EXHIBIT 10.1


 


SECURITIES PURCHASE AGREEMENT


 


SECURITIES PURCHASE AGREEMENT
(the “Agreement”), dated as of
June 10, 2004, by and among EPIQ Systems, Inc., a Missouri corporation, with
headquarters located at 501 Kansas Avenue, Kansas City, Kansas 66105 (the “Company”), and the investors listed on the
Schedule of Buyers attached hereto (individually, a “Buyer” and collectively, the “Buyers”).


 


WHEREAS:


 


A.            The Company and each Buyer are
executing and delivering this Agreement in reliance upon the exemption from
securities registration afforded by Rule 144A (“Rule 144A”) of the Securities Act of 1933, as amended (the “1933 Act”), by Section 4(2) of the 1933 Act
and Rule 506 of Regulation D (“Regulation D”)
and as promulgated by the United States Securities and Exchange Commission (the
“SEC”) under the 1933 Act;


 


B.            The Company has authorized
contingent convertible subordinated notes of the Company in the form attached
hereto as Exhibit A (together with any contingent convertible
subordinated notes issued in replacement thereof in accordance with the terms
thereof, the “Notes”), which Notes
shall be convertible into shares of the Company’s Common Stock, par value $0.01
per share (the “Common Stock”) (as
converted, the “Conversion Shares”),
in accordance with the terms of the Notes;


 


C.            Each Buyer wishes to purchase, and
the Company wishes to sell, upon the terms and conditions stated in this
Agreement, that aggregate principal amount of Notes set forth opposite such
Buyer’s name in column (3) on the Schedule of Buyers (which aggregate principal
amount for all Buyers shall be $50,000,000);


 


D.            Contemporaneously with the execution
and delivery of this Agreement, the parties hereto are executing and delivering
a Registration Rights Agreement, substantially in the form attached hereto as Exhibit
B (the “Registration Rights Agreement”),
pursuant to which the Company has agreed to provide certain registration rights
with respect to the Notes and the Conversion Shares under the 1933 Act and the
rules and regulations promulgated thereunder, and applicable state securities
laws; and


 


G.            The Notes and the Conversion Shares
collectively are referred to herein as the “Securities”.


 


NOW, THEREFORE, the
Company and each Buyer hereby agree as follows:


 


1.             PURCHASE AND SALE OF NOTES.


 


(a)           Purchase of Notes.


 


(i)            Notes.  Subject
to the satisfaction (or waiver) of the conditions set forth in Sections 6(a)
and 7(a) below, the Company shall issue and sell to each Buyer, and each Buyer
severally, but not jointly, agrees to purchase from the Company on the Closing
Date (as defined below), a principal amount of Notes, as is set forth opposite
such Buyer’s name in column (3) on the Schedule of Buyers  (the “Closing”).


 


(ii)           Closing.  The Closing shall occur on the Closing Date
at the offices of Schulte Roth & Zabel LLP, 919 Third Avenue, New York, New
York 10022.


 


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(iii)          Purchase Price.  The purchase price for each Buyer (the “Purchase Price”) of the Notes to be
purchased by each such Buyer at the Closing shall be equal to $1.00 for each
$1.00 of principal amount of Notes being purchased by such Buyer at the
Closing.


 


(b)           Closing Date.  The date and time of the Closing (the “Closing Date”) shall be 10:00 a.m., New
York Time, on the date hereof, subject to notification of satisfaction (or
waiver) of the conditions to the Closing set forth in Sections 6(a) and 7(a)
below (or such later date as is mutually agreed to by the Company and each
Buyer).


 


(c)           Form of Payment.  On the Closing Date, (i) each Buyer shall
pay its Purchase Price to the Company for the Notes to be issued and sold to
such Buyer at the Closing, by wire transfer of immediately available funds in
accordance with the Company’s written wire instructions, and (ii) the
Company shall deliver to each Buyer the Notes (in the principal amounts as such
Buyer shall request) which such Buyer is then purchasing, duly executed on
behalf of the Company and registered in the name of such Buyer or its designee.


 


2.             BUYER’S REPRESENTATIONS AND
WARRANTIES.


 


Each Buyer represents and warrants with respect to only itself that:


 


(a)           No Public Sale or Distribution.  Such Buyer is (i) acquiring the Notes and
(ii) upon conversion of the Notes will acquire the Conversion Shares issuable
upon conversion of the Notes, in the ordinary course of business for its own
account and not with a view towards, or for resale in connection with, the
public sale or distribution thereof, except pursuant to sales registered or
exempted under the 1933 Act; provided, however, that by making
the representations herein, such Buyer does not agree to hold any of the
Securities for any minimum or other specific term and reserves the right to
dispose of the Securities at any time in accordance with or pursuant to a
registration statement or an exemption from the registration requirements of
the 1933 Act and applicable state securities laws.  Such Buyer is acquiring the Securities hereunder in the ordinary
course of its business.  Such Buyer
presently does not have any agreement or understanding, directly or indirectly,
with any Person to distribute any of the Securities.  “Person” means an
individual, a limited liability company, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization and a government or any
department or agency thereof.


 


(b)           Qualified Institutional Buyer;
Accredited Investor Status.  Such
Buyer is a “qualified institutional buyer” as defined in Rule 144A under the
1933 Act (a “QIB”) and such Buyer
is an “accredited investor” as that term is defined in Rule

501(a) of Regulation D.


 


(c)           Transfer or Resale.  In connection with such Buyer’s subsequent
offers to sell, such Buyer (i) will offer the Notes for resale only upon the
terms and conditions set forth in this Agreement and, if required, pursuant to
prospectus delivery requirements (the “Exempt
Resales”), and (ii) will solicit offers to buy the Notes only from,
and will offer and sell the Notes only to, (A) persons reasonably believed by
such Buyer to be QIBs or (B) persons reasonably believed by such Buyer to be an
“accredited investor” as that term is defined in Rule 501(a) of Regulation D
(an “Accredited Investor”) or (C)
persons reasonably believed by such Buyer to be non-U.S. persons referred to in
Regulation S under the 1933 Act (“Non-U.S.
Persons”), and in connection with each such sale, it will take
reasonable steps to ensure that the purchaser of such Notes is aware that such
sale is being made in reliance on Rule 144A, Regulation D or Regulation S, as
applicable.


 


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(d)           General Solicitation.  No form of general solicitation or general
advertising in violation of the 1933 Act has been or will be used nor will any
offers in any manner involving a public offering within the meaning of Section
4(2) of the 1933 Act or, with respect to Notes to be sold in reliance on
Regulation S, by means of any directed selling efforts be made by such Buyer or
any of its representatives in connection with the offer and sale of any of the
Notes.


 


(e)           Reliance on Exemptions.  Such Buyer understands that the Securities
are being offered and sold to it in reliance on specific exemptions from the
registration requirements of United States federal and state securities laws
and that the Company is relying in part upon the truth and accuracy of, and
such Buyer’s compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of such Buyer
to acquire the Securities.


 


(f)            Information.  Such Buyer and its advisors, if any, have
been furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of the
Securities which have been requested by such Buyer.  Buyer has received and reviewed the Company’s Annual Report on
Form 10-K for the year ended December 31, 2003, its Quarterly Report on Form
10-Q for the quarter ended March 31, 2004, and each Current Report on Form 8-K
filed by the Company since December 31, 2003. 
Such Buyer and its advisors, if any, have been afforded the opportunity
to ask questions of the Company and have received what such Buyer and its
advisors, if any, believe to be satisfactory answers to any such
inquiries.  Neither such inquiries nor
any other due diligence investigations conducted by such Buyer or its advisors,
if any, or its representatives shall modify, amend or affect such Buyer’s right
to rely on the Company’s representations and warranties contained herein.  Such Buyer understands that its investment
in the Securities involves a high degree of risk.  Such Buyer has sought such accounting, legal and tax advice as it
has considered necessary to make an informed investment decision with respect
to its acquisition of the Securities.


 


(g)           No Governmental Review.  Such Buyer understands that no United States
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.


 


(h)           Restrictions.  Such Buyer understands that except as
provided in this Agreement and the Registration Rights Agreement: (i) the
Securities have not been and are not being registered under the 1933 Act or any
state securities laws, and may not be offered for sale, sold, assigned or
transferred unless (A) subsequently registered thereunder, (B) such Buyer shall
have delivered to the Company an opinion of counsel, in a form reasonably
acceptable to the Company, to the effect that such Securities to be sold,
assigned or transferred may be sold, assigned or transferred pursuant to an
exemption from such registration, or (C) such Buyer provides the Company with
reasonable assurance that such Securities can be sold, assigned or transferred
pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act, as amended,
(or a successor rule thereto) (collectively, “Rule
144”); (ii) any sale of the Securities made in reliance on Rule 144
may be made only in accordance with the terms of Rule 144 and further, if Rule
144 is not applicable, any resale of the Securities under circumstances in which
the seller (or the Person (as defined in Section 3(s)) through whom the sale is
made) may be deemed to be an underwriter (as that term is defined in the 1933
Act) may require compliance with some other exemption under the 1933 Act or the
rules and regulations of the SEC thereunder; and (iii) neither the Company nor
any other Person is under any obligation to register the Securities under the
1933 Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder. 
The Securities may be pledged in connection with a bona fide margin
account or other loan secured by the Securities and such pledge of Securities
shall not be deemed to be a transfer, sale or assignment of the Securities
hereunder, and no Buyer effecting a pledge of Securities shall be required to
provide the Company with any notice thereof or


 


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otherwise make any delivery to the Company pursuant to this Agreement
or any other Transaction Document, including, without limitation, this Section
2(h); provided, that in order to make any sale, transfer or assignment
of Securities, such Buyer and its pledgee makes such disposition in accordance
with or pursuant to a registration statement or an exemption under the 1933
Act.


