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Exhibit
10.13
SECURITIES PURCHASE
AGREEMENT
THIS SECURITIES PURCHASE
AGREEMENT (the “Agreement”), dated effective the
3rd day of May, 2006, is made by and between VICIS CAPITAL
MASTER FUND (the “Purchaser”), and CHINA MEDIA
NETWORKS INTERNATIONAL, INC., a Nevada corporation (the
“Company”).
Article I
SALE OF
SECURITIES
1.1 Sale of Securities
. The Company has authorized the sale to the Purchaser of a
convertible note in the original principal amount of $300,000 (the
“Note”), and up to 300,000 shares (the
“Shares”) of the Company’s common stock (the
“Common Stock”). The Note and the Shares are referred
to herein collectively as the “Securities.”
1.2 Purchase Price .
Subject to the terms and conditions hereof and on the basis of the
representations and warranties hereinafter set forth, the Company
hereby agrees to issue and sell to the Purchaser, and the Purchaser
agrees to purchase from the Company, at the Closing (as defined in
Section 1.3 hereof), the Securities. This offer is only being
made to the Purchaser as an “accredited investor” (as
defined in Rule 501 under the Securities Act of 1933, as amended
(the “Securities Act”)) in reliance upon an exemption
from registration under Section 4(2) of the Securities Act
and/or Regulation D promulgated thereunder, and on similar
exemptions under applicable state laws.
1.3 Closing . The
closing of the transactions contemplated hereunder (the
“Closing”) shall be deemed to occur at the offices of
Bingham McCutchen LLP, 150 Federal Street, Boston, MA 02110, or at
such other place as shall be mutually agreeable to the parties, at
5:00 p.m., Boston Time, on May 3, 2006 or such other date as
be mutually agreeable to the parties (the “Closing
Date”).
1.4 Closing Matters .
At the Closing the following actions shall be taken:
(a) The Purchaser shall
deliver $300,000 (the “Purchase Price”) to the Company
in immediately available United States funds; and
(b) The Company shall deliver
the Securities to the Purchaser.
(c) The Purchaser
acknowledges and agrees that the Purchase Price will be deposited
in an account maintained by the Company and that there is no escrow
of funds and all funds may be utilized by the Company upon
acceptance. There is no “minimum” sale amount and funds
may be released to the Company and closings held, from time to
time, as determined by the Company.
(d) The Company intends to
use the proceeds derived from this sale to satisfy its working
capital requirements. Management reserves the right to utilize the
net proceeds of the sale in a manner in the best interests of the
Company. The amount of the net proceeds that will be invested in
particular areas of the Company’s business will depend upon
future economic conditions and business opportunities. To the
extent that the Company continues to incur losses from operations,
such losses will be funded from its general funds, including the
net proceeds of this sale.
1.5 Convertible Debt
Financing. (a) The Purchaser acknowledges and understands
the Company intends to consummate a subsequent financing of
convertible senior secured debentures and warrants for an aggregate
sales price of not less than $1,500,000 (which amount includes the
$300,000 Purchase Price received by the Company in exchange for the
Securities being sold hereunder) (such financing, the
“Convertible Debt Financing”). The Purchaser further
acknowledges and understands that upon the consummation of the
Convertible Debt Financing, the Note issued pursuant to this
Agreement will be converted into the securities issuable in such
Convertible Debt Financing. Annexed hereto as Exhibit A is a
term sheet summarizing the principal terms and conditions relating
to the Convertible Debt Financing, and each Purchaser is strongly
encouraged to read and understand such terms prior to making its
investment in the Company.
(b) The Company further
agrees that the Purchaser shall be entitled to have the Shares
issued hereunder registered on the registration statement
contemplated by the Convertible Debt Financing, pari passu ,
with the investors in the Convertible Debt Financing. The foregoing
rights, however are subject to each Purchaser, however, agreeing to
the terms and conditions pertaining to such registration as may be
set forth in the registration rights agreement or other applicable
agreement entered into by the Company and the investors in the
Convertible Debt Financing.
