Document:

ex_121452.htm

 

 

Exhibit 10.2

 

SECURITIES PURCHASE AGREEMENT

 

This SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of August 6, 2018, by and between XSUNX, INC., a Colorado corporation, with its address at 65 Enterprise, Aliso Viejo, CA 92656 (the “Company”), and ___________________, a Virginia corporation, with its address at ______________________ (the “Buyer”).

 

WHEREAS:

 

A.     The Company and the Buyer are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by the rules and regulations as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the “1933 Act”); and

 

B.     Buyer desires to purchase and the Company desires to issue and sell, upon the terms and conditions set forth in this Agreement a convertible note of the Company, in the form attached hereto as Exhibit A, in the aggregate principal amount of $30,000.00 (together with any note(s) issued in replacement thereof or as a dividend thereon or otherwise with respect thereto in accordance with the terms thereof, the “Note”), convertible into shares of common stock, no par value per share, of the Company (the “Common Stock”), upon the terms and subject to the limitations and conditions set forth in such Note.

 

NOW THEREFORE, the Company and the Buyer severally (and not jointly) hereby agree as follows:

 

1.     Purchase and Sale of Note.

 

 

a.     Purchase of Note. On the Closing Date (as defined below), the Company shall issue and sell to the Buyer and the Buyer agrees to purchase from the Company such principal amount of Note as is set forth immediately below the Buyer’s name on the signature pages hereto.

 

b.     Form of Payment. On the Closing Date (as defined below), (i) the Buyer shall pay the purchase price for the Note to be issued and sold to it at the Closing (as defined below) (the “Purchase Price”) by wire transfer of immediately available funds to the Company, in accordance with the Company’s written wiring instructions, against delivery of the Note in the principal amount equal to the Purchase Price as is set forth immediately below the Buyer’s name on the signature pages hereto, and

(ii)     the Company shall deliver such duly executed Note on behalf of the Company, to the Buyer, against delivery of such Purchase Price.

 

c.     Closing Date. Subject to the satisfaction (or written waiver) of the conditions thereto set forth in Section 6 and Section 7 below, the date and time of the issuance and sale of the Note pursuant to this Agreement (the “Closing Date”) shall be 12:00 noon, Eastern Standard Time on or about August 10, 2018, or such other mutually agreed upon time. The closing of the transactions

 

 

 

 

contemplated by this Agreement (the “Closing”) shall occur on the Closing Date at such location as may be agreed to by the parties.

 

2.     Buyer’s Representations and Warranties. The Buyer represents and warrants to the Company that:

 

a.     Investment Purpose. As of the date hereof, the Buyer is purchasing the Note and the shares of Common Stock issuable upon conversion of or otherwise pursuant to the Note (such shares of Common Stock being collectively referred to herein as the “Conversion Shares” and, collectively with the Note, the “Securities”) for its own account and not with a present view towards the public sale or distribution thereof, except pursuant to sales registered or exempted from registration under the 1933 Act.

 

b.     Accredited Investor Status. The Buyer is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D (an “Accredited Investor”).

 

c.     Reliance on Exemptions. The Buyer understands that the Securities are being offered and sold to it in reliance upon specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying upon the truth and accuracy of, and the Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of the Buyer to acquire the Securities.

 

d.     Information. The Company has not disclosed to the Buyer any material nonpublic information and will not disclose such information unless such information is disclosed to the public prior to or promptly following such disclosure to the Buyer.

 

e.     Legends. The Buyer understands that the Note and, until such time as the Conversion Shares have been registered under the 1933 Act; or may be sold pursuant to an applicable exemption from registration, the Conversion Shares may bear a restrictive legend in substantially the following form:

 

"THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY STATE SECURITIES LAWS, AND MAY NOT BE PLEDGED, SOLD, ASSIGNED, HYPOTHECATED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR (2) THE ISSUER OF SUCH SECURITIES RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH COUNSEL AND OPINION ARE REASONABLY ACCEPTABLE TO THE ISSUER’S TRANSFER AGENT, THAT SUCH SECURITIES MAY BE PLEDGED, SOLD, ASSIGNED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS."

 

 

 

 

 

The legend set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of any Security upon which it is stamped, if, unless otherwise required by applicable state securities laws, (a) such Security is registered for sale under an effective registration statement filed under the 1933 Act or otherwise may be sold pursuant to an exemption from registration without any restriction as to the number of securities as of a particular date that can then be immediately sold, or (b) such holder provides the Company with an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such Security may be made without registration under the 1933 Act, which opinion shall be accepted by the Company so that the sale or transfer is effected. The Buyer agrees to sell all Securities, including those represented by a certificate(s) from which the legend has been removed, in compliance with applicable prospectus delivery requirements, if any. In the event that the Company does not accept the opinion of counsel provided by the Buyer with respect to the transfer of Securities pursuant to an exemption from registration, such as Rule 144, at the Deadline, it will be considered an Event of Default pursuant to Section 3.2 of the Note.

 

f.     Authorization; Enforcement. This Agreement has been duly and validly authorized. This Agreement has been duly executed and delivered on behalf of the Buyer, and this Agreement constitutes a valid and binding agreement of the Buyer enforceable in accordance with its terms.

 

3.     Representations and Warranties of the Company. The Company represents and warrants to the Buyer that:

 

a.     Organization and Qualification. The Company and each of its Subsidiaries (as defined below), if any, is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated, with full power and authority (corporate and other) to own, lease, use and operate its properties and to carry on its business as and where now owned, leased, used, operated and conducted. “Subsidiaries” means any corporation or other organization, whether incorporated or unincorporated, in which the Company owns, directly or indirectly, any equity or other ownership interest.

 

b.     Authorization; Enforcement. (i) The Company has all requisite corporate power and authority to enter into and perform this Agreement, the Note and to consummate the transactions contemplated hereby and thereby and to issue the Securities, in accordance with the terms hereof and thereof, (ii) the execution and delivery of this Agreement, the Note by the Company and the consummation by it of the transactions contemplated hereby and thereby (including without limitation, the issuance of the Note and the issuance and reservation for issuance of the Conversion Shares issuable upon conversion or exercise thereof) have been duly authorized by the Company’s Board of Directors and no further consent or authorization of the Company, its Board of Directors, or its shareholders is required,

 

(iii)     this Agreement has been duly executed and delivered by the Company by its authorized representative, and such authorized representative is the true and official representative with authority to sign this Agreement and the other documents executed in connection herewith and bind the Company accordingly, and (iv) this Agreement constitutes, and upon execution and delivery by the Company of the Note, each of such instruments will constitute, a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms.

