SHAREHOLDERS' AGREEMENT
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TABLE OF CONTENTS
CLAUSE NO: PAGE NO:
1. DEFINITIONS AND INTERPRETATION 1
2. CONDUCT OF THE AFFAIRS OF THE COMPANY AND AUSCRIPT 3
3. ISSUE OF SHARES 7
4. TRANSFER OR DISPOSITION OF SHARES 8
5. GENERAL SALE PROVISIONS 12
6. FAIR MARKET VALUE 14
7. TERMINATION 15
8. GENERAL 16
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AGREEMENT made at Sydney and Ontario on January 2001
BETWEEN VOICEIQ INC., a company incorporated under the laws of the Province of
Ontario, Canada (hereinafter referred to as "VIQ")
AND X0X.XXX LIMITED, a company incorporated under the laws of New South
Wales, Australia (hereinafter referred to as "B2G")
AND B2G LEGAL PTY LTD., a company incorporated under the laws of New South
Wales, Australia (hereinafter referred to as the "Company")
RECITALS
A. The Company's issued capital consists of one hundred (100) Ordinary
Shares which is owned by B2G;
B. VIQ has acquired on the date hereof a 7% Convertible Note of the
Company with a face value of $1,450,000 which is convertible into one
hundred (100) Ordinary Shares of the Company during the period of 60
days following the date hereof;
C. If and when the Note is converted into one hundred (100) Shares of the
Company, each of VIQ and B2G will be the registered and beneficial
owner of one-half of the outstanding Shares of the Company;
D. There are no other authorised classes of Shares in the capital of the
Company and there are no other issued and outstanding Shares in the
capital of the Company;
E. The Shareholders wish to enter into this agreement to provide for the
management of the Company and to regulate dealings with their
investments in it;
F. In consideration of the mutual agreements herein set forth, the parties
hereto have agreed one with each of the others as follows:
THE PARTIES AGREE:
1. DEFINITIONS AND INTERPRETATION
1.1 UNLESS THE SUBJECT MATTER OR CONTEXT OTHERWISE REQUIRES:
"ACCOUNTING PRINCIPLES" means the accounting standards as in force
under the Law and, to the extent not inconsistent, the standards and
principles adopted by The Australian Society of CPA's and the Institute
of Chartered Accountants in Australia.
"ASSOCIATE" has the meaning given to that term by section 11 of the Law
as at the date of this Agreement.
"AUSCRIPT" means Auscript Pty Limited, ACN 082 664 220, a company
incorporated under the laws of New South Wales, Australia.
"BUSINESS DAY" means any day except Saturday, Sunday or any day on
which banks are not generally open for business in Sydney, Australia.
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"BUSINESS OF THE COMPANY" means the business of acting as a holding
corporation of all of the issued and outstanding shares of Auscript.
"BUSINESS OF AUSCRIPT" means the business of providing monitoring and
transcription services to Courts, Conciliations and Arbitrations and
related bodies throughout Australia and the Asia-Pacific region and
providing a suite of other court and legal support services including
such activities set out in the B2G Legal Business Plan dated 6 November
2000.
"CONSTITUTION" means the constitution of the Company, as amended.
"CONTROL" has the meaning given by section 50AA of the Law as at the
date of this Agreement.
"CONVERTIBLE NOTE" means the 7% convertible promissory note of the
Company having a face value of $1,450,000 which is convertible into one
hundred Ordinary Shares at any time on or before 60 days from the
issuing of the Convertible Note.
"FAIR MARKET VALUE" has the meaning attributed thereto in clause 6.
"LAW" means the Corporations Law.
"ORDINARY SHARES" means the Ordinary Shares in the capital of the
Company.
"PERSON" means an individual, a partnership, a corporation, a trust, an
unincorporated organisation, a government or any departments or agency
thereof and the heirs, executors, administrators or other legal
representatives of an individual, and word importing persons have a
similar meaning.
"RELATED BODY CORPORATE" has the meaning given to it in the Law as at
the date of this Agreement.
"SHAREHOLDER" means any holder of Shares.
"SHAREHOLDING PROPORTION" means the proportion which the number of
Shares owned such Shareholder bears to the total number of issued
Shares.
"SHARES" means shares of any class or series in the capital of the
Company whether currently or subsequently authorised.
"THIS AGREEMENT", the "AGREEMENT", "HERETO", "HEREOF", "HEREIN",
"HEREBY", "HEREUNDER", and similar expressions mean or refer to this
Agreement as amended from time to time and any agreement or instrument
supplemental or ancillary hereto or in implementation hereof, and the
expression "CLAUSE" followed by a number or letter mean and refer to
the specified clause of this Agreement.
1.2 INTERPRETATION
(a) Extended Meanings
Words importing the singular number include the plural and vice versa
and words importing gender include all genders.
(b) Business Days
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If any payment is required to be made or other action is required to be
taken pursuant to this Agreement on any day which is not a Business
Day, then such payment or action shall be made or taken on the next
Business Day.
(c) Interpretation Not Affected By Headings
The division of this Agreement into clauses and insertion of headings
are for convenience and reference only and shall not affect the
construction or interpretation of this Agreement.
(d) Currency
Unless otherwise indicated, all references in currency herein are the
lawful money of Australia.