Article II
REPRESENTATIONS AND
WARRANTIES OF COMPANY
The Company hereby represents
and warrants to the Purchaser as of the date of this Agreement as
follows:
(A) The Company owns,
directly or indirectly, all of the capital stock of each material
subsidiary of the Company (a “Subsidiary”) free and
clear of any and all liens, other than restrictions on transfer
under applicable securities laws, and all the issued and
outstanding shares of capital stock of each Subsidiary are validly
issued and are fully paid, non-assessable and free of preemptive
and similar rights. The Company and Subsidiary is duly organized,
validly existing and in good standing under the laws of its state
of incorporation, with all requisite power and authority to own,
lease, license, and use its properties and assets and to carry out
the business in which it is engaged, except where the failure to
have or be any of the foregoing may not be expected to have a
material adverse effect on the Company’s presently conducted
businesses. Neither the Company nor any Subsidiary is in violation
of any of the provisions of its respective certificate or articles
of incorporation, bylaws or other organizational or charter
documents. The Company and each Subsidiary is duly qualified to
transact the business in which it is engaged and is in good
standing as a foreign corporation in every jurisdiction in which
its ownership, leasing, licensing or use of property or assets or
the conduct of its business make 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, have
or reasonably be expected to result in (i) a material and
adverse effect on the legality, validity or enforceability of this
Agreement or the Note, (ii) a material and adverse effect on
the results of operations, assets, prospects, business or condition
(financial or otherwise) of the Company and the Subsidiaries, taken
as a whole, or (iii) an adverse impairment to the
Company’s ability to perform on a timely basis its
obligations hereunder (any of (i), (ii) or (iii), a
“Material Adverse Effect”).
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(B) The Company is authorized
to issue 50,000,000 shares of Common Stock, $.0001 par value per
share, and no shares of Preferred Stock, $.001 par value per share.
Except as set forth in the Company’s existing Investor Rights
Agreement dated as of December 30, 2005, no securities of the
Company are entitled to preemptive or similar rights, and no entity
or person has any right of first refusal, preemptive right, right
of participation, or any similar right to participate in the
transactions contemplated by this Agreement unless any such rights
have been waived. Except as a result of the purchase and sale of
the Securities, except as disclosed in the Company’s Annual
Report on Form 10-KSB for the fiscal year ended December 31,
2005, and except in connection with the consummation of the
Company’s reverse merger transaction consummated on
December 30, 2005, t here are no outstanding options,
warrants, scrip rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities, rights or
obligations convertible into or exchangeable for, or giving any
entity or 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. The issue and sale of the Securities will not (except
pursuant to their terms thereunder), immediately or with the
passage of time, obligate the Company to issue shares of Common
Stock or other securities to any entity or person and will not
result in a right of any holder of Company securities to adjust the
exercise, conversion, exchange or reset price under such
securities.
(C) The Company has the
requisite corporate power and authority to enter into, deliver and
consummate the transactions contemplated by this Agreement, to
issue, sell and deliver the Securities, and otherwise to carry out
its obligations hereunder. The execution and delivery of this
Agreement and the consummation by it of the transactions
contemplated thereby have been duly authorized by the Company and
no further action is required by the Company in connection
therewith. When executed and delivered by the Company, this
Agreement will constitute the legal, valid and binding obligation
of the Company, enforceable as to the Company in accordance with
its terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, arrangement, fraudulent conveyance or
transfer, moratorium or other laws or court decisions, now or
hereinafter in effect, relating to or affecting the rights of
creditors generally and as may be limited by general principles of
equity and the discretion of the court having jurisdiction in an
enforcement action (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(D) No consent,
authorization, approval, order, license, certificate or permit of
or from, or declaration or filing with, any federal, state, local
or other governmental authority or any court or any other tribunal
is required by the Company for the execution, delivery or
performance by the Company of this Agreement or the execution,
issuance, sale or delivery of the Securities.
