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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS UNDER SECTION 12(b)
OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
TECHNOR INTERNATIONAL, INC.
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(Name of small business issuer in its charter)
Nevada 52-2032380
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Industrivagen 2, S-19162, Sollentuna, Sweden
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(Address of Principal Executive Offices) (Zip Code)
46(0) 8-5449-0000
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(Issuer's telephone number, including area code)
Securities to be registered under Section 12(b) of the Exchange Act:
Title of Each Class Name of Each Exchange on Which
to be so Registered Each Class is to be Registered
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None
Securities to be registered under Section 12(g) of the Exchange Act:
Common Stock, par value $0.01 per share
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(Title of Class)
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(Title of Class)
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ITEM 1. DESCRIPTION OF BUSINESS
GENERAL
Technor International, Inc. ("Technor" or the "Company") promotes,
markets, offers, sells, supports, assigns and distributes GSM technologies for
positioning and telematics in all territories outside of Africa, north of the
Sahara. In that regard, the Company has entered into a relationship with Wasp
International (Pty) Ltd., a South African Corporation ("Wasp") which is a
license agreement pursuant to the provisions of which the Company will market,
support, distribute and sell GSM positioning and telematics technology systems
which enable users to determine the position of an object, or remotely control
objects equipped with the necessary hardware and software components using the
existing GSM cellular networks. CellPoint Systems AB ("CellPoint") is a
wholly-owned subsidiary of Technor focusing on the worldwide application of the
Company's technologies for digital cellular (GSM) communication and positioning
systems. The technology is marketed under the name "CellPoint System".
The Company has entered into a 25-year license agreement with Wasp,
which has developed and refined technology used within the GSM networks for
positioning and telematics. This agreement, in exchange for shares in Technor,
grants a license (the "License") to Technor to market, promote, offer, sell,
install, distribute, support and assign the Wasp technologies to non-South
African territories north of the Sahara Desert and in first instance, in Europe.
Technor also has the right to receive further developments of this technology
including enhancements and new versions. In connection with the License, Technor
has acquired a 25% ownership interest in Wasp, together with an option to
acquire the remaining 75% of the shares prior to June 30, 1999.
The Company was organized on February 28, 1997, as a Nevada
corporation, pursuant to the provisions of General Corporation Law of Nevada.
The principal business address and telephone numbers of the Company are
Industrivagen 2, S-191 62, Sollentuna, Sweden, telephone +46 (0)8 5449-0000,
facsimile +46 (0)8 5449 0005. The Company maintains a website at
www.technorinc.com.
RISK FACTORS
LIMITED HISTORY OF THE COMPANY. The Company has limited operating
history upon which an evaluation of the Company's prospects can be made. The
Company's prospects must be considered keeping in mind the risks, expenses, and
difficulties frequently encountered in the establishment of a new business in an
ever changing industry and the research, development, manufacture,
commercialization, distribution, and commercialization of technology,
procedures, and products and related technologies. There can be no assurance
that unanticipated technical or other problems will not occur which would result
in material delays in product commercialization or that the efforts of the
Company will result in successful product commercialization. There can be no
assurance that the Company will be able to achieve profitable operations.
GOING CONCERN OPINION. The report of the Company's independent
accountants, Ohrlings Coopers & Lybrand AB on the Company's financial statements
for the fiscal year ended June 30, 1998, includes a statement that the Company
is a developmental stage company, with no revenues, which has sustained losses
from operations since inception. The auditors have stated that there is
substantial doubt about the ability of the Company to continue as a going
concern. Investors in the Company's shares should review carefully the report
of Ohrlings Coopers & Lybrand. There can be no assurances that the Company will
be able to continue as a going concern.
SPECULATIVE INVESTMENT. The business objectives of the Company must
be considered speculative, and there is no assurance the Company will satisfy
those objectives. No assurance can be given that the stockholders of the
Company will realize a substantial return on their purchase of shares, or any
return whatsoever, or the stockholders of the Company will not lose their
investments in the Company completely.
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LIQUIDITY. The Company may require additional cash to implement its
business strategies, including cash for (i) payment of increased operating
expenses; and (ii) further implementation of those business strategies. Such
additional capital may be raised through additional public or private
financings, as well as borrowings and other resources. To the extent that
additional capital is raised through the sale of equity or equity-related
securities, the issuance of such securities could result in dilution to the
Company's stockholders. No assurance can be given, however, that the Company
will have access to the capital markets in the future, or that financing will be
available on acceptable terms to satisfy the cash requirements of the Company to
implement its business strategies. The inability of the Company to access the
capital markets or obtain acceptable financing could have a material adverse
effect on the results of operations and financial conditions of the Company. The
Company may be required to raise substantial funds. If adequate funds are not
available, the Company may be required to curtail operations significantly or to
obtain funds through entering into arrangements with collaborative partners or
others that may require the Company to relinquish rights to certain of its
technologies or product candidates that the Company would not otherwise
relinquish. The Company's forecast of the period of time through which its
financial resources will be adequate to support its operations is a
forward-looking statement that involves risks and uncertainties, and actual
results could vary as a result of a number of factors, including those described
in these Risk Factors.
RELIANCE ON MANAGEMENT. The Company is dependent on the efforts and
abilities of its senior management. The loss of various members of that
management could have a material adverse effect on the business and prospects of
the Company. The members of the Board of Directors of the Company believe that
all commercially reasonable efforts have been made to minimize the risks
attendant with the departure by key personnel from the service of the Company.
There is no assurance, however, that upon the departure of key personnel from
the service of the Company that replacement personnel will cause the Company to
operate profitably.
LOSS ON DISSOLUTION OF THE COMPANY. In the event of dissolution of
the Company, the proceeds realized from the liquidation of the Company's assets,
if any, will be distributed to the stockholders of the Company only after
satisfaction of claims of the Company's creditors. The ability of a stockholder
to recover all or any portion of his or her purchase price for the shares in
that case will depend on the amount of funds realized and the claims to be
satisfied therefrom.
DEPENDENCE ON WASP. The Company is dependent on Wasp initially for
commercial quantities of the GSM Terminal Units ("GT-1" and "GT-3"). Inasmuch
as the capacity for certain services and components by Wasp may be limited, the
inability of the Company, for economic or other reasons, to continue to receive
commercial quantities of the GT-1 and GT-3 hardware from Wasp could have a
material adverse effect on the Company. The Company has a supply agreement with
Wasp stipulating that the Company will purchase GSM Terminal Units from Wasp
whenever Wasp can supply them on competitive terms, but the Company can contract
to have the GSM Terminal Units manufactured by another supplier. There can be
no assurance that the alternate source of GSM Terminal Units will be available
in commercial quantities, and the lack of any such alternate source could have a
material adverse effect on the Company.
The Company currently does not have any commercial operations of the
CellPoint System. There can be no assurance that the CellPoint System will
achieve a significant degree of market acceptance, and that acceptance, if
achieved, will be sustained for any significant period or that product life
cycles will be sufficient (or substitute products developed) to permit the
Company to recover start-up and other associated costs. Failure of the
CellPoint System to achieve or sustain market acceptance could have a material
adverse effect on the business, financial conditions, and results of operations
of the Company.
LIMITATIONS IN THE WASP LICENSE. The License granted by Wasp to the
Company is exclusive for the Nordic countries (Sweden, Finland, Norway and
Denmark). The License also extends to the world outside of Africa, north of
the Sahara Desert, but exclusivity is granted in any country only upon the
Company's completion of a distribution arrangement with a cellular service
provider in that country.
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There can be no assurance that the Company will be successful in completing such
arrangements with cellular service providers.
The Company currently owns 25% of the outstanding shares of Wasp. The
Company has an option to purchase the remaining 75% of Wasp before June 30,
1999. If the Company purchases the balance of the Wasp shares, the License will
become exclusive for all areas outside of Africa. The agreement with Wasp
provides that the purchase price for the balance of the Wasp shares is US
$15,000,000. The purchase price is payable by US$3,000,000 in cash and the
balance in Common Stock of the Company based on the average market price of the
Company's Common Stock for the ten trading days preceding the exercise of the
option. If the Company does not exercise the option to purchase the balance of
the shares of Wasp by June 30, 1999, Wasp has the right to re-evaluate the
exclusivity of the License, based on the performance of the Company. Further, if
the Company does not purchase 100% of the shares of Wasp, the contract with Wasp
is for 25 years and renewable in 5-year periods thereafter, enabling the Company
to maintain a long-term right to market, sell, distribute and support the
technology. Either the Company or Wasp may cancel the License after 25 years
upon one-year's written notice. There can be no assurances that the License
will continue beyond the initial 25-year period.
TECHNOLOGICAL FACTORS. The market for the CellPoint System and
cellular telecommunications products is characterized by rapidly changing
technology which could result in product obsolescence or short product life
cycles. Similarly, the industry is characterized by continuous development and
introduction of new products and technology to replace outdated products and
technology. There can be no assurance that competitors will not develop
technologies or products that render the CellPoint System obsolete or less
marketable. The Company and Wasp may be required to satisfy evolving industry
or customer requirements, which could require the expenditure of significant
funds and resources, and the Company does not have a source or commitment for
any such funds and resources.
INTENSE COMPETITION. Competition in the telecommunications industry is
intense. The Company is aware that other companies and businesses market,
promote and develop technologies and products which could be competitive with
the CellPoint System. There may exist other technologies and products that are
functionally equivalent or similar to the CellPoint System. The Company expects
that companies or businesses which may have developed or are developing such
technologies and products, as well as other companies and businesses which have
the expertise which would encourage them to develop and market competitive
products and technology, may attempt to develop technology and products directly
competitive with the CellPoint System. Many of these competitors have greater
financial and other resources than the Company.
The telecommunication and cellular telephone industries continue to
undergo rapid change, and competition is intense and is expected to increase.
There can be no assurance that competitors have not or will not succeed in
developing technologies and products that are more effective than any which Wasp
is developing or which would render the CellPoint System obsolete and
noncompetitive. Many of the competitors of the Company have substantially
greater experience, financial resources and marketing capabilities than the
Company.
RISK OF PRODUCT LIABILITY; POTENTIAL UNAVAILABILITY OF INSURANCE.
Wasp is taking a very limited responsibility for consequential damages and
liabilities of the technology. To that end, the Company will be responsible for
product performance and liabilities of itself and its sublicensees. Wasp does
not warrant the technology performance or functionality outside of South Africa
and Sweden and will assume no liability for factors beyond its control in the
event of non-performance of the technology. There are no assurances that the
technology will function outside of South Africa and Sweden. The business of
the Company may expose it to potential product liability risks that are inherent
in the marketing of products. The Company does not currently have product
liability insurance, and there can be no assurance that the Company will be able
to obtain or maintain such insurance on acceptable terms or, if obtained, that
such insurance will provide adequate coverage against potential liabilities. The
Company faces a business risk of exposure to product liability and other claims
in the event that the use of the CellPoint System is alleged to have resulted in
adverse effects. Such risk exists even with respect to those
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products that are manufactured in licensed and regulated facilities or that
otherwise possess regulatory approval for commercial sale. There can be no
assurance that the Company will avoid significant product liability exposure.
There can be no assurance that insurance coverage will be available in the
future on commercially reasonable terms, or at all, that such insurance will be
adequate to cover potential product liability claims or that a loss of insurance
coverage or the assertion of a product liability claim or claims would not
materially adversely affect the Company's business, financial condition and
results of operations. While the Company has taken, and will continue to take,
what it believes are appropriate precautions, there can be no assurance that it
will avoid significant liability exposure. An inability to obtain product
liability insurance at acceptable cost or to otherwise protect against potential
product liability claims could prevent or inhibit the marketing and distribution
of the CellPoint System by the Company. A product liability claim could have a
material adverse effect on the Company's business, financial condition and
results of operations.
LIMITATION ON LIABILITY OF OFFICERS AND DIRECTORS OF THE COMPANY. The
Articles of Incorporation of the Company includes a provision eliminating or
limiting the personal liability of the officers and directors of the Company to
the Company and its stockholders for damages for breach of fiduciary duty as a
director or officer.
CONFLICTS OF INTEREST. The officers and directors of the Company may
engage in other activities. The persons serving as officers and directors of
the Company may have conflicts of interests in allocating time, services, and
functions between the other business ventures in which those persons may be or
become involved. The officers and directors of the Company, however, believe
that the Company will have sufficient staff, consultants, employees, agents,
contractors, and managers to adequately conduct the business of the Company.
CONTROL BY EXISTING STOCKHOLDERS. The founding stockholders and the
stockholders of Wasp beneficially own a majority of the issued and outstanding
shares of the Company's Common Stock. Because of such ownership, the founding
stockholders and the stockholders of Wasp will effectively control the election
of all members of the Board of Directors of the Company and determine all
corporate actions. Stockholders are not entitled to accumulate their votes for
the election of directors or otherwise.
NO FORESEEABLE DIVIDENDS. The Company does not anticipate paying
dividends on its common stock in the foreseeable future; but, rather, the
Company plans to retain earnings, if any, for the operation and expansion of the
business of the Company.
PENNY STOCK REGULATION. The Securities and Exchange Commission has
adopted rules that regulate broker-dealer practices in connection with
transactions in "penny stocks". Penny stocks generally are equity securities
with a price of less than $5.00 (other than securities registered on certain
national securities exchanges or quoted on the NASDAQ system, provided that
current price and volume information with respect to transactions in such
securities is provided by the exchange or system). The penny stock rules
require a broker-dealer, prior to a transaction in a penny stock not otherwise
exempt from those rules, deliver a standardized risk disclosure document
prepared by the Securities and Exchange Commission, which specifies information
about penny stocks and the nature and significance of risks of the penny stock
market. The broker-dealer also must provide the customer with bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction, and monthly account statements showing the
market value of each penny stock held in the customer's account. In addition,
the penny stock rules require that prior to a transaction in a penny stock not
otherwise exempt from those rules the broker-dealer must make a special written
determination that the penny stock is a suitable investment for the purchaser
and receive the purchaser's written agreement to the transaction. These
disclosure requirements may have the effect of reducing the trading activity in
the secondary market for a stock that becomes subject to the penny stock rules.
If the Company's common stock becomes subject to the penny stock rules,
stockholders may find it more difficult to sell their shares. The Company's
stock is currently subject to the Penny Stock rules.
ABILITY OF THE COMPANY TO IMPLEMENT ITS BUSINESS STRATEGY. Although
the Company intends to pursue a strategy of aggressive product marketing and
distribution, implementation of this
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strategy will depend in large part on its ability to (i) establish a significant
customer base and maintain favorable relationships with those customers; (ii)
effectively introduce acceptable products to its customers; (iii) obtain
adequate financing on favorable terms to fund its business strategy; (iv)
maintain appropriate procedures, policies, and systems; (v) hire, train, and
retain skilled employees; and (vi) continue to operate in the face of increasing
competition. The inability of the Company to obtain or maintain any or all of
these factors could impair its ability to successfully implement its business
strategy, which could have a material adverse effect on the results of
operations and financial condition of the Company.
UNCERTAINTY OF FUTURE FINANCIAL RESULTS, FLUCTUATIONS IN OPERATING
RESULTS. The Company's results of operations may vary from period to period due
to a variety of factors, including the introduction of new products by
competitors, cost increases from third-party manufacturers, supply
interruptions, the availability and cost of raw materials, the mix of products
sold by the Company, changes in marketing and sales expenditures, market
acceptance of the CellPoint System, competitive pricing pressures, and general
economic and industry conditions that affect customer demand.
RISK OF PRODUCT RECALL, PRODUCT RETURNS. Product recalls may be
issued at the discretion of the Company, Wasp, or government agencies having
regulatory authority for product sales and may occur due to disputed labeling
claims, manufacturing issues, quality defects or other reasons. No assurance
can be given that product recalls will not occur in the future. Any product
recall could materially adversely affect the Company's business, financial
condition or results of operations. There can be no assurance that future
recalls or returns would not have a material adverse effect upon the Company's
business, financial condition and results of operations.
RISKS OF INTERNATIONAL SALES AND OPERATIONS. The Company anticipates
that a significant portion of the revenue from the sale of the CellPoint System
will be derived from customers located outside the United States of America.
Because certain customers of the Company will be located in other countries, the
Company anticipates that international sales will account for a significant
portion of its revenues. There can be no assurance that the Company will be
able to compete successfully in international markets or to satisfy the service
and support requirements of its customers. Additionally, the Company's sales
and operations could be subject to certain risks, including tariffs, and other
barriers, difficulties in staffing and managing foreign subsidiary and branch
operations, currency exchange risks and exchange controls, potentially adverse
tax consequences and the possibly of difficulty in accounts receivable
collection. There can be no assurance that any of these factors will not have a
material adverse effect on the Company's business, financial condition and
results of operations.
The Company will sell the CellPoint System in currencies other than
the U.S. Dollar, which would make the management of currency fluctuations
difficult and expose the Company to risks in this regard. The Company's results
of operations are subject to fluctuations in the value of various currencies
against the U.S. dollar. Although management will monitor the Company's exposure
to currency fluctuations, there can be no assurance that exchange rate
fluctuations will not have a material adverse effect on the Company's results of
operations or financial condition.
The products marketed and distributed the Company may be subject to
foreign government standards and regulations that are continually being amended.
Although the Company will endeavor to satisfy foreign technical and regulatory
standards, there can be no assurance that the CellPoint System will comply with
government standards and regulations, or changes thereto, or that it will be
cost effective for Wasp to redesign its products to comply with such standards
or regulations. The inability of Wasp to design or redesign products to comply
with foreign standards could have a material adverse effect on the Company's
business, financial condition and results of operations.
COMPLIANCE WITH GOVERNMENT REGULATIONS. The Company may be subject to
various forms of government regulations, including environmental and safety
laws. Any future violation of, and the cost of compliance with, these laws and
regulations could have a material adverse effect on the Company's business,
financial condition and results of operations.
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PRODUCTS AND SERVICES
The Company promotes, markets, offers, sells, supports, assigns and
distributes GSM technologies for positioning and telematics. The Company has
acquired a License for this technology from Wasp, which license is effective in
territories outside of Africa, north of the Sahara Desert. The Company paid
U.S. $500,000 and issued 1,950,000 Shares of its Common Stock in exchange for
the License, 25% of the outstanding shares of Wasp and an option to purchase the
remaining 75% of the outstanding shares of Wasp. The Company does not currently
have any commercial applications of the CellPoint System in operation. The
Company has conducted pilot programs, the results of which have been
satisfactory.
CellPoint's telemetry application is, simply stated, the opportunity
for nationwide, economical two-way communications between remote equipment and a
central facility. It is the union of cellular radio and telemetry technologies
into one service that uses the cellular telephone infrastructure to transmit
very short telemetry messages. The CellPoint System collects, sorts, and routes
these messages using an SMS message over the standard GSM digital cellular
telephone system. The System does not affect the voice-carrying capacity of the
cellular telephone system. It is less expensive than circuit-switched and
packet radio because it does not use the cellular voice channel for
transmission. Implementation costs are lower because it does not require the
extensive modification or build-out that packet and private radio require.
Access for the end user is via the Internet, via data connection or phone. The
GSM platform has grown to the status of a global standard, partly through the
substantial benefits of international roaming. International roaming capability
allows phone subscribers to roam on foreign networks and be accessed by calling
their one same GSM phone number.
GSM technology provides for the integration of voice and data,
allowing for a wide variety of new data services (without the use of a separate
modem). Of key interest is the use of data services such as short message
service (SMS) and data communications. Using the existing GSM mobile networks,
CellPoint's communication and positioning technology, the CellPoint System, is
the only commercially available system in the world known to the Company that
can determine the position of an object using the unmodified GSM networks. An
object is equipped with a proprietary GSM terminal and uses the existing GSM
network to determine the location of the object. The object can also be a
standard GSM telephone with the new SIM Toolkit standard for communication
between the GSM phone and the SIM card. In this way, the technology can be used
to track, for example, stolen cars, but the technology is also of value for
fleet and asset management, security applications, vehicle and equipment rental
services, insurance applications, information and navigation services, etc.
The CellPoint System utilizes:
- A GSM network
- A proprietary server system (hardware and software) interacting
with the operator's system, placed at the operator's site or at
CellPoint's premises
- A proprietary GSM terminal unit installed in the asset
- In the case of positioning services - a control center to which
the server communicates the terminal's position
- Access to the networks site-database which provides data to
compute positioning services
Access to the information and monitoring/control is managed via a
PC-based control center situated at the customer's premises, CellPoint's
premises or a network central site. A request for a position can be initiated by
an authorized owner, and the location is displayed on a computerized map,
together with selected information regarding the vehicle. The CellPoint System
can also be pre-
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programmed to execute instructions at specific intervals. Communication with the
device in the vehicle is achieved using the GSM Short Message System (SMS),
which enables the customer to communicate with the vehicle at any time and at a
low cost. This is a key feature when the product is used for vehicle tracking
and fleet management. Additionally, SMS message traffic does not interfere or
utilize the mobile networks voice channels, therefore capacity problems are
avoided.
To determine the position of the mobile unit, signals from up to seven
GSM base stations are used. The more base stations that can be accessed by the
terminals, the higher the accuracy. The terminals collect this information and
send it as an SMS message to the CellPoint server. The server takes this
information together with the information from the network's site-database and
calculates a position.
The CellPoint System can be programmed to activate by remote control
when someone, for example, reports an item missing over the phone, presses a
distress button, or when a conventional alarm is triggered. The System can also
be pre-programmed to indicate when a vehicle passes certain limits, e.g., being
driven on board of a ferry or passing a country border. When notification of an
alarm is received, appropriate actions can be undertaken. The remote
configuration will allow the operator to position the car, lock doors, make the
lights flash, shut off fuel injection, etc.
The CellPoint System makes it possible to locate the vehicle to a
certain area via the GSM network. If necessary, a special homing beacon can be
activated when a recovery team is close to the vehicle to assist in the final
tracking of the vehicle to the exact spot. Wasp has used this method in
multi-level car parks and underground garages.
The CellPoint System is also a valuable tool for fleet owners, i.e.,
shipping agencies, coach companies, taxi services, car rental agencies, delivery
firms, railroad companies, etc., who want to manage their vehicles and assets
more effectively. The communication and positioning system will help fleet
owners to optimize routes and allocate resources. The product can also be used
to monitor location, speed, rpm, distance traveled, time at certain locations,
fuel tank content and consumption of fuel. The potential cost savings for using
the CellPoint System are believed to be significant.
Rental companies (e.g., of machinery, vehicles, equipment and
containers) can use the CellPoint communication and positioning system for
surveillance and allocation purposes. Additionally, they can use the remote
control feature to shut off ignition and fuel, lock doors, etc., in case the
customer misuses the equipment or does not return the asset. In case of theft,
the asset can also be located and recovered.
The Company expects that other uses of the technology in addition to
these positioning services will continue to grow in importance. Examples of
these services are location-based services for standard mobile telephones such
as information, navigation and safety/security applications as well as
telemetry/telematics applications, which involve controlling and monitoring
assets and functions remotely, using the Company's Server System, GT Terminals
and the existing GSM Networks.
Set forth below are some examples of various potential uses of
CellPoint's telemetry applications:
INDUSTRIAL AND COMMERCIAL
- Monitor and control of oil pipe lines
- Turn pumps off and on depending on when oil flow goes over or
under a certain limit
- Collect data and send messages regarding operating status of a
multitude of machinery, equipment and metering devices
- Monitor temperature changes, activate cooling/heating equipment
- Transmit delivery timing - can optimize productivity of receiving
staff
- Device Status Data - e.g. Parking Lot is Full, Bridge is Closed
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- Heating/Cooling equipment
AGRICULTURE
- Monitor and control of irrigation systems
Turn water off and on when moisture level goes over or under a
certain level
- Greenhouse temperature monitoring
CAPACITY MANAGEMENT AND SERVICING
- When a container is close to full, a message is sent to the
control center
- Vending machine inventory control
- Collect and consolidate information on photocopier machines
- Utilities - Automatic Meter Reading
SECURITY
- Remote monitoring of alarms - works even if phone lines are cut
- Burglar alarm
- Personal security alert
- Fire alarm
- Flood alarm
ALARM
- Flooding alarm
- Temperature alarm
PROPERTY MANAGEMENT, AUTO CLUBS
- Unlock and lock doors
TRANSPORTATION
- Monitor and service equipment in railway networks
- Traffic control/traffic lights
- Automatic messaging, e.g., school buses, drop off in five minutes
The Company has not yet implemented any of the foregoing commercial
applications, and there can be no assurances that the Company will be able to do
so.
As an option, the CellPoint System can also support the GPS satellite
system. This will increase the positioning accuracy in certain situations, for
example in remote areas where the GSM sites are far apart. Experience has shown,
however, that most applications do not require all the positioning accuracy GPS
can provide and in case there is no GSM coverage, neither the GSM systems nor
the GPS systems may work, because usually they are both using the GSM system for
communication. Certainly the cost savings are significant when using only GSM
technology. Partly due to the fact that GPS systems usually use similar
equipment for communication as the CellPoint System is using for positioning and
communication with the control center. GPS systems need additional equipment for
communicating the positioning of the vehicle.
SYSTEM COMPONENTS
CellPoint's technology is based on a specially designed, compact GSM
terminal unit, the GT-1, which can easily be hidden in a vehicle, container or
elsewhere. The GT-1 terminal communicates over the GSM network which makes it
possible to instantly locate the vehicle or asset through the existing
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GSM radio network. The vehicle or asset's position is displayed graphically on a
computerized map. Since the System uses the existing GSM radio network,
vehicles and other assets can be located even if they are inside buildings,
containers, urban canyons - places where there is normally GSM coverage but not
necessarily GPS coverage.
The system uses SMS messaging for communicating positioning and
telematics. Distribution of information to the client is facilitated via several
other communication channels such as the Internet, direct or dial-up connections
or via GSM.
THE SERVER SYSTEM. The server consists of a number of computers that
manage the traffic between the GSM network and the client software. It is
designed to handle large quantities of SMS messages used in complex
applications. The System manages the communication processes, including routing
of messages, calculation of positions, database management and bi-directional
message confirmation. Remote billing features are also integrated.
THE CLIENT SOFTWARE. Client software is developed for the customer's
needs and can be tailored to match most applications. Normally this software
provides a graphical interface to display positions or to control the terminal's
functions. Client software can be modified for single user environment or for a
full control center with multiple workstations. Connection to the CellPoint
Server can be established through the Internet, dial-up or direct connection or
via GSM.
TERMINALS. Installation of terminals in cars will be done by
specially trained and approved installers, e.g., chains of car stereo/telephone
installers. CellPoint will be responsible and handle all orders. Delivery will
first be to CellPoint, who will configure the terminals, install the SIM cards
and deliver out to distributors.
THE GT-1 TERMINAL. This microprocessor-controlled terminal contains a
Class 4, 2-Watt GSM unit and has a number of inputs and outputs to interact
with user defined requirements. The integrated antenna allows the terminal
to function even when the unit is completely hidden. The GSM mobile
terminal unit (GT-1) is 130mm x 85mm x 33mm in size and consists of a GSM
transmitter and receiver, a computer circuit board and a battery. The
battery provides back up in case the regular power source is disconnected.
The antenna is very small and does not need to be mounted visibly, in the
open or at the exterior, so the units can be completely concealed and
hidden in the asset or vehicle. The GT-1 can also be connected to many data
input-output devices, which can facilitate remote monitoring, configuration
and remote operation of connected features.
THE CELLULAR PHONE. The CellPoint System and AU-System's AviSIM OTA,
used in combination with the SIM Toolkit standard for communication between
the GSM phone and the SIM card make it possible for the CellPoint System to
position standard GSM phones.
THE GT-3 TERMINAL. This is a more advanced and comprehensive terminal
supporting the full range of GSM services and GPS positioning, and caters
to extensive fleet management and logistic services. The GT-3 will interact
with the CellPoint Server System or function on a point to point basis.
OPERATION OF THE SYSTEM
The CellPoint System offers a simple, efficient solution to effective
GSM positioning and telematics. The positioning process takes approximately 15
seconds from initial contact to establishing a fixed position or executing a
telematics function.
- STEP ONE
The CellPoint System can be initiated in many ways: by the client
software, an activated alarm, on demand, through another event or
automatically at predetermined intervals.
9
<PAGE>
- STEP TWO
A request is sent from the client software to the server system, via
either a fixed data link or the Internet, requesting the terminal's
position or initiating a telematics function.
- STEP THREE
The server translates the request into an SMS message and sends it via
the GSM network to the terminal. The message can also execute
telematics applications.
- STEP FOUR
The terminal responds by sending an SMS message back to the server,
providing the data necessary to obtain its position as well as any
other required information. A bi-directional confirmation process is
inherent providing verification of execution.
- STEP FIVE
The data is processed in the server and the position is calculated.
The position and telematic information is sent back to the client
software. The client can see the location of the terminal on a
computer map or access other required information verifying the
telematics function.
Password authentication is done on all client connections to ensure
authorized usage. With the CellPoint System, customers are only able to access
information about terminals that are registered to them. Security issues are a
very high priority in all developments of the CellPoint System and its
applications.
VALUE-ADDED MOBILE SERVICES
Operators of cellular phone systems have, in a short period of time,
commanded the global market for mobile voice communication using their huge
investments in the mobile networks, and the GSM operators are now trying to
expand their revenue base and prevent churning of customers by offering VAMS
(Value Added Mobile Services). The companies demanding these new services are
the mobile operators in Sweden, other OECD countries and around the world.
The CellPoint technology fits very well into these operator demands.
The CellPoint System offers the cellular network operators the opportunity to
increase significantly their subscriber base and increase revenues by offering
additional services, without the necessity for a large capital investment. The
Company is not aware of any existing similar competing product offered by any
potential competitors at the date hereof, and currently believes, that it has a
timing advantage before any competing system is ready for commercial
introduction. There can be no assurance, however, as to the effect on the
Company's business, of any competing system when such system becomes
commercially feasible.
The CellPoint System technology does not require any modification of
the mobile operator's existing base station hardware and software, which means
that these value added services can be offered with very low initial investments
and be implemented very quickly. The technology functions independently of the
manufacturer of the equipment or the provider of the cellular service.
There can be no assurance that the GSM technology will achieve a
significant degree of market, and that such acceptance, if achieved, will be
sustained for any significant period or that life cycles of that technology will
be sufficient (or substitute products available) to permit the Company to
recover start-up and other associated costs.
COMPETITION
Although the Company believes the technology offered to be unique in
using GSM networks for positioning, there can be no assurances that other
companies will not introduce similar or more advanced technologies. To date,
there is no known product on the market that either performs
10
<PAGE>
positioning using the unmodified GSM network or has the extent of commercial
experience in performing positioning using the GSM network.
Competition in the future may come from the large telecommunications
companies, which are normally associated with GSM technology. A few of the more
established telecommunication companies are Ericsson, Nokia, Siemens and
Motorola. The known discussed solutions from these companies, however, indicate
a requirement for extensive additions and/or rebuilding of the existing
networks.
