout payments to the Sellers under Section 2.8 of the Purchase Agreement upon the achievement of the Earnout Milestones within the timeframes specified therein. The Earnout Escrow Reserve shall be held, invested, and disbursed by the Escrow Agent solely in accordance with the provisions of this Article IV.

Section 4.2 Release Upon Milestone Achievement. (a) Milestone 1. Upon the achievement of Milestone 1 (i.e., the receipt of FDA 510(k) clearance of the ArthroNav Robotic-Assisted Arthroscopy System (Generation 1.0) on or before December 31, 2026), Buyer shall, within ten (10) Business Days following such achievement, deliver to the Escrow Agent and the Sellers' Representative a written notice (a "Milestone Achievement

Section 4.3 Release to Buyer Upon Expiration. If neither Earnout Milestone has been achieved on or before the Earnout Expiration Date (June 30, 2027), or if only Milestone 1 has been achieved and less than the full Earnout Escrow Reserve has been released in connection with Milestone 1, then any remaining balance in the Earnout Escrow Sub-Account (including all accrued interest and earnings thereon) shall be released

Section 4.4 Partial Achievement. In the event that Milestone 1 is achieved (and the Earnout Escrow Reserve is applied to the Milestone 1 payment in accordance with Section 4.2(a)) but Milestone 2 is not achieved on or before June 30, 2027, then any unused portion of the Earnout Escrow Reserve remaining in the Earnout Escrow Sub-Account after application to the Milestone 1 payment (if any) shall be released to Buyer w

Section 4.5 Dispute Resolution. Any disagreement between Buyer and the Sellers' Representative regarding whether an Earnout Milestone has been achieved (including any dispute regarding the interpretation of FDA clearance letters, the scope of device classifications, or the timeliness of achievement) shall be resolved in accordance with Section 2.8(f) of the Purchase Agreement, which provides for binding expert determ

ARTICLE V — INVESTMENT OF ESCROW FUNDS

Section 5.1 Permitted Investments. The Escrow Agent shall invest and reinvest the Escrow Funds (including amounts held in both the Indemnity Escrow Account and the Earnout Escrow Sub-Account) in United States Treasury money market instruments, including United States Treasury bills, United States Treasury notes, or money market mutual funds that invest exclusively in direct obligations of the United States government

Section 5.2 Allocation of Interest and Earnings. All interest, dividends, and other earnings on the Escrow Funds (collectively, "Earnings") shall be allocated as follows: (a) Fifty percent (50%) of all Earnings shall be allocated to Buyer; and (b) Fifty percent (50%) of all Earnings shall be allocated to the Sellers (through the Sellers' Representative, for further allocation among the Sellers pro rata in accordance

Section 5.3 Tax Reporting. (a) For United States federal and applicable state and local income tax purposes, all Earnings accrued on the Indemnity Escrow Amount shall be reported as income fifty percent (50%) to Buyer and fifty percent (50%) to the Sellers (allocated among the Sellers pro rata in accordance with their respective percentages). All Earnings accrued on the Earnout Escrow Reserve shall be reported as inc

Section 5.4 Investment Risk. The Parties acknowledge and agree that the Escrow Agent shall not be liable or responsible for any loss in value of the Escrow Funds or any portion thereof resulting from market fluctuations in the value of Permitted Investments, including any decline in the net asset value of any money market fund in which the Escrow Funds are invested, or any loss resulting from the liquidation of Permi

ARTICLE VI — CONCERNING THE ESCROW AGENT

Section 6.1 Duties and Responsibilities. The Escrow Agent's duties and responsibilities under this Agreement are limited solely and exclusively to those expressly set forth in this Agreement, and the Escrow Agent shall not be subject to, or obligated to comply with, any other agreement to which the Escrow Agent is not a party (including the Purchase Agreement), even though reference thereto may be made herein. The Es

Section 6.2 Reliance. The Escrow Agent shall be entitled to rely upon, and shall not incur any liability for acting or refraining from acting in good faith upon, any written notice, instruction, request, certificate, instrument, or other document that the Escrow Agent believes in good faith to be genuine and to have been signed or presented by the proper person or persons. The Escrow Agent shall have no duty or oblig

