As filed with the Securities and Exchange Commission on April 6, 2007.

Registration No. 333-

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

____________

 

FORM S-8

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

 

____________

 

NETWORK CN INC.

(Exact Name of Registrant as Specified in Its Charter)

 

 

  Delaware  

11-3177042

 
 

(State or Other Jurisdiction of Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

 


 

21/F., Chinachem Century Tower,  178 Gloucester Road, Wanchai, Hong Kong  

(Address of Principal Executive Offices)

 

____________

 

Option Agreement for Mark E. Crone, Alisande M. Rozynko and Sean O'Halloran
NETWORK CN INC. 2007 STOCK OPTION/STOCK ISSUANCE PLAN


( Full Title of the Plan)

 

 

GODFREY CHIN TONG HUI
CHIEF EXECUTIVE OFFICER
 

21/F., Chinachem Century Tower,  178 Gloucester Road, Wanchai, Hong Kong  

(011) (852) 2833-2186

(Name, Address and Telephone Number of Agent For Service)

 

____________

with copies to:

Crone Rozynko LLP
101 Montgomery Street, Suite 1950
San Francisco, CA 94104
(415) 955-8900

 

CALCULATION OF REGISTRATION FEE

Title Of Securities

To Be Registered

 

Amount To Be Registered

 

Proposed
Maximum Offering Price Per Share

 

Proposed
Maximum
Aggregate Offering Price

 

Amount of Registration Fee

 

Common Stock, $0.001 par value, , to be issued under the 2007 Stock Option/Stock Issuance Plan (1)

 

 

7,500,000

 

$

3.10 (2)

 

$

23,250,000 (2)

 

$

713.75

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock, $0.001 par value

 

100,000(3)

 

$

0.10 (4).

 

$

10,000(4)

 

$

0.31

 

Common Stock, $0.001 par value 

 

100,000(3)

 

$

0.10 (4)..

 

$

10,000(4)

 

$

0.31

 

Common Stock, $0.001 par value 

 

25,000(3)

 

$

0.10 (4)..

 

$

2,500(4)

 

$

0.076

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

7,725,000

 

 

 

 

$

 

 

$

714.45

 

 

 

(1)

Pursuant to Rule 416 under the Securities Act of 1933, to the extent additional shares of our Common Stock may be issued or issuable as a result of a stock split or other distribution declared at any time by our Board of Directors while this Registration Statement is in effect, this Registration Statement is hereby deemed to cover all such additional shares of Common Stock.

 

 

(2)

Estimated solely for the purpose of determining the registration fee and computed pursuant to Rule 457(c) and Rule 457(h)(1) and based upon the average of the high and low sale prices on March 30, 2007 as reported by the Over The Counter Bulletin Board.

 

(3)

 

Pursuant to option agreements for Mark E. Crone, Alisande M. Rozynko and Sean O’Halloran.

 

(4)

 

Priced in accordance with Rule 457(h) and Rule 457(c) at the exercise price for each of these options.

 

 

Part I

 

INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS

 

EXPLANATORY NOTE

 

     This Registration Statement on Form S-8 relates to the Registrant's 2007 Stock Option/Stock Issuance Plan (the "2007 Plan") as well as option agreements issued to Mark Crone, Alisande Rozynko and Sean O’Halloran, consultants to the Registrant.

 

     In accordance with the Note to Part I of Form S-8, the information specified by Part I of S-8 has been omitted from this Registration Statement on Form S-8.  Such information will be sent or given to participants in the 2007 Plan described herein as specified by Rule 428(b)(1) under the Securities Act of 1933, as amended (the “Securities Act”).  Although such documents are not being filed with the Securities and Exchange Commission, they constitute (along with the documents incorporated by reference into this Registration Statement pursuant to Item 3 of Part II hereof) a prospectus that meets the requirements of Section 10(a) of the Securities Act.

 

  

 

Part II

 

INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

 

Item 3.   Incorporation of Documents By Reference.

 

The following documents, which have been filed by Network CN, Inc. (the “Company” or “Registrant”), with the Securities and Exchange Commission (the “Commission”) are incorporated herein by reference in this Registration Statement:

 

 

(a)

The Registrant’s annual report on Form 10-KSB for the fiscal year ended December 31, 2006 filed on April 2, 2007;

 

 

(b)

The Registrant’s quarterly reports on Form 10-QSB for the quarters ended March 31, 2006, June 30, 2006 and September 30, 2006;

 

 

(c)

The Registrant’s current reports on Form 8-K filed on May 4, 2006, June 1, 2006, June 20, 2006 (subsequently amended by Forms 8-K/A filed on August 28, 2006, September 26, November 9, 2006 and March 30, 2007), June 29, 2006, August 22, 2006, September 15, 2006, September 18, 2006, September 26, 2006, October 24, 2006, November 1, 2006, November 15, 2006, November 20, 2006, November 29, 2006, December 21, 2006, January 25, 2007, February 2, 2007(subsequently amended by Form 8-K/A filed on March 30, 2007), February 13, 2007, February 15, 2007 (subsequently amended by Form 8K/A filed on February 23, 2007), February 27, 2007, and March 7, 2007.

 

 

(d)

The description of the Registrant’s common stock, par value $0.001 per share, contained in the Registration Statement on Form 10-SB12G (File No. 033-87994) filed September, 3, 1999, including any further amendments or reports filed hereafter for purposes of updating such description.

 


All documents filed by the Registrant pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the date hereof and prior to the filing of a post-effective amendment which indicates that all securities offered hereunder have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein will be deemed to be modified or superseded for purposes of this Registration Statement to the extent that a statement contained herein or in any other subsequently filed document which also is, or is deemed to be, incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this Registration Statement.

 

Item 4.   Description of Securities.

 

Not Applicable.

 

Item 5.   Interests of Named Experts and Counsel.

 

The validity of the securities registered hereby is being passed upon for Network CN Inc. by Crone Rozynko LLP, counsel to the Company. The Company has agreed to issue to partners of Crone Rozynko, LLP 45,000 shares of the Company’s common stock registered pursuant to this Registration Statement as compensation forlegal services. As of the effective date of this registration statement, partners of Crone Rozynko LLP,

 

 

have received options exercisable for an aggregate of 225,000 shares of the Company’s common stock, which are also being registered hereby.

 

Item 6.   Indemnification of Officers and Directors.

 

Section 145(a) of the Delaware General Corporation Law provides in relevant part that “[a] corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person’s conduct was unlawful.” With respect to derivative actions, Section 145(b) of the Delaware General Corporation Law provides in relevant part that “[a] corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor . . . [by reason of such person’s service in one of the capacities specified in the preceding sentence] against expenses (including attorneys’ fees) actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.”

The Company’s Amended and Restated Certificate of Incorporation and Bylaws provide that the Company shall indemnify its directors and officers to the fullest extent permitted under the Delaware General Corporation Law, except that the Company will not be required to indemnify such person if the indemnification sought is in connection with a proceeding initiated by such person without the authorization of the board of directors. As permitted by the Company’s Bylaws, the Company may obtain insurance on behalf of its directors and officers against liability arising out of his or her actions in such capacity, regardless of whether the Company has the power to indemnify such individual against such liability under the provisions of the Delaware General Corporation Law.

The Company intends to enter into indemnification agreements, within the next 60 to 90 days, with each of its directors and executive officers that provide the maximum indemnity allowed to directors and executive officers by Section 145 of the Delaware General Corporation Law.

The Company has also obtained on behalf of its directors and executive officers insurance against losses arising from claim asserted against or incurred by such individual in any such capacity, subject to certain exclusions.

 

The indemnification provision in the Company’s Amended and Restated Certificate of Incorporation Bylaws may be sufficiently broad to permit indemnification of the Company’s officers and directors for liabilities arising under the Securities Act of 1933, as amended (the “Securities Act”).

 

Item 7.   Exemption from Registration Claimed.

 

Not Applicable.

 

 

Item 8.     Exhibits.

 

See Exhibit Index immediately following the signature page.

 

Item 9.     Undertakings.

 

A.        The undersigned registrant hereby undertakes:

 

(1)     To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement;

 
                             (i)       To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;


                             (ii)      To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; and

                             (iii)     To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs A(1)(i) and A(1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement.

 

(2)     That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

 

(3)     To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

 

B.        The undersigned registrant hereby undertakes that, for purposes of determining liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the registration statement shall be deemed a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

 

C.        Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion o f its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

 

 

  

SIGNATURES

 

Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Wanchai, Hong Kong, on April 6, 2007.

 

 

    Network CN Inc.
 
 
  By: /s/ Godfrey Chin Tong Hui
    Godfrey Chin Tong Hui
    Chief Executive Officer
(Principal Executive Officer) 

 

 

 

POWER OF ATTORNEY

 

Each person whose signature appears below hereby severally constitutes and appoints Godfrey Chin Tong Hui , as his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities to sign any and all amendments to this registration statement on Form S-8, including any post-effective amendments hereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that each said attorney-in-fact and agents or any of them or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

 

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form S-8 has been signed by the following persons in the capacities and on the dates indicated.

 

Signature

 

Title Date

 

 

 

/s/ Godfrey Chin Tong Hui 

 

Director & Chief Executive Officer 

4/6/2007

Godfrey Chin Tong Hui

 

 

 

 

 

/s/ Benedict Fung                     

 

President

4/6/2007

Benedict Fung

 

 

 

 

 

/s/ Raymond Chan                         

 

Director

4/6/2007

Raymond Chan

 

 

 

 

 

/s/ Stanley Chu

 

Director

4/6/2007

Stanley Chu

 

 

 

 

 

/s/ Daniel Kuen Kwok So       

 

Director

4/6/2007

Daniel Kuen Kwok So

 

 

     

/s/ Daley Mok

 

Chief Financial Officer

4/6/2007

Daley Mok

 

(Principal Financial and Accounting Officer)

 

 
 

EXHIBIT INDEX

 

 

Exhibit Number

Description

 

 

4.1

Articles of Incorporation incorporated herein by reference from Registrant’s Report on Form 10-SB12G/A filed with the SEC on January 24, 2000.

