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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-SB/A-1
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.)
Sofielundsvagen 4, S-191 47, Sollentuna, Sweden
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(Address of Principal Executive Offices) (Zip Code)
46 8594 74 900
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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
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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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PART I
ITEM 1. DESCRIPTION OF BUSINESS
GENERAL
Technor International, Inc. ("Technor" or the "Company") promotes,
markets, offers, sells, supports, assigns and distributes digital cellular,
or GSM (Global System for Mobile Communications, "GSM") technologies for
positioning and telematics in all territories outside of Africa, north of the
Sahara. Effective February 28, 1999, the Company acquired technology and
intellectual property rights from Novel Electronic Systems & Technologies
("Novel") for GSM positioning technology originally developed in South
Africa. The Company owns the technology, and has the right to use it
worldwide, with the exception of sub-Saharan Africa where such rights were
acquired by Wasp International (Pty) Ltd., a South African corporation
("Wasp"). The Company is in the process of changing its name to "CellPoint
Inc."
From inception to May 26, 1998, the Company was developing its
business plan based on a December 1997 Agreement in Principle with Wasp. On
May 26, 1998, the Company entered into a relationship, including a license
agreement, with Wasp which developed and refined the technology used within
the GSM networks for positioning and telematics. Pursuant to the license
agreement, the Company was entitled to 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 (the "License"). Technor also had the right to receive
further developments of this technology including enhancements and new
versions. As consideration for the license rights it received pursuant to the
License, the Company offered Wasp shares in Technor. In connection with the
License, Technor acquired a 25% ownership interest in Wasp, together with an
option to acquire the remaining 75% of the shares prior to June 30, 1999.
Effective February 28, 1999, Technor amended and restated its
existing arrangements with Wasp. Those arrangements, which were originally
implemented in 1998, have been superseded by this new transaction, which the
Company believes, provides stronger assurances of the Company's continued
access to the GSM technology. In the 1999 transaction: (i) Technor acquired
from Novel the intellectual property rights to the GSM technology for all
territories outside of sub-Saharan Africa, (ii) Technor purchased 100% of
Wasp, the business of which consists only of a development team and tools
used in the development of proprietary GSM positioning and telematics
technologies; and (iii) Technor acquired 10% of Wasp SA (Pty) Ltd. ("Wasp
SA"), which is the South African corporation with rights to the GSM
technology in sub-Saharan Africa. Wasp has subsequently been renamed as
CellPoint Systems S.A. (Pty) Ltd. ("CellPoint SA").
CellPoint Systems AB ("CellPoint"), a wholly-owned subsidiary of
Technor, focuses on the worldwide marketing, support, distribution and sales of
the Company's technologies for the GSM communication and positioning systems.
Technor's technology is marketed under the name, the "CellPoint System".
The Company's technology enables users to determine the position of a
cellular telephone or object, or to control remotely objects equipped with the
necessary hardware and software components using the existing GSM cellular
networks. Objects would typically be
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assets such as motor vehicles including cars, trucks, boats, construction
machinery and other assets possessing battery power. Telematics, or remote
control of these objects, can include power on/off, remote control of door
locks, fuel injection, vehicle lights and horn and could also include
temperature monitoring of cargo, engine RPM and activation/deactivation of
vehicle security systems. The primary applications include fleet management
and vehicle tracking for security, including positioning and tracking for
recovery in the event of theft.
The technology was originally commercialized by Wasp SA and Matrix
Vehicle Tracking (Pty) Ltd., a South African corporation ("Matrix"), and has
been in commercial use in South Africa for almost three years. There are more
than 18,000 commercial users of the technology in South Africa. The Company
has entered into a cooperation agreement with Matrix whereby Matrix will make
available to the Company its knowledge and know-how regarding GSM positioning
applications, strategies and service delivery. While the Company currently
anticipates that it will be able to implement commercial usage of the GSM
technology in Europe in the near future, there can be no assurance that the
Company will be successful in its efforts in such time period.
Positioning of cellular telephones is a relatively new development of
the technology. Applications include resource and fleet management of mobile
personnel and assets, location of a caller in the event of emergency and
location-based information services, on demand, for a cellular phone user. In
the resource and fleet management application, companies can view and track
their mobile service personnel over the Internet. Information services can
include location-sensitive traffic reports, weather, and concierge information
services such as the location of the nearest hotel, restaurant or repair shop.
Emergency applications could include locating persons making emergency calls,
roadside assistance in the event of vehicle breakdown or location of a disabled
or impaired person who may be lost or missing.
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
Sofielundsvagen 4, S-191 47, 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 has had no revenue from its operations through June 30, 1999 and
there can be no assurances as to when the Company will commence generating
revenues, or that it will be profitable once revenues are generated. 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
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product commercialization or that the Company's efforts 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, BDO International AB on the Company's financial statements for
the fiscal years ended June 30, 1999 and 1998, includes a statement that the
Company is a developmental stage company, with no revenues, and 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 BDO International AB. 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.
LIQUIDITY. The Company will require additional funds to implement
its business strategies, including cash for (i) payment of increased
operating expenses; and (ii) further implementation of its business
strategies. Such additional capital may be raised through additional public
or private financings, as well as borrowings and other resources. The Company
anticipates that it will need to raise capital prior to the end of calendar
1999. 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 condition 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. The Company's immediate financial resources
are described in Item 2, Management's Discussion or Plan of Operation,
Liquidity and Capital Resources, Recent Events.
RELIANCE ON MANAGEMENT. The Company is dependent on the efforts and
abilities of its senior management. The Company has employment agreements with
its executive officers: Albert van Urk, Lynn Duplessis, Peter Henricsson and
Hadar Cars. The key personnel are: Peter Henricsson - President and Chairman of
the Board of Technor and Technor's wholly-owned subsidiary CellPoint Systems AB
of Sweden and a director of CellPoint SA of South Africa; Lynn Duplessis -
Corporate Vice President of Technor and a director of Technor
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and each of its subsidiaries; Hadar Cars, President of CellPoint Systems AB and
CellPoint Systems S.A. (Pty) Ltd.; Albert van Urk - Vice President of Technology
of CellPoint Systems AB and a director of Technor and each of its subsidiaries.
Mr. Henricsson and Ms. Duplessis are husband and wife. The loss of any of these
key employees 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 of any key personnel from the service of the
Company. There can be no assurance, however, that upon the departure of any key
personnel from the service of the Company that replacement personnel will cause
the Company to operate profitably. The Company has no key man life insurance
with respect to any of its executive employees.
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 an investment in capital stock of the Company
will depend on the amount of funds realized and the claims to be satisfied
therefrom.
SUPPLY OF HARDWARE. The Company owns the technology for the CellPoint
System but does not, at this time, manufacture the GSM terminals, SIM cards, or
any cellular telephone equipment. The Company is not required to buy terminals
or other equipment from Wasp SA and can contract to have the terminals
manufactured by another supplier. The Company has purchased quantities of the
GSM computer terminals from Wasp SA. Inasmuch as the capacity for certain
services and components by Wasp SA may be limited, as the Company's business
grows, the inability of the Company, for economic or other reasons, to obtain
commercial quantities of such computer terminals from Wasp SA could have a
material adverse effect on the Company. There can be no assurance that the
alternate source of terminals and other equipment will be available in
commercial quantities or on reasonable terms, and the lack of any such alternate
source could have a material adverse effect on the Company.
COMMERCIALIZATION NOT YET ACHIEVED. The Company is currently
implementing 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.
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 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
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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.
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 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. The telecommunication and cellular telephone
industries continue to undergo rapid change, and competition is intense and is
expected to increase. 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 could 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.
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
the Company 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. Novel
is taking a very limited responsibility for consequential damages and
liabilities of the GSM technology acquired by the Company. To that end, the
Company will be responsible for product performance and liabilities of itself,
and possibly, its sublicensees. Novel does not warrant the technology
performance or functionality outside of South Africa and will assume no
liability for factors beyond its control in the event of non-performance of the
technology. 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 result in adverse effects.
Such risk exists even with respect to those products that are manufactured in
licensed and regulated facilities or that otherwise possess
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regulatory approval for commercial sale. There can be no assurance that the
Company will avoid significant product liability exposure or 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.
RISK OF PRODUCT RECALL, PRODUCT RETURNS. Product recalls may be issued
at the discretion of the Company 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 by 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 the Company to redesign its products to comply with such
standards or regulations. The inability of the Company to design or redesign
products to
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comply with foreign standards could have a material adverse effect on the
Company's business, financial condition and results of operations.
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. Mr. Henricsson and Ms. Duplessis,
the founders of the Company, and Novel beneficially own a majority of the
issued and outstanding shares of the Company's Common Stock. Mr. Henricsson
and Ms. Duplessis are not shareholders of Novel. Because of such ownership,
these stockholders 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.
YEAR 2000 ISSUES. Many computer systems experience problems handling
dates beyond the year 1999. Therefore, some computer hardware and software will
need to be
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modified prior to the year 2000 in order to remain functional. The Company has
undertaken a Year 2000 project to address the Company's readiness and exposure
to Year 2000 issues. The Company has assessed its exposure to Year 2000 issues
in terms of its products, internally used operating systems, software, and other
technology, and third party vendors and suppliers.
While the Company believes that it has substantially identified and
resolved all potential Year 2000 problems with any of the products that it
develops and markets, it is not possible to determine with complete certainty
that all Year 2000 problems affecting the Company's products have been
identified or corrected because these products interact with other third party
vendor systems not under the Company's control. It should be noted that the
operation of office and facilities equipment, such as fax machines,
photocopiers, telephone systems, security systems, elevators, and other common
devices may be affected by the Year 2000 problem.
The Company has identified major suppliers and other third party
vendors integral to the operations of the Company's business. The Company will
initiate communications with those suppliers and third party vendors to assess
their readiness to handle Year 2000 problems. However, the Company has no
control over and cannot predict the corrective actions of these third party
vendors and suppliers. The Company intends to arrange, to the extent available,
alternate supplier arrangements in the event that it considers a third party
vender to have material Year 2000 issues. While the Company expects that it will
be able to resolve any significant Year 2000 problems related to third party
products and services, there can be no assurance that it will be successful in
resolving any such problems. Any failure of these third party vendors and
suppliers to resolve Year 2000 problems with their systems in a timely manner
could have a material adverse effect on the Company's business, financial
condition, and results of operations.
The discussions of the Company's efforts relating to Year 2000
compliance are forward-looking statements. The Company's ability to achieve Year
2000 compliance and the associated level of incremental costs could be adversely
affected by, among other things, the availability and cost of programming and
testing resources, vendors' ability to modify proprietary software and other
unanticipated problems. The failure to correct a material Year 2000 problem
could result in an interruption of certain normal business activities or
operations. Such failures could materially affect the Company's results of
operations, liquidity and financial condition. Because of the general
uncertainty inherent in the Year 2000 problem, the Company is unable at this
time to determine those consequences.
PRODUCTS AND SERVICES
The Company markets, supports, distributes and sells GSM positioning
and telematics technology systems and applications which enable users to
determine the position of a cellular telephone or object, or to control
remotely objects equipped with the necessary hardware and software components
using the existing cellular networks. The Company, through its subsidiaries,
markets the technology under the name the "CellPoint System". Objects that
are typically assets for which the technology is useful include cars, trucks,
boats, construction machinery and other assets possessing battery power.
Telematics, or remote control of these objects, can include power
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on/off, remote control of door locks, fuel injection, vehicle lights and horn,
and could also include temperature monitoring of cargo, engine RPM's and
activation/deactivation of vehicle security systems. The primary applications
are fleet management and vehicle tracking for security including positioning and
tracking for recovery in the event of theft.
Positioning of cellular telephones is a relatively new development of
the technology. Applications include resource and fleet management of mobile
personnel and assets, location of a caller in the event of emergency and
location-based information services, on demand, for a cellular phone user. In
the resource and fleet management application, companies can view and track
their mobile service personnel over the Internet. Information services can
include location-sensitive traffic reports, weather, and concierge information
services such as the location of the nearest hotel, restaurant or repair shop.
Emergency applications could include locating persons making emergency calls,
roadside assistance in the event of vehicle breakdown or location of an elderly
or mentally challenged person who may be lost or missing.
The CellPoint System is 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. While the Company believes that the
potential cost savings for fleet owners using the CellPoint System are
significant, the Company has not had any experience yet in the commercial use of
these products.
Rental companies (e.g., of machinery, vehicles, equipment and
containers) can use the CellPoint 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 vehicle. In case of theft, the vehicle can also be
located and recovered. If necessary, a special homing beacon can be activated
when a recovery team is close to a stolen vehicle to assist in the final
tracking of the vehicle to the exact spot. Matrix has used this method in
multi-level car parks and underground garages.
The hardware terminals used for these applications contain a GSM
module. These terminals are built to be installed in vehicles and withstand the
harsh in-vehicle operating environment. Terminals have input-output devices for
telematics functions. One version of the terminal also includes a global
positioning module which is a satellite tracking technology that complements the
GSM tracking technology. The Company's products also include proprietary
software used in the positioning calculations.
The CellPoint System's terminals can also be programmed to activate by
remote control when, for example, someone reports an item missing, presses a
distress button, or when a conventional alarm is triggered. The CellPoint 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. The remote
configuration will allow the operator to position the asset, lock doors, make
the lights flash, shut off fuel injection, etc.
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The Federal Communications Commission ("FCC") in the United States
adopted a ruling in June 1996 (Docket No. 94-102) that will require all cellular
telephone carriers to provide location information on all 911 calls. By October
2001, carriers will be required to provide phone location information within 125
meters of accuracy, 67% of the time. Management of the Company believes that
other countries will initiate such rulings in the future as well. Even without
such a ruling, many cellular carriers are interested in providing value-added
services incorporating cellular location such as the services available with the
CellPoint System.
A wide assortment of standard cellular telephones support the CellPoint
technology today. The Company believes that 50% - 75% or more of the cellular
phones sold in Europe this year will be compatible with the CellPoint
technology.
SYSTEM COMPONENTS
CellPoint's technology is based on both cellular telephones and
specially designed, compact GSM terminal units, which can easily be hidden in a
vehicle, boat, container or elsewhere. The cellular telephone can be positioned
in the same way as the purpose-designed terminals. One version of the terminal
communicates with the network operator over the GSM network which makes it
possible instantly to locate the vehicle or asset through the existing GSM radio
network. The telephone, or the vehicle or asset's position is displayed
graphically on a computerized map. Since the CellPoint System uses the existing
GSM radio network, cellular telephones, 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 satellite coverage.
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).
Using the existing GSM mobile networks, the CellPoint System communication and
positioning technology 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. The CellPoint 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
telephone.
The CellPoint System utilizes:
- A standard GSM network
- Proprietary server system, the CellPoint System, (hardware and
software) interacting with the GSM cellular network operator's system, placed at
the operator's site, at CellPoint's premises or third party premises
- A GSM cellular phone or a CellPoint GSM terminal unit
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- Client Software
- The Internet
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 messages used in complex applications. The CellPoint 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.
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 over the Internet 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.
This microprocessor-controlled terminal contains a GSM unit and has a
number of inputs and outputs for customized uses. It 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 Company also has a more advanced version of the terminal, with a
broader range of GSM functions and additional Global Positioning System ("GPS")
satellite capability, making it more practical for extensive fleet management
services.
BUSINESS STRATEGY AND COMMERCIAL APPLICATIONS
The Company's business strategy is to provide GSM positioning services
in target markets around the world. The Company must begin with installing the
CellPoint System at a GSM cellular network operator with the necessary software.
The network operator will then "offer" the CellPoint System as part of a group
of services offered to the end users of the cellular network.
Revenues can be earned through (i) percentage or fixed price
participation in the revenue streams resulting from the new services offered by
that the network operator, (ii) sale of tiered licenses to network operators,
such as a fixed price for the first 50,000 users with increases for additions of
100,000, 500,000 and 1,000,000 users, (iii) usage revenues for service
providers, based on transaction volumes such as usage of 5 positions per second
scaled to hundreds of positions per second, (iv) sale of the CellPoint System to
strategic partners where partners are licensed to operate the technology in a
specified geographic area, and (v) advertising revenues for the internet web
application which is the application from which consumers and companies access
graphical positioning information of mobile telephones and terminals. To date,
the Company is engaged in marketing each type of these revenue opportunities.
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The Company's first commercial agreement was signed in April 1999 with
Tele2, a GSM network operator in Sweden, for positioning services for GSM
telephones. This is a significant contract in that it constitutes the first use
of the technology outside of South Africa. The Company will receive revenue
percentage participation based on a sliding scale, such that a higher percentage
is received for the first few thousand users, and that percentage is reduced
beyond higher volume users of the technology. Further, the Company will receive
minimum monthly payments regardless of the number of users. Ongoing revenues
will commence in October 1999 after the evaluation project where the Company
participates in new revenues generated from the technology on an ongoing basis,
both for start-up fees and monthly fees, for as long as the technology is used.
Further strategic alliances are in place to co-market new services
internationally, such as with AU- System of Sweden for location-based
information services for cellular telephones and with Matrix for deploying
vehicle tracking and fleet management services with the Company's
purpose-designed terminals. Additional strategic alliances being sought include
distribution and marketing channels to sell the positioning and telematics
services for GSM telephones and the proprietary hardware terminals to end-users.
End-users can include companies wishing to track and protect their vehicle
fleets for purposes of scheduling, dispatch, security and theft recovery.
End-user individuals could be the owner or a car for purposes of location in the
event of theft, for emergency SOS/E-911 services or location- based information
services.
In addition to location services, the CellPoint System also supports
telematics applications. An example of a standard telematics application is to
remotely blink the vehicle's rear lights when law enforcement personnel close-in
on the stolen vehicle. A control center, equipped with the necessary CellPoint
client software and mapping application, can track a stolen vehicle and report
on the vehicle's whereabouts. Law enforcement personnel can verify that they
have located the exact vehicle in question when executing the remote control
operation to blink the vehicle's rear lights. Today, there are over 18,000
purpose-designed GT terminals installed in South Africa where the technology has
been in commercial operation for three years. Recovery rates for stolen vehicles
are greater than 90%.
The Company is in the process of negotiating additional contracts with
network operators. The completion and implementation of any one of these
contracts will be significant but there can be no assurance that such contracts
will be completed.
RESEARCH AND DEVELOPMENT
Technor, through CellPoint Systems AB has spent approximately $225,000
on research and development activities in the current fiscal year, as compared
to $7,000 spent on research and development in the previous fiscal year. In a
development project for the development of an X.25 communications interface with
SOS Alarm, Sweden's emergency dispatch organization, the costs for the
development were shared between CellPoint Systems AB and SOS Alarm.
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VALUE-ADDED MOBILE SERVICES
Operators of cellular phone networks 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 moving 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 cellular operators 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 CellPoint System will achieve a
significant degree of market share, 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 that the CellPoint System is unique,
there can be no assurances that other companies will not introduce similar or
more advanced technologies. To date, there is no known product installed in the
market that either performs positioning using the unmodified GSM network or has
the extent of commercial experience in performing positioning using the GSM
network. Today, the CellPoint technology is in use in South Africa where there
are more than 18,000 users and the Company is currently implementing it in
Sweden and France.
The Company knows of some companies that are working in the area of
using the GSM networks for positioning. Potential competitors have chosen to
develop "Network-based" solutions as opposed to the "terminal-based" solution
Technor has. As far as the Company knows, no other company has implemented any
terminal-based solution in the GSM world. The Company's technology can be
accessed merely by installing the CellPoint System server in a cellular
operator's network and registering the new users. By comparison, a network-based
solution requires new hardware and software in the base stations, which takes
considerable time and results in a significant cost to the network operator.
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The main advantage of the network-based system is that once it is
installed, every phone can be positioned, while in the terminal-based system,
only the special terminals or the specific phones can be positioned. Only users
of the positioning services would then pay for the services. There are also
known privacy issues associated with network-based services.
The main advantage of the terminal-based solution is that it works
today, while the network-based systems are only in the testing phase. The
CellPoint System can be implemented not only much faster than the network-based
systems but also at a fraction of the cost for the network operator. Cellular
operators have also identified the market for positioning services now and
likely may not want to wait until another system is available.
Ericsson announced its network-based Mobile Positioning Center "MPC"
System for positioning GSM telephones in November, 1998. The MPC system has
started testing in a small area in Sweden but Ericsson has indicated it would
not be ready to deliver commercial services until the year 2001. Key
differentiator of the MPC technology is that it works in Ericsson-only networks
whereas the CellPoint technology is independent of GSM infrastructure supplier
(it can work with Ericsson, Motorola, Nokia, Siemens, Alcatel, etc.). It is also
understood that the MPC system is significantly more costly than the CellPoint
System as it is an overlay system which means the operator must install hardware
on every cellular tower/basestation in the network. This will take time and
money. The CellPoint System requires no modification to the GSM operator's
network as it is a terminal-based system rather than a network-based system. The
user can also determine if they want to be positioned or not by selecting an
option on their telephone.
Other companies using similar approach to Ericsson are True Position in
the USA and Cambridge Positioning Systems in the UK. They are also overlay
systems requiring special hardware add-ons in the GSM networks and it is
understood by management that they have no commercial installation base today.
To the Company's knowledge, there is no other technology that is
commercially deployed, or at a commercially-ready stage, nor does the Company
know of any other terminal-based solutions under development, except for some
planning by companies such as Snaptrack and Sirf to build GPS into hand-held
telephones.
In the United States, the FCC has outlined guidelines for wireless E911
waivers for terminal-based approaches for the second phase of the FCC's E911
requirements. In the original ruling (Docket No. 94-102), a cellular caller's
location must be identified within 125 meters 67% of the time. All existing and
new cellular telephones would have to have the capability to be positioned by
location technology by October 1 of Year 2001. In the new FCC rule waivers, the
FCC has stated its willingness to consider issues and benefits of terminal-based
technologies in its rulemaking due to possible advantages in cost and accuracy
for a cellular service provider. This new ruling has made the Company's
terminal- based technology a viable option to the network operators in the
United States .
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The path chosen by the major companies who are competitors or potential
competitors of the Company - Ericsson, Motorola, Nokia, Alcatel, Sony, Panasonic
and Siemens may factor significantly in market share available to the Company.
These companies are eager and have more substantial resources than those of the
Company. There are possibilities for the CellPoint technology to co-exist with
other network-based solutions. In this example, a cellular operator could use
the cost-effective CellPoint technology in urban areas, where the cellular
basestations are most dense, and an Ericsson solution could be implemented for
rural areas where overall costs and service offerings for the cellular operator
would be optimized.
Even if companies commercialize competing systems, the Company believes
it is positioned to achieve a significant market share. The Company is
benefitting from increased interest in its technology as more information about
the value and potential of positioning technology becomes public.
EMPLOYEES
The Company and its subsidiaries have 31 full-time employees and five
part-time employees. The Company expects to expand its technical and marketing
resources by hiring 14 additional full-time staff in the next six months. 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
In January 1999, the Company applied for a trademark for The CellPoint
System and logo. The Company has not applied for any patents for the CellPoint
System.
The Company believes that the complexity involved in developing this
technology offers considerable protection against similar developments. The
technology has been under development for five years and is continually being
refined and improved.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
GENERAL
Technor, and its subsidiaries, 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, 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
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commercialization. There can be no assurance that the Company will be able to
achieve profitable operations.
The report of the Company's independent accountants, BDO
International AB on the Company's financial statements for the fiscal years
ended June 30, 1998 and 1999, include 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 BDO International AB. 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 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 subsidiaries,
CellPoint Systems AB and CellPoint Systems S.A. (Pty) Ltd.
BUSINESS STRATEGY
The Company's business strategy is to enable GSM positioning services
in target markets around the world. Enabling the technology begins with
installing the CellPoint System with a GSM Network Operator. Revenues can be
through the sale of a tiered license to use the technology (based on number of
customers and transaction rates) or through participation in new revenue streams
created as a result of the new services that the network operator can offer. The
technology supports GSM telephones as well as purpose-designed terminals for
in-vehicle use.
The Company's first commercial agreement was signed in April with
Tele2, a GSM network operator in Sweden for positioning services for GSM
telephones. Further strategic alliances are in place to co-market new services
internationally, such as with AU-System for location-based information services
for telephones and with Matrix Vehicle Tracking (Pty) Ltd. for deploying vehicle
tracking and fleet management services with purpose-designed terminals.
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Additional strategic alliances being sought include distribution and marketing
channels to sell the positioning and telematics services for GSM telephones and
proprietary hardware terminals to end-users. End-users can include companies
wishing to track and protect their vehicle fleets for purposes of scheduling,
dispatch, security and theft recovery. End-user individuals could be the owner
of a car for purposes of location in the event of theft, for emergency SOS/E-911
services or location-based information services.
In addition to location services, the technology also supports
telematics applications. A standard telematics application is to remotely blink
the vehicle's rear lights when law enforcement personnel close-in on the stolen
vehicle. A control center, equipped with the necessary CellPoint client software
and mapping application, can track a stolen vehicle and report on the vehicle's
whereabouts. Law enforcement personnel can verify that they have located the
exact vehicle in question when executing the remote control operation to blink
the vehicle's rear lights.
FISCAL YEAR ENDED JUNE 30, 1999
For fiscal 1999, the Company had no revenues from commercial
operations. The Company funded its operations out of proceeds from equity
offerings. For fiscal 1999, the Company incurred a net loss of $2,969,751.
The remaining $120,000 stock subscription outstanding at June 30,
1998 was paid in November 1998 and in March 1999.
The average cash outflow per month between July 1998 and June 1999
was approximately $154,000, consisting of salaries and personnel costs
(approximately $78,000), rent and other facilities (approximately $5,000),
marketing and selling expenses (approximately $19,500), professional services
(approximately $39,000), insurance $2,500, computers and equipment $10,000.
FISCAL YEAR ENDED JUNE 30, 1998
The Company commenced operations in February 1997. The Company has had
only nominal 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 financing 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.
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In fiscal 1998, the Company issued 1,950,000 shares of its Common Stock
to Wasp and its stockholders and paid the Wasp shareholders $500,000 cash. This
transaction has since been replaced by the Amended and Restated Option
Agreement.
LIQUIDITY AND CAPITAL RESOURCES
The Company will require additional capital by the end of calendar 1999
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 financing, 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 fourth calendar quarter of 1999 to sustain operations. Management is
expecting revenues from the Swedish operations to commence during fiscal 2000,
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 2000,
the Company will need to raise further capital.
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The Company, through CellPoint Systems AB, entered into an agreement in
April 1999 to provide its technology and related services to a GSM operator in
Sweden, Tele2. Once the evaluation project is complete and services are launched
commercially in October 1999, CellPoint will receive a percentage of the
revenue stream created through the new technology offering. Those revenue
streams are a percentage of fees that Tele2 will collect and include a monthly
minimum payment requirement.
In July 1999, the Company entered into an agreement with France Telecom
Mobiles to provide it's technology and related services in France. Revenues will
commence during this evaluation project and significant revenue is expected by
management upon completion of the evaluation project.
The Company has additional commercial business pending at the time
of writing. Significant revenue may be realized from the closing of these
business situations. Should the realized revenue not accommodate the
Company's current growth and expense projections, additional funding will be
sought. The current cash reserves are believed to be sufficient to cover the
Company's current operating costs into the fourth calendar quarter of 1999.
FISCAL YEAR ENDED JUNE 30, 1999
At June 30, 1999, the end of the fiscal year of 1999, the Company
had $236,193 in current assets. Cash and cash equivalents amounted of
$180,073. The decrease in cash and cash equivalents from June 30, 1998 is
attributable to ongoing operations of the company.
During fiscal 1998/99, current assets decreased by $7,036,544 mostly
as a result of the restated agreements during the period. This includes
$5,400,000 relative to the exercise of the option to purchase CellPoint
Systems S.A. (Pty) Ltd. Current liabilities decreased from $919,495 at
June 30, to $595,643 at June 30, 1999.
The Company's stockholders' equity was $11,160,899 at June 30, 1999,
including an accumulated deficit of $3,806,343.
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
subscription receivable from its Regulation S offering, which subscriptions of
$2,226,667 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 shareholders 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.
RECENT EVENTS
TECHNOLOGY ACQUISITION. Effective February 28, 1999, Technor and
Wasp SA amended and restated their previous agreements and completed a new
agreement for the acquisition of the GSM Positioning Technology from Novel
Electronic Systems & Technologies ("Novel"). This transaction resulted in
acquisition of the intellectual property rights to the technology from Novel.
Further, there was a merger of the operations of subsidiary CellPoint Systems
AB and Wasp through the acquisition of Wasp International (Pty) Ltd. The
Company's new subsidiary, CellPoint Systems S.A. (Pty) Ltd. in South Africa
consists of a technical development team and tools, greatly enhancing the
Company's ability to quickly deploy and enable the technology worldwide.
COMMERCIAL AGREEMENTS. On April 23, 1999, Technor International Inc.
signed an agreement with Tele2 in Sweden for implementation of services built on
the Company's CellPoint GSM positioning technology. The first services are
targeted for transport companies, service and sales organizations, with further
services on the way.
On July 28, 1999, the Company signed an agreement with France Telecom
Mobiles for an evaluation project of the Company's CellPoint GSM positioning
technology. The CellPoint System has been installed and undergoing technical
testing since march 1999. A commercial testing phase will commence in September
1999.
ADDITIONAL FINANCING. On July 27, 1999, the Company signed two
letters of intent with Madison Securities, Inc. of Chicago Illinois for the
raising of additional capital through a bridge financing of $2,000,000 and a
private placement of up to $8,000,000 of equity. On August 31, 1999, the
bridge financing of $2,000,000 of 12% promissory notes was completed. In
connection with such bridge financing, the Company issued an aggregate of
180,000 common stock purchase warrants; 100,000 of which have an exercise
price of $7.49 per share and 80,000 of which have an exercise price of
$8.04 per share. It is currently anticipated that the private placement of
equity will be completed before the end of calendar 1999, and the proceeds of
such financing will be used to refinance the bridge notes. The Company
believes these additional funds will enable it to grow rapidly and expand
it's staff and reserves.
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YEAR 2000 ISSUES
The services of the CellPoint technology are based primarily on
technology developed by the South African company Wasp International (Pty) Ltd.
Wasp, the original developers of the technology, issued a Year 2000 compliance
statement to the Company wherein it confirmed that all software and hardware is
millennium compliant.
The CellPoint services to be offered to Swedish customers initially
will be contingent upon the supply of communications services and basestation
data from the Swedish telecommunications operator Tele2 AB ("Tele2"). Tele2 has
issued a Year 2000 compliance statement to the Company wherein it is confirmed
that most of Tele2's systems are currently millennium compliant. A limited
number of Tele2's systems are not currently millennium compliant, but these
systems are scheduled to be millennium compliant by the end of summer
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1999. The Company has no reason to question the correctness of Tele2's statement
or the reasonability of Tele2's time schedule.
Any new supplier of vital goods and services to the Company and
subsidiaries will be requested to submit a millennium compliance statement
before the Company accepts the supplier as a supplier of goods and services to
the Company.
During recent years, there has been significant global awareness raised
regarding the potential disruption to business operations worldwide resulting
from the inability of current technology to process properly the change from the
year 1999 to 2000. The Company is aware of the potential Year 2000 problem, and
has undertaken a Year 2000 project to address the Company's readiness and
exposure to Year 2000 issues. The Year 2000 project addresses the Company's
products; internally used operating systems, software, and other technology; and
third party vendors and suppliers. Each of these areas is discussed below.
The Company believes that it has substantially identified and resolved
all potential Year 2000 problems with any of the products that it develops and
markets. In order to confirm its belief, the Company has implemented an ongoing
program to test its products for Year 2000 issues. The Company believes that if
any Year 2000 issues are identified, the Company will be able to correct the
problem with a minimal cost or time investment. However, management also
believes that it is not possible to determine with complete certainty that all
Year 2000 problems affecting the Company's products have been identified or
corrected due to the fact that these products interact with other third party
vendor systems not under the Company's control (see below). In addition, the
Company's evaluation is based on a limited number of actual customer
installations.
The Company has conducted a process to identify all internally used
operating systems, software, and other technology that may be impacted by the
Year 2000 problem. This process is now substantially complete. For the
internally used operating systems, software, and technology the Company has
identified as material, the Company is assessing the Year 2000 exposure through
testing and vendor inquiry. Material operating systems, software, and other
technology deemed to be adversely affected by the Year 2000 problem will be
upgraded or replaced. The Company currently estimates the range of costs to
upgrade or replace systems it believes may be impacted by Y2K issues to be from
$50,000 to $150,000. In addition to operating systems, software, and other
technology, the operation of office and facilities equipment, such as fax
machines, photocopiers, telephone systems, security systems, elevators, and
other common devices may be affected by the Year 2000 problem.
The Company has identified major suppliers and other third party
vendors integral to the operations of the Company's business. The Company will
initiate communications with those suppliers and third party vendors to assess
their readiness to deal with Year 2000 problems. As part of the Year 2000
project, the Company will identify alternative providers of products and
services deemed material to the Company's operations. However, the Company has
no control over and cannot predict the corrective actions of these third party
vendors and suppliers. The Company intends to arrange, to the extent available,
alternate supplier arrangements in the event a
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third party vender is materially impacted by Y2K issues. While the Company
expects that it will be able to resolve any significant Year 2000 problems
related to third party products and services, there can be no assurance that it
will be successful in resolving any such problems. Any failure of these third
party vendors and suppliers to resolve Year 2000 problems with their systems in
a timely manner could have a material adverse effect on the Company's business,
financial condition, and results of operations.
The discussions of the Company's efforts relating to Year 2000
compliance are forward-looking statements. The Company's ability to achieve Year
2000 compliance and the associated level of incremental costs could be adversely
impacted by, among other things, the availability and cost of programming and
testing resources, vendors' ability to modify proprietary software, and other
unanticipated problems. The failure to correct a material Year 2000 problem
could result in an interruption of certain normal business activities or
operations. Such failures could materially affect the Company's results of
operations, liquidity and financial condition. Due to the general uncertainty
inherent in the Year 2000 problem, the Company is unable at this time to
determine those consequences. The Company believes that, with the completion of
the Year 2000 project as scheduled, the possibility of significant interruptions
of normal operations should be reduced or eliminated.
ITEM 3. DESCRIPTION OF PROPERTY.
The Company occupies completely furnished facilities consisting of 3675
square feet of leased office space located at Sofielundsvagen 4, S-191 47
Sollentuna, Sweden. The Company occupies those facilities on a lease basis and
pays the equivalent of $3,900 per month rent for those facilities. The
facilities are leased until April 30, 2000 with an option to continue for an
additional three years. The leased property is covered by a comprehensive
insurance policy covering property, fire, theft, business interruption,
liability, legal and litigation. Management believes the staff could increase by
50% before needing to move into larger premises. 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 $350.00
per month rent for those facilities.
The Company's South African subsidiary in Johannesburg occupies 4500
square feet of leased office space located at Ibhubezi House, Howick Close,
Waterfall Park, Midrand, South Africa. The Company occupies those on a rent
basis and pays the equivalent of $3,150 per month rent for those facilities. The
lease held by Wasp SA expires in May of 2002. The leased property is covered by
a comprehensive insurance policy covering fire, theft, business interruption,
public liability, electronic equipment, office contents, and accident insurance
for staff. Management believes the staff could increase by 100% before needing
to move into larger premises.
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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 September 10, 1999 and 3,000,000 shares of Preferred Stock, none of
which is outstanding. The Company has an obligation to issue an additional
750,000 shares of Common Stock pursuant to it agreement with Novel Electronic
Systems & Technologies in connection with the acquisition of the CellPoint
technology and Matrix Vehicle Tracking (Pty) Ltd. in connection with a
cooperation agreement. The Company believes there are approximately 600
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 September 10, 1999,
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.
