Document:

EX-10.31 License Agreement/Encore Medical, L.P.

 

EXHIBIT 10.31

EXECUTION COPY

LICENSE AGREEMENT

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

Recitals

     WHEREAS, ENCORE has developed a certain Implant and System (each as defined below) to which
MAKO seeks certain rights;

     WHEREAS, ENCORE and MAKO entered into (a) that certain Letter of Intent, dated December 11,
2006 (“LOI”) in which ENCORE agreed to grant to MAKO an exclusive, worldwide license to
certain rights relating to the System when used in connection with the HGS (defined herein) (the
“MAKO Field”), and (b) that certain mutual Nondisclosure Agreement, by and between the
Parties, dated December 11, 2006 (the “NDA,” attached hereto as Exhibit A and
incorporated herein by reference);

     WHEREAS, MAKO desires to be the exclusive licensee of the rights relating to the System in the
MAKO Field and ENCORE is willing to license MAKO those rights under the terms and conditions of
this Agreement;

     WHEREAS, ENCORE and MAKO have concurrently entered into that certain Supply Agreement
(“Supply Agreement”), by which ENCORE agrees to supply to MAKO commercial quantities of the
System for resale during the Transition Period (as defined below) for use with the MAKO Haptic
Guidance SystemTM (“HGS”) as either an ENCORE or MAKO private labeled product
under ENCORE’s Premarket Notification 510(k) (the “Encore 510(k)”), under the terms and
conditions of the Supply Agreement;

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

ARTICLE I.

Definitions

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

     1.1 An “Affiliate” of a Party means an entity directly or indirectly Controlling,
Controlled by or under common Control with that Party, for the time during which such Control
exists.

 

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

 

 

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     1.2 “Control” means the ownership or control, directly or indirectly, of more than
fifty percent of all of the voting power of the shares (or other securities or rights) entitled to
vote for the election of directors or other governing authority, as of the date of this Agreement
or hereafter during the Effective Period of this Agreement.

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

     1.4 “Effective Period” has the meaning given to in Section 8 1.

     1.5 “Implant” as used in both a singular and plural context, means the E.P.I.K.
Unicondylar Knee System and all components thereof, including the femoral component, tibia base
plate and poly inserts developed by ENCORE and used for a single procedure.

     1.6 “Licensed Implant Methods” means surgical techniques and processes for implanting
the Implant and using associated medical instruments and equipment.

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

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

     1.9 “Licensed Product” shall mean the System or any 510(k) unicondylar knee system
developed by MAKO under the License, or any part thereof.

     1.10 “Net Sales” shall mean the amount invoiced on sales (regardless of uncollectible
accounts) of Licensed Product and/or services using Licensed Processes after deducting, if not
already deducted in the amount invoiced (a) trade and/or quantity discounts; (b) credits on
returns, recalls, allowances; (c) commissions paid (but not in excess of amounts that are usual and
customary in medical device industry); (d) taxes, excises and other governmental charges, and (d)
outbound transportation, shipping, and handling costs.

     1.11 “System” means the Implant and related instrumentation, the Licensed Technical
Information and related know-how.

     1.12 “Transition Period” means the period outlined in Section 3.1.

 

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

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ARTICLE II.

Grant of License

     2.1 Grant of License to MAKO. Subject to all of the terms and conditions of this
Agreement, ENCORE grants to MAKO a non-transferable (except as expressly permitted under Section
9.1), exclusive (even as to ENCORE), royalty-bearing, non-terminable and irrevocable (except as
expressly provided in this Agreement) worldwide license to certain rights relating to the Licensed
IP Rights in connection with the HGS,

     (a) to make, have made, use, offer for sale, sell, and import the System in connection with
the use of the HGS as either an ENCORE or MAKO private labeled product under the Encore 510(k),
under the terms and conditions of this Agreement including, without limitation, the implant
instruments, surgical techniques, production knowledge and know-how and access to production
processes (until such time as MAKO has developed the capabilities to produce the System
independently); provided, however, that MAKO shall not make or have made the System under the
Encore 510(k);

     (b) to use, disclose, reproduce, distribute, display, perform, and prepare derivatives
of Licensed Technical Information in connection with developing and manufacturing the
System, and to authorize others to do so on behalf of MAKO or its Affiliates for the System
to be sold by MAKO or its Affiliates;

     (c) to use, disclose, reproduce, distribute, display, perform, and prepare derivatives
of and improvements to the Licensed Technical Information in connection with selling,
distributing, implanting, testing and using the System, and to authorize others to do so;
and

     (d) to use the Licensed Implant Methods and to authorize others to use the Licensed
Implant Methods, in connection with the System.

Certain of the Licensed Technical Information and the Licensed Implant Methods are proprietary and
confidential information of ENCORE. The rights granted MAKO in Sections 2.1(b), (c) and (d),
above, shall be used solely in exercising MAKO’s rights under Section 2.1(a) and MAKO shall
continue to protect ENCORE’s proprietary and confidential information in accordance with the NDA,
which shall apply to all Licensed Technical Information and Licensed Implant Methods.

     2.2 Sublicensing. The license granted to MAKO under Section 2.1 does not include any
right of MAKO to grant sublicenses without the consent of ENCORE, except that, without limiting the
scope of Section 2.1, MAKO may grant limited, non-transferable sublicenses, under the Licensed IP
Rights: (i) to its vendors or manufacturers for the sole and limited purposes of having components
made, and/or the System assembled on behalf of MAKO; (ii) to its sales representatives,
distributors and other sales agents to market and sell the System; (iii) to medical and
professional organizations and support staff to use the System in connection with implanting the
Implant and patient care; and (iv) to Affiliates, provided, however, that should any such Affiliate
have a then-available product directly competitive to the System, other than the Stelkast
Unicondylar Knee System or the total modular knee system currently under development by

 

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

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MAKO, either Party may provide the other with written notice of its decision to terminate this
Agreement nine (9) months from the date of delivery of such notice. For the avoidance of doubt, a
total knee system consisting of two unicondylar implants used for total knee replacement shall not
be considered directly competitive to the System.

