Document:

ex10-1.htm

  
    Exhibit
10.1

    

    Amendment to Non-Employee
Director Stock Plan as of March 31, 2009

    

    Pursuant
to a resolution adopted by the Board of Directors on March 31, 2009, the 2006
Non-Employee Director Stock Plan (the “Plan”) is hereby amended by increasing
the number of shares available under Section 3 of the Plan by 55,000 shares and
by adding the following to the end of Section 7 of the Plan:

    

    Notwithstanding
anything in this Section 7 to the contrary, in the event an Eligible Director
elects to receive his cash director fees for the 2009 calendar year in shares of
Stock, such shares shall be restricted (the “2009 Restricted Stock”) until such
time as a  shareholders meeting is held to approve the  plan
of dissolution and complete liquidation. If the shareholders approve the plan of
dissolution and complete liquidation (“Shareholder Approval”), then such
director, to the extent not then known to be a continuing Eligible Director for
the 2009 calendar year (“Continuing Director”),  shall immediately
forfeit a pro rata portion of the 2009 Restricted Stock which amount shall be
determined by multiplying the number of shares of 2009 Restricted Stock by a
fraction the numerator of which shall be the number of days that remain in
calendar year 2009 and the denominator of which shall be 365. To the extent such
director is  then known to be a Continuing  Director, then
the amount of 2009 Restricted Stock that shall  be
immediately  forfeited  shall be determined to take into
account the new fees for the Board following Shareholder
Approval.  For example, if Shareholder Approval is obtained on June
30, 2009, and the new fees for the Board after Shareholder Approval is $15,000
on an annual basis,  then the Continuing Director shall forfeit the
amount of shares of 2009 Restricted Stock which exceed the value of $32,500
($50,000 divided by 2 plus $15,000 divided by 2) using the fair market value of
the  Stock on March 31, 2009. All shares of Restricted Stock that are
not forfeited pursuant to this formula shall immediately vest. Any dividends
paid on shares of 2009 Restricted Stock that are forfeited under this
subsection  shall also be forfeited.ex4_1.htm

  
    Exhibit
4.1

     

    THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (AS AMENDED, THE “ACT”) OR UNDER THE SECURITIES LAWS OF
ANY STATE.  THIS SECURITY MAY NOT BE TRANSFERRED, SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT, (B) AN EXEMPTION OR QUALIFICATION UNDER APPLICABLE
SECURITIES LAWS OR (C) AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.  ANY ATTEMPT TO
TRANSFER, SELL, PLEDGE OR HYPOTHECATE THIS SECURITY IN VIOLATION OF THESE
RESTRICTIONS SHALL BE VOID.

    

    1% SENIOR UNSECURED
CONVERTIBLE NOTE

    

    
      
        	
                $[______________]

              	
                April
      2, 2009

              

      

    

    

    FOR VALUE RECEIVED, NETWORK CN INC., a Delaware
corporation (the “Company”), hereby promises to
pay to the order of SCULPTOR FINANCE ([•]) IRELAND LIMITED, a company organized
under the laws of the Republic of Ireland whose registered office is at 5
Harbourmaster Place, IFSC, Dublin 1, Ireland (the “Holder”), or its registered
assigns or successors in interest or order, without demand, the sum of
[___________ ($__________)] (the “Principal”), plus accrued and
unpaid interest thereon on April 1, 2012 (the “Maturity Date”).

    

    This 1% Senior Unsecured Convertible
Note due 2012 of the Company (this “Note,” and together with the
other 1% Senior Unsecured Convertible Note due 2012 of the Company, as they may
hereafter be further amended, restated, supplemented or otherwise modified from
time to time, the “Notes”) have been issued
pursuant to, and are subject to, the Note Exchange Agreement, dated as of April
2, 2009, by and among the Company, the Holder and the other parties named
therein (the “Exchange
Agreement”).  The securities represented by this Note are also
subject to a Registration Rights Agreement (the “Registration Rights
Agreement”) and a Letter Agreement and Termination of Investor Rights
Agreement (the “Letter
Agreement,” and together with the Notes, the Exchange Agreement, the
Registration Rights Agreement and the Letter Agreement, the “Transaction Documents”), each
dated as of April 2, 2009, among the Company, the Holder and the other parties
named therein.  The following terms shall apply to this
Note:

     

    ARTICLE
I

     

    INTEREST

     

    1.1           Interest
Rate.  The Company hereby agrees to pay interest to the Holder
in respect of the outstanding Principal, at a per annum rate equal to one
percent (1%) in cash.  Such interest shall accrue on the outstanding
Principal from and after the date hereof, and shall be payable semi-annually in
arrears with the first interest payment due on September 30, 2009 and succeeding
interest payments due on the last Business Day of each  March and
September thereafter (each, an “Interest Payment Date”). All
computations of interest hereunder shall be made on the basis of a year of 365
days for the actual number of days (including the first but excluding the last
day) occurring in the period for which such interest is payable. As used in this
Note, “Business Day”
means a day, excluding a Saturday, Sunday, legal holiday or other days on which
banks are required to be closed in the People’s Republic of China, Hong Kong or
New York.

