NOTE AND WARRANT PURCHASE AGREEMENT
Exhibit
10.2
This
NOTE AND WARRANT PURCHASE AGREEMENT (this “Agreement’) is made as of November
12, 2007 by and between Network CN Inc., a Delaware corporation (the “Company”),
and Wei An Developments Limited (the “Investor”).
RECITALS
A. The
Company is currently in need of funds to help finance its
operations.
B. The
Investor is willing to advance funds to the Company in exchange for the issuance
to them of (i) certain convertible promissory notes evidencing the Company’s
obligation to repay the Investor’s loan of the advanced funds and (ii) certain
warrants to purchase shares of the Company’s common stock, all as provided in
this Agreement.
NOW
THEREFORE, the parties hereby agree as follows:
1. PURCHASE
AND SALE OF NOTES AND WARRANTS.
1.1 Note
Purchase. Subject to the terms and conditions of this Agreement,
the Company agrees to sell to the Investor, and the Investor agrees to purchase
from the Company, a Convertible Promissory Note in the form attached to this
Agreement as Exhibit A (the “Note”) in the
principal amount (the “Principal Amount”) of
$5,000,000.
1.2 Warrant
Issuance. Subject to the terms and conditions of this Agreement and
in consideration of Investor’s commitment to advance up to the Principal Amount
of $5,000,000, the Company further agrees to issue to the Investor a warrant
to
purchase up to 250,000 shares of the Company’s common stock, par value $0.001
per share (“Warrant Stock”) in the form attached
hereto as Exhibit B
(the“Warrant”).
2. CLOSING.
The
purchase and sale of the Notes and the Warrants will take place at the offices
of Xxxxx Rozynko LLP, 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, XX 00000, at 5:00
p.m. pacific time, on November 12, 2007, or at such other time and place as
the
Company and the Investor mutually agree upon (which time and place are referred
to as the “Closing”). At the Closing, the Investor will deliver to the Company
payment in full for the Note and the Warrant at the Closing by (i) a check
payable to the Company’s order. (ii) wire transfer of funds to the Company or
(iii) any combination of the foregoing. At the Closing, the Company will deliver
to the Investor a duly executed Note in the Principal Amount and a duly executed
Warrant.
3. REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.
The
Company hereby represents and warrants to the Investor that the statements
in
the following paragraphs of this Section 3 are all true and complete as
of immediately prior to the closing:
3.1 Organization,
Good Standing, and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the
laws
of the State of Delaware and has all requisite corporate power and authority
to
carry on its business as now conducted and as proposed to be conducted. The
Company is duly qualified to transact business and is in good standing in each
jurisdiction in which the failure so to qualify would have a material adverse
effect on its business or properties. The Company has all requisite corporate
power and authority to own its properties, to carry on its business as now
conducted, and to enter into and perform its obligations under this Agreement
and the agreements and instruments contemplated by it.
3.2 Capitalization. The
authorized capitalization of the Company immediately prior to the Closing is
as
follows:
(a) Common
Stock. 800,000,000 shares of Common Stock (the
“Common Stock”), 69,151,608 of which were issued and outstanding. The Company
has reserved (i) 2,083,333 shares of Common Stock for issuance upon conversion
of the Notes and (ii) 250,000 shares of Common Stock for issuance upon exercise
of the Warrants.
(b) Preferred
Stock. 5,000,000 shares of Preferred Stock and none of which were
issued and outstanding.
3.3 Authorization. All
corporate actions on the part of the Company necessary for the authorization,
execution and delivery of this Agreement, and the performance of all obligations
of the Company hereunder, and the authorization, issuance and delivery of the
Note and Warrant has been taken or will be taken prior to the relevant Closing.
This Agreement, the Notes and the Warrant, when executed and delivered by the
Company, shall constitute valid and legally binding obligations of the Company,
enforceable in accordance with their terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors’ rights generally, and (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies
3.4 Valid
Issuance.
The
Note, the shares of Common Stock issued upon conversion of the Note, the Warrant
and the Common Stock issued upon the exercise thereof, when issued, sold, and
delivered in accordance with the terms of the Note and the Warrant, will be
duly
and
validly issued, fully paid and non-assessable and, based in part upon the
representations of the Investor in this Agreement, will be issued in compliance
with all applicable federal and state securities laws.
3.5 Compliance
with Other Instruments. The Company is not in violation or default
of any provisions of any instrument, judgment, order, writ, decree or contract
to which it is a party or by which it is bound. The execution, delivery and
performance of the Agreement, the consummation of the transactions contemplated
hereby and the authorization, issuance and delivery of the Note and the Warrant
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 an
event which results in the creation of any lien, charge or encumbrance upon
any
assets of the Company.