 

 

4.2

Amendment to Articles of Incorporation incorporated herein by reference from Exhibit A to Registrant’s Definitive Information Statement on Schedule 14C filed with the SEC on March 26, 2004.

 

 

4.3

Amendment to Articles of Incorporation incorporated herein by reference from Exhibit A to Registrant’s Definitive Information Statement on Schedule 14A filed with the SEC on July 12, 2006.

 

 

4.4

Amended and Restated By-Laws, adopted on January 10, 2006, is incorporated herein by reference from Exhibit 3-(II) to Registrant’s Current Report on Form 8-K filed with the SEC on January 18, 2006.  

 

 

 5.1*  

Opinion of Crone Rozynko LLP as to the legality of the securities registered hereunder.

   

10.1*

Network CN Inc. 2007 Equity Incentive Plan.

 

 

10.2*

Form of Stock Option Agreement for Mark E. Crone.

   

10.3*

Form of Stock Option Agreement for Alisande M. Rozynko.

   

10.4*

Form of Stock Option Agreement for Sean O’Halloran.

   

 

23.1*

Consent of Independent Auditor - Webb & Company P.A.

   
23.2*

Consent of Independent Auditor - Jimmy C.H. Cheung & Co.

 

 

23.3*

Consent of Crone Rozynko LLP (contained in Opinion of Crone Rozynko LLP, filed as Exhibit 5.1 herewith).

 

 

24.1*

Power of Attorney (set forth on the signature page to this Registration Statement).

 

*Filed herewith. 

 

Exhibit 5.1

 

CRONE ROZYNKO, LLP

101Montgomery Street

Suite 1950

San Francisco, California 94104

Telephone (415) 955-8900

Facsimile (415) 955-8910

 

April 6, 2007

Network CN, Inc.

21/F., Chinachem Century Tower

178 Gloucester Road

Wanchai, Hong Kong

Ladies and Gentlemen:

With reference to the Registration Statement on Form S-8 to be filed by Network CN Inc., a Delaware corporation (the “Company”), with the Securities and Exchange Commission under the Securities Act of 1933, as amended, relating to 7,725,000 shares of the Company’s Common Stock issuable pursuant to the Company’s 2007 Equity Incentive Plan, and Stock Option Agreements with Mark E. Crone, Alisande M. Rozynko and Sean O’Halloran (the “Equity Plans”), it is our opinion that such shares of the Common Stock of the Company, when issued and sold in accordance with the Equity Plans, will be legally issued, fully paid and nonassessable.

We hereby consent to the filing of this opinion with the Securities and Exchange Commission as Exhibit 5.1 to the Registration Statement.

Very truly yours,

CRONE ROZYNKO, LLP

/S/CRONE ROZYNKO, LLP

 

 

 

Exhibit 10.1

 

NETWORK CN INC.
 

2007 STOCK OPTION/STOCK ISSUANCE PLAN  
 

ARTICLE ONE  
 

GENERAL PROVISIONS  
 

I.    PURPOSE OF THE PLAN

 

This Plan is intended to promote the interests of Network CN Inc. (the “Corporation”), by providing eligible persons employed by or serving the Corporation or any Subsidiary or Parent with the opportunity to acquire a proprietary interest, or otherwise increase their proprietary interest, in the Corporation as an incentive for them to continue in such employ or service.

 

Capitalized terms herein shall have the meanings assigned to such terms in the attached Appendix.

 

II.     STRUCTURE OF THE PLAN  

 

A. The Plan shall be divided into two separate equity programs:

 

(1) the Option Grant Program under which eligible persons may, at the discretion of the Plan Administrator, be granted options to purchase shares of Common Stock, and

 

(2) the Stock Issuance Program under which eligible persons may, at the discretion of the Plan Administrator, be issued shares of Common Stock directly, either through the immediate purchase of such shares or as a bonus for services rendered the Corporation (or any Parent or Subsidiary).

 

B. The provisions of Articles One and Four shall apply to both equity programs under the Plan and shall accordingly govern the interests of all persons under the Plan.

 

III.    ADMINISTRATION OF THE PLAN

 

A.    The Board shall administer the Plan. However, any or all administrative functions otherwise exercisable by the Board may be delegated to the Committee. Members of the Committee shall serve for such period of time as the Board may determine and shall be subject to removal by the Board at any time. The Board may also at any time terminate the functions of the Committee and reassume all powers and authority previously delegated to the Committee. The initial Committee and Plan Administrator shall be the Chief Executive Officer of the Corporation; provided that he/she remains a director of the Corporation.

 

B.    The Plan Administrator shall have full power and authority (subject to the provisions of the Plan) to establish such rules and procedures as it may deem appropriate for proper administration of the Plan and to make such determinations under, and issue such interpretations of, the Plan and any outstanding options or stock issued under the Plan as it may deem necessary or advisable. Decisions of the Plan Administrator shall be final and binding on all parties who have an interest in the Plan or any option grant or stock issued under the Plan.

 

C.    The Plan Administrator shall have full authority to determine, (1) with respect to the grants made under the Option Grant Program, which eligible persons are to receive such grants, the time or times when those grants are to be made, the number of shares to be covered by each such grant, the status of the granted option as either an Incentive Option or a Non-Statutory Option, the time or times when each option is to become exercisable, the vesting schedule (if any) applicable to the option shares and the maximum term for which the option is to remain outstanding, and (2) with respect to stock issuances made under the Stock Issuance Program, which eligible persons are to receive such issuances, the time or times when those issuances are to be made, the number of shares to be issued to each Participant, the vesting schedule (if any) applicable to the issued shares and the consideration to be paid by the Participant for such shares. Each option grant or stock issuance approved by the Plan Administrator shall be evidenced by the appropriate documentation.

 

 

   IV.    ELIGIBILITY

 

   A.    The persons eligible to participate in the Plan are as follows:

 

(1) employees;

 

(2) members of the Board and the members of the board of directors of any Parent or Subsidiary; and

 

(3) independent contractors who provide services to the Corporation (or any Parent or Subsidiary).
 

 

V.     STOCK SUBJECT TO THE PLAN

 

A.    The shares issuable under the Plan shall be shares of authorized but unissued or reacquired shares of Common Stock. The maximum number of shares of Common Stock that may be issued and outstanding or subject to options outstanding under the Plan shall not exceed seven million five hundred thousand (7,500,000) shares.

 

B.     Shares of Common Stock subject to outstanding options shall be available for subsequent issuance under the Plan to the extent (1) the options expire or terminate for any reason prior to exercise in full or (2) the options are cancelled in accordance with the cancellation and re-grant provisions of Article Two. Unvested Shares issued under the Plan and subsequently repurchased by the Corporation, at a price per share not greater than the option exercise or direct issue price paid per share, pursuant to the Corporation’s repurchase rights under the Plan shall be added back to the number of shares of Common Stock reserved for issuance under the Plan and shall accordingly be available for reissuance through one or more subsequent option grants or direct stock issuances under the Plan.

 

C.     Should any change be made to the Common Stock by reason of any stock split, stock dividend, reverse stock split, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration, appropriate adjustments shall be made to (1) the maximum number and/or class of securities issuable under the Plan and (2) the number and/or class of securities and the exercise price per share in effect under each outstanding option in order to prevent the dilution or enlargement of benefits thereunder. The adjustments determined by the Plan Administrator shall be final and binding. In no event shall any such adjustments be made in connection with the conversion of one or more outstanding shares of the Corporation’s preferred stock into shares of Common Stock.

 

D.     The grant of options or the issuance of shares of Common Stock under the Plan shall in no way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

 

 

ARTICLE TWO

 

OPTION GRANT PROGRAM  

 

I     OPTION TERM

 

A.    Agreement

 

Each option shall be in such form and shall contain such terms and conditions as the Board or Committee shall deem appropriate. All Options shall be separately designated Incentive Stock Options or Non-Statutory Stock Options at the time of grant, and, if certificates are issued, a separate certificate or certificates will be issued for shares of Common Stock purchased on exercise of each type of Option. The provisions of separate Options need not be identical, but each Option shall be subject to the terms and conditions of the Plan:

 

   B.    Exercise Price .

 

(1) The Plan Administrator shall fix the exercise price per share, subject to any requirements of U.S. federal and state securities laws. However, with respect to Incentive Stock Options, (a) if the option is granted to a 10% Stockholder, the exercise price per share must not be less than 110% of the Fair Market Value per share of Common Stock on the date the option is granted, and (b) if the option is granted to an Optionee who is not a 10% Stockholder, the exercise price per share shall not be less than 100% of the Fair Market Value per share of Common Stock on the date the option is granted. Notwithstanding the foregoing, options may be granted with a per share exercise price other than as required above pursuant to a merger or other corporate transaction.

 

(2) The exercise price shall become immediately due upon exercise of the option and shall, subject to the provisions of Section I of Article Four and the documents evidencing the option, be payable in cash or check made payable to the Corporation. Should the Common Stock be registered under Section 12 of the 1934 Act at the time the option is exercised, then the exercise price (and any applicable withholding taxes) may also be paid as follows:

 

(a) in shares of Common Stock held for the requisite period, if any, necessary to avoid a charge to the Corporation’s earnings for financial reporting purposes and valued at Fair Market Value on the Exercise Date, or

 

(b) to the extent the option is exercised for Vested Shares, through a special sale and remittance procedure pursuant to which the Optionee shall concurrently provide irrevocable instructions (i) to a Corporation-designated brokerage firm to effect the immediate sale of the purchased shares and remit to the Corporation, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate exercise price payable for the purchased shares plus all applicable income and employment taxes required to be withheld by the Corporation by reason of such exercise and (ii) to the Corporation to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sale.

 

Except to the extent such sale and remittance procedure is utilized, payment of the exercise price for the purchased shares must be made on the Exercise Date.

 

   C.    Exercise and Term of Options . Each option shall be exercisable at such time or times, during such period and for such number of shares as shall be determined by the Plan Administrator and set forth in the documents evidencing the option grant. However, no Incentive Stock Option shall have a term in excess of ten years measured from the option grant date.

