JOINT VENTURE SHAREHOLDERS AGREEMENT
THIS
JOINT VENTURE SHAREHOLDERS AGREEMENT is made this 18th day of December, 2007
(this "Agreement") by and among LASER ENERGETICS, INC., an Oklahoma Corporation
with an address of 0000 Xxxxxx Xxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxxx, Xxx Xxxxxx
00000 ("LEI") and XXXXXX LASER, INC., a Nevada corporation with an address
of 00
Xxxxxxxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxxxx 00000 ("LLI") (LEI and LLI are
collectively referred to as the "Shareholders" and each a "Shareholder"); and
HyGeniLase, Inc., a Delaware corporation with an address of 0000 Xxxxxx Xxxxxx
Xxxx, Xxxxx 000, Xxxxxxxxxxx, Xxx Xxxxxx 00000 (the "Company").
WITNESSETH:
WHEREAS,
LEI is
engaged in the design, engineering, manufacturing, sales and distribution of
lasers;
WHEREAS,
LLI is
engaged in the commercialization of technology in the human and animal dental
field including managing clinical development and sales and
marketing;
WHEREAS,
LEI and
LLI are parties to a certain Memorandum of Understanding dated October 25,
2007
(the "MOU") pursuant to which the Shareholders agreed to form a joint venture
to
develop, manufacture, market, sell and distribute dental laser systems and
dental laser process technology to the dental markets (the "Joint
Venture");
WHEREAS,
LLI has
determined that research prototype and study found in LEI Quotation #10072147
have been successfully completed, and accordingly has agreed to form the Company
and enter into this Agreement in furtherance of the Joint Venture;
NOW
THEREFORE,
in
consideration of the premises and mutual understandings contained herein, the
Shareholders agree as follows:
1. ESTABLISHMENT
OF THE COMPANY.
Prior
to the execution of this Agreement, the Shareholders have established a Delaware
corporation, and accordingly will cause amendments to the corporation's
organizational documents as follows:
1.1 Name.
The
name of the Company shall be HyGeniLase, Inc., or if such name is not available,
then such other name as the Shareholders mutually agree in writing.
1.2 Purpose.
The purpose of business of the Company shall be to develop, manufacture, market,
sell and distribute dental laser systems and dental laser process technology
to
the dental markets worldwide. The Company shall not conduct any other business
without the prior written consent of the Shareholders.
1.3 Address.
The principal office of the Company shall be located at the offices of
LEI.
1.4 Shareholders.
In consideration for the payments, licenses and contributions by each of the
Shareholders pursuant to the MOU and this Agreement, each Shareholder shall
initially be issued 100 shares of Common Stock, par value $0.001 (along with
any
other shares issued to either of the Shareholders, the "Shares"), so that each
Shareholder owns 50% of the issued and outstanding equity in the Company. Except
as otherwise set forth in this Agreement, neither Shareholder shall have any
further obligations to furnish additional funds in connection with the Company.
No additional equity (whether by issuance of stock, convertible debt, warrants,
options, or otherwise) in the Company shall be issued without the prior written
consent of the Shareholders.
1.5 Number
of
Directors. Board of Directors shall consist of two Directors. Each Director
shall have one vote.
1.6 The
Board
will consist of one Director nominated by LEI and one Director nominated by
LLI.
Initially, the Director nominated by LEI shall be Xxxxxx X. Bath, and the
Director nominated by LLI shall be Xxxxxxx X. Xxxxx. Each of LEI and LLI will
have the exclusive right to remove its respective designees and to fill any
vacancy caused by the removal, resignation or death of its respective designees.
Each Shareholder shall vote all of its Shares in favor of the election of the
Directors nominated in accordance with this Agreement.
1.7 Fiscal
Year. Fiscal Year of the Company shall commence on January 1 of each year and
end on December 31 of the same year.
1.8 Reporting.
Each Shareholder and the Board shall be entitled to receive sufficient
management and financial information and reports to allow the Directors to
monitor the conduct of the business of the Company. All information provided
thereunder will be provided subject to the terms of confidentiality set forth
in
Section 9 below.
1.9 Access
to
Records. Subject to the requirements of confidentiality set forth in Section
9
below, each Shareholder may inspect the books, accounts and records of the
Company and, to the extent necessary to ensure compliance with this Agreement,
of the other Shareholder.
2. ROLES
OF THE PARTIES.
The
roles of each of the Shareholders shall be as follows:
2.1 LEI'S
Role. LEI shall be responsible for product development, product specifications,
quality control, product improvement, and manufacturing. LEI shall be directly
compensated by the Company for these functions at a rate equal to "cost plus
10%" basis.
2.2 LLI's
Role. LLI shall be responsible for funding the Company, clinical evaluation,
process development, market development, and sales and marketing to the human
and animal dental market. LLI shall be directly compensated by the Company
for
these functions at a rate equal to of 5% of net sales less
discounts.
