EX-10.30 Supply Agreement w/Encore Medical, L.P.



 



EXHIBIT 10.30




EXECUTION COPY




SUPPLY AGREEMENT




     This Supply Agreement (along with all schedules and exhibits hereto, the “Agreement”),
is made and entered into as of the last date of execution appearing on the signature page hereto
(the “Effective Date”), by and between Encore Medical, L.P., a Delaware limited
partnership, having its principal place of business in Austin, Texas (“ENCORE”) and MAKO
Surgical Corp., a Delaware corporation, having its principal place of business in Hollywood,,
Florida (“MAKO”). ENCORE and MAKO are sometimes referred to herein individually as a
“Party” and collectively as the “Parties.”



Recitals




     WHEREAS, ENCORE has developed a certain Implant and System (each as defined below);



     WHEREAS, ENCORE and MAKO entered into that certain Letter of Intent, dated December 11, 2006
(“LOI”) in which ENCORE agreed to grant to MAKO an exclusive, worldwide license to certain
rights relating to the System when used in connection with the MAKO Haptic Guidance
SystemTM (“HGS”) (the System when used in connection with the HGS, being used
in the “MAKO Field”);



     WHEREAS, ENCORE and MAKO have concurrently entered into that certain License Agreement
(“License Agreement,” the terms of which are expressly incorporated herein by reference),
by which ENCORE licenses to MAKO the rights relating to the System so that MAKO may use, offer for
sale, sell, and import the System and ultimately make, have made, use, offer for sale, sell, and
import independently of ENCORE; and



     WHEREAS, during a Supply Period (as defined below) MAKO desires to purchase from ENCORE, and
ENCORE is willing to supply, certain Products (as defined below) for use with the HGS as either an
ENCORE or MAKO private labeled product under ENCORE’s Premarket Notification 510(k) (the
“Encore 510(k)”), under the terms and conditions of this Agreement.



     NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and undertakings
set forth herein, and other valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties agree as follows:



ARTICLE I

Definitions




          The terms of the recitals and preamble are incorporated herein by reference.




     1.1 An “Affiliate” of a party means an entity directly or indirectly controlling,
controlled by or under common control with that Party, where control means the ownership or
control, directly or indirectly, of more than fifty percent of all of the voting power of the
shares (or other securities or rights) entitled to vote for the election of directors or other
governing authority, as of the date of this Agreement or hereafter during the Effective Period of
this Agreement. However, the entity will be considered an Affiliate only for the time during which
such control exists.





 




			
	[***]	 	Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [***].
A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.





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     1.2 “Agreement” means this Supply Agreement, as it may be amended from time to time.



     1.3 “CGMP Regulations” means the current good manufacturing practices (“CGMP”)
promulgated by the FDA, as amended, including those currently set out in Parts 210 and 211 of Title
21 of the Code of Federal Regulations.



     1.4 “Effective Date” has the meaning given in the preamble.



     1.5 “Effective Period” has the meaning given to in Section 6.1.



     1.6 “FDA” means the United States Food and Drug Administration.



     1.7 “Implant” as used in both a singular and plural context, means the E.P.I.K.
Unicondylar Knee System and all components thereof, including the femoral component, tibia base
plate and poly inserts (manufactured according to all Specifications), and all the related medical
instruments and surgical techniques, developed by ENCORE and used for a single procedure.



     1.8 “Law” means any United States or non-United States federal, national,
supranational, state, provincial, local or similar law, ordinance, regulation, rule, code, order,
or requirement.



     1.9 “License Agreement” has the meaning given to it in the recitals.



     1.10 “Licensed IP Rights” means all patents, copyrights, proprietary rights in
technical information and similar industrial and intellectual property rights throughout the world
that pertain to the existing System design as of the Effective Date, and that are owned by ENCORE
or that ENCORE has the right to license as of the Effective Date.



     1.11 “Product,” as used in both a singular and plural context, means the System or
any one or more components thereof.



     1.12 “Product Price” regarding each component of the Product and the System as a
whole is in each case the price set forth in Schedule 1 hereto.



     1.13 “Specifications” means the description and specification for the Implant
contained in the specifications and technical documents relating to the manufacture, operation, use
and implantation of the Implant (including all prior versions and the most current version of it)
that are in the possession of ENCORE or its employees, representatives or agents on or before the
Effective Date including, without limitation, FDA design control documents DHF, DMR (design
requirement and criteria, specified requirements, V&V, design transfer), clinical data and implant
follow-ups and manufacturing specifications and know-how.



     1.14 “System” means the Implant and related instrumentation, the Specifications and
related know-how.


 
 




			
	[***]	 	Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [***].
A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.




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     1.15 “Supply Period” means the period between the Effective Date and the date on
which MAKO is able and ready to make and sell the System independently, under its own label and a
MAKO 510(k) (as defined below), but in any case ending the later of (a) thirty six (36) months
after the Effective Date (the “Initial Term”); and (b) at the discretion of MAKO, any one
(1) year extensions in addition to said Initial Term; provided, however, that ENCORE may terminate
the Supply Period (i) at any time after ENCORE ceases to manufacture the System based on bona fide
product safety, efficacy, or regulatory concerns (described in written detail to MAKO), in
ENCORE’s sole and absolute discretion; and (ii) with six (6) months written notice following
ENCORE’s decision to cease manufacturing the System for any other reason.



