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EMPLOYMENT AGREEMENT

SOLSTICE BIOMEDICAL, INC.

and

DR. MARCUS ELLSWORTH

Dated as of October 31, 2024

EMPLOYMENT AGREEMENT

This Employment Agreement (this "Agreement") is entered into as of October 31, 2024 (the "Effective Date"), by and between Solstice Biomedical, Inc., a Delaware corporation, with its principal offices located at 1200 Innovation Drive, Suite 400, Wilmington, Delaware 19801 (the "Company" or "Employer"), and Dr. Marcus Ellsworth, an individual residing in King of Prussia, Pennsylvania (the "Executive"). The Company and the Executive are each referred to herein individually as a "Party" and collectively as the "Parties."

RECITALS

WHEREAS, the Company is a wholly owned subsidiary of Solstice Biomedical Devices Ltd., a private limited company organized under the laws of Ireland (Companies Registration Office Number 648217), with its registered office at Solstice House, 14 Fitzwilliam Place, Dublin 2, D02 YF82, Ireland ("Parent");

WHEREAS, pursuant to that certain Stock Purchase Agreement, dated as of August 20, 2024 (the "Purchase Agreement"), among the Company, Meridian Surgical Technologies, Inc., a Delaware corporation ("Meridian"), the Sellers named therein, and Dr. Marcus Ellsworth, in his capacity as the Sellers' Representative, the Company has acquired all of the outstanding capital stock and vested options of Meridian;

WHEREAS, the Executive was the Founder, Chief Executive Officer, and largest individual shareholder of Meridian, holding 2,845,900 shares, representing approximately 38.2% of the outstanding common stock of Meridian immediately prior to the Closing;

WHEREAS, in connection with the closing of the transactions contemplated by the Purchase Agreement (the "Closing"), the Company desires to employ the Executive, and the Executive desires to be employed by the Company, on the terms and conditions set forth herein;

WHEREAS, the execution and delivery of this Agreement by the Executive is a condition to the Closing under Section 7.2(f) of the Purchase Agreement; and

NOW, THEREFORE, in consideration of the mutual covenants, promises, and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

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ARTICLE 1 — DEFINITIONS

As used in this Agreement, the following terms shall have the meanings set forth below. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Purchase Agreement, unless the context otherwise requires.

1.1 "Affiliate" means, with respect to any Person, any other Person that, directly or indirectly, through one or more intermediaries, Controls, is Controlled by, or is under common Control with, such Person. For purposes of this definition, "Control" (including the terms "Controlled by" and "under common Control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise.

1.2 "ArthroNav Platform" means the ArthroNav Robotic-Assisted Arthroscopy System and all related software modules, including, without limitation, the Real-Time Cartilage Mapping module (also referred to as the Generation 2.0 upgrade), together with all associated intellectual property, know-how, documentation, and regulatory submissions, as more fully described in Schedule 1.1(a) of the Purchase Agreement.

1.3 "Base Salary" has the meaning set forth in Section 3.1 of this Agreement.

1.4 "Board" means the Board of Directors of the Company, as constituted from time to time.

1.5 "Cause" has the meaning set forth in Section 5.2 of this Agreement.

1.6 "Change of Control" means the occurrence of any of the following events: (a) the consummation of a merger, consolidation, or similar business combination involving the Company or Parent with or into another entity, unless, immediately following such transaction, the holders of the outstanding equity securities of Parent immediately prior to such transaction continue to hold, directly or indirectly, more than fifty percent (50%) of the combined voting power of the outstanding equity securities of the surviving or resulting entity; (b) the sale, transfer, or other disposition of all or substantially all of the assets of the Company and its Affiliates, taken as a whole, to any Person or group of related Persons; or (c) the acquisition by any Person or group of related Persons, directly or indirectly, of beneficial ownership of more than fifty percent (50%) of the combined voting power of the outstanding equity securities of Parent; provided, however, that no Change of Control shall be deemed to have occurred as a result of any intra-group reorganization, restructuring, or internal transfer of equity interests or assets among Parent, the Company, and/or any of their respective wholly owned subsidiaries.

1.7 "Closing Date" means October 31, 2024.

1.8 "Confidential Information" has the meaning set forth in Section 7.1 of this Agreement.

1.9 "Disability" has the meaning set forth in Section 5.4 of this Agreement.

1.10 "Earnout" means the contingent consideration of up to Thirty-Five Million Dollars ($35,000,000) in the aggregate payable under Article II of the Purchase Agreement upon achievement of the specified FDA 510(k) regulatory milestones set forth therein, subject to the terms and conditions of the Purchase Agreement.

1.11 "Earnout Period" means the period commencing on the Closing Date and ending on June 30, 2027.

1.12 "Employment Period" or "Term" has the meaning set forth in Section 2.2 of this Agreement.

1.13 "Good Reason" has the meaning set forth in Section 5.3 of this Agreement.

1.14 "Person" means any individual, corporation, partnership, limited liability company, trust, estate, governmental authority, or other entity.

1.15 "Purchase Agreement" means the Stock Purchase Agreement, dated as of August 20, 2024, among the Company, Meridian, the Sellers named therein, and Dr. Marcus Ellsworth, in his capacity as the Sellers' Representative, as the same may be amended, supplemented, or modified from time to time in accordance with its terms.

1.16 "Restricted Period" has the meaning set forth in the Non-Competition and Non-Solicitation Agreement referenced in Section 7.2 of this Agreement.

1.17 "Sellers' Representative" means Dr. Marcus Ellsworth, in his capacity as the Sellers' Representative under and as defined in the Purchase Agreement.

1.18 "Term" has the meaning set forth in Section 2.2 of this Agreement.

ARTICLE 2 — EMPLOYMENT AND TERM

Section 2.1 — Position and Duties

(a) The Company hereby employs the Executive, and the Executive hereby accepts employment with the Company, as Division President, Orthopedic Instruments. In such capacity, the Executive shall report directly to Dr. Fiona Gallagher, Chief Executive Officer of Parent, or such other senior executive of Parent as Dr. Gallagher may designate from time to time (any such designee, together with Dr. Gallagher, the "Reporting Officer"). The Executive shall have overall leadership and management responsibility for the Meridian orthopedic instruments business unit (the "Business Unit"), as integrated within the Company's organizational structure following the Closing, including, without limitation, oversight of: (i) existing Meridian product lines, including single-use arthroscopic blades, powered shaver systems, and PrecisionBlade products; (ii) the ArthroNav Platform development program; (iii) manufacturing operations; (iv) sales and marketing for the Business Unit; and (v) such other duties and responsibilities consistent with the Executive's position as may be reasonably assigned by the Reporting Officer from time to time.

(b) The Executive's principal place of work shall be Meridian's headquarters located at 780 Keystone Boulevard, Suite 200, King of Prussia, Pennsylvania 19406. The Executive acknowledges that the performance of his duties will require periodic travel to the Company's manufacturing facility located at 45 Forge Creek Road, Exton, Pennsylvania 19341, as well as to other Company, Parent, or Affiliate locations, including Parent's offices in Dublin, Ireland, and such other domestic and international locations as may be reasonably required in connection with the Executive's duties.

(c) During the Employment Period, the Executive shall devote substantially all of his business time, attention, skill, and best efforts to the faithful and diligent performance of his duties hereunder; provided, however, that the Executive may, without violating this Agreement:

(i) serve on the boards of directors of up to two (2) entities that do not compete with the Company or its Affiliates, subject to the prior written consent of the Board, which consent shall not be unreasonably withheld, conditioned, or delayed;

(ii) engage in charitable, civic, educational, religious, and professional activities and serve on the boards of charitable, civic, educational, religious, and professional organizations;

(iii) manage his personal investments and passive business interests; and

(iv) fulfill his duties and obligations as Sellers' Representative under the Purchase Agreement,

in each case, so long as such activities, individually or in the aggregate, do not materially interfere with the Executive's performance of his duties and responsibilities under this Agreement.

Section 2.2 — Term

(a) The initial term of the Executive's employment under this Agreement shall commence on the Effective Date and shall continue until October 31, 2027 (the "Initial Term"), unless earlier terminated in accordance with the provisions of Article 5 of this Agreement.

(b) Following the expiration of the Initial Term, this Agreement shall automatically renew for successive periods of one (1) year each (each, a "Renewal Term"), unless either Party provides written notice of non-renewal to the other Party at least ninety (90) days prior to the expiration of the then-current Initial Term or Renewal Term, as applicable. For the avoidance of doubt, a notice of non-renewal delivered by the Company shall not constitute a termination without Cause for purposes of Section 5.5, and a notice of non-renewal delivered by the Executive shall not constitute a resignation for Good Reason for purposes of Section 5.3, unless the circumstances otherwise independently satisfy the applicable definition.

(c) The Initial Term, together with any Renewal Terms, shall be referred to collectively herein as the "Employment Period" or the "Term."

ARTICLE 3 — COMPENSATION AND BENEFITS

Section 3.1 — Base Salary

(a) During the Employment Period, the Company shall pay the Executive an annual base salary of Five Hundred Twenty-Five Thousand Dollars ($525,000) (the "Base Salary"), payable in accordance with the Company's standard payroll practices as in effect from time to time (currently bi-weekly), less all applicable federal, state, and local tax withholdings and other required deductions.

(b) The Base Salary shall be reviewed annually by the Board (or any duly authorized compensation committee thereof), with the first such review to occur no later than October 31, 2025. Following each annual review, the Board may, in its sole discretion, increase the Base Salary; provided, however, that during the Initial Term, the Base Salary shall not be decreased below Five Hundred Twenty-Five Thousand Dollars ($525,000) without the Executive's prior written consent.

Section 3.2 — Annual Bonus

(a) During the Employment Period, the Executive shall be eligible to participate in the Company's annual performance bonus program, as established and administered by the Board (or any duly authorized compensation committee thereof), with a target annual bonus equal to fifty percent (50%) of the Executive's then-current Base Salary (i.e., an initial target of Two Hundred Sixty-Two Thousand Five Hundred Dollars ($262,500)) (the "Target Bonus"). The Target Bonus shall be based on the achievement of individual and Business Unit performance objectives established by the Board in consultation with the Executive at the beginning of each fiscal year, or as soon as practicable thereafter.

(b) The actual annual bonus amount payable to the Executive for any fiscal year may range from zero percent (0%) to one hundred fifty percent (150%) of the Target Bonus, as determined by the Board in its reasonable discretion based on the level of achievement of the applicable performance objectives. The Board shall set forth the applicable performance objectives, weighting, and bonus calculation methodology in writing within sixty (60) days following the commencement of each fiscal year.

(c) For the fiscal year ending December 31, 2024 (the "Stub Period"), the Executive's annual bonus opportunity shall be prorated based on the number of calendar days of employment during such fiscal year (from October 31, 2024 through December 31, 2024), divided by 366 (the total number of calendar days in the 2024 fiscal year). The performance objectives for the Stub Period shall be established by the Board within thirty (30) days following the Effective Date.

(d) Annual bonus payments for any fiscal year shall be paid no later than March 15 of the calendar year immediately following the fiscal year to which such bonus relates. Except as otherwise provided in Section 5.5 with respect to a pro-rata bonus upon a qualifying termination, the Executive must remain continuously employed by the Company through the date on which the annual bonus is actually paid in order to be eligible to receive such bonus. For the avoidance of doubt, if the Executive's employment is terminated for any reason prior to the bonus payment date, no annual bonus shall be payable for the fiscal year in which such termination occurs, except as expressly provided in Article 5.