The path chosen by the major companies within GSM Telephony -
Ericsson, Motorola, Nokia, and Siemens may contribute significantly to
CellPoint's market share. Even if companies eventually develop competing
systems, CellPoint believes it can gain a sizeable market share. This is based
on the fact that the technology is stable and commercially proven, giving the
Company a significant head start on competitors, and the technology is
independent of GSM infrastructure manufacturers with the capability to work
across mixed-vendor platforms.
EMPLOYEES
The Company has 12 full-time employees. The Company anticipates that
it may substantially increase the number of its employees in the near term.
None of the Company's employees is represented by a labor union. The Company
considers its relations with its employees to be very good.
TRADEMARKS AND PATENTS
The Company has not yet filed any applications for patents of the
CellPoint System.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION.
GENERAL
Technor and its subsidiary CellPoint are development stage companies.
The Company has limited operating history upon which an evaluation of the
Company's prospects can be made. The Company's prospects must be considered
keeping in mind the risks, expenses, and difficulties frequently encountered in
the establishment of a new business in an ever changing industry and the
research, development, manufacture, commercialization, distribution, and
commercialization of technology, procedures, and products and related
technologies. There can be no assurance that unanticipated technical or other
problems will not occur which would result in material delays in product
commercialization or that the efforts of the Company will result in successful
product commercialization. There can be no assurance that the Company will be
able to achieve profitable operations.
The report of the Company's independent accountants, Ohrlings Coopers
& Lybrand AB on the Company's financial statements for the fiscal year ended
June 30, 1998, includes a statement that the Company is a developmental stage
company, with no revenues, which has sustained losses from operations since
inception. The auditors have stated that there is substantial doubt about the
ability of the Company to continue as a going concern. Investors in the
Company's shares should review carefully the report of Ohrlings Coopers &
Lybrand. There can be no assurances that the Company will be able to continue as
a going concern.
Except for historical information, the material contained in this
Management's Discussion and Analysis or Plan of Operation is forward-looking.
This discussion includes, in addition to historical information, forward looking
statements which involve risks and uncertainties. The Company's actual results
could differ materially from the results discussed in the forward looking
statements. Factors that could cause or contribute to such differences are
discussed below and elsewhere in this Registration
11
<PAGE>
Statement on Form 10-SB. These risks and uncertainties include the rate of
market development and acceptance of positioning technology, the
unpredictability of the Company's sales cycle, the limited revenues and
significant operating losses generated to date, and the possibility of
significant ongoing capital requirements. For the purposes of the safe harbor
protection for forward-looking statements provided by the Private Securities
Litigation Reform Act of 1995, readers are urged to review the list of certain
important factors set forth in "Cautionary Statement for Purposes of the "Safe
Harbor" Provisions of the Private Securities Litigation Reform Act of 1995".
For purposes of the discussion contained herein, all information is
reported on a consolidated basis for Technor and its wholly-owned subsidiary,
CellPoint.
RESULTS OF OPERATIONS
The Company has limited operating history upon which an evaluation of
the Company's prospects can be made. The Company's prospects must be considered
keeping in mind the risks, expenses, and difficulties frequently encountered in
the establishment of a new business in an ever changing industry and the
research, development, manufacture, commercialization, distribution, and
commercialization of technology, procedures, and products and related
technologies. There can be no assurance that unanticipated technical or other
problems will not occur which would result in material delays in product
commercialization or that the efforts of the Company will result in successful
product commercialization. There can be no assurance that the Company will be
able to achieve profitable operations.
FISCAL YEAR ENDED JUNE 30, 1998
The Company commenced operations in February 1997. The Company has
had no commercial revenues to date and has relied solely upon proceeds from the
sale of its securities to fund its operations.
In March 1997, Technor sold 500,000 shares of its Common Stock at
US$0.20 per share pursuant to Rule 504 of Regulation D under the Securities Act
of 1933, as amended (the "Securities Act"). The Company received gross proceeds
of $100,000 from such offering. During the period from the commencement of
operations until June 1997, the end of the Company's first fiscal year, the
Company spent approximately $40,100. This amount was spent for general and
administrative purposes, including the costs of setting up offices.
For the Company's fiscal year ended June 30, 1998, the Company did not
have any revenues from commercial operations. In February 1998, the Company
sold 715,000 shares of its Common Stock at US$1.25 per share, pursuant to Rule
504 of Regulation D under the Securities Act. The Company received gross
proceeds of $893,750 from such offering. In June 1998, the Company sold
775,000 shares of its Common Stock at US $4.00 per share, pursuant to Regulation
S under the Securities Act. All such shares were sold to "non-U.S. Persons" as
defined in Regulation S. The Company received gross proceeds of $3,100,000 from
such offering.
The Company incurred a loss of $812,571 for its 1998 fiscal year. For
that period, selling, general and administrative expenses were $513,652,
professional fees were $315,431, and depreciation expense was $6,725. The
Company also realized a net gain of $23,237 for financial items, consisting
mainly of exchange rate differences during the financings together with interest
on capital. Labor costs for fiscal 1998 were $196,300 as the Company grew from
two to seven employees. The Company purchased computer equipment for $110,000
and technology inventory for $80,000.
In fiscal 1998, the Company's principal accomplishment was the
purchase of 25% of Wasp and the execution of the License Agreement with Wasp.
The Company issued 250,000 shares of its Common Stock to Wasp and its
stockholders and paid Wasp $500,000 cash.
12
<PAGE>
FISCAL QUARTER ENDED SEPTEMBER 30, 1998
For the Company's first fiscal quarter of 1999 ended September 30,
1998, the Company did not have any revenues from commercial operations. The
Company funded its operations out of proceeds from equity offerings. For the
fiscal quarter ended September 30, 1998, the Company incurred a net loss of
$283,651.
The average cash spending per month between July and September, 1998
was approximately $89,000, consisting of salaries (approximately $47,000),
facilities overhead (approximately $9,000), marketing and selling expenses
(approximately $12,000), professional services (approximately $18,000) and
depreciation ($3,000).
The number of employees at September 30, 1998 was eleven, up from
seven at the June 30, 1998 fiscal year end.
LIQUIDITY AND CAPITAL RESOURCES
The Company will require additional cash to implement its business
strategies, including cash for (i) payment of increased operating expenses such
as salaries for additional employees; and (ii) further implementation of those
business strategies. Such additional capital may be raised through additional
public or private financings, as well as borrowings and other resources. To the
extent that additional capital is raised through the sale of equity or
equity-related securities, the issuance of such securities could result in
dilution to the Company's stockholders. No assurance can be given, however, that
the Company will have access to the capital markets in the future, or that
financing will be available on acceptable terms to satisfy the cash requirements
of the Company to implement its business strategies. The inability of the
Company to access the capital markets or obtain acceptable financing could have
a material adverse effect on the results of operations and financial conditions
of the Company. The Company may be required to raise substantial funds. If
adequate funds are not available, the Company may be required to curtail
operations significantly or to obtain funds through entering into arrangements
with collaborative partners or others that may require the Company to relinquish
rights to certain of its technologies or product candidates that the Company
would not otherwise relinquish. Assuming no revenues and slowly increased
spending, the Company would need a cash injection as early as the 4th quarter of
1999 to sustain operations. Management is expecting revenues from the Swedish
operations to commence during fiscal 1999, but there can be no assurance as to
when such operations will provide adequate cash to sustain the Company's
operations. If the Company decides to expand its business faster, or to
geographic areas outside of Europe during fiscal 1999, the Company will need to
raise further capital.
In order to exercise the option to buy the remaining 75% of Wasp
before June 30, 1999, the Company will need to raise additional capital for the
$3,000,000 cash component of the purchase price.
FISCAL YEAR ENDED JUNE 30, 1998
At June 30, 1998, the Company had $7,272,737 in current assets. Cash
and cash equivalents amounted to $764,603. The Company also had $2,346,667 in
subscriptions receivable from its Regulation S offering, which subscriptions
were subsequently paid during the first fiscal quarter of 1999. The Company
also had indebtedness to an employee of $151,554, and owed $250,000 to the
stockholders of Wasp in connection with the acquisition of the license from
Wasp.
The Company's stockholders' equity was $10,713,334 at the end of
fiscal 1998, including an accumulated deficit of $836,592.
13
<PAGE>
FISCAL QUARTER ENDED SEPTEMBER 30, 1998
At September 30, 1998, the end of the first fiscal quarter of 1999,
the Company had approximately $6,568,162 in current assets. Cash and cash
equivalents amounted to $2,203,693. The increase in cash and cash equivalents
from June 30,1998 is attributable to the receipt during the quarter of the
subscriptions receivable in the amount of $2,226,667 from the offering of shares
pursuant to Regulation S.
During the first fiscal quarter of 1999, current assets decreased as a
result of the payment of accounts payable during the quarter. Accounts payable
decreased from $247,040 at June 30, 1998 to $76,158 at September 30, 1998. The
accounts payable which were paid during the quarter include the payment for the
purchase of 5 percent of Wasp International Ltd. ($250,000), commissions
payable from the $3.1 million Regulation S financing in June ($155,000) and a
repayment of advances from an employee ($107,000).
The Company's stockholders' equity was $10,669,320 at the September
30, 1998, including an accumulated deficit of $1,120,243.
ITEM 3. DESCRIPTION OF PROPERTY.
The Company occupies completely furnished facilities consisting of
1830 square feet of leased office space located at Industrivagen 2, S-191 62
Sollentuna, Sweden. The Company occupies those facilities on a month-to-month
basis and pays the equivalent of $1560.00 per month rent for those facilities.
The Company also occupies completely furnished facilities consisting of 350
square feet of leased office space located at Satraangsvagen 88, S-18237
Danderyd, Sweden. Technor occupies those facilities on a month-to-month basis
and pays the equivalent of $450.00 per month rent for those facilities.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The Company's capital structure consists of 22,000,000 authorized
shares of Common Stock, of which 7,440,000 shares were issued and outstanding as
of December 1, 1998, and 3,000,000 shares of Preferred Stock, none of which is
outstanding. The Company believes there are approximately 300 beneficial owners
of its Common Stock. Each share of Common Stock is entitled to one vote per
share.
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of December 1, 1998, by
(i) each person who is known by the Company to own beneficially more than 5% of
the Company's outstanding Common Stock; (ii) each of the Company's officers and
directors; and (iii) all officers and directors as a group.
14
<PAGE>
NAME AND ADDRESS OF SHARES OF PERCENT OF COMMON
BENEFICIAL OWNERS AND COMMON STOCK STOCK BENEFICIALLY
DIRECTORS AND OFFICERS BENEFICIALLY OWNED OWNED
- --------------------------------------------------------------------------------
5% Beneficial Owners
Bank Ippa & Associates(a) 1,950,000 26.2%
15 Boulevard de la Foire
L-1528 Luxembourg
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Directors and Executive Officers
Lynn Duplessis 2,050,000(b) 27.3%
Saatrangsvagen 88
S-182 37
Danderyd, Sweden
- --------------------------------------------------------------------------------
Christer Forsstrom 175,000(c) 2.3%
Industrivagen 2
S-191 62
Sollentuna, Sweden
- --------------------------------------------------------------------------------
Peter Henricsson 2,050,000(d) 27.3%
Saatrangsvagen 88
S-182 37
Danderyd, Sweden
- --------------------------------------------------------------------------------
Mats Jonnerhag 27,000(e) *
Borslnsikt AB
Box 6044
192 06 Sollentuna
Sweden
- --------------------------------------------------------------------------------
Bengt Nordstrom 50,000(f) *
SmarTone Telecommunications Holdings Ltd.
8/F., World Trade Centre
280 Gloucester Road
Causeway Bay
Hong Kong
- --------------------------------------------------------------------------------
Guy Redford 2,025,000(g) 26.9%
P.O. Box 1995
Rivonia, 2128
South Africa
- --------------------------------------------------------------------------------
Mikhael Todini 125,000(h) 1.7%
Industrivagen 2
S-191 62
Sollentuna, Sweden
- --------------------------------------------------------------------------------
Officers and Directors as a
Group (7 persons) 4,452,000 58.8%
- --------------------------------------------------------------------------------
* Less than 1%.
- ----------------------
(a) Nominee for Wasp and Guy Redford, a director of the Company and a
stockholder of Wasp, and Albert van Urk and Gerrit van Urk, stockholders of
Wasp.
(b) Includes: (1) options to acquire 75,000 shares, of which 25,000 options
are currently exercisable, (2) 1,500,000 shares owned by Peter Henricsson,
Ms. Duplessis' husband, and (3) options to acquire 75,000 shares issued to
Mr. Henricsson, of which 25,000 options are currently exercisable.
(c) Includes options to acquire 175,000 shares.
(d) Includes: (1) options to acquire 75,000 shares, of which 25,000 options
are currently exercisable, (2) 500,000 shares owned by Lynn Duplessis, Mr.
Henricsson's wife; and (3) options to acquire 75,000 shares issued to Ms.
Duplessis, of which 25,000 options are currently exercisable.
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<PAGE>
(e) Includes 20,500 shares held by Borslnsikt AB, of which Mr. Jonnerhag is a
66% stockholder.
(f) Includes options to acquire 50,000 shares.
(g) Includes: (1) 1,950,000 shares owned for the account of Wasp, of which Mr.
Redford is a director and a 25% stockholder and (2) options to acquire
75,000 shares, of which 25,000 options are currently exercisable.
(h) Includes options to acquire 125,000 shares, of which 50,000 options are
currently exercisable.
STOCK INCENTIVE PLAN
The Board of Directors of the Company has adopted a stock incentive
plan (the "Plan"). Pursuant to the provisions of the Plan, 1,000,000 shares of
the Company's Common Stock are reserved for issuance upon exercise of options.
The Plan is designed to retain qualified and competent officers, employees, and
directors of the Company.
The Company's Board of Directors, or a committee thereof, shall
administer the Plan and is authorized, in its sole and absolute discretion, to
grant options thereunder to all eligible employees of the Company, including
officers and directors (whether or not employees) of the Company. Options will
be granted pursuant to the provisions of the Plan on such terms and at such
prices as determined by the Company's Board of Directors. The exercise price
will not be lower than the closing price on the date the options are issued, or
if such prices are not available, at the fair market value as determined by the
Board of Directors. Options granted under the Plan will be exercisable after
the period specified in the option agreement. Options granted under the Plan
will not be exercisable after the expiration of ten years from the date of
grant. The Plan will also authorize the Company to make loans to optionees to
enable them to exercise their options. At present, 650,000 options have been
granted and none have been exercised.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants
- ------------------------------------------------------------------------------------------------------------
Number of Securities
Underlying Percent of Total Exercise or
Options/SARs(1) Granted Options/SARs Granted to Base Price
Name (#) Employees in Fiscal Year ($/Sh) Expiration Date
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Peter Henricsson, 75,000/0(2)(5) 10.4% $2.75 March 25, 2008
President and Chief
Executive Officer
</TABLE>
(1) To date, the Company has issued no SARs.
(2) 25,000 options became exercisable on September 25, 1998, 25,000 options
will become exercisable on March 25, 1999, and 25,000 options will become
exercisable on September 25, 1999.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS.
LYNN DUPLESSIS, 38, has been Secretary, Treasurer and director of the
Company since its formation. She has 17 years of experience in the information
technology field. Ms. Duplessis has been employed by Minerva Technology Inc,
Vancouver, British Columbia, (1996), director of industry solutions with The
Capstan Group, Vancouver, British Columbia, (1992-1993), and was employed in
marketing, management and systems engineering by IBM Canada Ltd., Vancouver,
British Columbia
16
<PAGE>
and Toronto, Ontario, Canada (1981-1992). She is also a director and Executive
Vice President of CellPoint Systems AB. Ms. Duplessis is married to Peter
Henricsson, a director and the President of the Company.
CHRISTER FORSSTROM, 55, is a director of the Company and the Managing
Director of CellPoint Systems AB. He was the Managing Director of Swedish
National Broadcasting company TV 4 from 1995-1998. Mr. Forsstrom has a long
international experience as the Executive Vice President of Electrolux and was
the Chief Executive Officer of Electrolux Wascator AB.
PETER HENRICSSON, 46, has been President, Chief Executive Officer, and
director of the Company since its formation. He has over 20 years of experience
in executive management, international marketing, venture capital, consulting
and financing, with both multinational corporations and emerging companies. Mr.
Henricsson has been, President of Iform Sverige AB of Sweden, (1996-1997), owner
of HIM Inc. (Henricsson International Marketing), Vancouver, British Columbia,
(1991-1996), senior vice president with Allied Environmental, Vancouver, British
Columbia, (1986-1991), and manager at Atlas Copco MCT AB, Stockholm, Sweden,
Hong Kong and Indonesia (1980-1986). He is also a director of Wasp
International (Pty) Ltd. and Chairman of the Board of CellPoint Systems AB. Mr.
Henricsson is married to Lynn Duplessis, a director and Secretary and Treasurer
of the Company.
MATS JONNERHAG, 45, was recently elected director of the Company.
Mr. Jonnerhag is the founder and majority owner of Borslnsikt AB. He founded
Borslnsikt in 1982 and has more than 20 years of experience with the Swedish
stock market. Borslnsikt publishes a weekly stock market newsletter. Subsidiary
operations include Borslnsikt Broker, which is a brokerage company, and
Borslnsikt BorsData AB, which markets analysis software developed in-house and
other research products.
BENGT NORDSTROM, 41, is the Chief Technology Officer and Executive
Director of SmarTone Telecommunications Ltd., a cellular network operator in
Hong Kong. Mr. Nordstrom is a member of the Executive Committee of the GSM MoU
association which represents the interests of 324 GSM and satellite network
operators around the world. He has been with SmarTone since 1993, and was
previously with Comviq GSM AB from 1989 - 1993 and with Ericsson Telecom AB from
1983 - 1989. He is also a director of CellPoint Systems AB.
GUY REDFORD, 45, has been a director of the Company and of CellPoint
since June 1998. He is co-founder, Director and Managing Director of Wasp
International (Pty) Ltd. of South Africa. He has been Managing Director of Wasp
since 1993. Wasp developed the CellPoint GSM positioning technology and
specializes in wireless application technology products. Wasp company has core
skills and expertise in GSM communication, electronic design and development and
interactive communication technologies.
MR. MIKAEL TODINI, 40, is Chief of Operations, CellPoint Systems AB.
Mr. Mikael Todini has been the Chief of Operations of the Company since April
1998. Before Technor, he was the manager of the Telecom Systems Department at
Comviq AB (1991-1998). Since August 1997, he was responsible for the development
of GSM positioning technology at Comviq. Mr. Mikael Todini has also been
employed by Bofors Aerotechnics, were he took active part in the development of
the radio system for JAS 39 Gripen (1981-1991).
ITEM 6. EXECUTIVE COMPENSATION.
The following table shows compensation for services rendered to the
Company during the fiscal years ended June 30, 1998 and 1997, respectively, by
the Chief Executive Officer. Each executive officer serves under the authority
of the Board of Directors. No other executive officer of the Company received
cash compensation that exceeded $100,000 during the fiscal years ended June 30,
1998 and 1997. Therefore, pursuant to Item 402 of Regulation S-B, only
compensation for the Chief
17
<PAGE>
Executive Officer is included in the table. Directors who are also employees of
the Company receive no extra compensation for their service on the Board of
Directors of the Company.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
-------------------------------- -----------------------------------------
Awards Payouts
-----------------------------------------
Securities All Other
Other Annual Restricted Underlying LTIP Compen-
Name and Fiscal Salary Bonus Compensation Stock Award(s) Options/SARs(1) Payouts sation
Principal Position Year ($) ($) ($) ($) (#) ($) ($)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Peter Henricsson, 1998 $62,500 $-0- $-0- -0- 75,000/0 0 0
President and CEO 1997 -0- -0- -0- -0- -0- 0 0
</TABLE>
The Company has no set bonus policy. Bonuses may be awarded by the independent
directors of the Board.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Since the formation of the Company, Peter Henricsson and Lynn
Duplessis, directors and executive officers of the Company, have made
interest-free loans to the Company to fund its cash needs. During the fiscal
year ended June 30, 1997, Mr. Henricsson and Ms. Duplessis paid all of the
Company's operating expenses in the amount of $40,100. During the Company's
fiscal year ended June 30, 1998, they continued to finance Company operations,
by extending loans which ranged from a low of $40,000 to a maximum of $180,000
outstanding at any one time. A portion of these loans was also used to fund the
initial payment made to Wasp in connection with the License Agreement. At June
30, 1998, the outstanding amount of the indebtedness of the Company to Mr.
Henricsson and Ms. Duplessis was $150,000, and at the end of the first fiscal
quarter of fiscal 1999 (September 30, 1998), the amount of the Company's
outstanding indebtedness to them was $45,000. The Company repays portions of
these loans as and when it has sufficient excess cash to do so. Since September
30, 1998, the loans have been repaid in full and as of December 1, 1998, there
is no outstanding indebtedness payable to Mr. Henricsson or Ms. Duplessis. At no
time, has interest been charged on the outstanding loans.
Upon the organization of the Company in 1997, Mr. Henricsson and Ms.
Duplessis invested $1,500 and $500, respectively, in consideration of which, the
Company issued to them 1,500,000 shares and 500,000 shares of Common Stock,
respectively. These investments were made when the Company had no assets and no
operations.
In connection with the Company's offering of Common Stock at US $4.00
per share pursuant to Regulation S under the Securities Act, the Company paid a
commission of 5% of the purchase price per share to Mats Jonnerhag, a director
of the Company, and Borslnsikt A.B., a company in which Jonnerhag is a 66%
stockholder. Mr. Jonnerhag and Borslnsikt placed a total of 260,000 shares,
and together they received a total commission of US$52,000.
18
<PAGE>
ITEM 8. LEGAL PROCEEDINGS.
There are no legal actions pending against the Company or either of
its subsidiaries, nor are any such legal actions contemplated.
ITEM 9. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS.
The Company's Common Stock commenced trading on the NASDAQ Bulletin
Board on January 7, 1998. The Company's fiscal year ends on June 30 of each
year.
Common Stock Prices
-------------------
Fiscal Quarter: High Low
3rd Qtr 98 $3.625 $1.25
4th Qtr 98 $5.437 $4.00
1st Qtr 99 $4.80 $2.50
2nd Qtr 99 (through $6.375 $2.75
November 4, 1998)
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.
In March 1997, Technor sold 500,000 shares of its Common Stock at US
$0.20 per share pursuant to Rule 504 of Regulation D under the Securities Act of
1933, as amended (the "Securities Act"). The Company received gross proceeds of
$100,000 from such offering. Three participants received shares as fees for
services with the shares valued at $1.25 per share. AktieNytt Nu AB received
12,500 shares and KBTSKRF AB 17,500 shares as payment for services invoiced to
Technor. Axon IT (a technical consulting company) received 30,000 shares
(valued at $1.25 per share) as payment for consulting services.
In February 1998, the Company sold 715,000 shares of its Common Stock
at US $1.25 per share, pursuant to Rule 504 of Regulation D under the Securities
Act. The Company received gross proceeds of $893,750 from such offering.
In June 1998 the Company sold 775,000 shares of its Common Stock at US
$4.00 per share, pursuant to Regulation S under the Securities Act. All such
shares were sold to "non-U.S. Persons" as defined in Regulation S. The Company
received gross proceeds of $3,100,000 from the offering. The Company paid a
commission of 5% of the purchase price per share to Mats Jonnerhags, a director
of the Company, and Borslnsikt A.B., a company in which Mr. Jonnerhags is a 66%
stockholder. Mr. Jonnerhags and Borslnsikt placed a total of 260,000 shares,
and together they received a total commission of US $52,000.
19
<PAGE>
ITEM 11. DESCRIPTION OF SECURITIES.
The Company is authorized to issue 22,000,000 shares of Common Stock,
$.001 par value per share and 3,000,000 shares of preferred stock, $.001 par
value per share. As of November 11, 1998, 7,440,000 shares of the Company's
Common Stock are issued and outstanding and no shares of the Company's preferred
stock are outstanding.
COMMON STOCK. The holders of the Company's Common Stock are entitled
to one vote for each share held of record on all matters to be voted on by those
stockholders. There is no cumulative voting with respect to the election of
directors of the Company, with the result that the holders of more than 50% of
the Company's Common Stock voted for the election of directors can elect all of
those directors. The holders of the Company's Common Stock are entitled to
receive dividends when, as, and if declared by the Company's Board of Directors
from funds legally available therefor. In the event of liquidation,
dissolution, or winding up of the Company, the holders of the Company's Common
Stock are entitled to share ratably in all assets remaining available for
distribution to them after payment of the Company's liabilities and after
provision has been made for each class of stock, if any, having preference over
the Company's Common Stock. Holders of shares of the Company's Common Stock, as
such, have no conversion, preemptive or other subscription rights, and there are
no redemption provisions applicable to the Company's common stock. All of the
outstanding shares of the Company's Common Stock are fully paid and
non-assessable.
NON-CUMULATIVE VOTING. The holders of shares of Common Stock of the
Company will not have cumulative voting rights, which means that the holders of
more than 50% of the outstanding Common Stock of the Company, voting for the
election of directors of the Company, may elect all of the directors of the
Company to be elected, if they so desire, and, in such event, the holders of the
remaining Common Stock of the Company may not be able to elect any of the
Company's directors.
REGISTRATION RIGHTS. Holders of shares of the Company's Common Stock
are not entitled to rights with respect to the registration of such shares under
the Securities Act.
PREFERRED STOCK. The Company is authorized to issue preferred stock
with such designations, rights and preferences as may be determined from time to
time by the Company's Board of Directors. Accordingly, the Company's Board of
Directors is empowered, without stockholder approval, to issue preferred stock
with liquidation privileges, dividend, conversion, voting, or other rights that
could adversely affect the voting power or other rights of the holders of the
Company's Common Stock. In the event of issuance, the Company's preferred stock
could be utilized, under certain circumstances, as a method of discouraging,
delaying or preventing a change in control of the Company.
DIVIDENDS. The payment by the Company of dividends, if any, in the
future, shall be determined by the Company's Board of Directors, in its
discretion, and will depend among other things, upon the Company's earnings, the
Company's capital requirements, and the Company's financial condition, as well
as other relevant factors. The Company has not paid or declared any dividends
to date. Holders of Common Stock are entitled to receive dividends as declared
and paid from time to time by the Company's Board of Directors from funds
legally available therefor. Management of the Company intends to retain any
earnings for the operation and expansion of its business and does not anticipate
paying cash dividends in the foreseeable future.
STOCK INCENTIVE PLAN. In February 1998, the Board of Directors of the
Company adopted a stock incentive plan (the "Plan"). Pursuant to the provisions
of the Plan, 1,000,000 shares of the Company's Common Stock have been reserved
for issuance upon exercise of options. The Plan is designed to retain qualified
and competent officers, employees, and directors of the Company. The Company's
Board of Directors, or a committee thereof, administers the Plan and will be
authorized, in its sole and absolute discretion, to grant options thereunder to
all eligible employees of the Company, including officers and directors (whether
or not employees) of the Company. Options will be granted pursuant to the
provisions of the Plan on such terms and at such prices as determined by the
Company's Board of Directors. Options granted under the Plan will be exercisable
after the period specified in the option agreement. Options granted under the
Plan will not exercisable after the expiration of ten years
20
<PAGE>
from the date of grant. As of the date hereof, 650,000 options have been
granted, and no options have been exercised.
TRANSFER AGENT. The Company's Transfer Agent is U.S. Stock Transfer
Corporation, 1745 Gardena Avenue, Suite 200, Glendale, California 91204,
telephone 818.502.1404.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company will enter into indemnification agreements with each of
its executive officers pursuant to which the Company agrees to indemnify each
such person for all expenses and liabilities, including criminal monetary
judgments, penalties and fines, incurred by such person in connection with any
criminal or civil action brought or threatened against such person by reason of
such person being or having been an officer or director or employee of the
Company. In order to be entitled to indemnification by the Company, such person
must have acted in good faith and in a manner such person believed to be in the
best interest of the Company and, with respect to criminal actions, such person
must have had no reasonable cause to believe his or her conduct was unlawful.
IN THE OPINION OF THE SECURITIES AND EXCHANGE COMMISSION,
INDEMNIFICATION FOR LIABILITIES ARISING PURSUANT TO THE SECURITIES ACT OF 1933
IS CONTRARY TO PUBLIC POLICY AND, THEREFORE, UNENFORCEABLE.
21
<PAGE>
ITEM 13. FINANCIAL STATEMENTS
TECHNOR INTERNATIONAL, INC.
