Exhibit 10.5

DEVELOPMENT AND SUPPLY AGREEMENT

This Development and Supply Agreement (“Agreement”) is made as of this 4th day
of November, 2011 (“Effective Date”), by and between Microline Surgical, Inc. of
800 Cummings Center, Suite 166T, Beverly, MA 01915 (“Microline”) and
Transenterix, Inc. of 635 Davis Drive, Suite 300, Durham, North Carolina 27713
(“Transenterix”).

WHEREAS, Microline develops and sells flexible and rigid sealing instruments for
use in surgical procedures;

WHEREAS, Transenterix has developed and launched the Spider System (as defined
below), and wishes to engage Microline to develop the FVS Product (as defined
below) for exclusive use in the Field with the Spider System; and

WHEREAS, following the development of such FVS Product, Microline shall supply
such FVS Product, along with the UPS Product (as defined below), to Transenterix
on the terms and conditions set forth herein;

NOW THEREFORE in consideration of the foregoing premises and for good and
valuable consideration (the receipt and sufficiency of which is hereby
acknowledged by the parties), the parties hereby agree as follows:

1. DEFINITIONS

(a) “Affiliates” shall mean a person or entity that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is under
common control with, the person specified. For purposes of this definition, the
terms “control,” “controlled by” and “under common control with” shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such person and, in the case of an
entity, shall require (a) in the case of a corporate entity, direct or indirect
ownership of at least a majority of the stock or shares having the right to vote
for the election of directors, and (b) in the case of a non-corporate entity,
direct or indirect ownership of at least a majority of the equity interests with
the power to direct the management and policies of such non-corporate entity.

(b) “Control” shall mean with respect to any Technology or Intellectual Property
Right, the possession (whether by ownership or license, other than by a license
granted pursuant to this Agreement) by a party of the ability to grant to the
other party access, ownership, a license and/or a sublicense under such
Technology or Intellectual Property Right without violating the terms of any
agreement or other arrangement with any third party as of the time such party
would first be required hereunder to grant the other party such access,
ownership, license, or sublicense.

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(c) “Deliverable” shall mean any of the items to be delivered by Microline to
Transenterix pursuant to the Work Plan, including the prototypes, Pre-Production
Devices and Pilot Product Units.

(d) “FDA” shall mean the United States Food and Drug Administration and any
successor agency thereto, and its equivalent in countries other than the United
States.

(e) “Field” shall mean open, minimally invasive and laparoscopic surgery.

(f) “FVS Product” shall mean the fully disposable flexible vessel sealing
product that utilizes a (i) rotational nob, (ii) introducer section that is
rigid and (iii) flexible catheter based shaft with the working length and
specifications determined in accordance with the Marketing Requirements Document
(which for purposes of Section 8(a), shall include the agreed working length
plus or minus five (5) centimeters).

(g) “FVS Product Specifications” shall mean the requirements and specifications
for the FVS Product as agreed in writing by the Parties upon the completion of
the Project (but in any event prior to the manufacture and delivery of the Pilot
Product Units).

(h) “Good Manufacturing Practices” shall mean all rules and standards contained
in the then-current “Good Laboratory Practices,” and/or “Good Manufacturing
Practices,” as promulgated by the FDA or by any other Governmental Authority
having jurisdiction over the development, marketing or sale of any Supply
Product.

(i) “Governmental Authority” shall mean any nation, territory, or government (or
union thereof), foreign, domestic, or multinational, any state, local, or other
political subdivision thereof, and any bureau, court, tribunal, board,
commission, department, agency, or other entity exercising executive,
legislative, judicial, regulatory, or administrative functions of government,
including all taxing authorities and all European notified bodies, including
notified bodies within the sense of Article 16 of the European Union Medical
Device Directive 93/42/EEC, and all other entities exercising regulatory
authority over medical products or devices.

(j) “Intellectual Property Rights” shall mean all intellectual property rights
in any jurisdiction worldwide, including: (i) Patent Rights; (ii) rights
associated with Technology that are works of authorship including copyrights,
copyright applications, and copyright registrations; (iii) rights relating to
the protection of Technology as trade secrets, know-how or confidential
information; and (iv) rights in any trade names, trademarks, service marks,
domain names, logos, trade dress and brand features.

(k) “Marketing Requirements Document” shall mean the description of the
requirements for the development of the FVS Product, as initially set forth on
Exhibit A, and as reviewed and updated by the parties and/or the Project
Managers.

(l) “Patent Rights” shall mean all patents, patent applications and inventions
on which patent applications are filed and all patents issuing therefrom
worldwide, together with any extensions, registrations, confirmations, reissues,
continuations, divisionals, continuations, continuations-in-part, reexamination
certificates, substitutions or renewals, supplemental protection certificates,
term extensions (under applicable patent law or other law), provisional rights
and certificates of inventions.

 

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(m) “Pre-Production Devices” shall mean non-sterile, pre-production units of the
FVS Product that are not intended for human use and are to be delivered to
Transenterix pursuant to the Work Plan in order to provide proof of principle
examples of future sterile FVS Products.

(n) “Pilot Product Units” shall mean sterile units of the FVS Product for
initial clinical demand that are to be delivered to Transenterix pursuant to the
Work Plan.

(o) “Project” shall mean the development work to be performed by Microline
pursuant to this Agreement.

(p) “Project Technology” shall mean any Technology conceived, created, made or
reduced to practice during the Term solely or jointly by or on behalf of
Microline or Transenterix, in each case directly arising out of the performance
of this Agreement.

(q) “Regulatory Approval” shall mean the 510(k) clearance requirement of the FDA
for the FVS Products.

(r) “Spider System” shall mean Transenterix’s existing SPIDER® Surgical System,
with the length and other characteristics described on Exhibit B.

(s) “Supply Products” shall mean the FVS Products and the UPS Products.

(t) “Supply Product Specifications” shall mean the FVS Product Specifications
and the specifications for the UPS Product as set forth in the Marketing
Requirements Document.

(u) “Technology” shall mean any invention, conception, process, composition,
device, apparatus, discovery, improvement thereon or other technology, whether
or not patented or patentable or otherwise protectable by Intellectual Property
Rights.

(v) “UPS Product” shall mean the current Microline Universal Power Supply
product, with such changes to such product as described in the Marketing
Requirements Document.

(w) “Work Plan” shall mean the Work Plan, including the timeline and Work Plan
Budget, for development of the FVS Product as set forth on Exhibit C, as such
Exhibit may be updated and amended during the Term as provided in this
Agreement.

2. DEVELOPMENT PROJECT

(a) Agreement to Develop. Microline shall, in consideration of the payments to
be made by Transenterix pursuant to this Agreement, use commercially reasonable
efforts to (i) design and develop the FVS Product in accordance with the
Marketing Requirements Document, (ii) deliver the Deliverables as set forth in
the Work Plan, including the prototypes, Pre-Production Devices and Pilot
Product Units, and (iii) otherwise comply with its obligations in the Work Plan
and the Marketing Requirements Document.

 

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(b) Transenterix’s Obligations. Transenterix shall use its commercially
reasonable efforts to perform any responsibilities allocated to it in the Work
Plan.

(c) Program Directors. Microline and Transenterix shall each designate a primary
contact person (a “Program Director”), who shall be responsible for representing
the interests of the appointing party with respect to the management of the
Project. The initial Program Directors shall be named in the Work Plan. Either
party may change its Program Director upon written notice to the other party.
The parties acknowledge and agree that the Program Directors shall have the
authority to amend the Marketing Requirements Document and the Work Plan on
behalf of the parties upon mutual agreement.

