Document:

Exhibit
10.1

 

 

SECOND

AMENDED
AND RESTATED

CREDIT
AND SECURITY AGREEMENT

 

among

 

EPIQ
SYSTEMS, INC.

 

and

 

THE
DOMESTIC SUBSIDIARY BORROWERS NAMED HEREIN

as
Borrowers

 

THE
LENDERS NAMED HEREIN

as
Lenders

 

and

 

KEYBANK
NATIONAL ASSOCIATION

as
Lead Arranger, Sole Book Runner and Administrative Agent

 

NATIONAL
CITY BANK

as
Co-Documentation Agent

 

SILICON
VALLEY BANK

as
Co-Documentation Agent

 

 

dated as
of

July 30,
2008

 

 

 

 

TABLE
OF 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

  

 

i

 

	
   

  	
  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

  

 

ii

 

	
   

  	
  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

  

 

iii

 

	
   

  	
  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

  

 

iv

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Schedule 6.17

  	
  Insurance

  	
   

  
	
  Schedule 6.18

  	
  Deposit Accounts

  	
   

  

 

v

 

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

 

(a)           EPIQ SYSTEMS, INC., a Missouri
corporation (“EPIQ”);

 

(b)           each Domestic
Subsidiary 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 1
hereto and each other Eligible Transferee, as hereinafter defined, that from
time to time becomes a party hereto pursuant to Section 2.9(b) or
11.10 hereof (collectively, the “Lenders” and, individually, each a “Lender”);

 

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

 

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

 

(f)            SILICON VALLEY BANK, as
co-documentation agent.

 

WITNESSETH:

 

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

 

WHEREAS, this Agreement
amends and restates in its entirety the Original Amended Credit Agreement and,
upon the effectiveness of this Agreement, on the Closing Date, the terms and
provisions of the Original Amended Credit Agreement shall be superseded
hereby.  All references to “Credit
Agreement” contained in the Loan Documents, as defined in the Original Credit
Agreement or the Original Amended Credit Agreement, delivered in connection
with the Original Credit Agreement or the Original Amended Credit Agreement
shall be deemed to refer to this Agreement. 
Notwithstanding the amendment and restatement of the Original Amended
Credit Agreement by this Agreement, the Obligations outstanding under the
Original Amended Credit Agreement as of the Closing Date shall remain outstanding
and constitute Obligations hereunder. 
The Obligations outstanding under the Original Credit Agreement on the
closing date of the Original Amended Credit Agreement constituted Obligations
under the Original Amended Credit Agreement and constitute Obligations under
this Agreement.  Such outstanding
Obligations and the guaranties of payment thereof shall in all respects be
continuing, and this Agreement shall not be deemed to evidence or result in a
novation or repayment and re-borrowing of such Obligations.  In furtherance of and, without limiting the
foregoing, from and 

 

 

after
the Closing Date and except as expressly specified herein, the terms,
conditions and covenants governing the Indebtedness outstanding under the
Original Amended Credit Agreement shall be solely as set forth in this
Agreement, which shall supersede the Original Amended Credit Agreement in its
entirety; and

 

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

 

NOW, THEREFORE, it is mutually agreed as follows:

 

ARTICLE I.  DEFINITIONS

 

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

 

“Accelerated Maturity Date” means the date that is
sixty (60) days prior to the stated maturity (or date when scheduled principal
payments are due), as in effect from time to time, of the Convertible
Subordinated Notes or any replacement notes.

 

“Acceptable Non-Acceleration Event” means any of the
following events: (a) if EPIQ refinances all of the outstanding
Convertible 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) all
of the Convertible Subordinated Notes are converted into equity; (c) for
the period commencing sixty (60) days prior to the maturity date of the
Convertible Subordinated Indebtedness through the maturity date of the
Convertible Subordinated Indebtedness (or, if earlier, until the repayment or
conversion of all of the outstanding Convertible Subordinated Notes), the
Available Liquidity is, at all times, no less than an amount equal to one
hundred percent (100%) of the outstanding principal amount of the Convertible
Subordinated Notes; (d) the Convertible Subordinated Noteholders agree in
writing (in form and substance reasonably acceptable to Agent) to extend the
stated maturity (or date when scheduled principal payments are due) of the
Convertible Subordinated Notes to a date that is no earlier than sixty (60)
days after the Facility Maturity Date; (e) (i) the Leverage Ratio, as
set forth in the most recently completed Compliance Certificate, is less than
or 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 the
end of each fiscal quarter of EPIQ thereafter, until the stated maturity of the
Convertible Subordinated Notes; or (f) if (i) for a period of at
least thirty (30) consecutive days prior to the Accelerated Maturity Date, EPIQ’s
common 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 Date
through the stated maturity date of the Convertible Subordinated Notes, EPIQ’s
common 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 be
appropriately adjusted for any stock dividend, stock split, stock combination
or other similar transaction during the applicable calculation period).

 

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

 

2

 

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

 

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

 

“Acquisition” means any transaction or series of
related transactions for the purpose of or resulting, directly or indirectly,
in (a) the acquisition of all or substantially all of the assets of any
Person (other than a Company), or any business or division of any Person (other
than 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 (other
than a Company) by a merger, amalgamation or consolidation or any other
combination with such Person.

 

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

 

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

 

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

 

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

 

“Administrative Borrower”
means EPIQ.

 

“Advantage” means any payment (whether made
voluntarily or involuntarily, by offset of any deposit or other indebtedness or
otherwise) received by any Lender in respect of the Obligations, if such
payment results in that Lender having less than its pro rata share (based upon
its 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, to
direct 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 as
defined in the first paragraph hereof.

 

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

 

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

 

3

 

“Applicable Commitment Fee Rate” means:

 

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

 

(b)           commencing with the Consolidated
financial statements of EPIQ for the fiscal quarter ending June 30, 2008, the
number of basis points set forth in the following matrix, based upon the result
of the computation of the Leverage Ratio, shall be used to establish the number
of 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 first
day of each calendar month following the date upon which Agent should have
received, pursuant to Section 5.3(a) and (b) hereof, the Consolidated financial
statements of EPIQ.  The above matrix
does not modify or waive, in any respect, the requirements of Section 5.7
hereof, the rights of Agent and the Lenders to charge the Default Rate, or the
rights and remedies of Agent and the Lenders pursuant to Articles VIII and IX
hereof.  Notwithstanding anything herein
to the contrary, (i) during any period when Borrowers shall have failed to
timely 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 the
appropriate Consolidated financial statements and Compliance Certificate are
delivered, the Applicable Commitment Fee Rate shall be the highest rate per
annum indicated in the above pricing grid regardless of the Leverage Ratio at
such time, and (ii) in the event that any financial information or
certification provided to Agent in the Compliance Certificate is shown to be
inaccurate (regardless of whether this Agreement or the Commitment is in effect
when such inaccuracy is discovered), and such inaccuracy, if corrected, would
have led to the application of a higher Applicable Commitment Fee Rate for any
period (an “Applicable Commitment Fee Period”) than the Applicable Commitment
Fee Rate applied for such Applicable Commitment Fee Period, then (A) Borrowers
shall immediately deliver to Agent a corrected Compliance Certificate for such
Applicable Commitment Fee Period, (B) the Applicable Commitment Fee Rate shall
be determined based on such corrected Compliance Certificate, and (C) Borrowers
shall immediately pay to Agent the accrued additional fees owing as a result of
such increased Applicable Commitment Fee Rate for such Applicable Commitment
Fee Period.

 

“Applicable Margin”
means:

 

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

 

4

 

(b)           commencing with the Consolidated
financial statements of EPIQ for the fiscal quarter ending June 30, 2008,
the number of basis points (depending upon whether Loans are Eurodollar Loans
or Base Rate Loans) set forth in the following matrix, based upon the result of
the computation of the Leverage Ratio, shall be used to establish the number of
basis 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 of
each calendar month following the date upon which Agent should have received,
pursuant to Section 5.3(a) and (b) hereof, the Consolidated
financial statements of EPIQ.  The above
matrix does not modify or waive, in any respect, the requirements of Section 5.7
hereof, the rights of Agent and the Lenders to charge the Default Rate, or the
rights and remedies of Agent and the Lenders pursuant to Articles VIII and IX
hereof.  Notwithstanding anything herein
to the contrary, (i) during any period when Borrowers shall have failed to
timely 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 the
appropriate Consolidated financial statements and Compliance Certificate are
delivered, the Applicable Margin shall be the highest rate per annum indicated
in the above pricing grid for Loans of that type regardless of the Leverage
Ratio at such time, and (ii) in the event that any financial information
or certification provided to Agent in the Compliance Certificate is shown to be
inaccurate (regardless of whether this Agreement or the Commitment is in effect
when such inaccuracy is discovered), and such inaccuracy, if corrected, would
have led to the application of a higher Applicable Margin for any period (an “Applicable
Margin Period”) than the Applicable Margin applied for such Applicable Margin
Period, then (A) Borrowers shall immediately deliver to Agent a corrected
Compliance Certificate for such Applicable Margin Period, (B) the
Applicable Margin shall be determined based on such corrected Compliance
Certificate, and (C) Borrowers shall immediately pay to Agent the accrued
additional interest owing as a result of such increased Applicable Margin for
such Applicable Margin Period.

 

5

 

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

 

“Authorized Officer” means
a Financial Officer or other individual authorized by a Financial Officer in
writing (with a copy to Agent) to handle certain administrative matters in
connection with this Agreement.

 

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

 

“Bank Product Agreements”
means those certain cash management service and other agreements entered into
from time to time between a Company and Agent or a Lender (or an affiliate of a
Lender) 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 a
Lender) pursuant to or evidenced by the Bank Product Agreements.

 

“Bank Products” means any
service or facility extended to a Company by Agent or any Lender (or an
affiliate of a Lender) including (a) credit cards and credit card
processing services, (b) debit and purchase cards, (c) ACH
transactions, and (d) cash management, including controlled disbursement,
accounts or services.

 

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

 

“Base Rate Loan” means a
Revolving Loan described in Section 2.2(a) hereof, that shall be
denominated in Dollars and on which Borrowers shall pay interest at a rate
based 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 any
day that is not a Saturday, a Sunday or another day of the year on which
national banks are authorized or required to close in Cleveland, Ohio, and, if
the applicable Business Day relates to a Eurodollar Loan, a day of the year on
which dealings in deposits are carried on in the London interbank Eurodollar
market.

 

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

 

6

 

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

 

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

 

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

 

“Cash Equivalents” means,
as to any Person, (a) securities issued by, or directly, unconditionally
and fully guaranteed or insured by, the United States or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States is pledged in support thereof) having maturities of not more than one
year from the date of acquisition by such Person; (b) securities issued
by, or directly, unconditionally and fully guaranteed or insured by, any state
of the United States of America or any political subdivision of any such state
or any public instrumentality thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either Standard & Poor’s or Moody’s; (c) time
deposits, certificates of deposit or bankers’ acceptances of any commercial bank
having, or which is the principal banking subsidiary of a bank holding company
organized under the laws of the United States, any state thereof or the
District 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) or
higher by at least one nationally recognized statistical rating organization
(as defined in Rule 436 under the Securities Act) with maturities of not
more than one year from the date of acquisition by such Person; (d) repurchase
obligations with a term of not more than thirty (30) days for underlying
securities of the types described in subpart (a) above entered into with
any bank meeting the qualifications specified in subpart (c) above, which
repurchase obligations are secured by a valid perfected security interest in
the underlying securities; (e) commercial paper issued by any Person
incorporated in the United States rated at least A-2 or the equivalent thereof
by Standard & Poor’s or at least P-2 or the equivalent thereof by
Moody’s, and in each case maturing not more than one year after the date of
acquisition by such Person; (f) investments in money market funds
substantially all of whose assets are comprised of securities of the types
described in subparts (a) through (e) above; and (g) demand
deposit accounts maintained in the ordinary course of business.

 

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

 

7

 

including but not limited to any of the foregoing that are presently or
may hereafter be existing or maintained with, issued by, drawn upon, or in the
possession 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 the
meaning 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 of
Sections 13d and 14d of the Securities Exchange Act of 1934, as then in
effect), of shares representing more than thirty percent (30%) of the aggregate
ordinary Voting Power represented by the issued and outstanding capital stock
of EPIQ; (b) the occupation of a majority of the seats (other than vacant
seats) on the board of directors or other governing body of EPIQ by Persons who
were neither (i) nominated by the board of directors or other governing
body of EPIQ nor (ii) appointed or approved by directors so nominated or
elected by a majority of shareholders; (c) if EPIQ shall cease to own one
hundred percent (100%) of each Domestic Subsidiary Borrower; or (d) the occurrence
of a change in control, or other term of similar import used therein, as
defined in any Material Indebtedness Agreement.

 

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

 

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

 

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

 

“Code” means the Internal
Revenue Code of 1986, as amended, together with the rules and regulations
promulgated thereunder.

 

“Collateral” means all of
each 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, but
exclusive of proceeds of any of the following: (i) computer equipment
provided to bankruptcy trustees and located on their premises in the ordinary
course of Borrowers’ business, (ii) fractional interests in aircraft where
a pledge is prohibited by the agreement among the holders of such interests, (iii) equity
interests in (A) any direct Foreign Subsidiary in excess of sixty-five
percent (65%) of the total outstanding voting equity interest of such direct
Foreign Subsidiary, and (B) any indirect Foreign Subsidiary, (iv) licenses
and contracts which by the terms of such licenses and contracts prohibit the
assignment of such agreements (to the extent such prohibition is enforceable at
law), and (v) fixed assets subject to a purchase money lien with an
underlying contract or agreement that prohibits the granting of a second lien
on such fixed assets, but only to the extent such prohibition is enforceable at
law and only as long as such liens attach to such fixed assets); (c) funds
now or hereafter on deposit in the Cash Collateral Account, if any; (d) Cash
Security (other than trust and payroll bank accounts); (e) the Real
Property; and (f) Proceeds of any of the foregoing.

 

8

 

“Commitment” means the
obligation hereunder of the Lenders, during the Commitment Period, to make
Loans and to participate in the issuance of Letters of Credit pursuant to the
Revolving Credit Commitment, up to the Total Commitment Amount.

 

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

 

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

 

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

 

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

 

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

 

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

 

“Confirmation of
Intellectual Property Security Agreement” means each Amendment and Confirmation
of Intellectual Property Collateral Assignment Agreement, relating to
Intellectual Property Security Agreements executed and delivered by the Credit
Parties prior to the Closing Date, as the same may from time to time be
amended, restated or otherwise modified.

 

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

 

“Consolidated” means the
resultant consolidation of the financial statements of EPIQ and its
Subsidiaries in accordance with GAAP, including principles of consolidation
consistent with those applied in preparation of the consolidated financial
statements referred to in Section 6.13 hereof.

 

“Consolidated Capital
Expenditures” 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 capitalized
lease (with acceptable

 

9

 

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

 

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

 

“Consolidated Current
Liabilities” means, at any date, the current liabilities of EPIQ, as determined
on a Consolidated basis and in accordance with GAAP.

 

“Consolidated
Depreciation and Amortization Charges” means, for any period, the aggregate of
all depreciation and amortization charges of EPIQ for such period, as
determined on a Consolidated basis and in accordance with GAAP; provided that,
notwithstanding the foregoing, Consolidated Depreciation and Amortization Charges
shall include any component of Consolidated Interest Expense resulting from the
amortization of any loan fees and Consolidated Interest Expense resulting from
imputed interest that is added to the principal balance of the underlying
Indebtedness.

 

“Consolidated EBITDA”
means, for any period, as determined on a Consolidated basis and in accordance
with GAAP, Consolidated Net Earnings for such period plus, without duplication,
the aggregate amounts deducted in determining such Consolidated Net Earnings in
respect of (a) Consolidated Interest Expense, (b) Consolidated Income
Tax Expense, (c) Consolidated Depreciation and Amortization Charges, (d) (i) extraordinary
or unusual non-cash losses, including the write-off of deferred costs incurred
in connection with the Original Credit Agreement, not incurred in the ordinary
course of business but that were counted in the net income calculation for such
period, minus (ii) extraordinary or unusual non-cash gains not incurred in
the ordinary course of business but that were counted in the net income
calculation for such period, (e) unamortized costs, fees and expenses
incurred in connection with the transactions contemplated by this Agreement
(specifically including the costs and fees paid by Borrowers in connection with
the closing of this Agreement whether or not capitalized) and any Acquisition
(occurring prior to, on or subsequent to the Closing Date), up to an aggregate
amount for all Companies, with respect to Acquisition related costs, fees and
expenses, not to exceed Six Million Dollars ($6,000,000) during any twelve (12)
month period, (f) expenses and charges which will be indemnified or
reimbursed to the extent such amounts are covered by funds in a valid escrow
account 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-based
payments to employees or directors; provided that any time an Acquisition on an
on-going business is made pursuant to Section 5.13 hereof, Consolidated
EBITDA shall be recalculated to include the EBITDA of the acquired company as
if such Acquisition had been completed on the first day of the relevant
measuring period; provided that Consolidated EBITDA shall be calculated without
giving any effect to FAS 141(R) as such relates to contingent
consideration.

 

“Consolidated Fixed
Charges” means, for any period, as determined on a Consolidated basis and in
accordance with GAAP, the aggregate, without duplication, of (a) Consolidated
Interest Expense (including, without limitation, the “imputed interest” portion
of Capitalized

 

10

 

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

 

“Consolidated
Funded 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 Tax
Expense” means, for any period, all provisions for taxes based on the gross or
net income of EPIQ (including, without limitation, any additions to such taxes,
and any penalties and interest with respect thereto), and all franchise taxes
of EPIQ, to the extent such taxes have been imposed in lieu of income taxes, as
determined on a Consolidated basis and in accordance with GAAP.

 

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

 

“Consolidated Net
Earnings” 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 such
date on a Consolidated basis and in accordance with GAAP.

 

“Control Agreement” means
each Deposit Account Control Agreement among a Credit Party, Agent and a
depository institution, as the same may from time to time be amended, restated
or otherwise modified.

 

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

 

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

 

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

 

11

 

“Convertible Subordinated
Noteholders” means any Buyer, as defined in the Note Agreement, and any holder
of the Convertible Subordinated Notes.

 

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

 

“Credit Event” means the
making by the Lenders of a Loan, the conversion by the Lenders of a Base Rate
Loan to a Eurodollar Loan, the continuation by the Lenders of a Eurodollar Loan
after the end of the applicable Interest Period, the making by the Swing Line
Lender of a Swing Loan, or the issuance (or amendment) by the Fronting Lender
of a Letter of Credit.

 

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

 

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

 

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

 

“Default Rate” means (a) with
respect 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) with
respect to any other amount, if no rate is specified or available, a rate per annum
equal to two percent (2%) in excess of the Derived Base Rate from time to time
in effect.

 

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

 

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

 

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

 

12

 

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

 

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

 

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

 

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

 

“Dormant Subsidiary”
means a Company that (a) is not a Credit Party, (b) has aggregate
assets of less than Two Hundred Fifty Thousand Dollars ($250,000), and (c) has
no direct or indirect Subsidiaries with aggregate assets for all such
Subsidiaries of more than Two Hundred Fifty Thousand Dollars ($250,000).

 

“EBITDA” means, for any
period, in accordance with GAAP, the net earnings of a Person for such period
plus the aggregate amounts deducted in determining such net earnings in respect
of (a) interest expense of such Person, (b) income taxes of such
Person, and (c) the aggregate of all depreciation and amortization charges
of such Person, (d) (i) extraordinary or unusual non-cash losses not
incurred in the ordinary course of business of such Person but that were counted
in the net income calculation for such period, minus (ii) extraordinary or
unusual non-cash gains not incurred in the ordinary course of business of such
Person but that were counted in the net income calculation for such period, (e) expenses
and charges which will be indemnified or reimbursed to the extent such amounts
are covered by funds in a valid escrow account or similar arrangement, and (f) 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-based payments to employees or directors;
provided that EBITDA shall be calculated without giving any effect to FAS 141(R) as
such 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 an
Affiliate.

 

“Environmental
Laws” 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 a
Governmental Authority or by any court, agency, instrumentality, regulatory
authority or commission of any of the foregoing concerning environmental health
or 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.

 

13

 

“ERISA” means the Employee Retirement Income Security
Act of 1974, as amended from time to time, and the regulations promulgated
pursuant thereto.

 

“ERISA Event” means (a) the existence of a
condition or event with respect to an ERISA Plan that would reasonably be
expected to result in the imposition of an excise tax or any other liability on
a Company or of the imposition of a Lien on the assets of a Company; (b) the
engagement by a Controlled Group member in a non-exempt “prohibited transaction”
(as defined under ERISA Section 406 or Code Section 4975) or a breach
of a fiduciary duty under ERISA that could reasonably be expected to result in
liability to a Company; (c) the application by a Controlled Group member
for a waiver from the minimum funding requirements of Code Section 412 or
ERISA Section 302 or a Controlled Group member is required to provide
security under Code Section 401(a)(29) or ERISA Section 307; (d) the
occurrence of a Reportable Event with respect to any Pension Plan as to which
notice is required to be provided to the PBGC; (e) the withdrawal by a
Controlled Group member from a Multiemployer Plan in a “complete withdrawal” or
a “partial withdrawal” (as such terms are defined in ERISA Sections 4203 and
4205, respectively); (f) notice that any Multiemployer Plan is in
reorganization under ERISA Section 4241; (g) the taking by the PBGC
of any steps to terminate a Pension Plan or appoint a trustee to administer a
Pension Plan, or the taking by a Controlled Group member of any steps to
terminate a Pension Plan; (h) the commencement, existence or threatening
of 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 a
Controlled Group member of any liability for post-retirement benefits under any
Welfare Plan, other than as required by ERISA Section 601, et.  seq.
or Code Section 4980B.

 

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

 

“Eurocurrency Liabilities” shall have the meaning
assigned to that term in Regulation D of the Board of Governors of the Federal
Reserve System, as in effect from time to time.

 

“Eurodollar” means a Dollar denominated deposit in a
bank 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 interest
at a rate based upon the Derived Eurodollar Rate.

 

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

 

14

 

rate is unavailable from
Reuters or Bloomberg, from any other similar company or service that provides
rate quotations comparable to those currently provided by Reuters or Bloomberg)
as the rate in the London interbank market for Dollar deposits in immediately
available funds with a maturity comparable to such Interest Period, provided
that, 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 nearest
1/16th of 1%) of the per annum rates at which deposits in immediately available
funds in Dollars for the relevant Interest Period and in the amount of the
Eurodollar Loan to be disbursed or to remain outstanding during such Interest
Period, as the case may be, are offered to Agent (or an affiliate of Agent, in
Agent’s discretion) by prime banks in any Eurodollar market reasonably selected
by Agent, determined as of 11:00 A.M. (London time) (or as soon thereafter
as practicable), two Business Days prior to the beginning of the relevant
Interest Period pertaining to such Eurodollar Loan; by (b) 1.00 minus the
Reserve Percentage.

 

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

 

“Excluded Taxes” means, in the case of Agent and each
Lender, taxes imposed on or measured by its overall net income or branch
profits, (and franchise taxes imposed on it (in lieu of net income taxes), by
the jurisdiction (or any
political subdivision thereof) under the laws of which Agent or such Lender, as
the 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 the
Commitment Period.

 

“Federal Funds Effective Rate” means, for any day, the
rate 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 any
successor) on such day as being the weighted average of the rates on overnight
federal funds transactions arranged by federal funds brokers on the previous
trading day, as computed and announced by such Federal Reserve Bank (or any
successor) in substantially the same manner as such Federal Reserve Bank
computes and announces the weighted average it refers to as the “Federal Funds
Effective Rate” as of the Closing Date.

 

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

 

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

 

15

 

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

 

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

 

“GAAP” means generally accepted accounting principles
in the United States as then in effect, which shall include the official
interpretations thereof by the Financial Accounting Standards Board (or
agencies within the United States. accounting profession with similar or
delegated functions and recognized by the Financial Accounting Standards Board
as having authority to issue such interpretations), applied on a basis
consistent with the past accounting practices and procedures of EPIQ and the
SEC (unless a change is the result of the adoption of a new standard or the interpretation
of an existing standard), which are applicable to the circumstances as of the
date of determination.

 

“General Intangibles” means all (a) general
intangibles, as defined in the U.C.C.; and (b) choses in action, causes of
action, intellectual property, customer lists, corporate or other business
records, 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 or
government, any state, province or territory or other political subdivision
thereof, any governmental agency, department, authority, instrumentality,
regulatory body, court, central bank or other governmental entity exercising
executive, legislative, judicial, taxing, regulatory or administrative
functions of or pertaining to government, any securities exchange and any
self-regulatory organization exercising such functions.

 

“Guarantor” means a Person that shall have pledged its
credit or property in any manner for the payment or other performance of the
indebtedness, contract or other obligation of another and includes (without
limitation) any guarantor (whether of payment or of collection), surety, co-maker,
endorser or Person that shall have agreed conditionally or otherwise to make
any purchase, loan or investment in order thereby to enable another to prevent
or correct a default of any kind.

 

“Guarantor of Payment” means each of the Companies
designated a “Guarantor of Payment” on Schedule 3 hereto, each of which
is executing and delivering a Guaranty of Payment on the Closing Date, and any
other Domestic Subsidiary that shall deliver a Guaranty of Payment to Agent
subsequent 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 Guaranty
of Payment executed and delivered on or after the Closing Date in
connection with this Agreement by the Guarantors of Payment, as the same may
from time to time be amended, restated or otherwise modified.

 

16

 

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

 

“Indebtedness” means, for
any Company, without duplication, (a) all obligations to repay borrowed
money, direct or indirect, incurred, assumed, or guaranteed, (b) all
obligations in respect of the deferred purchase price of property or services
(other than trade accounts payable and accrued expenses incurred in the
ordinary course of business), (c) all obligations under conditional sales
or other title retention agreements, (d) all obligations (contingent or
otherwise) under any letter of credit or banker’s acceptance, (e) all net
obligations under any currency swap agreement, interest rate swap, cap, collar
or floor agreement or other interest rate management device or any Hedge
Agreement, (f) all synthetic leases, (g) all Capitalized Lease
Obligations, (h) all obligations of such Company with respect to asset
securitization financing programs, (i) all obligations to advance funds
to, or to purchase assets, property or services from, any other Person in order
to maintain the financial condition of such Person, (j) all indebtedness
secured by a Lien on the property of a Company, whether or not such
indebtedness shall have been assumed by such Company, provided that if such
Company has not assumed or otherwise become liable for such indebtedness, such
indebtedness shall be measured at the fair market value of such property
securing such indebtedness at the time of determination, (k) all
indebtedness of the types referred to in subparts (a) through (i) above
of any partnership or joint venture (other than a joint venture that is itself
a corporation or limited liability company) in which such Company is a general
partner or joint venturer, unless such indebtedness is expressly made
non-recourse to such Company, (k) any other transaction (including forward
sale or purchase agreements) having the commercial effect of a borrowing of
money entered into by such Company to finance its operations or capital
requirements, and (l) any guaranty of any obligation described in subparts
(a) through (k) hereof.

