Exhibit 10.1

LOAN AND SECURITY AGREEMENT

THIS LOAN AND SECURITY AGREEMENT (as the same may be amended, restated,
modified, or supplemented from time to time, this “Agreement”) dated as of
May 10, 2017 (the “Effective Date”) among INNOVATUS LIFE SCIENCES LENDING FUND
I, LP, a Delaware limited partnership, as collateral agent (in such capacity,
together with its successors and assigns in such capacity, “Collateral Agent”),
and the Lenders listed on Schedule 1.1 hereof or otherwise a party hereto from
time to, and TRANSENTERIX, INC., a Delaware corporation (“Parent”), TRANSENTERIX
SURGICAL, INC., a Delaware corporation (“TransEnterix Surgical”), SAFESTITCH
LLC, a Virginia limited liability company (“SafeStitch”), and TRANSENTERIX
INTERNATIONAL, INC., a Delaware corporation (“TransEnterix International”, and
together with Parent, TransEnterix Surgical, and SafeStitch, individually and
collectively, jointly and severally, “Borrower”), each with offices located at
635 Davis Drive, Suite 300, Morrisville, North Carolina 27560, provides the
terms on which the Lenders shall lend to Borrower and Borrower shall repay the
Lenders. The parties agree as follows:

 

1. DEFINITIONS, ACCOUNTING AND OTHER TERMS

1.1 Capitalized terms used herein shall have the meanings set forth in
Section 13 to the extent defined therein. All other capitalized terms used but
not defined herein shall have the meaning given to such terms in the Code. Any
accounting term used but not defined herein shall be construed in accordance
with GAAP and all calculations shall be made in accordance with GAAP. The term
“financial statements” shall include the accompanying notes and schedules. Any
section, subsection, schedule or exhibit references are to this Agreement unless
otherwise specified.

 

2. LOANS AND TERMS OF PAYMENT

2.1 Promise to Pay. Borrower hereby unconditionally promises to pay each Lender
the outstanding principal amount of the Term Loan advanced to Borrower by such
Lender and accrued and unpaid interest thereon and any other amounts due
hereunder as and when due in accordance with this Agreement.

2.2 Term Loans.

(a) Availability. (i) Subject to the terms and conditions of this Agreement, the
Lenders agree, severally and not jointly, to make a term loan to Borrower on the
Funding Date thereof in an aggregate principal amount of Fourteen Million
Dollars ($14,000,000.00) according to each Lender’s Term A Loan Commitment as
set forth on Schedule 1.1 hereto (the “Term A Loan”). After repayment, the Term
A Loan may not be re borrowed.

(ii) Subject to the terms and conditions of this Agreement, the Lenders agree,
severally and not jointly, during the Second Draw Period, to make an additional
term loan to Borrower in an aggregate amount of Three Million Dollars
($3,000,000.00) according to each Lender’s Term B Loan Commitment as set forth
on Schedule 1.1 hereto (such term loans are hereinafter referred to singly as a
“Term B Loan”, and collectively as the “Term B Loans”; each Term A Loan or Term
B Loan is hereinafter referred to singly as a “Term Loan” and the Term A Loans
and the Term B Loans are hereinafter referred to collectively as the “Term
Loans”). After repayment, no Term B Loan may be re borrowed.

(b) Repayment. Borrower shall make monthly payments of interest only commencing
on the second (2nd) Payment Date following the Funding Date of each Term Loan,
and continuing on the Payment Date of each successive month thereafter through
and including the Payment Date immediately preceding the Amortization Date.
Borrower agrees to pay, on the Funding Date of each Term Loan, any initial
partial monthly interest payment otherwise due for the period between the
Funding Date of such Term Loan and the first Payment Date after such Funding
Date. Commencing on the Amortization Date, and continuing on the Payment Date of
each month thereafter, Borrower shall make consecutive equal monthly payments of
principal and interest, in arrears, to each Lender, as calculated by Collateral
Agent (which calculations shall be deemed correct absent manifest error) based
upon: (1) the amount of such Lender’s Term Loan, (2) the effective rate of
interest, as determined in Section 2.3(a), and (3) a repayment schedule equal to
twenty-four (24) months. All unpaid principal and accrued and unpaid interest
with respect to the Term Loan is due and payable in full on the Maturity Date.
The Term Loan may only be prepaid in accordance with Sections 2.2(c) and 2.2(d).

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(c) Mandatory Prepayments. If an event described in Section 7.2(c)(ii) occurs or
the Term Loans are accelerated following the occurrence of an Event of Default,
Borrower shall immediately pay to Lenders, payable to each Lender in accordance
with its respective Pro Rata Share, an amount equal to the sum of: (i) all
outstanding principal of the Term Loans plus accrued and unpaid interest thereon
through the prepayment date, (ii) the Final Fee, (iii) the Prepayment Fee, plus
(iv) all other Obligations that are due and payable, including, without
limitation, Lenders’ Expenses and interest at the Default Rate with respect to
any past due amounts. Notwithstanding (but without duplication with) the
foregoing, on the Maturity Date, if the Final Fee had not previously been paid
in full in connection with the prepayment of the Term Loans in full, Borrower
shall, subject to the proviso set forth in the definition of “Final Fee,” pay to
each Lender in accordance with its respective Pro Rata Share, the Final Fee in
respect of the Term Loans.

(d) Permitted Prepayment of Term Loans. Borrower shall have the option to prepay
all, but not less than all, of the Term Loans advanced by the Lenders under this
Agreement, provided Borrower (i) provides written notice to Collateral Agent of
its election to prepay the Term Loans at least five (5) Business Days prior to
such prepayment, and (ii) pays to the Lenders on the date of such prepayment,
payable to each Lender in accordance with its respective Pro Rata Share, an
amount equal to the sum of (A) all outstanding principal of the Term Loans plus
accrued and unpaid interest thereon through the prepayment date, (B) the Final
Fee, subject to the proviso set forth in the definition of “Final Fee,” (C) the
Prepayment Fee, subject to the proviso set forth in the definition of
“Prepayment Fee,” plus (D) all other Obligations that are due and payable,
including, without limitation, Lenders’ Expenses and interest at the Default
Rate with respect to any past due amounts.

2.3 Payment of Interest on the Term Loans.

(a) Interest Rate. Subject to Section 2.3(b), the principal amount outstanding
under the Term Loans shall accrue interest at a fixed per annum rate equal to
eleven percent (11.00%), which interest shall be payable monthly in arrears in
accordance with Sections 2.2(b) and 2.3(e); provided that during the PIK Option
Period, at the election of Borrower (which shall be considered elected on the
Effective Date) with no less than five (5) Business Day written notice to
Collateral Agent prior to the applicable Payment Date, two and one-half percent
(2.50%) of such eleven percent (11.00%) may be payable in-kind by adding an
amount equal to such two and one-half percent (2.50%) of the outstanding
principal amount of the Term Loans to the then outstanding principal balance of
the Term Loans on a monthly basis so as to increase the outstanding principal
balance of the Term Loans on each Payment Date and which amount shall be payable
when the principal amount of the Term Loans is payable in accordance with
Sections 2.2(b) and 2.3(e) and on which principal amount interest shall be owed
pursuant to Section 2.3(a).

Interest shall accrue on each Term Loan commencing on, and including, the
Funding Date of such Term Loan, and shall accrue on the principal amount
outstanding under the Term Loan through and including the day on which the Term
Loan is paid in full.

(b) Default Rate. Immediately upon the occurrence and during the continuance of
an Event of Default, Obligations shall accrue interest at a fixed per annum rate
equal to the rate that is otherwise applicable thereto plus five percentage
points (5.00%) (the “Default Rate”). Payment or acceptance of the increased
interest rate provided in this Section 2.3(b) is not a permitted alternative to
timely payment and shall not constitute a waiver of any Event of Default or
otherwise prejudice or limit any rights or remedies of Collateral Agent.

(c) 365 Day Year. Interest shall be computed on the basis of a three hundred
sixty-five (365) day year and the actual number of days elapsed.

(d) Debit of Accounts. Collateral Agent and each Lender may debit (or ACH) any
deposit accounts maintained by Borrower or any of its Subsidiaries for principal
and interest payments or any other amounts Borrower owes the Lenders under the
Loan Documents when due. Any such debits (or ACH activity) shall not constitute
a set off.

 

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(e) Payments. Except as otherwise expressly provided herein, all payments by
Borrower under the Loan Documents shall be made to the respective Lender to
which such payments are owed, at such Lender’s office in immediately available
funds on the date specified herein. Unless otherwise provided, interest is
payable monthly on the Payment Date of each month. Payments of principal and/or
interest received after 2:00 p.m. Eastern time are considered received at the
opening of business on the next Business Day. When a payment is due on a day
that is not a Business Day, the payment is due the next Business Day and
additional fees or interest, as applicable, shall continue to accrue until paid.
All payments to be made by Borrower hereunder or under any other Loan Document,
including payments of principal and interest, and all fees, expenses,
indemnities and reimbursements, shall be made without set off, recoupment or
counterclaim, in lawful money of the United States and in immediately available
funds.

2.4 Fees. Borrower shall pay to Collateral Agent:

(a) Facility Fee. The Facility Fee, which shall be due on the Funding Date of
each Term Loan, payable solely for the account of Collateral Agent;

(b) Final Fee. The Final Fee, if and when due hereunder, to be shared among the
Lenders in accordance with their respective Pro Rata Shares;

(c) Prepayment Fee. The Prepayment Fee, if and when due hereunder, to be shared
among the Lenders in accordance with their respective Pro Rata Shares; and

(d) Lenders’ Expenses. All Lenders’ Expenses (including reasonable attorneys’
fees and expenses for due diligence, investigation, documentation and
negotiation of this Agreement) incurred through and after the Effective Date,
when due.

2.5 Withholding. Payments received by the Collateral Agent or the Lenders from
Borrower hereunder will be made free and clear of and without deduction for any
and all present or future taxes, levies, imposts, duties, deductions,
withholdings, assessments, fees or other charges imposed by any governmental
authority (including any interest, additions to tax or penalties applicable
thereto). Specifically, however, if at any time any Governmental Authority,
applicable law, regulation or international agreement requires Borrower to make
any withholding or deduction from any such payment or other sum payable
hereunder to the Lenders, Borrower hereby covenants and agrees that the amount
due from Borrower with respect to such payment or other sum payable hereunder
will be increased to the extent necessary to ensure that, after the making of
such required withholding or deduction, each Lender receives a net sum equal to
the sum which it would have received had no withholding or deduction been
required and Borrower shall pay the full amount withheld or deducted to the
relevant Governmental Authority. Borrower will, upon request, furnish the
Lenders with proof reasonably satisfactory to the Lenders indicating that
Borrower has made such withholding payment; provided, however, that Borrower
need not make any withholding payment if the amount or validity of such
withholding payment is contested in good faith by appropriate and timely
proceedings and as to which payment in full is bonded or reserved against by
Borrower. The agreements and obligations of Borrower contained in this
Section 2.5 shall survive the termination of this Agreement.

2.6 Secured Promissory Notes. The Term Loans shall be evidenced by a Secured
Promissory Note or Notes in the form attached as Exhibit D hereto (each a
“Secured Promissory Note”), and shall be repayable as set forth in this
Agreement. Borrower irrevocably authorizes each Lender to make or cause to be
made, on or about the Funding Date of each Term Loan or at the time of receipt
of any payment of principal on such Lender’s Secured Promissory Note, an
appropriate notation on such Lender’s Secured Promissory Note Record reflecting
the making of such Term Loan or (as the case may be) the receipt of such
payment. The outstanding amount of each Term Loan set forth on such Lender’s
Secured Promissory Note Record shall be prima facie evidence (absent manifest
error) of the principal amount thereof owing and unpaid to such Lender, but the
failure to record, or any error in so recording, any such amount on such
Lender’s Secured Promissory Note Record shall not limit or otherwise affect the
obligations of Borrower under any Secured Promissory Note or any other Loan
Document to make payments of principal of or interest on any Secured Promissory
Note when due. Upon receipt of an affidavit of an officer of a Lender as to the
loss, theft, destruction, or mutilation of its Secured Promissory Note, Borrower
shall issue, in lieu thereof, a replacement Secured Promissory Note in the same
principal amount thereof and of like tenor.

 

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3. CONDITIONS OF LOANS

3.1 Conditions Precedent to Initial Term Loan. Each Lender’s obligation to make
the Term Loan is subject to the condition precedent that Collateral Agent and
each Lender shall consent to or shall have received, in form and substance
satisfactory to Collateral Agent and each Lender, such documents, and completion
of such other matters, as Collateral Agent and each Lender may reasonably deem
necessary or appropriate, including, without limitation:

(a) original Loan Documents, each duly executed by Borrower and Guarantor, as
applicable;

(b) a completed Perfection Certificate for Borrower and each of its
Subsidiaries;

(c) duly executed original Control Agreements (or similar) with respect to any
Collateral Accounts maintained by Borrower or any Guarantor;

(d) the Operating Documents and good standing certificates of Borrower and each
Guarantor certified by the Secretary of State (or equivalent agency) of
Borrower’s and such Guarantors’ jurisdiction of organization or formation and
each jurisdiction in which Borrower and each Subsidiary is qualified to conduct
business, each as of a date no earlier than thirty (30) days prior to the
Effective Date;

(e) a copy of resolutions of the governing body for Borrower evidencing approval
of the Term Loan and other transactions evidenced by the Loan Documents;

(f) duly executed original officer’s certificates for Borrower and each
Guarantor certifying as to (i) the incumbency of each Responsible Officer
executing each Loan Document and (ii) the documents delivered pursuant to
Section 3.1(d) and 3.1(e), in a form acceptable to Collateral Agent and the
Lenders;

(g) certified copies, dated as of date no earlier than thirty (30) days prior to
the Effective Date, of financing statement searches, as Collateral Agent shall
request, accompanied by written evidence (including any UCC termination
statements) that the Liens indicated in any such financing statements either
constitute Permitted Liens or have been or, in connection with the initial Term
Loan, will be terminated or released;

(h) a duly executed legal opinion of counsel to Borrower dated as of the Funding
Date of the Term A Loan;

(i) evidence satisfactory to Collateral Agent and the Lenders that the insurance
policies required by Section 6.5 hereof are in full force and effect, together
with appropriate evidence showing loss payable and/or additional insured clauses
or endorsements in favor of Collateral Agent, for the ratable benefit of the
Lenders;

(j) [reserved];

(k) payment of the Facility Fee and Lenders’ Expenses then due as specified in
Section 2.4 hereof;

(l) a landlord’s consent executed in favor of Collateral Agent in respect of all
of Borrower’s and each Guarantor’s leased locations where Borrower or such
Guarantor maintains Collateral having a book of value in excess of Two Hundred
Fifty Thousand Dollars ($250,000.00);

(m) a bailee waiver executed in favor of Collateral Agent in respect of each
third party bailee where Borrower or any Guarantor maintains Collateral having a
book value in excess of Two Hundred Fifty Thousand Dollars ($250,000.00);

(n) the certificate(s) for the Shares, together with Assignment(s) Separate from
Certificate, duly executed in blank;

 

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(o) a payoff letter from the Existing Lenders in respect of the Existing
Indebtedness; and

(p) evidence that (i) the Liens securing the Existing Indebtedness have been or
will be terminated and (ii) the documents and/or filings evidencing the
perfection of such Liens, including without limitation any financing statements
and/or control agreements, have been or will, concurrently with the Funding
Date, be terminated.

3.2 Conditions Precedent to all Term Loans. The obligation of each Lender to
extend each Term Loan, including the initial Term Loan, is subject to the
following conditions precedent:

(a) receipt by Collateral Agent of (i) an executed Loan Payment Request Form in
the form of Exhibit B-1 attached hereto and (ii) an executed Disbursement Letter
in the form of Exhibit B-2 attached hereto;

(b) the representations and warranties in Section 5 hereof shall be true,
accurate and complete in all material respects on the date of each Loan Payment
Request Form and the date of each Disbursement Letter and the Funding Date of
each Term Loan; provided, however, that such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified or
modified by materiality in the text thereof; and provided, further that those
representations and warranties expressly referring to a specific date shall be
true, accurate and complete in all material respects as of such date, and no
Event of Default shall have occurred and be continuing or result from the
funding of such Term Loan;

(c) in such Lender’s reasonable discretion, there has not been any Material
Adverse Change;

(d) no Event of Default or an event that with the passage of time could result
in an Event of Default, shall exist;

(e) to the extent not delivered at the Effective Date, duly executed original
Secured Promissory Notes and Warrants, in number, form and content acceptable to
each Lender, and in favor of each Lender according to its Commitment Percentage,
with respect to each credit extension made by such Lender after the Effective
Date; and

(f) payment of the fees and Lenders’ Expenses then due as specified in
Section 2.5 hereof.

3.3 Covenant to Deliver. Borrower agrees to deliver to Collateral Agent and the
Lenders each item required to be delivered to Collateral Agent under this
Agreement as a condition precedent to the Term Loan. Borrower expressly agrees
that the Term Loan made prior to the receipt by Collateral Agent or any Lender
of any such item shall not constitute a waiver by Collateral Agent or any Lender
of Borrower’s obligation to deliver such item, and any such Term Loan in the
absence of a required item shall be made in each Lender’s sole discretion.

3.4 Conditions Subsequent to Effective Date. Prior to the Funding Date of the
Term A Loan, to the extent not delivered prior thereto, Borrower agrees to
deliver to Collateral Agent, the following: (i) the Guaranty Documents; and
(ii) pledges of the Shares of each Foreign Subsidiary.

3.5 Procedures for Borrowing. Subject to the prior satisfaction of all other
applicable conditions to the making of a Term Loan set forth in this Agreement,
to obtain the Term B Loan, Borrower shall notify the Lenders (which notice shall
be irrevocable) by electronic mail, facsimile, or telephone by 2:00 p.m. Eastern
time five (5) Business Days prior to the date the Term B Loan is to be made.
Together with any such electronic, facsimile or telephonic notification,
Borrower shall deliver to the Lenders by electronic mail or facsimile a
completed Disbursement Letter executed by a Responsible Officer or his or her
designee. The Lenders may rely on any telephone notice given by a person whom a
Lender reasonably believes is a Responsible Officer or designee. On the Funding
Date of the Term B Loan, each Lender shall credit and/or transfer (as
applicable) to the Designated Deposit Account, an amount equal to its Term Loan
Commitment.