Section 3.3 — Equity Incentive Compensation

(a) During the Employment Period, the Executive shall be eligible to receive equity-based awards, which may include stock options, restricted stock units, performance share units, or other equity or equity-linked awards, under any long-term incentive plan or equity compensation program adopted by Parent or the Company for the benefit of senior executives, as determined by the Board, the compensation committee of Parent's board of directors, or their respective designees, in their sole discretion.

(b) Any such equity awards shall be subject to the terms and conditions of the applicable plan and award agreement, including vesting schedules, forfeiture provisions, and any clawback or recoupment policies adopted by Parent or the Company.

(c) The Board shall consider making an initial equity grant to the Executive within ninety (90) days following the Effective Date. The type, size, and terms of any such initial grant shall be determined by the Board in its sole discretion, taking into account the Executive's role, the equity incentive compensation provided to other similarly situated senior executives within the Solstice group, and such other factors as the Board deems relevant.

Section 3.4 — Benefits

(a) During the Employment Period, the Executive shall be entitled to participate in all employee benefit plans, programs, policies, and arrangements generally available to similarly situated senior executives of the Company and its Affiliates, as such plans, programs, policies, and arrangements may be in effect from time to time, including, without limitation:

(i) group health insurance (medical, dental, and vision coverage), with the Company paying the same percentage of premiums as it pays for other senior executives;

(ii) group life insurance and accidental death and dismemberment insurance;

(iii) short-term and long-term disability insurance;

(iv) the Company's 401(k) retirement savings plan, including any employer matching contributions available thereunder; and

(v) any other fringe benefits or perquisites that the Company may make available to senior executives from time to time.

The Company reserves the right to amend, modify, or terminate any employee benefit plan or program at any time in accordance with applicable law, provided that any such amendment, modification, or termination is applied on a basis consistent with the treatment of other similarly situated senior executives.

(b) The Executive shall be entitled to twenty-five (25) days of paid vacation per calendar year, prorated for any partial calendar year of employment during the first and last years of the Employment Period. Unused vacation days may be carried over, accrued, and/or forfeited in accordance with the Company's vacation policy as in effect from time to time. In addition, the Executive shall be entitled to all Company-recognized holidays during the Employment Period.

(c) The Company shall reimburse the Executive for all reasonable and documented out-of-pocket business expenses incurred by the Executive in the performance of his duties hereunder, including travel expenses, in accordance with the Company's expense reimbursement policy as in effect from time to time. The Executive shall submit expense reports with appropriate supporting documentation within thirty (30) days following the date on which such expenses are incurred, and the Company shall process reimbursements within thirty (30) days following receipt of a properly documented expense report.

Section 3.5 — D&O Insurance

The Executive acknowledges and agrees that the Company has obtained, at the Company's sole cost and expense, a six (6)-year directors' and officers' liability tail (run-off) insurance policy from Northbridge Specialty Insurance Co., Policy No. NSI-DO-2024-08732, arranged through Caldwell Risk Advisors, Inc., with a per occurrence and aggregate limit of Ten Million Dollars ($10,000,000) and a prepaid premium of Three Hundred Eighty-Five Thousand Dollars ($385,000) (the "D&O Tail Policy"). The D&O Tail Policy provides coverage for the acts and omissions of Meridian's pre-Closing directors and officers (including the Executive) occurring during the period prior to the Closing Date, and shall remain in full force and effect for a period of six (6) years following the Closing Date. The Company shall not cancel, reduce coverage under, or fail to maintain the D&O Tail Policy without the Executive's prior written consent.

ARTICLE 4 — EARNOUT COOPERATION OBLIGATIONS

Section 4.1 — Dual Capacity Acknowledgment

The Parties acknowledge and agree that, as of the Effective Date, the Executive serves in a dual capacity: (a) as an employee of the Company in the role of Division President, Orthopedic Instruments, with fiduciary and contractual duties owed to the Company as set forth in this Agreement, and (b) as the Sellers' Representative under the Purchase Agreement, with authority and responsibilities on behalf of all Sellers (as defined in the Purchase Agreement), including, without limitation, authority over post-closing earnout determinations and disputes, indemnification claims against and by the Sellers, escrow release matters (including with respect to the Indemnity Escrow and the Earnout Escrow Reserve), and net working capital adjustment disputes. Nothing in this Agreement shall be deemed to limit, restrict, modify, or otherwise affect the Executive's rights, duties, authority, or obligations as Sellers' Representative under the Purchase Agreement or the Sellers' Representative Appointment and Joinder Agreement, nor shall the Executive's good faith exercise of such rights and duties constitute a breach of this Agreement, a violation of any duty owed to the Company, or grounds for termination for Cause under Section 5.2.

Section 4.2 — Cooperation in Pursuit of Earnout Milestones

(a) The Executive acknowledges that the Purchase Agreement provides for the Earnout consisting of contingent consideration of up to Thirty-Five Million Dollars ($35,000,000) in the aggregate, comprised of the following two milestones:

Milestone 1: Twenty Million Dollars ($20,000,000), payable upon FDA 510(k) clearance of the ArthroNav Robotic-Assisted Arthroscopy System (Generation 1.0) on or before December 31, 2026.

Milestone 2: Fifteen Million Dollars ($15,000,000), payable upon FDA 510(k) clearance of the ArthroNav Software Module for Real-Time Cartilage Mapping (Generation 2.0 upgrade) on or before June 30, 2027.

(b) During the Earnout Period, the Executive shall use his commercially reasonable efforts to cooperate with and support the Company's pursuit of both earnout milestones, including, without limitation:

(i) providing guidance and institutional knowledge regarding the ArthroNav Platform's development history, design control documentation, design verification and validation testing, regulatory strategy, and prior interactions with the U.S. Food and Drug Administration (the "FDA"), including the results and outcomes of the Q-Sub pre-submission meeting completed in March 2024, feedback received from FDA regarding the proposed regulatory pathway, and the identification of predicate device K203847;

(ii) supporting the preparation, review, and filing of 510(k) premarket notification submissions for the ArthroNav Platform, with a target filing date for the Generation 1.0 submission during the second quarter of 2025;

(iii) collaborating closely with Dr. Raj Subramanian, Senior Vice President, ArthroNav Development, and Dr. Niamh Cassidy, Vice President, Regulatory Affairs of Parent, and their respective teams on all regulatory matters related to the ArthroNav Platform, including preparation of regulatory submissions, responses to FDA information requests, and any necessary bench testing, clinical data analysis, or biocompatibility assessments;

(iv) assisting with communications with Pinnacle Conformity Assessment Services, LLC, the Company's ISO certification body, in connection with the Company's ISO 13485:2016 quality management system certification (Certificate No. PCA-2022-04819, expiring April 2025), including any recertification, surveillance, or transition audits that may be necessary to support the 510(k) submissions and ongoing regulatory compliance;

(v) facilitating the maintenance of continued relationships with Polytechnic Innovations, Ltd. under the existing license agreement between Meridian and Polytechnic Innovations, Ltd. (providing for a royalty of 2.5% of net ArthroNav sales), to the extent such relationships are relevant to the ArthroNav Platform development, including ensuring continued access to licensed technology and fulfillment of any obligations under such license agreement; and

(vi) making himself reasonably available for meetings, calls, and discussions with FDA, regulatory consultants, and internal development teams as reasonably requested by the Company.

(c) The Executive's obligations under this Section 4.2 are subject to, and shall not conflict with, the Executive's rights and obligations as Sellers' Representative under the Purchase Agreement. The Parties agree that the Executive's cooperation obligations under this Section 4.2 are in addition to, and not in lieu of, the Company's independent covenants under the Purchase Agreement regarding the conduct of the ArthroNav development program during the Earnout Period.

Section 4.3 — Information Rights Regarding Earnout

(a) In his capacity as Sellers' Representative, the Executive shall be entitled to reasonable access to information regarding the Company's progress toward the achievement of the earnout milestones, as and to the extent provided in the Purchase Agreement.

(b) During the Earnout Period, the Company shall not unreasonably restrict the Executive's access, in his capacity as Sellers' Representative, to: (i) ArthroNav program status reports, including engineering progress reports, design review documentation, and project timelines; (ii) FDA correspondence related to the ArthroNav Platform, including any 510(k) submissions, FDA requests for additional information, and FDA clearance or denial letters; and (iii) R&D budget information pertaining to the ArthroNav program, including actual expenditures relative to the budget commitment. Such access shall be consistent with the Company's covenant under Section 2.4(b) of the Purchase Agreement to maintain a dedicated ArthroNav R&D budget of no less than Six Million Dollars ($6,000,000) per year during the Earnout Period.

(c) The Executive acknowledges that information received in his capacity as Sellers' Representative constitutes Confidential Information of the Company and shall be used solely for the purpose of fulfilling his duties as Sellers' Representative and shall not be disclosed to third parties except as permitted under the Purchase Agreement and applicable law.

Section 4.4 — No Conflict Waiver

The Parties acknowledge and agree that a potential conflict of interest exists between the Executive's fiduciary and contractual duties as an employee of the Company (which require the Executive to serve the Company's best interests) and the Executive's role as Sellers' Representative (which requires the Executive to protect and advance the interests of the Sellers, including with respect to the Earnout, indemnification claims, and escrow releases). The Parties agree that: (a) good faith actions taken by the Executive in his capacity as Sellers' Representative, including, without limitation, asserting claims or disputes against the Company regarding earnout achievement, challenging the Company's calculations or determinations with respect to earnout milestones, pursuing or defending indemnification claims under Article VIII of the Purchase Agreement, or contesting the release or withholding of amounts from the Indemnity Escrow or the Earnout Escrow Reserve, shall not constitute a breach of any duty owed by the Executive to the Company under this Agreement, at law, or in equity; (b) the Company waives any claim against the Executive based on any conflict of interest arising from such dual capacity to the fullest extent permitted by applicable law; and (c) the Executive shall act in good faith in both capacities and shall use reasonable efforts to manage the dual capacity in a manner that is fair and transparent.

ARTICLE 5 — TERMINATION

Section 5.1 — Termination At Will

The employment relationship between the Company and the Executive is terminable at will, subject to the provisions of this Article 5. Either Party may terminate this Agreement and the Executive's employment at any time, for any reason or no reason, subject to the notice requirements and other provisions set forth in this Article 5. Notwithstanding the foregoing, upon any termination of the Executive's employment, the Executive shall be entitled to the compensation and benefits specified in this Article 5, determined in accordance with the circumstances of such termination.

Section 5.2 — Termination by the Company for Cause

(a) The Company may terminate the Executive's employment for Cause at any time during the Employment Period. For purposes of this Agreement, "Cause" means the occurrence of any of the following:

(i) the Executive's material breach of any provision of this Agreement or the Non-Competition and Non-Solicitation Agreement referenced in Section 7.2 (which provides for a two (2)-year post-termination restricted period), which material breach remains uncured for a period of thirty (30) calendar days following the Company's delivery of written notice to the Executive specifying in reasonable detail the nature of such breach;

(ii) the Executive's conviction of, or entry of a plea of guilty or nolo contendere to, a felony under federal or state law, or any crime (whether felony or misdemeanor) involving moral turpitude, fraud, dishonesty, or breach of trust;

(iii) the Executive's willful misconduct or gross negligence in the performance of his duties hereunder, which has caused or is reasonably likely to cause material harm to the Company, its Affiliates, or their respective businesses, operations, or reputations;

(iv) the Executive's material violation of written Company policies, including, without limitation, the Company's code of conduct, anti-corruption policy, insider trading policy, and data privacy policy, in each case as in effect from time to time and made available to the Executive; or

(v) the Executive's fraud, embezzlement, misappropriation of funds or property of the Company or any of its Affiliates, or any other act of personal dishonesty in connection with the Executive's employment that has caused or is reasonably likely to cause material financial or reputational harm to the Company or any of its Affiliates.

