Document:

Exhibit

10.1

 

FIRST AMENDMENT TO

CREDIT AGREEMENT

 

THIS FIRST AMENDMENT TO CREDIT AGREEMENT dated as of

July 16, 2003 by and among REALTY INCOME CORPORATION (the “Borrower”), REALTY

INCOME TEXAS PROPERTIES, INC., REALTY INCOME TEXAS PROPERTIES, L.P. (together

with Realty Income Texas Properties, Inc. the “Guarantors”), each of the

financial institutions party hereto and their assignees under Section 13.6 of

the Credit Agreement (as defined below)(the “Lenders”), WELLS FARGO BANK,

NATIONAL ASSOCIATION, as Agent (the “Agent”) and the other parties thereto.

 

WHEREAS, the Borrower, the Lenders and the Agent are

parties to that certain Credit Agreement dated as of October 28, 2002 (as

amended, restated, supplemented or otherwise modified prior to the date hereof,

the “Credit Agreement”);

 

WHEREAS, the Borrower, the Lenders and the Agent

desire to amend certain provisions of the Credit Agreement;

 

NOW, THEREFORE, for good and valuable consideration,

the receipt and sufficiency of which are hereby acknowledged by the parties

hereto, the parties hereto hereby agree as follows:

 

Section 1. 

Specific Amendments to Credit Agreement.

 

(a)                                  The

definition of “Annualized Base Rents” shall be deleted in its entirety and

replaced with the following:

 

“Annualized Base Rents” means, for any

tenant in a Property owned by the Borrower, a Loan Party or any other

Subsidiary, an amount equal to the GAAP revenue received from such tenant

during the quarter most recently ended multiplied by 4.

 

(b)                                 The

definition of “Base Rent” shall be deleted in its entirety.

 

Section 2. 

Effectiveness of Amendments and Waivers.  The effectiveness of Section 1 is

subject to receipt by the Agent of each of the following in form and substance

satisfactory to the Agent:

 

(a)                                  Counterparts

of this Amendment executed by each of the parties hereto; and

 

(b)                                 Such

other documents and instruments as the Agent may reasonably request.

 

Section 3. 

Representations of the Borrower. 

The Borrower represents and warrants to the Agent and the Lenders that:

 

 

(a)                                  Authorization.  The Borrower has the right and power, and

has taken all necessary action to authorize it, to execute and deliver this

Amendment and to perform its obligations hereunder and under the Credit

Agreement, as amended by this Amendment, in accordance with their respective

terms.  This Amendment has been duly

executed and delivered by a duly authorized officer of the Borrower and each of

this Amendment and the Credit Agreement, as amended by this Amendment, is a

legal, valid and binding obligation of the Borrower enforceable against the

Borrower in accordance with its respective terms except as the same may be

limited by bankruptcy, insolvency, and other similar laws affecting the rights

of creditors generally and the availability of equitable remedies for the

enforcement of certain obligations contained herein or therein may be limited

by equitable principles generally.

 

(b)                                 Compliance

with Laws, etc.  The execution and

delivery by the Borrower of this Amendment and the performance by the Borrower

of this Amendment and the Credit Agreement, as amended by this Amendment, in

accordance with their respective terms, do not and will not, by the passage of

time, the giving of notice or otherwise: 

(i) require any Government Approval or violate any Applicable Law

relating to the Borrower; (ii) conflict with, result in a breach of or

constitute a default under the Borrower’s declaration of trust or any

indenture, agreement or other instrument to which the Borrower is a party or by

which it or any of its properties may be bound; or (iii) result in or

require the creation or imposition of any Lien upon or with respect to any

property now owned or hereafter acquired by the Borrower other than in favor of

the Agent for the benefit of the Lenders.

 

Section 4. 

Reaffirmation by Borrower. 

The Borrower hereby repeats and reaffirms all representations and

warranties made by the Borrower to the Agent and the Lenders in the Credit

Agreement and the other Loan Documents to which it is a party on and as of the

date hereof (and after giving effect to this Amendment) with the same force and

effect as if such representations and warranties were set forth in this

Amendment in full.

 

Section 5.  Reaffirmation

by Guarantors.  Each Guarantor

hereby reaffirms its continuing obligations to the Agent and the Lenders under

the Guaranty to which it is a party, and agrees that the transactions

contemplated by this Amendment shall not in any way affect the validity and

enforceability of such Guaranty, or reduce, impair or discharge the obligations

of such Guarantor thereunder.

 

Section 6. 

References to the Credit Agreement.  Each reference to the Credit Agreement in any of the Loan

Documents (including the Credit Agreement) shall be deemed to be a reference to

the Credit Agreement, as amended by this Amendment.

 

Section 7. 

