4.1 CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT, dated as of December
24, 1997 (this "Agreement"), among Say Yes Foods, Inc., a Nevada corporation
(the "Company") and JNC Opportunity Fund Ltd., a corporation organized under the
laws of the Cayman Islands (the "Purchaser").
WHEREAS, subject to the terms and conditions set forth in this
Agreement, the Company desires to issue and sell to the Purchaser and the
Purchaser desires to purchase an aggregate principal amount of $3,750,000 of the
Company's 7% Series B Convertible Preferred Stock, par value $.001 per share
(the "Preferred Stock"), which is convertible into shares of the Company's
common stock, par value $.001 per share (the "Common Stock").
IN CONSIDERATION of the mutual covenants and agreements set forth
herein and for good and valuable consideration, the receipt of which is hereby
acknowledged, the parties agree as follows:
ARTICLE I
PURCHASE AND SALE OF PREFERRED STOCK; CLOSING
1
.15 The Closing.
(a) The Closing. (i) Subject to the terms and conditions set forth
in this Agreement, the Company shall issue and sell to the Purchaser and the
Purchaser shall, severally and not jointly, purchase the Preferred Stock for an
aggregate purchase price of $3,750,000. The closing of the purchase and sale of
the Preferred Stock (the "Closing") shall take place at the offices of Xxxxxxxx
Xxxxxxxxx Xxxxxx Xxxxxxxx & Xxxxxx LLP (the "Escrow Agent"), 0000 Xxxxxx xx xxx
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, immediately following the execution hereof
or such later date as the parties shall agree. The date of the Closing is
hereinafter referred to as the "Closing Date."
(ii) Prior to the Closing, the parties shall deliver
or shall cause to be delivered to the Escrow Agent such items as are required
to be delivered by them in accordance with and subject to the terms and
conditions of the Escrow Agreement, dated as of the date hereof, by and among
the Company, the Purchaser and the Escrow Agent (the "Escrow Agreement"),
including the following: (A) the Company shall deliver (1) 1,500,000 shares
of Preferred Stock, registered in the name of the Purchaser, (2) the
Warrants (as defined in Section 3.16), (3) the Registration Rights Agreement
dated the date hereof between the Company and the Purchaser, substantially in
the form of Exhibit B (the "Registration Rights Agreement"), and (4) the
legal opinion of Stibel & Toulan LLP, substantially in the form of Exhibit C
(the "Legal Opinion"); (B) the Purchaser shall deliver $3,750,000; and (C) each
party hereto shall deliver all other executed instruments, agreements and
certificates as are required to be delivered hereunder by or on their behalf
at the Closing.
1(p) Form of Preferred Stock. The Preferred Stock shall have the
rights preferences and privileges set forth in Exhibit A, and shall be
incorporated into a [Certificate of Designation] ("Certificate of Designation"),
in form and substance approved by the Purchaser.
For purposes of this Agreement, "Conversion Price," "Original
Issue Date," "Conversion Date" "Trading Day" and "Per Share Market Value" shall
have the meanings set forth in Exhibit A; "Market Price" as at any date shall
mean the average Per Share Market Value for the five (5) Trading Days
immediately preceding
such date, and "Business Day" shall mean any day except Saturday, Sunday and any
day which shall be a federal legal holiday or a day on which banking
institutions in the State of New York are authorized or required by law or other
governmental action to close.
ARTICLE 7.
REPRESENTATIONS AND WARRANTIES
2(a) Representations, Warranties and Agreements of the Company. The
Company hereby makes the following representations and warranties to the
Purchaser:
(i) Organization and Qualification. The Company is a corporation,
duly incorporated, validly existing and in good standing under the laws of the
State of Nevada, with the requisite corporate power and authority to own and use
its properties and assets and to carry on its business as currently conducted.
The Company has no subsidiaries other than as set forth in Schedule 2.1(a)
attached hereto (collectively, the "Subsidiaries"). Each of the Subsidiaries is
a corporation, duly incorporated, validly existing and in good standing under
the laws of the jurisdiction of its incorporation, with the full corporate power
and authority to own and use its properties and assets and to carry on its
business as currently conducted. Each of the Company and the Subsidiaries is
duly qualified to do business and is in good standing as a foreign corporation
in each jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary, except where the failure to be
so qualified or in good standing, as the case may be, could not, individually or
in the aggregate, (x) adversely affect the legality, validity or enforceability
of this Agreement, the Preferred Stock, the Warrants, the Registration Rights
Agreement or the Escrow Agreement (collectively, the "Transaction Documents"),
(y) have a material adverse effect on the results of operations, assets,
prospects, or condition of the Company and the Subsidiaries, taken as a whole,
or (z) adversely impair the Company's ability to perform fully on a timely basis
its obligations under any Transaction Document (any of the foregoing, a
"Material Adverse Effect").
(ii) Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry out its
obligations thereunder. The execution and delivery of each of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary action on the
part of the Company. Each of the Transaction Documents has been duly executed by
the Company and when delivered in accordance with the terms hereof shall
constitute the legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement
of, creditors' rights and remedies or by other equitable principles of general
application. Neither the Company nor any Subsidiary is in violation of any of
the provisions of its respective certificate of incorporation, by-laws or other
charter documents.
