Exhibit 10.1
 
FIRST AMENDMENT TO NOTE AND WARRANT PURCHASE AGREEMENT

THIS FIRST AMENDMENT TO NOTE AND WARRANT PURCHASE AGREEMENT (this “First
Amendment”) is made as of January 31, 2008 by and among Network CN Inc., a
Delaware corporation (the “Company”), Shanghai Quo Advertising Company Limited,
a limited liability company, incorporated under the laws of PRC (“Quo”), the
Designated Holders and the Investors.

Each of the parties listed above referred to herein individually as a “Party”
and collectively as the “Parties”.
 
WHEREAS:

A.        The Company, Quo, the Designated Holders and the Investors have
entered into that certain Note and Warrant Purchase Agreement dated November 19,
2007 (as amended, modified or supplemented from time to time, the “Purchase
Agreement”), to which reference is made for the meaning of all capitalized terms
not otherwise defined herein; and

B.        The Company has requested that the Purchase Agreement be amended to
establish, among other things, additional funding channels between the Company
and its PRC Operating Companies as hereinafter set forth and to provide for
certain other modifications in connections with the Third Closing, including
relating to the delivery of the Security Documents, and the Investors have
agreed, subject to the terms and conditions of this First Amendment, to so amend
the Purchase Agreement.

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth
herein, and for other consideration, the receipt and adequacy of which is hereby
acknowledged, the Parties hereto agree as follows:

Section A.     Amendments to Purchase Agreement

1.     Amendments to Recitals

(a)           The recitals of the Purchase Agreement are hereby amended by
amending and restating the third recital as follows:

“WHEREAS, the Company shall enter into a share purchase agreement with
Cityhorizon Limited, a company incorporated under the laws of the Hong Kong
Special Administrative Region (“Cityhorizon”) to acquire 100% of the equity in
Cityhorizon BVI (the “Cityhorizon Acquisition”).”

2.     Amendments to Definitions

(a)           Section 1 of the Purchase Agreement is hereby amended by adding
thereto the following definitions, which shall be inserted in proper
alphabetical order:

““Ad JV” means the joint venture to be established by Quo and Linkrich as
further described in Section 7(cc).

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“BVI” means the British Virgin Islands.

“Cityhorizon Acquisition” has the meaning given in the recitals.

“Cityhorizon BVI Acquisition” means the acquisition of Cityhorizon BVI by
Cityhorizon pursuant to the Share Purchase Agreement, dated as of January 1,
2008 by and among the Company, NCN Media Services Ltd., Cityhorizon, Cityhorizon
BVI, Lianhe, Bona and Liu Man Ling.

“Cityhorizon BVI” means Cityhorizon Limited, a company incorporated under the
laws of BVI.

“Collateral Agent” means Sculptor Finance (MD) Ireland Limited as collateral
agent for the benefit of itself and the other Investors, and its successors and
assigns.

“Collateral Agency Agreement” means that certain Collateral Agency Agreement
dated as of January 31, 2008 among Sculptor Finance (MD) Ireland Limited, as
collateral agent, and the Investors and any successor agreement.

“Crown Eagle” means Crown Eagle Investments Limited, a company incorporated
under the laws of HK.

“Crown Eagle Assignment of Contracts” means any Assignment of Contracts to be
entered into between Crown Eagle and the Company, in the form annexed hereto as
Exhibit K-3 or as otherwise agreed by the Collateral Agent.

“Crown Eagle Mortgage Agreement” means any Mortgage Agreement to be entered into
between Crown Eagle and the Operating Lease WFOE, in the form annexed hereto as
Exhibit K-1 or as otherwise agreed by the Collateral Agent.

“Crown Eagle Shareholder Loan Agreement” means any Shareholder Loan Agreement to
be entered into between Crown Eagle and the Operating Lease WFOE, in the form
annexed hereto as Exhibit K-2 or as otherwise agreed by the Collateral Agent.

“Crown Eagle Shareholder Loan Documents” means in respect of any Crown Eagle
Shareholder Loan to the Operating Lease WFOE, each of a Crown Eagle Shareholder
Loan Agreement, a Crown Eagle Mortgage Agreement and a Crown Eagle Assignment of
Contracts.

“Crown Eagle Shareholder Loans” means the loans made from time to time by Crown
Eagle to the Operating Lease WFOE made pursuant to the Crown Eagle Shareholder
Loan Documents.

“Drawdown Notice” has the meaning given in Section 7(bb).

