CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMMISSIONS.
EXHIBIT 10.26
-------------
MASTER JOINT VENTURE AGREEMENT
This Master Joint Venture Agreement (the "Agreement") is
made as of this 30th day of October, 1996 by and among ThermoLase
Corporation, a Delaware corporation having its principal offices
at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇,
U.S.A. ("ThermoLase"), Franklin Holding, S.A., a French
corporation having its principal offices at ▇▇, ▇▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ("Franklin Holding"), and ▇▇. ▇▇▇▇
▇▇▇▇▇▇▇, a citizen of Switzerland ("▇▇▇▇▇▇▇").
WHEREAS, the parties have agreed that it is in their mutual best
interests to form a joint venture for the commercialization of
certain laser-based technology for the removal of human hair and
the exfoliation or rejuvenation of skin in France; and
WHEREAS, the parties have agreed upon the terms of certain
agreements and documents necessary for the formation of such
joint venture; and
WHEREAS, the formation of the joint venture will occur no later
than November 15, 1996, upon the finalization of the drafting of
the contractual documentation and the completion of certain other
actions relating thereto;
NOW THEREFORE, in consideration of the mutual promises contained
herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree
as follows:
1. No later than November 15, 1996 (the "Closing Date"),
subject to the provisions of this Agreement, the parties shall
have taken the following actions:
▇. ▇▇▇▇▇▇▇▇ Holdings, Jacques Dessange Management,
▇▇▇▇▇▇▇▇ Dessange, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Michel Couvin and ▇▇▇▇▇▇ ▇▇▇▇▇
will form a French S.A. ("DBC Holding"), of which Franklin
Holdings will own at least 51%, and shall have applied for
registration of DBC Holdings with the Registry of Commerce of
Paris;
▇. ▇▇▇▇▇▇▇ and DBC Holdings will form a French SA (the
"SA"), of which ▇▇▇▇▇▇▇, either personally or through a holding
company, will own 15.8% and DBC Holdings will own 84.2%, and
shall apply or have applied for registration of SA with the
Registry of Commerce of Paris;
1PAGE
c. ThermoLase and SA will form a French SAS (the "SAS")
having By-laws and a Shareholders Agreement in the forms attached
hereto as Exhibits A and B , respectively , and shall apply
have applied for registration of SAS with the Registry of
Commerce of Paris;
d. ThermoLase and SA will form a Delaware limited
liability company (the "LLC") having an Operating Agreement in
the form attached hereto as Exhibit C , and the Certificate of
Formation of the LLC will be filed with the Secretary of State of
the State of Delaware;
e. ThermoLase will license certain technology to the LLC
pursuant to a License Agreement in the form attached hereto as
Exhibit D, which shall be executed and delivered by each of them;
f. LLC will sublicense such technology to SAS pursuant to
a Sublicense Agreement in the form attached hereto as Exhibit E ,
which shall be executed and delivered by each of them;
▇. ▇▇▇▇▇▇▇▇ Holdings will license certain trademark rights
in the name "Jacques Dessange" to SAS pursuant to a Trademark
License in form and substance acceptable to the parties and
ThermoLase, which shall be executed and delivered by Franklin
Holdings and SAS;
h. ThermoLase and SA will enter into an Option Agreement
in the form attached hereto as Exhibit F, which shall be executed
and delivered by each of them;
i. ThermoLase and Franklin Holdings will agree to supply
certain equipment and other materials to SAS pursuant to a Supply
Agreement in the form attached hereto as Exhibit G , which shall
be executed and delivered by each of them;
▇. ▇▇▇▇▇▇▇▇ Holdings, acting in the name and on behalf of
SAS, will enter into a lease agreement for the rental of premises
for use as a first location of a Spa Thira in France, which lease
agreement shall be in form and substance reasonably acceptable to
ThermoLase;
▇. ▇▇▇▇▇▇▇▇ Holdings, acting in the name and on behalf of
SAS, will enter into various agreements with an architect,
decorators and construction company or companies for the
reconditioning of the premises leased as described above, all on
terms and conditions reasonably acceptable to ThermoLase;
l. Each party shall have received an accurate translation
of each of the foregoing documents that has not been drafted in
its native language, and such translation shall be an accurate
reflection of the agreement of the parties. In addition, the
French and English translations of each agreement shall be
consistent in all respects.
2PAGE
2. Each party agrees to use its best efforts to take the
actions set forth in Article 1 above by the Closing Date.
3. No modifications to this Agreement or to any exhibits hereto
shall be made except by a written instrument executed by all the
parties hereto or, in the case of an agreement, a form of which
is an exhibit hereto, the parties to such agreement;
modifications or adjustments will nevertheless be permitted
within reason until the Closing Date. A party's execution of any
of the agreements referenced above in a form modified from that
attached as an exhibit hereto shall presumptively evidence such
party's consent to the form of the agreement executed, including
all modifications thereto.
4. This Agreement shall be governed by the laws of the
Commonwealth of Massachusetts, U.S.A., without regard to its
conflict of laws provisions. This Agreement may be executed in
one or more counterparts, which, when taken together, shall
constitute a single agreement.
5. Any dispute, controversy or claim arising out of or relating
to this Agreement or to a breach hereof, including its
interpretation, performance or termination, shall be finally
resolved by arbitration. The arbitration shall be conducted by
one (1) arbitrator fluent in French and English, to be appointed
by the presiding officer of the London Court of International
Arbitration ("LCIA"). The arbitration shall be conducted in
English and in accordance with the LCIA arbitration rules. The
arbitration, including the rendering of the award, shall take
place in London, England, and shall be the exclusive forum for
resolving such dispute, controversy or claim. The decision of
the arbitrator shall be binding upon the parties hereto, and the
expense of the arbitration (including without limitation the
award of attorneys' fees to the prevailing party) shall be paid
as the arbitrator determines. The decision of the arbitrator
shall be executory, and judgment thereon may be entered by any
court of competent jurisdiction. Multiple arbitration
proceedings relating to the same subject matter may be joined in
the same proceeding.
3PAGE
IN WITNESS WHEREOF, this Agreement has been executed by the
parties as of the date first written above:
THERMOLASE CORPORATION FRANKLIN HOLDINGS, S.A.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Dessange
--------------------------- ------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Vice President
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------
[Signature Page to Master Joint Venture Agreement]
4PAGE
EXHIBIT A
S.A.S.
A Simplified Joint Stock Company
with a capital of frs. 250,000
and registered offices at:
▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
The undersigned:
-The ThermoLase Corporation, a joint stock company, created
in accordance with the legal provisions of the State of Delaware,
United States of America, with its main offices located at ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇
of America, and a share of capital of US $ , corresponding
to the equivalent of French francs on the date of this
instrument, i.e., a sum amounting at least to the sum stipulated
under Article 262.1 of the law governing trade companies,
represented for the purposes of this instrument by its Chairman,
Mr. ▇▇▇▇ ▇▇▇▇▇▇, duly empowered for the purposes of this
instrument by decision of its Board of Directors in its meeting
of , 1996 (referred to below as "ThermoLase"),
-the (Dessange Holding) company, a joint stock company with
a share capital of frs. 1,500,000, i.e., a sum amounting at least
to the sum stipulated under Article 262-1 of the law governing
trade companies, with registered offices at ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, represented by its Chief Executive
Officer for the purposes of this instrument.
Prior to drawing up and signing the Articles of Incorporation,
the undersigned parties declare, each to the extent that it is
concerned,
That they have agreed to create a simplified joint stock company
between them, without any public issue. The name of this company
is , and its capital is frs. 250,000, divided
into 1,000 shares of frs. 250 each, all cash shares, fully paid
up at their face value.
Each of the future partners has paid the sum corresponding to the
amount of its subscription.
The sum of frs. 250,000 corresponding to 1,000 shares of a face
value of Frs. 250 each, fully subscribed and paid up at their
face value, was deposited at the along with a list of the
subscribers.
1PAGE
Payments were established in the depository's certificate, issued
on , 1996, upon presentation of the list of the future
partners, mentioning the shares of subscribed and the sums paid
by each of them.
The undersigned parties then declared, after having examined the
list of the future partners, that the sums paid by them comply
with the statements contained in said list and that they
confirmed their subscription of the shares constituting the share
capital, up to an amount of their respective payments, i.e.,
Amount of the
No. of Subscription Payments
Subscribers Shares (in FF.) (in FF.)
ThermoLase 500 125,000 125,000
Corporation
(Dessange Holding) 500 125,000 125,000
TOTAL 1,000 250,000 250,000
2PAGE
ARTICLES OF INCORPORATION
CHAPTER I
FORM - OBJECT - NAME - REGISTERED OFFICES -
TERM - COMPANY YEAR
Article I - Forum
The company is a simplified joint stock company, governed by the
provisions of law no. 94-1 of January 3, 1994, law no. 66-537 of
July 24, 1966 and by these Articles of Incorporation. It may not
make a public issue.
Article 2 - Object
The company's object in France (Metropolitan France and France's
Overseas Departments except France's Overseas Territories) is to
exercise, either directly or indirectly, health care activity
such as beauty care and in particular the removal of body hair
and skin care, by using technologies requiring laser, including
requiring, if any, licenses or franchisees.
All such, for itself as well as on behalf of third parties or by
participating, by any way, such as by way of setting up a
company, by subscription, by sleeping partnership, by merger and
merger-acquisition, by loan, purchase or sale of securities or
company shares, by "location-g_rance" of all on-going business
("fonds de commerce"), by sale or loan of all or part of its
goods and real property and personal property rights, or by any
other way.
And, generally speaking, all financial, commercial, industrial,
personal and real operations which may further or pertain to this
object, directly or indirectly.
Article 3 - Name
The name of the company is .
------------------------
All acts and documents issued by the company and intended for
third parties must indicate the company's name immediately and
legibly preceded or followed by the words "a simplified joint
stock company" or the initials "SAS" and a statement of the
amount of the share capital and the company's registration number
in the Trade & Companies Register.
Article 4 - Registered Offices
The registered offices are at ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇.
3PAGE
They may be transferred to any other place in France. A
collective decision of the partners, made in accordance with
Chapter IV of these Articles of Incorporation, is necessary to
transfer the offices outside the geographic limits of the
department of the registered offices.
Article 5 - Term
The company's term has been set at ninety-nine (99) years
beginning on the date of its registration in the trade Register,
except in the event of advance dissolution in accordance with the
provisions of Article 37 of these Articles of Incorporation, or
an extension by collective decision of the partners, ruling on
the conditions of Article 24 below.
Article 6 - the Company Year
The company year begins on (January 1st) and ends on (December
31st) of each year.
As an exception, the first company year shall begin on the date
of the company's registration in the Trade & Companies Register
and end on (December 31st, 1997).
CHAPTER II
CAPITAL - SHARES
Article 7 - Capital
The share capital has been set at the sum of frs 250,000. It is
divided into 1,000 shares of frs. 250 each, all of the same
category and fully paid up.
Article 8 - Modification of the Share Capital
The share capital may be increased or reduced on the conditions
stipulated by law and these Articles of Incorporation.
Article 9 - Paying up of Shares
All share subscriptions in cash must be accompanied by immediate
payment of the entire amount of the face value of the shares
subscribed.
Article 10 - Form
Shares are registered.
Ownership of a share is the result of its registration in the
name of the holder (or holders) in the accounts kept for this
purpose by the company, on the conditions and according to the
methods stipulated by law for joint stock companies.
4PAGE
At the partner's request, a certificate testifying to the
registration of the share in this account is issued to him (it)
by the company.
Article 11 - Indivisibility of shares
Shares are indivisible in the company's eyes.
Joint owners of shares are obliged to be represented on the
Company by one person selected among them, considered as the sole
owner, or by a sole representative. In the event of
disagreement, the sole representative may be appointed by the
court, at the request of the most diligent co-owner.
The voting right attached to a share belongs to the beneficial
owner in ordinary shareholders meetings and to the bare owner in
extraordinary shareholders meetings. However, the shareholders
may agree among themselves to distribute otherwise the exercise
of the voting rights at the shareholders meetings. In this case,
they shall inform the company of their decision by registered
letter sent to the registered offices.
Article 12 - Rights & Obligations attached to the shares
1. General rights & obligations
All shareholders are entitled to information on the company's
smooth running and discovery of certain company documents, on the
dates and conditions stipulated by law and the Articles of
Incorporation.
The shareholders bear the burden of loss only up to the amount of
the sums they have brought into the company.
The possession of a share automatically implies compliance with
the shareholders' decisions and with these Articles of
Incorporation.
The rights and obligations attached to the share follow it
wherever it goes.
2. Voting rights and the right to take part in shareholders
meetings.
The voting right attached to capital or dividend shares is
proportional to the share in the capital they represent and each
share entitles its owner to one vote.
3. Rights to the company's profit and assets.
A share entitles its owner to a share in the profits and reserve,
or in the company's assets at the time of any distribution,
amortization or allotment during the company's lifetime or during
its liquidation, which is proportional to the capital it
represents.
5PAGE
Article 13 - Conveyance of shares
1. Terms & conditions for conveying shares
The conveyance of shares is carried out in the eyes of the
company or third parties by means of a transfer from the
assignor's account to the assignee's account, upon presentation
of a transfer order.
This transfer is entered beforehand in a register with initialed,
consecutively numbered pages, held chronologically, known as the
"Share Transfer Register."
The company is obliged to register these transfers as soon as it
receives the order for the transfer of securities and within 6
days thereof at the latest.
The transfer order, drawn up on a form provided or approved by
the company, is signed by the assignor or its (his)
representative.
2. Restrictions on the conveyance of shares
All transfers of shares even between shareholders are prohibited
for a period of 10 years, imposed by law, as of the signing of
these Articles of Incorporation, except if all shareholders
agree.
The term "transfer" means any form of conveyance of shares, in
full ownership, bare ownership or beneficial ownership, in any
form whatsoever and according to any terms and conditions
whatsoever, for valuable consideration or free of charge and in
particular, without limitation, any contribution in kind, partial
business transfer or swapping of the company's shares.
The term "share" includes all existing shares or shares issued
subsequently by the company;
Article 14 - Change of Control
All partners shall inform the company of the amount of their
share capital, the list of their owner partners and the breakdown
of their capital among them. When one or several of these
partners are legal entities themselves, the notice shall contain
the breakdown of the capital of these legal entities, it being
understood that the result of this provision is not to obligate
the partners to provide information on all the shareholders of
listed companies.
All change concerning this information, as well as any of the
events referred to in paragraph b) below must be notified to the
company within 30 days. All such notices shall be made by
registered mail with return receipt.
6PAGE
CHAPTER III
THE ADMINISTRATION & CONTROL OF THE COMPANY
Article 15 - The Chairman
The Chairman is a real person who shall not be over 80, and need
not be a partner. The Chairman is appointed by the Board of
Directors, on proposal by Dessange Holding among the members of
the Board of Directors which were appointed by Dessange Holding.
He is appointed for an undetermined period of time.
The Chairman's duties shall automatically cease if one of the
following events occurs:
- death or disability
- resignation
- loss of his seat on the Board of Directors
-ad nutum dismissal by Board of Directors. This dismissal
will not have to be justified and will give no right to
indemnification.
In the event that one of the cases referred to above occurs, a
new Chairman is appointed by decision of the Board of Directors,
on proposal by Dessange Holding among the members of the Board of
Directors which were appointed by Dessange Holding.
Article 16 - Power of the Chairman - Remuneration
▇. ▇▇▇▇▇▇
The Chairman represents the company in the eyes of third parties,
and is vested with the broadest powers to act under all
circumstances on the company's behalf, within the limit of the
company's object. He manages the company under the control of
the Board of Directors and prepares, among other things, the
Budget and the annual development plan which he submits to the
Board of Directors for approval, and which he is responsible for
executing.
However, internally and without it being possible that this
clause be put forth or opposed to third parties, the powers of
the Chairman are limited by the powers which these Articles of
Incorporation and the partners' subsequent collective partners'
decisions reserve now or in the future for other company organs.
In particular, the following must obtain the prior approval of
the Board of Directors.
7PAGE
-the sale of tangible real property, the total or partial sale of
equity interests, the creation of sureties and of securities,
endorsements and guarantees;
-the purchase or sale of assets or the commitment to make any
expenditure for a unit amount exceeding frs. (100,000), inasmuch
as this commitment, this acquisition or this sale is not provided
for in the Budget;-the instituting of court proceedings or the
settlement of all disputes for a unit amount in principal of frs.
100,000 or more, or for essential matters linked to the
professional regulations applicable to the activities of the
company or its subsidiaries, it being understood that the Board
of Directors shall be informed in all events of all procedures
pending the date of any Board meeting;
-the signing of any contract with a subsidiary or with one of the
partners of the company, or with a company affiliated with Thermo
Electron or with Franklin Holding and the modification or waiver
of any rights granted under such contracts;
-and generally speaking, all operations not provided for in the
Budget apt to have a substantial effect on the company's
activity;
The Chairman convenes Shareholders Meetings, establishes their
Agenda and executes their decisions under the control of the
Board of Directors.
The Chairman may, with the prior authorization of the Board of
Directors, grant all powers to a third party for one or several
specific purposes, in the respect of the foregoing provisions.
The representatives of the Works Committee shall exercise with
the Chairman the rights defined in Article L.432-6 of the labor
regulations.
2. Remuneration
The Chairman's duties remuneration shall be determined by the
Board of Directors.
Article 17 - The Board of Directors
1. Composition
The Company is managed by a Board of Directors composed of six
real persons who shall not be over the age of 80, and who are not
necessarily partners, appointed by the shareholders as
stipulated hereafter.
Every shareholder holding:
-at least 1% and less than 20% of the company's capital may
appoint one Director:
8PAGE
-at least 20% and less than 49% of the company's capital may
appoint two Directors;
-at least 49% and no more than 51% of the company's capital
may appoint three Directors;
-more than 51% and no more than 80% of the company's capital
may appoint four Directors;
-more than 80% and no more than 99% of the company's capital
may appoint five Directors;
-more than 99% of the company's capital may appoint six
Directors.
The term in office of members of the Board of Directors is one
year, renewable indefinitely. The term ends at the end of the
Ordinary Shareholders Meeting called to rule on the year's
accounts, held the year during which the mandate expires, or
pursuant to death, disability, resignation or the dismissal of
the member of the Board of Directors.
Any member of the Board of Directors may resign by registered
letter with return receipt sent to the Chairman. The resignation
comes into effect on the date of the receipt of the registered
letter (the return receipt constitutes proof thereof) or in the
absence of receipt on the day of the first presentation, unless
the letter of resignation stipulates otherwise.
Any member of the Board of Directors can be dismissed at any time
by the partner who has appointed him, without it being possible
that such dismissal call for the payment of damages, by
registered mail with return receipt sent to the dismissed member,
and to the Chairman for information and to each of the other
members of the Board of Directors. Dismissal comes into effect
on the date of the receipt of the registered letter by the
dismissed member of the Board of Directors (the return receipt
constitutes proof) or in the absence of receipt thereof on the
date of the first presentation, unless the letter of dismissal
provides otherwise.
The partner who has appointed the director whose duties end for
any reason whatsoever must, within thirty days, appoint a new
director and inform the other members of the Board of Directors
by registered letter with return receipt.
2. Smooth running of the Board of Directors
a) Time between meetings - Voting method
The Board of Directors meets as long as the company's interests
so require.
9PAGE
The Board meets regularly on the dates and in the place
determined during previous Board meetings. Furthermore, the
Board meets by notice of the Chairman or of two of its members
who have taken this initiative to call the meeting.
The decisions of the Board of Directors are made either during a
meeting held in the registered offices or in any other place in
the notice (with the participation, when appropriate, of certain
directors, by teleconference), or by teleconference (by telephone
or audiovisual), or are the results of the consent of all the
Board members expressed in an act.
b) Notice of meetings
The members of the Board of Directors are convened by simple
letter, telex or fax, sent eight days prior to the date of the
meeting and mentioning the meeting's date, hour, place and
Agenda.
The notice sent to the directors consulted in a teleconference
vote is made by all means, eight days in advance. The
consultation may nonetheless take place immediately if all the
partners take part therein. The Agenda is then determined by
joint agreement of the partners.
No action for annulment due to a failure to convene is admissible
when all the Board members are present or represented.
c) Quorum
The Board makes valid decisions only if at least two thirds of
the directors are present or represented, and if at least one
director appointed by (Dessange Holding) and at least one
administrator appointed by ThermoLase Corporation are present.
Any director may ▇▇▇▇▇ ▇▇▇▇▇▇ to another director, even by simple
letter or telegram, to represent him at a meeting of the Board of
Directors.
The Board of Directors or a Committee created by the Board of
Directors may invite a third person, at a majority of the Board
or Committee members present, to participate in one of its
meetings without any voting right.
Furthermore, each partner may appoint two persons responsible for
advising him, who may attend all meetings of the company's organs
in an advisory capacity, inasmuch as these persons undertake to
respect the confidentiality of the information or documents to
which they might have access. The appointment and dismissal of
these advisors, in order to be binding upon the company, is
notified to the Board of Directors in writing.d) Majority
Decisions are made by a positive vote of four or more members of
the Board of Directors (present or represented), except when
10PAGE
these Articles of Incorporation state otherwise. In the event of
a tie, the Chairman's vote is not the casting vote.
The following decisions are made at a unanimous vote of the six
members of the Board of Directors (present or represented):
-unless they are provided for in the Budget or Development Plan,
the creation and liquidation of all subsidiaries for managing a
spa, the signing of all loan agreements with such a subsidiary,
the financing of all increases in the capital of such a
subsidiary.
-unless they are provided for in the Budget or Development Plan,
the acquisition or sale of securities and the taking out of
interests, with the exception of current cash management
operations on the financial market for a total amount of less at
all times than FRF 500,000;
-the adoption and, as the case may be, the modification of the
company's annual budget (referred to below as "the Budget");
-the appointment or replacement of the company's statutory
auditors, auditing firm or bankers;
-unless they are provided for in the Budget or Development Plan,
investment decisions for an amount exceeding FRF 500,000;-unless
they are provided for in the Budget or the Development Plan, the
sale, transfer, rental, exchange, pledging or allocation as
surety of all or a portion of the company's assets or business,
as well as any surety, endorsement or guarantee granted in favor
of a third party, including subsidiaries;
-unless it is provided in the Budget or Development Plan, the
subscribing of short, middle or long-term loans for an amount
exceeding FRF 500,000;
-the approval and as the case may be the modification of the
annual development plan (referred to below as "the Development
Plan");
-the presentation to the General Meeting of the Partners of a
proposal to liquidate the company or to modify its Articles of
Incorporation.
-unless it is provided for in the Budget or in the Development
Plan, the lending, rental, allocation, transfer or sale of any
copyrights, except in the case of the Company's normal, current
operations.
-unless it is provided for in the Budget or the Development Plan,
the signing of any contract with a subsidiary or a partner of the
company, or with any subsidiary or company affiliated with a
partner or with any person owning a share in a partner's capital.
11PAGE
-decisions pertaining to the hiring of personnel, the signing of
service agreements, or the dismissal of company executives or
managers of each subsidiary, with the exception of the contracts
of this nature referred to in the Development Plan or within the
limits stipulated in the Budget.-the distribution of dividends,
subject to the ratification of the General Meeting of the
Partners in legal forms.
-the definition of the powers of the bank's signature.
-unless provided for in the Budget or in the Development Plan,
the granting of loans to third parties for an amount exceeding
FRF 50,000;
-unless provided for in the Budget or in the Development Plan,
the signing of contracts of over one year, involving expenditures
(or the equivalent thereof in kind) for an amount exceeding FRF
250,000;
-unless provided for in the Budget or in the Development Plan,
the authorization, conclusions or execution of any fact or
contract which might result in a modification in the distribution
of the capital between ThermoLase Corporation and (Dessange
Holding).
-the authorization to issue a statement of the company's
insolvency;
e) Minutes
The proceedings of Meetings of the Board of Directors are
recorded in minutes drawn up in accordance with the legal
provisions in force, and signed by the Chairman (or in his
absence by the Chairman of the Meeting) and at least one other
member of the Board appointed by ThermoLase Corporation.
When decisions are made by teleconference, the Chairman draws up,
dates and signs, as rapidly as possible, the text of the minutes
of the meeting containing the (i) identify of the voting
directors, when appropriate the director represented by the
latter (ii) that of the directors not taking part in proceedings
(non-voting) as well as, (iii) for each motion, the identify of
the directors with their respective votes (for or against).
The Chairman sends out a copy of the minutes of the meeting by
regular mail. The directors return their original copy to the
Chairman after signing it, by regular mail, at their earliest
convenience. The date of the last signature received making it
possible to achieve the majority or the unanimous vote required
for adopting a motion shall be considered as the date of the
adoption of the motion at issue.
Proof of the mailing and receipt of the minutes to the directors
and the copies returned signed by the directors as indicated
above are kept in the registered offices.
12PAGE
When a decision is the result of the approval of all the members
of the Board expressed in an act, a copy of this act is appended
to the minutes of the board meeting.
Article 18 - Powers of the Board of Directors
The Board of Directors, a collegial organ, is responsible for
administering and managing the company within the limits of the
company's object, the provisions of these Articles of
Incorporation and the legal provisions appearing in the Article
262-10 of the law governing trade companies reserving certain
prerogatives to the body of partners as a whole, and within the
limits of the exclusive power of representation with respect to
third parties which the law confers upon the Chairman. In
particular, it is responsible for adopting the annual Budget and
supervises the execution thereof by the Chairman.
a) Committees
The Board of Directors may decide to create committees composed
of several members of the Board of Directors, responsible for
studying or dealing with items submitted to it by itself or its
Chairman. The Board of Directors determines the composition and
prerogatives of the committee, which exercises them under its
responsibility.
The committees must record their proceedings in a register in the
form of minutes and must communicate this register to the Board
of Directors along with any report which the latter might request
of them;
No committee shall have the power to make decisions which require
a unanimous vote of the Board of Directors and in particular
those listed in article 17-2-d), above.
b) Delegation of Powers:
The Board of Directors may, at a unanimous vote, delegate all
special and temporary powers to a third party, to perform all
acts or sign all contracts on the company's behalf, within the
limits of the powers reserved to the General Meeting of the
Partners and the Chairman pursuant to law and these Articles of
Incorporation.
Article 19 - Remuneration of members of the Board of Directors
The Directors' duties are not remunerated. However, they are
entitled to reimbursement of their expenses upon presentation of
documents in proof and within the limits which the Board of
Directors may decide to set.
The members of the Board of Directors may receive no remuneration
from the Company, be it permanent or otherwise, other than that
13PAGE
stipulated in the preceding paragraphs, unless they are bound to
the company by an employment contract on the conditions
authorized by law.
Article 20 - Agreements between the Company and a member of the
Board of Directors
Any agreement signed between the company and one of the members
of its partners who are members of the Board of Directors, either
directly or indirectly or through an intermediary party, is
subject to the prior approval of the Board of Directors.
The same is true of agreements between the company and another
company if one of the members of the Board of Directors of the
company is a partner, manager, director, managing director,
member of the Board of Trustees or of the Management Board of the
other company.
The member of the Board of Directors concerned shall not take
place in the vote concerning the authorization.
These agreements are authorized, approved by the partners on the
conditions provided under Article 262-11 of the law of July 24,
1966.
Article 21 - Statutory Auditors
The company's accounts are audited by one or several statutory
auditors in office, performing their duties in accordance with
the law.
One or several alternate statutory auditors, called upon to
replace the auditors in office in the event of refusal,
hindrance, resignation, death or replacement, are appointed at
the same time as the acting statutory auditors and for the same
term.
The Statutory Auditors are appointed by decision of the
shareholders' meeting.
The statutory auditors are appointed for six financial years,
their terms expire at the end of the collective decision of the
partners ruling on the accounts of the sixth financial year.
The statutory auditors are always re-eligible. In the event of
their fault or hindrance, the statutory auditors may, at the
request of the Chairman, the works committee, of one or several
partners representing at last one tenth of the share capital, be
removed from office prior to the normal expiry thereof, by court
decision made on the conditions established by decree.
A statutory auditor appointed to replace another shall remain in
office only until the expiry of his predecessor's term.
Statutory auditors are vested with the duties and powers
conferred upon them by law. They must be informed of any
14PAGE
procedure for consulting the partners and must receive the same
documents as those sent to the partners.
The fees of the Statutory Auditors are paid by the Company.
CHAPTER IV
COLLECTIVE DECISION OF THE PARTNERS
Article 22 - Object
1. The following decisions fall within the partners' exclusive
prerogatives:
- the extension or modification of the company's object
- the transfer of the registered offices outside the
department
- appointment of Statutory Auditors
- the approval of the annual accounts and the allocation
of results
-the approval of the agreements signed between members of
the Board of Directors and the company, in accordance with
Article 262-11 of the law of July 24, 1966;
-the increase, amortization or reduction of the share
capital, in particular in the cases stipulated in Article 13
above.
-merger, partial business transfer or split;
-the transformation of the company;
-the dissolution of the company in the cases referred to in
Article 37, paragraph 1;
-the modification of the provisions governing restrictions
of share transfers and the terms and conditions of such
transfers;
-more generally speaking, any amendment of the Articles of
Incorporation, unless otherwise stipulated herein,
2. Any other direction, including cases entailing a statutory
amendment, may be made by the Board of Directors on the
conditions stipulated in Article 17 above.
Article 23 - Frequency of Consultations
15PAGE
The partners must be consulted at least once per annum, within
six months following the close of the company year, to approve
the accounts of the year which has ended.
Other collective decisions are made at any time of the year.
Article 24 - Majority
Unless otherwise expressly stipulated in the Articles of
Incorporation or by the law, collective decisions are adopted by
a number of partners representing three-quarters of the shares
composing the share capital.
Article 25 - Voting Rights
The voting rights attached to the capital shares are proportional
to the share in the capital they represent, and each share
entitles its owner to one vote.
(Exercise of the voting right attached to the shares of a
Modified Partner is suspended as indicated in Article 14 of the
Articles of Incorporation.)
Article 26 - Methods for Consulting Partners
The partners are consulted at the initiative of the Chairman, two
members of the Board of Directors, a partner or the Statutory
Auditor.
Collective decisions are made either in General Meetings of the
Partners, convened in the registered offices, or in any other
place indicated in the notice, or by the Partners' signing of
written resolutions or a private instrument, or by
teleconferences (by telephone or audiovisual). The person who
has taken the initiative of consulting the partners determines
the method of consultation.
Article 27 - General Meetings
The convening of a General Meeting is optional.
The partners are convened to general meetings by simple letter
sent fifteen days prior to the meeting, and mentioning the date,
hour, place and Agenda of the meeting. The Statutory Auditor is
convened on the same conditions.
Each partner may be represented by a person of his choice, be he
a partner or not, vested with the powers for this purpose.
When all the partners are present or represented, if they
expressly accept, the general meeting can meet validly without a
notice. The Agenda is then determined by joint agreement of the
partners.
Article 28 - Written Motions
16PAGE
Decisions may also be made by written consent of the Partners.
The draft of the proposed motions is sent by the person who has
initiated the consultation of the partners, to each partner and,
for information, to the company and the Statutory Auditor by
registered mail with return receipt, regular mail, fax,
electronic mail or by any other means establishing proof of
mailing and receipt.
The partners are entitled to fifteen days as of the date of the
receipt of the motions to sign the draft motion if they agree and
send it back to the Company's Chairman by registered mail with
return receipt, regular mail or fax. A partner who has not sent
back his reply within the foregoing period shall be considered as
having refused the proposed motions.
The date of the last written motion received enabling a majority
or unanimous vote required for adopting the motion, shall be
considered as the date of the adoption of the motion concerned.
During the reply period, any partner may demand all additional
explanations from the person who has taken the initiative to
consult the partners or, as the case may be, the Company's
Chairman.
Proof of the mailing and receipt of the draft motions and the
return copies of these motions signed by the partners as
indicated above, shall be kept in the registered offices.