(b) Termination for Cause shall be effected by delivery of written notice from the Company to the Executive, which notice shall specify in reasonable detail the factual basis and grounds for such termination. With respect to Cause based on clause (i) above, termination shall not be effective until the expiration of the applicable thirty (30)-day cure period, provided that no cure opportunity shall be required if the breach is not reasonably susceptible to cure. With respect to Cause based on clauses (ii) through (v) above, termination shall be effective immediately upon delivery of such written notice.

(c) Upon termination by the Company for Cause, the Executive shall be entitled to receive only the following (collectively, the "Accrued Obligations"):

(i) accrued and unpaid Base Salary through the date of termination, payable on the Company's next regular payroll date;

(ii) payment for accrued but unused vacation days, to the extent required by applicable law or Company policy;

(iii) reimbursement of reasonable and documented business expenses incurred by the Executive prior to the date of termination in accordance with Section 3.4(c), subject to timely submission of expense reports; and

(iv) any vested benefits to which the Executive is entitled under the terms of any applicable employee benefit plan, payable in accordance with the terms of such plan.

For the avoidance of doubt, upon a termination for Cause, the Executive shall not be entitled to any Severance Benefits (as defined in Section 5.5), any annual bonus for the fiscal year in which such termination occurs (whether or not the bonus has been earned or would otherwise have been payable), or any other compensation or benefits except as expressly set forth in this Section 5.2(c).

Section 5.3 — Termination by Executive for Good Reason

(a) The Executive may terminate his employment for Good Reason at any time during the Employment Period, subject to the procedural requirements set forth in Section 5.3(b). For purposes of this Agreement, "Good Reason" means the occurrence, without the Executive's prior written consent, of any of the following events:

(i) a material diminution in the Executive's title, duties, authority, or reporting relationship, including, without limitation, a change in the Executive's reporting structure such that the Executive no longer reports directly to the Chief Executive Officer of Parent (or her designee), the removal of the Division President title, or a material reduction in the scope of the Executive's responsibilities with respect to the Business Unit, in each case without the Executive's prior written consent;

(ii) a material reduction in the Executive's Base Salary below Five Hundred Twenty-Five Thousand Dollars ($525,000) during the Initial Term;

(iii) the relocation of the Executive's principal place of work to a location that is more than fifty (50) miles from King of Prussia, Pennsylvania, without the Executive's prior written consent;

(iv) a material breach by the Company of any provision of this Agreement that remains uncured for thirty (30) calendar days following written notice by the Executive to the Company specifying in reasonable detail the nature of such breach; or

(v) the Company's material breach of its earnout covenants under the Purchase Agreement during the Earnout Period, including, without limitation: (A) the Company's failure to maintain a dedicated ArthroNav R&D budget of no less than Six Million Dollars ($6,000,000) per year during the Earnout Period, as required by Section 2.4(b) of the Purchase Agreement; (B) the Company's diversion or reassignment of Dr. Raj Subramanian from the ArthroNav development program without the prior consent of the Sellers' Representative, as required by Section 2.4(c) of the Purchase Agreement; or (C) the Company's discontinuation, abandonment, or material curtailment of the ArthroNav development program without providing at least ninety (90) days' prior written notice to the Sellers' Representative, as required by Section 2.4(d) of the Purchase Agreement.

(b) The Executive's right to terminate his employment for Good Reason is subject to the following procedural requirements:

(i) The Executive must provide written notice to the Company of the existence of the condition constituting Good Reason within sixty (60) calendar days following the date on which the Executive first becomes aware (or reasonably should have become aware) of the occurrence of such condition. Such notice shall describe in reasonable detail the condition that the Executive believes constitutes Good Reason.

(ii) The Company shall have a period of thirty (30) calendar days following receipt of such notice (the "Cure Period") within which to remedy the condition. If the Company fails to remedy the condition within the Cure Period, the Executive's resignation for Good Reason shall become effective on the thirty-first (31st) calendar day following the expiration of the Cure Period (or such later date as the Executive may specify in his notice).

(iii) If the Company remedies the condition within the Cure Period, the Executive's notice of Good Reason shall be deemed withdrawn and the Executive's employment shall continue under the terms of this Agreement.

Section 5.4 — Termination Due to Death or Disability

(a) The Executive's employment shall terminate automatically upon the Executive's death.

(b) The Company may terminate the Executive's employment upon the Executive's Disability. For purposes of this Agreement, "Disability" means the Executive's inability, by reason of physical or mental impairment, to perform the essential functions of his position under this Agreement, with or without reasonable accommodation, for a period of one hundred eighty (180) consecutive calendar days or for an aggregate of two hundred seventy (270) calendar days in any twelve (12)-month period. The determination of Disability shall be made by a physician selected by the Company and reasonably acceptable to the Executive (or the Executive's legal representative). The Executive (or his legal representative) shall cooperate in good faith with any such determination, including by submitting to reasonable medical examinations. Termination for Disability shall be effective upon thirty (30) days' written notice from the Company to the Executive (or the Executive's legal representative) following the determination of Disability.

(c) Upon termination of the Executive's employment due to death or Disability, the Executive (or the Executive's estate or legal representative, as applicable) shall be entitled to receive: (i) the Accrued Obligations; and (ii) a pro-rated annual bonus for the fiscal year in which the termination occurs, calculated based on actual performance and prorated based on the number of calendar days elapsed in such fiscal year through the date of termination, payable at the same time as bonuses are paid to other senior executives of the Company.

Section 5.5 — Termination by the Company Without Cause or by Executive for Good Reason

(a) If the Company terminates the Executive's employment without Cause (other than due to death or Disability), or if the Executive resigns for Good Reason, the Executive shall be entitled to receive, in addition to the Accrued Obligations, the following severance compensation and benefits (collectively, the "Severance Benefits"), subject to the Executive's compliance with Section 5.7:

(i) Severance Payment. Continued payment of the Executive's Base Salary, at the rate in effect as of the date of termination, for a period of twelve (12) months following the date of termination (the "Severance Period"), payable in substantially equal installments in accordance with the Company's regular payroll practices, less applicable withholdings and deductions.

(ii) Pro-Rata Bonus. A pro-rated annual bonus for the fiscal year in which the termination occurs, calculated based on actual performance for such fiscal year (as determined by the Board upon conclusion of the applicable fiscal year) and prorated based on the number of calendar days elapsed in such fiscal year through the date of termination, divided by the total number of calendar days in such fiscal year. Such pro-rated bonus, if any, shall be payable at the same time as annual bonuses are paid to other senior executives of the Company, but in no event later than March 15 of the calendar year immediately following the fiscal year to which such bonus relates.

(iii) COBRA Continuation. Subject to the Executive's timely election of continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), the Company shall pay or reimburse the Executive for the monthly COBRA premiums for the Executive and the Executive's eligible dependents under the Company's group health plan (medical, dental, and vision) at the same rate the Company pays for active employees for the lesser of: (A) twelve (12) months following the date of termination; and (B) the period until the Executive becomes eligible for substantially comparable group health insurance coverage through a subsequent employer or otherwise. The Executive shall promptly notify the Company upon becoming eligible for such alternative coverage. If at any time the Company's payment or reimbursement of COBRA premiums would violate applicable law or result in the imposition of penalties or excise taxes on the Company, the Parties shall work together in good faith to restructure the benefit in a manner that provides substantially equivalent economic value to the Executive without adverse consequences to the Company.

(iv) Accelerated Vesting. Notwithstanding the terms of any applicable equity plan or award agreement, full and immediate vesting of any outstanding equity awards (including stock options, restricted stock units, and any other equity-based awards) held by the Executive that would have vested during the Severance Period had the Executive remained continuously employed through the end of the Severance Period, in each case subject to the terms and conditions of the applicable equity plan and award agreement (other than the vesting conditions being accelerated hereunder).

(b) For the avoidance of doubt, the Severance Benefits shall be in lieu of, and not in addition to, any other severance, separation, or termination benefits to which the Executive might otherwise be entitled under any Company severance plan, policy, or arrangement. The Executive's receipt of Severance Benefits shall not reduce or otherwise affect the Executive's rights under the Purchase Agreement, including with respect to the Earnout, indemnification, or the Executive's authority as Sellers' Representative.

Section 5.6 — Termination by Executive Without Good Reason

The Executive may resign from his employment at any time without Good Reason upon not less than sixty (60) days' prior written notice to the Company. Upon receipt of such notice, the Company may, in its sole discretion, waive the notice period (in whole or in part), accelerate the effective date of the Executive's resignation, and place the Executive on paid or unpaid administrative leave during all or any portion of such notice period, provided that such actions by the Company shall not convert the resignation into a termination without Cause. Upon a resignation without Good Reason, the Executive shall be entitled to receive only the Accrued Obligations. No Severance Benefits or annual bonus for the year of termination shall be payable upon a resignation without Good Reason.

Section 5.7 — Release Requirement

(a) The Company's obligation to provide the Severance Benefits under Section 5.5 is expressly conditioned upon the Executive's execution and delivery to the Company, and non-revocation, of a valid and enforceable general release of claims in substantially the form attached hereto as Exhibit A (the "Release"), which Release must become effective and irrevocable no later than: (i) the twenty-eighth (28th) day following the date of termination, if the Executive is not eligible for the release consideration period under the Age Discrimination in Employment Act of 1967, as amended (the "ADEA"), or the Older Workers Benefit Protection Act of 1990, as amended; or (ii) the fifty-second (52nd) day following the date of termination, if the Executive is eligible for the extended consideration period under the ADEA (which provides for a forty-five (45)-day consideration period and a seven (7)-day revocation period).

(b) The first installment of the Severance Benefits shall be paid on the Company's first regular payroll date following the date on which the Release becomes effective and irrevocable, and such first installment shall include a catch-up payment equal to the aggregate amount of any Severance Benefits that would have been paid during the period between the date of termination and such first payroll date had no Release requirement applied. Thereafter, the remaining Severance Benefits shall continue to be paid in accordance with the Company's regular payroll schedule.

Section 5.8 — Resignation from All Positions

Upon any termination of the Executive's employment for any reason, the Executive shall be deemed to have resigned, effective as of the date of termination, from: (a) all officer positions held by the Executive with the Company, Meridian, Parent, and each of their respective Affiliates; (b) all director positions held by the Executive on the Board and on the boards of directors (or equivalent governing bodies) of the Company, Meridian, Parent, and each of their respective Affiliates; and (c) all other positions held by the Executive with the Company, Meridian, Parent, and each of their respective Affiliates. Such deemed resignations shall be self-effectuating and shall not require any further action by the Executive. The Executive agrees to execute any documents reasonably requested by the Company to effectuate such resignations. Notwithstanding the foregoing, such deemed resignations shall not in any way affect, limit, or modify the Executive's continuing role, authority, and obligations as Sellers' Representative under the Purchase Agreement, which role shall survive any termination of the Executive's employment in accordance with the terms of the Purchase Agreement and the Sellers' Representative Appointment and Joinder Agreement.

ARTICLE 6 — SECTION 409A COMPLIANCE

Section 6.1 — General 409A Compliance

This Agreement is intended to comply with, or be exempt from, the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the "Code"), and the Treasury Regulations and other guidance issued thereunder (collectively, "Section 409A"), and shall be interpreted, construed, and administered in a manner consistent with such intent. To the extent that any provision of this Agreement is ambiguous as to its compliance with, or exemption from, Section 409A, the provision shall be read in a manner that does not result in the imposition of additional taxes or penalties under Section 409A. Payments made pursuant to this Agreement that qualify as "short-term deferrals" within the meaning of Treasury Regulation § 1.409A-1(b)(4) are intended to be exempt from Section 409A. The Company makes no representation or warranty to the Executive regarding the tax treatment of any payments or benefits provided under this Agreement, and the Executive shall be solely responsible for any taxes, interest, or penalties imposed under Section 409A.

