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EXHIBIT 10.1  


SUBORDINATED BRIDGE NOTE  


 PURCHASE AGREEMENT  


 DATED AS OF NOVEMBER 26, 2001  


 BY AND BETWEEN  


 CTN MEDIA GROUP, INC.  


 AND  


 U-C HOLDINGS, L.L.C.








   Table of Contents  



	 
	 	 
	 	 
	 	Page

	ARTICLE I	 	 	 	 	 	 
	DEFINITIONS
	

ARTICLE II	
 	

 	
 	

 	
 	

 
	CLOSING
	 	 	2.01	 	Authorization of Notes	 	7
	 	 	2.02	 	Purchase and Sale of Initial Note	 	7
	 	 	2.03	 	Initial Closing	 	8
	 	 	2.04	 	Purchase of Additional Notes	 	8
	 	 	2.05	 	Subsequent Closings	 	8
	 	 	2.06	 	Conversion Rights	 	8
	 	 	2.07	 	Security Interest	 	9
	

ARTICLE III	
 	

 	
 	

 	
 	

 
	PURCHASER'S REPRESENTATIONS
	 	 	3.01	 	Investment Intention	 	9
	 	 	3.02	 	Corporate Existence	 	10
	 	 	3.03	 	Corporate Power; Authorization; Enforceable Obligations	 	10
	 	 	3.04	 	Confidentiality	 	10
	ARTICLE IV	 	 	 	 	 	 
	COMPANY'S REPRESENTATIONS, WARRANTIES AND COVENANTS
	 	 	4.01	 	Capitalization	 	10
	 	 	4.02	 	Authorization and Issuance of the Notes	 	11
	 	 	4.03	 	Corporate Existence; Compliance with Law	 	11
	 	 	4.04	 	Subsidiaries	 	12
	 	 	4.05	 	Corporate Power; Authorization; Enforceable Obligations	 	12
	 	 	4.06	 	Financial Statements	 	12
	 	 	4.07	 	Ownership of Property	 	13
	 	 	4.08	 	Material Contracts; Indebtedness	 	13
	 	 	4.09	 	Environmental Protection	 	13
	 	 	4.10	 	Labor Matters	 	14
	 	 	4.11	 	Securities Laws	 	15
	 	 	4.12	 	Taxes	 	15
	 	 	4.13	 	No Litigation	 	16
	 	 	4.14	 	Brokers	 	16
	 	 	4.15	 	Management and Labor Agreements	 	16
	 	 	4.16	 	Patents, Trademarks, Copyrights and Licenses	 	16
	 	 	4.17	 	No Material Adverse Effect	 	17
	 	 	4.18	 	ERISA	 	17
	 	 	4.19	 	Registration Rights	 	19
	 	 	4.20	 	Required Filings	 	19
	 	 	4.21	 	Full Disclosure	 	19
	 	 	4.22	 	Use of Proceeds	 	19
	 	 	4.23	 	Insurance	 	19



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	 	 	4.24	 	Affiliated Transactions	 	19
	 	 	4.25	 	Special Finance Committee	 	19
	

ARTICLE V	
 	

 	
 	

 	
 	

 
	EVENTS OF NONCOMPLIANCE
	 	 	5.01	 	Definition	 	20
	 	 	5.02	 	Consequences of Events of Noncompliance	 	21
	

ARTICLE VI	
 	

 	
 	

 	
 	

 
	CONDITIONS PRECEDENT TO CLOSING
	 	 	6.01	 	Conditions Precedent	 	21
	

ARTICLE VII	
 	

 	
 	

 	
 	

 
	SECURITIES LAWS MATTERS
	 	 	7.01	 	General Provisions	 	23
	 	 	7.02	 	Information Requests	 	23
	

ARTICLE VIII	
 	

 	
 	

 	
 	

 
	EXPENSES
	

ARTICLE IX	
 	

 	
 	

 	
 	

 
	LIMITATION ON CLAIMS OF THE PURCHASER
	 	 	9.01	 	Limitation	 	23
	

ARTICLE X	
 	

 	
 	

 	
 	

 
	MISCELLANEOUS
	 	 	10.01	 	Notices	 	24
	 	 	10.02	 	Binding Effect; Benefits	 	25
	 	 	10.03	 	Amendment	 	25
	 	 	10.04	 	Successors and Assigns; Assignability	 	25
	 	 	10.05	 	Remedies	 	25
	 	 	10.06	 	Section and Other Headings	 	26
	 	 	10.07	 	Severability	 	26
	 	 	10.08	 	Entire Agreement	 	26
	 	 	10.09	 	Counterparts	 	26
	 	 	10.10	 	Publicity	 	26
	 	 	10.11	 	Governing Law	 	26
	 	 	10.12	 	No Setoffs, etc	 	26
	 	 	10.13	 	No Strict Construction	 	27




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SCHEDULES AND EXHIBITS  



	Schedule 4.01	 	Capitalization
	Schedule 4.03	 	Foreign Qualification
	Schedule 4.04	 	Subsidiaries
	Schedule 4.06	 	Financial Statements; Other Obligations
	Schedule 4.07	 	Ownership of Property
	Schedule 4.08	 	Material Contracts
	Schedule 4.10	 	Labor Matters
	Schedule 4.12	 	Taxes
	Schedule 4.13	 	Litigation
	Schedule 4.15	 	Management and Labor Agreements
	Schedule 4.19	 	Registration Rights
	Schedule 4.23	 	Insurance
	Schedule 4.24	 	Affiliated Transactions
	

Exhibit A	
 	

Form of Note
	Exhibit B	 	Subordinated Security Agreement
	Exhibit C	 	Capitalization Chart




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SUBORDINATED BRIDGE NOTE
  PURCHASE AGREEMENT    
  


    THIS SUBORDINATED BRIDGE NOTE PURCHASE AGREEMENT (the "Agreement"), is dated as of November 26, 2001, by
and between CTN Media Group, Inc., a Delaware corporation having an office at 3350 Peachtree Road, Suite 1500, Atlanta, Georgia 30326 (the "Company"),
and U-C Holdings, L.L.C., a Delaware limited liability company (the "Purchaser"). 


    WHEREAS,
the Company has agreed to issue and sell to Purchaser, and Purchaser has agreed to purchase from the Company, upon the terms and conditions hereinafter provided, subordinated
bridge notes in the form attached hereto as Exhibit A (the "Notes"). 


    WHEREAS,
the Company has agreed to grant to Purchaser a lien on the assets of the Company as collateral security for the obligations of the Company under this Agreement and the Notes
upon the terms and conditions set forth in a Subordinated Security Agreement in the form attached hereto as Exhibit B. 


    NOW,
THEREFORE, in consideration of the premises and the covenants hereinafter contained, it is agreed as follows: 


ARTICLE
1 


 
  DEFINITIONS    
  


    "Affiliate" of any particular Person means any other Person controlling, controlled by or under common control
with such particular Person, where "control" means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting
securities or otherwise. 


    "Affiliated Group" shall mean an affiliated group as defined in Section 1504 of the IRC (or any analogous combined, consolidated or
unitary group defined under state, local or foreign income tax law) of which Company is or has been a member. 


    "Annual Report" shall mean the annual report of the Company on Form 10-KSB for the fiscal year ended December 31, 2000, which has been
filed with the SEC. 


    "Board" shall mean the board of directors of the Company. 


    "Business Day" shall mean any day that is not a Saturday, a Sunday or a day on which banks are required or permitted to be closed in
the State of Illinois or the State of Georgia. 


    "Capitalization Chart" shall have the meaning set forth in Section 4.01. 


    "Certificate of Incorporation" shall mean the Amended and Restated Certificate of Incorporation of the Company filed on May 9, 2001
with the Secretary of State of the State of Delaware, and as the same may be further amended, modified or restated from time to time. 


    "Charges" shall mean (A) all federal, state, county, city, municipal, local, foreign or other governmental (including, without
limitation, PBGC taxes at the time due and payable, levies, assessments, charges, liens, claims or encumbrances upon or relating to (i) the Company's employees, payroll, income or gross receipts, (ii)
the Company's ownership or use of any of its assets, or (iii) any other aspect of the Company's business, or (B) any liability of the Company for the payment of any amounts of the type described in
clause (A) arising as a result of being (or ceasing to be) a member of any Affiliated Group (or being included (or required to be included) in any tax return relating thereto). 


    "Closing" shall mean each of the Initial Closing and each Subsequent Closing, and "Closing
Date" shall mean each of the Initial Closing Date and each Subsequent Closing Date. 


    "COBRA" shall have the meaning set forth in Section 4.18(l) hereof. 



    "Commitment Termination Date" shall have the meaning given to it in Section 2.04
hereof. 


    "Common Stock" shall mean the common stock of the Company, par value $.005 per share. 