<TABLE>
<CAPTION>
Name and Address of
Beneficial Owners and Shares of Common Stock Percent of Common Stock
Directors and Officers Beneficially Owned Beneficially Owned
---------------------- ------------------ ------------------
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
5% BENEFICIAL OWNERS
- --------------------
Novel Electronic Systems & Technologies
c/o Bank Ippa & Associates 1,950,000(a) 26.2%
15 Boulevard de la Foire
L-1528 Luxembourg
- --------------------------------------------------------------------------------------------------------------
Novel Electronic Systems & 500,000(b) 5.8%
Technologies
5 Duke of Edinburgh Ave
Port Louis, Mauritius
DIRECTORS AND EXECUTIVE OFFICERS
- --------------------------------
Lynn Duplessis 2,150,000(c) 28.3%
Saatrangsvagen 88
S-182 37
Danderyd, Sweden
- --------------------------------------------------------------------------------------------------------------
Peter Henricsson 2,150,000(d) 28.3%
Saatrangsvagen 88
S-182 37
Danderyd, Sweden
- --------------------------------------------------------------------------------------------------------------
-23-
<PAGE>
<CAPTION>
<S> <C> <C>
Mats Jonnerhag 25,390(e) *
Borsinsikt AB
Box 6044
S-192 06 Sollentuna
Sweden
- --------------------------------------------------------------------------------------------------------------
Bengt Nordstrom 35,000(f) *
Northstream AB
Sjoangsvagen 7
S-19172 Sollentuna
Sweden
- --------------------------------------------------------------------------------------------------------------
Guy Redford 75,000(g) *
P.O. Box 1995
Rivonia, 2128
South Africa
- --------------------------------------------------------------------------------------------------------------
Albert van Urk 75,000(h) *
20 Van Rooy Street
Potchefstroom
South Africa
- --------------------------------------------------------------------------------------------------------------
Kjell Wallman 12,500(i) *
Brahegatan 39
S-114 37 Stockholm
Sweden
- --------------------------------------------------------------------------------------------------------------
Hadar Cars 0(j) 0
Vitsippsvagen 3
122 36 Saltsjobaden
Sweden
- --------------------------------------------------------------------------------------------------------------
Bjorn Waltre 0(k) 0
Kassmans vag 8
S-182 38 Danderyd
Sweden
- --------------------------------------------------------------------------------------------------------------
Officers and Directors as a Group 2,372,890 30.5%
( 9 persons)
- --------------------------------------------------------------------------------------------------------------
</TABLE>
* Less than 1%.
(a) Nominee for Novel Electronics Systems & Technologies.
(b) The Company has an obligation to issue 500,000 shares pursuant to the
Company's agreement with Novel Electronic Systems & Technologies, in
connection with the Company's acquisition of the CellPoint technology.
-24-
<PAGE>
(c) Includes: (1) options to acquire 75,000 shares, all of which
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, all of which are currently
exercisable.
(d) Includes: (1) options to acquire 75,000 shares, all of which
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, all of which are currently exercisable.
(e) Includes (1)16,500 shares held by BorsInsikt AB, of which
Mr. Jonnerhag is a 66% stockholder (owning 10,890 shares), and
(2) options to acquire 25,000 shares of which 8,500 are currently
exercisable.
(f) Mr. Nordstrom has options to acquire 50,000 shares, of which 35,000
are currently exercisable.
(g) Mr. Redford has options to acquire 75,000 shares, all of which are
currently exercisable.
(h) Mr. van Urk has options to acquire 75,000 shares, all of which are
currently exercisable.
(i) Mr. Wallman has options to acquire 25,000 shares, of which 12,500 are
currently exercisable.
(j) Includes options to acquire 100,000 shares, none of which is currently
exercisable.
(k) Includes options to acquire 25,000 shares, none of which is 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, 970,000 options have been granted and
none have been exercised.
-25-
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants
<TABLE>
<CAPTION>
Name Number of Securities Percent of Total Exercise or Expiration Date
Underlying Options/SARs Granted to Base Price
Options/SARs Employees in Fiscal Year ($/Sh)
(1) Granted
(#)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Peter Henricsson, 0/0(2) 0% --
President and Chief
Executive Officer
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) To date, the Company has issued no SARs.
(2) No options were granted to Mr. Henricsson in fiscal 1999; 75,000
options, with an exercise price of $2.75 per share, were granted to
Mr. Henricsson in fiscal 1998. Of such options, 25,000 options became
exercisable on September 25, 1998, 25,000 options became 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.
HADAR CARS, 35, recently joined the Company as Managing
Director of CellPoint Systems. He has 10 years experience in international
telecommunications marketing, sales and general management within the
Ericsson Group. He has conducted business globally (in Europe, Asia and Latin
America) mainly in the cellular systems business area, and also headed up the
fixed network department of Ericsson in Japan. his latest assignment at
Ericsson was to establish the department for UMTS (third generation wireless
system --successor of GSM) marketing and sales towards new "Greenfield"
operators. His knowledge of the industry combined with his business
experience, sales skills and drive have translated in to major new business
for Ericsson. He is a strong team-leader with the ability to inspire people
from different cultural and ethnic backgrounds to work together to achieve
common goals.
Mr. Cars also has experience as an investment analyst with
a private equity house in Stockholm. He holds a Master of Science in
Mechanical Engineering from the Royal Institute of Technology in Sweden and a
Master of Business Administration from INSEAD in France.
LYNN DUPLESSIS, 39, has been Corporate Vice President and
Secretary, Treasurer and director of the Company since its formation. She has
18 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 and Toronto,
Ontario, Canada (1981-1992). She is also a director of CellPoint SA, a
wholly-owned subsidiary of the Company, and a director of CellPoint Systems
AB. Ms. Duplessis is married to Peter Henricsson, a director and the
President of the Company.
PETER HENRICSSON, 47, has been President, Chief Executive
Officer, and director of the Company since its formation. He has over 20
years of experience in executive management,
-26-
<PAGE>
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
CellPoint SA, a wholly-owned subsidiary of the Company, and Chairman of the
Board and a director 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 BorsInsikt AB. He
founded BorsInsikt in 1982 and has more than 20 years of experience with the
Swedish stock market. BorsInsikt publishes a weekly stock market newsletter.
Subsidiary operations include BorsInsikt Broker, which is a brokerage
company, and BorsInsikt BorsData AB, which markets analysis software
developed in-house and other research products.
BENGT NORDSTROM, 42, was the Chief Technology Officer and
Executive Director of SmarTone Telecommunications Ltd., a cellular network
operator in Hong Kong, until January 1999. He is now the President and Senior
Partner of Northstream AB of Sweden, a GSM consulting company specializing in
data over GSM. Mr. Nordstrom is a member of the Executive Committee of the
GSM MoU association which represents the interests of 347 GSM and satellite
network operators around the world. He was with SmarTone from 1993 to 1998,
and was previously with Comviq GSM AB from 1989 - 1993 and with Ericsson
Telecom AB from 1983 - 1989.
GUY REDFORD, 45, has been a director of the Company and of
CellPoint Systems AB since June 1998. He is co-founder of Wasp International
(Pty) Ltd. of South Africa. He was Managing Director of Wasp since 1993 and
was the Managing Director of CellPoint Systems AB of Sweden until June 23,
1999. He is also a director of CellPoint Systems AB and CellPoint SA,
wholly-owned subsidiaries of the Company. Wasp developed the CellPoint GSM
positioning technology and specialized in wireless application technology
products. The Wasp company was acquired by Technor in May, 1999 along with a
staff possessing core skills and expertise in GSM communication, electronic
design and development and interactive communication technologies.
ALBERT VAN URK, 32, is co-founder of Wasp International
(Pty) Ltd. of South Africa and is a Director of Technor International Inc.
and a director and Vice President of Technology for CellPoint Systems AB. He
is also a director of CellPoint SA, a wholly-owned subsidiary of the Company.
He had been the Director of Research and Development of Wasp International
from 1993 to 1999. He led the development of the CellPoint GSM positioning
technology and is responsible for all research and development activities for
all aspects of the GSM technology. He continues to be the leader in directing
enhancements and further development of the technology.
-27-
<PAGE>
KJELL WALLMAN, 66, had been a partner with Mannheimer
Swartling Advokatbyra since1990 and retired in January 1999. He continues to
consult to Mannheimer on corporate law matters. He was also a partner with
Carl Swartling Advokatbyra from 1974-1990, and a partner with Weltter &
Swartling Advokatbyra from 1968-1974. He is also a member of the Board in a
number of other Swedish companies.
BJORN WALTRE, 53, is the Chief Financial Officer for
Technor International Inc. Until 1999 he was partner and senior consultant
with the Management Consulting firm Nordic Adviser Group with activities in
Sweden, Finland and the Baltics. He was previously Director of Finance and
Administration with companies such as with Pleiad Real Estate, Stockholm,
with real estate assets in eight countries in Europe as well as with Nordic
Investment Bank in Helsinki and Swedish Match in Nyon, Switzerland.
ITEM 6. EXECUTIVE COMPENSATION.
The following table shows compensation for services
rendered to the Company during the fiscal years ended June 30, 1999, 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 $100,000
during the fiscal years ended June 30, 1999, 1998 and 1997. Therefore,
pursuant to Item 402 of Regulation S-B, only compensation for the Chief
Executive Officer is included in the table. Directors who are also employees
of the Company receive no extra compensation for their service on the Board
of Directors of the Company.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
- ------------------------------------------------------------------------------------------------------------------------------
Awards Payouts
---------------------------------------
Name and Fiscal Salary ($) Bonus ($) Other Restricted Securities LTIP All Other
Principal Year Annual Stock Underlying Payouts Compen-
Position Compen- Award(s) Options/ ($) sation
sation ($) SARs ($)
($) (#)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Peter 1999 $71,000 -0- -0- -0- -0- -0- -0-
Henricsson, 1998 $35,500 -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. There is no bonus plan currently under discussion or in
place with the Company. The board has established a salary review committee
consisting of two independent directors and the Chairman of the board, plus an
alternate director where the Chairman's compensation is concerned. This salary
-28-
<PAGE>
review committee will review salaries for all staff. The directors of the
company do not receive salaries for being directors but do have options in the
Company.
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.
The Company repays portions of these loans as and when it has sufficient
excess cash to do so. At no time, has interest been charged on the
outstanding loans. The above loans were repaid in full in November, 1998.
In addition, Henricsson and Duplessis have loaned the Company
an aggregate of $300,000 in June and July 1999. Interest of 5% will be charged
on the outstanding balance of this loan.
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 Borsinsikt A.B., a company in which
Jonnerhag is a 66% stockholder. Mr. Jonnerhag and Borsinsikt placed a total of
260,000 shares, and together they received a total commission of US$52,000.
ITEM 8. 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 September 10, 1999, 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. The Company has an obligation to
issue an additional 750,000 shares of Common Stock in connection with the
acquisition of the CellPoint technology and a cooperative marketing agreement.
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 be exercisable after the expiration of ten years from the date of grant.
As of the date hereof, 970,000 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.
-29-
<PAGE>
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANTS COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS.
The Company's Common Stock commenced trading on the NASDAQ
Electronic Bulletin Board on January 7, 1998. The Company's fiscal year ends on
June 30 of each year. Set forth below are the high and low closing prices for
the Company's Common Stock for each fiscal quarter since January 7, 1998:
<TABLE>
<CAPTION>
COMMON STOCK PRICES
-------------------
FISCAL QUARTER HIGH LOW
<S> <C> <C>
3rd Qtr 98 3.625 1.25
4th Qtr 98 5.437 4.00
1st Qtr 99 4.80 2.50
2nd Qtr 99 6.375 2.75
3rd Qtr 99 5.375 2.94
4th Qtr 99 5.00 3.125
1st Qtr 00 (through September 10, 1999) 13.125 4.75
</TABLE>
ITEM 2. LEGAL PROCEEDINGS.
There are no legal actions pending against the Company or
either of its subsidiaries, nor are any such legal actions contemplated.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
From the Company's inception through the fall of 1997, the
Company's auditors were Kelly & Company, of Newport Beach, California. By mutual
agreement, the Company and Kelly & Company terminated their professional
relationship in fall of 1997. The report of Kelly & Company on the Company's
financial statements from inception (February 1997) through June 30, 1997
included a statement that the Company was a developmental stage Company, with no
revenues, which has sustained losses from operations since inception. Kelly &
Company stated that there was substantial doubt about the Company's ability to
continue as a going concern. The Company did not disagree with such statements
at that time. The decision to terminate the Company's professional relationship
with Kelly & Co. was approved by the Board of Directors of the Company.
The Company's auditors from the fall of 1997 through
January 27, 1999 were Ohrlings Coopers & Lybrand of Sweden. By mutual
agreement, the Company and Ohrlings Coopers & Lybrand terminated their
professional relationship in January 1999. Such decision was approved by the
Board of Directors of the Company. The report of Ohrlings Coopers & Lybrand
on the Company's financial statements for the fiscal year ended June 30, 1998
included a statement that the Company was a developmental stage company, with
no revenues, which has sustained losses from operations since inception.
Ohrlings Coopers & Lybrand stated that there was substantial doubt about the
ability of the Company to continue as a going concern. See "Description of
Business -- Risk Factors." The Company did not disagree with such statements
at that time.
As of January 1999, the Company's auditors are BDO
International AB of Sollentuna, Sweden. BDO International AB has
audited the Company's financial statements for the fiscal years ended June
30, 1999 and June 30, 1998. The report of BDO International AB includes
a statement that there is substantial doubt about the ability of the Company
to continue as a going concern. The Company does not disagree with such
statement.
ITEM 4. 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 Jonnerhag, a
director of the Company, and Borsinsikt A.B., a company in which Mr. Jonnerhag
is a 66% stockholder. Mr. Jonnerhag and Borsinsikt placed a total of 260,000
shares, and together they received a total commission of US $52,000.
-30-
<PAGE>
Summary of issuance of common stock (par value USD 0.001)
<TABLE>
<CAPTION>
Number Share Amount
Date of Shares Price Received
---- --------- ----- --------
<S> <C> <C> <C>
February 1997 3,500,000 0.001 $ 3,500
March 1997 500,000 0.20 100,000
February 1998 715,000 1.25 893,750
June 1998 775,000 4.00 3,100,000
----------- ---------
Total shares sold 5,490,000 $4,097,250
May 1998
Acquisition of 25% of
Wasp 1,950,000 4.00
February 1999
Acquisition of
Technology 2,450,000* 4.00
February 1999
Cooperation Agreement
With Matrix 250,000 4.00
----------
Total 8,190,000
</TABLE>
- -------------
* Amended and Restated Option Agreement replaced May 1998 transactions, and
the 2,450,000 shares includes the 1,950,000 shares previously issued in
May 1998 in connection with the acquisition of 25% of Wasp.
-31-
<PAGE>
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company has entered 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.
-32-
<PAGE>
PART F/S
TECHNOR INTERNATIONAL, INC.
CONSOLIDATED FINANCIAL STATEMENTS (AUDITED)
FOR THE FISCAL YEARS ENDED JUNE 30, 1999 AND 1998
<TABLE>
<S> <C>
Report of Independent Accountants...............................................................................F-2
Consolidated Balance Sheets as of June 30, 1999 and 1998........................................................F-3
Consolidated Statements of Operations for the fiscal years ended June 30, 1999 and 1998
and for the period from February 28, 1997 (Inception) through June 30, 1999 ..................................F-5
Consolidated Statements of Stockholders' Equity for the fiscal years ended June 30, 1999, 1998 and 1997 ........F-6
Consolidated Statements of Cash Flows for the fiscal years ended June 30, 1999 and 1998
and for the period from February 28, 1997 (Inception) through June 30, 1999 ..................................F-7
Notes to the Consolidated Financial Statements..................................................................F-8
WASP INTERNATIONAL, S.A.
FINANCIAL STATEMENTS (AUDITED)
FOR THE YEARS ENDED FEBRUARY 28, 1999 AND 1998
Report of Independent Auditors.................................................................................F-18, F-19
Income Statement...............................................................................................F-20
Balance Sheet..................................................................................................F-21
Cash Flow Statement............................................................................................F-22
Notes to the Financial Statements..............................................................................F-23
TECHNOR INTERNATIONAL, INC.
CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
Statement regarding the Pro Forma Consolidated Financial Information...........................................F-28
Consolidated Pro Forma Statements of Operations for the fiscal year ended June 30, 1999........................F-29
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
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, 1999 and 1998 the related consolidated statements
of operations, stockholders' equity and cash flows for the years ended June
30, 1999 and 1998 and for the period from February 28, 1997 (Inception)
through June 30, 1999. 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, 1999 and 1998, and the
results of its operations and its cash flows for the years ended June 30,
1999 and 1998 and for the period from February 28, 1997 (Inception) through
June 30, 1999 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 2 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 2. The financial
statements do not include any adjustments that might result from the outcome
of this uncertainty.
/s/ BDO International AB
BDO International AB
Sollentuna, Sweden
September 9, 1999
F-2
<PAGE>
TECHNOR INTERNATIONAL INC. AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
(Amounts in USD)
<TABLE>
<CAPTION>
June 30, June 30,
1998 1999
-------- -------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 764,603 $180,073
Stock subscriptions receivable 2,346,667 --
Option for shares in Wasp 4,050,000 --
Prepaid expenses 40,653 19,597
Other receivables 70,814 20,533
Other assets -- 15,990
--------- -------
TOTAL CURRENT ASSETS 7,272,737 236,193
--------- -------
Long-term assets:
Investment in affiliates 4,250,000 500,000
Purchased technology, net of amortization of $483,336 -- 9,666,664
Matrix franchising concept, net of amortization of $111,112 -- 888,888
Employment contracts, net of amortization of $68,333 -- 354,657
Furniture and equipment, net of depreciation of $6,860 and
$46,142 respectively 110,092 110,140
------------ -----------
TOTAL LONG-TERM ASSETS 4,360,092 11,520,349
------------ -----------
TOTAL ASSETS $ 11,632,829 $ 11,756,541
------------ ------------
------------ ------------
</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 BALANCE SHEETS
(Amounts in USD)
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
June 30, June 30,
1998 1999
<S> <C> <C>
Current liabilities:
Accrued expenses and other current liabilities $270,901 $210,732
Accounts payable 247,040 39,517
Deferred revenue -- 58,690
Due to shareholders 250,000 150,000
Due to affiliate -- 123,799
Advances from employee 151,554 --
Other current liabilities -- 12,901
-------- -----------
TOTAL CURRENT LIABILITIES 919,495 595,639
-------- -----------
Stockholders' 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; 4,715,000 shares issued and 1,950,000 shares to
be issued as of June 30, 1998 and 7,440,000 shares issued
and 750,000 shares to be issued as of June 30, 1999) 6,665 8,190
Shares subscribed ($0.001 par value; 775,000 common shares) 775
Additional paid in capital 11,662,123 14,961,373
Cumulative translation adjustment 363 (2,318)
Deficit accumulated (836,592) (3,806,343)
---------- -----------
10,833,334 11,160,902
Less: Subscriptions receivable (30,000 shares) (120,000) --
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 10,713,334 11,160,902
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $11,632,829 $11,756,541
----------- -----------
----------- -----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
F-4
<PAGE>
TECHNOR INTERNATIONAL INC. AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENT OF OPERATIONS
(Amounts in USD)
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR PERIOD FROM
ENDED JUNE 30 ENDED JUNE 30 FEBRUARY 28, 1997 (INCEPTION)
1998 1999 THROUGH JUNE 30, 1999
<S> <C> <C> <C>
Revenue $ -- $ -- $ --
Cost of goods sold -- -- --
Gross profit -- --
Selling, general and administrative expenses (513,652) (1,637,240) (2,165,682)
Professional fees (315,431) (534,176) (859,138)
Depreciation and amortization (6,725) (702,063) (708,788)
-------- ----------- -----------
OPERATING LOSS (835,808) (2,873,479) (3,733,608)
FINANCIAL ITEMS, NET 23,237 (96,272) (72,737)
-------- ----------- -----------
NET LOSS BEFORE TAXES (812,571) (2,969,751) (3,806,345)
INCOME TAXES -- -- --
-------- ----------- -----------
Net loss $(812,571) $(2,969,751) $(3,806,345)
-------- ----------- -----------
Basic and diluted loss per share (0.18) (0.36)
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
F-5
<PAGE>
TECHNOR INTERNATIONAL INC. AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
Years ended June 30, 1999, 1998 and 1997
<TABLE>
<CAPTION> COMMON SHARES
COMMON SHARES ISSUED TO BE ISSUED
----------------------- ----------------------------
Number of Amount Number of Amount
Shares (Par value Shares (Par Value $0.001)
$0.001)
<S> <C> <C> <C> <C>
Balance, February 28, 1997 (Inception) -- -- -- --
Comprehensive income (loss)
Net loss -- -- -- --
Other comprehensive income (loss)
Currency translation -- -- -- --
Comprehensive loss for fiscal year
April 1997 - Share subscription at par value -- -- 3,500,000 $3,500
June 1997 - Share subscription at $0.20 per share,
net of offering costs -- -- 500,000 500
--------- ------ ----------- -------
Balance June 30, 1997 -- -- 4,000,000 4,000
--------- ------ ----------- -------
September 1997 - Shares issued 4,000,000 $4,000 (4,000,000) (4,000)
Comprehensive income (loss)
Net loss -- -- -- --
Other comprehensive income (loss)
Currency translation -- -- -- --
Comprehensive loss for fiscal year
January 1998 - Share subscription at $1.25 715,000 715 -- --
per share, net of offering costs
May 1998 - Shares in connection with Wasp transaction -- -- 1,950,000 1,950
June 1998 - Share subscription at $4.00 per share, net
of offering costs -- -- 775,000 775
Subscriptions receivable not yet paid -- -- -- --
--------- ------ ----------- -------
Balance June 30, 1998 4,715,000 4,715 2,725,000 2,725
--------- ------ ----------- -------
1998 - Shares issued 2,725,000 2,725 (2,725,000) (2,725)
Comprehensive income (loss)
Net loss -- -- -- --
Other comprehensive income (loss)
Currency translation -- -- -- --
Comprehensive loss for fiscal year
Subscriptions paid -- -- -- --
Shares issued in connection with purchased technology -- -- 500,000 500
Shares issued in connection with marketing agreement -- -- 250,000 250
--------- ------ ----------- -------
Balance June 30, 1999 7,440,000 $7,440 750,000 $ 750
--------- ------ ----------- -------
</TABLE>
<TABLE>
<CAPTION>
Additional Paid Deficit Subscriptions Accumulated Total
In Capital Accumulated Receivable Other
During the Comprehensive
Development Income (Loss)
Stage
<S> <C> <C> <C> <C> <C>
Balance, February 28, 1997 (Inception) -- -- -- -- --
Comprehensive income (loss)
Net loss -- $(24,021) -- -- $ (24,021)
Other comprehensive income (loss)
Currency translation -- -- -- --
-----------
Comprehensive loss for fiscal year $ (24,021)
-----------
April 1997 - Share subscription at par value -- -- -- -- 3,500
June 1997 - Share subscription at $0.20 per share,
net of offering costs $98,262 -- -- -- 98,762
----------- ----------- --------- ------- -----------
Balance June 30, 1997 98,262 (24,021) -- -- 78,241
----------- ----------- --------- ------- -----------
September 1997 - Shares issued -- -- -- -- --
Comprehensive income (loss)
Net loss -- (812,571) -- -- $ (812,571)
Other comprehensive income (loss)
Currency translation -- -- -- 363 363
-----------
Comprehensive loss for fiscal year (812,208)
-----------
January 1998 - Share subscription at $1.25 855,535 -- -- -- 856,250
Per share, net of offering costs
May 1998 - Shares in connection with Wasp transaction 7,798,050 -- -- -- 7,800,000
June 1998 - Share subscription at $4.00 per share, net
of offering costs 2,910,276 -- -- -- 2,911,051
Subscriptions receivable not yet paid -- -- $(120,000) -- (120,000)
----------- ----------- --------- ------- -----------
Balance June 30, 1998 11,662,123 (836,592) (120,000) 363 10,713,334
----------- ----------- --------- ------- -----------
1998 - Shares issued -- -- -- -- --
Comprehensive income (loss)
Net loss -- (2,969,751) -- -- $(2,969,751)
Other comprehensive income (loss)
Currency translation -- -- -- (2,681) (2,681)
-----------
Comprehensive loss for fiscal year (2,972,432)
-----------
Subscriptions paid -- -- 120,000 -- 120,000
Shares issued in connection with purchased technology 2,299,500 -- -- -- 2,300,000
Shares issued in connection with marketing agreement 999,750 -- -- -- 1,000,000
----------- ----------- --------- ------- -----------
Balance June 30, 1999 $14,961,373 $(3,806,343) -- $(2,318) $11,160,902
----------- ----------- --------- ------- -----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
F-6
<PAGE>
TECHNOR INTERNATIONAL INC. AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOW
(Amounts in USD)
<TABLE>
<CAPTION>
For the year For the year Period from February 28,
ended June 30 ended June 1997 (Inception) through
1998 30 1999 June 30, 1999
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(812,571) $(2,969,751) $(3,806,343)
Depreciation & Amortization 6,725 702,063 708,788
Adjustments to reconcile net loss to cash provided by
Operating activities:
Other assets -- (15,990) (15,990)
(Increase) Decrease in prepaid expenses (29,077) 21,056 (19,597)
(Increase) Decrease in short term receivables (70,814) 50,281 (20,533)
Increase in accrued expenses and other current
liabilities 270,901 11,425 282,326
Increase (Decrease)in accounts payable 247,040 (207,522) 39,515
Increase (Decrease) in advance from employee 97,695 (151,554)
Increase Due to affiliate -- 123,799 123,799
--------- --------- ------------
Net cash used in operating activities (290,101) (2,436,193) (2,708,035)
--------- ----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of technology -- -- (50,000)
Purchase of shares in subsidiary and affiliate (250,000) (500,000) (950,000)
Purchase of fixed assets (99,993) ( 39,330) (139,323)
--------- ----------- ------------
Net cash used in investing activities (349,993) ( 539,330) 1,139,323
--------- ----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances (Payments) of stockholders' loans -- (100,000) 150,000
Net proceeds from issuance of shares 1,300,634 2,466,667 3,879,753
--------- ----------- ------------
Net cash provided by financing activities 1,300,634 2,366,667 4,029,753
--------- ----------- ------------
Effect of changes in exchange rates on cash 363 (2,684) (2,321)
--------- ----------- ------------
Net increase in cash and cash equivalents 660,903 584,529 180,074
Cash and cash equivalents at beginning of year 103,700 764,603 --
--------- ----------- ------------
Cash and cash equivalents at end of the year $764,603 $180,074 180,074
--------- ----------- ------------
--------- ----------- ------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS
F-7
<PAGE>
1. BUSINESS
Technor International Inc. a development stage company ("Technor"
or "the Company"), was incorporated in the state of Nevada on
February 28, 1997. Technor has purchased a GSM (Global System for
mobile communications) positioning system technology ("the
Technology") from a Novel Electronics Systems & Technologies which
can be used for a variety of positioning and telematics applications
including positioning standard mobile phones for resource management,
information, safety and security, locating vehicles, management of
security and alarm systems, surveillance of rented objects as well
as for remote control of industrial equipment.
Technor is marketing and further developing the positioning and
telematics applications of the CellPoint System. The CellPoint System
consists of three main parts: the mobile phone or terminal, the
positioning server and the positioning programs. The GSM network
facilitates the communication between the mobile phone or terminal
and the Cellpoint server system. The positioning server system
enables the use of the Internet or fixed lines as information
carriers.
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.
Effective February 28, 1999, Technor acquired 100% of Wasp
International (Pty) Ltd., a South African company ("Wasp") (see
note 3).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying consolidated financial statements include the
financial statements of Technor and all its subsidiaries and have
been prepared in accordance with U.S. generally accepted accounting
principles and are presented in U.S.dollars. All material
inter-company transactions and balances have been eliminated.
DEVELOPMENT STAGE ACTIVITIES
The Company has not earned revenues from its activities through
June 30, 1999. As such, the Company is still in a development
stage and falls under the provisions of Statement of Financial
Accounting Standards ("SFAS") No 7, "Accounting and Reporting by
Development Stage Enterprises."
F-8
<PAGE>
GOING CONCERN AND MANAGEMENT'S PLANS
The Company has a limited operating history with no revenues. Through
June 30, 1999, the Company has accumulated a deficit of $3,806,343.
Management's efforts have focused on securing the Technology,
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 and expects that the first
significant orders for its product will commence late in calendar
year 1999 and that the company will have a positive cashflow during
the second half of fiscal 2000. 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 or further financing is received,
management believes that the existing capital is sufficient for
approximately 9-12 months after June 30 1999.
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 recoverability and classification of assets or the
classification of liabilities that might result from the outcome of
this uncertainty.
INVESTMENT IN AFFILIATE
The investment in an affiliate is recorded at the lower of cost or
net realizable value, as no significant influence is exercised over
the financial and operating decisions of that affiliate.
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 as a component of stockholder's equity.
Receivables and liabilities denominated in foreign currencies are
translated at balance sheet date rates. Unrealized exchange gains and
losses on translation 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 loses in such accounts.
FURNITURE AND EQUIPMENT
Furniture 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
equipment over 5 years. Furniture 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.
F-9
<PAGE>
AMORTIZATION
Intangible assets are amortized on a straight-line basis over their
estimated lives, as follows: purchased technology seven years, the
marketing agreement, the term of the agreement, which is three years,
and employment contracts, the length of the employment contracts,
which is two years.
DEFERRED REVENUE
Deferred revenue represents pre-billing of contract fees pertaining
to future periods.
IMPAIRMENT OF LONG-LIVED ASSETS
The company periodically evaluates potential impairment of
long-lived assets based upon cash flows. A loss relating to an
impairment of assets occurs when the aggregate of the estimated
undiscounted future cash inflows to be generated by the Company's
assets groups (including any salvage values) are less than the
related assets' carrying value. Impairment is measured based on the
difference between the higher of the fair value of the assets or
present value of the discounted expected future cash flows and the
assets' carrying value. No impairement was recorded in 1999 or 1998.
INCOME TAXES
The Company utilizes the asset and liability method to account for
income taxes whereby deferred tax assets and liabilities are
recognized to reflect the future tax consequences attributable to
temporary differences between the financial reporting basis of
existing assets and liabilities and their respective tax basis.
Deferred tax assets and liabilities are measured using enacted tax
rates expected to be recovered and settled. The effect of a change in
tax rates on deferred tax assets and liabilities is recognized in the
period in which the change is enacted.
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). Assumed
exercise of options has not been included in the calculation of
diluted EPS since the effect would be anti-dilutive. Accordingly
basic and diluted net loss per share do not differ for any period
presented. EPS is computed based on the loss to common
stockholders and the weighted average number of shares
outstanding. The weighted average number of shares outstanding
were 4,460,417 and 7,440,000 as of June 30, 1998 and 1999,
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.
F-10
<PAGE>
EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS
SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities", establishes accounting and reporting requirements for
derivative instruments. The Company has not in the past nor does it
anticipate that it will engage in transactions involving derivative
instruments, and therefore does not expect this pronouncement to have
any effect on the financial statements.
Statement of Position 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use", requires an entity
to expense all software development costs incurred in the preliminary
project stage, training costs and data conversion costs for fiscal
years beginning after December 15, 1998. The Company believes that
adoption of this statement will not have a material effect on the
Company's financial statements.
Statement of Position 98-5, "Accounting for Start-up Costs", requires
an entity to expense all start-up related costs as incurred for the
fiscal years beginning after December 15, 1998. The Company believes
that adoption of this statement will not have a material effect on
the Company's financial statements.
3. TRANSACTIONS WITH NOVEL ELECTRONIC SYSTEMS & TECHNOLOGIES, WASP
INTERNATIONAL (PTY) LTD., MATRIX VEHICLE TRACKING (PTY) LTD. AND
WASP SA (PTY) LTD..
On May 26, 1998, the Company entered into a license agreement with
Wasp 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.
On June 20, 1998, the Company exercised the first option and
purchased 25 % of the shares of Wasp.
The total transaction amounted to a share transfer of 1,950,000
shares of Technor's stock valued at $4.00 per share and $ 500,000
in cash.
The original agreements were amended and restated effective
February 28, 1999 as follows:
Technor acquired:
- 100 % of Wasp International (Pty) Ltd., including the
development team (18 persons currently employed in Wasp).
- Intellectual Property Rights (IPR) and total ownership of the
technology for use throughout the world, except Africa south of
the Sahara, which had previously been acquired from the owners of
the technology by Novel Electronic Systems & Technologies.
F-11
<PAGE>
- 10% of the common stock of Wasp SA (Pty) Ltd. ("Wasp SA") -
Wasp SA is the company with the current operations in South
Africa and Intellectual Property Rights (IPR) for Africa, south
of the Sahara.
The total consideration in the above transactions was as follows:
- 2,450,000 shares in Technor at the current market price of $4 per
share which amounted to $9,800,000 plus a $50,000 cash payment to
Novel Electronic Systems & Technologies for the Intellectual
Property Rights. (Of the above shares, 1,950,000 shares had
already been issued under the previous agreements before the
amendment).
- $950,000 to the stockholders of Wasp International (Pty) Ltd.
(subsequently renamed Cellpoint Systems SA (Pty) Ltd.) comprising
$450,000 for the acquisition of Wasp International (Pty) Ltd., and
$500,000 for the 10% interest in Wasp SA (of the above amount,
$500,000 had already been paid under the previous agreements
before the amendment).
Under the revised agreements, Technor could possibly be required to
issue up to an additional 75,000 shares and pay a maximum of $750,000
at the end of 1999 if certain stock price targets are not met. The
cost of shares which could potentially be issued has been recorded at
market value at the time of the agreement of $4.00 per share with a
corresponding credit to additional paid in capital. The potential
additional payment of up to $750,000 has not been recorded.
In connection with the acquisitions, the Company also concluded an
agreement with Matrix Vehicle Tracking (Pty) Ltd. ("Matrix"), the
company that has commercialized the technology in South Africa. Matrix
received 250,000 shares in Technor, with a market value of $4.00 per
share (the current market price), for services Matrix performed in the
acquisition of the technology and the development team and its transfer
of know-how and procedures of vehicle tracking. Matrix will also
continue to provide its services to Technor for the next three years
under the current agreement.
In connection with the acquisition of Wasp SA International (Pty) Ltd.,
the excess purchase price over the book value of assets acquired
amounted to $422,990 which was allocated to employment contracts.
This intangible asset will be amortized over the term of the
agreements, which is two years. The purchased technology will be
amortized over its estimated useful life of seven years and the Matrix
service agreement will be amortized over three years, the term of the
agreement.
F-12
<PAGE>
4 INCOME TAXES
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
JUNE 30, 1998 JUNE 30, 1999
------------- -------------
<S> <C> <C>
Current tax expense:
Federal -- --
State -- --
Foreign -- --
Deferred tax expense:
Federal -- --
State -- --
Foreign -- --
Total tax provision -- --
</TABLE>
Technor International Inc. did not have taxable income for the period
from February 28, 1997 (Inception) through June 30, 1999 and
therefore does not have any current income tax expense.
Technor's wholly-owned subsidiaries, CellPoint and Wasp had net
operating losses for the year ended June 30, 1999 and were not
subject to tax in Sweden and South Africa, respectively.
The significant components of the Company's deferred income tax
assets are as follows:
<TABLE>
<CAPTION>
JUNE 30, 1998 JUNE 30, 1999
------------- -------------
<S> <C> <C>
Deferred income tax assets:
Net operating losses $ 284,000 $ 1,294,000
Unrealized currency gain (7,400) (7,700)
--------- ----------
Total deferred income tax asset 276,000 1 286,300
Valuation allowance (276,000) (1 286,300)
--------- ----------
Net deferred income tax asset $ - $ -
--------- ----------
</TABLE>
The Swedish net operating losses amount to approximately U.S.
