Securities Law & Instruments

Headnote

Issuer spun off from a reporting issuer in connection with a plan of arrangement deemed to be a reporting issuer where parent company has been a reporting issuer for more than 12 months and the assets that will make up the business of the spun off issuer have been subject to reporting in the continuous disclosure filings of the parent company. Prospectus level disclosure of the spun off entity to be provided in the information circular.

Ontario Statutes

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 83.1(1).

IN THE MATTER OF

THE SECURITIES ACT R.S.O. 1990,

CHAPTER S.5, AS AMENDED (the "Act")

AND

IN THE MATTER OF

VOICEIQ INC., VIQ SOLUTIONS INC. AND

YOHO RESOURCES PARTNERSHIP

 

ORDER

(Subsection 83.1(1) of the Act)

UPON the application of VIQ Solutions Inc. ("Techco") for an order pursuant to subsection 83.1(1) of the Act deeming Techco to be a reporting issuer for the purposes of Ontario securities legislation at the time of a proposed plan of arrangement (the "Arrangement") becoming effective;

AND UPON considering the applications and the recommendation of the staff of the Commission;

AND UPON Techco representing to the Commission as follows:

Background

1. On November 19, 2004, VoiceIQ Inc. ("VoiceIQ" or the "Corporation") announced that it had entered into an agreement (the "Arrangement Agreement") providing for the Arrangement to recapitalize and reorganize its business. The Arrangement consists of two parts, the "Creditors' Arrangement", and the "Shareholders' Arrangement".

2. The Shareholders' Arrangement provides for a reorganization of VoiceIQ and its business pursuant to which the shareholders of VoiceIQ (the "Shareholders") will (i) maintain their interests in VoiceIQ's existing voice capture, digitization and compression business (the "Existing Business") and (ii) retain their interests in VoiceIQ which will acquire producing oil and natural gas assets. Essentially, VoiceIQ will (i) transfer the assets comprising the Existing Business to Techco, its subsidiary, (ii) distribute common shares of Techco (the "Techco Shares") and "new" common shares in VoiceIQ (the "New Common Shares") to the Shareholders, such that Shareholders hold direct interests in both, and (iii) raise capital, acquire oil and gas exploration and production assets and change its name to "Yoho Resources Inc."

3. The Creditors' Arrangement provides for a settlement by VoiceIQ with its creditors (with respect to liabilities relating to the conduct of the Existing Business, to be transferred to Techco under the Arrangement) pursuant to the Companies Creditors Arrangement Act (Canada) (the "CCAA"). Creditors who are owed up to $2,000 by VoiceIQ are to receive 100% of their claim value in cash, while creditors owed more than $2,000 will receive the first $2,000 of their claim in cash, plus a pro rata share of a basket of cash and shares of VoiceIQ and Techco. The Creditors' Arrangement must be approved by 66 2/3% of the votes of, and the majority in number of, the creditors of VoiceIQ (other than the professional advisors for liabilities incurred for the purpose of implementing the Creditors' Arrangement) present in person or by proxy at a meeting of the creditors held to obtain such approval (which is expected to be on or about December 20, 2004) and requires approval of the Court of Queen's Bench of Alberta. As a consequence of the Creditors' Arrangement, Techco will acquire the Existing Business with substantially all of the associated liabilities compromised; no other changes will be made to the Existing Business as such under the Arrangement.

4. The Creditors' Arrangement and the Shareholders' Arrangement are inter-conditional.

5. The information circular describing the Arrangement (the "Information Circular"), which is dated November 23, 2004, has been printed and mailed to the Shareholders, and was filed on the System for Electronic Document Analysis and Retrieval ("SEDAR") on November 26, 2004.

VoiceIQ

6. VoiceIQ was incorporated pursuant to the laws of the Province of Alberta by certificate of incorporation on July 12, 1993 under the name Torque Industries Inc. On March 15, 1994, the Corporation acquired The BCB Technology Group Inc. ("BCB Technology"), a private Ontario corporation, through a share exchange. By articles of amendment dated March 18, 1994, the name of the Corporation was changed to BCB Holdings Inc. By articles of continuance dated October 1, 1996, the Corporation was continued under the laws of Ontario. By articles of amendment dated August 17, 1998 and August 31, 1998, the Corporation changed its name to BCB Voice Systems Inc. and consolidated its common shares on a 10-for-one basis. By articles of amendment dated October 4, 2000, the Corporation changed its name to its present name VoiceIQ Inc. The Corporation's head office is Bankers Hall, 888 3rd St. S.W., Suite 1031, Calgary, Alberta, T2P 5C5 and principal place of business is located at 100 Allstate Parkway, Suite 200, Markham, Ontario.