     

    1.2           Default
Redemption.  Notwithstanding anything to the contrary herein,
upon the occurrence and during the continuation of any Event of Default (as
defined in Article
4 hereof), the Holder shall have the right, at its option, to require the
Company to repurchase this Note (or any part thereof), in accordance with the
terms set forth in Article 5
hereof.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    1.3           No
Prepayment.  The Company may not prepay all or any part of the
amounts outstanding under this Note at any time without the express written
consent of the Holder. For the avoidance of doubt, any redemption pursuant to
Article 5
hereof shall not be deemed a prepayment.

    

    1.4           Taxes.  Any
and all payments by the Company to or for the account of the Holder under this
Note shall be made free and clear of and without deduction for any taxes, except
as required by applicable law.  If the Company shall be required by
any applicable law to deduct any taxes from or in respect of any sum payable
under this Note to the Holder, (i) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this ‎ Section 1.4 ), the
Holder receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Company shall make such deductions, (iii) the
Company shall pay the full amount deducted to the relevant taxation authority or
other authority in accordance with applicable law, and (iv) as promptly as
practicable after the date of such payment, the Company shall furnish to the
Holder the original or a certified copy of a receipt evidencing payment
thereof.

    

    ARTICLE
II

     

    CONVERSION

     

    2.1           Note
Conversion.  The Holder shall have the right, but not the
obligation, to convert all or any part of the outstanding Principal of this
Note, together with any accrued and unpaid interest thereon to the date of such
conversion, into such number of fully paid and non-assessable shares of the
Company’s common stock, par value US$0.001 per share (the “Common Stock”) or other
securities of the Company as and if required pursuant to Section 2.3(b), at
any time and from time to time prior to the later of the Maturity Date or the
date on which this Note is paid in full, subject to the terms and conditions set
forth in this Article
2, at a conversion price per share of Common Stock equal to US$0.02326
(the “Conversion
Price”), as the same may be adjusted from time to time in accordance with
this Note and as proportionally adjusted for any subdivision, consolidation,
reclassification or similar event of the Common Stock) calculated in accordance
with Section
2.3.

    

    2.2           Conversion
Procedures

     

    (a)           In
the event that the Holder elects to convert this Note, the Holder shall give
notice of such election by delivering an executed and completed notice of
conversion (a “Notice of
Conversion”) to the Company, which Notice of Conversion shall provide a
breakdown in reasonable detail of the Principal, accrued and unpaid interest
amounts being converted and the name of the entity to be issued the Shares of
Common Stock upon conversion.  The date specified in the Notice of
Conversion, or if no date is specified, then the date of the delivery of the
Notice of Conversion, shall be referred to as the “Conversion Date.”  A
form of Notice of Conversion to be employed by the Holder is annexed hereto as
Exhibit
A.

     

    (b)           Pursuant
to the terms of the Notice of Conversion, the Company shall deliver, or cause to
be delivered, such number of Shares of Common Stock (or other securities of the
Company as and if required pursuant to Section 2.3(b)) as determined pursuant to
this Note (the “Conversion
Shares”) via physical certificates to the Holder or its assignee (if and
as designated in the Notice of Conversion and to the extent permitted by
applicable securities laws). In the case of the exercise of the conversion
rights set forth herein, the conversion privilege shall be deemed to have been
exercised and the Conversion Shares issuable upon such conversion shall be
deemed to have been issued upon the Conversion Date.  The Holder or
its assignee (if and as designated in the Notice of Conversion) shall be treated
for all purposes as the beneficial holder of such Conversion Shares, unless the
Holder provides the Company written instructions to the
contrary.  

     

    
      
        
        

      

      
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    (c)           The
number of Conversion Shares to be issued upon each conversion of this Note
pursuant to this Article 2 shall be
the quotient obtained by dividing the Principal and accrued interest by the then
applicable Conversion Price.  No fractional shares of Common Stock
shall be issued upon any conversion of this Note.  In lieu of the
Company issuing any fractional shares to the Holder upon any conversion of this
Note, the Company shall make an adjustment and payment in cash to the
Holder.

