**Exhibit10.1**

** **

** **

**SECOND**

**AMENDEDAND RESTATED**

**CREDITAND SECURITY AGREEMENT**

 

**among**

 

**EPIQSYSTEMS, INC.**

 

**and**

 

**THEDOMESTIC SUBSIDIARY BORROWERS NAMED HEREIN**

***asBorrowers***

 

**THELENDERS NAMED HEREIN**

***asLenders***

 

**and**

 

**KEYBANKNATIONAL ASSOCIATION**

***asLead Arranger, Sole Book Runner and Administrative Agent***

 

**NATIONALCITY BANK**

***asCo-Documentation Agent***

 

**SILICONVALLEY BANK**

***asCo-Documentation Agent***

 

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**dated asof**

**July 30,2008**

 

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**TABLEOF CONTENTS**

 
| ** **                                                                                 | **Page** |
|--------------------------------------------------------------------------------------------|----------|
|                                                                                       |     |
| ARTICLE  I. DEFINITIONS                                                                    | 2        |
| Section 1.1.  Definitions                                                             | 2        |
| Section 1.2.  Accounting Terms                                                        | 26       |
| Section 1.3.  Terms Generally                                                         | 27       |
| Section 1.4.  Confirmation of Recitals                                                | 27       |
|                                                                                       |     |
| ARTICLE II. AMOUNT AND TERMS OF  CREDIT                                                    | 27       |
| Section 2.1.  Amount and Nature of Credit                                             | 27       |
| Section 2.2.  Revolving Credit                                                        | 28       |
| Section 2.3.  Interest                                                                | 32       |
| Section 2.4.  Evidence of Indebtedness                                                | 33       |
| Section 2.5.  Notice of Credit Event; Funding of Loans                                | 33       |
| Section 2.6.  Payment on Loans and Other Obligations                                  | 35       |
| Section 2.7.  Prepayment                                                              | 36       |
| Section 2.8.  Commitment and Other Fees                                               | 36       |
| Section 2.9.  Modifications to Commitment                                             | 36       |
| Section 2.10.  Computation of Interest and Fees                                       | 38       |
| Section 2.11.  Mandatory Payments                                                     | 38       |
| Section 2.12.  Liability of Borrowers                                                 | 38       |
| Section 2.13.  Addition of a Domestic Subsidiary Borrower                             | 40       |
|                                                                                       |     |
| ARTICLE III. ADDITIONAL PROVISIONS  RELATING TO EURODOLLAR LOANS; INCREASED CAPITAL; TAXES | 41       |
| Section 3.1.  Requirements of Law                                                     | 41       |
| Section 3.2.  Taxes                                                                   | 43       |
| Section 3.3.  Funding Losses                                                          | 44       |
| Section 3.4.  Change of Lending Office                                                | 45       |
| Section 3.5.  Eurodollar Rate Lending Unlawful; Inability to Determine Rate           | 45       |
| Section 3.6.  Replacement of Lenders                                                  | 46       |
| Section 3.7.  Discretion of Lenders as to Manner of Funding                           | 46       |
|                                                                                       |     |
| ARTICLE IV. CONDITIONS PRECEDENT                                                           | 46       |
| Section 4.1.  Conditions to Each Credit Event                                         | 46       |
| Section 4.2.  Conditions to the First Credit Event                                    | 47       |
|                                                                                       |     |
| ARTICLE  V. COVENANTS                                                                      | 50       |
| Section 5.1.  Insurance                                                               | 50       |
| Section 5.2.  Money Obligations                                                       | 50       |
| Section 5.3.  Financial Statements and Information                                    | 50       |
| Section 5.4.  Financial Records                                                       | 51       |
| Section 5.5.  Franchises; Change in Business                                          | 51       |
| Section 5.6. ERISA Pension and Benefit Plan  Compliance                               | 51       |
| Section 5.7.  Financial Covenants                                                     | 52       |
| Section 5.8.  Borrowing                                                               | 52       |
| Section 5.9.  Liens                                                                   | 53       |

 

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|                                                                                                           | **Page** |
|----------------------------------------------------------------------------------------------------------------|----------|
|                                                                                                           |     |
| Section 5.10.  Regulations T, U and X                                                                     | 54       |
| Section 5.11.  Investments, Loans and Guaranties                                                          | 54       |
| Section 5.12.  Merger and Sale of Assets                                                                  | 56       |
| Section 5.13.  Acquisitions                                                                               | 56       |
| Section 5.14.  Notice                                                                                     | 57       |
| Section 5.15.  Restricted Payments                                                                        | 58       |
| Section 5.16. Environmental Compliance                                                                    | 58       |
| Section 5.17. Affiliate Transactions                                                                      | 59       |
| Section 5.18.  Use of Proceeds                                                                            | 59       |
| Section 5.19.  Corporate Names and Locations of Collateral                                                | 59       |
| Section 5.20.  Subsidiary Guaranties, Security Documents and Pledge of Stock or Other  Ownership Interest | 60       |
| Section 5.21.  Restrictive Agreements                                                                     | 60       |
| Section 5.22.  Other Covenants                                                                            | 61       |
| Section 5.23.  Note Agreement                                                                             | 61       |
| Section 5.24.  Collateral                                                                                 | 61       |
| Section 5.25.  Property Acquired Subsequent to the Closing Date and Right to Take Additional  Collateral  | 63       |
| Section 5.26.  Fiscal Year of Each Borrower                                                               | 63       |
| Section 5.27.  Amendment of Organizational Documents                                                      | 63       |
| Section 5.28.  Further Assurances                                                                         | 63       |
|                                                                                                           |     |
| ARTICLE VI. REPRESENTATIONS AND  WARRANTIES                                                                    | 63       |
| Section 6.1.  Corporate Existence; Subsidiaries; Foreign Qualification                                    | 63       |
| Section 6.2.  Corporate Authority                                                                         | 64       |
| Section 6.3.  Compliance with Laws and Contracts                                                          | 64       |
| Section 6.4.  Litigation and Administrative Proceedings                                                   | 65       |
| Section 6.5.  Title to Assets                                                                             | 65       |
| Section 6.6.  Liens and Security Interests                                                                | 65       |
| Section 6.7.  Tax Returns                                                                                 | 65       |
| Section 6.8.  Environmental Laws                                                                          | 65       |
| Section 6.9.  Locations                                                                                   | 66       |
| Section 6.10.  Employee Benefits Plans                                                                    | 66       |
| Section 6.11.  Consents or Approvals                                                                      | 67       |
| Section 6.12.  Solvency                                                                                   | 67       |
| Section 6.13.  Financial Statements                                                                       | 67       |
| Section 6.14.  Regulations                                                                                | 67       |
| Section 6.15.  Material Agreements                                                                        | 68       |
| Section 6.16.  Intellectual Property                                                                      | 68       |
| Section 6.17.  Insurance                                                                                  | 68       |
| Section 6.18.  Deposit Accounts                                                                           | 68       |
| Section 6.19.  Accurate and Complete Statements                                                           | 68       |
| Section 6.20.  Note Agreement                                                                             | 68       |
| Section 6.21.  Investment Company; Other Restrictions                                                     | 69       |
| Section 6.22.  Subordinated Debt Documents                                                                | 69       |

 

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|                                                                | **Page** |
|---------------------------------------------------------------------|----------|
|                                                                |     |
| Section 6.23.  Defaults                                        | 69       |
|                                                                |     |
| ARTICLE VII. SECURITY                                               | 69       |
| Section 7.1.  Security Interest in Collateral                  | 69       |
| Section 7.2.  Collections and Receipt of Proceeds by Borrowers | 69       |
| Section 7.3.  Collections and Receipt of Proceeds by Agent     | 70       |
| Section 7.4.  Use of Inventory and Equipment                   | 71       |
|                                                                |     |
| ARTICLE VIII. EVENTS OF DEFAULT                                     | 71       |
| Section 8.1.  Payments                                         | 71       |
| Section 8.2.  Special Covenants                                | 71       |
| Section 8.3.  Other Covenants                                  | 71       |
| Section 8.4.  Representations and Warranties                   | 72       |
| Section 8.5.  Cross Default                                    | 72       |
| Section 8.6.  ERISA Default                                    | 72       |
| Section 8.7.  Change in Control                                | 72       |
| Section 8.8.  Judgments                                        | 72       |
| Section 8.9.  Security                                         | 73       |
| Section 8.10.  Validity of Loan Documents                      | 73       |
| Section 8.11.  Solvency                                        | 73       |
|                                                                |     |
| ARTICLE IX. REMEDIES UPON DEFAULT                                   | 74       |
| Section 9.1.  Optional Defaults                                | 74       |
| Section 9.2.  Automatic Defaults                               | 74       |
| Section 9.3.  Letters of Credit                                | 74       |
| Section 9.4.  Offsets                                          | 74       |
| Section 9.5.  Equalization Provisions                          | 75       |
| Section 9.6.  Collateral                                       | 75       |
| Section 9.7.  Other Remedies                                   | 76       |
| Section 9.8.  Application of Proceeds                          | 76       |
|                                                                |     |
| ARTICLE X. THE AGENT                                                | 77       |
| Section 10.1.  Appointment and Authorization                   | 77       |
| Section 10.2.  Note Holders                                    | 78       |
| Section 10.3.  Consultation With Counsel                       | 78       |
| Section 10.4.  Documents                                       | 78       |
| Section 10.5.  Agent and Affiliates                            | 78       |
| Section 10.6.  Knowledge of Default                            | 78       |
| Section 10.7.  Action by Agent                                 | 79       |
| Section 10.8.  Release of Collateral or Guarantor of Payment   | 79       |
| Section 10.9.  Delegation of Duties                            | 79       |
| Section 10.10.  Indemnification of Agent                       | 79       |
| Section 10.11.  Successor Agent                                | 80       |
| Section 10.12.  Fronting Lender                                | 80       |
| Section 10.13.  Swing Line Lender                              | 80       |
| Section 10.14.  Agent May File Proofs of Claim            | 80       |

 

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|                                                                             | **Page**         |
|----------------------------------------------------------------------------------|------------------|
|                                                                             |             |
| Section 10.15.  No Reliance on Agent’s Customer Identification Program | 81               |
| Section 10.16.  Other Agents                                                | 81               |
|                                                                             |             |
| ARTICLE XI. MISCELLANEOUS                                                        | 81               |
| Section 11.1.  Lenders’ Independent Investigation                      | 81               |
| Section 11.2.  No Waiver; Cumulative Remedies                               | 82               |
| Section 11.3.  Amendments, Waivers and Consents                             | 82               |
| Section 11.4.  Notices                                                      | 83               |
| Section 11.5.  Costs, Expenses and Taxes                                    | 84               |
| Section 11.6.  Indemnification                                              | 84               |
| Section 11.7.  Obligations Several; No Fiduciary Obligations                | 84               |
| Section 11.8.  Execution in Counterparts                                    | 85               |
| Section 11.9.  Binding Effect; Borrowers’ Assignment                   | 85               |
| Section 11.10.  Lender Assignments                                          | 85               |
| Section 11.11.  Sale of Participations                                      | 87               |
| Section 11.12.  Patriot Act Notice                                          | 88               |
| Section 11.13.  Severability of Provisions; Captions; Attachments           | 88               |
| Section 11.14.  Investment Purpose                                          | 88               |
| Section 11.15.  Entire Agreement                                            | 88               |
| Section 11.16.  Legal Representation of Parties                             | 88               |
| Section 11.17.  Governing Law; Submission to Jurisdiction                   | 88               |
| Section  11.18. Jury Trial Waiver                                                | Signature Page 1 |
|                                                                                  |                  |  |

 
| Exhibit A | Form of Revolving  Credit Note                             |
|----------------|-----------------------------------------------------------------|
| Exhibit B | Form of Swing Line  Note                                   |
| Exhibit C | Form of Notice of  Loan                                    |
| Exhibit D | Form of Compliance  Certificate                            |
| Exhibit E | Form of Assignment  and Acceptance Agreement               |
| Exhibit F | Form of Domestic  Subsidiary Borrower Assumption Agreement |
|           |                                                            |
| Schedule 1     | Commitments of Lenders                                          |
| Schedule 2     | Domestic Subsidiary  Borrowers                                  |
| Schedule 3     | Guarantors of Payment                                           |
| Schedule 4     | Pledged  Securities                                             |
| Schedule 5     | Real  Property                                                  |
| Schedule 5.8   | Indebtedness                                                    |
| Schedule 5.9   | Liens                                                           |
| Schedule 5.11  | Permitted  Foreign Subsidiary Loans and Investments             |
| Schedule 6.1   | Corporate  Existence; Subsidiaries; Foreign Qualification       |
| Schedule 6.4   | Litigation  and Administrative Proceedings                      |
| Schedule 6.5   | Real  Estate Owned by the Companies                             |
| Schedule 6.9   | Locations                                                       |
| Schedule 6.10  | Employee Benefits Plans                                         |
| Schedule 6.15  | Material Agreements                                             |
| Schedule 6.16  | Intellectual Property                                           |

 

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|          |             | **Page** |
|---------------|------------------|----------|
|          |             |     |
| Schedule 6.17 | Insurance        |     |
| Schedule 6.18 | Deposit Accounts |     |

 

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This SECOND AMENDED ANDRESTATED CREDIT AND SECURITY AGREEMENT (as the same may from time to time beamended, restated or otherwise modified, this “Agreement”) is made effective asof the 30th day of July, 2008 among:

 

(a)           EPIQ SYSTEMS, INC., a Missouricorporation (“EPIQ”);

 

(b)           each DomesticSubsidiary Borrower, as hereinafter defined (each such Domestic Subsidiary Borrower,together with EPIQ shall be referred to herein, collectively, as “Borrowers”and, individually, each a “Borrower”);

 

(c)           the lenders listed on Schedule 1hereto and each other Eligible Transferee, as hereinafter defined, that fromtime to time becomes a party hereto pursuant to Section 2.9(b) or11.10 hereof (collectively, the “Lenders” and, individually, each a “Lender”);

 

(d)           KEYBANK NATIONAL ASSOCIATION, as thelead arranger, sole book runner and administrative agent for the Lenders underthis Agreement (“Agent”);

 

(e)           NATIONAL CITY BANK, asco-documentation agent; and

 

(f)            SILICON VALLEY BANK, asco-documentation agent.

 

WITNESSETH:

 

WHEREAS, EPIQ, the lenders named therein and Agententered into that certain Amended and Restated Credit and Security Agreement,dated as of November 15, 2005 (as amended, the “Original Amended CreditAgreement”), which agreement amended and restated that certain Credit andSecurity Agreement, dated as of July 20, 2004 (the “Original CreditAgreement”);

 

WHEREAS, this Agreementamends and restates in its entirety the Original Amended Credit Agreement and,upon the effectiveness of this Agreement, on the Closing Date, the terms andprovisions of the Original Amended Credit Agreement shall be supersededhereby.  All references to “CreditAgreement” contained in the Loan Documents, as defined in the Original CreditAgreement or the Original Amended Credit Agreement, delivered in connectionwith the Original Credit Agreement or the Original Amended Credit Agreementshall be deemed to refer to this Agreement. Notwithstanding the amendment and restatement of the Original AmendedCredit Agreement by this Agreement, the Obligations outstanding under theOriginal Amended Credit Agreement as of the Closing Date shall remain outstandingand constitute Obligations hereunder. The Obligations outstanding under the Original Credit Agreement on theclosing date of the Original Amended Credit Agreement constituted Obligationsunder the Original Amended Credit Agreement and constitute Obligations underthis Agreement.  Such outstandingObligations and the guaranties of payment thereof shall in all respects becontinuing, and this Agreement shall not be deemed to evidence or result in anovation or repayment and re-borrowing of such Obligations.  In furtherance of and, without limiting theforegoing, from and 

 

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afterthe Closing Date and except as expressly specified herein, the terms,conditions and covenants governing the Indebtedness outstanding under theOriginal Amended Credit Agreement shall be solely as set forth in thisAgreement, which shall supersede the Original Amended Credit Agreement in itsentirety; and

 

WHEREAS, Borrowers, Agent and the Lenders desire tocontract for the establishment of credits in the aggregate principal amountshereinafter set forth, to be made available to Borrowers upon the terms andsubject to the conditions hereinafter set forth;

 

NOW, THEREFORE, it is mutually agreed as follows:

 

ARTICLE I.  DEFINITIONS

 

Section 1.1. Definitions.  As used inthis Agreement, the following terms shall have the meanings set forth below:

 

“Accelerated Maturity Date” means the date that issixty (60) days prior to the stated maturity (or date when scheduled principalpayments are due), as in effect from time to time, of the ConvertibleSubordinated Notes or any replacement notes.

 

“Acceptable Non-Acceleration Event” means any of thefollowing events: (a) if EPIQ refinances all of the outstandingConvertible Subordinated Indebtedness with new Subordinated Indebtedness that,by its terms, has a stated maturity (or has scheduled principal payments due)no earlier than sixty (60) days after the Facility Maturity Date; (b) allof the Convertible Subordinated Notes are converted into equity; (c) forthe period commencing sixty (60) days prior to the maturity date of theConvertible Subordinated Indebtedness through the maturity date of theConvertible Subordinated Indebtedness (or, if earlier, until the repayment orconversion of all of the outstanding Convertible Subordinated Notes), theAvailable Liquidity is, at all times, no less than an amount equal to onehundred percent (100%) of the outstanding principal amount of the ConvertibleSubordinated Notes; (d) the Convertible Subordinated Noteholders agree inwriting (in form and substance reasonably acceptable to Agent) to extend thestated maturity (or date when scheduled principal payments are due) of theConvertible Subordinated Notes to a date that is no earlier than sixty (60)days after the Facility Maturity Date; (e) (i) the Leverage Ratio, asset forth in the most recently completed Compliance Certificate, is less thanor equal to 2.50 to 1.00, and (ii) EPIQ maintains a Leverage Ratio of  less than or equal to 2.50 to 1.00 as of theend of each fiscal quarter of EPIQ thereafter, until the stated maturity of theConvertible Subordinated Notes; or (f) if (i) for a period of atleast thirty (30) consecutive days prior to the Accelerated Maturity Date, EPIQ’scommon stock closes each day at a price of at least Seventeen Dollars ($17.00)per share, and (ii) for the period from the Accelerated Maturity Datethrough the stated maturity date of the Convertible Subordinated Notes, EPIQ’scommon stock closes each day at a price of at least Thirteen Dollars ($13.00)(any price determination required pursuant to this subsection (f) is to beappropriately adjusted for any stock dividend, stock split, stock combinationor other similar transaction during the applicable calculation period).

 

“Account” means all accounts, as defined in the U.C.C.

 

2

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“Account Debtor” means any Person obligated to pay allor any part of any Account in any manner and includes (without limitation) anyGuarantor thereof.

 

“Accounting Change” means that term as defined in Section 1.2hereof

 

“Acquisition” means any transaction or series ofrelated transactions for the purpose of or resulting, directly or indirectly,in (a) the acquisition of all or substantially all of the assets of anyPerson (other than a Company), or any business or division of any Person (otherthan a Company), (b) the acquisition of in excess of fifty percent (50%)of the outstanding capital stock (or other equity interest) of any Person(other than a Company), or (c) the acquisition of another Person (otherthan a Company) by a merger, amalgamation or consolidation or any othercombination with such Person.

 

“Additional Commitment” means that term as defined in Section 2.9(b) hereof.

 

“Additional Lender” means an Eligible Transferee that shallbecome a Lender during the Commitment Increase Period pursuant to Section 2.9(b) hereof.

 

“Additional Lender Assumption Agreement” means anadditional lender assumption agreement, in form and substance satisfactory toAgent, wherein an Additional Lender shall become a Lender.

 

“Additional Lender Assumption Effective Date” meansthat term as defined in Section 2.9(b) hereof.

 

“Administrative Borrower”means EPIQ.

 

“Advantage” means any payment (whether madevoluntarily or involuntarily, by offset of any deposit or other indebtedness orotherwise) received by any Lender in respect of the Obligations, if suchpayment results in that Lender having less than its pro rata share (based uponits Commitment Percentage) of the Obligations then outstanding.

 

“Affiliate” means any Person, directly or indirectly,controlling, controlled by or under common control with a Company and “control”(including the correlative meanings, the terms “controlling”, “controlled by”and “under common control with”) means the power, directly or indirectly, todirect or cause the direction of the management and policies of a Company,whether through the ownership of voting securities, by contract or otherwise.

 

“Agent” means that term asdefined in the first paragraph hereof.

 

“Agent Fee Letter” means the Agent Fee Letter betweenEPIQ and Agent, dated as of the Closing Date, as the same may from time to timebe amended, restated or otherwise modified.

 

“Agreement” means that termas defined in the first paragraph hereof.

 

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“Applicable Commitment Fee Rate” means:

 

(a)           for the period from the Closing Datethrough August 31, 2008, thirty (30.00) basis points; and

 

(b)           commencing with the Consolidatedfinancial statements of EPIQ for the fiscal quarter ending June 30, 2008, thenumber of basis points set forth in the following matrix, based upon the resultof the computation of the Leverage Ratio, shall be used to establish the numberof basis points that will go into effect on September 1, 2008 and thereafter,as provided below:

 
| **Leverage Ratio**                                           | ** ** | **Applicable Commitment Fee Rate** |
|-------------------------------------------------------------------|------------|---------------------------------------------------|
| Greater than or equal  to 2.50 to 1.00                            |       | 50.00 basis  points                               |
| Greater than or equal  to 1.50 to 1.00 but less than 2.50 to 1.00 |       | 40.00 basis  points                               |
| Less than 1.50 to 1.00                                            |       | 30.00 basis  points                               |

 

After September 1, 2008,changes to the Applicable Commitment Fee Rate shall be effective on the firstday of each calendar month following the date upon which Agent should havereceived, pursuant to Section 5.3(a) and (b) hereof, the Consolidated financialstatements of EPIQ.  The above matrixdoes not modify or waive, in any respect, the requirements of Section 5.7hereof, the rights of Agent and the Lenders to charge the Default Rate, or therights and remedies of Agent and the Lenders pursuant to Articles VIII and IXhereof.  Notwithstanding anything hereinto the contrary, (i) during any period when Borrowers shall have failed totimely deliver the Consolidated financial statements pursuant to Section 5.3(a)or (b) hereof, or the Compliance Certificate pursuant to Section 5.3(c) hereof,and such failure has continued for five Business Days, until such time as theappropriate Consolidated financial statements and Compliance Certificate aredelivered, the Applicable Commitment Fee Rate shall be the highest rate perannum indicated in the above pricing grid regardless of the Leverage Ratio atsuch time, and (ii) in the event that any financial information orcertification provided to Agent in the Compliance Certificate is shown to beinaccurate (regardless of whether this Agreement or the Commitment is in effectwhen such inaccuracy is discovered), and such inaccuracy, if corrected, wouldhave led to the application of a higher Applicable Commitment Fee Rate for anyperiod (an “Applicable Commitment Fee Period”) than the Applicable CommitmentFee Rate applied for such Applicable Commitment Fee Period, then (A) Borrowersshall immediately deliver to Agent a corrected Compliance Certificate for suchApplicable Commitment Fee Period, (B) the Applicable Commitment Fee Rate shallbe determined based on such corrected Compliance Certificate, and (C) Borrowersshall immediately pay to Agent the accrued additional fees owing as a result ofsuch increased Applicable Commitment Fee Rate for such Applicable CommitmentFee Period.

 

“Applicable Margin”means:

 

(a)           for the period from the Closing Datethrough August 31, 2008, (i) two hundred fifty (250.00) basis points forEurodollar Loans, and (ii) fifty (50.00) basis points for Base Rate Loans; and

 

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(b)           commencing with the Consolidatedfinancial statements of EPIQ for the fiscal quarter ending June 30, 2008,the number of basis points (depending upon whether Loans are Eurodollar Loansor Base Rate Loans) set forth in the following matrix, based upon the result ofthe computation of the Leverage Ratio, shall be used to establish the number ofbasis points that will go into effect on September 1, 2008 and thereafter,as provided below:

 
| **Leverage Ratio**                                           | ** ** | **Applicable Basis   Points for   Eurodollar Loans** | ** ** | **Applicable Basis  Points for   Base Rate Loans** | ** ** |
|-------------------------------------------------------------------|------------|-------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------|------------|
| Greater than or  equal to 2.50 to 1.00                            |       | 325.00                                                                        |       | 125.00                                                                      |       |
| Greater than or  equal to 2.00 to 1.00 but less than 2.50 to 1.00 |       | 300.00                                                                        |       | 100.00                                                                      |       |
| Greater than or  equal to 1.50 to 1.00 but less than 2.00 to 1.00 |       | 275.00                                                                        |       | 75.00                                                                       |       |
| Greater than or  equal to 1.00 to 1.00 but less than 1.50 to 1.00 |       | 250.00                                                                        |       | 50.00                                                                       |       |
| Less than 1.00  to 1.00                                           |       | 225.00                                                                        |       | 25.00                                                                       |       |

 

After September 1,2008, changes to the Applicable Margin shall be effective on the first day ofeach calendar month following the date upon which Agent should have received,pursuant to Section 5.3(a) and (b) hereof, the Consolidatedfinancial statements of EPIQ.  The abovematrix does not modify or waive, in any respect, the requirements of Section 5.7hereof, the rights of Agent and the Lenders to charge the Default Rate, or therights and remedies of Agent and the Lenders pursuant to Articles VIII and IXhereof.  Notwithstanding anything hereinto the contrary, (i) during any period when Borrowers shall have failed totimely deliver the Consolidated financial statements pursuant to Section 5.3(a) or(b) hereof, or the Compliance Certificate pursuant to Section 5.3(c) hereof,and such failure has continued for five Business Days, until such time as theappropriate Consolidated financial statements and Compliance Certificate aredelivered, the Applicable Margin shall be the highest rate per annum indicatedin the above pricing grid for Loans of that type regardless of the LeverageRatio at such time, and (ii) in the event that any financial informationor certification provided to Agent in the Compliance Certificate is shown to beinaccurate (regardless of whether this Agreement or the Commitment is in effectwhen such inaccuracy is discovered), and such inaccuracy, if corrected, wouldhave led to the application of a higher Applicable Margin for any period (an “ApplicableMargin Period”) than the Applicable Margin applied for such Applicable MarginPeriod, then (A) Borrowers shall immediately deliver to Agent a correctedCompliance Certificate for such Applicable Margin Period, (B) theApplicable Margin shall be determined based on such corrected ComplianceCertificate, and (C) Borrowers shall immediately pay to Agent the accruedadditional interest owing as a result of such increased Applicable Margin forsuch Applicable Margin Period.

 

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“Assignment Agreement”means an Assignment and Acceptance Agreement in the form of the attached Exhibit E.

 

“Authorized Officer” meansa Financial Officer or other individual authorized by a Financial Officer inwriting (with a copy to Agent) to handle certain administrative matters inconnection with this Agreement.

 

“Available Liquidity”means, at any date, the sum of (a) unrestricted and unencumbered (exceptas to any Lien of Agent, for the benefit of the Lenders) cash on hand ofBorrowers held at financial institutions located in the United States plus CashEquivalents in excess of Ten Million Dollars ($10,000,000), plus (b) RevolvingCredit Availability, plus (c) Unexercised Availability.

 

“Bank Product Agreements”means those certain cash management service and other agreements entered intofrom time to time between a Company and Agent or a Lender (or an affiliate of aLender) in connection with any of the Bank Products.

 

“Bank Product Obligations”means all obligations, liabilities, contingent reimbursement obligations, fees,and expenses owing by a Company to Agent or any Lender (or an affiliate of aLender) pursuant to or evidenced by the Bank Product Agreements.

 

“Bank Products” means anyservice or facility extended to a Company by Agent or any Lender (or anaffiliate of a Lender) including (a) credit cards and credit cardprocessing services, (b) debit and purchase cards, (c) ACHtransactions, and (d) cash management, including controlled disbursement,accounts or services.

 

“Base Rate” means a rateper annum equal to the greater of (a) the Prime Rate or (b) one-halfof one percent (.50%) in excess of the Federal Funds Effective Rate.  Any change in the Base Rate shall beeffective immediately from and after such change in the Base Rate.

 

“Base Rate Loan” means aRevolving Loan described in Section 2.2(a) hereof, that shall bedenominated in Dollars and on which Borrowers shall pay interest at a ratebased on the Derived Base Rate.

 

“Borrower”means that term as defined in the first paragraph hereof.

 

“Borrowers”means that term as defined in the first paragraph hereof.

 

“Business Day” means anyday that is not a Saturday, a Sunday or another day of the year on whichnational banks are authorized or required to close in Cleveland, Ohio, and, ifthe applicable Business Day relates to a Eurodollar Loan, a day of the year onwhich dealings in deposits are carried on in the London interbank Eurodollarmarket.

 

“Capital Distribution”means a payment made, liability incurred or other consideration given by aCompany to any Person that is not a Company, for the purchase, acquisition,redemption, repurchase, payment or retirement of any capital stock or otherequity interest of 

 

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such Company or as adividend, return of capital or other distribution (other than any stockdividend, stock split or other equity distribution payable only in capitalstock or other equity of such Company) in respect of such Company’s capitalstock or other equity interest.

 

“Capitalized LeaseObligations” means obligations of the Companies for the payment of rent for anyreal or personal property under leases or agreements to lease that, inaccordance with GAAP, have been or should be capitalized on the books of thelessee and, for purposes hereof, the amount of any such obligation shall be thecapitalized amount thereof determined in accordance with GAAP.

 

“Cash Collateral Account”means a commercial Deposit Account designated “cash collateral account” andmaintained by one or more Borrowers with Agent, without liability by Agent orthe Lenders to pay interest thereon, from which account Agent, on behalf of theLenders, subject to the provisions of Section 7.2 hereof, shall have theexclusive right to withdraw funds until all of the Secured Obligations are paidin full.

 

“Cash Equivalents” means,as to any Person, (a) securities issued by, or directly, unconditionallyand fully guaranteed or insured by, the United States or any agency orinstrumentality thereof (provided that the full faith and credit of the UnitedStates is pledged in support thereof) having maturities of not more than oneyear from the date of acquisition by such Person; (b) securities issuedby, or directly, unconditionally and fully guaranteed or insured by, any stateof the United States of America or any political subdivision of any such stateor any public instrumentality thereof maturing within one year from the date ofacquisition thereof and, at the time of acquisition, having one of the twohighest ratings obtainable from either Standard & Poor’s or Moody’s; (c) timedeposits, certificates of deposit or bankers’ acceptances of any commercial bankhaving, or which is the principal banking subsidiary of a bank holding companyorganized under the laws of the United States, any state thereof or theDistrict of Columbia or any United States branch of a foreign bank having,capital and surplus aggregating in excess of Five Hundred Million Dollars($500,000,000) and a rating of “A” (or such other similar equivalent rating) orhigher by at least one nationally recognized statistical rating organization(as defined in Rule 436 under the Securities Act) with maturities of notmore than one year from the date of acquisition by such Person; (d) repurchaseobligations with a term of not more than thirty (30) days for underlyingsecurities of the types described in subpart (a) above entered into withany bank meeting the qualifications specified in subpart (c) above, whichrepurchase obligations are secured by a valid perfected security interest inthe underlying securities; (e) commercial paper issued by any Personincorporated in the United States rated at least A-2 or the equivalent thereofby Standard & Poor’s or at least P-2 or the equivalent thereof byMoody’s, and in each case maturing not more than one year after the date ofacquisition by such Person; (f) investments in money market fundssubstantially all of whose assets are comprised of securities of the typesdescribed in subparts (a) through (e) above; and (g) demanddeposit accounts maintained in the ordinary course of business.

 

“Cash Security” means allcash, instruments, Deposit Accounts and other cash equivalents, whether maturedor unmatured, whether collected or in the process of collection, upon which aCompany presently has or may hereafter have any claim, wherever located, 

 

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including but not limited to any of the foregoing that are presently ormay hereafter be existing or maintained with, issued by, drawn upon, or in thepossession of Agent or any Lender.

 

“Change in Control” means (a) the acquisition of,or, if earlier, the shareholder or director approval of the acquisition of,ownership or voting control, directly or indirectly, beneficially (within themeaning of Rules 13d-3 and 13d-5 of the Securities Exchange Act of 1934,as then in effect) or of record, on or after the Closing Date, by any Person(other than Tom Olofson or Christopher Olofson) or group (within the meaning ofSections 13d and 14d of the Securities Exchange Act of 1934, as then ineffect), of shares representing more than thirty percent (30%) of the aggregateordinary Voting Power represented by the issued and outstanding capital stockof EPIQ; (b) the occupation of a majority of the seats (other than vacantseats) on the board of directors or other governing body of EPIQ by Persons whowere neither (i) nominated by the board of directors or other governingbody of EPIQ nor (ii) appointed or approved by directors so nominated orelected by a majority of shareholders; (c) if EPIQ shall cease to own onehundred percent (100%) of each Domestic Subsidiary Borrower; or (d) the occurrenceof a change in control, or other term of similar import used therein, asdefined in any Material Indebtedness Agreement.

 

“Closing CommitmentAmount” means One Hundred Million Dollars ($100,000,000).

 

“Closing Date” means theeffective date of this Agreement as set forth in the first paragraph of thisAgreement.

 

“Closing Fee Letter”means the Closing Fee Letter between EPIQ and Agent, dated as of the ClosingDate.

 

“Code” means the InternalRevenue Code of 1986, as amended, together with the rules and regulationspromulgated thereunder.

 

“Collateral” means all ofeach Borrower’s existing and future (a) personal property; (b) Accounts,Investment Property, instruments, contract rights, chattel paper, documents,supporting obligations, letter-of-credit rights, commercial tort claims,General Intangibles, Inventory and Equipment (other than the following, butexclusive of proceeds of any of the following: (i) computer equipmentprovided to bankruptcy trustees and located on their premises in the ordinarycourse of Borrowers’ business, (ii) fractional interests in aircraft wherea pledge is prohibited by the agreement among the holders of such interests, (iii) equityinterests in (A) any direct Foreign Subsidiary in excess of sixty-fivepercent (65%) of the total outstanding voting equity interest of such directForeign Subsidiary, and (B) any indirect Foreign Subsidiary, (iv) licensesand contracts which by the terms of such licenses and contracts prohibit theassignment of such agreements (to the extent such prohibition is enforceable atlaw), and (v) fixed assets subject to a purchase money lien with anunderlying contract or agreement that prohibits the granting of a second lienon such fixed assets, but only to the extent such prohibition is enforceable atlaw and only as long as such liens attach to such fixed assets); (c) fundsnow or hereafter on deposit in the Cash Collateral Account, if any; (d) CashSecurity (other than trust and payroll bank accounts); (e) the RealProperty; and (f) Proceeds of any of the foregoing.

 

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“Commitment” means theobligation hereunder of the Lenders, during the Commitment Period, to makeLoans and to participate in the issuance of Letters of Credit pursuant to theRevolving Credit Commitment, up to the Total Commitment Amount.

 

“CommitmentIncrease Period” means the period from the Closing Date to the date that is thirty (30) days prior tothe last day of the Commitment Period.

 

“CommitmentPercentage” means, for each Lender, the percentage set forth opposite suchLender’s name under the column headed “Commitment Percentage”, as listed in Schedule1 hereto (taking into account any assignments pursuant to Section 11.10hereof).

 

“Commitment Period” meansthe period from the Closing Date to the earlier of the Accelerated MaturityDate or July 29, 2011 (or such earlier date on which the Commitment shallhave been terminated pursuant to Article IX hereof); provided that thereshall be no Accelerated Maturity Date if an Acceptable Non-Acceleration Eventshall occur prior to (or with respect to subpart (c) of the definition ofAcceptable Non-Acceleration Event, during the sixty (60) day period referencedin the definition of Accelerated Maturity Date) the Accelerated Maturity Date.

 

“Companies” means allBorrowers and all Subsidiaries of all Borrowers.

 

“Company” means aBorrower or a Subsidiary of a Borrower.

 

“Compliance Certificate”means a Compliance Certificate, substantially in the form of the attached Exhibit D.

 

“Confirmation ofIntellectual Property Security Agreement” means each Amendment and Confirmationof Intellectual Property Collateral Assignment Agreement, relating toIntellectual Property Security Agreements executed and delivered by the CreditParties prior to the Closing Date, as the same may from time to time beamended, restated or otherwise modified.

 

“Consideration” means, inconnection with an Acquisition, the aggregate consideration paid or to be paid,including borrowed funds, cash, deferred payments, the issuance of securitiesor notes, the assumption or incurring of liabilities (direct or contingent, butexcluding ordinary trade payables and ordinary accrued expenses, in each casepayable in the ordinary course of business), the payment of consulting fees orfees for a covenant not to compete and any other consideration paid or to bepaid for such Acquisition.

 

“Consolidated” means theresultant consolidation of the financial statements of EPIQ and itsSubsidiaries in accordance with GAAP, including principles of consolidationconsistent with those applied in preparation of the consolidated financialstatements referred to in Section 6.13 hereof.

 

“Consolidated CapitalExpenditures” means, for any period, the amount of capital expenditures of EPIQ(specifically including any software development costs that are capitalized,but excluding capital expenditures directly financed through a capitalizedlease (with acceptable

 

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documentation available upon request of Agent or any Lender) andintangibles (other than software development costs)), as determined on aConsolidated basis and in accordance with GAAP.

