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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):September 18, 1996
Sector Communications, Inc.
(Exact name of registrant as specified in its charter)
Commission File Number: 0-22382
Nevada 56-1051491
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7601 Lewinsville Road, Suite 200, McLean, Va. 22102
(Address of principal executive offices)
(703) 761-1500
Registrant's telephone number
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
------------------------------------
ACQUISITION OF HIS TECHNOLOGY AG AND MOUNTAIN SOFTWARE AG
On August 12, 1996, the Registrant entered into a Definitive Agreement (the
"Agreement") with HIS Technologies AG (Histech), the holders of 100% of the
outstanding capital stock of HIS Technologies AG (the "Histech Stockholders"),
and Mountain Software AG for the purchase, through it's wholly owned subsidiary,
Sector Communications AG, of an 80% capital stock interest in Histech, the
purchase of 100% of the capital stock of Mountain Software AG and for the
subsequent merger of Mountain Software AG with and into Histech.
Effective August 23, 1996, Sector Communications AG, acquired 54.45% (7,314
shares) of the issued and outstanding shares of capital stock of Histech from
two Histech Shareholders, Joan Brown and Aledo Services Ltd. and 100% of the
issued and outstanding shares of capital stock of Mountain Software AG from
Simon Brown, the sole shareholder of Mountain Software AG, in exchange for the
issuance of 4,118,094 shares and 716,191 shares of the Registrant's common
stock, par value $0.001 per share, respectively. Joan Brown is Simon Brown's
mother and Hugo Wyss, a director of Sector Communications AG and the Chairman of
the Board of Directors of Histech is a director of Aledo Services Ltd. The
Agreement also provides for the payment of additional cash or shares of
Registrant's common stock to be issued, as a purchase price adjustment, to the
above parties in the event that the average bid price of the Registrants common
stock during the last ten trading days of October 1996 is less than $2.25 per
share. The average closing bid price during this ten day period was $0.934375.
As such, the maximum number of additional shares the Company is required to
issue is 6,724,243.
The Registrant also issued 1,250,000 shares of it's common stock, par value
$0.001 per share and a warrant for the purchase of 1,250,000 shares of it's
common stock at an exercise price of $0.79 per share, expiring three year from
the date of issue, as a fee to KAV Kapitalangleger Verlag-AG ("KAV") for
services performed in connection with this transaction.
As a part of this Agreement, Sector Communications AG, also purchased for cash
3,428 shares of previously unissued Histech capital stock, such shares
representing a 25.55% capital stock interest in Histech for a $1,200,000. The
final payment for the purchase of this interest was made on September 18, 1996.
Sources of funds for the acquisition of the above interest was provided for by
(i) the sale of the Company's common stock in an offshore private placement, and
(ii) from the sale of marketable securities the Company held.
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The shares of Registrant common stock issued above have not been registered
under the Securities Act of 1933, were issued in accordance with Regulation S
and bear a legend to such effect. The shares issued to Joan Brown, Aledo
Services, Ltd. and Simon Brown bear additional restrictive legends limiting
their sale or transfer in accordance with the Agreement. These shares become
available for sale or transfer at a rate of 10% of the total shares issued to
them each quarter, beginning in November 1996, until all such shares are freely
tradeable.
The amount of consideration paid by the Registrant was determined through
negotiations between the parties based upon the business, financial condition,
operations, management and prospects of the Registrant, Histech and Mountain
Software AG.
ITEM 5. OTHER EVENTS
------------
ACQUISITION OF SECTOR COMMUNICATIONS AG
Effective July 31, 1996, the Company acquired 100% of the outstanding capital
stock of Sector Communications AG, a Swiss corporation from Murray Services,
Ltd. for a cash payment of $12,000. As of acquisition date, Sector
Communications AG was an "off the shelf company" and had no assets or
liabilities. Sector Communications AG was purchased by the Registrant to hold
the equity ownership interest it acquired in Histech and Mountain Software, Inc.
described above.
As of the date of acquisition, Murray Services, Ltd. ("Murray") beneficially
owned 1,000,000 shares of the Registrants common stock, representing less than a
5% interest in the Registrant. These shares were being held at that time for
Murray by Telecom Partners Ltd and were received in connection with the
acquisition of Global Communications Group, Inc. bu the Registrant. Hugo Wyss,
a director of Sector Communications AG and Histech is also a director of Murray
Services Ltd.
DIRECTORS, OFFICERS AND OTHER MATERIAL RELATIONSHIPS
The Board of Directors of Sector Communications AG currently consists of
Theodore Georgelas, president and chief executive officer of Sector
Communications, Inc., Hugo Wyss and Daniel Poitry. The Board of Directors of
Histech consists of Robert Scherpenhuijzen, president of Histech, Hugo Wyss and
Daniel Poitry.