Section 6.2 — Separation from Service

For purposes of Section 409A, each installment payment of severance or other compensation under this Agreement shall be treated as a separate payment within the meaning of Treasury Regulation § 1.409A-2(b)(2)(iii). Any payments under this Agreement that are contingent on a "termination of employment" or words of similar import shall be made only upon a "separation from service" within the meaning of Section 409A and Treasury Regulation § 1.409A-1(h), and references herein to "termination of employment," "termination," "resignation," or similar terms shall be construed accordingly.

Section 6.3 — Six-Month Delay for Specified Employees

Notwithstanding any other provision of this Agreement, if the Executive is a "specified employee" within the meaning of Section 409A(a)(2)(B)(i) of the Code and the regulations thereunder at the time of the Executive's separation from service, and if any payment or benefit under this Agreement constitutes "nonqualified deferred compensation" within the meaning of Section 409A that is payable on account of the Executive's separation from service and is not otherwise exempt from Section 409A, then such payment or benefit shall not be made or provided until the first business day following the earlier of: (a) the date that is six (6) months after the Executive's separation from service, or (b) the date of the Executive's death. On the first business day following the expiration of the applicable delay period, the Executive (or the Executive's estate, as applicable) shall receive, in a single lump-sum cash payment, all payments and benefits that were delayed pursuant to this Section 6.3, without interest. Thereafter, any remaining payments shall be made in accordance with their original schedule.

ARTICLE 7 — RESTRICTIVE COVENANTS

Section 7.1 — Confidentiality

(a) The Executive acknowledges that, by reason of his employment with the Company and his prior service as Founder and Chief Executive Officer of Meridian, the Executive has had and will continue to have access to, and knowledge of, confidential, proprietary, and trade secret information of the Company, Meridian, Parent, and their respective Affiliates (collectively, "Confidential Information"). For purposes of this Agreement, "Confidential Information" includes, without limitation:

(i) trade secrets, including, without limitation, the proprietary algorithms for real-time cartilage thickness mapping that are core to the ArthroNav Platform, manufacturing processes, product designs, and engineering specifications;

(ii) business plans, strategic plans, marketing plans, and product development roadmaps;

(iii) customer lists, customer identities, customer requirements, and customer relationship information;

(iv) pricing information, pricing strategies, discount structures, and cost data;

(v) financial data, financial projections, revenue forecasts, and operating budgets;

(vi) supplier and vendor information, including terms and pricing;

(vii) research and development data, clinical data, laboratory notebooks, testing results, and regulatory submissions;

(viii) personnel information, compensation data, and organizational charts;

(ix) software source code, object code, databases, and technical documentation; and

(x) any other non-public information relating to the business, operations, products, services, customers, suppliers, or technology of the Company, Meridian, Parent, or any of their respective Affiliates.

(b) The Executive shall not, during or at any time after the Employment Period, directly or indirectly, disclose, publish, communicate, furnish, use, or permit the use of any Confidential Information, except: (i) as required in the faithful and diligent performance of the Executive's duties under this Agreement; (ii) as authorized in advance in writing by the Company; (iii) as required by applicable law, regulation, or order of a court or governmental agency of competent jurisdiction (in which case the Executive shall provide prompt written notice to the Company prior to any such disclosure to the extent permitted by law, so that the Company may seek a protective order or other appropriate remedy); or (iv) as necessary for the Executive to perform his duties as Sellers' Representative under the Purchase Agreement, subject to any confidentiality obligations applicable thereto.

(c) The restrictions in this Section 7.1 shall not apply to information that: (i) is or becomes generally available to the public other than as a result of the Executive's breach of this Agreement; (ii) was known to the Executive on a non-confidential basis prior to the Executive's employment with Meridian, as documented by the Executive's contemporaneous records; or (iii) is received by the Executive from a third party that is not, to the Executive's knowledge, subject to any obligation of confidentiality with respect to such information.

(d) The Executive's obligations under this Section 7.1 shall survive any termination or expiration of this Agreement: (i) with respect to trade secrets, for so long as such information continues to constitute a trade secret under applicable law; and (ii) with respect to all other Confidential Information, for a period of five (5) years following the date of termination of the Executive's employment.

(e) Upon termination of the Executive's employment for any reason, or at any time upon the Company's request, the Executive shall promptly return to the Company all documents, files, records, data, equipment, devices, and other materials (including copies, reproductions, and derivatives thereof, in any format or medium) containing or relating to Confidential Information that are in the Executive's possession, custody, or control, except to the extent that retention of specific materials is necessary for the Executive to fulfill his continuing obligations as Sellers' Representative under the Purchase Agreement.

Section 7.2 — Reference to Separate Non-Competition and Non-Solicitation Agreement

The Executive acknowledges that, concurrently with the execution of this Agreement and as a condition to the Closing under the Purchase Agreement, the Executive has executed a separate Non-Competition and Non-Solicitation Agreement in the form attached as Exhibit E to the Purchase Agreement (the "Non-Competition Agreement"). The Non-Competition Agreement provides for a two (2)-year post-termination restricted period during which the Executive is subject to non-competition, non-solicitation of customers, and non-solicitation of employees covenants, on the terms and conditions set forth therein. The terms and conditions of the Non-Competition Agreement are incorporated herein by reference and shall survive any termination or expiration of this Agreement in accordance with their terms. To the extent of any conflict between the provisions of this Agreement and the Non-Competition Agreement, the provisions of the Non-Competition Agreement shall control with respect to the subject matter covered thereby.

Section 7.3 — Work Product / Intellectual Property Assignment

(a) The Executive agrees that all inventions, discoveries, improvements, designs, developments, processes, methods, formulae, techniques, works of authorship, computer programs, software, databases, trade secrets, know-how, and other intellectual property, whether or not patentable or copyrightable, that are conceived, created, developed, discovered, made, or reduced to practice by the Executive, solely or jointly with others, during the Employment Period and that (i) relate to the Company's actual or reasonably anticipated business, research, or development activities, (ii) are conceived, created, or developed using the Company's resources, facilities, equipment, or Confidential Information, or (iii) arise out of or result from the Executive's performance of his duties under this Agreement (collectively, "Work Product"), shall be the sole and exclusive property of the Company. To the extent that any Work Product constitutes a "work made for hire" under the United States Copyright Act, 17 U.S.C. § 101 et seq., such Work Product shall be deemed a work made for hire and the Company shall be considered the author thereof.

(b) To the extent that any Work Product does not qualify as a work made for hire, the Executive hereby irrevocably assigns, transfers, and conveys to the Company all right, title, and interest in and to such Work Product, including all patents, copyrights, trademarks, trade secrets, and other intellectual property rights therein, throughout the world, in perpetuity.

(c) The Executive shall promptly and fully disclose all Work Product to the Company. The Executive shall, at the Company's request and expense, execute and deliver all documents and instruments, and perform all acts, reasonably necessary to vest in the Company full and exclusive ownership of all Work Product and to enable the Company to apply for, obtain, perfect, maintain, and enforce patents, copyrights, trademarks, and other intellectual property protections for such Work Product in any and all jurisdictions.

(d) The Executive hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as the Executive's agent and attorney-in-fact (which designation and appointment is coupled with an interest and is irrevocable), to act for and on the Executive's behalf to execute, verify, acknowledge, deliver, file, and prosecute any and all applications, assignments, and other documents that the Executive is obligated to execute under this Section 7.3 but fails or refuses to execute, in each case with the same legal force and effect as if executed by the Executive.

Section 7.4 — Non-Disparagement

(a) During and after the Employment Period, neither the Executive nor the Company (through its officers, directors, and authorized spokespersons) shall make, publish, or communicate any defamatory, disparaging, or derogatory statements, whether written or oral, about the other Party, or, in the case of the Company, about any of its Affiliates, or their respective officers, directors, employees, products, services, or business practices, to any third party, including the media, industry participants, financial institutions, customers, suppliers, or regulatory authorities.

(b) Notwithstanding the foregoing, the restrictions in this Section 7.4 shall not apply to: (i) truthful statements made in response to a valid subpoena, court order, or governmental investigation; (ii) truthful statements made in the course of any legal or arbitration proceeding between the Parties; (iii) truthful statements made to governmental authorities in connection with reporting a suspected violation of law; or (iv) good faith communications made internally within the Company or to the Company's legal counsel in the ordinary course of business.

Section 7.5 — Defend Trade Secrets Act Notice

Pursuant to the Defend Trade Secrets Act of 2016, 18 U.S.C. § 1833(b), the Executive is hereby notified as follows:

(i) An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that is made (A) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney, and solely for the purpose of reporting or investigating a suspected violation of law; or (B) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.

(ii) An individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal and does not disclose the trade secret, except pursuant to court order.

ARTICLE 8 — REPRESENTATIONS AND WARRANTIES

Section 8.1 — Executive's Representations

The Executive hereby represents and warrants to the Company as follows:

(a) The Executive is not a party to, or bound by, any employment agreement, non-competition agreement, non-solicitation agreement, confidentiality agreement, or other contractual obligation with any Person that would prevent, restrict, or materially impair the Executive's ability to enter into this Agreement or to fully and faithfully perform his duties and obligations hereunder, other than (i) the restrictive covenants and other obligations set forth in the Purchase Agreement and the agreements and instruments executed in connection therewith (including the Non-Competition Agreement), which are being satisfied, superseded, or otherwise addressed by this Agreement, the Non-Competition Agreement, and the transactions contemplated hereby and thereby, and (ii) any obligations to prior employers or other Persons that have expired by their terms or been fully discharged.

(b) The Executive has the full legal right, capacity, and authority to enter into and perform his obligations under this Agreement. This Agreement constitutes the legal, valid, and binding obligation of the Executive, enforceable against the Executive in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors' rights generally and to general principles of equity.

(c) The Executive has disclosed to the Company all material facts known to the Executive that could reasonably be expected to affect the Executive's ability to perform his duties and obligations under this Agreement, including, without limitation, any pending or threatened litigation, regulatory investigations, or other legal proceedings involving the Executive that could materially interfere with his service as Division President, Orthopedic Instruments.

Section 8.2 — Company's Representations

The Company hereby represents and warrants to the Executive as follows:

(a) The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware (Delaware Division of Corporations File Number 7203841, formed April 22, 2024), and has all requisite corporate power and authority to conduct its business as currently conducted and to own, lease, and operate its properties and assets.

(b) The Company has the corporate power and authority to enter into and perform its obligations under this Agreement. The execution, delivery, and performance of this Agreement by the Company have been duly authorized by all necessary corporate action, including approval by its sole director, Helena Byrne, and no other corporate proceedings are necessary for the authorization, execution, delivery, or performance of this Agreement by the Company.

(c) The execution, delivery, and performance of this Agreement by the Company do not and will not: (i) violate or conflict with the Company's Certificate of Incorporation or Bylaws; (ii) violate, conflict with, or constitute a default under any agreement, contract, commitment, or obligation to which the Company is a party or by which it is bound; or (iii) violate any applicable law, rule, regulation, order, judgment, or decree.