$2,100,000 at June 30, 1999. These net operating losses do not
expire.
Reconciliation of the effective tax rate to the U.S. statutory rate
is as follows:
<TABLE>
<CAPTION>
JUNE 30, 1998 JUNE 30, 1999
------------- -------------
<S> <C> <C>
Tax expense at U.S. statutory rate (34%) (34%)
Meals and entertainment (0.4) 0.5
Change in federal valuation allowance 33.6 33.5
------ ------
Effective income tax rate -- --
------ ------
</TABLE>
F-13
<PAGE>
4 FURNITURE AND EQUIPMENT
Furniture and equipment at June 30, 1998 and 1999 consisted of the
following:
<TABLE>
<CAPTION>
1998 1999
---- ----
<S> <C> <C>
Furniture and equipment $116,952 $ 156,282
Less: accumulated depreciation (6,860) (46,142)
-------- ---------
$110,092 $ 110,140
-------- ---------
</TABLE>
5 ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
<TABLE>
<CAPTION>
JUNE 30, 1998 JUNE 30, 1999
------------- -------------
<S> <C> <C>
Professional fees $ 113,455 $ 76,636
Offering costs 51,596 --
Accrued vacation 16,409 112,541
Payroll taxes and social security costs 18,714 18,580
Other 70,727 2,975
------------ ------------
$ 270,901 $ 210,732
------------ ------------
</TABLE>
6 ADVANCES FROM EMPLOYEES
Two principal stockholders, also employees of the Company, lent the
Company $150,000 in June 1999. There are no stated repayment terms
though interest of 5% will be charged on the outstanding balance of
this loan.
7 FINANCIAL ITEMS, NET
<TABLE>
<CAPTION>
JUNE 30 1998 JUNE 30 1999
------------ ------------
<S> <C> <C>
Interest income $ 2,708 $ 33,895
Unrealized exchange gains 21,766 (22,755)
Realized exchange losses (1,237) (107,412)
---------- -----------
Total $ 23,237 $ (96,272)
---------- -----------
</TABLE>
F-14
<PAGE>
8 STOCK INCENTIVE PLAN
In 1998, the Company adopted a Stock Incentive plan ("the Stock
Incentive Plan") for its employees, officers and directors
(whether or not employees). The Stock Incentive Plan provides for
the grant of non-qualified stock options. The Stock Incentive Plan
also provides that for each option granted under the Stock
Incentive Plan, the exercise price shall not be less than 100% of
the fair market value of the common share on the date before the
option is granted. The Stock Incentive Plan provides that options
granted vest in one, two or three installments: the first being
six to twelve months, the second being one year to two years, and
the third being eighteen months to twenty eight months after the
anniversary of the date of grant, and expire no later than 10
years subsequent to the grant date.
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, 1999
was 840,000. As of June 30, 1999, no options had been exercised.
The following table summarizes information about stock options
outstanding at June 30, 1999:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
---------------------------------------------------- ----------------------------------------------------
WEIGHTED AVERAGE
RANGE OF OUTSTANDING REMAINING WEIGHTED AVERAGE EXERCISABLE WEIGHTED AVERAGE
EXERCISE PRICES AS OF 6/30/99 CONTRACTUAL YEARS EXERCISE PRICES AS OF 6/30/99 EXERCISE PRICES
---------------------------------------------------- ----------------------------------------------------
<S> <C> <C> <C> <C> <C>
$1.00 125,000 8.5 $1.00 100,000 $1.00
---------------------------------------------------- ----------------------------------------------------
$2.50-$2.75 350,000 8.8 $2.70 225,000 $2.75
---------------------------------------------------- ----------------------------------------------------
$3.00-$3.88 185,000 9.8 $3.40 8,500 $3.25
---------------------------------------------------- ----------------------------------------------------
$4.00-$4.63 180,000 9.5 $4.29 -- --
---------------------------------------------------- ----------------------------------------------------
------- -------
840,000 333,500
------- -------
</TABLE>
Information concerning the Stock Incentive Plan is summarized as
follows:
<TABLE>
<CAPTION>
OPTION SHARES OPTION PRICE PER SHARE WEIGHTED AVERAGE PRICE PER SHARE
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Outstanding at June 30, 1997 -- -- --
Granted 405,000 $1.00-$2.75 $2.21
Exercised -- -- --
Cancelled/Expired -- -- --
-------
Outstanding at June 30, 1998 405,000 $1.00-$2.75 $2.21
Granted 435,000 $2.50-$4.63 $3.63
Exercised -- -- --
Cancelled/Expired -- -- --
-------
Outstanding at June 30, 1999 840,000 $1.00-$4.63 $2.94
</TABLE>
The Company accounts for stock options granted to employees under the
provisions of Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees" ("APB 25"), as permitted by Statement
of Financial Accounting Standards N0. 123, ("SFAS 123"), "Accounting
for Stock-Based Compensation." APB 25 provides for compensation cost
to be recognized over the vesting period of the options based on the
difference, if any, between the fair market value of the Company's
stock and the option price on the grant date. SFAS No. 123 requires
the company to provide pro forma disclosure of net income and
earnings per share as if the optional fair value method had been
F-15
<PAGE>
applied to determine compensation costs for the Company's stock
option plans. The Company has used the Black-Scholes
option-pricing model to estimate the fair value of each stock
option issued in 1999 and 1998. The following weighted average
assumptions were used in 1999 and 1998 respectively: a risk-free
interest rate of 4.97% and 4.94%; an expected option life of 3
years for both years; expected volatility of 65% and 65%; and no
dividends paid.
<TABLE>
<CAPTION>
Year Year
Ended Ended
June 30, 1998 June 30, 1999
<S> <C> <C> <C>
Net loss As reported $ (812,571) (2,961,751)
Pro Forma $ (941,955) (3,592,651)
Earnings per share As reported $ (0.18) (0.36)
Pro Forma $ (0.21) (0.50)
</TABLE>
9 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
and South African Rand, 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 and South
African Rand 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, on a
month to month basis. Rental expense amounted to $13,590 and $32,420
for 1997 and 1998, respectively. On July 1,
F-16
<PAGE>
1999 the Company signed a lease for nine months with future minimum
rental payments of $35,714.
The Company is obligated under various employment agreements with
certain officers, which provide for base annual compensation
aggregating $378,959. All agreements are for two years with two
expiring May 31, 2001 and two expiring July 31, 2001.
10 SUBSEQUENT EVENTS
During August 1999, the Company closed on a $2 million bridge
financing .The Company sold 20 units, each unit consisting of a one
year $100,000 promissory note that bears interest at 12% per annum
and a warrant to purchase 4,000 shares of the Company's common stock
at a price equal to the ten day average closing bid price prior to
closing. The placement agent receives commissions of 5% of the total
financing and warrants to purchase shares of the Company's common
stock of 5,000 warrants per unit. Principal and interest is payable
upon the earlier of one year or the date on which the Company has
received funds in the minimum amount of $3 million dollars in a
subsequent equity private placement.
Further to the bridge financing, a Letter of Intent is also in place
for a subsequent private placement of up to $8,000,000 to be
completed by the end of 1999.
Two principal shareholders, also employees of the Company, lent the
Company $150,000 in July 1999. There are no stated repayment terms.
Interest of 5% will be charged on the outstanding balance of this
loan
F-17
<PAGE>
REPORT OF THE INDEPENDENT AUDITOR
TO THE MEMBER OF WASP INTERNATIONAL (PROPRIETARY) LIMITED
We have audited the annual financial statements of Wasp International
(Proprietary) Limited set out on pages F-19 to F-28 for the year ended 28
February 1999 all expressed in South African Rand. These financial statements
are the responsibility of the company's directors. Our responsibility is to
express an opinion on these financial statements based on our audit.
SCOPE
We conducted our audit in accordance with statements of South African Auditing
Standards which are not significantly different from those of the United States
of America. Those standards require that we plan and perform the audit to obtain
reasonable assurance that 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;
- assessing the accounting
principles used and significant estimates made by management; and
- evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
AUDIT OPINION
In our opinion, these financial statements fairly present, in all material
respects, the financial position of the company at 28 February 1999, and the
results of its operations and cash flows for the year then ended in accordance
with South African generally accepted accounting practice, which are not
significantly different to US generally accepted accounting practice, and in the
manner required by the Companies Act.
/s/ BDO Spencer Steward
BDO Spencer Steward
Johannesburg
May 17, 1999
F-18
<PAGE>
REPORT OF THE INDEPENDENT AUDITORS
To the members of
Wasp International (Proprietary) Limited
We have audited the annual financial statements of Wasp International
(Proprietary) Limited set out on pages 3 to 12 for the year ended 28 February
1998. These financial statements are the responsibility of the company's
directors. Our responsibility is to express an opinion on these financial
statements based on our audit.
SCOPE
We conducted our audit in accordance with Statements of South African
Auditing Standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance that 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,
- - assessing the accounting principles used and significant estimates made by
management, and
- - evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
AUDIT OPINION
In our opinion, the financial statements fairly present, in all material
respects, the financial position of the company at 28 February 1998, and the
results of its operations and cash flows for the year then ended, in
accordance with generally accepted accounting practice, and in the manner
required by the Companies Act.
ACCOUNTING AND SECRETARIAL DUTIES
With the written consent of all members, we have performed certain accounting
and secretarial duties.
/s/ Price Waterhouse
- -----------------------------
PRICE WATERHOUSE
Chartered Accountants (SA)
Sandton
12 June 1998
F-19
<PAGE>
WASP INTERNATIONAL (PROPRIETARY) LIMITED
INCOME STATEMENT
FOR THE YEARS ENDED 28 FEBRUARY 1999 AND 1998
<TABLE>
<CAPTION>
NOTES 1999 1998
R R
<S> <C> <C> <C>
GROSS REVENUE 2 22,188,141 20,971,976
COST OF SALES (13,784,811) (17,205,072)
----------- -----------
GROSS PROFIT 8,403,330 3,766,904
OPERATING COSTS (5,844,720) (4,781,317)
----------- -----------
OPERATING PROFIT/(LOSS) 2,558,610 (1,014,413)
INCOME FROM INVESTMENTS 4 325 4,224
----------- -----------
NET PROFIT/(LOSS) after investment income 2,558,935 (1,010,189)
INTEREST PAID (504,649) (830,148)
----------- -----------
NET PROFIT/(LOSS) for the year 2,054,286 (1,840,337)
ACCUMULATED LOSS - beginning of the year (1,889,879) (49,542)
----------- -----------
RETAINED EARNINGS/(ACCUMULATED LOSS) - end of the year 164,407 (1,889,879)
----------- -----------
----------- -----------
</TABLE>
F-20
<PAGE>
WASP INTERNATIONAL (PROPRIETARY) LIMITED
BALANCE SHEET
AT 28 FEBRUARY 1999 AND 1998
<TABLE>
<CAPTION>
NOTES 1999 1998
R R
<S> <C> <C> <C>
CAPITAL EMPLOYED
SHARE CAPITAL 6 100 100
DISTRIBUTABLE RESERVE/ACCUMULATED LOSS 164,407 (1,889,879)
------- ----------
SHAREHOLDER'S INTEREST/(DEFICIT) 164,507 (1,889,779)
SHAREHOLDERS' LOANS 7 2,162,789
LONG-TERM LIABILITIES 8 651,312
------- ----------
164,507 924,322
------- ----------
------- ----------
EMPLOYMENT OF CAPITAL
FIXED ASSETS 9 164,507 2,720,818
INVESTMENTS 10 - 28,307
CURRENT ASSETS
Inventory 11 - 2,009,275
Accounts receivable 72,194 1,772 622
Bank and cash balances - 1,625
------- ----------
72,194 3,783,522
CURRENT LIABILITIES
Advances received 72,194 491,067
Accounts payable - 1,898,691
Income received in advance - 1,815,637
Bank overdraft - 1,402,930
------- ----------
72,194 5,608 325
NET CURRENT LIABILITIES - (1,824,803)
------- ----------
164,507 924,322
------- ----------
------- ----------
</TABLE>
F-21
<PAGE>
WASP INTERNATIONAL (PROPRIETARY) LIMITED
CASH FLOW STATEMENT
FOR THE YEARS ENDED 28 FEBRUARY 1999 AND 1998
<TABLE>
<CAPTION>
NOTES 1999 1998
R R
<S> <C> <C> <C>
OPERATING ACTIVITIES
Cash flow from operating activities 12.1 933,650 (28,698)
Change in working capital 12.2 1,392,139 (1,610,272)
Cash generated from operating activities 2,325,789 (1,638,970)
Investment income 325 4,224
Finance costs (504,649) (830,148)
--------- ----------
Net cash flow from operating activities 1,821,465 (2,464,894)
--------- ----------
INVESTING ACTIVITIES
Additions to fixed assets 12.3 (277,687) (287,826)
Proceeds from disposal of fixed assets 12.4 2,643,321 22,509
Other investments 28,307 (28,307)
Net cash flow from investing activities 2,393,941 (293,624)
--------- ----------
FINANCING ACTIVITIES
Long term loans raised - 1,038,855
Long term loans repaid (2,814,101) -
--------- ----------
Net cash flow from financing activities (2,814,101) 1,038,855
--------- ----------
NET CASH FLOW 1,401,305 (1,719,663)
NET (BANK OVERDRAFT)/CASH - at beginning of the year (1,401,305) 318,358
--------- ----------
BANK OVERDRAFT - at end of the year - (1,401,305)
--------- ----------
--------- ----------
</TABLE>
F-22
<PAGE>
WASP INTERNATIONAL (PROPRIETARY) LIMITED
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
28 FEBRUARY 1999 AND 1998
1. ACCOUNTING POLICY
The annual financial statements were prepared in accordance with the
historical cost convention and incorporate the following principal
accounting policies which were consistent with those of the previous
year and conform in all material respects with Generally Accepted
Accounting Practice and the requirements of the Companies Act. There
are no material differences from accounting policies generally accepted
in the United States of America.
1.1. FIXED ASSETS AND DEPRECIATION
Fixed assets were stated at cost and depreciated at rates considered
appropriate to reduce carrying values to estimated residual values over
their estimated useful lives.
The annual rates used for this purpose were:
- Motor vehicles 25%
- Furniture and fittings 17%
- Office equipment 25%
- Computer equipment 33%
- Computer software 50%
1.2. INVESTMENTS
Investments, other than in associates, were stated at cost less any
provisions for permanent diminution in value.
1.3. INVENTORY
Inventory was stated at the lower of cost or net estimated realizable
value. Merchandise is valued at invoice cost on a weighted average
basis.
1.4. FOREIGN CURRENCY TRANSLATION
Transactions in foreign currencies were accounted for at the rates of
exchange ruling on transaction dates.
Monetary assets and liabilities denominated in foreign currencies were
translated at the rates of exchange ruling at the balance sheet date,
or at the forward rates where related forward exchange contracts have
been entered into. Unrealised differences on monetary assets and
liabilities were recognised in the income statement in the period in
which they occur.
F-23
<PAGE>
WASP INTERNATIONAL (PROPRIETARY) LIMITED
NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED)
28 FEBRUARY 1999 AND 1998
1.5. REVENUE RECOGNITION
Interest is recognised on a time proportion basis, taking account of
the principal outstanding and the effective rate over the period to
maturity, when it is determined that such income will accrue to the
group.
The sale of goods is recognised when the significant risks and rewards
of ownership of the goods were transferred to the buyer.
2. GROSS REVENUE
Major classes of revenue comprise:
- Sale of Goods
- Services rendered
3. NET PROFIT/(LOSS)
Net profit/(loss) is arrived at after taking into account the following
items:
<TABLE>
<CAPTION>
1999 1998
R R
<S> <C> <C>
Auditors' remuneration 45,000 54,951
------- -------
Depreciation
- Computer equipment 128,319 91,515
- Computer software 26,724 9,064
- Furniture and fittings 27,832 22,148
- Motor vehicles 2,517 2,517
- Office equipment 5,285 445
------- -------
190,677 125,689
------- -------
Net loss on disposal of fixed assets (22,509)
------- -------
Fees paid to outside parties - consultancy 250,994 112,230
------- -------
Exchange losses relating to foreign currency borrowings (15,314) -
------- -------
4. INCOME FROM INVESTMENTS
Interest income - current account 325 4,224
------- -------
------- -------
</TABLE>
F-24
<PAGE>
WASP INTERNATIONAL (PROPRIETARY) LIMITED
NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED)
28 FEBRUARY 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
R R
<S> <C> <C>
5. DIRECTORS' EMOLUMENTS
For services as directors 1,262,248 957,943
--------- -------
--------- -------
6. SHARE CAPITAL
Authorised:
1 000 Ordinary shares of R1 each 1,000 1,000
--------- -------
--------- -------
Issued:
100 Ordinary shares of R1 each 100 100
--------- -------
--------- -------
7. SHAREHOLDERS' LOANS
A. van Urk - 543,956
G. Redford - 683,617
G. van Urk - 506,842
M. Carroll - 428,374
--------- -------
Shareholders' loans payable - Long-term portion - 2,162,789
--------- -------
--------- -------
These indefinite period loan were interest free
and unsecured.
8. LONG TERM LIABILITIES
Loan from Vutech (Proprietary) Limited - 651,312
--------- -------
--------- -------
</TABLE>
The unsecured loan is an indefinite period
fluctuating loan and accrued interest at prime.
9. FIXED ASSETS
<TABLE>
<CAPTION>
1999 1998
ACCUMULATED CARRYING ACCUMULATED CARRYING
COST DEPRECIATION VALUE COST DEPRECIATION VALUE
<S> <C> <C> <C> <C> <C> <C>
OWNED ASSETS
Computer equipment 139,105 45,156 93,949 291,036 105,692 185,344
Computer software 45,125 28,516 16,609 28,846 9,064 19,782
Furniture and fittings 85,522 32,584 52,938 168,840 36,074 132,766
Motor vehicles - - - 10,070 2,642 7,428
Office equipment 1,942 931 1,011 1,942 445 1,497
Initial technology - - - 2,374,001 - 2,374,001
---------------------------------------------------------------------------
Total assets 271,694 107,187 164,507 2,874,735 153,917 2,720,818
---------------------------------------------------------------------------
---------------------------------------------------------------------------
</TABLE>
F-25
<PAGE>
WASP INTERNATIONAL (PROPRIETARY) LIMITED
NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED)
28 FEBRUARY 1999 AND 1998
9. FIXED ASSETS (CONTINUED)
The carrying amounts of fixed assets can be reconciled as follows:
<TABLE>
<CAPTION>
CARRYING ADDITIONS REVALUATIONS DISPOSALS DEPREC. CARRYING
VALUE AT VALUE AT
BEGINNING END
OF YEAR OF YEAR
<S> <C> <C> <C> <C> <C> <C>
OWNED ASSETS
Computer equipment 185,344 210,447 - (173,523) (128,319) 93,949
Computer software 19,782 32,683 (9,132) (26,724) (16,609) -
Furniture and fittings 132,766 - - (51,996) (27,832) 52,938
Motor vehicles 7,428 - (4,911) (2,517) (1,011) -
Office equipment 1,497 34,557 (29,758) (5,285) (1,011) -
Initial technology 2,374,001 - (2,374,001) - - -
--------- ------- ----------- ---------- -------- -------
Total assets 2,720,818 277,687 - (2,643,321) (190,677) 164,507
--------- ------- ----------- ---------- -------- -------
--------- ------- ----------- ---------- -------- -------
</TABLE>
<TABLE>
<CAPTION>
1999 1998
R R
<S> <C> <C>
10. INVESTMENTS
Loan to Capital Control Centre (Proprietary) Limited - 28,307
--------- ----------
--------- ----------
11. INVENTORY
Raw materials - 1,161,747
Finished goods - 847,528
--------- ----------
- 2,009,275
--------- ----------
--------- ----------
12. CASH FLOW INFORMATION
12.1. CASH GENERATED BY/(UTILIZED IN) OPERATIONS
Operating profit/(loss) before financing costs 2,558,935 (1,010,189)
Adjustment for:
Depreciation 190,677 125,690
Net loss on disposal of fixed assets - 22,509
Income from investments (325) (4,224)
Provision for maintenance (1,815,637) 837,516
--------- ----------
933,650 (28,698)
--------- ----------
--------- ----------
</TABLE>
F-26
<PAGE>
WASP INTERNATIONAL (PROPRIETARY) LIMITED
NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED)
28 FEBRUARY 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
R R
<S> <C> <C>
12. CASH FLOW INFORMATION (CONTINUED)
12.2. CHANGE IN WORKING CAPITAL
Change in inventories 2,009,275 (606,041)
Change in accounts receivable 1,700,428 (837,843)
Change in accounts payable (2,317,564) (166,388)
--------- ----------
1,392,139 (1,610,272)
--------- ----------
--------- ----------
12.3. FIXED ASSETS ACQUIRED FOR CASH
Computer equipment (210,447) -
Computer software (32,683) -
Office equipment (34,557) -
Initial technology - (287,826)
--------- ----------
(277,687) (287,826)
--------- ----------
--------- ----------
12.4. PROCEEDS FROM DISPOSAL OF FIXED ASSETS
Carrying value of fixed assets disposed 2,643,321 45,018
Loss on disposal - (22,509)
--------- ----------
2,643,321 22,509
--------- ----------
--------- ----------
</TABLE>
13. Sale of the Company
Effective February 28, 1999, the Company was acquired by Technor
International, Inc. Prior to the acquisition by Technor
International, Inc., the operations were transferred to another
entity, leaving the development team. The balance sheet at
February 28, 1999 reflects the transfer of operations.
F-27
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma consolidated financial
information (the "Unaudited Pro Forma Consolidated Financial Information") has
been derived from the application of pro forma adjustments to Technor
International, Inc. and Subsidiaries consolidated historical audited statements
for the year ended June 30, 1999 included elsewhere herein, combined with the
audited statements of Wasp International (Proprietary) Limited.
The Unaudited Pro Forma Consolidated Financial information
gives effect to the acquisition of Wasp International (Proprietary) Limited and
the purchase of technology as if such events had occurred on July 1, 1998. All
amounts were converted into U.S. dollars at the average rate of exchange. An
Unaudited Pro Forma Consolidated Balance Sheet as of June 30, 1999 has not been
presented because the events, which became effective on February 28, 1999, are
already reflected in the historical balance sheet as of June 30, 1999. The pro
forma adjustments are described in the accompanying notes.
The Unaudited Pro Forma Consolidated Financial information is
presented for informational purposes only and does not purport to represent what
the results of operations of Technor International, Inc. and Subsidiaries would
actually have been if the aforementioned events had occurred on the date
specified or to the project Technor International, Inc. and Subsidiaries results
of operations for any future periods. The Unaudited Pro Forma Consolidated
Financial Information should be read in conjunction with Technor International,
Inc. and Subsidiaries consolidated historical financial statements, and the
notes thereto, included elsewhere herein.
F-28
<PAGE>
TECHNOR INTERNATIONAL INC. AND SUBSIDIARIES
Unaudited Pro Forma Consolidated Statement of Operations
Year Ended June 30, 1999
<TABLE>
<CAPTION>
HISTORICAL (1) WASP (1) ADJUSTMENTS PRO FORMA
------------- -------- ----------- ---------
<S> <C> <C> <C> <C>
Sales, Net $ -- $266,144 $ 266,144
Cost of Sales - - --
--------- ------- --------- ---------
Gross Profit -- 266,144 266,144
--------- ------- --------- ---------
Selling, general and
administrative expenses 2,171,416 61,587 2,233,003
Depreciation and
amortization 702,063 -- 1,333,489 (2) 2,035,552
------- ------ --------- --- -----------
Total Operating
Expenses 2,873,479 61,587 1,333,489 4,268,555
--------- ------- --------- ---------
Loss from operations
(2,873,479) 204,557 (1,333,489) (4,002,411)
Financial Items, Net (96,272) -- (96,272)
------------ -------- --------- ------------
Net Income (loss) $(2,969,751) $204,557 (1,333,489) $(4,098,683)
------------ -------- ----------- ------------
------------ -------- ----------- ------------
Net loss per share, basic
and diluted (0.20) (0.50)
Weighted average shares
outstanding, basic and
diluted 7,502,500 8,190,000
</TABLE>
(1) Reflects the portion of the results from operations from July 1,
1998 through February 29, 1999 which relates to the ongoing business
of the company acquired. Included in the historical column are the
results of operations for the period February 28, 1999 through
June 30, 1999. The Company acquired the development team.
(2) Reflects the amortization of the following: $966,667 relating to the
purchased technology ($10,150,000 amortized over 7 years), $222,222
relating to the marketing agreement ($1,000,000 amortized over 3
years), $141,000 relating to the excess purchase price ($422,990
amortized over 2 years), all of which was attributed to employment
contracts, and depreciation expenses of $3,600 on acquired fixed assets
($27,000 amortized over 5 years).
F-29
<PAGE>
PART III
ITEM 1. INDEX TO EXHIBITS
The documents required to be filed and as listed on the Index
to Exhibits below follow immediately after the signatures below.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
<S> <C>
3.1 Articles of Incorporation
3.2 By-Laws
10.1 [superseded]
10.2 [superseded]
10.3 [superseded]
10.4 [superseded]
10.5 Stock Incentive Plan
10.6 Agreement between Matrix Vehicle Tracking (Pty) Ltd. and
Technor International Inc., dated May 11, 1999 (filed
herewith)
10.7 Amended and Restated Option Agreement, dated May 13, 1999
(filed herewith)
10.8 Sale of Technology Agreement between Novel Electronic Systems
& Technologies and Technor International Inc., dated May 13,
1999 (filed herewith)
10.9 Share Sale Agreement, dated May 13, 1999 between Gerrit van
Urk, Albert van Urk, Guy Redford and Technor International,
Inc.(filed herewith)
10.10 Memorandum of Understanding between AU-System and CellPoint
Systems AB, dated Feb. 17, 1999 (filed herewith)
10.11 Limited Sale of Business, dated as of March 1, 1999,
between Wasp International (Pty) Limited and Wasp S.A. (Pty)
Limited (filed herewith)
10.12 Project Agreement, dated April 23, 1999, between Tele2 and
CellPoint Systems AB, (filed herewith)
10.13 Contract, dated August 1999, between France Telecom and
CellPoint Systems AB (filed herewith)
10.14 Employment Agreement, dated as of June 1, 1999, between
Technor International, Inc. and Peter Henricsson (filed
herewith)
10.15 Employment Agreement, dated as of June 1, 1999, between
Technor International, Inc. and Lynn Duplessis (filed
herewith)
10.16 Employment Agreement, dated as of August 1, 1999, between
CellPoint Systems AB and Hadar Cars (filed herewith)
10.17 Employment Agreement, dated as of July 31, 1998, between
Wasp International (Pty) Ltd. and Albert van Urk (filed
herewith)
27 Financial Data Schedule
</TABLE>
ITEM 2. DESCRIPTION OF EXHIBITS
The documents required to be filed and as listed on the
immediately preceding Index to Exhibits follow immediately after Signatures
below.
<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: September 16, 1999 By: /s/ PETER HENRICSSON
---------------------------
Peter Henricsson
Chairman, CEO and President
<PAGE>
Exhibit 10.6
AGREEMENT
AGREEMENT, dated as of May 11, 1999, between MATRIX VEHICLE TRACKING (PTY)
LTD., a South African corporation ("Matrix"), and TECHNOR INTERNATIONAL, INC., a
Nevada corporation ("Technor").
W I T N E S S E T H:
WHEREAS, Matrix operates end-user applications based on the tracking
technology licensed from Wasp International (Pty), Ltd. ("Wasp") and has
significant unique experience in working with the technology;
WHEREAS, Matrix has used the tracking technology in making over 15,000
installations in South Africa, and has gained considerable knowledge and
experience in marketing and installing the tracking technology;
WHEREAS, Technor is acquiring the tracking technology and related
intellectual property rights; and Technor is marketing the tracking technology
throughout the world;
WHEREAS, Matrix has provided, and has agreed to continue to provide,
Technor with certain technical advice and expertise in connection with the
marketing, installation and practical implementation of the tracking technology
on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and mutual covenants and
representations contained herein, the parties hereby agree as follows:
SERVICES TO BE PERFORMED BY MATRIX.
(a) Matrix will make available to Technor, its subsidiaries and their
respective employees, agents and affiliates: (i) technical manuals;
(ii) procedures and diagrams for installation and implementation of the
technology; (iii) training materials; (iv) control room procedures and
training; (iv) uplifting procedures and training; (v) marketing and
promotional materials; (vi) competitive information and strategies;
(vii) technology marketing strategies; (viii) product delivery, methods,
innovations and packaging; and (ix) procedures and contacts with insurance
companies. Documentation, procedures and processes referred to in this
clause, will be only in reference to the Wasp technology.
<PAGE>
(b) Matrix will allow Technor, its subsidiaries and their respective
employees and agents and affiliates, upon reasonable prior notice, access
to its site for reference and training purposes. Matrix will also allow
Technor and its invited guests to visit and review the Matrix installations
for marketing, training and verification purposes.
(c) Upon request by Technor, Matrix will use its reasonable endeavors to
assist Technor in promoting the CellPoint technology system outside of
South Africa.
(d) Upon request by Technor, Matrix will use its reasonable endeavors to
assist Technor in establishing relationships, on behalf of Technor, with
operators, potential joint venture partners, insurance companies and other
potential users of the tracking technology and potential investors outside
of South Africa. It is recorded that Technor should have no claim against
Matrix if the "relationships" referred to do not occur.
The services outlined herein, which Technor may call upon Matrix to perform
from time to time, are to be paid for by Technor or its subsidiaries at
Matrix's direct cost.
Technor will assure that any third party receiving confidential information
from Matrix will be bound by the same confidentiality agreement signed
between Matrix and Technor.
RELATIONSHIP WITH WASP. Technor acknowledges and agrees that Matrix played
a role in the introduction of Technor and Wasp to each other.
ISSUANCE OF TECHNOR SHARES.
(a) In consideration of the foregoing, the receipt and sufficiency of which
is hereby acknowledged by Technor, Technor agrees to issue to Matrix an
aggregate of 250,000 shares (the "Shares") of Common Stock of Technor,
which shares shall be deemed to be validly issued and fully-paid and
non-assessable. The shares should be issued to Matrix, or its nominee if
instructed within 14 days of the signature date, on or before June 15,
1999.
(b) Matrix hereby acknowledges and agrees that (i) the issuance of the
Shares shall satisfy all obligations which Technor may have incurred to
Matrix in connection with the services (including, but without limitation,
the services of Matrix in introducing Technor to Wasp) heretofore provided
by Matrix, and that Technor shall have no other liabilities with respect
thereto; and (ii) the Shares have not been registered under the Securities
Act of 1933, as amended, of the United States of America (the "Securities
Act"), or applicable state securities laws, and accordingly are regarded as
"restricted securities" which may only be sold, pledged, encumbered,
assigned or otherwise
<PAGE>
transferred upon registration under the Securities Act and such applicable
state securities laws or the availability of an exemption from such
registration.
(c) Matrix also further acknowledges and agrees that it is a condition
precedent to the issuance of the Shares to Matrix that (i) the agreement
between Technor and Wasp regarding sale of Wasp to Technor is signed, and
(ii) the agreement between Wasp and Matrix regarding exclusive use of the
technology in RSA is signed.
GOVERNING LAW. This Agreement shall governed by and construed in accordance
with the laws of the State of Nevada of the United States of America.
DURATION OF AGREEMENT: This Agreement shall be valid for 3 years from the
signing date.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first written above.
MATRIX VEHICLE TRACKING (PTY) LTD.
By: Stefan Joss, CEO
----------------
TECHNOR INTERNATIONAL, INC.
By: Peter Henricsson, CEO
---------------------
<PAGE>
Exhibit 10.7
AMENDED AND RESTATED 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 "Option" means the option granted to Technor by the Shareholders in 3.1;
1.4 "Option Agreement" means the original option agreement entered into
between the Shareholders and Technor on 26 May 1998;
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;
<PAGE>
2
1.7 "Shares" means all the ordinary par value shares of R1,00 in the issued
share capital of Wasp;
1.8 "Share Sale Agreement" means the share sale agreement to be entered into
between the Shareholders and Technor for the sale of the Shares to
Technor by the Shareholders on the exercise of the Option by Technor, in
SCHEDULE 1;
1.9 "Technor" means Technor International Inc., a corporation registered in
Nevada, United States of America with an office at Satraangsvagen 88,
S-18237 Danderyd, Sweden;
1.10 "Wasp" means Wasp International (Pty) Ltd, Reg No 93/00271/07, a private
company with limited liability incorporated under the laws of the RSA.
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:
<PAGE>
3
2.1 Technor wishes to obtain the right and option to acquire all the equity
in Wasp in order to secure technologies which may be developed by Wasp
from time to time;
2.2 the Shareholders have accordingly agreed to grant the right and option
to Technor to acquire the Shares and Technor has agreed to acquire such
right and option on the terms and conditions set out in this Agreement;
2.3 Technor and the Shareholders entered into the Option Agreement and have
also agreed, in order to properly and fully achieve the objectives set
out in 2.1 and 2.2, to amend and restate the Option Agreement on the
terms and conditions set forth herein.
3 OPTION
3.1 The Shareholders hereby irrevocably grant to Technor the
non-transferable and non-assignable right and option to acquire the
Shares from them by delivering a notice of exercise of the option in
accordance with 5 on or before 30 May 1999.
3.2 The purchase price due and payable by Technor to the Shareholders on
exercise of the Option and execution of the Share Sale Agreement shall
be US$450 000,00.
3.3 The parties record the stamp duty payable on the transfer of the Shares
into Technor's name on the exercise of the Option and execution of the
Share Sale Agreement shall be borne by Technor.
3.4 The parties agree that Technor shall be entitled to discharge any
obligation it may have in terms of this Agreement, or to exercise any
right it may have in terms of this Agreement by dealing only with Guy
<PAGE>
4
Redford, acting both in his personal capacity as a Shareholder and as
agent for the remaining Shareholders. Any notices, legal processes and
other communications served on Guy Redford at his address specified in
9.1 shall accordingly constitute due and proper notice to all the
Shareholders.
4 PERIOD OF THE OPTION
The Option shall be exercisable by the giving of 14 days' written notice
by Technor to Guy Redford at his chosen DOMICILIUM in terms of 9.1,
which notice Technor shall be entitled to give at any time up to and
including close of business on 30 May 1999.
5 EXERCISE OF THE OPTION
5.1 Should Technor elect to exercise the Option within the period referred
to in 4, then it shall do so by signing the Share Sale Agreement.
5.2 If Guy Redford is presented with the Share Sale Agreement duly signed by
Technor, each of the Shareholders shall be obliged to countersign such
agreement within 1 Business Day of receipt of such agreement or failing
such signature, Guy Redford shall be entitled to sign such agreement for
and on behalf of any Shareholder who does not so sign the Share Sale
Agreement.
5.3 If the Option is exercised then the sale of the Shares from the
Shareholders to Technor shall result on the terms and conditions set
forth in the Share Sale Agreement.
<PAGE>
5
6 OPTION MONIES
As option monies for the granting of the Option by the Shareholders to
Technor in terms of this Agreement, the parties record that an amount of
US$500, 000,00 was paid to the Shareholders on or about June 1998, and
that such payment was divided amongst each of the Shareholders pro rata
according to the number of Shares owned by that Shareholder.
7 UNDERTAKINGS
The Shareholders undertake not to allot and issue any further Shares, or
any securities, options, warrants or rights exercisable for or
convertible into Shares, between the date of signature of this Agreement
and the last date for exercise of the Option without the prior written
consent of Technor.
8 CONFIDENTIALITY AND PUBLIC 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) to the
announcement or statement and to its contents; except that Technor shall
be entitled to make such announcements and public disclosures as may be
required by the Federal Securities Laws of the United States of America.
