1037-00006 · Solstice Biomedical Devices Ltd · Transaction Documents

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EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (this "Agreement") is entered into and made effective as of October 31, 2024 (the "Effective Date"), which is the Closing Date under the Stock Purchase Agreement (as defined below), by and between:

SOLSTICE BIOMEDICAL, INC., a Delaware corporation, with offices at 1200 Innovation Drive, Suite 400, Wilmington, DE 19801 (the "Employer" or the "Company");

and

DR. RAJ SUBRAMANIAN, an individual residing at the address on file with the Company (the "Executive" or "Employee").

The Company and Executive are sometimes referred to herein individually as a "Party" and collectively as the "Parties."

RECITALS

WHEREAS, Solstice Biomedical, Inc. is a wholly owned subsidiary of Solstice Biomedical Devices Ltd., an Irish private limited company (CRO No. 648217), with headquarters at Solstice House, 14 Fitzwilliam Place, Dublin 2, D02 YF82, Ireland ("Solstice Ireland" or the "Parent");

WHEREAS, the Company has consummated the acquisition of one hundred percent (100%) of the outstanding capital stock of Meridian Surgical Technologies, Inc. ("Meridian"), a Delaware corporation, pursuant to that certain Stock Purchase Agreement, dated as of August 20, 2024 (the "Stock Purchase Agreement"), among the Company, Meridian, the Sellers named therein, and Dr. Marcus Ellsworth, in his capacity as the representative of the Sellers (the "Sellers' Representative");

WHEREAS, Executive served as Chief Technology Officer of Meridian prior to the Closing Date and was the principal architect of the ArthroNav Robotic-Assisted Arthroscopy Platform (the "ArthroNav Platform"), a proprietary robotic-assisted surgical system designed to enhance the precision and clinical outcomes of arthroscopic procedures;

WHEREAS, the Company desires to employ Executive, and Executive desires to be employed by the Company, on the terms and conditions set forth herein, to lead the continued development and regulatory advancement of the ArthroNav Platform and related technologies following the closing of the transactions contemplated by the Stock Purchase Agreement;

WHEREAS, the Stock Purchase Agreement provides for earnout payments of up to Thirty-Five Million Dollars ($35,000,000) in the aggregate (the "Earnout Payments"), payable to the Sellers upon the achievement of specified FDA 510(k) regulatory milestones for the ArthroNav Platform, and the Parties acknowledge that Executive's scientific expertise, institutional knowledge, and continued leadership of the ArthroNav development program are critical to the achievement of such milestones; and

WHEREAS, as a condition to, and in connection with, the closing of the transactions contemplated by the Stock Purchase Agreement, the Company and Executive have agreed to enter into this Agreement to set forth the terms and conditions of Executive's employment with the Company following the Effective Date.

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

ARTICLE 1 — EMPLOYMENT; TERM

Section 1.1 — Employment

The Company hereby employs Executive, and Executive hereby accepts employment with the Company, subject to the terms and conditions set forth in this Agreement. Executive's employment with the Company shall commence on the Effective Date. Executive acknowledges that, as of the Effective Date, his prior employment relationship with Meridian (as it existed before the closing of the Stock Purchase Agreement) is hereby superseded in its entirety by this Agreement, and any prior employment agreement, offer letter, or similar arrangement between Executive and Meridian is terminated and of no further force or effect.

Section 1.2 — Term

The term of Executive's employment under this Agreement shall commence on the Effective Date and shall continue for an initial period of three (3) years, expiring on October 31, 2027 (the "Initial Term"), unless earlier terminated in accordance with Article 5 of this Agreement. Upon expiration of the Initial Term, this Agreement shall automatically renew for successive periods of one (1) year each (each such period, a "Renewal Term"), unless either Party provides the other Party with written notice of non-renewal at least ninety (90) days prior to the expiration of the then-current term (whether the Initial Term or any Renewal Term). The Initial Term, together with any Renewal Terms during which Executive remains employed by the Company, shall be referred to herein collectively as the "Employment Term."

Section 1.3 — At-Will Acknowledgment

Notwithstanding the foregoing provisions regarding the Initial Term and any Renewal Terms, Executive's employment with the Company shall at all times remain "at will," meaning that either the Company or Executive may terminate the employment relationship at any time, for any reason or for no reason, subject to the notice requirements and the severance and other payment provisions set forth in Article 5 of this Agreement. Nothing in this Agreement shall be construed as a guarantee of employment for any specific period of time, except as expressly set forth herein with respect to the severance and other obligations of the Company upon certain types of termination.

ARTICLE 2 — POSITION, DUTIES, AND REPORTING

Section 2.1 — Title and Position

Executive shall serve as Senior Vice President, ArthroNav Development of the Company (and, following the closing of the transactions contemplated by the Stock Purchase Agreement, in a corresponding capacity at Meridian, which shall continue to operate as a wholly owned subsidiary of the Company). Executive shall have overall responsibility for the research, development, engineering, clinical testing, and regulatory submission activities related to the ArthroNav Robotic-Assisted Arthroscopy Platform, including both: (a) the ArthroNav Generation 1.0 system (the core robotic-assisted arthroscopy hardware and software platform); and (b) the ArthroNav Generation 2.0 Software Module for Real-Time Cartilage Mapping (the advanced software upgrade incorporating proprietary algorithms for real-time cartilage thickness measurement and visualization during arthroscopic procedures). Executive's title and the scope of his responsibilities as described in this Section 2.1 shall not be materially diminished during the Employment Term without Executive's prior written consent, except as otherwise expressly provided herein.

Section 2.2 — Reporting

Executive shall report directly to the Division President, Orthopedic Instruments of the Company (as of the Effective Date, Dr. Marcus Ellsworth), or such other senior officer of the Company or Solstice Biomedical Devices Ltd. as may be designated by the Company from time to time upon reasonable prior notice to Executive. In addition, Executive shall coordinate with Dr. Niamh Cassidy, Vice President, Regulatory Affairs of Solstice Biomedical Devices Ltd., on all regulatory strategy matters related to the ArthroNav Platform, including without limitation the development and execution of the regulatory submission strategy for both the Generation 1.0 and Generation 2.0 510(k) applications. Executive acknowledges that the reporting structure described in this Section 2.2 may be modified from time to time to reflect changes in the Company's organizational structure, provided that any such modification shall not result in a material diminution of Executive's authority, duties, or responsibilities.

Section 2.3 — Duties

Executive shall devote substantially all of his business time, attention, skill, and efforts to the faithful performance of his duties and responsibilities under this Agreement. Executive shall perform such duties and responsibilities as are customary for the position of Senior Vice President, ArthroNav Development, and as may be reasonably assigned to him from time to time by the Company, including without limitation:

(a) Leading, managing, and directing the ArthroNav development team, including all engineers, scientists, clinical specialists, and other technical personnel assigned to the ArthroNav program;

(b) Overseeing the preparation and submission of the FDA 510(k) premarket notification application for the ArthroNav Robotic-Assisted Arthroscopy System (Generation 1.0), with a targeted submission date of the second quarter of 2025 (the predicate device for purposes of such submission being the Marlowe Asset Management Robotic Surgical Assist System, FDA Clearance No. K203847);

(c) Overseeing the continued development of, and the preparation and submission of the FDA 510(k) premarket notification application for, the ArthroNav Software Module for Real-Time Cartilage Mapping (Generation 2.0), in accordance with the timeline contemplated by the earnout provisions of the Stock Purchase Agreement;

(d) Managing and safeguarding the proprietary algorithms for real-time cartilage thickness mapping, which constitute trade secrets of the Company and are core to the achievement of Milestone 2 of the earnout as defined in the Stock Purchase Agreement;

(e) Coordinating with Polytechnic Innovations, Ltd. (Oxford, United Kingdom) regarding the licensed background intellectual property in robotic surgical navigation, ensuring compliance with the terms of the applicable license agreement and maximizing the value of such licensed technology in the ArthroNav development program;

(f) Collaborating with Linda Fontaine, Vice President, Quality & Regulatory Compliance at Meridian, on Quality System Regulation (QSR) compliance, ISO 13485:2016 quality management system matters, and related quality assurance activities necessary to support the ArthroNav regulatory submissions and ongoing manufacturing operations;

(g) Representing the Company in interactions with the U.S. Food and Drug Administration ("FDA") and other regulatory authorities, as appropriate, in connection with the ArthroNav program; and

(h) Such other duties and responsibilities as may be reasonably assigned by the Company from time to time, consistent with Executive's position and the terms of this Agreement.

Section 2.4 — Place of Performance

Executive's primary place of work shall be the Meridian manufacturing and development facility located at 45 Forge Creek Road, Exton, Pennsylvania 19341, and the Meridian headquarters located at 780 Keystone Boulevard, Suite 200, King of Prussia, Pennsylvania 19406. Executive acknowledges that reasonable business travel will be required from time to time in connection with the performance of his duties, including travel for FDA meetings and pre-submission conferences, regulatory submissions and consultations, industry conferences and scientific meetings, and coordination with the Company's offices in Wilmington, Delaware and the Parent's offices in Dublin, Ireland. The Company shall reimburse Executive for all reasonable and documented travel expenses in accordance with Section 3.6 of this Agreement.

Section 2.5 — Exclusivity

During the Employment Term, Executive shall not engage in any other employment, consulting, or business activity, whether or not for compensation, that would materially interfere with the performance of his duties and obligations under this Agreement, without the prior written consent of the Company. Notwithstanding the foregoing, Executive may (i) serve on the board of directors or advisory board of charitable or civic organizations, (ii) deliver lectures or fulfill speaking engagements at academic or professional conferences, and (iii) manage his personal investments, in each case so long as such activities do not individually or in the aggregate materially interfere with the performance of Executive's duties hereunder and are not in conflict with the interests of the Company or the terms of the Restrictive Covenant Agreement (as defined in Section 6.1).

ARTICLE 3 — COMPENSATION AND BENEFITS

Section 3.1 — Base Salary

During the Employment Term, the Company shall pay Executive an annual base salary of Four Hundred Ten Thousand Dollars ($410,000) (the "Base Salary"), payable in accordance with the Company's regular payroll practices as in effect from time to time (currently semi-monthly, on the fifteenth and last day of each calendar month). The Base Salary shall be subject to annual review by the Company's Board of Directors, its Compensation Committee, or a duly authorized designee thereof, and may be increased in the Company's sole discretion based on Executive's performance, the Company's financial condition, and other factors deemed relevant by the Company. Notwithstanding the foregoing, the Base Salary shall not be decreased during the Employment Term without Executive's prior written consent, except as part of a general reduction in base salaries applicable to all similarly situated senior executives of the Company on a substantially proportional basis, and then only if such reduction does not exceed ten percent (10%) of the then-current Base Salary.

Section 3.2 — Annual Bonus

In addition to the Base Salary, Executive shall be eligible to receive an annual performance bonus (the "Annual Bonus") for each fiscal year during the Employment Term, with a target bonus opportunity equal to fifty percent (50%) of the Base Salary (i.e., a target Annual Bonus of Two Hundred Five Thousand Dollars ($205,000)) (the "Target Bonus"). The actual amount of the Annual Bonus, if any, for each fiscal year shall be determined by the Company in its reasonable discretion based on Executive's achievement of individual performance objectives and the Company's achievement of corporate performance objectives, in each case as established by the Company at the beginning of the applicable fiscal year in consultation with Executive. For the first partial fiscal year following the Effective Date (the period from November 1, 2024 through December 31, 2024), any Annual Bonus earned shall be prorated based on the number of days during which Executive was employed by the Company during such period relative to the total number of days in such fiscal year. The Annual Bonus, if any, shall be payable within seventy-five (75) days following the end of the applicable fiscal year, subject to Executive's continued employment with the Company on the applicable payment date, except as otherwise provided in Article 5 of this Agreement.