Section 6.3 No Duty to Investigate. The Escrow Agent shall have no duty or obligation to review, investigate, or determine whether any instruction, direction, notice, or other communication given to the Escrow Agent by any Party complies with the terms of the Purchase Agreement or any other agreement or instrument, or whether any condition to any disbursement or release has been satisfied (other than the Escrow Agent

Section 6.4 Indemnification of Escrow Agent. Buyer, on the one hand, and the Sellers (through the Sellers' Representative), on the other hand, shall jointly and severally, on a fifty percent (50%) / fifty percent (50%) basis, indemnify, defend, and hold harmless the Escrow Agent and its respective officers, directors, employees, agents, and representatives (collectively, the "Escrow Agent Indemnified Parties") from a

Section 6.5 Limitation of Liability. Notwithstanding any other provision of this Agreement, in no event shall the Escrow Agent be liable for any indirect, incidental, consequential, special, punitive, or exemplary damages (including lost profits or opportunity costs) of any kind whatsoever, regardless of the form of action and whether or not the Escrow Agent has been advised of the possibility of such damages. The ag

Section 6.6 Right to Legal Counsel. The Escrow Agent may at any time consult with legal counsel of its own choosing (who may be counsel to any Party) regarding any question, dispute, or uncertainty arising under or in connection with this Agreement, and the Escrow Agent shall not incur any liability for any action taken, suffered, or omitted by it in good faith in accordance with the advice of such counsel. The reaso

Section 6.7 Conflicting Instructions; Interpleader. In the event that the Escrow Agent receives conflicting instructions or conflicting claims or demands from Buyer and the Sellers' Representative with respect to the Escrow Funds or any portion thereof, or if the Escrow Agent is in doubt as to the action to be taken under this Agreement, the Escrow Agent shall be entitled, in its sole discretion, to: (a) refrain from

ARTICLE VII — COMPENSATION OF ESCROW AGENT

Section 7.1 Fees. The Escrow Agent shall be entitled to compensation for its services under this Agreement in accordance with the fee schedule attached hereto as Schedule A and incorporated herein by reference. Unless otherwise agreed in writing by the Parties, fifty percent (50%) of all fees payable to the Escrow Agent pursuant to Schedule A shall be borne by Buyer and fifty percent (50%) shall be borne by the Selle

Section 7.2 Reimbursement of Expenses. In addition to the fees payable pursuant to Section 7.1, Buyer, on the one hand, and the Sellers' Representative (on behalf of the Sellers), on the other hand, shall reimburse the Escrow Agent for all reasonable and documented out-of-pocket expenses incurred by the Escrow Agent in connection with the performance of its duties under this Agreement, including postage, courier char

ARTICLE VIII — RESIGNATION AND REMOVAL OF ESCROW AGENT

Section 8.1 Resignation. The Escrow Agent may resign at any time by giving at least thirty (30) days' prior written notice to Buyer and the Sellers' Representative. Such resignation shall not take effect until the appointment of a successor escrow agent in accordance with Section 8.3 and the transfer of all Escrow Funds and records to such successor escrow agent.

Section 8.2 Removal. Buyer and the Sellers' Representative may jointly remove the Escrow Agent at any time, with or without cause, by giving at least thirty (30) days' prior written notice to the Escrow Agent. Such removal shall be effected by a Joint Written Instruction delivered to the Escrow Agent, and shall not take effect until the appointment of a successor escrow agent in accordance with Section 8.3 and the tr

Section 8.3 Appointment of Successor. If the Escrow Agent resigns or is removed pursuant to Section 8.1 or Section 8.2, Buyer and the Sellers' Representative shall jointly appoint a successor escrow agent within thirty (30) days after the effective date of the notice of resignation or removal. If Buyer and the Sellers' Representative are unable to agree on a successor escrow agent within such thirty (30) day period,

Section 8.4 Transfer of Funds. Upon the appointment of a successor escrow agent and acceptance of such appointment by the successor, the outgoing Escrow Agent shall promptly (and in any event within five (5) Business Days) transfer and deliver all Escrow Funds, together with all records, documents, and other materials held by the outgoing Escrow Agent in connection with this Agreement, to the successor escrow agent.