    

    (d)           The
Company shall deliver or cause to be delivered certificates representing the
Conversion Shares within seven (7) business days of the Conversion Date (the
“Certificate Delivery
Date”).  If the Holder has made a sale or transfer of any such
Conversion Shares either pursuant to Rule 144 or pursuant to a registration
statement and (1) the Company shall fail to deliver or cause to be delivered to
the Holder by the Certificate Delivery Date, a certificate representing such
Conversion Shares and (2) following the Certificate Delivery Date the Holder, or
any third party on behalf of the Holder, purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in satisfaction of a
sale by the Holder of such Conversion Shares (a “Buy-In”), then, the Company
shall pay in cash to the Holder (for costs incurred either directly by such
Holder or on behalf of a third party) the amount by which the total purchase
price paid for Common Stock as a result of the Buy-In (including brokerage
commissions, if any) exceed the proceeds received by such Holder as a result of
the sale to which such Buy-In relates. The Holder shall provide the Company
written notice indicating the amounts payable to the Holder in respect of the
Buy-In.

    

    2.3           Adjustment
Events.  The Conversion Price and number and kind of shares or
other securities to be issued upon conversion shall be subject to adjustment
from time to time upon the happening of certain events while this conversion
right remains outstanding, as follows:

     

    (a)           Merger, Sale of Assets,
etc.  If (i) the Company effects any merger or consolidation of
the Company with or into another entity, (ii) the Company effects any sale of
all or substantially all of its assets in one or a series of related
transactions, (iii) any tender offer or exchange offer (whether by the Company
or another entity) is completed pursuant to which holders of Common Stock are
permitted to tender or exchange their shares for other securities, cash or
property, (iv) the Company consummates a stock purchase agreement or other
business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with one or more persons or
entities whereby such other persons or entities (such other persons or entities,
the “Purchasers”)
acquire more than 50% of the outstanding shares of Common Stock (not including
any shares of Common Stock held by the Purchasers or such other persons or
entities associated or affiliated with the Purchasers), or (v) any “person” or
“group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the
1934 Act) is or shall become the “beneficial owner” (as defined in Rule 13d-3
under the 1934 Act), directly or indirectly, of 50% of the aggregate Common
Stock of the Company (in any such case, a “Fundamental Transaction”),
this Note, as to the Principal and accrued and unpaid interest thereon, shall
thereafter, at the Holder’s election, be deemed to evidence the right to convert
into such number and kind of shares or other securities and property as would
have been issuable or distributable on account of such Fundamental Transaction,
upon or with respect to the securities subject to the conversion right
immediately prior to such Fundamental Transaction.  The foregoing
provision shall similarly apply to successive Fundamental Transactions of a
similar nature by any such successor or purchaser. Without limiting the
generality of the foregoing, the provisions of this Section 2.3 shall
apply to such securities of such successor or purchaser after any such
Fundamental Transaction.

     

    
      
        
        

      

      
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    (b)           Reclassification,
etc.  If the Company at any time shall, by reclassification or
otherwise, change the Common Stock into the same or a different number of
securities of any class or classes, this Note, as to the Principal hereof and
accrued and unpaid interest hereon, shall thereafter be deemed to evidence the
right to convert into an adjusted number of such securities and kind of
securities as would have been issuable as the result of such change with respect
to the Common Stock immediately prior to such reclassification or other
change.

     

    (c)           Stock Splits, Combinations
and Dividends.  If the shares of Common Stock are subdivided or
combined into a greater or smaller number of shares of Common Stock (whether by
a stock split or otherwise), or if a dividend is paid on the Common Stock in
shares of Common Stock, the Conversion Price shall be proportionately reduced in
case of subdivision of shares or stock dividend or proportionately increased in
the case of combination of shares, in each such case by the ratio which the
total number of shares of Common Stock outstanding immediately after such event
bears to the total number of shares of Common Stock outstanding immediately
prior to such event.

    