 

“Consolidated CurrentAssets” means, at any date, the current assets of EPIQ, as determined on aConsolidated basis and in accordance with GAAP.

 

“Consolidated CurrentLiabilities” means, at any date, the current liabilities of EPIQ, as determinedon a Consolidated basis and in accordance with GAAP.

 

“ConsolidatedDepreciation and Amortization Charges” means, for any period, the aggregate ofall depreciation and amortization charges of EPIQ for such period, asdetermined on a Consolidated basis and in accordance with GAAP; provided that,notwithstanding the foregoing, Consolidated Depreciation and Amortization Chargesshall include any component of Consolidated Interest Expense resulting from theamortization of any loan fees and Consolidated Interest Expense resulting fromimputed interest that is added to the principal balance of the underlyingIndebtedness.

 

“Consolidated EBITDA”means, for any period, as determined on a Consolidated basis and in accordancewith GAAP, Consolidated Net Earnings for such period plus, without duplication,the aggregate amounts deducted in determining such Consolidated Net Earnings inrespect of (a) Consolidated Interest Expense, (b) Consolidated IncomeTax Expense, (c) Consolidated Depreciation and Amortization Charges, (d) (i) extraordinaryor unusual non-cash losses, including the write-off of deferred costs incurredin connection with the Original Credit Agreement, not incurred in the ordinarycourse of business but that were counted in the net income calculation for suchperiod, minus (ii) extraordinary or unusual non-cash gains not incurred inthe ordinary course of business but that were counted in the net incomecalculation for such period, (e) unamortized costs, fees and expensesincurred in connection with the transactions contemplated by this Agreement(specifically including the costs and fees paid by Borrowers in connection withthe closing of this Agreement whether or not capitalized) and any Acquisition(occurring prior to, on or subsequent to the Closing Date), up to an aggregateamount for all Companies, with respect to Acquisition related costs, fees andexpenses, not to exceed Six Million Dollars ($6,000,000) during any twelve (12)month period, (f) expenses and charges which will be indemnified orreimbursed to the extent such amounts are covered by funds in a valid escrowaccount or similar arrangement, and (g) any other component of net income(or net loss) which is non-cash and will not convert to cash within one year,including without exception any charges related to the granting of share-basedpayments to employees or directors; provided that any time an Acquisition on anon-going business is made pursuant to Section 5.13 hereof, ConsolidatedEBITDA shall be recalculated to include the EBITDA of the acquired company asif such Acquisition had been completed on the first day of the relevantmeasuring period; provided that Consolidated EBITDA shall be calculated withoutgiving any effect to FAS 141(R) as such relates to contingentconsideration.

 

“Consolidated FixedCharges” means, for any period, as determined on a Consolidated basis and inaccordance with GAAP, the aggregate, without duplication, of (a) ConsolidatedInterest Expense (including, without limitation, the “imputed interest” portionof Capitalized

 

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Lease Obligations, synthetic leases and asset securitizations, if any,and excluding (i) any fees (including underwriting fees) and expenses paidin connection with the consummation of Acquisitions (occurring prior to, on orsubsequent to the Closing Date), (ii) any payments made to obtain a HedgeAgreement, and (iii) any amendment, closing, agent or collateralmonitoring fees paid or required to be paid pursuant to this Agreement (paid incash) or any prior financing; (b) Consolidated Income Tax Expense paid incash; (c) scheduled principal payments on Consolidated Funded Indebtedness(other than (i) optional prepayments of the Revolving Loans, and (ii) scheduledpayments on the Convertible Subordinated Indebtedness); and (d) CapitalDistributions.

 

“ConsolidatedFunded Indebtedness” means, at any date, all Indebtedness (including,but not limited to, current, long-term and Subordinated Indebtedness, if any) of EPIQ, as determined on a Consolidated basis and in accordance with GAAP.

 

“Consolidated Income TaxExpense” means, for any period, all provisions for taxes based on the gross ornet income of EPIQ (including, without limitation, any additions to such taxes,and any penalties and interest with respect thereto), and all franchise taxesof EPIQ, to the extent such taxes have been imposed in lieu of income taxes, asdetermined on a Consolidated basis and in accordance with GAAP.

 

“Consolidated InterestExpense” means, for any period, the interest expense of EPIQ for such period,as determined on a Consolidated basis and in accordance with GAAP; providedthat, notwithstanding the foregoing, Consolidated Interest Expense shallexclude any interest expense resulting from the amortization of any loan fees,and interest expense resulting from imputed interest that is added to theprincipal balance of the underlying Indebtedness.

 

“Consolidated NetEarnings” means, for any period, the net income (loss) of EPIQ for such period,as determined on a Consolidated basis and in accordance with GAAP.

 

“Consolidated Net Worth”means, at any date, the stockholders’ equity of EPIQ, determined as of suchdate on a Consolidated basis and in accordance with GAAP.

 

“Control Agreement” meanseach Deposit Account Control Agreement among a Credit Party, Agent and adepository institution, as the same may from time to time be amended, restatedor otherwise modified.

 

“Controlled Group” meansa Company and each Person required to be aggregated with a Company under Code Section 414(b),(c), (m) or (o).

 

“Convertible SubordinatedDocuments” means the Note Agreement, the Convertible Subordinated Notes, andany other agreement entered into or delivered in connection therewith.

 

“Convertible SubordinatedIndebtedness” means the Subordinated Indebtedness under or in respect of theConvertible Subordinated Notes, in the original principal amount of up to FiftyMillion Dollars ($50,000,000).

 

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“Convertible SubordinatedNoteholders” means any Buyer, as defined in the Note Agreement, and any holderof the Convertible Subordinated Notes.

 

“Convertible SubordinatedNotes” means those certain $50,000,000 4% Contingent Convertible SubordinatedNotes due June 15, 2010, issued pursuant to the Note Agreement, as thesame may from time to time be amended, restated or otherwise modified with theprior written consent of the Required Lenders.

 

“Credit Event” means themaking by the Lenders of a Loan, the conversion by the Lenders of a Base RateLoan to a Eurodollar Loan, the continuation by the Lenders of a Eurodollar Loanafter the end of the applicable Interest Period, the making by the Swing LineLender of a Swing Loan, or the issuance (or amendment) by the Fronting Lenderof a Letter of Credit.

 

“Credit Party” means aBorrower and any Subsidiary or other Affiliate that is a Guarantor of Payment.

 

“Current Ratio” means, atany time, as determined on a Consolidated basis and in accordance with GAAP,the ratio of (a) Consolidated Current Assets (for the most recentlycompleted fiscal quarter of EPIQ) to (b) Consolidated Current Liabilities(for the most recently completed fiscal quarter of EPIQ); provided that, forpurposes of calculating the Current Ratio, Consolidated Current Liabilitiesshall exclude the current portion of Subordinated Indebtedness and theRevolving Credit Exposure.

 

“Default” means an eventor condition that constitutes, or with the lapse of any applicable grace periodor the giving of notice or both would constitute, an Event of Default, and thathas not been waived by the Required Lenders (or, if applicable, all of theLenders) in writing.

 

“Default Rate” means (a) withrespect to any Loan or other Obligation, a rate per annum equal to two percent(2%) in excess of the rate otherwise applicable thereto, and (b) withrespect to any other amount, if no rate is specified or available, a rate per annumequal to two percent (2%) in excess of the Derived Base Rate from time to timein effect.

 

“Deposit Account” means (a) adeposit account, as defined in the U.C.C., (b) any other deposit account,and (c) any demand, time, savings, checking, passbook or similar accountmaintained with a bank, savings and loan association, credit union, or similarorganization.

 

“Derived Base Rate” meansa rate per annum equal to the sum of the Applicable Margin (from time to timein effect) for Base Rate Loans plus the Base Rate.

 

“Derived Eurodollar Rate”means a rate per annum equal to the sum of the Applicable Margin (from time totime in effect) for Eurodollar Loans plus the Eurodollar Rate.

 

“Disposition” means thelease, transfer or other disposition of assets (whether in one or more than onetransaction) by a Company, other than a sale, lease, transfer or otherdisposition made by a Company in the ordinary course of business.

 

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“Dollar” or the $ signmeans lawful money of the United States of America.

 

“Domestic Subsidiary”means a Subsidiary that is not a Foreign Subsidiary.

 

“DomesticSubsidiary Borrower” means each of the Domestic Subsidiaries of EPIQ set forthon Schedule 2 hereto, together with any other Domestic Subsidiary ofEPIQ that, on or after the Closing Date, shall have satisfied, in the opinionof Agent, the requirements of Section 2.13(a) hereof.

 

“DomesticSubsidiary Borrower Assumption Agreement” means each of the Domestic SubsidiaryBorrower Assumption Agreements executed by a Company that shall have become aBorrower pursuant to Section 2.13 hereof after the Closing Date, in theform of the attached Exhibit F, as the same may from time to timebe amended, restated or otherwise modified.

 

“Dormant Subsidiary”means a Company that (a) is not a Credit Party, (b) has aggregateassets of less than Two Hundred Fifty Thousand Dollars ($250,000), and (c) hasno direct or indirect Subsidiaries with aggregate assets for all suchSubsidiaries of more than Two Hundred Fifty Thousand Dollars ($250,000).

 

“EBITDA” means, for anyperiod, in accordance with GAAP, the net earnings of a Person for such periodplus the aggregate amounts deducted in determining such net earnings in respectof (a) interest expense of such Person, (b) income taxes of suchPerson, and (c) the aggregate of all depreciation and amortization chargesof such Person, (d) (i) extraordinary or unusual non-cash losses notincurred in the ordinary course of business of such Person but that were countedin the net income calculation for such period, minus (ii) extraordinary orunusual non-cash gains not incurred in the ordinary course of business of suchPerson but that were counted in the net income calculation for such period, (e) expensesand charges which will be indemnified or reimbursed to the extent such amountsare covered by funds in a valid escrow account or similar arrangement, and (f) anyother component of net income (or net loss) which is non-cash and will notconvert to cash within one year, including without exception any chargesrelated to the granting of share-based payments to employees or directors;provided that EBITDA shall be calculated without giving any effect to FAS 141(R) assuch relates to contingent consideration.

 

“Eligible Transferee”means a commercial bank, financial institution or other “accredited investor”(as defined in SEC Regulation D) that is not a Borrower, a Subsidiary or anAffiliate.

 

“EnvironmentalLaws” means all provisions of law (including the common law), statutes,ordinances, codes, rules, guidelines, policies, procedures, orders-in-council,regulations, permits, licenses, judgments, writs, injunctions, decrees, orders,awards and standards which are legally binding and promulgated by aGovernmental Authority or by any court, agency, instrumentality, regulatoryauthority or commission of any of the foregoing concerning environmental healthor safety and protection of, or regulation of the discharge of substances into,the environment.

 

“Equipment” means all equipment,as defined in the U.C.C.

 

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“ERISA” means the Employee Retirement Income SecurityAct of 1974, as amended from time to time, and the regulations promulgatedpursuant thereto.

 

“ERISA Event” means (a) the existence of acondition or event with respect to an ERISA Plan that would reasonably beexpected to result in the imposition of an excise tax or any other liability ona Company or of the imposition of a Lien on the assets of a Company; (b) theengagement by a Controlled Group member in a non-exempt “prohibited transaction”(as defined under ERISA Section 406 or Code Section 4975) or a breachof a fiduciary duty under ERISA that could reasonably be expected to result inliability to a Company; (c) the application by a Controlled Group memberfor a waiver from the minimum funding requirements of Code Section 412 orERISA Section 302 or a Controlled Group member is required to providesecurity under Code Section 401(a)(29) or ERISA Section 307; (d) theoccurrence of a Reportable Event with respect to any Pension Plan as to whichnotice is required to be provided to the PBGC; (e) the withdrawal by aControlled Group member from a Multiemployer Plan in a “complete withdrawal” ora “partial withdrawal” (as such terms are defined in ERISA Sections 4203 and4205, respectively); (f) notice that any Multiemployer Plan is inreorganization under ERISA Section 4241; (g) the taking by the PBGCof any steps to terminate a Pension Plan or appoint a trustee to administer aPension Plan, or the taking by a Controlled Group member of any steps toterminate a Pension Plan; (h) the commencement, existence or threateningof a claim, action, suit, audit or investigation with respect to an ERISA Plan,other than a routine claim for benefits; or (i) any incurrence by aControlled Group member of any liability for post-retirement benefits under anyWelfare Plan, other than as required by ERISA Section 601, et.seq.or Code Section 4980B.

 

“ERISA Plan” means an “employee benefit plan” (withinthe meaning of ERISA Section 3(3)) that a Controlled Group member at anytime sponsors, maintains, contributes to, has liability with respect to or hasan obligation to contribute to such plan.

 

“Eurocurrency Liabilities” shall have the meaningassigned to that term in Regulation D of the Board of Governors of the FederalReserve System, as in effect from time to time.

 

“Eurodollar” means a Dollar denominated deposit in abank or branch outside of the United States.

 

“Eurodollar Loan” means a Revolving Loan described in Section 2.2(a) hereof,that shall be denominated in Dollars and on which Borrowers shall pay interestat a rate based upon the Derived Eurodollar Rate.

 

“Eurodollar Rate” means, with respect to a EurodollarLoan, for any Interest Period, a rate per annum equal to the quotient obtained(rounded upwards, if necessary, to the nearest 1/16th of 1%) bydividing (a) the rate of interest, determined by Agent in accordance withits usual procedures (which determination shall be conclusive absent manifesterror) as of approximately 11:00 A.M. (London time) two Business Daysprior to the beginning of such Interest Period pertaining to such EurodollarLoan, as listed on British Bankers Association Interest Rate LIBOR 01 or 02 asprovided by Reuters or Bloomberg (or, if for any reason such

 

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rate is unavailable fromReuters or Bloomberg, from any other similar company or service that providesrate quotations comparable to those currently provided by Reuters or Bloomberg)as the rate in the London interbank market for Dollar deposits in immediatelyavailable funds with a maturity comparable to such Interest Period, providedthat, in the event that such rate quotation is not available for any reason,then the Eurodollar Rate shall be the average (rounded upward to the nearest1/16th of 1%) of the per annum rates at which deposits in immediately availablefunds in Dollars for the relevant Interest Period and in the amount of theEurodollar Loan to be disbursed or to remain outstanding during such InterestPeriod, as the case may be, are offered to Agent (or an affiliate of Agent, inAgent’s discretion) by prime banks in any Eurodollar market reasonably selectedby Agent, determined as of 11:00 A.M. (London time) (or as soon thereafteras practicable), two Business Days prior to the beginning of the relevantInterest Period pertaining to such Eurodollar Loan; by (b) 1.00 minus theReserve Percentage.

 

“Event of Default” means an event or condition thatshall constitute an event of default as defined in Article VIII hereof.

 

“Excluded Taxes” means, in the case of Agent and eachLender, taxes imposed on or measured by its overall net income or branchprofits, (and franchise taxes imposed on it (in lieu of net income taxes), bythe jurisdiction (or anypolitical subdivision thereof) under the laws of which Agent or such Lender, asthe case may be, is organized or in which its principal office is located, or,in the case of any Lender, in which its applicable lending office is located.

 

“Facility Maturity Date” means the last day of theCommitment Period.

 

“Federal Funds Effective Rate” means, for any day, therate per annum (rounded upward to the nearest one one-hundredth of one percent(1/100 of 1%)) announced by the Federal Reserve Bank of New York (or anysuccessor) on such day as being the weighted average of the rates on overnightfederal funds transactions arranged by federal funds brokers on the previoustrading day, as computed and announced by such Federal Reserve Bank (or anysuccessor) in substantially the same manner as such Federal Reserve Bankcomputes and announces the weighted average it refers to as the “Federal FundsEffective Rate” as of the Closing Date.

 

“Financial Officer” means any of the followingofficers: chief executive officer, president, chief financial officer ortreasurer.  Unless otherwise qualified,all references to a Financial Officer in this Agreement shall refer to aFinancial Officer of EPIQ.

 

“Fixed Charge Coverage Ratio” means, as determined forthe most recently completed four fiscal quarters of EPIQ, on a Consolidatedbasis and in accordance with GAAP, the ratio of (a) (i) ConsolidatedEBITDA, minus (ii) Consolidated Capital Expenditures (excludingConsolidated Capital Expenditures that are made (A) in connection with anAcquisition permitted pursuant to Section 5.13 hereof, (B) inconnection with leasehold improvements (but only to the extent suchimprovements are reimbursable by the landlord), or (C) with the net proceedsof Dispositions of capital assets (excluding real estate); to (b) ConsolidatedFixed Charges.

 

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“Foreign Subsidiary” means a Subsidiary that isorganized under the laws of any jurisdiction other than the United States, anyState thereof or the District of Columbia.

 

“Fronting Lender” means, as to any Letter of Credittransaction hereunder, Agent as issuer of the Letter of Credit, or, in theevent that Agent either shall be unable to issue or shall agree that anotherLender may issue, a Letter of Credit, such other Lender as shall agree to issuethe Letter of Credit in its own name, but in each instance on behalf of theLenders hereunder.

 

“GAAP” means generally accepted accounting principlesin the United States as then in effect, which shall include the officialinterpretations thereof by the Financial Accounting Standards Board (oragencies within the United States. accounting profession with similar ordelegated functions and recognized by the Financial Accounting Standards Boardas having authority to issue such interpretations), applied on a basisconsistent with the past accounting practices and procedures of EPIQ and theSEC (unless a change is the result of the adoption of a new standard or the interpretationof an existing standard), which are applicable to the circumstances as of thedate of determination.

 

“General Intangibles” means all (a) generalintangibles, as defined in the U.C.C.; and (b) choses in action, causes ofaction, intellectual property, customer lists, corporate or other businessrecords, inventions, designs, patents, patent applications, service marks,registrations, trade names, trademarks, copyrights, licenses, goodwill,computer software, rights to indemnification and tax refunds.

 

“Governmental Authority” means any nation orgovernment, any state, province or territory or other political subdivisionthereof, any governmental agency, department, authority, instrumentality,regulatory body, court, central bank or other governmental entity exercisingexecutive, legislative, judicial, taxing, regulatory or administrativefunctions of or pertaining to government, any securities exchange and anyself-regulatory organization exercising such functions.

 

“Guarantor” means a Person that shall have pledged itscredit or property in any manner for the payment or other performance of theindebtedness, contract or other obligation of another and includes (withoutlimitation) any guarantor (whether of payment or of collection), surety, co-maker,endorser or Person that shall have agreed conditionally or otherwise to makeany purchase, loan or investment in order thereby to enable another to preventor correct a default of any kind.

 

“Guarantor of Payment” means each of the Companiesdesignated a “Guarantor of Payment” on Schedule 3 hereto, each of whichis executing and delivering a Guaranty of Payment on the Closing Date, and anyother Domestic Subsidiary that shall deliver a Guaranty of Payment to Agentsubsequent to the Closing Date.

 

“Guaranty of Payment” means each Guaranty of Payment,each Amended and Restated Guaranty of Payment and each Second Amended and Restated Guarantyof Payment executed and delivered on or after the Closing Date inconnection with this Agreement by the Guarantors of Payment, as the same mayfrom time to time be amended, restated or otherwise modified.

 

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“Hedge Agreement” meansany (a) hedge agreement, interest rate swap, cap, collar or flooragreement, or other interest rate management device entered into by a Companywith any Person in connection with any Indebtedness of such Company, or (b) currencyswap agreement, forward currency purchase agreement or similar arrangement oragreement designed to protect against fluctuations in currency exchange ratesentered into by a Company.

 

“Indebtedness” means, forany Company, without duplication, (a) all obligations to repay borrowedmoney, direct or indirect, incurred, assumed, or guaranteed, (b) allobligations in respect of the deferred purchase price of property or services(other than trade accounts payable and accrued expenses incurred in theordinary course of business), (c) all obligations under conditional salesor other title retention agreements, (d) all obligations (contingent orotherwise) under any letter of credit or banker’s acceptance, (e) all netobligations under any currency swap agreement, interest rate swap, cap, collaror floor agreement or other interest rate management device or any HedgeAgreement, (f) all synthetic leases, (g) all Capitalized LeaseObligations, (h) all obligations of such Company with respect to assetsecuritization financing programs, (i) all obligations to advance fundsto, or to purchase assets, property or services from, any other Person in orderto maintain the financial condition of such Person, (j) all indebtednesssecured by a Lien on the property of a Company, whether or not suchindebtedness shall have been assumed by such Company, provided that if suchCompany has not assumed or otherwise become liable for such indebtedness, suchindebtedness shall be measured at the fair market value of such propertysecuring such indebtedness at the time of determination, (k) allindebtedness of the types referred to in subparts (a) through (i) aboveof any partnership or joint venture (other than a joint venture that is itselfa corporation or limited liability company) in which such Company is a generalpartner or joint venturer, unless such indebtedness is expressly madenon-recourse to such Company, (k) any other transaction (including forwardsale or purchase agreements) having the commercial effect of a borrowing ofmoney entered into by such Company to finance its operations or capitalrequirements, and (l) any guaranty of any obligation described in subparts(a) through (k) hereof.

 

“Intellectual PropertySecurity Agreement” means an Intellectual Property Security Agreement orIntellectual Property Collateral Assignment Agreement, executed and deliveredby a Borrower or a Guarantor of Payment in favor of Agent, for the benefit ofthe Lenders, granting a security interest in all intellectual property owned bysuch Borrower or such Guarantor of Payment, and any other Intellectual PropertySecurity Agreement executed prior to, on or after the Closing Date, as the samemay from time to time be amended, restated or otherwise modified.

 

“Interest Adjustment Date”means the last day of each Interest Period.

 

“Interest Period” means,with respect to a Eurodollar Loan, the period commencing on the date suchEurodollar Loan is made and ending on the last day of such period, as selectedby Administrative Borrower pursuant to the provisions hereof, and, thereafter(unless such Eurodollar Loan is converted to a Base Rate Loan), each subsequentperiod commencing on the last day of the immediately preceding Interest Periodand ending on the last day of such period, as selected by AdministrativeBorrower pursuant to the provisions hereof. The duration of each

 

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Interest Period for aEurodollar Loan shall be one month, two months, three months or six months, ineach case as Administrative Borrower may select upon notice, as set forth in Section 2.5hereof; provided that if Administrative Borrower shall fail to so select theduration of any Interest Period for a Eurodollar Loan at least three BusinessDays prior to the Interest Adjustment Date applicable to such Eurodollar Loan,Borrowers shall be deemed to have converted such Eurodollar Loan to a Base RateLoan at the end of the then current Interest Period.

 

“Inventory” means allinventory, as defined in the U.C.C.

 

“Investment Property” meansall investment property, as defined in the U.C.C., unless the UniformCommercial Code as in effect in another jurisdiction would govern theperfection and priority of a security interest in investment property, and, insuch case, “investment property” shall be defined in accordance with the law ofthat jurisdiction as in effect from time to time.

 

“KeyBank” means KeyBankNational Association, and its successors and assigns.

 

“Landlord’s Waiver” meansa landlord’s waiver or mortgagee’s waiver, each in form and substancereasonably satisfactory to Agent, delivered by a Credit Party in connectionwith this Agreement, as such waiver may from time to time be amended, restatedor otherwise modified.

 

“Lender” means that termas defined in the first paragraph hereof and, as the context requires, shallinclude the Fronting Lender and the Swing Line Lender.

 

“Letter of Credit” meansa standby letter of credit that shall be issued by the Fronting Lender for theaccount of a Borrower or a Guarantor of Payment, including amendments thereto,if any, and shall have an expiration date no later than the earlier of (a) oneyear after its date of issuance (provided that such Letter of Credit mayprovide for the renewal thereof for additional one year periods), or (b) oneyear after the last day of the Commitment Period.

 

“Letter of CreditCommitment” means the commitment of the Fronting Lender, on behalf of theLenders, to issue Letters of Credit in an aggregate face amount of up to TenMillion Dollars ($10,000,000).

 

“Letter of CreditExposure” means, at any time, the sum of (a) the aggregate undrawn amountof all issued and outstanding Letters of Credit, and (b) the aggregate ofthe draws made on Letters of Credit that have not been reimbursed by Borrowersor converted to a Revolving Loan pursuant to Section 2.2(b)(iv) hereof.

 

“Leverage Ratio” means,as determined on a Consolidated basis and in accordance with GAAP, the ratio of(a) Consolidated Funded Indebtedness (for the most recently completedfiscal quarter of EPIQ), to (b) Consolidated EBITDA (for the most recentlycompleted four fiscal quarters of EPIQ).

 

“Lien” means anymortgage, deed of trust, security interest, lien (statutory or other), charge,assignment, hypothecation, encumbrance on, pledge or deposit of, or conditionalsale,

 

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leasing (other thanoperating leases), sale with a right of redemption or other title retentionagreement and any capitalized lease with respect to any property (real orpersonal) or asset.

 

“Liquidity” means, at anydate, an amount equal to the sum of (a) unrestricted and unencumberedcash, (b) unrestricted and unencumbered Cash Equivalents having maturitiesof not more than one year from the date of acquisition; and (c) theRevolving Credit Availability.

 

“Loan” means a RevolvingLoan or a Swing Loan granted to Borrowers by the Lenders in accordance with Section 2.2hereof.

 

“Loan Documents” means,collectively, this Agreement, each Note, each Guaranty of Payment, alldocumentation relating to each Letter of Credit, each Security Document, eachDomestic Subsidiary Borrower Assumption Agreement, the Agent Fee Letter and theClosing Fee Letter, as any of the foregoing may from time to time be amended,restated or otherwise modified or replaced, and any other document deliveredpursuant thereto.

 

“Material Adverse Effect”means a material adverse effect on (a) the business, operations, property,condition (financial or otherwise) or prospects of any Borrower, (b) thebusiness, operations, property, condition (financial or otherwise) or prospectsof the Companies taken as a whole, (c) the ability ofBorrowers or the Companies to perform its or their obligations under thisAgreement or any of the other Loan Documents, or (d) the validity or enforceabilityof the Loan Documents or the rights and remedies of Agent or the Lendershereunder or thereunder.

 

“Material IndebtednessAgreement” means any debt instrument, lease (capital, operating or otherwise),guaranty, contract, commitment, agreement or other arrangement evidencing orentered into in connection with any Indebtedness of any Company or theCompanies in excess of the amount of Three Million Dollars ($3,000,000).

 

“Maximum Amount” means,for each Lender, the amount set forth opposite such Lender’s name under thecolumn headed “Maximum Amount” as set forth on Schedule 1 hereto,subject to decreases determined pursuant to Section 2.9(a) hereof,increases pursuant to Section 2.9(b) hereof and assignments ofinterests pursuant to Section 11.10 hereof; provided that the MaximumAmount for the Swing Line Lender shall exclude the Swing Line Commitment (otherthan its pro rata share), and the Maximum Amount of the Fronting Lender shallexclude the Letter of Credit Commitment (other than its pro rata share).

 

“Maximum CommitmentAmount” means One Hundred Seventy-Five Million Dollars ($175,000,000).

 

“MaximumRate” means that term as defined in Section 2.3(d) hereof.

 

“Moody’s” means Moody’sInvestors Service, Inc., and any successor to such company.

 

“Mortgage” means eachOpen-End Mortgage, Assignment of Leases and Rents and Security Agreement (ordeed of trust or comparable document), relating to the Real Property, executedand delivered by a Credit Party, on or as of the closing dateof the Original Credit

 

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Agreement,the Original Amended Credit Agreement or on or as of the Closing Date, to further secure the SecuredObligations, as the same may from time to time be amended, restated orotherwise modified.

 

“Mortgage Amendment”means each Second Mortgage Modification Agreement, relating to each Mortgagedelivered prior to the Closing Date, executed and delivered by a Company as ofthe Closing Date.

 

“Multiemployer Plan”means a Pension Plan that is subject to the requirements of Subtitle E of TitleIV of ERISA.

 

“Non-CreditParty” means a Company that is not a Credit Party.

 

“Non-CreditParty Exposure” means the aggregate amount, incurred on or after the ClosingDate, of loans by a Credit Party to, investments by a Credit Party in,guaranties by a Credit Party of Indebtedness of, and Letters of Credit issuedto or for the benefit of, a Foreign Subsidiary that is a Non-Credit Party.

 

“Non-U.S.Lender” means that term as defined in Section 3.2(e) hereof.

 

“Note” means a RevolvingCredit Note or the Swing Line Note, or any other promissory note deliveredpursuant to this Agreement.

 

“Note Agreement” meansthe Security Purchase Agreement, dated as of June 10, 2004, by and amongEPIQ and the Buyers, as defined therein, as the same may from time to time beamended, restated or otherwise modified with the prior written consent of theRequired Lenders.

 

“Notice of Loan” means aNotice of Loan in the form of the attached Exhibit C.

 

“Obligations” means,collectively, (a) all Indebtedness and other obligations now owing orhereafter incurred by one or more Borrowers to Agent, the Swing Line Lender,the Fronting Lender, or any Lender (or any affiliate thereof) pursuant to thisAgreement and the other Loan Documents, and includes the principal of andinterest on all Loans and all obligations pursuant to Letters of Credit; (b) eachrenewal, extension, consolidation or refinancing of any of the foregoing, inwhole or in part; (c) the commitment and other fees and any prepaymentfees payable pursuant to this Agreement or any other Loan Documents; (d) allfees and charges in connection with the Letters of Credit; (e) every otherliability, now or hereafter owing to Agent or any Lender by any Companypursuant to this Agreement or any other Loan Document; and (f) all RelatedExpenses.

 

“Original Amended CreditAgreement” means that term as defined in the first Whereas clause on the first page ofthis Agreement.

 

“Original CreditAgreement” means that term as defined in the first Whereas clause on the first page ofthis Agreement.

 

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“Organizational Documents”means, with respect to any Person (other than an individual), such Person’sArticles (Certificate) of Incorporation, operating agreement or equivalentformation documents, and Regulations (Bylaws), or equivalent governingdocuments, and any amendments to any of the foregoing.

 

“Other Taxes” means anyand all present or future stamp or documentary taxes or any other excise, advalorem or property taxes, goods and services taxes, harmonized sales taxes andother sales taxes, use taxes, value added taxes, charges or similar taxes orlevies arising from any payment made hereunder or from the execution, deliveryor enforcement of, or otherwise with respect to, this Agreement or any otherLoan Document.

 

“Participant” means thatterm as defined in Section 11.11 hereof.

 

“Patriot Act” means theUniting and Strengthening America by Providing Appropriate Tools Required toIntercept and Obstruct Terrorism Act of 2001, USA Patriot Act, Title III ofPub. L. 107-56, signed into law October 26, 2001, as amended from time totime.

 

“PBGC” means the PensionBenefit Guaranty Corporation, and its successor.

 

“Pension Plan” means anERISA Plan that is a “pension plan” (within the meaning of ERISA Section 3(2)).

 

“Permitted ForeignSubsidiary Loans and Investments” means:

 

(a)                                   the investments by EPIQ or a DomesticSubsidiary in a Foreign Subsidiary, existing as of the Closing Date and setforth on Schedule 5.11 hereto;

 

(b)                                  the loans by EPIQ or a DomesticSubsidiary to a Foreign Subsidiary, in such amounts existing as of the ClosingDate and set forth on Schedule 5.11 hereto;

 

(c)                                   any investment by a Foreign Subsidiaryin, or loan from a Foreign Subsidiary to, or guaranty from a Foreign Subsidiaryof Indebtedness of, a Company; and

 

(d)                                  any Non-Credit Party Exposure, nototherwise permitted under this definition, up to the aggregate amount for allForeign Subsidiaries, when combined with all Permitted Investments, not toexceed Fifty Million Dollars ($50,000,000) at any time outstanding.

 

“Permitted Investment”means an investment of a Company in the stock (or other debt or equityinstruments) of a Person (other than a Company), so long as the aggregateamount of all such investments of all Companies does not exceed, at any time,an aggregate amount of One Million Dollars ($1,000,000).

 

“Person” means anyindividual, sole proprietorship, partnership, joint venture, unincorporatedorganization, corporation, limited liability company, unlimited liabilitycompany, institution, trust, estate, Governmental Authority or any otherentity.

 

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 “Pledge Agreement” means each Pledge Agreement and each Amended andRestated Pledge Agreement, relating to the Pledged Securities, executed anddelivered by a Borrower and each Domestic Subsidiary, as applicable, in favorof Agent, for the benefit of the Lenders, by a Borrower or a Guarantor ofPayment, as applicable, with respect to the Pledged Securities, on or after theClosing Date, as any of the foregoing may from time to time be amended,restated or otherwise modified.

 

 “Pledged Securities” means all of the shares of capital stock orother equity interest of a Subsidiary of a Borrower, whether now owned orhereafter acquired or created, and all proceeds thereof; provided that PledgedSecurities shall only include up to sixty-five percent (65%) of the shares ofvoting capital stock or other voting equity interest of any first-tier ForeignSubsidiary and shall not include any Foreign Subsidiary other than a first-tierForeign Subsidiary.  (Schedule 4hereto lists, as of the Closing Date, all of the Pledged Securities.)

 

 “Prime Rate” means the interest rate established from time to timeby Agent as Agent’s prime rate, whether or not such rate shall be publiclyannounced; the Prime Rate may not be the lowest interest rate charged by Agentfor commercial or other extensions of credit. Each change in the Prime Rateshall be effective immediately from and after such change.

 

 “Proceeds” means (a) proceeds, as defined in the U.C.C., andany other proceeds, and (b) whatever is received upon the sale, exchange,collection or other disposition of Collateral or proceeds, whether cash ornon-cash.  Cash proceeds include, withoutlimitation, moneys, checks and Deposit Accounts.  Proceeds include, without limitation, anyAccount arising when the right to payment is earned under a contract right, anyinsurance payable by reason of loss or damage to the Collateral, and any returnor unearned premium upon any cancellation of insurance.  Except as expressly authorized in thisAgreement, the right of Agent and the Lenders to Proceeds specifically setforth herein or indicated in any financing statement shall never constitute anexpress or implied authorization on the part of Agent or any Lender to aCompany’s sale, exchange, collection or other disposition of any or all of theCollateral.

 

 “Real Property” means each parcel of the real estate owned by aCredit Party as set forth on Schedule 5 hereto, together with allimprovements and buildings thereon and all appurtenances, easements or otherrights thereto belonging, and being defined collectively as the “Property” ineach of the Mortgages.

 

 “Register” means that term as described in Section 11.10(i) hereof.

 

 “Regularly Scheduled Payment Date” means the last day of each March,June, September and December of each year.

 

 “Related Expenses” means any and all reasonable out-of-pocket costs,liabilities and expenses (including, without limitation, losses, damages,penalties, claims, actions, attorneys’ fees, legal expenses, judgments, suitsand disbursements) (a) incurred by Agent, or imposed upon or assertedagainst Agent or any Lender in any attempt by Agent and the Lenders to (i) obtain,preserve, perfect or enforce any Loan Document or any security interestevidenced by

 

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any Loan Document; (ii) obtainpayment, performance or observance of any and all of the Obligations; or (iii) maintain,insure, audit, collect, preserve, repossess or dispose of any of the collateralsecuring the Obligations or any part thereof, including, without limitation,costs and expenses for appraisals, assessments and audits of any Company or anysuch collateral; or (b) incidental or related to (a) above,including, without limitation, interest thereupon from the date incurred,imposed or asserted until paid at the Default Rate.

 

 “Related Writing” means each Loan Document and any other assignment,mortgage, security agreement, guaranty agreement, subordination agreement,financial statement, audit report or other writing furnished by any CreditParty, or any of its officers, to Agent or the Lenders pursuant to or otherwisein connection with this Agreement.

 

 “Reportable Event” means a reportable event as that term is definedin Title IV of ERISA, except actions of general applicability by the Secretaryof Labor under Section 110 of such Act.

 

 “Required Lenders” means the holders of at least fifty-one percent(51%), based upon each Lender’s Commitment Percentage, of (a) the TotalCommitment Amount, or, (b) after the Commitment Period, the aggregateamount of the Revolving Credit Exposure; provided that, if there shall be twoor more Lenders, Required Lenders shall constitute at least two Lenders.

 

 “Requirement of Law” means, as to any Person, any law, treaty, rule orregulation or determination or policy statement or interpretation of anarbitrator or a court or other Governmental Authority, in each case applicableto or binding upon such Person or any of its property.

 

 “Reserve Percentage” means for any day that percentage (expressed asa decimal) that is in effect on such day, as prescribed by the Board ofGovernors of the Federal Reserve System (or any successor) for determining themaximum reserve requirement (including, without limitation, all basic,supplemental, marginal and other reserves and taking into account anytransitional adjustments or other scheduled changes in reserve requirements)for a member bank of the Federal Reserve System in Cleveland, Ohio, in respectof Eurocurrency Liabilities.  TheEurodollar Rate shall be adjusted automatically on and as of the effective dateof any change in the Reserve Percentage.

 

 “Restricted Payment” means, with respect to any Company, (a) anyCapital Distribution, (b) any amount paid in redemption (including anymandatory redemption or optional redemption), retirement, repurchase, direct orindirect, of the Convertible Subordinated Notes or any other SubordinatedIndebtedness; or (c) the exercise by such Company of any right ofdefeasance or covenant defeasance or similar right with respect to theConvertible Subordinated Notes or any other Subordinated Indebtedness.