Section 3.3 — Equity Participation

Executive shall be eligible to participate in any equity incentive plan of the Company or Solstice Biomedical Devices Ltd. as may be adopted or made available from time to time, subject to the terms and conditions of any such plan and the terms of any individual award agreements entered into thereunder. The Company anticipates that Solstice Biomedical Devices Ltd. will establish a long-term incentive plan for key employees of the Company and its subsidiaries following the closing of the acquisition. Executive's initial equity grant, if any, under such plan shall be determined by the Board of Directors of Solstice Biomedical Devices Ltd. or the Compensation Committee thereof within ninety (90) days following the Effective Date, and shall be subject to such vesting conditions and other terms as set forth in the applicable plan documents and award agreement.

Section 3.4 — Retention Bonus

In addition to the foregoing compensation, Executive shall be eligible to participate in the Company's Three Million Five Hundred Thousand Dollar ($3,500,000) retention bonus pool (the "Retention Pool") established by the Company for key employees of Meridian in connection with the transactions contemplated by the Stock Purchase Agreement. The Retention Pool is funded entirely by the Company. Executive's individual allocation under the Retention Pool shall be as determined by the Company, and shall be payable in two (2) equal installments as follows:

(a) The first installment shall be payable on or about April 30, 2025 (six (6) months following the Effective Date); and

(b) The second installment shall be payable on or about October 31, 2025 (twelve (12) months following the Effective Date).

Each installment of the retention bonus shall be subject to Executive's continued employment with the Company on the applicable payment date, except as otherwise provided in Sections 5.2 and 5.5 of this Agreement. The retention bonus shall be subject to all applicable tax withholding and deductions.

Section 3.5 — Benefits

During the Employment Term, Executive shall be entitled to participate in all employee benefit plans, programs, and arrangements made available by the Company to its similarly situated senior executives, as such plans, programs, and arrangements may be in effect and amended from time to time, including without limitation:

(a) Health, dental, and vision insurance coverage for Executive and his eligible dependents, in accordance with the terms of the Company's applicable health benefit plans;

(b) Company-provided life insurance and accidental death and dismemberment (AD&D) coverage, and short-term and long-term disability coverage, in each case at benefit levels no less favorable than those provided to similarly situated senior executives of the Company;

(c) Participation in the Meridian Surgical Technologies 401(k) Plan, as administered by Cornerstone Retirement Plan Services, Inc. (or any successor retirement plan established by the Company following the closing of the acquisition), including any employer matching contributions provided thereunder in accordance with the terms of such plan;

(d) Paid time off ("PTO") in accordance with the Company's PTO policy as in effect from time to time, provided that Executive shall be entitled to not less than four (4) weeks of PTO per calendar year (prorated for any partial calendar year of employment); and

(e) Such other benefits as the Company may make available to its similarly situated senior executives from time to time in its sole discretion.

Nothing in this Agreement shall be construed to require the Company to establish or maintain any particular benefit plan or program, and the Company reserves the right to amend or terminate any benefit plan or program at any time in accordance with its terms and applicable law, provided that any such amendment or termination is applied on a uniform basis to all similarly situated senior executives.

Section 3.6 — Business Expenses

The Company shall reimburse Executive for all reasonable and documented business expenses incurred by Executive in the performance of his duties under this Agreement, in accordance with the Company's expense reimbursement policies and procedures as in effect from time to time. Executive shall submit expense reports with supporting documentation within thirty (30) days of incurring such expenses, and the Company shall process reimbursement within thirty (30) days following receipt of a properly documented expense report. All expense reimbursements shall be made in a manner consistent with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the "Code").

Section 3.7 — Withholding

All compensation payable to Executive under this Agreement, including without limitation the Base Salary, Annual Bonus, retention bonus, and any equity-based compensation, shall be subject to applicable federal, state, and local tax withholding and all other deductions and withholdings required by law or authorized by Executive.

ARTICLE 4 — EARNOUT-RELATED PROVISIONS AND ARTHRONAV PROGRAM CONTINUITY

Section 4.1 — Background and Acknowledgments

The Parties acknowledge and agree as follows:

(a) The Stock Purchase Agreement provides for Earnout Payments of up to Thirty-Five Million Dollars ($35,000,000) in the aggregate, payable by the Company to the Sellers upon the achievement of specified FDA regulatory milestones, as follows:

(i) Milestone 1: FDA 510(k) clearance of the ArthroNav Robotic-Assisted Arthroscopy System (Generation 1.0) on or before December 31, 2026 — an Earnout Payment of Twenty Million Dollars ($20,000,000) (the "Milestone 1 Payment"); and

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

(b) The period from the Closing Date through June 30, 2027 (or such earlier date on which both Milestone 1 and Milestone 2 have been achieved or have become incapable of achievement) is referred to herein as the "Earnout Period."

(c) Executive's continued leadership of the ArthroNav program, his deep expertise in the underlying technology and algorithms, and his established relationships with the FDA and key regulatory consultants are critical to the timely achievement of the earnout milestones described above.

(d) The Company has covenanted in the Stock Purchase Agreement to use commercially reasonable efforts to pursue the 510(k) submissions for both the Generation 1.0 system and the Generation 2.0 Software Module, and to maintain a dedicated ArthroNav R&D budget of no less than Six Million Dollars ($6,000,000) per year during the Earnout Period (through June 30, 2027).

Section 4.2 — Executive's Earnout Cooperation Obligations

During the Earnout Period, Executive shall:

(a) Use his best professional efforts, consistent with applicable regulatory standards, industry best practices, and the Company's quality management system, to advance the ArthroNav program toward the achievement of both Milestone 1 and Milestone 2 within the timeframes specified in the Stock Purchase Agreement;

(b) Lead and manage the ArthroNav development team and allocate sufficient resources within his area of responsibility to support the timely preparation, submission, and prosecution of 510(k) premarket notification applications for both the Generation 1.0 system and the Generation 2.0 Software Module, including responding to any FDA requests for additional information, deficiency letters, or other regulatory inquiries;

(c) Cooperate fully and in good faith with the Company's regulatory affairs personnel, including Dr. Niamh Cassidy, Vice President, Regulatory Affairs of Solstice Biomedical Devices Ltd., and Linda Fontaine, Vice President, Quality & Regulatory Compliance at Meridian, in the preparation and prosecution of all FDA submissions and related regulatory activities;

(d) Provide periodic written progress reports, no less frequently than quarterly, to the Division President, Orthopedic Instruments (or such other senior officer of the Company designated for this purpose) and, upon the reasonable request of the Sellers' Representative (Dr. Marcus Ellsworth), to the Sellers' Representative, regarding the status of the ArthroNav development program, including: (i) a summary of development activities completed during the reporting period; (ii) the current status of all regulatory submissions and interactions with the FDA; (iii) anticipated regulatory timelines and any material changes thereto; (iv) any significant technical, scientific, or regulatory challenges or risks identified during the reporting period; and (v) the status of the ArthroNav R&D budget and resource allocation; and

(e) Promptly notify the Company's Division President and General Counsel of any material development, event, or circumstance that could reasonably be expected to adversely affect the timing or likelihood of achieving either Milestone 1 or Milestone 2.

Section 4.3 — Restriction on Reassignment During Earnout Period

Consistent with the Company's obligations under the Stock Purchase Agreement, the Company shall not, during the Earnout Period, reassign, divert, or materially alter Executive's responsibilities with respect to the ArthroNav program without the prior written consent of the Sellers' Representative (Dr. Marcus Ellsworth). The foregoing restriction shall not preclude the Company from assigning additional responsibilities to Executive that are not inconsistent with his ArthroNav duties, provided that such additional responsibilities do not materially impair Executive's ability to dedicate adequate time and attention to the ArthroNav program and the timely achievement of the earnout milestones. In the event of a dispute regarding whether a proposed reassignment or alteration of Executive's responsibilities is "material" within the meaning of this Section 4.3, the Parties shall endeavor to resolve such dispute in good faith through consultation with the Sellers' Representative.

Section 4.4 — ArthroNav R&D Budget

The Company acknowledges and reaffirms its covenant under the Stock 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 (through June 30, 2027). Executive shall have primary authority over the allocation and deployment of the ArthroNav R&D budget within the parameters of the Company's annual budget process, subject to the overall governance, approval processes, and financial controls of the Company. Executive shall exercise such budgetary authority in a manner consistent with the objective of achieving the earnout milestones within the timeframes specified in the Stock Purchase Agreement. Executive shall promptly notify the Company's Division President and General Counsel if, in Executive's reasonable judgment, the ArthroNav R&D budget or the resources (including personnel, equipment, and facilities) allocated to the ArthroNav program are insufficient to support the timely achievement of the earnout milestones, and the Company shall consider such notification in good faith and take commercially reasonable steps to address any identified deficiencies.

Section 4.5 — Program discontinuance

The Company shall not discontinue or abandon the ArthroNav program during the Earnout Period without providing ninety (90) days' prior written notice to the Sellers' Representative, as required under the Stock Purchase Agreement. In the event that the Company provides such notice of discontinuance or abandonment of the ArthroNav program during the Employment Term, such discontinuance or abandonment shall constitute "Good Reason" for the termination of Executive's employment under Section 5.4 of this Agreement, and Executive shall have the right to terminate his employment in accordance with the procedures set forth therein. For the avoidance of doubt, this Section 4.5 does not create any obligation on the part of the Company to continue the ArthroNav program beyond the requirements of the Stock Purchase Agreement, but is intended solely to establish Executive's rights in the event of such discontinuance.

ARTICLE 5 — TERMINATION OF EMPLOYMENT

Section 5.1 — Termination by the Company for Cause

The Company may terminate Executive's employment at any time for "Cause." For purposes of this Agreement, "Cause" shall mean the occurrence of any of the following:

(a) Executive's material breach of any provision of this Agreement or any restrictive covenant agreement to which Executive is a party (including, without limitation, the Restrictive Covenant Agreement defined in Section 6.1), provided that the Company shall first provide Executive with written notice specifying the nature of the breach in reasonable detail, and Executive shall have a period of thirty (30) calendar days following receipt of such notice to cure the breach (to the extent such breach is reasonably susceptible to cure);

(b) Executive's conviction of, or plea of guilty or nolo contendere to, a felony or any crime involving fraud, dishonesty, or moral turpitude under the laws of any jurisdiction;

(c) Executive's willful misconduct or gross negligence in the performance of his duties under this Agreement that results in, or could reasonably be expected to result in, material harm to the Company, its affiliates, or their business, operations, or reputation;

(d) Executive's commission of fraud, embezzlement, or misappropriation of Company or affiliate funds or property;

(e) Executive's material violation of written Company policies, including without limitation applicable quality and regulatory compliance policies, Good Manufacturing Practices, or the Company's Code of Business Conduct and Ethics, in each case as in effect from time to time and made known to Executive; or

(f) Executive's willful and continued refusal to perform his material duties under this Agreement (other than as a result of physical or mental incapacity), after the Company has provided Executive with written notice specifying the duties that Executive has failed to perform and a reasonable opportunity to cure such failure (not less than fifteen (15) business days following receipt of such notice).

