**Exhibit10.1**

 

 

**LOAN AGREEMENT**

**DATED AS OF JUNE 11, 2003**

 

**BY AND AMONG**

 

**LaSALLEBANK N.A.**

 

**AND**

 

**EPIQSYSTEMS, INC.**

 

 

**LaSALLE BANK N.A. AND EPIQ SYSTEMS,INC.**

 

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**EXHIBIT LIST**

 
| Exhibit 2.3         |   | Revolving Note                         |
|---------------------|--------|----------------------------------------|
|                |   |                                   |
| Exhibit 3.1(E)      |   | Liens                                  |
|                |   |                                   |
| Exhibit 3.1(G)      |   | Litigation and  Contingent Liabilities |
|                |   |                                   |
| Exhibit 3.1(J)      |   | Taxes                                  |
|                |   |                                   |
| Exhibit 3.1(K)      |   | No Default or  Event of Default        |
|                |   |                                   |
| Exhibit 3.1(P)      |   | Officers,  Directors and Ownership     |
|                |   |                                   |
| Exhibit 3.1(Q)      |   | Certificates of  Insurance             |
|                |   |                                   |
| Exhibit  5.1(A)(ix) |   | Opinion of Counsel                     |

 

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**LOAN AGREEMENT**

 

THIS LOAN AGREEMENT (the“Agreement”) is made and entered into as of June 11, 2003, by and among LaSALLEBANK N.A. (“Lender”) and EPIQ SYSTEMS, INC., a Missouri corporation (“Borrower”).

 

THEPARTIES HERETO agree as follows:

 

ARTICLE ONE.  DEFINITIONS

 

SECTION 1.1.        **DEFINED TERMS.**  In addition to the terms defined elsewherein this Agreement or any Exhibit hereto, the following terms shall have thefollowing meanings:

 

(A)          “**Affiliate**” shall mean any Person who,directly or indirectly, owns or controls, on an aggregate basis, at least a 5%interest in any other Person, or which is controlled by or is under commoncontrol with any other Person.  Forpurposes of this definition, “control” shall mean the possession, directly orindirectly, of the power to direct or to cause the direction of management andpolicies, whether through ownership of voting securities, by contract orotherwise.

 

(B)           “**Code**” shall mean the Internal Revenue Codeof 1986, along with the regulations issued pursuant thereto, as amended fromtime to time.

 

(C)           “**Documents**” shall mean this Agreement, theRevolving Note, and the Opinion of Counsel, all dated the date hereof, and anyother instruments or documents required or contemplated hereunder, whether nowexisting or at any time hereafter arising.

 

(D)          “**EBITDA**” shall mean earnings beforeinterest, taxes, depreciation and amortization.

 

(E)           “**Event of Default**” or “**Events of Default**” shall havethe meaning set forth in Section 6.1 of this Agreement.

 

(F)           “**Liabilities**” shall mean all liabilities,indebtedness and obligations of Borrower to Lender, howsoever created, arisingor evidenced, whether now existing or hereafter arising, whether direct orindirect (including those acquired by assignment), absolute or contingent, dueor to become due, primary or secondary, joint or several, and any and allamendments, extensions, modifications, additions, substitutions, renewals,restatements, confirmations, or reaffirmations thereof, whether existing orarising through discount, overdraft, purchase, direct loan,

 

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participation, operationof law, or otherwise, including, without limitation, all liabilities,indebtedness and obligations of Borrower to Lender pursuant to any letter ofcredit, any standby letter of credit or any of the Documents, and actual andreasonable outside attorneys’ and paralegals’ fees or charges relating to thepreparation of the Documents and the enforcement of Lender’s rights, remedies,powers and security interests under this Agreement, including, withoutlimitation, the drafting of any documents in the preparation and enforcement ofthe Revolving Loans.

 

(G)           “**LIBOR”** shall have the meaning set forth inSection 2.3 of this Agreement.

 

(H)          “**Permitted Liens**” shall have the meaning setforth in Section 3.1(E) of this Agreement.

 

(I)            “**Person**” shall mean anyindividual, sole proprietorship, partnership, joint venture, trust,unincorporated organization, association, limited liability company,corporation, institution, entity, party or government (whether national,federal, state, county, city, municipal or otherwise including, withoutlimitation, any instrumentality, division, agency, body or department thereof).

 

(J)            “**Revolving Loan**” or “**RevolvingLoans**” shall mean the loans being made by Lender on a revolvingbasis pursuant to Section 2.1 of this Agreement.

 

(K)          “**Revolving Note**” shall mean the revolvingnote given to Lender by Borrower pursuant to Section 2.3 of this Agreement.

 

(L)           “**Subsidiary**” of any Person means anycorporation, partnership, trust, limited liability company or other entity ofwhich stock (or equivalent ownership interest) having voting power to elect amajority of the board of directors (if a corporation) or to select the trusteeor equivalent controlling Person(s), shall, at the time such reference becomesoperative, be directly or indirectly owned by such Person.

 

(M)         “**UCC**” shall mean the Uniform Commercial Codeas enacted and amended in the State of Illinois.

 

SECTION 1.2.        **OTHER TERMS.**  Accounting terms used in this Agreement thatare not specifically defined shall have the meanings customarily given them inaccordance with generally accepted accounting principles.  Terms used in this Agreement that aredefined in the UCC, shall, unless the context

 

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indicates otherwise orare otherwise defined in this Agreement, have the meanings provided for by theUCC.

 

ARTICLE TWO.  LOANS

 

SECTION2.1.        **LOAN AMOUNT.**  Subject tothe terms and conditions of this Agreement, on the date upon which all of theterms and conditions of the Documents have been met or fulfilled to thesatisfaction of Lender (the “Closing Date”), Lender agrees to make loans toBorrower on a revolving basis (such loans being herein called individually, a“Revolving Loan,” and collectively, the “Revolving Loans”) from time to time insuch amounts as Borrower may from time to time request up to an aggregateamount outstanding of $25,000,000.00; provided, however, notwithstanding theforegoing: (a) Lender’s commitment to make Revolving Loans shall remain ineffect for a period to and including May 31, 2006 (the “Revolver TerminationDate”); and (b) notwithstanding any provision herein to the contrary: (1) uponthe occurrence and continuance of any Event of Default, and in each such event,the Lender may, in its sole discretion, immediately cease to make RevolvingLoans; and (2) on the Revolver Termination Date, Borrower shall repay to theLender all Revolving Loans, plus interest accrued to the date of payment.  Termination of this Agreement shallterminate Lender’s obligation to make additional Revolving Loans hereunder, butshall not terminate any of Borrower’s obligations hereunder or under the RevolvingNote, which shall remain in full force and effect thereafter until all suchobligations are paid in full.

 

SECTION 2.2.        **USE OF LOAN PROCEEDS.**  The proceedsof any borrowing by Borrower pursuant to the Revolving Loans shall be used byBorrower solely for working capital and general corporate purposes, to fundfuture acquisitions and to pay the fees, costs and expenses of Lender asprovided herein.

