EXHIBIT 10.8
DATED THIS 4th DAY OF JUNE 1997
BETWEEN
JANMIL HOLDINGS PTE LTD
AND
TELEGEN COMMUNICATIONS CORPORATION
-------------------------
SHAREHOLDERS AGREEMENT
-------------------------
RG.OBL.J5912.97
A:\0617-12F3\▇▇▇▇▇-▇▇.AGT
▇▇▇▇▇▇▇ ▇▇▇▇ & PARTNERS
SINGAPORE
TABLE OF CONTENTS
PAGE
----
1. DEFINITIONS AND INTERPRETATION...................... 1
2. OBLIGATIONS AFTER SIGNING THIS AGREEMENT............ 2
3. SHAREHOLDINGS OF THE COMPANY........................ 2
4. BUSINESS OF THE COMPANY............................. 3
5. BOARD OF DIRECTORS.................................. 3
6. SALE OF SHARES TO THIRD PARTY....................... 3
7. EXPECTATION OF BUSINESS............................. 5
8. NON-COMPETITION..................................... 5
9. USE OF NAME......................................... 6
10. CONFIDENTIALITY..................................... 7
11. DURATION AND TERMINATION............................ 7
12. FORCE MAJEURE....................................... 7
13. PREVALENCE OF AGREEMENT............................. 7
14. NOTICE.............................................. 8
15. NO ASSIGNMENT....................................... 8
16. COSTS............................................... 8
17. GOVERNING LAW....................................... 9
-i-
THIS AGREEMENT is made on 4th day of June 1997.
BETWEEN:
(1) JANMIL HOLDINGS PTE LTD. a company incorporated in Singapore and having its
registered address at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇, #▇▇-▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ("Janmil") of the one part;
AND
(2) TELEGEN COMMUNICATIONS CORPORATION, a corporation formed under the laws of
the State of California, United States of America and having its principal
---------
place of business at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇▇▇
----------------- ------------------------------------------------
("Telegen") of the second part;
WHEREAS
(A) Janmil and Telegen are desirous of co-operating with each other to engage
in the international telecommunications business, including but not limited
to the international call-back business, through one or more corporations
(the "Joint Venture Corporations") to be formed in the Territory (as
defined below).
(B) The Company is a Company existing and registered under the laws of the
British Virgin Islands. The Parties intend for the Company to hold the
Joint Venture Corporations and this Agreement sets out the financial,
managerial, administrative and other arrangements agreed between the
Parties in relation to their participation in the Company and the manner in
which the affairs of the Company will be regulated.
NOW IT IS HEREBY AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 In this Agreement, unless the context otherwise requires, the following
expressions shall have the following meanings:
"BOARD" means the Board of Directors of the Company.
"BUSINESS" means the business of the Company referred to in Clause 4.
"BUSINESS DAY" means a day other than a Sunday or public holiday in Singapore.
"BVI" means the British Virgin Islands.
"COMPANY" means Seawhite International Limited, a company registered and
existing under the laws of the British Virgin Islands and having its registered
office at Box 957, Offshore Incorporations Centre, Road Town, Totala British
Virgin Islands.
"DIRECTORS" means the directors of the Company.
"MEMORANDUM AND ARTICLES OF ASSOCIATION" means the Memorandum and Articles of
Association of the Company for the time being and as amended, modified or
supplemented from time to time.
"PARTIES" or "PARTY" means Janmil and Telegen and such one of them as the case
may be.
"SHARES" means the ordinary shares of US$1.00 each in the capital of the
Company.
"TERRITORY" means Singapore, Malaysia, Indonesia, India and Brunei and such
other countries as may be agreed between the Parties from time to time.
"US$" means the lawful currency of the United States of America.
1.2 Words denoting the singular number only shall include the plural number
and vice versa.
1.3 Words denoting the masculine gender only shall include the feminine
gender.
1.4 References to persons shall be deemed to include bodies incorporate or
unincorporate.
1.5 The Recitals to this Agreement shall be and form an integral part of this
Agreement.
2. OBLIGATIONS AFTER SIGNING THIS AGREEMENT
After the signing of this Agreement, the Parties shall procure the change
of name of the Company to "Telegen International Limited" or such other names as
may be agreed between the Parties and approved by the SVI Registrar of
Companies.
3. SHAREHOLDINGS OF THE COMPANY
3.1 The Company has been incorporated with an authorized capital of US$
50,000 divided into 50,000 shares ("Shares") of US$1.00 each.
