Document:

Exhibit

Exhibit 10.19

MANUFACTURING AND SUPPLY AGREEMENT
This Manufacturing and Supply Agreement (this “Agreement”) is entered into as of the Effective Date (as defined below) by and between (1) Apollo Endosurgery, Delaware corporation having offices at 1120 S Capital of Texas Highway #300, Austin, TX 78746 (“APOLLO”), and (2) Establishment Labs, S.A a corporation organized under the laws of Costa Rica and having a principal place of business at Coyol Free Zone, B15, Alajuela, 20113, Costa Rica (“ESTABLISHMENT”).  APOLLO and ESTABLISHMENT shall hereinafter be individually referred to as a “Party” and collectively as the “Parties.”
RECITALS
		
	A.
	APOLLO is engaged in the research and development, manufacture, distribution and marketing of certain medical devices.

		
	B.
	ESTABLISHMENT is engaged in the contract manufacturing and packaging of certain medical device products.

		
	C.
	APOLLO desires that ESTABLISHMENT be the manufacturer and supplier of the product(s) outlined on Exhibit A of this Agreement (“Product”) for APOLLO.

		
	D.
	APOLLO and ESTABLISHMENT desire to enter into this Agreement governing the supply of the Product upon the terms and conditions contained herein.

AGREEMENT
NOW THEREFORE, in consideration of the covenants contained herein, the above recitals, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:
		
	1.
	DEFINITIONS

1.1“Affiliates” of a Party shall mean any corporation or other business entity controlling, controlled by, or under common control with such Party.
1.2“Certificate of Conformance” or “COC” shall mean a document prepared by ESTABLISHMENT containing at a minimum: product name, Lot (defined below) number, lot quantity and a statement indicating compliance to all product specifications.  Each COC shall be signature approved by ESTABLISHMENT’s Quality Assurance department.
1.3“Control” (including “controlling”, “controlled by” and “under common control with” of any party, corporation, or other business entity) shall mean the direct or indirect ownership of at least fifty percent (50%) of the voting or income interest in such party, corporation, or other business entity, respectively.
1.4“Current Good Manufacturing Practices” (abbreviated “GMPs” or “cGMPs”) shall mean, a) for any period during the Term during which ESTABLISHMENT has 

received FDA certification, the standards established by the United States Food and Drug Administration (the “FDA”) for current Good Manufacturing Practices, as specified in FDA 21 C.F.R. §820 Quality Systems Regulations (or its successor provisions); and b) ISO 13485 Medical Devices - Quality Management Systems and other sections so designated by the title “Good Manufacturing Practices”; and c) as applicable to each respective Product to be manufactured and/or supplied by ESTABLISHMENT.
1.5“Effective Date” shall mean December 5, 2014.
1.6“Facilities” shall mean ESTABLISHMENT’s manufacturing facilities at Coyol Free Zone, B15, Alajuela, 20113, Costa Rica.
1.7“Lead Time” shall mean the time period that begins on the day ESTABLISHMENT receives a Purchase Order (defined below) for Product from APOLLO and ends on the day ESTABLISHMENT is required to deliver the Product to APOLLO.
1.8“Lot” shall mean a defined quantity of starting material, packaging material or product processed in one process or series of processes so that it could be expected to be homogeneous.
1.9“Product” shall mean the product(s) to be manufactured and supplied by ESTABLISHMENT to APOLLO under Purchase Order(s) issued under this Agreement and as more specifically detailed in Exhibit A attached hereto.
1.10“Purchase Order” shall mean a written purchase order issued to ESTABLISHMENT by APOLLO for the purchase of Product under this Agreement.
1.11“Span of Control” shall mean all operational activities that are necessary to occur at ESTABLISHMENT and component suppliers, if any, that are related to the procurement and manufacture of the Product.
1.12“Specifications” shall mean the Product specifications provided to ESTABLISHMENT by APOLLO.  The Specifications shall include all necessary test protocols, packaging and labeling specifications, bills of materials and other documentation required to describe, control, and assure the quality of the manufacture of the Product.
1.13“WIP” shall mean Work In Progress.
		
	2.
	TERM AND TERMINATION

2.1Term.  This Agreement shall commence on the Effective Date and shall be valid for a period of five (5) years with automatic renewal of one year thereafter until terminated by either party with one (1) year written notice prior to the expiration of the initial period or any extension period thereof.

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2.2Termination.
(a)Either Party may terminate this Agreement (i) for material breach upon one hundred and twenty (120) days written notice specifying the nature of the breach, if such breach has not been substantially cured within the one hundred twenty (120) day period, or (ii) if the other Party shall formally declare bankruptcy, insolvency, reorganization, liquidation, or receivership; or is named in an action for bankruptcy, insolvency, reorganization, liquidation, or receivership proceedings, and fails to remove itself from such proceedings within ten (90) days from the date of institution of such proceedings.
(b)In the event this Agreement is terminated for reasons other than material breach by ESTABLISHMENT, APOLLO shall pay ESTABLISHMENT for all work, material purchases, WIP and finished goods performed pursuant to any unfinished Purchase Order(s) prior to such termination in addition to reparation charges outlined on Exhibit A of this Agreement.
(c)In the event this Agreement is terminated for any reason, ESTABLISHMENT shall promptly cease performing any work not necessary for the orderly close out of the affected Purchase Order(s) or for the fulfillment of regulatory requirements.
(d)Within thirty (30) days following the termination of this Agreement, and upon receiving payment for any outstanding invoices for previously fulfilled Purchase Orders, ESTABLISHMENT shall deliver to APOLLO all data and materials provided by APOLLO to ESTABLISHMENT for the manufacturing and supply activities under the impacted Purchase Order(s).  Within this same timeframe APOLLO shall provide ESTABLISHMENT any reasonable compensation relative to work, materials, and WIP purchased specifically to support APOLLO’s Product.  Termination of this Agreement, for any reason, shall not release either Party from liability which at said time has already incurred, nor affect in any way the survival of any rights, duties or obligations of either Party which are expressly stated elsewhere in this Agreement to survive termination.  Without limiting the generality of the foregoing, the Parties agree that Sections 2.2 and Articles 6, 7, 8, 9, and 10 shall survive termination of this Agreement for any reason.
		
	3.
	MANUFACTURE AND SUPPLY OF PRODUCT

3.1Performance Standards.  ESTABLISHMENT shall manufacture the Product in accordance with the Specifications of this Agreement, and shall comply with all quality system requirement communicated by Apollo from time to time, ISO 13485:2012 and any applicable cGMPs and all other applicable local, United States or European regulations or laws in connection with the manufacture, testing, packaging, labeling, shipping, and handling of the Product.
(a)ESTABLISHMENT shall be responsible for normal and daily maintenance of all consigned equipment provided by APOLLO, as described in Exhibit C.  APOLLO will be responsible for all other repair and/or replacement costs relating to loaned or consigned equipment due to normal wear and use.  Unless otherwise agreed upon in writing, at 

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APOLLO’s sole discretion, this equipment will be insured by APOLLO while located in ESTABLISHMENT’s manufacturing plants.
3.2ESTABLISHMENT Representations.  ESTABLISHMENT makes the following representations to APOLLO:
(a)ESTABLISHMENT is duly organized, validly existing and in good standing under the laws of Costa Rica.  ESTABLISHMENT has all requisite power and authority to own, operate and lease its properties and to carry on its business as now conducted.  ESTABLISHMENT has full corporate power and authority to execute, deliver and perform this Agreement; all corporate actions of ESTABLISHMENT necessary for such execution, delivery and performance have been duly taken; and this Agreement is a valid and binding obligation of ESTABLISHMENT.
ESTABLISHMENT shall perform all manufacturing, storage, handling, and testing of the Product(s) at the Facilities.  ESTABLISHMENT warrants that the Facilities have been periodically inspected by its Notified Body’s representatives and auditors and/or any other required government agency and are in good standing with said governmental agencies, are fully compliant with ISO 13485:2012 and that all employees working on the Product whose responsibilities involve work which must be performed under ISO 13485:2012 standards have been properly trained in the requirements of those standards.  ESTABLISHMENT additionally warrants that the Facilities hold all necessary licenses and permits from applicable local, national, and European regulatory bodies, required for the manufacture and testing of the Product and that all such licenses and permits are in full force and effect.
(b)ESTABLISHMENT shall comply with all applicable export and import control laws and regulations.
3.3Suppliers.  Except as otherwise agreed upon in writing ESTABLISHMENT assumes the responsibility for interacting with all chemical, component and packaging suppliers as required to deliver the Product in accordance with the applicable Purchase Order, including the Specifications, and this Agreement.  Payment to the suppliers shall be handled directly by ESTABLISHMENT unless otherwise agreed upon in writing by APOLLO.  ESTABLISHMENT shall not change its raw material, component or packaging materials without the prior written consent of APOLLO, which consent shall not be unreasonably withheld.  With respect to the supply of the silicone raw materials for the shell and sheath product components, APOLLO shall acquire materials from a third party supplier and arrange for delivery to ESTABLISHMENT and ESTABLISHMENT shall be responsible for inspecting said components to ensure that they meet chemical, component and packaging specifications.
		