 

   D.    Effect of Termination of Service .

 

(1) The following provisions shall govern the exercise of any options granted to the Optionee that remain outstanding at the time the Optionee’s Service ceases:

 

 

(a) Should the Optionee cease to remain in Service for any reason other than death, Disability or Misconduct, then each option shall be exercisable for the number of shares subject to the option that were Vested Shares at the time the Optionee’s Service ceased and shall remain exercisable until the close of business on the earlier of (i) the three month anniversary of the date Optionee’s Service ceased or (ii) the expiration date of the option.

 

(b) Should the Optionee cease to remain in Service by reason of death or Disability, then each option shall be exercisable for the number of shares subject to the option which were Vested Shares at the time of the Optionee’s Service ceased and shall remain exercisable until the close of business on the earlier of (i) the twelve month anniversary of the date Optionee’s Service ceased or (ii) expiration date of the option.

 

(c) No additional vesting will occur after the date the Optionee’s Service ceases, and the option shall immediately terminate with respect to the Unvested Shares. Upon the expiration of any post-Service exercise period or (if earlier) upon the expiration date of the term of the option, the option shall terminate with respect to the Vested Shares.

 

(d) Should the Optionee’s Service be terminated for Misconduct or should the Optionee otherwise engage in Misconduct, then each outstanding option granted to the Optionee shall terminate immediately with respect to all shares.

 

(2) Understanding that there may be adverse tax and accounting consequences to doing so, the Plan Administrator shall have the discretion, exercisable either at the time an option is granted or at any time while the option remains outstanding, to:

 

(a) extend the period of time for which the option is to remain exercisable following the Optionee’s cessation of Service for such period of time as the Plan Administrator shall deem appropriate, but in no event beyond the expiration of the option, and/or

 

(b) permit the option to be exercised, during the applicable post-Service exercise period, not only with respect to the number of Vested Shares for which such option is exercisable at the time of the Optionee’s cessation of Service but also with respect to one or more additional installments in which the Optionee would have vested under the option had the Optionee continued in Service.

 

   E.     Stockholder Rights . The holder of an option shall have no stockholder rights with respect to the shares subject to the option until such person shall have exercised the option, paid the exercise price and become the recordholder of the purchased shares.

 

   F.     Unvested Shares . The Plan Administrator shall have the discretion to grant options that are exercisable for Unvested Shares. Should the Optionee’s Service cease while the shares issued upon the early exercise of the Optionee’s option are still unvested, the Corporation shall have the right to repurchase, any or all of those Unvested Shares at the lower of (1) the exercise price paid per share, or (2) the Fair Market Value per share on the date the Optionee’s Service ceased. Once the Corporation exercises its repurchase right, the Optionee shall have no further stockholder rights with respect to those shares. The terms upon which such repurchase right shall be exercisable (including the period and procedure for exercise and the appropriate vesting schedule for the purchased shares) shall be established by the Plan Administrator and set forth in the document evidencing such repurchase right. Any such repurchase must be made in accordance with applicable corporate law. The Plan Administrator may set the vesting schedule, subject to applicable U.S. federal and state securities laws.

 

  G.      Limited Transferability of Options . An Incentive Option shall be exercisable only by the Optionee during his or her lifetime and shall not be assignable or transferable other than by will or by the laws of inheritance following the Optionee’s death. A Non-Statutory Option may be assigned in whole or in part during the Optionee’s lifetime to one or more members of the Optionee’s family (as defined in Rule 701 promulgated by the Securities and Exchange Commission) or to a trust established exclusively for one or more such family members or to the Optionee’s former spouse, to the extent such assignment is in connection with the Optionee’s estate plan or pursuant to a domestic relations order. The terms applicable to the assigned portion

 

 

shall be the same as those in effect for the option immediately prior to such assignment and shall be set forth in such documents issued to the assignee as the Plan Administrator may deem appropriate.

 

II.    INCENTIVE OPTIONS

 

The terms specified below shall be applicable to all Incentive Options. Except as modified by the provisions of this Section II, all the provisions of Articles One, Two and Four shall be applicable to Incentive Options. Options that are specifically designated as Non-Statutory Options shall not be subject to the terms of this Section II.

 

A. Eligibility . Incentive Options may only be granted to Employees.

 

B. Dollar Limitation . The aggregate Fair Market Value of the shares of Common Stock (determined as of the respective date or dates of grant) for which one or more options granted to any Employee under the Plan (or any other option plan of the Corporation or any Parent or Subsidiary) may for the first time become exercisable as Incentive Options during any one calendar year shall not exceed $100,000.

 

C. Term of Option Granted to a 10% Stockholder . If any Employee to whom an Incentive Option is granted is a 10% Stockholder, then the option term shall not exceed five years measured from the date the option is granted.

 

III.    CHANGE IN CONTROL

 

A. The shares subject to each option outstanding under the Plan at the time of a Change in Control shall automatically become Vested Shares, and each such option shall, immediately prior to the effective date of the Change in Control, become exercisable for all of the shares of Common Stock at the time subject to that option. However, the shares subject to an outstanding option shall not become Vested Shares on an accelerated basis if and to the extent: (1) such option is assumed by the successor corporation (or parent thereof) or otherwise continued in full force and effect pursuant to the terms of the Change in Control transaction or (2) such option is to be replaced with a cash incentive program of the Corporation or any successor corporation which preserves the spread existing on the Unvested Shares at the time of the Change in Control and provides for subsequent payout of that spread no later than the time the Optionee would vest in those Unvested Shares or (3) the acceleration of such option is subject to other limitations imposed by the Plan Administrator.

 

B. All outstanding repurchase rights under the Option Grant Program shall also terminate automatically, and the shares of Common Stock subject to those terminated rights shall immediately become Vested Shares, in the event of any Change in Control, except to the extent: (1) those repurchase rights are assigned to the successor corporation (or parent thereof) or otherwise continued in effect pursuant to the terms of the Change in Control transaction, (2) the property (including cash payments) issued with respect to Unvested Shares is to be held in escrow and released in accordance with the vesting schedule in effect for the Unvested Shares pursuant to the Change in Control transaction or (3) such accelerated vesting is precluded by other limitations imposed by the Plan Administrator.

 

C. Immediately following the consummation of the Change in Control, all outstanding options shall terminate, except to the extent assumed by the successor corporation (or parent thereof) or otherwise continued in effect pursuant to the terms of the Change in Control transaction.

 

D. Each option that is assumed in connection with a Change in Control or otherwise continued in effect shall be appropriately adjusted, immediately after such Change in Control, to apply to the number and class of securities which would have been issuable to the Optionee in consummation of such Change in Control, had the option been exercised immediately prior to such Change in Control. Appropriate adjustments shall also be made to (1) the number and class of securities available for issuance under the Plan following the consummation of such Change in Control and (2) the exercise price payable per share under each outstanding option, provided the aggregate exercise price payable for such securities shall remain the same. To the extent the holders of the Common Stock receive cash consideration for their Common Stock in consummation of the Change in Control, the successor corporation may, in connection with the assumption of the outstanding options under this Plan,

 

 

substitute one or more shares of its own common stock with a fair market value equivalent to the cash consideration paid per share of Common Stock in such Change in Control.

 

E. The Plan Administrator shall have the discretion, exercisable either at the time the option is granted or at any time while the option remains outstanding, to structure one or more options so that the option shall become immediately exercisable and some or all of the shares subject to those options shall automatically become Vested Shares (and some or all of the repurchase rights of the Corporation with respect to the Unvested Shares subject to those options shall immediately terminate) upon the occurrence of a Change in Control or another specified event, or the Optionee’s Involuntary Termination within a designated period following a specified event.

 

F. In addition, the Plan Administrator may provide that one or more of the Corporation’s outstanding repurchase rights with respect to some or all of the shares held by the Optionee at the time of a Change in Control or other specified event, or the Optionee’s Involuntary Termination following a specified event, shall immediately terminate on an accelerated basis, and the shares subject to those terminated rights shall become Vested Shares at that time.

 

G. The portion of any Incentive Option accelerated in connection with a Change in Control shall remain exercisable as an Incentive Option only to the extent the applicable $100,000 limitation set forth in Section II.C. of Article Two is not exceeded. To the extent such dollar limitation is exceeded, the accelerated portion of such option shall be exercisable as a Non-Statutory Option under the federal tax laws.

 

IV.    CANCELLATION AND REGRANT OF OPTIONS

 

The Plan Administrator shall have the authority to effect, at any time and from time to time, with the consent of the affected option holders, the cancellation of any or all outstanding options under the Plan and to grant in substitution therefor new options covering the same or different number of shares of Common Stock.

 

ARTICLE THREE

 

STOCK ISSUANCE PROGRAM  

 

 

I.

STOCK ISSUANCE TERMS

 

A.   Stock Awards

 

  Each stock bonus agreement and restricted stock purchase agreement shall be in such form and shall contain such terms and conditions as the Board or Committee shall deem appropriate. The term and conditions as the Board shall deem appropriate. The terms and conditions of such stock bonus and restricted stock purchase agreements may change from time to time, and the terms and conditions of separate stock bonus or restricted stock purchase agreements need not be identical, but each stock bonus and restricted stock purchase agreement shall be subject to the terms and conditions of the Plan.

 

B.   Purchase Price .

 

(1) The Plan Administrator shall fix the purchase price per share, subject to any requirements of U.S. federal and state securities laws.

 

(2) Shares of Common Stock may be issued under the Stock Issuance Program for any of the following items of consideration which the Plan Administrator may deem appropriate in each individual instance:

 

(a) cash or check made payable to the Corporation,

 

(b) past services rendered to the Corporation (or any Parent or Subsidiary), or

 

 

(c) a promissory note to the extent permitted by Section I of Article Four.

 

C.   Vesting Provisions .

 

    (1)   Shares of Common Stock issued under the Stock Issuance Program may, in the discretion of the Plan Administrator, be Vested Shares or may vest in one or more installments over the Participant’s period of Service or upon attainment of specified performance objectives.

