STRATATEL LIMITED

A.C.N. 088 257 729

NOTICE OF ANNUAL GENERAL MEETING

EXPLANATORY MEMORANDUM

AND

PROXY FORM

DATE OF MEETING

23 November 2006

TIME OF MEETING

9.30 am WST

PLACE OF MEETING

Level 46, Bank West Tower 108 St. George's Terrace Perth Western Australia

This notice of Annual General Meeting and Explanatory Memorandum should be read in its entirety. If Shareholders are in doubt as to how they should vote, they should seek advice from their accountant, solicitor or other professional adviser without delay.

STRATATEL LIMITED A.C.N. 088 257 729

NOTICE OF MEETING

Notice is hereby given that the Annual General Meeting of STRATATEL LIMITED for the year to 30th June 2006 will be held at Level 46. Bank West Tower, 108 St George's Terrace, Perth, Western Australia on Thursday 23rd November 2006 at 9.30am.

ORDINARY BUSINESS

To lay before the Annual General Meeting the Financial Statements and the Directors' Declaration and Report for the year ended 30 June 2006, together with the Auditors Report to the Members of the Company for Shareholders to receive and consider.

Resolutions

To consider, and if thought fit, pass with or without modification, the following ordinary resolutions:

1. ADOPTION OF REMIINERATION REPORT

"That the Remuneration Report contained in the Directors' Report of the 2006 Annual Report be adopted."

Note: In accordance with section 250R of the Corporations Act 2001, the vote on Resolution 1 will be advisory only and will not bind the Directors or the Company. The Remuneration Report can be found on pages 6 to 8 of the Company's 2006 Annual Report.

2. RE-ELECTION OF MR GEOFFREY E LAMBERT AS A DIRECTOR

"That Mr Geoffrey Lambert retires in accordance with Article 17.1 of the Company's Constitution and who offers himself for re-election, be re-elected a Director."

SPECIAL BUSINESS

3. INCREASE THE AGGREGATE NON-EXECUTIVE DIRECTORS' FEES

"That, in accordance with clause 20.1 of the Company's Constitution, then maximum fees payable to the Non-Executive Directors of the Company be increased from \$150,000 per annum to \$250,000 per annum, divided amongst the Non-Executive Directors in such proportions and in such manner as they may agree and, in default of agreement, in equal shares."

The Company will disregard any votes cast on this resolution by a Director of the Company or their associates. However, the Company need not disregard a vote if:

• it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form;
• or it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy directs.

RATIFICATION OF PREVIOUS ISSUE OF SHARES $\overline{4}$ .

"That, for the purpose of Listing Rule 7.4 of the Listing Rules of Australian Stock Exchange Limited and for all other purposes, the shareholders of the Company hereby approve and ratify the allotment and issue of 5,555,555 fully paid ordinary shares in the capital of the Company at an issue price of 9.0 cents each to the parties listed in the Explanatory Statement accompanying this Notice, pursuant to a Placement to sophisticated investors.'

The Company will disregard any votes cast on this resolution by persons who participated in the issue and any associates of those persons. However, the Company need not disregard a vote if:

• it is east by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy × form
• or it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy directs.

REPLACEMENT OF AN EXECUTIVE AND EMPLOYEE OPTION PLAN 5.

"That the issue of options in the capital of the Company under an Executive and Employee Option Plan, the terms and conditions of which are contained in the Explanatory Memorandum accompanying this Notice of Meeting, is approved."

The above resolution has been proposed in order to satisfy the requirements of exception 9 of Listing Rule 7.2.

The Company will disregard any votes cast on this resolution by a Director of the Company or their associates. However, the Company need not disregard a vote if:

• it is east by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy × form:
• or it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy directs.

BY ORDER OF THE BOARD OF DIRECTORS

Paul K Brown Company Secretary Stratatel Limited

23 October 2006

EXPLANATORY STATEMENT

This Explanatory Statement has been prepared for the shareholders with their consideration of the resolutions to be put to the Annual General Meeting of the Company to be held on Thursday 23^rd November 2006.