In addition, Histech entered into employment agreements with Robert
Scherpenhuijzen, Nicholas de Smith and Simon Brown, all holders of Histech
capital stock and parties to the Agreement.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
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(a) Financial Statements of Business Acquired and Pro Forma Financial
Information:
It is impractical to provide the required financial statements for the acquired
business and pro forma financial information at the time this Current Report on
Form 8-K is filed since none are currently available. The financial statements
and pro forma financial information required by Item 310 of Regulation S-B will
be filed by the Registrant by means of an amendment to this Report as soon as
these financial statements are available or on or before December 2, 1996.
(b) Exhibits
Exhibit
Number Description
- ------ -----------
10.01 Definitive Agreement, dated August 12, 1996, between HIS Technologies
AG, Simon Brown, Joan Brown, Robert Scherpenhuijzen, Nicholas de
Smith, Aledo Services Ltd, Mountain Software AG, Sector
Communications, AG and Sector Communications, Inc.
10.02 Purchase Agreement between Murray Services Ltd BVI and Sector
Communications, Inc. (formerly Aurtex, Inc.)
10.03 Agreement with KAV Kapitalangleger-Verlag AG
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934 the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Sector Communications, Inc.
/s/ Theodore Georgelas
- --------------------------------------
Theodore J. Georgelas
President and Chief Executive Officer
Date: November 18, 1996
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EXHIBIT 10.01
DEFINITIVE AGREEMENT, DATED AUG. 12, 1996 BETWEEN HIS TECHNOLOGIES AG,
Binzstrasse 15, 8045 Zurich, Switzerland, represented by Robert Scherpenhuijzen,
Dammweg 13, 8806 Baech, President, CEO and Director with sole signatory power
hereafter referred to as "HIS"
and
1. Simon Brown, Casa Marcau, Via Lieptgas, 7031 Laax
and
2. Joan Brown, Isle of Man, UK
and
3. Robert Scherpenhuijzen, Dammweg 13, 8806 Baech
and
4. Nicholas de Smith, Goudhurst, (Kent) Great Britain
and
5. Aledo Services Ltd., Wickhams Cay, PO Box 146, Road Town, Tortola, British
Virgin Islands, represented by Hugo Wyss, Essorbiers 32, 2022 Bevaix, Director,
with sole signatory power
1 to 5 hereafter collectively referred to as "HIS shareholders"
1, 3 and 4 hereafter collectively referred to as "HIS principals"
and
Mountain Software AG, Casa Marcau, Via Lieptgas, 7031 Laax, represented by Hugo
Wyss, Essorbiers 32, 2022 Bevaix, Chairman, with sole signatory power hereafter
referred to as "Mountain Software AG'
and
Sector Communications AG, Zeughausgasse 7a, c/o Rudolf Kleiner, 6301 Zug,
represented by Daniel Poitry, Rue des Preels 4, 2036 Cormondreclie, Director,
with sole signatory power hereafter referred to as "Sector AG"
and
Sector Communications Inc., a Nevada corporation having its principal executive
office at 7601 Lewinsville Road, Suite 200, McLean, VA 22102, USA represented by
Theodore Georgelas, Chairman
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President and CEO hereafter referred to as "SECT' concerning
= Acquisition of 80% of the share capital of HIS Technologies AG by Sector
Communications AG
= Purchase of Mountain Software AG by Sector Communications AG
= Subsequent merger of Mountain Software into HIS Technologies AG.
INTRODUCTION
1. Purpose Of The Agreement
------------------------
By this agreement the "Definitive Agreement" according to paragraph 1 of the
Memorandum of Understanding dated May 14, 1996, is stipulated. The Memorandum
of Understanding and the loan agreement between SECT and HIS of May 8, 1996 will
therefore be substituted to the extent that the obligations stated in this
agreement will lead to a 80% stake of Sector AG in HIS and to a 100% take-over
of Mountain Software AG by Sector AG. This agreement supersedes any other
previous written or oral agreement between the parties.