 

  (2)   Any new, substituted or additional securities or other property (including money paid other than as a regular cash dividend) which the Participant may have the right to receive with respect to the Participant’s Unvested Shares by reason of any stock dividend, stock split, reverse stock split, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration shall be issued subject to (a) the same vesting requirements applicable to the Participant’s Unvested Shares treated as if acquired on the same date as the Unvested Shares and (b) such escrow arrangements as the Plan Administrator shall deem appropriate.

 

    (3)   The Participant shall have full stockholder rights with respect to any shares of Common Stock issued to the Participant under the Stock Issuance Program, whether or not the Participant’s interest in those shares is vested. Accordingly, the Participant shall have the right to vote such shares and to receive any regular cash dividends paid on such shares.

 

    (4)   Should the Participant cease to remain in Service while holding one or more Unvested Shares issued under the Stock Issuance Program or should the performance objectives not be attained with respect to one or more such Unvested Shares, then the Corporation shall have the right to repurchase the Unvested Shares at the lower of (a) the purchase price paid per share or (b) the Fair Market Value per share on the date Participant’s Service ceased or the performance objective was not attained. The terms upon which such repurchase right shall be exercisable shall be established by the Plan Administrator and set forth in the document evidencing such repurchase right. Any repurchase must be made in compliance with the relevant provisions of California law.

 

    (5)   The Plan Administrator may in its discretion waive the surrender and cancellation of one or more Unvested Shares (or other assets attributable thereto) which would otherwise occur upon the non-completion of the vesting schedule applicable to those shares. Such waiver shall result in the immediate vesting of the Participant’s interest in the shares of Common Stock as to which the waiver applies. Such waiver may be effected at any time, whether before or after the Participant’s Service ceases or he or she attains the applicable performance objectives.

 

 

II.

CHANGE IN CONTROL

 

A. Upon the occurrence of a Change in Control, all outstanding repurchase rights under the Stock Issuance Program shall terminate automatically, and the shares of Common Stock subject to those terminated rights shall immediately become Vested Shares, except to the extent: (1) those repurchase rights are assigned to the successor corporation (or parent thereof) or otherwise continued in effect pursuant to the terms of the Change in Control transaction, (2) the property (including cash payments) issued with respect to the Unvested Shares is held in escrow and released in accordance with the vesting schedule in effect for the Unvested Shares pursuant to the terms of the Change in Control transaction, or (3) such accelerated vesting is precluded by other limitations imposed by the Plan Administrator.

 

B.  The Plan Administrator shall have the discretionary authority, exercisable either at the time the Unvested Shares are issued or any time while the Corporation’s repurchase rights with respect to those shares remain outstanding, to provide that those rights shall automatically terminate in whole or in part on an accelerated basis, and some or all of the shares of Common Stock subject to those terminated rights shall immediately become Vested Shares, in the event of a Change of Control or other event or the Participant’s Service is terminated by reason of an Involuntary Termination within a designated period following a Change in Control or any other specified event.

 

 

ARTICLE FOUR

 

MISCELLANEOUS  

 

 

I.

FINANCING

 

The Plan Administrator may permit any Optionee or Participant to pay the option exercise price under the Option Grant Program or the purchase price for shares issued under the Stock Issuance Program by delivering a full-recourse, interest bearing promissory note secured by the purchased shares. The Plan Administrator, after considering the potential adverse tax and accounting consequences, shall set the remaining terms of the note. In no event may the maximum credit available to the Optionee or Participant exceed the sum of (A) the aggregate option exercise price or purchase price payable for the purchased shares (less the par value of those shares) plus (B) any applicable income and employment tax liability incurred by the Optionee or the Participant in connection with the option exercise or share purchase.

 

 

II.

FIRST REFUSAL RIGHTS

 

Upon the grant of options or shares, the Corporation may impose a right of first refusal with respect to any proposed disposition by the Optionee or Participant (or any successor in interest) of any shares of Common Stock issued under the Plan. Such right of first refusal shall be exercisable and lapse in accordance with the terms established by the Plan Administrator and set forth in the document evidencing such right.

 

 

III.

SHARE ESCROW/LEGENDS

 

Unvested Shares may, in the Plan Administrator’s discretion, be held in escrow by the Corporation until the Unvested Shares vest or may be issued directly to the Participant or Optionee with restrictive legends on the certificates evidencing the fact that the Participant or Optionee does not have a vested right to them.

 

 

IV.

EFFECTIVE DATE AND TERM OF PLAN

 

A.  The Plan shall become effective when adopted by the Board, but no Incentive Stock Options granted under the Plan may be exercised until the Corporation’s stockholders approve the Plan. Subject to such limitation, the Plan Administrator may grant options and issue shares under the Plan at any time after the effective date of the Plan and before the date fixed herein for termination of the Plan.

 

B.  The Plan shall terminate upon the earlier of (1) the expiration of the ten year period measured from the date the Plan is adopted by the Board or (2) termination by the Board. All options and unvested stock issuances outstanding at the time of the termination of the Plan shall continue in effect in accordance with the provisions of the documents evidencing those options or issuances.

 

 

V.

AMENDMENT OR TERMINATION OF THE PLAN

 

A.  The Board shall have complete and exclusive power and authority to amend or terminate the Plan or any awards made thereunder in any or all respects. However, no such amendment or termination shall adversely affect the rights and obligations with respect to options or unvested stock issuances at the time outstanding under the Plan unless the Optionee or the Participant consents to such amendment or termination. In addition, certain amendments may require stockholder approval pursuant to applicable laws and regulations.

 

B.  Although there may be adverse accounting consequences to doing so, options may be granted under the Option Grant Program and shares may be issued under the Stock Issuance Program which are in each instance in excess of the number of shares of Common Stock then available for issuance under the Plan, provided any excess shares actually issued under those programs shall be held in escrow until there is obtained stockholder approval of an amendment sufficiently increasing the number of shares of Common Stock available for issuance under the Plan. If such stockholder approval is not obtained within twelve months after the date the first such excess grants or issuances are made, then (1) any unexercised options granted on the basis of such excess shares shall terminate and (2) the Corporation shall promptly refund to the Optionees and the

 

 

Participants the exercise or purchase price paid for any excess shares issued under the Plan and held in escrow, together with interest (at the applicable Short Term Federal Rate) for the period the shares were held in escrow, and such shares shall thereupon be automatically cancelled.

 

 

VI.

USE OF PROCEEDS

 

Any cash proceeds received by the Corporation from the sale of shares of Common Stock under the Plan shall be used for any corporate purpose.

 

 

VII.

WITHHOLDING

 

The Corporation’s obligation to deliver shares of Common Stock upon the exercise of any options granted under the Plan or upon the issuance or vesting of any shares issued under the Plan shall be subject to the satisfaction of all applicable income and employment tax withholding requirements.

 

 

VIII.  

REGULATORY APPROVALS

 

The implementation of the Plan, the granting of any options under the Plan and the issuance of any shares of Common Stock (A) upon the exercise of any option or (B) under the Stock Issuance Program shall be subject to the Corporation’s procurement of all approvals and permits required by regulatory authorities having jurisdiction over the Plan, the options granted under it and the shares of Common Stock issued pursuant to it.

 

 

IX.

NO EMPLOYMENT OR SERVICE RIGHTS

 

Nothing in the Plan shall confer upon the Optionee or the Participant any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Parent or Subsidiary employing or retaining such person) or of the Optionee or the Participant, which rights are hereby expressly reserved by each, to terminate such person’s Service at any time for any reason, with or without cause.

 

 

 

APPENDIX  

 

The following definitions shall be in effect under the Plan:

 

A.  Board shall mean the Corporation’s Board of Directors.

 

B.  Change in Control shall mean a change in ownership or control of the Corporation effected through any of the following transactions:

 

    (i) a stockholder-approved merger, consolidation or other reorganization in which securities representing more than 50% of the total combined voting power of the Corporation’s outstanding securities are beneficially owned, directly or indirectly, by a person or persons different from the person or persons who beneficially owned those securities immediately prior to such transaction;

 

    (ii) a stockholder-approved sale, transfer or other disposition of all or substantially all of the Corporation’s assets; or

 

    (iii) the acquisition, directly or indirectly, by any person or related group of persons (other than the Corporation or a person that directly or indirectly controls, is controlled by, or is under common control with, the Corporation), of beneficial ownership (within the meaning of Rule 13-d3 of the 1934 Act) of securities possessing more than 50% of the total combined voting power of the Corporation’s outstanding securities from a person or persons other than the Corporation.

 

In no event shall any public offering of the Corporation’s securities be deemed to constitute a Change in Control. In no event shall a merger of the Corporation’s Parent with the Corporation constitute a Change in Control.

 

C. Code shall mean the Internal Revenue Code of 1986, as amended.

 

D. Committee shall mean a committee of one or more Board members appointed by the Board to exercise one or more administrative functions under the Plan.

 

E.  Common Stock shall mean the Corporation’s common stock.

 

F.  Corporation shall mean Network CN Inc., a Delaware corporation, or the successor to all or substantially all of the assets or the voting stock of Network CN Inc. which has assumed the Plan.

 

G.  Disability shall mean the inability of the Optionee or the Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that is expected to result in death or has lasted or can be expected to last for a continuous period of twelve months or more.

 

H.  Employee shall mean an individual who is in the employ of the Corporation (or any Parent or Subsidiary), subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance.

 

I.   Exercise Date shall mean the date on which the option has been exercised in accordance with the applicable option documentation.

 

J.   Fair Market Value per share of Common Stock on any relevant date shall be determined in accordance with the following provisions:

 

(i) If the Common Stock is at the time listed on the Nasdaq Stock Market, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question, as such price is reported by the National Association of Securities Dealers on the Nasdaq Stock Market and published in The Wall Street Journal . If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists.

 

   (ii)   If the Common Stock is at the time listed on any stock exchange, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question on the stock

 

 

exchange determined by the Plan Administrator to be the primary market for the Common Stock, as such price is officially quoted in the composite tape of transactions on such exchange and published in The Wall Street Journal . If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists.