 


    "Company" shall mean CTN Media Group, Inc., a Delaware corporation having an office at 3350 Peachtree Road, Suite 1500, Atlanta,
Georgia 30326. 


    "Controlled Group" shall mean all members of a controlled group of corporations and all members of a controlled group of trades or
businesses (whether or not incorporated) under common control which, together with the Company, are treated as a single employer under Section 414 of the IRC or Section 4001 of ERISA. 


    "Environmental Laws" shall mean all federal, state and local laws, statutes, ordinances and regulations, now or hereafter in effect,
and in each case as amended or supplemented from time to time, and any judicial or administrative interpretation thereof, including, without limitation, any applicable judicial or administrative
order, consent decree or judgment, relative to the applicable Real Estate, relating to the regulation and protection of human health, safety, the environment and natural resources (including, without
limitation, ambient air, surface water, groundwater, wetlands, land surface or subsurface strata, wildlife, aquatic species and vegetation). Environmental Laws include but are not limited to the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C. / / 9601 et seq.) ("CERCLA"); the
Hazardous Material Transportation Act, as amended (49 U.S.C. / / 1801 et seq.); the Federal Insecticide, Fungicide, and Rodenticide Act, as amended (7 U.S.C. / / 136 et seq. ); the
Resource Conservation and Recovery Act, as amended (42 U.S.C. / /6901 et seq.) ("RCRA"); the Toxic Substance Control Act, as amended (15 U.
S.C. / / 2601 et seq.); the Clean Air Act, as amended (42 U. S.C. / / 740 et seq.); the Federal Water Pollution Control Act, as amended (33 U.S.C. / / 1251 et seq.); the
Occupational Safety and Health Act, as amended (29 U.S.C. / / 651 et sec.) ("OSHA"); and the Safe Drinking Water Act, as amended (42 U.S.C.
/ / 300f et seq.), and any and all regulations promulgated thereunder, and all analogous state and local counterparts or equivalents and any transfer of ownership notification or approval
statutes. 


    "Environmental Liabilities and Costs" shall mean all liabilities, obligations, responsibilities, remedial actions, losses, damages,
punitive damages, consequential damages, treble damages, costs and expenses (including, without limitation, all fees, disbursements and expenses of counsel, experts and consultants and costs of
investigation and feasibility studies), fines, penalties, sanctions and interest incurred as a result of any claim, suit, action or demand by any Person, whether based in contract, tort, implied or
express warranty, strict liability, criminal or civil statute or common law (including, without limitation, any thereof arising under any Environmental Law, permit, order or agreement with any
Governmental Authority) and which relate to any health or safety condition regulated under any Environmental Law or in connection with any other environmental matter or Spill or the presence of a
hazardous substance or threatened Spill of any Hazardous Substance. 


    "ERISA" shall mean the Employee Retirement Income Security Act of 1974 (or any successor legislation thereto), as amended from time to
time and any regulations promulgated thereunder. 


    "ERISA Affiliate" shall mean, with respect to the Company, any trade or business (whether or not incorporated) under common control
with the Company and which, together with the Company, are treated as a single employer within the meaning of Section 414(b), (c), (m) or (o) of the IRC, excluding the Purchaser and each other Person
which would not be an ERISA Affiliate if the Purchaser did not own any issued and outstanding shares of Stock of the Company. 



    "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and all rules and regulations promulgated thereunder. 


    "Evaluation Material" shall have the meaning set forth in Section 3.04. 


    "Event of Noncompliance" shall have the meaning set forth in Section 5.01. 


    "Facility" shall have the meaning set forth in Section 4.09. 



    "Financials" shall mean the financial statements referred to in Section 4.07 hereof. 


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    "GAAP" shall mean generally accepted accounting principles in the United States of America as in effect from time to time. 


    "Governmental Authority" shall mean any nation or government, any state or other political subdivision thereof, and any agency,
department or other entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. 


    "Guaranteed Indebtedness" shall mean, as to any Person, any obligation of such Person guaranteeing any Indebtedness, lease, dividend,
or other obligation ("primary obligations") of any other Person (the "primary obligor") in any manner
including, without limitation, any obligation or arrangement of such Person (a) to purchase or repurchase any such primary obligation, (b) to advance or supply funds (i)
for the purchase or payment of any such primary obligation or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency or any
balance sheet condition of the primary obligor, (c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the
primary obligor to make payment of such primary obligation, or (d) to indemnify the owner of such primary obligation against loss in respect thereof. 


    "Hazardous Substance" shall have the meaning set forth in Section 4.09(a)
hereof. 


    "Indebtedness" of any Person shall mean (i) all indebtedness of such Person for borrowed money or for the deferred purchase price of
property or services (including, without limitation, reimbursement and all other obligations with respect to surety bonds, letters of credit and bankers acceptances, whether or not matured, but not
including obligations to trade creditors incurred in the ordinary course of business), (ii) all obligations evidenced by notes, bonds, debentures or similar instruments, (iii) all indebtedness created
or arising under any conditional sale or other title retention agreements with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such property), (iv) all capital lease obligations required to be capitalized in accordance with GAAP, (v) all Guaranteed
Indebtedness, (vi) all Indebtedness referred to in clause (i), (ii), (iii), (iv) or (v) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise,
to be secured by) any Lien upon or in property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness and (vii) all liabilities under Title IV of ERISA. 


    "Independent Third Parties" shall mean third party investors who are not Affiliates of the Purchaser, the Company or any of the WSP
Parties. 


    "Initial Closing" and "Initial Closing Date" shall have the meaning set forth in  Section 2.03. 


    "Initial Note" shall have the meaning set forth in Section 2.02. 


    "Initial Principal Amount" shall have the meaning set forth in Section 2.02. 


    "IRC" shall mean the Internal Revenue Code of 1986, as amended, and any successor thereto. 


    "IRS" shall mean the Internal Revenue Service, or any successor thereto. 


    "LaSalle Credit Agreement" shall mean the Amended and Restated Credit Agreement, dated as of August 14, 2001, by and between the
Company and LaSalle Bank National Association, as amended, restated and modified from time to time. 


    "Lien" shall mean any mortgage or deed of trust, pledge, hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, easement or encumbrance, or preference, priority, or other security agreement or preferential arrangement of any kind or nature whatsoever (including without limitation, any title retention
agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of, or agreement to give, any financing 


3





 


statement perfecting a security interest as to assets owned by the relevant Person under the Uniform Commercial Code or comparable law of any jurisdiction). 



    "Material Adverse Effect" shall mean material adverse effect on the business, assets, operations, prospects or financial or other
condition of the Company. 


    "Material Contracts" shall mean (i) all of the Company's contracts, agreements, leases or other instruments to which the Company is a
party or by which the Company or its properties are bound, which in the Company's good faith judgment are required to be disclosed as exhibits to the Company's annual report on Form 10-KSB, (ii) all
of the Company's and its Subsidiaries' loan agreements, bank lines of credit agreements, indentures, mortgages, deeds of trust, pledge and security agreements, factoring agreements, conditional sales
contracts, letters of credit or other debt instruments, (iii) all material operating or capital leases for equipment to which the Company is a party, (iv) all non-competition and similar agreements
other than as contained in employment agreements to which the Company is a party, (v) all contracts for the employment of any officer or employee, (vi) all consulting agreements, (vii) any guarantees
by the Company, (viii) all distributor and sales agency agreements, (ix) all other material contracts not made in the ordinary course of business, and (x) all material contracts relating to the
operation of the Company or, the production of or programming for the Company or related to the technology utilized by the Company. 


    "Multiemployer Plan" shall mean a "multiemployer plan" as defined in Section 4001(a)(3) of ERISA, and to which Company or any ERISA
Affiliate is making, is obligated to make, has made or been obligated to make, contributions on behalf of participants who are or were employed by any of them. 


    "New Financing" means the consummation by the Company of a new round of equity or subordinated debt financing approved by the Special
Finance Committee with Independent Third Parties by the Commitment Termination Date. 


    "New Securities" shall have the meaning set forth in Section 2.06. 


    "Notes" shall have the meaning set forth in the Recitals. 


    "PBGC" shall mean the Pension Benefit Guaranty Corporation or any successor thereto. 


    "Pension Plan" shall mean all "employee benefit plans", as defined in Section 3(3) of ERISA, and any other employee benefit
arrangements or payroll practices, including, without limitation, severance pay, sick leave, vacation pay, salary continuation for disability, consulting or other compensation agreements, retirement,
deferred compensation, bonus, stock purchase, hospitalization, medical insurance, life insurance and scholarship programs (the "Plans") maintained by
the Company or to which the Company contributed, contributes or is obligated to contribute thereunder, and (ii) all "employee pension plans", as defined in Section 3(2) of ERISA, maintained by the
Company or any of its ERISA Affiliates to which the Company or any of its ERISA Affiliates contributed, contributes or is obligated to contribute thereunder. 


