Exhibit 10.2
SHAREHOLDERS AGREEMENT
THIS AGREEMENT made as of the 31 st day of May, 1997.
BETWEEN:
DATATAX BUSINESS SERVICES LIMITED
a corporation incorporated pursuant to the laws of the Province of Ontario
(hereinafter referred to as "Datatax")
OF THE FIRST PART
- - and -
JTH TAX, INC.
a corporation incorporated pursuant to the laws of the State of Delaware
(hereinafter referred to as "JTH")
OF THE SECOND PART
- - and -
TAX DEPOT INC.
a corporation incorporated pursuant to the laws of the Province of Manitoba
(hereinafter referred to as the "Corporation")
OF THE THIRD PART
WHEREAS the authorized capital of the Corporation consists of an unlimited
number of common shares, of which 100 are issued and outstanding;
AND WHEREAS at the date hereof all of the issued shares of the Corporation are
beneficially owned as follows: Datatax 100 Common
AND WHEREAS JTH and the Corporation are entering into a Subscription Agreement
as of the date hereof, which subscription will be completed on September 2, 1997
whereby JTH will acquire 150 Common Shares of the Corporation;
AND WHEREAS this Agreement is being entered as a condition of the Subscription
Agreement, and is effective as of the date hereof;
AND WHEREAS the shareholders of the Corporation have agreed to enter into this
Agreement as being in their respective best interests and for the purpose of
providing for the operation of the Corporation.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and
the mutual covenants and agreements herein contained the parties hereto agree as
follows:
ARTICLE ONE - INTERPRETATION
1.1 Definitions
In this Agreement, unless something in the subject matter or context is
inconsistent therewith:
(a)"Accountant" means the auditor or accountant, as the case may be, of the
Corporation appointed from time to time;
(b) "Agreement" means this agreement and all schedules attached hereto and all
amendments made hereto and thereto by written agreement between the Shareholders
and the Corporation;
(c)"Business Corporations Act" means the Manitoba Business Corporations Act, as
now enacted or as the same may from time to time be amended, re-enacted or
replaced;
(d) "Business Day" means a day other than a Saturday, Sunday or
statutory holiday in Manitoba;
(e) "Communication" has the meaning set out in Section 5.7;
(f) "Notice" has the meaning set out in Section 3.3 and 5.7;
(g) "Notified Shareholder" has the meaning set out in Section 3.3;
(h) "Offer" has the meaning set out in Section 3.3;
(i) "Offeree" has the meaning set out in Section 3.3 and 3.6;
(j) "Offeror" has the meaning set out in Sections 3.3, and 3.6;
(k) "Shareholders" means Datatax and JTG, together with such other persons as
may become parties to this Agreement, collectively and "Shareholder" means any
one of such persons individually;
(1) "Shares" should mean 100 Common Shares issued to Datatax and 150 Common
Shares issued to JTH, together with any additional shares issued to the
Shareholders pursuant to Section 4. 1;
1.2 Sections and Headings
The division of this Agreement into Articles and Sections and the insertion of
headings are for the convenience of reference only and shall not affect the
construction or interpretation of this Agreement. The terms "this Agreement",
"hereof, "hereunder" and similar expressions refer to this Agreement and not to
any particular Article, Section or other portion hereof and include any
agreement or instrument supplemental or ancillary hereto. Unless something in
the subject matter or context is inconsistent therewith, references herein to
Articles and Sections are to Articles and Sections of this Agreement.
1.3 Number
Words importing the singular number only shall include the plural and vice
versa, words importing the masculine gender shall include the feminine and
neuter genders and vice versa and words importing persons shall include
individuals, partnerships, associations, trusts, unincorporated organizations
and corporations and vice versa.
1.4 Accounting Principles
Wherever in this Agreement reference is made to "generally accepted accounting
principles", such reference shall be deemed to be the generally accepted
accounting principles from time to time approved by the Canadian Institute of
Chartered Accountants, or any successor institute, applicable as at the date on
which such calculation is made or required to be made in accordance with
generally accepted accounting principles.
1.5 Unanimous Shareholder Agreement
To the extent that this Agreement specifies that any matters may only be or
shall be dealt with or approved by or shall require action by the Shareholders,
the discretion and powers of the directors of the Corporation to manage and to
supervise the management of the business and affairs of the Corporation with
respect to such matters are correspondingly restricted.