ARTICLE IX — SELLERS' REPRESENTATIVE

Section 9.1 Authority. Dr. Marcus Ellsworth, in his capacity as Sellers' Representative, is hereby authorized, empowered, and directed to act on behalf of all Sellers with respect to all matters arising under this Agreement, including, without limitation: (a) providing instructions and directions to the Escrow Agent regarding the disbursement and release of Escrow Funds; (b) receiving notices, certifications, and com

Section 9.2 Reliance by Escrow Agent. The Escrow Agent shall be entitled to treat any instruction, direction, notice, consent, or other communication given by the Sellers' Representative as having been duly authorized by, and given on behalf of, all of the Sellers. The Escrow Agent shall have no duty or obligation to inquire into or verify the authority of the Sellers' Representative to act on behalf of any individua

Section 9.3 Successor Sellers' Representative. In the event that Dr. Marcus Ellsworth is unable or unwilling to continue to serve as Sellers' Representative for any reason (including death, disability, resignation, or removal by the requisite Sellers), a successor Sellers' Representative may be designated in accordance with the terms and procedures set forth in Section 11.15 of the Purchase Agreement and the Sellers'

Section 10.1 Notice Requirements. All notices, instructions, requests, consents, demands, waivers, and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given: (a) upon delivery, if delivered personally or by hand; (b) upon sending, if sent by electronic mail (with electronic confirmation of receipt by the intended recipient, and prov

Section 11.1 Termination. This Agreement shall terminate automatically, without any further action on the part of any Party, upon the later to occur of: (a) the disbursement of all Escrow Funds (including all accrued Earnings thereon) held in the Indemnity Escrow Account and the Earnout Escrow Sub-Account in accordance with the terms of this Agreement, such that no Escrow Funds remain in the custody or control of the

Section 11.2 Survival. Notwithstanding the termination of this Agreement pursuant to Section 11.1, the following provisions shall survive and continue in full force and effect following termination: (a) Article VI (Concerning the Escrow Agent), including the indemnification obligations of the Parties set forth in Section 6.4; (b) Article VII (Compensation of Escrow Agent), including the obligation to pay all fees and

ARTICLE XII — GENERAL PROVISIONS

Section 12.1 Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.

Section 12.2 Entire Agreement. This Agreement, together with the Purchase Agreement, the Sellers' Representative Appointment and Joinder Agreement, and the schedules and exhibits attached hereto and thereto, constitutes the entire agreement among the Parties with respect to the subject matter hereof and supersedes all prior negotiations, representations, warranties, commitments, offers, contracts, agreements, and und

Section 12.3 Amendments and Waivers. This Agreement may not be amended, modified, supplemented, or restated except by a written instrument duly executed by each of Buyer, the Sellers' Representative, and the Escrow Agent. No waiver of any provision of this Agreement or any right, remedy, or power hereunder shall be effective unless set forth in a written instrument signed by the Party against whom enforcement of such

Section 12.4 Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective heirs, executors, administrators, legal representatives, successors, and permitted assigns. No Party may assign this Agreement or any of its rights or obligations hereunder without the prior written consent of the other Parties; provided, however, that Buyer may, without the con

Section 12.5 Third-Party Beneficiaries. The Sellers are intended third-party beneficiaries of this Agreement to the extent of their respective pro rata interests in the Indemnity Escrow Amount and the Earnout Escrow Reserve, and shall be entitled to enforce the provisions of this Agreement relating to the release and disbursement of the Escrow Funds to the Sellers' Representative on their behalf, subject to the autho

Section 12.6 Severability. If any term, provision, covenant, or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void, or unenforceable in any respect, the remainder of the terms, provisions, covenants, and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired, or invalidated, so long as the economic and legal s

Section 12.7 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or electronic transmission in portable document format (.pdf) or by any other electronic means intended to preserve the orig

Section 12.8 Headings. The headings, captions, and section numbers contained in this Agreement are for reference purposes only and shall not affect in any way the meaning, construction, or interpretation of this Agreement.

Section 12.9 Dispute Resolution. Any dispute, claim, or controversy arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation, or validity thereof (other than disputes regarding whether an Earnout Milestone has been achieved, which shall be governed exclusively by Section 4.5 of this Agreement and Section 2.8(f) of the Purchase Agreement), shall be submitted to and resolved