Articles 29 - Private Instruments
All collective decisions of the partners may also be adopted by
the partners' signing of a private instrument containing the
draft motions proposed.
Article 30 - Decisions made by Teleconference (telephone or
audiovisual)
The Partners consulted by teleconference are convened by any
means, eight days prior to the consultation.
The consultation may nonetheless be carried out immediately if
all the partners take part therein. The Agenda is then
determined by joint agreement of the parties.
When decisions are made by teleconference, the Chairman draws up
the minutes of the meeting, at his earliest convenience,
indicating:
-the identify of the partners voting, as the case may be the
partner which the latter represents; that of the partners not
taking part in proceedings (non-voting);-and, for each motion,
the identity of the partners with the content of their respective
votes (adoption or rejection).
The Chairman sends out a copy of the minutes of the general
meeting by regular mail. The partners return their original copy
17PAGE
to the Chairman after signing it, by regular mail, at their
earliest convenience. The date of the last signature received
enabling the majority or unanimous vote required to adopt a
motion, shall be considered as the date of adoption of the motion
at issue.
Documents in proof of the mailing and receipt of the minutes to
the partners and the copies returned signed by the partners as
indicated above, are kept in the registered offices.
Article 31 - Minutes
The decisions made by the partners in general meetings are
recorded in minutes indicating the method of consultation, the
place and date of the meeting, the identify of the partners
present or their proxies, the documents and reports submitted to
the meeting for discussion, a statement of the discussions, the
texts of the motions put to a vote and the results of the votes.
Minutes are signed by the Chairman of the meeting and a
ThermoLase Corporation representative.
The decisions adopted by signing written motions are recorded in
the minutes drawn up and signed by the Chairman. These minutes
mention the use of this procedure and the partners' responses are
appended thereto.
The decisions adopted by signing a private instrument are
recorded in minutes drawn up and signed by the Chairman. A copy
of the private instrument is appended to the minutes. The
original of the private instrument is kept in the company's
registered offices.
The decisions adopted by teleconference are recorded in the
minutes drawn up and signed by the Chairman and the partners, as
indicated in Article 25 above. The minutes shall mention the use
of this procedure.
Article 32 - Information Provided to the Partners
Regardless of the method of consultation, all consultations of
the partners shall be preceded by information containing all the
documents and information commonly sent to the shareholders of a
joint stock company or held at their disposal in the registered
offices on the conditions stipulated in Article 444 of law no.
66-537 of July 24, 1966 and 133 and 135 of enactment No. 67-236
of March 23, 1967, the reports of the Board of Directors are
replaced, for the purposes of this instrument, by the Chairman's
reports.
This information shall be communicated to each partner at least
fifteen days prior to the date of the consultation.
CHAPTER VI
18PAGE
ACCOUNTS - ALLOCATION & DISTRIBUTION OF RESULTS
Article 33 - Annual Accounts
Regular accounts are kept of the company's operations, in
accordance with law. The Chairman draws up a management report
on the company's management during the past year.
At the close of each year, the Chairman draws up the balance
sheet, the income statement and the appendix, in accordance with
law.
Article 34 - Allocation & Distribution of Results
The Income Statement, which recapitulates the year's proceeds and
costs, indicates, on the basis of the difference between these
two items, after deducting amortization and provisions, the
year's profits or losses.
At least one-twentieth of the year's profits, minus, as the case
may be, previous losses, is deducted to create the reserve known
as the "legal reserve." This levy ceases to be mandatory when
the reserve amounts to one-tenth of the share capital; it must be
resumed when, for any reason whatsoever, the reserve falls below
this percentage.
The distributable profit is made up of the year's profit, minus
previous losses, and sums to be deposited in reserve accounts
pursuant to law and the Articles of Incorporation, plus the
profit carried forward.
The partners are entitled to levy the sums they deem appropriate
from the distributable profit, to allocate them to the
appropriation of all optional, ordinary or extraordinary
reserves, or to carry them forward, all in the proportions they
determine. The balance, if any exists, is distributed in equal
amounts among all the shares as dividends.
Furthermore, the partners may decide to distribute sums levied
from optional reserves, either to provide or supplement a
dividend, or as an exceptional distribution. In the latter case,
the decision expressly indicates the reserve items from which the
levies are made.
Except in the case of a reduction of the capital, no sums shall
be distributed to the partners when shareholders equity has
fallen or would fall, at the date of such deduction, below the
amount of the capital plus the reserves of which the law or these
Articles of Incorporation prevent the distribution.
The revaluation differential may not be distributed. It cannot
be totally or partially incorporated into the capital.
19PAGE
Losses, if any exist, are carried forward, after the approval of
accounts, to be charged to the profits of subsequent years, until
they are entirely wiped out.
Article 35 - Methods for Paying Dividends
The methods for paying dividends are determined by collective
decision of the partners.
The payment of dividends shall take place within a maximum period
of nine months after the close of the year, unless this period is
extended by permission of the court.
Dividends may be paid in cash, in kind or in shares, including
shares in the company.
The distribution of any interim dividends, in cash or in kind or
in shares, including shares in the company, may take place at any
time, in accordance with law.
CHAPTER VI
DISSOLUTION - LIQUIDATION - TRANSFORMATION
Article 36 - Shareholders Equity Falling Below One Half of the
Share Capital
If, due to losses ascertained in accounting documents, the
company's shareholders equity falls below one half of the share
capital, the Chairman is obliged, within four months following
the approval of the accounts revealing these losses, to consult
the partners for the purpose of deciding whether it is fitting to
dissolve the company in advance.
If dissolution is not pronounced, the company is obliged, no
later than at the close of the second company year following the
year during which the losses were ascertained, and subject to the
provisions of Article 71 of the law of July 24, 1966, to reduce
its capital by a sum amounting at least to the sum of the losses
which it has not been possible to charge to reserves, if within
this period, the shareholders equity has not been brought back up
to at least one half of the share capital.
Failing consultation of the partners, all parties interested may
request that the Court dissolve the Company. The same is true
if the provisions of paragraph 2 above have not been applied.
Article 37 - Advance Dissolution
1. The company's dissolution occurs at the expiry of its term,
or prior thereto, by decision of the partners, adopted at a
majority of three-quarters of the shares composing the share
capital.
20PAGE
2. The company is dissolved automatically if one of the
following events occurs:
a)judgment ordering receivership or liquidation or any other
bankruptcy procedure against the company or one of its partners,
subject to the regulations which apply in bankruptcy matters
(unless otherwise decided by all the partners not affected by
this situation confirming the Company's activity).
b)judgment adopting a plan for the total sale of the assets,
pronounced against one of the company's partners (unless
otherwise decided by all the partners not affected by this
situation confirming the Company's activity).
c)dissolution, for any cause whatsoever (other than a merger or
split) of one of the company's partners (unless otherwise decided
by all the partners not affected by this situation conforming the
Company's activity).
d) dissolution of ThermoLase France LLC
e)in the event of the loss by one of the partners of its status
partner (by means of the sale of all of its shares or otherwise),
unless otherwise decided by the remaining partners, owning at
least 50% of the company's shares, inasmuch as the latter have
the possibility of approving one or several new partners on
conditions determined by them.
3. Furthermore, the company is dissolved:
a)At the request of ThermoLase Corporation notified to the other
partners by registered mail with return receipt, within 6 months
following the first anniversary date of the company's
registration in the Trade & Companies Register, if the company
has not opened, at the first anniversary date of the company's
registration, an SPA in France utilizing the "Soft Light"
technology for which it holds the license from ThermoLase France
LLC.
b)At the request of ThermoLase Corporation, notified to the other
partners by registered mail with return receipt within 6 months
following the second anniversary date of the first SPA opened by
the company in France, utilizing "Soft Light" technology, if the
consolidated sales of the company and its subsidiaries during
these two years do not exceed US dollars 5,000,000.
Article 38 - Liquidation
Except in the cases of merger, split or the ownership of all the
shares by one entity, the company's dissolution entails its
liquidation.
21PAGE
During liquidation, the company's activity is reduced to the
settlement of its business, payment of its debts, and the
performance of its obligations, the sale of its assets and the
distribution, as the case may be, of the remaining assets to the
partners, in proportion to their share in the company.Subject to
the applicable regulations, every partner will have a
preferential right to the goods or rights he had brought with him
to the company.
The partners are consulted at the end of the liquidation to rule
on the final liquidation accounts, on the discharge of the
liquidator for his management and release from his mandate and to
establish the close of the liquidation.
The decision is adopted at a two-third's majority of the shares
composing the share capital.
The sharing out of the liquidation dividend remaining after
reimbursement of the face value of the shares is performed among
the partners in the same proportions as their share in the
capital.
Article 39 - Transformation
The company's transformation into a company of another form is
always possible by collective decision of the partners at a
majority of three-quarters of the shares composing the share
capital, unless otherwise provided by law.
CHAPTER VII
DISPUTES
Article 40 - Disputes - Election of Domicile
Any disputes which might arise during the company's lifetime or
its liquidation, either between the partners and the company or
among the partners themselves, concerning company business, shall
be settled definitely according to the Regulation of the
International Arbitration Court of London ("LCIA") by one
arbitrator ruling in accordance with this Regulation. London
shall be the seat of the Court of Arbitration and the language of
the arbitration shall be English, it being understood that the
arbitrators shall have good knowledge of French.
CHAPTER VIII
APPOINTMENT OF THE CHAIRMAN
AND OF THE STATUTORY AUDITORS
Article 41 - The First Chairman
The following person has been appointed as the Company's Chairman
for a period of 1 year: Mr. _________________________
22PAGE
The Chairman appointed above has accepted the mission which has
just been entrusted to him, in a letter dated __________________,
and declares that no incompatibility or any prohibition exists
preventing him from accepting this office.
Article 42 - First Statutory Auditors
The following parties have been appointed as the Company's acting
and alternate Statutory Auditors for a term of six (6) company
years, ending at the end of the meeting of all the partners
convened to close the accounts of the sixth company year:
-as acting Statutory Auditor:
Audit & Conseils Associ_s - ACA, SA, ▇▇, ▇▇▇ ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇
__________________________________________
- as alternate Statutory Auditor:
__________________________________________In a letter of
____________________, 1996, ACA and _____________________
declared that they accepted the mission which has just been
entrusted to them and that no incompatibility or factor
prohibiting them from occupying office exists on their count.
CHAPTER IX
MISCELLANEOUS PROVISIONS
Article 43 - Commitments made for the account of the company
being created
The acts accomplished and commitments made for the account of the
company, appearing on the list appended hereto, are incumbent
upon the company, as of the date of the signing of this
instrument or the date on which they were signed, with effect on
the date of the company's registration in the Trade & Companies
Register.
The company's partners hereby empower the ___________________
company, duly represented by an empowered representative, to
conclude and sign the acts listed in Appendix II hereto on behalf
of the Company, prior to its registration in the Trade &
Companies Register.
Article 44 - Costs
The costs, taxes and fees of these Articles of Incorporation, and
those which shall ensue are to be paid by the Company.
Article 45 - Publicity - Powers
The publicity formalities required by law and the regulations are
to carried out at the Chairman's discretion.
23PAGE
Drawn up in Paris
in six copies
on November, 1996
_________________________ _________________________
ThermoLase Corporation (Dessange Holding)
Represented by Represented by
Mr. ▇▇▇▇ ▇▇▇▇▇▇ Mr. _____________________
acting as Chairman Acting as _______________
24PAGE
EXHIBIT B
(THERMOLASE-DESSANGE) SAS
SHAREHOLDERS' PACT
BETWEEN:
The ThermoLase Corporation, a partnership formed under the laws
of the State of Delaware, United States of America, whose head
office is located at, ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ of America, represented for the
purposes hereof by its President, Mr. ▇▇▇▇ ▇▇▇▇▇▇, duly
authorized for the purposes hereof by a resolution of its Board
of Directors dated ______________, 1996 (hereinafter referred to
as "ThermoLase").
First Party
AND;
the [Dessange Holding] company, a public company capitalized at
FRF 1.500.000, whose registered office is at ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, represented by its Chairman and
Managing Director for the purposes hereof (hereinafter referred
to as "SA").
Second Party
PARTICIPANTS IN THE PACT:
1. ThermoLase France L.L.C., a limited liability company
incorporated under the laws of the State of Delaware, United
States of America, whose head office is located at ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ of
America, represented for the purposes hereof by its Chief
Executive Officer Mr. _______, duly authorized for the purposes
hereof by a resolution of its Board of Directors dated
_________________, 1996 (hereinafter referred to as "LLC").
2. The Franklin Holding Company, a public company
capitalized at FRF 19.853.200, whose registered office is at ▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, represented by its
Chairman and Managing Director for the purposes hereof
(hereinafter referred to as "Franklin Holding").
3. ▇▇▇▇ ▇▇▇▇▇▇▇'▇ Company.
4. ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇, resident in Geneva, Switzerland
(address) (hereinafter referred to as "▇▇▇▇ ▇▇▇▇▇▇▇").
DBC Holding Company, a public company capitalized at
FRF 250.000, whose registered office is at 37, avenue ▇▇▇▇▇▇▇▇ ▇.
1PAGE
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, represented by its Chairman and Managing
Director for the purposes hereof (hereinafter referred to as
"D.B.C. Holding").
WHEREBY:
1. ThermoLase Corporation and [Dessange Holding] (the
"Parties") wishes to participate together in the joint
development of beauty salons or spas (the "Spas") in France and
in the French overseas departments (the "Territory"), dedicated
to the use of procedures - whether patented or not - developed by
the group [Thermo] and licensed by him and described in English
in Appendix 1 hereto (hereinafter referred to as the "ThermoLase
Technology"), or to grant a license to medical firms.
2. In this context, the parties decided to incorporate the
LLC in order to acquire the necessary rights on the ThermoLase
Technology and entered into an Operating Agreement appended in
Appendix 2-A.
3. For this purpose, the Parties, in order to carry
through the project, decided to set up a partnership, with the
assistance and support of their main shareholders, Franklin
Holding SA and ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇, participants herein. This
partnership (hereinafter referred to as "SAS" will sign
agreements with the holder of the rights to ThermoLase
Technology, LLC, in order to (i) obtain a license for the said
technology so that the Spas to be created by SAS and the medical
firms could benefit therefrom either directly or indirectly
through subsidiaries set up with this sole aim, and (ii) to
acquire or enable the Spas and the doctors concerned to acquire
products such as ▇▇▇▇▇▇ generators and lotions, vital for use of
the ThermoLase Technology (the "Products"). The draft license
agreement is appended hereto in Appendix 2-B.
4. In the same way, SAS would sign an agreement with
Franklin Holding SA, holder of the rights to the "Jacques
Dessange" trademark, in order to obtain a license for the said
trademark so that the Spas to be created by SAS could benefit
therefrom. The draft trademark license agreement is appended
hereto in Appendix 2-C.
5. The parties considered it necessary to indicate, in
this shareholders' pact, the conditions of the incorporation,
management and financing of the SAS and the rules intended to
govern their relations and their cooperation such SAS.
2PAGE
IT HAS BEEN AGREED AS FOLLOWS:
Article 1
Purpose of the contract - Effective contract date
1.1 The purpose of this contract is to define the legal
relations between the parties at the time of incorporation and
management of a partnership in which ThermoLase and SA shall be
the sole partners.
1.2 In the context of this contract and their relations as
partners in SAS, the aim of the Parties is to enable SAS to
create and develop in the Territory, using the ThermoLase
Technology and the name and reputation of ▇▇. ▇▇▇▇▇▇▇ Dessange, a
network of healthcare centers and medical firms using the
ThermoLase Technology and the Products for hair removal and skin
exfoliation treatments. SAS may also make the ThermoLase
Technology available to qualified doctors, under conditions
substantially complying with the sublicense agreement appended in
Appendix 2-B, subject to the modification of this document to
comply with French law.
1.3 The Contract shall come into effect as from its
signature by the Parties thereto and the participants mentioned
in the introduction hereto [and from the time of performance of
the events or suspensive conditions mentioned in Article 13
hereafter] (hereinafter the "Effective contract date").
Article 2
Incorporation of SAS
2.1 At the latest by the Effective Contract Date, the
Parties shall incorporate SAS, the articles of incorporation of
which, in substance, shall comply with the model enclosed in
Appendix 3 hereto.
2.2 Both shareholders in SAS shall subscribe in cash for
five hundred (500) shares with a nominal value of two hundred and
fifty francs (FRF250) which shall provide a fifty per cent (50%)
shareholding in the capital of SAS.
The respective participation of the parties shall be liable to
vary in the case where ThermoLase exercises the Promise to Sell
granted thereto [this day _______] by SA for the acquisition of
shares representing a tenth of one per cent of the capital of SAS
and LLC, or in the case of deadlock, under Article 11 of the
present contract.
3PAGE
2.3 Each share shall have a single voting right and the
Parties shall be prohibited from introducing any statutory clause
or mechanism providing double voting rights, or from issuing any
investment certificate or voting right certificate until the end
of the period described in Article 4.2.5. (e) hereafter.
2.4 The company name of SAS shall be indicated in Appendix
3, it being understood that SAS may not continue to use the trade
names, trademarks or other names unless it is authorized to do so
by the holders of the intellectual property rights of the said
names, trademarks and trade names through license agreements
signed with SAS.
Failing this, SAS shall modify its company name and shall stop
using the names and trade marks, for which it no longer has the
necessary rights, as soon as possible in order to avoid any
violation of the Parties' rights.
2.5 The initial registered office of SAS shall be located
at the address shown in Appendix 3 but may be transferred to any
other location at the first request of Franklin Holding.
2.6 In the event of any dispute regarding the
interpretation of this contract, or between the provisions of the
contract and those of the articles of incorporation of SAS, the
Contract provisions shall take precedence over the articles of
incorporation between the Parties.
Article 3
Management of SAS
3.1 SAS shall be managed by a Board of Directors as stated
in Appendix 3.
3.2 The Parties shall take the steps necessary to ensure
that their representatives on the Board of Directors or at
meetings of shareholders of SAS exercise their voting rights in
the interest of SAS; this shall imply respect of the Contract and
all the other agreements established between the Parties or with
companies of the ThermoLase group and/or of the Dessange group
which directly or indirectly refer to the purpose of this
Contract.
3.3 The Board of Directors shall manage all the business of
SAS for which it shall constitute the supreme authority for
making management decisions that are not legally attributed to
another authority by Law or the articles of incorporation.
3.4 Powers of the board of directors of SAS
3.4.1 The following decisions must be unanimously approved by
the Board of Directors of SAS:
4PAGE
(a) except where planned in the Budget or the Annual Development
Plan of SAS, the incorporation and liquidation of any
subsidiary intended to manage a Spa, the signature of any
loan agreement with such a subsidiary or the financing of
any capital increase for such a subsidiary.
(b) except where planned in the Budget or the Annual Development
Plan of SAS, the acquisition or sale of securities and
equity investments, with the exception of current cash
management operations on the financial market whose total
amount, at any time, is less than [FRF500.000] (the
instruments of this current management shall be investments
though specialized UCITS and/or negotiable certificates of
deposit with a term of six (6) months or less, or any other
financial instrument of the same type).
(c) the adoption, where necessary, of a change in the annual
budget of SAS (hereinafter referred to as "the Budget").
The Budget shall consist of the draft annual budget prepared
for each financial year of SAS by the General Management,
approved by the Board of Directors of SAS, based in
particular on prospects of revenue and expenditure that are
reasonably foreseeable.
The draft annual budget shall respect the format of the
draft budget for financial year 1996-1997 as shown in
Appendix [ ] hereto.
(d) The appointment or replacement of auditors, the audit firm,
or the bankers of SAS.
(e) Investment decisions of an amount superior to FRF 500.000,
except if the Budget or the Development Plan envisage the
considered investment.
(f) Except where such operations are planned in the Budget or
the Annual Development Plan of SAS: transfer, rental,
exchange, pledging or granting as guarantee of all or part
of the assets or the business of SAS, as well as any
guarantees and endorsements granted to third parties,
including subsidiaries.
(g) Except where such operations are planned in the Budget or
the Annual Development Plan of SAS: the subscription for
short, medium or long-term bonds of an amount superior to
FRF 500.000.
(h) The approval and, where necessary, the modification of the
annual development plan (hereinafter referred to as "the
Development Plan").
5PAGE
The Development Plan shall consist of the draft annual
development plan prepared for each financial year of SAS on
the basis of the information available concerning the
company, as well as the reasonably foreseeable commercial
prospects.
The draft Development Plan shall respect the same format as
the draft Development Plan for 1996-1997 as shown in
Appendix [ ] hereto.
(i) The submission to the meeting of partners of a proposal to
liquidate SAS or to change its articles of incorporation.
(j) Except where such operations are planned in the Budget or
the Annual Development Plan of SAS, the loan, rental,
appropriation, transfer or sale of any intellectual property
rights, except in the case of normal, current operations of
the company.
(k) Except where such operations are planned in the Budget or
the Annual Development Plan of SAS, the signing of any
contract with a subsidiary or with one of the Parties or the
Participants herein, or with a subsidiary of ThermoLase, and
the modification or cancellation of any right in regard to
the terms of such contracts.
(l) Decisions relative to recruitment or the signing of service
contracts or the dismissal of executives of SAS or the
director of each subsidiary, with the exception of contracts
of such type mentioned in the Development Plan or within the
limits set by the Budget.
(m) The distribution of dividends, subject to ratification of
the Board's decision by the meeting of the partners in legal
forms.
(n) The definition of bank signature powers of attorney.
(o) Except where such operations are planned in the Budget or
the Annual Development Plan of SAS, the granting to third
parties of loans exceeding [FRF 50.000].
(p) Except where such operations are planned in the Budget or
the Annual Development Plan of SAS, the signature of
contracts with a term of more than one year implying
expenditure (or the equivalent in kind) exceeding [FRF
___________].
(q) Except where such operations are planned in the Budget or
the Annual Development Plan of SAS, the authorization,
signature or execution of any action or contract which could
lead to a modification of the capital distribution between
ThermoLase Corporation and [Dessange Holding].
6PAGE
(r) The authorization to proceed with declaration of suspension
of payment by the company.
[To be filled in where necessary]
3.4.2 In the same conditions of majority, the board of
directors of SAS shall have the power to decide to increase or
decrease the amounts mentioned in Articles 3.4(o) and (p),
without this requiring any change in the provisions of the
Contract.
3.5 Distribution of dividends policy
The parties promise to facilitate the granting to the
shareholders as easy as possible of the dividends of the SAS (in
particular by granting payments in advance).
3.6 Agreements between the SAS and its shareholders
The parties acknowledge that the preliminary authorization
procedure provided by Article 20 of the SAS by-laws as appended
in Appendix 3 will not apply to the conclusion of the License
Agreements, which are referred to in Appendix 2-B and 2-C, nor to
the supplying by ThermoLase or Dessange Holding of products
provided for the business of the SAS.
Article 4
Financing of SAS
4.1 Capital of SAS
4.1.1 The initial registered capital of SAS shall be
[FRF25.000] consisting of [1,000] shares with a nominal value of
FRF250. The initial capital of the company shall be paid in full
at the time of its incorporation. ThermoLase and SA shall each
receive 500 shares (i.e., 50%) for a cash contribution of
FRF125.000.
4.1.2 This initial capital could be modified under the
statutory conditions governing modification of the articles of
incorporation, i.e., (i) in terms of the shareholders' equity
requirements of SAS identified by the Parties in the Annual
Budget of SAS as defined in terms of the requirements of the
Annual Development Plan of SAS, or (ii) failing any plan in the
said documents, following a decision made in terms of an
identified requirement.
4.2 Principals governing the financing of SAS
4.2.1 The Parties shall agree to assist SAS and to cooperate
as closely as possible and in particular, the parties acknowledge
the importance for SAS of the provision, in good time by each
party, in proportion to its shares in the capital, of the
7PAGE
financial resources necessary for it to finance its investments
and its working capital.
In this respect, Franklin Holding confirms that (i) it shall
guarantee the payment by SA, in good time, in terms of the
payment schedule defined by SAS in the context of the Development
Plans and the Annual Budgets, of all sums that should be advanced
by SA to SAS, within the limit of the equivalent of five million
US dollars ($5,000,000) in French francs minus the amount of the
distributable profits of the SAS which are not allocated to the
SA by the SAS as stipulated in Article 4.2.5(a) and (ii) that,
each year, and for the first time at the time of signature of
this contract, it shall give ThermoLase a certified copy of the
accounts of the Franklin Holding company as soon as they have
been approved by the shareholders of Franklin Holding.
4.2.2 In as much as the Spas may be incorporated in the form
of entities separate from SAS, the Parties are also aware of the
need for SAS to be able to meet the requirements of the said
entities and the deadlines inherent in the circulation of the
financial resources required by the said entities.
As such, the Parties agree to respond, as quickly as possible, to
calls for funds notified to its partners by SAS and to provide
the said funds or, where considered preferable, to help it find
the financial resources necessary to satisfy its obligations as
creator of Spas or as main shareholder of companies managing Spas
at the time of calls for funds from the entities incorporated for
the creation and management of the said Spas.
4.2.3 SPA shall be financed by the personal contributions of
SAS shareholders or by borrowings made by SAS from its
shareholders, or by borrowings made by SAS from independent
financial establishments or by using the own resources of the
SAS, under the conditions and according to the schedule relative
to the financial requirements of SAS.
Such requirements shall reflect those of establishments and/or
subsidiaries of SAS and shall be defined in terms of the annual
Development Plan of the company in the Annual Budge of SAS. Such
requirements will be granted by the shareholders of the SAS, in
proportion to its shares in the capital
4.2.4 Development Plan and Budget of the Company
(a) The General Management of SAS shall draw up the Development
Plan and the Budget of SAS for the financial year, according
to the models enclosed in Appendices 4 and 5, in terms of
the guidelines defined by the Board of Directors, and should
present them to the Board of Directors of the Company for
approval each year, at a date to be agreed jointly but which
should be within four (4) months of the start of each
financial year.
8PAGE
As is the case for the Development Plan and Budget for 1997
enclosed in Appendices 4 and 5, the annual Development Plan
and Budget should each have an appendix describing the
projected development of SAS and the financing for the
following four financial years. This will be used as a
basis, each year, for preparation of the Development Plan
and Budget of the following financial year in order to keep
the entire investment in a totally coherent context.
(b) The Development Plan and the Budget may be established
overall for SAS, SA, LLC and the SAS subsidiaries as long as
they indicate the financial flows relative to each entity in
such a way that SAS can then respect its commitments.
(c) Both the Development Plan and the Budget of SAS for a given
financial year shall be prepared in terms of the elements
communicated by the shareholders, the forecast financing of
SAS subsidiaries and all other information known by the
parties, in particular regarding market behavior.
(d) Both the Budget and the Development Plan shall be updated
regularly by the directors of SAS during the financing year
and any major differences which were stated during the
course of the budget and development plan shall be notified
to the SAS partners under the conditions to be defined
jointly by the Parties or by the Board of Directors.
The parties attach particular importance to the fact that
meetings of those in charge of ThermoLase and Franklin
Holding and the directors of SAS should be organized at
least three times a year in order to follow up application
of the Development Plan and the Budget. In addition, the
SAS directors shall receive instructions from the partners
to respect to regular communication and reporting procedure
on the commercial policy applied, the market, the accounts
and, in particular, the results along with any other
appropriate information.
(e) At the latest three (3) months after the end of the on-going
SAS financial year (or, where the Budget and/or the
Development Plan are not approved at the expected time,
within one month of approval of the Annual Budget by the
Board of Directors of SAS), each of the Parties (i) should
have paid the due amount incumbent thereon in terms of the
financial requirements of SAS into a bank account opened for
this purpose by SAS, as such amount is indicated in the
Development Plan and the Budget decided by the SAS partners
for the following financial year, and (ii) should inform the
other Party of the said payment.
(f) In the case where one Party notes that the other Party has
not made the payment incumbent thereon in good time, the
non-defaulting Party may notify the defaulting Party of its
intention to invoke application of the procedure applicable
9PAGE
in the case of Deadlock as described in Article 11 of this
contract. This procedure can only be interrupted by the
payment of the entire sum, increased by late-payment
interest of 5%, within three working days of receipt of such
notice by the defaulting Party.
4.2.5 SAS finance conditions
(a) The Parties shall agree to ensure the financing of SAS in
the form of shareholders' equity (or finance considered
equivalent thereto by the Parties ruling in the context of
the Board of Directors of SAS) to the extent of a total of
ten (10) million US dollars ($10,000,000). This financial
contribution shall be made by the partners of SAS to the
extent of their respective share in the capital of SAS on
the date of each call for funds by SAS (i.e., at now, USD
5,000,000 for each shareholder). The amount of the profits
of the SAS which won't be allocated to the shareholders,
amounts to the contribution of the shareholders to the
financing of the company, as set above and is deducted from
the USD 10,000,000.
(b) In order to appreciate the total amount of the contributions
actually made in regard to the previously-mentioned
commitment, the parties agree that every financial
contribution made in French francs shall be converted into
US dollars at the French franc/US dollar exchange rate in
force for exchange between banks, on the date of payment of
the French francs sum made on the SAS bank account by the
SA, as published in the Wall Street Journal Europe. Where
the said journal or the said information is no longer
published, the Parties shall obtain this information from
the Financial Times.
In the case of a contribution made by allocation of the
distributable profits of the SAS which were not allocated,
as described above in paragraph a., the amount of
contribution in French francs will be converted into US
dollars at the French franc/US dollar exchange rate in force
for exchange between banks, on the date when the relevant
decision is voted.
(c) In the context of the Development Plan, where the parties
decide that the Company shall proceed with one or more
capital increases, these could be effected in cash, or
possibly through off-setting against all or part of the sums
advanced by the Parties in the form of advances or loans, as
long as the said capital increase(s) of the Company do not
lead to a change in the capital distribution of the Company,
subject, however, to any authorized share transfers that may
have taken place in the meantime.
(d) The Parties shall unanimously decide to introduce company
procedures which could have an impact on their financial
10PAGE
situation and their respective percentage of shares of the
capital of SAS. This shall apply, in particular, to:
-the cancellation or waiver of any preferential subscription
right
-the amount of any issue premium applicable at the time of a
capital increase
-any contribution in kind of any assets, including any debt
-any appropriation to the reserves or distribution of
dividend in the case where they consider that SAS should
keep more than the balance of the net profit of SAS as an
extraordinary reserve after appropriation to the compulsory
reserve items.
-any depreciation or any reduction of the capital,
regardless of the cause
These company procedures shall be followed by SAS through
strict respect of French rules applicable to partnerships.
(e) The procedures defined heretofore are intended to ensure
that the Parties maintain their respective percentage of
shareholdings as long as the joint investment threshold of
$10,000,000 has not be reached.
(f) When the said amount of $10,000,000 is reached, and
notwithstanding what is stated previously:
(1) The Parties shall be free to decide, in the management
bodies of SAS, the conditions of complementary finance, in
shareholders' equity, in virtual shareholders' equity, through
borrowing or even through the investment of securities with
investors concerned, as long as such an investor (i) has accepted
to acquire an equivalent stake in the capital of LLC and (ii) has
accepted to ratify all the accords and agreements governing the
legal relations between the Parties.
Where one of the SAS partners decides not to contribute to such a
capital increase for SAS, any other partner shall be entitled to
subscribe instead of it, leading, ipso facto, to dilution of the
percentage of its stake in SAS and in LLC, which the Parties
acknowledge and admit.
(2) Where one of the Parties, duly obligated to pay funds
in order to contribute to the financing of SAS, is unable to do
so, or cannot make the payment within the deadline stipulated by
SAS through application of the applicable contractual, statutory
or legal rules, the other Party may validly make the payment
instead of the defaulting Party; in such a cause, the defaulting
Party shall have his rights reduced or limited in due proportion.