    (d)           Share
Issuance.  So long as any amount of this Note is outstanding,
if the Company shall issue any Equity-Linked Securities (as defined below),
except for securities issued or issuable pursuant to an Exempt Issuance (as
defined below), prior to the full conversion or payment of this Note, for a
consideration that is less than the Conversion Price, then, and thereafter
successively upon each such issuance, the Conversion Price shall be reduced to
such other lower issue price.  For purposes of this Note, “Equity-Linked Securities”
means any equity securities of the Company (including any Common Stock) and any
equity-linked securities of the Company (including any instruments, warrants,
options or rights to acquire any equity securities of the
Company).  For purposes of this adjustment, the issuance of any
Equity-Linked Securities shall result in an adjustment to the Conversion Price
upon the issuance of such Equity-Linked Security, and again upon the issuance of
shares of Common Stock upon exercise of such conversion or purchase rights if
such issuance is at a price lower than the then applicable Conversion
Price.  For purposes of this Article 2, “Exempt Issuance” shall mean
(a) the issuance of shares of Common Stock to employees, consultants, service
providers, officers or directors of the Company, pursuant to any other stock or
option plan duly adopted for such purpose by the Company, up to an aggregate
number of shares not to exceed fifteen percent (15%) of the total outstanding
Common Stock of the Company, as determined as of the date of this Note (as the same may be proportionally adjusted for
any subdivision, consolidation, reclassification or similar event of the Common
Stock), (b) the issuance of securities upon the exercise or exchange of or
conversion of any securities issued hereunder and/or other securities
exercisable or exchangeable for or convertible into shares of Common Stock
issued and outstanding on the date of this Note, provided that such securities
have not been amended since the date of this Note to increase the number of such
securities or to decrease the exercise, exchange or conversion price of such
securities, and (c) the issuance of securities to bona fide third party
purchasers on an arm’s length basis;

    

    (e)           Replacement
Note.  In the event of any partial conversion of the
outstanding Principal and any accrued and unpaid interest under this Note, the
Holder agrees to surrender this Note to the Company and the Company shall issue
to the Holder a replacement Note in the amount of the remaining Principal (and
accrued and unpaid interest, if applicable) after giving effect to such partial
conversion.

    

    2.4           Notice as to
Adjustments. Whenever the Conversion Price is adjusted pursuant to this
Article 2, the
Company shall promptly mail to the Holder a notice setting forth the Conversion
Price after such adjustment and setting forth a statement of the facts requiring
such adjustment.

     

    
      
        
        

      

      
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    2.5           Reservation and
Registration.  The Company covenants that it will at all times
reserve and keep available out of its authorized and unissued shares of Common
Stock for the sole purpose of issuance upon conversion of this Note, free from
all mortgages, charges, pledges, liens, hypothecations or other security
interests (“Liens”),
preemptive rights or any other actual contingent purchase rights of persons
other than the Holder, not less than the aggregate number of shares of the
Common Stock as shall be issuable (taking into account the adjustments and
restrictions of this Article 2) upon the
conversion of this Note.  The Company covenants that all shares of
Common Stock that shall be so issuable shall, upon issue, be duly authorized,
validly issued, fully paid and nonassessable and, pursuant to the Registration
Rights Agreement, shall be registered for public sale in accordance
therewith.  The Company agrees that its issuance of this Note shall
constitute full authority to its officers, agents, and transfer agents who are
charged with the duty of executing and issuing stock certificates to execute and
issue the necessary certificates for shares of Common Stock upon the conversion
of this Note.

     

    2.6           Transfer
Taxes.  The issuance of certificates for shares of the Common
Stock on conversion of this Note shall be made without charge to the Holder
hereof for any documentary, stamp or similar taxes that may be payable in
respect of the issue or delivery of such certificates.

     

    ARTICLE
III

     

    COVENANTS

     

    3.1           Affirmative Covenants of the
Company.  The Company covenants and agrees that, so long as all
or any of the Principal of this Note remains outstanding, it shall:

     

     

    (a)           pay
and discharge all taxes, assessments and governmental charges or levies imposed
upon it or upon its income and profits, or upon any properties belonging to it
before the same shall be in default; provided, however, that the Company shall
not be required to pay any such tax, assessment, charge or levy which is being
contested in good faith by proper proceedings and adequate reserves for the
accrual of same are maintained if required by generally accepted accounting
principles;

     

     

    (b)           preserve
its corporate existence and continue to engage in business of the same general
type as conducted as of the date hereof; and

     

     

    (c)           comply
in all respects with all statutes, laws, ordinances, orders, judgments, decrees,
injunctions, rules, regulations, permits, licenses, authorizations and
requirements (the “Requirement(s)”) of all
governmental bodies, departments, commissions, boards, companies or associates
insuring the premises, courts, authorities, officials, or officers, which are
applicable to the Company or its property; except wherein the failure to comply
would not have a materially adverse on (i) the
business, property, results of operations or condition (financial or otherwise)
of the Company and its Subsidiaries taken as a whole or (ii) the ability of the
Company to perform its obligations under this Note, the Exchange Agreement, the
Registration Rights Agreement or the Letter Agreement (collectively, the “Transaction Documents”);
provided that nothing contained herein shall prevent the Company from contesting
the validity or the application of any Requirements. As used in this Note,
“Subsidiary” means, with
respect to a person, any corporation, company (including any limited liability
company), association, partnership, joint venture or other business entity of
which at least a majority of the total voting power of the voting stock is at
the time owned or controlled, directly or indirectly, by such person, and, in
respect of the Company, shall also include any corporation, company (including
any limited liability company), association, partnership, joint venture or other
business entity from time to time organized and existing under the laws of the
People’s Republic of China whose financial reporting is consolidated with the
Company in any audited financial statements filed by the Company with the
Commission in accordance with the Securities and Exchange of 1934 as amended,
together with the rules and regulations promulgated thereunder from time to time
in effect.