ARTICLE TWO - MANAGEMENT
2.1 Carrying out of the Agreement
The Shareholders shall at all times carry out and cause the Corporation to carry
out the provisions of this Agreement and agree to remove any director who is
their nominee that does not comply with this Agreement.
2.2 Idem
The Corporation confirms its knowledge of this Agreement and will carry out and
be bound by the provisions of this Agreement to the full extent that it has the
capacity and power at law to do so.
2.3 Directors
The board of directors of the Corporation shall consist of three directors and
Datatax. shall be entitled to one nominee on the board of directors and JTH
shall be entitled to two nominees on the board of directors. Datatax and JTH at
any time may appoint a new nominee to the board of directors, immediately upon
the resignation of their existing nominee or nominees.
2.4 Accountant
BD0 Dunwoody Limited shall be appointed the accountant of the
Corporation unless, prior to tie- other person as accountant of the Corporation,
all of the Shareholders have consented in writing to such person being appointed
and a copy of such consent has been filed with the Corporation.
2.5 Approval of Matters
None of the following actions may be undertaken unless approved by all of the
Shareholders of the Corporation.
(a) any change in the articles or by-laws of the Corporation;
(b) any change in the authorized or issued capital of the Corporation;
(c) the entering into of any agreement or the making of any offer or the
granting of any right capable of becoming an agreement to allot or issue any
shares of the Corporation;
(d) any action which may lead to or result in a material change in the nature of
the business of the Corporation;
(e) the entering into of any agreement other than in the ordinary course of the
Corporation's business;
(f) the taking of any steps to wind up or terminate the corporate existence of
the Corporation;
(g) the sale, lease, exchange or disposition of the entire undertaking or
property or assets of the Corporation or any substantial part thereof;
(h) the making of, directly or indirectly, loans or advances to, or the giving
of security for or the guaranteeing of the debts of any person, other than in
the ordinary course of business and other than any transactions involving a
franchisee.
(i) the taking, holding, subscribing for or agreeing to purchase or acquire
shares in the capital of any body corporate;
(j) the entering into of a partnership or of any arrangement for the sharing of
profits, union of interests, joint venture or reciprocal concession with any
person;
(k) the entering into of an amalgamation, merger or consolidation with any other
body corporate;
(l) the payment of salaries, bonuses and other remuneration (the "Remuneration")
to personnel (including all employees, officers, directors, consultants or
contractors) of the Corporation and its subsidiaries, which total Remuneration
exceeds:
(i) 25% of the annual gross revenues of the Corporation determined on a
consolidated basis for the fiscal year-end of the Corporation ending in 1998 and
1999; and
(ii) 20% of the annual gross revenues of the Corporation determined on a
consolidated basis for the fiscal year of the Corporation ending in 2000 and
subsequent years.
2.6 Budgets and Financial Statements
(a) Commencing with the fiscal year ended May 31st, 1999, the Corporation
shall, thirty (30) days prior to the commencement of any fiscal year, provide an
annual budget and business plan to the Shareholders, for their review.
(b) Commencing with the fiscal quarter (1/4) year for the period ending November
30, 1997, the Corporation shall within thirty (30) days following the end of
each fiscal quarter (1/4), provide the Shareholders with an interim Consolidated
Balance Sheet and an interim Consolidated Statements of Operations.
ARTICLE THREE - DEALING WITH SHARES
3.1 No Transfer of Shares
Except as expressly provided for in this Section 3, the Shareholders shall not
sell, transfer, assign, pledge, charge, mortgage or in any other way dispose of
or encumber their Shares or their rights under this Agreement without first
complying with all of the provisions of this Agreement unless, prior to the
disposition or encumbrance of their Shares, all of the Shareholders have
consented in writing to such disposition or encumbrance.
3.2 Endorsement on Certificates
Share certificates of the Corporation shall bear the following language either
as an endorsement or on the face thereof:
"The shares represented by this certificate are subject to all the terms and
conditions of an agreement made as of May 31st, 1997, a copy of which is on file
at the registered office of the Corporation".