(d) Design Meetings. The Program Directors shall meet periodically to discuss
the status of the Project at such times and in such locations or forms (e.g.,
telephone or video conference) as the parties shall agree. At such meetings, the
parties shall review the progress of the Project as against the Work Plan and
any potential technical difficulties or potential need to revise the Work Plan
or the Marketing Requirements Document. The Microline Program Director shall be
responsible for recording the minutes of each meeting. Such minutes shall be
circulated promptly following the meeting for review and comment. Such minutes
shall be deemed approved by both of the parties unless a party objects to the
accuracy of such minutes by providing written notice to the other party’s
Program Director within ten (10) days of receipt of such minutes.

(e) Kick-Off Meeting. The first meeting of the Program Directors (the “Kick-Off
Meeting”) may take place before or as soon as practicable following the
Effective Date; provided that the parties shall endeavor to hold such Kick-Off
Meeting within fifteen (15) days after the Effective Date or as mutually agreed
by the parties. During the Kick-Off Meeting, the parties shall review the
Marketing Requirements Document. Promptly after the Kick-Off Meeting, Microline
shall update the Marketing Requirements Document to reflect any changes agreed
to by the parties during the Kick-Off Meeting for approval by both Program
Directors.

(f) Changes to Marketing Requirements Document or Work Plan. Except as provided
herein, no changes to the Work Plan or Marketing Requirements Document shall be
permitted without the written consent of both parties. If either party wishes to
propose a change to the Work Plan or Marketing Requirements Document, it shall
submit a written request for such change, describing all anticipated changes in
fees, costs, feasibility or delivery schedule that will result from such change.
The parties shall then negotiate in good faith the requested change, but neither
party shall be under any obligation to agree to any change, and if the parties
fail to agree to a change the Project shall continue unamended.

(g) Development Costs. Microline shall use commercially reasonable efforts to
design and develop the FVS Product in accordance with the budget set forth in
the Work Plan (“Work Plan Budget”). To the extent that Microline shall incur any
capital costs or overruns not accounted for in the Work Plan Budget, such
expenses shall be the sole responsibility of Microline (and such overruns or
costs shall not relieve Microline of any of its obligations to Transenterix
hereunder).

 

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(h) Subcontracting. Either party may subcontract its obligations under the Work
Plan. Each party shall be responsible for any act or omission of any of its
subcontractors in connection with such subcontractor’s performance of such
party’s obligations under this Agreement. Such subcontractors shall be bound by
the confidentiality and intellectual property obligations of the parties set
forth in Section 14 of this Agreement.

3. DELIVERABLES AND TESTING; REGULATORY APPROVAL

(a) Deliverables. Microline shall use commercially reasonable efforts to deliver
Deliverables conforming to the Marketing Requirements Document to Transenterix
in accordance with the Work Plan (and the timeframes set forth therein). Upon
delivery of a Deliverable, Microline shall also deliver to Transenterix copies
of all associated design documentation, test data, reports, and any other
information that is reasonably required by Transenterix in order to understand
and review such Deliverable.

(b) Review of Deliverables. Upon delivery of any Deliverable to Transenterix,
Transenterix shall promptly, but within no more than fifteen (15) business days,
(i) inspect, review and test each Deliverable and (ii) accept or reject such
Deliverable by written notice to Microline. Transenterix shall accept all
Deliverables delivered in conformity with the Marketing Requirements Document,
but may reject any Deliverable that fails to conform with the Marketing
Requirements Document. In the event Transenterix rejects any Deliverable, it
shall provide the reasons for such rejection to Microline. Microline shall have
up to forty-five (45) days following such rejection to remedy any deficiencies
in such Deliverable and to re-deliver such Deliverable to Transenterix. The
parties shall repeat the procedures described in this Section 3(b) until the
Deliverable, based on the good faith determination of Transenterix, conforms to
the Marketing Requirements Document.

(c) Regulatory Approval. Microline shall apply for and use commercially
reasonable efforts to obtain at its expense (i) Regulatory Approval for the use
of the FVS Product in the United States and (ii) a 510(k) clearance for a FVS
Product with a 5 and/or 7 (as determined by Microline) millimeter vessel sealing
indication (the “5MM Clearance” and the “7MM Clearance”, respectively).
Microline shall keep Transenterix informed as to the status of its applications
for such Regulatory Approval, 5 MM Clearance and/or the 7MM Clearance (as
applicable)). Microline shall use commercially reasonably efforts to obtain
regulatory approvals for jurisdictions outside of the United States as
reasonably requested by Transenterix at Transenterix’s expense. Microline shall
provide all information related to the FVS Product reasonably requested by
Transenterix if Transenterix elects to pursue regulatory approvals in
jurisdictions outside of the United States, including, without limitation, the
technical file for CE/European approval. Transenterix shall cooperate with
Microline relating to all material issues, amendments, supplements, and other
matters respecting all regulatory approvals for the FVS Product described in
this Section 3(c).

4. SUPPLY RELATIONSHIP

(a) Purchase and Sale. During the period beginning on the date that Microline
delivers five hundred (500) Pilot Product Units to Transenterix in compliance
with the Warranties (“Pilot Product Delivery Date”) and ending on the third
(3rd) anniversary of the Pilot Product Delivery Date (such period, the “Supply
Period”), Microline agrees to manufacture and sell to Transenterix all of its
requirements, and Transenterix agrees to purchase, all of its requirements for
the Supply Products at the prices set forth on Exhibit D, in each case subject
to the other terms and conditions of this Agreement.

 

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(b) Forecasts. Subject to Section 4(c), each quarter, Transenterix will provide
Microline non-binding, rolling twelve (12) month forecasts for its requirements
for the Supply Products (which shall become binding if not amended by
Transenterix ninety (90) days prior to the commencement of the forecasted
period). Microline shall use commercially reasonable efforts to accommodate such
forecasts and provide the required Supply Products in accordance with the
forecasts provided by Transenterix (timeframe and volume), subject to a
reasonable maximum monthly order limit to be determined by the parties in good
faith. Notwithstanding the foregoing, (i) Microline shall meet Transenterix’s
volume requirements for the Supply Products in any given quarter provided that
the volume for such quarter is not in excess of twenty percent (20%) from the
previous quarter, and (ii) Microline shall provide the Supply Products to
Transenterix on the dates described in the binding forecasts. Microline
covenants and agrees with Transenterix to use its commercially reasonable
efforts to accommodate any change in the forecasts requested by Transenterix
(i.e., increases, decreases, timing of delivery, etc.).

(c) Product Minimums. Notwithstanding anything to the contrary contained in this
Agreement, during each of the first three (3) twelve (12) month periods
following the date that Microline receives the Regulatory Approval
(collectively, the “Minimum Period”), Transenterix shall purchase at least 75%
of the minimum number of Supply Products set forth on Exhibit E, which shall
become 100% of such minimum number upon the obtaining of 5MM Clearance or 7MM
Clearance, prorated for the 12 month period based on the month in which such
clearance was obtained (the “Minimum Products”). In the event that this
Agreement is terminated prior to the expiration of the Minimum Period other than
by Transenterix in accordance with Section 15(b) or 15(d)(ii), Transenterix
shall pay to Microline, for each Minimum Product not purchased by Transenterix
during the Minimum Period, an amount equal to (i) the then-current price of such
Minimum Product multiplied by (ii) the profit margin achieved by Microline with
respect to such Minimum Product as of the effective date of such termination, as
certified by Microline. During any Renewal Term (as such term is defined in
Section 15(a)), Transenterix shall purchase the cumulative minimum number of
Supply Products set forth on Exhibit E for such Renewal Term (the “Renewal
Minimum Products”). In the event that this Agreement is terminated prior to the
expiration of such Renewal Term other than by Transenterix in accordance with
Section 15(b), Transenterix shall pay to Microline, for each Renewal Minimum
Product not purchased by Transenterix during the Renewal Term, an amount equal
to (A) the then-current price of such Renewal Minimum Product multiplied by
(B) the profit margin achieved by Microline with respect to such Renewal Minimum
Product as of the effective date of such termination, as certified by Microline.

