Exhibit 10.4

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS MARKED WITH “*” AND BRACKETS AND HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

ROBOTIC DEVELOPMENT AND SUPPLY AGREEMENT

This Robotic Development and Supply Agreement (“Agreement”) is made as of this
13th day of February, 2014 (“Effective Date”), by and between Microline
Surgical, Inc. of 800 Cummings Center, Suite 166T, Beverly, MA 01915
(“Microline”) and TransEnterix Surgical, 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 previously agreed to have Microline develop and supply a
fully disposable flexible sealing product and power supply (known as FVS and UPS
Products) in a Development and Supply Agreement dated November 4, 2011 (the
“Original Agreement”);

WHEREAS, the parties are amending the Original Agreement by entering into
Amendment No. 1 to the Original Agreement;

WHEREAS, TransEnterix is developing and launching its SurgiBot® surgical
platform, and wishes to engage Microline to develop a flexible sealer product
for its Robotic System (as defined below) for exclusive use in the Field with
the Robotic System; and

WHEREAS, following the development of such FSP Product (as defined below),
Microline shall supply such FSP Product, along with the Power Supply 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) “Animal Testing “ shall mean burst pressure testing of the FSP Product using
explanted vessels, and simulated use testing of the FSP Product in a live animal
model.

(c) “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

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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS MARKED WITH “*” AND BRACKETS AND HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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.

(d) “Deliverable” shall mean any of the items to be delivered by Microline to
TransEnterix pursuant to the Work Plan, including the PoPP1, PoPP2, and Pilot
Product Units.

(e) [Intentionally omitted.]

(f) “Design Review” shall mean a meeting between Microline and TransEnterix
where a detailed review of the FSP Product device design and any relevant
document deliverables occurs. The Design Review is not considered complete until
the Project Directors agree in writing that the design or documentation changes
resulting from the review are complete and that the reviewed FSP Product device
design is considered acceptable.

(g) “FDA” shall mean the United States Food and Drug Administration and any
successor agency thereto.

(h) “FDA Clearance [******] mm or [**] mm” shall mean Microline’s 510(k)
clearance by the FDA for marketing and sale in the United States of the FSP
Product developed by Microline hereunder, with a [*****************************]
indication and for use with the Robotic System.

(i) “FDA Clearance [**]” shall mean a 501(k) clearance by the FDA for marketing
and sale in the United States of the FSP Product developed hereunder, with a
[************************************] indication and for use with the Robotic
System.

(j) “FDA Submission [*****] mm or [**] mm” shall mean Microline’s submission to
the FDA of a request for 510(k) clearance for marketing and sale in the United
States of the FSP Product developed hereunder, with
a [******************************** ****] indication and for use with the
Robotic System.

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

(l) “FSP Design Freeze” shall mean the reasonable completion of the design and
Design Review for the final iteration of the FSP Product, where the Project
Directors agree that the resulting device should meet all of the FSP Product
Specifications. This assessment is made based upon the review of (i) PoPP2 test
data (or such other test data as required) and (ii) design modifications made to
reasonably address specification failures in PoPP2 (or any subsequent proof of
principle prototype iterations).

(m) “FSP Launch Date” shall mean the date on which all Milestones have been met
and Pilot Product Acceptance has occurred.

 

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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS MARKED WITH “*” AND BRACKETS AND HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

(n) “FSP Product” shall mean the fully disposable flexible vessel sealing
product that (i) utilizes the Power Supply Products, (ii) is designed and
intended for use with the Robotic System and (iii) is designed in accordance
with the FSP Product Specifications.

(o) “FSP Product Specifications” shall mean the written requirements and
specifications for the FSP Product to be developed hereunder, as agreed to in
writing by the Parties pursuant to Section 2(f) and as subsequently amended by
mutual agreement of the Parties.

(p) “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.

(q) “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.

(r) “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.

(s) “Marketing Requirements Document” shall mean the description of the
requirements for the development of the FSP Product as initially set forth on
Exhibit A, and as reviewed and updated in writing by mutual agreement of the
Project Directors.

(t) “Milestone” shall mean each of the events listed in Section 10, which
include, in addition to the Effective Date of this Agreement, Kick-Off Meeting,
Design Review and sign off on Supply Product Specification, Proof of Principle
Prototype 1, Proof of Principle Prototype 2, FSP Design Freeze, FDA Clearance
[**], FDA Submission [******] mm or [**] mm, and FDA Clearance [*****] mm or
[**] mm.

(u) “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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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS MARKED WITH “*” AND BRACKETS AND HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

(v) “Pilot Product Acceptance” shall mean acceptance by TransEnterix of the
Pilot Product Units, which acceptance shall not be unreasonably withheld, and
which acceptance shall be made if the Pilot Product Units are acceptable for use
in accordance with instructions for use and substantially meet the tissue
sealing product specifications within the Supply Product Specifications agreed
upon by the Project Directors.

(w) “Pilot Product Units” shall mean one-hundred (100) sterile units of the FSP
Product in compliance with the Warranties, for initial clinical demand, that are
to be delivered to TransEnterix pursuant to the Work Plan.

