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FORM 10-K

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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

¨

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Delaware	11-2962080
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

 

635 Davis Drive, Suite 300, Morrisville, NC 27560

Title of each class		Name of each exchange on which registered
None		None

Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer ¨ (Do not check if a smaller reporting company)	Smaller reporting company x

 

Part III of this Annual Report on Form 10-K is incorporated by reference to our Definitive Proxy Statement on Schedule 14A to be filed in respect of our 2014 Annual Meeting of Stockholders.

			Page
		PART I
ITEM 1.		BUSINESS	3
ITEM 1A.		RISK FACTORS	18
ITEM 1B.		UNRESOLVED STAFF COMMENTS	36
ITEM 2.		PROPERTIES	36
ITEM 3.		LEGAL PROCEEDINGS	36
ITEM 4.		MINE SAFETY DISCLOSURES	36
		PART II
ITEM 5.		MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED  STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	37
ITEM 6.		SELECTED FINANCIAL DATA	38
ITEM 7.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	39
ITEM 7A.		QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	48
ITEM 8.		FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	49
ITEM 9.		CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	78
ITEM 9A.		CONTROLS AND PROCEDURES	78
ITEM 9B.		OTHER INFORMATION	79
		PART III
ITEM 10.		DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	80
ITEM 11.		EXECUTIVE COMPENSATION	80
ITEM 12.		SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND  MANAGEMENT AND RELATED STOCKHOLDERS MATTERS	80
ITEM 13.		CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	80
ITEM 14.		PRINCIPAL ACCOUNTANT FEES AND SERVICES	80
		PART IV
ITEM 15.		EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	81

 

·

our history of operating losses;

·

our need to obtain additional funding to continue our operations;

·

our ability to successfully develop, clinically test and commercialize our products;

·

the timing and outcome of the regulatory review process for our products;

·

our ability to attract and retain key management, marketing and scientific personnel;

·

competition from existing and new market entrants;

·

our ability to successfully prepare, file, prosecute, maintain, defend and enforce patent claims and other intellectual property rights;

·

our ability to successfully transition from a research and development company to a company focused on marketing, sales and distribution of our products in development;

·

changes in the health care and regulatory environments of the United States and other countries in which we intend to operate;

·

our ability to identify and pursue development of additional products; and

·

other factors contained in the section entitled “Risk Factors” contained in this Annual Report.

	3

	4

	5

	6

·

The SurgiBot™ Base:  a reusable robotic base that provides the platform of the system;

·

The EndoDrive:  a single port, surgical access device for abdominal surgery that interfaces with the SurgiBot Base, which allows for the insertion of surgical instruments for the surgical procedures being performed;

·

The Positioning Arm:  a reusable arm that supports and repositions the SurgiBot Base at the operating table; and

·

The 3-D Vision System:  a three dimensional scope and vision system for laparoscopic surgical visualization that can be viewed by all operating room personnel, not just the surgeon.

·

Precision with scaling: The SurgiBot System allows the user to adjust the level of mechanized movement using scaled ratios;

·

Strength:  The SurgiBot System features powered motion driven by motors controlled by the surgeon;

·

Ergonomics:  The SurgiBot System stabilizes multiple instruments and a laparoscope, and allows the surgeon to reposition their hands in an ergonomic fashion;

·

Patient side:  The SurgiBot System is positioned next to the operating table, thereby allowing the surgeon, as operator, to remain in the sterile field next to the patient;

·

Internal Triangulation:  The SurgiBot System utilizes a deployment mechanism to achieve triangulation of multiple instruments inside the body as contrasted with other robotic systems that rely on crossing instruments at the patient’s abdominal wall.  The SurgiBot System allows for triangulation that can be repositioned in the surgical field during a procedure and be maintained at positions throughout a body cavity; and

·

Direct surgeon connection to the instruments:  The SurgiBot System allows the surgeon-operator to maintain human tactile feedback along several degrees of motion. Existing robotic systems lack any such tactile feedback.

	7

·

Triangulation achieved via single site access through the belly button;

·

True left and true right instrumentation for surgeons;

·

Flexible, articulating instruments;

·

A single-operator platform; and

·

An open platform with multiple working channels.

	8

	9

 

·

there are a number of hospitals and an increasing number of ambulatory surgery centers in the U.S. and internationally that could benefit from the addition of robotic-assisted minimally invasive surgery at a lower cost of entry than existing robotic assisted surgery systems;

·

surgeons can benefit from the ease of use, 3-D visualization and precision of robotic assisted surgery while remaining patient-side within the sterile field, consistent with current laparoscopic surgery procedures; and

·

patients will continue to seek a minimally invasive option offering minimal scarring and fewer incisions for many common general abdominal and gynecologic surgeries.

	10

	11

Products and Products Under Development		Significant Competitors
SPIDER® Surgical System		Applied Medical, Olympus America, Johnson & Johnson and Covidien
The SurgiBot™ System		Intuitive Surgical
Gastroplasty Device		USGI Medical, Endo Gastric Solutions, Inc., ValenTx, Inc., GI Dynamics, Inc. and Medigus, Ltd.

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	14

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·

the costs associated with the integration of the respective businesses and operations of SafeStitch and TransEnterix Surgical;

·

the costs associated with establishing a sales force and commercialization capabilities;

·

the costs associated with the expansion of our manufacturing capabilities;

·

our need to expand our research and development activities;

·

the rate of progress and cost of our clinical trials;

·

the costs of acquiring, licensing or investing in businesses, products and technologies;

·

the costs and timing of seeking and obtaining FDA and other non-U.S. regulatory clearances and approvals;

·

the economic and other terms and timing of our existing licensing arrangement and any collaboration, licensing or other arrangements into which we may enter in the future;

	18

·

our need and ability to hire additional management, scientific, medical and sales and marketing personnel;

·

the effect of competing technological and market developments;

·

our need to implement additional internal systems and infrastructure, including financial and reporting systems; and

·

our ability to maintain, expand and defend the scope of our intellectual property portfolio.

·

failure to effectively coordinate research and development efforts and capabilities effectively;

·

failure to adequately communicate our product capabilities and expected product roadmap;

·

failure to compete effectively against companies already serving the broader market opportunities expected to be available to us and our potential expanded product offerings;

·

coordinating research and development activities to enhance the introduction of new devices and platforms acquired in the acquisition;

	19

·

failure to successfully integrate and harmonize financial reporting and information technology systems of the two companies;

·

integrating a senior management team as well as members from both companies into our Board of Directors;

·

retaining and integrating key employees from TransEnterix Surgical and SafeStitch;

·

managing effectively the diversion of management’s attention from business matters to integration issues;

·

retaining TransEnterix Surgical’s relationships with partners and integrating partnering efforts so that new partners acquired can easily do business with us; and

·

transitioning all facilities to a common information technology environment.

	20

	21

·

the efficacy, safety and reliability of our products;

·

the speed at which we develop our products;

·

our ability to commercialize and market any of our products that may receive regulatory clearance or approval;

	22

	·	our ability to design and successfully execute appropriate clinical trials;
	·	the cost of our products in relation to alternative devices;

·

the timing and scope of regulatory clearances or approvals;

·

our ability to protect intellectual property rights related to our products;

	·	our ability to have our partners manufacture and sell commercial quantities of any approved products to the market;
	·	the effectiveness of our sales and marketing efforts; and

·

acceptance of future products by physicians and other health care providers.

·

delay or failure to obtain sufficient supplies of the product for our clinical trials;

·

limited number of, and competition for, suitable patients that meet the protocol’s inclusion criteria and do not meet any of the exclusion criteria;

·

limited number of, and competition for, suitable sites to conduct our clinical trials, and delay or failure to obtain FDA approval, if necessary, to commence a clinical trial;

·

requirements to provide the medical device required in our clinical trial at cost, which may require significant expenditures that we are unable or unwilling to make;

·

delay or failure to reach agreement on acceptable clinical trial agreement terms or clinical trial protocols with prospective sites or investigators; and

·

delay or failure to obtain IRB approval or renewal to conduct a clinical trial at a prospective or accruing site, respectively.

·

lack of efficacy evidenced during clinical trials;

·

slower than expected rates of patient recruitment and enrollment;

·

failure of patients to complete the clinical trial;

·

unforeseen safety issues;

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·

termination of our clinical trials by one or more clinical trial sites;

·

inability or unwillingness of patients or medical investigators to follow our clinical trial protocols or allocate sufficient resources to complete our clinical trials; and

·

inability to monitor patients adequately during or after treatment.

·

a medical device candidate may not be deemed safe or effective, in the case of a PMA application;

	24

·

a medical device candidate may not be deemed to be substantially equivalent to a device lawfully marketed either as a grandfathered device or one that was cleared through the 510(k) premarket notification process;

·

a medical device candidate may not be deemed to be in conformance with applicable standards and regulations;

·

FDA or other regulatory officials may not find the data from pre-clinical studies and clinical trials sufficient;

·

the FDA might not approve our processes or facilities or those of any of our third-party manufacturers for our Class III PMA devices;

·

other non-U.S. regulatory authorities may not approve our processes or facilities or those of any of our third-party manufacturers, thereby restricting export; or

·

the FDA or other non-U.S. regulatory authorities may change clearance or approval policies or adopt new regulations.

·

restrictions on the products, manufacturers or manufacturing process;

·

adverse inspectional observations (Form 483), warning letters, non-warning letters incorporating inspectional observations;

·

civil or criminal penalties or fines;

·

injunctions;

·

product seizures, detentions or import bans;

·

voluntary or mandatory product recalls and publicity requirements;

·

suspension or withdrawal of regulatory clearances or approvals;

	25

·

total or partial suspension of production;

·

imposition of restrictions on operations, including costly new manufacturing requirements;

·

refusal to clear or approve pending applications or premarket notifications; and

·

import and export restrictions.