(e) Entire Agreement
This Agreement constitutes the entire Agreement between the parties
with respect to the subject matter hereof and, except as stated herein
and in the instruments and documents to be executed and delivered
pursuant hereto, contains all of the representations, undertakings and
agreements of the respective parties. There are no verbal
representations, undertakings or agreements of any kind between the
parties respecting the subject matter hereof except those contained
herein. This Agreement supersedes any prior negotiations and
discussions of the parties with respect to the subject matter of this
Agreement. No amendment of this Agreement shall be binding unless it is
executed in writing by all of the parties to this Agreement.
2. CONDUCT OF THE AFFAIRS OF THE COMPANY AND AUSCRIPT
2.1 THIS AGREEMENT TO AUTOMATICALLY COME INTO EFFECT
This Agreement will automatically come into effect on the conversion by
VIQ of the Convertible Note and will from this time regulate the
management of the Company and the parties' dealings with the
investments in the Company according to the terms of this Agreement.
2.2 COMPLIANCE WITH AGREEMENT
The Shareholders must at all times do and cause to be done all acts and
things and vote their Shares and otherwise exercise their respective
rights, as Shareholders or otherwise, to the extent permitted by law,
to cause such meetings to be held, resolutions to be passed,
constitution to be amended and documents to be executed so that at all
times the provisions, conditions, restrictions and prohibitions
contained in this Agreement relating to their respective shareholdings
in the capital of the Company and the business and affairs of the
Company and Auscript shall be performed and complied with.
2.3 CONFLICT WITH CONSTITUTION
In the event of inconsistency between this Agreement and the
Constitution of the Company and Auscript, this Agreement shall apply,
and the parties shall immediately make all changes to the Constitution
of the Company and Auscript as are necessary and lawful to render them
consistent with this Agreement.
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2.4 MANAGEMENT AND AUDITORS
During the term of this Agreement, unless they otherwise agree, each Shareholder
hereby agrees to vote any Shares owned by such Shareholder and take any other
necessary steps such that:
(a) The board of directors of each of the Company and Auscript
shall consist of four directors.
(b) Resolutions of the board of directors of each of the Company
and Auscript shall be decided by a majority of those voting;
and in the event of a voting tie, the chairman of the board of
directors shall not have a second casting vote.
(c) Except where otherwise required by the Law and except as
otherwise provided in this Agreement, resolutions of the
shareholders of each of the Company and Auscript shall be
decided by a majority of those voting; and in the event of a
voting tie, the chairman of any meeting of shareholders shall
not have a second casting vote.
(d) Each of VIQ and B2G shall be entitled to nominate and have
appointed two directors to the board of directors of the
Company and Auscript.
(e) Any Shareholder may replace any director nominated by it at
any time.
(f) If any vacancy occurs on the board of directors of the Company
or Auscript, such vacancy shall be filled by a person
nominated by the Shareholder whose nominee left the board and
created the vacancy.
(g) The directors of the Company and Auscript shall appoint the
officers of the Company and of Auscript.
(h) All requisite meetings of directors and shareholders of the
Company and Auscript shall be held from time to time for the
purpose of electing to the board any person nominated by a
Shareholder as its respective representative. The parties
hereto agree to vote, and cause the directors to appoint, any
person nominated by a Shareholder as its respective
representative to the board of directors of the Company and
Auscript.
(i) A quorum for meetings of the board of directors of the Company
and Auscript shall be at least two directors and no business
shall be conducted by the board of directors of the Company or
Auscript unless an equal number of representatives of VIQ and
B2G are present or unless the representative of the
shareholder whose representative is not present votes in
favour of any resolution passed or business conducted at such
meeting.
(j) Each of the Shareholders shall use its best efforts to, and
shall cause its nominee directors to, act promptly and
expeditiously in considering and making decisions on those
matters regarding the affairs of the Company and Auscript that
require shareholders approval or board approval and, in so
doing, shall avoid unreasonable delays which would prevent the
management of the Company and Auscript from continuing to
function in a timely manner. In this regard, any Shareholder
entitled to nominate a director or directors may call meetings
of the Board or circulate resolutions for the signature of all
the directors, and may circulate for signature by the
Shareholders consents to signify Shareholder's approval.
(k) The auditors of the Company and Auscript will be a recognised
firm of chartered accountants independent of both B2G and VIQ
(and their shareholders), and acceptable to each of VIQ and
B2G.
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(l) The registered office of the Company shall be located at Xxxxx
0, 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxx Xxxxx Xxxxx and the
registered office of Auscript shall be located at Xxxxx 00,
00-00 Xxxxxxxxx Xxxxxx, Xxxxxx, Xxx Xxxxx Xxxxx, Xxxxxxxxx.
2.5 FINANCIAL STATEMENTS AND RECORDS
(a) Within 90 days after the end of each financial year, the
Company will furnish to the parties hereto a copy of the
financial statements for each of the Company and Auscript,
which financial statements will be prepared in accordance with
the Accounting Principles and with the report of the auditors
thereon.
(b) Within 45 days after the end of each quarter of each financial
year, the Company will furnish to the parties hereto a copy of
the unaudited interim financial statements of each of the
Company and Auscript for such three-month period.
(c) The financial statements referred to in clauses (a) and (b)
above shall include a balance sheet prepared as of the end of
the financial period in question profit and loss accounts and
statements of cash flow, retained earnings and of changes in
financial position for the financial periods in question.
