System Sale and Cooperation Agreement, dated December 15, 2017, by and between the Company and Great Belief International Limited

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

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

The Seller has developed the System.

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

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

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

Definitions and interpretation

In this Agreement, unless the context otherwise requires:

Unless the context otherwise requires:

each gender includes the other genders;

the singular includes the plural and vice versa;

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

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

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

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

clause headings do not affect their interpretation; and

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

Sale and purchase of the System and the system Assets

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

In addition:

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

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

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

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

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

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

Consideration

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

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

The remainder of the consideration shall be paid as follows:

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

US$4,500,000 at Closing 2.

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

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

Closing  1

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

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

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

this Agreement duly executed by the Seller;

the Subscription Agreement duly executed by the Seller;

the Supply Agreement duly executed by Seller;

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

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

The Buyer will:

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

this Agreement duly executed by the Buyer;

the Subscription Agreement duly executed by the Buyer;

the Supply Agreement duly executed by CSIMC;

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

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

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

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

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

Delivery of system capital goods

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

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

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

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

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

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

CLOSING 2

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

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

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

possession of digital copies of current versions of all of the following:

the System Information;

the System Software (source code and compiled versions).

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

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

The Seller and Buyer shall execute and enter into:

the License Agreement;

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

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

the Share Pledge Agreement.

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

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

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

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

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

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

ACTIONS AFTER CLOSING 2

Transfers of registered System IPR

Restrictions on re-transfer by Buyer and CSIMC

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

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

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

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

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

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

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

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

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

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

at Buyer's election, either:

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

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

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

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

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

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

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

the provisions of clause 7.2.2 continue to apply

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

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

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

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

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

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

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

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

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

Non-competition

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

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx].  

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

Knowledge transfer and support

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

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

Royalty payments

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

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

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

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

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

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

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

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

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

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

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

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

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

the Quarterly Period for which the royalties were calculated;

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

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

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

the amount of royalties due and payable;

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

any other particulars the Seller may reasonably require.

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

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

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

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

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

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

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

Marketing and training materials

Compliance with laws

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

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

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

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

Continuing security

Warranties

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

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

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

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

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

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

liabilities and indemnity

Definitions

Indemnity

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

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

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

De minimis claims

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

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

Maximum liability

Pre-Notice of a claim

Specific Limitations

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

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

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

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

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

Conduct of claims

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

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

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

Recovery from third parties

General

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

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

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

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

Miscellaneous

Variation

Severability

Waiver

Further assurance

Assignment

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

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

Entire agreement

No joint venture or agency

Succession

Counterparts

Costs

Notices

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

by international courier: five Business Days after posting;

by hand: on delivery.

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

Notices will be sent:

to the Seller at:

to the Buyer at:

Confidential information

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

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

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

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

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

Confidential Information does not include information which is:

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

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

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

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

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

Governing law and jurisdiction

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

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

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The seller

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

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

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

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

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

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

The System Assets

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

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

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

Intellectual Property Rights

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

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

All System IPRs are freely assignable without requiring any consent.

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

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

Information Technology

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

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

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

Litigation

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

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

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

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

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

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

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