Document:

trxc-ex107_560.htm

 

Exhibit 10.7

AMENDED and RESTATED
EMPLOYMENT AGREEMENT

This Amended and Restated Employment Agreement (this “Agreement”) is made and entered into as of March 6, 2018, by and between TransEnterix, Inc., a Delaware corporation (the “Company”), and Anthony Fernando (the “Executive”).

WITNESSETH

WHEREAS, the Company and the Executive (the “Parties”) are currently parties to that certain Employment Agreement, dated as of August 14, 2015 (the “Prior Agreement”), and desire to replace that Prior Agreement with this Agreement; and

WHEREAS, the Parties have agreed to enter into this Agreement relating to the continued employment of the Executive by the Company;

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the Parties, intending to be legally bound, agree as follows:

	
1.
	
Term of Employment.

(a)The Company employs the Executive, and the Executive agrees to remain in the employment of the Company, in accordance with the terms and provisions of this Agreement, for the period set forth below (the “Employment Period”).  By executing this Agreement, the Parties agree that the Prior Agreement is terminated and of no further force and effect.  

(b)The Employment Period under this Agreement shall commence on March 1, 2018, (the “Effective Date”) and, subject only to the provisions of Sections 6, 7 and 8 below relating to termination of employment, shall continue until the close of business on December 31, 2020 or, if the Employment Period is extended pursuant to subsection (c) of this Section 1, the close of business on the Extended Termination Date.

(c)On December 31, 2020, and on each Extended Termination Date, the Employment Period will automatically be extended for an additional 12-month period so as to end on December 31 of the succeeding calendar year (an “Extended Termination Date”) unless either Party gives written notice to the other Party at least one hundred twenty (120) days in advance of the date on which the Employment Period would otherwise end that the Employment Period will not be extended.

	
2.
	
Duties.

During the Employment Period the Executive will serve as the Chief Operating Officer of the Company.  The Executive will devote his full business time and attention to the affairs of the Company and his duties as its Chief Operating Officer; provided, however, the Executive is not precluded from serving on the board of directors or managers, or committees thereof, of other entities if so serving as of the Effective Date or if approved by the Nominating and Corporate 

	
	
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Governance Committee. The Executive will have such duties as are appropriate to his position as determined by the President and Chief Executive Officer of the Company (the “CEO”) and shall report to the CEO and serve at the pleasure of the Board of Directors (the “Board”).  The Executive will be based at the headquarters of the Company, which is currently located in Morrisville, North Carolina, and his services will be rendered there except insofar as travel may be involved in connection with his regular duties.  

	
3.
	
Cash- and Equity-Based Compensation.

(a)Base Salary.  The Company will pay the Executive an annual base salary, which currently is $318,270, which base salary as in effect from time to time will be reviewed periodically (at intervals of not more than twelve (12) months) by the compensation committee of the Board (the “Compensation Committee”).  In evaluating increases in the Executive’s base salary, the Compensation Committee will take into account such factors as corporate performance in relation to the business plan approved by the Board, individual merit, and such other considerations as it deems appropriate.  The Executive’s base salary will be paid in accordance with the standard practices for other corporate executives of the Company.

(b)Incentive Compensation.  The Executive will be eligible to receive annually or otherwise any incentive compensation awards, payable in cash, which the Company, the Compensation Committee or such other authorized committee of the Board determines to award.  For each fiscal year of the Company falling in whole or in part during the Employment Period, the Executive’s target annual cash incentive compensation opportunity will be no less than 50% of his base salary for the portion of the Employment Period falling within that fiscal year.  With respect to the annual cash incentive compensation award, the performance goals shall be based on both company performance metrics approved by the Compensation Committee or the Board annually and personal performance metrics established and approved by the Compensation Committee or the Board.  All other terms of such incentive compensation awards shall be established by the Board or the Compensation Committee.  Any such bonus shall be paid to the Executive no later than two and one-half (21⁄2) months after the end of the fiscal year to which the bonus relates.  

(c)Equity Compensation.  The Executive is eligible to receive stock-based awards under the Company’s Amended and Restated Incentive Compensation Plan, as amended, or any successor thereto (the “Plan”) in the discretion of the Compensation Committee or the Board.   

4.Benefits.  The Executive will continue to be eligible to participate in all employee benefit plans and programs of the Company from time to time in effect for the benefit of senior executives of the Company, including, but not limited to, retirement and savings plans, group life insurance, medical coverage, sick leave, salary continuation arrangements, vacations and holidays, long-term disability, and such other benefits as are or may be made available from time to time to senior executives of the Company.  

	
5.
	
Business Expenses.

The Executive will be reimbursed for all reasonable expenses incurred by him in connection with the conduct of the business of the Company, provided he properly accounts therefor in accordance with the Company’s policies.

			
	
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6.
	
Termination of Employment by the Company.

(a)Involuntary Termination by the Company Other Than For Permanent and Total Disability or For Cause.  The Company may terminate the Executive’s employment at any time and for any reason (other than for Permanent and Total Disability as provided in subsection (b) below, or for Cause as provided in subsection (c) below) by giving him a written notice of termination to that effect at least five (5) business days before the date of termination.  In the event the Company terminates the Executive’s employment for any reason other than for Permanent and Total Disability (as provided in subsection (b) below), or for Cause (as provided in Section (c) below), the Executive shall be entitled to the compensation described in Section 9.

(b)Termination Due to Permanent and Total Disability.  If the Executive incurs a Permanent and Total Disability, the Company may terminate the Executive’s employment by giving him written notice of termination at least thirty (30) before the date of such termination.  In the event of such termination of the Executive’s employment because of Permanent and Total Disability, the Executive shall be entitled to receive (i) his base salary pursuant to Section 3(a) and any other compensation and benefits to the extent actually earned by the Executive pursuant to this Agreement or under any benefit plan or program of the Company as of the date of such termination of employment at the normal time for payment of such salary, compensation or benefits, and (ii) any reimbursement amounts owing under Section 5.  For purposes of this Agreement, the Executive shall be considered to have incurred a “Permanent and Total Disability” if he becomes disabled within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the regulations thereunder.  The existence of such Permanent and Total Disability shall be determined by the Compensation Committee and shall be evidenced by such medical certification as the Compensation Committee shall require.  

(c)Termination for Cause.  The Company may terminate the Executive’s employment for Cause.  For purposes of this Agreement, “Cause” means the Executive: (i) willfully, substantially, and continually fails to perform the duties for which he is employed by the Company; (ii) willfully fails to comply with the legal instructions of the Board or the CEO; (iii) willfully engages in conduct which is or would reasonably be expected to be materially and demonstrably injurious to the Company; (iv) willfully engages in an act or acts of dishonesty resulting in material personal gain to the Executive at the expense of the Company; (v) is indicted for, or enters a plea of nolo contendere to, a felony; (vi) engages in an act or acts of gross malfeasance in connection with his employment hereunder; (vii) commits a material breach of Sections 12, 13 or 14 of this Agreement; (viii) commits a material breach of any policies and procedures contemplated by the Company’s Code of Conduct or similar policy; or (ix) exhibits demonstrable evidence of alcohol or drug abuse having a substantial adverse effect on his job performance hereunder.  The Company shall exercise its right to terminate the Executive’s employment for Cause by giving him written notice of termination on or before the date of such termination specifying in reasonable detail the circumstances constituting such Cause, and providing Executive with a period of at least thirty (30) days in which to cure the conduct constituting Cause if such conduct is capable of being cured.  In the event of such termination of the Executive’s employment for Cause, the Executive shall be entitled to receive (A) his base salary pursuant to Section 3(a) and any other compensation and benefits to the extent actually earned pursuant to this Agreement or under any benefit plan or program of the Company as of the date of such termination at the normal time for payment of such salary, compensation or benefits and (B) any amounts owed under the reimbursement policy of Section 5.

			
	
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7.
	
Termination of Employment by the Executive.

(a)Good Reason.  The Executive may terminate his employment for Good Reason by giving the Company a written notice of termination at least thirty (30) days before the date of such termination specifying in reasonable detail the circumstances constituting such Good Reason.  In the event of the Executive’s termination of his employment for Good Reason, the Executive shall be entitled to the compensation described in Section 9.  For purposes of this Agreement, “Good Reason” shall mean (i) the assignment to the Executive of authority, functions, duties or responsibilities which are materially inconsistent with that of a senior executive officer of the Company (ii) any material reduction in the Executive’s base salary and target bonus, taken as a whole, other than in connection with an across the board reduction similarly affecting substantially all senior executives of the Company, (iii) a significant reduction in the employee benefits provided to the Executive other than in connection with an across the board reduction similarly affecting substantially all senior executives of the Company, (iv) the relocation, without the Executive’s consent, of the Executive’s place of work to a location outside a 50-mile radius of Morrisville, North Carolina or (vi) a material breach of this Agreement by the Company or its successor.  Each of the forgoing events will cease to constitute Good Reason and the Executive shall be deemed to have waived his right to terminate employment for Good Reason in connection with such event unless (A) the Executive gives the Company notice of Executive’s intention to resign Executive’s position with the Company within three months (3) after the occurrence of such event and (B) the Company has failed to cure any condition that constitutes Good Reason within thirty (30) days from its receipt of such notice of any such condition.

(b)Other.  The Executive may terminate his employment at any time and for any reason, other than pursuant to subsection (a) above, by giving the Company a written notice of termination to that effect at least thirty (30) days before the date of termination.  In the event of the Executive’s termination of his employment pursuant to this Section 7(b), the Executive shall be entitled to receive (i) his base salary pursuant to Section 3(a) and any other compensation and benefits to the extent actually earned by the Executive pursuant to this Agreement or under any benefit plan or program of the Company as of the date of such termination at the normal time for payment of such salary, compensation or benefits, and (ii) any reimbursement amounts owing under Section 5.

8.Termination of Employment by Death.  In the event of the death of the Executive during the Employment Period, the Executive’s estate shall be entitled to receive (i) his base salary pursuant to Section 3(a) and any other compensation and benefits to the extent actually earned by the Executive pursuant to this Agreement or under any other benefit plan or program of the Company as of the date of such termination at the normal time for payment of such salary, compensation or benefits, and (ii) any reimbursement amounts owing under Section 5.  In addition, in the event of such death, the Executive’s beneficiaries shall receive any death benefits owed to them under the Company’s employee benefit plans.

			
	
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9.Benefits upon Termination Without Cause or For Good Reason.  If the Executive’s employment with the Company shall terminate (i) as a result of termination by the Company pursuant to Section 6(a), or (ii) because of termination by the Executive for Good Reason pursuant to Section 7(a), the Executive shall be entitled to the following:

(a)The Company shall pay to the Executive his base salary pursuant to Section 3(a) and any other compensation and benefits to the extent actually earned by the Executive under this Agreement or under any benefit plan or program of the Company as of the date of such termination at the normal time for payment of such salary, compensation or benefits.

(b)The Company shall pay the Executive any reimbursement amounts owing under Section 5.

(c)Subject to the Executive’s timely execution of a Confidential Separation and Release Agreement as provided in Section 21 of this Agreement, the Company shall pay to the Executive as a severance benefit for each month during the nine (9) month period beginning with the month next following the date of termination of the Executive’s employment an amount equal to one-twelfth the sum of (i) the Executive’s annual rate of base salary immediately preceding his termination of employment, and (ii) his target annual bonus for the fiscal year in which the termination occurs.  Each such monthly benefit shall be paid no later than the last day of the applicable month.  In the event that the Executive dies before the end of such 9-month period, the payments for the remainder of such period shall be made to the Executive’s estate.  The commencement of payments pursuant to this subsection shall be subject to Section 20 of this Agreement.