“Escrow Account” has the meaning given in Section 7(bb).

“HK” means the Hong Kong Special Administrative Region.

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“Linkrich” means Linkrich Enterprise Advertising and Investment Limited, a
company incorporated under the laws of HK.

“Linkrich Acquisition” means the acquisition of Linkrich by NCN Media in
December 2007.

“Majority Holders” means the holders of a majority of the principal amount of
the Notes.

“NCN Group” means NCN Group Limited, a direct wholly-owned subsidiary of the
Company, incorporated under the laws of BVI.

“NCN Group Note” means the Secured Promissory Note, dated as of January 31,
2008, issued by NCN Group in favour of the Company, in the aggregate principal
amount of $50 million evidencing the proceeds of the Notes loaned by the Company
to NCN Group.

“NCN Group Share Charge” means the Share Charge, dated as of January 31, 2008,
entered into between the Company and the Collateral Agent under BVI law whereby
the Company pledges 66% of its equity interest in NCN Group to the Collateral
Agent for the benefit of the Collateral Agent and the Investors (“NCN Group
Share Charge”).
 
“NCN Media” means NCN Media Services Ltd., an indirect wholly owned subsidiary
of the Company, incorporated under the laws of BVI.

“Network Security Agreement” means the Security Agreement dated as of January
31, 2008 between the Company and the Collateral Agent, whereby the Company
grants a security interest in all its assets (excluding security interests in
excess of 66% of the voting securities of foreign subsidiaries directly owned by
the Company) in favor of the Collateral agent for the benefit of the Collateral
Agent and the Investors.

“Network Security Documents” means the Network Security Agreement, the NCN Group
Note and the NCN Group Share Charge.

“Operating Lease WFOE” means the WFOE to be established by Crown Eagle as
further described in Section 7(dd).

“PRC Subsidiaries” means Lianhe, Ad JV, the Operating Lease WFOE and any other
Subsidiary of the Company organized under the laws of the PRC and approved by
the Collateral Agent.

“Trust Documents” means the agreements listed in Schedule IV attached hereto.

“Undertaking Agreement” means the NCN Parties Undertaking Agreement dated as of
January 31, 2008, among the Company, NCN Group, NCN Media, Cityhorizon,
Cityhorizon BVI, Crown Eagle, Linkrich and the Collateral Agent for the benefit
of the Collateral Agent and the Investors.

“US” means the United States of America.

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“WFOE” means wholly foreign owned enterprise.”

(b)           Section 1 of the Purchase Agreement is hereby amended by amending
and restating the definitions of “Group Companies”, “Offshore Security
Documents”, “Onshore Documents”, “Security Documents”, “Shareholder Loan” and
“Transaction Documents” as follows:

““Group Companies” means the Company, its Subsidiaries and the PRC Operating
Companies.

“Offshore Security Documents” means the security documents listed in Exhibit E
attached hereto and all other mortgages, security agreements, documents,
instruments and other materials, entered into from time to time, necessary to
create or perfect any Lien upon the assets of the Company and its Subsidiaries,
in form and substance satisfactory to the Investors.

“Onshore Security Documents” means the security documents listed in Exhibit F
attached hereto and all other mortgages, security agreements, documents,
instruments and other materials, entered into from time to time, necessary to
create or perfect any Lien upon the assets of the Company and its Subsidiaries,
in form and substance satisfactory to the Investors.

“Security Documents” means the Network Security Documents, the Offshore Security
Documents, the Onshore Security Documents, the Crown Eagle Shareholder Loan
Documents and all other mortgages, security agreements, documents, instruments
and other materials, entered into from time to time, necessary to create or
perfect any Lien upon the assets of the Company and its Subsidiaries.

“Shareholder Loans” means the Crown Eagle Shareholder Loans and any other loans
approved by the Collateral Agent and made from time to time by each of
Cityhorizon BVI, Cityhorizon, Crown Eagle, Linkrich or any other Subsidiary of
the Company, as the case may be, to the Company’s PRC Subsidiaries.

“Transaction Documents”  means the Purchase Agreement (including the updated
Disclosure Schedules), the Securities, the NCN Group Note, the Undertaking
Agreement, the Security Documents, the Restructuring Documents, the Investor
Rights Agreement, the Bloompoint Lock-up Agreement, the Management Lock-Up
Agreement, the Non-Competition Agreements, the Registration Rights Agreement,
the Bloompoint Waiver and all other agreements, instruments and documents
delivered from time to time in connection herewith and therewith as any or all
of the foregoing may be supplemented or amended from time to time.”

