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Exhibit K
RIGHT OF FIRST OFFER AGREEMENT
THIS AGREEMENT made the 16th day of April, 1999,
BETWEEN:
SOUTHBRIDGE INC.,
a corporation incorporated under the laws of the Province of Ontario
(hereinafter called "Southbridge")
OF THE FIRST PART,
- and -
INTERNATIONAL MENU SOLUTIONS INC.,
a corporation incorporated under the laws of the Province of Ontario
(hereinafter called the "IMSI")
OF THE SECOND PART,
- and -
INTERNATIONAL MENU SOLUTIONS CORPORATION,
a corporation incorporated under the laws of the State of Nevada
(hereinafter called "IMSC")
OF THE THIRD PART,
- and -
1254859 ONTARIO INC.
a corporation incorporated under the laws of the Province of Ontario
(hereinafter called "Steele")
OF THE FOURTH PART.
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RECITALS:
A. Southbridge and IMSC have entered into a Subscription Agreement dated
April 16th, 1999 (the "Subscription Agreement") with respect to the
subscription by Southbridge for 1,523,810 common shares in IMSC, herein
called the "Subject Shares";
B. Steele owns, as of the date hereof, 1,513,712 Class N Shares in IMSC which
are convertible into common shares of IMSC (such shares, including the
common shares into which they are convertible are herein called the
"Steele Shares");
C. It is a condition of the Subscription Agreement that Southbridge and
Steele enter into this Right of First Offer Agreement with IMSC on the
terms and conditions set forth herein.
NOW THEREFORE in consideration of the sum of $10.00 and other good and valuable
consideration (the receipt and sufficiency of which is hereby acknowledged by
the parties hereto), the parties agree as follows:
1. Definition of Transfer
For the purposes of this Right of First Refusal Agreement, "Transfer" includes
any sale, exchange, or disposition by which possession, legal title or
beneficial ownership passes from one person to another and any agreement to
effect any of the foregoing.
2. Restriction on Transfer
(a) For the period commencing on the date of this Agreement and ending one
hundred eighty (180) days following the date that the registration statement
registering the Subject Shares becomes effective (the "Initial Period"),
Southbridge covenants not to Transfer, in any calendar month, more than 100,000
of the Subject Shares or in any one day, more than 10,000 of the Subject Shares
except in accordance with the terms of this Right of First Offer Agreement, or
except with the prior written consent of IMSC, such consent not to be
unreasonably withheld or delayed.
(b) Subject to Section 3 below, for the period commencing on the date that the
Initial Period ends and ending 180 days later (the "Second Period"), Southbridge
covenants not to Transfer in any calendar month more than 250,000 of the Subject
Shares or in any one day more than 20,000 of the Subject Shares except in
accordance with the terms of the Right of First Offer Agreement or except with
the prior written consent of IMSC, such consent not to be unreasonably withheld
or delayed; and
(c) Subject to Section 3 below, for the period commencing on the date that the
Second Period ends and ending 180 days later (the "Third Period"), Southbridge
covenants not to Transfer in any calendar month more than 250,000 of the Subject
Shares or in any one day more than 40,000 of the Subject Shares except in
accordance with the terms of the Right of First Offer Agreement
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or except with the prior written consent of IMSC, such consent not to be
unreasonably withheld or delayed.
(c) A purported Transfer of any Subject Shares in violation of this Right of
First Refusal Agreement will not be valid and IMSC will not register, nor permit
any transfer agent to register, any such Shares on the securities register of
IMSC. The provisions of the immediately preceding sentence are in addition to,
and not in lieu of, any other remedies to enforce the provisions of this Right
of First Refusal Agreement.
(d) Following the end of the Third Period there shall be no restrictions on
Transfers by Southbridge imposed by this Right of First Offer Agreement.
3. Termination of Obligation
The restrictions on Transfers by Southbridge set out in Section 2 hereof and the
requirement to offer shares to IMSI and IMSC pursuant to Section 4 hereof shall
terminate and be of no further force or effect on the date that the Common
Shares of Southbridge commence trading on a Recognized Exchange (as defined in
the Subscription Agreement).
4. Notice of Intent to Sell
Subject to section 6 below, if Southbridge wishes to effect a Transfer of more
Subject Shares in a calendar month than otherwise permitted pursuant to Section
2 above, Southbridge shall first offer to sell such additional shares (the
"Offered Shares") to IMSI and IMSC (the "Offerees"), such offer (the "Offer") to
be made by notice in writing given by Southbridge specifying the price, number
of Offered Shares and other terms, if any, upon which Southbridge proposes to
sell the Offered Shares (the "Selling Notice"). The Offerees shall then have a
period of forty-eight (48) hours (but not including Saturdays, Sundays or
Statutory Holidays) following receipt (or deemed receipt) of the Selling Notice
to accept the Offer by notice in writing to Southbridge given within such
forty-eight (48) hour period. The Offerees shall be entitled to assign their
right to purchase the Offered Shares, on the terms contained in the Selling
Notice, to any person designated by them (the "Designated Purchaser") in writing
provided that any such designation shall not release IMSI and IMSC from their
obligation to purchase if the Designated Purchaser fails to complete the
purchase in accordance with Section 5 below.
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5. Terms of Purchase
If the Offer is accepted by either of IMSI or IMSC (the "Offeree") within the
required time period, then such acceptance shall constitute a binding agreement
pursuant to which Southbridge has agreed to sell and the Offeree or the
Designated Purchaser, as applicable, has agreed to purchase the Offered Shares
upon the terms and conditions contained in the Selling Notice. The closing will
take place at the offices of Southbridge in Cambridge, Ontario at 2:00 p.m.,
Cambridge time, on the date which is five (5) days after the date on which the
Offer is accepted by the Offeree unless such date in not a business day in both
Toronto, Ontario and Nevada (a "Business Day") in which case the closing will
occur on the next Business Day.
