1037-00006 · Solstice Biomedical Devices Ltd · Diligence

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MEMORANDUM

PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT

To: Helena Byrne, EVP, Corporate Development & Strategy, Solstice Biomedical Devices Ltd. Patrick Lennox, General Counsel & Company Secretary, Solstice Biomedical Devices Ltd.

From: Tiffany Rosenthal, Lead Associate, Calderwood & Harkness LLP With contributions from Victoria Shen, Counsel, Regulatory & Life Sciences, Calderwood & Harkness LLP

Date: July 22, 2024

Re: intellectual Property Due Diligence Summary — Meridian Surgical Technologies, Inc. (Calderwood & Harkness Matter No. 1037-00006)

Cc: Beatrice Holloway, Responsible Partner, M&A, Calderwood & Harkness LLP Andrew Fitzpatrick, Working Associate, M&A, Calderwood & Harkness LLP

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I. Executive Summary

This memorandum summarizes the intellectual property due diligence conducted by Calderwood & Harkness LLP in connection with the proposed acquisition by Solstice Biomedical Devices Ltd. ("Solstice" or the "Buyer") of one hundred percent (100%) of the outstanding common stock and vested options of Meridian Surgical Technologies, Inc. ("Meridian" or the "Company"), a Delaware corporation headquartered at 780 Keystone Boulevard, Suite 200, King of Prussia, Pennsylvania 19406, pursuant to that certain Stock Purchase Agreement (the "SPA") providing for an aggregate purchase price of Two Hundred Twenty Million Dollars ($220,000,000), subject to customary adjustments and earnout provisions as described more fully in the SPA. The proposed transaction is structured as a stock purchase, with Meridian continuing post-closing as a wholly owned subsidiary of Solstice.

Meridian's core business is the design, development, and manufacture of minimally invasive surgical instruments for orthopedic procedures. The Company's product portfolio includes its proprietary single-use arthroscopic blades marketed under the "PrecisionBlade" brand, powered shaver systems used in arthroscopic debridement and tissue removal procedures, and the in-development "ArthroNav" robotic-assisted arthroscopy platform. The ArthroNav platform represents the most significant component of Meridian's forward-looking value proposition, and its anticipated FDA 510(k) clearance and subsequent commercialization form the basis for the earnout milestones set forth in the SPA.

IP Portfolio Summary. Meridian's intellectual property portfolio consists of the following principal assets:

• Fourteen (14) issued U.S. utility patents covering Meridian's commercial products and the ArthroNav development platform;

• Three (3) pending U.S. patent applications, including one continuation application, one new utility application, and one provisional application;

• Six (6) issued European patents granted through the European Patent Office ("EPO"), validated in key European markets;

• Three (3) registered U.S. trademarks for the "Meridian Surgical," "ArthroNav," and "PrecisionBlade" marks;

• Significant trade secrets, most critically including the real-time cartilage thickness mapping algorithms that are foundational to the ArthroNav Software Module and the Generation 2.0 upgrade; and

• One material inbound license from Polytechnic Innovations, Ltd. ("Polytechnic"), a UK-domiciled university spinoff, covering robotic surgical navigation background intellectual property.

Material Litigation. One pending patent infringement action has been identified: Hartwell Orthopedic Solutions, Inc. v. Meridian Surgical Technologies, Inc., Civil Action No. 2:23-cv-04817, filed in the United States District Court for the Eastern District of Pennsylvania. The plaintiff, Hartwell Orthopedic Solutions, Inc. ("Hartwell"), alleges that certain of Meridian's powered shaver blade products infringe a Hartwell design patent. This litigation is discussed in detail in Section VIII below. Meridian's outside litigation counsel estimates potential damages exposure in the range of $2.5 million to $5.0 million if Hartwell were to prevail. The litigation has been fully disclosed in the Disclosure Schedules to the SPA and is subject to specific indemnification by the Sellers.

Overall Assessment. Based on our review, Meridian's IP portfolio is substantial and well-maintained, forming the competitive backbone of its existing commercial product lines and the ArthroNav development platform. The patent estate provides meaningful protection across the Company's key technology areas, and the trademark portfolio covers the Company's principal brands. Trade secret protections, while inherently more fragile than patent rights, appear to be supported by reasonable organizational and contractual safeguards. The Polytechnic inbound license provides necessary background IP for the ArthroNav platform on commercially reasonable terms and, importantly, contains no change-of-control provision that would impede the transaction.

The Hartwell litigation presents a moderate risk that is manageable through the existing litigation defense strategy and the indemnification and disclosure schedule framework established in the SPA. The risk is isolated to the powered shaver blade product line and does not extend to the ArthroNav platform or the PrecisionBlade single-use blade products.

Documents Reviewed. This memorandum is based upon our review of documents and information produced by Meridian and its counsel, Whitmore Crane & Pfeiffer LLP, in response to the Preliminary Diligence Request List dated May 13, 2024, as supplemented by materials subsequently uploaded to the virtual data room. We have also conducted independent public records searches, including searches of the United States Patent and Trademark Office ("USPTO") Patent Application Information Retrieval ("PAIR") system, the EPO Register, the USPTO Trademark Electronic Search System ("TESS") and Trademark Status and Document Retrieval ("TSDR") system, and Uniform Commercial Code filing records in Delaware and Pennsylvania. A complete list of the documents reviewed is maintained in our diligence files and is available upon request.

II. U.S. Patent Portfolio

A. Overview. Meridian's U.S. patent portfolio consists of fourteen (14) issued utility patents and three (3) pending utility patent applications, all of which are assigned to Meridian Surgical Technologies, Inc. as the sole owner. Our review confirmed that there are no co-ownership or joint inventorship issues that would dilute or complicate Meridian's ownership rights in any of the issued patents or pending applications.

We reviewed the employee invention assignment agreements executed by all named inventors across the fourteen issued patents and three pending applications. All key technical personnel, including Dr. Raj Subramanian, the Company's Chief Technology Officer and the lead inventor on the foundational ArthroNav patents, and all other members of the R&D engineering staff identified as inventors, have executed written invention assignment agreements assigning to Meridian all right, title, and interest in inventions conceived or reduced to practice during the course of their employment. These agreements are consistent with standard practice for technology-driven medical device companies and appear to be properly executed and enforceable under applicable state law.

All maintenance fees for the fourteen issued patents are current as of the date of this memorandum. No lapsed or abandoned patents were identified among the issued patents. We have confirmed the status of each patent through the USPTO PAIR system and have cross-referenced maintenance fee payment records. A complete schedule of all issued U.S. patents, including patent numbers, titles, issue dates, named inventors, and expiration dates, is set forth in Appendix A to this memorandum.

B. Key Patent: U.S. Patent No. 11,432,887

The single most strategically significant patent in Meridian's portfolio is U.S. Patent No. 11,432,887, entitled "Robotic-Assisted Arthroscopic Navigation System and Method." The key details of this patent are as follows:

Claims Coverage. The '887 patent includes independent and dependent claims directed to the core robotic navigation architecture underlying the ArthroNav platform. The independent claims cover, among other things, a system and method for integrating real-time imaging data with robotic arm positioning to guide arthroscopic instruments during minimally invasive orthopedic procedures. The claims address the coordination of imaging modality inputs (including intraoperative ultrasound and fluoroscopy data) with the kinematic control of a robotic arm operating within the confined anatomical space of a joint capsule, enabling precision positioning of arthroscopic instruments based on dynamically updated three-dimensional spatial mapping.

Significance to the Transaction. The '887 patent is the foundational patent for the ArthroNav robotic-assisted arthroscopy platform and is directly relevant to the earnout milestones established in Article III of the SPA. Specifically:

• Earnout Milestone 1 ($20,000,000): Tied to FDA 510(k) clearance of ArthroNav Generation 1.0 by December 31, 2026. The technology protected by the '887 patent forms the core of the ArthroNav Generation 1.0 system for which 510(k) clearance will be sought.

• Earnout Milestone 2 ($15,000,000): Tied to clearance or approval of the ArthroNav Software Module for Real-Time Cartilage Mapping Generation 2.0 upgrade by June 30, 2027. While the cartilage mapping algorithms are separately maintained as trade secrets (see Section V below), the integration of that software module with the robotic navigation system described in the '887 patent is essential to the Generation 2.0 product configuration.

Prosecution History Review. We reviewed the complete prosecution history of the '887 patent as available through the USPTO PAIR system. The patent was allowed after a standard examination process. Notably, no significant narrowing amendments to the independent claims were required during prosecution. The applicant responded to examiner rejections primarily by distinguishing the cited prior art on factual and structural grounds without materially limiting the scope of the independent claims. This strengthens the enforceability posture of the patent and reduces the risk that a competitor could design around the claims through minor modifications.

Challenges and Post-Grant Proceedings. No inter partes review ("IPR") petitions have been filed against the '887 patent. No ex parte reexamination proceedings have been initiated. No prior art challenges are on record with the USPTO beyond those considered during the original prosecution. The absence of post-grant challenges, while not a guarantee of validity, is a favorable indicator given that the patent has been issued for approximately two years and covers a technology area—robotic-assisted surgery—that has attracted significant competitive interest.

Remaining Patent Term. Based on the earliest effective filing date and the standard twenty-year patent term under 35 U.S.C. § 154(a)(2), the '887 patent has a remaining term extending through approximately 2042. No terminal disclaimers have been filed, and no patent term adjustments (positive or negative) appear to have been applied. This remaining term is more than sufficient to cover the ArthroNav product lifecycle through and well beyond the earnout milestone periods and the initial commercial launch window.

C. Other Issued U.S. Patents (Remaining 13)

The remaining thirteen issued U.S. patents in Meridian's portfolio are categorized below by product line. Each patent has been reviewed for proper assignment, maintenance fee status, prosecution history (at a summary level), and relevance to Meridian's current and planned product offerings.

PrecisionBlade Single-Use Arthroscopic Blades (5 Patents). Five patents cover various aspects of the PrecisionBlade product line, including blade geometry and edge profile design, advanced coating technologies (including anti-fouling and friction-reducing coatings applied to blade surfaces), and the single-use cartridge mechanisms that allow rapid blade changes during arthroscopic procedures. The earliest of these patents was issued in 2017, and the most recent was issued in 2023. Collectively, these patents provide robust protection for the PrecisionBlade product line, which represents a significant portion of Meridian's current recurring revenue stream.

Powered Shaver Systems (4 Patents). Four patents cover Meridian's powered shaver system technology, including the motor-driven shaver handpiece design, integrated suction functionality, and blade oscillation control systems. These patents were issued between 2018 and 2022. It is within this product line that the Hartwell patent infringement litigation arises (discussed in Section VIII below), though the specific claims asserted by Hartwell in the '224 patent relate to a particular blade design configuration and do not extend to the broader handpiece and oscillation control technologies covered by Meridian's own patents.

ArthroNav Platform — Additional Patents (3 Patents). In addition to the foundational '887 patent, three further patents cover aspects of the ArthroNav robotic-assisted arthroscopy platform, including robotic arm kinematics optimized for the confined anatomical spaces encountered in joint surgery, haptic feedback systems designed to provide the surgeon with tactile responsiveness during robotic-assisted procedures, and sterilizable instrument coupling interfaces that enable the use of disposable arthroscopic instruments with the reusable robotic arm components. These patents were issued between 2021 and 2023 and complement the '887 patent by protecting specific subsystems and design features of the ArthroNav platform.

General Surgical Instrument Design (1 Patent). One patent covers an ergonomic handle design that is used across multiple Meridian product families, including both the PrecisionBlade manual instrument set and certain powered shaver handpiece configurations. This patent was issued in 2019 and provides design protection for a user interface element that appears in multiple commercial products.