(d)Subject to the Executive’s timely execution of a Confidential Separation and Release Agreement as provided in Section 21 of this Agreement, during the period of nine (9) months beginning on the date of the Executive’s termination of employment, the Executive shall remain covered by the medical, dental, vision, life insurance, and, if reasonably commercially available through nationally reputable insurance carriers, long-term disability plans of the Company that covered him immediately prior to his termination of employment as if he had remained in employment for such period.  In the event that the Executive’s participation in any such plan is barred, the Company shall arrange to provide the Executive with substantially similar benefits (but, in the case of long-term disability benefits, only if reasonably commercially available).  Any medical insurance coverage for such 9-month period pursuant to this subsection (d) shall become secondary upon the earlier of (i) the date on which the Executive begins to be covered by comparable medical coverage provided by a new employer, or (ii) the earliest date upon which the Executive becomes eligible for Medicare or a comparable Government insurance program.  The Executive’s COBRA entitlements shall run concurrently with the benefit coverage provided pursuant to this subsection (d).  The commencement of payments pursuant to this subsection shall be subject to Section 20 of this Agreement.

(e)Notwithstanding the foregoing, if the Executive’s employment with the Company is terminated pursuant to Section 6(a) or Section 7(a), and such termination occurs within one (1) year following a Change in Control of the Company (as defined in the Plan), or within six (6) months prior to but in connection with a Change in Control of the Company, (i) the references in Sections 9(c) and (d) to a 9-month period shall be replaced with an 18-month period, (ii) the target bonus paid as part of the cash severance payment described in Section 9(c) shall be equal to the 

			
	
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target bonus approved for the Executive for the year in which the Change in Control occurs, or, if the Executive is not employed by the Company in such year, or a bonus is not determined for such year, then the year immediately preceding the year in which the Change in Control occurs; (iii) the cash severance payment described in Section 9(c) (as modified by Sections 9(e)(i)) and 9(e)(ii) shall be paid in a single lump sum on the sixtieth (60th) day following the later of the date of the Executive’s separation from service or the date of the Change in Control of the Company, which amount shall be reduced by any amounts previously paid under Section 9(c); and (iv) to the extent not previously accelerated, all unvested outstanding equity awards shall accelerate and vest upon the date of termination.  

10.Benefits Upon Non-Extension of Employment Period.  If the Executive’s employment with the Company shall terminate on December 31, 2020 or an Extended Termination Date (a) by reason of the Company’s election not to extend the Employment Period pursuant to Section 1(c) of this Agreement, the non-extension shall be treated as a termination by the Company without Cause, as described in Section 6(a), and the Executive shall be entitled to receive the amounts and benefits described in Section 9 (including, without limitation, Section 9(e)) or (b) by reason of the Executive’s election not to extend the Employment Period pursuant to Section 1(c) of this Agreement, the Executive shall be entitled to receive (i) his base salary pursuant to Section 3(a) and any other compensation and benefits to the extent actually earned by the employee under this Agreement or under any benefit plan or program of the Company as of the date of such termination at the normal time for payment of such salary, compensation or benefits and (ii) any amounts owed under the reimbursement policy of Section 5.

	
11.
	
Entitlement to Other Benefits.

Except as otherwise provided in this Agreement, this Agreement shall not be construed as limiting in any way any rights or benefits that the Executive or his spouse, dependents or beneficiaries may have pursuant to any other plan or program of the Company.

	
12.
	
Non-solicitation and Non-competition.

(a)Executive agrees that during the term of his employment with the Company and for a period of one (1) year immediately following the termination of Executive’s employment with Company for any reason whatsoever, whether with or without Cause, (i) Executive shall not, either directly or indirectly, solicit, induce, recruit or encourage any employees of the Company and/or its affiliates to leave their employment, or take away such employees, or attempt to solicit, induce, recruit, encourage or take away employees of Company and/or its affiliates, either for Executive or for any other Person and (ii) neither the Executive, nor any firm, organization or corporation in which he is interested, shall, for any reason, directly or indirectly, persuade or attempt to persuade any investor, licensor, licensee, supplier or customer of Company, or any potential investor, licensor, licensee, supplier or customer to which Company and/or its affiliates have made a presentation or with which Company and/or its affiliates have been having discussions, to not transact business with Company and/or its affiliates or to transact business with the Executive or any other individual or entity (“Person”) as an alternative to or in addition to Company and/or its affiliates.

(b)Executive agrees that during the term of his employment with the Company and for a period of one (1) year immediately following the termination of Executive’s employment with 

			
	
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Company for any reason whatsoever, whether with or without Cause, Executive shall not, anywhere in the world, engage, either directly or indirectly, whether as a principal or as an agent, officer, director, employee, consultant, shareholder, partner or otherwise, alone or in association with any other Person, in any Competing Business.  For purposes of this Agreement, the term “Competing Business” means any Person engaged in the development or commercialization of products that are the same or substantially similar to, or that directly compete with, those products developed or commercialized by the Company at the time of such termination and in the six (6) months prior to such date of termination.

(c)In the event that the provisions of Section 12(a) or 12(b) above should be determined by a court or other tribunal of competent jurisdiction to exceed the time, geographic, services or product limitations permitted by the applicable law in a jurisdiction in which enforcement of this Agreement is sought, then such provisions shall be deemed reformed in such jurisdiction to the maximum time, geographic, service or product limitations permitted by such applicable law, and the parties hereby expressly grant any court or competent jurisdiction the authority to effect such reformation.

(d)The parties confirm that a violation by Executive of the provisions of this Agreement, including but not limited to, the restrictions in Sections 12 through 14, will cause Company irreparable harm that cannot be remedied adequately by monetary damages.  Executive agrees that, in the event of such a violation, Company shall be entitled to temporary, preliminary and permanent injunctive relief to restrain any such violation (without the posting of a bond) and to an equitable accounting of all earnings, profits and other benefits arising from the breach or violation, which rights shall be cumulative and in addition to any other rights or remedies to which Company may be entitled.  Company shall be entitled to commence action for such relief in any state or federal court in the State of North Carolina, and Executive waives to the fullest extent permitted by law any objection that he may now or hereafter have to the jurisdiction and venue of the court in any such proceeding.

	
13.
	
Confidential Information, Inventions and Proprietary Information.

(a)During the Employment Period and thereafter, Executive shall hold in strictest confidence, and not use, except for the benefit of the Company, or to disclose to any Person without prior written authorization of the Company, any Confidential Information of the Company.  Executive understands that “Confidential Information” means Inventions (as defined herein) and any other information of the Company and/or its affiliates disclosed or made available to the Executive, whether before or during the term hereof, including but not limited to financial information, technical and non-technical data, services, products, processes, operations, reports, analyses, test results, technology, samples, specifications, protocols, performance standards, formulations, compounds, know-how, methodologies, trade secrets, trade practices, marketing plans and materials, strategies, forecasts, research, concepts, ideas, and names, addresses and any other characteristics or identifying information of the Company’s existing or potential investors, licensors, licensees, suppliers, customers or employees.  Confidential Information shall not include any information Executive can establish by competent proof is or becomes public knowledge or part of the public domain through no act or omission of Executive.  Notwithstanding the foregoing, Executive shall be permitted to disclose Confidential Information pursuant to a court order, government order or any other legal requirement of disclosure if no suitable protective order or equivalent remedy is available, provided that Executive gives the Company written notice of 

			
	
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such court order, government order or legal requirement of disclosure immediately upon knowledge thereof and allows the Company a reasonable opportunity to seek to obtain a protective order or other appropriate remedy prior to such disclosure to the extent permitted by law.

(b)During the Employment Period and thereafter, Executive will not improperly use or disclose any proprietary information or trade secrets of any former employer of Executive or other Person and Executive will not bring onto the premises of the Company any unpublished documents or proprietary information belonging to any such former employer or Person unless consented to in writing by such former employer or Person.

(c)Executive recognizes that the Company has received and in the future will receive from third parties certain confidential or proprietary information subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes.  Executive agrees to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any Person, or to use it except as necessary in carrying out his work for the Company consistent with the Company’s agreement with such third party.

(d)Executive shall promptly make full written disclosure to the Company, shall hold in trust for the sole right and benefit of the Company, shall assign and hereby does assign to Company, or its designee, all of Executive’s right, title, and interest in and to any and all inventions, original works of authorship, developments, concepts, improvements, designs, discoveries, ideas, trademarks or trade secrets, whether or not patentable or registerable under copyright or similar laws, which Executive may, solely or jointly, conceive or develop or reduce to practice during the period of time Executive is in the employ of the Company that relate to the Company and/or its products (collectively referred to as “Inventions”).  Executive further acknowledges that all original works of authorship which are made by Executive (solely or jointly with others) within the scope of and during the period of his employment with the Company and which are protectable by copyright are “works made for hire”, as that term is defined in the United States Copyright Act. Executive understands and agrees that the decision whether or not to commercialize or market any Invention developed by the Executive (solely or jointly with others) is within the Company’s sole discretion and for the Company’s sole benefit and that no royalty will be due to Executive as a result of the Company’s efforts to commercialize or market any such Invention.

(e)Executive shall keep and maintain adequate and current written records of all Inventions made by the Executive (solely or jointly with others) during the term of his employment with the Company.  The records will be in the form of notes, sketches, drawings, and any other format that may be specified by the Company.  The records will be available to and remain the sole property of the Company at all times.

(f)If the Company is unable because of Executive’s mental or physical incapacity or for any other reason to secure his signature on any such document, then the Executive hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as his agent and attorney-in-fact to act for and on the Executive’s behalf and stead to execute and file any such document and to do all other lawfully permitted acts to further the prosecution and issuance of letters patent or copyright registrations thereon with the same legal force and effect as if executed by the Executive.

			
	
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(g)Executive, at the time of leaving the employ of the Company, shall deliver to the Company (and will not keep in his possession, recreate or deliver to anyone else) any and all devices, records, data, notes, reports, proposals, lists, correspondence, materials, equipment, other documents or property, or reproductions of any of the aforementioned items developed by Executive pursuant to his employment with the Company or otherwise belonging to the Company, its successors or assigns.

	
14.
	
Non-Disparagement.  

The Executive will not at any time publish or communicate to any person or entity any Disparaging remarks, comments or statements concerning the Company, its subsidiaries and affiliates, and their respective present and former members, partners, directors, officers, shareholders, employees, agents, attorneys, successors and assigns.  The Company will instruct its directors and officers not to publish or communicate to any person or entity any Disparaging remarks, comments or statements concerning the Executive.  “Disparaging” remarks, comments or statements are those that impugn the character, honesty, integrity or morality or business acumen or abilities in connection with any aspect of the operation of business of the individual or entity being disparaged.

	
15.
	
Golden Parachute Reduction.

(a)Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution made, or benefit provided (including, without limitation, the acceleration of any payment, distribution or benefit and the accelerated exercisability of any stock option), to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise) (a “Payment”) would be subject to the excise tax imposed by Section 4999 of the Code (or any similar excise tax) or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the payments, distributions and benefits under this Agreement shall be reduced (by the minimum possible amounts) until no amount payable to the Executive under this Agreement gives rise to an Excise Tax; provided, however, that no such reduction shall be made if the net after-tax payment (after taking into account Federal, state, local and other income and excise taxes) to which the Executive would otherwise be entitled without such reduction would be greater than the net after-tax payment (after taking into account Federal, state, and local and other income taxes) to the Executive resulting from the receipt of such payments distributions and benefits with such reduction.  Any reduction pursuant to the preceding sentence shall be made by first reducing the severance benefit described in Section 9(c).  If, as a result of subsequent events or conditions (including a subsequent payment or absence of a subsequent payment under this Agreement or other plans, programs, arrangements or agreements maintained by the Company or any of its subsidiaries or affiliates), it is determined that payments, distributions or benefits under this Agreement to the Executive have been reduced by more than the minimum amount required to prevent any payments, distributions or benefits from giving rise to the Excise Tax, then an additional payment shall be made by the Company to the Executive on such date as shall be determined by the Compensation Committee but no later than sixty (60) days after the applicable event or condition in an amount equal to the additional amount that can be paid without causing any payment, distribution or benefit to give rise to an Excise Tax.