(d) Improvements to UPS Products. Microline may notify Transenterix in writing
of any improvement made by Microline to the UPS Products during the Term
(“Improvements Notice”), which Improvements Notice shall contain a reasonably
detailed description of such improvement. If Transenterix notifies Microline in
writing (“Election Notice”) within thirty (30) days after the receipt of such
Improvements Notice that Transenterix desires to incorporate such improvement
into the UPS Products being supplied to Transenterix hereunder, the parties
shall negotiate in good faith an adjustment to the price of such UPS Products to
reflect such improvement. To the extent that the parties cannot agree upon such
an adjustment within sixty (60) days following Microline’s receipt of the
Election Notice, such adjustment shall be determined in accordance with
Section 16(e).

 

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(e) Inventory Reports. Within fifteen (15) days following each quarter during
the Term, Transenterix shall provide Microline with an inventory report for such
quarter in such form as Microline may reasonably request, along with a short
summary of Transenterix’s marketing and sales plans for the Supply Products.

5. SHIPPING, RISK OF LOSS, ACCEPTANCE

(a) Shipment. Microline shall: (i) ship Supply Products in accordance with
Section 4(b) to Transenterix’s address as specified in Section 16(i);
(ii) enclose a packing memorandum with each shipment and, when more than one
(1) package is shipped, identify the package containing the memorandum;
(iii) forward bills of lading and shipping notices with invoices; and
(iv) invoice Transenterix by mailing or otherwise transmitting invoices, bills,
and notices to Transenterix’s address as specified in Section 16(i).

(b) Shipping Point, Risk of Loss. Microline shall pack the Supply Products in
accordance with good commercial practice to avoid damage in transit. Supply
Products ordered by Transenterix shall be shipped by Microline FOB Beverly,
Massachusetts, with the carrier and to Transenterix’s address as specified in
Section 16(i). The Supply Products shall be sent from Microline and received by
Transenterix sterile, finished, supply boxed and packaged with appropriate
Transenterix labeling (unless otherwise specified by Transenterix) so that
Transenterix can ship the Supply Products directly to its customers.

6. SUPPLY PRODUCT WARRANTIES

(a) Supply Product Warranty. Microline represents and warrants to Transenterix
that (i) all Supply Products (and the Pilot Product Units) will function with
other Supply Products (i.e., the FVS Product will function with the UPS Product,
and vice versa), conform in all material respects to the applicable Supply
Product Specifications, will conform with the applicable Regulatory Approval
(and after obtained by Microline, the 5MM Clearance and/or 7MM Clearance, as
applicable) and will be free from any material defects in materials and
workmanship for a period of twelve (12) months from delivery thereof (the “Shelf
Life”), (ii) Microline will transfer good title to the Supply Products to
Transenterix, and (iii) all documentation supplied with the Supply Products will
be accurate (the warranties contained in Section 6(a)(i), (ii) and
(iii) collectively, the “Warranties”). At the reasonable request and expense of
Transenterix, Microline shall use commercially reasonable efforts to extend the
Shelf Life for the Supply Products.

(b) Inspection and Acceptance. Within fifteen (15) days after delivery of a
shipment of Supply Products, Transenterix (or its end user customer) shall
conduct a visual inspection of the quantity and outside of the packaging of each
unit of sale received in such shipment and shall provide written notice to
Microline identifying any (a) Supply Product shortages or (b) Supply Products
that substantially fail to conform with the Warranties (each of (a) and (b), a
“Warranty Claim”). Except as otherwise set forth below, any Supply Product for
which a Warranty

 

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Claim has not been received by Microline within the fifteen (15) day period
shall be deemed to have been accepted by Transenterix. Transenterix’s acceptance
of such Supply Product shall be deemed to waive any claims other than claims
brought during the Shelf Life of such Supply Product arising solely out of such
Supply Product’s substantial failure to comply with any of the Warranties (and
not arising solely out of Transenterix’s or any end-user’s storage, handling,
modification, misuse, marketing, export, import, advertising, labeling,
distribution or sale of such Supply Product) (a “Specifications Claim”).

(c) End-User Procedures. Whenever Transenterix shall sell a Supply Product it
shall instruct the purchaser of such Supply Product to contact Transenterix
customer service for general support for such Supply Product. Transenterix shall
provide general support and maintenance for such Supply Product; provided that
if such Supply Product is returned to Transenterix due to a Warranty Claim or a
Specifications Claim, Transenterix shall provide such Supply Product(s) to
Microline within the time periods described in Section 6(b). Upon verification
of such claim in accordance with Section 7(e), Microline shall promptly repair
or replace such Supply Product, at Microline’s sole cost and expense.

7. QUALITY, AUDIT AND RECORDS

(a) Appointment of Quality Control Manager. Each party shall appoint a
responsible Quality Control Manager who shall be responsible for all
communications with respect to quality control with the other party, including
those relating to Supply Product qualification and inspection, testing and
quality control procedures.

(b) Quality Assurance Procedures. Microline shall adopt and maintain quality
assurance procedures to ensure that all Supply Products manufactured under this
Agreement conform to the applicable Supply Product Specifications (the “QA
Procedures”).

(c) Government Inspections. Microline agrees to provide access to its facilities
at any time to FDA representatives or representatives from any other
Governmental Authorities (including notified bodies) having appropriate
jurisdiction for inspection or other purposes, on any notice period required by
the FDA or any other Governmental Authority. In addition, if the facilities used
by Microline to manufacture the Supply Products are the subject of an audit or
inspection by the FDA or similar Governmental Authority, Microline shall notify
Transenterix and if possible under the circumstances, Transenterix shall have
the right to be present during such audit or inspection.

(d) Records. Microline shall keep complete, accurate and detailed original
records pertaining to the manufacture of the Supply Products hereunder. Records
shall be maintained for the longer of (i) any period required under applicable
law; and (ii) a period of two (2) years after expiration or termination of this
Agreement. Microline shall make available to Transenterix such records without
unreasonable delay to the extent reasonably requested and required by
Transenterix to comply with its regulatory and other legal and reasonable
business requirements.

 

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(e) Microline Personnel. During the Shelf Life of each Supply Product delivered
hereunder, Microline shall provide, at the request of Transenterix and at no
additional cost to Transenterix, technically competent personnel of Microline to
assist in the identification and resolution of any performance problems with the
Supply Products in accordance with Microline’s regulatory procedures.

8. EXCLUSIVITY.

(a) Microline Exclusivity; Changes to FVS Product. Microline agrees that it
shall develop the FVS Product exclusively for, and supply the FVS Product
exclusively to, Transenterix for use with the Spider System in the Field.
Transenterix acknowledges and agrees that nothing herein shall preclude
Microline from conducting any development efforts, or from using any Technology
or Intellectual Property Rights, in each case to research, develop or
commercialize products (other than the FVS Product to be used with the Spider
System) in the Field. Microline covenants and agrees that it shall promptly
refer all inquiries regarding the FVS Product for use with the Spider System in
the Field to Transenterix. Microline agrees that it will not supply the FVS
Product for use with the Spider System to any third party (other than
Transenterix), whether directly or indirectly, for use in the Field. Microline
acknowledges that any continuing and material breach of this Section 8(a) may
cause Transenterix irreparable harm for which damages may not be an adequate
remedy, and accordingly Microline hereby agrees that the issuance of an
injunction or other equitable relief may be appropriate to restrain any such
breach or threatened breach.

During the Term, Transenterix may request that Microline consider the
development of a flexible sealing vessel product (other than the FVS Product)
for use with the Spider System in the Field. In the event that Microline desires
to develop such a product, the parties shall use good faith efforts to negotiate
a development and supply arrangement with development payments, supply minimums
and other terms acceptable to the parties.

