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Exhibit J
REGISTRATION RIGHTS AGREEMENT made as of the 22nd day of October, 1999.
BY AND AMONG:
INTERNATIONAL MENU SOLUTIONS CORPORATION,
a corporation incorporated under the laws of the State of Nevada,
(sometimes referred to herein as "IMSC" or the "Company"),
OF THE FIRST PART,
- and -
SOUTHBRIDGE EQUITIES INC.,
a corporation incorporated under the laws of the Province of
Ontario,
(hereinafter called the "Shareholder"),
OF THE SECOND PART.
WHEREAS:
A. In connection with the subscription agreement by and among IMSC,
International Menu Solutions Inc., a corporation formed under the laws of
the Province of Ontario, Canada ("IMSI") and the Shareholder of even date
herewith (the "Subscription Agreement"), IMSI has agreed, upon the terms
and subject to the conditions of the Subscription Agreement, to issue and
sell to the Shareholder an aggregate of 1,555,556 Special Warrants
entitling the Shareholder to receive, upon exercise, either: (i)
securities of IMSI which are exchangeable for an equivalent or greater
number of shares of common stock of the Company (the "Exchangeable
Shares"); or (ii) upon the occurrence of certain events, an equivalent or
greater number of shares of common stock of the Company, (all shares of
IMSC issuable or obtainable under the Special Warrants being referred to
herein as the "IMSC Shares"), which Shares will have the rights ascribed
to them in the rights, privileges, restrictions and conditions attaching
to such IMSC Shares as set out in the constating documents of IMSC;
B. In connection with certain share purchase agreements to be executed
between the Shareholder and certain third parties (the "Purchase
Agreements"), the Shareholder has agreed to acquire 266,667 IMSC Shares
from such third parties (the "Purchased Shares"); and
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C. To induce the Shareholder to execute and deliver the Subscription
Agreement and the Purchase Agreements, the Company has agreed to provide
certain registration rights under the Securities Act of 1933, as amended,
and the rules and regulations thereunder, or any similar successor statute
(collectively, the "1933 Act"), and applicable state securities laws with
respect to the IMSC Shares:
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Shareholder
hereby agree as follows:
1. DEFINITIONS.
Unless otherwise defined in this agreement or in the recitals hereto, the
following terms shall be deemed to have the following meanings:
(a) "Common Stock" means common shares in the capital stock of IMSC, as
such shares are subdivided, consolidated or changed from time to
time;
(b) "Person" means a corporation, a limited liability company, an
association, a partnership, an organization, a business, an
individual, a governmental or political subdivision thereof or a
governmental agency;
(c) "Register", "registered", and "registration" refer to a registration
effected by preparing and filing one or more Registration Statements
in compliance with the 1933 Act and pursuant to Rule 415 under the
1933 Act or any successor rule providing for offering securities on
a continuous basis ("Rule 415"), and the declaration or ordering of
effectiveness of such Registration Statement(s) by the United States
Securities and Exchange Commission (the "SEC");
(d) "Registerable Securities" means the IMSC Shares and the Purchased
Shares proposed to be registered pursuant to the provisions hereof
and, in respect of such Purchased Shares and the IMSC Shares to be
issued pursuant to the exercise of the Special Warrants or the
exchange of the Exchangeable Shares, such number of shares of Common
Stock which may be acquired on such exchange or exercise in the
event that prior to the filing of the Registration Statement or at
any time thereafter an event occurs which increases the number of
IMSC Shares which may be acquired on exercise of the Special
Warrants or the exchange of the Exchangeable Shares;
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(e) "Registration Statement" means a registration statement of the
Company filed under the 1933 Act.
Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings set forth in the Subscription Agreement.
2.1 REGISTRATION STATEMENT.
The Company shall prepare, and, on or prior to March 31, 2000, file with the SEC
a Registration Statement on Form SB-2 (the "Registration Statement") or, if such
form is unavailable for such a registration, on such other form as is available
for such a registration for the Registerable Securities, which Registration
Statement shall include not less than 2,288,890 shares of Common Stock of IMSC
(inclusive of the Registerable Securities). The Company shall cause the
Registration Statement to become effective within five (5) business days after
receipt of notice from the SEC that it has no further comments.