     

    
      
        
        

      

      
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    3.2           Negative Covenants of the
Company.  The Company covenants that so long as all or any of
the Principal of this Note remains outstanding, it shall not, and shall ensure
that none of its Subsidiaries shall, without the prior written consent of the
holders of a majority of the principal amount of the Notes:

     

    (a)           Charter
Documents.  Except with respect to any amendment of the
Company’s certificate of incorporation to implement a reverse stock split and
increase or decrease the authorized shares of the Company; modify, alter, repeal
or amend the Company’s certificate of incorporation, by-laws or other
organizational documents or effect any change of legal form of the Company;
provided, however, that the number of Conversion Shares issuable hereunder shall
be adjusted to prevent the dilution of such shares in the event of a reverse
stock split as contemplated under Section 2.3(c) hereof;

     

    (b)           Dividends.  Declare
or pay dividends or other distributions by the Company or any of its
Subsidiaries in respect of the equity securities of such entity other than
dividends or distributions of cash which amounts during any 12-month period that
do not exceed ten percent (10%) of the consolidated net income of the Company
based on the Company’s most recent audited financial statements disclosed in the
Company’s annual report on Form 10-K (or equivalent form) filed with the U.S.
Securities and Exchange Commission.

     

    (c)           Redemptions or
Repurchases.  Except for any redemption pursuant to Article V hereof,
redeem or repurchase shares of Common Stock or any other securities of the
Company unless the Holders shall have first received, in respect of the Notes or
the Conversion Shares, an amount in cash equal to the greater of (i) the
Redemption Price and (ii) the amounts the Holders would be entitled to receive
assuming the Conversion Shares are subject the redemption or
repurchase.

     

    ARTICLE
IV

    

    EVENTS
OF DEFAULT

    

    The occurrence of any of the following
events shall constitute an event of default (“Event of
Default”):

    

    4.1           Failure to Pay Principal or
Interest.  The Company shall fail to pay the Principal, when
due, or any interest or other sum when due under this Note.

     

    4.2           Breach of Covenant or
Representations and Warranties.  The Company breaches any
covenant or other term or condition of the Transaction Documents (including but
not limited to the conversion obligations in Article 2) in any
material respect, which failure is not cured, if possible to cure, within five
Business Days after the Company has become or should have become aware of such
failure, or any representation or warranty of the Company made in Transaction
Documents shall be false or misleading in any material respect as of the date
hereof.

     

    4.3           Failure to Close Note
Exchange.  The Company and Keywin Holdings Limited (“Keywin”) fail to effect the
exchange of the 3% Senior Secured Convertible Notes Due June 30, 2011 of the
Company held by Keywin for shares of Common Stock in accordance with the terms
of and pursuant to the Note Exchange and Option Agreement, dated April 2, 2009,
by and between the Company and Keywin, by the date of this Note.

    

    4.4           General
Assignment.  The Company or any Subsidiary makes an assignment
for the benefit of creditors, or apply for or consent to the appointment of a
receiver or trustee for them or for a substantial part of their property or
business; or such a receiver or trustee shall otherwise be
appointed.

    

    
      
        
        

      

      
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    4.5           Bankruptcy.  Bankruptcy,
insolvency, reorganization, or liquidation proceedings or other such proceedings
or relief under any bankruptcy, insolvency or restructuring law or any law, or
the issuance of any notice in relation to such event, shall be instituted by or
against the Company or any Subsidiary.

    

    4.6           Judgments.  Any
judgment against the Company or any Subsidiary or any of their property or other
assets with actual damages, net of insurance proceeds, in excess of $1,000,000
and such judgment, writ or similar final process shall remain unvacated,
unbonded or unstayed for a period of thirty (30) calendar days.

    

    4.7           Delisting.  The
Common Stock shall not be eligible for listing or quotation for trading on a
Trading Market for a period of ten (10) consecutive trading days, and shall not
be eligible to resume listing or quotation for trading thereon within thirty
(30) trading days. As used in this Note, “Trading Market” means the
following markets or exchanges on which the Common Stock is listed or quoted for
trading on the date in question: the OTC Bulletin Board, the New York Stock Exchange, NYSE Alternext U.S.
(formerly known as the American Stock Exchange), the Nasdaq Global Market or the
Nasdaq Capital Market.