	26

   

·

timing of market introduction of competitive products;

·

safety and efficacy of our products;

·

physician training in the use of our products;

·

prevalence and severity of any side effects;

·

potential advantages or disadvantages over alternative treatments;

·

strength of marketing and distribution support; and

·

price of our future products, both in absolute terms and relative to alternative treatments.

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	28

 

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	31

·

difficulties in compliance with U.S. and non-U.S. laws and regulations;

·

changes in U.S. and non-U.S. regulations and customs;

·

changes in non-U.S. currency exchange rates and currency controls;

·

changes in a specific country’s or region’s political or economic environment;

·

trade protection measures, import or export licensing requirements or other restrictive actions by U.S. or non-U.S. governments;

·

negative consequences from changes in tax laws; and

·

difficulties associated with staffing and managing foreign operations, including differing labor relations.

	32

·

the announcement of new products or product enhancements by us or our competitors;

·

developments concerning intellectual property rights and regulatory approvals;

·

variations in our and our competitors’ results of operations;

·

changes in earnings estimates or recommendations by securities analysts, if our common stock is covered by analysts;

·

developments in the medical device industry;

·

the results of product liability or intellectual property lawsuits;

·

future issuances of common stock or other securities;

·

the addition or departure of key personnel;

·

announcements by us or our competitors of acquisitions, investments or strategic alliances; and

	33

·

general market conditions and other factors, including factors unrelated to our operating performance.

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	35

	36

 

ITEM 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

	37

(1)

Includes 20,114,436 shares underlying outstanding stock options awarded under the 2007 Plan and 50,000 restricted stock units awarded under the 2007 Plan.

(2)

These shares are all available for future awards under the 2007 Plan.

(3)

Represents 15,362,436 shares underlying outstanding stock options awarded prior to the Merger under the 2006 Plan and assumed in the Merger, and a new hire award of 1,000,000 restricted stock units to our Chief Financial Officer.

ITEM 6.

SELECTED FINANCIAL DATA

	38

·

there are a number of hospitals and ambulatory surgery centers (ASCs) in the U.S. and internationally that could benefit from the addition of robotic-assisted minimally invasive surgery at a lower cost of entry than existing robotic surgery systems;

·

surgeons can benefit from the ease of use, 3-D visualization and precision of robotic assisted surgery while remaining patient-side within the sterile field, consistent with current laparoscopic surgery procedures; and

·

patients will continue to seek a minimally invasive option offering minimal scarring and fewer incisions for many common general abdominal and gynecologic surgeries.

	39

	40

 

	42

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ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

	49

 

	50

   

	51

 

	52

       

	53

       

	54

 

TransEnterix, Inc., formerly known as SafeStitch Medical, Inc., a Delaware corporation (“SafeStitch”) was originally incorporated in August 1988 as NCS Ventures Corp., after which NCS Ventures Corp. name was changed to Cellular Technical Services Company, Inc. On September 4, 2007, Cellular Technical Services Company, Inc. acquired SafeStitch LLC, and, in January 2008, changed its name to SafeStitch Medical, Inc. On September 3, 2013, SafeStitch and TransEnterix Surgical, Inc., a Delaware corporation formerly known as TransEnterix, Inc. (“TransEnterix Surgical”) consummated a merger transaction whereby TransEnterix Surgical merged with a merger subsidiary of SafeStitch, with TransEnterix Surgical as the surviving entity in the merger (“the Merger”)  As a result of the Merger, TransEnterix Surgical became a wholly owned subsidiary of SafeStitch.  On December 6, 2013, SafeStitch changed its corporate name to TransEnterix, Inc.  As used herein, the term “Company” refers to the combination of SafeStitch and TransEnterix Surgical after giving effect to the Merger, the term “SafeStitch” refers to the business of SafeStitch Medical, Inc. prior to the Merger, and the term “TransEnterix Surgical” refers to the business of TransEnterix Surgical, Inc. prior to the Merger.

 

Pursuant to the Merger Agreement, each share of TransEnterix Surgical’s capital stock issued and outstanding immediately preceding the Merger was converted into the right to receive 1.1533 shares (“the Exchange Ratio”) of SafeStitch’s common stock, par value $0.001 per share , other than those shares of TransEnterix Surgical’s common stock held by non-accredited investors, which shares were instead converted into the right to receive an amount in cash per share of SafeStitch common stock equal to $1.08, without interest, which was the volume-weighted average price of a share of common stock on the OTCBB for the 60-trading day period ended on August 30, 2013 (one business day prior to the effective date of the Merger). Upon the closing of the Merger, and in accordance with the terms of the Merger Agreement, the Company issued an aggregate of 105,549,746 shares of the Company’s common stock as Merger consideration and paid $293,000 to unaccredited investors in lieu of common stock. Additionally, pursuant to the Merger Agreement, upon consummation of the Merger, the Company assumed all of TransEnterix Surgical’s options, whether vested or unvested, and warrants issued and outstanding immediately prior to the Merger at the same Exchange Ratio.          

	Molds		3 years
	Machinery and manufacturing equipment		5 years
	Computer equipment		3 years
	Furniture		5 years
	Leasehold improvements		Lesser of lease term or 3 to 10 years

 

 

	62

 

  

	65

 

	67

 

	70

               

	74

	75

       

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

ITEM 9A.

CONTROLS AND PROCEDURES

	78

ITEM 9B.

OTHER INFORMATION

	79

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

ITEM 11.

EXECUTIVE COMPENSATION

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

	80

 

Consolidated Financial Statements	Page
Report of Independent Registered Public Accounting Firm	52
Consolidated Balance Sheets as of December 31, 2013 and 2012	53
Consolidated Statements of Operations and Comprehensive Loss for each of the years in the two-year period ended December 31, 2013	54
Consolidated Statements of Preferred Stock and Stockholders’ Equity (Deficit) for each of the years in the two-year period ended December 31, 2013	55
Consolidated Statements of Cash Flows for each of the years in the two-year period ended December 31, 2013	56

	Exhibit No.		Description
	2.1!		Agreement and Plan of Merger, dated as of August 13, 2013, by and among SafeStitch Medical, Inc., Tweety Acquisition Corp. and TransEnterix, Inc. (filed as Exhibit 2.1 to our Current Report on Form 8-K, filed with the SEC on August 14, 2013 and incorporated by reference herein).
	2.1(a)!		First Amendment to Agreement and Plan of Merger, dated as of August 30, 2013, by and among SafeStitch Medical, Inc., Tweety Acquisition Corp and TransEnterix, Inc. (filed as Exhibit 2.2 to our Current Report on Form 8-K, filed with the SEC on September 6, 2013 and incorporated by reference herein).
	3.1		Amended and Restated Certificate of Incorporation of TransEnterix, Inc. (filed as Exhibit 3.1 to our Current Report on Form 8-K, filed with the SEC on December 9, 2013 and incorporated by reference herein).
	3.2		Amended and Restated Bylaws of TransEnterix, Inc. (filed as Exhibit 3.2 to our Current Report on Form 8-K, filed with the SEC on December 9, 2013 and incorporated by reference herein).
	4.1		Certificate of Designation of Series A Preferred Stock (filed as Exhibit 3.1 to our Current Report on Form 8-K filed with the SEC on July 23, 2009 and incorporated by reference herein).
	4.2		Certificate of Designation of Series B Convertible Preferred Stock (filed as Exhibit 4.1 to our Current Report on Form 8-K, filed with the SEC on September 6, 2013 and incorporated by reference herein).

	81

	Exhibit No.		Description
	4.3		Specimen Certificate for Common Stock of TransEnterix, Inc. (filed as Exhibit 4.1 to the Registrant’s Registration Statement on Form S-3, File No. 333-193235, filed with the SEC on January 8, 2014 and incorporated by reference herein).
	4.4		Form of Common Stock Warrant (filed as Exhibit 4.1 to our Current Report on Form 8-K filed with the SEC on September 10, 2007 and incorporated by reference herein).
	4.5		Form of Common Stock Warrant (filed as Exhibit A to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on March 26, 2013 and incorporated herein by reference)
	10.1		Securities Purchase Agreement, dated as of August 13, 2013, by and among SafeStitch Medical, Inc. and the Investor parties thereto (filed as Exhibit 10.1 to our Current Report on Form 8-K, filed with the SEC on August 14, 2013 and incorporated by reference herein).
	10.2		Form of Lock-up and Voting Agreement (filed as Exhibit 10.2 to our Current Report on Form 8-K, filed with the SEC on August 14, 2013 and incorporated by reference herein).
	10.3		Exclusive License and Development Agreement, dated as of May 26, 2006, by and between Creighton University and SafeStitch LLC (filed as Exhibit 10.5 to our Annual Report on Form 10-KSB, as amended, filed with the SEC on March 29, 2008 and incorporated by reference herein).
	10.4		Patent Assignment, dated as of June 26, 2009, by and between TransEnterix Surgical, Inc. and Synecor, LLC (filed as Exhibit 10.3 to our Current Report on Form 8-K, filed with the SEC on September 6, 2013 and incorporated by reference herein).
	10.5		Patent Acquisition and License Termination Agreement, dated as of June 26, 2009, by and among TransEnterix Surgical, Inc., Synecor, LLC and Barosense, Inc. (filed as Exhibit 10.4 to our Current Report on Form 8-K, filed with the SEC on September 6, 2013 and incorporated by reference herein).
	10.6		Development and Supply Agreement, dated as of November 4, 2011, by and between TransEnterix Surgical, Inc. and Microline Surgical, Inc. (filed as Exhibit 10.5 to our Current Report on Form 8-K, filed with the SEC on September 6, 2013 and incorporated by reference herein)
	10.7		Loan and Security Agreement dated as of January 17, 2012, by and among the Registrant, Silicon Valley Bank and Oxford Finance LLC, as amended, and associated notes and warrants issued by TransEnterix to Silicon Valley Bank and Oxford Finance LLC (filed as Exhibit 10.8 to our Current Report on Form 8-K, filed with the SEC on September 6, 2013 and incorporated by reference herein).
	10.8		Amended and Restated Pre-Release Distribution Agreement, dated as of June 15, 2012, between TransEnterix Surgical, Inc. and Al Danah Medical Co. W.L.L. (filed as Exhibit 10.9 to our Current Report on Form 8-K, filed with the SEC on September 6, 2013 and incorporated by reference herein).
	10.9		Registration Rights Agreement, dated as of September 3, 2013, by and among the Company and the investors party thereto (filed as Exhibit 10.10 to our Current Report on Form 8-K, filed with the SEC on September 6, 2013 and incorporated by reference herein).
	10.10 +		Offer letter, dated as of June 9, 2008, by and between the Registrant and Todd M. Pope (filed as Exhibit 10.6 to our Current Report on Form 8-K, filed with the SEC on September 6, 2013 and incorporated by reference herein).