3. REGISTRATION PROVISIONS.
3.1 The Company shall file the Registration Statement with respect to the
Registerable Securities on or prior to March 31, 2000, for the
registration of the Registerable Securities pursuant to Section 2.1 and
use its best efforts to cause such Registration Statement relating to the
Registerable Securities to become effective as promptly thereafter as
possible and keep the Registration Statement effective pursuant to Rule
415 at all times until the earlier of (i) the date upon which the
Shareholder has sold all of its Registerable Securities, and (ii) the date
which is three (3) years after the effective date of the Registration
Statement (the "Registration Period").
3.2 The Company shall promptly prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to the Registration
Statement and the prospectus used in connection with the Registration
Statement, which prospectus is to be filed pursuant to Rule 424
promulgated under the 1933 Act, as may be necessary to keep the
Registration Statement effective at all times during the Registration
Period, and, during such period, comply with the provisions of the 1933
Act with respect to the disposition of all Registerable Securities of the
Company covered by the Registration Statement (as such securities may be
split, reverse split or otherwise changed from time to time and in order
to give full effect to any stock dividends or similar transactions
applicable to the Registerable Securities).
3.3 The Company shall furnish to the Shareholder without charge promptly after
the same is prepared and filed with the SEC at least ten (10) copies of
the Registration
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Statement and any amendment thereto, including financial statements and
schedules, all documents incorporated therein by reference, all exhibits
and the prospectus(es) included in such Registration Statement.
3.4 The Company shall use its commercially reasonable efforts to prevent the
issuance of any stop order or other suspension of effectiveness of a
Registration Statement, or the suspension of the qualification of any of
the Registerable Securities for sale in any jurisdiction and, if such an
order or suspension is issued, to obtain the withdrawal of such order or
suspension at the earliest possible moment and to notify the Shareholder
of the issuance of such order and the resolution thereof or its receipt of
actual notice of the initiation or threat of any proceeding for such
purpose.
3.5 The Company shall hold in confidence and not make any disclosure of
information concerning the Shareholder provided to the Company unless in
the opinion of its legal counsel (i) disclosure of such information is
necessary to comply with federal or state securities laws, (ii) the
disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the release
of such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available
to the public other than by disclosure in violation of this or any other
agreement. The Company agrees that it shall, upon learning that disclosure
of such information concerning the Shareholder is sought in or by a court
or governmental body of competent jurisdiction or through other means,
give prompt written notice to the Shareholder and allow the Shareholder,
at the Shareholder's expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, such information.
3.6 The Company shall cooperate with the Shareholder so as to facilitate the
timely preparation and delivery of certificates (not bearing any
restrictive legend) representing the Registerable Securities.
3.7 The Company shall otherwise use its commercially reasonable efforts to
comply with all applicable rules and regulations of the SEC in connection
with any registration hereunder.
3.8 The Company shall furnish, without charge, to the Shareholder such number
of Prospectuses and other documents incident thereto as the Shareholder
from time to time reasonably requests in writing in order to facilitate
the disposition of the Registerable Securities in accordance with the plan
of disposition set forth for the Shareholder in the Registration Statement
of which such Prospectus forms a part.
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3.9 The Company shall use its best efforts, concurrently with the filing of a
Registration Statement with the SEC, to register or qualify the
Registerable Securities included in such Registration Statement for sale
under the securities or "blue sky" laws of such number of state securities
commissions as the Shareholder may reasonably request (not to exceed 10
states), except that IMSC shall not be required in connection therewith to
execute a general consent to service of process or to qualify to do
business in any state. The Company shall only be responsible for the
expenses associated with "blue sky" registration in up to 10 states and
the Shareholder shall be solely responsible and shall indemnify the
Company for all expenses associated with registration in any additional
states.
3.10 The Company shall notify the Shareholder promptly and (if requested by the
Shareholder) confirm such notice in writing (i) when a Registration
Statement or post-effective amendment to a Registration Statement has been
filed, and, with respect to a Registration Statement or any post-effective
amendment thereto, when the same has become effective, (ii) of the
issuance or threat of issuance by the SEC of any stop order suspending the
effectiveness of a Registration Statement or the initiation of any
proceedings for that purpose, (iii) of the receipt by IMSC of any
notification with respect to the suspension or threat of suspension of the
qualification of any of the Registerable Securities for sale in any state
in which such sale has previously been qualified or the initiation of any
proceeding for such purpose, or (iv) of the occurrence of any event which
makes any statement made in the Registration Statement, the Prospectus or
any document incorporated therein by reference untrue or which requires
any revisions to the Registration Statement or Prospectus so that they do
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading.
