Exhibit 10.1
SHAREHOLDERS’ AGREEMENT OF TRANSPHENE, INC.

THIS SHAREHOLDERS’ AGREEMENT (the “Agreement”) is entered into as of the 5th day
of January 2015 in Santa Barbara, California by and among Transphene, Inc., a
Nevada corporation (the “Company”), Kaustav Banerjee, an individual
(“Banerjee”), and Carbon Sciences, Inc., a Nevada corporation (“CSI,” and
collectively with Banerjee, the “Shareholders”), with respect to the following
facts:

RECITALS

WHEREAS, the Shareholders are the record owners of the shares (collectively, the
“Shares”) of the Company’s common stock noted in Schedule 1 of this Agreement.

WHEREAS, the Shareholders desire to enter into an agreement which provides for
disposition of the Shares owned by a Shareholder in the event that any
Shareholder seeks to dispose of his Shares.

WHEREAS, the Shareholders also wish to agree to certain other matters regarding
the Shares and the Company.

NOW, THEREFORE, in consideration of the mutual covenants herein contained and
for other consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

 
1.
VOTING COVENANT.

For so long as the Shareholders and their transferees own the Shares, at any
annual or special shareholders meeting, and whenever the shareholders of the
Company act by written consent with respect to election of directors, each
Shareholder agrees to vote or otherwise give such Shareholder's consent in
respect of all shares of capital stock of the Company (whether new or hereafter
acquired) owned by such Shareholder or as to which such Shareholder is entitled
to vote, and the Company shall take all necessary and desirable actions within
its control, in order to cause:

(1)           the authorized number of directors on the Board of Directors of
the Company (the “Board”) to remain at two (2) directors; and

(2)           the election to the Board to consist of William E. Beifuss and
Kaustav Banerjee.

 
2.
PROPRIETARY RIGHTS.

With respect to inventions (“Inventions”), including but not limited to, any
inventions, formulae, techniques, discoveries, developments, designs,
contributions, ideas, improvements, know-how, negative know-how, new machines,
manufacturing processes or

 
 

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methods, original writings, software programs, processes, uses, apparatus,
compositions of matter, copyrights, trademarks, designs or configurations of any
kind, whether or not patentable or registrable under patent, copyright or
similar statutes, conceived, made, learned or reduced to practice by Banerjee,
either alone or jointly with others, or any improvements to any of the above,
conceived, made, learned or reduced to practice by Banerjee, alone or with
others, during Banerjee’s employment or engagement by the Company, which are
related to or useful in the current or potential business of the Company, result
from the tasks assigned to Banerjee by the Company or result from the use of any
facilities or equipment of Company:

(1)           Banerjee will disclose such Inventions promptly to the Company;

(2)           Such Inventions are the sole property of the Company and Banerjee
hereby assigns to the Company any rights he has or may acquire in any
Inventions;

(3)           Banerjee will assist the Company in obtaining patent, copyright
and trademark protection in all countries for the benefit of the Company; and

(4)           Banerjee will execute all such documents and take such further
action as may be reasonably requested by the Company to effect the intention of
this section.

(5)           CSI recognizes that Banerjee is an employee of the University of
California at Santa Barbara (“UCSB”) and has certain intellectual property
assignment obligations to UCSB.  Accordingly, the Inventions described in this
Section 2 shall exclude any inventions that are assignable to UCSB through
Banerjee’s employment agreement with UCSB.  Banerjee agrees not to disclose or
practice any of the Company’s Inventions and intellectual property at UCSB
without the prior written consent of the Company.

 
3.
SALE OF SHARES.

Before there can be a valid sale or transfer of any of the Shares in the Company
by any holder thereof (hereinafter referred to as the “Selling Shareholder”),
the Selling Shareholder shall first offer its Shares to the other Shareholder
(hereinafter referred to as the “Non-Selling Shareholder”) and then to the
Company in the following manner:

A.           Delivery of Notice

The Selling Shareholder shall deliver a notice (“Initial Notice”) in writing in
the manner set forth in Paragraph 10 below to the Secretary of the Company
stating the price, terms and conditions of the proposed sale or transfer, and
the identity of the proposed purchaser.  For a period of ten (10) days
thereafter, the Non-Selling Shareholder shall have the prior right to elect to
purchase all of the Shares so offered (and not less than all) at the purchase
price and subject to the terms of payment set forth in subparagraph 3D below
(the “Purchase Price”), provided, that Non-Selling Shareholder must close the
purchase within thirty (30) days after electing to purchase the Shares.  The
Non-Selling Shareholder shall exercise its rights by delivering to the
Secretary, in the manner set forth in Paragraph 10 below, a written offer to
purchase all of the