    "Permitted Indebtedness" shall mean any debt incurred by the Company under the LaSalle Credit Agreement or permitted to be incurred by
the Company under Section 10.7 of the LaSalle Credit Agreement. 


    "Person" shall mean any individual, sole proprietorship, partnership, limited liability company, joint venture, trust, unincorporated
organization, association, corporation, institution, public benefit corporation, entity or government (whether federal, state, county, city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof). 


    "Preferred Stock" shall mean the Series A Convertible Preferred Stock and the Series B Convertible Preferred Stock of the Company, par
value $.001 per share. 


4





 


    "Purchaser" shall mean U-C Holdings, L.L.C., a Delaware limited liability company. 


    "Registration Rights Agreement" shall mean the Registration Rights Agreement between the Company and the Purchaser, dated as of April
25, 1997, as such agreement may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof. 



    "SEC" shall mean the U.S. Securities and Exchange Commission, or any successor thereto. 


    "Securities Act" shall mean the Securities Act of 1933, as amended, and all rules and regulations promulgated thereunder. 


    "Special Finance Committee" means the special finance committee of the Company, the members of which are independent from the
Purchaser. 


    "Spill" shall have the meaning set forth in Section 4.09. 



    "Stock" shall mean all shares, options, warrants, general or limited partnership interests, limited liability company membership
interest, participations or other equivalents (regardless of how designated) of or in a corporation, partnership, limited liability company or equivalent entity whether voting or nonvoting, including,
without limitation, common stock, preferred stock, or any other equity security (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the SEC under the Exchange
Act). 


    "Subordinated Security Agreement" shall mean the Subordinated Security Agreement by and between Company and Purchaser, dated as of the
date hereof, in the form attached hereto as Exhibit B, as amended, restated and modified from time to time. 


    "Subordination Agreement" shall mean the Subordination and Intercreditor Agreement by and between Company, Purchaser and LaSalle Bank
National Association, dated as of the date hereof, as amended, restated and modified from time to time. 


    "Subsequent Closing" or "Subsequent Closing Date" shall refer to any closing pursuant
to Section 2.02 hereof that takes place after the Initial Closing. 


    "Subsidiary" shall mean, with respect to any Person, (a) any corporation of which an aggregate of more than 50% of the outstanding
Stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, Stock of any other class or classes of such corporation
shall have or might have voting power by reason of the happening of any contingency)
is at the time, directly or indirectly, owned legally or beneficially by such Person and/or one or more Subsidiaries of such Person, and (b) any partnership or other entity in which such Person and/or
one or more Subsidiaries of such Person shall have an interest (whether in the form of voting or participation in profits or capital contribution) of more than 50%. 


    "Transaction Documents" shall mean this Agreement, the Notes issued pursuant hereto, the Subordinated Security Agreement, the
Subordination Agreement and all other agreements or documents contemplated herein. 


    "WSP Parties" shall mean Willis Stein & Partners, L.P., Willis Stein & Partners II, L.P. and Willis Stein & Partners Dutch, L.P. 


    References
to this "Agreement" shall mean this Subordinated Bridge Note Purchase Agreement, including all amendments, modifications and
supplements and any exhibits or schedule to any of the foregoing, and shall refer to the Agreement as the same may be in effect at the time such reference becomes operative. 


    Any
accounting term used in this Agreement shall have, unless otherwise specifically provided herein, the meaning customarily given such term in accordance with GAAP, and all
financial computations hereunder shall be computed, unless otherwise specifically provided herein, in accordance 


5





 


with GAAP, consistently applied. That certain terms or computations are explicitly modified by the phrase "in accordance with GAAP" shall in no way be construed to limit the foregoing. The words
"herein," "hereof" and "hereunder" and other words of similar import refer to this Agreement, as a whole, including the exhibits and schedules hereto, as the same may from time to time be amended,
modified or supplemented, and not to any particular section, subsection or clause contained in this Agreement. Wherever from the context it appears appropriate, each term stated in either the singular
or plural shall include the singular and the plural, and pronouns stated in the masculine, feminine or neuter gender shall include the masculine, the feminine and the neuter. 


ARTICLE
2 


CLOSING  


    2.1 Authorization of Notes. At or prior to the Initial Closing, the Company shall have duly authorized the issuance and
sale to the Purchaser of the Notes, in form and substance as set forth in Exhibit A attached hereto, to be purchased at the Initial Closing or any
Subsequent Closing. 


    2.2 Purchase and Sale of Initial Note. Subject to the terms and conditions set forth in this Agreement, at the Initial
Closing, the Purchaser shall purchase from the Company, and the Company shall sell to the Purchaser, a Note in the aggregate principal amount of $1,500,000 (the "Initial
Principal Amount"), for a purchase price equal to $1,500,000 (the "Initial Note"). 


    2.3 Initial Closing. The closing of the purchase and sale of the Initial Note (the "Initial
Closing") shall take place at the offices of Kirkland & Ellis, 200 East Randolph Drive, Chicago, Illinois on November 26, 2001, or at such other place or on such other date as
may be mutually agreeable to the Company and the Purchaser (the "Initial Closing Date"). On the Initial Closing Date, the Company shall deliver to the
Purchaser an instrument evidencing the Initial Note to be purchased by the Purchaser, executed by the Company and issued in the name of the Purchaser, upon payment of the Initial Principal Amount by
payment of cash by wire transfer of immediately available funds to the Company. 


    2.4 Purchase of Additional Notes. Subject to the terms and conditions set forth in this Agreement and in this  Section 2.04, from time to time after the Initial Closing and
until the earlier of (a) three months following the Initial Closing Date (the
"Commitment Termination Date"), and (b) the consummation of a New Financing, the Purchaser shall purchase from the Company additional Notes at any
Subsequent Closing up to an aggregate principal amount of $1,500,000 and an aggregate purchase price of $1,500,000 (the "Additional Notes"); provided
that, the Purchaser shall only be obligated to purchase such Additional Notes if (i) the Purchaser shall have received a request in writing from the Special Finance Committee (which notice may be
waived by the parties to this Agreement) specifying (A) a proposed date for the Subsequent Closing, (B) the proposed principal amount of each Additional Note to be purchased and (C) such other
information as the Purchaser may request, (ii) the Purchaser and the WSP Parties shall have consented in writing to the purchase of such Additional Notes as described in the written request from the
Special Finance Committee and (iii) the conditions precedent set forth in this Agreement have been satisfied or waived as provided herein. 



    2.5 Subsequent Closings. The closing of the purchase and sale of each Additional Note (each, a
"Subsequent Closing") shall take place at the offices of Kirkland & Ellis, 200 East Randolph Drive, Chicago, Illinois on the date proposed by the
Company for the Subsequent Closing, or at such other place or on such other date as may be mutually agreeable to the Company and the Purchaser (each, a "Subsequent Closing
Date"). On each Subsequent Closing Date, the Company shall deliver to the Purchaser an instrument evidencing the Additional Note to be purchased by the Purchaser, executed by
the Company and issued in the name of the Purchaser, against delivery by the Purchaser of the purchase price therefor by payment of cash by wire transfer of immediately available funds to the Company. 


6





 


    2.6 Conversion Rights. 



    (a) In
connection with each New Financing, the Company and the Special Finance Committee shall deliver a written notice to each holder of a Note no less than 15 days
prior to the proposed closing date of such New Financing (the "New Financing Closing Date") setting forth such proposed New Financing Closing Date, the
terms of such New Financing and such other information as the Purchaser may request. All or any portion of the principal amount of any Notes outstanding at the time of a New Financing (including all
accrued but unpaid interest thereon) shall be convertible at the election of the holders of a majority of the aggregate principal amount of such Notes, upon written notice of such election to the
Company (including the principal amount to be converted in connection with such New Financing) no less than five (5) days prior to any proposed New Financing Closing Date, into the same securities
(the "New Securities") offered in such New Financing at the same price at which such New Securities will be issued and sold in such New Financing, and
subject to the same restrictions to which such New Securities are subject (including, without limitation, to the provisions of any subordination agreements governing such New Securities), to
Independent Third Parties, on terms no less favorable to the holders of the Notes. 



	 
	 	 
	 	 

	 	 	For example, with respect to each Note to be converted (or any portion thereof), the holder of such Note shall receive New Securities with a value of $1 (which value shall equal the sale price of such New Securities at
the time of the New Financing) in exchange for each $1 of principal amount and/or accrued interest.	 	 





    (b) If
all or any portion of the principal amount of the Notes (including all accrued but unpaid interest thereon) has not been converted on or prior to the Commitment
Termination Date, the interest rate on any such outstanding Notes (including all accrued but unpaid interest thereon) shall increase immediately to 18% (or, if less, the highest rate permitted by
law). With respect to any such Notes, any increase of the interest rate resulting from the operation of this subparagraph shall continue until the earlier to occur of the conversion of such Notes in
accordance with Section 2.06(a) above or payment of the full amount of principal and accrued interest on such Notes. 