 

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4. CREATION OF SECURITY INTEREST

4.1 Grant of Security Interest. Effective from and after the Funding Date of the
Term A Loan, Borrower hereby grants Collateral Agent, for the ratable benefit of
the Lenders, to secure the payment and performance in full of all of the
Obligations, a continuing security interest in, and pledges to Collateral Agent,
for the ratable benefit of the Lenders, the Collateral, wherever located,
whether now owned or hereafter acquired or arising, and all proceeds and
products thereof. If Borrower shall acquire a commercial tort claim (as defined
in the Code), Borrower shall grant to Collateral Agent, for the ratable benefit
of the Lenders, a security interest therein and in the proceeds thereof, all
upon the terms of this Agreement, with such writing to be in form and substance
reasonably satisfactory to Collateral Agent.

If this Agreement is terminated, Collateral Agent’s Lien in the Collateral shall
continue until the Obligations (other than inchoate indemnity obligations) are
repaid in full in cash. Upon payment in full in cash of the Obligations (other
than inchoate indemnity obligations) and at such time as the Lenders’ obligation
to extend the Term Loan has terminated, Collateral Agent shall, at the sole cost
and expense of Borrower, release its Liens in the Collateral and all rights
therein shall revert to Borrower.

4.2 Authorization to File Financing Statements. Borrower hereby authorizes
Collateral Agent to file financing statements or take any other action required
to perfect Collateral Agent’s security interests in the Collateral, without
notice to Borrower, with all appropriate jurisdictions to perfect or protect
Collateral Agent’s interest or rights under the Loan Documents.

4.3 Pledge of Collateral. Effective from and after the Funding Date of the Term
A Loan, Borrower hereby pledges, assigns and grants to Collateral Agent, for the
ratable benefit of the Lenders, a security interest in all the Shares, together
with all proceeds and substitutions thereof, all cash, stock and other moneys
and property paid thereon, all rights to subscribe for securities declared or
granted in connection therewith, and all other cash and noncash proceeds of the
foregoing, as security for the performance of the Obligations. On the Funding
Date, or, to the extent not certificated as of the Funding Date, within ten
(10) days of the certification of any Shares, the certificate or certificates
for the Shares will be delivered to Collateral Agent, accompanied by an
instrument of assignment duly executed in blank by Borrower. To the extent
required by the terms and conditions governing the Shares, Borrower shall cause
the books of each entity whose Shares are part of the Collateral and any
transfer agent to reflect the pledge of the Shares. Upon the occurrence and
during the continuance of an Event of Default hereunder, Collateral Agent may
effect the transfer of any securities included in the Collateral (including but
not limited to the Shares) into the name of Collateral Agent and cause new (as
applicable) certificates representing such securities to be issued in the name
of Collateral Agent or its transferee. Borrower will execute and deliver such
documents, and take or cause to be taken such actions, as Collateral Agent may
reasonably request to perfect or continue the perfection of Collateral Agent’s
security interest in the Shares. Unless an Event of Default shall have occurred
and be continuing, Borrower shall be entitled to exercise any voting rights with
respect to the Shares and to give consents, waivers and ratifications in respect
thereof, provided that no vote shall be cast or consent, waiver or ratification
given or action taken which would be inconsistent with any of the terms of this
Agreement or which would constitute or create any violation of any of such
terms. All such rights to vote and give consents, waivers and ratifications
shall terminate upon the occurrence and continuance of an Event of Default.
Collateral Agent reserves the right to take such steps in any jurisdiction of
organization of any Foreign Subsidiary the Shares of which are pledged hereunder
or under any Guaranty Document to perfect and maintain the perfection of any
security interest granted with respect to the Shares (and any assets, as
applicable) of any such Foreign Subsidiary.

 

5. REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants to Collateral Agent and the Lenders as follows:

5.1 Due Organization, Authorization: Power and Authority. Borrower and each of
its Subsidiaries is duly existing and in good standing as a Registered
Organization in its jurisdictions of organization or formation and Borrower and
each of its Subsidiaries is qualified and licensed to do business and is in good
standing in any jurisdiction in which the conduct of its businesses or its
ownership of property requires that it be qualified except where the failure to
do so could not reasonably be expected to have a Material Adverse Change. In
connection with this Agreement, Borrower and each of its Subsidiaries has
delivered to Collateral Agent a completed perfection

 

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certificate and any updates or supplements thereto on or before the Effective
Date (each a “Perfection Certificate” and collectively, the “Perfection
Certificates”). Borrower represents and warrants that all the information set
forth on the Perfection Certificates pertaining to Borrower and each of its
Subsidiaries is accurate and complete in all material respects as of the
Effective Date.

The execution, delivery and performance by Borrower and each of its Subsidiaries
of the Loan Documents to which it is a party have been duly authorized, and do
not (i) conflict with any of Borrower’s or such Subsidiaries’ organizational
documents, including its respective Operating Documents, (ii) contravene,
conflict with, constitute a default under or violate any material Requirement of
Law applicable thereto, (iii) contravene, conflict or violate any applicable
order, writ, judgment, injunction, decree, determination or award of any
Governmental Authority by which Borrower or such Subsidiary, or any of their
property or assets may be bound or affected, (iv) require any action by, filing,
registration, or qualification with, or Governmental Approval from, any
Governmental Authority (except such Governmental Approvals which have already
been obtained and are in full force and effect) or are being obtained pursuant
to Section 6.1(b), or (v) constitute an event of default under any material
agreement by which Borrower or any of such Subsidiaries, or their respective
properties, is bound. Neither Borrower nor any of its Subsidiaries is in default
under any agreement to which it is a party or by which it or any of its assets
is bound in which such default could reasonably be expected to have a Material
Adverse Change.

5.2 Collateral.

(a) Borrower and each Guarantor has good title to, have rights in, and the power
to transfer each item of the Collateral upon which it purports to grant a Lien
under the Loan Documents, free and clear of any and all Liens except Permitted
Liens, and neither Borrower nor any of its Subsidiaries have any Deposit
Accounts, Securities Accounts, Commodity Accounts or other investment accounts
other than the Collateral Accounts or other investment accounts, if any,
described in the Perfection Certificates delivered to Collateral Agent in
connection herewith with respect to which Borrower or Guarantor has given
Collateral Agent notice and taken, subject to Section 6.6 (a), such actions as
are necessary to give Collateral Agent a perfected security interest therein.

(b) The security interest granted herein is and shall at all times continue to
be a first priority perfected security interest in the Collateral, subject only
to Permitted Liens that are permitted by the terms of this Agreement to have
priority to Collateral Agent’s Lien.

(c) On the Effective Date, and except as disclosed on the Perfection Certificate
(i) the Collateral is not in the possession of any third party bailee, and
(ii) no such third party bailee possesses components of the Collateral in excess
of Two Hundred Fifty Thousand Dollars ($250,000.00).

(d) All Inventory and Equipment is in all material respects of good and
marketable quality, free from material defects.

(e) Borrower and each of its Subsidiaries is the sole owner of the Intellectual
Property each respectively purports to own, free and clear of all Liens other
than Permitted Liens. Except as noted on the Perfection Certificates, neither
Borrower nor any of its Subsidiaries is a party to, nor is bound by, any
Material Agreement.

5.3 Litigation. Except as disclosed on the Perfection Certificate, there are no
actions, suits, investigations, or proceedings pending or, to the Knowledge of
the Responsible Officers, threatened in writing by or against Borrower or any of
its Subsidiaries involving more than Two Hundred Fifty Thousand Dollars
($250,000.00) or a claim for infringement of any Intellectual Property. Except
as disclosed on the Perfection Certificate, there are no actions, suits,
investigations or proceedings pending or, to the Knowledge of the Responsible
Officers, threatened in writing by or against Borrower or any Subsidiaries
involving challenges to the validity of the Intellectual Property.

5.4 No Material Adverse Change; Financial Statements. All consolidated financial
statements for Parent and its Subsidiaries, delivered to Collateral Agent fairly
present, in conformity with GAAP, in all material respects the consolidated
financial condition of Parent and its Subsidiaries, and the consolidated results
of operations of Parent and its Subsidiaries. Since the date of the most recent
financial statements submitted to any Lender, there has not been a Material
Adverse Change.

 

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5.5 Solvency. Borrower and each of its Subsidiaries, when taken as a whole, is
Solvent.

5.6 Regulatory Compliance. Neither Borrower nor any of its Subsidiaries is an
“investment company” or a company “controlled” by an “investment company” under
the Investment Company Act of 1940, as amended. Neither Borrower nor any of its
Subsidiaries is engaged as one of its important activities in extending credit
for margin stock (under Regulations X, T and U of the Federal Reserve Board of
Governors). Borrower and each of its Subsidiaries has complied in all material
respects with the Federal Fair Labor Standards Act. Neither Borrower nor any of
its Subsidiaries is a “holding company” or an “affiliate” of a “holding company”
or a “subsidiary company” of a “holding company” as each term is defined and
used in the Public Utility Holding Company Act of 2005. Neither Borrower nor any
of its Subsidiaries has violated any laws, ordinances or rules, the violation of
which could reasonably be expected to have a Material Adverse Change. Neither
Borrower’s nor any of its Subsidiaries’ properties or assets has been used by
Borrower or such Subsidiary or, to Borrower’s Knowledge, by previous Persons, in
disposing, producing, storing, treating, or transporting any hazardous substance
other than in material compliance with applicable laws. Borrower and each of its
Subsidiaries has obtained all consents, approvals and authorizations of, made
all declarations or filings with, and given all notices to, all Governmental
Authorities that are necessary to continue their respective businesses as
currently conducted.

None of Borrower, any of its Subsidiaries, or any of Borrower’s or its
Subsidiaries’ Affiliates or any of their respective agents acting or benefiting
in any capacity in connection with the transactions contemplated by this
Agreement is (i) in violation of any Anti-Terrorism Law, (ii) engaging in or
conspiring to engage in any transaction that evades or avoids, or has the
purpose of evading or avoiding or attempts to violate, any of the prohibitions
set forth in any Anti-Terrorism Law, or (iii) is a Blocked Person. None of
Borrower, any of its Subsidiaries, or to the Knowledge of Borrower and any of
their Affiliates or agents, acting or benefiting in any capacity in connection
with the transactions contemplated by this Agreement, (x) conducts any business
or engages in making or receiving any contribution of funds, goods or services
to or for the benefit of any Blocked Person, or (y) deals in, or otherwise
engages in any transaction relating to, any property or interest in property
blocked pursuant to Executive Order No. 13224, any similar executive order or
other Anti-Terrorism Law.

5.7 Investments. Neither Borrower nor any of its Subsidiaries owns any stock,
shares, partnership interests or other equity securities except for Permitted
Investments.

5.8 Tax Returns and Payments; Pension Contributions. Borrower and each of its
Subsidiaries has timely filed all required tax returns and reports, and Borrower
and each of its Subsidiaries, has timely paid all foreign, federal, state, and
local taxes, assessments, deposits and contributions owed by Borrower and such
Subsidiaries in an amount greater than Twenty-Five Thousand Dollars
($25,000.00), in all jurisdictions in which Borrower or any such Subsidiary is
subject to taxes, including the United States, unless such taxes are being
contested in accordance with the next sentence. Borrower and each of its
Subsidiaries, may defer payment of any contested taxes, provided that Borrower
or such Subsidiary in good faith contests its obligation to pay the taxes by
appropriate proceedings promptly and diligently instituted and conducted.
Neither Borrower nor any of its Subsidiaries is aware of any claims or
adjustments proposed for any of Borrower’s or such Subsidiaries’ prior tax years
which could result in additional taxes becoming due and payable by Borrower or
its Subsidiaries. Borrower and each of its Subsidiaries have paid all amounts
necessary to fund all present pension, profit sharing and deferred compensation
plans in accordance with their terms, and neither Borrower nor any of its
Subsidiaries have, withdrawn from participation in, and have not permitted
partial or complete termination of, or permitted the occurrence of any other
event with respect to, any such plan which could reasonably be expected to
result in any material liability of Borrower and its Subsidiaries, taken as a
whole, including any liability to the Pension Benefit Guaranty Corporation or
its successors or any other Governmental Authority.

5.9 Use of Proceeds. Borrower shall use the proceeds of the Term Loan solely as
working capital and to fund its general business requirements in accordance with
the provisions of this Agreement, and not for personal, family, household or
agricultural purposes. Unless satisfied in full prior thereto, written evidence
of which has been provided to Collateral Agent, a portion of the proceeds of the
Term Loan shall be used by Borrower to repay the Existing Indebtedness in full
on the Funding Date of the Term A Loan.

 

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5.10 Full Disclosure. No written representation, warranty or other statement of
Borrower or any of its Subsidiaries in any certificate or written statement
given to Collateral Agent or any Lender, as of the date such representation,
warranty, or other statement was made, taken together with all such written
certificates and written statements given to Collateral Agent or any Lender,
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained in the certificates or
statements not misleading (it being recognized that projections and forecasts
provided by Borrower in good faith and based upon reasonable assumptions are not
viewed as facts and that actual results during the period or periods covered by
such projections and forecasts may differ from the projected or forecasted
results).

5.11 Shares. Borrower has full power and authority to create a first lien on the
Shares and no disability or contractual obligation exists that would prohibit
Borrower from pledging the Shares pursuant to this Agreement. To Borrower’s
knowledge, there are no subscriptions, warrants, rights of first refusal or
other restrictions on transfer relative to, or options exercisable with respect
to the Shares. With respect to TransEnterix Surgical and TranEnterix
International, and each other Domestic Subsidiary which is a corporation, the
Shares have been and will be duly authorized and validly issued, and are fully
paid and non-assessable. To Borrower’s knowledge, the Shares are not the subject
of any present or threatened suit, action, arbitration, administrative or other
proceeding, and Borrower knows of no reasonable grounds for the institution of
any such proceedings.

 

6. AFFIRMATIVE COVENANTS

Borrower shall, and shall cause each of its Subsidiaries to, do all of the
following:

6.1 Government Compliance.

(a) Maintain its and all its Subsidiaries’ legal existence and good standing in
their respective jurisdictions of organization and maintain qualification in
each jurisdiction in which the failure to so qualify could reasonably be
expected to have a Material Adverse Change. Comply with all laws, ordinances and
regulations to which Borrower or any of its Subsidiaries is subject, the
noncompliance with which could reasonably be expected to have a Material Adverse
Change.

(b) Obtain and keep in full force and effect, all of the material Governmental
Approvals necessary for the performance by Borrower and its Subsidiaries of
their respective businesses and obligations under the Loan Documents and the
grant of a security interest to Collateral Agent for the ratable benefit of the
Lenders, in all of the Collateral.

6.2 Financial Statements, Reports, Certificates; Notices.

(a) Deliver to Collateral Agent and each Lender:

(i) as soon as available, but no later than thirty (30) days after the last day
of each month, a company prepared consolidated and consolidating balance sheet,
income statement and cash flow statement covering the consolidated operations of
Parent and its Subsidiaries for such month certified by a Responsible Officer
and in a form reasonably acceptable to Collateral Agent;

(ii) as soon as available, but no later than one hundred twenty (120) days after
the last day of Parent’s fiscal year or within five (5) days of filing with the
Securities and Exchange Commission, audited consolidated financial statements
prepared under GAAP, consistently applied, together with an unqualified opinion
on the financial statements from an independent certified public accounting firm
acceptable to Collateral Agent in its reasonable discretion;

(iii) (x) as soon as available after delivery to and approval thereof by
Parent’s board of directors, but no later than the earlier of ten (10) days
after such approval, and within ten (10) days following any Equity Cure,
Borrower’s annual (and quarterly, if applicable) budget for the entire current
fiscal year as approved by Parent’s board of directors; provided that, any
revisions to such budget approved by Parent’s board of directors shall be
delivered to Collateral Agent and the Lenders no later than seven (7) days after
such approval); and (y) as soon as

 

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available after delivery thereof by Parent’s board of directors, but no later
than forty-five (45) days after the last day of Borrower’s fiscal year, and
within ten (10) days following any Equity Cure, Borrower’s annual (or quarterly,
as applicable) financial projections for the entire current fiscal year as
delivered to Parent’s board of directors;

(iv) within five (5) days of delivery, copies of all non-ministerial statements,
reports and notices made available to Borrower’s board of directors, security
holders or holders of Subordinated Debt;

(v) in the event that Borrower becomes subject to the reporting requirements
under the Securities Exchange Act of 1934, as amended, within five (5) days of
filing, all reports on Form 10 K, 10 Q and 8 K filed with the Securities and
Exchange Commission;

(vi) prompt notice of any material amendments of or other changes to the
capitalization table of Borrower (other than Parent) and to the Operating
Documents of Borrower or any of its Subsidiaries, together with any copies
reflecting such amendments or changes with respect thereto;

(vii) as soon as available, but no later than thirty (30) days after the last
day of each month, copies of the month end account statements for each
Collateral Account maintained by Borrower or its Subsidiaries, which statements
may be provided to Collateral Agent and each Lender by Borrower or directly from
the applicable institution(s);

(viii) prompt (x) delivery of (and in any event within five (5) days after the
same are sent or received) copies of all material correspondence, reports,
documents and other filings with any Governmental Authority that could
reasonably be expected to have a material adverse effect on any of the
Governmental Approvals material to Borrower’s business or otherwise could
reasonably be expected to have a Material Adverse Change; and (y) access to (and
in any event within five (5) days after the same are sent or received) material
correspondence, reports, documents and any other material written materials to
or from the FDA related to Senhance; provided that, the FDA’s initial requests
for additional information shall be deemed to be “material” for purposes of this
subclause;

(ix) prompt notice of any event that (A) could reasonably be expected to
materially and adversely affect the Borrower’s Intellectual Property and
(B) could reasonably be expected to result in a Material Adverse Change;

(x) written notice at least (10) days’ prior to Borrower’s creation of a New
Subsidiary in accordance with the terms of Section 6.10;

(xi) written notice at least (30) days’ prior to Borrower’s (A) adding any new
offices or business locations, including warehouses (unless such new offices or
business locations contain less than Two Hundred Fifty Thousand Dollars
($250,000.00) in assets or property of Borrower or any of its Subsidiaries), (B)
changing its jurisdiction of organization, (C) changing its organizational
structure or type, (D) changing its legal name, (E) changing any organizational
number (if any) assigned by its jurisdiction of organization, or (F) registering
or filing any Intellectual Property;

(xii) upon Borrower becoming aware of the existence of any Event of Default or
event which, with the giving of notice or passage of time, or both, would
constitute an Event of Default, prompt (and in any event within three
(3) Business Days) written notice of such occurrence, which such notice shall
include a reasonably detailed description of such Event of Default or event
which, with the giving of notice or passage of time, or both, would constitute
an Event of Default;

(xiii) immediate notice if Borrower or such Subsidiary has Knowledge that
Borrower, or any Subsidiary or Affiliate of Borrower, is listed on the OFAC
Lists or (a) is convicted on, (b) pleads nolo contendere to, (c) is indicted on,
or (d) is arraigned and held over on charges involving money laundering or
predicate crimes to money laundering;

(xiv) notice of any commercial tort claim of Borrower or any Guarantor and of
the general details thereof;

 

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(xv) if Borrower or any of its Subsidiaries is not now a Registered Organization
but later becomes one, written notice of such occurrence and information
regarding such Person’s organizational identification number within seven
(7) Business Days of receiving such organizational identification number; and

(xvi) other information as reasonably requested by Collateral Agent or any
Lender.