ARTICLE II

Sale and Purchase of Product




     2.1 Sale and Purchase.



     (a) During the Supply Period, (i) ENCORE, within the limitations contained in this Article,
agrees to use its reasonable best efforts to sell to MAKO such quantities of Product as MAKO may
order in accordance herewith; (ii) MAKO shall have the right to provide ENCORE with one or more
written purchase commitments for the manufacture by ENCORE of the System bearing the MAKO name and
logo; and ENCORE shall use its reasonable best efforts to assist MAKO in over-labeling of the
System to carry MAKO’s name and labeling, any such labeling being at MAKO’s reasonable expense;
and (iii) ENCORE shall, at no additional cost, maintain an adequate Implant inventory to
accommodate MAKO’s business requirements as periodically communicated to ENCORE in a written
quarterly forecast pursuant to the procedures outlined below.



     (b) Notwithstanding the foregoing (i) MAKO expressly reserves, in its sole discretion, the
right to choose the manufacturer of the System other than ENCORE at any time based on MAKO’s
production needs; (ii) MAKO shall have the rights to manufacture the System for use with the HGS
when MAKO obtains a 510(k) Notification (a “MAKO 510(k)”) using MAKO’s preferred suppliers
as a MAKO product as further detailed below; and (iii) for the term of this Agreement and all
times thereafter, ENCORE shall be prohibited from selling or supplying the System in the MAKO
Field.



     (c) During the Supply Period, ENCORE shall manufacture the System for MAKO, and MAKO shall
initially sell the System under the Encore 510(k).



     (d) In the event (i) ENCORE becomes subject to an order of a regulatory authority with
competent jurisdiction prohibiting the distribution of the Products, (ii) the results of any FDA
inspection or inspection by any other applicable regulatory body or quality systems auditing body
directly impact the marketing and/or distribution of the Products or indicate a material safety
concern with respect to the Products that could have a significant effect on the safety or
efficacy of such Products, or (iii) ENCORE receives written notice from a third party that
indicates a material concern with respect to the safety or efficacy of the Products and that is
reasonably likely to indicate a material concern with respect to the safety or efficacy of the
Products, ENCORE shall all provide MAKO immediate notice thereof and ENCORE shall have



 
 




			
	[***]	 	Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [***].
A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.






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no further obligation to supply the Products to MAKO, and MAKO shall immediately cease
supplying the Products to MAKO’s customers until further notice by ENCORE.



     2.2 Quantity; Forecasts.



     (a) MAKO shall have the right to purchase from ENCORE an unlimited number of complete Systems
and, for so long as MAKO has not chosen another manufacturer for any of the components of the
System, individual System components and Products from ENCORE, all of which shall be purchased
pursuant to the Product Pricing, but in no event shall ENCORE be required to supply more than the
amount of Products provided in any quarterly forecast covering the time period of any written
purchase commitment.



     (b) All Products delivered to MAKO will be F.O.B. MAKO’s destination. ENCORE will use its
reasonable best efforts to deliver Product within five (5) days of the applicable date for which
delivery of Product is properly requested in a purchase order, and assist MAKO in arranging any
desired insurance (in amounts that MAKO shall determine) and transportation, via air freight unless
otherwise specified in writing, to any destinations specified in writing from time to time by MAKO.
All customs, duties, costs, taxes, insurance premiums, and other expenses relating to such
transportation and delivery will be at MAKO’s expense.



     (c) ENCORE will include with each shipment copies of all applicable inspection records.



     2.3 Rejection of Product in Case of Nonconformity.



     (a) MAKO may reject any portion of any shipment of Product that (i) does not conform to the
description or Specifications, (ii) is adulterated or misbranded within the meaning of the Federal
Food, Drug and Cosmetic Act (the “Act”), (iii) does not comply with an order for the
Products, or (iv) does not comply with the CGMP Regulations.



     (b) In order to reject a shipment, MAKO must (i) give notice to ENCORE of MAKO’s intent to
reject the shipment within thirty (30) days of receipt (the “Inspection Period”) together with a
written indication of the reasons for such possible rejection; (ii) return such Product to ENCORE,
if so requested; and (iii) as promptly as reasonably possible thereafter, provide ENCORE with
notice of final rejection and the full basis therefore. After notice of intent to reject is given,
MAKO shall cooperate with ENCORE in determining whether rejection is necessary or justified. If no
such notice of intent to reject is timely received, MAKO shall be deemed to have accepted such
delivery of Product; provided, however, that, following the Inspection Period, in the event any
Product (i) has a latent or unknown defect, (ii) MAKO made a diligent examination of the Product,
commercially reasonable under the circumstances, within the Inspection Period and did not discover
such latent or unknown defect, and (iii) the latent or unknown defect is not caused by MAKO or any
of MAKO’s representatives, MAKO may reject such Product as though the defect were discovered during
the Inspection Period, and the parties shall follow the same procedures as herein described.



     (c) In any event, MAKO must pay for the shipment as otherwise provided herein and will be
entitled to a refund of the purchase price (together with insurance and freight charges) of
properly rejected Products at the time they are ultimately rejected, provided that if ENCORE



 
 




			
	[***]	 	Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [***].
A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.






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disputes the rejection, refund shall be made, if at all, at the time the dispute is finally
resolved. ENCORE shall notify MAKO as promptly as reasonably possible whether it accepts MAKO’s
basis for any rejection.