(b) Transenterix Exclusivity. During the Term, and except as set forth in
Section 8(c), Transenterix agrees that it shall purchase all FVS Products and
UPS Products, and any other tissue sealing and power supply products for use
with the Spider System, exclusively from Microline.

(c) Alternate Suppliers. In the event that either (i) Microline shall determine
that it no longer has the capability to manufacture Supply Products for
Transenterix or (ii) Microline fails to supply at least 50% of the binding
forecasts for two consecutive quarters (unless due to reasons beyond the
reasonable control of Microline), in each case in accordance with this
Agreement, then either Microline shall provide written notice thereof to
Transenterix promptly after making such determination in Section 8(c)(i) or
Transenterix will provide notice of such failure to supply in Section 8(c)(ii)
(which Microline can dispute). Within sixty (60) days after such notice (or if
disputed, after resolution of such dispute), Microline shall provide
Transenterix with written notice (the “Alternative Supplier Notice”) identifying
one or more third party manufacturer(s) (each, an “Alternative Supplier”) from
which Transenterix may purchase the Supply Products. If Microline fails to so
deliver the Alternative Supplier Notice (or if the Alternative Supplier(s)
identified in the Alternative Supplier Notice cannot or will not deliver the
Supply Products in accordance with Transenterix’s minimum forecasts and at or
less than the pricing set forth in this Agreement, in Transenterix’s reasonable
discretion), then Transenterix may choose one or more Alternative Suppliers in
its sole discretion. Promptly after the selection of an Alternative Supplier (or
another supplier chosen by Transenterix pursuant to the immediately preceding
sentence), Microline shall provide such alternative supplier with sufficient
information to permit such alternative supplier to manufacture the Supply
Products.

 

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9. COMMERCIALIZATION OF SUPPLY PRODUCTS

(a) Commercialization of Supply Products. Except as otherwise provided in this
Agreement, Transenterix shall have sole responsibility for, and sole discretion
with respect to, the commercialization of the Supply Products as long as it does
not alter or modify the Supply Products, and it provides for the use of the
Supply Products solely with its Spider System in accordance with the applicable
Regulatory Approval (or 5MM Clearance and/or 7MM Clearance as applicable) and
other use specifications as provided by Microline.

(b) Use of Trademarks.

(i) Transenterix Marks. All Supply Products ordered by Transenterix under this
Agreement shall bear solely such trademarks, service marks, trade names and logo
identifications owned by or licensed to Transenterix as Transenterix shall
specify (the “Transenterix Marks”); provided that all Supply Products shall bear
the trademarks of Microline and/or its Affiliates (the “Microline Marks”) as
reasonably requested by Microline, which Microline Marks shall be displayed less
prominently than the Transenterix Marks. Microline shall have no right or
license to use any Transenterix Marks (other than to affix them to the packaging
and labeling of the Supply Products sold to Transenterix under this Agreement).
All goodwill relating to or developed with respect to any Transenterix Marks
shall belong exclusively to Transenterix or its Affiliates. Microline will not
challenge the validity of any such Transenterix Mark or use a mark that is
deceptively similar to any of the Transenterix Marks.

(ii) Microline Trademark License. Microline hereby grants to Transenterix a
non-exclusive, non-transferable, worldwide, royalty-free license to use the
Microline Marks in connection with Transenterix’s marketing and sale of the
Supply Products. All goodwill associated with the foregoing license shall inure
to the benefit of Microline and its Affiliates, and Microline shall have sole
control of, and responsibility for, any applications and registrations for the
Microline Marks. Transenterix shall use the Microline Marks in accordance with
Microline’s reasonable guidelines with respect to trademark usage of the
Microline Marks, as provided to Transenterix upon reasonable prior notice.

(c) Labeling. Transenterix shall provide Microline with any labeling or product
literature to be used in connection with any Supply Product at least ninety
(90) days prior to the first commercial sale of such Supply Product.
Transenterix shall give full consideration to any comments received from
Microline with respect to such labeling and product literature. Thereafter,
Transenterix shall provide Microline with notice describing any material change
to any such labeling or product literature at least ninety (90) days prior to
the first incorporation of such material change, and shall give full
consideration to comments received from Microline with respect to such material
change.

 

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10. PAYMENTS

(a) License Fees. In consideration of the license rights granted to Transenterix
pursuant to this Agreement, Transenterix shall pay Microline non-refundable
license fees as follows:

(i) Transenterix shall pay Microline $250,000 within two (2) business days of
the Effective Date;

(ii) Transenterix shall pay Microline $200,000 within two (2) business days of
delivery of twenty five (25) Pre-Production Devices (in accordance with the Work
Plan and the Marketing Requirements Document) (the “Prototype Date”);

(iii) Transenterix shall pay Microline $100,000 within two (2) business days of
receipt by Microline of Regulatory Approval for use of a FVS Product;

(iv) Transenterix shall pay Microline $150,000 within two (2) business days of
receipt by Microline of 5MM Clearance; and

(v) Transenterix shall pay Microline $150,000 within two (2) business days of
receipt by Microline of 7MM Clearance.

(b) Payments for Development Milestones. In consideration of the work to be
conducted by Microline pursuant to the Work Plan, Transenterix shall pay
Microline non-refundable milestone payments as set forth below:

(i) Transenterix shall pay Microline $250,000 within two (2) business days of
the later of the Kick-Off Meeting or the Effective Date;

(ii) Transenterix shall pay Microline $250,000 within two (2) business days of
the date that Microline has achieved the specific stage of development of the
FVS Product prior to delivery of the Pre-Production Devices that is described in
the Work Plan as the “Design Review”;

(iii) Transenterix shall pay Microline $125,000 within two (2) business days of
the Prototype Date; and

(iv) in addition to the amounts owed with respect to such Pilot Product Units
pursuant to Sections 4(a) and 10(c), Transenterix shall pay Microline $125,000
within two business days of delivery of five hundred (500) Pilot Product Units
in compliance with the Warranties.

(c) Supply Products.

(i) Microline shall invoice Transenterix within thirty (30) days following each
shipment of Supply Products in accordance with the shipping terms set forth in
Section 4 above. Prices shall be as set forth on Exhibit D, and Transenterix
shall pay all invoiced amounts in accordance with such pricing terms within
thirty (30) days of receipt of an invoice therefor.

 

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(ii) Each invoice shall contain (A) Microline’s name and the invoice date,
(B) the type, price, and quantity of the Supply Products actually delivered,
(C) the name (where applicable), title, phone number, and complete mailing
address of the responsible official to whom payment shall be sent, and (D) other
substantiating documentation or information as may reasonably be required by
Transenterix from time to time.

11. REPRESENTATIONS AND WARRANTIES

(a) Development Warranty. Microline represents and warrants to Transenterix that
it will develop the FVS Products diligently, with reasonable skill and care, and
using the services of appropriately skilled and trained workers, and in
compliance with Good Manufacturing Practices and the QA Procedures.

(b) Representations and Warranties of Microline. Microline represents and
warrants that as of the Effective Date (i) Microline has the full power, right
and authority to enter into this Agreement, carry out its obligations under this
Agreement, and grant the rights granted to Transenterix hereunder;
(ii) Microline has not previously granted and will not in the future grant any
rights in or to the Microline Background Technology (as defined in
Section 12(a)), Microline Project Technology (as defined in Section 12(b)), FVS
Products or the UPS Products to a third party which are inconsistent with the
rights granted to Transenterix herein; and (iii) Microline has not received any
communications alleging that Microline’s use of Microline Background Technology
relating to the FVS Products or UPS Products would violate Intellectual Property
Rights of any third party.

