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Exhibit No. Description
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99.2 Securities Purchase Agreement, dated September 20, 2000, by
and between IMSC and PAC.
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EXHIBIT 99.2
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement") is entered into
as of the 20th day of September, 2000, by and between INTERNATIONAL MENU
SOLUTIONS CORPORATION, a Nevada corporation (the "Company"), and PAC, INC., a
Missouri corporation ("Investor").
RECITAL:
A. The Company and Investor deem it advisable for Investor to purchase
and the Company to sell to Investor an aggregate of 750,000 shares of the
Company's common stock, $.001 par value per share (the "Common Stock"), and
issue to Investor warrants to purchase up to an additional 500,000 shares of
Common Stock, all upon the terms and subject to the conditions herein provided.
NOW, THEREFORE, in consideration of the mutual promises and other
consideration hereinafter set forth, the adequacy and receipt of which hereby
are acknowledged by the parties hereto, the parties agree as follows:
1. PURCHASE OF COMMON STOCK; TRANSACTION FEE.
1.1 Purchase of Common Stock; Issuance of Warrants. Subject to the
terms and conditions hereof and on the basis of the representations and
warranties hereinafter set forth, on the Closing Date hereinafter mentioned, the
Company agrees to issue and sell to Investor, and Investor agrees to purchase
from the Company, an aggregate of 750,000 shares of Common Stock for an
aggregate purchase price of $1,500,000. In addition, on the Closing Date, the
Company shall issue to Investor warrants to purchase up to 500,000 shares of
Common Stock at an exercise price of $2.00 per share, such warrants to be
substantially in form attached as Exhibit A hereto (the "Warrants"). In
addition, on the Closing Date, the Company shall deliver to Investor (i) a legal
opinion of counsel to the Company in form reasonably satisfactory to Investor as
to the matters set forth in Exhibit B attached hereto, and (ii) such other
certificates of officers of the Company and other documentation as Investor
shall reasonably request in connection with the consummation of the transactions
contemplated hereby.
1.2 Closing Date. Delivery of the Common Stock to be issued and
purchased pursuant to this Agreement shall be at the offices of Thompson Coburn
LLP, One Firstar Plaza, Suite 3400, St. Louis, Missouri, against payment to the
Company of the purchase price therefor by wire transfer of immediately available
funds (the "Closing"), at 10:00 A.M., St. Louis time, on September 20, 2000 or
such later date as shall be mutually agreed upon by the Company and Investor
(the "Closing Date").
1.3 Transaction Fee. In consideration of the transactions contemplated
by this Agreement, the Company shall pay to Investor a transaction fee as
follows: (i) on the Closing Date, the Company shall deliver to Investor the
amount of $50,000, (ii) on the first anniversary of the Closing Date, the
Company shall deliver to Investor the amount of $50,000, and (iii) within 10
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business days after the expiration of the first calendar quarter following the
first anniversary of the Closing Date, the Company shall deliver to Investor
shares of Common Stock having an aggregate value of $125,000, the number of such
shares of Common Stock to be determined by dividing 125,000 by the average
Trading Price (as defined in Section 5.1) of the Common Stock during the first
calendar quarter following the first anniversary of the Closing Date; provided,
however, that in the event that the Trading Price for such period is less than
$1.75, then in such case the Company shall have the option to pay all or any
portion of such $125,000 of value in cash, and any remaining portion not paid in
cash shall be paid in by the Company by delivery of a number of shares of Common
Stock to be determined by dividing such remainder amount by the greater of (i)
the average Trading Price for such period, and (ii) $1.00 per share.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
In order to induce Investor to enter into this Agreement and to
purchase the Common Stock, the Company hereby represents and warrants to
Investor, which representations and warranties shall survive the execution and
delivery thereof, that:
2.1 Organization. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada.
2.2 Authorization and Consents. The Company has all requisite corporate
power and authority to own or lease and use its properties and assets, to carry
on its business as proposed to be conducted, to own enter into and to consummate
the transactions contemplated by this Agreement and to perform its obligations
hereunder. The execution, delivery and performance of this Agreement by the
Company has been duly and effectively authorized and approved by all requisite
corporate action of the Company, and no other corporate or shareholder act or
proceeding on the part of the Company shall be necessary to authorize this
Agreement or the transactions contemplated hereby. This Agreement constitutes a
valid and legally binding obligation of the Company, enforceable against the
Company in accordance with its terms. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby nor
compliance by the Company with any of the provisions hereof will violate or
conflict with any of the terms, conditions or provisions of the Articles of
Incorporation or Bylaws of the Company, or violate any order, writ, injunction,
decree, statute, rule or regulation applicable to the Company. Except as set
forth in Schedule 2.2, no consent or approval by, notice to or registration with
any governmental authority or other third party is required on the part of the
Company in connection with the execution and delivery of this Agreement or the
consummation by the Company of the transactions contemplated hereby.