			
	
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(b)All determinations required to be made under this Section 15 shall be made by the accounting firm selected by the Company (the “Accounting Firm”), which shall provide detailed supporting calculations both to the Company and the Executive within fifteen (15) business days of the date of termination of the Executive’s employment, if applicable, within fifteen (15) days after receipt of written notice from the Executive that there has been a Payment, or at such earlier time as is requested by the Company, provided that any determination that an Excise Tax would be payable by the Executive shall be made on the basis of substantial authority.  If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall furnish the Executive with a written opinion that he has substantial authority not to report any Excise Tax on his Federal income tax return.  Any determination by the Accounting Firm meeting the requirements of this Section 15(b) shall be binding upon the Company and the Executive.  The fees and disbursements of the Accounting Firm shall be paid by the Company.

	
16.
	
Indemnification.

The Company shall indemnify and hold the Executive harmless to the fullest extent legally permissible under the laws of the State of Delaware and the Company’s Certificate of Incorporation and Bylaws, against any and all expenses, liabilities and losses (including attorney’s fees, judgments, fines and amounts paid in settlement) reasonably incurred or suffered by him by reason of any claim or cause of action asserted against him because of his service at any time as a director or officer of the Company.  The Company shall advance to the Executive the amount of his expenses incurred in connection with any proceeding relating to such service to the fullest extent legally permissible under the laws of the State of Delaware, subject to the Executive’s agreement to repay any such amounts to the extent that it is determined that Executive is not entitled to such amounts.  Notwithstanding the foregoing, the Company’s obligations pursuant to this Section 16 shall not apply in the case of any claim or cause of action by or in the right of the Company or any subsidiary thereof.

	
17.
	
Liability Insurance.

The Company shall maintain a directors and officers liability insurance policy and will take all steps necessary to ensure that the Executive is covered under such policy for his service as a director or officer of the Company or any subsidiary of the Company with respect to claims made at any time with respect to such service.

18.No Duty to Seek Employment.  The Executive shall not be under any duty or obligation to seek or accept other employment following termination of employment, and no amount, payment or benefits due to the Executive hereunder shall be reduced or suspended if the Executive accepts subsequent employment.

	
19.
	
Deductions and Withholding.

All amounts payable or which become payable under any provision of this Agreement shall be subject to any deductions authorized by the Executive and any deductions and withholdings required by law.

			
	
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20.
	
Compliance with IRC Section 409A.

In the event that it shall be determined that any payments or benefits under this Agreement constitute nonqualified deferred compensation covered by Section 409A of the Code for which no exemption under Code Section 409A or the regulations thereunder is available (“Covered Deferred Compensation”); then notwithstanding anything in this Agreement to the contrary (i) if the Executive is a “specified employee” (within the meaning of Code Section 409A and the regulations thereunder and as determined by the Company in accordance with said Section 409A) at the time of the Executive’s separation from service (as defined below), the payment of any such Covered Deferred Compensation payable on account of such separation from service shall be made no earlier than the date which is six (6) months after the date of the Executive’s separation from service (or, if earlier than the end of such six-month period, the date of the Executive’s death) and (ii) the Executive shall be deemed to have terminated from employment for purposes of this Agreement if and only if the Executive has experienced a “separation from service” within the meaning of said Section 409A and the regulations thereunder.  To the extent any payment of Covered Deferred Compensation is subject to the six‐month delay, such payment shall be paid immediately at the end of such 6-month period (or the date of death, if earlier).  Whenever payments under this Agreement are to be made in installments, each such installment shall be deemed a separate payment for purposes of Code Section 409A.  The provisions of this Agreement relating to such Covered Deferred Compensation shall be interpreted and operated consistently with the requirements of Code Section 409A and the regulations thereunder.  

Anything in this Agreement to the contrary notwithstanding, any payments or benefits under this Agreement that are conditioned on the timely execution of a Confidential Separation and Release Agreement and that would, in the absence of this sentence, be payable before the date which is sixty (60) days after the termination of the Executive’s employment shall be delayed until, and paid on, such 60th day after the termination of the Executive’s employment (or, if such 60th day is not a business day, on the next succeeding business day), but only if the Executive executes such Confidential Separation and Release Agreement, and does not revoke it, in accordance with Section 21 of this Agreement.

Anything in this Agreement to the contrary notwithstanding, any reimbursements or in-kind benefits to which the Executive is entitled under this Agreement (other than such reimbursements or benefits that are not taxable to the Executive for federal income tax purposes or that are otherwise exempt from coverage under Section 409A of the Code pursuant to said Section 409A and the regulations thereunder) shall meet the following requirements: (i) the amount of expenses eligible for reimbursement, or in-kind benefits provided, in one calendar year may not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year (except that the Company’s medical plans may impose a limit on the amount that may be reimbursed or provided), (ii) any reimbursement of an eligible expense must be made on or before the last day of the calendar year following the calendar year in which the expense was incurred, and (iii) the Executive’s right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.

	
21.
	
Confidential Separation and Release Agreement.

For purposes of this Agreement a “Confidential Separation and Release Agreement” means a Confidential Separation and Release Agreement in the form prescribed by the Company at the 

			
	
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applicable time which is executed by the Executive within ten (10) business days after the termination of the Executive’s employment and not revoked by him.  If the Executive fails to execute such Confidential Separation and Release Agreement within such ten-day period or shall revoke his agreement thereto, the Executive shall not be entitled to any of the payments or benefits under this Agreement that are conditioned upon his timely execution of a Confidential Separation and Release Agreement.

	
22.
	
Governing Law.

The validity, interpretation and performance of this Agreement will be governed by the laws of the State of North Carolina without regard to the conflict of law provisions.

	
23.
	
Notice.

Any written notice required to be given by one Party to the other Party hereunder will be deemed effected if given by personal delivery or mailed by overnight delivery or certified mail:

		
	
To the Company at:
	
TransEnterix, Inc.

635 Davis Drive, Suite 300

Morrisville, North Carolina 27560

Attention: Chief Legal Officer

or such other address as may be stated in a notice given as provided

To the Executive at the address in the corporate records or such other address as may be stated in a notice given to the Company as provided.

	
24.
	
Severability. 

If any one or more of the provisions contained in this Agreement is held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability will not affect any other provision hereof.

	
25.
	
Successors and Assigns.

This Agreement will be binding upon and inure to the benefit of the Parties hereto and their personal representatives, and, in the case of the Company, its successors and assigns. To the extent the Company’s obligations under this Agreement are transferred to any successor or assign, such successor or assign shall be treated as the “Company” for purposes of this Agreement.  Other than as contemplated by this Agreement, the Executive may not assign his rights or duties under this Agreement.

	
26.
	
Continuing Effect.

Wherever appropriate to the intention of the Parties hereto, the respective rights and obligations of the Parties, including the obligations referred to in Sections 9, 10, 12, 13, 14, 15, 16, 17, 18, 20, 21 and 22 hereof, will survive any termination or expiration of the term of this Agreement.

			
	
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27.
	
Entire Agreement.

This Agreement constitutes the entire agreement between the Parties and supersedes any and all other agreements and understandings between the Parties in respect of the matters addressed in this Agreement.

	
28.
	
Amendment and Waiver.

No amendment or waiver of any provision of this Agreement shall be effective, unless the same shall be in writing and signed by the Parties, and then such amendment, waiver or consent shall be effective only in the specific instance or for the specific purpose for which such amendment, waiver or consent was given.

	
29.
	
Executive Representations.

The Executive hereby represents and warrants to the Company that (a) the execution, delivery and performance of this Agreement by the Executive does not and will not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which the Executive is a party or by which he is bound, and (b) the Executive is not in violation of any employment agreement, transition services agreement, non-competition agreement, non-solicitation agreement or confidentiality agreement with any person or entity.

	
30.
	
Counterparts.

This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed an original but all of which together shall constitute one and the same instrument.

 

 

[Signatures on the next page.]

			
	
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IN WITNESS WHEREOF, the Company has caused this Amended and Restated Employment Agreement to be executed by its duly authorized officer and the Executive has hereunto set his hand as of the date written below.

			
	
 
	
TRANSENTERIX, INC. 

	
 
	
 

	
 
	
 

	
 
	
By:
	
/s/ Todd M. Pope

	
 
	
 
	
Name:  Todd M. Pope

	
 
	
 
	
Title:  President and Chief Executive Officer

	
 
	
 

 

	
 
	
/s/ Anthony Fernando

	
 
	
Anthony Fernando

 

			
	
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EXHIBIT 10.17

 

DATED  15 December 2017

 

 

 

 

 

 

 

 

 

(1)TranSENTERIX, inc.

(2)Great belief international limited

 

 

 

 

 

 

 

 

 

 

	
	
system sale and cooperation agreement

 

 

 

 

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This Agreement is made on 15 December 2017

BETWEEN: 

	
(1)
	
TransEnterix, Inc., a company incorporated in Delaware, USA, with SEC File No. 000-19437 whose principal executive office is at 635 Davis Drive, Suite 300, Morrisville NC USA 27560 ("Seller"); and

	
(2)
	
Great Belief International Limited, a company incorporated in British Virgin Islands under number 2364376 whose registered office is at P. O. Box 957, Offshore Incorporation Centre, Road Town, Tortola, British Virgin Islands. ("Buyer")

(each of the "Seller" and the "Buyer" being a "Party" and together the "Seller" and the "Buyer" are the "Parties").

BACKGROUND:

	
(A)
	
The Seller has developed the System. 

	
(B)
	
The Seller has agreed to sell and transfer the System to the Buyer subject to the terms and conditions in this Agreement.

	
(C)
	
The Buyer has agreed to purchase the System, to purchase shares of common stock in the Seller, to pay royalties to Seller in connection with future sales of the System, and to make the System available for purchase and resale by the Seller in the Non-China Territory, all in accordance with the terms of this Agreement and the relevant Ancillary Agreements; 

	
(D)
	
Subsequent to purchase of the System by the Buyer, the Buyer will license CSIMC to manufacture the System using the System IPR and to distribute the System in the China Territory and (subject to the Seller's Right of First Offer and Right of First Refusal) elsewhere in the world, all in accordance with the terms of this Agreement, the Exclusive Manufacturing and Distribution Agreement and the Supply Agreement.  

IT IS AGREED:

	
1.
	