Assignment and Encumbrances. All thirteen patents are assigned to Meridian Surgical Technologies, Inc. No liens, encumbrances, or security interests were identified on any individual patent, other than the blanket security interest held by Ironclad Commercial Lending, LLC, which is discussed in detail in Section XI. This was confirmed through cross-reference of the USPTO assignment records with the Uniform Commercial Code filings in Delaware and Pennsylvania and with the documentation for Ironclad's existing Twelve Million Dollar ($12,000,000) revolving credit facility. The Ironclad security interest encumbers all assets of Meridian, including intellectual property, but includes a standard IP release upon payoff of the outstanding balance. The outstanding balance of Seven Million Three Hundred Forty-One Thousand Eight Hundred Twenty-Two Dollars and Sixteen Cents ($7,341,822.16) will be paid off at closing from the purchase price proceeds, and UCC-3 termination statements will be filed to release the lien. The complete schedule of these thirteen patents is included in Appendix A.

D. Pending U.S. Patent Applications (3)

Meridian has three pending U.S. patent applications, summarized below. A detailed schedule of these applications, including application numbers, titles, filing dates, and current status, is set forth in Appendix B.

Application 1: Continuation of the '887 Patent (Broadening Claims for Next-Generation Cartilage Mapping Integration). This continuation application was filed in 2023 and claims the benefit of the filing date of the '887 patent. It seeks to broaden certain claims to cover the integration of next-generation cartilage thickness mapping capabilities with the robotic navigation architecture described in the parent patent. The application is currently under examination; a non-final Office Action has been received, and the response deadline is forthcoming. Our preliminary review of the cited prior art references does not indicate that any of the asserted rejections present a material obstacle to obtaining meaningful claim coverage, although prosecution outcomes are inherently uncertain. If allowed, this continuation would meaningfully strengthen the patent protection available for the ArthroNav Generation 2.0 product configuration.

Application 2: Improved Single-Use Shaver Blade Coupling Mechanism. This new utility application was filed in early 2024 and covers an improved coupling mechanism for single-use shaver blades. The application is in the early stages of examination and is currently awaiting a first Office Action from the USPTO. This application, if issued, would extend patent protection to the next generation of the PrecisionBlade coupling system and could provide additional freedom-to-operate insulation relative to competitors.

Application 3: Provisional Application for AI-Enhanced Surgical Planning Module. This provisional application was filed in 2024 and relates to an artificial intelligence-enhanced real-time surgical planning module designed for integration with the ArthroNav platform. Under U.S. patent law, a provisional application establishes a priority date but does not mature into an issued patent unless a non-provisional application is filed within the twelve-month priority window. Meridian has indicated that conversion to a non-provisional application is anticipated within the applicable deadline. The subject matter of this provisional application is closely aligned with Meridian's product roadmap for ArthroNav and represents a forward-looking expansion of the patent portfolio into AI-assisted surgical technologies.

Assessment. The three pending applications are well-aligned with Meridian's product roadmap and, if issued, would materially strengthen the ArthroNav and PrecisionBlade portfolios. Based on our review of the pending prosecution and the disclosed prior art, no rejection basis has been identified that raises a material concern regarding the ultimate patentability of the claimed inventions, although as noted above, the outcome of patent prosecution is inherently uncertain and cannot be guaranteed.

III. European Patent Portfolio

A. Overview. Meridian holds six (6) issued European patents granted through the European Patent Office ("EPO"). Each patent has been validated in key European markets, specifically Germany, France, the United Kingdom, Italy, and the Netherlands. All six patents are assigned to Meridian Surgical Technologies, Inc. A complete schedule of these patents, including EP numbers, titles, grant dates, and validated countries, is set forth in Appendix C.

B. Coverage Summary

The six European patents correspond to the following technology areas:

• PrecisionBlade and Powered Shaver Systems (3 Patents). Three European patents are counterparts to U.S. patents in the PrecisionBlade and powered shaver system families. These patents provide European market protection for Meridian's blade geometry, coating technologies, and powered shaver handpiece designs.

• ArthroNav Robotic Platform (2 Patents). Two European patents correspond to ArthroNav robotic platform patents, including a European counterpart to U.S. Patent No. 11,432,887. These patents provide protection for the ArthroNav technology in the European market, which Meridian has identified as a secondary target market following initial commercialization in the United States.

• Surgical Instrument Sterilization Tray System (1 Patent). One European patent covers a surgical instrument sterilization tray system that is unique to the European filings and does not have a corresponding U.S. patent. This patent protects a tray design developed specifically for compatibility with European hospital sterilization protocols and represents a modest but meaningful addition to the European product offering.

Maintenance and Renewal Fees. All maintenance and renewal fees are current across all validated jurisdictions for all six European patents. We confirmed the status of each patent through the EPO Register.

Oppositions and Litigation. No oppositions are pending or recorded at the EPO for any of the six European patents. Under EPO rules, the nine-month window for filing an opposition has closed for all six patents without any opposition having been initiated. Additionally, no patent litigation is pending in any European jurisdiction with respect to any of Meridian's European patents. The absence of oppositions and European litigation is a favorable indicator regarding the perceived strength and validity of the European patent portfolio.

IV. Trademark Portfolio

A. Registered U.S. Trademarks

Meridian holds three (3) registered U.S. trademarks, each of which is registered with the United States Patent and Trademark Office. A complete schedule of these trademarks, including registration numbers, marks, goods and services designations, and current status, is set forth in Appendix D.

"Meridian Surgical" (Standard Character Mark).

This trademark is registered with the USPTO as a standard character mark for goods and services in the fields of surgical instruments and orthopedic devices. The registration is active, and all renewal filings and declarations of use (including Sections 8 and 15 filings, as applicable) are current. The "Meridian Surgical" mark is the Company's primary corporate brand and is used across all product lines and marketing materials. Following closing of the transaction, this trademark will continue to be owned by Meridian Surgical Technologies, Inc. in its capacity as a wholly owned subsidiary of Solstice Biomedical Devices Ltd.

"ArthroNav" (Standard Character Mark).

This trademark is registered with the USPTO as a standard character mark for goods and services in the field of robotic-assisted surgical navigation systems and related software. The registration is active and all filings are current. The "ArthroNav" mark is critically important to the ArthroNav platform and the associated earnout milestones, as the mark will serve as the primary brand identity for the robotic-assisted arthroscopy product when it reaches commercialization. Our review of the prosecution history confirmed that no third-party oppositions or cancellation proceedings have been filed against this registration. The trademark clearance search conducted at the time of filing revealed no conflicting marks in the medical device space, and we are not aware of any subsequent third-party filings that would create a likelihood of confusion.

"PrecisionBlade" (Standard Character Mark).

This trademark is registered with the USPTO as a standard character mark for goods and services covering single-use arthroscopic surgical blades and blade cartridge systems. The registration is active, and all filings are current. The "PrecisionBlade" mark is a key product-line brand and is used extensively in marketing and on product packaging for Meridian's single-use blade products.

B. Unregistered Marks / Common Law Rights

In addition to the three registered trademarks, Meridian uses various product line sub-brands, model designations, and marketing names in its commercial activities that are not separately registered with the USPTO. These include specific model numbers and marketing names for shaver handpieces and certain descriptive product family names used in catalogs and promotional materials. While these marks are not registered, Meridian may possess common law trademark rights based on use in commerce, though such rights are inherently more limited in geographic scope and more difficult to enforce than rights arising from federal registration.

Recommendation. Following closing, Solstice should evaluate whether additional trademark registrations are warranted, particularly for ArthroNav sub-product names and module designations as commercialization approaches. Securing federal registrations for key sub-brands in advance of market launch would provide stronger enforcement rights and constructive nationwide notice, which will be important as the ArthroNav platform enters a competitive marketplace for robotic-assisted surgical technologies.

C. Domain Names

Meridian holds domain name registrations including meridianst.com and arthronav.com. We reviewed the WHOIS registration records for these domains and confirmed that each is currently registered in the name of Meridian Surgical Technologies, Inc. The domain registrations are current and are not subject to any pending dispute, transfer proceeding, or Uniform Domain-Name Dispute-Resolution Policy ("UDRP") action. These domains will continue to be held by Meridian as a wholly owned subsidiary of Solstice following closing.

V. Trade Secrets

A. Overview. Meridian maintains a trade secret program covering proprietary algorithms, manufacturing processes, and clinical data. The Company has adopted a deliberate strategy of relying on trade secret protection, rather than patent protection, for certain categories of intellectual property where the nature of the technology makes reverse engineering difficult and where the value of maintaining secrecy outweighs the benefits of the limited-term exclusivity that a patent would provide. This section, prepared with contributions from Victoria Shen, Counsel, Regulatory & Life Sciences, addresses the key trade secrets identified during diligence and the measures in place to protect them.

B. Key Trade Secrets — Real-Time Cartilage Thickness Mapping Algorithms

The most strategically significant trade secrets in Meridian's portfolio are the proprietary algorithms for real-time cartilage thickness mapping. These algorithms are foundational to the ArthroNav Software Module and specifically to the Generation 2.0 upgrade that is the subject of Earnout Milestone 2 ($15,000,000 payable upon clearance or approval by June 30, 2027). The algorithms enable the ArthroNav system to generate a dynamic, three-dimensional map of articular cartilage thickness during an arthroscopic procedure using intraoperative ultrasound data, providing the surgeon with real-time visualization of cartilage condition without the need for pre-operative MRI or CT imaging.

Meridian elected a trade secret strategy for these algorithms to avoid the public disclosure of the algorithmic methodology that would be required under patent law. Because the algorithms operate within the ArthroNav software platform and are not susceptible to reverse engineering from the surgical device itself, trade secret protection was judged by Meridian's management and patent counsel to be the more effective form of IP protection for this particular technology.

Protection Measures Reviewed. We reviewed the following trade secret protection measures implemented by Meridian:

• Non-Disclosure Agreements (NDAs). Non-disclosure agreements are in place with all employees and contractors who have access to the cartilage mapping algorithms or related proprietary information. These NDAs contain specific provisions regarding the confidential treatment of algorithmic source code, development documentation, and clinical validation data.

• Limited Access Controls. Access to the cartilage mapping algorithms is restricted to the ArthroNav R&D team, which is led by Dr. Raj Subramanian and consists of a small, defined group of software engineers and data scientists. Access is granted on a need-to-know basis, and the team operates within a segmented information environment.

• Confidential Information Provisions. The employment agreements executed by all Meridian employees contain confidential information provisions that define proprietary information broadly and impose ongoing obligations of confidentiality that survive termination of employment. The Meridian employee handbook includes additional policies regarding the handling and protection of confidential and proprietary information.

• Physical and Digital Access Controls. Meridian's manufacturing and R&D facility, located at 45 Forge Creek Road, Exton, Pennsylvania 19341, employs physical access controls (badge-access systems, secured laboratory areas) and digital access controls (encrypted repositories, multi-factor authentication, audit logging) to restrict access to trade secret materials. The ArthroNav R&D laboratory is separately secured within the facility.

Assessment. Based on our review, Meridian's trade secret protections appear adequate and consistent with the standard of "reasonable measures" required under the Defend Trade Secrets Act of 2016 (18 U.S.C. § 1836 et seq.) and the Pennsylvania Uniform Trade Secrets Act (12 Pa. Cons. Stat. § 5302 et seq.). However, the inherent vulnerability of a trade secret strategy must be acknowledged: unlike patents, trade secrets can be lost through inadvertent disclosure, employee departure, or independent development by competitors.

The risk associated with key personnel departure—particularly the departure of Dr. Subramanian, who is the principal architect of the cartilage mapping algorithms—is mitigated by several contractual mechanisms:

• Dr. Subramanian has executed a new three-year employment agreement with Meridian, providing for a base salary of $410,000 per annum, which will remain in effect through the earnout period.

• Dr. Subramanian's employment agreement includes two-year post-termination non-competition and non-solicitation covenants, which restrict his ability to work for competitors or recruit Meridian personnel for a period of two years following any termination of employment.

• The SPA contains an earnout conduct covenant that restricts the Buyer from reassigning, terminating, or otherwise diverting Dr. Subramanian from the ArthroNav development program without the Sellers' Representative's prior written consent during the earnout period.

These measures, taken together, provide substantial mitigation of the key-person risk, though they do not entirely eliminate the possibility that trade secret protection could be compromised over time.