2.3 Company Common Stock. All shares of the Common Stock to be issued
to Investor pursuant to this Agreement at the Closing or thereafter pursuant to
the Warrants are and shall be duly authorized, validly issued, fully paid and
non-assessable.
2.4 Information Regarding the Company. The Company has delivered or
made available to Investor true and complete copies of all reports filed by the
Company with the Securities and Exchange Commission (the "SEC") pursuant to the
Securities Exchange Act of 1934, as amended (the "1934 Act"), within the last
two (2) years, commencing with its Form 10-
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SB, as amended, which report is currently under review and comment by the SEC.
To the best of the Company's knowledge and belief, none of the foregoing
reports, nor any other filing made by the Company with the SEC, contained, at
the time thereof, any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading.
2.5 Litigation. Except as set forth on Schedule 2.5, there are no
actions, suits, proceedings, claims, investigations or inquiries of any kind
pending or, to the knowledge of the Company, threatened against the Company
before any court, commission, agency or other administrative or judicial
authority which could have a material adverse effect on the financial condition,
results of operations, assets, liabilities or business of the Company. The
Company is not the subject of any judicial or governmental order or decree,
other than those of general application. There is no suit, claim, action,
proceeding or governmental investigation now pending or, to the Company's
knowledge, threatened against the Company which contests the validity of this
Agreement or the ability of the Company to consummate the transactions
contemplated by this Agreement.
2.6 Financial Statements. The Company's audited financial statements as
of and for the year ended December 31, 1999 contained in its Form 10-KSB, and
the Company's unaudited financial statements as of and for the quarter ended
June 30, 2000 contained in its Form 10-QSB (collectively, the "Company Financial
Statements") are true and complete copies of such statements. The Company
Financial Statements, taken together with the other disclosures in those
filings, present fairly in all material respects the consolidated financial
position and consolidated results of operations of the Company as of the
respective dates and for the respective periods indicated, and have been
prepared in conformity with generally accepted accounting principles applied on
a basis consistent (except as otherwise noted) with prior periods, except that
the unaudited statements lack full footnote disclosures and are subject to year
end adjustment. The SEC is currently reviewing the Company's accounting
treatment of the Company's disposition of the Seafood Selections division and,
accordingly, the Company's Financial Statements may require restatement to the
extent that the Company and the SEC determine that such treatment requires
revision. Since June 30, 2000, there has been no material adverse change in the
financial condition, results of operations, assets, liabilities or business of
the Company and its subsidiaries, taken as a whole, save for seasonal losses
forecasted by the Company.
2.7 Transactional Approvals. Except as set forth on Schedule 2.7, no
approval, authorization, order, license, permit, franchise or consent of, or
registration, qualification or filing with, or notice to, any judicial or
governmental agency or authority, or any other person or entity, is required in
connection with the execution, delivery or performance by the Company of this
Agreement.
2.8 Capitalization. The authorized and issued capital stock of the
Company is as set forth in the Company's Registration Statement on Form SB-2
filed by the Company on September 1, 2000 under the Securities Act of 1933, as
amended, except that the issued shares of stock of the Company may have been
affected since such date as a result of the exercise of outstanding options.
Except as set forth in the most recent amendment to Form 10-SB, there are
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no outstanding preemptive, conversion or other rights, options, warrants or
agreements granted or issued by or binding upon the Company for the purchase or
acquisition of any shares of the Company's capital stock.
2.9 Intellectual Property. The Company owns, or has the valid license
or other rights to use, all patents, patent rights, trademarks, trademark
rights, trade names, trade name rights and copyrights used by the Company in its
business (the "Intellectual Property Rights"), and all such Intellectual
Property Rights are valid and in good standing and adequate and sufficient to
permit the Company to conduct its business as conducted by it without conflict
with or infringement upon any valid rights of others, except where such conflict
or infringement would not have a material adverse effect on the Company or the
conduct of its business as presently conducted by it. To the Company's
knowledge, all Intellectual Property Rights owned or used by the Company are
free of any adverse claims, rights or encumbrances as to the Company's rights
thereto.