Notwithstanding the foregoing, documents required to be delivered pursuant to
the terms hereof (to the extent any such documents are included in materials
otherwise filed with the Securities and Exchange Commission) may be delivered
electronically and if so delivered, shall be deemed to have been delivered on
the date on which Parent posts such documents, or provides a link thereto, on
Parent’s website on the internet at Borrower’s website address.

(b) Concurrently with the delivery of the financial statements specified in
Section 6.2(a)(i) above but no later than thirty (30) days after the last day of
each month, deliver to Collateral Agent and each Lender:

(i) a duly completed Compliance Certificate signed by a Responsible Officer of
Parent;

(ii) [reserved;]

(iii) copies of any material Governmental Approvals obtained by Borrower or any
of its Subsidiaries;

(iv) written notice of the commencement of, and any material development in, the
proceedings contemplated by Section 5.8 hereof;

(v) written notice of any litigation or governmental proceedings pending or
threatened (in writing) against Borrower or any of its Subsidiaries, which could
reasonably be expected to result in damages or costs to Borrower or any of its
Subsidiaries of more than One Hundred Thousand Dollars ($100,000.00); and

(vi) written notice of all returns, recoveries, disputes and claims regarding
Inventory that involve more than One Hundred Thousand Dollars ($100,000.00)
individually or in the aggregate in any calendar year.

(c) Keep proper, complete and true books of record and account in accordance
with GAAP in all material respects. Borrower shall, and shall cause each of its
Subsidiaries to, allow, at the sole cost of Borrower, Collateral Agent or any
Lender, during regular business hours upon reasonable prior notice (provided
that no notice shall be required when an Event of Default has occurred and is
continuing), to visit and inspect any of its properties, to examine and make
abstracts or copies from any of its books and records, and to conduct a
collateral audit and analysis of its operations and the Collateral. Such audits
shall be conducted no more often than twice every year unless (and more
frequently if) an Event of Default has occurred and is continuing.
Notwithstanding the foregoing, upon request of any Lender, Borrower agrees to
permit such Lender to communicate with Borrower’s accounting firm, in the
presence of a Responsible Officer of the Parent, with respect to the
consolidated financial statements delivered pursuant to this Section 6.2.

6.3 Inventory; Returns. Keep all Inventory in good and marketable condition,
free from material defects. Returns and allowances between Borrower, or any of
its Subsidiaries, and their respective Account Debtors shall follow Borrower’s,
or such Subsidiary’s, customary practices as they exist at the Effective Date.

6.4 Taxes; Pensions. Timely file and require each of its Subsidiaries to timely
file, all required tax returns and reports and timely pay, and require each of
its Subsidiaries to timely pay, all foreign, federal, state, and local taxes,
assessments, deposits and contributions owed by Borrower or its Subsidiaries,
except as otherwise permitted pursuant to the terms of Section 5.8 hereof, and
shall deliver to Collateral Agent and each Lender, on demand, appropriate
certificates attesting to such payments, and pay all amounts necessary to fund
all present pension, profit sharing and deferred compensation plans in
accordance with the terms of such plans.

 

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6.5 Insurance. Keep Borrower’s and its Subsidiaries’ business and the Collateral
insured for risks and in amounts standard for companies in Borrower’s and its
Subsidiaries’ industry and location and as Collateral Agent may reasonably
request, including, but not limited to, D&O insurance reasonably satisfactory to
Collateral Agent. Insurance policies shall be in a form, with companies, and in
amounts that are reasonably satisfactory to Collateral Agent and Lenders. All
property policies shall have a lender’s loss payable endorsement showing
Collateral Agent as lender loss payee and waive subrogation against Collateral
Agent, and all liability policies shall show, or have endorsements showing,
Collateral Agent, as additional insured. The Collateral Agent shall be named as
lender loss payee and/or additional insured with respect to any such insurance
providing coverage in respect of any Collateral, and each provider of any such
insurance shall agree, by endorsement upon the policy or policies issued by it
or by independent instruments furnished to the Collateral Agent, that it will
give the Collateral Agent thirty (30) days’ prior written notice before any such
policy or policies shall be materially altered or canceled (other than
cancellation for non-payment of premiums, for which ten (10) days’ prior written
notice shall be required). At Collateral Agent’s request, Borrower shall deliver
certified copies of policies and evidence of all premium payments. Proceeds
payable under any policy shall, at Collateral Agent’s option, be payable to
Collateral Agent, for the ratable benefit of the Lenders, on account of the
Obligations. Notwithstanding the foregoing, (a) so long as no Event of Default
has occurred and is continuing, Borrower shall have the option of applying the
proceeds of any casualty policy within 90 days of receipt thereof up to One
Hundred Thousand Dollars ($100,000.00) with respect to any loss, but not
exceeding Two Hundred Fifty Thousand Dollars ($250,000.00), in the aggregate for
all losses under all casualty policies in any one year, toward the replacement
or repair of destroyed or damaged property; provided that any such replaced or
repaired property (i) shall be of equal or like value as the replaced or
repaired Collateral and (ii) shall be deemed Collateral in which Collateral
Agent has been granted a first priority security interest, and (b) after the
occurrence and during the continuance of an Event of Default, all proceeds
payable under such casualty policy shall, at the option of Collateral Agent, be
payable to Collateral Agent, for the ratable benefit of the Lenders, on account
of the Obligations. If Borrower or any of its Subsidiaries fails to obtain
insurance as required under this Section 6.5 or to pay any amount or furnish any
required proof of payment to third persons, Collateral Agent and/or any Lender
may make (but has no obligation to do so), at Borrower’s expense, all or part of
such payment or obtain such insurance policies required in this Section 6.5, and
take any action under the policies Collateral Agent or such Lender deems
prudent.

6.6 Operating Accounts.

(a) Borrower shall provide Collateral Agent ten (10) days’ prior written notice
before Borrower or any of its Subsidiaries establishes any Collateral Account.
In addition, for each Collateral Account that Borrower or any Guarantor at any
time maintains, Borrower shall, subject to the proviso below, cause the
applicable bank or financial institution at or with which such Collateral
Account is maintained to execute and deliver a Control Agreement or other
appropriate instrument with respect to such Collateral Account to perfect
Collateral Agent’s Lien in such Collateral Account in accordance with the terms
hereunder prior to the establishment of such Collateral Account, which Control
Agreement may not be terminated without prior written consent of Collateral
Agent; provided, that with respect to Collateral Accounts of a Foreign
Subsidiary Guarantor maintained outside of the United States, the Borrower
shall, or cause such Guarantor to use its best efforts, to obtain such
agreements or instruments necessary to perfect Collateral Agent’s Lien in such
Collateral Account. The provisions of the previous sentence shall not apply to
deposit accounts exclusively used for payroll, payroll taxes and other employee
wage and benefit payments to or for the benefit of Borrower’s, or any of its
Subsidiaries’, employees and identified to Collateral Agent by Borrower as such
in the Perfection Certificate or any deposit accounts that are subject to clause
(l) of the definition of “Permitted Liens.”

(b) Neither Borrower nor any of its Subsidiaries shall maintain any Collateral
Accounts except Collateral Accounts maintained in accordance with Section 6.6.

6.7 Protection of Intellectual Property Rights. Borrower and each of its
Subsidiaries shall: (a) protect, defend and maintain the validity and
enforceability of its Intellectual Property that is material to its business;
(b) promptly advise Collateral Agent in writing of a challenge to the validity,
or material infringement by a third party of its Intellectual Property; and
(c) not allow any Intellectual Property material to its business to be

 

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abandoned, forfeited or dedicated to the public without Collateral Agent’s prior
written consent. If Borrower or any Guarantor (i) obtains any patent, registered
trademark or servicemark, registered copyright, registered mask work, or any
pending application for any of the foregoing, whether as owner, licensee or
otherwise, or (ii) applies for any patent or the registration of any trademark
or servicemark, then Borrower or such Guarantor shall substantially
contemporaneously provide written notice thereof to Collateral Agent and each
Lender and shall execute such intellectual property security agreements and
other documents and take such other actions as Collateral Agent shall reasonably
request in its good faith business judgment to perfect and maintain a first
priority perfected security interest in favor of Collateral Agent, for the
ratable benefit of the Lenders, in such property. If Borrower or any Guarantor
decides to register any copyrights or mask works in the United States Copyright
Office, Borrower or such Guarantor shall: (x) provide Collateral Agent and each
Lender with at least ten (10) days prior written notice of Borrower’s or such
Guarantor’s intent to register such copyrights or mask works together with a
copy of the application it intends to file with the United States Copyright
Office (excluding exhibits thereto); (y) execute an intellectual property
security agreement and such other documents and take such other actions as
Collateral Agent may reasonably request in its good faith business judgment to
perfect and maintain a first priority perfected security interest in favor of
Collateral Agent, for the ratable benefit of the Lenders, in the copyrights or
mask works intended to be registered with the United States Copyright Office;
and (z) record such intellectual property security agreement with the United
States Copyright Office contemporaneously with filing the copyright or mask work
application(s) with the United States Copyright Office. Borrower or such
Guarantor shall promptly provide to Collateral Agent and each Lender with
evidence of the recording of the intellectual property security agreement
necessary for Collateral Agent to perfect and maintain a first priority
perfected security interest in such property.

6.8 Litigation Cooperation. Commencing on the Effective Date and continuing
through the termination of this Agreement, make available to Collateral Agent
and the Lenders, without expense to Collateral Agent or the Lenders, Borrower
and each of Borrower’s officers, employees and agents and Borrower’s Books, to
the extent that Collateral Agent or any Lender may reasonably deem them
necessary to prosecute or defend any third party suit or proceeding instituted
by or against Collateral Agent or any Lender with respect to any Collateral or
relating to Borrower.

6.9 Landlord Waivers; Bailee Waivers. In the event that Borrower or any
Guarantor, after the Effective Date, intends to add any new offices or business
locations, including warehouses, or otherwise store any portion of the
Collateral with, or deliver any portion of the Collateral to, a bailee, in each
case pursuant to Section 7.2, then Borrower or such Guarantor will first receive
the written consent of Collateral Agent and, in the event that the Collateral at
any new location is valued in excess of Two Hundred Fifty Thousand Dollars
($250,000.00) in the aggregate, at Collateral Agent’s election, such bailee or
landlord, as applicable, must execute and deliver a bailee waiver or landlord
waiver, as applicable, in form and substance reasonably satisfactory to
Collateral Agent prior to the addition of any new offices or business locations,
or any such storage with or delivery to any such bailee, as the case may be.

6.10 Creation/Acquisition of Subsidiaries. In the event any Borrower or any
Subsidiary of any Borrower creates or acquires any Subsidiary after the
Effective Date, Borrower or such Subsidiary shall promptly notify Collateral
Agent of such creation or acquisition, and Borrower or such Subsidiary shall
take all actions reasonably requested by Collateral Agent to achieve any of the
following with respect to such “New Subsidiary” (defined as a Subsidiary formed
after the date hereof during the term of this Agreement): (i) to cause such New
Subsidiary to become either a co-Borrower hereunder or a secured guarantor with
respect to the Obligations, in each case, if such New Subsidiary is organized
under the laws of the United States or is a Material Foreign Subsidiary; and
(ii) to grant and pledge to Collateral Agent a perfected security interest in
the Shares of such New Subsidiary to the extent such New Subsidiary is organized
under the laws of the United States, or is a First-Tier Foreign Subsidiary or a
Material Foreign Subsidiary, as applicable.

6.11 Minimum Liquidity. Borrower shall at all times maintain minimum
unrestricted cash and Cash Equivalents, in an account subject to a control
agreement in favor of Collateral Agent, in an amount equal to (x) Six Million
Dollars ($6,000,000.00), at all times prior to Senhance Clearance; and (y) at
all times thereafter, the least of (i) $6,000,000.00, (ii) Borrower’s trailing
three (3) months’ cash used to fund operating activities as determined as of the
most recent month end and (iii) the then outstanding principal amount of the
Term Loan, together with accrued but unpaid interest.

 

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6.12 Reserved.

6.13 Further Assurances. Execute any further instruments and take further action
as Collateral Agent or any Lender reasonably requests to perfect or continue
Collateral Agent’s Lien in the Collateral or to effect the purposes of this
Agreement, including without limitation, permit Collateral Agent or any Lender
to discuss Borrower’s financial condition with Borrower’s accountants in the
presence of a Responsible Officer of the Parent.

 

7. NEGATIVE COVENANTS

Borrower shall not, and shall not permit any of its Subsidiaries to, do any of
the following without the prior written consent of the Required Lenders:

7.1 Dispositions. Convey, sell, lease, transfer, assign, dispose of
(collectively, “Transfer”), or permit any of its Subsidiaries to Transfer, all
or any part of its business or property (including Intellectual Property),
except for Transfers (a) of (i) Inventory in the ordinary course of business and
(ii) Inventory, that, prior to the Effective Date, has been written down or
written off, together with related tangible assets and Non-Material Intellectual
Property; (b) of worn out or obsolete Equipment; (c) in connection with
Permitted Liens, Permitted Investments and Permitted Licenses; (d) of any
Non-Material Intellectual Property; (e) from (i) Borrower or a Guarantor to
another Borrower or Guarantor, (ii) a non-Borrower or non-Guarantor Subsidiary
to a Borrower or a Guarantor, and (iii) a non-Borrower or non-Guarantor
Subsidiary to another non-Borrower or non-Guarantor Subsidiary; or (f) permitted
under Section 7.3 below.

7.2 Changes in Business, Management, Ownership, or Business Locations.
(a) Engage in or permit any of its Subsidiaries to engage in any business other
than the businesses engaged in by Borrower as of the Effective Date or
reasonably related thereto; (b) liquidate or dissolve or permit any of its
Subsidiaries to liquidate or dissolve; or (c) (i) any Key Person shall cease to
be actively engaged in the management of Borrower unless written notice thereof
is provided to Collateral Agent and each Lender within ten (10) days of such Key
Person ceasing to be actively engaged in the management of Borrower, or
(ii) enter into any transaction or series of related transactions in which
(A) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), shall
become, or obtain rights (whether by means or warrants, options or otherwise) to
become, the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under
the Exchange Act), directly or indirectly, of more than 50% of the voting stock
of the Parent and (B) Parent ceases to own, directly or indirectly, (x) 100% of
the ownership interests of a Subsidiary of Parent (other than TransEnterix
Italia) and (y) 90% of the ownership interests of TransEnterix Italia. Neither
Borrower nor any Guarantor shall, without at least thirty (30) days’ prior
written notice to Collateral Agent: (A) add any new offices or business
locations, including warehouses (unless such new offices or business locations
contain less than Two Hundred Fifty Thousand Dollars ($250,000.00) in assets or
property of Borrower or any of its Subsidiaries); (B) change its jurisdiction of
organization, (C) change its organizational structure or type, (D) change its
legal name, or (E) change any organizational number (if any) assigned by its
jurisdiction of organization.

7.3 Mergers or Acquisitions. Merge or consolidate, or permit any of its
Subsidiaries to merge or consolidate, with any other Person, or acquire, or
permit any of its Subsidiaries to acquire, all or substantially all of the
capital stock, shares or property of another Person, except that (a) a Borrower
may merge or consolidate into another Borrower or a Guarantor, so long as in the
case of a merger between a Borrower and a Guarantor, a Borrower is the surviving
entity, (b) a Subsidiary organized under the laws of the United States may merge
with or into another Subsidiary organized under the laws of the United States so
long as such surviving Subsidiary is a “co Borrower” hereunder or has provided a
secured Guaranty of Borrower’s Obligations hereunder, (c) a Foreign Subsidiary
may merge with or into a Borrower, so long as Borrower is the surviving legal
entity, (d) a Foreign Subsidiary Guarantor may merge with or into another
Foreign Subsidiary Guarantor or (e) non-Guarantor Foreign Subsidiary may merge
with or into another non-Guarantor Foreign Subsidiary; provided that in each
case no Event of Default is occurring prior thereto or arises as a result
therefrom.

7.4 Indebtedness. Create, incur, assume, or be liable for any Indebtedness, or
permit any Subsidiary to do so, other than Permitted Indebtedness.

 

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7.5 Encumbrance. Create, incur, allow, or suffer any Lien on any of its
property, or assign or convey any right to receive income, including the sale of
any Accounts, or permit any of its Subsidiaries to do so, except for Permitted
Liens, or permit any Collateral not to be subject to the first priority security
interest granted herein (except for Permitted Liens), or enter into any
agreement, document, instrument or other arrangement (except with or in favor of
Collateral Agent, for the ratable benefit of the Lenders) with any Person which
directly or indirectly prohibits or has the effect of prohibiting Borrower, or
any of its Subsidiaries, from assigning, mortgaging, pledging, granting a
security interest in or upon, or encumbering any of Borrower’s or such
Subsidiary’s Intellectual Property, except as is otherwise permitted in
Section 7.1 hereof and the definition of “Permitted Liens”.

7.6 Maintenance of Collateral Accounts. Maintain any Collateral Account except
pursuant to the terms of Section 6.6 hereof.

