DEVELOPMENT AND SUPPLY AGREEMENT

Exhibit 10.5

This Development and Supply Agreement (“Agreement”) is made as of this 4th day of November, 2011 (“Effective Date”), by and between Microline Surgical, Inc. of 000 Xxxxxxxx Xxxxxx, Xxxxx 000X, Xxxxxxx, XX 00000 (“Microline”) and Transenterix, Inc. of 000 Xxxxx Xxxxx, Xxxxx 000, Xxxxxx, Xxxxx Xxxxxxxx 00000 (“Transenterix”).

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

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

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

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

1. DEFINITIONS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

2. DEVELOPMENT PROJECT

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

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

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

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

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

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

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

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

3. DELIVERABLES AND TESTING; REGULATORY APPROVAL

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

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

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

4. SUPPLY RELATIONSHIP

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

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

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

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

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

5. SHIPPING, RISK OF LOSS, ACCEPTANCE

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

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

6. SUPPLY PRODUCT WARRANTIES

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

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

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

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

7. QUALITY, AUDIT AND RECORDS

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

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

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

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

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

8. EXCLUSIVITY.

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

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

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

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

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9. COMMERCIALIZATION OF SUPPLY PRODUCTS

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

(b) Use of Trademarks.

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

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

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

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10. PAYMENTS

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

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

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

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

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

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

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

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

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

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

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

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

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

11. REPRESENTATIONS AND WARRANTIES

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

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

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

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

12. INTELLECTUAL PROPERTY

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

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

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

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

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

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

(f) License Grants.

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

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

(g) No Implied Licenses.

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

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

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13. INDEMNIFICATION AND INSURANCE

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

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

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

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

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

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

(d) Insurance.

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

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

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14. CONFIDENTIALITY

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

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

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

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

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

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15. TERM AND TERMINATION

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


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

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

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

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

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

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

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

(d) Termination for Convenience; FDA Approval.

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

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

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

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

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

16. GENERAL

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

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

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

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

(e) Dispute Resolution.

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

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

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

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

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

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

Notices shall be sent to Microline at:

Microline Surgical, Inc.

000 Xxxxxxxx Xxxxxx, Xxxxx 000X

Xxxxxxx, XX 00000

Attention: President

Telecopier: (000) 000-0000

with a required copy to:

Xxxxx Xxxx LLP Seaport West

000 Xxxxxxx Xxxxxxxxx

Xxxxxx, Xxxxxxxxxxxxx 00000

Attention: Xxx Xxxx, Esq.

Telecopier No.: (000) 000-0000

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and to Transenterix at:

Transenterix, Inc.

000 Xxxxx Xxxxx, Xxxxx 000

Xxxxxx, Xxxxx Xxxxxxxx 00000

Attention: Xxxx Xxxxx

Telecopier: (000) 000-0000

with a required copy to:

Xxxxxxx Firm, P.C.

0000 Xxxxxxx Xxxxxxxxx

Xxxxxx, Xxxxx Xxxxxxxx 00000

Attention: Xxxxx Xxxxxxx, Esq.

Telecopier No.: (000) 000-0000

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

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

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

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


Transenterix, Inc.		Microline Surgical, Inc.

By:	/s/ Xxxx X. Xxxx	By:	/s/ Xxxxxx X. Xxxxx

Name:	Xxxx X. Xxxx	Name:	Xxxxxx X. Xxxxx

Title:	Chief Executive Officer	Title:	President & CEO

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DEVELOPMENT AND SUPPLY AGREEMENT

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