2.10 Environmental Matters. No person or party (including, but not
limited to, governmental agencies of any kind) has asserted any claim against
the Company, relating to any violation, citation, claim or complaint relating to
the business of the Company or its property arising under any law relating to
the environment, including, without limitation, the Resource Conservation and
Recovery Act, the Comprehensive Environmental Response Compensation and
Liability Act, the Superfund Amendments and Reauthorization Act, the Toxic
Substances Control Act, the Safe Drinking Water Act, the Federal Water Pollution
Control Act (Clean Water Act), the Clean Air Act and antipollution, waste
control and disposal and environmental "clean-up" provisions of similar statutes
of any federal, state or local governmental authorities, and all regulations and
standards enacted pursuant thereto and all permits and authorizations issued in
connection therewith, except to the extent any such claim will not have a
material adverse effect on the Company or on the conduct of its business.
2.11 Tax Matters. The Company has prepared and duly filed all tax
reports and returns required to be filed by it, including all federal, state,
local and foreign tax returns and reports, and the Company has paid in full all
taxes shown to be due on such returns or any assessment, deficiency notice,
30-day letter or similar notice received by it, except where such taxes are
being protested in good faith by appropriate proceedings or where such reports
and returns do not reflect that any tax is due and owing by the Company and
except where the failure to file such reports and returns or pay such taxes
would not have a material adverse effect on the Company or the conduct of its
business. All taxes which the Company has been required to collect or withhold
have been duly collected or withheld and, to the extent required, have been paid
to the proper taxing authority. The Company is not a party to any pending action
or proceeding by any governmental authority for the assessment of any Tax, and
no claim for assessment or collection of any Tax has been asserted against the
Company that has not been paid, except to the extent such actions, proceedings
or claims, if adversely determined to the Company, will not have a material
adverse effect on the Company or the conduct of its business. To the best of the
Company's knowledge, there is no valid basis for any assessment, deficiency
notice, 30-day letter or similar intention to assess any tax with respect to
returns filed or required to be filed by the Company.
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2.12 Insurance. The Company maintains policies of insurance from
reputable insurers (including comprehensive general liability, personal and
professional liability, comprehensive general casualty and extended coverage,
products liability, automobile, fire and lightning and worker's compensation) in
amounts and limits deemed appropriate in light of the Company's business
activities, and the Company is not aware of any material gaps in coverage or any
denial of coverage with respect to a material loss affecting the Company.
2.13 Labor Matters. The Company is in compliance in all material
respects with federal, state, local and other applicable law respecting
employment and employment practices, terms and conditions of employment and
wages and hours. There is no labor strike, dispute, organizing effort, slow
down, stoppage or other labor difficulty pending, or to Company's knowledge
threatened, against or affecting the Company which could reasonably be expected
to have a material adverse effect on the Company or the conduct of its business.
There are no pending or, to the Company's knowledge, threatened claims against
the Company by any present, former or prospective employee arising out of the
denial or termination of employment or any matters relating to any workplace
environment of the Company or the actions or omissions of other employees of the
Company (other than claims for worker's compensation benefits as a result of
workplace injuries), except claims which, if adversely determined to Company,
will not have a material adverse effect on the Company or the conduct of its
business.
2.14 No Broker. No person, firm or corporation has acted in the
capacity of broker, advisor, investment banker or finder on behalf of the
Company to bring about the negotiation or consummation of this Agreement.
2.15 Accuracy of Statements. Neither this Agreement nor any Schedule
hereto nor any certificate furnished by the Company to Investor in connection
this Agreement or any of the transactions contemplated hereby contains or will
contain an untrue statement of a material fact or omits or will omit to state a
material fact necessary to make the statements contained herein or therein, in
light of the circumstances in which they are made, not misleading.
3. REPRESENTATIONS AND WARRANTIES OF INVESTOR.
Investor represents and warrants to the Company that all action on the
part of such Investor necessary for the authorization, execution, delivery and
performance of all its obligations under this Agreement has been (or will be)
taken prior to the Closing Date. This Agreement, when executed and delivered by
Investor, shall constitute a valid and legally binding obligation of such
Investor enforceable in accordance with its terms, subject to laws of general
application relating to bankruptcy, insolvency and the relief of debtors.