A termination for Cause shall be effective immediately upon the delivery of a written notice of termination from the Company to Executive (or, in the case of clauses (a) and (f) above, upon the expiration of the applicable cure period without cure). Upon a termination by the Company for Cause, Executive shall be entitled to receive only: (i) accrued but unpaid Base Salary through the date of termination; (ii) accrued but unused PTO in accordance with applicable Company policy; and (iii) any vested benefits to which Executive is entitled under the terms of the Company's benefit plans (collectively, the "Accrued Obligations"). Executive shall not be entitled to any further compensation, severance, bonus (including any prorated Annual Bonus), retention bonus payments, or other benefits following a termination for Cause.

Section 5.2 — Termination by the Company Without Cause

The Company may terminate Executive's employment without Cause at any time upon thirty (30) days' prior written notice to Executive. In the event of a termination by the Company without Cause (other than as a result of Executive's death or Disability, which are addressed in Section 5.5), Executive shall be entitled to receive the following, in addition to the Accrued Obligations:

(a) Severance Payment. A severance payment equal to twelve (12) months of the Base Salary in effect on the date of termination (i.e., Four Hundred Ten Thousand Dollars ($410,000), or such greater amount if the Base Salary has been increased), payable in substantially equal installments over the twelve (12)-month period following the date of termination in accordance with the Company's normal payroll practices, with the first installment to be paid on the first regular payroll date following the date on which the Release (as defined below) becomes effective and irrevocable, and such first installment to include any amounts that would have been paid between the date of termination and such first payroll date;

(b) Prorated Annual Bonus. A prorated Annual Bonus for the fiscal year in which the termination occurs, calculated based on actual Company and individual performance for the full fiscal year (as determined by the Company in its reasonable discretion) and prorated for the portion of such fiscal year during which Executive was employed by the Company, payable at the time Annual Bonuses are generally paid to other senior executives of the Company for such fiscal year, but in no event later than seventy-five (75) days following the end of such fiscal year;

(c) COBRA Premium Reimbursement. Reimbursement of the premiums paid by Executive for continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), for Executive and his eligible dependents, for a period of up to twelve (12) months following the date of termination (or, if earlier, until Executive becomes eligible for comparable health insurance coverage under another employer's plan), provided that Executive timely elects COBRA continuation coverage;

(d) Accelerated Retention Bonus Vesting. Accelerated vesting and payment of any retention bonus installments under Section 3.4 that would have been payable within six (6) months following the date of termination had Executive remained employed by the Company during such period, with such accelerated installments payable within thirty (30) days following the date on which the Release becomes effective and irrevocable.

The severance benefits described in this Section 5.2 (other than the Accrued Obligations) shall be conditioned upon Executive's timely execution and non-revocation of a general release of claims in favor of the Company, its affiliates, and their respective officers, directors, employees, and agents, in a form reasonably satisfactory to the Company (the "Release"), within sixty (60) days following the date of termination. If Executive fails to execute the Release within such sixty (60)-day period, or if Executive revokes the Release within any applicable revocation period, Executive shall forfeit all rights to the severance benefits described in clauses (a) through (d) above.

Section 5.3 — Termination by Executive Without Good Reason

Executive may terminate his employment with the Company at any time without Good Reason upon sixty (60) days' prior written notice to the Company. During such notice period, Executive shall continue to perform his duties under this Agreement unless the Company elects to waive the notice period in whole or in part (in which case the Company shall pay Executive his Base Salary through the earlier of (i) the expiration of the notice period and (ii) the date designated by the Company as Executive's last day of employment). Upon a termination by Executive without Good Reason, Executive shall be entitled to receive only the Accrued Obligations and shall not be entitled to any further compensation, severance, bonus, retention bonus payments, or other benefits.

Section 5.4 — Termination by Executive for Good Reason

Executive may terminate his employment with the Company for "Good Reason." For purposes of this Agreement, "Good Reason" shall mean the occurrence of any of the following events without Executive's prior written consent:

(a) A material reduction in Executive's Base Salary (for this purpose, a reduction of greater than ten percent (10%) of the then-current Base Salary shall be deemed material), other than a reduction that is part of a general reduction in base salaries applicable to all similarly situated senior executives of the Company on a substantially proportional basis;

(b) A material diminution in Executive's title, authority, duties, or responsibilities, including, during the Earnout Period, any reassignment of Executive away from the ArthroNav program or any material reduction in Executive's authority or responsibilities with respect to the ArthroNav program, in each case without the prior written consent of the Sellers' Representative (Dr. Marcus Ellsworth);

(c) A relocation of Executive's principal place of work to a location that is more than fifty (50) miles from Executive's then-current principal place of work (as of the Effective Date, King of Prussia, Pennsylvania and Exton, Pennsylvania), without Executive's prior written consent;

(d) The Company's material breach of any provision of this Agreement, including without limitation the Company's failure to fund or maintain the minimum ArthroNav R&D budget of Six Million Dollars ($6,000,000) per year as contemplated by Section 4.4 of this Agreement; or

(e) The Company's notification of discontinuance or abandonment of the ArthroNav program during the Earnout Period, as described in Section 4.5 of this Agreement.

Notwithstanding the foregoing, Executive may not terminate his employment for Good Reason unless: (i) Executive provides written notice to the Company of the existence of the condition constituting Good Reason within thirty (30) calendar days after the initial occurrence of such condition; (ii) the Company fails to cure such condition within thirty (30) calendar days following receipt of such written notice (the "Cure Period"); and (iii) Executive resigns from employment within thirty (30) calendar days following the expiration of the Cure Period (if the condition remains uncured). If the Company cures the condition during the Cure Period, Executive's notice of Good Reason shall be deemed withdrawn and Executive's employment shall continue on the existing terms.

Upon a termination by Executive for Good Reason, Executive shall be entitled to receive the same severance benefits as would be payable upon a termination by the Company without Cause under Section 5.2 of this Agreement (including the Accrued Obligations, severance payment, prorated Annual Bonus, COBRA premium reimbursement, and accelerated retention bonus vesting), subject to Executive's timely execution and non-revocation of the Release within sixty (60) days following the date of termination.

Section 5.5 — Termination Due to Death or Disability

Executive's employment shall terminate automatically upon Executive's death. In addition, the Company may terminate Executive's employment upon Executive's "Disability," which for purposes of this Agreement shall mean Executive's inability to perform the essential functions of his position, with or without reasonable accommodation, for a period of one hundred eighty (180) consecutive calendar days or an aggregate of two hundred seventy (270) calendar days in any three hundred sixty-five (365)-day period, as determined by a physician qualified to make such determination who is mutually agreed upon by the Company and Executive (or, if Executive is unable to participate in such selection, Executive's legal representative).

In the event of a termination of Executive's employment due to death or Disability, Executive (or, in the case of death, Executive's estate, beneficiary, or legal representative, as applicable) shall be entitled to receive, in addition to the Accrued Obligations:

(a) A prorated Annual Bonus for the fiscal year in which the termination occurs, calculated based on actual Company and individual performance for the full fiscal year and prorated for the portion of the year during which Executive was employed, payable at the time Annual Bonuses are generally paid to other senior executives of the Company for such fiscal year;

(b) Continued payment of Executive's Base Salary for a period of six (6) months following the date of termination (or, in the case of death, payment to Executive's estate, designated beneficiary, or legal representative), payable in accordance with the Company's regular payroll practices; and

(c) Accelerated vesting and payment of any unpaid retention bonus installments under Section 3.4 that remain outstanding as of the date of termination, regardless of whether Executive would have remained employed on the applicable payment dates, with such amounts payable within thirty (30) days following the date of termination (or, in the case of death, to Executive's estate, designated beneficiary, or legal representative).

Section 5.6 — Expiration of Term; Non-Renewal

In the event that either Party provides timely notice of non-renewal in accordance with Section 1.2 and Executive's employment terminates upon the expiration of the then-current term (whether the Initial Term or any Renewal Term) as a result of such non-renewal, such termination shall be treated as a termination by the Company without Cause for purposes of severance under Section 5.2 of this Agreement, and Executive shall be entitled to the severance benefits described therein, provided that Executive timely executes and does not revoke the Release. For the avoidance of doubt, if Executive provides the notice of non-renewal and subsequently elects to continue employment through the end of the then-current term, Executive shall be treated as having been terminated without Cause upon the expiration of such term for purposes of this Section 5.6.

Section 5.7 — Return of Company Property

Upon the termination of Executive's employment for any reason, or at any time upon the Company's request, Executive shall promptly return to the Company all property of the Company and its affiliates in Executive's possession or control, including without limitation: (a) all documents, files, records, reports, and correspondence (whether in physical or electronic form) containing or relating to Confidential Information (as defined in Section 6.2); (b) all computers, laptops, tablets, mobile devices, and other electronic equipment provided by the Company; (c) all access cards, keys, and security credentials; (d) all laboratory notebooks, research data, and experimental records related to the ArthroNav program or any other Company project; and (e) all other property, materials, and items belonging to the Company or its affiliates. Executive shall not retain any copies, reproductions, or summaries of any Company property or Confidential Information following termination, except as may be required by applicable law.

Section 5.8 — Section 409A Compliance

This Agreement is intended to comply with, or be exempt from, the requirements of Section 409A of the Code and the Treasury Regulations and other guidance promulgated thereunder ("Section 409A"), and shall be interpreted and construed in a manner consistent with such intent.

(a) Each installment payment of severance or other compensation under this Agreement shall be treated as a separate payment for purposes of Section 409A.

(b) To the extent that any payment or benefit under this Agreement constitutes "nonqualified deferred compensation" within the meaning of Section 409A and is payable upon Executive's termination of employment, such payment or benefit shall be made or provided only upon Executive's "separation from service" within the meaning of Section 409A.

(c) If Executive is a "specified employee" within the meaning of Section 409A(a)(2)(B)(i) of the Code as of the date of Executive's separation from service, any payment or benefit that constitutes "nonqualified deferred compensation" within the meaning of Section 409A and that would otherwise be payable during the six (6)-month period following Executive's separation from service shall instead be accumulated and paid in a lump sum on the first business day of the seventh month following Executive's separation from service (or, if earlier, the date of Executive's death), together with interest at the applicable federal rate under Section 7872(f)(2)(A) of the Code.

(d) In no event shall Executive, directly or indirectly, designate the calendar year of any payment to be made under this Agreement that constitutes "nonqualified deferred compensation" within the meaning of Section 409A.

(e) The Company shall use commercially reasonable efforts to ensure that all reimbursements and in-kind benefits provided under this Agreement are administered in a manner that complies with Section 409A, including by ensuring that: (i) the amount of expenses eligible for reimbursement or in-kind benefits provided during any calendar year shall not affect the amount of expenses eligible for reimbursement or in-kind benefits to be provided in any other calendar year; (ii) each reimbursement shall be made no later than the last day of the calendar year following the calendar year in which the expense was incurred; and (iii) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.

(f) To the extent that any payment under this Agreement is intended to qualify for the "short-term deferral" exemption under Treasury Regulation Section 1.409A-1(b)(4) or the exemption for separation pay under Treasury Regulation Section 1.409A-1(b)(9)(iii) (the "two-year/two-times pay" exemption), the applicable provisions shall be interpreted and administered in a manner consistent with such exemptions.