2. Increase Of The Share Capital Of HIS To CHF 100,000.00 And Reduction Of The
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Nominal Value Of The HIS Bearer Shares To CHF 10.00
- ---------------------------------------------------
At this time, the above mentioned HIS shareholders together hold 100% of the
outstanding nominal share capital of HIS of CHF 100,000.00 divided into 10,000
bearer shares of a nominal value of CHF 10.00 each, namely
Simon Brown holds 500 HIS shares
Joan Brown holds 5,500 HIS shares
Robert Scherpenhuijzen holds 500 HIS shares
Nicholas de Smith holds 500 HIS shares
Aledo Services Ltd. BVI holds 3,000 HIS shares
CONTENTS OF THE AGREEMENT
1. Modification Of The USD 500,000.00 Loan Agreement Dated May 8, 1996 Between
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HIS And SECT. Increase Of The Loan Principal Up To USD 1,200,000
- ----------------------------------------------------------------
By mutual consent HIS and SECT agree to increase the principal of the above loan
by an increment of USD 700,000.00 reaching thus a total of USD 1,200,000.00. The
loan agreement has accordingly to be amended and the HIS shareholders are
obliged to pass the necessary resolutions.
The disbursement of the above increment of loan principal to HIS will be
effectuated by SECT according to the following schedule:
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a) SECT will transfer by wire transfer to HIS' account no.N5-114,001.0, Swiss
Bank Corporation Zurich, SWIFT: SBCOCHZZ80A, USD 100,000.00 on or before Aug.
14, 1996
b) SECT will transfer by wire on the same account as above USD 300,000.00 on or
before Aug.20, 1996
c) SECT will transfer to the UBS, Zug account of Sector AG USD 300,000.00 on or
before Sept.6, 1996.
Sector AG will immediately thereafter credit the CHF counterpart of the received
USD 300,000.00 to the above Swiss Bank Corporation account of HIS. This
constitutes then the last tranche payment of the loan increment as defined in
the amended loan agreement.
2. Conversion Of The Loan Of USD 1,200,000.00 Principal into 25.55% Equity
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Interest Of Sector AG In HIS
- ----------------------------
Immediately after receipt of the last tranche payment from SECT/Sector AG to HIS
as specified above, HIS commits itself and the HIS shareholders agree to pass
all necessary resolutions in their capacity as shareholders and/or members of
the board of HIS, to convert the USD 1,200,000.00 principal of the loan into an
equity interest of Sector AG of 25.55% by issuing 3,428 bearer shares of CHF
10.00 nominal value to Sector AG (CHF 34,280.00) for the full payment of the
nominal value of 3428 shares and the difference of CHF 34,280.00 to USD
1,200,000.00 at the exchange rate of the day (as a premium). The cost of this
increase of capital (including the costs for the interim audited balance sheet,
notary fees, registration fees, and stamp tax as collected on nominal capital
and premium) will be borne by HIS.
3. Purchase Of 54.45% Of HIS Equity By Sector AG From The Remaining
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Shareholders In Exchange For SECT Shares
- ----------------------------------------
Sector AG is obliged to purchase an additional total 7,314 HIS shares from the
following HIS shareholders no later than Aug.23,1996 in exchange for a total
4,118,094 SECT shares (valuation USD 9,200,000.00), namely
= 5,000 HIS shares from Joan Brown in exchange for 2,815,200 SECT shares of USD
0.001 nominal value.
= 2,314 HIS shares from Aledo Services Ltd. In exchange for 1,302,894 SECT
shares of USD 0.001 nominal value
If the average of the NASDAQ bid price of the SECT shares during the last 10
trading days of October 1996 is less than USD 2.25, then Sector AG has to
compensate for the shortfall up to the value of USD 9,200,000.00 by issuing
additional SECT shares ("reconciliation shares") or in cash, at the option of
SECT or Sector AG.
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4. Purchase Of 100% Of Mountain Software AG In Exchange Of SECT Shares
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Simon Brown holds 100% of the outstanding share capital of Mountain Software AG
of CHF 50,000.00 divided into 500 registered shares of nominal value of CHF
100.00 each. Sector AG is obliged to purchase and Simon Brown agrees to sell to
Sector AG the total 500 shares of Mountain Software AG as above in exchange for
716,191 SECT shares (valuation USD 1,600,000.00) no later than Aug.23,1996.
If the average of the NASDAQ bid price of SECT during the last 10 trading days
of October 1996 is below USD 2.25, then Sector AG has to compensate the
shortfall up to a value of USD 1,600,000 by issuing additional SECT shares
("reconciliation shares") or in cash, at the option of SECT or Sector AG.
5. Merger Of Mountain Software AG Into HIS
---------------------------------------
Mountain Software AG as of July 31,1996 has total net assets approaching CHF
300,000.00 and the right to collect a 15% royalty on gross sales of X-Products
made by HIS since April 1, 1996.
As soon as the loan of Sector AG to HIS has been converted into equity, Mountain
Software AG will lend to Simon Brown a sum corresponding to the above net
assets. This sum and the corresponding passive interests will be offset with
salary payments due to Simon Brown by HIS during the period up to July 31,1999
according to loan agreement in the form of Annex ( ) to be signed by Mountain
Software AG and Simon Brown. After payment of the loan to Simon Brown, Sector
AG will immediately merge Mountain Software AG into HIS without any increase in
HIS capital.