     2.3 No Other Licenses; No Assignments. Other than the license expressly set forth
above, neither Party is granting to the other any license or sublicense, whether by implication,
estoppel or otherwise. Except as otherwise expressly stated, nothing in this Agreement is intended
to transfer title to or other ownership interest in any intellectual property tight.

     2.4 Right to Manufacture. At any time following MAKO’s receipt of its own Premarket
Notification 510(k) (a “MAKO 510(k)”), MAKO shall have the right (a) in its sole discretion, to
choose the manufacturer of the System other than ENCORE at any time based on MAKO’s production
needs and (b) to manufacture the System itself for use with the HGS using MAKO’s preferred
suppliers as a MAKO product.

ARTICLE III.

Transfer of Information, Assistance and Ownership

     3.1 Technical Assistance. ENCORE will provide MAKO, on a commercially reasonable
basis and in accordance with Schedule I, technical support during the period from the Effective
Date until the date on which MAKO is able to make or have made the Implant without the assistance
of ENCORE and sell the System independently, under its own label, with all necessary regulatory
approvals in the United States (the “Transition Period”).

     3.2 Clinical Training, Data and Support. During the Transition Period, ENCORE will
use commercially reasonable efforts to provide MAKO or its designees, at MAKO’s reasonable expense
and in accordance with Schedule I, necessary initial training by qualified ENCORE personnel,
concerning the System in the areas of engineering, sales, marketing, clinical and regulatory, and
manufacturing (the “Necessary Training”). The Necessary Training shall include, without
limitation, training in technical areas (design and manufacturing), clinical training, and
marketing training, and shall include the transfer of all documentation and literature associated
with the same. ENCORE shall provide MAKO with reasonable opportunity to observe on five (5)
separate occasions (at no charge) the current System surgical technique as practiced in clinical
cases. During the Transition Period, ENCORE will provide MAKO with any new clinical data and
follow-ups on the use of the System as are available to ENCORE and not previously provided to MAKO.

     3.3 Regulatory Matters.

     (a) FDA Approval. MAKO may sell the System under the ENCORE 510(k) until MAKO
receives a MAKO 510(k). ENCORE will use commercially reasonable efforts to assist MAKO in
applying for and obtaining a MAKO 510(k) and a corresponding CE marking for the System by
providing MAKO with all the required technical information and appropriate documentation
including, without limitation, Licensed Technical Information, clinical data, a complete
copy of any regulatory filing for the System created by ENCORE and existing as of the
Effective Date, and all

 

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

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specifications which are in ENCORE’s possession. Any other relevant assistance shall
be provided to MAKO by ENCORE on a commercially reasonable basis and in accordance with
Schedule I. In addition, ENCORE shall transfer to MAKO electronic CAD data and electronic
editable copies of all regulatory submissions and technical files existing as of the date of
the Closing of the latest System that could be then transferred to production or be used for
the purpose of design changes and future improvements by MAKO. CAD files existing as of the
Closing shall be transferred in a mutually agreed upon format.

     (b) Complaints. Each Party agrees and covenants to notify and forward to the
other within forty-eight hours of initial receipt any Complaint (as such term is defined in
such Complaint-receiving Party’s quality system) received related to the System. ENCORE
agrees and covenants that it shall inform MAKO immediately of any potential MDR noted during
any complaint investigation and that ENCORE shall be solely responsible for System advisory
notices, recalls, EC vigilance, end-user customer complaints, MDR determinations, and
post-production monitoring.

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

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

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

     3.4 Ownership of System IP and Other Intellectual Property. ENCORE does and shall own
all right, interest and title in the intellectual property embodied in the System (collectively,
“System IP”) existing as of the date of the Effective Date. MAKO shall own all right,
interest and title to any improvements made by MAKO to the System IP, which shall be, and hereby
is, licensed back to ENCORE on a royalty-free, world-wide, non-exclusive basis for use outside of
the MAKO Field. MAKO shall own all rights, interests and title to any intellectual property (a)
generated during the integration of the System for use with the HGS (other than any improvement to
System IP) and (b) owned by MAKO and existing prior to the Effective Date. MAKO’s technology in
the surgical robotics, image guidance, and software is owned by MAKO and shall be expressly
excluded from the terms of this Agreement.

 

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

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ARTICLE IV.

Publicity and Confidentiality

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

     (a) Each Party may represent to third parties that MAKO has been granted a license to
the System as provided by this Agreement

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

     4.2 Publicity and Trademarks. Nothing in this Agreement is intended nor shall be
construed as conferring upon either Party or its Affiliates any right to include in advertising,
packaging or other commercial activities related to the Implant, any reference to the other Party
(or any of its Affiliates), its trade names, trademarks or service marks in a manner which would be
likely to cause confusion or to indicate that the Implant is in any way certified by the other
Party hereto or its Affiliates.

ARTICLE V.

Payments

     5.1 License Fee. In full consideration for the license granted by ENCORE to MAKO and
the transfer of Licensed Technical Information, MAKO shall pay to ENCORE the following:

     (a)
a $50,000 License Fee upon execution by both Parties of this Agreement;

 

			
	[***]	 	Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [***]. A complete version of this exhibit has
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(b) a
running royalty of five percent (5%) (“Running Royalty”) of the Net
Sales of any Licensed Product sold in the MAKO Field during any calendar quarter, payable
quarterly in arrears, within thirty (30) days following the end of each quarter in which
such Running Royalty is earned; and

     (c) during the Effective Period, within thirty (30) days of each of the three
consecutive anniversaries following the Effective Date of the Agreement (each a “Minimum
Royalty Payment Date”), the following amounts (each a “Minimum Royalty”) less
all Running Royalties accrued during the prior 365-day period:

	 	(i)	 	First Minimum Royalty Payment
Date:          $40,000
	 
	 	(ii)	 	Second Minimum Royalty Payment
Date:     $50,000
	 
	 	(iii)	 	Third Minimum Royalty Payment
Date:         $60,000

     5.2 Audit Rights. MAKO shall maintain accurate books and records with respect to the
Licensed Products such that the payments due and payable set forth in Section 5.1 can be
ascertained. Such books and records shall be maintained at MAKO’s principal place of business for
a period of at least three (3) years; and, such portions as are relevant to the subject matter of
this Agreement, shall be available for inspection by ENCORE or its representative(s) during the
normal business day upon not less than ten (10) days’ prior written notice, provided that ENCORE or
its representatives) agree to protect any confidential information of MAKO and not unduly interfere
with MAKO’S business. Any such inspection shall not be more frequent than annually. In the event
that such inspection determines that the amount of payments paid to ENCORE was in error by more
than five percent (5%), MAKO shall pay the costs of the inspection.