The purpose of this Explanatory Statement is to provide shareholders with information that the Board believes to be material to shareholders in deciding whether or not to approve the resolutions detailed in the Notice. This Explanatory Memorandum should be read with, and forms part of, the accompanying Notice of Meeting.

The resolutions set out in the Notice are important and affect the future of the Company. Shareholders are therefore urged to give careful consideration to the Notice and the contents of this Explanatory Statement.

ACCOUNTS AND REPORTS

The Corporations Act requires the financial statements and the reports of the directors and auditors of the Company to be put before the Annual General Meeting. There will be an opportunity for shareholders to ask questions or make comment on these documents. No resolution is required to be passed on this item.

Shareholders will also have the opportunity to ask questions of the auditors or their representative questions relative to the conduct of the audit, the preparation and content of the auditor's report, the accounting policies adopted by the Company in relation to the preparation of the financial statements, and the independence of the auditors.

RESOLUTIONS

ORDINARY BUSINESS

RESOLUTION 1 - ADOPTION OF THE REMUNERATION REPORT

Recent amendments to the Corporations Act have expended the disclosure requirements for publicly listed companies in relation to the remuneration of directors and executives. This disclosure, the Remuneration Report, is set out in pages 6 to 8 of the Annual Report.

Members will have the opportunity to ask questions, or make comment on, the Remuneration Report at the Annual General Meeting.

In addition the Corporations Act requires that the members of a publicly listed company vote at the Annual General Meeting on a non-binding resolution as to whether to adopt the Remuneration Report. This vote is considered advisory in nature and thus is not legally binding on the directors or the Company.

The directors recommend that the shareholders vote in favour of the resolution.

Voting Exclusion Statement

The Directors and Executives named in the Remuneration Report will not vote on the resolution, other than as proxy for another shareholder and in accordance with the directions of that shareholder, even though they are not legally restrained from voting.

RESOLUTION 2 - RE-ELECTION OF A DIRECTOR

In accordance with Article17.1 of the Company's constitution, Mr Geoff Lambert will retire at the Annual General Meeting and being eligible offers himself for re-election

Biography

Information about Mr Lambert is available in the Annual Report that accompanies the Notice of Meeting.

All Directors except Mr Lambert recommend that shareholders vote in favour of resolution 2 (re-election of Mr Geoff Lambert as a Director)

SPECIAL BUSINESS

RESOLUTION 3 - INCREASE THE AGGREGATE NON-EXECUTIVE DIRECTOR'S FEES

The Company seeks shareholder approval to increase the aggregate fee payable to non-executive Directors from \$150,000 per annum to \$250,000 per annum.

On 23^rd August 2000 shareholders voted to establish the \$150,000 aggregate fixed sum per annum from which fees may be paid to non-executive Directors of the Company.

The increase in fees are sought to compensate the non-executive Directors for the greater and more onerous responsibilities accompanying the Company's expanding operations.

Under the Company's Constitution, the fees payable to non-executive Directors must not be more than an aggregate fixed sum, which is determined by shareholders at a general meeting.

Approval is therefore sought to increase the aggregate fixed sum or non-executive Directors fees to \$250,000 per annum divided amongst the Non-Executive Directors in such proportions and in such manner as they may agree and, in default of agreement, in equal shares...

RESOLUTION 4 - RATIFICATION OF ALLOTMENT AND ISSUE OF SHARES

Background

On 13 March 2006, the Company issued 5,555,555 Shares at an issue price of \$0.09 cents each, pursuant to a Placement to sophisticated investors. The issue of the Shares was announced to ASX on 13 March 2006.

Regulatory Requirements - ASX Listing Rule 7.4

Under Listing Rule 7.4, an issue of securities made without approval under Listing Rule 7.1 is treated as having been made with approval for the purposes of Listing Rule 7.1 if each of the following apply:

• the issue did not breach Listing Rule 7.1; and $(a)$
• $(b)$ holders of ordinary securities subsequently approve it.