Definitions and interpretation

	
1.1
	
In this Agreement, unless the context otherwise requires:

			
	
"agreed form"
	
means a form which has been agreed by the Parties and which has been duly executed or initialled by them or on their behalf for identification purposes with any alterations that may be agreed between the Parties in writing;

	
"Ancillary Agreements"
	
means the License Agreement, the Exclusive Manufacturing and Distribution Agreement, the Share Pledge Agreement, the Subscription Agreement, and the Supply Agreement;

	
"Business Day"
	
In respect of any action to be taken by the Buyer, means any day on which the companies in PRC are generally open for business in the PRC, including a Saturday or Sunday which the PRC government temporarily declares to be a working day, but excluding a statutory holiday, a Saturday or Sunday other than a Working Rest Day, and a weekday which the  PRC government temporarily declares to be a rest day; in respect of any action to be taken by the Seller, means a day, other than a Saturday, Sunday or public holiday, on which banks are open for non-automated commercial business in the United States and Business Days means more than one of them;

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"China Territory"
	
means the People’s Republic of China, excluding for purposes of this Agreement Taiwan and the Hong Kong and Macao Special Administrative 

Regions;

	
"CFDA" 
	
means the China Food and Drug Administration; 

	
"Closing 1"
	
means the first completion of the sale and purchase of the System in accordance with clause 4;

	
"Closing 2" 
	
means the second completion of the sale and purchase of the System in accordance with clause 6;

	
"Consideration"
	
means the sum specified in clause 3.1;

	
" License Agreement"
	
means the agreement between Buyer and Seller signed the date hereof wherein Buyer licenses Seller to exploit the System IPR;

	
"CSIMC"
	
means China National Scientific and Instruments and Materials Company, a company incorporated in the People's Republic of China under number [xxxxxxxxxxxxxxxxx] whose registered office is at Building #1, No.19 Taiyanggong Road, Chaoyang District, Beijing 100028, China

	
"Encumbrance"
	
means any mortgage, charge, pledge, lien or other security interest of any kind, and any right of set off, assignment by way of security, trust or other agreement or arrangement whatsoever for the purpose of providing security or having similar effect to the provision of security and Encumbrances means more than one of them;

	
" Exclusive Manufacturing and Distribution Agreement"
	
means an agreement to be entered into by Buyer and CSIMC, under which Buyer shall grant to CSIMC the exclusive right to manufacture the System, and to distribute the System in the China Territory and (subject to the Seller's Right of First Offer and Right of First Refusal) elsewhere in the world, in exchange for royalty payments, in the agreed form;

	
"Intellectual Property Rights"
	
means copyright, rights in inventions, patents, know-how, trade secrets, trademarks and trade names, service marks, design rights, rights in get-up, database rights and rights in data, semiconductor chip topography rights, rights in software, the right to sue for passing off, utility models, and all similar rights (including the surgibot.com domain name) and, in each case:

(a)whether registered or not;

(b)including any applications to protect or register such rights;

(c)including all renewals and extensions of such rights or applications;

(d)whether vested, contingent or future; and

(e)wherever existing;

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"Net Sales Price" 
	
means the [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

 

(a)    [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]; or

(b)     [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx],

[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx];

	
"Nominated Account"
	
means the Seller's account as set forth in Schedule 3 to this Agreement;

	
"Non-China Territory"
	
means the rest of the world outside of the China Territory;

	
"Quarterly Periods"
	
means the periods of three months commencing on 1 January, 1 April, 1 July and 1 October respectively;

	
"Right of First Offer"
	
means Seller's right, on its own initiative, to elect to distribute the System in a country or area within the Non-China Territory, as set forth in Cl. 2.1 and Cl. 2.2 of the Supply Agreement; 

	
"Right of First Refusal"
	
means Seller's right to elect to distribute the System in a new country or area in the Non-China Territory, following CSIMC's proposal to sell into that location, as set forth in Cl. 2.1 and Cl. 2.4 of the Supply Agreement;

	

"Royalty Period" 
	
means a period of five calendar years beginning at the earlier of: (a) 1 January immediately following the date of the final CFDA decision on medical device registration for the System for marketing in China (whether that decision is positive or negative), or; (b) 1 January immediately following the fifth anniversary of Closing 2, if by then there has been no final CFDA decision on registration of the System.

	
"Share Pledge Agreement"
	
means the agreement between Buyer and Seller, under which Buyer pledges to Seller 100% of the Seller shares that Buyer will purchase under the Subscription Agreement, in order to secure the performance of Buyer's obligations hereunder; 

	
"Subscription Agreement"
	
means an agreement (including lock up and other customary ancillary agreements) under which Buyer shall purchase newly issued common stock in the Seller for a purchase price of US$3,000,000, at a value per share equal to the greater of (1) $1.01 / share, or (2) 110% of the closing price of the Buyer's stock on the signing date of this Agreement, in the agreed form;  

	
"Supply Agreement"
	
means the System Sale and Distribution Agreement between Seller and CSIMC, signed on the same date as this Agreement for purchase by Seller of Systems;  

	
"System"
	
means the SurgiBot® System, which includes the capital system (SurgiBot arm and base), instruments and accessories, and vision system, including all Assets; an illustrative view of the system is provided in Schedule 3. 

	
"System Assets"
	
means the System Information, the System IPR, the System Tooling and Equipment,  the System Stock, and the System Software  and System Asset means one of them;

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"System Capital 

Goods"
	
means the System Stock and the System Tooling and Equipment, including those listed in Schedule 1, Part 4;

	
"System Information"
	
means all drawings, specifications, procedures, manuals, and other information, know-how and techniques in any form which wholly or partially relate to all or any part of the System design, manufacture, installation, operation, calibration and testing, marketing, or maintenance;

	
"System IPR"
	
means the Intellectual Property Rights in connection with the System, owned by the Seller or by the Seller’s wholly owned subsidiary TransEnterix Surgical Inc., and with respect to patents means in particular the patents indicated  in Schedule 1, Part 1, as well as any divisionals, continuations, etc. of those patents;

	
"System Software"
	
means all  computer software incorporated into the finished System, as further described in Schedule 1Part 2 (not including any third party development tools, such as Microsoft Development Tools);

	
"System Stock"
	
means stores, raw materials and components purchased for incorporation into the System, spare parts,  and work-in-progress, together with finished products of the System or parts thereof;

	
"System Tooling and Equipment"
	
means all equipment, machinery, special tooling, moulds, jigs, fittings, and other assets owned by the Seller and used exclusively in the manufacture of the System at the Transfer Date;

	
"US Market"
	
means United States of America and its territories and possessions.

	
"Warranties"
	
means the representations and warranties set out in 0 and Warranty means one of them.

	
1.2
	
Unless the context otherwise requires:

	
 
	
1.2.1
	
each gender includes the other genders;

	
 
	
1.2.2
	
the singular includes the plural and vice versa;

	
 
	
1.2.3
	
references to clauses, Schedules or Appendices are to clauses, Schedules and Appendices (if any) of this Agreement;

	
 
	
1.2.4
	
references to this Agreement include its Schedule and Appendices (if any);

	
 
	
1.2.5
	
references to persons include individuals, unincorporated bodies, government entities, companies and corporations;

	
 
	
1.2.6
	
the words 'including' or 'includes' mean including or includes without limitation;

	
 
	
1.2.7
	
clause headings do not affect their interpretation; and

	
 
	
1.2.8
	
references to legislation include any modification or re-enactment thereof before the date of this Agreement.

	
2.
	
Sale and purchase of the System and the system Assets

	
2.1
	
Subject to the terms and conditions of this Agreement the Seller will sell, free from all Encumbrances, and the Buyer will buy, the System and System Assets.

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2.2
	
In addition:

	
 
	
2.2.1
	
Buyer will pay Seller a royalty according to Article 7.5 of this Agreement.

	
 
	
2.2.2
	
Subject to the terms and conditions of the Subscription Agreement, Buyer shall purchase common stock of the Seller. 

	
 
	
2.2.3
	
Subject to the terms of the Supply Agreement, Seller may purchase the System from Buyer after the date of this Agreement, and Seller will have the Right of First Offer and Right of First Refusal to distribute the System in the Non-China Territory. 

	
 
	
2.2.4
	
Subject to the terms of the Share Pledge Agreement, Buyer will pledge the Seller shares owned by Buyer to secure the performance of the Buyer's obligations hereunder. 

	
 
	
2.2.5
	
Buyer will enter into the Exclusive Manufacturing and Distribution Agreement to allow CSIMC to exploit the System IPR to produce and market the System worldwide, subject to Seller's Right of First Offer and Right of First Refusal to market the System in the Non-China Territory.

	
 
	
2.2.6
	
Subject to the terms of the License Agreement, Buyer will grant Seller a license in relation to the System IPR. 

	
3.
	
Consideration

	
3.1
	
The consideration for the transfer by Seller to Buyer of the System and the System Assets shall be US$12,000,000.  

	
3.2
	
Further to that certain Deposit Agreement entered into between the Parties on 1 December 2017, Buyer paid US$500,000 to Seller as a Deposit on 5 December 2017.

	
3.3
	
The remainder of the consideration shall be paid as follows: 

	
 
	
3.3.1
	
.US$7,000,000 at Closing 1;

	
 
	
3.3.2
	
US$4,500,000 at Closing 2.

	
3.4
	
The Buyer shall pay the consideration under the Subscription Agreement in the amount of US$3,000,000 at the time of Closing 2.

	
3.5
	
All sums payable under this Agreement are exclusive of VAT (or similar tax) and shall be paid free and clear of all deductions and withholdings whatsoever, unless the deduction or withholding is required by law. If any deduction or withholding is required by law the Buyer shall pay to the Seller such sum as will, after the deduction or withholding has been made, leave the Seller with the same amount as it would have been entitled to receive in the absence of any such requirement to make a deduction or withholding. For the avoidance of doubt, Seller shall be solely responsible for, and Buyer's obligation in the previous sentence shall not apply to, any fees charged by Seller's own bank, and any taxes, levies or assessments required by the government in the Seller's location.  

	
4.
	
Closing  1

	
4.1
	
Closing 1 shall take place on the date of signature of this Agreement by both Parties.

	
4.2
	
At Closing 1, the matters set out in clauses 4.2.1 and 4.2.2 shall be transacted.

	
 
	
4.2.1
	
The Seller shall deliver, procure the delivery of, make available or procure the availability to the Buyer of:

	
 
	
(a)
	
this Agreement duly executed by the Seller;

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(b)
	
the Subscription Agreement duly executed by the Seller;

	
 
	
(c)
	
the Supply Agreement duly executed by Seller;

	
 
	
(d)
	
a certified copy of the resolutions of the Seller's board of directors approving the transaction and authorising the execution and delivery of this Agreement, and other documents required to be signed by the Seller in accordance with this Agreement.

	
 
	
(e)
	
a certified copy of the resolutions of the board of directors of TransEnterix Surgical Inc., approving sale and transfer of the System IPRs under its name and authorising the execution and delivery of any and all assignments or other documents for completion of such transfer of System IPR to Buyer at Closing 2.

	
 
	
4.2.2
	
The Buyer will:

	
 
	
(a)
	
deliver, procure the delivery of, make available or procure the availability to the Seller of:

	
 
	
(i)
	
this Agreement duly executed by the Buyer;

	
 
	
(ii)
	
the Subscription Agreement duly executed by the Buyer;

	
 
	
(iii)
	
the Supply Agreement duly executed by CSIMC;

	
 
	
(iv)
	
the Exclusive Manufacturing and Distribution Agreement duly executed by Buyer and CSIMC;

	
 
	
(b)
	
provide Seller with certified true copies of irrevocable and binding written instructions to all relevant third parties for the payment, no later than 22 December 2017, of the sum of US$7,000,000 to the Seller by way of electronic transfer of funds into the Nominated Account, receipt of which sum in such account by such date shall constitute a good discharge to the Buyer in respect of its obligation under clause 3.3.1 (following Closing 1, the Buyer will also provide Seller with copies of confirmations of all bank transfers conducted in order to affect payment in accordance with this sub-clause (b));

	
 
	
(c)
	
deliver or procure the delivery to the Seller of a certified copy of the board resolutions of the Buyer authorising the execution and delivery of this Agreement and the other documents required to be signed by the Buyer and CSIMC in accordance with this Agreement.

	
4.3
	
If either Party fails or is unable to perform any obligation required to be performed by it under clause 4.2 at Closing 1, the other Party shall not be obliged to complete its obligations under clause 4.2, the sale and purchase of the System, or any other terms of this Agreement, and may unilaterally terminate this Agreement.

	
4.4
	
If this Agreement terminates pursuant to clause 4.3, each Party’s further rights and obligations cease immediately on termination, save that clauses 1 (Definitions and interpretation), 10.6 (Entire agreement), 10.10 (Costs), 11 (Notices), 12 (Confidential information) and 13 (Governing law and jurisdiction) shall remain in full force and effect and termination shall not affect any Party’s accrued rights and obligations at the date of termination.  

	
5.
	
Delivery of system capital goods 

	
5.1
	
The Seller shall, within ten (10) days after Closing 1, deliver the System Capital Goods to an affiliate of the Buyer registered in Hong Kong for import to Hong Kong. The System Capital Goods will be delivered on an Ex Works (Incoterms 2010) basis to Buyer's affiliate's designated carrier at Seller's chosen premises in the United States. Buyer (by itself, or by its affiliate) will be responsible, on a timely basis, for taking delivery of the System Capital Goods, and for arranging and paying all costs in relation to shipping, insurance, export and import clearance, and customs duties.  

