STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made as of the 15th day of September,
1997, by and between Odyssey Pictures Corporation, a Nevada corporation (the
"Company"), and Kinnevik Media Properties, Ltd., a Delaware corporation
("Investor").
THE PARTIES HEREBY AGREE AS FOLLOWS:
Purchase and Sale of Stock.
Stock.
(a) Sale and Issuance of Series A Preferred
i. The Company, through its Board of Directors, shall adopt and file with
the Company's corporate records the Resolutions of the Board of Directors
authorizing Series A Preferred Stock in accordance with the Company's Articles
of Incorporation and the Statement of Designations in the form attached hereto
as Exhibit A (the "Statement of Designations").
ii. Subject to the terms and conditions of this Agreement, the Investor
agrees to purchase and the Company agrees to sell and issue to the Investor
500,000 shares of the Series A Preferred Stock in consideration of $500,000 as
follows:
(1) An aggregate of $250,000 at the Closing consisting of
$150,000 in ready funds and the application of the $100,000
Advance, pursuant to and in accordance with that certain letter
agreement between the Company and Investor dated as of July 8,
1997, as a credit towards this payment, with the accrued interest
on such Advance being applied to the final Promissory Note below;
and
(2) Investor's delivery of two (2) Promissory Notes in the
following amounts and with the following maturity dates:
1. $125,000 payable 90 days after the Closing (the 1190 Day Note,,);
and
11. $125,000 payable 270 days after the Closing (the 11270 Day
Note").
iii. Notwithstanding the foregoing, Investor agrees that it will pay the
Company an additional $100,000 (to be applied in the manner described below) on
the earlier of (x) 30 immediately prior to the Closing, of:
(i) Preferred Stock. 10,000,000 shares authorized, par value $0.10 per
share, none of which are outstanding prior to the Closing.
(ii) Common Stock. 40,000,000 shares authorized, par value $0.01 per
share, 4,456,637 of which are outstanding.
(iii) Class A Stock. 10,000,000 shares authorized, par value $0.01 per
share, none of which are outstanding.
(iv) The outstanding shares of Common Stock are all duly and validly
authorized and issued, fully paid and nonassessable, and were issued in
accordance with the registration or qualification provisions of the
Securities Act of 1933, as amended (the "Act") and any relevant state
securities laws or pursuant to valid exemptions therefrom.
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(c) Authorization. All corporate action on the part of the Company,
its officers, directors and shareholders necessary for the authorization,
execution and delivery of this Agreement, the performance of all
obligations of the Company hereunder, and the authorization, issuance (or
reservation for issuance), sale and delivery of the Series A Preferred
Stock being sold hereunder and the Common Stock issuable upon conversion of
the Series A Preferred Stock has been taken or will be taken prior to the
Closing, and this Agreement constitutes the valid and legally binding
obligation of the Company, enforceable in accordance with its terms, except
(x) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, and other laws of general application affecting enforcement of
creditors' rights generally and (y) as limited by laws relating to the
availability of specific enforcement, injunctive relief, or other equitable
remedies.
(d) Valid Issuance of Preferred Stock. The Series A Preferred Stock
that is being purchased by the Investor hereunder, when issued, sold and
delivered in accordance with the terms of this Agreement for the
consideration expressed herein, will be duly and validly issued, fully paid
and nonassessable and will be issued in compliance with all applicable
federal and state securities laws. The Common Stock issuable upon
conversion of the Series A Preferred Stock purchased under this Agreement
has been duly and validly reserved for issuance and, upon issuance in
accordance with the terms of the Articles of Incorporation and the enabling
resolutions, will be duly and validly issued, fully paid and nonassessable
and will be issued in compliance with all applicable federal and state
securities laws.
(e) Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration
or filing with, any federal, state or local governmental authority on the
part of the Company is required in connection with the consummation of the
transactions contemplated by this Agreement except to the extent required
to comply with all applicable federal and state securities laws.
(f) Compliance with Other Instruments. The Company is not in violation
or default of any provision of its Articles of Incorporation or Bylaws, or
in any material respect of any instrument, judgment, order, writ, decree or
contract to which it is a party or by which it is bound, except as set
forth in the Registration Statement (as hereinafter defined), or, to the
best of its knowledge, of any provision of any federal or state statute,
rule or regulation applicable to the Company. The execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, will not result in any such violation or be in
conflict with or constitute, with or without the passage of time and giving
of notice, either a default under any such provision, instrument, judgment,
order, writ, decree or contract or any event that results in the creation
of any material lien, charge or encumbrance upon any assets of the Company.