As such, in the event of default of a Party in the payment of
sums intended to cover a call for funds to finance a capital
increase, the other Party may subscribe in a reducible way for
all or part of the shares normally reserved for the defaulting
11PAGE
Party; as such, the defaulting Party shall suffer a reduction of
its share to the extent of its percentage stake in the capital of
SAS. The respective percentage of shares of the parties in the
LLC capital will then be adjusted accordingly.
4.3 SAS financial year
The financial year of SAS shall start on January 1st and shall
terminate on December 31st of each year. The first financial
year shall terminate on December 31st, 1997.
4.4 SAS accounting
4.4.1 The accounts of SAS shall be kept in compliance with
the accounting rules generally accepted in France and in a way
which enables application of the rules and standards to which the
Parties may agree, or those which are indispensable for correct
execution of the agreements with ThermoLase.
4.4.2 It is agreed that (i) the accounts and finance
reporting system introduced at the level of SAS, as stated in
article 4.2.4(d) heretofore, should be defined in order to be
easy to use for a French company, but compatible with that of LLC
and (ii) where it turns out to be indispensable for ThermoLase,
the presentation of the SAS accounts should be compatible with
the American accounting rules governing LLC.
4.5 Auditors
4.5.1 The statuary auditor of the Company will be: Audit et
Conseils Associes - ACA
▇▇ ▇▇▇ ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
4.5.2 The substitute auditor of the Company will be:
4.5.3 Where ThermoLase so requests, the parties, shall assist
the Company to choose an international audit firm to help prepare
the company accounts.
Article 5
Transfer of Company shares
5.1 The conditions governing the transfer of SAS shares are
indicated in the SAS articles of incorporation as shown in
Appendix [3] hereto.
5.2 Notwithstanding what is stated previously, the parties
agree that at the first request from one of them formulated
during the period described in Article 4.2.5(f) heretofore, they
shall meet to study a modification of the transfer rules to
enable the development of SAS to continue through finding
investors interested in taking a share in SAS or in its
subsidiaries or through any other means in order to guarantee the
12PAGE
Parties that their investment and the development of Spas will be
enhanced.
In the event of such a request, the Parties shall agree to meet
and, where they fail to reach agreement, shall let the shares be
transfered at the expert's price mentioned in Article 11.3.2(b)
of the present agreement
In any case, any interested investor will have to execute the
present agreement and to ratify all the agreements which were
entered into by the parties or with certain companies from the
ThermoLase Group or from the Dessange Group, relating directly or
indirectly to the object of the present agreement.
5.3 Where the shares are sold, the existing partners may
validly decide to close the accounts of SAS and to distribute all
the distributable profits accumulated at the said accounts
closing date (dividends, where necessary distributed in the form
of an interim payment, and available reserves) of SAS and, where
one of the partners so requests, the Parties shall proceed with
such accounts closing and distribution at the first possible date
in order to limit any additional charges resulting from such a
procedure for SAS and its partners. The parties also agree that
the transfer may not take place and ownership may not be
transferred until the dividends and/or reserves mentioned
previously have been distributed.
Article 6
Non-competition
6.1 During the full period of its ownership of SAS shares,
each of the signatories shall agree not to invest in a company
and not to exercise an activity, either directly or indirectly,
alone or with other persons, in a company using laser technology
for skin care and hair removal.
This restriction shall be valid for the entire Territory.
6.2 The parties shall ensure that all the directors and all
the executives and staff of SAS, of SA, of DBC Holding and of the
SAS subsidiaries sign a non-competition commitment of the same
type as mentioned heretofore. They shall also agree to take
unrelenting legal action in the case of violation by any person
linked by such a commitment.
6.3 Where SAS is wound up in compliance with the provisions
of Article 37.2 or 37.3 of its articles of incorporation as well
as in the case stated in Article 11.3.1 and in the case of
purchase by ThermoLase of the stake of SA in the capital of SAS
in compliance with the provisions of Article 11.3.2(b) to (e), SA
shall agree, on its own behalf and on behalf of its shareholders,
not to have, either directly or indirectly as owner, partner, or
13PAGE
shareholder - except within the limit of one per cent (1%) of the
capital of a quoted company - executive director, employee,
director, investor or lender, or in any other capacity, a company
which has a substantial commercial activity in the field of the
development, promotion, manufacture, sale or marketing of skin
care and hair removal products and/or services in the Territory
for a period of two (2) years as from the date of the voting, by
SA partners, of a resolution deciding to liquidate SAS (or the
date of the judgment pronouncing liquidation of SAS); however, it
is understood that the previously-mentioned persons shall be
authorized to continue their activities in the field of
hairdressing, and in that of the ownership, control, franchising,
licensing and management of beauty salons, including the supply,
sale and use in the said beauty salons of hair removal and/or
skin care products and services which do not incorporate
techniques using light sources or the technique of electrolysis.
6.4 Notwithstanding what is stated previously, where the
Company is wound up through application of the provisions of
Article 37.2(b) or (c) following a collective procedure against
ThermoLase which prevents it respecting its obligations under
this contract, or subsequent to non-execution by ThermoLase of
its obligations under this contract or any contract directly
linked to it, or where SA repurchases ThermoLase's interest in
the capital of the SAS pursuant Article 11 hereunder. ThermoLase
shall agree, for a period of two (2) years as from the date of
the vote by the partners of a resolution to liquidate SAS (or the
date of the judgment pronouncing liquidation of SAS), not to
incorporate a private company, or form a partnership, a joint
venture, sign a cooperation agreement or joint marketing
agreement, or any other cooperation agreement in the Territory
with an individual or legal entity which has substantial
commercial activities in the field of investment in (or
management of) hairdressing salons or beauty salons in order to
develop, promote, distribute or sell skin care and/or hair
removal products or services using laser technology, whether
directly or indirectly, on its own behalf and on behalf of the
companies which control it or are under its control (the word
control should be understood in the sense attributed by Article
355-1 of the Commercial Companies Act of July 24, 1966, as
modified).
Article 7
Technical support
7.1 Where necessary, Franklin Holding or any company of
such group, at the request shall provide operational, accounting,
legal and financing assistance in return for remittance which
shall be defined through mutual agreement on an annual basis.
This agreement will reflect the provisions which are generally
used by Franklin Holdings subject to the adjustment reasonably
asked for by ThermoLase.
14PAGE
7.2 The said remuneration shall not cover the fees of all
the external advisers (lawyers, accounting experts, advisers or
consultants, doctors, etc.) whose intervention may be necessary
for the correct execution of the activities of SAS.
7.3 This assistance shall be independent from that which
may be offered to SAS in the context of technology license or
trademark agreements signed with SAS.
Article 8
Confidentiality
8.1 Confidential information
8.1.1 The Parties shall do everything possible to maintain
the confidentiality of all information and data, all written
documents, all files, whether kept in electronic or other form
and, more generally, all documents (unless they can be
immediately accessed by a public source or contain information
already published) (hereinafter referred to as "Information")
communicated by one of the parties or by a company of the
ThermoLase group or by one of the consultants or technicians
authorized by SAS.
Same treatment will apply to information which every party may
have on the other party's situation.
8.1.2 Where this contract is terminated, the Information
media, regardless of the form (paper, tape, diskette, etc.) and
all the copies thereof which could have been made, shall be
returned to the Party which provided them or which is the owner
thereof.
8.1.3 The obligation of confidentiality imposed by this
article 8 shall continue even if the contract is terminated and
shall remain in force as long as the Information remains
confidential.
8.1.4 The parties agree that the Information shall only be
used for purposes of execution of the Contract and the agreements
associated therewith. Where it turns out that Information should
be disclosed to a third party, including any employee of one or
other of the Parties, such a disclosure should only take place
where it is strictly necessary and the recipient of such
information should be informed of its confidentiality and must
agree to respect this confidentiality as stated heretofore.
8.2 Confidentiality of the Contract terms
8.2.1 The text and conditions of the Contract and all the
agreements associated therewith may not be revealed publicly by
either of the Parties unless written authorization is obtained
15PAGE
from the other Party, except at the request of any government
authority with jurisdiction over the Party which must make the
disclosure, or where this is imposed by a legislative or
statutory text, including those governing stock markets
(particularly at the time of a share issue by one of the Parties
or one of the companies of the ThermoLase group).
8.2.2 With the exception of information intended for the
public or stock market releases which should be submitted to the
Parties and to ThermoLase beforehand, no public announcement
concerning the Contract nor any of the operations that it
concerns should be made unless there is agreement between the
Parties and with ThermoLase as regards the time, the form and the
content of the said announcement.
8.3 Protection of patents, trademarks and know-how
8.3.1 Since the activities of SAS and its subsidiaries are
directly linked to the protection provided by the status of
patents and trade marks in the Territory, the Parties explicitly
agree to inform any of their number concerned, or ThermoLase, as
quickly as possible, of any events which come to their knowledge
concerning the patents, trade marks and know-how used by SAS in
its activities. In such a case, they shall provide each other
with assistance and support.
Article 9
Contract term
9.1 The Contract shall terminate on December 31, 2012.
9.2 However, notwithstanding what is stated previously:
(a) The Contract could be extended by successive periods of five
(5) civil years as long as the ThermoLase technology
continues to be licensed to SAS.
(b) The Contract shall terminate as soon as all the shares
representing the capital of SAS are held directly or
indirectly by one of the two Parties (in particular through
employees, close family members or representatives of a
company belonging to the same group as the Party in
question).
(c) The Contract shall also terminate by way of dissolution or
liquidation of the SAS.
(d) If one Party does not own any share of the SAS, this Party
will be released from its obligations under the present
agreement as soon as it won't own any share of the SAS,
except for Article 8 and, if necessary, for Article 6.
16PAGE
9.3 In the case of dissolution or liquidation of the SAS,
ThermoLase may be granted all the equipment it brought to the
SAS, subject to the relevant rules.
Article 10
Intellectual property rights
10.1 SAS shall benefit from the rights to certain patents,
trademarks and elements of know-how shall be licensed to it by
the Parties or their shareholders in the context of license
contracts complying, in substance, with the models enclosed in
Appendices 2.A and 2.B.
ThermoLase undertakes to provide to the SAS and SA all the
documents and information likely to justify the royalty rate
applying to the SAS under the license or sublicense agreements,
except the contracts made between the SAS and Franklin Holding or
French companies which are subsidiaries of or affiliated to
Franklin Holdings.
10.2 In case of a complaint or request of any kind against
the SAS or one of its licensees and/or franchisees, by a third
party relying on an infringement of his rights due to the use of
the ThermoLase Technology, or due to the performance of the
agreements referred to at article 10.1 hereabove, ThermoLase may
defend the SAS, at SAS's own expense.
In case of a complaint or request of any kind, against a
shareholder of the SAS, the managers or the shareholders of the
shareholders of the SAS themselves, by a third party relying on
the infringement of its intellectual or industrial property
rights due to the use of the ThermoLase Technology by the SAS,
ThermoLase shall defend, at SAS's own expense, against this
complaint or request, and the SAS will have to indemnify the
shareholders, their managers or their own shareholders, for all
the final judgments that could be passed against them.
If the SAS is precluded from providing such indemnification
(especially considering its financial situation), ThermoLase
shall indemnify the shareholders, their managers and their own
shareholders equal to the amounts that will not be paid by the
SAS.
In case of a request or action by a third-party against a
shareholder of the SAS, relying on an infringement of his rights
due to the use of the ThermoLase Technology, such shareholder
will have to inform the SAS and ThermoLase as soon as possible.
Failing that, the SAS would be released from its obligations
towards such shareholder if the delay to inform the SAS had
harmful consequences to the defense in respect of such
third-party's request. ThermoLase will defend, at SAS's own
expense, the shareholder or shareholders as soon as it is
informed of the request or the action of such third-party. The
shareholder may participate (without controlling it) to such
17PAGE
defense, at its own expense, unless the counsel chosen by
ThermoLase has a conflict of interests with such shareholder and
the latter first informs the SAS.
ThermoLase may not settle an affair out of court nor acquiesce in
a decision which would have consequences other than financial for
a shareholder without first obtaining the written agreement of
such shareholder, who cannot refuse nor delay it without motives.
Article 11
Deadlock
11.1 Aware of the mutual interest which the project
presented in this contract, and in the deeds and other documents
associated therewith, for themselves and for their shareholders,
the parties agree that they shall provide each other with support
and assistance in order to overcome any difficulties which could
arise in their relations.
Nevertheless, they acknowledge that, in good faith, situations
could arise in which their different positions could lead to the
impossibility of agreeing to the decisions to be made by the
management bodies of SAS. The purpose of this article is to
define the conditions for solving such a disagreement (defined
for the requirements of this Contract by the term "Deadlock").
11.2 There is Deadlock where the Parties are unable to agree
according to the decision-making rules defined in the articles of
incorporation of SAS. In such a case, the Parties shall agree:
(a) To identify in writing, at the meeting where the difference
arises, the point which raises a problem and the position of
each of the parties, along with an indication of the number
of directors or partners which are in favor of it.
(b) To put off making the contested decision for a period of two
weeks.
(c) To use this period to (i) consult each other (ii) to bring
in an impartial mediator who speaks English and French
(hereafter refereed to as the "Mediator") in order to find a
mutually acceptable common solution (the cost of the
mediator shall be paid half by each of the Parties and not
by SAS), (iii) to study the economic or commercial bases on
which each of the Parties took its stance or the doubts
formulated by the Parties and (iv) to examine the
possibility of defining a path other than the one proposed,
in close liaison with the Mediator.
(d) To convene a meeting in two weeks' time with the only item
on the agenda being an examination and a vote concerning the
disputed point. It shall be explicitly agreed by the
Parties that the Mediator shall chair the meeting and shall
18PAGE
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMMISSIONS.
start it with a summary of the situation of SAS, the problem
raised and the solutions envisaged, while reminding the
participants of the consequences of their diverging
viewpoints on the future of SAS.
11.3 In the case where the Parties are unable to agree on
this occasion, the following shall take place:
11.3.1 If the deadlock arises before the consolidated sales of
the Company and its subsidiaries realized after the date of
incorporation of the SAS exceeds ************* (using an exchange
rate determined at the date of the meeting referred to in Article
11.2.d above),
(a) ThermoLase shall have the option of purchasing DBC Holding's
interest in the capital of the SA for a price equal to the
cumulated amount of the investments of such company in the
SA (contributions to capital, loans, advances by
shareholders or other finance contributions), it being
understood that DBC Holding and, if necessary, Franklin
Holding must indemnify jointly and severally ThermoLase in
respect of any liability of the SA which is not related to
the activities of the SA in the context of the direct or
indirect exploitation of the ThermoLase technology in France
or abroad.
For this purpose, ThermoLase shall send Franklin Holding,
for signature by DBC Holding the securities transaction
order(s) necessary to make the transfer of securities
representing the stake of DBC Holding in the capital of SA,
as well as any deed enabling the transfer of the receivables
which are due to DBC Holding by the SA to ThermoLase or any
other company of its group and to give DBC Holding a
banker's draft for the amount mentioned in paragraph (a)
heretofore in exchange for the securities transaction
orders.
ThermoLase shall be authorized to choose a new partner for
the development of the ThermoLase Technology in the
Territory. This partner shall be chosen from among groups
which have no activity in the field of hairdressing and
beauty salons. Franklin Holding shall be bound by the
non-competition clause mentioned in article 6.3 heretofore.
(b) If ThermoLase fails to exercise the options set out in a.
above within thirty days from the date of the meeting
referred to in 11.2.d above, the SAS shall be dissolved.
ThermoLase and the SA shall pay their respective shares of
the cost of closing the Spas and of liquidating the SAS in
order to avoid a judicial liquidation of the latter, it
being understood that ThermoLase shall purchase at net book
value the technical equipment which was furnished by it or
by other companies of its group (e.g., lasers).
19PAGE
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMMISSIONS.
11.3.2 If the Deadlock takes place after the consolidated
sales of the Company and its subsidiaries realized after the date
of incorporation of the SAS exceeds ************* (using an
exchange rate determined at the date of the meeting referred to
in Article 11.2.d above),
(a) Where the parties cannot agree to the solution defined
hereafter in paragraph (b), SAS shall be wound up and
ThermoLase and SA shall agree to pay their respective shares
of the closing of the Spas and the liquidation of SAS in
order to avoid any legal liquidation of the latter, it being
understood that ThermoLase shall buy back the technical
equipment provided by it or by other companies of its group
(e.g. lasers) at its net book value.
b) Where no agreement on the valuation of the SAS can be
reached within fifteen (15) days after the meeting referred
to in Article 11.2.d above, and where one of the parties so
proposes, in order to limit the losses of the SAS partners
or to avoid the difficulties and costs linked to winding up
SAS, an independent chartered accountants firm elected by
mutual assent of the Parties shall be asked, at the request
of the most diligent party, to evaluate SAS and each of the
Parties shall then be entitled to offer to buy or sell its
share.
(c) This valuation should take into account the specific
situation of SAS in accordance with the conditions referred
to in Article 9.03.2 c of the Operating Agreement enclosed
in Appendices 2-A.
(d) In the case where two Parties wish to acquire SAS on the
basis of the previously mentioned expert's valuation, an
auction shall be organized, which shall permit the Parties
to bid on the price determined by the expert, increased by
5% at a time, with the final bid being that for which no
higher bid is received during a period of two (2)
consecutive working days in Paris.
(e) At the end of the procedures described previously, the
Parties shall exchange the documents, payments and deeds
necessary to terminate the resulting winding up or sale.
Article 12
Relations between the parties
12.1 The contract shall not create any joint venture or de
facto company between the parties that is separate from SAS and
shall not create any link of subordination between them.
20PAGE
Article 13
Change of control
13.1 Dessange Holding, DBC Holding and Franklin Holding
agree and guarantee ThermoLase that they will make DBC Holding
stay the majority shareholder of Dessange Holding and that
Franklin Holding will stay the majority shareholder of DBC
Holding.
Any change in control of Dessange Holding or DBC Holding,
pursuant to Article 355-1 of the 1966 French law on commercial
companies, will have to be first authorized by ThermoLase.
13.2 ThermoLase agrees and guarantees Dessange Holding, DBC
Holding and Franklin Holding that ThermoLase will stay directly
or indirectly controlled, in the sense of Article 355-1 of the
July 24, 1966, Statute on commercial companies, by Thermo
Electron Corporation or by one of its direct or indirect
subsidiaries.
Article 14
Applicable law - Arbitration
14.1 Applicable law
14.1.1 This contract shall be governed by French law.
14.2 Arbitration
14.2.1 In the event of any dispute concerning the execution or
interpretation of this Contract, the Parties shall agree to
consult each other in order to settle it through conciliation,
where necessary with the assistance of a third party.
14.2.2 Any dispute resulting from the Contract which cannot be
settled under the conditions mentioned heretofore shall be
settled definitively according to the Regulation of the
International Arbitration Court of London ("LCIA") by one (1)
arbitrator ruling in compliance with the said regulations. The
arbitration tribunal shall sit in London and the arbitration
language shall be English, it being understood that the
arbitrators should have a good knowledge of French.
14.2.3 In the case where the dispute which necessitated
recourse to arbitration also concerns the contract entitled
"Operating Agreement" signed by SA, ThermoLase and ThermoLase
France LLC, the parties shall agree to consult each order in
order to consider, under the auspices of the LCIA Clerk's Office,
the condition of joinder or separation, depending on the case, of
the two arbitration procedures. Where no agreement is reached on
this point, the disputes shall be settled separately.
21PAGE
Article 15
Miscellaneous
15.1 Under no circumstances may the provisions of this
article be interpreted as prohibiting or restricting the right
for the shareholders of Franklin Holding to decide any operation
concerning the shareholders' equity of the said company, in
particular any placement of the share capital of Franklin Holding
on the financial markets.
15.2 Contributions - Transfers
Neither of the Parties shall be entitled to transfer all or part
of its rights and obligations in terms of the Contract nor to
contribute them to a third party without the written
authorization of the other Party.
15.2.1 However, in the case where one of the Parties transfers
its shares in SAS to a non-shareholder third party, it must
obtain confirmation from the new shareholder of its ratification
of all the provisions of this Contract, through the signature of
an additional clause to this effect along with the Parties.
Notwithstanding any such a transfer, the transferor shall
guarantee the perfect execution by the transferee for a period of
one civil year of all its obligations under this Contract.
15.2 Waiver
Waiver of the right to invoke any non-execution of the Contract
shall not be considered as waiver of any subsequent non-execution
that is identical or different. No amendment, modification or
waiver of any of the provisions of this Contract shall be valid
unless it is made in writing and signed by the party against
which such an amendment, modification or waiver is invoked.
15.4 Independence of provisions
Where any of the provisions of this contract turns out to be
invalid or inapplicable in terms of any law whatsoever, the said
provision shall be considered as unwritten, without altering the
validity of the other provisions. In this respect, it is
explicitly agreed that such a provision shall be independent and
that this Contract shall be interpreted in all cases as though
the invalid or inapplicable provision had never existed.
15.5 Titles
The titles used in this Contract are only intended to give an
indication and should not have any effect on its interpretation.
15.6 Mutual assistance
22PAGE
In view of the commitments which the Parties shall make in regard
to each other under the terms of this Contract and the length of
their cooperation in this respect, the Parties agree to assist
each other in order to resolve, quickly and satisfactorily, any
obligation, procedure or request that has to be accomplished for
perfect execution of the Contract and any contract resulting
therefrom or linked thereto, either directly or indirectly.
15.7 Notice
15.7.1 Except for provisions which explicitly stipulate a
different method for notice, all notice required through
application of the Contract shall be validly served when sent by
registered mail, telex, fax, D.H.L. or any other express mail
company, or where is it delivered personally to the address of
one of the parties as indicated heretofore (any other address may
be notified at any time):
(a) If notice is sent to SA:
for the attention of President
▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
Telephone: (33) 01
Fax: (33) 01
(b) If notice is sent to ThermoLase:
for the attention of President
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (1)
Fax: (▇) ▇▇▇-▇▇▇-▇▇▇▇
If notice is sent to Franklin Holding:
for the attention of President
▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
Telephone: ( )
Fax: ( )
If notice is sent to ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇:
for the attention of
-----------------
--------------------------------------
--------------------------------------
Telephone: ( )
Fax: ( )
23PAGE
If notice is sent to __________________:
for the attention of __________________
_______________________________________
_______________________________________
Telephone: ( )
Fax: ( )
15.7.2 Any change of address should be notified according to
the same procedure. Any notice sent by fax or telex shall be
considered as received on the date specified on the transmission
form, subject to confirmation by registered letter.
15.8 Consultants' fees
Each of the parties shall be personally responsible for the
payment of the fees of its own consultants.
IN WITNESS WHEREOF, each of the parties duly signed this
contract, in as many original copies as there are Parties, under
the conditions indicated with each signature.
In Paris
October ___, 1996
SA
----------------------------
by:____________________________
In_____________________________
October ___, 1996
In_____________________________
October ___, 1996
In_____________________________
October ___, 1996
In_____________________________
October ___, 1996
24PAGE
EXHIBIT C
OPERATING AGREEMENT
OF
THERMOLASE FRANCE L.L.C.
This Operating Agreement is made and entered into this ____
day of November, 1996, by and among ThermoLase Corporation, a
Delaware corporation, JDM Invest S.A., a French S.A., and
ThermoLase France L.L.C., a Delaware limited liability company.
WHEREAS, the parties hereto are desirous of creating a
limited liability company under the laws of the State of
Delaware;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein and other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby
acknowledged by the parties, the parties hereto agree as follows:
ARTICLE I
Definitions
1.01. Definitions . The following terms used in the
Operating Agreement shall have the following meanings (unless
otherwise expressly provided herein):
a. " Capital Account " as of any given date shall mean
the Capital Contribution to the Company by a Member as adjusted
up to the date in question pursuant to Article V.
b. " Capital Contribution " shall mean any contribution
to the capital of the Company in cash or property by a Member
whenever made. " Initial Capital Contribution " shall mean the
initial contribution to the capital of the Company made pursuant
to Section 5.01(a) this Operating Agreement.
c. " Certificate of Formation " shall mean
Certificate of Formation of ThermoLase France L.L.C. as filed
with the Secretary of State of Delaware as the same may be
amended from time to time.
d. "Company" shall refer to ThermoLase France L.L.C.,
a Delaware limited liability company.
e. " Deficit Capital Account " shall mean with respect
to any Member, the deficit balance, if any, in such Member's
Capital Account as of the end of the Fiscal Year, after giving
effect to the following adjustments:
i. Credit to such Capital Account any amount
which such Member is obligated to restore under Treas. Reg.
e 1.704-1(b)(2)(ii)(c), as well as any addition thereto pursuant
1PAGE
to the next to last sentence of Treas. Reg. ee 1.704-2(g)(1) and
(i)(5), after taking into account thereunder any changes during
such Fiscal Year in partnership minimum gain (as determined in
accordance with Treas. Reg. e 1.704-2(d)) and in the minimum gain
attributable to any partner nonrecourse debt (as determined under
Treas. Reg. e1.704-2(i)(3)); and
ii. Debit to such Capital Account the items
described in Treas. Reg. ee1.704-1(b)(2)(ii)(d)(4), (5) and (6).
iii. This definition of Deficit Capital Account
is intended to comply with the provisions of Treas. Reg.
ee 1.704-1(b)(2)(ii)(d) and 1.704-2, and will be interpreted
consistently with those provisions.
f. " Delaware Act " shall mean the Delaware Limited
Liability Company Act.
g. " Economic Interest " shall mean a Member's or
Economic Interest Owner's share of the Company's Net Profits, Net
Losses, and distributions of the Company's assets pursuant to
this Operating Agreement and the Delaware Act, but shall not
include any right to participate in the management or affairs of
the Company, including the right to vote on, consent to, or
otherwise participate in any decision of the Members.
h "Economic Interest Owner" shall mean the owner of an
Economic Interest who is not a Member.
i. " Entity " shall mean any general partnership
limited partnership, limited liability company, corporation,
joint venture, trust, business trust, cooperative or association,
or any foreign trust, or other organization.
j. "Fiscal Year" shall mean the Company's fiscal year,
which shall be the 52/53 week period ending on the Saturday
closest to September 30, or such other period required as a
taxable year under IRC e 706.
k. "JDM" shall mean, JDM Invest S.A., a French S.A.
l. " Gifting Party " shall mean any Member or Economic
Interest Owner who gifts, bequeaths, or otherwise transfers for
no consideration (by operation of law or otherwise, except for
bankruptcy) all or any part of its Membership Interest or
Economic Interest.
m. " Interest Owner " shall mean any Member or Economic
Interest Owner.
n. "IRC" shall mean the Internal Revenue Code of 1986,
as amended and in effect, or corresponding provisions of
subsequent superseding federal revenue laws.
2PAGE
o. "JV France" shall mean ThermoDess, S.A.S., a French
S.A.S.
p. " License Agreement " shall mean the Licence
Agreement between the Company and ThermoLase which shall be
executed and delivered as ThermoLase's Initial Capital
Contribution.
q. " Majority Interest " shall mean one or
Membership Interests which taken together exceed 50.1 percent of
the aggregate of all Membership Interests.
r. "Majority Vote" shall mean a vote of more than
50.1%.
s. " Member " shall mean each of the parties
executes a counterpart of this Operating Agreement as a Member
and each of the parties who may hereafter become a Member in
accordance with the terms of this Operating Agreement.
t. " Member's Economic Interest " shall mean, for each
Member, the Economic Interest of that Member.
u. " Membership Interest " shall mean a Member's entire
interest in the Company including the Member's Economic Interest
and the right to participate in the management of the business
and affairs of the Company, including the right to vote on,
consent to, or otherwise participate in any decision or action of
or by the Members granted pursuant to this Operating Agreement
and the Delaware Act.
v. " Net Profits " and " Net Losses " shall
income, gain, loss, deductions, and credits of the Company in the
aggregate or separately stated, as appropriate, determined in
accordance with generally accepted accounting principles employed
under the accrual method of accounting at the close of each
Fiscal Year on the Company's information tax return filed for
federal income tax purposes.
w. " Operating Agreement " shall mean this Operating
Agreement as originally executed and as amended from time to
time.
x. " Person " shall mean any individual or Entity, and
the heirs, executors, administrators, legal representatives,
successors, and assigns of the " Person " when the context so
permits.
y. "Reserves" shall mean, for any fiscal period, funds
set aside or amounts allocated during such period to reserves
that shall be maintained in amounts deemed sufficient by the
Members for working capital and to pay taxes, insurance, debt
service, or other costs or expenses incident to the ownership or
operation of the Company's business.
3PAGE
z. " Selling Party " shall mean any Member or Economic
Interest Owner which sells, assigns, pledges, hypothecates, or
otherwise transfers for consideration all or any portion of its
Membership Interest or Economic Interest.
aa. "Supermajority Interest" shall mean one or more
Membership Interests which taken together exceed 80 percent of
the aggregate of all Membership Interests.
bb. "Supermajority Vote" shall mean a vote of more
than 80%.
cc. "Territory Patent" means a European patent granted
on European Patent Application No. 92 923298.1, which is
enforceable in the Territory and which has claims corresponding
in scope to the claims of U.S. Patent No. 5,425,728, and covering
a significant portion of the Licensed Technology (as defined in
the License Agreement) used in practicing laser-based hair
removal, and which, if asserted, could prevent the practice in
the Territory of the SoftLight Procedures for hair removal, as
currently practiced by ThermoLase.
dd. " ThermoLase " shall mean ThermoLase Corporation, a
Delaware corporation.
ee. " Transferring Party " shall collectively mean a
Selling Party and a Gifting Party.
ff. "Treasury Regulations" shall include all temporary
and final regulations promulgated under the IRC in effect as of
the date of filing the Certificate of Formation and the
corresponding section of any regulations subsequently issued that
amend or supersede those regulations.
gg. "Consolidated Venture Revenue" shall mean Direct
Venture Revenue plus Sublicense Revenue. Consolidated Venture
Revenue is calculated without reference to any sales or
value-added tax that may be imposed on such amounts.
hh. "Direct Venture Revenue" shall mean
consolidated aggregate revenues received from customers in
respect of the performance of the SoftLight Procedures in the
Territory (as defined in the License Agreement) and the sale of
directly related products by (i) the Company, (ii) JV France,
(iii) any entities in which they own any equity or ownership
interests, or (iv) any entities which are owned, wholly or
partially, directly or indirectly, by ThermoLase, JDM, D.B.C.
Holding S.A., Franklin Holding S.A., or any of their direct or
indirect owners.
ii. "Sublicense Revenue" shall mean the aggregate
revenue received by the entities listed in 1.01(hh)(i) to (iv)
from any of their sublicensees or franchisees who do not fall
4PAGE
into categories (i) to (iv) above, and excluding any
inter-company payments (such as royalty payments, fees, service
charges and the like) between the entities listed in (i) to (iv)
above.
ARTICLE II
Formation of Company
2.01. Statutory Authority . The parties hereby agree to
form the Company as a limited liability company under and
pursuant to the provisions of the Delaware Act. The rights and
obligations of the Company, the Members and the Economic Interest
Owners shall, except as otherwise required by the Delaware Act,
be governed by this Operating Agreement.
2.02. Filings . Prior to the execution of this Operating
Agreement, a Certificate of Formation conforming to the
requirements of the Delaware Act shall have been filed in the
Office of the Secretary of State of the State of Delaware. The
Company shall make such other filings and recordings and do such
other acts and things conforming thereto as shall constitute
compliance with all requirements for the formation of a limited
liability company under the Delaware Act and the laws of such
other states in which the Company elects to do business.
2.03. Name . The name of the Company shall be the name set
forth in the heading of this Operating Agreement. The affairs of
the Company shall be conducted under the Company name or such
other name as the Board of Directors may select in accordance
with the Delaware Act. The Company shall execute and file with
the proper offices any and all certificates which in the judgment
of the officers of the Company are required by the fictitious
name or assumed name statutes of the states in which the Company
elects to do business.