	82

	Exhibit No.		Description
	10.11 +		Offer letter, dated as of December 15, 2010, by and between the Registrant and Richard M. Mueller (filed as Exhibit 10.7 to our Current Report on Form 8-K, filed with the SEC on September 6, 2013 and incorporated by reference herein).
	10.12 +		Offer letter, dated September 12, 2013, by and between the Registrant and Joseph P. Slattery (filed as Exhibit 10.1 to our Current Report on Form 8-K, filed with the SEC on September 23, 2013 and incorporated by reference herein).
	10.12 +		Offer letter, dated as of August 30, 2013, by and between SafeStitch Medical, Inc. and Charles J. Filipi, M.D. (filed as Exhibit 10.11 to our Current Report on Form 8-K, filed with the SEC on September 6, 2013 and incorporated by reference herein).
	10.13 +		Offer letter, dated as of August 30, 2013, by and between SafeStitch Medical, Inc. and James J. Martin (filed as Exhibit 10.12 to our Current Report on Form 8-K, filed with the SEC on September 6, 2013 and incorporated by reference herein).
	10.14 +		Amended and Restated TransEnterix, Inc. 2007 Incentive Compensation Plan (the 2007 Plan) (filed as Exhibit 4.1 to the Registrant’s Registration Statement on Form S-8, File No. 333-193234, filed with the SEC on January 8, 2014 and incorporated by reference herein).
	10.15 + *		Form of Employee Stock Option Agreement pursuant to the 2007 Plan.
	10.16 + *		Form of Employee Stock Option Agreement (performance stock options) pursuant to the 2007 Plan.
	10.17 + *		Form of Non-Employee Stock Option Agreement pursuant to the 2007 Plan.
	10.18 + *		Form of Restricted Stock Unit Agreement pursuant to the 2007 Plan.
	10.19 + *		Restricted Stock Unit Agreement, dated as of October 2, 2013, by and between the Company and Joseph P. Slattery.
	10.20		Note and Security Agreement, dated as of September 4, 2007, by and among the Registrant, SafeStitch LLC, The Frost Group, LLC and Jeffrey G. Spragens (filed as Exhibit 10.2 to our Current Report on Form 8-K, filed with the SEC on September 10, 2007 and incorporated by reference herein).
	10.20.1		First Amendment to Note and Security Agreement, dated March 25, 2009, by and among the Registrant, SafeStitch LLC, The Frost Group, LLC and Jeffrey G. Spragens (filed as Exhibit 10.8 to our Annual Report on Form 10-K for the year ended December 31, 2008, filed with the SEC on March 27, 2009 and incorporated by reference herein).
	10.20.2		Second Amendment to Note and Security Agreement, dated March 29, 2010, by and among the Registrant, SafeStitch LLC, The Frost Group, LLC and Jeffrey G. Spragens (filed as Exhibit 10.14 to our Annual Report on Form 10-K for the year ended December 31, 2009, filed with the SEC on March 31, 2010 and incorporated by reference herein).
	10.20.3		Third Amendment to Note and Security Agreement, dated March 28, 2011, by and among the Registrant, SafeStitch LLC, The Frost Group, LLC and Jeffrey G. Spragens (filed as Exhibit 10.20 to our Annual Report on Form 10-K for the year ended December 31, 2010, filed with the SEC on March 30, 2011 and incorporated by reference herein).

	83

	Exhibit No.		Description
	10.20.4		Fourth Amendment to Note and Security Agreement, dated August 10, 2011, by and among the Registrant, SafeStitch LLC, The Frost Group, LLC and Jeffrey G. Spragens (filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, filed with the SEC on August 12, 2011 and incorporated by reference herein).
	10.21		Promissory Note of SafeStitch Medical, Inc. in favor of Hsu Gamma Investments, L.P (filed as Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on November 27, 2012 and incorporated by reference herein).
	10.22		Promissory Note of SafeStitch Medical, Inc. in favor of Frost Gamma Investments Trust (filed as Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on January 2, 2013 and incorporated by reference herein).
	10.23		Promissory Note of SafeStitch Medical, Inc. in favor of Jane Hsiao (filed as Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on February 28, 2013 and incorporated by reference herein).
	10.24		Form of Stock Purchase Agreement and Common Stock Warrant dated March 22, 2013 (filed as Exhibit 10.1 to our Current Report on Form 8-K filed on March 26, 2013 and incorporated by reference herein).
	14.1		Code of Ethics Pursuant to Section 406 of the Sarbanes-Oxley Act of 2002 (incorporated by reference to the Registrant’s website – see Item  1. “BUSINESS – Available Information.”)
	21.1 *		Subsidiaries of the Registrant
	23.1 *		Consent of BDO USA, LLP
	31.1 *		Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a)
	31.2 *		Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a)
	32.1 *		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
	32.2 *		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
	101.INS		XBRL Instance Document
	101.SCH		XBRL Taxonomy Extension Schema Document
	101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
	101.LAB		XBRL Taxonomy Extension Label Linkbase Document
	101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document
	101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

	!	The schedules and exhibits to the Agreement and Plan of Merger have been omitted from this filing pursuant to Item 601(b)(2) of Regulation S-K. The Company will furnish copies of any such schedules and exhibits to the U.S. Securities and Exchange Commission upon request.
	+	A management contract, compensatory plan or arrangement required to be separately identified.
	*	Filed herewith.

	84

	85

 

EXHIBIT 10.15

 

TRANSENTERIX, INC.

 

[INCENTIVE STOCK OPTION] [NON-QUALIFIED STOCK OPTION] AGREEMENT

(EMPLOYEE)

 

Agreement

 

1. Grant of Option. TRANSENTERIX, INC. (the "Company") hereby grants, as of [ ] (the "Date of Grant"), to [ ] (the "Optionee") an option (the "Option") to purchase up to [ ] shares of the Company's common stock, par value $0.001 per share (the "Shares"), at an exercise price per share equal to $[ ] (the "Exercise Price"). The Option shall be subject to the terms and conditions set forth in this option agreement (this "Option Agreement"). The Option is issued pursuant to the TransEnterix, Inc. 2007 Incentive Compensation Plan (the "Plan"), which is incorporated by reference herein for all purposes. [The Option is a Non-Qualified Stock Option, and not an Incentive Stock Option.] [The Option is an Incentive Stock Option.] [The Option is an Incentive Stock Option to the extent eligible under the Plan and the Code, and otherwise is a Non-Qualified Stock Option.] The Optionee hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all of the terms and conditions hereof and thereof and all applicable laws and regulations.

 

2. Definitions. Capitalized terms used herein and not otherwise defined shall have the respective meanings ascribed thereto in the Plan.

 

3. Exercise Schedule. Except as otherwise provided in Sections 6 or 9 of this Option Agreement, or in the Plan, the Option is exercisable in accordance with the vesting schedule below. To the extent that the Option has become exercisable as provided below, the Option may thereafter be exercised by the Optionee, in whole or in part, at any time or from time to time prior to the expiration of the Option as provided herein. [ ] (the "Vesting Dates"), subject to Optionee's Continuous Service through each such Vesting Date.

 

Except as otherwise specifically provided herein, there shall be no proportionate or partial vesting in the periods prior to each Vesting Date, and all vesting shall occur only on the appropriate Vesting Date. Upon the termination of the Optionee's Continuous Service, any unvested portion of the Option shall terminate and be null and void.

 

4. Method of Exercise. The vested portion of this Option shall be exercisable in whole or in part in accordance with the exercise schedule set forth in Section 3 hereof by written notice, which shall state the election to exercise the Option, the number of Shares in respect of which the Option is being exercised, and such other representations and agreements as to the holder's investment intent with respect to such Shares as may be required by the Company pursuant to the provisions of the Plan. Such written notice shall be signed by the Optionee and shall be delivered in person or by certified mail to the Secretary of the Company. The written notice shall be accompanied by payment of the Exercise Price. This Option shall be deemed to be exercised after both (a) receipt by the Company of such written notice accompanied by the Exercise Price and (b) arrangements that are satisfactory to the Committee in its sole discretion have been made for Optionee's payment to the Company of the amount, if any, that is necessary to be withheld in accordance with applicable Federal or state withholding requirements. No Shares shall be issued pursuant to the Option unless and until such issuance and such exercise complies with all relevant provisions of applicable law, including the requirements of any stock exchange upon which the Shares may then be traded.

 

 

 

5. Method of Payment. Payment of the Exercise Price shall be by any of the following, or a combination thereof, at the election of the Optionee: (a) cash; (b) check; (c) to the extent permitted by the Committee, with Shares owned by the Optionee, or the withholding of Shares that otherwise would be delivered to the Optionee as a result of the exercise of the Option; (d) pursuant to a "cashless exercise" procedure, by delivery of a properly executed exercise notice together with such other documentation, and subject to such guidelines, as the Committee shall require to effect an exercise of the Option and delivery to the Company by a licensed broker acceptable to the Company of proceeds from the sale of Shares or a margin loan (to the extent available to the Optionee) sufficient to pay the Exercise Price and any applicable income or employment taxes; or (e) such other consideration or in such other manner as may be determined by the Committee in its absolute discretion.