     (d) Whether or not ENCORE accepts MAKO’s basis for rejection, promptly on receipt of a notice
of rejection, ENCORE shall use its reasonable efforts, at MAKO’s request, to provide replacement
Product which shall be purchased by MAKO as provided in this Agreement.



     (e) Unless ENCORE requests the return to it of rejected Products within sixty (60) days of
receipt of MAKO’s notice of rejection, MAKO shall destroy such Products promptly and provide ENCORE
with certification of such destruction. MAKO shall, upon receipt of ENCORE’s request for return,
promptly dispatch said Products to ENCORE, at ENCORE’s cost.



     2.4 MAKO’s Obligations.



     (a) MAKO agrees to ascertain and comply with all applicable Laws and regulations and standards
of industry or professional conduct in connection with the use, distribution or promotion of the
Products, including without limitation, those applicable to product claims, labeling, approvals,
registrations and notifications. The termination or expiration of this Agreement shall not relieve
either party of its responsibility to comply in all material respects with all applicable Laws and
regulations and standards of industry.



     (b) MAKO will work diligently to establish an independent product source for Products,
including obtaining necessary FDA approvals for Products made under its authority.



     (c) MAKO shall not make any material misrepresentation about the System, the Products, or
ENCORE or otherwise disparage the System, the Products, or ENCORE. For the avoidance of doubt, the
Parties agree and recognize that factual statements made by MAKO concerning competitive advantages
of implant systems offered by MAKO other than the System, including, without limitation, the
Stelkast Unicondylar Knee System and the total modular knee system currently under development by
MAKO, shall not be deemed to have violated this Section 6.2(d).



     (d) For so long as MAKO shall sell the System under the Encore 510(k), MAKO shall not
utilize any promotional material prepared by it with respect to any of the System or the Products
without obtaining the prior written approval thereof from ENCORE, which shall not be unreasonably
delayed or withheld. If at any time MAKO shall sell the System under a MAKO 510(k), MAKO shall not
utilize any promotional materials prepared by it containing any ENCORE trade names, trademarks,
service marks, or copyrighted material without obtaining the prior written approval thereof from
ENCORE which shall not be unreasonably delayed or withheld.



     (e) For so long as MAKO shall sell the System under the Encore 510(k), MAKO shall not
make any claims related to the efficacy of the Products or the System other than those claims made
by ENCORE.



     (f) For the avoidance of any doubt, MAKO has no obligation to purchase Products from ENCORE.



 
 




			
	[***]	 	Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [***].
A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.






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ARTICLE III

Price and Payments




     3.1 Price. MAKO shall pay to ENCORE the Product Price for Product purchased under
this Agreement. Provided, however, the Product Price does not include the reasonable cost of
labeling Product as required by MAKO, and which shall be separately charged to MAKO.



     3.2 Method of Payment. All payments due hereunder to ENCORE shall be paid to ENCORE
in United States dollars in the United States not later than 30 days following the date of the
applicable invoice.



ARTICLE IV

Branding




     4.1 Labeling. MAKO may specify, at the time of ordering, whether Products will bear
an ENCORE label or a MAKO label. If MAKO orders Products with MAKO labels, MAKO must first have
provided to ENCORE either labels suitable for placing on ENCORE’s packaging for the Products or
packaging suitable for the Products. ENCORE shall not be required to label any product with a
MAKO label if ENCORE has a good faith belief that such MAKO label would be inconsistent with
ENCORE or MAKO’s regulatory obligations; provided, however, that ENCORE will work with MAKO in
good faith in correcting any labeling or packaging deficiency.



     4.2 Limited License. ENCORE grants to MAKO a limited, non-exclusive license to use
the mark “ENCORE.” and any other trade names, trademarks and trade dress used on or in connection
with Products purchased by MAKO from ENCORE pursuant to this Agreement, to refer to the Products
and to ENCORE in connection with the marketing, advertising, distribution, sale and use of the
Products. ENCORE further grants to MAKO the right to create, reproduce, publish, and distribute
images and renderings (including photographs and video) of the Products and packaging and any
accompanying documentation. MAKO shall follow ENCORE’s instructions at all times as to the use or
discontinuance of such trade names, trademarks and trade dress. Use of such trade names,
trademarks and trade dress shall not give MAKO a right thereto.



ARTICLE V

Regulatory Matters and Recalls




     5.1 FDA Regulatory Matters



     (a) Each party shall cooperate fully with the other patty in dealing with customer complaints
concerning the Products and shall take reasonable action to promptly resolve and follow up with
regard to such complaints.



     (b) Each of the Parties shall be responsible for complying with the Medical Device Reporting
requirements set forth in 21 C.F.R. Part 803, as may be amended from time to time (“MDR”), for the
Products. Each of the Parties shall promptly provide to the other Patty copies of such filings
and reports that could affect the safety or efficacy of the System. For the



 
 




			
	[***]	 	Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [***].
A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.






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avoidance of doubt, ENCORE shall be responsible for all MDR requirements for Products
manufactured by ENCORE, and MAKO shall be responsible for all MDR requirements for Products
manufactured by or for MAKO, other than those manufactured by ENCORE.