2.04. Principal Office of the Company . The principal
office of the Company shall be located at such place as the Board
of Directors may from time to time designate. The Company may
have additional offices in such other place or places as may be
selected from time to time by the Board of Directors.
2.05. Records to be Maintained . The Board of Directors
shall at all times keep at the Company's principal office such
information and records as are specified in the Delaware Act or
this Operating Agreement.
2.06. Registered Office and Registered Agent . The
Company's registered office in Delaware shall be located at ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇, and the name of the
Company's registered agent for service of process at such office
shall be CT Corporation. The Board of Directors may from time to
time in accordance with the Delaware Act change the Company's
registered office and/or registered agent. The Members shall
5PAGE
select and designate a registered office and registered agent for
the Company in each state in which the Company is required to
maintain or appoint one.
2.07. Term . The term of the Company shall commence as of
the date hereof and shall continue until the ninety-ninth (99th)
anniversary of such date, unless the Company is earlier dissolved
in accordance with either the provisions of this Operating
Agreement or the Delaware Act.
ARTICLE III
Business of Company
The business of the Company is to realize the full
commercial value in the territory set forth in the License
Agreement of the technology licensed to the Company by ThermoLase
through the efforts of one or more authorized sublicensees or
franchisees. Such activities may include developing or licensing
improvements or related technologies, know how, services, trade
and service marks, and products and establishing wholesale,
retail and spa facilities and every other research, development,
marketing, financing, manufacturing and product and service
delivery activity which may be necessary or desirable in
connection with such business. Subject to the restrictions of
law and in the License Agreement and this Operating Agreement,
the Company may do any and all things permitted under the
Delaware Act.
ARTICLE IV
Management of Company
4.01. Management by Members . The management of the
Company is fully reserved to the Members, and the Company shall
not have "managers," as such term is used in the Act. The powers
of the Company shall be exercised by or under the authority of,
and the business and affairs of the Company shall be managed
under the direction or authority of, the Members who shall make
all decisions and take all actions for the Company.
Notwithstanding the foregoing, the Members hereby expressly agree
that, except to the extent otherwise required by non- waivable
provisions of applicable law or expressly provided herein or in
the Certificate of Formation, in managing the business and
affairs of the Company and exercising its powers, each Member
shall act solely through the Directors designated by such Member
to serve on the Board of Directors pursuant to Section 4.02, in
the manner set forth in such Section 4.02. Except as set forth
in the foregoing provisions of this Section 4.01 or expressly
provided otherwise elsewhere in this Operating Agreement, no
Member has the right, power or authority to act for or on behalf
of the Company, to do any act that would be binding on the
Company, or to incur any expenditures on behalf of the Company.
Decisions or actions taken by the Members in accordance with this
6PAGE
Operating Agreement shall constitute decisions or actions by the
Company and shall be binding on each Member, Director, officer
and employee of the Company.
4.02. Board of Directors.
a. The Company shall have a board of directors (the
"Board of Directors" or the "Board"), composed of directors (the
"Directors") designated by the Members as set forth below in this
Section 4.02. The Board of Directors shall be the highest
governing body of the Company with respect to all matters
relating to the management of the business and affairs of the
Company and the exercise of its powers. The number of Directors
who shall constitute the whole Board of Directors shall be six
(6). The Directors shall be appointed by ThermoLase and the
persons, if any, to whom ThermoLase has transferred any
Membership Interests in accordance with the terms hereof, on the
one hand, and JDM and the persons, if any, to whom JDM has
transferred any Membership Interests in accordance with the terms
hereof, on the other hand, in accordance with their collective
Membership Interests as follows (with fractional Membership
Interests being rounded to the nearest whole number):
Membership Interest Number of Directors
------------------- -------------------
0% 0/6
1% - 19% 1/6
20% - 48% 2/6
49% - 51% 3/6
52% - 80% 4/6
81% - 99% 5/6
100% 6/6
_________, __________ and __________ shall serve as the Directors
initially designated by ThermoLase, and __________, ___________
and _______________ shall serve as the Directors initially
designated by JDM.
b. In serving on the Board of Directors, each
Director shall act solely as an agent of the Member designating
such Director, in a representative capacity and not in such
Director's individual capacity. Each Director shall devote only
such time to the affairs of the Company as such Director may, in
his sole discretion, deem necessary or advisable for the proper
discharge of his duties as a Director hereunder. Each Member
hereby (i) acknowledges that each Director has certain
responsibilities to the Member designating him as a Director as
set forth herein, and (ii) agrees that each Director shall be
entitled to spend such time as may be necessary or appropriate to
discharge such responsibilities. Directors need not be Members
of the Company.
c. Each Director shall hold office until his death,
resignation or removal in accordance with the provisions hereof.
7PAGE
d. Any Director may resign by delivering his written
resignation to (i) the officer of the Company designated by the
Board of Directors to receive such resignations, or (ii) the
Board. Such resignation shall be effective upon receipt unless
it is specified to be effective at some other time or upon the
happening of some other event.
e. Any Director may be removed at any time, with or
without cause, by the Member which designated such person as
Director as set forth in Section 4.02(a) or 4.02(f), as the case
may be, by delivering written notice of such removal to (i) the
officer of the Company designated by the Board of Directors to
receive such notices, and (ii) each other Member. Such removal
shall be effective upon the giving of the notice specified in the
preceding sentence to each Person entitled thereto, unless such
notice is specified to be effective at some other time or upon
the happening of some other event.
f. Any vacancy on the Board of Directors resulting
from the death, resignation or removal of any Director shall be
filled, as promptly as practicable, by the Member which
designated the Director whose position has become vacant, by
designating a replacement Director in a written notice given to
(i) the officer designated by the Board of Directors to receive
such notices, and (ii) each other Member. Such designation of a
replacement Director shall be effective upon the giving of the
notice specified in the preceding sentence to each Person
entitled thereto, unless such notice is specified to be effective
at some other time or upon the happening of some other event.
g. Regular meetings of the Board of Directors may be
held with or without notice at such time and place as shall be
determined from time to time by the Board of Directors; provided
that any Director who is absent when such a determination is made
shall be given notice of the determination. Special meetings of
the Board of Directors may be held at any time and place
designated in a call by any two Directors. Notice of any special
meeting of Directors shall be given to each Director by a
Director calling the meeting or by the officer designated by the
Board for such duty, as the case may be. Any Director may
participate in any meeting by telephone or video conference,
provided that all parties are able to hear one another clearly.
Notice of meetings shall be duly given to each Director (i) by
giving notice to such Person in person or by telephone at least
72 hours in advance of the meeting, (ii) by sending a telegram,
telex or facsimile transmission, or delivering written notice by
hand, to his last known business or home address at least 72
hours in advance of the meeting, or (iii) by sending by reputable
international overnight delivery service (such as Federal Express
or DHL) written notice to his last known business or home address
at least five (5) business days in advance of the meeting. A
notice or waiver of notice of a meeting of the Board of Directors
need not specify the purposes of the meeting. Directors shall be
entitled to waive any notice required to be given hereunder. A
8PAGE
Director's attendance at or participation in a meeting shall be
deemed to constitute a waiver of any notice of such meeting which
was not given to such Director.
h. At any meeting of the Board of Directors, the
Majority Vote of all Directors then in office shall be required
and sufficient to take any action, unless a different vote is
specified by law, the Certificate of Formation or this Operating
Agreement. In the event of a deadlock of Directors which cannot
be resolved pursuant to good faith negotiations between the
parties, the deadlock resolution provisions of Article IX hereof
shall apply.
i. Directors or any members of any committee
designated by the Directors may participate in a meeting of the
Board of Directors or such committee by means of conference
telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and
participation by such means shall constitute presence in person
at such meeting. Any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee of the
Board of Directors may be taken without a meeting, if all of the
members of the Board or committee, as the case may be, who would
be empowered to take the relevant action at a duly convened
meeting of the Board or committee, as the case may be, consent to
the action in writing, and the written consents are filed with
the minutes of proceedings of the Board or committee.
j. The Board of Directors may, by resolution,
designate one or more committees, each committee to consist of
one or more of the Directors of the Company. Any such committee,
to the extent provided in the resolution of the Board of
Directors and subject to the provisions of the Act, shall have
and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the
Company; provided, however, that no committee of the Board of
Directors shall have any power or authority with respect to any
matter requiring a Supermajority Vote of the Board of Directors
hereunder unless such committee's grant of powers and authority
was made by a Supermajority Vote of the Board. Each such
committee shall keep minutes and make such reports as the Board
of Directors may from time to time request. Except as the Board
of Directors may otherwise determine, any committee may make
rules for the conduct of its business, but unless otherwise
provided by the Directors or in such rules, its business shall be
conducted as nearly as possible in the same manner as is provided
in this Operating Agreement for the Board of Directors.
k. Directors will not be paid compensation for their
services; but they may receive such reimbursement for expenses of
attendance at meetings as the Board of Directors may from time to
time determine. No such payment shall preclude any Director from
serving the Company or any of its parent or subsidiary entities
9PAGE
in any other capacity and receiving compensation for such
service.
l. To the fullest extent permitted by the Delaware
Act and other applicable law, and to the extent not inconsistent
with the specific provisions of this Operating Agreement or the
Certificate of Formation, it is the intention of the parties that
the Board of Directors shall act collectively, and no Director
acting individually in his capacity as such (but not in his
capacity, if any, as an officer of the Company) shall have any
right or authority to bind the Company. Except as the Board of
Directors may generally or in any particular case otherwise
authorize, and subject to the other provisions of this Operating
Agreement and the Certificate of Formation, the Directors may
designate an officer or officers of the Company to execute on
behalf of the Company any deeds, leases, contracts, bonds, notes,
checks, drafts and other instruments and documents.
m. Each Member may designate up to two (2) persons as
Advisors to the Company. Advisors shall be entitled to notice of
and attendance at meetings of the Board, but shall have no right
to vote or to exercise any authority with respect to the Company.
A Member may designate and remove Advisors upon notice to the
Board of Directors. In addition, upon the unanimous consent of
all Members, any Member may invite any other person to observe,
but not participate in, Board Meetings.
4.03. Officers.
a. The Board of Directors may designate one or more
individuals to be Officers of the Company. No Officer need be a
resident of the State of Delaware or a Director or Member.
Officers are not "managers" as such term is used in the Delaware
Act. Officers shall have such authority and perform such duties
as the Board of Directors may delegate to them; provided,
however, that, if the Board determines to establish any officer
position with a title expressly referenced in the General
Corporation Law of the State of Delaware, such officer shall, to
the maximum extent possible, unless otherwise determined by the
Board of Directors, have the duties and responsibilities
associated with such officer position under the General
Corporation Law of the State of Delaware. Any two or more
offices may be held by the same person.
b. Except as otherwise provided by law, by the
Certificate of Formation or by this Operating Agreement, each
officer shall hold office until his death, resignation or
removal, unless a different term is specified in the action of
the Board of Directors designating him. Any officer may resign
by delivering his written resignation to the Board of Directors.
Such resignation shall be effective upon receipt unless it is
specified to be effective at some other time or upon the
happening of some other event. Any officer may be removed at any
time, with or without cause, by action of the Board of Directors.
10PAGE
c. Except as the Board of Directors may otherwise
determine, no officer who resigns or is removed shall have any
right to any compensation as an officer for any period following
his resignation or removal, or any right to damages on account of
such removal, whether his compensation be by the month or by the
year or otherwise, unless such compensation is expressly provided
in a duly authorized written agreement with the Company.
4.04. Actions of the Board.
(A) Notwithstanding any provision in this Operating
Agreement to the contrary, the following decisions and actions
require a Supermajority Vote of the Board of Directors:
a. causing or permitting the Company to take any
action, other than as set forth in Article IX, which would alter
the ratio of ThermoLase's Economic Interest to JDM's Economic
Interest; or
b. causing or permitting the Company to become
bankrupt (but this provision shall not be construed to require
any Member to ensure the profitability or solvency of the
Company).
(B) Notwithstanding any provision in this Operating
Agreement to the contrary, the following decisions and actions
require a Majority Vote of the Board of Directors:
a. causing or permitting the Company to grant a
sublicense under the License Agreement;
b. approving the annual budget of the Company;
c. incurring any expenditure, indebtedness, or cash
reserve in the individual or aggregate case which is (i) not
provided for in an approved annual operating budget and greater
than $100,000, or (ii) if such amount is (A) in an approved
annual operating budget but more than 120% of the amount shown
therefor and (B) more than $100,000;
d. causing or permitting the Company (i) to be a party
to a merger, consolidation, share exchange, interest exchange or
other transaction authorized by or subject to the provisions of
e 18-209 of the Delaware Act or (ii) to convert into any other
type of Entity;
e. causing the Company to initiate or defend any legal
action;
f. causing the Company to amend materially the License
Agreement or any sublicense agreement under the License
Agreement;
11PAGE
g. causing the Company to engage in any trade or
business in the United States.
4.05. Related Party Transactions . Other than
transactions contemplated or required by (a) the License
Agreement, including the sublicense of certain rights and
technology to JV France, (b) the supply of certain products to JV
France by ThermoLase and Franklin Holding pursuant to a Supply
Agreement acceptable to ThermoLase and Franklin Holding, and (c)
the provision by ThermoLase of certain administrative and
accounting services to the Company pursuant to a services
agreement reasonably acceptable to JDM, the Company shall not
enter into, engage in or waive or amend any rights under any
transaction, contract, agreement or arrangement in which a Member
(a "Related Member"), an officer or employee of such Related
Member, an affiliate of any of the foregoing, or a person related
by blood or marriage to any of the foregoing has an interest
unless other Members holding at least 50% of the Membership
Interests of the Company, excluding the Related Member's
Membership Interest, consent to such transactions, contract,
agreement or arrangement.
4.06. Prohibited Acts. No Member shall cause or permit the
Company to enter into or engage in any transaction, contract,
agreement or arrangement that (i) is unrelated to the Company's
purpose (as set forth in Article III above), (ii) otherwise
contravenes the Certificate of Formation or this Operating
Agreement, or (iii) would make it impossible to carry on the
ordinary business of the Company.
4.07. Duties of the Parties . The Members' respective
obligations to each other are limited to the express obligations
described in this Operating Agreement, the License Agreement, the
By-laws and Shareholders Agreement of JV France, and the other
agreements expressly described herein, which obligations the
Members shall carry out with ordinary prudence and in a manner
characteristic of business persons in similar circumstances. No
Member shall be a fiduciary of or have any fiduciary obligations
to the other Members in connection with the Company or this
Operating Agreement or such Member's performance of its
obligations under this Operating Agreement, and each Member
hereby waives to the fullest extent permitted by applicable law
any rights it may have to claim any breach of fiduciary
obligation under this Operating Agreement or in connection with
the Company.
4.08. Indemnification.
a. Except in cases of infringement as set forth in
Article XI below, each of the Directors and each of the Members,
and its direct and indirect owners (each, an "Indemnitee"), shall
be indemnified by the Company under the following circumstances
and in the manner and to the extent indicated:
12PAGE
i. In any threatened, pending, or completed
action, suit or proceeding to which an Indemnitee was or is a
party, or is threatened to be made a party (other than an action,
suit or proceeding by or in the right of the Company), involving
an alleged cause of action for damages arising out of, or in any
way connected with, the manner in which the Indemnitee conducted
the Company's business or exercised its rights hereunder, the
Company shall indemnify the Indemnitee, or its direct or indirect
owner as the case may be, against all expenses, including
attorneys' fees, judgments, and amounts paid in settlement
actually and reasonably incurred by the Indemnitee in connection
with such action, suit or proceeding if, in the transaction
giving rise to such action, suit or proceeding, the Indemnitee
acted in good faith and in a manner the Indemnitee reasonably
believed to be in, or not opposed to, the best interests of the
Company and the Indemnitee's conduct in such transaction did not
constitute gross negligence, willful or wanton misconduct or a
breach of the Indemnitee's fiduciary obligations to the other
Members. The termination of any action, suit or proceeding by
judgment, order or settlement shall not, of itself, create a
presumption that the Indemnitee did not act in good faith and in
a manner which the Indemnitee reasonably believed to be in, or
not opposed to, the best interests of the Company.
ii. In any threatened, pending or completed
action, suit or proceeding by or in the right of the Company to
which an Indemnitee was or is a party, or is threatened to be
made a party, involving an alleged cause of action for damages
arising out of, or in any way connected with, the manner in which
the Indemnitee managed or was deemed to manage the internal
affairs of the Company as prescribed by this Operating Agreement
or by the Delaware Act, or both, or exercised its rights
hereunder, the Company shall indemnify the Indemnitee against all
expenses, including attorneys' fees, actually and reasonably
incurred by the Indemnitee in connection with such action, suit
or proceeding if, in the transaction giving rise to such action,
suit or proceeding, the Indemnitee did not violate its fiduciary
duties and acted in good faith and in a manner the Indemnitee
reasonably believed to be in the best interests of the Company,
except that no indemnification shall be made in respect of any
claim, issue, or matter as to which the Indemnitee shall have
been adjudged to be liable for negligence, misconduct, or breach
of the Indemnitee's fiduciary obligations, unless and only to the
extent that the court in which such action, suit or proceeding
was brought shall determine upon application that, despite the
adjudication of liability but in view of all circumstances of the
case, the Indemnitee is fairly and reasonably entitled to
indemnity for such expenses which such court shall deem proper.
b. Except in cases of infringement as set forth in
Article XI below, each officer of the Company shall be
indemnified by the Company against all judgments, fines,
settlement payments and expenses, including reasonable attorneys'
fees, paid or incurred in connection with any claim, action, suit
13PAGE
or proceeding, civil or criminal, to which he may be a party or
with which he may be threatened by reason of his being or having
been an officer of the Company, or, at its request, a director,
officer, stockholder or member of any other company, firm or
association of which the Company is a stockholder, member, or
creditor and by which he is not so indemnified, or by reason of
any action or omission by him in such capacity, whether or not he
continues to be an officer at the time of incurring such expenses
or at the time the indemnification is made. No indemnification
shall be made hereunder (a) with respect to payments and expenses
incurred in relation to matters as to which he shall be finally
adjudged in such action, suit or proceeding not to have acted in
good faith and in the reasonable belief that his action was in
the best interests of the Company or (b) if otherwise prohibited
by law. To the extent permitted under local law, the Company
shall cause each of its subsidiaries to have in the appropriate
organizational document of such subsidiary an indemnification
provision substantially similar to the indemnification provisions
set forth in this section 4.08(b).
c. The foregoing rights of indemnification shall not
be exclusive of other rights to which any Member, director or
officer may otherwise be entitled and shall inure to the benefit
of the executor or administrator of such director or officer.
ARTICLE V
Contributions to Capital and Capital Accounts
5.01. Initial Capital.
a. Each Member shall contribute to the capital of the
Company the amount of money or property set forth or described on
Exhibit A as its Initial Capital Contribution opposite that
Member's name at the times set forth on Exhibit A , provided that
the Percentage Interests in respect of such Initial Capital
Contributions shall accrue to the Members on the effective date
of this Agreement.
b. JDM represents and warrants to ThermoLase that set
forth on Exhibit B is a true, correct and complete list of the
direct and indirect owners of JDM (up to Franklin Holdings,
S.A.), together with a true, correct and complete list of the
direct and indirect owners of such direct and indirect owners of
JDM, as of the effective date of this Operating Agreement. JDM
covenants to ThermoLase that JDM shall not admit new stockholders
to itself (except nominees holding one single share each up to
seven shareholders in order to satisfy French company law
requirements) and shall cause each of its stockholders not to
transfer all or any part of its stockholders interest in JDM
without ThermoLase's prior written consent, which shall be within
its sole discretion. Each of the persons executing this
Agreement as a JDM Owner covenants to ThermoLase that such person
shall not transfer all or any part of its ownership interest in
14PAGE
JDM, D.B.C. Holding, S.A., JV France, Franklin Holding, S.A., or
any of its or their direct or indirect owners without
ThermoLase's prior written consent, which shall be within its
sole discretion. Notwithstanding the foregoing, ThermoLase agrees
that (i) the shareholders of JDM shall have the right to transfer
shares of JDM among themselves (but not to any third party),
provided that Franklin Holdings, S.A. at no time reduces its
ownership interest in JDM below 50%; (ii) the shareholders of
D.B.C. Holding, S.A. shall have the right to transfer shares of
D.B.C. Holding, S.A. among themselves, provided that Franklin
Holding S.A. does not reduce its ownership of shares of Franklin
Holdings, S.A. below 50.1% of the total shares of D.B.C.
Holdings, S.A.; (iii) the shareholders of Franklin Holding S.A.
shall have the right to transfer shares of Franklin Holding, S.A.
among themselves or to offer shares of Franklin Holding S.A. to
the public or to sell shares of Franklin Holding S.A. to third
parties, to the extent that the JDM Owners, their next of kin and
current or future executives and employees of Franklin Holding,
S.A. or companies controlled by Franklin Holding, S.A. retain at
least 50.1% of the capital stock and voting rights of Franklin
Holding, S.A., and (iv) the JDM Owners may transfer their
ownership interests in JDM, JV France, Franklin Holding, S.A., or
any of its or their direct or indirect owners as required by the
laws of estate or family devolution.
c. ThermoLase represents and warrants to JDM that
ThermoLase is controlled by Thermo Electron Corporation, through
one or more direct or indirect subsidiaries of Thermo Electron
Corporation. ThermoLase agrees that it shall not, without the
prior written consent of JDM, effect a change in its ownership
that would result in Thermo Electron Corporation not having
direct or indirect (through one or more subsidiaries) over
ThermoLase.
5.02. Additional Capital Contributions . Except as set
forth in section 5.01 or 5.03(g) no Member shall be required to
make any Capital Contributions.
5.03. Capital Accounts. A separate Capital Account will be
maintained for each Interest Owner.
a. Each Interest Owner's Capital Account will be
increased by:
i. The amount of money contributed by the
Interest Owner to the Company;
ii. The fair market value of property contributed
by the Interest Owner to the Company (net of liabilities secured
by such contributed property that the Company is considered to
assume or take subject to under IRC e 752); and
iii. Allocations to the Interest Owner of
partnership income and gain (or items thereof), including tax
15PAGE
exempt income, and taking into account income and gain described
in Treas. Reg. e 1.704-1(b)(2)(iv)(g).
b. Each Interest Owner's Capital Account will be
decreased by:
i. The amount of money distributed to the
Interest Owner by the Company or withdrawn from the Company by
the Interest Owner;
ii. The fair market value of property distributed
to the Interest Owner by the Company (net of liabilities secured
by such distributed property that such Interest Owner is
considered to assume or take subject to under IRC e 752);
iii. Allocations to the Interest Owner of
expenditures described in IRC e 705(a)(2)(B); and
iv. Allocations to the account of the Interest
Owner of Company loss and deduction as set forth in the relevant
Treasury Regulations, taking into account adjustments to reflect
book value under Treas. Reg. e 1.704-1(b)(2)(iv)(g).
c. In the event of a permitted sale or exchange of a
Membership Interest or an Economic Interest in the Company, the
Capital Account of the transferor shall become the Capital
Account of the transferee to the extent it relates to the
transferred Membership Interest or Economic Interest in
accordance with Treas. Reg. e 1.704-1(b)(2)(iv).
d. Any adjustments to Capital Accounts to reflect
revaluations of the Company's property shall be made as follows:
i. In the case of a distribution of appreciated
or depreciated property to an Interest Owner, the Capital
Accounts shall first be adjusted to reflect the manner in which
the unrealized income, gain, loss, and deduction inherent in such
property (that has not been reflected in the capital accounts
previously) would be allocated among the Interest Owners if there
were a taxable disposition of such property for the fair market
value of such property on the date of distribution, in accordance
with Treas. Reg. e 1.704-1(b)(2)(iv)(e).
ii. The Capital Accounts of the Interest Owners
may, upon the determination of a Majority Interest for a
substantial non-tax business purpose, be adjusted to reflect a
revaluation of Company property (including intangible assets such
as goodwill) in connection with any one or more of the following
events: (A) the contribution of money or other property (other
than a de minimis amount) to the Company by a new or existing
Interest Holder as consideration for an Economic Interest;
(B) the liquidation of the Company or a distribution of money or
other property (other than a de minimis amount) by the Company to
a retiring or continuing partner as consideration for an Economic
16PAGE
Interest; or (C) under generally accepted industry accounting
practices, provided substantially all of the Company's property
(excluding money) consists of securities readily tradable on an
established securities market. Revaluations pursuant to this
section 5.03(d)(ii) shall be made in accordance with Treas. Reg.
e 1.704-1(b)(2)(iv)(f).
e. The manner in which Capital Accounts are to be
maintained pursuant to this section 5.03 is intended to comply
with the requirements of IRC e 704(b) and the Treasury
Regulations promulgated thereunder. If in the opinion of the
Company's accountants the manner in which Capital Accounts are to
be maintained pursuant to the preceding provisions of this
section should be modified to comply with IRC e 704(b) and the
Treasury Regulations thereunder, then, notwithstanding anything
to the contrary contained in the preceding provisions of this
section 5.03, the method in which Capital Accounts are maintained
shall be so modified; provided, however, that any such change
pursuant to this section 5.03(e) in the manner of maintaining
Capital Accounts shall not materially alter the economic
agreement between or among the Members.
f. Upon liquidation of the Company (or any Member's
Membership Interest or Economic Interest Owner's Economic
Interest), liquidating distributions will be made in accordance
with section 10.03.
g. Except as otherwise required by the Delaware Act
(and subject to sections 5.01 and 5.02 above), no Member or
Economic Interest Owner shall have any liability to restore all
or any portion of a deficit balance in the Member's or Economic
Interest Owner's Capital Account. If such restoration is required
by the Delaware Act, amounts payable pursuant to such restoration
shall be payable by the Members in proportion to their Economic
Interests; provided that this provision is for the benefit of the
Members and not for the benefit of third party creditors of the
Company.
5.04. Withdrawal or Reduction of Members' Contributions to
Capital . A Member shall not receive out of the Company's
property any part of its Capital Contribution until:
(i) all liabilities of the Company, except liabilities
to Members on account of their Capital Contributions, have been
paid or there remains property of the Company sufficient to pay
them;
(ii) the consent of all Members is had, unless the
return of the Capital Contribution may be rightfully demanded
under the Delaware Act; or
(iii) the Certificate of Formation is canceled or so
amended as to set out the withdrawal or reduction.
17PAGE
ARTICLE VI
Allocations and Distributions
6.01. Allocations of Profits and Losses from Operations .
All items of income, loss, deduction or credit of the Company
shall be allocated among the Interest Owners according to and in
proportion with their respective Economic Interests.
6.02. Tax and Special Allocations . For U.S. tax purposes
only, except as provided below or as otherwise required by the
IRC or Treasury Regulations promulgated thereunder (including,
without limitation, Treasury Regulations e 1.704-1 and
1.704-2), Company income, gain, loss, deduction, credit and other
partnership items, as computed for federal income tax purposes,
shall be allocated among the Economic Interest Owners in the same
manner as the corresponding book items are allocated pursuant to
section 6.01. In order that Company allocations have substantial
economic effect under the IRC and Treasury Regulations, the
following additional rules shall apply with respect to
allocations for tax purposes:
a. In accordance with IRC e 704(c)(1)(A) a
regulations issued thereunder, if a Member contributes property
with a fair market value that differs from its adjusted basis at
the time of contribution, income, gain, loss, and deductions
attributable to the property shall, solely for federal income tax
purposes, be allocated among the Interest Owners so as to take
account of any variation between the adjusted basis of the
property to the Company and its fair market value at the time of
contribution.
b. If any Interest Owner unexpectedly receives any
adjustments, allocations, or distributions described in Treas.
Reg. e 1.704-1(b)(2)(ii)(d)(4), (5) or (6) which create
increase a Deficit Capital Account of the Interest Owner, the
items of Company income and gain (consisting of a pro rata
portion of each item of Company income, including gross income,
and gain for such Fiscal Year and, if necessary, for subsequent
Fiscal Years) shall be specially credited to the Capital Account
of the Interest Owner in an amount and manner sufficient to
eliminate, to the extent required by the Treasury Regulations,
the Deficit Capital Account so created as quickly as possible.
It is intended that this section 6.02(b) be interpreted to
constitute a "qualified income offset" and to comply with the
alternate test for economic effect set forth in Treas. Reg.
e 1.704-1(b)(2)(ii)(d).
c. If any Interest Owner would have a Deficit Capital
Account at the end of any Fiscal Year which is in excess of the
sum of any amount that the Interest Owner is obligated to restore
to the Company under Treas. Reg. e 1.704-1(b)(2)(ii)(c) and the
Interest Owner's share of minimum gain as defined in Treas. Reg.
18PAGE
e 1.704-2(g)(1)(which is also treated as an obligation to restore
in accordance with Treas. Reg. e 1.704-1(b)(2)(ii)(d)), the
Capital Account of the Interest Owner shall be specially credited
with items of Company income (including gross income) and gain in
the amount of the excess as quickly as possible.
d. No allocation of loss or deduction shall be made to
an Interest Owner to the extent such allocation causes or
increases a Deficit Capital Account balance at the end of the
Fiscal Year to which such allocation relates; such loss or
deduction shall instead be allocated among the other Interest
Owners in accordance with their Economic Interests, subject to
the limitations of this section 6.02(d).
e. Non-recourse deductions (as defined in Treas. Reg.
e 1.704-2(b)(1)) shall be allocated in accordance with the
Interest Owners' respective Economic Interests, pursuant to
Treas. Reg. e 1.704-2(e)(2). Non-recourse deductions
attributable to Interest Owner non-recourse debt (as defined in
Treas. Reg. e 1.704-2(b)(4)) shall be allocated to the Interest
Owner or Interest Owners that bear the economic risk of loss for
such debt in accordance with Treas. Reg. e 1.704-2(i)(1).
f. If there is a net decrease in "partnership
[Company] minimum gain" as defined in Treas. Reg. e 1.704-2(d)
during a Fiscal Year, each Interest Owner with a share of Company
minimum gain as of the beginning of the Fiscal Year shall be
allocated items of Company income and gain for such Fiscal Year
(and, as necessary, for subsequent years) equal to that Interest
Owner's share of the decrease in Company minimum gain. This
paragraph is intended to and shall in all events be interpreted
and applied so as to constitute a "minimum gain chargeback"
within the meaning of Treas. Reg. e 1.704-2(f). If, in any
Fiscal Year that the Company has a net decrease in the Company's
minimum gain, the minimum gain chargeback requirement would cause
a distortion in the economic arrangement among the Interest
Owners and it is not expected that the Company will have
sufficient other income to correct that distortion, the Company
may (and shall, if requested to do so by a Member) seek to have
the IRS waive the minimum gain chargeback requirement in
accordance with Treas. Reg. e 1.704-2(f)(4).
g. If there is a net decrease in "partner [Interest
Owner] non-recourse debt minimum gain" as defined in Treas. Reg.
e 1.704-2(i)(3) during a Fiscal Year, each Interest Owner with a
share of Interest Owner non-recourse debt minimum gain as of the
beginning of the Fiscal Year shall be allocated items of Company
income and gain for such Fiscal Year (and, as necessary, for
subsequent years) equal to that Interest Owner's share of the net
decrease in Interest Owner non-recourse debt minimum gain. This
paragraph is intended to and shall in all events be interpreted
and applied so as to constitute "partner non-recourse debt
minimum gain chargeback" within the meaning of Treas. Reg. e
1.704-2(i)(4).
19PAGE
h. All recapture of income tax deductions resulting
from sale or disposition of Company property shall be allocated
to the Interest Owner(s) to whom the deduction that gave rise to
the recapture was allocated hereunder to the extent that gain
from the sale or other disposition of the property is allocated
to such Interest Owner(s).
i. An Interest Owner's share of the liabilities of the
Company shall be determined under IRC e 752 and the Treasury
Regulations promulgated thereunder.
j. Income, gain, loss, and deduction with respect to
property contributed to the Company by an Interest Owner shall be
allocated in accordance with IRC e 704(c) and the Treasury
Regulations promulgated thereunder.