Accordingly, the Company seeks to have shareholders ratify the issue of securities pursuant to Listing Rule 7.4 in order to reinstate the Company's capacity to issue up to 15% of its issued capital, if required, in the next 12 months without shareholder approval.

The following information is provided to shareholders for the purposes of obtaining shareholder approval pursuant to the ASX Listing Rules:

• the number of Shares issued by the Company was 5,555,555; $(a)$
• the Shares were issued to the following parties, at an issue price of 9.0 cents each to raise \$500,000 $(b)$ pursuant to a Placement to Sophisticated Investors:

$(c)$ the Shares rank equally with the existing Shares on issue; and

the funds raised from the issue of the Shares have been used to provide working capital for the Company to increase sales and marketing activities, and further the development of the FleetManager^® system.

RESOLUTION 5 - REPLACEMENT OF EXECUTIVE AND EMPLOYEE OPTION PLAN

In August 2000 shareholders approved an Employee and Executive Option Plan ("Original Plan"). Under the Original Plan options were issued to employees of the Company to secure the services of employees who could assist the Company in fulfilling its objectives.

There are currently 1,150,000 options issued under the Original Plan (see Table 1). Should the Original Plan be cancelled the Company will, under the AIFRS, have to expense the value of the cancelled options, impacting the result for the 2006-2007 financial year. In preference, the Company will allow the Original Plan and the associated terms and conditions to remain in force, but not issue any further options under the Original Plan.

Table 1: Summary of the options issued under the Original Plan since August 2000

A new plan was proposed and approved at the Annual General Meeting of Shareholders dated 18 November 2005. This plan ("Current Plan") provided Directors with the authority to reward and provide incentive to executives and employees of the Company with Options that had an expiry date 60 months following the issue date and an exercise price of the greater of \$0.20 per option or the weighted average sale price of shares sold through the ASX in the 5 trading days immediately prior to the grant date of the options, plus a premium of 10%.

No options have been issued under the Current Plan as the Company's shares have been trading significantly below the exercise price. Accordingly, the Directors take the view that the Plan does not provide the incentive anticipated.

In a competitive labour market and as part of its risk management strategy to retain key staff, the Company considers it necessary to revise the terms of the incentive provided by the options.

The Company is, therefore, asking shareholders to consider and approve an Executive and Employee Option Plan ("EEOP") to replace the Current Plan.

Under the terms of the EEOP, the exercise price is the price determined by the Directors at the time the Board of Directors resolves to grant the Options ("Grant Date"), provided that the price must not be less than the weighted average sale price of shares sold through ASX in the 5 trading days immediately prior to the proposed Grant Date, plus a premium of 10%.

The exercise price for the first issue of options issued under the EEOP will be \$0.10 per option.

Regulatory Requirements

Approval for the issue of options under the EEOP is sought by way of an ordinary resolution to satisfy the requirements of Listing Rule 7.2, exception 9. Listing Rule 7.2 is an exception to the requirements of Listing Rule 7.1 that the Company not issue equity securities in any 12 month period that amount to more that 15% of its ordinary securities.

Set out below is a summary of the terms of the EEOP. This information is provided for the benefit of the shareholders and in accordance with the requirements of Listing Rule 7.2.

Summary Terms

• $(a)$ An option issued under the EEOP will automatically lapse 60 months from and including the date it is issued.("Expiry Date")
• Options issued under the EEOP will be issued for no consideration. $(b)$
• The exercise price of each option issued under the EEOP will be set by the Board of Directors but the price must $\left( \infty \right)$ not be less than the weighted average sale price of shares sold through ASX in the 5 trading days immediately prior to the proposed grant date, plus a premium of 10%.
• Each option exercised will entitle the holder to one fully paid ordinary share in the capital of the Company. $(d)$
• $(e)$ The options may be exercised at any time prior to the Expiry Date, in whole or in part, upon payment of the

Exercise Price per option.