(d) Each of the Company and Auscript shall at all times maintain
at its registered office proper books of account, which shall
contain accurate and complete records of all transactions,
receipts, expenses, assets and liabilities of the Company and
Auscript, as the case may be, and shall provide all
Shareholders reasonable access to them.
(e) The Company shall permit Persons designated by any Shareholder
to examine the books and financial records of the Company and
Auscript and to discuss their affairs, finances and accounts,
all at such reasonable times and as often as may reasonably be
requested by the Shareholder. The Persons designated by the
Shareholder may include accountants, consultants or others
appointed by the Shareholder to examine all or any aspect of
the operations of the Company and Auscript, and the Company
agrees to answer any enquiries which such Persons may make
fully and fairly and to the best of its ability. The Company
agrees that such Persons may, in the course of their
investigations, discuss the business and affairs of the
Company and Auscript with the officers, directors and
employees of the Company and Auscript and with the auditors or
accountants of the Company and Auscript and other reasonably
expected to have knowledge of the relevant matters. All
information obtained and opinions developed in the course of
such examinations, inspections or enquiries shall be retained
in strict confidence and not used or disclosed by such
Shareholder except in the interest of the Company or Auscript,
as the case may be, any Shareholder's enforcement of its
rights hereunder, or in the Shareholder's dealings with the
Shares owned by it.
2.6 RESTRICTION ON CERTAIN CORPORATE ACTIONS
During the term of this Agreement, the Company will not, nor will it
cause or permit any subsidiary including Auscript to, without, in each
case, either (i) the prior approval of all of the directors of the
Company expressed by a resolution passed by the unanimous approval of
directors voting thereon or an instrument in writing signed by all
directors or (ii) the prior approval of all holders of the Ordinary
Shares expressed by a resolution passed by the unanimous approval of
Shareholders voting thereon or by an instrument in writing signed by
all Shareholders:
(a) amalgamate with, or merge into, any other corporation (other
than an amalgamation or merger with a wholly-owned
subsidiary);
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(b) sell, transfer or otherwise dispose of all or substantially
all of its assets;
(c) enter into any corporate transaction (whether by way of
reconstruction, reorganisation, consolidation, amalgamation,
merger, sale, lease or otherwise) whereby all or substantially
all of its undertaking, property or assets or any portion
thereof would become the property of any other Person or in
the case of any such amalgamation or merger, the property of
the continuing corporation resulting therefrom;
(d) dissolve, wind-up or liquidate;
(e) amend or change its Constitution;
(f) guarantee or otherwise become liable for any debts or
obligations of any Person other than of the Company and
Auscript;
(g) lend money to any Person other than loans to Auscript or
advances in the ordinary course of business;
(h) incur whether absolutely or contingently indebtedness for
borrowed money whether directly or by financing, lease or
other indirect financing arrangements;
(i) convey, sell, lease, exchange, mortgage, transfer or otherwise
dispose of all or substantially all of the property or assets
of the Company or Auscript or of a part of the property or
assets of the Company or Auscript having a value in excess of
$40,000 in respect of any one item or $250,000 (in aggregate)
in respect of items sold in one financial year out of the
ordinary course of the Business of the Company or of the
Business of Auscript;
(j) purchase, lease or otherwise acquire, in any one transaction
any asset having a value in excess of $100,000, or in any
financial year assets having an aggregate value in excess of
$250,000 out of the ordinary course of the Business of the
Company or of the Business of Auscript;
(k) enter into any acquisition or agreement to acquire any capital
asset, any lease or agreement to lease of real or personal
property or any acquisition or agreement to acquire property
by way of conditional sale agreement or agreement granting a
purchase money security interest having a value in excess of
$100,000 in respect of any one transaction or $250,000 (in
aggregate) in respect of one financial year;
(l) grant a security interest in all or any of the assets,
business or properties of the Company or Auscript;
(m) appoint officers and other senior employees of the Company or
Auscript, if their annual base salary would exceed $100,000
("Senior Executives");
(n) make any change in the appointment, compensation or benefits
of any such Senior Executives, other than changes approved by
the board of directors;
(o) distribute surplus or earnings, return share capital,
repurchase or redeem Shares or other obligations, except as
provided for herein;
(p) declare any dividend on any Shares;
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(q) repay loans or advances made by Shareholders to it, except as
provided for herein;
(r) enter into any material transaction in which any director,
officer, shareholder or employee of the Company, Auscript or
any associate or Related Body Corporate of any such Person has
a material interest;
(s) participate, directly or indirectly in any business other than
the Business of the Company or the Business of Auscript;
(t) cause any material change to the Business of the Company or
the Business of Auscript;
(u) acquire assets not required in the conduct of the Business of
the Company or the Business of Auscript;
(v) enter into any material contract, agreement, obligation,
liability or other transaction which is not in the ordinary
course of establishing or carrying on the Business of the
Company or the Business of Auscript;
(w) discontinue the Business of the Company or the Business of
Auscript;
(x) change its auditors; or
(y) permit the Company to carry on any business other than that of
a financial holding corporation.
3. ISSUE OF SHARES
3.1 RESTRICTION ON ISSUE
Except as the parties hereto may otherwise agree in writing, there
shall be no additional issue of Shares or securities convertible,
exercisable or exchangeable into Shares and Auscript shall not issue
any additional shares or securities convertible, exercisable or
exchangeable into shares.
