Exhibit 10.2
NOTE EXCHANGE AND OPTION
AGREEMENT
THIS NOTE EXCHANGE AND OPTION AGREEMENT (this
“ Agreement ”) is effective as of April 2, 2009,
by and between KEYWIN HOLDINGS LIMITED, a British Virgin Islands
company (“ Noteholder ”), and NETWORK CN INC., a
Delaware corporation (the “ Company
”).
RECITAL
WHEREAS , the Noteholder purchased that certain 3%
Senior Secured Convertible Notes due June 30, 2011 of the Company
in the aggregate principal amount of $45,000,000 (the
“Notes” ) from Sculptor Finance (MD) Ireland
Limited, Sculptor Finance (AS) Ireland Limited and Sculptor Finance
(SI) Ireland Limited pursuant to the Note Purchase Agreement, dated
April 2, 2009;
WHEREAS , the Noteholder desires to exchange the Notes
(the “ Exchange ”) for 307,035,463 shares of the
Company’s common stock (the “ Common Stock
”);
WHEREAS , the Company desires to issue to the Noteholder
307,035,463 shares of the Common Stock in exchange for the Notes;
and
WHEREAS , in connection with the Exchange, the Company
desires to grant the Noteholder an option (the “
Option ”) to purchase from the Company an aggregate of
122,814,185 shares of the Common Stock for an aggregate purchase
price of $2,000,000, exercisable within 3 months after April 2,
2009 or such other date as agreed by the parties hereto (the
“ Closing Date ”).
NOW, THEREFORE , in consideration of the
mutual covenants and agreements herein set forth, the parties
hereby agree as follows:
(a) Notwithstanding
any provisions or terms to the contrary contained in the Notes, the
Noteholder hereby elects to exchange the Notes for 307,035,463
shares of the Common Stock and the Company hereby agrees to issue
to the Noteholder 307,035,463 shares of the Common Stock in full
satisfaction of its obligations under the Notes, including all
principal and accrued and unpaid interest thereon. After
the Exchange, the Noteholder shall have no rights in respect of the
Notes, and, in lieu thereof, will only have those rights afforded
to the holders of Common Stock. The Noteholder hereby acknowledges
and agrees that it shall have no further right or entitlement under
the Notes, and the Company shall have no further obligation under
the Notes.
(b) On
the Closing Date, the Noteholder shall tender to the Company the
original Notes and in exchange, the Company shall deliver an
irrevocable instruction letter to the Company’s transfer
agent in which the Company shall instruct the transfer agent to
issue a stock certificate representing 307,035,463 shares of the
Common Stock to the Noteholder. Such stock certificate
shall be delivered to the Noteholder within five (5) business days
after the Closing Date.
(c) As
of the Closing Date, the Noteholder and Company irrevocably cancel
the Notes and the Notes are of no further force or
effect.
2.
Option to Purchase Common Stock .
(a) For a three (3)
month period commencing on the Closing Date (the “
Exercise Period ”), the Noteholder shall have the
right to purchase from the Company an aggregate of 122,814,185
shares of the Common Stock for an aggregate purchase price of
$2,000,000 (the “ Purchase Price
”). The Option may be exercised by the Noteholder
at any time during the Exercise Period by giving written notice to
the Company.
(b) The Purchase Price
shall be paid to the Company in cash or immediately available
funds, unless otherwise mutually agreed. Upon receipt of
the Purchase Price and written notice, the Company shall, as
promptly as practical, issue the Noteholder a stock certificate
representing 122,814,185 shares of the Common Stock.
(c) If the Noteholder
fails to exercise the Option during the Exercise Period pursuant to
this Section 2, the Option shall terminate.
3.
Representations and Warranties of the Company . The Company
hereby makes the following representations, warranties, and
covenants each of which is true and correct on the date
hereof.
(a) The Company is a
corporation duly formed, validly existing and in good standing
under the laws of the State of Delaware. The Company has
the power and authority to own its own property and assets and to
transact the business in which it is engaged. The
Company is qualified to do business in each state or jurisdiction
in which the failure to so qualify would have a material adverse
effect on its business.
(b) The Company has
the power and authority to execute, deliver and perform this
Agreement, and the Company has taken all necessary corporate action
to authorize the execution, delivery and performance of this
Agreement. This Agreement constitutes the authorized,
valid and legally binding obligations of the Company, enforceable
against the Company in accordance with its terms, except
that