Benefits.  This Amendment

shall be binding upon and shall inure to the benefit of the parties hereto and

their respective successors and assigns.

 

Section 8. 

GOVERNING LAW.  THIS

AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF

THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY

PERFORMED, IN SUCH STATE.

 

2

 

Section 9. 

Effect.  Except as

expressly herein amended, the terms and conditions of the Credit Agreement and

the other Loan Documents shall remain in full force and effect.

 

Section 10. 

Effective Date.  This

Amendment shall not be effective until its execution and delivery by all of the

parties hereto whereupon its shall be deemed effective as of the date first

written above.

 

Section 11. 

Counterparts.  This

Amendment may be executed in any number of counterparts, each of which shall be

deemed to be an original and shall be binding upon all parties, their

successors and assigns.

 

Section 12. 

Definitions.  All

capitalized terms not otherwise defined herein are used herein with the

respective definitions given them in the Credit Agreement.

 

[Signatures on

Next Page]

 

3

 

IN WITNESS WHEREOF, the parties hereto have caused

this First Amendment to Credit Agreement to be executed as of the date first

above written.

 

	

   

  	

  BORROWER:

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  REALTY INCOME

  CORPORATION

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

  Name:  Michael R. Pfeiffer

  
	

   

  	

   

  	

  Title:

  	

  Executive Vice

  President, General Counsel

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  GUARANTORS  :

  
	

   

  	

   

  	

   

  
	

   

  	

  REALTY INCOME TEXAS

  PROPERTIES, INC.

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

  Name:  Michael R. Pfeiffer

  	

   

  
	

   

  	

   

  	

  Title:

  	

  Secretary

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  REALTY INCOME TEXAS

  PROPERTIES, L.P.

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  By:  Realty Income Corporation, General Partner

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

  Name:  Michael R. Pfeiffer

  	

   

  
	

   

  	

   

  	

  Title:

  	

  Executive Vice

  President, General Counsel

  
						

 

[Signatures Continued on Next Page]

 

4

 

[Signature Page to First Amendment to

Credit Agreement with Realty Income Corporation]

 

	

   

  	

  WELLS FARGO BANK,

  NATIONAL ASSOCIATION,

  as Agent, as Lender and as Swingline Lender

  
	

   

  
	

   

  
	

   

  
	

   

  	

  By:

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  Name:

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  Title:

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  BANK OF AMERICA, N.A.,

  as Lender

  	

   

  
	

   

  
	

   

  
	

   

  
	

   

  	

  By:

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  Name:

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  Title:

  	

   

  	

   

  	

   

  
	

   

  
	

   

  	

  WACHOVIA BANK, NATIONAL

  ASSOCIATION,

  as Lender

  	

   

  
	

   

  
	

   

  
	

   

  	

  By:

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  Name:

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  Title:

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  THE BANK OF NEW YORK,

  as Lender

  	

   

  
	

   

  
	

   

  
	

   

  
	

   

  	

  By:

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  Name:

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  Title:

  	

   

  	

   

  	

   

  
							

 

[Signatures Continued on Next Page]

 

5

 

[Signature Page to First Amendment to

Credit Agreement with Realty Income Corporation]

 

	

   

  	

  AMSOUTH BANK, as Lender

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  Name:

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  Title:

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  U.S. BANK NATIONAL

  ASSOCIATION, as Lender

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  Name:

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  Title:

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  BANK OF MONTREAL, as

  Lender

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  Name:

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  Title:

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  BANK ONE, NA, as Lender

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  Name:

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  Title:

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  CHEVY CHASE BANK, FSB,

  as Lender

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  Name:

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  Title:

  	

   

  	

   

  	

   

  
											

 

6Exhibit
10.1

 

 

LOAN AGREEMENT

DATED AS OF JUNE 11, 2003

 

BY AND AMONG

 

LaSALLE
BANK N.A.

 

AND

 

EPIQ
SYSTEMS, INC.

 

 

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

 

 

EXHIBIT LIST

 

	
  Exhibit 2.3

  	
   

  	
  Revolving Note

  
	
   

  	
   

  	
   

  
	
  Exhibit 3.1(E)

  	
   

  	
  Liens

  
	
   

  	
   

  	
   

  
	
  Exhibit 3.1(G)

  	
   

  	
  Litigation and
  Contingent Liabilities

  
	
   

  	
   

  	
   

  
	
  Exhibit 3.1(J)

  	
   

  	
  Taxes

  
	
   

  	
   

  	
   

  
	
  Exhibit 3.1(K)

  	
   

  	
  No Default or
  Event of Default

  
	
   

  	
   

  	
   

  
	
  Exhibit 3.1(P)

  	
   

  	
  Officers,
  Directors and Ownership

  
	
   

  	
   

  	
   

  
	
  Exhibit 3.1(Q)

  	
   

  	
  Certificates of
  Insurance

  
	
   

  	
   

  	
   

  
	
  Exhibit
  5.1(A)(ix)

  	
   

  	
  Opinion of Counsel

  

 

1

 

LOAN AGREEMENT

 

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

 

THE
PARTIES HERETO agree as follows:

 

ARTICLE ONE.  DEFINITIONS

 

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

 

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

 

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

 

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

 

(D)          “EBITDA” shall mean earnings before
interest, taxes, depreciation and amortization.