3.2 PRE-EMPTION RIGHTS
If the parties do agree in writing that the Company will issue
securities (including Shares) the Shareholders shall cause the
Directors to apply the following procedures:
(a) The Company must issue an invitation to each Shareholder to
subscribe for securities in their Shareholding Proportion
("OFFER SHARES").
(b) Where the number of Offer Shares that would otherwise be
offered to a Shareholder includes a fraction, that fraction
will be rounded up or down as determined by the Secretary
acting in good faith.
(c) The invitation to subscribe for the Offer Shares must be made
by written notice specifying the total number of Offer Shares
and the Shareholding Proportion offered to each Shareholder,
the subscription price, and the period of 20 Business Days
within which the Shareholder must give notice under clause
3.2(d) after which time the invitation will lapse.
(d) A Shareholder must by written notice to the Secretary:
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(i) reject all of the Offer Shares offered to it;
(ii) accept a lesser number of such Offer Shares;
(iii) accept all of such Offer Shares; or
(iv) accept all of such Offer Shares and indicate the
number of additional Offer Shares it would be
prepared to subscribe for.
(e) If a Shareholder does not advise the Secretary as required by
clause 3.2(d), the Shareholder shall be deemed to have
rejected all of the Offer Shares.
(f) If a Shareholder rejects all of the Offer Shares offered to it
or accept a lesser number of Offer Shares than offered to it,
those Offer Shares which are not so accepted must then be
offered to those Shareholders who indicated they would be
prepared to subscribe for additional Offer Shares in
accordance with the number of additional Offer Shares those
Shareholders indicated they would be prepared to subscribe
for, or if there were more additional Offer Shares so
specified by the other Shareholders than were rejected by the
Shareholder concerned, then the additional Offer Shares must
be offered on a pro-rata basis with the process continuing
until all additional Offer Shares have been accepted and
allocated to Shareholders or no Shareholder is willing to take
up any remaining balance; and
(g) If the Company does not receive sufficient acceptances in
relation to all of the Offer Shares at the relevant
subscription price, the Company may offer any remaining Offer
Shares for subscription at the subscription price within 40
Business Days of the end of the procedures under sub-clauses
(a)- (f) of this clause 3.2 to any person who agrees in
writing in the form of the Accession Deed to be bound by the
terms of this Agreement.
4. TRANSFER OR DISPOSITION OF SHARES
4.1 RESTRICTIONS ON TRANSFERS
Except as expressly provided herein or as specifically consented to in
writing by the parties hereto, the parties hereto shall not, and shall
not make any agreement to, directly or indirectly, sell, assign,
transfer, give, devise, bequeath, mortgage, pledge, hypothecate or
otherwise dispose of, alienate or in any way encumber or create a
security interest in, or grant any option on, any of the Shares in the
capital of the Company they respectively own or may own for any reason
or purpose whatsoever. Any attempt to accomplish or effect any or all
of the acts prohibited thereby shall be null and void.
4.2 DEEMED CONSENT TO PERMITTED TRANSFER
For the purposes of this Agreement and the Constitution of the Company,
each Shareholder shall be deemed to have consented to every transfer of
Shares that is made in accordance with the provisions of this
Agreement.
4.3 EXEMPT TRANSFERS
The provisions of clause 4.1 shall not apply to the transfer or pledge
of any Shares by any party hereto to any other party hereto. In
addition and notwithstanding the provisions of clause 4.1, a
Shareholder (the "Transferor") may transfer all (but not less than all)
of the Shares owned by it to any Related Body Corporate of the
Shareholder (the "Transferee"). No transfer hereunder to a Transferee
shall be valid and effective under the provisions of this clause 4.3,
unless
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the Transferee shall continue to be a Related Body Corporate of the
Transferor after such transfer. No Transferor may, after the sale or
transfer of the Shares owned by it to a Related Body Corporate pursuant
hereto, take or permit any action whereby such Related Body Corporate
will cease to be a Related Body Corporate (except by winding up or
merger of the Transferor into the Related Body Corporate) without first
either causing the Related Body Corporate to retransfer all of the
Shares to the Transferor or a Related Body Corporate of the Transferor
from whom the Shares were acquired.
4.4 ADDITIONAL PARTIES
Every transfer or pledge of Shares, whether contemplated by clause 4.3
or otherwise, shall be subject to the condition that the transferee (or
pledgee) shall, if not a party hereto, agree to be bound by the terms
hereof and become a party hereto, failing which such transfer or pledge
shall be void. No such transfer or pledge shall relieve the transferor
of any of its obligations hereunder unless the other parties agree.