 

6. Termination of Option.

 

(a) General. Any unexercised portion of the Option shall automatically and without notice terminate and become null and voidat the time of the earliest of the following to occur:

 

(i) unless the Committee otherwise determines in writing in its sole discretion, three months after the date on which the Optionee's Continuous Service terminates other than by reason of (A) by the Company or a Related Entity for Cause, (B) a Disability of the Optionee as determined by a medical doctor satisfactory to the Committee, or (C) the death of the Optionee;

 

(ii) immediately upon the termination of the Optionee's Continuous Service by the Company or a Related Entity for Cause;

 

(iii) twelve months after the date on which the Optionee's Continuous Service is terminated by reason of a Disability as determined by a medical doctor satisfactory to the Committee;

 

(iv) (A) twelve months after the date of termination of the Optionee's Continuous Service by reason of the death of the Optionee, or, if later, (B) three months after the date on which the Optionee shall die if such death shall occur during the one year period specified in Section 6(a)(iii) hereof; or

 

(v) the tenth (10^th) anniversary of the date as of which the Option is granted.

 

(b) Cancellation. To the extent not previously exercised, (i) the Option shall terminate immediately in the event of (A) the liquidation or dissolution of the Company, or (B) any reorganization, merger, consolidation or other form of corporate transaction in which the Company does not survive or the Shares are exchanged for or converted into securities issued by another entity, or an affiliate of such successor or acquiring entity, unless the successor or acquiring entity, or an affiliate thereof, assumes the Option or substitutes an equivalent option or right pursuant to Section 10(c) of the Plan, and (ii) the Committee in its sole discretion may by written notice ("cancellation notice") cancel, effective upon the consummation of any transaction that constitutes a Change in Control, the Option (or portion thereof) that remains unexercised on such date. The Committee shall give written notice of any proposed transaction referred to in this Section 6(b) a reasonable period of time prior to the closing date for such transaction (which notice may be given either before or after approval of such transaction), in order that the Optionee may have a reasonable period of time prior to the closing date of such transaction within which to exercise the Option if and to the extent that it then is exercisable (including any portion of the Option that may become exercisable upon the closing date of such transaction). The Optionee may condition his exercise of the Option upon the consummation of a transaction referred to in this Section 6(b).

 

 

 

7. Transferability. Unless otherwise determined by the Committee, the Option is not transferable [otherwise than by will or under the applicable laws of descent and distribution], and, during the lifetime of the Optionee, the Option shall be exercisable only by the Optionee, or the Optionee's guardian or legal representative. In addition, the Option shall not be assigned, negotiated, pledged or hypothecated in any way (whether by operation of law or otherwise), and the Option shall not be subject to execution, attachment or similar process. Upon any attempt to transfer, assign, negotiate, pledge or hypothecate the Option, or in the event of any levy upon the Option by reason of any execution, attachment or similar process contrary to the provisions hereof, the Option shall immediately become null and void. The terms of this Option shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee.

 

8. No Stockholder Rights. Neither the Optionee nor any personal representative (or beneficiary) shall be, or shall have any of the rights and privileges of, a stockholder of the Company with respect to any Shares issuable upon the exercise of the Option, in whole or in part, prior to the date on which the Shares are issued.

 

9. Acceleration of Exercisability of Option.

 

(a) Acceleration upon Certain Terminations or Cancellations of Option. This Option shall become immediately fully exercisable prior to the termination of the Option pursuant to Section 6 hereof, in the event that, (i) the Option will be terminated pursuant to Section 6(b)(i) hereof, or (ii) the Company exercises its discretion to provide a cancellation notice with respect to the Option pursuant to Section 6(b)(ii) hereof.

 

(b) Acceleration upon Change in Control. This Option shall become immediately fully exercisable in the event that, prior to the termination of the Option pursuant to Section 6 hereof, and during the Optionee's Continuous Service, there is a "Change in Control," as defined in Section 9(b) of the Plan.

 

(c) Exception to Acceleration upon Change in Control. Notwithstanding the foregoing, if in the event of a Change in Control the successor company assumes or substitutes for the Option, the vesting of the Option shall not be accelerated as described in Section 9(b). For the purposes of this paragraph, the Option shall be considered assumed or substituted for if following the Change in Control the Option or substituted option confers the right to purchase, for each Share subject to the Option immediately prior to the Change in Control, the consideration (whether stock, cash or other securities or property) received in the transaction constituting a Change in Control by holders of Shares for each Share held on the effective date of such transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares); provided, however, that if such consideration received in the transaction constituting a Change in Control is not solely common stock of the successor company or its parent or subsidiary, the Committee may, with the consent of the successor company, or its parent or subsidiary, provide that the consideration to be received upon the exercise or vesting of the Option will be solely common stock of the successor company or its parent or subsidiary substantially equal in Fair Market Value to the per share consideration received by holders of Shares in the transaction constituting a Change in Control. The determination of such substantial equality of value of consideration shall be made by the Committee in its sole discretion and its determination shall be conclusive and binding. Notwithstanding the foregoing, on such terms and conditions as may be set forth in an Award Agreement, in the event of a termination of the Optionee's employment in such successor company (other than for Cause) within 24 months following such Change in Control, the option held by the Optionee at the time of the Change in Control shall be accelerated as described in paragraph (b) of this Section 9.

 

 

 

10. No Right to Continued Employment. Neither the Option nor this Option Agreement shall confer upon the Optionee any right to continued employment or service with the Company.

 

11. Governing Law. This Option Agreement shall be governed in accordance with and by the internal laws of the State of Delaware.

 

12. Interpretation / Provisions of Plan Control. This Option Agreement is subject to all the terms, conditions and provisions of the Plan, including, without limitation, the amendment provisions thereof, and to such rules, regulations and interpretations relating to the Plan adopted by the Committee as may be in effect from time to time. If and to the extent that this Option Agreement conflicts or is inconsistent with the terms, conditions and provisions of the Plan, the Plan shall control, and this Option Agreement shall be deemed to be modified accordingly. The Optionee accepts the Option subject to all of the terms and provisions of the Plan and this Option Agreement. The undersigned Optionee hereby accepts as binding, conclusive and final all decisions or interpretations of the Committee upon any questions arising under the Plan and this Option Agreement, unless shown to have been made in an arbitrary and capricious manner.

 

13. Notices. Any notice under this Option Agreement shall be in writing and shall be deemed to have been duly given when delivered personally or when deposited in the United States mail, registered, postage prepaid, and addressed, in the case of the Company, to the Company's Secretary at 635 Davis Drive, Suite 300, Morrisville, NC 27560, or if the Company should move its principal office, to such principal office, and, in the case of the Optionee, to the Optionee's last permanent address as shown on the Company's records, subject to the right of either party to designate some other address at any time hereafter in a notice satisfying the requirements of this Section.

 

Signatures Follow on Next Page

 

  

Option Grant No.:            

 

IN WITNESS WHEREOF, the undersigned have executed this Option Agreement as of the date first set forth above.

 

	COMPANY:
	TRANSENTERIX, INC.
	By:
	Name: Joseph P. Slattery
	Title: EVP and Chief Financial Officer

  

The Optionee acknowledges receipt of a copy of the Plan and represents that he or she has reviewed the provisions of the Plan and this Option Agreement in their entirety, is familiar with and understands their terms and provisions, and hereby accepts this Option subject to all of the terms and provisions of the Plan and this Option Agreement. The Optionee further represents that he or she has had an opportunity to obtain the advice of counsel prior to executing this Option Agreement.

 

	OPTIONEE:
Name:

 

GRANT SUMMARY
Grant Date:		Expiration Date:
Grant Type:		Optionee Class:
Number of Shares:		Exercise Price:
1st Vesting Date:		Number or % Vesting:
Additional Vesting:

 

 

EXHIBIT 10.16

 

 

TRANSENTERIX, INC.

 

[INCENTIVE STOCK OPTION] [NON-QUALIFIED STOCK OPTION] AGREEMENT

(EMPLOYEE)

 

Agreement

 

1. Grant of Option. TRANSENTERIX, INC. (the "Company") hereby grants, as of [ ] (the "Date of Grant"), to [ ] (the "Optionee") an option (the "Option") to purchase up to [       ] shares of the Company's common stock, par value $0.001 per share (the "Shares"), at an exercise price per share equal to $[ ] (the "Exercise Price"). The Option shall be subject to the terms and conditions set forth in this option agreement (this "Option Agreement"). The Option is issued pursuant to the TransEnterix, Inc. 2007 Incentive Compensation Plan (the "Plan"), which is incorporated by reference herein for all purposes. [The Option is a Non-Qualified Stock Option, and not an Incentive Stock Option.] [The Option is an Incentive Stock Option.] [The Option is an Incentive Stock Option to the extent eligible under the Plan and the Code, and otherwise is a Non-Qualified Stock Option.] The Optionee hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all of the terms and conditions hereof and thereof and all applicable laws and regulations.

 

2. Definitions. Capitalized terms used herein and not otherwise defined shall have the respective meanings ascribed thereto in the Plan.

 

3. Vesting. Except as otherwise provided in Sections 6 or 9 of this Option Agreement, or in the Plan, the Option will be earned upon achievement of the following performance goals: [                   ]. To the extent that the Option has become exercisable as provided below, the Option may thereafter be exercised by the Optionee, in whole or in part, at any time or from time to time prior to the expiration of the Option as provided herein. To the extent the Option is earned as provided above, the Option shall vest on [ ] (the "Vesting Date"), subject to Optionee's Continuous Service through the Vesting Date.

 

Except as otherwise specifically provided herein, there shall be no proportionate or partial vesting prior to the Vesting Date, and all vesting shall occur only on the Vesting Date. Upon the termination of the Optionee's Continuous Service, any unvested portion of the Option shall terminate and be null and void.