(x) “Power Supply Product” shall mean the Microline Universal Power Supply
product conforming to the applicable Supply Product Specification and consistent
with the Marketing Requirements Document.

(y) “Program Executives” shall mean Sharad Joshi or his successor as Chief
Executive Officer for Microline, and Todd M. Pope or his successor as Chief
Executive Officer for TransEnterix.

(z) “Profit Margin” shall mean [*********************] of then-current Transfer
Price for a Supply Product.

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

(bb) “Project Directors” shall initially mean Richard M. Mueller and Chris
Devlin and their successors agreed to by the Program Executives.

(cc) “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.

(dd) “Proof of Principle Prototype 1” or “PoPP1” shall mean the completion of
the design, Design Review, fabrication and testing (including Animal Testing) of
the first iteration of FSP Product prototypes.
[***************************************
**********************************************************************************************************
**********************************************************************************************************
**********************************************************.]

 

(ee) “Proof of Principle Prototype 2” or “PoPP2” shall mean the completion of
the design, Design Review, fabrication and testing (including Animal Testing) of
the second iteration of FSP Product
prototypes.[*******************************************
***********************************************************************************************************
***********************************************************************************************************
***********************************************************************************************************
***********************************************************************************************************
***************************************************************************.]

 

- 4 -

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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS MARKED WITH “*” AND BRACKETS AND HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

(ff) “Regulatory Approval” shall mean FDA Clearance [******] mm or [**] mm.

(gg) “Robotic System” shall mean TransEnterix’s robotic surgical system, with
the characteristics described on Exhibit B.

(hh) “Supply Products” shall mean the FSP Products and the Power Supply
Products.

(ii) “Supply Product Specifications” shall mean the FSP Product Specifications
and the specifications for the Power Supply Product in each case as developed by
the Project Directors and consistent with the requirements set forth in the
Marketing Requirements Document, and as agreed to by the Project Directors in
writing.

(jj) “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.

(kk) “Transfer Price” for a Supply Product for a given period shall mean the
transfer price indicated on Exhibit D for such Supply Product and period.

(ll) “Work Plan” shall mean the Work Plan, including the timeline and Work Plan
Budget, for development of the FSP Product as mutually agreed-upon by the
parties and attached as Exhibit C, as such Exhibit may be updated and amended
upon mutual written agreement of the parties (acting through the Program
Executives) as provided in this Agreement.

 

2. DEVELOPMENT PROJECT

(a) Supply Product Specifications and Marketing Requirements Document. The
parties will mutually agree to and approve Supply Product Specifications and
Marketing Requirements Documents. Prior to the Kick-Off Meeting required under
Section 2(f), Microline shall develop, with collaborative input by TransEnterix,
proposed Supply Product Specifications that are consistent with the Marketing
Requirements Document. It is understood and agreed to by the Parties that while
the Supply Product Specifications shall be developed through collaboration
between the parties, Microline shall be considered the developer of the Supply
Product Specifications for all regulatory purposes. TransEnterix must provide a
clear set of technical specifications of the Robotic System that affect the
Supply Product Specifications before Supply Product Specifications are
finalized.

(b) 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 an FSP Product, for use with the Robotic
System, that is consistent with the Marketing Requirements Document and in
accordance with the FSP Product Specification, (ii) deliver the Deliverables as
set forth in the Work Plan, including the prototypes and Pilot Product Units,
and (iii) otherwise comply with its obligations in the Work Plan and the
Marketing Requirements Document.

 

- 5 -

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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS MARKED WITH “*” AND BRACKETS AND HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

(c) TransEnterix’s Obligations. TransEnterix shall make test fixtures and
breadboards available to Microline at mutually agreed points in the Work Plan so
it can test for compatibility and interactions with the Robotic System.
TransEnterix will certify the test fixtures and breadboards and in any event
supply them to Microline so as not to delay development of the FSP Product or
Power Supply Product. TransEnterix shall otherwise use its commercially
reasonable efforts to perform any responsibilities allocated to it in the Work
Plan.

(d) Project Directors. Each Project Director shall be responsible for
representing the interests of the corresponding party with respect to the
management of the Project. The parties acknowledge and agree that the Project
Directors shall have the authority to amend the Marketing Requirements Document,
and the Supply Product Specifications, on behalf of the parties upon mutual
agreement.

(e) Design Meetings. The Project 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,
the Marketing Requirements Document, or the Supply Product Specifications. The
Microline Project Director shall be responsible for recording the minutes of
each meeting. Such minutes shall be circulated within ten (10) business days
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 Project Director within
ten (10) business days of receipt of such minutes.