 

 “Revolving Credit Availability” means, at any time, the amount equalto the Revolving Credit Commitment minus the Revolving Credit Exposure.

 

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 “Revolving Credit Commitment” means the obligation hereunder, duringthe Commitment Period, of (a) the Lenders to make Revolving Loans, (b) theFronting Lender to issue and the Lenders to participate in, Letters of Creditpursuant to the Letter of Credit Commitment, and (c) the Swing Line Lenderto make, and the Lenders to participate in, Swing Loans pursuant to the SwingLine Commitment; up to an aggregate principal amount outstanding at any timeequal to the Total Commitment Amount.

 

 “Revolving Credit Exposure” means, at any time, the sum of (a) theaggregate principal amount of all Revolving Loans outstanding, (b) theSwing Line Exposure, and (c) the Letter of Credit Exposure.

 

 “Revolving Credit Note” means a Revolving Credit Note, in the formof the attached Exhibit A, executed and delivered pursuant to Section 2.4(a) hereof.

 

 “Revolving Loan” means a Loan made to Borrowers by the Lenders inaccordance with Section 2.2(a) hereof.

 

 “SEC” means the United States Securities and Exchange Commission, orany governmental body or agency succeeding to any of its principal functions.

 

 “Secured Obligations” means, collectively, (a) the Obligations,(b) all obligations and liabilities of the Companies owing to Lendersunder Hedge Agreements, and (c) the Bank Product Obligations owing toLenders under Bank Product Agreements.

 

 “Security Agreement” means each Security Agreement and each Amendedand Restated Security Agreement, executed and delivered by a Guarantor ofPayment in favor of Agent, for the benefit of the Lenders, dated on or prior tothe Closing Date, and any other Security Agreement executed after the ClosingDate, as the same may from time to time be amended, restated or otherwisemodified.

 

 “Security Documents” means each Security Agreement, each PledgeAgreement, each Intellectual Property Security Agreement, each Mortgage, eachLandlord’s Waiver, each Mortgage Amendment, each Control Agreement, eachConfirmation of Intellectual Property Security Agreement, each U.C.C. FinancingStatement or similar filing as to a jurisdiction located outside of the UnitedStates of America filed in connection herewith or perfecting any interestcreated in any of the foregoing documents, and any other document pursuant towhich any Lien is granted by a Company or any other Person to Agent, for thebenefit of the Lenders, as security for the Secured Obligations, or any partthereof, and each other agreement executed in connection with any of theforegoing, as any of the foregoing may from time to time be amended, restatedor otherwise modified or replaced.

 

 “Standard & Poor’s” means Standard & Poor’sRatings Group, a division of McGraw-Hill, Inc., and any successor to suchcompany.

 

 “Subordinated” means, as applied to Indebtedness, Indebtedness thatshall have been subordinated (by written terms or written agreement being, in eithercase, in form and substance

 

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reasonably satisfactoryto Agent and the Required Lenders) in favor of the prior payment in full of theObligations (other than contingent indemnity obligations).

 

 “Subsidiary” means (a) a corporation more than fifty percent(50%) of the Voting Power of which is owned, directly or indirectly, by aBorrower or by one or more other subsidiaries of such Borrower or by suchBorrower and one or more subsidiaries of such Borrower, (b) a partnership,limited liability company or unlimited liability company of which a Borrower,one or more other subsidiaries of such Borrower or such Borrower and one ormore subsidiaries of such Borrower, directly or indirectly, is a general partneror managing member, as the case may be, or otherwise has an ownership interestgreater than fifty percent (50%) of all of the ownership interests in suchpartnership, limited liability company or unlimited liability company, or (c) anyother Person (other than a corporation, partnership, limited liability companyor unlimited liability company) in which a Borrower, one or more othersubsidiaries of such Borrower or such Borrower and one or more subsidiaries ofsuch Borrower, directly or indirectly, has at least a majority interest in theVoting Power or the power to elect or direct the election of a majority ofdirectors or other governing body of such Person.  Unless otherwise specified, references toSubsidiary shall mean a Subsidiary of EPIQ.

 

 “Supporting Letter of Credit” shall mean a standby letter of credit,in form and substance satisfactory to Agent and the Fronting Lender, issued byan issuer satisfactory to Agent and the Fronting Lender.

 

 “Swing Line Commitment” means the commitment of the Swing LineLender to make Swing Loans to Borrowers up to the aggregate amount at any timeoutstanding of Five Million Dollars ($5,000,000).

 

 “Swing Line Exposure” means, at any time, the aggregate principalamount of all Swing Loans outstanding.

 

 “Swing Line Lender” means KeyBank, as holder of the Swing LineCommitment.

 

 “Swing Line Note” means the Swing Line Note, in the form of theattached Exhibit B executed and delivered pursuant to Section 2.4(b) hereof.

 

 “Swing Loan” means a loan that shall be denominated in Dollarsgranted to Borrowers by the Swing Line Lender under the Swing Line Commitment, in accordancewith Section 2.2(c) hereof.

 

 “Swing Loan Maturity Date” means, with respect to any Swing Loan,the earlier of (a) thirty (30) days after the date such Swing Loan ismade, or (b) the last day of the Commitment Period.

 

 “Taxes” means any and all present or future taxes of any kind,including but not limited to, levies, imposts, duties, surtaxes, charges, fees,deductions or withholdings now or hereafter imposed, levied, collected,withheld or assessed by any Governmental Authority (together with

 

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any interest, penalties,fines, additions to taxes or similar liabilities with respect thereto) other thanExcluded Taxes.

 

 “Total Commitment Amount” means the Closing Commitment Amount, assuch amount may be increased up to the Maximum Commitment Amount pursuant to Section 2.9(b) hereof,or decreased pursuant to Section 2.9(a) hereof.

 

 “U.C.C.” means the Uniform Commercial Code, as in effect from timeto time in the State of Ohio.

 

 “U.C.C. Financing Statement” means a financing statement filed or tobe filed in accordance with the Uniform Commercial Code, as in effect from timeto time, in the relevant state or states.

 

 “Unexercised Availability” means the aggregate amount of all writtencommitments received by Borrowers from financial institutions to provideAdditional Commitments pursuant to Section 2.9(b) hereof, but only solong as (a) such commitments have not yet been accepted by Borrowers, (b) suchcommitments are in form and substance reasonably satisfactory to Agent, and (c) theaggregate amount of all such commitments does not exceed the increase amountavailable to Borrowers pursuant to Section 2.9(b) hereof.

 

 “Voting Power” means, with respect to any Person, the exclusiveability to control, through the ownership of shares of capital stock,partnership interests, membership interests or otherwise, the election ofmembers of the board of directors or other similar governing body of suchPerson.  The holding of a designatedpercentage of Voting Power of a Person means the ownership of shares of capitalstock, partnership interests, membership interests or other interests of suchPerson sufficient to control exclusively the election of that percentage of themembers of the board of directors or similar governing body of such Person.

 

 “Welfare Plan” means an ERISA Plan that is a “welfare plan” withinthe meaning of ERISA Section 3(l).

 

 “Wholly-Owned Subsidiary” means, with respectto any Person, any corporation, limited liability company, unlimited liabilitycompany or other entity, all of the securities or other ownership interest ofwhich having ordinary Voting Power to elect a majority of the board ofdirectors, or other persons performing similar functions, are at the timedirectly or indirectly owned by such Person.

 

 Section 1.2.  AccountingTerms.  Any accounting term notspecifically defined in this Article I shall have the meaning ascribed theretoby GAAP.  In the event that any “AccountingChange” (as defined below) shall occur and such change results in a change inthe method of calculation of financial covenants, standards or terms in thisAgreement, then Borrowers, Agent and the Required Lenders agree to enter intonegotiations in order to amend such provisions of this Agreement so as toequitably reflect such Accounting Changes with the desired result that thecriteria for evaluating the financial condition of Borrowers shall be the same aftersuch Accounting Changes as if such Accounting Changes had not been made.  Until such time as such

 

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an amendment shall havebeen executed and delivered by Borrowers, Agent and the Required Lenders, allfinancial covenants, standards and terms in this Agreement shall continue to becalculated and construed as if such Accounting Changes had not occurred.  “Accounting Changes” refers to changes inaccounting principles required by the promulgation of any rule, regulation,pronouncement or opinion by the Financial Accounting Standards Board of theAmerican Institute of Certified Public Accountants or, if applicable, the SEC(or successors thereto or agencies with similar functions).

 

 Section 1.3.  Terms Generally.  The foregoing definitions shall be applicableto the singular and plural forms of the foregoing defined terms.  Unless otherwise defined in this Article I,terms that are defined in the U.C.C. are used herein as so defined.

 

 Section 1.4.  Confirmationof Recitals.  Borrowers, Agent andthe Lenders hereby confirm the statements set forth in the recitals of  this Agreement.

 

ARTICLE II.  AMOUNT AND TERMS OF CREDIT

 

 Section 2.1.  Amountand Nature of Credit.

 

(a)                                     Subject to the terms and conditions of thisAgreement, the Lenders, during the Commitment Period and to the extenthereinafter provided, shall make Loans to Borrowers, participate in Swing Loansmade by the Swing Line Lender to Borrowers, and issue or participate in Lettersof Credit at the request of Borrowers, in such aggregate amount as Borrowersshall request pursuant to the Commitment; provided that in no event shall theaggregate principal amount of all Loans and Letters of Credit outstanding underthis Agreement be in excess of the Total Commitment Amount.

 

(b)                                  Each Lender, for itself and not one forany other, agrees to make Loans, participate in Swing Loans, and issue orparticipate in Letters of Credit, during the Commitment Period, on such basisthat, immediately after the completion of any borrowing by Borrowers or theissuance of a Letter of Credit:

 

(i)                                       theaggregate outstanding principal amount of Loans made by such Lender (other thanSwing Loans made by the Swing Line Lender), when combined with such Lender’spro rata share, if any, of the Letter of Credit Exposure and the Swing LineExposure, shall not be in excess of the Maximum Amount for such Lender; and

 

(ii)                                   the aggregate outstanding principalamount of Loans (other than Swing Loans) made by such Lender shall representthat percentage of the aggregate principal amount then outstanding on all Loans(other than Swing Loans) that shall be such Lender’s Commitment Percentage.

 

Each borrowing (otherthan Swing Loans which shall be risk participated on a pro rata basis) from theLenders shall be made pro rata according to the respective CommitmentPercentages of the Lenders.

 

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(c)                                  The Loans may be made as Revolving Loansas described in Section 2.2(a) hereof, and as Swing Loans asdescribed in Section 2.2(c) hereof, and Letters of Credit may beissued in accordance with Section 2.2(b) hereof.

 

 Section 2.2.  RevolvingCredit.

 

(a)                                  Revolving Loans. Subject to the terms and conditions of this Agreement, during theCommitment Period, the Lenders shall make a Revolving Loan or Revolving Loansto Borrowers in such amount or amounts as Administrative Borrower, through anAuthorized Officer, mayfrom time to time request, but not exceeding in aggregate principal amount atany time outstanding hereunder the Revolving Credit Commitment, when suchRevolving Loans are combined with the Letter of Credit Exposure and the SwingLine Exposure.  Borrowers shall have theoption, subject to the terms and conditions set forth herein, to borrowRevolving Loans, maturing on the last day of the Commitment Period, by means ofany combination of Base Rate Loans or Eurodollar Loans.  Subject to the provisions of this Agreement,Borrowers shall be entitled under this Section 2.2(a) to borrowfunds, repay the same in whole or in part and re-borrow hereunder at any timeand from time to time during the Commitment Period.

 

(b)                                 Letters of Credit.

 

(i)                                     Generally.  Subject to the terms and conditions of thisAgreement, during the Commitment Period, the Fronting Lender shall, in its ownname, on behalf of the Lenders, issue such Letters of Credit for the account ofa Credit Party, as Administrative Borrower may from time to time request.  Administrative Borrower shall not request anyLetter of Credit (and the Fronting Lender shall not be obligated to issue anyLetter of Credit) if, after giving effect thereto, (A) the Letter ofCredit Exposure would exceed the Letter of Credit Commitment, or (B) theRevolving Credit Exposure would exceed the Revolving Credit Commitment.  The issuance of each Letter of Credit shallconfer upon each Lender the benefits and liabilities of a participationconsisting of an undivided pro rata interest in the Letter of Credit to theextent of such Lender’s Commitment Percentage.

 

(ii)                                  Request for Letter of Credit.  Each request for a Letter of Credit shall bedelivered to Agent (and to the Fronting Lender, if the Fronting Lender is aLender other than Agent) by an Authorized Officer not later than 11:00 A.M.(Eastern time) three Business Days prior to the date of the proposed issuanceof the Letter of Credit.  Each suchrequest shall be in a form reasonably acceptable to Agent (and the FrontingLender, if the Fronting Lender is a Lender other than Agent) and shall specifythe face amount thereof, the account party, the beneficiary, the requested dateof issuance, amendment, renewal or extension, the expiry date thereof, and thenature of the transaction or obligation to be supported thereby.  Concurrently with each such request, AdministrativeBorrower, and any Credit Party for whose account the Letter of Credit is to beissued, shall execute and deliver to the Fronting Lender an appropriateapplication and agreement, being in the standard form of the Fronting Lenderfor such letters of credit, as amended to conform to the provisions of thisAgreement if required by Agent.  Agent

 

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shall give the FrontingLender and each Lender notice of each such request for a Letter of Credit.

 

(iii)          Standby Letters ofCredit.  With respect to each Letterof Credit and the drafts thereunder, whether issued for the account of aBorrower or any other Credit Party, Borrowers agree to (A) pay to Agent,for the pro rata benefit of the Lenders, a non-refundable commission based uponthe face amount of such Letter of Credit, which shall be paid quarterly inarrears, on each Regularly Scheduled Payment Date, at a rate per annum equal tothe Applicable Margin for Eurodollar Loans (in effect on the date such paymentis to be made) multiplied by the face amount of such Letter of Credit; (B) payto Agent, for the sole benefit of the Fronting Lender, an additional Letter ofCredit fee, which shall be paid on each date that such Letter of Credit shallbe issued, amended or renewed, at the rate of one-eighth percent (1/8%) of theface amount of such Letter of Credit; and (C) pay to Agent, for the solebenefit of the Fronting Lender, such other issuance, amendment, negotiation,draw, acceptance, telex, courier, postage and similar transactional fees as arecustomarily charged by the Fronting Lender in respect of the issuance andadministration of similar letters of credit under its fee schedule as in effectfrom time to time.

 

(iv)          Refunding of Lettersof Credit with Revolving Loans. Whenever a Letter of Credit shall be drawn, Borrowers shall promptlyreimburse the Fronting Lender for the amount drawn.  In the event that the amount drawn shall nothave been reimbursed by Borrowers on the date of the drawing of such Letter ofCredit, at the sole option of Agent (and the Fronting Lender, if the FrontingLender is a Lender other than Agent), Borrowers shall be deemed to haverequested a Revolving Loan, subject to the provisions of Sections 2.2(a) and2.5 hereof (other than the requirement set forth in Section 2.5(d) hereof),in the amount drawn.  Such Revolving Loanshall be evidenced by the Revolving Credit Notes (or, if a Lender has notrequested a Revolving Credit Note, by the records of Agent and suchLender).  Each Lender agrees to make aRevolving Loan on the date of such notice, subject to no conditions precedentwhatsoever.  Each Lender acknowledges andagrees that its obligation to make a Revolving Loan pursuant to Section 2.2(a) hereofwhen required by this Section 2.2(b)(iv) shall be absolute andunconditional and shall not be affected by any circumstance whatsoever,including, without limitation, the occurrence and continuance of a Default orEvent of Default, and that its payment to Agent, for the account of theFronting Lender, of the proceeds of such Revolving Loan shall be made withoutany offset, abatement, recoupment, counterclaim, withholding or reduction whatsoeverand whether or not the Revolving Credit Commitment shall have been reduced orterminated.  Borrowers irrevocablyauthorize and instruct Agent to apply the proceeds of any borrowing pursuant tothis Section 2.2(b)(iv) to reimburse, in full (other than theFronting Lender’s pro rata share of such borrowing), the Fronting Lender forthe amount drawn on such Letter of Credit. Each such Revolving Loan shall be deemed to be a Base Rate Loan unlessotherwise requested by and available to Borrowers hereunder.  Each Lender is hereby authorized to record onits records relating to its Revolving Credit Note (or, if such Lender has notrequested a Revolving Credit Note, its records relating to Revolving Loans)such Lender’s pro rata share of the amounts paid and not reimbursed on theLetters of Credit.

 

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(v)           Participation inLetters of Credit.  If, for anyreason, Agent (and the Fronting Lender if the Fronting Lender is a Lender otherthan Agent) shall be unable to or, in the opinion of Agent, it shall beimpracticable to, convert any Letter of Credit to a Revolving Loan pursuant tothe preceding subsection, Agent (and the Fronting Lender if the Fronting Lenderis a Lender other than Agent) shall have the right to request that each Lenderpurchase a participation in the amount due with respect to such Letter ofCredit, and Agent shall promptly notify each Lender thereof (by facsimile ortelephone, confirmed in writing).  Uponsuch notice, but without further action, the Fronting Lender hereby agrees togrant to each Lender, and each Lender hereby agrees to acquire from theFronting Lender, an undivided participation interest in the amount due withrespect to such Letter of Credit in an amount equal to such Lender’s CommitmentPercentage of the principal amount due with respect to such Letter ofCredit.  In consideration and infurtherance of the foregoing, each Lender hereby absolutely and unconditionallyagrees, upon receipt of notice as provided above, to pay to Agent, for theaccount of the Fronting Lender, such Lender’s ratable share of the amount duewith respect to such Letter of Credit (determined in accordance with suchLender’s Commitment Percentage).  EachLender acknowledges and agrees that its obligation to acquire participations inthe amount due under any Letter of Credit that is drawn but not reimbursed byBorrowers pursuant to this subsection (v) shall be absolute andunconditional and shall not be affected by any circumstance whatsoever, including,without limitation, the occurrence and continuance of a Default or Event ofDefault, and that each such payment shall be made without any offset,abatement, recoupment, counterclaim, withholding or reduction whatsoever andwhether or not the Revolving Credit Commitment shall have been reduced orterminated.  Each Lender shall complywith its obligation under this subsection (v) by wire transfer ofimmediately available funds, in the same manner as provided in Section 2.5hereof with respect to Revolving Loans. Each Lender is hereby authorized to record on its records such Lender’spro rata share of the amounts paid and not reimbursed on the Letters of Credit.

 

(vi)          Letters of CreditOutstanding Beyond the Commitment Period. If any Letter of Credit is outstanding upon the termination of theCommitment, then, upon such termination, Borrowers shall deposit with Agent,for the benefit of the Fronting Lender, with respect to all outstanding Lettersof Credit, either cash or a Supporting Letter of Credit, which, in each case,is (A) in an amount equal to one hundred five percent (105%) of theundrawn amount of the outstanding Letters of Credit, and (B) free andclear of all rights and claims of third parties.  The cash shall be deposited in an escrowaccount at a financial institution designated by the Fronting Lender.  The Fronting Lender shall be entitled towithdraw (with respect to the cash) or draw (with respect to the SupportingLetter of Credit) amounts necessary to reimburse the Fronting Lender for paymentsto be made under the Letters of Credit and any fees and expenses associatedwith such Letters of Credit, or incurred pursuant to the reimbursementagreements with respect to such Letters of Credit.  Borrowers shall also execute suchdocumentation as Agent or the Fronting Lender may reasonably require inconnection with the survival of the Letters of Credit beyond the Commitment orthis Agreement.  After expiration of allundrawn 

 

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Letters of Credit, theSupporting Letter of Credit or the remainder of the cash, as the case may be,shall promptly be returned to Borrower.

 

(c)           Swing Loans.

 

(i)            Generally.  Subject to the terms and conditions of thisAgreement, during the Commitment Period, the Swing Line Lender shall make aSwing Loan or Swing Loans to Borrowers in such amount or amounts asAdministrative Borrower, through an Authorized Officer, may from time to timerequest; provided that Administrative Borrower shall not request any Swing Loanif, after giving effect thereto, (A) the Revolving Credit Exposure wouldexceed the Revolving Credit Commitment, or (B) the Swing Line Exposurewould exceed the Swing Line Commitment. Each Swing Loan shall be due and payable on the Swing Loan Maturity Dateapplicable thereto.

 

(ii)           Refunding of SwingLoans.  If the Swing Line Lender soelects, by giving notice to Administrative Borrower and the Lenders, Borrowersagree that the Swing Line Lender shall have the right, in its sole discretion,to require that any Swing Loan be refinanced as a Revolving Loan.  Such Revolving Loan shall be a Base Rate Loanunless otherwise requested by and available to Borrowers hereunder.  Upon receipt of such notice by Borrowers andthe Lenders, Borrowers shall be deemed, on such day, to have requested aRevolving Loan in the principal amount of the Swing Loan in accordance withSections 2.2(a) and 2.5 hereof (other than the requirement set forthin Section 2.5(c) hereof). Such Revolving Loan shall be evidenced by the Revolving Credit Notes(or, if a Lender has not requested a Revolving Credit Note, by the records ofAgent and such Lender).  Each Lenderagrees to make a Revolving Loan on the date of such notice, subject to noconditions precedent whatsoever.  EachLender acknowledges and agrees that such Lender’s obligation to make aRevolving Loan pursuant to Section 2.2(a) hereof when required bythis Section 2.2(c)(ii) is absolute and unconditional and shall notbe affected by any circumstance whatsoever, including, without limitation, theoccurrence and continuance of a Default or Event of Default, and that itspayment to Agent, for the account of the Swing Line Lender, of the proceeds ofsuch Revolving Loan shall be made without any offset, abatement, recoupment,counterclaim, withholding or reduction whatsoever and whether or not theRevolving Credit Commitment shall have been reduced or terminated.  Borrowers irrevocably authorize and instructAgent to apply the proceeds of any borrowing pursuant to this Section 2.2(c)(ii) torepay in full such Swing Loan.  Each Lender is hereby authorized torecord on its records relating to its Revolving Credit Note (or, if such Lenderhas not requested a Revolving Credit Note, its records relating to RevolvingLoans) such Lender’s pro rata share of the amounts paid to refund such SwingLoan.

 

(iii)          Participation inSwing Loans.  If, for any reason,Agent is unable to or, in the opinion of Agent, it is impracticable to, convertany Swing Loan to a Revolving Loan pursuant to the preceding Section 2.2(c)(ii),then on any day that a Swing Loan is outstanding (whether before or after thematurity thereof), Agent shall have the right to request that each Lenderpurchase a participation in such Swing Loan, and Agent shall promptly notifyeach Lender thereof (by facsimile or telephone, confirmed in writing).  

 

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Upon such notice, butwithout further action, the Swing Line Lender hereby agrees to grant to eachLender, and each Lender hereby agrees to acquire from the Swing Line Lender, anundivided participation interest in such Swing Loan in an amount equal to suchLender’s Commitment Percentage of the principal amount of such Swing Loan.  In consideration and in furtherance of theforegoing, each Lender hereby absolutely and unconditionally agrees, uponreceipt of notice as provided above, to pay to Agent, for the benefit of theSwing Line Lender, such Lender’s ratable share of such Swing Loan (determinedin accordance with such Lender’s Commitment Percentage).  Each Lender acknowledges and agrees that itsobligation to acquire participations in Swing Loans pursuant to this Section 2.2(c)(iii) isabsolute and unconditional and shall not be affected by any circumstancewhatsoever, including, without limitation, the occurrence and continuance of aDefault or an Event of Default, and that each such payment shall be madewithout any offset, abatement, recoupment, counterclaim, withholding orreduction whatsoever and whether or not the Revolving Credit Commitment shallhave been reduced or terminated.  EachLender shall comply with its obligation under this Section 2.2(c)(iii) bywire transfer of immediately available funds, in the same manner as provided inSection 2.5 hereof with respect to Revolving Loans to be made by suchLender.

 

Section 2.3.  Interest.

 

(a)           Revolving Loans.

 

(i)            Base Rate Loan.  Borrowers shall pay interest on the unpaidprincipal amount of a Base Rate Loan outstanding from time to time from thedate thereof until paid at the Derived Base Rate from time to time ineffect.  Interest on such Base Rate Loanshall be payable, commencing September 30, 2008, and continuing on eachRegularly Scheduled Payment Date thereafter and at the maturity thereof.

 

(ii)           Eurodollar Loans.  Borrowers shall pay interest on the unpaidprincipal amount of each Eurodollar Loan outstanding from time to time, fixedin advance on the first day of the Interest Period applicable thereto throughthe last day of the Interest Period applicable thereto (but subject to changes inthe Applicable Margin for Eurodollar Loans), at the Derived EurodollarRate.  Interest on such Eurodollar Loanshall be payable on each Interest Adjustment Date with respect to an InterestPeriod (provided that if an Interest Period shall exceed three months, theinterest must be paid every three months, commencing three months from thebeginning of such Interest Period).

 

(b)           Swing Loans.  Borrowers shall pay interest to Agent, forthe sole benefit of the Swing Line Lender (and any Lender that shall have purchaseda participation in such Swing Loan), on the unpaid principal amount of eachSwing Loan outstanding from time to time from the date thereof until paid atthe Derived Base Rate from time to time in effect.  Interest on each Swing Loan shall be payableon the Swing Loan Maturity Date applicable thereto. Each Swing Loan shall bearinterest for a minimum of one day.

 

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(c)           Default Rate.  Anything herein to the contrarynotwithstanding, if an Event of Default pursuant to Section 8.1 or 8.11hereof shall occur and be continuing, upon the election of the Required Lenderswith respect to an Event of Default pursuant to Section 8.1 hereof andautomatically with respect to an Event of Default pursuant to Section 8.11hereof, (i) the principal of each Loan and the unpaid interest thereonshall bear interest, until paid, at the Default Rate, (ii) the fee for theaggregate undrawn amount of all issued and outstanding Letters of Credit shallbe increased by two percent (2%) in excess of the rate otherwise applicablethereto, and (iii) in the case of any other amount not paid when due fromBorrowers hereunder or under any other Loan Document, such amount shall bearinterest at the Default Rate.

 

(d)           Limitation on Interest.  In no event shall the rate of interesthereunder exceed the maximum rate allowable by law.  Notwithstanding anything to the contrarycontained in any Loan Document, the interest paid or agreed to be paid underthe Loan Documents shall not exceed the maximum rate of non-usurious interestpermitted by applicable law (the “Maximum Rate”).  If Agent or any Lender shall receive interestin an amount that exceeds the Maximum Rate, the excess interest shall beapplied to the principal of the Loans or, if it exceeds such unpaid principal,refunded to the Administrative Borrower for distribution to Borrowers, asappropriate.  In determining whether theinterest contracted for, charged, or received by Agent or a Lender exceeds theMaximum Rate, such Person may, to the extent permitted by applicable law, (i) characterizeany payment that is not principal as an expense, fee, or premium rather thaninterest, (ii) exclude voluntary prepayments and the effects thereof, and (iii) amortize,prorate, allocate, and spread in equal or unequal parts the total amount ofinterest throughout the contemplated term of the Obligations.

 

Section 2.4.  Evidence of Indebtedness.

 

(a)           Revolving Loans.  Upon the request of a Lender, to evidence theobligation of Borrowers to repay the Revolving Loans made by such Lender and topay interest thereon, Borrowers shall execute a Revolving Credit Note, payableto the order of such Lender in the principal amount of its Revolving CreditCommitment, or, if less, the aggregate unpaid principal amount of RevolvingLoans made by such Lender; provided that the failure of a Lender to request aRevolving Credit Note shall in no way detract from Borrowers’ obligations tosuch Lender hereunder.

 

(b)           Swing Loans.  Upon the request of the Swing Line Lender, toevidence the obligation of Borrowers to repay the Swing Loans and to payinterest thereon, Borrowers shall execute a Swing Line Note, payable to theorder of the Swing Line Lender in the principal amount of the Swing LineCommitment, or, if less, the aggregate unpaid principal amount of Swing Loansmade by the Swing Line Lender; provided that the failure of the Swing LineLender to request a Swing Line Note shall in no way detract from Borrowers’obligations to the Swing Line Lender hereunder.

 

Section 2.5.  Notice of Credit Event; Funding of Loans.

 

(a)           Notice of CreditEvent.  Administrative Borrower,through an Authorized Officer, shall provide to Agent a Notice of Loan prior to(i) 12:00 noon (Eastern time) on the proposed 

 

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date of borrowing or conversion of any Base Rate Loan, (ii) 12:00noon (Eastern time) three Business Days prior to the proposed date ofborrowing, conversion or continuation of any Eurodollar Loan, and (iii) 3:00 P.M.(Eastern time) on the proposed date of borrowing of any Swing Loan, or suchother time to which the Swing Line Lender may agree.  Borrowers shall comply with the noticeprovisions set forth in Section 2.2(b) hereof with respect to Lettersof Credit.

 

(b)           Fundingof Loans.  Agent shall notify eachLender of the date, amount and Interest Period (if applicable) promptly uponthe receipt of a Notice of Loan (other than for a Swing Loan, or a RevolvingLoan to be funded as a Swing Loan), and, in any event, by 2:00 P.M. (Easterntime) on the date such Notice of Loan is received.  On the date that the Credit Event set forthin such Notice of Loan is to occur, each such Lender shall provide to Agent,not later than 3:00 P.M. (Eastern time), the amount in Dollars, in federalor other immediately available funds, required of it.  If Agent shall elect to advance the proceedsof such Loan prior to receiving funds from such Lender, Agent shall have theright, upon prior notice to Administrative Borrower, to debit any account of theappropriate Borrower or otherwise receive such amount from the appropriateBorrower, promptly after demand, in the event that such Lender shall fail toreimburse Agent in accordance with this subsection.  Agent shall also have the right to receiveinterest from such Lender at the Federal Funds Effective Rate in the event thatsuch Lender shall fail to provide its portion of the Loan on the date requestedand Agent shall elect to provide such funds.

 

(c)           Conversionand Continuation of Loans.

 

(i)            At the request ofAdministrative Borrower to Agent, subject to the notice and other provisions ofthis Section 2.5, the Lenders shall convert a Base Rate Loan to one ormore Eurodollar Loans at any time and shall convert a Eurodollar Loan to a BaseRate Loan on any Interest Adjustment Date applicable thereto.  Swing Loans may be converted by the SwingLine Lender to Revolving Loans in accordance with Section 2.2(c)(ii) hereof.

 

(ii)           At the request ofAdministrative Borrower to Agent, subject to the notice and other provisions ofthis Section 2.5, the Lenders shall continue one or more Eurodollar Loansas of the end of the applicable Interest Period as a new Eurodollar Loan with anew Interest Period.

 

(d)           MinimumAmount.  Each request for:

 

(i)            a Base Rate Loan shallbe in an amount of not less than Two Million Dollars ($2,000,000), increased byincrements of One Million Dollars ($1,000,000);

 

(ii)           a Eurodollar Loan shallbe in an amount of not less than Two Million Dollars ($2,000,000), increased byincrements of One Million Dollars ($1,000,000); and

 

(iii)          a Swing Loan shall be inan amount of not less than One Hundred Thousand Dollars ($100,000).

 

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(e)           InterestPeriods.  Administrative Borrowershall not request that Eurodollar Loans be outstanding for more than sixdifferent Interest Periods at the same time.

 

Section 2.6. Payment on Loans and Other Obligations.

 

(a)           PaymentsGenerally.  Each payment madehereunder by a Credit Party shall be made without any offset, abatement,recoupment, counterclaim, withholding or reduction whatsoever.

 

(b)           Paymentsfrom Borrowers.  All payments(including prepayments) to Agent of the principal of or interest on each Loanor other payment, including but not limited to principal, interest, fees or anyother amount owed by Borrowers under this Agreement, shall be made inDollars.  All payments described in thissubsection (b) shall be remitted to Agent, at the address of Agent fornotices referred to in Section 11.4 hereof for the account of the Lenders(or the Fronting Lender or the Swing Line Lender, as appropriate) not laterthan 1:00 P.M. (Eastern time) on the due date thereof in immediatelyavailable funds.  Any such paymentsreceived by Agent after 1:00 P.M. (Eastern time) shall be deemed to havebeen made and received on the next Business Day.

 

(c)           Paymentsto Lenders.  Upon Agent’s receipt ofpayments hereunder, Agent shall immediately distribute to each Lender (exceptwith respect to Swing Loans, which shall be paid to the Swing Line Lender or,with respect to Letters of Credit, certain of which payments shall be paid tothe Fronting Lender) their respective ratable shares, if any, of the amount ofprincipal, interest, and commitment and other fees received by Agent for the accountof such Lender.  Payments received byAgent shall be delivered to the Lenders in Dollars in immediately availablefunds.  Each Lender shall record anyprincipal, interest or other payment, the principal amounts of Base Rate Loans,Eurodollar Loans, Swing Loans and Letters of Credit, all prepayments and theapplicable dates, including Interest Periods, with respect to the Loans made,and payments received by such Lender, by such method as such Lender maygenerally employ; provided that failure to make any such entry shall in no waydetract from the obligations of Borrowers under this Agreement or anyNote.  The aggregate unpaid amount ofLoans, types of Loans, Interest Periods and similar information with respect tothe Loans and Letters of Credit set forth on the records of Agent shall berebuttably presumptive evidence with respect to such information, including theamounts of principal, interest and fees owing to each Lender.

 

(d)           Timingof Payments.  Whenever any payment tobe made hereunder, including, without limitation, any payment to be made on anyLoan, shall be stated to be due on a day that is not a Business Day, suchpayment shall be made on the next Business Day and such extension of time shallin each case be included in the computation of the interest payable on suchLoan; provided that, with respect to a Eurodollar Loan, if the next BusinessDay shall fall in the succeeding calendar month, such payment shall be made onthe preceding Business Day and the relevant Interest Period shall be adjustedaccordingly.

 

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Section 2.7. Prepayment.

 

(a)           Rightto Prepay.  Borrowers shall have theright at any time or from time to time to prepay, on a pro rata basis for allof the Lenders, all or any part of the principal amount of the Revolving Loansthen outstanding, as designated by Administrative Borrower.  Such payment shall include interest accruedon the amount so prepaid to the date of such prepayment and any amount payableunder Article III hereof with respect to the amount being prepaid.  Borrowers shall have the right, at any timeor from time to time, to prepay, for the benefit of the Swing Line Lender (andany Lender that has purchased a participation in such Swing Loan), all or anypart of the principal amount of the Swing Loans then outstanding, as designatedby Administrative Borrower, plus interest accrued on the amount so prepaid tothe date of such prepayment.

 

(b)           Noticeof Prepayment.  AdministrativeBorrower shall give Agent notice of prepayment of a Base Rate Loan or SwingLoan by no later than 11:00 A.M. (Eastern time) on the Business Day onwhich such prepayment is to be made and written notice of the prepayment of anyEurodollar Loan not later than 1:00 P.M. (Eastern time) three BusinessDays before the Business Day on which such prepayment is to be made.

 

(c)           MinimumAmount.  Each prepayment of aEurodollar Loan shall be in the principal amount of not less than Five HundredThousand Dollars ($500,000), increased by increments of Two Hundred FiftyThousand Dollars ($250,000), or, with respect to a Swing Loan, the principalbalance of such Swing Loan, except in the case of a mandatory payment pursuantto Section 2.11 or Article III hereof.

 

Section 2.8. Commitment and Other Fees.

 

(a)           CommitmentFee.  Borrowers shall pay to Agent,for the ratable account of the Lenders, as a consideration for the RevolvingCredit Commitment, a commitment fee from the Closing Date to and including thelast day of the Commitment Period, payable quarterly, at a rate per annum equalto (i) the Applicable Commitment Fee Rate in effect on the payment date,multiplied by (ii) (A) the average daily Revolving Credit Commitmentin effect during such quarter, minus (B) the average daily RevolvingCredit Exposure (exclusive of the Swing Line Exposure) during suchquarter.  The commitment fee shall bepayable in arrears, on September 30, 2008 and continuing on each RegularlyScheduled Payment Date thereafter, and on the last day of the CommitmentPeriod.

 

(b)           AgentFee.  Borrowers shall pay to Agent,for its sole benefit, the fees set forth in the Agent Fee Letter.

 

Section 2.9. Modifications to Commitment.

 

(a)           OptionalReduction of Revolving Credit Commitment. Borrowers may at any time and from time to time permanently reduce inwhole or ratably in part the Revolving Credit Commitment to an amount not lessthan the then existing Revolving Credit Exposure, by giving Agent not fewerthan three Business Days’ written notice of such reduction, provided that anysuch partial reduction shall be in an aggregate amount, for all of the Lenders,of not less than 

 

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Five Million Dollars ($5,000,000). Agent shall promptly notify each Lender of the date of each suchreduction and such Lender’s proportionate share thereof.  After each such partial reduction, thecommitment fees payable hereunder shall be calculated upon the Revolving CreditCommitment as so reduced.  If Borrowersreduce in whole the Total Commitment Amount on the effective date of suchreduction (the appropriate Borrowers having prepaid in full the unpaidprincipal balance, if any, of the Loans, together with all interest (if any)and commitment and other fees accrued and unpaid with respect thereto, andprovided that no Letter of Credit Exposure or Swing Line Exposure shall exist),all of the Revolving Credit Notes shall be delivered to Agent marked “Canceled”and Agent shall redeliver such Revolving Credit Notes to AdministrativeBorrower.  Any partial reduction in theRevolving Credit Commitment shall be effective during the remainder of theCommitment Period.