 

SECTION 2.3.        **REVOLVING NOTE.**  The Revolving Loans shall be evidenced by apromissory note (herein called the “Revolving Note”) in the form attachedhereto, and made a part hereof, as Exhibit 2.3, dated the date first abovewritten, payable to the order of Lender, in the principal amount of$25,000,000.00.  The date and amount ofeach Revolving Loan made by Lender and of each repayment of principal thereonreceived by Lender shall be recorded by Lender in the records of Lender and theaggregate unpaid principal amount shown on such records shall be rebuttable,presumptive evidence of the principal owing and unpaid on such revolvingNote.  The failure to record any suchamount on such records shall not, however, limit or otherwise affect theobligations of Borrower hereunder or under the Revolving Note to repay the principalamount of the Revolving Loans together with all interest accruing thereon.  The unpaid principal amount from time totime outstanding on each Revolving Loan shall, at Borrower’s choice, bear

 

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interest at either thePrime Rate as published in the WallStreet Journal (the “Prime Rate”) or LIBOR plus 200 basis points.

 

Interest on Prime Rateborrowings shall accrue and be payable at the Prime Rate, adjusted as of eachchange of the Prime Rate (each Revolving Loan bearing interest at such rate a“Revolving Prime Rate Loan”) on a monthly basis, in arrears, commencing on July1, 2003 and continuing on the first day of each successive calendar monththereafter until paid in full.  Interest on LIBOR borrowings shall accrue and be payable, provided that an Event of Default has notoccurred and is not continuing, at the per annum rate of interest atwhich U.S. dollar deposits of an amount comparable to the amount of theRevolving Loan and for a period equal to the relevant Interest Period (ashereinafter defined) are offered generally to Lender (rounded upward ifnecessary, to the next highest 1/16 of 1.0%) in the London Interbank Eurodollarmarket at 10:00 a.m. (London time) on the applicable Business Day (“LIBOR” andeach Revolving Loan bearing interest at such rate a “Revolving LIBOR Loan”),such rate to remain fixed for such Interest Period.  Interest on LIBOR borrowings shall be payable on a monthly basis,in arrears, commencing on July 1, 2003 and continuing on the first day of eachsuccessive calendar month thereafter until paid in full.  “Business Day” shall mean any day other thana Saturday, Sunday or a day on which banks in London, England, and Chicago,Illinois, are required or permitted by law to close.  Interest shall be computed for the actual number of days elapsedon the basis of a year consisting of 360 days.

 

“Interest Period” shallmean a 30, 60, or 90 day period as selected from time to time by Borrower byirrevocable notice (in writing, by telex, telegram or cable) given to Lender notless than two Business Days prior to the first day of each respective InterestPeriod commencing on the date hereof; provided that: (i) each such InterestPeriod may be continued upon its expiration by Borrower by irrevocable notice(in writing, by telex, telegram or cable) given to Lender not less than twoBusiness Days prior to the expiration thereof, which notice shall specify thatsuch Interest Period shall continue for a 30, 60, or 90 day period; (ii) thefinal Interest Period shall be such that its expiration occurs on or before thestated maturity date hereof; (iii) if for any reason Borrower shall fail toselect a time period, then interest on such Revolving LIBOR Loan shall accrueand be payable at the Prime Rate; and (iv) the first such Revolving LIBOR Loanshall be in an amount of at least $250,000.00, and each such Revolving LIBORLoan thereafter shall be in $100,000.00 increments.

 

Lender’s determination ofLIBOR as provided above shall be conclusive, absent manifest error.  Further, if Lender determines in good faith(which determination shall be conclusive, absent manifest error), prior to the

 

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commencement of anyInterest Period that by reason of circumstances that affect the London InterbankEurodollar market, adequate and fair means do not exist to ascertain the rateof interest to be applicable to the Revolving Loan, Lender may, at its sole andabsolute option, promptly notify Borrower that interest on the Revolving Loanshall be determined using Lender’s reference rate which shall be equal to the Prime Rate (the “Reference Rate”).

 

If, after the datehereof, the introduction of, or any change in any applicable law, treaty, rule,regulation or guideline or in the interpretation or administration thereof byany governmental authority or any central bank or other fiscal, monetary orother authority having jurisdiction over Lender or its lending office (a“Regulatory Change”), shall, in the opinion of counsel to Lender, make itunlawful for Lender to make or maintain the Revolving Loan evidenced hereby,then Lender may, at its sole and absolute option, promptly notify Borrower thatinterest on the Revolving Loan shall be determined using the ReferenceRate.  If any Regulatory Change, whetheror not having the force of law, shall (a) impose, modify or deem applicable anyassessment, reserve, special deposit or similar requirement against assets heldby, or deposits in or for the account of or loans by, or any other acquisitionof funds or disbursements by, Lender; (b) subject Lender or the Revolving Loanto any tax, duty, charge, stamp tax, or fee or change the basis of taxation ofpayments to Lender of principal or interest due from Borrower to Lenderhereunder (other than a change in the taxation of the overall net income ofLender); or (c) impose on Lender any other condition regarding the RevolvingLoan or Lender’s funding thereof, and Lender shall determine (whichdetermination shall be conclusive absent manifest error) that the result of theforegoing is to increase the cost to Lender of making or maintaining theRevolving Loan or to reduce the amount of principal and interest received byLender hereunder, then Borrower shall pay to Lender, on demand, such additionalamounts as Lender shall, from time to time, determine are sufficient tocompensate and indemnify Lender for such increased costs or reduced amount.

 

Notwithstanding anyprovision in this Section 2.3 to the contrary, upon the occurrence andcontinuance of an Event of Default, the Revolving Note shall bear interest at arate 2% in excess of the aforesaid rate.

 

SECTION 2.4.        **NON-REFUNDABLE FEES.**  Uponexecution of this Agreement, Borrower shall pay to Lender a one-time,non-refundable Revolving Loan fee equal to ten (10) basis points relative tothe initial principal amount available under the Revolving Loan.  On each June 30, September 30, December 31,and March 31 during the term of the Revolving Loan, Borrower also agrees to payto Lender a non-refundable fee for the unused portion of the principal amountavailable under the Revolving Loan equal to thirty-seven and one-half (37.5)basis

 

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points, pro-ratedquarterly and pro-rated for the initial quarter of the Revolving Loan, payable quarterlyin arrears.

 

SECTION 2.5.        **OPTIONAL PREPAYMENT.**  Borrower mayfrom time to time prepay the principal of the Revolving Note in whole or inpart without any premium or penalty; provided, however, any partial prepaymentshall: (a) be applied to the unpaid installments thereof in the order ofmaturity; and (b) be accompanied by accrued interest to the date of prepaymenton the principal amount being prepaid.