(f) Kick-Off Meeting. The first meeting of the Project 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 thirty (30) days after the Effective Date or on such other date
as mutually agreed to by the parties. During the Kick-Off Meeting, the parties
shall (i) review each of the Work Plan, the Marketing Requirements Document, and
the Supply Product Specifications developed by the parties under Section 2(a),
and (ii) develop and agree to a detailed statement of work (the “SOW”) which
shall become part of the Work Plan. Promptly after the Kick-Off Meeting,
Microline shall update the FSP Product Specification, Power Supply Product
Specification, Work Plan (including by incorporating the SOW) and/or Marketing
Requirements Document to reflect any changes agreed to by the parties during the
Kick-Off Meeting, and the same shall be delivered to the Program Executives for
written approval.

(g) Changes to Marketing Requirements Document, Supply Product Specifications or
Work Plan. Except as provided herein, no changes to the Work Plan, Supply
Product Specifications, or Marketing Requirements Document shall be permitted
without the written consent of both parties. If either party wishes to propose a
change to any such 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.

 

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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS MARKED WITH “*” AND BRACKETS AND HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

(h) Development Costs. Microline shall use commercially reasonable efforts to
design and develop the FSP Product to be developed hereunder 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). Microline shall have the sole authority
to select and manage vendors to be used in connection with the project.
TransEnterix will have the option to make direct payments to vendors for
purchases of tooling specific to the FSP Supply Products. In such cases,
TransEnterix shall additionally pay to the vendors the costs for validations of
such tooling made at such vendors’ facilities, whereas Microline shall be solely
responsible for operation of the tooling and any costs associated with
validations of such tooling made at the Microline facility.

(i) Subcontracting. Either party may subcontract its obligations under the Work
Plan upon prior written notice to the other party. 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. Each Party agrees to enter into an agreement with any such
subcontractors pursuant to which the subcontractor agrees to be bound by the
confidentiality and intellectual property obligations of the parties set forth
in Section 14 of this Agreement. TransEnterix may perform a quality system
assessment of any subcontractor who provides Microline with contract
manufacturing services related to the Supply Products.

 

3. DELIVERABLES AND TESTING; REGULATORY APPROVAL

(a) Deliverables. Microline shall use commercially reasonable efforts to deliver
Deliverables conforming to the Supply Product Specifications and 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 to TransEnterix of the Pilot Product
Units, TransEnterix shall promptly, but within no more than fifteen
(15) business days, (i) inspect, review and test and (ii) accept or reject such
Pilot Product Units by written notice to Microline. Upon delivery to
TransEnterix of any Deliverable (but not including the Pilot Product Units or
any Deliverable defined herein to require mutual satisfaction or agreement
(e.g., FSP Design Freeze, PoPP1, PoPP2)), TransEnterix shall promptly, but
within no more than ten (10) business days, (i) inspect, review and test each
Deliverable and (ii) accept or reject such Deliverable by written notice to
Microline. Payment for any Deliverable with an associated Milestone payment
under Section 10 shall be due as specified in Section 10(a). TransEnterix shall
accept all such Deliverables delivered in reasonable conformity with the
material aspects of the Supply Product Specifications, Marketing Requirements
Document, or Work Plan, as applicable, but may reject any Deliverable that fails
to conform to a reasonable degree with material aspects of such criteria. In the
event TransEnterix rejects any such Deliverable, it shall provide the reasons
for such rejection to Microline. Unless the parties agree to a longer timeframe
and/or cost, as applicable, Microline shall have up to forty-five (45) days
following

 

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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS MARKED WITH “*” AND BRACKETS AND HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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 Supply Product Specifications.
Notwithstanding anything to the contrary in this Agreement, each Party shall be
commercially reasonable in agreeing that a Milestone or Deliverable has been
met.

(c) Regulatory Approval. Microline shall apply for and use commercially
reasonable efforts to obtain at its expense Regulatory Approval, and
corresponding 510(k) clearance for use of the Power Supply Product, in each case
in the United States. Microline shall keep TransEnterix informed as to the
status of its applications for such Regulatory Approval and 510(k) clearance,
and shall advise TransEnterix as to whether such applications are for the
[******] mm or [**] mm [************] indication. As reasonably requested by
TransEnterix, the Parties shall meet to negotiate mutually acceptable amendments
to the Work Plan and SOW to develop necessary extended Shelf Life (as defined in
6(a)), and the necessary information and documents for filing for such
additional regulatory clearances in jurisdictions outside of the United States
at TransEnterix’s expense, including, without limitation, the technical file for
CE/European approval. All cost increases associated with such amendments shall
be reflected in a mutually agreed-upon amendment to the Work Plan. TransEnterix
shall cooperate with Microline relating to all material issues, amendments,
supplements, and other matters described in this Section 3(c) respecting all
regulatory approvals for the FSP Product developed hereunder. Upon such mutually
agreed-upon amendments, Microline shall use commercially reasonable efforts to
obtain regulatory approvals for use of the FSP Product developed hereunder, and
the Power Supply Product, in jurisdictions outside of the United States, as
agreed, at TransEnterix’s expense.