4. REPRESENTATIONS,
WARRANTIES AND CERTAIN AGREEMENTS OF
INVESTOR. In connection with the
transactions provided for herein, the Investor hereby represents and warrants
to
the Company that:
4.1 Authorization.
This Agreement constitutes such Investor’s valid and legally binding obligation,
enforceable in accordance with its terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors’ rights generally, and (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies.
4.2 Purchase
Entirely for Own Account. Such Investor acknowledges that this
Agreement is made with such Investor in reliance upon such Investor’s
representation to the Company that the securities will be acquired for
investment for such Investor’s own account, not as a nominee or agent, and not
with a view to the resale or distribution of any part thereof, and that such
Investor has no present intention of selling, granting any participation in,
or
otherwise distributing the same. By executing this Agreement, such Investor
further represents that such Investor does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participation to such person or to any third person, with respect to the
securities. Such Investor represents that it has full power and authority to
enter into this Agreement.
4.3 Disclosure
of Information. Such Investor acknowledges that it has received all
the information it considers necessary or appropriate for deciding whether
to
acquire the securities. Such Investor further represents that it has had an
opportunity to ask questions and receive answers from the Company regarding
the
terms and conditions of the offering of the securities.
4.4 Investment
Experience. Such Investor is an investor in securities of companies
in the development stage and acknowledges that it is able to fend for itself,
can bear the economic risk of its investment and has such knowledge and
experience in financial
or business matters that it is capable of evaluating the merits and risks of
the
investment in the securities. If other than an individual, such Investor also
represents it has not been organized solely for the purpose of acquiring the
securities.
4.5 Accredited
Investor. Such Investor is an “accredited investor”
within the meaning of Rule 501 of Regulation D of the Securities
and Exchange
Commission (“SEC”), as presently in
effect,.
4.6 Restricted
Securities. Such Investor understands that the securities are
characterized as “restricted securities” under the
federal securities laws inasmuch as they are being acquired from the Company
in
a transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration
under
the Securities Act of 1933, as amended (the “Act”),
only in certain limited circumstances. Such Investor represents that it is
familiar with SEC Rule 144, as presently in effect, and understands the resale
limitations imposed thereby and by the Act.
4.7 Further
Limitations on Disposition. Without in any way limiting
the representations set forth above, such Investor further agrees not to
make
any disposition of all or any portion of the securities unless and until
the
transferee has agreed in writing for the benefit of the Company to be bound
by
this Section 4 and:
(a)
There
is then in effect a Registration Statement under the Act covering such proposed
disposition and such disposition is made in accordance with such Registration
Statement; or
(b)
Investor shall have notified the Company of the proposed disposition and shall
have furnished the Company with a detailed statement of the circumstances
surrounding the proposed disposition, and (ii) if requested by the Company,
the
Investor shall have furnished the Company with an opinion of counsel,
satisfactory to the Company, that such disposition will not require registration
of such shares under the Act.
4.8 Legends.
It is understood that the securities may bear the following legends in addition
to any legends required by the laws of any State in which such securities
are
issued:
“THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE
SECURITIES ACT OF 1933 OR AN OPINION OF COUNSEL SATISFACTORY
TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED
UNDER SUCH ACT.”
“THESE
SECURITIES ARE SUBJECT TO THE TERMS OF ONE OR MORE AGREEMENTS
BY AND AMONG THE COMPANY AND CERTAIN HOLDERS
OF THE COMPANY’S SECURITIES. COPIES OF SUCH AGREEMENTS
MAY BE OBTAINED FROM THE COMPANY. BY ACCEPTING
ANY INTEREST IN THESE SECURITIES, THE PERSON OR ENTITY
ACCEPTING SUCH INTEREST SHALL BE DEEMED TO AGREE TO
AND
SHALL BE BOUND BY ALL THE PROVISIONS OF SAID AGREEMENTS.”
5. CONDITIONS
TO CLOSING.
5.1 Conditions
to Investor’s Obligations. The obligations of the
Investor under Section 2 of this Agreement are subject to the fulfillment
or waiver, on or before the Closing, of each of the following conditions, the
waiver of which shall not be effective against any Investor who does not consent
to such waiver, which consent may be given by written or email communication
to
the Company, its counsel or to special counsel to the Investor:
(a) Each
of the representations and warranties of the Company contained in Section
3 shall be true and correct on and as of the Closing with the same effect
as
though such representations and warranties had been made on and as of the
date
of the Closing; and
(b) the
Company shall have performed and complied with all agreements, obligations
and
conditions contained in this Agreement that are required to be performed
or
complied with by it on or before the Closing and shall have obtained all
approvals, consents and qualifications necessary to complete the purchase
and
sale described herein.