 

4. Method of Exercise. Once vested, this Option shall be exercisable in whole or in part by written notice, which shall state the election to exercise the Option, the number of Shares in respect of which the Option is being exercised, and such other representations and agreements as to the holder's investment intent with respect to such Shares as may be required by the Company pursuant to the provisions of the Plan. Such written notice shall be signed by the Optionee and shall be delivered in person or by certified mail to the Secretary of the Company. The written notice shall be accompanied by payment of the Exercise Price. This Option shall be deemed to be exercised after both (a) receipt by the Company of such written notice accompanied by the Exercise Price and (b) arrangements that are satisfactory to the Committee in its sole discretion have been made for Optionee's payment to the Company of the amount, if any, that is necessary to be withheld in accordance with applicable Federal or state withholding requirements. No Shares shall be issued pursuant to the Option unless and until such issuance and such exercise complies with all relevant provisions of applicable law, including the requirements of any stock exchange upon which the Shares may then be traded.

 

  

5. Method of Payment. Payment of the Exercise Price shall be by any of the following, or a combination thereof, at the election of the Optionee: (a) cash; (b) check; (c) to the extent permitted by the Committee, with Shares owned by the Optionee, or the withholding of Shares that otherwise would be delivered to the Optionee as a result of the exercise of the Option; (d) pursuant to a "cashless exercise" procedure, by delivery of a properly executed exercise notice together with such other documentation, and subject to such guidelines, as the Committee shall require to effect an exercise of the Option and delivery to the Company by a licensed broker acceptable to the Company of proceeds from the sale of Shares or a margin loan (to the extent available to the Optionee) sufficient to pay the Exercise Price and any applicable income or employment taxes; or (e) such other consideration or in such other manner as may be determined by the Committee in its absolute discretion.

 

6. Termination of Option.

 

(a) General. Any unexercised portion of the Option shall automatically and without notice terminate and become null and voidat the time of the earliest of the following to occur:

 

(i) unless the Committee otherwise determines in writing in its sole discretion, three months after the date on which the Optionee's Continuous Service terminates other than by reason of (A) by the Company or a Related Entity for Cause, (B) a Disability of the Optionee as determined by a medical doctor satisfactory to the Committee, or (C) the death of the Optionee;

 

(ii) immediately upon the termination of the Optionee's Continuous Service by the Company or a Related Entity for Cause;

 

(iii) twelve months after the date on which the Optionee's Continuous Service is terminated by reason of a Disability as determined by a medical doctor satisfactory to the Committee;

 

(iv) (A) twelve months after the date of termination of the Optionee's Continuous Service by reason of the death of the Optionee, or, if later, (B) three months after the date on which the Optionee shall die if such death shall occur during the one year period specified in Section 6(a)(iii) hereof; or

 

(v) the tenth (10^th) anniversary of the date as of which the Option is granted.

 

(b) Cancellation. To the extent not previously exercised, (i) the Option shall terminate immediately in the event of (A) the liquidation or dissolution of the Company, or (B) any reorganization, merger, consolidation or other form of corporate transaction in which the Company does not survive or the Shares are exchanged for or converted into securities issued by another entity, or an affiliate of such successor or acquiring entity, unless the successor or acquiring entity, or an affiliate thereof, assumes the Option or substitutes an equivalent option or right pursuant to Section 10(c) of the Plan, and (ii) the Committee in its sole discretion may by written notice ("cancellation notice") cancel, effective upon the consummation of any transaction that constitutes a Change in Control, the Option (or portion thereof) that remains unexercised on such date. The Committee shall give written notice of any proposed transaction referred to in this Section 6(b) a reasonable period of time prior to the closing date for such transaction (which notice may be given either before or after approval of such transaction), in order that the Optionee may have a reasonable period of time prior to the closing date of such transaction within which to exercise the Option if and to the extent that it then is exercisable (including any portion of the Option that may become exercisable upon the closing date of such transaction). The Optionee may condition his exercise of the Option upon the consummation of a transaction referred to in this Section 6(b).

 

 

 

7. Transferability. Unless otherwise determined by the Committee, the Option is not transferable [otherwise than by will or under the applicable laws of descent and distribution], and, during the lifetime of the Optionee, the Option shall be exercisable only by the Optionee, or the Optionee's guardian or legal representative. In addition, the Option shall not be assigned, negotiated, pledged or hypothecated in any way (whether by operation of law or otherwise), and the Option shall not be subject to execution, attachment or similar process. Upon any attempt to transfer, assign, negotiate, pledge or hypothecate the Option, or in the event of any levy upon the Option by reason of any execution, attachment or similar process contrary to the provisions hereof, the Option shall immediately become null and void. The terms of this Option shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee.

 

8. No Stockholder Rights. Neither the Optionee nor any personal representative (or beneficiary) shall be, or shall have any of the rights and privileges of, a stockholder of the Company with respect to any Shares issuable upon the exercise of the Option, in whole or in part, prior to the date on which the Shares are issued.

 

9. Acceleration of Exercisability of Option.

 

(a) Acceleration upon Certain Terminations or Cancellations of Option. This Option shall become immediately exercisable to the extent earned prior to the termination of the Option pursuant to Section 6 hereof, in the event that, (i) the Option will be terminated pursuant to Section 6(b)(i) hereof, or (ii) the Company exercises its discretion to provide a cancellation notice with respect to the Option pursuant to Section 6(b)(ii) hereof.

 

(b) Acceleration upon Change in Control. This Option shall become immediately exercisable to the extent earned in the event that, prior to the termination of the Option pursuant to Section 6 hereof, and during the Optionee's Continuous Service, there is a "Change in Control," as defined in Section 9(b) of the Plan.

 

(c) Exception to Acceleration upon Change in Control. Notwithstanding the foregoing, if in the event of a Change in Control the successor company assumes or substitutes for the Option, the vesting of the Option shall not be accelerated as described in Section 9(b). For the purposes of this paragraph, the Option shall be considered assumed or substituted for if following the Change in Control the Option or substituted option confers the right to purchase, for each Share subject to the Option immediately prior to the Change in Control, the consideration (whether stock, cash or other securities or property) received in the transaction constituting a Change in Control by holders of Shares for each Share held on the effective date of such transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares); provided, however, that if such consideration received in the transaction constituting a Change in Control is not solely common stock of the successor company or its parent or subsidiary, the Committee may, with the consent of the successor company, or its parent or subsidiary, provide that the consideration to be received upon the exercise or vesting of the Option will be solely common stock of the successor company or its parent or subsidiary substantially equal in Fair Market Value to the per share consideration received by holders of Shares in the transaction constituting a Change in Control. The determination of such substantial equality of value of consideration shall be made by the Committee in its sole discretion and its determination shall be conclusive and binding. Notwithstanding the foregoing, on such terms and conditions as may be set forth in an Award Agreement, in the event of a termination of the Optionee's employment in such successor company (other than for Cause) within 24 months following such Change in Control, the option held by the Optionee at the time of the Change in Control shall be accelerated as described in paragraph (b) of this Section 9.

 

 

 

10. No Right to Continued Employment. Neither the Option nor this Option Agreement shall confer upon the Optionee any right to continued employment or service with the Company.

 

11. Governing Law. This Option Agreement shall be governed in accordance with and by the internal laws of the State of Delaware.

 

12. Interpretation / Provisions of Plan Control. This Option Agreement is subject to all the terms, conditions and provisions of the Plan, including, without limitation, the amendment provisions thereof, and to such rules, regulations and interpretations relating to the Plan adopted by the Committee as may be in effect from time to time. If and to the extent that this Option Agreement conflicts or is inconsistent with the terms, conditions and provisions of the Plan, the Plan shall control, and this Option Agreement shall be deemed to be modified accordingly. The Optionee accepts the Option subject to all of the terms and provisions of the Plan and this Option Agreement. The undersigned Optionee hereby accepts as binding, conclusive and final all decisions or interpretations of the Committee upon any questions arising under the Plan and this Option Agreement, unless shown to have been made in an arbitrary and capricious manner.

 

13. Notices. Any notice under this Option Agreement shall be in writing and shall be deemed to have been duly given when delivered personally or when deposited in the United States mail, registered, postage prepaid, and addressed, in the case of the Company, to the Company's Secretary at 635 Davis Drive, Suite 300, Morrisville, NC 27560, or if the Company should move its principal office, to such principal office, and, in the case of the Optionee, to the Optionee's last permanent address as shown on the Company's records, subject to the right of either party to designate some other address at any time hereafter in a notice satisfying the requirements of this Section.

 

Signatures Follow on Next Page

 

  

Option Grant No.:            

 

IN WITNESS WHEREOF, the undersigned have executed this Option Agreement as of the date first set forth above.

 

	COMPANY:
	TRANSENTERIX, INC.
	By:
	Name: Joseph P. Slattery
	Title: EVP and Chief Financial Officer

  

The Optionee acknowledges receipt of a copy of the Plan and represents that he or she has reviewed the provisions of the Plan and this Option Agreement in their entirety, is familiar with and understands their terms and provisions, and hereby accepts this Option subject to all of the terms and provisions of the Plan and this Option Agreement. The Optionee further represents that he or she has had an opportunity to obtain the advice of counsel prior to executing this Option Agreement.

 

	OPTIONEE:
Name:

 

 

GRANT SUMMARY
Grant Date:		Expiration Date:
Grant Type:		Optionee Class:
Number of Shares:		Exercise Price:
Performance Goals:
Number or % Earned Per Performance Goal:
Vesting Date:

 

 

EXHIBIT 10.17

 

 

TRANSENTERIX, INC.