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3

 

indicates otherwise or
are otherwise defined in this Agreement, have the meanings provided for by the
UCC.

 

ARTICLE TWO.  LOANS

 

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

 

SECTION 2.2.        USE OF LOAN PROCEEDS.  The proceeds
of any borrowing by Borrower pursuant to the Revolving Loans shall be used by
Borrower solely for working capital and general corporate purposes, to fund
future acquisitions and to pay the fees, costs and expenses of Lender as
provided herein.

 

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

 

4

 

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

 

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

 

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

 

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

 

5

 

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

 

If, after the date
hereof, the introduction of, or any change in any applicable law, treaty, rule,
regulation or guideline or in the interpretation or administration thereof by
any governmental authority or any central bank or other fiscal, monetary or
other authority having jurisdiction over Lender or its lending office (a
“Regulatory Change”), shall, in the opinion of counsel to Lender, make it
unlawful for Lender to make or maintain the Revolving Loan evidenced hereby,
then Lender may, at its sole and absolute option, promptly notify Borrower that
interest on the Revolving Loan shall be determined using the Reference
Rate.  If any Regulatory Change, whether
or not having the force of law, shall (a) impose, modify or deem applicable any
assessment, reserve, special deposit or similar requirement against assets held
by, or deposits in or for the account of or loans by, or any other acquisition
of funds or disbursements by, Lender; (b) subject Lender or the Revolving Loan
to any tax, duty, charge, stamp tax, or fee or change the basis of taxation of
payments to Lender of principal or interest due from Borrower to Lender
hereunder (other than a change in the taxation of the overall net income of
Lender); or (c) impose on Lender any other condition regarding the Revolving
Loan or Lender’s funding thereof, and Lender shall determine (which
determination shall be conclusive absent manifest error) that the result of the
foregoing is to increase the cost to Lender of making or maintaining the
Revolving Loan or to reduce the amount of principal and interest received by
Lender hereunder, then Borrower shall pay to Lender, on demand, such additional
amounts as Lender shall, from time to time, determine are sufficient to
compensate and indemnify Lender for such increased costs or reduced amount.

 

Notwithstanding any
provision in this Section 2.3 to the contrary, upon the occurrence and
continuance of an Event of Default, the Revolving Note shall bear interest at a
rate 2% in excess of the aforesaid rate.

 

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

 

6

 

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

 

SECTION 2.5.        OPTIONAL PREPAYMENT.  Borrower may
from time to time prepay the principal of the Revolving Note in whole or in
part without any premium or penalty; provided, however, any partial prepayment
shall: (a) be applied to the unpaid installments thereof in the order of
maturity; and (b) be accompanied by accrued interest to the date of prepayment
on the principal amount being prepaid.

 

ARTICLE
THREE.  REPRESENTATIONS AND WARRANTIES

 

SECTION 3.1.        BORROWER.  Borrower represents and warrants to Lender
that:

 

(A)          Organization,
Etc.  Borrower is duly
organized, validly existing and in good standing under the laws of the State of
Missouri, and is duly qualified and in good standing or has applied for
qualification as a foreign corporation authorized to do business in each
jurisdiction where a failure to be so qualified would have a material adverse
effect on the business, financial condition or prospects of Borrower.

 

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

 

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

 

(D)          Title
to Assets.  Except as set forth in Section 3.1(E) of
this Agreement, it has good and marketable title to all its assets, subject to
no liens, encumbrances, security interests or mortgages except for Permitted
Liens.

 

7

 

(E)           Liens.  None of its assets are subject to any mortgage, pledge, title
retention lien, or other lien, encumbrance or security interest, except for the
following (hereinafter referred to as “Permitted Liens”):  (i) for current taxes not delinquent or taxes
being contested in good faith and by appropriate proceedings and for which
adequate reserves have been established; (ii) liens arising in the ordinary
course of business for sums not due or sums being contested in good faith and
by appropriate proceedings and for which adequate reserves have been
established, but not involving any deposits, advances or borrowed money or the
deferred purchase price of property or services; (iii) liens specifically
permitted pursuant to this Agreement; (iv) liens securing indebtedness having
maturities of one year or more after the date of the occurrence, which are
incurred in connection with an expenditure for fixed assets; and to the extent
set forth in Exhibit 3.1(E) attached hereto and made a part hereof.