9 DOMICILIUM CITANDI ET EXECUTANDI
9.1 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
<PAGE>
6
agreement:
9.1.1 Gerrit van Urk: Lower Ground Floor
Exide Place
1 Ernst Oppenheimer Drive
Bruma Lake
Johannesburg
2198
Gauteng
South Africa
Telefax Number :(+2711) 622-8973
9.1.2 Albert van Urk: Lower Ground Floor
Exide Place
1 Ernst Oppenheimer Drive
Bruma Lake
Johannesburg
2198
Gauteng
South Africa
Telefax Number :(+2711) 622-8973
9.1.3 Guy Redford: Lower Ground Floor
Exide Place
1 Ernst Oppenheimer Drive
Bruma Lake
Johannesburg
2198
Gauteng
South Africa
Telefax Number :(+2711) 622-8973
<PAGE>
7
9.1.4 Technor: Satraangsvagen 88,
S-18237 Danderyd,
Sweden
Telefax Number : (+468) 544-90005
9.2 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.
9.3 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.
9.4 Any notice to a party contained in a correctly addressed envelope and -
9.4.1 sent by prepaid registered post to it at its chosen address; or
9.4.2 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 9.4.1, on the
seventh Business Day after posting (unless the contrary is proved) and,
in the case of 9.4.2, on the day of delivery.
9.5 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
<PAGE>
8
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.
10 GENERAL
10.1 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.
10.2 This document contains the entire agreement between the parties as to
the subject matter hereof.
10.3 No party shall have any claim or right of action arising from any
undertaking, representation or warranty not included in this Agreement.
10.4 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.
10.5 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.
10.6 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.
<PAGE>
9
10.7 Each party warrants that it is acting as a principal and not as an agent
for an undisclosed principal.
<PAGE>
10
SIGNED at Johannesburg on May 13 1999
/s/ GERRIT VAN URK
---------------------------------------
GERRIT VAN URK
SIGNED at Bruma on May 13 1999
/s/ ALBERT VAN URK
---------------------------------------
ALBERT VAN URK
SIGNED at Bruma on May 13 1999
/s/ GUY REDFORD
---------------------------------------
GUY REDFORD
SIGNED at Johannesburg on May 13 1999
For: TECHNOR INTERNATIONAL INC.
/s/ Peter Henricsson
---------------------------------------
Signatory: Peter Henricsson
Capacity: Director
Authority: Board Resolution
<PAGE>
11
Signatory:
Capacity:
Authority:
<PAGE>
12
SCHEDULE 1
SHARE SALE AGREEMENT
<PAGE>
Exhibit 10.8
SALE OF TECHNOLOGY AGREEMENT
between
NOVEL ELECTRONIC SYSTEMS & TECHNOLOGIES
and
TECHNOR INTERNATIONAL INC.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
- --------------------------------------------------------------------------
NO CLAUSE PAGE NO
- --------------------------------------------------------------------------
<S> <C> <C>
1 DEFINITIONS ....................................................... 1
2 PREAMBLE .......................................................... 3
3 SALE OF THE WGT IN THE TERRITORY .................................. 3
4 CONSIDERATION, PAYMENT AND DELIVERY ............................... 3
5 UNDERTAKINGS BY THE ASSIGNOR ...................................... 5
6 WARRANTIES ........................................................ 6
7 INDEMNITIES AND EXEMPTIONS ........................................ 8
8 DELIVERY OF DOCUMENTS ............................................. 9
9 IMPROVEMENTS IN THE WGT ........................................... 9
10 COSTS ............................................................. 10
11 BREACH ............................................................ 11
12 DOMICILIUM AND NOTICES ............................................ 11
13 GOVERNING LAW AND JURISDICTION .................................... 13
14 GENERAL ........................................................... 13
15 COUNTERPARTS ...................................................... 14
16 INTERPRETATION .................................................... 14
SCHEDULE
SCHEDULE: 1 THE WGT
</TABLE>
<PAGE>
Page 1
1 DEFINITIONS
For the purposes of this agreement, unless the context indicates otherwise-
1.1 "Agreement" means this Agreement and the schedule hereto;
1.2 "Assignor" means Novel Electronic Systems & Technologies, an
international company duly organised and registered in Mauritius;
1.3 "Assignee" means Technor International Inc., a corporation registered in
Nevada, United States of America with an address at Satraangsvagen 88,
S-18237 Danderyd, Sweden;
1.4 "ETSI" means the European Telecommunications Standards Institute;
1.5 "GSM" means the Global System for Mobile communication as defined in the
ETSI standards;
1.6 "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;
1.7 "Shares" means shares of common stock of the Assignee, having a par
value US$0.001 per share;
<PAGE>
Page 2
1.8 "Signature Date" means the date of last signature hereto;
1.9 "Territory" means the world, excluding all those countries or
territories on the African continent whose sovereign territory or any
part thereof lies south of the Sahara Desert;
1.10 "WGT" means all the GSM technologies or products owned by the Assignor
as at the Signature Date, including but not being limited to vehicle
tracking systems, terminal units, communication processes (including
computer operated programs), policy and procedures; technical
information, know-how, whether or not patented or patentable, including,
without limitation, specifications, marketing studies, physical
performance and other operational information or data relating to any
part of or improvement of any system developed and made available for
commercial exploitation by the Assignor, more fully described in
SCHEDULE 1;
1.11 "US$" means United States Dollars, the lawful currency of the United
States of America.
<PAGE>
Page 3
2 PREAMBLE
The parties record that--
2.1 the Assignor is the owner of all rights, title and interest in and to
the WGT and priority flowing therefrom in the Territory;
2.2 the Assignee has approached the Assignor to acquire all of its rights,
title and interest in and to the WGT and priority flowing therefrom in
the Territory;
2.3 the Assignor has agreed to assign and cede to the Assignee all of its
rights, title interest in and to the WGT and priority flowing therefrom
in the Territory,
and the parties are entering into this Agreement to give effect thereto.
3 SALE OF THE WGT IN THE TERRITORY
The Assignor hereby sells, with effect from the Signature Date, all of its
rights, title and interest in and to the WGT and priority flowing therefrom
in the Territory to the Assignee, who purchases it, for the consideration
and on the terms and conditions set out in this Agreement.
4 CONSIDERATION, PAYMENT AND DELIVERY
4.1 In consideration for the sale referred to in 3 the Assignee shall pay to
the Assignor the aggregate of the following component items :
4.1.1 US$50,000,00; and
<PAGE>
Page 4
4.1.2 2 450 000 shares of common stock of the Assignee, par value US$ 0.001
per share ("the Consideration Shares"), allotted and issued fully
paid-up.
4.2 The US$ amount in 4.1.1 shall be payable by way of bank transfer by the
Assignee to the Assignor at BNPI Port Louis, Mauritius, account number
400 89 001 28 within 10 days of the Signature Date.
4.3 The parties record that as at the Signature Date 1 950 000 of the
Consideration Shares have already been allotted and issued to the
Assignor or its nominee. Subject to 4.4, the balance of the
Consideration Shares shall be allotted and issued, fully paid up, by the
Assignee to the Assignor (or its nominee, provided that the Assignee is
notified of the nominee's identity in writing prior to such allotment
and issue) on or before 15 June 1999.
4.4 Should:
4.4.1 the average price of the Consideration Shares (as quoted at the closing
of the Nasdaq OTC Bulletin Board or Small Cap Market, as the case may
be, for the 20 consecutive trading days immediately preceding and
including 30 September 1999) be less than US$ 16,00 per Share, then the
Assignee shall allot and issue to the Assignor a further 75 000 Shares,
fully paid up;
4.4.2 the aggregate market value of the Shares issued pursuant to 4.4.1 be
less than US$ 750 000,00 on 31 December 1999, the Assignee shall
forthwith pay to the Assignor an amount equal to the difference between
such aggregate market value and US$ 750 000,00 at BNPI Port Louis,
Mauritius, account number 400 89 001 28.
4.5 All issue duty, stamp duty and the like payable in respect of the issue
and/or transfer of the Consideration Shares or the Shares
<PAGE>
Page 5
issued or allotted pursuant to 4.4.1 shall be borne and paid for by the
Assignee.
4.6 Payment of the purchase price pursuant to 4.1.1 and the allotment and
issue of the Consideration Shares (or Shares, as the case may be)
pursuant to 4.1.2 or 4.4.1, as the case may be, shall constitute due and
proper discharge by the Assignee to the Assignor of all its payment
obligations in terms of this clause 4.
4.7 To the extent that the Assignee is not already in possession thereof,
the Assignor shall within 10 days from the Signature Date, deliver to
the Assignee all the documents in its possession recording or embodying
the WGT and which, according to the Assignor's experience, will enable
qualified technicians to follow and give effect to them.
5 UNDERTAKINGS BY THE ASSIGNOR
5.1 The Assignor hereby undertakes to sign all documents and to do whatever
may be required to effect registration of transfer of the WGT in the
Territory to the Assignee.
5.2 The Assignor hereby appoints the Assignee, irrevocably and IN REM SUAM,
as its lawful and duly authorised agent, with powers of substitution and
delegation to do all or any of the acts and to sign all or any of the
documents that may be required to give effect to the provisions of 5.1.
<PAGE>
Page 6
5.3 The Assignor shall not:
5.3.1 dispute the novelty of the WGT in the Territory, nor the validity of the
WGT in the Territory and it will furthermore not assist anyone else to
do so;
5.3.2 sell or transfer any technology relating to the WGT to any third party.
6 WARRANTIES
6.1 Subject to 6.2, the Assignor warrants to the Assignee that--
6.1.1 this Agreement has been duly authorised by the Assignor and constitutes
the valid and legally binding obligation of the Assignor;
6.1.2 the WGT includes all know-how to the technology embodied therein and to
the best of the Assignor's knowledge and belief, the WGT includes all
know-how to the technology embodied therein and is capable of being used
or applied in trade and industry in the Territory;
6.1.3 the Assignor is the owner of all rights, title and interest in and to
the WGT and priority flowing therefrom in the Territory;
6.1.4 to the best of the Assignor's knowledge and belief, the WGT does not
infringe the legitimate rights, proprietary or otherwise, of any other
person;
6.1.5 the Assignor has not sold, transferred, encumbered or otherwise
alienated the WGT or any part thereof and/or any rights therein or
flowing therefrom in the Territory, nor has the Assignor granted any
third party the right to acquire, either by way of option or right
<PAGE>
Page 7
of pre-emption, any rights, title or interest in or to the WGT and/or
any rights whatsoever therein or flowing therefrom in the Territory;
6.1.6 the Assignor has not granted any person any other right of any nature
whatsoever in or to the WGT and/or any rights therein or flowing
therefrom in the Territory, including without limitation any license or
any other right of use or exploitation thereof;
6.1.7 no person has any right of any nature whatsoever in or to the WGT and/or
any rights therein or flowing therefrom in the Territory, including
without limitation any license or any other right of use or exploitation
thereof;
6.2 The Assignor hereby cedes all of its rights under the agreement pursuant
to which the Assignor acquired the WGT in the Territory, , and the
Assignor hereby consents to the Assignee enforcing any such rights
directly against the original owner of the WGT in the event that this be
desirable or become necessary. Save as set out in this clause 6, and
notwithstanding anything to the contrary in this Agreement, the Assignor
gives no other warranties and makes no other representations relating to
or connected in any way to the WGT, it being specifically agreed that
the Assignee's sole remedy in the event of it having any claim in terms
of this Agreement (for breach of warranty or otherwise) shall lie only
against the original owner of the WGT and not against the Assignor.
<PAGE>
Page 8
6.3 Each warranty referred to in 6.1--
6.3.1 is a separate warranty and is in no way limited or restricted by the
terms of any other warranty;
6.3.2 continues and remains in force notwithstanding the completion of the
sale and assignment contemplated in this Agreement;
6.3.3 is deemed to be a material representation inducing the Assignee to enter
into this Agreement.
7 INDEMNITIES AND EXEMPTIONS
The Assignor hereby indemnifies the Assignee and its affiliates and hold
them harmless from all claims, demands, actions or proceedings for sums of
money, damages, costs, penalties and losses arising out of or, in any way,
connected with the infringement or alleged infringement of the WGT of any
other intellectual property rights of any third party in the RSA. It is
expressly agreed that this obligation to indemnify the Assignee shall
survive the termination or expiration of this Agreement and shall include
all reasonable expenses incurred by the Assignee in respect of the claims,
including reasonable legal fees.
8 DELIVERY OF DOCUMENTS
The Assignor shall, if requested to do so in writing by the Assignee,
within 14 days of such request deliver to the Assignee all books, notes,
notebooks, diaries, instructions manuals, papers, graphs, drawings,
records, formulations, computer diskettes, tests and all other material and
information containing, revealing, summarising, commenting on or referring
to the WGT or any part thereof, together with all copies thereof in its
possession and shall not retain the same or any part thereof in any form,
except as the Assignee may otherwise agree to in writing.
<PAGE>
Page 9
9 IMPROVEMENTS IN THE WGT
9.1 For the sake of clarity, the parties record that the Assignor has no
rights regarding the WGT in all those countries or territories on the
African continent whose sovereign territory or any part thereof lies
South of the Sahara Desert.
9.2 Should the Assignor or the Assignee, or any employee of the Assignor or
the Assignee or anyone else under the Assignor's or the Assignee's
control or working in association with the Assignor or the Assignee, as
the case may be ("the Discovering Party"), make or discover any
improvement relating to the WGT and capable of commercial exploitation:
9.2.1 the Discovering Party shall be obliged to notify the other party ("the
Receiving Party") thereof as soon as is reasonably possible under the
circumstances and to make the relevant know-how, technology and related
intellectual property ("the New Intellectual Property") available for
exploitation on a perpetual licence basis to the Receiving Party free of
any royalty, charge or fee of whatsoever nature, provided that the
Receiving Party:
9.2.1.1 should such party be the Assignor, shall not be entitled to exploit
the New Intellectual Property in any countries in the Territory;
9.2.1.2 should such party be the Assignee, shall only be entitled to exploit
the New Intellectual Property in the Territory; and
9.2.2 if the improvement in question is an invention capable of being
registered as a patent, then:
<PAGE>
Page 10
9.2.2.1 the Discovering Party shall have the right to apply at its cost for
letters patent therefor in the RSA, the Territory and in all other
countries of the world;
9.2.2.2 any letters patent is sued in respect of the invention shall be and
remain the Discovering Party's sole property, subject always to the
Receiving Party's right of use and exploitation in terms of 9.2.1.
10 COSTS
10.1 The Assignee shall be responsible for all costs of any nature whatsoever
which may be incurred in the transfer of the WGT or any part thereof in
the Territory into the name of the Assignee..
10.2 Each party shall bear its own costs of and incidental to the
negotiating, preparing and drawing of this Agreement.
11 BREACH
11.1 Should the Assignee commit a breach of this Agreement and fail to remedy
that breach within 7 days after receipt from the Assignor of written
notice calling upon it so to do, then the Assignor shall be entitled, in
addition to and without prejudice to any right it may have as a result
of that breach, either to--
11.1.1 enforce the performance of the terms hereof; or
11.1.2 if the breach is material breach, cancel this Agreement and recover such
damages as it may have sustained.
<PAGE>
Page 11
11.2 Should the Assignor commit a breach of this Agreement and fail to remedy
that breach within 7 days after receipt from the Assignee of written
notice calling upon it so to do, or should the Assignor commit a
material breach of this Agreement, then the Assignee shall not be
entitled to cancel this Agreement or to claim damages from the Assignor,
but shall only be entitled to enforce the performance of the terms
hereof or to claim damages from the original owner of the WGT.
11.3 The parties' remedies under this clause 11 are exhaustive, and neither
party shall be entitled to any remedy other than those to which they are
entitled in terms of this clause 11.
12 DOMICILIUM AND NOTICES
12.1 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--
12.1.1 the Assignor: 5 Duke of Edinburgh Ave
Port Louis
Mauritius
Telefax: 230 212 4448
12.1.2 the Assignee: Satraangsvagen 88,S-18237
Danderyd
Sweden
Telefax :(+468) 544-90005.
12.2 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.
<PAGE>
Page 12
12.3 Any notice to a party contained in a correctly addressed envelope and--
12.3.1 sent by prepaid registered post to it at its chosen address; or
12.3.2 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 12.3.1, on the
14th business day after posting (unless the contrary is proved) and, in
the case of 12.3.2, on the day of delivery.
12.4 Any notice sent by telefax to a party at its telefax number shall be
deemed (unless the contrary is proved) to have been received -
12.4.1 if it is transmitted during normal business hours, within 2 hours of
transmission;
12.4.2 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.
12.5 Each party chooses the physical address set out opposite its name in
12.1 as the address at which legal process must be delivered for the
purpose of this Agreement.
12.6 The parties shall be entitled at any time to change their addresses for
the purposes of this clause 12 to any other address in the RSA by giving
written notice to that effect to the other.
13 GOVERNING LAW AND JURISDICTION
<PAGE>
Page 13
13.1 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.
13.2 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
14 GENERAL
14.1 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. 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.
14.2 The parties to this Agreement undertake to treat all matters relating to
this Agreement and the schedule hereto as being confidential and,
therefore, shall not, without the written approval of the other,
disclose the provisions hereof to any third party.
14.3 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.
14.4 All the transactions and arrangements contemplated in this Agreement
constitute one indivisible transaction.
15 COUNTERPARTS
<PAGE>
Page 14
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.
16 INTERPRETATION
16.1 In this Agreement, unless the context requires otherwise -
16.1.1 words importing any one gender shall include the other two genders;
16.1.2 the singular shall include the plural and vice versa;
16.1.3 a reference to natural persons shall include created entities (corporate
and unincorporate) and VICE VERSA.
16.1.4 the headings in this Agreement have been inserted for convenience only
and shall not be used for nor assist or affect its interpretation.
<PAGE>
Page 15
SIGNED at Port Louis on the May 10 1999
For: NOVEL ELECTRONIC SYSTEMS &
TECHNOLOGIES
-----------------------------
Signatory:
Capacity: Director
Authority:
SIGNED at Johannesburg on the May 13 1999
For: TECHNOR INTERNATIONAL INC.
/s/ Peter Henricsson
-----------------------------
Signatory: Peter Henricsson
Capacity: Director
Authority: Board Resolution
<PAGE>
Page 16
SCHEDULE 1
THE WGT
<PAGE>
EXHIBIT 10.9
SCHEDULE 1
SHARE SALE AGREEMENT
between
GERRIT VAN URK
and
ALBERT VAN URK
and
GUY REDFORD
and
TECHNOR INTERNATIONAL INC
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
- -------------------------------------------------------------------------------------------------------------------
NO CLAUSE PAGE NO
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1 DEFINITIONS..............................................................................................1
2 PREAMBLE.................................................................................................4
3 SUSPENSIVE CONDITIONS....................................................................................4
4 SALE.....................................................................................................6
5 PURCHASE PRICE AND PAYMENT ..............................................................................6
6 COMPLETION...............................................................................................7
7 RISK AND BENEFIT.........................................................................................8
8 WARRANTIES...............................................................................................9
9 SHAREHOLDERS AGREEMENT..................................................................................11
10 INDEMNITIES.............................................................................................12
11 BREACH..................................................................................................13
12 ANNOUNCEMENTS...........................................................................................14
13 NON-VARIATION...........................................................................................14
14 ARBITRATION.............................................................................................15
15 GENERAL.................................................................................................16
16 INTERPRETATION..........................................................................................16
17 DOMICILIUM AND NOTICES..................................................................................18
18 GOOD FAITH..............................................................................................19
19 GOVERNING LAW AND JURISDICTION..........................................................................19
20 COSTS...................................................................................................20
21 COUNTERPARTS............................................................................................20
SCHEDULES
SCHEDULE 1 : EFFECTIVE DATE ACCOUNTS
SCHEDULE 2 : SELLERS' WARRANTIES
SCHEDULE 3 : DISCLOSURE SCHEDULE
</TABLE>
<PAGE>
Page 1
1 DEFINITIONS
For the purposes of this Agreement unless the context indicates otherwise -
1.1 "Agreement" means this share sale agreement and the schedules hereto,
both as may be amended from time to time;
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 "Business Sale Agreement" means the business sale agreement to be
concluded between the Company and Wasp SA (Proprietary) Limited for the
sale as a going concern of the Company's business to Wasp SA
(Proprietary) Limited;
1.5 "Company" means Wasp International (Proprietary) Limited, Registration
Number 93/00271/07, a private company with limited liability
incorporated under the laws of the RSA;
1.6 "Completion Date" means the second Business Day after the suspensive
conditions referred to in 3.1 have been fulfilled;
<PAGE>
Page 2
1.7 "Disclosure Schedule" means the disclosure schedule, in SCHEDULE 3;
1.8 "Effective Date" means 1 March 1999;
1.9 "Effective Date Accounts" means the unaudited balance sheet of the
Company as at 28 February 1999 , in SCHEDULE 1;
1.10 "Gerrit" means Gerrit Van Urk;
1.11 "Guy" means Guy Redford;
1.12 "Option Agreement" means the original option agreement entered into
between the Sellers and the Purchaser on 26 May 1998 and as amended and
restated as at 13 May 1999;
1.13 "Purchaser" means Technor International Inc., a corporation registered
in Nevada, United States of America with an address at Satraangsvagen
88, S- 18237 Danderyd, Sweden;
1.14 "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;
<PAGE>
Page 3
1.15 "Sale Shares" means 100 ordinary par value shares of R 1,00 each in the
issued share capital of the Company, being 100% of the entire issued
share capital at the Effective Date -
1.15.1 33 of which are held by Gerrit;
1.15.2 33 of which are held by Albert; and
1.15.3 34 of which are held by Guy;
1.16 "Sellers" means Gerrit, Albert and Guy collectively;
1.17 "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
1.18 "Wasp Shareholders' Agreement" means the shareholders' agreement entered
into between the Sellers and Michael Carroll on 6 August 1997 governing
their relationship as shareholders in the Company;
1.19 "ZAR" means South African Rand, the lawful currency of the RSA.
<PAGE>
Page 4
2 PREAMBLE
The parties record that -
2.1 the Company is involved in the communications and technology industry,
focussing primarily on the development of proprietary GSM technologies,
and has become a leading South African company in this area;
2.2 the Company, in order to properly exploit the technologies that it has
developed and the intellectual property rights that it owns, intends to
restructure its business affairs;
2.3 one of the steps in the restructure referred to in 2.2 involves the
Sellers selling all of their shares in the issued share capital of the
Company to the Purchaser upon the Purchaser exercising the option set
forth in the Option Agreement;
and the parties have accordingly agreed to provide, in this Agreement,
for the basis upon which the Purchaser will acquire from the Sellers
the Sale Shares and are entering into this Agreement to give effect
thereto.
3 SUSPENSIVE CONDITIONS
3.1 This Agreement is subject to and conditional upon the fulfilment of the
following suspensive conditions on or before the Business Day
immediately following the Signature Date or such later date as the
parties may agree upon in writing, namely:
3.1.1 the approval of the board of directors of the Purchaser;
3.1.2 that the Business Sale Agreement be signed by the parties thereto and
becomes unconditional in accordance with its terms;
<PAGE>
Page 5
3.1.3 the approval of the board of directors of the Company of the
registration of the transfer of the Sale Shares to the Purchaser should
this Agreement become unconditional in accordance with its terms;
3.1.4 that the Sellers procure that Nedbank Limited, in its capacity as an
authorised dealer on behalf of the RSA Reserve Bank, provide the
Purchaser with a certificate stating that all consents and permissions
that may be required from the RSA Reserve Bank for the validity of this
Agreement and the transfer of the Sale Shares to the Purchaser in terms
of this Agreement have been obtained by the Sellers;
3.1.5 that the Sellers procure that the Company's attorneys provide the
Purchaser with a legal opinion that to the best of their knowledge and
belief there are no other consents that may be required from the RSA
government for the validity of this Agreement and the transfer of the
Sale Shares to the Purchaser in terms of this Agreement.
3.2 The Sellers shall use their best endeavours to procure fulfilment of the
suspensive conditions in 3.1.2, 3.1.3, 3.1.4 and 3.1.5. The Purchaser
shall use its best endeavours to procure fulfilment of the suspensive
conditions in 3.1.1.
3.3 The suspensive condition(s) in:
3.3.1 3.1.1 and 3.1.3 have been stipulated for the benefit of the Purchaser.
The suspensive condition in 3.1.1 is not capable of being waived by the
Purchaser, and the suspensive condition in 3.1.3 is capable of being
waived by the Purchaser by giving written notice to that effect to the
Sellers;
<PAGE>
Page 6
3.3.2 3.1.2 has been stipulated for the benefit of the Sellers and is capable
of being waived by the Sellers giving written notice to that effect to
the Purchaser;
3.3.3 3.1.4 and 3.1.5 has been stipulated for the joint benefit of the
Purchaser and of the Sellers and is not capable of being waived by
either the Purchaser or the Sellers.
3.4 If any of the suspensive conditions in 3.1 remains unfulfilled or where
applicable has not been waived in writing by the party for the benefit
of which such suspensive condition has been stipulated, by 30 May 1999
or such later date as the parties may agree upon in writing, this
Agreement shall not come into force or effect. In such event no party
shall have any claim against any other party by virtue of the provisions
of this Agreement.
4 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.
5 PURCHASE PRICE AND PAYMENT
5.1 The total purchase price payable by the Purchaser to the Sellers for the
Sale Shares shall be US$ 450 000,00
5.2 The purchase price in 5.1 shall be paid in by the Purchaser to Guy,
acting both in his personal capacity and as agent for the other Sellers,
by telegraphic transfer at Nedbank Limited, Commercial Central Branch,
account number 1284 011 623 on the Completion Date. By executing this
Agreement Albert and Gerrit hereby
<PAGE>
Page 7
acknowledge and agree that Guy is authorised and has the power of
attorney to so act on their behalf.
5.3 Payment of the purchase price pursuant to 5.1 shall constitute due and
proper discharge by the Purchaser to the Sellers of all its obligations
in terms of this clause 5 and the Purchaser shall not be obliged to take
cognizance of any internal arrangements between the Sellers.
6 COMPLETION
On the Completion Date representatives of the parties shall meet at the
Company's business premises and -
6.1 the Sellers shall deliver the following documents to the Purchaser -
6.1.1 share certificates in respect of the Sale Shares;
6.1.1.1 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;
6.1.1.2 a duly passed resolution of the Company appointing the Purchaser's
nominees to the board of directors of the Company;
6.1.2 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;
<PAGE>
Page 8
6.1.3 a letter of resignation signed by each of the directors of the board of
directors of the Company resigning from that board, together with a duly
passed resolution of the board of directors of the Company in terms of
which each of the Company's directors as at the Signature Date resigns
from the board of directors of the Company;
6.1.4 a certificate signed by each of the Sellers that all the covenants,
warranties and representations given by them in this Agreement, or in
SCHEDULE 2 as at the Effective Date and where appropriate the Completion
Date, are both true and correct.
7 RISK AND BENEFIT
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.
8 WARRANTIES
8.1 Each of the Sellers, jointly and severally, gives to the Purchaser all
the warranties in SCHEDULE 2 in respect of the Company and warrant,
jointly and severally to the Purchaser that -
8.1.1 he is the registered and beneficial owner of the number of Sale Shares
set out opposite his name in 1.15 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;
8.1.2 there are no other issued shares in the share capital of the Company;
<PAGE>
Page 9
8.1.3 he has not granted any options or rights to acquire the Sale Shares to
any third party;
8.1.4 neither he nor the Company have issued any warrants, convertible
securities or other any other rights giving any third party the right to
acquire any securities in the Company;
8.1.5 to the best of his knowledge and belief, the Company has sold all
technology and intellectual property rights developed by it (or the
Sellers) in the ordinary and regular course of the Company's business in
respect of all those countries having all or part of their territories
south of the Sahara Desert, to Wasp SA (Proprietary) Limited in terms of
the Business Sale Agreement;
8.1.6 the Effective Date Accounts :
8.1.6.1 fairly reflect the state of affairs, business and profits of the
Company as at the Effective Date;
8.1.6.2 have been drawn up in accordance with generally accepted accounting
practice in the RSA,
8.1.6.3 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, 1973 and all other
applicable laws;
<PAGE>
Page 10
8.1.6.4 fully disclose all liabilities of the Company, whether direct or
indirect, actual or contingent, insofar as these liabilities are
required to be disclosed by generally accepted accounting practice in
the RSA.
8.2 Subject to 8.1, 8.3 and the provisions of SCHEDULE 2, 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.
8.3 The Purchaser has entered into this Agreement on the strength of the
warranties given by the Sellers herein and in SCHEDULE 2 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 warranty, the
context or Disclosure Schedule clearly indicates otherwise.
8.4 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.
8.5 The warranties given by the Sellers to the Purchaser pursuant to 8.1,
are given on the basis that:
8.5.1 no claim arising from any breach of any warranty may be brought after
expiry of a period of 3 years calculated from the Completion Date;
8.5.2 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
<PAGE>
Page 11
warranty and any and all such liability is hereby expressly excluded.
8.6 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 8 and in
SCHEDULE 2 shall be deemed to have been qualified to the extent of any
disclosures contained in this Agreement or in the Disclosure Schedule.
9 SHAREHOLDERS AGREEMENT AND CHANGE OF NAME
9.1 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.
9.2 The Sellers, by executing this Agreement, hereby acknowledge and agree
that the Wasp Shareholders' Agreement has been terminated with effect
from the Signature Date without further liability to the Company.
9.3 The Purchaser hereby undertakes as soon as is reasonably possible after
the Completion Date, to procure that the Company change its name to
"CellPoint Systems SA (Proprietary) Limited" or such other name as may
be agreed to by the parties in writing, provided that any name change
shall always be subject to the approval of the Registrar of Companies.
10 INDEMNITIES
<PAGE>
Page 12
10.1 The Sellers, jointly and severally, hereby indemnify and hold the
Purchaser harmless against any liability incurred prior to the Effective
Date:
10.1.1 in respect of the Company's business,
10.1.2 in respect of any breach of any of the Sellers' representations or
warranties set forth in this Agreement (including SCHEDULE 2 insofar as
such warranties relate to the Company's business, the Company's assets,
the Company's employees, the contracts of the Company and the tax
affairs of the Company);
10.1.3 against any demand, claim, action or other legal proceedings, made or
instituted against the Purchaser in respect of any such liabilities, and
against all costs (including attorney's fees) incurred by the Purchaser
or awarded against it in respect of any such demand, claim, action or
other legal proceedings provided that such liability has not been
disclosed in the Effective Date Accounts or in the Disclosure Schedule,
provided that the liability of the Sellers jointly in terms of 10.1.1
and 10.1.2 shall in no circumstances exceed the sum of ZAR 350 000,00,
and provided further that any such liability shall only endure for a
period of 3 years from the Completion Date.
10.2 Notwithstanding anything to the contrary in this Agreement, and in
particular the provisions of 10.1.3, the parties agree that the
warranties given by each of the Sellers in 8.1.1, 8.1.2, 8.1.3, 8.1.4,
8.1.5 and 8.1.6.4 shall not be limited to any extent whatsoever.
10.3 Any party relying on any claim pursuant to 10.1 ("the indemnified
party") shall notify the other party ("the indemnifying party") in
writing of any indemnified claim within 7 days after the indemnified
<PAGE>
Page 13
party first becomes aware thereof, to enable the indemnifying party to
take steps to contest it; provided that the aforegoing shall not release
the indemnified party from its obligation to diligently contest any such
indemnified claim and provided further that the indemnified party shall
not be entitled to settle or compromise any claim brought against it
without the indemnifying party's prior written consent. All reasonable
legal costs incurred by the indemnified party in so contesting any such
claim shall be for the indemnifying party's account.
11 BREACH
11.1 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.
11.2 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.
11.3 The remedies of each party in terms of this clause 11, 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 the in
terms of the RSA's common law.
<PAGE>
Page 14
12 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) to the
announcement or statement and to its contents; except that the Purchaser
shall be entitled to make such announcements and public disclosures as may
be required by the Federal Securities Laws of the United States of America.
13 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.
14 ARBITRATION
14.1 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.
14.2 There shall be 1 arbitrator who shall be, if the question in issue is -
14.2.1 primarily an accounting matter, an independent chartered accountant of
not less than 15 years' standing;
14.2.2 primarily a legal matter, a practising attorney or advocate of not less
than 15 years' standing;
<PAGE>
Page 15
14.2.3 primarily a technical matter, a suitably qualified person;
14.2.4 any other matter, a suitably qualified person.
14.3 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.
14.4 Subject to the other provisions of this clause 14, each arbitration
shall be held in Johannesburg in accordance with the provisions of the
Arbitration Act, 1965, as amended.
14.5 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.
15 GENERAL
15.1 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.
15.2 Subject to 12, 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
<PAGE>
Page 16
party who or which does not have a legitimate interest in the contents
thereof.
15.3 This Agreement constitutes the entire contract between the parties and
no other claims, conditions, warranties, guarantees and representations
of whatsoever nature shall be of any force or effect other than those
which are included herein.
15.4 All the transactions and arrangements contemplated in this Agreement
constitute one indivisible transaction.
16 INTERPRETATION
16.1 In this Agreement, unless the context requires otherwise -
16.1.1 words importing any one gender shall include the other two genders;
16.1.2 the singular shall include the plural and vice versa;
16.1.3 a reference to natural persons shall include created entities (corporate
and unincorporate) and vice versa.
16.1.4 "day" means any day including a Saturday, Sunday or any official public
holiday within the Republic of South Africa;
16.1.5 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;
16.1.6 if any provision in a definition is a substantive provision conferring
rights or imposing obligations on any party, notwithstanding that
<PAGE>
Page 17
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;
16.1.7 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;
16.1.8 expressions or words defined in this Agreement shall bear the same
meaning in the schedules to this Agreement which do not themselves
contain definitions.
16.2 The headings in this Agreement have been inserted for convenience only
and shall not be used for nor assist or affect its interpretation.
17 DOMICILIUM AND NOTICES
17.1 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 -
17.1.1 Gerrit at 20 Van Rooy Street, Potchefstroom or Telefax Number
(018) 297 2121;
17.1.2 Albert at 20 Van Rooy Street, Potchefstroom or Telefax Number
(018) 297 2121;
17.1.3 Guy at 4A, Redhill Road, Morningside, Sandton, 2128 or Telefax No.
(011) 783-1719;
<PAGE>
Page 18
17.1.4 Technor at Satraangsvagen 88,S-18237 Danderyd, Sweden, or Telefax Number
(+468) 544-90005.
17.2 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.
17.3 Any notice to a party contained in a correctly addressed envelope and
delivered by hand to such party or to a responsible person during
ordinary business hours located at its chosen address, shall be deemed
to have been received on the day of delivery.
17.4 Any notice sent by telefax to a party at its telefax number shall be
deemed (unless the contrary is proved) to have been received -
17.4.1 if it is transmitted during normal business hours, within 2 hours of
transmission;
17.4.2 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.
17.5 The parties choose the physical address set out opposite its name in
17.1 as the address at which legal process must be delivered for the
purpose of this Agreement.
17.6 The parties shall be entitled at any time to change their addresses for
the purposes of this clause 17 to any other address in the RSA by giving
written notice to that effect to the other, which change shall only be
effective upon receipt.
18 GOOD FAITH
<PAGE>
Page 19
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.
19 GOVERNING LAW AND JURISDICTION
19.1 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.
19.2 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.
20 COSTS
20.1 Each party shall bear its own costs of and incidental to the
negotiating, preparing and drawing of this Agreement.
20.2 The transfer duty payable on the transfer of the Sale Shares into the
name of the Purchaser shall be borne by the Purchaser.