 

“Intellectual Property
Security Agreement” means an Intellectual Property Security Agreement or
Intellectual Property Collateral Assignment Agreement, executed and delivered
by a Borrower or a Guarantor of Payment in favor of Agent, for the benefit of
the Lenders, granting a security interest in all intellectual property owned by
such Borrower or such Guarantor of Payment, and any other Intellectual Property
Security Agreement executed prior to, on or after the Closing Date, as the same
may 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 such
Eurodollar Loan is made and ending on the last day of such period, as selected
by Administrative Borrower pursuant to the provisions hereof, and, thereafter
(unless such Eurodollar Loan is converted to a Base Rate Loan), each subsequent
period commencing on the last day of the immediately preceding Interest Period
and ending on the last day of such period, as selected by Administrative
Borrower pursuant to the provisions hereof. 
The duration of each

 

17

 

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

 

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

 

“Investment Property” means
all investment property, as defined in the U.C.C., unless the Uniform
Commercial Code as in effect in another jurisdiction would govern the
perfection and priority of a security interest in investment property, and, in
such case, “investment property” shall be defined in accordance with the law of
that jurisdiction as in effect from time to time.

 

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

 

“Landlord’s Waiver” means
a landlord’s waiver or mortgagee’s waiver, each in form and substance
reasonably satisfactory to Agent, delivered by a Credit Party in connection
with this Agreement, as such waiver may from time to time be amended, restated
or otherwise modified.

 

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

 

“Letter of Credit” means
a standby letter of credit that shall be issued by the Fronting Lender for the
account 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) one
year after its date of issuance (provided that such Letter of Credit may
provide for the renewal thereof for additional one year periods), or (b) one
year after the last day of the Commitment Period.

 

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

 

“Letter of Credit
Exposure” means, at any time, the sum of (a) the aggregate undrawn amount
of all issued and outstanding Letters of Credit, and (b) the aggregate of
the draws made on Letters of Credit that have not been reimbursed by Borrowers
or 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 completed
fiscal quarter of EPIQ), to (b) Consolidated EBITDA (for the most recently
completed four fiscal quarters of EPIQ).

 

“Lien” means any
mortgage, deed of trust, security interest, lien (statutory or other), charge,
assignment, hypothecation, encumbrance on, pledge or deposit of, or conditional
sale,

 

18

 

leasing (other than
operating leases), sale with a right of redemption or other title retention
agreement and any capitalized lease with respect to any property (real or
personal) or asset.

 

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

 

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

 

“Loan Documents” means,
collectively, this Agreement, each Note, each Guaranty of Payment, all
documentation relating to each Letter of Credit, each Security Document, each
Domestic Subsidiary Borrower Assumption Agreement, the Agent Fee Letter and the
Closing Fee Letter, as any of the foregoing may from time to time be amended,
restated or otherwise modified or replaced, and any other document delivered
pursuant 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) the
business, operations, property, condition (financial or otherwise) or prospects
of the Companies taken as a whole, (c) the ability of
Borrowers or the Companies to perform its or their obligations under this
Agreement or any of the other Loan Documents, or (d) the validity or enforceability
of the Loan Documents or the rights and remedies of Agent or the Lenders
hereunder or thereunder.

 

“Material Indebtedness
Agreement” means any debt instrument, lease (capital, operating or otherwise),
guaranty, contract, commitment, agreement or other arrangement evidencing or
entered into in connection with any Indebtedness of any Company or the
Companies 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 the
column 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 of
interests pursuant to Section 11.10 hereof; provided that the Maximum
Amount for the Swing Line Lender shall exclude the Swing Line Commitment (other
than its pro rata share), and the Maximum Amount of the Fronting Lender shall
exclude the Letter of Credit Commitment (other than its pro rata share).

 

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

 

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

 

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

 

“Mortgage” means each
Open-End Mortgage, Assignment of Leases and Rents and Security Agreement (or
deed of trust or comparable document), relating to the Real Property, executed
and delivered by a Credit Party, on or as of the closing date
of the Original Credit

 

19

 

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

 

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

 

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

 

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

 

“Non-Credit
Party Exposure” means the aggregate amount, incurred on or after the Closing
Date, 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 issued
to 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 Revolving
Credit Note or the Swing Line Note, or any other promissory note delivered
pursuant to this Agreement.

 

“Note Agreement” means
the Security Purchase Agreement, dated as of June 10, 2004, by and among
EPIQ and the Buyers, as defined therein, as the same may from time to time be
amended, restated or otherwise modified with the prior written consent of the
Required Lenders.

 

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

 

“Obligations” means,
collectively, (a) all Indebtedness and other obligations now owing or
hereafter incurred by one or more Borrowers to Agent, the Swing Line Lender,
the Fronting Lender, or any Lender (or any affiliate thereof) pursuant to this
Agreement and the other Loan Documents, and includes the principal of and
interest on all Loans and all obligations pursuant to Letters of Credit; (b) each
renewal, extension, consolidation or refinancing of any of the foregoing, in
whole or in part; (c) the commitment and other fees and any prepayment
fees payable pursuant to this Agreement or any other Loan Documents; (d) all
fees and charges in connection with the Letters of Credit; (e) every other
liability, now or hereafter owing to Agent or any Lender by any Company
pursuant to this Agreement or any other Loan Document; and (f) all Related
Expenses.

 

“Original Amended Credit
Agreement” means that term as defined in the first Whereas clause on the first page of
this Agreement.

 

“Original Credit
Agreement” means that term as defined in the first Whereas clause on the first page of
this Agreement.

 

20

 

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

 

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

 

“Participant” means that
term as defined in Section 11.11 hereof.

 

“Patriot Act” means the
Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism Act of 2001, USA Patriot Act, Title III of
Pub. L. 107-56, signed into law October 26, 2001, as amended from time to
time.

 

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

 

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

 

“Permitted Foreign
Subsidiary Loans and Investments” means:

 

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

 

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

 

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

 

(d)                                  any Non-Credit Party Exposure, not
otherwise permitted under this definition, up to the aggregate amount for all
Foreign Subsidiaries, when combined with all Permitted Investments, not to
exceed 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 equity
instruments) of a Person (other than a Company), so long as the aggregate
amount 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 any
individual, sole proprietorship, partnership, joint venture, unincorporated
organization, corporation, limited liability company, unlimited liability
company, institution, trust, estate, Governmental Authority or any other
entity.

 

21

 

 “Pledge Agreement” means each Pledge Agreement and each Amended and
Restated Pledge Agreement, relating to the Pledged Securities, executed and
delivered by a Borrower and each Domestic Subsidiary, as applicable, in favor
of Agent, for the benefit of the Lenders, by a Borrower or a Guarantor of
Payment, as applicable, with respect to the Pledged Securities, on or after the
Closing 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 or
other equity interest of a Subsidiary of a Borrower, whether now owned or
hereafter acquired or created, and all proceeds thereof; provided that Pledged
Securities shall only include up to sixty-five percent (65%) of the shares of
voting capital stock or other voting equity interest of any first-tier Foreign
Subsidiary and shall not include any Foreign Subsidiary other than a first-tier
Foreign Subsidiary.  (Schedule 4
hereto lists, as of the Closing Date, all of the Pledged Securities.)

 

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

 

 “Proceeds” means (a) proceeds, as defined in the U.C.C., and
any other proceeds, and (b) whatever is received upon the sale, exchange,
collection or other disposition of Collateral or proceeds, whether cash or
non-cash.  Cash proceeds include, without
limitation, moneys, checks and Deposit Accounts.  Proceeds include, without limitation, any
Account arising when the right to payment is earned under a contract right, any
insurance payable by reason of loss or damage to the Collateral, and any return
or unearned premium upon any cancellation of insurance.  Except as expressly authorized in this
Agreement, the right of Agent and the Lenders to Proceeds specifically set
forth herein or indicated in any financing statement shall never constitute an
express or implied authorization on the part of Agent or any Lender to a
Company’s sale, exchange, collection or other disposition of any or all of the
Collateral.

 

 “Real Property” means each parcel of the real estate owned by a
Credit Party as set forth on Schedule 5 hereto, together with all
improvements and buildings thereon and all appurtenances, easements or other
rights thereto belonging, and being defined collectively as the “Property” in
each 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, suits
and disbursements) (a) incurred by Agent, or imposed upon or asserted
against 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 interest
evidenced by

 

22

 

any Loan Document; (ii) obtain
payment, performance or observance of any and all of the Obligations; or (iii) maintain,
insure, audit, collect, preserve, repossess or dispose of any of the collateral
securing the Obligations or any part thereof, including, without limitation,
costs and expenses for appraisals, assessments and audits of any Company or any
such 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 Credit
Party, or any of its officers, to Agent or the Lenders pursuant to or otherwise
in connection with this Agreement.

 

 “Reportable Event” means a reportable event as that term is defined
in Title IV of ERISA, except actions of general applicability by the Secretary
of 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 Total
Commitment Amount, or, (b) after the Commitment Period, the aggregate
amount of the Revolving Credit Exposure; provided that, if there shall be two
or more Lenders, Required Lenders shall constitute at least two Lenders.

 

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

 

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

 

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

 

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

 

23

 

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

 

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

 

 “Revolving Credit Note” means a Revolving Credit Note, in the form
of 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 in
accordance with Section 2.2(a) hereof.

 

 “SEC” means the United States Securities and Exchange Commission, or
any 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 Lenders
under Hedge Agreements, and (c) the Bank Product Obligations owing to
Lenders under Bank Product Agreements.

 

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

 

 “Security Documents” means each Security Agreement, each Pledge
Agreement, each Intellectual Property Security Agreement, each Mortgage, each
Landlord’s Waiver, each Mortgage Amendment, each Control Agreement, each
Confirmation of Intellectual Property Security Agreement, each U.C.C. Financing
Statement or similar filing as to a jurisdiction located outside of the United
States of America filed in connection herewith or perfecting any interest
created in any of the foregoing documents, and any other document pursuant to
which any Lien is granted by a Company or any other Person to Agent, for the
benefit of the Lenders, as security for the Secured Obligations, or any part
thereof, and each other agreement executed in connection with any of the
foregoing, as any of the foregoing may from time to time be amended, restated
or otherwise modified or replaced.

 

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

 

 “Subordinated” means, as applied to Indebtedness, Indebtedness that
shall have been subordinated (by written terms or written agreement being, in either
case, in form and substance

 

24

 

reasonably satisfactory
to Agent and the Required Lenders) in favor of the prior payment in full of the
Obligations (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 a
Borrower or by one or more other subsidiaries of such Borrower or by such
Borrower 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 or
more subsidiaries of such Borrower, directly or indirectly, is a general partner
or managing member, as the case may be, or otherwise has an ownership interest
greater than fifty percent (50%) of all of the ownership interests in such
partnership, limited liability company or unlimited liability company, or (c) any
other Person (other than a corporation, partnership, limited liability company
or unlimited liability company) in which a Borrower, one or more other
subsidiaries of such Borrower or such Borrower and one or more subsidiaries of
such Borrower, directly or indirectly, has at least a majority interest in the
Voting Power or the power to elect or direct the election of a majority of
directors or other governing body of such Person.  Unless otherwise specified, references to
Subsidiary 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 by
an issuer satisfactory to Agent and the Fronting Lender.

 

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

 

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

 

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

 

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

 

 “Swing Loan” means a loan that shall be denominated in Dollars
granted to Borrowers by the Swing Line Lender under the Swing Line Commitment, in accordance
with 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 is
made, 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

 

25

 

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

 

 “Total Commitment Amount” means the Closing Commitment Amount, as
such 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 time
to time in the State of Ohio.

 

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

 

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

 

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

 

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

 

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

 

 Section 1.2.  Accounting
Terms.  Any accounting term not
specifically defined in this Article I shall have the meaning ascribed thereto
by GAAP.  In the event that any “Accounting
Change” (as defined below) shall occur and such change results in a change in
the method of calculation of financial covenants, standards or terms in this
Agreement, then Borrowers, Agent and the Required Lenders agree to enter into
negotiations in order to amend such provisions of this Agreement so as to
equitably reflect such Accounting Changes with the desired result that the
criteria for evaluating the financial condition of Borrowers shall be the same after
such Accounting Changes as if such Accounting Changes had not been made.  Until such time as such

 

26

 

an amendment shall have
been executed and delivered by Borrowers, Agent and the Required Lenders, all
financial covenants, standards and terms in this Agreement shall continue to be
calculated and construed as if such Accounting Changes had not occurred.  “Accounting Changes” refers to changes in
accounting principles required by the promulgation of any rule, regulation,
pronouncement or opinion by the Financial Accounting Standards Board of the
American 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 applicable
to 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.  Confirmation
of Recitals.  Borrowers, Agent and
the Lenders hereby confirm the statements set forth in the recitals of  this Agreement.

 

ARTICLE II.  AMOUNT AND TERMS OF CREDIT

 

 Section 2.1.  Amount
and Nature of Credit.

 

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

 

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

 

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

 

(ii)                                   the aggregate outstanding principal
amount of Loans (other than Swing Loans) made by such Lender shall represent
that 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 (other
than Swing Loans which shall be risk participated on a pro rata basis) from the
Lenders shall be made pro rata according to the respective Commitment
Percentages of the Lenders.

 

27

 

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

 

 Section 2.2.  Revolving
Credit.

 

(a)                                  Revolving Loans. 
Subject to the terms and conditions of this Agreement, during the
Commitment Period, the Lenders shall make a Revolving Loan or Revolving Loans
to Borrowers in such amount or amounts as Administrative Borrower, through an
Authorized Officer, may
from time to time request, but not exceeding in aggregate principal amount at
any time outstanding hereunder the Revolving Credit Commitment, when such
Revolving Loans are combined with the Letter of Credit Exposure and the Swing
Line Exposure.  Borrowers shall have the
option, subject to the terms and conditions set forth herein, to borrow
Revolving Loans, maturing on the last day of the Commitment Period, by means of
any 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 borrow
funds, repay the same in whole or in part and re-borrow hereunder at any time
and from time to time during the Commitment Period.

 

(b)                                 Letters of Credit.

 

(i)                                       Generally.  Subject to the terms and conditions of this
Agreement, during the Commitment Period, the Fronting Lender shall, in its own
name, on behalf of the Lenders, issue such Letters of Credit for the account of
a Credit Party, as Administrative Borrower may from time to time request.  Administrative Borrower shall not request any
Letter of Credit (and the Fronting Lender shall not be obligated to issue any
Letter of Credit) if, after giving effect thereto, (A) the Letter of
Credit Exposure would exceed the Letter of Credit Commitment, or (B) the
Revolving Credit Exposure would exceed the Revolving Credit Commitment.  The issuance of each Letter of Credit shall
confer upon each Lender the benefits and liabilities of a participation
consisting of an undivided pro rata interest in the Letter of Credit to the
extent of such Lender’s Commitment Percentage.

 

(ii)                                    Request for Letter of Credit.  Each request for a Letter of Credit shall be
delivered to Agent (and to the Fronting Lender, if the Fronting Lender is a
Lender 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 issuance
of the Letter of Credit.  Each such
request shall be in a form reasonably acceptable to Agent (and the Fronting
Lender, if the Fronting Lender is a Lender other than Agent) and shall specify
the face amount thereof, the account party, the beneficiary, the requested date
of issuance, amendment, renewal or extension, the expiry date thereof, and the
nature of the transaction or obligation to be supported thereby.  Concurrently with each such request, Administrative
Borrower, and any Credit Party for whose account the Letter of Credit is to be
issued, shall execute and deliver to the Fronting Lender an appropriate
application and agreement, being in the standard form of the Fronting Lender
for such letters of credit, as amended to conform to the provisions of this
Agreement if required by Agent.  Agent

 

28

 

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

 

(iii)          Standby Letters of
Credit.  With respect to each Letter
of Credit and the drafts thereunder, whether issued for the account of a
Borrower 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 upon
the face amount of such Letter of Credit, which shall be paid quarterly in
arrears, on each Regularly Scheduled Payment Date, at a rate per annum equal to
the Applicable Margin for Eurodollar Loans (in effect on the date such payment
is to be made) multiplied by the face amount of such Letter of Credit; (B) pay
to Agent, for the sole benefit of the Fronting Lender, an additional Letter of
Credit fee, which shall be paid on each date that such Letter of Credit shall
be issued, amended or renewed, at the rate of one-eighth percent (1/8%) of the
face amount of such Letter of Credit; and (C) pay to Agent, for the sole
benefit of the Fronting Lender, such other issuance, amendment, negotiation,
draw, acceptance, telex, courier, postage and similar transactional fees as are
customarily charged by the Fronting Lender in respect of the issuance and
administration of similar letters of credit under its fee schedule as in effect
from time to time.

 

(iv)          Refunding of Letters
of Credit with Revolving Loans. 
Whenever a Letter of Credit shall be drawn, Borrowers shall promptly
reimburse the Fronting Lender for the amount drawn.  In the event that the amount drawn shall not
have been reimbursed by Borrowers on the date of the drawing of such Letter of
Credit, at the sole option of Agent (and the Fronting Lender, if the Fronting
Lender is a Lender other than Agent), Borrowers shall be deemed to have
requested a Revolving Loan, subject to the provisions of Sections 2.2(a) and
2.5 hereof (other than the requirement set forth in Section 2.5(d) hereof),
in the amount drawn.  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 of Agent and such
Lender).  Each Lender agrees to make a
Revolving Loan on the date of such notice, subject to no conditions precedent
whatsoever.  Each Lender acknowledges and
agrees that its obligation to make a Revolving Loan pursuant to Section 2.2(a) hereof
when required by this Section 2.2(b)(iv) shall be absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including, without limitation, the occurrence and continuance of a Default or
Event of Default, and that its payment to Agent, for the account of the
Fronting Lender, of the proceeds of such Revolving Loan shall be made without
any offset, abatement, recoupment, counterclaim, withholding or reduction whatsoever
and whether or not the Revolving Credit Commitment shall have been reduced or
terminated.  Borrowers irrevocably
authorize and instruct Agent to apply the proceeds of any borrowing pursuant to
this Section 2.2(b)(iv) to reimburse, in full (other than the
Fronting Lender’s pro rata share of such borrowing), the Fronting Lender for
the amount drawn on such Letter of Credit. 
Each such Revolving Loan shall be deemed to be a Base Rate Loan unless
otherwise requested by and available to Borrowers hereunder.  Each Lender is hereby authorized to record on
its records relating to its Revolving Credit Note (or, if such Lender has not
requested a Revolving Credit Note, its records relating to Revolving Loans)
such Lender’s pro rata share of the amounts paid and not reimbursed on the
Letters of Credit.

 

29

 

(v)           Participation in
Letters of Credit.  If, for any
reason, Agent (and the Fronting Lender if the Fronting Lender is a Lender other
than Agent) shall be unable to or, in the opinion of Agent, it shall be
impracticable to, convert any Letter of Credit to a Revolving Loan pursuant to
the preceding subsection, Agent (and the Fronting Lender if the Fronting Lender
is a Lender other than Agent) shall have the right to request that each Lender
purchase a participation in the amount due with respect to such Letter of
Credit, and Agent shall promptly notify each Lender thereof (by facsimile or
telephone, confirmed in writing).  Upon
such notice, but without further action, the Fronting Lender hereby agrees to
grant to each Lender, and each Lender hereby agrees to acquire from the
Fronting Lender, an undivided participation interest in the amount due with
respect to such Letter of Credit in an amount equal to such Lender’s Commitment
Percentage of the principal amount due with respect to such Letter of
Credit.  In consideration and in
furtherance of the foregoing, each Lender hereby absolutely and unconditionally
agrees, upon receipt of notice as provided above, to pay to Agent, for the
account of the Fronting Lender, such Lender’s ratable share of the amount due
with respect to such Letter of Credit (determined in accordance with such
Lender’s Commitment Percentage).  Each
Lender acknowledges and agrees that its obligation to acquire participations in
the amount due under any Letter of Credit that is drawn but not reimbursed by
Borrowers pursuant to this subsection (v) shall be absolute and
unconditional and shall not be affected by any circumstance whatsoever, including,
without limitation, the occurrence and continuance of a Default or Event of
Default, and that each such payment shall be made without any offset,
abatement, recoupment, counterclaim, withholding or reduction whatsoever and
whether or not the Revolving Credit Commitment shall have been reduced or
terminated.  Each Lender shall comply
with its obligation under this subsection (v) by wire transfer of
immediately available funds, in the same manner as provided in Section 2.5
hereof with respect to Revolving Loans. 
Each Lender is hereby authorized to record on its records such Lender’s
pro rata share of the amounts paid and not reimbursed on the Letters of Credit.

 

(vi)          Letters of Credit
Outstanding Beyond the Commitment Period. 
If any Letter of Credit is outstanding upon the termination of the
Commitment, then, upon such termination, Borrowers shall deposit with Agent,
for the benefit of the Fronting Lender, with respect to all outstanding Letters
of 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 the
undrawn amount of the outstanding Letters of Credit, and (B) free and
clear of all rights and claims of third parties.  The cash shall be deposited in an escrow
account at a financial institution designated by the Fronting Lender.  The Fronting Lender shall be entitled to
withdraw (with respect to the cash) or draw (with respect to the Supporting
Letter of Credit) amounts necessary to reimburse the Fronting Lender for payments
to be made under the Letters of Credit and any fees and expenses associated
with such Letters of Credit, or incurred pursuant to the reimbursement
agreements with respect to such Letters of Credit.  Borrowers shall also execute such
documentation as Agent or the Fronting Lender may reasonably require in
connection with the survival of the Letters of Credit beyond the Commitment or
this Agreement.  After expiration of all
undrawn 

 

30

 

Letters of Credit, the
Supporting 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 this
Agreement, during the Commitment Period, the Swing Line Lender shall make a
Swing Loan or Swing Loans to Borrowers in such amount or amounts as
Administrative Borrower, through an Authorized Officer, may from time to time
request; provided that Administrative Borrower shall not request any Swing Loan
if, after giving effect thereto, (A) the Revolving Credit Exposure would
exceed the Revolving Credit Commitment, or (B) the Swing Line Exposure
would exceed the Swing Line Commitment. 
Each Swing Loan shall be due and payable on the Swing Loan Maturity Date
applicable thereto.

 

(ii)           Refunding of Swing
Loans.  If the Swing Line Lender so
elects, by giving notice to Administrative Borrower and the Lenders, Borrowers
agree 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 Loan
unless otherwise requested by and available to Borrowers hereunder.  Upon receipt of such notice by Borrowers and
the Lenders, Borrowers shall be deemed, on such day, to have requested a
Revolving Loan in the principal amount of the Swing Loan in accordance with
Sections 2.2(a) and 2.5 hereof (other than the requirement set forth
in 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 of
Agent and such Lender).  Each Lender
agrees to make a Revolving Loan on the date of such notice, subject to no
conditions precedent whatsoever.  Each
Lender acknowledges and agrees that such Lender’s obligation to make a
Revolving Loan pursuant to Section 2.2(a) hereof when required by
this Section 2.2(c)(ii) is absolute and unconditional and shall not
be affected by any circumstance whatsoever, including, without limitation, the
occurrence and continuance of a Default or Event of Default, and that its
payment to Agent, for the account of the Swing Line Lender, of the proceeds of
such Revolving Loan shall be made without any offset, abatement, recoupment,
counterclaim, withholding or reduction whatsoever and whether or not the
Revolving Credit Commitment shall have been reduced or terminated.  Borrowers irrevocably authorize and instruct
Agent to apply the proceeds of any borrowing pursuant to this Section 2.2(c)(ii) to
repay in full such Swing Loan.  Each Lender is hereby authorized to
record on its records relating to its Revolving Credit Note (or, if such Lender
has not requested a Revolving Credit Note, its records relating to Revolving
Loans) such Lender’s pro rata share of the amounts paid to refund such Swing
Loan.

 

(iii)          Participation in
Swing Loans.  If, for any reason,
Agent is unable to or, in the opinion of Agent, it is impracticable to, convert
any 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 the
maturity thereof), Agent shall have the right to request that each Lender
purchase a participation in such Swing Loan, and Agent shall promptly notify
each Lender thereof (by facsimile or telephone, confirmed in writing).  

 

31

 

Upon such notice, but
without further action, the Swing Line Lender hereby agrees to grant to each
Lender, and each Lender hereby agrees to acquire from the Swing Line Lender, an
undivided participation interest in such Swing Loan in an amount equal to such
Lender’s Commitment Percentage of the principal amount of such Swing Loan.  In consideration and in furtherance of the
foregoing, each Lender hereby absolutely and unconditionally agrees, upon
receipt of notice as provided above, to pay to Agent, for the benefit of the
Swing Line Lender, such Lender’s ratable share of such Swing Loan (determined
in accordance with such Lender’s Commitment Percentage).  Each Lender acknowledges and agrees that its
obligation to acquire participations in Swing Loans pursuant to this Section 2.2(c)(iii) is
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including, without limitation, the occurrence and continuance of a
Default or an Event of Default, and that each such payment shall be made
without any offset, abatement, recoupment, counterclaim, withholding or
reduction whatsoever and whether or not the Revolving Credit Commitment shall
have been reduced or terminated.  Each
Lender shall comply with its obligation under this Section 2.2(c)(iii) by
wire transfer of immediately available funds, in the same manner as provided in
Section 2.5 hereof with respect to Revolving Loans to be made by such
Lender.

 

Section 2.3.  Interest.

 

(a)           Revolving Loans.

 

(i)            Base Rate Loan.  Borrowers shall pay interest on the unpaid
principal amount of a Base Rate Loan outstanding from time to time from the
date thereof until paid at the Derived Base Rate from time to time in
effect.  Interest on such Base Rate Loan
shall be payable, commencing September 30, 2008, and continuing on each
Regularly Scheduled Payment Date thereafter and at the maturity thereof.

 

(ii)           Eurodollar Loans.  Borrowers shall pay interest on the unpaid
principal amount of each Eurodollar Loan outstanding from time to time, fixed
in advance on the first day of the Interest Period applicable thereto through
the last day of the Interest Period applicable thereto (but subject to changes in
the Applicable Margin for Eurodollar Loans), at the Derived Eurodollar
Rate.  Interest on such Eurodollar Loan
shall be payable on each Interest Adjustment Date with respect to an Interest
Period (provided that if an Interest Period shall exceed three months, the
interest must be paid every three months, commencing three months from the
beginning of such Interest Period).

 

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

 

32

 

(c)           Default Rate.  Anything herein to the contrary
notwithstanding, if an Event of Default pursuant to Section 8.1 or 8.11
hereof shall occur and be continuing, upon the election of the Required Lenders
with respect to an Event of Default pursuant to Section 8.1 hereof and
automatically with respect to an Event of Default pursuant to Section 8.11
hereof, (i) the principal of each Loan and the unpaid interest thereon
shall bear interest, until paid, at the Default Rate, (ii) the fee for the
aggregate undrawn amount of all issued and outstanding Letters of Credit shall
be increased by two percent (2%) in excess of the rate otherwise applicable
thereto, and (iii) in the case of any other amount not paid when due from
Borrowers hereunder or under any other Loan Document, such amount shall bear
interest at the Default Rate.