CONSOLIDATED FINANCIAL STATEMENTS (AUDITED)
FOR THE FISCAL YEAR ENDED JUNE 30, 1998
Report of Independent Accountants. . . . . . . . . . . . . . . . . . . . . . F-2
Consolidated Balance Sheets as of June 30, 1997 and 1998 . . . . . . . . . . F-3
Consolidated Statements of Operations for the period from
February 28,1997 (Inception) through June 30, 1997 and
for the year ended June 30, 1998. . . . . . . . . . . . . . . . . . . . F-4
Consolidated Statements of Shareholders' Equity for the period
from February 28, 1997 (Inception) through June 30, 1997
and for the year ended June 30, 1998. . . . . . . . . . . . . . . . . . F-5
Consolidated Statements of Cash Flows for the period from
February 28, 1997 (Inception) through June 30, 1997
and for the year ended June 30, 1998. . . . . . . . . . . . . . . . . . F-6
Notes to the Consolidated Financial Statements . . . . . . . . . . . . . . . F-7
CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE FISCAL QUARTER ENDED SEPTEMBER 30, 1998
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . F-16
Consolidated Statements of Operations . . . . . . . . . . . . . . . . . . F-17
Consolidated Statements of Cash Flows. . . . . . . . . . . . . . . . . . . F-18
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . F-19
F-1
<PAGE>
TECHNOR INTERNATIONAL INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
Technor International, Inc.,
We have audited the accompanying consolidated balance sheet of Technor
International Inc. and subsidiaries, a development stage company ("the
Company"), as of June 30, 1998, and the related consolidated statements of
operations, shareholders' equity and cash flows for the year ended June 30,
1998. The financial statements of the Company as of June 30, 1997 and for the
period from February 28, 1997 (Inception) through June 30, 1997, were audited by
other auditors, whose report, dated August 14, 1997, expressed a going concern
qualified opinion. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with U.S. generally accepted auditing
standards. Those standards require that we plan and perform our audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Technor
International, Inc. and subsidiaries as of June 30, 1998, and the results of its
operations and its cash flows for the year ended June 30, 1998 in conformity
with U.S. generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As more fully discussed in
Note 1 to the consolidated financial statements, the Company is a development
stage company with no revenues and has sustained losses from operations since
inception. These factors raise substantial doubt about the ability of the
Company to continue as a going concern. Management's plans in regard to these
matters are also described in Note 1. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
OHRLINGS COOPERS & LYBRAND AB
Stockholm, Sweden
October 29, 1998
F-2
<PAGE>
TECHNOR INTERNATIONAL INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN USD)
<TABLE>
<CAPTION>
JUNE 30, JUNE 30,
1997 1998
---------- ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 103,700 $ 764,603
Stock subscription receivables - 2,346,667
Option for shares in Wasp - 4,050,000
Prepaid expenses 11,576 40,653
Other receivables - 70,814
---------- ----------
TOTAL CURRENT ASSETS 115,276 7,272,737
Long-term assets:
Investment in Wasp - 4,250,000
Machinery and equipment 3,065 110,092
---------- ----------
Total long-term assets 3,065 4,360,092
---------- ----------
TOTAL ASSETS $ 118,341 $11,632,829
========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accrued expenses and other current liabilities - $ 270,901
Accounts payable - 247,040
Due to shareholders of Wasp - 250,000
Advances from employee $ 40,100 151,554
---------- ----------
TOTAL CURRENT LIABILITIES 40,100 919,495
---------- ----------
Shareholders' equity:
Preferred shares ($0.001 par value; 3,000,000
shares authorized, no shares issued) - -
Common shares ($0.001 par value; 22,000,000
shares authorized, 4,000,000 shares to be
issued as of June 30,1997; 4,715,000 shares
issued and 1,950,000 shares to be issued as
of June 30, 1998) 4,000 6,665
Shares subscribed ($0.001 par value;
775,000 common shares) - 775
Additional paid in capital 98,262 11,662,123
CUMULATIVE TRANSLATION ADJUSTMENT - 363
DEFICIT ACCUMULATED DURING THE DEVELOPMENT STAGE (24,021) (836,592)
----------
78,241 10,833,334
LESS: SUBSCRIPTIONS RECEIVABLE (30,000 SHARES) - (120,000)
---------- ----------
Total shareholders' equity 78,241 10,713,334
---------- ----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 118,341 $11,632,829
========== ===========
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements
F-3
<PAGE>
TECHNOR INTERNATIONAL INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN USD)
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
FEBRUARY 28, FEBRUARY 28,
1997 1997
(INCEPTION) FOR THE (INCEPTION)
THROUGH YEAR ENDED THROUGH
JUNE 30, 1997 JUNE 30, 1998 JUNE 30, 1998
------------- ------------- -------------
<S> <C> <C> <C>
REVENUE
Cost of goods sold - - -
Gross profit - - -
Selling, general and administrative expenses $ (14,790) $ (513,652) $ (528,442)
Professional fees (9,531) (315,431) (324,962)
Depreciation - (6,725) (6,725)
----------- ----------- -----------
OPERATING LOSS (24,321) (835,808) (860,129)
----------- ----------- -----------
Financial items, net 300 23,237 23,537
----------- ----------- -----------
LOSS AFTER FINANCIAL ITEMS (24,021) (812,571) (836,592)
----------- ----------- -----------
Income taxes - - -
----------- ----------- -----------
Net loss $ (24,021) $ (812,571) $ (836,592)
=========== =========== ===========
Basic and diluted loss per share $ (.01) $ (0.18)
=========== ===========
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statement
F-4
<PAGE>
TECHNOR INTERNATIONAL INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Shares
Common Shares Issued to Be Issued
--------------------- ---------------------
Deficit Cumu-
Accumulated lative
Amount Amount Additional During the Trans-
Number of (Par Value Number of (Par Value Paid in Development Subscriptions lation
Shares $.001) Shares $.001) Capital Stage Receivable Adjust. Total
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, February 28,
1997 (Inception) - - - - - - - - -
April 1997-Share
subscription at
par value - - 3,500,000 $3,500 - - - - $3,500
June 1997-Share
subscription at
$0.20 per share, net
of offering costs - - 500,000 500 $98,262 - - - 98,762
Net loss - - - - - $(24,021) - - (24,021)
----------------------------------------------------------------------------------------------------------
Balance, June 30, 1997 - - 4,000,000 $4,000 $98,262 $(24,021) - - $78,241
----------------------------------------------------------------------------------------------------------
September 1997 -
Shares issued 4,000,000 $4,000 (4,000,000) (4,000) - - - - -
January 1998- Share
subscription at
$1.25 per share,
net of offering costs 715,000 715 - - 855,535 - - - 856,250
May 1998-Shares in
connection with Wasp
transaction (see Note 2) - - 1,950,000 1,950 7,798,050 - - - 7,800,000
June 1998-Share
Subscription at
$4.00 per share, net
of offering costs - - 775,000 775 2,910,276 - - - 2,911,051
Subscriptions receivable
not yet paid - - - - - - $(120,000) - (120,000)
Net loss - - - - - (812,571) - - (812 571)
Currency translation
adjustment - - - - - - - $363 363
----------------------------------------------------------------------------------------------------------
Balance, June 30, 1998 4,715,000 $4,715 2,725,000 $2,725 $11,662,123 $(836,592) $(120,000) $363 $10,713,334
----------------------------------------------------------------------------------------------------------
</TABLE>
F-5
<PAGE>
TECHNOR INTERNATIONAL INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOW
(AMOUNTS IN USD)
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
FEBRUARY 28, FEBRUARY 28,
1997 1997
(INCEPTION) FOR THE (INCEPTION)
THROUGH YEAR ENDED THROUGH
JUNE 30, 1997 JUNE 30, 1998 JUNE 30, 1998
------------- ------------- -------------
<S> <C> <C> <C>
Net loss $ (24,021) $ (812,571) $ (836,592)
Depreciation 135 6,725 6,860
Adjustments to reconcile net loss to cash
provided by operating activities:
Increase in prepaid expenses (11,576) (29,077) (40,653)
Increase in short term receivables - (70,814) (70,814)
Increase in accrued expenses and other
current liabilities - 270,901 270,901
Increase in accounts payable - 247,040 247,040
Increase in advance from employee 35,662 97,695 133,357
Other - 363 363
---------- ----------- -----------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 200 (289,738) (289,538)
---------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of shares in Wasp - (250,000) (250,000)
Purchase of fixed assets - (99,993) (99,993)
---------- ----------- -----------
NET CASH (USED IN) INVESTING ACTIVITIES - (349,993) (349,993)
---------- ----------- -----------
Cash flows from financing activities:
Net proceeds from issuance of shares 103,500 1,300,634 1,404,134
---------- ----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 103,500 1,300,634 1,404,134
---------- ----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 103,700 660,903 764,603
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR - 103,700 -
---------- ----------- -----------
CASH AND CASH EQUIVALENTS AT END OF THE YEAR $ 103,700 $ 764,603 $ 764,603
========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statement
F-6
<PAGE>
TECHNOR INTERNATIONAL INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN USD, UNLESS OTHERWISE STATED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL
Technor International Inc., a development stage company ("Technor "or "the
Company"), was incorporated in the state of Nevada on February 28, 1997.
Technor has licensed a GSM (Global System for Mobile Communications)
positioning system technology ("the Technology") from a South African
Company which can be used for a variety of positioning and telematics
applications including locating vehicles, management of security and alarm
systems, surveillance of rented objects as well as for remote control of
industrial equipment.
On January 16, 1998, Technor formed a wholly-owned subsidiary in Sweden,
CellPoint Systems AB ("CellPoint"). CellPoint is Technor's commercial arm
focusing primarily on, but not limited to, Europe.
Technor owns 25 percent of Wasp International Ltd. ("Wasp"), the South
African company that developed and has ownership rights to the Technology.
CellPoint and Wasp are collaborating on the further development as well as
the marketing, selling, and distribution supporting the technology which,
in Europe, is referred to as the CellPoint system.
BASIC OF PRESENTATION
The accompanying consolidated financial statements were prepared in
accordance with U.S. generally accepted accounting principles and are
presented in U.S. dollars.
DEVELOPMENT STAGE ACTIVITIES
Technor is marketing and further developing the positioning and telematics
applications of the Cellpoint System. The CellPoint System consists of
three parts: the terminal, the positioning server and the positioning
programs. The GSM network handles the communication between the terminal
and the server system. The positioning server system enables the use of the
Internet or fixed lines as information carriers.
The Company has not earned revenues to date from its planned activities. As
such, the Company is still in a development stage and falls under the
provisions of U.S. Statement of Financial Accounting Standards ("SFAS")
No. 7, "Accounting and Reporting by Development Stage Enterprises."
GOING CONCERN AND MANAGEMENT'S PLANS
The Company has a limited operating history with no revenues. Through June
30, 1998, the Company has accumulated a deficit of $836,592. Management's
efforts have focused on securing the Technology, its relationship with
Wasp, developing the CellPoint System and acquiring staff and facilities
for operations. As such, the Company is subject to all the risks and
uncertainties associated with a new business. Management believes they have
a commercially feasible product.
Management expects that the first significant orders for its product will
commence late in calendar year 1998 and that the company will be cash flow
positive during the second half of calendar year 1999. The success of the
Company's future operations is, however, dependent upon the Company's
ability to successfully market the product and to meet additional capital
requirements. If no revenues are realized, management believes that the
existing capital is sufficient for approximately 9-12 months after June 30,
1998. However, the Company will need to raise additional capital in order
to exercise the option to purchase the remaining shares of Wasp and
possibly also for additional working capital until positive cash flow is
reached.
F-7
<PAGE>
TECHNOR INTERNATIONAL INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN USD, UNLESS OTHERWISE STATED)
These factors, among others raise substantial doubt about the Company's ability
to continue as a going concern. The financial statements do not include any
adjustments to reflect the possible future effect on the recoverability and
classification of assets or the classification of liabilities that might result
from the outcome of this uncertainty. Subsequent events are discussed in Note
13.
PRINCIPLES OF CONSOLIDATION
All wholly owned subsidiaries are consolidated and all material inter-company
transactions are eliminated. Investments between 20% and 50% are accounted for
under the equity method.
RECLASSIFICATIONS
Certain amounts in the 1997 financial statements have been reclassified to
conform to the presentation.
FOREIGN CURRENCY TRANSLATION
Assets and liabilities of foreign units are translated at balance sheet date
rates to USD. Income statements are translated at the average exchange rate for
the period. Translation differences that arise are recorded directly in
shareholders' equity.
Receivables and liabilities denominated in foreign currencies are translated at
balance sheet date rates. Unrealized exchange gains and losses are reported in
the income statement.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include all highly liquid investments with original
maturities of three months or less. The majority of the Company's cash and cash
equivalents reside with high quality Swedish financial institutions. Therefore,
the cash balances are not insured by the U.S. Federal Deposit Insurance
Corporation. The Company has not experienced any losses in such accounts.
MACHINERY AND EQUIPMENT
Machinery and equipment are recorded at acquisition cost less accumulated
depreciation. Depreciation is calculated using a straight-line method over the
estimated useful lives of the related assets. Computer equipment is depreciated
over 3 years and other machinery and equipment over 5 years. Machinery and
equipment acquired during the year are depreciated from the date the assets are
put to service. Expenditures for normal maintenance and repairs are charged to
income. Significant improvements are capitalized.
AMORTIZATION
Intangible assets are amortized on a straight-line basis over a 5-year economic
useful life.
IMPAIRMENT OF LONG-LIVED ASSETS
The Company reviews it's long term assets and the impairment pursuant to SFAS
No. 121 "Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of." SFAS No. 121 establishes criteria for the recognition and
measurement of impairment loss associated with long-lived assets.
INCOME TAXES
The Company accounts for deferred income taxes using the liability method in
accordance with SFAS No. 109. Deferred income taxes are computed based on the
tax liability or benefit in future years of the reversal of temporary
differences in the recognition of income or deduction of expenses between
financial and tax reporting purposes. The net difference between income tax
F-8
<PAGE>
TECHNOR INTERNATIONAL INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(AMOUNTS IN USD, UNLESS OTHERWISE STATED)
expense and taxes currently payable, if one existed, would be reflected in the
balance sheet as deferred taxes. Deferred tax assets and/or liabilities are
classified as current and non-current based on the classification of the related
asset or liability for financial reporting purposes, or based on the expected
reversal date for deferred taxes that are not related to an asset or liability.
EARNINGS PER SHARE
The Company calculated its earnings per share pursuant to SFAS No. 128 "Earnings
Per Share" which requires the presentation of both basic and fully diluted
earnings per share (EPS). Since the Company has incurred losses in both years,
the diluted EPS is anti-dilutive and accordingly not presented. EPS is computed
based on the loss to common stockholders and the weighted average number of
shares outstanding. The weighted average numbers of shares outstanding were
2,750,000 and 4,460,417 as of June 30, 1997 and 1998, respectively.
USE OF ESTIMATES
The preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the dates of the financial
statements and the reported amounts of expenses during the reporting periods.
Actual results could differ from those estimates.
EFFECT OF RECENT PRONOUNCEMENTS
The Financial Accounting Standards Board and other standard-setting bodies have
issued the following pronouncements which will be effective for fiscal years
beginning after December 15, 1997, except as noted below. The Company plans to
adopt these pronouncements in fiscal year 1999 and does not expect the
implementation of these pronouncements to have a material impact on the
Company's consolidated financial statements.
SFAS No. 130, "Reporting Comprehensive Income" established standards for the
reporting and display of comprehensive income and its components in a full set
of general purpose financial
statements. The new rule requires that the Company (a) classify items of other
comprehensive income by their nature in a financial statement and (b) display
the accumulated balance of other comprehensive income separately from retained
earning and additional paid-in capital in the equity section of the balance
sheet.
SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement
Benefit" significantly changes current financial statement disclosure
requirements relating to pensions and other postretirement benefits.
Statement of Position ("SOP") No. 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained For Internal Use" establishes standards for
expensing and capitalizing internal use software.
SOP No. 98-5, "Reporting on the Cost of Start-Up Activities" generally requires
that the cost of start-up activities be expensed as incurred. SOP No. 98-5 is
effective for fiscal years beginning after December 15, 1998 and requires that
any unamortized start-up costs be written-off and reported as the cumulative
effect of a change in accounting principle.
SFAS No. 133, "Accounting for Derivatives and Hedging Activities " is effective
for all fiscal quarters of all fiscal years beginning after June 15, 1999 and
requires that all derivative
F-9
<PAGE>
TECHNOR INTERNATIONAL INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(AMOUNTS IN USD, UNLESS OTHERWISE STATED)
instruments be recorded on the balance sheet at their fair value. Changes
in the fair value of derivatives are recorded each period in current
earnings or other comprehensive income, depending on whether a derivative
is designated as part of a hedge transaction and, if it is, the type of
hedge transaction. The Company anticipates that, due to its limited use of
derivative instruments, the adoption of SFAS No. 133 will not have a
material effect on the Company's consolidated financial statements.
2. TRANSACTIONS WITH WASP
On May 26, 1998, the Company entered into an agreement with Wasp, to
purchase a license for Wasp's positioning system technology and a two step
option to purchase 100% of the shares in Wasp in exchange for a combination
of shares of the Company and cash. The license agreement provides the
exclusive rights to distribute, market, sell and promote the Technology in
Sweden, Finland, Norway, and Denmark for a period of 25 years. In
addition, the license grants the same exclusivity in England, Germany,
France, Italy, and Spain for a period of 1 year and non-exclusive rights
anywhere else in the world for a period of 25 years, with the exception of
the countries south of the Sahara within Africa.
On June 30, 1998, the Company exercised the first option and purchased 25%
of the shares of Wasp. The total purchase price for the investment in
Wasp, which includes the exclusive license rights is $4,250,000. The excess
of the total cost of the investment in Wasp and the Company's share in
Wasp's net equity is $4,236,026 as the Company's 25% share of Wasp's net
equity is $13,974. Management believes that, in substance, the value of
Wasp resides in the underlying technology since Wasp has only limited and
approximately breakeven levels of operations. The Company's holding in
Wasp is a strategic decision to gain access to the technology and to be in
a position to influence the future development of the technology. The
excess of the total cost of the investment in Wasp over the Company's share
in Wasp's net equity is amortized over 5 years, which is determined to be
the useful life. The Company's investment in Wasp is its total exposure
to Wasp.
The total transaction with Wasp amounted to a share transfer of 1,950,000
of Technor's stock valued at $4 per share and $500,000 in cash. The
Company's shares have not yet been issued to Wasp and its shareholders and
$250,000 of the cash payment remains as a payable to Wasp shareholders at
June 30, 1998.
The cost of the option to purchase the remaining 75% of the shares of Wasp,
which expires on June 30, 1999, is the market price share equivalent of the
Company's stock equal to $12,000,000 as quoted plus $3,000,000 in cash.
F-10
<PAGE>
TECHNOR INTERNATIONAL INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(AMOUNTS IN USD, UNLESS OTHERWISE STATED)
3. SHARE SUBSCRIPTION
In June 1998, the Company offered its securities via a Regulation S
Financing at $4 per share. As of June 30, 1998, the offering subscription
was closed at 775,000 shares. The shares are restricted from trading in
the U.S. or to U.S. persons until July 1999. The subscription receivables
which have been paid subsequent to June 30,1998 have been classified as a
current asset, the remainder has been classified as a reduction of
shareholders' equity.
4. INCOME TAXES
PERIOD FROM
FEBRUARY 28,
1997 FOR THE
(INCEPTION) YEAR ENDED
THROUGH THROUGH
JUNE 30, 1997 JUNE 30, 1998
------------- -------------
Current tax expense:
Federal - -
State - -
Deferred tax expense:
Federal - -
State - -
Total tax provision - -
Technor International Inc. did not have taxable income for the period from
February 28, 1997 (Inception) through June 30, 1998 and therefore does not
have income tax expense.
Technor's wholly owned subsidiary, Cellpoint (a Swedish Corporation) had a
net operating loss for the year ended June 30, 1998 and was not subject to
tax in Sweden.
The significant components of the Company's deferred income tax assets are
as follows:
JUNE 30, 1997 JUNE 30, 1998
------------- -------------
Deferred income tax assets:
Start-up costs $ 7,825 $ 137,747
Swedish net operating loss - 124,049
Unrealized currency gain - (7,400)
Total deferred income tax asset 7,825 254,396
Valuation allowance (7,825) (254,396)
-------- ---------
Net deferred income tax asset $ - $ -
======== =========
F-11
<PAGE>
TECHNOR INTERNATIONAL INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(AMOUNTS IN USD, UNLESS OTHERWISE STATED)
The Swedish net operating loss does not expire.
Reconciliation of the effective tax rate to the U.S. statutory rate is as
follows:
PERIOD FROM
FEBRUARY 28,
1997 FOR THE
(INCEPTION) YEAR ENDED
THROUGH THROUGH
JUNE 30, 1997 JUNE 30, 1998
------------- -------------
Tax expense at U.S. statutory rate 34% 34%
Meals and entertainment (1.43) (0.37)
Cellpoint loss (Swedish) - (3.33)
Change in federal valuation allowance (32.57) (30.3)
------- ------
Effective income tax rate - -
======= ======
5. MACHINERY AND EQUIPMENT
Machinery and equipment at June 30, 1997 and 1998 consisted of the
following:
1997 1998
-------- --------
Machinery and equipment $ 3,200 $116,952
Less: accumulated depreciation (135) (6,860)
$ 3,065 $110,092
--------
6. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
JUNE 30, 1997 JUNE 30, 1998
------------- -------------
Professional fees - $113,455
Offering costs - 51,596
Accrued vacation - 16,409
Payroll taxes and social security costs - 18,714
Other - 70,727
- $270,901
======== ========
7. ADVANCES FROM EMPLOYEE
Certain capital and other related expenditures were paid on the Company's
behalf by two principal shareholders, also employees of the Company. There
are no stated terms of repayment. Due to the expected short term nature of
the advance, the amount is not currently accruing interest.
F-12
<PAGE>
TECHNOR INTERNATIONAL INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(AMOUNTS IN USD, UNLESS OTHERWISE STATED)
8. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
PERIOD FROM
FEBRUARY 28,
1997
(INCEPTION)
THROUGH YEAR ENDED
JUNE 30, 1997 JUNE 30, 1998
------------- -------------
CASH PAID DURING THE PERIOD FOR:
Interest - -
Income Taxes - -
Non-Cash Activities
Funds advanced for purchase of fixed assets:
Fixed assets $ 3,200 $ 13,759
Advances from employee $ (3,200) $ (13,759)
Changes against equity paid directly by
shareholders:
Additional paid in capital $ 1,238 -
Advances from employee $ (1,238) -
Shares to be issued in connection with
Wasp transaction (see Note 12) - $7,800,000
9. FINANCIAL ITEMS, NET
JUNE 30, 1997 JUNE 30, 1998
------------- -------------
Interest income $ 300 $ 2,708
Unrealized exchange gains, net - 21,766
Realized exchange losses - (1,237)
------ ---------
Total $ 300 $ 23,237
====== =========
10. EMPLOYEE BENEFIT PLAN
The Company has no benefit plans established for its employees.
11. SHARE OPTION PLAN
In 1998, the Company adopted a share option plan ("the Share Option Plan")
for its employees, officers and directors (whether or not employees). The
Share Option Plan provides for the grant of non-qualified share options.
The Share Option Plan also provides that for each option granted under the
Share Option Plan, the exercise price shall not be less than 100% of the
fair market value of the common share on the date the option is granted.
The Share Option Plan provides that options granted vest in two or three
installments: the first being six to nine months, the second being one year
to fifteen months, and the third being eighteen months to twenty one months
after the anniversary of the date of grant, and expire no later than 10
years subsequent to the grant date.
F-13
<PAGE>
TECHNOR INTERNATIONAL INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(AMOUNTS IN USD, UNLESS OTHERWISE STATED)
The number of shares authorized for grants under the Share Option Plan is
1,000,000 and the number of options granted at June 30, 1998 is 405,000. As
of June 30, 1998, no options were exercised.
The following options were granted during fiscal 1998:
Number of Exercise
Shares Price Date of issue
--------- -------- -------------
125,000 $ 1.00 January 5, 1998
280,000 $ 2.75 March 25, 1998
-------
405,000
=======
The Company applies SFAS No 123 and related interpretations in accounting
for the Stock Option Plan. Accordingly, no compensation cost has been
recognized. Had compensation cost for the Company's Stock Option Plan been
determined based on the fair value at the grant dates for awards under
those plans consistent with the method of SFAS No. 123, the Company's net
income and earnings per share would have been reduced to the pro forma
amounts indicated below:
YEAR ENDED
JUNE 30, 1998
-------------
Net loss As reported $(812,571)
Pro Forma $(941,955)
Earnings per share As reported $ (.18)
Pro Forma $ (.21)
The estimated fair value of the options is charged to expense over the
option's vesting period. The following assumptions were used:
YEAR ENDED
JUNE 30, 1998
-------------
Expected lives (years) 3
Dividend yield 0%
Expected volatility 65%
Weighted average interest rate 4.94%
F-14
<PAGE>
TECHNOR INTERNATIONAL INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(AMOUNTS IN USD, UNLESS OTHERWISE STATED)
12. COMMITMENTS AND CONTINGENCIES
A significant portion of the Company's business is conducted in currencies
other than the U.S. dollar (the currency in which its financial statements
are stated), primarily the Swedish krona. The Company incurs a significant
portion of its expenses in Swedish krona, including all of its product
development expenses and a substantial portion of its general and
administrative expenses. As a result, the value of the Swedish krona
relative to the other currencies in which the Company generates revenues,
particularly the U.S. dollar, could adversely affect operating results. The
Company does not currently undertake hedging transactions to cover its
currency exposure.
The Company rents an office under an operating lease agreement, which
commenced on April 15, 1998 and expires March 1999 but is cancelable with
two months notice. Rental expense amounted to $0 and $13,590 for 1997 and
1998, respectively.
The Company has received a compliance statement from Wasp confirming that
all software and hardware of the Technology is Year 2000 compliant.
13. SUBSEQUENT EVENTS
Subscription receivables of $2,346,667, as described in Note 3, have been
paid subsequent to year-end. The remaining $120,000, which has been
classified as a reduction in shareholder's equity, remains outstanding.
In September 1998, a communications link directly into Comviq's SMS-C
(Short Message Service Center) was installed, which makes the CellPoint
Server System in Sweden fully installed and operational. Comviq is one of
Sweden's three GSM operators.
AU-System Mobile AB and CellPoint completed a study showing the viability
of the CellPoint System to work not only in the CellPoint purpose-designed
terminal, but also in normal handheld Cellular phones using the AU-System
standard product AviSim OTA (Over the Air Subscriber Identity Module). This
would make it possible to position a cellular telephone in CellPoint's
system. AU-System is the market-leading supplier of software products in
the area of SIM card (Subscriber Identity Module) management and
value-added services to GSM operators with a customer base exceeding 35
operators. It's main shareholders are Ericsson (41%) and Telia (47%).
Mr. Christer Forsstrom has been appointed as the new CEO of CellPoint and
member of The Board of Directors of Technor and CellPoint. Mr. Forsstrom
was previously CEO of TV4 a Swedish national broadcasting company and has a
long international experience as former Executive Vice President of the
multinational corporation Electrolux.
Mr. Bengt Nordstrom has been appointed to the Board of Directors of Technor
and CellPoint. Mr. Nordstrom is currently the Chief Technology Officer and
Executive Director of SmarTone Telecommunications Ltd., a cellular network
operator in Hong Kong. Among Mr. Nordstrom's other experiences are six
years with Ericsson Telecom AB and five years with Comviq GSM AB, where he
was Project Director for building the GSM network. He is currently a member
of the Executive Committee of the GSM MoU Association.
F-15
<PAGE>
TECHNOR INTERNATIONAL INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Balance Sheet (Unaudited)
Q1, 1999 (July 1, 1998 - September 30, 1998)
Prepared by management
(Amounts in USD)
<TABLE>
<CAPTION>
(unaudited) (1$ = 8 SEK) September 30, 1998 June 30, 1998
<S> <C> <C>
ASSETS $ $
Current assets:
Cash and cash equivalents 2,203,693 764,603
Stock subscription receivables 120,000 2,346,667
Option for shares in Wasp 4,050,000 4,050,000
Prepaid expenses 28,669 40,653
Other receivables 165,800 70,814
Total current assets 6,568,162 7,272,737
----------- -----------
Long-term assets
Investment in Wasp 4,250,000 4,250,000
Machinery and equipment 103,690 110,092
Total long-term assets 4,353,690 4,360,092
----------- -----------
TOTAL ASSETS 10,921,852 11,632,829
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accrued expenses and other current liabilities 132,008 270,901
Accounts payable 76,158 247,040
Due to shareholders of Wasp 250,000
Advances from employee 44,366 151,554
Total current liabilities 252,532 919,495
----------- -----------
Total liabilities 252,532 919,495
----------- -----------
Stockholders' equity:
Common stock 7,440 6,665
Shares subscribed 775
Additional paid in capital 11,662,123 11,662,123
Cumulative translation adjustment 363
Accumulated deficit (1,120,243) (836,592)
Less: Subscriptions receivable (30,000 shares) (120,000) (120,000)
Total shareholder's equity 10,669,320 10,713,334
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY 10,921,852 11,632,829
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements
F-16
<PAGE>
TECHNOR INTERNATIONAL INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Operations (Unaudited)
Q1, 1999 (July 1, 1998 - September 30, 1998)
Prepared by management
(Amounts in USD)
<TABLE>
<CAPTION>
(unaudited) (1$ = 8 SEK) For the three months ended
September 30, 1998
<S> <C>
Sales, net --
Cost of sales --
Gross profit --
Selling, general an administrative expenses (264,593)
Depreciation (8,373)
Total operating expenses (272,966)
Loss from operations (272,966)
Net interest (including exchange loss) (10,685)
Net loss (283,651)
Net loss per share (undiluted) (.038)
Weighted average shares outstanding 7,440,000
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements
F-17
<PAGE>
TECHNOR INTERNATIONAL INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Cash Flows (Unaudited)
Q1, 1999 (July 1, 1998 - September 30, 1998)
Prepared by management
(Amounts in USD)
<TABLE>
<CAPTION>
(unaudited) Exchange rate 1$ = 8 SEK For the three months ended
September 30, 1998
<S> <C>
$
Cash flows from operating activities:
Net loss (283,651)
Adjustments to reconcile net loss to
net cash used in operating activities:
Translation adjustment
Depreciation 8,373
Effects of changes in operating assets
and liabilities:
Stock subscription receivables 2,346,667
Subscription receivables 120,000
Prepaid expenses 11,984
Other receivables (94,986)
Accrued expenses and other current liabilities (139,256)
Accounts payable (170,882)
Due to shareholders of Wasp (250,000)
Advances from employee (107,188)
Net cash used in operating activities 1,441,061
Cash flows from investing activities:
Capital expenditures (1,971)
Net cash used in investing activities (1,971)
Cash flows from financing activities:
Net cash provided by financing activities --
Increase in cash and cash equivalents 1,439,090
Cash and cash equivalents, beginning of period 764,603
Cash and cash equivalents, end of period 2,203,693
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements
F-18
<PAGE>
Notes to Consolidated Financial Statements
(Unaudited)
Unaudited Interim Financial Information
The accompanying consolidated financial statements are
unaudited, but include all adjustments (consisting only of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
presentation of the financial position at such dates and the operations and cash
flows for the periods then ended. The financial information is presented in a
condensed format, and it does not include all of the footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles. Operating results for the periods ended
September 30, 1998 is not necessarily indicative of results that may be expected
for the entire year. The preparation of financial statements requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities and reported
amounts of revenue and expenses during the reporting period. Actual results
could differ materially from such assumptions and estimates. The accompanying
financial statements and related footnotes should be read in conjunction with
the Company's audited financial statements for June 30, 1998.
The Company
General
Technor International Inc., a development stage company ("Technor "or" the
Company"), was incorporated in the state of Nevada on February 28, 1997. Technor
has licensed a GSM (Global System for Mobile Communications) positioning system
technology ("the Technology") from a South African Company which can be used for
a variety of positioning and telematics applications including locating
vehicles, management of security and alarm systems, surveillance of rented
objects as well as for remote control of industrial equipment.
On January 16, 1998, Technor formed a wholly-owned subsidiary in Sweden,
CellPoint Systems AB ("CellPoint"). CellPoint is Technor's commercial arm
focusing primarily on, but not limited to, Europe.
Technor owns 25 percent of Wasp International Ltd. ("Wasp"), the South African
company that developed and has ownership rights to the Technology.
CellPoint and Wasp are collaborating on the further development as well as the
marketing, selling, and distribution supporting the technology which, in Europe,
is referred to as the CellPoint system.
Development Stage Activities
Technor is marketing and further developing the positioning and telematics
applications of the CellPoint System. The CellPoint System consists of three
parts: the terminal, the positioning server and the positioning programs. The
GSM network handles the communication between the terminal and the server
system. The positioning server system enables the use of the Internet or fixed
lines as information carriers.
The Company has not earned revenues to date from its planned activities. As
such, the Company is still in a development stage and falls under the provisions
of U.S. Statement of Financial Accounting Standards ("SFAS") No. 7, "Accounting
and Reporting by Development Stage Enterprises."
Cash and Cash Equivalents, Accounts and Interest Receivable
Changes between receivables and cash are due to the stock subscription
receivables from June 30 being paid.
F-19
<PAGE>
Accounts Payable
Movement in accounts payable is mainly due to payment for the purchase of 25
percent of Wasp International Ltd. ("Wasp") and 5% commissions payable from the
$3.1 million Regulation S financing in June. Several other items in accounts
payable were also paid in the quarter.