ARTICLE VI.

Representations, Warranties and Covenants

     6.1 ENCORE Representations. ENCORE represents, warrants and covenants to MAKO as to
the following as of the Effective Date:

     (a) The execution, delivery and performance by ENCORE of this Agreement does not breach
any term or provision of or constitute a default under any material indenture, mortgage,
deed of trust, contract, agreement, lease or other commitment or instrument to which ENCORE
is a party or by which ENCORE or its assets or properties are bound, do not conflict with
any provision of the articles of incorporation or bylaws of ENCORE and do not constitute an
event which, with the lapse of time or action by a third party, could result in any default
under any of the foregoing.

     (b) ENCORE has full power, authority and legal right to enter into this Agreement and
grant the licenses and rights set forth in this Agreement and has not made, and will not
make, any commitments to others inconsistent with or in derogation of such rights. Upon
execution and delivery by ENCORE of this Agreement it will be a valid and binding obligation
of ENCORE, enforceable in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization or similar laws

 

			
	[***]	 	Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [***]. A complete version of this exhibit has
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affecting the rights of creditors generally. Notwithstanding the foregoing, no
representation or warranty is made regarding the availability of equitable remedies.

     (c) The manufacture, sale and use of the System and the use of Licensed Technical
Information as permitted by this Agreement, will not infringe the patents or copyrights of,
or misappropriated information of, a third party.

     (d) ENCORE has the requisite institutional knowledge and commercially adequate
expertise to provide the Necessary Training it is offering and/or pledging to provide to
MAKO under this Agreement.

     (e) ENCORE has obtained the Encore 510(k) and the CE mark to sell the System and hereby
permits MAKO to sell the System under the Encore 501(k) and the CE mark.

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

     6.2 MAKO Representations and Warranties. MAKO represents and warrants the following:

     (a) The execution, delivery and performance by MAKO of this Agreement does not breach
any term or provision of or constitute a default under any material indenture, mortgage,
deed of trust, contract, agreement, lease or other commitment or instrument to which MAKO is
a party or by which MAKO or its assets or properties are bound, do not conflict with any
provision of the articles of incorporation or bylaws of MAKO and do not constitute an event
which, with the lapse of time or action by a third party, could result in any default under
any of the foregoing.

     (b) MAKO has full power, authority and legal right to enter into this Agreement. Upon
execution and delivery by MAKO of this Agreement it will be a valid and binding obligation
of MAKO, enforceable in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting the rights of creditors
generally. Notwithstanding the foregoing, no representation or warranty is made regarding
the availability of equitable remedies.

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

     (d) MAKO shall not make any material misrepresentation about the System or ENCORE or
otherwise disparage the System or ENCORE. For the avoidance of doubt,

 

			
	[***]	 	Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [***]. A complete version of this exhibit has
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the Parties agree and recognize that factual statements made by MAKO concerning
competitive advantages of implant systems offered by MAKO other than the System, including,
without limitation, the Stelkast Unicondylar Knee System or the total modular knee system
currently under development by MAKO shall not be deemed to have violated this Section
6.2(d).

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

     6.3 Disclaimers.

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

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

ARTICLE VII.

Indemnification

     7.1 ENCORE Indemnification. ENCORE agrees to indemnify in respect of, and hold MAKO
and its officers, directors, employees and agents (the “MAKO Indemnified Parties”) harmless against
any and all damages, claims, deficiencies, losses, including taxes, and all expenses (including,
without limitation, interest, penalties, and reasonable attorneys’ and accountants’ fees and
disbursements but reduced by any tax savings, benefits or offsets to which the indemnified party
shall be entitled directly or indirectly by reason thereof) (collectively “Damages”)
resulting from (a) any misrepresentation, breach of warranty, or failure to perform any covenant or
agreement on the part of ENCORE or its employees, agents or representatives under this Agreement;
(b) personal injuries and/or deaths from the use of products manufactured, produced, sold or
marketed by ENCORE or its employees, agents or representatives, except if sold to MAKO unless such
products, when delivered to MAKO, failed to meet the Specifications,

 

			
	[***]	 	Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [***]. A complete version of this exhibit has
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as defined in the Supply Agreement (in each such case, a “Non-Conforming Product”); or (c) any
negligent or fraudulent act or willful misconduct of ENCORE or its employees, agents or
representatives. ENCORE’s liability under this Section 7.1 shall be reduced to the extent that any
such Damages were caused by (i) the negligence or culpability or willful misconduct of the MAKO
Indemnified Parties, (ii) the failure of MAKO or its employees, agents or representatives to
perform their duties under this Agreement, or (iii) a change made to any such products after having
been manufactured by ENCORE.

     7.2 MAKO Indemnification. MAKO agrees to indemnify in respect of, and hold, ENCORE
and its officers, directors, employees and agents (the “ENCORE Indemnified Parties”) harmless
against any and all Damages resulting from (a) any misrepresentation, breach of warranty, or
failure to perform any covenant or agreement on the part of MAKO or its employees, agents or
representatives under this Agreement; (b) personal injuries and/or deaths from the use of products
manufactured, produced, sold or marketed by MAKO or its employees, agents or representatives,
except for use of a Non-Conforming Product, unless MAKO knew or should have known, through
reasonable diligence, that a product causing such personal injuries and/or deaths was a
Non-Conforming Product; or (c) any negligent or fraudulent act or willful misconduct of ENCORE or
its employees, agents or representatives. MAKO’s liability under this Section 7.2 shall be reduced
to the extent that any such Damages were caused by (i) the negligence or culpability or willful
misconduct of the ENCORE Indemnified Parties; or (ii) the failure of ENCORE or its employees,
agents or representatives to perform their duties under this Agreement.