7. VoiceIQ develops software and provides solutions that capture, digitize, compress and store voice from a variety of sources, including microphones, telephones and hand held recorders.

8. The authorized capital of VoiceIQ consists of an unlimited number of Common Shares and Non-Voting Preference Shares, of which, as at November 19, 2004, 36,401,310 Common Shares and nil Non-Voting Preference Shares were issued and outstanding.

9. As at November 16, 2004, there were issued and outstanding options to purchase 1,511,333 Common Shares (the "Options") and warrants exercisable for 3,539,577 Common Shares (the "Warrants").

10. All holders of outstanding Options and Warrants have agreed to exchange all Options and Warrants held by them for similar securities in Techco.

11. VoiceIQ is, and has been since November 24, 1993, a reporting issuer under the securities legislation of Alberta, and since August 25, 2000, a reporting issuer under the securities legislation of British Columbia and Ontario (collectively, the "Legislation") and, to the best of its knowledge, is not in default of any requirement under the Legislation.

12. The Common Shares are listed and posted for trading on the TSX Venture Exchange (the "TSXV") under the trading symbol "VIQ". Upon the closing of the Arrangement, the Common Shares will be voluntarily delisted from the TSXV. VoiceIQ then intends to make application to list the New Common Shares on the TSXV.

13. The continuous disclosure materials filed by VoiceIQ under the Legislation are available on SEDAR. VoiceIQ's continuous disclosure record is up to date.

14. To the knowledge of VoiceIQ, there are no Shareholders holding sufficient securities to affect materially the control of VoiceIQ.

15. Neither VoiceIQ nor any of its officers or directors has (i) been the subject of any penalties or sanctions imposed by a court relating to Canadian securities legislation or by a Canadian securities regulatory authority, (ii) entered into a settlement agreement with a Canadian securities regulatory authority, or (iii) been subject to any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor making an investment decision.

16. Neither VoiceIQ nor any of its officers or directors is or has been subject to:

(a) any known ongoing or concluded investigations by:

(A) a Canadian securities regulatory authority, or

(B) a court or regulatory body, other than a Canadian securities regulatory authority, that would be likely to be considered important to a reasonable investor making an investment decision; or

(b) any bankruptcy or insolvency proceedings, or other proceedings, arrangements or compromises with creditors, or the appointment of a receiver, receiver-manager or trustee, within the preceding 10 years, other than the Creditors' Arrangement contemplated in the Arrangement and described above under "Background".

17. None of the officers or directors of VoiceIQ is or has been at the time of such event an officer or director of any other issuer which is or has been subject to:

(a) any cease trade or similar orders, or orders that denied access to any exemptions under Ontario securities law, for a period of more than 30 consecutive days, within the preceding 10 years; or

(b) any bankruptcy or insolvency proceedings, or other proceedings, arrangements or compromises with creditors, or the appointment of a receiver, receiver-manager or trustee, within the preceding 10 years.

Techco

18. Techco was incorporated under the Business Corporations Act (Alberta) ("ABCA") on November 10, 2004. Techco's head office is located at 1031, 888 --3rd Street, S.W., Calgary, Alberta, T2P 5C5, and its registered office is located at 1400, 350-7th Avenue, S.W., Calgary, Alberta, T2P 3N9.

19. Techco has not conducted any business to date and has not undertaken any activities other than the execution and delivery of the Arrangement Agreement and matters related to the implementation of the Arrangement.

20. The authorized capital of Techco consists of an unlimited number of Techco Shares. As of the date hereof, there is one Techco Share issued and outstanding, which Techco Share is owned by VoiceIQ.

21. Techco is not a reporting issuer in any jurisdiction.

22. After giving effect to the Arrangement, all of VoiceIQ's assets (collectively, the "Technology Assets") relating to its Existing Business, including without restriction, all of VoiceIQ's interest in its subsidiaries, VoiceIQ Australia Pty Limited, Spark & Cannon Pty Ltd., Spark & Cannon (SA) Pty Ltd., CAN 082 664 220 Pty Limited and VoiceIQ NZ Limited, each of which is wholly-owned (directly or indirectly), or controlled, by VoiceIQ will be transferred by VoiceIQ to Techco pursuant to the terms and conditions of a purchase and sale agreement between VoiceIQ and Techco.

23. After giving effect to the Arrangement, pursuant to the securities legislation of British Columbia (the "BC Legislation"), Techco will be a reporting issuer under BC Legislation and will have been deemed to be a reporting issuer under BC Legislation since August 25, 2000. Techco will also be a reporting issuer in Alberta from the date of listing on the TSXV.

24. Techco intends to apply to the TSXV to have the Techco Shares listed on the TSXV upon the completion of the Arrangement.