4.5 MANDATORY TRANSFER
In the event that:
(a) an order is made or a resolution is effectively passed for the
winding up of a Shareholder (not being a winding up for the
purpose of amalgamation or reconstruction of the Shareholder);
(b) a receiver or receiver and manager or an administrator or
trustee is appointed or an encumbrancer takes possession of
the whole or any material part of the undertaking or property
of a Shareholder;
(c) a Shareholder enters into any arrangement, compromise or
composition with or assignment for the benefit of its
creditors generally or any of them;
(d) a Shareholder ceases to carry on business or suspends payment
of its debts generally; or
(e) in the case of a Shareholder not incorporated in Australia any
event analogous to any of the events described above under the
law of the country or state of incorporation of the
Shareholder,
the other Shareholders shall have the right to purchase all but not
less than all of the Shares of any such Shareholder as nearly as may be
in proportion to the number of Ordinary Shares then held respectively
among themselves. The price of such Shares shall be agreed upon by the
Shareholders or their representative or, in default of such agreement,
shall be the Fair Market Value of the Shares. A Shareholder may
exercise this right at any time within 90 days after receiving actual
notice of the event by giving notice in writing to the other
Shareholders and the Company that it intends to exercise such right.
4.6 RIGHTS OF FIRST OFFER AND FIRST REFUSAL
A Shareholder who desires to sell (the "Seller") all, but not less than
all of the Ordinary Shares owned by him (the "Offered Securities")
shall give notice (the "Selling Notice") to the other Shareholders (the
"Other Shareholders") of his intention so to do. The Selling Notice
shall state the price per Share at which the Seller is prepared to sell
the Offered Securities, shall provide that the purchase price is to be
paid in full on the completion of the sale and the proposed date of
sale (the "Sale Date"), which shall not be less than 45 days nor more
than 60 days after the date on
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which the Selling Notice is given to the Other Shareholders. In such
event, unless all the Other Shareholders and the Seller otherwise
agree, the following provisions shall govern such purchase and sale:
(a) the Selling Notice shall be deemed to be an offer, irrevocable
within the time hereinafter specified for acceptance, by the
Seller to sell the Offered Securities to the Other
Shareholders;
(b) within 30 days after receipt of the Selling Notice, each Other
Shareholder may give to the Seller a notice of acceptance (an
"Acceptance Notice") which shall set forth the number of
Offered Securities which such Other Shareholder is willing to
purchase from the Seller;
(c) if the Other Shareholders collectively are prepared to
purchase all or more than all of the Offered Securities, then
the Other Shareholders shall be entitled to purchase the
Offered Securities. If all of the Other Shareholders do not
claim their respective proportions, the unclaimed Offered
Securities shall be allocated so as to satisfy the unsatisfied
claims of Other Shareholders for Offered Securities in excess
of their proportions and, if the claims in excess are more
than sufficient to exhaust such unclaimed Offered Securities,
the unclaimed Offered Securities shall be divided among the
remaining Other Shareholders in proportion to their holdings
of Shares immediately prior to the delivery of the Selling
Notice. The allocation method set out in this paragraph shall
be, if necessary, repetitively applied until either (i) all
Offered Securities are accepted, or (ii) all claims of the
Other Shareholders for Offered Securities are satisfied. An
Other Shareholder shall not be bound to purchase any Offered
Securities in excess of the number which it agreed to purchase
in his Acceptance Notice;
(d) if none of the Other Shareholders accepts the offer or the
Other Shareholders collectively are not prepared to purchase
all of the Offered Securities, then the Seller may sell all
(but not less than all) of the Offered Securities to any other
person (a "Third Party") within 60 days after the Sale Date at
a price per security not less than the price per security and
on terms and conditions not more favourable than the terms and
conditions on which the Seller is required first to offer to
sell the Shares to the Other Shareholders pursuant to this
clause 4.6. In the event that the Seller does not sell the
Offered Securities to a Third Party within such 60 day period,
then the provisions of this Agreement shall once again apply
and so on from time to time; and
(e) if the Seller has received, prior to the date of the Selling
Notice, a bona fide offer from any other person (a "Third
Party") to purchase the Offered Securities for cash which it
wishes to accept, then a copy of such offer shall be sent to
each Other Shareholder with the Selling Notice which shall be
delivered to the Other Shareholders in accordance with this
clause 4.6, and the terms and conditions of sale set forth in
the Selling Notice shall be the same as those set forth in
such offer, and the Sale Date proposed shall not be less than
45 days nor more than 60 days after the date on which the
Selling Notice is given to each Other Shareholder. By
delivering a Selling Notice, the Seller represents and
warrants to each Other Shareholder that no direct or indirect
collateral benefit or supplementary consideration (whether or
not in the nature of money, property, securities or other
benefits or opportunities) has been or is to be paid or
received by the Third Party or any other person not at arm's
length with it, in connection with the Third Party's offer and
that such offer is not made as part of or in connection with
any other transaction. Each such Other Shareholder shall be
entitled to obtain from the Seller and the Third Party and
review all documents relevant to this issue of collateral
benefit or supplementary consideration.
4.7 "TAG-ALONG" RIGHTS
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The following rights and obligations apply to transactions to which
clause 4.6 applies where, after compliance with the provisions of
clause 4.6, any Shareholder (or any group of Shareholders) (referred to
in this clause as the "Seller") desires and is entitled to sell
Ordinary Shares to a single purchaser or group of purchasers, other
than the existing Shareholders (referred to in this clause as the
"Buyer") so that, as a result of such transactions and all previous or
contemporaneous transactions, if any, with any person or persons, the
Buyer, together with any persons not acting at arm's length with the
Buyer, would hold in the aggregate not less than 50% of the issued and
outstanding Ordinary Shares.