(d) TransEnterix shall use commercially reasonable efforts to, within five
(5) months from the Effective Date, freeze the aspects of the Robotic System
that affect the FSP Product Specification (“Surgibot Design Freeze”). If
Surgibot Design Freeze does not occur within five (5) months of the Effective
Date, all subsequent deadlines shall be extended by the length of time Surgibot
Design Freeze is delayed. Microline’s obligations to meet the Milestones, the
Deliverables and Pilot Product Acceptance are subject to the Robotic System
receiving FDA clearance and such Robotic System aspects not changing in the
FDA-cleared Robotic System in a way that affects the FSP Product Specification.

 

4. SUPPLY RELATIONSHIP

(a) Purchase and Sale. During the Minimum Period (defined in Section 4(c))),
Microline agrees to manufacture and sell to TransEnterix 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.

(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. Such forecasts shall become binding with respect to any
given calendar quarter ninety (90) days prior to the commencement of such
calendar quarter. Microline shall use commercially reasonable efforts to
accommodate such forecasts and provide the required Supply

 

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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS MARKED WITH “*” AND BRACKETS AND HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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 [******************] 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 [*************************] following the FSP
Launch Date (collectively, the “Minimum Period”), TransEnterix shall purchase at
least the minimum number of Supply Products set forth on Exhibit E, which number
shall be reduced by [****]% for each month’s delay in the FSP Launch Date from
the date specified in the Work Plan that is caused solely by Microline (the
“Minimum Products”). Delays to the Work Plan that are caused by a delay in
TransEnterix deliverables or by mutually agreed changes to FSP Product
Specifications will not be counted towards this reduction in Minimum Products,
but instead will shift the Work Plan schedule
accordingly. [*************************************************************************************************
************************************************************************************************************
******************************************************************************************************
****************************************************.] 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”).[*****************************************************************
************************************************************************************************************
************************************************************************************************************
*******************************************************************.]

(d) Improvements to Power Supply Products. Microline may notify TransEnterix in
writing of any improvement made by Microline to the Power Supply 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 Power Supply Products being supplied to TransEnterix
hereunder, the parties shall negotiate in good faith an adjustment to the price
of such Power Supply 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).

(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.

 

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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS MARKED WITH “*” AND BRACKETS AND HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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) or such
other address specified by TransEnterix in writing; (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) or such other address specified by TransEnterix in writing. 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 FSP Supply Product will function with the Power
Supply Product supplied hereunder, and vice versa), conform in all material
respects to the applicable Supply Product Specifications, will conform with the
applicable Regulatory Approval and will be free from any material defects in
materials and workmanship for a period (the “Shelf Life”) of twelve (12) months
from the date of shipment from Microline to TransEnterix or such other duration
agreed to in writing by the parties, (ii) Microline will transfer good title to
the Supply Products to TransEnterix, and (iii) all documentation supplied with
the Supply Products will be complete and accurate (the warranties contained in
Section 6(a)(i), (ii) and (iii) collectively, the “Warranties”).

(b) Inspection and Acceptance. Within fifteen (15) business 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 may, at its option, test select units
for conformance to Supply Product Specifications, 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 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

 

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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS MARKED WITH “*” AND BRACKETS AND HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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 fifteen (15) business days following receipt of such returned
Supply Product(s) by TransEnterix. 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 provided that the Supply Product
did not meet the Supply Product Specifications or Warranties and was used in
accordance with instructions for use.

 

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. Microline shall adopt and maintain a quality system to
ensure that all Supply Products manufactured under this Agreement conform to the
applicable approved Supply Product Specifications (the “QA System”).
TransEnterix may annually perform a quality system assessment and product
assessment (i.e. quality system audit and product quality audit) at Microline’s
facilities to assure conformance to quality system regulations and product
specifications. Each party shall work together in good faith to resolve any
issues related to quality and/or regulatory requirements.

(c) Government Inspections. Microline agrees to provide access to its facilities
at any time to FDA representatives or, if applicable, 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 ten (10) 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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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS MARKED WITH “*” AND BRACKETS AND HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

(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.

(f) Complaints and Corrective Action.

(i) TransEnterix will be the initial contact for all complaints from its
customers. TransEnterix will record, log, and maintain complaint files.
TransEnterix will forward to Microline reports of complaints within ten
(10) business days of their receipt by TransEnterix. If the complaint is
accompanied by or followed by return of the subject Supply Product to
TransEnterix, TransEnterix will return to Microline the Product that is the
subject of the complaint; provided, TransEnterix may at its option perform an
initial evaluation of the returned Product to determine the root cause of
failure. Microline shall make available all complaint investigation reports,
customer communications and corrective actions associated with Supply Product
complaint reports within sixty (60) days of receiving the TransEnterix report of
complaint.

(ii) Microline will be responsible for filing all required regulatory reports
with the appropriate Regulatory Authorities.