C. Manufacturing Process Know-How

In addition to the cartilage mapping algorithms, Meridian maintains as trade secrets its proprietary manufacturing processes for PrecisionBlade single-use blades. These processes involve precision grinding techniques and specialized coating application methods that are central to the performance characteristics of the PrecisionBlade products, including blade sharpness, surface friction, and resistance to biological fouling. The manufacturing know-how has been developed over several years of iterative process refinement and represents a meaningful competitive advantage that would be difficult for competitors to replicate without access to Meridian's proprietary process documentation.

Meridian's supply relationship with Titanium Precision Components, Inc. ("TPC"), located at 215 Industrial Park Drive, Lancaster, Pennsylvania 17601, is relevant in this context. TPC supplies titanium instrument housings to Meridian under an exclusive supply agreement that includes confidentiality provisions. Importantly, TPC does not have access to Meridian's proprietary blade geometry specifications beyond what is strictly necessary for the fabrication of the titanium housing components. The blade manufacturing processes themselves are performed entirely in-house at Meridian's Exton facility, ensuring that the most sensitive manufacturing know-how remains within Meridian's direct control.

VI. Inbound License Agreement — Polytechnic Innovations, Ltd.

A. License Summary

Meridian is the licensee under a technology license agreement with Polytechnic Innovations, Ltd. ("Polytechnic"), a UK-domiciled private limited company that was originally established as a spinoff from a university research group. The key terms of this license are as follows:

Significance to the Transaction. This license is critical to the ArthroNav platform. The background IP licensed from Polytechnic includes foundational robotic navigation algorithms and sensor integration methodologies that are incorporated into certain subsystems of the ArthroNav architecture. Without this license, Meridian would not have the right to practice certain aspects of the ArthroNav technology, and the development and commercialization of the platform could be materially impaired. The 2.5% royalty on net sales of ArthroNav products will apply to all commercial sales post-510(k) clearance and should be factored into Solstice's revenue projections, financial models, and earnout economics for both Milestone 1 and Milestone 2.

A summary of the key terms of the Polytechnic license agreement is set forth in Appendix E.

B. Diligence Observations

We reviewed the Polytechnic license agreement in its entirety, including all amendments and side letters. Our principal observations are as follows:

• No Default or Breach. No default or breach of the license agreement by either party was identified. Meridian has complied with all material obligations under the agreement, and no notices of default or cure have been issued or received.

• Royalty Payments Current. All royalty payments are current. Because ArthroNav is a pre-commercial product, royalty obligations to date have been de minimis, consisting solely of nominal development-stage milestone payments as specified in the license agreement. No delinquencies or disputes regarding royalty calculations were identified.

• IP Ownership Chain. The IP ownership chain from the originating university research group to Polytechnic has been confirmed. Polytechnic holds clear title to the licensed patents through properly executed assignments from the university, and we reviewed copies of the relevant assignment documents.

• No Termination Rights Triggered by the Acquisition. Given the absence of a change-of-control provision, the proposed acquisition will not trigger any consent requirement, termination right, or renegotiation clause under the license agreement. The license will remain in full force and effect following closing without the need for any action by Polytechnic.

VII. Outbound Licenses

No material outbound licenses of Meridian's intellectual property were identified during our review. Meridian has not granted any exclusive patent licenses, exclusive trademark licenses, or technology transfer agreements to third parties.

The sole outbound IP arrangement identified is a limited, non-exclusive trademark license granted to OrthoLink Distribution, LLC ("OrthoLink"), located at 9400 Snowden River Parkway, Suite 300, Columbia, Maryland 21045. Under the Distribution Agreement between Meridian and OrthoLink, OrthoLink is authorized to use the "Meridian Surgical" and "PrecisionBlade" trademarks in connection with distribution activities within the eastern United States. The Distribution Agreement has a three-year term expiring in December 2025, and OrthoLink holds exclusive distribution rights for the eastern United States during the term.

The trademark license granted to OrthoLink is standard in nature for distribution arrangements and is limited to the use of the marks in connection with the marketing, promotion, and sale of Meridian products. The license does not constitute a transfer of ownership or an independent right to use the marks outside the distribution relationship. Upon termination or expiration of the Distribution Agreement, the trademark license reverts to Meridian, and OrthoLink's rights to use the marks cease.

No IP assignment, co-ownership, or joint development provisions were identified in the OrthoLink Distribution Agreement, and the arrangement does not create any third-party rights in Meridian's intellectual property that would survive the expiration of the distribution term.

VIII. IP-Related Litigation — *Hartwell Orthopedic Solutions, Inc. v. Meridian Surgical Technologies, Inc.*

A. Case Summary

The sole pending IP-related litigation involving Meridian is the action captioned Hartwell Orthopedic Solutions, Inc. v. Meridian Surgical Technologies, Inc., Civil Action No. 2:23-cv-04817, pending in the United States District Court for the Eastern District of Pennsylvania. The key details of this action are as follows:

Hartwell is a mid-size orthopedic device company that competes with Meridian in the powered surgical shaver market. In its complaint, Hartwell alleges that certain of Meridian's powered shaver blade products incorporate a blade design configuration that falls within the scope of one or more claims of the '224 Patent. Hartwell seeks damages in the form of a reasonable royalty, injunctive relief, and attorney's fees, though no willfulness allegations have been asserted that would support a claim for enhanced damages under 35 U.S.C. § 284.

A summary of the Hartwell litigation status and damages analysis is set forth in Appendix F.

B. Status of Litigation

Meridian has retained Braddock & Lyle LLP, located at 1600 Arch Street, Suite 2000, Philadelphia, Pennsylvania 19103, as outside litigation counsel for the defense of the Hartwell action. The lead counsel is Deborah Lyle, a partner in the firm's patent litigation group.

Meridian has filed a motion for summary judgment asserting two principal defenses: (i) non-infringement, on the grounds that Meridian's accused powered shaver blade products do not meet one or more limitations of the asserted claims of the '224 Patent under a proper claim construction; and (ii) invalidity, on the grounds that the asserted claims are anticipated or rendered obvious by certain prior art references not considered by the examiner during prosecution of the '224 Patent. The motion for summary judgment is currently pending before the court, and a decision is expected in the second half of 2024.

We have reviewed the summary judgment briefing, the expert declarations submitted in support of Meridian's motion, and the relevant claim construction analysis. While the outcome of any litigation is uncertain, the summary judgment motion presents a credible basis for a favorable ruling on either or both grounds asserted by Meridian.

C. Damages Exposure

Meridian's litigation counsel at Braddock & Lyle LLP has provided an estimate of potential damages exposure in the range of Two Million Five Hundred Thousand Dollars ($2,500,000) to Five Million Dollars ($5,000,000) in the event that Hartwell prevails on the merits. This estimate is based on a reasonable royalty analysis applied to Meridian's historical and projected powered shaver blade sales during the relevant damages period. The estimate assumes a hypothetical negotiation framework consistent with Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970), and takes into account the competitive landscape, the relative contribution of the patented feature to the overall product, and comparable license agreements in the powered surgical instrument space.

Because Hartwell has not alleged willful infringement, enhanced damages under 35 U.S.C. § 284 are not at issue in this case. Similarly, the case does not present the type of exceptional circumstances that would support an award of attorney's fees under 35 U.S.C. § 285.

D. Impact on Transaction

The Hartwell litigation has been fully disclosed in the Disclosure Schedules to the Stock Purchase Agreement and is subject to specific indemnification obligations of the Sellers as set forth in Article X of the SPA. The following observations are relevant to the transaction:

• Product Line Isolation. The Hartwell litigation relates solely to certain powered shaver blade products and does not affect the ArthroNav platform or the PrecisionBlade single-use blade product line. The '224 Patent at issue covers a particular powered shaver blade design configuration, and the claims do not extend to single-use arthroscopic blades (which operate on a different mechanical principle) or to robotic-assisted navigation technology.

• Freedom-to-Operate for Core Assets. Based on our review of the claim construction briefing and the specifications of the accused products, Meridian's ArthroNav platform and core PrecisionBlade products do not implicate the Hartwell '224 Patent claims. The risk presented by the Hartwell litigation is confined to the powered shaver blade product line.

• Indemnification and Insurance Coverage. The indemnification provisions of the SPA, including the Twenty-Six Million Four Hundred Thousand Dollar ($26,400,000) indemnity escrow held at Keystone Escrow Services, Inc., provide financial protection to Solstice in the event of a loss. Additionally, the Ridgeline Mutual Insurance Company buy-side representations and warranties insurance ("RWI") policy (Policy No. RMI-RWI-2024-08172, with $40,000,000 in aggregate coverage) may provide additional coverage for losses arising from breaches of the IP representations and warranties in the SPA, subject to the terms, conditions, and exclusions of that policy.

Recommendation. We recommend that Solstice continue to monitor the pending summary judgment motion and any settlement discussions that may arise. Coordination with Braddock & Lyle LLP should continue through closing and into the post-closing period, with regular reporting to Solstice's legal team regarding case developments. The combination of the pending summary judgment motion, the SPA indemnification framework, the escrow, and the RWI policy provides an adequate risk management structure for this litigation.

IX. Freedom-to-Operate Analysis

A. Methodology. We conducted patent landscape searches in the United States and Europe in the fields most directly relevant to Meridian's products and the ArthroNav development platform, including robotic-assisted arthroscopy, arthroscopic blade design, powered shaver systems, and cartilage mapping technology. These searches were performed using commercial patent search databases and the public records of the USPTO and EPO, supplemented by targeted citation analyses of patents in the relevant technology clusters.

In addition, we reviewed Meridian's internal freedom-to-operate analyses previously prepared by Meridian's patent counsel at Whitmore Crane & Pfeiffer LLP. These internal analyses were conducted in the ordinary course of Meridian's product development process and provide additional context regarding Meridian's awareness of potentially relevant third-party patent rights.

B. Findings. ArthroNav Platform. No third-party patents were identified—other than the Polytechnic licensed patents, which are addressed by the inbound license agreement described in Section VI above—that are reasonably likely to be asserted against the ArthroNav system as currently designed. Our search included a review of patent portfolios held by the major participants in the robotic-assisted surgery space. The identified predicate device for 510(k) purposes, K203847 (the Marlowe Asset Management Robotic Surgical Assist System), does not appear to be associated with patent assertions in the arthroscopic field, and the manufacturer of that predicate device has not, to our knowledge, engaged in patent enforcement activity targeting competitors in the arthroscopy market. While the freedom-to-operate landscape for robotic-assisted surgery is complex and evolving, we did not identify any specific patent that presents a material near-term risk to the ArthroNav platform's development or commercialization.

PrecisionBlade Products. Apart from the Hartwell '224 Patent litigation discussed in Section VIII—which is limited to powered shaver blades and does not implicate the single-use PrecisionBlade products—no material freedom-to-operate concerns were identified for the PrecisionBlade single-use blade product line. The PrecisionBlade products are well-differentiated from competing products in terms of blade geometry and cartridge mechanism design, and Meridian's own patent portfolio provides defensive protection in this space.

Powered Shaver Systems. The Hartwell litigation represents the only identified freedom-to-operate risk for Meridian's powered shaver product line. As discussed in Section VIII, Meridian's summary judgment motion is pending, and potential damages exposure is estimated at $2.5 million to $5.0 million. No additional third-party patents were identified that present a material infringement risk for the powered shaver product line.

Cartilage Mapping Algorithms (Trade Secrets). Because the real-time cartilage thickness mapping algorithms are maintained as trade secrets rather than patented, there is no patent publication or patent disclosure associated with this technology that could create a third-party freedom-to-operate issue for Meridian. However, the trade secret strategy also means that Meridian does not hold patent exclusivity over the algorithmic approach itself. Competitors could, in principle, independently develop similar or functionally equivalent cartilage mapping algorithms without infringing any Meridian patent. This is an inherent limitation of the trade secret strategy that Meridian has adopted, and it should be considered in the context of Solstice's competitive analysis and long-term IP strategy for the ArthroNav platform.

