Exhibit 10.3
LETTER AGREEMENT AND
TERMINATION OF INVESTOR RIGHTS AGREEMENT
April 2, 2009
To: The Investors (as defined
below)
Cc: Keywin Holdings
Limited
Re:
Agreement and Termination of Investor Rights Agreement (“
Termination Agreement ”)
Gentlemen:
We refer to the Investor Rights Agreement (the
“ Investor Rights Agreement ”), dated as of
November 19, 2007, by and among Network CN Inc. (the “
Company ”); Sculpture Finance (MD) Ireland
Limited, Sculpture Finance (AS) Ireland Limited and
Sculpture Finance (SI) Ireland Limited (the “ Initial
Investors ”); and OZ Master Fund, Ltd., OZ Asia Master
Fund, Ltd. and OZ Global Special Investments Master Fund, L.P.
(together with the Initial Investors, the “ Investors
”), pursuant to which, among other things, the Company
granted certain rights to the Initial Investors in connection with
their purchase of 3% Senior Secured Convertible Notes Due June 30,
2011 of the Company (the “ Original Notes ”) in
aggregate principal amount of $50,000,000, under that certain Note
and Warrant Purchase Agreement, dated as of November 19, 2007, by
and among the Company, the Investors and certain other parties
named therein, as amended by the First Amendment to the Note and
Warrant Purchase Agreement, dated as of January 31,
2008.
As you know, the Initial Investors have agreed
to transfer and sell to Keywin Holdings Limited (“
Keywin ”), a portion of the Original Notes held by
them (the “ Keywin Note ”), pursuant to a
certain Note Purchase Agreement, dated April 2, 2009, by and among
Keywin and the Initial Investors. Keywin desires, among other
things, to exchange the Keywin Note into 307,035,463 shares of the
Company’s common stock, in full satisfaction of the
Company’s obligations under the Keywin Note, and to be
granted an option to purchase from the Company an aggregate of
122,814,185 shares of the Company’s common stock for an
aggregate purchase price of $2,000,000, on the terms and conditions
set forth in that certain Note Exchange and Option Agreement, dated
as of the date hereof, among the Company and Keywin (the “
Option Agreement ”). In connection
with the foregoing transactions, the Initial Investors desire,
among other things, to exchange the balance of the Original Notes
in the aggregate principal amount of $5,000,000, for new notes of
the Company (the “ New Notes ”), on the terms
and conditions set forth in that certain Note Exchange Agreement,
dated as of the date hereof, among the Company and the Investors
(the “ Exchange Agreement ”).
In consideration of the Company’s
agreement to enter onto the Option Agreement and the Exchange
Agreement, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the Company,
Keywin and the Investors have agreed as follows:
1.
Termination . The Company and each of the
undersigned agree to terminate the Investor Rights Agreement in its
entirety, effective upon the execution of this Termination
Agreement and the consummation of the transactions contemplated by
the Option Agreement and the Exchange Agreement (“
Termination Date ”). As of the Termination
Date, the Investor Rights Agreement will be deemed in all instances
and for all purposes to be fully and finally surrendered and
terminated and of no further force and effect, and none of the
parties thereto will have any further rights or obligations
thereunder. The Company and Keywin hereby covenant and agree not to
waive, modify or amend any provision of the Option Agreement prior
to the close of the transactions contemplated therein without the
prior written consent of the Investors.
(a) In the event
that Keywin, its affiliates and/or any of the persons listed in the
Company’s filings with the Securities and Exchange
Commission, as current officers or directors of the Company
(collectively, the “ Controlling Stockholders ”)
propose to transfer, sell, assign or otherwise dispose of, or
transfer, sell, assign or otherwise dispose of, in each case,
directly or indirectly, any of its or their securities in the
Company (the “ Selling Controlling Stockholder
”) in a transaction which, together with previous transfers
or sales, would constitute a Change in Control (a “
Proposed Transfer ”), then each of the Investors (and
their assigns) shall have the right to sell at their sole election,
together with such Selling Controlling Stockholder, up to their
entire interest in the Company (including, for the avoidance of
doubt, at such Investor’s sole election, either the New Notes
or the securities issuable upon and pursuant to the conversion of
the New Notes (the “ Conversion Shares ”));
provided, however, that any such co-sale shall be on the same terms
and conditions agreed to by the Selling Controlling Stockholder (it
being understood that in the event that the Electing Investor
elects to transfer the New Notes in connection with the Proposed
Transfer, the consideration for the New Notes shall equal in the
aggregate the consideration payable per Transfer Share (defined
below) multiplied by the aggregate amount of the Conversion Shares
without giving effect to the Conversion Limitation (defined below)
(the “ Notes Purchase Price ”)). The
Company shall cause the Selling Controlling Stockholder to deliver
(and in the event the Selling Controlling Stockholder is Keywin
and/or any of its affiliates, Keywin shall deliver) to the
Investors, notice of any Proposed Transfer, not later than thirty
(30) days prior to the consummation of such Proposed Transfer
(“ Transfer Notice ”). The Transfer
Notice shall contain the material terms and conditions (including
price and form of consideration) of the Proposed Transfer, the
amount and type of securities to be transferred and sold by the
Selling Controlling Stockholder (the “ Transfer Shares
”) and the identity of the prospective transferee(s) (the
“ Proposed Transferee ”). Each
Investor who desires to exercise its co-sale rights hereunder (each
an “ Electing Investor ”) must give the Selling
Controlling Stockholder written notice to that effect within
fifteen (15) days after receipt of the Transfer Notice, which
notice shall include the amount and type of securities in the
Company such Electing Investor elects to transfer to the Proposed
Transferee, and upon giving such notice such Electing Investor
shall be deemed to have effectively exercised its right of co-sale
hereunder. To the extent that any Proposed Transferee
prohibits the participation of any Investor exercising its right of
co-sale hereunder in a Proposed Transfer or otherwise refuses to
purchase the New Notes or Conversion Shares (as applicable) from
such Investor(s) exercising its right of co-sale hereunder, the
Selling Controlling Stockhold
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