	4.
	PRICING AND PAYMENT; Fixtures and Tooling

4.1Product Prices.  Pricing for the Product ordered per the terms of this Agreement is set forth in Exhibit A attached hereto.  Any penalty for failure to purchase a designated quantity of product for a defined period, if any, shall be clearly described in Exhibit A 

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or in a written amendment.  Any future modification to pricing shall be mutually agreed upon and may be captured in a revised Exhibit A or a written amendment signed by both Parties.
4.2Payment Terms.  Unless otherwise agreed to by ESTABLISHMENT in writing, ESTABLISHMENT shall invoice APOLLO for Product ordered at the time of shipment and APOLLO shall pay each invoice within thirty (30) days from date of invoice.  Each invoice shall set forth, in U.S. Dollars, the applicable price for the shipment properly determined in accordance with the provisions of this Agreement.  If APOLLO disputes any portion of an invoice received from ESTABLISHMENT the Parties shall use good faith efforts to reconcile the disputed amounts as soon as practicable.  Invoices should be sent to the physical and email addresses as specified in writing by APOLLO in the applicable Purchase Order.
4.3Fixtures and Tooling.  In addition, Apollo will pay as set forth in Exhibit A for certain fixtures and tooling to be set forth in Exhibit C, and Apollo will maintain all right, title and interest in and to such fixtures and tooling.  During the Term, fixtures and tooling will be identified to Apollo and will be subject to the requirements for ESTABLISHMENT to maintain set forth as part of the Services in Exhibit A.  The parties will amend Exhibit C from time to time in writing to set forth an accurate list of such fixtures and tooling.  With respect to all tooling and fixtures purchased by Apollo in connection with the manufacture and supply of Product and provision of Services hereunder and listed on Exhibit C (which, in accordance with this Agreement, Apollo shall retain all right, title and interest in and to), for so long as ESTABLISHMENT maintains possession of such tooling and fixtures, Establishment will retain, maintain and use such fixtures and tooling in the ordinary course of business (normal wear and tear excepted) consistent with its handling of other tooling and fixtures and will use such tooling and fixtures only for manufacturing and supply of Product and provision of Services to APOLLO as provided in this Agreement.
		
	5.
	FORECASTS, PURCHASE ORDERS AND DELIVERY

5.1Forecasts.  APOLLO shall provide ESTABLISHMENT on a monthly basis a twelve (12) month rolling forecast to allow for visibility into expected future demands.  APOLLO shall deliver to ESTABLISHMENT a forecast for anticipated monthly deliveries of Product to APOLLO over the subsequent four (4) calendar quarters (the “Forecast”).  The Forecast is to be used by the Parties for planning purposes and is not a commitment by APOLLO to purchase the quantities of Products specified in such Forecast, except as described below.
The quantities of Product forecasted for the initial three (3) months of each updated rolling Forecast shall represent a binding obligation of Apollo to purchase from ESTABLISHMENT, and of ESTABLISHMENT to manufacture and supply to APOLLO, such quantities of Product.  ESTABLISHMENT shall, at all times during the Term, maintain an inventory of raw materials and components sufficient to manufacture the binding obligations.
5.2Orders.  APOLLO shall routinely provide ESTABLISHMENT Purchase Orders for Product demands.  All Product ordered by APOLLO shall be in the form of a firm written Purchase Order.  Each Purchase Order shall contain at a minimum, the following information: description of the Product and quantity ordered, price, freight carrier information, 

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payment terms, delivery date, and Purchase Order number for billing purposes.  The Parties shall cooperate to establish appropriate lead times for orders; requested delivery dates shall provide sufficient lead times for the products ordered.
5.3Delivery.  Unless expressly provided otherwise in the applicable Purchase Order, shipping to APOLLO for the Product shall be Ex Works - ESTABLISHMENT (Incoterms 2010).  The Product will be packaged and shipped per the Specifications and using a shipper and insurance coverage approved by APOLLO.  In the event that any delivery of the Product is anticipated to be late, ESTABLISHMENT will promptly notify APOLLO of the circumstances for the delay and, upon request, ESTABLISHMENT will take reasonable steps to minimize the delay.  At the request of APOLLO, ESTABLISHMENT will provide a written corrective action for the result of delays caused by events under the Span of Control of ESTABLISHMENT.
5.4Acceptance, Rejection, and Claims.  APOLLO may inspect any or all shipments of Product to insure all specifications are met including proper labeling, packaging and count within thirty (30) business days of APOLLO’s receipt of each shipment; however, any such inspection shall not relieve ESTABLISHMENT of any obligations or warranties under this Agreement.  APOLLO has the right to reject, via written notification to ESTABLISHMENT within this thirty (30) day period, any or all of a shipment of Product that fails to satisfy any warranty in this Agreement and may reject all of a given Lot of Product if a statistical sample does not meet the Specifications.  Upon confirmation of defective condition by ESTABLISHMENT and issuance of a return material authorization (“RMA”) number, APOLLO shall be entitled to the immediate return and replacement, free of charge, of any Product supplied by ESTABLISHMENT in breach of any warranty under this Agreement.
5.5Spoilage Due to Change or Obsolescence.  APOLLO shall be responsible for any printed packaging components, purchased raw materials, work in progress or finished Product which becomes obsolete as a result of a specification or drawing change so long as the purchased raw materials did not exceed three months of APOLLO’s forecast requirements and, upon Apollo’s request, such raw materials, work in progress and finished Product are transferred to APOLLO
		
	6.
	WARRANTIES

6.1Product Warranty.  ESTABLISHMENT warrants that all Product supplied under this Agreement shall, when it leaves ESTABLISHMENT’s possession and control, conform with the Specifications and shall be free from defects in materials and workmanship.  ESTABLISHMENT further warrants that the Product shall be manufactured in accordance with applicable ISO 13485:2012 standards and with all applicable laws and regulations.
6.2Debarment.  ESTABLISHMENT represents, warrants and covenants that no person or entity that will be involved in the performance of ESTABLISHMENT’s obligations under this Agreement is under investigation by the FDA or other Regulatory Authority for debarment or is presently debarred by the FDA or other Regulatory Authority.  In addition, ESTABLISHMENT represents and warrants that it has not engaged in any conduct or activity that could lead to any such debarment actions.  If during the Term, ESTABLISHMENT or any 

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person or entity that will be involved in the performance of ESTABLISHMENT’s obligations under this Agreement (i) comes under investigation by the FDA for a debarment action, (ii) is debarred, or (iii) engages in any conduct or activity that could lead to debarment, ESTABLISHMENT shall notify APOLLO immediately after gaining knowledge of the situation.
6.3Intellectual Property.  ESTABLISHMENT represents, warrants and covenants to APOLLO that ESTABLISHMENT will not, in the course of performing obligations hereunder, infringe or misappropriate any intellectual property of any other person.  APOLLO represents, warrants and covenants to ESTABLISHMENT that by complying with its obligations under this agreement APOLLO will not knowingly direct ESTABLISHMENT to incur any violation, infraction or misappropriation of any intellectual property of any other party.
6.4Training.  ESTABLISHMENT represents, warrants and covenants to APOLLO that all of its employees and personnel that will be performing any work in connection with this Agreement will have the appropriate training and skill necessary to perform their job functions.
6.5No Conflicts.  ESTABLISHMENT represents, warrants and covenants that it shall not enter into any agreement or arrangement with any other entity that would prevent or in any way negatively interfere with ESTABLISHMENT’s ability to perform it obligations hereunder.
		