21 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
<PAGE>
Page 20
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 Johannesburg on May 13 1999
/s/ GERRIT VAN URK
------------------------------------------
GERRIT VAN URK
SIGNED at Bruma on May 13 1999
/s/ ALBERT VAN URK
------------------------------------------
ALBERT VAN URK
SIGNED at Bruma on May 13 1999
/s/ GUY REDFORD
------------------------------------------
GUY REDFORD
<PAGE>
Page 21
SIGNED at Johannesburg on May 13 1999
For: TECHNOR INTERNATIONAL INC.
/s/ PETER HENRICSSON
-----------------------------------------
Signatory: Peter Henricsson
Capacity: Director
Authority: Board Resolution
<PAGE>
Page 22
SCHEDULE 1
EFFECTIVE DATE ACCOUNTS
<PAGE>
Page 23
SCHEDULE 2
SELLERS' WARRANTIES
For purposes of this SCHEDULE 2, 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
1 EACH OF 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
1.1 The Company is incorporated as a private company with limited liability
according to the laws of the RSA.
1.2 No steps have been taken or are pending for the deregistration of the
Company, whether under Section 73 of the Companies Act, 1973 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).
1.3 The authorised share capital of the Company is R 4000,00 divided into
4000 shares of R 1,00 each.
1.4 The issued share capital of the Company is R 100,00 divided into 100
shares of R 1,00 each, fully paid up.
<PAGE>
Page 24
1.5 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.
1.6 The Sellers are the registered and beneficial holders of the Sale Shares
and are entitled and able to give to the Purchaser free and unencumbered
title to the Sale Shares.
1.7 Save as disclosed in 9 the Agreement no third party 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.
1.8 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.
STATUTORY BOOKS, RECORDS AND ACCOUNTS
1.9 The minute books of the Company contain all of the resolutions passed by
its directors and members.
1.10 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.
1.11 The Company's audited annual financial statements for the financial year
ended 28 February 1999 have been drawn up:
1.11.1 in accordance with generally accepted accounting practice in the RSA,
<PAGE>
Page 25
1.11.2 except to the extent stated therein, on the basis of accounting policies
consistent with prior years, and
1.11.3 in accordance with the provisions of the Companies Act and all other
applicable laws, and
1.11.4 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.
That, for the period up to and including the Effective Date, each of the Sellers
jointly and severally gives the following warranties, and for the period between
the Effective Date and the Completion Date, each of the Sellers, jointly and
severally, gives the following warranties to the best of their knowledge and
belief after due investigation and inquiry:
ASSETS
1.12 the Company is the owner of and is in lawful possession of, all of the
assets reflected and as stated in the Effective Date Accounts, and that
all such assets are owned free and clear of all liens, charges and
encumbrances by the Company;
1.13 there are no material defects in any of the assets of the Company;
1.14 the Company and its 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;
1.15 the Company has not granted to anyone an option to purchase, or any
right over any of its assets;
<PAGE>
Page 26
EMPLOYEES
1.16 the Company has not given notice of termination to any of its key
employees, and nor has any of its key employees resigned;
1.17 all leave entitlements, bonuses, salaries and other amounts relating to
their employment by the Company to which any employees of the Company
are entitled as at the Effective Date are reflected in the Effective
Date Accounts and all such amounts due to such Employees have been paid
as at the Completion Date, and that the Company is current in all of its
obligations to employees as at the Completion Date and that the Company
has not agreed to pay any compensation, bonuses or other incentives out
of the ordinary course of business which have not been disclosed to the
Purchaser;
CONTRACTS
1.18 the Company is not bound by any contracts, agreements or commitments
entered into outside the ordinary course of its business;
1.19 all of the contracts of a material nature to which the Company is a
party have been disclosed and delivered to the Purchaser and 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;
1.20 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;
<PAGE>
Page 27
BUSINESS
1.21 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;
1.22 the Company is not a party to any litigation or arbitration proceedings,
and to the best of the Sellers' knowledge and belief no litigation or
arbitration proceedings are threatened against the Company, 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;
1.23 no dividends which have been declared by the Company, have not been paid
by the Company;
1.24 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;
TAX
1.25 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
<PAGE>
Page 28
reserves for tax shall have been established therefor in the Effective
Date Accounts;
1.26 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.
2 EACH OF THE SELLERS, JOINTLY AND SEVERALLY, GIVE THE FOLLOWING WARRANTIES
IN RESPECT OF THE PERIOD BETWEEN THE EFFECTIVE DATE AND THE COMPLETION DATE
AND AGREE THAT :
2.1 The Company will not incur or become committed to incur any capital
expenditure.
2.2 The Company will not enter into any transaction except in the ordinary
and regular conduct of its business.
2.3 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.
2.4 No dividend will be declared nor will any distribution out of profit,
accumulated profit, reserves or capital of the Company be made.
2.5 The Company will not borrow any money.
<PAGE>
Page 29
3 EACH OF THE SELLERS, JOINTLY AND SEVERALLY, GIVE THE FOLLOWING WARRANTY IN
RESPECT OF THE PERIOD BETWEEN 1 MARCH 1999 AND THE COMPLETION DATE
3.1 There has not been and will not be any material adverse change in the
financial position of the Company.
4 EACH OF THE SELLERS, JOINTLY AND SEVERALLY, TO THE BEST OF THEIR KNOWLEDGE
AND BELIEF THAT AT THE EFFECTIVE DATE:
4.1 any and all software, hardware, peripherals, services, electronic
equipment, interfaces and any other information technology used in the
Business ("the IT Products") at the Effective Date is fully year 2000
compliant. For purposes of this warranty, year 2000 compliance shall
mean that the IT Products, together will all upgrades, enhancements and
modifications thereto -
4.1.1 have been designed to and will function accurately, correctly,
consistently and as expected without error or interruption prior to, on,
and beyond 1 January 2000 and that neither the performance nor
functionality of the IT Products will in any way be adversely affected
by the passage of time from the twentieth to the twenty first century;
4.1.2 shall, without derogating from the generality of 4.1.1:
4.1.2.1 operate prior to, on and beyond 1 January 2000 without error,
interruption or decreased performance relating or in any way
connected to any data or input which includes an indication of or
reference to date;
4.1.2.2 manage and manipulate data involving dates (including, but not
limited to
<PAGE>
Page 30
calculating, comparing, sequencing, processing and outputting) so as
to be capable of accepting date input, providing date output, storing
date information, performing calculations on dates or portions of
dates and identifying and renewing any abuses of date fields and
data;
4.1.2.3 provide that all date-related user interface functionalities and data
fields include the indication of century to eliminate data ambiguity
without human intervention;
4.2 shall function accurately, correctly, consistently and as expected
without error or interruption prior to, on and beyond 1 January in or
together with any level of computer hardware and/or software including,
but not limited to, microcode, firmware, application programs, files and
databases; provided that such computer hardware and/or computer software
or system is itself year 2000 compliant;
4.3 shall recognise the year 2000 as a leap year and act accordingly.
<PAGE>
Page 31
SCHEDULE 4
DISCLOSURE SCHEDULE
<PAGE>
EXHIBIT 10.10
- --------------------------------------------------------------------------------
MEMORANDUM OF UNDERSTANDING
AU-SYSTEM MOBILE - CELLPOINT SYSTEMS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Memorandum of Understanding 1
<PAGE>
PARTIES
This Memorandum of Understanding, MoU, is made this 17th day of February 1999,
by and between:
CELLPOINT SYSTEMS AB, a company organised under the laws of Sweden, having their
registered office at Sofielundsvagen 4, 191 47, Sollentuna, hereinafter referred
to as "CellPoint"
and
AU-System Mobile AB a company organised under the laws of Sweden, having their
registered office at Box 47612, 117 94 Stockholm, Sweden Hereinafter referred to
as "AUS", collectively CellPoint and AUS will be referred to as the "The
Parties" for the purpose of this Agreement.
PREAMBLE
AUS is a market-leading supplier of software products in the area of SIM card
management and value-added services to GSM operators.
CELLPOINT is a market-leading supplier of positioning systems to GSM operators.
OBJECTIVES
The objective of this MoU is to establish the terms under which CellPoint and
AUS will work together on the market.
This MoU should be finalised by February 1999.
The parties agree that this is a non-exclusive agreement. Nothing in this
agreement shall prevent either party from entering into any type of agreement or
relationship with any third party.
DEFINITION OF PRODUCTS
AviSIM OTA ENABLED FOR POSITIONING: AviSIM OTA Wireless Internet Gateway with
plug-in modules for positioning services and plug-in modules in the WIB
(Wireless Internet Browser).
THE CELLPOINT SYSTEM: The CellPoint System for positioning.
SCOPE
AUS and CellPoint recognize that the combined capabilities of the two companies
have a wide range of opportunities available in the area of location-based value
added services.
- --------------------------------------------------------------------------------
Memorandum of Understanding 2
<PAGE>
AUS and CellPoint will market and sell its respective products independent of
each other.
Each company will finance and own development efforts that are needed to proceed
with the cooperation.
Each company will market and sell its own products. When there is a joint
business opportunity the parties will co-ordinate its respective offering to try
to win the business.
Co-ordination shall be achieved by having regular meetings between the parties
sales organisations.
The SMS Gateway from AUS shall be regarded as a special case, and where a
technical and commercial discussion and evaluation shall be conducted between
the parties. From case to case, it will be determined if it makes sense for the
parties that CellPoint should use the AUS SMS gateway and if so, what
compensation should be paid by CellPoint.
DEGREE OF EXCLUSIVITY
The parties should see each other as preferred partners, which does not exclude
other partnerships.
DEMO SYSTEM
CellPoint have the possibility to buy the hardware and third party software and
AUS will provide free of charge AviSIM OTA software to operate a demo system.
Any requested AUS support activity would be charged. AUS will provide training
free of charge to allow CellPoint sales staff to operate the demo system.
COMMITMENTS OF AUS
- -- Include CellPoint's name as a partner in all marketing materials.
- -- Include the CellPoint System, wherever appropriate, in general marketing
activities and programs.
- -- Co-ordinate sales activities with CellPoint
COMMITMENTS OF CELLPOINT
- -- Include AviSIM OTA, wherever appropriate, in general marketing activities
and programs.
- -- Co-ordinate sales activities with AUS.
- --------------------------------------------------------------------------------
Memorandum of Understanding 3
<PAGE>
LENGTH AND RENEWAL OF MOU
This MoU shall become effective, as of the date of the signature by both parties
written below and shall continue until a replacement agreement has been signed
between the parties or until December 31, 1999.
TERMINATION OF MOU
Either party can terminate this MoU at any time.
This contract has been drawn up in two identical copies and duly signed
accordingly:
Sollentuna 17/2 1999 Stockholm 17/2 1999
CELLPOINT SYSTEMS AB AU-SYSTEM MOBILE AB
/s/ PETER HENRICSSON /s/ ANDERS HARDEBRING
- ----------------------------- --------------------------------
Peter Henricsson Anders Hardebring
Chairman Executive Vice President
- --------------------------------------------------------------------------------
Memorandum of Understanding 4
<PAGE>
Exhibit 10-11
WASP INTERNATIONAL (PROPRIETARY) LIMITED SALE OF BUSINESS
AGREEMENT
between
WASP INTERNATIONAL (PROPRIETARY) LIMITED
(REG. NO 93/00271/07)
and
WASP S.A. (PROPRIETARY) LIMITED
(REG NO. 99/06789/07)
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
NO CLAUSE PAGE NO
- -------------------------------------------------------------------------
<S> <C> <C>
1 DEFINITIONS 2
2 PREAMBLE 6
3 SUSPENSIVE CONDITION 7
4 SALE 8
5 EFFECTIVE DATE ACCOUNTS AND ADJUSTMENT ACCOUNT 9
6 PURCHASE PRICE AND PAYMENT 13
7 CREDITORS AND LIABILITIES OF THE BUSINESS 13
8 DELIVERY 15
9 OWNERSHIP, RISK AND BENEFIT 16
10 ASSIGNMENT OF CONTINUING CONTRACTS
AND IMPROVEMENTS IN THE WGT 17
11 LEASED ASSETS 20
12 WARRANTIES 21
13 EMPLOYEES OF THE BUSINESS 21
14 GOOD FAITH 23
15 PAYMENTS 23
16 BREACH 24
17 THE INSOLVENCY ACT, 1936 25
18 CONFIDENTIALITY AND PUBLIC ANNOUNCEMENTS 25
19 ARBITRATION 26
20 DOMICILIUM CITANDI ET EXECUTANDI 27
21 INTERPRETATION 29
22 GENERAL 30
23 COSTS 31
</TABLE>
<PAGE>
SCHEDULES
<TABLE>
<S> <C>
SCHEDULE 1 : DESCRIPTION OF THE BUSINESS
SCHEDULE 2 : CONTRACTS
SCHEDULE 3 : FIXED ASSETS
SCHEDULE 4 : EXCLUDED ASSETS
SCHEDULE 5 : VALUES OF CERTAIN ASSETS OF THE BUSINESS
SCHEDULE 6 : LEASED ASSETS
SCHEDULE 7 : EMPLOYEES NOT TO BE TRANSFERRED IN TERMS OF
CLAUSE 13 OF THE AGREEMENT
SCHEDULE 8 : THE WGT
</TABLE>
1
<PAGE>
2
1 DEFINITIONS
In this agreement, unless the context requires 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 "Agreement" means this agreement and all the
schedules hereto;
1.2 "Assets" means all the assets used in or in
connection with the Business which the
Seller is selling to the Purchaser in
terms of this agreement and which are
described more fully in 4.4;
1.3 "Business" means the business referred to in 2.2 and
more fully described in SCHEDULE 1 and
includes the Assets owned by the Seller
in connection with the Business, but
excludes the Excluded Assets;
1.4 "Business Day" means any day other than a Saturday,
Sunday or public holiday in the RSA,
within the meaning of the Public Holidays
Act of the RSA, 1994;
1.5 "Completion Date" means the date set out in 6.2;
1.6 "Contracts" means all the contracts listed in
SCHEDULE 2;
1.7 "Effective Date" means 1 March 1999;
<PAGE>
3
1.8 "Effective Date Accounts" means the unaudited financial statements
of the Seller in respect of the Business
for the period commencing on 1 March 1998
and ended on 28 February 1999, to be
prepared by the Seller's auditors on the
basis set out in 5.1;
1.9 "ETSI" means the European Telecommunications
Standards Institute;
1.10 "Excluded Assets" means the assets of the Business that the
Seller is not selling to the Purchaser in
terms of this Agreement, in SCHEDULE 4;
1.11 "Fixed Assets" means all the motor vehicles, furniture,
fittings and equipment, plant and
machinery of the Business as at the
Effective Date, listed in SCHEDULE 3;
1.12 "GSM" means the global system for mobile
communication as defined in the ETSI
standards;
1.13 "Liabilities" means all the liabilities of the Seller
in respect of the Business as shown in
the Effective Date Accounts, even if the
invoice or other form of voucher for that
liability is only received after the
Effective Date, but such liabilities
shall not include -
<PAGE>
4
1.13.1 any liability for the payment by the
Seller of any tax, duty or levy imposed
by the Income Tax Act, 1962 or imposed by
any other law administered by the
Commissioner for Inland Revenue or
imposed by any other fiscal or revenue
laws;
1.13.2 any liability which arises or which has
arisen other than in the normal and
ordinary course of the operation of the
Business;
1.13.3 any liability arising out of a
contravention of any law (including,
without being limited to, any regulation,
standard, order, judgement, decree and
other governmental or administrative
requirements having the force of law) by
the Seller in relation to the Business;
1.14 "Prime Rate" means the basic quoted lending rate of
interest at which Nedbank Limited 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;
1.15 "Purchaser" means Wasp S.A. (Proprietary) Limited
(Reg No 99/06789/07), a private company
with limited liability
<PAGE>
5
incorporated under the laws of the RSA;
1.16 "RSA" means the national territory of the
Republic of South Africa comprising the
nine provinces identified in section 103
of the Constitution of the Republic of
South Africa, 1996;
1.17 "Seller" 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 "Signature Date" means the date upon which both 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;
1.19 "Technor" means Technor International Inc, a
corporation registered in Nevada, United
States of America with an office at
Satraangsvagen 88, S-18237 Danderyd,
Sweden;
1.20 "Territory" means all those countries or territories
on the African continent whose sovereign
territory or any part thereof lies South
of the Sahara Desert;
<PAGE>
6
1.21 "WGT" means all the GSM technologies or
products owned or developed by the Seller
as at the Signature Date, including but
not being limited to vehicle tracking
systems, terminal units, communication
processes (including computer operated
programs), 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 of
any system developed and made available
for commercial exploitation by the
Seller, more fully described in
SCHEDULE 8.
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, namely:
2.1 the Seller is involved in the communications and technology
industry, focussing primarily on the development of proprietary GSM
technologies, and has become a leading South African company in this
area;
<PAGE>
7
2.2 the Seller, in order to properly exploit the technologies that is
has developed and the intellectual property rights that it owns,
intends restructuring its business affairs;
2.3 one of the steps in the restructure referred to in 2.2 involves the
Seller selling its Business to the Purchaser;
and the parties have accordingly agreed to provide, in this Agreement,
for the basis upon which the Purchaser will acquire from the Seller the
Business as a going concern.
3 SUSPENSIVE CONDITION
3.1 This Agreement is subject to the suspensive condition that the board
of directors of the Purchaser approves the transaction contemplated
in this Agreement by no later than 31 May 1999 or such later date as
the parties may agree to in writing.
3.2 If the suspensive condition in 3.1 remains unfulfilled on or before
the date stipulated in 3.1 or such later date as the parties may
agree upon in writing pursuant to 3.1, this Agreement shall not come
into force or effect. In such event, neither party shall have any
claim against the other party by virtue of the provisions of this
Agreement.
4 SALE
4.1 The Seller hereby sells to the Purchaser, which purchases from the
Seller, the Business (together with all the Assets thereof, but
excluding the Excluded Assets) as a going concern, with effect from
the Effective Date on the terms and conditions set out in this
Agreement.
<PAGE>
8
4.2 The Seller and the Purchaser agree that:
4.2.1 the enterprise being transferred in terms of this Agreement from the
Seller to the Purchaser will constitute an income earning activity
on the Effective Date and on the Completion Date;
4.2.2 since all the Assets necessary to carry on the enterprise being
transferred by the Seller to the Purchaser in terms of this
Agreement will be so transferred,
the transfer of Assets and Liabilities contained in this Agreement
falls within the ambit of section 11(1)(e) of the Value-Added Tax
Act, 1991 and therefore VAT is payable at the rate of zero per cent.
4.3 Each of the Seller and the Purchaser respectively warrants to the
other that it will, on the Signature Date and on the Completion
Date, be registered as vendors in terms of the Value-Added Tax Act,
1991.
4.4 The Assets sold by the Seller to the Purchaser in terms of 4.1
consist, subject to 4.4.8 and 4.4.9, of all the assets of the
Business at the Effective Date, including but not limited to:
4.4.1 all the intellectual property rights and know-how owned by the
Business and relating to the WGT in the Territory;
4.4.2 the Fixed Assets;
4.4.3 cash-on-hand and cash-at-bank;
4.4.4 the Contracts;
<PAGE>
9
4.4.5 the goodwill of the Business; and
4.4.6 all other assets used in connection with the day to day operations
of the Business,
but specifically excluding:
4.4.7 all assets not utilised by the Seller in connection with the day to
day operations of the Business;
4.4.8 the Excluded Assets all of which are listed in SCHEDULE 5.
5 EFFECTIVE DATE ACCOUNTS AND ADJUSTMENT ACCOUNT
5.1 The Seller shall at its own cost and expense, which shall be fully
provided for in the Effective Date Accounts, procure that its
auditors audit the books and records of the Business and prepare the
Effective Date Accounts, as soon as reasonably possible after the
Effective Date, but in any event, by no later than 1 Business Day
after the Signature Date.
5.2 The Seller warrants in favour of the Purchaser and undertakes to
procure that:
5.2.1 the Effective Date Accounts shall:
5.2.1.1 reflect all the Assets and all the Liabilities of the Seller in
respect of the Business at the Effective Date;
<PAGE>
10
5.2.1.2 be drawn up in accordance with generally accepted accounting
practice;
5.2.1.3 comply with the provisions of the Companies Act, 1973 and all other
applicable laws;
5.2.1.4 include adequate provisions for all the Liabilities;
5.2.1.5 save as required in terms of the provisions of this Agreement, be
prepared on the basis of accounting policies which were used in the
preparation of the audited annual financial statements of the Seller
for its financial year ended 28 February 1999 and except to the
extent required by changes in South African generally accepted
accounting practice since the date of the last audited annual
financial statements;
5.2.1.6 fairly reflect the financial position, affairs, operations and
results of the Business as at the Effective Date;
5.2.1.7 be signed by the Seller's auditors, without any qualification;
5.2.2 true copies of the Effective Date Accounts will be delivered to the
Purchaser as soon as possible after their completion, but in any
event by no later than 1 Business Day after the Signature Date.
5.3 In addition, the Seller shall at its cost and expense procure that,
simultaneously with the preparation of the Effective Date Accounts,
that its auditors prepare an adjustment account, subject to the
provisions of 5.2.1.5, which shall reflect:
<PAGE>
11
5.3.1 all prepayments of interest, taxation, rates, electricity, water,
metropolitan substructure charges, insurance and the like made by
the Seller in respect of the Business PRIOR to the Effective Date in
respect of any period AFTER the Effective Date if such asset was not
taken into account in arriving at the purchase price of the
Business, as at the Effective Date, which amount shall be credited
in the adjustment account to the Seller; and
5.3.2 all prepayments of interest, taxation, rates, electricity, water,
metropolitan substructure charges, insurance and the like made by
the Purchaser in respect of the Business AFTER the Effective Date in
respect of any period PRIOR to the Effective Date if such asset was
not taken into account in arriving at the purchase price of the
Business, as at the Effective Date, which amount shall be credited
in the adjustment account to the Purchaser.
5.4 Amounts credited to the Seller and the Purchaser pursuant to 5.3.1
and 5.3.2 respectively, shall be set-off against each other and:
5.4.1 if there is a credit balance in favour of the Purchaser, then the
purchase price in 6 shall be reduced by an amount equal to such
balance; or
5.4.2 if there is a credit balance in favour of the Seller, then the
purchase price in 6 shall be increased by an amount equal to such
balance.
5.5 If an amount is owing by:
5.5.1 the Seller to the Purchaser pursuant to 5.4.1, such amount shall be
due and payable by the Seller to the Purchaser by telegraphic
transfer into a current account to be designated by the Purchaser
for that purpose; or
5.5.2 the Purchaser to the Seller pursuant to 5.4.2, such amount shall be
due and payable by the Purchaser by telegraphic transfer into the
<PAGE>
12
Seller's current account to be designated by the Seller for that
purpose, within 10 Business Days after the Seller's auditors shall
have issued a certificate stipulating what amount is due and payable
by either the Seller or the Purchaser pursuant to the provisions of
5.3 and 5.4 and shall have delivered that certificate to both the
Seller and the Purchaser.
5.6 For the purposes of the Effective Date Accounts, the Assets shall,
subject to 5.2.1.2, be reflected at the following values:
5.6.1 the value of each item of the Fixed Assets referred to in 4.4.2 and
the other assets referred to in 4.4.6 shall be its book value at the
Effective Date, unless and to the extent indicated otherwise in
SCHEDULE 5;
5.6.2 the value of the Contracts referred to in 4.4.4 shall be the value
reflected in SCHEDULE 5;
5.6.3 the value of the goodwill referred to in 4.4.5, shall be the value
reflected in SCHEDULE 5.
5.7 For the purposes of 5.6.1, the "book value" of any asset shall be
the written-down value of the asset in the Seller's books after
allowing for depreciation up to the Effective Date to the extent
which such depreciation has been and will be allowed as a deduction
for tax purposes.
6 PURCHASE PRICE AND PAYMENT
6.1 The purchase price to be paid by the Purchaser to the Seller in
respect of the Business shall be R 1,00.
<PAGE>
13
6.2 The purchase price in 6.1 shall be paid by the Purchaser to the
Seller:
6.2.1 once the suspensive conditions in 3 have been fulfilled;
6.2.2 the Effective Date Accounts have been delivered to the Purchaser in
accordance with 5.1 ("the Completion Date"), in cash provided that if
any amount is due by the Seller to the Purchaser on that date in terms
of 5.3.1 then such amount shall be deducted from the purchase price in
6.1 and the balance, if any, shall be paid to the Seller.
7 CREDITORS AND LIABILITIES OF THE BUSINESS
7.1 Subject to 7.2, the Purchaser shall assume and discharge all the
Liabilities which are reflected in the Effective Date Accounts.
7.2 Notwithstanding anything to the contrary anywhere else in this
Agreement :
7.2.1 the Purchaser shall also assume and discharge any and all
liabilities of the Business (or any part thereof) which are not
reflected in the Effective Date Accounts and which cause of action
arose prior to the Effective Date, provided that the Purchaser's
total obligations and liabilities in terms of this 7.2.1 and 7.2.3
shall in no circumstances whatsoever exceed the sum of R 350 000,00;
7.2.2 the Purchaser shall, from the Completion Date, assume all the
obligations and liabilities of the Seller in connection with Matrix
Vehicle (Tracking) Proprietary Limited;
<PAGE>
14
7.2.3 the Purchaser shall, from the Completion Date, assume all the
obligations and liabilities of the Seller in connection with any
sale of technology agreement concluded between the Seller and a
third party ("the Third Party") relating the WGT ("the Sale of
Technology Agreement");
7.2.4 The Third Party shall be entitled to cede to any other person all of
its rights in terms the Sale of Technology Agreement against the
Seller and that such person shall accordingly be:
7.2.4.1 deemed to be a third party beneficiary of the obligations of the
Purchaser in terms of the Sale of Technology Agreement;
7.2.4.2 to pursue against the Purchaser any claims that such person may have
in connection with the representations, warranties and covenants
made by the Seller to the Third Party in the Sale of Technology
Agreement.
7.2.5 shall be construed so as to relieve the Seller from the payment of
any tax, duty or levy imposed by the Income Tax Act, 1962 or imposed
by any other law administered by the Commissioner for Inland Revenue
or imposed by any other fiscal or revenue laws, provided that the
Purchaser shall reimburse the Seller for such tax amount as may be
levied for the period between the Effective Date and the Completion
Date against receipt of the relevant asssessment.
7.3 The Purchaser indemnifies the Seller and holds it harmless against
all the Liabilities shown in the Effective Date Accounts and subject
to the proviso in 7.2.1, against all other liabilities referred to
in 7.2 and against any demand, claim, action or other legal
proceedings made or instituted against the Seller in respect of any
of such
<PAGE>
15
liabilities, and against all costs incurred by the Seller or awarded
against it in respect of any such demand, claim, action or other
legal proceedings.
7.4 Without prejudice to the provisions of 8.1.2, the Seller or its
representatives shall be entitled to make copies of the books of
account of the Business to such extent as the Seller may reasonably
require from time to time, for the purposes of monitoring the way in
which the Purchaser discharges its obligations under this clause 7.
8 DELIVERY
8.1 On the Completion Date:
8.1.1 each item of the Fixed Assets referred to in 4.4.2, the cash-on-hand
and cash-at-bank referred to in 4.4.3 and the other assets referred
to in 4.4.6 shall be delivered by the Seller to the Purchaser at the
premises at which they are located on that date;
8.1.2 or as soon thereafter as is reasonably possible, the Seller shall
deliver to the Purchaser all the Contracts, books, records and other
documents of the Business as at the Effective Date provided that:
8.1.2.1 insofar as the Seller is obliged in law to retain any such book,
record or document then he shall deliver a photocopy thereof to the
Purchaser;
8.1.2.2 if the Seller requires to make copies of or to inspect any such
book, record or document after the Effective Date then it shall be
entitled to do so during normal business hours upon giving the
Purchaser
<PAGE>
16
reasonable written notice to that effect, provided that such book,
record or document relates to the operations of the Business prior
to the Effective Date.
9 OWNERSHIP, RISK AND BENEFIT
9.1 All risk and benefit in the Assets and the Business shall pass from
the Seller to the Purchaser on the Effective Date.
9.2 Notwithstanding delivery in terms of 8 and the passing of the risk
referred to in 9.1, the ownership of the Assets and the Business
shall only pass from the Seller to the Purchaser on the Completion
Date.
9.3 The parties record that the Seller will continue to operate the
Business during the period between the Effective Date and the
Completion Date as agent for and on behalf of the Purchaser, and
between the Seller and the Purchaser INTER SE, the Purchaser would
subject always to the provisions of 9.4 and 9.5, be put in the same
position as that in which the Purchaser would have been, had the
transfer of the Assets of the Business physically taken place on the
Effective Date.
9.4 Any profit made or any loss suffered or liability incurred by the
Business during the period between the Effective Date and the
Completion Date shall be for the Purchaser's sole benefit and
account provided that the Purchaser shall not be liable for any loss
if any of the assets of the Business are sold or otherwise disposed
of during the period between the Effective Date and the Completion
Date without the prior written approval of the Purchaser.
<PAGE>
17
9.5 The Purchaser hereby indemnifies the Seller and holds it harmless
against any claim which may be instituted by any third party against
the Seller for any loss or damage or liability incurred by any such
third party during the period after the Effective Date insofar as
the carrying on of the Business during the period after the
Effective Date is concerned
10 ASSIGNMENT OF CONTINUING CONTRACTS AND IMPROVEMENTS IN THE WGT
10.1 For the purposes of this clause 10, "Continuing Contract", in
relation to the Business, means the ongoing Contracts entered into
by the Seller with third parties for the purposes of the Business.
10.2 The Seller shall, subject to 10.4, be obliged to assign to the
Purchaser with effect from the Effective Date, all its rights and
obligations under every Continuing Contract, and the Purchaser shall
be obliged to accept the assignment of all those rights and
obligations under each such Continuing Contract.
10.3 Each party shall be obliged to enter into all such agreements and
sign all such documents and do all such things as may reasonably be
required of it to give effect to the provisions of 10.2.
10.4 Where any other party to any Continuing Contract assigned to the
Purchaser in terms of 10.2 does not consent to its assignment then:
10.4.1 the Purchaser shall carry out the Seller's obligations under the
Continuing Contract in question, as if the Purchaser were a
subcontractor to the Seller, and shall be entitled to all of the
Seller's rights and benefits under the Continuing Contract in
question;
<PAGE>
18
10.4.2 if the terms of the Continuing Contract do not permit the provisions
of 10.4.1 to be carried into effect, then the Purchaser and the
Seller shall co-operate with each other in a lawful manner to enable
the objects of this clause 10 to be achieved with respect to the
contract in question.
10.5 The Purchaser hereby indemnifies the Seller and holds it harmless
against any claim or loss instituted or asserted by any third party
against the Seller for any loss or damage or liability incurred by
or to such third party with respect to the conduct of the Business
after the Effective Date, but only in respect of any claims, the
cause of action of which will have arisen before the Effective Date,
provided that the Purchaser shall not be obliged to indemnify the
Purchaser against any liability of the Seller which is included
among the Liabilities as shown in the Effective Date Accounts and
provided further that the Purchaser's total obligations and
liabilities in terms of this 7.2.1 and 7.2.3 shall in no
circumstances whatsoever exceed the sum of R 350 000,00.
10.6 Should either the Purchaser or the Seller, or any employee of the
Purchaser or the Seller or anyone else under the Purchaser's or the
Seller's control or working in association with the Purchaser or the
Seller, as the case may be ("the Discovering Party"), make or
discover any improvement relating to the WGT and capable of
commercial exploitation:
10.6.1 the Discovering Party shall be obliged to notify the other party
thereof ("the Receiving Party") as soon as is reasonably possible
under the circumstances and to make the relevant know-how,
technology and related intellectual property ("the New Intellectual
Property") available for exploitation to the Receiving Party free of
any royalty, charge or fee of whatsoever nature, provided that the
Receiving Party:
<PAGE>
19
10.6.1.1 should such party be the Purchaser, shall only be entitled to
exploit the New Intellectual Property in the Territory;
10.6.1.2 should such party be the Seller, shall only be entitled to exploit
the New Intellectual Property in countries and territories not in
the Territory; and
10.6.2 if the improvement in question is an invention capable of being
registered as a patent, then:
10.6.2.1 the Discovering Party shall have the right to apply at its cost for
letters patent therefor in the RSA, the Territory and in all other
countries of the world;
10.6.2.2 any letters patent issued in respect of the invention shall be and
remain the Discovering Party's sole property, subject always to the
Receiving Party's right of use and exploitation in terms of 10.6.1.
11 LEASED ASSETS
11.1 The Seller, insofar as it is able to do so, hereby cedes all of its
rights and delegates all of its obligations under the leases of
assets and instalment sale agreements set out in SCHEDULE 6 to the
Purchaser with effect from the Effective Date and the Purchaser
accepts such assignments, provided that should the lessor in respect
of any such lease or the credit grantor in respect of any such
instalment sale agreement, as the case may be, not consent to the
assignment of that lease or instalment sale, as the case may
<PAGE>
20
be, to the Purchaser, then the Seller shall, subject to 12.2,
sub-let the assets in question to the Purchaser at the same rental
and on the same terms and conditions, mutatis mutandis, as provided
for in the lease(s) between the lessor(s) in question and the Seller
(in the case of the leases) or as provided for in the instalment
sale agreement(s) between the creditor grantor(s) and the Seller (in
the case of instalment sale agreements).
11.2 If the terms of any one or more of the leases or instalment sale
agreements, as the case may be, do not permit the provisions of 11.1
to be carried into effect, then the Purchaser and the Seller shall
co-operate with each other in a lawful manner to enable the objects
of this clause 11 to be achieved with respect of the contract in
question.
12 WARRANTIES
The parties agree and record that the Seller gives the Purchaser no
warranties and makes no representations in connection with the Assets,
and that the Assets are accordingly sold voetstoots, that is "as is".
13 EMPLOYEES OF THE BUSINESS
13.1 It is recorded that all the employees of the Business who were in
the Seller's employment on the Effective Date (save for the
employees in SCHEDULE 7 who are to remain in the Seller's employ,
"the Employees") will be employed by the Purchaser in accordance
with the relevant provisions of the Labour Relations Act, 1995 ("the
Labour Relations Act") on terms and conditions of employment and
employment benefits which will be substantially the same as the
terms and conditions and employment benefits which applied to the
Employees immediately prior to the Effective Date.
<PAGE>
21
13.2 The Purchaser undertakes to the Seller that it will:
13.2.1 recognise and give effect to the length of service and service
record of each of the Employees for the purposes of any awards for
long service by the Purchaser at any time after the Effective Date;
13.2.2 assume all the liabilities relating to leave pay and bonus pay and
any other incentives or benefits which are not paid monthly and
which are due to the Employees, provided that such liabilities are
fully provided for in the Effective Date Accounts; and
13.2.3 assume all the liabilities relating to the costs incurred and
amounts to be paid in respect of the retrenchment of any of the
Employees who are retrenched by the Purchaser after the Effective
Date.
13.3 The Purchaser hereby indemnifies and holds the Seller harmless
against all the costs referred to in 13.2.2 and 13.2.3 and
undertakes forthwith upon receipt of a written request from the
Seller, to pay such amount(s) to the Seller, where The Seller has
paid any such amount on the Purchaser's behalf.
13.4 The Seller shall remain liable for and shall pay to each of the
Employees all amounts which are payable to the Employees up to the
termination of his or her service contract with the Seller but
excluding any amount referred to in 13.2.2 and 13.2.3. The Seller
hereby warrants and represents to the Purchaser that the Effective
Date Accounts shall include full and adequate provisions for all
liabilities directly or indirectly associated with every Employee
insofar as wages, accrued leave pay or any other compensation,
remuneration or fringe benefits in respect of the period up to and
including the Effective Date are concerned.