 

c.     Capitalization. As of the date hereof, the authorized common stock of the Company consists of 2,000,000,000 authorized shares of Common Stock, no par value per share, of

 

 

 

 

 

which 1,468,106,819 shares are issued and outstanding; and 238,693,319 shares are reserved for issuance upon conversion of the Note. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and non-assessable. .

 

d.     Issuance of Shares. The Conversion Shares are duly authorized and reserved for issuance and, upon conversion of the Note in accordance with its respective terms, will be validly issued, fully paid and non-assessable, and free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights or other similar rights of shareholders of the Company and will not impose personal liability upon the holder thereof.

 

e.     No Conflicts. The execution, delivery and performance of this Agreement, the Note by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance and reservation for issuance of the Conversion Shares) will not (i) conflict with or result in a violation of any provision of the Certificate of Incorporation or By-laws, or (ii) violate or conflict with, or result in a breach of any provision of, or constitute a default (or an event which with notice or lapse of time or both could become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture, patent, patent license or instrument to which the Company or any of its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations and regulations of any self-regulatory organizations to which the Company or its securities are subject) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected (except for such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect). The businesses of the Company and its Subsidiaries, if any, are not being conducted, and shall not be conducted so long as the Buyer owns any of the Securities, in violation of any law, ordinance or regulation of any governmental entity. “Material Adverse Effect” means any material adverse effect on the business, operations, assets, financial condition or prospects of the Company or its Subsidiaries, if any, taken as a whole, or on the transactions contemplated hereby or by the agreements or instruments to be entered into in connection herewith.

 

f.     SEC Documents; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “1934 Act”) (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements and schedules thereto and documents (other than exhibits to such documents) incorporated by reference therein, being hereinafter referred to herein as the “SEC Documents”). Upon written request the Company will deliver to the Buyer true and complete copies of the SEC Documents, except for such exhibits and incorporated documents. As of their respective dates or if amended, as of the dates of the amendments, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. None of the statements made in any such SEC Documents is, or has been, required to be amended or updated under applicable law (except for such statements as have been amended or updated in subsequent filings prior the date hereof). As of their respective dates or if amended, as of the dates of the amendments, the financial statements of the Company included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. Such financial statements have been prepared in accordance

 

 

 

 

with United States generally accepted accounting principles, consistently applied, during the periods involved and fairly present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). The Company is subject to the reporting requirements of the 1934 Act.

 

g.     Absence of Certain Changes. Since March 31, 2018, except as set forth in the SEC Documents, there has been no material adverse change and no material adverse development in the assets, liabilities, business, properties, operations, financial condition, results of operations, prospects or 1934 Act reporting status of the Company or any of its Subsidiaries.

 

h.     Absence of Litigation. Except as set forth in the SEC Documents, there is no action, suit, claim, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company or any of its Subsidiaries, threatened against or affecting the Company or any of its Subsidiaries, or their officers or directors in their capacity as such, that could have a Material Adverse Effect. The Company and its Subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing.

 

i.     No Integrated Offering. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has directly or indirectly made any offers or sales in any security or solicited any offers to buy any security under circumstances that would require registration under the 1933 Act of the issuance of the Securities to the Buyer. The issuance of the Securities to the Buyer will not be integrated with any other issuance of the Company’s securities (past, current or future) for purposes of any shareholder approval provisions applicable to the Company or its securities.

 

j.     No Brokers. The Company has taken no action which would give rise to any claim by any person for brokerage commissions, transaction fees or similar payments relating to this Agreement or the transactions contemplated hereby.

 

k.     No Investment Company. The Company is not, and upon the issuance and sale of the Securities as contemplated by this Agreement will not be an “investment company” required to be registered under the Investment Company Act of 1940 (an “Investment Company”). The Company is not controlled by an Investment Company.

 

l.     Breach of Representations and Warranties by the Company. If the Company breaches any of the representations or warranties set forth in this Section 3, and in addition to any other remedies available to the Buyer pursuant to this Agreement, it will be considered an Event of default under Section 3.4 of the Note.

 

4.     COVENANTS.

 

a.     Best Efforts. The Company shall use its best efforts to satisfy timely each of the conditions described in Section 7 of this Agreement.

 

b.     Form D; Blue Sky Laws. The Company agrees to timely make any filings required by federal and state laws as a result of the closing of the transactions contemplated by this Agreement.

 

 

 

 

 

c.     Use of Proceeds. The Company shall use the proceeds for general working capital purposes.

 

d.     Expenses. At the Closing, the Company’s obligation with respect to the transactions contemplated by this Agreement is to reimburse Buyer’ expenses shall be $2,000.00 for Buyer’s legal fees and due diligence fee.

 

e.     Corporate Existence. So long as the Buyer beneficially owns any Note, the Company shall maintain its corporate existence and shall not sell all or substantially all of the Company’s assets, except with the prior written consent of the Buyer.

 

f.     Breach of Covenants. If the Company breaches any of the covenants set forth in this Section 4, and in addition to any other remedies available to the Buyer pursuant to this Agreement, it will be considered an event of default under Section 3.4 of the Note.

 

g.     Failure to Comply with the 1934 Act. So long as the Buyer beneficially owns the Note, the Company shall comply with the reporting requirements of the 1934 Act; and the Company shall continue to be subject to the reporting requirements of the 1934 Act.

 

 

h.     Trading Activities. Neither the Buyer nor its affiliates has an open short position in the common stock of the Company and the Buyer agrees that it shall not, and that it will cause its affiliates not to, engage in any short sales of or hedging transactions with respect to the common stock of the Company.