ARTICLE 6 — RESTRICTIVE COVENANTS

Section 6.1 — Reference to Separate Non-Competition Agreement

Executive acknowledges and agrees that, simultaneously with the execution of this Agreement, Executive has entered into that certain Non-Competition and Non-Solicitation Agreement (the "Restrictive Covenant Agreement"), dated as of the Effective Date, by and between Executive and the Company, a copy of which is attached as an exhibit to the Stock Purchase Agreement. The Restrictive Covenant Agreement provides for, among other things, a two (2)-year post-termination non-competition period and a two (2)-year post-termination non-solicitation period (with respect to both employees and customers), and is governed by the laws of the State of Delaware. The terms and conditions of the Restrictive Covenant Agreement are incorporated herein by reference and shall survive the termination or expiration of this Agreement in accordance with their terms. In the event of any conflict between the provisions of this Agreement and the Restrictive Covenant Agreement, the Restrictive Covenant Agreement shall control with respect to the subject matter thereof.

Section 6.2 — Confidentiality

(a) Obligation. Executive acknowledges that, in the course of his employment with the Company and its affiliates (including Meridian), Executive will have access to, and will develop and contribute to, Confidential Information (as defined below) of the Company and its affiliates. Executive shall maintain the strict confidentiality of all Confidential Information, both during and after the Employment Term, and shall not, directly or indirectly, disclose, publish, communicate, or make available any Confidential Information to any person or entity, or use any Confidential Information for any purpose, other than in the proper performance of his duties under this Agreement and for the benefit of the Company and its affiliates.

(b) Definition. For purposes of this Agreement, "Confidential Information" means any and all information, data, knowledge, and materials (whether oral, written, electronic, or in any other form) that are proprietary or confidential to the Company or any of its affiliates (including Meridian, Solstice Biomedical Devices Ltd., and their respective subsidiaries), including without limitation:

(i) proprietary technical information, know-how, inventions, discoveries, research data, experimental results, designs, specifications, prototypes, and engineering documentation related to the ArthroNav Platform or any other product or technology of the Company or its affiliates;

(ii) trade secrets, including the proprietary algorithms for real-time cartilage thickness mapping that are core to the ArthroNav Generation 2.0 Software Module;

(iii) product designs, schematics, manufacturing processes, and quality control procedures;

(iv) regulatory submissions, clinical data, pre-clinical data, and regulatory strategy documents, including all materials submitted to or received from the FDA;

(v) business plans, strategic plans, marketing plans, and competitive analyses;

(vi) financial information, budgets, projections, cost data, and pricing information;

(vii) customer and supplier information, including customer lists, supplier lists, and the terms of customer and supplier agreements;

(viii) information regarding the Company's employees, consultants, and contractors, including compensation data and performance evaluations;

(ix) information relating to the Stock Purchase Agreement, the earnout milestones, and the integration of Meridian's operations into the Company; and

(x) any other information that is not generally known to the public and that derives economic value from not being generally known.

Confidential Information shall not include information that: (A) is or becomes generally available to the public other than as a result of a disclosure by Executive in violation of this Agreement; (B) was in Executive's possession on a non-confidential basis prior to the Effective Date and was not obtained by Executive from the Company or Meridian; or (C) is received by Executive on a non-confidential basis from a third party that is not under an obligation of confidentiality to the Company.

(c) Duration. Executive's obligations under this Section 6.2 shall survive the termination or expiration of this Agreement and Executive's employment: (i) indefinitely with respect to information that constitutes a "trade secret" under applicable law (including the Delaware Uniform Trade Secrets Act and the federal Defend Trade Secrets Act of 2016), for so long as such information qualifies as a trade secret under such law; and (ii) for a period of five (5) years following the date of termination of Executive's employment with respect to all other Confidential Information.

(d) Permitted Disclosures. Nothing in this Agreement shall prohibit or restrict Executive from: (i) making disclosures required by applicable law, regulation, or legal process (including a valid subpoena or court order), provided that Executive shall, to the extent legally permitted, provide the Company with prompt written notice of such requirement so that the Company may seek a protective order or other appropriate remedy; (ii) providing truthful testimony or information in connection with any legal proceeding; or (iii) making disclosures to Executive's personal attorneys, tax advisors, or financial advisors who have a need to know such information and who are bound by professional obligations of confidentiality.

(e) 18 U.S.C. § 1833(b) Notice. Pursuant to 18 U.S.C. § 1833(b), Executive is hereby notified that 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 (A) is made (I) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, and (II) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. 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 (A) files any document containing the trade secret under seal and (B) does not disclose the trade secret, except pursuant to court order.

Section 6.3 — Intellectual Property Assignment

(a) Assignment. Executive acknowledges and agrees that all inventions, discoveries, improvements, enhancements, works of authorship, designs, software, algorithms, methods, processes, data, databases, and other intellectual property, whether or not patentable or copyrightable, that are conceived, created, developed, or reduced to practice by Executive, either alone or jointly with others, during the Employment Term and that: (i) relate in any way to the business, products, services, or technology of the Company or its affiliates (including the ArthroNav Platform); (ii) result from or are suggested by any task, duty, or project assigned to Executive or undertaken by Executive on behalf of the Company; or (iii) are developed using any resources, equipment, facilities, or Confidential Information of the Company or its affiliates (collectively, "Inventions"), shall be the sole and exclusive property of the Company. To the extent that any Invention constitutes a "work made for hire" under the Copyright Act of 1976, as amended, Executive agrees that such Invention is a work made for hire and that the Company is the author thereof. To the extent that any Invention does not constitute a work made for hire, Executive hereby irrevocably assigns, transfers, and conveys to the Company all right, title, and interest in and to such Invention, including all intellectual property rights therein, without the requirement of any further consideration.

(b) Cooperation. Executive shall promptly and fully disclose all Inventions to the Company and shall execute all documents, instruments, assignments, and applications reasonably required by the Company to perfect, protect, and enforce the Company's ownership of any Invention, including without limitation patent applications, copyright registration applications, and assignments of intellectual property rights, in each case in the United States and in any foreign jurisdiction. Executive hereby irrevocably appoints the Company and its officers as Executive's attorney-in-fact, coupled with an interest, to execute any such documents on Executive's behalf if Executive fails or refuses to do so within a reasonable period after the Company's request.

(c) Pre-Existing Inventions. Executive has identified on Schedule A attached hereto a complete list of all inventions, discoveries, and intellectual property that were conceived, created, or reduced to practice by Executive prior to the Effective Date (other than in the course of his prior employment with Meridian, which are owned by Meridian) and that Executive wishes to exclude from the assignment provisions of this Section 6.3. If no items are listed on Schedule A, Executive represents that there are no such pre-existing inventions.

Section 6.4 — Non-Disparagement

(a) Executive agrees that, during and after the Employment Term, he shall not make, publish, or communicate any defamatory or disparaging remarks, comments, or statements, whether oral, written, or electronic, concerning the Company, its affiliates, or any of their respective officers, directors, employees, shareholders, or agents.

(b) The Company agrees that, during and after the Employment Term, it shall instruct its senior executives and officers not to make, publish, or communicate any defamatory or disparaging remarks, comments, or statements, whether oral, written, or electronic, concerning Executive.

(c) Nothing in this Section 6.4 shall restrict either Party from: (i) providing truthful testimony or information in connection with any legal proceeding, investigation, or regulatory inquiry; (ii) making statements required by applicable law, regulation, or legal process; or (iii) responding truthfully to inquiries from any governmental authority.

Section 6.5 — Cooperation

Executive agrees that, during and after the Employment Term, he shall cooperate fully and in good faith with the Company and its affiliates in connection with any litigation, arbitration, investigation, regulatory proceeding, audit, or other matter arising out of or related to events occurring during the Employment Term or Executive's employment with Meridian prior to the Effective Date. Without limiting the generality of the foregoing, Executive acknowledges that his cooperation may be reasonably required in connection with the pending litigation matter Hartwell Orthopedic Solutions, Inc. v. Meridian Surgical Technologies, Inc., Civil Action No. 2:23-cv-04817 (E.D. Pa.), and Executive agrees to make himself available at reasonable times and upon reasonable notice for purposes of depositions, trial testimony, document review, and other litigation-related activities, as requested by the Company or its counsel. The Company shall reimburse Executive for all reasonable and documented out-of-pocket expenses (including reasonable travel expenses) incurred by Executive in connection with such cooperation, and the Company shall use reasonable efforts to minimize any disruption to Executive's personal and professional obligations. Following the termination of Executive's employment, the Company shall compensate Executive for time spent on cooperation activities at a reasonable hourly rate to be mutually agreed upon by the Parties.

ARTICLE 7 — REPRESENTATIONS AND WARRANTIES

Section 7.1 — Executive's Representations

Executive hereby represents and warrants to the Company as follows:

(a) Executive is not a party to, or bound by, any employment agreement, non-competition agreement, non-solicitation agreement, confidentiality agreement, or any other agreement, restriction, obligation, or commitment (whether written or oral) that would prevent or materially impair Executive's ability to perform his duties and obligations under this Agreement, except for the Restrictive Covenant Agreement entered into by Executive simultaneously herewith and any obligations that have expired or been waived prior to the Effective Date;

(b) The execution, delivery, and performance of this Agreement by Executive does not and will not violate, conflict with, or result in a breach of any agreement, contract, instrument, or obligation to which Executive is a party or by which Executive is bound;

(c) Executive will not bring to the Company, or use or disclose in the performance of his duties hereunder, any confidential or proprietary information, trade secrets, or other intellectual property of any third party (other than information that is properly within the scope of the license agreement between the Company (or Meridian) and Polytechnic Innovations, Ltd., which information Executive is authorized to use in connection with his duties); and

(d) All information provided by Executive to the Company in connection with the negotiation and execution of this Agreement and the Stock Purchase Agreement is true, complete, and accurate in all material respects.

Section 7.2 — Company's Representations

The Company hereby represents and warrants to 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;

(b) The Company has all requisite corporate power and authority to enter into and perform its obligations under this Agreement, and the execution and delivery of this Agreement by the Company have been duly authorized by all necessary corporate action on the part of the Company; and

(c) This Agreement has been duly authorized, executed, and delivered by the Company and constitutes a valid and binding obligation of the Company, enforceable against the Company 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.

ARTICLE 8 — INDEMNIFICATION AND D&O COVERAGE

Section 8.1 — Indemnification

The Company shall indemnify and hold harmless Executive to the fullest extent permitted by the General Corporation Law of the State of Delaware and the Company's certificate of incorporation and bylaws (as in effect from time to time) against all losses, claims, damages, liabilities, judgments, fines, penalties, amounts paid in settlement, and reasonable expenses (including reasonable attorneys' fees, costs, and disbursements) incurred by Executive in connection with, arising out of, or relating to Executive's service as an officer and employee of the Company and Meridian, including any service at the request of the Company as an officer, director, employee, or agent of any other entity. The foregoing indemnification obligations shall be subject to the customary exceptions and limitations set forth in the Company's certificate of incorporation and bylaws, including without limitation the exclusion of indemnification with respect to any claim arising from Executive's fraud, willful misconduct, or knowing violation of law. The Company shall advance to Executive reasonable attorneys' fees and other expenses incurred in connection with any proceeding for which indemnification may be sought under this Section 8.1, upon receipt of an undertaking by Executive to repay such amounts if it is ultimately determined that Executive is not entitled to indemnification. The indemnification obligations set forth in this Section 8.1 shall survive the termination of this Agreement and Executive's employment with the Company.