6. Reg S. Shares Issued By SECT In Exchange For HIS Shares And Mountain
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Software AG Shares
- ------------------
Of the total 4,834,285 SECT shares, issued on or before Aug.23, 1996 under Reg.
S by SECT as set forth in paragraphs 4 and 5 above, 483,428 will become
unrestricted and tradable in the US after the Reg. S holding period ends, which
is expected to be no later then the end of October 1996. The balance to
4,834,285 as well as the eventual additional "reconciliation shares" issued
thereafter will carry a SECT mandated restriction, which will free tradability
in the US by increments of 10% of the grand total issued by SECT under
paragraphs 4 and 5 for each lapsed quarter starting Nov. 1, 1996.
To this purpose SECT will issue to Joan Brown and Aledo Services Ltd.
proportionately, as set forth in paragraph 3, additional 9 certificates with
staged restrictions automatically expiring after 1 to 9 quarters after Nov. 1,
1996.
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7. Board Of Directors Of HIS.
--------------------------
The HIS principals have the right to be represented by a majority on the board
of directors of HIS for a period extending until July 31, 1999, provided that
all HIS principals stay employed by HIS during this period. The internal board
regulations will be submitted to SECT for approval.
As of Sep. 1, 1996 the board of HIS will be changed and will comprise the
following persons
Chairman - Hugo Wyss (representing the HIS Principals)
Member - Robert Scherpenhuijzen (representing the HIS Principals) Member -
Daniel Poitry (representing Sector AG)
Any appointment of a new representative of the HIS principals to the board is
subject to SECT approval. Such approval will not be unreasonably withheld.
Simon Brown has the right to act as Board Secretary without any voting rights
for a period extending until July 31,1999, provided that all of the HIS
principals stay employed by HIS during this period.
Sector AG has the right to make changes to the board if HIS directors fail to
maintain the performance of HIS above a lower limit which is 30% lower than the
revised business plan dated April 17, 1996, violate their employment agreement
or the internal regulations of the board.
8. Remuneration Of HIS Principals
------------------------------
The HIS principals will have a three year contract with a one year roll-over
period with HIS, subject to Swiss law in the form of Annex ( ) and to be signed
by HIS and each HIS Principal. Said contract will provide for a compensation
scheme which has a base remuneration (salary plus fringe benefits, but excluding
statutory employers related costs) of CHF 140,000.00 and a performance related
bonus pool for all HIS employees (including but not limited to the HIS
principals), payable in SECT shares, which equals 10% of HIS' net profits,
payable each year within 30 days of audit.
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9. Put Option In Favour Of HIS Principals
--------------------------------------
Each of the HIS principals has the right, in the event that their employment
with HIS is terminated without cause, as defined in each of the individual HIS
Principals Employment Agreement (Annexes ), to have SECT or Sector AG purchase
from said HIS Principal the entire 500 shares of HIS capital stock owned by them
for 50% of the net earnings, computed in accordance with Generally Accepted
Accounting Principles promulgated in the US, with the measurement year based on
the date of the HIS Principal's termination as follows:
If the HIS principal's employment is terminated prior to February 28, 1999, then
the year used for computation of net earnings shall, at the option of the HIS
principal, be either the year ended Feb.28, 1999 or the year ended immediately
prior to the year in which the termination occurred.
If the HIS Principal's employment is terminated after Feb.28,1999, the year used
for the computation of net earnings shall be the year ended immediately prior to
the year in which the termination occurred.
The purchase price of the 500 shares of HIS capital stock owned by the HIS
principal will be payable in Reg.S shares of SECT common stock, with the number
of shares based on the closing bid price on the day of termination, and payable
90 days from termination, unless the HIS principal elects the measurement year
to be the year ended Feb.28, 1999, the amount will be payable on May 31, 1999.
10. Going Public Of HIS
-------------------
Within the period up to July 31, 1999, SECT and/or Sector AG has the right to
take HIS public, giving the HIS principals the right to sell all of their HIS
stake in a public offering.
11. Release Of Public Information Related To HIS
--------------------------------------------
SECT and/or Sector AG will submit by fax any public disclosure related to HIS to
the Chairman or to the CEO of HIS for approval and cannot release such
disclosure without HIS approval. SECT and/or Sector AG are allowed to publicly
disclose information related to HIS even in case of denial by the Chairman or
the CEO if non-disclosure of said information would be in conflict with legal
duties applicable to SECT and/or Sector AG.