4. FEDERAL AND OTHER SECURITIES LAWS.
4.1 Investment Representations.
(a) This Agreement is made with Investor in reliance upon
Investor's representation to the Company, which by its acceptance hereof
Investor hereby confirms, that the Common Stock and the Warrants (all such
securities are referred to as the "Securities" for
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purposes of this Section 4) to be received by it will be acquired for investment
for its own account, not as a nominee or agent, and not with a view to the sale
or distribution of any part thereof, and that it has no present intention of
selling, granting participation in or otherwise distributing the same. By
executing this Agreement, Investor further represents that it does not have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participation to such person or to any third person with
respect to any of the Securities.
(b) Investor understands that the Securities are not
registered under the Securities Act of 1933, as amended (the "1933 Act"), on the
ground that the sale provided for in this Agreement and the issuance of
Securities hereunder should be exempt from registration under the 1933 Act and
that the Company's reliance on such exemption is predicated on Investor's
representations set forth herein. Investor realizes that the basis for the
exemption may not be present if, notwithstanding such representations, Investor
has in mind merely acquiring the Securities for a fixed or determinable period
in the future, or for a market rise or for sale if the market does not rise.
Investor confirms it has no such intention.
(c) Investor represents that it is an "accredited investor"
within the meaning of Rule 501 under the 1933 Act and that Investor is
experienced in evaluating and investing in companies such as the Company, is
able to fend for itself in the transactions contemplated by this Agreement, has
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of its investment and has the ability to bear
the economic risks of its investment. Investor further represents that it has
had access, during the course of the transaction and prior to its purchase of
the Securities, to the same kind of information that would be provided in a
registration statement filed by the Company under the 1933 Act and that it has
had, during the course of the transaction and prior to its purchase of the
Securities, the opportunity to ask questions of, and receive answers from, the
Company concerning the terms and conditions of the offering and to obtain
additional information necessary to verify the accuracy of any information
furnished to it or to which it had access.
(d) Investor understands that the Securities may not be sold,
transferred or otherwise disposed of without registration under the 1933 Act or
an exemption therefrom, and that in the absence of an effective registration
statement covering the Securities or an available exemption from registration
under the 1933 Act, the Securities must be held indefinitely. In particular,
Investor is aware that the Securities may not be sold pursuant to Rule 144
promulgated under the 1933 Act unless all of the conditions of Rule 144 are met.
Investor represents that, in the absence of an effective registration statement
covering the Securities, it will sell, transfer or otherwise dispose of the
Securities only in a manner consistent with its representations set forth herein
and then only in accordance with the provisions of Section 4.1(e) hereof.
(e) Investor agrees that in no event will it make a transfer
or disposition of any of the Securities (other than in accordance with the terms
of conversion thereof or pursuant to an effective registration statement under
the 1933 Act) unless and until (i) Investor shall have notified the Company of
the proposed disposition and shall have furnished the Company with a statement
of the circumstances surrounding the disposition and assurance that the proposed
disposition is in compliance with all applicable laws and (ii) if reasonably
requested by the
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Company, at the expense of Investor or transferee, it shall have furnished to
the Company an opinion of counsel, reasonably satisfactory to the Company, to
the effect that such transfer may be made without registration under the 1933
Act.
4.2 Legends; Stop Transfer.
(a) All certificates for the Securities may bear the following
or a substantially similar legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN
OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933."
(b) The certificates for the Securities may also bear any
legend required by any applicable state securities or other law or any of the
other agreements executed by Investor in connection with its investment in the
Company.
(c) In addition, the Company shall make a notation regarding
the restrictions on transfer of the Securities in its records and the Securities
shall be transferred on the books of the Company only if transferred or sold
pursuant to an effective registration statement under the 1933 Act covering such
shares or pursuant to and in compliance with the provisions of Section 4.1(e)
hereof.