ARTICLE VIII.

Term, Termination and Expiration

     8.1 Term. This Agreement will become effective as of the Effective Date and will
continue until terminated (the “Effective Period”) according to its terms or until
expiration of all Licensed IP Rights.

     8.2 Termination.

     (a) MAKO may voluntarily terminate this Agreement upon thirty (30) days written notice
to ENCORE;

     (b) In the event of any breach or default by one Party in any of the terms or
conditions of this Agreement, and such defaulting Patty has not cured such default within
thirty (30) days after written notice from the non-defaulting Party of such default, the
non-defaulting Party may immediately terminate this Agreement by giving written notice to
the defaulting Party.

     (c) At any time following closing of any transaction or series of transactions
resulting in Control of MAKO by an entity with a then-available product directly competitive
to the System, either Party may provide the other with written notice of its decision to
terminate this Agreement nine (9) months from the date of delivery of such notice.

     (d) ENCORE may immediately terminate this Agreement in the event of:

 

			
	[***]	 	Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [***]. A complete version of this exhibit has
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     (i) any material misrepresentation or disparagement by MAKO of the System or
ENCORE as described in Section 6.2(d), of materially adverse effect to Encore and/or
the market for the System, which cannot be cured, in Encore’s reasonable discretion;

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

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

     8.3 Rights under Termination. In the event of termination under this Section 8, MAKO
shall pay ENCORE within thirty (30) days of the termination for all sums under Sections 5.1(a) and
(b), whether such sums are due before, on or after the effective date of such termination. In the
event of a termination of this Agreement other than by MAKO pursuant to Section 8.2(b), the Minimum
Royalty that would have been due following the period during which such termination occurred, if
any, shall be payable on a pro-rated basis for that number of days from the prior Minimum Royalty
Payment Date to the termination date, less all Running Royalties accrued for that same period. In
such a case, payment of the Minimum Royalty, if any, shall be made within thirty (30) days of the
termination date. MAKO will also (a) return all Licensed Technical Information transferred from
ENCORE, and will erase any copies or files existing in the MAKO system and (b) be prohibited from
using any of the Licensed Technical Information disclosed by ENCORE for any purpose whatsoever.

     8.4 Survival. Any provisions of this Agreement, which by their nature extend beyond
the Effective Period, shall survive any termination of the Agreement.

ARTICLE IX.

Miscellaneous Provisions

     9.1 Assignment. This Agreement shall not be assignable by either Party absent the
written consent of the other Party, except that no such consent will be required for succession by
merger, consolidation, sale of all or substantially all of the assets, or change of control of a
Party, but only if the assignee, successor or surviving entity agrees to be bound in writing to all
of its terms and conditions. This Agreement will be binding on successors in interest and
permitted

 

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

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assigns. An assignment other than as expressly permitted by this Section 9.1 will be void and
shall constitute a breach of this Agreement.

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

	 	 	 	 	 
	 

	 	If to ENCORE:
	 	Encore Medical, L.P.
	 

	 	 	 	9800 Metric Boulevard
	 

	 	 	 	Austin, Texas 78758
	 

	 	 	 	Attention: General Counsel
	 
	 	 	 	 
	 

	 	If to MAKO:
	 	MAKO Surgical Corp.
	 

	 	 	 	2555 Davie Road
	 

	 	 	 	Ft. Lauderdale, FL 33317
	 

	 	 	 	Attention: General Counsel

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

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

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

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

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

 

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

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Party may terminate this Agreement upon written notice to the other Party within 30 days after
learning such change has been effected.

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

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

     9.9 Legal Costs. Each of the Parties will be responsible for its own expenses,
including legal and accounting fees of advisors, incurred in connection with the negotiation and
preparation of this Agreement.

 

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

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     9.10 Dispute Resolution.

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

     (b) In the event that, after reasonable consultation, but within 30 days, the Parties
are unable to reach agreement, any claim or controversy shall be settled by arbitration
administered by the American Arbitration Association under its then current Commercial
Arbitration Rules in New York, New York, before a single arbitrator and ,judgment
on any award rendered by or finding of the arbitrator may be entered in any court having
jurisdiction thereof. The arbitrator shall have the authority to award actual money damages
(with interest on unpaid amounts from the date due), temporary injunctive relief, and
reasonable attorney’s fees and expenses, but, the arbitrator shall not have the authority to
award exemplary or punitive damages, and the Parties expressly waive any claimed right to
such damages. The costs of arbitration shall be borne by the Parties in accordance with the
award of the arbitrator. If a Party fails to proceed with arbitration, unsuccessfully
challenges the arbitration award, or fails to comply with the arbitration award, the other
Party is entitled to costs, including reasonable attorney’s fees, for having to compel
arbitration or defend or enforce the award. Except as otherwise required by law, the
Parties agree to maintain and to cause the arbitrator to maintain as Proprietary
Information, all information, documents and other data of any kind or nature whatsoever
obtained during the arbitration process, including the fact that such arbitration is being
undertaken and the final award of the arbitrator.

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

     9.12 No Partnership. Neither this Agreement, not any terms and conditions contained
herein, will be deemed or construed to create a partnership, joint venture, other form of business
enterprise or association or cooperative arrangement, agency relationship, or franchise
relationship between the Parties or otherwise to create any liability for either Party whatsoever
with respect to the indebtedness, liabilities, and obligations of the other Party.

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

 

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

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

     9.15 BASIS OF BARGAIN. EACH PARTY RECOGNIZES AND AGREES THAT THE WARRANTY DISCLAIMERS
AND LIABILITY AND REMEDY LIMITATIONS IN THIS AGREEMENT ARE MATERIAL, BARGAINED FOR BASES OF THIS
AGREEMENT AND THAT THEY HAVE BEEN TAKEN INTO ACCOUNT AND REFLECTED N DETERMINING THE CONSIDERATION
TO BE GIVEN BY EACH PARTY UNDER THIS AGREEMENT AND IN THE DECISION BY EACH PARTY TO ENTER INTO THIS
AGREEMENT.