3. TECHNOLOGY.
3.1 LEI
&
LLI IP. Attached hereto as Appendix "A" LEI lists its intellectual property
(the
"LEI IP"), both patents and patents pending, if public, which is applicable
to
the dental markets, including the future LEI Patent for cleaning of teeth using
the 3rd Harmonic (250nm) laser light. Attached hereto as Appendix "B" LLI lists
it intellectual property (the "LLI IP"), both patents and patents pending,
if
public, which is applicable to the dental markets
2
3.2 Unless
as
otherwise provided for herein, all products, technology and intellectual
property developed by LEI in connection with this Joint Venture shall be owned
by LEI and all products, technology and intellectual property developed by
LLI
in connection with this Joint Venture shall be owned by LLI. LEI hereby grants
the Company a royalty-free, exclusive worldwide license to make, use, market,
sell and distribute the LEI IP, limited specifically to applications relating
to
the human and animal dental markets. LLI hereby grants the Company a
royalty-free, exclusive, worldwide license to make, use, market, sell and
distribute the LLI IP, limited specifically to applications relating to the
human and animal dental markets in connection with the Joint Venture. Initial
dental applications contemplated are for cleaning teeth, cutting
teeth.
4. FUNDING.
a. LLI
shall
be responsible for raising the initial funding of the Company in the amount
of
approximately $650,000.00, of which $91,000.00 has been committed for the Laser
Cost Study and the Refurbished ALX laser.
b. LLI
has
already committed to LEI $91,000 and advanced $56,000 to LEI for the benefit
of
the Company. The Company will re-pay LLI all advances including this $56,000
at
such time as the Company has been funded with at least $750,000.
x. XXX
has
incurred legal expenses in the amount of $5,000 for the benefit of the Company.
The Company will reimburse LEI at such time as the Company has been funded
with
at least $750,000.
d. LLI,
for
the benefit of the Company, has paid LEI and LEI has provided LLI, for the
benefit of the Company, a full laser system cost analysis, as well as LEI will
deliver a reconditioned research prototype Alexandrite laser
system.
e. The
Company will fund and purchase from LEI a fully developed pre-production
prototype dental laser system primarily for dental cleaning. The initial work
of
undertaking a full systems cost analysis has been successfully completed by
LEI.
LLI acknowledges that it has authorized, for the benefit of the Company prior
to
its formation, the development and building of a pre-production prototype dental
laser system (the "Prototype") by LEI, in accordance with LEI & LLI MOU
signed October 25th, 2007, for a total purchase price of $550,000 (to be paid
to
LEI directly by the Company,).
f. Upon
the
execution of this Agreement, LLI shall pay LEI an initial non refundable down
payment of $50,000. Further payments will be made as follows: $200,000 by
January 31, 2008 and $150,000 by February 29, 2008. Upon commencement of the
design review of the Prototype, LLI shall pay LEI an additional $100,000.00
towards the purchase price for the Prototype, which is estimated to take place
before March 30,2008. Upon final acceptance of the Prototype by the Company,
the
Company shall pay LEI the final payment of $50,000 for the Prototype. The full
specification of the prototype is to be supplied against the final payment.
Funding for the Joint Venture thereafter shall be provided by the Company,
although LLI shall have primary responsibility for funding and will use its
commercial best efforts to have the Company adequately funded to meet its
objectives.
3
5. MANUFACTURING.
LEI
shall be responsible for the manufacturing of the dental laser systems and
dental laser process technology under the Joint Venture. The Company and LLI
hereby xxxxx XXX the exclusive right to manufacture all of their requirements
(and the requirements for any of their Affiliates) for dental laser systems
and
dental laser process technology for the dental markets. All systems and
technology manufactured by LEI for the Company under the Joint Venture shall
be
provided pursuant to LEI's standard terms and conditions, which are attached
hereto as Appendix "C" at a rate to be mutually agreed upon, which shall be
on a
manufactured "cost plus 10%" basis as defined in 2.1 above
6. MARKET
DEVELOPMENT AND MARKETING.
LLI
shall be responsible for organizing clinical evaluation, validation and
worldwide sales and distribution of the products developed under the Joint
Venture. All sales and distribution decisions will be made jointly by the
Shareholders.
7. REGULATORY
COMPLIANCE.
The
Shareholders agree to engage a third party regulatory consultant (with costs
to
be financed by the Company, with assistance as necessary from LLI) to provide
advice and assistance on the regulatory compliance of any dental laser systems
and dental laser process technology developed or manufactured under the Joint
Venture.
8. TRANSFER
OF SHARES.
8.1 Transfers.
A Shareholder may not transfer to any individual or entity any of its Shares
except (i) with the written approval of all Shareholders, (ii) in accordance
with clause 8.2 below. Any Transfer of Shares in violation of this Section
8.1
shall be null and void.