(iii) Capitalization. The authorized, issued and outstanding
capital stock of the Company is set forth in Schedule 2.1(c). No shares of
Common Stock are entitled to preemptive or similar rights, nor is any holder of
the Common Stock entitled to preemptive or similar rights arising out of any
agreement or understanding with the Company by virtue of any of the Transaction
Documents. Except as disclosed in Schedule 2.1(c), there are no outstanding
options, warrants, script rights to subscribe to, calls or commitments of any
character whatsoever relating to, or, except as a result of the purchase and
sale of the Preferred Stock and Warrants hereunder, securities, rights or
obligations convertible into or exchangeable for, or giving any person any right
to subscribe for or acquire any shares of Common Stock, or contracts,
commitments, understandings, or
arrangements by which the Company or any Subsidiary is or may become bound to
issue additional shares of Common Stock, or securities or rights convertible or
exchangeable into shares of Common Stock. To the knowledge of the Company,
except as specifically disclosed in the SEC Documents (as defined below) or
Schedule 2.1(c), no Person (as defined below) beneficially owns (as determined
pursuant to Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) or has the right to acquire by agreement with or
by obligation binding upon the Company, beneficial ownership of in excess of 5%
of the Common Stock. There are no agreements or arrangements under which the
Company or any Subsidiary is obligated to register the sale of any of their
securities under the Securities Act (other than as contemplated in the
Registration Rights Agreement). A "Person" means an individual or corporation,
partnership, trust, incorporated or unincorporated association, joint venture,
limited liability company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.
(iv) Issuance of Preferred Stock, Warrants and Underlying Shares.
The Preferred Stock and the Warrants are duly authorized, and, when issued in
accordance with the terms hereof, shall be validly issued, fully paid and
nonassessable, free and clear of all liens, encumbrances and rights of first
refusals of any kind (collectively, "Liens"). The Company has and at all times
while the Preferred Stock and the Warrants are outstanding will maintain an
adequate reserve of duly authorized shares of Common Stock to enable it to
perform its conversion, exercise and other obligations under this Agreement, the
Warrants and the Preferred Stock and in no circumstances shall such reserved and
available shares of Common Stock be less than the sum of (i) two times the
number of shares of Common Stock as would be issuable upon conversion in full of
the Preferred Stock, assuming such conversion were effected on the Original
Issue Date or the Filing Date (as defined in the Registration Rights Agreement),
whichever yields a lower Conversion Price, (ii) the number of shares of Common
Stock as are issuable as payment of dividends on the Preferred Stock, and (iii)
the number of shares of Common Stock as are issuable upon exercise in full of
the Warrants. The shares of Common Stock issuable upon conversion of the
Preferred Stock, as payment of dividends in respect thereof and upon exercise of
the Warrants are sometimes referred to herein as the "Underlying Shares," and
the Preferred Stock, Warrants and Underlying Shares are, are collectively
referred to herein as, the "Securities." When issued in accordance with the
terms of the Preferred Stock and the Warrants, the Underlying Shares will be
duly authorized, validly issued, fully paid and nonassessable, free and clear of
all Liens.
(v) No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated thereby do not and will not (i) conflict with or
violate any provision of its certificate of incorporation, bylaws or other
charter documents (each as amended through the date hereof) or (ii) subject to
obtaining the consents referred to in Section 2.1(f), conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument (evidencing a Company debt or otherwise) to which the Company is a
party or by which any property or asset of the Company is bound or affected, or
(iii) result in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental authority
to which the Company is subject (including federal and state securities laws and
regulations), or by which any property or asset of the Company is bound or
affected, except in the case of each of clauses (ii) and (iii), as could not,
individually or in the aggregate, have or result in a Material Adverse Effect.
The business of the Company is not being conducted in violation of any law,
ordinance or regulation of any governmental authority, except for violations
which, individually or in the aggregate, do not have a Material Adverse Effect.
(vi) Consents and Approvals. Except as specifically set forth in
Schedule 2.1(f), neither the Company nor any Subsidiary is required to obtain
any consent, waiver, authorization or order of, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of the Transaction Documents other
than (i) the filing of a registration statement covering the resale of the
Underlying Shares by the Purchaser (the "Underlying Shares Registration
Statement") with the Securities and Exchange Commission (the "Commission"),
which shall be filed in the time period set forth in the Registration Rights
Agreement and (ii) other than, in all other cases, where the failure to obtain
such consent, waiver, authorization or order, or to give or make such notice or
filing, could not have or result in, individually or in the aggregate, a
Material Adverse Effect (together with the consents, waivers, authorizations,
orders, notices and filings referred to in Schedule 2.1(f), the "Required
Approvals").
(vii) Litigation; Proceedings. Except as specifically disclosed in
the Disclosure Materials (as hereinafter defined), there is no action, suit,
notice of violation, proceeding or investigation pending or, to the best
knowledge of the Company, threatened against or affecting the Company or any of
its Subsidiaries or any of their respective properties before or by any court,
governmental or administrative agency or regulatory authority (Federal, state,
county, local or foreign) which (i) adversely affects or challenges the
legality, validity or enforceability of any of the Transaction Documents or the
Securities or (ii) could, individually or in the aggregate, have or result in a
Material Adverse Effect.
(viii) No Default or Violation. Neither the Company nor any
Subsidiary (i) is in default under or in violation of (and no event has occurred
which has not been waived which, with notice or lapse of time or both, would
result in a default by the Company or any Subsidiary under), nor has the Company
or any Subsidiary received notice of a claim that it is in default under or that
it is in violation of, any indenture, loan or credit agreement or any other
agreement or instrument to which it is a party or by which it or any of its
properties is bound, (ii) is in violation of any order of any court, arbitrator
or governmental body, or (iii) is in violation of any statute, rule or
regulation of any governmental authority, except as could not individually or in
the aggregate, have or result in, individually or in the aggregate, a Material
Adverse Effect.