[signature page follows]

 

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

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

	 	 	 	 	 	 	 
	 	 	ENCORE MEDICAL, L.P.	 	 
	 
	 	 	 	 	 	 
	 

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

	 	By:
	 	/s/ Harry L. Zimmerman
 

Harry L. Zimmerman

Executive Vice-President—General Counsel
	 	 
	 
	 	 	 	 	 	 
	 

	 	Date:
	 	2/28/07
 

	 	 
	 	 	MAKO SURGICAL CORP.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Maurice R. Ferré
 

	 	 
	 

	 	 	 	Maurice R. Ferré, MD	 	 
	 

	 	 	 	President & Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 

	 	Date:
	 	2/28/07
 

	 	 
	 
	 	 	 	 	 	 
	 

	 	EXHIBITS	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Exhibit
	 	A: Non-Disclosure Agreement	 	 

 

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

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Exhibit A

Non-Disclosure Agreement

[as attached]

 

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

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December 11, 2006

Exhibit A

CONFIDENTIALITY AND NONDISCLOSURE AGREEMENT

     THIS CONFIDENTIALITY AND NON-DISCLOSURE AGREEMENT (“Agreement”) is made to be effective as of
August 17, 2006, by and between (i) Encore Medical L.P., a Delaware limited partnership, which has
a place of business at 9800 Metric Blvd., Austin, Texas 78758 (“COMPANY”), and (ii) MAKO Surgical
Corp. a Delaware corporation which has a place of business at 2555 Davie Road, Ft. Lauderdale,
Florida 33317 (“MAKO”) who, intending to be legally bound, hereby agree as follows:

RECITALS

     WHEREAS, representatives of MAKO and COMPANY wish to communicate for the propose of evaluating
the prospect for future cooperation, subject to the parties’ agreement to hold the existence and
substance of such communications in confidence in accordance with this Agreement; and

     WHEREAS, each party agrees to hold the substance and existence of communications between their
representatives in confidence;

     NOW,
THERE FORE, in consideration of the mutual promises contained herein, the parties agree as follows:

     1. This .Agreement shall apply to all information: (i) which the disclosing party
designates as confidential, (ii) the receiving party should reasonably have known would be
confidential from its nature or from the circumstances surrounding its disclosure, and (iii)
disclosed by the parties to each other, including without limitation information related to product
designs, capabilities, specifications, program code, data bases (business forms and documents), and
information regarding regulatory and financial affairs, personnel, sales, commercial files, future
technical business and marketing plans and product strategies, the identity of actual and potential
partners, customers and suppliers, and other intellectual property (hereinafter referred to as
“Proprietary Information”). Proprietary Information may be owned by MAKO or any affiliate thereof,
COMPANY or any affiliate thereof, or by any third party which has disclosed such information to any
of the foregoing subject to a nondisclosure obligation. Proprietary Information shall
not include information which (a) was already known to the receiving party prior to disclosure by
the other party, (b) is in or has entered the public domain through no breach of this Agreement or
other wrongful act by the receiving party, (c) has been rightly received in good faith from a third
party who is not under any obligation of confidentiality with respect to such information, (d) has
been approved for release by written authorization of the disclosing party, or (e) is independently
developed by a party without use of the other party’s Proprietary Information. MAKO and COMPANY
hereby agree that any information which fails within the definition of Proprietary Information and
which was disclosed prior to the signing of this Agreement shall be deemed to be
included in and covered by the terms and conditions of this Agreement.

     2. MAKO and COMPANY understand and agree that each will be deemed to be in a fiduciary
relationship of confidence with the other party regarding the confidentiality of the

 

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

LOI-MAKO
& Encore

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December 11, 2006

Proprietary Information. Each party acknowledges that the disclosure of the Proprietary
Information, including but not limited to the existence of communications between the parties, or
use of the Proprietary Information for any purpose other than the purposes identified herein could
result in irreparable injury to the business and goodwill of the other party whether such
disclosure occurs during the course of such communications or after their completion or
abandonment. Accordingly, each party agrees that it will keep the Proprietary Information in
strictest confidence and will not disclose the Proprietary Information to any third party. In
addition, each party shall take all steps necessary to protect the Proprietary Information from
unauthorized or inadvertent disclosure, including without limitation all steps such party takes to
protect the confidentiality of its own proprietary information, but in no event less than ordinary
degree of care. Notwithstanding the foregoing, the receiving party may disclose and grant access
to the Proprietary Information only to those of its employees, agents and consultants, or the
employees, agents and consultants of its affiliates or subsidiaries, who have a legitimate need to
know the Proprietary Information for the purposes of this Agreement and who shall have agreed to
abide by the terms and provisions of this Agreement.

     3. Except with the written consent of the disclosing party, neither party shall:

     (a) modify the disclosing party’s Proprietary Information;

     (b) disclose any part of the disclosing party’s Proprietary Information;

     (c) make any notes, sketches, drawings or photocopies, or other written or photographic
records of the disclosing party’s Proprietary Information, except for such copies as may be
reasonably required for the purpose of this Agreement; or

     (d) use or allow the use of the disclosing party’s Proprietary Information for any purpose
other than those of this Agreement, including but not limited to developing, directly or
indirectly, any product competing with or similar in functionality to any product marketed or
developed by the disclosing party.

     4. In the event the receiving party is required by law, regulation, or court order to disclose
any of the disclosing party’s Proprietary Information, the receiving party will promptly notify the
disclosing party in writing prior to making any such disclosure in order to facilitate the
disclosing party seeking a protective order or other appropriate remedy.

     5. Upon the completion or abandonment of the communications contemplated hereby, and in any
event upon the written request of the disclosing party at any time, whether during the course of
communications or after their completion or abandonment, each party shall immediately return to the
other party all items of Proprietary Information and all copies thereof and shall destroy any notes
or personal memoranda which include or make reference to the Proprietary Information.