 

5.     Transfer Agent Instructions. The Company shall issue irrevocable instructions to its transfer agent to issue certificates, registered in the name of the Buyer or its nominee, for the Conversion Shares in such amounts as specified from time to time by the Buyer to the Company upon conversion of the Note in accordance with the terms thereof (the “Irrevocable Transfer Agent Instructions”). In the event that the Company proposes to replace its transfer agent, the Company shall provide, prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered pursuant to this Agreement (including but not limited to the provision to irrevocably reserve shares of Common Stock in the Reserved Amount as such term is defined in the Note) signed by the successor transfer agent to Company and the Company. Prior to registration of the Conversion Shares under the 1933 Act or the date on which the Conversion Shares may be sold pursuant to an exemption from registration, all such certificates shall bear the restrictive legend specified in Section 2(e) of this Agreement. The Company warrants that: (i) no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section 5, will be given by the Company to its transfer agent and that the Securities shall otherwise be freely transferable on the books and records of the Company as and to the extent provided in this Agreement and the Note; (ii) it will not direct its transfer agent not to transfer or delay, impair, and/or hinder its transfer agent in transferring (or issuing)(electronically or in certificated form) any certificate for Conversion Shares to be issued to the Buyer upon conversion of or otherwise pursuant to the Note as and when required by the Note and this Agreement; and (iii) it will not fail to remove (or directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for any Conversion Shares issued to the Buyer upon conversion of or otherwise pursuant to the Note as and when required by the Note and/or this Agreement. If the Buyer provides the Company and the Company’s transfer, at the cost of the Buyer, with an opinion of counsel in form, substance and scope customary for opinions in comparable transactions, to the effect that a public sale or transfer of such Securities may be made without registration under the

 

 

 

 

1933 Act, the Company shall permit the transfer, and, in the case of the Conversion Shares, promptly instruct its transfer agent to issue one or more certificates, free from restrictive legend, in such name and in such denominations as specified by the Buyer. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Buyer, by vitiating the intent and purpose of the transactions contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Section 5 may be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section, that the Buyer shall be entitled, in addition to all other available remedies, to an injunction restraining any breach and requiring immediate transfer, without the necessity of showing economic loss and without any bond or other security being required.

 

6.     Conditions to the Company’s Obligation to Sell. The obligation of the Company hereunder to issue and sell the Note to the Buyer at the Closing is subject to the satisfaction, at or before the Closing Date of each of the following conditions thereto, provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion:

 

a.     The Buyer shall have executed this Agreement and delivered the same to the Company.

 

b.     The Buyer shall have delivered the Purchase Price in accordance with Section 1(b) above.

 

c.     The representations and warranties of the Buyer shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date), and the Buyer shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Buyer at or prior to the Closing Date.

 

d.     No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.

 

7.     Conditions to The Buyer’s Obligation to Purchase. The obligation of the Buyer hereunder to purchase the Note at the Closing is subject to the satisfaction, at or before the Closing Date of each of the following conditions, provided that these conditions are for the Buyer’s sole benefit and may be waived by the Buyer at any time in its sole discretion:

 

a.     The Company shall have executed this Agreement and delivered the same to the Buyer.

 

b.     The Company shall have delivered to the Buyer the duly executed Note (in such denominations as the Buyer shall request) in accordance with Section 1(b) above.

 

c.     The Irrevocable Transfer Agent Instructions, in form and substance satisfactory to the Buyer, shall have been delivered to and acknowledged in writing by the Company’s Transfer Agent.

 

 

 

 

d.     The representations and warranties of the Company shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made at such time (except for representations and warranties that speak as of a specific date) and the Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the Closing Date. The Buyer shall have received a certificate or certificates, executed by the chief executive officer of the Company, dated as of the Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by the Buyer including, but not limited to certificates with respect to the Board of Directors’ resolutions relating to the transactions contemplated hereby.

 

e.     No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.

 

f.     No event shall have occurred which could reasonably be expected to have a Material Adverse Effect on the Company including but not limited to a change in the 1934 Act reporting status of the Company or the failure of the Company to be timely in its 1934 Act reporting obligations.

 

g.     The Conversion Shares shall have been authorized for quotation on an exchange or electronic quotation system and trading in the Common Stock on such exchange or electronic quotation system shall not have been suspended by the SEC or an exchange or electronic quotation system.

 

8.     Governing Law; Miscellaneous.

 

a.     Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Virginia without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the state courts of New York or in the federal courts located in the Eastern District of New York. The parties to this Agreement hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. The Company and Buyer waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees and costs. In the event that any provision of this Agreement or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement. Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Agreement, the Note or any related document or agreement by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.

 

b.     Counterparts. This Agreement may be executed in one or more

 

 

 

 

counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party.

 

c.     Headings. The headings of this Agreement are for convenience of reference only and shall not form part of, or affect the interpretation of, this Agreement.

 

d.     Severability. In the event that any provision of this Agreement is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any provision hereof which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision hereof.

 

e.     Entire Agreement; Amendments. This Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor the Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be waived or amended other than by an instrument in writing signed by the majority in interest of the Buyer.

 

f.     Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. Each party shall provide notice to the other party of any change in address.

 

g.     Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and assigns. Neither the Company nor the Buyer shall assign this Agreement or any rights or obligations hereunder without the prior written consent of the other. Notwithstanding the foregoing, the Buyer may assign its rights hereunder to any person that purchases Securities in a private transaction from the Buyer or to any of its “affiliates,” as that term is defined under the 1934 Act, without the consent of the Company.

 

h.     Survival. The representations and warranties of the Company and the agreements and covenants set forth in this Agreement shall survive the closing hereunder notwithstanding any due diligence investigation conducted by or on behalf of the Buyer. The Company agrees to indemnify and hold harmless the Buyer and all their officers, directors, employees and agents for loss or damage arising as a result of or related to any breach or alleged breach by the Company of any of its representations, warranties and covenants set forth in this Agreement or any of its covenants and obligations under this Agreement, including advancement of expenses as they are incurred.

 

 

 

 

 

i.     Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

 

j.     No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

 

k.     Remedies. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Buyer by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Agreement will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Agreement, that the Buyer shall be entitled, in addition to all other available remedies at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing any breach of this Agreement and to enforce specifically the terms and provisions hereof, without the necessity of showing economic loss and without any bond or other security being required.

 

 

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IN WITNESS WHEREOF, the undersigned Buyer and the Company have caused this Agreement to be duly executed as of the date first above written.

 

 

XSUNX, INC.