 

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

 

Section 2.4.  Evidence of Indebtedness.

 

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

 

(b)           Swing Loans.  Upon the request of the Swing Line Lender, to
evidence the obligation of Borrowers to repay the Swing Loans and to pay
interest thereon, Borrowers shall execute a Swing Line Note, payable to the
order of the Swing Line Lender in the principal amount of the Swing Line
Commitment, or, if less, the aggregate unpaid principal amount of Swing Loans
made by the Swing Line Lender; provided that the failure of the Swing Line
Lender 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 Credit
Event.  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 

 

33

 

date of borrowing or conversion of any Base Rate Loan, (ii) 12:00
noon (Eastern time) three Business Days prior to the proposed date of
borrowing, 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 such
other time to which the Swing Line Lender may agree.  Borrowers shall comply with the notice
provisions set forth in Section 2.2(b) hereof with respect to Letters
of Credit.

 

(b)           Funding
of Loans.  Agent shall notify each
Lender of the date, amount and Interest Period (if applicable) promptly upon
the receipt of a Notice of Loan (other than for a Swing Loan, or a Revolving
Loan to be funded as a Swing Loan), and, in any event, by 2:00 P.M. (Eastern
time) on the date such Notice of Loan is received.  On the date that the Credit Event set forth
in 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 federal
or other immediately available funds, required of it.  If Agent shall elect to advance the proceeds
of such Loan prior to receiving funds from such Lender, Agent shall have the
right, upon prior notice to Administrative Borrower, to debit any account of the
appropriate Borrower or otherwise receive such amount from the appropriate
Borrower, promptly after demand, in the event that such Lender shall fail to
reimburse Agent in accordance with this subsection.  Agent shall also have the right to receive
interest from such Lender at the Federal Funds Effective Rate in the event that
such Lender shall fail to provide its portion of the Loan on the date requested
and Agent shall elect to provide such funds.

 

(c)           Conversion
and Continuation of Loans.

 

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

 

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

 

(d)           Minimum
Amount.  Each request for:

 

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

 

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

 

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

 

34

 

(e)           Interest
Periods.  Administrative Borrower
shall not request that Eurodollar Loans be outstanding for more than six
different Interest Periods at the same time.

 

Section 2.6. 
Payment on Loans and Other Obligations.

 

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

 

(b)           Payments
from Borrowers.  All payments
(including prepayments) to Agent of the principal of or interest on each Loan
or other payment, including but not limited to principal, interest, fees or any
other amount owed by Borrowers under this Agreement, shall be made in
Dollars.  All payments described in this
subsection (b) shall be remitted to Agent, at the address of Agent for
notices 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 later
than 1:00 P.M. (Eastern time) on the due date thereof in immediately
available funds.  Any such payments
received by Agent after 1:00 P.M. (Eastern time) shall be deemed to have
been made and received on the next Business Day.

 

(c)           Payments
to Lenders.  Upon Agent’s receipt of
payments hereunder, Agent shall immediately distribute to each Lender (except
with 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 to
the Fronting Lender) their respective ratable shares, if any, of the amount of
principal, interest, and commitment and other fees received by Agent for the account
of such Lender.  Payments received by
Agent shall be delivered to the Lenders in Dollars in immediately available
funds.  Each Lender shall record any
principal, interest or other payment, the principal amounts of Base Rate Loans,
Eurodollar Loans, Swing Loans and Letters of Credit, all prepayments and the
applicable dates, including Interest Periods, with respect to the Loans made,
and payments received by such Lender, by such method as such Lender may
generally employ; provided that failure to make any such entry shall in no way
detract from the obligations of Borrowers under this Agreement or any
Note.  The aggregate unpaid amount of
Loans, types of Loans, Interest Periods and similar information with respect to
the Loans and Letters of Credit set forth on the records of Agent shall be
rebuttably presumptive evidence with respect to such information, including the
amounts of principal, interest and fees owing to each Lender.

 

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

 

35

 

Section 2.7. 
Prepayment.

 

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

 

(b)           Notice
of Prepayment.  Administrative
Borrower shall give Agent notice of prepayment of a Base Rate Loan or Swing
Loan by no later than 11:00 A.M. (Eastern time) on the Business Day on
which such prepayment is to be made and written notice of the prepayment of any
Eurodollar Loan not later than 1:00 P.M. (Eastern time) three Business
Days before the Business Day on which such prepayment is to be made.

 

(c)           Minimum
Amount.  Each prepayment of a
Eurodollar Loan shall be in the principal amount of not less than Five Hundred
Thousand Dollars ($500,000), increased by increments of Two Hundred Fifty
Thousand Dollars ($250,000), or, with respect to a Swing Loan, the principal
balance of such Swing Loan, except in the case of a mandatory payment pursuant
to Section 2.11 or Article III hereof.

 

Section 2.8. 
Commitment and Other Fees.

 

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

 

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

 

36

 

Five Million Dollars ($5,000,000). 
Agent shall promptly notify each Lender of the date of each such
reduction and such Lender’s proportionate share thereof.  After each such partial reduction, the
commitment fees payable hereunder shall be calculated upon the Revolving Credit
Commitment as so reduced.  If Borrowers
reduce in whole the Total Commitment Amount on the effective date of such
reduction (the appropriate Borrowers having prepaid in full the unpaid
principal balance, if any, of the Loans, together with all interest (if any)
and commitment and other fees accrued and unpaid with respect thereto, and
provided 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 Administrative
Borrower.  Any partial reduction in the
Revolving Credit Commitment shall be effective during the remainder of the
Commitment Period.

 

(b)           Increase
in Commitment.  At any time during
the Commitment Increase Period, Administrative Borrower may request that Agent
increase the Total Commitment Amount from the Closing Commitment Amount up to
an amount that shall not exceed the Maximum Commitment Amount.  Each such increase shall be in an amount of
at least Five Million Dollars ($5,000,000), increased by increments of One
Million Dollars ($1,000,000), and may be made by either (i) increasing,
for one or more Lenders, with their prior written consent, their respective
Revolving Credit Commitments, or (ii) including one or more Additional
Lenders, each with a new commitment under the Revolving Credit Commitment, as a
party to this Agreement (collectively, the “Additional Commitment”); provided
that existing Lenders shall be given the first opportunity to provide
Additional Commitments.  During the
Commitment Increase Period, all of the Lenders agree that Agent shall permit
one or more Additional Commitments upon satisfaction of the following
requirements: (A) each Additional Lender, if any, shall execute an
Additional Lender Assumption Agreement, (B) Agent shall provide to
Administrative Borrower and each Lender a revised Schedule 1 to this
Agreement, including revised Commitment Percentages for each of the Lenders, if
appropriate, at least three Business Days prior to the date of the
effectiveness of such Additional Commitments (each an “Additional Lender
Assumption Effective Date”), (C) Borrowers shall execute and deliver to
Agent and the Lenders such replacement or additional Revolving Credit Notes as
shall be required by Agent, and (D) Borrowers shall, on the Additional
Lender Assumption Effective Date, deliver to Agent, for the benefit of the
Lenders, (1) written confirmation (in form and substance reasonably
satisfactory to Agent) that EPIQ shall have given written notice to each
Convertible Subordinated Noteholder that the Obligations incurred pursuant to
the Additional Commitments are being designated as Senior Indebtedness (as
defined in the Convertible Subordinated Notes), and (2) a certificate and
any other reasonable evidence required by Agent or the Required Lenders
demonstrating that all terms and conditions for designating Senior Indebtedness
(as defined in the Convertible Subordinated Notes) under the Convertible
Subordinated Notes are being met.  The
Lenders hereby authorize Agent to execute each Additional Lender Assumption
Agreement on behalf of the Lenders.  On
each Additional Lender Assumption Effective Date, the Lenders shall make adjustments
among themselves with respect to the Revolving Loans then outstanding and
amounts of principal, interest, commitment fees and other amounts paid or
payable with respect thereto as shall be necessary, in the opinion of Agent, in
order to reallocate among such Lenders such outstanding amounts, based on the
revised Commitment Percentages and to otherwise carry out fully the intent and
terms of this Section 2.9(b).  In
connection therewith, it is understood and agreed that the Maximum Amount of
any Lender will not be increased (or decreased except 

 

37

 

pursuant to Section 2.9(a) hereof)
without the prior written consent of such Lender.  Borrowers shall not request any increase in
the Total Commitment Amount pursuant to this Section 2.9(b) if a
Default or an Event of Default shall then exist, or immediately after giving
effect to any such increase (including a pro forma calculation of the financial
covenants 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 of
Credit fees, Related Expenses and commitment and other fees and charges
hereunder 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, interest
shall 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 calculated
for the actual number of days elapsed.

 

Section 2.11. 
Mandatory Payments.

 

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

 

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

 

(c)           Mandatory
Payments Generally.  Unless otherwise
designated by Administrative Borrower, each prepayment pursuant to subsection (a) hereof
shall be applied in the following order (i) first, to the outstanding Base
Rate Loans, and (ii) second, to the outstanding Eurodollar Loans, provided
that, in each case, if the outstanding principal amount of any Eurodollar Loan
shall be reduced to an amount less than the minimum amount set forth in Section 2.5(c) hereof
as a result of such prepayment, then such Eurodollar Loan shall be converted
into a Base Rate Loan on the date of such prepayment.  Any prepayment of a Eurodollar Loan or Swing
Loan pursuant to this Section 2.11 shall be subject to the prepayment
provisions set forth in Article III hereof.

 

Section 2.12.  Liability of Borrowers.

 

(a)           Joint and Several Liability.  Each
Borrower hereby authorizes Administrative Borrower or any other Borrower to
request Loans or Letters of Credit hereunder. 
Each Borrower acknowledges and agrees that Agent and the Lenders are
entering into this Agreement at the request of each Borrower and with the
understanding that each Borrower is and shall remain fully liable, jointly and
severally, for payment in full of the Obligations and any other amount
payable under this Agreement and the other Loan Documents.  Each
Borrower agrees that it is receiving or will receive a direct pecuniary benefit
for each Loan made or Letter of Credit issued hereunder.

 

38

 

(b)           Appointment of Administrative Borrower.  Each
Borrower hereby irrevocably appoints Administrative Borrower as the borrowing
agent and attorney-in-fact for all Borrowers, which appointment shall remain in
full force and effect unless and until Agent shall have received prior written
notice signed by each Borrower that such appointment has been revoked and that
another Borrower has been appointed Administrative Borrower.  Each Borrower hereby irrevocably appoints and
authorizes Administrative Borrower to (i) provide Agent with all notices
with respect to Loans and Letters of Credit obtained for the benefit of any
Borrower and all other notices and instructions under this Agreement, (ii) take
such action as Administrative Borrower deems appropriate on its behalf to
obtain Loans and Letters of Credit, and (iii) exercise such other powers
as are reasonably incidental thereto to carry out the purposes of this
Agreement.  It is understood that the
handling of the Collateral of Borrowers in a combined fashion, as more fully
set forth herein, is done solely as an accommodation to Borrowers in order to
utilize the collective borrowing powers of Borrowers in the most efficient and
economical manner and at their request, and that neither Agent nor any Lender
shall 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 combined
fashion since the successful operation of each Borrower is dependent on the
continued successful performance of the integrated group.

 

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

 

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

 

39

 

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

 

Section 2.13.  Addition of a Domestic Subsidiary Borrower
.

 

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

 

(i)            Domestic Subsidiary
Borrower Assumption Agreement.  Each
Borrower and such Domestic Subsidiary shall have delivered to Agent a fully
executed Domestic Subsidiary Borrower Assumption Agreement.  Agent is hereby authorized by the Lenders to
enter into such Domestic Subsidiary Borrower Assumption Agreement on behalf of
the Lenders.

 

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

 

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

 

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

 

(v)           Officer’s
Certificate, Resolutions, Organizational Documents.  Such Domestic Subsidiary shall have delivered
to Agent an officer’s certificate (or comparable domestic document) certifying
the names of the officers or members of such Domestic Subsidiary authorized to
sign the Loan Documents, together with the true signatures of such officers and
certified copies of (A) the resolutions of the board of directors (or
comparable documents) of such Domestic Subsidiary evidencing approval of the
execution and delivery of the Loan Documents and the execution of other Related

 

40

 

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

 

(vi)          Good Standing or Full
Force and Effect Certificates.  Such
Domestic Subsidiary shall have delivered to Agent a good standing certificate
or full force and effect certificate, as the case may be, for such Domestic
Subsidiary, issued on or about the date that such Domestic Subsidiary is to
become a Domestic Subsidiary Borrower hereunder, by the Secretary of State in
the state or states where such Domestic Subsidiary is incorporated or formed or
qualified as a foreign entity.

 

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

 

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

 

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

 

ARTICLE III.  ADDITIONAL
PROVISIONS RELATING TO

EURODOLLAR LOANS; INCREASED CAPITAL; TAXES

 

Section 3.1. 
Requirements of Law.

 

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

 

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

 

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

 

41

 

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

 

(C)           shall impose on such
Lender any other condition;

 

and the result of any of
the foregoing is to increase the cost to such Lender of making, converting
into, continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit, or to reduce any amount receivable hereunder in respect thereof,
then, in any such case, Borrowers shall pay to such Lender, promptly after
receipt of a written request (or, if required by Administrative Borrower, a
certificate of such Lender specifying the basis for such request) therefor, any
additional amounts necessary to compensate such Lender for such increased cost
or reduced amount receivable.  If any
Lender becomes entitled to claim any additional amounts pursuant to this
subsection (a), such Lender shall promptly notify Administrative Borrower (with
a copy to Agent) of the event by reason of which it has become so entitled.

 

(b)           If
any Lender shall have determined that, after the Closing Date, the adoption of
or any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof by a Governmental Authority or compliance
by such Lender or any corporation controlling such Lender with any request or
directive regarding capital adequacy (whether or not having the force of law)
from any Governmental Authority shall have the effect of reducing the rate of
return on such Lender’s or such corporation’s capital as a consequence of its
obligations hereunder, or under or in respect of any Letter of Credit, to a
level below that which such Lender or such corporation could have achieved but
for such adoption, change or compliance (taking into consideration the policies
of such Lender or corporation with respect to capital adequacy), then from time
to time, upon submission by such Lender to Administrative Borrower (with a copy
to Agent) of a written request therefor (which shall include the method for
calculating such amount in reasonable detail), Borrowers shall promptly pay or
cause to be paid to such Lender such additional amount or amounts as will
compensate such Lender for such reduction.

 

(c)           A
certificate as to any additional amounts payable pursuant to this Section 3.1
submitted by any Lender to Administrative Borrower (with a copy to Agent) shall
be conclusive absent manifest error.  In
determining any such additional amounts, such Lender may use any method of
averaging and attribution that it (in its sole discretion) shall deem
applicable.  The obligations of Borrowers
pursuant to this Section 3.1 shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.

 

(d)           Notwithstanding
the foregoing, no Lender shall be entitled to any indemnification or
reimbursement pursuant to this Section 3.1 to 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 giving rise to such entitlement or, if
later, such Lender having knowledge of such event.

 

42

 

Section 3.2.  Taxes.

 

(a)           All
payments made by any Credit Party under any Loan Document shall be made free
and clear of, and without deduction or withholding for or on account of any
Taxes or Other Taxes.  If any Taxes or
Other Taxes are required to be deducted or withheld from any amounts payable to
Agent or any Lender hereunder, the amounts so payable to Agent or such Lender
shall 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 the
amounts specified in the Loan Documents.

 

(b)           Whenever
any Taxes or Other Taxes are required to be withheld and paid by a Credit
Party, such Credit Party shall timely withhold and pay such taxes to the relevant
Governmental Authorities.  As promptly as
possible thereafter, such Credit Party shall send to Agent for its own account
or for the account of the relevant Lender, as the case may be, a certified copy
of an original official receipt received by such Credit Party showing payment
thereof or other evidence of payment
reasonably acceptable to Agent or such Lender.  If such Credit Party shall fail to pay any
Taxes or Other Taxes when due to the appropriate Governmental Authority or
fails to remit to Agent the required receipts or other required documentary
evidence, such Credit Party and Borrowers shall indemnify Agent and the
appropriate Lenders on demand for any incremental Taxes or Other Taxes paid or
payable by Agent or such Lender as a result of any such failure.

 

(c)           If
any Lender shall be so indemnified by a Credit Party, such Lender shall use
reasonable efforts to obtain the benefits of any refund, deduction or credit
for any taxes or other amounts with respect to the amount paid by such Credit
Party and shall reimburse such Credit Party to the extent, but only to the
extent, that such Lender shall receive a refund with respect to the amount paid
by such Credit Party or an effective net reduction in taxes or other
governmental charges (including any taxes imposed on or measured by the total
net income of such Lender) of the United States or any state or subdivision or
any other Governmental Authority thereof by virtue of any such deduction or
credit, after first giving effect to all other deductions and credits otherwise
available to such Lender.  If, at the
time any audit of such Lender’s income tax return is completed, such Lender
determines, based on such audit, that it shall not have been entitled to the
full amount of any refund reimbursed to such Credit Party as aforesaid or that
its net income taxes shall not have been reduced by a credit or deduction for
the full amount reimbursed to such Credit Party as aforesaid, such Credit
Party, upon request of such Lender, shall promptly pay to such Lender the
amount so refunded to which such Lender shall not have been so entitled, or the
amount by which the net income taxes of such Lender shall not have been so
reduced, as the case may be.

 

(d)           Each
Lender that is not (i) a citizen or resident of the United States of
America, (ii) a corporation, partnership or other entity created or
organized in or under the laws of the United States of America (or any
jurisdiction thereof), or (iii) an estate or trust that is subject to
federal income taxation regardless of the source of its income (any such
Person, a “Non-U.S. Lender”) shall deliver to Administrative Borrower and Agent
two copies of either U.S. Internal Revenue Service Form W-8BEN, Form W-8IMY
or Form W-8ECI, or, in the case of a Non-U.S. Lender claiming exemption
from U.S. federal withholding tax under Section 871(h) or 881(c) of
the Code with respect to payments of “portfolio interest”, a statement with
respect to such interest and two copies of Form W-8BEN, or any subsequent
versions thereof or successors 

 

43

 

thereto, properly completed and duly executed by such Non-U.S. Lender
claiming complete exemption from, or a reduced rate of, U.S. federal
withholding tax on all payments by Credit Parties under this Agreement and the
other Loan Documents.  Such forms shall
be delivered by each Non-U.S. Lender on or before the date it becomes a party
to this Agreement or such other Loan Document. 
In addition, each Non-U.S. Lender shall deliver such forms or
appropriate replacements promptly upon the expiration, obsolescence or
invalidity of any form previously delivered by such Non-U.S. Lender.  Each Non-U.S. Lender shall promptly notify
Administrative Borrower at any time it determines that such Lender is no longer
in a position to provide any previously delivered certificate to Administrative
Borrower (or any other form of certification adopted by the U.S. taxing
authorities 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) that
such Non-U.S. Lender is not legally able to deliver.

 

(e)           The
agreements in this Section 3.2 shall survive the termination of the Loan
Documents and the payment of the Loans and all other amounts payable hereunder.

 

(f)            For
any period with respect to which a Non-U.S. Lender has failed to provide
Borrowers with the appropriate form, statement or other document described in
subsection (d) above (other than if such failure is due to a change in
law, or in the interpretation or application thereof, occurring subsequent to
the 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 States
solely by reason of such failure.

 

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

 

Section 3.3. 
Funding Losses.  Borrowers
agree to indemnify each Lender, promptly after receipt of a written, reasonably
detailed certification and request therefor, and to hold each Lender harmless
from, any loss or expense that such Lender may sustain or incur as a
consequence of (a) default by a Borrower in making a borrowing of,
conversion into or continuation of Eurodollar Loans after such Borrower has
given a notice requesting the same in accordance with the provisions of this
Agreement, (b) default by a Borrower in making any prepayment of or conversion
from Eurodollar Loans after such Borrower has given a notice thereof in
accordance with the provisions of this Agreement, (c) the making of a
prepayment of a Eurodollar Loan on a day that is not the last day of an
Interest Period applicable thereto, or (d) any conversion of a Eurodollar
Loan to a Base Rate Loan on a day that is not the last day of an Interest
Period applicable thereto.  Such
indemnification shall be in an amount equal to the excess, if any, of (i) the
amount of interest that would have accrued on the amounts so prepaid, or not so
borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
such Interest Period (or, in the case of a failure to borrow, convert or
continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Loans
provided for herein (excluding, however, the Applicable Margin included
therein, if any) over (ii) the 

 

44

 

amount of interest (as reasonably determined by such Lender) that would
have accrued to such Lender on such amount by placing such amount on deposit
for a comparable period with leading banks in the appropriate London interbank
market, along with any administration fee charged by such Lender.  A certificate as to any amounts payable
pursuant to this Section 3.3 submitted to Administrative Borrower (with a
copy to Agent) by any Lender shall be conclusive absent manifest error.  The obligations of Borrowers pursuant to this
Section 3.3 shall survive the termination of this Agreement and the
payment of the Loans and all other amounts payable hereunder.  Notwithstanding the foregoing, no Lender shall
be entitled to any indemnification or reimbursement pursuant to this Section 3.3
to 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 giving
rise to such entitlement or, if later, such Lender having knowledge of such
event.

 

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

 

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

 

(a)           If
any Lender shall reasonably determine (which determination shall, upon notice
thereof to Administrative Borrower and Agent, be conclusive and binding on
Borrowers) that, after the Closing Date, (i) the introduction of or any
change in or in the interpretation of any law makes it unlawful, or (ii) any
Governmental Authority asserts that it is unlawful, for such Lender to make or
continue 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, be
suspended until such Lender shall notify Agent that the circumstances causing
such suspension no longer exist, and all outstanding Eurodollar Loans payable
to such Lender shall automatically convert (if conversion is permitted under
this Agreement) into a Base Rate Loan, or be repaid (if no conversion is
permitted) at the end of the then current Interest Periods with respect thereto
or sooner, if required by law or such assertion.

 

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

 

45

 

may revoke any pending request for a borrowing of, conversion to or
continuation of such Eurodollar Loan or, failing that, will be deemed to have
converted such request into a request for a borrowing of a Base Rate Loan in
the amount specified therein.

 

Section 3.6. 
Replacement of Lenders. 
Administrative Borrower shall be permitted to replace any Lender that
requests 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 3.5
hereof; provided that (a) such replacement does not conflict with any
Requirement of Law, (b) no Default or Event of Default shall have occurred
and be continuing at the time of such replacement, (c) prior to any such
replacement, such Lender shall have taken no action under Section 3.4
hereof so as to eliminate the continued need for payment of amounts owing
pursuant 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 financial
institution shall purchase, at par, all Loans and other amounts owing to such
replaced Lender on or prior to the date of replacement and assume all
commitments and obligations of such replaced Lender, (e) the appropriate
Borrowers shall be liable to such replaced Lender under Section 3.3 hereof
if any Eurodollar Loan owing to such replaced Lender shall be purchased other
than on the last day of the Interest Period relating thereto, (f) the replacement
Lender, if not already a Lender, shall be reasonably satisfactory to Agent, (g) the
replaced Lender shall be obligated to make such replacement in accordance with
the provisions of Section 11.10 hereof (provided that Borrowers (or the
succeeding Lender, if such Lender is willing) shall be obligated to pay the
assignment fee referred to therein), and (h) until such time as such
replacement shall be consummated, the appropriate Borrowers shall pay all
additional 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 this
Agreement to the contrary, each Lender shall be entitled to fund and maintain
its funding of all or any part of such Lender’s Loans in any manner such Lender
deems to be appropriate; it being understood, however, that for the purposes of
this Agreement all determinations hereunder shall be made as if such Lender had
actually funded and maintained each Eurodollar Loan during the applicable
Interest Period for such Loan through the purchase of deposits having a
maturity corresponding to such Interest Period and bearing an interest rate
equal 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 Line
Lender to participate in any Credit Event shall be conditioned, in the case of
each Credit Event, upon the following:

 

(a)           all
conditions precedent as listed in Section 4.2 hereof required to be
satisfied prior to the first Credit Event shall have been satisfied prior to or
as of the first Credit Event;

 

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

 

46

 

(c)           no
Default or Event of Default shall then exist or immediately after such Credit
Event would exist;

 

(d)           no
condition or event shall have occurred that Agent or the Required Lenders
determine has or is reasonably likely to have a Material Adverse Effect; and

 

(e)           each
of the representations and warranties contained in Article VI hereof shall
be true in all material respects as if made on and as of the date of such
Credit Event, except to the extent that any thereof expressly relate to an
earlier date.

 

Each request by Administrative Borrower or any other Borrower for a
Credit Event shall be deemed to be a representation and warranty by Borrowers
as of the date of such request as to the satisfaction of the conditions
precedent 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 or
prior to the Closing Date.  The
obligation of the Lenders, the Fronting Lender and the Swing Line Lender to
participate in the first Credit Event is subject to Borrowers satisfying each
of the following conditions prior to or concurrently with such Credit Event
(unless waived in writing by Agent):

 

(a)           Notes
as Requested.  Each Borrower shall
have executed and delivered to (i) each Lender requesting a Revolving
Credit Note such Lender’s Revolving Credit Note, and (ii) the Swing Line
Lender the Swing Line Note, if requested by the Swing Line Lender.

 

(b)           Guaranties
of Payment.  Each Guarantor of
Payment shall have executed and delivered to Agent a Guaranty of Payment, in
form and substance reasonably satisfactory to Agent and the Lenders.

 

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

 

(d)           Pledge
Agreements.  Each Credit Party that
has a Subsidiary shall have executed and delivered to Agent, for the benefit of
the Lenders, a Pledge Agreement, in form and substance satisfactory to Agent,
with respect to the Pledged Securities, together with the Pledged Securities referenced
therein and appropriate stock powers.

 

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

 

47

 

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

 

(f)            Control
Agreements.  Borrowers shall have delivered
to Agent a Control Agreement, in form and substance reasonably satisfactory to
Agent, for each Deposit Account or securities account maintained by a Credit
Party (other than the securities account of EPIQ (#48604181) held at Silicon
Valley Bank), unless (i) a Control Agreement was already provided for such
deposit account prior to the Closing Date, or (ii) otherwise agreed to by
Agent.

 

(g)           Real
Estate Matters.  With respect to each
parcel of the Real Property owned by a Credit Party, Borrowers shall have
delivered to Agent:

 

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

 

(ii)           two fully executed
originals of each Mortgage Amendment; and

 

(iii)          with respect to each
parcel of the Real Property, an updated loan policy of title insurance
reasonably acceptable to Agent.

 

(h)           Lien
Searches.  With respect to the
property owned or leased by each Credit Party and any other property securing
the Obligations, Borrowers shall have caused to be delivered to Agent (i) the
results of Uniform Commercial Code
lien searches, satisfactory to Agent and the Lenders, (ii) the results of
federal and state tax lien and judicial lien searches, satisfactory to Agent
and the Lenders, and (iii) Uniform
Commercial Code termination statements reflecting termination of all
U.C.C. Financing Statements previously filed by any Person and not expressly
permitted pursuant to Section 5.9 hereof.