Supplemental Disclosures of Cash Flow for the three months ending
September 30, 1998
<TABLE>
<S> <C>
Cash flow from operating activities: $(275,278)
Posted loss for the quarter ended September 30, 1998: $ 283,651
</TABLE>
Included in this total was an exchange rate loss booked at $16,814 in connection
with the Regulation S Financing and depreciation of $8,373. The other monthly
expenditures were comprised of labor averaged at $47,000, rent at $2,000, $5,000
for telephone services, $4,000 for printing and promotion, $500 for transfer
agent fees, $1,000 for bank fees, $2,000 for marketing and cost of goods sold,
$6,000 for travel and entertainment, $16,500 for professional services, and the
$2,000 balance for miscellaneous office expenses
The company is operating sales and marketing through the wholly-owned
subsidiary, CellPoint Systems AB, from leased office facilities in Sollentuna,
Sweden. The number of employees at September 30, 1998 was eleven (11).
Earnings per Share
The company calculates earnings per share based on SFAS No. 128, "Earnings Per
Share". Basic earnings per share are calculated using the average number of
common shares outstanding. Potentially dilutive shares resulting from stock
options have been excluded from the computation of diluted earnings per share
for the three months ended September 30, 1998 as they are antidilutive. The
number of common stock options outstanding at September 30, 1998 that could be
potentially diluted are 650,000.
F-20
<PAGE>
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
None.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
(a) LIST OF FINANCIAL STATEMENTS FILED AS PART OF THE REGISTRATION
STATEMENT.
The financial statements required to be filed and as listed below
may be found under the response to Item 13 of this Registration Statement.
CONSOLIDATED FINANCIAL STATEMENTS (AUDITED)
FOR THE FISCAL YEAR ENDED JUNE 30, 1998
Report of Independent Accountants
Consolidated Balance Sheets as of June 30, 1997 and 1998
Consolidated Statements of Operations for the period from February 28,1997
(Inception) through June 30, 1997 and for the year ended June 30, 1998
Consolidated Statements of Shareholders' Equity for the period from February 28,
1997 (Inception) through June 30, 1997 and for the year ended June 30, 1998
Consolidated Statements of Cash Flows for the period from February 28, 1997
(Inception) through June 30, 1997 and for the year ended June 30, 1998
Notes to the Consolidated Financial Statements
CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE FISCAL QUARTER ENDED SEPTEMBER 30, 1998
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
22
<PAGE>
(b) EXHIBITS
The documents required to be filed and as listed on the Index to
Exhibits below follow immediately after the signatures below.
Exhibit No. Description of Exhibit
- ----------- ----------------------
3.1 Articles of Incorporation
3.2 By-Laws
10.1 License Agreement, dated as of May 26, 1998, between Wasp
International (Pty) Ltd. and Technor International, Inc.
10.2 Shareholders Agreement, dated as of May 26, 1998, between Gerrit
van Urk, Albert van Urk, Guy Redford, Technor International, Inc.
and Wasp International (Pty) Ltd.
10.3 Option Agreement
10.4 Share Sale Agreement
10.5 Stock Incentive Plan
27 Financial Data Schedule
23
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
TECHNOR INTERNATIONAL, INC.
(Registrant)
Date: December 23, 1998 By: /s/ PETER HENRICSSON
Peter Henricsson
Chairman, CEO and President
24
<PAGE>
EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
TECHNOR INTERNATIONAL, INC.
The undersigned, acting as incorporator, pursuant to the provisions of
the laws of the State of Nevada relating to private corporations, hereby adopts
the following Articles of Incorporation:
ARTICLE ONE. [NAME]. The name of the corporation is:
TECHNOR INTERNATIONAL, INC.
ARTICLE TWO. [RESIDENT AGENT]. The initial agent for service of
process is The Nevada Agency and Trust Company, 50 West Liberty Street, Suite
880, City of Reno, County of Washoe, State of Nevada 89501.
ARTICLE THREE. [PURPOSES]. The purposes for which the corporation is
organized are to engage in any activity or business not in conflict with the
laws of the State of Nevada or of the United States of America, and without
limiting the generality of the foregoing, specifically:
I. [OMNIBUS]. To have to exercise all the powers now or hereafter
conferred by the laws of the State of Nevada upon corporations organized
pursuant to the laws under which the corporation is organized and any and all
acts amendatory thereof and supplemental thereto.
II. [CARRYING ON BUSINESS OUTSIDE STATE]. To conduct and carry on
its business or any branch thereof in any state or territory of the United
States or in any foreign country in conformity with the laws of such state,
territory, or foreign country, and to have and maintain in any state, territory,
or foreign country a business office, plant, store or other facility.
III. [PURPOSES TO BE CONSTRUED AS POWERS]. The purposes specified
herein shall be construed both as purposes and powers and shall be in no wise
limited or restricted by reference to, or inference from, the terms of any other
clause in this or any other article, but the purposes and powers specified in
each of the clauses herein shall be regarded as independent purposes and powers,
and the enumeration of specific purposes and powers shall not be construed to
limit or restrict in any manner the meaning of general terms or of the general
powers of the corporation; nor shall the expression of one thing be deemed to
exclude another, although it be of like nature not expressed.
ARTICLE FOUR. [CAPITAL STOCK]. The corporation shall have authority
to issue an aggregate of TWENTY-FIVE MILLION (25,000,000) shares of stock, Par
Value ONE MILL ($0.001) per share, divided into two (2) classes of stock as
follows:
(A) NON-ASSESSABLE COMMON STOCK: TWENTY-TWO MILLION (22,000,000)
shares of NON-ASSESSABLE COMMON STOCK, Par Value ONE MILL ($0.001) per share and
(B) PREFERRED STOCK: THREE MILLION (3,000,000) shares of PREFERRED
NON-VOTING STOCK, Par Value ONE MILL ($0.001) per share.
All capital stock when issued shall be fully paid and non-assessable.
No holder of shares of capital stock of the corporation shall be entitled as
such to any pre-emptive or preferential rights to subscribe to any unissued
stock, or any other securities which the corporation may now or hereafter be
authorized to issue.
<PAGE>
The corporation's capital stock may be issued and sold from time to
time for such consideration as may be fixed by the Board of Directors, provided
that the consideration so fixed is not less than par value.
Holders of the corporation's Common Stock shall not possess cumulative
voting rights at any shareholders meetings called for the purpose of electing a
Board of Directors or on other matters brought before stockholders meetings,
whether they be annual or special.
ARTICLE FIVE. [DIRECTORS]. The affairs of the corporation shall be
governed by a Board of Directors of not more than nine (9) nor less than one (1)
person. The name and address of the first Board of Directors is:
NAME ADDRESS
Peter Henriesson Kristinagatan 10
S-70214 Orebro
Sweden
ARTICLE SIX. [ASSESSMENT OF STOCK]. The capital stock of the
corporation, after the amount of the subscription price or par value has been
paid in, shall not be subject to pay debts of the corporation, and no paid up
stock and no stock issued as fully paid up shall ever be assessable or assessed.
ARTICLE SEVEN. [INCORPORATOR]. The name and address of the
incorporator of the corporation is as follows:
NAME ADDRESS
Amanda Cardinalli Suite #880, 50 West Liberty Street
Reno, Nevada 89501
ARTICLE EIGHT. [PERIOD OF EXISTENCE]. The period of existence of the
corporation shall be perpetual.
ARTICLE-NINE. [BY-LAWS]. The initial By-laws of the corporation
shall be adopted by its Board of Directors. The power to alter, amend, or repeal
the By-laws, or to adopt new By-laws, shall be vested in the Board of Directors,
except as otherwise may be specifically provided in the By-laws.
ARTICLE TEN. [STOCKHOLDERS' MEETINGS]. Meetings of stockholders
shall. be held at such place within or without the State of Nevada as may be.
provided by the By-laws of the corporation. Special meetings of the stockholders
may be called by the President or any other executive officer of the
corporation, the Board of Directors, or any member thereof, or by the record
holder or holders of at least ten percent (10%) of all shares entitled to vote
at the meeting. Any action otherwise required to be taken at a meeting of the
stockholders, except election of directors, may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be signed by
stockholders having at least a majority of the voting power.
ARTICLE ELEVEN. [CONTRACTS OF CORPORATION]. No contract or other
transaction between the corporation and any other corporation, whether or not a
majority of the shares of the capital stock of such other corporation is owned
by this corporation, and no act of this corporation shall in any way be affected
or invalidated by the fact that any of the directors of this corporation are
pecuniarily or otherwise interested in, or are directors or officers of such
other corporation. Any director of this corporation, individually, or any firm
of which such director may be a member, may be a party to, or may be pecuniarily
or otherwise interested in any contract or transaction of the corporation;
provided, however, that the fact that he or such firm is so interested shall be
disclosed or shall have been known to the Board
-2-
<PAGE>
of Directors of this corporation, or a majority thereof; and any director of
this corporation who is also a director or officer of such other corporation, or
who is so interested, may be counted in determining the existence of a quorum at
any meeting of the Board of Directors of this corporation that shall authorize
such contract or transaction, and may vote thereat to authorize such contract or
transaction, with like force and effect as if he were not such director or
officer of such other corporation or not so interested.
ARTICLE TWELVE. [LIABILITY OF DIRECTORS AND OFFICERS]. No
director or officer shall have any personal liability to the corporation or its
stockholders for damages for breach of fiduciary duty as a director or officer,
except that this Article Twelve shall not eliminate or limit the liability of a
director or officer f or (I) acts or omissions which involve intentional
misconduct, fraud or a knowing violation of law, or (ii) the payment of
dividends in violation of the Nevada Revised Statutes.
IN WITNESS WHEREOF, the undersigned incorporator has hereunto affixed
her signature at Reno, Nevada this 27th day of February, 1997.
-------------------------------------
AMANDA CARDINALLI
STATE OF NEVADA )
: ss.
COUNTY OF WASHOE )
On the 27th day of February, 1997, before me, the undersigned, a
Notary Public in and for the State of Nevada, personally appeared AMANDA
CARDINALLI, known to me to be the person described in and who executed the
foregoing instrument, and who acknowledged to me that she executed the same
freely and voluntarily for the uses and purposes therein mentioned.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year first above written.
--------------------------------------
NOTARY/PUBLIC
Residing in Reno, Nevada
My Commission Expires:
October 10, 1998
-3-
<PAGE>
EXHIBIT 3.2
BYLAWS FOR THE REGULATION
EXCEPT AS OTHERWISE PROVIDED BY STATUTE
OR ITS ARTICLES OF INCORPORATION OF
TECHNOR INTERNATIONAL, INC.
ARTICLE I.
OFFICES
Section 1. PRINCIPAL OFFICE. The principal office for the
transaction of the business of the corporation is hereby fixed and located at
Suite 880, Bank of America Plaza, 50 West Liberty Street, Reno, Nevada 89501,
being the offices of THE NEVADA AGENCY AND TRUST COMPANY. The board of directors
is hereby granted full power and authority to change said principal office from
one location to another in the State of Nevada.
Section 2. OTHER OFFICES. Branch or subordinate offices may at
any time be established by the board of directors at any place or places where
the corporation is qualified to do business.
ARTICLE II.
MEETINGS OF SHAREHOLDERS
Section 1. MEETING PLACE. All annual meetings of shareholders and
all other meetings of shareholders shall be held either at the principal office
or at any other place within or without the State of Nevada which may be
designated either by the board of directors, pursuant to authority hereinafter
granted to said board, or by the written consent of all shareholders entitled to
vote thereat, given either before or shareholders entitled to vote thereat,
given either before or after the meeting and filed with the Secretary of the
corporation.
Section 2. ANNUAL MEETINGS. The annual meetings of shareholders
shall be held on the second Thursday of September of each year, at the hour of
10:00 o'clock A.M. of said day commencing with the year 1998, provided, however,
that should said day fall upon a legal holiday then any such annual meeting of
shareholders shall be held at the same time and place on the next day thereafter
ensuing which is not a legal holiday.
<PAGE>
Written notice of each annual meeting signed by the president or a
vice president, or the secretary, or an assistant secretary, or by such other
person or persons as the directors shall designate, shall be given to each
shareholder entitled to vote thereat, either personally or by mail or other
means of written communication, charges prepaid, addressed to such shareholder
at his address appearing on the books of the corporation or given by him to the
corporation for the purpose of notice. If a shareholder gives no address, notice
shall be deemed to have been given to him, if sent by mail or other means of
written communication addressed to the place where the principal office of the
corporation is situated, or if published at least once in some newspaper of
general circulation in the county in which said office is located. All such
notices shall be sent to each shareholder entitled thereto not less than ten
(10) nor more than sixty (60) days before each annual meeting, and shall specify
the place, the day and the hour of such meeting, and shall also state the
purpose or purposes for which the meeting is called.
Section 3. SPECIAL MEETINGS. Special meetings of the
shareholders, for any purpose or purposes whatsoever, may be called at any time
by the president or by the board of directors, or by one or more shareholders
holding not less than 10 % of the voting power of the corporation. Except in
special cases where other express provision is made by statute, notice of such
special meetings shall be given in the same manner as for annual meetings of
shareholders. Notices of any special meeting shall specify in addition to the
place, day and hour of such meeting, the purpose or purposes for which the
meeting is called.
Section 4. ADJOURNED MEETINGS AND NOTICE THEREOF. Any
shareholders' meeting, annual or special, whether or not a quorum is present,
may be adjourned from time to time by the vote of a majority of the shares, the
holders of which are either present in person or represented by proxy thereat,
but in the absence of a quorum, no other business may be transacted at any such
meeting.
When any shareholders' meeting, either annual or special, is adjourned
for thirty (30) days or more, notice of the adjourned meeting shall be given as
in the case of an original meeting. Save as aforesaid, it shall not be necessary
to give any notice of an adjournment or of the business to be transacted at an
adjourned meeting, other than by announcement at the meeting at which such
adjournment is taken.
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Section 5. ENTRY OF NOTICE. Whenever any shareholder entitled to
vote has been absent from any meeting of shareholders, whether annual or
special, an entry in the minutes to the effect that notice has been duly given
shall be conclusive and incontrovertible evidence that due notice of such
meeting was given to such shareholders, as required by law and the Bylaws of the
corporation.
Section 6. VOTING. At all annual and special meetings of
stockholders entitled to vote thereat, every holder of stock issued to a bona
fide purchaser of the same, represented by the holders thereof, either in person
or by proxy in writing, shall have one vote for each share of stock so held and
represented at such meetings, unless the Articles of Incorporation of the
company shall otherwise provide, in which event the voting rights, powers and
privileges prescribed in the said Articles of Incorporation shall prevail.
Voting for directors and, upon demand of any stockholder, upon any question at
any meeting shall be by ballot. Any director may be removed from office by the
vote of stockholders representing not less than two-thirds of the voting power
of the issued and outstanding stock entitled to voting power.
Section 7. QUORUM. The presence in person or by proxy of the
holders of a majority of the shares entitled to vote at any meeting shall
constitute a quorum for the transaction of business. The shareholders present at
a duly called or held meeting at which a quorum is present may continue to do
business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
Section 8. CONSENT OF ABSENTEES. The transactions of any meeting
of shareholders, either annual or special, however called and noticed, shall be
as valid as though at a meeting duly held after regular call and notice, if a
quorum be present either in person or by proxy, and if either before or after
the meeting, each of the shareholders entitled to vote, not present in person or
by proxy, sign a written waiver of Notice, or a consent to the holding of such
meeting, or an approval of the minutes thereof. All such waivers, consents or
approvals shall be filed with the corporate records or made a part of the
minutes of this meeting.
Section 9. PROXIES. Every person entitled to vote or execute
consents shall have the right to do so either in person or by an agent or agents
authorized by a written proxy executed by such person or his duly authorized
agent and filed with the secretary of the corporation; provided that no such
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<PAGE>
proxy shall be valid after the expiration of eleven (11) months from the date of
its execution, unless the shareholder executing it specifies therein the length
of time for which such proxy is to continue in force, which in no case shall
exceed seven (7) years from the date of its execution.
ARTICLE III.
Section 1. POWERS. Subject to the limitations of the Articles of
Incorporation or the Bylaws, and the provisions of the Nevada Revised Statutes
as to action to be authorized or approved by the shareholders, and subject to
the duties of directors as prescribed by the Bylaws, all corporate powers shall
be exercised by or under the authority of, and the business and affairs of the
corporation shall be controlled by the board of directors. Without prejudice to
such general powers, but subject to the same limitations, it is hereby expressly
declared that the directors shall have the following powers, to wit:
FIRST - To select and remove all the other officers, agents and
employees of the corporation, prescribe such powers and duties for them as may
not be inconsistent with law, with the Articles of Incorporation or the Bylaws,
fix their compensation, and require from them security for faithful service.
SECOND - To conduct, manage and control the affairs and business of
the corporation, and to make such rules and regulations therefor not
inconsistent with law, with the Articles of Incorporation or the Bylaws, as they
may deem best.
THIRD - To change the principal office for the transaction of the
business of the corporation from one location to another within the same county
as provided in Article I, Section 1, hereof; to fix and locate from time to time
one or more subsidiary offices of the corporation within or without the State of
Nevada, as provided in Article I, Section 2, hereof; to designate any place
within or without the State of Nevada for the holding of any shareholders I
meeting or meetings; and to adopt, make and use a corporate seal, and to
prescribe the forms of certificates of stock, and to alter the form of such seal
and of such certificates from time to time, as in their judgment they may deem
best, provided such seal and such certificates shall at all times comply with
the provisions of law.
FOURTH - To authorize the issue of shares of stock of the corporation
from time to time, upon such terms as may be lawful, in consideration of money
paid, labor done or services actually
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<PAGE>
rendered, debts or securities canceled, or tangible or intangible property
actually received, or in the case of shares issued as a dividend, against
amounts transferred from surplus to stated capital.
FIFTH - To borrow money and incur indebtedness for the purposes of the
corporation, and to cause to be executed and delivered therefor, in the
corporate name, promissory notes, bonds, debentures, deeds of trust, mortgages,
pledges, hypothecations or other evidences of debt and securities therefore.
SIXTH - To appoint an executive committee and other committees and to
delegate to the executive committee any of the powers and authority of the board
in management of the business and affairs of the corporation, except the power
to declare dividends and to adopt, amend or repeal Bylaws. The executive
committee shall be composed of one or more directors.
Section 2. NUMBER AND QUALIFICATION OF DIRECTORS. The authorized
number of directors of the corporation shall be not less than one (1) and no
more than fifteen (15).
Section 3. ELECTION AND TERM OF OFFICE. The directors shall be
elected at each annual meeting of shareholders, but if any such annual meeting
is not held, or the directors are not elected thereat, the directors may be
elected at any special meeting of shareholders. All directors shall hold office
until their respective successors are elected.
Section 4. VACANCIES. Vacancies in the board of directors may be
filled by a majority of the remaining directors, though less than a quorum, or
by a sole remaining director, and each director so elected shall hold office
until his successor is elected at an annual or a special meeting of the
shareholders.
A vacancy or vacancies in the board of directors shall be deemed to
exist in case of the death, resignation or removal of any director, or if the
authorized number of directors be increased, or if the shareholders fail at any
annual or special meeting of shareholders at which any director or directors are
elected to elect the full authorized number of directors to be voted for at that
meeting.
The shareholders may elect a director or directors at any time to fill
any vacancy or vacancies not filled by the directors. If the board of directors
accept the resignation of a director tendered to take effect at a future time,
the board or the shareholders shall have the power to elect a successor to take
office when the resignation is to become effective.
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No reduction of the authorized number of directors shall have the
effect of removing any director prior to the expiration of his term of office.
Section 5. PLACE OF MEETING. Regular meetings of the board of
directors shall be held at any place within or without the State which has been
designated from time to time by resolution of the board or by written consent of
all members of the board. In the absence of such designation, a regular meeting
shall be held at the principal office of the corporation. Special meetings of
the board may be held either at a place so designated, or at the principal
office.
Section 6. ORGANIZATION MEETING. Immediately following each
annual meeting of shareholders, the board of directors shall hold a regular
meeting for the purpose of organization, election of officers, and the
transaction of other business. Notice of such meeting is hereby dispensed with.
Section 7. OTHER REGULAR MEETINGS. Other regular meetings of the
board of directors shall be held without call on the eighth (8th) day of each
month at the hour of 10:00 clock A.M. of said day; provided, however, should
said day fall upon a legal holiday, then said meeting shall be held at the same
time on the next day thereafter ensuing which is not a legal holiday. Notice of
all such regular meetings of the board of directors is hereby dispensed with.
Section 8. SPECIAL MEETINGS. Special meetings of the board of
directors for any purpose or purposes shall be called at any time by the
president, or, if he is absent or unable or refuses to act, by any vice
president or by any two (2) directors.
Written notice of the time and place of special meetings shall be
delivered personally to the directors or sent to each director by mail or other
form of written communication, charges prepaid, addressed to him at his address
as it is shown upon the records of the corporation, or if it is not shown on
such records or is not readily ascertainable, at the place in which the meetings
of the directors are regularly held. In case such notice is mailed or
telegraphed, it shall be deposited in the United States mail or delivered to the
telegraph company in the place in which the principal office of the corporation
is located at least forty-eight (48) hours prior to the time of the holding of
the meeting. In case such notice is delivered as above provided, it shall be so
delivered at least twenty-four (24) hours prior to the time of the
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holding of the meeting. Such mailing, telegraphing or delivery as above provided
shall be due, legal and personal notice to such director.
Section 9. NOTICE OF ADJOURNMENT. Notice of the time and place of
holding an adjourned meeting need not be given to absent directors, if the time
and place be fixed at the meeting adjourned.
Section 10. ENTRY OF NOTICE. Whenever any director has been absent
from any special meeting of the board of directors, an entry in the minutes to
the effect that notice has been duly given shall be conclusive and
incontrovertible evidence that due notice of such special meeting was given to
such director, as required by law and the Bylaws of the corporation.
Section 11. WAIVER OF NOTICE. The transactions of any meeting of
the board of directors, however called and noticed or wherever held, shall be as
valid as though had a meeting duly held after regular call and notice, if a
quorum be present, and if, either before or after the meeting, each of the
directors not present sign a written waiver of notice or a consent to the
holding of such meeting or an approval of the minutes thereof. All such waivers,
consents or approvals shall be filed with the corporate records or made a part
of the minutes of the meeting.
Section 12. QUORUM. A majority of the authorized number of
directors shall be necessary to constitute a quorum for the transaction of
business, except to adjourn as hereinafter provided. Every act or decision done
or made by a majority of the directors present at a meeting duly held at which a
quorum is present, shall be regarded as the act of the board of directors,
unless a greater number be required by law or by the Articles of Incorporation.
Section 13. ADJOURNMENT. A quorum of the directors may adjourn any
directors' meeting to meet again at a stated day and hour; provided, however,
that in the absence of a quorum, a majority of the directors present at any
directors' meeting, either regular or special, may adjourn from time to time
until the time fixed for the next regular meeting of the board.
Section 14. FEES AND COMPENSATION. Directors shall not receive any
stated salary for their services as directors, but by resolution of the board, a
fixed fee, with or without expenses of attendance may be allowed for attendance
at each meeting. Nothing herein contained shall be construed
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to preclude any director from serving the corporation in any other capacity as
an officer, agent, employee, or otherwise, and receiving compensation therefor.
ARTICLE IV.
OFFICERS
Section 1. OFFICERS. The officers of the corporation shall be a
president, a vice president and a secretary/treasurer. The corporation may also
have, at the discretion of the board of directors, a chairman of the board, one
or more vice presidents, one or more assistant secretaries, one or more
assistant treasurers, and such other officers as may be appointed in accordance
with the provisions of Section 3 of this Article. Officers other than president
and chairman of the board need not be directors. Any person may hold two or more
offices.
Section 2. ELECTION. The officers of the corporation, except such
officers as may be appointed in accordance with the provisions of Section 3 or
Section 5 of this Article, shall be chosen annually by the board of directors,
and each shall hold his office until he shall resign or shall be removed or
otherwise disqualified to serve, or his successor shall be elected and
qualified.
Section 3. SUBORDINATE OFFICERS, ETC. The board of directors may
appoint such other officers as the business of the corporation may require, each
of whom shall hold office for such period, have such authority and perform such
duties as are provided in the Bylaws or as the board of directors may from time
to time determine.
Section 4. REMOVAL AND RESIGNATION. Any officer may be removed,
either with or without cause, by a majority of the directors at the time in
office, at any regular or special meeting of the board.
Any officer may resign at any time by giving written notice to the
board of directors or to the president, or to the secretary of the corporation.
Any such resignation shall take effect at the date of the receipt of such notice
or at any later time specified therein; and, unless otherwise specified therein,
the acceptance of such resignation shall not be necessary to make it effective.
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Section 5. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled in the
manner prescribed in the Bylaws for regular appointments to such office.
Section 6. CHAIRMAN OF THE BOARD. The chairman of the board, if
there shall be such an officer, shall, if present, preside at all meetings of
the board of directors, and exercise and perform such other powers and duties as
may be from time to time assigned to him by the board of directors or prescribed
by the Bylaws.
Section 7. PRESIDENT. Subject to such supervisory powers, if any,
as may be given by the board of directors to the chairman of the board, if there
be such an officer, the president shall be the chief executive officer of the
corporation and shall, subject to the control of the board of directors, have
general supervision, direction and control of the business and officers of the
corporation. He shall preside at all meetings of the shareholders and in the
absence of the chairman of the board, or if there be none, at all meetings of
the board of directors. He shall be ex-officio a member of all the standing
committees, including the executive committee, if any, and shall have the
general powers and duties of management usually vested in the office of
president of a corporation, and shall have such other powers and duties as may
be prescribed by the board of directors or the Bylaws.
Section 8. VICE PRESIDENT. In the absence or disability of the
president, the vice presidents in order of their rank as fixed by the board of
directors, or if not ranked, the vice president designated by the board of
directors, shall perform all the duties of the president and when so acting
shall have all the powers of, and be subject to all the restrictions upon, the
president. The vice presidents shall have such other powers and perform such
other duties as from time to time may be prescribed for them respectively by the
board of directors or the Bylaws.
Section 9. SECRETARY. The secretary shall keep, or cause to be
kept, a book of minutes at the principal office or such other place as the board
of directors may order, of all meetings of directors and shareholders, with the
time and place of holding, whether regular or special, and if special, how
authorized, the notice thereof given, the names of those present at directors'
meetings, the number of shares present or represented at shareholders' meetings
and the proceedings thereof.
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The secretary shall keep, or cause to be kept, at the principal
office, a share register, or a duplicate share register, showing the names of
the shareholders and their addresses; the number and classes of shares held by
each; the number and date of certificates issued for the same, and the number
and date of cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all the
meetings of the shareholders and of the board of directors required by the
Bylaws or by law to be given, and he shall keep the seal of the corporation in
safe custody, and shall have such other powers and perform such other duties as
may be prescribed by the board of directors or the Bylaws.
Section 10. TREASURER. The treasurer shall keep and maintain, or
cause to be kept and maintained, adequate and correct accounts of the properties
and business transactions of the corporation, including accounts of its assets,
liabilities, receipts, disbursement, gains, losses, capital, surplus and shares.
Any surplus, including earned surplus, paid-in surplus and surplus arising from
a reduction of stated capital, shall be classified according to source and shown
in a separate account. The books of account shall at all times be open to
inspection by any director.
The treasurer shall deposit all moneys and other valuables in the name
and to the credit of the corporation with such depositories as may be designated
by the board of directors. He shall disburse the funds of the corporation as may
be ordered by the board of directors, shall render to the president and
directors, whenever they request it, an account of all of his transactions as
treasurer and of the financial condition of the corporation, and shall have such
other powers and perform such other duties as may be prescribed by the board of
directors or the Bylaws.
ARTICLE V.
MISCELLANEOUS
Section 1. RECORD DATE AND CLOSING STOCK BOOKS. The board of
directors may fix a time, in the future, not exceeding fifteen (15) days
preceding the date of any meeting of shareholders, and not exceeding thirty (30)
days preceding the date fixed for the payment of any dividend or distribution,
or for the allotment of rights, or when any change or conversion or exchange of
shares shall go into effect, as a record date for the determination of the
shareholders entitled to notice of and to vote at any such meeting, or entitled
to receive any such dividend or distribution, or any such allotment of
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<PAGE>
rights, or to exercise the rights in respect to any such change, conversion or
exchange of shares, and in such case only shareholders of record on the date so
fixed shall be entitled to notice of and to vote at such meetings, or to receive
such dividend, distribution or allotment of rights, or to exercise such rights,
as the case may be, notwithstanding any transfer of any shares on the books of
the corporation after any record date fixed as aforesaid. The board of directors
may close the books of the corporation against transfers of shares during the
whole, or any part of any such period.
Section 2. INSPECTION OF CORPORATE RECORDS. The share register or
duplicate share register, the books of account, and minutes of proceedings of
the shareholders and directors shall be open to inspection upon the written
demand of any shareholder or the holder of a voting trust certificate, at any
reasonable time, and for a purpose reasonably related to his interests as a
shareholder, or as the holder of a voting trust certificate, and shall be
exhibited at any time when required by the demand of ten percent (10%) of the
shares represented at any shareholders' meeting. Such inspection may be made in
person or by an agent or attorney, and shall include the right to make extracts.
Demand of inspection other than at a shareholders' meeting shall be made in
writing upon the president, secretary or assistant secretary of the corporation.
Section 3. CHECKS, DRAFTS, ETC. All checks, drafts or other
orders for payment of money, notes or other evidences of indebtedness, issued in
the name of or payable to the corporation, shall be signed or endorsed by such
person or persons and in such manner as, from time to time, shall be determined
by resolution of the board of directors.
Section 4. ANNUAL REPORT. The board of directors of the
corporation shall cause to be sent to the shareholders not later than one
hundred twenty (120) days after the close of the fiscal or calendar year an
annual report.
Section 5. CONTRACT, ETC., HOW EXECUTED. The board of directors,
except as in the Bylaws otherwise provided, may authorize any officer or
officers, agent or agents, to enter into any contract, deed or lease or execute
any instrument in the name of and on behalf of the corporation, and such
authority may be general or confined to specific instances; and unless so
authorized by the board of directors, no officer, agent or employee shall have
any power or authority to bind the corporation by any contract or engagement or
to pledge its credit to render it liable for any purpose or to any amount.
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Section 6. CERTIFICATES OF STOCK. A certificate or certificates
for shares of the capital stock of the corporation shall be issued to each
shareholder when any such shares are fully paid up. All such certificates shall
be signed by the president or a vice president and the secretary or an assistant
secretary, or be authenticated by facsimiles of the signature of the president
and secretary or by a facsimile of the signature of the president and the
written signature of the secretary or an assistant secretary. Every certificate
authenticated by a facsimile of a signature must be countersigned by a transfer
agent or transfer clerk.
Certificates for shares may be issued prior to full payment under such
restrictions and for such purposes as the board of directors or the Bylaws may
provide; provided, however, that any such certificate so issued prior to full
payment shall state the amount remaining unpaid and the terms of payment
thereof.
Section 7. REPRESENTATIONS OF SHARES OF OTHER CORPORATIONS. The
president or any vice president and the secretary or assistant secretary of this
corporation are authorized to vote, represent and exercise on behalf of this
corporation all rights incident to any and all shares of any other corporation
or corporations standing in the name of this corporation. The authority herein
granted to said officers to vote or represent on behalf of this corporation or
corporations may be exercised either by such officers in person or by any person
authorized so to do by proxy or power of attorney duly executed by said
officers.