	7.
	REGULATORY AND QUALITY

7.1Compliance.  ESTABLISHMENT agrees that its work under this Agreement will be conducted in compliance with all applicable laws, rules and regulations, and with the standard of care customary in the industry.  If requested by APOLLO, ESTABLISHMENT shall provide APOLLO with a certificate evidencing its accreditation by the appropriate accrediting body.  Such accreditation shall remain in force during the term of this Agreement.  ESTABLISHMENT agrees that all Product shipments to APOLLO shall be in accordance with APOLLO’s instructions governing the shipment, labeling, and packaging of the Product.
7.2Quality Control.  Establishment shall maintain and follow a quality control and testing program consistent with the Product Specifications, ISO 13485:2012, Applicable Laws and quality system requirements communicated in writing by APOLLO from time to time (the “Quality Control Procedures”).  All Product supplied to APOLLO hereunder shall be manufactured in compliance with ISO 13485:2012 and all other applicable requirements of Regulatory Authorities, and in compliance with all other Applicable Laws (collectively, “Regulatory Standards”).  At all times the Products shall be manufactured in an ISO Class 7 Clean Room, unless otherwise set forth in an amendment to this Agreement or the Exhibits hereto signed by both Parties.
7.3Records.  Establishment shall keep complete, accurate and authentic accounts, notes, data and records pertaining to the manufacture, processing, testing, storage, and distribution of the Product, including without limitation master production and control records, in 

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material compliance with applicable Regulatory Standards.  Establishment shall use commercially reasonable efforts to maintain and store such records in a manner to prevent loss, theft or deterioration.  Establishment shall retain such records for five (5) years following the date of manufacture, or such longer period of time if consistent with Regulatory Standards, and shall make available to Apollo copies of such records; and upon the expiration of such period, Establishment shall contact Apollo and give Apollo the option to have such quality control documentation transferred to Apollo or destroyed.  Unless this Agreement is terminated by Apollo due to a Triggering Event, in which case APOLLO shall bear the following costs: (i) ESTABLISHMENT may charge APOLLO for ESTABLISHMENT actual, documented, reasonable labor expenses incurred by ESTABLISHMENT for transfer or destruction of such documents and (ii) in the event of transfer of documents all freight costs shall be borne by APOLLO.
7.4Product Complaints/Reports.  The parties expect that APOLLO shall receive any complaint, claim or adverse reaction report regarding the Product.  However (and except as otherwise noted below) in the event that ESTABLISHMENT receives any complaint, claim or adverse reaction report regarding any Product, including, but not limited to, notices from a competent Regulatory Authority regarding any regulatory non-compliance of a Product, upon notice, ESTABLISHMENT shall within a reasonable time frame provide APOLLO with all information related to such complaint, report, or notice and such additional information regarding the Product as may be reasonably requested.  ESTABLISHMENT shall provide as much information as it has, to allow APOLLO comply with the competent Regulatory Authority requirements for complaint handling.  If Product contains a defect which could or did cause death or serious bodily injury, ESTABLISHMENT shall immediately provide APOLLO with a complete description of all relevant details known to ESTABLISHMENT concerning any such incident, including but not limited to, a description of any defect and such other information which may be necessary to report to the competent Regulatory Authority or any Ministry of Health.  APOLLO is responsible for filing any/all MDR Reports as required by the competent Regulatory Authority.
7.5Recalls.  APOLLO shall have the right to reasonably declare any recall of, or field corrective action to, any Product supplied to APOLLO under this Agreement.  ESTABLISHMENT agrees to cooperate with APOLLO in connection with any such recall inasmuch as related to its concern in the Product.
7.6Government Inquiries.  Without limiting the generality of Section 7.2, ESTABLISHMENT shall use its best efforts to:
(a)Respond fully and accurately to all inquiries directed to it by the competent Regulatory Authority or any government agency or regulatory body with respect to the manufacture and testing of the Product.
(b)Assist APOLLO in responding to inquiries directed to APOLLO by any competent Regulatory Authority or any government agency or regulatory body with respect to the manufacture and testing of the Product.

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7.7Inspection of Manufacturing Facilities.
(a)ESTABLISHMENT shall permit APOLLO and its agents, during business hours and upon notice to ESTABLISHMENT, to inspect the Facilities where the Product is manufactured, handled, stored or tested, as well as all processes relating to the manufacture, handling, storage, or testing of the Product, as well as all test records regarding the Product.
7.8ESTABLISHMENT warrants and agrees that it will correct within a reasonable amount of time from the date of notification, all deficiencies and/or non-conformances found during an APOLLO or any competent Regulatory Authority (regulatory body or agency) audit; and that it will take reasonable steps to correct such deficiencies and/or non-conformances or issue an approved plan, including a timetable, to correct all deficiencies and/or non-conformances within a reasonable time period.
7.9Control Testing.  ESTABLISHMENT shall perform quality control testing in accordance with the Specifications for release of each Lot of Product to APOLLO.  Quality control testing shall include testing associated with the production of the Product, including, but not limited to, incoming component and raw material testing, in process testing, and final release testing as agreed upon from time to time between APOLLO and ESTABLISHMENT.
7.10Specifications and Change Control.
(a)The Specifications may not be changed without prior written approval by APOLLO.
(b)ESTABLISHMENT shall not make any changes to the manufacturing process, Facilities, or equipment used in the manufacture that affects the form, fit or function of the Product without APOLLO’s prior written approval.
(c)APOLLO shall use commercially reasonable efforts to provide ESTABLISHMENT with sufficient written notice of any instructions or requirements of a government regulatory agency that may require a change of the Specifications.  ESTABLISHMENT shall immediately notify APOLLO if any such changes in the Specifications shall render ESTABLISHMENT unable to supply the Product in accordance with the terms and conditions of this Agreement or if they would cause a delay in supply of the Product.
7.11Technical Assistance.  ESTABLISHMENT shall provide APOLLO with certain technical support regarding the Product as reasonably requested by APOLLO, including, but not limited to, analytical test methods, manufacturing process development, and validation support.  If there are charges associated with these services, a separate quote will be provided to APOLLO.
7.12Quality Agreement.  ESTABLISHMENT and APOLLO shall execute a written Quality Agreement between the Parties (the “Regulatory Agreement”).  Upon execution, the Quality Agreement shall be attached hereto as Exhibit B and shall be incorporated 

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herein.  The Quality Agreement may be updated from time to time upon the mutual written agreement of the Parties.  ESTABLISHMENTs agrees to comply with any reasonable requirements of APOLLO’s quality system.
		
	8.
	INDEMNIFICATION, LIMITATION OF LIABILITY AND INSURANCE

8.1Indemnification by APOLLO.  APOLLO agrees to indemnify, defend and hold harmless ESTABLISHMENT, its officers, agents, and employees from any and all liability, loss (including reasonable attorneys’ fees) or damage they may suffer as the result of claims, demands, costs or judgments against them arising out of the negligence, recklessness or willful misconduct on the part of APOLLO, its officers, agents, employees, contractors or consultants in connection with this Agreement.
8.2Indemnification by ESTABLISHMENT.  ESTABLISHMENT agrees to indemnify, defend and hold harmless APOLLO, its officers, agents, and employees from any and all liability, loss (including reasonable attorneys’ fees), or damage they may suffer as the result of claims, demands, costs or judgments against them arising out of:
(a)a failure by ESTABLISHMENT, its officers, agents, employees, contractors or consultants to adhere to the terms of a Purchase Order or written instructions received from APOLLO in accordance with this agreement;
(b)negligence, recklessness or willful misconduct on the part of ESTABLISHMENT, its officers, agents, employees, contractors or consultants; or
(c)a breach of any applicable local law or regulation or of this Agreement by ESTABLISHMENT, its officers, agents, employees, contractors or consultants in relation to the execution of this agreement.
8.3General Conditions of Indemnification.  Each Party’s agreement to indemnify, defend and hold the other harmless is conditioned on the indemnified Party (i) providing written notice to the indemnifying Party of any claim, demand or action arising out of the indemnified activities within thirty (30) days after the indemnified Party has knowledge of such claim, demand or action; (ii) permitting the indemnifying Party to assume full responsibility to investigate, prepare for and defend against any such claim or demand; (iii) assisting the indemnifying Party, at the indemnifying Party’s reasonable expense, in the investigation of, preparation for and defense of any such claim or demand; and (iv) not compromising or settling such claim or demand without the indemnifying Party’s written consent; provided, however, that the failure of the indemnified Party to undertake any of the foregoing actions shall not relieve the indemnifying Party of any obligation it may have under this Article 8, except to the extent that the indemnifying Party’s ability to fulfill such obligation has been materially prejudiced thereby.
8.4Limitation of Liability.  EXCEPT FOR BREACHES OR VIOLATIONS OF ARTICLE 9, OR INDEMNITY LIABILITIES ARISING UNDER THIS ARTICLE 8, OR CASES OF GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY CONSEQUENTIAL, INDIRECT, 

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SPECIAL, INCIDENTAL OR PUNITIVE DAMAGES INCLUDING LOSS OF USE, REVENUES OR PROFITS, INTERRUPTION OF BUSINESS OR CLAIMS AGAINST EITHER PARTY OR ITS CUSTOMERS BY ANY THIRD PARTY, WHETHER SUCH CLAIM IS BASED IN CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY OR OTHERWISE, EVEN IF THE PARTY IS ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
8.5Insurance.  ESTABLISHMENT, at its sole cost and expense, will maintain appropriate insurance including, but not limited to, Commercial General Liability Insurance with premises, operations coverage including Person Injury/Property Damage coverage, with limits of not less than $1,000,000 per occurrence.  As of January 1, 2015, such insurance shall also have annual aggregate limits not less than $2,000,000.  Evidence of insurance indicating such coverage will be delivered to APOLLO upon request.  The evidence will (a) indicate that the policy will not change or terminate without at least fifteen (15) days prior written notice to APOLLO, (b) APOLLO shall be listed as an additional insured on the commercial general liability policy.
		