 


(i)            Legends.  Until the time set forth below, such Buyer
understands that the certificates or other instruments representing the Notes
and the stock certificates representing the Conversion Shares shall bear any
legend as required by the “blue sky” laws of any state and a restrictive legend
in substantially the following form (and a stop-transfer order may be placed
against transfer of such stock certificates):


 


[NEITHER THE
ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE
SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN][THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR (B) AN OPINION OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO THE
COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD
PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES.


 


The legend set forth above
shall be removed and the Company shall issue a certificate without such legend
to the holder of the Securities upon which it is stamped, if, unless otherwise
required by state securities laws, (i) as to the Conversion Shares, when such
Conversion Shares are registered for resale under the 1933 Act, (ii) in
connection with a sale, assignment or other transfer pursuant to a registration
statement or if such holder provides the Company with an opinion of counsel, in
a form reasonably acceptable to the Company, to the effect that such sale,
assignment or transfer of the Securities may be made pursuant to Rule 144, or
(iii) such holder provides the Company with reasonable assurance that the
Securities can be sold, assigned or transferred pursuant to Rule 144(k).


 


(j)            Validity; Enforcement.  This Agreement and the Registration Rights
Agreement have been duly and validly authorized, executed and delivered on
behalf of such Buyer and shall constitute the legal, valid and binding
obligations of such Buyer enforceable against such Buyer in accordance with
their respective terms, except as such enforceability may be limited by general
principles of equity or to applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation and other similar laws relating to, or affecting generally, the
enforcement of applicable creditors’ rights and remedies, and except that any
rights to indemnity or contribution under the Transaction Documents may be
limited by federal and state securities laws and public policy considerations.


 


(k)           No Conflicts.  The execution, delivery and performance by
such Buyer of this Agreement and the Registration Rights Agreement and the
consummation by such Buyer of the transactions contemplated hereby and thereby
will not (i) result in a violation of the organizational documents of such
Buyer or (ii) conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
any agreement, indenture or instrument to which such Buyer


 


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is a party, or (iii) result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state securities
laws) applicable to such Buyer, except in the case of clauses (ii) and (iii)
above, for such conflicts, defaults, rights or violations which would not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the ability of such Buyer to perform its obligations
hereunder.


 


(l)            Residency.  Such Buyer is a resident of that
jurisdiction specified below its address on the Schedule of Buyers.  Such Buyer represents that it was not
organized solely for purposes of making an investment in the Company.


 


3.             REPRESENTATIONS AND WARRANTIES
OF THE COMPANY.


 


The Company
represents and warrants to each of the Buyers that:


 


(a)           Organization and Qualification.  Except as set forth on Schedule 3(a),
the Company and its “Subsidiaries”
(which for purposes of this Agreement means any entity in which the Company,
directly or indirectly, owns at least 25% of the capital stock or holds at
least 25% of the equity or similar interests) are corporations or limited
liability companies duly organized and validly existing in good standing under
the laws of the jurisdiction in which they are organized, and have the
requisite corporate power and authorization to own their properties and to carry
on their business as now being conducted. 
Each of the Company and its Subsidiaries is duly qualified as a foreign
corporation to do business and is in good standing in every jurisdiction in
which its ownership of property or the nature of the business conducted by it
makes such qualification necessary, except to the extent that the failure to be
so qualified or be in good standing would not have a Material Adverse
Effect.  As used in this Agreement, “Material Adverse Effect” means any material
adverse effect on the business, properties, assets, operations, results of
operations, condition (financial or otherwise) or prospects of the Company and
its Subsidiaries, taken as a whole, or on the transactions contemplated hereby
and the other Transaction Documents or by the agreements and instruments to be
entered into in connection herewith or therewith, or on the authority or
ability of the Company to perform its obligations under the Transaction
Documents (as defined below).  The
Company has no Subsidiaries except as set forth on the Company’s Annual Report
on Form 10-K for the year ended December 31, 2003 (the “2003 10-K”).


 


(b)           Authorization; Enforcement;
Validity.  The Company has the
requisite corporate power and authority to enter into and perform its obligations
under this Agreement, the Notes, the Registration Rights Agreement, the
Irrevocable Transfer Agent Instructions (as defined in Section 5(b)) and each
of the other agreements entered into by the parties hereto in connection with
the transactions contemplated by this Agreement (collectively, the “Transaction Documents”) and to issue the
Securities in accordance with the terms hereof and thereof.  The execution and delivery of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby, including, without limitation,
the issuance of the Notes and the reservation for issuance and the issuance of
the Conversion Shares issuable upon conversion, issuance or exercise thereof,
as the case may be, have been duly authorized by the Company’s Board of
Directors and no further consent or authorization is required by the Company,
its Board of Directors or its stockholders. 
This Agreement and the other Transaction Documents of even date herewith
have been duly executed and delivered by the Company, and constitute the legal,
valid and binding obligations of the Company enforceable against the Company in
accordance with their respective terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of applicable creditors’ rights and
remedies, and except that any rights to indemnity or contribution under the
Transaction Documents may be limited by federal and state securities laws and
public policy considerations.


 


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(c)           Issuance of Securities.  The Notes are duly authorized and, upon issuance
in accordance with the terms hereof, shall be free from all taxes, liens and
charges with respect to the issue thereof. 
As of the Closing, a number of shares of Common Stock shall have been
duly authorized and reserved for issuance which equals the sum of 100% of the
number of shares of Common Stock issuable upon conversion of the Notes to be
issued at such Closing.  Upon
conversion, exercise or issuance in accordance with the Notes, the Conversion
Shares will be validly issued, fully paid and nonassessable and free from all
transfer, stamp or similar taxes, liens and charges with respect to the issue
thereof, with the holders being entitled to all rights accorded to a holder of
Common Stock.  Assuming the accuracy of
each of the representations and warranties of the Buyers contained in Section 2
and, in connection with Securities issued after the transfer of any Securities
hereunder assuming that such transfer was made in compliance with the covenants
and agreements in this Agreement and the Registration Rights Agreement relating
to the transfer of any Securities, the issuance by the Company of the
Securities is exempt from the registration requirements of Section 5 of the
1933 Act.


 


(d)           No Conflicts.  The execution, delivery and performance of
the Transaction Documents by the Company and the consummation by the Company of
the transactions contemplated hereby and thereby (including, without
limitation, the issuance of the Notes and reservation for issuance and issuance
of the Conversion Shares) will not (i) result in a violation of the certificate
of incorporation, any certificate of designations, preferences and rights of
any outstanding series of preferred stock or bylaws of the Company or any of
its Subsidiaries or (ii) conflict with, or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, any material agreement, indenture or instrument to which the
Company or any of its Subsidiaries is a party, except which are the subject of
written waivers or consents which have been obtained or effected on or prior to
the Closing Date or (iii) result in a violation of any law, rule, regulation,
order, judgment or decree (including federal and state securities laws and
regulations and the rules and regulations of the Principal Market) applicable
to the Company or any of its Subsidiaries or by which any property or asset of
the Company or any of its Subsidiaries is bound or affected, except in the case
of clauses (ii) and (iii), for such breaches or defaults as could not
reasonably be expected to have a Material Adverse Effect.


 


(e)           Consents.  Except as disclosed in Schedule 3(e),
the Company is not required to obtain any consent, authorization or order of,
or make any filing or registration with, any court, governmental agency or any
regulatory or self-regulatory agency or any other Person in order for it to
execute, deliver or perform any of its obligations under or contemplated by the
Transaction Documents, in each case in accordance with the terms hereof or
thereof.  All consents, authorizations,
orders, filings and registrations which the Company is required to obtain
pursuant to the preceding sentence have been obtained or effected on or prior
to the Closing Date (other then filings and reports relating to the offer and
sale of the Securities required under Regulation D or applicable securities or
“Blue Sky” laws as contemplated under Section 4(b) of this Agreement), and the
Company and its Subsidiaries are unaware of any facts or circumstances which
might prevent the Company from obtaining or effecting any of the registration,
application or filings pursuant to the preceding sentence.  The Company is not in violation of the
listing requirements of the Principal Market and has no knowledge of any facts
which would reasonably lead to delisting or suspension of the Common Stock in
the foreseeable future.