 

ARTICLETHREE.  REPRESENTATIONS AND WARRANTIES

 

SECTION 3.1.        **BORROWER.**  Borrower represents and warrants to Lenderthat:

 

(A)**          Organization,Etc.**  Borrower is dulyorganized, validly existing and in good standing under the laws of the State ofMissouri, and is duly qualified and in good standing or has applied forqualification as a foreign corporation authorized to do business in eachjurisdiction where a failure to be so qualified would have a material adverseeffect on the business, financial condition or prospects of Borrower.

 

(B)**           Authorization;No Conflict.**  The execution and delivery of the Documentsare all within its corporate powers, have been duly authorized by all necessaryaction, have, or by the time of their execution and delivery shall have,received all necessary governmental or regulatory approval (if any shall berequired), and do not and will not contravene or conflict with any provision of(i) law, rule, regulation or ordinance; (ii) its articles of incorporation orby-laws; or (iii) any agreement binding upon it or any of its properties, asthe case may be.

 

(C)**           Validityand Binding Nature.**  The Documents are the legal, valid andbinding obligations of it, enforceable against it, in accordance with theirrespective terms, except as enforceability may be limited by bankruptcy,insolvency, reorganization and other similar laws of general applicationaffecting the rights and remedies of creditors and except as the availabilityof specific performance or injunctive relief is subject to the discretion ofthe court before which any proceeding therefor may be brought.

 

(D)**          Titleto Assets.**  Except as set forth in Section 3.1(E) ofthis Agreement, it has good and marketable title to all its assets, subject tono liens, encumbrances, security interests or mortgages except for PermittedLiens.

 

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(E)**           Liens.**  None of its assets are subject to any mortgage, pledge, titleretention lien, or other lien, encumbrance or security interest, except for thefollowing (hereinafter referred to as “Permitted Liens”):  (i) for current taxes not delinquent or taxesbeing contested in good faith and by appropriate proceedings and for whichadequate reserves have been established; (ii) liens arising in the ordinarycourse of business for sums not due or sums being contested in good faith andby appropriate proceedings and for which adequate reserves have beenestablished, but not involving any deposits, advances or borrowed money or thedeferred purchase price of property or services; (iii) liens specificallypermitted pursuant to this Agreement; (iv) liens securing indebtedness havingmaturities of one year or more after the date of the occurrence, which areincurred in connection with an expenditure for fixed assets; and to the extentset forth in Exhibit 3.1(E) attached hereto and made a part hereof.

 

(F)**           FinancialStatements.**  Its financial statements and projections,copies of which have been previously delivered to Lender, have been prepared ona basis and in conformity with generally accepted accounting principles appliedon a consistent basis, are true and correct and fairly present its financialcondition on such dates and the results of its operations for the periods thenended, and since the date such information was submitted there has been nomaterial adverse change in such financial condition, operations orexpectations.

 

(G)**           Litigationand Contingent Liabilities.**  No litigation (including, withoutlimitation, derivative actions), arbitration proceedings, administrativeproceedings or governmental proceedings are pending or, to its knowledge,threatened against it which would, if adversely determined, materially andadversely affect its financial condition or continued operations, except:  (i) for litigation for which it is fullyinsured against any loss; and (ii) as set forth on Exhibit 3.1(G) attached heretoand made a part hereof.  Except for anyliability incident in such litigation or proceedings, it has no known materialcontingent liabilities.

 

(H)**          NoViolations of Laws.**  To the best of Borrower’s knowledge afterdue inquiry, it is not in violation of any law, statute, ordinance, rule,regulation, judgment, decree, order, writ or injunction of any federal, stateor local authority, court, agency, bureau, board, commission, department orgovernmental body, and it has not received any notice, letter or othercommunication that concerns such.  Itsproducts do not violate any law or rights of any person (including withoutlimitation export laws or any copyright, patent, trademark, trade secret,proprietary, contract, or any other third party right); does not contain anyvirus or any other similar harmful, malicious, or hidden program, code or datawhich would materially adversely effect the business of Borrower; does notthreaten, harass, abuse or

 

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otherwise offend; is notinaccurate or misleading; and does not otherwise expose Borrower to civil orcriminal liability.

 

(I)**            BurdensomeObligations.**  Except for indentures, agreements, leases,contracts, deeds or other instruments entered into in the ordinary course ofbusiness that are not otherwise precluded or prohibited pursuant to theDocuments, to the best of Borrower’s knowledge after due inquiry, it is not aparty to any indenture, agreement, lease, contract, deed or other instrument,or subject to any partnership restrictions or has any knowledge of anythingwhich would materially and adversely affect or impair its business, assets,operations, properties, prospects or condition, financial or otherwise.

 

(J)**            Taxes.**  Except as set forth on Exhibit 3.1(J) attached hereto and made apart hereof, (i) federal, state and local tax returns, reports and statements(including, without limitation, for personal property taxes), required to befiled by it which, if not so filed, could have an material adverse affect onits business, operations, assets, properties, prospects or condition, financialor otherwise, have been filed with the appropriate governmental agencies in alljurisdictions in which such returns, reports or statements are required to befiled, and all taxes due and payable by it have been timely paid; (ii) it hasneither given nor been requested to give a waiver of any statute of limitationsrelating to the payment of federal, state or local taxes; and (iii) periodicpayments of sales and use taxes required by any applicable state or local law,statute, ordinance, rule or regulation have been made by it.

 

(K)**          NoDefault or Event of Default.**  Except as described on Exhibit 3.1(K)attached hereto, to the best of Borrower’s knowledge after due inquiry, thereexists no event or condition under any mortgage, indenture, lease, contract,agreement, instrument, judgment, decree or order to which it is a party or maybe subject, or by which it or any of its properties may be bound, whichconstitutes a material default or an Event of Default thereunder, or will, withthe passage of time, constitute a material default or Event of Defaultthereunder, which has any reasonable likelihood of resulting in an adversechange in its business, assets, operations, properties, prospects or condition,financial or otherwise.

 

(L)**           EmployeeBenefit Plans.**  Each employee benefit plan, if any, (asdefined in Section 3(3) of ERISA) maintained by it complies in all materialrespects with all applicable requirements of law and regulations and, to theknowledge of Borrower after due inquiry, (i) no Reportable Event (as defined inSection 4043 of ERISA) for which the report has not been waived by regulationhas occurred with respect to any such plan; (ii) no steps have been taken toterminate any such plan; (iii) no accumulated funding deficiency (as defined inSection 412(a) of the Code)

 

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exists with respect toany such plan, whether or not waived; (iv) no transaction prohibited by Section406 of ERISA or Section 4975 of the Code has occurred with respect to any suchplan which could result in liability to it; and (v) each such plan which is astock bonus, pension or profit-sharing plan described in Section 401(a) of theCode has been determined by the Internal Revenue Service to meet therequirements for qualification under Section 401(a) of the Code, and each suchplan meets the requirements for qualification under Section 401(a) of the Code,and each trust established to fund any such plan meets all requirements for taxexemption under Section 501(a) of the Code, except for amendments to such plansrequired to comply with new legislation and any other laws, regulations orrulings, including Section 401(a) and 501(a) of the Code, and with respect towhich the remedial amendment period provided in Section 401(b) of the Code hasnot yet expired, which amendments will be adopted in a timely manner or suchplan will be terminated.  It has notwithdrawn or initiated any steps to withdraw from any multiemployer pensionplan (as defined in Section 3(37) of ERISA) contributed to by it.