	9.
	CONFIDENTIALITY

9.1Confidential Information.  For purposes of this Agreement, “Confidential Information” shall mean all information relating to the subject matter of this Agreement (i) identified in written or oral format by the disclosing Party as confidential, trade secret or proprietary information and, if disclosed orally, summarized in written format within thirty (30) days of disclosure, or (ii) the receiving Party knows or has reason to know is confidential, trade secret or proprietary information of the disclosing Party.  Notwithstanding the foregoing, “Confidential Information” shall not include any information which the receiving Party can show: (i) is now or subsequently becomes legally and publicly available without breach of this Agreement by the receiving Party, (ii) was rightfully in the possession of the receiving Party without any obligation of confidentiality prior to receiving it from the disclosing Party, (iii) was rightfully obtained by the receiving Party from a source other than the disclosing Party without any obligation of confidentiality, or (iv) was developed by or for the receiving Party independently and without reference to such information as shown by documentary evidence.
9.2Nondisclosure.  Each Party agrees not to use the Confidential Information of the other Party for any purpose, including trading in the financial instruments of the other Party, except in its performance under this Agreement.  In addition, the receiving Party shall treat and protect such Confidential Information in the same manner as it treats its own information of like character, but with not less than reasonable care.  The receiving Party agrees to take appropriate measures by instruction and/or written agreement prior to disclosure of Confidential Information to its employees and contractors to prevent unauthorized use or disclosure.  Confidential Information may be disclosed to the extent necessary to comply with an order of an administrative agency or court of competent jurisdiction provided, however, that the Party so required to disclose Confidential Information shall provide prior written notice thereof to the other Party in sufficient time to enable that Party to seek a protective order or otherwise prevent such disclosure.  The receiving Party’s confidentiality obligations under this Article 9 shall 

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survive the termination of this Agreement, and shall remain binding on the Parties hereto until the earlier of a) the Confidential Information falls within one of the exceptions stated in Section 9.1 and b) five (5) years from the expiration or termination of the Agreement.  Previously executed non-disclosure agreements between the Parties will remain in effect in conjunction with The Agreement until the termination dates specified in those agreements and any Confidential Information shall also be considered to be Confidential Information hereunder.  Disclosure of Confidential Information under this Agreement will create no license, right, interest, or ownership in any such information in a receiving Party.
		
	10.
	GENERAL PROVISIONS

10.1Relationship Between the Parties.  In fulfilling its obligations pursuant to this Agreement, each Party shall be acting as an independent contractor.  Neither Party is granted any right or authority to assume or to create any obligation or responsibility, express or implied, on behalf of or in the name of the other Party.
10.2Nonexclusivity.  Nothing in this Agreement shall limit or restrict Apollo from establishing a second source for the manufacture of the Products.
10.3No Third Party Beneficiaries.  This Agreement is neither expressly nor impliedly made for the benefit of any party other than those executing it.
10.4Severability.  If, for any reason, any part of this Agreement or any Purchase Order is adjudicated invalid, unenforceable or illegal by a court of competent jurisdiction, such provision will be changed and interpreted to accomplish the objectives of such provision to the greatest extent possible under applicable law and the remaining provisions of this Agreement or Purchase Order (as the case may be) will continue in full force and effect.
10.5Notices.  Any notice to be given under this Agreement must be in writing and delivered either in person, by any method of mail (postage prepaid) requiring return receipt, or by overnight courier, to the Party to be notified at its address(es) given below, or at any address such Party has previously designated by prior written notice to the other.  Notice shall be presumptively deemed to be sufficiently given for all purposes upon the earlier of: (a) the date of actual receipt; (b) if mailed, three (3) calendar days after the date of postmark; or (c) if delivered by overnight courier, the next business day the overnight courier regularly makes deliveries.
If to ESTABLISHMENT:
Establishment Labs S.A.
Coyol Free Zone, B15, Alajuela
20113, Costa Rica
Attention: Luis Gutierrez. General Counsel
If to APOLLO:
Apollo Endosurgery, Inc.
1120 S. Capital of Texas Hwy, Suite 300
Austin, TX 78746

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Attn: Brian Szymczak, Legal Dept.
10.6Force Majeure.  Each Party shall be excused from liability for the failure or delay in performance of any obligation under this Agreement by reason of any event beyond such Party’s reasonable control, including, but not limited to, Acts of God, other natural forces or war.  Such excuse from liability shall be effective only to the extent and duration of the event(s) causing the failure or delay in performance and provided that the Party seeking relief has not caused such event(s) to occur.  Notice of a Party’s failure or delay in performance due to force majeure must be given to the other Party within three (3) calendar days after its occurrence.  All delivery dates under this Agreement that have been affected by force majeure shall be tolled for the duration of such force majeure.
10.7Legal Fees.  The prevailing Party in any litigation between the Parties relating to this Agreement may be awarded some or all of its reasonable attorneys’ fees and court costs if the Court (in its reasonable discretion) finds that a non-prevailing party has not acted in good faith in the pursuit or defense of a claim hereunder, in addition to any other relief that it may be awarded.
10.8Governing Law and Venue.  Notwithstanding its place of execution or performance, this Agreement shall be governed by and construed in accordance with the laws of the State of Texas, irrespective of its laws regarding choice or conflict of laws.  Any dispute arising under or relating to this Agreement shall be submitted for resolution to a state or federal court of competent jurisdiction in Austin, Texas, and the Parties hereby agree to submit to the jurisdiction and venue of such court.
10.9Assignment.  This Agreement is binding upon and inures to the benefit of the Parties to it, and to their successors and assigns.  Neither Party shall have the right to assign this Agreement or any of its rights or obligations hereunder without the prior written consent of the other Party; provided, however, APOLLO may assign the Agreement to and may, without the prior consent of ESTABLISHMENT, assign all of its rights under this Agreement to (i) a parent or subsidiary of Apollo, (ii) a purchaser of all or substantially all the Apollo assets related to this Agreement, or (iii) a third party acquiring control of Apollo through a merger, acquisition, sale of assets or other corporate reorganization.

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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the Effective Date.
	
					
	ESTABLISHMENT LABS, SA
	 
	Apollo Endosurgery, Inc.

	By:
	/s/ Juan Jose Chacon
	 
	By:
	/s/ Todd Newton

	Name:
	Juan Jose Chacon
	 
	Name:
	Todd Newton

	Title:
	CEO
	 
	Title:
	CEO

EXHIBIT A
Product & Price Listing
[Intentionally Omitted]

Exhibit B
Regulatory Agreement
Establishment Labs
Apollo BIB Balloon and Sheath Testing & Inspection Proposal
		
	1.
	Manufacturing facility capabilities:

		
	•
	ISO Class 7 (ISO 14644-1:1999) - Certified clean room.

		
	•
	ISO 13485:2003 and ISO 9001:2008 Certified facility.

		
	•
	RDC#16:2013 Brazilian GMPs Approved facility.

		
	•
	SAP inventory levels remote consultation interface.  Optional.

		
	2.
	Certificate of raw material conformance as per specification for all supplier lots of silicone dispersions, valve ring, slit valve and silicone adhesive:

		
	•
	Incoming inspection testing, as applicable:

		
	◦
	Appearance, viscosity, Shore A durometer value, tear strength, refractive index, supplier certificate review, tack free time, tensile strength, and elongation.

		
	◦
	Verification of Slit Valve functionality at incoming receiving.

		
	•
	Pre-process testing and statistical analysis report to comply with mechanical properties of the shell:

		
	◦
	Shell thickness lot analysis.

		
	◦
	Shell elongation and break force.

		
	◦
	Tensile set.

		
	◦
	Lot viscosity and devol time process parameters definition.

		
	3.
	Certificate of product conformance per lot, including:

		
	•
	Reference to Apollo/EL specifications drawing or Material Standard Specification.

		
	•
	EL Product Lot Number.

		
	•
	QTY description per lot.

		
	•
	Product Part Number and Description.

		
	•
	Raw Materials description with related documents including:

		
	◦
	Part number and supplier lot number.

		
	◦
	Supplier product certificates.

		
	•
	In process product testing controls, including:

		
	◦
	100% shell and Sheath thickness report.

		
	◦
	100% shell and Sheath visual inspection.