 

   (iii)  If the sales prices of the Common Stock is at the time quoted in the over-the-counter market on the electronic bulletin board, the last reported sales price or, if no such price is reported for such security, the average of the bid prices of all market makers for such security as reported in the “pink sheets” by the National Quotation Bureau, Inc., in each case for such date or, is such date was not a trading day for such security, on the next preceding date that was a trading day.

 

   (iv)    If the Common Stock is at the time neither listed on any stock exchange or the Nasdaq Stock Market or quoted in the over-the-counter market on the electronic bulletin board or in the “pink sheets” by the National Quotation Bureau, Inc., then the Fair Market Value shall be determined by the Plan Administrator after taking into account such factors as the Plan Administrator shall deem appropriate but shall be determined without regard to any restriction other than a restriction which, by its term will never lapse.

 

K. Incentive Option shall mean an option that satisfies the requirements of Code Section 422.

 

L.  Involuntary Termination shall mean the termination of the Service of any individual which occurs by reason of:

 

(i)  such individual’s involuntary dismissal or discharge by the Corporation (or any Parent or Subsidiary) for reasons other than Misconduct, or

 

(ii) such individual’s voluntary resignation following (A) a change in his or her position with the Corporation (or any Parent or Subsidiary) which materially reduces his or her duties and responsibilities, (B) a reduction in his or her base salary by more than 15%, unless the base salaries of all similarly situated individuals are reduced by the Corporation or any Parent or Subsidiary employing the individual, or (C) a relocation of such individual’s place of employment by more than fifty miles, provided and only if such change, reduction or relocation is effected without the individual’s written consent.

 

M. Misconduct shall mean the commission of any act of fraud, embezzlement or dishonesty by the Optionee or Participant, any unauthorized use or disclosure by such person of confidential information or trade secrets of the Corporation (or any Parent or Subsidiary), or any other intentional misconduct by such person adversely affecting the business or affairs of the Corporation (or any Parent or Subsidiary) in a material manner; provided , however , that if the term or concept has been defined in an employment agreement between the Corporation and the Optionee or Participant, then Misconduct shall have the definition set forth in such employment agreement. The foregoing definition shall not in any way preclude or restrict the right of the Corporation (or any Parent or Subsidiary) to discharge or dismiss any Optionee, Participant or other person in the Service of the Corporation (or any Parent or Subsidiary) for any other acts or omissions, but such other acts or omissions shall not be deemed, for purposes of the Plan, to constitute grounds for termination for Misconduct.

 

N. 1934 Act shall mean the Securities Exchange Act of 1934, as amended.

 

O. Non-Statutory Option shall mean an option that does not satisfy the requirements of Code Section 422.

 

P. Option Grant Program shall mean the option grant program in effect under the Plan.

 

Q. Optionee shall mean any person to whom an option is granted under the Plan.

 

R. Parent shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation)

 

 

owns, at the time of the determination, stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

 

S. Participant shall mean any person who is issued shares of Common Stock under the Stock Issuance Program.

 

T. Plan shall mean the Network CN Inc. 2007 Stock Option/Stock Issuance Plan, as set forth in this document.

 

U. Plan Administrator shall mean either the Board or the Committee acting in its capacity as administrator of the Plan.

 

V. Service shall mean the provision of services to the Corporation (or any Parent or Subsidiary) by a person in the capacity of an Employee, a member of the board of directors or an independent contractor, except to the extent otherwise specifically provided in the documents evidencing the option grant.

 

W. Stock Issuance Agreement shall mean the agreement entered into by the Corporation and the Participant at the time of issuance of shares of Common Stock under the Stock Issuance Program.

 

X. Stock Issuance Program shall mean the stock issuance program in effect under the Plan.

 

Y. Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

 

Z. 10% Stockholder shall mean the owner of stock (after taking into account the constructive ownership rules of Section 424(d) of the Code) possessing more than 10% of the total combined voting power of all classes of stock of the Corporation (or any Parent or Subsidiary).

 

AA. Unvested Shares shall mean shares of Common Stock which have not vested in accordance with the vesting schedule applicable to those shares or any special vesting acceleration provisions and which are subject to the Corporation’s repurchase right.

 

BB.  Vested Shares shall mean shares of Common Stock which have vested in accordance with the vesting schedule applicable to those shares or any special vesting acceleration provisions and which are no longer subject to the Corporation’s repurchase right.

 

 

 

                 Exhibit 10.2

STOCK OPTION AGREEMENT

This Stock Option Agreement (the “Option Agreement”) is made as of February 9, 2006 by and between Network CN, Inc. , a Delaware corporation (the “Company”), and Mark E. Crone (the “Optionee”).

WHEREAS, the parties have entered into an agreement to provide legal services dated February 9, 2006 related to the Company’s reporting obligations under the Securities Exchange Act of 1934, as amended (the “Engagement Agreement”);

WHEREAS, pursuant to the Engagement Agreement, the Company has agreed to grant Optionee an option to purchase 100,000 shares of the Company’s Common Stock subject to the terms and conditions hereunder;

NOW, THEREFORE, in consideration of the mutual covenants and representations set forth below, the Company and Optionee agree as follows:

 

1.

Definitions . As used herein, the following definitions shall apply:

  (a) “ Board ” means the Board of Directors of the Company.
     
  (b) “ Change in Control ” means the occurrence of any of the following events:

   (i)      The consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets; or

   (ii)    The consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation.

(c)        “ Parent ” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.

(d)       “ Securities Act means the Securities Act of 1933, as amended.

(e)         “ Subsidiary ” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code.

 

 2.         Grant of Option . The Company hereby grants to Optionee an option (the “Option”) to purchase 100,000 shares of the Company’s Common Stock, $.001 par value (the “Shares”) at an exercise price of $0.10 per Share (the “Exercise Price”). This Option shall be treated as a Nonstatutory Stock Option (“NSO”). 

 3.          Exercise of Option . This Option shall be exercisable during the term hereof by delivery of an exercise notice in the form attached as Exhibit A (the “Exercise Notice”) which shall state the election to exercise the Option, the number of Shares with respect to which the Option is being exercised, and such other representations and agreements as may be required by the Company. The Exercise Notice shall be accompanied by payment of the aggregate Exercise Price as to all Exercised Shares or instructions with respect to which exercise option Optionee has selected, as the case may be. This Option shall be deemed to be exercised upon receipt by the Company of such fully executed Exercise Notice accompanied by the aggregate Exercise Price or instructions with respect to an alternative exercise method, as the case may be. No Shares shall be issued pursuant to the exercise of an Option unless such issuance and such exercise complies with applicable laws. Assuming such compliance, for income tax purposes the Shares shall be considered transferred to the Optionee on the date on which the Option is exercised with respect to such Shares.

 4.          Optionee’s Representations . In the event the Shares have not been registered under the Securities Act at the time this Option is exercised, the Optionee shall, if required by the Company, concurrently with the exercise of all or any portion of this Option, deliver to the Company his Investment Representation Statement in the form attached hereto as Exhibit B .

 5.          Method of Payment . Payment of the aggregate Exercise Price shall be by any of the following, or a combination thereof, at the election of the Optionee:

(a)        by cancellation of indebtedness of the Company to the Optionee;

(b)         by surrender of shares of the Company’s Common Stock that (i) either (A) have been owned by Optionee for more than six (6) months and have been paid for within the meaning of SEC Rule 144 (and, if such shares were purchased from the Company by use of a promissory note, such note has been fully paid with respect to such shares); or (B) were obtained by Optionee in the open public market; and (ii) are clear of all liens, claims, encumbrances or security interests;

(c)         by waiver of compensation due or accrued to Optionee for services rendered;

(d)         provided that a public market for the Company’s stock exists: (i) through a “same day sale” commitment from Optionee and a broker-dealer that is a member of the National Association of Securities Dealers (an “NASD Dealer”) whereby Optionee irrevocably elects to exercise the Option and to sell a portion of the Shares so purchased sufficient to pay for the total Exercise Price and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to forward the total Exercise Price directly to the Company, or (ii) through a “margin” commitment from Optionee and an NASD Dealer whereby Optionee irrevocably elects to exercise the Option and to pledge the Shares so purchased to the NASD Dealer in a margin account as security for a loan from the NASD Dealer in the amount of the total Exercise Price, and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to forward the total Exercise Price directly to the Company;

-2-  

(e)        any other form of consideration approved by the Company’s Board; or

(f)        by any combination of the foregoing.

6.        Term of Option . This Option may be exercised until February 9, 2011.

7.         Tax Obligations . Optionee agrees to make appropriate arrangements with the Company for the satisfaction of all Federal, state, local and foreign income and employment tax withholding requirements applicable to the Option exercise. Optionee acknowledges and agrees that the Company may refuse to honor the exercise and refuse to deliver Shares if such withholding amounts are not delivered at the time of exercise.

8.          Registration . If the Company at any time proposes for any reason to register its common stock under the Securities Act (other than on Form S-4 or Form S-8 promulgated under the Securities Act or any successor forms thereto), it shall include in such registration all of the Shares issued or issuable upon exercise of this Option on the same terms and conditions as the securities otherwise being registered in such registration. The Company shall pay the fees and expenses for such registration.

9.          Entire Agreement; Governing Law . This Option Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes in its entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee’s interest except by means of a writing signed by the Company and Optionee. This agreement is governed by the internal substantive laws but not the choice of law rules of California.

10.         Adjustments; Dissolution or Liquidation; Merger or Change in Control .

(a)           Adjustments . In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares occurs, the number, class, and price of the Shares covered by this Option shall automatically be adjusted in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available to Optionee.

(b)            Dissolution or Liquidation . In the event of the proposed dissolution or liquidation of the Company, the Board shall notify Optionee as soon as practicable prior to the effective date of such proposed transaction. To the extent it has not been previously exercised, this Option will terminate immediately prior to the consummation of such proposed action.