 


(f)            Acknowledgment Regarding Buyer’s
Purchase of Securities.  The Company
acknowledges and agrees that each Buyer is acting solely in the capacity of
arm’s length purchaser with respect to the Transaction Documents and the
transactions contemplated hereby and thereby and that immediately prior to the
execution of this Agreement no Buyer is (i) an officer or director of the
Company, (ii) an “affiliate” of the Company (as defined in Rule 144) or (iii)
to the knowledge of the Company, a “beneficial owner” of more than 10% of the
Common Stock (as defined for purposes of Rule


 


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13d-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)).  The Company further acknowledges that no Buyer is acting as a
financial advisor or fiduciary of the Company (or in any similar capacity) with
respect to the Transaction Documents and the transactions contemplated hereby
and thereby, and any advice given to the Company by a Buyer or any of its
representatives or agents in connection with the Transaction Documents and the
transactions contemplated hereby and thereby is merely incidental to such
Buyer’s purchase of the Securities.  The
Company further represents to each Buyer that the Company’s decision to enter
into the Transaction Documents has been based on the independent evaluation by
the Company and its representatives and in reliance upon the representations
and warranties of each Buyer hereunder.


 


(g)           No General Solicitation; Placement
Agent’s Fees.  Neither the Company,
nor any of its affiliates, nor any Person acting on its or their behalf, has
engaged in any form of general solicitation or general advertising (within the
meaning of Regulation D) in connection with the offer or sale of the
Securities.  The Company shall be
responsible for the payment of any placement agent’s fees, financial advisory
fees, or brokers’ commissions (other than for persons engaged by any Buyer or
its investment advisor) relating to or arising out of the transactions
contemplated hereby.  The Company shall
pay, and hold each Buyer harmless against, any liability, loss or expense
(including, without limitation, attorney’s fees and out-of-pocket expenses)
arising in connection with any such claim. 
The Company acknowledges that is has engaged A.G. Edwards & Sons’ as
placement agent (the “Agent”) in
connection with the sale of the Notes. 
Other than the Agent, the Company has not engaged any placement agent or
other agent in connection with the sale of the Notes.


 


(h)           No Integrated Offering.  None of the Company, its Subsidiaries, any
of their affiliates, and any Person acting on their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would require registration of any of
the Securities under the 1933 Act or cause this offering of the Securities to
be integrated with prior offerings by the Company for purposes of the 1933 Act
or any applicable stockholder approval provisions, including, without
limitation, under the rules and regulations of any exchange or automated
quotation system on which any of the securities of the Company are listed or
designated.  None of the Company, its
Subsidiaries, their affiliates and any Person acting on their behalf will take
any action or steps referred to in the preceding sentence that would require
registration of any of the Securities under the 1933 Act or cause the offering
of the Securities to be integrated with other offerings.


 


(i)            [INTENTIONALLY OMITTED]


 


(j)            Application of Takeover
Protections; Rights Agreement.  The
Company and its board of directors have taken all necessary action, if any, in
order to render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Company’s Articles of
Incorporation (the “Articles of Incorporation”)
or the laws of the state of its incorporation which is or could become
applicable to any Buyer as a result of the transactions contemplated by this
Agreement, including, without limitation, the Company’s issuance of the
Securities and any Buyer’s ownership of the Securities.  The Company has not adopted a stockholder
rights plan or similar arrangement relating to accumulations of beneficial
ownership of Common Stock or a change in control of the Company.


 


(k)           SEC Documents; Financial
Statements.  Since January 1, 2001,
the Company has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the Exchange Act (all of the foregoing filed prior to the date
hereof, and all exhibits included therein and financial statements and
schedules thereto and documents incorporated by reference therein being
hereinafter referred to as the “SEC Documents”).  The Company has delivered to the Buyers or
their respective representatives true, correct and complete copies of the


 


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SEC Documents not available on the EDGAR system.  As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the
Exchange Act and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents, and none of the SEC Documents, at the time
they were filed with the SEC, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. 
As of their respective dates, the financial statements of the Company
included in the SEC Documents complied as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto.  Such
financial statements have been prepared in accordance with generally accepted
accounting principles, consistently applied, during the periods involved
(except (i) as may be otherwise indicated in such financial statements or the
notes thereto, or (ii) in the case of unaudited interim statements, to the
extent they may exclude footnotes or may be condensed or summary statements)
and fairly present in all material respects the financial position of the
Company as of the dates thereof and the results of its operations and cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments). 
No other written information provided by or on behalf of the Company to
the Buyers which is not included in the SEC Documents, including, without
limitation, information referred to in Section 2(d) of this Agreement, and
taken as a whole with the SEC Documents, contains any untrue statement of a
material fact or omits to state any material fact necessary in order to make
the statements therein, in the light of the circumstance under which they are
or were made, not misleading.


 


(l)            Absence of Certain Changes.  Except as disclosed in Schedule 3(l)
or the SEC Documents filed since December 31, 2003, since December 31, 2003,
there has been no material adverse change and no material adverse development
in the business, properties, operations, condition (financial or otherwise),
results of operations or prospects of the Company or its Subsidiaries.  Except as disclosed in the SEC Documents
filed since December 31, 2003 or in Schedule 3(l), since December 31, 2003, the
Company has not (i) declared or paid any dividends, (ii) sold any assets,
individually or in the aggregate, in excess of $100,000 outside of the ordinary
course of business or (iii) had capital expenditures, individually or in the
aggregate, in excess of $1,000,000.  The
Company has not taken any steps to seek protection pursuant to any bankruptcy
law nor does the Company have any knowledge or reason to believe that its
creditors intend to initiate involuntary bankruptcy proceedings or any actual
knowledge of any fact which would reasonably lead a creditor to do so.  The Company is not as of the date hereof,
and after giving effect to the transactions contemplated hereby to occur at the
Closing, will not be Insolvent (as defined below).  For purposes of this Section 3(l), “Insolvent” means (i) the present fair saleable value of the
Company’s assets is less than the amount required to pay the Company’s total Indebtedness(as
defined in Section 3(s)), (ii) the Company is unable to pay its debts and
liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured, (iii) the Company intends to incur or
believes that it will incur debts that would be beyond its ability to pay as
such debts mature or (iv) the Company has unreasonably small capital with which
to conduct the business in which it is engaged as such business is now
conducted and is proposed to be conducted.


 


(m)          [INTENTIONALLY OMITTED].


 


(n)           Conduct of Business; Regulatory
Permits.  Neither the Company nor
its Subsidiaries is in violation of any term of or in default under its
Articles or Certificate of Incorporation, any Certificate of Designations,
Preferences and Rights of any outstanding series of preferred stock of the
Company or Bylaws or their organizational charter or bylaws, respectively.  Neither the Company nor any of its
Subsidiaries is in violation of any judgment, decree or order or any statute,
ordinance, rule or regulation applicable to the Company or its Subsidiaries,
except for possible violations which would not, individually or in the
aggregate, have a Material Adverse Effect. 
Without limiting the generality of the foregoing, the Company is not in
violation of any of the rules, regulations or requirements of the Nasdaq


 


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National Market (the “Principal
Market”) other than violations which could not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect
and has no knowledge of any facts or circumstances which would reasonably lead
to delisting or suspension of the Common Stock by the Principal Market in the
foreseeable future.  Since January 1,
2003, (i) the Common Stock has been designated for quotation on the Principal
Market, (ii) trading in the Common Stock has not been suspended by the SEC or
the Principal Market and (iii) the Company has received no communication,
written or oral, from the SEC or the Principal Market regarding the suspension
or delisting of the Common Stock from the Principal Market.  The Company and its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses, except where the failure to possess such certificates,
authorizations or permits would not have, individually or in the aggregate, a
Material Adverse Effect, and neither the Company nor any such Subsidiary has
received any notice of proceedings relating to the revocation or modification
of any such certificate, authorization or permit.


 


(o)           Foreign Corrupt Practices.  Neither the Company, nor any of its
Subsidiaries, nor any director, officer, agent, employee or other Person acting
on behalf of the Company or any of its Subsidiaries has, in the course of its
actions for, or on behalf of, the Company (i) used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses relating
to political activity; (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds; (iii)
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate,
payoff, influence payment, kickback or other unlawful payment to any foreign or
domestic government official or employee.


 


(p)           Sarbanes-Oxley Act.  The Company is in compliance with any and
all applicable requirements of the Sarbanes-Oxley Act of 2002 that are
effective as of the date hereof, and any and all applicable rules and
regulations promulgated by the SEC thereunder that are effective as of the date
hereof, except where such noncompliance would not have, individually or in the
aggregate, a Material Adverse Effect.