		
	◦
	100% assembly visual inspection.

		
	◦
	Sampling testing for shell elongation and break force.

		
	◦
	Sampling testing for patch-joint.

		
	◦
	Sampling testing tensile strength.

		
	◦
	100% leak test inspection of the balloon assembly.

		
	•
	DHR Review and QA approvals.

		
	•
	Other as required.

		
	4.
	Process engineering:

		
	•
	Manufacturing procedures engineering change orders managing and execution.

		
	•
	Process parameters improvement and DMR’s updating, if applicable.

		
	•
	Process data analysis.

		
	•
	Process Control Plans that identify Procedures, tooling, critical process controls, inspection requirements, inspection frequency, and inspection equipment.

		
	5.
	Digital back-up at Establishment Labs in accordance with Quality Standards of:

		
	•
	Raw material incoming inspection reports.

		
	•
	Pre-process testing reports.

		
	•
	DHRs for every lot number.

		
	•
	Lot processing parameters.

		
	•
	Clean room monitoring.

		
	•
	Equipment maintenance and calibration records.

		
	•
	Tensile tester testing raw data.

		
	6.
	Validations:

		
	•
	All processes that cannot be verified need to be validated.

		
	7.
	Quality System:

		
	•
	Must be updated to allow business as a contract manufacturer.

		
	•
	For Apollo product, updates should include but not limited to: customer related processes, customer audits, feedback, monitoring and measurement of product, management review, and analysis of non-conforming product.

Exhibit C
Fixtures and ToolingExhibit

Exhibit 10.20

ESTABLISHMENT LABS S.A.
AND
THE HOSPITAL GROUP

SUPPLY AGREEMENT

Supply Agreement
The following Supply Agreement is entered  
BY AND BETWEEN :
ESTABLISHMENT LABS S.A., a corporation organized under the laws of Costa Rica, having its registered office located in Zona Franca Coyol, Costa Rica, with company ID number 3-101-366337, (Hereinafter referred to as “ESTABLISHMENT”)
Represented by Juan Jose Chacan Quiros, CEO;
AND
THE PURCHASER, as defined in the previous Data Sheet
Hereinafter individually or collectively referred to as the “Parties”.
WITNESSETH
1.    WHEREAS ESTABLISHMENT has developed and manufactures a range of mammary implants and related products under the trademark MOTIVA IMPLANT MATRIX®.
2.    WHEREAS THE PURCHASER is willing to purchase MOTIVA IMPLANT MATRIX® products brand to be used in its facilities (as defined below – see article 1.15), all on the terms and under the conditions set forth below.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
ARTICLE I - DEFINITIONS
As used in this Agreement, the singular shall include the plural and the plural shall include the singular, wherever so required by fact or context.  Titles used in the articles hereof shall be only for the sake of convenience and shall not be regarded as a part of this Agreement.  Exhibit means any exhibit to this Agreement, each of them being made an integral part hereof.  As used in and for the sole purpose of this Agreement, and unless otherwise provided, the following terms shall have the meaning set forth below:
1.1    “Affiliate” shall mean any corporation or other business entity controlled by, controlling or under common control with a Party to this Agreement.  For this purpose “control” shall mean (i) direct or indirect beneficial ownership of fifty percent (50%) or more of the voting stock, or (ii) a fifty percent (50%) or more interest in the income of such corporation or other business entity or (iii) direct or indirect power to direct or cause the direction of the management and policies by any means whatsoever.
1.2    “Agreement” shall mean the present purchase agreement.
1.3    “Calendar Year” means each twelve-month period starting on 1 January and ending 31 December.

1.4    “Commercial Year” shall mean each twelve (12) months’ period starting on the date of this agreement and ending on its anniversary.
1.5    “Effective Date” shall mean the date of signature of the Agreement.
1.6    “Minimum Net Purchases” shall mean the minimum Net Purchases (as hereinafter defined) EXW value (EDC) of Products as per ICC Incoterms (2000 Edition) that THE PURCHASER commits to attain each Commercial Year with ESTABLISHMENT, as indicated in Article 9 hereof.
1.7    “Net Purchases” shall mean the actual selling prices charged by ESTABLISHMENT to THE PURCHASER in bona fide, as per invoices covering the sales less all rebates, returns, trade and cash discounts and all taxes.
1.8    “Product(s)” shall collectively mean the MOTIVA IMPLANT MATRIX® range of breast implants and related products, conceived, developed and marketed by ESTABLISHMENT listed in EXHIBIT I (A).  This shall also include any new MOTIVA IMPLANT MATRIX® product(s) that ESTABLISHMENT will decide to launch in the Territory;
1.9    “Product(s) Price(s)” shall mean the EXW EDC (Incoterms 2000) prices of Products, supplied by ESTABLISHMENT to THE PURCHASER, as determined from time to time in accordance with article 11.2 herein.
1.10    “Physicians” shall mean exclusively the physicians working in the PURCHASER’s facilities.
1.11    “Quality Agreement” means the document relating to the medical devices of the brand MOTIVA IMPLANT MATRIX® set out in EXHIBIT IV hereto.
1.12    “Third Party” means any party other than THE PURCHASER, ESTABLISHMENT or their respective Affiliates.
ARTICLE 2 – SUBJECT MATTER OF THE AGREEMENT
2.1    ESTABLISHMENT hereby grants THE PURCHASER which in turn accepts, the right to import, store into its warehouse sites located in the addresses indicated in the Data Sheet, promote, and employ the Products under the Trademarks through the Physicians in its facilities.
2.2    Subject to prior agreement between the Parties, with respect to specific commercial terms (such as Minimum Net Purchases, invoices and prices), this Agreement may be extended by an amendment to cover any new MOTIVA IMPLANT MATRIX® product launched by ESTABLISHMENT.
2.3    In consideration of the rights hereby granted, THE PURCHASER agrees to perform and be responsible for all operations of import, returns, traceability, and in general all operations relating to maintaining availability and the offering of the Products to the Physicians 

-2-

working at its facilities, in accordance with the terms and conditions of this Agreement and all medical rules and laws which may apply.
2.4    ESTABLISHMENT undertakes to meet THE PURCHASER’s requirements for the Products and to sell the Products to THE PURCHASER at the prices hereto agreed.
2.5    ESTABLISHMENT shall be entitled to:
2.5.1    Invoice THE PURCHASER upon shipment of the Products.
2.5.2    At any time and at its discretion, without the consent of THE PURCHASER, to make any change or introduce any modification, new presentation, enhancement or improvement to any of the Products; and/or introduce new additional or replacement Products; and such alteration in the products shall become Products for the purposes of this Agreement;
2.5.3    Whether or not requested by THE PURCHASER, at its sole discretion assist THE PURCHASER in promoting the sales of the Products.
2.6    THE PURCHASER undertakes and agrees with ESTABLISHMENT at all times during the term of this Agreement:
2.6.1    to pay in full and in Pounds (GBP) each invoice issued by ESTABLISHMENT within the term granted as indicated in the Data Sheet from the date of the invoice thereafter.
2.6.2    to use its best endeavors to promote the use of the Products by its patients and Physicians and any line extensions or new products within the range to ESTABLISHMENT’S satisfaction.
2.6.3    to employ or engage a sufficient number of suitably qualified personnel to ensure the proper fulfillment of THE PURCHASER’s obligations under this Agreement;
2.6.4    to maintain an inventory of the Products at levels which are appropriate and adequate to meet the demand;
2.6.5    to keep all stocks of the Products which it holds in conditions appropriate for their storage and to provide security for the Products all at its own cost and according to this Agreement;
2.6.6    to inform ESTABLISHMENT immediately of any change in its organization or method of doing business which may affect the performance of THE PURCHASER’s duties in this Agreement;
2.6.7    not to use or make reference to or authorize others to use or make reference to, ESTABLISHMENT’s name, emblems or symbols in relation to the Products in any 