3.11 The Company shall, upon the occurrence of any event referred to in Section
3.10(ii) or (iv) above, use its best efforts to promptly prepare a
post-effective amendment to the applicable Registration Statement or
supplement to the related Prospectus so that, as thereafter delivered to
the purchasers of the Registerable Securities being sold thereunder, such
Prospectus does not contain an untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein not
misleading.
3.12 The Company shall make reasonable efforts to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement or
suspending the qualification of the Registerable Securities for sale in
any state where they have previously been qualified.
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3.13 The Company shall cause all such Registerable Securities to be listed on
each securities exchange on which similar securities issued by the Company
are then listed.
4. PIGGYBACK REGISTRATIONS.
4.1 For a period of three years from the date of this Agreement, whenever the
Company proposes to register any of its equity securities under the 1933
Act (other than by a registration on Form S-4 or S-8, or any successor or
similar forms) and the registration form to be used may be used for the
registration of Registerable Securities (a "Piggyback Registration"), the
Company shall give prompt written notice to the Shareholder of its
intention to effect such a registration and shall include in such
registration all Registerable Securities with respect to which the Company
has received written requests for inclusion therein within 15 days after
the receipt of the Company's notice.
4.2 The registration expenses (exclusive of legal counsel) of the Shareholder
shall be paid by the Company in all Piggyback Registrations.
4.3 If a Piggyback Registration is an underwritten primary registration on
behalf of the Company, and the managing underwriters advise the Company
that in their opinion the number of securities requested to be included in
such registration exceeds the number which can be sold in an orderly
manner in such offering within a price range acceptable to the Company or
without adversely affecting the marketability of the offering, the Company
shall include in such registration (i) first, the securities the Company
proposes to sell and (ii) second, the Registerable Securities requested to
be included in such registration.
4.4 If a Piggyback Registration is an underwritten secondary registration on
behalf of holders of the Company's securities or securities convertible
into the Company's securities, and the managing underwriters advise the
Company in writing that in their opinion the number of securities
requested to be included in such registration exceeds the number which can
be sold in an orderly manner in such offering within a price range
acceptable to the holders initially requesting such registration, the
Company shall include in such registration (i) first, the securities
requested to be included therein by the holders requesting such
registration and (ii) second, the Registerable Securities requested to be
included in such registration.
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5. OBLIGATIONS OF THE SHAREHOLDER.
(a) At least thirty (30) days prior to the first anticipated filing date
of the Registration Statement, the Company shall notify the
Shareholder in writing of the information the Company requires from
the Shareholder if the Shareholder elects to have any of the
Shareholder's Registerable Securities included in the Registration
Statement. It shall be a condition precedent to the obligations of
the Company to complete the registration pursuant to this Agreement
with respect to the Registerable Securities that the Shareholder
shall furnish to the Company such information regarding itself, as
shall be reasonably required to effect the registration of such
Registerable Securities.
(b) As a precondition to the Company's obligations under this agreement,
the Shareholder agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and
filing of the Registration Statement hereunder (and any amendments
thereto), unless the Shareholder has notified the Company in writing
of the Shareholder's election to exclude all of the Shareholder's
Registerable Securities from the Registration Statement.
6. INDEMNIFICATION AND CONTRIBUTION.
(a) IMSC shall indemnify and hold harmless the Shareholder, its
directors and officers (if any), each underwriter, within the
meaning of the 1933 Act, who may purchase from or sell for the
Shareholder any Registerable Securities and any person or entity who
"controls" any of the foregoing within he meaning of the 1933 Act
(each, a "Seller") from and against any and all losses, claims,
damages, liabilities and expenses (including without limitation,
amounts paid in settlement of any litigation, commenced or
threatened, or claim based upon matters covered by the indemnities
provided for in this sentence, and expenses reasonably incurred in
defending against any such commenced or threatened litigation or
claims), joint or several, to which such Seller may become subject
which arise out of or are based on any untrue statement or alleged
untrue statement of a material fact contained in any Registration
Statement, Prospectus or other document incident to any
registration, qualification or compliance (or in any related
registration statement, notification or the like) required to be
filed or furnished by reason of this Agreement or caused by any
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims,
damages, liabilities or expenses are caused by any such untrue
statement or alleged untrue statement or omission or alleged
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omission based solely upon written information furnished or required
to be furnished to IMSC by a Seller expressly for use therein.