12. Right Of First Refusal
----------------------
Once Sector AG has gained control of 80% of HIS the following rights of first
refusal apply:
Sector AG provides the HIS principals, each individually, with the
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right of first refusal on its HIS shares until March 31, 1999. This right must
be exercised within 30 days from the written notification of the Principal.
Also up to March 31, 1999 the HIS principals provide Sector AG with the right of
first refusal on their HIS shares. This right must be exercised within 30 days
counted from the written notification of Sector AG.
If a party should prevent the exercise of the right of first refusal according
to paragraph 1 and 2 above, for each claimed HIS share a penalty in the amount
of 150% of the gained price, but at least USD 1,000.00 per HIS share is owed.
13. Restriction Of Assignment.
-------------------------
This agreement cannot be assigned without the written consent of all the parties
to this agreement. The consent of Aledo Services Ltd. and Joan Brown is not
needed once Sector has gained control of 80% of HIS.
14. Representations And Warranties
------------------------------
Reference is made to Exhibit 1. The representations and warranties that HIS,
(the HIS shareholders, Mountain Software AG, and Simon Brown are explicitly
making under this agreement are attached as binding part of this agreement in
Exhibit 1. Sector AG and SECT waive all other warranty claims, which are not
mentioned in Exhibit 1 to the largest extent possible against HIS, the HIS
shareholders, Mountain Software AG and Simon Brown.
If after the signing of the agreement it occurs that a representation is
inaccurate, untrue or incorrect or a warranty breached, SECT or Sector AG shall
request the HIS shareholders or Simon Brown and HIS or Mountain Software AG,
each individually by registered mail to bring within 14 days after such notice
the situation in line with the representations and warranties and reimburse HIS
or Mountain Software AG. There is no obligation of SECT or Sector AG to inspect
or investigate into correctness of the representations immediately. SECT and/or
Sector AG is entitled to have an audit performed by a first rate (e.g. Deloitte
Touche) auditor. The HIS shareholders or Simon Brown will pay the amount
equivalent to the difference between valuations stated in the balance sheet of
1995 of Mountain Software AG and in the balance sheet 1996 of HIS and the
assessments in such audit report. SECT and/or Sector AG will accept as form of
payment SECT shares.
If it is impossible to get the situation in line with the representations and
warranties within reasonable time the following applies:
The HIS shareholders or Simon Brown respectively and HIS or Mountain Software AG
respectively shall indemnify Sector AG or SECT
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for the costs of their efforts in trying get in line with the representations
and warranties.
Any misstatements of substance resulting in losses for SECT/Sector AG in the
balance sheet 1996 of HIS or the Mountain Software 1995 balance sheet
respectively and the income statements for HIS and Mountain Software AG of 1996
lead to a reduction of the consideration paid by SECT/Sector AG.
After the close of the first fiscal year of HIS, Mountain Software AG being
already merged into HIS, all financial statements related to HIS will be audited
by an auditor approved by, SECT/Sector AG, discharging the HIS shareholders and
Simon Brown from any future claims from SECT/Sector AG related to the time after
April 1, 1997.
SECT and Sector AG have supplied the HIS shareholders with financial information
related to SECT, including the last 1OK, 1OQ, proxy statement for the AGM of
Aug. 19, 96 and Schedule 14 information related to the written consent by a
majority of SECT shareholders in lieu of a shareholders meeting and the HIS
shareholders acknowledge having received the above information.
15. Choice Of Law, Court Of Jurisdiction
------------------------------------
This agreement is governed by Swiss Law. Any dispute arising between the
parties will be judged by the Courts of the Canton of Zurich, venue being
Zurich. The language for interpretation of this agreement is US English,
translated into German by an expert of the Swiss-American Chamber of Commerce in
Zurich.
16. Joint Liability.
---------------
With the signing of this agreement SECT is jointly liable together with Sector
AG for the fulfilment of Sector AG's obligations under this agreement.
Zurich and McLean, August 12th, 1996
HIS Technologies AG Mountain Software AG Aledo Services Ltd.
/s/ Robert Sherpenhuijzen /s/ Hugo Wyss /s/ Hugo Wyss
- ------------------------- ---------------------- ----------------------
by Robert Scherpenhuijzen by Hugo Wyss, Chairman by Hugo Wyss, Director
President and Director
/s/ Robert Sherpenhuijzen /s/ Simon Brown /s/ Joan Brown
- ------------------------- ---------------------- ----------------------
Robert Scherpenhuijzen Simon Brown Joan Brown
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Sector Communications AG Sector Communications Inc.