5. PUT OPTION OF INVESTOR.
5.1 Put Option. During the one year period following the first
anniversary of this Agreement, in the event that the average Trading Price (as
defined below) of the Common Stock during any 90 consecutive trading days shall
be less than $2.25 per share ("Floor Price"), then at any time during the 60-day
period following such 90 consecutive day period Investor shall have the option
(the "Put Option") to elect to sell to the Company (and the Company hereby
agrees to repurchase from Investor) up to 300,000 shares of Common Stock issued
to Investor pursuant to Section 1.1 hereof at a purchase price of $2.25 per
share. In the event that the Company shall at any time change the number of
issued shares of Common Stock without new consideration to the Company (such as
by stock dividends, stock splits or recapitalization), then the total number of
shares subject to the Put Option and the purchase price per share shall be
proportionately adjusted to assure that the aggregate consideration payable by
the Company pursuant to the Put Option shall not change, and the Floor Price
shall be proportionately adjusted. For purposes of this Section 5, the term
Trading Price shall mean (i) for any period during which the Common Stock shall
be listed for trading on a national securities exchange, the closing price per
share on such exchange, (ii)
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for any period during which the Common Stock shall not be listed for trading on
a national securities exchange, but when prices for the Common Stock shall be
authorized for quotation on the Nasdaq National Market, the last transaction
price per share as quoted by the Nasdaq National Market, (iii) for any period
during which the Common Stock shall not be listed for trading on a national
securities exchange or its price reported by the Nasdaq National Market, but
when prices for the Common Stock shall be authorized for quotation on the Nasdaq
SmallCap Market, the closing bid price per share as reported by the Nasdaq
SmallCap Market, (iv) for any period during which the Common Stock is neither
listed for trading on a national securities exchange nor its price reported by
the Nasdaq National Market or the Nasdaq SmallCap Market, but when prices of the
Common Stock are quoted in the OTC Bulletin Board or similar quotation medium
used by members of the National Association of Securities Dealers, Inc., the
closing bid price as provided by the OTC Bulletin Board or similar quotation
medium, or (v) the market price per share as determined by a the Board of
Directors of the Company in good faith in the event neither (i), (ii), (iii) nor
(iv) above shall be applicable.
5.2 Exercise of Put Option; Closing. The Put Option shall be
exercised by written notice (the "Put Exercise Notice") delivered by Investor to
the Company within the 60-day period specified in Section 5.1 above. The Put
Exercise Notice shall specify the number of shares of Common Stock for which the
Put Option is being exercised and a closing date for the transfer of the Common
Stock to be transferred, which closing date shall be not later than 90 days
following the date of such Put Exercise Notice. The purchase of the Common Stock
by the Company pursuant to the Put Exercise Notice shall be closed and
consummated at the principal office of the Company. At the closing, the Company
and Investor shall execute and deliver all documents and instruments as are
reasonably deemed appropriate by their respective counsel to effect the transfer
of the Common Stock for which the Put Option is being exercised.
5.3 Limitation on Company's Obligation. Notwithstanding anything to the
contrary contained herein, the Company shall not be obligated to repurchase from
Investor shares of Common Stock pursuant to the Put Option to the extent that at
any time (i) payment of the purchase price for the Common Stock at such time
would result in a breach of, or default or event of default in respect of, the
Company's senior credit facilities, without the written consent of the lenders
thereunder, or (ii) payment of the Put Price shall be, at such time, prohibited
by any applicable law (including, without limitation, the Nevada General
Corporation Law). The Company shall use commercially reasonable efforts to
remove any such restrictions on its obligations under this Section 5.3 at the
earlier possible time.
6. OBSERVER RIGHTS.
During the two year period following the Closing Date, Investor shall
have the right to send one (1) representative to attend in a nonvoting observer
capacity all meetings of the Company's Board of Directors (the "Company Board")
(whether held in person or via telephone conference). Such representative may
participate in all discussions of matters brought to the Company Board,
including the right to receive all notices, minutes, consents and other
materials, financial and otherwise, which the Company provides to the Company
Board, such copies to be delivered to the address specified by such
representative; provided, however, that the Company reserves the right to
exclude any such representative from access to any material or meeting or
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portion thereof if the Company believes upon advice of counsel that such
exclusion is reasonably necessary to preserve attorney-client privilege. The
Company shall give each such representative written notice of any meeting of the
Company Board simultaneously with that given to the members of the Company Board
such that the representative will be able to exercise effectively the rights
granted by this Section 6. The Company shall give such representative copies of
any written actions by consent of the Company Board. Each such representative
shall execute a confidentiality agreement in form and substance reasonably
satisfactory to the Company Board with respect to the information and
discussions to which such representative has access pursuant to this Section 6.
Investor shall be responsible for payment of any and all travel and other
expenses incurred by Investor and its representative in connection with the
rights granted by this Section 6.
Notwithstanding the foregoing, if at any time following the Trigger
Date (as defined below) the Investor shall own of record not less than five
percent of the issued and outstanding shares of the Company's Common Stock, the
Company Board shall, upon request of Investor, cause a representative selected
by Investor and reasonably acceptable to the Company to be nominated by the
Company Board for election as a director of the Company at the next regularly
scheduled Annual Meeting of Stockholders of the Company. For purposes of this
Agreement, the "Trigger Date" shall mean the earlier of (i) the date of the 2001
Annual Meeting of Shareholders of the Company, or (ii) the date of receipt by
the Company of a determination or interpretation of the SEC reasonably
acceptable to the Company that the Investor would not be considered an
"affiliate" of the Company for purposes of Rule 415 under the 1933 Act by reason
of the Investor's beneficial ownership of the Company's securities and/or the
Investor's right under this Section 6 hereof to cause its representative to be
nominated for election to the Company's Board of Directors.