-3-

manner whatsoever, save where approved by ESTABLISHMENT in the case of packaging requirements;
2.6.8    to fully and effectively indemnify ESTABLISHMENT for each breach by THE PURCHASER of any of the provision of this Agreement.
ARTICLE 3 –TERM
3.1    This Agreement will become effective as of the Effective Date and unless otherwise prematurely terminated as provided herein, shall remain in full force and effect for a term of three (3) Commercial Years, i.e. until the Final Date indicated in the Data Sheet.
3.2    Thereafter, unless otherwise terminated by any Party giving the other six (6) months’ prior notice before any expiry, this Agreement will be renewed for successive periods of three (3) Commercial Years.
ARTICLE 4 –TRADEMARKS
4.1    The Products will be exclusively marketed under the Trademarks.  In addition, all packaging and documents will bear ESTABLISHMENT logo.
4.2    THE PURCHASER acknowledges the exclusive right, title and interest of ESTABLISHMENT or its Affiliate(s) in and to the Trademarks and to ESTABLISHMENT logo and will not do or cause to be done any act or thing contesting or, in any way, impairing or tending to impair any part of said right, title and interest, for the duration of this Agreement and after its expiry.
Furthermore, THE PURCHASER agrees not to register or acquire domain names which they know are identical or confusingly similar to the Trademark and/or the Logo or which include all or part of said Trademark and/or Logo for the duration of the Agreement and after its expiry.
4.3    THE PURCHASER shall notify ESTABLISHMENT promptly of any infringement of the Trademarks and ESTABLISHMENT logo and of any unfair competition coming to its attention.  THE PURCHASER will not take any action either amicable or legal, and will let ESTABLISHMENT take any action suitable in its judgment providing that, at ESTABLISHMENT’s request, THE PURCHASER shall collaborate in said amicable or legal action taken by ESTABLISHMENT or its representative.
ARTICLE 5 –COMMERCIAL AND MARKETING POLICY
5.1    During the last semester of each Commercial Year, ESTABLISHMENT and THE PURCHASER will meet at mutually convenient time and place in order to define jointly the commercial and marketing and merchandising policy to be applied for the next Commercial Year, said policy shall take into consideration ESTABLISHMENT’s international strategy for such Products including ESTABLISHMENT’s international merchandising introduction strategy.

-4-

5.2    THE PURCHASER agrees to employ the Products only through its clinics and qualified Physicians.
ARTICLE 6 –SALES PROMOTION AND ADVERTISING
6.1    As described hereinafter, every Commercial Year, THE PURCHASER will devote thereto an overall Budget as previously informed to ESTABLISHMENT for each Commercial Year.
6.2    The policy regarding media advertising and sales promotion will be mutually agreed each Commercial Year.
Regarding the merchandising policy, Products introduction should be performed by THE PURCHASER in accordance with ESTABLISHMENT’s merchandising recommendations as approved in the marketing plan.
6.3    In order to inform THE PURCHASER, ESTABLISHMENT may provide THE PURCHASER with samples of advertising material used in other territories.  THE PURCHASER undertakes not to create and use any promotion material in whatever form and aid (such as internet) without ESTABLISHMENT’s prior written consent.
ARTICLE 7 –MINIMUM NET PURCHASES, SHIPMENTS AND PRICES
7.1    For the duration of this Agreement, THE PURCHASER agrees to achieve each Commercial Year the Minimum Net Purchases as indicated in the Data Sheet.  The Minimum Net Purchases indicated for each year shall be divided by four to control progress during each quarter.
7.2    In case of non compliance during any Commercial Year, or during any quarter of such year, with any of the Minimum Net Purchases figures as indicated above, ESTABLISHMENT may increase or stop offering the special prices contained in the Agreement, and begin using the regular list prices for Europe for the Products, as indicated in 12.6 below.
7.3    In any Commercial Year of this Agreement, to the extent that THE PURCHASER’s non-compliance with the Minimum Net Purchases figures referred to above is due to ESTABLISHMENT’s failure to supply THE PURCHASER with Products on time and in full, such lost sales shall be included in any event in the calculation of the Minimum Net Purchases to be achieved in that Commercial Year by THE PURCHASER.
For the purposes of clarification, ESTABLISHMENT shall be entitled to deliver to PURCHASER plus or minus twenty per cent (20%) of all quantities of Products ordered by THE PURCHASER and account shall be taken of this fact in determining if ESTABLISHMENT has supplied THE PURCHASER with Product on time and in full in any given Commercial Year.

-5-

ARTICLE 8 –PRICES AND SHIPMENTS
8.1    For the term of this Agreement, ESTABLISHMENT agrees to have THE PURCHASER supplied with, and THE PURCHASER agrees to buy from ESTABLISHMENT most of its requirements of the Products.
8.2    
8.2.1    The Products will be supplied by ESTABLISHMENT, EXW EDC as per ICC Incoterms (2000 Edition) at the prices as indicated in EXHIBIT I hereto.
8.2.2    The Products Prices shall be maintained during the year of the Execution Date of this Agreement.  Thereafter, said Products Prices shall be revised once every calendar year after mutual consultation, with variations being effective every January 1st.
Market conditions, prices of the raw material as well as volume of business between the Parties shall be taken into account in establishing the Products Prices.  Should on November 30th at the latest no agreement be reached between the Parties hereto with respect to the level of said price increase, the prices of the Products will be increased only up to five per cent (5%).
8.2.3    Once the Products are delivered, THE PURCHASER undertakes to store them in its warehouses located as indicated in the Data Sheet, which warehouses complies with the storage conditions of the Products as described in the Exhibits.
8.3    
8.3.1    Each invoice will be sent by ESTABLISHMENT to THE PURCHASER and will be paid by THE PURCHASER by bank transfer in Pounds within the term indicated in the Data Sheet from the date of the invoice, with a credit limit as indicated in the Data Sheet (hereinafter referred to as the “Authorized Facility”) unless otherwise agreed to in writing by the parties.
THE PURCHASER acknowledges and agrees that, during the term of the Agreement, the amount of the Authorized Facility, or the term granted for such credit, could be modified by ESTABLISHMENT, depending on the PURCHASER’s payment record or current market conditions.
8.3.2    In the event that THE PURCHASER desires to place an order of Products for an amount exceeding the Authorized Facility, THE PURCHASER shall obtain ESTABLISHMENT’s prior consent.  In case of refusal, THE PURCHASER shall secure said new order providing ESTABLISHMENT with:
		
	-
	either a guaranty or bond in a form acceptable to ESTABLISHMENT, said guaranty to be maintained until the order concerned is fully paid;

-6-

		
	-
	or a bank guarantee or letter of credit opened by a local first class bank confirmed by a first class bank acceptable to ESTABLISHMENT, said guaranty to be maintained until the order concerned is fully paid;

		
	-
	or prepayment of the order or the excess

8.4    
8.4.1    Within ten (10) days from date of receipt, THE PURCHASER shall conduct a visual inspection of the Products delivered by ESTABLISHMENT for damage, defects or shortage.  After such ten (10) days, if no notice to ESTABLISHMENT is made regarding damages, defects or shortage, the Products will be considered accepted by THE PURCHASER, provided however that in the event of latent defects of the Product not reasonably detected in connection with the visual inspection, THE PURCHASER shall notify ESTABLISHMENT promptly in writing upon detection thereof.
8.4.2    In the case where the inspection performed by THE PURCHASER indicates that the Products are damaged, defective or short in quantity, THE PURCHASER shall, at the time of notifying such non-conformity, provide ESTABLISHMENT, where relevant, with a sample of the damaged or defective Product.
8.4.3    Should ESTABLISHMENT agree with such results, and given that the damages are not the responsibility of the carrier, ESTABLISHMENT shall replace damaged or defective Products or make up shortfalls in the quantity of Products at the earliest possible time.
For the purpose of this clause 8.4.3, ESTABLISHMENT’s liability for delivering Products found to be damaged, defective or short of quantity shall be limited to replacement of the said Products, and only when there is no liability from the carrier and it is not covered by the fright insurance.
Notwithstanding the above, ESTABLISHMENT shall not be liable to replace damaged or defective Product unless such damage or defect in the Product is directly attributable to ESTABLISHMENT (therefore excluding cases such as damage during principal transportation, delays in customs clearing, bad storage conditions in THE PURCHASER warehouse(s) or any other cause beyond the control of ESTABLISHMENT).  ESTABLISHMENT’s liability for damages occurred in transit shall be limited as per the EXW EDC, Incoterms 2000.
8.4.4    In the event that ESTABLISHMENT should not agree with THE PURCHASER that the Product is defective or that ESTABLISHMENT is responsible for the damage, the issue shall be submitted to an independent Third Party designated by mutual agreement whose decision shall be final.  The costs arising from the intervention of the independent Third Party shall be borne by the Party in the wrong.
8.5    THE PURCHASER shall maintain at all times an inventory as needed to supply its doctors and related to the projected net purchases.