(g) Product Recalls. If, in the judgment of Microline or TransEnterix, any
Supply Product defect or any government action requires a recall of, or the
issuance of an advisory letter regarding, any Supply Product, either Party shall
undertake such recall or issue such advisory letter only after notification to
and agreement with the other Party. Each Party shall notify the other Party
within five (5) business days of becoming aware (as such phrase is defined in 21
CFR 803) of any issue that could lead to a field action related to the Supply
Products. The Parties shall endeavor to reach an agreement prior to making any
recall or issuing any advisory letter regarding the manner, text and timing of
any publicity to be given in such matters in time to comply with any applicable
legal or regulatory requirements, but such agreement will not be a precondition
to any action that either Party deems necessary to protect users of Supply
Products or to comply with any applicable governmental orders or mandates. The
Parties agree to provide reasonable assistance to one another in the event of
any recall or issuance of any advisory letter. Notwithstanding anything in this
Agreement to the contrary, TransEnterix shall have the right to manage any
Supply Product recall.

(h) Return of Products Safety Related or Not Safety Related. With regard to
issues pertaining to quality, reliability, durability or customer
dissatisfaction, but not necessarily pertaining to safety related issues,
whereby customer complaints indicate a known or inherent product fault, flaw, or
deficiency not related to the Marketing Requirements, both parties shall work
together in good faith to resolve the issues. TransEnterix may return inventory
of Supply Products to Microline for rework, repair, or replacement at
Microline’s expense in the event of known and confirmed product faults, flaws,
or deficiencies whether related to product safety or not within a reasonable
period of time but not to exceed thirty (30) days from the time of the return.

 

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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS MARKED WITH “*” AND BRACKETS AND HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

8. EXCLUSIVITY.

(a) Microline Exclusivity; Changes to FSP Product. Microline agrees that it
shall develop the FSP Product exclusively for, and supply the FSP Product
exclusively to, TransEnterix for use with the Robotic System in the Field.
TransEnterix acknowledges and agrees that nothing herein shall preclude
Microline from conducting any development efforts, or from using any Microline
Background Technology, Microline Project Technology, or Intellectual Property
Rights therein, in each case to research, develop or commercialize products
(other than the FSP Product, or any fully or partially reusable version thereof,
specifically for use with the Robotic System in the Field). Microline covenants
and agrees that it shall promptly refer all inquiries regarding the FSP Product
for use with the Robotic System in the Field to TransEnterix. Microline agrees
that it will not supply the FSP Product for use with the Robotic System, or any
other product specifically for use with the Robotic 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.

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(b) TransEnterix Exclusivity. During the Minimum Period, and except as set forth
in Section 8(c), TransEnterix agrees that it shall purchase all FSP Products and
Power Supply Products, and any other vessel sealing devices and associated power
supply products for use with the Robotic 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 [**]% of the binding
forecasts for [***] 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 reasonably 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

 

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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS MARKED WITH “*” AND BRACKETS AND HAS BEEN FILED
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the selection of an Alternative Supplier (or another alternative 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 and authorize said
alternative supplier to manufacture Supply Products, including a limited
non-exclusive, non-sublicensable license under Microline Project Technology and
Microline Background Technology solely to the extent necessary to manufacture
Supply Products for TransEnterix.

 

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 Robotic System in accordance with the applicable
Regulatory Approval 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. Microline shall provide to TransEnterix samples of the planned
labeling or product literature at least ninety (90) days prior to the submission
of the labeling to regulatory authorities in accordance with the FDA Clearance
[******] mm or [**] mm, the FDA Clearance [**] and, if applicable, CE Mark
Technical File, or other similar regulatory market applications. Microline shall
give full consideration to any comments received from TransEnterix with respect
to such labeling and product literature. In addition, Microline shall

 

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REQUEST. REDACTED MATERIAL IS MARKED WITH “*” AND BRACKETS AND HAS BEEN FILED
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provide to TransEnterix copies of the regulatory approved or cleared labeling to
be used in connection with any FSP Supply Product at least thirty (30) days
prior to the first commercial sale of such Supply Product. 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 Microline shall give full
consideration to comments received from TransEnterix with respect to such
material change.

 

10. PAYMENTS

(a) 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:

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(b) 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.

(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

 

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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS MARKED WITH “*” AND BRACKETS AND HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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 FSP 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)), FSP
Products or the Power Supply Products to a third party which are inconsistent
with the rights granted to TransEnterix herein; (iii) Microline has not received
any communications alleging that Microline’s use of Microline Background
Technology relating to the FSP Products or Power Supply Products would violate
Intellectual Property Rights of any third party; and (iv) Microline shall comply
in all material respects with all applicable laws.

(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 Robotic System to a third party which are inconsistent with
the rights granted to Microline herein; (iii) TransEnterix will use commercially
reasonable efforts to seek to obtain all United States regulatory approvals
from, to make all necessary and appropriate applications and other submissions
to, and to prepare and maintain 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 business activities
relating to the Robotic System; and (iv) TransEnterix has not received any
communications alleging that TransEnterix’s use of TransEnterix Background
Technology relating to the Robotic System would violate Intellectual Property
Rights of any third party; and (v) TransEnterix shall comply in all material
respects with all applicable laws.

(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.