 

(i)            Officer’s
Certificate, Resolutions, Organizational Documents.  Each Credit Party shall have delivered to
Agent an officer’s certificate (or comparable domestic or foreign documents)
certifying the names of the officers of such Credit Party authorized to sign
the Loan Documents, together with the true signatures of such officers and
certified copies of (i) the resolutions of the board of directors (or
comparable domestic or foreign documents) of such Credit Party evidencing
approval of the execution and delivery of the Loan Documents and the execution
of other Related Writings to which such Credit Party is a party, and (ii) the
Organizational Documents of such Credit Party.

 

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

 

(k)           Legal
Opinion.  Borrowers shall have
delivered to Agent an opinion of counsel for each Credit Party, in form and
substance reasonably satisfactory to Agent and the Lenders.

 

48

 

(l)            Insurance
Certificate.  Borrowers shall have
delivered to Agent evidence of insurance on ACORD 25 and 27 or 28 form, and
otherwise reasonably satisfactory to Agent and the Lenders, of adequate real
property, personal property and liability insurance of each Company, with
Agent, on behalf of the Lenders, listed as mortgagee loss payee and additional
insured, as appropriate.

 

(m)          Advertising
Permission Letter.  Borrowers shall
have delivered to Agent an advertising permission letter, authorizing Agent to
publicize the transaction and specifically to use the names of Borrowers in
connection with “tombstone” advertisements in one or more publications selected
by Agent.

 

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

 

(o)           Closing
Certificate.  Borrowers shall have
delivered to Agent and the Lenders an officer’s certificate certifying that, as
of the Closing Date, (i) all conditions precedent set forth in this Article IV
have been satisfied, (ii) no Default or Event of Default exists nor
immediately after the first Credit
Event will exist, and (iii) each of the representations and
warranties contained in Article VI hereof are true and correct in all
material respects as of the Closing Date.

 

(p)           Letter
of Direction.  Borrowers shall have
delivered to Agent a letter of direction authorizing Agent, on behalf of the
Lenders, to disburse the proceeds of the Loans, which letter of direction
includes the authorization to transfer funds under this Agreement and the wire
instructions that set forth the locations to which such funds shall be sent.

 

(q)           Designation
of Senior Indebtedness; Convertible Subordinated Documents.  Borrowers shall, on the Closing Date, deliver
to Agent, for the benefit of the Lenders, (i) written confirmation (in
form and substance reasonably satisfactory to Agent) that EPIQ shall have given
written notice to each Convertible Subordinated Noteholder that the Secured
Obligations are being designated as Senior Indebtedness (as defined in the
Convertible Subordinated Notes), and (ii) a copy of the Convertible
Subordinated Documents, certified by an officer of EPIQ as being true and
complete as of the Closing Date.

 

(r)            No
Material Adverse Change.  No material
adverse change, in the opinion of Agent, shall have occurred in the financial
condition, operations or prospects of the Companies since March 31, 2008.

 

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

 

49

 

ARTICLE V.  COVENANTS

 

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

 

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

 

Section 5.3. 
Financial Statements and Information.

 

(a)           Quarterly
Financials.  Borrowers shall deliver
to Agent, within forty-five (45) days after the end of each of the first three
quarterly periods of each fiscal year of EPIQ, balance sheets of the Companies
as 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, all
prepared on a Consolidated basis, in accordance with GAAP, and certified by a
Financial Officer.

 

(b)           Annual
Audit Report.  Borrowers shall
deliver to Agent, within ninety (90) days after the end of each fiscal year of
EPIQ, an annual audit report of the Companies for that year prepared on a
Consolidated basis, in accordance with GAAP, and certified by an opinion (which
shall be unqualified as to going concern or scope (other than a qualification
relating to the refinancing of the Convertible Subordinated Indebtedness)) of
an independent nationally recognized public accountant or a public accountant
certified by the Public Company Accounting Oversight Board, which report shall
include balance sheets and statements of income (loss), stockholders’ equity
and cash-flow for that period.

 

(c)           Compliance Certificate.  Borrowers
shall deliver to Agent, concurrently with the delivery of the financial
statements set forth in subsections (a) and (b) above, a Compliance
Certificate.

 

(d)           Management
Report.  Borrowers shall deliver to
Agent, concurrently with the delivery of the quarterly and annual financial
statements set forth in subsections (a) and (b) above, a copy of any
management report, letter or similar writing furnished to the Companies by 

 

50

 

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

 

(e)           Annual
Budget.  Borrowers shall deliver to
Agent, within thirty (30) days after the end of each fiscal year of EPIQ, an
annual budget of the Companies for the then current fiscal year, to be in form
and detail reasonably satisfactory to Agent.

 

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

 

(g)           Financial
Information of Companies. 
Administrative Borrower shall use commercially reasonable efforts to
deliver to Agent, within ten days of the written request of Agent or any
Lender, such other information about the financial condition, properties and
operations of any Company as Agent or such Lender may from time to time
reasonably request, which information shall be submitted in form and detail
reasonably satisfactory to Agent or such Lender.

 

Section 5.4. 
Financial Records.  Each
Company shall at all times maintain records and books of account, which are
true and correct in all material respects, including, without limiting the
generality of the foregoing, appropriate provisions for possible losses and
liabilities, all in accordance with GAAP, and at all reasonable times (during
normal business hours and upon reasonable notice to such Company) permit Agent,
or any representative of Agent, to examine such Company’s books and records and
to make excerpts therefrom and transcripts thereof; provided that, except
during the continuance of an Event of Default, such examinations shall be
limited to one per year.

 

Section 5.5. 
Franchises; Change in Business.

 

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

 

(b)           No
Company shall engage in any business if, as a result thereof, the general
nature of the business of the Companies taken as a whole would be substantially
changed from the general nature of the business the Companies are engaged in on
the Closing Date.

 

Section 5.6.  ERISA Pension and Benefits Plan Compliance.  Except to the extent a failure to comply
would reasonably be expected to result in a Material Adverse Effect, no
Company shall incur any accumulated funding deficiency within the meaning of
ERISA, or any liability to the PBGC, established thereunder in connection with
any ERISA Plan.  Borrowers shall furnish
to Agent and the Lenders (a) as soon as possible and in any event within
thirty (30) 

 

51

 

days after any Company knows or has reason to know that any Reportable
Event with respect to any ERISA Plan has occurred, a statement of a Financial
Officer of such Company, setting forth details as to such Reportable Event and
the action that such Company proposes to take with respect thereto, together
with a copy of the notice of such Reportable Event given to the PBGC if a copy
of such notice is available to such Company, and (b) promptly after
receipt thereof, a copy of any notice such Company, or any member of the Controlled
Group may receive from the PBGC or the Internal Revenue Service with respect to
any ERISA Plan administered by such Company; provided, that this latter clause
shall not apply to notices of general application promulgated by the PBGC or
the Internal Revenue Service.  Borrowers
shall promptly notify Agent of any material taxes assessed, proposed to be
assessed or that Borrowers have reason to believe may be assessed against a
Company 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 being
an amount equal to five percent (5%) of Consolidated Net Worth.  As soon as practicable, and in any event
within twenty (20) days, after any Company shall become aware that an ERISA
Event shall have occurred that could reasonably be expected to result in a
Material Adverse Effect, such Company shall provide Agent with notice of such
ERISA Event with a certificate by a Financial Officer of such Company setting
forth the details of the event and the action such Company or another
Controlled Group member proposes to take with respect thereto.  Borrowers shall, at the reasonable request of
Agent, deliver or cause to be delivered to Agent true and correct copies of any
documents relating to the ERISA Plan of any Company.

 

Section 5.7. 
Financial Covenants.

 

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

 

(b)           Fixed
Charge Coverage Ratio.  Borrowers
shall not suffer or permit at any time the Fixed Charge Coverage Ratio to be
less than 1.25 to 1.00.

 

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

 

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

 

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

 

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

 

52

 

(c)           the
Indebtedness existing on the Closing Date, in addition to the other
Indebtedness permitted to be incurred pursuant to this Section 5.8, as set
forth in Schedule 5.8 hereto (and any extension, renewal or refinancing
thereof but only to the extent that the principal amount thereof does not
increase after the Closing Date);

 

(d)           loans
to, and guaranties of Indebtedness of, a Company from a Company so long as each
such Company is a Credit Party;

 

(e)           Indebtedness
under any Hedge Agreement, so long as such Hedge Agreement shall have been
entered into in the ordinary course of business and not for speculative
purposes;

 

(f)            Permitted
Foreign Subsidiary Loans and Investments;

 

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

 

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

 

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

 

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

 

(a)           Liens
for taxes not yet due or that are being actively contested in good faith by
appropriate proceedings and for which adequate reserves shall have been
established in accordance with GAAP;

 

(b)           other
statutory or common law Liens incidental to the conduct of its business or the
ownership of its property and assets that (i) were incurred in the
ordinary course of business, (ii) were not incurred in connection with the
borrowing of money or the obtaining of advances or credit, and (iii) do
not in the aggregate materially detract from the value of its property or
assets or materially impair the use thereof in the operation of its business;

 

53

 

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

 

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

 

(e)           the
Liens existing on the Closing Date as set forth in Schedule 5.9 hereto
and replacements, extensions, renewals, refundings or refinancings thereof, but
only to the extent that the amount of debt secured thereby shall not be
increased;

 

(f)            purchase
money Liens on fixed assets securing the loans and Capitalized Lease
Obligations pursuant to Section 5.8(b) hereof, provided that such
Lien is limited to the purchase price (including shipping costs and taxes) and
only attaches to the property being acquired;

 

(g)           easements
or other minor defects or irregularities in title of real property not
interfering in any material respect with the use of such property in the
business of any Company;

 

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

 

(i)            Liens
of a broker or depository institution encumbering deposit, margin, commodity
trading or brokerage accounts held by such broker or depository institution
incurred in the ordinary course of business;

 

(j)            Liens
on 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 Million
Dollars ($1,000,000); or

 

(k)           other
Liens, in addition to the Liens listed above, securing amounts, in the
aggregate 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 a
contract or agreement entered into in connection with Indebtedness permitted
pursuant to Section 5.8(h) hereof, the purchase or lease of fixed
assets that prohibits Liens on such fixed assets or intellectual property
licensing agreements) that would prohibit Agent or the Lenders from acquiring a
security 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.  No
Company shall take any action that would result in any non-compliance of the
Loans or Letters of Credit with Regulations T, U or X, or any other applicable
regulation, of the Board of Governors of the Federal Reserve System.

 

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

 

54

 

outstanding any advance or loan to any Person (other than accounts
receivable incurred in the ordinary course of business), or (e) be or
become 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 a
check or other medium of payment for deposit or collection through normal
banking channels or similar transaction in the normal course of business;

 

(ii)           investments of the
Companies in Cash Equivalents;

 

(iii)          investments in, loans to
and 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 Credit
Party;

 

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

 

(v)           any Permitted
Investments or Permitted Foreign Subsidiary Loans and Investments, so long as
no Default or Event of Default shall exist prior to of after giving effect to
such loan or investment;

 

(vi)          the purchase or holding
of any stock or other equity interest that has been acquired pursuant to an
Acquisition permitted by Section 5.13 hereof;

 

(vii)         any advance or loan to an
officer or employee of a Company made in the ordinary course of such Company’s
business, so long as all such advances and loans from all Companies aggregate
not more than the maximum principal sum of One Hundred Thousand Dollars
($100,000) at any time outstanding;

 

(viii)        any securities (whether
debt or equity) received by a Company in the ordinary course of business in
connection with the bankruptcy or reorganization of any customer or supplier of
such Company;

 

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

 

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

 

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

 

55

 

For purposes of this Section 5.11,
the amount of any investment in equity interests shall be based upon the
initial amount invested and shall not include any appreciation in value or
return on such investment but shall take into account repayments, redemption
and 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 Person
other than in the ordinary course of business, except that, if no Default or
Event of Default shall then exist or immediately thereafter shall begin to
exist:

 

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

 

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

 

(c)           any
Company may sell, lease, transfer or otherwise dispose of any of its assets to (i) a
Borrower, (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 no
longer used in such Company’s business for fair market value, as determined by
the board of directors of EPIQ;

 

(e)           any
sale or other Disposition (including cancellation of Indebtedness) of Cash
Equivalents or non-core assets acquired pursuant to Acquisitions) in the
ordinary course of business for fair market value, as determined by the board
of directors of EPIQ; or

 

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

 

Section 5.13. 
Acquisitions.  No Company
shall effect an Acquisition; provided that a Credit Party may effect an
Acquisition with the prior written consent of the Required Lenders or so long
as:

 

(a)           in
the 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 a
surviving entity);

 

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

 

(c)           the
business to be acquired shall be reasonably similar to that of the Credit
Parties or a reasonable extension thereof;

 

56

 

(d)           Borrowers
shall have provided to Agent and the Lenders, at least ten Business Days prior
to such Acquisition (or, if the aggregate Consideration paid for such
Acquisition is less than Fifteen Million Dollars ($15,000,000), within five
Business Days after the completion of such Acquisition), historical financial
statements of the target entity and a pro forma financial statement of the
Companies accompanied by a certificate of a Financial Officer of EPIQ showing (i) pro
forma compliance with Sections 5.7 and 5.13(g) through (j) hereof,
both before and after the proposed Acquisition, (it being understood that, in
the calculation of Fixed Charge Coverage Ratio, (A) the EBITDA of the
business to be acquired shall be included in Consolidated EBITDA as if the
Acquisition had been completed on the first day of the measurement period, (B) Consolidated
Interest Expense shall be recalculated as if any debt incurred or assumed as a
result 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 the
calculation of Fixed Charge Coverage Ratio, and (ii) positive EBITDA for
the acquired entity during the most recently completed four fiscal quarters of
such entity;

 

(e)           no
Default or Event of Default shall exist prior to or after giving effect to such
Acquisition;

 

(f)            such
Acquisition is not actively opposed by the board of directors (or similar
governing body) of the selling Persons or the Persons whose equity interests
are to be acquired;

 

(g)           Borrowers
shall have Liquidity of no less than Ten Million Dollars ($10,000,000) after
giving effect to such Acquisition;

 

(h)           the
aggregate amount of (i) cash Consideration (exclusive of the issuance of
equity) paid for any such Acquisition (or related series of Acquisitions) would
not exceed Eighty Million Dollars ($80,000,000), and (ii) Consideration
paid for any such Acquisition (or related series of Acquisitions) would not
exceed One Hundred Twenty-Five Million Dollars ($125,000,000);

 

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

 

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

 

Section 5.14. 
Notice.

 

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

 

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

 

57

 

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

 

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

 

(b)           Borrowers
shall provide written notice to Agent and the Lenders contemporaneously with
any notice provided to the Convertible Subordinated Noteholders under any of
the Convertible Subordinated Documents.

 

Section 5.15. 
Restricted Payments.  No
Company shall make or commit itself to make any Restricted Payment at any time,
except that:

 

(a)           so
long as no Default or Event of Default shall then exist or, after giving
proforma effect to such payment, thereafter shall begin to exist, any Company
may make Capital Distributions; and

 

(b)           so
long as no Default or Event of Default shall then exist or, after giving
proforma effect to such payment, thereafter shall begin to exist, EPIQ may:

 

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

 

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

 

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

 

Section 5.16.  Environmental
Compliance.  Each Company
shall comply in all material respects with any and all material Environmental
Laws including, without limitation, all Environmental Laws in jurisdictions in
which such Company owns or operates a facility or site, arranges for disposal
or treatment of hazardous substances, solid waste or other wastes, accepts for
transport any hazardous substances, solid waste or other wastes or holds any
interest in real property or otherwise. 
Borrowers shall furnish to Agent and the Lenders, promptly after receipt
thereof, a copy of any notice such Company may receive from any Governmental
Authority or private Person, or otherwise, that any material litigation or
proceeding pertaining to any environmental, health or safety matter has been
filed or is threatened against such Company, any real property in which such
Company holds any interest or any past or present operation of such
Company.  No Company shall allow the
release or disposal of hazardous waste, solid waste or other wastes on, under
or to any real property in which any Company holds any interest or performs any
of its operations, in material violation of any material Environmental
Law.  As used in this Section 5.16, “litigation
or proceeding” means any demand, claim, notice, suit, suit 

 

58

 

in equity action,
administrative action, investigation or inquiry whether brought by any
Governmental Authority or private Person, or otherwise.  Each Borrower shall defend, indemnify and
hold 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 noncompliance
of any Company with any Environmental Law. 
Such indemnification shall survive any termination of this Agreement.

 

Section 5.17.  Affiliate Transactions.  No Company shall, directly or
indirectly, enter into or permit to exist any transaction (including, without
limitation, the purchase, sale, lease or exchange of any property or the
rendering of any service) with any Affiliate (other than a Company that is a
Credit Party or a Foreign Subsidiary) on terms that shall be less favorable to
such Company than those that might be obtained at the time in a transaction
with a non-Affiliate; provided that the foregoing shall not prohibit (a) the
payment of customary and reasonable directors’ fees, (b) the payment of reasonable
compensation and expense reimbursement to officers and employees for service
actually rendered to any such Company, (c) indemnities and reimbursement
paid to directors, (d) stock option and compensation plans of the
Companies, (e) employment contracts with officers and management of the
Companies, (f) transactions among Companies, (g) the repurchase of
equity interests from former officers, directors and employees to the extent
permitted by this Agreement, (h) advances and loans to officers and
employees of the Companies to the extent permitted by this Agreement, and (i) other
transactions 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 general
corporate purposes (including Acquisitions) of the Companies and for the
refinancing of existing Indebtedness.

 

Section 5.19. 
Corporate Names and Locations of Collateral.  No Company shall change its corporate name or
its state, province or other jurisdiction of organization, unless, in each
case, 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 Lenders
of (a) any material change in any location where any Company’s Inventory
or Equipment is maintained, and any new locations where any material portion of
any Credit Party’s Inventory or Equipment is to be maintained; (b) any
change in the location of the office where any Company’s records pertaining to
its Accounts are kept; (c) the location of any new places of business and
the changing or closing of any of its existing places of business; and (d) any
change in the location of any Company’s chief executive office.  In the event of any of the foregoing or if
deemed appropriate by Agent, Agent is hereby authorized to file new U.C.C.
Financing Statements describing the Collateral and otherwise in form and
substance sufficient for recordation wherever necessary or appropriate, as
determined in Agent’s sole discretion, to perfect or continue perfected the
security interest of Agent, for the benefit of the Lenders, in the
Collateral.  Borrowers shall pay all
filing and recording fees and taxes in connection with the filing or
recordation of such U.C.C. Financing Statements and security interests and
shall promptly reimburse Agent therefor if Agent pays the same.  Such amounts shall be Related Expenses
hereunder.

 

59

 

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

 

(a)           Guaranties
and Security Documents.  Each
Domestic Subsidiary (that is not a Dormant Subsidiary) created, acquired or
held subsequent to the Closing Date, shall promptly execute and deliver to
Agent, for the benefit of the Lenders, a Guaranty of Payment of all of the
Obligations and a Security Agreement and Mortgages, as appropriate, such
agreements to be in form and substance reasonably acceptable to Agent, along
with any such other supporting documentation, Security Documents, corporate
governance and authorization documents, and an opinion of counsel as may be
deemed necessary or advisable by Agent. 
At such time that a Subsidiary (that has been classified as a Dormant
Subsidiary) 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 documents
referenced in the foregoing sentence.

 

(b)           Pledge
of Stock or Other Ownership Interest. 
With respect to the creation or acquisition of a Domestic Subsidiary or
first-tier Foreign Subsidiary of a Borrower, Borrowers shall deliver to Agent,
for the benefit of the Lenders, all of the share certificates (or other
evidence of equity) owned by a Credit Party pursuant to the terms of a Pledge
Agreement executed by the appropriate Credit Party; provided that (i) no
Company shall be required to pledge more than sixty-five percent (65%) of the
outstanding voting shares or other voting ownership interest of any Foreign
Subsidiary, and (ii) if Agent, in its reasonable discretion, after
consultation with Administrative Borrower, determines that the cost of delivery
of any such share certificates is impractical or cost-prohibitive, then Agent
may agree to forego (until such time as Agent determines it is practical to do
so) the delivery of such share certificates.

 

(c)           Perfection
or Registration of Interest in Foreign Shares.  With respect to any foreign shares pledged to
Agent, for the benefit of the Lenders, on or after the Closing Date, Agent
shall at all times, in the discretion of Agent or the Required Lenders, have
the 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 in
such shares in the respective foreign jurisdiction.

 

Section 5.21. 
Restrictive Agreements. 
Except as set forth in this Agreement, Borrowers shall not, and shall
not permit any of their Subsidiaries to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any Subsidiary to (a) make, directly or
indirectly, any Capital Distribution to such Borrower, (b) make, directly
or 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 to
such Borrower; except for such encumbrances or restrictions existing under or
by reason of (i) applicable law, (ii) non-assignment provisions in
leases or other agreements entered in the ordinary course of business, or (iii) customary
restrictions in security agreements or mortgages securing Indebtedness or
capital leases, of a Company to the extent such restrictions shall only
restrict the transfer of the property subject to such security agreement,
mortgage or lease.

 

60

 

 

Section 5.22. 
Other Covenants.  In the
event that any Company shall enter into, or shall have entered into, the Note
Agreement (or the Convertible Subordinated Documents), or any agreement
evidencing Indebtedness of any Company or the Companies in excess of the amount
of Ten Million Dollars ($10,000,000) wherein the covenants contained therein
shall be more restrictive than the covenants set forth herein, then the
Companies shall be bound hereunder by such more restrictive covenants with the
same force and effect as if such covenants were written herein.

 

Section 5.23. 
Note Agreement.

 

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

 

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

 

(c)           Senior
Indebtedness.  The Secured
Obligations shall at all times constitute indebtedness permitted under the
terms of the Convertible Subordinated Documents and “Senior Indebtedness”, as
defined in the Convertible Subordinated Documents, and permitted to be secured
under the Convertible Subordinated Documents.

 

(d)           Subordinated
Indebtedness.  The Secured
Obligations shall at all times constitute senior indebtedness which is entitled
to the benefits of the subordination provisions of all outstanding Subordinated
Indebtedness, including, but not limited to, the Convertible Subordinated
Indebtedness.

 

Section 5.24. 
Collateral.  Each Borrower
shall:

 

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

 

(b)           use
commercially reasonable efforts to promptly furnish to Agent or any Lender upon
reasonable request (i) additional statements and information with respect
to the Collateral, and all writings and information relating to or evidencing
any of such Borrower’s Accounts (including, without limitation, computer
printouts or typewritten reports listing the mailing addresses of all present
Account Debtors), and (ii) any other writings and information as Agent or
such Lender may reasonably request;

 

61

 

(c)           with
respect to the securities account of EPIQ (#48604181) held at Silicon Valley
Bank, promptly cause to be delivered to Agent a Control Agreement with respect
thereto if at any time (i) the Leverage Ratio is equal to or greater than
2.50 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 but
greater than or equal to 2.00 to 1.00, and the balance in such account exceeds
Ten Million Dollars ($10,000,000);

 

(d)           notify
Agent in writing promptly upon the creation by any Company of a Deposit Account
not listed on Schedule 6.19 hereto and provide for the execution of a
Control Agreement with respect thereto, if required by Agent;

 

(e)           promptly
notify Agent and the Lenders in writing of any information that Borrowers have
or may receive with respect to the Collateral or the Real Property that might
reasonably be determined to materially and adversely affect the value thereof
or the rights of Agent and the Lenders with respect thereto;

 

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

 

(g)           deliver to Agent, to
hold as security for the Secured Obligations, within ten Business Days after
the written request of Agent, all certificated Investment Property owned by a
Credit Party, in suitable form for transfer by delivery, or accompanied by duly
executed instruments of transfer or assignment in blank, all in form and
substance reasonably satisfactory to Agent, or in the event such Investment
Property is in the possession of a securities intermediary or credited to a
securities account, execute with the related securities intermediary an
investment property control agreement over such securities account in favor of
Agent, for the benefit of the Lenders, in form and substance reasonably
satisfactory to Agent;

 

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

 

(i)            upon
the 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 reasonably
deem necessary or appropriate, including, without limitation, chattel paper, to
carry into effect the intention of this Agreement, or so as to completely vest
in and ensure to Agent and the Lenders their respective rights hereunder and in
or to the Collateral and the Real Property.

 

Each Borrower hereby
authorizes Agent, on behalf of the Lenders, to file U.C.C. Financing Statements
with respect to the Collateral.  All
Related Expenses are payable to Agent within thirty (30) days after demand
therefor; after the occurrence of an Event of Default, Agent may, at its
option, debit Related Expenses directly to any deposit account of a Company
located at Agent or the Loans.

 

62

 

Section 5.25. 
Property Acquired Subsequent to the Closing Date and Right to Take Additional
Collateral.  Borrowers shall provide
Agent with prompt written notice with respect to any real property acquired by
any Company subsequent to the Closing Date with an individual value in excess
of One Million Dollars ($1,000,000).  In
addition to any other right Agent and the Lenders may have pursuant to this
Agreement or otherwise, upon written request of Agent, whenever made, Borrowers
shall grant to Agent as additional security for the Secured Obligations, a Lien
on such real property of each Borrower. 
Borrowers agree, promptly after the date of such written request, to
secure all of such Indebtedness by delivering to Agent security agreements,
mortgages (or deeds of trust, if applicable) or other documents, instruments or
agreements or such thereof as Agent may require.  In addition, if any Subsidiary acquires any
federally registered intellectual property (including, without limitation, any
patents, 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 Subsidiary
shall promptly execute and deliver an Intellectual Property Collateral
Assignment Agreement with respect to such federally registered intellectual
property.  Borrowers shall pay all
recordation, legal and other expenses in connection therewith.

 

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

 

Section 5.27.  Amendment of Organizational Documents.  No Company shall amend its Organizational
Documents to change its name or state, province or other jurisdiction of
organization, or otherwise amend its Organizational Documents in any manner
adverse 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 Lenders
through Agent, (a) correct any material defect or error that may be
discovered in any Loan Document or in the execution, acknowledgment, filing or
recordation thereof, and (b) do, execute, acknowledge, deliver, record,
re-record, file, re-file, register and re-register any and all such further
acts, deeds, certificates, assurances and other instruments related to the
Collateral as Agent, or the Required Lenders through Agent, may reasonably
require from time to time in order to carry out more effectively the purposes
of the Loan Documents.

 

ARTICLE VI.  REPRESENTATIONS AND WARRANTIES

 

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

 

63

 

Schedule 6.1 hereto sets forth, as
of the Closing Date, each Subsidiary of a Borrower (and whether such Subsidiary
is a Dormant Subsidiary), its state (or jurisdiction) of formation, its
relationship to a Borrower, including the percentage of each class of stock or
other equity interest owned by a Company, the location of its chief executive
office and its principal place of business. 
Each Borrower, directly or indirectly, owns all of the equity interests
of each of its Subsidiaries.