     6. Each party shall be deemed the owner of all Proprietary Information disclosed by it to the
other party hereunder; including without limitation all patent, copyright, trademark, trade secret
and other proprietary rights and interests therein, and each party recognizes and agrees that

 

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

LOI-MAKO & Encore

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December 11, 2006

nothing in this Agreement shall be construed as granting any rights, by license or otherwise,
in or to any Proprietary Information. The disclosing party provides Proprietary Information
without warranty of any kind, other than a warranty that it has the right to disclose the
Proprietary Information and that the Proprietary Information is disclosed in good faith. Neither
party makes, and each party hereby expressly disclaims, any warranty regarding the accuracy or
completeness of the Proprietary Information.

     7. Each party hereby acknowledges that unauthorized disclosure, use or disposition of any
Proprietary information would cause irreparable harm and significant
injury to the other party
which would be difficult to ascertain. Accordingly, each party agrees that the other party shall
have the right to seek an immediate injunction against any breach, threatened breach or attempted
breach of this Agreement, in addition to any other remedies that may be available at law or in
equity. Each party agrees to promptly notify the other party in writing of any unauthorized use or
disclosure of the other party’s Proprietary Information of which such party becomes aware and will
provide reasonable assistance to the other party to bring about the cessation of such unauthorized
use or disclosure.

     8. Each party further acknowledges and agrees that:

     (a) The termination of its communications with the other party shall not in any way affect the
obligations set forth herein;

     (b) This Agreement and the obligations set forth herein shall expire five (5) years after the
.date of last disclosure of Proprietary Information, provided however, that to the
extent the Proprietary Information are trade secrets, the obligations will survive until such
information is no longer treated as a trade secret by the disclosing party.

     (c) This Agreement constitutes the entire agreement between the parties in connection with the
subject matter hereof and supersedes all prior and .contemporaneous agreements,
understandings, negotiations and discussions between the parties, whether oral or written.

     (d) The validity, construction and performance of this Agreement shall be governed by and
construed in accordance with the substantive law of the State of Delaware, without regard to
conflicts of law provisions and any action or claims by or between any of the parties hereto
concerning the Proprietary Information, whether asserted on the basis of contract, tort (including
negligence and strict liability) or otherwise, shall be resolved exclusively under the law of such
jurisdiction. If any provision of this Agreement. or the application of any such
provision shall be held by a tribunal of competent jurisdiction to be contrary to law, the
remaining provisions of this Agreement shall remain in full force and effect to the maximum extent
permissible.

     (e) This Agreement is not assignable or transferable in whole or in part without written
consent of the other party. Any attempted assignment without such written consent shall be void
and shall constitute a breach of this Agreement.

     (f) This Agreement may be signed in original or by fax in counterparts, each of which will be
deemed to be an original, and the counterparts will together constitute one complete document.

 

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

LOI-MAKO & Encore

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December 11, 2006

     (g) Each of the undersigned signatories, executing on behalf of the respective party, hereby
represents and warrants that (i) the execution and delivery of, and compliance with, this Agreement
has been duly authorized by such party, (ii) such signatory has actual necessary legal authority to
bind such party to the terrors of this Agreement, and (iii) this Agreement shall, by its terms,
bind such party to the covenants set forth herein.

 

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

LOI-MAKO & Encore

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December 11, 2006

     IN WITNESS WHEREOF, the parties hereto have executed this Confidentiality Agreement be
effective as of the date first written above.

	 	 	 	 	 	 	 	 	 
	MAKO SURGICAL CORP.	 	 	 	ENCORE MEDICAL L.P.
	 	 	 	 	 	 	BY: ENCORE MEDICAL GP, INC.
	 	 	 	 	 	 	                     its general partner
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Maurice R. Ferré
	 	 	 	By:
	 	/s/ Jack Cahill
	Name:

	 	Maurice R. Ferré
	 	 	 	Name:
	 	Jack Cahill
	Title:

	 	President/CEO
	 	 	 	Title:
	 	President, Surgical Implant Div.
	Date:

	 	12-12-2006
	 	 	 	Date:
	 	12-14-06

 

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

LOI-MAKO & Encore

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Schedule I

     Except for third-party expenses, during the first thirty days following the Effective Date, no
charges shall be due and owing to ENCORE from MAKO for support or training up to a maximum of [***]
([***]) hours. Thereafter, ENCORE shall bill MAKO at a rate of [***] Dollars ($[***]) for each
hour of support or training provided by ENCORE pursuant to the terms of the Agreement. Any
third-party expenses, such as consulting surgeon services, shall be borne by MAKO at [***]% of the
cost to ENCORE .

 

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

Page 23exv10w19b

 

Exhibit 10.19b

ASSIGNMENT, ASSUMPTION AND AMENDMENT OF

LEASE AGREEMENT FOR A GAMMA KNIFE UNIT

     This ASSIGNMENT, ASSUMPTION AND AMENDMENT OF LEASE AGREEMENT FOR A GAMMA KNIFE UNIT (this
“Amendment”) is made effective as of the close of business on June 30, 2006 (the “Amendment
Effective Date”) and is entered into by and among Yale-New Haven Ambulatory Services Corporation,
a Connecticut corporation (“ASC”), Yale-New Haven Hospital, Inc. a/k/a Yale-New Haven Hospital, a
Connecticut corporation (“YNHH”) and GK Financing, LLC, a California limited liability company
(“GKF”).

RECITALS

     WHEREAS, on April 10, 1997 GKF and ASC entered into a Lease Agreement For A Gamma Knife Unit
(the “Lease”), which Lease was amended pursuant to an Addendum dated as of October 25, 2005 (the
“Addendum”) (the Lease, as amended by the Addendum, is hereinafter referred to as the “Amended
Lease”);

     WHEREAS, YNHH is an affiliate of ASC, and ASC desires to transfer and assign its interest in
the Amended Lease (as further amended hereby) to YNHH; and

     WHEREAS, ASC, YNHH and GKF desire to further amend the Amended Lease with respect to
reimbursement paid to GKF and certain other provisions and to effect such transfer and assignment.

     NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and
for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:

	 	1.	 	Definitions. All capitalized terms used but not defined herein have the
meanings given thereto in the Amended Lease. The lease arrangement as amended and assigned
to YNHH hereby is referred to as the “Assigned Lease.”
	 