6.03. Distributions. Except as provided in section 10.03
of this Operating Agreement, all distributions of cash or other
property shall be as follows:
a. All distributions by the Company shall be made to
the Interest Owners pro rata in proportion to the respective
Economic Interests of the Interest Owners on the record date of
the distribution.
b. All amounts withheld pursuant to the IRC or any
provisions of state or local tax law for any payment or
distribution to the Interest Owners from the Company shall be
treated as amounts distributed to the relevant Interest Owner or
Interest Owners pursuant to this section 6.03.
c. No distribution shall be made pursuant to this
section 6.03 unless, after the distribution is made, the assets
of the Company are in excess of all liabilities of the Company,
except any liabilities to Interest Owners with respect to their
capital contributions.
d. No Interest Owner shall be entitled to interest on
its Capital Contribution or to return of its Capital
Contribution, except as otherwise specifically provided for in
this Operating Agreement.
e. Nothing in this Operating Agreement shall prevent
any Interest Holder from making secured or unsecured loans to the
Company by agreement with the Company.
f. Subject to the foregoing provisions of this section
6.03, the Board of Directors shall determine the amount and
timing of distributions, provided, however that the Company shall
no later than ninety (90) days after the end of each Fiscal Year
distribute all Distributable Funds of the Company with respect to
the preceding Fiscal Year. For purposes of this section,
"Distributable Funds" means all cash received (or released from
20PAGE
reserves) by the Company during any Fiscal Year (including all
interest income from temporary investments made by the Company
pending utilization, investment, or distribution by the Company),
less (i) amounts paid or reserved to pay all costs or expenses
incurred by the Company during such period, (ii) amounts paid or
reserved for payment of any indebtedness or liability of the
Company, and (iii) amounts used to create or increase reserves as
the Board of Directors may determine for the discharge of known
or existing liabilities or obligations of the Company or
otherwise for the Company's present or future obligations, needs
or business opportunities.
ARTICLE VII
Transferability
7.01. General . Except as otherwise specifically provided
in this Operating Agreement, or as approved by the unanimous
consent of the Members, neither a Member nor an Economic Interest
Owner shall have the right to:
a. sell, assign, pledge, hypothecate, transfer,
exchange or otherwise transfer for consideration (collectively,
"Sell") all or any part of its Membership Interest or Economic
Interest; or
b. gift, bequeath or otherwise transfer for no
consideration (whether or not by operation of law, except in the
case of bankruptcy) all or part of its Membership Interest or
Economic Interest.
7.02 a. Any sale or gift of a Membership Interest or
Economic Interest or admission of a Member in compliance with
this Article VII shall be deemed effective as of the last day of
the fiscal month in which the remaining Members' consent thereto
was given. The Selling Party agrees, upon the request of the
remaining Members, to execute such certificate or other documents
and perform such other acts as may be reasonably requested by the
remaining Members from time to time in connection with such sale,
transfer, assignment, or substitution. The Selling Party hereby
indemnifies the Company and the remaining Members against any and
all loss, damage, or expense (including, without limitation, tax
liabilities or loss of tax benefits) arising directly or
indirectly from any transfer or purported transfer in violation
of this Article VII.
b. The provisions of this Section 7.01 shall not apply
to a transfer made pursuant to the terms and conditions of the
Option Agreement dated as of the effective date of this Operating
Agreement between ThermoLase and JDM.
c. Any sale or gift of a Membership Interest or
Economic Interest or admission of a Member in compliance with
21PAGE
this Article VII shall be deemed effective to the extent such
sale or gift shall have taken place together with a sale or gift
of the Selling Party's corresponding participating interest in JV
France in accordance with the By-laws and Shareholders' Agreement
governing the operations of JV France and the relationships of
the Parties or shareholders of JV France.
7.03. Transferee Not a Member in Absence of Unanimous
Consent. Notwithstanding anything contained in this Operating
Agreement to the contrary (including, without limitation, section
7.02 above), if all of the remaining Members do not approve by
unanimous written consent of the proposed sale or gift of the
Transferring Party's Membership Interest or Economic Interest to
a transferee or donee which is not a Member immediately before
the sale or gift, the proposed transferee or donee shall have no
right to participate in the management of the business and
affairs of the Company or to become a Member; provided, however ,
ThermoLase shall have the right to transfer its Membership
Interest to any direct or indirect subsidiary of Thermo Electron
Corporation without such consent or complying with section 7.02
above, and upon such transfer such subsidiary shall be a Member
of the Company and ThermoLase shall remain liable for its
obligations under this Operating Agreement to the extent such
subsidiary does not perform or satisfy such obligations. The
transferee or donee shall be merely an Economic Interest Owner.
No transfer of a Member's interest in the Company (including any
transfer of the Economic Interest or any other transfer that has
not been approved by unanimous written consent of the Members)
shall be effective unless and until written notice (including the
name and address of the proposed transferee or donee and the date
of such transfer) has been provided to the Company and the
nontransferring Member(s).
a. Upon and contemporaneously with any sale or gift of
a Transferring Party's Economic Interest in the Company which
does not at the same time transfer the balance of the rights
associated with the Economic Interest transferred by the
Transferring Party (including, without limitation, the rights of
the Transferring Party to participate in the management of the
business and affairs of the Company), the Company shall purchase
from the Transferring Party, and the Transferring Party shall
sell to the Company for a purchase price of $100, all remaining
rights and interests retained by the Transferring Party that
immediately before the sale or gift were associated with the
transferred Economic Interest.
b. The restrictions on transfer contained in this
section 7.03 are intended to comply (and shall be interpreted
consistently) with the restrictions on transfer set forth in the
Delaware Act.
ARTICLE VIII
Additional Membership Interests
22PAGE
and Additional Members
8.01. Additional Membership Interests. From the date of
the formation of the Company, the Directors may, by their
unanimous vote, authorize the issuance of new and additional
Membership Interests for such consideration as the Directors by
their unanimous vote shall determine.
8.02. Admission to Membership .From the date of the
formation of the Company, any Person acceptable to the Directors
by their unanimous vote may become a Member in this Company
whether by the issuance by the Company of Membership Interests
for such consideration as the Directors by their unanimous vote
shall determine, or as a transferee of a Member's Membership
Interest or any portion thereof, subject to the terms and
conditions of this Operating Agreement. Notwithstanding any
other provision of this Operating Agreement, no Person shall
become a Member of the Company without satisfying the provisions
of this section 8.02 or Article VII.
8.03. Financial Adjustments. No new Members shall be
entitled to any retroactive allocation of losses, income, or
expense deductions incurred by the Company. The Board of
Directors may, at their option, at the time a Member is admitted,
close the Company's books (as though the Company's Fiscal Year
had ended) or make pro rata allocations of loss, income, and
expense deductions to a new Member for that portion of the
Company's Fiscal Year in which a Member was admitted in
accordance with the provisions of IRC e 706(d) and the Treasury
Regulations promulgated thereunder.
ARTICLE IX
Deadlock Resolution
9.01 The parties agree and acknowledge that it is in their
mutual best interest to cooperate to resolve differences that
23PAGE
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMMISSIONS.
arise in the course of their relationship and to overcome
disagreements that arise in the governance of the Company.
Nevertheless, the parties acknowledge that situations could arise
in which their different interests lead to a material inability
of the Company to act due to a failure of the members of the
Board of Directors, despite their good faith best efforts, to
agree upon one or more decisions which are required to be made
in order to continue the effective operation of the Company
("Deadlock"). The purpose of this Article IX is to define the
provisions pursuant to which such Deadlocks shall be resolved.
9.02 a. In the event of a Deadlock, the Members will first
comply with the mediation and dispute resolution procedures set
forth in Section 12.01 hereof.
9.03 If the Members remain unable to agree on a solution
following such procedures, then the following shall apply:
9.03.1 If the Deadlock occurs before Consolidated
Venture Revenue exceeds **********************************
************* then the parties shall dissolve the Company as
though by mutual consent, it being understood that in such event,
ThermoLase shall have the right, but not the obligation, to
purchase from D.B.C. Holding, S.A. all its interest in JDM for a
price, subject to the provisions of this section, equal to the
positive account balance of D.B.C. Holding in JDM at the time of
such purchase.
9.03.2 If the Deadlock occurs after Consolidated
Venture Revenue exceeds **********************************
************* then the following shall apply:
a. ThermoLase shall have the right to purchase from
D.B.C. Holding all its ownership interest in JDM; and JDM shall
have the right to purchase from ThermoLase all its interest in
the Company (collectively, the "Purchase Rights"). No later than
five (5) business days following the Members' failure to resolve
a Deadlock as described above, each Member shall give the other
Member a non-binding notification as to whether it would prefer
to exercise or not to exercise its Purchase Right.
b. If one Member prefers to exercise its Purchase
Right and one Member prefers not to exercise its Purchase Right,
then the Members shall attempt, in good faith, to agree upon an
appropriate exercise price for the exercising Member's purchase
right.
c. If the Members cannot agree on an appropriate
exercise price, or if both Members either desire to exercise or
not to exercise their Purchase Rights, than an independent
appraiser not connected with either Member, experienced in the
valuation of international joint ventures and otherwise
reasonably acceptable to both Members shall be engaged by and at
the expense of the Company (or by JV France, at its option) to
24PAGE
determine the fair market value of the Members' respective
ownership interests subject to the Purchase Rights (the "Value").
The appraiser shall base its determination of the Value on the
price an independent third party would be willing to pay for the
ownership interest in question, without regard to whether such
interest would be held, bought or sold by ThermoLase or JDM. The
upper bound of such Value shall be the price which would be
ascribed to such interest based on the valuation of the Company
set forth in the Option Agreement of even date herewith between
ThermoLase and JDM. The determination of the appraiser shall be
final and binding on both Members.
d. No later than five (5) business days following the
delivery of the appraiser's final valuation, each Member shall
provide the other with a binding election as to whether or not it
elects to exercise its Purchase Right.
e. If only one Member exercises its Purchase Right,
then the purchase and sale of such interest shall occur promptly
following the delivery of such Member's notice to that effect for
the Value.
f. If both Members exercise their Purchase Rights,
then the Mediator shall organize an auction in which the price at
which the Purchase Right may be exercised shall increase in
increments of five percent (5%), with the winning bid being the
final bid received by the Mediator from a Member, with no higher
bid received from the other Member within 48 hours. The costs
and expenses of the Mediator shall be shared equally by the
Members, and not by the Company.
g. If neither Member exercises its Purchase Right,
then the Mediator shall organize an auction in which the price at
which the Purchase Right may be exercised shall decrease in
increments of five percent (5%), and the Member who first elects
to exercise its Purchase Right at the then-current bid price,
with no competing bid received from the other Member within 48
hours, shall be entitled to exercise its Purchase Right for such
price. The costs and expenses of the Mediator shall be shared
equally by the Members, and not by the Company.
h. The parties shall cause their respective owners to
execute all required documents evidencing the transfer of
ownership described in this Section 9.03.2.
i. Following the purchase described in this Section
9.03.2, the parties shall be bound by the applicable
non-competition provisions set forth in Section 10.07.
9.04 D.B.C. Holdings and the JDM Owners agree, jointly and
severally, to indemnify, defend and hold ThermoLase harmless
against any and all liabilities, obligations, claims, actions and
suits relating to JDM or its acts or omissions, except those
25PAGE
which arise directly from its ownership of the Membership
Interests or its interest in JV France.
ARTICLE X
Dissolution and Termination
10.01. Dissolution.
a. The Company shall be dissolved upon the occurrence
of the following events:
i. when the period fixed for the duration of the
Company shall expire pursuant to section 2.07 above;
ii. by the written agreement of a Supermajority
Interest;
iii. at the election of ThermoLase, in its sole
and absolute discretion (which election shall be made in writing
and delivered to the other Members no later than six months
following the first anniversary of the date of this Operating
Agreement), if, by the first anniversary of the date of this
Operating Agreement, JV France has not opened for paying
customers a spa facility in France employing the SoftLight
technology sublicensed to it by the Company;
iv. at the election of ThermoLase, in its sole
and absolute discretion (which election shall be made in writing
and delivered to the other Members no later than six months
following the second anniversary of the opening by JV France of a
spa facility in France employing the SoftLight technology
sublicensed to it by the Company) if, by such second anniversary,
Consolidated Venture Revenues are below $5,000,000;
v. upon the dissolution, liquidation, or other
termination of the existence or business of JV France;
vi. upon the bankruptcy (under the Federal
Bankruptcy Code of 1978, as amended or similar legislation), or
dissolution of a Member or upon the occurrence of any other event
that terminates the continued membership of a Member in the
Company, unless within ninety (90) days Members owning at least a
Majority of the Membership Interests of the Company, excluding
the affected Member's Membership Interest, agree to continue the
term of the Company, subject to the other provisions hereof, and
provided that, upon any of the foregoing events that terminate
the continued membership of a Member in the Company, the
remaining Member or Members shall immediately be entitled to
admit an additional Member or additional Members on such terms
and conditions as such remaining Members shall determine. In any
such case, the Members hereunder shall remain Members of the
Company; each Member of the Company (including the former Member)
shall retain such economic interest in the Company as was held
26PAGE
prior to such event; and all of the assets of the Company of any
nature whatsoever and all liabilities of the Company shall remain
the assets and liabilities of the Company. The remaining Members
shall file an amended Certificate of Formation in accordance with
the Act, if necessary, together with any documents or instruments
necessary to effectuate the provisions of this section
10.01(a)(vi).
b. As soon as possible following the occurrence of any
of the events specified in section 10.01(a) effecting the
dissolution of the Company, the appropriate representative of the
Company shall execute a statement of intent to dissolve in such
form as shall be prescribed by the Delaware Secretary of State
and file same with the Delaware Secretary of State's office.
c. If a Member who is an individual dies or a court of
competent jurisdiction adjudges him to be incompetent to manage
the Member's person or property, the Member's executor,
administrator, guardian, conservator, or other legal
representative may exercise all of the Member's rights for the
purpose of settling the Member's estate or administering his
property.
10.02. Effect of Filing of Dissolving Statement . Upon the
filing with the Delaware Secretary of State of a statement of
intent to dissolve, the Company shall cease to carry on its
business, except insofar as may be necessary for the winding up
of its business, but its separate existence shall continue until
a certificate of dissolution has been issued by the Secretary of
State or until a decree dissolving the Company has been entered
by a court of competent jurisdiction.
10.03. Winding Up, Liquidation, and Distribution of Assets.
Upon dissolution, an accounting shall be made by the Company's
independent accountants of the accounts of the Company and of the
Company's assets, liabilities, and operations, from the date of
the last previous accounting until the date of dissolution. The
Board of Directors shall immediately proceed to wind up the
affairs of the Company. If the Company is dissolved and its
affairs are to be wound up, the Board of Directors shall:
a. Sell or otherwise liquidate all of the Company's
assets as promptly as practicable (except any assets which are
required to be distributed to the Members in kind);
b. Allocate any profit or loss resulting from such
sales to the Members' and Economic Interest Owners' Capital
Accounts in accordance with Article VI above;
c. Discharge all liabilities of the Company, including
liabilities to Members and Economic Interest Owners who are
creditors, to the extent otherwise permitted by law, other than
liabilities to Members and Economic Interest Owners for
distributions, and establish such Reserves as may be reasonably
27PAGE
necessary to provide for contingencies or liabilities of the
Company (for purposes of determining the Capital Accounts of the
Members and Economic Interest Owners, the amounts of such
Reserves shall be deemed to be an expense of the Company).
d. Distribute the remaining assets in the following
order:
i. The Company will distribute to ThermoLase in
kind whatever interest it has, if any, in the property
contributed by ThermoLase as its Initial Capital Contribution
pursuant to section 5.01 of this Operating Agreement. The fair
market value of such property shall be deemed to be the fair
market value of such property as reflected in the Company's books
and records at the time of its contribution to the Company for
purposes of adjustments to Capital Accounts under section 5.03 of
this Operating Agreement.
ii. All additional property of the Company shall
be distributed to the Interest Owners in proportion to their
Economic Interests.
iii. The Company may offset damages for breach of
this Operating Agreement by a Member or Economic Interest Owner
whose interest is liquidated (either upon the withdrawal of the
Member or the liquidation of the Company) against the amount
otherwise distributable to the Member under this section
10.04(d); provided, however, that a Member's election pursuant
to sections 10.01(a)(iii), (iv) or (v), or the occurrence of a
deadlock as resolved under Article IX, shall not constitute a
breach of this Operating Agreement.
e. Notwithstanding anything to the contrary in this
Operating Agreement, upon a liquidation within the meaning of
Treas. Reg. e 1.704-1(b)(2)(ii)(g), if any Member has a Deficit
Capital Account (after giving effect to all contributions,
distributions, allocations, and other Capital Account adjustments
for all taxable years, including the year during which such
liquidation occurs), the Member shall have no obligation to make
any Capital Contribution, and the negative balance of the
Member's Capital Account shall not be considered a debt owed by
the Member to the Company or to any other Person for any purpose
whatsoever.
f. Upon completion of the winding up, liquidation, and
distribution of the assets, the Company shall be deemed
terminated.
g. The Board of Directors shall comply with any
applicable requirements of applicable law pertaining to the
winding up of the affairs of the Company and the final
distribution of its assets.
28PAGE
10.04. Articles of Dissolution . When all
liabilities, and obligations have been paid and discharged or
adequate provisions have been made therefor and all of the
remaining property and assets have been distributed to the
Members, articles of dissolution shall be executed in duplicate
and verified by the person signing the articles, which articles
shall set forth the information required by the Delaware Act.
Duplicate originals of the articles of dissolution shall be
delivered to the Delaware Secretary of State.
10.05. Certificate of Dissolution. Upon the issuance of
the certificate of dissolution, the existence of the Company
shall cease, except for the purpose of suits, other proceedings,
and appropriate action as provided in the Delaware Act. The
Board of Directors shall have authority to distribute any Company
property discovered after dissolution, convey real estate, and
take such other action as may be necessary on behalf of and in
the name of the Company.
10.06. Return of Contribution Nonrecourse to Other Members.
Except as provided by law or as expressly provided in this
Operating Agreement, upon dissolution, each Member shall look
solely to the assets of the Company for the return of its Capital
Contribution. If the Company property remaining after the
payment or discharge of the debts and liabilities of the Company
is insufficient to return the cash contributions of one or more
Members, the Members shall have no recourse against any other
Member.
10.07. Non-Compete.
a. During the term of this Agreement, except through
the Company and JV France, neither party shall directly or
indirectly as an individual proprietor, partner, stockholder,
officer, employee, director, joint venturer, investor, lender, or
in any other capacity whatsoever (other than as the holder of not
more than one percent (1%) of the total outstanding stock of a
publicly held company), engage in the Territory in the business
of developing, producing, marketing or selling products or
services related to hair removal or skin rejuvenation, provided,
however, that such persons shall not be restricted in the
continuation of their activities in the field of hairdressing and
the ownership, operation, franchising, licensing and management
of beauty salons, including the supply, sale or use in such
salons of non-light source, non-electrolysis hair removal and
skin rejuvenation products and/or services.
b. If the Company is dissolved pursuant to section
10.01(a) above, or if JDM's interest in the Company is acquired
by ThermoLase pursuant to Article IX, then for a period of two
years after the filing of the Articles of Dissolution pursuant to
section 10.04 of this Operating Agreement, JDM will not, and will
cause its stockholders not to, directly or indirectly as an
individual proprietor, partner, stockholder, officer, employee,
29PAGE
director, joint venturer, investor, lender, or in any other
capacity whatsoever (other than as the holder of not more than
one percent (1%) of the total outstanding stock of a publicly
held company), engage in the Territory in the business of
developing, producing, marketing or selling products or services
related to hair removal or skin rejuvenation, provided, however,
that such persons shall not be restricted in the continuation of
their activities in the field of hairdressing and the ownership,
operation, franchising, licensing and management of beauty
salons, including the supply, sale or use in such salons of
non-light source, non-electrolysis hair removal and skin
rejuvenation products and/or services.
c. If the Company is dissolved pursuant to section
10.01(a)(vi) as a result of the bankruptcy of or other similar
event affecting ThermoLase, or pursuant to section 10.01(a)(v) as
a result of a failure of ThermoLase to fulfil its obligations, or
if ThermoLase's interest in the Company is acquired by JDM
pursuant to Article IX, then for a period of two years after the
filing of the Articles of Dissolution pursuant to section 10.04
of this Operating Agreement, ThermoLase will not, and will cause
its corporate parent and subsidiary companies not to, directly or
indirectly, enter into a business partnership, joint venture,
cooperative marketing arrangement or collaboration in the
Territory with a person or company involved in the business of
owning or operating hairdressing or skin care salons for the
purpose of developing, producing, marketing or selling products
or services related to laser-based hair removal or laser-based
skin rejuvenation.
d. If any restriction set forth in this section 10.07
is found by any court of competent jurisdiction to be
unenforceable because it extends for too long a period of time or
over too great a range of activities or in too broad a geographic
area, it shall be interpreted to extend only over the maximum
period of time, range of activities or geographic area as to
which it may be enforceable.
e. The restrictions contained in this section 10.07
are necessary for the protection of the business and goodwill of
the parties and are considered by the parties to be reasonable
for such purpose. Each party agrees that any breach by it of this
section 10.07 will cause the other party substantial and
irrevocable damage and, therefore, in the event of any such
breach, in addition to such other remedies which may be
available, the non-breaching party shall have the right to seek
specific performance and injunctive relief.
ARTICLE XI
Intellectual Property Infringement
11.01. Defense of Actions Against the Company
Notwithstanding anything to the contrary contained in Article IV
30PAGE
of this Operating Agreement, if a claim is made or a suit is
brought by a third party against the Company or its sublicensee
or franchisee relating to an allegation that the Company's or
such sublicensee's or franchisee's conduct, in practice of the
processes licensed to the Company under the License Agreement,
infringes such third party's patent or other intellectual
property right, or a claim for indemnification is made by a
Member pursuant to section 11.02 below, ThermoLase shall have the
right to control the defense of such claim or suit on behalf of
the Company and at the Company's expense.
11.02. Indemnification of Members.
a. If a claim is made or suit is brought by a third
party against any of the Members, or its officers, directors or
owners, relating to an allegation that the Company's conduct, in
the practice of the processes licensed to the Company under the
License Agreement, infringes such third party's patent or other
intellectual property right (each, a "Third Party Infringement
Action"), ThermoLase shall defend such claim or suit at the
expense of the Company, and the Company shall pay or indemnify
such Member, officer, director or owner against all damages and
costs finally awarded, or settlement amounts paid, in the suit or
in connection with the claim.
b. In the event that the Company is financially unable
to perform its indemnification obligations set forth in section
11.02(a) above, but only in such event and only to the extent of
such non-performance, ThermoLase hereby agrees to assume the
performance of such obligations, at ThermoLase's expense.
11.03. Indemnification Procedures . Promptly after receipt
by a Member of notice of the commencement of any Third Party
Infringement Action against it, such Member shall give notice to
the Company and ThermoLase of the commencement of such action,
but the failure to promptly notify the Company will not relieve
the Company of any liability that it may have to any Member
except to the extent it is prejudiced by such failure. If any
Third Party Infringement Action is brought against a Member and
such Member gives notice to the Company of the commencement of
such action, ThermoLase, at the cost and expense of the Company,
shall assume the defense and control of any such claim or legal
proceeding, provided that a Member or related person who is
required to be a party to such suit shall remain a party to the
extent so required. ThermoLase shall select counsel to conduct
the defense of such action and shall take all steps necessary in
the defense or settlement thereof. ThermoLase shall not consent
to a settlement of, or the entry or any judgment arising from,
any claim or legal proceeding for other than solely monetary
damages without the prior written consent of the indemnified
person (which shall not be unreasonably withheld or delayed).
The indemnified person shall be entitled to participate in (but
not control) the defense of any such action, with its own counsel
and at its own expense (except that the Company will be
31PAGE
responsible for the fees and expenses of the separate co-counsel
to the extent the indemnified person reasonably concludes that
the counsel the Company has selected has a conflict of interest
and provides timely notice of such fact to the Company).
ARTICLE XII
Dispute Resolution
12.01 Mediation . In the event of any dispute,
controversy or claim arising out of or relating to this Agreement
or to a breach hereof, including its interpretation, performance
or termination, the Members agree to follow the procedures set
forth in this Section 12.01. First, the Members shall identify
in writing the point on which they cannot agree (the "Disputed
Point") and the respective positions of each Director with
respect to such point. The Members will refrain from making a
decision on the Disputed Point for a period of up to two weeks.
During such 2-week period, the Members will (i) consult with one
another in good faith with the goal of resolving the Disputed
Point, (ii) engage a mutually acceptable impartial mediator who
is fluent in both English and French (the "Mediator") to assist
them in finding a mutually agreeable solution to the Disputed
Point, (iii) study the economic or commercial bases on which each
of the parties has based its position and the issues raised by
each of the parties in respect of the Disputed Point, and (iv)
cooperate with the Mediator in examining alternative solutions to
the Disputed Point. The costs and expenses of the Mediator shall
be shared equally by the Members, and not by the Company. The
Members will meet at the end of such 2-week period for the sole
purpose of discussing and voting on the Disputed Point. The
Mediator shall conduct the meeting and begin it with a summary of
the situation, the nature of the Disputed Point and any proposed
solutions, while reminding the Members of the consequences of the
continuation of the dispute. The Members will use their good
faith best efforts to agree on a solution prior to or during such
meeting.
12.02. Arbitration. In the event that a Disputed Point
cannot be resolved by the mediation procedure described in
Section 12.01 above, and provided that the Deadlock resolution
provisions of Article IX do not apply, then such Disputed Point,
shall be finally resolved by arbitration. The arbitration shall
be conducted by one (1) arbitrator fluent in French and English,
with experience in international commercial joint ventures, to be
appointed by the presiding officer of the London Court of
International Arbitration ("LCIA"). The arbitration shall be
conducted in English, under the supervisory authority of the
LCIA, and in accordance with the LCIA arbitration rules.
Multiple arbitrations between the parties and their Affiliates
relating to the same transaction or series of transactions may be
aggregated in the same arbitration proceeding. The arbitration,
including the rendering of the award, shall take place in London,
32PAGE
England, and shall be the exclusive forum for resolving such
dispute, controversy or claim. The decision of the arbitrator
shall be binding upon the parties hereto, and the expense of the
arbitration (including without limitation the award of attorneys'
fees to the prevailing party) shall be paid as the arbitrator
determines. The decision of the arbitrator shall be executory,
and judgment thereon may be entered by any court of competent
jurisdiction. The prevailing party in any arbitration shall be
entitled to such reasonable attorneys' fees as may be awarded by
the arbitrator. The non-prevailing party shall pay to the other
party such reasonable attorneys' fees, together with such fees of
the arbitrator and costs and expenses of the arbitration, as may
be awarded by the arbitrator. Notwithstanding the foregoing,
nothing in this section 12.02 shall be construed as limiting in
any way the right of a Member to seek injunctive relief with
respect to any actual or threatened breach of this Operating
Agreement from a court of competent jurisdiction.
12.03. Limitation of Liability . No party to this
Operating Agreement shall be entitled to recover from any other
party to this Operating Agreement any special, incidental,
consequential or punitive damages.
ARTICLE XIII
Miscellaneous
13.01. Notices . Any and all notices, requests, elections,
consents or demands permitted or required to be made under this
Operating Agreement shall be in writing, signed by the Member
giving such notice, request, election, consent or demand, and
shall be delivered personally, or sent by registered or certified
mail, or by telefax, or by overnight mail, Federal Express or
other similar commercial overnight courier, to the other Member
or Members, at their addresses set forth below, or at such other
address as may be supplied by written notice given in conformity
with the terms of this section 13.01:
If to ThermoLase:
ThermoLase Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: President
Telefax No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Thermo Electron Corporation
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel
Telefax No.: (▇▇▇) ▇▇▇-▇▇▇▇
33PAGE
If to JDM:
with a copy to:
The date of personal delivery, the date set forth on the telefax
confirmation, or the date of mailing or delivery to an overnight
courier, as the case may be, shall be the date of such notice.
13.02. Successors and Assigns. Subject to the restrictions
on transfer set forth herein, this Operating Agreement, and each
and every provision hereof, shall be binding upon and shall inure
to the benefit of the Members, their respective successors,
successors-in-title, heirs and assigns, and each and every
successor-in-interest to any Member, whether such successor
acquires such interest by way of gift, purchase, foreclosure, or
by any other method, shall hold such interest subject to all of
the terms and provisions of this Operating Agreement.
13.03. Amendments . Unless otherwise stated in
Operating Agreement to the contrary, this Operating Agreement may
be amended only by a written instrument executed by a
Supermajority Interest.
13.04. No Partition . The Members hereby agree that no
Member, nor any successor-in-interest to any Member, shall have
the right while this Operating Agreement remains in effect to
have the property of the Company partitioned, or to file a
complaint or institute any proceeding at law or in equity to have
the property of the Company partitioned, and each Member, on
behalf of himself, his successors, representatives, heirs, and
assigns, hereby waives any such right. It is the intention of
the Members that during the term of this Operating Agreement, the
rights of the Members and their successors-in-interest, as among
themselves, shall be governed by the terms of this Operating
Agreement, and that the right of any Member or
successor-in-interest to assign, transfer, sell or otherwise
dispose of his interest in the Company shall be subject to the
limitations and restrictions of this Operating Agreement.
13.05. No Waiver. The failure of any Member to insist upon
strict performance of a covenant hereunder or of any obligation
hereunder, irrespective of the length of time for which such
failure continues, shall not be a waiver of such Member's right
to demand strict compliance in the future. No consent or waiver,
express or implied, to or of any breach or default in the
performance of any obligation hereunder, shall constitute a
consent or waiver to or of any other breach or default in the
performance of the same or any other obligation hereunder.
13.06. Entire Agreement . This Operating Agreement
together with the other agreements referenced herein, constitutes
the full and complete agreement of the parties hereto with
respect to the subject matter hereof.
34PAGE
13.07. Captions . Titles or captions of Articles
sections contained in this Operating Agreement are inserted only
as a matter of convenience and for reference, and in no way
define, limit, extend or describe the scope of this Operating
Agreement or the intent of any provision hereof.
13.08. Counterparts . This Operating Agreement may be
executed in a number of counterparts, all of which together shall
for all purposes constitute one Operating Agreement, binding on
all the Members notwithstanding that all Members have not signed
the same counterpart.
13.09. Applicable Law . This Operating Agreement and the
rights and obligations of the parties hereunder shall be governed
by and interpreted, construed and enforced in accordance with the
laws of the State of Delaware, without reference to its choice of
law rules.
13.10. Gender, Etc . In the case of all terms used in this
Operating Agreement, the singular shall include the plural and
the masculine gender shall include the feminine and neuter, and
vice versa, as the context requires.
13.11. Creditors. None of the provisions of this Operating
Agreement shall be for the benefit of or enforceable by any
creditor of any Member or of the Company other than a Member who
is such a creditor of the Company.
13.12. U.S. Dollars. All amounts expressed herein shall be
deemed to be in U.S. dollars.
13.13. Confidential Information . Each Member acknowledges
and agrees that it may receive from the Company certain
confidential information of the Company regarding its business
operations, trade secrets, know-how, customer information,
pricing, marketing data and other information of a confidential
nature, including without limitation the terms of this Operating
Agreement (collectively, the "Confidential Information"). Each
Member agrees to maintain the confidentiality of the Confidential
Information. Notwithstanding the foregoing provisions of this
section 13.13, each Member shall have the right to disclose any
information which (i) was rightfully possessed by such Member
before it was received from the Company, (ii) is independently
developed by or for such Member without reference to or
derivation from the Confidential Information, (iii) is or become
public otherwise than through any act or default of such Member
or (iv) is required by law or stock exchange rule to be
disclosed, provided such Member notifies the Company prior to
making any such disclosure so as to afford the Company a
reasonable opportunity to object or seek an appropriate
protective order with respect to such disclosure.