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5.2
	
The Buyer or its affiliate shall maintain shipping insurance on the System Capital Goods through  arrival at the facility of its affiliate in Hong Kong, in a minimum amount of US$6,000,000, and the Seller shall be named as the beneficiary on the policy of insurance.  Buyer shall provide proof of such insurance prior to taking delivery of the System Capital Goods in accordance with clause 5.1.  

	
5.3
	
Risk of loss in the System Capital Goods will pass upon delivery to Buyer's affiliate's designated carrier at Seller's premises, and title will pass on the Seller's receipt of full payment as provided for in clause 6.2.2. 

	
5.4
	
The failure of Buyer (or its affiliate) to take delivery of the System Capital Goods within forty-five (45) days after Buyer makes the goods available in accordance with clause 5.1, shall constitute a material breach of this Agreement.   

	
5.5
	
Buyer shall keep Seller informed of progress in the transportation of the System Capital Goods, and shall promptly inform Buyer when the System Capital Goods land in Hong Kong, and subsequently when they clear Hong Kong and Chinese customs.  

	
5.6
	
In any case that the Seller fails to deliver the System Capital Goods to Buyer’s affiliate’s in accordance with clause 5.1, the Seller shall refund US$7,500,000 to Buyer without any deductions or withholdings whatsoever, after which the Agreement and its Ancillary Agreements shall automatically terminate.   

	
6.
	
CLOSING 2 

	
6.1
	
Closing 2 shall take place within thirty (30) Business Days after the full shipment of System Capital Goods has landed in Hong Kong. 

	
6.2
	
At Closing 2, the matters set out in clauses 6.2.1 through 6.2.4 shall be transacted.

	
 
	
6.2.1
	
The Seller shall procure the delivery of, make available or procure the availability to the Buyer of:

	
 
	
(a)
	
possession of digital copies of current versions of all of the following: 

	
 
	
(i)
	
the System Information;

	
 
	
(ii)
	
the System Software (source code and compiled versions).

	
 
	
6.2.2
	
The Buyer will pay the sum of US$4,500,000 to the Seller by way of electronic transfer of funds for the same day value into the Nominated Account, receipt of which sum in such account shall constitute a good discharge to the Buyer in respect of its obligation under clause 3.3.2;

	
 
	
6.2.3
	
The Parties shall do all acts and things reasonably necessary to complete the closing under the Subscription Agreement, including issuance of stock and payment therefor. 

	
 
	
6.2.4
	
The Seller and Buyer shall execute and enter into:

	
 
	
(a)
	
the License Agreement;

	
 
	
(b)
	
in respect of the System IPR, a duly executed assignment in the agreed form (and Seller shall procure that TransEnterix Surgical Inc. also executes the same);

	
 
	
(c)
	
the Lock-up Agreement in the form appended to the executed Subscription Agreement (signed by Buyer only);

	
 
	
(d)
	
the Share Pledge Agreement.

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6.3
	
If either Party fails or is unable to perform any of its obligation required to be performed by it under clause 6.2 at Closing 2, the other Party shall not be obliged to complete its obligations under clause 6.2, the sale and purchase of the System, or any other terms of this Agreement, and may unilaterally terminate this Agreement, in which case: 

	
 
	
6.3.1
	
All of the executed Ancillary Agreements (and not some, only) will automatically terminate; 

	
 
	
6.3.2
	
If termination of this Agreement is caused by the Buyer’s failure to perform any of its obligation required to be performed by it under clause 6.2 at Closing 2, Buyer shall promptly return or procure the return of all of the System Capital Goods to Seller's designated premises in the United States, at Buyer's own risk and expense; and

	
 
	
6.3.3
	
If termination of this Agreement is caused by the Seller’s failure to perform any of its obligation required to be performed by it under clause 6.2 at Closing 2, Buyer shall promptly return or procure the return of all of the System Capital Goods to Seller's designated premises in the United States, at Seller's own risk and expense; and

	
 
	
6.3.4
	
Upon return of the System Capital Goods in accordance with clause 6.3.2 or 6.3.3, Seller shall return all funds received by it from Buyer under clause 4.2.2(b), 6.2.2 and 6.2.3 prior to that date; provided, however, that if the failure of Closing 2 is a result of Buyer's failure to perform any of its other obligations hereunder, the Seller will be entitled (without limitation to its rights to claim any damages or other compensation to which it may be entitled) to retain [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx], and to complete that transaction in accordance with its terms; and if the failure of Closing 2 is a result of Seller's failure to perform any of its other obligations hereunder, the Buyer will be entitled to claim damages and compensation including but not limited to its expenses for shipping the System Capital Goods from the US to Hong Kong. 

	
6.4
	
If this Agreement terminates pursuant to clause 6.3, each Party’s further rights and obligations cease immediately on termination, save that clauses 1 (Definitions and interpretation), 6.3 (consequences of termination), 10.6 (Entire agreement), 10.10 (Costs), 11 (Notices), 12 (Confidential information) and 13 (Governing law and jurisdiction) shall remain in full force and effect, and termination shall not affect any Party’s accrued rights and obligations at the date of termination.

	
7.
	
ACTIONS AFTER CLOSING 2

After the conclusion of Closing 2, the Parties will have the following rights and obligations. 

	
7.1
	
Transfers of registered System IPR 

Seller shall cooperate with Buyer to do or procure to be done all acts and things reasonably required to record the transfer of the registered System IPR (being all patents, trademarks, registered copyright, and domain name assets within the System IPR) to the Buyer through official filings with the relevant registration authorities. Seller will provide proof of completion of these filings within 10 Business Days after Closing 2. 

	
7.2
	
Restrictions on re-transfer by Buyer and CSIMC

	
 
	
7.2.1
	
From the signing date of this Agreement until the expiry of the Royalty Period: 

	
 
	
(a)
	
without Seller's written consent in advance, Buyer may not transfer its ownership of the System IPR, nor license, lend or otherwise transfer any aspect of the System or the System IPR, in whole or part, to any party other than CSIMC.  

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(b)
	
without Seller's written consent in advance, Buyer shall not permit any direct or indirect assignment, sub-licensing, lending or other transfer by CSIMC of CSIMC's rights, in whole or in part, in the System or System IPR.  

	
 
	
(c)
	
Buyer shall ensure that CSIMC does not directly or indirectly distribute the System anywhere in the Non-China Territory in violation of Seller's Right of First Refusal or Right of First Offer. 

	
 
	
7.2.2
	
Buyer shall ensure that Seller enjoys exclusive distribution rights and the right to file for 510(k) clearance or PMA approval for the System in the U.S. Market, and neither Buyer nor CSIMC has the right to provide any distribution rights to any third party, or to file such 510(k) clearance or PMA approval. This clause remains in effect after the end of the Royalty Period unless the Parties otherwise agree to different terms.

	
 
	
7.2.3
	
Notwithstanding Seller's Right of First Offer and Right of First Refusal and the provisions of clause 7.2.2, with prior written notice, CSIMC may elect to use one or more other distributors in lieu of or in addition to Distributor for sales in the U.S. Market.  For all sales in the U.S. Market by any distributor other than the Distributor, the royalty rate in clause 7.5.1 shall be [xxx]. 

	
 
	
7.2.4
	
Notwithstanding the provisions of clauses 7.2.1(a) and 7.2.1(b), if (a) at any time within the first five (5) calendar years after Closing 2 the CFDA finally rejects CSIMC's application for registration of the System or (b) by the end of such period, the CFDA has not taken final action on CSIMC’s application for registration of the System, , then in either case, provided that CSIMC has formally filed for registration of the System with the CFDA and used its reasonable best efforts to pursue Medical Regulatory Approval in China,Buyer shall be entitled to elect to either: 

	
 
	
(a)
	
select a single competent and qualified company to replace and substitute for CSIMC in the Exclusive Manufacturing and Distribution Agreement and the Supply Agreement; or 

	
 
	
(b)
	
sell the System and System Assets (in whole but not in part) to a single third party.

	
 
	
7.2.5
	
If Buyer chooses to license another manufacturer in accordance with clause 7.2.4(a) then: 

	
 
	
(a)
	
at Buyer's election, either: 

	
 
	
(i)
	
Buyer shall ensure that throughout the Royalty Period the Seller shall continue to enjoy the Right of First Offer and Right of First Refusal to sell the System in the Non-China Territory, and the royalty provisions specified in clause 7.5 shall remain unchanged; or

	
 
	
(ii)
	
Seller shall no longer enjoy the Right of First Offer or Right of First Refusal to sell the System in the Non-China Territory, but the royalty rate in clause 7.5.1 shall be [xxx].  

	
 
	
(b)
	
in the case of a Buyer election under either sub-clause (a)(i) or (a)(ii) above: 

	
 
	
(i)
	
Buyer shall ensure that CSIMC and the new manufacturer enter into a written novation agreement with Seller for the new manufacturer to substitute for and assume all of CSIMC's rights and obligations under the Supply Agreement as if the new manufacturer were an original party to that Agreement, subject to any amendments required in accordance with sub-clause (a)(ii);

	
 
	
(ii)
	
there shall be no disruption in the payment of minimum royalty payments because of any such transfer and substitution; 

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(iii)
	
Seller's rights under the Licensing Agreement shall continue in effect;

	
 
	
(iv)
	
Buyer shall continue to maintain the security in accordance with clause 7.8; and

	
 
	
(v)
	
the provisions of clause 7.2.2 continue to apply 

	
 
	
7.2.6
	
if Buyer chooses to sell the System and System Assets in accordance with 7.2.4(b), then:

	
 
	
(a)
	
as a condition of and at completion of Buyer's sale of the System, Buyer shall pay to Seller the amount of US$14,000,000, equal to 100% of the aggregate total minimum royalty payments under clause 7.5.7;

	
 
	
(b)
	
Buyer shall procure that,  as a condition of and at completion of Buyer's sale of the System, the purchaser of the System and System Asset ("Potential System Purchaser") shall pay to Seller a royalty premium in the amount of [xxxxxxxxxxx];

	
 
	
(c)
	
as a condition of the sale of the System and System Assets, the Buyer shall procure that the Potential System Purchaser confirms in a legally binding writing to Seller it's agreement to be bound by the requirements of sub-clause (b), and enters into a binding written guarantee, in favour of the Seller, of Buyer's performance under the above sub-clause (a), in a form acceptable to Seller; 

	
 
	
(d)
	
upon satisfaction of the requirements of sub-clauses (a) and (b) above, this Agreement and all Ancillary Agreements to which Seller is a party shall terminate, and Seller shall have no Right of First Refusal or Right of First Offer, nor any right to receive royalties;

	
 
	
(e)
	
if the Potential System Purchaser fails to pay the amount of [xxxxxxxxxx] in accordance with sub-clause (b) above, the Buyer shall be jointly and severally liable to pay such sum to the Seller.

	
 
	
7.2.7
	
Subject to clauses 7.2.3 through 7.2.6, Buyer shall use its reasonable best efforts to maintain the Exclusive Manufacturing and Distribution Agreement in effect, and to ensure that CSIMC performs its obligations under the Supply Agreement, prior to and for the duration of the Royalty Period.

	
 
	
7.2.8
	
The Exclusive Manufacturing and Distribution Agreement shall provide that, in any Buyer transfer under clause 7.2.6, CSIMC shall not retain any rights to the System or System Assets, including, without limitation, any System IPR. 

	
 
	
7.2.9
	
Buyer shall keep Seller fully informed of any developments related to a planned re-licensing or sale under clause 7.2.5 or 7.2.6, including the identity of any proposed transferee or licensee, and proposed terms of transfer, time schedules, etc.  Buyer shall ensure that any proposed transferee has sufficient financial, technical and other resources required to satisfy the terms of this Agreement and, if relevant, the Supply Agreement and the Exclusive Manufacturing and Distribution Agreement.  