	 	2.	 	Additional Amendments to the Amended Lease. GKF and ASC agree to amend the
Amended Lease as follows:

	 	a.	 	As of the Amendment Effective Date, Section 7 of the Lease (captioned
“Reimbursement to GKF”) and Section 4 of the Addendum (captioned “Lease Payment to
GKF”) are deleted and of no further force or effect.
	 
	 	b.	 	From and after the Amendment Effective Date, YNHH shall pay to GKF the
monthly “Lease Payments” (as defined below), plus, if applicable, the
“Additional Payments” (as defined below). The Lease Payments shall be payable
within thirty (30) days after the conclusion of each calendar month in which the
applicable procedures were performed. In addition to the Lease Payments and the
Additional Payments, YNHH shall pay to GKF quarterly payments in an amount equal to
one quarter of YNHH’s reasonable projection of the total * due on the Equipment and
paid by GKF for each “Contract Year” (as defined below). Within thirty (30) days
after the end of each Contract Year, the sum of such quarterly projected payments
made by YNHH shall be reconciled against the actual amounts of such expenses, and
YNHH or GKF shall, within thirty (30) days thereafter, make a “true up” payment to
the other as appropriate. Through the term of the Assigned
Lease, and thereafter until final settlement of all amounts owed to or claimed by
either party under the Assigned Lease, each party shall have the right at reasonable
times and upon reasonable advance notice to inspect, audit and copy the other
party’s books and 

- 1 -

 

	 	 	 	records which relate to scheduling and billing of, and
reimbursement for, Gamma Knife procedures, the Lease Payments and Additional
Payments, and the * associated with the Equipment. Notwithstanding the foregoing,
the compensation payable to GKF pertaining to procedures performed prior to the
Amendment Effective Date shall be calculated and paid by ASC in accordance with
Section 4 of the Amended Lease.

	 	i.	 	As used herein:

	 	(A)	 	“Lease Payment” shall mean and be equal to *
multiplied by each and every procedure performed after the Amendment
Effective Date during the applicable calendar month using the
Equipment, irrespective of (1) whether the procedure is performed by
YNHH, its representatives or affiliates, or any other person or entity;
or (2) the actual amounts billed or collected, if any, pertaining to
such procedures.
	 
	 	(B)	 	“Affiliate” shall mean as to any YNHH and/or
ASC, (1) any Person which, directly or indirectly, is in control of, is
controlled by, or is under common control with such YNHH and/or ASC, or
(2) any Person who is a director or officer (aa) of YNHH and/or ASC,
(bb) of any subsidiary of YNHH and/or ASC, or (cc) of any Person
described in clause (1) above. For purposes of this definition,
control of a Person shall mean the power, direct or indirect, to direct
or cause the direction of the management and policies of such Person
whether through ownership of voting securities, by contract or
otherwise.
	 
	 	 	 	Without limiting the generality of the foregoing, “Affiliate” shall
expressly include the Yale-New Haven Delivery Network and all of its
constituent entities, including, without limitation, Yale-New Haven
Hospital, Yale-New Haven Children’s Hospital, Yale-New Haven
Psychiatric Hospital, Yale-New Haven Ambulatory Services Corp (Temple
Medical Center), Yale-New Haven Independent Practice Association
(IPA), Yale-New Haven Physician Hospital Organization (PHO), and
Medical Center Pharmacy.
	 
	 	 	 	Notwithstanding the foregoing, “Affiliate” shall expressly exclude
(aaa) the Bridgeport Delivery Network, comprised of Bridgeport
Hospital, Ahlbin Rehabilitation Centers, United Visiting Nurse
Association and Bridgeport Hospital Foundation, and (bbb) the
Greenwich Delivery Network comprised of Greenwich Hospital, Greenwich
Physicians Association, Inc., and Greenwich Hospital Hospice
services.
	 
	 	(C)	 	“Contract Year” shall mean each successive
twelve (12) month period commencing from the First Procedure Date.
	 
	 	(D)	 	“Person” shall mean any individual,
partnership, corporation, business trust, joint stock company, trust,
unincorporated association, joint venture, or other entity of whatever
nature.

	 	ii.	 	If (A) at any time, YNHH, ASC and/or any of their
respective Affiliates purchases, leases or otherwise acquires, directly
or indirectly, an ownership or other interest in one or more additional
Leksell Gamma Knife units (each, an “Additional Unit”) for use or
operation within the State of Connecticut in 

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	 	 	 	addition to the Equipment;
and (B) at any time or from time-to-time thereafter, the number of
procedures performed using the Equipment during any Contract Year is *
shall be prorated if the Contract Year is less than 365 days (a
“Shortfall Contract Year”), then, in addition to the Lease Payments
payable to GKF for procedures performed using the Equipment, YNHH shall
pay to GKF an additional amount (each, an “Additional Payment”) equal to
the sum of * multiplied by each procedure performed using the Additional
Unit(s) during the corresponding Shortfall Contract Year, up to an
aggregate of * (prorated if the subject Contract Year is less than 365
days) combined between procedures performed using the Equipment and
procedures performed using the Additional Unit(s), irrespective of (1)
whether such procedures are performed by YNHH, its representatives or
affiliates, or any other person or entity; or (2) the actual amounts
billed or collected, if any, pertaining to any such procedures. The
Additional Payments shall be paid by YNHH to GKF quarterly in an amount
equal to one quarter of YNHH’s reasonable projection of the aggregate
Additional Payment for the then-current Contract Year. Within thirty
(30) days after the end of each Contract Year, the sum of such quarterly
projected payments made by YNHH shall be reconciled against the actual
Additional Payment payable for the subject Contract Year, and YNHH or GKF
shall, within thirty (30) days thereafter, make a “true up” payment to
the other as appropriate. Nothing set forth herein shall limit or place
a ceiling on the number of procedures that may be performed using the
Equipment or on the Lease Payment that is payable in connection with
procedures performed using the Equipment.

	 	iii.	 	For example, if Additional Unit(s) have been
acquired:

	 	1.	 	Assuming * procedures are performed using
the Equipment during a Contract Year and another * procedures are
performed in the same Contract Year using the Additional Unit(s),
then, the aggregate Lease Payments for that Contract Year would
equal *, and the Additional Payment for that Contract Year would
equal *.
	 