 

(b)           Increasein Commitment.  At any time duringthe Commitment Increase Period, Administrative Borrower may request that Agentincrease the Total Commitment Amount from the Closing Commitment Amount up toan amount that shall not exceed the Maximum Commitment Amount.  Each such increase shall be in an amount ofat least Five Million Dollars ($5,000,000), increased by increments of OneMillion Dollars ($1,000,000), and may be made by either (i) increasing,for one or more Lenders, with their prior written consent, their respectiveRevolving Credit Commitments, or (ii) including one or more AdditionalLenders, each with a new commitment under the Revolving Credit Commitment, as aparty to this Agreement (collectively, the “Additional Commitment”); providedthat existing Lenders shall be given the first opportunity to provideAdditional Commitments.  During theCommitment Increase Period, all of the Lenders agree that Agent shall permitone or more Additional Commitments upon satisfaction of the followingrequirements: (A) each Additional Lender, if any, shall execute anAdditional Lender Assumption Agreement, (B) Agent shall provide toAdministrative Borrower and each Lender a revised Schedule 1 to thisAgreement, including revised Commitment Percentages for each of the Lenders, ifappropriate, at least three Business Days prior to the date of theeffectiveness of such Additional Commitments (each an “Additional LenderAssumption Effective Date”), (C) Borrowers shall execute and deliver toAgent and the Lenders such replacement or additional Revolving Credit Notes asshall be required by Agent, and (D) Borrowers shall, on the AdditionalLender Assumption Effective Date, deliver to Agent, for the benefit of theLenders, (1) written confirmation (in form and substance reasonablysatisfactory to Agent) that EPIQ shall have given written notice to eachConvertible Subordinated Noteholder that the Obligations incurred pursuant tothe Additional Commitments are being designated as Senior Indebtedness (asdefined in the Convertible Subordinated Notes), and (2) a certificate andany other reasonable evidence required by Agent or the Required Lendersdemonstrating that all terms and conditions for designating Senior Indebtedness(as defined in the Convertible Subordinated Notes) under the ConvertibleSubordinated Notes are being met.  TheLenders hereby authorize Agent to execute each Additional Lender AssumptionAgreement on behalf of the Lenders.  Oneach Additional Lender Assumption Effective Date, the Lenders shall make adjustmentsamong themselves with respect to the Revolving Loans then outstanding andamounts of principal, interest, commitment fees and other amounts paid orpayable with respect thereto as shall be necessary, in the opinion of Agent, inorder to reallocate among such Lenders such outstanding amounts, based on therevised Commitment Percentages and to otherwise carry out fully the intent andterms of this Section 2.9(b).  Inconnection therewith, it is understood and agreed that the Maximum Amount ofany Lender will not be increased (or decreased except 

 

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pursuant to Section 2.9(a) hereof)without the prior written consent of such Lender.  Borrowers shall not request any increase inthe Total Commitment Amount pursuant to this Section 2.9(b) if aDefault or an Event of Default shall then exist, or immediately after givingeffect to any such increase (including a pro forma calculation of the financialcovenants set forth in Section 5.7 hereof) would exist.

 

Section 2.10. Computation of Interest and Fees. With the exception of Base Rate Loans, interest on Loans Letter ofCredit fees, Related Expenses and commitment and other fees and chargeshereunder shall be computed on the basis of a year having three hundred sixty(360) days and calculated for the actual number of days elapsed.  With respect to Base Rate Loans, interestshall be computed on the basis of a year having three hundred sixty-five (365)days or three hundred sixty-six (366) days, as the case may be, and calculatedfor the actual number of days elapsed.

 

Section 2.11. Mandatory Payments.

 

(a)           RevolvingCredit Exposure.  If, at any time,the Revolving Credit Exposure shall exceed the Revolving Credit Commitment asthen in effect, Borrowers shall, as promptly as practicable, but in no eventlater than the next Business Day, pay an aggregate principal amount of theRevolving Loans sufficient to bring the Revolving Credit Exposure within theRevolving Credit Commitment.

 

(b)           SwingLine Exposure.  If, at any time, theSwing Line Exposure shall exceed the Swing Line Commitment, Borrowers shall, aspromptly as practicable, but in no event later than the next Business Day, payan aggregate principal amount of the Swing Loans sufficient to bring the SwingLine Exposure within the Swing Line Commitment.

 

(c)           MandatoryPayments Generally.  Unless otherwisedesignated by Administrative Borrower, each prepayment pursuant to subsection (a) hereofshall be applied in the following order (i) first, to the outstanding BaseRate Loans, and (ii) second, to the outstanding Eurodollar Loans, providedthat, in each case, if the outstanding principal amount of any Eurodollar Loanshall be reduced to an amount less than the minimum amount set forth in Section 2.5(c) hereofas a result of such prepayment, then such Eurodollar Loan shall be convertedinto a Base Rate Loan on the date of such prepayment.  Any prepayment of a Eurodollar Loan or SwingLoan pursuant to this Section 2.11 shall be subject to the prepaymentprovisions set forth in Article III hereof.

 

Section 2.12.  Liability of Borrowers.

 

(a)           Joint and Several Liability.  EachBorrower hereby authorizes Administrative Borrower or any other Borrower torequest Loans or Letters of Credit hereunder. Each Borrower acknowledges and agrees that Agent and the Lenders areentering into this Agreement at the request of each Borrower and with theunderstanding that each Borrower is and shall remain fully liable, jointly andseverally, for payment in full of the Obligations and any other amountpayable under this Agreement and the other Loan Documents.  EachBorrower agrees that it is receiving or will receive a direct pecuniary benefitfor each Loan made or Letter of Credit issued hereunder.

 

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(b)           Appointment of Administrative Borrower.  EachBorrower hereby irrevocably appoints Administrative Borrower as the borrowingagent and attorney-in-fact for all Borrowers, which appointment shall remain infull force and effect unless and until Agent shall have received prior writtennotice signed by each Borrower that such appointment has been revoked and thatanother Borrower has been appointed Administrative Borrower.  Each Borrower hereby irrevocably appoints andauthorizes Administrative Borrower to (i) provide Agent with all noticeswith respect to Loans and Letters of Credit obtained for the benefit of anyBorrower and all other notices and instructions under this Agreement, (ii) takesuch action as Administrative Borrower deems appropriate on its behalf toobtain Loans and Letters of Credit, and (iii) exercise such other powersas are reasonably incidental thereto to carry out the purposes of thisAgreement.  It is understood that thehandling of the Collateral of Borrowers in a combined fashion, as more fullyset forth herein, is done solely as an accommodation to Borrowers in order toutilize the collective borrowing powers of Borrowers in the most efficient andeconomical manner and at their request, and that neither Agent nor any Lendershall incur liability to any Borrower as a result hereof.  Each Borrower expects to derive benefit,directly or indirectly, from the handling of the Collateral in a combinedfashion since the successful operation of each Borrower is dependent on thecontinued successful performance of the integrated group.

 

(c)           Maximum Liability of Each Domestic SubsidiaryBorrower.  Anything in this Agreement or any other LoanDocument to the contrary notwithstanding, in no event shall the maximumliability of any Domestic Subsidiary Borrower exceed the maximum amount that(after giving effect to the incurring of the obligations hereunder and to anyrights to contribution of such Domestic Subsidiary Borrower from otherAffiliates of such Domestic Subsidiary Borrower) would not render the rights topayment of Agent and the Lenders hereunder void, voidable or avoidable underany applicable fraudulent transfer law.

 

(d)           Waivers of Each Borrower.  Inthe event that any obligation of any Borrower under this Agreement is deemed tobe an agreement by such Borrower to answer for the debt or default of anotherCredit Party or as an hypothecation of property as security therefore, eachBorrower represents and warrants that (i) no representation has been madeto such Borrower as to the creditworthiness of such other Credit Party, and (ii) suchBorrower has established adequate means of obtaining from such other CreditParty on a continuing basis, financial or other information pertaining to suchother Credit Party’s financial condition. Each Borrower expressly waives, except as expressly required under thisAgreement, diligence, demand, presentment, protest and notice of every kind andnature whatsoever, consents to the taking by Agent and the Lenders of anyadditional security of another Credit Party for the obligations secured hereby,or the alteration or release in any manner of any security of another CreditParty now or hereafter held inconnection with the Obligations, and consents that Agent, the Lenders and anyother Credit Party may deal with each other in connection with such obligationsor otherwise, or alter any contracts now or hereafter existing between them, inany manner whatsoever, including without limitation the renewal, extension,acceleration or changes in time for payment of any such obligations or in theterms or conditions of any security held. Agent and the Lenders are hereby expressly given the right, at theiroption, to proceed in the enforcement of any of the Obligations independentlyof any other remedy or security they may at any time hold in connection withsuch obligations secured and it shall not be necessary for Agent 

 

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and the Lenders to proceed upon or against orexhaust any other security or remedy before proceeding to enforce their rightsagainst such Borrower.  Each Borrowerfurther waives any right of subrogation, reimbursement, exoneration,contribution, indemnification, setoff or other recourse in respect of sums paidto Agent and the Lenders by any other Credit Party, until such time as theCommitment has been terminated and the Secured Obligations have been repaid infull (other than contingent indemnity obligations).

 

Section 2.13.  Addition of a Domestic Subsidiary Borrower.

 

(a)           Addition of a Domestic Subsidiary Borrower.  Atthe request of Administrative Borrower (with at least seven days prior writtennotice to Agent and the Lenders), a Wholly-Owned Subsidiary of EPIQ that is aDomestic Subsidiary may become a Domestic Subsidiary Borrower hereunder,provided that all of the following requirements shall have been met to thesatisfaction of Agent:

 

(i)            Domestic SubsidiaryBorrower Assumption Agreement.  EachBorrower and such Domestic Subsidiary shall have delivered to Agent a fullyexecuted Domestic Subsidiary Borrower Assumption Agreement.  Agent is hereby authorized by the Lenders toenter into such Domestic Subsidiary Borrower Assumption Agreement on behalf ofthe Lenders.

 

(ii)           Notes as Requested.  Each Borrower and such Domestic Subsidiaryshall have executed and delivered to (A) each Lender requesting areplacement Revolving Credit Note such Lender’s replacement Revolving CreditNote, and (B) the Swing Line Lender a replacement Swing Line Note, ifrequested by the Swing Line Lender.

 

(iii)          Security Documents.  Such Domestic Subsidiary shall have executedand delivered to Agent, for the benefit of the Lenders, such Security Documentsas may be deemed advisable or necessary by Agent.

 

(iv)          Lien Searches.  With respect to the property owned or leasedby such Domestic Subsidiary, Borrowers shall have caused to be delivered toAgent (A) the results of Uniform Commercial Code lien searches,satisfactory to Agent and the Lenders, (B) the results of federal andstate tax lien and judicial lien searches, satisfactory to Agent and theLenders, and (C) Uniform Commercial Code termination statements reflectingtermination of all U.C.C. Financing Statements previously filed by any Personand not expressly permitted pursuant to Section 5.9 hereof.

 

(v)           Officer’sCertificate, Resolutions, Organizational Documents.  Such Domestic Subsidiary shall have deliveredto Agent an officer’s certificate (or comparable domestic document) certifyingthe names of the officers or members of such Domestic Subsidiary authorized tosign the Loan Documents, together with the true signatures of such officers andcertified copies of (A) the resolutions of the board of directors (orcomparable documents) of such Domestic Subsidiary evidencing approval of theexecution and delivery of the Loan Documents and the execution of other Related

 

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Writings to which suchDomestic Subsidiary is a party, and (B) the Organizational Documents ofsuch Domestic Subsidiary.

 

(vi)          Good Standing or FullForce and Effect Certificates.  SuchDomestic Subsidiary shall have delivered to Agent a good standing certificateor full force and effect certificate, as the case may be, for such DomesticSubsidiary, issued on or about the date that such Domestic Subsidiary is tobecome a Domestic Subsidiary Borrower hereunder, by the Secretary of State inthe state or states where such Domestic Subsidiary is incorporated or formed orqualified as a foreign entity.

 

(vii)         Legal Opinion.  Such Domestic Subsidiary shall have deliveredto Agent an opinion of counsel for such Domestic Subsidiary, in form andsubstance reasonably satisfactory to Agent.

 

(viii)        Miscellaneous. Borrowers and such Domestic Subsidiary shall have provided to Agent suchother items and shall have satisfied such other conditions as may be reasonablyrequired by Agent.

 

(b)           AdditionalCredit Party Bound by Provisions. Upon satisfaction by Administrative Borrower and any such DomesticSubsidiary of the requirements set forth in subsection (a) above, Agentshall promptly notify Administrative Borrower and the Lenders, whereupon suchDomestic Subsidiary shall be designated a “Domestic Subsidiary Borrower”pursuant to the terms and conditions of this Agreement, and such DomesticSubsidiary shall become bound by all representations, warranties, covenants,provisions and conditions of this Agreement and each other Loan Documentapplicable to Borrowers as if such Domestic Subsidiary Borrower had been theoriginal party making such representations, warranties and covenants.

 

ARTICLE III.  ADDITIONALPROVISIONS RELATING TOEURODOLLAR LOANS; INCREASED CAPITAL; TAXES

 

Section 3.1. Requirements of Law.

 

(a)           If,after the Closing Date, (i) the adoption of or any change in anyRequirement of Law or in the interpretation or application thereof by aGovernmental Authority, or (ii) the compliance by any Lender with anyrequest or directive (whether or not having the force of law) from any centralbank or other Governmental Authority:

 

(A)          shall subject any Lenderto any tax of any kind whatsoever with respect to this Agreement, any Letter ofCredit or any Eurodollar Loan made by it, or change the basis of taxation ofpayments to such Lender in respect thereof (except for Taxes and Excluded Taxeswhich are governed by Section 3.2 hereof);

 

(B)           shall impose, modify orhold applicable any reserve, special deposit, compulsory loan or similarrequirement against assets held by, deposits or other liabilities 

 

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in or for the account of,advances, loans or other extensions of credit by, or any other acquisition offunds by, any office of such Lender that is not otherwise included in thedetermination of the Eurodollar Rate; or

 

(C)           shall impose on suchLender any other condition;

 

and the result of any ofthe foregoing is to increase the cost to such Lender of making, convertinginto, continuing or maintaining Eurodollar Loans or issuing or participating inLetters of Credit, or to reduce any amount receivable hereunder in respect thereof,then, in any such case, Borrowers shall pay to such Lender, promptly afterreceipt of a written request (or, if required by Administrative Borrower, acertificate of such Lender specifying the basis for such request) therefor, anyadditional amounts necessary to compensate such Lender for such increased costor reduced amount receivable.  If anyLender becomes entitled to claim any additional amounts pursuant to thissubsection (a), such Lender shall promptly notify Administrative Borrower (witha copy to Agent) of the event by reason of which it has become so entitled.

 

(b)           Ifany Lender shall have determined that, after the Closing Date, the adoption ofor any change in any Requirement of Law regarding capital adequacy or in theinterpretation or application thereof by a Governmental Authority or complianceby such Lender or any corporation controlling such Lender with any request ordirective regarding capital adequacy (whether or not having the force of law)from any Governmental Authority shall have the effect of reducing the rate ofreturn on such Lender’s or such corporation’s capital as a consequence of itsobligations hereunder, or under or in respect of any Letter of Credit, to alevel below that which such Lender or such corporation could have achieved butfor such adoption, change or compliance (taking into consideration the policiesof such Lender or corporation with respect to capital adequacy), then from timeto time, upon submission by such Lender to Administrative Borrower (with a copyto Agent) of a written request therefor (which shall include the method forcalculating such amount in reasonable detail), Borrowers shall promptly pay orcause to be paid to such Lender such additional amount or amounts as willcompensate such Lender for such reduction.

 

(c)           Acertificate as to any additional amounts payable pursuant to this Section 3.1submitted by any Lender to Administrative Borrower (with a copy to Agent) shallbe conclusive absent manifest error.  Indetermining any such additional amounts, such Lender may use any method ofaveraging and attribution that it (in its sole discretion) shall deemapplicable.  The obligations of Borrowerspursuant to this Section 3.1 shall survive the termination of thisAgreement and the payment of the Loans and all other amounts payable hereunder.

 

(d)           Notwithstandingthe foregoing, no Lender shall be entitled to any indemnification orreimbursement pursuant to this Section 3.1 to the extent such Lender hasnot made demand therefore (as set forth above) within two hundred seventy (270)days after the occurrence of the event giving rise to such entitlement or, iflater, such Lender having knowledge of such event.

 

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Section 3.2.  Taxes.

 

(a)           Allpayments made by any Credit Party under any Loan Document shall be made freeand clear of, and without deduction or withholding for or on account of anyTaxes or Other Taxes.  If any Taxes orOther Taxes are required to be deducted or withheld from any amounts payable toAgent or any Lender hereunder, the amounts so payable to Agent or such Lendershall be increased to the extent necessary to yield to Agent or such Lender(after deducting, withholding and payment of all Taxes and Other Taxes)interest or any such other amounts payable hereunder at the rates or in theamounts specified in the Loan Documents.

 

(b)           Wheneverany Taxes or Other Taxes are required to be withheld and paid by a CreditParty, such Credit Party shall timely withhold and pay such taxes to the relevantGovernmental Authorities.  As promptly aspossible thereafter, such Credit Party shall send to Agent for its own accountor for the account of the relevant Lender, as the case may be, a certified copyof an original official receipt received by such Credit Party showing paymentthereof or other evidence of paymentreasonably acceptable to Agent or such Lender.  If such Credit Party shall fail to pay anyTaxes or Other Taxes when due to the appropriate Governmental Authority orfails to remit to Agent the required receipts or other required documentaryevidence, such Credit Party and Borrowers shall indemnify Agent and theappropriate Lenders on demand for any incremental Taxes or Other Taxes paid orpayable by Agent or such Lender as a result of any such failure.

 

(c)           Ifany Lender shall be so indemnified by a Credit Party, such Lender shall usereasonable efforts to obtain the benefits of any refund, deduction or creditfor any taxes or other amounts with respect to the amount paid by such CreditParty and shall reimburse such Credit Party to the extent, but only to theextent, that such Lender shall receive a refund with respect to the amount paidby such Credit Party or an effective net reduction in taxes or othergovernmental charges (including any taxes imposed on or measured by the totalnet income of such Lender) of the United States or any state or subdivision orany other Governmental Authority thereof by virtue of any such deduction orcredit, after first giving effect to all other deductions and credits otherwiseavailable to such Lender.  If, at thetime any audit of such Lender’s income tax return is completed, such Lenderdetermines, based on such audit, that it shall not have been entitled to thefull amount of any refund reimbursed to such Credit Party as aforesaid or thatits net income taxes shall not have been reduced by a credit or deduction forthe full amount reimbursed to such Credit Party as aforesaid, such CreditParty, upon request of such Lender, shall promptly pay to such Lender theamount so refunded to which such Lender shall not have been so entitled, or theamount by which the net income taxes of such Lender shall not have been soreduced, as the case may be.

 

(d)           EachLender that is not (i) a citizen or resident of the United States ofAmerica, (ii) a corporation, partnership or other entity created ororganized in or under the laws of the United States of America (or anyjurisdiction thereof), or (iii) an estate or trust that is subject tofederal income taxation regardless of the source of its income (any suchPerson, a “Non-U.S. Lender”) shall deliver to Administrative Borrower and Agenttwo copies of either U.S. Internal Revenue Service Form W-8BEN, Form W-8IMYor Form W-8ECI, or, in the case of a Non-U.S. Lender claiming exemptionfrom U.S. federal withholding tax under Section 871(h) or 881(c) ofthe Code with respect to payments of “portfolio interest”, a statement withrespect to such interest and two copies of Form W-8BEN, or any subsequentversions thereof or successors 

 

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thereto, properly completed and duly executed by such Non-U.S. Lenderclaiming complete exemption from, or a reduced rate of, U.S. federalwithholding tax on all payments by Credit Parties under this Agreement and theother Loan Documents.  Such forms shallbe delivered by each Non-U.S. Lender on or before the date it becomes a partyto this Agreement or such other Loan Document. In addition, each Non-U.S. Lender shall deliver such forms orappropriate replacements promptly upon the expiration, obsolescence orinvalidity of any form previously delivered by such Non-U.S. Lender.  Each Non-U.S. Lender shall promptly notifyAdministrative Borrower at any time it determines that such Lender is no longerin a position to provide any previously delivered certificate to AdministrativeBorrower (or any other form of certification adopted by the U.S. taxingauthorities for such purpose). Notwithstanding any other provision of this subsection (d), a Non-U.S.Lender shall not be required to deliver any form pursuant to this subsection (d) thatsuch Non-U.S. Lender is not legally able to deliver.

 

(e)           Theagreements in this Section 3.2 shall survive the termination of the LoanDocuments and the payment of the Loans and all other amounts payable hereunder.

 

(f)            Forany period with respect to which a Non-U.S. Lender has failed to provideBorrowers with the appropriate form, statement or other document described insubsection (d) above (other than if such failure is due to a change inlaw, or in the interpretation or application thereof, occurring subsequent tothe date on which the form otherwise is not required under subsection (d) above),such Non-U.S. Lender shall not be entitled to indemnification under Section 3.2(a) or(b) with respect to any additional Taxes imposed by the United Statessolely by reason of such failure.

 

(g)           Ifany Lender is entitled to a reduction in (and not a complete exemption from)the applicable withholding tax and the Company shall have previously paid infull such withholding tax prior to such reduction, the Company may withholdfrom any interest payment to such Lender an amount equivalent to the reductionin the applicable withholding tax.

 

Section 3.3. Funding Losses.  Borrowersagree to indemnify each Lender, promptly after receipt of a written, reasonablydetailed certification and request therefor, and to hold each Lender harmlessfrom, any loss or expense that such Lender may sustain or incur as aconsequence of (a) default by a Borrower in making a borrowing of,conversion into or continuation of Eurodollar Loans after such Borrower hasgiven a notice requesting the same in accordance with the provisions of thisAgreement, (b) default by a Borrower in making any prepayment of or conversionfrom Eurodollar Loans after such Borrower has given a notice thereof inaccordance with the provisions of this Agreement, (c) the making of aprepayment of a Eurodollar Loan on a day that is not the last day of anInterest Period applicable thereto, or (d) any conversion of a EurodollarLoan to a Base Rate Loan on a day that is not the last day of an InterestPeriod applicable thereto.  Suchindemnification shall be in an amount equal to the excess, if any, of (i) theamount of interest that would have accrued on the amounts so prepaid, or not soborrowed, converted or continued, for the period from the date of suchprepayment or of such failure to borrow, convert or continue to the last day ofsuch Interest Period (or, in the case of a failure to borrow, convert orcontinue, the Interest Period that would have commenced on the date of suchfailure) in each case at the applicable rate of interest for such Loansprovided for herein (excluding, however, the Applicable Margin includedtherein, if any) over (ii) the 

 

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amount of interest (as reasonably determined by such Lender) that wouldhave accrued to such Lender on such amount by placing such amount on depositfor a comparable period with leading banks in the appropriate London interbankmarket, along with any administration fee charged by such Lender.  A certificate as to any amounts payablepursuant to this Section 3.3 submitted to Administrative Borrower (with acopy to Agent) by any Lender shall be conclusive absent manifest error.  The obligations of Borrowers pursuant to thisSection 3.3 shall survive the termination of this Agreement and thepayment of the Loans and all other amounts payable hereunder.  Notwithstanding the foregoing, no Lender shallbe entitled to any indemnification or reimbursement pursuant to this Section 3.3to the extent such Lender has not made demand therefore (as set forth above)within two hundred seventy (270) days after the occurrence of the event givingrise to such entitlement or, if later, such Lender having knowledge of suchevent.

 

Section 3.4. Change of Lending Office. Each Lender agrees that, upon the occurrence of any event giving rise tothe operation of Section 3.1 or 3.2(a) hereof with respect to suchLender, it will, if requested by Administrative Borrower, use reasonableefforts (subject to overall policy considerations of such Lender) to designateanother lending office (or an affiliate of such Lender, if practical for suchLender) for any Loans affected by such event with the object of avoiding theconsequences of such event; provided, that such designation is made on termsthat, in the sole judgment of such Lender, cause such Lender and its lendingoffice(s) to suffer no economic, legal or regulatory disadvantage; andprovided, further, that nothing in this Section 3.4 shall affect orpostpone any of the obligations of any Borrower or the rights of any Lenderpursuant to Section 3.1 or 3.2(a) hereof.

 

Section 3.5. Eurodollar Rate Lending Unlawful; Inability to Determine Rate.

 

(a)           Ifany Lender shall reasonably determine (which determination shall, upon noticethereof to Administrative Borrower and Agent, be conclusive and binding onBorrowers) that, after the Closing Date, (i) the introduction of or anychange in or in the interpretation of any law makes it unlawful, or (ii) anyGovernmental Authority asserts that it is unlawful, for such Lender to make orcontinue any Loan as, or to convert (if permitted pursuant to this Agreement)any Loan into, a Eurodollar Loan, the obligations of such Lender to make,continue or convert any such Eurodollar Loan shall, upon such determination, besuspended until such Lender shall notify Agent that the circumstances causingsuch suspension no longer exist, and all outstanding Eurodollar Loans payableto such Lender shall automatically convert (if conversion is permitted underthis Agreement) into a Base Rate Loan, or be repaid (if no conversion ispermitted) at the end of the then current Interest Periods with respect theretoor sooner, if required by law or such assertion.

 

(b)           IfAgent or the Required Lenders reasonably determine that for any reason adequateand reasonable means do not exist for determining the Eurodollar Rate for anyrequested Interest Period with respect to a proposed Eurodollar Loan, or thatthe Eurodollar Rate for any requested Interest Period with respect to aproposed Eurodollar Loan does not adequately and fairly reflect the cost to theLenders of funding such Loan, Agent will promptly so notify AdministrativeBorrower and each Lender.  Thereafter,the obligation of the Lenders to make or maintain such Eurodollar Loan shall besuspended until Agent (upon the instruction of the Required Lenders) revokessuch notice.  Upon receipt of suchnotice, Administrative Borrower 

 

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may revoke any pending request for a borrowing of, conversion to orcontinuation of such Eurodollar Loan or, failing that, will be deemed to haveconverted such request into a request for a borrowing of a Base Rate Loan inthe amount specified therein.

 

Section 3.6. Replacement of Lenders. Administrative Borrower shall be permitted to replace any Lender thatrequests reimbursement for amounts owing pursuant to Section 3.1 or 3.2(a) hereof,or asserts its inability to make a Eurodollar Loan pursuant to Section 3.5hereof; provided that (a) such replacement does not conflict with anyRequirement of Law, (b) no Default or Event of Default shall have occurredand be continuing at the time of such replacement, (c) prior to any suchreplacement, such Lender shall have taken no action under Section 3.4hereof so as to eliminate the continued need for payment of amounts owingpursuant to Section 3.1 or 3.2(a) hereof or, if it has taken any action,such request has still been made, (d) the replacement financialinstitution shall purchase, at par, all Loans and other amounts owing to suchreplaced Lender on or prior to the date of replacement and assume allcommitments and obligations of such replaced Lender, (e) the appropriateBorrowers shall be liable to such replaced Lender under Section 3.3 hereofif any Eurodollar Loan owing to such replaced Lender shall be purchased otherthan on the last day of the Interest Period relating thereto, (f) the replacementLender, if not already a Lender, shall be reasonably satisfactory to Agent, (g) thereplaced Lender shall be obligated to make such replacement in accordance withthe provisions of Section 11.10 hereof (provided that Borrowers (or thesucceeding Lender, if such Lender is willing) shall be obligated to pay theassignment fee referred to therein), and (h) until such time as suchreplacement shall be consummated, the appropriate Borrowers shall pay alladditional amounts (if any) required pursuant to Section 3.1 or 3.2(a) hereof,as the case may be.

 

Section 3.7. Discretion of Lenders as to Manner of Funding.  Notwithstanding any provision of thisAgreement to the contrary, each Lender shall be entitled to fund and maintainits funding of all or any part of such Lender’s Loans in any manner such Lenderdeems to be appropriate; it being understood, however, that for the purposes ofthis Agreement all determinations hereunder shall be made as if such Lender hadactually funded and maintained each Eurodollar Loan during the applicableInterest Period for such Loan through the purchase of deposits having amaturity corresponding to such Interest Period and bearing an interest rateequal to the Eurodollar Rate for such Interest Period.

 

ARTICLE IV.  CONDITIONS PRECEDENT

 

Section 4.1. Conditions to Each Credit Event. The obligation of the Lenders, the Fronting Lender and the Swing LineLender to participate in any Credit Event shall be conditioned, in the case ofeach Credit Event, upon the following:

 

(a)           allconditions precedent as listed in Section 4.2 hereof required to besatisfied prior to the first Credit Event shall have been satisfied prior to oras of the first Credit Event;

 

(b)           AdministrativeBorrower shall have submitted a Notice of Loan (or with respect to a Letter ofCredit, complied with the provisions of Section 2.2(b)(ii) hereof)and otherwise complied with Section 2.5 hereof;

 

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(c)           noDefault or Event of Default shall then exist or immediately after such CreditEvent would exist;

 

(d)           nocondition or event shall have occurred that Agent or the Required Lendersdetermine has or is reasonably likely to have a Material Adverse Effect; and

 

(e)           eachof the representations and warranties contained in Article VI hereof shallbe true in all material respects as if made on and as of the date of suchCredit Event, except to the extent that any thereof expressly relate to anearlier date.

 

Each request by Administrative Borrower or any other Borrower for aCredit Event shall be deemed to be a representation and warranty by Borrowersas of the date of such request as to the satisfaction of the conditionsprecedent specified in subsections (c), (d) and (e) above.

 

Section 4.2. Conditions to the First Credit Event.  Borrowers shall cause the following conditions to be satisfied on orprior to the Closing Date.  Theobligation of the Lenders, the Fronting Lender and the Swing Line Lender toparticipate in the first Credit Event is subject to Borrowers satisfying eachof the following conditions prior to or concurrently with such Credit Event(unless waived in writing by Agent):

 

(a)           Notesas Requested.  Each Borrower shallhave executed and delivered to (i) each Lender requesting a RevolvingCredit Note such Lender’s Revolving Credit Note, and (ii) the Swing LineLender the Swing Line Note, if requested by the Swing Line Lender.

 

(b)           Guarantiesof Payment.  Each Guarantor ofPayment shall have executed and delivered to Agent a Guaranty of Payment, inform and substance reasonably satisfactory to Agent and the Lenders.

 

(c)           SecurityAgreements.  Each Guarantor ofPayment shall have executed and delivered to Agent, for the benefit of theLenders, a Security Agreement, and such other documents or instruments, as maybe reasonably required by Agent to create or perfect the Liens of Agent, forthe benefit of the Lenders, in the assets of such Credit Party, all to be inform and substance reasonably satisfactory to Agent and the Lenders.

 

(d)           PledgeAgreements.  Each Credit Party thathas a Subsidiary shall have executed and delivered to Agent, for the benefit ofthe Lenders, a Pledge Agreement, in form and substance satisfactory to Agent,with respect to the Pledged Securities, together with the Pledged Securities referencedtherein and appropriate stock powers.

 

(e)           Confirmationof Intellectual Property Security Agreements.  Each (i) Credit Party that previouslyexecuted and delivered to Agent, for the benefit of the Lenders, anIntellectual Property Security Agreement, shall execute and deliver to Agent aConfirmation of Intellectual Property Security Agreement, and (ii) CreditParty that owns federally registered intellectual property (other than a CreditParty subject to subpart (i) above) shall have executed and 

 

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delivered to Agent, for the benefit of the Lenders, an IntellectualProperty Security Agreement, in form and substance reasonably satisfactory toAgent.

 

(f)            ControlAgreements.  Borrowers shall have deliveredto Agent a Control Agreement, in form and substance reasonably satisfactory toAgent, for each Deposit Account or securities account maintained by a CreditParty (other than the securities account of EPIQ (#48604181) held at SiliconValley Bank), unless (i) a Control Agreement was already provided for suchdeposit account prior to the Closing Date, or (ii) otherwise agreed to byAgent.

 

(g)           RealEstate Matters.  With respect to eachparcel of the Real Property owned by a Credit Party, Borrowers shall havedelivered to Agent:

 

(i)            an opinion of counselwith respect to the enforceability of the Mortgage Amendment, in form andsubstance reasonably satisfactory to Agent and the Lenders;

 

(ii)           two fully executedoriginals of each Mortgage Amendment; and

 

(iii)          with respect to eachparcel of the Real Property, an updated loan policy of title insurancereasonably acceptable to Agent.

 

(h)           LienSearches.  With respect to theproperty owned or leased by each Credit Party and any other property securingthe Obligations, Borrowers shall have caused to be delivered to Agent (i) theresults of Uniform Commercial Codelien searches, satisfactory to Agent and the Lenders, (ii) the results offederal and state tax lien and judicial lien searches, satisfactory to Agentand the Lenders, and (iii) UniformCommercial Code termination statements reflecting termination of allU.C.C. Financing Statements previously filed by any Person and not expresslypermitted pursuant to Section 5.9 hereof.

 

(i)            Officer’sCertificate, Resolutions, Organizational Documents.  Each Credit Party shall have delivered toAgent an officer’s certificate (or comparable domestic or foreign documents)certifying the names of the officers of such Credit Party authorized to signthe Loan Documents, together with the true signatures of such officers andcertified copies of (i) the resolutions of the board of directors (orcomparable domestic or foreign documents) of such Credit Party evidencingapproval of the execution and delivery of the Loan Documents and the executionof other Related Writings to which such Credit Party is a party, and (ii) theOrganizational Documents of such Credit Party.

 

(j)            GoodStanding and Full Force and Effect Certificates.  Borrowers shall have delivered to Agent agood standing certificate or full force and effect certificate (or comparabledocument, if neither certificate is available in the applicable jurisdiction),as the case may be, for each Credit Party, issued on or about the Closing Dateby the Secretary of State in the state or states where such Credit Party isincorporated or formed or qualified as a foreign entity.

 

(k)           LegalOpinion.  Borrowers shall havedelivered to Agent an opinion of counsel for each Credit Party, in form andsubstance reasonably satisfactory to Agent and the Lenders.

 

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(l)            InsuranceCertificate.  Borrowers shall havedelivered to Agent evidence of insurance on ACORD 25 and 27 or 28 form, andotherwise reasonably satisfactory to Agent and the Lenders, of adequate realproperty, personal property and liability insurance of each Company, withAgent, on behalf of the Lenders, listed as mortgagee loss payee and additionalinsured, as appropriate.

 

(m)          AdvertisingPermission Letter.  Borrowers shallhave delivered to Agent an advertising permission letter, authorizing Agent topublicize the transaction and specifically to use the names of Borrowers inconnection with “tombstone” advertisements in one or more publications selectedby Agent.

 

(n)           AgentFee Letter, Closing Fee Letter and Other Fees.  Borrowers shall have (i) executed anddelivered to Agent, the Agent Fee Letter and paid to Agent, for its soleaccount, the fees stated therein, (ii) executed and delivered to Agent,the Closing Fee Letter and paid to Agent, for the benefit of the Lenders, thefees stated therein, and (iii) paid all legal fees and expenses of Agentin connection with the preparation and negotiation of the Loan Documents.

 

(o)           ClosingCertificate.  Borrowers shall havedelivered to Agent and the Lenders an officer’s certificate certifying that, asof the Closing Date, (i) all conditions precedent set forth in this Article IVhave been satisfied, (ii) no Default or Event of Default exists norimmediately after the first CreditEvent will exist, and (iii) each of the representations andwarranties contained in Article VI hereof are true and correct in allmaterial respects as of the Closing Date.

 

(p)           Letterof Direction.  Borrowers shall havedelivered to Agent a letter of direction authorizing Agent, on behalf of theLenders, to disburse the proceeds of the Loans, which letter of directionincludes the authorization to transfer funds under this Agreement and the wireinstructions that set forth the locations to which such funds shall be sent.

 

(q)           Designationof Senior Indebtedness; Convertible Subordinated Documents.  Borrowers shall, on the Closing Date, deliverto Agent, for the benefit of the Lenders, (i) written confirmation (inform and substance reasonably satisfactory to Agent) that EPIQ shall have givenwritten notice to each Convertible Subordinated Noteholder that the SecuredObligations are being designated as Senior Indebtedness (as defined in theConvertible Subordinated Notes), and (ii) a copy of the ConvertibleSubordinated Documents, certified by an officer of EPIQ as being true andcomplete as of the Closing Date.

 

(r)            NoMaterial Adverse Change.  No materialadverse change, in the opinion of Agent, shall have occurred in the financialcondition, operations or prospects of the Companies since March 31, 2008.

 

(s)           Miscellaneous.  Borrowers shall have provided to Agent andthe Lenders such other items and shall have satisfied such other conditions asmay be reasonably required by Agent or the Lenders.