(c) Representations and Warranties of Transenterix. Transenterix represents and
warrants that as of the Effective Date, (i) it has the full power, right and
authority to enter into this Agreement and to carry out its obligations
hereunder; (ii) Transenterix has not previously granted and will not in the
future grant any rights in or to the Transenterix Background Technology (as
defined in Section 12(a)), Transenterix Project Technology (as defined in
Section 12(c)) or Spider System to a third party which are inconsistent with the
rights granted to Microline herein; (iii) Transenterix has obtained all United
States regulatory approvals from, has made all necessary and appropriate
applications and other submissions to, and has prepared and maintained all
records, studies and other documentation needed to maintain and demonstrate
compliance with the requirements of, the FDA and other United States
Governmental Authorities for its current and past business activities relating
to the Spider System; and (iv) Transenterix has not received any communications
alleging that Transenterix’s use of Transenterix Background Technology relating
to the Spider System would violate Intellectual Property Rights of any third
party.

(d) Exclusion of Any Other Warranties of Microline. The representations and
warranties contained in this Agreement are made in lieu of all other
representations or warranties, express or implied, by Microline, whether oral or
written. Microline hereby disclaims all implied warranties, including the
warranties of merchantability and fitness for a particular purpose.

12. INTELLECTUAL PROPERTY

(a) Background Technology. Each party shall own and retain all right, title and
interest in and to all Technology, and all Intellectual Property Rights therein,
Controlled by such party that does not constitute Project Technology or that is
otherwise created prior to or independently from the Project (“Microline
Background Technology” and “Transenterix Background Technology,” respectively).

 

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(b) Microline Project Technology. Microline shall own all right, title and
interest in and to all Project Technology, and all Intellectual Property Rights
therein, related to the FVS Products or the UPS Products or to the development
efforts relating to such FVS Products or UPS Products (“Microline Project
Technology”).

(c) Transenterix Project Technology. Transenterix shall own all right, title and
interest in and to all Project Technology, and all Intellectual Property Rights
therein, related to the Spider System, but excluding any Microline Project
Technology (“Transenterix Project Technology”).

(d) Assignment of Technology. Subject to the licenses and other rights
specifically set forth in this Agreement, to the extent either party (such
party, the “Assigning Party”) obtains any title or similar ownership interest in
any Project Technology, or any Intellectual Property Rights therein, that is to
be owned by the other party (the “Assigned Party”) in accordance with the terms
and conditions of this Agreement, the Assigning Party hereby assigns and, to the
extent such assignment cannot be made at present, agrees promptly to assign, to
the Assigned Party all of the Assigning Party’s title and other ownership
interest in and to such Project Technology and Intellectual Property Rights. The
Assigning Party shall execute and procure such documents, including short-form
assignments and assignments of patent applications and patents, and take such
other actions as may be reasonably requested from time to time by the Assigned
Party to obtain for its own benefit appropriate protections for Intellectual
Property Rights with respect to such Project Technology, or otherwise to
transfer or confirm the transfer, in whole or in part, as the case may be, of
such Project Technology and the related Intellectual Property Rights for the
benefit of the Assigned Party. Each party represents and covenants that all of
its employees, consultants and agents, and all third parties acting on behalf of
such party in performing its obligations under this Agreement, shall be
obligated under a binding written agreement to assign to such party all Project
Technology and Intellectual Property Rights conceived, created, made or reduced
to practice by such employees, consultants, agents and third parties in
connection with the Project.

(e) Prosecution and Enforcement of Project Technology. The owner of any Project
Technology (the “Owner”) shall have the sole right to prepare, file applications
on and registrations for, prosecute, obtain, maintain, defend and enforce all
Intellectual Property Rights in such Project Technology in such manner as the
Owner deems appropriate in its sole discretion, including incurring all expenses
required for such purposes. Notwithstanding the foregoing, (i) Microline shall
use commercially reasonable efforts to preserve, obtain and maintain all
Intellectual Property Rights for Microline Project Technology and for Microline
Background Technology related to the FVS Products or the UPS Products and to
file patent applications covering any inventions included within such
technology, in each case in its reasonable discretion and (ii) Transenterix
shall use commercially reasonable efforts to preserve, obtain and maintain all
Intellectual Property Rights for Transenterix Project Technology and for
Transenterix Background Technology related to the Spider System and to file
patent applications covering any inventions included within such technology, in
each case in its reasonable discretion. The non-Owner party shall cooperate
fully at its

 

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own expense in those activities by the Owner, which cooperation shall include,
without limitation, (i) promptly executing all papers and instruments or
requiring the non-Owner’s employees, agents and third parties acting on the
non-Owner’s behalf to execute such papers and instruments as are reasonable and
appropriate so as to enable the Owner to prepare, file, prosecute, obtain,
maintain, defend and enforce such Intellectual Property Rights, and
(ii) promptly informing the Owner of matters that may affect those activities
(including any prior art that may be material to Patent Rights contained in the
such Intellectual Property Rights).

(f) License Grants.

(i) Subject to the terms and conditions of this Agreement, Microline hereby
grants to Transenterix a worldwide, non-exclusive license or sublicense (as the
case may be) in the Field, without the right to sublicense except to
subcontractors as permitted by Section 2(g), under all Intellectual Property
Rights Controlled by Microline to use the Microline Background Technology and
Microline Project Technology, but only as necessary to exercise its rights or
fulfill its obligations under this Agreement. The license granted pursuant to
this Section 12(0(i) is only transferable in accordance with the terms and
conditions of Section 16(c).

(ii) Subject to the terms and conditions of this Agreement, Transenterix hereby
grants to Microline a worldwide, non-exclusive license or sublicense (as the
case may be) in the Field, without the right to sublicense except to
subcontractors as permitted by Section 2(g), under all Intellectual Property
Rights Controlled by Transenterix, to use Transenterix Background Technology and
Transenterix Project Technology, but only as necessary to exercise its rights or
fulfill its obligations under this Agreement. The license granted pursuant to
this Section 12(f)(ii) is only transferable in accordance with the terms and
conditions of Section 16(c).

(g) No Implied Licenses.

(i) Transenterix acknowledges and agrees that, as between the parties and
notwithstanding anything to the contrary in this Agreement, Microline owns all
right, title and interest in and to, including all Intellectual Property Rights
pertaining to, all Microline Background Technology and Microline Project
Technology, and that under this Agreement, Transenterix shall acquire no right,
title or interest in or to any of the foregoing, by implication, estoppel or
otherwise, other than the license rights expressly granted herein or as
otherwise expressly provided herein.

(ii) Microline acknowledges and agrees that, as between the parties and
notwithstanding anything to the contrary in this Agreement, Transenterix owns
all right, title and interest in and to, including all Intellectual Property
Rights pertaining to, all Transenterix Background Technology and Transenterix
Project Technology, and that under this Agreement, Microline shall acquire no
right, title or interest in or to any of the foregoing, by implication, estoppel
or otherwise, other than the license rights expressly granted herein or as
otherwise expressly provided herein.

 

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13. INDEMNIFICATION AND INSURANCE

(a) Microline Product Liability Indemnification. Microline shall defend,
indemnify and hold harmless Transenterix, its Affiliates, their permitted
successors and assigns and their respective directors, officers, employees, and
agents from and against all liabilities, damages, losses, settlements, claims,
actions, suits, penalties, fines, costs and expenses (including reasonable
attorneys and professionals’ fees) (“Liabilities”) resulting from any and all
claims by third parties for loss, damage or injury (including death) caused by
(i) any Warranty Claim or Specifications Claim, (ii) Microline’s material breach
of this Agreement, (iii) Microline’s gross negligence or willful misconduct or
(iv) any other defect to any Supply Product directly attributable to Microline
or its subcontractors or suppliers, except, in the case of clauses (i) through
(iv), to the extent such Liabilities are caused by (A) the storage, handling,
modification, misuse, marketing, export, import, advertising, labeling,
distribution or sale by Transenterix of any Supply Product, (B) Transenterix’s
material breach of this Agreement, (C) Transenterix’s gross negligence or
willful misconduct or (D) any Transenterix product containing or used in
conjunction with a Supply Product, including, without limitation, the Spider
System (“Transenterix Product”).