 

By:                                                       

Tom Djokovich

Chief Executive Officer

 

 

	
			BUYER

			 

				 
	
			By:                                                                            

			Name:

			Title: Chief Executive Officer

			 

			 

				 
	
			 

			AGGREGATE SUBSCRIPTION AMOUNT:

				 
	
			Aggregate Principal Amount of Note:

				
			$30,000.00

			
	
			Aggregate Purchase Price:

				
			$30,000.00Exhibit

EXHIBIT 10.21

ESTABLISHMENT LABS HOLDINGS INC.
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of August 10, 2018 (the “Effective Date”), by and between ESTABLISHMENT LABS HOLDINGS INC., a BVI corporation (the “Company”) and Renee Gaeta an individual residing at 750 Calle Alella Santa Barbara, CA 93109, US (the “Executive”).
Background
WHEREAS, the Company desires to confirm the current terms of employment between the Executive and the Company for the term hereof;
WHEREAS, the Executive desires to continue being employed by the Company in accordance with the terms hereof; and
WHEREAS, the Company and the Executive mutually intend to set forth herein the terms and conditions of the Executive’s employment with the Company.
NOW, THEREFORE, in consideration of the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Company and Executive agree as follows:
1.Employment.  The Company hereby agrees to employ the Executive, and the Executive hereby accepts such employment with the Company subject to the terms and conditions set forth herein.  During the Term (as defined in Section 2), the Executive shall serve in the capacity of Chief Financial Officer of the Company and shall report directly to the Chief Executive Officer.  The Executive’s duties hereunder will be those normally incident to the Executive’s position and such other duties as may be reasonably assigned to her from time to time by the Chief Executive Officer.  During the Term, except for illness and vacation periods, the Executive shall devote all of her business time, attention, skill and efforts to the faithful performance of her duties hereunder.  The Executive shall not be involved with any community or professional organizations or serve as a director for any other entities, other than those activities and investments that do not impair the ability of the Executive to perform the duties of her position.  The parties understand and agree that the Executive is primarily providing services out of the United States, and for employment purposes, Motiva USA, LLC shall employ the Executive, maintain her employment records, pay her cash compensation and provide her benefits.
2.    Term / Termination.
(a)    Term.  The term of the Executive’s employment (the “Term”) shall continue in full force and effect until terminated in accordance with Sections 2(b), 2(c), 2(d), 2(e) or 2(f) below.

(b)    Termination for Cause.  The Executive’s employment may be terminated by the Company for “Cause.”  For purposes of this Agreement, “Cause” shall mean (i) the Executive’s conviction, or pleading guilty or nolo contendere to, a felony or other crime involving moral turpitude, (ii) the Executive’s engagement in fraud, dishonesty, embezzlement, insubordination, or misconduct, (iii) the failure of the Executive to perform her assigned duties or follow the reasonable and lawful directives of the Board of Directors of the Company (the “Board of Directors”), which failure is not cured within ten (10) days of written notice from the Company of such material failure, (iv) the material breach by the Executive of her obligations hereunder or under any material provision of the Company’s Code of Business Conduct and Ethics or any related agreements with any Company Group member, which breach (to the extent curable) is not cured within ten (10) days of written notice from the Company of such breach, or (v) any of the causes described in the applicable Labor Code.  The Executive shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to her written notice of such termination.
(c)    Termination by Executive for Good Reason.  The Executive’s employment may be terminated by the Executive for “Good Reason” if the Executive resigns from her employment with the Company in accordance with the following sentence after the occurrence of any of the following events, without the Executive’s consent:
(i)    a material diminution by the Company of the responsibility, importance or scope of the Executive’s functions, duties or position with the Company from the position and attributes thereof described in Section 1;
(ii)    breach by the Company of any material provision hereof; or
(iii)    any reduction of the Executive’s Base Compensation (as defined in Section 3(a) below).
In order for the Executive’s resignation to constitute a resignation for “Good Reason,” the Executive must first provide the Company with written notice of the acts or omissions constituting the grounds for “Good Reason” within thirty (30) days of the initial existence of such grounds for “Good Reason” and a period of thirty (30) days following the date of such notice to cure such grounds (the “Cure Period”), such grounds must not have been cured by the expiration of the Cure Period, and the Executive must resign within thirty (30) days following the expiration of the Cure Period.
(d)    Termination by Reason of Death or Disability.  The Executive’s employment will automatically terminate upon the death or Disability of the Executive.  For purposes of this Section 2(d), the term “Disability” shall mean the inability or failure of the Executive to perform the essential functions of her position of employment with the Company with or without reasonable accommodation as a result of a mental or physical disability for a total of ninety (90) or more days (whether or not consecutive) during any twelve (12) months, all as determined in good faith by a majority of the disinterested members of the Board of Directors; provided, however, if the Company maintains a policy insuring against the disability of Executive, then “Disability” shall have the same meaning as in such policy.

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(e)    Termination by Company without Cause.  The Executive’s employment may be terminated by the Company without Cause, at any time, for any reason or for no reason, upon the payment by the Company of all indemnities which may be deemed mandatory according to the applicable local legislation.
(f)    Termination by Executive without Good Reason.  The Executive’s employment may be terminated by the Executive without Good Reason, at any time, upon thirty (30) days’ prior written notice of termination. Upon receipt of the Executive’s written notice of termination, the Company may immediately terminate the Executive’s employment, which termination shall be deemed for “Cause.”
3.    Compensation.  The Company shall pay the Executive as compensation, in consideration for all her services hereunder, the amounts described in this Section 3:
(a)    Base Compensation.  The Executive will be paid a base salary equivalent to USD $315,000.00 per annum (the “Base Compensation”).  Such salary shall be paid to the Executive in equal installments not less frequently than monthly, in accordance with the Company’s business practices in effect from time to time. Any compensation which may be paid to the Executive under any additional compensation or incentive plans of the Company or which may otherwise be authorized from time to time by the Board of Directors shall be in addition to the Base Compensation to which the Executive is entitled to under this Agreement.
(b)    Incentive Compensation (Annual Bonus). The Executive shall also be eligible to receive additional annual compensation of up to 50% of the Base Compensation (the “Target Bonus”), upon the verification of the achievement of certain individual targets and goals by the Executive and certain targets and milestones by the Company.  Such targets and goals shall be established in writing by the Company.  The determination of whether such targets have been achieved shall be determined by the Company in its sole discretion.  The Executive shall be entitled to such additional annual compensation only if the Executive is employed by the Company through the end of the applicable fiscal year, except as expressly contemplated in Section 8.  Any such additional annual compensation to which the Executive is entitled with respect to a particular fiscal year shall be paid no later than March 15 of the year following such fiscal year.  Any additional annual compensation for the 2018 fiscal year may be paid in cash or shares of the Company’s common stock having an equivalent value (as determined by the Board of Directors), at the discretion of the Board of Directors.  
(c)    Equity Awards.  The Executive will be eligible to receive equity awards pursuant to any plans or arrangements the Company may have in effect from time to time.  The Board of Directors (or a committee of the Board of Directors) will determine in its discretion whether the Executive will be granted any such equity awards and the terms and conditions of any such equity award in accordance with the terms and conditions of any applicable plan or arrangement that may be in effect from time to time.
(d)    Participation in Plans.  During the Executive’s employment with the Company, the Executive shall be entitled to participate in all savings and retirement plans, policies and programs maintained in force by the Company, including any qualified pension, profit sharing 