	
7.3
	
Non-competition

	
 
	
7.3.1
	
Prior to and for the duration of the Royalty Period, Seller shall not compete with Buyer, CSIMC, or their permitted assignees to manufacture and sell any [xxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxx] other than the System anywhere in the world. For the avoidance of doubt, Seller can purchase the System from the Buyer or CSIMC and distribute in markets other than the China Territory, all in accordance this Agreement and the Ancillary Agreements.  For purposes of this clause 7.3, [xxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 

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xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx].   

	
 
	
7.3.2
	
In case the arbitrators finally determine that there has been a violation of clause 7.3.1 by the Seller, Seller agrees that, after the date of the final award, Buyer will have the right to retain payment of royalty in the amount of damages as determined by the arbitrators (but only in such amount). For the avoidance of doubt, such retention of payment shall not constitute Buyer’s breach to clause 7.5 whatsoever, and clause 7.5.5 shall not be applied to the royalty withheld in accordance with this clause 7.3.2. 

	
7.4
	
Knowledge transfer and support

	
 
	
7.4.1
	
Seller shall provide all necessary resources and support  to ensure a full and complete transfer of the information, knowledge, know-how and patents in relation to the System, and will use its commercially reasonable efforts to make Buyer / CSIMC personnel working with the System understand the technology and methods embodied in the System and necessary for its manufacture and servicing.  

	
 
	
7.4.2
	
At no cost to Buyer and CSIMC, Seller shall provide up to sixty (60) man days of support in the first six months after Closing 2, and up to ten (10) man days per month for the next 12 months thereafter. For the avoidance of any doubt, when support is demanded by the Buyer or CSIMC, Seller shall provide personnel that are qualified to support, and for each day, the support shall last no less than 8 hours unless otherwise waived by the Buyer. Support shall be provided on a timely basis when requested by the Buyer or CSIMC either at CSIMC's facility in China, at Seller's facility in the US, or remotely, as agreed by CSIMC and the Seller on an on-going basis. Seller and CSIMC will each be responsible for its own costs of travel etc. in respect of such support services. If additional support beyond that provided for above is required by CSIMC in any period, Buyer or CSIMC may purchase such additional support services from Supplier at Supplier's then current standard rates for technical services, and subject to reimbursement of Seller's reasonable costs for travel, etc. 

	
7.5
	
Royalty payments

	
 
	
7.5.1
	
Throughout the Royalty Period, the Buyer shall pay to the Seller a royalty of [xxx] (or [xxx], if an election is made under clause 7.2.3 or 7.2.5(a)(ii)) of the Net Sales Price of each System or component thereof that is directly or indirectly: 

	
 
	
(a)
	
sold by CSIMC, its distributors, agents or affiliates (other than sales to Seller under the Supply Agreement);

	
 
	
(b)
	
leased, lent, or sold on a lease purchase basis by CSIMC, its distributors, agents or affiliates;

	
 
	
(c)
	
supplied by CSIMC, its distributors, agents or affiliates to any person otherwise than in accordance with clause 7.5.1(a) or clause 7.5.1(b) 

provided always that in respect of any System or System component manufactured, used or supplied, only a single royalty shall be payable, and the royalty accrues on the date when the System or component is used or supplied, the date it is supplied being the earliest of when it is invoiced, paid for, installed or delivered to the customer. For the avoidance of doubt, the royalty years shall be full calendar years, and no royalty shall be payable after December 31st of the fifth year of the Royalty Period.

	
 
	
7.5.2
	
If CSIMC begins sale or transfer of the System in any market other than China prior to commencement of the Royalty Period, then:

	
 
	
(a)
	
Buyer shall be obligated to pay royalties to TRXC on such sales or transfers in accordance with the provisions of this clause 7.5;

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(b)
	
TRXC will provide Buyer with a credit against minimum royalties due under clause 7.5.7 in the amount of the royalties received by TRXC under clause 7.5.2(a), whether prior to or during the Royalty Period;

	
 
	
(c)
	
Buyer's obligation to pay royalties for sales or transfers in such other market shall terminate on the earlier of (i) the end of the Royalty Period, or (b) the fifth anniversary of the first sale or transfer in such other market;

	
 
	
(d)
	
All other provisions of this Agreement, including without limitation this clause  7.5, shall apply to such sales or transfers. 

	
 
	
7.5.3
	
Royalties shall be paid in US Dollars to the Nominated Account.

	
 
	
7.5.4
	
Royalties payable under this Agreement shall be paid within sixty (60) days after the end of each successive Quarterly Period.

	
 
	
7.5.5
	
In the event of any delay in paying any sum due under this Agreement by the due date, the Buyer shall pay to the Seller interest on the overdue amount at the rate of [xxxxxx xxxxxxx]. Such interest shall accrue on a daily basis from the due date until actual payment of the overdue amount, whether before or after judgment. The Buyer shall pay the interest together with the overdue amount.

	
 
	
7.5.6
	
At the same time as payment of royalties falls due, the Buyer shall submit or cause to be submitted to the Seller a statement in writing recording the calculation of such royalties payable, and in particular:

	
 
	
(a)
	
the Quarterly Period for which the royalties were calculated;

	
 
	
(b)
	
the number of Systems supplied or used during the Quarterly Period by CSIMC, its distributors and affiliates;

	
 
	
(c)
	
the number of Systems manufactured during the Quarterly Period but not yet supplied;

	
 
	
(d)
	
the Net Sales Price of each System supplied during the Quarterly Period;

	
 
	
(e)
	
the amount of royalties due and payable;

	
 
	
(f)
	
the amount of any withholding or other income taxes deductible or due to be deducted from the amount of royalties due and payable; and

	
 
	
(g)
	
any other particulars the Seller may reasonably require.

	
 
	
7.5.7
	
During the Royalty Period, Buyer shall pay minimum royalties in accordance with the following schedule:

		
	
PERIOD AFTER CFDA REGISTRATION DECISION 
	
MINIMUM ROYALTY

	
YEAR 1
	
[xxxxxxxxxxxx]

	
YEAR 2
	
[xxxxxxxxxxxx]

	
YEAR 3
	
[xxxxxxxxxxxx]

	
YEAR 4
	
[xxxxxxxxxxxx]

	
YEAR 5
	
[xxxxxxxxxxxx]

 

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If in any year the royalties actually received by Seller are less than these amounts, then Buyer shall pay the difference to Seller within sixty (60) days after the end of the relevant royalty year. If in any year the royalties actually received by Seller in accordance with clause 7.5.1 are more than these amounts, then Buyer shall only pay the royalties mentioned in clause 7.5.1, but not the minimum royalties herein.

	
 
	
7.5.8
	
For the avoidance of doubt, the minimum royalty amounts in clause 7.5.7 shall be payable by Buyer regardless of whether or not CSIMC receives CFDA approval to market the System.  

	
 
	
7.5.9
	
The Buyer and CSIMC, its distributors and affiliates shall keep proper records and books of account showing the description and price of Systems supplied or put into use. Such records and books shall be kept separate from any records and books not relating solely to the System, and Seller (or its authorised representative) shall have the right on thirty (30) days advance notice to inspect and audit the same, and entitled to take copies of or extracts from the same. If such inspection or audit should reveal a discrepancy in the royalties paid from those payable under this Agreement, the Buyer shall immediately make up the shortfall and reimburse the Seller in respect of any professional charges incurred for such audit or inspection. Such right of inspection of the Seller shall remain in effect for a period of one year after the end of the royalty period indicated in clause 7.5.1.

	
 
	
7.5.10
	
Within sixty (60) days of the end of each calendar year the Buyer shall submit to the Seller a written statement certified by CSIMC's auditors of the aggregate Net Sales Price of Systems supplied or put into use by CSIMC in that year and the amount due to be paid for that year under this clause 7.5. In the event that such statement shows that the amount paid by the Buyer is less than the amount due, the Buyer shall pay to the Seller, within seven (7) days of the submission of the statement, an amount equivalent to the difference between the amount paid and the amount due.

	
 
	
7.5.11
	
The provisions of this clause 7.5 shall remain in effect notwithstanding termination or expiry of this Agreement or the Supply Agreement until the settlement of all subsisting claims of the Seller.

	
 
	
7.5.12
	
Where the Buyer or CSIMC has appointed any sales agent or distributor or the like, the Buyer shall include, in its royalty payments, payments in respect of all activities set out in clause 7.5.1 which are carried out by or on behalf of the agent or distributor, and shall include records of such activities in the statements it submits pursuant to clause 7.5.6 and clause 7.5.10. For the avoidance of any doubt, under above circumstances only a single royalty shall be payable for each System. Sales made by Buyer/CSIMC to an agent or distributor or the like are not the basis of a royalty payment, which royalty is to be calculated based on the sale price to the end user customer.

	
 
	
7.5.13
	
In the event that CSIMC transfers its rights under the Exclusive Manufacturing and Distribution Agreement to a third party, or if the Buyer transfers the System or System IPR to a party other than CSIMC, the royalty payment obligation under this clause 7.5 shall apply, mutatis mutandis, to sales or other transfers of the System by such third party.

	
7.6
	
Marketing and training materials

CSIMC shall create promotional, training, service and other literature for the System, and shall at its own risk and expense market, promote, sell and service the System. 

	
7.7
	
Compliance with laws

	
 
	
7.7.1
	
The Buyer or CSIMC shall be solely responsible for obtaining any regulatory approvals required to market and use the System in the China Territory. 

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7.7.2
	
In case of markets in the Non-China Territory where the Seller chooses to distribute the System using its Right of First Offer or Right of First Refusal, responsibilities of obtaining regulatory approvals required to market and use the System in such jurisdictions shall be subject to distribution agreement between CSIMC and the Seller, except as set forth in clause 7.2.2.

	
 
	
7.7.3
	
In case of markets in the Non-China Territory where the Seller chooses not to distribute the System using its Right of First Offer or Right of First Refusal, responsibilities of obtaining regulatory approvals required to market and use the System in such jurisdictions shall be subject to distribution agreement between CSIMC and its appointed distributor(s), subject to clause 7.2.2.

	
 
	
7.7.4
	
Both Parties agree to comply with, and Buyer shall ensure that CSIMC complies with, all applicable laws and regulations with respect to this Agreement, and in relation to the manufacturing, sale and marketing of the System. Without limitation, CSIMC marketing materials shall comply with all relevant PRC laws and regulations, and shall not make claims contradicting or exceeding the specifications of the System or any part thereof.

	
7.8
	
Continuing security

Buyer shall provide security for its obligations to Seller in an amount not less than [xxxxxxxxxx] from the period beginning with Closing 2 and continuing until the end of the Royalty Period.  This security shall first be satisfied through the pledge of the shares of Seller’s capital stock (the “Shares”) under the Share Pledge Agreement.  After the end of the initial two-year term of the Share Pledge Agreement, Buyer may extend the security through a pledge of the Shares by sending written notice at least thirty (30) Business Days in advance of the expiration of the Share Pledge Agreement to extend the pledge and the term of the Share Pledge Agreement for one additional year.  Buyer shall be entitled to extend the security through the pledge of the Shares each year during the Royalty Period under this clause 7.8; provided, however, that if Buyer desires to release the Shares from the pledge, it will substitute a letter of credit for the pledged shares, with such letter of credit having a term equal to the remaining Royalty Period.

	
8.
	
Warranties

	
8.1
	
The Seller represents, warrants and undertakes to the Buyer that at Closing 1 and Closing 2 the Warranties set out in 0, Part A, are true, accurate and not misleading. 

	
8.2
	
The Buyer represents, warrants and undertakes to the Seller that at Closing 1 and Closing 2 the Warranties set out in 0, Part B, are true, accurate and not misleading.

	
8.3
	
For the purpose of this clause 8 the term fairly and reasonably disclosed means disclosed in such manner and in such detail as to enable a reasonable person to make an informed and accurate assessment of the matter concerned.