3.3 First Right of Refusal and Tag-Along Sale Rights
(a) If either Datatax or JTH shall at any time desire to sell all of its Shares,
such shareholder (the "Offeree") shall first obtain a bona fide written offer
from a prospective purchaser (the "Offeror") which it desires to accept (the
"Offer") to purchase all but not less than all, of its Shares of the Offeree for
a fixed cash price. The Offer shall set forth its date, the proposed price per
Share and all other terms and conditions upon which the purchase is proposed to
be made, as well as the name and address of the Offeror. The Offeree shall
transmit a copy of the Offer to the other Shareholder (the "Notified
Shareholder") within five (5) days of its receipt of the offer.
(b) Transmittal of the Offer to the Notified Shareholder shall constitute an
offer by the Offeree to sell all but not less than all, of its Common Shares to
the Notified Shareholder at the price and upon the terms set forth in the Offer.
For a period of fourteen (14) days after the submission of the Offer to the
Notified Shareholder, the Notified Shareholder shall have an option exercisable
by written notice to the Offeree to accept the Offer. If, at the end the
fourteen (14) day period, the option has not been exercised by the Notified
Shareholder to purchase all of the Offeree's Shares, the option shall terminate
and the Offeree shall be free for a period of one hundred twenty (120) days
thereafter to sell all, but not less than all, of its Shares to the Offeror on
the terms contained in the Offer. If such Shares are not so sold within the one
hundred twenty day (120) period, the Offeree will not be permitted to sell such
Shares without again complying with this Section 3.4;
(c) If the Notified Shareholder does not exercise the option to purchase the
Offeree's Shares as provided in Subsection (b) above, then the Notified
Shareholder has the right to participate in the sale of such Shares pursuant to
the Offer, to a maximum amount of the percentage of the Shares in the
Corporation owned by the Notified Shareholder multiplied by the number of Shares
in the Offer. The Shareholders each acknowledge that such opportunity may result
in the Offeree selling fewer of its own Shares than would have been sold had the
Notified Shareholder not joined in such sale. Such right to participate in such
sale shall be exercised in the manner set forth in Subsection (b) above and
within the fourteen (14) day option period.
Example:
If the Offer is for the 150 Common Shares owned by JTH; and Datatax. (the
Notified Shareholder) does not exercise the option in Section 3.4(b); then
Datatax. shall have the right to sell 100/250 x 150 = 60 Common Shares pursuant
to the Offer, and JTH would have the right to sell 90 Shares pursuant to the
Offer.
3.4 Pledge of Shares
Any Shareholder may pledge, charge, mortgage or otherwise specifically encumber
his Shares to a bank or other financial institution for the purpose of securing
any borrowings by such Shareholder, provided that such bank or financial
institution acknowledges to the parties to this Agreement in writing that the
pledge, charge, mortgage or encumbrance of such Shares shall at all times be
subject to all the terms and conditions of this Agreement.
3.5 Insolvency of a Shareholder
(1) If any Shareholder makes an assignment for the benefit of creditors or is
the subject of any proceedings under any bankruptcy or insolvency law,
(hereinafter in this Section referred to as the "Offeror"), the other
Shareholder (hereinafter in this Section 3.5 referred to as the "Offeree") shall
have the right to purchase all, but not less than all, of the Shares
beneficially owned by the Offeror.
(2) The Offeree shall be entitled to purchase the Shares beneficially owned by
the Offeror at the price to be determined in accordance with the provisions of
Section 3.5(3).
(3) The price of the Shares shall be the fair market value of such Shares as
determined by the Accountant in accordance with generally accepted accounting
principles as at the end of the fiscal quarter of the Corporation immediately
preceding the fiscal quarter in which the event referred to in Section 3.5.(1)
occurred. Such determination shall be made in writing and given to each of the
Shareholders and to the Corporation within twenty Business Days of the date of
the event referred to in Section 3.5(l) or as soon thereafter as may be
reasonably possible.
(4) In the event the Offeree purchases the shares of the Offeror pursuant to
this Section, the closing of such purchase shall be completed within thirty (30)
days of the receipt of the accountant's report referred to in Section 3.5(3).
ARTICLE FOUR - FUNDING
4.1 Additional Capital
(1) Notwithstanding any other provision contained in this Agreement, if
requested by the board of directors of the Corporation, as evidenced by a
resolution duly passed by the directors, the Shareholders may each contribute
additional capital to the Corporation, pro rata based upon the number of Shares
beneficially owned by the Shareholders, by way of subscription for shares, loan
or otherwise, as determined by the board of directors. Such contribution shall
be at the discretion of the individual Shareholders.