 

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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS MARKED WITH “*” AND BRACKETS AND HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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).
Microline Background Technology and TransEnterix Background Technology each
includes all Technology Controlled by Microline or TransEnterix, as the case may
be, and disclosed to the other party for use in connection with the Project,
together with any improvements to, or derivations of, such Technology.

(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 FSP Products or the Power Supply Products or to the
development efforts relating to such FSP Products or Power Supply Products
(“Microline Project Technology”), but excluding all TransEnterix Background
Technology and TransEnterix Project Technology).

(c) TransEnterix Project Technology. TransEnterix shall own all right, title and
interest in and to the following Project Technology: (i) all Project Technology,
and all Intellectual Property Rights therein, relating to Interface Features
(defined below), and (ii) all Project Technology, and all Intellectual Property
Rights therein, that is an improvement to, a derivation of, or in the Robotic
System (“TransEnterix Project Technology”). For the purposes of this
Section 12(c), an “Interface Feature” means any feature for mechanically,
electrically or electronically coupling or connecting the FSP Product with the
Robotic System, whether those components of the Interface Feature are included
on the FSP Product or the Robotic System.

(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.

 

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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS MARKED WITH “*” AND BRACKETS AND HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

(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 FSP Products or the Power Supply 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 Robotic 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 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(h), 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 to
sell the Supply Products purchased from Microline to distributors and end users
or fulfill its obligations under this Agreement. The license granted pursuant to
this Section 12(f)(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(h), 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

 

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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.

 

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 Robotic
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, misuse, 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.

 

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SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

(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.

(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

 

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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS MARKED WITH “*” AND BRACKETS AND HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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.

 

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. Notwithstanding the
foregoing, the Parties agree that TransEnterix Background Technology and
TransEnterix Project Technology is the Confidential Information of TransEnterix,
and Microline Background Technology and Microline Project Technology is the
Confidential Information of Microline.

(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

 

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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS MARKED WITH “*” AND BRACKETS AND HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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, or as required by law. In the event the
terms of this Agreement or the other Confidential Information are required to be
disclosed by law, the disclosing party shall notify the non-disclosing party
with sufficient advance notice to obtain any Microline internal approvals and
give the non-disclosing party an opportunity to review and comment. 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.

 

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 Minimum 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 FSP Products during the year prior to the applicable
Renewal Term:

 

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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS MARKED WITH “*” AND BRACKETS AND HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

Renewal Term

  

Quantity

First Renewal Term    [*****] Second Renewal Term    [*****] Third Renewal Term
   [*****]

(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.

(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 the Alternate Supplier to manufacture or commercialize the FSP Product or
Power Supply Product. Such license shall terminate on the second anniversary of
the date that the Initial Term or then-current Renewal Term (as of the effective
date of termination, 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 as necessary to enable TransEnterix to manufacture, have
manufactured, use and sell the FSP Product developed hereunder and the Power
Supply Product.

 

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REQUEST. REDACTED MATERIAL IS MARKED WITH “*” AND BRACKETS AND HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

(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, Delay.

(i) Notwithstanding any other provision of this Agreement, TransEnterix shall
have the right to terminate this Agreement at any time after it has accepted the
Pilot Product Units as in compliance with the Warranties, upon ninety (90) days’
written notice to Microline; however, in such instance, TransEnterix shall not
be released from its obligation to pay Microline the Transfer Price multiplied
by the Profit Margin for each Minimum Product not purchased, as specified in
Section 4(c), and any other payment obligations accruing prior to or in
connection with such termination.

(ii) Microline shall use commercially reasonable efforts to obtain the
Regulatory Approval within [****************] 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 [****************] of the Effective Date (unless Microline’s
failure to obtain such Regulatory Approval is due to reasons beyond the
reasonable control of Microline or related to any acts, omissions or delays of
or caused by TransEnterix). Notwithstanding the immediately preceding
parenthetical, if Microline has not procured the Regulatory Approval for any
reason within [***************] after the Effective Date, TransEnterix may at
its option terminate this Agreement upon ninety (90) days written notice to
Microline. If TransEnterix fails to accept a Deliverable on a timely basis as
provided in Section 3(b) or to make any Milestone payment on a timely basis in
accordance with Section 10(a) (or fails to be commercially reasonable in
agreeing in a reasonable period of time that a Deliverable or Milestone has been
met), the subsequent deadlines for Microline to deliver subsequent Deliverables
or meet subsequent Milestones, including deadlines for obtaining Regulatory
Approval resulting from this section, shall be extended by the total number of
days of delay in payment or acceptance.

(iii) 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’s cumulative delay (unrelated to any
acts, omissions or

 

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REQUEST. REDACTED MATERIAL IS MARKED WITH “*” AND BRACKETS AND HAS BEEN FILED
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delays of or caused by TransEnterix) in delivering a Deliverable to TransEnterix
extends more than [***********] beyond the delivery date for such Deliverable
specified in the Work Plan, except that if TransEnterix fails to accept a
Deliverable on a timely basis as provided in Section 3(b) or to make any
Milestone payment on a timely basis in accordance Section 10(a) (or fails to be
commercially reasonable in agreeing in a reasonable period of time that a
Deliverable or Milestone has been met), subsequent deadlines, including
deadlines resulting from this section, shall be extended by the total number of
days of delay in payment or acceptance. For the purpose of this Subsection
15(d)(iii), Microline’s cumulative delay shall be calculated exclusive of any
period of delay attributable to a failure by TransEnterix to carry out its
obligations under the Work Plan or this Agreement or to any acts, omissions or
delays of or caused by TransEnterix.