(c)             Merger or Change in Control . In the event of a merger of the Company with or into another corporation, or a Change in Control, this Option shall be assumed or an equivalent option substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor

 -3- 
 

corporation in a merger or Change in Control refuses to assume or substitute for the Option or Stock Purchase Right, then the Optionee shall fully have the right to exercise the Option or Stock Purchase Right as to all of the Optioned Stock prior to the consummation of such transaction. For the purposes of this paragraph, the Option shall be considered assumed if, following the merger or Change in Control, the option or right confers the right to purchase or receive, for each Share of Optioned Stock subject to the Option immediately prior to the merger or Change in Control, the consideration (whether stock, cash, or other securities or property) received in the merger or Change in Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or Change in Control is not solely common stock of the successor corporation or its Parent, the Board may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each Share of Optioned Stock subject to the Option, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of common stock in the merger or Change in Control.

-4- 
 

     Optionee has reviewed this Option in its entirety, has had an opportunity to obtain the advice of counsel prior to executing this Option and fully understands all provisions of the Option. Optionee further agrees to notify the Company upon any change in the residence address indicated below.
 

 

OPTIONEE   NETWORK CN INC.
 
 
   
Signature   By:
 
 
 
Print Name   Title:

 

 
 
 
 
Residence Address  

      

 

 -5- 
 

EXHIBIT A

EXERCISE NOTICE

 

NETWORK CN INC.

 

Address:______________

 

Attention: _____________

 

1.            Exercise of Option . Effective as of today, _____________, _____, the undersigned (“Optionee”) hereby elects to exercise Optionee’s option to purchase _________ shares of the Common Stock (the “Shares”) of Network CN Inc. (the “Company”) under and pursuant to the Stock Option Agreement dated as of February 9, 2006 (the “Option Agreement”).

2.            Payment of Exercise Price . (Check the Appropriate Box)

 

o

Optionee herewith delivers to the Company the full purchase price of the Shares, as set forth in the Option Agreement, and any and all withholding taxes due in connection with the exercise of the Option.

  o Optionee (1) has provide irrevocable instructions to _________________________, Optionee’s broker or dealer (a copy of which is attached hereto as Schedule A ) to effect the immediate sale of the purchased Shares and remit to the Company, out of the sale proceeds available on the settlement date, sufficient funds to cover the exercise price of the Option plus all applicable taxes required to be withheld by the Company by reason of such exercise, and (2) hereby instructs the Company to deliver the certificates for the purchased Shares directly to such broker or dealer in order to complete the sale.

3.            Representations of Optionee . Optionee acknowledges that Optionee has received, read and understood the Option Agreement and agrees to abide by and be bound by its terms and conditions.

4.            Rights as Stockholder . Until the issuance of the Shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Shares shall be issued to the Optionee as soon as practicable after the Option is exercised in accordance with the Option Agreement. No adjustment shall be made for a dividend or other right for which the record date is prior to the date of issuance.

5.            Tax Consultation . Optionee understands that Optionee may suffer adverse tax consequences as a result of Optionee’s purchase or disposition of the Shares. Optionee represents that Optionee has consulted with any tax consultants Optionee deems advisable in connection with the purchase or disposition of the Shares and that Optionee is not relying on the Company for any tax advice.

 

 

6.            Restrictive Legends and Stop-Transfer Orders .

(a)            Legends . Optionee understands and agrees that the Company shall cause such legends that may be required by the Company or by state or federal securities laws to be placed upon any certificate(s) evidencing ownership of the Shares.

(b)            Stop-Transfer Notices . Optionee agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate “stop transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.

(c)            Refusal to Transfer . The Company shall not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Exercise Notice or (ii) to treat as owner of such Shares or to accord the right to vote or pay dividends to any Optionee or other transferee to whom such Shares shall have been so transferred.

7.              Successors and Assigns . The Company may assign any of its rights under this Exercise Notice to single or multiple assignees, and this Exercise Notice shall inure to the benefit of the successors and assigns of the Company. This Exercise Notice shall be binding upon Optionee and his heirs, executors, Boards, successors and assigns.

8.              Interpretation . Any dispute regarding the interpretation of this Exercise Notice shall be submitted by Optionee or by the Company forthwith to the Board which shall review such dispute at its next regular meeting. The resolution of such a dispute by the Board shall be final and binding on all parties.

9.              Governing Law; Severability . This Exercise Notice is governed by the internal substantive laws but not the choice of law rules, of California. In the event that any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Option Agreement will continue in full force and effect.

10.            Entire Agreement . The Option Agreement is incorporated herein by reference. This Exercise Notice, the Option Agreement and the Investment Representation Statement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee’s interest except by means of a writing signed by the Company and Optionee.

-2-  

 

Submitted by:   Accepted by:
     
     
OPTIONEE   NETWORK CN INC.
     
 
 
 

Signature

 

By
     
 
 
 
Print Name   Title
     
Address :   Address :
 
 
 
     
 
 
 
     
 
   
Date Received    

 

 

-3- 
 

EXHIBIT B

INVESTMENT REPRESENTATION STATEMENT

  OPTIONEE:  
     
  COMPANY: NETWORK CN INC.
     
  SECURITY: COMMON STOCK
     
  AMOUNT:  
     
  DATE:  

In connection with the purchase of the above-listed Securities, the undersigned Optionee represents to the Company the following:

(a)            Optionee is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities. Optionee is acquiring these Securities for investment for Optionee’s own account only and not with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act.

(b)            Optionee acknowledges and understands that the Securities constitute “restricted securities” under the Securities Act and have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of Optionee’s investment intent as expressed herein. Optionee further understands that the Securities must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. In this connection, the Investor represents that it is familiar with SEC Rule 144, as now in effect, and understands the resale limitations imposed thereby and by the Act. Optionee further acknowledges and understands that the certificate evidencing the Securities will be imprinted with any legend required under applicable state securities laws.

(c)            Optionee 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. Optionee is an “accredited investor” within the meaning of SEC Rule 501 of Regulation D, as now in effect.
 

  Signature of Optionee:
   
 
 
  Date:   ,
 

 

 

                 Exhibit 10.3

STOCK OPTION AGREEMENT

This Stock Option Agreement (the “Option Agreement”) is made as of February 9, 2006 by and between Network CN, Inc. , a Delaware corporation (the “Company”), and Alisande M. Rozynko (the “Optionee”).

WHEREAS, the parties have entered into an agreement to provide legal services dated February 9, 2006 related to the Company’s reporting obligations under the Securities Exchange Act of 1934, as amended (the “Engagement Agreement”);

WHEREAS, pursuant to the Engagement Agreement, the Company has agreed to grant Optionee an option to purchase 100,000 shares of the Company’s Common Stock subject to the terms and conditions hereunder;

NOW, THEREFORE, in consideration of the mutual covenants and representations set forth below, the Company and Optionee agree as follows:

1.           Definitions . As used herein, the following definitions shall apply:

(a)         “ Board ” means the Board of Directors of the Company.

(b)         “ Change in Control ” means the occurrence of any of the following events:

(i)      The consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets; or

(ii)    The consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation.

(c)            “ Parent ” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.

(d)         “ Securities Act means the Securities Act of 1933, as amended.

(e)            “ Subsidiary ” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code.

 

 2.             Grant of Option . The Company hereby grants to Optionee an option (the “Option”) to purchase 100,000 shares of the Company’s Common Stock, $.001 par value (the “Shares”) at an exercise price of $0.10 per Share (the “Exercise Price”). This Option shall be treated as a Nonstatutory Stock Option (“NSO”).

3.              Exercise of Option . This Option shall be exercisable during the term hereof by delivery of an exercise notice in the form attached as Exhibit A (the “Exercise Notice”) which shall state the election to exercise the Option, the number of Shares with respect to which the Option is being exercised, and such other representations and agreements as may be required by the Company. The Exercise Notice shall be accompanied by payment of the aggregate Exercise Price as to all Exercised Shares or instructions with respect to which exercise option Optionee has selected, as the case may be. This Option shall be deemed to be exercised upon receipt by the Company of such fully executed Exercise Notice accompanied by the aggregate Exercise Price or instructions with respect to an alternative exercise method, as the case may be. No Shares shall be issued pursuant to the exercise of an Option unless such issuance and such exercise complies with applicable laws. Assuming such compliance, for income tax purposes the Shares shall be considered transferred to the Optionee on the date on which the Option is exercised with respect to such Shares.

4.              Optionee’s Representations . In the event the Shares have not been registered under the Securities Act at the time this Option is exercised, the Optionee shall, if required by the Company, concurrently with the exercise of all or any portion of this Option, deliver to the Company his Investment Representation Statement in the form attached hereto as Exhibit B .

5.              Method of Payment . Payment of the aggregate Exercise Price shall be by any of the following, or a combination thereof, at the election of the Optionee:

(a)          by cancellation of indebtedness of the Company to the Optionee;

(b)            by surrender of shares of the Company’s Common Stock that (i) either (A) have been owned by Optionee for more than six (6) months and have been paid for within the meaning of SEC Rule 144 (and, if such shares were purchased from the Company by use of a promissory note, such note has been fully paid with respect to such shares); or (B) were obtained by Optionee in the open public market; and (ii) are clear of all liens, claims, encumbrances or security interests;

(c)            by waiver of compensation due or accrued to Optionee for services rendered;

(d)            provided that a public market for the Company’s stock exists: (i) through a “same day sale” commitment from Optionee and a broker-dealer that is a member of the National Association of Securities Dealers (an “NASD Dealer”) whereby Optionee irrevocably elects to exercise the Option and to sell a portion of the Shares so purchased sufficient to pay for the total Exercise Price and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to forward the total Exercise Price directly to the Company, or (ii) through a “margin” commitment from Optionee and an NASD Dealer whereby Optionee irrevocably elects to exercise the Option and to pledge the Shares so purchased to the NASD Dealer in a margin account as security for a loan from the NASD Dealer in the amount of the total Exercise Price, and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to forward the total Exercise Price directly to the Company;

 -2- 

(e)          any other form of consideration approved by the Company’s Board; or

(f)           by any combination of the foregoing.

6.            Term of Option . This Option may be exercised until February 9, 2011.

7.              Tax Obligations . Optionee agrees to make appropriate arrangements with the Company for the satisfaction of all Federal, state, local and foreign income and employment tax withholding requirements applicable to the Option exercise. Optionee acknowledges and agrees that the Company may refuse to honor the exercise and refuse to deliver Shares if such withholding amounts are not delivered at the time of exercise.