 

(M)**         FederalLaws and Regulations.**  It is not (i) an “investment company” or acompany “controlled”, whether directly or indirectly, by an “investmentcompany”, within the meaning of the Investment Company Act of 1940, as amended;(ii) a “holding company,” or a “subsidiary company” of a “holding company,” oran “affiliate” of a “holding company” or of a “subsidiary company” of a“holding company,” within the meaning of the Public Utility Holding Company Actof 1935, as amended; or (iii) engaged principally, or as one of its importantactivities, in the business of extending credit for the purpose of purchasingor carrying margin stock (within the meaning of Regulation U of the Board ofGovernors of the Federal Reserve System).

 

(N)**          Fiscal Year.**  Its fiscalyear ends on December 31 of each year.

 

(O)**          Operation.**  It has obtained all required permits, certificates, licenses,approvals and other authorizations from governmental entities (whether federal,state or local) or other third parties necessary or reasonably required tocarry on its operations.

 

(P)**           Officers,Directors and Ownership.**  As of the date hereof, each Person listed onExhibit 3.1(P), attached hereto and made a part hereof, (i) is an officer ordirector as set forth next to his or her name on such Exhibit; and  (ii) owns, directly or indirectly, thepercentage of issued and outstanding ownership interest and the voting powerover such items, set forth next to his or her name.

 

(Q)**          Insurance.**  Within thirty (30) days of executing this Agreement, Borrowershall provide to Lender a description of its insurance policies.  The

 

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description of insurancepolicies shall be attached as Exhibit 3.1(Q) hereto and become a part hereof,and shall summarize the property and casualty insurance program carried byBorrower as of the date of delivery, and shall be complete and accurate as ofthe date of delivery.  The descriptionof insurance policies shall include the insurer’s(s’) name(s), policynumber(s), expiration date(s), amount(s) of coverage, type(s) of coverage, theannual premium(s), Best’s policyholder’s and financial size ratings of theinsurers, exclusions, deductibles and self-insured retention and describes indetail any retrospective rating plan, fronting arrangement or any otherself-insurance or risk assumption agreed to by the Borrower or imposed upon theBorrower by such insurer, in each case, as of the date of delivery.  This summary shall also include anyself-insurance program that is in effect on the date delivery.

 

(R)**           Solvency.**  Borrower is now, and, after giving effect to the Revolving Loanto be made hereunder, will be solvent in that it:  (i) owns property whose fair saleable value is greater than theamounts required to pay all of its debts, liabilities, and obligations,including contingent debts; (ii) is able to pay all of its indebtedness as suchindebtedness matures; and (iii) has sufficient capital to carry on its businessand transactions and all business and transactions in which it is about toengage.

 

ARTICLE FOUR.  COVENANTS

 

SECTION 4.1.        **BORROWER.**  Until all the Liabilities are paid in full,Borrower covenants and agrees that:

 

(A)**          FinancialStatements and Certificates.**  It will furnish to the Lender:  (i) within 120 days after the close of eachits fiscal years, a copy of its annual financial statements prepared on aconsolidating and consolidated basis and in conformity with generally acceptedaccounting principles, duly reviewed by certified public accountants ofrecognized standing selected by it; (ii) within 45 days after the close of eachfiscal quarter of each year, a copy of an unaudited and unreviewed financialstatements prepared in the same manner as the audited report referred to inclause (i) above, signed by a proper accounting officer of it and consisting ofat least a balance sheet as at the close of such calendar quarter andstatements of earnings for such fiscal quarter and for the period from thebeginning of such fiscal year to the close of such fiscal quarter, and aborrowing base certificate; (iii) quarterly, a certificate signed by an officerof the Borrower certifying that except as described therein, (1) no Event of Defaulthas occurred and is continuing, (2) no litigation, arbitration proceeding orgovernmental or regulatory proceeding has been instituted or adverselydetermined, or is threatened which is reasonably likely to be materiallyadverse to it on a consolidated basis, and

 

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(3) Borrower is incompliance with the terms and conditions of this Agreement, all as of the dateof such certificate; (iv) a schedule of all intercompany debt upon Lender’srequest; and (v) such other information as the Lender from time to timereasonably requests.

 

(B)**           Books,Records and Inspections.**  It will: (i) maintain complete and accurate books and records; (ii) permitreasonable access by Lender to its books and records; and (iii) permit Lender,upon reasonable notice, to inspect its properties, whether real or personal,and operations.

 

(C)**           Insurance.**  It will maintain such insurance as may be required by law andsuch other insurance to the extent and against such hazards and liabilities asis customarily maintained by companies similarly situated.  At least 20 days prior to Lender making anyRevolving Loan under this Agreement, all property insurance policies at suchtime shall contain loss payable clauses in form and substance reasonablysatisfactory to Lender, naming Lender as a lender’s loss payee, and providingthat such policies and loss payable clauses may not be canceled, amended orterminated unless at least 30 days prior written notice thereof has been givento Lender.  All insurance proceedsreceived by Lender shall be retained by Lender for application to the paymentof any principal or interest on the Liabilities then due and owing to Lender byit as the Lender may determine.

 

(D)**          Taxesand Liabilities; Litigation.**  It will pay when due all taxes, assessmentsand other liabilities except as contested in good faith and by appropriateproceedings and for which adequate reserves have been established.  It shall notify Lender in writing of anyclaim or lawsuit against it that exceeds $250,000.00.

 

(E)**           Restrictionon Dividends.** It willnot declare or pay, or authorize a declaration or payment of, any dividend,whether a cash dividend or stock dividend, or make any distribution in cash,property or securities in respect of, any class of its capital stock orownership interests, without Lender’s prior written consent, which consent willnot be unreasonably withheld.

 

(F)**           Indebtedness.**  It will not incur or permit to exist any material indebtedness orliability on account of advances or for borrowed money, for the deferredpurchase price of any property or any services, except: (i) indebtedness havingmaturities of one year or more after the date of the occurrence that isincurred in connection with an expenditure for fixed assets or for leases; and(ii) current accounts payable arising in the ordinary course of business.

 

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(G)**           Liens.**  It will not create or permit to exist any mortgage, pledge, titleretention lien, mechanics’ lien, materialmen’s lien, or other lien, encumbranceor security interest with respect to any assets now owned or hereafteracquired, except for Permitted Liens.

 

(H)**          Guaranties,Loans or Advances.**  It will not become or be a guarantor orsurety of, or otherwise become or be responsible in any manner (whether byagreement to purchase any obligations, stock, assets, goods, services, or tosupply or advance any funds, assets, goods or services or otherwise) withrespect to any undertaking of any other Person, or make or permit to exist anyloans or advances to any other Person, except for the endorsement, in theordinary course of collection, of instruments payable to it or to its order,except for transactions with Affiliates.