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or other retirement plans, non-qualified retirement and deferred compensation plans, and other similar retirement and welfare benefit plans, programs and arrangements, provided that the Executive qualifies for participation in such plans, programs and arrangements pursuant to the terms thereof and only if such plans or programs are put in place.  The Executive shall be informed by the Company when and if any of these apply.
(e)    Employee Benefits.  During the Executive’s employment with the Company, the Executive shall continue to be eligible to participate in all of the Company benefit plans and programs in effect for similarly-situated employees.  The Company reserves the right to cancel or change the benefit plans and programs it offers to its employees at any time.
(f)    Expense Reimbursement.  The Company shall pay or reimburse the Executive (or, in the Company’s sole discretion shall pay directly), upon a proper accounting as the Company may reasonably require, for reasonable business related expenses and disbursements incurred by the Executive in the course of the performance of the Executive’s duties under this Agreement, provided that the incurring of such expenses shall have been approved in accordance with the Company’s regular reimbursement procedures and policies of the Company in effect from time to time.
(g)    Withholding.  Payment of all amounts to the Executive shall be net of any withholding.  The Company may withhold from the Executive’s compensation all applicable amounts (including, withholding and payroll taxes) required by law.
(h)    Additional Benefits.  During the Executive’s employment with the Company, the Executive shall receive a car allowance according to the Company standard for executives.  Additionally, and only while the Executive is employed by the Company during the twenty-four (24)-month period beginning on July 1, 2017, the Executive shall also receive a monthly living stipend of US$2,000.
4.    Vacation.  The Executive shall be entitled to paid vacation in accordance with the Company’s vacation policy, with the timing and duration of specific vacations mutually and reasonably agreed to by the parties hereto.
5.    Place of Performance.  In connection with her employment by the Company, the Executive shall render her services wherever the Company requires it.
6.    Facilities Available to Executive.  The Company shall furnish Executive with facilities and technical services as may be reasonably appropriate for the performance of her duties in the Company’s industry.
7.    Equity Acceleration Upon a Change in Control.  Upon a Change in Control that occurs before the termination of the Executive’s employment with the Company, the Executive will receive accelerated vesting as to one hundred percent (100%) of the then‐unvested portions of all of Executive’s outstanding equity awards that were granted before the Effective Date, and with respect to such equity awards with performance-based vesting, all performance goals or other vesting 

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criteria will be deemed achieved at one hundred percent (100%) of target levels and all other terms and conditions met.
8.    Payments Due Upon Termination of Employment.  
(a)    Non-CIC Qualified Termination.  If a Non-CIC Qualified Termination occurs, then, subject to Sections 8(e) and 9, the Executive will receive the following severance payment and benefits:
(i)    Salary Severance.  A lump sum severance payment equal to nine (9) months of the Executive’s Base Compensation as in effect immediately prior to such termination of the Executive’s employment (or if such termination is the result of Executive’s resignation due to a material reduction in the Executive’s Base Compensation, as in effect immediately prior to such reduction).  
(ii)    Bonus Severance.  A lump sum severance payment equal to (A) the annual bonus that the Executive would have earned under Section 3(b) for the fiscal year in which the Executive’s Non-CIC Qualified Termination occurs had the Executive remained employed with the Company through the date the Executive was required to continue employment with the Company in order to be eligible to receive such bonus multiplied by (B) the fraction obtained by dividing (x) the number of days the Executive has worked during such fiscal year by (y) the total number of days in such fiscal year, which will be paid at the same time as other similarly situated employees of the Company receive bonus payments for the fiscal year but in no event later than March 15 of the year following the year of the Non-CIC Qualified Termination.  
(iii)    Health Benefit.  Subject to Section 8(d), the Company will pay the premiums for the Executive and the Executive’s eligible dependents to continue healthcare coverage at the rates then in effect for active employees, subject to any subsequent changes in rates that are generally applicable to the Company’s active employees (the “Health Benefit”), until the earlier of (A) a period of nine (9) months from the date of the Executive’s termination of employment, (B) the date upon which the Executive and/or the Executive’s eligible dependents becomes covered under similar plans or (C) the date upon which the Executive ceases to be eligible for coverage under COBRA or other applicable law or policy governing such coverage.
(b)    CIC Qualified Termination.  If a CIC Qualified Termination occurs, then, subject to Sections 8(e) and 9, the Executive will receive the following severance payments and benefits from the Company:
(i)    Salary Severance.  A lump sum severance payment equal to twelve (12) months of the higher of (x) the Executive’s Base Compensation as in effect immediately prior to such termination of Executive’s employment (or if such termination is the result of the Executive’s resignation due to a material reduction in the Executive’s Base Compensation, as in effect immediately prior to such reduction) or (y) the Executive’s Base Compensation as of immediately prior to the Change in Control.

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(ii)    Bonus Severance.  A lump sum severance payment equal to one hundred percent (100%) of the Executive’s Target Bonus as in effect for the fiscal year in which the Executive’s termination of employment occurs.  
(iii)    Equity Acceleration.  Accelerated vesting as to one hundred percent (100%) of the then‐unvested portions of all of Executive’s outstanding equity awards that are granted on or after the Effective Date. 
(iv)    Health Benefit.  Subject to Section 8(d), the Company will provide Health Benefit until the earlier of (A) a period of twelve (12) months from the date of the Executive’s termination of employment, (B) the date upon which the Executive and/or the Executive’s eligible dependents becomes covered under similar plans or (C) the date upon which the Executive ceases to be eligible for coverage under COBRA or other applicable law or policy governing such coverage.