(ix) Private Offering. Assuming the accuracy of the
representations and warranties of the Purchaser set forth in Section 2.2(b)-(f),
the issuance and sale of the Securities to the Purchaser as contemplated hereby
are exempt from the registration requirements of the Securities Act. Neither the
Company nor any Person acting on its behalf has taken or will take any action
which might subject the offering, issuance or sale of the Securities to the
registration requirements of the Securities Act.
(x) Disclosure Material. The financial statements of the Company
dated December 31, 1996 and September 30, 1997 and any other financial
statements delivered by the Company to the Purchaser (the "Financial Statements"
and, together with the Schedules to this Agreement and other documents and
information furnished by or on behalf of the Company at any time prior to the
Closing, the "Disclosure Materials") comply in all material respects with
applicable accounting requirements. Such Financial Statements have been prepared
in accordance with United States generally accepted accounting principles,
applied on a consistent basis ("GAAP") during the periods involved, except as
may be otherwise specified in such Financial Statements or the notes thereto,
and fairly present in all material respects the financial position of the
Company as of and for the dates thereof and the results of operations and cash
flows for the periods then ended, subject, in the case of unaudited statements,
to normal year-end audit adjustments. There are no liabilities, contingent or
otherwise, of the Company involving material amounts not disclosed in said
Financial Statements. The Disclosure Materials do not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. Other than the
$200,000 loan from Global Dairy Products Ltd., since September 30, 1997, there
has been no event, occurrence or development that has had or that could have or
result in a Material Adverse Effect.
(xi) Investment Company. The Company is not, and is not an
Affiliate of an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
(xii) Certain Fees. Other than fees payable to CDC Consulting,
Inc., no fees or commissions will be payable by the Company to any broker,
financial advisor, finder, investment banker, or bank with respect to the
transactions contemplated hereby. Neither the Purchaser nor any of its
affiliates shall have any obligation with respect to such fees or with respect
to any claims made by or on behalf of other Persons for fees of a type
contemplated in this Section that may be due in connection with the transactions
contemplated hereby. The Company shall indemnify and hold harmless the
Purchaser, its respective employees, officers, directors, agents, and partners,
and their respective Affiliates (as such term is defined under Rule 405
promulgated under the Securities Act), from and against all claims, losses,
damages, costs (including the costs of preparation and attorney's fees) and
expenses suffered in respect of any such claimed or existing fees.
(xiii) Solicitation Materials. The Company has not (i) distributed
any offering materials in connection with the offering and sale of the
Securities other than the Disclosure Materials and any amendments and
supplements thereto or (ii) solicited any offer to buy or sell the Securities by
means of any form of general solicitation or advertising.
(xiv) Exclusivity. The Company shall not issue and sell
Preferred Stock to any Person other than the Purchaser.
(xv) Listing and Maintenance Requirements Compliance. The Company
has not in the two years preceding the date hereof received written notice from
any stock exchange, market or trading facility on which the Common Stock is or
has been listed or quoted to the effect that the Company is not in compliance
with the listing, maintenance or other requirements of such exchange, market,
trading or quotation facility. The Company has no reason to believe that it does
not now or will not in the future meet any such requirements.
(xvi) Patents and Trademarks. The Company has, or has rights to
use, all patents, patent applications, trademarks, trademark applications,
service marks, trade names, copyrights, licenses and rights which are necessary
for use in connection with its business and which the failure to so have would
have a Material Adverse Effect (collectively, the "Intellectual Property
Rights"). To the best knowledge of the Company, there is no existing
infringement of any of the Intellectual Property Rights.
(r) Disclosure. All information relating to or concerning the
Company set forth in the Transaction Documents or provided to the Purchaser or
its respective representatives and counsel in connection with the transactions
contemplated hereby is true and correct in all material respects and does not
fail to state any material fact necessary in order to make the statements herein
or therein, in light of the circumstances under which they were made, not
misleading. The Company confirms that it has not provided to the Purchaser or
any of its representatives, agents or counsel any information that constitutes
or might constitute material nonpublic information. The Company understands and
confirms that the Purchaser shall be relying on the foregoing representation in
effecting transactions in securities of the Company.
2(b) Representations and Warranties of the Purchaser. The Purchaser
hereby makes the following representations and warranties to the Company.
(i) Organization; Authority. Such Purchaser is an entity
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite power and authority to enter
into and to consummate the transactions contemplated by the Transaction
Documents and to carry out its obligations thereunder. The acquisition of the
Securities to be acquired hereunder by such Purchaser has been duly authorized
by all necessary action on the part of such Purchaser. Each of this Agreement,
the Registration Rights Agreement and the Escrow Agreement has been duly
executed and delivered by such Purchaser and constitutes the valid and legally
binding obligation of such Purchaser, enforceable against it in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights generally and to general principles of equity.
(ii) Investment Intent. Such Purchaser is acquiring the Securities
to be acquired hereunder by such Purchaser for its own account for investment
purposes only and not with a view to or for distributing or reselling such
Securities or any part thereof or interest therein, without prejudice, however,
to such Purchaser's right, subject to the provisions of this Agreement and the
Registration Rights Agreement, at all times to sell or otherwise dispose of all
or any part of such Securities pursuant to an effective registration statement
under the Securities Act and in compliance with applicable state securities laws
or under an exemption from such registration.
(iii) Purchaser Status. At the time such Purchaser was offered the
Securities to be acquired hereunder by such Purchaser, it was, at the date
hereof, it is, and at the Closing Date, it will be, an "accredited investor" as
defined in Rule 501(a) under the Securities Act.
(iv) Experience of Purchaser. Such Purchaser either alone or
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Securities, and has so
evaluated the merits and risks of such investment.
(v) Ability of Purchaser to Bear Risk of Investment. Such
Purchaser acknowledges that the Securities are speculative investments and
involve a high degree of risk and such Purchaser is able to bear the economic
risk of an investment in the Securities to be acquired hereunder by such
Purchaser, and, at the present time, is able to afford a complete loss of such
investment.