 

(I)**            Mergers,Consolidations and Sales.**  It will not be a party to any merger orconsolidation with, or purchase or otherwise acquire all or substantially allof the assets or stock of any class of, or any partnership or joint ventureinterest in, any other Person, or sell, transfer, convey or lease all or anysubstantial part of its assets, except with prior written notice to Lender.

 

(J)**            Self-Dealing.**  It will not purchase, acquire or lease any property from, orsell, transfer or lease any property to, or loan or advance funds to:  (a) any Affiliate; (b) any officer, directoror shareholder of it or any Affiliate; or (c) any member of the immediatefamily of any of the foregoing; except for such transactions that are made onterms comparable to the terms that would prevail in an arms-length transactionbetween unaffiliated third parties.

 

(K)**          CapitalInterest.**  Except with prior written notice to Lender,it will neither purchase, retire, redeem or otherwise acquire any shares orinterest nor issue any additional shares or interest.

 

(L)**           Violationof Law.**  It will not violate any law, statute,ordinance, rule, regulation, judgment, decree, order, writ or injunction of anyfederal, state or local authority, court, agency, bureau, board, commission,department or governmental body, including, without limitation, EnvironmentalLaws, and maintain and keep in force any and all licenses, permits, franchises,or other authorizations of governmental entities or other third partiesnecessary to the ownership of its properties or to the conduct of its businesses,which violation or failure to obtain might materially and adversely effect itsbusiness, prospects, profits, properties or condition financial or otherwise.

 

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(M)**         Maintenanceof Business**.  It will preserve itsexistence in the jurisdictions of establishment, as that may be from time totime, and it will not engage in any new line of business that is materiallydifferent from present business endeavors, except upon prior written notice toLender.  It shall give Lender priorwritten notice of conducting business in any other jurisdiction or establishingits principal business office in any jurisdiction other than as in effect onthe date of this Agreement.

 

(N)**          EmployeeBenefit Plans.**  Borrower will not cause or permit any eventto occur, or fail to take any action required, which would either result in aviolation of any of the representations set forth in Section 3.1(L) of thisAgreement or result in liability to Borrower for the termination of any employeebenefit plan that would have a material adverse effect on Borrower’s financialcondition.

 

(O)**          Useof Proceeds.**  It will not permit any proceeds of theRevolving Loan to be used either directly or indirectly, for the purpose,whether immediate, incidental or ultimate, of “purchasing or carrying anymargin stock” within the meaning of Regulation U of the Board of Governors ofthe Federal Reserve System, as amended from time to time.

 

(P)**           GoodTitle.**  It shall at all times maintain good andmarketable title to all of its assets.

 

(Q)**          Officers,Directors and Ownership of Borrower.**  As of the date hereof, each person listed onExhibit 3.1(P):  (i) is an officer,director or both, as set forth next to his name on such Exhibit; and (ii) owns,directly or indirectly, the percentage of issued and outstanding capitalinterest or stock listed thereon, and the voting power over said interest orstock set forth next to his, her or its name.

 

(R)**           Certification.** All reports, certificates, schedules, notices and financial informationsubmitted by it to the Lender pursuant to this Agreement shall be certified asmaterially correct by a proper accounting officer of it.

 

(S)**           MaterialAdverse Change.**  It shall give Lender prompt written noticeof any event, occurrence or other matter which has resulted or may result in amaterial adverse change in its financial condition or business operations.

 

(T)**           MinimumEBITDA.**  It shall maintain EBITDA of at least thefollowing amounts on a rolling, four-quarter basis:

 

(i)                                     $18,000,000.00through June 30, 2003;

 

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(ii)                                  $20,000,000.00from July 1, 2003, through September 30, 2003; and

 

(iii)                               $25,000,000.00from October 1, 2003 and thereafter.

 

(U)**          MaximumTotal Debt to EBITDA. **It shall notpermit the ratio of its total debt to its EBITDA to exceed the following:

 

(i)                                     1.20from the date of this Agreement until December 31, 2003;

 

(ii)                                  1.15from January 1, 2004, through December 31, 2004; and

 

(iii)                               1.05from January 1, 2005 and thereafter.

 

(V)**           NegativePledge.**  In addition to the terms ofSection 4.1(G) above, for so long as any amount is due or owing to Lenderhereunder, Borrower shall not grant, pledge, create or suffer to exist anylien, other charge or encumbrance, or any other type of preferentialarrangement, upon or with respect to any of its real or personal property,assets or rights of any nature whatsoever, whether now owned or hereafteracquired.  Further, Borrower agrees tonot make any such covenant to any third party as long as any amount is due orowing to Lender hereunder.

 

ARTICLE FIVE.  CONDITIONS PRECEDENT

 

SECTION 5.1.        **CONDITIONS PRECEDENT TO EACH REVOLVING LOAN.**  Lender’s obligation to make the Revolving Loans is subject to thefulfillment of each and every one of the following conditions prior to orcontemporaneously with the making of each and every such extension of credit:

 

(A)**          Deliveryof Documents.**  Lender shall have received each of thefollowing in form and substance satisfactory to Lender and its counsel:

 

(i)            Certified copies of all corporateactions taken and consents made by Borrower to authorize the obtaining ofcredit by Borrower pursuant to this Agreement, the Note, and the transactionsotherwise provided for or contemplated under this Agreement and the executionand delivery of, and performance in accordance with the respective terms of,the Documents;

 

(ii)           Certificates of the appropriateofficers, directors or shareholders of Borrower certifying the names of theofficer(s), director(s) or shareholder(s) of Borrower authorized to sign theDocuments, together with a sample of the

 

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true signature of eachsuch officer, director or shareholder. Lender may conclusively rely on such certificates until formally advisedby a like certificate of any changes therein;

 

(iii)          Copies of Uniform Commercial Code, taxlien and judgment searches made with the Missouri Secretary of State and anyother jurisdiction required by Lender;

 

(iv)          Copies of Certificates of Insurancethat meet Lender’s requirements;

 

(v)           The Revolving Note duly executed;

 

(vi)          Certified copies of all documentsevidencing any and all required consents and governmental or regulatoryapprovals, if any, with respect to the Documents;

 

(vii)         Certified copies of Borrower’s Articlesof Incorporation and By-laws;

 

(viii)        Certificates of good standing forBorrower from the appropriate governmental authority in the jurisdiction of itsorganization and in those jurisdictions in which a failure by Borrower to bequalified to do business would have a material adverse effect on Borrower’sbusiness, financial condition or prospects;

 

(ix)           AnOpinion of Borrower’s Counsel duly executed and delivered, in form attachedhereto and made a part hereof as Exhibit 5.1(A)(ix) acceptable to Lender andits counsel;

 

(x)            Such other instruments or documentsas the Lender may reasonably request.