    2.7 Security Interest. Subject to the terms and conditions of this Agreement and the Subordination Agreement, on or
prior to the Initial Closing Date, the Company shall grant to Purchaser a lien on its assets pursuant to and as described in the Subordinated Security Agreement attached hereto as  Exhibit B. 


ARTICLE
3 


PURCHASER'S REPRESENTATIONS  


    As of each Closing, the Purchaser makes the following representations and warranties to the Company, each and all of which shall survive the execution and
delivery of this Agreement and each Closing hereunder: 


    3.1 Investment Intention. The Purchaser hereby represents that it is an "accredited investor" (as defined in Rule 501
under Regulation D of the Securities Act), and that it is acquiring the Notes purchased hereunder or acquired pursuant hereto for its own account with the present intention of holding such securities
for purposes of investment, and that it has no intention of selling such securities in a public distribution in violation of the federal securities laws or any applicable state securities laws;
provided that nothing contained herein shall prevent the Purchaser and subsequent holders of Notes from transferring such securities in compliance with the provisions of  Article VII hereof. 


7





 


    3.2 Corporate Existence. The Purchaser is a limited liability company duly organized, validly existing and in good
standing under the laws of its jurisdiction of formation. 


    3.3 Corporate Power; Authorization; Enforceable Obligations. The execution, delivery and performance by the Purchaser of
the Transaction Documents to be executed by it: (i) are within Purchaser's power, as applicable; (ii) have been duly authorized by all necessary action, as applicable; (iii) are not in contravention
of any provision of the Purchaser's governing documents, as applicable; and (iv) will not violate any law or regulation, or any order or decree of any court or governmental instrumentality binding on
the Purchaser. The Purchaser has full power and authority to perform its obligations under the Transaction Documents. The Transaction Documents to which the Purchaser is a party have each been duly
executed and delivered by Purchaser and constitute the legal, valid and binding obligations of the Purchaser, enforceable against it in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally, and subject, as to enforceability, to general principles
of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity). 


    3.4 Confidentiality. The Purchaser acknowledges that the Company has made available to it certain information concerning
the business, financial condition, operations, assets and liabilities of the Company solely for the purpose of evaluating a possible transaction between the Company and the Purchaser. The Purchaser
agrees to use commercially reasonable efforts to keep confidential, except to the extent required by applicable law, regulation, order or legal process, any such information (whether prepared by the
Company, its advisors or otherwise and irrespective of the form of communication
provided) which has been furnished to the Purchaser by or on behalf of the Company (collectively referred to as the "Evaluation Material") (it being
understood that the Purchaser shall in no event be responsible for any employee or former employee of the Company failing to maintain the confidentiality of the Evaluation Material). The term
"Evaluation Material" does not include information which (i) is or becomes generally available to the public other than as a result of a disclosure by the Purchaser, (ii) was within the Purchaser's
possession prior to its being furnished by or on behalf of the Company, (iii) becomes available to the Purchaser on a non-confidential basis from a source other than the Company or (iv) was
independently developed by the Purchaser. 


ARTICLE
4 


COMPANY'S REPRESENTATIONS, WARRANTIES AND COVENANTS  


    As of each Closing, the Company makes the following representations, warranties and covenants to the Purchaser, each and all of which shall survive the
execution and delivery of this Agreement and the Closing: 


    4.1 Capitalization. 



    (a) The
"Capitalization Chart" attached hereto as Exhibit C sets forth a
true and complete description of all authorized, issued and outstanding shares of the Company by including a description of (i) the number of shares of each class of Stock of the Company issued and
outstanding and (ii) the number and class of all outstanding warrants, options and other securities convertible into, or exchangeable for, shares of Common Stock or other securities of the Company. 


    (b) All
issued and outstanding Stock of the Company listed on the Capitalization Chart is duly authorized, validly issued, fully paid and non-assessable.  Schedule 4.01 hereto or the Annual Report contains
a complete and correct list of all stockholders of the Company owning, to the knowledge of the
Company, more than 5% of the outstanding Stock of the Company and the number of shares or warrants owned by each. Except as set forth in  Schedule 4.01 or the Annual Report (i) there is no existing
option, warrant, call, commitment or other agreement to which the Company is a party
requiring, and there are no convertible securities of the Company outstanding 



8





 


which upon conversion would require, the issuance of any additional shares of Stock of the Company or other securities convertible into shares of equity securities of the Company, (ii) there are no
agreements or obligations (contingent or otherwise) requiring the Company to repurchase or otherwise acquire or retire any shares of its capital stock or any warrants, options or other rights to
acquire its
capital stock, and (iii) there are no agreements to which the Company is a party or, to the knowledge of the Company, to which any stockholder or warrant holder of the Company is a party, with respect
to the voting or transfer of the Stock of the Company. Except as set forth in Schedule 4.01 or the Annual Report, there are no stockholders' preemptive
rights or rights of first refusal or other similar rights with respect to the issuance of the Notes by the Company. True and correct copies of the Certificate of Incorporation and by-laws of the
Company, as in effect on the date hereof, have been delivered to the Purchaser. 




    4.2 Authorization and Issuance of the Notes. The issuance of the Notes at such Closing has been duly authorized by all
necessary corporate action on the part of the Company and, upon delivery to the Purchaser of the Notes, the Notes will have been validly issued and free and clear of all pledges, liens, encumbrances
and preemptive rights. 


    4.3 Corporate Existence; Compliance with Law. The Company (i) is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware; (ii) except as indicated in Schedule 4.03, is duly qualified as a foreign corporation and
in good standing under the laws of Alabama, Arizona, California, Delaware, Georgia, Illinois, Massachusetts, New York, and Vermont and each jurisdiction where its ownership or lease of property or the
conduct of its business requires such qualification (except for jurisdictions in which such failure to so qualify or to be in good standing would not have a Material Adverse Effect); (iii) has the
requisite corporate power and authority and the legal right to own, pledge, mortgage or otherwise encumber and operate its properties, to lease the property it operates under lease, and to conduct its
business as now being conducted in all material respects; (iv) has, or has applied for, all material licenses, permits, consents or approvals from or by, and has made all material filings with, and
has given all material notices to, all Governmental Authorities having jurisdiction, to the extent required for such ownership, operation and conduct; (v) is in compliance with its Certificate of
Incorporation and by-laws in all material respects; and (vi) is in compliance with all applicable provisions of applicable laws, including, but not limited to, the Securities Act and the Exchange Act,
except for such non-compliance which would not have a Material Adverse Effect. The Company has timely filed all reports with the SEC required by the Securities Act and Exchange Act and a Rule 144
exemption is available to qualified holders of Stock of the Company. 


    4.4 Subsidiaries. Except for those entities listed on the Schedule 4.04,
there currently exist no Subsidiaries of the Company and the Company has no equity interest in any other Person. 



    4.5 Corporate Power; Authorization; Enforceable Obligations. The execution, delivery, and performance by the Company of
this Agreement, the other Transaction Documents to which it is a party and all instruments and documents to be delivered by the Company, the issuance and sale of the Notes, and the consummation of the
other transactions contemplated by any of the foregoing: (i) are within the Company's corporate power and authority; (ii) have been duly authorized by all necessary or proper corporate action; (iii)
are not in contravention of any provision of the Company's Certificate of Incorporation or by-laws; (iv) will not violate any law or regulation, or any order or decree of any court or governmental
instrumentality; (v) will not conflict with or result in the breach or termination of, constitute a default under or accelerate any performance required by, any indenture, mortgage, deed of trust,
lease, agreement or other instrument to which the Company is a party or by which the Company or any of their property is bound; (vi) will not result in the creation or imposition of any Lien upon the
capital stock or any of the property of the Company and (vii) do not require the consent or approval
of, or any filing with, any Governmental Authority or any other Person (except to the extent previously obtained or made). The execution, delivery and performance of this Agreement and the
transactions contemplated herein do not require approval or consent of the stockholders or other holders of Stock 


9





 


of the Company or the approval or authorization of any Governmental Authority, The Nasdaq Stock Market (except for the listing of additional shares pursuant to NASD Rule 4310(c)(17) regarding notice
of issuance of additional securities issuable upon conversion of the Notes), any other securities exchange or any other Person. Each of this Agreement and the other Transaction Documents, shall have
been duly executed and delivered by the Company and each shall then constitute a legal, valid and binding obligations of the Company, enforceable against the Company in accordance with its terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally, and subject, as to enforceability,
to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity). 