Section 8.2 — D&O Insurance

During the Employment Term, the Company shall maintain directors' and officers' liability insurance coverage for Executive (in his capacity as an officer of the Company and Meridian) with coverage levels and terms no less favorable than those maintained by the Company for similarly situated senior ex

EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is entered into and made effective as of October 31, 2024 (the "Effective Date"), which is the Closing Date under the Stock Purchase Agreement (as defined below), by and between:
SOLSTICE BIOMEDICAL, INC., a Delaware corporation, with offices at 1200 Innovation Drive, Suite 400, Wilmington, DE 19801 (the "Employer" or the "Company");
and
DR. RAJ SUBRAMANIAN, an individual residing at the address on file with the Company (the "Executive" or "Employee").
The Company and Executive are sometimes referred to herein individually as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, Solstice Biomedical, Inc. is a wholly owned subsidiary of Solstice Biomedical Devices Ltd., an Irish private limited company (CRO No. 648217), with headquarters at Solstice House, 14 Fitzwilliam Place, Dublin 2, D02 YF82, Ireland ("Solstice Ireland" or the "Parent");
WHEREAS, the Company has consummated the acquisition of one hundred percent (100%) of the outstanding capital stock of Meridian Surgical Technologies, Inc. ("Meridian"), a Delaware corporation, pursuant to that certain Stock Purchase Agreement, dated as of August 20, 2024 (the "Stock Purchase Agreement"), among the Company, Meridian, the Sellers named therein, and Dr. Marcus Ellsworth, in his capacity as the representative of the Sellers (the "Sellers' Representative");
WHEREAS, Executive served as Chief Technology Officer of Meridian prior to the Closing Date and was the principal architect of the ArthroNav Robotic-Assisted Arthroscopy Platform (the "ArthroNav Platform"), a proprietary robotic-assisted surgical system designed to enhance the precision and clinical outcomes of arthroscopic procedures;
WHEREAS, the Company desires to employ Executive, and Executive desires to be employed by the Company, on the terms and conditions set forth herein, to lead the continued development and regulatory advancement of the ArthroNav Platform and related technologies following the closing of the transactions contemplated by the Stock Purchase Agreement;
WHEREAS, the Stock Purchase Agreement provides for earnout payments of up to Thirty-Five Million Dollars ($35,000,000) in the aggregate (the "Earnout Payments"), payable to the Sellers upon the achievement of specified FDA 510(k) regulatory milestones for the ArthroNav Platform, and the Parties acknowledge that Executive's scientific expertise, institutional knowledge, and continued leadership of the ArthroNav development program are critical to the achievement of such milestones; and
WHEREAS, as a condition to, and in connection with, the closing of the transactions contemplated by the Stock Purchase Agreement, the Company and Executive have agreed to enter into this Agreement to set forth the terms and conditions of Executive's employment with the Company following the Effective Date.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
ARTICLE 1 — EMPLOYMENT; TERM
Section 1.1 — Employment
The Company hereby employs Executive, and Executive hereby accepts employment with the Company, subject to the terms and conditions set forth in this Agreement. Executive's employment with the Company shall commence on the Effective Date. Executive acknowledges that, as of the Effective Date, his prior employment relationship with Meridian (as it existed before the closing of the Stock Purchase Agreement) is hereby superseded in its entirety by this Agreement, and any prior employment agreement, offer letter, or similar arrangement between Executive and Meridian is terminated and of no further force or effect.
Section 1.2 — Term
The term of Executive's employment under this Agreement shall commence on the Effective Date and shall continue for an initial period of three (3) years, expiring on October 31, 2027 (the "Initial Term"), unless earlier terminated in accordance with Article 5 of this Agreement. Upon expiration of the Initial Term, this Agreement shall automatically renew for successive periods of one (1) year each (each such period, a "Renewal Term"), unless either Party provides the other Party with written notice of non-renewal at least ninety (90) days prior to the expiration of the then-current term (whether the Initial Term or any Renewal Term). The Initial Term, together with any Renewal Terms during which Executive remains employed by the Company, shall be referred to herein collectively as the "Employment Term."
Section 1.3 — At-Will Acknowledgment
Notwithstanding the foregoing provisions regarding the Initial Term and any Renewal Terms, Executive's employment with the Company shall at all times remain "at will," meaning that either the Company or Executive may terminate the employment relationship at any time, for any reason or for no reason, subject to the notice requirements and the severance and other payment provisions set forth in Article 5 of this Agreement. Nothing in this Agreement shall be construed as a guarantee of employment for any specific period of time, except as expressly set forth herein with respect to the severance and other obligations of the Company upon certain types of termination.
ARTICLE 2 — POSITION, DUTIES, AND REPORTING
Section 2.1 — Title and Position
Executive shall serve as Senior Vice President, ArthroNav Development of the Company (and, following the closing of the transactions contemplated by the Stock Purchase Agreement, in a corresponding capacity at Meridian, which shall continue to operate as a wholly owned subsidiary of the Company). Executive shall have overall responsibility for the research, development, engineering, clinical testing, and regulatory submission activities related to the ArthroNav Robotic-Assisted Arthroscopy Platform, including both: (a) the ArthroNav Generation 1.0 system (the core robotic-assisted arthroscopy hardware and software platform); and (b) the ArthroNav Generation 2.0 Software Module for Real-Time Cartilage Mapping (the advanced software upgrade incorporating proprietary algorithms for real-time cartilage thickness measurement and visualization during arthroscopic procedures). Executive's title and the scope of his responsibilities as described in this Section 2.1 shall not be materially diminished during the Employment Term without Executive's prior written consent, except as otherwise expressly provided herein.
Section 2.2 — Reporting
Executive shall report directly to the Division President, Orthopedic Instruments of the Company (as of the Effective Date, Dr. Marcus Ellsworth), or such other senior officer of the Company or Solstice Biomedical Devices Ltd. as may be designated by the Company from time to time upon reasonable prior notice to Executive. In addition, Executive shall coordinate with Dr. Niamh Cassidy, Vice President, Regulatory Affairs of Solstice Biomedical Devices Ltd., on all regulatory strategy matters related to the ArthroNav Platform, including without limitation the development and execution of the regulatory submission strategy for both the Generation 1.0 and Generation 2.0 510(k) applications. Executive acknowledges that the reporting structure described in this Section 2.2 may be modified from time to time to reflect changes in the Company's organizational structure, provided that any such modification shall not result in a material diminution of Executive's authority, duties, or responsibilities.
Section 2.3 — Duties
Executive shall devote substantially all of his business time, attention, skill, and efforts to the faithful performance of his duties and responsibilities under this Agreement. Executive shall perform such duties and responsibilities as are customary for the position of Senior Vice President, ArthroNav Development, and as may be reasonably assigned to him from time to time by the Company, including without limitation:
(a) Leading, managing, and directing the ArthroNav development team, including all engineers, scientists, clinical specialists, and other technical personnel assigned to the ArthroNav program;
(b) Overseeing the preparation and submission of the FDA 510(k) premarket notification application for the ArthroNav Robotic-Assisted Arthroscopy System (Generation 1.0), with a targeted submission date of the second quarter of 2025 (the predicate device for purposes of such submission being the Marlowe Asset Management Robotic Surgical Assist System, FDA Clearance No. K203847);
(c) Overseeing the continued development of, and the preparation and submission of the FDA 510(k) premarket notification application for, the ArthroNav Software Module for Real-Time Cartilage Mapping (Generation 2.0), in accordance with the timeline contemplated by the earnout provisions of the Stock Purchase Agreement;
(d) Managing and safeguarding the proprietary algorithms for real-time cartilage thickness mapping, which constitute trade secrets of the Company and are core to the achievement of Milestone 2 of the earnout as defined in the Stock Purchase Agreement;
(e) Coordinating with Polytechnic Innovations, Ltd. (Oxford, United Kingdom) regarding the licensed background intellectual property in robotic surgical navigation, ensuring compliance with the terms of the applicable license agreement and maximizing the value of such licensed technology in the ArthroNav development program;
(f) Collaborating with Linda Fontaine, Vice President, Quality & Regulatory Compliance at Meridian, on Quality System Regulation (QSR) compliance, ISO 13485:2016 quality management system matters, and related quality assurance activities necessary to support the ArthroNav regulatory submissions and ongoing manufacturing operations;
(g) Representing the Company in interactions with the U.S. Food and Drug Administration ("FDA") and other regulatory authorities, as appropriate, in connection with the ArthroNav program; and
(h) Such other duties and responsibilities as may be reasonably assigned by the Company from time to time, consistent with Executive's position and the terms of this Agreement.
Section 2.4 — Place of Performance
Executive's primary place of work shall be the Meridian manufacturing and development facility located at 45 Forge Creek Road, Exton, Pennsylvania 19341, and the Meridian headquarters located at 780 Keystone Boulevard, Suite 200, King of Prussia, Pennsylvania 19406. Executive acknowledges that reasonable business travel will be required from time to time in connection with the performance of his duties, including travel for FDA meetings and pre-submission conferences, regulatory submissions and consultations, industry conferences and scientific meetings, and coordination with the Company's offices in Wilmington, Delaware and the Parent's offices in Dublin, Ireland. The Company shall reimburse Executive for all reasonable and documented travel expenses in accordance with Section 3.6 of this Agreement.
Section 2.5 — Exclusivity
During the Employment Term, Executive shall not engage in any other employment, consulting, or business activity, whether or not for compensation, that would materially interfere with the performance of his duties and obligations under this Agreement, without the prior written consent of the Company. Notwithstanding the foregoing, Executive may (i) serve on the board of directors or advisory board of charitable or civic organizations, (ii) deliver lectures or fulfill speaking engagements at academic or professional conferences, and (iii) manage his personal investments, in each case so long as such activities do not individually or in the aggregate materially interfere with the performance of Executive's duties hereunder and are not in conflict with the interests of the Company or the terms of the Restrictive Covenant Agreement (as defined in Section 6.1).
ARTICLE 3 — COMPENSATION AND BENEFITS
Section 3.1 — Base Salary
During the Employment Term, the Company shall pay Executive an annual base salary of Four Hundred Ten Thousand Dollars ($410,000) (the "Base Salary"), payable in accordance with the Company's regular payroll practices as in effect from time to time (currently semi-monthly, on the fifteenth and last day of each calendar month). The Base Salary shall be subject to annual review by the Company's Board of Directors, its Compensation Committee, or a duly authorized designee thereof, and may be increased in the Company's sole discretion based on Executive's performance, the Company's financial condition, and other factors deemed relevant by the Company. Notwithstanding the foregoing, the Base Salary shall not be decreased during the Employment Term without Executive's prior written consent, except as part of a general reduction in base salaries applicable to all similarly situated senior executives of the Company on a substantially proportional basis, and then only if such reduction does not exceed ten percent (10%) of the then-current Base Salary.
Section 3.2 — Annual Bonus
In addition to the Base Salary, Executive shall be eligible to receive an annual performance bonus (the "Annual Bonus") for each fiscal year during the Employment Term, with a target bonus opportunity equal to fifty percent (50%) of the Base Salary (i.e., a target Annual Bonus of Two Hundred Five Thousand Dollars ($205,000)) (the "Target Bonus"). The actual amount of the Annual Bonus, if any, for each fiscal year shall be determined by the Company in its reasonable discretion based on Executive's achievement of individual performance objectives and the Company's achievement of corporate performance objectives, in each case as established by the Company at the beginning of the applicable fiscal year in consultation with Executive. For the first partial fiscal year following the Effective Date (the period from November 1, 2024 through December 31, 2024), any Annual Bonus earned shall be prorated based on the number of days during which Executive was employed by the Company during such period relative to the total number of days in such fiscal year. The Annual Bonus, if any, shall be payable within seventy-five (75) days following the end of the applicable fiscal year, subject to Executive's continued employment with the Company on the applicable payment date, except as otherwise provided in Article 5 of this Agreement.
Section 3.3 — Equity Participation