13.14 Compliance with Law . Each party agrees to comply
with all applicable laws, rules and governmental regulations
35PAGE
applicable to its performance hereunder. During the term of this
Operating Agreement, the Members shall monitor the sales levels
and market share of the Company and its sublicensees and
subfranchisees, and shall, if counsel to the Company so advises,
modify the Company's arrangements with its licensees,
sublicensees and subfranchisees, and take other steps, to comply
with applicable laws, rules and governmental regulations.
IN WITNESS WHEREOF, the parties have executed this Operating
Agreement as of the date first above written.
MEMBERS:
THERMOLASE CORPORATION JDM INVEST S.A.
By:___________________________ By:___________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇ Name:
Title: President Title:
THERMOLASE FRANCE L.L.C.
By its Members
THERMOLASE CORPORATION JDM INVEST S.A.
By:__________________________ By:___________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇ Name:
Title: President Title:
JDM OWNERS:
JACQUES DESSANGE MANAGEMENT FRANKLIN HOLDING S.A.
By:__________________________ By:___________________________
Name: Name:
Title: Title:
_____________________________ ______________________________
▇▇▇▇▇▇▇▇ Dessange ▇▇▇▇▇▇▇ ▇▇▇▇▇
_____________________________ ______________________________
Michel Couvin ▇▇▇▇▇▇ ▇▇▇▇▇
36PAGE
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMMISSIONS.
OPERATING AGREEMENT
OF
THERMOLASE FRANCE L.L.C.
a Delaware Limited Liability Company
EXHIBIT A
Schedule of Interests
---------------------
Initial Capital Membership
Name Contribution Interest %
---- ------------ ----------
JDM *********************************
********************************* 50%
*************************
*******************************
********************************
**********************************
*********************************
************
*********************************
********************************
*********************************
****************************
********************************
*********************************
**************************
**********************************
**********************************
*************************
ThermoLase License Agreement, to be executed
Corporation and delivered on or before the date 50%
of this Operating Agreement.
37PAGE
OPERATING AGREEMENT
OF
THERMOLASE FRANCE L.L.C.
a Delaware Limited Liability Company
EXHIBIT B
Schedule of Ownership
---------------------
JDM Invest S.A.
---------------
▇▇▇▇ ▇▇▇▇▇▇▇ ____%
D.B.C. Holding S.A. ____%
Jacques Dessange
Management, S.A. ____%
▇▇▇▇▇▇▇▇ Dessange ____%
▇▇▇▇▇▇▇ ▇▇▇▇▇ ____%
Michel Couvin ____%
▇▇▇▇▇▇ ▇▇▇▇▇ ____%
D.B.C. Holding S.A.
-------------------
Franklin Holdings, S.A. 59.5%
Jacques Dessange
Management, S.A. ____%
▇▇▇▇▇▇▇▇ Dessange ____%
▇▇▇▇▇▇▇ ▇▇▇▇▇ ____%
Michel Couvin ____%
▇▇▇▇▇▇ ▇▇▇▇▇ ____%
38PAGE
EXHIBIT D
LICENSE AGREEMENT
-----------------
Licensee Information:
Name: THERMOLASE FRANCE L.L.C. ("Licensee")
Address: ________________
________________
________________
Telephone No.: ________________
Fax No. ________________
Effective Date: ________ __, ▇▇▇▇
▇▇▇▇▇▇▇▇▇: ▇▇▇▇▇▇ (including its Departements d'Outre-Mer
(D.O.M)., but excluding all other Territories
d'Outre-Mer (▇.▇.▇.) and other jurisdictions)
BACKGROUND
A. ThermoLase Corporation ("ThermoLase") has developed certain
proprietary technology and processes for the removal of unwanted
human hair and the exfoliation or rejuvenation of skin.
ThermoLase desires to have such technology and processes utilized
in the Territory set forth above (the "Territory").
B. In order to satisfy its initial capital contribution
obligations to Licensee pursuant to the terms of the Operating
Agreement of ThermoLase France L.L.C. between ThermoLase and JDM
Invest S.A. of even date herewith (the "Operating Agreement"),
ThermoLase is prepared to license the technology and processes to
Licensee for use in the Territory on the terms and conditions set
forth in this License Agreement (the "Agreement"), and to sell to
Licensee certain SoftLight Lasers and SoftLight Lotion for use in
practicing such procedures, all pursuant to a mutually acceptable
Supply Agreement to be entered into by the parties (the "Supply
Agreement").
AGREEMENT
ThermoLase and Licensee hereby agree as follows:
1. DEFINITIONS
The following terms shall have the following meanings when
capitalized herein:
1.1 "Business Day" means a day on which banks are open for
business in San Diego, California and Paris, France.
1PAGE
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMMISSIONS.
1.2 "Improvement" means any improvement, enhancement or
modification to Licensed Technology, whether developed by
ThermoLase, Licensee or any third party.
1.3 "Licensed Technology" means the inventions claimed in
the Patents, including Improvements, together with any and all
know-how, trade secrets and other information relating to the
SoftLight Procedures and SoftLight Laser.
1.4 "Patents" means (i) the patents and patent applications
listed on Exhibit A attached hereto, (ii) any subsequent patent
application by ThermoLase having one or more claims covering
Improvements, (iii) any divisions, reissues, continuations,
renewals and extensions of any of said patents or patent
applications, and (iv) any patent issuing upon any of the
foregoing.
1.5 "SoftLight Laser" means a laser designed by ThermoLase
for use with a lotion in the removal of unwanted human hair and
the exfoliation or rejuvenation of skin.
1.6 "SoftLight Lotion" means the lotion approved by
ThermoLase for use in the SoftLight Procedures.
1.7 "SoftLight Procedures" means the removal of unwanted
human hair and the exfoliation or rejuvenation of skin using one
or more SoftLight Lasers and the SoftLight Lotion.
1.8 "Territory Patent" means a European patent granted on
European Patent Application No. ***********, which is enforceable
in the Territory and which has claims corresponding in scope to
the claims of U.S. Patent No. *********, and covering a
significant portion of the Licensed Technology used in practicing
laser-based hair removal, and which, if asserted, could prevent
the practice in the Territory of the SoftLight Procedures for
hair removal, as currently practiced by ThermoLase.
1.9 "ThermoLase Marks" means ThermoLase's SoftLight(SM) and
Spa Thira(SM) service marks and the trade name "ThermoLase",
including the registrations and applications listed on Exhibit A
hereto.
1.10. "Consolidated Venture Revenue" shall mean Direct
Venture Revenue plus Sublicense Revenue. Consolidated Venture
Revenue is calculated without reference to any sales or
value-added tax that may be imposed on such amounts.
1.11. "Direct Venture Revenue" shall mean the consolidated
aggregate revenues received from customers in respect of the
performance of the SoftLight Procedures in the Territory and the
sale of directly related products by (i) the Licensee, (ii) any
entities in which Licensee owns any equity or ownership
interests, or (iii) any entities which are owned, wholly or
2PAGE
partially, directly or indirectly, by ThermoLase, JDM
Investment, S.A., D.B.C. Holding S.A., Franklin Holding S.A., or
any of their direct or indirect owners.
1.12. "Sublicense Revenue" shall mean the aggregate revenue
received by the entities listed in 1.11(i) to (iv) from any of
their sublicensees or franchisees who do not fall into categories
(i) to (iv) above, and excluding any inter-company payments (such
as royalty payments, fees, service charges and the like) between
the entities listed in (i) to (iv) above.
2. LICENSE AND OWNERSHIP OF TECHNOLOGY
2.1 Grant of License . ThermoLase grants to Licensee, upon
the terms and subject to the conditions set forth in this
Agreement, an exclusive, non-transferable license, under the
Patents and all other ThermoLase intellectual property in the
Licensed Technology, to perform the SoftLight Procedures in the
Territory. Licensee shall have the right to sublicense the
foregoing rights to one or more sublicensees in the Territory
(the "Sublicensee(s)") pursuant to sublicense agreements in form
and substance acceptable to ThermoLase.
2.2 Ownership of Licensed Technology . Licensee will not
take any action or position contrary to ThermoLase's ownership of
all right, title and interest in and to the Patents and the
Licensed Technology, and Licensee agrees that it will not, at any
time, do or cause to be done any act or thing contesting or in
any way impairing or tending to impair the Patents or Licensed
Technology or any part of such right, title or interest of
ThermoLase. Licensee shall not in any manner represent that
Licensee has ownership of the Licensed Technology or Patents, and
acknowledges that Licensee's use of the Licensed Technology shall
not create in Licensee any right, title or interest in or to the
Licensed Technology, except for the rights granted to Licensee by
the express terms of this Agreement.
2.3 Licensee Improvements . Licensee shall disclose
promptly to ThermoLase any and all Improvements to the Licensed
Technology developed or discovered by Licensee or Sublicensee or
their officers, employees or agents. All such Improvements shall
be the property of ThermoLase, and, to the extent permitted by
law, Licensee hereby assigns all right, title and interest in and
to such Improvements, and all patent, copyright, trademark, trade
secret and other intellectual property rights therein, to
ThermoLase, as they are developed. Licensee shall, at
ThermoLase's request, execute and deliver all certificates,
waivers, applications, assignments and other instruments as
ThermoLase may reasonably request in order to effectuate the
assignment of Improvements to ThermoLase as described above,
including agreements between Licensee or its Sublicensee and
their employees relating to the ownership of inventions prepared
by employees. All employees of Licensee shall waive all moral
3PAGE
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMMISSIONS.
rights with respect to works of authorship constituting
Improvements created by them to the fullest extent permitted by
law.
2.4 ThermoLase Improvements . In the event that ThermoLase
develops or acquires Improvements that it commercially implements
at its commercial facilities for the SoftLight Procedures in the
United States, it shall provide such Improvements to Licensee at
no additional charge. Such Improvements shall be deemed to
constitute Licensed Technology for all purposes hereunder.
2.5 Future Patents . ThermoLase shall have the exclusive
right, at its sole expense, to make all decisions and take all
actions relating to the filing and prosecution of additional
patent applications relating to the Licensed Technology and the
Improvements. If Licensee requests ThermoLase to pursue
particular patent protection in the Territory relating to the
Licensed Technology, then, notwithstanding ThermoLase's exclusive
ownership of such patent, Licensee shall be responsible for all
costs of preparing, prosecuting and maintaining such patent in
the Territory.
3. THERMOLASE TECHNICAL ASSISTANCE
During the first year of the term of this Agreement,
ThermoLase shall provide to Licensee (or to Sublicensee, if so
designated by Licensee) up to an aggregate of **************** of
support and assistance in connection with the establishment and
operation of facilities for the performance of the SoftLight
Procedures. ThermoLase shall not charge for such support
services, except that Licensee shall be responsible for all
reasonable travel and out of pocket expenses incurred by
ThermoLase and its personnel in connection with providing such
services. Any direct costs and expenses for additional support
and assistance shall be borne by the Licensee. The parties shall
cooperate with each other to schedule training and assistance in
an efficient and cost-effective manner.
4. PAYMENT OF FEES AND ROYALTIES
4.1 Fees and Royalties.
(a) In consideration of the rights and licenses
granted to Licensee pursuant to this Agreement, Licensee shall
pay to ThermoLase (i) percentage royalties as provided in
paragraph (b) below (the "Royalties") and (ii) a single fee of
**************************************************************
******************************
**************************************************
*****************************************************************
************************
4PAGE
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMMISSIONS.
**************************************************
*****************************************************************
******************
Licensee's obligation to make further installment payments shall
expire if, prior to the date such installment is due, the
Licensee is dissolved or Dessange Holding's interest in the
Licensee is acquired by ThermoLase.
(b) Royalties shall be payable quarterly within 45
days following the end of each calendar quarter in the amount of
**** of Consolidated Venture Revenues. Each payment of
Royalties shall be accompanied by a written report, in detail
reasonably satisfactory to ThermoLase, specifying the method of
calculation of the Royalties for the applicable quarter. Any
fees or Royalties that are not paid when due shall bear interest
from the due date until paid at the lesser of (i) the rate of
1.5% per month or (ii) the maximum rate allowed by applicable
law.
(c) The Royalties, fees and all other amounts payable
pursuant to this Agreement are exclusive of any and all present
and future federal, national, state, local, municipal and other
excise, sales, use, property, value-added or similar taxes and
fees, all of which shall be paid by Licensee. Licensee shall
obtain and provide to ThermoLase any certificate of exemption or
similar document required to exempt any transaction under this
Agreement from any such tax or fee.
(d) The Royalties, fees and all other amounts payable
pursuant to this Agreement shall be payable in United States
Dollars. To the extent that Licensee's revenues are in a
currency other than United States Dollars, such revenues shall be
converted into United States Dollars, for the purposes of
calculating Royalties payable to ThermoLase hereunder, at the
average exchange rate during the relevant quarter as published in
the New York edition of the Wall Street Journal.
5. USE OF THERMOLASE MARKS
5.1 Trademark License; Promotional Materials.
(a) ThermoLase grants to Licensee an exclusive right
and license in the Territory (including the right to sublicense
to one or more Sublicensees) to use the ThermoLase Marks in
connection with promotional activities relating to the
performance of SoftLight Procedures, provided Licensee and all
Sublicensees acknowledge ThermoLase's rights in and to the
ThermoLase Marks by (i) referring to the same at all times as
service marks of ThermoLase in any signage, advertising, press
release, article, publication or other promotional material,
document or broadcast referencing the ThermoLase Marks and by
(ii) including the proprietary marking "(SM)" after SoftLight and
5PAGE
Spa Thira each time they are used by Licensee (or Sublicensee) in
any printed or electronic media. In any and all descriptions of
or references to the SoftLight Procedures, Licensee and
Sublicensee shall use no descriptive name or ▇▇▇▇ other than
SoftLight(SM) Spa Thira(SM), and "ThermoLase", or a name approved
in advance by ThermoLase which is formed by combining a
ThermoLase ▇▇▇▇ with the name "Jacques Dessange" (the "Combined
Name"), the use of which will be authorized only to the extent
Licensee or Sublicensee has received appropriate licenses or
sublicenses from the relevant trademark owners.
(b) ThermoLase shall have the right to review and
pre-approve (or reject) all promotional and advertising materials
relating to the SoftLight Procedures or SoftLight Lasers which
are prepared by Licensee or its Sublicensee, consultants,
contractors or agents, and which are not based substantially on
materials provided by ThermoLase. Licensee shall not include in
any such promotional or advertising materials any claims, facts,
data or representations relating to the SoftLight Procedures or
SoftLight Lasers which are not provided in writing by ThermoLase
or otherwise approved by ThermoLase in writing.
5.2 Ownership of ThermoLase Marks . ThermoLase shall have
the exclusive right under this Agreement to apply for
registration (and shall so apply), and to extend existing
registrations, of the ThermoLase Marks for use in connection with
the SoftLight Procedures or otherwise, except the Combined Name,
which may be applied for and owned by Licensee, subject to
ThermoLase's ownership of any underlying ThermoLase Marks and any
third party's ownership of the name "Jacques Dessange". Licensee
will not register, or cause or permit to be registered in the
name of any entity other than ThermoLase, the ThermoLase Marks or
any trademark, trade name or service ▇▇▇▇ confusingly similar
thereto, with any federal, national, supra-national, state,
municipal or other governmental authority of any jurisdiction,
whether within or outside the United States or the Territory.
Except as contemplated by the parties in case of use of the
Combined Name, Licensee will not use or associate the ThermoLase
Marks with any other trademark, trade name or service ▇▇▇▇ in any
advertising or publicity utilized by Licensee in connection with
the SoftLight Procedures or otherwise in such manner as to be
misleading with respect to the ownership of the ThermoLase Marks.
Licensee further agrees not to create a composite trademark,
trade name or service ▇▇▇▇ with the ThermoLase Marks, except in
each instance with ThermoLase's prior written consent which
ThermoLase acting in its sole discretion may withhold. Licensee
agrees that every use of the ThermoLase Marks shall inure to the
ultimate benefit of ThermoLase. Licensee shall not remove or
obscure or alter in any manner the ThermoLase Marks or any notice
thereof, which may be displayed on the SoftLight Lasers, the
SoftLight Lotion, a facility for the performance of SoftLight
Procedures, or any other documentation provided by ThermoLase
hereunder.
6PAGE
5.3 Quality Controls and Assurance.
(a) Licensee agrees that any services provided by
Licensee and its Sublicensees based on performance of the
SoftLight Procedures pursuant to this Agreement shall be of a
quality at least equal to the quality of similar services
provided by ThermoLase or its other franchisees at facilities at
which ThermoLase or its other franchisees provide such services.
(b) In addition, in order to comply with ThermoLase's
quality control standards, Licensee shall: (i) use the
ThermoLase Marks in compliance with all relevant laws and
regulations; and (ii) accord ThermoLase the right (to the extent
permitted by local law or rules of professional conduct) to
inspect during normal business hours, without prior advance
notice, its facilities (and those of its Sublicensees) in order
to confirm that Licensee's use of the ThermoLase Marks is in
compliance with this Agreement.
(c) Licensee agrees that its failure to comply with
the quality standards described in this Article 5 shall
constitute a material breach of this Agreement.
5.4 Translation of Documentation . Licensee shall ensure,
at its expense, that all technical manuals, advertising and
marketing information and other documentation provided by
ThermoLase required by law to be in the French language are
translated into French. Licensee shall provide ThermoLase with
advance copies of all such materials for approval; provided ,
however, that Licensee shall take full responsibility for any
mistakes or inaccuracies in such translations. All right, title
and interest in and to such translations shall be owned by
ThermoLase, and Licensee hereby assigns all right, title and
interest in and to such translations, and all copyright,
trademark and other intellectual property rights therein, to
ThermoLase, as they are developed. Licensee shall, at
ThermoLase's request, execute and deliver all certificates,
applications, assignments and other instruments as ThermoLase may
reasonably request in order to effectuate the assignment of
translations to ThermoLase as described above. All employees of
Licensee shall waive all moral rights with respect to works of
authorship in such translations created by them. To the extent
permitted by local law, Licensee will enter into, and cause
Sublicensee to enter into, agreements with its employees to
ensure compliance with the provisions of this Section 5.4.
6. CONFIDENTIALITY
6.1 Licensee acknowledges and agrees that ThermoLase has
disclosed, and shall continue to disclose, to Licensee in
connection with the use of the Licensed Technology and
performance of this Agreement certain confidential information of
ThermoLase regarding its business operations, trade secrets,
know-how, customer information, pricing, marketing data and other
7PAGE
information of a confidential nature relating to the Licensed
Technology and the SoftLight Procedures, including, without
limitation, the terms of this Agreement (collectively, the
"ThermoLase Confidential Information"). In addition, ThermoLase
acknowledges and agrees that Licensee may disclose to it during
the term of this Agreement certain confidential information of
Licensee regarding its business operations, trade secrets,
know-how, customer information, pricing, marketing data and other
information of a confidential nature (the "Licensee Confidential
Information").
6.2 The Confidential Information of each party shall remain
the sole and exclusive property of such party, and the other
party shall have no interest or rights with respect thereto,
except to the extent expressly provided in this Agreement. Each
party agrees to maintain the confidentiality of the Confidential
Information of the other party, provided, however, that Licensee
shall have the right to disclose such information to its
sublicensees who have a need to know such information and who
have agreed in writing to maintain the confidentiality thereof in
a manner no less restrictive than that required under this
Agreement. Notwithstanding the foregoing provisions of this
Article 6, the receiving party shall have the right to disclose
any information that it can demonstrate (i) was rightfully
possessed by the receiving party before it was received from the
disclosing party, (ii) is or becomes public otherwise than
through any act or default of the receiving party, or (iii) is
required by law, court order or stock exchange rule to be
disclosed, provided the receiving party notifies the disclosing
party in writing prior to making any such disclosure so as to
afford to ThermoLase a reasonable opportunity to object or seek
an appropriate protective order with respect to such disclosure.
7. ENFORCEMENT OF RIGHTS
Licensee shall promptly advise ThermoLase upon becoming
aware of any infringement or threatened infringement of any of
the Licensed Technology or the ThermoLase Marks in the Territory
or any claim that the Licensed Technology or the ThermoLase Marks
infringe the intellectual property rights of another party in
the Territory. ThermoLase, in its sole discretion, shall
determine the appropriate action, if any, to be taken with
respect to any such infringement and shall have the right to
exclusive control of any enforcement suit or proceeding
(provided, however, that Licensee shall remain a party to such
suit to the extent so required). Licensee shall cooperate with
ThermoLase with respect to any enforcement, including, without
limitation, joining as a party to any litigation, if required.
All costs and expenses (including attorneys' fees) of any action
relating to any such infringement shall be borne by Licensee or,
and all amounts, if any, recovered under such action, shall be
paid to Licensee. Notwithstanding the foregoing, ThermoLase
shall be solely responsible for enforcing its rights against the
European Laser Center's technology as it exists as of the
8PAGE
Effective Date, and shall bear all costs, and receive all
recoveries, in connection therewith.
8. LIMITATION OF LIABILITY; REMEDIES
8.1 Consequential Damages. Notwithstanding anything to the
contrary contained in this Agreement, including without
limitation the provisions of Article 7 above, neither party
hereto shall be liable to the other for any indirect, special,
consequential, incidental or punitive damages (including without
limitation damages for loss of use of facilities or equipment,
loss of revenue, loss of profits or loss of goodwill) regardless
of (i) the negligence (either sole or concurrent) of either party
and (ii) whether either party has been informed of the
possibility of such damages.
8.2 No Warranty. THERMOLASE PROVIDES HEREIN NO WARRANTY OF
MERCHANTABILITY, OF FITNESS FOR A PARTICULAR PURPOSE, OF NON-
INFRINGEMENT, OR AS TO THE RESULTS THAT MAY BE ATTAINED BY THE
PERFORMANCE, PRACTICE OR OPERATION OF THE SOFTLIGHT PROCEDURES,
INCLUDING WITHOUT LIMITATION THE SOFTLIGHT LASERS.
8.3 Equitable Relief . Notwithstanding any other provision
of this Agreement to the contrary, due to the fact that the
unauthorized use, transfer or dissemination of the ThermoLase
Confidential Information or the Licensed Technology, or the
improper use thereof in violation of ThermoLase's instructions
and/or applicable law or regulations, would diminish
substantially the value thereof and cause irreparable harm to
ThermoLase which could not be adequately addressed by monetary
damages, if Licensee breaches any of the provisions of Articles 2
or 5 of this Agreement, ThermoLase shall be entitled, without
limiting its other rights or remedies, to obtain equitable relief
to prevent or restrain such breach, including without limitation
injunctive relief.
9. TERM AND TERMINATION
9.1 Term . The initial term of this Agreement ("Term")
shall commence on the Effective Date and shall continue until
December 31, 2012, unless sooner terminated as set forth herein,
and shall be renewed automatically for successive one-year
renewal terms, unless either party notifies the other of its
desire not to so renew at least sixty (60) days prior to the end
of the initial term or the applicable renewal term, as the case
may be.
9.2 Termination.
ThermoLase shall have the right to terminate this Agreement,
effective immediately upon notice to Licensee:
(a) if Licensee fails to perform or observe, or
otherwise materially breaches any of its material obligations
9PAGE
under this Agreement or the Supply Agreement, and such failure or
breach continues unremedied for a period of thirty (30) days
following written notice thereof; or
(b) upon the occurrence of any change in the ownership
of Dessange Holding S.A., Licensee, D.B.C. Holding, Franklin
Holdings, S.A., or any of its or their direct or indirect owners.
Notwithstanding the foregoing, ThermoLase agrees that (i) the
shareholders of Dessange Holding listed on Exhibit B hereto shall
have the right to transfer shares of Dessange Holding among
themselves (but not to any third party), provided that Franklin
Holdings, S.A. at no time reduces its ownership interest in
Dessange Holding below 50%; (ii) the shareholders of D.B.C.
Holding, S.A. shall have the right to transfer shares of D.B.C.
Holding, S.A. among themselves, provided that Franklin Holding
S.A. does not reduce its ownership of shares of Franklin
Holdings, S.A. below 50.1% of the total shares of D.B.C.
Holdings, S.A.; (iii) the shareholders of Franklin Holding S.A.
shall have the right to transfer shares of Franklin Holding, S.A.
among themselves or to offer shares of Franklin Holding S.A. to
the public or to sell shares of Franklin Holding S.A. to third
parties, to the extent that the Dessange Holding Owners, their
next of kin and current or future executives and employees of
Franklin Holding, S.A. or companies controlled by Franklin
Holding, S.A. retain at least 50.1% of the capital stock and
voting rights of Franklin Holding, S.A., and (iv) the Dessange
Holding Owners may transfer their ownership interests in Dessange
Holding, JV France, Franklin Holding, S.A., or any of its or
their direct or indirect owners as required by the laws of estate
or family devolution.
(c) upon the occurrence of an event of dissolution
pursuant to the terms of Article X of the Operating Agreement, or
upon the occurrence of ThermoLase's purchase of D.B.C. Holding's
interest in Licensee pursuant to Article IX of the Operating
Agreement; or
(d) upon the dissolution of JV France; or
(e) if Licensee: (i) files for or consents to a
general assignment for the benefit of creditors, (ii) applies for
or consents to the appointment of, or the taking possession by, a
receiver, custodian, trustee or liquidator of itself or all or a
substantial part of its assets, (iii) files a petition in
bankruptcy or liquidation, or is adjudicated bankrupt or
insolvent or takes similar actions under the laws of any
jurisdiction for the general benefit of creditors of an insolvent
or financially troubled debtor, (iv) seeks the liquidation,
dissolution or winding-up of itself, or the composition or
readjustment of its debts, (v) adopts any resolution of its
Members or Directors for the purpose of effecting any of the
foregoing, or (vi) is the subject of an involuntary proceeding,
which is not fully dismissed within forty-five (45) days, seeking
Licensee's liquidation, reorganization, dissolution or
10PAGE
winding-up, or composition or readjustment of its debts, or the
appointment of a trustee, receiver custodian, liquidator or the
like of Licensee or all or any substantial part of its assets, or
similar relief in respect of Licensee under any law relating to
bankruptcy, insolvency, reorganization, winding-up or the
composition or readjustment of debts.
Licensee (by action of its Directors other than Directors
designated by ThermoLase) shall have the right to terminate this
Agreement, effective immediately upon notice to ThermoLase:
(f) in the event that ThermoLase ceases to be
controlled, directly or indirectly, by Thermo Electron
Corporation or one of its direct or indirect subsidiaries (where
control means ownership of more than 50% of the capital stock or
voting stock of a corporation); or
(g) upon the occurrence of an event of dissolution
pursuant to the terms of Article X of the Operating Agreement, or
(h) upon the dissolution of JV France.
9.3 Effects of Termination . Upon expiration or earlier
termination of this Agreement for any reason, all rights and
obligations of the parties under this Agreement shall cease,
except that Licensee shall be obligated to pay to ThermoLase all
outstanding fees and Royalties that are payable with respect to
the period prior to the effective date of such expiration or
earlier termination. Upon such expiration or earlier
termination, Licensee shall cease all use of the ThermoLase Marks
and the Licensed Technology, and ThermoLase shall have free
access to all User Manuals and any other materials in Licensee's
possession that are related to the Licensed Technology or the
ThermoLase Marks. Upon the expiration or earlier termination of
this Agreement, Licensee will be deemed to have assigned,
transferred or conveyed to ThermoLase any and all rights and
goodwill in or to the ThermoLase Marks that may have been
obtained or developed by Licensee, and Licensee will, without any
consideration other than the mutual covenants and agreements of
this Agreement, execute and deliver such instruments and other
documents as may be requested by ThermoLase to accomplish such
assignment, transfer and conveyance, or to preserve and secure
the rights of ThermoLase (or its parents, subsidiaries or
affiliates) in and to the ThermoLase Marks. Upon the expiration
or earlier termination of this Agreement, Licensee shall
immediately remove all signs and other markings from each of its
facilities and articles (and shall oversee such removal from the
facilities and articles of its Sublicensees) which indicate any
connection to the SoftLight Procedures, SoftLight Lasers, the
ThermoLase Marks or ThermoLase.
9.4 No Rights to Compensation Upon Expiration or
Termination . In the event of a termination pursuant to any of
the provisions of this Agreement or upon expiration of this
11PAGE
Agreement, ThermoLase shall not have any obligation to Licensee
or to its Sublicensee, or to any employee of Licensee or
Sublicensee, for compensation or for damages on account of the
loss by Licensee or Sublicensee or such employee of present or
prospective sales, investments, compensation or goodwill.
Licensee, for itself and on behalf of each of its employees,
hereby waives any rights which may be granted to it or them under
the laws and regulations of the Territory or otherwise which are
not granted to it or them by this Agreement.
9.5 Survival . Notwithstanding anything to the contrary
contained herein, the provisions of Sections 2.2, 2.3, 6, 7, 8,
9.3, 9.4, 9.5 and 10 of this Agreement shall survive any
expiration or earlier termination of this Agreement according to
their respective terms.
10. MISCELLANEOUS
10.1 Compliance with Laws . Licensee shall comply with all
national, supra-national, provincial and local laws, rules,
orders, ordinances and regulations of any governmental or other
public authority applicable to the performance of the SoftLight
Procedures.
10.2 Notices . Whenever by the terms of this Agreement,
notice, demand or other communication shall or may be given to
either party, the same shall be in writing and, addressed as
follows, or to such other address or addresses as shall from time
to time be designated by written notice by either party to the
other as herein provided:
if to Licensee:
ThermoLase France, L.L.C.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇▇▇
Attn: President;
if to ThermoLase:
ThermoLase Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇▇▇
Attn: President;
with a copy to
General Counsel
Thermo Electron Corporation
▇▇ ▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇
All notices shall be sent by registered or certified air mail,
postage prepaid and return receipt requested, or by Federal
12PAGE
Express or other comparable courier providing proof of delivery,
and shall be deemed duly given and received (i) if mailed, on the
[tenth (10th)] Business Day following the mailing thereof, or
(ii) if sent by courier, the date of its receipt (or, if such day
is not a Business Day, the next succeeding Business Day).
10.3 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware,
excluding its conflict of laws principles. Notwithstanding the
application of the laws of the State of Delaware, Licensee agrees
that ThermoLase shall have no obligation to provide Licensee with
any information or disclosures relating to the Licensed
Technology, the SoftLight Procedures or the operation of a Spa
Thira except as set forth herein. In particular, Licensee
waives, and releases ThermoLase from, any obligation to comply
with the Disclosure Requirements and Prohibitions concerning
Franchising and Business Opportunity Ventures of the United
States Federal Trade Commission or any similar provisions
existing under the laws of the State of Delaware.
10.4 Governing Language . This Agreement, any sublicense
under this Agreement and any amendments or other modifications
hereof or thereof, and all notices and other communications
hereunder or thereunder shall be in the English language. In the
event that this Agreement or any sublicense hereunder is
translated into any other language, the English language version
shall control.
10.5 Entire Agreement . This Agreement, including all
schedules and exhibits hereto, constitutes the sole and entire
agreement between ThermoLase and Licensee with respect to the
subject matter hereof, supersedes all prior agreements between
the parties either written or oral and shall not be supplemented,
amended, varied or modified in any manner except by an instrument
in writing signed by duly authorized representatives of both
parties.
10.6 Waiver. No delay or omission on the part of either
party to this Agreement in requiring performance by the other
party or in exercising any right hereunder shall operate as a
waiver of any provision hereof or of any right hereunder, and the
waiver, omission or delay in requiring performance or exercising
any right hereunder on any one occasion shall not be construed as
a bar to or waiver of such performance or right on any future
occasion.
10.7 Remedies Cumulative . Any and all rights and remedies
which either party may have under this Agreement, at law or in
equity, shall be cumulative and shall not be deemed inconsistent
with each other, and any two or more of all such rights and
remedies may be exercised at the same time insofar as permitted
by law.