(vi) Access to Information. Such Purchaser acknowledges receipt of
the Disclosure Materials and further acknowledges that it has been afforded (i)
the opportunity to ask such questions as it has deemed necessary of, and to
receive answers from, representatives of the Company concerning the terms and
conditions of the offering of the Securities, and the merits and risks of
investing in the Securities, (ii) access to information about the Company and
the Company's financial condition, results of operations, business, properties,
management and prospects sufficient to enable it to evaluate its investment, and
(iii) the opportunity to obtain such additional information which the Company
possesses or can acquire without unreasonable effort or expense that is
necessary to make an informed investment decision with respect to the investment
and to verify the accuracy and completeness of the information contained in the
Disclosure Materials. Neither such inquiries nor any other investigation
conducted by or on behalf of such Purchaser or its representatives or counsel
shall modify, amend or affect such Purchaser's right to rely on the truth,
accuracy and completeness of the Disclosure Materials and the Company's
representations and warranties contained in the Transaction Documents.
(vii) Reliance. Such Purchaser understands and acknowledges that
(i) the Securities to be acquired by it hereunder are being offered and sold to
it without registration under the Securities Act in a private placement that is
exempt from the registration provisions of the Securities Act and (ii) the
availability of such exemption, depends in part on, and the Company will rely
upon the accuracy and truthfulness of, the foregoing representations and such
Purchaser hereby consents to such reliance.
The Company acknowledges and agrees that the Purchaser makes no
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 2.2.
ARTICLE 8.
OTHER AGREEMENTS OF THE PARTIES
3(a) Transfer Restrictions. (i) Securities may only be disposed of pursuant
to an effective registration statement under the Securities Act, to the Company
or pursuant to an available exemption from or in a transaction not subject to
the registration requirements thereof. In connection with any transfer of any
Securities other than pursuant to an effective registration statement or to the
Company, the Company may require the transferor thereof to provide to the
Company an opinion of counsel selected by the transferor, the form and substance
of which opinion shall be reasonably satisfactory to the Company, to the effect
that such transfer does not require registration under the Securities Act.
Notwithstanding the foregoing, the Company hereby consents to and agrees to
register (i) any transfer of Securities by one Purchaser to another Purchaser,
and agrees that no documentation other than executed transfer documents shall be
required for any such transfer, and (ii) any transfer by any Purchaser to an
Affiliate of such Purchaser or to an Affiliate of another Purchaser, or any
transfers among any such Affiliates provided in each case of clauses (i) and
(ii) the transferee certifies to the Company that it is an "accredited investor"
as defined in Rule 501(a) under the Securities Act. Any such Purchaser or
Affiliate transferee shall have the rights of a Purchaser under this Agreement
and the Registration Rights Agreement.
(ii) The Purchaser agrees to the imprinting, so long as is
required by this Section 3.1(b), of the following legend on the Securities:
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE [CONVERTIBLE] [EXERCISABLE] HAVE BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY
STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT
BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN
A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
[FOR PREFERRED STOCK ONLY] THESE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND CONVERSION SET FORTH IN
SECTION 3.8 OF A CONVERTIBLE STOCK PURCHASE AGREEMENT, DATED AS OF DECEMBER
___, 1997, BETWEEN SAY YES FOODS, INC. (THE "COMPANY") AND THE ORIGINAL
HOLDERS HEREOF. A COPY OF THAT AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE
OF THE COMPANY.
Underlying Shares shall not contain the legend set forth above if
the conversion of Preferred Stock, exercise of Warrants or other issuances of
Underlying Shares in as contemplated hereby, as the case may be, occurs at any
time while an Underlying Shares Registration Statement is effective under the
Securities Act or, in the event there is not an effective Underlying Shares
Registration Statement at such time, if in the opinion of counsel to the Company
such legend is not required under applicable requirements of the Securities Act
(including judicial interpretations and pronouncements issued by the staff of
the Commission). The Company agrees that it will provide the Purchaser, upon
request, with a certificate or certificates representing Underlying Shares, free
from such legend at such time as such legend is no longer required hereunder.
The Company may not make any notation on its records or give instructions to any
transfer agent of the Company which enlarge the restrictions of transfer set
forth in this Section 3.1(b).
3(b) Acknowledgement of Dilution. The Company acknowledges that the
issuance of Underlying Shares upon (i) conversion of the Preferred Stock and as
payment of interest thereon and (ii) exercise of the Warrants may result in
dilution of the outstanding shares of Common Stock, which dilution may be
substantial under certain market conditions. The Company further acknowledges
that its obligation to issue Underlying Shares, as provided in the Transaction
Documents, is not and shall not be effected by any such dilution.
3(c) Furnishing of Information. As long as the Purchaser owns Securities,
the Company covenants to timely file (or obtain extensions in respect thereof
and file within the applicable grace period) all reports required to be filed by
the Company after the date hereof pursuant to Section 13(a) or 15(d) of the
Exchange Act. If at any time prior to the date on which the Purchaser may resell
all of its Underlying Shares without volume restrictions pursuant to Rule 144(k)
promulgated under the Securities Act (as determined by counsel to the Company
pursuant to a written opinion letter to such effect, addressed and acceptable to
the Company's transfer agent for the benefit of and enforceable by the
Purchaser) the Company is not required to file reports pursuant to such
sections, it will prepare and furnish to the Purchaser and make publicly
available in accordance with Rule 144(c) promulgated under the Securities Act
annual and quarterly financial statements, together with a discussion and
analysis of such financial statements in form and substance substantially
similar to those that would otherwise be required to be included in reports
required by Section 13(a) or 15(d) of the Exchange Act in the time period that
such filings would have been required to have been made under the Exchange Act.