     (c) Each of the Parties shall provide such assistance and information as reasonably requested
by the other Party to fulfill such Party’s MDR obligations for the Products. Without limiting the
generality of the foregoing, the Parties shall: (1) keep and maintain a record of all customer
complaints received by them relating to the Products that are required to be maintained by them
pursuant to 21 C.F.R. § 820.198; (2) notify the other Party upon receipt of any information that
indicates a material safety concern with respect to the Products that could have a significant
effect on the safety or efficacy of the Products; and (3) otherwise cooperatively undertake
investigations, provide information and analysis, and conduct such follow-up activities as
reasonably requested in fulfillment of their obligations under this Agreement.



     (d) Each Party agrees and covenants that it will inform the other Party within forty-eight
hours of any corrective/preventive action related to the System. This notice will include the
corrective action plan to address the root cause.



     (e) Each Party agrees and covenants to provide to the other, within twenty-four hours of the
initial receipt, any report of any serious adverse experience with respect to the System. Serious
adverse experience means any experience that suggests a significant hazard, contraindication, side
effect or precaution, or any experience that is fatal or life threatening, is permanently
disabling, or requires or prolongs inpatient hospitalization.



     (f) For so long as the Supply Agreement remains in force between the Parties, any Party
receiving a communication of any kind pertaining to the System from a regulatory authority will
promptly provide to the other Party copies of any such communication. Each Party agrees and
covenants that it shall promptly notify the other Party of the receipt of any FDA Form 483 Report
on Inspectional Observations or equivalent notice from any regulatory authority which affects the
System. Such notice will include the corrective action plan to remedy the deficiency.



     5.2 Removals and Corrections (Recalls)



     (a) If either Party, in good faith, determines that a removal, correction or other field
action involving the System, or any party thereof, is warranted, such Party shall immediately
notify the other Party in writing and shall advise such other Party of the reasons underlying its
determination that a removal, correction or other field action is warranted. The Parties shall
consult with each other as to any action to be taken in regard to such removal, correction or other
field action. If, after consultations, either Party, in good faith, believes that such a removal,
correction or field action should be undertaken, the Parties shall cooperate in carrying out the
same.



     (b) MAKO shall track the Product in accordance with all applicable Laws and as reasonable
requested by ENCORE.



 
 




			
	[***]	 	Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [***].
A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.






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     (c) For any Products manufactured by ENCORE, ENCORE shall submit to the FDA any necessary
reports of removals, corrections or other field actions, as required under 21 C.F.R. Part 806, and
shall be responsible for drafting any notifications of removals and corrections with respect
thereto. For any Products manufactured by MAKO under a MAKO 510(k), MAKO shall submit to the FDA
any necessary reports of removals, corrections or other field actions, as required under 21 C.F.R.
Part 806, and shall be responsible for drafting any notifications of removals and corrections with
respect thereto. Each Party shall within a reasonable time thereafter provide the other Party with
a copy of all such reports as filed with the FDA, with the exception of any confidential, trade
secret or proprietary information. Each Party shall maintain records of all corrections or
removals as required by Law, and shall promptly provide the other Party with a copy of such
records, with the exception of any confidential, trade secret or proprietary information.



     (d) For any Products manufactured by ENCORE, ENCORE shall be responsible for all costs and
expenses of any removals or corrections to the extent such removal or correction is exclusively
caused by: (1) the failure of ENCORE to comply with any requirement or directive of the FDA; or (2)
the failure of the Products to comply with any material specification. For any Products
manufactured by ENCORE and sold to MAKO, MAKO shall also be responsible for all costs and expenses
of any removals or corrects to the extent such removal or correction is caused by MAKO’s failure to
comply with any requirement or directive of the FDA or any alteration of the Product by MAKO. For
any Products manufactured by MAKO under a MAKO 510(k), MAKO shall be responsible for all costs and
expenses of any removals or corrections.



ARTICLE VI

Termination, Rights And Obligations Upon Termination




     6.1 Term. This Agreement shall continue in effect until the end of the Supply Period
unless earlier terminated (the “Effective Period”).



     6.2
Termination by Mutual Agreement. This Agreement may be terminated upon mutual written agreement of the Parties.



     6.3 Termination for Default. If either Party materially defaults in the performance
of any material agreement, condition or covenant of this Agreement and such default or
noncompliance shall not have been remedied, or steps initiated to remedy the same to the other
Party’s reasonable satisfaction, within sixty (60) days (or 30 days in the case of non-payment)
after receipt by the defaulting Party of a written notice thereof from the other Party, the Party
not in default may terminate this Agreement.



     6.4 Termination of License. This Agreement will terminate automatically upon termination of the License Agreement.



     6.5 Termination by ENCORE. ENCORE may immediately terminate this
Agreement in the event of:



 
 




			
	[***]	 	Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [***].
A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.






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     (a) any material misrepresentation or disparagement by MAKO of the System or ENCORE as
described in Section 2.4(c), of materially adverse effect to Encore and/or the market for the
System, which cannot be cured, in Encore’s reasonable discretion;



     (b) any assignment for the benefit of creditors or offer to make an extension to creditors by
MAKO; the insolvency (as “insolvent” is defined in Section 1-201 of the Texas Uniform Commercial
Code) of MAKO; the commencement of any proceeding under any bankruptcy laws by MAKO or against
MAKO’s business; or any transfer (either voluntary or involuntary) of a substantial part of MAKO’s
property or assets other than in the ordinary course of business; or



     (c) (1) the imposition of any sanctions against MAKO within the meaning of Social Security
Act Section 1128A or any amendments thereof, (2) actions by MAKO, or any of MAKO’s employees,
agents, representatives, owners, or contractors, that result in a violation the federal Stark Law,
federal False Claims Act, federal Anti-Kickback Statute, federal Health Insurance and Portability
Act provisions, federal Civil Money Penalties Statute, or similar state laws; or (3) any
debarment, exclusion or suspension of MAKO or any of MAKO’s employees, agents, representatives,
owners, or contractors from participation in any federal or state health care program.



