Related Party Transactions

In August 2017, the Company entered into an aircraft time share agreement, pursuant to which the Company has agreed from time to time to make its aircraft available to the CEO for lease on a time sharing basis. The Company charges the CEO for personal use based on agreed upon reimbursement rates. For the year ended December 30, 2017, the Company charged the CEO less than $20,000 related to such reimbursements.

The Company’s Chairman and CEO is also the Chairman and CEO of Cercacor. The Company is a party to the following agreements and transactions with Cercacor:

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Cross-Licensing Agreement - The Company and Cercacor are parties to the Cross-Licensing Agreement, which governs each party’s rights to certain intellectual property held by the parties. The Company is subject to certain annual minimum aggregate royalty obligations for use of the rainbow^® licensed technology. The current annual minimum royalty obligation is $5.0 million. Actual aggregate royalties accrued for Cercacor under the license were $8.0 million, $6.4 million and $6.7 million for the years ended December 30, 2017, December 31, 2016 and January 2, 2016, respectively. All amounts prior to the deconsolidation of Cercacor on January 3, 2016 were eliminated in consolidation. The Company had less than $0.1 million in sales to Cercacor for each of the years ended December 30, 2017 and December 31, 2016 and no sales to Cercacor for the year ended January 2, 2016.

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Administrative Services Agreement - The Company is a party to an administrative services agreement with Cercacor (G&A Services Agreement), which governs certain general and administrative services that the Company provides to Cercacor. Amounts charged by the Company pursuant to the G&A Services Agreement were $0.2 million for each of the years ended December 30, 2017, December 31, 2016 and January 2, 2016.

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Patent Transfer and Licensing Agreement. The Company entered into a patent transfer and licensing agreement with Cercacor (the Patent Agreement) effective July 2015, pursuant to which, among other things, it purchased certain patents from Cercacor (the Purchased Patents) for an aggregate purchase price of $2.4 million. Pursuant to the Patent Agreement, the Company granted Cercacor an irrevocable, non-exclusive, worldwide license with respect to the products and services covered by the Purchased Patents.

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Sublease Agreement - In March 2016, the Company entered into a sublease agreement with Cercacor for approximately 16,830 square feet of excess office and laboratory space located at 40 Parker, Irvine, California (Cercacor Sublease). The Cercacor Sublease began on May 1, 2016 and expires on November 30, 2019. The Company recognized $0.4 million and $0.3 million of sublease income for the years ended December 30, 2017 and December 31, 2016, respectively.

Net amounts due from Cercacor were approximately $1.5 million and $0.5 million as of December 30, 2017 and December 31, 2016, respectively.

The Company’s Chief Executive Officer is also the Chairman and one of his family members is a Director of the Masimo Foundation for Ethics, Innovation and Competition in Healthcare (Masimo Foundation), a non-profit organization which was founded in 2010 to provide a platform for encouraging ethics, innovation and competition in healthcare. In addition, the Company’s Executive Vice President (EVP) and General Counsel is a Director and also serves as the Secretary and Treasurer of the Masimo Foundation. For the fiscal year ended December 30, 2017, the Company made no contributions to the Masimo Foundation. During the fiscal years ended December 31, 2016 and January 2, 2016, the Company contributed approximately $5.0 million and $6.3 million, respectively, to the Masimo Foundation. A portion of the Company’s contributions to the Masimo Foundation were, in turn, contributed by the Masimo Foundation to the Patient Safety Movement Foundation.

The Company’s Chief Executive Officer is also the Chairman of the Patient Safety Movement Foundation, a non-profit organization which was founded in 2013 to work with hospitals, medical technology companies and patient advocates to unite the healthcare ecosystem and eliminate the more than 200,000 U.S. preventable hospital deaths that occur every year by 2020. The Company’s EVP and General Counsel and the Company’s EVP, Chief Financial Officer serve as the Secretary and the Treasurer, respectively, of the Patient Safety Movement Foundation. During the fiscal years ended December 30, 2017, December 31, 2016 and January 2, 2016, the Company contributed approximately $0, $200,271 and $220, respectively.

The Company’s Chief Executive Officer is also the Chairman of the Patient Safety Movement Coalition, a not-for-profit social welfare organization which was founded in 2013 to promote patient safety legislation. The Company’s EVP and General Counsel and the Company’s EVP, Chief Financial Officer serve as the Secretary and the Treasurer, respectively, of the Patient Safety Movement Coalition. During the fiscal years ended December 30, 2017, December 31, 2016 and January 2, 2016, the Company contributed approximately $1,300, $20,000 and $10,000, respectively, to the Patient Safety Movement Coalition.

The Company’s Chief Executive Officer is a member of the board of directors for Atheer Labs (Atheer), which is working with the Company on the development of next generation Root^™ applications. For the fiscal year ended December 30, 2017, the Company incurred no license fees or expenses payable to Atheer. During the fiscal years ended December 31, 2016 and January 2, 2016, the Company incurred approximately $255,000 and $200,000, respectively, in license fees and other expenses payable to Atheer.

The Company’s Chief Executive Officer is a member of the board of directors of Children’s Hospital of Orange County and CHOC Children’s at Mission Hospital (collectively, CHOC), two non-profit hospitals that are devoted exclusively to caring for children. During the fiscal years ended December 30, 2017, December 31, 2016 and January 2, 2016, the Company contributed approximately $15,000, $11,500 and $1,500, respectively, to CHOC and its affiliates.