The Company further covenants that it will take such further action as any
holder of Securities may reasonably request, all to the extent required from
time to time to enable such Person to sell Securities without registration under
the Securities Act within the limitation of the exemptions provided by Rule 144
promulgated under the Securities Act, including the legal opinion referenced
above in this Section. Upon the request of any such Person, the Company shall
deliver to such Person a written certification of a duly authorized officer as
to whether it has complied with such requirements.
3(d) Use of Disclosure Materials. The Company consents to the use of the
Disclosure Materials and any information provided by or on behalf of the Company
pursuant to Section 3.3, and any amendments and supplements thereto, by the
Purchaser in connection with resales of the Securities other than pursuant to an
effective registration statement.
3(e) Blue Sky Laws. In accordance with the Registration Rights Agreement,
the Company shall qualify the Underlying Shares under the securities or Blue Sky
laws of such jurisdictions as the Purchaser may request and shall continue such
qualification at all times until the Purchaser notifies the Company in writing
that they no longer own Securities; provided, however, that neither the Company
nor its Subsidiaries shall be required in connection therewith to qualify as a
foreign corporation where they are not now so qualified or to take any action
that would subject the Company to general service of process in any such
jurisdiction where it is not then so subject.
3(f) Integration. The Company shall not and shall use its best efforts to
ensure that no Affiliate shall sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in Section 2 of the
Securities Act) that would be integrated with the offer or sale of the
Securities in a manner that would require the registration under the Securities
Act of the issue or sale of the Securities to the Purchaser.
3(g) Increase in Authorized Shares. At such time as the Company would be,
if a notice of conversion or exercise (as the case may be) were to be delivered
on such date, precluded from (a) converting the full outstanding principal
amount of Preferred Stock (and paying any accrued but unpaid dividends in
respect thereof in shares of Common Stock) that remain unconverted at such date
or (b) honoring the exercise in full of the Warrants due to the unavailability
of a sufficient number of shares of authorized but unissued or re-acquired
Common Stock, the Board of Directors of the Company shall promptly (and in any
case within 30 Business Days
from such date) prepare and mail to the shareholders of the Company proxy
materials requesting authorization to amend the Company's restated certificate
of incorporation to increase the number of shares of Common Stock which the
Company is authorized to issue to at least such number of shares as reasonably
requested by the Purchaser in order to provide for such number of authorized and
unissued shares of Common Stock to enable the Company to comply with its
conversion, exercise and reservation of shares obligations as set forth in this
Agreement, the Preferred Stock and the Warrants. In connection therewith, the
Board of Directors shall (a) adopt proper resolutions authorizing such increase,
(b) recommend to and otherwise use its best efforts to promptly and duly obtain
stockholder approval to carry out such resolutions (and hold a special meeting
of the shareholders no later than the 60th day after delivery of the proxy
materials relating to such meeting) and (c) within 5 Business Days of obtaining
such shareholder authorization, file an appropriate amendment to the Company's
certificate of incorporation to evidence such increase.
3(h) Purchaser Ownership of Common Stock. The Purchaser shall not convert
Preferred Stock or exercise its Warrant to the extent such conversion or
exercise would result in such Purchaser beneficially owning (as determined in
accordance with Section 13(d) of the Exchange Act and the rules thereunder) in
excess of 4.999% of the then issued and outstanding shares of Common Stock,
including shares issuable upon conversion of the Preferred Stock held by such
Purchaser after application of this Section. To the extent that the limitation
contained in this Section applies, the determination of whether Preferred Stock
are convertible (in relation to other securities owned by a Purchaser) and of
which portion of the principal amount of such Preferred Stock are convertible
shall be in the sole discretion of such Purchaser, and the submission of
Preferred Stock for conversion shall be deemed to be such Purchaser's
determination of whether such Preferred Stock are convertible (in relation to
other securities owned by a Purchaser) and of which portion of such Preferred
Stock are convertible, in each case subject to such aggregate percentage
limitation, and the Company shall have no obligation to verify or confirm the
accuracy of such determination. Nothing contained herein shall be deemed to
restrict the right of a Purchaser to convert Preferred Stock at such time as
such conversion will not violate the provisions of this Section. The provisions
of this Section may be waived by a Purchaser as to itself (and solely as to
itself) upon not less than 75 days prior notice to the Company, and the
provisions of this Section shall continue to apply until such 75th day (or
later, if stated in the notice of waiver).
3(i) Listing of Underlying Shares. The Company will use its commercially
reasonable efforts to list the Common Stock for trading on either the Nasdaq
SmallCap Market or Nasdaq National Market as soon as possible after the Closing
Date and to maintain such listing thereafter as long as Underlying Shares are
outstanding. If the Common Stock hereafter is listed for trading on the Nasdaq
National Market, Nasdaq SmallcCap Market (or on the American Stock Exchange or
New York Stock Exchange, or any other national securities market or exchange),
then the Company shall (1) take all necessary steps to list the Underlying
Shares thereon, including the preparation of any required additional listing
application therefor covering at least the sum of (i) two times the number of
Underlying Shares as would be issuable upon a conversion in full of the then
outstanding principal amount of Preferred Stock (plus all Underlying Shares are
issuable as payment of dividends thereon, assuming all such dividends were paid
in shares of Common Stock) and upon exercise in full of the then unexercised
portion of the Warrants and (2) provide to the Purchaser evidence of such
listing, and the Company shall maintain the listing of its Common Stock on such
exchange or market. In addition, if at any time following the listing of the
Underlying Shares in accordance with the foregoing, the number of shares of
Common Stock issuable on conversion of all then outstanding shares of Preferred
Stock, on account of accrued and unpaid dividends thereon and upon exercise in
full of the Warrants is greater than the number of shares of Common Stock
theretofore listed, the Company shall promptly take such action to file an
additional shares listing application covering at least a number of shares equal
to the sum of (x) 200% of (A) the number of Underlying Shares as would then be
issuable upon a conversion in full of the Preferred Stock, and (B) the number of
Underlying Shares as would be issuable as
payment of dividends on the Preferred Stock and (y) the number of Underlying
Shares as would be issuable upon exercise in full of the Warrants.