    

    4.8           Stop
Trade.  Stop trade order imposed judicially or by the U.S.
Securities and Exchange Commission or by the OTC Bulletin Board or other
exchange trading suspension with respect to Company’s Common Stock and such stop
order not being rectified and resumed within thirty (30) trading
days.

    

    4.9           Non-Registration.  The
failure to timely file the registration statements covering the Conversion
Shares in accordance with the Registration Rights Agreement.

    

    4.10           Reservation
Default.  Failure by the Company to have reserved for issuance
upon conversion of this Note the amount of Common Stock as set forth in this
Note and the Transaction Documents.

    

    4.11           Cross
Default.  A default by the Company or any of its Subsidiaries
under any loan, mortgage, indenture, notes, debentures or any other instrument
evidencing any indebtedness of the Company or any of its Subsidiaries in excess
of $1,000,000, that results in acceleration of the maturity of such debt or
liability, or failure to pay any such debt when due. 

    

     

    ARTICLE
V

     

    REDEMPTION

     

    5.1           Optional Redemption
Rights.  If there is an occurrence of any Event of Default
hereunder, the Holder shall have the right, at its option, to require the
Company to repurchase this Note (the “Redemption Rights”) from the
Holder for an aggregate purchase price in cash equal to 110% of the aggregate
Principal and any accrued and unpaid interest (the “Redemption
Price”).  

     

    5.2           Redemption
Procedures.  The Holder may exercise the Redemption Rights
under Section
5.1 by delivering written notice to the Company (the “Redemption
Notice”).  The Company shall pay the Holder the Redemption
Price not later than thirty (30) Business Days after delivery of such Redemption
Notice by the Holder (the “Redemption Date”), and this
Note shall be immediately cancelled and retired.   If the
Redemption Notice shall have been duly given, and if on the Redemption Date the
Redemption Price payable upon repurchase of this Note is paid or tendered for
payment or deposited with an independent payment agent so as to be available
therefor, then notwithstanding that this Note shall not have been surrendered by
the Holder, interest with respect to this Note shall cease to accrue after the
Redemption Date and all rights with respect to this Note (other than the right
to receive the Redemption Price) shall forthwith after the Redemption Date
terminate.

     

    
      
        
        

      

      
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    5.3           Failure to
Pay.  In the event that the Holder exercises the Redemption
Rights and the Company does not have sufficient funds to pay the Redemption
Price in full, this Note and the then outstanding Principal plus all accrued and
unpaid interest thereon shall, notwithstanding the Holder’s surrender of this
Note to the Company pursuant to Section 5.2, remain
outstanding until the date the Holder receives the Redemption Price in full and
the Holder shall maintain all of its rights and remedies under this
Note.  For the avoidance of doubt, interest on the Principal shall
continue to accrue to the extent provided in Section 1.1 until the
date the Holder receives the Redemption Price in full.

     

    ARTICLE
VI

     

    STATUS
OF NOTE

     

    6.1           Status of
Note.  Except for obligations arising from Permitted Liens, and
subject to Section
6.2 below, the obligations of the Company under this Note shall rank
senior to all indebtedness of the Company, whether now or hereinafter existing.
“Permitted Liens” means
the individual and collective reference to any: (a) Liens for taxes, assessments
and other governmental charges or levies not yet due, or Liens for taxes,
assessments and other governmental charges or levies being contested in good
faith and by appropriate proceedings for which adequate reserves (in the good
faith judgment of the management of the Company) have been established in
accordance with U.S. generally accepted accounting principals, consistently
applied, and duly reflected in the Company’s financial statements; (b) Liens
imposed by law which were incurred in the ordinary course of the Company’s
business, such as carriers,’ warehousemen’s and mechanics’ liens, statutory
landlords’ liens, and other similar liens arising in the ordinary course of the
Company’s business, and which (i) do not individually or in the aggregate
materially detract from the value of such property or assets or materially
impair the use thereof in the operation of the business of the Company and its
consolidated Subsidiaries or (ii) are being contested in good faith by
appropriate proceedings, which proceedings have the effect of preventing for the
foreseeable future the forfeiture or sale of the property or asset subject to
such Lien; and (c) Liens incurred in connection with lease obligations, purchase
money indebtedness of up to two million dollars ($2,000,000), in the aggregate,
incurred in connection with the acquisition of capital assets and lease
obligations with respect to newly acquired or leased assets, provided that such
liens are not secured by assets of the Company or its Subsidiaries other than
the assets so acquired or leased.