(c)           Section 1 of the Purchase Agreement is hereby further amended by
deleting the definitions of “Acquisition” and “Joinder to the Purchase
Agreement” in their entirety.
 
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3.     Amendments to the Representations and Warranties of the Company and Quo

(a)       Section 6 of the Purchase Agreement is hereby amended by adding the
following at the end of the first sentence in subsection (6)(d)(i):

“; provided, however, that as of the Third Closing 71,546,608 shares of Common
Stock are issued and outstanding”

(b)           Section 6 of the Purchase Agreement is hereby amended by amending
and restating subsection 6(k) as follows:

“(k)           Security Interests

(i)           Each Network Security Document creates valid and enforceable
security interests in favour of the Collateral Agent, for the benefit of the
Collateral Agent and the Investors, subject to no other prior or pari passu
Liens, in all the collateral specified therein, including without limitation,
the NCN Group Note and all rights of the Company under the other Security
Documents, which security interests will secure the repayment of the Notes
issued hereunder and the other obligations purported to be secured thereby.

(ii)           Each Security Document other than the Network Security Documents
and the Crown Eagle Shareholder Loan Documents creates valid and enforceable
security interests in favour of the Company, subject to no other prior or pari
passu Liens, in all the collateral specified therein, which security interests
secure the repayment of the NCN Group Note and the other obligations purported
to be secured thereby.”

(iii)           When executed and delivered, the Crown Eagle Shareholder Loan
Documents will create valid and enforceable security interests in favour of
Crown Eagle subject to no other prior or pari passu Liens, in all the collateral
specified therein, which security interest secures the repayment of the relevant
Crown Eagle Shareholder Loan and the other obligations purported to be secured
thereby.

(c)           Section 6 of the Purchase Agreement is hereby amended by amending
and restating the first sentence in subsection 6(q) as follows:

“Except as set forth in Schedule 6(q) of the Disclosure Schedule, all tax
returns required to be filed by each of the Group Companies have been filed
(taking into account all extensions of due dates), and all such returns are
true, complete and correct.”
 
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4.     Amendments to the Covenants of the Company and Quo

Section 7 of the Purchase Agreement is hereby amended by adding immediately
after sub-section 7(aa) the following:

  b
“(bb)
The Company shall immediately cause NCN Group to deposit US$32,000,000 of the
Third Note Purchase Price into bank account No. 263-693-500288-111 (Swift Code:
CATHUS6L) owned by NCN Group in Cathay Bank Hong-Kong Branch (the “Escrow
Account”) and cause the Escrow Account to be continuously subject to the Fixed
Charge over Bank Account referred to in Exhibit E annexed hereto.  The Company
shall submit to the Collateral Agent for approval a written application for
every drawdown from the Escrow Account, which application shall detail the
proposed use of such drawdown amount, the estimated timeline for such usage, the
cash flow channel utilized with respect thereto and include such other
information with respect thereto requested by the Collateral Agent (each, a
“Drawdown Notice”).  The Company may withdraw amounts from the Escrow Account
only with the express written consent of the Collateral Agent and shall only use
the proceeds of any such withdrawal in accordance with the description thereof
set out in the relevant Drawdown Notice; it being understood that, if the
amounts withdrawn are not promptly applied in accordance with such Drawdown
Notice and the Transaction Documents, the Company shall immediately provide
written notice to the Collateral Agent of such event and, unless otherwise
agreed by the Collateral Agent, redeposit any such amount in the Escrow Account
or, as the case maybe, a new PRC escrow account satisfactory to the Collateral
Agent whereby the written approval of a designee of the Collateral Agent is
required, in a manner satisfactory to the Collateral Agent, for any withdraw of
funds from such PRC escrow account.      
 
(cc)
Within 30 days after the Third Closing or such later date as agreed to by the
Collateral Agent, the Company and Quo shall take all necessary action in
accordance with Applicable Law to establish a joint venture between Linkrich and
Quo in the PRC, in form and substance satisfactory to the Collateral Agent (the
“Ad JV”).  Linkrich and Quo shall initially hold 51% and 49%, respectively, of
the equity interests of the Ad JV and the Company and Quo agree to take all
necessary actions in accordance with Applicable Law to increase Linkrich’s
equity holding in the Ad JV to at least 90%, in such case in form and substance
satisfactory to the Collateral Agent. Upon written notice by the Collateral
Agent or Majority Holders to the Company, the Company shall promptly replace any
of the Designated Holders of Quo with a nominee chosen by the Collateral Agent
or Majority Holders at any time after the Third Closing, such that the Investors
control at least 90% of the equity interest of Quo; it being understood that the
price for such transfer of equity interest in Quo shall be nominal as to the
Investors.