3(j) Conversion Procedures. Exhibit E sets forth the form of Transfer
Agent Instructions which shall be executed by the Company's transfer agent prior
to the Closing Date.
3(k) Purchaser's Rights if Trading in Common Stock is Suspended or
Delisted. If at any time while any Purchaser (or any assignee thereof) owns any
Securities the Common Stock is not Actively Traded (as defined below) on the OTC
Bulletin Board (or, if after the Closing Date the Common Stock is listed on any
of the exchange, markets or trading facilities contemplated in Section 3.9, if
the Common Stock is delisted or suspended from trading on such exchange, market
or trading facility, other than as a result of the suspension of trading in
securities on such market or exchange generally, or temporary suspensions
pending the release of material information) for more than three (3) Trading
Days, then, notwithstanding anything to the contrary contained in any
Transaction Document, at a Purchaser's option exercisable by five (5) Business
Days prior written notice to the Company, the Company shall redeem all Preferred
Stock and Underlying Shares then held by the Purchaser, at an aggregate purchase
price equal to the sum of (I) the number of shares of Preferred Stock then held
by the Purchaser multiplied by the product of (1) the average Per Share Market
Value for the five (5) Trading Days immediately preceding (a) the day of such
notice or (b) the date of payment in full of the redemption price calculated
under this Section 3.11, whichever is greater, multiplied by (2) the Conversion
Ratio on the date of the repurchase notice, (II) the number of Underlying Shares
then held by the Purchaser multiplied by the average Per Share Market Value for
the five (5) Trading Days immediately preceding (A) the date of the notice or
(B) the date of payment in full by the Company of the redemption price
calculated under this Section 3.11, whichever is greater, and (III) interest on
the amounts set forth in I - II above accruing from the 5th day after such
notice until the redemption price under this Section 3.11 is paid in full at the
rate of 15% per annum. If after the Original Issue Date the Common Stock shall
be listed for trading or quoted on the Nasdaq SmallCap Market, Nasdaq National
Market or any other national securities exchange or market, this provision shall
similarly apply to any delistings or suspensions therefrom. The term "Actively
Traded" shall mean that (i) shares of Common Stock worth at least $500,000 trade
on the OTC Bulletin Board (or any other national securities exchange or market
on which the Common Stock is then listed or traded) in any five consecutive
Trading Day period and (ii) there are at least eight (8) market makers actively
making a market in the Common Stock.
3(l) Use of Proceeds. The Company shall use all of the proceeds from the
sale of the Securities for working capital purposes and not for the satisfaction
of Company debt or to redeem Company any equity or equity-equivalent securities.
Pending application of the proceeds of this placement in the manner permitted
hereby the Company will invest such proceeds in interest bearing accounts and/or
short-term, investment grade interest bearing securities.
3(m) Notice of Breaches. Each of the Company and the Purchaser shall give
prompt written notice to the other of any breach by it of any representation,
warranty or other agreement contained in any Transaction Document, as well as
any events or occurrences arising after the date hereof, which would reasonably
be likely to cause any representation or warranty or other agreement of such
party, as the case may be, contained in the Transaction Document to be incorrect
or breached as of such Closing Date. However, no disclosure by either party
pursuant to this Section shall be deemed to cure any breach of any
representation, warranty or other agreement contained in any Transaction
Document.
Notwithstanding the generality of the foregoing, the Company shall promptly
notify the Purchaser of any notice or claim (written or oral) that it receives
from any lender of the Company to the effect that the consummation of the
transactions contemplated by the Transaction Documents violates or would violate
any written agreement or understanding between such lender and the Company, and
the Company shall promptly
furnish by facsimile to the holders of the Preferred Stock a copy of any written
statement in support of or relating to such claim or notice.
3(n) Conversion Obligations of the Company. The Company shall honor
conversions of the Preferred Stock and exercises of the Warrants and shall
deliver Underlying Shares in accordance with the respective terms and conditions
and time periods set forth in the Preferred Stock and the Warrants.