(a) Such sales shall be permitted only if the Buyer, within 15
days before the Sale Date referred to in clause 4.6, then
makes an offer (the "Tag Along Offer") in writing irrevocable
for 10 days to all other Shareholders holding Ordinary Shares
to purchase at the same price and upon the same terms and
conditions the same proportion of Ordinary Shares as is being
purchased by the Buyer from the Seller from each such other
Shareholder. Such Tag Along Offer may be accepted and
completed without further compliance by the other Shareholders
with the provisions of clause 4.6.
(b) The Seller shall be deemed to warrant to the Other
Shareholders receiving the Tag Along Offer, and the Buyer
shall be required to make in writing in its Tag Along Offer, a
representation and warranty that no direct or indirect
collateral benefit or supplementary consideration (whether or
not in the nature of a tangible or intangible asset, money,
property, security or other benefits or opportunities) has
been or is to be paid or received by the Buyer, or any other
person not at arm's length with it, in connection with such
Tag Along Offer and that such Tag Along Offer is not made as
part of or in connection with any other transaction. Each
Other Shareholder may obtain from the Seller and such Buyer
and review all documents relevant to this issue of
supplementary consideration.
4.8 "DRAG-ALONG" RIGHTS
(a) The following rights and obligations apply to transactions to
which clause 4.6 applies, where, after compliance first with
the provisions of clause 4.6 and next with the provisions of
clause 4.7, any Shareholder (or any group of Shareholders)
(referred to in this clause as the "Seller") desires and is
entitled to sell Ordinary Shares to any person, other than the
existing Shareholders (referred to in this clause as the
"Buyer") with whom the Seller deals at arm's length so that,
as a result of such transactions(s) and all previous or
contemporaneous transactions, if any, with any person or
persons, the Buyer, together with any persons not acting at
arm's length with the Buyer, would hold in the aggregate not
less than 50% of the issued and outstanding Ordinary Shares.
(b) In such circumstances, the Buyer may at its option, by written
notice to all Shareholders who are not Sellers given at least
5 days before the Sale Date referred to in clause 4.6, require
such other Shareholders to sell to the Buyer on the Sale Date
the same proportion of such other Shareholder's Ordinary
Shares as the Seller is selling to the Buyer at the same price
(and if the price is not payable in cash then the cash
equivalent of such price) and on the same terms as apply to
the sale by the Seller to such Buyer of the Seller's Ordinary
Shares and clause 4.6 shall not apply to such sales by such
other Shareholders.
5. GENERAL SALE PROVISIONS
5.1 CLOSING PROVISIONS
If a purchase and sale of shares is effected pursuant to this
Agreement, the following shall apply subject to any express provisions
to the contrary:
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(a) For the purposes of this clause:
(i) "CLOSING"means the closing of the transaction of
purchase and sale contemplated by clauses 4.5 or 4.6
of this Agreement which shall occur at 11:00 a.m. on
the Closing Date;
(ii) "CLOSING DATE" means, in case of clause 4.5, 10
business days following the determination of Fair
Market Value, in the case of clause 4.6, the Sale
Date;
(iii) "PLACE OF CLOSING" means the office of the solicitors
of the Company;
(iv) "VENDOR" means the party who is selling Shares
pursuant to this Agreement; and
(v) "PURCHASER" means the party or parties who are
purchasing Shares pursuant to this Agreement.
(b) At Closing, the Vendor shall deliver to the Purchaser:
(i) certificates for all Shares of the Company owned by
the Vendor duly endorsed in blank for transfer;
(ii) a certificate representing and warranting that the
Vendor owns the Shares being sold with good title
thereto free and clear of all encumbrances and claims
whatsoever and that the Vendor has the unrestricted
power and authority to sell the Shares to the
Purchaser, which representations and warranties shall
survive Closing;
(iii) a signed stamp duty declaration; and
(iv) all other documents necessary or desirable in order
to carry out the intent of this Agreement;
and, where all of its Shares in the Company are being sold,
the Vendor shall also deliver to the Purchaser at Closing:
(v) the resignation of the Vendor and any nominees of the
Vendor as employees, officers and directors of the
Company; and
(vi) a release of all claims the Vendor and any person
resigning under subparagraph (iii) above have or may
have against the Company and the Purchaser except for
previously due agreed amounts or amounts then in
dispute.
(c) The Purchaser shall deliver to the Vendor the following:
(i) a bank cheque payable to the Vendor for the purchase
price; and
(ii) all other documents necessary or desirable in order
to carry out the intent of this Agreement.
(d) Where the Vendor is selling all of its Shares in the Company,
the Purchaser shall indemnify and save harmless the Vendor
against the debts, obligations and liabilities of the Company
relating to periods after Closing.
(e) If, at Closing, the Vendor (or any of its associates) shall be
indebted to the Company in an amount recorded on the books of
the Company and verified by the accountants or auditors of the
Company, the Purchaser shall pay the purchase price of the
Shares to the Company,
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and the Company shall deduct such debt therefrom and shall
forthwith pay the balance, if any, to the Vendor.
(f) If, at Closing, the Company shall be indebted to the Vendor
(or any of its associates) in an amount recorded on the books
of the Company and verified by the accountants or auditors of
the Company, then, at the option of the Purchaser:
(i) the Company shall pay such debt to the Vendor (or any
of its associates) by bank cheque at Closing; or
(ii) the Purchaser shall purchase such indebtedness for
the full amount thereof, free and clear of all
encumbrances and claims whatsoever.