7.7 Restricted Payments. Pay any dividends (other than dividends payable solely
in capital stock) or make any distribution or payment in respect of or redeem,
retire or purchase any capital stock other than (a) repurchases pursuant to the
terms of employee stock purchase plans, employee restricted stock agreements,
stockholder rights plans, director or consultant stock option plans, or similar
plans, provided such repurchases do not exceed One Hundred Thousand Dollars
($100,000.00) in the aggregate per fiscal year, (b) to the extent constituting a
payment on account of or redemption, retirement or purchase of capital stock,
not to exceed One Hundred Thousand Dollars ($100,000.00) in the aggregate per
fiscal year, (c) the conversion of Parent’s convertible securities into other
securities pursuant to the terms of such convertible securities, (d) payments of
cash in lieu of fractional shares in connection with such conversion or
(e) dividends or distributions from a Subsidiary to a Borrower or a Guarantor
(including through another Subsidiary).

7.8 Investments. Directly or indirectly make any Investment other than Permitted
Investments, or permit any of its Subsidiaries to do so.

7.9 Transactions with Affiliates. Directly or indirectly enter into or permit to
exist any material transaction with any Affiliate of Borrower or any of its
Subsidiaries (other than among Borrower and/or Guarantors), except for
(a) transactions that are in the ordinary course of Borrower’s or such
Subsidiary’s business, upon fair and reasonable terms that are no less favorable
to Borrower or such Subsidiary than would be obtained in an arm’s length
transaction with a non-affiliated Person, and (b) Subordinated Debt or equity
investments by Borrower’s investors in Borrower or its Subsidiaries.

7.10 Subordinated Debt. (a) Make or permit any payment on any Subordinated Debt,
except under the terms of the subordination, intercreditor, or other similar
agreement to which such Subordinated Debt is subject, or (b) amend any provision
in any document relating to the Subordinated Debt which would increase the
amount thereof or adversely affect the subordination thereof to Obligations owed
to the Lenders.

7.11 Compliance. Become an “investment company” or a company controlled by an
“investment company”, under the Investment Company Act of 1940, as amended, or
undertake as one of its important activities extending credit to purchase or
carry margin stock (as defined in Regulation U of the Board of Governors of the
Federal Reserve System), or use the proceeds of the Term Loan for that purpose;
fail to meet the minimum funding requirements of ERISA, permit a Reportable
Event or Prohibited Transaction, as defined in ERISA, to occur; fail to comply
with the Federal Fair Labor Standards Act or violate any other law or
regulation, if the failure to comply or violation could reasonably be expected
to have a Material Adverse Change, or permit any of its Subsidiaries to do so;
withdraw or permit any Subsidiary to withdraw from participation in, permit
partial or complete termination of, or permit the occurrence of any other event
with respect to, any present pension, profit sharing and deferred compensation
plan which could reasonably be expected to result in any liability of Borrower
or any of its Subsidiaries, including any liability to the Pension Benefit
Guaranty Corporation or its successors or any other Governmental Authority.

7.12 Compliance with Anti-Terrorism Laws. Neither Borrower nor any of its
Subsidiaries shall, nor shall Borrower or any of its Subsidiaries permit any
Affiliate to, directly or indirectly, knowingly enter into any documents,
instruments, agreements or contracts with any Person listed on the OFAC Lists.
Neither Borrower nor any of its Subsidiaries shall, nor shall Borrower or any of
its Subsidiaries, permit any Affiliate to, directly or indirectly, (i) conduct
any business or engage in any transaction or dealing with any Blocked Person,
including,

 

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without limitation, the making or receiving of any contribution of funds, goods
or services to or for the benefit of any Blocked Person, (ii) deal in, or
otherwise engage in any transaction relating to, any property or interests in
property blocked pursuant to Executive Order No. 13224 or any similar executive
order or other Anti-Terrorism Law, or (iii) engage in or conspire to engage in
any transaction that evades or avoids, or has the purpose of evading or
avoiding, or attempts to violate, any of the prohibitions set forth in Executive
Order No. 13224 or other Anti-Terrorism Law.

7.13 Material Agreements. Neither Borrower nor any of its Subsidiaries shall,
without the consent of Collateral Agent, other than in the ordinary course of
business or with the approval of Parent’s Board of Directors, (a) enter into a
Material Agreement or (b) terminate or materially amend a Material Agreement.

7.14 SOFAR/Vulcanos Unit Purchase Agreement. Neither Parent nor any Subsidiary
shall (i) permit or cause to be paid in cash or cash equivalents all or any part
of the “Third Tranche,” under and as defined in the SOFAR/Vulcanos Unit Purchase
Agreement, during the term of this Agreement, provided, that any payment in part
or in whole in the form of Parent’s equity shall be permitted; or (ii) suffer or
permit any modification, amendment and/or restatement of all or any part of the
SOFAR/Vulcanos Unit Purchase Agreement, other than any modification or amendment
resulting (a) in any delay in an required payments or (b) a consideration being
paid in equity of the Parent in lieu of payments cash or cash equivalents.
Without limiting the foregoing, Parent shall cause the SOFAR Lien to be
terminated by September 18, 2017, and provide evidence thereof to Collateral
Agent promptly thereafter.

7.15 Cash or Assets with Foreign Subsidiaries. Permit any Foreign Subsidiary
which is not a Guarantor to maintain cash, Cash Equivalents or other assets of a
value (or amount) at any one time in excess of (i) One Hundred Thousand Dollars
($100,000.00) per individual Foreign Subsidiary, and (ii) One Million Dollars
($1,000,000.00) in the aggregate for all such Foreign Subsidiaries.

 

8. EVENTS OF DEFAULT

Any one of the following shall constitute an event of default (an “Event of
Default”) under this Agreement:

8.1 Payment Default. Borrower fails to (a) make any payment of principal or
interest on the Term Loan on its due date, or (b) pay any other Obligations
within three (3) Business Days after such Obligations are due and payable (which
three (3) Business Day grace period shall not apply to payments due on the
Maturity Date or the date of acceleration pursuant to Section 9.1 (a) hereof);

8.2 Covenant Default.

(a) Borrower or any of its Subsidiaries fails or neglects to perform any
obligation in Sections 6.2 (Financial Statements, Reports, Certificates), 6.4
(Taxes), 6.5 (Insurance), 6.6 (Operating Accounts), 6.7 (Protection of
Intellectual Property Rights), 6.9 (Landlord Waivers; Bailee Waivers), 6.10
(Creation/Acquisition of Subsidiaries), 6.11 (Minimum Liquidity), 6.12 (Board
Observation Rights) or Borrower violates any provision in Section 7; or

(b) Borrower, or any of its Subsidiaries, fails or neglects to perform, keep, or
observe any other term, provision, condition, covenant or agreement contained in
this Agreement or any Loan Documents, and as to any default (other than those
specified in this Section 8) under such other term, provision, condition,
covenant or agreement that can be cured, has failed to cure the default within
ten (10) days after the occurrence thereof; provided, however, that if the
default cannot by its nature be cured within the ten (10) day period or cannot
after diligent attempts by Borrower be cured within such ten (10) day period,
and such default is likely to be cured within a reasonable time, then Borrower
shall have an additional period (which shall not in any case exceed thirty
(30) days) to attempt to cure such default, and within such reasonable time
period the failure to cure the default shall not be deemed an Event of Default
(but no Term Loan shall be made during such cure period);

8.3 Material Adverse Change. A Material Adverse Change has occurred;

 

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8.4 Attachment; Levy; Restraint on Business.

(a) (i) The service of process seeking to attach, by trustee or similar process,
any funds of Borrower, Guarantor or any of its Material Subsidiaries or of any
entity under control of Borrower, Guarantor or its Material Subsidiaries on
deposit with any institution at which Borrower or any of its Subsidiaries
maintains a Collateral Account, or (ii) a notice of lien, levy, or assessment is
filed against Borrower, Guarantor or any of its Material Subsidiaries or their
respective assets by any government agency, and the same under subclauses
(i) and (ii) hereof are not, within ten (10) days after the occurrence thereof,
discharged or stayed (whether through the posting of a bond or otherwise); and

(b) (i) any material portion of Borrower’s or any of its Subsidiaries’ assets is
attached, seized, levied on, or comes into possession of a trustee or receiver,
or (ii) any court order enjoins, restrains, or prevents Borrower or any of its
Subsidiaries from conducting any part of its business;

8.5 Insolvency. (a) Parent is or becomes Insolvent; (b) Parent and its
Subsidiaries, taken as a whole, are or become Insolvent; (c) Borrower, Guarantor
or any Material Subsidiary begins an Insolvency Proceeding; or (d) an Insolvency
Proceeding is begun against Borrower, Guarantor or any Material Subsidiary and
is not dismissed or stayed within forty five (45) days (but no Term Loan shall
be extended while Parent or any Subsidiary is Insolvent and/or until any
Insolvency Proceeding is dismissed);

8.6 Other Agreements. There is (a) a default in any agreement to which Borrower
or any of its Subsidiaries is a party with a third party or parties resulting in
a right by such third party or parties, whether or not exercised, to accelerate
the maturity of any Indebtedness in an amount in excess of Two Hundred Fifty
Thousand Dollars ($250,000.00) or that could reasonably be expected to have a
Material Adverse Change; or (b) any default under a Material Agreement that
permits the counterparty thereto to accelerate the payments in excess of Two
Hundred Fifty Thousand Dollars ($250,000.00) owed thereunder.

8.7 Judgments. (a) One or more judgments, orders, or decrees for the payment of
money in an amount, individually or in the aggregate, of at least Two Hundred
Fifty Thousand Dollars ($250,000.00) (not covered by independent third party
insurance) shall be rendered against Borrower or any of its Subsidiaries and
shall remain unsatisfied, unvacated, or unstayed for a period of twenty
(20) days after the entry thereof or (b) any judgments, orders or decrees
rendered against Borrower that could reasonably be expected to result in a
Material Adverse Change;

8.8 Misrepresentations. Borrower or any of its Subsidiaries or any Person acting
for Borrower or any of its Subsidiaries makes any representation, warranty, or
other statement now or later in this Agreement, any Loan Document or in any
writing delivered to Collateral Agent and/or Lenders or to induce Collateral
Agent and/or the Lenders to enter this Agreement or any Loan Document, and such
representation, warranty, or other statement, when taken as a whole, is
incorrect in any material respect when made;

8.9 Subordinated Debt. A default or breach occurs under any agreement between
Borrower or any of its Subsidiaries and any creditor of Borrower or any of its
Subsidiaries that signed a subordination, intercreditor, or other similar
agreement with Collateral Agent or the Lenders, or any creditor that has signed
such an agreement with Collateral Agent or the Lenders breaches any terms of
such agreement;

8.10 Guaranty. (a) Any Guaranty terminates or ceases for any reason to be in
full force and effect; (b) any Guarantor does not perform any obligation or
covenant under any Guaranty; or (c) any circumstance described in Section 8
occurs with respect to any Guarantor;

8.11 Governmental Approvals; FDA Action. (a) Any Governmental Approval shall
have been revoked, rescinded, suspended, modified in an adverse manner, or not
renewed in the ordinary course for a full term and such revocation, rescission,
suspension, modification or non-renewal has resulted in or could reasonably be
expected to result in a Material Adverse Change; or (b) (i) the FDA, DOJ, or
other Governmental Authority initiates a Regulatory Action or any other
enforcement action against Borrower or any of its Subsidiaries or any supplier
of Borrower or any of its Subsidiaries that causes Borrower or any of its
Subsidiaries to recall, withdraw, remove or

 

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discontinue manufacturing, distributing, and/or marketing any of its products,
even if such action is based on previously disclosed conduct; (ii) the FDA
issues a warning letter or Regulatory Action to Borrower or any of its
Subsidiaries with respect to any of its activities or products which could
reasonably be expected to result in a Material Adverse Change; (iii) Borrower or
any of its Subsidiaries conducts a mandatory or voluntary recall which could
reasonably be expected to result in liability and expense to Borrower or any of
its Subsidiaries of Two Hundred Fifty Thousand Dollars ($250,000.00) or more;
(iv) Borrower or any of its Subsidiaries enters into a settlement agreement with
the FDA, DOJ, or other Governmental Authority that results in aggregate
liability as to any single or related series of transactions, incidents or
conditions, of Two Hundred Fifty Thousand Dollars ($250,000.00) or more, or that
could reasonably be expected to result in a Material Adverse Change even if such
settlement agreement is based on previously disclosed conduct; or (v) Borrower
or any of its Subsidiaries fails to remediate observations identified in an FDA
Form 483 notice of inspection observation to Collateral Agent’s reasonable
satisfaction within six months of receipt; or (vi) the FDA revokes any
authorization or permission granted under any Registration, or Borrower or any
of its Subsidiaries withdraws any Registration, that could reasonably be
expected to result in a Material Adverse Change.

8.12 Lien Priority; Intellectual Property. Any Lien created hereunder or by any
other Loan Document shall at any time fail to constitute a valid and perfected
Lien on any of the Collateral purported to be secured thereby, subject to no
prior or equal Lien, other than Permitted Liens arising as a matter of
applicable law. Any Intellectual Property material to Borrower’s business shall
cease to be validly owned or licensed by Borrower free and clear of any Liens
other than Permitted Liens.

 

9. RIGHTS AND REMEDIES

9.1 Rights and Remedies.

(a) Upon the occurrence and during the continuance of an Event of Default,
Collateral Agent may, without notice or demand, do any or all of the following:
(i) deliver notice of the Event of Default to Borrower, (ii) by notice to
Borrower declare all Obligations immediately due and payable (but if an Event of
Default described in Section 8.5 occurs all Obligations shall be immediately due
and payable without any action by Collateral Agent or the Lenders) or (iii) by
notice to Borrower suspend or terminate the obligations, if any, of the Lenders
to advance money or extend credit for Borrower’s benefit under this Agreement or
under any other agreement between Borrower and Collateral Agent and/or the
Lenders (but if an Event of Default described in Section 8.5 occurs all
obligations, if any, of the Lenders to advance money or extend credit for
Borrower’s benefit under this Agreement or under any other agreement between
Borrower and Collateral Agent and/or the Lenders shall be immediately terminated
without any action by Collateral Agent or the Lenders).

(b) Without limiting the rights of Collateral Agent and the Lenders set forth in
Section 9.1(a) above, upon the occurrence and during the continuance of an Event
of Default, Collateral Agent shall have the right, without notice or demand, to
do any or all of the following:

(i) foreclose upon and/or sell or otherwise liquidate, the Collateral;

(ii) apply to the Obligations any (a) balances and deposits of Borrower that
Collateral Agent or any Lender holds or controls, or (b) any amount held or
controlled by Collateral Agent or any Lender owing to or for the credit or the
account of Borrower; and/or

(iii) commence and prosecute an Insolvency Proceeding or consent to Borrower
commencing any Insolvency Proceeding.

(c) Without limiting the rights of Collateral Agent and the Lenders set forth in
Sections 9.1(a) and (b) above, upon the occurrence and during the continuance of
an Event of Default, Collateral Agent shall have the right, without notice or
demand, to do any or all of the following:

 

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(i) settle or adjust disputes and claims directly with Account Debtors for
amounts on terms and in any order that Collateral Agent considers advisable,
notify any Person owing Borrower money of Collateral Agent’s security interest
in such funds, and verify the amount of such account;

(ii) make any payments and do any acts it considers necessary or reasonable to
protect the Collateral and/or its security interest in the Collateral. Borrower
shall assemble the Collateral if Collateral Agent requests and make it available
in a location as Collateral Agent reasonably designates. Collateral Agent may
enter premises where the Collateral is located, take and maintain possession of
any part of the Collateral, and pay, purchase, contest, or compromise any Lien
which appears to be prior or superior to its security interest and pay all
expenses incurred. Borrower grants Collateral Agent a license to enter and
occupy any of its premises, without charge, to exercise any of Collateral
Agent’s rights or remedies;

(iii) ship, reclaim, recover, store, finish, maintain, repair, prepare for sale,
and/or advertise for sale, the Collateral. Collateral Agent is hereby granted a
non-exclusive, royalty free license or other right to use, without charge,
Borrower’s and each of its Subsidiaries’ labels, Patents, Copyrights, mask
works, rights of use of any name, trade secrets, trade names, Trademarks,
service marks, and advertising matter, or any similar property as it pertains to
the Collateral, in completing production of, advertising for sale, and selling
any Collateral and, in connection with Collateral Agent’s exercise of its rights
under this Section 9.1, Borrower’s and each of its Subsidiaries’ rights under
all licenses and all franchise agreements inure to Collateral Agent, for the
benefit of the Lenders;

(iv) place a “hold” on any account maintained with Collateral Agent or the
Lenders and/or deliver a notice of exclusive control, any entitlement order, or
other directions or instructions pursuant to any Control Agreement or similar
agreements providing control of any Collateral;

(v) demand and receive possession of Borrower’s Books;

(vi) appoint a receiver to seize, manage and realize any of the Collateral, and
such receiver shall have any right and authority as any competent court will
grant or authorize in accordance with any applicable law, including any power or
authority to manage the business of Borrower or any of its Subsidiaries; and

(vii) subject to clauses 9.1(a) and (b), exercise all rights and remedies
available to Collateral Agent and each Lender under the Loan Documents or at law
or equity, including all remedies provided under the Code (including disposal of
the Collateral pursuant to the terms thereof).

Notwithstanding any provision of this Section 9.1 to the contrary, upon the
occurrence of any Event of Default, Collateral Agent shall have the right to
exercise any and all remedies referenced in this Section 9.1 without the written
consent of Required Lenders following the occurrence of an Exigent Circumstance.

9.2 Power of Attorney. Borrower hereby irrevocably appoints Collateral Agent as
its lawful attorney in fact, exercisable upon the occurrence and during the
continuance of an Event of Default, to: (a) endorse Borrower’s or any of its
Subsidiaries’ name on any checks or other forms of payment or security; (b) sign
Borrower’s or any of its Subsidiaries’ name on any invoice or bill of lading for
any Account or drafts against Account Debtors; (c) settle and adjust disputes
and claims about the Accounts directly with Account Debtors, for amounts and on
terms Collateral Agent determines reasonable; (d) make, settle, and adjust all
claims under Borrower’s insurance policies; (e) pay, contest or settle any Lien,
charge, encumbrance, security interest, and adverse claim in or to the
Collateral, or any judgment based thereon, or otherwise take any action to
terminate or discharge the same; and (f) transfer the Collateral into the name
of Collateral Agent or a third party as the Code or any applicable law permits.
Borrower hereby appoints Collateral Agent as its lawful attorney in fact to sign
Borrower’s or any of its Subsidiaries’ name on any documents necessary to
perfect or continue the perfection of Collateral Agent’s security interest in
the Collateral regardless of whether an Event of Default has occurred until all
Obligations (other than inchoate indemnity obligations) have been satisfied in
full and Collateral Agent and the Lenders are under no further obligation to
extend the Term Loan hereunder. Collateral Agent’s foregoing appointment as
Borrower’s or any of its Subsidiaries’ attorney in fact, and all of Collateral
Agent’s rights and powers, coupled with an interest, are irrevocable until all
Obligations (other than inchoate indemnity obligations) have been fully repaid
and performed and Collateral Agent’s and the Lenders’ obligation to provide the
Term Loan terminates.