X. IP-Related Contract Provisions in Key Agreements

A. Titanium Precision Components, Inc. Supply Agreement

Meridian is party to an exclusive supply agreement with Titanium Precision Components, Inc. ("TPC") for the supply of titanium instrument housings used in the manufacture of Meridian's surgical instruments. The key IP-related provisions of this agreement are as follows:

• Term and Scope. The agreement has a five-year term expiring in March 2027 and provides for a minimum annual purchase commitment by Meridian of Three Million Two Hundred Thousand Dollars ($3,200,000).

• Confidentiality. The agreement contains robust confidentiality provisions requiring TPC to maintain the confidentiality of Meridian's proprietary specifications and design information provided in connection with the supply relationship.

• Change of Control. The agreement includes a change-of-control provision requiring Meridian to obtain TPC's consent to an assignment or change of control. TPC's consent to the proposed Solstice acquisition was obtained on August 5, 2024, and a copy of the consent letter is included in the data room.

• IP Ownership. The agreement includes clear IP ownership provisions under which TPC acknowledges that all designs, specifications, and proprietary information provided by Meridian remain the sole property of Meridian. There are no license-back, joint IP, or co-ownership provisions in the agreement.

B. OrthoLink Distribution, LLC Distribution Agreement

The OrthoLink Distribution Agreement, discussed in Section VII above, contains the following IP-related provisions:

• Term. Three-year term expiring December 2025; exclusive distribution for the eastern United States.

• Trademark License. Non-exclusive trademark license limited to the use of the "Meridian Surgical" and "PrecisionBlade" marks in connection with OrthoLink's distribution activities. The license reverts to Meridian upon termination or expiration of the Distribution Agreement.

• Change of Control. The agreement requires notice to OrthoLink in the event of a change of control of Meridian (notice only; consent is not required). Notice was provided to OrthoLink on August 12, 2024.

• No IP Assignment or Co-Ownership. The Distribution Agreement does not contain any IP assignment, co-ownership, or joint development provisions.

C. Polytechnic Innovations, Ltd. License Agreement

The Polytechnic license agreement is addressed in detail in Section VI above. As noted, the license contains no change-of-control provision and is freely assignable by Meridian in connection with the proposed transaction.

XI. UCC and Lien Search Results

We conducted Uniform Commercial Code ("UCC") lien searches in Delaware (Meridian's state of incorporation) and Pennsylvania (Meridian's principal place of business and manufacturing location) to identify any security interests, liens, or encumbrances on Meridian's intellectual property assets. The results of these searches are as follows:

• Ironclad Commercial Lending, LLC. Ironclad Commercial Lending, LLC holds a blanket security interest in all assets of Meridian, including intellectual property, under the existing Twelve Million Dollar ($12,000,000) revolving credit facility. The outstanding balance under this facility is Seven Million Three Hundred Forty-One Thousand Eight Hundred Twenty-Two Dollars and Sixteen Cents ($7,341,822.16) as of the date of this memorandum. Pursuant to the terms of the credit facility and the related security agreement, the Ironclad lien will be released upon full payoff of the outstanding balance, and UCC-3 termination statements will be filed with the Delaware Secretary of State and the applicable Pennsylvania filing offices. The SPA contemplates that the Ironclad indebtedness will be paid off at closing from the purchase price proceeds, and the payoff letter and form UCC-3 termination statements have been requested from Ironclad.

• No Other Liens. No other liens, security interests, or encumbrances on Meridian's intellectual property were identified in the UCC search results or through our review of the USPTO assignment records and other applicable databases.

Recommendation. We recommend that Solstice confirm receipt of fully executed UCC-3 termination statements from Ironclad Commercial Lending, LLC at or promptly following closing to ensure that the lien on Meridian's IP assets is released of record. This should be included as a closing deliverable or a post-closing covenant in the SPA, and the filing of the termination statements should be independently verified by Solstice's counsel within a reasonable period following closing.

XII. ISO Certification and Quality System IP Considerations

Meridian's manufacturing facility, located at 45 Forge Creek Road, Exton, Pennsylvania 19341, holds ISO 13485:2016 certification, which establishes the international standard for quality management systems applicable to the design and manufacture of medical devices. This section was prepared with contributions from Victoria Shen, Counsel, Regulatory & Life Sciences.

The ISO 13485 certification supports the quality management system documentation that is integral to both the manufacture of Meridian's existing commercial products and the preparation of the ArthroNav 510(k) submission. The FDA's acceptance of a 510(k) submission typically depends in part on the applicant's demonstrated compliance with current good manufacturing practice ("cGMP") requirements, and ISO 13485 certification provides evidence of such compliance. A lapse in ISO certification could create complications for the ArthroNav 510(k) submission process and, by extension, could affect the earnout milestone timelines established in the SPA.

Recommendation. Solstice should ensure timely renewal of the ISO 13485 certification prior to the April 2025 expiration date. Given the lead time typically required for certification renewal audits and any required corrective actions, the renewal process should be initiated promptly following closing. A lapse in certification could affect not only the ArthroNav FDA submission timeline but also the ongoing manufacture and distribution of PrecisionBlade and powered shaver products, which rely on the quality system infrastructure validated by the ISO certification.

XIII. Recommendations and Risk Summary

A. Summary of IP Strengths

Based on our review, Meridian's intellectual property portfolio presents the following material strengths:

1. Robust Patent Portfolio. The portfolio of fourteen (14) issued U.S. patents, six (6) European patents, and three (3) pending U.S. patent applications is well-aligned with Meridian's commercial product lines and the ArthroNav development pipeline. The patents cover the full spectrum of Meridian's technology, from single-use blade design to robotic navigation architecture, and provide meaningful barriers to competitive entry across all major product areas.

2. Foundational ArthroNav Patent Protection. The key patent, U.S. Patent No. 11,432,887, provides strong and broadly drafted protection for the ArthroNav platform's core robotic navigation technology. The prosecution history is clean, no post-grant challenges have been filed, and the remaining patent term extends through approximately 2042—well beyond the product's anticipated commercial lifecycle.

3. Well-Maintained Trademark Registrations. The three registered U.S. trademarks—"Meridian Surgical," "ArthroNav," and "PrecisionBlade"—cover Meridian's core brands and product lines. All registrations are active and current, and no third-party oppositions or cancellation proceedings are pending.

4. Adequate Trade Secret Protections. The trade secret protections for the real-time cartilage mapping algorithms, while inherently more vulnerable than patent rights, appear adequate based on the organizational, contractual, and technical safeguards that Meridian has implemented.

5. Favorable Inbound License Terms. The Polytechnic Innovations license provides the necessary background IP for the ArthroNav platform on commercially reasonable terms, including a 2.5% royalty on net sales, exclusive rights in the field of orthopedic arthroscopic surgery, and—critically—no change-of-control provision that would require Polytechnic's consent or otherwise impede the proposed acquisition.

B. Summary of IP Risks

The following IP risks have been identified and should be considered in the context of the transaction:

1. Hartwell Litigation. The pending Hartwell v. Meridian patent infringement action presents a moderate risk with estimated potential damages exposure of $2.5 million to $5.0 million. The risk is limited to the powered shaver blade product line and does not extend to the ArthroNav platform or the PrecisionBlade single-use blade products. Meridian's pending motion for summary judgment presents a credible basis for a favorable disposition, and the litigation has been properly disclosed in the SPA Disclosure Schedules and is subject to specific Seller indemnification. The indemnity escrow ($26,400,000) and the RWI policy ($40,000,000 aggregate coverage) provide additional financial protection.

2. Trade Secret Dependency. The decision to maintain the cartilage mapping algorithms as trade secrets rather than patents creates a risk that competitors could independently develop similar or functionally equivalent technologies without infringing any Meridian intellectual property rights. This risk is mitigated by the key employee retention mechanisms in place (including Dr. Subramanian's three-year employment agreement, two-year post-termination non-compete, and the SPA earnout conduct covenant), but it cannot be entirely eliminated. The trade secret strategy is a considered business judgment by Meridian's management, and the decision not to patent the algorithms is reasonable given the difficulty of reverse engineering the software-based technology.

3. ISO Certification Renewal. The ISO 13485 certification expires in April 2025, and a timely renewal is required to avoid disruption to manufacturing operations and the ArthroNav 510(k) submission process. This is a manageable administrative matter but requires prompt attention in the post-closing period.

4. Pending Patent Application Outcomes. The three pending U.S. patent applications may or may not ultimately issue as patents. Non-issuance would not affect Meridian's existing commercial products, which are covered by the fourteen issued U.S. patents, but could limit future competitive protection for ArthroNav platform enhancements and next-generation PrecisionBlade coupling mechanisms. Patent prosecution outcomes are inherently uncertain and cannot be guaranteed.

C. Recommended Actions

Based on our diligence findings, we recommend the following actions:

1. Disclosure Schedule Accuracy. Ensure that the Disclosure Schedules to the SPA accurately and completely reflect the Hartwell litigation, the Ironclad lien and all other IP encumbrances, the Polytechnic inbound license, and the OrthoLink trademark license. Any discrepancies between the diligence record and the Disclosure Schedules should be resolved prior to closing.

2. UCC-3 Termination Filings. Confirm that Ironclad Commercial Lending, LLC files UCC-3 termination statements in Delaware and Pennsylvania at closing (or promptly thereafter) to release all security interests in Meridian's intellectual property. Solstice's counsel should independently verify the filing of these termination statements within a reasonable period following closing.

3. IP Representations and Warranties. The SPA should include comprehensive IP representations and warranties covering, at a minimum: (a) sole ownership of all IP assets by Meridian, free and clear of encumbrances (subject to scheduled exceptions); (b) non-infringement of third-party IP rights (to the knowledge of the Sellers); (c) absence of undisclosed IP encumbrances, licenses, or transfer obligations; (d) validity and enforceability of all IP registrations; (e) proper execution of invention assignment agreements by all employees and contractors; and (f) compliance with the Polytechnic license agreement.

4. Post-Closing IP Management. Following closing, Solstice should:

(a) Initiate the ISO 13485 certification renewal process promptly to avoid any lapse prior to the April 2025 expiration;

(b) Evaluate whether additional trademark registrations are warranted for ArthroNav sub-product names and module designations as commercialization approaches;

(c) Continue to monitor the Hartwell litigation proceedings and coordinate with Braddock & Lyle LLP on case strategy, settlement negotiations, and any developments relating to the pending summary judgment motion;

(d) Ensure continuity of compliance with the Polytechnic license agreement, including establishing internal tracking systems for royalty obligations as ArthroNav approaches commercialization; and

(e) Evaluate the pending U.S. patent applications and determine whether additional patent filings are warranted to strengthen coverage of the ArthroNav platform and PrecisionBlade product enhancements.

5. Polytechnic License Compliance. Post-closing, Solstice should ensure that royalty tracking and reporting systems are in place for the Polytechnic license in advance of ArthroNav commercial launch. The 2.5% royalty on net sales will become a recurring obligation upon commercialization, and timely and accurate royalty reporting will be essential to maintaining the license in good standing.

6. Tax Treatment Coordination. Confirm that the Section 338(h)(10) election and asset purchase treatment for tax purposes properly accounts for IP valuation and amortization. This analysis should be coordinated with Leonard Cross and the tax advisors at Brindoval & Albright LLP, including Eleanor Voss, to ensure that the IP assets are appropriately valued and that the amortization schedule reflects the useful life of the various categories of IP (patents, trade secrets, customer relationships, and goodwill).