     6.6 Rights and Obligations on Expiration or Termination. Except to the extent
expressly provided to the contrary, any provision of this Agreement, which by its terms would
survive termination of the Agreement, shall survive. For the avoidance of doubt, provisions that
shall survive the termination of this Agreement include: Section 2.1(b)(iii) and Articles VI, VII
and VIII. Any rights of ENCORE to payments accrued through termination as well as obligations of
the Parties under firm orders for purchase and delivery of Products at the time of such
termination shall remain in effect, except that in the case of termination under Section 6.,3, the
terminating Party may elect whether obligations under firm orders will remain in effect.



ARTICLE VII

Representation and Warranties




     7.1 ENCORE represents, warrants and covenants to MAKO as to the following as of the Effective
Date:



     (a) When shipped to MAKO by ENCORE, the Products (i) will conform in all material respects to
the Specifications; (ii) will not be adulterated or misbranded within the meaning of the Act; (iii)
will be manufactured in accordance with CGMP Regulations; and (iv) that ENCORE has obtained the
Encore 510(k) allowing for the sale of Products and has the legal and regulatory right to permit
MAKO to sell the Products under the Encore 510(k). ENCORE further represents and warrants to MAKO
that of the Products which shall be shipped to MAKO (y) the Products and their sale, marketing and
use in their intended manner will not infringe any patent or copyright, or misappropriate any trade
secrets, of any third party, and (z) any branding or trade dress appearing on the Products, other
than MAKO’s marks and trade dress, will not cause infringement of any trademark, trade name,
service mark, or trade dress of any third party, or constitute unfair competition or violate any
rights of publicity or privacy when sold or advertised.



 
 




			
	[***]	 	Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [***].
A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.






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     (b) ENCORE has the requisite institutional knowledge and commercially adequate expertise to
meet its obligations under this Agreement. ENCORE is the entity possessing the rights to
manufacture Products and supply Products to MAKO under the terms of this Agreement.



     (c) ENCORE maintains adequate product liability insurance covering the Products as would be
acquired and maintained by a reasonable and prudent company carrying on a similar line of business,
but in no case for an amount of less than Four Million Dollars ($4,000,000) per claim and/or Five
Million Dollars ($5,000,000) in the aggregate (“Adequate Insurance”). Such Adequate
Insurance shall at all times during the Effective Period and for not less than three (3) years
thereafter include all vendors of the Products.



     (d) The undersigned signatory, executing on behalf of ENCORE, hereby represents and warrants
that (i) the execution and delivery of, and compliance with, this Agreement has been duly
authorized by ENCORE, (ii) such signatory has actual necessary legal authority to bind ENCORE to
the terms of this Agreement, and (iii) this Agreement shall, by its terms, bind ENCORE to the terms
and provisions set forth herein.



     7.2 MAKO represents, warrants and covenants to ENCORE that as of and following the Effective
Date:



     (a) MAKO shall maintain Adequate Insurance. Such Adequate Insurance shall at all times during
the Effective Period and for not less than three (3) years thereafter insure ENCORE, its Board of
Directors, officers, employees, agents and consultants as insured parties.



     (b) The undersigned signatory, executing on behalf of MAKO, hereby represents and warrants
that (i) the execution and delivery of, and compliance with, this Agreement has been duly
authorized by MAKO, (ii) such signatory has actual necessary legal authority to bind MAKO to the
terms of this Agreement, and (iii) this Agreement shall, by its terms, bind MAKO to the terms and
provisions set forth herein.



     7.3 Disclaimers.



     (a) Other than the representations, warranties and covenants expressly made in this Agreement,
neither Party, nor any of its Affiliates, make any representations or extend any warranties of any
kind, express or implied. ENCORE and MAKO each disclaim all implied warranties including, without
limitation, warranties of merchantability, and fitness for a particular purpose.



     (b) EXCEPT IN CONNECTION WITH INDEMNIFICATION FOR DAMAGES AWARDED FOR THIRD PARTY CLAIMS OF
PERSONAL INJURY PURSUANT TO THIS ARTICLE, INFRINGEMENT CLAIMS, OR AS EXPRESSLY PROVIDED ELSEWHERE
IN THIS AGREEMENT, IN NO EVENT WILL MAKO OR ENCORE BE LIABLE FOR ANY PUNITIVE, INDIRECT, SPECIAL,
INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND WITH RESPECT TO ANY SUBJECT MATTER OF THIS
AGREEMENT UNDER ANY THEORY, INCLUDING CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR
EQUITABLE THEORY, EVEN IF EITHER PARTY IS NOTIFIED



 
 




			
	[***]	 	Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [***].
A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.