25. Neither Techco nor any of its officers, directors or shareholders holding sufficient securities to affect materially the control of Techco (the "Techco Controlling Shareholders") has (i) been the subject of any penalties or sanctions imposed by a court relating to Canadian securities legislation or by a Canadian securities regulatory authority, (ii) entered into a settlement agreement with a Canadian securities regulatory authority, or (iii) been subject to any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor making an investment decision.

26. Neither Techco nor any of its officers, directors nor, to the knowledge of Techco, its officers and directors, any of the Techco Controlling Shareholders, is or has been subject to:

(a) any known ongoing or concluded investigations by:

(A) a Canadian securities regulatory authority, or

(B) a court or regulatory body, other than a Canadian securities regulatory authority, that would be likely to be considered important to a reasonable investor making an investment decision; or

(b) any bankruptcy or insolvency proceedings, or other proceedings, arrangements or compromises with creditors, or the appointment of a receiver, receiver-manager or trustee, within the preceding 10 years, other than the Creditors' Arrangement contemplated in the Arrangement and described above under "Background".

27. None of the officers or directors of Techco, nor, to the knowledge of Techco, its officers and directors, any of the Techco Controlling Shareholders, is or has been at the time of such event an officer or director of any other issuer which is or has been subject to:

(a) any cease trade or similar orders, or orders that denied access to any exemptions under Ontario securities law, for a period of more than 30 consecutive days, within the preceding 10 years; or

(b) any bankruptcy or insolvency proceedings, or other proceedings, arrangements or compromises with creditors, or the appointment of a receiver, receiver-manager or trustee, within the preceding 10 years, except that one current officer, one current officer-director and one current director of Techco are also officers or directors of VoiceIQ, which is subject to the Creditors' Arrangement contemplated in the Arrangement and described above under "Background".

The Arrangement

28. On November 23, 2004, VoiceIQ obtained an interim order (the "Interim Order") of the Ontario Superior Court of Justice (the "Court"), under section 182 of the Business Corporations Act (Ontario) (the "OBCA"), providing for the calling and holding of the annual and special meeting of the Shareholders (the "Meeting") and other procedural matters. The Meeting is anticipated to be held on or about December 20, 2004.

29. The Interim Order provides that the resolution of the Shareholders concerning the Arrangement (the "Arrangement Resolution") requires the approval of not less than 66 2/3% of the aggregate votes cast by the Shareholders, voting together as a single class, present in person or by proxy at the Meeting. Each Shareholder is entitled to one vote for each Common Share held.

30. In connection with the Meeting and pursuant to the Interim Order, VoiceIQ mailed, on or about November 26, 2004, to each Shareholder: (i) a notice of annual and special meeting; (ii) a form of proxy; (iii) the Information Circular, and (iv) a letter of transmittal. The Information Circular has been prepared substantially in accordance with Multilateral Instrument 52-102 - Continuous Disclosure Obligations, and contains disclosure of the Arrangement and the business and affairs of each of VoiceIQ, Yoho Resources Inc., Techco and the producing oil and natural gas assets to be acquired by VoiceIQ pursuant to the Arrangement.

31. For the Arrangement to become effective, a number of transactions and trades, which are outlined below under "The Arrangement Steps", must take place. Such transactions and trades are set out in the Plan of Arrangement which is appended to the Information Circular as an exhibit to the Arrangement Agreement. No one transaction or trade will be effective unless all are effective.

32. In connection with the Arrangement, the Board of Directors of VoiceIQ asked Acumen Capital Finance Partners Limited ("Acumen") to address the fairness, from a financial point of view, of the Arrangement to Shareholders. In connection with this mandate, Acumen has prepared an opinion which states that, as of the date of the opinion, the Arrangement is fair from a financial point of view to the Shareholders.

33. The Arrangement also provides that the Shareholders will have the ability to exercise dissent rights and to be paid the fair value of their Common Shares, as applicable, as set forth under the OBCA, subject to modifications set out by the Interim Order.

The Arrangement Steps

34. The Arrangement Agreement provides for the consummation of the following transactions (comprising the Arrangement) on the effective date of the Arrangement:

34.1 the articles of incorporation of VoiceIQ will be amended to create a new class of non-voting common shares (the "Non-Voting Common Shares") and a new class of voting common shares (defined herein as the "New Common Shares") in the capital of VoiceIQ;

34.2 the articles of incorporation of VoiceIQ will also be amended to change its name from "VoiceIQ Inc." to "Yoho Resources Inc.";

34.3 the Creditors' Arrangement will be effected;

34.4 the Technology Assets, together with the associated contractual obligations and liabilities (to the limited extent such liabilities have not been compromised pursuant to the terms of the Creditors' Arrangement) will be transferred by VoiceIQ to Techco in consideration for (i) that number of Techco Shares equal to the number of Common Shares outstanding immediately prior to the Arrangement (being, as at November 19, 2004, 36,401,310 Techco Shares) less one; and (ii) an indemnification given by Techco to VoiceIQ and its directors, officers and employees;