 
(dd)
Within 30 days of the Third Closing or such later date as agreed to by the
Collateral Agent, the Company shall cause NCN Media, through its wholly owned
subsidiary Crown Eagle, to establish a new WFOE in accordance with Applicable
Law, in form and substance satisfactory to the Collateral Agent (the “Operating
Lease WFOE”).  The Company and its Subsidiaries will cause the Operating Lease
WFOE to purchase all the LED panels and, unless otherwise agreed by the
Collateral Agent, all other LED panels of any nature purchased by the Company or
any of its Subsidiaries, and all such purchases shall be on terms and conditions
in form and substance satisfactory to the Collateral Agent.  For each Crown
Eagle Shareholder Loan, the Company shall cause Crown Eagle and the Operating
Lease WFOE to execute and deliver to the Company and the Collateral Agent a set
of Crown Eagle Shareholder Loan Documents with respect thereto in form and
substance satisfactory to the Collateral Agent.

 
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(ee)
The Company represents, warrants and covenants that all amounts invested
(through a Shareholder Loan or otherwise) in any PRC Subsidiary, PRC Operating
Company or otherwise into the PRC, including any direct or indirect proceeds of
the Notes, will be in compliance with all Applicable Laws except for de minimus
violations that are curable and are cured promptly.  The Company represents,
warrants and covenants that all such investments will be made into any PRC
Subsidiary by their respective offshore direct holding company in the form of a
Shareholder Loan in form and substance satisfactory to the Collateral Agent,
except to the extent otherwise agreed by the Collateral Agent.

 
(ff)
The Company shall cause Lianhe to maintain its status as a Chinese hi-tech WFOE
under Applicable Laws and shall cause any revenues generated by the PRC
Operating Companies to be transferred to Lianhe or another PRC Subsidiary of the
Company in accordance with the Structure Agreements or as otherwise agreed by
the Collateral Agent.

 
(gg)
Concurrently with the establishment of the Ad JV and the Operating Lease WFOE,
respectively, the Company shall cause each of Linkrich and Crown Eagle to enter
into the share pledge agreements listed in Schedule VI attached hereto, in form
and substance satisfactory to the Collateral Agent and pledge not less than 66%
of the equity of the Ad JV and the Operating Lease WFOE to secure the NCN Group
Note and the other obligations set forth therein.  The Company shall further
cause each of Linkrich, Crown Eagle, the Ad JV and the Operating Lease WFOE to
obtain approvals from, and complete filing procedures with relevant Governmental
Authorities in respect of the aforementioned share pledge agreements within
sixty (60) days after the Third Closing Date or such later date agreed to by the
Collateral Agent.  The Company shall, as required by the Collateral Agent, cause
the Ad JV and the Operating Lease WFOE to enter into similar Structure
Agreements with the PRC Operating Companies, in form and substance satisfactory
to the Collateral Agent; provided that, except as otherwise agreed by the
Collateral Agent, the Company shall simultaneously cause any existing Structure
Agreements entered into by Lianhe with the PRC Operating Companies to be
terminated such that at any given time the PRC Operating Companies shall have
entered into valid and effective Structure Agreements with only one of Lianhe,
the Ad JV or the Operating Lease WFOE.

 
 
(ii)
Within thirty (30) days after the Third Closing or such later date agreed to by
the Collateral Agent, the Company shall cause Cityhorizon BVI and Lianhe,
respectively, to obtain approvals from, and complete filing procedures with,
relevant Governmental Authorities in respect of the security provided by the
Security Documents.

 
 
(jj)
As soon as practicable after the Third Closing but, in any event, no later than
December 31, 2008, the Company shall cause Cityhorizon BVI to be liquidated with
and into Citihorizon HK and, in connection with such liquidation, shall cause
Citihorizon HK and its other Subsidiaries to enter into Security Documents
requested by the Collateral Agent.

 
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(kk)
Upon written notice by the Collateral Agent or Majority Holders to the Company,
the Company shall promptly replace certain shareholders of Bona and Botong with
a nominee chosen by the Collateral Agent or Majority Holders such that the
Investors control at least 51% of the equity interest of each of Bona and
Botong; it being understood that the price for such transfer of equity interest
in Bona and Botong shall be nominal as to the Investors.