ARTICLE 9 — INDEMNIFICATION

Section 9.1 — Company Indemnification

(a) To the fullest extent permitted by applicable law, the Company's Certificate of Incorporation, and the Company's Bylaws, the Company shall indemnify, defend, and hold harmless the Executive from and against any and all losses, claims, damages, liabilities, costs, and expenses (including, without limitation, reasonable attorneys' fees, expert witness fees, court costs, and settlement amounts) (collectively, "Losses") arising out of, resulting from, or related

EMPLOYMENT AGREEMENT
SOLSTICE BIOMEDICAL, INC.
and
DR. MARCUS ELLSWORTH
Dated as of October 31, 2024
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is entered into as of October 31, 2024 (the "Effective Date"), by and between Solstice Biomedical, Inc., a Delaware corporation, with its principal offices located at 1200 Innovation Drive, Suite 400, Wilmington, Delaware 19801 (the "Company" or "Employer"), and Dr. Marcus Ellsworth, an individual residing in King of Prussia, Pennsylvania (the "Executive"). The Company and the Executive are each referred to herein individually as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, the Company is a wholly owned subsidiary of Solstice Biomedical Devices Ltd., a private limited company organized under the laws of Ireland (Companies Registration Office Number 648217), with its registered office at Solstice House, 14 Fitzwilliam Place, Dublin 2, D02 YF82, Ireland ("Parent");
WHEREAS, pursuant to that certain Stock Purchase Agreement, dated as of August 20, 2024 (the "Purchase Agreement"), among the Company, Meridian Surgical Technologies, Inc., a Delaware corporation ("Meridian"), the Sellers named therein, and Dr. Marcus Ellsworth, in his capacity as the Sellers' Representative, the Company has acquired all of the outstanding capital stock and vested options of Meridian;
WHEREAS, the Executive was the Founder, Chief Executive Officer, and largest individual shareholder of Meridian, holding 2,845,900 shares, representing approximately 38.2% of the outstanding common stock of Meridian immediately prior to the Closing;
WHEREAS, in connection with the closing of the transactions contemplated by the Purchase Agreement (the "Closing"), the Company desires to employ the Executive, and the Executive desires to be employed by the Company, on the terms and conditions set forth herein;
WHEREAS, the execution and delivery of this Agreement by the Executive is a condition to the Closing under Section 7.2(f) of the Purchase Agreement; and
NOW, THEREFORE, in consideration of the mutual covenants, promises, and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
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ARTICLE 1 — DEFINITIONS
As used in this Agreement, the following terms shall have the meanings set forth below. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Purchase Agreement, unless the context otherwise requires.
1.1 "Affiliate" means, with respect to any Person, any other Person that, directly or indirectly, through one or more intermediaries, Controls, is Controlled by, or is under common Control with, such Person. For purposes of this definition, "Control" (including the terms "Controlled by" and "under common Control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise.
1.2 "ArthroNav Platform" means the ArthroNav Robotic-Assisted Arthroscopy System and all related software modules, including, without limitation, the Real-Time Cartilage Mapping module (also referred to as the Generation 2.0 upgrade), together with all associated intellectual property, know-how, documentation, and regulatory submissions, as more fully described in Schedule 1.1(a) of the Purchase Agreement.
1.3 "Base Salary" has the meaning set forth in Section 3.1 of this Agreement.
1.4 "Board" means the Board of Directors of the Company, as constituted from time to time.
1.5 "Cause" has the meaning set forth in Section 5.2 of this Agreement.
1.6 "Change of Control" means the occurrence of any of the following events: (a) the consummation of a merger, consolidation, or similar business combination involving the Company or Parent with or into another entity, unless, immediately following such transaction, the holders of the outstanding equity securities of Parent immediately prior to such transaction continue to hold, directly or indirectly, more than fifty percent (50%) of the combined voting power of the outstanding equity securities of the surviving or resulting entity; (b) the sale, transfer, or other disposition of all or substantially all of the assets of the Company and its Affiliates, taken as a whole, to any Person or group of related Persons; or (c) the acquisition by any Person or group of related Persons, directly or indirectly, of beneficial ownership of more than fifty percent (50%) of the combined voting power of the outstanding equity securities of Parent; provided, however, that no Change of Control shall be deemed to have occurred as a result of any intra-group reorganization, restructuring, or internal transfer of equity interests or assets among Parent, the Company, and/or any of their respective wholly owned subsidiaries.
1.7 "Closing Date" means October 31, 2024.
1.8 "Confidential Information" has the meaning set forth in Section 7.1 of this Agreement.
1.9 "Disability" has the meaning set forth in Section 5.4 of this Agreement.
1.10 "Earnout" means the contingent consideration of up to Thirty-Five Million Dollars ($35,000,000) in the aggregate payable under Article II of the Purchase Agreement upon achievement of the specified FDA 510(k) regulatory milestones set forth therein, subject to the terms and conditions of the Purchase Agreement.
1.11 "Earnout Period" means the period commencing on the Closing Date and ending on June 30, 2027.
1.12 "Employment Period" or "Term" has the meaning set forth in Section 2.2 of this Agreement.
1.13 "Good Reason" has the meaning set forth in Section 5.3 of this Agreement.
1.14 "Person" means any individual, corporation, partnership, limited liability company, trust, estate, governmental authority, or other entity.
1.15 "Purchase Agreement" means the Stock Purchase Agreement, dated as of August 20, 2024, among the Company, Meridian, the Sellers named therein, and Dr. Marcus Ellsworth, in his capacity as the Sellers' Representative, as the same may be amended, supplemented, or modified from time to time in accordance with its terms.
1.16 "Restricted Period" has the meaning set forth in the Non-Competition and Non-Solicitation Agreement referenced in Section 7.2 of this Agreement.
1.17 "Sellers' Representative" means Dr. Marcus Ellsworth, in his capacity as the Sellers' Representative under and as defined in the Purchase Agreement.
1.18 "Term" has the meaning set forth in Section 2.2 of this Agreement.
ARTICLE 2 — EMPLOYMENT AND TERM
Section 2.1 — Position and Duties
(a) The Company hereby employs the Executive, and the Executive hereby accepts employment with the Company, as Division President, Orthopedic Instruments. In such capacity, the Executive shall report directly to Dr. Fiona Gallagher, Chief Executive Officer of Parent, or such other senior executive of Parent as Dr. Gallagher may designate from time to time (any such designee, together with Dr. Gallagher, the "Reporting Officer"). The Executive shall have overall leadership and management responsibility for the Meridian orthopedic instruments business unit (the "Business Unit"), as integrated within the Company's organizational structure following the Closing, including, without limitation, oversight of: (i) existing Meridian product lines, including single-use arthroscopic blades, powered shaver systems, and PrecisionBlade products; (ii) the ArthroNav Platform development program; (iii) manufacturing operations; (iv) sales and marketing for the Business Unit; and (v) such other duties and responsibilities consistent with the Executive's position as may be reasonably assigned by the Reporting Officer from time to time.
(b) The Executive's principal place of work shall be Meridian's headquarters located at 780 Keystone Boulevard, Suite 200, King of Prussia, Pennsylvania 19406. The Executive acknowledges that the performance of his duties will require periodic travel to the Company's manufacturing facility located at 45 Forge Creek Road, Exton, Pennsylvania 19341, as well as to other Company, Parent, or Affiliate locations, including Parent's offices in Dublin, Ireland, and such other domestic and international locations as may be reasonably required in connection with the Executive's duties.
(c) During the Employment Period, the Executive shall devote substantially all of his business time, attention, skill, and best efforts to the faithful and diligent performance of his duties hereunder; provided, however, that the Executive may, without violating this Agreement:
(i) serve on the boards of directors of up to two (2) entities that do not compete with the Company or its Affiliates, subject to the prior written consent of the Board, which consent shall not be unreasonably withheld, conditioned, or delayed;
(ii) engage in charitable, civic, educational, religious, and professional activities and serve on the boards of charitable, civic, educational, religious, and professional organizations;
(iii) manage his personal investments and passive business interests; and
(iv) fulfill his duties and obligations as Sellers' Representative under the Purchase Agreement,
in each case, so long as such activities, individually or in the aggregate, do not materially interfere with the Executive's performance of his duties and responsibilities under this Agreement.
Section 2.2 — Term
(a) The initial term of the Executive's employment under this Agreement shall commence on the Effective Date and shall continue until October 31, 2027 (the "Initial Term"), unless earlier terminated in accordance with the provisions of Article 5 of this Agreement.
(b) Following the expiration of the Initial Term, this Agreement shall automatically renew for successive periods of one (1) year each (each, a "Renewal Term"), unless either Party provides written notice of non-renewal to the other Party at least ninety (90) days prior to the expiration of the then-current Initial Term or Renewal Term, as applicable. For the avoidance of doubt, a notice of non-renewal delivered by the Company shall not constitute a termination without Cause for purposes of Section 5.5, and a notice of non-renewal delivered by the Executive shall not constitute a resignation for Good Reason for purposes of Section 5.3, unless the circumstances otherwise independently satisfy the applicable definition.
(c) The Initial Term, together with any Renewal Terms, shall be referred to collectively herein as the "Employment Period" or the "Term."
ARTICLE 3 — COMPENSATION AND BENEFITS
Section 3.1 — Base Salary
(a) During the Employment Period, the Company shall pay the Executive an annual base salary of Five Hundred Twenty-Five Thousand Dollars ($525,000) (the "Base Salary"), payable in accordance with the Company's standard payroll practices as in effect from time to time (currently bi-weekly), less all applicable federal, state, and local tax withholdings and other required deductions.
(b) The Base Salary shall be reviewed annually by the Board (or any duly authorized compensation committee thereof), with the first such review to occur no later than October 31, 2025. Following each annual review, the Board may, in its sole discretion, increase the Base Salary; provided, however, that during the Initial Term, the Base Salary shall not be decreased below Five Hundred Twenty-Five Thousand Dollars ($525,000) without the Executive's prior written consent.
Section 3.2 — Annual Bonus
(a) During the Employment Period, the Executive shall be eligible to participate in the Company's annual performance bonus program, as established and administered by the Board (or any duly authorized compensation committee thereof), with a target annual bonus equal to fifty percent (50%) of the Executive's then-current Base Salary (i.e., an initial target of Two Hundred Sixty-Two Thousand Five Hundred Dollars ($262,500)) (the "Target Bonus"). The Target Bonus shall be based on the achievement of individual and Business Unit performance objectives established by the Board in consultation with the Executive at the beginning of each fiscal year, or as soon as practicable thereafter.
(b) The actual annual bonus amount payable to the Executive for any fiscal year may range from zero percent (0%) to one hundred fifty percent (150%) of the Target Bonus, as determined by the Board in its reasonable discretion based on the level of achievement of the applicable performance objectives. The Board shall set forth the applicable performance objectives, weighting, and bonus calculation methodology in writing within sixty (60) days following the commencement of each fiscal year.
(c) For the fiscal year ending December 31, 2024 (the "Stub Period"), the Executive's annual bonus opportunity shall be prorated based on the number of calendar days of employment during such fiscal year (from October 31, 2024 through December 31, 2024), divided by 366 (the total number of calendar days in the 2024 fiscal year). The performance objectives for the Stub Period shall be established by the Board within thirty (30) days following the Effective Date.
(d) Annual bonus payments for any fiscal year shall be paid no later than March 15 of the calendar year immediately following the fiscal year to which such bonus relates. Except as otherwise provided in Section 5.5 with respect to a pro-rata bonus upon a qualifying termination, the Executive must remain continuously employed by the Company through the date on which the annual bonus is actually paid in order to be eligible to receive such bonus. For the avoidance of doubt, if the Executive's employment is terminated for any reason prior to the bonus payment date, no annual bonus shall be payable for the fiscal year in which such termination occurs, except as expressly provided in Article 5.
Section 3.3 — Equity Incentive Compensation
(a) During the Employment Period, the Executive shall be eligible to receive equity-based awards, which may include stock options, restricted stock units, performance share units, or other equity or equity-linked awards, under any long-term incentive plan or equity compensation program adopted by Parent or the Company for the benefit of senior executives, as determined by the Board, the compensation committee of Parent's board of directors, or their respective designees, in their sole discretion.
(b) Any such equity awards shall be subject to the terms and conditions of the applicable plan and award agreement, including vesting schedules, forfeiture provisions, and any clawback or recoupment policies adopted by Parent or the Company.