/s/ Daniel Poitry /s/ Theodore Georgelas /s/ Nicholas de Smith
- -------------------------- ---------------------- ---------------------
by Daniel Poitry, Director by Theodore Georgelas Nicholas de Smith
Chairman & CEO
The signatures of Robert Scherpenhuijzen, Daniel Poitry and Nicholas de Smith
are attached on separate sheets, forwarded by fax on Aug. 12,1996 and certified
by Hugo Wyss as being authentic.
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Exhibit 1 To The "Definitive Agreement" Dated Aug. 12, 1996 Representations And
Warranties
A. Representations And Warranties With Respect To HIS
HIS and the HIS shareholders, each individually, represent, warrant and covenant
to SECT and Sector AG and confirm that each of these representations and
warranties is true and correct:
1. Each HIS shareholder owns and holds title to his/her respective share-holding
free and clear of any liens or encumbrances.
a) with respect to the corporate standings of HIS
2. HIS is a corporation duly organized, validly existing according to the
enclosed excerpts of the commercial register (Annex ). HIS is not in
liquidation and its articles of incorporation are identical to these attached
in Annex to this Agreement.
3. The copies of the protocols for the shareholder meetings of business year of
1996 (Annex _) and the copy of the board resolution regarding signatory power
(Annex _) are identical to the Originals binding upon HIS and there are no
other shareholders or board resolutions between April 1996 and the time of
the signing of this Agreement.
b) with the respect to the financial standings of HIS
4. The unaudited income statement and balance sheet for the first operational
quarter (April-June 1996) have been submitted to SECT;
5. All receivable are mentioned in Annex HIS have no reason to believe presently
that the receivable cannot be timely collected;
6. No assets are considered in the valuation of the Inventory which are of no
use for the ordinary course of business of HIS;
7. All moveable property of HIS is free and clear of any liens or encumbrances
to the best of its knowledge. HIS owns or possesses all rights and licenses
necessary to develop, market and sell in an unrestricted manner its products
or other intellectual property and HIS has not granted any rights or licenses
to any third party to develop, market or sell such products, other than in
the ordinary course of business;
8. There are no liabilities to HIS besides the liabilities to HIS, besides those
mentioned in the balance sheet which should have been stated in the balance
sheet or for which reserves should have accumulated;
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9. There are no contingent liabilities of HIS, besides those mentioned in the
balance sheet or the annexes attached thereto;
10.Since the date of the HIS Financial Statements there has not been any
material adverse change in the financial condition, results or operations or
business of HIS, or any other event that would have a material negative
impact on HIS' strategic or competitive position, its Organization or
customer base and all changes have happened in the ordinary course of
business;
11.No dividends have been paid nor will be paid until Sector AG is holding a 80%
in HIS;
12.To the best of MS' knowledge, there are no tax liabilities incurred prior to
April 1, 1996;
13.All leased or hired equipment, as listed in Annex is available to HIS at the
time of the signing of this Agreement-
14.All intellectual property rights, as allowed under Swiss law, as listed in
Annex belong exclusively to HIS and there are no current or potential claims
from third parties on these rights. Furthermore, all necessary registrations
are made and the respective fees paid;
15.All business documentation, files and records are in reasonable order;
16.All assets necessary to conduct HIS' business are in usable condition at the
time of the signing of this Agreement;
c) with respect to contractual and legal obligations
17.HIS is not in violation of any laws at the time of the signing of this
Agreement and no obligations remain outstanding from previous violations;
18.At the time of the signing of this Agreement HIS is not in default in
performing a contractual obligation under a contract which provides for an
obligation of HIS which exceeds CHF 5000 in value;
19.To the best knowledge of HIS, there are no claims or threatened claims
against the company-,
20.No known litigation is pending or threatened against HIS;
21.Except as listed in Annex ( ) HIS has not entered into any contractual
commitments which provide for a single obligation exceeding CHF 100,000 or
monthly payments exceeding CHF 20,000. Further, under none of the contracts
listed in Annex ( )HIS has received notice of termination and under none of
these contracts the counterpart is in delay;
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d) with respect to the time between the signing of this Agreement and the time
of the acquisition of a 80% stake by Sector AG in HIS
22.HIS will only enter into contracts according to the ordinary course of
business and will conduct its business according to its recent practice,
23.HIS will not enter into any commitments which provide for a single obligation
exceeding CHF 100,000 or monthly payments exceeding CHF 20,000 without the
prior written consent of Sector AG or SECT;
24.HIS will not start litigation or conclude settlements without notifying
Sector AG or SECT;
25.Sector AG and SECT will be informed, within 48 hours, of any circumstance or
event which makes the above mentioned representations and warranties untrue,
except if the event occurs in the ordinary course of business.
e) Employees and Pension Funds
26.HIS does not employ any employees with a yearly salary exceeding CHF 100,000
except for those listed in Annex ( ). All employment contracts listed in
this Annex have been available to Sector AG and SECT before the signing of
this Agreement which is confirmed by Sector AG and SECT. HIS will not hire
new employees with a yearly salary of CHF 100,000 or increase existing
salaries without the written consent of Sector AG or SECT;
27.The employees of HIS are beneficiaries of the _________ Pension Fund as
prescribed by Swiss Law. HIS made all required contribution to the Fund in
the past.