7. UNDERTAKINGS BY COMPANY.
It is anticipated that Company shall utilize a portion of the proceeds
from the sale of the Common Stock and Warrants to make an investment in and/or
provide financing to The Great American Barbecue Food Company, a Delaware
corporation which is a subsidiary of the Company ("Buyer"), and which has
entered into an agreement to acquire substantially all of the assets of Great
American Barbecue Company, a Missouri corporation ("GABCO"), pursuant to an
Agreement and Plan of Reorganization, dated as of July 14, 2000 (as amended, the
"Reorganization Agreement"), among the Company, Buyer, GABCO and certain
principal shareholders of GABCO, including Investor (the "Principal
Shareholders"). On or about the date of this Agreement, the Company, Buyer,
GABCO and the Principal Shareholders are entering into an Interim Operating
Agreement ("IOA") pursuant to which, among other things, Buyer will provide
financing to GABCO pending such time, if any, as the closing under the
Reorganization Agreement occurs.
7.1 Obligation Upon Consummation of Reorganization Agreement. Upon the
consummation by Buyer or an affiliate thereof of the acquisition of
substantially all of the assets of GABCO on the same or substantially similar
terms and conditions set forth in the Reorganization Agreement, in consideration
of the transfer to the Company of its 500,000 shares of the Convertible
Preferred Stock of GABCO originally issued to an affiliate of Investor for
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$1,100,000 (the "GABCO Preferred Stock"), Investor shall be entitled to receive
the consideration provided in the Reorganization Agreement, as amended or
modified with the approval of Investor, which amount as of the date of the
execution of the IOA was 1,224,218 shares of Common Stock. In the event that on
the closing of the transaction contemplated by the Reorganization Agreement, the
consideration due Investor from GABCO pursuant thereto shall be less than
1,224,218 shares, the Company shall deliver to Investor a number of shares of
Common Stock computed by subtracting (a) the actual number of shares of Common
Stock received by Investor pursuant to the Reorganization Agreement from (b)
1,224,218 shares of Common Stock. In addition, on the date of consummation of
the transactions contemplated by the Reorganization Agreement, Investor shall
surrender and deliver to the Company that certain Unsecured Convertible
Promissory Note, dated May 30, 2000, in the aggregate principal amount of
$300,000 (the "Note" and, collectively with the GABCO Preferred Stock, the
"GABCO Securities") in exchange for 171,430 of shares of Common Stock. Such
exchange shall be effected pursuant to the terms and conditions of an exchange
agreement mutually acceptable to each of Company and Investor.
7.2 Obligation to Purchase Interests. If Buyer or any affiliate thereof
does not acquire, on or before May 10, 2001, the assets of GABCO on
substantially the same terms as are contained in the Reorganization Agreement,
then the Company shall cause Buyer to purchase from Investor, and Investor shall
sell to Buyer, (a) all of Investor's GABCO Preferred Stock, and (b) the Note.
The aggregate purchase price to be paid by Buyer to Investor for the GABCO
Securities shall be $1,400,000, subject to reduction on a pro rata basis to the
extent Investor, prior to the purchase of the GABCO Securities, has received
distributions with respect to the GABCO Preferred Stock or principal payments
with respect to the Note (the "Purchase Price"). Such purchase shall take place
on a business day designated by Buyer (the "Purchase Date") which is not more
than six months, nor less than 45 trading days, after the earlier of (i) May 15,
2001, and (ii) the date on which the IOA is terminated without the closing under
the Reorganization Agreement having been completed (the "Key Date"). On the
Purchase Date, (A) Investor shall execute and deliver the original certificates
evidencing the GABCO Preferred Stock and the original Note, duly endorsed for
transfer to Buyer, together with a customary certificate of warranties
reasonably satisfactory to Buyer (which shall include, but not be limited to,
warranties to the effect that Investor is the lawful owner of the GABCO
Securities and has full power and authority to convey the same), and (B) Buyer
shall pay the Purchase Price by delivering a number of shares of Common Stock
having an aggregate Stipulated Value equal to the Purchase Price (the "Purchase
Money Shares"); provided, however, that in no event shall the number of Purchase
Money Shares exceed 1,224,218 shares of Common Stock. The term "Stipulated
Value" means the average Trading Price of the Common Stock during the period of
ninety (90) trading days consisting of the 45 trading days ending on the Key
Date and the 45 trading days following the Key Date. If the Stipulated Value of
the Common Stock is less than Two Dollars ($2.00) per share, then the Company at
its option may cause Buyer to pay all or any part of the Purchase Price in cash.