XIV. Limitations and Qualifications

This memorandum is subject to the following limitations and qualifications:

1. Document and Information Sources. This memorandum is based upon the documents and information made available by Meridian and its counsel, Whitmore Crane & Pfeiffer LLP, through the virtual data room established for this transaction, supplemented by public records searches conducted by Calderwood & Harkness LLP. The public records searched include the USPTO Patent Application Information Retrieval ("PAIR") system, the EPO Register, the USPTO Trademark Electronic Search System ("TESS") and Trademark Status and Document Retrieval ("TSDR") system, and Uniform Commercial Code filing records maintained by the Delaware Sec

MEMORANDUM
PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT
To: Helena Byrne, EVP, Corporate Development & Strategy, Solstice Biomedical Devices Ltd. Patrick Lennox, General Counsel & Company Secretary, Solstice Biomedical Devices Ltd.
From: Tiffany Rosenthal, Lead Associate, Calderwood & Harkness LLP With contributions from Victoria Shen, Counsel, Regulatory & Life Sciences, Calderwood & Harkness LLP
Date: July 22, 2024
Re: intellectual Property Due Diligence Summary — Meridian Surgical Technologies, Inc. (Calderwood & Harkness Matter No. 1037-00006)
Cc: Beatrice Holloway, Responsible Partner, M&A, Calderwood & Harkness LLP Andrew Fitzpatrick, Working Associate, M&A, Calderwood & Harkness LLP
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I. Executive Summary
This memorandum summarizes the intellectual property due diligence conducted by Calderwood & Harkness LLP in connection with the proposed acquisition by Solstice Biomedical Devices Ltd. ("Solstice" or the "Buyer") of one hundred percent (100%) of the outstanding common stock and vested options of Meridian Surgical Technologies, Inc. ("Meridian" or the "Company"), a Delaware corporation headquartered at 780 Keystone Boulevard, Suite 200, King of Prussia, Pennsylvania 19406, pursuant to that certain Stock Purchase Agreement (the "SPA") providing for an aggregate purchase price of Two Hundred Twenty Million Dollars ($220,000,000), subject to customary adjustments and earnout provisions as described more fully in the SPA. The proposed transaction is structured as a stock purchase, with Meridian continuing post-closing as a wholly owned subsidiary of Solstice.
Meridian's core business is the design, development, and manufacture of minimally invasive surgical instruments for orthopedic procedures. The Company's product portfolio includes its proprietary single-use arthroscopic blades marketed under the "PrecisionBlade" brand, powered shaver systems used in arthroscopic debridement and tissue removal procedures, and the in-development "ArthroNav" robotic-assisted arthroscopy platform. The ArthroNav platform represents the most significant component of Meridian's forward-looking value proposition, and its anticipated FDA 510(k) clearance and subsequent commercialization form the basis for the earnout milestones set forth in the SPA.
IP Portfolio Summary. Meridian's intellectual property portfolio consists of the following principal assets:
•  Fourteen (14) issued U.S. utility patents covering Meridian's commercial products and the ArthroNav development platform;
•  Three (3) pending U.S. patent applications, including one continuation application, one new utility application, and one provisional application;
•  Six (6) issued European patents granted through the European Patent Office ("EPO"), validated in key European markets;
•  Three (3) registered U.S. trademarks for the "Meridian Surgical," "ArthroNav," and "PrecisionBlade" marks;
•  Significant trade secrets, most critically including the real-time cartilage thickness mapping algorithms that are foundational to the ArthroNav Software Module and the Generation 2.0 upgrade; and
•  One material inbound license from Polytechnic Innovations, Ltd. ("Polytechnic"), a UK-domiciled university spinoff, covering robotic surgical navigation background intellectual property.
Material Litigation. One pending patent infringement action has been identified: Hartwell Orthopedic Solutions, Inc. v. Meridian Surgical Technologies, Inc., Civil Action No. 2:23-cv-04817, filed in the United States District Court for the Eastern District of Pennsylvania. The plaintiff, Hartwell Orthopedic Solutions, Inc. ("Hartwell"), alleges that certain of Meridian's powered shaver blade products infringe a Hartwell design patent. This litigation is discussed in detail in Section VIII below. Meridian's outside litigation counsel estimates potential damages exposure in the range of $2.5 million to $5.0 million if Hartwell were to prevail. The litigation has been fully disclosed in the Disclosure Schedules to the SPA and is subject to specific indemnification by the Sellers.
Overall Assessment. Based on our review, Meridian's IP portfolio is substantial and well-maintained, forming the competitive backbone of its existing commercial product lines and the ArthroNav development platform. The patent estate provides meaningful protection across the Company's key technology areas, and the trademark portfolio covers the Company's principal brands. Trade secret protections, while inherently more fragile than patent rights, appear to be supported by reasonable organizational and contractual safeguards. The Polytechnic inbound license provides necessary background IP for the ArthroNav platform on commercially reasonable terms and, importantly, contains no change-of-control provision that would impede the transaction.
The Hartwell litigation presents a moderate risk that is manageable through the existing litigation defense strategy and the indemnification and disclosure schedule framework established in the SPA. The risk is isolated to the powered shaver blade product line and does not extend to the ArthroNav platform or the PrecisionBlade single-use blade products.
Documents Reviewed. This memorandum is based upon our review of documents and information produced by Meridian and its counsel, Whitmore Crane & Pfeiffer LLP, in response to the Preliminary Diligence Request List dated May 13, 2024, as supplemented by materials subsequently uploaded to the virtual data room. We have also conducted independent public records searches, including searches of the United States Patent and Trademark Office ("USPTO") Patent Application Information Retrieval ("PAIR") system, the EPO Register, the USPTO Trademark Electronic Search System ("TESS") and Trademark Status and Document Retrieval ("TSDR") system, and Uniform Commercial Code filing records in Delaware and Pennsylvania. A complete list of the documents reviewed is maintained in our diligence files and is available upon request.
II. U.S. Patent Portfolio
A. Overview.  Meridian's U.S. patent portfolio consists of fourteen (14) issued utility patents and three (3) pending utility patent applications, all of which are assigned to Meridian Surgical Technologies, Inc. as the sole owner. Our review confirmed that there are no co-ownership or joint inventorship issues that would dilute or complicate Meridian's ownership rights in any of the issued patents or pending applications.
We reviewed the employee invention assignment agreements executed by all named inventors across the fourteen issued patents and three pending applications. All key technical personnel, including Dr. Raj Subramanian, the Company's Chief Technology Officer and the lead inventor on the foundational ArthroNav patents, and all other members of the R&D engineering staff identified as inventors, have executed written invention assignment agreements assigning to Meridian all right, title, and interest in inventions conceived or reduced to practice during the course of their employment. These agreements are consistent with standard practice for technology-driven medical device companies and appear to be properly executed and enforceable under applicable state law.
All maintenance fees for the fourteen issued patents are current as of the date of this memorandum. No lapsed or abandoned patents were identified among the issued patents. We have confirmed the status of each patent through the USPTO PAIR system and have cross-referenced maintenance fee payment records. A complete schedule of all issued U.S. patents, including patent numbers, titles, issue dates, named inventors, and expiration dates, is set forth in Appendix A to this memorandum.
B. Key Patent: U.S. Patent No. 11,432,887
The single most strategically significant patent in Meridian's portfolio is U.S. Patent No. 11,432,887, entitled "Robotic-Assisted Arthroscopic Navigation System and Method." The key details of this patent are as follows:
Claims Coverage. The '887 patent includes independent and dependent claims directed to the core robotic navigation architecture underlying the ArthroNav platform. The independent claims cover, among other things, a system and method for integrating real-time imaging data with robotic arm positioning to guide arthroscopic instruments during minimally invasive orthopedic procedures. The claims address the coordination of imaging modality inputs (including intraoperative ultrasound and fluoroscopy data) with the kinematic control of a robotic arm operating within the confined anatomical space of a joint capsule, enabling precision positioning of arthroscopic instruments based on dynamically updated three-dimensional spatial mapping.
Significance to the Transaction. The '887 patent is the foundational patent for the ArthroNav robotic-assisted arthroscopy platform and is directly relevant to the earnout milestones established in Article III of the SPA. Specifically:
•  Earnout Milestone 1 ($20,000,000): Tied to FDA 510(k) clearance of ArthroNav Generation 1.0 by December 31, 2026. The technology protected by the '887 patent forms the core of the ArthroNav Generation 1.0 system for which 510(k) clearance will be sought.
•  Earnout Milestone 2 ($15,000,000): Tied to clearance or approval of the ArthroNav Software Module for Real-Time Cartilage Mapping Generation 2.0 upgrade by June 30, 2027. While the cartilage mapping algorithms are separately maintained as trade secrets (see Section V below), the integration of that software module with the robotic navigation system described in the '887 patent is essential to the Generation 2.0 product configuration.
Prosecution History Review. We reviewed the complete prosecution history of the '887 patent as available through the USPTO PAIR system. The patent was allowed after a standard examination process. Notably, no significant narrowing amendments to the independent claims were required during prosecution. The applicant responded to examiner rejections primarily by distinguishing the cited prior art on factual and structural grounds without materially limiting the scope of the independent claims. This strengthens the enforceability posture of the patent and reduces the risk that a competitor could design around the claims through minor modifications.
Challenges and Post-Grant Proceedings. No inter partes review ("IPR") petitions have been filed against the '887 patent. No ex parte reexamination proceedings have been initiated. No prior art challenges are on record with the USPTO beyond those considered during the original prosecution. The absence of post-grant challenges, while not a guarantee of validity, is a favorable indicator given that the patent has been issued for approximately two years and covers a technology area—robotic-assisted surgery—that has attracted significant competitive interest.
Remaining Patent Term. Based on the earliest effective filing date and the standard twenty-year patent term under 35 U.S.C. § 154(a)(2), the '887 patent has a remaining term extending through approximately 2042. No terminal disclaimers have been filed, and no patent term adjustments (positive or negative) appear to have been applied. This remaining term is more than sufficient to cover the ArthroNav product lifecycle through and well beyond the earnout milestone periods and the initial commercial launch window.
C. Other Issued U.S. Patents (Remaining 13)
The remaining thirteen issued U.S. patents in Meridian's portfolio are categorized below by product line. Each patent has been reviewed for proper assignment, maintenance fee status, prosecution history (at a summary level), and relevance to Meridian's current and planned product offerings.
PrecisionBlade Single-Use Arthroscopic Blades (5 Patents). Five patents cover various aspects of the PrecisionBlade product line, including blade geometry and edge profile design, advanced coating technologies (including anti-fouling and friction-reducing coatings applied to blade surfaces), and the single-use cartridge mechanisms that allow rapid blade changes during arthroscopic procedures. The earliest of these patents was issued in 2017, and the most recent was issued in 2023. Collectively, these patents provide robust protection for the PrecisionBlade product line, which represents a significant portion of Meridian's current recurring revenue stream.
Powered Shaver Systems (4 Patents). Four patents cover Meridian's powered shaver system technology, including the motor-driven shaver handpiece design, integrated suction functionality, and blade oscillation control systems. These patents were issued between 2018 and 2022. It is within this product line that the Hartwell patent infringement litigation arises (discussed in Section VIII below), though the specific claims asserted by Hartwell in the '224 patent relate to a particular blade design configuration and do not extend to the broader handpiece and oscillation control technologies covered by Meridian's own patents.
ArthroNav Platform — Additional Patents (3 Patents). In addition to the foundational '887 patent, three further patents cover aspects of the ArthroNav robotic-assisted arthroscopy platform, including robotic arm kinematics optimized for the confined anatomical spaces encountered in joint surgery, haptic feedback systems designed to provide the surgeon with tactile responsiveness during robotic-assisted procedures, and sterilizable instrument coupling interfaces that enable the use of disposable arthroscopic instruments with the reusable robotic arm components. These patents were issued between 2021 and 2023 and complement the '887 patent by protecting specific subsystems and design features of the ArthroNav platform.
General Surgical Instrument Design (1 Patent). One patent covers an ergonomic handle design that is used across multiple Meridian product families, including both the PrecisionBlade manual instrument set and certain powered shaver handpiece configurations. This patent was issued in 2019 and provides design protection for a user interface element that appears in multiple commercial products.