34.5 VoiceIQ will acquire all outstanding Common Shares from the holders thereof (other than dissenting Shareholders) and shall deliver in exchange for each Common Share held 0.012877 of a New Common Share and one Techco Share. The Common Shares acquired by VoiceIQ will be cancelled;

34.6 a total of $7.0 million will be invested in VoiceIQ by a group of investors in consideration for the issuance of an aggregate of 750,000 Non-Voting Common Shares, 1,250,000 New Common Shares and 1,250,000 flow-through New Common Shares;

34.7 VoiceIQ shall acquire all of the shares of 960330 Alberta Ltd., 960331 Alberta LTd., 960332 Alberta Ltd., 960333 Alberta Ltd., 960334 Alberta Ltd., Edam Joint Venture Ltd., Atlee Joint Venture Ltd., Sousa Joint Venture Ltd., Hamilton Lake III Joint Venture Ltd., Bassett Lake Joint Venture Ltd. and Basset Lake III Joint Venture Ltd. (collectively, the "JV Companies") from the holders thereof in consideration of the issuance of 5,082,383 Non-Voting Common Shares, a share purchase warrant issued to the holder of the shares of Basset Lake III Joint Venture Ltd. ("Basset JV") which shall entitle the holder thereof to acquire a certain number of Non-Voting Common Shares at an exercise price of $0.01 per share after the delivery of a reserve report respecting the oil and gas property that Basset JV will transfer to VoiceIQ pursuant to the Arrangement, as well as in consideration of an aggregate of $4,500,000 in debt of VoiceIQ, as secured against certain of the oil and gas properties and assets owned indirectly by the JV Companies; and

34.8 VoiceIQ will be continued under the ABCA, which continuation shall include the deletion of the Common Shares from VoiceIQ's articles of incorporation, the re-designation of the New Common Shares as the "common shares" of VoiceIQ and the adoption of new by-laws of VoiceIQ.

35. The end result of the steps described above is that: (a) each holder of a Common Share will receive one Techco Share and 0.012877 New Common Shares; (b) the Technology Assets will be transferred to Techco and Techco will be owned by the existing Shareholders of VoiceIQ and the creditors of VoiceIQ (pursuant to the Creditors' Arrangement); and (c) VoiceIQ will change its name to Yoho Resources Inc. and be converted into an oil and gas exploration and production company.

General

36. VoiceIQ is a reporting issuer, in good standing, in various jurisdictions, including Ontario (and has been since November 24, 1993 under the securities legislation of Alberta, and since August 25, 2000 under the securities legislation of British Columbia and Ontario). Its continuous disclosure, including audited financial statements, are available on SEDAR. This historic disclosure relates to the Existing Business, which is to be transferred to Techco; the only material change to the Existing Business will be the compromise of most of its liabilities pursuant to the Creditors' Arrangement. Techco will, in addition to acquiring the business in respect of which there has been historic disclosure, also have substantially the same management team.

37. The Information Circular disseminated in connection with the Arrangement provides (or incorporates by reference) prospectus-level disclosure about Techco and the Existing Business, based on the historical public record disclosure. Certain pro forma financial information is also included to reflect the single change to the business, which is the compromise of liabilities pursuant to the Creditors' Arrangement.

38. Except for dissenting Shareholders, the Shareholders of VoiceIQ immediately prior to the effective time of the Arrangement will become shareholders of Techco immediately following the effective time of the Arrangement. As noted above, Techco intends to apply to list the Techco shares for trading on the TSXV as of the time of the implementation of the Arrangement.

39. The Arrangement will require the approval of the Shareholders, voting as ordered in the Interim Order of the Court, and of the Court. In considering whether to approve the arrangement, the Court will consider whether the Arrangement is fair to such Shareholders.

40. The Board of Directors of VoiceIQ has (i) received a fairness opinion from Acumen to the effect that the Arrangement is fair, from a financial point of view, to the Shareholders, (ii) approved the Arrangement and (iii) recommended that the Shareholders vote in favour of the Arrangement.

41. Holders of Common Shares will have the right to dissent from the Arrangement under Section 185 of the OBCA, and the Information Circular discloses full particulars of this right in accordance with applicable law.

AND UPON the Commission being satisfied that to do so would not be prejudicial to the public interest;

IT IS HEREBY ORDERED pursuant to subsection 83.1(1) of the Act that Techco be deemed a reporting issuer for the purposes of Ontario securities legislation at the time of the Arrangement becoming effective.

December 24, 2004.

"Paul M. Moore"
"H. Lorne Morphy"