Exhibit10.1 FIRSTAMENDMENT TO NOTE AND WARRANT PURCHASE AGREEMENT

“(bb)

 

(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.

 

(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.

 

(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.

(mm)

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.

 

(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”.

(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.

(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.

(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.”