Executive shall be eligible to participate in any equity incentive plan of the Company or Solstice Biomedical Devices Ltd. as may be adopted or made available from time to time, subject to the terms and conditions of any such plan and the terms of any individual award agreements entered into thereunder. The Company anticipates that Solstice Biomedical Devices Ltd. will establish a long-term incentive plan for key employees of the Company and its subsidiaries following the closing of the acquisition. Executive's initial equity grant, if any, under such plan shall be determined by the Board of Directors of Solstice Biomedical Devices Ltd. or the Compensation Committee thereof within ninety (90) days following the Effective Date, and shall be subject to such vesting conditions and other terms as set forth in the applicable plan documents and award agreement.
Section 3.4 — Retention Bonus
In addition to the foregoing compensation, Executive shall be eligible to participate in the Company's Three Million Five Hundred Thousand Dollar ($3,500,000) retention bonus pool (the "Retention Pool") established by the Company for key employees of Meridian in connection with the transactions contemplated by the Stock Purchase Agreement. The Retention Pool is funded entirely by the Company. Executive's individual allocation under the Retention Pool shall be as determined by the Company, and shall be payable in two (2) equal installments as follows:
(a) The first installment shall be payable on or about April 30, 2025 (six (6) months following the Effective Date); and
(b) The second installment shall be payable on or about October 31, 2025 (twelve (12) months following the Effective Date).
Each installment of the retention bonus shall be subject to Executive's continued employment with the Company on the applicable payment date, except as otherwise provided in Sections 5.2 and 5.5 of this Agreement. The retention bonus shall be subject to all applicable tax withholding and deductions.
Section 3.5 — Benefits
During the Employment Term, Executive shall be entitled to participate in all employee benefit plans, programs, and arrangements made available by the Company to its similarly situated senior executives, as such plans, programs, and arrangements may be in effect and amended from time to time, including without limitation:
(a) Health, dental, and vision insurance coverage for Executive and his eligible dependents, in accordance with the terms of the Company's applicable health benefit plans;
(b) Company-provided life insurance and accidental death and dismemberment (AD&D) coverage, and short-term and long-term disability coverage, in each case at benefit levels no less favorable than those provided to similarly situated senior executives of the Company;
(c) Participation in the Meridian Surgical Technologies 401(k) Plan, as administered by Cornerstone Retirement Plan Services, Inc. (or any successor retirement plan established by the Company following the closing of the acquisition), including any employer matching contributions provided thereunder in accordance with the terms of such plan;
(d) Paid time off ("PTO") in accordance with the Company's PTO policy as in effect from time to time, provided that Executive shall be entitled to not less than four (4) weeks of PTO per calendar year (prorated for any partial calendar year of employment); and
(e) Such other benefits as the Company may make available to its similarly situated senior executives from time to time in its sole discretion.
Nothing in this Agreement shall be construed to require the Company to establish or maintain any particular benefit plan or program, and the Company reserves the right to amend or terminate any benefit plan or program at any time in accordance with its terms and applicable law, provided that any such amendment or termination is applied on a uniform basis to all similarly situated senior executives.
Section 3.6 — Business Expenses
The Company shall reimburse Executive for all reasonable and documented business expenses incurred by Executive in the performance of his duties under this Agreement, in accordance with the Company's expense reimbursement policies and procedures as in effect from time to time. Executive shall submit expense reports with supporting documentation within thirty (30) days of incurring such expenses, and the Company shall process reimbursement within thirty (30) days following receipt of a properly documented expense report. All expense reimbursements shall be made in a manner consistent with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the "Code").
Section 3.7 — Withholding
All compensation payable to Executive under this Agreement, including without limitation the Base Salary, Annual Bonus, retention bonus, and any equity-based compensation, shall be subject to applicable federal, state, and local tax withholding and all other deductions and withholdings required by law or authorized by Executive.
ARTICLE 4 — EARNOUT-RELATED PROVISIONS AND ARTHRONAV PROGRAM CONTINUITY
Section 4.1 — Background and Acknowledgments
The Parties acknowledge and agree as follows:
(a) The Stock Purchase Agreement provides for Earnout Payments of up to Thirty-Five Million Dollars ($35,000,000) in the aggregate, payable by the Company to the Sellers upon the achievement of specified FDA regulatory milestones, as follows:
(i) Milestone 1: FDA 510(k) clearance of the ArthroNav Robotic-Assisted Arthroscopy System (Generation 1.0) on or before December 31, 2026 — an Earnout Payment of Twenty Million Dollars ($20,000,000) (the "Milestone 1 Payment"); and
(ii) Milestone 2: FDA 510(k) clearance of the ArthroNav Software Module for Real-Time Cartilage Mapping (Generation 2.0 upgrade) on or before June 30, 2027 — an Earnout Payment of Fifteen Million Dollars ($15,000,000) (the "Milestone 2 Payment").
(b) The period from the Closing Date through June 30, 2027 (or such earlier date on which both Milestone 1 and Milestone 2 have been achieved or have become incapable of achievement) is referred to herein as the "Earnout Period."
(c) Executive's continued leadership of the ArthroNav program, his deep expertise in the underlying technology and algorithms, and his established relationships with the FDA and key regulatory consultants are critical to the timely achievement of the earnout milestones described above.
(d) The Company has covenanted in the Stock Purchase Agreement to use commercially reasonable efforts to pursue the 510(k) submissions for both the Generation 1.0 system and the Generation 2.0 Software Module, and to maintain a dedicated ArthroNav R&D budget of no less than Six Million Dollars ($6,000,000) per year during the Earnout Period (through June 30, 2027).
Section 4.2 — Executive's Earnout Cooperation Obligations
During the Earnout Period, Executive shall:
(a) Use his best professional efforts, consistent with applicable regulatory standards, industry best practices, and the Company's quality management system, to advance the ArthroNav program toward the achievement of both Milestone 1 and Milestone 2 within the timeframes specified in the Stock Purchase Agreement;
(b) Lead and manage the ArthroNav development team and allocate sufficient resources within his area of responsibility to support the timely preparation, submission, and prosecution of 510(k) premarket notification applications for both the Generation 1.0 system and the Generation 2.0 Software Module, including responding to any FDA requests for additional information, deficiency letters, or other regulatory inquiries;
(c) Cooperate fully and in good faith with the Company's regulatory affairs personnel, including Dr. Niamh Cassidy, Vice President, Regulatory Affairs of Solstice Biomedical Devices Ltd., and Linda Fontaine, Vice President, Quality & Regulatory Compliance at Meridian, in the preparation and prosecution of all FDA submissions and related regulatory activities;
(d) Provide periodic written progress reports, no less frequently than quarterly, to the Division President, Orthopedic Instruments (or such other senior officer of the Company designated for this purpose) and, upon the reasonable request of the Sellers' Representative (Dr. Marcus Ellsworth), to the Sellers' Representative, regarding the status of the ArthroNav development program, including: (i) a summary of development activities completed during the reporting period; (ii) the current status of all regulatory submissions and interactions with the FDA; (iii) anticipated regulatory timelines and any material changes thereto; (iv) any significant technical, scientific, or regulatory challenges or risks identified during the reporting period; and (v) the status of the ArthroNav R&D budget and resource allocation; and
(e) Promptly notify the Company's Division President and General Counsel of any material development, event, or circumstance that could reasonably be expected to adversely affect the timing or likelihood of achieving either Milestone 1 or Milestone 2.
Section 4.3 — Restriction on Reassignment During Earnout Period
Consistent with the Company's obligations under the Stock Purchase Agreement, the Company shall not, during the Earnout Period, reassign, divert, or materially alter Executive's responsibilities with respect to the ArthroNav program without the prior written consent of the Sellers' Representative (Dr. Marcus Ellsworth). The foregoing restriction shall not preclude the Company from assigning additional responsibilities to Executive that are not inconsistent with his ArthroNav duties, provided that such additional responsibilities do not materially impair Executive's ability to dedicate adequate time and attention to the ArthroNav program and the timely achievement of the earnout milestones. In the event of a dispute regarding whether a proposed reassignment or alteration of Executive's responsibilities is "material" within the meaning of this Section 4.3, the Parties shall endeavor to resolve such dispute in good faith through consultation with the Sellers' Representative.
Section 4.4 — ArthroNav R&D Budget
The Company acknowledges and reaffirms its covenant under the Stock 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 (through June 30, 2027). Executive shall have primary authority over the allocation and deployment of the ArthroNav R&D budget within the parameters of the Company's annual budget process, subject to the overall governance, approval processes, and financial controls of the Company. Executive shall exercise such budgetary authority in a manner consistent with the objective of achieving the earnout milestones within the timeframes specified in the Stock Purchase Agreement. Executive shall promptly notify the Company's Division President and General Counsel if, in Executive's reasonable judgment, the ArthroNav R&D budget or the resources (including personnel, equipment, and facilities) allocated to the ArthroNav program are insufficient to support the timely achievement of the earnout milestones, and the Company shall consider such notification in good faith and take commercially reasonable steps to address any identified deficiencies.
Section 4.5 — Program discontinuance
The Company shall not discontinue or abandon the ArthroNav program during the Earnout Period without providing ninety (90) days' prior written notice to the Sellers' Representative, as required under the Stock Purchase Agreement. In the event that the Company provides such notice of discontinuance or abandonment of the ArthroNav program during the Employment Term, such discontinuance or abandonment shall constitute "Good Reason" for the termination of Executive's employment under Section 5.4 of this Agreement, and Executive shall have the right to terminate his employment in accordance with the procedures set forth therein. For the avoidance of doubt, this Section 4.5 does not create any obligation on the part of the Company to continue the ArthroNav program beyond the requirements of the Stock Purchase Agreement, but is intended solely to establish Executive's rights in the event of such discontinuance.
ARTICLE 5 — TERMINATION OF EMPLOYMENT
Section 5.1 — Termination by the Company for Cause
The Company may terminate Executive's employment at any time for "Cause." For purposes of this Agreement, "Cause" shall mean the occurrence of any of the following:
(a) Executive's material breach of any provision of this Agreement or any restrictive covenant agreement to which Executive is a party (including, without limitation, the Restrictive Covenant Agreement defined in Section 6.1), provided that the Company shall first provide Executive with written notice specifying the nature of the breach in reasonable detail, and Executive shall have a period of thirty (30) calendar days following receipt of such notice to cure the breach (to the extent such breach is reasonably susceptible to cure);
(b) Executive's conviction of, or plea of guilty or nolo contendere to, a felony or any crime involving fraud, dishonesty, or moral turpitude under the laws of any jurisdiction;
(c) Executive's willful misconduct or gross negligence in the performance of his duties under this Agreement that results in, or could reasonably be expected to result in, material harm to the Company, its affiliates, or their business, operations, or reputation;
(d) Executive's commission of fraud, embezzlement, or misappropriation of Company or affiliate funds or property;
(e) Executive's material violation of written Company policies, including without limitation applicable quality and regulatory compliance policies, Good Manufacturing Practices, or the Company's Code of Business Conduct and Ethics, in each case as in effect from time to time and made known to Executive; or
(f) Executive's willful and continued refusal to perform his material duties under this Agreement (other than as a result of physical or mental incapacity), after the Company has provided Executive with written notice specifying the duties that Executive has failed to perform and a reasonable opportunity to cure such failure (not less than fifteen (15) business days following receipt of such notice).
A termination for Cause shall be effective immediately upon the delivery of a written notice of termination from the Company to Executive (or, in the case of clauses (a) and (f) above, upon the expiration of the applicable cure period without cure). Upon a termination by the Company for Cause, Executive shall be entitled to receive only: (i) accrued but unpaid Base Salary through the date of termination; (ii) accrued but unused PTO in accordance with applicable Company policy; and (iii) any vested benefits to which Executive is entitled under the terms of the Company's benefit plans (collectively, the "Accrued Obligations"). Executive shall not be entitled to any further compensation, severance, bonus (including any prorated Annual Bonus), retention bonus payments, or other benefits following a termination for Cause.