<PAGE>
22
13.5 The Seller confirms having notified and, where legally obliged to do
so, having consulted with the Employees in relation to the disposal
of the Business prior to the Effective Date.
13.6 If required by the Labour Relations Act, the Purchaser shall submit
to each of the Employees a written offer for the purpose of giving
effect to the requirements of 13.1, which written offer shall be
submitted to the Employees as soon as possible after the Seller
gives its notice of termination to them. The Seller shall use its
best endeavours to ensure that the Employees will accept the offers
of employment to be made to them by the Purchaser.
13.7 The Purchaser shall have free access to all of the Employees during
the period from the Signature Date to the Completion Date in order
to consult with them about the offers of employment to be made to
them and their future employment with the Purchaser after the
Completion Date. The Seller shall provide all such assistance as the
Purchaser may reasonably require to make such access possible.
13.8 The parties shall communicate and liaise with each other and
generally co-operate with each other so as to ensure as far as
possible an orderly transfer of the services of the Employees who
accept the Purchaser's offer of employment if such procedure is
required or are transferred automatically pursuant to the provisions
of the Labour Relations Act from the service of the Seller to the
service of the Purchaser, as the case may be, and to consult where
necessary with any trade unions or other representative bodies who
may need to be consulted for that purpose.
13.9 The provisions of this clause 13 are not intended as a STIPULATIO
ALTERI in favour of any transferring Employee and shall not operate
to create any rights in favour of any person who is not a party to
this Agreement.
<PAGE>
23
14 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 it shall neither do anything nor
refrain from doing anything which might prejudice or detract from the
rights, assets or interests of the other party.
15 PAYMENTS
15.1 All payments to be made by either party to the other in terms of
this Agreement shall be made free of bank and other charges.
15.2 If any amount payable by either party is not paid on its due date
then, in addition and without prejudice to any other remedies, the
amount of the payment or any balance outstanding from time to time
shall bear interest at Prime Rate (compounded monthly in arrear)
from the date it falls due until it is discharged in full.
16 BREACH
16.1 The Seller shall be entitled to cancel this Agreement summarily by
giving written notice to that effect to the other parties if the
Purchaser fails to pay on due date any amount which becomes due and
payable in terms of 6.1 and remains in default for 14 days after
receiving written notice from the Seller to remedy the default.
16.2 Should the Purchaser commit any other breach of this Agreement, the
Seller 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
<PAGE>
24
reasonable time after the Purchaser receives written notice from the
Seller to remedy the breach.
16.3 Should the Seller 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
Seller receives written notice from the Purchaser to remedy the
breach.
16.4 The remedies of each party in terms of this clause 16, 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.
17 THE INSOLVENCY ACT, 1936
17.1 The parties agree that notice of this transaction will not be
published in accordance with the requirements of Section 34 of the
Insolvency Act, 1936.
17.2 The Seller hereby indemnifies the Purchaser and holds the Purchaser
harmless against any claim of any nature which may be made against
the Purchaser or against any loss or damage of any nature whatsoever
which the Purchaser may suffer as a result of the non- publication
of the notices referred to in 17.1.
18 CONFIDENTIALITY AND PUBLIC ANNOUNCEMENTS
18.1 Neither party shall make any public announcement or statement about
this Agreement or its contents without first having obtained the
other's prior written consent (which may not be unreasonably
withheld) to the announcement or statement and to its contents.
<PAGE>
25
18.2 The provisions of 18.1 shall not apply to any announcement,
statement or disclosure which any of the parties is obliged to make
by virtue of shares of its holding company or any of its
subsidiaries being listed on any stock exchange, provided that the
party in question shall consult with the other before making any
announcement, statement or disclosure contemplated in this clause
18.2.
18.3 Notwithstanding anything to the contrary anywhere else in this
clause 18, any the Seller shall be entitled to notify its customers
and suppliers of this Agreement and its consequences at any time
after the first public announcement has been made by either party in
accordance with the requirements of this clause 18.
19 ARBITRATION
19.1 Any dispute arising out of this Agreement or the interpretation
thereof, both while in force and after its termination, shall be
submitted to and determined by arbitration. Such arbitration shall
be held in Johannesburg unless otherwise agreed to and shall be held
in a summary manner with a view to it being completed as soon as
possible.
19.2 There shall be one arbitrator who shall be, if the question in issue
is:
19.2.1 primarily an accounting matter, an independent chartered accountant
of not less than 15 years' experience as such;
19.2.2 primarily a legal matter, a practising senior counsel or retired
judge of the High Court of South Africa;
19.2.3 primarily a technical matter, a suitably qualified person; and
<PAGE>
26
19.2.4 any other matter, a suitably qualified person.
19.3 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
Arbitration Foundation of Southern Africa to make the appointment
who, in making his appointment, shall have regard to the nature of
the dispute.
19.4 The arbitrator shall have the powers conferred upon an arbitrator
under the Arbitration Act, 1965, as amended, or re-enacted in some
other form from time to time, but shall not be obliged to follow the
procedures described in that Act and shall be entitled to decide on
such procedures as he may consider desirable for the speedy
determination of the dispute, and in particular he shall have the
sole and absolute discretion to determine whether and to what extent
it shall be necessary to file pleadings, make discovery of documents
or hear oral evidence.
19.5 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
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.
20 DOMICILIUM CITANDI ET EXECUTANDI
20.1 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:
<PAGE>
27
20.1.1 the Seller: Lakeside Place
1 Ernst Oppenheimer Drive
Bruma Lake
Johannesburg
2198
Telefax :(011) 622-8973
20.1.2 the Purchaser: Lakeside Place
1 Ernst Oppenheimer Drive
Bruma Lake
Johannesburg
2198
Telefax :(011) 622-8973
20.2 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.
20.3 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.
20.4 Any notice to a party contained in a correctly addressed envelope
and:
20.4.1 sent by prepaid registered post to it at its chosen address; or
20.4.2 delivered by hand to a responsible person during ordinary business
hours at its chosen address,
<PAGE>
28
shall be deemed to have been received, in the case of 20.4.1, on the
seventh business day after posting (unless the contrary is proved)
and, in the case of 20.4.2, on the day of delivery.
20.5 Any notice by telefax to a party at its telefax number shall be
deemed, unless the contrary is proved, to have been received within
24 hours of transmission where it is transmitted during normal
business hours or within 24 hours of the opening of business on the
first business day after it is transmitted where it is transmitted
outside those business hours.
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 or unincorporate) and vice versa;
21.1.4 the headings have been inserted for convenience only and shall not
be used for nor assist or affect the interpretation of this
Agreement.
21.2 If any definition contains a substantive provision conferring rights
or imposing obligations on anyone, effect shall be given to it as if
it were a substantive provision in the body of this Agreement.
<PAGE>
29
21.3 Any reference to an enactment is to that enactment as at the date of
signature of this Agreement and as amended or re-enacted from time
to time.
21.4 When any number of days is prescribed in this Agreement, such 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 the RSA, in which case the last day shall be the
next succeeding day which is not a Saturday, Sunday or public
holiday.
21.5 Expressions defined in this Agreement shall bear the same meanings
in Schedules to this Agreement which do not themselves contain their
own definitions.
21.6 Where any term is defined within the context of any particular
clause in this Agreement, the term so defined, unless it is clear
from the clause in question that the term so defined has limited
application to the relevant clause, shall bear the meaning ascribed
to it in that clause, for all purposes in terms of this Agreement,
notwithstanding that that term has not been defined in 1.
22 GENERAL
22.1 This document and the Schedules to it contain the entire Agreement
between the parties.
22.2 If any clause or term of this Agreement should be invalid,
unenforceable or illegal, then the remaining terms and provisions of
this Agreement shall be deemed to be separate and severable
therefrom, and shall continue in full force and effect unless such
invalidity, unenforceability or illegality goes to the root of this
Agreement.
<PAGE>
30
22.3 No party shall have any claim or right of action arising from any
undertaking, representation or warranty not included in this
document.
22.4 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.
22.5 No agreement to vary, add to or cancel this Agreement shall be of
any force or effect unless reduced to writing and signed by or on
behalf of the parties to this Agreement.
22.6 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 party.
22.7 Each party warrants that it is acting as a principal and not as an
agent for an undisclosed principal.
23 COSTS
Each party shall bear its own costs of and incidental to the negotiating,
drafting and preparation of this Agreement.
31
<PAGE>
SIGNED at Bruma on the May 13 1999
------- --------
For: WASP INTERNATIONAL
(PROPRIETARY) LIMITED
/s/ ALBERT VAN URK
-----------------------------
Signatory : Albert van Urk
Capacity : Director
Authority :
<PAGE>
32
SIGNED at Bruma on the May 13 1999
------- --------
For: WASP S.A. (PROPRIETARY)
LIMITED
/s/ GUY REDFORD
-----------------------------
Signatory :
Capacity : Director
Authority : Board
<PAGE>
SCHEDULE 1
DESCRIPTION OF THE BUSINESS
<PAGE>
SCHEDULE 2
CONTRACTS
<PAGE>
SCHEDULE 3
FIXED ASSETS
<PAGE>
SCHEDULE 4
EXCLUDED ASSETS
1 ASSETS NOT UTILISED IN CONNECTION WITH DAY TO DAY OPERATIONS OF
THE BUSINESS
2 ASSETS SPECIFICALLY EXCLUDED FROM SALE
<PAGE>
SCHEDULE 5
VALUES OF CERTAIN ASSETS OF THE BUSINESS
1 FIXED ASSETS
2 CONTRACTS
3 GOODWILL
<PAGE>
SCHEDULE 6
LEASED ASSETS
1 LEASE AGREEMENTS
2 INSTALMENT SALE AGREEMENTS
<PAGE>
SCHEDULE 7
EMPLOYEES NOT TO BE TRANSFERRED IN TERMS OF CLAUSE 13 OF AGREEMENT
<PAGE>
SCHEDULE 8
THE WGT
<PAGE>
EXHIBIT 10.12
PROJECT AGREEMENT
This project agreement (this "Agreement") is made and entered into by and
between
1. CellPoint Systems AB, with an address for purposes of this Agreement at
Sofielundsvagen 4, 191 47 Sollentuna ("CP"), and
2. Tele2 AB, with an address for purposes of this Agreement at Box 62, 164 94
Kista ("Tele2").
CP and Tele2 are hereinafter individually referred to as "Party" and they are
jointly referred to as the "Parties".
1. BACKGROUND
1.1 CP has developed a system enabling GSM-based positioning and telematics
(the "CellPoint System"). The CellPoint System is described in the
CellPoint System Technical Description (APPENDIX 1).
1.2 Tele2 is licensed to operate mobile communications services in Sweden.
1.3 Tele2 has decided to launch commercial positioning services to its
customers based on the CellPoint System after a Quotation from CP (APPENDIX
2). Tele2's positioning services are described in the Product Description
(APPENDIX 3). The implementation of Tele2's positioning services are
described in the Implementation Project Definition (APPENDIX 4).
1.4 CP and Tele2 are interested in jointly carrying out a project in order to
implement Tele2's positioning services (the "Implementation Project") and
to negotiate the detailed terms and conditions of a commercial agreement
(the "Commercial Agreement").
1.5 In consideration of the foregoing, the Parties have agreed the following:
2. SCOPE OF THE AGREEMENT
2.1 The scope of this Agreement is to regulate the relationship and the
activities between CP and Tele2 during the Implementation Project. The aim
is to conclude all necessary preparations before the commercial launch of
Tele2's positioning services as described in the Product Description. The
Parties shall jointly
<PAGE>
2
determine the specifications and the evaluation criteria to test the
performance and capacity of the Tele2's Positioning services as described
in the Product Description. The target date for internal launch of Tele2's
positioning services is June 1, 1999.
2.2 Further, in parallel with the Implementation Project, CP and Tele2 shall
negotiate the detailed terms and conditions of, and execute as
expeditiously as possible, the Commercial Agreement, which shall be based
on the Quotation.
3. THE DIVISION OF RESPONSIBILITIES AND COSTS
The division of responsibilities and costs between the Parties during the
Implementation Project shall be as specified in this Agreement and its
Appendices. As expeditiously as possible after the start of the
Implementation Project, the Parties shall agree on a project plan (the
"Project Plan") detailing the activities and the time schedule and sequence
of events for the performance of the Implementation Project.
4. COMMERCIAL AGREEMENT
4.1 This Agreement shall form the basis for the final Commercial Agreement and
the Parties shall use best efforts to conduct good faith negotiations on
the detailed terms and conditions of the Commercial Agreement. The
Commercial Agreement shall have an initial term of 24 months and it shall,
unless terminated by either party, be prolonged for consecutive 12-month
periods. [CONFIDENTIAL TREATMENT PURSUANT TO SECTION 24b-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934]
4.2 [CONFIDENTIAL TREATMENT PURSUANT TO SECTION 24b-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934]
5. INTELLECTUAL PROPERTY RIGHTS
<PAGE>
3
The CellPoint System, including any confidential information of CP and all
rights therein, including without limitation, any intellectual property
rights relating thereto, are owned solely by CP and no such rights are
granted and/or transferred to Tele2 pursuant to this Agreement. All CP's
trademarks, service marks, trade names, logos or other words or symbols are
and will remain the exclusive property of CP and any use by Tele2 of the
trademarks and/or logos of CP or the CellPoint System are subject to the
terms and conditions of the Commercial Agreement.
6. CONFIDENTIALITY
6.1 Neither Party shall use or divulge or communicate to any person (other than
those whose province it is to know the same or as permitted or contemplated
by this Agreement or with the written approval of the other Party or as may
be required by law or by any applicable stock exchange regulations):
(a) any confidential information concerning the systems, customers,
business, accounts, finance or contractual arrangements or other
dealings, transactions or affairs of the other Party which may come to
first Party's knowledge during the term of this Agreement; or
(b) any of the terms of this Agreement
and each Party shall use its best endeavours (i) to prevent the
unauthorised publication or disclosure of any such information, materials
or documents and (ii) to ensure that any person to whom such information,
materials or documents are disclosed by such Party is aware that the same
is confidential to the other Party.
6.2 Each Party shall ensure that its employees are aware of and comply with the
confidentiality and non-disclosure provisions contained in this Section and
shall indemnify the other Party against any loss or damage which the other
Party may sustain or incur as a result of any breach of confidence by any
of such Party's employees.
6.3 The provisions of this Section shall survive the termination of this
Agreement, but the restrictions contained in sub-section 6.1 shall cease to
apply to any information which may come into the public domain otherwise
than through unauthorised disclosure by either Party or their employees.
7. TERMINATION
7.1 Notwithstanding anything else contained herein, this Agreement may be
terminated by either Party forthwith on giving notice in writing to the
other if the other Party:
<PAGE>
4
(a) becomes insolvent or starts negotiations about composition with its
creditors or a petition in bankruptcy is filed by or against it or it
makes an assignment for the benefit of its creditors; or
(b) fails to fulfil any of its material obligations under this Agreement
and (in case of a failure capable of being remedied) remedial action
to correct such failure is not commenced within thirty (30) days from
having received a written request for such remedial action from the
first Party, which request specifically references the section of this
Agreement being breached and which explicitly states the first Party's
intention to terminate this Agreement pursuant to this sub-section
7.1(b) if such remedial action is not commenced within such thirty day
period.
7.2 Any termination of this Agreement (howsoever occasioned) shall not affect
any accrued rights or liabilities of either Party nor shall it affect the
coming into force or the continuance in force of any provision hereof which
is expressly or by implication intended to come into or continue in force
on or after such termination.
8. LIABILITY
Since the scope of this Agreement is to carry out the Implementation
Project and not to provide the CellPoint System for commercial use, the
Parties agree that neither Party shall be liable to the other Party or any
third party for any indirect damages or losses caused by, or related to,
the CellPoint System and/or either Party's performance (or non-performance)
of its obligations hereunder. The liability for direct damages between the
Parties to be limited to SEK 500,000. CP disclaims all warranties, either
express, implied or statutory warranties, including but not limited to the
warranties of design, merchantability or fitness for a particular purpose,
with respect to the CellPoint System. CP does not warrant, guarantee, or
make any representations regarding the use of, or the results of the use
of, the CellPoint System in terms of correctness, accuracy, reliability or
otherwise, and Tele2 relies on the Cell-Point System and its results solely
at Tele2s own risk. The Parties acknowledge that the limitations and
exclusions of liability are reasonable in the context of the arrangements
taken on a whole. This limitation of liability clause shall be renegotiated
when entering into the Commercial Agreement.
9. FORCE MAJEURE
9.1 Neither Party will be responsible for failure to fulfil its obligations due
to events of force majeure nor due to events beyond its control or due to
events beyond its sub-contractors' control.
<PAGE>
5
9.2 The events referred to in sub-section 9.1 include, but are by no way
limited to; partial or total strikes (either internal or external),
lock-out, inclemency, epidemic, blockage of means of transport or of
supplies for whatever reason, earthquake, fire, storm, flood, water damage
and governmental or legal restrictions.
10. SEVERABILITY
If a provision of this Agreement, or the application thereof to any person
or circumstance, shall for any reason or to any extent, be invalid or
unenforceable, such invalidity or enforceability shall not in any manner
affect or render invalid or unenforceable the remainder of this Agreement,
and the application of that provision to other persons or circumstances
shall not be affected but, rather, shall be enforced to the extent
permitted by law. In the event of the invalidity or unenforceability of any
provision of this Agreement or of the application thereof to any person or
circumstance, the Parties shall, at the request of either Party, negotiate
in good faith to agree on changes of amendments to this Agreement which are
required to carry out the intent and accomplish the purpose of this
Agreement in the light of such invalidity or unenforceability.
11. WAIVER
The failure of either Party hereto to insist upon the strict adherence to
any term of this Agreement on any occasion shall not be considered as a
waiver of any right hereunder nor shall it deprive that Party of the right
to insist upon the strict adherence to that term or any other term of this
Agreement at some other time.
12. AGREEMENT
This Agreement (which term shall be deemed to include all of the Appendices
attached hereto) constitutes the entire agreement between the Parties with
respect to its subject matter, and supersedes all other agreements,
understandings and contracts whether oral or written with respect thereto.
Any purchase order, order acknowledgement, invoice or other document
containing additional or different terms of conditions shall not have force
or effect upon the terms of conditions of this Agreement and any Party
receiving such document shall not be deemed to have accepted said
additional or different terms or conditions by its failure to object
thereto.
13. SURVIVAL OF RIGHTS AND OBLIGATIONS
<PAGE>
6
Rights and obligations under this Agreement, which by their nature would
continue beyond the termination or ending in any other way of this
Agreement shall survive the termination of this Agreement.
14. AMENDMENTS
No amendments, changes, revisions or discharges of this Agreement, in whole
or in part, shall have any force or effect unless set forth in writing and
signed by the Parties hereto.
15. ASSIGNMENT
The Parties may not wholly or partly assign, sub-contract, pledge or
otherwise encumber any of its rights and/or obligations under this
Agreement to any third party, except as expressly stated herein or with the
prior written consent of the other Party. Notwithstanding the foregoing,
either Party may assign all of its rights or obligations arising out of
this Agreement to any company which is from time to time a holding company
or a subsidiary of such Party or a subsidiary of any such holding company.
16. PRESS RELEASES
Subject to the consent of the other Party (which consent shall not be
unreasonably withheld or delayed) each Party may issue one or several press
releases with respect to the Implementation Project and this Agreement.
17. NON-EXCLUSIVITY
This Agreement will in no way be deemed to restrict or otherwise limit CP's
right to freely carry on (on its own or jointly with third parties) any
business, testing, development or research activities anywhere in the
world, including, but not limited to, the marketing and operation of the
CellPoint System.
18. GOVERNING LAW
<PAGE>
7
This Agreement shall be governed by, and construed and enforced in
accordance with the substantive laws of Sweden without regard to its
principles of conflicts of laws.
19. ARBITRATION
Any and all disputes, controversies and claims arising out of or in
connection with this Agreement, or the breach, termination or invalidity
thereof, shall be settled by arbitration in accordance with the rules of
the Arbitration Institute of the Stockholm Chamber of Commerce. Unless the
Parties agree otherwise, the arbitration proceedings shall be conducted in
Stockholm, Sweden, in the English language. The arbitration award shall be
final and binding upon the Parties.
20. NOTICES
All notices required by this Agreement to be given by either Party to the
other Party shall be in English, unless otherwise is specifically agreed
upon, and shall be sent by mail, telex or telefax and shall be addressed to
the last known address of the other Party and shall be confirmed by
registered letter if so required.
21. EFFECTIVE DATE
This Agreement becomes effective when it has been duly executed by both
Parties.
----------------
<PAGE>
8
This Agreement has been executed in two identical counterparts, whereof the
Parties have taken one each.
Date: Date:
April 23, 1999 April 23, 1999
Place: Place:
CELLPOINT SYSTEMS AB TELE2 AB
/S/ PETER HENRICSSON, /S/ LARS-JOHAN JARNHEIMER,
- --------------------- --------------------------
PRESIDENT MANAGING DIRECTOR
<PAGE>
9
Appendix 1
CellPoint System
Technical Description
[CONFIDENTIAL TREATMENT PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934]
<PAGE>
10
Appendix 2
CellPoint System
Quotation
[CONFIDENTIAL TREATMENT PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT
OF 1934]
<PAGE>
11
Appendix 3
CellPoint System
Positioning Services
Product Description
[CONFIDENTIAL TREATMENT PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT
OF 1934]
<PAGE>
12
Appendix 4
CellPoint System
Positioning Service Implementation Project Definition
[CONFIDENTIAL TREATMENT PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT
OF 1934]
<PAGE>
EXHIBIT 10.13
- --------------------------------------------------------------------------------
[LOGO]
DIRECTION DES OPERATIONS ET DU DEVELOPPEMENT
DIRECTION DES ACHATS ET DU CONTROLE DE GESTION
41-45 BOULEVARD ROMAIN ROLLAND
75672 PARIS CEDEX 14
CONTRACT 99 8G ...
EXPERIMENTATION OF THE
" GSM LOCALISATION" SERVICE
SUPPLIER :
CELLPOINT SYSTEMS AB
- --------------------------------------------------------------------------------
<PAGE>
BETWEEN :
FRANCE TELECOM,
A "societe anonyme" i.e. French-law joint stock company, with capital of
4,098,458,244 EUROS, entered on the Trade and Companies Register of Paris,
France, under the nDEG. 380 129 866, whose address for service for the
purposes of the present contract is 41-45 Boulevard Romain Rolland -
F-75672 Paris cedex 14, represented by the signatory of the present
Contract,
AND
CELLPOINT SYSTEMS
Company : Cellpoint Systems AB
With capital of :
...............................................
Entered on the Trade and Companies Register of :
..................................................................
Registered office : Sofiellundsvagen 4, 191 47 Sollentuna , Sweden
Represented by : Guy Redford
Hereinafter "the Parties"
IT HAS BEEN AGREED AND DECIDED AS FOLLOWS :
<PAGE>
--------------------------------------------------
TABLE OF CONTENTS
--------------------------------------------------
<TABLE>
<S> <C>
DEFINITIONS 4
ARTICLE 1 - PURPOSE OF THE CONTRACT 5
ARTICLE 2 - EXECUTION OF THE SERVICES 5
ARTICLE 3 - TERM OF THE CONTRACT 5
ARTICLE 4 - THE PARTIES' OBLIGATIONS 6
ARTICLE 5 - CONTRACTUAL DOCUMENTS 6
ARTICLE 6 - AMOUNT OF THE CONTRACT 7
ARTICLE 7 -TERMS AND CONDITIONS FOR DRAWING UP PRICES 7
ARTICLE 8 - LETTERS OF ORDER 8
ARTICLE 9 - INVOICING 8
ARTICLE 10 - METHODS OF PAYMENT 8
ARTICLE 11 - TERMS AND CONDITIONS OF PAYMENT 9
ARTICLE 12 - PROGRESS REPORT 9
ARTICLE 13 - HOST SITES 9
ARTICLE 14 - VALIDATION OF OPERATIONS 10
ARTICLE 15 - QUALITY CRITERIA 10
ARTICLE 16 - EXCLUSIVITY 10
ARTICLE 17 - LIABILITY 11
ARTICLE 18 - RIGHTS ARISING FROM INTELLECTUAL CREATION 11
ARTICLE 19 - THE YEAR 2000 14
ARTICLE 20 - COMPETENCE 14
ARTICLE 21 - LANGUAGE 14
ARTICLE 22 - RIGHT OF TRANSFER 14
ARTICLE 23 - INTEGRALITY 15
ANNEXE 1 : SPECIFICATIONS 16
ANNEXE 2 : PRICE LIST 17
ANNEXE 3 : TESTS SPECIFICATIONS 18
ANNEXE 4 : TECHNICAL SPECIFICATIONS 19
ANNEXE 5 : STANDARD TERMS AND CONDITIONS OF PURCHASE 20
</TABLE>
<PAGE>
--------------------------------------------------
DEFINITIONS
--------------------------------------------------
BLOCKING IRREGULARITY : This means an irregularity making it impossible to issue
the Official Technical Appraisal Report.
SPECIFICATIONS : This means the document issued by FT setting out the technical
and operational specifications for the localisation service.
TECHNICAL APPRAISAL : This means the technical tests carried out by FT with the
assistance of Cellpoint Systems, making it possible to issue the official
Technical Appraisal Report.
EXPERIMENTATION : This includes the Technical Appraisal phase and commercial
experimentation.
COMMERCIAL EXPERIMENTATION : Commercial experimentation follows acceptance of
the Technical Appraisal. This phase makes it possible to carry out
experimentation under real localisation service conditions as defined in the
specifications.
ORDER LETTER : This is the document issued by FT, binding it firmly. It sets out
the price, the types of services, the quantities and the time-limits for
providing them.
MAINTENANCE : This means all services and action ensured by Cellpoint Systems,
in order to ensure maximum reliability of the System.
OFFICIAL TECHNICAL APPRAISAL REPORT : This is a document drawn up by FT, signed
by the Parties, officially acknowledging delivery of the system and making it
possible to declare acceptance of the latter.
OFFICIAL EXPERIMENTATION ACCEPTANCE REPORT : This is a document drawn up by FT,
signed by the Parties, officially acknowledging acceptance of Experimentation,
and making it possible to declare said acceptance of the system, possibly
accompanied by reserves.
SERVER : This refers to Cellpoint Systems' platform. This platform is the
support which makes it possible to check that Cellpoint Systems' services are in
conformity with the operational and technical specifications set out in the
contractual documents. The Server is made up of the actual platform itself and
the associated software.
TECHNICAL SPECIFICATIONS : This is the document issued by Cellpoint Systems,
containing all of the technical information inherent to the System being
experimented.
SYSTEM : This refers to all of the means (software, material and equipment,
operating environment) necessary for the supply of the GSM localisation service,
and all of the means which Cellpoint Systems hereby undertakes to made available
to FT, which shall be in conformity with that which is defined in the present
contract in terms of resources, capacities, and functions.
TECHNICAL TESTS : This refers to all of the tests carried out by FT during the
Technical Appraisal, as defined in the Tests specifications (appendix 3).
<PAGE>
ARTICLE 1 - PURPOSE OF THE CONTRACT
The purpose of the present contract is to entrust Cellpoint Systems with the
execution of services necessary for Experimentation by FT of a fleet
localisation and management GSM service, as defined in the specifications under
the reference number FTM/DIP/SVA/PR/98/loc/CDC-CPS dated 22 December 1998.
The parties hereby expressly agree that the present contract shall only be
entered into for the purpose of carrying out Experimentation, and that the
provisions thereof do not stipulate that the parties undertake to enter into a
contract again, under any form whatsoever, for the purpose of operating the
service concerned by Experimentation, commercially.
ARTICLE 2 - EXECUTION OF THE SERVICES
The present contract is made up of two batches, one of which is conditional.
- - BATCH 1: TECHNICAL APPRAISAL
FTM shall carry out the Technical Tests for the GSM localisation system proposed
by Cellpoint Systems. These technical tests shall be carried out in Cellpoint
Systems' premises in Sweden. This phase shall begin on 3 May 1999, and end when
FTM issues the official Technical Appraisal Acceptance Report. This phase shall
last 10 business days.
- - BATCH 2 : COMMERCIAL EXPERIMENTATION
This phase shall be subject to FTM's issuing an Official Technical Appraisal
Acceptance Report. It shall begin at the latest one month after said official
report has been issued, and shall end either when FTM issues the Official
Experimentation Acceptance Report, or on October 3. This phase shall last 60
calendar days.
ARTICLE 3 - TERM OF THE CONTRACT
The contract shall take effect on 3 May 1999, and shall end on the first of the
two following dates:
- The date on which the Official Experimentation Acceptance Report is
issued
- 3 October 1999, if the Official Experimentation Acceptance Report has not
been issued at said date.
ARTICLE 4 - THE PARTIES' OBLIGATIONS
4.1. CELLPOINT SYSTEMS' OBLIGATIONS
In order to enable FT to carry out the Technical Tests and commercial
Experimentation of the GSM localisation system, Cellpoint Systems shall supply
and/or make available to FT, continuously, throughout the entire term of the
present contract, unless the parties agree otherwise:
<PAGE>
- the GSM localisation service as defined in appendix 1; to do so,
Cellpoint Systems hereby undertakes to make available to FTM the
system as described in appendix 4, principally made up of a Cellpoint
Systems server linked up to the Itineris network, and to operate and
maintain it. This server shall be configured to manage 200
localisations per user per month and support 50 000 users;
- technical assistance - Cellpoint Systems hereby undertakes to provide
FT, as of the contract's coming into effect, with a telephone hotline
number and to ensure this assistance service during business hours and
business days i.e. 5 days per week from 8 a.m. until 7 p.m. (French
time). Technical assistance shall be provided in the French or English
languages;
- with all elements and information required for the production of SIM
cards, responsible for adequate SIM Tool Kit implementation;
- support for the FT Hot Line;
- all documentation concerning the System which FT might require in
order to carry out Experimentation of the GSM localisation service;
- training - during the commercial Experimentation phase, Cellpoint
Systems shall ensure 5 days of training, in the English language to 5
persons representing FT.
4.2. FT 'S OBLIGATIONS
FT hereby undertakes to:
- provide test customers, responsible for testing the service during the
commercial experimentation phase, with compatible STK terminals
equipped with SIM cards, including downloading of the STK application,
subject to Cellpoint Systems providing all elements necessary for the
production of said SIM cards.
- provide technical documentation to each user of the service at the
beginning of the commercial experimentation phase.
- provide geographical configuration data for the network.
ARTICLE 5 - CONTRACTUAL DOCUMENTS
With respect to interpretation of the present contract, the body of the contract
shall prevail over the content of the appendices, and the contractual documents
are, by decreasing order of priority, as follows:
1 - The text of the present contract and its appendices:
- Appendix nDEG.1 - Operational Specifications bearing the reference:
FTM/DOD/SES/PR/002
- Appendix nDEG.2 - The price list - Commercial proposal bearing the
reference number:
- Appendix nDEG.3 - CPS Tests Specifications bearing the reference number:
- Appendix nDEG.4 - CPS Technical Specifications bearing the reference
number:
<PAGE>
- Appendix nDEG.5 - FT's Standard Terms and Conditions of Purchase -
December 1998 Edition
2 - Order letters
ARTICLE 6 - AMOUNT OF THE CONTRACT
The amount of orders to be placed by FT under the present contract shall be
between:
[CONFIDENTIAL TREATMENT PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE
ACT]
ARTICLE 7 - TERMS AND CONDITIONS FOR DRAWING UP PRICES
7.1. DETERMINING PRICES
[CONFIDENTIAL TREATMENT PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT
OF 1934]
7.2. PRICE LIST
[CONFIDENTIAL TREATMENT PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT
OF 1934]
7.3. X25 LINKS
[CONFIDENTIAL TREATMENT PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT
OF 1934]
7.4. TAX
The price of the present contract shall be subject to value added tax (V.A.T.)
at the legal rate in force on the date of invoicing.
<PAGE>
ARTICLE 8 - LETTERS OF ORDER
Letters of order issued shall bear:
- reference to the present contract, a number, a date.
- the designation, reference and price of the service ordered, in
conformity with Cellpoint Systems' offer.
- the places and time limits for delivery.
Throughout the entire term of the contract, FT may issue orders. If the duration
of an order is greater than that of the present contract, the clauses of the
present contract concerning execution or interpretation of the order shall
remain in force until the order expires.
ARTICLE 9 - INVOICING
The services shall be paid, on presentation of an invoice. Invoices concerning
payment shall be sent in triplicate to the following address:
FRANCE TELECOM MOBILES
DCCG - SERVICE COMPTABILITE
41-45, BOULEVARD ROMAIN ROLLAND
F-75672 PARIS CEDEX 14
Cellpoint Systems shall, obligatorily, set out the reference numbers of the
contract on all invoices, in order to facilitate payment thereof. Cellpoint
Systems shall indicate, on its invoice, the date payment must take place. This
date shall be equal, at the earliest, to t + 60 days, "t" being the date of
issue of the invoice by Cellpoint Systems, and the latter date shall not be
prior to the occurrence giving rise to the drawing up of the invoice.
ARTICLE 10 - METHODS OF PAYMENT
FT shall properly settle all amounts due under the present contract, by bank
transfer thereof to an account opened in the name of Cellpoint Systems, the
reference numbers of which shall be shown on each of the invoices. Full payment
shall only be made on condition that FT deems that the Experimentation results
are in conformity with those defined in the present contract.
Should, at the term of this contract, FT decide to enter into a contract with
Cellpoint Systems to provide its customers with the GSM localisation service,
Cellpoint Systems hereby undertakes to draw up a credit note for FT
corresponding to the amount of the present contract, and to deduct it from the
first invoice concerning the commercial start-up contract, and the following
invoices if necessary.
Should the Official Experimentation Acceptance Report not be issued before
October 3, Cellpoint Systems shall be bound to reimburse FT for all amounts paid
to it by FT under the present contract.
<PAGE>
ARTICLE 11 - TERMS AND CONDITIONS OF PAYMENT
Invoices shall be issued in accordance with the following terms and conditions:
[CONFIDENTIAL TREATMENT PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF
1934]
ARTICLE 12 - PROGRESS REPORT
Cellpoint Systems hereby undertakes to supply every 15 days, a detailed report
setting out:
- - services executed
- - a detailed schedule of tasks to be continued or begun
- - indicator follow-up
The reports shall be sent by Fax to Mr Patrick REMY (NDEG. 01 55 22 23 43).
A final overall report shall be supplied by Cellpoint Systems five days before
Experimentation is deemed to have finished, in order to allow for issue of the
Official Experimentation Acceptance Report.
ARTICLE 13 - HOST SITES
CELLPOINT SYSTEMS
SOFIELUNDSVAGEN 4
S-191 47 SOLLENTUNA
SWEDEN
The server shall be installed on the abovementioned host site, in premises
fitted out by Cellpoint Systems, at its own expense and under its own
responsibility, for the purpose of being equipped with telecommunications
infrastructure equipment. Should the equipment be moved, Cellpoint Systems
hereby undertakes to inform FT at least one month in advance, before moving
begins. Cellpoint Systems hereby undertakes to carry out said moving of
equipment, without interrupting the service.
It shall be Cellpoint Systems' responsibility to take all measures necessary to
prevent accidents, which could harm the proper operation of the present
contract.
Cellpoint Systems hereby undertakes to grant unrestricted access to the entire
system hosted in its premises, to any FT personnel who may have to work there.
<PAGE>
ARTICLE 14 - VALIDATION OF OPERATIONS
- - Stage 1 : The Official Technical Appraisal Acceptance Report shall only be
issued if any blocking irregularity, preventing operations, detected by FT,
shall have been corrected by Cellpoint Systems and FT shall have lifted the
reserves corresponding to it.