 


(q)           Transactions With Affiliates.  Except as set forth on Schedule 3(q)
and in the SEC Documents filed at least ten days prior to the date hereof and
other than the grant of stock options since December 31, 2003 disclosed on Schedule
3(q), none of the officers, directors or employees of the Company is
presently a party to any transaction with the Company or any of its
Subsidiaries (other than for ordinary course services as employees, officers or
directors), including any material contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any
such officer, director or employee or, to the knowledge of the Company, any
corporation, partnership, trust or other entity in which any such officer,
director, or employee has a substantial interest or is an officer, director,
trustee or partner.


 


(r)            Equity Capitalization.  As of the date hereof, the authorized
capital stock of the Company consists of (x) 50,000,000 shares of Common Stock,
of which as of the date hereof, 17,834,180 shares of Common Stock are issued
and outstanding, 5,403,962 shares of Common Stock are reserved for issuance
pursuant to the Company’s stock option and purchase plans and no shares of
Common Stock are reserved for issuance pursuant to securities (other than the
Notes and stock options referenced in the preceding clause) exercisable or
exchangeable for, or convertible into, shares of Common Stock, and (y)
2,000,000 shares of preferred stock, of which as of the date hereof, none are
issued and outstanding.  All of such
outstanding shares have been, or upon issuance will be, validly issued and are
fully paid and nonassessable.  All of
such outstanding shares of capital stock are duly authorized, validly issued,
fully paid and nonassessable.  No shares
of capital stock of the Company are subject to preemptive rights or


 


9

















 


any other similar rights of the shareholders of the Company or any
liens or encumbrances imposed through the actions or failure to act of the
Company.  Other than as set forth on Schedule
3(r), pursuant to this Agreement or as contemplated by the Company’s
employee and director benefit, incentive, or option plans disclosed in the
Company’s SEC Documents (the “Plans”), there are no outstanding options,
warrants, scrip, rights to subscribe for, puts, calls, rights of first refusal,
and there are no agreements, understandings, claims, antidilution protection or
other commitments or rights of any character whatsoever that could require the
Company to issue additional shares of capital stock of the Company or adjust
the purchase or exercise price of any such instrument.  Other than as set forth on Schedule 3(r),
there are no agreements or arrangements, including any set forth in the SEC
Documents, (other than the Registration Rights Agreement) under which the
Company is obligated to register the sale of any of its securities under the
1933 Act.


 


(s)           Indebtedness and Other Contracts.  Except as disclosed in the Company’s 2003
10-K or the other SEC Documents filed since December 31, 2003, neither the
Company nor any of its Subsidiaries (i) has any outstanding Indebtedness (as
defined in the Notes), or (ii) is in violation of any term of or in default
under any contract, agreement or instrument relating to any Indebtedness,
except where such violations and defaults would not result, individually or in
the aggregate, in a Material Adverse Effect.


 


(t)            Absence of Litigation.  There is no action, suit, proceeding,
inquiry or investigation before or by the Principal Market, any court, public
board, government agency, self-regulatory organization or body pending or, to
the knowledge of the Company, threatened against or affecting the Company, the
Common Stock or any of the Company’s Subsidiaries that could, individually or
in the aggregate, reasonably be expected to result in a Material Adverse Effect


 


(u)           Insurance.  The Company and each of its Subsidiaries are
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as management of the Company believes to be
prudent and customary in the businesses in which the Company and its
Subsidiaries are engaged.  Since January
1, 2003, neither the Company nor any such Subsidiary has been refused any
insurance coverage sought or applied for and neither the Company nor any such
Subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect.


 


(v)           Employee Relations.  (i) 
Neither the Company nor any of its Subsidiaries is a party to any
collective bargaining agreement.  The
Company and its Subsidiaries believe that their relations with their employees
are good.  No executive officer of the
Company (as defined in Rule 501(f) of the 1933 Act) has notified the Company
that such officer intends to leave the Company or otherwise terminate such
officer’s employment with the Company. 
No executive officer of the Company, to the knowledge of the Company,
is, or is now expected to be, in violation of any material term of any
employment contract, confidentiality, disclosure or proprietary information
agreement, non-competition agreement, or any other contract or agreement or any
restrictive covenant.  To the knowledge
of the Company, the continued employment of each such executive officer does
not subject the Company or any of its Subsidiaries to any liability with
respect to any of the foregoing matters.


 


(ii)           The Company and its Subsidiaries are
in compliance with all federal, state, local and foreign laws and regulations
respecting employment and employment practices, terms and conditions of
employment and wages and hours, except where failure to be in compliance would
not, either individually or in the aggregate, reasonably be expected to result
in a Material Adverse Effect.


 


10

















 


(w)          Title.  The Company and its Subsidiaries have good
and marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them which is material to the business
of the Company and its Subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as do not materially affect the value of
such property and do not interfere with the use made and proposed to be made of
such property by the Company and any of its Subsidiaries.  Any real property and facilities held under
lease by the Company and any of its Subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not material and
do not interfere with the use made and proposed to be made of such property and
buildings by the Company and its Subsidiaries.


 


(x)            Intellectual Property Rights.  To the knowledge of the Company, the Company
and its Subsidiaries own or possess adequate rights or licenses to use all
trademarks, trade names, service marks, service mark registrations, service
names, patents, patent rights, copyrights, inventions, licenses, approvals,
governmental authorizations, trade secrets and other intellectual property
rights (“Intellectual Property Rights”)
necessary to conduct their respective businesses as now conducted.  None of the Company’s Intellectual Property
Rights have expired or terminated, or are expected to expire or terminate,
within three years from the date of this Agreement.  The Company does not have any knowledge of any infringement by
the Company or its Subsidiaries of Intellectual Property Rights of others,
except where such infringement would not, individually or in the aggregate,
have a Material Adverse Effect.  There
is no claim, action or proceeding being made or brought, or to the knowledge of
the Company, being threatened, against the Company or its Subsidiaries regarding
its Intellectual Property Rights which could have a Material Adverse
Effect.  The Company is unaware of any
facts or circumstances which might give rise to any of the foregoing
infringements or claims, actions or proceedings.  The Company and its Subsidiaries have taken reasonable security
measures to protect the secrecy, confidentiality and value of all of their
Intellectual Property Rights.


 


(y)           Environmental Laws.  To the knowledge of the Company, the Company
and its Subsidiaries (i) are in compliance with any and all Environmental Laws
(as hereinafter defined), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in compliance with all terms and conditions
of any such permit, license or approval where, in each of the foregoing clauses
(i), (ii) and (iii), the failure to so comply could be reasonably expected to
have, individually or in the aggregate, a Material Adverse Effect.  The term “Environmental
Laws” means all federal, state, local or foreign laws relating to
pollution or protection of human health or the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or subsurface
strata), including, without limitation, laws relating to emissions, discharges,
releases or threatened releases of chemicals, pollutants, contaminants, or
toxic or hazardous substances or wastes (collectively, “Hazardous Materials”)  into the environment, or otherwise relating
to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials, as well as all
authorizations, codes, decrees, demands or demand letters, injunctions,
judgments, licenses, notices or notice letters, orders, permits, plans or
regulations issued, entered, promulgated or approved thereunder.


 


(z)            Subsidiary Rights.  The Company or one of its Subsidiaries has
the unrestricted right to vote, and (subject to limitations imposed by
applicable law) to receive dividends and distributions on, all capital
securities of its Subsidiaries as owned by the Company or such Subsidiary.


 


(aa)         Tax Status.  The Company and each of its Subsidiaries (i)
has made or filed all federal and state income and all other tax returns,
reports and declarations required by any jurisdiction to which it is subject,
(ii) has paid all taxes and other governmental assessments and charges that are
material in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and (iii) has set
aside on its books provision reasonably adequate for the


 


11

















 


payment of all taxes for periods subsequent to the periods to which
such returns, reports or declarations apply. 
There are no unpaid taxes in any material amount claimed to be due by
the taxing authority of any jurisdiction, and the officers of the Company know
of no basis for any such claim.


 


(bb)         Internal Accounting Controls.  The Company and each of its Subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset and liability
accountability, (iii) access to assets or incurrence of liabilities is
permitted only in accordance with management’s general or specific
authorization and (iv) the recorded accountability for assets and liabilities
is compared with the existing assets and liabilities at reasonable intervals
and appropriate action is taken with respect to any difference.


 


(cc)         Disclosure.  The Company confirms that neither it nor, to
its knowledge, any officer, director or agent of the Company has provided any
of the Buyers or their respective agents or counsel with any information that
constitutes material, nonpublic information. 
The Company understands and confirms that each of the Buyers will rely
on the foregoing representations in effecting transactions in securities of the
Company.  All written disclosure
provided to the Buyers regarding the Company, its business and the transactions
contemplated hereby, including the Schedules to this Agreement, furnished by or
on behalf of the Company, taken as a whole, are true and correct and do not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.  No event or circumstance has occurred or
information exists with respect to the Company or any Subsidiary or either of
its or their respective business, properties, prospects, operations or
financial conditions, which, under applicable law, rule or regulation, requires
public disclosure or announcement by the Company on or before the date hereof
but which has not been so publicly announced or disclosed (assuming for this
purpose that the Company’s reports filed under the Exchange Act, as amended,
are being incorporated into an effective registration statement filed by the
Company under the 1933 Act).  The
Company acknowledges and agrees that no Buyer makes or has made any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in Section 2.


