Note Exchange And Option Agreement

NOTE EXCHANGE AND OPTION AGREEMENT



THIS NOTE EXCHANGE AND OPTION AGREEMENT (this " Agreement ") is effective as of April 2, 2009, by and between KEYWIN HOLDINGS LIMITED, a British Virgin Islands company (" Noteholder "), and NETWORK CN INC., a Delaware corporation (the " Company ").



RECITAL



WHEREAS , the Noteholder purchased that certain 3% Senior Secured Convertible Notes due June 30, 2011 of the Company in the aggregate principal amount of $45,000,000 (the "Notes" ) from Sculptor Finance (MD) Ireland Limited, Sculptor Finance (AS) Ireland Limited and Sculptor Finance (SI) Ireland Limited pursuant to the Note Purchase Agreement, dated April 2, 2009;



WHEREAS , the Noteholder desires to exchange the Notes (the " Exchange ") for 307,035,463 shares of the Company's common stock (the " Common Stock ");



WHEREAS , the Company desires to issue to the Noteholder 307,035,463 shares of the Common Stock in exchange for the Notes; and



WHEREAS , in connection with the Exchange, the Company desires to grant the Noteholder an option (the " Option ") to purchase from the Company an aggregate of 122,814,185 shares of the Common Stock for an aggregate purchase price of $2,000,000, exercisable within 3 months after April 2, 2009 or such other date as agreed by the parties hereto (the " Closing Date ").



NOW, THEREFORE , in consideration of the mutual covenants and agreements herein set forth, the parties hereby agree as follows:





1. Exchange of Notes .



(a) Notwithstanding any provisions or terms to the contrary contained in the Notes, the Noteholder hereby elects to exchange the Notes for 307,035,463 shares of the Common Stock and the Company hereby agrees to issue to the Noteholder 307,035,463 shares of the Common Stock in full satisfaction of its obligations under the Notes, including all principal and accrued and unpaid interest thereon. After the Exchange, the Noteholder shall have no rights in respect of the Notes, and, in lieu thereof, will only have those rights afforded to the holders of Common Stock. The Noteholder hereby acknowledges and agrees that it shall have no further right or entitlement under the Notes, and the Company shall have no further obligation under the Notes.





(b) On the Closing Date, the Noteholder shall tender to the Company the original Notes and in exchange, the Company shall deliver an irrevocable instruction letter to the Company's transfer agent in which the Company shall instruct the transfer agent to issue a stock certificate representing 307,035,463 shares of the Common Stock to the Noteholder. Such stock certificate shall be delivered to the Noteholder within five (5) business days after the Closing Date.



(c) As of the Closing Date, the Noteholder and Company irrevocably cancel the Notes and the Notes are of no further force or effect.




2. Option to Purchase Common Stock .



(a) For a three (3) month period commencing on the Closing Date (the " Exercise Period "), the Noteholder shall have the right to purchase from the Company an aggregate of 122,814,185 shares of the Common Stock for an aggregate purchase price of $2,000,000 (the " Purchase Price "). The Option may be exercised by the Noteholder at any time during the Exercise Period by giving written notice to the Company.










(b) The Purchase Price shall be paid to the Company in cash or immediately available funds, unless otherwise mutually agreed. Upon receipt of the Purchase Price and written notice, the Company shall, as promptly as practical, issue the Noteholder a stock certificate representing 122,814,185 shares of the Common Stock.



(c) If the Noteholder fails to exercise the Option during the Exercise Period pursuant to this Section 2, the Option shall terminate.



3. Representations and Warranties of the Company . The Company hereby makes the following representations, warranties, and covenants each of which is ...