-7-

8.6    THE PURCHASER undertakes to handle and store the Products manufactured in accordance with Good Manufacturing Practice (“GMP”) and according storage conditions, described in the exhibits.
8.7    In the event that any Product delivered to THE PURCHASER does not comply with ESTABLISHMENT’s warranty as set forth herein, ESTABLISHMENT hereby undertakes to replace such non-complying Product at its sole expense.
8.8    THE PURCHASER undertakes to distribute and employ the Products in conformity with the “FEFO - First Expiry - First Out” principle.  THE PURCHASER agrees to be sole responsible of obsolete Products.  ESTABLISHMENT will never ship, as part of the Products, medical devices with an expiry date less than twelve (12) months away from the shipping date.
8.9    In the event that there is a shortage of the Products for whatever reason, ESTABLISHMENT shall apportion supplies of the Products as it sees fit.  ESTABLISHMENT shall use its reasonable endeavours to meet the delivery date specified in that order but time shall not be of the essence of this Agreement and, for the avoidance of doubt, ESTABLISHMENT shall not be liable to THE PURCHASER for any late delivery or non-delivery of the Products, as long as the delay is justified and not longer than 30 (thirty) days, under the penalty of incurring in loss and damages.  Quantities not delivered as a consequence of a shortage shall be considered for the calculation of the Minimum Net Purchase.
8.10    All orders placed by THE PURCHASER in respect of the Products shall be either made in writing and sent to ESTABLISHMENT at an address specified by it from time to time or sent by electronic ordering if requested by ESTABLISHMENT and shall fall in line with the forecasts provided by THE PURCHASER
8.11    Any and all expenses, costs and charges incurred by THE PURCHASER in the performance of its obligations under this Agreement shall be paid by THE PURCHASER.
8.12    THE PURCHASER shall not be entitled by reason of any set-off, counter claim, abatement, or other similar deduction to withhold payment of any amount due to ESTABLISHMENT.
8.13    THE PURCHASER shall be responsible for the collection, remittance and payment of any or all taxes, charges, levies, assessments and other fees of any kind imposed by any governmental of other authority in respect of the purchase, importation, or sale of the Products.
8.14    All prices of the Products are exclusive of any applicable value added or any other sales tax for which THE PURCHASER may be additionally liable.

-8-

8.15    If THE PURCHASER fails to pay any sums due to ESTABLISHMENT under this Agreement as they fall due, ESTABLISHMENT shall be entitled (without prejudice to any other right or remedy it may have) to:
8.15.1    Cancel or suspend any further delivery to THE PURCHASER under any order;
8.15.2    Charge THE PURCHASER interest on the outstanding sum at the rate of 4% of the total amount of the invoice concerned per month of delay, from the date the payment became due until actual payment is made, irrespective of whether the date of payment is before or after any judgement or award in respect of the same.
ARTICLE 9 –FORECAST
9.1    Upon the signature of the Agreement, THE PURCHASER shall provide ESTABLISHMENT with a written forecast containing those monthly quantities of Products that will presumably be ordered by THE PURCHASER and covering a period of twelve (12) months starting from the date of launch of the Products.
Every months, THE PURCHASER shall provide ESTABLISHMENT with a written revised forecast of its monthly requirements of Products for the period covering the next twelve (12) months.
Each order to be issued by THE PURCHASER shall be within the range of twenty per cent (20%) of its last forecast for the same time period.
9.2    Notwithstanding the foregoing, should THE PURCHASER require delivery of Products in excess of twenty per cent (20%) above those quantities stated in its last forecast for the same time period, ESTABLISHMENT agrees to use reasonable efforts to supply such additional quantities.
ARTICLE 10 –MATERIOVIGILANCE
THE PURCHASER shall keep ESTABLISHMENT informed on all reports of adverse events reactions coming from their knowledge with regard to the Products, regardless of their origin – the term « reports » shall also include publications.
Reports on such adverse reactions, which according to the informing party’s professional evaluation may negatively affect the benefit-risk ratio of the Product or may have consequences regarding the Product information (eg labelling, data sheets, package inserts) or may require immediate safety measures (such as special information / warnings to health professionals, patients, authorities or product withdrawal) shall be forwarded to the other Party without delay after becoming known.

-9-

Exchange of materiovigilance information shall be addressed to :
For ESTABLISHMENT :
Quality, Regulatory and Materiovigilance Department: 
		
	Name company :
	ESTABLISHMENT LABS S.A.

		
	Address:
	Bldg. 15, 4th St. Zona Franca Coyol  

Alajuela, Costa Rica 
20113
		
	Phone : Fax :
	+(506).2434.2400 

+(506).2434.2450
For THE PURCHASER : as indicated in the Data Sheet.
Or to such other address for each Party as may be notified from time to time.
ARTICLE 11 –PRODUCT RECALLS
If either Party determines that an event, incident or circumstance has occurred which may result in the need for a “recall” or “market withdrawal” (collectively referred to as “Recall”) of any Product used by THE PURCHASER, such Party shall advise and consult with the other Party regarding such event as set forth below:
11.1    Recall due to breach by THE PURCHASER
To the extent that the Recall of the Product is due to THE PURCHASER’s negligence or wilful misconduct, THE PURCHASER shall bear all out-of pocket costs and expenses of such Recall, including out-of-pocket costs incurred by Third Parties, the out-of-pocket costs of notifying customers and the out-of-pocket costs associated with shipment of such recalled Product and the costs and expenses of the necessary replacement and destruction of such Product which is removed from the market (the “Recall Expenses”).
11.2    Recall due to breach by ESTABLISHMENT
To the extent that the Recall is due to acts or conduct by ESTABLISHMENT, ESTABLISHMENT shall be responsible for the Recall Expenses.
11.3    Recall instituted by the Health Authorities of the Territory
In the event of a compulsory Recall at the behest of a Health Authority of the Territory there shall be no requirement for the Parties to agree on the need for such a Recall.  The Parties shall however co-operate fully with one another in relation to such a Recall and the Recall Expenses shall be borne by the Parties in accordance with clauses 14.1 and 14.2 above.

-10-

11.4    Procedure
Product recalls will be conducted in accordance with THE PURCHASER’s standard operating procedure on recalls which procedure shall be transmitted to ESTABLISHMENT at the latest on the Effective Date of the Agreement.
ARTICLE 12 –TERMINATION
12.1    This Agreement is entered into by ESTABLISHMENT in consideration of THE PURCHASER’s legal and financial situation on the Effective Date of this Agreement.
Consequently, any substantial modification of the situation, status or control of THE PURCHASER will have to be notified to ESTABLISHMENT within thirty (30) days from the date of such substantial modification, and ESTABLISHMENT will then have the right to terminate this Agreement upon a further sixty (60) days’ notice to THE PURCHASER.
In the absence of notification by THE PURCHASER, ESTABLISHMENT shall be entitled to exercise its right to terminate the Agreement as aforesaid whenever it has received sufficient evidence (through publication in media or otherwise) that THE PURCHASER’s situation, status or control has been substantially modified.
For purposes of this Agreement, the term “control” shall mean the power, directly or indirectly, to direct the management and / or policies of THE PURCHASER, whether through the ownership of voting share, by contract, by operation of law or otherwise.
12.2    This Agreement will terminate automatically without any prior notice nor indemnity to any Party in the event any proceeding is commenced by or against THE PURCHASER, seeking relief under any bankruptcy or insolvency law and if such proceeding be involuntary, it remains un-dismissed for thirty (30) days from the date of its filing by the competent authorities.
12.3    In the event that either Party shall violate any provisions of this Agreement, or shall default in the performance of any of its obligations hereunder, including the payment of any invoice on or before its agreed due-time according to the conditions set in the Data Sheet or anywhere else in this Agreement, the non-defaulting Party may, at its sole option, terminate this Agreement by giving written notice to the defaulting Party specifying said default and its intention to terminate and, unless said default shall be rectified by the defaulting Party within thirty (30) days of the notice given, this Agreement shall become terminated thirty (30) days after said notice is given, without any further notice.
12.4    The present Agreement may be terminated by either Party in case of Recall (as defined in this agreement) of the Product from the market due to a decision by the competent Health Authorities of such country.

-11-

The said termination shall not become effective until ten (10) days after dispatch by the terminating Party of a registered letter with receipt explaining the reasons for the letter, to which a copy of the decision of the authorities is to be attached.
12.5    ESTABLISHMENT also reserves the right to terminate the present Agreement if it decides to stop the marketing of any of the Product(s) in the country where THE PURCHASER is located.
The said termination shall not become effective until thirty (30) days following dispatch by ESTABLISHMENT of a registered letter with receipt explaining its decision.
12.6    In case of non compliance during any Commercial Year with any of the Minimum Net Purchases figures as indicated above for two consecutive quarters, the parties shall have a meeting within the next thirty days to negotiate new prices for the products, since the prices granted in the agreement to PURCHASER are based on the volume agreed as minimum purchases.  If the Parties don’t meet or cannot reach an agreement, ESTABLISHMENT may continue charging its regular list prices for the Products on the following orders.
ARTICLE 13 –CONSEQUENCES OF EXPIRATION OR OF TERMINATION
13.1    Expiry of the term or termination of this Agreement by either Party, shall not relieve the Parties hereto of any obligation accruing prior to such termination.
13.2    Neither Party shall be entitled to receive any indemnity or other compensation merely because this Agreement is not renewed beyond the original term or any renewal period.
13.3    Upon the expiry of the term or termination of this Agreement, whatever the cause and the date may be, THE PURCHASER agrees to cease all use of the Trademark(s) and ESTABLISHMENT Logo.
ARTICLE 14 –TRANSFER OF RIGHTS
The rights and obligations of THE PURCHASER under this Agreement, shall not be assignable or be sub-licensed except with the prior written consent of ESTABLISHMENT.
The supply obligations of ESTABLISHMENT shall-be fulfilled by its local distributor: Aesthetic Healthcare Ltd.  If for any reason Aesthetic Healthcare Ltd. stops being the local distributor of ESTABLISHMENT or becomes unable to comply with its obligations, ESTABLISHMENT shall comply with the supply obligations directly, including claims.  All warranty obligations shall be kept at all times by ESTABLISHMENT, except for the submittal and reception of documents, all of which shall be transferred to the local distributor.