 


(dd)         Manipulation of Price.  The Company has not, and to its knowledge no
one acting on its behalf has, (i) taken, directly or indirectly, any action
designed to cause or to result in, or that has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of any of
the Securities, (ii) sold, bid for, purchased, or paid anyone any compensation
for soliciting purchases of, any of the Securities, or (iii) paid or agreed to
pay to any person any compensation for soliciting another to purchase any other
securities of the Company.


 


(ee)         Rule 144A Resales.  Assuming (i) that the purchasers in the
Exempt Resales are QIBs or Non-U.S. Persons and (ii) the accuracy of the
Buyer’s representations contained in Section 2 of this Agreement, the Notes are
eligible for resale pursuant to Rule 144A under the 1933 Act and no other
securities of the Company are of the same class (within the meaning of Rule
144A under the 1933 Act) as the Notes and listed on a national securities
exchange registered under Section 6 of the Exchange Act, or quoted in a U.S.
automated inter-dealer quotation system. 
No securities of the Company of the same class as the Notes have been
offered, issued or sold by the Company or any of its affiliates within the
six-month period immediately prior to the date hereof.


 


12

















 


4.             COVENANTS.


 


(a)           Best Efforts.  Each party shall use its best efforts timely
to satisfy each of the conditions to be satisfied by it as provided in Sections
6 and 7 of this Agreement.


 


(b)           Form D and Blue Sky.  The Company agrees to file a Form D with
respect to the Securities as required under Regulation D and to provide a copy
thereof to each Buyer promptly after such filing.  The Company shall, on or before the Closing Date, take such
action as the Company shall reasonably determine is necessary in order to
obtain an exemption for or to qualify the Securities for sale to the Buyers at
the Closing pursuant to this Agreement under applicable securities or “Blue
Sky” laws of the states of the United States (or to obtain an exemption from
such qualification), and shall provide evidence of any such action so taken to
the Buyers on or prior to the Closing Date. 
The Company shall make all filings and reports relating to the offer and
sale of the Securities required under applicable securities or “Blue Sky” laws
of the states of the United States following the Closing Date and, prior to any
public offering of the Registrable Securities pursuant to the Registration
Statement, use its best efforts to register or qualify or cooperate with the
Buyers in connection with the registration or qualification (or exemption from
such registration or qualification) of such Securities for resale under the
securities or Blue Sky laws of such jurisdictions within the United States as
holders of Notes representing not less than a majority of the aggregate
principal amount of the then outstanding Notes reasonably request.


 


(c)           Reporting Status.  With a view to making available to the
Investors (as that term is defined in the Registration Rights Agreement) the
benefits of Rule 144 promulgated under the Securities Act or any similar rule
or regulation of the Commission that may at any time permit the Investors to
sell securities of the Company to the public without registration (“Rule 144”), until two years after no Notes
are outstanding, the Company shall: (1) make and keep public information
available, as those terms are understood and defined in Rule 144; (2) file with
the Commission in a timely manner all reports and other documents required of
the Company under the Securities Act and the Exchange Act; and (3) furnish to
each Investor, so long as such Investor owns Registrable Securities (the “Reporting Period”), promptly upon request,
(A) a written statement by the Company, if true, that it has complied with the
applicable reporting requirements of Rule 144, the Securities Act and the
Exchange Act, (B) a copy of the most recent annual or quarterly report of the
Company and copies of such other reports and documents so filed by the Company,
(C) the information required by Rule 144A(d)(4) (or any successor rule) under
the Securities Act, and (D) such other information as may be reasonably
requested to permit the Investors to sell such securities pursuant to Rule 144
without registration.


 


(d)           [INTENTIONALLY OMITTED].


 


(e)           Financial Information.  The Company agrees to send the following to
each Investor during the Reporting Period (i) unless the following are filed
with the SEC through EDGAR and are available to the public through the EDGAR
system, within one (1) Business Day after the filing thereof with the SEC, a
copy of its Annual Reports on Form 10-K, its Quarterly Reports on Form 10-Q,
any Current Reports on Form 8-K and any registration statements (other than on
Form S-8) or amendments filed pursuant to the 1933 Act, and (ii) copies of any
notices and other information made available or given to the stockholders of
the Company generally, contemporaneously with the making available or giving
thereof to the stockholders (other than those in connection with the Company’s
annual meeting of stockholders).


 


(f)            Listing.  The Company shall promptly secure the
listing of all of the Conversion Shares (as defined in the Registration Rights
Agreement) upon each national securities exchange and automated quotation
system, if any, upon which shares of Common Stock are then listed (subject to


 


13

















 


official notice of issuance) and shall use its reasonable best efforts
to maintain, so long as any other shares of Common Stock shall be so listed,
such listing of all Conversion Shares from time to time issuable under the
terms of the Transaction Documents.  The
Company shall use its reasonable best efforts to maintain the Common Stock’s
authorization for quotation on the Principal Market.  Neither the Company nor any of its Subsidiaries shall take any
action which would be reasonably expected to result in the delisting or
suspension of the Common Stock on the Principal Market.  The Company shall pay all fees and expenses
in connection with satisfying its obligations under this Section 4(f).


 


(g)           Fees.  The Company shall reimburse the Buyers in
the maximum aggregate amount of $25,000 for the Buyers’ reasonable expenses
actually incurred in connection with the preparation, execution and performance
of this Agreement and the transactions contemplated hereunder, which amount
will be net funded from the Purchase Price of Riverview Group, LLC at the
Closing.  The Company shall be
responsible for the payment of any placement agent’s fees, financial advisory
fees, or broker’s commissions (other than for Persons engaged by any Buyer)
relating to or arising out of the transactions contemplated hereby, including,
without limitation, any fees or commissions payable to the Agent.  The Company shall pay, and hold each Buyer
harmless against, any liability, loss or expense (including, without
limitation, reasonable attorney’s fees and out-of-pocket expenses) arising in
connection with any claim relating to any such payment.  Except as otherwise set forth in this
Agreement or in the Transaction Documents, each party to this Agreement shall
bear its own expenses in connection with the sale of the Securities to the
Buyers.


 


(h)           Pledge of Securities.  The Company acknowledges and agrees that the
Securities may be pledged by an Investor (as defined in the Registration Rights
Agreement) in connection with a bona fide margin agreement or other loan or
financing arrangement that is secured by the Securities.  The pledge of Securities shall not be deemed
to be a transfer, sale or assignment of the Securities hereunder, and no
Investor effecting a pledge of Securities shall be required to provide the
Company with any notice thereof or otherwise make any delivery to the Company
pursuant to this Agreement or any other Transaction Document, including,
without limitation, Section 2(f) hereof; provided that an Investor and its
pledgee shall be required to comply with the provisions of Section 2(f) hereof
in order to effect a sale, transfer or assignment of Securities to such
pledgee.  The Company hereby agrees to
execute and deliver such documentation as a pledgee of the Securities may
reasonably request in connection with a pledge of the Securities to such
pledgee by an Investor.


 


(i)            Disclosure of Transactions and
Other Material Information.  On or
before 8:30 a.m., New York Time, on June 14, 2004,  the Company shall file a Current Report on Form 8-K
describing the terms of the transactions contemplated by the Transaction
Documents in the form required by the Exchange Act, and attaching the material
Transaction Documents (including, without limitation, this Agreement, the form
of Note, and the Registration Rights Agreement) as exhibits to such filing
(including all attachments, the “8-K Filing”).  From and after the filing of the 8-K Filing
with the SEC, unless required pursuant to Section 3(i) of the Registration
Rights Agreement, no Buyer shall be in possession of any material, nonpublic
information received from the Company, any of its Subsidiaries or any of its
respective officers, directors, employees or agents, that is not disclosed in
the 8-K Filing.  Unless required
pursuant to Section 3(i) of the Registration Rights Agreement, the Company
shall not, and shall cause each of its Subsidiaries and its and each of their
respective officers, directors, employees and agents, not to, provide any Buyer
with any material, nonpublic information regarding the Company or any of its
Subsidiaries from and after the filing of the 8-K Filing with the SEC without
the express written consent of such Buyer. 
Neither the Company nor any Buyer shall issue any press releases or any
other public statements with respect to the transactions contemplated hereby; provided,
however, that the Company shall be entitled, without the prior approval
of any Buyer, to make any press release or other public disclosure with respect
to such transactions (i) in substantial conformity with the 8-K Filing and prior
to or contemporaneously therewith and (ii) as is required by applicable law and
regulations


 


14

















 


(provided that in the case of clause (i) Riverview Group, LLC, shall be
consulted by the Company in connection with any such press release or other
public disclosure prior to its release).