    4.6 Financial Statements. 



    (a) The
audited financial statements of the Company dated as of December 31, 2000 (the "Financials") have been prepared
in accordance with the books and records of the Company, present fairly the financial condition of the Company as of the respective dates indicated therein and the results of operations for the
respective periods indicated therein, and have been prepared in accordance with GAAP applied on a consistent basis. 



    (b) Except
as set forth in Schedule 4.06 or the Annual Report, the Company has no material obligations, contingent or
otherwise, including, without limitation, liabilities for Charges, long-term leases or long-term commitments which are not reflected in the Financials, other than those incurred since December 31,
2000 in the ordinary course of business (none of which is a liability resulting from breach of contract, breach of warranty, tort, infringement, or any claim or lawsuit). 


    (c) Except
as set forth in Schedule 4.06, no dividends or other distributions have been declared, paid or made upon any
Stock of the Company, nor has any Stock of the Company been redeemed, retired, purchased or otherwise acquired for value by the Company since December 31, 2000. 




    4.7 Ownership of Property. 



    (a) The
Company does not own any real estate. Except as set forth in Schedule 4.07 or the Annual Report, the
Company owns, has a valid leasehold interest in, or has a valid license to use, all material
assets, properties and rights, whether tangible or intangible, necessary for the conduct of its business as presently conducted and as presently proposed to be conducted. 



    (b) All
real property leased by the Company is set forth in Schedule 4.07 or the Annual Report. Each of such
leases is valid and enforceable in accordance with its terms (subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity)) and is in full force and effect. Except as set forth in Schedule 4.07 or the Annual
Report, the Company is not in default of its obligations under any material lease or has it delivered or received any notice of default under any such lease, nor to the knowledge of the Company has
any event occurred which, with the giving of notice, the passage of time or both, would constitute a default under any such lease. 




    4.8 Material Contracts; Indebtedness. Each of the Material Contracts is a valid and binding agreement of the Company
enforceable against the Company in accordance with its terms (subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity)), and the Company has no 


10





 


knowledge that any Material Contract is not a valid and binding agreement against the other parties thereto. Except as set forth in Schedule 4.08 or the
Annual Report, the Company is not in material default or breach (whether with or without the passage of time, the giving of notice or both) or in receipt of any claims of default or breach in either
case that could reasonably be expected to have a Material Adverse Effect, nor to the Company's knowledge is any third party in default or breach, under or with respect to any Material Contract. Except
as set forth in Schedule 4.08 or the Annual Report, the Company has no Indebtedness except for indebtedness under the LaSalle Credit Agreement
and except for Permitted Indebtedness. 


    4.9 Environmental Protection. 



    (a) To
the Company's actual knowledge without independent investigation, all real property owned, leased or otherwise operated by the Company and each Subsidiary (a
"Facility") is free of contamination from any substance, waste or material (i) currently identified to be toxic or hazardous pursuant to, or which may
result in liability under, any Environmental Law or (ii) within the definition of a substance which is toxic or hazardous under any Environmental Law, including, without limitation, any asbestos, PCB,
radioactive substance, methane, volatile hydrocarbons, industrial solvents, oil or petroleum or chemical liquids or solids, liquid or gaseous products, or any other material or substance which has in
the past or could at any time in the future cause or constitute a health, safety, or environmental hazard to any Person or property or result in any Environmental Liabilities and Costs
("Hazardous Substance") of more than $25,000 or which, in either case, could have a Material Adverse Effect. Nor has the Company caused or suffered to
occur any release, Spill, migration, leakage, discharge, spillage, uncontrolled loss, seepage, or filtration of Hazard Substances at or from the Facility (a
"Spill") which could result in Environmental Liabilities and Costs in excess of $25,000. 



    (b) The
Company and each Subsidiary has generated, treated, stored and disposed of any Hazardous Substances in full compliance with applicable Environmental Laws,
except for such non-compliances which would not have a Material Adverse Effect. 


    (c) The
Company and each Subsidiary has obtained, or has applied for, and is in full compliance with and in good standing under all permit required under Environmental
Laws (except for such failures which would not have a Material Adverse Effect). The Company does not have any knowledge of any proceedings to substantially modify or to revoke any such permit. 



    (d) There
are no investigations, proceedings or litigation pending or, to the Company's knowledge, threatened, affecting or against the Company or the Facilities
relating to Environmental Laws or Hazardous Substances. 


    (e) Since
December 31, 1999, the Company has not received any communication or notice (including, without limitation, requests for information) indicating the potential
of Environmental Liabilities and Costs against the Company. 




    4.10 Labor Matters. 



    (a) There
are no strikes or other labor disputes against the Company pending or to the Company's knowledge threatened. Hours worked by and payment made to employees of
the Company have not been in violation of the Fair Labor Standards Act or any other applicable law dealing with such matters. All payments due from the Company on account of employee health and
welfare insurance have been paid or accrued as a liability on the books of the Company. There is no organizing activity involving the Company pending or, to the Company's knowledge, threatened by any
labor union or group of employees that individually or in the aggregate could reasonably be expected to have a Material Adverse Effect. There are no representation proceedings pending or, to the
Company's knowledge, threatened with the National Labor Relations Board, and no labor organization or group of employees of the Company has made a 



11





 


pending demand for recognition. Except as set forth in Schedule 4.10, there are no complaints or charges against the Company pending or, to the
Company's knowledge, threatened to be filed with any
federal, state, local or foreign court, governmental agency or arbitrator based on, arising out of, in connection with, or otherwise relating to the employment or termination of employment by the
Company of any individual. 



    (b) The
Company is not, and during the five years preceding the date hereof was not, a party to any labor or collective bargaining agreement and there are no labor or
collective bargaining agreements which pertain to employees of the Company. 




    4.11 Securities Laws. In reliance on the representations of the Purchaser contained in  Section 3.01, the offer, issuance, sale and delivery of the Notes, as provided in
this Agreement, are exempt from the registration requirements
of the Securities Act and all applicable state securities laws, and are otherwise in compliance with such laws. Neither the Company nor any Person acting on its behalf has taken or will take any
action (including, without limitation, any offering of any securities of the Company under circumstances which would require the integration of such offering with the offering of the Notes under the
Securities Act and the rules and regulations of the SEC thereunder) which might subject the offering, issuance or sale of the Notes to the registration requirements of Section 5 of the Securities Act.
No information contained in the documents filed with the SEC contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statements contained therein not
misleading in light of the circumstances under which made. 


    4.12 Taxes. Except as otherwise disclosed in Schedule 4.12, all
federal, state, local and foreign tax returns, reports and statements required to be filed by the Company and each Affiliated Group have been timely filed with the appropriate Governmental Authority
except where the failure to file such report or statement would not have a Material Adverse Effect and all such returns, reports and statements are true, correct and complete in all material respects.
Except as otherwise disclosed in Schedule 4.12, all Charges and other impositions due and payable for the periods covered by such returns,
reports and statements have been paid prior to the date on which any fine, penalty, interest or late charge may be added thereto for nonpayment thereof or any such fine, penalty, interest or late
charge has been paid. Except as otherwise disclosed in Schedule 4.12, proper and accurate amounts have been withheld by the Company from its
employees, independent contractors, or other third parties for all periods in full and complete compliance with the tax, social security and unemployment withholding provisions of applicable federal,
state, local and foreign law and such withholdings have been timely paid to the respective governmental agencies. The Company has not executed or filed with the IRS or any other Governmental Authority
any agreement or other document extending, or having the effect of extending, the period for assessment or collection of any Charges. Except as otherwise disclosed in  Schedule 4.12, no tax audits
or other administrative or judicial proceedings are pending or threatened with regard to any Charges for which the
Company may be liable and which would reasonably be expected to have a Material Adverse Effect and no assessment of Charges is proposed against the Company. The Company has not filed a consent
pursuant to IRC Section 341(f) or agreed to have IRC Section 341(f)(2) apply to any dispositions of subsection (f) assets (as such term is defined in IRC Section 341(f)(4)). None of the property owned
by the Company is property which such the Company is required to treat as being owned by any other Person pursuant to the provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as
amended, and in effect immediately prior to the enactment of the Tax Reform Act of 1986 or is "tax-exempt" use property, within the meaning of IRC Section 168(h). The Company has not agreed or has
been requested to make any adjustment under IRC Section 481(a) by reason of a change in accounting method or otherwise. The Company has no obligation under any written tax sharing agreement. The
Company is not a party to or bound by any tax allocation or tax sharing agreement and has no current or potential contractual obligation to
indemnify any other person with respect to any Charges. The Company has not made any payments, and is not and will not become obligated (under any contract entered into on or before the Initial 


12





 


Closing Date) to make any payments, that will be non-deductible under Section 280G of the IRC (or any corresponding provision of state, local or foreign income tax law). The Company will not be
required (A) as a result of a change in method of accounting for a taxable period ending on or prior to the Initial Closing Date, to include any adjustment in taxable income for any taxable period (or
portion thereof) ending after the Initial Closing Date or (B) as a result of any deferred intercompany gain described in Treasury Regulation Sections 1. 1502-13 of former Treasury Regulations Section
1. 1502-14 or any excess loss account described in Treasury Regulation Section 1. 1502-19 (or any corresponding or similar provision or administrative rule of federal, state, local or foreign income
tax law), to include any item of income in taxable income for any taxable period (or portion thereof) ending after the Initial Closing Date, in each case, which would reasonably be expected to have a
Material Adverse Effect. The Company has not been a member of an Affiliated Group other than one of which the Company was the common parent, or filed or been included in a combined, consolidated or
unitary income tax return, other than one filed by the Company. 