(g) If, at Closing, the Vendor (or any of its associates) shall
have any personal guarantees, securities or covenants pledged
with any Person to secure an indebtedness, liability or
obligation of the Company, then the Company and the Purchaser
shall use all reasonable efforts to deliver up or cause to be
delivered up to Vendor and cancel or cause to be cancelled
such guarantees, securities and/or covenants at or before
Closing. If such is not possible, the Purchaser shall, at
Closing indemnify and save harmless the Vendor (or any of its
associates) from and against all claims arising out of any
such guarantees, securities and/or covenants referable to any
period of time after Closing.
(h) If on the Closing Date the Vendor neglects or refuses to
complete the purchase and sale or does not comply with the
procedures set out in this Agreement, the Purchaser has the
right upon such default (without prejudice to any other
rights), upon:
(i) payment by it of the full amount of the purchase
price to the solicitor for the Company in trust for,
on behalf of and in the name of, the Vendor, and,
(ii) delivery by it to the solicitor for the Company of
any documents required to be delivered to the Vendor
on Closing,
to complete the transaction as above described, and such
Purchaser is hereby irrevocably constituted the true and
lawful attorney of the Vendor for such purpose.
(i) All deliveries to be made at Closing shall be made at the
Place of Closing.
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6. FAIR MARKET VALUE
6.1 MEANING OF "FAIR MARKET VALUE"
(a) The "Fair Market Value" of any Shares shall mean at any time
the fair market value thereof determined by the auditors or
accountants of the Company (hereinafter referred to in this
clause as the "auditors"), subject to the express terms of
this Agreement, in accordance with such procedures and
applying such valuation principles as the auditors shall
consider to be appropriate, fair and reasonable in all
circumstances.
(b) In valuing the Shares of the Company under clause 6.1(a) no
minority discount by reason of a minority shareholding in the
Company shall be applied and the fair market value of such
Shares shall be the fair market value of the Company on a
going concern basis multiplied by a fraction, the numerator of
which is the number of Shares being valued of the Company, and
the denominator of which is the number of all outstanding
Shares of the Company.
(c) A Shareholder, exercising any of the rights granted hereby,
shall, not later than ten (10) business days following the
giving of any written notice required hereunder, give written
notice to the other Shareholder and with a copy to the
auditors requesting the auditors to determine the Fair Market
Value of the Shares and specifying the clause under which such
right is being exercised. In addition, either of the
Shareholders shall be entitled at any time, upon written
notice to the other Shareholder, to request the auditors to
determine the Fair Market Value of the Shares. Each
Shareholder shall be entitled to receive a copy of any
determination of Fair Market Value provided by the auditors.
(d) The party making a request of the auditors under clause 6.1(c)
shall be liable for the reasonable fees of the auditor in so
doing. In the event that a party which wishes to make such a
request cannot agree in advance with the auditors as to the
fees payable in connection with the valuation, such party
shall be entitled, upon written notice to the other
Shareholder, to appoint any other nationally recognised firm
of chartered accountants to carry out such valuation and in
that event, all references in this Agreement to the "auditors"
shall be deemed a reference to such other firm so appointed.
(e) Immediately upon receipt of a written request given under
clause 6.1(c) to do so, the auditors shall proceed to
determine the Fair Market Value of the Shares. Such
determination shall be made by the auditors as expeditiously
as possible and in any event within a period of sixty (60)
days following the receipt by the auditors of the written
request. In the event that the auditors fail for any reason
whatsoever to make their determination within such period, any
party shall be entitled to immediately refer the determination
of the Fair Market Value of the Shares to a national firm of
chartered accountants selected in the manner described in
clause 6.1(g).
(f) Immediately upon a determination by the auditors of the Fair
Market Value of the Shares, the auditors shall give notice in
writing to each of the Shareholders of their determination and
of reasonable particulars of the basis upon which such value
was determined. In the event that none of the Shareholders
gives written notice to the auditors (with copies to the other
Shareholder) within a period of fifteen (15) business days
following its receipt of the auditors' determination that such
party disputes the determination, then, except as hereinafter
provided, the determination by the auditors of the Fair Market
Value of the Shares shall be final and binding on all parties.
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(g) In the event that notice is given to the auditors within the
period referred to in clause 6.1(f) that a party disputes the
determination of the auditors, the matter shall be referred to
one of the following national firms of chartered accountants
who are not at that time the auditors for the Company or any
of the Shareholders and who shall be agreed upon by the
Shareholders:
o KPMG;
o PriceWaterhouseCoopers;
o Ernst & Young;
o Delloitte Touche Tomatsu;
o Xxxxxx Xxxxxxxx
If the Shareholders are unable to agree upon such national
firm of chartered accountants, any Shareholder may apply to
the President of the Law Society of New South Wales upon not
less than five (5) business days notice requesting that such
President appoint such national firm of chartered accountants.
The decision of such President shall be final and binding upon
the parties and not subject to appeal. Such national firm of
chartered accountants shall thereupon proceed to determine the
Fair Market Value of the Shares. Such chartered accountants
shall make their determination, after assessing any
submissions made to them by any Shareholder wishing to make
submissions, but always subject to the express terms of this
Agreement and in accordance with such procedures and applying
such valuation principles as they consider to be appropriate,
fair and reasonable in all the circumstances. The
determination of Fair Market Value by such national firm of
chartered accountants shall be final and binding upon all of
the parties and shall not be subject to appeal.