 

Section 6.2. 
Corporate Authority.  Each
Credit Party has the right and power and is duly authorized and empowered to
enter into, execute and deliver the Loan Documents to which it is a party and
to perform and observe the provisions of the Loan Documents.  The Loan Documents to which each Credit Party
is a party have been duly authorized and approved by such Credit Party’s board
of directors or other governing body, as applicable, and are the valid and
binding obligations of such Credit Party, enforceable against such Credit Party
in accordance with their respective terms, except as enforceability thereof may
be limited by bankruptcy, insolvency, moratorium and similar laws and by
equitable principles, whether considered at law or in equity.  The execution, delivery and performance of
the Loan Documents will not conflict with, result in a breach in any of the
provisions 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 or
property of any Company under the provisions of, such Company’s Organizational
Documents or any material agreement.

 

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

 

(a)           holds
permits, certificates, licenses, orders, registrations, franchises,
authorizations, and other approvals from any Governmental Authority necessary
for the conduct of its business and is in compliance with all applicable laws
relating thereto;

 

(b)           is
in compliance with all federal, state, local, or foreign applicable statutes,
rules, regulations, and orders including, without limitation, those relating to
environmental protection, occupational safety and health, and equal employment
practices;

 

(c)           is
not in violation of or in default under any agreement to which it is a party or
by which its assets are subject or bound;

 

(d)           has
ensured that no Person who owns a controlling interest in a Company or
otherwise controls a Company is (i) listed on the Specially Designated
Nationals and Blocked Person List maintained by the Office of Foreign Assets
Control (“OFAC”), Department of the Treasury, or any other similar lists
maintained by OFAC pursuant to any authorizing statute, executive order or
regulation, or (ii) a Person designated under Section 1(b), (c) or
(d) of Executive Order No. 13224 (September 23, 2001), any
related enabling legislation or any other similar executive orders;

 

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

 

64

 

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

 

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

 

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

 

Section 6.6. 
Liens and Security Interests. 
On and after the Closing Date, except for Liens permitted pursuant to Section 5.9
hereof, (a) there is and will be no U.C.C. Financing Statement or similar
notice of Lien outstanding covering any personal property of any Company; (b) there
is and will be no mortgage outstanding covering any real property of any
Company; and (c) no real or personal property of any Company is subject to
any Lien of any kind.  Agent, for the
benefit of the Lenders, upon the filing of the U.C.C. Financing Statements and
taking such other actions necessary to perfect its Lien against Collateral of
the corresponding type as authorized hereunder will have a valid and
enforceable first Lien on the Collateral to the extent such Lien may be
perfected by the filing of a U.C.C. Financing Statement.  No Company has entered into any contract or
agreement (other than a contract or agreement entered into in connection with
Indebtedness permitted pursuant to Section 5.8(h) hereof, the
purchase or lease of fixed assets or an intellectual property licensing
agreement that prohibits Liens on such fixed assets) that exists on or after
the Closing Date that would prohibit Agent or the Lenders from acquiring a Lien
on, or a collateral assignment of, any of the property or assets of any
Company.

 

Section 6.7. 
Tax Returns.  All federal
and all material state, provincial and local tax returns and other reports
required by law to be filed in respect of the income, business, properties and
employees of each Company have been filed, and all taxes, assessments, fees and
other governmental charges that are due and payable have been paid, except as
otherwise permitted herein.  The
provision for taxes on the books of each Company is adequate for all years not
closed by applicable statutes and for the current fiscal year.

 

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

 

65

 

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

 

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

 

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

 

(a)           no
ERISA Event has occurred or is expected to occur with respect to an ERISA Plan;

 

(b)           full
payment has been made of all amounts that a Controlled Group member is
required, under applicable law or under the governing documents, to have paid
as a contribution to or a benefit under each ERISA Plan;

 

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

 

(d)           no
changes have occurred or are expected to occur that would cause a material
increase in the cost of providing benefits under the ERISA Plan;

 

(e)           with
respect 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 the
applicable requirements of Code Section 401(a); (ii) the ERISA Plan
and any associated trust have been amended to comply with all such requirements
as currently in effect, other than those requirements for which a retroactive
amendment can be made within the “remedial amendment period” available under
Code Section 401(b) (as extended under Treasury Regulations and other
Treasury pronouncements upon which taxpayers may rely); (iii) the ERISA
Plan and any 

 

66

 

associated trust have received a favorable determination letter from
the 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, if
applicable, that any cash or deferred arrangement under the ERISA Plan
qualifies under Code Section 401(k), unless the ERISA Plan was first
adopted at a time for which the above-described “remedial amendment period” has
not yet expired; (iv) the ERISA Plan currently satisfies the requirements
of Code Section 410(b), without regard to any retroactive amendment that
may be made within the above-described “remedial amendment period”; and (v) no
contribution made to the ERISA Plan is subject to an excise tax under Code Section 4972;
and

 

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

 

Section 6.11. 
Consents or Approvals.  No
material consent, approval or authorization of, or filing, registration or
qualification with, any Governmental Authority or any other Person is required
to 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 been
obtained or completed.

 

Section 6.12. 
Solvency.  Each Borrower
has received consideration that is the reasonably equivalent value of the
obligations and liabilities that such Borrower has incurred to Agent and the
Lenders.  No Borrower is insolvent as
defined in any applicable state, federal or relevant foreign statute, nor will
any Borrower be rendered insolvent by the execution and delivery of the Loan
Documents to Agent and the Lenders.  No
Borrower is engaged or about to engage in any business or transaction for which
the assets retained by it are or will be an unreasonably small amount of
capital, taking into consideration the obligations to Agent and the Lenders
incurred hereunder.  No Borrower intends
to, nor does it believe that it will, incur debts beyond its ability to pay
such debts as they mature.

 

Section 6.13. 
Financial Statements.  The
Consolidated financial statements of EPIQ, for the fiscal year ended December 31,
2007 and the unaudited Consolidated financial statements of EPIQ for the fiscal
quarter ended March 31, 2008 furnished to Agent and the Lenders, are true
and complete in all material respects, have been prepared in accordance with
GAAP, and fairly present in all material respects the financial condition of
the Companies as of the dates of such financial statements and the results of
their operations for the periods then ending. 
As of the Closing Date, since the dates of such statements, there has
been 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 is
engaged principally or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any “margin stock” (within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System
of the United States of America). 
Neither the granting of any Loan (or any conversion thereof) or Letter
of Credit nor the use of the proceeds of any Loan or Letter of Credit 

 

67

 

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 Closing
Date, no Company is a party to any (a) debt instrument (excluding the Loan
Documents); (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 contract
for personal services with any of its Affiliates that is not otherwise
terminable 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, necessary
for the conduct of its business without any known significant conflict with the
rights of others.  Except as disclosed on
Schedule 6.16 hereto, as of the Closing Date, no Subsidiary owns any
federally registered intellectual property, including, without limitation, any
patents, patent applications, trademarks, service marks, copyrights, licenses,
and rights with respect to the foregoing.

 

Section 6.17. 
Insurance.  Each Company
maintains with financially sound and reputable insurers insurance with coverage
and limits as required by law and as is customary with Persons engaged in the
same businesses as the Companies.  Schedule
6.17 hereto sets forth all insurance carried by the Companies on the
Closing Date, setting forth in detail the amount and type of such insurance.

 

Section 6.18. 
Deposit Accounts.  Schedule
6.18 hereto lists all banks (other than payroll, tax withholding or trust
accounts) and other financial institutions at which any Company maintains
deposit or other accounts as of the Closing Date, and Schedule 6.18
hereto correctly identifies the name, address and telephone number of each
depository, the name in which the account is held, a description of the purpose
of 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 Company
in connection with any of the Loan Documents (excluding budgets and
projections), contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained therein or in the
Loan Documents not materially misleading. 
On the Closing Date, after due inquiry by Borrowers, there is no known
fact that any Company has not disclosed to Agent and the Lenders that has or is
likely to have a Material Adverse Effect.

 

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

 

68

 

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 registered
as such within the meaning of the Investment Company Act of 1940, as amended,
or (b) subject to any foreign, federal, state or local statute or
regulation limiting its ability to incur Indebtedness.

 

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

 

Section 6.23. 
Defaults.  No Default or
Event of Default exists hereunder, nor will any begin to exist immediately
after 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 of
all of the Secured Obligations, each Borrower hereby grants to Agent, for the
benefit of the Lenders, a security interest in the Collateral.

 

Section 7.2. 
Collections and Receipt of Proceeds by Borrowers.

 

(a)           Prior
to the exercise by Agent and the Required Lenders of their rights under Article IX
hereof, both (i) the lawful collection and enforcement of all of each
Borrower’s Accounts, and (ii) the lawful receipt and retention by each
Borrower of all Proceeds of all of such Borrower’s Accounts and Inventory shall
be as the agent of Agent and the Lenders.

 

(b)           After
the occurrence and during the continuance of an Event of Default, upon written
notice to Administrative Borrower from Agent, at the election of the Required
Lenders, a Cash Collateral Account shall be opened by Borrowers at the main
office of Agent (or such other office as shall be designated by Agent) and all
such lawful collections of each Borrower’s Accounts and such Proceeds of each
Borrower’s Accounts and Inventory shall be remitted daily by such Borrower to
Agent in the form in which they are received by such Borrower, either by mailing
or by delivering such collections and Proceeds to Agent, appropriately endorsed
for deposit in the Cash Collateral Account. 
In the event that such notice is given to Administrative Borrower from
Agent, no Borrower shall commingle such collections or Proceeds with any of
such Borrower’s other funds or property or the funds or property of any other
Borrower, but shall hold such collections and Proceeds separate and apart
therefrom upon an express trust for Agent, for the benefit of the Lenders.  In such case, Agent may, in its sole
discretion, and shall, at the request of the Required Lenders, at any time and
from time to time after the occurrence and during the continuance of an Event
of Default, apply all or any portion of the account balance in the Cash
Collateral Account as a credit against (i) the outstanding principal or
interest of the Loans, or (ii) any other Secured Obligations in accordance
with this Agreement.  If any remittance
shall be dishonored, or if, upon final payment, any claim with respect thereto
shall be 

 

69

 

made against Agent on its warranties of collection, Agent may charge
the amount of such item against the Cash Collateral Account or any other
Deposit Account (other than a trust, tax withholding or payroll account)
maintained by any Borrower with Agent or with any other Lender, and, in any
event, retain the same and such Borrower’s interest therein as additional
security 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 the
business of Borrowers.  The balance in
the Cash Collateral Account may be withdrawn by Borrowers upon termination of
this Agreement and payment in full of all of the Secured Obligations (other
than contingent indemnity obligations).

 

(c)           After
the occurrence and during the continuance of an Event of Default, at Agent’s
written request, Borrowers shall cause all remittances representing collections
and Proceeds of Collateral to be mailed to a lockbox at a location acceptable
to Agent to which Agent shall have access for the processing of such items in
accordance with the provisions, terms and conditions of the customary lockbox
agreement of Agent.

 

(d)           Agent,
or Agent’s designated agent, is hereby constituted and appointed
attorney-in-fact for each Borrower with authority and power to endorse, after
the occurrence and during the continuance of an Event of Default, any and all
instruments, documents, and chattel paper upon the failure of Borrowers to do so.  Such authority and power, being coupled with
an interest, shall be (i) irrevocable until all of the Secured Obligations
(other than contingent indemnity obligations) are paid, (ii) exercisable
by Agent at any time and without any request upon such Borrower by Agent to so
endorse, 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 other
similar notices with respect thereto, regardless of the form of any endorsement
thereof.  Neither Agent nor the Lenders
shall be bound or obligated to take any action to preserve any rights therein
against prior parties thereto.

 

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

 

(a)           to
receive, 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 of
Inventory, collection of Accounts, and any other writings relating to any of
the Collateral;

 

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

 

70

 

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

 

(d)                                 to
notify and require Account Debtors on such Borrower’s Accounts and purchasers
of such Borrower’s Inventory to make payment of their indebtedness directly to
Agent;

 

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

 

(f)                                    to
accept all collections in any form relating to the Collateral, including
remittances that may reflect deductions, and to deposit the same, into such
Borrower’s Cash Collateral Account or, at the option of Agent, to apply them as
a payment against the Loans or any other Secured Obligations in accordance with
this Agreement.

 

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

 

ARTICLE VIII.  EVENTS OF DEFAULT

 

Each of the following shall constitute an Event of
Default hereunder:

 

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

 

Section 8.2. 
Special Covenants.  If any
Company 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 any
Company shall fail or omit to perform and observe any agreement or other
provision (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 on
such Company’s part to be complied with, and that Default shall not have been
fully corrected within thirty (30) days

 

71

 

after the earlier
of (a) any Financial Officer of such Company becomes aware of the
occurrence thereof, or (b) the giving of written notice thereof to
Administrative Borrower by Agent or the Required Lenders that the specified
Default is to be remedied.

 

Section 8.4. 
Representations and Warranties. 
If any representation or warranty made in any Loan Document shall be
false 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 any
Convertible Subordinated Document) shall occur under any Convertible
Subordinated Document or any agreement executed in connection therewith, or (ii) the
Indebtedness incurred in connection with any Convertible Subordinated Note
shall be accelerated for any reason.

 

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

 

Section 8.6. 
ERISA Default.  The
occurrence of one or more ERISA Events that (a) the Required Lenders
reasonably determine would have a Material Adverse Effect, or (b) results
in 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 is
entered against any Company (a) a final judgment or order for the payment
of money by a court of competent jurisdiction, that remains unpaid or unstayed
and undischarged for a period (during which execution shall not be effectively
stayed) of sixty (60) days after the date on which the right to appeal has
expired, provided that the aggregate of all such judgments for all such
Companies, shall exceed Five Million Dollars ($5,000,000) (less (i) any
amount that will be covered by the proceeds of insurance and is not subject to
dispute by the insurance provider and (ii) any money judgment to the
extent such amounts are provided by funds in a valid escrow account or similar
arrangement); or (b) any one or more non-monetary final judgments that are
not covered by insurance, or, if covered by insurance, for which the insurance
company 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 either
case, (i) enforcement proceedings are commenced by the prevailing party or
any creditor upon such judgment or order, or (ii) there is a period of ten
consecutive Business Days during which a stay of enforcement of such judgment,
by reason of a pending appeal or otherwise, is not in effect.

 

72

 

Section 8.9. 
Security.  If any Lien
granted in this Agreement or any other Loan Document in favor of Agent, for the
benefit of the Lenders, shall be determined to be (a) void, voidable or
invalid, or is subordinated or not otherwise given the priority contemplated by
this Agreement with respect to any material amount of Collateral and the Credit
Parties have failed to promptly execute appropriate documents to correct such
matters, or (b) unperfected as to any material amount of Collateral (as
determined by Agent, in its reasonable discretion).

 

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

 

Section 8.11.  Solvency.  If a Borrower, Epiq Class Action &
Claims Solutions, Inc. or any
other Company with assets over Five Million Dollars ($5,000,000) shall (a) except
as permitted pursuant to Section 5.12 hereof, discontinue business, (b) generally
not pay its debts as such debts become due, (c) make a general assignment
for the benefit of creditors, (d) apply for or consent to the appointment
of 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 or
of such Company, (e) be adjudicated a debtor or insolvent or have entered
against it an order for relief under Title 11 of the United States Code, or
under any other bankruptcy insolvency, liquidation, winding-up, corporate or
similar statute or law, foreign, federal, state or provincial, in any
applicable jurisdiction, now or hereafter existing, as any of the foregoing may
be amended from time to time, or other applicable statute for jurisdictions
outside of the United States, as the case may be, (f) file a voluntary
petition in bankruptcy, or file a proposal or notice of intention to file a
proposal or have an involuntary proceeding filed against it and the same shall
continue undismissed for a period of sixty (60) days from commencement of such
proceeding or case, or file a petition, an answer, or an application or a proposal
seeking reorganization or an arrangement with creditors or seeking to take
advantage of any other law (whether federal, provincial or state, or, if
applicable, other jurisdiction) relating to relief of debtors, or admit (by
answer, by default or otherwise) the material allegations of a petition filed
against 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 unstayed
and in effect for sixty (60) consecutive days any judgment, decree or order
entered by a court of competent jurisdiction, that approves a petition or an
application or a proposal seeking its reorganization or appoints an interim
receiver, a receiver and manager, an administrator, custodian, trustee, interim
trustee or liquidator of all or a substantial part of its assets, or of such
Company, or (h) take, or omit to take, any action in order thereby to
effect any of the foregoing.

 

73

 

ARTICLE IX.  REMEDIES UPON DEFAULT

 

Notwithstanding any contrary provision or inference
herein or elsewhere:

 

Section 9.1. 
Optional Defaults.  If any
Event 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 the
Required Lenders, and shall, at the written request of the Required Lenders,
give written notice to Borrowers to:

 

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

 

(b)                                 accelerate
the maturity of all of the Obligations (if the Obligations are not already due
and payable), whereupon all of the Obligations shall become and thereafter be
immediately due and payable in full without any presentment or demand and
without any further or other notice of any kind, all of which are hereby waived
by each Borrower.

 

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

 

(a)                                  all
of the Commitment shall automatically and immediately terminate, if not previously
terminated, and no Lender thereafter shall be under any obligation to grant any
further Loan, nor shall the Fronting Lender be obligated to issue any Letter of
Credit; and

 

(b)                                 the
principal of and interest then outstanding on all of the Loans, and all of the
other Obligations, shall thereupon become and thereafter be immediately due and
payable in full (if the Obligations are not already due and payable), all
without any presentment, demand or notice of any kind, which are hereby waived
by each Borrower.

 

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

 

Section 9.4. 
Offsets.  If there shall
occur or exist any Event of Default referred to in Section 8.11 hereof or
if the maturity of the Obligations is accelerated pursuant to Section 9.1
or 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 the
Obligations then owing by Borrowers or a Guarantor of Payment to such Lender
(including, without limitation, any participation purchased 

 

74

 

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

 

Section 9.5. 
Equalization Provisions. 
Each Lender agrees with the other Lenders that if it, at any time, shall
obtain any Advantage over the other Lenders or any thereof in respect of the
Obligations (except as to Swing Loans and Letters of Credit prior to Agent’s
giving of notice to participate and except under Article III hereof), it
shall purchase from the other Lenders, for cash and at par, such additional
participation in the Obligations as shall be necessary to nullify the
Advantage.  If any such Advantage
resulting in the purchase of an additional participation as aforesaid shall be
recovered in whole or in part from the Lender receiving the Advantage, each
such purchase shall be rescinded, and the purchase price restored (but without
interest unless the Lender receiving the Advantage is required to pay interest
on 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 time
shall receive any payment for or on behalf of any  Borrower on any Indebtedness owing by any
Borrower pursuant to this Agreement (whether by voluntary payment, by
realization upon security, by reason of offset of any deposit or other
indebtedness, by counterclaim or cross-action, by the enforcement of any right
under any Loan Document, or otherwise), it will apply such payment first to any
and all Indebtedness owing by such Borrower to that Lender pursuant to this
Agreement (including, without limitation, any participation purchased or to be
purchased pursuant to this Section 9.5 or any other section of this
Agreement).  Each Credit Party agrees
that any Lender so purchasing a participation from the other Lenders or any
thereof pursuant to this Section 9.5 may exercise all of its rights of
payment (including the right of set-off) with respect to such participation as
fully as if such Lender were a direct creditor of such Credit Party in the
amount of such participation.

 

Section 9.6. 
Collateral.  Upon the
occurrence and during the continuance of an Event of Default and at all times
thereafter, Agent and the Lenders shall have the rights and remedies of a
secured party under the U.C.C., in addition to the rights and remedies of a
secured party provided elsewhere within this Agreement, in any other Related
Writing executed by any Borrower or otherwise provided in law or equity.  Agent may require Borrowers to assemble the
Collateral, which each Borrower agrees to do, and make it available to Agent
and 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 or
without the aid of legal process, make use of such force as may be necessary to
enter any premises where the Collateral, or any thereof, may be found and to
take possession thereof (including anything found in or on the Collateral that
is not specifically described in this Agreement, each of which findings
shall  be considered to be an accession
to and a part of the Collateral) and for that purpose may pursue the Collateral
wherever the same may be found, without liability for trespass or damage caused
thereby to such Borrower.  After any
delivery or taking of possession of the Collateral, or any thereof, pursuant to
this Agreement, then, with or without resort to any Borrower personally or any
other Person or property, all of which each Borrower hereby waives, and upon such
terms and in such manner as

 

75

 

Agent may deem advisable, Agent, in its discretion, may sell, assign,
transfer and deliver any of the Collateral at any time, or from time to
time.  No prior notice need be given to
any Borrower or to any other Person in the case of any sale of Collateral that
Agent determines to be perishable or to be declining speedily in value or that
is customarily sold in any recognized market, but in any other case Agent shall
give Borrowers not fewer than ten days prior notice of either the time and
place of any public sale of the Collateral or of the time after which any
private sale or other intended disposition thereof is to be made.  Each Borrower waives advertisement of any
such sale and (except to the extent specifically required by the preceding
sentence) waives notice of any kind in respect of any such sale.  At any such public sale, Agent or the Lenders
may purchase the Collateral, or any part thereof, free from any right of
redemption, all of which rights each Borrower hereby waives and releases.  After deducting all Related Expenses, and
after paying all claims, if any, secured by Liens having precedence over this
Agreement, Agent may apply the net proceeds of each such sale to or toward the
payment of the Secured Obligations, whether or not then due, in such order and
by such division as Agent, in its sole discretion, may deem advisable. Any
excess, to the extent permitted by law, shall be paid to Borrowers, and each
Borrower shall remain liable for any deficiency.  In addition, Agent shall at all times have
the right to obtain new appraisals of any Borrower or the Collateral, the cost
of which shall be paid by Borrowers.

 

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

 

Section 9.8. 
Application of Proceeds.

 

(a)                                  Payments
Prior to Exercise of Remedies.  Prior
to the exercise by Agent, on behalf of the Lenders, of remedies under this
Agreement or the other Loan Documents, all monies received by Agent in
connection with the Revolving Credit Commitment shall be applied, unless
otherwise required by the terms of the other Loan Documents or by applicable
law, to the Loans and Letters of Credit, as appropriate; provided that Agent
shall have the right at all times to apply any payment received from Borrowers
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 of
Related Expenses.

 

(b)                                 Payments
Subsequent to Exercise of Remedies. 
After the exercise by Agent or the Required Lenders of remedies under
this Agreement or the other Loan Documents, all monies received by Agent shall
be applied, unless otherwise required by the terms of the other Loan Documents
or 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 of
Related Expenses;

 

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(ii)                                  second,
to the payment pro rata of (A) interest then accrued and payable on the
outstanding Loans, (B) any fees then accrued and payable to Agent, and (C) any
fees then accrued and payable to any Fronting Lender or the holders of the
Letter 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 of
Credit Exposure, on a pro rata basis to the Lenders, based upon each such
Lender’s Commitment Percentage, provided that the amounts payable in respect of
the Letter of Credit Exposure shall be held and applied by Agent as security
for the reimbursement obligations in respect thereof, and, if any Letter of
Credit shall expire without being drawn, then the amount with respect to such
Letter of Credit shall be distributed to the Lenders, on a pro rata basis in
accordance with this subsection (iii), (B) the Indebtedness under any
Hedge Agreement with a Lender, such amount to be based upon the net termination
obligation of Borrowers under such Hedge Agreement, and (C) the Bank
Product Obligations owing to Lenders under Bank Product Agreements; with such
payment 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 in
full, to Borrowers or to whomsoever shall be lawfully entitled thereto.

 

ARTICLE X.  THE AGENT

 

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

 

Section 10.1. 
Appointment and Authorization. 
Each Lender hereby irrevocably appoints and authorizes Agent to take
such action as agent on its behalf and to exercise such powers hereunder as are
delegated to Agent by the terms hereof, together with such powers as are
reasonably incidental thereto.  Neither
Agent nor any of its affiliates, directors, officers, attorneys or employees
shall (a) be liable for any action taken or omitted to be taken by it or
them hereunder or in connection herewith, except for its or their own gross
negligence or willful misconduct (as determined by a court of competent
jurisdiction), or be responsible in any manner to any of the Lenders for the effectiveness,
enforceability, genuineness, validity or due execution of this Agreement or any
other Loan Documents, (b) be under any obligation to any Lender to
ascertain or to inquire as to the performance or observance of any of the
terms, covenants or conditions hereof or thereof on the part of Borrowers or
any other Company, or the financial condition of Borrowers or any other
Company, or (c) be liable to any of the Companies for consequential
damages resulting from any breach of contract, tort or other wrong in
connection with the negotiation, documentation, administration or collection of
the Loans or Letters of Credit or any of the Loan Documents.  Notwithstanding any provision to the contrary
contained in this Agreement or in any other Loan Document, Agent shall not have
any duty or responsibility except those expressly set forth herein, nor shall
Agent have or be deemed to have any fiduciary relationship with any Lender or
participant, and no implied covenants, functions, responsibilities, duties, obligations
or liabilities shall be read into this Agreement or any other 

 

77

 

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

 

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

 

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

 

Section 10.4. 
Documents.  Agent shall not
be under any duty to examine into or pass upon the validity, effectiveness,
genuineness or value of any Loan Document or any other Related Writing
furnished pursuant hereto or in connection herewith or the value of any
collateral obtained hereunder, and Agent shall be entitled to assume that the
same 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 credit
for the account of, accept deposits from, acquire equity interests in and
generally engage in any kind of banking, trust, financial advisory,
underwriting or other business with the Companies and Affiliates as though
KeyBank were not Agent hereunder and without notice to or consent of any
Lender.  Each Lender acknowledges that,
pursuant to such activities, KeyBank or its affiliates may receive information
regarding any Company or any Affiliate (including information that may be
subject to confidentiality obligations in favor of such Company or such
Affiliate) and acknowledge that Agent shall be under no obligation to provide
such information to other Lenders.  With
respect to Loans and Letters of Credit (if any), KeyBank and its affiliates
shall have the same rights and powers under this Agreement as any other Lender
and 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, in
their individual capacities.

 

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

 

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Section 10.7. 
Action by Agent.  Subject
to 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 of
Default shall have occurred and be continuing, Agent shall be entitled to use
its discretion with respect to exercising or refraining from exercising any
rights that may be vested in it by, or with respect to taking or refraining
from taking any action or actions that it may be able to take under or in
respect of, this Agreement.  Agent shall
incur no liability under or in respect of this Agreement by acting upon any
notice, certificate, warranty or other paper or instrument believed by it to be
genuine or authentic or to be signed by the proper party or parties, or with
respect to anything that it may do or refrain from doing in the reasonable
exercise of its judgment, or that may seem to it to be necessary or desirable
in the premises.  Without limiting the
foregoing, no Lender shall have any right of action whatsoever against Agent as
a result of Agent’s acting or refraining from acting hereunder in accordance
with the instructions of the Required Lenders.