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OF THE POSSIBILITY, LIKELIHOOD OR CERTAINTY THAT SUCH DAMAGES WOULD BE INCURRED




ARTICLE VIII

Indemnification




     8.1 ENCORE Indemnification. ENCORE agrees to indemnify in respect of, and hold MAKO
and its officers, directors, employees and agents (the “MAKO Indemnified Patties”) harmless
against any and all damages, claims, deficiencies, losses, including taxes, and all expenses
(including, without limitation, interest, penalties, and reasonable attorneys’ and accountants’
fees and disbursements but reduced by any tax savings, benefits or offsets to which the
indemnified party shall be entitled directly or indirectly by reason thereof) (collectively
“Damages”) resulting from (a) any misrepresentation, breach of warranty, or failure to
perform any covenant or agreement on the part of ENCORE or its employees, agents or
representatives under this Agreement; (b) personal injuries and/or deaths from the use of products
manufactured, produced, sold or marketed by ENCORE or its employees, agents or representatives,
except if sold to MAKO unless such products, when delivered to MAKO, failed to meet the
Specifications, as defined in the Supply Agreement (in each such case, a “Non-Conforming
Product”); or (c) any negligent or fraudulent act or willful misconduct of ENCORE or its
employees, agents or representatives. ENCORE’s liability under this Section 8.1 shall
be reduced to the extent that any such Damages were caused by (i) the negligence or culpability or
willful misconduct of the MAKO Indemnified Patties, (ii) the failure of MAKO or its employees,
agents or representatives to perform their duties under this Agreement, or (iii) a change made to
any such products after having been manufactured by ENCORE.



     8.2 MAKO Indemnification. MAKO agrees to indemnify in respect of, and hold, ENCORE
and its officers, directors, employees and agents (the “ENCORE Indemnified Parties”) harmless
against any and all Damages resulting from (a) any misrepresentation, breach of warranty, or
failure to perform any covenant or agreement on the part of MAKO or its employees, agents or
representatives under this Agreement; (b) personal injuries and/or deaths from the use of products
manufactured, produced, sold or marketed by MAKO or its employees, agents or representatives,
except for use of Non-Conforming Product, unless MAKO knew or should have known, though reasonable
diligence, that a product causing such personal injuries and/or deaths was a Non-Conforming
Product; or (c) any negligent or fraudulent act or willful misconduct of MAKO or its employees,
agents or representatives. MAKO’s liability under this Section 8.2 shall be reduced to the extent
that any such Damages were caused by (i) the negligence or culpability or willful misconduct of the
ENCORE Indemnified Parties, or (ii) the failure of ENCORE or its employees, agents or
representatives to perform their duties under this Agreement.



 
 




			
	[***]	 	Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [***].
A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.






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ARTICLE IX

Miscellaneous Provisions




     9.1 Confidentiality of Agreement. The terms, but not the existence, of this Agreement
will be treated as Proprietary Information (as such term is defined in the NDA) by the Parties, and
neither Party may disclose such terms to any third party without the prior written consent of’ the
other Party, except as follows:




     (a) MAKO may represent to third parties that it is possesses a commitment to supply
Products as provided by this Agreement.




     (b) Each Party may (i) disclose this Agreement and its terms to potential acquirers of,
investors in or lenders to such Party (including any representatives of the Parties in such
transaction), or disclosures reasonably necessary in connection with the divestiture,
merger, transfer or sale of all or any portion of a Party’s respective businesses, but only
if such disclosure is made pursuant to a written confidentiality agreement binding upon such
potential acquirer, investor, lender or other party, which obligates such party not to
disclose and to take reasonable precautions against unauthorized disclosure of the Agreement
and its terms; (ii) disclose this Agreement and its terms in any arbitration, mediation or
other official dispute resolution procedure pursuant to a written confidentiality agreement
binding upon the parties, which obligates such parties not to disclose and to take
reasonable precautions against unauthorized disclosure of the Agreement and its terms; (iii)
disclose this Agreement and its terms to its professional advisors who are under an ethical
obligation of confidentiality in order to comply with, or determine compliance with, any
law, rule, regulation, or accounting or similar requirement; and (iv) disclose this
Agreement and its terms, in response to a judicial or governmental request, requirement or
order, or as required by law, including any securities laws, on the condition that such
Party provides the other Party with sufficient prior notice in order to contest such
request, requirement or order or seek protective measures.



     9.2 Assignment. Neither Party may assign or delegate its obligations under this
Agreement absent the written consent of the other Party, except that no such consent will be
required for succession by merger, consolidation, sale of all or substantially all of the assets,
or change of control, but only if the assignee, successor or surviving entity agrees to be bound
in writing to all of its terms and conditions. This Agreement will be binding on successors in
interest and permitted assigns. An assignment other than as expressly permitted by this Section
9.2 will be void and shall constitute a breach of this Agreement.



     9.3 Notices. All notices and other communications which are required or which may be
given under the provisions of this Agreement will be in writing and may be delivered (a)
personally, (b) expedited delivery service with proof of delivery or (c) sent by United States
Mail, postage prepaid, registered or certified, return receipt requested, addressed as follows:



	 	 	 	 	 
	 

	 	If to ENCORE:
	 	Encore Medical, L.P.
	 

	 	 	 	9800 Metric Boulevard






 
 




			
	[***]	 	Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [***].
A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.






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	 	 	 	Austin, Texas 78758
	 

	 	 	 	Attention: General Counsel
	 
	 	 	 	 
	 

	 	If to MAKO:
	 	MAKO Surgical Corp.
	 