 
 
(ll)
The Company shall, and shall cause each of the Group Companies to, comply with
all applicable tax laws at all times and in all respects, including, but not
limited to, the due and timely filing of all tax returns.
        b
(mm)
b
In the event the Company intends to form or acquire any additional Subsidiaries
after the Third Closing, the Company shall, prior to such formation or
acquisition, notify the Collateral Agent and the Investors thereof, and provide
to the Collateral Agent and the Investors such formation or acquisition
documents for approval by the Collateral Agent. In the event that the Collateral
Agent and Majority Holders provide consent to such formation or acquisition, the
Company may form or acquire such additional Subsidiaries and shall cause such
Subsidiaries to concurrently execute and become a party to any and all Security
Documents and other Transaction Documents required by the Collateral Agent and
Majority Holders.  The Company agrees to provide such evidence as the Collateral
Agent or Majority Investors shall request as to the perfection and priority
status of each of the security interests and Liens created by such Security
Documents and any other Security Documents.

 
 
(nn)
The Company shall and shall cause its Subsidiaries to take such actions as are
necessary or as the Collateral Agent or the Majority Holders may request from
time to time (including the execution and delivery of joinders and/or guaranties
to this Agreement and any other applicable Security Documents, Transaction
Documents, deposit account control agreements and other documents, the filing or
recording of any of the foregoing, and the delivery of stock certificates and
other collateral with respect to which perfection is obtained by possession) to
ensure that the obligations of the Company and its Subsidiaries hereunder and
under the other Transaction Documents are secured by substantially all of the
assets, equity securities and personal property of the Company and its
Subsidiaries (whether now existing or promptly upon the acquisition or creation
thereof after the date hereof) and to give effect to the other provisions of
this Agreement and the other Transaction Documents.

 
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(oo)
The Company acknowledges and agrees that, notwithstanding anything contrary
provided in any Warrant, if any of the Notes have not been paid in full on or
prior to June 30, 2011, the Warrants shall continue in full force and effect
until such time as the Notes have been paid in full.  If requested by any
Investor, the Company shall issue replacement warrants for the Warrants of such
Investor issued in connection with the First Closing and the Second Closing
adding at the end of Section 14 thereof the following: “; provided, however, if
any of the Notes have not been paid in full on or prior to June 30, 2011, this
Warrant shall continue in full force and effect until such time as the Notes
have been paid in full”.

 

5.      Amendments to Conditions Precedent to the Third Closing

Section 9(c) of the Purchase Agreement is hereby amended and restated in its
entirety as follows:

“(c)        The Investors’ obligation to purchase the Third Note under this
Agreement at the Third Closing is subject to the satisfaction or waiver of each
of the following conditions on or prior to the Third Closing:
 
(i)  
All the representations and warranties of each of the Group Companies shall be
true and correct as of the Closing Date.  Each of the Group Companies shall have
performed, satisfied and complied with, as of the Closing Date and to the
Investors’ satisfaction, all covenants, agreements and conditions required by
the Transaction Documents, as applicable to each of the Group Companies.

 
(ii)  
The Company shall provide to the Investors evidence to the satisfaction of the
Investors that the procedure contemplated by sections 47A-48 of the Companies
Ordinance (Cap. 32 of the Laws of Hong Kong) (the “Whitewash Procedure”) has
been completed by each of Company’s Subsidiaries organized under HK law in
relation to any relevant Transaction Document.

 
(iii)  
No injunction, restraining order or order of any nature by a Governmental
Authority shall have been issued as of the Closing Date that could prevent or
interfere with the consummation of the transactions contemplated under the
Transaction Documents to be entered into at the Third Closing; and no stop order
suspending the qualification or exemption from qualification of any of the
Securities in any jurisdiction shall have been issued and no Proceeding for that
purpose shall have been commenced or be pending or threatened as of the Closing
Date.

 
(iv)  
No action shall have been taken and no Applicable Law shall have been enacted,
adopted or issued that could, as of the Closing Date, reasonably be expected to
prevent the consummation of the transactions contemplated under the Transaction
Documents.  No Proceeding shall be pending or threatened other than Proceedings
that if adversely determined could not, individually or in the aggregate,
adversely affect the issuance or marketability of the Securities.