 

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ARTICLE V.  COVENANTS

 

Section 5.1. Insurance.  Each Companyshall (a) maintain insurance to such extent and against such hazards andliabilities as should be maintained in accordance with its reasonable businessjudgment; and (b) within ten days of any Lender’s written request, furnishto such Lender such information about such Company’s insurance as that Lendermay from time to time reasonably request, which information shall be preparedin form and detail reasonably satisfactory to such Lender.

 

Section 5.2. Money Obligations.  EachCompany shall pay in full (a) prior in each case to the date whenpenalties would attach, all taxes, assessments and governmental charges andlevies (except only those so long as and to the extent that the same shall becontested in good faith by appropriate and timely proceedings and for whichadequate provisions have been established in accordance with GAAP) for which itmay be or become liable or to which any or all of its properties may be orbecome subject; (b) all of its wage obligations to its employees incompliance with the Fair Labor Standards Act (29 U.S.C. §§ 206-207) or anycomparable provisions; and (c) all of its other obligations calling forthe payment of money (except only those so long as and to the extent that thesame shall be contested in good faith and for which adequate provisions havebeen established in accordance with GAAP) before such payment becomes overdue;except in the case of (a), (b) or (c), as would not reasonably be expectedto have a Material Adverse Effect.

 

Section 5.3. Financial Statements and Information.

 

(a)           QuarterlyFinancials.  Borrowers shall deliverto Agent, within forty-five (45) days after the end of each of the first threequarterly periods of each fiscal year of EPIQ, balance sheets of the Companiesas of the end of such period and statements of income (loss), stockholders’equity and cash flow for the quarter and fiscal year to date periods, allprepared on a Consolidated basis, in accordance with GAAP, and certified by aFinancial Officer.

 

(b)           AnnualAudit Report.  Borrowers shalldeliver to Agent, within ninety (90) days after the end of each fiscal year ofEPIQ, an annual audit report of the Companies for that year prepared on aConsolidated basis, in accordance with GAAP, and certified by an opinion (whichshall be unqualified as to going concern or scope (other than a qualificationrelating to the refinancing of the Convertible Subordinated Indebtedness)) ofan independent nationally recognized public accountant or a public accountantcertified by the Public Company Accounting Oversight Board, which report shallinclude balance sheets and statements of income (loss), stockholders’ equityand cash-flow for that period.

 

(c)           Compliance Certificate.  Borrowersshall deliver to Agent, concurrently with the delivery of the financialstatements set forth in subsections (a) and (b) above, a ComplianceCertificate.

 

(d)           ManagementReport.  Borrowers shall deliver toAgent, concurrently with the delivery of the quarterly and annual financialstatements set forth in subsections (a) and (b) above, a copy of anymanagement report, letter or similar writing furnished to the Companies by 

 

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the accountants in respect of the Companies’ systems, operations,financial condition or properties.

 

(e)           AnnualBudget.  Borrowers shall deliver toAgent, within thirty (30) days after the end of each fiscal year of EPIQ, anannual budget of the Companies for the then current fiscal year, to be in formand detail reasonably satisfactory to Agent.

 

(f)            Shareholderand SEC Documents.  Borrowers shalldeliver to Agent, as soon as available, copies of all material notices,reports, definitive proxy or other statements and other documents sent byBorrowers to its shareholders generally, to the holders of any of itsdebentures or bonds generally or the trustee of any indenture securing the sameor pursuant to which they are issued, or sent by Borrowers (in final form) toany securities exchange or over the counter authority or system, or to the SECor any similar federal agency having regulatory jurisdiction over the issuanceof Borrowers’ securities.

 

(g)           FinancialInformation of Companies. Administrative Borrower shall use commercially reasonable efforts todeliver to Agent, within ten days of the written request of Agent or anyLender, such other information about the financial condition, properties andoperations of any Company as Agent or such Lender may from time to timereasonably request, which information shall be submitted in form and detailreasonably satisfactory to Agent or such Lender.

 

Section 5.4. Financial Records.  EachCompany shall at all times maintain records and books of account, which aretrue and correct in all material respects, including, without limiting thegenerality of the foregoing, appropriate provisions for possible losses andliabilities, all in accordance with GAAP, and at all reasonable times (duringnormal business hours and upon reasonable notice to such Company) permit Agent,or any representative of Agent, to examine such Company’s books and records andto make excerpts therefrom and transcripts thereof; provided that, exceptduring the continuance of an Event of Default, such examinations shall belimited to one per year.

 

Section 5.5. Franchises; Change in Business.

 

(a)           EachCompany (other than a Dormant Subsidiary) shall preserve and maintain at alltimes its existence, and its rights and franchises necessary for its business,except as otherwise permitted pursuant to Section 5.12 hereof.

 

(b)           NoCompany shall engage in any business if, as a result thereof, the generalnature of the business of the Companies taken as a whole would be substantiallychanged from the general nature of the business the Companies are engaged in onthe Closing Date.

 

Section 5.6.  ERISA Pension and Benefits Plan Compliance.  Except to the extent a failure to complywould reasonably be expected to result in a Material Adverse Effect, noCompany shall incur any accumulated funding deficiency within the meaning ofERISA, or any liability to the PBGC, established thereunder in connection withany ERISA Plan.  Borrowers shall furnishto Agent and the Lenders (a) as soon as possible and in any event withinthirty (30) 

 

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days after any Company knows or has reason to know that any ReportableEvent with respect to any ERISA Plan has occurred, a statement of a FinancialOfficer of such Company, setting forth details as to such Reportable Event andthe action that such Company proposes to take with respect thereto, togetherwith a copy of the notice of such Reportable Event given to the PBGC if a copyof such notice is available to such Company, and (b) promptly afterreceipt thereof, a copy of any notice such Company, or any member of the ControlledGroup may receive from the PBGC or the Internal Revenue Service with respect toany ERISA Plan administered by such Company; provided, that this latter clauseshall not apply to notices of general application promulgated by the PBGC orthe Internal Revenue Service.  Borrowersshall promptly notify Agent of any material taxes assessed, proposed to beassessed or that Borrowers have reason to believe may be assessed against aCompany by the Internal Revenue Service with respect to any ERISA Plan.  As used in this Section 5.6, “material”means the measure of a matter of significance that shall be determined as beingan amount equal to five percent (5%) of Consolidated Net Worth.  As soon as practicable, and in any eventwithin twenty (20) days, after any Company shall become aware that an ERISAEvent shall have occurred that could reasonably be expected to result in aMaterial Adverse Effect, such Company shall provide Agent with notice of suchERISA Event with a certificate by a Financial Officer of such Company settingforth the details of the event and the action such Company or anotherControlled Group member proposes to take with respect thereto.  Borrowers shall, at the reasonable request ofAgent, deliver or cause to be delivered to Agent true and correct copies of anydocuments relating to the ERISA Plan of any Company.

 

Section 5.7. Financial Covenants.

 

(a)           Leverage Ratio.  Borrowers shall not suffer or permit at anytime the Leverage Ratio to exceed 3.00 to 1.00.

 

(b)           FixedCharge Coverage Ratio.  Borrowersshall not suffer or permit at any time the Fixed Charge Coverage Ratio to beless than 1.25 to 1.00.

 

(c)           CurrentRatio.  Borrowers shall not suffer orpermit at any time the Current Ratio to be less than 1.50 to 1.00.

 

Section 5.8. Borrowing.  No Companyshall create, incur or have outstanding any Indebtedness of any kind; providedthat this Section 5.8 shall not apply to the following:

 

(a)           theLoans, the Letters of Credit and any other Indebtedness under this Agreement;

 

(b)           anyloans granted to or Capitalized LeaseObligations entered into by any Company for the purchase or lease offixed assets (and refinancings of such loans or Capitalized Lease Obligations), which loans and Capitalized Lease Obligations shallonly be secured by the fixed assets being purchased or leased, so long as theaggregate principal amount of all such loans and Capitalized Lease Obligations for all Companies shall not exceedFifteen Million Dollars ($15,000,000) at any time outstanding;

 

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(c)           theIndebtedness existing on the Closing Date, in addition to the otherIndebtedness permitted to be incurred pursuant to this Section 5.8, as setforth in Schedule 5.8 hereto (and any extension, renewal or refinancingthereof but only to the extent that the principal amount thereof does notincrease after the Closing Date);

 

(d)           loansto, and guaranties of Indebtedness of, a Company from a Company so long as eachsuch Company is a Credit Party;

 

(e)           Indebtednessunder any Hedge Agreement, so long as such Hedge Agreement shall have beenentered into in the ordinary course of business and not for speculativepurposes;

 

(f)            PermittedForeign Subsidiary Loans and Investments;

 

(g)           unsecuredSubordinated Indebtedness with subordination terms reasonably satisfactory toAgent, so long as (i) the aggregate principal amount of all SubordinatedIndebtedness for all Companies (including the Subordinated Indebtednessexisting as of the Closing Date and referenced on Schedule 5.8 hereto),shall not exceed One Hundred Million Dollars ($100,000,000) at any timeoutstanding, and (ii) such Subordinated Indebtedness is permitted underthe Note Agreement and the Convertible Subordinated Notes;

 

(h)           otherIndebtedness (that does not constitute Non-Credit Party Exposure) of ForeignSubsidiaries, in addition to the Indebtedness listed above, in an aggregateamount for all Foreign Subsidiaries not to exceed Three Million Dollars($3,000,000) at any time outstanding, so long as such Indebtedness is permittedunder the Note Agreement and the Convertible Subordinated Notes; and

 

(i)            otherIndebtedness, in addition to the Indebtedness listed above, in an aggregateprincipal amount for all Companies not to exceed Two Million Dollars($2,000,000) at any time outstanding, so long as such Indebtedness is permittedunder the Note Agreement and the Convertible Subordinated Notes.

 

Section 5.9. Liens.  No Company shallcreate, assume or suffer to exist (upon the happening of a contingency orotherwise) any Lien upon any of its property or assets, whether now owned orhereafter acquired; provided that this Section 5.9 shall not apply to thefollowing:

 

(a)           Liensfor taxes not yet due or that are being actively contested in good faith byappropriate proceedings and for which adequate reserves shall have beenestablished in accordance with GAAP;

 

(b)           otherstatutory or common law Liens incidental to the conduct of its business or theownership of its property and assets that (i) were incurred in theordinary course of business, (ii) were not incurred in connection with theborrowing of money or the obtaining of advances or credit, and (iii) donot in the aggregate materially detract from the value of its property orassets or materially impair the use thereof in the operation of its business;

 

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(c)           Lienson property or assets of a Subsidiary to secure obligations of such Subsidiaryto a Credit Party;

 

(d)           anyLien granted to Agent, for the benefit of the Lenders;

 

(e)           theLiens existing on the Closing Date as set forth in Schedule 5.9 heretoand replacements, extensions, renewals, refundings or refinancings thereof, butonly to the extent that the amount of debt secured thereby shall not beincreased;

 

(f)            purchasemoney Liens on fixed assets securing the loans and Capitalized LeaseObligations pursuant to Section 5.8(b) hereof, provided that suchLien is limited to the purchase price (including shipping costs and taxes) andonly attaches to the property being acquired;

 

(g)           easementsor other minor defects or irregularities in title of real property notinterfering in any material respect with the use of such property in thebusiness of any Company;

 

(h)           attachment,appeal bonds, judgments and other similar Liens to the extent such judgmentsand Liens do not, in the aggregate for all Companies, exceed Five HundredThousand Dollars ($500,000) at any time;

 

(i)            Liensof a broker or depository institution encumbering deposit, margin, commoditytrading or brokerage accounts held by such broker or depository institutionincurred in the ordinary course of business;

 

(j)            Lienson assets of Foreign Subsidiaries securing loans permitted pursuant to Section 5.8(h) hereof,in an aggregate amount for all Foreign Subsidiaries not to exceed One MillionDollars ($1,000,000); or

 

(k)           otherLiens, in addition to the Liens listed above, securing amounts, in theaggregate for all Companies, not to exceed Five Hundred Thousand Dollars($500,000) at any time.

 

No Company shall enter into any contract or agreement (other than acontract or agreement entered into in connection with Indebtedness permittedpursuant to Section 5.8(h) hereof, the purchase or lease of fixedassets that prohibits Liens on such fixed assets or intellectual propertylicensing agreements) that would prohibit Agent or the Lenders from acquiring asecurity interest, mortgage or other Lien on, or a collateral assignment of,any of the property or assets of such Company.

 

Section 5.10. Regulations T, U and X.  NoCompany shall take any action that would result in any non-compliance of theLoans or Letters of Credit with Regulations T, U or X, or any other applicableregulation, of the Board of Governors of the Federal Reserve System.

 

Section 5.11. Investments, Loans and Guaranties.  No Company shall (a) create, acquire orhold any Subsidiary, (b) make or hold any investment in any stocks, bondsor securities of any kind, (c) be or become a party to any joint ventureor other partnership, (d) make or keep 

 

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outstanding any advance or loan to any Person (other than accountsreceivable incurred in the ordinary course of business), or (e) be orbecome a Guarantor of any kind (other than a Guarantor of Payment under the Loan Documents);provided that this Section 5.11 shall not apply to the following:

 

(i)            any endorsement of acheck or other medium of payment for deposit or collection through normalbanking channels or similar transaction in the normal course of business;

 

(ii)           investments of theCompanies in Cash Equivalents;

 

(iii)          investments in, loans toand guaranties of the Indebtedness (permitted under Section 5.8 hereof)of, a Company from or by a Company so long as each such Company is a CreditParty;

 

(iv)          the holding of each ofthe Subsidiaries listed on Schedule 6.1 hereto, and the creation,acquisition and holding of any new Subsidiary after the Closing Date so long assuch new Subsidiary shall have been created, acquired or held in accordancewith the terms and conditions of this Agreement;

 

(v)           any PermittedInvestments or Permitted Foreign Subsidiary Loans and Investments, so long asno Default or Event of Default shall exist prior to of after giving effect tosuch loan or investment;

 

(vi)          the purchase or holdingof any stock or other equity interest that has been acquired pursuant to anAcquisition permitted by Section 5.13 hereof;

 

(vii)         any advance or loan to anofficer or employee of a Company made in the ordinary course of such Company’sbusiness, so long as all such advances and loans from all Companies aggregatenot more than the maximum principal sum of One Hundred Thousand Dollars($100,000) at any time outstanding;

 

(viii)        any securities (whetherdebt or equity) received by a Company in the ordinary course of business inconnection with the bankruptcy or reorganization of any customer or supplier ofsuch Company;

 

(ix)           any investment receivedin connection with Dispositions permitted pursuant to Section 5.12 hereof,so long as any such investments that shall be securities are promptly pledgedto Agent, for the benefit of the Lenders;

 

(x)            to the extentpermitted by applicable law, notes from officers and employees in exchange forcapital stock of a Company purchased by such officers or employees pursuant toa stock ownership or purchase plan or compensation plan; and

 

(xi)           other Investments notspecifically listed above in an aggregate amount, for all Companies, not toexceed Two Million Dollars ($2,000,000) at any time.

 

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For purposes of this Section 5.11,the amount of any investment in equity interests shall be based upon theinitial amount invested and shall not include any appreciation in value orreturn on such investment but shall take into account repayments, redemptionand return of capital.

 

Section 5.12. Merger and Sale of Assets. No Company shall merge, amalgamate or consolidate with any other Person,or sell, lease or transfer or otherwise dispose of any assets to any Personother than in the ordinary course of business, except that, if no Default orEvent of Default shall then exist or immediately thereafter shall begin toexist:

 

(a)           anyCompany (other than a Borrower) may merge with (i) a Borrower (providedthat such Borrower shall be the continuing or surviving Person), (ii) anyone or more Guarantors of Payment (provided that a Guarantor of Payment shallbe the continuing or surviving Person), or (iii) any other Company, solong as both such Companies are Non-Credit Parties;

 

(b)           aBorrower may merge with another Borrower (provided that EPIQ shall be acontinuing or surviving Person);

 

(c)           anyCompany may sell, lease, transfer or otherwise dispose of any of its assets to (i) aBorrower, (ii) any Guarantor of Payment, or (iii) any other Company,so long as both such Companies are Non-Credit Parties;

 

(d)           any Company may sell,lease, transfer or otherwise dispose of any assets that are obsolete or nolonger used in such Company’s business for fair market value, as determined bythe board of directors of EPIQ;

 

(e)           anysale or other Disposition (including cancellation of Indebtedness) of CashEquivalents or non-core assets acquired pursuant to Acquisitions) in theordinary course of business for fair market value, as determined by the boardof directors of EPIQ; or

 

(f)            Acquisitionsmay be effected in accordance with the provisions of Section 5.13 hereofand investments may be effected in accordance with the provisions of Section 5.11hereof.

 

Section 5.13. Acquisitions.  No Companyshall effect an Acquisition; provided that a Credit Party may effect anAcquisition with the prior written consent of the Required Lenders or so longas:

 

(a)           inthe case of a merger, amalgamation or other combination including a Borrower,such Borrower shall be the surviving entity (and in all cases, EPIQ shall be asurviving entity);

 

(b)           inthe case of a merger, amalgamation or other combination including a CreditParty (other than a Borrower), a Credit Party shall be the surviving entity;

 

(c)           thebusiness to be acquired shall be reasonably similar to that of the CreditParties or a reasonable extension thereof;

 

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(d)           Borrowersshall have provided to Agent and the Lenders, at least ten Business Days priorto such Acquisition (or, if the aggregate Consideration paid for suchAcquisition is less than Fifteen Million Dollars ($15,000,000), within fiveBusiness Days after the completion of such Acquisition), historical financialstatements of the target entity and a pro forma financial statement of theCompanies accompanied by a certificate of a Financial Officer of EPIQ showing (i) proforma compliance with Sections 5.7 and 5.13(g) through (j) hereof,both before and after the proposed Acquisition, (it being understood that, inthe calculation of Fixed Charge Coverage Ratio, (A) the EBITDA of thebusiness to be acquired shall be included in Consolidated EBITDA as if theAcquisition had been completed on the first day of the measurement period, (B) ConsolidatedInterest Expense shall be recalculated as if any debt incurred or assumed as aresult of the Acquisition had been in place for the entire measurement period,and (C) aside from the adjustment in subparts (A) and (B) above,the fixed charges of the business to be acquired shall not be included in thecalculation of Fixed Charge Coverage Ratio, and (ii) positive EBITDA forthe acquired entity during the most recently completed four fiscal quarters ofsuch entity;

 

(e)           noDefault or Event of Default shall exist prior to or after giving effect to suchAcquisition;

 

(f)            suchAcquisition is not actively opposed by the board of directors (or similargoverning body) of the selling Persons or the Persons whose equity interestsare to be acquired;

 

(g)           Borrowersshall have Liquidity of no less than Ten Million Dollars ($10,000,000) aftergiving effect to such Acquisition;

 

(h)           theaggregate amount of (i) cash Consideration (exclusive of the issuance ofequity) paid for any such Acquisition (or related series of Acquisitions) wouldnot exceed Eighty Million Dollars ($80,000,000), and (ii) Considerationpaid for any such Acquisition (or related series of Acquisitions) would notexceed One Hundred Twenty-Five Million Dollars ($125,000,000);

 

(i)            theaggregate cash Consideration (exclusive of the issuance of equity) paid for allAcquisitions for all Companies, during the Commitment Period, would not exceedOne Hundred Thirty Million Dollars ($130,000,000); and

 

(j)            theaggregate Consideration paid for all Acquisitions for all Companies, during theCommitment Period, would not exceed Two Hundred Million Dollars($200,000,000).

 

Section 5.14. Notice.

 

(a)           EachBorrower shall cause a Financial Officer of such Borrower to promptly notifyAgent and the Lenders, in writing, whenever:

 

(i)            a Default or Event ofDefault may occur hereunder or any representation or warranty made in Article VIhereof or elsewhere in this Agreement or in any Related Writing may for anyreason cease in any material respect to be true and complete;

 

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(ii)           a Borrower learns of alitigation or proceeding against such Borrower before a court, administrativeagency or arbitrator that, if successful, might have a Material Adverse Effect;and

 

(iii)          a Borrower learns thatthere has occurred or begun to exist any event, condition or thing that isreasonably likely to have a Material Adverse Effect.

 

(b)           Borrowersshall provide written notice to Agent and the Lenders contemporaneously withany notice provided to the Convertible Subordinated Noteholders under any ofthe Convertible Subordinated Documents.

 

Section 5.15. Restricted Payments.  NoCompany shall make or commit itself to make any Restricted Payment at any time,except that:

 

(a)           solong as no Default or Event of Default shall then exist or, after givingproforma effect to such payment, thereafter shall begin to exist, any Companymay make Capital Distributions; and

 

(b)           solong as no Default or Event of Default shall then exist or, after givingproforma effect to such payment, thereafter shall begin to exist, EPIQ may:

 

(i)            make regularlyscheduled payments of interest on the Convertible Subordinated Notes;

 

(ii)           convert the ConvertibleSubordinated Notes into equity of EPIQ; and

 

(iii)          if the AvailableLiquidity is equal to or greater than an amount equal to one hundred percent(100%) of the outstanding principal amount of the Convertible SubordinatedNotes, prepay any amount of principal of the Convertible Subordinated Notes.

 

Section 5.16.  EnvironmentalCompliance.  Each Companyshall comply in all material respects with any and all material EnvironmentalLaws including, without limitation, all Environmental Laws in jurisdictions inwhich such Company owns or operates a facility or site, arranges for disposalor treatment of hazardous substances, solid waste or other wastes, accepts fortransport any hazardous substances, solid waste or other wastes or holds anyinterest in real property or otherwise. Borrowers shall furnish to Agent and the Lenders, promptly after receiptthereof, a copy of any notice such Company may receive from any GovernmentalAuthority or private Person, or otherwise, that any material litigation orproceeding pertaining to any environmental, health or safety matter has beenfiled or is threatened against such Company, any real property in which suchCompany holds any interest or any past or present operation of suchCompany.  No Company shall allow therelease or disposal of hazardous waste, solid waste or other wastes on, underor to any real property in which any Company holds any interest or performs anyof its operations, in material violation of any material EnvironmentalLaw.  As used in this Section 5.16, “litigationor proceeding” means any demand, claim, notice, suit, suit 

 

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in equity action,administrative action, investigation or inquiry whether brought by anyGovernmental Authority or private Person, or otherwise.  Each Borrower shall defend, indemnify andhold Agent and the Lenders harmless against all costs, expenses, claims,damages, penalties and liabilities of every kind or nature whatsoever(including attorneys’ fees) arising out of or resulting from the noncomplianceof any Company with any Environmental Law. Such indemnification shall survive any termination of this Agreement.

 

Section 5.17.  Affiliate Transactions.  No Company shall, directly orindirectly, enter into or permit to exist any transaction (including, withoutlimitation, the purchase, sale, lease or exchange of any property or therendering of any service) with any Affiliate (other than a Company that is aCredit Party or a Foreign Subsidiary) on terms that shall be less favorable tosuch Company than those that might be obtained at the time in a transactionwith a non-Affiliate; provided that the foregoing shall not prohibit (a) thepayment of customary and reasonable directors’ fees, (b) the payment of reasonablecompensation and expense reimbursement to officers and employees for serviceactually rendered to any such Company, (c) indemnities and reimbursementpaid to directors, (d) stock option and compensation plans of theCompanies, (e) employment contracts with officers and management of theCompanies, (f) transactions among Companies, (g) the repurchase ofequity interests from former officers, directors and employees to the extentpermitted by this Agreement, (h) advances and loans to officers andemployees of the Companies to the extent permitted by this Agreement, and (i) othertransactions specifically permitted under this Agreement.

 

Section 5.18. Use of Proceeds.  Borrowers’use of the proceeds of the Loans shall be for working capital and other generalcorporate purposes (including Acquisitions) of the Companies and for therefinancing of existing Indebtedness.

 

Section 5.19. Corporate Names and Locations of Collateral.  No Company shall change its corporate name orits state, province or other jurisdiction of organization, unless, in eachcase, such Company shall have provided Agent and the Lenders with at least thirty(30) days prior written notice thereof. Administrative Borrower shall also promptly notify Agent and the Lendersof (a) any material change in any location where any Company’s Inventoryor Equipment is maintained, and any new locations where any material portion ofany Credit Party’s Inventory or Equipment is to be maintained; (b) anychange in the location of the office where any Company’s records pertaining toits Accounts are kept; (c) the location of any new places of business andthe changing or closing of any of its existing places of business; and (d) anychange in the location of any Company’s chief executive office.  In the event of any of the foregoing or ifdeemed appropriate by Agent, Agent is hereby authorized to file new U.C.C.Financing Statements describing the Collateral and otherwise in form andsubstance sufficient for recordation wherever necessary or appropriate, asdetermined in Agent’s sole discretion, to perfect or continue perfected thesecurity interest of Agent, for the benefit of the Lenders, in theCollateral.  Borrowers shall pay allfiling and recording fees and taxes in connection with the filing orrecordation of such U.C.C. Financing Statements and security interests andshall promptly reimburse Agent therefor if Agent pays the same.  Such amounts shall be Related Expenseshereunder.

 

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Section 5.20. Subsidiary Guaranties, Security Documents and Pledge of Stock orOther Ownership Interest.

 

(a)           Guarantiesand Security Documents.  EachDomestic Subsidiary (that is not a Dormant Subsidiary) created, acquired orheld subsequent to the Closing Date, shall promptly execute and deliver toAgent, for the benefit of the Lenders, a Guaranty of Payment of all of theObligations and a Security Agreement and Mortgages, as appropriate, suchagreements to be in form and substance reasonably acceptable to Agent, alongwith any such other supporting documentation, Security Documents, corporategovernance and authorization documents, and an opinion of counsel as may bedeemed necessary or advisable by Agent. At such time that a Subsidiary (that has been classified as a DormantSubsidiary) no longer meets the requirements of a Dormant Subsidiary,Administrative Borrower shall provide to Agent prompt written notice thereof,and shall provide, with respect to such Subsidiary, all of the documentsreferenced in the foregoing sentence.

 

(b)           Pledgeof Stock or Other Ownership Interest. With respect to the creation or acquisition of a Domestic Subsidiary orfirst-tier Foreign Subsidiary of a Borrower, Borrowers shall deliver to Agent,for the benefit of the Lenders, all of the share certificates (or otherevidence of equity) owned by a Credit Party pursuant to the terms of a PledgeAgreement executed by the appropriate Credit Party; provided that (i) noCompany shall be required to pledge more than sixty-five percent (65%) of theoutstanding voting shares or other voting ownership interest of any ForeignSubsidiary, and (ii) if Agent, in its reasonable discretion, afterconsultation with Administrative Borrower, determines that the cost of deliveryof any such share certificates is impractical or cost-prohibitive, then Agentmay agree to forego (until such time as Agent determines it is practical to doso) the delivery of such share certificates.

 

(c)           Perfectionor Registration of Interest in Foreign Shares.  With respect to any foreign shares pledged toAgent, for the benefit of the Lenders, on or after the Closing Date, Agentshall at all times, in the discretion of Agent or the Required Lenders, havethe right to perfect, at Borrowers’ cost, payable upon request therefor(including, without limitation, any foreign counsel, or foreign notary, filing,registration or similar, fees, costs or expenses), its security interest insuch shares in the respective foreign jurisdiction.

 

Section 5.21. Restrictive Agreements. Except as set forth in this Agreement, Borrowers shall not, and shallnot permit any of their Subsidiaries to, directly or indirectly, create orotherwise cause or suffer to exist or become effective any encumbrance orrestriction on the ability of any Subsidiary to (a) make, directly orindirectly, any Capital Distribution to such Borrower, (b) make, directlyor indirectly, loans or advances or capital contributions to such Borrower or (c) transfer,directly or indirectly, any of the properties or assets of such Subsidiary tosuch Borrower; except for such encumbrances or restrictions existing under orby reason of (i) applicable law, (ii) non-assignment provisions inleases or other agreements entered in the ordinary course of business, or (iii) customaryrestrictions in security agreements or mortgages securing Indebtedness orcapital leases, of a Company to the extent such restrictions shall onlyrestrict the transfer of the property subject to such security agreement,mortgage or lease.

 

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Section 5.22. Other Covenants.  In theevent that any Company shall enter into, or shall have entered into, the NoteAgreement (or the Convertible Subordinated Documents), or any agreementevidencing Indebtedness of any Company or the Companies in excess of the amountof Ten Million Dollars ($10,000,000) wherein the covenants contained thereinshall be more restrictive than the covenants set forth herein, then theCompanies shall be bound hereunder by such more restrictive covenants with thesame force and effect as if such covenants were written herein.

 

Section 5.23. Note Agreement.

 

(a)           Modifications.  EPIQ shall not, without the prior writtenconsent of Agent and the Required Lenders, amend, restate, supplement orotherwise modify any of the Convertible Subordinated Documents to (i) increasethe principal amount outstanding thereunder, or (ii) change the date ofany principal or interest payment to an earlier date.

 

(b)           NoDefault.  No “Default” or “Event ofDefault”, as each term is defined in the Convertible Subordinated Documents, (i) shallexist, or (ii) shall exist immediately after the granting or continuationof any Loan.

 

(c)           SeniorIndebtedness.  The SecuredObligations shall at all times constitute indebtedness permitted under theterms of the Convertible Subordinated Documents and “Senior Indebtedness”, asdefined in the Convertible Subordinated Documents, and permitted to be securedunder the Convertible Subordinated Documents.

 

(d)           SubordinatedIndebtedness.  The SecuredObligations shall at all times constitute senior indebtedness which is entitledto the benefits of the subordination provisions of all outstanding SubordinatedIndebtedness, including, but not limited to, the Convertible SubordinatedIndebtedness.

 

Section 5.24. Collateral.  Each Borrowershall:

 

(a)           atall reasonable times and after reasonable prior notice, allow Agent or anyLender by or through any of its officers, agents, employees, attorneys, oraccountants to (i) examine, inspect, and make extracts from such Borrower’sbooks and other records, including, without limitation, the tax returns of suchBorrower; (ii) arrange for verification of such Borrower’s Accounts, underreasonable procedures; and (iii) examine and inspect such Borrower’sInventory and Equipment, wherever located, under reasonable procedures;provided that any such examination or verification shall be limited, exceptduring the continuance of an Event of Default, to one visit per year;

 

(b)           usecommercially reasonable efforts to promptly furnish to Agent or any Lender uponreasonable request (i) additional statements and information with respectto the Collateral, and all writings and information relating to or evidencingany of such Borrower’s Accounts (including, without limitation, computerprintouts or typewritten reports listing the mailing addresses of all presentAccount Debtors), and (ii) any other writings and information as Agent orsuch Lender may reasonably request;

 

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(c)           withrespect to the securities account of EPIQ (#48604181) held at Silicon ValleyBank, promptly cause to be delivered to Agent a Control Agreement with respectthereto if at any time (i) the Leverage Ratio is equal to or greater than2.50 to 1.00, and the balance in such account exceeds Five Million Dollars($5,000,000), or (ii) the Leverage Ratio is less than 2.50 to 1.00 butgreater than or equal to 2.00 to 1.00, and the balance in such account exceedsTen Million Dollars ($10,000,000);

 

(d)           notifyAgent in writing promptly upon the creation by any Company of a Deposit Accountnot listed on Schedule 6.19 hereto and provide for the execution of aControl Agreement with respect thereto, if required by Agent;

 

(e)           promptlynotify Agent and the Lenders in writing of any information that Borrowers haveor may receive with respect to the Collateral or the Real Property that mightreasonably be determined to materially and adversely affect the value thereofor the rights of Agent and the Lenders with respect thereto;

 

(f)            maintainsuch Borrower’s Equipment (that is necessary in the business of the Companies)in good operating condition and repair, ordinary wear and tear and casualtyloss excepted, making all necessary replacements thereof in its reasonablebusiness judgment so that the value and operating efficiency thereof shall atall times be maintained and preserved;

 

(g)           deliver to Agent, tohold as security for the Secured Obligations, within ten Business Days afterthe written request of Agent, all certificated Investment Property owned by aCredit Party, in suitable form for transfer by delivery, or accompanied by dulyexecuted instruments of transfer or assignment in blank, all in form andsubstance reasonably satisfactory to Agent, or in the event such InvestmentProperty is in the possession of a securities intermediary or credited to asecurities account, execute with the related securities intermediary aninvestment property control agreement over such securities account in favor ofAgent, for the benefit of the Lenders, in form and substance reasonablysatisfactory to Agent;

 

(h)           provideto Agent, on a quarterly basis (as necessary), a list of any patents,trademarks or copyrights that have been federally registered during suchquarter; and

 

(i)            uponthe reasonable request of Agent, promptly take such action and promptly make,execute, and deliver all such additional and further items, deeds, assurances,instruments and any other writings as Agent may from time to time reasonablydeem necessary or appropriate, including, without limitation, chattel paper, tocarry into effect the intention of this Agreement, or so as to completely vestin and ensure to Agent and the Lenders their respective rights hereunder and inor to the Collateral and the Real Property.

 

Each Borrower herebyauthorizes Agent, on behalf of the Lenders, to file U.C.C. Financing Statementswith respect to the Collateral.  AllRelated Expenses are payable to Agent within thirty (30) days after demandtherefor; after the occurrence of an Event of Default, Agent may, at itsoption, debit Related Expenses directly to any deposit account of a Companylocated at Agent or the Loans.

 

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Section 5.25. Property Acquired Subsequent to the Closing Date and Right to Take AdditionalCollateral.  Borrowers shall provideAgent with prompt written notice with respect to any real property acquired byany Company subsequent to the Closing Date with an individual value in excessof One Million Dollars ($1,000,000).  Inaddition to any other right Agent and the Lenders may have pursuant to thisAgreement or otherwise, upon written request of Agent, whenever made, Borrowersshall grant to Agent as additional security for the Secured Obligations, a Lienon such real property of each Borrower. Borrowers agree, promptly after the date of such written request, tosecure all of such Indebtedness by delivering to Agent security agreements,mortgages (or deeds of trust, if applicable) or other documents, instruments oragreements or such thereof as Agent may require.  In addition, if any Subsidiary acquires anyfederally registered intellectual property (including, without limitation, anypatents, patent applications, trademarks, service marks, copyrights, licenses,and rights with respect to the foregoing) subsequent to the Closing Date,Borrowers shall promptly provide written notice to Agent and such Subsidiaryshall promptly execute and deliver an Intellectual Property CollateralAssignment Agreement with respect to such federally registered intellectualproperty.  Borrowers shall pay allrecordation, legal and other expenses in connection therewith.

 

Section 5.26.  Fiscal Year of Each Borrower.  No Borrower shall change the date of itsfiscal year end without the prior written consent of Agent.  As of the Closing Date, the fiscal year endof each Borrower is December 31 of each year.

 

Section 5.27.  Amendment of Organizational Documents.  No Company shall amend its OrganizationalDocuments to change its name or state, province or other jurisdiction oforganization, or otherwise amend its Organizational Documents in any manneradverse to the Lenders, without the prior written consent of Agent.

 

Section 5.28. Further Assurances. Borrowers shall, promptly upon request by Agent, or the Required Lendersthrough Agent, (a) correct any material defect or error that may bediscovered in any Loan Document or in the execution, acknowledgment, filing orrecordation thereof, and (b) do, execute, acknowledge, deliver, record,re-record, file, re-file, register and re-register any and all such furtheracts, deeds, certificates, assurances and other instruments related to theCollateral as Agent, or the Required Lenders through Agent, may reasonablyrequire from time to time in order to carry out more effectively the purposesof the Loan Documents.

 

ARTICLE VI.  REPRESENTATIONS AND WARRANTIES

 

Section 6.1. Corporate Existence; Subsidiaries; Foreign Qualification.  Each Company is duly organized, validlyexisting, and in good standing (or comparable concept in the applicablejurisdiction) under the laws of its state or jurisdiction of incorporation ororganization, and is duly qualified and authorized to do business and is ingood standing (or comparable concept in the applicable jurisdiction) as a foreignentity in the jurisdictions set forth opposite its name on Schedule 6.1hereto, which are all of the states or jurisdictions where the character of itsproperty or its business activities makes such qualification necessary, exceptwhere a failure to so qualify or be in good standing would not reasonably beexpected to result in a Material Adverse Effect. 

 

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Schedule 6.1 hereto sets forth, asof the Closing Date, each Subsidiary of a Borrower (and whether such Subsidiaryis a Dormant Subsidiary), its state (or jurisdiction) of formation, itsrelationship to a Borrower, including the percentage of each class of stock orother equity interest owned by a Company, the location of its chief executiveoffice and its principal place of business. Each Borrower, directly or indirectly, owns all of the equity interestsof each of its Subsidiaries.

 

Section 6.2. Corporate Authority.  EachCredit Party has the right and power and is duly authorized and empowered toenter into, execute and deliver the Loan Documents to which it is a party andto perform and observe the provisions of the Loan Documents.  The Loan Documents to which each Credit Partyis a party have been duly authorized and approved by such Credit Party’s boardof directors or other governing body, as applicable, and are the valid andbinding obligations of such Credit Party, enforceable against such Credit Partyin accordance with their respective terms, except as enforceability thereof maybe limited by bankruptcy, insolvency, moratorium and similar laws and byequitable principles, whether considered at law or in equity.  The execution, delivery and performance ofthe Loan Documents will not conflict with, result in a breach in any of theprovisions of, constitute a default under, or result in the creation of a Lien(other than Liens permitted under Section 5.9 hereof) upon any assets orproperty of any Company under the provisions of, such Company’s OrganizationalDocuments or any material agreement.