3(o) Right of First Refusal; Subsequent Registrations; Certain Corporate
Actions. (i) The Company shall not, directly or indirectly, without the prior
written consent of Encore Capital Management, L.L.C. ("Encore"), offer, sell,
grant any option to purchase, or otherwise dispose of (or announce any offer,
sale, grant or any option to purchase or other disposition) any of its or its
Affiliates' equity or equity-equivalent securities or any instrument that
permits the holder thereof to acquire Common Stock at any time over the life of
the security or investment at a price that is less than the market price of the
Common Stock at the time of issuance of such security or investment (a
"Subsequent Financing") for a period of 180 days after the Closing Date, except
(i) the granting of options or warrants to employees, officers and directors,
and the issuance of shares upon exercise of options granted, under any stock
option plan heretofore or hereinafter duly adopted by the Company, (ii) shares
issued upon exercise of any currently outstanding warrants and upon conversion
of any currently outstanding convertible preferred stock in each case disclosed
in Schedule 3.1(c), and (iii) shares of Common Stock issued upon conversion of
Preferred Stock, as payment of dividends thereon, or upon exercise of the
Warrants in accordance with their respective terms, unless (A) the Company
delivers to Encore a written notice (the "Subsequent Financing Notice") of its
intention effect such Subsequent Financing, which Subsequent Financing Notice
shall describe in reasonable detail the proposed terms of such Subsequent
Financing, the amount of proceeds intended to be raised thereunder, the Person
with whom such Subsequent Financing shall be affected, and attached to which
shall be a term sheet or similar document relating thereto and (B) Encore shall
not have notified the Company by 5:00 p.m. (New York City time) on the tenth
(10th) Trading Day after its receipt of the Subsequent Financing Notice of its
willingness to cause the Purchaser to provide (or to cause its sole designee to
provide), subject to completion of mutually acceptable documentation, financing
to the Company on substantially the terms set forth in the Subsequent Financing
Notice. If Encore shall fail to notify the Company of its intention to enter
into such negotiations within such time period, the Company may effect the
Subsequent Financing substantially upon the terms and to the Persons (or
Affiliates of such Persons) set forth in the Subsequent Financing Notice;
provided, that the Company shall provide Encore with a second Subsequent
Financing Notice, and Encore shall again have the right of first refusal set
forth above in this paragraph (a), if the Subsequent Financing subject to the
initial Subsequent Financing Notice shall not have been consummated for any
reason on the terms set forth in such Subsequent Financing Notice within thirty
(30) Trading Days after the date of the initial Subsequent Financing Notice with
the Person (or an Affiliate of such Person) identified in the Subsequent
Financing Notice.
(ii) Except Underlying Shares and other "Registrable Securities"
(as such term is defined in the Registration Rights Agreement) to be registered
in accordance with the Registration Rights Agreement, and other than Company
securities to be registered for resale in connection with financings permitted
pursuant to paragraph (a)(i) through (iii) of this Section, the Company shall
not, without the prior written consent of the Purchaser, (i) issue or sell any
of its or any of its Affiliates' equity or equity-equivalent securities pursuant
to Regulation S promulgated under the Securities Act, or (ii) register for
resale any securities of the Company for a period of not less than 90 Trading
Days after the date that the Underlying Shares Registration Statement is
declared effective by the Commission. Any days that a Purchaser is unable to
sell Underlying Shares under the Underlying Shares Registration Statement shall
be added to such 90 Trading Day period for the purposes of (i) and (ii) above.
(iii) As long as there are shares of Preferred Stock
outstanding, the Company shall
not and shall cause the Subsidiaries not to, without the consent of the holders
of the Preferred Stock, (i) amend its certificate of incorporation, bylaws or
other charter documents so as to adversely affect any rights of the holders of
Preferred Stock; (ii) repay, repurchase or offer to repay, repurchase or
otherwise acquire shares of its Common Stock other than as to the Underlying
Shares; or (iii) enter into any agreement with respect to any of the foregoing.
3(p) The Warrants. At the Closing, the Company shall issue to the
Purchaser, a Common Stock purchase warrant, in the form of Exhibit D (the
"Warrants"), pursuant to which the Purchaser shall have the right at any time
and from time to time thereafter through the fifth anniversary of the date of
issuance thereof, to acquire 187,500 shares of Common Stock at an exercise price
per share equal to $2.50 per share.
3(q) Transfer of Intellectual Property Rights. Except in connection with
the sale of all or substantially all of the assets of the Company, the Company
shall not transfer, sell or otherwise dispose of, any Intellectual Property
Rights, or allow the Intellectual Property Rights to become subject to any
Liens, or fail to renew such Intellectual Property Rights (if renewable and
would otherwise expire), without the prior written consent of the Purchaser.
3(r) Certain Securities Laws Disclosures; Publicity. (a) The Company shall
timely file with the Commission a Form D promulgated under the Securities Act as
required under Regulation D promulgated under the Securities Act and provide a
copy thereof to the Purchaser promptly after the filing thereof. The Company
shall file with the Commission (i) a press release acceptable to the Purchaser
disclosing the transactions contemplated hereby within three (3) Business Days
after the Closing Date and (ii) a Report on Form 8-K disclosing this Agreement
and the transactions contemplated hereby within ten (10) Business Days after the
Closing Date.
(b) In furtherance and in addition to the obligation of the
Company set forth in Section 3.18(a) above, the Company and the Purchaser shall
consult with each other in issuing any press releases or otherwise making public
statements with respect to the transactions contemplated hereby and neither
party shall issue any such press release or otherwise make any such public
statement without the prior written consent of the other, which consent shall
not be unreasonably withheld or delayed, except that no prior consent shall be
required if such disclosure is required by law, in which such case the
disclosing party shall provide the other party with prior notice of such public
statement.
3(s) Reimbursement. In the event that any Purchaser, other than by reason
of its gross negligence or willful misconduct, becomes involved in any capacity
in any action, proceeding or investigation brought by or against any person,
including stockholders of the Company, in connection with or as a result of the
consummation of the transactions contemplated pursuant to the Transaction
Documents, the Company will reimburse such Purchaser for its legal and other
expenses (including the cost of any investigation and preparation) incurred in
connection therewith. In addition, with respect to the Purchaser, other than
with respect to any matter in which such Purchaser is a named party, the Company
will pay such Purchaser the charges, as reasonably determined by such Purchaser,
for the time of any officers or employees of such Purchaser devoted to appearing
and preparing to appear as witnesses, assisting in preparation for hearings,
trials or pretrial matters, or otherwise with respect to inquiries, hearings,
trials, and other proceedings relating to the subject matter of this Agreement.