 
(v)  
The Company shall have obtained any and all approvals, consents and waivers
necessary for consummation of the transactions contemplated by the Transaction
Documents, including, but not limited to, all Permits, authorizations, approvals
or consents of any Governmental Authority.

 
(vi)  
The Company shall have received due and proper waivers, or shall have entered
into amendments or agreements effecting such waivers, by the security holder,
creditor or anyone who holds similar rights in the Company (other than the
holders of the Securities), of any restrictions with respect to the issuance or
sale of the Securities or the consummation of the transactions contemplated
under the Transaction Documents, or any provisions that would materially and
adversely affect the interests of the holders of the Securities or the
consummation of the transactions contemplated under the Transaction Documents,
including without limitation any right of first refusal or right to be consulted
or to make a comparable offer with respect to the Securities, held by any such
security holder, creditor or  holder of similar rights.

 
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(vii)  
The Investors shall have received on the Closing Date a certificate dated as of
the Closing Date, signed by the Chief Executive Officer of the Company on behalf
of the Group Companies to the effect that (a) the representations and warranties
set forth in the Agreement and the other Transaction Documents are true and
correct with the same force and effect as though expressly made at and as of the
Closing Date, (b) each of the Group Companies has complied with all agreements
and satisfied all conditions on its part to be performed or satisfied hereunder
at or prior to the Closing Date in the Transaction Documents, (c) at the Closing
Date, since the date hereof or since the date of the most recent financial
statements in the SEC Reports, no event or events have occurred, no information
has become known nor does any condition exist that could, individually or in the
aggregate, have a Material Adverse Effect on the Group Companies, (d) since the
date of the most recent financial statements in the SEC Reports, none of the
Group Companies has incurred any liabilities or obligations, direct or
contingent, not in the ordinary course of business, or entered into any other
transactions not in the ordinary course of business, and there has not been any
change in the Capital Stock or long-term indebtedness of any of the Group
Companies, and (e) the sale of any of the Notes or Warrants has not been
enjoined (temporarily or permanently) and (f) the Cityhorizon BVI Acquisition
and the Linkrich Acquisition have occurred.

 
(viii)  
The respective board of directors (or its equivalent) of the Group Companies
shall have approved and authorized by all necessary corporate or other action,
as applicable, (i) the execution and delivery of the Transaction Documents to
which they are a party, (ii) all actions to be performed or satisfied under the
Transaction Documents to which they are a party, (iii) the consummation of the
transactions contemplated by the Transaction Documents to which they are a
party, and (iv) all other actions necessary in connection with the transactions
contemplated by the Transaction Documents and the offering of the Notes and the
issuance of the Warrants, and shall have provided the Investors with a copy of
such authorizations.

 
(ix)  
The consummation of the Cityhorizon BVI Acquisition and the Linkrich Acquisition
and the termination of the Trust Documents with the Designated Holders in
accordance with Applicable Laws and to the satisfaction of the Investors.

 
(x)  
Lianhe submitted application to the relevant Governmental Authority in the PRC
to amend its business scope and adjust its total investment and registered
capital, and Lianhe shall enter into the Structure Agreements with the PRC
Operating Companies.

 
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(xi)  
NCN Group shall issue the NCN Group Note and the Company, NCN Group, NCN Media,
Cityhorizon, Cityhorizon BVI, Linkrich and Crown Eagle shall execute and deliver
to the Collateral Agent a fully executed original (or clearly legible facsimile
copy) of the Undertaking Agreement.

 
(xii)  
The Offshore Security Documents and the Onshore Security Documents shall have
been executed and delivered by the parties thereto and the Collateral Agent
shall have received a fully executed original (or clearly legible facsimile
copy) of the Offshore Security Documents and the Onshore Security
Documents.  The security provided by the Offshore Security Documents shall have
been perfected, charged, approved, registered with relevant filing agents or
Government Authorities, as applicable.

 
(xiii)  
The Collateral Agent and the Investors and their counsel shall be satisfied that
(i) the Liens granted to the Collateral Agent, for the benefit of the Investors,
in the collateral described in the Network Security Documents is a first
priority Lien; (ii) no Lien exists on any of the collateral described therein
other than the Lien created in favor of the Collateral Agent, for the benefit of
the Investors, (iii) the Liens granted to the Company in the collateral
described in the other Security Documents is a first priority Lien, and (iv) no
Lien exists on any of the collateral described therein other than the Lien
created in favor of the Company.