8.              Registration . If the Company at any time proposes for any reason to register its common stock under the Securities Act (other than on Form S-4 or Form S-8 promulgated under the Securities Act or any successor forms thereto), it shall include in such registration all of the Shares issued or issuable upon exercise of this Option on the same terms and conditions as the securities otherwise being registered in such registration. The Company shall pay the fees and expenses for such registration.

9.              Entire Agreement; Governing Law . This Option Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes in its entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee’s interest except by means of a writing signed by the Company and Optionee. This agreement is governed by the internal substantive laws but not the choice of law rules of California.

10.           Adjustments; Dissolution or Liquidation; Merger or Change in Control .

(a)            Adjustments . In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares occurs, the number, class, and price of the Shares covered by this Option shall automatically be adjusted in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available to Optionee.

(b)            Dissolution or Liquidation . In the event of the proposed dissolution or liquidation of the Company, the Board shall notify Optionee as soon as practicable prior to the effective date of such proposed transaction. To the extent it has not been previously exercised, this Option will terminate immediately prior to the consummation of such proposed action.

(c)            Merger or Change in Control . In the event of a merger of the Company with or into another corporation, or a Change in Control, this Option shall be assumed or an equivalent option substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor

 -3-
 

corporation in a merger or Change in Control refuses to assume or substitute for the Option or Stock Purchase Right, then the Optionee shall fully have the right to exercise the Option or Stock Purchase Right as to all of the Optioned Stock prior to the consummation of such transaction. For the purposes of this paragraph, the Option shall be considered assumed if, following the merger or Change in Control, the option or right confers the right to purchase or receive, for each Share of Optioned Stock subject to the Option immediately prior to the merger or Change in Control, the consideration (whether stock, cash, or other securities or property) received in the merger or Change in Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or Change in Control is not solely common stock of the successor corporation or its Parent, the Board may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each Share of Optioned Stock subject to the Option, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of common stock in the merger or Change in Cont rol.
 

 

-4-
 

Optionee has reviewed this Option in its entirety, has had an opportunity to obtain the advice of counsel prior to executing this Option and fully understands all provisions of the Option. Optionee further agrees to notify the Company upon any change in the residence address indicated below.

 

OPTIONEE

 

NETWORK CN INC.

     
     
Signature   By
     
     
Print Name   Title
     
     
     

Residence Address

 

   

 

 

 

-5-
 

  EXHIBIT A

EXERCISE NOTICE

 

NETWORK CN INC.

 

Address:______________

 

Attention: _____________

 

1.              Exercise of Option . Effective as of today, _____________, _____, the undersigned (“Optionee”) hereby elects to exercise Optionee’s option to purchase _________ shares of the Common Stock (the “Shares”) of Network CN Inc. (the “Company”) under and pursuant to the Stock Option Agreement dated as of February 9, 2006 (the “Option Agreement”).

2.             Payment of Exercise Price . (Check the Appropriate Box)

 

o

Optionee herewith delivers to the Company the full purchase price of the Shares, as set forth in the Option Agreement, and any and all withholding taxes due in connection with the exercise of the Option.

 

o

Optionee (1) has provide irrevocable instructions to _________________________, Optionee’s broker or dealer (a copy of which is attached hereto as Schedule A ) to effect the immediate sale of the purchased Shares and remit to the Company, out of the sale proceeds available on the settlement date, sufficient funds to cover the exercise price of the Option plus all applicable taxes required to be withheld by the Company by reason of such exercise, and (2) hereby instructs the Company to deliver the certificates for the purchased Shares directly to such broker or dealer in order to complete the sale.

3.              Representations of Optionee . Optionee acknowledges that Optionee has received, read and understood the Option Agreement and agrees to abide by and be bound by its terms and conditions.

4.              Rights as Stockholder . Until the issuance of the Shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Shares shall be issued to the Optionee as soon as practicable after the Option is exercised in accordance with the Option Agreement. No adjustment shall be made for a dividend or other right for which the record date is prior to the date of issuance.

5.              Tax Consultation . Optionee understands that Optionee may suffer adverse tax consequences as a result of Optionee’s purchase or disposition of the Shares. Optionee represents that Optionee has consulted with any tax consultants Optionee deems advisable in connection withthe purchase or disposition of the Shares and that Optionee is not relying on the Company for any tax advice.

 

 

6.             Restrictive Legends and Stop-Transfer Orders .

(a)            Legends . Optionee understands and agrees that the Company shall cause such legends that may be required by the Company or by state or federal securities laws to be placed upon any certificate(s) evidencing ownership of the Shares.

(b)            Stop-Transfer Notices . Optionee agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate “stop transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.

(c)            Refusal to Transfer . The Company shall not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Exercise Notice or (ii) to treat as owner of such Shares or to accord the right to vote or pay dividends to any Optionee or other transferee to whom such Shares shall have been so transferred.

7.              Successors and Assigns . The Company may assign any of its rights under this Exercise Notice to single or multiple assignees, and this Exercise Notice shall inure to the benefit of the successors and assigns of the Company. This Exercise Notice shall be binding upon Optionee and his heirs, executors, Boards, successors and assigns.

8.              Interpretation . Any dispute regarding the interpretation of this Exercise Notice shall be submitted by Optionee or by the Company forthwith to the Board which shall review such dispute at its next regular meeting. The resolution of such a dispute by the Board shall be final and binding on all parties.

9.              Governing Law; Severability . This Exercise Notice is governed by the internal substantive laws but not the choice of law rules, of California. In the event that any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Option Agreement will continue in full force and effect.

10.            Entire Agreement . The Option Agreement is incorporated herein by reference. This Exercise Notice, the Option Agreement and the Investment Representation Statement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee’s interest except by means of a writing signed by the Company and Optionee.

 -2- 

 

Submitted by:   Accepted by:
     
     
OPTIONEE   NETWORK CN INC.
     
     
     
Signature   By
     
     
Print Name   Title
     
Address :   Address :
     
     
     
     
     

Date Received

 

   

                                                               

 

 

 

 

 

 -3-
  

EXHIBIT B

INVESTMENT REPRESENTATION STATEMENT

  OPTIONEE:  
     
  COMPANY: NETWORK CN INC.
     
  SECURITY: COMMON STOCK
     
  AMOUNT:  
     
  DATE:  

In connection with the purchase of the above-listed Securities, the undersigned Optionee represents to the Company the following:

(a)            Optionee is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities. Optionee is acquiring these Securities for investment for Optionee’s own account only and not with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act.

(b)            Optionee acknowledges and understands that the Securities constitute “restricted securities” under the Securities Act and have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of Optionee’s investment intent as expressed herein. Optionee further understands that the Securities must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. In this connection, the Investor represents that it is familiar with SEC Rule 144, as now in effect, and understands the resale limitations imposed thereby and by the Act. Optionee further acknowledges and understands that the certificate evidencing the Securities will be imprinted with any legend required under applicable state securities laws.

(c)            Optionee 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. Optionee is an “accredited investor” within the meaning of SEC Rule 501 of Regulation D, as now in effect.

 

  Signature of Optionee:
  		   
       
  Date:   ,  

 

 

                 Exhibit 10.4

STOCK OPTION AGREEMENT

This Stock Option Agreement (the “Option Agreement”) is made as of February 9, 2006 by and between Network CN, Inc. , a Delaware corporation (the “Company”), and Sean O’Halloran (the “Optionee”).

WHEREAS, the parties have entered into an agreement to provide legal services dated February 9, 2006 related to the Company’s reporting obligations under the Securities Exchange Act of 1934, as amended (the “Engagement Agreement”);

WHEREAS, pursuant to the Engagement Agreement, the Company has agreed to grant Optionee an option to purchase 25,000 shares of the Company’s Common Stock subject to the terms and conditions hereunder;

NOW, THEREFORE, in consideration of the mutual covenants and representations set forth below, the Company and Optionee agree as follows:

  1. Definitions . As used herein, the following definitions shall apply:
    (a) “ Board ” means the Board of Directors of the Company.
    (b) “ Change in Control ” means the occurrence of any of the following events:

(i)      The consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets; or

(ii)    The consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation.

(c)            “ Parent ” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.

(d)           “ Securities Act means the Securities Act of 1933, as amended.

(e)            “ Subsidiary ” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code.  

 

2.             Grant of Option . The Company hereby grants to Optionee an option (the “Option”) to purchase 25,000 shares of the Company’s Common Stock, $.001 par value (the “Shares”) at an exercise price of $0.10 per Share (the “Exercise Price”). This Option shall be treated as a Nonstatutory Stock Option (“NSO”).

3.              Exercise of Option . This Option shall be exercisable during the term hereof by delivery of an exercise notice in the form attached as Exhibit A (the “Exercise Notice”) which shall state the election to exercise the Option, the number of Shares with respect to which the Option is being exercised, and such other representations and agreements as may be required by the Company. The Exercise Notice shall be accompanied by payment of the aggregate Exercise Price as to all Exercised Shares or instructions with respect to which exercise option Optionee has selected, as the case may be. This Option shall be deemed to be exercised upon receipt by the Company of such fully executed Exercise Notice accompanied by the aggregate Exercise Price or instructions with respect to an alternative exercise method, as the case may be. No Shares shall be issued pursuant to the exercise of an Option unless such issuance and such exercise complies with applicable laws. Assuming such compliance, for income tax purposes the Shares shall be considered transferred to the Optionee on the date on which the Option is exercised with respect to such Shares.

4.              Optionee’s Representations . In the event the Shares have not been registered under the Securities Act at the time this Option is exercised, the Optionee shall, if required by the Company, concurrently with the exercise of all or any portion of this Option, deliver to the Company his Investment Representation Statement in the form attached hereto as Exhibit B .