 

(B)**           Paymentof Fees.**  Payment to Lender of non-refundableRevolving Loan fee as set forth in Section 2.4;

 

(C)**           Expenses.** Borrower’s payment to Lender of all Lender’s reasonable expensesassociated with the proposed credit facility, including, without limitation,attorneys’ fees, documentation expenses, field audit expenses and appraisals;

 

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(D)**          NoEvent of Default.**  No Event of Default shall have occurred andbe continuing, may occur with the giving of notice, the passage of time, orboth, or shall result from the making of any Loan;

 

(E)**           NoMaterial Adverse Change.**  There shall have been no material adversechange in the business of Borrower or the financial condition of Borrower fromthe most recent financial statements submitted by each of them to Lender; and

 

(F)**           Continuationof Representations and Warranties.**  The representations and warranties containedin Article Four of this Agreement shall be true and correct as of the making ofany Loan, with the same effect as though made on such dates except to theextent such representations and warranties expressly relate to an earlier date,in which event they shall be true as of such date.

 

(G)           **Certificates of Insurance.**   Borrower shall provide to Lender withinthirty (30) days of executing this Agreement a description of its insurancepolicies as described in Section 3.1(Q) above.

 

ARTICLE SIX.  EVENTS OF DEFAULT

 

SECTION 6.1.        **EVENTS OF DEFAULT.**  Each of thefollowing acts, occurrences or omissions shall constitute an event of defaultunder this Agreement (herein referred to as an “Event of Default”), whateverthe reason for such Event of Default and whether it shall be voluntary orinvoluntary or be effected by operation of law or pursuant to any judgment ororder of any court or any order, rule or regulation of any governmental ornongovernmental body or tribunal:

 

(A)          Borrower shall default in the paymentwhen due of any amount due and owing by Borrower to the Lender under the Note;or

 

(B)           Except for the Event of Default setforth in Section 6.1(A) of this Agreement, default, and continuance thereof for10 days after written notice thereof to Borrower by the Lender, in the paymentof the Liabilities or any other amount owing by Borrower to the Lender pursuantto the Documents or pursuant to any other agreement, note, instrument orguarantee; or

 

(C)           Any representation or warranty made byBorrower contained in the Documents shall at any time prove to have beenincorrect in any material respect when made; or

 

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(D)          Borrower shall default in theperformance or observance of any term, covenant, condition or agreement on itspart to be performed or observed under the Documents (not constituting an Eventof Default under any other clause of this Section 6.1 of this Agreement) or anyother document entered into from time to time between Lender and Borrower andsuch default shall continue unremedied for 10 days after written notice thereofshall have been given by the Lender to Borrower, provided however that if thedefault stated in the notice cannot reasonably be corrected within the 10-dayperiod, it shall not constitute the basis of an Event of Default hereunder if(i) corrective action is initiated by Borrower within the 10-day period anddiligently pursued until the default is corrected and (ii) said default iscorrected within 30 days following the initial notice to Borrower; or

 

(E)           Either:  (i) the Borrower shall become insolvent or generally fail to pay,or admit in writing its inability to pay, its debts as they become due, or aproceeding under any bankruptcy, reorganization, arrangement of debt,insolvency, readjustment of debt or receivership law or statute is filed by oragainst Borrower, or Borrower makes an assignment for the benefit of creditors;provided, however, that no Event of Default shall exist pursuant to thisSubsection E, Clause (i) due to an involuntary bankruptcy case, proceeding orpetition filed against Borrower unless such involuntary case, proceeding orpetition shall not have been dismissed or withdrawn within 30 days after thedate of such involuntary filing; or (ii) corporate or other action shall betaken by Borrower for the purpose of effectuating any of the foregoing; or

 

(F)           Borrower shall be dissolved, whethervoluntarily or involuntarily, and Borrower has not taken all actions requiredto become reinstated; or

 

(G)           Subject to any applicable cureperiod, (i) an event of default (howsoever designated) as defined in any note,security agreement, mortgage, indenture, loan agreement, agreement, document orinstrument pursuant to which there may be issued, secured or evidencedindebtedness for money borrowed or guaranteed by Borrower, whether suchindebtedness now exists or shall hereafter be created, shall occur; (ii) anyevent shall occur which would permit such indebtedness to be declared due andpayable prior to its date of maturing or due dates; or (iii) Borrower shallfail to cure within any applicable cure period default in the payment when dueof any principal of or interest on any indebtedness for money borrowed orguaranteed by Borrower; or (iv) Borrower shall fail to cure within anyapplicable cure period default in the payment when due, or in the materialperformance or observance of, any material obligation of, or condition agreedto by, Borrower with respect to any purchase or lease (including capitalized leases)of any real or personal property or services, or the purchase of stock or otherinterest in any Person; or

 

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(H)          Borrower fails to meet its minimumfunding requirements under ERISA, with respect to any of its plans subjectthereto, which would have a material adverse effect on Borrower; or

 

(I)            There shall have occurred anymaterial adverse change in the business or financial condition of Borrower; or

 

(J)            There shall be entered against theBorrower one or more judgment or decrees which shall cause the aggregate amountof judgments and decrees at any one time outstanding against the Borrower toexceed $250,000.00,****excluding those judgments or decrees:  (i) that shall have been outstanding lessthan 30 calendar days from the entry thereof; (ii) for which an appeal has beentaken in good faith by appropriate proceedings to the extent adequate reserveshave been established therefor; or (iii) for and to the extent which theBorrower is insured and with respect to which the insurer has assumedresponsibility in writing or for and to extent which Borrower is otherwiseindemnified if the terms of such indemnification are satisfactory to Lender; or

 

(K)          There shall occur a cessation of asubstantial part of the business of Borrower for a period which significantlyeffects Borrower’s capacity to continue its business on a profitable basis; orBorrower shall suffer the loss or revocation for a period in excess of 30 daysof any license, permit consent or authorization now held or hereafter acquiredby Borrower, which is necessary to the continued or lawful operation of itsbusiness; or Borrower shall be enjoined, restrained or in any way prevented bycourt, governmental or administrative order from conducting all or any materialpart of its business affairs; or

 

ARTICLESEVEN.  REMEDIES

 

SECTION 7.1.        **REMEDIES UPON DEFAULT.**  Upon theoccurrence and continuance of any Event of Default, and the expiration of anyapplicable cure period, and in every such event:

 

(A)          Notwithstanding anything to thecontrary in the Documents, the Lender may, in its sole and arbitrarydiscretion, declare the principal of and interest on the Revolving Loan andRevolving Note, and all other amounts owed under the Documents or the Liabilities,to be forthwith due and payable without presentment, demand, protest or othernotice of any kind, all of which are hereby expressly waived; and

 

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(B)           Lender may exercise all of its rightsand remedies against Borrower under applicable law and the Documents.

 

SECTION 7.2.        **ATTORNEY-IN-FACT.**  Upon theoccurrence and during the continuation of an Event of Default, and the failureto cure such Default within the applicable cure period, Borrower hereby appointsLender as its Attorney-in-Fact, with full authority in its place and stead andin its name or otherwise, from time to time in Lender’s sole and arbitrarydiscretion, to take any action and to execute any instrument which Lender maydeem necessary or advisable to remedy the Event of Default under Section 7.1(A)and allow full compliance with the terms and conditions of the Documents.