In computing the Stipulated Value and accounting for the 1,224,218 share ceiling
and $2.00 share price floor, equitable adjustments shall be made to reflect
share dividends, stock splits, reverse stock splits, reclassifications of shares
and like transactions between the date of this Agreement and the date on which
the Stipulated Value or Purchase Price is being determined or paid. Investor
hereby agrees that, from and during any period set forth above used in the
determination of Stipulated Value, Investor and its affiliates
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shall not, directly or indirectly, engage in any short sale of the Common Stock
or otherwise engage in any bid for, offer to sell, trade, transaction or course
of action which could reasonably be anticipated to adversely affect the
Stipulated Value of the Common Stock and/or the trading market for the Common
Stock.
7.3 Obligations Upon Consummation of an Enhanced Transaction. In the
event that at any time on or before May 10, 2001 the Company or its affiliate
shall consummate a purchase of all or a portion of the assets of GABCO in an
Enhanced Transaction (as defined below), in consideration of the purchase by
Investor of the Common Stock and Warrants as described herein, Investor shall be
entitled to receive, in addition to any consideration to be received by Investor
in respect of the GABCO Preferred Stock, an additional number of shares of
Common Stock having an aggregate Trading Price equal to fifty percent (50%) of
the Enhancement (as defined below). For purposes of this Section 7.3, the term
"Enhanced Transaction" shall mean the purchase of substantially all or a
significant portion of the assets of GABCO in a transaction in which the Net
Transaction Value exceeds the Net Transaction Value that would have applied if
the asset purchase contemplated by the Reorganization Agreement had been
completed September 1, 2000 in accordance with the terms of the Reorganization
Agreement. The term "Net Transaction Value," as of any date on which GABCO's
assets are or hypothetically would have been acquired, means an amount equal to
(a) the aggregate fair value of the assets of GABCO to be acquired, as
determined in good faith by the Company and Investor, less (b) the aggregate
consideration (whether cash, Common Stock, assumption of liabilities or other
consideration) payable by the Company in such transaction. For purposes of this
Section 7.3, the term "Enhancement" shall mean the amount, if any, by which (i)
the Net Transaction Value in a purchase described in the second sentence of this
Section 7.3, exceeds (ii) the Net Transaction Value that would have applied as
of September 1, 2000.
7.4 Undertaking to Register. If, under Section 7.2 above, Buyer
delivers more than 500,000 shares of Common Stock in payment of the Purchase
Price, and if the Purchase Money Shares have not otherwise been registered under
U.S. federal securities laws, then the Company shall offer to enter into a
registration rights agreement with Investor on customary terms by which the
Company will undertake to register all of such shares under U.S. federal
securities laws at the request of Investor within one year after the Purchase
Date, such registration to remain effective for at least ninety (90) days.
8. ADDITIONAL INTERIM AGREEMENTS.
To facilitate the intent of the parties with respect to the IOA and the
transactions contemplated hereby, the Company and Investor hereby additionally
agree to the following:
8.1 Proxy. Upon the execution of the IOA, Investor shall execute and
deliver to the Company its irrevocable non-transferable proxy in favor of the
Company with respect to its GABCO Preferred Stock, such proxy to be valid so
long as the IOA remains in effect, provided, however, that such proxy shall not
extend to Investor's right to vote the GABCO Preferred Stock concerning any of
the following without Investor's written consent: (i) a merger, consolidation,
reorganization, sale of equity securities constituting more than 50% of the
voting power of GABCO securities, or sale of all or substantially all of the
assets of GABCO, or (ii) amendment
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of the articles of incorporation or bylaws of GABCO in a manner which would
adversely affect the voting rights or rights and preferences of the GABCO
Preferred Stock. In connection with the grant of such proxy, the Company hereby
agrees to indemnify Investor and hold Investor harmless against and in respect
of any and all loss, liability, cost, expense or damage (including judgments and
settlement payments) incurred by Investor following the grant of such
irrevocable proxy in connection with or resulting from the exercise of such
proxy by the Company. The parties understand and agree that such indemnification
shall relate only to matters with respect to which the Company has exercised
such proxy, and shall not relate to any matters arising prior to the effective
date of the IOA or any matters specified in (i) or (ii) above on which Investor
exercises its voting rights in the GABCO Preferred Stock.