(b) Each Seller, severally and not jointly, shall be obligated to
indemnity IMSC, its directors and officers and each person, if any,
who "controls" IMSC within the meaning of the 1933 Act (each, an
"IMSC Affiliate"), from and against any and all losses, claims,
damages, liabilities and expenses (including, without limitation,
amounts paid in settlement of any litigation, commenced or
threatened, or claim based upon mattes covered by the indemnities
provided for in this sentence, and expenses reasonably incurred in
defending against any such commenced or threatened litigation or
claims), joint or several, to which such IMSC Affiliate may become
subject which arise out of or are based on any untrue statement or
alleged untrue statement of a material fact contained in any
Registration Statement, Prospectus or other document incident to any
registration, qualification or compliance (or in any written related
registration statement, notification or the like) required to be
filed or furnished by reason of this Agreement or caused by any
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, based solely upon written information
furnished or required to be furnished to IMSC by a Seller expressly
for use therein, provided that the maximum liability of the
Shareholder pursuant to this paragraph (b) shall be limited to the
net amount of proceeds received by the Shareholder from the sale of
Registerable Securities pursuant to such Registration Statement.
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against an
indemnifying party under this Section, notify the indemnifying party
in writing of the commencement thereof. In case any such action is
brought against any indemnified party and such indemnified party
seeks or intends to seek indemnity from an indemnifying party, the
indemnifying party will be entitled to participate in, and, to the
extent that it may wish, jointly with all other indemnifying parties
similarly notified, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party; provided,
however, if the defendants in any such action include both the
indemnified party and the indemnifying party and counsel to the
indemnified party shall have reasonably concluded that there may be
a conflict between the positions of the indemnifying party and the
indemnified party in conducting the defense of any such action or
that there may be legal defenses available to it and/or other
indemnified parties which are different form or additional to those
available to the indemnifying party, the indemnified party or
parties shall have the right to select separate counsel to assume
such legal such legal defenses and to
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otherwise participate in the defense of such action on behalf of
such indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of its election so to
assume the defense of such action and approval by the indemnified
party of its election so to assume the defense of such action and
approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this Section for
any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (i)
the indemnified party shall have employed counsel in connection with
the assumption of legal defenses in accordance with the proviso to
the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the fees and expenses of
more than one separate counsel representing the indemnified parties
who are parties to such action) or (ii) the indemnifying party shall
not have employed counsel reasonably satisfactory to the indemnified
party to represent the indemnified party within a reasonable time
after notice of commencement of the action, in each of which cases
the fees and expenses of counsel shall be at the expense of the
indemnifying party.
(d) If the indemnification provided for in this Section is held by a
court of competent jurisdiction to be unavailable to or otherwise
insufficient to hold harmless an indemnified party in respect of any
losses, claims, damages, liabilities or expenses referred to herein,
then each applicable indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of any
losses, claims, damages, liabilities or expenses referred to herein
in such proportion as is appropriate to reflect the relative fault
of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the statements or omissions
which resulted in such loss, claim, damage, liability or expense as
well as any other relevant equitable considerations. The relative
fault of the indemnifying party and the indemnified party shall be
determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission to
state a material fact relates to information supplied by the
indemnifying party or by the unindemnified party and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
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7. EXPENSES OF REGISTRATION.
All reasonable expenses incurred in connection with a registration, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration fees, filing fees, fees and expenses of compliance with blue sky
laws (subject to Section 3.9 hereof), underwriters fees and disbursements (in
respect of underwriters engaged by the Company only), accounting fees, and fees
and disbursements of counsel for the Company shall be borne by the Company. Fees
of counsel to the Shareholder shall be borne exclusively by the Shareholder.