-2-
3.2 As soon as practicable after the execution of the Agreement, each Party
shall subscribe for such number of Shares for cash at par so that their
percentage shareholding as between themselves (the "Agreed Proportion") shall be
as set out below:
% IN THE ISSUED
SHARE CAPITAL
OF THE COMPANY
---------------
3.2.1 Janmil 50%
3.2.1 Telegen 50%
---------------
100%
===============
3.3 The Parties shall at all times maintain their shareholding in the Agreed
Proportion.
4. BUSINESS OF THE COMPANY
4.1 The Company and the Joint Venture Corporations shall initially engage in
the international telecommunications business, including but not limited to the
international call-back business, and all such other business incidental to such
business.
4.2 The Parties agree that the Company and the Joint Venture Corporations may
engage in any other business as may be agreed in writing between the Parties
from time to time.
5. BOARD OF DIRECTORS
The Parties agree that each Party shall be entitled to appoint equal number
of Directors onto the Board of Directors of the Company.
6. SALE OF SHARES TO THIRD PARTY
6.1 If a Party (in this Clause called the "Seller") shall wish to sell the
Shares of the Seller to a third party the Seller may only sell such Shares in
accordance with the following provisions of this Clause (and a Party shall not
sell or otherwise deal in any way with its Shares other than in accordance with
the provision of this Clause):
6.1.1 the Seller may sell the whole or part of its Shares but only in
accordance with the provisions and in the manner hereinafter set out;
-3-
6.1.2 the Seller shall give notice in writing ("Sale Notice") to the other
Party ("the Other Party") of its wish to sell any of its Shares
specifying the price ("the Sale Price") the number of Shares to be sold
("the Sale Shares") and the terms on which it is willing to dispose of
the Sale Shares;
6.1.3 within 30 days of the date of the giving to the Other Party of the Sale
Notice the Other Party shall have the following options
(a) to purchase all but not part of the Sale Shares at the Sale Price
and on the terms specified in the Sale Notice and where there are
more than one purchasing party the number of Shares to be purchased
shall be in the proportion (as nearly as circumstances permit) as
the number of Shares held by the other parties inter-se in the
capital of the Company; or
(b) in the event of the Other Party does not agree to the Sale Price,
the Other Party shall notify the Seller of such disagreement and the
Other Party may appoint an independent valuer (the "Independent
Valuer") to certify in writing the Sale Price based on the fair
value of the Sale Shares as between a willing seller and a willing
buyer. The Independent Valuer shall be appointed by agreement
between the Seller and the Other Party. If the Seller and the Other
Party fail to agree within 14 days after the expiry of the 30 days
after the date of the Sale Notice, either the Seller or the Other
Party shall be entitled to request the auditors for the time being
of the Company to nominate an independent valuer and the person so
nominated shall be an Independent Valuer. The Independent Valuer
shall act as expert and not as arbitrator and his determination,
save for manifest error shall be final and binding on all persons
concerned. The cost and expense of the Independent Valuer shall be
-------------------------------------------------------
shared equally between the Seller and the Other Party;
-----------------------------------------------------
6.1.4 upon the exercise of such option or upon the price, being agreed or
determined as aforesaid, as the case may be, the Other Party shall pay
to the Seller the Sale Price and in exchange therefor the Seller shall
deliver and transfer to the Other Party full legal and beneficial title
to the Sale Shares sold free (unless otherwise agreed) from encumbrances
and the Seller shall execute and do all such documents acts and things
as may be necessary to effect such delivery and transfer;
6.1.5 if the Other Party shall not exercise any of the options referred to in
Clause 6.1.3, the Seller shall, within 90 days of the date of the giving
of 'the Sale Notice referred to in Clause 6.1.2 (subject as hereinafter
and in Clause 6.1.8 below provided) be at liberty to sell the whole (but
not part) of the Sale Shares to a third party on terms no more favorable
than those specified in the Sale Notice provided the transferee shall as
a condition of such sale enter into an agreement supplemental hereto in
terms reasonably satisfactory to the Other Party whereunder the
transferee accepts and agrees to be bound by the terms of this Agreement
(subject only to such variations, additions and other alterations as may
be necessary to make such covenant consistent with this Agreement and
this Agreement shall have full force and
-4-
effect and shall be read and construed and be binding on such third party
as if the terms of such covenants were inserted in this Agreement by way
of addition or substitution or deletion as the case may be) and until the
transferee is so bound the transfer shall not be registered in favour of
the transferee;
6.1.6 notwithstanding the transfer of the Sale Shares the Seller shall remain
liable and be responsible for the due discharge, performance and
observance of all its liabilities and obligations, whether actual or
contingent, arising out of or on or in respect of or in connection with
this Agreement at any time up to and including the date of the transfer of
the Sale Shares and, unless the Sale Shares constitute the whole of the
Seller's Shares, the Seller shall continue to be bound by this Agreement;
6.1.7 the Seller shall remain entitled to all rights and benefits arising out of
or on or in respect of or in connection with the Sale Shares up to and
including the date of the transfer of the Sale Shares; and
6.1.8 if the Sale Shares are not sold to a third party within 90 days in
accordance with Clause 6.1.5, any subsequent sale shall be made in
accordance with the procedure described in this Clause.