 

SECTION 7.3.        **REMEDIES ARE SEVERABLE AND CUMULATIVE.**  All provisions contained herein pertaining to any remedy of theLender shall be and are severable and cumulative.  Any notification required pursuant to this Article Seven or underapplicable law shall be reasonably and properly given to Borrower at theaddress and by any of the methods of giving such notice as set forth in Section8.3 of this Agreement, at least 10 days before taking any action.

 

ARTICLEEIGHT.  MISCELLANEOUS

 

SECTION 8.1.        **NO WAIVER; MODIFICATIONS IN WRITING.**  Any failure or delay on the part of the Lender in exercising anyright, power or remedy pursuant to the Documents shall not 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. No amendment, modification, supplement,termination or waiver of or to any provision of the Documents, shall beeffective unless the same shall be in writing and signed by the Borrower andthe Lender.  Any waiver of any provisionof the Documents shall be effective only in the specific instance and for thespecific purpose for which given.

 

SECTION 8.2.        **SET-OFF.**  Lender shall have the right to set-off,appropriate and apply toward payment of any of the Liabilities in such order ofapplication as the Lender may from time to time and at any time elect, anycash, credit, deposits, accounts, securities and any other property of Borrowerwhich is in transit to or in the possession, custody or control of the Lender,or any agent or bailee of the Lender.

 

SECTION 8.3.        **NOTICES, ETC.**  All notices, demands, instructions and other communicationsrequired or permitted to be given to or made upon any party hereto shall be inwriting personally delivered or sent by First Class Mail, postage

 

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prepaid, or by facsimilemachine, and shall be deemed to be given for purposes of this Agreement on theday that such writing is delivered or sent by facsimile machine (with proof oftransmission) or three days after such notice is sent by mail to the intendedrecipient thereof in accordance with the provisions of this Section 8.3.  Unless otherwise specified in a notice sentor delivered in accordance with the foregoing provisions of this Section 8.3 ofthis Agreement, notices, demands, instructions and other communications inwriting shall be given to or made upon the respective parties hereto at theirrespective addresses indicated for such party below:

 
| If to Borrower:    |   | Elizabeth M. Baham                    |
|--------------------|--------|---------------------------------------|
|               |   | Vice President, CFO                   |
|               |   | EPIQ Systems, Inc.                    |
|               |   | 501 Kansas Avenue                     |
|               |   | Kansas City, Kansas  66105-1309       |
|               |   | Phone:  913-621-9500             |
|               |   | Fax No.: 913-321-1243                 |
|               |   |                                  |
| With copies to:    |   | Robert C. Levy,  Esq.                 |
|               |   | Seigreid,  Bingham, Levy,             |
|               |   | Seizer & Gee                      |
|               |   | 2800 Commerce  Tower                  |
|               |   | 911 Main Street                       |
|               |   | Kansas City, MO  64105                |
|               |   | Phone:  816-421-4460                  |
|               |   | Fax No.:  816-474-3447                |
|               |   |                                  |
| If to the  Lender: |   | LaSalle Bank  N.A.                    |
|               |   | 135 South  LaSalle Street, Suite 1125 |
|               |   | Chicago,  Illinois 60603              |
|               |   | Attention: Keith  J. Cable            |
|               |   | Phone:  312-904-7621             |
|               |   | Fax No.:  312-904-6242           |
|               |   |                                  |
| With a copy to:    |   | Robert M. Mintz,  Esq.                |
|               |   | Holland &  Knight LLC             |
|               |   | 131 South  Dearborn, 30th Floor       |
|               |   | Chicago,  Illinois 60603              |
|               |   | Phone:  312-422-9090             |
|               |   | Fax No.:  312-578-6666           |

 

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SECTION 8.4.        **COSTS, EXPENSES AND TAXES.**  Borroweragrees to pay all reasonable fees plus out-of-pocket expenses of the Lender(including, without limitation, field audit expenses and costs of outsideconsultants, appraisers, counsel and paralegals to the Lender) in connectionwith the preparation, administration and enforcement of the Documents and theadministration and enforcement of the Revolving Loans.  In addition, Borrower shall pay any and allstamp, transfer and other taxes payable or determined to be payable in connectionwith the execution and delivery of the Documents and agrees to hold the Lenderharmless from and against any and all liabilities with respect to or resultingfrom any delay in paying or omission to pay such taxes.  If any action, suit or proceeding arisingfrom any of the foregoing is brought against the Lender, Borrower, to theextent and in the manner directed by the Lender, will resist and defend suchaction, suit or proceeding or cause the same to be resisted and defended bycounsel designated by Borrower (which counsel shall be subject to the approvalof the Lender, which approval shall not be unreasonably withheld).  If Borrower shall fail to do any act orthing which it has covenanted to do under this Agreement or any representationor warranty on the part of Borrower contained in this Agreement shall bebreached, the Lender may, in its sole and arbitrary discretion, after 20 dayswritten notice is sent to Borrower, do the same or cause it to be done orremedy any such breach, and may expend its funds for such purpose; and any andall amounts so expended by the Lender shall be repayable to the Lender byBorrower immediately upon the Lender’s demand therefor, with interest at a rateequal to the interest rate described in Section 2.3 of this Agreement in effectfrom time to time during the period from and including the date funds are soexpended by the Lender to the date of repayment, and any such amounts due andowing the Lender shall be an additional obligation of Borrower to theLender.  The obligations of Borrowerunder this Section 8.4 shall survive the termination of this Agreement and thedischarge of the other obligations of Borrower under the Documents for a periodof two years.  Any payment required tobe made pursuant to this Agreement not paid within five days of the applicabledue date shall be subject to a late charge which Borrower hereby agrees to payequal to the lessor of:  (a) 5% of theoverdue amount; or (b) the maximum amount permitted by law.

 

SECTION 8.5.        **COMPUTATIONS.**  Where the character or amount of any assetor liability or item of income or expense is required to be determined, or anyconsolidation or other accounting computation is required to be made, for thepurpose of this Agreement, such determination or calculation shall, to theextent applicable and except as otherwise specified in this Agreement, be madein accordance with generally accepted accounting principles applied on a basisconsistent with those at the time in effect.

 

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SECTION 8.6.        **FURTHER ASSURANCES.**  Borroweragrees to do such further acts and things and to execute and deliver to theLender such additional assignments, agreements, powers, documents andinstruments as the Lender may reasonably require or deem advisable to carryinto effect the purposes of the Documents, or to better assure and confirm untothe Lender its rights, powers and remedies under the Documents.

 

SECTION 8.7.        **COUNTERPARTS.**  This Agreement executed in any number ofcounterparts, each of which counterparts, once they are executed and delivered,shall be deemed to be an original and all of which counterparts, taken togethershall constitute but one and the same agreement.