 

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9.3 Protective Payments. If Borrower or any of its Subsidiaries fail to obtain
the insurance called for by Section 6.5 or fails to pay any premium thereon or
fails to pay any other amount which Borrower or any of its Subsidiaries is
obligated to pay under this Agreement or any other Loan Document, Collateral
Agent may obtain such insurance or make such payment, and all amounts so paid by
Collateral Agent are Lenders’ Expenses and immediately due and payable, bearing
interest at the Default Rate, and secured by the Collateral. Collateral Agent
will make reasonable efforts to provide Borrower with notice of Collateral Agent
obtaining such insurance or making such payment at the time it is obtained or
paid or within a reasonable time thereafter. No such payments by Collateral
Agent are deemed an agreement to make similar payments in the future or
Collateral Agent’s waiver of any Event of Default.

9.4 Application of Payments and Proceeds. Notwithstanding anything to the
contrary contained in this Agreement, upon the occurrence and during the
continuance of an Event of Default, (a) Borrower irrevocably waives the right to
direct the application of any and all payments at any time or times thereafter
received by Collateral Agent from or on behalf of Borrower or any of its
Subsidiaries of all or any part of the Obligations, and, as between Borrower on
the one hand and Collateral Agent and Lenders on the other, Collateral Agent
shall have the continuing and exclusive right to apply and to reapply any and
all payments received against the Obligations in such manner as Collateral Agent
may deem advisable notwithstanding any previous application by Collateral Agent,
and (b) the proceeds of any sale of, or other realization upon all or any part
of the Collateral shall be applied: first, to the Lenders’ Expenses; second, to
accrued and unpaid interest on the Obligations (including any interest which,
but for the provisions of the United States Bankruptcy Code, would have accrued
on such amounts); third, to the principal amount of the Obligations outstanding;
and fourth, to any other indebtedness or obligations of Borrower owing to
Collateral Agent or any Lender under the Loan Documents. Any balance remaining
shall be delivered to Borrower or to whoever may be lawfully entitled to receive
such balance or as a court of competent jurisdiction may direct. In carrying out
the foregoing, (x) amounts received shall be applied in the numerical order
provided until exhausted prior to the application to the next succeeding
category, and (y) each of the Persons entitled to receive a payment in any
particular category shall receive an amount equal to its pro rata share of
amounts available to be applied pursuant thereto for such category. Any
reference in this Agreement to an allocation between or sharing by the Lenders
of any right, interest or obligation “ratably,” “proportionally” or in similar
terms shall refer to Pro Rata Share unless expressly provided otherwise.
Collateral Agent, or if applicable, each Lender, shall promptly remit to the
other Lenders such sums as may be necessary to ensure the ratable repayment of
each Lender’s portion of the Term Loan and the ratable distribution of interest,
fees and reimbursements paid or made by Borrower. Notwithstanding the foregoing,
a Lender receiving a scheduled payment shall not be responsible for determining
whether the other Lenders also received their scheduled payment on such date;
provided, however, if it is later determined that a Lender received more than
its ratable share of scheduled payments made on any date or dates, then such
Lender shall remit to Collateral Agent or other Lenders such sums as may be
necessary to ensure the ratable payment of such scheduled payments, as
instructed by Collateral Agent. If any payment or distribution of any kind or
character, whether in cash, properties or securities, shall be received by a
Lender in excess of its ratable share, then the portion of such payment or
distribution in excess of such Lender’s ratable share shall be received by such
Lender in trust for and shall be promptly paid over to the other Lender for
application to the payments of amounts due on the other Lenders’ claims. To the
extent any payment for the account of Borrower is required to be returned as a
voidable transfer or otherwise, the Lenders shall contribute to one another as
is necessary to ensure that such return of payment is on a pro rata basis. If
any Lender shall obtain possession of any Collateral, it shall hold such
Collateral for itself and as agent and bailee for Collateral Agent and other
Lenders for purposes of perfecting Collateral Agent’s security interest therein.

9.5 Liability for Collateral. So long as Collateral Agent and the Lenders comply
with reasonable banking practices regarding the safekeeping of the Collateral in
the possession or under the control of Collateral Agent and the Lenders,
Collateral Agent and the Lenders shall not be liable or responsible for: (a) the
safekeeping of the Collateral; (b) any loss or damage to the Collateral; (c) any
diminution in the value of the Collateral; or (d) any act or default of any
carrier, warehouseman, bailee, or other Person. Borrower bears all risk of loss,
damage or destruction of the Collateral.

 

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9.6 No Waiver; Remedies Cumulative. Failure by Collateral Agent or any Lender,
at any time or times, to require strict performance by Borrower of any provision
of this Agreement or any other Loan Document shall not waive, affect, or
diminish any right of Collateral Agent or any Lender thereafter to demand strict
performance and compliance herewith or therewith. No waiver hereunder shall be
effective unless signed by Collateral Agent and the Required Lenders and then is
only effective for the specific instance and purpose for which it is given. The
rights and remedies of Collateral Agent and the Lenders under this Agreement and
the other Loan Documents are cumulative. Collateral Agent and the Lenders have
all rights and remedies provided under the Code, any applicable law, by law, or
in equity. The exercise by Collateral Agent or any Lender of one right or remedy
is not an election, and Collateral Agent’s or any Lender’s waiver of any Event
of Default is not a continuing waiver. Collateral Agent’s or any Lender’s delay
in exercising any remedy is not a waiver, election, or acquiescence.

9.7 Demand Waiver. Borrower waives, to the fullest extent permitted by law,
demand, notice of default or dishonor, notice of payment and nonpayment, notice
of any default, nonpayment at maturity, release, compromise, settlement,
extension, or renewal of accounts, documents, instruments, chattel paper, and
guarantees held by Collateral Agent or any Lender on which Borrower or any
Subsidiary is liable.

 

10. NOTICES

All notices, consents, requests, approvals, demands, or other communication
(collectively, “Communication”) by any party to this Agreement or any other Loan
Document must be in writing and shall be deemed to have been validly served,
given, or delivered: (a) upon the earlier of actual receipt and three
(3) Business Days after deposit in the U.S. mail, first class, registered or
certified mail return receipt requested, with proper postage prepaid; (b) upon
transmission, when sent by facsimile transmission; (c) one (1) Business Day
after deposit with a reputable overnight courier with all charges prepaid; or
(d) when delivered, if hand delivered by messenger, all of which shall be
addressed to the party to be notified and sent to the address, facsimile number,
or email address indicated below. Any of Collateral Agent, Lender or Borrower
may change its mailing address or facsimile number by giving the other party
written notice thereof in accordance with the terms of this Section 10.

 

If to Borrower:    TRANSENTERIX, INC.   

635 Davis Drive, Suite 300

Morrisville, North Carolina 27560

Attn: Joseph P. Slattery,

Executive Vice President/Chief Financial Officer

Fax: (919) 765-8459

Email: jslatttery@transenterix.com

with a copy (which shall not
constitute notice) to:    BALLARD SPAHR LLP   

1735 Market Street, 51st Floor

Philadelphia, PA 19103-7599

Attn: Mary Mullany

Fax: (215) 864-8999

Email: mullany@ballardspahr.com

If to Collateral Agent:    INNOVATUS LIFE SCIENCES    LENDING FUND I, LP    777
Third Avenue, 25th Floor    New York, NY 10017    Attn: Claes Ekstrom    Email:
cekstrom@innovatuscp.com

 

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with a copy (which shall
not constitute notice) to:    COOLEY LLP    3175 Hanover Street    Palo Alto,
California 94304-1130    Attn: Troy Zander    Email: tzander@cooley.com

 

11. CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER

11.1 Waiver of Jury Trial. EACH OF BORROWER, COLLATERAL AGENT AND LENDERS
UNCONDITIONALLY WAIVES ANY AND ALL RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE OTHER LOAN
DOCUMENTS, ANY OF THE INDEBTEDNESS SECURED HEREBY, ANY DEALINGS AMONG BORROWER,
COLLATERAL AGENT AND/OR LENDERS RELATING TO THE SUBJECT MATTER OF THIS
TRANSACTION OR ANY RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP THAT IS BEING
ESTABLISHED AMONG BORROWER, COLLATERAL AGENT AND/OR LENDERS. THE SCOPE OF THIS
WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE
FILED IN ANY COURT. THIS WAIVER IS IRREVOCABLE. THIS WAIVER MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING. THE WAIVER ALSO SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, ANY OTHER
LOAN DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS
TRANSACTION OR ANY RELATED TRANSACTION. THIS AGREEMENT MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.

11.2 Governing Law and Jurisdiction.

(a) THIS AGREEMENT, THE OTHER LOAN DOCUMENTS (EXCLUDING THOSE LOAN DOCUMENTS
THAT BY THEIR OWN TERMS ARE EXPRESSLY GOVERNED BY THE LAWS OF ANOTHER
JURISDICTION) AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND
THEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICT
OF LAWS PRINCIPLES THAT WOULD RESULT IN THE APPLICATION OF ANY LAWS OTHER THAN
THE LAWS OF THE STATE OF NEW YORK), INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, REGARDLESS OF THE LOCATION OF THE COLLATERAL,
PROVIDED, HOWEVER, THAT IF THE LAWS OF ANY JURISDICTION OTHER THAN NEW YORK
SHALL GOVERN IN REGARD TO THE VALIDITY, PERFECTION OR EFFECT OF PERFECTION OF
ANY LIEN OR IN REGARD TO PROCEDURAL MATTERS AFFECTING ENFORCEMENT OF ANY LIENS
IN COLLATERAL, SUCH LAWS OF SUCH OTHER JURISDICTIONS SHALL CONTINUE TO APPLY TO
THAT EXTENT.

(b) Submission to Jurisdiction. Any legal action or proceeding with respect to
the Loan Documents shall be brought exclusively in the courts of the State of
New York located in the City of New York, Borough of Manhattan, or of the United
States of America for the Southern District of New York and, by execution and
delivery of this Agreement, Borrower hereby accepts for itself and in respect of
its Property, generally and unconditionally, the jurisdiction of the aforesaid
courts. Notwithstanding the foregoing, Collateral Agent and Lenders shall have
the right to bring any action or proceeding against Borrower (or any property of
Borrower) in the court of any other jurisdiction Collateral Agent or Lenders
deem necessary or appropriate in order to realize on the Collateral or other
security for the Obligations. The parties hereto hereby irrevocably waive any
objection, including any objection to the laying of venue or based on the
grounds of forum non conveniens, that any of them may now or hereafter have to
the bringing of any such action or proceeding in such jurisdictions.

(c) Service of Process. Borrower irrevocably waives personal service of any and
all legal process, summons, notices and other documents and other service of
process of any kind and consents to such service in any suit, action or
proceeding brought in the United States of America with respect to or otherwise
arising out of or in connection with any Loan Document by any means permitted by
applicable requirements of law, including by the mailing thereof (by registered
or certified mail, postage prepaid) to the address of Borrower

 

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specified herein (and shall be effective when such mailing shall be effective,
as provided therein). Borrower agrees that a final judgment in any such action
or proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.

(d) Non-exclusive Jurisdiction. Nothing contained in this Section 11.2 shall
affect the right of Collateral Agent or Lenders to serve process in any other
manner permitted by applicable requirements of law or commence legal proceedings
or otherwise proceed against Borrower in any other jurisdiction.

 

12. GENERAL PROVISIONS

12.1 Successors and Assigns. This Agreement binds and is for the benefit of the
successors and permitted assigns of each party. Borrower may not transfer,
pledge or assign this Agreement or any rights or obligations under it without
Collateral Agent’s prior written consent (which may be granted or withheld in
Collateral Agent’s discretion, subject to Section 12.5). The Lenders have the
right, without the consent of or notice to Borrower, to sell, transfer, assign,
pledge, negotiate, or grant participation in (any such sale, transfer,
assignment, negotiation, or grant of a participation, a “Lender Transfer”) all
or any part of, or any interest in, the Lenders’ obligations, rights, and
benefits under this Agreement and the other Loan Documents.

12.2 Indemnification. Borrower agrees to indemnify, defend and hold Collateral
Agent and the Lenders and their respective directors, officers, employees,
consultants, agents, attorneys, or any other Person affiliated with or
representing Collateral Agent or the Lenders (each, an “Indemnified Person”)
harmless against: (a) all obligations, demands, claims, and liabilities
(collectively, “Claims”) asserted by any other party in connection with; related
to; following; or arising from, out of or under, the transactions contemplated
by the Loan Documents; and (b) all losses or Lenders’ Expenses incurred, or paid
by Indemnified Person in connection with; related to; following; or arising
from, out of or under, the transactions contemplated by the Loan Documents
between Collateral Agent, and/or the Lenders and Borrower (including reasonable
attorneys’ fees and expenses), except for Claims and/or losses directly caused
by such Indemnified Person’s gross negligence or willful misconduct. Borrower
hereby further indemnifies, defends and holds each Indemnified Person harmless
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses and disbursements
of any kind or nature whatsoever (including the fees and disbursements of
counsel for such Indemnified Person) in connection with any investigative,
response, remedial, administrative or judicial matter or proceeding, whether or
not such Indemnified Person shall be designated a party thereto and including
any such proceeding initiated by or on behalf of Borrower, and the reasonable
expenses of investigation by engineers, environmental consultants and similar
technical personnel and any commission, fee or compensation claimed by any
broker (other than any broker retained by Collateral Agent or Lenders) asserting
any right to payment for the transactions contemplated hereby which may be
imposed on, incurred by or asserted against such Indemnified Person as a result
of or in connection with the transactions contemplated hereby and the use or
intended use of the proceeds of the loan proceeds except for liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements directly caused by such Indemnified Person’s
gross negligence or willful misconduct.

12.3 Severability of Provisions. Each provision of this Agreement is severable
from every other provision in determining the enforceability of any provision.

12.4 Correction of Loan Documents. Collateral Agent may correct patent errors
and fill in any blanks in this Agreement and the other Loan Documents consistent
with the agreement of the parties.

12.5 Amendments in Writing; Integration. (a) No amendment, modification,
termination or waiver of any provision of this Agreement or any other Loan
Document, no approval or consent thereunder, or any consent to any departure by
Borrower or any of its Subsidiaries therefrom, shall in any event be effective
unless the same shall be in writing and signed by Borrower, Collateral Agent and
the Required Lenders provided that:

(i) no such amendment, waiver or other modification that would have the effect
of increasing or reducing a Lender’s Term Loan Commitment or Commitment
Percentage shall be effective as to such Lender without such Lender’s written
consent;

 

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(ii) no such amendment, waiver or modification that would affect the rights and
duties of Collateral Agent shall be effective without Collateral Agent’s written
consent or signature; and

(iii) no such amendment, waiver or other modification shall, unless signed by
all the Lenders directly affected thereby, (A) reduce the principal of, rate of
interest on or any fees with respect to the Term Loan or forgive any principal,
interest (other than default interest) or fees (other than late charges) with
respect to the Term Loan (B) postpone the date fixed for, or waive, any payment
of principal of the Term Loan or of interest on the Term Loan (other than
default interest) or any fees provided for hereunder (other than late charges or
for any termination of any commitment); (C) change the definition of the term
“Required Lenders” or the percentage of Lenders which shall be required for the
Lenders to take any action hereunder; (D) release all or substantially all of
any material portion of the Collateral, authorize Borrower to sell or otherwise
dispose of all or substantially all or any material portion of the Collateral or
release any Guarantor of all or any portion of the Obligations or its guaranty
obligations with respect thereto, except, in each case with respect to this
clause (D), as otherwise may be expressly permitted under this Agreement or the
other Loan Documents (including in connection with any disposition permitted
hereunder); (E) amend, waive or otherwise modify this Section 12.5 or the
definitions of the terms used in this Section 12.5 insofar as the definitions
affect the substance of this Section 12.5; (F) consent to the assignment,
delegation or other transfer by Borrower of any of its rights and obligations
under any Loan Document or release Borrower of its payment obligations under any
Loan Document, except, in each case with respect to this clause (F), pursuant to
a merger or consolidation permitted pursuant to this Agreement; (G) amend any of
the provisions of Section 9.4 or amend any of the definitions of Pro Rata Share,
Term Loan Commitment, Commitment Percentage or that provide for the Lenders to
receive their Pro Rata Shares of any fees, payments, setoffs or proceeds of
Collateral hereunder; (H) subordinate the Liens granted in favor of Collateral
Agent securing the Obligations. It is hereby understood and agreed that all
Lenders shall be deemed directly affected by an amendment, waiver or other
modification of the type described in the preceding clauses (C), (D), (E), (F),
(G) and (H) of the immediately preceding sentence.

(b) Other than as expressly provided for in Section 12.5(a)(i) (iii), Collateral
Agent may, if requested by the Required Lenders, from time to time designate
covenants in this Agreement less restrictive by notification to a representative
of Borrower.

(c) This Agreement and the Loan Documents represent the entire agreement about
this subject matter and supersede prior negotiations or agreements with respect
to such subject matter. All prior agreements, understandings, representations,
warranties, and negotiations between the parties about the subject matter of
this Agreement and the Loan Documents merge into this Agreement and the Loan
Documents.

12.6 Counterparts. This Agreement may be executed in any number of counterparts
and by different parties on separate counterparts, each of which, when executed
and delivered, is an original, and all taken together, constitute one Agreement.

12.7 Survival. All covenants, representations and warranties made in this
Agreement continue in full force and effect until this Agreement has terminated
pursuant to its terms and all Obligations (other than inchoate indemnity
obligations and any other obligations which, by their terms, are to survive the
termination of this Agreement) have been satisfied. The obligation of Borrower
in Section 12.2 to indemnify each Lender and Collateral Agent, as well as the
confidentiality provisions in Section 12.8 below, shall survive until the
statute of limitations with respect to such claim or cause of action shall have
run.