B. Representation And Warranties With The Respect To Mountain Software AG
Mountain Software AG and Simon Brown, each individually, represent, warrant and
covenant to Sector AG and SECT and confirm that each of these representations
and warranties are true and correct;
28.Simon Brown owns and holds title to all shares of Mountain Software AG free
and clear of any liens or encumbrances.
a) with respect to Mountain Software AG
29.Mountain Software AG is a corporation duly organized, validly existing
according to the enclosed excerpts of the commercial register (Annex ).
Mountain Software AG is not in liquidation and its articles of incorporation
are identical to these attached in Annex to this Agreement.
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30.The copies of the protocols for the shareholder meetings of business year of
1996 (Annex ) and the copy of the board resolution regarding signatory power
(Annex ) are identical to the Originals binding upon Mountain software AG
and there are no other shareholders or board resolutions between April 1996
and the time of the signing of this Agreement.
b) with the respect to the financial standings of Mountain Software AG
31.The unaudited income statement and balance sheet for the first operational
quarter (April-June 1996) have been submitted to SECT;
32.All receivable are mentioned in Annex Mountain Software AG have no reason to
believe presently that the receivable cannot be timely collected-,
33.No assets are considered in the valuation of the Inventory which are of no
use for the ordinary course of business of Mountain Software AG;
34.All moveable property of Mountain Software AG is free and clear of any liens
or encumbrances to the best of its knowledge. Mountain Software AG owns or
possesses all rights and licenses necessary to develop, market and sell in an
unrestricted manner its products or other intellectual property Mountain
Software AG has granted an exclusive world-wide license to HIS Technologies
AG, Zurich for sales of its products. There are no other rights or licenses
granted to any other party.
35.There are no known liabilities to Mountain Software AG besides the
liabilities to Mountain Software AG, besides those mentioned in the balance
sheet which should have been stated in the balance sheet or for which
reserves should have accumulated;
36.There are no contingent liabilities of Mountain Software AG, besides those
mentioned in the balance sheet or the annexes attached thereto;
37.Since the date of the Mountain Software AG Financial Statements there has not
been any material adverse change in the financial condition, results or
operations or business of Mountain Software AG, or any other event that would
have a material negative impact on Mountain Software's strategic or
competitive position, its Organization or customer base and all changes have
happened in the ordinary course of business-,
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38.No dividends have been paid nor will be paid until Sector AG is holding a
100% in Mountain Software AG;
39.All taxes for the years preceding 1994 has been definitively assessed by the
respective authorities and fully paid. All taxes for the year 1994 have been
paid according to the provisional assessment. Sufficient provisions for the
tax assessment of 1995 has been made. Furthermore, all public-law financial
obligations by Mountain Software AG for the years preceding 1996, such as
social security contributions, have been fully paid by Mountain Software AG
or there are adequate provisions;
40.All leased or hired equipment, as listed in Annex ( ), is available to
Mountain Software AG at the time of the signing of this Agreement.
41.All intellectual property rights, as allowed under Swiss law, as listed in
Annex belong exclusively to Mountain Software AG and there are no current or
potential claims from third parties on these rights. Furthermore, all
necessary registrations are made and the respective fees paid;
42.All business documentation, files and records are in reasonable order;
43.All assets necessary to conduct Mountain Software's business are in usable
condition at the time of the signing of this Agreement;
c) with respect to contractual and legal obligations
44.Mountain Software AG is not in violation of any laws at the time of the
signing of this Agreement and no obligations remain outstanding from previous
violations;
45.At the time of the signing of this Agreement Mountain Software AG is not in
default in performing a contractual obligation under a contract which
provides for an obligation of Mountain Software AG which exceeds CHF 5000 in
value;
46.To the best knowledge of Mountain Software AG, there are no claims or
threatened claims against the company;
47.No known litigation is pending or threatened against Mountain Software AG,
48.Except as listed in Annex ( ) Mountain Software AG has not entered into any
contractual commitments which provide for a single obligation exceeding CHF
100,000 or monthly payments exceeding CHF 20,000. Further, under none of the
contracts listed in Annex HIS has received notice of termination and under
none of these contracts the counterpart is in delay,
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d) with respect to the time between the signing of this Agreement and the time
of the acquisition of a 100% stake by Sector AG in Mountain Software AG
49.Mountain Software AG. will only enter into contracts according to the
ordinary course of business and will conduct its business according to its
recent practice,
50.Mountain Software AG will not enter into any commitments which provide for a
single obligation exceeding CHF 50,000 or monthly payments exceeding CHF
5,000, except for a loan agreement with Simon Brown, without the prior
notification of Sector AG or SECT;
51.Mountain Software AG will not start litigation or conclude settlements
without notifying Sector AG or SECT;
52.Sector AG and SECT will be informed, within 48 hours, of any circumstance or
event which makes the above mentioned representations and warranties untrue,
except if the event occurs in the ordinary course of business.