Assignment and Encumbrances. All thirteen patents are assigned to Meridian Surgical Technologies, Inc. No liens, encumbrances, or security interests were identified on any individual patent, other than the blanket security interest held by Ironclad Commercial Lending, LLC, which is discussed in detail in Section XI. This was confirmed through cross-reference of the USPTO assignment records with the Uniform Commercial Code filings in Delaware and Pennsylvania and with the documentation for Ironclad's existing Twelve Million Dollar ($12,000,000) revolving credit facility. The Ironclad security interest encumbers all assets of Meridian, including intellectual property, but includes a standard IP release upon payoff of the outstanding balance. The outstanding balance of Seven Million Three Hundred Forty-One Thousand Eight Hundred Twenty-Two Dollars and Sixteen Cents ($7,341,822.16) will be paid off at closing from the purchase price proceeds, and UCC-3 termination statements will be filed to release the lien. The complete schedule of these thirteen patents is included in Appendix A.
D. Pending U.S. Patent Applications (3)
Meridian has three pending U.S. patent applications, summarized below. A detailed schedule of these applications, including application numbers, titles, filing dates, and current status, is set forth in Appendix B.
Application 1: Continuation of the '887 Patent (Broadening Claims for Next-Generation Cartilage Mapping Integration). This continuation application was filed in 2023 and claims the benefit of the filing date of the '887 patent. It seeks to broaden certain claims to cover the integration of next-generation cartilage thickness mapping capabilities with the robotic navigation architecture described in the parent patent. The application is currently under examination; a non-final Office Action has been received, and the response deadline is forthcoming. Our preliminary review of the cited prior art references does not indicate that any of the asserted rejections present a material obstacle to obtaining meaningful claim coverage, although prosecution outcomes are inherently uncertain. If allowed, this continuation would meaningfully strengthen the patent protection available for the ArthroNav Generation 2.0 product configuration.
Application 2: Improved Single-Use Shaver Blade Coupling Mechanism. This new utility application was filed in early 2024 and covers an improved coupling mechanism for single-use shaver blades. The application is in the early stages of examination and is currently awaiting a first Office Action from the USPTO. This application, if issued, would extend patent protection to the next generation of the PrecisionBlade coupling system and could provide additional freedom-to-operate insulation relative to competitors.
Application 3: Provisional Application for AI-Enhanced Surgical Planning Module. This provisional application was filed in 2024 and relates to an artificial intelligence-enhanced real-time surgical planning module designed for integration with the ArthroNav platform. Under U.S. patent law, a provisional application establishes a priority date but does not mature into an issued patent unless a non-provisional application is filed within the twelve-month priority window. Meridian has indicated that conversion to a non-provisional application is anticipated within the applicable deadline. The subject matter of this provisional application is closely aligned with Meridian's product roadmap for ArthroNav and represents a forward-looking expansion of the patent portfolio into AI-assisted surgical technologies.
Assessment. The three pending applications are well-aligned with Meridian's product roadmap and, if issued, would materially strengthen the ArthroNav and PrecisionBlade portfolios. Based on our review of the pending prosecution and the disclosed prior art, no rejection basis has been identified that raises a material concern regarding the ultimate patentability of the claimed inventions, although as noted above, the outcome of patent prosecution is inherently uncertain and cannot be guaranteed.
III. European Patent Portfolio
A. Overview.  Meridian holds six (6) issued European patents granted through the European Patent Office ("EPO"). Each patent has been validated in key European markets, specifically Germany, France, the United Kingdom, Italy, and the Netherlands. All six patents are assigned to Meridian Surgical Technologies, Inc. A complete schedule of these patents, including EP numbers, titles, grant dates, and validated countries, is set forth in Appendix C.
B. Coverage Summary
The six European patents correspond to the following technology areas:
•  PrecisionBlade and Powered Shaver Systems (3 Patents). Three European patents are counterparts to U.S. patents in the PrecisionBlade and powered shaver system families. These patents provide European market protection for Meridian's blade geometry, coating technologies, and powered shaver handpiece designs.
•  ArthroNav Robotic Platform (2 Patents). Two European patents correspond to ArthroNav robotic platform patents, including a European counterpart to U.S. Patent No. 11,432,887. These patents provide protection for the ArthroNav technology in the European market, which Meridian has identified as a secondary target market following initial commercialization in the United States.
•  Surgical Instrument Sterilization Tray System (1 Patent). One European patent covers a surgical instrument sterilization tray system that is unique to the European filings and does not have a corresponding U.S. patent. This patent protects a tray design developed specifically for compatibility with European hospital sterilization protocols and represents a modest but meaningful addition to the European product offering.
Maintenance and Renewal Fees. All maintenance and renewal fees are current across all validated jurisdictions for all six European patents. We confirmed the status of each patent through the EPO Register.
Oppositions and Litigation. No oppositions are pending or recorded at the EPO for any of the six European patents. Under EPO rules, the nine-month window for filing an opposition has closed for all six patents without any opposition having been initiated. Additionally, no patent litigation is pending in any European jurisdiction with respect to any of Meridian's European patents. The absence of oppositions and European litigation is a favorable indicator regarding the perceived strength and validity of the European patent portfolio.
IV. Trademark Portfolio
A. Registered U.S. Trademarks
Meridian holds three (3) registered U.S. trademarks, each of which is registered with the United States Patent and Trademark Office. A complete schedule of these trademarks, including registration numbers, marks, goods and services designations, and current status, is set forth in Appendix D.
"Meridian Surgical" (Standard Character Mark).
This trademark is registered with the USPTO as a standard character mark for goods and services in the fields of surgical instruments and orthopedic devices. The registration is active, and all renewal filings and declarations of use (including Sections 8 and 15 filings, as applicable) are current. The "Meridian Surgical" mark is the Company's primary corporate brand and is used across all product lines and marketing materials. Following closing of the transaction, this trademark will continue to be owned by Meridian Surgical Technologies, Inc. in its capacity as a wholly owned subsidiary of Solstice Biomedical Devices Ltd.
"ArthroNav" (Standard Character Mark).
This trademark is registered with the USPTO as a standard character mark for goods and services in the field of robotic-assisted surgical navigation systems and related software. The registration is active and all filings are current. The "ArthroNav" mark is critically important to the ArthroNav platform and the associated earnout milestones, as the mark will serve as the primary brand identity for the robotic-assisted arthroscopy product when it reaches commercialization. Our review of the prosecution history confirmed that no third-party oppositions or cancellation proceedings have been filed against this registration. The trademark clearance search conducted at the time of filing revealed no conflicting marks in the medical device space, and we are not aware of any subsequent third-party filings that would create a likelihood of confusion.
"PrecisionBlade" (Standard Character Mark).
This trademark is registered with the USPTO as a standard character mark for goods and services covering single-use arthroscopic surgical blades and blade cartridge systems. The registration is active, and all filings are current. The "PrecisionBlade" mark is a key product-line brand and is used extensively in marketing and on product packaging for Meridian's single-use blade products.
B. Unregistered Marks / Common Law Rights
In addition to the three registered trademarks, Meridian uses various product line sub-brands, model designations, and marketing names in its commercial activities that are not separately registered with the USPTO. These include specific model numbers and marketing names for shaver handpieces and certain descriptive product family names used in catalogs and promotional materials. While these marks are not registered, Meridian may possess common law trademark rights based on use in commerce, though such rights are inherently more limited in geographic scope and more difficult to enforce than rights arising from federal registration.
Recommendation. Following closing, Solstice should evaluate whether additional trademark registrations are warranted, particularly for ArthroNav sub-product names and module designations as commercialization approaches. Securing federal registrations for key sub-brands in advance of market launch would provide stronger enforcement rights and constructive nationwide notice, which will be important as the ArthroNav platform enters a competitive marketplace for robotic-assisted surgical technologies.
C. Domain Names
Meridian holds domain name registrations including meridianst.com and arthronav.com. We reviewed the WHOIS registration records for these domains and confirmed that each is currently registered in the name of Meridian Surgical Technologies, Inc. The domain registrations are current and are not subject to any pending dispute, transfer proceeding, or Uniform Domain-Name Dispute-Resolution Policy ("UDRP") action. These domains will continue to be held by Meridian as a wholly owned subsidiary of Solstice following closing.
V. Trade Secrets
A. Overview.  Meridian maintains a trade secret program covering proprietary algorithms, manufacturing processes, and clinical data. The Company has adopted a deliberate strategy of relying on trade secret protection, rather than patent protection, for certain categories of intellectual property where the nature of the technology makes reverse engineering difficult and where the value of maintaining secrecy outweighs the benefits of the limited-term exclusivity that a patent would provide. This section, prepared with contributions from Victoria Shen, Counsel, Regulatory & Life Sciences, addresses the key trade secrets identified during diligence and the measures in place to protect them.
B. Key Trade Secrets — Real-Time Cartilage Thickness Mapping Algorithms
The most strategically significant trade secrets in Meridian's portfolio are the proprietary algorithms for real-time cartilage thickness mapping. These algorithms are foundational to the ArthroNav Software Module and specifically to the Generation 2.0 upgrade that is the subject of Earnout Milestone 2 ($15,000,000 payable upon clearance or approval by June 30, 2027). The algorithms enable the ArthroNav system to generate a dynamic, three-dimensional map of articular cartilage thickness during an arthroscopic procedure using intraoperative ultrasound data, providing the surgeon with real-time visualization of cartilage condition without the need for pre-operative MRI or CT imaging.
Meridian elected a trade secret strategy for these algorithms to avoid the public disclosure of the algorithmic methodology that would be required under patent law. Because the algorithms operate within the ArthroNav software platform and are not susceptible to reverse engineering from the surgical device itself, trade secret protection was judged by Meridian's management and patent counsel to be the more effective form of IP protection for this particular technology.
Protection Measures Reviewed. We reviewed the following trade secret protection measures implemented by Meridian:
•  Non-Disclosure Agreements (NDAs). Non-disclosure agreements are in place with all employees and contractors who have access to the cartilage mapping algorithms or related proprietary information. These NDAs contain specific provisions regarding the confidential treatment of algorithmic source code, development documentation, and clinical validation data.
•  Limited Access Controls. Access to the cartilage mapping algorithms is restricted to the ArthroNav R&D team, which is led by Dr. Raj Subramanian and consists of a small, defined group of software engineers and data scientists. Access is granted on a need-to-know basis, and the team operates within a segmented information environment.
•  Confidential Information Provisions. The employment agreements executed by all Meridian employees contain confidential information provisions that define proprietary information broadly and impose ongoing obligations of confidentiality that survive termination of employment. The Meridian employee handbook includes additional policies regarding the handling and protection of confidential and proprietary information.
•  Physical and Digital Access Controls. Meridian's manufacturing and R&D facility, located at 45 Forge Creek Road, Exton, Pennsylvania 19341, employs physical access controls (badge-access systems, secured laboratory areas) and digital access controls (encrypted repositories, multi-factor authentication, audit logging) to restrict access to trade secret materials. The ArthroNav R&D laboratory is separately secured within the facility.
Assessment. Based on our review, Meridian's trade secret protections appear adequate and consistent with the standard of "reasonable measures" required under the Defend Trade Secrets Act of 2016 (18 U.S.C. § 1836 et seq.) and the Pennsylvania Uniform Trade Secrets Act (12 Pa. Cons. Stat. § 5302 et seq.). However, the inherent vulnerability of a trade secret strategy must be acknowledged: unlike patents, trade secrets can be lost through inadvertent disclosure, employee departure, or independent development by competitors.
The risk associated with key personnel departure—particularly the departure of Dr. Subramanian, who is the principal architect of the cartilage mapping algorithms—is mitigated by several contractual mechanisms:
•  Dr. Subramanian has executed a new three-year employment agreement with Meridian, providing for a base salary of $410,000 per annum, which will remain in effect through the earnout period.
•  Dr. Subramanian's employment agreement includes two-year post-termination non-competition and non-solicitation covenants, which restrict his ability to work for competitors or recruit Meridian personnel for a period of two years following any termination of employment.