 

Section 6.3. Compliance with Laws and Contracts.  Except as would not reasonably be expected toresult in a Material Adverse Effect, each Company:

 

(a)           holdspermits, certificates, licenses, orders, registrations, franchises,authorizations, and other approvals from any Governmental Authority necessaryfor the conduct of its business and is in compliance with all applicable lawsrelating thereto;

 

(b)           isin compliance with all federal, state, local, or foreign applicable statutes,rules, regulations, and orders including, without limitation, those relating toenvironmental protection, occupational safety and health, and equal employmentpractices;

 

(c)           isnot in violation of or in default under any agreement to which it is a party orby which its assets are subject or bound;

 

(d)           hasensured that no Person who owns a controlling interest in a Company orotherwise controls a Company is (i) listed on the Specially DesignatedNationals and Blocked Person List maintained by the Office of Foreign AssetsControl (“OFAC”), Department of the Treasury, or any other similar listsmaintained by OFAC pursuant to any authorizing statute, executive order orregulation, or (ii) a Person designated under Section 1(b), (c) or(d) of Executive Order No. 13224 (September 23, 2001), anyrelated enabling legislation or any other similar executive orders;

 

(e)           isin material compliance with all applicable Bank Secrecy Act (“BSA”) andanti-money laundering laws and regulations; and

 

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(f)            isin compliance, in all material respects, with the Patriot Act.

 

Section 6.4. Litigation and Administrative Proceedings.  Except as disclosed on Schedule 6.4hereto and would not reasonably be expected to result in a Material AdverseEffect, as of the Closing Date, there are (a) no lawsuits, actions,investigations, examinations or other proceedings pending or, to the knowledgeof Borrowers, threatened against any Company, or in respect of which anyCompany may have any liability, in any court or before or by any GovernmentalAuthority, arbitration board, or other tribunal, (b) no orders, writs,injunctions, judgments, or decrees of any court or Governmental Authority towhich any Company is a party or by which the property or assets of any Companyare bound, and (c) no grievances, disputes, or controversies outstandingwith any union or other organization of the employees of any Company, orthreats of work stoppage, strike, or pending demands for collective bargaining.

 

Section 6.5. Title to Assets.  EachCompany has good title to and ownership of all material property it purports toown, which property is free and clear of all Liens, except those permittedunder Section 5.9 hereof.  As of theClosing Date, the Companies own the real property listed on Schedule 6.5hereto.

 

Section 6.6. Liens and Security Interests. On and after the Closing Date, except for Liens permitted pursuant to Section 5.9hereof, (a) there is and will be no U.C.C. Financing Statement or similarnotice of Lien outstanding covering any personal property of any Company; (b) thereis and will be no mortgage outstanding covering any real property of anyCompany; and (c) no real or personal property of any Company is subject toany Lien of any kind.  Agent, for thebenefit of the Lenders, upon the filing of the U.C.C. Financing Statements andtaking such other actions necessary to perfect its Lien against Collateral ofthe corresponding type as authorized hereunder will have a valid andenforceable first Lien on the Collateral to the extent such Lien may beperfected by the filing of a U.C.C. Financing Statement.  No Company has entered into any contract oragreement (other than a contract or agreement entered into in connection withIndebtedness permitted pursuant to Section 5.8(h) hereof, thepurchase or lease of fixed assets or an intellectual property licensingagreement that prohibits Liens on such fixed assets) that exists on or afterthe Closing Date that would prohibit Agent or the Lenders from acquiring a Lienon, or a collateral assignment of, any of the property or assets of anyCompany.

 

Section 6.7. Tax Returns.  All federaland all material state, provincial and local tax returns and other reportsrequired by law to be filed in respect of the income, business, properties andemployees of each Company have been filed, and all taxes, assessments, fees andother governmental charges that are due and payable have been paid, except asotherwise permitted herein.  Theprovision for taxes on the books of each Company is adequate for all years notclosed by applicable statutes and for the current fiscal year.

 

Section 6.8. Environmental Laws.  EachCompany is in material compliance with all material Environmental Laws,including, without limitation, all Environmental Laws in all jurisdictions inwhich any Company owns or operates, or has owned or operated, a facility orsite, arranges or has arranged for disposal or treatment of hazardoussubstances, solid waste or other wastes, accepts or has accepted for transportany hazardous substances, solid waste or other wastes or holds or has held anyinterest in real property or otherwise. No material litigation or 

 

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proceeding arising under, relating to or in connection with anyEnvironmental Law is pending or, to the best knowledge of any officer of anyCompany, threatened, against any Company, any real property in which anyCompany holds or has held an interest or any past or present operation of anyCompany.  No release, threatened releaseor disposal of hazardous waste, solid waste or other wastes is occurring, orhas occurred (other than those that are currently being remediated inaccordance with Environmental Laws), on, under or to any real property in whichany Company holds any interest or performs any of its operations, in materialviolation of any material Environmental Law. As used in this Section 6.8, “litigation or proceeding” means anydemand, claim, notice, suit, suit in equity, action, administrative action,investigation or inquiry whether brought by any Governmental Authority orprivate Person, or otherwise.

 

Section 6.9. Locations.  As of theClosing Date, the Companies have places of business or maintain their Accounts,Inventory and Equipment at the locations (including third party locations) setforth on Schedule 6.9 hereto, and each Company’s chief executive officeis set forth on Schedule 6.9 hereto. Schedule 6.9 hereto further specifies whether each location, asof the Closing Date, (a) is owned by the Companies, or (b) is leasedby a Company from a third party, and, if leased by a Company from a thirdparty, if a Landlord’s Waiver has been requested.  As of the Closing Date, Schedule 6.9hereto correctly identifies the name and address of each third party locationwhere assets of the Companies with a value in excess of One Million Dollars($1,000,000) are located.

 

Section 6.10. Employee Benefits Plans.  Schedule6.10 hereto identifies each ERISA Plan as of the Closing Date.  Except as would not reasonably be expected toresult in a Material Adverse Effect:

 

(a)           noERISA Event has occurred or is expected to occur with respect to an ERISA Plan;

 

(b)           fullpayment has been made of all amounts that a Controlled Group member isrequired, under applicable law or under the governing documents, to have paidas a contribution to or a benefit under each ERISA Plan;

 

(c)           theliability of each Controlled Group member with respect to each ERISA Plan hasbeen fully funded based upon reasonable and proper actuarial assumptions, hasbeen fully insured, or has been fully reserved for on its financial statementsin accordance with GAAP;

 

(d)           nochanges have occurred or are expected to occur that would cause a materialincrease in the cost of providing benefits under the ERISA Plan;

 

(e)           withrespect to each ERISA Plan that is intended to be qualified under Code Section 401(a),(i) the ERISA Plan and any associated trust operationally comply with theapplicable requirements of Code Section 401(a); (ii) the ERISA Planand any associated trust have been amended to comply with all such requirementsas currently in effect, other than those requirements for which a retroactiveamendment can be made within the “remedial amendment period” available underCode Section 401(b) (as extended under Treasury Regulations and otherTreasury pronouncements upon which taxpayers may rely); (iii) the ERISAPlan and any 

 

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associated trust have received a favorable determination letter fromthe Internal Revenue Service stating that the ERISA Plan qualifies under Code Section 401(a),that the associated trust qualifies under Code Section 501(a) and, ifapplicable, that any cash or deferred arrangement under the ERISA Planqualifies under Code Section 401(k), unless the ERISA Plan was firstadopted at a time for which the above-described “remedial amendment period” hasnot yet expired; (iv) the ERISA Plan currently satisfies the requirementsof Code Section 410(b), without regard to any retroactive amendment thatmay be made within the above-described “remedial amendment period”; and (v) nocontribution made to the ERISA Plan is subject to an excise tax under Code Section 4972;and

 

(f)            withrespect to any Pension Plan, the “accumulated benefit obligation” of ControlledGroup members with respect to the Pension Plan (as determined in accordancewith Statement of Accounting Standards No. 87, “Employers’ Accounting forPensions”) does not exceed the fair market value of Pension Plan assets.

 

Section 6.11. Consents or Approvals.  Nomaterial consent, approval or authorization of, or filing, registration orqualification with, any Governmental Authority or any other Person is requiredto be obtained or completed by any Company in connection with the execution,delivery or performance of any of the Loan Documents, that has not already beenobtained or completed.

 

Section 6.12. Solvency.  Each Borrowerhas received consideration that is the reasonably equivalent value of theobligations and liabilities that such Borrower has incurred to Agent and theLenders.  No Borrower is insolvent asdefined in any applicable state, federal or relevant foreign statute, nor willany Borrower be rendered insolvent by the execution and delivery of the LoanDocuments to Agent and the Lenders.  NoBorrower is engaged or about to engage in any business or transaction for whichthe assets retained by it are or will be an unreasonably small amount ofcapital, taking into consideration the obligations to Agent and the Lendersincurred hereunder.  No Borrower intendsto, nor does it believe that it will, incur debts beyond its ability to paysuch debts as they mature.

 

Section 6.13. Financial Statements.  TheConsolidated financial statements of EPIQ, for the fiscal year ended December 31,2007 and the unaudited Consolidated financial statements of EPIQ for the fiscalquarter ended March 31, 2008 furnished to Agent and the Lenders, are trueand complete in all material respects, have been prepared in accordance withGAAP, and fairly present in all material respects the financial condition ofthe Companies as of the dates of such financial statements and the results oftheir operations for the periods then ending. As of the Closing Date, since the dates of such statements, there hasbeen no material adverse change in any Company’s financial condition,properties or business or any change in any Company’s accounting procedures.

 

Section 6.14. Regulations.  No Company isengaged principally or as one of its important activities, in the business of extendingcredit for the purpose of purchasing or carrying any “margin stock” (within themeaning of Regulation U of the Board of Governors of the Federal Reserve Systemof the United States of America). Neither the granting of any Loan (or any conversion thereof) or Letterof Credit nor the use of the proceeds of any Loan or Letter of Credit 

 

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will violate, or be inconsistent with, the provisions of Regulation T,U or X or any other Regulation of such Board of Governors.

 

Section 6.15. Material Agreements. Except as disclosed on Schedule 6.15 hereto, as of the ClosingDate, no Company is a party to any (a) debt instrument (excluding the LoanDocuments); (b) real estate lease, whether as lessee or lessor thereunder;(c) contract, commitment, agreement, or other arrangement with any of its “Affiliates”(as such term is defined in the Securities Exchange Act of 1934, as amended)other than a Company; (d) management or employment contract or contractfor personal services with any of its Affiliates that is not otherwiseterminable at will or on less than ninety (90) days’ notice without liability;or (e) collective bargaining agreement.

 

Section 6.16. Intellectual Property. Each Company owns or has the right to use all of the material patents,patent applications, industrial designs, designs, trademarks, service marks,copyrights and licenses, and rights with respect to the foregoing, necessaryfor the conduct of its business without any known significant conflict with therights of others.  Except as disclosed onSchedule 6.16 hereto, as of the Closing Date, no Subsidiary owns anyfederally registered intellectual property, including, without limitation, anypatents, patent applications, trademarks, service marks, copyrights, licenses,and rights with respect to the foregoing.

 

Section 6.17. Insurance.  Each Companymaintains with financially sound and reputable insurers insurance with coverageand limits as required by law and as is customary with Persons engaged in thesame businesses as the Companies.  Schedule6.17 hereto sets forth all insurance carried by the Companies on theClosing Date, setting forth in detail the amount and type of such insurance.

 

Section 6.18. Deposit Accounts.  Schedule6.18 hereto lists all banks (other than payroll, tax withholding or trustaccounts) and other financial institutions at which any Company maintainsdeposit or other accounts as of the Closing Date, and Schedule 6.18hereto correctly identifies the name, address and telephone number of eachdepository, the name in which the account is held, a description of the purposeof the account, and the complete account number therefor.

 

Section 6.19. Accurate and Complete Statements. Neither the Loan Documents nor any written statement made by any Companyin connection with any of the Loan Documents (excluding budgets andprojections), contains any untrue statement of a material fact or omits tostate a material fact necessary to make the statements contained therein or in theLoan Documents not materially misleading. On the Closing Date, after due inquiry by Borrowers, there is no knownfact that any Company has not disclosed to Agent and the Lenders that has or islikely to have a Material Adverse Effect.

 

Section 6.20. Note Agreement.  No Eventof Default (as defined in the Note Agreement) or Default (as defined in theNote Agreement) exists, nor will any such Event of Default or Default existimmediately after the granting of any Loan or the issuance of any Letter ofCredit under this Agreement.

 

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Section 6.21. Investment Company; Other Restrictions.  No Company is (a) an “investment company”or a company “controlled” by an “investment company” required to be registeredas such within the meaning of the Investment Company Act of 1940, as amended,or (b) subject to any foreign, federal, state or local statute orregulation limiting its ability to incur Indebtedness.

 

Section 6.22. Subordinated Debt Documents. No “default” or “event of default” (as defined in any Subordinated DebtDocument), or event with which the passage of time or the giving of notice, orboth, would cause a default or event of default exists, nor will existimmediately after the granting of any Loan or the issuance of any Letter ofCredit under this Agreement.

 

Section 6.23. Defaults.  No Default orEvent of Default exists hereunder, nor will any begin to exist immediatelyafter the execution and delivery hereof.

 

ARTICLE VII.SECURITY

 

Section 7.1. Security Interest in Collateral. In consideration of and as security for the full and complete payment ofall of the Secured Obligations, each Borrower hereby grants to Agent, for thebenefit of the Lenders, a security interest in the Collateral.

 

Section 7.2. Collections and Receipt of Proceeds by Borrowers.

 

(a)           Priorto the exercise by Agent and the Required Lenders of their rights under Article IXhereof, both (i) the lawful collection and enforcement of all of eachBorrower’s Accounts, and (ii) the lawful receipt and retention by eachBorrower of all Proceeds of all of such Borrower’s Accounts and Inventory shallbe as the agent of Agent and the Lenders.

 

(b)           Afterthe occurrence and during the continuance of an Event of Default, upon writtennotice to Administrative Borrower from Agent, at the election of the RequiredLenders, a Cash Collateral Account shall be opened by Borrowers at the mainoffice of Agent (or such other office as shall be designated by Agent) and allsuch lawful collections of each Borrower’s Accounts and such Proceeds of eachBorrower’s Accounts and Inventory shall be remitted daily by such Borrower toAgent in the form in which they are received by such Borrower, either by mailingor by delivering such collections and Proceeds to Agent, appropriately endorsedfor deposit in the Cash Collateral Account. In the event that such notice is given to Administrative Borrower fromAgent, no Borrower shall commingle such collections or Proceeds with any ofsuch Borrower’s other funds or property or the funds or property of any otherBorrower, but shall hold such collections and Proceeds separate and aparttherefrom upon an express trust for Agent, for the benefit of the Lenders.  In such case, Agent may, in its solediscretion, and shall, at the request of the Required Lenders, at any time andfrom time to time after the occurrence and during the continuance of an Eventof Default, apply all or any portion of the account balance in the CashCollateral Account as a credit against (i) the outstanding principal orinterest of the Loans, or (ii) any other Secured Obligations in accordancewith this Agreement.  If any remittanceshall be dishonored, or if, upon final payment, any claim with respect theretoshall be 

 

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made against Agent on its warranties of collection, Agent may chargethe amount of such item against the Cash Collateral Account or any otherDeposit Account (other than a trust, tax withholding or payroll account)maintained by any Borrower with Agent or with any other Lender, and, in anyevent, retain the same and such Borrower’s interest therein as additionalsecurity for the Secured Obligations. Agent may, in its sole discretion, at any time and from time to time,release funds from the Cash Collateral Account to Borrowers for use in thebusiness of Borrowers.  The balance inthe Cash Collateral Account may be withdrawn by Borrowers upon termination ofthis Agreement and payment in full of all of the Secured Obligations (otherthan contingent indemnity obligations).

 

(c)           Afterthe occurrence and during the continuance of an Event of Default, at Agent’swritten request, Borrowers shall cause all remittances representing collectionsand Proceeds of Collateral to be mailed to a lockbox at a location acceptableto Agent to which Agent shall have access for the processing of such items inaccordance with the provisions, terms and conditions of the customary lockboxagreement of Agent.

 

(d)           Agent,or Agent’s designated agent, is hereby constituted and appointedattorney-in-fact for each Borrower with authority and power to endorse, afterthe occurrence and during the continuance of an Event of Default, any and allinstruments, documents, and chattel paper upon the failure of Borrowers to do so.  Such authority and power, being coupled withan interest, shall be (i) irrevocable until all of the Secured Obligations(other than contingent indemnity obligations) are paid, (ii) exercisableby Agent at any time and without any request upon such Borrower by Agent to soendorse, and (iii) exercisable in the name of Agent or such Borrower.  Each Borrower hereby waives presentment,demand, notice of dishonor, protest, notice of protest, and any and all othersimilar notices with respect thereto, regardless of the form of any endorsementthereof.  Neither Agent nor the Lendersshall be bound or obligated to take any action to preserve any rights thereinagainst prior parties thereto.

 

Section 7.3. Collections and Receipt of Proceeds by Agent.  Each Borrower hereby constitutes and appointsAgent, or Agent’s designated agent, as such Borrower’s attorney-in-fact toexercise at any time, after the occurrence and during the continuance of anEvent of Default, all or any of the following powers which, being coupled withan interest, shall be irrevocable until the complete and full payment of all ofthe Secured Obligations (other than contingent indemnity obligations):

 

(a)           toreceive, retain, acquire, take, endorse, assign, deliver, accept, and deposit,in the name of Agent or such Borrower, any and all of such Borrower’s cash,instruments, chattel paper, documents, Proceeds of Accounts, Proceeds ofInventory, collection of Accounts, and any other writings relating to any ofthe Collateral;

 

(b)           totransmit to Account Debtors, on any or all of such Borrower’s Accounts, noticeof assignment to Agent, for the benefit of the Lenders, thereof and thesecurity interest therein, and to request from such Account Debtors at anytime, in the name of Agent or such Borrower, information concerning suchBorrower’s Accounts and the amounts owing thereon;

 

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(c)                                  totransmit to purchasers of any or all of such Borrower’s Inventory, notice ofAgent’s security interest therein, and to request from such purchasers at anytime, in the name of Agent or such Borrower, information concerning suchBorrower’s Inventory and the amounts owing thereon by such purchasers;

 

(d)                                 tonotify and require Account Debtors on such Borrower’s Accounts and purchasersof such Borrower’s Inventory to make payment of their indebtedness directly toAgent;

 

(e)                                  totake or bring, in the name of Agent or such Borrower, all steps, actions,suits, or proceedings deemed by Agent necessary or desirable to effect thereceipt, enforcement, and collection of the Collateral; and

 

(f)                                    toaccept all collections in any form relating to the Collateral, includingremittances that may reflect deductions, and to deposit the same, into suchBorrower’s Cash Collateral Account or, at the option of Agent, to apply them asa payment against the Loans or any other Secured Obligations in accordance withthis Agreement.

 

Section 7.4. Use of Inventory and Equipment. Until the exercise by Agent and the Required Lenders of their rightsunder Article IX hereof, each Borrower may (a) retain possession ofand use its Inventory and Equipment in any lawful manner not inconsistent withthis Agreement or with the terms, conditions, or provisions of any policy ofinsurance thereon; (b) sell or lease its Inventory in the ordinary courseof business or as otherwise permitted by this Agreement; provided that a saleor lease in the ordinary course of business does not include a transfer inpartial or total satisfaction of an Indebtedness; and (c) use and consumeany raw materials or supplies, the use and consumption of which are necessaryin order to carry on such Borrower’s business.

 

ARTICLE VIII.  EVENTS OF DEFAULT

 

Each of the following shall constitute an Event ofDefault hereunder:

 

Section 8.1. Payments.  If (a) theinterest on any Loan, any commitment or other fee, or any other Obligation(other than those specified in subpart (b) hereof) shall not be paid infull when due and payable or within three Business Days thereafter, or (b) theprincipal of any Loan or any reimbursement obligation under any Letter ofCredit that has been drawn, shall not be paid in full when due and payable.

 

Section 8.2. Special Covenants.  If anyCompany shall fail or omit to perform and observe Section 5.7, 5.8, 5.9,5.11, 5.12, 5.13, 5.15, 5.22 or 5.23(b), (c) or (d) hereof.

 

Section 8.3. Other Covenants.  If anyCompany shall fail or omit to perform and observe any agreement or otherprovision (other than those referred to in Section 8.1 or 8.2 hereof)contained or referred to in this Agreement or any Related Writing that is onsuch Company’s part to be complied with, and that Default shall not have beenfully corrected within thirty (30) days

 

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after the earlierof (a) any Financial Officer of such Company becomes aware of theoccurrence thereof, or (b) the giving of written notice thereof toAdministrative Borrower by Agent or the Required Lenders that the specifiedDefault is to be remedied.

 

Section 8.4. Representations and Warranties. If any representation or warranty made in any Loan Document shall befalse or misleading in any material respect.

 

Section 8.5.  Cross Default.

 

(a)                                  Convertible Subordinated Indebtedness.  If(i) any event of default (as each term or similar term is defined in anyConvertible Subordinated Document) shall occur under any ConvertibleSubordinated Document or any agreement executed in connection therewith, or (ii) theIndebtedness incurred in connection with any Convertible Subordinated Noteshall be accelerated for any reason.

 

(b)                                 Other Cross Defaults.  Ifany Company shall default in the payment of principal, interest or fees due andowing (i) in an amount in excess of One Million Dollars ($1,000,000)beyond any period of grace provided with respect thereto; or (ii) underany Material Indebtedness Agreement beyond any period of grace provided withrespect thereto or in the performance or observance of any other agreement,term or condition contained in any agreement under which such obligation iscreated, if the effect of such default is to allow the acceleration of thematurity of such Indebtedness or to permit the holder thereof to cause suchIndebtedness to become due prior to its stated maturity.

 

Section 8.6. ERISA Default.  Theoccurrence of one or more ERISA Events that (a) the Required Lendersreasonably determine would have a Material Adverse Effect, or (b) resultsin a Lien on assets of the Companies in excess of Two Million Dollars($2,000,000).

 

Section 8.7. Change in Control.  If  any Change in Control shall occur.

 

Section 8.8. Judgments.  There isentered against any Company (a) a final judgment or order for the paymentof money by a court of competent jurisdiction, that remains unpaid or unstayedand undischarged for a period (during which execution shall not be effectivelystayed) of sixty (60) days after the date on which the right to appeal hasexpired, provided that the aggregate of all such judgments for all suchCompanies, shall exceed Five Million Dollars ($5,000,000) (less (i) anyamount that will be covered by the proceeds of insurance and is not subject todispute by the insurance provider and (ii) any money judgment to theextent such amounts are provided by funds in a valid escrow account or similararrangement); or (b) any one or more non-monetary final judgments that arenot covered by insurance, or, if covered by insurance, for which the insurancecompany has not agreed to or acknowledged coverage, and that, in either case,the Required Lenders reasonably determine have, or could be expected to have,individually or in the aggregate, a Material Adverse Effect and, in eithercase, (i) enforcement proceedings are commenced by the prevailing party orany creditor upon such judgment or order, or (ii) there is a period of tenconsecutive Business Days during which a stay of enforcement of such judgment,by reason of a pending appeal or otherwise, is not in effect.

 

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Section 8.9. Security.  If any Liengranted in this Agreement or any other Loan Document in favor of Agent, for thebenefit of the Lenders, shall be determined to be (a) void, voidable orinvalid, or is subordinated or not otherwise given the priority contemplated bythis Agreement with respect to any material amount of Collateral and the CreditParties have failed to promptly execute appropriate documents to correct suchmatters, or (b) unperfected as to any material amount of Collateral (asdetermined by Agent, in its reasonable discretion).

 

Section 8.10. Validity of Loan Documents. (a) Any material provision of any material Loan Document shall atany time for any reason cease to be valid, binding and enforceable against anyCredit Party; (b) the validity, binding effect or enforceability of anyLoan Document against any Credit Party shall be contested by any Credit Party; (c) anyCredit Party shall deny that it has any or further liability or obligationunder any Loan Document; or (d) any Loan Document shall be terminated,invalidated or set aside, or be declared ineffective or inoperative in anymaterial respect or in any material way cease to give or provide to Agent and theLenders the benefits purported to be created thereby.

 

Section 8.11.  Solvency.  If a Borrower, Epiq Class Action &Claims Solutions, Inc. or anyother Company with assets over Five Million Dollars ($5,000,000) shall (a) exceptas permitted pursuant to Section 5.12 hereof, discontinue business, (b) generallynot pay its debts as such debts become due, (c) make a general assignmentfor the benefit of creditors, (d) apply for or consent to the appointmentof an interim receiver, a receiver, a receiver and manager, an administrator,sequestrator, monitor, a custodian, a trustee, an interim trustee, liquidator,agent or other similar official of all or a substantial part of its assets orof such Company, (e) be adjudicated a debtor or insolvent or have enteredagainst it an order for relief under Title 11 of the United States Code, orunder any other bankruptcy insolvency, liquidation, winding-up, corporate orsimilar statute or law, foreign, federal, state or provincial, in anyapplicable jurisdiction, now or hereafter existing, as any of the foregoing maybe amended from time to time, or other applicable statute for jurisdictionsoutside of the United States, as the case may be, (f) file a voluntarypetition in bankruptcy, or file a proposal or notice of intention to file aproposal or have an involuntary proceeding filed against it and the same shallcontinue undismissed for a period of sixty (60) days from commencement of suchproceeding or case, or file a petition, an answer, or an application or a proposalseeking reorganization or an arrangement with creditors or seeking to takeadvantage of any other law (whether federal, provincial or state, or, ifapplicable, other jurisdiction) relating to relief of debtors, or admit (byanswer, by default or otherwise) the material allegations of a petition filedagainst it in any bankruptcy, reorganization, insolvency or other proceeding(whether federal, provincial or state, or, if applicable, other jurisdiction)relating to relief of debtors, (g) suffer or permit to continue unstayedand in effect for sixty (60) consecutive days any judgment, decree or orderentered by a court of competent jurisdiction, that approves a petition or anapplication or a proposal seeking its reorganization or appoints an interimreceiver, a receiver and manager, an administrator, custodian, trustee, interimtrustee or liquidator of all or a substantial part of its assets, or of suchCompany, or (h) take, or omit to take, any action in order thereby toeffect any of the foregoing.

 

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ARTICLE IX.  REMEDIES UPON DEFAULT

 

Notwithstanding any contrary provision or inferenceherein or elsewhere:

 

Section 9.1. Optional Defaults.  If anyEvent of Default referred to in Section 8.1, 8.2, 8.3, 8.4, 8.5, 8.6, 8.7,8.8, 8.9 or 8.10 hereof shall occur, Agent may, with the consent of theRequired Lenders, and shall, at the written request of the Required Lenders,give written notice to Borrowers to:

 

(a)                                  terminatethe Commitment, if not previously terminated, and, immediately upon suchelection, the obligations of the Lenders, and each thereof, to make any furtherLoan, and the obligation of the Fronting Lender to issue any Letter of Credit,immediately shall be terminated; and/or

 

(b)                                 acceleratethe maturity of all of the Obligations (if the Obligations are not already dueand payable), whereupon all of the Obligations shall become and thereafter beimmediately due and payable in full without any presentment or demand andwithout any further or other notice of any kind, all of which are hereby waivedby each Borrower.

 

Section 9.2. Automatic Defaults.  If anyEvent of Default referred to in Section 8.11 hereof shall occur:

 

(a)                                  allof the Commitment shall automatically and immediately terminate, if not previouslyterminated, and no Lender thereafter shall be under any obligation to grant anyfurther Loan, nor shall the Fronting Lender be obligated to issue any Letter ofCredit; and

 

(b)                                 theprincipal of and interest then outstanding on all of the Loans, and all of theother Obligations, shall thereupon become and thereafter be immediately due andpayable in full (if the Obligations are not already due and payable), allwithout any presentment, demand or notice of any kind, which are hereby waivedby each Borrower.

 

Section 9.3. Letters of Credit.  If thematurity of the Obligations shall be accelerated pursuant to Section 9.1or 9.2 hereof, Borrowers shall immediately deposit with Agent, as security forthe obligations of Borrowers and any Guarantor of Payment to reimburse Agentand the Lenders for any then outstanding Letters of Credit, cash equal to thesum of the aggregate undrawn balance of any then outstanding Letters ofCredit.  Agent and the Lenders are herebyauthorized, at their option, to deduct any and all such amounts from anydeposit balances then owing by any Lender (or any affiliate of such Lender, wherever located) to or for thecredit or account of any Company, as security for the obligations of Borrowersand any Guarantor of Payment to reimburse Agent and the Lenders for any thenoutstanding Letters of Credit.

 

Section 9.4. Offsets.  If there shalloccur or exist any Event of Default referred to in Section 8.11 hereof orif the maturity of the Obligations is accelerated pursuant to Section 9.1or 9.2 hereof, each Lender shall have the right at any time to set off against,and to appropriate and apply toward the payment of, any and all of theObligations then owing by Borrowers or a Guarantor of Payment to such Lender(including, without limitation, any participation purchased 

 

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or to be purchased pursuant to Sections 2.2(b), 2.2(c) or 9.5hereof), whether or not the same shall then have matured, any and all deposit(general or special (but excluding trust, tax withholding and payrollaccounts)) balances and all other indebtedness then held or owing by suchLender (including, without limitation, by branches and agencies or anyaffiliate of such Lender, wherever located) to or for the credit or account ofany Borrower or Guarantor of Payment, all without notice to or demand upon anyBorrower or any other Person, all such notices and demands being herebyexpressly waived by each Borrower.

 

Section 9.5. Equalization Provisions. Each Lender agrees with the other Lenders that if it, at any time, shallobtain any Advantage over the other Lenders or any thereof in respect of theObligations (except as to Swing Loans and Letters of Credit prior to Agent’sgiving of notice to participate and except under Article III hereof), itshall purchase from the other Lenders, for cash and at par, such additionalparticipation in the Obligations as shall be necessary to nullify theAdvantage.  If any such Advantageresulting in the purchase of an additional participation as aforesaid shall berecovered in whole or in part from the Lender receiving the Advantage, eachsuch purchase shall be rescinded, and the purchase price restored (but withoutinterest unless the Lender receiving the Advantage is required to pay intereston the Advantage to the Person recovering the Advantage from such Lender)ratably to the extent of the recovery. Each Lender further agrees with the other Lenders that if it at any timeshall receive any payment for or on behalf of any  Borrower on any Indebtedness owing by anyBorrower pursuant to this Agreement (whether by voluntary payment, byrealization upon security, by reason of offset of any deposit or otherindebtedness, by counterclaim or cross-action, by the enforcement of any rightunder any Loan Document, or otherwise), it will apply such payment first to anyand all Indebtedness owing by such Borrower to that Lender pursuant to thisAgreement (including, without limitation, any participation purchased or to bepurchased pursuant to this Section 9.5 or any other section of thisAgreement).  Each Credit Party agreesthat any Lender so purchasing a participation from the other Lenders or anythereof pursuant to this Section 9.5 may exercise all of its rights ofpayment (including the right of set-off) with respect to such participation asfully as if such Lender were a direct creditor of such Credit Party in theamount of such participation.

 

Section 9.6. Collateral.  Upon theoccurrence and during the continuance of an Event of Default and at all timesthereafter, Agent and the Lenders shall have the rights and remedies of asecured party under the U.C.C., in addition to the rights and remedies of asecured party provided elsewhere within this Agreement, in any other RelatedWriting executed by any Borrower or otherwise provided in law or equity.  Agent may require Borrowers to assemble theCollateral, which each Borrower agrees to do, and make it available to Agentand the Lenders at a reasonably convenient place to be designated by Agent.Agent may, with or without notice to or demand upon such Borrower and with orwithout the aid of legal process, make use of such force as may be necessary toenter any premises where the Collateral, or any thereof, may be found and totake possession thereof (including anything found in or on the Collateral thatis not specifically described in this Agreement, each of which findingsshall  be considered to be an accessionto and a part of the Collateral) and for that purpose may pursue the Collateralwherever the same may be found, without liability for trespass or damage causedthereby to such Borrower.  After anydelivery or taking of possession of the Collateral, or any thereof, pursuant tothis Agreement, then, with or without resort to any Borrower personally or anyother Person or property, all of which each Borrower hereby waives, and upon suchterms and in such manner as

 

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Agent may deem advisable, Agent, in its discretion, may sell, assign,transfer and deliver any of the Collateral at any time, or from time totime.  No prior notice need be given toany Borrower or to any other Person in the case of any sale of Collateral thatAgent determines to be perishable or to be declining speedily in value or thatis customarily sold in any recognized market, but in any other case Agent shallgive Borrowers not fewer than ten days prior notice of either the time andplace of any public sale of the Collateral or of the time after which anyprivate sale or other intended disposition thereof is to be made.  Each Borrower waives advertisement of anysuch sale and (except to the extent specifically required by the precedingsentence) waives notice of any kind in respect of any such sale.  At any such public sale, Agent or the Lendersmay purchase the Collateral, or any part thereof, free from any right ofredemption, all of which rights each Borrower hereby waives and releases.  After deducting all Related Expenses, andafter paying all claims, if any, secured by Liens having precedence over thisAgreement, Agent may apply the net proceeds of each such sale to or toward thepayment of the Secured Obligations, whether or not then due, in such order andby such division as Agent, in its sole discretion, may deem advisable. Anyexcess, to the extent permitted by law, shall be paid to Borrowers, and eachBorrower shall remain liable for any deficiency.  In addition, Agent shall at all times havethe right to obtain new appraisals of any Borrower or the Collateral, the costof which shall be paid by Borrowers.

 

Section 9.7. Other Remedies.  Theremedies in this Article IX are in addition to, not in limitation of, anyother right, power, privilege, or remedy, either in law, in equity, orotherwise, to which the Lenders may be entitled.  Agent shall exercise the rights under this Article IXand all other collection efforts on behalf of the Lenders and no Lender shallact independently with respect thereto, except as otherwise specifically setforth in this Agreement.

 

Section 9.8. Application of Proceeds.

 

(a)                                  PaymentsPrior to Exercise of Remedies.  Priorto the exercise by Agent, on behalf of the Lenders, of remedies under thisAgreement or the other Loan Documents, all monies received by Agent inconnection with the Revolving Credit Commitment shall be applied, unlessotherwise required by the terms of the other Loan Documents or by applicablelaw, to the Loans and Letters of Credit, as appropriate; provided that Agentshall have the right at all times to apply any payment received from Borrowersfirst to the payment of all obligations (to the extent not paid by Borrowers)incurred by Agent pursuant to Section 11.5 hereof and to the payment ofRelated Expenses.

 

(b)                                 PaymentsSubsequent to Exercise of Remedies. After the exercise by Agent or the Required Lenders of remedies underthis Agreement or the other Loan Documents, all monies received by Agent shallbe applied, unless otherwise required by the terms of the other Loan Documentsor by applicable law, as follows:

 

(i)                                     first,to the payment of all obligations (to the extent not paid by Borrowers)incurred by Agent pursuant to Section 11.5 hereof and to the payment ofRelated Expenses;

 

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(ii)                                  second,to the payment pro rata of (A) interest then accrued and payable on theoutstanding Loans, (B) any fees then accrued and payable to Agent, and (C) anyfees then accrued and payable to any Fronting Lender or the holders of theLetter of Credit Commitment in respect of the Letter of Credit Exposure;

 

(iii)                               third,for payment of (A) principal outstanding on the Loans and the Letter ofCredit Exposure, on a pro rata basis to the Lenders, based upon each suchLender’s Commitment Percentage, provided that the amounts payable in respect ofthe Letter of Credit Exposure shall be held and applied by Agent as securityfor the reimbursement obligations in respect thereof, and, if any Letter ofCredit shall expire without being drawn, then the amount with respect to suchLetter of Credit shall be distributed to the Lenders, on a pro rata basis inaccordance with this subsection (iii), (B) the Indebtedness under anyHedge Agreement with a Lender, such amount to be based upon the net terminationobligation of Borrowers under such Hedge Agreement, and (C) the BankProduct Obligations owing to Lenders under Bank Product Agreements; with suchpayment to be pro rata among (A), (B) and (C) of this subsection(iii); and

 

(iv)                              finally,any remaining surplus after all of the Secured Obligations have been paid infull, to Borrowers or to whomsoever shall be lawfully entitled thereto.