13PAGE
10.8 Headings . Article and Section headings and the
organization of this Agreement are for descriptive purposes only
and shall not control or alter the meaning of this Agreement.
10.9 Costs . Except as otherwise expressly provided herein,
each party shall bear its own costs and expenses in performing
its obligations under this Agreement. In the event that one
party to this Agreement commences an action against the other
party to this Agreement, the prevailing party shall be entitled
to recover its costs resulting from such action from the
non-prevailing party.
10.10 Successors and Assigns . This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
10.11 Authority . The individuals executing this
Agreement hereby represent and warrant that they are empowered
and duly authorized to so execute this Agreement on behalf of the
parties they represent.
10.12 Severability . If any provision of this Agreement
is declared invalid or unenforceable by a court or other tribunal
having competent jurisdiction, it is mutually agreed that this
Agreement shall endure except for the part declared invalid or
unenforceable by order of such court or tribunal. The parties
shall consult and use their best efforts to agree upon a valid
and enforceable provision which shall be a reasonable substitute
for such invalid or unenforceable provision in light of the
intent of this Agreement.
10.13 Change in Control. In the event that Dessange
Holding acquires the entire interest of ThermoLase in the
Licensee, then ThermoLase and Licensee shall negotiate in good
faith such amendments to this Agreement as are reasonably
necessary to enable Licensee to enjoy the benefits of this
Agreement.
10.14 Dispute Resolution.
a. Mediation . In the event of any dispute,
controversy or claim arising out of or relating to this Agreement
or to a breach hereof, including its interpretation, performance
or termination, the parties agree to follow the procedures set
forth in this Section 10.14. First, the parties shall identify
in writing the point on which they cannot agree (the "Disputed
Point") and the respective positions of each party with respect
to such point. The parties will refrain from making a decision on
the Disputed Point for a period of up to two weeks. During such
2-week period, the parties will (i) consult with one another in
good faith with the goal of resolving the Disputed Point, (ii)
engage a mutually acceptable impartial mediator who is fluent in
both English and French (the "Mediator") to assist them in
finding a mutually agreeable solution to the Disputed Point,
14PAGE
(iii) study the economic or commercial bases on which each of the
parties has based its position and the issues raised by each of
the parties in respect of the Disputed Point, and (iv) cooperate
with the Mediator in examining alternative solutions to the
Disputed Point. The costs and expenses of the Mediator shall be
shared equally by the parties. The parties will meet at the end
of such 2-week period for the sole purpose of discussing and
voting on the Disputed Point. The Mediator shall conduct the
meeting and begin it with a summary of the situation, the nature
of the Disputed Point and any proposed solutions, while reminding
the parties of the consequences of the continuation of the
dispute. The parties will use their good faith best efforts to
agree on a solution prior to or during such meeting.
b. Arbitration. In the event that a Disputed Point
cannot be resolved by the mediation procedure described in
Section 10.14(a) above, and provided that the Deadlock
resolution provisions of Article IX of the Operating Agreement do
not apply, then such Disputed Point, shall be finally resolved by
arbitration. The arbitration shall be conducted by one (1)
arbitrator fluent in French and English, with experience in
international commercial joint ventures, to be appointed by the
presiding officer of the London Court of International
Arbitration ("LCIA"). The arbitration shall be conducted in
English, under the supervisory authority of the LCIA, and in
accordance with the LCIA arbitration rules. Multiple
arbitrations between the parties and their Affiliates relating to
the same transaction or series of transactions may be aggregated
in the same arbitration proceeding. The arbitration, including
the rendering of the award, shall take place in London, England,
and shall be the exclusive forum for resolving such dispute,
controversy or claim. The decision of the arbitrator shall be
binding upon the parties hereto, and the expense of the
arbitration (including without limitation the award of attorneys'
fees to the prevailing party) shall be paid as the arbitrator
determines. The decision of the arbitrator shall be executory,
and judgment thereon may be entered by any court of competent
jurisdiction. The prevailing party in any arbitration shall be
entitled to such reasonable attorneys' fees as may be awarded by
the arbitrator. The non-prevailing party shall pay to the other
party such reasonable attorneys' fees, together with such fees of
the arbitrator and costs and expenses of the arbitration, as may
be awarded by the arbitrator. Notwithstanding the foregoing,
nothing in this section 10.14(b) shall be construed as limiting
in any way the right of a party to seek injunctive relief with
respect to any actual or threatened breach of this Agreement from
a court of competent jurisdiction.
[Remainder of Page Intentionally Blank]
15PAGE
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement under seal as of the date first set forth above.
THERMOLASE CORPORATION THERMOLASE FRANCE L.L.C.
By: ____________________ By:___________________________
Name: Name:
Title: Title:
[Signature Page to License Agreement]
16PAGE
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMMISSIONS.
EXHIBIT A
Licensed Technology
United States Patents
5,226,907 Hair Removal Device and Method
5,425,728 Hair Removal Device and Method
5,423,803 Skin Surface Peeling Process using Laser
United States Patent Applications
********** ******************************
********** ****************************
********** **********************************************
*******************************
********** **********************************
********** ****************************
********** **********************************
********** *******************
European Patent Applications
*********** ***********************************************
********
*********** ****************************************
*************************
Patent Cooperation Treaty ("PCT") Applications
*************** ******************
*************** *********************************
Other Patents. As patent applications that cover the Licensed
Technology are filed and issue in the Territory, they shall
constitute Patents under this Agreement.
Other Licensed Technology
ThermoLase's trade secrets and know how relating to the
inventions covered by the above patents, the operation and
maintenance of the SoftLight Lasers and the performance of the
SoftLight Procedures, as described more fully in the User Manual
and the training to be provided by ThermoLase to Licensee.
European Trademarks
-------------------
ThermoLase has applied for EC trademarks for the following marks:
▇▇▇▇ Application Date Classes
---- ---------------- -------
SoftLight April 6, 1996 9, 42
Spa Thira April 6, 1996 3, 42
17PAGE
EXHIBIT B
Schedule of Ownership
JDM Investment, S.A.
--------------------
▇▇▇▇ ▇▇▇▇▇▇▇ ____%
D.B.C. Holding S.A. ____%
Jacques Dessange
Management, S.A. ____%
▇▇▇▇▇▇▇▇ Dessange ____%
▇▇▇▇▇▇▇ ▇▇▇▇▇ ____%
Michel Couvin ____%
▇▇▇▇▇▇ ▇▇▇▇▇ ____%
D.B.C. Holding S.A.
-------------------
Franklin Holdings, S.A. 59.5%
Jacques Dessange
Management, S.A. ____%
▇▇▇▇▇▇▇▇ Dessange ____%
▇▇▇▇▇▇▇ ▇▇▇▇▇ ____%
Michel Couvin ____%
▇▇▇▇▇▇ ▇▇▇▇▇ ____%
18PAGE
EXHIBIT E
SUBLICENSE AGREEMENT
Sublicensee Information:
Name: THERMODESS, S.A.S. ("Sublicensee")
Address: ________________
________________
________________
Telephone No.: ________________
Fax No. ________________
Effective Date: ________ __, ▇▇▇▇
▇▇▇▇▇▇▇▇▇: ▇▇▇▇▇▇ (including its Departements d'Outre-Mer
(D.O.M)., but excluding all other Territories
d'Outre-Mer (▇.▇.▇.) and other jurisdictions)
BACKGROUND
A. ThermoLase Corporation ("ThermoLase") has developed certain
proprietary equipment and processes for the removal of unwanted
human hair and the exfoliation or rejuvenation of skin.
ThermoLase desires to have such technology and processes utilized
in the Territory set forth above (the "Territory").
B. ThermoLase France L.L.C. ("Licensee") has been appointed as
ThermoLase's exclusive licensee of such Patents and procedures in
France, pursuant to a License Agreement between ThermoLase and
Licensee, of even date herewith (the "License Agreement").
C. Sublicensee is a French S.A.S., the members of which are
ThermoLase and JDM Invest S.A. Licensee is prepared to appoint
Sublicensee as a sublicensee of such Patents and procedures in
the territory set forth above (the "Territory") on the terms and
conditions set forth below, and to sell to Sublicensee certain
SoftLight Lasers and SoftLight Lotion for use in practicing such
procedures, all pursuant to a mutually acceptable Supply
Agreement to be entered into by the parties (the "Supply
Agreement").
AGREEMENT
Licensee and Sublicensee hereby agree as follows:
1. DEFINITIONS
The following terms shall have the following meanings when
capitalized herein:
1.1 "Business Day" means a day on which banks are open for
business in San Diego, California and Paris, France.
PAGE
1.2 "Improvement" means any improvement, enhancement or
modification to existing Licensed Technology, whether developed
by ThermoLase, Licensee, Sublicensee or any third party.
1.3 "Licensed Technology" means the inventions claimed in
the Patents, including Improvements, together with any and all
know-how, trade secrets and other information relating to the
SoftLight Procedures and SoftLight Laser.
1.4 "Patents" means (i) the patents and patent applications
listed on Exhibit A attached hereto, (ii) any subsequent patent
application by ThermoLase having one or more claims covering
Improvements, (iii) any divisions, reissues, continuations,
renewals and extensions of any of said patents or patent
applications, and (iv) any patent issuing upon any of the
foregoing.
1.5 "SoftLight Laser" means a laser designed by ThermoLase
for use with a lotion in the removal of unwanted human hair and
the exfoliation or rejuvenation of skin.
1.6 "SoftLight Lotion" means the lotion approved by
ThermoLase for use in the SoftLight Procedures.
1.7 " SoftLight Procedures" means the removal of unwanted
human hair and the exfoliation or rejuvenation of skin using one
or more SoftLight Lasers and the SoftLight Lotion.
1.8 "ThermoLase Marks" means ThermoLase's SoftLight(SM) and
Spa Thira(SM) service marks and the trade name "ThermoLase",
including the registrations and applications listed on Exhibit A
hereto.
1.9. "Consolidated Venture Revenue" shall mean Direct
Venture Revenue plus Sublicense Revenue. Consolidated Venture
Revenue is calculated without reference to any sales or
value-added tax that may be imposed on such amounts.
1.10. "Direct Venture Revenue" shall mean the consolidated
aggregate revenues received from customers in respect of the
performance of the SoftLight Procedures in the Territory and the
sale of directly related products by (i) the Sublicensee, (ii)
any entities in which Sublicensee owns any equity or ownership
interests, or (iii) any entities which are owned, wholly or
partially, directly or indirectly, by ThermoLase, JDM Investment,
S.A., D.B.C. Holding S.A., Franklin Holding S.A., or any of their
direct or indirect owners.
1.11. "Sublicense Revenue" shall mean the aggregate revenue
received by the entities listed in 1.10(i) to (iv) from any of
their sublicensees or franchisees who do not fall into categories
(i) to (iv) above, and excluding any inter-company payments (such
as royalty payments, fees, service charges and the like) between
the entities listed in (i) to (iii) above.
1PAGE
2. LICENSE AND OWNERSHIP OF TECHNOLOGY
2.1 Grant of License. Licensee grants to Sublicensee, upon
the terms and subject to the conditions set forth in this
Agreement, an exclusive, non-transferable license, under the
Patents and all other ThermoLase intellectual property in the
Licensed Technology, to perform the SoftLight Procedures in the
Territory. Sublicensee shall have the right to sublicense the
foregoing rights to one or more further sublicensees in the
Territory (the "Sub-Sublicensee(s)") pursuant to sublicense
agreements in form and substance acceptable to ThermoLase and
Licensee.
2.2 Ownership of Licensed Technology. Sublicensee will not
take any action or position contrary to ThermoLase's ownership of
all right, title and interest in and to the Patents and the
Licensed Technology, and Sublicensee agrees that it will not, at
any time, do or cause to be done any act or thing contesting or
in any way impairing or tending to impair the Patents or Licensed
Technology or any part of such right, title or interest of
ThermoLase. Sublicensee shall not in any manner represent that
Sublicensee has ownership of the Licensed Technology or Patents,
and acknowledges that Sublicensee's use of the Licensed
Technology shall not create in Sublicensee any right, title or
interest in or to the Licensed Technology, except for the rights
granted to Sublicensee by the express terms of this Agreement.
2.3 Sublicensee Improvements . (a) Sublicensee shall
disclose promptly to ThermoLase any and all Improvements to the
Licensed Technology developed or discovered by Sublicensee or its
officers, employees or agents. All such Improvements shall be
the property of ThermoLase, and, to the extent permitted by law,
Sublicensee hereby assigns all right, title and interest in and
to such Improvements, and all patent, copyright, trademark, trade
secret and other intellectual property rights therein, to
ThermoLase, as they are developed. Sublicensee shall, at
ThermoLase's request, execute and deliver all certificates,
waivers, applications, assignments and other instruments as
ThermoLase may reasonably request in order to effectuate the
assignment of Improvements to ThermoLase as described above,
including agreements between Sublicensee or its
Sub-Sublicensee(s) and their employees relating to the ownership
of inventions prepared by employees. All employees of
Sublicensee shall waive all moral rights with respect to works of
authorship constituting Improvements created by them to the
fullest extent permitted by law. To the extent permitted by
local law, Sublicensee will enter into agreements with its
employees to ensure compliance with the provisions of this
Section 2.3.
(b) To this end, the parties agree that French employment
agreements entered into with employees and/or employees of any
Sub-sublicensees will include appropriate language requiring
2PAGE
employees to undertake, in accordance with the provisions of
French Law No. 79-797 of September 4, 1979, to declare formally
to their employer any and all inventions such employee might
develop as author or co-author, attaching to such declaration any
necessary information, data, drawings or documents held by such
employee and relating to such inventions.
(c) With respect to inventions which would be made by such
employees within the scope of any research task required from the
employee by its employer within the scope of its employment
agreement, the employee shall undertake:
- to acknowledge the ownership of its employer on
the invention, and
- to satisfy all statutory requirements and to carry
out all steps required to allow the employer to be recognized as
the owner of such invention, including any patents or other
intellectual property rights which might result from such
invention, it being understood that the name of the employee
shall be stated in case any patent application is filed, without
such statement entailing any right of co-ownership on the patent.
In consideration therefor, the employer shall grant the
employee a remuneration which shall be in addition to the
employee's contractual remuneration, and which shall be set in
accordance with applicable collective bargaining rules and/or
then current French practice.
(d) With respect to inventions which would be made by such
employee outside of the scope of any research task required from
the employee by its employer as stated above, but which would
satisfy the rules set out in Article L.611-7 of the French
Industrial Property Code, then such inventions would be governed
by the rules set out in such statutory provision.
(e) The employer shall thereupon take all steps to transfer
the ownership of the intellectual property right, or, if such
transfer is contrary to local law, to license to ThermoLase the
perpetual, irrevocable, exclusive right to use such invention, in
which case ThermoLase shall undertake to reimburse the employer
for any amounts paid to the employee in accordance with local
rules, as set out above.
2.4 Additional Improvements . n the event that Licensee
receives or is entitled to receive improvements to the Licensed
Technology from ThermoLase, Licensee shall provide such
Improvements to Sublicensee at the price at which such
Improvements were provided to Licensee.
3PAGE
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMMISSIONS.
2.5 Future Patents . ThermoLase shall have the exclusive
right, at its sole expense, to make all decisions and take all
actions relating to the filing and prosecution of additional
patent applications relating to the Licensed Technology and the
Improvements. If Sublicensee requests ThermoLase to pursue
particular patent protection in the Territory relating to the
Licensed Technology, then, notwithstanding ThermoLase's
exclusive ownership of such patent, Sublicensee shall be
responsible for all costs of preparing, prosecuting and
maintaining such patent in the Territory.
3. THERMOLASE TECHNICAL ASSISTANCE
During the first year of the term of this Agreement,
Licensee shall engage ThermoLase to provide to Sublicensee (or to
Sub-Sublicensee(s), if so designated by Sublicensee), up to an
aggregate of **************** of support and assistance in
connection with the establishment and operation of the
Facilities. ThermoLase shall not charge for such support
services, except that Sublicensee shall be responsible for all
reasonable travel and out of pocket expenses incurred by
ThermoLase and its personnel in connection with providing such
services. Any direct costs and expenses for additional support
and assistance shall be borne by the Sublicensee. The parties
shall cooperate with each other to schedule training and
assistance in an efficient and cost-effective manner.
4. PAYMENT OF FEES AND ROYALTIES
4.1 Fees and Royalties.
(a) In consideration of the rights and licenses
granted to Sublicensee pursuant to this Agreement, Sublicensee
shall pay to Licensee percentage royalties as provided in
paragraph (b) below (the "Royalties").
(b) Royalties shall be payable quarterly within 45
days following the end of each calendar quarter. The amount of
such Royalties shall equal ******************** of Direct Venture
Revenue. ********************************************************
*****************************************************************
************************
(c) Sublicensee shall be entitled to retain ***
************* of Sublicense Revenue. Sublicensee shall remit to
Licensee the balance of Sublicense Revenue as an additional
Royalty.
(d) Notwithstanding the foregoing, in no event shall
the Royalties payable during any quarter exceed Sublicensee's
total profits during such quarter.
4PAGE
(e) Each payment of Royalties shall be accompanied by
a written report, in detail reasonably satisfactory to Licensee,
specifying the method of calculation of the Royalties for the
applicable quarter. Any fees or Royalties that are not paid when
due shall bear interest from the due date until paid at the
lesser of (i) the rate of 1.5% per month or (ii) the maximum rate
allowed by applicable law. The foregoing Royalty rate is
intended by the parties to be the arm's length royalty rate; and
the parties will, no less than annually, consider whether it
still reflects the arm's length rate and, if not, whether to
adjust the Royalty rate by mutual agreement.
(f) The Royalties, fees and all other amounts payable
pursuant to this Agreement are exclusive of any and all present
and future federal, national, state, local, municipal and other
excise, sales, use, property, value-added or similar taxes and
fees, all of which shall be paid by Sublicensee. Sublicensee
shall obtain and provide to Licensee any certificate of exemption
or similar document required to exempt any transaction under this
Agreement from any such tax or fee.
(g) The Royalties, fees and all other amounts payable
pursuant to this Agreement shall be payable in United States
Dollars. To the extent that revenues are in a currency other
than United States Dollars, such revenues shall be converted into
United States Dollars, for the purposes of calculating Royalties
payable to Licensee hereunder, at the average exchange rate
during the relevant quarter as published in the New York edition
of the Wall Street Journal.
5. USE OF THERMOLASE MARKS
5.1 Trademark License; Promotional Materials.
(a) Licensee grants to Sublicensee an exclusive right
and license in the Territory (including the right to sublicense
to one or more Sub-Sublicensees) to use the ThermoLase Marks in
connection with promotional activities relating to the
performance of SoftLight Procedures, provided Sublicensee and all
Sub-Sublicensees acknowledge ThermoLase's rights in and to the
ThermoLase Marks by (i) referring to the same at all times as
service marks of ThermoLase in any signage, advertising, press
release, article, publication or other promotional material,
document or broadcast referencing the ThermoLase Marks and by
(ii) including the proprietary marking "(SM)" after SoftLight and
Spa Thira each time they are used by Licensee (or Sublicensee) in
any printed or electronic media. In any and all descriptions of
or references to the SoftLight Procedures, Sublicensee and its
Sub-Sublicensees shall use no descriptive name or ▇▇▇▇ other than
SoftLight, Spa Thira, and "ThermoLase", or a name approved in
advance by ThermoLase which is formed by combining a ThermoLase
▇▇▇▇ with the name "Jacques Dessange" (the "Combined Name"), the
use of which will be authorized only to the extent Sublicensee or
5PAGE
Sub-Sublicensee(s) has received appropriate licenses or
sublicenses from the relevant trademark owners.
(b) ThermoLase shall have the right to review and
pre-approve (or reject) all promotional and advertising materials
relating to the SoftLight Procedures or SoftLight Lasers which
are prepared by Sublicensee or its Sub-Sublicensees, consultants,
contractors or agents, and which are not based substantially on
materials provided by ThermoLase or Licensee. Sublicensee shall
not include in any such promotional or advertising materials any
claims, facts, data or representations relating to the SoftLight
Procedures or SoftLight Lasers which are not provided in writing
by ThermoLase or Licensee or otherwise approved by ThermoLase or
Licensee in writing.
5.2 Ownership of ThermoLase Marks . ThermoLase shall have
the exclusive right to apply for registration, and to extend
existing registrations, of the ThermoLase Marks for use in
connection with the SoftLight Procedures or otherwise, except the
Combined Name, which may be applied for and owned by Sublicensee,
subject to ThermoLase's ownership of any underlying ThermoLase
Marks and any third party's ownership of the name "Jacques
Dessange". Licensee will not register, or cause or permit to be
registered in the name of any entity other than ThermoLase, the
ThermoLase Marks or any trademark, trade name or service ▇▇▇▇
confusingly similar thereto, with any federal, national,
supra-national, state, municipal or other governmental authority
of any jurisdiction, whether within or outside the United States
or the Territory. Except as contemplated by the parties in case
of use of the Combined Name, Sublicensee will not use or
associate the ThermoLase Marks with any other trademark, trade
name or service ▇▇▇▇ in any advertising or publicity utilized by
Licensee in connection with the SoftLight Procedures or otherwise
in such manner as to be misleading with respect to the ownership
of the ThermoLase Marks. Sublicensee further agrees not to
create a composite trademark, trade name or service ▇▇▇▇ with the
ThermoLase Marks, except in each instance with ThermoLase's prior
written consent which ThermoLase acting in its sole discretion
may withhold. Sublicensee agrees that every use of the
ThermoLase Marks shall inure to the ultimate benefit of
ThermoLase. Sublicensee shall not remove or obscure or alter in
any manner the ThermoLase Marks or any notice thereof, which may
be displayed on the SoftLight Lasers, the SoftLight Lotion, a
facility for the performance of SoftLight Procedures, or any
other documentation provided by ThermoLase or Licensee hereunder.
5.3 Quality Controls and Assurance.
(a) Sublicensee agrees that any services provided by
Sublicensee and its Sub-Sublicensees based on performance of the
SoftLight Procedures pursuant to this Agreement shall be of a
quality at least equal to the quality of similar services
provided by ThermoLase or its other franchisees at facilities at
which ThermoLase or its other franchisees provide such services.
6PAGE
(b) In addition, in order to comply with ThermoLase's
quality control standards, Sublicensee shall: (i) use the
ThermoLase Marks in compliance with all relevant laws and
regulations; and (ii) accord ThermoLase the right (to the extent
permitted by local law or rules of professional conduct) to
inspect during normal business hours, without prior advance
notice, its facilities (and those of its Sub-Sublicensees) in
order to confirm that the use of the ThermoLase Marks is in
compliance with this Agreement.
(c) Sublicensee agrees that its failure to comply with
the quality standards described in this Article 5 shall
constitute a material breach of this Agreement.
5.4 Translation of Documentation . Sublicensee shall
ensure, at its expense, that all technical manuals, advertising
and marketing information and other documentation provided by
ThermoLase or Licensee required by law to be in the French
language are translated into French. Sublicensee shall provide
ThermoLase with advance copies of all such materials for
approval; provided, however, that Sublicensee shall take
responsibility for any mistakes or inaccuracies in such
translations. All right, title and interest in and to such
translations shall be owned by ThermoLase, and Sublicensee hereby
assigns all right, title and interest in and to such
translations, and all copyright, trademark and other intellectual
property rights therein, to ThermoLase, as they are developed.
Sublicensee shall, at ThermoLase's request, execute and deliver
all certificates, applications, assignments and other
instruments as ThermoLase may reasonably request in order to
effectuate the assignment of translations to ThermoLase as
described above. All employees of Sublicensee and
Sub-Sublicensees shall waive all moral rights with respect to
works of authorship in such translations created by them. To the
extent permitted by local law, Sublicensee will enter into, and
cause its Sub-Sublicensee to enter into, agreements with its
employees to ensure compliance with the provisions of this
Section 5.4.
6. CONFIDENTIALITY
6.1 Licensee acknowledges and agrees that ThermoLase and
Licensee have disclosed, and shall continue to disclose, to
Sublicensee in connection with the use of the Licensed Technology
and performance of this Agreement certain confidential
information of ThermoLase and Licensee regarding its business
operations, trade secrets, know-how, customer information,
pricing, marketing data and other information of a confidential
nature relating to the Licensed Technology and the SoftLight
Procedures, including, without limitation, the terms of this
Agreement (collectively, the "ThermoLase Confidential
Information"). In addition, Licensee acknowledges and agrees
that Sublicensee may disclose to it during the term of this
7PAGE
Agreement certain confidential information of Sublicensee
regarding its business operations, trade secrets, know-how,
customer information, pricing, marketing data and other
information of a confidential nature (the "Sublicensee
Confidential Information").
6.2 The Confidential Information of each party shall remain
the sole and exclusive property of such party, and the other
party shall have no interest or rights with respect thereto,
except to the extent expressly provided in this Agreement. Each
party agrees to maintain the confidentiality of the Confidential
Information of the other party, provided, however, that Licensee
shall have the right to disclose such information to its
sublicensees who have a need to know such information and who
have agreed in writing to maintain the confidentiality thereof in
a manner no less restrictive than that required under this
Agreement. Notwithstanding the foregoing provisions of this
Article 6, the receiving party shall have the right to disclose
any information that it can demonstrate (i) was rightfully
possessed by the receiving party before it was received from the
disclosing party, (ii) is or becomes public otherwise than
through any act or default of the receiving party, or (iii) is
required by law, court order or stock exchange rule to be
disclosed, provided the receiving party notifies the disclosing
party in writing prior to making any such disclosure so as to
afford to ThermoLase a reasonable opportunity to object or seek
an appropriate protective order with respect to such disclosure.
7. ENFORCEMENT OF RIGHTS
Sublicensee shall promptly advise Licensee and ThermoLase
upon becoming aware of any infringement or threatened
infringement of any of the Licensed Technology or the ThermoLase
Marks in the Territory or any claim that the Licensed Technology
or the ThermoLase Marks infringe the intellectual property rights
of another party in the Territory. Sublicensee agrees that
ThermoLase, in its sole discretion, shall determine the
appropriate action, if any, to be taken with respect to any such
infringement and shall have the right to exclusive control of any
enforcement suit or proceeding (provided, however, that
Sublicensee shall remain a party to such suit to the extent so
required). Sublicensee shall cooperate with ThermoLase with
respect to any enforcement, including, without limitation,
joining as a party to any litigation, if required. All costs and
expenses (including attorneys' fees) of any action relating to
any such infringement shall be borne by Sublicensee, and all
amounts, if any, recovered under such action, shall be paid to
Sublicensee. Notwithstanding the foregoing, ThermoLase shall be
solely responsible for enforcing its rights against the European
Laser Center's technology as it exists as of the Effective Date,
and shall bear all costs, and receive all recoveries, in
connection therewith.
8. LIMITATION OF LIABILITY; REMEDIES
8PAGE
8.1 Consequential Damages. Notwithstanding anything to the
contrary contained in this Agreement, including without
limitation the provisions of Article 7 above, neither party
hereto shall be liable to the other for any indirect, special,
consequential, incidental or punitive damages (including without
limitation damages for loss of use of facilities or equipment,
loss of revenue, loss of profits or loss of goodwill) regardless
of (i) the negligence (either sole or concurrent) of either party
and (ii) whether either party has been informed of the
possibility of such damages.
8.2 No Warranty . THERMOLASE AND LICENSEE PROVIDE HEREIN NO
WARRANTY OF MERCHANTABILITY, OF FITNESS FOR A PARTICULAR PURPOSE,
OF NON-INFRINGEMENT, OR AS TO THE RESULTS THAT MAY BE ATTAINED BY
THE PERFORMANCE, PRACTICE OR OPERATION OF THE SOFTLIGHT
PROCEDURES, INCLUDING WITHOUT LIMITATION THE SOFTLIGHT LASERS.
8.3 Equitable Relief . Notwithstanding any other provision
of this Agreement to the contrary, due to the fact that the
unauthorized use, transfer or dissemination of the ThermoLase
Confidential Information or the Licensed Technology, or the
improper use thereof in violation of the User Manual and/or
applicable law or regulations, would diminish substantially the
value thereof and cause irreparable harm to ThermoLase and
Licensee which could not be adequately addressed by monetary
damages, if Sublicensee breaches any of the provisions of
Articles 2 or 5 of this Agreement, ThermoLase and Licensee shall
be entitled, without limiting their other rights or remedies, to
obtain equitable relief to prevent or restrain such breach,
including without limitation injunctive relief.
9. TERM AND TERMINATION
9.1 Term .The initial term of this Agreement ("Term")
shall commence on the Effective Date and shall continue until
December 31, 2012, unless sooner terminated as set forth herein,
and shall be renewed automatically for successive one-year
renewal terms, unless either party notifies the other of its
desire not to so renew at least sixty (60) days prior to the end
of the initial term or the applicable renewal term, as the case
may be. This Agreement shall terminate automatically upon the
termination, for any reason, of the License Agreement.
9.2 Termination. Licensee shall have the right to
terminate this Agreement, effective immediately upon notice to
Sublicensee:
(a) if Sublicensee fails to perform or observe, or
otherwise materially breaches any of its obligations under this
Agreement or the Supply Agreement, and such failure or breach
continues unremedied for a period of thirty (30) days following
written notice thereof; or
9PAGE
(b) if Sublicensee: (i) files for or consents to a
general assignment for the benefit of creditors, (ii) applies for
or consents to the appointment of, or the taking possession by, a
receiver, custodian, trustee or liquidator of itself or all or a
substantial part of its assets, (iii) files a petition in
bankruptcy or liquidation, or is adjudicated bankrupt or
insolvent or takes similar actions under the laws of any
jurisdiction for the general benefit of creditors of an insolvent
or financially troubled debtor, (iv) seeks the liquidation,
dissolution or winding-up of itself, or the composition or
readjustment of its debts, (v) adopts any resolution of its
Members or Directors for the purpose of effecting any of the
foregoing, or (vi) is the subject of an involuntary proceeding,
which is not fully dismissed within forty-five (45) days, seeking
Sublicensee's liquidation, reorganization, dissolution or
winding-up, or composition or readjustment of its debts, or the
appointment of a trustee, receiver custodian, liquidator or the
like of Sublicensee or all or any substantial part of its assets,
or similar relief in respect of Sublicensee under any law
relating to bankruptcy, insolvency, reorganization, winding-up or
the composition or readjustment of debts.
Sublicensee shall have the right to terminate this
Agreement, effective immediately upon notice to Licensee:
(f) in the event that ThermoLase ceases to be
controlled, directly or indirectly, by Thermo Electron
Corporation or one of its direct or indirect subsidiaries (where
control means ownership of more than 50% of the capital stock or
voting stock of a corporation); or
(g) upon the occurrence of an event of dissolution
pursuant to the terms of Article X of the Operating Agreement.
9.3 Effects of Termination . Upon expiration or earlier
termination of this Agreement for any reason, all rights and
obligations of the parties under this Agreement shall cease,
except that Sublicensee shall be obligated to pay to Licensee all
outstanding fees and Royalties that are payable with respect to
the period prior to the effective date of such expiration or
earlier termination. Upon such expiration or earlier
termination, Sublicensee shall cease all use of the ThermoLase
Marks and the Licensed Technology, and Licensee shall have free
access to all user manuals and any other materials in
Sublicensee's possession that are related to the Licensed
Technology or the ThermoLase Marks. Upon the expiration or
earlier termination of this Agreement, Sublicensee will be deemed
to have assigned, transferred or conveyed to ThermoLase any and
all rights and goodwill in or to the ThermoLase Marks that may
have been obtained or developed by Sublicensee, and Sublicensee
will, without any consideration other than the mutual covenants
and agreements of this Agreement, execute and deliver such
instruments and other documents as may be requested by ThermoLase
or Licensee to accomplish such assignment, transfer and
10PAGE
conveyance, or to preserve and secure the rights of ThermoLase
(or its parents, subsidiaries or affiliates) in and to the
ThermoLase Marks. Upon the expiration or earlier termination of
this Agreement, Sublicensee shall immediately remove all signs
and other markings from each of its facilities and articles (and
shall oversee such removal from the facilities and articles of
its Sub-Sublicensees) which indicate any connection to the
SoftLight Procedures, SoftLight Lasers, the ThermoLase Marks or
ThermoLase or Licensee.