 


(j)            [INTENTIONALLY OMITTED]


 


(k)           Additional Notes; Additional
Registration Statement; Additional Securities.  For so long as any Buyer beneficially owns any Securities, the
Company will not issue any Notes other than to the Buyers as contemplated
hereby and the Company shall not issue any other securities that would cause a
breach or default under the Notes. 
Until such time as the Registration Statement (as defined in the
Registration Rights Agreement) is declared effective by the SEC, (i) the
Company will not file a registration statement under the 1933 Act relating to
securities that are not the Securities, other than a registration statement on
Form S-8, in order to register the shares underlying equity incentive plans in
existence as of the date of this Agreement and (ii) the Company will not issue,
sell or exchange, agree or obligate itself to issue, sell or exchange or
reserve or set aside for issuance, sale or exchange other than in connection
with any Excluded Securities (as defined in the Notes), (A) any shares of
Common Stock, (B) any other equity security of the Company, including without
limitation shares of preferred stock, (C) any debt security of the Company (other
than debt with no equity feature), including without limitation any debt
security which by its terms is convertible into or exchangeable for any equity
security of the Company, (D) any security of the Company that is a combination
of debt and equity, or (E) any option, warrant or other right to subscribe for,
purchase or otherwise acquire any such equity security or any such debt
security of the Company.


 


(l)            Corporate Existence.  So long as any Buyer beneficially owns any
Notes, the Company shall maintain its corporate existence as a publicly traded
entity whose stock is owned by its public shareholders and shall not sell all
or substantially all of the Company’s assets, except in connection with a
Change of Control (as defined in the Notes) or Surviving Change (as defined in
the Notes) where the Company complies with its obligations under Section 5 of
the Notes.


 


(m)          Reservation of Shares.  The Company shall take all action necessary
to at all times have authorized, and reserved for the purpose of issuance, 100%
of the number of shares of Common Stock issuable upon conversion of the Notes
being issued at the Closing.


 


(n)           Conduct of Business.  The business of the Company and its
Subsidiaries shall not be conducted in violation of any law, ordinance or regulation
of any governmental entity, except where such violations would not result,
either individually or in the aggregate, in a Material Adverse Effect.


 


(o)           [INTENTIONALLY OMITTED]


 


(p)           Sales by Buyers.  Each Buyer will sell any Securities sold by
it in compliance with applicable prospectus delivery requirements, if any, or
otherwise in compliance with the requirements for an exemption from
registration under the Securities Act and the rules and regulations promulgated
thereunder.  No Buyer will make any
sale, transfer or other disposition of the Securities in violation of the
federal or state securities laws.  In
the event that the Company is required by a regulatory agency or in a legal
proceeding to provide information as to the availability of an exemption for
the issuance of the Notes or for any Exempt Resale or for any transfers of
Securities by a Buyer, each Buyer will cooperate with the Company in providing
such written certifications as the Company may reasonably request following the
transfer of any Securities by a Buyer in order for the Company to confirm the
continuing compliance by each Buyer with its agreements relating to transfers
of the Securities.


 


15

















 


(q)           CUSIP Numbers. The Company in
issuing the Securities shall use “CUSIP” numbers (if then generally in use),
and shall use such “CUSIP” numbers in notices to holders as a convenience to
holders thereof.


 


(r)            PORTAL.  If requested in writing by the holders of
Notes representing not less than a majority of the aggregate principal amount
of the then outstanding Notes, the Company shall use its reasonable best
efforts to apply for and effect the quotation of the Notes on the Private
Offerings, Resales and Trading Automated Linkages market.  The Company shall not be required to effect
the quotation of the Notes on the PORTAL market if, in the Company’s reasonable
determination, the listing thereof will permit any person to hold less than
$3,000,000 principal amount of Notes, other than by virtue of partial
redemption or partial conversion of the Notes.


 


5.             REGISTER; TRANSFER AGENT
INSTRUCTIONS.


 


(a)           Register.  The Company shall maintain at its principal
executive offices (or such other office or agency of the Company as it may
designate by notice to each holder of Notes), a register for the Notes, in
which the Company shall record the name and address of the Person in whose name
the Notes  have been issued
(including the name and address of each transferee), the principal amount of
Notes held by such Person.  The Company
shall keep the register open and available at all times during business hours
for inspection of any Buyer or its legal representatives.


 


(b)           Transfer Agent Instructions.  The Company shall issue irrevocable
instructions to its transfer agent, and any subsequent transfer agent, to issue
certificates or credit shares to the applicable balance accounts at The
Depository Trust Company (“DTC”),
registered in the name of each Buyer or its respective nominee(s), for the
Notes (but only if the Notes have been qualified for quotation on the PORTAL
market in accordance with Section 4(r)) and the Conversion Shares  in such amounts as specified from time to
time by each Buyer to the Company upon transfer of the Notes or conversion of
the Notes in the form of Exhibit C attached hereto (the “Irrevocable Transfer Agent Instructions”).  The Company warrants that no instruction
other than the Irrevocable Transfer Agent Instructions referred to in this
Section 5(b), and stop transfer instructions to give effect to Section 2(g)
hereof, will be given by the Company to its transfer agent, and that the
Securities shall otherwise be freely transferable on the books and records of
the Company as and to the extent provided in this Agreement and the other
Transaction Documents.  If a Buyer
effects a sale, assignment or transfer of the Securities in accordance with
Sections 2(h) and 2(i), the Company shall permit the transfer and shall
promptly instruct its transfer agent to issue one or more certificates or
credit Notes or shares to the applicable balance accounts at DTC (but only if
the Notes have been qualified for quotation on the PORTAL market in accordance
with Section 4(r)) in such name and in such denominations as specified by such
Buyer to effect such sale, transfer or assignment.  In the event that such sale, assignment or transfer involves
Securities sold, assigned or transferred pursuant to an effective registration
statement or pursuant to Rule 144, the transfer agent shall issue such
Securities to the Buyer, assignee or transferee, as the case may be, without
any restrictive legend.  The Company
acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to a Buyer. 
Accordingly, the Company acknowledges that the remedy at law for a
breach of its obligations under this Section 5(b) will be inadequate and
agrees, in the event of a breach or threatened breach by the Company of the
provisions of this Section 5(b), that a Buyer shall be entitled, in addition to
all other available remedies, to an order and/or injunction restraining any
breach and requiring immediate issuance and transfer, without the necessity of
showing economic loss and without any bond or other security being
required.  Nothing in this Section 5(b)
will affect in any way the Buyer’s obligations and agreements set forth in
Section 4 hereof to comply with all applicable prospectus delivery
requirements, upon resale of the Securities.


 


16

















 


6.             CONDITIONS TO THE COMPANY’S
OBLIGATION TO SELL.


 


(a)           Closing Date.  The obligation of the Company hereunder to
issue and sell the Notes  to each
Buyer at the Closing is subject to the satisfaction, at or before the Closing
Date, of each of the following conditions, provided that these conditions are
for the Company’s sole benefit and may be waived by the Company at any time in
its sole discretion by providing each Buyer with prior written notice thereof:


 


(i)            Such Buyer shall have executed each
of the Transaction Documents to which it is a party and delivered the same to
the Company.


 


(ii)           Such Buyer and each other Buyer shall
have delivered to the Company the Purchase Price (less, in the case of
Riverview Group, LLC, the amounts withheld pursuant to Section 4(g)) for the
Notes being purchased by such Buyer and each other Buyer at the Closing by wire
transfer of immediately available funds pursuant to the wire instructions
provided by the Company.


 


(iii)          The representations and warranties of
such Buyer shall be true and correct in all material respects as of the date
when made and as of the Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date), and such
Buyer shall have performed, satisfied and complied in all material respects
with the covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by such Buyer at or prior to the Closing
Date.


 


7.             CONDITIONS TO EACH BUYER’S
OBLIGATION TO PURCHASE.


 


(a)           Closing Date.  The obligation of each Buyer hereunder to
purchase the Notes  at the Closing
is subject to the satisfaction, at or before the Closing Date, of each of the
following conditions, provided that these conditions are for each Buyer’s sole
benefit and may be waived by such Buyer at any time in its sole discretion by
providing the Company with prior written notice thereof:


 


(i)            The Company shall have executed and
delivered to such Buyer (i) each of the Transaction Documents and (ii) the
Notes (in such principal amounts as such Buyer shall request)  (in such amounts as such Buyer shall
request) being purchased by such Buyer at the Closing pursuant to this
Agreement.


 


(ii)           Such Buyer shall have received the
opinion of Gilmore & Bell, P.C., the Company’s counsel, dated as of the Closing
Date, in substantially the form of Exhibit D attached hereto.


 


(iii)          The Company shall have delivered to
such Buyer a copy of the Irrevocable Transfer Agent Instructions, in the form
of Exhibit C attached hereto, which instructions shall have been delivered
to and acknowledged in writing by the Company’s transfer agent.


 


(iv)          The Company shall have delivered to
such Buyer a certificate evidencing the incorporation and good standing of the
Company and each of its Subsidiaries in such corporation’s state of
incorporation issued by the Secretary of State of such state of incorporation,
as of a date within 10 days of the Closing Date.