    4.13 No Litigation. Except as set forth in Schedule 4.13, no
action, claim or proceeding is now pending or, to the knowledge of the Company, threatened against the Company (or to the Company's knowledge, pending or threatened against or affecting any of the
officers, directors or employees of the Company with respect to its business or proposed business activities), or pending or threatened by the Company against any third party, at law, in equity or
otherwise, before any court, board, commission, agency or instrumentality of any federal, state, or local government or of any agency or subdivision thereof, or before any arbitrator or panel of
arbitrators. 


    4.14 Brokers. No broker or finder acting on behalf of the Company brought about the consummation of the transactions
contemplated pursuant to this Agreement and the Company has no obligation to any Person in respect of any finder's or brokerage fees (or any similar obligation) in connection with the transactions
contemplated by this Agreement. The Company is solely responsible for the payment of all such finder's or brokerage fees. 



    4.15 Management and Labor Agreements. Except as set forth in  Schedule 4.15 or the Annual Report, there are no management agreements covering officers of the Company.



    4.16 Patents, Trademarks, Copyrights and Licenses. The Company owns all licenses, patents, patent applications,
copyrights, service marks, trademarks and registrations and applications for registration thereof, and trade names necessary to continue to conduct its business as heretofore conducted by it and now
being conducted by it. To the Company's knowledge, the Company conducts its businesses without infringement or claim of infringement of any license, patent, copyright, service mark, trademark, trade
name, trade secret or other intellectual property right of others and the Company has received no notices claiming any such infringement. To the Company's knowledge, there is no
infringement by others of any license, patent, copyright, service mark, trademark, trade name, trade secret or other intellectual property right of the Company. 


    4.17 No Material Adverse Effect. Except as set forth in  Schedule 4.17, to the Company's knowledge, no event has occurred since December 31, 2000 which has had or could
be reasonably expected to have a
Material Adverse Effect; provided, however, the Purchaser acknowledges that it has been advised that the Company has operated at a loss and has had negative cash flow since October 31, 1998. 


    4.18 ERISA. 



    (a) During
the twelve-consecutive-month period prior to the date of the execution and delivery of this Agreement, (i) no steps have been taken to terminate any Pension
Plan and (ii) no contribution failure has occurred with respect to any Pension Plan sufficient to give rise to a Lien under Section 302(f) of ERISA. No condition exists or event or transaction has
occurred with respect to any Pension Plan which could result in the incurrence by the Company of any material 



13





 


liability, fine or penalty, other than the obligations of the Company to fund the benefits provided under the Pension Plan. 


    (b) All
contributions (if any) have been made to any Multiemployer Plan that are required to be made by the Company or any other member of the Controlled Group under
the terms of the plan or of any collective bargaining agreement or by applicable law; neither the Company nor any member of the Controlled Group has withdrawn or partially withdrawn from any
Multiemployer Plan, incurred any withdrawal liability with respect to any such plan or received notice of any claim or demand for withdrawal liability or partial withdrawal liability from any such
plan, and no condition has occurred which, if continued, might result in a withdrawal or partial withdrawal from any such plan; and neither the Company nor any member of the Controlled Group has
received any notice that any Multiemployer Pension Plan is in reorganization, that increased contributions may be required to avoid a reduction in plan benefits or the imposition of any excise tax,
that any such plan is or has been funded at a rate less than that required under Section 412 of the IRC, that any such plan is or may be terminated, or that any such plan is or may become insolvent. 



    (c) The
Pension Plans and the trusts maintained pursuant thereto are exempt from federal income taxation under Section 501 of the IRC, and nothing has occurred with
respect to the operation of the Pension Plans which could cause the loss of such qualification or exemption or the imposition of any liability, penalty, or tax under ERISA or the IRC. 


    (d) All
contributions required by law or pursuant to the terms of the Plans (without regard to any waivers granted under Section 412 of the IRC) to any funds or trusts
established thereunder or in connection therewith have been made by the due date thereof (including any valid extension) and no accumulated funding deficiencies exist in any of the Pension Plans
subject to Section 412 of the IRC. 


    (e) There
is no "amount of unfunded benefit liabilities" as defined in Section 4001 (a) (18) of ERISA in any of the respective Pension Plans, which are subject to Title
IV of ERISA. Each of the respective Pension Plans are fully funded in accordance with the actuarial assumptions used by the PBGC to determine the level of funding required in the event of the
termination of the Pension Plan and all benefit liabilities do not exceed the assets of such Pension Plans. 


    (f)  There
have been no "reportable events" as that term is defined in Section 404 of ERISA and the regulations thereunder with respect to the Pension Plans subject to
Title IV of ERISA which would require the giving of notice, or any event requiring disclosure under Sections 4041(c)(3)(C), 4063(a) or 4068(f) of ERISA. 



    (g) There
is no material violation of ERISA with respect to the filing of applicable reports, documents, and notice, regarding the Plans with the Secretary of Labor and
the Secretary of the Treasury or the furnishing of such documents to the participants or beneficiaries of the Plans. 


    (h) To
the knowledge of the Company, there are no pending actions, claims or lawsuits which have been asserted or instituted against the Plans, the assets of any of the
trusts under such Plans or the plan sponsor or the plan administrator, or against any fiduciary of the Plans with respect to the operation of such Plans (other than routine benefit claims), nor does
the Company have knowledge of facts which could form the basis for any such claim or lawsuit. 


    (i)  All
amendments and actions required to bring the Plans into conformity in all material respects with all of the applicable provisions of ERISA and other applicable
laws have been made or taken except to the extent that such amendments or actions are not required by law, regulation or order pronounced by the IRS, to be made or taken until a date after the
applicable Closing Date. 



14





 


    (j)  The Plans have been maintained, in all material respects, in accordance with their terms and with all provisions of ERISA (including rules and regulations
thereunder) and other applicable Federal and state law, and the Company or "party in interest" or "disqualified person" with respect to the Plans has engaged in a "prohibited transaction" within the
meaning of Section 4975 of the IRC or Section 406 of ERISA. 


    (k) Neither
the Company nor any ERISA Affiliate has terminated any Pension Plan subject to Title IV, or incurred any outstanding liability under Section 4062 of ERISA
to the PBGC, or to a trustee appointed under Section 4042 of ERISA. 


    (l)  Neither
the Company nor any ERISA Affiliate maintains retiree life and retiree health insurance plans which are Welfare Plans and which provide for continuing
benefits or coverage for any participant or any beneficiary of a participant except as may be required under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA"). The Company and each ERISA Affiliate which maintains a Welfare Plan has complied with the notice and continuation requirements of COBRA and
the regulations thereunder in all material respects. 


    (m) Neither
the Company nor any ERISA Affiliate has contributed or been obligated to contribute to a Multiemployer Plan as of the applicable Closing. 



    (n) Neither
the Company nor any ERISA Affiliate has withdrawn in a complete or partial withdrawal from any Multiemployer Plan prior to the applicable Closing Date, nor
has any of them incurred any liability due to the termination or reorganization of a Multiemployer Plan. 




    4.19 Registration Rights. Except as listed in Schedule 4.19 and
except pursuant to the Registration Rights Agreement or as set forth in the Annual Report, the Company is not obligated to register any of its securities pursuant to the Securities Act. 


    4.20 Required Filings. As of the date hereof, the Company has made all required filings under the Securities Act and
Exchange Act and all information contained in such filings are true and correct in all material respects and do not contain any untrue information or omit to state a material fact necessary to make
any statements contained in such filings not misleading in light of the circumstances under which they were made. 


    4.21 Full Disclosure. No information contained in this Agreement, any other Transaction Document, the Financials or any
written statement furnished by or on behalf of the Company pursuant to the terms of this Agreement contains any untrue statement of a material fact or omits to state a material fact necessary to make
the statements contained herein or therein not misleading in light of the circumstances under which they were made. 



    4.22 Use of Proceeds. The Company shall use the proceeds from the purchase of the Notes for its working capital and
other general corporate purposes, including debt service requirements. 