• $(f)$ Each option may be exercised:
• at any time during a takeover "Bid Period" (as defined in the Corporations Act); $(i)$
• (ii) at any time after a person, or a group of associated persons, becoming entitled to sufficient shares in the Company to give that person or persons the ability, in general meeting, to replace all or a majority of the Board of Directors; or
• $(iii)$ at any time after the announcement of a proposed capital reconstruction.
• Options may only be exercised by notice in writing to the Company delivered to the registered office of the $(g)$ Company. The notice must specify the number of options being exercised together with payment of the relevant exercise price.
• $(h)$ Each holder of an option is required to exercise the option in order to participate in any new issues of shares made by the Company. Each holder will be provided written notice of the terms of the issue to shareholders and afforded that period of time as required by the Listing Rules before the record date to determine entitlements to the issue to exercise his or her options.
• In the event of any reorganisation (including consolidation, subdivision, reduction or return) of the issued $(i)$ capital, rights issue or bonus issue in the Company, the options will be reorganised in accordance with the Listing Rules.
• Shares allotted and issued pursuant to the exercise of an option will be allotted and issued not more than 10 $(i)$ Business Days after the receipt of a properly executed notice of exercise of option and the application monies. The Company will apply for official quotation of shares issued pursuant to the exercise of options, in accordance with the Listing Rules.
• $(k)$ A certificate will be issued for options unless the options are part of any uncertified form of transfer. If there is more than one option on a certificate and prior to the Expiry Date those options are exercised in part, the Company will issue another certificate for the balance of the options held and not yet exercised.
• Application will not be made for official quotation of the options on ASX. $(1)$
• Subject to exceptions dealing with death, retirement, redundancy and total and permanent disablement, if an $(m)$ employee leaves any options held by that employee will only be exercisable after receiving written consent from the Board of Directors.
• The options are not transferable, other than in the case of death of the holder. $(n)$

ATTENDANCE AND VOTING ELIGIBILITY

For the purposes of the meeting, securities will be taken to be held by the persons who are registered holders at 10.00am on Tuesday 20th November 2006. Accordingly, transactions registered after that time will be disregarded in determining entitlements to attend and vote at the meeting.

PROXIES

A member entitled to attend and vote at the Annual General Meeting convened by the above Notice is entitled to appoint not more than 2 proxies to attend, and, on a poll, to vote in his stead. Where 2 proxies are appointed, and the appointment does not specify the proportion or number of votes that each proxy may exercise, each proxy may exercise one half of the votes of the member. A proxy need not himself be a member. Proxy forms must be deposited at or sent by facsimile transmission to the office of the Company at Level 1, 1254 Hay Street, West Perth, Western Australia 6005, Fax no. (08) 9212 4001 not less than 48 hours before the time fixed for the holding of the meeting.

STRATATEL LIMITED A.C.N. 088 257 729

PROXY FORM

$I/We$ $\overline{\phantom{a}}$

being a member of STRATATEL LIMITED and holding hereby appoint

shares in the capital of the Company

$0^\dagger$ ....................................

or, failing him/her, the Chairman of the meeting as my/our proxy to vote on my/our behalf at the Annual General Meeting of the Company to be held at Level 46, Bank West Tower, 108 St George's Terrace, Perth, Western Australia on Thursday 23rd November 2006 at 9.30am and any adjournment thereof.

Proxies made in favour of the Chairman when the member has not indicated their voting intentions, will be voted in favour of the Resolutions.

Should the member desire to direct the proxy how to vote the member should place a mark in the appropriate box; otherwise the proxy may vote as he or she thinks fit, or abstain from voting.

Ordinary Business

$of \square$

$OR$

If you do not wish to direct your proxy how to vote, please place a mark in this box

By marking this box, you acknowledge that the Chairman may exercise your proxy even if he has an interest in the outcome of the resolution and votes cast by him other than as proxy holder will be disregarded because of the interest.

The Chairman will vote in favour of all of the resolutions if no directions are given.

Signed this 2006. day of

$Bv:$ Individuals and joint holders

Companies (affix common seal if appropriate)

Note:

This proxy form must be signed personally by the member or his attorney. A corporation must sign under its Common Seal (if applicable) or under the hand of its attorney and shall be duly attested by witnessing.