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EXHIBIT 10.02
PURCHASE CONTRACT
between
Murray Services Ltd B.V.I.
Town Road
Tortola (British Virgin Islands)
(known as the Seller)
represented by Mr. Hugo Wyss, director
and
SECTOR COMMUNICATIONS, INC.
Suite 250
7601 Lewinsville Road
McLean, VA 22102
(known as the Purchaser)
represented by Mr. Theodore Georgelas, Chairman & CEO
The following contract has been agreed:
1) The Seller is in possession of 100% of the shares of IHC Inter Hotel Club AG,
(the Company) actually Chamerstr. 52, CH 6300 Zug. He sells these shares to
the Purchaser with all rights and liabilities.
2) The purchase price is set at CHF 15'000.-- (fifteen thousand)
3) The Purchaser transfers CHF 15'000 to the Bank account of the seller .
(account Nr. PO-273,669.0 at Swiss Bank Corporation, Zurich by July 31,
1996.)
4) The Seller has already closed at his costs the company's Bank account and
Post Office account.
5) The Seller is responsible for filing the tax declaration for 1996 for the
Federal Tax Authorities, the Cantonal Tax Authorities of Zug and the Tax
Authorities of the City of Zug by October 1996.
6) The seller has cleared with the Swiss Federal Register of Commerce the change
of company's name to SECTOR COMMUNICATIONS AG (S.A., Ltd.). Upon signature of
this purchase contract he will file immediately the new name with the federal
and cantonal authorities. The costs therefore will be charged to the company.
Zug, June 20, 1996
The Seller: The Purchaser:
/s/ Hugo Wyss /s/ Theodore Georgelas
- ----------------- ----------------------
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EXHIBIT 10.03
KAV Kapitalanleger-Verlag AG
Chamerstrasse 52
CH-6300 ZUG Switzerland
Aurtex, Inc.
1415 Springhill Road
McLean, VA 22102 USA
Att. Mr. Theodore Georgelas, Chairman
March 22, 1996
Re: Buy-out of the HIS Software AG (Zurich) Open VMS Division
Dear Mr. Georgelas,
This is to confirm the understanding that we had with your MR. Roger Hedin last
week, whereby KAV Kapitalanleger-Verlag AG will assist Aurtex, Inc. in
negotiating and closing a transaction in Switzerland, consisting in the spin-off
of the Open VMS Division of HIS Software AG, its initial capitalization as an
independent company under the management of Messrs. Robert Scherpenhuijzen,
Simon Brown and Nicholas de Smith and its subsequent incorporation over a time
not longer than two years into Aurtex, Inc.
As agreed we shall work on this project without retainer and on the basis of a
success only. Our renumeration is successful (e.g. when Aurtex, Inc. signs an
agreement , whereby Aurtex gains control over more than 50% of the spin out)
will consist in the following:
Upon signature of the final agreement between Aurtex and the spin out giving
control to Aurtex, Aurtex or its successor company will issue to us following
securities, carrying a Reg. S Restriction, as we are an offshore company (non-US
person under SEC rules):
1,250,000 post-split shares of common stock of Aurtex
1,250,000 post-split warrants, 3 years validity, exercise price adjusted by the
split ratio.
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The basis for valuation of this fee is a post-split price of the Aurtex shares
of $2.25 per share. Upon signature as acceptance of this letter by Aurtex, Inc.
we shall immediately start with the work on this project, that we believe could
greatly enhance the position of Aurtex, Inc. in the software field.
Sincerely yours,
KAV Kapitalanleger-Verlag AG
/s/ Martin Thony, Bevollmachtigte
- ---------------------------------
by Martin Thony, Bevollmachtigte
Dated ___________ Approved
AURTEX, INC.
/s/ Theodore Georgelas
- ----------------------
by Theodore Georgelas
Chairman and CEO
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