 


(v)           The Company shall have delivered to
such Buyer a certificate evidencing the Company’s qualification as a foreign
corporation and good standing issued by the Secretary of State of the State of
Kansas, as of a date within 10 days of the Closing Date.


 


17

















 


(vi)          The Company shall have delivered to
such Buyer a certified copy of the Articles of Incorporation as certified by
the Secretary of State of the State of Missouri within 10 days of the Closing
Date.


 


(vii)         The Company shall have delivered to
such Buyer a certificate, executed by the Secretary of the Company and dated as
of the Closing Date, as to (i) the resolutions consistent with Section 3(b) as
adopted by the Company’s Board of Directors in a form reasonably acceptable to
such Buyer (the “Resolutions”),
(ii) the Articles of Incorporation and (iii) the Bylaws, each as in effect at
the Closing, in the form attached hereto as Exhibit E.


 


(viii)        The representations and warranties of
the Company shall be true and correct as of the date when made and as of the
Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date) and the Company shall have
performed, satisfied and complied in all respects with the covenants,
agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by the Company at or prior to the Closing
Date.  Such Buyer shall have received a
certificate, executed by the Chief Executive Officer of the Company, dated as
of the Closing Date, to the foregoing effect and as to such other matters as
may be reasonably requested by such Buyer in the form attached hereto as Exhibit
F.


 


(ix)           The Company shall have delivered to
such Buyer a letter from the Company’s transfer agent certifying the number of
shares of Common Stock outstanding as of a date within five days of the Closing
Date.


 


(x)            The Common Stock (I) shall be
designated for quotation or listed on the Principal Market and (II) shall not
have been suspended, as of the Closing Date, by the SEC or the Principal Market
from trading on the Principal Market nor shall suspension by the SEC or the
Principal Market have been threatened, as of the Closing Date, either (A) in
writing by the SEC or the Principal Market or (B) by falling below the minimum
listing maintenance requirements of the Principal Market.


 


(xi)           The Company shall have obtained all
governmental, regulatory or third party consents and approvals, if any,
necessary for the sale of the Notes.


 


(xii)          The Company shall have delivered to
such Buyer such other documents relating to the transactions contemplated by
this Agreement as such Buyer or its counsel may reasonably request.


 


8.             TERMINATION.  In the event that the Closing shall not have
occurred with respect to a Buyer on or before five (5) Business Days from the
date hereof due to the Company’s or such Buyer’s failure to satisfy the
conditions set forth in Sections 6 and 7 above (and the nonbreaching party’s
failure to waive such unsatisfied condition(s)), the nonbreaching party shall
have the option to terminate this Agreement with respect to such breaching party
at the close of business on such date without liability of any party to any
other party; provided, however, this if this Agreement is
terminated pursuant to this Section 8 by Buyer and the Company has failed to
timely satisfy the conditions in Section 7 above, the Company shall remain
obligated to reimburse the non-breaching Buyers for the expenses described in
Section 4(g) above.


 


9.             MISCELLANEOUS.


 


(a)           Governing Law; Jurisdiction; Jury
Trial.  All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of New York, without giving
effect to any choice of law or conflict of law provision or


 


18

















 


rule (whether of the State of New York or any other jurisdictions) that
would cause the application of the laws of any jurisdictions other than the
State of New York.  Each party hereby
irrevocably submits to the non-exclusive jurisdiction of the state and federal
courts sitting in the City of New York, Borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper.  Each party hereby irrevocably waives personal service of process
and consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it
under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any
right to serve process in any manner permitted by law.  EACH PARTY
HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A
JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH
OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.


 


(b)           Counterparts.  This Agreement may be executed in two or
more identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original,
not a facsimile signature.


 


(c)           Headings.  The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.


 


(d)           Severability.  If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the remainder
of this Agreement in that jurisdiction or the validity or enforceability of any
provision of this Agreement in any other jurisdiction.


 


(e)           Entire Agreement; Amendments.  This Agreement supersedes all other prior
oral or written agreements between the Buyers, the Company, their affiliates
and Persons acting on their behalf with respect to the matters discussed
herein, and this Agreement and the instruments referenced herein contain the
entire understanding of the parties with respect to the matters covered herein
and therein and, except as specifically set forth herein or therein, neither
the Company nor any Buyer makes any representation, warranty, covenant or
undertaking with respect to such matters. 
No provision of this Agreement or the Notes may be amended other than by
an instrument in writing signed by the Company and the holders of Notes
representing at least a majority of the aggregate principal amount of the Notes
then outstanding, or, if prior to the Closing Date, the Company and the Buyers
listed on the Schedule of Buyers as being obligated to purchase at least a
majority of the aggregate principal amount of the Notes, and any amendment to
this Agreement or the Notes made in conformity with the provisions of this
Section 9(e) shall be binding on all Buyers and holders of Notes, as
applicable.  No provision hereof may be
waived other than by an instrument in writing signed by the party against whom
enforcement is sought.  No such
amendment shall be effective to the extent that it applies to less than all of
the holders of the Notes then outstanding. 
No consideration shall be offered or paid to any Person to amend or
consent to a waiver or modification of any provision of any of the Transaction
Documents unless the same consideration also is offered to all of the parties
to the Transaction Documents, holders of Notes.  The Company has not, directly or indirectly, made any agreements
with any Buyers relating to the terms or conditions of the transactions contemplated
by the Transaction Documents except as set forth in the Transaction Documents.


 


19

















 


(f)            Notices.  Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement or the Notes must be in writing and will be deemed to have been
delivered and received:  (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile
(provided confirmation of transmission is mechanically or electronically
generated and kept on file by the sending party); or (iii) one Business Day
after deposit with an overnight courier service, in each case properly
addressed to the party to receive the same. 
The addresses and facsimile numbers for such communications shall be:


 


	
  If to the
  Company:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  EPIQ
  Systems, Inc.

  
	
  501
  Kansas Avenue

  
	
  Kansas
  City, Kansas  66105-1300

  
	
  Telephone:

  	
   

  	
  913-621-9500

  
	
  Facsimile:

  	
   

  	
  913-621-7281

  
	
  Attention:

  	
   

  	
  Elizabeth M. Braham,
  Senior Vice President and

  
	
   

  	
   

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
  with a copy (which
  shall not constitute notice) to:

  
	
   

  	
   

  	
   

  
	
  Gilmore & Bell, P.C.

  
	
  2405 Grand Boulevard, Suite 1100

  
	
  Kansas City, Missouri  64108

  
	
  Telephone:

  	
   

  	
  816-221-1000

  
	
  Facsimile:

  	
   

  	
  816-221-1018

  
	
  Attention:

  	
   

  	
  Richard M. Wright, Jr., Esq.

  
	
   

  	
   

  	
   

  
	
  If to the
  Transfer Agent:

  
	
   

  	
   

  	
   

  
	
  Wells Fargo Shareowner Services

  
	
  161 North Concord Exchange

  
	
  South St. Paul, Minnesota  55075

  
	
  Telephone:

  	
   

  	
  (651) 306-4402

  
	
   

  	
   

  	
  (800) 689-8788

  
	
  Facsimile:

  	
   

  	
  (651) 450-4078

  
	
  Attention:

  	
   

  	
  Cheryl Kelly, Account Manager

  
	
   

  	
   

  	
   

  
	
  If to a Buyer, to its
  address and facsimile number set forth on the Schedule of Buyers, with copies
  to

  
	
   

  	
   

  	
   

  
	
  (for informational purposes only)

  
	
   

  	
   

  	
   

  
	
  Schulte Roth & Zabel LLP

  
	
  919 Third Avenue

  
	
  New York New York  10022

  
	
  Telephone:

  	
   

  	
  (212)
  756-2000

  
	
  Facsimile:

  	
   

  	
  (212)
  593-5955

  
	
  Attention:

  	
   

  	
  Eleazer N.
  Klein, Esq.

  
							



 


and such Buyer’s
representatives as set forth on the Schedule of Buyers, or to such other
address and/or facsimile number and/or to the attention of such other Person as
the recipient party has specified by


 


20

















 


written notice given to each
other party five (5) days prior to the effectiveness of such change.  Written confirmation of receipt (A) given by
the recipient of such notice, consent, waiver or other communication, (B)
mechanically or electronically generated by the sender’s facsimile machine
containing the time, date, recipient facsimile number and an image of the first
page of such transmission or (C) provided by an overnight courier service shall
be rebuttable evidence of personal service, receipt by facsimile or receipt
from an overnight courier service in accordance with clause (i), (ii) or (iii)
above, respectively.