 

NON-QUALIFIED STOCK OPTION AGREEMENT

(NON-EMPLOYEE)

 

Agreement

 

1. Grant of Option. TRANSENTERIX, INC. (the "Company") hereby grants, as of [ ] (the "Date of Grant"), to [ ] (the "Optionee") an option (the "Option") to purchase up to [          ] shares of the Company's common stock, par value $0.001 per share (the "Shares"), at an exercise price per share equal to $[ ] (the "Exercise Price"). The Option shall be subject to the terms and conditions set forth in this option agreement (this "Option Agreement"). The Option is issued pursuant to the TransEnterix, Inc. 2007 Incentive Compensation Plan (the "Plan"), which is incorporated by reference herein for all purposes. The Option is a Non-Qualified Stock Option, and not an Incentive Stock Option. The Optionee hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all of the terms and conditions hereof and thereof and all applicable laws and regulations.

 

2. Definitions. Capitalized terms used herein and not otherwise defined shall have the respective meanings ascribed thereto in the Plan.

 

3. Exercise Schedule. Except as otherwise provided in Sections 6 or 9 of this Option Agreement, or in the Plan, the Option is exercisable in accordance with the vesting schedule below. To the extent that the Option has become exercisable as provided below, the Option may thereafter be exercised by the Optionee, in whole or in part, at any time or from time to time prior to the expiration of the Option as provided herein. [ ] (the "Vesting Dates"), subject to Optionee's Continuous Service through each such Vesting Date.

 

Except as otherwise specifically provided herein, there shall be no proportionate or partial vesting in the periods prior to each Vesting Date, and all vesting shall occur only on the appropriate Vesting Date. Upon the termination of the Optionee's Continuous Service, any unvested portion of the Option shall terminate and be null and void.

 

4. Method of Exercise. The vested portion of this Option shall be exercisable in whole or in part in accordance with the exercise schedule set forth in Section 3 hereof by written notice, which shall state the election to exercise the Option, the number of Shares in respect of which the Option is being exercised, and such other representations and agreements as to the holder's investment intent with respect to such Shares as may be required by the Company pursuant to the provisions of the Plan. Such written notice shall be signed by the Optionee and shall be delivered in person or by certified mail to the Secretary of the Company. The written notice shall be accompanied by payment of the Exercise Price. This Option shall be deemed to be exercised after both (a) receipt by the Company of such written notice accompanied by the Exercise Price and (b) arrangements that are satisfactory to the Committee in its sole discretion have been made for Optionee's payment to the Company of the amount, if any, that is necessary to be withheld in accordance with applicable Federal or state withholding requirements. No Shares shall be issued pursuant to the Option unless and until such issuance and such exercise complies with all relevant provisions of applicable law, including the requirements of any stock exchange upon which the Shares may then be traded.

 

  

5. Method of Payment. Payment of the Exercise Price shall be by any of the following, or a combination thereof, at the election of the Optionee: (a) cash; (b) check; (c) to the extent permitted by the Committee, with Shares owned by the Optionee, or the withholding of Shares that otherwise would be delivered to the Optionee as a result of the exercise of the Option; (d) pursuant to a "cashless exercise" procedure, by delivery of a properly executed exercise notice together with such other documentation, and subject to such guidelines, as the Committee shall require to effect an exercise of the Option and delivery to the Company by a licensed broker acceptable to the Company of proceeds from the sale of Shares or a margin loan (to the extent available to the Optionee) sufficient to pay the Exercise Price and any applicable income or employment taxes; or (e) such other consideration or in such other manner as may be determined by the Committee in its absolute discretion.

 

6. Termination of Option.

 

(a) General. Any unexercised portion of the Option shall automatically and without notice terminate and become null and voidat the time of the earliest of the following to occur:

 

(i) unless the Committee otherwise determines in writing in its sole discretion, three months after the date on which the Optionee's Continuous Service terminates other than by reason of (A) by the Company or a Related Entity for Cause, (B) a Disability of the Optionee as determined by a medical doctor satisfactory to the Committee, or (C) the death of the Optionee;

 

(ii) immediately upon the termination of the Optionee's Continuous Service by the Company or a Related Entity for Cause;

 

(iii) twelve months after the date on which the Optionee's Continuous Service is terminated by reason of a Disability as determined by a medical doctor satisfactory to the Committee;

 

(iv) (A) twelve months after the date of termination of the Optionee's Continuous Service by reason of the death of the Optionee, or, if later, (B) three months after the date on which the Optionee shall die if such death shall occur during the one year period specified in Section 6(a)(iii) hereof; or

 

(v) the tenth (10^th) anniversary of the date as of which the Option is granted.

 

(b) Cancellation. To the extent not previously exercised, (i) the Option shall terminate immediately in the event of (A) the liquidation or dissolution of the Company, or (B) any reorganization, merger, consolidation or other form of corporate transaction in which the Company does not survive or the Shares are exchanged for or converted into securities issued by another entity, or an affiliate of such successor or acquiring entity, unless the successor or acquiring entity, or an affiliate thereof, assumes the Option or substitutes an equivalent option or right pursuant to Section 10(c) of the Plan, and (ii) the Committee in its sole discretion may by written notice ("cancellation notice") cancel, effective upon the consummation of any transaction that constitutes a Change in Control, the Option (or portion thereof) that remains unexercised on such date. The Committee shall give written notice of any proposed transaction referred to in this Section 6(b) a reasonable period of time prior to the closing date for such transaction (which notice may be given either before or after approval of such transaction), in order that the Optionee may have a reasonable period of time prior to the closing date of such transaction within which to exercise the Option if and to the extent that it then is exercisable (including any portion of the Option that may become exercisable upon the closing date of such transaction). The Optionee may condition his exercise of the Option upon the consummation of a transaction referred to in this Section 6(b).

 

 

 

7. Transferability. Unless otherwise determined by the Committee, the Option is not transferable [otherwise than by will or under the applicable laws of descent and distribution, and, during the lifetime of the Optionee, the Option shall be exercisable only by the Optionee, or the Optionee's guardian or legal representative. In addition, the Option shall not be assigned, negotiated, pledged or hypothecated in any way (whether by operation of law or otherwise), and the Option shall not be subject to execution, attachment or similar process. Upon any attempt to transfer, assign, negotiate, pledge or hypothecate the Option, or in the event of any levy upon the Option by reason of any execution, attachment or similar process contrary to the provisions hereof, the Option shall immediately become null and void. The terms of this Option shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee.

 

8. No Stockholder Rights. Neither the Optionee nor any personal representative (or beneficiary) shall be, or shall have any of the rights and privileges of, a stockholder of the Company with respect to any Shares issuable upon the exercise of the Option, in whole or in part, prior to the date on which the Shares are issued.

 

9. Acceleration of Exercisability of Option.

 

(a) Acceleration upon Certain Terminations or Cancellations of Option. This Option shall become immediately fully exercisable prior to the termination of the Option pursuant to Section 6 hereof, in the event that, (i) the Option will be terminated pursuant to Section 6(b)(i) hereof, or (ii) the Company exercises its discretion to provide a cancellation notice with respect to the Option pursuant to Section 6(b)(ii) hereof.

 

(b) Acceleration upon Change in Control. This Option shall become immediately fully exercisable in the event that, prior to the termination of the Option pursuant to Section 6 hereof, and during the Optionee's Continuous Service, there is a "Change in Control," as defined in Section 9(b) of the Plan.

 

(c) Exception to Acceleration upon Change in Control. Notwithstanding the foregoing, if in the event of a Change in Control the successor company assumes or substitutes for the Option, the vesting of the Option shall not be accelerated as described in Section 9(b). For the purposes of this paragraph, the Option shall be considered assumed or substituted for if following the Change in Control the Option or substituted option confers the right to purchase, for each Share subject to the Option immediately prior to the Change in Control, the consideration (whether stock, cash or other securities or property) received in the transaction constituting a Change in Control by holders of Shares for each Share held on the effective date of such transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares); provided, however, that if such consideration received in the transaction constituting a Change in Control is not solely common stock of the successor company or its parent or subsidiary, the Committee may, with the consent of the successor company, or its parent or subsidiary, provide that the consideration to be received upon the exercise or vesting of the Option will be solely common stock of the successor company or its parent or subsidiary substantially equal in Fair Market Value to the per share consideration received by holders of Shares in the transaction constituting a Change in Control. The determination of such substantial equality of value of consideration shall be made by the Committee in its sole discretion and its determination shall be conclusive and binding. Notwithstanding the foregoing, on such terms and conditions as may be set forth in an Award Agreement, in the event of a termination of the Optionee's employment in such successor company (other than for Cause) within 24 months following such Change in Control, the option held by the Optionee at the time of the Change in Control shall be accelerated as described in paragraph (b) of this Section 9.

 

 

 

10. No Right to Continued Employment. Neither the Option nor this Option Agreement shall confer upon the Optionee any right to continued employment or service with the Company.

 

11. Governing Law. This Option Agreement shall be governed in accordance with and by the internal laws of the State of Delaware.

 

12. Interpretation / Provisions of Plan Control. This Option Agreement is subject to all the terms, conditions and provisions of the Plan, including, without limitation, the amendment provisions thereof, and to such rules, regulations and interpretations relating to the Plan adopted by the Committee as may be in effect from time to time. If and to the extent that this Option Agreement conflicts or is inconsistent with the terms, conditions and provisions of the Plan, the Plan shall control, and this Option Agreement shall be deemed to be modified accordingly. The Optionee accepts the Option subject to all of the terms and provisions of the Plan and this Option Agreement. The undersigned Optionee hereby accepts as binding, conclusive and final all decisions or interpretations of the Committee upon any questions arising under the Plan and this Option Agreement, unless shown to have been made in an arbitrary and capricious manner.

 

13. Notices. Any notice under this Option Agreement shall be in writing and shall be deemed to have been duly given when delivered personally or when deposited in the United States mail, registered, postage prepaid, and addressed, in the case of the Company, to the Company's Secretary at 635 Davis Drive, Suite 300, Morrisville, NC 27560, or if the Company should move its principal office, to such principal office, and, in the case of the Optionee, to the Optionee's last permanent address as shown on the Company's records, subject to the right of either party to designate some other address at any time hereafter in a notice satisfying the requirements of this Section.