6.2 In the event that any part of the Shares held by any of the Parties is at
any time and from time to time transferred to a third party or parties, then it
shall be the responsibility of the Party so transferring such Shares to make it
a condition of such transfer whereby such transferee accepts and is bound by the
terms of this Agreement (subject only to such variations, additions and other
alterations as may be necessary to make such covenant consistent with this
Agreement and this Agreement shall have full force and effect and shall be read
and construed and be enforceable as if the terms of such covenant are inserted
in this Agreement by way of addition or substitution or deletion as the case may
be) and until such transferee is so bound the transfer shall not be effective.
6.3 Notwithstanding the provisions of this Clause 6 but subject to the
provisions of Clause 6.2 a Party may in the case of a company transfer the whole
of its Shares to a company which is either its holding or subsidiary company or
its holding company's wholly owned subsidiary.
7. EXPECTATION OF BUSINESS
7.1 The Parties agree that for the period commencing from 1 August 1997 and
------------------------------------------------
ending 15 months thereafter, the Company and the Joint Venture Corporations
---------------------------------------------------------------------------
shall achieve on a consolidated basis a pre-tax cumulative net positive cash-
----------------------------------------------------------------------------
flow of US$1 million after accounting for original capital investments of each
------------------------------------------------------------------------------
Party.
------
7.2 In the event the goal set out in Clause 7.1 is not achieved by the
---------------------
Company, either Party may request that the Company be liquidated and both
Parties shall take such steps as may be necessary to forthwith liquidate the
Company.
-5-
8. NON-COMPETITION
8.1 Neither of the Parties shall at anytime whilst it is beneficially
interested in any Shares of the Company or for a period of 5 years from the date
on which such Party ceases to be beneficially interested in the Shares, do or
permit any of the following without the prior written consent of the other
Party:
8.1.1 either solely or jointly with or on behalf of any person directly or
indirectly carry on or be engaged or interested in any business competing
in the Territory with the Business;
8.1.2 solicit the custom of any person in the Territory who is or has been at
any time during the term of this Agreement a customer of the Business for
the purpose of offering to such customer goods or services similar to or
competing with those of the Business;
8.1.3 solicit or entice away or endeavor to solicit or entice away any Director
or employee of the Company or of any subsidiary of the Company, but
without prejudice to the right of such Party to terminate arrangements
under which any of its staff are seconded to the Company;
8.1.4 cause or permit any person directly or indirectly under its control to do
any of the foregoing acts or things;
Provided that nothing herein shall preclude or restrict either Party or their
respective subsidiaries from:
(a) carrying on any activity carried on during the period of 12 months
immediately preceding the date of this Agreement; or
(b) offering any service or goods similar to those previously supplied as part
of the Business but subsequently discontinued and not supplied by the
Company at the time when such similar service or goods are offered.
8.2 Each undertaking contained in Clause 8.1 shall be read and construed
independently of the other covenants therein contained so that if one or more
should be hold to be invalid as an unreasonable restraint of trade or for any
other reason whatsoever then the remaining covenants shall be valid to the
extent that they are not held to be so invalid.
8.3 While the covenants in Clause 8.1 are considered by the Parties to be
reasonable in all the circumstances, if one or more should be held invalid as an
unreasonable restraint of trade or for any other reason whatsoever but would
have been held valid if part of the wording thereof had been deleted or the
period thereof reduced or the range of activities or area dealt with thereby
reduced in scope, the said covenants shall apply with such modifications as may
be necessary to make them valid and effective.