	 	 	 	2555 Davie Road
	 

	 	 	 	Ft. Lauderdale, FL 33319
	 

	 	 	 	Attention: General Counsel





or to such other address designated by the Parties as provided above. Any such notice will be
deemed to have been given either at the time of personal delivery or, in the case of delivery
service or mail, as of the date of fast attempted delivery at the address and in the manner
provided herein.




     9.4 Choice of Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF DELAWARE, EXCLUSIVE OF ITS CONFLICTS OF LAW PRINCIPLES.



     9.5 Captions. The captions, headings, and arrangements used in this Agreement are
for convenience only and do not in any way affect, limit, amplify, or modify its terms and
provisions.



     9.6 No Strict Construction. This Agreement is the result of substantial negotiations
among the Parties and their counsel and has been prepared by their joint efforts. Accordingly,
the fact that counsel to one Party or another may have drafted this Agreement or any portion of
this Agreement is immaterial and this Agreement will not be strictly construed against any Party.



     9.7 Severability and Reformation. Wherever possible, each provision of this
Agreement will be interpreted in such manner as to be effective. If any provision of this
Agreement is held to be illegal, invalid, or unenforceable under present or future laws effective
during the term of this Agreement, such provision will be fully severable and this Agreement will
be construed and enforced as if such illegal, invalid, or unenforceable provision had never
comprised a part of this Agreement, and the remaining provisions of this Agreement will remain in
full force and effect. Furthermore, in lieu of each such illegal, invalid, or unenforceable
provision, there will be added automatically as a part of this Agreement a provision as similar in
terms to such illegal, invalid, or unenforceable provision as may be possible and be legal, valid,
and enforceable; provided, however, that, if any such change will materially diminish the
practical realization of the benefits intended to be conferred to any Party to this Agreement,
such Party may terminate this Agreement upon written notice to each other Party within 30 days
after learning such change has been effected.



     9.8 Consents; Waivers. Any consent or approval required as a condition to an action
under this Agreement will be effective only (a) if in writing and signed by the Party whose consent
is sought, (b) with respect to the specific matter made the subject to such consent or approval
(and no other matter), and (c) for the specific instance(s) expressly set forth in such consent or
approval (and no earlier or subsequent instances). Any Party may waive any condition, covenant,
term, or provision of this Agreement, but any such waiver will be effective



 
 




			
	[***]	 	Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [***].
A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.






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only (a) if in writing and signed by the Party sought to be bound by such waiver, (b) with
respect to the specific condition, covenant, term, or provision expressly made the subject to such
waiver (and no other condition, covenant, term, or provision), and (c) for the specific stance(s)
expressly set forth in such waiver (and no earlier or subsequent instances). Without limiting the
foregoing sentence, none of the following will constitute a waiver of the rights of a Party to this
Agreement to demand exact compliance with the conditions, covenants, terms, and provisions of this
Agreement: (a) a failure of such Party to exercise any power reserved to it in this Agreement; (b)
a failure of such Party to insist upon compliance by any other Party to this Agreement with any
condition, covenant, term, or provision in this Agreement; (c) a delay, forbearance, or omission of
such Party to exercise any power; or (d) any custom or practice of the Parties at variance with the
terms of this Agreement. The consent or approval of any Party to this Agreement with respect to
the act of any other Party to this Agreement will not be deemed to waive or render unnecessary
consent to or approval of any subsequent similar act. Subsequent acceptance by a Party to this
Agreement of any performance due to it under this Agreement will not be deemed to be a waiver by
such first Party of any preceding breach by any other Party of any terms, provisions, covenants, or
conditions of this Agreement. No act or conduct of or by MAKO under this Agreement, including any
payment of a royalty, shall be evidence, or deemed an admission or suggestion, that any product
manufactured, licensed, or distributed by MAKO infringes the Licensed IP Rights or any other
intellectual property right.



     9.9 Force Majeure. Neither Party will be in default or otherwise liable for any
delay in or failure of its performance under this Agreement if such delay or failure arises by any
reason beyond its reasonable control, including any act of God, any acts of the common enemy, the
elements, earthquakes, floods, fires, epidemics, riots, failures or delay in transportation or
communications, or any act or failure to act by the other Party or such other Party’s employees,
agents, or independent contractors or representatives; provided, however, that lack of funds will
not be deemed to be a reason beyond a Party’s reasonable control. The Parties will promptly
inform and consult with each other as to any of the above causes that in their judgment may or
could be the cause of a delay in the performance of this Agreement.



     9.10 Legal Costs. Each of the Parties will be responsible for its own expenses,
including legal and accounting fees of advisors, incurred in connection with the negotiation and
preparation of this Agreement If any action is brought to enforce or interpret the terms of this
Agreement (including through arbitration), the prevailing Party will be entitled to reasonable
legal fees, costs, and disbursements in addition to any other relief to which such Party may be
entitled.



     9.11 Dispute Resolution.




     (a) ENCORE and MAKO will attempt to settle any claim or controversy arising out of
this Agreement through consultation and negotiation in good faith and in a spirit of mutual
cooperation.




     (b) In the event that, after reasonable consultation, but within 30 days, the Parties
are unable to reach agreement, any claim or controversy shall be settled by arbitration
administered by the American Arbitration Association under its then current Commercial
Arbitration Rules in New York, New York, before a single arbitrator and



 
 




			
	[***]	 	Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [***].
A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.