 

Signatures Follow on Next Page

 

    

Option Grant No.:            

 

IN WITNESS WHEREOF, the undersigned have executed this Option Agreement as of the date first set forth above.

 

	COMPANY:
	TRANSENTERIX, INC.
	By:
	Name: Joseph P. Slattery
	Title: EVP and Chief Financial Officer

  

The Optionee acknowledges receipt of a copy of the Plan and represents that he or she has reviewed the provisions of the Plan and this Option Agreement in their entirety, is familiar with and understands their terms and provisions, and hereby accepts this Option subject to all of the terms and provisions of the Plan and this Option Agreement. The Optionee further represents that he or she has had an opportunity to obtain the advice of counsel prior to executing this Option Agreement.

 

	OPTIONEE:
Name:

 

 

GRANT SUMMARY
Grant Date:		Expiration Date:
Grant Type:		Optionee Class:
Number of Shares:		Exercise Price:
1st Vesting Date:		Number or % Vesting:
Additional Vesting:

 

 

Exhibit 10.18

 

TRANSENTERIX, INC.
RESTRICTED STOCK UNIT AWARD AGREEMENT

 

This RESTRICTED STOCK UNIT AWARD AGREEMENT (this “Agreement”) dated as of [ ] (the “Date of Grant”), is made by TransEnterix, Inc., a Delaware corporation, formerly known as SafeStitch Medical, Inc. (the “Company”), to [ ] (the “Participant”).

 

RECITALS

 

The Amended and Restated 2007 Incentive Compensation Plan of the Company (the “Plan”) provides for the issuance of equity awards to “Eligible Employees” of the Company, and the Participant is an Eligible Employee under the Plan.

 

The Board of Directors has determined that it is in the best interests of the Company and its stockholders to grant the restricted stock unit award provided for herein to the Participant pursuant to the terms set forth herein as an incentive for the Participant to contribute to the Company’s future success and prosperity.

 

NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties hereto agree as follows:

 

1.

Award of the Restricted Stock Units.

 

(a)                The Company hereby grants to the Participant [      ] restricted stock units (“Restricted Stock Units”), representing the right to receive an equal number of shares of common stock of the Company (the “Shares”), upon the lapse of forfeiture restrictions (“vesting”) of some or all of such Restricted Stock Units, subject to the terms and conditions set forth in this Agreement.

 

(b)               The Restricted Stock Units are awarded to the Participant as a Deferred Stock Award under the Plan, and are subject to the terms and conditions set forth in the Plan, including the discretion of the Committee under the Plan, subject to any specific provisions set forth in this Agreement. A copy of the Plan is attached to this Agreement and made a part hereof. Capitalized terms not defined in this Agreement shall have the meanings set forth in the Plan.

 

(c)                Upon vesting of the Restricted Stock Units, the Restricted Stock Units will be settled by a delivery of Shares. No dividend equivalents are authorized as part of the award of these Restricted Stock Units.

 

(d)               Prior to vesting of the Restricted Stock Units pursuant to Sections 2 or 3 of this Agreement: (i) the Participant shall not be treated as a stockholder as to Shares issuable to the Participant with respect to such Restricted Stock Units, and shall only have a contractual right to receive such Shares following such vesting, unsecured by any assets of the Company or its Subsidiaries; (ii) the Participant shall not be permitted to vote the Restricted Stock Units or the Shares issuable with respect to such Restricted Stock Units; and (iii) the Participant’s right to receive such Shares following vesting of the Restricted Stock Units shall be subject to the adjustment provisions set forth in Section 10(c) of the Plan. The Restricted Stock Units shall be subject to all of the restrictions hereinafter set forth.

 

  

2.

Vesting.

 

(a)                Except as otherwise provided in this Section 2 and in Section 3 hereof, the Restricted Stock Units shall vest in accordance with the following schedule: [ ]

 

(b)               Notwithstanding any other provision of the Plan or this Agreement to the contrary, until the restrictions set forth in this Section 2 have lapsed, the Restricted Stock Units may not be transferred, assigned or otherwise encumbered other than in accordance with the applicable provisions of Section 6 hereof.

 

3.             Change in Control. The provisions of Article 9 of the Plan shall apply to the Restricted Stock Units under this Agreement.

 

4.             Issuance of Certificates. Following the applicable vesting date with respect to the Restricted Stock Units, and subject to the terms and conditions of the Plan, the Company will issue a stock certificate for the Shares issuable with respect to such vested Restricted Stock Units. Such issuance shall take place as soon as practicable following the applicable vesting date (but in no event later than two and one-half months following the end of the calendar year in which the vesting date occurs). The certificates representing the Shares issued in respect of the Restricted Stock Units shall be subject to such stop transfer orders and other restrictions as the Committee may determine is required by the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which such Shares are listed, any applicable federal or state laws and the Company’s Certificate of Incorporation and Bylaws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.

 

5.             No Right to Continued Employment. Neither the Plan nor this Agreement shall confer on the Participant any right to be retained, in any position, as an employee, consultant or director of the Company.

 

6.

Transferability.

 

(a)                     The Restricted Stock Units are not transferable and may not be sold, assigned, transferred, disposed of, pledged or otherwise encumbered by the Participant, other than by will or the laws of descent and distribution. Upon such transfer (by will or the laws of descent and distribution), such transferee in interest shall take the rights granted herein subject to all the terms and conditions hereof.

 

(b)                     Subject to Section 6(a) hereof, in order to comply with any applicable securities laws, the Participant agrees that the Shares issued to the Participant with respect to vested Restricted Stock Units shall only be sold by the Participant following registration of such Shares under the Securities Act of 1933, as amended, or pursuant to an exemption therefrom.

 

  

7.                  Withholding. The Participant shall pay to the Company promptly upon request, and in any event at the time the Participant recognizes taxable income in respect of the Restricted Stock Units, an amount equal to the federal, state or local taxes the Company determines it is required to withhold with respect to the Restricted Stock Units.

 

8.                  Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the conflicts of law provisions thereof.

 

9.                  Amendments. This Agreement may be amended or modified at any time by an instrument in writing signed by the parties hereto, except as otherwise provided in Section 12 of this Agreement regarding permitted unilateral action by the Committee or in Section 10(e) of the Plan related to amendments or alterations that do not adversely affect the rights of the Participant in this Award.

 

10.              Administration. This Agreement shall at all times be interpreted in accordance with the terms and conditions of the Plan as if set forth herein. The Committee shall have sole and complete discretion under this Agreement with respect to all matters reserved to it by the Plan and decisions of the Committee with respect thereto and this Agreement shall be final and binding upon the Participant and the Company. In the event of any conflict between the terms and conditions of this Agreement and the Plan, the provisions of this Agreement shall control. The Committee has the authority and discretion to determine any questions which arise in connection with the award of the Restricted Share Units hereunder.

 

11.              Compliance with Code Section 409A. It is the intention of the Company and Participant that this Agreement not result in an unfavorable tax consequences to Participant under Code Section 409A. Accordingly, Participant consents to any amendment of this Agreement as the Company may reasonably make in furtherance of such intention, and the Company shall make available to the Participant a copy of such amendment. Any such amendments shall be made in a manner that preserves to the maximum extent possible the intended benefits to Participant. This paragraph does not create an obligation on the part of Company to modify this Agreement and does not guarantee that the amounts or benefits owed under the Agreement will not be subject to interest and penalties under Code Section 409A.

 

12.              Imposition of Other Requirements. The Company reserves the right to impose other requirements on the Restricted Stock Units and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable in order to comply with local law or facilitate the administration of the Award, and to require the Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing. The Participant agrees, upon demand of the Company or the Committee, to do all acts and execute, deliver and perform all additional documents, instruments and agreements which may be reasonably required by the Company or the Committee, as the case may be, to implement the provisions and purposes of this Agreement.

 

  

13.              Notices. Any notice, request, instruction or other document given under this Agreement shall be in writing and may be delivered by such method as may be permitted by the Company, and shall be addressed and delivered, in the case of the Company, to the Secretary of the Company at the principal office of the Company and, in the case of the Participant, to the Participant’s address as shown in the records of the Company or to such other address as may be designated in writing (or by such other method approved by the Company) by either party.

 

14.              Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of the Agreement shall be severable and enforceable to the extent permitted by law.

 

 

 

[Signatures on the following page.]

 

  

IN WITNESS WHEREOF, the Company and the Participant hereby execute this Agreement.

 

	TRANSENTERIX, INC.
	By:
	Name:
	Title:
	Date:
	Accepted:
	PARTICIPANT
	By:
	Name:
	Date:

 

 

Exhibit 10.19

 

TRANSENTERIX, INC.
RESTRICTED STOCK UNIT AWARD AGREEMENT

 

This RESTRICTED STOCK UNIT AWARD AGREEMENT (this “Agreement”) dated as of October 2, 2013 (the “Date of Grant”), is made by TransEnterix, Inc., a Delaware corporation, formerly known as SafeStitch Medical, Inc. (the “Company”), to Joseph P. Slattery (the “Executive”).

 

RECITALS

 

On September 22, 2013, the Board of Directors of the Company appointed the Executive as Executive Vice President and Chief Financial Officer of the Company effective as of the Date of Grant and approved the award of restricted stock units evidenced by this Agreement.

 

The Board of Directors has determined that it is in the best interests of the Company and its stockholders to grant the restricted stock unit award provided for herein to the Executive pursuant to the terms set forth in this Agreement as an incentive for the Executive to joining the Company and to contribute to the Company’s future success and prosperity.

 

NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties hereto agree as follows:

 

1.

Award of the Restricted Stock Units.

 

(a)                The Company hereby grants to the Executive 1,000,000 restricted stock units (“Restricted Stock Units”), representing the right to receive an equal number of shares of common stock of the Company (the “Shares”), upon the lapse of forfeiture restrictions (“vesting”) of some or all of such Restricted Stock Units, subject to the terms and conditions set forth in this Agreement.