    

    6.2           Unsecured Debt and Bank Loan
Facilities.  Notwithstanding anything to the contrary in Section 6.1 above:
(a) the Company may issue unsecured debt ranking pari passu with this Note so
long as the maturity date (and any other repayment or prepayment date) for such
new indebtedness or any other provision allowing for such indebtedness to be
redeemed or put to the Company is later than the Maturity Date; and (b) the
Company may enter into bank loan facilities that are senior to this
Note.

    

    6.3           Liquidation.  Upon
any Liquidation Event, the Holder will be entitled to receive, before any
distribution or payment is made upon, or set apart with respect to, any other
indebtedness of the Company or any class of capital stock of the Company, an
amount equal to the Principal plus all accrued and unpaid interest
thereon.  For purposes of this Note, “Liquidation Event” means a
liquidation pursuant to a filing of a petition for bankruptcy under applicable
law or any other insolvency or debtor’s relief, an assignment for the benefit of
creditors, or a voluntary or involuntary liquidation, dissolution or winding up
of the affairs of the Company.

    

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

       

    

    ARTICLE
VII

     

    MISCELLANEOUS

     

    7.1           Non-Waiver and Other
Remedies.  No course of dealing, failure or delay on the part
of the Holder of this Note in exercising any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further exercise thereof or
of any other right, power or privilege.  All rights and remedies
existing hereunder are cumulative to, and not exclusive of, any rights or
remedies otherwise available.

     

    7.2           Notices.  Any
notice required or permitted pursuant to this Note shall be given in writing and
shall be given either personally or by sending it by next-day or second-day
courier service, fax, electronic mail or similar means to the address as shown
below (or at such other address as such party may designate by fifteen (15)
days’ advance written notice to the other parties to this Note given in
accordance with this section):

               

    
      
        	 If
      to the Holder:   	
                5
      Harbourmaster Place, IFSC

              
	 	
                Dublin
      1, Ireland

              
	 	
                Fax:
      +353-1-6806050

              
	 	
                Attention:
      The Directors

              
	 	 
      
	 	
                with
      a copy to:

              
	 	 
      
	 	
                c/o
      Och-Ziff Capital Management HK Ltd

              
	 	
                Suite
      2003A Cheung Kong Center

              
	 	
                2
      Queen's Road Central

              
	 	
                Hong
      Kong S.A.R.

              
	 	
                Fax:
      +852-2297-0818

              
	 	
                Attention:
      Zoltan Varga and David C. Zeiden

              
	 	 
      
	 If
      to the Company: 	
                Network
      CN Inc.

              
	 	
                21F,
      Chinachem Century Tower

              
	 	
                178
      Gloucester Road

              
	 	
                Wanchai,
      Hong Kong

              
	 	
                Attention:
      Daley Mok

              
	 	
                Fax:  (852)
      2295-6977

              
	 	 
      
	 	
                with
      a copy to (which shall not constitute notice):

              
	 	 
      
	 	
                Pillsbury
      Winthrop Shaw Pittman LLP

              
	 	
                50
      Fremont Street

              
	 	
                San
      Francisco, California  94105-2228

              
	 	
                Attention:  Scott
      C. Kline, Esq.

              
	 	
                Fax:  (415)
      983-1200

              

      

    

    

    Where a
notice is sent by next-day or second-day courier service, service of the notice
shall be deemed to be effected by properly addressing, pre-paying and sending by
next-day or second-day service through an internationally-recognized courier a
letter containing the notice, with a confirmation of delivery, and to have been
effected at the expiration of two (2) days after the letter containing the same
is sent as aforesaid.  Where a notice is sent by fax or electronic
mail, service of the notice shall be deemed to be effected by properly
addressing, and sending such notice through a transmitting organization, with a
written confirmation of delivery, and to have been effected on the day the same
is sent as aforesaid.

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

    7.3           Assignability.  This
Note shall be binding upon the Company and its successors and assigns, and shall
inure to the benefit of the Holder and its successors and assigns. Subject to
applicable laws and regulations, this Note and all rights hereunder may be
transferred or assigned in whole or in part by the Holder, and the Company shall
assist the Holder in consummating any such transfer or assignment. The Company
may not assign this Note without the consent of the Holder. A transfer of this
Note may be effected only by a surrender hereof to the Company and the issuance
by the Company of a new note or notes in replacement thereof, which shall be
registered by the Company in accordance with Section 7.4 hereof
once an executed copy of the replacement note has been executed by the
transferee.