(b) Transenterix Product Liability Indemnification. Transenterix shall defend,
indemnify and hold harmless Microline, its Affiliates, their permitted
successors and assigns and their respective directors, officers, employees, and
agents from and against all Liabilities resulting from any and all claims by
third parties for loss, damage or injury (including death) caused by (i) the
storage, handling, modification, marketing, export, import, advertising,
labeling, distribution or sale by Transenterix of any Supply Product,
(ii) Transenterix’s material breach of this Agreement, (iii) Transenterix’s
gross negligence or willful misconduct or (iv) any Transenterix Product, except,
in the case of clauses (i) through (iv), to the extent such Liabilities are
caused by (A) any Warranty Claim or Specifications Claim, (B) Microline’s
material breach of this Agreement, (C) Microline’s gross negligence or willful
misconduct or (D) any other defect to any Supply Product directly attributable
to Microline or its subcontractors or suppliers.

(c) Procedure. The parties will follow the following procedures with respect to
any indemnification provided pursuant to this Agreement:

(i) Any person claiming indemnification under this Agreement (the “Indemnified
Party”) will give Microline or Transenterix, as the case may be (the
“Indemnitor”), written notice of any claim promptly after receipt by such
Indemnified Party of notice thereof. Any delay in giving notice hereunder which
does not materially prejudice the Indemnitor will not affect the Indemnified
Party’s rights to indemnification hereunder. The Indemnitor will have the right
to defend the Indemnified Party against any claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (A) the Indemnitor
notifies the Indemnified Party in writing, within fifteen (15) days after the
Indemnified Party has given notice of the claim, of the Indemnitor’s election to
defend the claim and of the identity of the Indemnitor’s counsel, (B) the
Indemnitor provides the Indemnified Party with evidence reasonably acceptable to
the Indemnified Party that the Indemnitor will have the financial resources to
defend against the claim and fulfill its indemnification obligations hereunder,
(C) the claim involves only money damages and does not seek an injunction or
other equitable relief, and (D) the Indemnitor conducts the defense of the claim
actively and diligently.

 

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(ii) So long as the Indemnitor is conducting the defense of the claim in
accordance with clause (i) above, (A) the Indemnified Party may retain separate
co-counsel at its sole cost and expense and participate in the defense of the
claim, (B) the Indemnified Party will not consent to the entry of any judgment
or enter into any settlement with respect to the claim without the prior written
consent of the Indemnitor (which consent shall not be unreasonably withheld) and
(C) the Indemnitor will not consent to the entry of any judgment or enter into
any settlement with respect to the claim without the prior written consent of
the Indemnified Party (which consent shall not be unreasonably withheld).

(iii) In the event any of the conditions in clause (i) above is or becomes
unsatisfied, (A) the Indemnified Party may defend against, and consent to the
entry of any judgment or enter into any settlement with respect to, the claim in
any manner it reasonably may deem appropriate (and the Indemnified Party need
not consult with, or obtain any consent from, the Indemnitor in connection
therewith), (B) the Indemnitor will reimburse the Indemnified Party promptly and
periodically for the costs of defending against the claim (including reasonable
attorneys’ fees and expenses), and (C) the Indemnitor will remain responsible
for any Liabilities the Indemnified Party may suffer resulting from, arising out
of, relating to, in the nature of, or caused by the claim to the fullest extent
provided in this Section 13.

(d) Insurance.

(i) Microline will procure and maintain at its expense comprehensive general
liability insurance with a reputable insurer in amounts of not less than $3
million per incident and $5 million annual aggregate. Such comprehensive general
liability insurance will (a) provide product liability coverage, (b) provide
broad form contractual liability coverage extending to Microline’s
indemnification obligations under this Section 13, (c) contain no products or
completed operations exclusions, (d) be in occurrence form and (e) name
Transenterix as an additional insured. Microline will maintain such insurance
during the Term and for a period of at least five (5) years thereafter.
Microline will provide Transenterix with written evidence of such insurance upon
the request of Transenterix, and will provide Transenterix with written notice
at least thirty (30) days prior to any cancellation, non-renewal, reduction or
other material change in such insurance.

(ii) Transenterix will procure and maintain at its expense comprehensive general
liability insurance with a reputable insurer in amounts of not less than $3
million per incident and $5 million annual aggregate. Such comprehensive general
liability insurance will (a) provide product liability coverage, (b) provide
broad form contractual liability coverage extending to Transenterix’s
indemnification obligations under this Section 13, (c) contain no products or
completed operations exclusions, (d) be in occurrence form and (e) name
Microline and its Affiliates as an additional insureds. Transenterix will
maintain such insurance during the Term and for a period of at least five
(5) years thereafter. Transenterix will provide Microline with written evidence
of such insurance upon the request of Microline, and will provide Microline with
written notice at least thirty (30) days prior to any cancellation, non-renewal,
reduction or other material change in such insurance.

 

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14. CONFIDENTIALITY

(a) “Confidential Information” means, as to any party (the “Disclosing Party”),
all confidential information provided by or on behalf of such party to the other
party (the “Receiving Party”), including any Technology, the terms of this
Agreement, and information relating to its business operations or technology,
whether disclosed orally or in writing and whether or not marked as being
confidential, except any portion thereof which: (i) is known, and can be shown
to have been known, by the Receiving Party (other than from the Disclosing Party
hereunder) before receipt thereof under this Agreement; (ii) is disclosed to the
Receiving Party by a third person who has a right to make such disclosure
without any obligation of confidentiality to the Disclosing Party hereunder;
(iii) is or becomes generally known to the public through no fault of the
Receiving Party; or (iv) is independently developed by the Receiving Party,
without access to other Confidential Information of the Disclosing Party, as
evidenced by the Receiving Party’s written records.

(b) Nondisclosure. Confidential Information of each Disclosing Party is the
exclusive property of such Disclosing Party. Confidential Information of a
Disclosing Party may be used by the Receiving Party only in connection with the
performance of any obligations or the exercise of any rights under this
Agreement. Confidential Information of the Disclosing Party shall not be
disclosed to a third party by the Receiving Party without the prior written
consent of the Disclosing Party or as authorized by this Agreement. Each
Receiving Party will protect the confidentiality of the Confidential Information
of the Disclosing Party with at least the same degree of care that it uses to
protect the confidentiality of its own proprietary and confidential information,
including by entering into appropriate confidentiality agreements with
employees, agents, independent contractors and subcontractors. Access to and use
of Confidential Information will be restricted to those of Microline’s and
Transenterix’s agents, employees or contractors engaged in a use permitted under
this Agreement and who have been apprised of the confidential nature of such
information. Each Receiving Party will be responsible for any breaches of this
Section 14 by its agents, employees or contractors. Confidential Information may
not be copied or reproduced without the Disclosing Party’s prior written
consent, except as necessary for use in connection with this Agreement.

(c) Disclosure Upon Process. In the event either party receives a subpoena, or
other validly-issued administrative or judicial process, requesting that
Confidential Information of the other party be disclosed, it will promptly
notify the other party of such receipt and allow the other party appropriate
time to apply for a protective order. The party receiving such request will
thereafter be entitled to comply with such subpoena or other process, only to
the extent required by law.

(d) Publicity. The terms and conditions of this Agreement shall be Confidential
Information of both parties, and shall not be disclosed by either party without
the prior written consent of the other, provided, however, that either party may
in any event provide and disclose this Agreement to third parties in connection
with any proposed financing or other corporate transaction, subject to a usual
and customary confidentiality agreement. Except as otherwise described in this
paragraph, neither party shall make any public announcement of this Agreement
except by mutual written consent.