(h) Each of the parties hereto agrees to co-operate in good faith
with each of the other parties hereto and the auditors to
permit the determination of the Fair Market Value of the
Shares including the preparation of the valuation contemplated
under clause 6.1(g).
7. TERMINATION
7.1 TERMINATION
This Agreement shall, subject to clause 7.2, continue in force until
the earlier of:
(a) the date on which only one Shareholder holds Shares and, if
outstanding, the Convertible Notes of the Company;
(b) the date this Agreement is terminated by written agreement by
all parties who are then Shareholders of the Company;
(c) the date the Company is listed for quotation on an Australian
Stock Exchange; and
(d) when the Company is wound up.
7.2 SURVIVAL
The provisions of sub-clause 5.1(d) and this clause 7.2 shall survive
termination of this Agreement.
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8 GENERAL
8.1 APPLICATION OF AGREEMENT
Except as the parties hereto may otherwise agree, this Agreement shall
apply to all Shares from time to time outstanding.
8.2 LEGEND
Reference to and notice of this Agreement shall be endorsed on all
share certificates issued by the Company.
8.3 VOTING POWER
The parties hereto shall at all times use their voting powers (whether
expressed by way of vote or written consent) in accordance with the
provisions of this Agreement and for the purpose of effectuating the
same and for the purposes of ensuring that the directors of the Company
shall exercise their powers as members of the board consistently with
the provisions of this Agreement and for the purpose of effectuating
the same.
8.4 AMENDMENTS.
This Agreement may be amended in writing by consent of the parties
hereto which shall be binding on all parties to this Agreement.
8.5 ASSIGNMENT
This Agreement is not assignable by any party except insofar as its
benefit and burden pass with the Shares transferred in accordance with
its provisions. This Agreement shall enure to the benefit of and be
binding upon the heirs, executors, administrators, committees,
curators, successors, receivers, trustees in bankruptcy, liquidators or
any other legal representatives of the parties hereto.
8.6 NOTICES
Any notice to be given under this Agreement shall be in writing and
delivered, faxed or mailed by prepaid mail addressed to the party to
whom it is to be given at his address as shown below or, in the
alternative, may be by telephone or similar means of communication
providing that confirming notice in writing is sent as aforesaid within
two business days thereafter and shall be deemed to have been received
on the day of delivery, fax or communication by telephone or similar
means of communication or on the fourth business day after mailing as
aforesaid, as the case may be. In the case of disruption in postal
services, any notice if mailed shall not be deemed to have been given
until it is actually delivered to the party to which it is given.
Notices shall be addressed as shown below or at such other address as
shall be designated by such party in a written notice to the other:
If to VIQ, at:
VoiceIQ Inc.
000 Xxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxx Xxxxxx, President & CEO
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Facsimile: (000) 000-0000
if to B2G, at:
o
Attention: o
Facsimile: o
if to the Company, at:
B2G Legal Pty Ltd.
Xxxxx 0
000 Xxxxxxx Xxxxxx
Xxxxxx, XXX 0000
Attention: o
Facsimile: o
8.7 BINDING EFFECT
Any other Agreement to be bound hereby and any other Agreement in
favour of the parties hereto shall be effectively delivered to each
party by delivering to the Secretary of the Company a signed copy
thereof and the Secretary shall thereupon forward a photocopy of such
copy to each party hereto.
8.8 ENFORCEMENT
It is expressly understood and agreed that the covenants, Agreements
and obligations herein expressed to be observed and performed by the
parties hereto may be enforced by any one of the parties hereto without
joining the other parties hereto in any proceedings.
8.9 SEVERABILITY
The invalidity of any provision of this Agreement or any covenant
herein contained on the part of any party shall not affect the validity
of any other provision or covenant hereof or herein contained.
8.10 COUNTERPARTS
This Agreement may be executed in several counterparts, each of which
when executed shall be deemed to be an original and such counterparts
together shall constitute one and the same instrument.
8.11 COSTS AND STAMP DUTY
Each party shall bear its own costs in relation to this Agreement and
the Company shall be liable for all stamp duty and similar transaction
taxes arising under or in connection with this Agreement.
8.12 WAIVER DOES NOT EXCUSE LATER BREACH
The waiver by any party of any breach of any term of this Agreement
shall not prevent the subsequent enforcement of that term in respect of
and shall not be deemed a waiver of any subsequent breach of that term.
8.13 GOVERNING LAW
The laws of New South Wales shall govern this Agreement.
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EXECUTED AS A DEED by VOICEIQ INC:
/s/ XXXXXXX XXXXXX /s/ XXXXX X. XXXXX
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Signature of Witness Signature
XXXXXXX XXXXXX XXXXX X. XXXXX
---------------------------------------- -----------------------------------
Name of Witness in full
EXECUTED AS A DEED by X0X.XXX LIMITED:
---------------------------------------- -----------------------------------
Signature of Witness Signature
---------------------------------------- -----------------------------------
Name of Witness in full
EXECUTED AS A DEED by B2G LEGAL PTY LTD:
---------------------------------------- -----------------------------------
Signature of Witness Signature
---------------------------------------- -----------------------------------
Name of Witness in full
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