	 	2.	 	Assuming * procedures are performed using
the Equipment during a Contract Year and another * procedures are
performed in the same Contract Year using the Additional Unit(s),
then, the aggregate Lease Payments for that Contract Year would
equal *, and the Additional Payment for that Contract Year would
equal *.
	 
	 	3.	 	Assuming * procedures are performed using
the Equipment during a Contract Year and * procedures are performed
in the same Contract Year using the Additional Unit(s), then, the
aggregate Lease Payments for that Contract Year would equal *, and
the Additional Payment for that Contract Year would equal *.
	 
	 	4.	 	Assuming * procedures are performed using
the Equipment during a Contract Year and * procedures are performed
in the same Contract Year using the Additional Unit(s), then, the
aggregate Lease Payments for that
Contract Year would equal *, and the Additional Payment for that
Contract Year would equal *.

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	 	c.	 	Section 11.1 (captioned “Right of First Refusal”) of the Lease is
hereby deleted and of no further force or effect.
	 
	 	d.	 	YNHH and GKF agree to implement Section 6 (captioned “Marketing
Support”) of the Lease in accordance with the following paragraph:
	 
	 	 	 	Marketing Support. YNHH shall provide reasonable and customary marketing
materials (i.e. brochures, announcements, etc.), marketing support, and
administrative and physician support for this clinical service (i.e. seminars by
neurosurgeons and radiation oncologists to interested physicians and the like). Not
less than ninety (90) days prior to each anniversary of the Amendment Effective
Date, GKF and YNHH shall develop a mutually agreed upon marketing budget and plan
for the clinical service to be supported by the Equipment for the succeeding twelve
(12) month period of the Term. Once mutually approved, the marketing budget and
plan shall be implemented in accordance with its terms. As funds are expended by
YNHH in accordance with the marketing budget and plan, YNHH shall submit invoices
(together with documentary evidence supporting the invoices) for its expenditures
and, promptly following the receipt of such invoices, GKF shall reimburse YNHH for *
of the expenditures up to an annual maximum reimbursement by GKF of *. It is
acknowledged by GKF and YNHH that the expenses to be reimbursed by GKF as provided
in this Section have been reflected in the calculation of the per procedure payment
to be paid to GKF by YNHH pursuant to the first sentence of Section 2.b of this
Amendment, and shall not be taken into account in calculating any obligations of GKF
or YNHH in connection with the payments for property tax, the service and support
agreement and insurance obligations contemplated by such Section 2.b.

	 	3.	 	Assignment and Assumption.

	 	a.	 	ASC hereby (i) transfers, sells, assigns and sets over to YNHH all of
ASC’s right, title and interest in, under and to the Assigned Lease to YNHH, its
successors and assigns, from and after the Amendment Effective Date for the entire
balance of the term of the Assigned Lease, subject to the terms, covenants and
conditions therein contained; and (ii) agrees to keep, carry out and perform of all
of the terms, covenants and conditions of the Amended Lease to be performed by
“Yale” thereunder and arising or accruing at any time prior to the Amendment
Effective Date.
	 
	 	b.	 	ASC hereby agrees to defend, indemnify and hold YNHH harmless from and
against any loss, cost, damage or expense arising out of or in connection with the
Amended Lease accruing up through the Amendment Effective Date.
	 
	 	c.	 	YNHH hereby (i) accepts such assignment, assumes the Assigned Lease,
and agrees to keep, carry out and perform of all of the terms, covenants and
conditions of the Assigned Lease to be performed by “Yale” thereunder and arising
or accruing from and after the Amendment Effective Date, and (ii) agrees to defend,
indemnify and hold ASC harmless from and against any loss, cost, damage or expense
arising out of or in connection with the Assigned Lease accruing from and after the
Amendment Effective Date.
	 
	 	d.	 	GKF hereby (i) consents to such assignment of the Assigned Lease and
the assumption of the Assigned Lease by YNHH; and (ii) agrees to release ASC from
any claim under the Amended Lease or the Assigned Lease first accruing from and
after the Amendment Effective Date.

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	 	4.	 	Address of YNHH for Notices. For the purposes of any notices required by the
Assigned Lease, YNHH’s address and contact shall be:

Yale-New Haven Hospital

20 York Street

New Haven, CT 06510

Fax: (203) 688-6886

Attn.: John Skelly, VP Finance

	 	5.	 	Governing Law. This Amendment shall be governed by and construed under the
laws of the State of Connecticut, without reference to its principles of conflicts of law.
	 
	 	6.	 	Counterparts. This Amendment may be executed in separate counterparts, each of
which when so executed and delivered shall be an original, but all of which counterparts
shall together constitute the same instrument.
	 
	 	7.	 	Captions. The captions and paragraph headings used herein are for convenience
only and shall not be used in construing or interpreting this Amendment.
	 
	 	8.	 	Successors. This Amendment shall inure to the benefit of and be binding upon
the parties and their respective successors and permitted assigns.
	 
	 	9.	 	Full Force and Effect. Except as amended by this Amendment, all of the terms
and provisions of the Amended Lease shall remain in full force and effect.

IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the day first written above.

	 	 	 	 	 	 	 	 	 
	YALE-NEW HAVEN AMBULATORY	 	GK FINANCING, LLC	 	 
	SERVICES CORPORATION	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Gayle Capozzalo
	 	By:
	 	/s/ Ernest A. Bates, M.D.	 	 
	 

	 	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	Its:
	 	Executive VP, Strategy and System Development	 	Its:	 	Policy Committee Member	 	 
	 
	 	 	 	 	 	 	 	 
	YALE-NEW HAVEN HOSPITAL, INC.	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ John Skelly
 

	 	 	 	 
	 	 
	 
	 	 	 	 	 	 	 	 
	Its:

	 	VP of Finance	 	 	 	 
	 	 

- 5 -

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