 

Section 10.8. 
Release of Collateral or Guarantor of Payment.  In the event of a transfer of assets
permitted by Section 5.12 hereof (or otherwise permitted pursuant to this
Agreement) where the proceeds of such transfer are applied in accordance with
the terms of this Agreement to the extent required to be so applied, Agent, at
the request and expense of Borrowers, is hereby authorized by the Lenders to (a) release
such Collateral from this Agreement, (b) release a Guarantor of Payment in
connection with such permitted transfer, and (c) duly assign, transfer and
deliver to the affected Company (without recourse and without any
representation or warranty) such Collateral as is then (or has been) so
transferred or released and as may be in possession of Agent and has not
theretofore been released pursuant to this Agreement.

 

Section 10.9. 
Delegation of Duties. 
Agent may execute any of its duties under this Agreement or any other
Loan Document by or through agents, employees or attorneys-in-fact and shall be
entitled to advice of counsel and other consultants or experts concerning all
matters pertaining to such duties.  Agent
shall not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects in the absence of gross negligence or willful
misconduct, 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 by
Borrowers) ratably, according to their respective Commitment Percentages, from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including attorneys’ fees and
expenses) or disbursements of any kind or nature whatsoever that may be imposed
on, incurred by or asserted against Agent in its capacity as agent in any way
relating to or arising out of this Agreement or any Loan Document or any action
taken 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 resulting
from Agent’s gross negligence or willful misconduct as determined by a court of
competent jurisdiction, or from any action taken or omitted by Agent in any
capacity other than as agent under this Agreement or any other Loan
Document.  No action taken in accordance
with the directions of the Required Lenders shall be deemed to constitute gross
negligence or willful misconduct for purposes of this Section 10.10.  The undertaking in this Section 10.10
shall survive repayment of the Loans, cancellation of the Notes, if any,
expiration or termination of the Letters of Credit, termination of the
Commitment,

 

79

 

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

 

Section 10.11. 
Successor Agent.  Agent may
resign as agent hereunder by giving not fewer than thirty (30) days prior
written 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 Lenders
a successor agent for the Lenders (with the consent of Administrative Borrower
so long as an Event of Default has not occurred and is continuing, and which
consent shall not be unreasonably withheld), or (b) if a successor agent
shall not be so appointed and approved within the thirty (30) day period
following Agent’s notice to the Lenders of its resignation, then Agent shall
appoint a successor agent that shall serve as agent until such time as the
Required Lenders appoint a successor agent. 
If no successor agent has accepted appointment as Agent by the date that
is thirty (30) days following a retiring Agent’s notice of resignation, the
retiring Agent’s resignation shall nevertheless thereupon become effective, and
the Lenders shall assume and perform all of the duties of Agent hereunder until
such time, if any, as the Required Lenders appoint a successor agent as
provided for above.  Upon its
appointment, such successor agent shall succeed to the rights, powers and
duties as agent, and the term “Agent” means such successor effective upon its
appointment, and the former agent’s rights, powers and duties as agent shall be
terminated without any other or further act or deed on the part of such former
agent or any of the parties to this Agreement. 
After any retiring Agent’s resignation as Agent, the provisions of this Article X
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement and the other Loan Documents.

 

Section 10.12. 
Fronting Lender.  The
Fronting Lender shall act on behalf of the Lenders with respect to any Letters
of Credit issued by the Fronting Lender and the documents associated
therewith.  The Fronting Lender shall
have all of the benefits and immunities (a) provided to Agent in Article IX
hereof with respect to any acts taken or omissions suffered by the Fronting
Lender in connection with the Letters of Credit and the applications and agreements
for letters of credit pertaining to such Letters of Credit as fully as if the
term “Agent”, as used in Article IX hereof, included the Fronting Lender
with respect to such acts or omissions, and (b) as additionally provided
in this Agreement with respect to the Fronting Lender.

 

Section 10.13. 
Swing Line Lender.  The
Swing Line Lender shall act on behalf of the Lenders with respect to any Swing
Loans.  The Swing Line Lender shall have
all of the benefits and immunities (a) provided to Agent in Article X
hereof with respect to any acts taken or omissions suffered by the Swing Line
Lender in connection with the Swing Loans as fully as if the term “Agent”, as
used in Article X hereof, included the Swing Line Lender with respect to
such acts or omissions, and (b) as additionally provided in this Agreement
with 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 and
payable as herein expressed or by declaration or otherwise and irrespective of
whether Agent shall have made any demand on any Borrower) shall be entitled and
empowered, by intervention in such proceeding or otherwise, to

 

80

 

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

 

Section 10.15. 
No Reliance on Agent’s Customer Identification Program.  Each Lender acknowledges and agrees that
neither such Lender, nor any of its affiliates, participants or assignees, may
rely on Agent to carry out such Lender’s or its affiliate’s, participant’s or
assignee’s customer identification program, or other obligations required or
imposed under or pursuant to the Patriot Act or the regulations thereunder,
including the regulations contained in 31 CFR 103.121 (as hereafter amended or
replaced, the “CIP Regulations”), or any other anti terrorism law, including
any programs involving any of the following items relating to or in connection
with Borrowers, their respective Affiliates or agents, the Loan Documents or
the transactions hereunder: (a) any identity verification procedures, (b) any
record keeping, (c) any comparisons with government lists, (d) any
customer notices or (e) any other procedures required under the CIP
Regulations or such other laws.

 

Section 10.16. 
Other Agents.  Agent shall
have the continuing right from time to time to designate one or more Lenders
(or its or their affiliates as “syndication agent”, “documentation agent”, “book
runner”, “lead arranger”, “arrangers” or other designations for purposes
hereof, 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 this
Agreement, acknowledges and agrees that Agent has made no representation or
warranty, express or implied, with respect to the creditworthiness, financial
condition, or any other condition of any Company or with respect to the
statements contained in any information memorandum furnished in connection
herewith or in any other oral or written communication between Agent and such
Lender.  Each Lender represents that it
has made and shall continue to make its own independent investigation of the
creditworthiness, financial condition and affairs of the Companies in
connection with the extension of credit hereunder, and agrees that Agent has

 

81

 

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 to
the Lenders hereunder), whether coming into its possession before the first
Credit Event hereunder or at any time or times thereafter.  Each Lender further represents that it has
reviewed each of the Loan Documents, and has received copies of and reviewed
the Convertible Subordinated Documents, including, but not limited to, the conditions
relating to the status of the Obligations as Senior Indebtedness (as defined in
the Convertible Subordinated Notes).

 

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

 

Section 11.3. 
Amendments, Waivers and Consents.

 

(a)                                  General
Rule.  No amendment, modification,
termination, or waiver of any provision of any Loan Document nor consent to any
variance therefrom, shall be effective unless the same shall be in writing and
signed by the Required Lenders and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.

 

(b)                                 Exceptions
to the General Rule.  Anything herein
to the contrary notwithstanding, unanimous consent of the Lenders shall be
required with respect to (i) any increase in the Commitment hereunder
(except as specified in Section 2.9(b) hereof), (ii) the extension
of maturity of the Loans, the payment date of interest or scheduled principal
thereunder, or the payment date of commitment or other fees payable hereunder, (iii) any
reduction in the stated rate of interest on the Loans (provided that the
institution of the Default Rate and a subsequent removal of the Default Rate
shall 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 any
reduction in the stated rate of commitment fees payable hereunder or any change
in the manner of pro rata application of any payments made by Borrowers to the
Lenders hereunder, (iv) any change in any percentage voting requirement,
voting rights, or the Required Lenders definition in this Agreement, (v) the
release of any Borrower or Guarantor of Payment or material amount of
collateral, except as specifically permitted hereunder, securing the Secured
Obligations, or (vi) any amendment to this Section 11.3 or Section 9.5
or 9.8 hereof.

 

(c)                                  Provisions Relating to Special Rights and
Duties.  No provision of this Agreement affecting
Agent in its capacity as such shall be amended, modified or waived without the
consent of Agent.  No provision of this
Agreement relating to the rights or duties of the Fronting Lender in its
capacity as such shall be amended, modified or waived without the consent of
the Fronting Lender. No provision of this Agreement relating to the rights or
duties of the Swing Line Lender

 

82

 

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

 

(d)                                 Replacement
of Non-Consenting Lender or Insolvent Lender.  If, in connection with any proposed
amendment, waiver or consent hereunder, (i) the consent of all Lenders is
required, but only the consent of Required Lenders is obtained, or (ii) the
consent of Required Lenders is required, but the consent of Lenders holding
fifty-one percent (51%) or more is not obtained (any Lender withholding consent
as described in subsection (a) and (b) hereof being referred to as a “Non-Consenting
Lender”), 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 and
Administrative Borrower, require such Non-Consenting Lender to assign and
delegate, without recourse (in accordance with the restrictions contained in Section 11.10
hereof) all of its interests, rights and obligations under this Agreement to an
Eligible Transferee that shall assume such obligations (which assignee may be
another Lender, if a Lender accepts such assignment); provided that such
Non-Consenting Lender shall have received payment of an amount equal to the
outstanding principal of its Loans, accrued interest thereon, accrued fees and
all other amounts payable to it hereunder, from such Eligible Transferee (to
the extent of such outstanding principal and accrued interest and fees) or
Borrowers (in the case of all other amounts, including any breakage
compensation under Article III hereof). 
To the extent that a Lender is insolvent and unable to meet its funding
obligations as set forth in this Agreement, Agent shall, at the request of
Administrative Borrower and upon notice to such Lender, require such Lender to
assign and delegate all of its interests, rights and obligations under this
Agreement as if such Lender were a Non-Consenting Lender.

 

(e)                                  Generally.  Notice of amendments, waivers or consents
ratified by the Lenders hereunder shall be forwarded by Agent to all of the
Lenders.  Each Lender or other holder of
a Note (or if there is no Note, the holder of the interest as reflected on the
books and records of Agent) (or interest in any Loan or Letter of Credit) shall
be 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 in
writing and, if to a Borrower, mailed or delivered to it, addressed to it at
the address specified on the signature pages of this Agreement, if to a
Lender, mailed or delivered to it, addressed to the address of such Lender
specified 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 notice
to each of the other parties.  All
notices, statements, requests, demands and other communications provided for
hereunder shall be deemed to be given or made when hand delivered, delivered by
overnight courier or two Business Days after being deposited in the mails with
postage prepaid by registered or certified mail, addressed as aforesaid, or
sent by facsimile with telephonic confirmation of receipt (if received during a
Business Day, otherwise the following Business Day), except that notices from a
Borrower to Agent or the Lenders pursuant to any of the provisions hereof shall
not be effective until received by Agent or the Lenders, as the case may be.  For purposes of Article II hereof, Agent
shall be entitled to rely on telephonic instructions from any person that Agent
in good faith believes is an Authorized Officer and Borrowers shall hold Agent
and each Lender harmless from any loss, cost or expense resulting from any such
reliance.

 

83

 

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

expenses of Agent and all
Related Expenses, including, but not limited to (a) syndication,
administration, travel and out-of-pocket expenses, including but not limited to
attorneys’ fees and expenses (excluding allocated costs of in-house counsel),
of Agent in connection with the preparation, negotiation and closing of the
Loan Documents and the administration of the Loan Documents, and the collection
and disbursement of all funds hereunder and the other instruments and documents
to be delivered hereunder, (b) extraordinary expenses of Agent in
connection with the administration of the Loan Documents and the other
instruments and documents to be delivered hereunder, and (c) the
reasonable fees and out-of-pocket expenses of special counsel for Agent, with
respect to the foregoing, and of local counsel, if any, who may be retained by
said special counsel with respect thereto. 
Borrowers also agree to pay on demand all costs and expenses (including
Related Expenses) of Agent and the Lenders, including reasonable attorneys’
fees and expenses, in connection with the restructuring or enforcement of the
Obligations, this Agreement or any Related Writing.  In addition, Borrowers shall pay any and all
stamp, transfer, documentary and other taxes, assessments, charges and fees
payable or determined to be payable in connection with the execution and
delivery of the Loan Documents, and the other instruments and documents to be
delivered hereunder, and agree to hold Agent and each Lender harmless from and
against any and all liabilities with respect to or resulting from any delay in
paying or failure to pay such taxes or fees, other than those liabilities
resulting from the gross negligence or willful misconduct of Agent, or, with
respect to amounts owing to a Lender, such Lender, in each case as determined
by a court of competent jurisdiction. 
All obligations provided for in this Section 11.5 shall survive any
termination of this Agreement.

 

Section 11.6. 
Indemnification.  Each
Borrower agrees to defend, indemnify and hold harmless Agent and the Lenders
(and their respective affiliates, officers, directors, attorneys, agents
and  employees) from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses (including attorneys’ fees but excluding anticipated
profits) or disbursements of any kind or nature whatsoever that may be imposed
on, incurred by or asserted against Agent or any Lender in connection with any
investigative, administrative or judicial proceeding (whether or not such
Lender or Agent shall be designated a party thereto) or any other claim by any
Person relating to or arising out of any Loan Document or any actual or
proposed use of proceeds of the Loans or any of the Obligations, or any
activities of any Company or its Affiliates; provided that no Lender nor Agent shall
have the right to be indemnified under this Section 11.6 for its own gross
negligence or willful misconduct as determined by a court of competent
jurisdiction.  All obligations provided
for 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 are
several and not joint.  Nothing contained
in this Agreement and no action taken by Agent or the Lenders pursuant hereto
shall be deemed to constitute Agent or the Lenders a partnership, association,
joint venture or other entity.  No
default by any Lender hereunder shall excuse the other Lenders from any
obligation under this Agreement; but no Lender shall have or acquire any
additional obligation of any kind by reason of such default.  The relationship between Borrowers and the
Lenders with respect to the Loan Documents and

 

84

 

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

 

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

 

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

 

Section 11.10. 
Lender Assignments.

 

(a)                                  Assignments
of Commitments.  Each Lender shall
have the right at any time or times to assign to an Eligible Transferee (other
than to a Lender that shall not be in compliance with this Agreement), without
recourse, all or a percentage of all of the following: (i) such Lender’s
Commitment, (ii) all Loans made by that Lender, (iii) such Lender’s
Notes, and (iv) such Lender’s interest in any Letter of Credit or Swing
Loan, and any participation purchased pursuant to Section 2.2(b) or
(c), or Section 9.5 hereof.

 

(b)                                 Prior
Consent.  No assignment may be
consummated pursuant to this Section 11.10 without the prior written
consent of Administrative Borrower and Agent (other than an assignment by any
Lender to any affiliate of such Lender which affiliate is an Eligible
Transferee and either wholly-owned by a Lender or is wholly-owned by a Person
that wholly owns, either directly or indirectly, such Lender, or to another
Lender), which consent of Administrative Borrower and Agent shall not be
unreasonably withheld; provided that the consent of Administrative Borrower
shall not be required if, at the time of the proposed assignment, any Default
or Event of Default shall then exist. 
Anything herein to the contrary notwithstanding, any Lender may at any
time make a collateral assignment of all or any portion of its rights under the
Loan Documents to a Federal Reserve Bank, and no such assignment shall release
such assigning Lender from its obligations hereunder.

 

(c)                                  Minimum
Amount.  Each such assignment shall
be in a minimum amount of the lesser of Five Million Dollars ($5,000,000) of
the assignor’s Commitment and interest herein, or the entire amount of the
assignor’s Commitment and interest herein.

 

(d)                                 Assignment
Fee.  Unless the assignment shall be
to an affiliate of the assignor or the assignment shall be due to merger of the
assignor or for regulatory purposes, either the assignor or the assignee shall
remit to Agent, for its own account, an administrative fee of Three Thousand
Five Hundred Dollars ($3,500).

 

85

 

(e)                                  Assignment
Agreement.  Unless the assignment
shall be due to merger of the assignor or a collateral assignment for
regulatory purposes, the assignor shall (i) cause the assignee to execute
and deliver to Administrative Borrower and Agent an Assignment Agreement, and (ii) execute
and 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 may
reasonably require.

 

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

 

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

 

(h)                                 Effect
of Assignment.  Upon satisfaction of
all applicable requirements set forth in subsections (a) through (g) above,
and any other condition contained in this Section 11.10, (i) the
assignee shall become and thereafter be deemed to be a “Lender” for the
purposes of this Agreement, (ii) the assignor shall be released from its
obligations hereunder to the extent that its interest has been assigned, (iii) in
the event that the assignor’s entire interest has been assigned, the assignor
shall 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 be
automatically amended, without further action, to reflect the result of any
such assignment.

 

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

 

86

 

The entries in the Register shall be conclusive, in the absence of
manifest error, and Borrowers, Agent and the Lenders may treat each Person
whose name is recorded in the Register as the owner of the Loan recorded
therein for all purposes of this Agreement. 
The Register shall be available for inspection by Borrowers or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.

 

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

 

(a)                                  any
such Lender’s obligations under this Agreement and the other Loan Documents
shall remain unchanged;

 

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

 

(c)                                  the
parties hereto shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement and
each of the other Loan Documents;

 

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

 

(e)                                  no
Participant (unless such Participant is itself a Lender) shall be entitled to
require such Lender to take or refrain from taking action under this Agreement
or under any other Loan Document, except that such Lender may agree with such
Participant that such Lender will not, without such Participant’s consent, take
action of the type described as follows:

 

(i)                                     increase
the portion of the participation amount of any Participant over the amount
thereof then in effect, or extend the Commitment Period, without the written
consent of each Participant affected thereby; or

 

(ii)                                  reduce
the principal amount of or extend the time for any payment of principal of any
Loan, or reduce the rate of interest or extend the time for payment of interest
on any Loan, or reduce the commitment fee, without the written consent of each
Participant affected thereby.

 

Borrowers agree that any
Lender that sells participations pursuant to this Section 11.11 shall
still be entitled to the benefits of Article III hereof, notwithstanding
any such transfer; provided that the obligations of Borrowers shall not
increase as a result of such transfer and Borrowers shall have no obligation to
any Participant.

 

87

 

Section 11.12.  Patriot Act Notice.  Each Lender and Agent (for itself and not on
behalf of any other party) hereby notifies the Credit Parties that, pursuant to
the requirements of the Patriot Act, such Lender and Agent are required to
obtain, verify and record information that identifies the Credit Parties, which
information includes the name and address of the Credit Parties and other
information that will allow such Lender or Agent, as applicable, to identify
the Credit Parties in accordance with the Patriot Act.  Each Borrower shall provide, to the extent
commercially reasonable, such information and take such actions as are
reasonably requested by Agent or a Lender in order to assist Agent or such
Lender in maintaining compliance with the Patriot Act.

 

Section 11.13. 
Severability of Provisions; Captions; Attachments.  Any provision of this Agreement that shall be
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.  The several captions to sections and
subsections herein are inserted for convenience only and shall be ignored in
interpreting the provisions of this Agreement. 
Each schedule or exhibit attached to this Agreement shall be
incorporated herein and shall be deemed to be a part hereof.

 

Section 11.14. 
Investment Purpose.  Each
of the Lenders represents and warrants to Borrowers that it is entering into
this Agreement with the present intention of acquiring any Note issued pursuant
hereto (or, if there is no Note, the interest as reflected on the books and
records of Agent) for investment purposes only and not for the purpose of
distribution or resale, it being understood, however, that each Lender shall at
all times retain full control over the disposition of its assets.

 

Section 11.15. 
Entire Agreement.  This
Agreement, any Note and any other Loan Document or other agreement, document or
instrument attached hereto or executed on or as of the Closing Date integrate
all of the terms and conditions mentioned herein or incidental hereto and
supersede all oral representations and negotiations and prior writings with
respect to the subject matter hereof.

 

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

 

Section 11.17. 
Governing Law; Submission to Jurisdiction.

 

(a)                                  Governing
Law.  This Agreement, each of the
Notes and any Related Writing shall be governed by and construed in accordance
with the laws of the State of Ohio and the respective rights and obligations of
Borrowers, Agent, and the Lenders shall be governed by Ohio law, without regard
to principles of conflicts of laws.

 

88

 

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

 

[Remainder of page left
intentionally blank]

 

89

 

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

 

IN WITNESS WHEREOF, the
parties have executed and delivered this Second Amended and Restated Credit and
Security 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 Page

of the Second
Amended and Restated

Credit and Security Agreement

 

1

 

	
  Address: 

  	
                                                                                    

  	
   

  	
  NATIONAL
  CITY BANK 

  as Co-Documentation Agent and as a Lender

  
	
   

  	
                                                                                    

  	
   

  
	
   

  	
                                                                                    

  	
   

  	
   

  
	
   

  	
  Attention:

  	
                                                                  

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  
								

 

Signature Page

of the Second
Amended and Restated

Credit and Security Agreement

 

2

 

	
  Address: 

  	
                                                                                    

  	
   

  	
  SILICON
  VALLEY BANK,

  as Co-Documentation Agent and as a Lender

  
	
   

  	
                                                                                    

  	
   

  
	
   

  	
                                                                                    

  	
   

  	
   

  
	
   

  	
  Attention:

  	
                                                                  

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  
								

 

Signature Page

of the Second
Amended and Restated

Credit and Security Agreement

 

3

 

	
  Address: 

  	
                                                                                    

  	
   

  	
  HSBC
  BANK USA, NATIONAL

  ASSOCIATION

  
	
   

  	
                                                                                    

  	
   

  
	
   

  	
                                                                                    

  	
   

  	
   

  
	
   

  	
  Attention:

  	
                                                                  

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  
								

 

Signature Page

of the Second
Amended and Restated

Credit and Security Agreement

 

4

 

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

 

SCHEDULE 2

 

DOMESTIC
SUBSIDIARY BORROWERS

 

None as of the
Closing Date

 

S-2

 

SCHEDULE 3

 

GUARANTORS OF
PAYMENT

 

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

EPIQ Systems
Acquisition, 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 Preference
Solutions, LLC (f/k/a Epiq Advisory Services, LLC)

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

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

 

S-3

 

EXHIBIT A

FORM OF

REVOLVING CREDIT
NOTE

 

	
  $                             

  	
  July 30,
  2008

  	
   

  

 

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

 

                                                                                                                                                                                                DOLLARS

 

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

 

As used herein, “Credit
Agreement” means the Second Amended and Restated Credit and Security Agreement
dated as of July 30, 2008, among Borrower, the Domestic Subsidiary
Borrowers named therein, the Lenders, as defined therein, KeyBank National
Association, as the lead arranger, sole book runner and administrative agent
for the Lenders (“Agent”), National City Bank, as co-documentation agent, and
Silicon Valley Bank, as co-documentation agent, as the same may from time to
time be amended, restated or otherwise modified.  Each capitalized term used herein that is
defined in the Credit Agreement and not otherwise defined herein shall have the
meaning ascribed to it in the Credit Agreement.

 

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

 

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

 

If this Note shall not be
paid at maturity, whether such maturity occurs by reason of lapse of time or by
operation of any provision for acceleration of maturity contained in the Credit
Agreement, the principal hereof and the unpaid interest thereon shall bear
interest, pursuant to the terms of the Credit Agreement, until paid, at a rate
per annum equal to the Default Rate.  All
payments of principal of and interest on this Note shall be made in immediately
available funds.

 

E-1

 

This Note is one of the
Revolving Credit Notes referred to in the Credit Agreement.  Reference is made to the Credit Agreement for
a 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 stated
maturity, and other terms and conditions upon which this Note is issued.

 

Borrower hereby
designates all Indebtedness and other obligations now or hereafter incurred or
otherwise outstanding under this Note, the Credit Agreement and the other Loan
Documents, as defined in the Credit Agreement, to be “Senior Indebtedness” as
defined in the Note Agreement.  Except as
expressly provided in the Credit Agreement, Borrower expressly waives
presentment, demand, protest and notice of any kind.  This Note shall be governed by and construed
in accordance with the laws of the State of Ohio, without regard to conflicts
of laws provisions.

 

JURY TRIAL WAIVER. 
BORROWER, TO THE EXTENT PERMITTED BY LAW, HEREBY WAIVES ANY RIGHT TO
HAVE 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 THE
RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS NOTE OR ANY OTHER
NOTE OR INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH OR THE TRANSACTIONS RELATED THERETO.

 

	
   

  	
  EPIQ SYSTEMS, INC.

  
	
   

  	
   

  
	 
	
   

  	
  By:

  	
   

  
	 
	
   

  	
  Name:

  	
   

  
	 
	
   

  	
  Title:

  	
   

  
							

 

E-2

 

EXHIBIT B

FORM OF

SWING LINE NOTE

 

	
  $5,000,000

  	
  July 30,
  2008

  	
   

  

 

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

 

FIVE MILLION AND
00/100                                                                                                                                                  DOLLARS

 

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

 

As used herein, “Credit
Agreement” means the Second Amended and Restated Credit and Security Agreement
dated as of July 30, 2008, among Borrower, the Domestic Subsidiary
Borrowers named therein, the Lenders, as defined therein, KeyBank National
Association, as the lead arranger, sole book runner and administrative agent
for the Lenders (“Agent”), National City Bank, as co-documentation agent, and
Silicon Valley Bank, as co-documentation agent, as the same may from time to
time be amended, restated or otherwise modified.  Each capitalized term used herein that is
defined in the Credit Agreement and not otherwise defined herein shall have the
meaning ascribed to it in the Credit Agreement.

 

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

 

The principal sum hereof
from time to time and the payments of principal and interest thereon, shall be
shown on the records of Swing Line Lender by such method as Swing Line Lender
may generally employ; provided that failure to make any such entry shall in no
way detract from the obligation of Borrower under this Note.

 

If this Note shall not be
paid at maturity, whether such maturity occurs by reason of lapse of time or by
operation of any provision for acceleration of maturity contained in the Credit
Agreement, the principal hereof and the unpaid interest thereon shall bear
interest, pursuant to the terms of the Credit Agreement, until paid, at a rate
per annum equal to the Default Rate.  All
payments of principal of and interest on this Note shall be made in immediately
available funds.

 

E-3

 

This Note is the Swing
Line Note referred to in the Credit Agreement. 
Reference is made to the Credit Agreement for a 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 stated maturity, and other terms
and conditions upon which this Note is issued.

 

Borrower hereby
designates all Indebtedness and other obligations now or hereafter incurred or
otherwise outstanding under this Note, the Credit Agreement and the other Loan
Documents, as defined in the Credit Agreement, to be “Senior Indebtedness” as
defined in the Note Agreement.  Except as
expressly provided in the Credit Agreement, Borrower expressly waives
presentment, demand, protest and notice of any kind.  This Note shall be governed by and construed
in accordance with the laws of the State of Ohio, without regard to conflicts of
laws provisions.

 

JURY TRIAL WAIVER.
 BORROWER, TO THE EXTENT PERMITTED BY
LAW, HEREBY WAIVES ANY RIGHT TO HAVE 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 THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH
THIS NOTE OR ANY OTHER NOTE OR INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED THERETO.

 

	
   

  	
  EPIQ SYSTEMS, INC.