(c) The
Company and the Investor shall have executed this Agreement, the Note and
the
Warrant.
(d) The
Company shall have received payment of the Principal Amount from the
Investor.
5.2 Conditions
to Company’s Obligations. The obligations of the Company to each
Investor under this Agreement are subject to the fulfillment or waiver on or
before the Closing of the following condition by such Investor:
(a) Each
of the representations and warranties of such Investor contained in Section
4 shall be true and correct on the date of the Closing with the same effect
as though such representations and warranties had been made on and as of
the
Closing;
(b) Such
Investor shall have performed and complied with all agreements, obligations
and
conditions contained in this Agreement that are required to be
performed or complied with by it on or before the Closing and shall have
obtained all approvals, consents and qualifications necessary to complete
the
purchase and sale described herein; and
(c)
The Company and each of the Investor shall have executed this Agreement,
the
Note and the Warrant.
6. GENERAL
PROVISIONS
6.1 Survival
of Warranties. The representations, warranties and covenants of the
Company and the Investor contained in or made pursuant to this Agreement shall
survive the execution and delivery of this Agreement and shall in no way be
affected by any investigation of the subject matter thereof made by or on behalf
of the Investor or the Company, as the case may be.
6.2 Successors
and Assigns. 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.
6.3 Governing
Law. This Agreement shall be governed by and construed under the
internal laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California, without reference to principles of conflict of laws or choice
of
laws.
6.4 Counterparts.
This Agreement may be executed in two or more counterparts, each of which
shall
be deemed an original, but all of which together shall constitute one and
the
same instrument.
6.5 Heading.
The headings and captions used in this Agreement are used only for convenience
and are not to be considered in construing or interpreting this Agreement.
All
references in this Agreement to sections, paragraphs, exhibits and schedules
shall, unless otherwise provided, refer to sections and paragraphs hereof
and
exhibits and schedules attached hereto, all of which exhibits and schedules
are
incorporated herein by this reference.
6.6 Notices.
Unless otherwise provided, any notice required or permitted under this Agreement
shall be given in writing and shall be deemed effectively given (i) at the
time
of personal delivery, if delivery is in person; (ii) one (1) business day
after
deposit with an express overnight courier for United States deliveries, or
two
(2) business days after such deposit for deliveries outside of the United
States, with proof of delivery from the courier requested; or (iii) three
(3)
business days after deposit in the United States mail by certified mail (return
receipt requested) for United States deliveries when addressed to the Investor,
to 0/X Xxxxxxx Xxxxxxxx, 0 Xxxxxx Xxxxxx, Xxxxxxx, Xxxx
Xxxx or, in the case of the Company, to 00/X, Xxxxxxxxx
Xxxxxxx Xxxxx, 000 Xxxxxxxxxx Xxxx, Xxxxxxx, Xxxx Xxxx, Attention: Chief
Executive Officer, or at such other
address as any party may designate by giving ten (10) days’ advance written
notice to all other parties.
6.7 Commitment
Fee. 2% of the Principle Amount payable to the Investor and
deductible from the Principle Amount on the Closing Date.
6.8 Amendments
and Waivers. Any term of this Agreement, the Note, and the Warrant
may be amended and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Investor.
Any amendment or waiver effected in accordance with this Section 6.8
shall be binding upon each holder of Note or Warrant at the time
outstanding.
6.9 Severability.
If one or more provisions of this Agreement are held to be unenforceable under
applicable law, such provision(s) shall be excluded from this Agreement and
the
balance of the Agreement shall be interpreted as if such provision(s) were
so
excluded and shall be enforceable in accordance with its terms.
6.10 Entire
Agreement. This Agreement, together with all exhibits and schedules
hereto, the Note and the Warrant entered into pursuant hereto, constitutes
the
entire agreement and understanding of the parties with respect to the subject
matter hereof and supersedes any and all prior negotiations, correspondence,
agreements, understandings duties or obligations between the parties with
respect to the subject matter hereof .
6.11 Further
Assurances. From and after the date of this Agreement, upon the
request of the Investor or the Company, the Company and the Investor shall
execute and deliver such instruments, documents or other writings as may be
reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement
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IN
WITNESS WHEREOF, the undersigned has executed this Agreement as of the date
first above written.
COMPANY: | |||
NETWORK CN INC. | |||
|
By:
|
/s/ Xxxxxxx Xxx | |
Xxxxxxx Xxx | |||
Chief
Executive Officer
|
|||
INVESTOR: | |||
WEI AN DEVELOPMENTS LTD. | |||
|
By:
|
/s/ Signature illegible | |
Name: | |||
Title: Director | |||