Technical Tests to be carried out are set out in a document called " Tests
Specifications ", set up beforehand by FT in collaboration with Cellpoint
Systems. FT reserves the right to carry out tests not provided for in the Tests
Specifications. Any such tests shall be taken into consideration, in agreement
with Cellpoint Systems, in the same manner as the tests initially provided for,
for the purposes of issuing the Official Technical Appraisal Acceptance Report.
By joint agreement, between the parties, these tests shall then be included in
the "Tests Specifications".
- - Stage 2 : The Official Experimentation Acceptance Report shall only be issued
by FT where the level of quality attained makes it possible to give approval for
implementation of the service.
Any irregularities discovered shall be corrected gradually as commercial
Experimentation is carried out, by Cellpoint Systems. The means implemented by
Cellpoint Systems shall result in a service in conformity with, and suitable
for, the criteria set out beforehand in the specifications.
ARTICLE 15 - QUALITY CRITERIA
Cellpoint Systems shall meet FT's quality criteria, by undertaking to supply a
service which complies with the indicators as defined in the Tests
specifications appended to the present contract. FT hereby reserves the right,
at all times, to point out shortcomings in the quality of the services supplied
to Cellpoint Systems. In agreement with FT, Cellpoint Systems shall immediately
take all steps it sees fit to re-establish a level of quality in conformity with
contractual undertakings.
Quality criteria during the period of commercial Experimentation shall be as
follows:
[CONFIDENTIAL PORTION. OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.]
ARTICLE 16 - EXCLUSIVITY
Throughout the entire period of Experimentation and for 4 months after it ends,
Cellpoint Systems hereby undertakes
- - to refrain from entering into a contract with an FT competitor, on French
territory, for the GSM fleet localisation service, whether directly or
indirectly, for the purpose of carrying out Experimentation, or a
commercialisation phase
- - to refrain from entering into a contract with an FT competitor, on French
territory, for any other service arising from the system,whether directly or
indirectly, for the purpose of carrying out Experimentation, or a
commercialisation phase.
<PAGE>
By FT competitor shall be meant, in particular, any operator of fixed
telecommunications networks or services, any operator of mobile
radiocommunications (radio phones and e-mail) and any distributor of fixed
telephone message services or mobile radiocommunications.
ARTICLE 17 - LIABILITY
Cellpoint Systems hereby undertakes not to cause any dilapidation, disturbance
or loss of data in the information system of FTM, to which it is connected for
the execution of the present contract. Dilapidation, disturbance, or loss of
data shall be deemed to be direct damage.
In the case of damage or dilapidation caused by FTM, with respect to all or part
of the equipment made available to FTM, FTM hereby undertakes either to restore
said equipment to a normal state of operation or to replace it by equivalent
equipment or to pay to Cellpoint Systems the as yet non-amortised value
thereof, excluding damages. The burden of proof shall be on Cellpoint Systems
to show that the damage has been caused directly and exclusively by FTM.
The parties hereby acknowledge that they shall not under any circumstances
whatsoever be liable for any consequential damage they may cause to each other
during performance of the present contract, such as, in particular, operating
loss, shortfall in profit, image prejudice ...
ARTICLE 18 - RIGHTS ARISING FROM INTELLECTUAL CREATION
The clauses of this article apply to the property rights and utilisation rights
of Cellpoint Systems and FT with respect to the results arising from performance
of the Contract, referred to hereafter as the "results". These results are
made up of the results of the tests and commercial Experimentation, as well as
any specific developments realised by Cellpoint Systems for the performance of
the present contract.
The results shall be entirely and exclusively those supplied to FT during
execution of the services provided for under the contract, and at the end
thereof. All intellectual creations realised under the contract shall be a part
of the results.
18.1 GUARANTIES WITH RESPECT TO THIRD PARTIES
FT and Cellpoint Systems shall, insofar as each of them is concerned, continue
to have ownership of their knowledge, which may or may not be capable of being
covered by intellectual property rights, held prior to the date of conclusion of
the contract.
Should, for the execution of the Contract, Cellpoint Systems intend to make use
of processes and/or products covered by intellectual property rights, obtained
by itself or by means of a licence, at the date of conclusion of the Contract,
or in the process of being obtained at said date, Cellpoint Systems shall inform
FT thereof.
<PAGE>
18.2 INTELLECTUAL PROPERTY RIGHTS AND UTILISATION RIGHTS
Gradually, as they are obtained, Cellpoint Systems shall transfer to FT all
rights concerning the results. The transfer of these intellectual property
rights to FT shall be effected for all countries and for the terms of legal
protection applying to said rights.
<PAGE>
Said rights thus transferred shall include, in particular, the right of:
- reproduction, in as many copies as FT shall see fit, by all means, and on
all supports and all sites
- representation, using all techniques, including land-based television
broadcasting and satellites,
- modification to or development of the results,
- adaptation, perfecting, correction, arrangement, decompilation, reverse
engineering, simplification, addition, incorporation in present or future
systems, transcription to another computer language, or translation into
another language, creation of derivative works, both by FT itself and by
third parties,
- publication with respect to third parties,
- use and exploitation on all central and/or local units by any number of
users, in the form of source programmes and object programmes, on all
sites and for the supply of services in shared time,
- commercial exploitation and distribution of the results and their
derivatives under any form whatsoever, whether for or without
consideration.
Each of the abovementioned rights shall apply to all modifications to or
developments of the results which FT shall carry out, or cause to be
carried out, by a third party. All of these rights may be transferred
wholly or partly by FT to any third party of its choice.
Cellpoint Systems hereby undertakes to inform FT promptly of the results,
and to provide it with all assistance and all documents, and more
generally, all information, irrespective of its form or support, necessary
for FT to fully exercise its rights and to enable it to:
- obtain, should it so desire, in its own name and at its own expense, any
intellectual property right over the results which it sees fit, for all
countries, and to carry out all formalities and take all steps necessary
for implementing and protecting said rights,
- use and exploit the Results.
Cellpoint Systems hereby guarantees that contracts binding persons who
shall be working directly or indirectly under the contract, do not contain
any provision restricting FT's intellectual property rights over the
results. Cellpoint Systems hereby undertakes to obtain the same guarantee
from its subcontractors and/or suppliers.
Cellpoint Systems may not exercise any right whatsoever over the results,
except in the case of prior written agreement to the contrary from FT, and
in accordance with terms and conditions which, if applicable, shall be
determined by joint agreement.
Should FT renounce, in writing, after receiving formal notice from
Cellpoint Systems, obtaining intellectual property rights over the results,
the contracting party may obtain such rights in its own name and at its own
expense, on condition that it grants France Telecom, free of charge and on
a non-exclusive basis, the right to exploit or to use said rights, France
Telecom having the faculty of sub-licensing.
<PAGE>
ARTICLE 19 - THE YEAR 2000
Cellpoint Systems hereby undertakes to design and supply the GSM localisation
System in such a manner that it can be used between now and the year 2000, at
the date of changeover from the year 1999 to the year 2000, and beyond.
Cellpoint Systems commits itself with respect to continuity of service at the
dates corresponding to the changeover from 1999 to 2000 and beyond. Cellpoint
Systems hereby guarantees FTM against any failure, irregularity, error,
malfunction and, in general, everything which could affect before, during or
after the changeover to the year 2000, FTM's information service, due to the
taking into account of the changeover to the year 2000 in the services covered
by the present contract.
Cellpoint Systems hereby undertakes to carry out all requisite tests in order to
ensure that the processing of dates, the calculation of dates and all references
to dates, of whatever nature, are in accordance with transmillennium criteria,
the characteristics of the year 2000 (a Leap Year, in particular) and all of the
consequences arising therefrom.
As Cellpoint Systems must connect up its system to other equipment by means of
communications interfaces, it hereby undertakes that such connecting up shall
not require any development of, changes to, transformation or arrangement of any
kind whatsoever of all or part of said interfaces.
Should it default on any of these obligations, Cellpoint Systems hereby
undertakes to repair the prejudice incurred by FT.
ARTICLE 20 - COMPETENCE
The parties shall make their best endeavours to settle any disputes arising from
the interpretation and/or execution of the present contract on a friendly basis.
Should they be unable to reach a friendly agreement, all disputes shall be
submitted by either party to the "Tribunal de Commerce" i.e. Trade Court of
Paris, France. The present contract shall be governed by French law.
ARTICLE 21 - LANGUAGE
The contract shall be drawn up in the French and English languages. The French
and English versions of the contract shall be signed by both parties, but the
French language contract shall be binding and shall prevail over the English
language version.
ARTICLE 22 - RIGHT OF TRANSFER
As the present contract is entered into with respect to the actual personality
of Cellpoint Systems, the latter hereby undertakes not to transfer or to assign
all or part of its rights and/or obligations arising under the present contract,
in any form or any way whatsoever, without the prior written agreement of FT.
<PAGE>
ARTICLE 23 - INTEGRALITY
The present contract reflects the entire contractual obligations of FT and
Cellpoint Systems. The provisions of the present contract cancel out and replace
all acceptation, exchange of correspondence and/or agreements prior to the
signature of the present contract. No changes to the terms and conditions of the
present contract shall generate obligations with regard to FT and Cellpoint
Systems if they are not covered by a written additional clause signed by FT and
Cellpoint Systems.
Signed in duplicate, with one copy for each of the parties.
<TABLE>
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
In Paris on 26 July, 1999 In Paris on 26 July, 1999
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Signature, name and capacity Signature, name and capacity
- ---------------------------------------------------------------------------------------------------------------------------
/s/ PETER HENRICSSON, Chairman /s/ JEAN CELESTE
- -------------------------------------------------------------------------------------------------------------------------
of Cell point Systems of the person empowered
to bind France Telecom
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Cellpoint Systems shall affix its company seal
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit 10.14
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of June 1,1999, between Technor International, Inc., a
Nevada corporation (the "Company"), and Peter Henricsson ("Executive").
W I T N E S S E T H:
WHEREAS, the Company is engaged in the business of [developing and
marketing products related to its cellular network tracking system] (as such
business is from time to time conducted by the Company and its affiliates during
the term of this Agreement, the "Business");
WHEREAS, the Company wishes to assure itself of the availability of the
advice and services of Executive in connection with the Business; and
WHEREAS, Executive wishes to be employed by the Company;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements set forth herein, the parties hereto agree as follows:
1. EMPLOYMENT AND TERM. Subject to the terms and conditions of this
Agreement, and unless earlier terminated as set forth herein, the Company agrees
to employ Executive, and Executive hereby accepts employment by the Company, for
the two-year period commencing on the date hereof; PROVIDED, HOWEVER, that
commencing on the date one year after the date hereof, and on each annual
anniversary of such date (such date and each annual anniversary thereof is
hereinafter referred to as the "Renewal Date"), the term of this Agreement shall
be automatically extended so as to terminate two years from such Renewal Date,
unless at least 60 days prior to the Renewal Date, either Executive or the
Company shall give notice that the term of this Agreement shall not be so
extended (the initial term, together with all renewal terms, is sometimes
referred to herein as the "Term").
2. DUTIES. During the Term, Executive shall serve the Company as its
President, and shall perform such executive and other duties for the Company, or
any division, subsidiary, affiliate or joint venture of the Company, as are
incident to such position and as may reasonably be requested by the Board of
Directors of the Company and under their direction. During the Term, Executive
shall devote his entire business time, attention and energies, on a full-time
basis, to his duties under this Agreement.
3. COMPENSATION.
a. BASE SALARY. During the Term, the Company shall pay to Executive, in
equal installments no less frequently than twice per month (or at such other
intervals as are in effect from time to time for other executive employees of
the Company), an annual base salary of $108,000 (such amount, as the same may
hereafter be modified by mutual agreement of
<PAGE>
Executive and the Company, to be reviewed once per year, being referred to
herein as the "Base Salary"). In addition, Executive may be awarded, at the
Company's sole and exclusive discretion, bonus compensation. Any such bonus
compensation shall be payable at such times as the Company may determine, but
only if Executive is, as of the date of such payment, an employee in good
standing and not subject to any of the notices described in Section 4.
b. BENEFITS. Executive shall be entitled to participate in such benefit
plans, including stock option, medical, health, retirement and other plans, as
may be established and maintained from time to time for executive employees of
the Company generally.
c. REIMBURSEMENT OF EXPENSES. Executive shall be entitled to reimbursement
for all normal and reasonable travel, entertainment and other expenses
necessarily incurred by him in the performance of his duties hereunder.
Executive shall submit on a timely basis such itemized accounts of such
expenses, together with such vouchers or receipts for individual expense items,
as the Company may from time to time require under its established policies and
procedures. The Company's payments hereunder shall be made within a reasonable
time following its receipt of such itemized accounts.
d. VACATION. Executive shall be entitled to 6 weeks' vacation each calendar
year during the Term (such period to be pro-rated based on the actual number of
working days for which Executive is employed during a calendar year). Executive
shall be entitled to additional compensation for any vacation time not taken in
respect of any calendar year, and Executive shall be entitled to carry over into
any succeeding year any unused vacation time.
e. DISABILITY. Except as hereinafter provided, the Company shall pay
Executive, for any period (up to a maximum of six months during the Term) in
which he is unable fully to perform his duties because of physical or mental
disability or incapacity, an amount equal to the Base Salary due him for such
period pursuant to Section 3(a), less the aggregate amount of all income
disability benefits which for such period he may receive by reason of (i) any
group health insurance plan, or disability insurance plan paid for by the
Company, in each case which is intended to function as a salary replacement
plan, (ii) any applicable compulsory state disability law, (iii) the Federal
Social Security Act, (iv) any applicable workmen's compensation law or similar
law and (v) any plan towards which the Company or any subsidiary or affiliate of
the Company (including any predecessor of any thereof) has contributed or for
which it has made payroll deductions, such as group accident or health policies,
other than those that reimburse for actual medical expenses.
f. KEY MAN INSURANCE. Executive agrees that the Company may obtain key man
life insurance with respect to Executive, and in connection therewith, agrees to
submit to all reasonable and customary examinations by the provider of such life
insurance.
4. TERMINATION OF EMPLOYMENT.
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<PAGE>
a. CAUSE. The Company shall have the right, at any time effective upon
notice to Executive, to terminate Executive's employment for "Cause," defined,
for purposes hereof, as (i) malfeasance, gross neglect or willful misconduct in
the performance of Executive's duties hereunder; (ii) conviction of a felony;
(iii) failure to perform any of Executive's material obligations under this
Agreement (other than by reason of death or disability contemplated by Section
3(e) or 4); (iv) fraud, dishonesty or unlawful conduct against the Company or
any of its or its affiliates' employees; or (v) a material breach of this
Agreement by Executive; PROVIDED, in the case of any default under clause (iii),
(iv) or (v) that is susceptible to cure, that such default continues uncured 15
days after written notice thereof from the Company to Executive.
b. DISABILITY; DEATH. In the event that Executive, due to physical or
mental disability or incapacity, is unable to substantially perform his duties
hereunder for a period of more than six months during the Term, the Company or
Executive shall have the right to terminate this Agreement and Executive's
employment hereunder upon 30 days' prior written notice and termination shall be
effective on the 30th day after receipt of such notice by the other party. In
the event that Executive is able to and recommences rendering services and
performing his duties hereunder within such 30-day notice period, Executive
shall be reinstated and such notice shall be without further force or effect. If
Executive dies during the Term, this Agreement shall terminate immediately upon
his death.
c. TERMINATION BY EXECUTIVE FOR GOOD REASON. Executive may terminate his
employment hereunder, such termination to be effective on written notice to the
Company, for any of the following reasons:
(i) the assignment to Executive of any duties inconsistent in any
material respect with Executive's position (including status, office,
titles and reporting requirements), authority, duties or responsibilities
as contemplated by this Agreement, or any other action by the Company which
results in a material diminution in such position, authority, duties or
responsibilities; or
(ii) the Company materially breaches its obligations under this
Agreement;
PROVIDED that any such action or default shall not have been remedied by the
Company within 15 days after receipt of notice thereof given by Executive.
d. VOLUNTARY TERMINATION BY EXECUTIVE. Executive may terminate his
employment under this Agreement on six months' written notice to the Company at
any time.
5. EFFECTS OF TERMINATION.
a. In the event that Executive's employment is terminated pursuant to
Section 4(a) or 4(d) hereof, (i) Executive's employment hereunder shall
immediately cease, (ii) the
-3-
<PAGE>
Company shall pay to Executive his accrued and unpaid salary, accrued vacation
time and expense reimbursement through the date of termination in accordance
with the Company's usual procedures, and (iii) all then non-exercisable stock
options shall immediately and automatically terminate. Once the amounts referred
to in clause (ii) are paid, however, the Corporation shall have no further
obligation to Executive.
b. In the event that Executive's employment is terminated pursuant to
Section 4(b) hereof as a result of Executive's death, (i) Executive's employment
hereunder shall cease in accordance with Section 4(b), (ii) the Company shall
pay to Executive his accrued and unpaid salary, accrued vacation time and
expense reimbursement through the date of termination in accordance with the
Company's usual procedures, (iii) all then non-exercisable stock options shall
immediately and automatically terminate, and (iv) any vested options shall be
transferred in accordance with Executive's will; PROVIDED that nothing in this
paragraph (b) shall alter any right of Executive (or his legal representative)
to receive death benefits provided in accordance with the terms of a benefit
plan in which Executive participates if Executive's employment is terminated
pursuant to Section 4(b) hereof.
c. In the event that Executive's employment is terminated pursuant to
Section 4(b) hereof as a result of Executive's disability, (i) the Company shall
pay to Executive his accrued and unpaid salary, accrued vacation time and
expense reimbursement through the date of termination in accordance with the
Company's usual procedures, (ii) the Company shall continue to pay to Executive
his Base Salary, and all associated benefits, for a period of six months
following such date of termination, in accordance with the Company's usual
procedures; (iii) any nonexercisable stock options which would otherwise have
become vested in accordance with their terms within such six-month period if
Executive's employment shall have continued shall be vested; and (iv) any stock
options which are not vested at the end of such six-month period shall
automatically terminate at the end of such six-month period; PROVIDED that
nothing in this paragraph (c) shall alter any right of Executive (or his legal
representative) to receive disability benefits provided in accordance with the
terms of a benefit plan in which Executive participates if Executive's
employment is terminated pursuant to Section 4(b) hereof.
d. In the event that Executive's employment hereunder is terminated by the
Company other than pursuant to Section 4(a) or (b) or if Executive's employment
is terminated pursuant to Section 4(c), then: (i) Executive shall be entitled to
receive, and the Company shall continue to pay to Executive, the Base Salary
specified in Section 3(a) for one year following the effective date of such
termination, (ii) Executive shall be entitled, during the period during which
such severance payment is being paid, to receive all benefits under the
Company's medical insurance, disability insurance, life insurance and other
benefit plans as are then in effect for executives of the Company, (iii) any
nonexercisable stock options which would otherwise have become vested in
accordance with their terms within such one-year period if Executive's
employment shall have continued shall be vested; and (iv) any stock options
which are not vested at the end of such one-year period shall automatically
terminate at the end of such one-year period.
-4-
<PAGE>
e. Executive's obligations pursuant to Sections 6 and 7 hereof shall
survive any termination of this Agreement for any reason whatsoever.
f. TERMINATION IN CERTAIN CIRCUMSTANCES AFTER A CHANGE OF CONTROL. If any
of the following shall occur:
(i) The acquisition by any person, entity or "group" (within the
meaning of Section 13(d)(3) of the Securities Exchange Act if 1934, as
amended (the "Exchange Act")) (other than the Company, its affiliates or
any Company benefit plan that acquires beneficial ownership of voting
securities of the Company) of beneficial ownership (within the meaning of
Rule 13d-3 under the Exchange Act) of 50% or more of the combined voting
power of the Company's then outstanding voting securities entitled to vote
generally in the election of directors; or
(ii) The failure of the individuals who, as of the date hereof,
constitute the Board of Directors of the Company (the "Incumbent Board"),
to constitute at least a majority of the Board of Directors; PROVIDED that
any person who becomes a director subsequent to the date hereof whose
recommendation, election or nomination for election by the Company's
stockholders was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be deemed to be a member of the
Incumbent Board; or
(iii) The consummation by the Company of a reorganization, share
exchange, merger or consolidation in which the persons who were the
stockholders of the Company immediately prior to such reorganization, share
exchange, merger or consolidation do not, immediately thereafter, own more
than 50% of the combined voting power entitled to vote in the election of
directors of the reorganized, merged or consolidated company;
and if Executive's employment is terminated within twelve months of any of the
foregoing events (other than pursuant to Sections 4(a), 4(b) or 4(d) hereof, (x)
the Company shall pay to the Executive, as severance pay or liquidated damages
or both, during the twelve four-month period immediately following such
termination, the amount of Base Salary that the Executive would have been
entitled to receive during such period had the Executive's employment not been
so terminated; (y) Executive shall be entitled, during the period during which
such severance payment is being paid, to receive all benefits under the
Company's medical insurance, disability insurance, life insurance and other
benefit plans as are then in effect for executives of the Company, and (z) any
nonexercisable stock options which would otherwise have become vested in
accordance with their terms within such one-year period if Executive's
employment shall have continued shall be vested.
6. CONFIDENTIALITY.
-5-
<PAGE>
a. Executive understands and acknowledges that, as a result of Executive's
employment with the Company, he shall necessarily become informed of, and shall
have access to, confidential information of the Company, including, without
limitation, the contents of this Agreement, inventions, trade secrets, technical
information, know-how, plans, marketing plans and information, pricing
information, identity of providers and their patients and prospective providers
and their patients and identity of suppliers, and that such information, even
though it may be developed or otherwise acquired by Executive, is the exclusive
property of the Company to be held by Executive in a fiduciary capacity and
solely for the Company's benefit. Executive shall not at any time, either during
or subsequent to his employment hereunder, reveal, report, publish, transfer or
otherwise disclose to any person, company or other entity, or use for his own
benefit, any of the Company's confidential information which Executive, in the
exercise of reasonable diligence, knows or should know to be confidential,
without the written consent of the Company, except for use on behalf of the
Company in connection with the Business, and except for such information which
is or becomes of general public knowledge from authorized sources other than
Executive.
b. Upon the termination of his employment with the Company for any reason,
Executive shall promptly deliver to the Company all manuals, letters, notes,
notebooks, reports, documents and copies thereof and all other materials,
including, without limitation, those of a secret or confidential nature,
relating to the Business that are in Executive's possession or control.
c. For purposes of this Section 6, the term "Company" includes the Company,
any predecessor company, and any of their respective affiliates.
7. NON-COMPETITION.
a. Subject to the provisions of paragraph (b) hereof, Executive agrees
that, for the period commencing on the date hereof and ending two years after
the termination of his employment with the Company for any reason, he shall not,
in any country in the world in which the Company then engages in the Business
(or in such lesser area or for such lesser period as may be determined by a
court of competent jurisdiction to be a reasonable limitation on the competitive
activity of Executive), directly or indirectly:
(i) engage, as an employee, officer, independent contractor or in any
other capacity, in any activity for or on behalf of any person or entity
(other than the Company) in a line of business competitive with the
Business or any aspect thereof or engage in any manner in the Business;
(ii) except for the benefit of the Company, solicit or attempt to
solicit business of entities who were providers for, or customers of, the
Company at any time within the prior two years (including prospective
providers or customers solicited by the Company) for products or services
the same or similar to those offered, sold, produced or under
-6-
<PAGE>
development by the Company, or dealt in by Executive, during his employment
therewith;
(iii) interfere with the Company, the Business or the conduct thereof
by the Company, or otherwise divert or attempt to divert from the Company
any business whatsoever;
(iv) hire, solicit or attempt to solicit for participation or
employment in any business endeavor any employee of the Company;
(v) use the name of the Company or any name used by the Company, or
any name similar to any thereof, whether or not registered; or
(vi) render any services as an officer, director, employee, partner,
consultant or otherwise to, or have any interest as a member, stockholder,
partner, lender or otherwise in, any person or entity that is engaged in
activities which, if performed by Executive, would violate this Section 7.
The foregoing shall not prevent Executive from purchasing up to five percent of
the voting securities of any other entity, the securities of which are
publicly-traded, during the time which the Executive is actively employed by the
Company.
b. In the event Executive's employment is terminated under the
circumstances contemplated by paragraphs (c) or (d) of Section 5, the
obligations of Executive set forth under this Section 7 shall only continue in
effect so long as the Company continues to pay to Executive his Base Salary (in
the intervals set forth in Section 3(a)) during the one-year period following
termination of such employment.
c. Executive agrees that the restrictions on competition set forth in this
Section 7 are reasonable and are properly required for the adequate protection
of the Business of the Company. Executive represents that his experience,
capabilities and circumstances are such that the provisions of this Section 7
will not prevent him from earning an appropriate livelihood.
8. REMEDIES AND SURVIVAL. Because the Company does not have an adequate
remedy at law to protect its interest in its confidential information and its
Business from Executive's competition, the Company shall be entitled to
injunctive relief, in addition to such other remedies and relief that would, in
the event of a breach of the provisions of Sections 6 or 7, be available to the
Company. The provisions of Sections 5 through 8 of this Agreement shall survive
any termination of Executive's employment with the Company.
9. ENTIRE AGREEMENT. This Agreement sets forth the entire understanding of
the parties hereto with respect to its subject matter, merges and supersedes any
prior or contemporaneous agreements or understandings with respect to its
subject matter and shall not be
-7-
<PAGE>
modified or terminated except by another agreement in writing executed by the
Company and Executive.
10. SEVERABILITY. If any provision of this Agreement is held to be invalid
or unenforceable by any court or tribunal of competent jurisdiction, the
remainder of this Agreement shall not be affected by such judgment, and such
provision shall be carried out as nearly as possible according to its original
terms and intent to eliminate such invalidity or unenforceability.
11. SUCCESSORS AND ASSIGNS. Neither party shall have the right to assign
this personal Agreement, or any rights or obligations hereunder, without the
consent of the other party; PROVIDED, HOWEVER, that upon the sale or transfer of
all or substantially all of the assets and business of the Company to another
party, or upon the merger or consolidation of the Company with another Company,
this Agreement shall inure to the benefit of, and be binding upon, both
Executive and the party purchasing or acquiring such assets, business and
goodwill, or surviving such merger or consolidation, as the case may be, in the
same manner and to the same extent as though such other party were the Company.
Subject to the foregoing, this Agreement shall inure to the benefit of, and
bind, the parties hereto and their legal representatives, heirs, successors and
permitted assigns.
12. CONSTRUCTION; COUNTERPARTS. The headings contained in this Agreement
are for convenience only and shall in no way restrict or otherwise affect the
construction of the provisions hereof. This Agreement may be executed in
multiple counterparts, each of which shall be an original and all of which
together shall constitute one and the same instrument.
13. ARBITRATION; GOVERNING LAW. This Agreement shall be governed by the
laws of the State of Nevada applicable to agreements made and fully to be
performed therein by residents thereof. Any dispute arising out of or in
connection with this Agreement, including, without limitation, disputes over the
nature of any termination hereof, shall be finally determined by binding
arbitration in New York before a single arbitrator chosen in accordance with the
rules of the American Arbitration Association then and there obtaining. The
arbitration shall be conducted in accordance with such rules, and the arbitrator
shall have the authority to order such injunctive relief as he may determine, to
determine how the parties shall bear the costs of such arbitration, and to award
such damages (but not any punitive or exemplary damages) as are appropriate.
Each of the parties hereby waives any and all objections he or it may have with
respect to the jurisdiction of such arbitral forum or the inconvenience of its
venue.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first set forth above.
TECHNOR INTERNATIONAL, INC.
By: /s/ LYNN DUPLESSIS
------------------------------------
Executive Vice President
/S/ PETER HENRICSSON
------------------------------------
Executive
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<PAGE>
Exhibit 10.15
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of June 1,1999, between Technor International, Inc., a
Nevada corporation (the "Company"), and Lynn Duplessis ("Executive").
W I T N E S S E T H:
WHEREAS, the Company is engaged in the business of [developing and
marketing products related to its cellular network tracking system] (as such
business is from time to time conducted by the Company and its affiliates during
the term of this Agreement, the "Business");
WHEREAS, the Company wishes to assure itself of the availability of the
advice and services of Executive in connection with the Business; and
WHEREAS, Executive wishes to be employed by the Company;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements set forth herein, the parties hereto agree as follows:
1. EMPLOYMENT AND TERM. Subject to the terms and conditions of this
Agreement, and unless earlier terminated as set forth herein, the Company agrees
to employ Executive, and Executive hereby accepts employment by the Company, for
the two-year period commencing on the date hereof; PROVIDED, HOWEVER, that
commencing on the date one year after the date hereof, and on each annual
anniversary of such date (such date and each annual anniversary thereof is
hereinafter referred to as the "Renewal Date"), the term of this Agreement shall
be automatically extended so as to terminate two years from such Renewal Date,
unless at least 60 days prior to the Renewal Date, either Executive or the
Company shall give notice that the term of this Agreement shall not be so
extended (the initial term, together with all renewal terms, is sometimes
referred to herein as the "Term").
2. DUTIES. During the Term, Executive shall serve the Company as its Vice
President, and shall perform such executive and other duties for the Company, or
any division, subsidiary, affiliate or joint venture of the Company, as are
incident to such position and as may reasonably be requested by the Board of
Directors of the Company and under their direction. During the Term, Executive
shall devote her entire business time, attention and energies, on a full-time
basis, to duties under this Agreement.
3. COMPENSATION.
a. BASE SALARY. During the Term, the Company shall pay to Executive, in
equal installments no less frequently than twice per month (or at such other
intervals as are in effect from time to time for other executive employees of
the Company), an annual base salary of $96,000 (such amount, as the same may
hereafter be modified by mutual agreement of Executive
<PAGE>
and the Company, to be reviewed once per year, being referred to herein as the
"Base Salary"). In addition, Executive may be awarded, at the Company's sole and
exclusive discretion, bonus compensation. Any such bonus compensation shall be
payable at such times as the Company may determine, but only if Executive is, as
of the date of such payment, an employee in good standing and not subject to any
of the notices described in Section 4.
b. BENEFITS. Executive shall be entitled to participate in such benefit
plans, including stock option, medical, health, retirement and other plans, as
may be established and maintained from time to time for executive employees of
the Company generally.
c. REIMBURSEMENT OF EXPENSES. Executive shall be entitled to reimbursement
for all normal and reasonable travel, entertainment and other expenses
necessarily incurred by her in the performance of her duties hereunder.
Executive shall submit on a timely basis such itemized accounts of such
expenses, together with such vouchers or receipts for individual expense items,
as the Company may from time to time require under its established policies and
procedures. The Company's payments hereunder shall be made within a reasonable
time following its receipt of such itemized accounts.
d. VACATION. Executive shall be entitled to 6 weeks' vacation each calendar
year during the Term (such period to be pro-rated based on the actual number of
working days for which Executive is employed during a calendar year). Executive
shall be entitled to additional compensation for any vacation time not taken in
respect of any calendar year, and Executive shall be entitled to carry over into
any succeeding year any unused vacation time.
e. DISABILITY. Except as hereinafter provided, the Company shall pay
Executive, for any period (up to a maximum of six months during the Term) in
which she is unable fully to perform her duties because of physical or mental
disability or incapacity, an amount equal to the Base Salary due her for such
period pursuant to Section 3(a), less the aggregate amount of all income
disability benefits which for such period she may receive by reason of (i) any
group health insurance plan, or disability insurance plan paid for by the
Company, in each case which is intended to function as a salary replacement
plan, (ii) any applicable compulsory state disability law, (iii) the Federal
Social Security Act, (iv) any applicable workmen's compensation law or similar
law and (v) any plan towards which the Company or any subsidiary or affiliate of
the Company (including any predecessor of any thereof) has contributed or for
which it has made payroll deductions, such as group accident or health policies,
other than those that reimburse for actual medical expenses.
f. KEY MAN INSURANCE. Executive agrees that the Company may obtain key man
life insurance with respect to Executive, and in connection therewith, agrees to
submit to all reasonable and customary examinations by the provider of such life
insurance.
4. TERMINATION OF EMPLOYMENT.
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<PAGE>
a. CAUSE. The Company shall have the right, at any time effective upon
notice to Executive, to terminate Executive's employment for "Cause," defined,
for purposes hereof, as (i) malfeasance, gross neglect or willful misconduct in
the performance of Executive's duties hereunder; (ii) conviction of a felony;
(iii) failure to perform any of Executive's material obligations under this
Agreement (other than by reason of death or disability contemplated by Section
3(e) or 4); (iv) fraud, dishonesty or unlawful conduct against the Company or
any of its or its affiliates' employees; or (v) a material breach of this
Agreement by Executive; PROVIDED, in the case of any default under clause (iii),
(iv) or (v) that is susceptible to cure, that such default continues uncured 15
days after written notice thereof from the Company to Executive.
b. DISABILITY; DEATH. In the event that Executive, due to physical or
mental disability or incapacity, is unable to substantially perform her duties
hereunder for a period of more than six months during the Term, the Company or
Executive shall have the right to terminate this Agreement and Executive's
employment hereunder upon 30 days' prior written notice and termination shall be
effective on the 30th day after receipt of such notice by the other party. In
the event that Executive is able to and recommences rendering services and
performing her duties hereunder within such 30-day notice period, Executive
shall be reinstated and such notice shall be without further force or effect. If
Executive dies during the Term, this Agreement shall terminate immediately upon
her death.
c. TERMINATION BY EXECUTIVE FOR GOOD REASON. Executive may terminate her
employment hereunder, such termination to be effective on written notice to the
Company, for any of the following reasons:
(i) the assignment to Executive of any duties inconsistent in any
material respect with Executive's position (including status, office,
titles and reporting requirements), authority, duties or responsibilities
as contemplated by this Agreement, or any other action by the Company which
results in a material diminution in such position, authority, duties or
responsibilities; or
(ii) the Company materially breaches its obligations under this
Agreement;
PROVIDED that any such action or default shall not have been remedied by the
Company within 15 days after receipt of notice thereof given by Executive.
d. VOLUNTARY TERMINATION BY EXECUTIVE. Executive may terminate her
employment under this Agreement on six months' written notice to the Company at
any time.
5. EFFECTS OF TERMINATION.
a. In the event that Executive's employment is terminated pursuant to
Section 4(a) or 4(d) hereof, (i) Executive's employment hereunder shall
immediately cease, (ii) the
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<PAGE>
Company shall pay to Executive her accrued and unpaid salary, accrued vacation
time and expense reimbursement through the date of termination in accordance
with the Company's usual procedures, and (iii) all then non-exercisable stock
options shall immediately and automatically terminate. Once the amounts referred
to in clause (ii) are paid, however, the Corporation shall have no further
obligation to Executive.
b. In the event that Executive's employment is terminated pursuant to
Section 4(b) hereof as a result of Executive's death, (i) Executive's employment
hereunder shall cease in accordance with Section 4(b), (ii) the Company shall
pay to Executive her accrued and unpaid salary, accrued vacation time and
expense reimbursement through the date of termination in accordance with the
Company's usual procedures, (iii) all then non-exercisable stock options shall
immediately and automatically terminate, and (iv) any vested options shall be
transferred in accordance with Executive's will; PROVIDED that nothing in this
paragraph (b) shall alter any right of Executive (or her legal representative)
to receive death benefits provided in accordance with the terms of a benefit
plan in which Executive participates if Executive's employment is terminated
pursuant to Section 4(b) hereof.
c. In the event that Executive's employment is terminated pursuant to
Section 4(b) hereof as a result of Executive's disability, (i) the Company shall
pay to Executive her accrued and unpaid salary, accrued vacation time and
expense reimbursement through the date of termination in accordance with the
Company's usual procedures, (ii) the Company shall continue to pay to Executive
her Base Salary, and all associated benefits, for a period of six months
following such date of termination, in accordance with the Company's usual
procedures; (iii) any nonexercisable stock options which would otherwise have
become vested in accordance with their terms within such six-month period if
Executive's employment shall have continued shall be vested; and (iv) any stock
options which are not vested at the end of such six-month period shall
automatically terminate at the end of such six-month period; PROVIDED that
nothing in this paragraph (c) shall alter any right of Executive (or her legal
representative) to receive disability benefits provided in accordance with the
terms of a benefit plan in which Executive participates if Executive's
employment is terminated pursuant to Section 4(b) hereof.
d. In the event that Executive's employment hereunder is terminated by the
Company other than pursuant to Section 4(a) or (b) or if Executive's employment
is terminated pursuant to Section 4(c), then: (i) Executive shall be entitled to
receive, and the Company shall continue to pay to Executive, the Base Salary
specified in Section 3(a) for one year following the effective date of such
termination, (ii) Executive shall be entitled, during the period during which
such severance payment is being paid, to receive all benefits under the
Company's medical insurance, disability insurance, life insurance and other
benefit plans as are then in effect for executives of the Company, (iii) any
nonexercisable stock options which would otherwise have become vested in
accordance with their terms within such one-year period if Executive's
employment shall have continued shall be vested; and (iv) any stock options
which are not vested at the end of such one-year period shall automatically
terminate at the end of such one-year period.