•  The SPA contains an earnout conduct covenant that restricts the Buyer from reassigning, terminating, or otherwise diverting Dr. Subramanian from the ArthroNav development program without the Sellers' Representative's prior written consent during the earnout period.
These measures, taken together, provide substantial mitigation of the key-person risk, though they do not entirely eliminate the possibility that trade secret protection could be compromised over time.
C. Manufacturing Process Know-How
In addition to the cartilage mapping algorithms, Meridian maintains as trade secrets its proprietary manufacturing processes for PrecisionBlade single-use blades. These processes involve precision grinding techniques and specialized coating application methods that are central to the performance characteristics of the PrecisionBlade products, including blade sharpness, surface friction, and resistance to biological fouling. The manufacturing know-how has been developed over several years of iterative process refinement and represents a meaningful competitive advantage that would be difficult for competitors to replicate without access to Meridian's proprietary process documentation.
Meridian's supply relationship with Titanium Precision Components, Inc. ("TPC"), located at 215 Industrial Park Drive, Lancaster, Pennsylvania 17601, is relevant in this context. TPC supplies titanium instrument housings to Meridian under an exclusive supply agreement that includes confidentiality provisions. Importantly, TPC does not have access to Meridian's proprietary blade geometry specifications beyond what is strictly necessary for the fabrication of the titanium housing components. The blade manufacturing processes themselves are performed entirely in-house at Meridian's Exton facility, ensuring that the most sensitive manufacturing know-how remains within Meridian's direct control.
VI. Inbound License Agreement — Polytechnic Innovations, Ltd.
A. License Summary
Meridian is the licensee under a technology license agreement with Polytechnic Innovations, Ltd. ("Polytechnic"), a UK-domiciled private limited company that was originally established as a spinoff from a university research group. The key terms of this license are as follows:
Significance to the Transaction. This license is critical to the ArthroNav platform. The background IP licensed from Polytechnic includes foundational robotic navigation algorithms and sensor integration methodologies that are incorporated into certain subsystems of the ArthroNav architecture. Without this license, Meridian would not have the right to practice certain aspects of the ArthroNav technology, and the development and commercialization of the platform could be materially impaired. The 2.5% royalty on net sales of ArthroNav products will apply to all commercial sales post-510(k) clearance and should be factored into Solstice's revenue projections, financial models, and earnout economics for both Milestone 1 and Milestone 2.
A summary of the key terms of the Polytechnic license agreement is set forth in Appendix E.
B. Diligence Observations
We reviewed the Polytechnic license agreement in its entirety, including all amendments and side letters. Our principal observations are as follows:
•  No Default or Breach. No default or breach of the license agreement by either party was identified. Meridian has complied with all material obligations under the agreement, and no notices of default or cure have been issued or received.
•  Royalty Payments Current. All royalty payments are current. Because ArthroNav is a pre-commercial product, royalty obligations to date have been de minimis, consisting solely of nominal development-stage milestone payments as specified in the license agreement. No delinquencies or disputes regarding royalty calculations were identified.
•  IP Ownership Chain. The IP ownership chain from the originating university research group to Polytechnic has been confirmed. Polytechnic holds clear title to the licensed patents through properly executed assignments from the university, and we reviewed copies of the relevant assignment documents.
•  No Termination Rights Triggered by the Acquisition. Given the absence of a change-of-control provision, the proposed acquisition will not trigger any consent requirement, termination right, or renegotiation clause under the license agreement. The license will remain in full force and effect following closing without the need for any action by Polytechnic.
VII. Outbound Licenses
No material outbound licenses of Meridian's intellectual property were identified during our review. Meridian has not granted any exclusive patent licenses, exclusive trademark licenses, or technology transfer agreements to third parties.
The sole outbound IP arrangement identified is a limited, non-exclusive trademark license granted to OrthoLink Distribution, LLC ("OrthoLink"), located at 9400 Snowden River Parkway, Suite 300, Columbia, Maryland 21045. Under the Distribution Agreement between Meridian and OrthoLink, OrthoLink is authorized to use the "Meridian Surgical" and "PrecisionBlade" trademarks in connection with distribution activities within the eastern United States. The Distribution Agreement has a three-year term expiring in December 2025, and OrthoLink holds exclusive distribution rights for the eastern United States during the term.
The trademark license granted to OrthoLink is standard in nature for distribution arrangements and is limited to the use of the marks in connection with the marketing, promotion, and sale of Meridian products. The license does not constitute a transfer of ownership or an independent right to use the marks outside the distribution relationship. Upon termination or expiration of the Distribution Agreement, the trademark license reverts to Meridian, and OrthoLink's rights to use the marks cease.
No IP assignment, co-ownership, or joint development provisions were identified in the OrthoLink Distribution Agreement, and the arrangement does not create any third-party rights in Meridian's intellectual property that would survive the expiration of the distribution term.
VIII. IP-Related Litigation — *Hartwell Orthopedic Solutions, Inc. v. Meridian Surgical Technologies, Inc.*
A. Case Summary
The sole pending IP-related litigation involving Meridian is the action captioned Hartwell Orthopedic Solutions, Inc. v. Meridian Surgical Technologies, Inc., Civil Action No. 2:23-cv-04817, pending in the United States District Court for the Eastern District of Pennsylvania. The key details of this action are as follows:
Hartwell is a mid-size orthopedic device company that competes with Meridian in the powered surgical shaver market. In its complaint, Hartwell alleges that certain of Meridian's powered shaver blade products incorporate a blade design configuration that falls within the scope of one or more claims of the '224 Patent. Hartwell seeks damages in the form of a reasonable royalty, injunctive relief, and attorney's fees, though no willfulness allegations have been asserted that would support a claim for enhanced damages under 35 U.S.C. § 284.
A summary of the Hartwell litigation status and damages analysis is set forth in Appendix F.
B. Status of Litigation
Meridian has retained Braddock & Lyle LLP, located at 1600 Arch Street, Suite 2000, Philadelphia, Pennsylvania 19103, as outside litigation counsel for the defense of the Hartwell action. The lead counsel is Deborah Lyle, a partner in the firm's patent litigation group.
Meridian has filed a motion for summary judgment asserting two principal defenses: (i) non-infringement, on the grounds that Meridian's accused powered shaver blade products do not meet one or more limitations of the asserted claims of the '224 Patent under a proper claim construction; and (ii) invalidity, on the grounds that the asserted claims are anticipated or rendered obvious by certain prior art references not considered by the examiner during prosecution of the '224 Patent. The motion for summary judgment is currently pending before the court, and a decision is expected in the second half of 2024.
We have reviewed the summary judgment briefing, the expert declarations submitted in support of Meridian's motion, and the relevant claim construction analysis. While the outcome of any litigation is uncertain, the summary judgment motion presents a credible basis for a favorable ruling on either or both grounds asserted by Meridian.
C. Damages Exposure
Meridian's litigation counsel at Braddock & Lyle LLP has provided an estimate of potential damages exposure in the range of Two Million Five Hundred Thousand Dollars ($2,500,000) to Five Million Dollars ($5,000,000) in the event that Hartwell prevails on the merits. This estimate is based on a reasonable royalty analysis applied to Meridian's historical and projected powered shaver blade sales during the relevant damages period. The estimate assumes a hypothetical negotiation framework consistent with Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970), and takes into account the competitive landscape, the relative contribution of the patented feature to the overall product, and comparable license agreements in the powered surgical instrument space.
Because Hartwell has not alleged willful infringement, enhanced damages under 35 U.S.C. § 284 are not at issue in this case. Similarly, the case does not present the type of exceptional circumstances that would support an award of attorney's fees under 35 U.S.C. § 285.
D. Impact on Transaction
The Hartwell litigation has been fully disclosed in the Disclosure Schedules to the Stock Purchase Agreement and is subject to specific indemnification obligations of the Sellers as set forth in Article X of the SPA. The following observations are relevant to the transaction:
•  Product Line Isolation. The Hartwell litigation relates solely to certain powered shaver blade products and does not affect the ArthroNav platform or the PrecisionBlade single-use blade product line. The '224 Patent at issue covers a particular powered shaver blade design configuration, and the claims do not extend to single-use arthroscopic blades (which operate on a different mechanical principle) or to robotic-assisted navigation technology.
•  Freedom-to-Operate for Core Assets. Based on our review of the claim construction briefing and the specifications of the accused products, Meridian's ArthroNav platform and core PrecisionBlade products do not implicate the Hartwell '224 Patent claims. The risk presented by the Hartwell litigation is confined to the powered shaver blade product line.
•  Indemnification and Insurance Coverage. The indemnification provisions of the SPA, including the Twenty-Six Million Four Hundred Thousand Dollar ($26,400,000) indemnity escrow held at Keystone Escrow Services, Inc., provide financial protection to Solstice in the event of a loss. Additionally, the Ridgeline Mutual Insurance Company buy-side representations and warranties insurance ("RWI") policy (Policy No. RMI-RWI-2024-08172, with $40,000,000 in aggregate coverage) may provide additional coverage for losses arising from breaches of the IP representations and warranties in the SPA, subject to the terms, conditions, and exclusions of that policy.
Recommendation. We recommend that Solstice continue to monitor the pending summary judgment motion and any settlement discussions that may arise. Coordination with Braddock & Lyle LLP should continue through closing and into the post-closing period, with regular reporting to Solstice's legal team regarding case developments. The combination of the pending summary judgment motion, the SPA indemnification framework, the escrow, and the RWI policy provides an adequate risk management structure for this litigation.
IX. Freedom-to-Operate Analysis
A. Methodology.  We conducted patent landscape searches in the United States and Europe in the fields most directly relevant to Meridian's products and the ArthroNav development platform, including robotic-assisted arthroscopy, arthroscopic blade design, powered shaver systems, and cartilage mapping technology. These searches were performed using commercial patent search databases and the public records of the USPTO and EPO, supplemented by targeted citation analyses of patents in the relevant technology clusters.
In addition, we reviewed Meridian's internal freedom-to-operate analyses previously prepared by Meridian's patent counsel at Whitmore Crane & Pfeiffer LLP. These internal analyses were conducted in the ordinary course of Meridian's product development process and provide additional context regarding Meridian's awareness of potentially relevant third-party patent rights.
B. Findings.  ArthroNav Platform. No third-party patents were identified—other than the Polytechnic licensed patents, which are addressed by the inbound license agreement described in Section VI above—that are reasonably likely to be asserted against the ArthroNav system as currently designed. Our search included a review of patent portfolios held by the major participants in the robotic-assisted surgery space. The identified predicate device for 510(k) purposes, K203847 (the Marlowe Asset Management Robotic Surgical Assist System), does not appear to be associated with patent assertions in the arthroscopic field, and the manufacturer of that predicate device has not, to our knowledge, engaged in patent enforcement activity targeting competitors in the arthroscopy market. While the freedom-to-operate landscape for robotic-assisted surgery is complex and evolving, we did not identify any specific patent that presents a material near-term risk to the ArthroNav platform's development or commercialization.
PrecisionBlade Products. Apart from the Hartwell '224 Patent litigation discussed in Section VIII—which is limited to powered shaver blades and does not implicate the single-use PrecisionBlade products—no material freedom-to-operate concerns were identified for the PrecisionBlade single-use blade product line. The PrecisionBlade products are well-differentiated from competing products in terms of blade geometry and cartridge mechanism design, and Meridian's own patent portfolio provides defensive protection in this space.
Powered Shaver Systems. The Hartwell litigation represents the only identified freedom-to-operate risk for Meridian's powered shaver product line. As discussed in Section VIII, Meridian's summary judgment motion is pending, and potential damages exposure is estimated at $2.5 million to $5.0 million. No additional third-party patents were identified that present a material infringement risk for the powered shaver product line.
Cartilage Mapping Algorithms (Trade Secrets). Because the real-time cartilage thickness mapping algorithms are maintained as trade secrets rather than patented, there is no patent publication or patent disclosure associated with this technology that could create a third-party freedom-to-operate issue for Meridian. However, the trade secret strategy also means that Meridian does not hold patent exclusivity over the algorithmic approach itself. Competitors could, in principle, independently develop similar or functionally equivalent cartilage mapping algorithms without infringing any Meridian patent. This is an inherent limitation of the trade secret strategy that Meridian has adopted, and it should be considered in the context of Solstice's competitive analysis and long-term IP strategy for the ArthroNav platform.