	
8.4
	
Each Party acknowledges that the other has entered into this Agreement on the basis of such Warranties.  For the avoidance of doubt, claims in relation to breach of the representations and warranties when made by the Parties may be brought for 24 months after the commencement of sales of the System by CSIMC. 

	
8.5
	
Each of the Warranties is a separate warranty and will not be limited or restricted by reference to the terms of any other Warranty or any other term of this Agreement.

	
8.6
	
The System is sold "as is". The Seller makes no warranties or representations other than those in Schedule 2, and excludes to the full extent permitted by law any other warranties whatsoever, including without limitation any warranties as to the suitability of the System for any particular purpose, as to its merchantability or marketability, or as to Buyer's ability to obtain any regulatory approvals in relation to the System. 

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9.
	
liabilities and indemnity

	
9.1
	
Definitions 

In this clause:

		
	
"Losses" 
	
means all damages, liabilities, demands, costs, expenses, claims, actions and proceedings (including all consequential, direct, indirect, special or incidental loss or punitive damages or loss, legal and other professional fees, cost and expenses, fines, penalties, interest and loss of profit or any other form of economic loss (including loss of reputation))

	
"Minimum Liability"
	
 means [xxxxxxxx];

	
"Claim Period"
	
means the period following Closing 2 and continuing until 24 months after the commencement of sales of the System by CSIMC.

and a reference to a claim is a reference to a claim by a Party on the grounds indicated in clause 9.2.

	
9.2
	
Indemnity

Each Party will, to the extent that a claim does not arise from the negligence or wilful default of the other Party, on demand indemnify and keep indemnified the other Party from and against all Losses suffered or incurred by the other Party arising out of or in connection with:

	
 
	
9.2.1
	
any act or omission by the first Party that is in breach of this Agreement; 

	
 
	
9.2.2
	
any breach of the Warranties by the first Party, provided that the claim is issued and served on the other Party during the Claim Period; 

	
 
	
9.2.3
	
any third party claim relating to the provision, supply or use of the System, provided that in the case of a third party claim brought against Buyer, the third party claim is served on the Buyer during the Claim Period.

	
9.3
	
De minimis claims

Neither Party shall be liable for a claim if the liability of the other Party for that claim when added to the total liability of the other Party under all previous claims does not exceed in aggregate the Minimum Liability.

	
 
	
9.3.1
	
Once the total of the claims exceeds in aggregate the Minimum Liability, the breaching Party shall be liable for the whole amount of such claim and not just for the amount exceeding the Minimum Liability.

	
 
	
9.3.2
	
No single claim may be made against a Party under the Warranties if the amount to be claimed does not exceed [xxxxxxxxx].

	
9.4
	
Maximum liability

The aggregate liability of the Seller or Buyer (as the case may be) in respect of all claims for breach of the Warranties shall not exceed [xxxxxxxxxxxxx].

	
9.5
	
Pre-Notice of a claim

The claiming Party shall not bring a claim against the other Party unless written notice has been given to the other Party within sixty (60) days after the claiming Party becomes aware of the grounds for a claim, providing details of the nature of the claim in reasonably sufficient detail and, so far as practicable, the amount claimed.

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9.6
	
Specific Limitations

	
 
	
9.6.1
	
Neither Party shall be able to bring a claim against the other if and to the extent that:

	
 
	
(a)
	
the breach on which the claim is based occurs as a result of any legislation not in force at the date of this Agreement taking effect retrospectively, any increase in the rates of taxation in force at that date or as a consequence of a change in the interpretation of the law in any jurisdiction after the date of this Agreement,

	
 
	
(b)
	
the claim relates to any loss for which the Party is indemnified by insurance.

	
 
	
9.6.2
	
If a Party is prevented by clause 9.6.1 from bringing any claim in whole or in part, the losses, costs or damages the Party would have sought to recover in such claim shall not be taken into account when calculating the Minimum Liability.

	
 
	
9.6.3
	
No claim shall be made by a Party in relation to a fact, omission, if the Party has actual, constructive or imputed knowledge of the fact, omission, circumstance or occurrence at the time of execution of this Agreement.

	
9.7
	
Conduct of claims

When a Party becomes aware of any third party claim that might give rise to a claim against the other Party out of or in relation to the System or System Assets, having given notice to the other Party in accordance with clause 9.5, the first Party shall:

	
 
	
9.7.1
	
not make any admission of liability or agreement or compromise with any party without prior consultation with and the agreement of the other Party;

	
 
	
9.7.2
	
take such action to avoid, dispute, resist, appeal, compromise or contest the dispute as the other Party may request, at the other Party's expense; and

	
 
	
9.7.3
	
make available to the other Party all information required and available to enable the other Party to avoid, dispute, resist, appeal, compromise or contest the claim and any liability connected with the claim, 

provided that the first Party shall not be obliged to take any action which is likely to materially prejudice the System or the first Party.

	
9.8
	
Recovery from third parties

If a Party receives any payment or benefit from any policy of insurance or any third party other than the other Party as a result of the circumstances giving rise to a claim, and the other Party has made payment to the first Party in respect of that claim, the first Party shall as soon as practicable after receipt, pay to the other Party an amount which is the lesser of the amount of the payment or benefit received from the insurer or other third party and the payment received from the other Party, having deducted all costs, charges and expenses reasonably incurred by the first Party in obtaining the payment or benefit.

	
9.9
	
General

	
 
	
9.9.1
	
Nothing in this clause shall in any way diminish Parties' obligation to take reasonable measures to  mitigate their losses.

	
 
	
9.9.2
	
If any potential claim arises by reason of a liability that is contingent only, then the Seller shall not be under any obligation to make any payment for that claim until such time as the contingent liability becomes actual.

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9.9.3
	
The Buyer confirms to the Seller that it is not at the date of this Agreement, and after discussion with its accountants and attorneys, aware of any matter or thing that in its reasonable opinion would or may give rise to any claim.

	
 
	
9.9.4
	
Nothing contained in this clause or any other terms of this Agreement shall affect any claim or other action by the Buyer in the case of fraud or other dishonesty or any omission or wilful or fraudulent misstatement the Seller or its agents may make or commit.

	
10.
	
Miscellaneous

	
10.1
	
Variation

Variations to this Agreement will only have effect when agreed in writing and signed by each of the Parties.

	
10.2
	
Severability

If any provision of this Agreement (wholly or partly) is or becomes illegal, invalid or unenforceable, the remaining provisions shall remain in full force and effect. If such provision would be legal, valid and enforceable if part of it were deleted or amended, the provision will apply with the required deletion or amendment provided that neither Party suffer any materially adverse effect.

	
10.3
	
Waiver

Unless otherwise agreed in writing, no failure, delay, indulgence, act or omission by either Party in exercising any right or remedy will be deemed a waiver of that, or any other, right or remedy.

	
10.4
	
Further assurance

Each Party will, at its own cost, do all further acts and execute all further documents necessary to give effect to this Agreement both on and after Closing 1.

	
10.5
	
Assignment

	
 
	
10.5.1
	
Except as provided in clause 7.2.1 and 7.2.3 or as otherwise agreed by the Parties, neither Party may assign or grant an Encumbrance over or deal in any way with any of its rights under this Agreement; provided, however, that Seller shall have the right to freely transfer all of its rights and obligations under this Agreement to any party acquiring substantially all, or a major part, of the business and/or assets of the Seller, as long as the successor assumes all of Seller’s obligations to Buyer/CSIMC; and Buyer shall have the right to freely transfer all of its rights and obligations under this Agreement to any party acquiring substantially all, or a major part, of the business and/or assets of the Buyer, as long as the successor assumes all of Buyer’s obligations to Seller under this Agreement.

	
 
	
10.5.2
	
A permitted Seller transferee under Clause 10.5.1 shall not be subject to the restrictions on competition in Clause 7.2.7 in respect of any [xxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxx] under development, already developed, or marketed by such transferee at the time of the transfer.

	
10.6
	
Entire agreement

This Agreement and documents referred to in it represent the entire agreement between the Parties and supersede all previous agreements and understanding of the Parties relating to acquisition of the System made available in this Agreement whether written or oral. Further, each Party acknowledges that it does not rely on, and shall have no remedy in respect of any statement, representation, assurance or warranty (whether of fact or law made innocently or negligently).

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10.7
	
No joint venture or agency

The Parties are independent contractors, and nothing in this Agreement is intended to create any joint venture or agency relationship between the Parties. No Party may purport to create or assume any obligation on behalf of the other. 

	
10.8
	
Succession

This Agreement will bind and benefit each Party’s respective successors and permitted assignees. Any successor and/or assignee shall in its own right be able to enforce any term of this Agreement in accordance with its terms as if it were in all respects a party to this Agreement, but until such time, any such successor or assignee shall have no rights whether as a third party or otherwise.

	
10.9
	
Counterparts

This Agreement may be signed in any number of separate counterparts. Each, when executed and delivered by a Party, will be an original. All counterparts will together constitute one instrument.

	
10.10
	
Costs

The Parties will each pay their own costs in connection with the negotiation, preparation and implementation of this Agreement and any documents referred to in or incidental to this Agreement.

	
11.
	
Notices

	
11.1
	
Notices under this Agreement will be in writing and sent to the person and address in clause 11.2. They may be given, and will be deemed received:

	
 
	
11.1.1
	
by international courier: five Business Days after posting;

	
 
	
11.1.2
	
by hand: on delivery.

	
 
	
11.1.3
	
by e-mail: on the next Business Day after sending to the correct address (provided that no notice of failure of delivery is received by the sender).

	
11.2
	
Notices will be sent:

	
 
	
11.2.1
	
to the Seller at: 

Anthony Fernando

Chief Operating Officer

TransEnterix, Inc.

635 Davis Drive, Suite 300

Morrisville, NC 27560 USA

[xxxxxxxxxxxxxxxxxxxx]

with copies to:

Joshua Weingard

Chief Legal Officer

TransEnterix, Inc.

635 Davis Drive, Suite 300

Morrisville, NC 27560 USA

[xxxxxxxxxxxxxxxxxxxx]

and

 

Kathleen Frost

Vice President - Intellectual Property

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TransEnterix, Inc.

635 Davis Drive, Suite 300

Morrisville, NC 27560 USA

[xxxxxxxxxxxxxxxxxxxx]

 

	
 
	
11.2.2
	
to the Buyer at: 

Wang Yan

Authorized Representative

Great Belief International Limited

B217 Southwest Building, No.9 Bei'er Village, 

Shahe, Changping District, Beijing 102206, P.R. China

[xxxxxxxxxxxxxxxxxxxx]

 

	
12.
	
Confidential information

	
12.1
	
Neither Party will, without the other’s prior written consent, disclose:

	
 
	
12.1.1
	
the existence or terms of this Agreement; provided, however, if this Agreement is material to Seller, it is authorized to disclose the Agreement in accordance with U.S. securities laws, including filing this Agreement with its filings with the U.S. Securities and Exchange Commission; and

	
 
	
12.1.2
	
any information relating to the customers, suppliers, methods, products, plans, finances, trade secrets or otherwise to the business or affairs of the other Party,

together the Confidential Information.

	
12.2
	
Neither Party will use the other's Confidential Information except to perform this Agreement or as contemplated by this Agreement.

	
12.3
	
Disclosure of Confidential Information may be made to such of a Party's officers, employees, professional advisers and consultants as reasonably necessary to advise on this Agreement and the transaction as a whole on the condition that the disclosing Party is responsible for such third party's compliance with the obligations under this clause. Disclosure may also be made as required by law, the Securities and Exchange Commission, any stock exchange, or any other regulatory body. 

