SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
___________________
FORM
8-K
___________________
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of
the
Securities Exchange Act of 1934
Date
of
Report (Date of earliest event reported): November 19, 2007
___________________
NETWORK
CN INC.
(Exact
Name of Registrant as Specified in Charter)
___________________
|
State
of Delaware
(State
or Other Jurisdiction
of
Incorporation)
|
000-30264
(Commission
File Number)
|
11-3177042
(I.R.S.
Employer Identification No.)
|
21/F,
Chinachem Century Tower
178
Gloucester Road
Wanchai,
Hong Kong
(Address
of Principal Executive Offices)
(852)
2833-2186
(Registrant’s
telephone number, including area code)
□
Check
the appropriate box below if the
Form 8-K filing is intended to simultaneously satisfy the filing obligation
of
the registrant under any of the following provisions:
□
Written
communications pursuant to Rule
425 under the Securities Act (17 CFR 230.425)
□
Soliciting
material pursuant to Rule
14a-12(b) under the Exchange Act (17 CFR 240.14a-12(b))
□
Pre-commencement
communications
pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
□
Pre-commencement communications
pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item
1.01 Entry into a Material Definitive Agreement
On
November 19, 2007, Network CN Inc. (the “Company”), Shanghai Quo Advertising
Company Limited, a limited liability company and subsidiary of the Company
(“Quo”) and the Designated Holders (as defined in the Purchase Agreement),
entered into a Note and Warrant Purchase Agreement (the “Purchase Agreement”)
with affiliated investment funds of Och-Ziff Capital Management Group (the
“Investors”). Pursuant to the Purchase Agreement, the Company agreed to issue 3%
Senior Secured Convertible Notes due June 30, 2011 in the aggregate principal
amount of up to US$50,000,000 (the “Convertible Notes”) and warrants to acquire
an aggregate amount of 34,285,715 shares of Common Stock of the Company (the
“Warrants”). The Convertible Notes and Warrants are issuable in three
tranches, with Convertible Notes in the aggregate principal amount of
US$6,000,000, Warrants exercisable for 2,400,000 shares at $2.50 per share
and
Warrants exercisable for 1,714,285 shares at $3.50 per share, to be issued
in
the first tranche, Convertible Notes in the aggregate principal amount of
US$9,000,000, Warrants exercisable for 3,600,000 shares at $2.50 per share
and
Warrants exercisable for 2,571,430 shares at $3.50 per share to be issued in
the
second tranche, and Convertible Notes in the aggregate principal amount of
US$35,000,000, Warrants exercisable for 14,000,000 shares at $2.50 per share
and
Warrants exercisable for 10,000,000 shares at $3.50 per share to be issued
in
the third tranche, in each case, subject to the satisfaction or waiver of
certain conditions of closing described in the Purchase
Agreement. Forms of the Purchase Agreement, the Convertible Notes,
and the Warrants are attached hereto as Exhibits 99.1-99.3.
The
Convertible Notes will bear interest at 3% per annum payable semi-annually
in
arrears and mature on June 30, 2011. The Convertible Notes are convertible
into
shares of Common Stock at an initial conversion price of $1.65 per share,
subject to customary anti-dilution adjustments. In addition, the
conversion price will be adjusted downward on an annual basis if the Company
should fail to meet certain annual earnings per share (“EPS”) targets described
in the Convertible Notes. In the event of a default, or if the Company’s actual
EPS for any fiscal year is less than 80% of the respective EPS target, certain
of the Investors may require the Company to redeem the Convertible Notes at
100%
of the principal amount, plus any accrued and unpaid interest, plus an amount
representing a 20% internal rate of return on the then outstanding principal
amount. The Warrants grant the holders the right to acquire shares of Common
Stock at $2.50 and $3.50 per share, subject to customary anti-dilution
adjustments. The exercise price of the Warrants will also be adjusted downward
whenever the conversion price of the Convertible Notes is adjusted downward
in
accordance with the provisions of the Convertible Notes.
As
a
condition to the third closing, the Company will enter into various security
agreements with certain of the Investors which will grant a first priority
security interest in certain assets of the Company and its subsidiaries in
favor
of certain of the Investors.
In
connection with the Purchase Agreement, the Company and the Investors entered
into a registration rights agreement (the “Registration Rights Agreement”)
pursuant to which the Company has agreed to register the shares of Common Stock
issuable to the Investors, as applicable, upon the conversion of the Convertible
Notes (the “Conversion Shares”) and exercise of the Warrants (the “Warrant
Shares”) on a shelf registration statement on Form S-3 or such other form of
registration statement available to the Company. The Company has also agreed
to
file additional registration statements under certain circumstances. The
Registration Rights Agreement also provides for the payment of partial
liquidated damages to the Investors under certain circumstances including the
failure by the Company to file or obtain or maintain the effectiveness of the
shelf registration statement as required under the Registration Rights
Agreement. The Investors were also granted piggy-back registration rights
pursuant to the Registration Rights Agreement. The registration rights granted
under the Registration Rights Agreement are subject to customary exceptions
and
qualifications and compliance with certain registration procedures. A copy
of
the Registration Rights Agreement is attached hereto as Exhibit
99.4.
The
foregoing descriptions do not purport to be a complete description of the terms
of the documents, and this description is qualified in its entirety by the
terms
of the definitive documents or forms thereof which are attached as exhibits
to
this Current Report on Form 8-K, and which are incorporated by
reference.
A
press
release dated November 26, 2007 describing the completion of the refinancing
transaction is attached to this Form 8-K as Exhibit 99.5.
Item
2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant
The
description of the issuance and terms of the Convertible Notes and the Warrants
and the entering into of the related security arrangements under the security
documents is set forth above in Item 1.01 and is hereby incorporated by
reference into this Item 2.03.
Item
3.02 Unregistered Sales of Equity Securities
The
description of the issuance and terms of the Convertible Notes and the Warrants
and the entering into of the related arrangement and agreements is set forth
above in Item 1.01 and is hereby incorporated by reference into this Item
3.02.
The
issuance of the Convertible Notes and the Warrants was done in reliance on
Regulation S of the Securities Act of 1933, as amended. As discussed above,
the
Conversion Shares and the Warrant Shares are entitled to certain registration
rights pursuant to the Registration Rights Agreement.
Item
9.01 Financial Statements and Exhibits
(d)
The
following exhibits are filed as part of this report:
|
Number
|
Exhibit
|
|
99.1
|
Purchase
Agreement, dated November 19, 2007, among the Company, Quo, the Designated
Holders and the Investors
|
|
99.2
|
Form
of Convertible Note
|
|
99.3
|
Form
of Warrant
|
|
99.4
|
Registration
Rights Agreement, dated November 19, 2007, between the Company and
the
Investors
|
|
99.5
|
Press
release of the Company dated November 26,
2007
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date:
November 26, 2007
NETWORK
CN INC.
(Registrant)
By: /s/
Daley Mok
Name: Daley
Mok
Title: Chief
Financial Officer and Secretary
EXHIBIT
INDEX
|
Number
|
Exhibit
|
|
99.1
|
Purchase
Agreement, dated November 19, 2007, among the Company, Quo, the Designated
Holders and the Investors
|
|
99.2
|
Form
of Convertible Note
|
|
99.3
|
Form
of Warrant
|
|
99.4
|
Registration
Rights Agreement, dated November 19, 2007, between the Company and
the
Investors
|
|
99.5
|
Press
release of the Company dated November 26,
2007
|