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ARTICLE 15 –GENERAL PROVISIONS
15.1    Independent Contractor
For the performance of this Agreement, THE PURCHASER will act as an independent contractor and not as an agent or representative of ESTABLISHMENT.
15.2    Product liability
(a)    ESTABLISHMENT warrants that all Products delivered and sold to THE PURCHASER will be free from defects in material and workmanship at the time of delivery to THE PURCHASER.  This warranty shall be effective per Product for the remaining shelf life of the Product.
(b)    ESTABLISHMENT shall be responsible for, and shall indemnify and hold THE PURCHASER harmless from and against any damage, loss, cost or expense arising out of the claims made by final consumers of the Products in relation to defects in material or workmanship, insofar as these damages are not attributable to faulty handling of the Products by THE PURCHASER.
THE PURCHASER undertakes to inform ESTABLISHMENT of any such claims made by final consumers and not to take any action with respect thereto without ESTABLISHMENT’s prior written consent.
(c)    All other guarantees, warranties, conditions and representations, either express or implied, whether arising under any statute, law, commercial usage or otherwise, including implied warranties of merchantability and fitness for a particular purpose relating to the Products, are hereby excluded to the fullest extent permitted by law.
Furthermore, under no circumstances shall ESTABLISHMENT be liable to THE PURCHASER for any indirect or consequential loss suffered or incurred by THE PURCHASER, howsoever arising.
(d)    THE PURCHASER shall not make any warranties or representations with respect to the Products on behalf of ESTABLISHMENT except to the extent specifically provided in paragraph (b) above or to the extent of the product warranty for final users as published in ESTABLISHMENT website current at the time of purchase.
THE PURCHASER shall indemnify and hold ESTABLISHMENT harmless from all claims and damages, including attorney’s fees, resulting from THE PURCHASER’s violation of this provision of this Agreement.
(e)    THE PURCHASER shall be responsible for, and shall indemnify and hold ESTABLISHMENT harmless from and against any damage, loss, cost or expense relating to Third Party claims or suits arising from the handling, storage, promotion and use of the Products unless such damages, loss, cost or expense is attributable to the Products supplied by ESTABLISHMENT, their properties and/or characteristics and/or any defect therein or non-

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compliance thereof with the relevant regulations in the country of the PURCHASER, and PROVIDING THAT upon receipt of notice by ESTABLISHMENT of any claims or suits, ESTABLISHMENT shall immediately notify THE PURCHASER thereof and at the cost and discretion of THE PURCHASER shall permit THE PURCHASER to handle such claims and suits.
(f)    The Products have a warranty cover provided by ESTABLISHMENT, as indicated in EXHIBIT II hereto.
ARTICLE 16 –NON COMPETITION
For the duration of this Agreement, THE PURCHASER shall use its best efforts not to use and/or promote and/or sell and/or buy, directly or indirectly any other products liable to compete with the Products, as may be permitted by law and local regulations.
ARTICLE 17 –CONFIDENTIALITY
THE PURCHASER agrees to exercise due care to prevent that any confidential information (hereinafter “Information”) about the Products, including the international marketing strategy of ESTABLISHMENT received from ESTABLISHMENT prior or during the term of this Agreement, might be revealed or disclosed to Third Parties.
This obligation to confidentiality shall remain in full force and effect during the whole validity period of the present Agreement plus ten (10) years beginning from its term or termination whatever the cause or the date.  However, the provisions of this Article 20 shall not apply to :
		
	•
	Information which at the time of disclosure, is part of the public knowledge,

		
	•
	Information which after disclosure, becomes part of the public knowledge through no fault of THE PURCHASER or of its employees,

		
	•
	Information which THE PURCHASER can establish by competent proof was in its possession prior to disclosure hereunder and was not acquired from ESTABLISHMENT or ESTABLISHMENT’s Affiliate, directly or indirectly, under a secrecy obligation,

		
	•
	Information which is subsequently obtained lawfully from a Third Party without any secrecy obligation.

ARTICLE 18 –FORCE MAJEURE
Neither THE PURCHASER nor ESTABLISHMENT shall be considered in default or be liable to the other Party for any delay in performance or non-performance caused by circumstances beyond the reasonable control of such Party, including but not limited to explosion, fire, flood, earthquake, war whether declared or not, accident, labour strike or labour disturbances, sabotage, order or decrees of any court or action of governmental authority; 

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provided, however, that diligent efforts are made to resume performance as quickly as possible.  Except as expressly provided elsewhere in this Agreement, if any event of force majeure continues for more than three (3) months, either Party may terminate this Agreement on giving a further three (3) months written notice to the other.
ARTICLE 19 –NOTICES
Any notice required or permitted to be given under this Agreement shall be deemed to have been sufficiently given if delivered personally, by courier or if sent by facsimile, addressed to the Party to be notified, at its address stated in this Agreement or at such other address as may hereafter be furnished in writing to the notifying party, and shall be deemed to have been served at the date of receipt in the case of personal delivery, or four days if delivered by courier and one (1) day after dispatch in the case of facsimile.
ARTICLE 20 –EXHIBITS
20.1    The exhibit I constitutes an integral part of the Agreement and must be respected by THE PURCHASER.
20.2    The said exhibit is as follows:
		
	•
	EXHIBIT I :    LIST OF PRODUCTS AND PRICES

20.3    Given the frequent modifications of the exhibits planned hereafter, it is expressly agreed and understood between the Parties that the modified exhibits will come into effect as soon as they will be validly signed by the representatives of both Parties, regardless of the signature of a written amendment.
ARTICLE 21 –APPLICABLE LAW AND ARBITRATION
This Agreement shall be construed and the rights of the Parties hereto, shall be determined in accordance with the laws of Costa Rica.
All disputes or differences that could relate to, or derived from this Agreement, its execution, liquidation or interpretation; will be resolved in accordance with the following procedure: 1) The Parties shall be subject to mediation mechanism in accordance with the Rules of Mediation of the London Court of International Arbitration.  If, within fifteen (15) working days from the request for mediation, the Parties have not reached a settlement agreement, the dispute or difference shall be settled by, 2) Arbitration in accordance with the Arbitration Rules of that Centre, whose rules the parties submit unconditionally.  The Arbitral Tribunal shall consist of one (1) member, and must decide based on the law.  The London Court of International Arbitration will be the institution responsible for administering the arbitration process.
ARTICLE 22 –ELECTION OF DOMICILE
The Parties declare that they have elected domicile at their offices, as indicated in this Agreement.

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ARTICLE 23 –COMPLETE AND FINAL UNDERSTANDING
23.1    This Agreement represents the complete and final understanding of the Parties hereto and replaces and supersedes all previously existing agreements and arrangements between the Parties hereto relating to the subject matter hereof.
23.2    This Agreement may not be changed orally but any and all modifications to this Agreement shall be made in writing and be subject of appropriate addenda.
23.3    Moreover, it is understood that in the event that any provision of this Agreement is declared void or unenforceable by a court or tribunal of competent jurisdiction, the other provisions hereof not so declared shall remain in full force and effect.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by their duly appointed representatives in two (2) original copies.
On the execution date indicated in the Data Sheet.
	
		
	ESTABLISHMENT
	THE PURCHASER

	 
	 

	/s/ Juan Jose Chacon Quiros
	/s/ David Ross

	 
	 

	Director and CEO
	CEO

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EXHIBIT I
LIST OF PRODUCTS AND PRICES
“MOTIVA IMPLANT MATRIX®” products:
See attached.
EXHIBIT II
PRODUCT WARRANTY
See attached.
	
		
	ESTABLISHMENT
	THE PURCHASER

	 
	 

	 
	 

	/s/ Juan Jose Chacon Quiros
	/s/ David Ross

	 
	 

	Director and CEO
	CEO

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