12.8 Confidentiality. In handling any confidential information of Borrower, the
Lenders and Collateral Agent shall exercise the same degree of care that it
exercises for their own proprietary information, but disclosure of information
may be made: (a) subject to the terms and conditions of this Agreement, to the
Lenders’ and Collateral Agent’s Subsidiaries or Affiliates; (b) to prospective
transferees (other than those identified in (a) above) or purchasers of any
interest in the Term Loan (provided, however, the Lenders and Collateral Agent
shall obtain such prospective transferee’s or purchaser’s agreement to the terms
of this provision or to similar confidentiality terms); (c) as required by law,
regulation, subpoena, or other order; (d) to Lenders’ or Collateral Agent’s
regulators or as otherwise required in connection with an examination or audit;
(e) as Collateral Agent reasonably considers appropriate in exercising remedies
under the Loan Documents; and (f) to third party service providers of the
Lenders and/or Collateral Agent so long as such service providers have executed
a confidentiality

 

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agreement or have agreed to similar confidentiality terms with the Lenders and
Collateral Agent with terms no less restrictive than those contained herein.
Confidential information does not include information that either: (i) is in the
public domain or in the Lenders’ and/or Collateral Agent’s possession when
disclosed to the Lenders and/or Collateral Agent, or becomes part of the public
domain after disclosure to the Lenders and/or Collateral Agent at no fault of
the Lenders or the Collateral Agent; or (ii) is disclosed to the Lenders and/or
Collateral Agent by a third party, if the Lenders and/or Collateral Agent does
not know that the third party is prohibited from disclosing the information.
Collateral Agent and the Lenders may use confidential information for any
purpose, including, without limitation, for the development of client databases,
reporting purposes, and market analysis. The provisions of the immediately
preceding sentence shall survive the termination of this Agreement. The
agreements provided under this Section 12.8 supersede all prior agreements,
understanding, representations, warranties, and negotiations between the parties
about the subject matter of this Section 12.8.

12.9 Right of Set Off. Borrower hereby grants to Collateral Agent and to each
Lender, a lien, security interest and right of set off as security for all
Obligations to Collateral Agent and each Lender hereunder, whether now existing
or hereafter arising upon and against all deposits, credits, collateral and
property, now or hereafter in the possession, custody, safekeeping or control of
Collateral Agent or the Lenders or any entity under the control of Collateral
Agent or the Lenders (including a Collateral Agent affiliate) or in transit to
any of them. At any time after the occurrence and during the continuance of an
Event of Default, without demand or notice, Collateral Agent or the Lenders may
set off the same or any part thereof and apply the same to any liability or
obligation of Borrower even though unmatured and regardless of the adequacy of
any other collateral securing the Obligations. ANY AND ALL RIGHTS TO REQUIRE
COLLATERAL AGENT TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER
COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF
SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER ARE
HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED BY BORROWER.

12.10 Cooperation of Borrower. If necessary, Borrower agrees to (i) execute any
documents reasonably required to effectuate and acknowledge each assignment of a
Term Loan Commitment or Term Loan to an assignee in accordance with
Section 12.1, (ii) make Borrower’s management available to meet with Collateral
Agent and prospective participants and assignees of Term Loan Commitments (which
meetings shall be conducted no more often than twice every twelve months unless
an Event of Default has occurred and is continuing), and (iii) assist Collateral
Agent or the Lenders in the preparation of information relating to the financial
affairs of Borrower as any prospective participant or assignee of a Term Loan
Commitment or Term Loan reasonably may request. Subject to the provisions of
Section 12.8, Borrower authorizes each Lender to disclose to any prospective
participant or assignee of a Term Loan Commitment, any and all information in
such Lender’s possession concerning Borrower and its financial affairs which has
been delivered to such Lender by or on behalf of Borrower pursuant to this
Agreement, or which has been delivered to such Lender by or on behalf of
Borrower in connection with such Lender’s credit evaluation of Borrower prior to
entering into this Agreement.

12.11 Public Announcement. Borrower hereby agrees that Collateral Agent and each
Lender may make a public announcement of the transactions contemplated by this
Agreement, and may publicize the same in marketing materials, newspapers and
other publications, and otherwise, and in connection therewith may use
Borrower’s name, tradenames and logos.

12.12 Collateral Agent and Lender Agreement. Collateral Agent and each Lender
hereby agree to the terms and conditions set forth on Annex I attached hereto.
Borrower acknowledges and agrees to the terms and conditions set forth on Annex
I attached hereto.

12.13 Borrower Liability. Each Borrower may, acting singly, request credit
extensions hereunder. Each Borrower hereby appoints the other as agent for the
other for all purposes hereunder, including with respect to requesting credit
extensions hereunder. Each Borrower hereunder shall be jointly and severally
obligated to repay all credit extensions made hereunder, regardless of which
Borrower actually receives said credit extension, as if each Borrower hereunder
directly received all credit extensions. Each Borrower waives (a) any suretyship
defenses available to it under the Code or any other applicable law, and (b) any
right to require Collateral Agent or any Lender to: (i) proceed against any
Borrower or any other person; (ii) proceed against or exhaust any security; or
(iii) pursue any other remedy. Collateral Agent and or any Lender may exercise
or not exercise any right or remedy it

 

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has against any Borrower or any security it holds (including the right to
foreclose by judicial or non-judicial sale) without affecting any Borrower’s
liability. Notwithstanding any other provision of this Agreement or other
related document, each Borrower irrevocably waives all rights that it may have
at law or in equity (including, without limitation, any law subrogating Borrower
to the rights of Collateral Agent and the Lenders under this Agreement) to seek
contribution, indemnification or any other form of reimbursement from any other
Borrower, or any other Person now or hereafter primarily or secondarily liable
for any of the Obligations, for any payment made by Borrower with respect to the
Obligations in connection with this Agreement or otherwise and all rights that
it might have to benefit from, or to participate in, any security for the
Obligations as a result of any payment made by Borrower with respect to the
Obligations in connection with this Agreement or otherwise. Any agreement
providing for indemnification, reimbursement or any other arrangement prohibited
under this Section shall be null and void. If any payment is made to a Borrower
in contravention of this Section, such Borrower shall hold such payment in trust
for Collateral Agent and the Lenders and such payment shall be promptly
delivered to Collateral Agent for application to the Obligations, whether
matured or unmatured.

 

13. DEFINITIONS

As used in this Agreement, the following terms have the following meanings:

“Account” is any “account” as defined in the Code with such additions to such
term as may hereafter be made, and includes, without limitation, all accounts
receivable and other sums owing to Borrower.

“Account Debtor” is any “account debtor” as defined in the Code with such
additions to such term as may hereafter be made under the Code.

“Affiliate” of any Person is a Person that owns or controls directly or
indirectly the Person, any Person that controls or is controlled by or is under
common control with the Person, and each of that Person’s senior executive
officers, directors, partners if such Person is a partnership and, for any
Person that is a limited liability company, that Person’s managers and members.

“Amortization Date” is the earliest of (i) the first Payment Date immediately
following the occurrence and continuation of an Event of Default, (ii) (a) the
first Payment Date immediately following the date, if any, upon which the
Interest-Only Milestones (other than the Performance to Plan Milestone) is not
met and (b) the first Payment Date following Borrower’s failure timely to obtain
the Equity Cure after the Performance to Plan Milestone is not met (the earliest
such date in the foregoing clauses (i) and (ii), the “Early Amortization Date”)
and (iii) the twenty-fifth (25th) Payment Date following the Funding Date.

“Anti-Terrorism Laws” are any laws relating to terrorism or money laundering,
including without limitation Executive Order No. 13224 (effective September 24,
2001), the USA PATRIOT Act, the laws comprising or implementing the Bank Secrecy
Act, and the laws administered by OFAC.

“Bank Services” are any products, credit services, and/or financial
accommodations previously, now, or hereafter provided to Borrower or any of its
Subsidiaries by financial institutions, including, without limitation, any
letters of credit, bankers’ guarantees, cash management services (including,
without limitation, merchant services, direct deposit of payroll, business
credit cards, and check cashing services), interest rate swap arrangements, and
foreign exchange services.

“Blocked Person” is any Person: (a) listed in the annex to, or is otherwise
subject to the provisions of, Executive Order No. 13224, (b) a Person owned or
controlled by, or acting for or on behalf of, any Person that is listed in the
annex to, or is otherwise subject to the provisions of, Executive Order
No. 13224, (c) a Person with which any Lender is prohibited from dealing or
otherwise engaging in any transaction by any Anti-Terrorism Law, (d) a Person
that commits, threatens or conspires to commit or supports “terrorism” as
defined in Executive Order No. 13224, or (e) a Person that is named a “specially
designated national” or “blocked person” on the most current list published by
OFAC or other similar list.

 

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“Borrower’s Books” are Borrower’s or any of its Subsidiaries’ books and records
including ledgers, federal, and state tax returns, records regarding Borrower’s
or its Subsidiaries’ assets or liabilities, the Collateral, business operations
or financial condition, and all computer programs or storage or any equipment
containing such information.

“Business Day” is any day that is not a Saturday, Sunday or a day on which
Collateral Agent is closed.

“Cash Equivalents” are (a) marketable direct obligations issued or
unconditionally guaranteed by the United States or any agency or any State
thereof having maturities of not more than one (1) year from the date of
acquisition; (b) commercial paper maturing no more than one (1) year after its
creation and having the highest rating from either Standard & Poor’s Ratings
Group or Moody’s Investors Service, Inc., (c) certificates of deposit maturing
no more than one (1) year after issue provided that the account in which any
such certificate of deposit is maintained is subject to a Control Agreement in
favor of Collateral Agent and (d) money market funds at least 95% of which
constitute Cash Equivalents of the kinds described in clauses (a) through (c) of
this definition.

“Code” is the Uniform Commercial Code, as the same may, from time to time, be
enacted and in effect in the State of New York; provided, that, to the extent
that the Code is used to define any term herein or in any Loan Document and such
term is defined differently in different Articles or Divisions of the Code, the
definition of such term contained in Article or Division 9 shall govern;
provided further, that in the event that, by reason of mandatory provisions of
law, any or all of the attachment, perfection, or priority of, or remedies with
respect to, Collateral Agent’s Lien on any Collateral is governed by the Uniform
Commercial Code in effect in a jurisdiction other than the State of New York,
the term “Code” shall mean the Uniform Commercial Code as enacted and in effect
in such other jurisdiction solely for purposes of the provisions thereof
relating to such attachment, perfection, priority, or remedies and for purposes
of definitions relating to such provisions.

“Collateral” is any and all properties, rights and assets of Borrower described
on Exhibit A.

“Collateral Account” is any Deposit Account, Securities Account, or Commodity
Account, or any other bank account maintained by Borrower or any Subsidiary at
any time.

“Commitment Percentage” is set forth in Schedule 1.1, as amended from time to
time.

“Commodity Account” is any “commodity account” as defined in the Code with such
additions to such term as may hereafter be made under the Code.

“Compliance Certificate” is that certain certificate in substantially the form
attached hereto as Exhibit C.

“Contingent Obligation” is, for any Person, any direct or indirect liability,
contingent or not, of that Person for (a) any indebtedness, lease, dividend,
letter of credit or other obligation of another Person such as an obligation
directly or indirectly guaranteed, endorsed, co-made, discounted or sold with
recourse by that Person, or for which that Person is directly or indirectly
liable; (b) any obligations for undrawn letters of credit for the account of
that Person; and (c) all obligations from any interest rate, currency or
commodity swap agreement, interest rate cap or collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; but “Contingent
Obligation” does not include endorsements in the ordinary course of business.
The amount of a Contingent Obligation is the stated or determined amount of the
primary obligation for which the Contingent Obligation is made or, if not
determinable, the maximum reasonably anticipated liability for it determined by
the Person in good faith; but the amount may not exceed the maximum of the
obligations under any guarantee or other support arrangement.

“Control Agreement” is any control agreement or similar agreement entered into
among the depository institution at which Borrower or any Guarantor maintains a
Deposit Account or the securities intermediary or commodity intermediary at
which Borrower or any Guarantor maintains a Securities Account or a Commodity
Account, Borrower and such Guarantor, and Collateral Agent pursuant to which
Collateral Agent, for the benefit of the Lenders, obtains “control” (within the
meaning of the Code) over such Deposit Account, Securities Account, or Commodity
Account.

 

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“Copyrights” are any and all copyright rights, copyright applications, copyright
registrations and like protections in each work of authorship and derivative
work thereof, whether published or unpublished and whether or not the same also
constitutes a trade secret.

“Deposit Account” is any “deposit account” as defined in the Code with such
additions to such term as may hereafter be made.

“Disbursement Letter” is that certain form attached hereto as Exhibit B-2.

“DOJ” means the U.S. Department of Justice or any successor thereto or any other
comparable Governmental Authority.

“Dollars,” “dollars” and “$” each mean lawful money of the United States.

“Domestic Subsidiary” is any Subsidiary which is not a Foreign Subsidiary.

“Equipment” is all “equipment” as defined in the Code with such additions to
such term as may hereafter be made, and includes without limitation all
machinery, fixtures, goods, vehicles (including motor vehicles and trailers),
and any interest in any of the foregoing.

“ERISA” is the Employee Retirement Income Security Act of 1974, as amended, and
its regulations.

“Equity Cure” means Borrower’s receipt, within sixty (60) days of any failure to
achieve the Performance to Plan Milestone, of net proceeds from the sale and
issuance of Parent’s equity securities, to investors and on terms and conditions
reasonably acceptable to Collateral Agent and the Lenders, of at least Ten
Million Dollars ($10,000,000.00).

“Equity Event” is the receipt by Borrower on or after the Effective Date and on
or prior to the Funding Date of the Term B Loan of unrestricted net cash
proceeds of not less than Twenty Five Million Dollars ($25,000,000.00) from
(i) the issuance and sale by Borrower of its equity securities (including the
proceeds of the sale of Borrower’s Series A and Series B Warrants) and/or (ii)
“up front” payments in connection with a Transfer of, or joint venture,
collaboration, licensing, or other partnering transaction related to, the
Non-Material Intellectual Property, to the extent permitted under this
Agreement, the objective of which is to commercialize the Non-Material
Intellectual Property.

“Exigent Circumstance” means any event or circumstance that, in the reasonable
judgment of Collateral Agent, imminently threatens the ability of Collateral
Agent to realize upon all or any material portion of the Collateral, such as,
without limitation, fraudulent removal, concealment, or abscondment thereof,
destruction or material waste thereof, or failure of Borrower or any of its
Subsidiaries after reasonable demand to maintain or reinstate adequate casualty
insurance coverage, or which, in the judgment of Collateral Agent, could
reasonably be expected to result in a material diminution in value of the
Collateral.

“Existing Indebtedness” is the indebtedness of Borrower to Oxford Finance LLC
and Silicon Valley Bank (the “Existing Lenders”) in the aggregate principal
outstanding amount as of the Effective Date of approximately Eleven Million One
Hundred Eighteen Thousand Seven Hundred Seventy Four Dollars and 45/100
($11,118,774.45) pursuant to that certain Amended and Restated Loan and Security
Agreement, dated as of September 26, 2014, entered into by and between the
Existing Lenders and Borrower.

“EU/Vulcanos License Agreement” is that certain License Agreement, dated
September 18, 2015, between The European Union and TransEnterix Italia (f/k/a
Vulcanos s.r.L).

“Facility Fee” is a fee due on the Funding Date of the Term A Loan equal to one
percent (1.00%) of the total Term Loan Commitment, payable solely to Collateral
Agent.

 

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“FDA” means the U.S. Food and Drug Administration or any successor thereto or
any other comparable Governmental Authority.

“Final Fee” is a payment (in addition to and not a substitution for the regular
monthly payments of principal plus accrued interest or any other fee payable
hereunder) due on the earliest to occur of (a) the Maturity Date, or (b) the
acceleration of any Term Loan, or (c) the prepayment of a Term Loan pursuant to
Section 2.2(c) or (d), in each case equal to four percent (4.00%) multiplied by
the Term Loan Commitment, payable to Lenders in accordance with their respective
Pro Rata Shares; provided that, (i) with respect to the Final Fee due with
respect to the Term A Loan only, if at all, if after Senhance Clearance,
Borrower elects to refinance the Obligations hereunder, and Collateral Agent
(whether alone or with another lender) provides such refinancing, no Final Fee
shall be due with respect to the Term A Loan; and (ii) with respect to the Final
Fee due with respect to the Term B Loan, in the event Borrower elects to
refinance the Obligations hereunder prior to the funding of the Term B Loan, the
Final Fee otherwise due with respect to the Term B Loan shall be paid in full on
the date of such refinance.

“First-Tier Foreign Subsidiary” is a Subsidiary directly owned by Borrower or
Borrower’s Subsidiary which is itself is organized under the laws of the United
States.

“Foreign Currency” means lawful money of a country other than the United States.

“Foreign Subsidiary” is a Subsidiary that is not an entity organized under the
laws of the United States or any state thereof.

“Funding Date” is any date on which a Term Loan is made to or on account of
Borrower which shall be a Business Day.

“GAAP” is generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other Person as
may be approved by a significant segment of the accounting profession in the
United States, which are applicable to the circumstances as of the date of
determination.

“General Intangibles” are all “general intangibles” as defined in the Code in
effect on the date hereof with such additions to such term as may hereafter be
made, and includes without limitation, all copyright rights, copyright
applications, copyright registrations and like protections in each work of
authorship and derivative work, whether published or unpublished, any patents,
trademarks, service marks and, to the extent permitted under applicable law, any
applications therefor, whether registered or not, any trade secret rights,
including any rights to unpatented inventions, payment intangibles, royalties,
contract rights, goodwill, franchise agreements, purchase orders, customer
lists, route lists, telephone numbers, domain names, claims, income and other
tax refunds, security and other deposits, options to purchase or sell real or
personal property, rights in all litigation presently or hereafter pending
(whether in contract, tort or otherwise), insurance policies (including without
limitation key man, property damage, and business interruption insurance),
payments of insurance and rights to payment of any kind.

“Governmental Approval” is any consent, authorization, approval, order, license,
franchise, permit, certificate, accreditation, registration, filing or notice,
of, issued by, from, or other act by or in respect of, any Governmental
Authority.