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(c)    Voluntary Resignation; Termination for Cause; Death; Disability.  If the Executive’s employment with the Company terminates (i) voluntarily by the Executive (other than for Good Reason), (ii) for Cause by the Company, or (iii) as a result of the Executive’s death or Disability, then the Executive will not be entitled to receive severance or other benefits except for those (if any) as may then be established under the Company’s then existing severance and benefits plans and practices or pursuant to other written agreements with the Company.
(d)    Conditions to Receipt of Health Benefit.  To the extent the Executive is covered under the Company’s U.S. health plans as of the time of the Executive’s Qualified Termination, the Executive’s receipt of the Health Benefit is subject to the Executive electing COBRA continuation coverage within the time period prescribed pursuant to COBRA for the Executive and the Executive’s eligible dependents.  If the Company determines in its sole discretion that it cannot provide the Health Benefit without potentially violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), the Company will in lieu thereof provide to the Executive a taxable monthly payment payable on the Company’s regularly scheduled payroll dates (except as provided by the following sentence), in an amount equal to the monthly COBRA premium that the Executive would be required to pay to continue the Executive’s group health coverage in effect on the date of the Executive’s Qualified Termination (which amount will be based on the rates then in effect for active employees, subject to any subsequent changes in rates that are generally applicable to the Company’s active employees) (each, a “Health Replacement Payment”), which Health Replacement Payments will be made regardless of whether the Executive elects COBRA continuation coverage and will end on the earlier of (x) the date upon which the Executive obtains other employment or (y) the date the Company has paid an amount totaling the number of Health Replacement Payments equal to the number of months in the applicable Health Benefit period.  For the avoidance of doubt, the Health Replacement Payments may be used for any purpose, including, but not limited to continuation coverage under COBRA, and will be subject to all applicable tax withholdings.  Notwithstanding anything to the contrary under this Agreement, if at any time the Company determines in its sole discretion that it cannot provide the Health Replacement Payments without violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), the Executive will not receive the Health Replacement Payments or any further Health Benefit.
(e)    Offset. The severance payments and benefits the Executive would otherwise be entitled to receive pursuant to Sections 8(a) or (b) will be reduced by any liability the Company may have to the Executive for any severance payments or benefits required under any applicable statute, law or regulation to the extent permitted by applicable law.
(f)    Accrued Compensation.  For the avoidance of any doubt, in the event of any termination of the Executive’s employment with the Company, the Executive will be entitled to receive all accrued but unpaid vacation, expense reimbursements, wages, and other benefits due to the Executive under any Company-provided plans, policies, and arrangements.
(g)    Transfer between the Company Group.  For purposes of this Agreement, if the Executive is involuntarily transferred from one member of the Company Group to another, the 

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transfer will not be a termination without Cause but may give the Executive the ability to resign for Good Reason in accordance with Section 2(c).
(h)    Exclusive Remedy.  In the event of a termination of the Executive’s employment with the Company, the provisions of this Section 8 are intended to be and are exclusive and in lieu of any other rights or remedies to which Executive may otherwise be entitled, whether at law, tort or contract, in equity.  Executive will be entitled to no benefits, compensation or other payments or rights upon termination of employment other than those benefits expressly set forth in this Section 8, subject to applicable law.
9.    Conditions to Receipt of Severance/Timing of Severance.
(a)    Separation Agreement and Release of Claims.  The receipt of any severance payment or benefits pursuant to Sections 8(a) or (b) will be subject to (i) the Executive resigning from all positions the Executive may hold as an officer or director of a Company Group member and executing all documents the applicable Company Group member determines, in its sole discretion, are necessary to effectuate such resignations prior to the Release Deadline (as defined below) (such resignation and execution of applicable documents, the “Resignations”), and (ii) the Executive signing and not revoking a separation agreement and release of claims in a form reasonably satisfactory to the Company (the “Release”) and provided that such Release becomes effective and irrevocable no later than sixty (60) days following the termination date (such deadline, the “Release Deadline”).  If the Resignations and the Release do not become effective and irrevocable by the Release Deadline, the Executive will forfeit any rights to severance payments or benefits under this Agreement.  In no event will severance payments or benefits be paid or provided until the Resignations and the Release become effective and irrevocable.  If earned, none of the severance payments and benefits payable upon the Executive’s Qualified Termination under Section 8 will be paid or otherwise provided prior to the sixtieth (60th day) following the Executive’s Qualified Termination.  Except with respect to the extent that payments are delayed under Section 9(c), on the first regularly scheduled Company payroll date following the 60th day following the Executive’s Qualified Termination, the Company will pay or provide the Executive the severance payments and benefits that the Executive would otherwise have received under Section 8 on or prior to that date, with the balance of the severance payments and benefits being paid or provided as originally scheduled.  
(b)    Timing of Severance Payments.  Provided that the Release and Resignations become effective and irrevocable by the Release Deadline, any severance payments or benefits under this Agreement will be paid on, or, in the case of installments, will not commence until, the first regularly scheduled Company payroll date following the date the Release and Resignations become effective and irrevocable, and the remaining payments will be made as provided in the Agreement (including any delay that may be required by Section 9(c)(ii)).  In no event will the Executive have discretion to determine the taxable year of payment for any Deferred Payments.
(c)    Section 409A.
(i)Notwithstanding anything to the contrary in this Agreement, no Deferred Payments will be paid or otherwise provided until the Executive has a “separation from 

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service” within the meaning of Section 409A.  Similarly, no severance payable to the Executive, if any, pursuant to this Agreement that otherwise would be exempt from Section 409A pursuant to Treasury Regulation Section 1.409A-1(b)(9) will be payable until the Executive has a “separation from service” within the meaning of Section 409A.
(ii)Notwithstanding anything to the contrary in this Agreement, if the Executive is a “specified employee” within the meaning of Section 409A at the time of the Executive’s separation from service (other than due to death), then the Deferred Payments, if any, that are payable within the first six (6) months following the Executive’s separation from service, will become payable on the first payroll date that occurs on or after the date that is six (6) months and one (1) day following the date of the Executive’s separation from service.  All subsequent Deferred Payments, if any, will be payable in accordance with the payment schedule applicable to each payment or benefit.  Notwithstanding anything herein to the contrary, if the Executive dies following the Executive’s separation from service, but prior to the six (6)-month anniversary of the separation from service, then any payments delayed in accordance with this Section 9(c)(ii) will be payable in a lump sum as soon as administratively practicable after the date of the Executive’s death and all other Deferred Payments will be payable in accordance with the payment schedule applicable to each payment or benefit.  Each payment, installment, and benefit payable under this Agreement is intended to constitute a separate payment for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations.
(iii)Any amount paid under this Agreement that satisfies the requirements of the “short-term deferral” rule set forth in Section 1.409A-1(b)(4) of the Treasury Regulations will not constitute Deferred Payments.  Any amount paid under this Agreement that qualifies as a payment made as a result of an involuntary separation from service pursuant to Section 1.409A-1(b)(9)(iii) of the Treasury Regulations that does not exceed the Section 409A Limit (as defined below) will not constitute Deferred Payments. 
(iv)The foregoing provisions and all compensation and benefits provided for under this Agreement are intended to comply with or be exempt from the requirements of Section 409A so that none of the severance payments and benefits to be provided hereunder will be subject to the additional tax imposed under Section 409A, and any ambiguities or ambiguous terms herein will be interpreted to be exempt or so comply.  The Company and the Executive agree to work together in good faith to consider amendments to this Agreement and to take such reasonable actions which are necessary, appropriate, or desirable to avoid imposition of any additional tax or income recognition prior to actual payment to the Executive under Section 409A.  In no event will 