 

(b)               The Amended and Restated 2007 Incentive Compensation Plan of the Company (the “Plan”) provides for the issuance of equity awards to “Eligible Employees” of the Company. On the Date of Grant, the maximum size of any restricted stock unit award under the Plan to any one Eligible Employee in a fiscal year was 500,000 shares; such individual limitation was increased to 1,000,000 shares on October 29, 2013. The Restricted Stock Units are awarded to the Executive outside of the Plan, and have been awarded to the Executive pursuant to the authority vested in the Board of Directors of the Company. The Board of Directors has reserved, and, as long as this award of Restricted Stock Units remains outstanding the Board of Directors will reserve, 1,000,000 shares of authorized and unissued common stock of the Company for issuance upon vesting of the Restricted Stock Units under this Agreement. Notwithstanding the fact that the Restricted Stock Units have been awarded outside of the Plan, the Board of Directors has designated that, unless specifically varied in this Agreement, the terms of these Restricted Stock Units shall be interpreted under, and entitled to the benefits of, the provisions of the Plan related to a “Deferred Stock Award” (as defined in the Plan) of units to acquire the Shares. A copy of the Plan is attached to this Agreement and made a part hereof. Capitalized terms not defined in this Agreement shall have the meanings set forth in the Plan.

 

  

(c)                Upon vesting of the Restricted Stock Units, the Restricted Stock Units will be settled by a delivery of Shares. No dividend equivalents are authorized as part of the award of these Restricted Stock Units.

 

(d)               Prior to vesting of the Restricted Stock Units pursuant to Sections 2 or 3 of this Agreement: (i) the Executive shall not be treated as a stockholder as to Shares issuable to the Executive with respect to such Restricted Stock Units, and shall only have a contractual right to receive such Shares following such vesting, unsecured by any assets of the Company or its Subsidiaries; (ii) the Executive shall not be permitted to vote the Restricted Stock Units or the Shares issuable with respect to such Restricted Stock Units; and (iii) the Executive’s right to receive such Shares following vesting of the Restricted Stock Units shall be subject to the adjustment provisions set forth in Section 10(c) of the Plan. The Restricted Stock Units shall be subject to all of the restrictions hereinafter set forth.

 

2.

Vesting.

 

(a)                Except as otherwise provided in this Section 2 and in Section 3 hereof, and contingent upon the Executive’s continued employment until the following applicable date, the Restricted Stock Units shall vest in accordance with the following schedule: (i) one-third of the Restricted Stock Units (333,333) shall vest on October 2, 2014; (ii) one-third of the Restricted Stock Units (333,333) shall vest on October 2, 2015; and (iii) the final one-third of the Restricted Stock Units (333,334) shall vest on October 2, 2016.

 

(b)               Notwithstanding any other provision of the Plan or this Agreement to the contrary, until the restrictions set forth in this Section 2 have lapsed, the Restricted Stock Units may not be transferred, assigned or otherwise encumbered other than in accordance with the applicable provisions of Section 6 hereof.

 

(c)                Except as set forth in Section 3, in the event of the Executive’s termination of employment, either voluntarily or by the Company, or pursuant to the death or disability of the Executive, the Restricted Stock Units shall be forfeited unless the Committee, in its discretion, makes a different determination.

 

3.             Change in Control. In the event that the Executive’s employment with the Company or any Subsidiary is terminated involuntarily at the time of, or within twelve (12) months following, the consummation of a Change in Control (as defined in the Plan), all then unvested Restricted Stock Units shall accelerate and vest in full as of the date of termination.

 

4.             Issuance of Certificates. Following the applicable vesting date with respect to the Restricted Stock Units, and subject to the terms and conditions of the Plan, the Company will issue a stock certificate for the Shares issuable with respect to such vested Restricted Stock Units. Such issuance shall take place as soon as practicable following the applicable vesting date (but in no event later than two and one-half months following the end of the calendar year in which the vesting date occurs). The certificates representing the Shares issued in respect of the Restricted Stock Units shall be subject to such stop transfer orders and other restrictions as the Committee may determine is required by the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which such Shares are listed, any applicable federal or state laws and the Company’s Certificate of Incorporation and Bylaws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.

 

 

 

5.             No Right to Continued Employment. Neither the Plan nor this Agreement shall confer on the Executive any right to be retained, in any position, as an employee, consultant or director of the Company.

 

6.

Transferability.

 

(a)                     The Restricted Stock Units are not transferable and may not be sold, assigned, transferred, disposed of, pledged or otherwise encumbered by the Executive, other than by will or the laws of descent and distribution. Upon such transfer (by will or the laws of descent and distribution), such transferee in interest shall take the rights granted herein subject to all the terms and conditions hereof.

 

(b)                     Subject to Section 6(a) hereof, in order to comply with any applicable securities laws, the Executive agrees that the Shares issued to the Executive with respect to vested Restricted Stock Units shall only be sold by the Executive following registration of such Shares under the Securities Act of 1933, as amended, or pursuant to an exemption therefrom.

 

7.             Withholding. The Executive shall pay to the Company promptly upon request, and in any event at the time the Executive recognizes taxable income in respect of the Restricted Stock Units, an amount equal to the federal, state or local taxes the Company determines it is required to withhold with respect to the Restricted Stock Units.

 

8.             Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the conflicts of law provisions thereof.

 

9.             Amendments. This Agreement may be amended or modified at any time by an instrument in writing signed by the parties hereto, except as otherwise provided in Section 12 of this Agreement regarding permitted unilateral action by the Committee or in Section 10(e) of the Plan related to amendments or alterations that do not adversely affect the rights of the Executive under this Award.

 

10.          Administration. This Agreement shall at all times be interpreted in accordance with the terms and conditions of the Plan as if set forth herein. The Committee shall have sole and complete discretion under this Agreement with respect to all matters reserved to it by the Plan and decisions of the Committee with respect thereto and this Agreement shall be final and binding upon the Executive and the Company. In the event of any conflict between the terms and conditions of this Agreement and the Plan, the provisions of this Agreement shall control. The Committee has the authority and discretion to determine any questions which arise in connection with the award of the Restricted Share Units hereunder.

 

11.          Compliance with Code Section 409A. It is the intention of the Company and Executive that this Agreement not result in an unfavorable tax consequences to Executive under Code Section 409A. Accordingly, Executive consents to any amendment of this Agreement as the Company may reasonably make in furtherance of such intention, and the Company shall make available to the Executive a copy of such amendment. Any such amendments shall be made in a manner that preserves to the maximum extent possible the intended benefits to Executive. This paragraph does not create an obligation on the part of Company to modify this Agreement and does not guarantee that the amounts or benefits owed under the Agreement will not be subject to interest and penalties under Code Section 409A.

 

 

 

12.              Imposition of Other Requirements. The Company reserves the right to impose other requirements on the Restricted Stock Units and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable in order to comply with local law or facilitate the administration of the Award, and to require the Executive to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing. The Executive agrees, upon demand of the Company or the Committee, to do all acts and execute, deliver and perform all additional documents, instruments and agreements which may be reasonably required by the Company or the Committee, as the case may be, to implement the provisions and purposes of this Agreement.

 

13.              Notices. Any notice, request, instruction or other document given under this Agreement shall be in writing and may be delivered by such method as may be permitted by the Company, and shall be addressed and delivered, in the case of the Company, to the Secretary of the Company at the principal office of the Company and, in the case of the Executive, to the Executive’s address as shown in the records of the Company or to such other address as may be designated in writing (or by such other method approved by the Company) by either party.

 

14.              Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of the Agreement shall be severable and enforceable to the extent permitted by law.

 

 

 

[Signatures on the following page.]

 

  

IN WITNESS WHEREOF, the Company and the Executive hereby execute this Agreement.

 

	TRANSENTERIX, INC.
	By:	/s/ Todd M. Pope
	Name: Todd M. Pope
	Title: President and CEO
	Date: February 10, 2014
	Accepted:
	By:	/s/ Joseph P. Slattery
		Joseph P. Slattery
	Date: February 10, 2014

 

 

Exhibit 21.1

 

SUBSIDIARIES

 

 

Name of Subsidiary		State of Incorporation
TransEnterix Surgical, Inc.		Delaware
SafeStitch LLC		Virginia

 

 

EXHIBIT 23.1

 

Consent of Independent Registered Public Accounting Firm

 

TransEnterix, Inc.

Morrisville, North Carolina

 

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-191011, No. 333-190184, and No. 333-161291) of SafeStitch Medical Inc. (now named TransEnterix, Inc.) and on Form S-3 (No. 333-193235) and Form S-8 (No. 333-193234) of TransEnterix, Inc. of our report dated March 5, 2014, relating to the consolidated financial statements, which appear in this Form 10-K.

 

/s/ BDO USA, LLP

BDO USA, LLP

Raleigh, North Carolina

 

March 5, 2014

 

(1)

I have reviewed this Annual Report on Form 10-K of TransEnterix, Inc.;

(2)

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3)

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4)

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

(5)

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	By:	/s/ Todd M. Pope
	Todd M. Pope
	President and Chief Executive Officer (Principal Executive Officer)
	March 5, 2014

(1)	I have reviewed this Annual Report on Form 10-K of TransEnterix, Inc.;

(2)	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3)	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4)

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

(5)	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	By:	/s/ Joseph P. Slattery
	Joseph P. Slattery
	Executive Vice President and Chief Financial Officer (principal financial officer and principal accounting officer)
	March 5, 2014

 

(1)	the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of TransEnterix, Inc.

	By:	/s/ Todd M. Pope
	Todd M. Pope
	President and Chief Executive Officer (Principal Executive Officer)
	March 5, 2014

(1)	the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of TransEnterix, Inc.

	By:	/s/ Joseph P. Slattery
	Joseph P. Slattery
	Executive Vice President and Chief Financial Officer (principal financial officer and principal accounting officer)
	March 5, 2014