 
 

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Shares within ten (10) days after receipt of the Secretary’s notice, and by
closing the purchase within thirty (30) days thereafter.  Should the Non-Selling
Shareholder elect not to purchase all the Shares being offered for sale by the
Selling Shareholder, then the Company will have the option to elect to purchase
the Shares for a period of ten (10) days after the expiration of the Non-Selling
Shareholder’s purchase rights, and must close the purchase within thirty (30)
days thereafter at the price and on the terms set forth in subparagraph 3D
herein.  If neither the Non-Selling Shareholder nor the Company offer to
purchase all of the Shares being offered for sale by the Selling Shareholder,
then the Secretary shall so notify the Selling Shareholder at the termination of
the Company’s ten (10) day option period.

B.           Failure to Purchase all Shares

If no offers to purchase all of the Shares referred to in the Initial Notice to
the Secretary have been made in accordance with the foregoing provisions, the
Selling Shareholder may dispose of all said Shares to any person or persons he
or she may so desire; provided, however, that (i) the Selling Shareholder shall
not transfer said Shares at a different price or on different terms than those
specified in the Initial Notice; (ii) the contemplated sale must take place
within sixty (60) days from the date the Secretary gives notice to the Selling
Shareholder as set forth in the last sentence of subparagraph 3A above, or the
Selling Shareholder must again comply with all of the requirements of this
Paragraph 3, (iii) the sale or transfer may not occur if the buyer is not a
bona-fide buyer, and (iv) the buyer must agree in writing to be bound by all of
the terms and conditions of this Agreement.  In any sale of Shares, the Selling
Shareholder shall comply with all federal and state securities laws, rules and
regulations.

C.           Waiver

The restrictions on transfer of Shares as provided herein, other than the
restriction relating to the rules and regulations of any state or federal
governmental agency, may be waived by the filing of a written waiver of said
restrictions with the Secretary of the Company, signed by all of the
Shareholders of the Company.  The waiver shall designate with particularity the
transaction as to which the waiver is effective.

 
D.
Payment Terms for Purchase by Company or Remaining Shareholder

Should the Company or the Non-Selling Shareholder exercise the right to purchase
the Shares of the Selling Shareholder, then the Purchase Price shall be the
price and terms stated in the Initial Notice of the Selling Shareholder to the
Secretary of the Company given pursuant to subparagraph 3A above, unless the
Non-Selling Shareholder elects in its sole discretion to pay the Purchase Price
as follows:  33% of the Purchase Price payable in cash upon the closing, with
the balance evidenced by a promissory note payable by the Non-Selling
Shareholder to the Selling Shareholder, secured by the Shares being sold,
bearing interest at a rate equal to one percentage point in excess of the prime
rate of interest charged by Bank of America in Los Angeles, California, from
time to time, and payable 33% of the Purchase Price plus accrued interest on a
date one year after the date of the issuance of the note, and 34% of the
Purchased Price plus accrued interest  on a date two years after the date of the
issuance of the note.

 
 

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E.           Permitted Transfers

Notwithstanding anything else in this Agreement except for events occurring
within the scope of Paragraph 4 of this Agreement, Banerjee may transfer Shares
to his spouse or children or to any trust for the benefit of Banerjee, without
being subject to a purchase option by, or the prior consent of CSI or the
Company; provided, that said transferees agree in writing to be bound by all of
the terms of this Agreement.

F.           Successors and Assigns

Any successor to a Shareholder who obtains Shares pursuant to the events
described in Paragraph 3 of this Agreement, even if not the Company or the other
shareholder, shall be bound in writing by all of the terms of this Agreement.

 
4.
DEATH OR BANKRUPTCY OF A SHAREHOLDER.

A.           Option to Purchase Shares

Upon the (i) death of Banerjee, or (ii) declaration of bankruptcy, assignment
for the benefit of creditors or similar event regarding the insolvency of a
Shareholder, whether voluntary or involuntary, which is not dismissed within
sixty (60) days of said declaration, or other event potentially causing an
involuntary transfer of Shares, then the following shall apply:  first the other
Shareholder, for a period of thirty (30) days after receipt of notice of such
event, and then the Company, for a period of thirty (30) days after receipt of
notice of the other Shareholder’s election not to purchase the Shares, shall
have the option to purchase all of the Shares of the Shareholder (and not less
than all) referred to in (i) and (ii) above.