 
(xiv)  
The Collateral Agent and the Investors shall have received copies of all
documents executed and delivered under or in connection with the transactions
contemplated in the Transaction Documents that are required to be executed and
delivered at or prior to the Third Closing Date and shall have received updated
Disclosure Schedules to the extent circumstances have changed since the Second
Closing in form and substance satisfactory to the Collateral Agent and the
Investors.

 
(xv)  
Neither the Company nor any other party to any of the Transaction Documents
shall be in breach or default under their respective obligations thereunder.

 
(xvi)  
The Collateral Agent and the Investors shall have received at the Third Closing,
the opinions of BVI counsel, US counsel, HK counsel, and PRC Counsel, in each
case, dated the Third Closing Date, in form and substance satisfactory to the
Collateral Agent and the Investors;

 
(xvii)  
The Collateral Agent and the Investors shall have approved a fund flow chart
setting forth how the proceeds from the issue of the Notes shall be transferred
to the PRC Operating Companies and converted into RMB.

 
(xviii)  
The Collateral Agent and the Investors shall have received certified copies of
searches of all applicable registers of security interests applicable to the
Group Companies, such searches to be satisfactory to the Investors.

 
(xix)  
All the conditions specified in Section 9(b) above shall have been fulfilled,
satisfied or remain satisfied for the Third Closing, unless waived in writing by
the Investors.”

 
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6.           Substitution of Exhibits
 
Exhibits A, E and F of the Purchase Agreement are hereby amended by deleting
said Exhibits in their entirety and substituting in place thereof the new
exhibits attached hereto as Annex A to this Amendment.
 
7.           Addition of Exhibits
 
The Purchase Agreement is hereby amended by adding Exhibits K-1, K-2 and K-3
attached hereto as Annex B.
 
8.           Substitution of Schedules
 
All of the Disclosure Schedules of the Purchase Agreement are hereby amended and
restated in their entirety as attached hereto as Annex C to this Amendment.
 
9.           Addition of Schedules
 
The Purchase Agreement is hereby amended by adding Schedules IV, V and VI
thereto attached hereto as Annex D.
 
Section B.           Representations and Warranties
 
1.        In order to induce Investors to enter into this First Amendment, the
Company, Quo and each of the other Group Companies that is a party hereto
represents and warrants to the Collateral Agent and the Investors that the
following statements are true, correct and complete:
 
(a)          each of the Company and Quo has all requisite corporate or other
organizational power and authority to enter into this First Amendment and to
carry out the transactions contemplated by, and perform its obligations under,
the Purchase Agreement as amended by this First Amendment (the “Amended
Agreement”);
 
(b)         the execution and delivery of this First Amendment and the
performance of the Amended Agreement have been duly authorized by all necessary
corporate action on the part of the Company and Quo;
 
(c)          the execution and delivery by the Company and Quo of this First
Amendment and the performance by the Company and Quo of the Amended Agreement do
not (i) conflict with or result in a breach of the terms, conditions or
provisions of, (ii) constitute a default under, (iii) except as created pursuant
to the Security Documents, result in the creation of any Lien upon any of the
Company’s and its Subsidiaries capital stock or assets pursuant to, (iv) give
any third party the right to accelerate any obligation under, (v) result in a
violation of, or (vi) require any authorization, consent, approval, exemption or
other action by or notice to any Governmental Authority pursuant to, (A) the
Charter Documents or By-Laws of the Company and its Subsidiaries and Quo, or (B)
any Law to which the Company and its Subsidiaries and Quo are subject, or (C)
any agreement, instrument, contract, order, judgment or decree to which each of
the Company or its Subsidiaries or Quo is a party;
 
(d)         Except as specifically provided by the Transaction Documents, no
registration with or consent or approval of, or other action by, any
Governmental Authority is required in connection with the execution and delivery
by the Company and Quo of this First Amendment and the performance by the
Company and Quo of the Amended Agreement, except for those which if not made,
obtained or taken could not reasonably be expected to result in a Material
Adverse Effect;
 
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(e)          this First Amendment and the Amended Agreement constitute, legal,
valid and binding obligations of each of the Company and Quo, enforceable in
accordance with their respective terms subject to applicable bankruptcy,
reorganization, moratorium or similar laws of general applicability affecting
the enforcement of creditors’ rights and subject to general equitable principles
which may limit the right to obtain equitable remedies;
 
(f)           the representations and warranties contained in Section 6 of the
Purchase Agreement are and true, correct and complete in all material respects
on and as of the date hereof and the Third Closing to the same extent as though
made on and as of such dates, except to the extent such representations and
warranties specifically relate to an earlier date, in which case they were true,
correct and complete in all material respects on and as of such earlier date;
and
 
(g)          no event has occurred and is continuing or will result from the
consummation of the transactions contemplated by this First Amendment that would
constitute a Default or an Event of Default.
 