(c) The Board shall consider making an initial equity grant to the Executive within ninety (90) days following the Effective Date. The type, size, and terms of any such initial grant shall be determined by the Board in its sole discretion, taking into account the Executive's role, the equity incentive compensation provided to other similarly situated senior executives within the Solstice group, and such other factors as the Board deems relevant.
Section 3.4 — Benefits
(a) During the Employment Period, the Executive shall be entitled to participate in all employee benefit plans, programs, policies, and arrangements generally available to similarly situated senior executives of the Company and its Affiliates, as such plans, programs, policies, and arrangements may be in effect from time to time, including, without limitation:
(i) group health insurance (medical, dental, and vision coverage), with the Company paying the same percentage of premiums as it pays for other senior executives;
(ii) group life insurance and accidental death and dismemberment insurance;
(iii) short-term and long-term disability insurance;
(iv) the Company's 401(k) retirement savings plan, including any employer matching contributions available thereunder; and
(v) any other fringe benefits or perquisites that the Company may make available to senior executives from time to time.
The Company reserves the right to amend, modify, or terminate any employee benefit plan or program at any time in accordance with applicable law, provided that any such amendment, modification, or termination is applied on a basis consistent with the treatment of other similarly situated senior executives.
(b) The Executive shall be entitled to twenty-five (25) days of paid vacation per calendar year, prorated for any partial calendar year of employment during the first and last years of the Employment Period. Unused vacation days may be carried over, accrued, and/or forfeited in accordance with the Company's vacation policy as in effect from time to time. In addition, the Executive shall be entitled to all Company-recognized holidays during the Employment Period.
(c) The Company shall reimburse the Executive for all reasonable and documented out-of-pocket business expenses incurred by the Executive in the performance of his duties hereunder, including travel expenses, in accordance with the Company's expense reimbursement policy as in effect from time to time. The Executive shall submit expense reports with appropriate supporting documentation within thirty (30) days following the date on which such expenses are incurred, and the Company shall process reimbursements within thirty (30) days following receipt of a properly documented expense report.
Section 3.5 — D&O Insurance
The Executive acknowledges and agrees that the Company has obtained, at the Company's sole cost and expense, a six (6)-year directors' and officers' liability tail (run-off) insurance policy from Northbridge Specialty Insurance Co., Policy No. NSI-DO-2024-08732, arranged through Caldwell Risk Advisors, Inc., with a per occurrence and aggregate limit of Ten Million Dollars ($10,000,000) and a prepaid premium of Three Hundred Eighty-Five Thousand Dollars ($385,000) (the "D&O Tail Policy"). The D&O Tail Policy provides coverage for the acts and omissions of Meridian's pre-Closing directors and officers (including the Executive) occurring during the period prior to the Closing Date, and shall remain in full force and effect for a period of six (6) years following the Closing Date. The Company shall not cancel, reduce coverage under, or fail to maintain the D&O Tail Policy without the Executive's prior written consent.
ARTICLE 4 — EARNOUT COOPERATION OBLIGATIONS
Section 4.1 — Dual Capacity Acknowledgment
The Parties acknowledge and agree that, as of the Effective Date, the Executive serves in a dual capacity: (a) as an employee of the Company in the role of Division President, Orthopedic Instruments, with fiduciary and contractual duties owed to the Company as set forth in this Agreement, and (b) as the Sellers' Representative under the Purchase Agreement, with authority and responsibilities on behalf of all Sellers (as defined in the Purchase Agreement), including, without limitation, authority over post-closing earnout determinations and disputes, indemnification claims against and by the Sellers, escrow release matters (including with respect to the Indemnity Escrow and the Earnout Escrow Reserve), and net working capital adjustment disputes. Nothing in this Agreement shall be deemed to limit, restrict, modify, or otherwise affect the Executive's rights, duties, authority, or obligations as Sellers' Representative under the Purchase Agreement or the Sellers' Representative Appointment and Joinder Agreement, nor shall the Executive's good faith exercise of such rights and duties constitute a breach of this Agreement, a violation of any duty owed to the Company, or grounds for termination for Cause under Section 5.2.
Section 4.2 — Cooperation in Pursuit of Earnout Milestones
(a) The Executive acknowledges that the Purchase Agreement provides for the Earnout consisting of contingent consideration of up to Thirty-Five Million Dollars ($35,000,000) in the aggregate, comprised of the following two milestones:
Milestone 1: Twenty Million Dollars ($20,000,000), payable upon FDA 510(k) clearance of the ArthroNav Robotic-Assisted Arthroscopy System (Generation 1.0) on or before December 31, 2026.
Milestone 2: Fifteen Million Dollars ($15,000,000), payable upon FDA 510(k) clearance of the ArthroNav Software Module for Real-Time Cartilage Mapping (Generation 2.0 upgrade) on or before June 30, 2027.
(b) During the Earnout Period, the Executive shall use his commercially reasonable efforts to cooperate with and support the Company's pursuit of both earnout milestones, including, without limitation:
(i) providing guidance and institutional knowledge regarding the ArthroNav Platform's development history, design control documentation, design verification and validation testing, regulatory strategy, and prior interactions with the U.S. Food and Drug Administration (the "FDA"), including the results and outcomes of the Q-Sub pre-submission meeting completed in March 2024, feedback received from FDA regarding the proposed regulatory pathway, and the identification of predicate device K203847;
(ii) supporting the preparation, review, and filing of 510(k) premarket notification submissions for the ArthroNav Platform, with a target filing date for the Generation 1.0 submission during the second quarter of 2025;
(iii) collaborating closely with Dr. Raj Subramanian, Senior Vice President, ArthroNav Development, and Dr. Niamh Cassidy, Vice President, Regulatory Affairs of Parent, and their respective teams on all regulatory matters related to the ArthroNav Platform, including preparation of regulatory submissions, responses to FDA information requests, and any necessary bench testing, clinical data analysis, or biocompatibility assessments;
(iv) assisting with communications with Pinnacle Conformity Assessment Services, LLC, the Company's ISO certification body, in connection with the Company's ISO 13485:2016 quality management system certification (Certificate No. PCA-2022-04819, expiring April 2025), including any recertification, surveillance, or transition audits that may be necessary to support the 510(k) submissions and ongoing regulatory compliance;
(v) facilitating the maintenance of continued relationships with Polytechnic Innovations, Ltd. under the existing license agreement between Meridian and Polytechnic Innovations, Ltd. (providing for a royalty of 2.5% of net ArthroNav sales), to the extent such relationships are relevant to the ArthroNav Platform development, including ensuring continued access to licensed technology and fulfillment of any obligations under such license agreement; and
(vi) making himself reasonably available for meetings, calls, and discussions with FDA, regulatory consultants, and internal development teams as reasonably requested by the Company.
(c) The Executive's obligations under this Section 4.2 are subject to, and shall not conflict with, the Executive's rights and obligations as Sellers' Representative under the Purchase Agreement. The Parties agree that the Executive's cooperation obligations under this Section 4.2 are in addition to, and not in lieu of, the Company's independent covenants under the Purchase Agreement regarding the conduct of the ArthroNav development program during the Earnout Period.
Section 4.3 — Information Rights Regarding Earnout
(a) In his capacity as Sellers' Representative, the Executive shall be entitled to reasonable access to information regarding the Company's progress toward the achievement of the earnout milestones, as and to the extent provided in the Purchase Agreement.
(b) During the Earnout Period, the Company shall not unreasonably restrict the Executive's access, in his capacity as Sellers' Representative, to: (i) ArthroNav program status reports, including engineering progress reports, design review documentation, and project timelines; (ii) FDA correspondence related to the ArthroNav Platform, including any 510(k) submissions, FDA requests for additional information, and FDA clearance or denial letters; and (iii) R&D budget information pertaining to the ArthroNav program, including actual expenditures relative to the budget commitment. Such access shall be consistent with the Company's covenant under Section 2.4(b) of the Purchase Agreement to maintain a dedicated ArthroNav R&D budget of no less than Six Million Dollars ($6,000,000) per year during the Earnout Period.
(c) The Executive acknowledges that information received in his capacity as Sellers' Representative constitutes Confidential Information of the Company and shall be used solely for the purpose of fulfilling his duties as Sellers' Representative and shall not be disclosed to third parties except as permitted under the Purchase Agreement and applicable law.
Section 4.4 — No Conflict Waiver
The Parties acknowledge and agree that a potential conflict of interest exists between the Executive's fiduciary and contractual duties as an employee of the Company (which require the Executive to serve the Company's best interests) and the Executive's role as Sellers' Representative (which requires the Executive to protect and advance the interests of the Sellers, including with respect to the Earnout, indemnification claims, and escrow releases). The Parties agree that: (a) good faith actions taken by the Executive in his capacity as Sellers' Representative, including, without limitation, asserting claims or disputes against the Company regarding earnout achievement, challenging the Company's calculations or determinations with respect to earnout milestones, pursuing or defending indemnification claims under Article VIII of the Purchase Agreement, or contesting the release or withholding of amounts from the Indemnity Escrow or the Earnout Escrow Reserve, shall not constitute a breach of any duty owed by the Executive to the Company under this Agreement, at law, or in equity; (b) the Company waives any claim against the Executive based on any conflict of interest arising from such dual capacity to the fullest extent permitted by applicable law; and (c) the Executive shall act in good faith in both capacities and shall use reasonable efforts to manage the dual capacity in a manner that is fair and transparent.
ARTICLE 5 — TERMINATION
Section 5.1 — Termination At Will
The employment relationship between the Company and the Executive is terminable at will, subject to the provisions of this Article 5. Either Party may terminate this Agreement and the Executive's employment at any time, for any reason or no reason, subject to the notice requirements and other provisions set forth in this Article 5. Notwithstanding the foregoing, upon any termination of the Executive's employment, the Executive shall be entitled to the compensation and benefits specified in this Article 5, determined in accordance with the circumstances of such termination.
Section 5.2 — Termination by the Company for Cause
(a) The Company may terminate the Executive's employment for Cause at any time during the Employment Period. For purposes of this Agreement, "Cause" means the occurrence of any of the following:
(i) the Executive's material breach of any provision of this Agreement or the Non-Competition and Non-Solicitation Agreement referenced in Section 7.2 (which provides for a two (2)-year post-termination restricted period), which material breach remains uncured for a period of thirty (30) calendar days following the Company's delivery of written notice to the Executive specifying in reasonable detail the nature of such breach;
(ii) the Executive's conviction of, or entry of a plea of guilty or nolo contendere to, a felony under federal or state law, or any crime (whether felony or misdemeanor) involving moral turpitude, fraud, dishonesty, or breach of trust;
(iii) the Executive's willful misconduct or gross negligence in the performance of his duties hereunder, which has caused or is reasonably likely to cause material harm to the Company, its Affiliates, or their respective businesses, operations, or reputations;
(iv) the Executive's material violation of written Company policies, including, without limitation, the Company's code of conduct, anti-corruption policy, insider trading policy, and data privacy policy, in each case as in effect from time to time and made available to the Executive; or
(v) the Executive's fraud, embezzlement, misappropriation of funds or property of the Company or any of its Affiliates, or any other act of personal dishonesty in connection with the Executive's employment that has caused or is reasonably likely to cause material financial or reputational harm to the Company or any of its Affiliates.
(b) Termination for Cause shall be effected by delivery of written notice from the Company to the Executive, which notice shall specify in reasonable detail the factual basis and grounds for such termination. With respect to Cause based on clause (i) above, termination shall not be effective until the expiration of the applicable thirty (30)-day cure period, provided that no cure opportunity shall be required if the breach is not reasonably susceptible to cure. With respect to Cause based on clauses (ii) through (v) above, termination shall be effective immediately upon delivery of such written notice.
(c) Upon termination by the Company for Cause, the Executive shall be entitled to receive only the following (collectively, the "Accrued Obligations"):
(i) accrued and unpaid Base Salary through the date of termination, payable on the Company's next regular payroll date;