B.           Purchase Price of Shares

The price of the Shares shall be equal to the fair market value of the
Shares.  The fair market value of the Shares shall be the fair market value as
has been determined by resolution of the Board of Directors of the Company
within last 90 days.  If such determination is not available, the fair market
value of the Shares shall be the value upon which the selling Shareholder and
the purchasing Shareholder have agreed.  If, within thirty (30) days after an
election to purchase the Shares has been made (or an event requiring repurchase
of the Shares), the selling Shareholder and the purchasing Shareholder cannot
agree upon the fair market value of the Shares, then the fair market value of
the Shares will be determined by an independent business appraiser selected by
the mutual agreement of the selling Shareholder and the purchasing Shareholder,
or if, within thirty (30) days thereafter, the selling Shareholder and the
purchasing Shareholder cannot mutually agree on the appointment of an
independent business appraiser, then each party shall promptly select an
independent business appraiser and the two independent business appraisers
selected will then promptly select a third independent business appraiser whose
determination of the fair market value of the Shares will be binding.  The
process of determining the fair market value of the Shares under Paragraph 4B of
this Agreement will be made as expeditiously as practicable.

 
 

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C.           Payment Terms for Shares

Payment for the Shares sold in accordance with this Paragraph 4 shall be made on
the following terms:  cash in the amount of twenty percent (20%) of the purchase
price and promissory note for the balance which shall have a maturity date
within thirty-six (36) months of the date of the purchase of said Shares,
bearing interest at the then Federal Discount Rate as determined on the 25th day
of the preceding month at the San Francisco branch of the Federal Reserve
Bank.  The note shall provide for quarterly payments with the first payment due
on the thirtieth (30th) day following the purchase.  The purchase shall be
consummated within sixty (60) days after the appointment of a new trustee of the
Shareholder, or one hundred twenty (120) days after receipt of notice of
bankruptcy or similar proceedings of the trustee of a Shareholder which are not
dismissed within said period.

D.           Estate Tax

In the case of the death of Banerjee, CSI shall have the right to demand such
tax releases as it may deem reasonably necessary to assure a transfer hereunder,
free of any tax liens.  The estate of deceased trustee of a Shareholder shall
bear, and save both the other Shareholder and the surviving trustee of the other
Shareholder harmless from all costs and expenses required for securing any court
orders, court decrease, court approvals, inheritance tax clearances, and estate
tax clearances required to enable the Shareholder of the deceased trustee to
transfer to the other Shareholder full legal and equitable tax-free title to the
Shares of the Shareholder of the deceased trustee.  Neither the surviving
trustee nor the Shareholder identified with such surviving trustee shall be
liable for any portion of the Federal Estate Tax imposed on the deceased
trustee’s estate, whether or not the purchase price established under the
provisions of this Agreement is accepted as the valuation of the Shares for
Federal Estate Tax purposes.

 
5.
PLEDGE OR HYPOTHECATION.

No Shareholder shall pledge, assign or hypothecate any or all of its Shares or
any of his right or interest therein except as provided in this Agreement
without the prior written consent of the Company.  In order for the Company to
consent pursuant to Paragraph 6 of this Agreement, the holders of 100% of the
issued and outstanding Shares must approve of the proposed transaction.

 
6.
ENDORSEMENT ON STOCK CERTIFICATE.

All certificates of stock of the Company owned by each of the Shareholders shall
be endorsed with the following statement:

“THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF
A SHAREHOLDERS’ AGREEMENT DATED JANUARY __, 2015, A COPY OF WHICH MAY BE
INSPECTED AT THE PRINCIPAL OFFICE OF THE COMPANY, ALL OF THE PROVISIONS OF WHICH
ARE INCORPORATED HEREIN BY REFERENCE.”

 
 

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A copy of this Agreement shall be delivered to the Secretary of the Company and
shall be shown by it to any person making inquiries concerning it.

 
7.
TERMINATION OF AGREEMENT.

This Agreement shall terminate, except for any continuing duty of the Company or
any Shareholder to make payments for Shares previously purchased pursuant to
this Agreement, on the first to occur of the following:

(1)           The written agreement of all of the parties; or

(2)           At such time as only one Shareholder remains because the shares of
the other Shareholder have been purchased by such Shareholder or repurchased by
the Company.

 
8.
TRANSFER AS GIFT.

Shares of the Company may not be transferred by gift to a transferee other than
a party described in Paragraph 4E of this Agreement unless the other Shareholder
consents.  Any Shareholder may, however, declare itself trustee of all or any of
its Shares for the benefit of others on the condition that (i) the Shareholder
shall remain the Shareholder of record of the Shares, and (ii) the Shares shall
remain subject to the terms and conditions of this Agreement.