(iv) For clarity, in no case shall a rejection by TransEnterix of a Deliverable
under the terms set forth in Section 3(b) be deemed a failure by TransEnterix to
accept a Deliverable on a timely basis under Sections 15(d)(ii) or 15(d)(iii),
provided however that acceptance is not unreasonably withheld, conditioned or
delayed, and that acceptance is made when in the reasonable mutual agreement of
the Project Directors, a Deliverable is acceptable for use in accordance with
the relevant instructions for use, where applicable, and substantially complies
with all material aspects of the relevant product specifications agreed upon by
the Project Directors.

(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 effective date of termination,
Microline had fully met its obligations to TransEnterix described in that
specific sub-section), 11, 12, 13, 14, 15(c)(ii),15(d)(i), 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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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS MARKED WITH “*” AND BRACKETS AND HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

(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

 

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REQUEST. REDACTED MATERIAL IS MARKED WITH “*” AND BRACKETS AND HAS BEEN FILED
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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.

(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

 

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REQUEST. REDACTED MATERIAL IS MARKED WITH “*” AND BRACKETS AND HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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

and to TransEnterix at:

TransEnterix Surgical, Inc.

635 Davis Drive, Suite 300

Durham, North Carolina 27713

Attention: Todd Pope, tpope@TransEnterix.com

Telecopier: (919) 765-8459

with a required copy to:

TransEnterix Surgical, Inc.

635 Davis Drive, Suite 300

Durham, North Carolina 27713

Attention: Legal Counsel

Telecopier: (919) 765-8459

(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.

Signatures Appear on the Following Page-

 

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REQUEST. REDACTED MATERIAL IS MARKED WITH “*” AND BRACKETS AND HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

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 Surgical, Inc.     Microline Surgical, Inc. By:   /s/ Todd M. Pope
    By:   /s/ Sharad H. Joshi Name:   Todd M. Pope     Name:   Sharad H. Joshi
Title:   CEO     Title:   President and CEO

 

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REQUEST. REDACTED MATERIAL IS MARKED WITH “*” AND BRACKETS AND HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

EXHIBIT A

MARKETING REQUIREMENTS DOCUMENT

 

1.0 PURPOSE

The purpose of this document is to define product concept and product
requirements for the SurgiBot FLEX VESSEL SEALING DEVICE, AND ASSOCIATED UPS.

 

2.0 SCOPE

This MRD covers the Surgibot FLEX VESSEL SEALING DEVICE and its use clinically
with the SurgiBot Surgical System.

 

3.0 DEFINITIONS

Requirement: A performance or physical characteristic of the product that must
be achieved in order to fulfill the requirement. The individual requirements are
indicated by a bold-face “(Rxx)” where xx is an alphanumeric unique to the
requirement.

Objective: A performance or physical characteristic of the product that is
desirable but is not required. The individual objectives are indicated by a
bold-face “(Oxx)” where xx is an alphanumeric unique to the objective.

Rationale: A short justification of the rationale for the requirement or
objective.

 

4.0 PRODUCT CONCEPT DEFINITION

 

4.1 Product Description:

[******************************************************************************************************

**********************************************************************************]

[************************************************************************************************]

[******************************************************************************************************

**************************************************************]

[*******************************************************************************************]

[******************************************************************************************************

*************]

[******************************************************************************************************

***********************************************************************************
**********]

[******************************************************************************************************]

[******************************************************************************************************

********************************]

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REQUEST. REDACTED MATERIAL IS MARKED WITH “*” AND BRACKETS AND HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

4.2 Intended Use:

 

  4.2.1 The Flex Vessel Sealing Device will simultaneously grasp, seal, and
divide tissue in a manner consistent with the current Microline FLS

 

  4.2.2 The FVS will seal vessels and have clearance for vessel sealing with a
target of [***] vessel sealing indication or a minimum of [***] vessel sealing
indication.

 

4.3 “Target Procedures” may include (but will not be limited to):

[*****************************************************************]

[*****************************************************************************************************]

[***********************************************************************************]

 

4.4 End Users: Prescription Use.

 

  4.4.1 Surgeon familiar with minimally invasive laparoscopy techniques

 

  4.4.2 Nurse: OR Nurse

 

4.5 Intended Markets: Laparoscopic Surgery

 

  4.5.1 The primary segments in which this product will be sold include:

 

  4.5.1.1 Hospital Operating Rooms

 

  4.5.1.2 Surgery Centers

 

5.0 MARKETING REQUIREMENTS

 

5.1 General Requirements

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5.2 Usability (Human Factor) Requirements

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5.3 Compatibility Requirements:

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5.X Performance Requirements:

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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
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5.4 Environmental Requirements

 

(R13)    Operating Environment: The System shall be utilized in temperatures
representative of an Operating Room environment. (R14)    Storage Environment:
The System shall be stored in conditions that do not adversely affect function
or sterility shelf life.