(ii) payment for accrued but unused vacation days, to the extent required by applicable law or Company policy;
(iii) reimbursement of reasonable and documented business expenses incurred by the Executive prior to the date of termination in accordance with Section 3.4(c), subject to timely submission of expense reports; and
(iv) any vested benefits to which the Executive is entitled under the terms of any applicable employee benefit plan, payable in accordance with the terms of such plan.
For the avoidance of doubt, upon a termination for Cause, the Executive shall not be entitled to any Severance Benefits (as defined in Section 5.5), any annual bonus for the fiscal year in which such termination occurs (whether or not the bonus has been earned or would otherwise have been payable), or any other compensation or benefits except as expressly set forth in this Section 5.2(c).
Section 5.3 — Termination by Executive for Good Reason
(a) The Executive may terminate his employment for Good Reason at any time during the Employment Period, subject to the procedural requirements set forth in Section 5.3(b). For purposes of this Agreement, "Good Reason" means the occurrence, without the Executive's prior written consent, of any of the following events:
(i) a material diminution in the Executive's title, duties, authority, or reporting relationship, including, without limitation, a change in the Executive's reporting structure such that the Executive no longer reports directly to the Chief Executive Officer of Parent (or her designee), the removal of the Division President title, or a material reduction in the scope of the Executive's responsibilities with respect to the Business Unit, in each case without the Executive's prior written consent;
(ii) a material reduction in the Executive's Base Salary below Five Hundred Twenty-Five Thousand Dollars ($525,000) during the Initial Term;
(iii) the relocation of the Executive's principal place of work to a location that is more than fifty (50) miles from King of Prussia, Pennsylvania, without the Executive's prior written consent;
(iv) a material breach by the Company of any provision of this Agreement that remains uncured for thirty (30) calendar days following written notice by the Executive to the Company specifying in reasonable detail the nature of such breach; or
(v) the Company's material breach of its earnout covenants under the Purchase Agreement during the Earnout Period, including, without limitation: (A) the Company's failure to maintain a dedicated ArthroNav R&D budget of no less than Six Million Dollars ($6,000,000) per year during the Earnout Period, as required by Section 2.4(b) of the Purchase Agreement; (B) the Company's diversion or reassignment of Dr. Raj Subramanian from the ArthroNav development program without the prior consent of the Sellers' Representative, as required by Section 2.4(c) of the Purchase Agreement; or (C) the Company's discontinuation, abandonment, or material curtailment of the ArthroNav development program without providing at least ninety (90) days' prior written notice to the Sellers' Representative, as required by Section 2.4(d) of the Purchase Agreement.
(b) The Executive's right to terminate his employment for Good Reason is subject to the following procedural requirements:
(i) The Executive must provide written notice to the Company of the existence of the condition constituting Good Reason within sixty (60) calendar days following the date on which the Executive first becomes aware (or reasonably should have become aware) of the occurrence of such condition. Such notice shall describe in reasonable detail the condition that the Executive believes constitutes Good Reason.
(ii) The Company shall have a period of thirty (30) calendar days following receipt of such notice (the "Cure Period") within which to remedy the condition. If the Company fails to remedy the condition within the Cure Period, the Executive's resignation for Good Reason shall become effective on the thirty-first (31st) calendar day following the expiration of the Cure Period (or such later date as the Executive may specify in his notice).
(iii) If the Company remedies the condition within the Cure Period, the Executive's notice of Good Reason shall be deemed withdrawn and the Executive's employment shall continue under the terms of this Agreement.
Section 5.4 — Termination Due to Death or Disability
(a) The Executive's employment shall terminate automatically upon the Executive's death.
(b) The Company may terminate the Executive's employment upon the Executive's Disability. For purposes of this Agreement, "Disability" means the Executive's inability, by reason of physical or mental impairment, to perform the essential functions of his position under this Agreement, with or without reasonable accommodation, for a period of one hundred eighty (180) consecutive calendar days or for an aggregate of two hundred seventy (270) calendar days in any twelve (12)-month period. The determination of Disability shall be made by a physician selected by the Company and reasonably acceptable to the Executive (or the Executive's legal representative). The Executive (or his legal representative) shall cooperate in good faith with any such determination, including by submitting to reasonable medical examinations. Termination for Disability shall be effective upon thirty (30) days' written notice from the Company to the Executive (or the Executive's legal representative) following the determination of Disability.
(c) Upon termination of the Executive's employment due to death or Disability, the Executive (or the Executive's estate or legal representative, as applicable) shall be entitled to receive: (i) the Accrued Obligations; and (ii) a pro-rated annual bonus for the fiscal year in which the termination occurs, calculated based on actual performance and prorated based on the number of calendar days elapsed in such fiscal year through the date of termination, payable at the same time as bonuses are paid to other senior executives of the Company.
Section 5.5 — Termination by the Company Without Cause or by Executive for Good Reason
(a) If the Company terminates the Executive's employment without Cause (other than due to death or Disability), or if the Executive resigns for Good Reason, the Executive shall be entitled to receive, in addition to the Accrued Obligations, the following severance compensation and benefits (collectively, the "Severance Benefits"), subject to the Executive's compliance with Section 5.7:
(i) Severance Payment. Continued payment of the Executive's Base Salary, at the rate in effect as of the date of termination, for a period of twelve (12) months following the date of termination (the "Severance Period"), payable in substantially equal installments in accordance with the Company's regular payroll practices, less applicable withholdings and deductions.
(ii) Pro-Rata Bonus. A pro-rated annual bonus for the fiscal year in which the termination occurs, calculated based on actual performance for such fiscal year (as determined by the Board upon conclusion of the applicable fiscal year) and prorated based on the number of calendar days elapsed in such fiscal year through the date of termination, divided by the total number of calendar days in such fiscal year. Such pro-rated bonus, if any, shall be payable at the same time as annual bonuses are paid to other senior executives of the Company, but in no event later than March 15 of the calendar year immediately following the fiscal year to which such bonus relates.
(iii) COBRA Continuation. Subject to the Executive's timely election of continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), the Company shall pay or reimburse the Executive for the monthly COBRA premiums for the Executive and the Executive's eligible dependents under the Company's group health plan (medical, dental, and vision) at the same rate the Company pays for active employees for the lesser of: (A) twelve (12) months following the date of termination; and (B) the period until the Executive becomes eligible for substantially comparable group health insurance coverage through a subsequent employer or otherwise. The Executive shall promptly notify the Company upon becoming eligible for such alternative coverage. If at any time the Company's payment or reimbursement of COBRA premiums would violate applicable law or result in the imposition of penalties or excise taxes on the Company, the Parties shall work together in good faith to restructure the benefit in a manner that provides substantially equivalent economic value to the Executive without adverse consequences to the Company.
(iv) Accelerated Vesting. Notwithstanding the terms of any applicable equity plan or award agreement, full and immediate vesting of any outstanding equity awards (including stock options, restricted stock units, and any other equity-based awards) held by the Executive that would have vested during the Severance Period had the Executive remained continuously employed through the end of the Severance Period, in each case subject to the terms and conditions of the applicable equity plan and award agreement (other than the vesting conditions being accelerated hereunder).
(b) For the avoidance of doubt, the Severance Benefits shall be in lieu of, and not in addition to, any other severance, separation, or termination benefits to which the Executive might otherwise be entitled under any Company severance plan, policy, or arrangement. The Executive's receipt of Severance Benefits shall not reduce or otherwise affect the Executive's rights under the Purchase Agreement, including with respect to the Earnout, indemnification, or the Executive's authority as Sellers' Representative.
Section 5.6 — Termination by Executive Without Good Reason
The Executive may resign from his employment at any time without Good Reason upon not less than sixty (60) days' prior written notice to the Company. Upon receipt of such notice, the Company may, in its sole discretion, waive the notice period (in whole or in part), accelerate the effective date of the Executive's resignation, and place the Executive on paid or unpaid administrative leave during all or any portion of such notice period, provided that such actions by the Company shall not convert the resignation into a termination without Cause. Upon a resignation without Good Reason, the Executive shall be entitled to receive only the Accrued Obligations. No Severance Benefits or annual bonus for the year of termination shall be payable upon a resignation without Good Reason.
Section 5.7 — Release Requirement
(a) The Company's obligation to provide the Severance Benefits under Section 5.5 is expressly conditioned upon the Executive's execution and delivery to the Company, and non-revocation, of a valid and enforceable general release of claims in substantially the form attached hereto as Exhibit A (the "Release"), which Release must become effective and irrevocable no later than: (i) the twenty-eighth (28th) day following the date of termination, if the Executive is not eligible for the release consideration period under the Age Discrimination in Employment Act of 1967, as amended (the "ADEA"), or the Older Workers Benefit Protection Act of 1990, as amended; or (ii) the fifty-second (52nd) day following the date of termination, if the Executive is eligible for the extended consideration period under the ADEA (which provides for a forty-five (45)-day consideration period and a seven (7)-day revocation period).
(b) The first installment of the Severance Benefits shall be paid on the Company's first regular payroll date following the date on which the Release becomes effective and irrevocable, and such first installment shall include a catch-up payment equal to the aggregate amount of any Severance Benefits that would have been paid during the period between the date of termination and such first payroll date had no Release requirement applied. Thereafter, the remaining Severance Benefits shall continue to be paid in accordance with the Company's regular payroll schedule.
Section 5.8 — Resignation from All Positions
Upon any termination of the Executive's employment for any reason, the Executive shall be deemed to have resigned, effective as of the date of termination, from: (a) all officer positions held by the Executive with the Company, Meridian, Parent, and each of their respective Affiliates; (b) all director positions held by the Executive on the Board and on the boards of directors (or equivalent governing bodies) of the Company, Meridian, Parent, and each of their respective Affiliates; and (c) all other positions held by the Executive with the Company, Meridian, Parent, and each of their respective Affiliates. Such deemed resignations shall be self-effectuating and shall not require any further action by the Executive. The Executive agrees to execute any documents reasonably requested by the Company to effectuate such resignations. Notwithstanding the foregoing, such deemed resignations shall not in any way affect, limit, or modify the Executive's continuing role, authority, and obligations as Sellers' Representative under the Purchase Agreement, which role shall survive any termination of the Executive's employment in accordance with the terms of the Purchase Agreement and the Sellers' Representative Appointment and Joinder Agreement.
ARTICLE 6 — SECTION 409A COMPLIANCE
Section 6.1 — General 409A Compliance
This Agreement is intended to comply with, or be exempt from, the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the "Code"), and the Treasury Regulations and other guidance issued thereunder (collectively, "Section 409A"), and shall be interpreted, construed, and administered in a manner consistent with such intent. To the extent that any provision of this Agreement is ambiguous as to its compliance with, or exemption from, Section 409A, the provision shall be read in a manner that does not result in the imposition of additional taxes or penalties under Section 409A. Payments made pursuant to this Agreement that qualify as "short-term deferrals" within the meaning of Treasury Regulation § 1.409A-1(b)(4) are intended to be exempt from Section 409A. The Company makes no representation or warranty to the Executive regarding the tax treatment of any payments or benefits provided under this Agreement, and the Executive shall be solely responsible for any taxes, interest, or penalties imposed under Section 409A.
Section 6.2 — Separation from Service
For purposes of Section 409A, each installment payment of severance or other compensation under this Agreement shall be treated as a separate payment within the meaning of Treasury Regulation § 1.409A-2(b)(2)(iii). Any payments under this Agreement that are contingent on a "termination of employment" or words of similar import shall be made only upon a "separation from service" within the meaning of Section 409A and Treasury Regulation § 1.409A-1(h), and references herein to "termination of employment," "termination," "resignation," or similar terms shall be construed accordingly.