8.2 Transfer
to Affiliate Transferees. Any Shareholder may, in its sole discretion and
without the consent of any other Shareholder, transfer all but not some of
its
Shares, directly to such Shareholder's Affiliate; provided, however, that (i)
the transferring Shareholder shall neither be relieved of nor released from
any
of its obligations set forth in this Agreement and shall cause the transferee
to
abide by the provisions of this Agreement and guarantee such obligations of
the
transferee with respect to such transferred Shares; and (ii) no Shareholder
shall permit an Affiliate to which Shares to cease to be an Affiliate, or permit
such Affiliate to be dissolved, liquidated, wound-up or otherwise to cease
to
exist by the operation of law or otherwise, unless such Shareholder shall first
have purchased all of the Shares that were transferred to such Affiliate. For
the purposes of this Agreement, "Affiliate" means an entity that is controlled
by, controls or under common control as a Shareholder, where control means
the
power to direct and/or influence the management or policies of an entity,
whether through the ownership of voting securities or otherwise.
9. CONFIDENTIALITY.
Except
as required by an officer or Director to carry out the business of the Company,
no Shareholder will divulge any information, paper, or document relating to
the
assets, liabilities, operations, business affairs, or any other information
about the Company or the other Shareholder. The right to maintain the
confidentiality of the affairs of the Company and the Shareholders in connection
with the Company's business may be enforced by any Shareholder or by the Company
itself by way of an injunction issued out of any court of competent
jurisdiction, and this right will not restrict or take the place of the
Shareholders' or the Company's rights to money damages, actual and exemplary,
for a violation of the provisions of this Section.
4
10. TERMINATION
AND EVENTS OF DEFAULT.
10.1 Special
Termination Events. This Agreement shall be terminated in the following
event:
(a) the
Company is liquidated or dissolved; or
(b) with
respect to any of the Shareholders, such Shareholder no longer is the
shareholder of the Company subject to the terms and conditions set forth in
this
Agreement; or
(c) the
Shareholders mutually agree to terminate this Agreement in writing.
Termination
of this Agreement will be without prejudice to any accrued rights of the
Shareholders and the Company.
10.2 Events
of
Default. The occurrence of any of the following events shall be an Event of
Default, it being understood that any Event of Default occurring with respect
to
any Shareholder that has transferred all or a part of its Shares to its
Affiliate in accordance with the provisions of Section 8.2 shall be deemed
to
have also occurred with respect to such Affiliate transferee:
10.2.1 If
any
Shareholder takes any action relating to the Company which constitutes gross
negligence or willful misconduct, and if subject to cure, such Shareholder
does
not cure such gross negligence or willful misconduct within thirty days
following delivery of notice of breach to such Shareholder by the nonbreaching
Shareholder; or
10.2.2 If
the
Company is unable to meet payment obligations for 45 days, such event shall
constitute an event of default on the part of LLI; or
10.2.3
If
any Shareholder takes any action or inaction relating to the Company which
constitutes a material breach of the obligations of such Shareholder under
this
Agreement or any of the agreements with the Company or with other Shareholder,
and if subject to cure, such Shareholder does not cure such breach within thirty
days following delivery of notice of breach to such Shareholder by the
nonbreaching Shareholder.
10.3 Rights
Upon Event of Default. Upon the occurrence of an Event of Default, the
nondefaulting Shareholder shall be entitled to the right set forth
below:
(a) Where
the
nondefaulting Shareholder desire to discontinue the business of the Company,
the
nondefaulting Shareholder shall have the right (i) to apply for the dissolution
of the Company, or (ii) to cause the defaulting Shareholder to purchase all
but
not less then all of the Shares owned by the nondefaulting Shareholders (i)
at a
price equal to 125 percent of the fair market value to be determined by a
reliable and reputable third-party appraiser, or (ii) at a price equal to actual
amount paid by such nondefaulting Shareholders for such Shares, whichever is
higher; or
5
(b) in
case
the nondefaulting Shareholder desires to continue the business of the Company,
the nondefaulting Shareholder shall have the right to purchase, from the
defaulting Shareholder the Shares held by the defaulting Shareholder (i) at
a
price equal to 75 percent of the fair market value to be determined by a
reliable and reputable third-party appraiser, or (ii) at a price equal to the
actual amount paid by such defaulting Shareholder for such Shares, whichever
is
lower; provided however that exercise of such purchase right shall not affect
the defaulting Shareholder's obligations under this Agreement.
11. MISCELLANEOUS.
11.1 Addresses.
All notices, consents, waivers, and other communications under this Agreement
must be in writing and will be deemed to have been duly given when (a) delivered
by hand (with written confirmation of receipt), or (b) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses set forth on
the
first page of this Agreement (or to such other addresses as a party may
designate by notice to the other parties).