The reimbursement obligations of the Company under this paragraph shall be in
addition to any liability which the Company may otherwise have, shall extend
upon the same terms and conditions to any Affiliate of the Purchaser and
partners, directors, agents, employees and controlling persons (if any), as the
case may be, of the Purchaser and any such other person or entity, and shall be
binding upon and inure to the benefit of any successors, assigns, heirs and
personal representatives of the Company, the Purchaser and any other such
person or entity. The Company also agrees that no Purchaser or any such
affiliates, partners, directors, agents, employees or controlling persons shall
have any liability to the Company or any person asserting claims on behalf of or
in right of the Company in connection with or as a result of the consummation of
the Transaction Documents except to the extent that any losses, claims, damages,
liabilities or expenses incurred by the Company result from the gross negligence
or willful misconduct of such Purchaser or entity in connection with the
transactions contemplated by this Agreement.
ARTICLE 9.
MISCELLANEOUS
4(a) Fees and Expenses. The Company shall pay the Purchaser at the
Closing (i) $15,000 for its legal fees and disbursements in connection with the
preparation and negotiation of the Transaction Documents and (ii) $7,000 for its
due diligence expenses and disbursements in connection with the transactions
contemplated hereby. Other than the amounts contemplated by the immediately
preceding sentence, and except as set forth in the Registration Rights
Agreement, each party shall pay the fees and expenses of its advisers, counsel,
accountants and other experts, if any, and all other expenses incurred by such
party incident to the negotiation, preparation, execution, delivery and
performance of this Agreement. The Company shall pay all stamp and other taxes
and duties levied in connection with the issuance of the Preferred Stock
pursuant hereto. The Purchaser shall be responsible for its own respective tax
liability that may arise as a result of the investment hereunder or the
transactions contemplated by this Agreement.
4(b) Entire Agreement; Amendments. This Agreement, together with
the Exhibits and Schedules hereto, the Preferred Stock and the Warrants contain
the entire understanding of the parties with respect to the subject matter
hereof and supersede all prior agreements and understandings, oral or written,
with respect to such matters.
4(c) Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Section prior to 7:00 p.m. (New
York City time) on a Business Day, (ii) the Business Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in the Purchase Agreement later than 7:00
p.m. (New York City time) on any date and earlier than 11:59 p.m. (New York City
time) on such date, (iii) the Business Day following the date of mailing, if
sent by nationally recognized overnight courier service, or (iv) upon actual
receipt by the party to whom such notice is required to be given. The address
for such notices and communications shall be as follows:
If to the Company: Say Yes Foods, Inc.
0000 Xxxxx Xxxxxxx
Xxxxx Xx. 0
Xxx Xxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Chief Financial Officer
With copies to: Stibel & Toulan LLP
000 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Facsimile No.: (000)000-0000
Attn: Xxx X. Xxxxxx, Xx., Esq.
If to the
Purchaser: JNC Opportunity Fund Ltd.
Olympia Capital (Cayman) Ltd.
c/o Olympia Capital (Bermuda) Ltd.
Xxxxxxxx Xxxxx, 00 Xxxx Xxxxxx
Xxxxxxxx XX00, Xxxxxxx
Facsimile No.: (000) 000-0000
Attn: Xxxx Xxxxx
With copies to (for Encore Capital Management, L.L.C.
communications to 00000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
either Purchaser): Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxx X. Xxxx
-and-
Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx &
Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxx X. Xxxxx, Esq.
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
4(d) Amendments; Waivers. No provision of this Agreement may be
waived or amended except in a written instrument signed, in the case of an
amendment, by both the Company and the Purchaser; or, in the case of a waiver,
by the party against whom enforcement of any such waiver is sought. No waiver of
any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any other provision, condition or requirement hereof, nor shall any delay or
omission of either party to exercise any right hereunder in any manner impair
the exercise of any such right accruing to it thereafter.
4(e) Headings. The headings herein are for convenience only, do
not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.
4(f) Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and permitted
assigns. The Company may not assign this Agreement or any rights or obligations
hereunder without the prior written consent of the Purchaser. Except as set
forth in Section 3.1(a), neither Purchaser may assign this Agreement or any
rights or obligations hereunder without the prior written consent of the
Company. The assignment by a party of this Agreement or any rights hereunder
shall not affect the obligations of such party under this Agreement.
4(g) No Third-Party Beneficiaries. This Agreement is intended for
the benefit of the parties hereto and their respective permitted successors and
assigns and, other than with respect to permitted assignees under Section 4.6,
is not for the benefit of, nor may any provision hereof be enforced by, any
other person.
4(h) Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York without regard to the principles of conflicts of law thereof. Each party
hereby irrevocably submits to the non-exclusive jurisdiction of the state and
federal courts sitting in the City of New York, borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of the any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper. Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof to such party at the
address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law.
4(i) Survival. The representations, warranties, agreements and
covenants contained in this Agreement shall survive the Closing and the and
conversion of the Preferred Stock and exercise of the Warrants.
4(j) Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
4(k) Severability. In case any one or more of the provisions of
this Agreement shall be invalid or unenforceable in any respect, the validity
and enforceability of the remaining terms and provisions of this Agreement shall
not in any way be affecting or impaired thereby and the parties will attempt to
agree upon a valid and enforceable provision which shall be a reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have caused this Preferred
Stock Purchase Agreement to be duly executed by their respective authorized
persons as of the date first indicated above.
SAY YES FOODS, INC.
By:___________________________
Name:
Title:
JNC OPPORTUNITY FUND LTD.
By:___________________________
Xxxx Xxxxx
Director
--------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
Among
SAY YES FOODS, INC.,
and
JNC OPPORTUNITY FUND LTD.
-----------------------------
December ___, 1997
------------------------------
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