(E) Neither the Company nor
any Subsidiary is required to obtain any consent, waiver,
authorization or order of, give any notice to, or make any filing
or registration with, any court or other federal, state, local or
other governmental authority or other person or entity in
connection with the execution, delivery and performance by the
Company of this Agreement or the issuance, sale or delivery of the
Securities other than (i) any filings required by state
securities laws, (ii) the filing of a Notice of a Sale of
Securities on Form D with the Commission under Regulation D of the
Securities Act (iii) those that have been made or obtained
prior to or contemporaneously with the date of this
Agreement.
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(F) The execution, delivery
and performance of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby
do not and will not: (i) conflict with or violate any
provision of the Company’s or any Subsidiary’s
certificate or articles of incorporation, bylaws or other
organizational or charter documents, or (ii) violate, conflict
with, or constitute a default or breach (or an event that 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 (with or without notice, lapse of time or both) of,
any agreement, credit facility, debt or other instrument
(evidencing a Company or Subsidiary debt or otherwise) or other
understanding to which the Company or any Subsidiary is a party or
by which any property or asset of the Company or any Subsidiary 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 or a Subsidiary is subject (including federal and state
securities laws and regulations), or by which any property or asset
of the Company or a Subsidiary is bound or affected; except in the
case of each of clauses (ii) and (iii), such as could not,
individually or in the aggregate, have or reasonably be expected to
result in a Material Adverse Effect.
(G) The Securities have been
duly authorized and, when issued and paid for in accordance with
this Agreement, will be duly and validly issued, fully paid and
nonassessable, will not be issued in violation of any preemptive or
other rights of stockholders, and will be issued free and clear of
all liens and encumbrances, other than restrictions on transfer
under applicable securities laws. The Company has reserved from its
duly authorized capital stock all of the Shares.
(H) Since December 30,
2005, the Company has filed all reports required to be filed by it
under the Securities Act of 1933, as amended (the “Securities
Act”), and the Exchange Act of 1934, as amended (the
“Exchange Act”), including pursuant to
Section 13(a) or 15(d) thereof, for the period from
December 30, 2005 and ending as of the date hereof (or such
shorter period as the Company was required by law to file such
reports) (the foregoing materials filed during such period being
collectively referred to herein as the “SEC Reports”)
on a timely basis or has timely filed a valid extension of such
time of filing and has filed any such SEC Reports prior to the
expiration of any such extension. As of their respective dates, the
SEC Reports complied in all material respects with the requirements
of the Securities Act and the Exchange Act and the rules and
regulations of the Commission promulgated thereunder, and none of
the SEC Reports, when filed, contained 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, in light of the circumstances under which they were made,
not misleading. The financial statements of the Company included in
the SEC Reports comply in all material respects with applicable
accounting requirements and the rules and regulations of the
Commission with respect thereto as in effect at the time of filing.
Such financial statements have been prepared in accordance with
generally accepted accounting principles in the United States
applied on a consistent basis during the periods involved
(“GAAP”), 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 and its
consolidated Subsidiaries 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,
immaterial, year-end audit adjustments.
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Article III
REPRESENTATIONS AND
WARRANTIES OF PURCHASER
By signing this Agreement,
the Purchaser hereby represents and warrants to the Company as
follows as an inducement to the Company to accept the subscription
of the Purchaser:
(A) The Purchaser
acknowledges and agrees that (i) the offering and sale of the
Securities are intended to be exempt from registration under the
Securities Act by virtue of Section 4(2) of the Securities Act
and/or Regulation D promulgated thereunder, (ii) the
Securities have not been registered under the Securities Act and
(iii) that the Company has represented to the Purchaser
(assuming the veracity of the representations of the Purchaser made
herein) that the Securities have been offered and sold by the
Company in reliance upon an exemption from registration provided in
Section 4(2) of the Securities Act and Regulation D
thereunder. In accordance therewith and in furtherance thereof, the
Purchaser represents and warrants to and agrees with the Company
that it is an accredited investor (as defined in Rule 501
promulgated under the Securities Act).