    4.23 Insurance. Schedule 4.23 lists and briefly describes each insurance policy maintained by or on behalf of the
Company with respect to its properties, assets and business, together with a claims history for the past five years. All of such insurance policies are in full force and effect, and the Company is not
and has never been in default with respect to its obligations under any such insurance policies and the Company has never been denied insurance coverage. The insurance coverage of the Company is
customary for corporations of similar size engaged in similar lines of business. The Company does not have any self-insurance or co-insurance programs. 


    4.24 Affiliated Transactions. Except for commitments and transactions with the Purchaser and the WSP Parties and as
disclosed for the Company's public filings or on Schedule 4.24, no officer, director, employee, stockholder, or Affiliate of the Company or any
individual related by marriage or adoption to any such individual or any entity in which any such Person owns any beneficial interest is a party to any agreement, Material Contract, commitment or
transaction with the Company or which is pertaining 


15





 


to the business of the Company or has any interest in any property, real or personal or mixed, tangible or intangible, used in or pertaining to the business of the Company. 


    4.25 Special Finance Committee. None of the members of the Special Finance Committee is an Affiliate of the Purchaser. 



ARTICLE
5 


EVENTS OF NONCOMPLIANCE  


    5.1 Definition. An "Event of Noncompliance" shall have occurred if: 



    (a) the
Company fails to pay when due the full amount of principal and accrued interest thereon on the Notes, whether or not such payment is legally permissible or is
prohibited by any agreement to which the Company is subject; 


    (b) the
Company breaches or otherwise fails to perform or observe any other material covenant or agreement set forth herein; 



    (c) any
representation or warranty contained in this Agreement or required to be furnished to any holder of Notes pursuant to this Agreement, or any information
contained in writing required to be furnished by the Company or any Subsidiary to any holder of Notes, is false or misleading in any material respect on the date made or furnished; 


    (d) the
Company or any material Subsidiary makes an assignment for the benefit of creditors; or an order, judgment or decree is entered adjudicating the Company or any
material Subsidiary bankrupt or insolvent, or any order for relief with respect to the Company or any material Subsidiary is entered under the Federal Bankruptcy Code; or the Company or any material
Subsidiary petitions or applies to any tribunal for the appointment of a custodian, trustee, receiver or liquidator of the Company or any material Subsidiary or of any substantial part of the assets
of the Company or any material Subsidiary, or commences any proceeding (other than a proceeding for the voluntary liquidation and dissolution of a Subsidiary) relating to the Company or any material
Subsidiary under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction; or any such petition or application is filed, or any
such proceeding is commenced, against the Company or any material Subsidiary and either (i) the Company or any such Subsidiary by any act indicates its approval thereof, consent thereto or
acquiescence therein or (ii) such petition, application or proceeding is not dismissed within 60 days; 


    (e) a
judgment in excess of $150,000 is rendered against the Company or any material Subsidiary and, within 60 days after entry thereof, such judgment is not discharged
or execution thereof stayed pending appeal, or within 60 days after the expiration of any such stay, such judgment is not discharged; 


    (f)  other
than with respect to the debt obligations of the Company under the LaSalle Credit Agreement, the Company or any material Subsidiary defaults in the
performance of any obligation or agreement if the effect of such default is to cause an amount exceeding $50,000 to become due prior to its stated maturity or to permit the holder or holders of any
obligation to cause an amount exceeding $50,000 to become due prior to its stated maturity; or 


    (g) the
occurrence of a default, which has not been cured, under the terms of the Preferred Stock (other than under Section 8A(i) or (vii) of the Certificate of
Designations governing the terms of the Preferred Stock). 




    5.2 Consequences of Events of Noncompliance. 



    (a) Immediately
upon the occurrence of an Event of Noncompliance, and for 90 days thereafter that such Event of Noncompliance is continuing, the interest rate on the
Notes shall 



16





 


increase immediately to 18% (or, if less, the highest rate permitted by law). Any increase of the interest rate resulting from the operation of this subparagraph shall terminate as of the close of
business on the date on which no Event of Noncompliance exists and the interest rate shall return to 12%, subject to subsequent increases pursuant to  Section 2.06(b) or this Section 5.02(a). 


    (b) If
any Event of Noncompliance exists, each holder of Notes shall also have any other rights which such holder is entitled to under any contract or agreement at any
time and any other rights which such holder may have pursuant to applicable law. 




ARTICLE
6 


CONDITIONS PRECEDENT TO CLOSING  


    6.1 Conditions Precedent. The obligation of the Purchaser to purchase Notes at the Initial Closing and each Subsequent
Closing pursuant to Article II hereof is subject to the condition that the Purchaser shall have received and the following shall have been
delivered to the Purchaser on each of the Initial Closing Date and each Subsequent Closing Date in form and substance satisfactory to the Purchaser, and the following actions occurred on or before
such Closing Date, unless waived in writing by the Purchaser: 



    (a) Resolutions
of the Board, certified by the Secretary or Assistant Secretary of the Company, to be duly adopted and in full force and effect on the Closing Date,
authorizing (i) the issuance and sale of the Notes to the Purchaser as provided in the Transaction Documents, (ii) each of the Transaction Documents, (iii) the consummation of each of the remaining
transactions contemplated in this Agreement and (iv) officers to execute and deliver this Agreement and each other Transaction Document to which it is a party. 


    (b) Minutes
of the meetings of the Special Finance Committee held on November 16, 2001 and November 26, 2001, certified by the Secretary or Assistant Secretary of the
Company, to be duly adopted and in full force and effect on the Closing Date, approving and authorizing (i) the issuance and sale of the Notes to the Purchaser on the terms set forth in the
Transaction Documents, and (ii) the consummation of each of the remaining transactions contemplated in this Agreement. 


    (c) A
copy of governmental certificate, dated the most recent practicable date prior to the Closing Date, with telegram updates where available, showing that the
Company is organized and in good standing in the State of Delaware and is qualified as a foreign corporation and in good standing in all other jurisdictions in which it is qualified to transact
business. 


    (d) A
copy of the organizational charter and bylaws and all amendments thereto of the Company, certified as of a recent date by the Secretary of State of the State of
Delaware. 


    (e) Certificates
of the Secretary or an Assistant Secretary of the Company, dated the Closing Date, as to the incumbency and signatures of the officers of the Company
executing this Agreement, the Notes, each other Transaction Document to which it is a party and any other certificate or other document to be delivered pursuant hereto or thereto, together with
evidence of the incumbency of such Secretary or Assistant Secretary. 


    (f)  A
copy of all third party consents and approvals (including, without limitation, the consent of LaSalle Bank National Association, which consent shall include a
waiver of the provisions of the LaSalle Credit Agreement prohibiting transactions with affiliates, approval of the terms of the Notes issued hereunder and/or waiver of the mandatory repayment
provisions with respect to the proceeds received by the Company in connection with the sale of the Notes hereunder) that are necessary for the consummation of the transactions contemplated hereby or
that are required in order to prevent a breach of or default under, a termination or modification of, or acceleration of the terms of, any contract, agreement or document required to be listed on 



17





 


the attached Schedule 4.08 or in the Annual Report, in each case on terms and conditions reasonably satisfactory to the Purchaser. 


    (g) A
copy of all governmental and regulatory consents and approvals that are necessary for the consummation of the transactions contemplated hereby, in each case on
terms and conditions satisfactory to the Purchaser. 


    (h) No
suit, action or other proceeding shall be pending before any court or governmental regulatory body or authority in which it is sought to restrain or prohibit the
transactions contemplated hereby, or that could have a Material Adverse Effect, and no injunction, judgment, order, decree or ruling with respect thereto shall be in effect. 



    (i)  Other
than as set forth on the Schedules hereto, since December 31, 2000, there shall have been no material adverse change or material adverse development in the
business, financial condition, business prospects, operating results, assets, operations or customer, supplier or employee relations of the Company. 


    (j)  The
Company shall have sold to the Purchaser the Note to be purchased at the Initial Closing or any Subsequent Closing, as applicable, which Note shall be subject
to the Subordination Agreement approved by LaSalle Bank National Association. 


    (k) The
representations and warranties contained in Article IV hereof shall be true and correct at and as of each
Closing as though then made, except to the extent of changes caused by the transactions expressly contemplated herein, and the Company shall have performed in all material respects all of the
covenants required to be performed by it hereunder prior to the Closing. 


    (l)  There
shall not exist any Event of Noncompliance. 


    (m) The
Company shall have made all filings under all applicable federal and state securities laws necessary to consummate the issuance of the Notes pursuant to this
Agreement. 


    (n) The
Purchaser and the WSP Parties shall have consented to the purchase of each Note. 


    (o) On
the Initial Closing Date, the Company shall have executed and delivered to Purchaser the Subordinated Security Agreement and the Subordination Agreement. 


    (p) The
Purchaser shall have received a certificate of an officer of the Company, in form and substance reasonably satisfactory, stating that the conditions specified
in Sections 6.01(a)-(o), inclusive, and Section 6.01(q) have been fully satisfied. 