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judgment on any award rendered by or finding of the arbitrator may be entered in any
court having jurisdiction thereof. The arbitrator shall have the authority to award actual
money damages (with interest on unpaid amounts from the date due), temporary injunctive
relief, and reasonable attorney’s fees and expenses, but the arbitrator shall not have the
authority to award exemplary or punitive damages, and the Parties expressly waive any
claimed right to such damages. The costs of arbitration shall be borne by the Parties in
accordance with the award of the arbitrator. If a Party fails to proceed with arbitration,
unsuccessfully challenges the arbitration award, or fails to comply with the arbitration
award, the other Party is entitled to costs, including reasonable attorney’s fees, for
having to compel arbitration or defend or enforce the award. Except as otherwise required
by law, the Parties agree to maintain and agree to cause the arbitrator to maintain as
Proprietary Information (as such term is defined in that certain mutual Nondisclosure
Agreement, by and between the Parties, dated December 11, 2006), all information, documents
and other data of any kind or nature whatsoever obtained during the arbitration process,
including the fact that such arbitration is being undertaken and the final award of the
arbitrator.



     9.12 Integration. This Agreement sets forth the entire agreement and understanding
between the Parties as to the subject matter hereof and merges all prior discussions between them
including, without limitation, the LOI; provided, however, that for the avoidance of doubt, this
Agreement shall not affect the Parties’ obligations under the License Agreement. Neither of the
Parties shall be bound by any warranties, understandings or representations with respect to such
subject matter other than as expressly provided herein or in a writing signed with or subsequent
to execution hereof by an authorized representative of the Party to be bound thereby.



     9.13 No Partnership. Neither this Agreement, nor any terms and conditions contained
herein, will be deemed or construed to create a partnership, joint venture, other form of business
enterprise or association or cooperative arrangement, agency relationship, or franchise
relationship between the Parties or otherwise to create any liability for either Party whatsoever
with respect to the indebtedness, liabilities, and obligations of the other Party.



     9.14 Counterparts. This Agreement may be executed in any number of counterparts and
will be effective when each Party to this Agreement has executed at least one counterpart, with
the same effect as if all signing Parties had signed the same document. All counterparts will be
construed together and evidence only one agreement, which, notwithstanding the actual date of
execution of any counterpart, will be deemed to be dated the day and year first written above. In
making proof of this Agreement, it will not be necessary to account for a counterpart executed by
any Party other than the Party against whom enforcement is sought or to account for more than one
counterpart executed by the Party against whom enforcement is sought.



     9.15 Facsimile Signatures. The manual signature of any Party to this Agreement that
is transmitted to any other Party or counsel to any other Party by facsimile will be deemed for
all purposes to be an original signature.



     9.16 BASIS OF BARGAIN. EACH PARTY RECOGNIZES AND AGREES THAT THE WARRANTY
DISCLAIMERS AND LIABILITY AND REMEDY LIMITATIONS IN THIS AGREEMENT ARE MATERIAL, BARGAINED FOR
BASES OF THIS AGREEMENT



 
 




			
	[***]	 	Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [***].
A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.






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AND THAT THEY HAVE BEEN TAKEN INTO ACCOUNT AND REFLECTED IN DETERMINING THE CONSIDERATION TO
BE GIVEN BY EACH PARTY UNDER THIS AGREEMENT AND IN THE DECISION BY EACH PARTY TO ENTER INTO THIS
AGREEMENT.



 
 




			
	[***]	 	Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [***].
A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.






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     IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed in
duplicate originals by its duly authorized representatives on the respective dates entered below.



	 	 	 	 	 	 	 
	 	 	ENCORE MEDICAL,
L.P.


By: Encore Medical GP, Inc., its general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Harry L. Zimmerman	 	 
	 

	 	 	 	 

Harry L. Zimmerman
	 	 
	 

	 	 	 	Executive Vice-President—General Counsel	 	 
	 
	 	 	 	 	 	 
	 

	 	Date:
	 	2/28/07	 	 
	 
	 	 	 	 	 	 
	 	 	MAKO SURGICAL CORP.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Maurice R. Ferré	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Maurice R. Ferré, MD	 	 
	 

	 	 	 	President & Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 

	 	Date:
	 	 2/28/07	 	 






 
 




			
	[***]	 	Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [***].
A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.






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Schedule 1




     E.P.I.K.TM Component Price Breakdown



Price per component for 0 to [***] implants per twelve month period




	 	 	 	 	 	 	 
	Onlay

	 	 	 	Inlay	 	 
	Femur

	 	$[***]
	 	Femur
	 	$[***]
	Tibia Baseplate

	 	$[***]
	 	Tibia Inlay
	 	$[***]
	Tibia Insert

	 	$[***]	 	 	 	 
	Total

	 	$[***]
	 	Total
	 	$[***]
	 
	 	 	 	 	 	 
	Price per component for [***] plus implants per twelve month period
	 
	 	 	 	 	 	 
	Onlay

	 	 	 	Inlay	 	 
	Femur

	 	$[***]
	 	Femur
	 	$[***]
	Tibia Baseplate

	 	$[***]
	 	Tibia Inlay
	 	$[***]
	Tibia Insert

	 	$[***]	 	 	 	 
	Total

	 	$[***]
	 	Total
	 	$[***]





A complete set of System instrumentation shall be sold by ENCORE to MAKO at a fixed price of
$[***].



ENCORE shall have the right to change the prices in this Schedule 1 at any time following the
first anniversary of this Agreement.




 
 




			
	[***]	 	Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [***].
A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.







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