  
	
   

  	
   

  
	 
	
   

  	
  By:

  	
   

  	 

	 
	
   

  	
  Name:

  	
   

  	 

	 
	
   

  	
  Title:

  	
   

  	 

							

 

E-4

 

EXHIBIT C

FORM OF

NOTICE OF LOAN

 

                                 ,
20          

 

KeyBank National
Association, as Agent

127 Public Square

Cleveland, Ohio
44114-0616

Attention:   Institutional Bank

 

Ladies and Gentlemen:

 

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

 

(a)                                  The
Borrower requesting the Proposed Loan is
                        .

 

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

 

(c)                                  The
amount of the Proposed Loan is
$                              .

 

(d)                                 The
Proposed Loan is to be a Base Rate Loan
         / Eurodollar Loan
      / Swing
Loan          (Check one.)

 

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

 

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

 

(i)                                     the
representations and warranties contained in Article VI of the Credit
Agreement 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)                                  no
event has occurred and is continuing, or would result from such Proposed Loan,
or the application of proceeds therefrom, that constitutes a Default or Event
of Default; and

 

E-5

 

(iii)                               the
conditions set forth in Section 2.5 and Article IV of the Credit
Agreement have been satisfied.

 

	
   

  	
  EPIQ SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

E-6

 

EXHIBIT D

FORM OF

COMPLIANCE CERTIFICATE

 

For Fiscal Quarter
ended                                                 

 

THE UNDERSIGNED HEREBY
CERTIFIES THAT:

 

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

 

(2)                                  I
am familiar with the terms of that certain Second Amended and Restated Credit
and Security Agreement, dated as of July 30, 2008, among Borrowers, the
lenders from time to time named on Schedule 1 thereto (together with
their respective successors and assigns, collectively, the “Lenders”), as
defined in the Credit Agreement, KEYBANK NATIONAL ASSOCIATION, as Agent,
NATIONAL CITY BANK, as co-documentation agent, and SILICON VALLEY BANK, as
co-documentation agent (as the same may from time to time be amended, restated
or otherwise modified, the “Credit Agreement”, the terms defined therein being
used herein as therein defined), and the terms of the other Loan Documents, and
I have made, or have caused to be made under my supervision, a review in
reasonable detail of the transactions and condition of Borrowers and their
Subsidiaries during the accounting period covered by the attached financial
statements;

 

(3)                                  The
review described in paragraph (2) above did not disclose, and I have no
knowledge of, the existence of any condition or event that constitutes or
constituted a Default or Event of Default, at the end of the accounting period
covered by the attached financial statements or as of the date of this Certificate;

 

(4)                                  The
representations and warranties made by Borrowers contained in Article VI
of the Credit Agreement are true in all material respects as if made on and as
of the date hereof, except to the extent that any thereof expressly relate to
an earlier date; and

 

(5)                                  Set
forth on Attachment I hereto are calculations of the financial covenants set
forth in Section 5.7 of the Credit Agreement, which calculations show
compliance with the terms thereof.

 

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

 

	
   

  	
  EPIQ SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

E-7

 

EXHIBIT E

FORM OF

ASSIGNMENT AND
ACCEPTANCE AGREEMENT

 

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

 

1.                                       Preliminary
Statement.  Assignor is a party to a
Second 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 otherwise
modified, the “Credit Agreement”), among EPIQ SYSTEMS, INC., a Missouri
corporation (“EPIQ”), the Domestic Subsidiary Borrowers named therein (together
with EPIQ, collectively, “Borrowers” and, individually, each a “Borrower”), the
lenders named on Schedule 1 thereto (together with their respective
successors and assigns, collectively, the “Lenders” and, individually, each a “Lender”),
KEYBANK NATIONAL ASSOCIATION, as the lead arranger, sole book runner and
administrative agent for the Lenders (“Agent”), NATIONAL CITY BANK, as
co-documentation agent, and SILICON VALLEY BANK, as co-documentation
agent.  Capitalized terms used herein and
not otherwise defined herein shall have the meanings attributed to them in the
Credit Agreement.

 

2.                                       Assignment
and Assumption.  Assignor hereby
sells and assigns to Assignee, and Assignee hereby purchases and assumes from
Assignor, an interest in and to Assignor’s rights and obligations under the
Credit Agreement, effective as of the Assignment Effective Date (as hereinafter
defined), 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) the
Commitment, (b) any Loan made by Assignor that is outstanding on the
Assignment Effective Date, (c) Assignor’s interest in any Letter of Credit
outstanding on the Assignment Effective Date, (d) any Note delivered to
Assignor pursuant to the Credit Agreement, and (e) the Credit Agreement
and the other Related Writings.  After
giving effect to such sale and assignment and on and after the Assignment
Effective Date, Assignee shall be deemed to have a “Commitment Percentage”
under the Credit Agreement equal to the Commitment Percentage set forth in
subpart II.A on Annex 1 hereto and an Assigned Amount as set forth on
subpart I.B of Annex 1 hereto (hereinafter, the “Assigned Amount”).

 

3.                                       Assignment
Effective Date.  The Assignment
Effective Date (the “Assignment Effective Date”) shall be
[                    
    ,         ] (or
such other date agreed to by Agent).  On
or prior to the Assignment Effective Date, Assignor shall satisfy the following
conditions:

 

(a)                                  receipt
by Agent of  this Assignment Agreement,
including Annex 1 hereto, properly executed by Assignor and Assignee and
accepted and consented to by Agent and, if necessary pursuant to the provisions
of Section 11.10(b) of the Credit Agreement, by Administrative
Borrower;

 

(b)                                 receipt
by 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

 

(c)                                  receipt
by Agent from Assignee of an administrative questionnaire, or other similar
document, which shall include (i) the address for notices under the Credit
Agreement, (ii) the address of its Lending Office, (iii) wire
transfer instructions for delivery of funds by Agent, (iv) and such other
information as Agent shall request; and

 

(d)                                 receipt
by Agent from Assignor or Assignee of any other information required pursuant
to Section 11.10 of the Credit Agreement or otherwise necessary to complete
the transaction contemplated hereby.

 

4.                                       Payment
Obligations.  In consideration for
the sale and assignment of Loans hereunder, Assignee shall pay to Assignor, on
the Assignment Effective Date, the amount agreed to by Assignee and
Assignor.  Any interest, fees and other
payments accrued prior to the Assignment Effective Date with respect to the
Assigned Amount shall be for the account of Assignor.  Any interest, fees and other payments accrued
on and after the Assignment Effective Date with respect to the Assigned Amount
shall be for the account of Assignee. 
Each of Assignor and Assignee agrees that it will hold in trust for the
other party any interest, fees or other amounts which it may receive to which
the other party is entitled pursuant to the preceding sentence and to pay the
other party any such amounts which it may receive promptly upon receipt
thereof.

 

5.                                       Credit
Determination; Limitations on Assignor’s Liability.  Assignee represents and warrants to Assignor,
Borrowers, Agent and the Lenders (a) that it is capable of making and has
made and shall continue to make its own credit determinations and analysis
based upon such information as Assignee deemed sufficient to enter into the
transaction contemplated hereby and not based on any statements or
representations by Assignor; (b) Assignee confirms that it meets the
requirements to be an assignee as set forth in Section 11.10 of the Credit
Agreement; (c) Assignee confirms that it is able to fund the Loans and the
Letters of Credit as required by the Credit Agreement; (d) Assignee agrees
that it will perform in accordance with their terms all of the obligations
which by the terms of the Credit Agreement and the Related Writings are
required to be performed by it as a Lender thereunder; and (e) Assignee
represents that it has reviewed each of the Loan Documents and the Convertible
Subordinated Documents.  It is understood
and agreed that the assignment and assumption hereunder are made without
recourse to Assignor and that Assignor makes no representation or warranty of
any kind to Assignee and shall not be responsible for (i) the due
execution, legality, validity, enforceability, genuineness, sufficiency or
collectability of the Credit Agreement or any Related Writings, (ii) any
representation, warranty or statement made in or in connection with the Credit
Agreement or any of the Related Writings, (iii) the financial condition or
creditworthiness of any Borrower or any Guarantor of Payment, (iv) the
performance of or compliance with any of the terms or provisions of the Credit
Agreement or any of the Related Writings, (v) the inspection of any of the
property, books or records of Borrowers, or (vi) the validity,
enforceability, perfection, priority, condition, value or sufficiency of any
collateral securing or purporting to secure the Loans or Letters of
Credit.  Neither Assignor nor any of its
officers, directors, employees, agents or attorneys shall be liable for any
mistake, error of judgment, or action taken or omitted to be taken in
connection with the Loans, the Letters of Credit, the Credit Agreement or the
Related Writings, except for its or their own gross negligence or willful
misconduct.  Assignee appoints Agent to
take such 

 

E-9

 

action as agent on its
behalf and to exercise such powers under the Credit Agreement as are delegated
to Agent by the terms thereof.

 

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

 

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

 

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

 

9.                                       Acceptance
of Agent; Notice by Assignor.  This
Assignment Agreement is conditioned upon the acceptance and consent of Agent
and, if necessary pursuant to Section 11.10 of the Credit Agreement, upon
the acceptance and consent of Administrative Borrower; provided that the
execution of this Assignment Agreement by Agent and, if necessary, by
Administrative Borrower is evidence of such acceptance and consent.

 

10.                                 Entire
Agreement.  This Assignment Agreement
embodies the entire agreement and understanding between the parties hereto and
supersedes all prior agreements and understandings between the parties hereto
relating to the subject matter hereof.

 

11.                                 Governing
Law.  This Assignment Agreement shall
be governed by the laws of the State of Ohio, without regard to conflicts of
laws.

 

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

 

E-10

 

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

 

[Remainder of page intentionally
left blank.]

 

E-11

 

14.                                 JURY
TRIAL WAIVER.  EACH OF THE UNDERSIGNED,
TO THE EXTENT PERMITTED BY LAW, WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN
RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, AMONG
AGENT, ANY OF THE LENDERS, AND ANY OF THE BORROWERS, OR ANY THEREOF, ARISING OUT
OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED AMONG THEM IN CONNECTION WITH THIS INSTRUMENT OR ANY NOTE OR OTHER
AGREEMENT, INSTRUMENT OR DOCUMENT EXECUTED OR DELIVERED IN CONNECTION THEREWITH
OR THE TRANSACTIONS RELATED HERETO.

 

IN WITNESS WHEREOF, the parties hereto have executed
this Assignment Agreement by their duly authorized officers as of the date
first 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

 

ANNEX 1

TO

ASSIGNMENT AND
ACCEPTANCE AGREEMENT

 

On and after the
Assignment Effective Date, after giving effect to all other assignments being
made 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

 

EXHIBIT F

FORM OF

DOMESTIC SUBSIDIARY BORROWER ASSUMPTION AGREEMENT

 

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

 

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

 

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

 

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

 

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

 

1.                                       Assumption.  On
and after the Assumption Effective Date, the Obligor irrevocably and
unconditionally assumes and shall be liable for all of the obligations of a Borrower
under the Credit Agreement and the Related Writings (the “Obligations”), on a
joint and several basis, as fully as if the Obligor had been an original party
to the Credit Agreement, including, but not limited to (a) all Loans and
Letters of Credit, (b) all other indebtedness now owing or hereafter
incurred by one or more Borrowers to Agent and the Lenders pursuant to the 

 

E-14

 

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

 

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

 

3.                                       Representations
and Warranties of the Obligor.  The
Obligor represents and warrants to Agent and each Lender that:

 

(a)                                  the
Obligor is duly organized, validly existing, and in good standing (or
comparable concept in the applicable jurisdiction) under the laws of its state
or jurisdiction of incorporation or organization, and is duly qualified and
authorized to do business and is in good standing (or comparable concept in the
applicable jurisdiction) as a foreign entity in each state or jurisdiction
where the character of its property or its business activities makes such
qualification necessary, except where a failure to so qualify or be in good
standing would not reasonably be expected to result in a Material Adverse
Effect;

 

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

 

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

 

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

 

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

 

(a)                                  no
Default or Event of Default exists under the Credit Agreement, nor will any
occur immediately after the execution and delivery of this Agreement or by the
performance or observance of any provision hereof; and

 

E-15

 

(b)                                 neither
the execution and delivery of this Agreement, nor the performance and
observance of the provisions hereof, by the Obligor will conflict with, or
constitute a violation or default under, any provision of any applicable law or
of any material contract (including, without limitation, the Obligor’s
organizational, constituting or governing documents) or of any other material
writing binding upon the Obligor in any manner.

 

5.                                       Obligations
of Borrowers and Each Guarantor Not Affected.  Anything herein to the contrary
notwithstanding, Borrowers and each Guarantor of Payment shall remain bound by
the terms and conditions of all of the Loan Documents to which such Borrower or
Guarantor of Payment is a party regardless of the assumption of the Obligations
by the Obligor hereunder or the enforceability thereof or of any of the Loan
Documents.

 

6.                                       Conditions
Precedent.  Concurrently with the
execution of this Agreement, Borrowers and the Obligor, as appropriate, shall:

 

(a)                                  satisfy
each of the conditions set forth in Section 2.13(a) of the Credit
Agreement;

 

(b)                                 pay
all reasonable legal fees and expenses of Agent incurred in connection with
this Agreement;

 

(c)                                  cause
each Guarantor of Payment to consent and agree to and acknowledge the terms of
this Agreement; and

 

(d)                                 provide
such other items as may be reasonably required by Agent or the Lenders in
connection with this Agreement.

 

7.                                       Binding
Nature of Agreement.  All provisions
of the Credit Agreement shall remain in full force and effect and be unaffected
hereby.  This Agreement is a Related
Writing as defined in the Credit Agreement. 
This Agreement shall bind and benefit Borrowers, the Obligor, Agent and
the Lenders and their respective successors and assigns.

 

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

 

9.                                       Ohio
Law to Govern.  The rights and
obligations of all parties hereto shall be governed by the laws of the State of
Ohio, without regard to principles of conflicts of laws.

 

[Remainder of page intentionally
left blank.]

 

E-16

 

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

 

IN WITNESS WHEREOF, the
parties hereto have executed this Agreement by their duly authorized officers
as 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:

  	
   

  
									

 

E-17

 

GUARANTOR
ACKNOWLEDGMENT

 

Each of the undersigned
consents and agrees to and acknowledges the terms of the foregoing the Domestic
Subsidiary Borrower Assumption Agreement, dated as of
[                      
      ,
        ].  Each of the undersigned specifically agrees
to the waivers set forth in such agreement, including, but not limited to, the
jury trial waiver.  Each of the
undersigned further agrees that the obligations of each of the undersigned
pursuant to the Guaranty of Payment and any other Loan Document to which any of
the undersigned is a party shall remain in full force and effect and be
unaffected hereby.

 

	
                                                               

  	
   

  	
                                                               

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
                                                                 

  	
   

  	
                                                             
  

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
														

 

E-18Exhibit 4.1

 

ASCENT
SOLAR TECHNOLOGIES, INC.

SECOND AMENDED AND RESTATED

2005 STOCK OPTION PLAN

(Approved by Board of Directors on May 2, 2008;

Adopted by Stockholders on July 1, 2008)

 

1.     Purposes
of the Plan.     The purposes of this 2005 Stock
Option Plan are:

 

·     to attract and retain the best available personnel;

 

·     to provide additional incentive to
Employees, Directors and Consultants; and

 

·     to promote the success of the Company’s
business.

 

        Options
granted under the Plan may be Incentive Stock Options or Nonstatutory Stock
Options, as determined by the Administrator at the time of grant.

 

2.     Definitions.
    As used herein, the following definitions shall apply:

 

        (a)   “
Administrator “ means the Board
or any of its Committees as shall be administering the Plan, in accordance with
Section 4 of the Plan.

 

        (b)   “
Applicable Laws “ means the
requirements relating to the administration of stock option plans under U. S.
state corporate laws, U.S. federal and state securities laws, the Code, any
stock exchange or quotation system on which the Common Stock is listed or
quoted and the applicable laws of any foreign country or jurisdiction where
Options are, or will be, granted under the Plan.

 

        (c)   “
Board “ means the Board of Directors
of the Company.

 

        (d)   “
Code “ means the Internal Revenue
Code of 1986, as amended.

 

        (e)   “
Committee “ means a committee of
Directors appointed by the Board in accordance with Section 4 of the Plan.

 

        (f)    “
Common Stock “ means the common
stock of the Company.

 

        (g)   “
Company “ means Ascent Solar
Technologies, Inc., a Delaware corporation.

 

        (h)   “
Consultant “ means any person,
including an advisor, engaged by the Company or a Parent or Subsidiary to render
services to such entity.

 

        (i)    “
Director “ means a member of the
Board.

 

        (j)    “
Disability “ means total and
permanent disability as defined in Section 22(e)(3) of the Code.

 

        (k)   “
Employee “ means any person,
including Officers and Directors, employed by the Company or any Parent or
Subsidiary of the Company. A Service Provider shall not cease to be an Employee
in the case of (i) any leave of absence approved by the Company or (ii) transfers
between locations of the Company or between the Company, its Parent, any
Subsidiary, or any successor. For purposes of Incentive Stock Options, no such
leave may exceed one hundred eighty (180) days, unless reemployment upon
expiration of such leave is guaranteed by statute or contract. If reemployment
upon expiration of a leave of absence approved by the Company is not so
guaranteed, on the one hundred eighty-first (181 st ) day of such leave any Incentive Stock Option
held by the Optionee shall cease to be treated as an Incentive Stock Option and
shall be treated for tax purposes as a Nonstatutory Stock Option. Neither
service as a Director nor payment of a director’s fee by the Company shall be
sufficient to constitute “employment” by the Company.

 

        (l)    “
Exchange Act “ means the
Securities Exchange Act of 1934, as amended.

 

        (m)  “
Fair Market Value “ means, as of
any date, the value of Common Stock determined as follows:

 

1

 

        (i)    If
the Common Stock is listed on any established stock exchange or a national
market system, including without limitation the Nasdaq Global Market or The
Nasdaq Capital Market, its Fair Market Value shall be the closing sales price
for such stock (or the closing bid, if no sales were reported) as quoted on
such exchange or system for the day of determination, as reported in The Wall Street Journal or such other
source as the Administrator deems reliable;

 

        (ii)   If
the Common Stock is regularly quoted by a recognized securities dealer but
selling prices are not reported, the Fair Market Value of a Share of Common
Stock shall be the mean between the high bid and low asked prices for the
Common Stock on the day of determination, as reported in The Wall Street Journal or such other source
as the Administrator deems reliable; or

 

        (iii)  In
the absence of an established market for the Common Stock, the Fair Market
Value shall be determined in good faith by the Administrator.

 

        (n)   “
Incentive Stock Option “ means an
Option intended to qualify as an incentive stock option within the meaning of Section 422
of the Code and the regulations promulgated thereunder.

 

        (o)   “
Nonstatutory Stock Option “ means
an Option not intended to qualify as an Incentive Stock Option.

 

        (p)   “
Notice of Grant “ means a written
or electronic notice evidencing certain terms and conditions of an individual
Option grant. The Notice of Grant is part of the Option Agreement.

 

        (q)   “
Officer “ means a person who is
an officer of the Company within the meaning of Section 16 of the Exchange
Act and the rules and regulations promulgated thereunder.

 

        (r)   “
Option “ means a stock option
granted pursuant to the Plan.

 

        (s)   “
Option Agreement “ means an
agreement between the Company and an Optionee evidencing the terms and
conditions of an individual Option grant. The Option Agreement is subject to
the terms and conditions of the Plan.

 

        (t)    “
Option Exchange Program “ means a
program whereby outstanding Options are surrendered in exchange for Options
with a lower exercise price.

 

        (u)   “
Optioned Stock “ means the Common
Stock subject to an Option.

 

        (v)   “
Optionee “ means the holder of an
outstanding Option granted under the Plan.

 

        (w)  “
Parent “ means a “parent
corporation,” whether now or hereafter existing, as defined in Section 424(e) of
the Code.

 

        (x)   “
Plan “ means this 2005 Stock
Option Plan, as amended.

 

        (y)   “
Rule 16b-3 “ means Rule 16b-3
of the Exchange Act or any successor to Rule 16b-3, as in effect when
discretion is being exercised with respect to the Plan.

 

        (z)   “
Section 16(b) “ means Section 16(b) of
the Exchange Act.

 

        (aa) “
Service Provider “ means an
Employee, Director or Consultant.

 

        (bb) “
Share “ means a share of the
Common Stock, as adjusted in accordance with Section 12 of the Plan.

 

        (cc) “
Subsidiary “ means a “subsidiary
corporation”, whether now or hereafter existing, as defined in Section 424(f) of
the Code.

 

3.     Stock
Subject to the Plan.     Subject to the
provisions of Section 12 of the Plan, the maximum aggregate number of
Shares which may be optioned and sold under the Plan is one million five  hundred thousand (1,500,000) Shares. The
Shares may be authorized, but unissued, or reacquired Common Stock.

 

        If an
Option expires or becomes unexercisable without having been exercised in full,
or is surrendered pursuant to an Option Exchange Program, the unpurchased
Shares which were subject thereto shall become available for future grant or
sale under the Plan (unless the Plan has terminated); provided , however , that Shares that have actually been issued under
the Plan shall not be returned to the Plan and shall not become available for
future distribution under the Plan.

 

4.     Administration
of the Plan.

 

        (a)     Procedure.

 

2

 

        (i)    
Multiple Administrative Bodies.
    The Plan may be administered by different Committees
with respect to different groups of Service Providers.

 

        (ii)   
Section 162(m).
    To the extent that the Administrator determines it to
be desirable to qualify Options granted hereunder as “performance-based
compensation” within the meaning of Section 162(m) of the Code, the
Plan shall be administered by a Committee of two or more “outside directors”
within the meaning of Section 162(m) of the Code.

 

        (iii)  
Rule 16b-3.
    To the extent desirable to qualify transactions
hereunder as exempt under Rule 16b-3, the transactions contemplated
hereunder shall be structured to satisfy the requirements for exemption under Rule 16b-3.

 

        (iv)  
Other Administration.
    Other than as provided above, the Plan shall be
administered by (A) the Board or (B) a Committee, which committee
shall be constituted to satisfy Applicable Laws.

 

        (b)     Powers of the Administrator.
    Subject to the provisions of the Plan, and in the case
of a Committee, subject to the specific duties delegated by the Board to such
Committee, the Administrator shall have the authority, in its discretion:

 

        (i)    to
determine the Fair Market Value;

 

        (ii)   to
select the Service Providers to whom Options may be granted hereunder;

 

        (iii)  to
determine the number of shares of Common Stock to be covered by each Option
granted hereunder;

 

        (iv)  to
approve forms of agreement for use under the Plan;

 

        (v)   to
determine the terms and conditions, not inconsistent with the terms of the
Plan, of any Option granted hereunder. Such terms and conditions include, but
are not limited to, the exercise price, the time or times when Options may be
exercised (which may be based on performance criteria), any vesting
acceleration or waiver of forfeiture restrictions, and any restriction or
limitation regarding any Option or the shares of Common Stock relating thereto,
based in each case on such factors as the Administrator, in its sole
discretion, shall determine;

 

        (vi)  to
institute an Option Exchange Program;

 

        (vii) to
construe and interpret the terms of the Plan and awards granted pursuant to the
Plan;

 

        (viii)  to
prescribe, amend and rescind rules and regulations relating to the Plan,
including rules and regulations relating to sub-plans established for the
purpose of qualifying for preferred tax treatment under foreign tax laws;

 

        (ix)  to
modify or amend each Option (subject to Section 14(c) of the Plan),
including the discretionary authority to extend the post-termination exercisability
period of Options longer than is otherwise provided for in the Plan;

 

        (x)   to
authorize any person to execute on behalf of the Company any instrument
required to effect the grant of an Option previously granted by the
Administrator; and

 

        (xi)  to
make all other determinations deemed necessary or advisable for administering
the Plan.

 

        (c)     Effect of Administrator’s
Decision.     The Administrator’s decisions,
determinations and interpretations shall be final and binding on all Optionees
and any other holders of Options.

 

5.     Eligibility.
    Nonstatutory Stock Options may be granted to Service
Providers. Incentive Stock Options may be granted only to Employees.

 

6.     Limitations.

 

        (a)   Each
Option shall be designated in the Option Agreement as either an Incentive Stock
Option or a Nonstatutory Stock Option. However, notwithstanding such
designation, to the extent that the aggregate Fair Market Value of the Shares
with respect to which Incentive Stock Options are exercisable for the first
time by the Optionee during any calendar year (under all plans of the Company
and any Parent or Subsidiary) exceeds $100,000, such Options shall be treated
as Nonstatutory Stock Options. For purposes of this Section 6(a), Incentive
Stock Options shall be taken into account in the order in which they were
granted. The Fair Market Value of the Shares shall be determined as of the time
the Option with respect to such Shares is granted.

 

        (b)   Neither
the Plan nor any Option shall confer upon an Optionee any right with respect to
continuing the Optionee’s relationship as a Service Provider with the Company,
nor shall they interfere in any way with the Optionee’s right or the Company’s
right to terminate such relationship at any time, with or without cause.

 

3

 

        (c)   No
Employee shall be granted, in any one fiscal year of the Company, Options to
purchase more than one hundred thousand (100,000) Shares.

 

7.     Term
of Plan.     Subject to Section 18 of the
Plan, the Plan shall become effective upon its adoption by the Board. It shall
continue in effect for a term of ten (10) years unless terminated earlier
under Section 14 of the Plan.

 

8.     Term
of Option.     The term of each Option shall be
stated in the Option Agreement; provided, however, that the term shall be no
more than ten (10) years from the date of grant thereof. In the case of an
Incentive Stock Option, the term shall be ten (10) years from the date of
grant or such shorter term as may be provided in the Option Agreement.
Moreover, in the case of an Incentive Stock Option granted to an Optionee who,
at the time the Incentive Stock Option is granted, owns stock representing more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or any Parent or Subsidiary, the term of the Incentive
Stock Option shall be five (5) years from the date of grant or such
shorter term as may be provided in the Option Agreement.

 

9.     Option
Exercise Price and Consideration.

 

        (a)     Exercise Price.
    The per share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:

 

        (i)    In
the case of an Incentive Stock Option

 

        (A)  granted
to an Employee who, at the time the Incentive Stock Option is granted, owns
stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the per Share
exercise price shall be no less than 110% of the Fair Market Value per Share on
the date of grant.

 

        (B)  granted
to any Employee other than an Employee described in paragraph (A) immediately
above, the per Share exercise price shall be no less than 100% of the Fair
Market Value per Share on the date of grant.

 

        (ii)   In
the case of a Nonstatutory Stock Option

 

        (A)  granted
to a Service Provider who, at the time the Nonstatutory Stock Option is
granted, owns stock representing more than ten percent (10%) of the voting
power of all classes of stock of the Company or any Parent or Subsidiary, the
per Share exercise price shall be no less than one hundred ten percent (110%)
of the Fair Market Value per Share on the date of grant.

 

        (B)  granted
to a Service Provider other than a Service Provider described in
paragraph (A) immediately above, or intended to qualify as “performance-based
compensation” within the meaning of Section 162(m) of the Code, the
per Share exercise price shall be no less than 100% of the Fair Market Value
per Share on the date of grant.