(2) If additional capital is to be contributed by way of subscription for shares
pursuant to Section 4. 1 (1) and if such shares are not taken up by any
Shareholder within twenty Business Days after receipt of a request to subscribe
for such shares from the Corporation, such shares may be taken up by the other
Shareholders.
(3) If additional capital is to be contributed by way of loan or otherwise than
by way of a subscription for shares pursuant to Section 4. 1 (1) and any
Shareholder is unable or unwilling to contribute his portion, any Shareholder
who contributed a portion of such additional capital shall be entitled to
repayment of the amount so contributed and/or to indemnification against
liability on any guarantee or other liability incurred by such Shareholder in
connection therewith by the Corporation in priority to any repayment by the
Corporation of any indebtedness of the Corporation to any Shareholder who did
not contribute additional capital at such time.
ARTICLE FIVE - GENERAL
5.1 Benefit of the Agreement
This Agreement shall entire to the benefit of and be binding upon the respective
heirs, executors, administrators, successors an permitted assigns of the parties
hereto.
5.2 Entire Agreement
This Agreement constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof and cancels and supersedes any prior
understandings and agreements between the parties hereto with respect thereto.
There are no representations, warranties, terms, conditions, undertakings or
collateral agreements, express, implied or statutory, between the parties other
than as expressly set forth in this Agreement.
5.3 Amendments and Waivers
No amendment to this Agreement shall be valid or binding unless set forth in
writing and duly execute by all of the parties hereto. No waiver of any breach
of any provision of this Agreement shall be effective or binding unless made in
writing and signed by the party purporting to give the same and, unless
otherwise provided in the written waiver shall be limited to the specific breach
waived.
5.4 Assignment
Except as may be expressly provided in this Agreement, none of the parties
hereto may assign his rights or obligations under this Agreement without the
prior written consent of all of the parties hereto.
5.5 Termination
This Agreement shall terminate upon:
(a) the written agreement of all of the Shareholders;
(b) the dissolution or bankruptcy of the Corporation or the making by the
Corporation of an assignment under the provisions of the Bankruptcy and
Insolvency Act; or
(c) one Shareholder becoming the beneficial owner of all of the Shares;
(d) upon the completion of a Public Offering by the Corporation.
5.6 Severability
If any provision of this Agreement is determined to be invalid or unenforceable
in whole or in part, such invalidity or unenforceability shall attach only to
such provision or part thereof and the remaining part of such provision and all
other provisions hereof shall continue in full force and effect.
5.7 Notices
Any demand, notice or other communication (hereinafter in this Section 5.7
referred to as a "Communication") to be given in connection with this Agreement
shall be given in writing and may be given by personal delivery, by registered
mail or by transmittal by telex addressed to the recipient as follows:
TO: DATATAX BUSINESS SERVICES LIMITED
680 Industrial Road
London, Ontario
N5V IV1
Attention: Gary Ibbotson
Telecopier: (519) 455-1934
TO: JTH TAX, INC.
2214 Commerce Parkway
Virginia Beach, Virginia
U.S.A. 23454
Attention: John Hewitt
Telecopier: (757) 340-7612
TO: TAX DEPOT INC.
Suite 280
6815 8th Street N.E.
Calgary, Alberta
T2E 7H7
Attention: Gary Ibbotson
Telecopier: (403) 274-1542
or such other address, telex number or individual as may be designated by notice
by any party to the other. Any Communication given by personal delivery shall be
conclusively deemed to have been given on the day of actual delivery thereof
and, if given by registered mail, on the third Business Day following the
deposit thereof in the mail and, if given by telex, on the day of transmittal
thereof. If the party giving any Communication knows or reasonably to know of
any difficulties with the postal system which might affect the delivery of mail,
any such Communication shall not be mailed but shall be given by personal
delivery or by telex.
5.8 Governing Law
This Agreement shall be governed by and construed in accordance with the laws of
the Province of Manitoba and the laws of Canada applicable therein.
IN WITNESS WHEREOF the parties have executed this Agreement.
DATATAX BUSINESS SERVICES LIMITED
/s/ Gary Ibbotson
----------------------------
Per: Gary Ibbotson - President
JTH TAX, INC
/s/ John T. Hewitt
-----------------------------
Per: John Hewitt - President
TAX DEPOT INC.
/s/ Gary Ibbotson
-----------------------------
Per: Gary Ibbotson-Director