 

5.5 Biocompatibility Requirements

 

(R15)    Biocompatible Materials: Tissue contacting materials of the System
shall be biocompatible according to the nature of contact and duration of
contact with tissue.

 

Rationale:    Biological testing of patient contacting materials is described by
ISO-10993, a standard recognized by the FDA. Tissue contacting material should
undergo designated testing or have long, safe histories of clinical use in other
devices legally marketed in the US.

 

5.6 Packaging Requirements

 

(R16)    System Packaging: The System shall be packaged in a manner that
protects the instrument from handling damage, maintains a sterile barrier, is
easily stored in a hospital environment, is easily opened by hospital staff for
use and meets applicable requirements of sterile packaging systems. (O1)   
Packaged individually in blister and box, then in shipper carton 3 per box.

 

5.7 Sterilization Requirements (please modify if not required)

 

(R17)    Sterilization Level: The System shall have a sterility assurance level
(SAL) of 10-6.

 

Rationale:    The normal SAL for medical devices is 10-6 (one in a million) for
critical and invasive devices.

(R18)    Sterilization Method: The single use portion of the system must be
compatible with Gamma or ETO sterilization methods.(MSI to provide sterile)

 

5.8 Labeling Requirements

 

(R19)    Labeling: Labeling content shall comply with federal and international
regulations for medical devices. (R20)    Trademarks and Registrations: The
System shall include relevant trademarks or registrations. (R21)    Latex Free:
No materials contain latex (notification on labeling is required if latex is
present).

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REQUEST. REDACTED MATERIAL IS MARKED WITH “*” AND BRACKETS AND HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

5.9 Distribution Requirements

 

(R22)    Distribution: Package must meet applicable requirements per
standardized distribution testing and maintain seal integrity for the sterility
shelf life of the product.

 

5.10 Shelf Life Requirements

 

(R23)    Sterility Shelf Life: The System will be initially launched with a 12
months sterility shelf life. (R24)    Functional Shelf Life: The Instrument will
be initially launched with a 12 months sterility shelf life.

 

5.11 Regulatory Requirements

 

(R25)    Relevant Regulations: The device will be immediately marketed in the US
with FDA clearance. (R26)    Upon request, MSI will obtain clearance for sale in
additional countries at TRX expense, and MSI will cooperate with provision of
the needed technical files.

 

5.12 Manufacturing Requirements

 

(O2)    Manufacturing Location: Target manufacturing location FLS is Beverly
Mass.

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EXHIBIT B

ROBOTIC SYSTEM

The Robotic System is a surgical platform which allows for flexible instruments
to be introduced into the body for purposes of performing surgery using motors
to orient and move the instruments within a body cavity. The system includes a
component(s) through which flexible instruments can be inserted into the body.
This component can receive a flexible instrument and use the motors to move the
flexible instrument in multiple degrees of freedom.

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EXHIBIT C

WORK PLAN

PLAN HAS BEEN REDACTED

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SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

EXHIBIT D

PRICING OF SUPPLY PRODUCTS

 

  •   Transfer Price for FSP Products based on tooling and volumes

 

Annual Volumes

   Transfer Price (no tooling)   Transfer Price (with tooling)

[*********] units

   $[***]   N/A

[**********] units

   $[***]   $[***]

[*********] units

   [****]   $[**************]

>[*****] units

   [****]   $[**************]

 

  •   The table above is an estimate. It is based on what Microline knows today
and, is subject to change based on the unknown changes required by
specifications and Surgibot interface requirements. Any changes that lead to an
increase in pricing must be reviewed and approved by TransEnterix prior to
implementation. Transfer pricing will be jointly reviewed upon Design Freeze for
the FSP Product and annually thereafter to provide opportunities for cost
reductions. Microline and TransEnterix agree that the pricing for >[*****] units
will be reduced to reflect volume pricing discounts; however the pricing for
these volumes will not be set until the aforementioned pricing reviews.

 

  •   Option is shown above for CapEx investment estimated to be $[******] to
bring component costs and Transfer Price down shown above “with tooling.”
TransEnterix and Microline will jointly develop a tooling plan and strategy
where TRx will cover the costs of tools that are unique to the FSP Product.

Power Supply Products

Transfer Price = $[*****]/unit

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EXHIBIT E

PRODUCT MINIMUMS

 

Period

   FSP Products   Power Supply Products

[******]*

   [*****]   [**]

[******]*

   [*****]   [**]

[******]*

   [*****]   [**]

First Renewal Term

   [*****]  

Second Renewal Term

   [*****]  

Third Renewal Term

   [*****]  

 

*Refers to [******] periods during the Minimum Period.