    (q) Purchaser
shall have received such other documents as the Purchaser may reasonably request or that are customary to this kind of transaction. 




ARTICLE
7 


SECURITIES LAWS MATTERS  


    7.1 General Provisions. The Notes are transferable only pursuant to (a) public offerings registered under the Securities
Act, (b) Rule 144 or Rule 144A of the Exchange Act (or any similar rule or rules then in force) if such rule is available and (c) subject to compliance with applicable security laws, any other legally
available means of transfer. 


    7.2 Information Requests. Upon the request of the Purchaser, the Company shall promptly supply to the Purchaser or its
prospective transferees all information regarding the Company required to be delivered in connection with a transfer hereof. 


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ARTICLE 8 


EXPENSES  


    The Company shall pay all reasonable out-of-pocket expenses of (i) the Purchaser in connection with the preparation, review or negotiation of the Transaction
Documents and the transactions contemplated thereby, including cost incurred in connection with the Closing, (ii) the Purchaser in connection with stamp and other taxes which may be payable in respect
of the execution and delivery of this Agreement, the issuance and delivery of the Notes and (iii) the Purchaser or its managing member in connection with (A) any amendment, modification or waiver, or
consent with respect to, any of the Transaction Documents, and (B) any attempt by the Purchaser or its managing member to enforce any of its rights against the Company or any other Person under or
pursuant to of any of the Transaction Documents (including the reasonable fees and expenses of all of its counsel and consultants retained in connection with the Transaction Documents and the
transactions contemplated thereby). 


ARTICLE
9 


LIMITATION ON CLAIMS OF THE PURCHASER  


    9.1 Limitation. 



    (a) The
Purchaser shall not bring any action or claim against the Company for damages for a breach of any representation or warranty covenant contained herein by the
Company until such damages exceed $100,000 at which time the Purchaser may bring an action for all claims. 


    (b) The
Company shall not bring any action or claims against the Purchaser for damages for a breach of any representation, warranty or covenant contained herein by the
Purchaser until such damages exceed $100,000, at which time the Company may bring an action for all claims. 



19







 
ARTICLE 10 


MISCELLANEOUS  


    10.1 Notices. Whenever it is provided herein that any notice, demand, request, consent, approval, declaration or other
communication shall or may be given to or served upon any of the parties by another, or whenever any of the parties desires to give or serve upon another any such communication with respect to this
Agreement, each such notice, demand, request, consent, approval, declaration or other communication shall be in writing and either shall be delivered in person with receipt acknowledged or by
registered or certified mail, return receipt requested, postage prepaid, or by telecopy and confirmed by telecopy answerback addressed as follows: 


    If
to the Purchaser: 





U-C
Holdings, L.L.C.

227 W. Monroe Street, Suite 4300

Chicago, Illinois 60606

Attn: Avy H. Stein

          Daniel M. Gill

Telecopy No.: (312) 422-2424 






    with
a copy to: 





Kirkland
& Ellis

200 E. Randolph Street

Chicago, Illinois 60601

Attn: Margaret A. Gibson, Esq.

Telecopy No.: (312) 861-2200 






    If
to the Company: 





CTN
Media Group, Inc.

3350 Peachtree Road

Suite 1500

Atlanta, Georgia 30326

Attn: Neil H. Dickson

Telecopy No.: (404) 256-9168







    with
a copy to: 





Morris,
Manning & Martin, L.L.P.

1600 Atlanta Financial Center

3343 Peachtree Road, N.E.

Atlanta, Georgia 30326

Attn: Lauren Z. Burnham, Esq.

Telecopy No.: (404) 365-9532 






or
at such other address as may be substituted by notice given as herein provided. The giving of any notice required hereunder may be waived in writing by the party entitled to receive such notice.
Every notice, demand, request, consent, approval, declaration or other communication hereunder shall be deemed to have been duly given or served on the date on which personally delivered, with receipt
acknowledged, telecopied and confirmed by telecopy answerback, or three (3) Business Days after the same shall have been deposited with the United States mail. 


    10.2 Binding Effect; Benefits. Except as otherwise provided herein, this Agreement shall be binding upon and inure to
the benefit of the parties to this Agreement and their respective successors and 


20





 


permitted assigns. Nothing in this Agreement, express or implied, is intended or shall be construed to give any person other than the parties to this Agreement or their respective successors or
assigns any legal or equitable right, remedy or claim under or in respect of any agreement or any provision contained herein. 


    10.3 Amendment. No amendment or waiver of any provision of this Agreement or any other Transaction Document nor consent
to any departure by the Company therefrom, shall in any event be effective
unless the same shall be in writing and signed by the Company and the Purchaser, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which
given. No action taken pursuant to this Agreement, including, without limitation, any investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such
action, of compliance with any representations, warranties, covenants or agreements contained herein. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or
be construed as a waiver of any preceding or succeeding breach and no failure by either party to exercise any right or privilege hereunder shall be deemed a waiver of such party's rights or privileges
hereunder or shall be deemed a waiver of such party's rights to exercise the same at any subsequent time or times hereunder. 


    10.4 Successors and Assigns; Assignability. Neither this Agreement nor any right, remedy, obligation or liability
arising hereunder or by reason hereof shall be assignable by the Company without the prior written consent of the Purchaser. All covenants contained herein shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns (including any subsequent holder of any of the Notes). 


    10.5 Remedies. The Purchaser, in addition to being entitled to exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this Agreement. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a
breach of the provisions of this Agreement and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate. In any action or proceeding brought to
enforce any provision of this Agreement or where any provision hereof is validly asserted as a defense, the successful party shall be entitled to recover reasonable attorneys' fees in addition to any
other available remedy. 


    10.6 Section and Other Headings. The section and other headings contained in this Agreement are for reference purposes
only and shall not affect the meaning or interpretation of this Agreement. 


    10.7 Severability. In the event that any one or more of the provisions contained in this Agreement shall be determined
to be invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision or provisions in every other respect and the remaining provisions
of this Agreement shall not be in any way impaired. 


    10.8 Entire Agreement. This Agreement and the agreements and documents referred to herein contain the entire agreement
and understanding between the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, whether written or oral, relating to such subject matter in any
way. 


    10.9 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an
original and all of which together shall be deemed to be one and the same instrument. 


    10.10
Publicity. Neither the Purchaser nor the Company shall issue any press release or make any public disclosure regarding the
transactions contemplated hereby unless such press release or public disclosure is approved by the other party in advance. Notwithstanding the foregoing, each of the parties hereto may, in documents
required to be filed by it with the SEC or other regulatory bodies, make such statements with respect to the transactions contemplated hereby as each may be advised by 


21





 


counsel is legally necessary or advisable, and may make such disclosure as it is advised by its counsel is required by law. 


    10.11
Governing Law. This Agreement shall be governed by, construed and enforced in accordance with, the laws of the Delaware without
regard to the principles thereof relating to conflict of laws. Service of process on the parties in any action arising out of or relating to this Agreement shall be effective if mailed to the parties
in accordance with Section 10.01 hereof. The parties hereto waive all right to trial by jury in any action or proceeding to enforce or defend any
rights under this Agreement. 


    10.12
No Setoffs, etc. All payments hereunder and under the Notes shall be made by the Company without setoff, offset, deduction or
counterclaim, free and clear of all taxes, levies, imports, duties, fees and charges, and without any withholding, restriction or conditions imposed by any governmental authority. If the Company shall
be required by any law to deduct, setoff or withhold any amount from or in respect of any payment to the Purchaser hereunder or under the Notes, then the amount so payable to the Purchaser shall be
increased as may be necessary so that, after making all required deductions, setoffs and withholdings, the Purchaser shall receive an amount equal to the sum it would have received had no such
deductions, setoffs or withholding been made. 


    10.13
No Strict Construction. The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to
express their mutual intent, and no rule of strict construction shall be applied against any party. 


*
* * * * 


22





 


    IN WITNESS WHEREOF, each of the Company and the Purchaser has executed this Agreement as of the day and year first above written. 



	 	 	CTN MEDIA GROUP, INC.
	

 	
 	

By:	
 	

/s/ NEIL H. DICKSON   
 Neil H. Dickson

Its: Chief Operating Officer
	

 	
 	
U-C HOLDINGS, L.L.C.
	

 	
 	

By:	
 	

WILLIS STEIN & PARTNERS, L.P.
	 	 	Its:	 	Managing Member
	

 	
 	

 	
 	

By:	
 	

Willis Stein & Partners, L.L.C.
	 	 	 	 	Its:	 	General Partner
	

 	
 	

 	
 	

By:	
 	

/s/ DANIEL M. GILL   
 Daniel M. Gill

Its: Managing Director




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SUBORDINATED BRIDGE NOTE PURCHASE AGREEMENT

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