“Governmental Authority” is any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body (including, without limitation, the FDA and any state board of
pharmacy or state pharmacy licensing authority), court, central bank or other
entity exercising executive, legislative, judicial, taxing, regulatory or
administrative functions of or pertaining to government, any securities exchange
and any self-regulatory organization.

“Guarantor” is any Person providing a Guaranty in favor of Collateral Agent for
the benefit of the Lenders, and includes each Material Foreign Subsidiary. As of
the Effective Date, the Guarantors include TransEnterix Europe S.ar.l
(Luxembourg) and TransEnterix Italia.

 

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“Guaranty” is any guarantee of all or any part of the Obligations, as the same
may from time to time be amended, restated, modified or otherwise supplemented.

“Guaranty Documents” is each Guaranty and each security agreement or similar
agreement or instrument executed and or delivered in connection therewith,
together with all other agreements required by Collateral Agent hereunder from
any Guarantor; all in form and substance acceptable to Collateral Agent.

“Indebtedness” is (a) indebtedness for borrowed money or the deferred price of
property or services, such as reimbursement and other obligations for surety
bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations, and
(d) Contingent Obligations in respect of any of the foregoing.

“Insolvency Proceeding” is any proceeding by or against any Person under the
United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions or proceedings
seeking reorganization, arrangement, or other relief.

“Insolvent” means not Solvent.

“Intellectual Property” means all of Borrower’s or any of its Subsidiaries’
right, title and interest in and to the following:

(a) its Copyrights, Trademarks and Patents;

(b) any and all trade secrets and trade secret rights, including, without
limitation, any rights to unpatented inventions, know how, operating manuals;

(c) any and all source code;

(d) any and all design rights which may be available to Borrower;

(e) any and all claims for damages by way of past, present and future
infringement of any of the foregoing, with the right, but not the obligation, to
sue for and collect such damages for said use or infringement of the
Intellectual Property rights identified above;

(f) all amendments, renewals and extensions of any of the Copyrights, Trademarks
or Patents; and

(g) all licenses, sublicenses or other contracts under which Borrower or any
Subsidiary is granted rights by third parties in any intellectual property asset
of such third parties.

“Interest-Only Milestones” means achievement of each of the following: (i) the
Performance to Plan Milestone; (ii) by May 31, 2018, the Qualifying Equity
Raise; and (iii) by May 30, 2018, Senhance Clearance; in each case, written
evidence of which is provided, and is in form and content reasonably acceptable,
to Collateral Agent and the Lenders. Notwithstanding the foregoing, Borrower’s
failure to achieve the Performance to Plan Milestone may be cured by the Equity
Cure.

“Inventory” is all “inventory” as defined in the Code in effect on the date
hereof with such additions to such term as may hereafter be made under the Code,
and includes without limitation all merchandise, raw materials, parts, supplies,
packing and shipping materials, work in process and finished products, including
without limitation such inventory as is temporarily out of any Person’s custody
or possession or in transit and including any returned goods and any documents
of title representing any of the above.

“Investment” is any beneficial ownership interest in any Person (including
stock, partnership interest or other securities), and any loan, advance or
capital contribution to any Person.

 

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“IP Security Agreement” is that certain Intellectual Property Security Agreement
executed and delivered by Borrower to Collateral Agent and dated as of the
Effective Date, as may be amended, restated, or otherwise modified or
supplemented from time to time.

“Key Person” is each of Borrower’s (i) President and Chief Executive Officer,
who is Todd M. Pope as of the Effective Date, (ii) EVP/Chief Financial Officer,
who is Joseph P. Slattery as of the Effective Date, (iii) Chief Technology
Officer, who is Anthony Fernando as of the Effective Date and (iv) General
Manager, Europe, who is Wouter Donders as of the Effective Date.

“Knowledge” means to the “best of” Borrower’s knowledge, or with a similar
qualification, knowledge or awareness means the actual knowledge, after
reasonable investigation, of the Responsible Officers.

“Lender” is any one of the Lenders.

“Lenders” are the Persons identified on Schedule 1.1 hereto and each assignee
that becomes a party to this Agreement pursuant to Section 12.1.

“Lenders’ Expenses” are all audit fees and expenses, costs, and expenses
(including reasonable attorneys’ fees and expenses, as well as appraisal fees,
fees incurred on account of lien searches, inspection fees, and filing fees) for
preparing, amending, negotiating, administering, defending and enforcing the
Loan Documents (including, without limitation, those incurred in connection with
appeals or Insolvency Proceedings) or otherwise incurred by Collateral Agent
and/or the Lenders in connection with the Loan Documents.

“Lien” is a mortgage, deed of trust, levy, charge, pledge, security interest, or
other encumbrance of any kind, whether voluntarily incurred or arising by
operation of law or otherwise against any property.

“Loan Documents” are, collectively, this Agreement, the IP Security Agreement,
the Guaranty Documents, each Secured Promissory Note, each Warrant, the
Perfection Certificate(s), each Control Agreement, each Compliance Certificate,
each Loan Payment Request Form, each Disbursement Letter, any subordination
agreements, any note, or notes or guaranties executed by Borrower or any other
Person, and any other present or future agreement entered into by Borrower, any
Guarantor or any other Person for the benefit of the Lenders and Collateral
Agent in connection with this Agreement; all as amended, restated, or otherwise
modified or supplemented from time to time.

“Loan Payment Request Form” is that certain form attached hereto as Exhibit B-1.

“Material Adverse Change” is (a) a material adverse change in the business,
operations or condition (financial or otherwise) of Parent, or Parent and each
Subsidiary, taken as a whole; (b) a material impairment of the prospect of
repayment of any portion of the Obligations, or (c) a material adverse effect on
the Collateral.

“Material Agreement” is any license, agreement or other similar contractual
arrangement with a Person or Governmental Authority whereby Borrower or any of
its Subsidiaries is reasonably likely to be required to transfer, either in-kind
or in cash, prior to the Maturity Date, assets or property valued (book or
market) at more than Two Hundred Fifty Thousand Dollars ($250,000.00) in the
aggregate or any license, agreement or other similar contractual arrangement
conveying rights in or to any Material Intellectual Property.

“Material Foreign Subsidiary” is any Foreign Subsidiary with assets or revenue
in excess of five percent (5.00%) of the aggregate amount of the assets or
revenue of Parent and its Subsidiaries on a consolidated basis.

“Material Intellectual Property” is the Intellectual Property arising out of,
related to, or in any way connected with Senhance.

“Maturity Date” is the earlier of (i) four (4) years from the Funding Date of
the Term A Loan and (ii) twenty-four (24) months following the Early
Amortization Date, if triggered.

 

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“Non-Material Intellectual Property” is any Intellectual Property which is not
Material Intellectual Property.

“Obligations” are all of Borrower’s obligations to pay when due any debts,
principal, interest, Lenders’ Expenses, the Prepayment Fee, the Final Fee, and
other amounts Borrower owes the Lenders now or later, in connection with,
related to, following, or arising from, out of or under, this Agreement or, the
other Loan Documents (other than the Warrant), or otherwise, and including
interest accruing after Insolvency Proceedings begin (whether or not allowed)
and debts, liabilities, or obligations of Borrower assigned to the Lenders
and/or Collateral Agent, and the performance of Borrower’s duties under the Loan
Documents (other than the Warrant).

“OFAC” is the U.S. Department of Treasury Office of Foreign Assets Control.

“OFAC Lists” are, collectively, the Specially Designated Nationals and Blocked
Persons List maintained by OFAC pursuant to Executive Order No. 13224, 66 Fed.
Reg. 49079 (Sept. 25, 2001) and/or any other list of terrorists or other
restricted Persons maintained pursuant to any of the rules and regulations of
OFAC or pursuant to any other applicable Executive Orders.

“Operating Documents” are, for any Person, such Person’s formation documents, as
certified by the Secretary of State (or equivalent agency) of such Person’s
jurisdiction of organization on a date that is no earlier than thirty (30) days
prior to the Effective Date, and, (a) if such Person is a corporation, its
bylaws in current form, (b) if such Person is a limited liability company, its
limited liability company agreement (or similar agreement), and (c) if such
Person is a partnership, its partnership agreement (or similar agreement), each
of the foregoing with all current amendments or modifications thereto.

“Patents” means all patents, patent applications and like protections including
without limitation improvements, divisions, continuations, renewals, reissues,
re-examination certificates, utility models, extensions and
continuations-in-part of the same.

“Payment Date” is the first (1st) calendar day of each calendar month,
commencing on June 1, 2017.

“Performance to Plan Milestone” means actual minimum trailing twelve (12) month
revenue, measured at the end of each calendar quarter commencing with the
quarter ending March 31, 2018, greater than eighty percent (80.00%) of projected
revenue for the twelve (12) month period then ending (such projections attached
hereto as Annex X (the “Management Plan”)); written evidence of which is
provided, and is in form and content reasonably acceptable, to Collateral Agent
and the Lenders; provided that Borrower shall have thirty (30) calendar days
from the last day of the applicable quarter to present unaudited financial
statements to Collateral Agent and the Lenders for review, to determine
compliance with the Performance to Plan Milestone.

“Permitted Indebtedness” is:

(a) Borrower’s Indebtedness to the Lenders and Collateral Agent under this
Agreement and the other Loan Documents;

(b) Indebtedness existing on the Effective Date and disclosed on the Perfection
Certificate(s);

(c) [reserved];

(d) unsecured Indebtedness to trade creditors and Indebtedness in connection
with credit cards incurred in the ordinary course of business;

(e) Indebtedness consisting of capitalized lease obligations and purchase money
Indebtedness, in each case incurred by Borrower or any of its Subsidiaries to
finance the acquisition, repair, improvement or construction of fixed or capital
assets of such Person, provided that (i) the aggregate outstanding principal
amount of all such Indebtedness does not exceed Two Hundred Fifty Thousand
Dollars ($250,000.00) at any time and (ii) the principal amount of such
Indebtedness does not exceed the lower of the cost or fair market value of the
property so acquired or built or of such repairs or improvements financed with
such Indebtedness (each measured at the time of such acquisition, repair,
improvement or construction is made);

 

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(f) Indebtedness on account of Bank Services in an aggregate amount not to
exceed One Million Four Hundred Thousand Dollars ($1,400,000) at any one time
outstanding;

(g) Indebtedness incurred as a result of endorsing negotiable instruments
received in the ordinary course of Borrower’s or any Subsidiary’s business;

(h) extensions, refinancings, modifications, amendments and restatements of any
items of Permitted Indebtedness (a) through (f) above, provided that the
principal amount thereof is not increased or the terms thereof are not modified
to impose materially more burdensome terms upon Borrower, or its Subsidiary, as
the case may be;

(i) Indebtedness that constitutes Permitted Investments;

(j) Indebtedness under the SOFAR/Vulcanos Unit Purchase Agreement; and

(k) unsecured Guarantees of the foregoing.

“Permitted Investments” are:

(a) Investments disclosed on the Perfection Certificate(s) and existing on the
Effective Date;

(b) Investments consisting of cash and Cash Equivalents, and (ii) any
Investments permitted by Borrower’s investment policy, as amended from time to
time, provided that such investment policy (and any such amendment thereto) has
been approved in writing by Collateral Agent;

(c) Investments consisting of the endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of Borrower
or any Subsidiary;

(d) Investments consisting of Collateral Accounts, including those Collateral
Accounts in which, if required by Section 6.6(a), Collateral Agent has a
perfected security interest;

(e) Investments in connection with Transfers permitted by Section 7.1;

(f) Investments consisting of (i) travel advances and employee relocation loans
and other employee loans and advances in the ordinary course of business, and
(ii) loans to employees, officers or directors relating to the purchase of
equity securities of Borrower or its Subsidiaries pursuant to employee stock
purchase plans or agreements approved by Borrower’s board of directors, not to
exceed Fifty Thousand Dollars ($50,000.00) in the aggregate outstanding at any
time for (i) and (ii) in any fiscal year;

(g) Investments (including debt obligations) received in connection with the
bankruptcy or reorganization of customers or suppliers and in settlement of
delinquent obligations of, and other disputes with, customers or suppliers
arising in the ordinary course of business;

(h) Investments consisting of notes receivable of, or prepaid royalties and
other credit extensions, to customers and suppliers who are not Affiliates, in
the ordinary course of business; provided that this paragraph (h) shall not
apply to Investments of Borrower in any Subsidiary;

(i) Investments by (i) a Borrower or a Guarantor in a Borrower or a Guarantor,
(ii) a Borrower or a Guarantor in non-Guarantor Foreign Subsidiaries, in an
aggregate amount not to exceed Two Hundred Thousand Dollars ($200,000.00) per
fiscal year per such non-Guarantor Foreign Subsidiary, provided, that for
purposes of such limitation such Investments shall be determined net of cash
payments of principal, dividends or redemptions to the extent received by a
Borrower or a Guarantor and (iii) a non-Guarantor Subsidiary in a Borrower or
Guarantor;

 

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(j) non-cash Investments in joint ventures or strategic alliances in the
ordinary course of Borrower’s business consisting of the nonexclusive licensing
of technology, the development of technology or the providing of technical
support.

“Permitted Licenses” are (A) licenses of over-the-counter software that is
commercially available to the public, (B) non-exclusive and exclusive licenses
for the use of the Material Intellectual Property of Borrower or any of its
Subsidiaries entered into in the ordinary course of business, provided, that,
with respect to each such license described in clause (B), (i) no Event of
Default has occurred or is continuing at the time of such license; (ii) the
license constitutes an arms-length transaction, the terms of which, on their
face, do not provide for a sale or assignment of any Material Intellectual
Property and do not restrict the ability of Borrower or any of its Subsidiaries,
as applicable, to pledge, grant a security interest in or lien on, or assign or
otherwise Transfer any Material Intellectual Property; (iii) in the case of any
exclusive license, (x) Borrower delivers ten (10) days’ prior written notice and
a brief summary of the terms of the proposed license to Collateral Agent and the
Lenders and delivers to Collateral Agent and the Lenders copies of the final
executed licensing documents in connection with the exclusive license promptly
upon consummation thereof, and (y) any such license could not result in a legal
transfer of title of the licensed property but may be exclusive in respects
other than territory and may be exclusive as to territory only as to discrete
geographical areas outside of the United States; and (iv) all upfront payments,
royalties, milestone payments or other proceeds arising from the licensing
agreement that are payable to Borrower or any of its Subsidiaries are paid to a
Deposit Account that is governed by a Control Agreement and (C) non-exclusive or
exclusive licenses for the use of the Non-Material Intellectual Property of
Borrower or any of its Subsidiaries; provided, that, with respect to each such
license described in clause (C), (i) no Event of Default has occurred or is
continuing at the time of such license and (ii) all upfront payments, royalties,
milestone payments or other proceeds arising from the licensing agreement that
are payable to Borrower or any of its Subsidiaries are paid to a Deposit Account
that is governed by a Control Agreement.

“Permitted Liens” are:

(a) Liens existing on the Effective Date and disclosed on the Perfection
Certificates or arising under this Agreement and the other Loan Documents;

(b) Liens for taxes, fees, assessments or other government charges or levies,
either (i) not due and payable or (ii) being contested in good faith and for
which Borrower maintains adequate reserves on its Books, provided that no notice
of any such Lien has been filed or recorded under the Internal Revenue Code of
1986, as amended, and the Treasury Regulations adopted thereunder;

(c) liens securing Indebtedness permitted under clause (e) of the definition of
“Permitted Indebtedness,” provided that (i) such liens exist prior to the
acquisition of, or attach substantially simultaneous with, or within twenty
(20) days after the, acquisition, lease, repair, improvement or construction of,
such property financed or leased by such Indebtedness and (ii) such liens do not
extend to any property of Borrower other than the property (and proceeds
thereof) acquired, leased or built, or the improvements or repairs, financed by
such Indebtedness;

(d) Liens of carriers, warehousemen, suppliers, or other Persons that are
possessory in nature arising in the ordinary course of business, securing
liabilities in the aggregate amount not to exceed at any one time outstanding
Two Hundred Fifty Thousand Dollars ($250,000.00), and which are not delinquent
or remain payable without penalty or which are being contested in good faith and
by appropriate proceedings which proceedings have the effect of preventing the
forfeiture or sale of the property subject thereto;

(e) Liens to secure payment of workers’ compensation, employment insurance, old
age pensions, social security and other like obligations incurred in the
ordinary course of business (other than Liens imposed by ERISA);

 

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(f) Liens incurred in the extension, renewal or refinancing of the Indebtedness
described in clauses (a) through (f) of the definition of “Permitted
Indebtedness,” but any extension, renewal or replacement Lien must be limited to
the property encumbered by the existing Lien and the principal amount of the
Indebtedness may not increase;

(g) leases or subleases of real property granted in the ordinary course of
Borrower’s business (or, if referring to another Person, in the ordinary course
of such Person’s business), and leases, subleases, nonexclusive licenses or
sublicenses of personal property (other than Intellectual Property) granted in
the ordinary course of Borrower’s business (or, if referring to another Person,
in the ordinary course of such Person’s business), if the leases, subleases,
licenses and sublicenses do not prohibit granting Collateral Agent or any Lender
a security interest therein;

(h) banker’s liens, rights of setoff and Liens in favor of financial
institutions incurred in the ordinary course of business arising in connection
with Borrower’s deposit accounts or securities accounts held at such
institutions solely to secure payment of fees and similar costs and expenses and
provided such accounts are maintained in compliance with Section 6.6 hereof;

(i) Liens arising from judgments, decrees or attachments in circumstances not
constituting an Event of Default under Section 8.4 or 8.7;

(j) Permitted Licenses;

(k) Liens in favor of customs and revenue authorities arising as a matter of law
to secure payment of customer duties in connection with the importation of goods
and which are not delinquent or remain payable without penalty or which are
being contested in good faith and by appropriate proceedings which proceedings
have the effect of preventing the forfeiture or sale of the property subject
thereto;

(l) Liens on cash and Cash Equivalents held in Deposit Accounts securing
Indebtedness on account of Bank Services permitted under clause (f) of the
definition of “Permitted Indebtedness” in an amount not to exceed Seven Hundred
Thousand Dollars ($700,000.00) at any one time;

(m) the SOFAR Lien, until September 18, 2017; and

(n) Good faith pledges or deposits made in the ordinary course of business to
secure bids, tenders, utilities, contracts (other than for the repayment of
borrowed money) or leases, not in excess of the aggregate amount due thereunder
or to secure statutory obligations, or surety, appeal, indemnity, performance or
other similar bonds required in the ordinary course of business; and

(o) the license assignment limitations set forth in the EU/Vulcanos License
Agreement.