 
9.
SPECIFIC PERFORMANCE.

If any Shareholder under this Agreement makes an offer to sell, hypothecate,
pledge, assign or transfer his Shares without compliance with this Agreement
(the “Defaulting Shareholder”), or if any person who acquires Shares in any
manner in contravention of this Agreement fails to disclose to the Company the
person from whom and the price and terms on which he acquired the Shares, then,
if the failure continues for five (5) days after written notice to said person
or Defaulting Shareholder, the Company may institute and maintain a proceeding
to compel performance of this Agreement by the Defaulting Shareholder.  Any
transfer or attempted transfer of the Company’s Shares in contravention of this
Agreement shall be null and void, and of no force or effect.  This Paragraph
shall not be construed as limiting in any way the right of the Company or any
Shareholder to pursue any other remedy available to it to enforce the provisions
of this Agreement or to bring an action for damages based on the breach of any
provision of this Agreement.

 
10.
NOTICE.

Whenever provision is made herein for the giving, service or delivery of any
notice, the notice shall be in writing and shall be deemed to have been duly
given, served or delivered, whether on personal delivery or on mailing the same
by certified mail, return receipt requested, addressed to each of the
Shareholders at their last known address (unless otherwise notified, the
Shareholders’ addresses are those listed in Schedule 1 hereto), and to the
Company

 
 

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 at the address of its principal business office as set forth below (or to any
other address(es) as shall be specified in any notice given under this
paragraph):

If to the Company:
Transphene, Inc.
5511-C Ekwill Street
Santa Barbara, California 93111

Attention: William E. Beifuss, Jr. Chief Executive Officer

 
11.
AUTHORIZATION.

The Company is authorized to enter into this Agreement by virtue of the
execution of this Agreement by the Shareholders.

 
12.
BENEFIT.

This Agreement shall be binding upon and operate for the benefit of the
Shareholder and their respective executors, administrators, successors and
assigns.

 
13.
APPROVAL AND AMENDMENT.

No waiver or amendment of this Agreement shall be valid unless in writing and
duly executed by all of the parties to this Agreement against whom the amendment
or waiver is sought to be enforced.  Whenever this Agreement requires the
approval of the Company, Shareholders who are not Defaulting Shareholders and
who hold 100% of the issued and outstanding voting common stock of the Company
held by nondefaulting Shareholders must give said approval.  No evidence of any
waiver or modification shall be received into evidence in any proceedings,
arbitration or litigation between the parties relating to this Agreement, or the
rights or obligations of the parties hereunder, unless the waiver or
modification is in writing, duly executed.  The parties further agree that the
provisions of this Paragraph may not be waived except as herein set forth.  This
Agreement and the agreements referred to herein are the entire agreement of the
parties hereto and supersede any and all other agreements, written and oral,
previously made.

 
14.
GOVERNING LAW.

This Agreement shall be construed, interpreted and governed for all purposes by
the laws of the State of California.  Venue for all legal proceedings initiated
under this Agreement will be in the County of Santa Barbara, State of
California.

 
15.
SEVERABLE PROVISIONS.

The provisions of this Agreement are severable and if any one or more provisions
are determined to be illegal or for any reason unenforceable, in whole or in
part, the remaining provisions (and any partially unenforceable provisions to
the extent they are enforceable) shall nevertheless be binding and enforceable.
 
 
 

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16.
FURTHER ACTS.

Each party hereto agrees to perform any further acts, vote his Shares in any
manner, and execute and deliver any documents which may reasonably be necessary
or desirable to carry out the provisions of this Agreement.  On any purchase by
the Company or a Shareholder of Shares pursuant to this Agreement, the Selling
Shareholder shall deliver to the Company for cancellation stock certificates
evidencing the Shares so purchased.

 
17.
COUNTERPARTS.

Each party to this Agreement may sign a counterpart separate from all other
parties to this Agreement, and every counterpart taken together shall constitute
one agreement.  The Company must execute each counterpart.

 
18.
CONFIDENTIALITY.

Banerjee agrees that during the time is an officer, director, employee or
consultant of the Company, and in perpetuity after he is no longer an officer,
director, employee or consultant of the Company, he will keep confidential and
not disclose any proprietary information, customer lists, or trade secrets of
the Company, other than that which is already public knowledge or necessary to
disclose in order to properly manage the Company’s business, or to comply with
the law.