9.4 No Rights to Compensation Upon Expiration or
Termination . In the event of a termination pursuant to any of
the provisions of this Agreement or upon expiration of this
Agreement, ThermoLase and Licensee shall not have any obligation
to Sublicensee, or to any Sub- Sublicensee or employee of
Sublicensee, for compensation or for damages on account of the
loss by Sublicensee or such Sub-Sublicensee or employee of
present or prospective sales, investments, compensation or
goodwill. Sublicensee, for itself and on behalf of each of its
employees hereby waives any rights which may be granted to it or
them under the laws and regulations of the Territory or otherwise
which are not granted to it or them by this Agreement.
9.5 Survival. Notwithstanding anything to the contrary
contained herein, the provisions of Sections 2.2, 2.3, 6, 7, 8,
9.3, 9.4, 9.5 and 10 of this Agreement shall survive any
expiration or earlier termination of this Agreement according to
their respective terms.
10. MISCELLANEOUS
10.1 Compliance with Laws . Sublicensee shall comply with
all national, supra-national, provincial and local laws, rules,
orders, ordinances and regulations of any governmental or other
public authority applicable to the performance of the SoftLight
Procedures.
10.2 Notices . Whenever by the terms of this Agreement,
notice, demand or other communication shall or may be given to
either party, the same shall be in writing and, addressed as
follows, or to such other address or addresses as shall from time
to time be designated by written notice by either party to the
other as herein provided:
if to Sublicensee:
if to Licensee:
ThermoLase France, L.L.C.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇▇▇
Attn: President;
11PAGE
with copies of all notices to:
ThermoLase Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇▇▇
Attn: President;
And
General Counsel
Thermo Electron Corporation
▇▇ ▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇
All notices shall be sent by registered or certified air mail,
postage prepaid and return receipt requested, or by Federal
Express or other comparable courier providing proof of delivery,
and shall be deemed duly given and received (i) if mailed, on the
tenth (10th) Business Day following the mailing thereof, or (ii)
if sent by courier, the date of its receipt (or, if such day is
not a Business Day, the next succeeding Business Day).
10.3 Governing Laws . This Agreement shall be governed by
and construed in accordance with the laws of the State of New
York, excluding its conflict of laws principles. Notwithstanding
the application of the laws of the State of New York, Sublicensee
agrees that Licensee and ThermoLase shall have no obligation to
provide Sublicensee with any information or disclosures relating
to the Licensed Technology, the SoftLight Procedures or the
operation of a Spa Thira except as set forth herein. In
particular, Sublicensee waives, and releases ThermoLase and
Licensee from, any obligation to comply with the Disclosure
Requirements and Prohibitions concerning Franchising and Business
Opportunity Ventures of the United States Federal Trade
Commission or any similar provisions existing under the laws of
the State of Delaware.
10.4 Governing Language . This Agreement, any sublicense
under this Agreement and any amendments or other modifications
hereof or thereof, and all notices and other communications
hereunder or thereunder shall be in the English language. In the
event that this Agreement or any sublicense hereunder is
translated into any other language, the English language version
shall control.
10.5 Entire Agreement . This Agreement, including all
schedules and exhibits hereto, constitutes the sole and entire
agreement between Sublicensee and Licensee with respect to the
subject matter hereof, supersedes all prior agreements between
the parties either written or oral and shall not be supplemented,
amended, varied or modified in any manner except by an instrument
12PAGE
in writing signed by duly authorized representatives of both
parties.
10.6 Waiver. No delay or omission on the part of either
party to this Agreement in requiring performance by the other
party or in exercising any right hereunder shall operate as a
waiver of any provision hereof or of any right hereunder, and the
waiver, omission or delay in requiring performance or exercising
any right hereunder on any one occasion shall not be construed as
a bar to or waiver of such performance or right on any future
occasion.
10.7 Remedies Cumulative . Any and all rights and remedies
which either party may have under this Agreement, at law or in
equity, shall be cumulative and shall not be deemed inconsistent
with each other, and any two or more of all such rights and
remedies may be exercised at the same time insofar as permitted
by law.
10.8 Headings . Article and Section headings and the
organization of this Agreement are for descriptive purposes only
and shall not control or alter the meaning of this Agreement.
10.9 Costs . Except as otherwise expressly provided herein,
each party shall bear its own costs and expenses in performing
its obligations under this Agreement. In the event that one
party to this Agreement commences an action against the other
party to this Agreement, the prevailing party shall be entitled
to recover its costs resulting from such action from the
non-prevailing party.
10.10 Successors and Assigns . This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
10.11 Authority . The individuals executing this
Agreement hereby represent and warrant that they are empowered
and duly authorized to so execute this Agreement on behalf of the
parties they represent.
10.12 Severability . If any provision of this Agreement
is declared invalid or unenforceable by a court or other tribunal
having competent jurisdiction, it is mutually agreed that this
Agreement shall endure except for the part declared invalid or
unenforceable by order of such court or tribunal. The parties
shall consult and use their best efforts to agree upon a valid
and enforceable provision which shall be a reasonable substitute
for such invalid or unenforceable provision in light of the
intent of this Agreement.
10.13 Change in Control . In the event that Dessange
Holding acquires the entire interest of ThermoLase in the
Licensee, then Licensee and Sublicensee shall negotiate in good
faith such amendments to this Agreement as are reasonably
13PAGE
necessary to enable Sublicensee to enjoy the benefits of this
Agreement.
10.14 Dispute Resolution.
a. Mediation . In the event of any dispute,
controversy or claim arising out of or relating to this Agreement
or to a breach hereof, including its interpretation, performance
or termination, the parties agree to follow the procedures set
forth in this Section 10.14. First, the parties shall identify
in writing the point on which they cannot agree (the "Disputed
Point") and the respective positions of each party with respect
to such point. The parties will refrain from making a decision on
the Disputed Point for a period of up to two weeks. During such
2-week period, the parties will (i) consult with one another in
good faith with the goal of resolving the Disputed Point, (ii)
engage a mutually acceptable impartial mediator who is fluent in
both English and French (the "Mediator") to assist them in
finding a mutually agreeable solution to the Disputed Point,
(iii) study the economic or commercial bases on which each of the
parties has based its position and the issues raised by each of
the parties in respect of the Disputed Point, and (iv) cooperate
with the Mediator in examining alternative solutions to the
Disputed Point. The costs and expenses of the Mediator shall be
shared equally by the parties. The parties will meet at the end
of such 2-week period for the sole purpose of discussing and
voting on the Disputed Point. The Mediator shall conduct the
meeting and begin it with a summary of the situation, the nature
of the Disputed Point and any proposed solutions, while reminding
the parties of the consequences of the continuation of the
dispute. The parties will use their good faith best efforts to
agree on a solution prior to or during such meeting.
b. Arbitration . In the event that a Disputed Point
cannot be resolved by the mediation procedure described in
Section 10.14(a) above, and provided that the Deadlock
resolution provisions of Article IX of the Operating Agreement do
not apply, then such Disputed Point, shall be finally resolved by
arbitration. The arbitration shall be conducted by one (1)
arbitrator fluent in French and English, with experience in
international commercial joint ventures, to be appointed by the
presiding officer of the London Court of International
Arbitration ("LCIA"). The arbitration shall be conducted in
English, under the supervisory authority of the LCIA, and in
accordance with the LCIA arbitration rules. Multiple
arbitrations between the parties and their Affiliates relating to
the same transaction or series of transactions may be aggregated
in the same arbitration proceeding. The arbitration, including
the rendering of the award, shall take place in London, England,
and shall be the exclusive forum for resolving such dispute,
controversy or claim. The decision of the arbitrator shall be
binding upon the parties hereto, and the expense of the
arbitration (including without limitation the award of attorneys'
fees to the prevailing party) shall be paid as the arbitrator
14PAGE
determines. The decision of the arbitrator shall be executory,
and judgment thereon may be entered by any court of competent
jurisdiction. The prevailing party in any arbitration shall be
entitled to such reasonable attorneys' fees as may be awarded by
the arbitrator. The non-prevailing party shall pay to the other
party such reasonable attorneys' fees, together with such fees of
the arbitrator and costs and expenses of the arbitration, as may
be awarded by the arbitrator. Notwithstanding the foregoing,
nothing in this section 10.14(b) shall be construed as limiting
in any way the right of a party to seek injunctive relief with
respect to any actual or threatened breach of this Agreement from
a court of competent jurisdiction.
10.15 Third Party Beneficiary .ThermoLase is made a
express third party beneficiary of this Agreement, and ThermoLase
shall be entitled to enforce the terms of this Agreement against
either party.
[Remainder of Page Intentionally Blank]
15PAGE
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement under seal as of the date first set forth above.
THERMOLASE FRANCE L.L.C. THERMODESS, S.A.S.
By: _________________________ By:_____________________
Name: Name:
Title: Title:
[Signature Page to Sublicense Agreement]
16PAGE
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMMISSIONS.
EXHIBIT A
Licensed Technology
United States Patents
5,226,907 Hair Removal Device and Method
5,425,728 Hair Removal Device and Method
5,423,803 Skin Surface Peeling Process using Laser
United States Patent Applications
********** ******************************
********** ****************************
********** **********************************************
*******************************
********** **********************************
********** ****************************
********** **********************************
********** *******************
European Patent Applications
*********** ***********************************************
********
*********** ****************************************
*************************
Patent Cooperation Treaty ("PCT") Applications
*************** ******************
*************** *********************************
Other Patents. As patent applications that cover the Licensed
Technology are filed and issue in the Territory, they shall
constitute Patents under this Agreement.
Other Licensed Technology
ThermoLase's trade secrets and know how relating to the
inventions covered by the above patents, the operation and
maintenance of the SoftLight Lasers and the performance of the
SoftLight Procedures, as described more fully in the User Manual
and the training to be provided by ThermoLase to Franchisee.
European Trademarks
ThermoLase has applied for EC trademarks for the following marks:
▇▇▇▇ Application Date Classes
---- ---------------- -------
SoftLight April 6, 1996 9, 42
Spa Thira April 6, 1996 3, 42
17PAGE
EXHIBIT B
Schedule of Ownership
JDM Investment, S.A.
--------------------
▇▇▇▇ ▇▇▇▇▇▇▇ ____%
D.B.C. Holding S.A. ____%
Jacques Dessange
Management, S.A. ____%
▇▇▇▇▇▇▇▇ Dessange ____%
▇▇▇▇▇▇▇ ▇▇▇▇▇ ____%
Michel Couvin ____%
▇▇▇▇▇▇ ▇▇▇▇▇ ____%
D.B.C. Holding S.A.
-------------------
Franklin Holdings, S.A. 59.5%
Jacques Dessange
Management, S.A. ____%
▇▇▇▇▇▇▇▇ Dessange ____%
▇▇▇▇▇▇▇ ▇▇▇▇▇ ____%
Michel Couvin ____%
▇▇▇▇▇▇ ▇▇▇▇▇ ____%
18PAGE
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMMISSIONS.
EXHIBIT F
OPTION AGREEMENT
This Agreement, dated as of , 1996 (the
"Effective Date") is made between ThermoLase Corporation, a
Delaware corporation ("ThermoLase") and JDM Invest S.A., a French
S.A. ("JDM").
WHEREAS, ThermoLase and JDM have entered into an Operating
Agreement for ThermoLase France L.L.C., a Delaware limited
liability company (the "US LLC") of even date herewith (the
"Operating Agreement"); and
WHEREAS, ThermoLase and JDM have entered into a Shareholders
Agreement for ThermoDess, S.A.S., a French S.A.S. ("SAS") of even
date herewith (the "S.A.S. Agreement"); and
WHEREAS, in connection with the execution of the Operating
Agreement and the S.A.S. Agreement, JDM has agreed to grant
ThermoLase an option to purchase those portions of JDM's equity
interest in the US LLC and SAS described below.
NOW, THEREFORE, ThermoLase and JDM hereby agree as follows:
1. Grant of Option . JDM hereby grants to ThermoLase an
irrevocable option (the "Option") to purchase from JDM the
following assets (collectively, the "Fractional Interests"): (a)
a one-tenth of one percent (.001) Membership Interest (as such
term is defined in the Operating Agreement) of the US LLC now
owned by JDM and (b) a one-tenth of one percent (.001) Membership
Interest (as such term is defined in the S.A.S. Agreement and the
Bylaws of SAS) of SAS now owned by JDM. ThermoLase may exercise
the Option only in full, for the purchase from JDM of all
Fractional Interests.
2. Exercise Price . The aggregate exercise price for the
Fractional Interests (the "Exercise Price") shall be determined
as follows, based on the date on which ThermoLase exercises the
Option:
Exercise Date Exercise Price
------------- --------------
Prior to second anniversary ***********************
of Effective Date ******************************
***************************
****************************
*****************************
******************************
***********************
On or after second *********************
anniversary of Effective Date ******************************
but prior to third ******************************
anniversary of Effective Date ****************************
PAGE
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMMISSIONS.
*****************************
******************************
***********************
On or after third anniversary *********************
of Effective Date but prior ******************************
to fourth anniversary of ******************************
Effective Date ****************************
*****************************
******************************
***********************
On or after fourth *********************
anniversary of Effective Date ******************************
**************************
****************************
*****************************
******************************
***********************
Consolidated revenue and consolidated net income of SAS
shall be determined in accordance with United States generally
accepted accounting principles. For purposes of this Agreement,
consolidated net revenue of SAS shall be determined without
regard to any royalties paid by SAS to US LLC.
3. Exercise of Option. The Option may be exercised by
ThermoLase at any time by sending notice to JDM, specifying the
calculation of the Exercise Price, and the place, date and time
for closing of the purchase of the Fractional Interests (the
"Closing"), provided that such date may not be more than thirty
(30) nor less than ten (10) business days from the date of such
notice. The Exercise Price shall be paid in U.S. Dollars, and to
the extent that the amounts on which the calculation of the
Exercise Price are not denominated in U.S. Dollars, such amounts
shall be converted to U.S. Dollars at the average conversion rate
as published in the New York edition of the Wall Street Journal
during the 30 business days immediately prior to the Closing.
At the Closing, JDM shall deliver all duly executed documents
necessary to effectuate the transfer of the Fractional Interests
to ThermoLase and ThermoLase shall deliver to JDM a wire transfer
or certified or bank cashier's check payable to JDM in an amount
equal to the Exercise Price. JDM covenants that at the time of
transfer of the Fractional Interests such transfer will vest in
ThermoLase full title to the Fractional Interests free and clear
of all liens, pledges or other encumbrances.
4. Adjustment in Certain Events. In the event of any
mergers, consolidations, recapitalizations, combinations,
conversions, exchanges, extraordinary or liquidating
distributions, or other changes in the corporate or capital
structure of the US LLC or SAS that would have the effect of
diluting or changing ThermoLase's rights hereunder, the number
1PAGE
and kind of interests or securities subject to the Option shall
be appropriately and equitably adjusted so that ThermoLase shall
receive upon the exercise of the Option the interests or other
securities or property that ThermoLase would have received in
respect of the Fractional Interests if the Option had been
exercised immediately prior to such event; provided, however,
that the aggregate Exercise Price shall not be changed.
5. Notices. Any notices required hereunder shall be given
in the manner provided in the Operating Agreement.
6. Amendments. This Agreement may only be modified by
written agreement of the parties hereto.
7. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns, provided that ThermoLase
may assign its rights and obligations to any affiliate of
ThermoLase and provided, further, that JDM may not assign,
delegate or otherwise transfer the Fractional Interests or any of
its rights or obligations under this Agreement without the prior
written consent of ThermoLase.
8. Specific Performance. Each party's obligation under
this Agreement is unique. If any party should default in his or
its obligations under this Agreement, the parties each
acknowledge that it would be extremely impractical to measure in
full all of the resulting damages; accordingly, the nondefaulting
party, in addition to any other available rights or remedies, may
▇▇▇ in equity for specific performance, and the parties each
knowingly and willingly waive the defense that a remedy in money
damages will be adequate (with no party waiving his or its
respective rights to pursue the remedy of money damages if it
elects to do so). The terms of this Agreement are specifically
enforceable.
9. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Delaware without giving
effect to the principles of conflicts of laws thereof.
[Remainder of Page Intentionally Blank]
2PAGE
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.
THERMOLASE CORPORATION JDM INVEST S.A.
By:_______________________ By:_____________________
▇▇▇▇ ▇. ▇▇▇▇▇▇, President Name:
Title:
[Signature Page to Option Agreement]
3PAGE
EXHIBIT G
---------
SUPPLY AGREEMENT
This Supply Agreement is entered into this ____ day of
_______, 1996 by and among ThermoLase Corporation (hereinafter
called "ThermoLase"), a corporation organized and existing under
the laws of the State of Delaware, with its principal offices
located at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇ of America; Franklin Holding, S.A., a French
corporation with its principal offices located at ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ("Franklin"); ThermoLase - Dessange
S.A.S., a French S.A.S. with its principal offices located at
_________________ Paris FRANCE ("SAS") and ThermoLase France,
L.L.C., a Delaware limited liability company ("LLC").
ThermoLase, Franklin, LLC and SAS are sometimes collectively
referred to herein as the "Parties" and individually as a
"Party";
1. Definitions
The following terms shall have the following meanings when
capitalized herein:
1.1 "Business Day" means a day on which banks are open for
business in San Diego, California, U.S.A. and Paris, France.
1.2 "Sublicense Agreement" means that Sublicense Agreement
of even date herewith between SAS and LLC, pursuant to which SAS
has been granted the right to practice the SoftLight Procedures
in certain territories therein defined.
1.3 "Other Products" means certain supplies and products,
other than the SoftLight Products, which may be used in
connection with the SoftLight Procedures and which ThermoLase
and/or Franklin make available to SAS, including without
limitation, smoke evacuator filters, waxing equipment and
supplies, and lotions and cleansers.
1.4 "Products" means the SoftLight Products and the Other
Products.
1.5 "SoftLight Laser" means a laser specified by ThermoLase
for use with a lotion in the removal of unwanted human hair and
the exfoliation or rejuvenation of skin.
1.6 "SoftLight Lotion" means the lotion approved by
ThermoLase for use in the SoftLight Procedures.
1.7 "SoftLight Procedures" means the removal of unwanted
human hair and the exfoliation or rejuvenation of skin using one
or more SoftLight Lasers and the SoftLight Lotion.
PAGE
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMMISSIONS.
1.8 "SoftLight Products" means the SoftLight Lasers and the
SoftLight Lotions.
1.9 "License Agreement" means that License Agreement of
even date herewith between ThermoLase and LLC, pursuant to which
LLC has been granted the right to practice and sublicense the
SoftLight Procedures in certain territories therein defined.
2. SUPPLY OF PRODUCTS.
2.1 SoftLight Products. LLC agrees to purchase all of its
requirements for the SoftLight Products exclusively from
ThermoLase upon the terms and conditions hereof. SAS agrees to
purchase all of its requirements for the SoftLight Products
exclusively from LLC upon the terms and conditions hereof. SAS
and LLC agree that they shall not purchase any products similar
to the SoftLight Products for use in the SoftLight Procedures
from any other vendors.
2.2 Use of SoftLight Products. SAS and LLC acknowledge and
understand that the SoftLight Products have been carefully
developed in order to maximize the safety and effectiveness of
the SoftLight Procedures in compliance with applicable laws and
regulations and ThermoLase's User Manual, and SAS and LLC
covenant and agree not to (i) modify the same in any manner or
(ii) use a SoftLight Laser in the absence of the SoftLight Lotion
or otherwise in conjunction with any lotion, gel, compound or
other substance which has not been approved in advance and in
writing by ThermoLase as complying with applicable laws and
regulations and satisfying ThermoLase's safety and efficacy
standards with respect to the use of SoftLight Lasers.
ThermoLase reserves the right to modify, from time to time during
the term of this Agreement, the SoftLight Products supplied to
hereunder. SAS and LLC expressly agree to use the SoftLight
Products in accordance with the instructions of ThermoLase and
the provisions of ThermoLase's User Manual, as it may be amended
from time to time (the "User Manual").
2.3 Other Products . SAS may, from time to time, purchase
Other Products from ThermoLase and/or Franklin, but shall have no
obligation to do so, and shall be free to purchase similar or
competing products from other vendors. ThermoLase and Franklin
shall supply Other Products to SAS based on their availability.
ThermoLase and Franklin agree that they shall not, directly or
indirectly through their subsidiaries or affiliates, supply Other
Products to the sublicensees or subfranchisees of SAS.
3. PRICING.
3.1 Price to SAS. ThermoLase, Franklin and LLC each agrees
to sell the Products under this Agreement at a price *********
*****************************************************************
*****************************************************************
*****************************************************************
1PAGE
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMMISSIONS.
*****************************************************************
*********
3.2 Price Charged by SAS . Neither ThermoLase, LLC nor
Franklin shall have any right under this Agreement to control the
price at which SAS offers the SoftLight Procedures or the Other
Products to its customers.
4. ORDERING AND DELIVERY.
4.1 Purchase Orders. From time to time a party may order
Products (as specified in Section 2) pursuant to written purchase
orders specifying the quantity of Products ordered, the requested
delivery date(s) and any special shipping or delivery
instructions. Subject to availability, the sellers will use
reasonable efforts to deliver Products to the buyers in
accordance with such purchase orders. All Products ordered in
accordance with this Section 4.1 shall be referred to as "Ordered
Products". The price in effect for the Ordered Products when
ordered shall be the price at which the buyer will be charged for
the Ordered Products when shipped, in accordance with Section 3.1
above. The Parties agree that if the terms or conditions stated
on any purchase order conflict with or are contradictory to any
of the provisions of this Agreement, the provisions of this
Agreement shall govern and the conflicting or contradictory
provisions of such purchase order shall have no effect.
4.2 Shipping . The seller shall ship, or cause to be
shipped, Products to the buyer, or another destination specified
by the buyer, by a reputable commercial carrier reasonably
acceptable to the buyer. The seller shall insure the Products in
shipment, at the buyer's expense. The buyer shall be responsible
for the cost of shipping the Products to the requested
destinations.
4.3 Risk of Loss . Risk of loss of the Products shall pass
to buyer immediately upon delivery to a carrier for shipment to
buyer.
5. PAYMENT TERMS.
5.1 Invoice . The seller shall invoice the buyer monthly
for all charges due hereunder. The Buyer shall remit payment in
full to the seller, in the currency specified by the seller, no
later than thirty (30) days following the date of each invoice.
5.2 Taxes . All taxes payable with respect to the Products
sold hereunder shall be paid by the buyer, except for the
corresponding income taxes which shall be paid by seller, as
applicable.
2PAGE
6. MANUFACTURERS' WARRANTY; LIMITATIONS OF LIABILITY.
6.1 Manufacturers' Warranty . The SoftLight Products may
contain written warranties extended by their respective
manufacturers. To the greatest extent permitted by law and the
terms of the manufacturers' warranties, the benefits of such
warranties shall be transferred by ThermoLase to LLC, by LLC to
SAS, and by SAS to its end user customers. ThermoLase and LLC
make no representations with respect to such manufacturers'
warranties, nor do ThermoLase or LLC represent or guaranty that
such warranties will be applicable to any person, including SAS's
customers.
6.2 NO OTHER WARRANTY . THERMOLASE, LLC AND FRANKLIN
DISCLAIM ALL WARRANTIES AND CONDITIONS, EXPRESS AND IMPLIED,
WITH RESPECT TO THE PRODUCTS, INCLUDING THE IMPLIED WARRANTIES
AND CONDITIONS OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, NON-INFRINGEMENT, OR AS TO THE RESULTS THAT MAY BE
ATTAINED BY THE PERFORMANCE, PRACTICE OR OPERATION OF THE
SOFTLIGHT PROCEDURES, INCLUDING WITHOUT LIMITATION THE SOFTLIGHT
LASERS.
6.3 Consequential Damages. Notwithstanding anything to the
contrary contained in this Agreement, no party hereto shall be
liable to the other for any indirect, special, consequential,
incidental or punitive damages (including without limitation
damages for loss of use of facilities or equipment, loss of
revenue, loss of profits or loss of goodwill) regardless of (i)
the negligence (either sole or concurrent) of the other party and
(ii) whether the other party has been informed of the possibility
of such damages.
7. TERMINATION.
Unless earlier terminated by mutual agreement of the
parties, this Agreement shall remain in effect until the
termination or expiration of the License Agreement. Upon any
termination of this Agreement, all rights and obligations of the
Parties hereunder shall immediately cease and terminate.
8. NOTICES.
Whenever by the terms of this Agreement, notice, demand or
other communication shall or may be given to a Party, the same
shall be in writing and, addressed as follows, or to such other
address or addresses as shall from time to time be designated by
written notice by a Party to the other as herein provided:
If to SAS: __________________________
__________________________
__________________________
Facsimile: ________________
Attention: ________________
3PAGE
If to ThermoLase: ThermoLase Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇▇▇
Attn: President
with a copy to: General Counsel
Thermo Electron Corporation
▇▇ ▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇
If to LLC:
If to Franklin: Franklin Holding, S.A.
▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Attn: General Manager
All notices shall be sent by registered or certified air mail,
postage prepaid and return receipt requested, or by Federal
Express or other comparable courier providing proof of delivery,
and shall be deemed duly given and received (i) if mailed, on the
tenth (10th) Business Day following the mailing thereof, or (ii)
if sent by courier, the date of its receipt (or, if such day is
not a Business Day, the next succeeding Business Day).
9. GOVERNING LAW AND LANGUAGE.
This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, U.S.A.,
excluding: (i) its conflict of laws principles; (ii) the United
Nations Convention on Contracts for the International Sale of
Goods; and (iii) the 1974 Convention on the Limitation Period in
the International Sale of Goods (the "1974 Convention") and the
Protocol amending the 1974 Convention, done at Vienna April 11,
1980. This Agreement is written in the English language and may
be executed in two (2) or more counterparts, each of which shall
be deemed an original. The English language text of this
Agreement shall prevail over any translation hereof.
10. GENERAL PROVISIONS.
10.1 Amendment. This Agreement shall not be deemed or
construed to be modified, amended or waived, in whole or in part,
except by written agreement of the parties.
10.2 Entire Agreement . This Agreement, including all
schedules hereto, constitutes the sole and entire agreement
between the Parties with respect to the subject matter hereof,
supersedes all prior agreements between the Parties either
written or oral and shall not be supplemented, amended, varied or
modified in any manner except by an instrument in writing signed
by duly authorized representatives of both Parties.
4PAGE
10.3 Waiver . No delay or omission on the part of any Party
to this Agreement in requiring performance by any other Party or
in exercising any right hereunder shall operate as a waiver of
any provision hereof or of any right hereunder, and the waiver,
omission or delay in requiring performance or exercising any
right hereunder on any one occasion shall not be construed as a
bar to or waiver of such performance or right on any future
occasion.
10.4 Remedies Cumulative . Any and all rights and remedies
which a Party may have under this Agreement, at law or in
equity, shall be cumulative and shall not be deemed inconsistent
with each other, and any two or more of all such rights and
remedies may be exercised at the same time insofar as permitted
by law.
10.5 Headings . Article and Section headings and the
organization of this Agreement are for descriptive purposes only
and shall not control or alter the meaning of this Agreement.
10.6 Authority . The individuals executing this Agreement
hereby represent and warrant that they are empowered and duly
authorized to so execute this Agreement on behalf of the Parties
they represent.
10.7 Severability .If any provision of this Agreement is
declared invalid or unenforceable by a court or other tribunal
having competent jurisdiction, it is mutually agreed that this
Agreement shall endure except for the part declared invalid or
unenforceable by order of such court or tribunal. The Parties
shall consult and use their best efforts to agree upon a valid
and enforceable provision which shall be a reasonable substitute
for such invalid or unenforceable provision in light of the
intent of this Agreement.
10.8 Force Majeure . No Party will be liable in any respect
for failures to perform hereunder due wholly or substantially to
the elements, acts of God, acts of terrorism, acts of civil or
military authority, fires, floods, epidemics, armed hostilities,
riots and other unavoidable natural disasters beyond the control
of the Parties.
10.9 Dispute Resolution.
a. Mediation . In the event of any dispute,
controversy or claim arising out of or relating to this Agreement
or to a breach hereof, including its interpretation, performance
or termination, the parties agree to follow the procedures set
forth in this Section 10.9. First, the parties shall identify in
writing the point on which they cannot agree (the "Disputed
Point") and the respective positions of each party with respect
to such point. The parties will refrain from making a decision on
the Disputed Point for a period of up to two weeks. During such
2-week period, the parties will (i) consult with one another in
5PAGE
good faith with the goal of resolving the Disputed Point, (ii)
engage a mutually acceptable impartial mediator who is fluent in
both English and French (the "Mediator") to assist them in
finding a mutually agreeable solution to the Disputed Point,
(iii) study the economic or commercial bases on which each of the
parties has based its position and the issues raised by each of
the parties in respect of the Disputed Point, and (iv) cooperate
with the Mediator in examining alternative solutions to the
Disputed Point. The costs and expenses of the Mediator shall be
shared equally by the parties. The parties will meet at the end
of such 2-week period for the sole purpose of discussing and
voting on the Disputed Point. The Mediator shall conduct the
meeting and begin it with a summary of the situation, the nature
of the Disputed Point and any proposed solutions, while reminding
the parties of the consequences of the continuation of the
dispute. The parties will use their good faith best efforts to
agree on a solution prior to or during such meeting.
b. Arbitration .In the event that a Disputed Point
cannot be resolved by the mediation procedure described in
Section 10.9(a) above, and provided that the Deadlock resolution
provisions of Article IX of the Operating Agreement do not apply,
then such Disputed Point, shall be finally resolved by
arbitration. The arbitration shall be conducted by one (1)
arbitrator fluent in French and English, with experience in
international commercial joint ventures, to be appointed by the
presiding officer of the London Court of International
Arbitration ("LCIA"). The arbitration shall be conducted in
English, under the supervisory authority of the LCIA, and in
accordance with the LCIA arbitration rules. Multiple
arbitrations between the parties and their Affiliates relating to
the same transaction or series of transactions may be aggregated
in the same arbitration proceeding. The arbitration, including
the rendering of the award, shall take place in London, England,
and shall be the exclusive forum for resolving such dispute,
controversy or claim. The decision of the arbitrator shall be
binding upon the parties hereto, and the expense of the
arbitration (including without limitation the award of attorneys'
fees to the prevailing party) shall be paid as the arbitrator
determines. The decision of the arbitrator shall be executory,
and judgment thereon may be entered by any court of competent
jurisdiction. The prevailing party in any arbitration shall be
entitled to such reasonable attorneys' fees as may be awarded by
the arbitrator. The non-prevailing party shall pay to the other
party such reasonable attorneys' fees, together with such fees of
the arbitrator and costs and expenses of the arbitration, as may
be awarded by the arbitrator. Notwithstanding the foregoing,
nothing in this section 10.9(b) shall be construed as limiting in
any way the right of a party to seek injunctive relief with
respect to any actual or threatened breach of this Agreement from
a court of competent jurisdiction.
6PAGE
IN WITNESS HEREOF, the Parties hereto have executed this
Agreement as of the date first set forth above.
THERMOLASE CORPORATION THERMOLASE - DESSANGE S.A.S.
By:_______________________ By:_________________________
Name: Name:
Title: Title:
FRANKLIN HOLDING, S.A. THERMOLASE FRANCE, L.L.C.
By:_______________________ By:_________________________
Name: Name:
Title: Title:
[Signature Page to Supply Agreement]