    

    7.4           Transfer
Register.  In the event of a transfer, the Company shall
maintain a register (the “Register”) for the
registration or transfer of this Note, and shall enter the names and addresses
of the registered holders of this Note, the transfers of this Note and the names
and addresses of the transferees of this Note.  The Company shall
treat any registered holder as the absolute owner of this Note held by such
holder, as indicated in the Register, for the purpose of receiving payment of
all amounts payable with respect to this Note and for all other purposes.
 The Note and the right, title, and interest of any person in and to such
Note shall be transferable only upon notation of such transfer in the Register.
 Solely for purposes of this Section 7.4 and for
tax purposes only, the keeper of the Register, if it is not the Company, shall
be the Company’s agent for purposes of maintaining the Register.  This
Section 7.4
shall be construed so that this Note is at all times maintained in “registered
form” within the meaning of Sections 163(f), 871(h)(2) and 881(c)(2) of the
United States Internal Revenue Code (the “Code”) and any related
regulations (and any other relevant or successor provisions of the Code or such
regulations).

    

    7.5           Collection Costs; Attorneys’
Fees.  If default is made in the payment of this Note, the
Company shall be obligated to pay the Holder hereof reasonable costs of
collection, including attorneys’ fees and, in addition, the Company and of any
amendment or modification of any of the foregoing requested by the Company or
arising following an Event of Default.

     

    7.6           Governing Law; Rules of
Construction.  THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF THE
COMPANY HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING, WITHOUT
LIMITATION, SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

     

     

    7.7           Consent to Jurisdiction and
Service of Process.  ALL JUDICIAL PROCEEDINGS ARISING OUT OF OR
RELATING TO THIS NOTE, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY STATE
OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW
YORK

     

     

    7.8           Waiver of Jury Trial.
  EACH OF THE PARTIES HERETO HEREBY AGREES TO WAIVE ITS RIGHT TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
NOTE.  THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF
ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE
SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND
STATUTORY CLAIMS.

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

     

    7.9           Usury Savings
Clause.  This Note is subject to the express condition that at
no time shall the Company be obligated or required to pay interest at a rate
which could subject the Holder to either civil or criminal liability as a result
of being in excess of the maximum rate which Company is permitted by law to
agree to pay.  If, by the terms of this Note, the Company is at any
time required or obligated to pay interest on the outstanding balance at a rate
in excess of such maximum rate, the rate of interest under this Note shall be
deemed to be immediately reduced to such maximum rate and interest pay able
hereunder shall be computed at such maximum rate and the portion of all prior
interest payments in excess of such maximum rate shall be applied and shall he
deemed to have been payments in reduction of the outstanding
balance.

     

    

    7.10           United States
Dollars.  All references to “$” or dollars in this Note shall
refer to the currency of the United States.

    

    7.11           Section
Headings.  Section headings herein have been inserted for
reference only and shall not be deemed to limit or otherwise affect, in any
matter, or be deemed to interpret in whole or in part any of the terms or
provisions of this Note.

    

    *    *    *

    

    [Remainder
of Page Left Blank Intentionally]

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

       

    

    IN WITNESS WHEREOF, this Note has been
executed and delivered on the date specified above by the duly authorized
representative of the Company.

     

    

    
      	 	NETWORK CN
INC.	 
	 	 	 
	 	 	 	 
	
               

            	
              By:
      

            	/s/ 	 
	 	Name: 	Godfrey
      Hui	 
	 	Title: 	Chief Executive Officer	 
	 	 	 	 

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Exhibit
A

     

    NOTICE OF
CONVERSION

     

    The
undersigned hereby elects to convert the following amount of the outstanding
principal [and accrued and unpaid interest thereon] under that certain 1% Senior
Unsecured Convertible Promissory Note, due April 1, 2012 of NETWORK CN INC., a
Delaware corporation (the “Company”), into shares of
Common Stock according to the conditions therein, as of the date written
below.  No fee will be charged to the holder for any
conversion.

     

    
      
        	Conversion
      calculation: 	
                                                                               

              
	 
      
	 
      

      

      
        	 
      
	Date
      to Effect Conversion:  	
                                                                    

              
	 
      
	 
      

      

      
        	 
      
	Number
      of shares of Common Stock
    to be issued:   	
                                                                                                             

              
	 
      
	 
      

      

      
        	 
      
	Shares
      of Common Stock to be issued in the name of:    	
                      [Insert name
      of Holder or its assignee]

              
	 
      
	 
      

      

      
        	 
      
	
                HOLDER:          

              
	 
      
	 
      
	 	 
      
	
                 (Print
      Name of Holder)

              

      

    

    

    
      
        	 	 
	By: 	
                 

              	 
	
                Name:

              	 
	
                Title:

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