5.              Method of Payment . Payment of the aggregate Exercise Price shall be by any of the following, or a combination thereof, at the election of the Optionee:

(a)          by cancellation of indebtedness of the Company to the Optionee;

(b)            by surrender of shares of the Company’s Common Stock that (i) either (A) have been owned by Optionee for more than six (6) months and have been paid for within the meaning of SEC Rule 144 (and, if such shares were purchased from the Company by use of a promissory note, such note has been fully paid with respect to such shares); or (B) were obtained by Optionee in the open public market; and (ii) are clear of all liens, claims, encumbrances or security interests;

(c)            by waiver of compensation due or accrued to Optionee for services rendered;

(d)           provided that a public market for the Company’s stock exists: (i) through a “same day sale” commitment from Optionee and a broker-dealer that is a member of the National Association of Securities Dealers (an “NASD Dealer”) whereby Optionee irrevocably elects to exercise the Option and to sell a portion of the Shares so purchased sufficient to pay for the total Exercise Price and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to forward the total Exercise Price directly to the Company, or (ii) through a “margin” commitment from Optionee and an NASD Dealer whereby Optionee irrevocably elects to exercise the Option and to pledge the Shares so purchased to the NASD Dealer in a margin account as security for a loan from the NASD Dealer in the amount of the total Exercise Price, and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to forward the total Exercise Price directly to the Company;

 -2- 

(e)          any other form of consideration approved by the Company’s Board; or

(f)           by any combination of the foregoing.

6.            Term of Option . This Option may be exercised until February 9, 2011.

7.              Tax Obligations . Optionee agrees to make appropriate arrangements with the Company for the satisfaction of all Federal, state, local and foreign income and employment tax withholding requirements applicable to the Option exercise. Optionee acknowledges and agrees that the Company may refuse to honor the exercise and refuse to deliver Shares if such withholding amounts are not delivered at the time of exercise.

8.              Registration . If the Company at any time proposes for any reason to register its common stock under the Securities Act (other than on Form S-4 or Form S-8 promulgated under the Securities Act or any successor forms thereto), it shall include in such registration all of the Shares issued or issuable upon exercise of this Option on the same terms and conditions as the securities otherwise being registered in such registration. The Company shall pay the fees and expenses for such registration.

9.              Entire Agreement; Governing Law . This Option Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes in its entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee’s interest except by means of a writing signed by the Company and Optionee. This agreement is governed by the internal substantive laws but not the choice of law rules of California.

10.          Adjustments; Dissolution or Liquidation; Merger or Change in Control .

(a)            Adjustments . In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares occurs, the number, class, and price of the Shares covered by this Option shall automatically be adjusted in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available to Optionee.

(b)            Dissolution or Liquidation . In the event of the proposed dissolution or liquidation of the Company, the Board shall notify Optionee as soon as practicable prior to the effective date of such proposed transaction. To the extent it has not been previously exercised, this Option will terminate immediately prior to the consummation of such proposed action.

(c)           Merger or Change in Control . In the event of a merger of the Company with or into another corporation, or a Change in Control, this Option shall be assumed or an equivalent option substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the

 -3-
 

successor corporation in a merger or Change in Control refuses to assume or substitute for the Option or Stock Purchase Right, then the Optionee shall fully have the right to exercise the Option or Stock Purchase Right as to all of the Optioned Stock prior to the consummation of such transaction. For the purposes of this paragraph, the Option shall be considered assumed if, following the merger or Change in Control, the option or right confers the right to purchase or receive, for each Share of Optioned Stock subject to the Option immediately prior to the merger or Change in Control, the consideration (whether stock, cash, or other securities or property) received in the merger or Change in Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or Change in Control is not solely common stock of the successor corporation or its Parent, the Board may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each Share of Optioned Stock subject to the Option, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of common stock in the merger or Change in Control.

 -4-

 Optionee has reviewed this Option in its entirety, has had an opportunity to obtain the advice of counsel prior to executing this Option and fully understands all provisions of the Option. Optionee further agrees to notify the Company upon any change in the residence address indicated below.

 

OPTIONEE

 

NETWORK CN INC.

     
     
Signature   By
     
     
Print Name   Title
     
     
     

Residence Address

 

   

 

 

 

 -5- 
 

EXHIBIT A

EXERCISE NOTICE

 

NETWORK CN INC.

 

Address:______________

 

Attention: _____________

 

1.              Exercise of Option . Effective as of today, _____________, _____, the undersigned (“Optionee”) hereby elects to exercise Optionee’s option to purchase _________ shares of the Common Stock (the “Shares”) of Network CN Inc. (the “Company”) under and pursuant to the Stock Option Agreement dated as of February 9, 2006 (the “Option Agreement”).

2.             Payment of Exercise Price . (Check the Appropriate Box)

 

o

Optionee herewith delivers to the Company the full purchase price of the Shares, as set forth in the Option Agreement, and any and all withholding taxes due in connection with the exercise of the Option.

 

o

Optionee (1) has provide irrevocable instructions to _________________________, Optionee’s broker or dealer (a copy of which is attached hereto as Schedule A ) to effect the immediate sale of the purchased Shares and remit to the Company, out of the sale proceeds available on the settlement date, sufficient funds to cover the exercise price of the Option plus all applicable taxes required to be withheld by the Company by reason of such exercise, and (2) hereby instructs the Company to deliver the certificates for the purchased Shares directly to such broker or dealer in order to complete the sale.

3.              Representations of Optionee . Optionee acknowledges that Optionee has received, read and understood the Option Agreement and agrees to abide by and be bound by its terms and conditions.

4.              Rights as Stockholder . Until the issuance of the Shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Shares shall be issued to the Optionee as soon as practicable after the Option is exercised in accordance with the Option Agreement. No adjustment shall be made for a dividend or other right for which the record date is prior to the date of issuance.

5.              Tax Consultation . Optionee understands that Optionee may suffer adverse tax consequences as a result of Optionee’s purchase or disposition of the Shares. Optionee represents that Optionee has consulted with any tax consultants Optionee deems advisable in connection with the purchase or disposition of the Shares and that Optionee is not relying on the Company for any tax advice. 

 

 

 

6.

Restrictive Legends and Stop-Transfer Orders .

(a)            Legends . Optionee understands and agrees that the Company shall cause such legends that may be required by the Company or by state or federal securities laws to be placed upon any certificate(s) evidencing ownership of the Shares.

(b)            Stop-Transfer Notices . Optionee agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate “stop transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.

(c)            Refusal to Transfer . The Company shall not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Exercise Notice or (ii) to treat as owner of such Shares or to accord the right to vote or pay dividends to any Optionee or other transferee to whom such Shares shall have been so transferred.

7.              Successors and Assigns . The Company may assign any of its rights under this Exercise Notice to single or multiple assignees, and this Exercise Notice shall inure to the benefit of the successors and assigns of the Company. This Exercise Notice shall be binding upon Optionee and his heirs, executors, Boards, successors and assigns.

8.              Interpretation . Any dispute regarding the interpretation of this Exercise Notice shall be submitted by Optionee or by the Company forthwith to the Board which shall review such dispute at its next regular meeting. The resolution of such a dispute by the Board shall be final and binding on all parties.

9.              Governing Law; Severability . This Exercise Notice is governed by the internal substantive laws but not the choice of law rules, of California. In the event that any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Option Agreement will continue in full force and effect.

10.            Entire Agreement . The Option Agreement is incorporated herein by reference. This Exercise Notice, the Option Agreement and the Investment Representation Statement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee’s interest except by means of a writing signed by the Company and Optionee.

-2-

 

Submitted by:   Accepted by:
     
     

OPTIONEE

 

NETWORK CN INC.

     
     
Signature   By
     
     
Print Name   Title
     
Address :   Address :
     
     
     
     
     
Date Received    

  

 

 -3-
 

EXHIBIT B

INVESTMENT REPRESENTATION STATEMENT

  OPTIONEE:  
  COMPANY: NETWORK CN INC.
  SECURITY: COMMON STOCK
  AMOUNT:  
  DATE:  

In connection with the purchase of the above-listed Securities, the undersigned Optionee represents to the Company the following:

(a)            Optionee is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities. Optionee is acquiring these Securities for investment for Optionee’s own account only and not with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act.

(b)            Optionee acknowledges and understands that the Securities constitute “restricted securities” under the Securities Act and have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of Optionee’s investment intent as expressed herein. Optionee further understands that the Securities must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. In this connection, the Investor represents that it is familiar with SEC Rule 144, as now in effect, and understands the resale limitations imposed thereby and by the Act. Optionee further acknowledges and understands that the certificate evidencing the Securities will be imprinted with any legend required under applicable state securities laws.

(c)            Optionee 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. Optionee is an “accredited investor” within the meaning of SEC Rule 501 of Regulation D, as now in effect.
 

  Signature of Optionee:    
         
         
  Date:   ,  

 

 

Exhibit 23.1 

 

 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

 

We consent to the incorporation by reference in the Registration Statement on Form S-8 of our report dated March 29, 2007 on the consolidated financial statements of Network CN, Inc. included in the Annual Report on Form 10-KSB of Network CN, Inc. for the years ended December 31, 2006 and 2005.

 

 

WEBB & COMPANY, P.A.

Certified Public Accountants


 

April 3 , 2007

 

 

Exhibit 23.2

JIMMY C.H. CHEUNG & CO.  
Certified Public Accountants
Members of Kreston International   		  Registered with the Public Company
Accounting Oversight Board    
 


CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE BOARD OF DIRECTORS OF
NETWORK CN INC.

We consent to the incorporation by reference in the Registration Statement on Form S-8 of our report dated March 19, 2007 on the consolidated financial statements of Network CN Inc, relating to our audit of the consolidated financial statements of NCN Group Limited and subsidiaries included in the Annual Report on Form 10-KSB of Network CN Inc. for the year ended December 31, 2006 and 2005.

 


JIMMY C.H. CHEUNG & CO.
Certified Public Accountants

Hong Kong

Date: April 3, 2007

 

   

 

1607 Dominion Centre, 43 Queen’s Road East, Wanchai, Hong Kong      
Telephone : (852) 25295500    Fax: (852) 28651067      
Email     : jchc@krestoninternational.com.hk     Kreston International with offices in Europe  
Website     : http://www.jimmycheungco.com     America, The Middle East, The Far East and Australia