8. REPORTS UNDER THE 1934 ACT.
With a view to making available to the Shareholder the benefits of Rule 144
promulgated under the 1933 Act or any other similar rule or regulation of the
SEC that may at any time permit the Shareholder to sell securities of the
Company to the public without registration ("Rule 144"), the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and other documents
required of the Company under the 1933 Act and the Securities
Exchange Act of 1934, as amended, (the "1934 Act") so long as the
Company remains subject to such requirements and the filing of such
reports and other documents is required for the applicable
provisions of Rule 144; and
(c) furnish to the Shareholder so long as the Shareholder owns IMSC
Shares promptly upon request, (i) a certificate of the Secretary of
the Company that it has complied with the reporting requirements of
Rule 144, the 1933 Act and the 1934 Act, (ii) a copy of the most
recent annual or quarterly report of the Company and such other
reports and documents so filed by the Company and, (iii) such other
information as may be reasonably requested to permit the Shareholder
to sell the Registerable Securities pursuant to Rule 144 without
registration.
9. AMENDMENTS.
Provisions of this Agreement may be amended and the observance thereof may be
waived (either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Shareholder.
Any amendment or waiver effected in accordance with this Section 7 shall be
binding upon the Shareholder and the Company.
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10. GENERAL.
(a) Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered (i) upon receipt,
when delivered personally; (ii) upon receipt, the business day
following the date sent by facsimile (with receipt confirmed); (iii)
three (3) days after being sent by mail, or (iv) one (1) day after
deposit with an internationally recognized overnight delivery
service, in each case properly addressed to the party to receive the
same. The addresses and facsimile numbers of such communications
shall be:
If to the Company:
International Menu Solutions Corporation
350 Creditstone Road
Concord, Ontario
L4K 3Z2
Attention: Michael A. Steele
Telecopier No.: (905) 660-4585
with a copy to:
McCarter Grespan Robson Beynon
675 Riverbend Drive
Kitchener, Ontario
N2K 3S3
Attention: Thomas D. Beynon, Q.C.
Telecopier No.: (519) 742-1841
If to the Shareholder:
c/o Southbridge Inc.
150 Water Street South
Cambridge, Ontario
N1R 3E2
Attention: Lynda King
Telecopier No.: (519) 621-8144
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with a copy to:
Gowling Strathy & Henderson
50 Queen Street North
Suite 1020
Kitchener, Ontario
N2H 6M2
Attention: F. John Durdan
Telecopier No.: (519) 571-5035
If to the Shareholder, to its address and facsimile number as
above-noted, with copies to the Shareholders counsel as above-noted.
Each party shall provide five (5) days' prior written notice to the
other party of any change in address or facsimile number.
(c) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.
(d) This Agreement shall be governed by and interpreted in accordance
with the laws of the State of Delaware without regard to the
principles of conflict of laws. In any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, such
invalidity or unenforceability shall not affect the validity or
enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of
this Agreement in any other jurisdiction.
(e) This Agreement and the Subscription Agreement constitute the entire
agreement among the parties hereto with respect to the subject
matter hereof and thereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred
to herein and therein. This Agreement and the Subscription Agreement
supersede all prior agreements and understandings among the parties
hereto with respect to the subject matter hereof and thereof.
(f) This Agreement shall inure to the benefit and of and be binding upon
the permitted successors and assigns of each of the parties hereto.
This Agreement and the rights hereunder shall not be assigned by any
of the parties of this Agreement without the prior consent of all of
the parties hereto.
(g) The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
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(h) This Agreement may be executed in two or more identical
counterparts, each of which shall be deemed an original but all of
which shall constitute one and the same agreement. This Agreement,
once executed by a party, may be delivered to the other party hereto
by facsimile transmission of a copy of this Agreement bearing the
signature of the party so delivering this Agreement.
(i) Each party shall do and perform, or cause to be done and performed,
all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
IN WITNESS WHEREOF the parties hereto have executed this Registration Rights
Agreement to be executed as of day and year first above written.
INTERNATIONAL MENU SOLUTIONS
CORPORATION
Per: /s/ [ILLEGIBLE]
-----------------------------------
Title: President
---------------------------------
SOUTHBRIDGE EQUITIES INC.
Per: /s/ Michael Peterson
-----------------------------------
Michael Peterson
Title: Vice-President
Per: /s/ Lynda King
-----------------------------------
Lynda King
Title: Vice-President Finance