	
12.4
	
Confidential Information does not include information which is:

	
 
	
12.4.1
	
publicly available, other than as a result of a breach of this Agreement by a Party; or

	
 
	
12.4.2
	
lawfully available to a Party from a third party free from any confidentiality restriction; or

	
 
	
12.4.3
	
required by law, regulation or by order or ruling of a court or administrative body of a competent jurisdiction to be disclosed (but in which case to the absolute minimum necessary) provided that the disclosing Party shall use its  reasonable endeavours to first consult fully with the other Party to establish whether and, if so, how far it is possible to prevent or restrict such enforced disclosure and take all steps as it may reasonably require to achieve prevention or restriction.

	
12.5
	
Without the express written consent of Seller, Buyer shall not, and shall ensure that CSIMC does not, make any public announcement or otherwise disclose to any third party the existence of this Agreement or any agreement ancillary to it, or the fact that discussions concerning a potential collaboration are taking place, except as required by law, the Securities and Exchange Commission, any stock exchange, or any other regulatory body. In the event such a disclosure is required, Buyer shall notify Seller no less than 24 hours in advance of the disclosure. 

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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.

 

 

	
12.6
	
Without the express written consent of Buyer, Seller shall not make any public announcement or otherwise disclose to any third party the existence of this Agreement or any agreement ancillary to it, or the fact that discussions concerning a potential collaboration are taking place, except as required by law, the Securities and Exchange Commission, any stock exchange, or any other regulatory body. In the event such a disclosure is required, Buyer shall notify Seller no less than 24 hours in advance of the disclosure. 

	
13.
	
Governing law and jurisdiction

	
13.1
	
This Agreement and any dispute or claim arising out of, or in connection with, it, its subject matter or formation (including non-contractual disputes or claims) shall be governed by, and construed in accordance with, the laws of Hong Kong, excluding the United Nations Convention on the International Sale of Goods.

	
13.2
	
Any dispute, difference or claim arising out of, in connection with or relating to this Agreement shall be submitted to and finally resolved by arbitration in Hong Kong under the auspices of the Hong Kong International Arbitration Commission (“HKIAC”), in accordance with the HKIAC Administered Arbitration Rules then in effect, which rules are hereby incorporated by reference into this Agreement. The arbitral tribunal shall consist of three arbitrators. One of the arbitrators shall be a national of the PRC, one a national of the US, and one of a third country. The arbitral proceedings shall be conducted in English.

This document has been executed by the duly authorized representatives of the Parties on the date written at the beginning of it.

 

		
	
Executed by TransEnterix Inc. acting by Anthony Fernando, its COO. 
	
 

/s/ Anthony Fernando

 

	
Executed by Great Belief International Limited acting by Mr. Wang Yan, its authorized representative.
	
 

/s/ Wang Yan

 

 

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SCHEDULE 1

SYSTEM ASSETS

 

Part 1

PATENTS

			
	
[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]

	
Reference No.
	
Title
	
Patent No./App. Serial No./Filing Date

	
[xxxxxxxx]
	
MECHANIZED MULTI-INSTRUMENT SURGICAL SYSTEM
	
US 9,333,040

U.S. Regular 13/759,036

February 4, 2013

	
[xxxxxxxxxx
	
xxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxx
	
xxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxx

xxxxxxxxxxxxxx

	
xxxxxxxxxx
	
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xxxxxxxxxxxxxxxxx

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xxxxxxxxxx
	
xxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxx
	
xxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxx

xxxxxxxxxxxxxx

	
xxxxxxxxxxx
	
xxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxx
	
xxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxx

xxxxxxxxxxxxxx]

	
[xxxxxxxx]
	
MECHANIZED MULTI-INSTRUMENT SURGICAL SYSTEM
	
U.S. Patent 9,345,545

U.S. Regular 13/939,227

July 11, 2013

	
[xxxxxxxxx]
	
MECHANIZED MULTI-INSTRUMENT SURGICAL SYSTEM
	
U.S. Patent 9,603,672

U.S. Regular 13/939,229

July 11, 2013

	
[xxxxxxxx
	
xxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxx
	
xxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxx

 

	
xxxxxxxx
	
xxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxx
	
xxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxx]

 

 

Part 2

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SYSTEM SOFTWARE

[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx:
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]  

 

	
 
	
Component
	
Function
	
Description

	
[Xxxxxxxx xxxxxxx
	
Xxxxxxxxxxxxxxxx
xx
	
Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxx 
	
Xxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxx

	
Xxxxxxxxxxxxxxx
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Xxxxxxxxxxxxxxxxxxxxxxxx
	
Xxxxxxxxxxxxxxxxxxxxxxxx

	
Xxxxxxxxxxxxxx
xxx
	
Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
	
Xxxxxxxxxxxxxxxxxxxxxx
 xxxxxxxxxxx

	
Xxxxxxxxxxxxxx
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Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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Xxxxxxxxxxxxxxxxxxxxxxxxxxxx  xxxxxxxxxxxxxxx

	
Xxxxxxxxx xxxxxxxxxxx
	
Xxxxxxxxxxxxxxxxx
	
Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxx
	
Xxxxxxxxxxxxxxxxx

	
Xxxxxxxxxxxxxxxxx
	
Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxx
	
Xxxxxxxxxxxxxxxxxxxxxxx

	
Xxxxxxxxxxxxxxx
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Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 
xxxxxxxxxxxxxxxxxxxxx
	
Xxxxxxxxxxxxxxxx

	
Xxxxxxxxxxxx xxxxxxxxxx
	
Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
	
Xxxxxxxxxxxxxx

 

Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxx

Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxx]    

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PART 3

TRADEMARKS

					
	
File Number
	
Trademark
	
Country
	
Status
	
Number

	
[xxxxxxxxxxxxxx
	
Xxxxxxxxxxxxxxxxx
	
Xxxxx
	
xxxxxxx
	
xxxxxxxx

	
Xxxxxxxxxxxxx
	
Xxxxxxxxxxxxxxxxx
	
Xxxxx
	
Xxxxxxx
	
xxxxxxxxx

	
xxxxxxxxxxxxx
	
Xxxxxxxxxxxxxxxxx
	
xxxxxx
	
Xxxxxxx
	
xxxxxxxxx]

	
070453-00051
	
SURGIBOT
	
Republic of Korea
	
Registered
	
45-2014-0001534

 

 

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PART 4

SYSTEM CAPITAL GOODS

[Asset listing provided to Buyer]

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Warranties

PART A – Seller Warranties

	
1.
	
The seller

	
1.1
	
The Seller is a company duly incorporated and existing under the laws of Delaware, USA.

	
1.2
	
The Seller has all requisite corporate power and authority to execute and perform this Agreement and all agreements and documents ancillary to it.

	
1.3
	
This Agreement and all agreements and documents ancillary to it constitute valid, legal, binding and enforceable obligations on the Seller.

	
1.4
	
To the Seller's knowledge, no order has been made, petition presented or resolution passed for the winding-up of the Seller and no administration order or administration application or notice of appointment of or notice of intention to appoint an administrator has been made or issued in relation to the Seller.

	
1.5
	
No receiver or administrative receiver has been appointed over any part of the System or the System Assets, no application has been made to the court for any such appointment, and no power of sale or power to appoint a receiver or administrative receiver under the terms of any charge, mortgage or security over the System Assets has become exercisable.

	
1.6
	
Performance by the Seller of the terms of this Agreement and such agreements and documents ancillary to it do not and will not conflict with or result in a breach of any of the provisions of the Seller memorandum or articles of association or any contractual, governmental or public agreement or other obligation made or given by the Seller, or any applicable laws, regulations, acts and other governmental policies especially those of the United States of America.

	
2.
	
The System Assets

	
2.1
	
The Seller or TransEnterix Surgical, Inc. have good title to all the System Assets and are the legal and beneficial owner of all the System Assets.  No System Asset are subject to any Encumbrance as of the date of transfer to Buyer.

	
2.2
	
To the Seller’s best knowledge, it is not aware of other parties’ rights which would be infringed upon by the use of the System Assets by the Buyer and CSIMC subject to this Agreement.  

	
2.3
	
The System Assets provided to Buyer are inclusive of all the versions of the System Assets (including the historical and latest versions, especially for the System Information, System IPR and System Software) created, possessed and obtained by the Seller.

	
3.
	
Intellectual Property Rights

	
3.1
	
The Seller and its wholly owned subsidiary, TransEnterix Surgical Inc., are the legal owners of the System IPRs.

	
3.2
	
To the Seller's knowledge, none of the System IPRs are subject to any dispute, infringement and/or challenge.

	
3.3
	
All System IPRs are freely assignable without requiring any consent.

	
3.4
	
To the Seller's knowledge, none of the elements or activities of the System have infringed the Intellectual Property Rights of any person in circumstances which would entitle any person to make a claim against the Seller. The Seller has not received notice of any claim which alleges that the Seller is infringing such person's Intellectual Property Rights in relation to the System.

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3.5
	
The System IPRs are not subject to any Encumbrance or any other rights exercisable by other parties, and the Seller is not obliged to grant any Encumbrance in respect of the System IPRs.

	
4.
	
Information Technology

	
4.1
	
If the Seller is the legal and beneficial owner of the System Software, then the Seller is the one and only legal and beneficial owner of such System Software; if the Seller is not the legal and beneficial owner of the System Software, then the Seller has the contractual right to use, the System Software, free from Encumbrances and all other rights exercisable by other parties. The Seller has obtained all necessary rights from third parties to permit the Seller to use the System IT exclusively and without restrictions and is able to transfer the System Software to the Buyer.

	
4.2
	
The Seller licenses all software necessary to enable the System to continue in the ordinary course of business and the Seller is able to transfer such software to the Buyer.

	
4.3
	
The Seller is not aware of any fact, matter, event or circumstance which may adversely affect the continued use of the System Software by Buyer after Closing 2.

	
5.
	
Litigation

	
5.1
	
Neither the Seller nor any person for whom the Seller may be vicariously liable in relation to the System or the System Assets is engaged, concerned or involved in (whether as an applicant, respondent or otherwise) any litigation, arbitration or other proceedings relating to the System or the System Assets which are in progress, threatened or pending by or against the Seller or the System or any of the System Assets and there are no facts of circumstances known to the Seller likely to give rise to any such litigation, arbitration or other proceedings.

PART A – Buyer Warranties

	
1.1
	
The Buyer is a company duly incorporated and existing under the laws of British Virgin Islands, and CSIMC is a company duly incorporated and existing under the laws of the People's Republic of China.

	
1.2
	
The Buyer and CSIMC have all requisite corporate power and authority to enter into and perform this Agreement and all agreements and documents ancillary to it.

	
1.3
	
This Agreement and all agreements and documents ancillary to it constitute valid, legal, binding and enforceable obligations on the Seller or CSIMC.

	
1.4
	
To the knowledge of the Buyer, no order has been made, petition presented or resolution passed for the winding-up of the Buyer or CSIMC and no administration order or administration application or notice of appointment of or notice of intention to appoint an administrator has been made or issued in relation to the Buyer or CSIMC.

	
1.5
	
No receiver or administrative receiver has been appointed over any part of the business or assets of Buyer or CSIMC, no application has been made to the court for any such appointment, and no power of sale or power to appoint a receiver or administrative receiver under the terms of any charge, mortgage or security over the System Assets has become exercisable.

	
1.6
	
Performance by the Buyer and CSIMC of the terms of this Agreement and such agreements and documents ancillary to it do not and will not conflict with or result in a breach of any of the provisions of the Buyer and CSIMC memorandum or articles of association or any contractual, governmental or public agreement or other obligation made or given by the Buyer or CSIMC.

 

 

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Schedule 2 

DESIGNATED ACCOUNT

Name of Bank: [xxxxxxxxxxxxxxxxx]

Bank Address:[ xxxxxxxxxxxxxxxxx

Xxxxxxxxxxxxxxx]

ABA Number:[ xxxxxxxxxxxxxxxxx]

Beneficiary Account Number: [xxxxxxxxxxxxx]

Beneficiary Name: [xxxxxxxxxxxxxxxxxxxxxxxx]

Beneficiary Address:[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]

 

 

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