X. IP-Related Contract Provisions in Key Agreements
A. Titanium Precision Components, Inc. Supply Agreement
Meridian is party to an exclusive supply agreement with Titanium Precision Components, Inc. ("TPC") for the supply of titanium instrument housings used in the manufacture of Meridian's surgical instruments. The key IP-related provisions of this agreement are as follows:
•  Term and Scope. The agreement has a five-year term expiring in March 2027 and provides for a minimum annual purchase commitment by Meridian of Three Million Two Hundred Thousand Dollars ($3,200,000).
•  Confidentiality. The agreement contains robust confidentiality provisions requiring TPC to maintain the confidentiality of Meridian's proprietary specifications and design information provided in connection with the supply relationship.
•  Change of Control. The agreement includes a change-of-control provision requiring Meridian to obtain TPC's consent to an assignment or change of control. TPC's consent to the proposed Solstice acquisition was obtained on August 5, 2024, and a copy of the consent letter is included in the data room.
•  IP Ownership. The agreement includes clear IP ownership provisions under which TPC acknowledges that all designs, specifications, and proprietary information provided by Meridian remain the sole property of Meridian. There are no license-back, joint IP, or co-ownership provisions in the agreement.
B. OrthoLink Distribution, LLC Distribution Agreement
The OrthoLink Distribution Agreement, discussed in Section VII above, contains the following IP-related provisions:
•  Term. Three-year term expiring December 2025; exclusive distribution for the eastern United States.
•  Trademark License. Non-exclusive trademark license limited to the use of the "Meridian Surgical" and "PrecisionBlade" marks in connection with OrthoLink's distribution activities. The license reverts to Meridian upon termination or expiration of the Distribution Agreement.
•  Change of Control. The agreement requires notice to OrthoLink in the event of a change of control of Meridian (notice only; consent is not required). Notice was provided to OrthoLink on August 12, 2024.
•  No IP Assignment or Co-Ownership. The Distribution Agreement does not contain any IP assignment, co-ownership, or joint development provisions.
C. Polytechnic Innovations, Ltd. License Agreement
The Polytechnic license agreement is addressed in detail in Section VI above. As noted, the license contains no change-of-control provision and is freely assignable by Meridian in connection with the proposed transaction.
XI. UCC and Lien Search Results
We conducted Uniform Commercial Code ("UCC") lien searches in Delaware (Meridian's state of incorporation) and Pennsylvania (Meridian's principal place of business and manufacturing location) to identify any security interests, liens, or encumbrances on Meridian's intellectual property assets. The results of these searches are as follows:
•  Ironclad Commercial Lending, LLC. Ironclad Commercial Lending, LLC holds a blanket security interest in all assets of Meridian, including intellectual property, under the existing Twelve Million Dollar ($12,000,000) revolving credit facility. The outstanding balance under this facility is Seven Million Three Hundred Forty-One Thousand Eight Hundred Twenty-Two Dollars and Sixteen Cents ($7,341,822.16) as of the date of this memorandum. Pursuant to the terms of the credit facility and the related security agreement, the Ironclad lien will be released upon full payoff of the outstanding balance, and UCC-3 termination statements will be filed with the Delaware Secretary of State and the applicable Pennsylvania filing offices. The SPA contemplates that the Ironclad indebtedness will be paid off at closing from the purchase price proceeds, and the payoff letter and form UCC-3 termination statements have been requested from Ironclad.
•  No Other Liens. No other liens, security interests, or encumbrances on Meridian's intellectual property were identified in the UCC search results or through our review of the USPTO assignment records and other applicable databases.
Recommendation. We recommend that Solstice confirm receipt of fully executed UCC-3 termination statements from Ironclad Commercial Lending, LLC at or promptly following closing to ensure that the lien on Meridian's IP assets is released of record. This should be included as a closing deliverable or a post-closing covenant in the SPA, and the filing of the termination statements should be independently verified by Solstice's counsel within a reasonable period following closing.
XII. ISO Certification and Quality System IP Considerations
Meridian's manufacturing facility, located at 45 Forge Creek Road, Exton, Pennsylvania 19341, holds ISO 13485:2016 certification, which establishes the international standard for quality management systems applicable to the design and manufacture of medical devices. This section was prepared with contributions from Victoria Shen, Counsel, Regulatory & Life Sciences.
The ISO 13485 certification supports the quality management system documentation that is integral to both the manufacture of Meridian's existing commercial products and the preparation of the ArthroNav 510(k) submission. The FDA's acceptance of a 510(k) submission typically depends in part on the applicant's demonstrated compliance with current good manufacturing practice ("cGMP") requirements, and ISO 13485 certification provides evidence of such compliance. A lapse in ISO certification could create complications for the ArthroNav 510(k) submission process and, by extension, could affect the earnout milestone timelines established in the SPA.
Recommendation. Solstice should ensure timely renewal of the ISO 13485 certification prior to the April 2025 expiration date. Given the lead time typically required for certification renewal audits and any required corrective actions, the renewal process should be initiated promptly following closing. A lapse in certification could affect not only the ArthroNav FDA submission timeline but also the ongoing manufacture and distribution of PrecisionBlade and powered shaver products, which rely on the quality system infrastructure validated by the ISO certification.
XIII. Recommendations and Risk Summary
A. Summary of IP Strengths
Based on our review, Meridian's intellectual property portfolio presents the following material strengths:
1.  Robust Patent Portfolio. The portfolio of fourteen (14) issued U.S. patents, six (6) European patents, and three (3) pending U.S. patent applications is well-aligned with Meridian's commercial product lines and the ArthroNav development pipeline. The patents cover the full spectrum of Meridian's technology, from single-use blade design to robotic navigation architecture, and provide meaningful barriers to competitive entry across all major product areas.
2.  Foundational ArthroNav Patent Protection. The key patent, U.S. Patent No. 11,432,887, provides strong and broadly drafted protection for the ArthroNav platform's core robotic navigation technology. The prosecution history is clean, no post-grant challenges have been filed, and the remaining patent term extends through approximately 2042—well beyond the product's anticipated commercial lifecycle.
3.  Well-Maintained Trademark Registrations. The three registered U.S. trademarks—"Meridian Surgical," "ArthroNav," and "PrecisionBlade"—cover Meridian's core brands and product lines. All registrations are active and current, and no third-party oppositions or cancellation proceedings are pending.
4.  Adequate Trade Secret Protections. The trade secret protections for the real-time cartilage mapping algorithms, while inherently more vulnerable than patent rights, appear adequate based on the organizational, contractual, and technical safeguards that Meridian has implemented.
5.  Favorable Inbound License Terms. The Polytechnic Innovations license provides the necessary background IP for the ArthroNav platform on commercially reasonable terms, including a 2.5% royalty on net sales, exclusive rights in the field of orthopedic arthroscopic surgery, and—critically—no change-of-control provision that would require Polytechnic's consent or otherwise impede the proposed acquisition.
B. Summary of IP Risks
The following IP risks have been identified and should be considered in the context of the transaction:
1.  Hartwell Litigation. The pending Hartwell v. Meridian patent infringement action presents a moderate risk with estimated potential damages exposure of $2.5 million to $5.0 million. The risk is limited to the powered shaver blade product line and does not extend to the ArthroNav platform or the PrecisionBlade single-use blade products. Meridian's pending motion for summary judgment presents a credible basis for a favorable disposition, and the litigation has been properly disclosed in the SPA Disclosure Schedules and is subject to specific Seller indemnification. The indemnity escrow ($26,400,000) and the RWI policy ($40,000,000 aggregate coverage) provide additional financial protection.
2.  Trade Secret Dependency. The decision to maintain the cartilage mapping algorithms as trade secrets rather than patents creates a risk that competitors could independently develop similar or functionally equivalent technologies without infringing any Meridian intellectual property rights. This risk is mitigated by the key employee retention mechanisms in place (including Dr. Subramanian's three-year employment agreement, two-year post-termination non-compete, and the SPA earnout conduct covenant), but it cannot be entirely eliminated. The trade secret strategy is a considered business judgment by Meridian's management, and the decision not to patent the algorithms is reasonable given the difficulty of reverse engineering the software-based technology.
3.  ISO Certification Renewal. The ISO 13485 certification expires in April 2025, and a timely renewal is required to avoid disruption to manufacturing operations and the ArthroNav 510(k) submission process. This is a manageable administrative matter but requires prompt attention in the post-closing period.
4.  Pending Patent Application Outcomes. The three pending U.S. patent applications may or may not ultimately issue as patents. Non-issuance would not affect Meridian's existing commercial products, which are covered by the fourteen issued U.S. patents, but could limit future competitive protection for ArthroNav platform enhancements and next-generation PrecisionBlade coupling mechanisms. Patent prosecution outcomes are inherently uncertain and cannot be guaranteed.
C. Recommended Actions
Based on our diligence findings, we recommend the following actions:
1.  Disclosure Schedule Accuracy. Ensure that the Disclosure Schedules to the SPA accurately and completely reflect the Hartwell litigation, the Ironclad lien and all other IP encumbrances, the Polytechnic inbound license, and the OrthoLink trademark license. Any discrepancies between the diligence record and the Disclosure Schedules should be resolved prior to closing.
2.  UCC-3 Termination Filings. Confirm that Ironclad Commercial Lending, LLC files UCC-3 termination statements in Delaware and Pennsylvania at closing (or promptly thereafter) to release all security interests in Meridian's intellectual property. Solstice's counsel should independently verify the filing of these termination statements within a reasonable period following closing.
3.  IP Representations and Warranties. The SPA should include comprehensive IP representations and warranties covering, at a minimum: (a) sole ownership of all IP assets by Meridian, free and clear of encumbrances (subject to scheduled exceptions); (b) non-infringement of third-party IP rights (to the knowledge of the Sellers); (c) absence of undisclosed IP encumbrances, licenses, or transfer obligations; (d) validity and enforceability of all IP registrations; (e) proper execution of invention assignment agreements by all employees and contractors; and (f) compliance with the Polytechnic license agreement.
4.  Post-Closing IP Management. Following closing, Solstice should:
(a) Initiate the ISO 13485 certification renewal process promptly to avoid any lapse prior to the April 2025 expiration;
(b) Evaluate whether additional trademark registrations are warranted for ArthroNav sub-product names and module designations as commercialization approaches;
(c) Continue to monitor the Hartwell litigation proceedings and coordinate with Braddock & Lyle LLP on case strategy, settlement negotiations, and any developments relating to the pending summary judgment motion;
(d) Ensure continuity of compliance with the Polytechnic license agreement, including establishing internal tracking systems for royalty obligations as ArthroNav approaches commercialization; and
(e) Evaluate the pending U.S. patent applications and determine whether additional patent filings are warranted to strengthen coverage of the ArthroNav platform and PrecisionBlade product enhancements.
5.  Polytechnic License Compliance. Post-closing, Solstice should ensure that royalty tracking and reporting systems are in place for the Polytechnic license in advance of ArthroNav commercial launch. The 2.5% royalty on net sales will become a recurring obligation upon commercialization, and timely and accurate royalty reporting will be essential to maintaining the license in good standing.
6.  Tax Treatment Coordination. Confirm that the Section 338(h)(10) election and asset purchase treatment for tax purposes properly accounts for IP valuation and amortization. This analysis should be coordinated with Leonard Cross and the tax advisors at Brindoval & Albright LLP, including Eleanor Voss, to ensure that the IP assets are appropriately valued and that the amortization schedule reflects the useful life of the various categories of IP (patents, trade secrets, customer relationships, and goodwill).
XIV. Limitations and Qualifications
This memorandum is subject to the following limitations and qualifications:
1.  Document and Information Sources. This memorandum is based upon the documents and information made available by Meridian and its counsel, Whitmore Crane & Pfeiffer LLP, through the virtual data room established for this transaction, supplemented by public records searches conducted by Calderwood & Harkness LLP. The public records searched include the USPTO Patent Application Information Retrieval ("PAIR") system, the EPO Register, the USPTO Trademark Electronic Search System ("TESS") and Trademark Status and Document Retrieval ("TSDR") system, and Uniform Commercial Code filing records maintained by the Delaware Sec

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