 

ARTICLE X.  THE AGENT

 

The Lenders authorize KeyBank and KeyBank herebyagrees to act as agent for the Lenders in respect of this Agreement upon theterms and conditions set forth elsewhere in this Agreement, and upon thefollowing terms and conditions:

 

Section 10.1. Appointment and Authorization. Each Lender hereby irrevocably appoints and authorizes Agent to takesuch action as agent on its behalf and to exercise such powers hereunder as aredelegated to Agent by the terms hereof, together with such powers as arereasonably incidental thereto.  NeitherAgent nor any of its affiliates, directors, officers, attorneys or employeesshall (a) be liable for any action taken or omitted to be taken by it orthem hereunder or in connection herewith, except for its or their own grossnegligence or willful misconduct (as determined by a court of competentjurisdiction), or be responsible in any manner to any of the Lenders for the effectiveness,enforceability, genuineness, validity or due execution of this Agreement or anyother Loan Documents, (b) be under any obligation to any Lender toascertain or to inquire as to the performance or observance of any of theterms, covenants or conditions hereof or thereof on the part of Borrowers orany other Company, or the financial condition of Borrowers or any otherCompany, or (c) be liable to any of the Companies for consequentialdamages resulting from any breach of contract, tort or other wrong inconnection with the negotiation, documentation, administration or collection ofthe Loans or Letters of Credit or any of the Loan Documents.  Notwithstanding any provision to the contrarycontained in this Agreement or in any other Loan Document, Agent shall not haveany duty or responsibility except those expressly set forth herein, nor shallAgent have or be deemed to have any fiduciary relationship with any Lender orparticipant, and no implied covenants, functions, responsibilities, duties, obligationsor liabilities shall be read into this Agreement or any other 

 

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Loan Document or otherwise exist against Agent.  Without limiting the generality of theforegoing sentence, the use of the term “agent” herein and in other LoanDocuments with reference to Agent is not intended to connote any fiduciary orother implied (or express) obligations arising under agency doctrine of anyapplicable law.  Instead, such term isused merely as a matter of market custom, and is intended to create or reflectonly an administrative relationship between independent contracting parties.

 

Section 10.2. Note Holders.  Agent maytreat the payee of any Note as the holder thereof (or, if there is no Note, theholder of the interest as reflected on the books and records of Agent) untilwritten notice of transfer shall have been filed with Agent, signed by suchpayee and in form satisfactory to Agent.

 

Section 10.3. Consultation With Counsel. Agent may consult with legal counsel selected by Agent and shall not beliable for any action taken or suffered in good faith by Agent in accordancewith the opinion of such counsel.

 

Section 10.4. Documents.  Agent shall notbe under any duty to examine into or pass upon the validity, effectiveness,genuineness or value of any Loan Document or any other Related Writingfurnished pursuant hereto or in connection herewith or the value of anycollateral obtained hereunder, and Agent shall be entitled to assume that thesame are valid, effective and genuine and what they purport to be.

 

Section 10.5. Agent and Affiliates. KeyBank and its affiliates may make loans to, issue letters of creditfor the account of, accept deposits from, acquire equity interests in andgenerally engage in any kind of banking, trust, financial advisory,underwriting or other business with the Companies and Affiliates as thoughKeyBank were not Agent hereunder and without notice to or consent of anyLender.  Each Lender acknowledges that,pursuant to such activities, KeyBank or its affiliates may receive informationregarding any Company or any Affiliate (including information that may besubject to confidentiality obligations in favor of such Company or suchAffiliate) and acknowledge that Agent shall be under no obligation to providesuch information to other Lenders.  Withrespect to Loans and Letters of Credit (if any), KeyBank and its affiliatesshall have the same rights and powers under this Agreement as any other Lenderand may exercise the same as though KeyBank were not Agent, and the terms “Lender”and “Lenders” include KeyBank and its affiliates, to the extent applicable, intheir individual capacities.

 

Section 10.6. Knowledge of Default. Agent shall not be deemed to have knowledge or notice of the occurrenceof any Default or Event of Default unless Agent has received written noticefrom a Lender or Borrower referring to this Agreement, describing such Defaultor Event of Default and stating that such notice is a “notice of default”.  In the event that Agent receives such anotice, Agent shall give notice thereof to the Lenders.  Agent shall take such action with respect tosuch Default or Event of Default as shall be reasonably directed by theRequired Lenders (or, if so specified by this Agreement, all Lenders); providedthat, unless and until Agent shall have received such directions, Agent may(but shall not be obligated to) take such action, or refrain from taking suchaction, with respect to such Default or Event of Default as it shall deemadvisable, in its discretion, for the protection of the interests of theholders of the Obligations.

 

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Section 10.7. Action by Agent.  Subjectto the other terms and conditions hereof, so long as Agent shall be entitled,pursuant to Section 10.6 hereof, to assume that no Default or Event ofDefault shall have occurred and be continuing, Agent shall be entitled to useits discretion with respect to exercising or refraining from exercising anyrights that may be vested in it by, or with respect to taking or refrainingfrom taking any action or actions that it may be able to take under or inrespect of, this Agreement.  Agent shallincur no liability under or in respect of this Agreement by acting upon anynotice, certificate, warranty or other paper or instrument believed by it to begenuine or authentic or to be signed by the proper party or parties, or withrespect to anything that it may do or refrain from doing in the reasonableexercise of its judgment, or that may seem to it to be necessary or desirablein the premises.  Without limiting theforegoing, no Lender shall have any right of action whatsoever against Agent asa result of Agent’s acting or refraining from acting hereunder in accordancewith the instructions of the Required Lenders.

 

Section 10.8. Release of Collateral or Guarantor of Payment.  In the event of a transfer of assetspermitted by Section 5.12 hereof (or otherwise permitted pursuant to thisAgreement) where the proceeds of such transfer are applied in accordance withthe terms of this Agreement to the extent required to be so applied, Agent, atthe request and expense of Borrowers, is hereby authorized by the Lenders to (a) releasesuch Collateral from this Agreement, (b) release a Guarantor of Payment inconnection with such permitted transfer, and (c) duly assign, transfer anddeliver to the affected Company (without recourse and without anyrepresentation or warranty) such Collateral as is then (or has been) sotransferred or released and as may be in possession of Agent and has nottheretofore been released pursuant to this Agreement.

 

Section 10.9. Delegation of Duties. Agent may execute any of its duties under this Agreement or any otherLoan Document by or through agents, employees or attorneys-in-fact and shall beentitled to advice of counsel and other consultants or experts concerning allmatters pertaining to such duties.  Agentshall not be responsible for the negligence or misconduct of any agent orattorney-in-fact that it selects in the absence of gross negligence or willfulmisconduct, as determined by a court of competent jurisdiction.

 

Section 10.10. Indemnification of Agent. The Lenders agree to indemnify Agent (to the extent not reimbursed byBorrowers) ratably, according to their respective Commitment Percentages, fromand against any and all liabilities, obligations, losses, damages, penalties,actions, judgments, suits, costs, expenses (including attorneys’ fees andexpenses) or disbursements of any kind or nature whatsoever that may be imposedon, incurred by or asserted against Agent in its capacity as agent in any wayrelating to or arising out of this Agreement or any Loan Document or any actiontaken or omitted by Agent with respect to this Agreement or any Loan Document,provided that no Lender shall be liable for any portion of such liabilities,obligations, losses, damages, penalties, actions, judgments, suits, costs,expenses (including attorneys’ fees and expenses or disbursements resultingfrom Agent’s gross negligence or willful misconduct as determined by a court ofcompetent jurisdiction, or from any action taken or omitted by Agent in anycapacity other than as agent under this Agreement or any other LoanDocument.  No action taken in accordancewith the directions of the Required Lenders shall be deemed to constitute grossnegligence or willful misconduct for purposes of this Section 10.10.  The undertaking in this Section 10.10shall survive repayment of the Loans, cancellation of the Notes, if any,expiration or termination of the Letters of Credit, termination of theCommitment,

 

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any foreclosure under, or modification, release or discharge of, any orall of the Loan Documents, termination of this Agreement and the resignation orreplacement of the agent.

 

Section 10.11. Successor Agent.  Agent mayresign as agent hereunder by giving not fewer than thirty (30) days priorwritten notice to Administrative Borrower and the Lenders.  If Agent shall resign under this Agreement,then either (a) the Required Lenders shall appoint from among the Lendersa successor agent for the Lenders (with the consent of Administrative Borrowerso long as an Event of Default has not occurred and is continuing, and whichconsent shall not be unreasonably withheld), or (b) if a successor agentshall not be so appointed and approved within the thirty (30) day periodfollowing Agent’s notice to the Lenders of its resignation, then Agent shallappoint a successor agent that shall serve as agent until such time as theRequired Lenders appoint a successor agent. If no successor agent has accepted appointment as Agent by the date thatis thirty (30) days following a retiring Agent’s notice of resignation, theretiring Agent’s resignation shall nevertheless thereupon become effective, andthe Lenders shall assume and perform all of the duties of Agent hereunder untilsuch time, if any, as the Required Lenders appoint a successor agent asprovided for above.  Upon itsappointment, such successor agent shall succeed to the rights, powers andduties as agent, and the term “Agent” means such successor effective upon itsappointment, and the former agent’s rights, powers and duties as agent shall beterminated without any other or further act or deed on the part of such formeragent or any of the parties to this Agreement. After any retiring Agent’s resignation as Agent, the provisions of this Article Xshall inure to its benefit as to any actions taken or omitted to be taken by itwhile it was Agent under this Agreement and the other Loan Documents.

 

Section 10.12. Fronting Lender.  TheFronting Lender shall act on behalf of the Lenders with respect to any Lettersof Credit issued by the Fronting Lender and the documents associatedtherewith.  The Fronting Lender shallhave all of the benefits and immunities (a) provided to Agent in Article IXhereof with respect to any acts taken or omissions suffered by the FrontingLender in connection with the Letters of Credit and the applications and agreementsfor letters of credit pertaining to such Letters of Credit as fully as if theterm “Agent”, as used in Article IX hereof, included the Fronting Lenderwith respect to such acts or omissions, and (b) as additionally providedin this Agreement with respect to the Fronting Lender.

 

Section 10.13. Swing Line Lender.  TheSwing Line Lender shall act on behalf of the Lenders with respect to any SwingLoans.  The Swing Line Lender shall haveall of the benefits and immunities (a) provided to Agent in Article Xhereof with respect to any acts taken or omissions suffered by the Swing LineLender in connection with the Swing Loans as fully as if the term “Agent”, asused in Article X hereof, included the Swing Line Lender with respect tosuch acts or omissions, and (b) as additionally provided in this Agreementwith respect to the Swing Line Lender.

 

Section 10.14. Agent May File Proofs of Claim.  In case of the pendency of any receivership,insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment,composition or other judicial proceeding relative to any Credit Party, (a) Agent(irrespective of whether the principal of any Loan shall then be due andpayable as herein expressed or by declaration or otherwise and irrespective ofwhether Agent shall have made any demand on any Borrower) shall be entitled andempowered, by intervention in such proceeding or otherwise, to

 

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(i) file and prove aclaim for the whole amount of the principal and interest owing and unpaid inrespect of the Loans, and all other Obligations that are owing and unpaid andto file such other documents as may be necessary or advisable in order to have theclaims of the Lenders and Agent (including any claim for the reasonablecompensation, expenses, disbursements and advances of the Lenders and Agent andtheir respective agents and counsel and all other amounts due the Lenders andAgent) allowed in such judicial proceedings, and (ii) collect and receiveany monies or other property payable or deliverable on any such claims and todistribute the same; and (b) any custodian, receiver, assignee, trustee,liquidator, sequestrator or other similar official in any such judicialproceeding is hereby authorized by each Lender to make such payments to Agentand, in the event that Agent shall consent to the making of such paymentsdirectly to the Lenders, to pay to Agent any amount due for the reasonablecompensation, expenses, disbursements and advances of Agent and its agents andcounsel, and any other amounts due Agent. Nothing contained herein shall be deemed to authorize Agent to authorizeor consent to or accept or adopt on behalf of any Lender any plan of reorganization,arrangement, adjustment or composition affecting the Obligations or the rightsof any Lender or to authorize Agent to vote in respect of the claim of anyLender in any such proceeding.

 

Section 10.15. No Reliance on Agent’s Customer Identification Program.  Each Lender acknowledges and agrees thatneither such Lender, nor any of its affiliates, participants or assignees, mayrely on Agent to carry out such Lender’s or its affiliate’s, participant’s orassignee’s customer identification program, or other obligations required orimposed under or pursuant to the Patriot Act or the regulations thereunder,including the regulations contained in 31 CFR 103.121 (as hereafter amended orreplaced, the “CIP Regulations”), or any other anti terrorism law, includingany programs involving any of the following items relating to or in connectionwith Borrowers, their respective Affiliates or agents, the Loan Documents orthe transactions hereunder: (a) any identity verification procedures, (b) anyrecord keeping, (c) any comparisons with government lists, (d) anycustomer notices or (e) any other procedures required under the CIPRegulations or such other laws.

 

Section 10.16. Other Agents.  Agent shallhave the continuing right from time to time to designate one or more Lenders(or its or their affiliates as “syndication agent”, “documentation agent”, “bookrunner”, “lead arranger”, “arrangers” or other designations for purposeshereof, but (a) any such designation shall have no substantive effect, and(b) any such Lender and its affiliates shall have no additional powers,duties or responsibilities as a result thereof.

 

ARTICLE XI.  MISCELLANEOUS

 

Section 11.1. Lenders’ Independent Investigation.  Each Lender, by its signature to thisAgreement, acknowledges and agrees that Agent has made no representation orwarranty, express or implied, with respect to the creditworthiness, financialcondition, or any other condition of any Company or with respect to thestatements contained in any information memorandum furnished in connectionherewith or in any other oral or written communication between Agent and suchLender.  Each Lender represents that ithas made and shall continue to make its own independent investigation of thecreditworthiness, financial condition and affairs of the Companies inconnection with the extension of credit hereunder, and agrees that Agent has

 

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no duty or responsibility, either initially or on a continuing basis,to provide any Lender with any credit or other information with respect thereto(other than such notices as may be expressly required to be given by Agent tothe Lenders hereunder), whether coming into its possession before the firstCredit Event hereunder or at any time or times thereafter.  Each Lender further represents that it hasreviewed each of the Loan Documents, and has received copies of and reviewedthe Convertible Subordinated Documents, including, but not limited to, the conditionsrelating to the status of the Obligations as Senior Indebtedness (as defined inthe Convertible Subordinated Notes).

 

Section 11.2. No Waiver; Cumulative Remedies. No omission or course of dealing on the part of Agent, any Lender or theholder of any Note (or, if there is no Note, the holder of the interest asreflected on the books and records of Agent) in exercising any right, power orremedy hereunder or under any of the Loan Documents shall operate as a waiverthereof; nor shall any single or partial exercise of any such right, power orremedy preclude any other or further exercise thereof or the exercise of anyother right, power or remedy hereunder or under any of the Loan Documents.  The remedies herein provided are cumulativeand in addition to any other rights, powers or privileges held under any of theLoan Documents or by operation of law, by contract or otherwise.

 

Section 11.3. Amendments, Waivers and Consents.

 

(a)                                  GeneralRule.  No amendment, modification,termination, or waiver of any provision of any Loan Document nor consent to anyvariance therefrom, shall be effective unless the same shall be in writing andsigned by the Required Lenders and then such waiver or consent shall beeffective only in the specific instance and for the specific purpose for whichgiven.

 

(b)                                 Exceptionsto the General Rule.  Anything hereinto the contrary notwithstanding, unanimous consent of the Lenders shall berequired with respect to (i) any increase in the Commitment hereunder(except as specified in Section 2.9(b) hereof), (ii) the extensionof maturity of the Loans, the payment date of interest or scheduled principalthereunder, or the payment date of commitment or other fees payable hereunder, (iii) anyreduction in the stated rate of interest on the Loans (provided that theinstitution of the Default Rate and a subsequent removal of the Default Rateshall not constitute a decrease in interest rate pursuant to this Section 11.3),or in any amount of interest or scheduled principal due on any Loan, or anyreduction in the stated rate of commitment fees payable hereunder or any changein the manner of pro rata application of any payments made by Borrowers to theLenders hereunder, (iv) any change in any percentage voting requirement,voting rights, or the Required Lenders definition in this Agreement, (v) therelease of any Borrower or Guarantor of Payment or material amount ofcollateral, except as specifically permitted hereunder, securing the SecuredObligations, or (vi) any amendment to this Section 11.3 or Section 9.5or 9.8 hereof.

 

(c)                                  Provisions Relating to Special Rights andDuties.  No provision of this Agreement affectingAgent in its capacity as such shall be amended, modified or waived without theconsent of Agent.  No provision of thisAgreement relating to the rights or duties of the Fronting Lender in itscapacity as such shall be amended, modified or waived without the consent ofthe Fronting Lender. No provision of this Agreement relating to the rights orduties of the Swing Line Lender

 

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in its capacity as such shall be amended,modified or waived without the consent of the Swing Line Lender.

 

(d)                                 Replacementof Non-Consenting Lender or Insolvent Lender.  If, in connection with any proposedamendment, waiver or consent hereunder, (i) the consent of all Lenders isrequired, but only the consent of Required Lenders is obtained, or (ii) theconsent of Required Lenders is required, but the consent of Lenders holdingfifty-one percent (51%) or more is not obtained (any Lender withholding consentas described in subsection (a) and (b) hereof being referred to as a “Non-ConsentingLender”), then, so long as Agent is not the Non-Consenting Lender, Agent may,at the sole expense of Borrowers, upon notice to such Non-Consenting Lender andAdministrative Borrower, require such Non-Consenting Lender to assign anddelegate, without recourse (in accordance with the restrictions contained in Section 11.10hereof) all of its interests, rights and obligations under this Agreement to anEligible Transferee that shall assume such obligations (which assignee may beanother Lender, if a Lender accepts such assignment); provided that suchNon-Consenting Lender shall have received payment of an amount equal to theoutstanding principal of its Loans, accrued interest thereon, accrued fees andall other amounts payable to it hereunder, from such Eligible Transferee (tothe extent of such outstanding principal and accrued interest and fees) orBorrowers (in the case of all other amounts, including any breakagecompensation under Article III hereof). To the extent that a Lender is insolvent and unable to meet its fundingobligations as set forth in this Agreement, Agent shall, at the request ofAdministrative Borrower and upon notice to such Lender, require such Lender toassign and delegate all of its interests, rights and obligations under thisAgreement as if such Lender were a Non-Consenting Lender.

 

(e)                                  Generally.  Notice of amendments, waivers or consentsratified by the Lenders hereunder shall be forwarded by Agent to all of theLenders.  Each Lender or other holder ofa Note (or if there is no Note, the holder of the interest as reflected on thebooks and records of Agent) (or interest in any Loan or Letter of Credit) shallbe bound by any amendment, waiver or consent obtained as authorized by this Section 11.3,regardless of its failure to agree thereto.

 

Section 11.4. Notices.  All notices,requests, demands and other communications provided for hereunder shall be inwriting and, if to a Borrower, mailed or delivered to it, addressed to it atthe address specified on the signature pages of this Agreement, if to aLender, mailed or delivered to it, addressed to the address of such Lenderspecified on the signature pages of this Agreement, or, as to each party,at such other address as shall be designated by such party in a written noticeto each of the other parties.  Allnotices, statements, requests, demands and other communications provided forhereunder shall be deemed to be given or made when hand delivered, delivered byovernight courier or two Business Days after being deposited in the mails withpostage prepaid by registered or certified mail, addressed as aforesaid, orsent by facsimile with telephonic confirmation of receipt (if received during aBusiness Day, otherwise the following Business Day), except that notices from aBorrower to Agent or the Lenders pursuant to any of the provisions hereof shallnot be effective until received by Agent or the Lenders, as the case may be.  For purposes of Article II hereof, Agentshall be entitled to rely on telephonic instructions from any person that Agentin good faith believes is an Authorized Officer and Borrowers shall hold Agentand each Lender harmless from any loss, cost or expense resulting from any suchreliance.

 

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Section 11.5. Costs, Expenses and Taxes. Borrowers agree to pay on demand all reasonable out-of-pocket costs and 

expenses of Agent and allRelated Expenses, including, but not limited to (a) syndication,administration, travel and out-of-pocket expenses, including but not limited toattorneys’ fees and expenses (excluding allocated costs of in-house counsel),of Agent in connection with the preparation, negotiation and closing of theLoan Documents and the administration of the Loan Documents, and the collectionand disbursement of all funds hereunder and the other instruments and documentsto be delivered hereunder, (b) extraordinary expenses of Agent inconnection with the administration of the Loan Documents and the otherinstruments and documents to be delivered hereunder, and (c) thereasonable fees and out-of-pocket expenses of special counsel for Agent, withrespect to the foregoing, and of local counsel, if any, who may be retained bysaid special counsel with respect thereto. Borrowers also agree to pay on demand all costs and expenses (includingRelated Expenses) of Agent and the Lenders, including reasonable attorneys’fees and expenses, in connection with the restructuring or enforcement of theObligations, this Agreement or any Related Writing.  In addition, Borrowers shall pay any and allstamp, transfer, documentary and other taxes, assessments, charges and feespayable or determined to be payable in connection with the execution anddelivery of the Loan Documents, and the other instruments and documents to bedelivered hereunder, and agree to hold Agent and each Lender harmless from andagainst any and all liabilities with respect to or resulting from any delay inpaying or failure to pay such taxes or fees, other than those liabilitiesresulting from the gross negligence or willful misconduct of Agent, or, withrespect to amounts owing to a Lender, such Lender, in each case as determinedby a court of competent jurisdiction. All obligations provided for in this Section 11.5 shall survive anytermination of this Agreement.

 

Section 11.6. Indemnification.  EachBorrower agrees to defend, indemnify and hold harmless Agent and the Lenders(and their respective affiliates, officers, directors, attorneys, agentsand  employees) from and against any andall liabilities, obligations, losses, damages, penalties, actions, judgments,suits, costs, expenses (including attorneys’ fees but excluding anticipatedprofits) or disbursements of any kind or nature whatsoever that may be imposedon, incurred by or asserted against Agent or any Lender in connection with anyinvestigative, administrative or judicial proceeding (whether or not suchLender or Agent shall be designated a party thereto) or any other claim by anyPerson relating to or arising out of any Loan Document or any actual orproposed use of proceeds of the Loans or any of the Obligations, or anyactivities of any Company or its Affiliates; provided that no Lender nor Agent shallhave the right to be indemnified under this Section 11.6 for its own grossnegligence or willful misconduct as determined by a court of competentjurisdiction.  All obligations providedfor in this Section 11.6 shall survive any termination of this Agreement.

 

Section 11.7. Obligations Several; No Fiduciary Obligations.  The obligations of the Lenders hereunder areseveral and not joint.  Nothing containedin this Agreement and no action taken by Agent or the Lenders pursuant heretoshall be deemed to constitute Agent or the Lenders a partnership, association,joint venture or other entity.  Nodefault by any Lender hereunder shall excuse the other Lenders from anyobligation under this Agreement; but no Lender shall have or acquire anyadditional obligation of any kind by reason of such default.  The relationship between Borrowers and theLenders with respect to the Loan Documents and

 

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the Related Writings is and shall be solely that of debtors and creditors,respectively, and neither Agent nor any Lender shall have any fiduciaryobligation toward any Credit Party with respect to any such documents or thetransactions contemplated thereby.

 

Section 11.8. Execution in Counterparts. This Agreement may be executed in any number of counterparts and bydifferent parties hereto in separate counterparts and by facsimile signature,each of which counterparts when so executed and delivered shall be deemed to bean original and all of which taken together shall constitute but one and thesame agreement.

 

Section 11.9. Binding Effect; Borrowers’ Assignment.  This Agreement shall become effective when itshall have been executed by each Borrower, Agent and each Lender and thereaftershall be binding upon and inure to the benefit of each Borrower, Agent and eachof the Lenders and their respective successors and permitted assigns, exceptthat no Borrower shall have the right to assign its rights hereunder or anyinterest herein without the prior written consent of Agent and all of theLenders.

 

Section 11.10. Lender Assignments.

 

(a)                                  Assignmentsof Commitments.  Each Lender shallhave the right at any time or times to assign to an Eligible Transferee (otherthan to a Lender that shall not be in compliance with this Agreement), withoutrecourse, all or a percentage of all of the following: (i) such Lender’sCommitment, (ii) all Loans made by that Lender, (iii) such Lender’sNotes, and (iv) such Lender’s interest in any Letter of Credit or SwingLoan, and any participation purchased pursuant to Section 2.2(b) or(c), or Section 9.5 hereof.

 

(b)                                 PriorConsent.  No assignment may beconsummated pursuant to this Section 11.10 without the prior writtenconsent of Administrative Borrower and Agent (other than an assignment by anyLender to any affiliate of such Lender which affiliate is an EligibleTransferee and either wholly-owned by a Lender or is wholly-owned by a Personthat wholly owns, either directly or indirectly, such Lender, or to anotherLender), which consent of Administrative Borrower and Agent shall not beunreasonably withheld; provided that the consent of Administrative Borrowershall not be required if, at the time of the proposed assignment, any Defaultor Event of Default shall then exist. Anything herein to the contrary notwithstanding, any Lender may at anytime make a collateral assignment of all or any portion of its rights under theLoan Documents to a Federal Reserve Bank, and no such assignment shall releasesuch assigning Lender from its obligations hereunder.

 

(c)                                  MinimumAmount.  Each such assignment shallbe in a minimum amount of the lesser of Five Million Dollars ($5,000,000) ofthe assignor’s Commitment and interest herein, or the entire amount of theassignor’s Commitment and interest herein.

 

(d)                                 AssignmentFee.  Unless the assignment shall beto an affiliate of the assignor or the assignment shall be due to merger of theassignor or for regulatory purposes, either the assignor or the assignee shallremit to Agent, for its own account, an administrative fee of Three ThousandFive Hundred Dollars ($3,500).

 

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(e)                                  AssignmentAgreement.  Unless the assignmentshall be due to merger of the assignor or a collateral assignment forregulatory purposes, the assignor shall (i) cause the assignee to executeand deliver to Administrative Borrower and Agent an Assignment Agreement, and (ii) executeand deliver, or cause the assignee to execute and deliver, as the case may be,to Agent such additional amendments, assurances and other writings as Agent mayreasonably require.

 

(f)                                    Non-U.S.Assignee.  If the assignment is to bemade to an assignee that is organized under the laws of any jurisdiction otherthan the United States or any state thereof, the assignor Lender shall causesuch assignee, at least five Business Days prior to the effective date of suchassignment, (i) to represent to the assignor Lender (for the benefit ofthe assignor Lender, Agent and Borrowers) that under applicable law andtreaties no taxes will be required to be withheld by Agent, Borrowers or theassignor with respect to any payments to be made to such assignee in respect ofthe Loans hereunder, (ii) to furnish to the assignor Lender (and, in thecase of any assignee registered in the Register (as defined below), Agent andBorrowers) either U.S. Internal Revenue Service Form W-8ECI, Form W-8IMYor U.S. Internal Revenue Service Form W-8BEN, as applicable (wherein suchassignee claims entitlement to complete exemption from U.S. federal withholdingtax on all payments hereunder), and (iii) to agree (for the benefit of theassignor, Agent and Borrowers) to provide to the assignor Lender (and, in thecase of any assignee registered in the Register, to Agent and Borrowers) a new Form W-8ECIor Form W-8BEN, as applicable, upon the expiration or obsolescence of anypreviously delivered form and comparable statements in accordance withapplicable U.S. laws and regulations and amendments duly executed and completedby such assignee, and to comply from time to time with all applicable U.S. lawsand regulations with regard to such withholding tax exemption.

 

(g)                                 Deliveriesby Borrowers.  Upon satisfaction ofall applicable requirements specified in subsections (a) through (f) above,Borrowers shall execute and deliver (i) to Agent, the assignor and theassignee, any consent or release (of all or a portion of the obligations of theassignor) required to be delivered by Borrowers in connection with theAssignment Agreement, and (ii) to the assignee, if requested, and theassignor, if applicable, an appropriate Note or Notes.  After delivery of the new Note or Notes, theassignor’s Note or Notes, if any, being replaced shall be returned toAdministrative Borrower marked “replaced”.

 

(h)                                 Effectof Assignment.  Upon satisfaction ofall applicable requirements set forth in subsections (a) through (g) above,and any other condition contained in this Section 11.10, (i) theassignee shall become and thereafter be deemed to be a “Lender” for thepurposes of this Agreement, (ii) the assignor shall be released from itsobligations hereunder to the extent that its interest has been assigned, (iii) inthe event that the assignor’s entire interest has been assigned, the assignorshall cease to be and thereafter shall no longer be deemed to be a “Lender” and(iv) the signature pages hereto and Schedule 1 hereto shall beautomatically amended, without further action, to reflect the result of anysuch assignment.

 

(i)                                     Agentto Maintain Register.  Agent shallmaintain at the address for notices referred to in Section 11.4 hereof acopy of each Assignment Agreement delivered to it and a register (the “Register”)for the recordation of the names and addresses of the Lenders and theCommitment of, and principal amount of the Loans owing to, each Lender fromtime to time.

 

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The entries in the Register shall be conclusive, in the absence ofmanifest error, and Borrowers, Agent and the Lenders may treat each Personwhose name is recorded in the Register as the owner of the Loan recordedtherein for all purposes of this Agreement. The Register shall be available for inspection by Borrowers or anyLender at any reasonable time and from time to time upon reasonable priornotice.

 

Section 11.11. Sale of Participations. Any Lender may, in the ordinary course of its commercial bankingbusiness and in accordance with applicable law, at any time sell participationsto one or more Eligible Transferees (each a “Participant”) in all or a portionof its rights or obligations under this Agreement and the other Loan Documents(including, without limitation, all or a portion of the Commitment and theLoans and participations owing to it and the Note held by it); provided that:

 

(a)                                  anysuch Lender’s obligations under this Agreement and the other Loan Documentsshall remain unchanged;

 

(b)                                 suchLender shall remain solely responsible to the other parties hereto for theperformance of such obligations;

 

(c)                                  theparties hereto shall continue to deal solely and directly with such Lender inconnection with such Lender’s rights and obligations under this Agreement andeach of the other Loan Documents;

 

(d)                                 suchParticipant shall be bound by the provisions of Section 9.5 hereof, andthe Lender selling such participation shall obtain from such Participant awritten confirmation of its agreement to be so bound; and

 

(e)                                  noParticipant (unless such Participant is itself a Lender) shall be entitled torequire such Lender to take or refrain from taking action under this Agreementor under any other Loan Document, except that such Lender may agree with suchParticipant that such Lender will not, without such Participant’s consent, takeaction of the type described as follows:

 

(i)                                     increasethe portion of the participation amount of any Participant over the amountthereof then in effect, or extend the Commitment Period, without the writtenconsent of each Participant affected thereby; or

 

(ii)                                  reducethe principal amount of or extend the time for any payment of principal of anyLoan, or reduce the rate of interest or extend the time for payment of intereston any Loan, or reduce the commitment fee, without the written consent of eachParticipant affected thereby.

 

Borrowers agree that anyLender that sells participations pursuant to this Section 11.11 shallstill be entitled to the benefits of Article III hereof, notwithstandingany such transfer; provided that the obligations of Borrowers shall notincrease as a result of such transfer and Borrowers shall have no obligation toany Participant.

 

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Section 11.12.  Patriot Act Notice.  Each Lender and Agent (for itself and not onbehalf of any other party) hereby notifies the Credit Parties that, pursuant tothe requirements of the Patriot Act, such Lender and Agent are required toobtain, verify and record information that identifies the Credit Parties, whichinformation includes the name and address of the Credit Parties and otherinformation that will allow such Lender or Agent, as applicable, to identifythe Credit Parties in accordance with the Patriot Act.  Each Borrower shall provide, to the extentcommercially reasonable, such information and take such actions as arereasonably requested by Agent or a Lender in order to assist Agent or suchLender in maintaining compliance with the Patriot Act.

 

Section 11.13. Severability of Provisions; Captions; Attachments.  Any provision of this Agreement that shall beprohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,be ineffective to the extent of such prohibition or unenforceability withoutinvalidating the remaining provisions hereof or affecting the validity orenforceability of such provision in any other jurisdiction.  The several captions to sections andsubsections herein are inserted for convenience only and shall be ignored ininterpreting the provisions of this Agreement. Each schedule or exhibit attached to this Agreement shall beincorporated herein and shall be deemed to be a part hereof.

 

Section 11.14. Investment Purpose.  Eachof the Lenders represents and warrants to Borrowers that it is entering intothis Agreement with the present intention of acquiring any Note issued pursuanthereto (or, if there is no Note, the interest as reflected on the books andrecords of Agent) for investment purposes only and not for the purpose ofdistribution or resale, it being understood, however, that each Lender shall atall times retain full control over the disposition of its assets.

 

Section 11.15. Entire Agreement.  ThisAgreement, any Note and any other Loan Document or other agreement, document orinstrument attached hereto or executed on or as of the Closing Date integrateall of the terms and conditions mentioned herein or incidental hereto andsupersede all oral representations and negotiations and prior writings withrespect to the subject matter hereof.

 

Section 11.16. Legal Representation of Parties. The Loan Documents were negotiated by the parties with the benefit oflegal representation and any rule of construction or interpretationotherwise requiring this Agreement or any other Loan Document to be construedor interpreted against any party shall not apply to any construction orinterpretation hereof or thereof.

 

Section 11.17. Governing Law; Submission to Jurisdiction.

 

(a)                                  GoverningLaw.  This Agreement, each of theNotes and any Related Writing shall be governed by and construed in accordancewith the laws of the State of Ohio and the respective rights and obligations ofBorrowers, Agent, and the Lenders shall be governed by Ohio law, without regardto principles of conflicts of laws.

 

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(b)                                 Submission to Jurisdiction. Each Borrower hereby irrevocably submits to the non-exclusivejurisdiction of any Ohio state or federal court sitting in Cleveland, Ohio,over any action or proceeding arising out of or relating to this Agreement, theObligations or any Related Writing, and each Borrower hereby irrevocably agreesthat all claims in respect of such action or proceeding may be heard anddetermined in such Ohio state or federal court. Each Borrower, on behalf of itself and its Subsidiaries, herebyirrevocably waives, to the fullest extent permitted by law, any objection itmay now or hereafter have to the laying of venue in any action or proceeding inany such court as well as any right it may now or hereafter have to remove suchaction or proceeding, once commenced, to another court on the grounds of FORUMNON CONVENIENS or otherwise.  EachBorrower agrees that a final, non-appealable judgment in any such action orproceeding shall be conclusive and may be enforced in other jurisdictions by suiton the judgment or in any other manner provided by law.

 

[Remainder of page leftintentionally blank]

 

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Section 11.18.  JURY TRIAL WAIVER.  TO THE EXTENT PERMITTED BY LAW, EACHBORROWER, AGENT AND EACH LENDER WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE INRESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONGBORROWERS, AGENT AND THE LENDERS, OR ANY THEREOF, ARISING OUT OF, IN CONNECTIONWITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM INCONNECTION WITH THIS AGREEMENT OR ANY NOTE OR OTHER INSTRUMENT, DOCUMENT ORAGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONSRELATED THERETO.

 

IN WITNESS WHEREOF, theparties have executed and delivered this Second Amended and Restated Credit andSecurity Agreement as of the date first set forth above.

 
| Address: | 501 Kansas  Avenue             | EPIQ SYSTEMS,  INC.                                     |
|----------|--------------------------------|---------------------------------------------------------|
|     | Kansas City,  Kansas 66105     |                                                    |
|     | Attn:  Elizabeth Braham   | By:                                                     |   |
|     |                           | Name:                                                   |   |
|     |                           | Title:                                                  |   |
|     |                           |
| Address: | 127 Public  Square             | KEYBANK NATIONAL ASSOCIATION,  as Agent and as a Lender |
|     | Cleveland, Ohio  44114-1306    |
|     | Attn:  Institutional Bank |                                                    |
|     |                           | By:                                                     |   |
|     |                           |                                                    | Jeff Kalinowski |
|     |                           |                                                    | Senior Vice  President |
|          |                                |                                                         |  |  |  |  |

 

Signature Pageof the SecondAmended and RestatedCredit and Security Agreement

 

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| Address: |                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                             | NATIONAL  CITY BANK   as Co-Documentation Agent and as a Lender |
|----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------|
|     |                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                             |
|     |                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                             |                                                            |
|     | Attention:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                  |                                                            | By: |   |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                             |                                                            | Name: |   |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                             |                                                            | Title: |   |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                 |  |  |  |  |

 

Signature Pageof the SecondAmended and RestatedCredit and Security Agreement

 

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| Address: |                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                             | SILICON  VALLEY BANK,  as Co-Documentation Agent and as a Lender |
|----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------|
|     |                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                             |
|     |                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                             |                                                             |
|     | Attention:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                  |                                                             | By: |   |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                             |                                                             | Name: |   |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                             |                                                             | Title: |   |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                  |  |  |  |  |

 

Signature Pageof the SecondAmended and RestatedCredit and Security Agreement

 

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| Address: |                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                             | HSBC  BANK USA, NATIONAL  ASSOCIATION |
|----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------|
|     |                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                             |
|     |                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                             |                                  |
|     | Attention:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                  |                                  | By: |   |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                             |                                  | Name: |   |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                             |                                  | Title: |   |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                  |                                       |  |  |  |  |

 

Signature Pageof the SecondAmended and RestatedCredit and Security Agreement

 

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SCHEDULE 1

 
| **LENDERS**                          | ** ** | **COMMITMENT  PERCENTAGE** | ** ** | **REVOLVING  CREDIT  COMMITMENT  AMOUNT** | ** **  | **MAXIMUM  AMOUNT** | ** ** |
|--------------------------------------|------------|----------------------------|------------|-------------------------------------------|-------------|---------------------|------------|
| KeyBank  National Association        |       | 35%                        |       | $                                         | 35,000,000  |                | $          | 35,000,000 |   |
| National  City Bank                  |       | 25%                        |       | $                                         | 25,000,000  |                | $          | 25,000,000 |   |
| Silicon  Valley Bank                 |       | 25%                        |       | $                                         | 25,000,000  |                | $          | 25,000,000 |   |
| HSBC  Bank USA, National Association |       | 15%                        |       | $                                         | 15,000,000  |                | $          | 15,000,000 |   |
| Total  Commitment Amount             |       | 100.00%                    |       | $                                         | 100,000,000 |                | $          | 100,000,000 |   |

 

S-1

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SCHEDULE 2

 

DOMESTICSUBSIDIARY BORROWERS

 

None as of theClosing Date

 

S-2

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SCHEDULE 3

 

GUARANTORS OFPAYMENT

 

Epiq BankruptcySolutions, LLC (f/k/a Bankruptcy Services LLC)

EPIQ SystemsAcquisition, Inc.