(e) Injunctive Relief. Each party acknowledges that any material breach of this
Section 14 shall cause the other party irreparable harm for which damages would
not be an adequate remedy, and accordingly each party hereby agrees that the
issuance of an injunction or other equitable relief is appropriate to restrain
any such breach or threatened breach.

 

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15. TERM AND TERMINATION

(a) Term. This Agreement shall be effective on the Effective Date and shall
continue in full force and effect until the expiration of the Supply Period,
unless terminated earlier as provided herein (the “Initial Term”). Unless
terminated by either party by written notice given not less than sixty (60) days
prior to the expiration of the Initial Term or any then-current Renewal Term,
the term of this Agreement shall automatically be extended for additional one
(1) year periods (each, a “Renewal Term,” and the Initial Term and any Renewal
Term, the “Term”). Notwithstanding anything in this Agreement to the contrary,
Microline covenants and agrees that it will not terminate this Agreement by
written notice pursuant to this Section 15(a) during or prior to any Renewal
Term as long as Transenterix has purchased or is bound to purchase at a minimum
the following quantities of FVS Products during the year prior to the applicable
Renewal Term:

 

Renewal Term

  

Quantity

First Renewal Term

   The greater of 7,500 FVS Products or 80% of the FVS Products purchased during
the second year of the Supply Period

Second Renewal Term

   The lesser of 10,000 FVS Products or an amount of FVS Products that is 15% or
more of the amount of FVS Products purchased by Transenterix from Microline
during the third year of the Supply Period

Third Renewal Term

   The lesser of 15,000 FVS Products or an amount of FVS Products that is 15% or
more of the amount of FVS Products purchased by Transenterix from Microline
during the fourth year of the Supply Period

(b) Termination for Breach. Notwithstanding any other provision of this
Agreement, each party shall have the right, in addition to any other rights and
remedies available to such party, to terminate this agreement immediately by
written notice to the other party if the other party breaches any material
provision of this Agreement and fails to cure such breach within thirty
(30) days of the receipt by the breaching party of notice specifying the breach
and requiring its remedy. The parties acknowledge that Transenterix’s failure to
timely pay any undisputed amounts due hereunder (and any disputed amounts upon
resolution or in any event within ninety (90) days of when originally due) shall
constitute a material breach.

 

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(c) Termination for Bankruptcy.

(i) Each party may terminate this Agreement immediately upon written notice to
the other party if such other party shall (A) file in any court or agency
pursuant to any law of any state, country or jurisdiction, a petition in
bankruptcy or insolvency or for reorganization or for an arrangement or for the
appointment of a receiver or trustee of that party or of its assets, (B) be
served with an involuntary petition in bankruptcy against it, filed in any such
proceeding, and such petition shall not be dismissed within sixty (60) days
after the filing thereof, (C) be a party to any dissolution or liquidation, or
(D) make a general assignment for the benefit of its creditors.

(ii) Microline Bankruptcy. If this Agreement is terminated by Transenterix in
accordance with this Section 15(c), Microline shall grant, and hereby grants, to
Transenterix a worldwide, non-exclusive, license in the Field under all
Intellectual Property Rights Controlled by Microline to use the Microline
Background Technology and Microline Project Technology, but only as necessary to
enable Transenterix to manufacture or commercialize the FVS Product or UPS
Product. Such license shall terminate on the date that the Initial Term or
then-current Renewal Term (as applicable) would have expired had this Agreement
not been terminated in accordance with this Section 15(c), provided, however,
that during the six (6) month period following the termination of such license,
Transenterix shall have the right to sell any Supply Products purchased by
Transenterix hereunder prior to the termination of this Agreement for which the
Shelf Life has not expired, and provided further that Transenterix shall comply
with the terms and provisions of this Agreement in connection with the sale of
such Supply Products.

(iii) Section 365(n). All rights and licenses granted under or pursuant to this
Agreement by ether party are, and shall otherwise be deemed to be, for purposes
of Section 365(n) of the United States Bankruptcy Code (the “Bankruptcy Code”),
licenses of rights to “intellectual property” as defined under Section 101 of
the Bankruptcy Code. The parties agree that the parties, as licensees of such
rights under this Agreement, shall retain and may fully exercise all of their
rights and elections under the Bankruptcy Code. The parties further agree that,
in the event of the commencement of a bankruptcy proceeding by or against either
party under the Bankruptcy Code, the party hereto that is not subject to such
proceeding shall be entitled to a complete duplicate of (or complete access to,
as appropriate) any such intellectual property and all embodiments of such
intellectual property, which, if not already in the non-subject party’s
possession, shall be promptly delivered to it (A) following any such
commencement of a bankruptcy proceeding upon the non-subject party’s written
request therefor, unless the party subject to such proceeding elects to continue
to perform all of its obligations under this Agreement, or (B) if not delivered
under the immediately preceding clause (A), upon written request therefor by the
non-subject party following the rejection of this Agreement by or on behalf of
the party subject to such proceeding.

(d) Termination for Convenience; FDA Approval.

(i) Notwithstanding any other provision of this Agreement, Transenterix shall
have the right to terminate this Agreement at any time after the Pilot Product
Delivery Date upon ninety (90) days’ written notice to Microline (and in such
instance, Transenterix shall not be released from any payment obligations
accruing prior to or in connection with such termination, including the
obligation to pay Microline the amounts specified in Section 4(c)).

 

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(ii) Microline shall use commercially reasonable efforts to obtain the
Regulatory Approval within twelve (12) months after the Effective Date.
Notwithstanding any other provision of this Agreement, Transenterix shall have
the right to terminate this Agreement upon thirty (30) days’ written notice to
Microline in the event that Microline shall not have obtained such Regulatory
Approval within fifteen (15) months of the Effective Date (unless Microline’s
failure to obtain such Regulatory Approval is due to reasons beyond the
reasonable control of Microline, including any unforeseen regulatory or
technical issues). Notwithstanding the immediately preceding parenthetical, if
Microline has not procured the Regulatory Approval for any reason within
eighteen (18) months after the Effective Date, Transenterix may at its option
terminate this Agreement upon ninety (90) days written notice to Microline.

(iii) Microline shall use commercially reasonable efforts to obtain the 5MM
Clearance or 7MM Clearance within nine (9) months after Microline’s receipt of
the Regulatory Approval. Notwithstanding any other provision of this Agreement,
Transenterix shall have the right to terminate this Agreement upon thirty
(30) days’ written notice to Microline in the event that Microline shall not
have obtained such 5MM Clearance or 7MM Clearance within twelve (12) months
after Microline’s receipt of the Regulatory Approval, unless Microline’s failure
to obtain such 5MM Clearance or 7MM Clearance is due to reasons beyond the
reasonable control of Microline, including any unforeseen regulatory or
technical issues.

(e) Effect of Termination. Except as described in Section 15(c)(ii), upon any
termination or expiration of the Agreement, each party shall return and make no
further use of any Confidential Information and materials (and all copies
thereof) belonging to the other party, provided, however, that during the six
(6) month period following such termination or expiration, Transenterix shall
have the right to sell any Supply Products purchased by Transenterix hereunder
prior to such termination or expiration for which the Shelf Life has not
expired, and provided further that Transenterix shall comply with the terms and
provisions of this Agreement in connection with the sale of such Supply
Products.

(f) Survival. In addition to such other provisions which by their nature
reasonably are intended to survive any expiration or termination of this
Agreement, the provisions of Sections 1, 7(d), 7(e), 10 (i.e., each sub-section
survives only to the extent that prior to the date of termination, Microline had
fully met its obligations to Transenterix described in that sub-specific
section), 11, 12, 13, 14, 15(c), 15(d), 15(e), 15(f) and 16, and any Exhibits or
definitions referenced therein, shall survive any such expiration or
termination.