11.2 Inconsistency.
As among the Parties, the provisions of this Agreement shall prevail over any
inconsistent section in the Certificate of Incorporation and By-Laws of the
Company, and as soon as possible after becoming aware of such an inconsistency,
all Parties will take all necessary steps to amend any inconsistency in the
Certificate of Incorporation and By-Laws, as the case may be.
11.3 Costs.
The Shareholders will share equally the fees and costs for the preparation
and
execution of this Agreement, and any document executed to give effect to any
provisions of this Agreement.
11.4 Assignment.
This Agreement will not be assignable or otherwise transferable by either
Shareholder, other than in accordance with the provisions of Section 8.1, and
any purported assignment or other transfer will be void and
unenforceable.
11.5 No
Waiver. A provision of or right under this Agreement may not be waived except
by
a waiver in writing signed by the party granting the waiver, and will be
effective only to the extent specifically set out in that waiver.
11.6 Amendment.
This Agreement may only be amended in a writing executed and delivered by all
the parties.
11.7 Governing:
Law. This Agreement and the rights and duties of the parties hereunder will
be
governed by, and construed and interpreted in accordance with, the laws of
Delaware, without giving effect to its principles or rules of conflict of
laws.
11.8 Further
Action. Each party will, and will use all reasonable efforts to, take or cause
to be taken all actions, and do or cause to be done all other things, necessary,
proper or advisable in order to give full effect to this Agreement.
6
11.9 Remedies.
The parties agree that any breach of the provisions of this Agreement by my
party may result in irreparable injury to the other party, that money damages
may be an inadequate remedy for such breach, and that, in addition to any other
remedies which they may have, the other party may enforce their respective
rights by actions for specific performance and for injunctive and other relief
(to the extent permitted by law). Each party agrees not to oppose the granting
of such relief in the event a court determines that such a breach has occurred,
and to waive any requirement for the posting of any bond in connection with
such
remedy.
11.10 Interpretation.
The headings are for ease of reference only and do not affect the construction
of this Agreement.
11.11 Severability.
If a court of competent jurisdiction or an arbitral panel holds that part of
this Agreement is invalid, inoperative or unenforceable in any jurisdiction
or
circumstances, that part will not be invalid, inoperative or unenforceable
in
any other jurisdiction or circumstances, and no other part of this Agreement
will be invalid, inoperative or unenforceable, or affected in any other way.
If
a provision of this Agreement is so broad as to be unenforceable, that provision
will be interpreted to be only so broad as is enforceable.
11.12 Counterparts.
This Agreement may be executed in any number of counterparts, each of which
will
be deemed an original, and all those counterparts taken together will be
regarded as one instrument.
11.13 Entire
Agreement. This Agreement constitutes the entire agreement and understanding
of
the parties as to their subject matter, and supersedes all prior agreements
or
understandings, both written and oral, between the parties with respect to
such
subject matter.
[THIS
SPACE INTENTIONALLY LEFT BLANK- SIGNATURE PAGE TO FOLLOW]
IN
WITNESS WHEREOF, the parties hereto have caused this Joint Venture Shareholders
Agreement to be duly executed as of the date first written above.
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By:
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|
|
Name
|
Xxxxxx
X. Xxxxxx
|
|
Title:
|
President
& CEO
|
|
XXXXXX
LASER, INC.
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|
|
Name
|
Xxxxxxx
X. Xxxxx
|
|
Title:
|
President
& CEO
|
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HYGENILASE,
INC.
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By:
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|
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Name
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|
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Title:
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7
APPENDICES
A:
LEI
IP
B:
LLI
IP
X.
XXX
TERMS & CONDITIONS
8
Appendix
A - LEI Intellectual Property
|
US
Patent #
|
Title
of Patent
|
|
|
5,331,652
|
Solid
State Laser Having Closed Cycle Gas Cooled Construction
|
|
|
5,321,711
|
Segmented
Solid State Laser Gain Media With Gradient Doping Level
|
|
|
5,235,606
|
Amplification
of Ultrashort Pulses with ND:Glass Amplifiers Pumped By Alexandrite
Free
Running Laser
|
|
|
5,142,548
|
Broadband
Tuning and Laser Line Narrowing Utilizing Birefringent Laser
Hosts
|
|
|
4,949,346
|
Conductively
Cooled Diode Pumped Solid State Slab Laser
|
|
|
4,933,946
|
Conductively
Cooled Solid State Slab Laser
|
|
|
4,809,283
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**
Method of Manufacturing Chromium - Doped Beryllium Aluminate Laser
Rod and
Lasers Incorportating the Rods therein.
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|
|
New
Patent on Flash lamp pumped Lasers LEI is applying for in Dec
2007
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9