(g) Disclosure. The Company has fully provided the Investor with all
the information that it has requested for deciding whether to purchase the
Series A Preferred Stock. To the Company's best knowledge, neither this
Agreement, nor any other statements or certificates made or delivered in
connection herewith contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements herein or
therein not misleading.
3.Representations and Warranties of Investor.
(a) Authorization. The Investor has full power and authority to enter
into this Agreement and all corporate action on the part of Investor, its
officers, directors and shareholders necessary for the authorization,
execution and delivery of this Agreement and the performance of all
obligations of Investor hereunder, has been taken or will be taken prior to
the Closing, and this Agreement constitutes the valid and legally binding
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obligation of the Investor, enforceable in accordance with its terms,
except (x) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, and other laws of general application affecting enforcement of
creditors' rights generally and (y) as limited by laws relating to the
availability of specific enforcement, injunctive relief, or other equitable
remedies.
(b) Compliance with Other Instruments. The Investor is not in
violation or default of any provision of its Articles of Incorporation or
Bylaws, or in any material respect of any instrument, judgment, order,
writ, decree or contract to which it is a party or by which it is bound,
or, to the best of its knowledge, of any provision of any federal or state
statute, rule or regulation applicable to Investor. The execution, delivery
and performance of this Agreement, and the consummation of the transactions
contemplated hereby, will not result in any such violation or be in
conflict with or constitute, with or without the passage of time and giving
of notice, either a default under any such provision, instrument, judgment,
order, writ, decree or contract or any event that results in the creation
of any material lien, charge or encumbrance upon any assets of Investor.
(c) Investor is acquiring the securities being purchased hereunder for
its own account as principal, not as a nominee or agent, for investment
purposes only, and not with a view to the resale or distribution thereof,
and no other person has a direct or indirect interest in such securities or
any component thereof. Investor does not have any contract, undertaking,
agreement, or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any
of the securities for which Investor is subscribing.
(d) Investor acknowledges that the offering of the Series A Preferred
Stock to Investor (the "Offering") is intended to be exempt from
registration under the Act by virtue of Sections 3(b) and/or 4(2) of the
Act and the provisions of Regulation D promulgated thereunder ("Regulation
D11). In furtherance thereof, Investor represents and warrants to the
Company as follows:
(i) Investor has the financial ability to bear the economic risk of
its investment in the Company, has adequate means of providing for its
current needs and financial contingencies, and has no need for liquidity
with respect to its investment in the Company; and
(ii) Investor has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of an
investment in the Company.
(e) Pursuant to Rule 502 of Regulation D, Investor acknowledges that
it has received the following from the Company: (i) Report on Form 10-K for
the fiscal year ended June 30, 1996, (ii) definitive Proxy Statement for
the Company relating to the Annual Meeting of Shareholders of the Company
held on November 22, 1996, (iii) Annual Report to Shareholders for the
fiscal year ended June 30, 1996, (iv) Quarterly Reports on Form 10-Q for
the quarters ended September 30, 1996, December 31, 1996, and March 31,
1997, and (v) Amendment No. 4 to Registration Statement on Form S-1, dated
August 11, 1997 (copies of all of which are incorporated herein by
reference).
(f) Investor has been provided an opportunity for a reasonable time
prior to the date hereof to obtain additional information concerning the
Offering, the Company and all other information to the extent the Company
possesses such information or can acquire it without unreasonable effort or
expense, and Investor has been given the opportunity to ask questions of
the Company and its representatives concerning the terms and conditions of
the Offering and other matters pertaining to an investment in the Company.
(g) Investor is not relying on any statements or representations made
by the Company or its affiliates with respect to economic considerations
involved in an investment in the Company. No representations or warranties
have been made to Investor except as set forth herein.
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(h) Investor fully understands and agrees that i must bear the
economic risk of its investment in the Company because, among other
reasons, the securities being purchased hereunder (including any
dividends-in-kind paid thereon and any shares of Common Stock into which
such securities shall be converted) have not been registered under the Act
and therefore cannot be resold, pledged, transferred, assigned or otherwise
disposed of unless they are subsequently registered under the Act or unless
an exemption from such registration requirements is available. Investor
understands that such securities will contain an appropriate legend
restricting transferability until such securities are registered under the
Act or an exemption therefrom is available.
4. As additional consideration for this agreement, the Company shall
endeavor to do the following during the 5 year term commencing on the date
of the Closing:
(a) Grant to Investor, on mutually acceptable terms, television
distribution rights to motion pictures owned or controlled, or to be owned
or controlled by the Company (provided however, that Investor acknowledges
that the Company is in the business of motion picture distribution and that
the Company may and shall grant to third parties television distribution
rights to the Company's pictures in conjunction with the Company's
distribution efforts, which actions by the Company shall not be deemed to
be in violation of the Company's obligations under this Agreement);
(b) The Company shall endeavor to secure television distribution
rights for Investor from third party sources; and
a) The Company shall endeavor to introduce various projects to
Investor that would be of possible interest to Investor.