6. Right of Southbridge
If the Offerees reject or fail to accept the Offer within the required time,
then Southbridge will be entitled to sell all or any portion of the Offered
Shares on the terms and conditions contained in the Offer (or at a higher price
than that contained in the Offer). If the Offerees or the Designated Purchaser
fails to close the purchase of the Offered Shares in accordance with the terms
set out in the Offer and the Terms of Purchase set out in Section 5, without
limiting the right of Southbridge to pursue any other remedies available to it
in law, the obligations of Southbridge under this Right of First Offer Agreement
shall be immediately terminated and for greater certainty, Southbridge shall not
be restricted in any subsequent sale of the Subject Shares.
7. Completion Within 30 Days
If all of the Offered Shares offered pursuant to the Offer have not been sold in
accordance with this Agreement within thirty (30) days from the rejection of the
Offer or failure to accept the Offer by the Offerees, from the giving of the
Selling Notice to the Offerees, no sale of the Offered Shares unsold as of such
date may be made without Southbridge again complying with the terms of Section 4
through 6 hereof, except to the extent that such sale is made in accordance with
Section 2 hereof.
8. Restrictions on Michael Steele's Right to Transfer
(a) For the period commencing on the date of this Agreement and ending one
hundred eighty (180) days following the date that the registration statement
registering the Steele Shares becomes effective (the "Initial Period"), Steele
covenants not to transfer in any calendar month more than 100,000 of the Steele
Shares or in any one day more than 10,000 of the Steele Shares except with the
prior written consent of Southbridge, such consent not to be unreasonably
withheld or delayed;
(b) For the period commencing on the date that the Initial Period ends and
ending one hundred eighty (180) days later (the "Second Period"), Steele
covenants not to transfer in any calendar month more than 250,000 of the Steele
Shares or in any one day more than 20,000 of the Steele Shares except in
accordance with the terms of the Right of First Offer Agreement or
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except with the prior written consent of Southbridge, such consent not to be
unreasonably withheld or delayed; and
(c) For the period commencing on the date that the Second Period ends and ending
one hundred eighty (180) days later, Steele covenants not to transfer in any
calendar month more than 250,000 of the Steele Shares or in any one day more
than 40,000 of the Steele Shares except in accordance with the terms of the
Right of First Offer Agreement or except with the prior written consent of
Southbridge, such consent not to be unreasonably withheld or delayed.
9. Further Assurances
Each party to this Right of First Offer Agreement covenants and agrees that,
from time to time subsequent to the date hereof, it will at the request and
expense of the requesting party, execute and deliver all such documents,
including, without limitation, all such additional conveyance, transfers,
consents and other assurances and do all such other acts and things as any other
party hereto, acting reasonably, may from time to request be executed or done in
order to better evidence or perfect or effectuate any provision of this Right of
First Offer Agreement or of any agreement or other document executed pursuant to
this Right of First Offer Agreement or any of the respective obligations
intended to be created hereby or thereby.
10. Notices
(a) Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be delivered in person, transmitted by
telecopy or similar means of recorded electronic communication or sent by
registered mail, charges prepaid, addressed as follows:
(i) if to Southbridge:
do Southbridge Capital Inc.
150 Water Street South
Cambridge, Ontario
N1R 3E2
Attention: Lynda King
Telecopier No.: (519) 621-8144
(ii) if to IMSI:
International Menu Solutions Inc.
350 Creditstone Road
Concord, Ontario
L4K 3Z2
Attention: Michael A. Steele
Telecopier No.: (416) 366-6368
with a copy to:
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McCarter Grespan Robson Beynon
675 Riverbend Drive
Kitchener, Ontario
N2K 3S3
Attention: Thomas D. Beynon, Q.C.
Telecopier No.: (519) 742-1841
(b) Any such notice or other communication shall be deemed to have been given
and received on the day on which it was delivered or transmitted (or, if such
day is not a Business Day, on the next following Business Day) or, if mailed, on
the fifth Business Day following the date of mailing; provided, however, that if
at the time of mailing or within five Business Days thereafter there is or
occurs a labour dispute or other event that might reasonably be expected to
disrupt the delivery of documents by mail, any notice or other communication
hereunder shall be delivered or transmitted by means of recorded electronic
communication as aforesaid.
(c) Any party may at any time change its address for service from time to time
by giving notice to the other parties in accordance with this section 8.
11. Time of Essence
Time shall be of the essence hereof.
12. Governing Law
This agreement and any agreement to purchase and sell resulting therefrom shall
be construed by and governed in accordance with the laws of the Province of
Ontario.
13. Assignment
The parties shall not assign their rights in this Agreement without the prior
written consent of IMSI or IMSI.
14. Enurement
This Agreement shall enure to the benefit of and be binding upon the parties
hereto and their respective heirs, executors, administrators, personal
representatives, successors and permitted assigns.
15. Counterparts
This Agreement may be executed in counterparts, each of which shall constitute
an original and all of which taken together shall constitute one and the same
instrument.
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IN WITNESS WHEREOF this Agreement has been executed by the parties.
SOUTHBRIDGE INC.
Per:
-----------------------------------
Title:
---------------------------------
Per:
-----------------------------------
Title:
---------------------------------
INTERNATIONAL MENU SOLUTIONS
INC.
Per:
-----------------------------------
Title:
---------------------------------
INTERNATIONAL MENU SOLUTIONS
CORPORATION
Per:
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Title:
---------------------------------
1254859 ONTARIO INC.
Per:
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Michael A. Steele