Section 8. INSPECTION OF BYLAWS. The corporation shall keep in its
principal office for the transaction of business the original or a copy of the
Bylaws as amended, or otherwise altered to date, certified by the secretary,
which shall be open to inspection by the shareholders at all reasonable times
during office hours.
ARTICLE VI.
AMENDMENTS
Section 1. POWER OF SHAREHOLDERS. New Bylaws may be adopted or
these Bylaws may be amended or repealed by the vote of shareholders entitled to
exercise a majority of the voting power of the corporation or by the written
assent of such shareholders.
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Section 2. POWER OF DIRECTORS. Subject to the right of
shareholders as provided in Section 1 of this Article VI to adopt, amend or
repeal Bylaws, Bylaws other than a Bylaw or amendment thereof changing the
authorized number of directors may be adopted, amended or repealed by the board
of directors.
Section 3. ACTION BY DIRECTORS THROUGH CONSENT IN LIEU OF MEETING.
Any action required or permitted to be taken at any meeting of the board of
directors or of any committee thereof, may be taken without a meeting, if a
written consent thereto is signed by all the members of the board or of such
committee. Such written consent shall be filed with the minutes of proceedings
of the board or committee.
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\
<PAGE>
LICENCE AGREEMENT EXHIBIT 10.1
between
WASP INTERNATIONAL (PROPRIETARY) LIMITED
and
TECHNOR INTERNATIONAL INC.
<PAGE>
SCHEDULES
SCHEDULE 1 WGT SPECIFICATIONS
<PAGE>
Page 1
1 DEFINITIONS
For the purposes of this agreement, unless the context indicates otherwise
-
1.1 "Application Development" means development of applications that
interfaces with the WGT or core technology;
1.2 "the/this Agreement" means this agreement and all the schedules hereto
and any signed amendments made in accordance with 17.2 reduced to
writing from time to time;
1.3 "Core Technology" means the core code making up the essential computer
programs constituting the WGT;
1.4 "ETSI" means the European Telecommunications Standards Institute;
1.5 "EMC" means equipment manufacturers and customers, being any person
who manufactures, supplies, and shall include but not be limited to,
any GSM Network Operator who may incorporate, make use of or otherwise
exploit the WGT or any part of the WGT within its own products or
services for any commercial purpose;
1.6 "GSM" means the global system for mobile communication as defined in
the ETSI standards;
1.7 "Manufacturing Licence" means a licence to appoint a manufacturer of
certain terminal products, subject to the provisions of clause 4.2.1,
and in accordance with the Manufacturing Standards and written design
specifications as provided by Wasp;
1.8 "Manufacturing Standards" means the generally accepted manufacturing
standards applicable to electronic production, being the ISO 9000 /
9002 certification;
1.9 "Network Operators" means an operator and provider of GSM
communication systems as defined in the relevant ETSI specifications
or standards;
1.10 "RSA" means the Republic of South Africa, being the nine provinces
identified in section 103 of the Constitution of the Republic of South
Africa, 1996;
1.11 "Signature Date" means the date upon which both parties to this
Agreement have signed this Agreement or in the event of their having
signed the agreement on different dates, the date of the last
signature;
<PAGE>
Page 2
1.12 "Sub-Licence Agreement" means an agreement for the distribution,
marketing and/or sale of the WGT, entered into between Technor and a
Sub-Licencee, incorporating, without limitation, the provisions
required by this Agreement, but no terms or conditions that are
inconsistent with any of the provisions or terms of this Agreement;
1.13 "Sub-Licencee" means an EMC with whom Technor contracts, in terms of a
Sub-Licence Agreement for the distribution, marketing and/or sale of
the WGT in accordance with the provisions or terms of this Agreement;
1.14 "Technor" means Technor International Inc, a corporation incorporated
in Nevada, United States of America having its registered office at
Satraangsvagen 88, S-18237 Danderyd, Sweden;
1.15 "Territory" means the national territories of Sweden, Finland, Norway
and Denmark and any other Territories that may be so designated in
terms of this Agreement;
1.16 "VARS" means value added resellers of services, terminals and/or users
of network services who may incorporate, make use of, or otherwise
exploit the WGT or any part of the WGT within their own product or
services for any commercial purpose;
1.17 "Wasp" means Wasp International (Proprietary) Limited, Reg No
93/00271/07, a private company with limited liability incorporated
under the laws of the RSA;
1.18 "WGT" means the GSM technologies or products owned or developed by
Wasp, including but not being limited to Core Technology "(CT)"
vehicle tracking systems, terminal units, communication processes,
policy and procedures; technical information, know-how, whether or not
patented or patentable, including, without limitation, specifications,
marketing studies, physical performance and other operational
information or data relating to any part of or improvement or new
developments of the system or part of the system developed and made
available for commercial exploitation by Wasp from time to time.
2 PREAMBLE
It is recorded for the purpose of elucidating the operative provisions of
this Agreement, that it is being entered into in the following
circumstances:
2.1 Wasp is the beneficial owner of the WGT and as such has the exclusive
right to develop, market, manufacture and otherwise exploit the WGT;
<PAGE>
Page 3
2.2 Wasp is entitled to licence rights to third parties;
2.3 Wasp desires to grant the rights recorded herein below to Technor and
Technor desires to accept such grant from Wasp;
and the parties are entering into this Agreement to give effect thereto.
3 PRIOR ARRANGEMENTS
This Agreement records that:
3.1 a "Letter of Intent and Principles for an Agreement to be finalised at
a later Date" entered into between Technor, Wasp and Matrix Vehicle
Tracking (Proprietary) Limited ("Matrix") dated December 17th 1997 was
cancelled by notice by TECHNOR to Wasp and Matrix, which cancellation
Wasp duly accepted and notified Matrix thereof;
3.2 Wasp undertakes within 14 working days of the Signature Date to take
all steps required by it as regards South African Exchange Control
and/or the Department of Trade and Industry relating to the conclusion
of this agreement by Wasp.
4 LICENCE
4.1 Subject to the terms of this Agreement, and with effect from the
Signature Date, Wasp hereby grants to Technor a non-transferable,
non-assignable exclusive licence to distribute, market, sell and to
promote the WGT in the Territory and (subject to the prior written
approval of Wasp which approval shall not be unreasonably withheld),
use any trademarks owned by Wasp.
4.2 The licence referred to in 4.1 shall :
4.2.1 include the right to appoint manufacturers in the Territory
for terminal units in terms of a Manufacturing Licence; and
4.2.2 shall be exclusive for transacting business with Network
Operators and EMC's in the Territory.
4.3 Technor shall be entitled to:
4.3.1 distribute, market, sell and promote the WGT anywhere in the
world other than within the countries South of the Sahara
within Africa;
4.3.2 appoint Sub-Licencees and or VARS to distribute, market,
sell and promote the WGT anywhere in the world (including
the
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Territory) other than within the countries South of the
Sahara within Africa in terms of a Sub-Licence Agreement
concluded or such other agreement between Technor and a VARS
to the extent that Technor may be required to comply with
local laws or regulations for the purposes of fully
exploiting the WGT;
4.3.3 rename the WGT or any part thereof in so far as Technor
requires to do so for the purposes of its business, provided
that Technor shall be solely liable and responsible for any
damage, loss or action of whatsoever nature brought against
either it or Wasp as a result of Technor so renaming the WGT
or any part thereof;
4.4 Should Technor sign a contract with a Network Operation in any country
outside the Territory or sub Saharan Africa the Territory shall be
extended to include such country provided that Wasp ratify the
substantial nature of such contract in writing. Such ratification by
Wasp shall not be unreasonable withheld or delayed. Such extension to
the Territory shall cease as at 30 June 1999;
4.5 Wasp agrees that should it enter into any negotiations which have as
the object thereof the conclusion of a contract or agreement relating
to the WGT within the countries of England, Germany, France, Italy,
and Spain within 12 months of the Signature Date, prior to the
conclusion of any such agreements Wasp shall use its best endeavors
and in good faith, enter into negotiations with Technor with the
intent of concluding such an agreement with Technor or including
Technor as a party in such agreement.
4.6 Technor shall have the right to request Wasp to undertake development
of the Core Technology on terms to be agreed between the parties on an
arms length commercial basis;
5 DURATION
This Agreement shall -
5.1 commence on the Signature Date and shall continue for a period of 25
years thereafter;
5.2 continue thereafter for further period of 5 years, provided that
either party shall be entitled to terminate this Agreement by giving
the other party at least 12 months written notice to that effect prior
to the expiry of the first 25 year period. Should such notice be given
by either party to the other, this Agreement will terminate on the
expiry of the first 25 year period.
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6 PRICE AND ROYALTY
6.1 In consideration of the rights granted by Wasp pursuant to and entry
into this Agreement by Wasp and Technor, Technor shall issue to Wasp
or as Wasp shall direct otherwise in writing, a total of 400,000 (Four
hundred thousand) shares of common stock of Technor, par value USD
0.001 per share (the "licence shares"), subject to the additional
terms and conditions, set forth on the certificates representing the
licence shares. Wasp acknowledges and agrees that such licence shares
have not been registered under the Securities Act of 1933, as amended
and may not be sold or transferred except pursuant to a registration
under the Securities Act of 1933 or exemption from registration;
6.2 Except as otherwise as provided herein no consideration or royalty
shall be payable by Technor to Wasp for the granting of this licence.
It is recorded, however, that subject to clause 7.6.2 below Technor
undertakes for the term of this Agreement to enter into an exclusive
supply agreement with Wasp in terms of which Wasp will supply to
Technor all of Technor's requirements worldwide of the WGT to be used
in connection with Wasp's GSM technology on an arm's length commercial
basis.
7 TECHNOR'S OBLIGATIONS
Technor shall -
7.1 actively and diligently promote the distribution, marketing, sale and
promotion of the WGT in the Territory and in the countries of England,
Germany, France, Italy, and Spain where, in terms of 4.1 it is
entitled to so distribute, market, sell and promote the WGT;
7.2 ensure that any person appointed by Technor in terms of a
Manufacturing Licence conforms with the Manufacturing Standards;
7.3 furnish Wasp with such written reports as may be reasonably required
by Wasp from time to time to keep Wasp fully informed of all relevant
market conditions affecting the manufacture, sale and demand for the
WGT in the Territory and the countries of England, Germany, France,
Italy, and Spain or any other region where, in terms of clause 4.1
Technor is entitled to distribute, market, sell and promote the WGT;
7.4 promptly bring to the attention of Wasp any improper or wrongful use
of any of Wasp's intellectual property rights which come to Technor's
attention;
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7.5 at Wasp's sole cost and expense, assist Wasp insofar as Technor is
reasonably able, in taking all steps to defend any infringement of
Wasp's intellectual property or other rights;
7.6 not, without obtaining Wasp's prior written consent, -
7.6.1 make any modification, improvement or other change of any
nature whatsoever to the Core Technology, the WGT or any
other Wasp related product;
7.6.2 manufacture, stock, sell, advertise or be engaged or
interested (directly or indirectly) at any time during the
period of the Agreement in the production, marketing,
distribution and/or sale of any goods which are similar to
or may be used as a substitute for or otherwise compete with
the WGT, save to the extent that Wasp is not able within the
terms and conditions of a long-term supply agreement
conclude between Wasp and Technor to provide Technor's
requirements in respect of the WGT, in which case and then
only for so long as Wasp is unable to so provide Technor's
requirements, Technor shall not be restricted in the
procurement of such competitive goods or products;
7.6.3 dispute or assist anyone else in disputing the validity of
any trade mark, patent, design or copyright used in
connection with the WGT at any time during the period of
this Agreement or after its termination for any reason;
7.6.4 other than as provided for in clause 4.1 above, use or
profess any association or connection with any Wasp
trademark or other Wasp intellectual property;
7.6.5 at any time during the period of this Agreement or after its
termination for any reason engage in any policy or practice
which will be injurious to Wasp or the WGT.
8 MODIFICATIONS AND IMPROVEMENTS
8.1 Should Technor during the currency of this Agreement become aware of
any modifications and/or improvements in and to the WGT, Technor shall
promptly furnish Wasp with full details of such modifications and
improvements, modifications which shall automatically become part of
the WGT subject to and incorporated in this Agreement;
8.2 All proprietary rights and interests vesting in any improvements,
developments or advances in regard to the WGT shall be the sole and
exclusive property of Wasp, irrespective of whether or not such
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improvements, developments and/or advances were conceived of,
developed and/or effected by Wasp or not. All intellectual property
rights in and to such developments, improvements and/or advances shall
vest in Wasp absolutely and as sole beneficial owner thereof.
8.3 If and when so required by Wasp, and at the expense of Wasp, Technor
shall apply or join in applying for the registration in the name of
Wasp of appropriate protection in respect of any developments,
improvements and/or advances which may be effected to the WGT.
8.4 This Agreement serves as an automatic assignment by Technor to Wasp of
all rights all developments, improvements and advances effected to the
WGT during the currency of this Agreement.
8.5 Nothing in this Agreement shall restrict or be construed as a
restriction of Technor's right to undertake Application Development in
the course of use of or deployment of the WGT in pursuit of Technor's
business and such developments shall belong to Technor.
9 CONFIDENTIALITY
The parties shall keep confidential all proprietary information furnished
by each other with respect to any information and/or the WGT, subject to
disclosure as may be required by applicable law or in connection with legal
or judicial proceedings (including, without limitation, any proceedings for
the enforcement of this Agreement or any related agreements).
10 WARRANTIES
Wasp warrants and represents to Technor as at the Signature Date of this
Agreement that :
10.1 to the best of its knowledge and belief, the WGT does not infringe any
existing intellectual property rights;
10.2 Wasp has rights to the WGT, free and clear of all liens, charges and
encumbrances and that Wasp has outside of sub-Saharan Africa as
defined in 4.3.1 not previously assigned, transferred or conveyed any
rights to or in the WGT to any other person;
10.3 has the power and authority to execute this Agreement and to implement
the Agreement, and save for that disclosed in clause 3.2 above, will
not conflict with or violate any agreement or law of the RSA or the
shareholder agreements or articles of association of Wasp to which
Wasp or any of its shareholders is a party or by which Wasp or any of
its shareholders or their respective assets are bound;
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10.4 there is no litigation pending, or to the knowledge of Wasp
threatened, with respect to the ownership of or rights to the WGT;
10.5 save for clause 3.2, no governmental consents or filings are required
with respect to the execution, delivery and performance of the
Agreement;
10.6 subject to clause 11.3, the WGT will perform in accordance with its
specifications (as notified by Wasp from time to time in writing to
Technor, a copy of which specifications applicable at the Signature
Date is annexed hereto marked Schedule 1) if used in conjunction with
products which comply with the Wasp product specifications.
11 EXEMPTIONS
11.1 Wasp does not represent or warrant that the rights granted by it to
Technor in terms of this Agreement (or by Technor to any person
appointed by Technor in terms of this Agreement) will not infringe any
patent, trade mark or design registered in the Territory or in any
other region, but it does warrant that it has no knowledge of any such
conflicting patent, trade mark or design. Technor shall accordingly
not make, nor permit any person appointed by it in terms of this
Agreement, to make any warranty representing the proprietary
information of the WGT or any Wasp product inconsistent or contrary to
the provisions of this clause.
11.2 Accordingly, if the appointment of a manufacturer by Technor, sale or
use of the WGT or any Wasp product by Technor or any person whatsoever
(including but not being limited to any EMC) results in any claim
against Technor or any person appointed by Technor in terms of this
Agreement for an infringement of any patent, trade mark or design
registered in the Territory or any other region, Technor shall be
solely liable therefor and hereby indemnifies Wasp and hold it
harmless against any claim flowing from or in any way connected with
any such infringement.
11.3 Wasp does not warrant that the WGT is capable of commercial
exploitation in the Territory or in any other region and the risk
thereof is assumed solely by Technor and any other person appointed by
it in terms of this Agreement.
11.4 The warranties set forth in clause 10 as regards the WGT or any part
thereof, or any trademark, including but not being limited to the
design, value, efficacy, merchantability or fitness for purpose use of
the WGT, shall not apply to or operate in favour of any person save
Technor. Wasp neither assumes nor authorises any person whatsoever to
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assume any other liability or responsibility in connection with the
sale or use of the WGT.
11.5 Notwithstanding any other provisions in this Agreement to the
contrary, Wasp shall not be liable for any loss of profit or other
special damages or any indirect or consequential damages whatsoever
which Technor or any other party appointed by Technor in terms of this
Agreement may suffer as a result of any breach of this Agreement by
Wasp.
12 BREACH
12.1 Should either party commit a breach of this Agreement and fail to
remedy that breach within 7 days after receipt from the other party of
written notice calling upon it so to do, then the party aggrieved by
that breach shall be entitled, in addition to and without prejudice to
any right it may have as a result of that breach, either to -
12.1.1 enforce the performance of the terms hereof; or
12.1.2 if the breach is a breach of any warranty referred to in
clause 10 or any other material breach, cancel this
Agreement and recover such damages as it may have sustained.
12.2 The parties' remedies under clause 12.1.1 shall not be exhaustive and
shall be in addition and without prejudice to any other remedies they
may have whether for damages or otherwise.
13 ARBITRATION
13.1 Any dispute between the parties in regard to any matter arising out of
this Agreement or its interpretation or their respective rights and
obligations under this Agreement or its cancellation or any matter
arising out of its cancellation, shall be submitted to and decided by
arbitration.
13.2 There shall be 1 arbitrator who shall be, if the question in issue is
-
13.2.1 primarily an accounting matter, an independent chartered
accountant;
13.2.2 primarily a legal matter, an advocate or attorney with at
least 10 years experience;
13.2.3 primarily a technical matter, a suitably qualified person;
13.2.4 any other matter, a suitably qualified person.
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13.3 The appointment of the arbitrator shall be agreed upon between the
parties, but failing agreement between them within a period of 14 days
after the arbitration has been demanded, either of the parties shall
be entitled to request the chairman for the time being of the
Johannesburg Bar Council to make the appointment and, in making his
appointment, to have regard to the nature of the dispute.
13.4 Subject to the other provisions of this clause 13, each arbitration
shall be held in Johannesburg in accordance with the provisions of the
Arbitration Act, 1965, as amended.
13.5 The decision of the arbitrator shall be final and binding on the
parties, and may be made an order of any Court of competent
jurisdiction. Each of the parties hereby submits itself to the
jurisdiction of the Witwatersrand Local Division of the High Court of
South Africa should the other party wish to make the arbitrator's
decision an order of that court.
14 GOVERNING LAW AND JURISDICTION
14.1 The validity of this Agreement, its interpretation, the respective
rights and obligations of the parties and all other matters arising in
any way out of this undertaking or its performance shall be determined
in accordance with the laws of the RSA.
14.2 The parties hereby consent and submit to the jurisdiction of the
Witwatersrand Local Division of the High Court of the Republic of
South Africa for the purposes of all or any legal proceedings arising
from or concerning this Agreement.
15 DOMICILIUM AND NOTICES
15.1 Each party chooses the address set out below as the address at which
all notices and other communications must be delivered for the
purposes of this Agreement -
15.1.1 Wasp : Lower Ground Floor
Lakeside Place
1 Ernst Oppenheimer Drive
Bruma Lake
Johannesburg
2198
Gauteng, South Africa
Telefax Number :(011) 622-8973
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15.1.2 Technor: at:Satraangsvagen 88,
S-18237 Danderyd,
Sweden
Telefax Number : 8 544 90005
16 Any notice or communication required or permitted to be given in terms of
this Agreement shall be valid and effective only if in writing but it shall
be competent to give notice by telefax with receipt confirmed.
16.1 Any notice to a party contained in a correctly addressed envelope and
16.1.1 sent by prepaid registered post to it at its chosen address;
or
16.1.2 delivered by hand to a responsible person during ordinary
business hours at its chosen address;
16.1.3 shall be deemed to have been received, in the case of clause
16.1.1.1, on the 14th business day after posting (unless the
contrary is proved) and, in the case of clause 16.1.1.2, on
the day of delivery.
16.2 Any notice sent by telefax to a party at its telefax number shall be
deemed (unless the contrary is proved) to have been received -
16.2.1 if it is transmitted during normal business hours, within 2
hours of transmission;
16.2.2 if it is transmitted outside normal business hours, within 2
hours of the commencement of normal business hours on the
first business day after it is transmitted.
16.3 Each party chooses the physical address set out opposite its name in
clause 15.1 as the address at which legal process must be delivered
for the purpose of this Agreement.
16.4 The parties shall be entitled at any time to change their addresses
for the purposes of this clause 15.1 to any other address in the RSA
by giving written notice to that effect to the other.
17 GENERAL
17.1 Any latitude or extension of time which may be allowed by any party
shall not under any circumstances whatsoever act as an estoppel or be
a waiver of that party's rights hereunder.
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17.2 No alteration or variation to, or consensual cancellation of, this
Agreement shall be of any force or effect unless it is recorded in
writing and signed by both parties to this Agreement.
17.3 The parties to this Agreement undertake to treat all matters relating
to this Agreement and the annexures hereto as being confidential and,
therefore, shall not, without the written approval of the others,
disclose the provisions hereof to any third party.
17.4 This Agreement constitutes the entire contract between the parties and
no other conditions, warranties, guarantees and representations shall
be of any force or effect other than those which are included herein.
17.5 All the transactions and arrangements contemplated in this Agreement
constitute one indivisible transaction.
18 INTERPRETATION
18.1 In this Agreement, unless the context requires otherwise -
18.1.1 words importing any one gender shall include the other two
genders;
18.1.2 the singular shall include the plural and vice versa;
18.1.3 a reference to natural persons shall include created
entities (corporate and unincorporate) and vice versa.
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18.1.4 The headings in this Agreement have been inserted for
convenience only and shall not be used for nor assist or
affect its interpretation.
SIGNED at on 1998
For: WASP INTERNATIONAL (PTY) LTD
-------------------------------------
Signatory:
Capacity:
Authority:
SIGNED at on 1998
For: TECHNOR INTERNATIONAL INC.
-------------------------------------
Signatory:
Capacity:
Authority:
<PAGE>
EXHIBIT 10.2
SCHEDULE 2
SHAREHOLDERS AGREEMENT
between
GERRIT VAN URK
and
ALBERT VAN URK
and
GUY REDFORD
and
TECHNOR INTERNATIONAL INC
and
WASP INTERNATIONAL (PTY) LTD
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CONTENTS
- --------------------------------------------------------------------------------
NO CLAUSE PAGE NO
- --------------------------------------------------------------------------------
1 DEFINITIONS 4
2 PREAMBLE 5
3 ORGANISATION OF THE COMPANY 6
4 TERMS AND CONDITIONS OF SHAREHOLDER'S LOANS 7
5 ADDITIONAL FINANCING 8
6 SHAREHOLDERS' MEETINGS 8
7 BOARD OF DIRECTORS 9
8 DISPOSAL OR SALE OF ASSETS 10
9 ENTRENCHED PROVISIONS 11
10 PRE-EMPTIVE RIGHTS 13
11 CALL OPTIONS 15
12 ARTICLES OF ASSOCIATION 17
13 DIVIDEND POLICY 17
14 EMPLOYMENT 17
15 RESTRAINT 17
16 ARBITRATION 19
17 BREACH 19
18 NON-VARIATION 20
19 DOMICILIUM AND NOTICES 20
20 GENERAL 21
21 INTERPRETATION 22
22 GOVERNING LAW AND JURISDICTION 23
23 COSTS 23
24 COUNTERPARTS 23
SCHEDULE
The Company's Articles of Association "1"
Employment Contract - Albert Van Urk "2"
Employment Contract - Guy Redford "3"
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1 DEFINITIONS
For the purposes of this agreement unless the context indicates
otherwise -
1.1 "Agreement" means this shareholders agreement and the schedule
hereto;
1.2 "Albert" means Albert Van Urk;
1.3 "Articles" means the articles of association of the Company, from
time to time;
1.4 "Auditors" means the auditors of the Company from time to time;
1.5 "Board" means the board of directors of the Company from time to
time;
1.6 "Business Day" means any day other than a Saturday, Sunday or
public holiday in the RSA, within the meaning of the Public
Holidays Act, 1994 of the RSA;
1.7 "Company" means Wasp International (Proprietary) Limited,
Registration Number 93/00271/07;
1.8 "Effective Date" means the date upon which all the parties to
this agreement have signed this Agreement or in the event of
their having signed the Agreement on different dates, the date of
the last signature;
1.9 "Gerrit" means Gerrit Van Urk;
1.10 "GSM" means the global system for mobile communication as defined
in the European Telecommunications Standards Institute standards;
1.11 "Guy" means Guy Redford;
1.12 "Prime Rate" means the basic quoted lending rate of interest at
which the Standard Bank of South Africa Ltd lends on overdraft
from time to time, as certified by any general manager of that
bank, whose authority and appointment it shall not be necessary
to prove;
1.13 "RSA" means the Republic of South Africa, including the nine
provinces identified in section 103 of the Constitution of the
Republic of South Africa, 1996;
1.14 "Shareholders" means Albert, Gerritt, Guy and Technor,
collectively;
1.15 "Shareholders' Loans" means all amounts due by the Company to the
Shareholders on loan account from time to time;
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1.16 "Shareholders' Meeting" means the shareholders' meetings held in
accordance with 6;
1.17 "Shareholders' Proportion" means, in respect of any Shareholder
at any time, the proportion which the number of shares in the
Company which are beneficially owned by the Shareholder in
question at the time in question bears to the total number of
shares in the issued share capital of the Company at the time in
question;
1.18 "Share Sale Agreement"means the share sale agreement to which
this Agreement constitutes Schedule 2;
1.19 "Technor" means Technor International Inc, a corporation
registered in Nevada, United States of America with its
registered office at Satraangsvagen 88, S-18237 Danderyd, Sweden;
1.20 "WGT" means the GSM technologies or products owned or developed
by the Company, including but not being limited to core
technology vehicle tracking systems, terminal units,
communication processes, policy and procedures; technical
information, know-how, whether or not patented or patentable,
including, without limitation, specifications, marketing studies,
physical performance and other operational information or data
relating to any part of or improvement or new developments of the
system or part of the system developed and made available for
commercial exploitation by the Company from time to time.
2 PREAMBLE
The parties record that -
2.1 in terms of the Share Sale Agreement Technor has agreed to
purchase 25 shares of the issued share capital of the Company
subject to the terms and conditions set out in that agreement;
2.2 Technor, having exercised the first option granted to it in terms
of an option agreement entered into between it and the other
parties to this Agreement on 1 June 1998, has a second option to
acquire the remaining 75% of the total issued share capital of
the Company subject to the terms and conditions set out in that
agreement;
2.3 it is a condition of the Share Sale Agreement that this Agreement
be signed by the parties thereto and becomes unconditional; and
the Shareholders wish to regulate their relationship as shareholders in
the Company in the manner set out in this Agreement.
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3 ORGANISATION OF THE COMPANY
It is recorded that the Company is organised on the following basis -
3.1 NAME
Wasp International (Proprietary) Limited.
3.2 AUTHORISED SHARE CAPITAL
R 1000,00 divided into 1000 ordinary par value shares of R 1,00
each.
3.3 ISSUED SHARE CAPITAL
R 100,00 divided into 100 ordinary par value shares of R 1,00
each of which -
3.3.1 Albert will be the registered and beneficial holder of 25
ordinary shares par value of R 1,00 each in the issued
share capital of the Company;
3.3.2 Gerritt will be the registered and beneficial holder of
25 ordinary par value shares of R 1,00 each in the issued
share capital of the Company;
3.3.3 Guy will be the registered and beneficial holder of 25
ordinary par value shares of R 1,00 each in the issued
share capital of the Company; and
3.3.4 Technor will be the registered and beneficial holder of
25 ordinary par value shares of R 1,00 each in the issued
share capital of the Company.
3.4 ARTICLES OF ASSOCIATION
As per Schedule "1" hereto.
3.5 REGISTERED OFFICE
Price Waterhouse, 90 Rivonia Road, Sandown, Sandton
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3.6 AUDITORS
Price Waterhouse, 90 Rivonia Road, Sandown, Sandton
3.7 BANKERS
Nedbank Limited, Fredman Drive, Sandown, Sandton
3.8 FINANCIAL YEAR-END
28 February
4 TERMS AND CONDITIONS OF SHAREHOLDER'S LOANS
4.1 The parties record that as at the Effective Date the Company is
indebted to the following shareholders in the following amounts :
4.1.1 Albert : R 717 793,00;
4.1.2 Gerritt : R 678 936,00; and
4.1.3 Guy : R 864 013,00. .
4.1.4 The parties agree that the Shareholders shall meet from
time to time to discuss the finance required by the
Company and the methods of providing such finance. All
Shareholders Loans (including those in 4.1.1, 4.1.2 and
4.1.3) shall be governed by the following terms and
conditions -
4.1.5 all Shareholders' Loans will only be repaid by the
Company when the Board considers that the Company is in a
financial position to make such repayments;
4.1.6 subject to 4.3 no Shareholders' Loan or any part thereof
shall be repaid to any Shareholder unless a proportionate
repayment is made to the other Shareholders;
4.1.7 all Shareholders' Loans shall bear interest at the Prime
Rate calculated and payable monthly in arrear.
4.2 If the Company is wound-up (provisionally or finally) or is
placed into judicial management in terms of a provisional or
final order, then all amounts due to the Shareholders by the
Company shall immediately become due and payable.
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4.3 Subject to 4.1.1, if the Shareholders' Loans are at any time not
in the Shareholders' Proportion, then any Shareholder whose
Shareholders' Loans are in excess of its Shareholders' Proportion
shall be entitled to the repayment of such excess before the
repayment of any other Shareholders' Loans.
5 ADDITIONAL FINANCING
The parties record that it is their intention that the Company be self
financing but that if the Company requires additional finance from time
to time for the establishment, development, expansion and carrying on of
its business and if it cannot be raised from external sources, then the
Shareholders shall meet in order to decide how best to raise that
additional finance.
6 SHAREHOLDERS' MEETINGS
6.1 The parties shall convene and hold Shareholders' Meetings of the
Company on the following basis -
6.1.1 a Shareholders' Meeting shall be held at least every 6
months;
6.1.2 an annual general meeting of the Shareholders of the
Company shall be held in accordance with the provisions
of the Companies Act, 1973;
6.1.3 at least 14 days' prior written notice of each
Shareholders' Meeting is given to all Shareholders.
6.2 Guy shall be the chairman at Shareholders' Meetings. If there is
an equality of votes on any resolution tabled at a Shareholders'
Meeting, then Guy shall have a second or casting vote at that
meeting.
6.3 There shall be no quorum at a Shareholders' Meeting unless
Shareholders holding not less than 75% of the shares in the
ordinary share capital of the Company are present in person or by
proxy.
6.4 No business shall be transacted at the Shareholders' Meeting
unless a quorum is present at the commencement of and throughout
the meeting.
6.5 All resolutions to be passed at a Shareholders' Meeting shall
acquire the approval of Shareholders holding not less than 50,1%
of the shares in the issued ordinary share capital of the Company
to be effected, but subject to the provisions of 9.