As and when Investor acquires rights resulting from the Company's
efforts hereunder, the parties shall mutually determine the value of such
services and such agreed upon value shall serve to redeem shares of the
Series A Preferred Stock (including any dividends paid-in-kind thereon, and
any shares of Common Stock into which such shares of Series A Preferred
Stock shall have been converted) that have been issued to Investor at the
rate of one share for each dollar of agreed upon value.
5. APPLICABLE LAW. This Agreement and all matters collateral thereto
shall be governed by New York law applicable to contracts executed and
performed entirely within New York. Any controversy or claim arising out of
or relating to this Agreement including, without limitation, the
interpretation or the breach thereof, shall be settled by arbitration in
the City, County and State of New York in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then obtaining,
and judgment upon the award rendered by a panel of three (3) Arbitrators
may be entered in any court having jurisdiction thereof. Notwithstanding
the foregoing, this agreement to arbitrate shall not bar either party from
seeking temporary or provisional remedies in any court having jurisdiction
thereof.
6. MODIFICATION. This Agreement cannot be modified except by written
agreement signed by the party to be charged.
7. SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties
(including transferees of any securities). Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the
parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
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8. SEVERABILITY. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted
as if such provision were so excluded and shall be enforceable in
accordance with its terms.
9.NOTICES.
(a) All notices to be sent to Investor shall be sent by fax and
registered or certified mail (with delivery deemed to be the date of
mailing) to:
Kinnevik media Properties, Ltd.
000 Xxxxx Xxxxxx 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxx, President
Telefax Number: (000) 000-0000
with a copy to:
Pavia & Harcourt
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Jordan X. Xxxxxx, Esq.
Telef ax Number: (000) 000-0000
(b) All notices to be sent to Seller shall be sent by fax and
registered or certified mail (with delivery deemed to be the date of
mailing) to:
Mr. Xxx Xxxxx
000 Xxxx 00xx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Messrs. Xxxxxxx Xxxxxxxxx and
Xxx Xxxxx
Telefax Number:(000) 000-0000
with a copy to:
Xxxxxx X. Xxxxxx, P.C.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telefax no. 000-000-0000
10.AGREEMENT COMPLETE.
This Agreement (together with the Exhibits attached hereto) contains
the entire understanding of the parties and, without limiting the
foregoing, supersedes and replaces any and all previous understandings
and/or agreements between the parties hereto concerning the subject matter
hereof. No such prior understanding or agreement may be used by either
party hereto to establish, deny, maintain, or challenge a claim for damages
in any legal proceeding concerning a dispute hereunder except as may be
permitted by the applicable "parole evidence rule" and/or related law.
Neither of the parties hereto has made any representation, warranty,
covenant, or undertaking of any nature whatsoever, expressed or implied, in
connection with or relating to this Agreement other than as herein
expressly set forth.
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IN WITNESS WHEREOF, the parties have executed this Stock Purchase
Agreement as of the date first written above.
KINNEVIK MEDIA PROPERTIES, LTD.
By:/s/ Xxxxxx X. Xxxxxx
-----------------------
Xxxxxx X. Xxxxxx
President
AGREED TO AND ACCEPTED:
ODYSSEY PICTURES CORPORATION
By:/s/ Xxx X. Xxxxx
-------------------
Xxx X. Xxxxx
President
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STATEMENT OF DESIGNATIONS
The relative designations, powers, preferences, rights,
qualifications, limitations and restrictions of the Corporation's Preferred
Stock, Series A (the "Series A Stock") are as follows:
1. Dividend Rate. The Series A Stock shall be entitled to a dividend
at the rate of 10% per annum, payable semi-annually in kind on a
non-compounded basis by the issuance of additional shares of Series A Stock
at the annual rate of one additional share of Series A Stock for every ten
(10) shares of Series A Stock then outstanding.