Epiq Class Action &Claims Solutions, Inc. (f/k/a Poorman-Douglas Corporation)

Epiq eDiscovery Solutions, Inc.(f/k/a nMatrix, Inc.)

Hilsoft, Inc.

Epiq PreferenceSolutions, LLC (f/k/a Epiq Advisory Services, LLC)

Epiq Bankruptcy AdvisoryServices, Inc. (f/k/a Novare, Inc.)

Epiq Financial BallotingGroup, LLC (f/k/a Financial Balloting Group, LLC)

 

S-3

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EXHIBIT A

FORM OF

REVOLVING CREDITNOTE

 
| $                              | July 30,  2008 |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------|--------|

 

FOR VALUE RECEIVED, theundersigned, EPIQ SYSTEMS, INC., a Missouri corporation (“Borrower”), promisesto pay, on the last day of the Commitment Period, as defined in the CreditAgreement (as hereinafter defined), to the order of                  (“Lender”) at the main office of KEYBANK NATIONAL ASSOCIATION, as Agent, ashereinafter defined, 127 Public Square, Cleveland, Ohio 44114-1306 theprincipal sum of

 

                                                                                                                                                                                                DOLLARS

 

or the aggregate unpaidprincipal amount of all Revolving Loans, as defined in the Credit Agreement,made by Lender to Borrower pursuant to Section 2.2(a) of the CreditAgreement, whichever is less, in lawful money of the United States of America.

 

As used herein, “CreditAgreement” means the Second Amended and Restated Credit and Security Agreementdated as of July 30, 2008, among Borrower, the Domestic SubsidiaryBorrowers named therein, the Lenders, as defined therein, KeyBank NationalAssociation, as the lead arranger, sole book runner and administrative agentfor the Lenders (“Agent”), National City Bank, as co-documentation agent, andSilicon Valley Bank, as co-documentation agent, as the same may from time totime be amended, restated or otherwise modified.  Each capitalized term used herein that isdefined in the Credit Agreement and not otherwise defined herein shall have themeaning ascribed to it in the Credit Agreement.

 

Borrower also promises topay interest on the unpaid principal amount of each Revolving Loan from time totime outstanding, from the date of such Revolving Loan until the payment infull thereof, at the rates per annum that shall be determined in accordancewith the provisions of Section 2.3(a) of the Credit Agreement.  Such interest shall be payable on each dateprovided for in such Section 2.3(a); provided that interest on anyprincipal portion that is not paid when due shall be payable on demand.

 

The portions of theprincipal sum hereof from time to time representing Base Rate Loans andEurodollar Loans, interest owing thereon and payments of principal and interestof any thereof, shall be shown on the records of Lender by such method asLender may generally employ; provided that failure to make any such entry shallin no way detract from the obligations of Borrower under this Note.

 

If this Note shall not bepaid at maturity, whether such maturity occurs by reason of lapse of time or byoperation of any provision for acceleration of maturity contained in the CreditAgreement, the principal hereof and the unpaid interest thereon shall bearinterest, pursuant to the terms of the Credit Agreement, until paid, at a rateper annum equal to the Default Rate.  Allpayments of principal of and interest on this Note shall be made in immediatelyavailable funds.

 

E-1

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This Note is one of theRevolving Credit Notes referred to in the Credit Agreement.  Reference is made to the Credit Agreement fora description of the right of the undersigned to anticipate payments hereof,the right of the holder hereof to declare this Note due prior to its statedmaturity, and other terms and conditions upon which this Note is issued.

 

Borrower herebydesignates all Indebtedness and other obligations now or hereafter incurred orotherwise outstanding under this Note, the Credit Agreement and the other LoanDocuments, as defined in the Credit Agreement, to be “Senior Indebtedness” asdefined in the Note Agreement.  Except asexpressly provided in the Credit Agreement, Borrower expressly waivespresentment, demand, protest and notice of any kind.  This Note shall be governed by and construedin accordance with the laws of the State of Ohio, without regard to conflictsof laws provisions.

 

JURY TRIAL WAIVER. BORROWER, TO THE EXTENT PERMITTED BY LAW, HEREBY WAIVES ANY RIGHT TOHAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT,TORT OR OTHERWISE, AMONG BORROWER, AGENT AND THE LENDERS, OR ANY THEREOF,ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THERELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS NOTE OR ANY OTHERNOTE OR INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTIONHEREWITH OR THE TRANSACTIONS RELATED THERETO.

 
|   | EPIQ SYSTEMS, INC. |
|--------|--------------------|
|   |               |
|   |               | By: |   |
|   |               | Name: |   |
|   |               | Title: |   |
|        |                    |  |  |  |  |  |

 

E-2

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EXHIBIT B

FORM OF

SWING LINE NOTE

 
| $5,000,000 | July 30,  2008 |   |
|------------|---------------------|--------|

 

FOR VALUERECEIVED, the undersigned, EPIQ SYSTEMS, INC., a Missouri corporation (“Borrower”),promises to pay to the order of KEYBANK NATIONAL ASSOCIATION (“Swing LineLender”) at the main office of KEYBANK NATIONAL ASSOCIATION, as Agent, ashereinafter defined, 127 Public Square, Cleveland, Ohio 44114-1306 theprincipal sum of

 

FIVE MILLION AND00/100                                                                                                                                                  DOLLARS

 

or the aggregate unpaidprincipal amount of all Swing Loans, as defined in the Credit Agreement (ashereinafter defined), made by the Swing Line Lender to Borrower pursuant to Section 2.2(c) ofthe Credit Agreement, whichever is less, in lawful money of the United Statesof America on the earlier of the last day of the Commitment Period, as definedin the Credit Agreement, or, with respect to each Swing Loan, the Swing LoanMaturity Date applicable thereto.

 

As used herein, “CreditAgreement” means the Second Amended and Restated Credit and Security Agreementdated as of July 30, 2008, among Borrower, the Domestic SubsidiaryBorrowers named therein, the Lenders, as defined therein, KeyBank NationalAssociation, as the lead arranger, sole book runner and administrative agentfor the Lenders (“Agent”), National City Bank, as co-documentation agent, andSilicon Valley Bank, as co-documentation agent, as the same may from time totime be amended, restated or otherwise modified.  Each capitalized term used herein that isdefined in the Credit Agreement and not otherwise defined herein shall have themeaning ascribed to it in the Credit Agreement.

 

Borrower also promises topay interest on the unpaid principal amount of each Swing Loan from time totime outstanding, from the date of such Swing Loan until the payment in fullthereof, at the rates per annum that shall be determined in accordance with theprovisions of Section 2.3(b) of the Credit Agreement.  Such interest shall be payable on each dateprovided for in such Section 2.3(b); provided that interest on anyprincipal portion that is not paid when due shall be payable on demand.

 

The principal sum hereoffrom time to time and the payments of principal and interest thereon, shall beshown on the records of Swing Line Lender by such method as Swing Line Lendermay generally employ; provided that failure to make any such entry shall in noway detract from the obligation of Borrower under this Note.

 

If this Note shall not bepaid at maturity, whether such maturity occurs by reason of lapse of time or byoperation of any provision for acceleration of maturity contained in the CreditAgreement, the principal hereof and the unpaid interest thereon shall bearinterest, pursuant to the terms of the Credit Agreement, until paid, at a rateper annum equal to the Default Rate.  Allpayments of principal of and interest on this Note shall be made in immediatelyavailable funds.

 

E-3

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This Note is the SwingLine Note referred to in the Credit Agreement. Reference is made to the Credit Agreement for a description of the rightof the undersigned to anticipate payments hereof, the right of the holderhereof to declare this Note due prior to its stated maturity, and other termsand conditions upon which this Note is issued.

 

Borrower herebydesignates all Indebtedness and other obligations now or hereafter incurred orotherwise outstanding under this Note, the Credit Agreement and the other LoanDocuments, as defined in the Credit Agreement, to be “Senior Indebtedness” asdefined in the Note Agreement.  Except asexpressly provided in the Credit Agreement, Borrower expressly waivespresentment, demand, protest and notice of any kind.  This Note shall be governed by and construedin accordance with the laws of the State of Ohio, without regard to conflicts oflaws provisions.

 

JURY TRIAL WAIVER. BORROWER, TO THE EXTENT PERMITTED BYLAW, HEREBY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANYDISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG BORROWER, AGENTAND THE LENDERS, OR ANY THEREOF, ARISING OUT OF, IN CONNECTION WITH, RELATEDTO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITHTHIS NOTE OR ANY OTHER NOTE OR INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED ORDELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED THERETO.

 
|   | EPIQ SYSTEMS, INC. |
|--------|--------------------|
|   |               |
|   |               | By: |   |   |
|   |               | Name: |   |   |
|   |               | Title: |   |   |
|        |                    |  |  |  |  |  |

 

E-4

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EXHIBIT C

FORM OF

NOTICE OF LOAN

 

                                 ,20          

 

KeyBank NationalAssociation, as Agent

127 Public Square

Cleveland, Ohio44114-0616

Attention:   Institutional Bank

 

Ladies and Gentlemen:

 

The undersigned, EPIQ SYSTEMS, INC., a Missouricorporation (“AdministrativeBorrower”), refers to the Credit and Security Agreement, dated as of July 30,2008 (“Credit Agreement”, the terms defined therein being used herein astherein defined), among Administrative Borrower, the Domestic SubsidiaryBorrowers named therein, the Lenders, as defined in the Credit Agreement,KEYBANK NATIONAL ASSOCIATION, as the lead arranger, sole book runner andadministrative agent for the Lenders (“Agent”), NATIONAL CITY BANK, asco-documentation agent, and SILICON VALLEY BANK, as co-documentation agent, andhereby gives you notice, pursuant to Section 2.5 of the Credit Agreementthat Borrowers hereby request a Loan (the “Proposed Loan”), and in connectiontherewith sets forth below the information relating to the Proposed Loan asrequired by Section 2.5 of the Credit Agreement:

 

(a)                                  TheBorrower requesting the Proposed Loan is                        .

 

(b)                                 TheBusiness Day of the Proposed Loan is                    ,20    .

 

(c)                                  Theamount of the Proposed Loan is$                              .

 

(d)                                 TheProposed Loan is to be a Base Rate Loan         / Eurodollar Loan      / SwingLoan          (Check one.)

 

(e)                                  Ifthe Proposed Loan is a Eurodollar Loan, the Interest Period requested is onemonth       , two months      , three months      , six months         (Check one.)

 

The undersigned herebycertifies on behalf of Borrowers that the following statements are true on thedate hereof, and will be true on the date of the Proposed Loan:

 

(i)                                     therepresentations and warranties contained in Article VI of the CreditAgreement are true in all material respects as if made on and as of such date,except to the extent that any thereof expressly relate to an earlier date;

 

(ii)                                  noevent has occurred and is continuing, or would result from such Proposed Loan,or the application of proceeds therefrom, that constitutes a Default or Eventof Default; and

 

E-5

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(iii)                               theconditions set forth in Section 2.5 and Article IV of the CreditAgreement have been satisfied.

 
|   | EPIQ SYSTEMS, INC. |
|--------|--------------------|
|   |               |
|   | By:                |   |
|   | Name:              |   |
|   | Title:             |   |
|        |                    |  |  |  |

 

E-6

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EXHIBIT D

FORM OF

COMPLIANCE CERTIFICATE

 

For Fiscal Quarterended                                                 

 

THE UNDERSIGNED HEREBYCERTIFIES THAT:

 

(1)                                  Iam the duly elected President or Chief Financial Officer of EPIQ SYSTEMS, INC.,a Missouri corporation (“EPIQ” and, together with each Domestic SubsidiaryBorrower, as defined in the Credit Agreement, as hereinafter defined, “Borrowers”);

 

(2)                                  Iam familiar with the terms of that certain Second Amended and Restated Creditand Security Agreement, dated as of July 30, 2008, among Borrowers, thelenders from time to time named on Schedule 1 thereto (together withtheir respective successors and assigns, collectively, the “Lenders”), asdefined in the Credit Agreement, KEYBANK NATIONAL ASSOCIATION, as Agent,NATIONAL CITY BANK, as co-documentation agent, and SILICON VALLEY BANK, asco-documentation agent (as the same may from time to time be amended, restatedor otherwise modified, the “Credit Agreement”, the terms defined therein beingused herein as therein defined), and the terms of the other Loan Documents, andI have made, or have caused to be made under my supervision, a review inreasonable detail of the transactions and condition of Borrowers and theirSubsidiaries during the accounting period covered by the attached financialstatements;

 

(3)                                  Thereview described in paragraph (2) above did not disclose, and I have noknowledge of, the existence of any condition or event that constitutes orconstituted a Default or Event of Default, at the end of the accounting periodcovered by the attached financial statements or as of the date of this Certificate;

 

(4)                                  Therepresentations and warranties made by Borrowers contained in Article VIof the Credit Agreement are true in all material respects as if made on and asof the date hereof, except to the extent that any thereof expressly relate toan earlier date; and

 

(5)                                  Setforth on Attachment I hereto are calculations of the financial covenants setforth in Section 5.7 of the Credit Agreement, which calculations showcompliance with the terms thereof.

 

IN WITNESS WHEREOF, I have signed this certificate the       day of                  ,20      .

 
|   | EPIQ SYSTEMS, INC. |
|--------|--------------------|
|   |               |
|   | By:                |   |
|   | Name:              |   |
|   | Title:             |   |
|        |                    |  |  |  |

 

E-7

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EXHIBIT E

FORM OF

ASSIGNMENT ANDACCEPTANCE AGREEMENT

 

This Assignment and Acceptance Agreement (this “AssignmentAgreement”) between                                            (the “Assignor”) and                                            (the “Assignee”) is dated as of                ,20_.  The parties hereto agree asfollows:

 

1.                                       PreliminaryStatement.  Assignor is a party to aSecond Amended and Restated Credit and Security Agreement, dated as of July 30,2008 (as the same may from time to time be amended, restated or otherwisemodified, the “Credit Agreement”), among EPIQ SYSTEMS, INC., a Missouricorporation (“EPIQ”), the Domestic Subsidiary Borrowers named therein (togetherwith EPIQ, collectively, “Borrowers” and, individually, each a “Borrower”), thelenders named on Schedule 1 thereto (together with their respectivesuccessors and assigns, collectively, the “Lenders” and, individually, each a “Lender”),KEYBANK NATIONAL ASSOCIATION, as the lead arranger, sole book runner andadministrative agent for the Lenders (“Agent”), NATIONAL CITY BANK, asco-documentation agent, and SILICON VALLEY BANK, as co-documentationagent.  Capitalized terms used herein andnot otherwise defined herein shall have the meanings attributed to them in theCredit Agreement.

 

2.                                       Assignmentand Assumption.  Assignor herebysells and assigns to Assignee, and Assignee hereby purchases and assumes fromAssignor, an interest in and to Assignor’s rights and obligations under theCredit Agreement, effective as of the Assignment Effective Date (as hereinafterdefined), equal to the percentage interest specified on Annex 1 hereto (hereinafter,the “Assigned Percentage”) of Assignor’s right, title and interest in and to (a) theCommitment, (b) any Loan made by Assignor that is outstanding on theAssignment Effective Date, (c) Assignor’s interest in any Letter of Creditoutstanding on the Assignment Effective Date, (d) any Note delivered toAssignor pursuant to the Credit Agreement, and (e) the Credit Agreementand the other Related Writings.  Aftergiving effect to such sale and assignment and on and after the AssignmentEffective Date, Assignee shall be deemed to have a “Commitment Percentage”under the Credit Agreement equal to the Commitment Percentage set forth insubpart II.A on Annex 1 hereto and an Assigned Amount as set forth onsubpart I.B of Annex 1 hereto (hereinafter, the “Assigned Amount”).

 

3.                                       AssignmentEffective Date.  The AssignmentEffective Date (the “Assignment Effective Date”) shall be[                        ,         ] (orsuch other date agreed to by Agent).  Onor prior to the Assignment Effective Date, Assignor shall satisfy the followingconditions:

 

(a)                                  receiptby Agent of  this Assignment Agreement,including Annex 1 hereto, properly executed by Assignor and Assignee andaccepted and consented to by Agent and, if necessary pursuant to the provisionsof Section 11.10(b) of the Credit Agreement, by AdministrativeBorrower;

 

(b)                                 receiptby Agent from Assignor of a fee of Three Thousand Five Hundred Dollars($3,500), if required by Section 11.10(d) of the Credit Agreement;

 

E-8

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(c)                                  receiptby Agent from Assignee of an administrative questionnaire, or other similardocument, which shall include (i) the address for notices under the CreditAgreement, (ii) the address of its Lending Office, (iii) wiretransfer instructions for delivery of funds by Agent, (iv) and such otherinformation as Agent shall request; and

 

(d)                                 receiptby Agent from Assignor or Assignee of any other information required pursuantto Section 11.10 of the Credit Agreement or otherwise necessary to completethe transaction contemplated hereby.

 

4.                                       PaymentObligations.  In consideration forthe sale and assignment of Loans hereunder, Assignee shall pay to Assignor, onthe Assignment Effective Date, the amount agreed to by Assignee andAssignor.  Any interest, fees and otherpayments accrued prior to the Assignment Effective Date with respect to theAssigned Amount shall be for the account of Assignor.  Any interest, fees and other payments accruedon and after the Assignment Effective Date with respect to the Assigned Amountshall be for the account of Assignee. Each of Assignor and Assignee agrees that it will hold in trust for theother party any interest, fees or other amounts which it may receive to whichthe other party is entitled pursuant to the preceding sentence and to pay theother party any such amounts which it may receive promptly upon receiptthereof.

 

5.                                       CreditDetermination; Limitations on Assignor’s Liability.  Assignee represents and warrants to Assignor,Borrowers, Agent and the Lenders (a) that it is capable of making and hasmade and shall continue to make its own credit determinations and analysisbased upon such information as Assignee deemed sufficient to enter into thetransaction contemplated hereby and not based on any statements orrepresentations by Assignor; (b) Assignee confirms that it meets therequirements to be an assignee as set forth in Section 11.10 of the CreditAgreement; (c) Assignee confirms that it is able to fund the Loans and theLetters of Credit as required by the Credit Agreement; (d) Assignee agreesthat it will perform in accordance with their terms all of the obligationswhich by the terms of the Credit Agreement and the Related Writings arerequired to be performed by it as a Lender thereunder; and (e) Assigneerepresents that it has reviewed each of the Loan Documents and the ConvertibleSubordinated Documents.  It is understoodand agreed that the assignment and assumption hereunder are made withoutrecourse to Assignor and that Assignor makes no representation or warranty ofany kind to Assignee and shall not be responsible for (i) the dueexecution, legality, validity, enforceability, genuineness, sufficiency orcollectability of the Credit Agreement or any Related Writings, (ii) anyrepresentation, warranty or statement made in or in connection with the CreditAgreement or any of the Related Writings, (iii) the financial condition orcreditworthiness of any Borrower or any Guarantor of Payment, (iv) theperformance of or compliance with any of the terms or provisions of the CreditAgreement or any of the Related Writings, (v) the inspection of any of theproperty, books or records of Borrowers, or (vi) the validity,enforceability, perfection, priority, condition, value or sufficiency of anycollateral securing or purporting to secure the Loans or Letters ofCredit.  Neither Assignor nor any of itsofficers, directors, employees, agents or attorneys shall be liable for anymistake, error of judgment, or action taken or omitted to be taken inconnection with the Loans, the Letters of Credit, the Credit Agreement or theRelated Writings, except for its or their own gross negligence or willfulmisconduct.  Assignee appoints Agent totake such 

 

E-9

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action as agent on itsbehalf and to exercise such powers under the Credit Agreement as are delegatedto Agent by the terms thereof.

 

6.                                       Indemnity.  Assignee agrees to indemnify and holdAssignor harmless against any and all losses, cost and expenses (including,without limitation, attorneys’ fees) and liabilities incurred by Assignor inconnection with or arising in any manner from Assignee’s performance ornon-performance of obligations assumed under this Assignment Agreement.

 

7.                                       SubsequentAssignments.  After the AssignmentEffective Date, Assignee shall have the right, pursuant to Section 11.10of the Credit Agreement to assign the rights which are assigned to Assigneehereunder, provided that (a) any such subsequent assignment does notviolate any of the terms and conditions of the Credit Agreement, any of theRelated Writings, or any law, rule, regulation, order, writ, judgment,injunction or decree and that any consent required under the terms of theCredit Agreement or any of the Related Writings has been obtained, (b) theassignee under such assignment from Assignee shall agree to assume all ofAssignee’s obligations hereunder in a manner satisfactory to Assignor, and (c) Assigneeis not thereby released from any of its obligations to Assignor hereunder.

 

8.                                       Reductionsof Aggregate Amount of Commitments. If any reduction in the Total Commitment Amount occurs between the dateof this Assignment Agreement and the Assignment Effective Date, the percentageof the Total Commitment Amount assigned to Assignee shall remain the percentagespecified in Section 1 hereof and the dollar amount of the Commitment ofAssignee shall be recalculated based on the reduced Total Commitment Amount.

 

9.                                       Acceptanceof Agent; Notice by Assignor.  ThisAssignment Agreement is conditioned upon the acceptance and consent of Agentand, if necessary pursuant to Section 11.10 of the Credit Agreement, uponthe acceptance and consent of Administrative Borrower; provided that theexecution of this Assignment Agreement by Agent and, if necessary, byAdministrative Borrower is evidence of such acceptance and consent.

 

10.                                 EntireAgreement.  This Assignment Agreementembodies the entire agreement and understanding between the parties hereto andsupersedes all prior agreements and understandings between the parties heretorelating to the subject matter hereof.

 

11.                                 GoverningLaw.  This Assignment Agreement shallbe governed by the laws of the State of Ohio, without regard to conflicts oflaws.

 

12.                                 Notices.  Notices shall be given under this AssignmentAgreement in the manner set forth in the Credit Agreement.  For the purpose hereof, the addresses of theparties hereto (until notice of a change is delivered) shall be the address setforth under each party’s name on the signature pages hereof.

 

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13.                                 Counterparts.  This Assignment Agreement may be executed inany number of counterparts, by different parties hereto in separatecounterparts and by facsimile signature, each of which when so executed and deliveredshall be deemed to be an original and all of which taken together shallconstitute but one and the same agreement.

 

[Remainder of page intentionallyleft blank.]

 

E-11

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14.                                 JURYTRIAL WAIVER.  EACH OF THE UNDERSIGNED,TO THE EXTENT PERMITTED BY LAW, WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE INRESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, AMONGAGENT, ANY OF THE LENDERS, AND ANY OF THE BORROWERS, OR ANY THEREOF, ARISING OUTOF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIPESTABLISHED AMONG THEM IN CONNECTION WITH THIS INSTRUMENT OR ANY NOTE OR OTHERAGREEMENT, INSTRUMENT OR DOCUMENT EXECUTED OR DELIVERED IN CONNECTION THEREWITHOR THE TRANSACTIONS RELATED HERETO.

 

IN WITNESS WHEREOF, the parties hereto have executedthis Assignment Agreement by their duly authorized officers as of the datefirst above written.

 
|                                                                                                                                                       |   | ASSIGNOR:                                                                                                                                                                                       |
|------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                       |   |                                                                                                                                                                                            |
|                                                                                                                                                       |   |                                                                                                                                                                                            |
| Address:                                                                                                                                                   |   |                                                                                                                                                                                            |   |
|                                                                                                                                                       |   |                                                                                                                                                                                            |   |
|                                                                                                                                                       | Attn:  |                                                                                                                                                                                            |   | By: |   |
|                                                                                                                                                       | Phone: |                                                                                                                                                                                            |   | Name: |   |
|                                                                                                                                                       | Fax:   |                                                                                                                                                                                            |   | Title: |   |
|                                                                                                                                                       |   |                                                                                                                                                                                            |
|                                                                                                                                                       |   | ASSIGNEE:                                                                                                                                                                                       |
|                                                                                                                                                       |   |                                                                                                                                                                                            |
|                                                                                                                                                       |   |                                                                                                                                                                                            |
| Address:                                                                                                                                                   |   |                                                                                                                                                                                            |   |
|                                                                                                                                                       |   |                                                                                                                                                                                            |   |
|                                                                                                                                                       | Attn:  |                                                                                                                                                                                            |   | By: |   |
|                                                                                                                                                       | Phone: |                                                                                                                                                                                            |   | Name: |   |
|                                                                                                                                                       | Fax:   |                                                                                                                                                                                            |   | Title: |   |
|                                                                                                                                                       |   |                                                                                                                                                                                            |   |
| Accepted  and Consented to this        day of        , 20      : |   | Accepted  and Consented to this        day of                ,  20    : |
|                                                                                                                                                       |   |                                                                                                                                                                                            |   |
| KEYBANK  NATIONAL ASSOCIATION,                                                                                                                             |   | EPIQ  SYSTEMS, INC.                                                                                                                                                                             |
| as Agent                                                                                                                                                   |   |                                                                                                                                                                                            |
|                                                                                                                                                       |   |                                                                                                                                                                                            |
| By:                                                                                                                                                        |   |                                                                                                                                                                                            | By: |   |
| Name:                                                                                                                                                      |   |                                                                                                                                                                                            | Name: |   |
| Title:                                                                                                                                                     |   |                                                                                                                                                                                            | Title: |   |
|                                                                                                                                                            |        |                                                                                                                                                                                                 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

E-12

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ANNEX 1

TO

ASSIGNMENT ANDACCEPTANCE AGREEMENT

 

On and after theAssignment Effective Date, after giving effect to all other assignments beingmade by Assignor on the Assignment Effective Date, the Commitment of Assignee,and, if this is less than an assignment of all of Assignor’s interest,Assignor, shall be as follows:

 
| I.     |   | INTEREST BEING ASSIGNED  TO ASSIGNEE                              |
|--------|--------|-------------------------------------------------------------------|
|   |   |                                                              |
|   |   | A.                                                                |   | Assigned Percentage |                     | % |
|   |   | B.                                                                |   | Assigned Amount | $                   |   |
|   |   |                                                              |   |   |   |   |
| II.    |   | ASSIGNEE’S COMMITMENT  (as of the Assignment Effective Date) |
|   |   |                                                              |   |   |   |   |
|   |   | A.                                                                |   | Assignee’s Commitment  Percentage under the Credit Agreement |                    | % |
|   |   | B.                                                                |   | Assignee’s Commitment  Amount under the Credit Agreement |   |   |
|   |   |                                                              |   |   |   |   |
| III.   |   | ASSIGNOR’S COMMITMENT  (as of the Assignment Effective Date) |
|   |   |                                                              |   |   |   |   |
|   |   | A.                                                                |   | Assignor’s Commitment  Percentage under the Credit Agreement |                     | % |
|   |   | B.                                                                |   | Assignor’s Commitment  Amount under the Credit Agreement | $                   |   |

 

E-13

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EXHIBIT F

FORM OF

DOMESTIC SUBSIDIARY BORROWER ASSUMPTION AGREEMENT

 

This DOMESTIC SUBSIDIARYBORROWER ASSUMPTION AGREEMENT (“Agreement”) is made effective as of                        ,20    , by and among [                              ,a                           ](the “Obligor”), EPIQ SYSTEMS, INC., aMissouri corporation (“EPIQ”), each Domestic Subsidiary Borrower, asdefined in the Credit Agreement, as hereinafter defined (each such DomesticSubsidiary Borrower, together with EPIQ, shall be referred to herein,collectively, as “Borrowers” and, individually, each a “Borrower”), and KEYBANKNATIONAL ASSOCIATION, as the administrative agent under the Credit Agreement (“Agent”),on behalf of and for the benefit of the Lenders, as defined in the CreditAgreement.

 

WHEREAS, Borrowers, Agentand the Lenders are parties to that certain Second Amended and Restated Credit and Security Agreement, datedas of July 30, 2008 (as thesame may from time to time be further amended, restated or otherwise modified,the “Credit Agreement”, each capitalized term not defined herein being usedherein as therein defined) wherein Agent and the Lenders have agreed to makeLoans to Borrowers, and the Fronting Lender has agreed to issue Letters ofCredit to Borrowers on behalf of the Lenders, all upon certain terms andconditions;

 

WHEREAS, pursuant to Section 2.13(a) ofthe Credit Agreement, Borrowers have requested that, effective on[                          ,        ] (the “Assumption EffectiveDate”), the Obligor shall be designated as a “Domestic Subsidiary Borrower”under the Credit Agreement; and

 

WHEREAS, Agent and theLenders are willing to permit the Obligor to become a “Domestic SubsidiaryBorrower” under the Credit Agreement and the Lenders are willing to make Loansto the Obligor and issue Letters of Credit for the account of the Obligorpursuant to the Commitment (on a joint and several basis with the otherBorrowers), upon certain terms and conditions as set forth in the CreditAgreement, one of which is that the Obligor shall assume all of theObligations, as hereinafter defined, and this Agreement is being executed anddelivered in consideration of each financial accommodation, if any, granted tothe Obligor by Agent and the Lenders, and for other valuable consideration;

 

NOW, THEREFORE, inconsideration of the foregoing premises and for other good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged,the Obligor hereby agrees as follows:

 

1.                                       Assumption.  Onand after the Assumption Effective Date, the Obligor irrevocably andunconditionally assumes and shall be liable for all of the obligations of a Borrowerunder the Credit Agreement and the Related Writings (the “Obligations”), on ajoint and several basis, as fully as if the Obligor had been an original partyto the Credit Agreement, including, but not limited to (a) all Loans andLetters of Credit, (b) all other indebtedness now owing or hereafterincurred by one or more Borrowers to Agent and the Lenders pursuant to the 

 

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Credit Agreement and the other Loan Documents executed in connectiontherewith, and (c) each renewal, extension, consolidation or refinancingof any of the foregoing, in whole or in part.

 

2.                                       TheObligor Party to the Credit Agreement. On and after the Assumption Effective Date, the Obligor shall (a) bedesignated a “Domestic Subsidiary Borrower” pursuant to the terms andconditions of the Credit Agreement, and (b) become bound by allrepresentations, warranties, covenants, provisions and conditions of the CreditAgreement and each other Loan Document applicable to Borrowers, as if theObligor had been the original party making such representations, warranties andcovenants.

 

3.                                       Representationsand Warranties of the Obligor.  TheObligor represents and warrants to Agent and each Lender that:

 

(a)                                  theObligor is duly organized, validly existing, and in good standing (orcomparable concept in the applicable jurisdiction) under the laws of its stateor jurisdiction of incorporation or organization, and is duly qualified andauthorized to do business and is in good standing (or comparable concept in theapplicable jurisdiction) as a foreign entity in each state or jurisdictionwhere the character of its property or its business activities makes suchqualification necessary, except where a failure to so qualify or be in goodstanding would not reasonably be expected to result in a Material AdverseEffect;

 

(b)                                 theObligor has full power, authority and legal right to execute and deliver thisAgreement, and to perform and observe the provisions hereof and of the CreditAgreement and the Notes (if any) executed by the Obligor, and the officersacting on behalf of the Obligor have been duly authorized to execute anddeliver this Agreement;

 

(c)                                  thisAgreement, the Credit Agreement and the Notes (if any) executed by the Obligorare each valid and binding upon the Obligor and enforceable against the Obligorin accordance with their respective terms, except as enforceability thereof maybe limited by bankruptcy, insolvency, moratorium and similar laws and byequitable principles, whether considered at law or in equity; and

 

(d)                                 eachof the representations and warranties set forth in Article VI of theCredit Agreement applicable to Borrowers are true and complete in all materialrespects with respect to the Obligor as a Domestic Subsidiary Borrower underthe Credit Agreement, except to the extent that any thereof expressly relate toan earlier date.

 

4.                                       Representationsand Warranties of Borrowers and the Obligor.  The Borrowers and the Obligor represent andwarrant to Agent and each Lender that:

 

(a)                                  noDefault or Event of Default exists under the Credit Agreement, nor will anyoccur immediately after the execution and delivery of this Agreement or by theperformance or observance of any provision hereof; and

 

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(b)                                 neitherthe execution and delivery of this Agreement, nor the performance andobservance of the provisions hereof, by the Obligor will conflict with, orconstitute a violation or default under, any provision of any applicable law orof any material contract (including, without limitation, the Obligor’sorganizational, constituting or governing documents) or of any other materialwriting binding upon the Obligor in any manner.

 

5.                                       Obligationsof Borrowers and Each Guarantor Not Affected.  Anything herein to the contrarynotwithstanding, Borrowers and each Guarantor of Payment shall remain bound bythe terms and conditions of all of the Loan Documents to which such Borrower orGuarantor of Payment is a party regardless of the assumption of the Obligationsby the Obligor hereunder or the enforceability thereof or of any of the LoanDocuments.

 

6.                                       ConditionsPrecedent.  Concurrently with theexecution of this Agreement, Borrowers and the Obligor, as appropriate, shall:

 

(a)                                  satisfyeach of the conditions set forth in Section 2.13(a) of the CreditAgreement;

 

(b)                                 payall reasonable legal fees and expenses of Agent incurred in connection withthis Agreement;

 

(c)                                  causeeach Guarantor of Payment to consent and agree to and acknowledge the terms ofthis Agreement; and

 

(d)                                 providesuch other items as may be reasonably required by Agent or the Lenders inconnection with this Agreement.

 

7.                                       BindingNature of Agreement.  All provisionsof the Credit Agreement shall remain in full force and effect and be unaffectedhereby.  This Agreement is a RelatedWriting as defined in the Credit Agreement. This Agreement shall bind and benefit Borrowers, the Obligor, Agent andthe Lenders and their respective successors and assigns.

 

8.                                       Counterparts.  This Agreement may be executed in any numberof counterparts, by different parties hereto in separate counterparts and byfacsimile signature, each of which when so executed and delivered shall bedeemed to be an original and all of which taken together shall constitute butone and the same agreement.

 

9.                                       OhioLaw to Govern.  The rights andobligations of all parties hereto shall be governed by the laws of the State ofOhio, without regard to principles of conflicts of laws.

 

[Remainder of page intentionallyleft blank.]

 

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10.                                 JURYTRIAL WAIVER.  EACH OF THEUNDERSIGNED, TO THE EXTENT PERMITTED BY LAW, HEREBY WAIVES ANY RIGHT TO HAVE AJURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT,OR OTHERWISE, AMONG AGENT, THE LENDERS, THE OBLIGOR AND BORROWERS, OR ANYTHEREOF, ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THERELATIONSHIP ESTABLISHED AMONG EACH OF THEM IN CONNECTION WITH THIS INSTRUMENTOR ANY NOTE OR OTHER AGREEMENT, INSTRUMENT OR DOCUMENT EXECUTED OR DELIVERED INCONNECTION THEREWITH OR THE TRANSACTIONS RELATED HERETO.

 

IN WITNESS WHEREOF, theparties hereto have executed this Agreement by their duly authorized officersas of the date first above written.

 

 
|   | OBLIGOR:                                                  |
|--------|-----------------------------------------------------------|
|   |                                                      |
|   | By:                                                       |   |
|   | Name:                                                     |   |
|   | Title:                                                    |   |
|   |                                                      |   |
|   |                                                      |   |
|   | EPIQ SYSTEMS, INC.                                        |
|   |                                                      |
|   | By:                                                       |   |
|   | Name:                                                     |   |
|   | Title:                                                    |   |
|   |                                                      |   |
|   | [OTHERS BORROWERS]                                        |
|   |                                                      |
|   | By:                                                       |   |
|   | Name:                                                     |   |
|   | Title:                                                    |   |
|   |                                                      |
|   |                                                      |
|   | KEYBANK NATIONAL  ASSOCIATION,                            |
|   | as  Agent on behalf of and for the benefit of the Lenders |
|   |                                                      |
|   | By:                                                       |   |
|   | Name:                                                     |   |
|   | Title:                                                    |   |
|        |                                                           |  |  |  |  |  |  |  |

 

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GUARANTORACKNOWLEDGMENT

 

Each of the undersignedconsents and agrees to and acknowledges the terms of the foregoing the DomesticSubsidiary Borrower Assumption Agreement, dated as of[                            ,        ].  Each of the undersigned specifically agreesto the waivers set forth in such agreement, including, but not limited to, thejury trial waiver.  Each of theundersigned further agrees that the obligations of each of the undersignedpursuant to the Guaranty of Payment and any other Loan Document to which any ofthe undersigned is a party shall remain in full force and effect and beunaffected hereby.

 
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