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6.6 The Shareholders shall procure that a record is made of all
decisions taken at Shareholders' Meetings and shall ensure that
such records are inserted into a minute book kept for that
purpose.
7 BOARD OF DIRECTORS
7.1 The Board of the Company shall consist of at least 4 persons.
7.2 Guy shall be the chairman of the Board and function as the
Company's chief executive officer and managing director. If there
is an equality of votes on any resolution tabled at any Board
meeting, Guy shall have a second or casting vote.
7.3 Meetings of the Board shall be held at least once every month in
accordance with the provisions of the Articles from time to time,
it being agreed by the parties that Technor's duly appointed
director shall be entitled to participate at such meetings either
in person or telephonically.
7.4 At least 7 days' prior written notice of each Board meeting shall
be given by the Company to all the directors, which notice shall
set forth any matters of a material nature to be considered or
resolved by the Board at such meeting.
7.5 For so long as :
7.5.1 Albert owns at least 5 % of the shares in the entire
issued ordinary share capital of the Company he shall be
entitled to be or to appoint a director of the Company;
7.5.2 Gerritt owns at least 5 % of the shares in the entire
issued ordinary share capital of the Company he shall be
entitled to be or to appoint a director of the Company;
7.5.3 Guy owns at least 5 % of the shares in the entire issued
ordinary share capital of the Company he shall be
entitled to be or to appoint a director of the Company;
7.5.4 Technor owns at least 5 % of the shares in the entire
issued ordinary share capital of the Company it shall be
entitled to appoint a director of the Company.
7.6 Each Shareholder shall be entitled to remove and to replace any
director so appointed by it from time to time and to appoint an
alternate to such director. Any such appointments or removals
shall be made by written notice to the Company signed by the
Shareholder in question and shall be operative as soon as such
written notice is received by the Company.
<PAGE>
Page 9
7.7 There shall be no quorum at any meetings of the Board unless
directors (or their alternates) who have been appointed by
Shareholders who hold at least 75% of the shares in the ordinary
share capital of the Company are present.
7.8 No business shall be transacted at a directors' meeting unless a
quorum is present at the commencement of and throughout that
meeting.
7.9 Each director on the Board shall have 1 vote and resolutions of
the Board shall, subject to 9, require it to be approved by a
majority of the directors of the Company (or their alternates)
present and voting in order to be of force or effect.
7.10 The Board shall ensure that a record is made of all decisions
taken at meetings of the Board and shall ensure that such records
are inserted into a minute book kept for that purpose.
8 DISPOSAL OR SALE OF ASSETS
8.1 The Board shall not, save with the approval of a general meeting
of the Company and subject to 8.2 for so long as the option
agreement referred to in 2.2 and 10.1 remains in force, have the
power to dispose of -
8.1.1 the whole or substantially the whole of the undertaking
of the Company;
8.1.2 the whole or the greater part of the assets of the
Company or
8.1.3 the WGT or any substantial part thereof.
(collectively "the Assets").
8.2 Should the Board secure the necessary approval referred to in 8.1
and desire to dispose of or receive a BONA FIDE third party offer
("the Third Party Offer") to purchase the Assets, then the Board
shall first offer the Assets to Technor for the same
consideration and on the same terms and conditions set out in the
Third Party Offer ("the Second Offer"), it being specifically
recorded by the parties hereto that any such Second Offer shall
not preclude Technor from exercising its option in terms of the
agreement referred to in 2.2 and 10.1. at any time subject to the
terms of such agreement.
8.3 The Second Offer may only be accepted within 180 days from
receipt of the Second Offer. Should the Second Offer not be
accepted by Technor, or should the Board not receive notification
of acceptance thereof within such 180 day period, then the Board
shall be entitled to sell or otherwise dispose
<PAGE>
Page 10
of the Assets for the consideration and on the terms and
conditions set out in the Third Party Offer, provided that -
8.3.1 the sale is concluded within 60 days after the end of the
180 day period referred to in 8.3;
8.3.2 if a sale is not concluded within the 60 day period
referred to in 8.3.1, then the Assets may not be sold to
the third party in question or any other third party and
if the Board once again wishes to sell the Assets it may
only do so in accordance with the this clause 8.
9 ENTRENCHED PROVISIONS
9.1 The parties agree that, unless Shareholders holding not less than
75% of the shares in the issued share capital of the Company vote
in favour of the appropriate resolution, the Shareholders and/or
the Directors shall not -
9.1.1 amend the Articles;
9.1.2 sell, alienate or pledge all or any of the assets of the
Company or the rights belonging thereto or connected
therewith;
9.1.3 change the nature of the business of the Company or carry
on any other business which is not directly related to
the business of the Company;
9.1.4 wind-up the Company on a voluntary basis;
9.1.5 create third party debts, debentures, liens or
encumbrances;
9.1.6 mortgage, pledge or otherwise encumber the assets of the
Company;
9.1.7 change the Auditors;
9.1.8 purchase any business or asset, other than in the
ordinary, normal and regular course of the business of
the Company, or enter into any lease in terms of which
any item will be leased, otherwise than in the ordinary,
normal and regular course of the business of the Company;
9.1.9 enter into any lease of movable or immovable property
(save for that of rental of office premises) in terms of
which the total rental payable is in excess of R
10 000,00 per month;
<PAGE>
Page 11
9.1.10 enter into, extend, renew or modify any long-term
(exceeding 6 months) contracts, other than in the normal,
ordinary and regular course of the business of the
Company and any unusual or onerous contract;
9.1.11 subscribe for or purchase shares or debentures issued by
any company or other body corporate;
9.1.12 enter into any transaction outside the normal, ordinary
and regular course of its business;
9.1.13 suspend or cease or abandon any business or part thereof
carried on by the Company;
9.1.14 furnish any suretyship or guarantees for the obligations
of any third party;
9.1.15 issue any indemnities by the Company or undertaking of
any other similar obligations;
9.1.16 institute any legal proceedings of any nature whatsoever
other than those arising in the ordinary, normal and
regular course of the business of the Company;
9.1.17 change the basis of accounting which was used by the
Company for its previous accounting periods;
9.1.18 change the financial year of the Company;
9.1.19 employ or dismiss any executive or employee of the
Company;
9.1.20 pay any bonus or increase in salary to any employee of
the Company;
9.1.21 permit any borrowings by the Company;
9.1.22 dispose of assets other than in the ordinary and regular
course of the business of the Company (subject to always
to 8.2);
9.1.23 approve of budgets of the Company from time to time and
deviations therefrom;
9.1.24 delegate any powers in respect of the matters set out in
this clause.
9.2 The Shareholders undertake not to increase or decrease or alter
the authorised or issued share capital of the Company or issue
any securities
<PAGE>
Page 12
convertible into or exchangeable for share capital in the Company
for so long as the option agreement referred to in 10.1 remains
in force without the prior written consent of Technor
10 PRE-EMPTIVE RIGHTS
10.1 The parties record that an option agreement was signed between
them on 1 June 1998 in terms of which Technor was granted the
non-transferable and non-assignable right and option to acquire
100% of the issued share capital of the Company in two tranches
of 25% and 75% each.
10.2 Notwithstanding anything to the contrary contained in the
Articles or in this Agreement and subject always to the
provisions of the option agreement referred to in 10.1, a
Shareholder ("the Offeror") shall not be entitled to sell,
alienate or in any other manner dispose of or transfer any share
in the Company unless-
10.2.1 all the shares ("the Offer Shares") beneficially owned by
the Offeror in the Company; and
10.2.2 all the Offeror's ordinary loans ("the Offer Loans") to
the Company,
have first been offered in writing ("the Offer") to the other
Shareholders ("the Offerees") pro rata to their respective
shareholdings.
10.3 The Offer shall -
10.3.1 be irrevocable for a period of 30 days after the date of
its receipt by the Offeree(s);
10.3.2 be at a price -
10.3.2.1 in the case of the Offer Shares, the price
specified by the Offeror in the Offer; and
10.3.2.2 in the case of the Offer Loans, specified by
the Offeror in the Offer, which shall not
exceed the face value thereof;
10.3.3 be subject to the conditions that -
10.3.3.1 the whole and not a part only of the Offer is
accepted;
10.3.3.2 the purchase price is payable in cash (in the
currency of the RSA) against registration of
transfer of the Offer
<PAGE>
Page 13
Shares and cession of the Offer Loans to the
Offeree(s) in the applicable proportions;
10.3.4 not be subject to any other terms or conditions of any
nature whatever without the prior written consent of
(all) the Offeree(s).
10.4 If there is more than one Offeree and any one of them does not
accept the Offer to purchase his proportionate share of the Offer
Shares and the Offer Loans, then the remaining Offerees shall be
entitled within 7 days after -
10.4.1 they have all been notified of that fact; or
10.4.2 the expiration of the 30 day period referred to in
10.3.1,
whichever is the earlier, to purchase a proportionate share of
the Offer Shares and the Offer Loans at the price and on the
conditions stated in 10.3 until all the Offerees have or have not
exercised their rights to accept the Offer.
10.5 Should the Offeree(s) not accept the whole of the Offer, then the
Offeror will be entitled, within 30 days after that
non-acceptance, to sell and transfer all (but not a part only) of
the Offer Shares and the Offer Loans to a bona fide third party
but only at a price which is not less than that referred to in
the Offer and on the same conditions stated in 10.3.
10.6 Should a sale be made by the Offeror in terms of this clause 10,
the Board shall not be obliged to register the transfer of the
Offer Shares and the Offer Loans unless -
10.6.1 the Purchaser has agreed in writing to be bound by the
terms and conditions of this Agreement;
10.6.2 it has been satisfied in such manner as it may reasonably
require that such sale is BONA FIDE and conforms to the
requirements of this clause 10; or
10.6.3 it has good grounds (which shall be given) for stating
that the admission of the proposed transferee is not in
the interests of the Company.
10.7 Should the Offeror not sell all the Offer Shares and Offer Loans
within the 30 days referred to in 10.5, then the provisions of
this clause 10 shall again apply, MUTATIS MUTANDIS, to all the
Offeror's shares in and loans to the Company.
<PAGE>
Page 14
11 CALL OPTIONS
11.1 Should Albert die, or become permanently disabled such that he is
unable to meaningfully participate in the affairs of the Company
or cease to be employed by the Company for whatsoever other
reason, then Gerrit shall have an option ("the Call Option") to
purchase all of Albert's shares in and claims on loan account
against the Company ("the Option Shares and Claims") on the
following terms and conditions:
11.1.1 should Gerrit wish to exercise the Call Option he shall
do so by delivering written notice to that effect to
Albert or the executor of his estate, as the case may be,
at any time after the event referred to above and with
effect from the date of that notice ("the Call Option
Date") a sale of all of the Option Shares and Claims to
Gerrit shall result, at the price and on the terms and
conditions determined by agreement between Albert or the
executor of his estate, as the case may be, and Gerrit,
but failing agreement within 30 days of the Call Option
Date, at the price determined by the Auditors, who shall
determine the fair market value of the Option Shares and
Claims taking into account all factors they deem relevant
including, but without limiting the generality of the
aforegoing, net asset value, any agreements concluded by
the Company but not yet implemented which may have a
material effect on the value of the Option Shares and
Claims, price earnings multiples applicable to companies
quoted on the Johannesburg Stock Exchange where those
companies carry on businesses similar to the business
carried on by the Company at the Call Option Date and the
competitive position of the Company in the industry, and
the decision of the Auditors shall be final and binding
on the parties;
11.1.2 the purchase price for the Option Shares and Claims shall
be paid by Gerrit to Albert or the executor of his
estate, as the case may be, in cash within 7 days of the
price being agreed or determined against delivery of
share certificates in respect of the shares in question
together with duly signed share transfer forms and a
cession of the claims in question.
11.2 Should Gerritt die, or become permanently disabled such that he
is unable to meaningfully participate in the affairs of the
Company, then Albert shall have an option to purchase all of
Gerritt's shares in and claims against the Company ("the Option
Shares and Claims") on the terms and conditions set out in 11.1,
MUTATIS MUTANDIS, save that each reference to "Albert" shall be a
reference to "Gerritt".
11.3 Should both Albert and Gerritt die within 14 Business Days of
each other, or become permanently disabled such that they are
unable to meaningfully
<PAGE>
Page 15
participate in the affairs of the Company within 14 Business Days
of each other, then Guy shall have an option to purchase all of
Albert's and Gerritt's shares in and claims against the Company
("the Option Shares and Claims") on the terms and conditions set
out in 11.1, MUTATIS MUTANDIS, save that each reference to
"Albert" shall be a reference to "Albert and Gerrit", and each
reference to "Gerrit" shall be a reference to "Guy".
11.4 Should Guy die, or become permanently disabled such that he is
unable to meaningfully participate in the affairs of the Company
or cease to be employed by the Company for whatsoever other
reason, then the Albert and Gerrit shall have an option to
purchase all of Guy's shares in and claims against the Company on
the terms and conditions set out in 11.1 MUTATIS MUTANDIS, save
that each reference to "Albert" shall be a reference to "Guy",
and each reference to "Gerrit" shall be a reference to "Albert
and Gerrit".
12 ARTICLES OF ASSOCIATION
Should the provisions of this Agreement conflict with the provisions of
the Articles in force from time to time, then the provisions of this
Agreement shall prevail and any party shall be entitled to require the
passing of a special resolution to make the appropriate amendments to
the Articles to resolve the conflict in question.
13 DIVIDEND POLICY
The parties agree that, unless the Shareholders decide otherwise from
time to time, the Company shall not declare and pay a dividend unless
the Shareholder's Loans are in the Shareholders' Proportion.
14 EMPLOYMENT
14.1 Albert and Guy shall both be employed on a full time basis by the
Company substantially on the terms and conditions set out in the
employment contracts attached hereto as SCHEDULE "2" and SCHEDULE
"3".
14.2 The Company shall procure that the Auditors (acting as experts
and not arbitrators) independently assess and determine the total
remuneration package payable to Albert and Guy in terms of the
said employment contracts. Such determination shall be final and
binding on all parties to this Agreement.
<PAGE>
Page 16
14.3 Until such determination has been made, Albert and Guy shall
continue to be employed by the Company on the same terms and
conditions that were in force on the Effective Date.
15 RESTRAINT
15.1 Each of the parties to this Agreement undertakes to the other
parties that for a period of 5 years from the Effective Date it
will not, either alone or jointly or together with or as agent
for any other person, partnership, body corporate or association
of any nature whatsoever -
15.1.1 be engaged, interested or concerned, whether financially
or otherwise or whether directly or indirectly, in;
15.1.2 be a director of or a shareholder in a company carrying
on or concerned directly or indirectly with;
15.1.3 solicit any employee or customer of the Company;
15.1.4 act as a consultant or adviser to -
any -
(A) business which is the same as or similar to
the business carried on by the Company;
(B) company or other body corporate carrying on a
business of the nature referred to in (A).
15.2 The restraints referred to in 15.1 shall only apply to the RSA,
Botswana, Lesotho, Zimbabwe, Namibia and Swaziland.
15.3 Each party records that the undertaking given in terms of 15.1
is -
15.3.1 fair and reasonable as regards its nature, restraint and
period;
15.3.2 necessary to protect the other parties' interests.
15.4 The undertaking set out in 15.1 is subject to the
condition that it will not prevent any of the parties at
any time from being the beneficial shareholder or not
more than 5% in the aggregate of the equity share capital
of any company, one of whose business is the same as or
similar to the business of the Company, and whose shares
are listed on The Johannesburg Stock Exchange.
<PAGE>
Page 17
15.5 Each of the restraints set out in 15.1 -
15.5.1 shall be construed as severable and divisible and
given effect to as such;
15.5.2 shall not be cancelled as a result of the
termination of this Agreement for any reason
whatsoever;
15.5.3 shall be enforceable by any of the parties or
their assignees notwithstanding any such
termination.
16 ARBITRATION
16.1 Any dispute between the parties in regard to any matter arising
out of this Agreement or its interpretation or their respective
rights and obligations under this Agreement or its cancellation
or any matter arising out of its cancellation, shall be submitted
to and decided by arbitration.
16.2 There shall be 1 arbitrator who shall be, if the question in
issue is -
16.2.1 primarily an accounting matter, an independent chartered
accountant of not less than 15 years' standing;
16.2.2 primarily a legal matter, a practising attorney or
advocate of not less than 15 years' standing;
16.2.3 primarily a technical matter, a suitably qualified
person;
16.2.4 any other matter, a suitably qualified person.
16.3 The appointment of the arbitrator shall be agreed upon between
the parties, but failing agreement between them within a period
of 14 days after the arbitration has been demanded, either of
the parties shall be entitled to request the chairman for the
time being of the Johannesburg Bar Council to make the
appointment and, in making his appointment, to have regard to the
nature of the dispute.
16.4 Subject to the other provisions of this clause 16, each
arbitration shall be held in Johannesburg in accordance with the
provisions of the Arbitration Act, 1965, as amended.
16.5 The decision of the arbitrator shall be final and binding on the
parties, and may be made an order of any Court of competent
jurisdiction. Each of the parties hereby submits itself to the
jurisdiction of the Witwatersrand Local
<PAGE>
Page 18
Division of the High Court of the RSA should the other party wish
to make the arbitrator's decision an order of that court.
17 BREACH
17.1 Should any party commit a breach of this Agreement and fail to
remedy that breach within 7 days after receipt from the other
parties of written notice calling upon him/it so to do, then the
party aggrieved by that breach shall be entitled, in addition to
and without prejudice to any right he/it may have as a result of
that breach, either to -
17.1.1 enforce the performance of the terms hereof; or
17.1.2 cancel this Agreement and recover such damages as he/it
may have sustained.
17.2 The parties remedies under 17.1 shall not be exhaustive and shall
be in addition and without prejudice to any other remedies they
may have whether for damages or otherwise.
18 NON-VARIATION
No alteration or variation to, or consensual cancellation of, this
Agreement shall be of any force or effect unless it is recorded in
writing and signed by all the parties to this Agreement.
19 DOMICILIUM AND NOTICES
19.1 The parties choose the address set out below as the address at
which all notices and other communications must be delivered for
the purposes of this Agreement -
19.1.1 Albert at 20 Van Rooy Street, Potchefstroom or Telefax
Number (0148) 297 2121;
19.1.2 the Company at Lower Ground Floor, Exide Place, 1 Ernst
Oppenheimer Drive, Bruma Lake, Johannesburg or Telefax
(011) 622-8973;
19.1.3 Gerrit at 20 Van Rooy Street, Potchefstroom or Telefax
Number (0148) 297 2121;
<PAGE>
Page 19
19.1.4 Guy at 4A, Redhill Road, Morningside, Sandton, 2128 or
Telefax No. (011) 783-1719;
19.1.5 Technor at Satraangsvagen 88, S-18237
Danderyd, Sweden, or Telefax Number (08) 455-90005
19.2 Any notice or communication required or permitted to be given in
terms of this Agreement shall be valid and effective only if in
writing but it shall be competent to give notice by telefax.
19.3 Any notice to a party contained in a correctly addressed envelope
and delivered by hand to a responsible person during ordinary
business hours at its chosen address, shall be deemed to have
been received on the day of delivery.
19.4 Any notice sent by telefax to a party at its telefax number shall
be deemed (unless the contrary is proved) to have been received -
19.4.1 if it is transmitted during normal business hours, within
2 hours of transmission;
19.4.2 if it is transmitted outside normal business hours,
within 2 hours of the commencement of normal business
hours on the first Business Day after it is transmitted.
19.5 The parties choose the physical address set out opposite its name
in 19.1 as the address at which legal process must be delivered
for the purpose of this Agreement.
19.6 The parties shall be entitled at any time to change their
addresses for the purposes of this clause 19 to any other address
in the RSA by giving written notice to that effect to the other.
20 GENERAL
20.1 Any latitude or extension of time which may be allowed by any
party shall not under any circumstances whatsoever act as an
estoppel or be a waiver of that party's rights hereunder.
20.2 The parties to this Agreement undertake to treat all matters
relating to this Agreement and the schedules hereto as being
confidential and, therefore, shall not, without the written
approval of the others, disclose the provisions hereof to any
third party.
<PAGE>
Page 20
20.3 This Agreement constitutes the entire contract between the
parties as regards its subject matter and no other conditions,
warranties, guarantees and representations shall be of any force
or effect other than those which are included herein.
20.4 All the transactions and arrangements contemplated in this
Agreement constitute one indivisible transaction.
21 INTERPRETATION
21.1 In this Agreement, unless the context requires otherwise -
21.1.1 words importing any one gender shall include the other
two genders;
21.1.2 the singular shall include the plural and vice versa;
21.1.3 a reference to natural persons shall include created
entities (corporate and unincorporate) and vice versa.
21.1.4 "day" means any day other than a Saturday, Sunday or any
official public holiday within the RSA;
21.1.5 any reference to an enactment is to that enactment as at
the date of signature hereof and as amended or re-enacted
from time to time;
21.1.6 if any provision in a definition is a substantive
provision conferring rights or imposing obligations on
any party, notwithstanding that it is only in the
definition clause, effect shall be given to it as if it
were a substantive provision in the body of this
Agreement;
21.1.7 when any number of days is prescribed in this Agreement,
that number of days shall be reckoned exclusively of the
first and inclusively of the last day unless the last day
falls on a Saturday, Sunday or official public holiday,
in which event the last day shall be the next succeeding
day which is not a Saturday, Sunday or official public
holiday;
21.1.8 expressions or words defined in this Agreement shall bear
the same meaning in the schedules to this Agreement which
do not themselves contain definitions.
21.2 The headings in this Agreement have been inserted for convenience
only and shall not be used for nor assist or affect its
interpretation.
<PAGE>
Page 21
22 GOVERNING LAW AND JURISDICTION
22.1 The validity of this Agreement, its interpretation, the
respective rights and obligations of the parties and all other
matters arising in any way out of this undertaking or its
performance shall be determined in accordance with the laws of
the RSA.
22.2 The parties hereby consent and submit to the jurisdiction of the
Witwatersrand Local Division of the High Court of the RSA for the
purposes of all or any legal proceedings arising from or
concerning this Agreement.
23 COSTS
Each party shall bear its own costs of and incidental to the
negotiating, preparing and drawing of this Agreement.
24 COUNTERPARTS
This Agreement may be executed in any number of counterparts which when
so executed will be deemed to be an original and all of which when taken
together will constitute one and the same instrument. One or more
counterparts of this Agreement may be delivered via telefax with the
intention that it will have the same effect as the delivery of an
original counterpart hereof.
SIGNED at on 1998
--------------------------------
ALBERT VAN URK
<PAGE>
Page 22
SIGNED at on 1998
--------------------------------
GERRIT VAN URK
SIGNED at on 1998
--------------------------------
GUY REDFORD
SIGNED at on 1998
For: TECHNOR INTERNATIONAL INC.
--------------------------------
Signatory:
Capacity:
Authority:
<PAGE>
Page 23
SIGNED at on 1998
For: WASP INTERNATIONAL (PTY) LTD
--------------------------------
Signatory:
Capacity:
Authority:
<PAGE>
SCHEDULE 1
THE COMPANY'S ARTICLES OF ASSOCIATION
<PAGE>
EXHIBIT 10.3
OPTION AGREEMENT
between
GERRIT VAN URK
and
ALBERT VAN URK
and
GUY REDFORD
and
TECHNOR INTERNATIONAL INC.
<PAGE>
1 DEFINITIONS
In this agreement, unless the context indicates otherwise, the words and
expressions set out below shall have the meanings assigned to them and
cognate expressions shall have a corresponding meaning, namely:
1.1 "the/this Agreement" means this option agreement;
1.2 "Business Day" means any day other than a Saturday, Sunday or
public holiday in the RSA, within the meaning of the Public
Holidays Act, 1994 of the RSA;
1.3 "GR" means Guy Redford in his personal capacity and as agent for
the remaining Shareholders in terms of 4.1,4.2 and 5.1;
1.4 "Licence Agreement" means the licence agreement entered into
between Wasp (as licensor) and Technor (as licencee) pursuant to
which Wasp granted to Technor a non-transferable, non-assignable
and exclusive licence to distribute, market and sell certain GSM
technologies or products owned or developed by Wasp and more
fully described under the definition of "WGT" in 1.18 of that
agreement or as amended or supplemented from time to time;
1.5 "RSA" means the Republic of South Africa, being the nine
provinces identified in section 103 of the Constitution of the
Republic of South Africa, 1996;
1.6 "Shareholders" means Gerrit van Urk, Albert van Urk and Guy
Redford;
1.7 "Shares" means all the ordinary par value shares of R1,00 each in
the issued share capital of Wasp,
1.8 "Technor" means Technor International Inc, a corporation
incorporated in Nevada, United States of America with its
registered office at Satraangsvagen 88, S-18237 Danderyd, Sweden;
1.9 "Wasp" means Wasp International (Pty) Ltd, Reg No 93/00271/07, a
private company with limited liability incorporated under the
laws of the RSA.
<PAGE>
2 PREAMBLE
It is recorded for the purpose of elucidating the operative provisions
of this Agreement, that it is being entered into in the following
circumstances:
2.1 Wasp and Technor have entered into the Licence Agreement;
2.2 Technor wishes to obtain the right and option to acquire the
equity of Wasp in order to secure further technologies which may
be developed by Wasp in the future;
2.3 the Shareholders have agreed to grant the right and option to
Technor to acquire 100% of the Shares in two tranches and Technor
has agreed to acquire such options on the terms and conditions
set out in this Agreement.
3 OPTION
3.1 The Shareholders hereby irrevocably grant to Technor the
non-transferable and non-assignable right and option to acquire
100% of the Shares from them in the following tranches:
3.1.1 25% of the Shares, by notifying on or before 7 June 1998
("the First Option");
3.1.2 75% of the Shares, by notifying on or before 30 June 1999
("the Second Option");
3.2 The purchase price due and payable by Technor to the Shareholders
on exercise of the First Option shall be the aggregate of
US$500,000,00 plus 200,000 shares of common stock of Technor, at
par value of US$0,01 per share.
3.3 The purchase price due and payable by Technor to the Shareholders
on exercise of the Second Option shall be the aggregate of
US$3,000,000,00 and shares of common stock of Technor, par value
US$0,01 per share to the value of US$12,000,000,00 as at the date
of their allotment and issue, based on the then average closing
price of the 10 preceding days as quoted on the NASDAQ Stock
Exchange or other inter dealer quotation system upon which
Technor may be listed at such time.
-2-
<PAGE>
3.4 The Shareholders acknowledge and agree that all shares of common
stock of Technor, par value US$0,01 per share, to be allotted and
issued to them pursuant to the exercise of the First Option or
the Second Option, as the case may be, have not been registered
under the USA Securities Act of 1933 and applicable USA State and
Securities laws, as amended and may not be sold or transferred
except pursuant to registration under the USA Securities Act of
1933 or any exemption from such registration.
4 PERIOD OF THE OPTIONS
4.1 The First Option shall be exercisable by the giving of written
notice by Technor to GR on behalf of all the Shareholders at his
chosen DOMICILIUM in terms of 10.1.3, which notice Technor shall
be entitled to give at any time up to and including close of
business on 7 June 1998;
4.2 The Second Option shall be exercisable by the giving of 14 days'
written notice by Technor to GR on behalf all of the Shareholders
at his chosen DOMICILIUM in terms 10.1.3, which notice Technor
shall be entitled to give at any time up to and including close
of business on 30 June 1999.
4.3 If notice to exercise the First Option is not received on or
before the 7 June 1998 both the First Option and Second Option
shall lapse automatically.
5 EXERCISE OF THE OPTIONS
5.1 On receipt by GR on behalf all of the Shareholders of the notice
of exercise of either the First Option or the Second Option or
both, the Shareholders shall within 14 days and against payment
of the balance of the purchase consideration due and payable for
the Shares to be acquired, to :
5.1.1 furnish to Technor the share certificates together with
share transfer forms (duly executed on behalf of the
Shareholders but with the name of the transferee left
blank) in respect of the Shares to which the First Option
or the Second Option applies, as the case may be;
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<PAGE>
5.1.2 a copy of a resolution of the board of directors of Wasp
recognising and agreeing to be bound by the registration
of transfer of the Shares to be acquired in terms of the
First Option or the Second Option, as the case may be, as
well as the appointment of Technor's representatives on
the board of directors of Wasp on the basis set out in 7.
6 OPTION MONIES
As option monies for the granting of the First Option and the Second
Option by the Shareholders to Technor in terms of this Agreement,
Technor undertakes forthwith upon signature of this Agreement to allot
and issue to the Shareholders as fully paid up, 1 350 000 shares of
common stock of Technor, par value US$0,01 per share, subject to such
additional terms and conditions set forth on the certificates
representing the shares concerned. The Shareholders agree that the
representations contained in 3.4 shall also apply to such shares of
common stock of Technor, par value US$0,01.
7 DIRECTORS
7.1 Technor shall be entitled, on exercise of the First Option, to
appoint a single representative on the board of directors of
Wasp, with the right to appoint an alternate director. The
Shareholders agree to accept such nominee.
7.2 In addition, Technor shall be entitled to appoint 100% in number
of the directors on the board of Wasp on exercise of the Second
Option.
8 UNDERTAKINGS AND WARRANTIES
8.1 The Shareholders undertake not to allot and issue, or cause or
consent to be issued any further Shares between the date of
signature of this Agreement and the last date for exercise of the
Second Option without the prior written consent of Technor. If
Technor consents to any such further allotment and issue of
Shares, then the number of Shares in respect of which the First
Option or the Second Option, as the case may be, will apply will
increase correspondingly so as to ensure that the percentage of
shares to which Technor would be entitled on the exercise of the
options concerned would remain unaltered.
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<PAGE>
8.2 The Shareholders warrant that they have agreements in place which
upon exercise and implementation, will render them able, on the
exercise of the First Option or the Second Option by Technor, as
the case may be to deliver the relevant percentage of Shares to
Technor in terms of this Agreement;
9 CONFIDENTIALITY
This Agreement and the entire content thereof is confidential to the
parties and may not be disclosed save for as may be required under
applicable law for the enforcement of the Agreement or part thereof or
otherwise as agreed to in writing by both parties.
10 DOMICILIUM CITANDI ET EXECUTANDI
10.1 Each party chooses the address set out opposite its name below as
its DOMICILIUM CITANDI ET EXECUTANDI at which all notices, legal
processes and other communications must be delivered for the
purposes of this agreement:
10.1.1 Gerrit van Urk: Lower Ground Floor
Lake Side Place
1 Ernst Oppenheimer Drive
Bruma Lake
Johannesburg
2198
Gauteng
South Africa
Telefax Number :(011) 622-8973
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<PAGE>
10.1.2 Albert van Urk: Lower Ground Floor
Lake Side Place
1 Ernst Oppenheimer Drive
Bruma Lake
Johannesburg
2198
Gauteng
South Africa
Telefax Number :(011) 622-8973
10.1.3 Guy Redford: Lower Ground Floor
Lake Side Place
1 Ernst Oppenheimer Drive
Bruma Lake
Johannesburg
2198
Gauteng
South Africa
Telefax Number :(011) 622-8973
10.1.4 Technor : Satraangsvagen 88,
S-18237 Danderyd,
Sweden
Telefax Number: (08) 455-90005
10.2 Any notice or communication required or permitted to be given in
terms of this agreement shall be valid and effective only if in
writing, but it shall be competent to give notice by telefax.