8.2 Investor Board Representation. Upon the execution of the IOA, upon
the request of the Company, any representatives of Investor to the Board of
Directors of GABCO shall resign, and Investor shall use its best efforts to
cause such representative to replaced by a representative of the Company and/or
such observers as the Company shall reasonably request.
8.3 Key-Man Life Insurance. The Company shall use its best efforts to
obtain within sixty (60) days of the Closing Date a key-man life insurance
policy on the life of Michael Steele in the amount of $4,000,000, which policy
shall be on terms mutually agreeable to the Company and Investor. The Company
shall bear all expenses associated with obtaining such policy.
9. MISCELLANEOUS.
9.1 Expenses, Stamp Tax Indemnity. The Company agrees that it will pay
and save Investor harmless against any and all liability with respect to stamp
and other taxes, if any, which may be payable or which may be determined to be
payable in connection with the execution and delivery of this Agreement. Each of
the parties hereto agrees to protect and indemnify the other parties against any
liability for any and all brokerage fees and commissions payable or claimed to
be payable to any person in connection with the issue and sale of the Common
Stock and Warrants by the Company pursuant to this Agreement which may arise out
of the actions of such party.
9.2 Notices. All communications (other than those sent to shareholders
generally) provided for hereunder shall be in writing and delivered or mailed by
registered or certified mail, by reputable overnight delivery, or by telecopy:
In the case of Company:
International Menu Solutions Corporation
350 Creditstone Road
Concord, Ontario L4K 3Z2
Canada
Attention: Michael Steele, President
Telephone: (416) 366-6368
Fax: (905) 760-9443
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With a copy to:
Thomas D. Beynon, Q.C.
McCarter Grespan Robson Beynon Thompson LLP
675 Riverbend Drive
Kitchener, Ontario N2K 3S3
Canada
Telephone: (519) 571-8800
Fax: (519) 742-1841
And with a copy to:
Thompson Coburn LLP
One Firstar Plaza
St. Louis, Missouri 63101
Attention: Thomas A. Litz
Telephone: (314) 552-6072
Fax: (314) 552-7072
In the case of Investor:
PAC, Inc.
160 Chesterfield Industrial Blvd.
Chesterfield, Missouri 63005
Attention: Mark Dunham
Telephone: (636) 537-5348
Fax: (636) 537-3350
With a copy to:
Bryan Cave LLP
One Metropolitan Square
St. Louis, Missouri 63101
Attention: Jon Dalton
Telephone: (314) 259-2000
Fax: (314) 259-2020
or to such other address or person as any party may have specified in a notice
duly given to the other party as provided herein. Such notice, request, demand,
waiver, consent, approval or other communication shall be deemed to have been
given as of the date so delivered.
9.3 Successors and Assigns. This Agreement shall be binding upon the
Company and its successors and assigns and shall inure to Investor's benefit and
to the benefit of Investor's successors and permitted assigns.
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9.4 Survival of Covenants and Representations. All covenants,
representations and warranties made by the Company herein and in any
certificates delivered pursuant hereto, whether or not in connection with the
closing of the transactions herein contemplated, shall survive such closing and
the delivery of this Agreement.
9.5 Severability. Should any part of this Agreement for any reason be
declared invalid, such decision shall not affect the validity of any remaining
portion, which remaining portion shall remain in force and effect as if this
Agreement had been executed with the invalid portion thereof eliminated and it
is hereby declared the intention of the parties hereto that they would have
executed the remaining portion of this Agreement without including therein any
such part, parts or portion which may, for any reason, be hereafter declared
invalid.
9.6 Governing Law. This Agreement and securities issued and sold
hereunder shall be governed by and construed in accordance with Missouri law,
without reference to conflict of laws principles.
9.7 Captions. The descriptive headings of the various Sections or parts
of this Agreement are for convenience only and shall not affect the meaning or
construction of any of the provisions hereof.
9.8 Number and Gender. Where required by the context, singular words or
pronouns shall be construed as plural, plural words and pronouns shall be
construed as singular and the gender of personal pronouns shall be construed as
either masculine, feminine or neuter.
9.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall constitute one Agreement binding on all the
parties hereto.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
COMPANY:
INTERNATIONAL MENU SOLUTIONS CORPORATION
By
Name:
Title:
INVESTOR:
PAC, INC.
By
Name:
Title:
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EXHIBIT A
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EXHIBIT B
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