Section C.           Conditons to Effectiveness
 
1.           This First Amendment shall be a Transaction Document and become
effective only upon the satisfaction of the following conditions precedent (the
“Closing Conditions”):
 
(a)         The Collateral Agent and the Investors shall have received on or
prior to the Third Closing this First Amendment, duly executed and delivered by
all Parties.
 
Section D.           Miscellaneous

1.           Reference to and Effect on the Purchase Agreement and the
SecurityDocuments
 
(a)         On and after the effective date of this First Amendment, each
reference in the Purchase Agreement to “this Agreement”, “hereunder”, “hereof”,
“herein” or words of like import referring to the Purchase Agreement and each
reference in the Security Documents to the “Purchase Agreement”, “thereunder”,
“thereof” or words of like import referring to the Purchase Agreement shall mean
and be a reference to the Purchase Agreement as amended hereby.
 
(b)         Except as specifically amended by this First Amendment, the Purchase
Agreement and the Security Documents shall remain in full force and effect and
are hereby ratified and confirmed.
 
(c)         The execution, delivery and performance of this First Amendment
shall not, except as expressly provided herein, constitute a waiver of any
provision of, or operate as a waiver of any right, power or remedy of any
Investor under the Purchase Agreement or any Security Document.
 
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2.           Headings
 
Section and subsection headings in this First Amendment are included herein for
convenience of reference only and shall not constitute a part of this First
Amendment for any other purpose or be given any substantive effect.
 
3.           Applicable Law
 
THIS FIRST AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING, WITHOUT LIMITATION,
SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT
REGARD TO CONFLICTS OF LAWS PRINCIPLES
 
4.           Consent to Jurisdiction and Service of Process
 
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST THE PARTIES HERETO ARISING OUT OF OR
RELATING TO THIS FIRST AMENDMENT, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT
IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND
CITY OF NEW YORK.
 
5.           Waiver of Jury Trial
 
THE PARTIES HERETO HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS FIRST
AMENDMENT.  THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY
AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT
MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.
 
6.           Counterparts
 
This First Amendment may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.
 

(Signature Pages Follow)
 
 
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IN WITNESS WHEREOF, the Parties hereto have executed this First Amendment on the
day and year first before written.
 
 

 
NETWORK CN INC.
 
By:    /s/ Godfrey C. Hui                                           
Name: Godfrey C. Hui
Title: CEO and Director

 
SHANGHAI QUO ADVERTISING COMPANY LIMITED
 
By:    /s/ Lina Zhang                                                
Name: Lina Zhang
Title: Legal Representative

 

 
 /s/ Lina Zhang                                                    
Lina Zhang 

 
 /s/ Qinxiu Zhang                                                
Qinxiu Zhang
 
 
 
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INVESTORS:
 

 
SCULPTOR FINANCE (MD) IRELAND LIMITED
 

 
By:  /s/ Jennifer Coyne                                             
Name: Jennifer Coyne
Title: Director

SCULPTOR FINANCE (AS) IRELAND LIMITED
 

 
By:  /s/ Jennifer Coyne                                           
Name: Jennifer Coyne
Title: Director

SCULPTOR FINANCE (SI) IRELAND LIMITED
 

 
By:  /s/ Jennifer Coyne                                          
Name: Jennifer Coyne
Title: Director
 
 
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OZ MASTER FUND, LTD.

By: OZ Management LP, its Investment Manager
By: Och-Ziff Holding Corporation, its General Partner

By:  /s/ Joel Frank                                                        
Name: Joel Frank
Title:  CFO
 

OZ ASIA MASTER FUND, LTD.

By: OZ Management LP, its Investment Manager
By: Och-Ziff Holding Corporation, its General Partner

By:  /s/ Joel Frank                                                        
Name: Joel Frank
Title: CFO
 

OZ GLOBAL SPECIAL INVESTMENTS MASTER FUND, L.P.
 
By: OZ Advisors II LP, its General Partner
By: Och-Ziff Holding LLC, its General Partner

By:  /s/ Joel Frank                                                          
Name: Joel Frank
Title: CFO
 
 
 
 
 
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