10.3 Any party may by written notice to the other parties change its
chosen address to another physical address and/or its chosen
telefax number to another telefax number, provided that the
change shall become effective on the fourteenth day after the
receipt of the notice by the addressee.
10.3.1 Any notice to a party contained in a correctly addressed
envelope and -
10.3.2 sent by prepaid registered post to it at its chosen
address; or
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<PAGE>
10.3.3 delivered by hand to a responsible person during ordinary
business hours at its chosen address, shall be deemed to
have been received, in the case of 10.3.1, on the seventh
Business Day after posting (unless the contrary is
proved) and, in the case of 10.3.3, on the day of
delivery.
10.4 Any notice by telefax to a party at its telefax number shall be
deemed, unless the contrary is proved, to have been received
within 2 hours of transmission where it is transmitted during
normal business hours or within 2 hours of the opening of
business on the first Business Day after it is transmitted where
it is transmitted outside those business hours.
11 GENERAL
11.1 This Agreement shall be governed by the law of the RSA in all
respects. The parties hereby consent and submit to the
non-exclusive jurisdiction of the Witwatersrand Local Division of
the High Court of the RSA for and in connection with any action
which may be instituted in connection with the terms and
provisions of this Agreement.
11.2 This document contains the entire agreement between the parties
as to the subject matter hereof.
11.3 No party shall have any claim or right of action arising from any
undertaking, representation or warranty not included in this
Agreement.
11.4 No failure by a party to enforce any provision of this Agreement
shall constitute a waiver of such provision or affect in any way
a party's right to require performance of any such provision at
any time in the future, nor shall the waiver of any subsequent
breach nullify the effectiveness of the provision itself.
11.5 No agreement to vary, add to or cancel this Agreement shall be of
any force or effect unless reduced to writing and signed on
behalf of this parties to this Agreement.
11.6 No party may cede any of its rights or delegate any of its
obligations under this Agreement without the prior written
consent of the other parties to this Agreement.
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<PAGE>
11.7 Each party warrants that it is acting as a principal and not as
an agent for an undisclosed principal.
11.8 All stamp duty payable in connection with a transfer of the
Shares from the Shareholders to Technor, shall be for Technor's
account.
SIGNED at on 1998
------------------------------
GERRIT VAN URK
SIGNED at on 1998
------------------------------
ALBERT VAN URK
SIGNED at on 1998
------------------------------
GUY REDFORD
SIGNED at on 1998
For: WASP INTERNATIONAL (Pty) Ltd.
------------------------------
Signatory:
Capacity: Duly Authorized
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<PAGE>
SIGNED at on 1998
For: TECHNOR INTERNATIONAL INC.
------------------------------
Signatory:
Capacity: Duly Authorized
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<PAGE>
EXHIBIT 10.4
SHARE SALE AGREEMENT
between
GERRIT VAN URK
and
ALBERT VAN URK
and
GUY REDFORD
and
TECHNOR INTERNATIONAL INC
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
NO CLAUSE PAGE NO
- --------------------------------------------------------------------------------
1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
2 PREAMBLE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
3 SUSPENSIVE CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . .3
4 DUE DILIGENCE INVESTIGATION . . . . . . . . . . . . . . . . . . . . . . .4
5 SALE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
6 PURCHASE PRICE, ALLOCATION AND PAYMENT . . . . . . . . . . . . . . . . .6
7 COMPLETION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
8 RISK AND BENEFIT. . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
9 WARRANTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
10 SHAREHOLDERS AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . .9
11 SELLERS' ADDITIONAL UNDERTAKINGS. . . . . . . . . . . . . . . . . . . . .9
12 BREACH. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
13 ANNOUNCEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
14 NON-VARIATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
15 ARBITRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
<PAGE>
16 GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
17 INTERPRETATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
18 DOMICILIUM AND NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . .13
19 GOOD FAITH. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
20 GOVERNING LAW AND JURISDICTION. . . . . . . . . . . . . . . . . . . . . .14
21 COSTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
22 COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
23 THE SELLERS JOINTLY AND SEVERALLY GIVE THE FOLLOWING WARRANTIES AS AT THE
EFFECTIVE DATE AND AS AT THE COMPLETION DATE: . . . . . . . . . . . . . .19
24 THE SELLERS JOINTLY AND SEVERALLY GIVE THE FOLLOWING WARRANTIES IN RESPECT
OF THE PERIOD BETWEEN THE EFFECTIVE DATE AND THE COMPLETION DATE: . . . .22
25 THE SELLERS JOINTLY AND SEVERALLY GIVE THE FOLLOWING WARRANTY IN RESPECT OF
THE PERIOD BETWEEN 28 FEBRUARY 1998 AND THE COMPLETION DATE . . . . . .22
SCHEDULES
Effective Date Accounts "1"
Shareholders Agreement "2"
Sellers' Warranties "3"
Disclosure Schedule "4"
Post Loan Statements "5"
<PAGE>
1 DEFINITIONS
For the purposes of this Agreement unless the context indicates otherwise -
1.1 "this Agreement" means this share sale agreement and the schedules
hereto;
1.2 "Albert" means Albert Van Urk;
1.3 "Business Day" means any day other than a Saturday, Sunday or public
holiday in the RSA, within the meaning of the Public Holidays Act,
1994 of the RSA;
1.4 "Company" means Wasp International (Proprietary) Limited, Registration
Number 93/00271/07;
1.5 "Completion Date" means the Effective Date or 5 Business Days after
the Due Diligence End Date, whichever is the later date;
1.6 "Consideration Shares" means the shares defined in 6.1.2;
1.7 "Due Diligence End Date" means 15 July 1998;
1.8 "Due Diligence Investigation" means the due diligence investigation of
the Company to be conducted by the Purchaser after the Signature Date
in terms of 4;
1.9 "Due Diligence Period" means the period commencing on the Signature
Date and ending on the Due Diligence End Date;
1.10 "Disclosure Schedule" means the disclosure schedule, in Schedule 4;
1.11 "Effective Date" means 31 May 1998,
1.12 "Effective Date Accounts" means the audited balance sheet of the
Company as at 28 February 1998 and for the 4 month period ended on the
Effective Date, Schedule 1;
1.13 "Gerrit" means Gerrit Van Urk;
1.14 "Guy" means Guy Redford;
1.15 "Material Adverse Effect" any adverse economic, legal, tax or any
other event having an adverse impact on the structure, activities or
the assets of the Company which could, in the reasonable opinion of
the Purchaser, result
<PAGE>
in a material deterioration in the capacity of the Company to generate
profits on a consolidated basis;
1.16 "the Payment Date" means June 10 1998 as regards 50% of the
consideration set out in 6.1.1 and 30 June 1998 as regards the balance
of such consideration;
1.17 "the Post Loan Statements" means the unaudited pro forma balance sheet
of the Company immediately after the amounts in 11.1 have been loaned
to the Company in accordance with 11, Schedule 5;
1.18 "the Purchaser" means Technor International Inc, a corporation
registered in Nevada, United States of America with its registered
office at Satraangsvagen 88, S-18237 Danderyd, Sweden;
1.19 "RSA" means the Republic of South Africa, including the nine provinces
identified in section 103 of the Constitution of the Republic of South
Africa, 1996;
1.20 "the Sale Shares" means 25 ordinary par value shares of R 1.00 each
in the issued share capital of the Company, being 25% of the entire
issued share capital at the Effective Date -
1.21 8 of which are held by Gerrit;
1.21.1 8 of which are held by Albert; and
1.21.2 9 of which are held by Guy;
1.21.3 "the Sellers" means Gerrit, Albert and Guy collectively;
1.22 "the Shareholders Agreement" means the Shareholders Agreement to be
concluded between the Sellers and the Purchaser (and as amended from
time to time), regulating their relationship as shareholders in the
Company after the implementation of this Agreement, a copy of which is
attached hereto as Schedule 2;
1.23 "the Signature Date" means the date upon which all the parties to this
Agreement have signed this Agreement or in the event of their having
signed this Agreement on different dates, the date of the last
signature.
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<PAGE>
2 PREAMBLE
The parties record that -
2.1 the Sellers are the beneficial owners of 100% of the shares in the
issued share capital of the Company;
2.2 the Sellers wish to sell 25% of the entire issued share capital of the
Company, of which shares -
2.2.1 8 are held by Gerrit;
2.2.2 8 are held by Albert; and
2.2.3 9 are held by Guy.
2.3 the Purchaser, which carries on business in the communication
technology and systems industry, wishes to acquire a 25% interest in
the Company from the Sellers, and the parties are entering into this
Agreement to give effect thereto.
3 SUSPENSIVE CONDITIONS
3.1 This Agreement is subject to the following suspensive conditions -
3.1.1 the approval of the board of directors of the Purchaser;
3.1.2 that the Shareholders Agreement is signed by the parties
thereto and becomes unconditional in accordance with its
terms;
3.1.3 that whatever consents as may be required from the South
African exchange control authorities for the validity or
performance of this Agreement are obtained.
3.2 The suspensive condition in 3.1.1 has been stipulated for the benefit
of the Sellers. The suspensive condition in 3.1.2 has been stipulated
for the joint benefit of the Sellers and the Purchaser. The suspensive
condition in 3.1.3 is not capable of waiver in law.
3.3 If any of the suspensive conditions in 3.1 remains unfulfilled or has
not been waived in writing by the party for the benefit of which such
suspensive condition has been stipulated or by both parties in those
instances where fulfilment of such a condition is not a legal
requirement, on or before the date stipulated in 3.4 or such later
date as the parties may agree upon in writing pursuant to 3.4, this
Agreement shall not come into force or effect. In such
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<PAGE>
event, no party shall have any claim against any other party by
virtue of the provisions of this Agreement, save that the parties
shall be obliged to refund or return forthwith to the appropriate
parties all that has been paid or transferred in terms of this
Agreement.
3.4 The parties shall use their best endeavours to procure that the
suspensive conditions referred to above are fulfilled on or before 3
Business Days after the Signature Date or such later date as the
parties may agree upon in writing, provided that the consents set out
in 3.1.3 are procured, insofar as such consents may be necessary, on
or before 31 July 1998 or such later date as the parties may agree
upon in writing.
4 DUE DILIGENCE INVESTIGATION
4.1 The Purchaser shall, during the Due Diligence Period, be entitled to
conduct a detailed due diligence investigation in respect of the
Company its business and, for the purposes of such due diligence
investigation, the Sellers shall procure that the Purchaser and its
representatives are given full access to all of the books, records,
contracts, documentation, financial information, employees and
advisors of the Company.
4.2 On conclusion of the due diligence investigation and at the latest on
15 July 1998, the Purchaser shall be entitled to terminate this
Agreement in the manner provided for in 4.3 below if, during the
course of the due diligence investigation, it discovers any of the
following facts or circumstances -
4.2.1 that the Company has conducted business which is contrary to
the laws of the RSA;
4.2.2 that the Company has carried out a business practice in the
past which, if terminated, would have a Material Adverse
Effect on the sustainable earnings of the Company; or
4.2.3 that any of the warranties given by the Sellers in terms of
9 are not accurate in any material respect.
provided that the Purchaser shall not be entitled to rely on any fact or
circumstance which is disclosed in Schedule 4 or which is reflected in the
Effective Date Accounts.
4.3 Should the Purchaser be of the view that it has discovered any facts
or circumstances referred to in 4.2, which fact or circumstance would
in the reasonable opinion of the Purchaser, if it were known to the
Purchaser previously, have influenced the Purchaser to enter into this
Agreement, and that, as a result thereof, it wishes to cancel this
Agreement, then it shall give
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<PAGE>
the Sellers written notice ("the Termination Notice") to that effect
on or before 15 July 1998, which Termination Notice shall set out,
with all appropriate justifications, those facts or circumstances
arising out of the due diligence investigation which the Purchaser
determines fall into one of the categories set out in 4.2.
4.4 Should -
4.4.1 the Purchaser give the Sellers a Termination Notice in terms
of 4.3 -
4.4.2 then this Agreement shall terminate and be of no further
force or effect and none of the parties shall have any claim
against the others in respect of or arising therefrom unless
the Sellers give the Purchaser the notice referred to in
4.4.1.2. Should this Agreement be terminated in pursuant to
this clause 4.4.1.1 then the parties shall be obliged to
refund or return forthwith to the appropriate parties all
that has been paid or transferred in terms of this
Agreement;
4.4.2.1 the Sellers not accept the Termination Notice, then the
Sellers shall be entitled to refer the matter for
determination by arbitration in terms of 15 by giving
the Purchaser written notice to that effect within 3
days of the date of the Termination Notice, which
notice shall set out, with all appropriate
justifications, the reasons why the Sellers believe
that the Purchaser was not entitled to rely on the
provisions of 4.2 and to give the Termination Notice;
4.4.3 the matter be referred to arbitration in terms of 4.4.1.2,
then
4.4.3.1 should the arbitration be determined in favour of the
Purchaser, then this Agreement shall terminate and be
of no further force or effect and none of the parties
shall have any claim against the others in respect of
or arising therefrom, provided that the Sellers shall
be obliged to refund to the Purchaser forthwith any
consideration referred to in 6.1.1 and 6.1.2 and paid
or otherwise transferred to the Sellers in accordance
with 6;
4.4.3.2 should the arbitration be determined in favour of the
Sellers, then this Agreement shall remain in full force
and effect and neither party shall have any claim
against the others relating to the Due Diligence.
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<PAGE>
4.5 All costs incurred, directly or indirectly, in connection with the Due
Diligence Investigation, are for the Purchaser's sole cost and
account.
5 SALE
The Sellers hereby sell to the Purchaser, which hereby purchases from the
Sellers, the Sale Shares with effect from the Effective Date at the price
and on the terms and conditions set out in this Agreement.
6 PURCHASE PRICE, ALLOCATION AND PAYMENT
6.1 The total purchase price payable by the Purchaser to the Sellers for
the Shares shall be the aggregate of the following component items:
6.1.1 US$500,000,00; and
6.1.2 500,000 shares of common stock of the Purchaser, par value
US$ 0.001 per share ("the Consideration Shares"), allotted
and issued fully paid-up.
6.2 The purchase price in 6.1.1 shall be paid on the Payment Date by the
Purchaser to Guy, acting both in his personal capacity and as agent
for the other Sellers, in cash at a bank in the RSA to be nominated by
Guy in writing prior to such payment.
6.3 The Consideration Shares shall be issued or transferred to Guy, acting
both in his personal capacity and as agent for the other Sellers, on
the condition that all issue duty, stamp duty and the like payable in
respect of the issue and/or transfer of the Consideration Shares shall
be borne and paid for by the Purchaser. The parties agree that Guy
shall be entitled to nominate a nominee in writing prior to the
Completion Date to receive or take delivery of all or part of the
Consideration Shares.
6.4 Payment of the purchase price pursuant to 6.2 and the allotment and
issue of the Consideration Shares pursuant to 6.3 shall constitute due
and proper discharge by the Purchaser to the Sellers of all its
obligations in terms of this clause 6 and the Purchaser shall not be
obliged to take cognizance of any internal arrangements between the
Sellers.
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<PAGE>
7 COMPLETION
On the Completion Date representatives of the parties shall meet at a place
to be agreed to in writing by the parties and -
7.1 the Sellers shall deliver the following documents to the Purchaser -
7.1.1 share certificates in respect of the Sale Shares;
7.1.2 share transfer forms in respect of the Sale Shares duly
signed by the Sellers as transferors and reflecting the
Purchaser or its nominee as transferee, provided the
Purchaser shall have notified the Sellers of the identity of
the nominee prior to the Completion Date;
7.1.3 a duly passed resolution of the Company appointing the
Purchaser's nominees to the board of directors of the
Company;
7.1.4 a resolution by the board of directors of the Company
authorising registration of transfer of the Sale Shares from
the Sellers into the name of the Purchaser or its nominee;
7.2 the Purchaser shall deliver to Guy, acting both in his personal
capacity and as agent for the remaining Sellers, the Consideration
Shares.
8 RISK AND BENEFIT
8.1 The risk in and benefit of the Sale Shares shall be deemed to have
passed from the Sellers to the Purchaser on the Effective Date,
notwithstanding the Signature Date and the Completion Date. The
parties agree that as from the Effective Date, and until the Sale
Shares are registered in the name of the Purchaser, the Purchaser
shall entitled to instruct the Sellers how to vote the Sale Shares and
the Sellers hereby agree to vote the Sale Shares in accordance with
the Purchaser's instruction.
8.2 The Sellers shall procure within 3 Business Days of the Completion
Date that the Purchaser is registered as a member of the Company.
9 WARRANTIES
9.1 Each of the Sellers, jointly and severally, give to the Purchaser all
the warranties in Schedule 3 in respect of the Company and warrants
to the Purchaser that -
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<PAGE>
9.2
9.2.1 he is the registered and beneficial owner of the number of
Sale Shares set out opposite his name in 2.2 and that he is entitled and able to
give transfer thereof to the Purchaser free of any liens, charges or other
encumbrances of any nature whatsoever;
9.2.2 the Effective Date Accounts
9.2.2.1 fairly reflect the state of affairs, business and
profits of the Company as at the Effective Date;
9.2.2.2 have been drawn up in accordance with generally
accepted accounting practice in the RSA,
9.2.2.3 except to the extent stated therein, have been drawn up
on the basis of accounting policies consistent with
prior years, and in accordance with the provisions of
the Companies Act and all other applicable laws.
9.3 Subject to 9.1, the Sellers do not give the Purchaser any warranties
nor do they make any representations express or implied in relation to
the Sale Shares or in respect of the Company or its business.
9.4 The Purchaser has entered into this Agreement on the strength of the
warranties given by the Sellers in Schedule 3 and on the basis that
such warranties will be correct as at the Signature Date, the
Effective Date and on the Completion Date, unless the relevant
warranty schedule clearly indicates otherwise.
9.5 Each warranty shall be a separate and severable warranty, and shall in
no way be limited to or restricted by reference to or inference from
the terms of any other warranty, or by any words in this Agreement.
9.6 The warranties given by the Sellers to the Purchaser pursuant to 9.1,
are given on the basis that:
9.6.1 no claim arising from any breach of any warranty may be
brought after expiry of a period of 180 days calculated from
the Completion Date;
9.6.2 the Sellers shall not be liable under any circumstances to
the Purchaser for any consequential loss or damage or loss
of profit whether in contract or in delict, arising from any
breach of any warranty and any and all such liability is
hereby expressly excluded.
9.7 For the purpose of determining whether any of the warranties have been
breached and, if so, for the purpose of determining the remedy arising
from such breach, the warranties referred to in this clause 9 and in
Schedule 3
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<PAGE>
shall be deemed to have been qualified to the extent of any disclosures
contained in this Agreement or in Schedule 4.
10 SHAREHOLDERS AGREEMENT
10.1 The parties agree that the Shareholders Agreement concluded between
the Sellers and Michael Carroll on 6 August 1997 ("the Wasp
Shareholders Agreement") will be cancelled with effect from the
Effective Date.
10.2 The Sellers hereby consent to the sale of the Sale Shares to the
Purchaser in terms of this Agreement and waive any pre-emptive rights
which any of them may have in respect of the Sale Shares pursuant to
the provisions of the Wasp Shareholders Agreement.
11 SELLERS' ADDITIONAL UNDERTAKINGS
11.1 The Sellers hereby undertake, within 14 Business Days of their
receiving the amount in 6.1.1 and within 14 Business Days of their
having sold or otherwise disposed of _______ Consideration Shares, all
to loan to the Company the following sums :
11.2 Gerrit - R 1260 000,00;
11.2.1 Albert - R 1200 000,00;
11.2.2 Guy - R 1260 000,00.
11.2.3 The amounts in 11.1 shall bear interest at Prime and shall
be repaid to the Sellers on the basis set out in the
Shareholders Agreement.
11.3 Each of the Sellers, jointly and severally, warrants that the Post
Loan Statements shall fairly reflect the state of affairs of the
Company immediately after the amounts due in terms of this clause 11
have been loaned to the Company.
12 BREACH
12.1 The Sellers shall be entitled to cancel this Agreement summarily by
giving written notice to that effect to the Purchaser if the Purchaser
fails to pay on due date any amount which becomes due and payable and
remains in default for 14 days after receiving written notice from the
Sellers to remedy the default.
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<PAGE>
12.2 Should the Purchaser commit any other breach of this Agreement, the
Sellers shall not be entitled to cancel it unless the breach is
material and cannot be remedied adequately by the payment of damages
and, being such a breach, it is not remedied or is not capable of
being remedied by specific performance within a reasonable time after
the Purchaser receives written notice from the Sellers to remedy the
breach.
12.3 Should the Sellers commit any breach of this Agreement, the Purchaser
shall not be entitled to cancel it unless the breach is material and
cannot be remedied adequately by the payment of damages and, being
such a breach, it is not remedied or is not capable of being remedied
by specific performance within a reasonable time after the Sellers
receive written notice from the Purchaser to remedy the breach.
12.4 The remedies of each party in terms of this clause 12, shall not be
exhaustive and shall be in addition and without prejudice to any
other remedies it has under or in consequence of this Agreement or in
terms of the common law. Should this Agreement be cancelled in terms
of 12.2 or 12.3, then the parties shall be obliged to refund or return
forthwith to the appropriate parties all that has been paid or
transferred in terms of this Agreement.
13 ANNOUNCEMENTS
No party shall make any public announcement or statement about this
Agreement or its contents without first having obtained the others' prior
written consent (which may not be unreasonably withheld or delayed), unless
and to the extent to which it is required to do so by operation of law or
under the rules and regulations of any stock exchange upon which the
Purchaser's shares are publicly traded.
14 NON-VARIATION
No alteration or variation to, or consensual cancellation of, this
Agreement shall be of any force or effect unless it is recorded in writing
and signed by all the parties to this Agreement.
15 ARBITRATION
15.1 Any dispute between the parties in regard to any matter arising out of
this Agreement or its interpretation or their respective rights and
obligations under this Agreement or its cancellation or any matter
arising out of its cancellation, shall be submitted to and decided by
arbitration.
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15.2 There shall be 1 arbitrator who shall be, if the question in issue
is -
15.2.1 primarily an accounting matter, an independent chartered
accountant of not less than 15 years' standing;
15.2.2 primarily a legal matter, a practising attorney or advocate
of not less than 15 years' standing;
15.2.3 primarily a technical matter, a suitably qualified person;
15.2.4 any other matter, a suitably qualified person.
15.3 The appointment of the arbitrator shall be agreed upon between the
parties, but failing agreement between them within a period of 14
days after the arbitration has been demanded, either of the parties
shall be entitled to request the chairman for the time being of the
Johannesburg Bar Council to make the appointment and, in making his
appointment, to have regard to the nature of the dispute.
15.4 Subject to the other provisions of this clause 15, each arbitration
shall be held in Johannesburg in accordance with the provisions of the
Arbitration Act, 1965, as amended.
15.5 The decision of the arbitrator shall be final and binding on the
parties, and may be made an order of any Court of competent
jurisdiction. Each of the parties hereby submits itself to the
jurisdiction of the Witwatersrand Local Division of the High Court of
the RSA should the other party wish to make the arbitrator's decision
an order of that court.
16 GENERAL
16.1 Any latitude or extension of time which may be allowed by any party
shall not under any circumstances whatsoever act as an estoppel or be
a waiver of that party's rights hereunder.
16.2 The parties to this Agreement undertake to treat all matters relating
to this Agreement and the schedules hereto as being confidential and,
therefore, shall not, without the written approval of the others,
disclose the provisions hereof to any third party who or which does
not have a legitimate interest in the contents thereof.
16.3 This Agreement constitutes the entire contract between the parties and
no other conditions, warranties, guarantees and representations shall
be of any force or effect other than those which are included herein.
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16.4 All the transactions and arrangements contemplated in this Agreement
constitute one indivisible transaction.
17 INTERPRETATION
17.1 In this Agreement, unless the context requires otherwise -
17.1.1 words importing any one gender shall include the other two
genders;
17.1.2 the singular shall include the plural and vice versa;
17.1.3 a reference to natural persons shall include created
entities (corporate and unincorporate) and vice versa.
17.1.4 "day" means any day including a Saturday, Sunday or any
official public holiday within the Republic of South Africa;
17.1.5 any reference to an enactment is to that enactment as at the
date of signature hereof and as amended or re-enacted from
time to time;
17.1.6 if any provision in a definition is a substantive provision
conferring rights or imposing obligations on any party,
notwithstanding that it is only in the definition clause,
effect shall be given to it as if it were a substantive
provision in the body of this Agreement;
17.1.7 when any number of days is prescribed in this Agreement,
that number of days shall be reckoned exclusively of the
first and inclusively of the last day unless the last day
falls on a Saturday, Sunday or official public holiday, in
which event the last day shall be the next succeeding day
which is not a Saturday, Sunday or official public holiday;
17.1.8 expressions or words defined in this Agreement shall bear
the same meaning in the annexures to this Agreement which do
not themselves contain definitions.
17.2 The headings in this Agreement have been inserted for convenience only
and shall not be used for nor assist or affect its interpretation.
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18 DOMICILIUM AND NOTICES
18.1 The parties choose the address set out below as the address at which
all notices and other communications must be delivered for the
purposes of this Agreement -
18.1.1 Gerrit at 20 Van Rooy Street, Potchefstroom or Telefax
Number (018) 297 2121;
18.1.2 Albert at 20 Van Rooy Street, Potchefstroom or Telefax
Number (018) 297 2121;
18.1.3 Guy at 4A, Redhill Road, Morningside, Sandton, 2128 or
Telefax No. (011) 783-1719;
18.1.4 Technor at Satraangsvagen 88, S-18237
Danderyd, Sweden, or Telefax Number (08) 455-90005.
18.2 Any notice or communication required or permitted to be given in terms
of this Agreement shall be valid and effective only if in writing but
it shall be competent to give notice by telefax.
18.3 Any notice to a party contained in a correctly addressed envelope
and delivered by hand to a responsible person during ordinary business
hours at its chosen address, shall be deemed to have been received on
the day of delivery.
18.3.0.1 Any notice sent by telefax to a party at its telefax number
shall be deemed (unless the contrary is proved) to have been
received -
18.3.1 if it is transmitted during normal business hours, within 2
hours of transmission;
18.3.2 if it is transmitted outside normal business hours, within 2
hours of the commencement of normal business hours on the
first Business Day after it is transmitted.
18.4 The parties choose the physical address set out opposite its name in
18.1 as the address at which legal process must be delivered for the
purpose of this Agreement.
18.5 The parties shall be entitled at any time to change their addresses
for the purposes of this clause 18 to any other address in the RSA by
giving written notice to that effect to the other.
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19 GOOD FAITH
The parties undertake in favour of one another to observe the utmost good
faith in the implementation of the provisions of this Agreement, and each
of the parties hereby undertakes in favour of the other party that in their
dealings with each other they shall neither do anything nor refrain from
doing anything which might prejudice or detract from the rights, assets or
interests of the other party.
20 GOVERNING LAW AND JURISDICTION
20.1 The validity of this Agreement, its interpretation, the respective
rights and obligations of the parties and all other matters arising in
any way out of this undertaking or its performance shall be determined
in accordance with the laws of the RSA.
20.2 The parties hereby consent and submit to the jurisdiction of the
Witwatersrand Local Division of the High Court of the Republic of
South Africa for the purposes of all or any legal proceedings arising
from or concerning this Agreement.
21 COSTS
21.1 Each party shall bear its own costs of and incidental to the
negotiating, preparing and drawing of this Agreement.
21.2 The transfer duty payable on the transfer of the Sale Shares into the
name of the Purchaser shall be borne by the Purchaser.
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22 COUNTERPARTS
This Agreement may be executed in any number of counterparts which when so
executed will be deemed to be an original and all of which when taken
together will constitute one and the same instrument. One or more
counterparts of this Agreement may be delivered via telefax with the
intention that it will have the same effect as the delivery of an original
counterpart hereof.
SIGNED at on 1998
----------------------------------
GERRIT VAN URK
SIGNED at on 1998
----------------------------------
ALBERT VAN URK
SIGNED at on 1998
----------------------------------
GUY REDFORD
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SIGNED at on 1998
For: TECHNOR INTERNATIONAL INC.
----------------------------------
Signatory:
Capacity:
Authority:
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SCHEDULE 1
EFFECTIVE DATE ACCOUNTS
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SCHEDULE 2
SHAREHOLDERS AGREEMENT
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SCHEDULE 3
SELLERS' WARRANTIES
For purposes of this Schedule 3, unless otherwise stated or the context
indicates otherwise, the word "Company" shall mean the Company as defined
in the agreement to which this schedule constitutes a schedule
23 THE SELLERS JOINTLY AND SEVERALLY GIVE THE FOLLOWING WARRANTIES AS AT THE
EFFECTIVE DATE AND AS AT THE COMPLETION DATE:
Constitution of the Company and Share Capital Structure
23.1 The Company is incorporated as a private company with limited
liability according to the laws of the RSA.
23.2 No steps have been taken or are pending for the deregistration of the
Company, whether under Section 73 of the Companies Act or otherwise
howsoever, and no steps have been taken or are pending to liquidate
the Company or place the Company under judicial management (whether
such liquidation or judicial management is final or provisional).
23.3 The authorised share capital of the Company is R 1000,00 divided into
1000 shares of R 1,00 each.
23.4 The issued share capital of the Company is R 100,00 divided into 100
shares of R 1,00 each, fully paid up.
23.5 No resolution has been passed nor is the Company obliged to increase
or to reduce its authorised or issued share capital or to vary any of
the rights attaching to the issued shares.
23.6 The Sellers are the beneficial holders of the Sale Shares and are
entitled and able to give to the Purchaser free and unencumbered title
to the Sale Shares.
23.7 Save as disclosed in 10 of the Agreement no person has any right
(including INTER ALIA, any option, pre-emptive right or right of first
refusal) to acquire any of the Sale Shares, present or future.
23.8 No resolution has been passed nor is the Company obliged to alter its
Memorandum of Association or Articles of Association or to create or
to issue any debentures.
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Statutory books, records and accounts
23.9 The minute books of the Company contain all of the resolutions passed
by its directors and members.
23.10 The Company's books of account, minute books, registers and
records have been fully and properly maintained according to law,
are in its possession, and are capable of being written up within
a reasonable time so as to accurately record all transactions to
which the Company has been a party.
23.11 The Company's audited annual financial statements for the
financial year ended 28 February 1998 have been drawn up:
23.11.1 in accordance with generally accepted accounting practice
in the RSA,
23.11.2 except to the extent stated therein, on the basis of
accounting policies consistent with prior years, and
23.11.3 in accordance with the provisions of the Companies Act and
all other applicable laws, and
23.11.4 to fairly reflect the financial position, affairs,
operations and results of the Company as at that date and
for the period to which they relate.
Assets
23.12 To the best of the Sellers' knowledge and belief, the Company is
the owner of and is in lawful possession of, all of the assets
reflected in the Effective Date Accounts.
23.13 There are no material defects in any of the assets of the
Company.