-6-
9. USE OF NAME
Janmil agrees that in the event Telegen disposes of all of its Shares in
the Company, Telegen shall have the right to require that the Company ceases to
use the name "Telegen" and Janmil shall use all reasonable endeavors to procure
as soon as practicable such change of name as may be necessary.
10. CONFIDENTIALITY
10.1 Party shall not divulge or communicate to any person (other than those
whose province it is to know the same or with proper authority) or use or
exploit for any purpose whatever any of the trade secrets or confidential
knowledge or information of the Company or of the other Party which the first-
mentioned Party may receive or obtain as a result of entering into this
Agreement, and each Party shall use its reasonable endeavors to prevent its
employees or agents if any from so doing. This restriction shall continue to
apply without limit in point of time but shall cease to apply to information or
knowledge which may properly come into the public domain through no fault of the
relevant Party.
10.2 Notwithstanding the termination of this Agreement, the obligations of the
Parties under this Clause 10 shall continue for a period of 5 years after the
termination of this Agreement.
11. DURATION AND TERMINATION
11.1 This Agreement shall take effect from the date hereof and shall continue
until terminated in accordance with the provisions hereunder or upon the Company
being put into liquidation.
11.2 On the occurrence of the event mentioned in Clause 7.2, this Agreement
shall terminate provided that the termination of this Agreement shall be without
prejudice to any obligations or rights of any Party which have accrued prior to
such termination and shall not affect any provision of this Agreement which is
expressly or by implication provided to come into effect on or to continue in
effect after such termination.
12. FORCE MAJEURE
No claim for damage or any other remedy shall arise out of any breach of,
or any failure to perform any of the obligations arising under, this Agreement
if such breach or failure is caused by compliance by any party with any
intervention or action by any state or federal authority or by any person
representing any such authority.
-7-
13. PREVALENCE OF AGREEMENT
This Agreement shall prevail over the Memorandum and Articles of
Association for the time being of the Company to the extent of any
inconsistencies that may arise between this Agreement and the Memorandum and
Articles of Association. In the event of any inconsistency arising, the Parties
shall forthwith cause such necessary alterations to be made to the Articles of
Association as required to resolve such inconsistency.
14. NOTICE
14.1 Subject as otherwise provided in this Agreement, all notices, demands or
other communications required or permitted to be given or made hereunder shall
be in writing and delivered personally or sent by prepaid registered post or by
facsimile message addressed to the intended recipient thereof at its address or
its facsimile number set out below (or to such other address or facsimile number
as any party may from time to time notify the others for the purpose of this
Clause).
14.2 Any notice, demand or communication shall be deemed to have been duly
served:
14.2.1 if delivered personally, on the day of delivery;
14.2.2 if sent by facsimile transmission, on the day of the conclusion of
transmission; and
14.2.3 if sent by registered letter, 5 Business Days after posting and in
proving the same it shall be sufficient to show that the envelope
containing the notice, demand or communication was duly addressed,
stamped and posted.
14.3 The initial addresses and facsimile numbers of the Parties for the
purposes of this Agreement are:
14.3.1 Janmil: JANMIL HOLDINGS PTE LTD
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇, #▇▇-▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Fax No. ▇▇▇-▇▇▇▇
14.3.1 Telegen: TELEGEN COMMUNICATIONS CORPORATION
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇ ▇▇▇▇▇, ▇▇▇
Fax No. ▇▇▇ ▇ ▇▇▇ ▇▇▇ ▇▇▇▇
-8-
15. NO ASSIGNMENT
No Party shall transfer or assign all or any of its rights, obligations or
benefits hereunder to any third party without the consent of the other Parties.
16. COSTS
Each of the Parties shall bear its own legal and other costs and expenses
incurred in connection with this Agreement.
17. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of Singapore and the Parties agree to be subject to the non-exclusive
jurisdiction of the Courts in Singapore.
IN WITNESS WHEREOF the parties hereto have hereunto set their respective
hands the day and year first above written.
SIGNED by Ramesh Shivandas ▇▇▇▇▇▇▇▇▇ )
)
for and on behalf of )
)
JANMIL HOLDINGS PTE LTD )
)
in the presence of: )
SIGNED by ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. )
)
for and on behalf of )
)
TELEGEN COMMUNICATIONS CORPORATION )
)
in the presence of: )
-9-