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<PAGE>
e. Executive's obligations pursuant to Sections 6 and 7 hereof shall
survive any termination of this Agreement for any reason whatsoever.
f. TERMINATION IN CERTAIN CIRCUMSTANCES AFTER A CHANGE OF CONTROL. If any
of the following shall occur:
(i) The acquisition by any person, entity or "group" (within the
meaning of Section 13(d)(3) of the Securities Exchange Act if 1934, as
amended (the "Exchange Act")) (other than the Company, its affiliates or
any Company benefit plan that acquires beneficial ownership of voting
securities of the Company) of beneficial ownership (within the meaning of
Rule 13d-3 under the Exchange Act) of 50% or more of the combined voting
power of the Company's then outstanding voting securities entitled to vote
generally in the election of directors; or
(ii) The failure of the individuals who, as of the date hereof,
constitute the Board of Directors of the Company (the "Incumbent Board"),
to constitute at least a majority of the Board of Directors; PROVIDED that
any person who becomes a director subsequent to the date hereof whose
recommendation, election or nomination for election by the Company's
stockholders was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be deemed to be a member of the
Incumbent Board; or
(iii) The consummation by the Company of a reorganization, share
exchange, merger or consolidation in which the persons who were the
stockholders of the Company immediately prior to such reorganization, share
exchange, merger or consolidation do not, immediately thereafter, own more
than 50% of the combined voting power entitled to vote in the election of
directors of the reorganized, merged or consolidated company;
and if Executive's employment is terminated within twelve months of any of the
foregoing events (other than pursuant to Sections 4(a), 4(b) or 4(d) hereof, (x)
the Company shall pay to the Executive, as severance pay or liquidated damages
or both, during the twelve-month period immediately following such termination,
the amount of Base Salary that the Executive would have been entitled to receive
during such period had the Executive's employment not been so terminated; (y)
Executive shall be entitled, during the period during which such severance
payment is being paid, to receive all benefits under the Company's medical
insurance, disability insurance, life insurance and other benefit plans as are
then in effect for executives of the Company, and (z) any nonexercisable stock
options which would otherwise have become vested in accordance with their terms
within such one-year period if Executive's employment shall have continued shall
be vested.
6. CONFIDENTIALITY.
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a. Executive understands and acknowledges that, as a result of Executive's
employment with the Company, she shall necessarily become informed of, and shall
have access to, confidential information of the Company, including, without
limitation, the contents of this Agreement, inventions, trade secrets, technical
information, know-how, plans, marketing plans and information, pricing
information, identity of providers and their patients and prospective providers
and their patients and identity of suppliers, and that such information, even
though it may be developed or otherwise acquired by Executive, is the exclusive
property of the Company to be held by Executive in a fiduciary capacity and
solely for the Company's benefit. Executive shall not at any time, either during
or subsequent to her employment hereunder, reveal, report, publish, transfer or
otherwise disclose to any person, company or other entity, or use for own
benefit, any of the Company's confidential information which Executive, in the
exercise of reasonable diligence, knows or should know to be confidential,
without the written consent of the Company, except for use on behalf of the
Company in connection with the Business, and except for such information which
is or becomes of general public knowledge from authorized sources other than
Executive.
b. Upon the termination of her employment with the Company for any reason,
Executive shall promptly deliver to the Company all manuals, letters, notes,
notebooks, reports, documents and copies thereof and all other materials,
including, without limitation, those of a secret or confidential nature,
relating to the Business that are in Executive's possession or control.
c. For purposes of this Section 6, the term "Company" includes the Company,
any predecessor company, and any of their respective affiliates.
7. NON-COMPETITION.
a. Subject to the provisions of paragraph (b) hereof, Executive agrees
that, for the period commencing on the date hereof and ending two years after
the termination of employment with the Company for any reason, she shall not, in
any country in the world in which the Company then engages in the Business (or
in such lesser area or for such lesser period as may be determined by a court of
competent jurisdiction to be a reasonable limitation on the competitive activity
of Executive), directly or indirectly:
(i) engage, as an employee, officer, independent contractor or in any
other capacity, in any activity for or on behalf of any person or entity
(other than the Company) in a line of business competitive with the
Business or any aspect thereof or engage in any manner in the Business;
(ii) except for the benefit of the Company, solicit or attempt to
solicit business of entities who were providers for, or customers of, the
Company at any time within the prior two years (including prospective
providers or customers solicited by the Company) for products or services
the same or similar to those offered, sold, produced or under
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<PAGE>
development by the Company, or dealt in by Executive, during her employment
therewith;
(iii) interfere with the Company, the Business or the conduct thereof
by the Company, or otherwise divert or attempt to divert from the Company
any business whatsoever;
(iv) hire, solicit or attempt to solicit for participation or
employment in any business endeavor any employee of the Company;
(v) use the name of the Company or any name used by the Company, or
any name similar to any thereof, whether or not registered; or
(vi) render any services as an officer, director, employee, partner,
consultant or otherwise to, or have any interest as a member, stockholder,
partner, lender or otherwise in, any person or entity that is engaged in
activities which, if performed by Executive, would violate this Section 7.
The foregoing shall not prevent Executive from purchasing up to five percent of
the voting securities of any other entity, the securities of which are
publicly-traded, during the time which the Executive is actively employed by the
Company.
b. In the event Executive's employment is terminated under the
circumstances contemplated by paragraphs (c) or (d) of Section 5, the
obligations of Executive set forth under this Section 7 shall only continue in
effect so long as the Company continues to pay to Executive her Base Salary (in
the intervals set forth in Section 3(a)) during the one-year period following
termination of such employment.
c. Executive agrees that the restrictions on competition set forth in this
Section 7 are reasonable and are properly required for the adequate protection
of the Business of the Company. Executive represents that her experience,
capabilities and circumstances are such that the provisions of this Section 7
will not prevent her from earning an appropriate livelihood.
8. REMEDIES AND SURVIVAL. Because the Company does not have an adequate
remedy at law to protect its interest in its confidential information and its
Business from Executive's competition, the Company shall be entitled to
injunctive relief, in addition to such other remedies and relief that would, in
the event of a breach of the provisions of Sections 6 or 7, be available to the
Company. The provisions of Sections 5 through 8 of this Agreement shall survive
any termination of Executive's employment with the Company.
9. ENTIRE AGREEMENT. This Agreement sets forth the entire understanding of
the parties hereto with respect to its subject matter, merges and supersedes any
prior or contemporaneous agreements or understandings with respect to its
subject matter and shall not be
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modified or terminated except by another agreement in writing executed by the
Company and Executive.
10. SEVERABILITY. If any provision of this Agreement is held to be invalid
or unenforceable by any court or tribunal of competent jurisdiction, the
remainder of this Agreement shall not be affected by such judgment, and such
provision shall be carried out as nearly as possible according to its original
terms and intent to eliminate such invalidity or unenforceability.
11. SUCCESSORS AND ASSIGNS. Neither party shall have the right to assign
this personal Agreement, or any rights or obligations hereunder, without the
consent of the other party; PROVIDED, HOWEVER, that upon the sale or transfer of
all or substantially all of the assets and business of the Company to another
party, or upon the merger or consolidation of the Company with another Company,
this Agreement shall inure to the benefit of, and be binding upon, both
Executive and the party purchasing or acquiring such assets, business and
goodwill, or surviving such merger or consolidation, as the case may be, in the
same manner and to the same extent as though such other party were the Company.
Subject to the foregoing, this Agreement shall inure to the benefit of, and
bind, the parties hereto and their legal representatives, heirs, successors and
permitted assigns.
12. CONSTRUCTION; COUNTERPARTS. The headings contained in this Agreement
are for convenience only and shall in no way restrict or otherwise affect the
construction of the provisions hereof. This Agreement may be executed in
multiple counterparts, each of which shall be an original and all of which
together shall constitute one and the same instrument.
13. ARBITRATION; GOVERNING LAW. This Agreement shall be governed by the
laws of the State of Nevada applicable to agreements made and fully to be
performed therein by residents thereof. Any dispute arising out of or in
connection with this Agreement, including, without limitation, disputes over the
nature of any termination hereof, shall be finally determined by binding
arbitration in New York before a single arbitrator chosen in accordance with the
rules of the American Arbitration Association then and there obtaining. The
arbitration shall be conducted in accordance with such rules, and the arbitrator
shall have the authority to order such injunctive relief as she may determine,
to determine how the parties shall bear the costs of such arbitration, and to
award such damages (but not any punitive or exemplary damages) as are
appropriate. Each of the parties hereby waives any and all objections or it may
have with respect to the jurisdiction of such arbitral forum or the
inconvenience of its venue.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first set forth above.
TECHNOR INTERNATIONAL, INC.
By: /s/ Peter Henricsson
--------------------------------------
President
/s/ Lynn Duplessis
--------------------------------------
Executive
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Exhibit 10.16
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of August 1,1999, between CellPoint Systems AB, (the
"Company"), and Hadar Cars ("Executive").
W I T N E S S E T H:
WHEREAS, the Company is engaged in the business of developing and marketing
products related to its cellular network tracking system (as such business is
from time to time conducted by the Company and its affiliates during the term of
this Agreement, the "Business");
WHEREAS, the Company wishes to assure itself of the availability of the
advice and services of Executive in connection with the Business; and
WHEREAS, Executive wishes to be employed by the Company;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements set forth herein, the parties hereto agree as follows:
1. EMPLOYMENT AND TERM. Subject to the terms and conditions of this
Agreement, and unless earlier terminated as set forth herein, the Company agrees
to employ Executive, and Executive hereby accepts employment by the Company, for
the two-year period commencing on the date hereof; PROVIDED, HOWEVER, that
commencing on the date one year after the date hereof, and on each annual
anniversary of such date (such date and each annual anniversary thereof is
hereinafter referred to as the "Renewal Date"), the term of this Agreement shall
be automatically extended so as to terminate two years from such Renewal Date,
unless at least 60 days prior to the Renewal Date, either Executive or the
Company shall give notice that the term of this Agreement shall not be so
extended (the initial term, together with all renewal terms, is sometimes
referred to herein as the "Term").
2. DUTIES. During the Term, Executive shall serve the Company as its
Managing Director, and shall perform such executive and other duties for the
Company, or any division, subsidiary, affiliate or joint venture of the Company,
as are incident to such position and as may reasonably be requested by the Board
of Directors of the Company and under their direction. During the Term,
Executive shall devote his entire business time, attention and energies, on a
full-time basis, to his duties under this Agreement.
3. COMPENSATION.
a. BASE SALARY. During the Term, the Company shall pay to Executive, in
equal installments no less frequently than twice per month (or at such other
intervals as are in effect from time to time for other executive employees of
the Company), a monthly base salary of 65,000 Swedish Crowns (such amount, as
the same may hereafter be modified by mutual
<PAGE>
agreement of Executive and the Company, to be reviewed once per year, being
referred to herein as the "Base Salary"). In addition, Executive may be awarded,
at the Company's sole and exclusive discretion, bonus compensation. Any such
bonus compensation shall be payable at such times as the Company may determine,
but only if Executive is, as of the date of such payment, an employee in good
standing and not subject to any of the notices described in Section 4.
b. BENEFITS. Executive shall be entitled to participate in such benefit
plans, including stock option, medical, health, retirement and other plans, as
may be established and maintained from time to time for executive employees of
the Company generally.
c. REIMBURSEMENT OF EXPENSES. Executive shall be entitled to reimbursement
for all normal and reasonable travel, entertainment and other expenses
necessarily incurred by him in the performance of his duties hereunder.
Executive shall submit on a timely basis such itemized accounts of such
expenses, together with such vouchers or receipts for individual expense items,
as the Company may from time to time require under its established policies and
procedures. The Company's payments hereunder shall be made within a reasonable
time following its receipt of such itemized accounts.
d. VACATION. Executive shall be entitled to 6 weeks' vacation each calendar
year during the Term (such period to be pro-rated based on the actual number of
working days for which Executive is employed during a calendar year). Executive
shall be entitled to additional compensation for any vacation time not taken in
respect of any calendar year, and Executive shall be entitled to carry over into
any succeeding year any unused vacation time.
e. DISABILITY. Except as hereinafter provided, the Company shall pay
Executive, for any period (up to a maximum of six months during the Term) in
which he is unable fully to perform his duties because of physical or mental
disability or incapacity, an amount equal to the Base Salary due him for such
period pursuant to Section 3(a), less the aggregate amount of all income
disability benefits which for such period he may receive by reason of (i) any
group health insurance plan, or disability insurance plan paid for by the
Company, in each case which is intended to function as a salary replacement
plan, (ii) any applicable compulsory state disability law, (iii) the Federal
Social Security Act, (iv) any applicable workmen's compensation law or similar
law and (v) any plan towards which the Company or any subsidiary or affiliate of
the Company (including any predecessor of any thereof) has contributed or for
which it has made payroll deductions, such as group accident or health policies,
other than those that reimburse for actual medical expenses.
f. KEY MAN INSURANCE. Executive agrees that the Company may obtain key man
life insurance with respect to Executive, and in connection therewith, agrees to
submit to all reasonable and customary examinations by the provider of such life
insurance.
4. TERMINATION OF EMPLOYMENT.
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a. CAUSE. The Company shall have the right, at any time effective upon
notice to Executive, to terminate Executive's employment for "Cause," defined,
for purposes hereof, as (i) malfeasance, gross neglect or willful misconduct in
the performance of Executive's duties hereunder; (ii) conviction of a felony;
(iii) failure to perform any of Executive's material obligations under this
Agreement (other than by reason of death or disability contemplated by Section
3(e) or 4); (iv) fraud, dishonesty or unlawful conduct against the Company or
any of its or its affiliates' employees; or (v) a material breach of this
Agreement by Executive; PROVIDED, in the case of any default under clause (iii),
(iv) or (v) that is susceptible to cure, that such default continues uncured 15
days after written notice thereof from the Company to Executive.
b. DISABILITY; DEATH. In the event that Executive, due to physical or
mental disability or incapacity, is unable to substantially perform his duties
hereunder for a period of more than six months during the Term, the Company or
Executive shall have the right to terminate this Agreement and Executive's
employment hereunder upon 30 days' prior written notice and termination shall be
effective on the 30th day after receipt of such notice by the other party. In
the event that Executive is able to and recommences rendering services and
performing his duties hereunder within such 30-day notice period, Executive
shall be reinstated and such notice shall be without further force or effect. If
Executive dies during the Term, this Agreement shall terminate immediately upon
his death.
c. TERMINATION BY EXECUTIVE FOR GOOD REASON. Executive may terminate his
employment hereunder, such termination to be effective on written notice to the
Company, for any of the following reasons:
(i) the assignment to Executive of any duties inconsistent in any
material respect with Executive's position (including status, office,
titles and reporting requirements), authority, duties or responsibilities
as contemplated by this Agreement, or any other action by the Company which
results in a material diminution in such position, authority, duties or
responsibilities; or
(ii) the Company materially breaches its obligations under this
Agreement;
PROVIDED that any such action or default shall not have been remedied by the
Company within 15 days after receipt of notice thereof given by Executive.
d. VOLUNTARY TERMINATION BY EXECUTIVE. Executive may terminate his
employment under this Agreement on six months' written notice to the Company at
any time.
5. EFFECTS OF TERMINATION.
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a. In the event that Executive's employment is terminated pursuant to
Section 4(a) or 4(d) hereof, (i) Executive's employment hereunder shall
immediately cease, (ii) the Company shall pay to Executive his accrued and
unpaid salary, accrued vacation time and expense reimbursement through the date
of termination in accordance with the Company's usual procedures, and (iii) all
then non-exercisable stock options shall immediately and automatically
terminate. Once the amounts referred to in clause (ii) are paid, however, the
Corporation shall have no further obligation to Executive.
b. In the event that Executive's employment is terminated pursuant to
Section 4(b) hereof as a result of Executive's death, (i) Executive's employment
hereunder shall cease in accordance with Section 4(b), (ii) the Company shall
pay to Executive his accrued and unpaid salary, accrued vacation time and
expense reimbursement through the date of termination in accordance with the
Company's usual procedures, (iii) all then non-exercisable stock options shall
immediately and automatically terminate, and (iv) any vested options shall be
transferred in accordance with Executive's will; PROVIDED that nothing in this
paragraph (b) shall alter any right of Executive (or his legal representative)
to receive death benefits provided in accordance with the terms of a benefit
plan in which Executive participates if Executive's employment is terminated
pursuant to Section 4(b) hereof.
c. In the event that Executive's employment is terminated pursuant to
Section 4(b) hereof as a result of Executive's disability, (i) the Company shall
pay to Executive his accrued and unpaid salary, accrued vacation time and
expense reimbursement through the date of termination in accordance with the
Company's usual procedures, (ii) the Company shall continue to pay to Executive
his Base Salary, and all associated benefits, for a period of six months
following such date of termination, in accordance with the Company's usual
procedures; (iii) any nonexercisable stock options which would otherwise have
become vested in accordance with their terms within such six-month period if
Executive's employment shall have continued shall be vested; and (iv) any stock
options which are not vested at the end of such six-month period shall
automatically terminate at the end of such six-month period; PROVIDED that
nothing in this paragraph (c) shall alter any right of Executive (or his legal
representative) to receive disability benefits provided in accordance with the
terms of a benefit plan in which Executive participates if Executive's
employment is terminated pursuant to Section 4(b) hereof.
d. In the event that Executive's employment hereunder is terminated by the
Company other than pursuant to Section 4(a) or (b) or if Executive's employment
is terminated pursuant to Section 4(c), then: (i) Executive shall be entitled to
receive, and the Company shall continue to pay to Executive, the Base Salary
specified in Section 3(a) for one year following the effective date of such
termination, (ii) Executive shall be entitled, during the period during which
such severance payment is being paid, to receive all benefits under the
Company's medical insurance, disability insurance, life insurance and other
benefit plans as are then in effect for executives of the Company, (iii) any
nonexercisable stock options which would otherwise have become vested in
accordance with their terms within such one-year period if Executive's
employment shall have continued shall be vested; and (iv) any stock options
which are not vested
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<PAGE>
at the end of such one-year period shall automatically terminate at the end of
such one-year period.
e. Executive's obligations pursuant to Sections 6 and 7 hereof shall
survive any termination of this Agreement for any reason whatsoever.
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6. CONFIDENTIALITY.
a. Executive understands and acknowledges that, as a result of Executive's
employment with the Company, he shall necessarily become informed of, and shall
have access to, confidential information of the Company, including, without
limitation, the contents of this Agreement, inventions, trade secrets, technical
information, know-how, plans, marketing plans and information, pricing
information, identity of providers and their patients and prospective providers
and their patients and identity of suppliers, and that such information, even
though it may be developed or otherwise acquired by Executive, is the exclusive
property of the Company to be held by Executive in a fiduciary capacity and
solely for the Company's benefit. Executive shall not at any time, either during
or subsequent to his employment hereunder, reveal, report, publish, transfer or
otherwise disclose to any person, company or other entity, or use for his own
benefit, any of the Company's confidential information which Executive, in the
exercise of reasonable diligence, knows or should know to be confidential,
without the written consent of the Company, except for use on behalf of the
Company in connection with the Business, and except for such information which
is or becomes of general public knowledge from authorized sources other than
Executive.
b. Upon the termination of his employment with the Company for any reason,
Executive shall promptly deliver to the Company all manuals, letters, notes,
notebooks, reports, documents and copies thereof and all other materials,
including, without limitation, those of a secret or confidential nature,
relating to the Business that are in Executive's possession or control.
c. For purposes of this Section 6, the term "Company" includes the Company,
any predecessor company, and any of their respective affiliates.
7. NON-COMPETITION.
a. Subject to the provisions of paragraph (b) hereof, Executive agrees
that, for the period commencing on the date hereof and ending two years after
the termination of his employment with the Company for any reason, he shall not,
in any country in the world in which the Company then engages in the Business
(or in such lesser area or for such lesser period as may be determined by a
court of competent jurisdiction to be a reasonable limitation on the competitive
activity of Executive), directly or indirectly:
(i) engage, as an employee, officer, independent contractor or in any
other capacity, in any activity for or on behalf of any person or entity
(other than the Company) in a line of business competitive with the
Business or any aspect thereof or engage in any manner in the Business;
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<PAGE>
(ii) except for the benefit of the Company, solicit or attempt to
solicit business of entities who were providers for, or customers of, the
Company at any time within the prior two years (including prospective
providers or customers solicited by the Company) for products or services
the same or similar to those offered, sold, produced or under development
by the Company, or dealt in by Executive, during his employment therewith;
(iii) interfere with the Company, the Business or the conduct thereof
by the Company, or otherwise divert or attempt to divert from the Company
any business whatsoever;
(iv) hire, solicit or attempt to solicit for participation or
employment in any business endeavor any employee of the Company;
(v) use the name of the Company or any name used by the Company, or
any name similar to any thereof, whether or not registered; or
(vi) render any services as an officer, director, employee, partner,
consultant or otherwise to, or have any interest as a member, stockholder,
partner, lender or otherwise in, any person or entity that is engaged in
activities which, if performed by Executive, would violate this Section 7.
The foregoing shall not prevent Executive from purchasing up to five percent of
the voting securities of any other entity, the securities of which are
publicly-traded, during the time which the Executive is actively employed by the
Company.
b. In the event Executive's employment is terminated under the
circumstances contemplated by paragraphs (c) or (d) of Section 5, the
obligations of Executive set forth under this Section 7 shall only continue in
effect so long as the Company continues to pay to Executive his Base Salary (in
the intervals set forth in Section 3(a)) during the one-year period following
termination of such employment.
c. Executive agrees that the restrictions on competition set forth in this
Section 7 are reasonable and are properly required for the adequate protection
of the Business of the Company. Executive represents that his experience,
capabilities and circumstances are such that the provisions of this Section 7
will not prevent him from earning an appropriate livelihood.
8. REMEDIES AND SURVIVAL. Because the Company does not have an adequate
remedy at law to protect its interest in its confidential information and its
Business from Executive's competition, the Company shall be entitled to
injunctive relief, in addition to such other remedies and relief that would, in
the event of a breach of the provisions of Sections 6 or 7, be available to the
Company. The provisions of Sections 5 through 8 of this Agreement shall survive
any termination of Executive's employment with the Company.
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<PAGE>
9. ENTIRE AGREEMENT. This Agreement sets forth the entire understanding of
the parties hereto with respect to its subject matter, merges and supersedes any
prior or contemporaneous agreements or understandings with respect to its
subject matter and shall not be modified or terminated except by another
agreement in writing executed by the Company and Executive.
10. SEVERABILITY. If any provision of this Agreement is held to be invalid
or unenforceable by any court or tribunal of competent jurisdiction, the
remainder of this Agreement shall not be affected by such judgment, and such
provision shall be carried out as nearly as possible according to its original
terms and intent to eliminate such invalidity or unenforceability.
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<PAGE>
11. SUCCESSORS AND ASSIGNS. Neither party shall have the right to assign
this personal Agreement, or any rights or obligations hereunder, without the
consent of the other party; PROVIDED, HOWEVER, that upon the sale or transfer of
all or substantially all of the assets and business of the Company to another
party, or upon the merger or consolidation of the Company with another Company,
this Agreement shall inure to the benefit of, and be binding upon, both
Executive and the party purchasing or acquiring such assets, business and
goodwill, or surviving such merger or consolidation, as the case may be, in the
same manner and to the same extent as though such other party were the Company.
Subject to the foregoing, this Agreement shall inure to the benefit of, and
bind, the parties hereto and their legal representatives, heirs, successors and
permitted assigns.
12. CONSTRUCTION; COUNTERPARTS. The headings contained in this Agreement
are for convenience only and shall in no way restrict or otherwise affect the
construction of the provisions hereof. This Agreement may be executed in
multiple counterparts, each of which shall be an original and all of which
together shall constitute one and the same instrument.
13. ARBITRATION; GOVERNING LAW. This Agreement shall be governed by the
laws of Sweden applicable to agreements made and fully to be performed therein
by residents thereof. Any dispute arising out of or in connection with this
Agreement, including, without limitation, disputes over the nature of any
termination hereof, shall be finally determined by the Swedish court system.
Each of the parties hereby waives any and all objections he or it may have with
respect to the jurisdiction of such legal forum or the inconvenience of its
venue.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first set forth above.
CellPoint Systems AB
BY: /s/ PETER HENRICSSON
------------------------------------
Chairman
/s/ HADAR CARS
------------------------------------
Executive
<PAGE>
Exhibit 10.17
EMPLOYMENT CONTRACT
between
WASP INTERNATIONAL (PROPRIETARY) LIMITED
(Registration No. 93/0027/07)
("the Company")
and
ALBERT VAN URK
("the Employee")
<PAGE>
EMPLOYMENT
The Company engages the Employee who agrees to accept the
appointment as Executive Director - Research and Development on the
terms and conditions set out in this agreement.
25 PERIOD OF EMPLOYMENT
25.1 This agreement shall commence on the date of signature of the
agreement to which this agreement constitutes SCHEDULE 2 by the
parties thereto and shall continue, subject to CLAUSE 36, for a period
of two years thereafter.
25.2 By agreement between the Company and the Employee, from time to time,
the parties may agree to extend the employment of the Employee for
further periods of 1 year.
26 THE EMPLOYEE'S OBLIGATIONS
The Employee shall -
26.1 perform the duties of an Executive Director - Research and Development
as determined from time to time by the Company;
26.2 comply with all instructions given to him from time to time by the
Company;
26.3 devote all his time and attention to his duties under this agreement;
26.4 while he is employed by the Company, not engage or take part, directly
or indirectly, whether as an Employee or otherwise, in any other
business without the prior written consent of the Company;
26.5 use his best endeavours to promote and extend the business and
interests of the Company;
26.6 comply with all the Company's reasonable rules, regulations, policies,
practices and procedures laid down from time to time for the efficient
and harmonious operation of the Company's business.
<PAGE>
27 REMUNERATION
27.1 As remuneration for the services to be rendered by the Employee in
terms of this agreement, the Company shall pay him, subject to 14.2, a
yearly salary of R 500 000 (Five hundred thousand) payable when all
the Company's other executive employees are paid.
27.2 At the end of each and every financial year of the Company, the
Company shall review the salary referred to in 27.1.
28 MEDICAL AID, INSURANCE AND PENSION
28.1 The Employee shall:
28.1.1 be entitled to become a member of the Company's medical aid fund; and
28.1.2 become a member of the pension or provident fund operated by the
Company from time to time.
28.2 If the Employee becomes a member of the medical aid fund, the Employer
shall contribute a 50% of the amounts payable on a regular monthly
basis to the medical aid scheme referred to in 28.1.1.
29 LEAVE
29.1 The Employee shall be entitled to 20 (twenty) working days leave on
full pay after every 12 months of completed service in terms of this
agreement; which leave shall be taken at a time convenient to the
Company. Any leave entitlement in excess of 20 (twenty) working days
per annum may be accumulated up to a maximum of 15 working days. The
Company shall not unreasonably post pone the taking of leave.
<PAGE>
29.2 The Employee shall be entitled to sick leave in accordance with the
Company's sick leave policy from time to time, details of which are
set out in the Company's Service Manual.
30 CAR ALLOWANCE
30.1 The Company and the Employee shall, as soon as practicable after
commencement of his employment, agree what portion of the remuneration
set out in 27.1 shall be allocated to the provision of a car allowance
policy, subject to the terms of the Company's car allowance policy.
30.2 The Company shall reimburse the Employee for all fuel and oil consumed
by his vehicle used in the ordinary course of the Company's business,
in accordance with the expenses incurred and subject to the Company's
car fuel policy.
30.3 The Company shall reimburse the employee for all maintenance expense
incurred in respect of the vehicle referred to in 30.1, in accordance
with expenses incurred and subject to the Company's car maintenance
policy.
30.4 The Employee shall be bound by the Company's car allowance, fuel, and
maintenance policies, and changes to those policies from time to time.
31 ENTERTAINMENT, CLUBS AND PROFESSIONAL ASSOCIATION MEMERSHIP FEES
The Company shall furnish the Employee with an entertainment allowance
per month to entertain customers of the Company in the ordinary course
of the Company's business and to enable the Employee to obtain
membership in clubs and professional associations.
32 TRAVEL AND SUBSISTENCE
The Company shall reimburse the Employee upon request for all domestic
travel expenses (other than for fuel and oil referred to in 30.2) and
domestic accommodation expenses, BONA FIDE incurred by the Employee on
the Company's business, in accordance with the expenses incurred.
<PAGE>
33 TELEPHONE
The Company shall reimburse the Employee for his recurring expenses
incurred to MTN or Vodacom for the use of a cellular phone and related
facility in connection with the Company's business.
34 CONFIDENTIAL INFORMATION
34.1 For the purposes of this clause 34 "the Confidential Information"
means all the information referred to in 34.2.1.
34.2 The Employee acknowledges that -
34.2.1 during his employment with the Company he will have access to
Confidential Information of the Company including, but without being
limited to, information relating to the identity of customers and
suppliers of the Company, the pricing methods of the Company, its
trade connections, its manufacturing procedures and technologies, and
its financial and marketing operations;
34.2.2 if any of the Confidential Information were to be given to or used by
any of the Company's competitors or potential competitors the Company
would be severely prejudiced and could suffer substantial damage and
loss;
34.2.3 because he will have access to the Confidential Information during the
period of his employment with the Company it is reasonable for the
protection of the Company that he shall be restrained from using it
for his own or anyone else's benefit.
34.3 For the reasons stated in 34.2 the Employee undertakes that -
34.3.1 for as long as he is employed by the Company and after the expiry or
other termination of his employment for any reason, he will not
divulge any of the Confidential Information to any person whatsoever
except insofar as may be necessary for the proper performance of his
duties to the Company in terms of this agreement; and
<PAGE>
34.3.2 he will not use any of the Confidential Information for his own or
anyone else's benefit,
unless and until, and then only to the extent, that the Confidential
Information becomes public knowledge through no fault of his.
34.4 The provisions of this clause 34 shall survive the expiration or
earlier termination of this agreement including any cancellation.
35 BOOKS OF ACCOUNT
All books of account, records, papers and correspondence concerning
and containing any reference to the Company's business shall be given
up by the Employee to the Company whenever he is required to do so by
the Company and in any event, on the expiration or earlier termination
of his employment with the Company.
36 TERMINATION
36.1 The Company may cancel this employment contract summarily at any time
if the Employee -
36.1.1 commits a material breach of his obligations under this agreement; or
36.1.2 acts in such a way or fails to act in such a way, which would entitle
the Company to summarily dismiss him at common law; or
36.1.3 becomes insolvent or compounds with his creditors; or
36.1.4 is incapacitated (for any reason whatsoever) from performing all or
any of his duties under this agreement for 4 consecutive months or for
periods aggregating 6 months in any 12 consecutive months.
36.2 Should the Company be of the view that the Employee should be made
redundant or should be retrenched in accordance with the Company's
normal policy or that the Employee is incompetent or does not perform
his work adequately then the Company shall give the Employee written
notice to that effect and, within 14 days from the date of such
notice, the parties shall meet to negotiate in good faith with a view
to resolving the
<PAGE>
issue in question. Should the parties be unable to resolve such issue
to the satisfaction of both parties within 21 days of the date of the
notice in question, then the parties shall be entitled to consider
resolution by conciliation, mediation or arbitration according to the
principles set out in clause 16 of the Shareholders Agreement.
36.3 The remedies referred to in 36.1 and 36.2 are not exhaustive and shall
be in addition and without prejudice to any other remedies the Company
may have, whether for summary cancellation or damages.
37 NON-VARIATION
No alteration or variation to this agreement shall be of any force or
effect unless it is recorded in writing and signed by all the parties
to this agreement.
38 DOMICILIUM AND NOTICES
38.1 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 -
38.1.1 the Company at : Lakeside Place
1 Ernest Oppenheimer Drive
Bruma
Johannesburg
2198
Telefax Number : (011) 622-8973
38.1.2 Albert van Urk: 20 Van Rooy Street
Potchefstroom
<PAGE>
Telefax Number : (018) 297 2121
38.2 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.
38.3 Any notice to a party contained in a correctly addressed envelope and
-
38.3.1 sent by prepaid registered post to it at its chosen address; or
38.3.2 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 38.3.1,
on the seventh business day after posting (unless the contrary
is proved) and, in the case of 38.3.2, on the day of delivery.
38.4 Any notice sent by telefax to a party at its telefax number shall be
deemed (unless the contrary is proved) to have been received -
38.4.1 if it is transmitted during normal business hours, within 2 hours of
transmission;
38.4.2 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.
38.5 Each party chooses the physical address set out opposite its name in
38.1 as the address at which legal process must be delivered for the
purpose of this agreement.
38.6 The parties shall be entitled at any time to change their addresses
for the purposes of this clause 38 to any other address in the
Republic of South Africa by giving written notice to that effect to
the other.
<PAGE>
39 GENERAL
39.1 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.
39.2 The parties to this agreement undertake to treat all matters relating
to this agreement as being confidential and, therefore, shall not,
without the written approval of the others, disclose the provisions
hereof to any third party.
39.3 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.
39.4 All the transactions and arrangements contemplated in this agreement
constitute one indivisible transaction.
39.5 If any of the provisions of this agreement shall be held unenforceable
in any pertinent jurisdiction, such event shall not affect the
validity of the remainder of the provisions of this agreement.
40 INTERPRETATION
40.1 In this agreement, unless the context requires otherwise -
40.1.1 words importing any one gender shall include the other two genders;
40.1.2 the singular shall include the plural and vice versa;
40.1.3 a reference to natural persons shall include created entities
(corporate and unincorporate) and vice versa.
40.2 The headings in this agreement have been inserted for convenience only
and shall not be used for nor assist or affect its interpretation.
40.3 This agreement shall be interpreted and implemented according to the
laws of the Republic of South Africa.
<PAGE>
SIGNED at on
July 31, 1998
For: WASP INTERNATIONAL (PTY) LTD
/s/ GUY REDFORD
---------------------------------------
Signatory: Guy Redford
Capacity:
Authority:
SIGNED at on
July 31, 1998
/s/ ALBERT VAN URK
---------------------------------------
ALBERT VAN URK
<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>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> JUN-30-1999
<CASH> 180,073
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 236,193
<PP&E> 156,282
<DEPRECIATION> 46,142
<TOTAL-ASSETS> 11,756,541
<CURRENT-LIABILITIES> 595,639
<BONDS> 0
0
0
<COMMON> 8,190
<OTHER-SE> 11,152,712
<TOTAL-LIABILITY-AND-EQUITY> 11,756,541
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 96,272
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,969,751)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,969,751)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,969,751)
<EPS-BASIC> (0.36)
<EPS-DILUTED> (0.36)
</TABLE>