(B) The Purchaser hereby
represents and warrants that the Purchaser is acquiring the
Securities hereunder for its own account for investment and not
with a view to distribution, and with no present intention of
distributing the Securities or selling the Securities for
distribution. The Purchaser understands that the Securities are
being sold to the Purchaser in a transaction which is exempt from
the registration requirements of the Securities Act. Accordingly,
the Purchaser acknowledges that it has been advised that the
Securities have not been registered under the Securities Act and
are being sold by the Company in reliance upon the veracity of the
Purchaser’s representations contained herein and upon the
exemption from the registration requirements provided by the
Securities Act and the securities laws of all applicable states.
The Purchaser’s acquisition of the Securities shall
constitute a confirmation of the foregoing representation and
warranty and understanding thereof.
(C) The Purchaser has such
knowledge and experience in financial and business matters as is
required for evaluating the merits and risks of making this
investment, and the Purchaser has received such information
requested by the Purchaser concerning the business, management and
financial affairs of the Company in order to evaluate the merits
and risks of making this investment. Further, the Purchaser
acknowledges that the Purchaser has had the opportunity to ask
questions of, and receive answers from, the officers of the Company
concerning the terms and conditions of this investment and to
obtain information relating to the organization, operation and
business of the Company and of the Company’s contracts,
agreements and obligations or needed to verify the accuracy of any
information contained herein or any other information about the
Company. Except as set forth in this Agreement, no representation
or warranty is made by the Company to induce the Purchaser to make
this investment, and any representation or warranty not made herein
or therein is specifically disclaimed and no information furnished
to the Purchaser or the Purchaser’s advisor(s) in connection
with the sale were in any way inconsistent with the information
stated herein. The Purchaser further understands and acknowledges
that no person has been authorized by the Company to make any
representations or warranties concerning the Company, including as
to the accuracy or completeness of the information contained in
this Agreement.
(D) The Purchaser is making
the foregoing representations and warranties with the intent that
they may be relied upon by the Company in determining the
suitability of the sale of
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the Securities to the Purchaser for
purposes of federal and state securities laws. Accordingly, the
Purchaser represents and warrants that the information stated
herein is true, accurate and complete, and agrees to notify and
supply corrective information promptly to the Company as provided
above if any of such information becomes inaccurate or incomplete.
The Purchaser has completed this Agreement, has delivered it
herewith and represents and warrants that it is accurate and true
in all respects and that it accurately and completely sets forth
the financial condition of the Purchaser on the date hereof. The
Purchaser has no reason to expect there will be any material
adverse change in its financial condition and will advise the
Company of any such changes occurring prior to the
Closing.
(E) The Purchaser is not
subscribing for any of the Securities as a result of or subsequent
to any advertisement, article, notice or other communication
published in any newspaper, magazine or similar media or broadcast
over television or radio, any seminar or meeting, or any
solicitation of a subscription by a person not previously known to
the Purchaser in connection with investments in Securities
generally.
(F) The Purchaser has
received certain information regarding the Company, including this
Agreement, and other accompanying documents of the Company receipt
of which is hereby acknowledged. The Purchaser has carefully
reviewed all information provided to it and has carefully evaluated
and understands the risks described therein related to the Company
and an investment in the Company, and understands and has relied
only on the information provided to it in writing by the Company
relating to this investment. No agent prepared any of the
information to be delivered to prospective investors in connection
with this transaction. The Purchaser is advised to conduct its own
review of the business, properties and affairs of the Company
before subscribing to purchase the Securities.
(G) The Purchaser also
understands and agrees that, although the Company will use its best
efforts to keep the information provided in this Agreement strictly
confidential, the Company or its counsel may present this Agreement
and the information provided in answer to it to such parties as
they may deem advisable if called upon to establish the
availabil
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