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any Company Group member reimburse the Executive for any taxes that may be imposed on the Executive as a result of Section 409A.
(d)    Compliance with Related Agreement.  The Executive’s receipt of any payments or benefits under Section 8(a) or (b) will be subject to the Executive continuing to comply with the terms of the Related Agreement (as defined below) and the provisions of this Agreement. 
(e)    No Duty to Mitigate.  The Executive will not be required to mitigate the amount of any payment contemplated by this Agreement, nor will any earnings that the Executive may receive from any other source reduce any such payment
10.    Limitation on Payments.  In the event that the payments and benefits provided for in this Agreement or otherwise payable to the Executive (collectively, the “Payments”) (x) constitute “parachute payments” within the meaning of Section 280G of the Code and (y) but for this Section 10, would be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such Payments will be either: 
(a)    delivered in full, or 
(b)    delivered as to such lesser extent which would result in no portion of such Payments being subject to the Excise Tax, whichever of the foregoing amounts, taking into account the applicable federal, state and local income and employment taxes and the Excise Tax, results in the receipt by the Executive, on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the Code.  If a reduction in severance and other benefits constituting “parachute payments” is necessary so that benefits are delivered to a lesser extent, reduction will occur in the following order: (i) reduction of cash payments, which will occur in reverse chronological order such that the cash payment owed on the latest date following the occurrence of the event triggering such excise tax will be the first cash payment to be reduced; (ii) cancellation of equity awards that were granted “contingent on a change in ownership or control” within the meaning of Section 280G of the Code in the reverse order of date of grant of the awards (that is, the most recently granted equity awards will be cancelled first); (iii) reduction of acceleration of vesting of equity awards, which will occur in the reverse order of the date of grant for such equity awards (i.e., the vesting of the most recently granted equity awards will be reduced first); and (iv) reduction of other benefits paid or provided to the Executive, which will occur in reverse chronological order such that the benefit owed on the latest date following the occurrence of the event triggering such excise tax will be the first benefit to be reduced. If more than one equity award was made to the Executive on the same date of grant, all such awards will have their acceleration of vesting reduced pro rata.  In no event will the Executive have any discretion with respect to the ordering of payment reductions.
Unless the Company and the Executive otherwise agree in writing, any determination required under this Section 10 will be made in writing by the Company’s legal counsel, a nationally recognized firm of independent public accountants selected by the Company, or such other person or entity to which the parties mutually agree (the “Firm”).  For purposes of making the calculations required by this Section 10, the Firm may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the 

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application of Sections 280G and 4999 of the Code.  The Company and the Executive will furnish to the Firm such information and documents as the Accountants may reasonably request in order to make a determination under this Section 10.  The Company will bear all costs the Firm may reasonably incur in connection with any calculations contemplated by this Section 10. 
11.    Definition of Terms.  
(a)    “Change in Control” has the meaning given to it in the Company’s 2018 Equity Incentive Plan.
(b)    “Change in Control Period” means the period beginning on a Change in Control and ending 12 months after the Change in Control. 
(c)    “Code” means the Internal Revenue Code of 1986, as amended.
(d)    “Company Group” means the Company and its parents and subsidiaries.
(e)    “Deferred Payment” means any severance pay or benefits to be paid or provided to the Executive (or the Executive’s estate or beneficiaries) pursuant to this Agreement and any other severance payments or separation benefits, that in each case, when considered together, are considered deferred compensation under Section 409A.
(f)    “Qualified Termination” means a termination of the Executive’s employment either (i) by the Company without Cause (excluding by reason of the Executive’s death or Disability) or (ii) by the Executive for Good Reason, in either case, during the Change in Control Period (a “CIC Qualified Termination”) or outside of the Change in Control Period (a “Non-CIC Qualified Termination”).
(g)    “Section 409A” means Section 409A of the Code and any final regulations and guidance thereunder and any applicable state law equivalent, as each may be amended or promulgated from time to time.
(h)    “Section 409A Limit” will mean 2 times the lesser of: (i) the Executive’s annualized compensation based upon the annual rate of pay paid to the Executive during the Executive’s taxable year preceding the Executive’s taxable year of Executive’s separation from service as determined under Treasury Regulation Section 1.409A-1(b)(9)(iii)(A)(1) and any Internal Revenue Service guidance issued with respect thereto; or (ii) the maximum amount that may be taken into account under a qualified plan pursuant to Section 401(a)(17) of the Internal Revenue Code for the year in which the Executive’s separation from service occurred.
12.    Representations of Executive.  The Executive hereby represents and warrants to the Company that (a) this Agreement is the valid, legal and binding obligation of Executive, and (b) this Agreement does not, and the Executive’s performance of her duties hereunder will not, violate any provision of any agreement, indenture or other instrument, or any fiduciary or other obligation, to which the Executive is a party or by which it is bound.

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13.    Related Agreement.  Executive confirms that the terms of the Employee Nondisclosure, Inventions and Solicitations Agreement that she has in place with the Company (the “Related Agreement”) still apply.  The Executive understands that nothing in this Agreement or the Related Agreement shall in any way limit or prohibit the Executive from engaging in any Protected Activity.  For purposes of this Agreement, “Protected Activity” means filing a charge or complaint with, or otherwise communicating or cooperating with or participating in any investigation or proceeding that may be conducted by any federal, state or local government agency or commission, including the Securities and Exchange Commission, the Equal Employment Opportunity Commission, the Occupational Safety and Health Administration, and the National Labor Relations Board (“Government Agencies”).  The Executive understands that in connection with such Protected Activity, the Executive is permitted to disclose documents or other information as permitted by law, and without giving notice to, or receiving authorization from, the Company Group.  Notwithstanding, in making any such disclosures or communications, the Executive agrees to take all reasonable precautions to prevent any unauthorized use or disclosure of any information that may constitute Proprietary Information to any parties other than the Government Agencies.  The Executive further understands that “Protected Activity” does not include the disclosure of any Company Group attorney-client privileged communications.  In addition, Executive hereby acknowledges that the Company has provided Executive with notice in compliance with the Defend Trade Secrets Act of 2016 regarding immunity from liability for limited disclosures of trade secrets.  The full text of the notice is attached in Exhibit A.
14.    Indemnification.  The Company hereby agrees to indemnify and hold harmless Executive in accordance with the Indemnification Agreement executed on April 23, 2018, between the Company and the Executive.
15.    General Provisions.
(a)    Entire Agreement.  This Agreement and the Related Agreement contain the entire understanding between the parties hereto and supersedes any prior employment and consulting agreements and understandings between the Executive and the Company (or any subsidiary of the Company).
(b)    Nonassignability.  Neither this Agreement nor any right or interest hereunder shall be assignable by the Executive, her heirs, beneficiaries or legal representatives without the Company’s prior written consent provided, however, that nothing in this Section 15 shall preclude:
(i)    The Executive from designating a beneficiary to receive benefits payable hereunder upon her death; or
(ii)    the personal representatives, administrators, or other legal representatives of Executive or her estate from assigning any rights hereunder to the person or persons entitled to such benefits.
The Company may assign this Agreement and its rights and interest hereunder without notice to or the consent of the Executive.