2. Conversion. During the five-year period following the date of
issuance of the Series A Stock (the "Five-Year Period"), the registered
holders thereof (the "Registered Holders") shall have the option to convert
the Series A Stock (and any dividends - in-kind paid thereon) into shares
of Common Stock of the Corporation on a share for share basis (a
"Conversion"), on the following terms and conditions:
a) During the Five-Year Period, any Registered Holder may effect a
Conversion at any time without the consent of the Corporation provided
that, upon completion of the Conversion, the shares of Common Stock
received upon the Conversion, together with all other shares of Common
Stock of the Corporation then "beneficially owned" by such Registered
Holder (as the term "beneficially owned" is defined in the Securities
Exchange Act of 1934), do not exceed 4.9% of the total amount of shares of
Common Stock of the Corporation then outstanding at the time of the
Conversion (inclusive of all shares of Common Stock deemed to be
beneficially owned by such Registered Holder);
b) In the event a Registered Holder desires to effect a Conversion
during the Five-Year Period for a number of shares of Common Stock which
would result in an aggregate beneficial ownership in the Corporation in
excess of 4.9% (as calculated in accordance with subparagraph (a) above) ,
then the Registered Holder shall be required to obtain the prior written
consent of the Corporation with respect to such Conversion, which consent
may be granted or withheld by the Corporation in its sole and absolute
discretion, unless the closing bid price of the Corporation's Common Stock
shall be $.75 or more for 20 consecutive trading days prior to the
Registered Holder's election to effect a Conversion, in which event the
consent of the Corporation shall not be required to effect such Conversion.
c) In the event that there shall be any change in the number of
outstanding shares of Common Stock of the Corporation by reason of the
declaration of stock dividends, or through a recapitalization resulting
from stock splits or combinations, the conversion rate set forth herein
(i.e., share-for-share) shall be appropriately adjusted (but without regard
to fractional shares) by the Board of Directors to reflect such change and
not be dilutive to the holder of Series A Stock.
3. Reservation of Common Stock. So long as any shares of the Series A
Stock are outstanding, the Corporation shall reserve and keep available out
of its duly authorized but unissued stock, for the purpose of effecting the
conversion of the Series A Stock as hereinabove provided, such number of
its duly authorized shares of Common Stock and other securities as shall
from time to time be sufficient to effect the conversion of all outstanding
shares of Series A Stock.
4. Redemption. If, at any time, the closing bid price of the
Corporation's Common Stock shall be $2.00 or more for 20 consecutive
trading days, then the Corporation shall have the right to call for the
redemption of all outstanding shares of the Series A Stock (including
dividends-in-kind paid thereon), in whole or in part, at a purchase price
of $1.25 per share, upon written notice to the registered holders thereof;
provided, however, upon receipt of such notice, the registered holders
shall have the option, for a period of ten (10) business days, upon written
notice to the Corporation, to elect to exercise their conversion rights
pursuant to Paragraph 2 hereof.
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5. Preference on Liquidation. Upon any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, the
registered holders of shares of Series A Stock shall be entitled, before
any distribution or payment is made upon any Common Stock, or upon any
other series of Preferred Stock hereafter authorized, to receive all
accrued dividends with respect to the Series A Stock, and to be paid an
amount equal to $1.00 per share of Series A Stock. If upon such
liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, the assets to be distributed among the registered
holders of Series A Stock shall be insufficient to permit payment to the
holders of Series A Stock of the total amount distributable as aforesaid,
then the entire assets of the Corporation to be distributed shall be
distributed ratably among the registered holders of shares of Series A
Stock. Upon any such liquidation, dissolution or winding up of the
Corporation, after the registered holders of shares of Series A Stock shall
have been paid the amounts to which they shall be entitled, the remaining
assets of the Corporation may be distributed to the holders of shares of
Common stock and any other authorized series of Preferred Stock.
6. No Voting Rights. The Series A Stock shall not carry any voting
rights in the Corporation.
7. Piggyback Registration Rights. If, at any time after the issuance
of the Series A Stock, the Corporation proposes to register any of its
securities under the Securities Act of 1933, as amended (the "Act"), except
for registrations on Form S-8 or Form S-4 or such other form as shall be
prescribed under the Act for the same purposes, it will at each such time
give written notice to the registered holders of the Series A Stock and,
upon the written request of any registered holder of Series A Stock, the
Corporation will use its best efforts to effect the registration of said
securities (including any shares of Common Stock into which the Series A
Stock may be converted) by including same in such registration statement on
a "most favored nations" basis with any other securityholders then being
included in said registration statement, all to the extent required to
permit the sale or other disposition thereof in accordance with the
intended method of sale or other disposition given in each such request.
The holders of Series A Stock included in any such registration shall bear
the cost of any underwriters, discounts and commissions relating to their
securities included in the registration, but the Corporation shall bear all
other fees, costs and expenses related to such registration. In the event
the registration involves an underwritten public offering, and the managing
underwriter shall advise the Corporation that, in its opinion, the number
of securities included in the registration exceeds the largest number of
securities which can be sold without having an adverse effect on such
offering, including the price at which such securities can be sold, then
the number of shares of Series A Stock to be included in the registration
shall be reduced on a pro-rata basis among the registered holders of any
securities of the Corporation then being included in such registration in
accordance with the determination of said managing underwriter.
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