Section 5.2 — Termination by the Company Without Cause
The Company may terminate Executive's employment without Cause at any time upon thirty (30) days' prior written notice to Executive. In the event of a termination by the Company without Cause (other than as a result of Executive's death or Disability, which are addressed in Section 5.5), Executive shall be entitled to receive the following, in addition to the Accrued Obligations:
(a) Severance Payment. A severance payment equal to twelve (12) months of the Base Salary in effect on the date of termination (i.e., Four Hundred Ten Thousand Dollars ($410,000), or such greater amount if the Base Salary has been increased), payable in substantially equal installments over the twelve (12)-month period following the date of termination in accordance with the Company's normal payroll practices, with the first installment to be paid on the first regular payroll date following the date on which the Release (as defined below) becomes effective and irrevocable, and such first installment to include any amounts that would have been paid between the date of termination and such first payroll date;
(b) Prorated Annual Bonus. A prorated Annual Bonus for the fiscal year in which the termination occurs, calculated based on actual Company and individual performance for the full fiscal year (as determined by the Company in its reasonable discretion) and prorated for the portion of such fiscal year during which Executive was employed by the Company, payable at the time Annual Bonuses are generally paid to other senior executives of the Company for such fiscal year, but in no event later than seventy-five (75) days following the end of such fiscal year;
(c) COBRA Premium Reimbursement. Reimbursement of the premiums paid by Executive for continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), for Executive and his eligible dependents, for a period of up to twelve (12) months following the date of termination (or, if earlier, until Executive becomes eligible for comparable health insurance coverage under another employer's plan), provided that Executive timely elects COBRA continuation coverage;
(d) Accelerated Retention Bonus Vesting. Accelerated vesting and payment of any retention bonus installments under Section 3.4 that would have been payable within six (6) months following the date of termination had Executive remained employed by the Company during such period, with such accelerated installments payable within thirty (30) days following the date on which the Release becomes effective and irrevocable.
The severance benefits described in this Section 5.2 (other than the Accrued Obligations) shall be conditioned upon Executive's timely execution and non-revocation of a general release of claims in favor of the Company, its affiliates, and their respective officers, directors, employees, and agents, in a form reasonably satisfactory to the Company (the "Release"), within sixty (60) days following the date of termination. If Executive fails to execute the Release within such sixty (60)-day period, or if Executive revokes the Release within any applicable revocation period, Executive shall forfeit all rights to the severance benefits described in clauses (a) through (d) above.
Section 5.3 — Termination by Executive Without Good Reason
Executive may terminate his employment with the Company at any time without Good Reason upon sixty (60) days' prior written notice to the Company. During such notice period, Executive shall continue to perform his duties under this Agreement unless the Company elects to waive the notice period in whole or in part (in which case the Company shall pay Executive his Base Salary through the earlier of (i) the expiration of the notice period and (ii) the date designated by the Company as Executive's last day of employment). Upon a termination by Executive without Good Reason, Executive shall be entitled to receive only the Accrued Obligations and shall not be entitled to any further compensation, severance, bonus, retention bonus payments, or other benefits.
Section 5.4 — Termination by Executive for Good Reason
Executive may terminate his employment with the Company for "Good Reason." For purposes of this Agreement, "Good Reason" shall mean the occurrence of any of the following events without Executive's prior written consent:
(a) A material reduction in Executive's Base Salary (for this purpose, a reduction of greater than ten percent (10%) of the then-current Base Salary shall be deemed material), other than a reduction that is part of a general reduction in base salaries applicable to all similarly situated senior executives of the Company on a substantially proportional basis;
(b) A material diminution in Executive's title, authority, duties, or responsibilities, including, during the Earnout Period, any reassignment of Executive away from the ArthroNav program or any material reduction in Executive's authority or responsibilities with respect to the ArthroNav program, in each case without the prior written consent of the Sellers' Representative (Dr. Marcus Ellsworth);
(c) A relocation of Executive's principal place of work to a location that is more than fifty (50) miles from Executive's then-current principal place of work (as of the Effective Date, King of Prussia, Pennsylvania and Exton, Pennsylvania), without Executive's prior written consent;
(d) The Company's material breach of any provision of this Agreement, including without limitation the Company's failure to fund or maintain the minimum ArthroNav R&D budget of Six Million Dollars ($6,000,000) per year as contemplated by Section 4.4 of this Agreement; or
(e) The Company's notification of discontinuance or abandonment of the ArthroNav program during the Earnout Period, as described in Section 4.5 of this Agreement.
Notwithstanding the foregoing, Executive may not terminate his employment for Good Reason unless: (i) Executive provides written notice to the Company of the existence of the condition constituting Good Reason within thirty (30) calendar days after the initial occurrence of such condition; (ii) the Company fails to cure such condition within thirty (30) calendar days following receipt of such written notice (the "Cure Period"); and (iii) Executive resigns from employment within thirty (30) calendar days following the expiration of the Cure Period (if the condition remains uncured). If the Company cures the condition during the Cure Period, Executive's notice of Good Reason shall be deemed withdrawn and Executive's employment shall continue on the existing terms.
Upon a termination by Executive for Good Reason, Executive shall be entitled to receive the same severance benefits as would be payable upon a termination by the Company without Cause under Section 5.2 of this Agreement (including the Accrued Obligations, severance payment, prorated Annual Bonus, COBRA premium reimbursement, and accelerated retention bonus vesting), subject to Executive's timely execution and non-revocation of the Release within sixty (60) days following the date of termination.
Section 5.5 — Termination Due to Death or Disability
Executive's employment shall terminate automatically upon Executive's death. In addition, the Company may terminate Executive's employment upon Executive's "Disability," which for purposes of this Agreement shall mean Executive's inability to perform the essential functions of his position, with or without reasonable accommodation, for a period of one hundred eighty (180) consecutive calendar days or an aggregate of two hundred seventy (270) calendar days in any three hundred sixty-five (365)-day period, as determined by a physician qualified to make such determination who is mutually agreed upon by the Company and Executive (or, if Executive is unable to participate in such selection, Executive's legal representative).
In the event of a termination of Executive's employment due to death or Disability, Executive (or, in the case of death, Executive's estate, beneficiary, or legal representative, as applicable) shall be entitled to receive, in addition to the Accrued Obligations:
(a) A prorated Annual Bonus for the fiscal year in which the termination occurs, calculated based on actual Company and individual performance for the full fiscal year and prorated for the portion of the year during which Executive was employed, payable at the time Annual Bonuses are generally paid to other senior executives of the Company for such fiscal year;
(b) Continued payment of Executive's Base Salary for a period of six (6) months following the date of termination (or, in the case of death, payment to Executive's estate, designated beneficiary, or legal representative), payable in accordance with the Company's regular payroll practices; and
(c) Accelerated vesting and payment of any unpaid retention bonus installments under Section 3.4 that remain outstanding as of the date of termination, regardless of whether Executive would have remained employed on the applicable payment dates, with such amounts payable within thirty (30) days following the date of termination (or, in the case of death, to Executive's estate, designated beneficiary, or legal representative).
Section 5.6 — Expiration of Term; Non-Renewal
In the event that either Party provides timely notice of non-renewal in accordance with Section 1.2 and Executive's employment terminates upon the expiration of the then-current term (whether the Initial Term or any Renewal Term) as a result of such non-renewal, such termination shall be treated as a termination by the Company without Cause for purposes of severance under Section 5.2 of this Agreement, and Executive shall be entitled to the severance benefits described therein, provided that Executive timely executes and does not revoke the Release. For the avoidance of doubt, if Executive provides the notice of non-renewal and subsequently elects to continue employment through the end of the then-current term, Executive shall be treated as having been terminated without Cause upon the expiration of such term for purposes of this Section 5.6.
Section 5.7 — Return of Company Property
Upon the termination of Executive's employment for any reason, or at any time upon the Company's request, Executive shall promptly return to the Company all property of the Company and its affiliates in Executive's possession or control, including without limitation: (a) all documents, files, records, reports, and correspondence (whether in physical or electronic form) containing or relating to Confidential Information (as defined in Section 6.2); (b) all computers, laptops, tablets, mobile devices, and other electronic equipment provided by the Company; (c) all access cards, keys, and security credentials; (d) all laboratory notebooks, research data, and experimental records related to the ArthroNav program or any other Company project; and (e) all other property, materials, and items belonging to the Company or its affiliates. Executive shall not retain any copies, reproductions, or summaries of any Company property or Confidential Information following termination, except as may be required by applicable law.
Section 5.8 — Section 409A Compliance
This Agreement is intended to comply with, or be exempt from, the requirements of Section 409A of the Code and the Treasury Regulations and other guidance promulgated thereunder ("Section 409A"), and shall be interpreted and construed in a manner consistent with such intent.
(a) Each installment payment of severance or other compensation under this Agreement shall be treated as a separate payment for purposes of Section 409A.
(b) To the extent that any payment or benefit under this Agreement constitutes "nonqualified deferred compensation" within the meaning of Section 409A and is payable upon Executive's termination of employment, such payment or benefit shall be made or provided only upon Executive's "separation from service" within the meaning of Section 409A.
(c) If Executive is a "specified employee" within the meaning of Section 409A(a)(2)(B)(i) of the Code as of the date of Executive's separation from service, any payment or benefit that constitutes "nonqualified deferred compensation" within the meaning of Section 409A and that would otherwise be payable during the six (6)-month period following Executive's separation from service shall instead be accumulated and paid in a lump sum on the first business day of the seventh month following Executive's separation from service (or, if earlier, the date of Executive's death), together with interest at the applicable federal rate under Section 7872(f)(2)(A) of the Code.
(d) In no event shall Executive, directly or indirectly, designate the calendar year of any payment to be made under this Agreement that constitutes "nonqualified deferred compensation" within the meaning of Section 409A.
(e) The Company shall use commercially reasonable efforts to ensure that all reimbursements and in-kind benefits provided under this Agreement are administered in a manner that complies with Section 409A, including by ensuring that: (i) the amount of expenses eligible for reimbursement or in-kind benefits provided during any calendar year shall not affect the amount of expenses eligible for reimbursement or in-kind benefits to be provided in any other calendar year; (ii) each reimbursement shall be made no later than the last day of the calendar year following the calendar year in which the expense was incurred; and (iii) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.
(f) To the extent that any payment under this Agreement is intended to qualify for the "short-term deferral" exemption under Treasury Regulation Section 1.409A-1(b)(4) or the exemption for separation pay under Treasury Regulation Section 1.409A-1(b)(9)(iii) (the "two-year/two-times pay" exemption), the applicable provisions shall be interpreted and administered in a manner consistent with such exemptions.
ARTICLE 6 — RESTRICTIVE COVENANTS
Section 6.1 — Reference to Separate Non-Competition Agreement
Executive acknowledges and agrees that, simultaneously with the execution of this Agreement, Executive has entered into that certain Non-Competition and Non-Solicitation Agreement (the "Restrictive Covenant Agreement"), dated as of the Effective Date, by and between Executive and the Company, a copy of which is attached as an exhibit to the Stock Purchase Agreement. The Restrictive Covenant Agreement provides for, among other things, a two (2)-year post-termination non-competition period and a two (2)-year post-termination non-solicitation period (with respect to both employees and customers), and is governed by the laws of the State of Delaware. The terms and conditions of the Restrictive Covenant Agreement are incorporated herein by reference and shall survive the termination or expiration of this Agreement in accordance with their terms. In the event of any conflict between the provisions of this Agreement and the Restrictive Covenant Agreement, the Restrictive Covenant Agreement shall control with respect to the subject matter thereof.