23.14 The Company and its fixed assets are insured against the risks to
which they are subject for amounts which accord with sound
business practice for a period terminating not earlier than 30
days after the Completion Date, and all premiums due in respect
of such insurance policies have been paid and there is no claim
outstanding under any such policy.
23.15 The Company has not granted to anyone an option to purchase, or
any right over any of its assets.
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Employees
23.16 The Company has not given notice of termination to any of its key
employees, and nor has any of its key employees resigned.
Contracts
23.17 The Company is not bound by any contracts, agreements or
commitments entered into outside the ordinary course of its
business.
23.18 All of the contracts of a material nature to which the Company is
a party are of full force and effect according to their terms and
the Company is not in material breach of any of those terms, and
none of the material terms of the contracts has been amended or
waived.
23.19 The Company has not given nor is it a party to any suretyships,
guarantees, indemnities or similar documents in respect of any
liabilities of any other person, and is not liable whether as
guarantor, indemnifier, surety, co-principal debtor for any
liabilities of any other person.
Business
23.20 To the best of the Sellers' knowledge and belief, all necessary
consents, licences, permits and other authorities required for
the conduct of the business carried on by the Company in the
places and in the manner in which such business is carried on at
the Completion Date, have been obtained and are valid and in full
force.
23.21 The Company is not a party to any litigation or arbitration
proceedings other than any proceedings that may have been
instituted by the Company against any of its debtors for the
recovery of debts due to the Company incurred in the ordinary
course of business.
23.22 No dividends which have been declared by the Company, have not
been paid by the Company.
23.23 Save to the extent that provision for bad debts has been made in
the Effective Date Accounts, the Company's book debts will be
paid upon expiry of normal credit terms or within 90 days after
the Completion Date, and in the event of any such amounts not
being recovered by that date, the amounts not so recovered shall
be paid by the Sellers to the Company against cession by the
Company to the Sellers of its claim against the debtor in
question.
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Tax
23.24 The Company has duly and punctually paid all taxes, levies and
duties which it has become liable to pay, and in particular
without limiting the generality of the aforegoing, all the
Company's assessments for tax which are due for payment prior to
the Effective Date shall have been paid or adequate provisions or
reserves for tax shall have been established therefor in the
Effective Date Accounts.
23.25 The Company has properly and punctually submitted all returns and
provided all information required for tax purposes and, to the
best of the Sellers' knowledge and belief, none of such returns
is disputed by the Commissioner for Inland Revenue or any other
authority.
24 THE SELLERS JOINTLY AND SEVERALLY GIVE THE FOLLOWING WARRANTIES IN RESPECT
OF THE PERIOD BETWEEN THE EFFECTIVE DATE AND THE COMPLETION DATE:
24.1 The Company will not incur or become committed to incur any capital
expenditure other than in the course of the Company's normal business
activities.
24.2 The Company will not enter into any transaction except in the ordinary
and regular conduct of its business.
24.3 No resolutions will be passed by the members or directors of the
Company other than such resolutions as are strictly necessary to give
effect to this Agreement.
24.4 No dividend will be declared nor will any distribution out of profit,
accumulated profit, reserves or capital of the Company be made.
25 THE SELLERS JOINTLY AND SEVERALLY GIVE THE FOLLOWING WARRANTY IN RESPECT OF
THE PERIOD BETWEEN 28 FEBRUARY 1998 AND THE COMPLETION DATE
25.1 There has not been and will not be any material adverse change in the
financial position of the Company.
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SCHEDULE 4
DISCLOSURE SCHEDULE
Contracts:
Services/ Suppliers:
26 MTN
27 Boardworks:- Manufacturing
28 Electromatic
29 Denel
Clients:
30 Matrix
31 Current deals sole distribution.-description
32 AMS
33 Capital Air
34 PGG
35 Infotrans
36 Celltronics
Legal:
37 Wasp International (Pty) Ltd ("Wasp") received notice of a suit being
brought against it by Radiospoor/Link, a shareholder of Matrix Vehicle
Tracking (Pty) Ltd ("Matrix"), in respect of disputes relating to the
supply and sale of components between the two companies. The particulars
more fully set out in the claim and counter-claim documents relating
thereto.
38 Wasp believes that it has a bona fide defence to this claim, and is
consequently vigorously contesting the action. The case is awaiting a trial
date and Wasp's counsel is of the opinion that the matter will in all
probability be settled in Wasp's favour prior to the case being heard.
39 Wasp received a letter from Matrix on 15 May 1998 alleging that Matrix had
suffered substantial damages in excess of R 8 million relating to heads of
agreement concluded between Matrix and Wasp on 14 June 1996 ("the
Agreement"). No details as to the precise nature and composition of this
claim have been supplied by Matrix to Wasp, despite Wasp having requested
this information.
40 Wasp has in the interim taken all steps to protect its interests and
reserve all of its rights as regards Matrix. Should the matter proceed,
Wasp will launch a counterclaim for Matrix's continued breaches of the
Agreement.
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41 In the interim, it must be pointed out that Matrix continues to place
orders with Wasp in terms of the Agreement, with current orders exceeding
1500 units. The Sellers have decided to place in escrow with their
attorneys securities which have a current day value of R 3 million to
defend all claim that might be brought against Wasp by Matrix until such
time as any such claims have been finally resolved or settled.
42 On 8 September 1997 Wasp signed a letter of proposal addressed by Matrix,
in terms of which it was agreed that the two companies
"split any net revenues derived from any resultant deal on a
75:25 basis, i.e 75% to Wasp and 25% to Matrix, unless
mutually agreed otherwise ............a later stage".
"Resultant deal" in the context of this letter means an offshore
transaction in respect of the Purchaser.
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SCHEDULE 5
THE POST LOAN STATEMENTS
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EXHIBIT 10.5
TECHNOR INTERNATIONAL, INC.
1998 STOCK INCENTIVE PLAN
1. PURPOSE. The purpose of this 1998 Stock Incentive Plan (the
"Plan") is to aid the Company in attracting, retaining and motivating officers,
key employees and directors of the Company by providing them with incentives for
making significant contributions to the growth and profitability of the Company.
The Plan is designed to accomplish this goal by offering stock options and other
incentive awards, thereby providing Participants with a proprietary interest in
the growth, profitability and success of the Company.
2. DEFINITIONS.
(a) AWARD. Any form of stock option, stock appreciation right, stock
or cash award granted under the Plan, whether granted singly, in combination or
in tandem, pursuant to such terms, conditions and limitations as the Board or
the Committee may establish in order to fulfill the objectives, and in
accordance with the terms and conditions, of the Plan.
(b) AWARD AGREEMENT. An agreement between the Company and a
Participant setting forth the terms, conditions and limitations applicable to an
Award.
(c) BOARD. The Board of Directors of Technor International, Inc.
(d) CODE. The Internal Revenue Code of 1986, as amended from time to
time.
(e) COMMITTEE. Such committee of the Board as may be designated from
time to time by the Board to administer the Plan or any subplan under the Plan.
The Committee shall consist of not less than two members of the Board who are
not officers or employees of the Company, PROVIDED that, unless the Board
otherwise determines, each such non-employee director member of the Committee
shall meet the requirements of Section 16(a) of the Securities Exchange Act of
1934, as amended, and Section 162(m) of the Code.
(f) COMPANY. Technor International, Inc. and its direct and indirect
subsidiaries.
(g) FAIR MARKET VALUE. Until the Stock is listed on a national
exchange, the last quoted sale price or, if not so quoted, the average of the
high bid and low asked prices for a share of the Stock in the over-the-counter
market, as reported by the National Association of Securities Dealers through
its Automated Quotation System or otherwise, in either case for the date on
which Fair Market Value is to be determined; PROVIDED that, if no transactions
in the Stock are reported for that date, its Fair Market Value shall be the
average of the high and low sale prices or last quoted sale price or, if not so
quoted, the average of the high bid and low asked prices as so reported for the
preceding day on which transactions in the Stock were effected, and PROVIDED,
FURTHER, that if no transactions in the Stock were effected within 10 business
days preceding such relevant date, or if otherwise deemed appropriate by the
Board or the Committee, the Fair Market Value of the Stock shall be as
determined by the Board or the Committee. If the Stock is listed on a national
exchange, the Fair Market Value thereof shall be the closing price of the Stock
as reported on the such exchange for the date on which Fair Market Value is to
be determined.
(h) GOVERNING LAW. The laws of the state of incorporation of
Technor.
(i) PARTICIPANT. An officer, key employee or director of the Company
to whom an Award has been granted.
<PAGE>
(j) STOCK. Authorized and issued or unissued shares of Common Stock,
par value $.01 per share, of Technor or any security issued in exchange or
substitution therefor.
(k) TECHNOR. Technor International, Inc.
3. ELIGIBILITY. Only officers, key employees, and directors who are
also officers or employees of the Company or who have been designated by the
Board as eligible to receive Awards are eligible to receive Awards under the
Plan. Key employees are those employees who hold positions of responsibility or
whose performance, in the judgment of the Board or the Committee, can have a
significant effect on the growth and profitability of the Company.
4. STOCK AVAILABLE FOR AWARDS. Subject to Section 14 hereof, a
total of 1,000,000 shares of Stock shall be available for issuance pursuant to
Awards granted under the Plan; PROVIDED, HOWEVER, that the aggregate number of
shares of Stock subject to options and upon which stock appreciation rights are
based pursuant to Awards hereunder shall not exceed 150,000 shares for any
Participant during any fiscal year; and, PROVIDED, FURTHER, that the Board or
the Committee shall have the power to grant Awards to a Participant exceeding
such annual maximum amount, but such Awards shall not qualify as "performance
based" for purposes of Section 162(m) of the Code to the extent of such excess.
From time to time, the Board and appropriate officers of Technor shall file such
documents with governmental authorities and, if the Stock is listed on a
national exchange, with such stock exchange, as are required to make shares of
Stock available for issuance pursuant to Awards and publicly tradeable. Shares
of Stock related to Awards, or portions of Awards, that are forfeited, canceled
or terminated, expire unexercised, are surrendered in exchange for other Awards,
or are settled in cash in lieu of Stock or in such manner that all or some of
the shares of Stock covered by an Award are not and will not be issued to a
Participant, shall be restored to the total number of shares of Stock available
for issuance pursuant to Awards.
5. ADMINISTRATION.
(a) GENERAL. The Plan shall be administered by the Board or, to the
extent determined by the Board, by the Committee, which shall have full and
exclusive power to (i) authorize and grant Awards to persons eligible to receive
Awards under the Plan;(ii) establish the terms, conditions and limitations of
each Award or class of Awards, including terms, conditions and limitations
governing the extent (if any) to which the Award may be assigned or transferred,
PROVIDED that awards shall not be assignable or transferable to any person who
is not at the time of transfer a member of the Participant's immediate family or
to any entity that is not established for the benefit of, or wholly-owned by,
the Participant or a member or members of the Participant's immediate
family;(iii) construe and interpret the Plan and all Award Agreements;(iv) grant
waivers of Plan restrictions; (v)adopt and amend such rules, procedures,
regulations and guidelines for carrying out the Plan as it may deem necessary or
desirable; and (vi) take any other action necessary for the proper operation and
administration of the Plan, all of which powers shall be exercised in a manner
consistent with the objectives, and in accordance with the terms and conditions,
of the Plan. The powers of the Board or the Committee, as applicable, shall
include, but shall not be limited to, the authority to (A) adopt such subplans
as may be necessary or appropriate (1) to provide for the authorization and
granting of Awards to promote specific goals or for the benefit of specific
classes of Participants, (2) to provide for grants of Awards by means of
formulae, standardized criteria or otherwise, or (3) for any other purposes as
are consistent with the objectives of the Plan, and to segregate shares of Stock
available for issuance under the Plan generally as being available specifically
for the purposes of one or more subplans, and (B) subject to Section 11 hereof,
adopt modifications, amendments, rules, procedures, regulations, subplans and
the like as may be necessary or appropriate (1) to comply with provisions of the
laws of other countries in which the Company may operate in order to assure the
effectiveness of Awards granted under the Plan and to enable Participants
employed in such other countries to receive advantages and benefits under the
Plan and such laws, (2) to effect the continuation, acceleration or modification
of Awards under certain circumstances, including events which might constitute a
Change in Control (as set forth in
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Section 7 hereof) of Technor, or (3) for any other purposes as are consistent
with the objectives of the Plan. All such modifications, amendments, rules,
procedures, regulations and subplans shall be deemed to be a part of the Plan as
if stated herein.
(b) COMMITTEE ACTIONS. All actions of the Committee with respect to
the Plan shall require the vote of a majority of its members or, if there are
only two members, by the vote of both. Any action of the Committee may be taken
by a written instrument signed by a majority (or both members) of the Committee,
and any action so taken shall be as effective as if it had been taken by a vote
at a meeting. All determinations and acts of the Committee as to any matters
concerning the Plan, including interpretations or constructions of the Plan and
any Award Agreement, shall be conclusive and binding on all Participants and on
any parties validly claiming through any Participants.
6. DELEGATION OF AUTHORITY. The Board or the Committee may delegate
to the Chief Executive Officer of Technor and to other executive officers of the
Company certain of its administrative duties under the Plan, pursuant to such
conditions or limitations as the Board or the Committee may establish, except
that neither the Board nor the Committee may delegate its authority with respect
to (a) the selection of eligible persons as Participants in the Plan, (b) the
granting or timing of Awards, (c) establishing the amount, terms and conditions
of any such Award, (d) interpreting the Plan, any subplan or any Award Agreement
or (e) amending or otherwise modifying the terms or provisions of the Plan, any
subplan or any Award Agreement.
7. AWARDS. Subject to Sections 4 and 19 hereof, the Board or the
Committee shall determine the types and timing of Awards to be made to each
Participant and shall set forth in the related Award Agreement the terms,
conditions and limitations applicable to each Award. Awards may include, but
are not limited to, those listed below in this Section 7. Awards may be granted
singly, in combination or in tandem, or in substitution for Awards previously
granted under the Plan. Awards may also be made in combination or in tandem
with, in substitution for, or as alternatives to, grants or rights under any
other benefit plan of the Company, including any such plan of any entity
acquired by, or merged with or into, the Company. Any such Awards made in
substitution for, or as alternatives to, grants or rights under a benefit plan
of an entity acquired by, or merged with or into, the Company in order to give
effect to the transaction shall be deemed to be issued in accordance with the
terms and conditions of the Plan. Awards shall be effected through Award
Agreements executed by the Company in such forms as are approved by the Board or
the Committee from time to time.
All or part of any Award may be subject to conditions established by
the Board or the Committee and set forth in the Award Agreement, which
conditions may include, without limitation, achievement of specific business
objectives, increases in specified indices, attainment of growth rates and other
measurements of Company performance.
The Board or the Committee may determine to make any or all of the
following Awards:
(a) STOCK OPTIONS. A grant of a right to purchase a specified number
of shares of Stock, at an exercise price not less than 100% of the Fair Market
Value of the Stock on the date of grant, during a specified period, all as
determined by the Board or the Committee. Without limitation, a stock option
may be in the form of (i) an incentive stock option which, in addition to being
subject to such terms, conditions and limitations as are established by the
Board or the Committee, complies with Section 422 of the Code or (ii) a
non-qualified stock option subject to such terms, conditions and limitations as
are established by the Board or the Committee.
(b) STOCK APPRECIATION RIGHTS. A right to receive a payment, in cash
or Stock, equal to the excess of the Fair Market Value (or other specified
valuation) of a specified number of shares of Stock on the date the stock
appreciation right ("SAR") is exercised over the Fair Market
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Value (or other specified valuation) on the date of grant of the SAR, except
that if an SAR is granted in tandem with a stock option, valuations on the grant
and exercise dates shall be no less than as determined on the basis of Fair
Market Value. The eventual amount, vesting or issuance of an SAR may be subject
to future service, performance standards and such other restrictions and
conditions as may be established by the Board or the Committee.
(c) STOCK AWARDS. An Award made in Stock or denominated in units of
Stock. The eventual amount, vesting or issuance of a Stock Award may be subject
to future service, performance standards and such other restrictions and
conditions as may be established by the Board or the Committee. Stock Awards
may be based on Fair Market Value or another specified valuation.
(d) CASH AWARDS. An Award made or denominated in cash. The eventual
amount of a cash Award may be subject to future service, performance standards
and such other restrictions and conditions as may be established by the Board or
the Committee.
Dividend equivalency rights, on a current or deferred basis, may be
extended to and be made part of any Award denominated in whole or in part in
Stock or units of Stock, subject to such terms, conditions and restrictions as
the Board or the Committee may establish.
Notwithstanding the provisions of the paragraphs of this Section 7,
Awards may be subject to acceleration of exercisability or vesting in the event
of a Change in Control of Technor (i) as set forth in agreements between Technor
and certain of its officers, directors and key employees which provide for
certain protections and benefits in the event of a change in control (as defined
in such agreements) or (ii) as may otherwise be determined by the Board or the
Committee under and in accordance with the terms and conditions of the Plan.
"Change in Control" for purposes of the Plan shall mean a change in control of
Technor under such circumstances as shall be specified by (x) the Board or the
Committee or (y) where applicable to any Awards granted under the Plan, by such
agreements between Technor and a Participant as (1) may have been entered into
prior to the effective date of the Plan or (2) shall be entered into after the
effective date of the Plan with, to the extent such an agreement is applicable
to an Award, the approval of the Board or the Committee. A "Change in Control"
may, without limitation, be deemed to have occurred if (A) any "person" or
"group" of persons (as the terms "person" and "group" are used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended, and the rules
thereunder) is or becomes the beneficial owner, directly or indirectly, of
securities of Technor representing 50.1% or more of the combined voting power of
the then outstanding securities of Technor, or (B) a change of more than 25% in
the composition of the Board occurs within a two-year period, unless such change
in composition was approved in advance by at least two-thirds of the previous
directors.
8. PAYMENT UNDER AWARDS. Payment by the Company pursuant to Awards
may be made in the form of cash, Stock or combinations thereof and may be
subject to such restrictions as the Board or the Committee determines,
including, in the case of Stock, restrictions on transfer and forfeiture
provisions. Stock subject to transfer restrictions or forfeiture provisions is
referred to herein as "Restricted Stock". The Board or the Committee, in its
discretion, may, but is not obligated to, provide for payments to be deferred,
such future payments to be made in installments or by lump-sum payment. The
Board or the Committee may permit selected Participants to elect to defer
payments of some or all types of Awards in accordance with procedures
established by the Board or the Committee to assure that such deferrals comply
with applicable requirements of the Code.
The Board or the Committee may also establish rules and procedures for
the crediting of interest on deferred cash payments and of dividend
equivalencies on deferred payments to be made in Stock or units of Stock.
-4-
<PAGE>
At the discretion of the Board or the Committee, a Participant may be
offered an election to substitute an Award for another Award or Awards, or for
awards made under any other benefit plan of the Company, of the same or
different type.
9. STOCK OPTION EXERCISE. The price at which shares of Stock may be
purchased upon exercise of a stock option shall be paid in full at the time of
the exercise, in cash or, if permitted by the Board or the Committee, by
(a) tendering Stock or surrendering such option or another Award, including
Restricted Stock, or an option or other award granted under another benefit plan
of the Company, in each case valued at, or on the basis of, Fair Market Value on
the date of exercise, (b) delivery of a promissory note issued by a Participant
to the Company in a form determined by the Board or the Committee, or (c) any
other means acceptable to the Board or the Committee. The Board or the
Committee shall determine acceptable methods for tendering Stock or surrendering
options or other Awards or grants and may impose such conditions on the use of
Stock or other Awards or grants to exercise a stock option as it deems
appropriate. If shares of Restricted Stock are tendered as consideration for
the exercise of a stock option, the Board or the Committee may require that the
number of shares issued upon exercise of the stock option equal to the number of
shares of Restricted Stock used as consideration therefor be subject to the same
restrictions as the Restricted Stock so tendered and any other restrictions as
may be imposed by the Board or the Committee. The Board or the Committee may
also permit Participants to exercise stock options and simultaneously sell some
or all of the shares of Stock so acquired pursuant to a brokerage or similar
arrangement which provides for the payment of the exercise price substantially
concurrently with the delivery of such shares.
10. TAX WITHHOLDING. Unless otherwise expressly provided under the
terms of any Award Agreement, the Company shall have the right to deduct
applicable taxes from any Award payment or shares of Stock receivable under an
Award and to withhold an appropriate number of shares of Stock for payment of
taxes required by law or to take such other action as may be necessary in the
opinion of the Company to satisfy all tax withholding obligations. In addition,
the Board or the Committee may permit Participants to elect to (a) have the
Company deduct applicable taxes resulting from any Award payment to, or exercise
of an Award by, such Participant by withholding an appropriate number of shares
of Stock for payment of tax obligations or (b) tender to the Company for the
purpose of satisfying tax payment obligations other Stock held by the
Participant. If the Company withholds shares of Stock to satisfy tax payment
obligations, the value of such Stock in general shall be its Fair Market Value
on the date of the Award payment or the date of exercise of an Award, as the
case may be. If a Participant tenders shares of Stock pursuant to clause (b)
above to satisfy tax payment obligations, the value of such Stock shall be the
Fair Market Value on the date the Participant tenders such Stock to the Company.
11. AMENDMENT, MODIFICATION, SUSPENSION OR TERMINATION OF THE PLAN.
The Board may amend, modify, suspend or terminate the Plan, or adopt subplans
under the Plan, (a) for the purpose of meeting or addressing any changes in any
applicable tax, securities or other laws, rules or regulations or (b) for any
other purpose permitted by law. Except as otherwise required by applicable law,
no amendment to this Plan or any subplan established hereunder will require
stockholder approval; PROVIDED, HOWEVER, that the Plan may not be amended in a
manner that would alter, impair, amend, modify, suspend or terminate any rights
of a Participant or obligation of the Company under any Awards theretofore
granted, in any manner adverse to any such affected Participant, without the
consent of such affected Participant.
12. TERMINATION OF EMPLOYMENT. Except as otherwise set forth in an
applicable Award Agreement or determined by the Board or the Committee, or as
otherwise provided in paragraph (a) or (b) of this Section 12, if a
Participant's employment or association with the Company terminates, all
unexercised, deferred and unpaid Awards (or portions of Awards) shall be
canceled immediately.
-5-
<PAGE>
(a) RETIREMENT, RESIGNATION OR OTHER TERMINATION. If a Participant's
employment or association with the Company terminates by reason of the
Participant's retirement or resignation, or for any other reason (other than the
Participant's death or disability), the Board or the Committee may, under
circumstances in which it deems an exception from the provisions of the first
sentence of this Section 12 to be appropriate to carry out the objectives of the
Plan and to be consistent with the best interests of the Company, permit Awards
to continue in effect and be exercisable or payable beyond the date of such
termination, up until the expiration date specified in the applicable Award
Agreement and otherwise in accordance with the terms of the applicable Award
Agreement, and may accelerate the exercisability or vesting of any Award, in
either case, in whole or in part.
(b) DEATH OR DISABILITY.
(i) In the event of a Participant's death, the Participant's
estate or beneficiaries shall have a period, not extending beyond the
expiration date specified in the applicable Award Agreement (except as
otherwise provided in such Award Agreement), within which to exercise any
outstanding Award held by the Participant, as may be specified in the Award
Agreement or as may otherwise be determined by the Board or the Committee.
All rights in respect of any such outstanding Awards shall pass in the
following order: (A) to beneficiaries so designated in writing by the
Participant; or if none, then (B) to the legal representative of the
Participant; or if none, then (C) to the persons entitled thereto as
determined by a court of competent jurisdiction. Awards so passing shall
be exercised or paid at such times and in such manner as if the Participant
were living, except as otherwise provided in the applicable Award Agreement
or as determined by the Board or the Committee.
(ii) If a Participant ceases to be employed by or associated with
the Company because the Participant is deemed by the Company to be
disabled, outstanding Awards held by the Participant may be paid to or
exercised by the Participant, if legally competent, or by a committee or
other legally designated guardian or representative if the Participant is
legally incompetent, for a period, not extending beyond the expiration date
specified in the applicable Award Agreement (except as otherwise provided
in such Award Agreement), following the termination of his employment or
association with the Company, as may be specified in the Award Agreement or
as may otherwise be determined by the Board or the Committee.
(iii) After the death or disability of a Participant, the
Board or the Committee may at any time (A) terminate restrictions with
respect to Awards held by the Participant, (B) accelerate the vesting or
exercisability of any or all installments and rights of the Participant in
respect of Awards held by the Participant and (C) instruct the Company to
pay the total of any accelerated payments under the Awards in a lump sum to
the Participant or to the Participant's estate, beneficiaries or
representatives, notwithstanding that, in the absence of such termination
of restrictions or acceleration of payments, any or all of the payments due
under the Awards might ultimately have become payable to other
beneficiaries.
(iv) In the event of uncertainty as to the interpretation of, or
controversies concerning, paragraph (b) of this Section 12, the Board's or
the Committee's determinations shall be binding and conclusive on all
Participants and any parties validly claiming through them.
-6-
<PAGE>
13. NONASSIGNABILITY.
(a) Except as provided for in paragraphs (a) and (b) of Section 12
hereof and paragraph (b) of this Section 13, and except as may otherwise be
determined by the Board or the Committee (subject to paragraph (a)(ii) of
Section 5 hereof and set forth in the applicable Award Agreement), no Award or
any other benefit under the Plan, or any right with respect thereto, shall be
assignable or transferable, or payable to or exercisable by, anyone other than
the Participant to whom it is granted.
(b) If a Participant's employment or association with the Company
terminates in order for such Participant to assume a position with a
governmental, charitable or educational agency or institution, and the
Participant retains Awards pursuant to paragraph (a) of Section 12 hereof, the
Board or the Committee, in its discretion and to the extent permitted by law,
may authorize a third party (including, without limitation, the trustee of a
"blind" trust), acceptable to the applicable authorities, the Participant and
the Board or the Committee, to act on behalf of the Participant with respect to
such Awards.
14. ADJUSTMENTS. In the event of any change in the outstanding Stock
by reason of a stock split, stock dividend, combination or reclassification of
shares, recapitalization, merger or similar event, the Board or the Committee
shall adjust proportionally (a) the number of shares of Stock (i) reserved under
the Plan, (ii) available for options or other Awards and available for issuance
pursuant to options, or upon which SARs may be based, for individual
Participants and (iii) covered by outstanding Awards denominated in Stock or
units of Stock; (b) the prices related to outstanding Awards; and (c) the
appropriate Fair Market Value and other price determinations for such Awards.
In the event of any other change affecting the Stock or any distribution (other
than normal cash dividends) to holders of Stock, such adjustments as may be
deemed equitable by the Board or the Committee, including adjustments to avoid
fractional shares, shall be made to give proper effect to such event. In the
event of a corporate merger, consolidation, acquisition of property or stock,
separation, reorganization or liquidation, the Board or the Committee shall be
authorized to issue or assume stock options or other awards, whether or not in a
transaction to which Section 424(a) of the Code applies, by means of
substitution of new stock options or Awards for previously issued options or
awards or an assumption of previously issued stock options or awards.
15. NOTICE. Any written notice to Technor required by any of the
provisions of the Plan shall be addressed to the Board, c/o the Secretary of
Technor, and shall become effective when received by the Secretary.
16. UNFUNDED PLAN. Insofar as the Plan provides for Awards of cash
or Stock, the Plan shall be unfunded unless and until the Board or the Committee
otherwise determines. Although bookkeeping accounts may be established with
respect to Participants who are entitled to cash, Stock or rights thereto under
the Plan, any such accounts shall be used merely as a bookkeeping convenience.
Unless the Board otherwise determines, (a) the Company shall not be required to
segregate any assets that may at any time be represented by cash, Stock or
rights thereto, nor shall the Plan be construed as providing for such
segregation, nor shall the Company, the Board or the Committee be deemed to be a
trustee of any cash, Stock or rights thereto to be granted under the Plan;
(b) any liability of the Company to any Participant with respect to a grant of
cash, Stock or rights thereto under the Plan shall be based solely upon any
contractual obligations that may be created by the Plan and an Award Agreement;
(c) no such obligation of the Company shall be deemed to be secured by any
pledge or other encumbrance on any property of the Company; and (d) neither the
Company, the Board nor the Committee shall be required to give any security or
bond for the performance of any obligation that may be created by or pursuant to
the Plan.
17. PAYMENTS TO TRUST. Notwithstanding the provisions of Section 16
hereof, the Board or the Committee may cause to be established one or more trust
agreements pursuant to
-7-
<PAGE>
which the Board or the Committee may make payments of cash, or deposit shares of
Stock, due or to become due under the Plan to Participants.
18. NO RIGHT TO EMPLOYMENT. Neither the adoption of the Plan nor the
granting of any Award shall confer on any Participant any right to continued
employment or association with the Company or in any way interfere with the
Company's right to terminate the employment or association of any Participant at
any time, with or without cause, and without liability therefor. Awards,
payments and other benefits received by a Participant under the Plan shall not
be deemed a part of the Participant's regular, recurring compensation for any
purpose, including, without limitation, for the purposes of any termination
indemnity or severance pay law of any jurisdiction.
19. GOVERNING LAW. The Plan and all determinations made and actions
taken pursuant hereto, to the extent not otherwise governed by the Code or the
securities laws of the United States, shall be governed by and construed under
the Governing Law. No Award shall be made under the Plan which is other than in
conformity with the Governing Law and, in the event of a conflict between any
for of Award Agreement and any provision of the Governing Law, the Award
Agreement shall be deemed modified to the extent necessary to comply with the
Governing Law.
20. EFFECTIVE AND TERMINATION DATES. This Plan, and any amendment
hereof requiring stockholder approval, shall become effective as of the date of
its approval by the stockholders of Technor by the affirmative vote of the
number of shares required by the Governing Law at a stockholders' meeting at
which the approval of the Plan (or any such amendment) is considered. The Plan
shall terminate on the tenth anniversary of the date of its adoption by the
Board, subject to earlier termination by the Board pursuant to Section 11
hereof, except as to Awards then outstanding.
-8-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS INDICATED BELOW AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> YEAR 3-MOS
<FISCAL-YEAR-END> JUN-30-1998 JUN-30-1999
<PERIOD-START> JUL-01-1997 JUL-01-1998
<PERIOD-END> JUN-30-1998 SEP-30-1998
<CASH> 764,603 2,203,693
<SECURITIES> 0 0
<RECEIVABLES> 2,417,481 285,800
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 7,272,737 6,568,162
<PP&E> 110,092 103,690
<DEPRECIATION> 6,725 8,373
<TOTAL-ASSETS> 11,632,829 10,921,852
<CURRENT-LIABILITIES> 919,495 252,532
<BONDS> 0 0
0 0
0 0
<COMMON> 6,665 7,440
<OTHER-SE> 11,662,123 11,662,123
<TOTAL-LIABILITY-AND-EQUITY> 11,632,829 10,921,852
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> (23,237) 10,685
<INCOME-PRETAX> (835,808) (272,966)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (835,808) (272,966)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (812,571) (283,288)
<EPS-PRIMARY> (0.18) (0.038)
<EPS-DILUTED> (0.18) (0.038)
</TABLE>