 

SECTION 8.8.        **BINDING EFFECTS; ASSIGNMENTS.**  ThisAgreement shall be binding upon, and inure to the benefit of Borrower, and itsrespective successors and assigns. Borrower shall not assign any of its rights nor delegate any of itsobligations under this Agreement without the prior written consent of theLender, which consent shall not be unreasonably withheld, and no such consentby the Lender shall, in any event, relieve Borrower of any of its obligationsunder this Agreement.  Lender may assignits rights hereunder.

 

SECTION 8.9.        **HEADINGS.**  Captions contained in this Agreement areinserted only as a matter of convenience and in no way define, limit or extendthe scope or intent of this Agreement or any provision of this Agreement andshall not affect the construction of this Agreement.

 

SECTION 8.10.      **ENTIRE AGREEMENT.**  ThisAgreement contains the entire agreement between the parties hereto with respectto the transactions contemplated herein and supersedes all prior agreements andunderstandings, whether oral or written, related to the subject matter of theAgreement.

 

SECTION 8.11.      **GOVERNING LAW.**  This Agreement shall be deemed to be acontract made under and for all purposes shall be construed in accordance withthe internal laws, and not the choice of laws, of the State of Illinois.

 

SECTION 8.12.      **SEVERABILITY OF PROVISIONS.**  Any provisionof this Agreement which is prohibited or unenforceable in any jurisdictionshall, as to such jurisdiction, be ineffective only to the extent of suchprohibition or unenforceability without invalidating the remaining provisionsof this Agreement or affecting the validity or enforceability of such provisionin any other jurisdiction.

 

SECTION 8.13.      **CONFLICT.**  In the event of any conflict between thisAgreement and any other instrument, document or agreement, including, but not

 

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limited to, the Note orany other instrument or document required or contemplated hereunder orthereunder, the terms and provisions of this Agreement shall govern andcontrol.

 

SECTION 8.14.      **JURISDICTION; WAIVERS.**  BORROWERACKNOWLEDGES THAT THIS AGREEMENT IS BEING SIGNED BY THE LENDER IN PARTIALCONSIDERATION OF LENDER’S RIGHT TO ENFORCE IN THE JURISDICTION STATED BELOW THETERMS AND PROVISION OF THIS AGREEMENT AND THE DOCUMENTS.  BORROWER CONSENTS TO JURISDICTION IN THESTATE OF ILLINOIS AND VENUE IN THE COUNTY OF COOK FOR SUCH PURPOSES AND WAIVESANY AND ALL RIGHTS TO CONTEST SAID JURISDICTION AND VENUE.  LENDER AND BORROWER  HEREBY EACH EXPRESSLY WAIVE ANY AND ALLRIGHTS TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BYANY OF THE PARTIES AGAINST ANY OTHER PARTY WITH RESPECT TO ANY MATTERWHATSOEVER RELATING TO, ARISING OUT OF OR IN ANY WAY CONNECTED WITH THEREVOLVING LOANS, THE DOCUMENTS OR THE TRANSACTIONS WHICH ARE THE SUBJECT OF THEDOCUMENTS.

 

SECTION 8.15.      **CAPITAL ADEQUACY INDEMNIFICATION.**  If Lender shall determine at any time afterthe date hereof that the adoption of any law, rule or regulation regardingcapital adequacy, or any change therein or in the interpretation oradministration thereof by any governmental authority, central bank orcomparable agency charged with the interpretation or administration thereof, orcompliance by Lender with any request or directive regarding capital adequacy(whether or not having the force of law) from any such authority, central bankor comparable agency, has or would have the effect of reducing the rate ofreturn on the Lender’s capital as a consequence of its obligations hereunder toa level below that which the Lender could have achieved but for such adoption,change or compliance (taking into consideration the Lender’s policies withrespect to capital adequacy) by an amount deemed by Lender to be material, thenthe Borrower shall pay to Lender upon demand such amount or amounts, inaddition to the amounts payable under the other provisions of this Agreement orunder the Note, as will compensate Lender for such reduction.  Determinations by Lender for purposes ofthis Section 8.15 of the additional amount or amounts required to compensatelender in respect of the foregoing shall be conclusive in the absence ofmanifest error.  In determining suchamount or amounts, Lender may use any reasonable averaging and attributionmethods.

 

SECTION 8.16.      **APPLICATION OF PAYMENTS.**  Following theoccurrence of any Event of Default and Borrower’s failure to cure within theapplicable cure period, Borrower waives the right to direct the application ofany

 

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and all payments at anytime or times hereafter received by Lender on account of any obligations owedby Borrower to Lender and Borrower agrees that Lender shall have the right toapply payments received by Lender to the obligations in any order or manner asLender may deem advisable, including, without limitation, the continuingexclusive right to apply and reapply such proceeds and payments in any order ormanner as Lender may deem advisable.

 

SECTION 8.17.      **INDEMNIFICATION.**  In consideration of the execution anddelivery of the Documents by Lender and agreement of Lender to make the Loanhereunder, Borrower hereby agrees to indemnify, exonerate and hold Lender andeach of its officers, directors, employees, attorneys and agents (collectively,the “Bank Parties”), free and harmless from any against any and all actions,causes of action, suits, losses, liabilities and damages, and expenses inconnection therewith, including, without limitation, reasonable attorneys’ feesand disbursements (the “Indemnified Liabilities”), incurred by Lender, or anyof them, as a result of, or arising out of, or relating to:  (a) any transaction financed or to befinanced in whole or in part directly or indirectly with the proceeds of anyLoan; (b) the execution, delivery and performance or enforcement of theDocuments by Borrower; (c) the possession, use, operation or control of anyassets of Borrower; except for any such Indemnified Liabilities arising onaccount of Lender’s negligence or misconduct, and if and to the extent that theforegoing undertakings may be unenforceable for any reason, Borrower agrees tomake the maximum contribution to the payment and satisfaction of each of theIndemnified Liabilities which is permissible under applicable law.  All obligations of Borrower under thisSection 8.17 shall survive any termination of this Agreement for a period oftwo years.

 

INWITNESS WHEREOF, the parties hereto have caused this Agreement to be dulyexecuted and delivered at Chicago, Illinois, as of the date first abovewritten.

 

BORROWER:

 
|   |   |   | EPIQ SYSTEMS, INC. |
|--------|--------|--------|--------------------|
|   |   |   |               |
|   |   |   | By:                |    /s/  Elizabeth M. Braham |   |
|   |   |   |               |
|   |   |   | Title:             | Vice President and  Chief |
|   |   |   |               | Financial Officer |
|        |        |        |                    |  |  |  |

 

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LENDER:

 
|   |   |   | LaSALLE BANK N.A. |
|--------|--------|--------|-------------------|
|   |   |   |              |
|   |   |   | By:          | /s/ Keith Cable |   |
|   |   |   |              |
|   |   |   | Title:            | Assistant Vice  President |   |
|        |        |        |                   |  |  |  |

 

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