“Person” is any individual, sole proprietorship, partnership, limited liability
company, joint venture, company, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or government agency.

“PIK Option Period” means the period from the Funding Date until the earlier of
(i) May     , 2018 and (ii) the Early Amortization Date.

“Prepayment Fee” is, with respect to the Term Loan subject to prepayment prior
to the Maturity Date, whether by mandatory or voluntary prepayment, acceleration
or otherwise (but not as a result of the scheduled amortization payments made
after the Amortization Date), an additional fee payable to the Lenders in amount
equal to:

(i) for a prepayment made on or after the Effective Date through and including
the first anniversary of the Effective Date, three percent (3.00%) of the
principal amount of the Term Loan prepaid;

 

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(ii) for a prepayment made after the date which is the first anniversary of the
Effective Date through and including the date which is the second anniversary of
the Effective Date, two percent (2.00%) of the principal amount of the Term Loan
prepaid;

(iii) for a prepayment made after the date which is the second anniversary of
the Effective Date through and including the date which is the third anniversary
of the Effective Date, one percent (1.00%) of the principal amount of the Term
Loan prepaid; and

(iv) for a prepayment made after the date which is the third anniversary of the
Effective Date and prior to the Maturity Date, zero percent (0.00%) of the
principal amount of the Term Loan prepaid;

provided that, if after Senhance Clearance, Borrower elects to refinance the
Obligations hereunder, and Collateral Agent (whether alone or with another
lender) provides such refinancing, no Prepayment Fee shall be due hereunder.

“Property” means any interest in any kind of property or asset, whether real,
personal or mixed, and whether tangible or intangible.

“Pro Rata Share” is, as of any date of determination, with respect to each
Lender, a percentage (expressed as a decimal, rounded to the ninth decimal
place) determined by dividing the outstanding principal amount of the Term Loan
held by such Lender by the aggregate outstanding principal amount of the Term
Loan.

“Qualifying Equity Raise” means Parent’s receipt of net proceeds from the sale
and issuance of Borrower’s equity securities, after April 10, 2017, of at least
Fifty Million Dollars ($50,000,000.00).

“Registered Organization” is any “registered organization” as defined in the
Code with such additions to such term as may hereafter be made under the Code.

“Registration” means any registration, authorization, approval, license, permit,
clearance, certificate, and exemption issued or allowed by the FDA or state
pharmacy licensing authorities (including, without limitation, new drug
applications, abbreviated new drug applications, biologics license applications,
investigational new drug applications, over-the-counter drug monograph, device
pre-market approval applications, device pre-market notifications,
investigational device exemptions, product recertifications, manufacturing
approvals, registrations and authorizations, CE Marks, pricing and reimbursement
approvals, labeling approvals or their foreign equivalent, controlled substance
registrations, and wholesale distributor permits).

“Regulatory Action” means an administrative, regulatory, or judicial enforcement
action, proceeding, investigation or inspection, FDA Form 483 notice of
inspectional observation, warning letter, untitled letter, other notice of
violation letter, recall, seizure, Section 305 notice or other similar written
communication, injunction or consent decree, issued by the FDA or a federal or
state court.

“Related Persons” means, with respect to any Person, each Affiliate of such
Person and each director, officer, employee, agent, trustee, representative,
attorney, accountant and each insurance, environmental, legal, financial and
other advisor and other consultants and agents of or to such Person or any of
its Affiliates.

“Required Lenders” means (i) for so long as all of the Persons that are Lenders
on the Effective Date (each an “Original Lender”) have not assigned or
transferred any of their interests in the Term Loan, Lenders holding one hundred
percent (100%) of the aggregate outstanding principal balance of the Term Loan,
or (ii) at any time from and after any Original Lender has assigned or
transferred any interest in its Term Loan, Lenders holding at least fifty one
percent (51%) of the aggregate outstanding principal balance of the Term Loan.

“Requirement of Law” is as to any Person, the organizational or governing
documents of such Person, and any law (statutory or common), treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.

 

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“Responsible Officer” is any of the President, Chief Executive Officer, or Chief
Financial Officer of Borrower acting alone.

“Second Draw Period” is the period commencing on the date of the occurrence of
the Term B Funding Milestones and ending on the earlier of (i) May 31, 2018 and
(ii) the occurrence and continuation of an Event of Default; provided, however,
that the Second Draw Period shall not commence if on the date of the occurrence
of the Term B Funding Milestones an Event of Default has occurred and is
continuing

“Secured Promissory Note” is defined in Section 2.6.

“Secured Promissory Note Record” is a record maintained by each Lender with
respect to the outstanding Obligations owed by Borrower to Lender and credits
made thereto.

“Securities Account” is any “securities account” as defined in the Code with
such additions to such term as may hereafter be made under the Code.

“Senhance” is Parent’s Senhance Surgical Robotic System.

“Senhance Clearance” is clearance for commercialization within the United States
by the FDA of Senhance.

“Shares” is (x) one hundred percent (100.00%) of the stock, units or other
evidence of equity ownership held by Borrower or its Subsidiaries of any
Subsidiary which is organized under the laws of the United States, and
(y) except as otherwise determined by Collateral Agent in its sole discretion,
including with respect to any Foreign Subsidiary which is a Guarantor,
sixty-five percent (65.00%) of the stock, units or other evidence of equity
ownership held by Borrower or its Subsidiaries in any Foreign Subsidiary.

“SOFAR Lien” means that certain twenty-four (24) month Lien (expiring
September 18, 2017) on ten percent (10%) of the ownership interest of
TransEnterix Italia S.R.L. (“TransEnterix Italia”) originally granted by
TransEnterix International, as the direct parent of TransEnterix Italia at such
time, to SOFAR, S.p.A. (“SOFAR”) in accordance with the terms of that certain
Quota Pledge Agreement, dated September 21, 2015 (“Quota Pledge Agreement”), by
and between TransEnterix International and SOFAR in order to secure
Parent’s/TransEnterix International’s obligations under the SOFAR/Vulcanos Unit
Purchase Agreement and Parent’s obligations to register in the name of, and
deliver to, SOFAR 1,554,341 shares of Parent’s stock by the end of the Escrow
Period (as defined in the SOFAR/Vulcanos Unit Purchase Agreement. The Quota
Pledge Agreement was modified pursuant to a Letter Agreement, dated July 22,
2016, among Parent, TransEnterix International, TransEnterix Europe S.A.R.L.
(“TransEnertix Europe”) and SOFAR to reflect that TransEnterix Europe, as the
direct of owner of TransEnterix Italia following the reorganization resulting in
TransEnterix Italia becoming a direct subsidiary of TransEnterix Europe, was the
new pledger of the Lien of the ten percent (10%) ownership interests in
TransEnterix Italia to SOFAR under the terms of such Quota Pledge Agreement.

“SOFAR/Vulcanos Unit Purchase Agreement” means that certain Membership Interest
Purchase Agreement, dated September 18, 2015, among Parent, TransEnterix
International, SOFAR and Vulcanos, S.R.L. pursuant to which TransEnterix
International purchased all of the outstanding equity units of Vulcanos S.R.L.

“Solvent” is, with respect to any Person: the fair salable value of such
Person’s consolidated assets (including goodwill minus disposition costs)
exceeds the fair value of such Person’s liabilities; such Person is not left
with unreasonably small capital after the transactions in this Agreement; and
such Person is able to pay its debts (including trade debts) as they mature in
the ordinary course (without taking into account any forbearance and extensions
related thereto).

 

37

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“Subordinated Debt” is indebtedness incurred by Borrower or any of its
Subsidiaries subordinated to all Indebtedness of Borrower and/or its
Subsidiaries to the Lenders (pursuant to a subordination, intercreditor, or
other similar agreement in form and substance satisfactory to Collateral Agent
and the Lenders entered into between Collateral Agent, Borrower, and/or any of
its Subsidiaries, and the other creditor), on terms acceptable to Collateral
Agent and the Lenders.

“Subsidiary” is, with respect to any Person, any Person of which more than fifty
percent (50%) of the voting stock or other equity interests (in the case of
Persons other than corporations) is owned or controlled, directly or indirectly,
by such Person or through one or more intermediaries. Unless otherwise
specified, references herein to a Subsidiary means a Subsidiary of Borrower.

“Term Loan” is defined in Section 2.2(a)(ii) hereof.

“Term A Loan” is defined in Section 2.2(a)(i) hereof.

“Term B Loan” is defined in Section 2.2(a)(ii) hereof.

“Term B Funding Milestones” means the last date upon which each of the following
has occurred: (i) Senhance Clearance; (ii) the Term B Revenue Milestone; and
(iii) the Equity Event.

“Term B Revenue Milestone” means actual minimum trailing twelve (12) month
revenue, measured as of the last day of the month ending immediately prior to
the Funding Date of the Term B Loan, greater than eighty percent (80.00%) of
projected revenue for the trailing twelve (12) month period ending on such date,
determined in accordance with the Management Plan (attached hereto as Annex X);
written evidence of which (including Borrower’s unaudited financial statements)
is provided, and is in form and content reasonably acceptable, to Collateral
Agent and the Lenders prior to the Fund Date of the Term B Loan.

“Term Loan Commitment” is, for any Lender, the obligation of such Lender to make
the Term Loan, up to the principal amount shown on Schedule 1.1. “Term Loan
Commitments” means the aggregate amount of such commitments of all Lenders.

“Trademarks” means any trademark and servicemark rights, whether registered or
not, applications to register and registrations of the same and like
protections, and the entire goodwill of the business of Borrower and each of its
Subsidiaries connected with and symbolized by such trademarks.

“Warrant” means any of that certain Warrant to Purchase Stock dated the Funding
Date issued by Borrower in favor of each Lender or such Lender’s Affiliates or
any other warrant entered into in connection with the Term Loan, all as may be
amended, restated, or otherwise modified or supplemented from time to time.

[Balance of Page Intentionally Left Blank]

 

38

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the Effective Date.

BORROWER:

 

TRANSENTERIX, INC. By  

/s/ Todd M. Pope

Name:  

Todd M. Pope

Title:  

President and Chief Executive Officer

 

TRANSENTERIX SURGICAL, INC. By  

/s/ Todd M. Pope

Name:  

Todd M. Pope

Title:  

President and Chief Executive Officer

 

SAFESTITCH LLC By:  

TRANSENTERIX, INC.

Its:  

sole member

 

  By  

/s/ Todd M. Pope

  Name:  

Todd M. Pope

  Title:  

President and Chief Executive Officer

 

TRANSENTERIX INTERNATIONAL, INC. By  

/s/ Todd M. Pope

Name:  

Todd M. Pope

Title:  

President and Chief Executive Officer

 

COLLATERAL AGENT AND LENDER:

INNOVATUS LIFE SCIENCES LENDING FUND I, LP

By:

 

Innovatus Life Sciences GP, LP

Its:

 

General Partner

 

  By  

/s/ Andrew Hobson

  Name:  

Andrew Hobson

  Title:  

Authorized Signatory

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SCHEDULE 1.1

Lenders and Commitments

 

     Term A Loan       

Lender

   Term Loan Commitment      Commitment Percentage

INNOVATUS LIFE SCIENCES LENDING FUND I, LP

   $ 14,000,000.00      100.00%

TOTAL

   $ 14,000,000.00      100.00%

 

     Term B Loan       

Lender

   Term Loan Commitment      Commitment Percentage

INNOVATUS LIFE SCIENCES LENDING FUND I, LP

   $ 3,000,000.00      100.00%

TOTAL

   $ 3,000,000.00      100.00%

 

     All Term Loans       

Lender

   Term Loan Commitment      Commitment Percentage

INNOVATUS LIFE SCIENCES LENDING FUND I, LP

   $ 17,000,000.00      100.00%

TOTAL

   $ 17,000,000.00      100.00%

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EXHIBIT A

Description of Collateral

The Collateral consists of all of Borrower’s right, title and interest in and to
the following property:

All goods, Accounts (including health-care receivables), Equipment, Inventory,
contract rights or rights to payment of money, leases, license agreements,
franchise agreements, General Intangibles (including Intellectual Property),
commercial tort claims, documents, instruments (including any promissory notes),
chattel paper (whether tangible or electronic), cash, deposit accounts and other
Collateral Accounts, all certificates of deposit, fixtures, letters of credit
rights (whether or not the letter of credit is evidenced by a writing),
securities, and all other investment property, supporting obligations, and
financial assets, whether now owned or hereafter acquired, wherever located; and

All Borrower’s Books relating to the foregoing, and any and all claims, rights
and interests in any of the above and all substitutions for, additions,
attachments, accessories, accessions and improvements to and replacements,
products, proceeds and insurance proceeds of any or all of the foregoing.

Notwithstanding the foregoing, the Collateral does not include (i) more than
sixty five percent (65%) of the total combined voting power of all classes of
stock entitled to vote the shares of capital stock (the “Shares”) of any Foreign
Subsidiary, other than any Material Foreign Subsidiary, if Borrower demonstrates
to Collateral Agent’s reasonable satisfaction that a pledge of more than sixty
five percent (65%) of the Shares of such Foreign Subsidiary creates a present
and existing adverse tax consequence to Borrower under the U.S. Internal Revenue
Code; (ii) any United States intent-to-use trademark or service mark application
to the extent that, and solely during the period in which, the grant of a
security interest therein would impair the validity or enforceability of such
intent-to-use trademark or service mark application under applicable law; and
(iii) any license or contract, in each case if the granting of a Lien in such
license or contract is prohibited by or would constitute a default under the
agreement governing such license or contract (but (A) only to the extent such
prohibition is enforceable under applicable law and (B) other than to the extent
that any such term would be rendered ineffective pursuant to Sections 9-406,
9-408 or 9-409 (or any other Section) of Division 9 of the Code); provided that
upon the termination, lapsing or expiration of any such prohibition, such
license or contract, as applicable, shall automatically be subject to the
security interest granted in favor of Collateral Agent hereunder and become part
of the “Collateral.”

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EXHIBIT B-1

Loan Payment Request Form

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EXHIBIT B-2

Form of Disbursement Letter

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AMORTIZATION TABLE

(Term Loan)

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EXHIBIT C

Compliance Certificate

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EXHIBIT D

Form of Secured Promissory Note

[see attached]

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SECURED PROMISSORY NOTE

(Term A Loan)

 

$14,000,000.00

Dated: May     , 2017

FOR VALUE RECEIVED, the undersigned, TRANSENTERIX, INC., a Delaware corporation
(“Parent”), TRANSENTERIX SURGICAL, INC., a Delaware corporation (“TransEnterix
Surgical”), SAFESTITCH LLC, a Virginia limited liability company (“SafeStitch”),
and TRANSENTERIX INTERNATIONAL, INC., a Delaware corporation (“TransEnterix
International”, and together with Parent, TransEnterix Surgical, and SafeStitch,
individually and collectively, jointly and severally, “Borrower”) HEREBY
PROMISES TO PAY to the order of INNOVATUS LIFE SCIENCES LENDING FUND I, LP
(“Lender”) the principal amount of FOURTEEN MILLION DOLLARS ($14,000,000.00) or
such lesser amount as shall equal the outstanding principal balance of the Term
A Loan made to Borrower by Lender, plus interest on the aggregate unpaid
principal amount of such Term A Loan, at the rates and in accordance with the
terms of the Loan and Security Agreement dated May __, 2017 by and among
Borrower, Lender, INNOVATUS LIFE SCIENCES LENDING FUND I, LP, as Collateral
Agent, and the other Lenders from time to time party thereto (as amended,
restated, supplemented or otherwise modified from time to time, the “Loan
Agreement”). If not sooner paid, the entire principal amount and all accrued and
unpaid interest hereunder shall be due and payable on the Maturity Date as set
forth in the Loan Agreement. Any capitalized term not otherwise defined herein
shall have the meaning attributed to such term in the Loan Agreement.

Principal, interest and all other amounts due with respect to the Term A Loan,
are payable in lawful money of the United States of America to Lender as set
forth in the Loan Agreement and this Secured Promissory Note (this “Note”). The
principal amount of this Note and the interest rate applicable thereto, and all
payments made with respect thereto, shall be recorded by Lender and, prior to
any transfer hereof, endorsed on the grid attached hereto which is part of this
Note.

The Loan Agreement, among other things, (a) provides for the making of a secured
Term A Loan by Lender to Borrower, and (b) contains provisions for acceleration
of the maturity hereof upon the happening of certain stated events.

This Note may not be prepaid except as set forth in Section 2.2 (c) and
Section 2.2(d) of the Loan Agreement.

This Note and the obligation of Borrower to repay the unpaid principal amount of
the Term A Loan, interest on the Term A Loan and all other amounts due Lender
under the Loan Agreement is secured under the Loan Agreement.

Presentment for payment, demand, notice of protest and all other demands and
notices of any kind in connection with the execution, delivery, performance and
enforcement of this Note are hereby waived.

Borrower shall pay all reasonable fees and expenses, including, without
limitation, reasonable attorneys’ fees and costs, incurred by Lender in the
enforcement or attempt to enforce any of Borrower’s obligations hereunder not
performed when due.

This Note shall be governed by, and construed and interpreted in accordance
with, the internal laws of the State of New York.

The ownership of an interest in this Note shall be registered on a record of
ownership maintained by Lender or its agent. Notwithstanding anything else in
this Note to the contrary, the right to the principal of, and stated interest
on, this Note may be transferred only if the transfer is registered on such
record of ownership and the transferee is identified as the owner of an interest
in the obligation. Borrower shall be entitled to treat the registered holder of
this Note (as recorded on such record of ownership) as the owner in fact thereof
for all purposes and shall not be bound to recognize any equitable or other
claim to or interest in this Note on the part of any other person or entity.

[Balance of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed by one of
its officers thereunto duly authorized on the date hereof.

 

BORROWER: TRANSENTERIX, INC.

By  

 

Name:  

 

Title:  

 

TRANSENTERIX SURGICAL, INC.

By  

 

Name:  

 

Title:  

 

SAFESTITCH LLC

By:  

 

Its:  

 

 

        By  

 

        Name:  

 

        Title:  

 

TRANSENTERIX INTERNATIONAL, INC.

By  

 

Name:  

 

Title:  

 

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CORPORATE BORROWING CERTIFICATE

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ANNEX I

Collateral Agent and Lender Terms

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ANNEX X

(Management Plan)