Section 6.3 — Six-Month Delay for Specified Employees
Notwithstanding any other provision of this Agreement, if the Executive is a "specified employee" within the meaning of Section 409A(a)(2)(B)(i) of the Code and the regulations thereunder at the time of the Executive's separation from service, and if any payment or benefit under this Agreement constitutes "nonqualified deferred compensation" within the meaning of Section 409A that is payable on account of the Executive's separation from service and is not otherwise exempt from Section 409A, then such payment or benefit shall not be made or provided until the first business day following the earlier of: (a) the date that is six (6) months after the Executive's separation from service, or (b) the date of the Executive's death. On the first business day following the expiration of the applicable delay period, the Executive (or the Executive's estate, as applicable) shall receive, in a single lump-sum cash payment, all payments and benefits that were delayed pursuant to this Section 6.3, without interest. Thereafter, any remaining payments shall be made in accordance with their original schedule.
ARTICLE 7 — RESTRICTIVE COVENANTS
Section 7.1 — Confidentiality
(a) The Executive acknowledges that, by reason of his employment with the Company and his prior service as Founder and Chief Executive Officer of Meridian, the Executive has had and will continue to have access to, and knowledge of, confidential, proprietary, and trade secret information of the Company, Meridian, Parent, and their respective Affiliates (collectively, "Confidential Information"). For purposes of this Agreement, "Confidential Information" includes, without limitation:
(i) trade secrets, including, without limitation, the proprietary algorithms for real-time cartilage thickness mapping that are core to the ArthroNav Platform, manufacturing processes, product designs, and engineering specifications;
(ii) business plans, strategic plans, marketing plans, and product development roadmaps;
(iii) customer lists, customer identities, customer requirements, and customer relationship information;
(iv) pricing information, pricing strategies, discount structures, and cost data;
(v) financial data, financial projections, revenue forecasts, and operating budgets;
(vi) supplier and vendor information, including terms and pricing;
(vii) research and development data, clinical data, laboratory notebooks, testing results, and regulatory submissions;
(viii) personnel information, compensation data, and organizational charts;
(ix) software source code, object code, databases, and technical documentation; and
(x) any other non-public information relating to the business, operations, products, services, customers, suppliers, or technology of the Company, Meridian, Parent, or any of their respective Affiliates.
(b) The Executive shall not, during or at any time after the Employment Period, directly or indirectly, disclose, publish, communicate, furnish, use, or permit the use of any Confidential Information, except: (i) as required in the faithful and diligent performance of the Executive's duties under this Agreement; (ii) as authorized in advance in writing by the Company; (iii) as required by applicable law, regulation, or order of a court or governmental agency of competent jurisdiction (in which case the Executive shall provide prompt written notice to the Company prior to any such disclosure to the extent permitted by law, so that the Company may seek a protective order or other appropriate remedy); or (iv) as necessary for the Executive to perform his duties as Sellers' Representative under the Purchase Agreement, subject to any confidentiality obligations applicable thereto.
(c) The restrictions in this Section 7.1 shall not apply to information that: (i) is or becomes generally available to the public other than as a result of the Executive's breach of this Agreement; (ii) was known to the Executive on a non-confidential basis prior to the Executive's employment with Meridian, as documented by the Executive's contemporaneous records; or (iii) is received by the Executive from a third party that is not, to the Executive's knowledge, subject to any obligation of confidentiality with respect to such information.
(d) The Executive's obligations under this Section 7.1 shall survive any termination or expiration of this Agreement: (i) with respect to trade secrets, for so long as such information continues to constitute a trade secret under applicable law; and (ii) with respect to all other Confidential Information, for a period of five (5) years following the date of termination of the Executive's employment.
(e) Upon termination of the Executive's employment for any reason, or at any time upon the Company's request, the Executive shall promptly return to the Company all documents, files, records, data, equipment, devices, and other materials (including copies, reproductions, and derivatives thereof, in any format or medium) containing or relating to Confidential Information that are in the Executive's possession, custody, or control, except to the extent that retention of specific materials is necessary for the Executive to fulfill his continuing obligations as Sellers' Representative under the Purchase Agreement.
Section 7.2 — Reference to Separate Non-Competition and Non-Solicitation Agreement
The Executive acknowledges that, concurrently with the execution of this Agreement and as a condition to the Closing under the Purchase Agreement, the Executive has executed a separate Non-Competition and Non-Solicitation Agreement in the form attached as Exhibit E to the Purchase Agreement (the "Non-Competition Agreement"). The Non-Competition Agreement provides for a two (2)-year post-termination restricted period during which the Executive is subject to non-competition, non-solicitation of customers, and non-solicitation of employees covenants, on the terms and conditions set forth therein. The terms and conditions of the Non-Competition Agreement are incorporated herein by reference and shall survive any termination or expiration of this Agreement in accordance with their terms. To the extent of any conflict between the provisions of this Agreement and the Non-Competition Agreement, the provisions of the Non-Competition Agreement shall control with respect to the subject matter covered thereby.
Section 7.3 — Work Product / Intellectual Property Assignment
(a) The Executive agrees that all inventions, discoveries, improvements, designs, developments, processes, methods, formulae, techniques, works of authorship, computer programs, software, databases, trade secrets, know-how, and other intellectual property, whether or not patentable or copyrightable, that are conceived, created, developed, discovered, made, or reduced to practice by the Executive, solely or jointly with others, during the Employment Period and that (i) relate to the Company's actual or reasonably anticipated business, research, or development activities, (ii) are conceived, created, or developed using the Company's resources, facilities, equipment, or Confidential Information, or (iii) arise out of or result from the Executive's performance of his duties under this Agreement (collectively, "Work Product"), shall be the sole and exclusive property of the Company. To the extent that any Work Product constitutes a "work made for hire" under the United States Copyright Act, 17 U.S.C. § 101 et seq., such Work Product shall be deemed a work made for hire and the Company shall be considered the author thereof.
(b) To the extent that any Work Product does not qualify as a work made for hire, the Executive hereby irrevocably assigns, transfers, and conveys to the Company all right, title, and interest in and to such Work Product, including all patents, copyrights, trademarks, trade secrets, and other intellectual property rights therein, throughout the world, in perpetuity.
(c) The Executive shall promptly and fully disclose all Work Product to the Company. The Executive shall, at the Company's request and expense, execute and deliver all documents and instruments, and perform all acts, reasonably necessary to vest in the Company full and exclusive ownership of all Work Product and to enable the Company to apply for, obtain, perfect, maintain, and enforce patents, copyrights, trademarks, and other intellectual property protections for such Work Product in any and all jurisdictions.
(d) The Executive hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as the Executive's agent and attorney-in-fact (which designation and appointment is coupled with an interest and is irrevocable), to act for and on the Executive's behalf to execute, verify, acknowledge, deliver, file, and prosecute any and all applications, assignments, and other documents that the Executive is obligated to execute under this Section 7.3 but fails or refuses to execute, in each case with the same legal force and effect as if executed by the Executive.
Section 7.4 — Non-Disparagement
(a) During and after the Employment Period, neither the Executive nor the Company (through its officers, directors, and authorized spokespersons) shall make, publish, or communicate any defamatory, disparaging, or derogatory statements, whether written or oral, about the other Party, or, in the case of the Company, about any of its Affiliates, or their respective officers, directors, employees, products, services, or business practices, to any third party, including the media, industry participants, financial institutions, customers, suppliers, or regulatory authorities.
(b) Notwithstanding the foregoing, the restrictions in this Section 7.4 shall not apply to: (i) truthful statements made in response to a valid subpoena, court order, or governmental investigation; (ii) truthful statements made in the course of any legal or arbitration proceeding between the Parties; (iii) truthful statements made to governmental authorities in connection with reporting a suspected violation of law; or (iv) good faith communications made internally within the Company or to the Company's legal counsel in the ordinary course of business.
Section 7.5 — Defend Trade Secrets Act Notice
Pursuant to the Defend Trade Secrets Act of 2016, 18 U.S.C. § 1833(b), the Executive is hereby notified as follows:
(i) An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that is made (A) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney, and solely for the purpose of reporting or investigating a suspected violation of law; or (B) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
(ii) An individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal and does not disclose the trade secret, except pursuant to court order.
ARTICLE 8 — REPRESENTATIONS AND WARRANTIES
Section 8.1 — Executive's Representations
The Executive hereby represents and warrants to the Company as follows:
(a) The Executive is not a party to, or bound by, any employment agreement, non-competition agreement, non-solicitation agreement, confidentiality agreement, or other contractual obligation with any Person that would prevent, restrict, or materially impair the Executive's ability to enter into this Agreement or to fully and faithfully perform his duties and obligations hereunder, other than (i) the restrictive covenants and other obligations set forth in the Purchase Agreement and the agreements and instruments executed in connection therewith (including the Non-Competition Agreement), which are being satisfied, superseded, or otherwise addressed by this Agreement, the Non-Competition Agreement, and the transactions contemplated hereby and thereby, and (ii) any obligations to prior employers or other Persons that have expired by their terms or been fully discharged.
(b) The Executive has the full legal right, capacity, and authority to enter into and perform his obligations under this Agreement. This Agreement constitutes the legal, valid, and binding obligation of the Executive, enforceable against the Executive in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors' rights generally and to general principles of equity.
(c) The Executive has disclosed to the Company all material facts known to the Executive that could reasonably be expected to affect the Executive's ability to perform his duties and obligations under this Agreement, including, without limitation, any pending or threatened litigation, regulatory investigations, or other legal proceedings involving the Executive that could materially interfere with his service as Division President, Orthopedic Instruments.
Section 8.2 — Company's Representations
The Company hereby represents and warrants to the Executive as follows:
(a) The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware (Delaware Division of Corporations File Number 7203841, formed April 22, 2024), and has all requisite corporate power and authority to conduct its business as currently conducted and to own, lease, and operate its properties and assets.
(b) The Company has the corporate power and authority to enter into and perform its obligations under this Agreement. The execution, delivery, and performance of this Agreement by the Company have been duly authorized by all necessary corporate action, including approval by its sole director, Helena Byrne, and no other corporate proceedings are necessary for the authorization, execution, delivery, or performance of this Agreement by the Company.
(c) The execution, delivery, and performance of this Agreement by the Company do not and will not: (i) violate or conflict with the Company's Certificate of Incorporation or Bylaws; (ii) violate, conflict with, or constitute a default under any agreement, contract, commitment, or obligation to which the Company is a party or by which it is bound; or (iii) violate any applicable law, rule, regulation, order, judgment, or decree.
ARTICLE 9 — INDEMNIFICATION
Section 9.1 — Company Indemnification
(a) To the fullest extent permitted by applicable law, the Company's Certificate of Incorporation, and the Company's Bylaws, the Company shall indemnify, defend, and hold harmless the Executive from and against any and all losses, claims, damages, liabilities, costs, and expenses (including, without limitation, reasonable attorneys' fees, expert witness fees, court costs, and settlement amounts) (collectively, "Losses") arising out of, resulting from, or related

EMPLOYMENT AGREEMENT

SOLSTICE BIOMEDICAL, INC.

DR. MARCUS ELLSWORTH

EMPLOYMENT AGREEMENT

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