 


(g)           Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
assigns, including any purchasers of the Notes.  The Company shall not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the holders of Notes
representing at least a majority of the aggregate principal amount of the Notes
then outstanding, except pursuant to a Change of Control or Corporate Event
(each as defined in Section 5 of the Notes) with respect to which the Company
is in compliance with Section 5 of the Notes. 
A Buyer may assign some or all of its rights hereunder to any purchaser
of not less than $3,000,000 principal amount of Notes (or such lesser amount
representing the remaining principal amount of such Note) without the consent
of (but with notice of such assignment to) the Company, in which event such
assignee shall be deemed to be a Buyer hereunder with respect to such assigned
rights and such assignee shall be bound by all covenants and agreements of
Buyer set forth in this Agreement.


 


(h)           No Third Party Beneficiaries.  This Agreement is intended for the benefit
of the parties hereto and their respective permitted successors and assigns,
and is not for the benefit of, nor may any provision hereof be enforced by, any
other Person.


 


(i)            Survival.  Unless this Agreement is terminated under
Section 8, the representations and warranties of the Company and the Buyers
contained in Sections 2 and 3 and the agreements and covenants set forth in
Sections 4, 5 and 9 shall survive the Closing. 
Each Buyer shall be responsible only for its own representations,
warranties, agreements and covenants hereunder.


 


(j)            Further Assurances.  Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
any other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.


 


(k)           Indemnification.  In consideration of each Buyer’s execution
and delivery of the Transaction Documents and acquiring the Securities
thereunder and in addition to all of the Company’s other obligations under the
Transaction Documents, the Company shall defend, protect, indemnify and hold
harmless each Buyer and each other holder of the Securities and all of their
stockholders, partners, members, officers, directors, employees and direct or
indirect investors and any of the foregoing Persons’ agents or other
representatives (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the “Indemnitees”) from and against any and all
actions, causes of action, suits, claims, losses, costs, penalties, fees,
liabilities and damages, and expenses in connection therewith (irrespective of
whether any such Indemnitee is a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys’ fees and
disbursements (the “Indemnified Liabilities”),
incurred by any Indemnitee as a result of, or arising out of, or relating to
(a) any misrepresentation or breach of any representation or warranty made by
the Company in the Transaction Documents, (b) any breach of any covenant,
agreement or obligation of the Company contained in the Transaction Documents
or (c) any cause of action, suit or claim brought or made against such
Indemnitee by a third party (including for these purposes a derivative action
brought on behalf of the Company) and arising out of or resulting from (i) the
execution, delivery, performance or enforcement of the Transaction Documents,
(ii) any transaction financed or to be financed in whole or in part, directly
or


 


21

















 


indirectly, with the proceeds of the issuance of the Securities, or
(iii) the status of such Buyer or holder of the Securities as an investor in
the Company pursuant to the transactions contemplated by the Transaction
Documents.  To the extent that the
foregoing undertaking by the Company may be unenforceable for any reason, the
Company shall make the maximum contribution to the payment and satisfaction of
each of the Indemnified Liabilities which is permissible under applicable
law.  Except as otherwise set forth
herein, the mechanics and procedures with respect to the rights and obligations
under this Section 9(k) shall be the same as those set forth in Section 6 of
the Registration Rights Agreement.


 


(l)            No Strict Construction.  The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.


 


(m)          Remedies.  Each Buyer and each holder of the Securities
shall have all rights and remedies set forth in the Transaction Documents and
all rights and remedies which such holders have been granted at any time under
any other agreement or contract and all of the rights which such holders have
under any law.  Any Person having any
rights under any provision of this Agreement shall be entitled to enforce such
rights specifically (without posting a bond or other security), to recover
damages by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. 
Furthermore, the Company recognizes that in the event that it fails to
perform, observe, or discharge any or all of its obligations under the
Transaction Documents, any remedy at law may prove to be inadequate relief to
the Buyers.  The Company therefore
agrees that the Buyers shall be entitled to seek temporary and permanent
injunctive relief in any such case without the necessity of proving actual
damages and without posting a bond or other security.


 


(n)           Payment Set Aside.  To the extent that the Company makes a
payment or payments to the Buyers hereunder or pursuant to any of the other
Transaction Documents or the Buyers enforce or exercise their rights hereunder
or thereunder, and such payment or payments or the proceeds of such enforcement
or exercise or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by or are
required to be refunded, repaid or otherwise restored to the Company, a
trustee, receiver or any other Person under any law (including, without
limitation, any bankruptcy law, state or federal law, common law or equitable
cause of action), then to the extent of any such restoration the obligation or
part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.


 


(o)           Independent Nature of Buyers’
Obligations and Rights.  The
obligations of each Buyer under any Transaction Document are several and not
joint with the obligations of any other Buyer, and no Buyer shall be
responsible in any way for the performance of the obligations of any other
Buyer under any Transaction Document. 
Nothing contained herein or in any other Transaction Document, and no
action taken by any Buyer pursuant hereto or thereto, shall be deemed to
constitute the Buyers as a partnership, an association, a joint venture or any
other kind of entity, or create a presumption that the Buyers are in any way
acting in concert or as a group with respect to such obligations or the
transactions contemplated by the Transaction Documents.  Each Buyer confirms that it has
independently participated in the negotiation of the transaction contemplated
hereby with the advice of its own counsel and advisors.  Each Buyer shall be entitled to
independently protect and enforce its rights, including, without limitations,
the rights arising out of this Agreement or out of any other Transaction
Documents, and it shall not be necessary for any other Buyer to be joined as an
additional party in any proceeding for such purpose.


 


[Signature Page Follows]


 


22

















 


IN WITNESS WHEREOF,
each Buyer and the Company have caused have caused their respective signature
page to this Securities Purchase Agreement to be duly executed as of the date
first written above.


 


 


	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  EPIQ SYSTEMS, INC. 

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ 
  Tom W. Olofson

  	
   

  
	
   

  	
  Name:

  	
  Tom W. Olofson

  
	
   

  	
  Title:

  	
  Chief Executive Officer

  
					



 


23

















 


IN WITNESS WHEREOF,
each Buyer and the Company have caused their respective signature page to this
Securities Purchase Agreement to be duly executed as of the date first written
above.


 


 


	
   

  	
  BUYERS:

  
	
   

  	
   

  
	
   

  	
  RIVERVIEW GROUP, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ 
  Terry Feeney

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Terry Feeney

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Chief Operating Officer

  	
   

  



 


24

















 


IN WITNESS WHEREOF,
each Buyer and the Company have caused their respective signature page to this
Securities Purchase Agreement to be duly executed as of the date first written
above.


 


	
   

  	
  BUYERS:

  
	
   

  	
   

  
	
   

  	
  SMITHFIELD FIDUCIARY LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ 
  Adam J. Chill

  	
   

  
	
   

  	
  Name: Adam J. Chill

  
	
   

  	
  Title:  Authorized
  Signatory

  



 


25

















 


IN WITNESS WHEREOF,
each Buyer and the Company have caused their respective signature page to this
Securities Purchase Agreement to be duly executed as of the date first written
above.


 


 


	
   

  	
  BUYERS:

  
	
   

  	
   

  
	
   

  	
  OMICRON MASTER TRUST

  
	
   

  	
  By:  Omicron Capital L.P., as advisor

  
	
   

  	
   

  
	
   

  	
  By:  Omicron Capital Inc., its general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ 
  Bruce Bernstein

  	
   

  
	
   

  	
  Name:  Bruce
  Bernstein

  
	
   

  	
  Title:  Managing
  Partner

  



 


26

















 


SCHEDULE OF BUYERS


 


	
  (1)

  	
   

  	
  (2)

  	
   

  	
  (3)

  	
   

  	
  (4)

  
	
  Buyer

  	
   

  	
  Address
  and Facsimile Number

  	
   

  	
  Aggregate

  Principal

  Amount of

  Notes

  	
   

  	
  Legal
  Representative’s

  Address and Facsimile Number

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Riverview
  Group, LLC

  	
   

  	
  666 Fifth Avenue, 8th
  Floor

  New York, New York  10103

  Attention:  Daniel Cardella

  Facsimile:  (212) 977-1667

  Telephone: (212) 841-4100

  Residence:  Delaware

  	
   

  	
  $

  	
  30,000,000

  	
   

  	
  Schulte Roth & Zabel
  LLP

  919 Third Avenue

  New York, New York  10022

  Attention:  Eleazer Klein, Esq.

  Facsimile:  (212) 593-5955

  Telephone: (212) 756-2000

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Smithfield Fiduciary LLC

  	
   

  	
  c/o
  Highbridge Capital

  Management, LLC

  9 West 57th Street, 27th Floor

  New York, New York  10019

  Attention:  Ari J. Storch

                   
  Adam J. Chill

  Facsimile:  (212) 751-0755 Telephone: (212) 287-4720
  Residence:  Cayman Islands

  	
   

  	
  $

  	
  10,000,000

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Omicron Master Trust

  	
   

  	
  c/o Omicron
  Capital L.P.

  810 Seventh Avenue

  39th Floor

  New York, New York 10019

  Attention:   Brian Daly

  Facsimile:   (212) 803-5269
  Telephone:  (212) 803-5263
  Residence:  Bermuda

  	
   

  	
  $

  	
  10,000,000

  	
   

  	
   

  



 


27