 

        (iii)  Notwithstanding
the foregoing, Options may be granted with a per Share exercise price of less
than one hundred percent (100%) of the Fair Market Value per Share on the date
of grant pursuant to a merger or other corporate transaction.

 

        (b)     Waiting Period and Exercise
Dates.     At the time an Option is granted, the
Administrator shall fix the period within which the Option may be exercised and
shall determine any conditions which must be satisfied before the Option may be
exercised.

 

        (c)     Form of Consideration.
    The Administrator shall determine the acceptable form
of consideration for exercising an Option, including the method of payment. In
the case of an Incentive Stock Option, the Administrator shall determine the
acceptable form of consideration at the time of grant. Such consideration may
consist entirely of:

 

        (i)    cash;

 

        (ii)   check;

 

        (iii)  other
Shares which (A) in the case of Shares acquired upon exercise of an
option, have been owned by the Optionee for more than six months on the date of
surrender, and (B) have a Fair Market Value on the date of surrender equal
to the aggregate exercise price of the Shares as to which said Option shall be
exercised;

 

        (iv)  consideration
received by the Company under a cashless exercise program, if implemented by
the Company in connection with the Plan;

 

        (v)   a
reduction in the amount of any Company liability to the Optionee, including any
liability attributable to the Optionee’s participation in any Company-sponsored
deferred compensation program or arrangement;

 

4

 

        (vi)  any
combination of the foregoing methods of payment; or

 

        (vii) such
other consideration and method of payment for the issuance of Shares to the
extent permitted by Applicable Laws.

 

10.     Exercise
of Option.

 

        (a)     Procedure for Exercise;
Rights as a Stockholder.     Any Option granted
hereunder shall be exercisable according to the terms of the Plan and at such
times and under such conditions as determined by the Administrator and set
forth in the Option Agreement. Unless otherwise stated in the Option Agreement,
Options shall become exercisable at a rate one-third (1/3) per year over three (3) years from
the date the Options are granted, with one-third (1/3) of the Shares under the Option vesting on each of
the first, second and third anniversaries of the date of grant. Unless the
Administrator provides otherwise, vesting of Options granted hereunder shall be
suspended during any unpaid leave of absence. An Option may not be exercised
for a fraction of a Share.

 

        An
Option shall be deemed exercised when the Company receives: (i) written or
electronic notice of exercise (in accordance with the Option Agreement) from
the person entitled to exercise the Option, and (ii) full payment for the
Shares with respect to which the Option is exercised. Full payment may consist
of any consideration and method of payment authorized by the Administrator and
permitted by the Option Agreement and the Plan. Shares issued upon exercise of
an Option shall be issued in the name of the Optionee or, if requested by the
Optionee, in the name of the Optionee and his or her spouse. Until the Shares
are issued (as evidenced by the appropriate entry on the books of the Company
or of a duly authorized transfer agent of the Company), no right to vote or
receive dividends or any other rights as a stockholder shall exist with respect
to the Optioned Stock, notwithstanding the exercise of the Option. The Company
shall issue (or cause to be issued) such Shares promptly after the Option is
exercised. No adjustment will be made for a dividend or other right for which
the record date is prior to the date the Shares are issued, except as provided
in Section 12 of the Plan.

 

        Exercising
an Option in any manner shall decrease the number of Shares thereafter
available, both for purposes of the Plan and for sale under the Option, by the
number of Shares as to which the Option is exercised.

 

        (b)     Termination of Relationship
as a Service Provider.     If an Optionee ceases
to be a Service Provider, other than upon the Optionee’s death or Disability,
the Optionee may exercise his or her Option within ninety (90) days of
termination, or such longer period of time as specified in the Option
Agreement, to the extent that the Option is vested on the date of termination
(but in no event later than the expiration of the term of such Option as set
forth in the Option Agreement). If, on the date of termination, the Optionee is
not vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified by the
Administrator, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.

 

        (c)     Disability of Optionee.
    If an Optionee ceases to be a Service Provider as a
result of the Optionee’s Disability, the Optionee may exercise his or her
Option within one (1) year of termination, or such longer period of time
as may be specified in the Option Agreement, to the extent the Option is vested
on the date of termination (but in no event later than the expiration of the
term of such Option as set forth in the Option Agreement). If, on the date of
termination, the Optionee is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall revert to the Plan.
If, after termination, the Optionee does not exercise his or her Option within
the time specified herein, the Option shall terminate, and the Shares covered
by such Option shall revert to the Plan.

 

        (d)     Death of Optionee.
    If an Optionee dies while a Service Provider, the
Option may be exercised within one (1) year following Optionee’s death, or
such longer period of time as may be specified in the Option Agreement, to the
extent that the Option is vested on the date of death (but in no event later
than the expiration of the term of such Option as set forth in the Notice of
Grant), by the Optionee’s designated beneficiary, provided such beneficiary has
been designated prior to Optionee’s death in a form acceptable to the
Administrator. If no such beneficiary has been designated by the Optionee, then
such Option may be exercised by the personal representative of the Optionee’s
estate or by the person(s) to whom the Option is transferred pursuant to
the Optionee’s will or in accordance with the laws of descent and distribution.
If, at the time of death, the Optionee is not vested as to his or her entire
Option, the Shares covered by the unvested portion of the Option shall
immediately revert to the Plan. If the Option is not so exercised within the
time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.

 

        (e)     Buyout Provisions.
    The Administrator may at any time offer to buy out for
a payment in cash or Shares an Option previously granted based on such terms
and conditions as the Administrator shall establish and communicate to the
Optionee at the time that such offer is made.

 

        (f)     Code Section 162(m) Provisions.

 

        (i)    Notwithstanding
any other provision of the Plan, if the Compensation Committee of the Board
(the “Compensation Committee”) determines at the time an Option is granted to
an Optionee that such Optionee is, or may be as of the end of the tax year for
which the Company would claim a tax deduction in connection with such Option, a
“covered employee” within the 

 

5

 

meaning of Section 162(m)(3) of the Code,
and to the extent the Compensation Committee considers it desirable for
compensation delivered pursuant to such Option to be eligible to qualify for an
exemption from the limit on tax deductibility of compensation under Section 162(m) of
the Code, then the Compensation Committee may provide that this Section 10(f) is
applicable to such Option under such terms as the Compensation Committee shall
determine.

 

        (ii)   If
an Option is subject to this Section 10(f), then vesting of the Option and
issuance of Optioned Stock pursuant thereto, as applicable, may be subject to
satisfaction of one, or more than one, objective performance targets. In such
event, the Compensation Committee shall determine the performance targets that
will be applied with respect to each Option subject to this Section 10(f) at
the time of grant, but in no event later than 90 days after the
commencement of the period of service to which the performance target(s) relate.
The performance criteria applicable to Options subject to this Section 10(f) will
be one or more of the following criteria: (A) stock price; (B) market
share; (C) sales; (D) earnings per share, core earnings per share or
variations thereof; (E) return on equity; (F) costs; (G) revenue;
(H) cash to cash cycle; (I) days payables outstanding; (J) days
of supply; (K) days sales outstanding; (L) cash flow; (M) operating
income; (N) profit after tax; (O) profit before tax; (P) return
on assets; (Q) return on sales; (R) inventory turns; (S) invested
capital; (T) net operating profit after tax; (U) return on invested
capital; (V) total shareholder return; (W) earnings; (X) return
on equity or average shareowners’ equity; (Y) total shareowner return; (Z) return
on capital; (AA) return on investment; (BB) income or net income; (CC)
operating income or net operating income; (DD) operating profit or net
operating profit; (EE) operating margin; (FF) return on operating revenue; (GG)
contract awards or backlog; (HH) overhead or other expense reduction; (II) growth
in shareowner value relative to the moving average of the S&P 500
Index or a peer group index; (JJ) credit rating; (KK) strategic plan
development and implementation; (LL) net cash provided by operating activities;
(MM) gross margin; (NN) economic value added; (OO) customer satisfaction; (PP)
financial return ratios; (QQ) market performance; (RR) production capacity;
(SS) production volume; (TT) achievement of photovoltaic conversion efficiency;
(UU) production yields; (VV) EBITDA; (WW) EBIT; (XX) market
capitalization; (YY) liquidity; (ZZ) strategic partnerships; (AAA) production
agreements and relationships; and (BBB) product certifications.

 

        (iii)  Notwithstanding
any contrary provision of the Plan, the Compensation Committee may not increase
the number of Optioned Stock pursuant to any Option subject to this Section 10(f),
nor may it waive the achievement of any performance target established pursuant
to this Section 10(f).

 

        (iv)  The
Compensation Committee shall have the power to impose such other restrictions
on Options subject to this Section 10(f) as it may deem necessary or
appropriate to ensure that such Option satisfies all requirements for “performance-based
compensation” within the meaning of Code section 162(m)(4)(C) of the
Code, the regulations promulgated thereunder, and any successors thereto.

 

11.     Limited
Transferability of Options.     Unless
determined otherwise by the Administrator, Options may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or the laws of descent and distribution, and may be exercised during the
lifetime of the Optionee, only by the Optionee. If the Administrator in its
sole discretion makes an Option transferable, such Option may only be
transferred (i) by will, (ii) by the laws of descent and
distribution, or (iii) as permitted by Rule 701 of the Securities Act
of 1933, as amended.

 

12.     Adjustments
Upon Changes in Capitalization, Dissolution, Merger or Asset Sale.

 

        (a)     Changes in Capitalization.
    Subject to any required action by the stockholders of
the Company, the number of shares of Common Stock covered by each outstanding
Option, and the number of shares of Common Stock which have been authorized for
issuance under the Plan but as to which no Options have yet been granted or
which have been returned to the Plan upon cancellation or expiration of an
Option, as well as the price per share of Common Stock covered by each such
outstanding Option, shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the Common Stock, or any other increase or decrease in the number of issued
shares of Common Stock effected without receipt of consideration by the
Company; provided , however , that conversion of any
convertible securities of the Company shall not be deemed to have been “effected
without receipt of consideration.” Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any
class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to an Option
..

 

        (b)     Dissolution or Liquidation.
    In the event of the proposed dissolution or liquidation
of the Company, the Administrator shall notify each Optionee as soon as
practicable prior to the effective date of such proposed transaction. The
Administrator in its discretion may provide for an Optionee to have the right
to exercise his or her Option until ten (10) days prior to such
transaction as to all of the Optioned Stock covered thereby, including Shares
as to which the Option would not otherwise be exercisable. In addition, the
Administrator may provide that any Company repurchase option applicable to any
Shares purchased upon exercise of an Option 

 

6

 

shall lapse as to all such Shares, provided the proposed dissolution or
liquidation takes place at the time and in the manner contemplated. To the
extent it has not been previously exercised, an Option will terminate
immediately prior to the consummation of such proposed action.

 

        (c)     Change of Control.
    Unless otherwise stated in the Option Agreement, in the
event of a Change of Control, then as to each Optionee, fifty percent (50%) of
any outstanding Optioned Stock that has not yet vested at the time such Change
of Control occurs shall become vested and exercisable. In such event, the
Administrator shall notify the Optionee in writing or electronically at least
fifteen (15) calendar days prior to the Change of Control of the
exercisability of the Option. The portion of the Option that is then vested
(including 50% of the unvested portion that becomes vested due to the Change of
Control) shall be exercisable by the Optionee for a period of fifteen
(15) calendar days from the date of such notice, and the Option shall
terminate upon the expiration of such period. Notwithstanding the foregoing and
anything else in this Plan, and unless otherwise stated in the Option
Agreement, if the employment of an Optionee is terminated by the Company or its
successor in connection with a Change of Control (as determined in the sole and
absolute discretion of the Committee), then the Optionee’s entire Option shall
become vested and exercisable upon termination  of employment. For purposes of this paragraph, a “Change
of Control” means the happening of any of the following:

 

        (i)    any
one person, or more than one person acting as a group, acquires ownership of
stock of the Company that, together with stock held by such person or group,
possesses more than 50 percent of the total fair market value or total
voting power of the stock of the Company; provided, however, that if any one
person, or more than one person acting as a group, is considered to own more
than 50 percent of the total fair market value or total voting power of
the stock of the Company, the acquisition of additional stock by the same
person or persons will not be considered a Change of Control. Notwithstanding
the foregoing, an increase in the percentage of stock of the Company owned by
any one person, or persons acting as a group, as a result of a transaction in
which the Company acquires its stock in exchange for property will be treated as
an acquisition of stock of the Company for purposes of this
subsection (i);

 

        (ii)   during
any period of 12 consecutive months, individuals who at the beginning of such
period constituted the Board (together with any new or replacement directors whose
election by the Board, or whose nomination for election by the Company’s
shareholders, was approved by a vote of at least a majority of the directors
then still in office who were either directors at the beginning of such period
or whose election or nomination for election was previously so approved) cease
for any reason to constitute a majority of the directors then in office; or

 

        (iii)  any
one person, or more than one person acting as a group, acquires (or has
acquired during the 12-month period ending on the date of the most recent
acquisition by the person or persons) assets from the Company, outside of the
ordinary course of business, that have a gross fair market value equal to or
more than 50 percent of the total gross fair market value of all of the
assets of the Company immediately prior to such acquisition or acquisitions.
For purposes of this subsection (iii), “gross fair market value” means the
value of the assets of the Company, or the value of the assets being disposed
of, determined without regard to any liabilities associated with such assets.
Notwithstanding anything to the contrary in this Agreement, the following shall
not be treated as a Change of Control under this subsection (iii): (A) a
transfer of assets from the Company to a shareholder of the Company (determined
immediately before the asset transfer); (B) a transfer of assets from the
Company to an entity, 50 percent or more of the total value or voting
power of which is owned, directly or indirectly, by the Company; (C) a
transfer of assets from the Company to a person, or more than one person acting
as a group, that owns, directly or indirectly, 50 percent or more of the
total value or voting power of all the outstanding stock of the Company; or (D) a
transfer of assets from the Company to an entity, at least 50 percent of
the total value or voting power of which is owned, directly or indirectly, by a
person described in (iii)(C) above.

 

13.     Date
of Grant.     The date of grant of an Option
shall be, for all purposes, the date on which the Administrator makes the
determination granting such Option, or such other later date as is determined
by the Administrator. Notice of the determination shall be provided to each
Optionee within a reasonable time after the date of such grant.

 

14.     Amendment
and Termination of the Plan.

 

        (a)     Amendment and Termination.
    The Board may at any time amend, alter, suspend or
terminate the Plan.

 

        (b)     Stockholder Approval.
    The Company shall obtain stockholder approval of any
Plan amendment to the extent necessary and desirable to comply with Applicable
Laws.

 

        (c)     Effect of Amendment or
Termination.     No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
Termination of the Plan shall not affect the Administrator’s ability to
exercise the powers granted to it hereunder with respect to Options granted
under the Plan prior to the date of such termination.

 

7

 

15.     Conditions
Upon Issuance of Shares.

 

        (a)     Legal Compliance.
    Shares shall not be issued pursuant to the exercise of
an Option unless the exercise of such Option and the issuance and delivery of
such Shares shall comply with Applicable Laws and shall be further subject to
the approval of counsel for the Company with respect to such compliance.

 

        (b)     Investment Representations.
    As a condition to the exercise of an Option, the
Company may require the person exercising such Option to represent and warrant
at the time of any such exercise that the Shares are being purchased only for
investment and without any present intention to sell or distribute such Shares
if, in the opinion of counsel for the Company, such a representation is
required.

 

16.     Inability
to Obtain Authority.     The inability of the
Company to obtain authority from any regulatory body having jurisdiction, which
authority is deemed by the Company’s counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.

 

17.     Reservation
of Shares.     The Company, during the term of
this Plan, will at all times reserve and keep available such number of Shares
as shall be sufficient to satisfy the requirements of the Plan.

 

18.     Stockholder
Approval.     The Plan shall be subject to
approval by the stockholders of the Company within twelve (12) months
after the date the Plan is adopted. Such stockholder approval shall be obtained
in the manner and to the degree required under Applicable Laws.

 

19.     Information
to Optionees.     The Company shall provide, or
make available, to each Optionee and to each individual who acquires Shares
pursuant to the Plan, not less frequently than annually during the period such
participant has one or more Options outstanding, and, in the case of an
individual who acquires Shares pursuant to the Plan, during the period such
individual owns such Shares, copies of annual financial statements. The Company
shall not be required to provide such statements to key employees whose duties
in connection with the Company assure their access to equivalent information.

 

8

 

ASCENT
SOLAR TECHNOLOGIES, INC.

SECOND AMENDED AND RESTATED 2005 STOCK OPTION PLAN

STOCK OPTION AGREEMENT

 

        Unless
otherwise defined herein, the terms defined in the Plan shall have the same
defined meanings in this Option Agreement.

 

I. NOTICE OF STOCK OPTION GRANT

 

«NAME»

 

        The undersigned
Optionee has been granted an Option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:

 

	
   

  	
  Date of Grant:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Vesting Commencement Date:

  	
   

  	
   

  
	
   

  	
  (same as Date of Grant, if left blank)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Exercise Price per Share:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Total Number of Shares Granted:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Type of Option:

  	
   

  	
            Incentive
  Stock Option

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
            Nonstatutory
  Stock Option

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Expiration Date:

  	
   

  	
   

  
	
   

  	
  (10 years from Date of Grant, if left blank)

  	
   

  	
   

  

 

Vesting Schedule:

 

        One-third
(1/3 ) of the Shares subject to the Option shall vest on
each of the first, second and third anniversaries of the Vesting Commencement
Date, subject to Optionee continuing as a Service Provider on such dates.

 

Termination Period:

 

        This
Option shall be exercisable for ninety (90) days after Optionee ceases to
be a Service Provider. Upon Optionee’s death or disability, this Option may be
exercised for such longer period as provided in the Plan. In no event may
Optionee exercise this Option after the Term/Expiration Date as provided above.

 

II. AGREEMENT

 

        1.     Grant of Option.
    The Plan Administrator of the Company hereby grants to
the Optionee named in the Notice of Grant (the “Optionee”), an option (the “Option”)
to purchase the number of Shares set forth in the Notice of Grant, at the
exercise price per Share set forth in the Notice of Grant (the “Exercise Price”),
and subject to the terms and conditions of the Plan, which is incorporated
herein by reference. Subject to Section 14(c) of the Plan, in the
event of a conflict between the terms and conditions of the Plan and this
Option Agreement, the terms and conditions of the Plan shall prevail.

 

        If
designated in the Notice of Grant as an Incentive Stock Option (“ISO”), this
Option is intended to qualify as an Incentive Stock Option as defined in Section 422
of the Code. Nevertheless, to the extent that it exceeds the $100,000 rule of
Code Section 422(d), this Option shall be treated as a Nonstatutory Stock
Option (“NSO”).

 

9

 

        2.     Exercise of Option.

 

        (a)     Right to Exercise.
    This Option shall be exercisable during its term in
accordance with the Vesting Schedule set out in the Notice of Grant and with
the applicable provisions of the Plan and this Option Agreement.

 

        (b)     Method of Exercise.
    This Option shall be exercisable by delivery of an
exercise notice in the form attached as Exhibit A
(the “Exercise Notice”) which shall state the election to exercise the Option,
the number of Shares with respect to which the Option is being exercised, and
such other representations and agreements as may be required by the Company.
The Exercise Notice shall be accompanied by payment of the aggregate Exercise
Price as to all Exercised Shares. This Option shall be deemed to be exercised
upon receipt by the Company of such fully executed Exercise Notice accompanied
by the aggregate Exercise Price.

 

        No
Shares shall be issued pursuant to the exercise of an Option unless such
issuance and such exercise complies with Applicable Laws. Assuming such
compliance, for income tax purposes the Shares shall be considered transferred
to the Optionee on the date on which the Option is exercised with respect to
such Shares.

 

        3.     Method of Payment.
    Payment of the aggregate Exercise Price shall be by any
of the following, or a combination thereof, at the election of the Optionee:

 

        (a)   cash
or check;

 

        (b)   consideration
received by the Company under a formal cashless exercise program adopted by the
Company in connection with the Plan;

 

        (c)   surrender
of other Shares which, (i) in the case of Shares acquired from the
Company, either directly or indirectly, have been owned by the Optionee for
more than six (6) months on the date of surrender, and (ii) have a
Fair Market Value on the date of surrender equal to the aggregate Exercise
Price of the Exercised Shares; or

 

        (d)   any
other form or manner endorsed in the Plan.

 

        4.     Restrictions on Exercise.
    This Option may not be exercised until such time as the
Plan has been approved by the shareholders of the Company, or if the issuance
of such Shares upon such exercise or the method of payment of consideration for
such shares would constitute a violation of any Applicable Law.

 

        5.     Non-Transferability of
Option.     This Option may not be transferred
in any manner otherwise than by will or by the laws of descent or distribution
and may be exercised during the lifetime of Optionee only by Optionee. The
terms of the Plan and this Option Agreement shall be binding upon the
executors, administrators, heirs, successors and assigns of the Optionee.

 

        6.     Term of Option.
    This Option may be exercised only within the term set
out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option.

 

        7.     Tax Obligations.

 

        (a)     Taxes.     Optionee
acknowledges and agrees that Optionee is solely responsible for the
satisfaction of all federal, state, local and foreign income and other tax
arising from or applicable to the Option exercise and the acquisition or sale of
the Optioned Stock. Optionee agrees that Optionee shall indemnify the Company
for any liability, including attorneys’ fees and expenses, accrued by the
Company as a result of the Optionee’s failure to satisfy those taxes.

 

        (b)     Notice of Disqualifying
Disposition of ISO Shares.     If the Option
granted to Optionee herein is an ISO, and if Optionee sells or otherwise
disposes of any of the Shares acquired pursuant to the ISO on or before the
later of (1) the date two (2) years after the Date of Grant, or (2) the
date one year after the date of exercise, the Optionee shall immediately notify
the Company in writing of such disposition.

 

        8.     Entire Agreement; Governing
Law.     The Plan is incorporated herein by
reference. The Plan and this Option Agreement constitute the entire agreement
of the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee’s interest except by means of a writing signed by the Company and
Optionee. This agreement is governed by the internal substantive laws but not
the choice of law rules of Colorado.

 

        9.     No Guarantee of Continued
Service.     OPTIONEE ACKNOWLEDGES AND AGREES
THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED
ONLY BY CONTINUING AS A SERVICE 

 

10

 

PROVIDER AT THE WILL OF THE COMPANY (NOT THROUGH THE
ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER).
OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS
CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT
CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE
PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT
INTERFERE IN ANY WAY WITH OPTIONEE’S RIGHT OR THE COMPANY’S RIGHT TO TERMINATE
OPTIONEE’S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT
CAUSE.

 

        Optionee
acknowledges receipt of a copy of the Plan and represents that he or she is
familiar with the terms and provisions thereof, and hereby accepts this Option
subject to all of the terms and provisions thereof. Optionee has reviewed the
Plan and this Option in their entirety, has had an opportunity to obtain the
advice of counsel and other advisors prior to executing this Option and fully
understands all provisions of the Option. Optionee hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Administrator upon
any questions arising under the Plan or this Option. Optionee further agrees to
notify the Company upon any change in the residence address indicated below.

 

	
  OPTIONEE:

  	
   

  	
  ASCENT SOLAR TECHNOLOGIES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature

  	
   

  	
  By

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Print Name

  	
   

  	
  Name

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title

  
	
   

  	
   

  	
   

  
	
  Residence Address

  	
   

  	
   

  

 

 

11

 

EXHIBIT A

 

EXERCISE NOTICE AND AGREEMENT

 

Ascent Solar Technologies, Inc.

8120 Shaffer Parkway

Littleton, CO 80127

 

Attention: Stock Option Plan Administrator

 

Re:

 

Exercise of Stock Option Pursuant to Second Amended
and Restated 2005 Stock Option Plan

 

	
  Name of Optionee:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Optionee’s Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Optionee’s Social Security Number:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date of Option Agreement:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exercise Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  The Shares Purchased are Incentive Stock Options:
  (circle one)

  	
   

  	
  Yes / No

  
	
   

  	
   

  	
   

  
	
  Number of Shares Purchased Pursuant to this Notice::

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exercise Price per Share:

  	
  $

  	
   

  
	
   

  	
   

  	
   

  
	
  Aggregate Exercise Price:

  	
  $

  	
   

  
	
   

  	
   

  	
   

  
	
  Amount of Payment Enclosed:

  	
  $

  	
   

  

 

        1.     Exercise of Option.
    Pursuant to the Second Amended and Restated 2005 Stock
Option Plan (the “Plan”) of Ascent Solar Technologies, Inc., a Delaware
corporation (the “Company”) and the Stock Option Agreement (“Option Agreement”)
entered into as of the date set forth above between the undersigned Optionee
and the Company, Optionee hereby elects, effective as of the date of this
notice, to exercise Optionee’s option to purchase the number of shares of
common stock (the “Shares”) of the Company indicated above.

 

        2.     Payment.
    Enclosed is Optionee’s payment in the amount indicated
above, which is the full exercise price for the Shares.

 

        3.     Deemed Date of Exercise.
    The date of exercise shall be deemed to be the first
date after which this Notice is filed with Company upon which Shares become
eligible for issuance to Optionee under applicable state and federal laws and
regulatory requirements.

 

        4.     Compliance with Laws.
    Optionee understands and acknowledges that the purchase
and sale of the Shares may be subject to approval under the state and federal
securities laws and other laws and, notwithstanding any other provision of the
Option Agreement to the contrary, the exercise of any rights to purchase Shares
is expressly conditioned upon approval (if necessary) and compliance with all
such laws.

 

        5.     Representations of Optionee.
    Optionee represents and warrants to the Company, as
follows:

 

12

 

        (a)   Optionee
has received, read, and understood the Plan and the Option Agreement and agrees
to abide by and be bound by their terms and conditions.

 

        (b)   The
Options exercised herewith are exercisable only according to the schedule in
the Option Agreement.

 

        (c)   Optionee
is aware of the business affairs and financial condition of the Company and has
acquired sufficient information about the Company to reach an informed and knowledgeable
decision to acquire the Shares.

 

        6.     Refusal to Transfer.
    The Company shall not be required (a) to transfer
on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement, the Option Agreement, or
the Plan or (b) to treat as owner of such Shares or to accord the right to
vote or receive dividends to any purchaser or other transferee to whom such
Shares shall have been so transferred.

 

        7.     Tax Consultation.
    Optionee understands that Optionee may suffer adverse
tax consequences as a result of Optionee’s purchase or disposition of the
Shares. Optionee represents that Optionee is not relying on the Company for any
tax advice.

 

        8.     Entire Agreement.
    The Plan and the Option Agreement are incorporated
herein by reference. This Agreement, the Plan, and the Option Agreement
constitute the entire agreement of the parties and supersede in their entirety
all prior undertakings and agreements of the Company and Optionee with respect
to the subject matter hereof.

 

	
  Submitted by:

  “OPTIONEE”:

  	
   

  	
  Accepted by:

  “COMPANY”

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Ascent Solar Technologies, Inc.,

  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature

  	
   

  	
  By

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Print Name

  	
   

  	
  Name

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title

  

 

13

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