Section 6.2 — Confidentiality
(a) Obligation. Executive acknowledges that, in the course of his employment with the Company and its affiliates (including Meridian), Executive will have access to, and will develop and contribute to, Confidential Information (as defined below) of the Company and its affiliates. Executive shall maintain the strict confidentiality of all Confidential Information, both during and after the Employment Term, and shall not, directly or indirectly, disclose, publish, communicate, or make available any Confidential Information to any person or entity, or use any Confidential Information for any purpose, other than in the proper performance of his duties under this Agreement and for the benefit of the Company and its affiliates.
(b) Definition. For purposes of this Agreement, "Confidential Information" means any and all information, data, knowledge, and materials (whether oral, written, electronic, or in any other form) that are proprietary or confidential to the Company or any of its affiliates (including Meridian, Solstice Biomedical Devices Ltd., and their respective subsidiaries), including without limitation:
(i) proprietary technical information, know-how, inventions, discoveries, research data, experimental results, designs, specifications, prototypes, and engineering documentation related to the ArthroNav Platform or any other product or technology of the Company or its affiliates;
(ii) trade secrets, including the proprietary algorithms for real-time cartilage thickness mapping that are core to the ArthroNav Generation 2.0 Software Module;
(iii) product designs, schematics, manufacturing processes, and quality control procedures;
(iv) regulatory submissions, clinical data, pre-clinical data, and regulatory strategy documents, including all materials submitted to or received from the FDA;
(v) business plans, strategic plans, marketing plans, and competitive analyses;
(vi) financial information, budgets, projections, cost data, and pricing information;
(vii) customer and supplier information, including customer lists, supplier lists, and the terms of customer and supplier agreements;
(viii) information regarding the Company's employees, consultants, and contractors, including compensation data and performance evaluations;
(ix) information relating to the Stock Purchase Agreement, the earnout milestones, and the integration of Meridian's operations into the Company; and
(x) any other information that is not generally known to the public and that derives economic value from not being generally known.
Confidential Information shall not include information that: (A) is or becomes generally available to the public other than as a result of a disclosure by Executive in violation of this Agreement; (B) was in Executive's possession on a non-confidential basis prior to the Effective Date and was not obtained by Executive from the Company or Meridian; or (C) is received by Executive on a non-confidential basis from a third party that is not under an obligation of confidentiality to the Company.
(c) Duration. Executive's obligations under this Section 6.2 shall survive the termination or expiration of this Agreement and Executive's employment: (i) indefinitely with respect to information that constitutes a "trade secret" under applicable law (including the Delaware Uniform Trade Secrets Act and the federal Defend Trade Secrets Act of 2016), for so long as such information qualifies as a trade secret under such law; and (ii) for a period of five (5) years following the date of termination of Executive's employment with respect to all other Confidential Information.
(d) Permitted Disclosures. Nothing in this Agreement shall prohibit or restrict Executive from: (i) making disclosures required by applicable law, regulation, or legal process (including a valid subpoena or court order), provided that Executive shall, to the extent legally permitted, provide the Company with prompt written notice of such requirement so that the Company may seek a protective order or other appropriate remedy; (ii) providing truthful testimony or information in connection with any legal proceeding; or (iii) making disclosures to Executive's personal attorneys, tax advisors, or financial advisors who have a need to know such information and who are bound by professional obligations of confidentiality.
(e) 18 U.S.C. § 1833(b) Notice. Pursuant to 18 U.S.C. § 1833(b), Executive is hereby notified that 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 (A) is made (I) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, and (II) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. 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 (A) files any document containing the trade secret under seal and (B) does not disclose the trade secret, except pursuant to court order.
Section 6.3 — Intellectual Property Assignment
(a) Assignment. Executive acknowledges and agrees that all inventions, discoveries, improvements, enhancements, works of authorship, designs, software, algorithms, methods, processes, data, databases, and other intellectual property, whether or not patentable or copyrightable, that are conceived, created, developed, or reduced to practice by Executive, either alone or jointly with others, during the Employment Term and that: (i) relate in any way to the business, products, services, or technology of the Company or its affiliates (including the ArthroNav Platform); (ii) result from or are suggested by any task, duty, or project assigned to Executive or undertaken by Executive on behalf of the Company; or (iii) are developed using any resources, equipment, facilities, or Confidential Information of the Company or its affiliates (collectively, "Inventions"), shall be the sole and exclusive property of the Company. To the extent that any Invention constitutes a "work made for hire" under the Copyright Act of 1976, as amended, Executive agrees that such Invention is a work made for hire and that the Company is the author thereof. To the extent that any Invention does not constitute a work made for hire, Executive hereby irrevocably assigns, transfers, and conveys to the Company all right, title, and interest in and to such Invention, including all intellectual property rights therein, without the requirement of any further consideration.
(b) Cooperation. Executive shall promptly and fully disclose all Inventions to the Company and shall execute all documents, instruments, assignments, and applications reasonably required by the Company to perfect, protect, and enforce the Company's ownership of any Invention, including without limitation patent applications, copyright registration applications, and assignments of intellectual property rights, in each case in the United States and in any foreign jurisdiction. Executive hereby irrevocably appoints the Company and its officers as Executive's attorney-in-fact, coupled with an interest, to execute any such documents on Executive's behalf if Executive fails or refuses to do so within a reasonable period after the Company's request.
(c) Pre-Existing Inventions. Executive has identified on Schedule A attached hereto a complete list of all inventions, discoveries, and intellectual property that were conceived, created, or reduced to practice by Executive prior to the Effective Date (other than in the course of his prior employment with Meridian, which are owned by Meridian) and that Executive wishes to exclude from the assignment provisions of this Section 6.3. If no items are listed on Schedule A, Executive represents that there are no such pre-existing inventions.
Section 6.4 — Non-Disparagement
(a) Executive agrees that, during and after the Employment Term, he shall not make, publish, or communicate any defamatory or disparaging remarks, comments, or statements, whether oral, written, or electronic, concerning the Company, its affiliates, or any of their respective officers, directors, employees, shareholders, or agents.
(b) The Company agrees that, during and after the Employment Term, it shall instruct its senior executives and officers not to make, publish, or communicate any defamatory or disparaging remarks, comments, or statements, whether oral, written, or electronic, concerning Executive.
(c) Nothing in this Section 6.4 shall restrict either Party from: (i) providing truthful testimony or information in connection with any legal proceeding, investigation, or regulatory inquiry; (ii) making statements required by applicable law, regulation, or legal process; or (iii) responding truthfully to inquiries from any governmental authority.
Section 6.5 — Cooperation
Executive agrees that, during and after the Employment Term, he shall cooperate fully and in good faith with the Company and its affiliates in connection with any litigation, arbitration, investigation, regulatory proceeding, audit, or other matter arising out of or related to events occurring during the Employment Term or Executive's employment with Meridian prior to the Effective Date. Without limiting the generality of the foregoing, Executive acknowledges that his cooperation may be reasonably required in connection with the pending litigation matter Hartwell Orthopedic Solutions, Inc. v. Meridian Surgical Technologies, Inc., Civil Action No. 2:23-cv-04817 (E.D. Pa.), and Executive agrees to make himself available at reasonable times and upon reasonable notice for purposes of depositions, trial testimony, document review, and other litigation-related activities, as requested by the Company or its counsel. The Company shall reimburse Executive for all reasonable and documented out-of-pocket expenses (including reasonable travel expenses) incurred by Executive in connection with such cooperation, and the Company shall use reasonable efforts to minimize any disruption to Executive's personal and professional obligations. Following the termination of Executive's employment, the Company shall compensate Executive for time spent on cooperation activities at a reasonable hourly rate to be mutually agreed upon by the Parties.
ARTICLE 7 — REPRESENTATIONS AND WARRANTIES
Section 7.1 — Executive's Representations
Executive hereby represents and warrants to the Company as follows:
(a) Executive is not a party to, or bound by, any employment agreement, non-competition agreement, non-solicitation agreement, confidentiality agreement, or any other agreement, restriction, obligation, or commitment (whether written or oral) that would prevent or materially impair Executive's ability to perform his duties and obligations under this Agreement, except for the Restrictive Covenant Agreement entered into by Executive simultaneously herewith and any obligations that have expired or been waived prior to the Effective Date;
(b) The execution, delivery, and performance of this Agreement by Executive does not and will not violate, conflict with, or result in a breach of any agreement, contract, instrument, or obligation to which Executive is a party or by which Executive is bound;
(c) Executive will not bring to the Company, or use or disclose in the performance of his duties hereunder, any confidential or proprietary information, trade secrets, or other intellectual property of any third party (other than information that is properly within the scope of the license agreement between the Company (or Meridian) and Polytechnic Innovations, Ltd., which information Executive is authorized to use in connection with his duties); and
(d) All information provided by Executive to the Company in connection with the negotiation and execution of this Agreement and the Stock Purchase Agreement is true, complete, and accurate in all material respects.
Section 7.2 — Company's Representations
The Company hereby represents and warrants to 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;
(b) The Company has all requisite corporate power and authority to enter into and perform its obligations under this Agreement, and the execution and delivery of this Agreement by the Company have been duly authorized by all necessary corporate action on the part of the Company; and
(c) This Agreement has been duly authorized, executed, and delivered by the Company and constitutes a valid and binding obligation of the Company, enforceable against the Company 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.
ARTICLE 8 — INDEMNIFICATION AND D&O COVERAGE
Section 8.1 — Indemnification
The Company shall indemnify and hold harmless Executive to the fullest extent permitted by the General Corporation Law of the State of Delaware and the Company's certificate of incorporation and bylaws (as in effect from time to time) against all losses, claims, damages, liabilities, judgments, fines, penalties, amounts paid in settlement, and reasonable expenses (including reasonable attorneys' fees, costs, and disbursements) incurred by Executive in connection with, arising out of, or relating to Executive's service as an officer and employee of the Company and Meridian, including any service at the request of the Company as an officer, director, employee, or agent of any other entity. The foregoing indemnification obligations shall be subject to the customary exceptions and limitations set forth in the Company's certificate of incorporation and bylaws, including without limitation the exclusion of indemnification with respect to any claim arising from Executive's fraud, willful misconduct, or knowing violation of law. The Company shall advance to Executive reasonable attorneys' fees and other expenses incurred in connection with any proceeding for which indemnification may be sought under this Section 8.1, upon receipt of an undertaking by Executive to repay such amounts if it is ultimately determined that Executive is not entitled to indemnification. The indemnification obligations set forth in this Section 8.1 shall survive the termination of this Agreement and Executive's employment with the Company.
Section 8.2 — D&O Insurance
During the Employment Term, the Company shall maintain directors' and officers' liability insurance coverage for Executive (in his capacity as an officer of the Company and Meridian) with coverage levels and terms no less favorable than those maintained by the Company for similarly situated senior ex

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