 
19.
COVENANT NOT TO COMPETE.

In consideration for the mutual covenants and agreements set forth in this
Agreement, the receipt and sufficiency of which are hereby acknowledged Banerjee
that, during the time that he is an officer, director or employee of the
Company, he will not directly or indirectly compete with the Company by owning,
managing, financing, consulting for, or sponsoring a business similar to or
competitive with the Company’s business in the State of California or anywhere
else in the world.  For the purposes of this paragraph, a business is a
commercial organization and shall not include any non-profit organizations,
universities or research institutions.  Banerjee further agrees that during the
above described period he will not divert or attempt to divert, directly or
indirectly, any business, customers or suppliers away from the Company.  The
parties hereto intend that the covenant contained in Paragraph 19 of this
Agreement be construed as a separate covenant for each county within the State
of California and each nation in the world.  If, in any judicial proceeding, a
court refuses to enforce any of the separate covenants deemed included in
Paragraph 19 of this Agreement, then such unenforceable covenants shall be
deemed eliminated from Paragraph 19 for the purpose of those proceedings to the
extent, and only to the extent, necessary to permit the remaining separate
covenants to be enforced.  The parties hereto acknowledge that the covenants and
agreements made by them hereunder are of a special, unique and extraordinary
character which gives this Agreement a peculiar value to the Company, the loss
of which cannot be reasonably or adequately compensated in damages in an action
of law.  Consequently, a breach by any party of any
 
 
 

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provision contained in this Paragraph 19 will cause the Company irreparable
injury.  The parties therefore expressly acknowledge that this Agreement is of
the type excluded from the operation of any law which may generally prohibit the
grant of an injunction and other equitable remedies.  The parties agree that the
Company shall be entitled to such injunctive relief and other equitable
remedies, including temporary injunctions, if appropriate.

 
20.
ATTORNEYS’ FEES.

The parties hereto agree that the prevailing party in any action brought to
enforce any of the terms and provisions of this Agreement shall be entitled to
its reasonable attorneys’ fees and costs incurred in connection with the action.

 
21.
EFFECT OF AGREEMENT.

Any purported transfer, conveyance, sale, hypothecation, assignment or other
disposition of Shares in violation of this Agreement is null and void ab initio.

 
22.
ARBITRATION AND REMEDIES.

In the event of any deadlock among the Company’s Board of Directors, then the
parties in deadlock must submit the issue to binding arbitration for resolution
in accordance with the prevailing rules of the American Arbitration Association
in Los Angeles, California.  In order to initiate the arbitration process, the
Shareholders will either mutually agree on an independent arbitrator, or if they
do not agree on an arbitrator within ten (10) days after the deadlock, then each
will choose an arbitrator within ten (10) days thereafter, and the two
arbitrators will then expeditiously select a third arbitrator to hear the
dispute.  The cost of the arbitration will be borne by the Company.  It is
expressly agreed that the parties to any such arbitration may take discovery as
contemplated and provided for by California Code of Civil Procedure
§1283.05.  Arbitration is not mandatory in the event that a party seeks relief
at law or in equity for any reason other than a deadlock of the Company’s Board
of Directors.  In this regard, the parties will have all remedies available to
them at law or in equity in the event of a breach of this Agreement by any
party, or for any reason other than a deadlock of the Company’s Board of
Directors.

 
23.
REPRESENTATION.

All parties hereto waive any conflict that may be created by virtue of having
this Agreement prepared by counsel to the Company.

[Signatures on following page.]

 
 

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IN WITNESS WHEREOF, the parties have signed this Agreement on the date first
hereinabove set forth.

“Shareholders”
Carbon Sciences, Inc.
  A Nevada Corporation              
By:________________________________
 
William E. Beifuss, Jr., Chief Executive Officer
          __________________________________   Kaustav Banerjee            
“Company”
Transphene, Inc.
 
A Nevada Corporation
             
By:________________________________
`
William E. Beifuss, Jr., Chief Executive Officer

 
 
 

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SCHEDULE 1 TO THE
SHAREHOLDERS’ AGREEMENT OF

TRANSPHENE, INC.

 
 

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SHAREHOLDERS OF TRANSPHENE, INC.

   
Names and Addresses of
Number of Shares
Shareholder
Owned                           
   
Kaustav Banerjee
1,000,000 shares
5511-C Ekwill Street
 
Santa Barbara, California 93111
         
Carbon Sciences, Inc.
1,000,000 shares
5511-C Ekwill Street
 
Santa Barbara, California 93111
 

 
 
 

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