16. GENERAL

(a) Entire Agreement. This Agreement, together with the attached Exhibits, shall
constitute the entire Agreement between the parties with respect to the subject
matter hereof and supersedes all other prior and contemporaneous oral and
written communications, agreements and understandings of the parties with
respect to the subject matter hereof. In making this Agreement, the parties have
not made or relied upon any representations, understandings or other agreements
not specifically set forth herein.

 

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(b) Waivers; Amendments; Supplements. No waiver by either party of a breach of
any covenant or condition of this Agreement by the other party shall be
construed to be a waiver of any succeeding breach of the same or any other
covenant or condition. Except as otherwise expressly provided herein, this
Agreement or any Exhibit hereunder may not be changed or amended except by a
writing expressly referring to this Agreement signed by both parties.

(c) Assignment. Neither party may assign or otherwise transfer this Agreement,
or any rights or obligations hereunder, to any third party without the prior
written consent of the other, which consent will not be unreasonably withheld.
Notwithstanding the immediately preceding sentence, either party may assign this
Agreement without consent of other party to an entity into which it is merged or
consolidated or by which it is acquired, or which acquires the portion of its
business related to this Agreement; provided that in each case the acquirer
agrees in writing to assume and fulfill the obligations of such party under this
Agreement.

(d) Choice of Law; Forum. This Agreement shall be governed by, and construed and
enforced in accordance with, the substantive laws of the state of New York
without regard to its principles of conflicts of laws. Subject to Section 16(e),
any litigation arising from or relating to this Agreement shall be filed and
prosecuted before a court of competent subject matter jurisdiction located in
the state of New York. The parties hereby consent to the jurisdiction of such
courts over them, stipulate to the convenience, efficiency and fairness of
proceeding in such courts, and covenant not to assert any objection to
proceeding in such courts based on any alleged lack of jurisdiction or any
alleged inconvenience, inefficiency or unfairness of such courts.

(e) Dispute Resolution.

(i) In the event of any dispute, claim or controversy arising out of or relating
to the interpretation of any provision of this Agreement, to the performance of
either party under this Agreement or to any other matter under or in connection
with this Agreement, including any action in tort, contract or otherwise, at
equity or law (a “Dispute”), either party may at any time provide the other
party written notice specifying the terms of such Dispute in reasonable detail.
As soon as practicable after receipt of such notice, one or more senior
executives from each party shall meet at a mutually agreed upon time and
location for the purpose of resolving such Dispute. Such senior executives shall
engage in good faith discussions and/or negotiations for a period of up to
thirty (30) days to resolve the Dispute or negotiate an interpretation or
revision of the applicable portion of this Agreement which is mutually agreeable
to both parties, without the necessity of formal procedures relating thereto.
During the course of such discussion and/or negotiation, the parties shall
reasonably cooperate and provide information that is not materially confidential
in order so that each of the parties may be fully informed with respect to the
issues in the Dispute.

(ii) Any Dispute not resolved pursuant to clause (i) above shall be resolved
exclusively by arbitration conducted in New York, New York by a single
arbitrator agreed between the parties, under the Commercial Arbitration Rules of
the American Arbitration Association. If the parties cannot agree on a single
arbitrator, either party shall have the right to give notice that the Dispute
shall be heard by three arbitrators, each party selecting one arbitrator and the
two selecting a third. The arbitrator(s) shall have at least fifteen (15) years’
experience in medical device matters and shall have no conflicts of interest.
Each party shall bear its own costs of participating in the arbitration, and the
costs and expenses of the arbitrators shall be shared equally. The decision of
the arbitrator shall be binding and enforceable in any court of competent
jurisdiction.

 

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(f) Independent Contractors. The relationship of Microline and Transenterix at
all times shall be solely that of independent contractors with respect to all
matters arising under this Agreement. Nothing herein shall be deemed to
establish a relationship of partnership, joint venture or employment between the
parties. Transenterix shall have no control or direction over Microline and any
of its employees, consultants and subcontractors performing development or
manufacturing hereunder. Any such employees, consultants and subcontractors
shall not have any contractual relationship whatsoever with Transenterix arising
out of or by virtue of this Agreement, and Microline shall be responsible for
compliance with all applicable employment related laws and regulations with
respect to such persons, including without limitation those governing hours of
labor, working conditions, workers’ compensation, payment of wages, and the
payment of any applicable taxes, such as unemployment, social security, and
other payroll taxes.

(g) Force Majeure. Neither party shall be liable for any delay or failure in
performance of any obligations hereunder (other than payment obligations)
arising out of acts or events beyond its reasonable ability to foresee and
avoid, including fires, labor disputes, embargoes, failure of suppliers,
requirements imposed by Government regulation, civil or military authorities,
judicial decisions, acts of God or by the public enemy.

(h) Further Actions. Each party agrees to execute, acknowledge and deliver such
further instruments, and to do all such other acts, as may be necessary or
appropriate in order to carry out the purposes and intent of this Agreement.

(i) Notices. All notices, demands, requests, approvals, consents or other
communications to be given or delivered under this Agreement shall be in writing
and shall be deemed to have been given: (i) when delivered in person or by
courier or confirmed facsimile; (ii) upon confirmation of receipt when sent by
certified mail, return receipt requested; or (iii) upon receipt when sent by
reputable private international courier with established tracking capability
(such as DHL, FedEx, or UPS), postage pre-paid, to the noticed party at the
address set forth below, or such other address as a party may specify by written
notice to the other.

Notices shall be sent to Microline at:

Microline Surgical, Inc.

800 Cummings Center, Suite 166T

Beverly, MA 01915

Attention: President

Telecopier: (978) 922-9209

with a required copy to:

Foley Hoag LLP Seaport West

155 Seaport Boulevard

Boston, Massachusetts 02210

Attention: Gil Arie, Esq.

Telecopier No.: (617) 832-7000

 

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and to Transenterix at:

Transenterix, Inc.

635 Davis Drive, Suite 300

Durham, North Carolina 27713

Attention: Luke Roush

Telecopier: (919) 765-8459

with a required copy to:

Forrest Firm, P.C.

4819 Emperor Boulevard

Durham, North Carolina 27703

Attention: James Forrest, Esq.

Telecopier No.: (919) 313-4505

(j) Captions, Section Headings. As used in this Agreement, “including” means
“including but not limited to”, and “herein”, “hereof”, and “hereunder” refer to
this Agreement as a whole. The Section headings used hereof are for reference
and convenience only, and shall not enter into the interpretation of this
Agreement. Unless otherwise expressly provided herein, any reference to a number
of “days” hereunder shall refer to calendar days.

(k) Severability. If any provision of this Agreement is determined to be
invalid, illegal or otherwise unenforceable, then such provision will instead be
construed to give effect to its intent to the maximum extent possible, and the
validity, legality and enforceability of the other provisions of this Agreement
shall not be affected thereby. If, after application of the immediately
preceding sentence, any provision of this Agreement is determined to be invalid,
illegal or unenforceable, such provision shall be severed, and after any such
severance, all other provisions hereof shall remain in full force and effect.

(l) Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed to be an original and all of which together shall be deemed to
be one and the same instrument. Execution and delivery of this Agreement and the
Exhibits hereto by any party via facsimile or e-mailed pdf shall be legal, valid
and binding execution and delivery of such document for all purposes.

- Signature Appear on the Following Page. -

 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed under
seal by their duly authorized representatives as of the Effective Date

 

Transenterix, Inc.     Microline Surgical, Inc. By:  

/s/ Todd M. Pope

    By:  

/s/ Sharad H. Joshi

Name:  

Todd M. Pope

    Name:  

Sharad H. Joshi

Title:  

Chief Executive Officer

    Title:  

President & CEO