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(c)    No Attachment.  Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or to execution, attachment, levy, or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to effect any such action shall be null, void, and of no effect.
(d)    Notice.  Any notice, consent, approval or other communication given pursuant to the provisions of this Agreement shall be in writing and shall be (i) delivered by hand, (ii) mailed by certified mail or registered mail, return receipt requested, postage prepaid, or (iii) delivered by a nationally recognized overnight courier, U.S. Post Office Express Mail, or similar overnight courier which delivers only upon signed receipt of the addressee, and addressed as follows:
If to the Company:     ESTABLISHMENT LABS
B15, Coyol Free Zone,
Alajuela, 20113, Costa Rica
Attention:    General Counsel
If to the Executive:    750 Calle Alella, Santa Barbara, CA 93109, US
    
Any notice shall be effective as of the time of receipt thereof by the addressee or any agent of the addressee, except that in the event the addressee or such agent of the addressee shall refuse to receive any notice given by registered mail or certified mail as above provided or there shall be no person available at the time of the delivery thereof to receive such notice, the time of the giving of such notice shall be the time of such refusal or the time of such delivery, as the case may be. Any party hereto may, by giving five (5) days written notice to the other party hereto in the manner described herein, designate any other address in substitution of the foregoing address to which notice shall be given.
(e)    Modification.  This Agreement may not be modified or amended except by an instrument in writing signed by the party against whom enforcement is sought.
(f)    Waiver.  No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument of the party charged with such waiver or estoppel.  No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall  operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived.
(g)    Governing Law.  The validity, construction, enforcement of and the remedies under this Agreement shall be governed in accordance with the laws of California.

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(h)    Headings.  The section headings used herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement.
(i)    Binding Agreement.  This Agreement shall be binding upon, and inure to the benefit of, the Executive and the Company, and the Company’s successors and assigns.  The rights and obligations hereunder are also being granted for the benefit of any Company Group member, and such rights and obligations may be enforced by any Company Group member.
(j)    Additional Acts.  The Executive and the Company each agrees to execute, acknowledge and deliver all further instruments, agreements or documents and do all further acts that are necessary or expedient to carry out this Agreement’s intended purposes.
(k)    Construction.  Each of the parties hereto declare that they or their counsel participated in the drafting of this Agreement and that, accordingly, this Agreement shall not be construed more strongly against any party hereto because it drafted this Agreement.
(l)    Severability.  The invalidity or unenforceability of any one or more of the words, phrases, sentences, clauses, or sections contained in this Agreement shall not affect the validity or enforceability of the remaining provisions of this Agreement or any part of any provision, all of which are inserted conditionally on their being valid in law, and in the event that any one or more of the words, phrases, sentences, clauses or sections contained in this Agreement shall be declared invalid or unenforceable, this Agreement shall be construed as if such invalid or unenforceable word or words, phrase or phrases, sentence or sentences, clause or clauses, or section or sections had not been inserted or shall be enforced as nearly as possible according to their original terms and intent to eliminate any invalidity or unenforceability.  If any invalidity or unenforceability is caused by the length of any period of time or the size of any area set forth in any part of this Agreement, the period of time or area, or both, shall be considered to be reduced to a period or area which would cure the invalidity or unenforceability.  A court of competent condition is expressly authorized to modify any unenforceable provision of this Agreement in lieu of severing such unenforceable provision in its entirety, whether by rewriting the offending provision, adding additional language to this Agreement, or making such other modifications as it deems warranted to carry out the intent as embodied herein to the maximum extent permitted by law.
(m)    Remedies.  Unless otherwise specified herein, no remedy conferred upon either party to this Agreement is intended to be exclusive of any other remedy herein or by law provided or permitted, but each shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity.  Every power or remedy given by this Agreement to any party or to which such party may otherwise be entitled, may be exercised concurrently or independently, from time to time, and as often as may be deemed expedient and inconsistent remedies may be pursued. Because a breach of the provisions of this Agreement or the Related Agreement will not adequately be compensated by money damages, the Company Group shall be entitled, in addition to any other right or remedy available, to an injunction restraining such breach or a threatened breach and to specific performance of any such provision of this Agreement or the Related Agreement and in any case no bond or other security shall be required in connection 

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therewith, and the parties hereby consent to the issuance of such injunction and to the ordering of specific performance.
(n)    Enforcement.  If any party hereto shall fail to perform any covenant or condition hereof or shall otherwise be in breach of this Agreement, such party shall pay to the non-defaulting party its reasonable attorneys’ fees and costs incurred as a result of their efforts to enforce this Agreement (whether or not litigation is commenced, at all trial and appellate levels and in bankruptcy).
(o)    Forum Selection:  THE PARTIES HERETO EXPRESSLY SUBMIT THEMSELVES TO AND AGREE THAT ALL ACTIONS ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE RELATIONSHIP BETWEEN THE PARTIES HERETO SHALL OCCUR SOLELY IN THE VENUE AND JURISDICTION OF CALIFORNIA.
(p)    Execution in Counterparts.  The parties hereto may execute this Agreement in two or more counterparts, each of which shall be deemed to be an original, but all such counterparts shall constitute one and the same instrument, and all signatures need not appear on any one counterpart.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the day and year first above written.
	
			
	ESTABLISHMENT LABS HOLDINGS INC.
	 
	EXECUTIVE

	/s/ Juan José Chacón Quirós
	 
	/s/ Renee Gaeta

	Name: Juan José Chacón Quirós
	 
	Name: Renee Gaeta

	Title: Chief Executive Officer
	 
	 

	 
	 
	 

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EXHIBIT A
Section 7 of the Defend Trade Secrets Act of 2016

“ . . . An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that—(A) is made—(i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. . . . An individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual—(A) files any document containing the trade secret under seal; and (B) does not disclose the trade secret, except pursuant to court order.”  

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