 

(F)           Financial
Statements.  Its financial statements and projections,
copies of which have been previously delivered to Lender, have been prepared on
a basis and in conformity with generally accepted accounting principles applied
on a consistent basis, are true and correct and fairly present its financial
condition on such dates and the results of its operations for the periods then
ended, and since the date such information was submitted there has been no
material adverse change in such financial condition, operations or
expectations.

 

(G)           Litigation
and Contingent Liabilities.  No litigation (including, without
limitation, derivative actions), arbitration proceedings, administrative
proceedings or governmental proceedings are pending or, to its knowledge,
threatened against it which would, if adversely determined, materially and
adversely affect its financial condition or continued operations, except:  (i) for litigation for which it is fully
insured against any loss; and (ii) as set forth on Exhibit 3.1(G) attached hereto
and made a part hereof.  Except for any
liability incident in such litigation or proceedings, it has no known material
contingent liabilities.

 

(H)          No
Violations of Laws.  To the best of Borrower’s knowledge after
due inquiry, it is not in violation of any law, statute, ordinance, rule,
regulation, judgment, decree, order, writ or injunction of any federal, state
or local authority, court, agency, bureau, board, commission, department or
governmental body, and it has not received any notice, letter or other
communication that concerns such.  Its
products do not violate any law or rights of any person (including without
limitation export laws or any copyright, patent, trademark, trade secret,
proprietary, contract, or any other third party right); does not contain any
virus or any other similar harmful, malicious, or hidden program, code or data
which would materially adversely effect the business of Borrower; does not
threaten, harass, abuse or

 

8

 

otherwise offend; is not
inaccurate or misleading; and does not otherwise expose Borrower to civil or
criminal liability.

 

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

 

(J)            Taxes.  Except as set forth on Exhibit 3.1(J) attached hereto and made a
part hereof, (i) federal, state and local tax returns, reports and statements
(including, without limitation, for personal property taxes), required to be
filed by it which, if not so filed, could have an material adverse affect on
its business, operations, assets, properties, prospects or condition, financial
or otherwise, have been filed with the appropriate governmental agencies in all
jurisdictions in which such returns, reports or statements are required to be
filed, and all taxes due and payable by it have been timely paid; (ii) it has
neither given nor been requested to give a waiver of any statute of limitations
relating to the payment of federal, state or local taxes; and (iii) periodic
payments of sales and use taxes required by any applicable state or local law,
statute, ordinance, rule or regulation have been made by it.

 

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

 

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

 

9

 

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

 

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

 

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

 

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

 

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

 

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

 

10

 

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

 

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

 

ARTICLE FOUR.  COVENANTS

 

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

 

(A)          Financial
Statements and Certificates.  It will furnish to the Lender:  (i) within 120 days after the close of each
its fiscal years, a copy of its annual financial statements prepared on a
consolidating and consolidated basis and in conformity with generally accepted
accounting principles, duly reviewed by certified public accountants of
recognized standing selected by it; (ii) within 45 days after the close of each
fiscal quarter of each year, a copy of an unaudited and unreviewed financial
statements prepared in the same manner as the audited report referred to in
clause (i) above, signed by a proper accounting officer of it and consisting of
at least a balance sheet as at the close of such calendar quarter and
statements of earnings for such fiscal quarter and for the period from the
beginning of such fiscal year to the close of such fiscal quarter, and a
borrowing base certificate; (iii) quarterly, a certificate signed by an officer
of the Borrower certifying that except as described therein, (1) no Event of Default
has occurred and is continuing, (2) no litigation, arbitration proceeding or
governmental or regulatory proceeding has been instituted or adversely
determined, or is threatened which is reasonably likely to be materially
adverse to it on a consolidated basis, and

 

11

 

(3) Borrower is in
compliance with the terms and conditions of this Agreement, all as of the date
of such certificate; (iv) a schedule of all intercompany debt upon Lender’s
request; and (v) such other information as the Lender from time to time
reasonably requests.

 

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

 

(C)           Insurance.  It will maintain such insurance as may be required by law and
such other insurance to the extent and against such hazards and liabilities as
is customarily maintained by companies similarly situated.  At least 20 days prior to Lender making any
Revolving Loan under this Agreement, all property insurance policies at such
time shall contain loss payable clauses in form and substance reasonably
satisfactory to Lender, naming Lender as a lender’s loss payee, and providing
that such policies and loss payable clauses may not be canceled, amended or
terminated unless at least 30 days prior written notice thereof has been given
to Lender.  All insurance proceeds
received by Lender shall be retained by Lender for application to the payment
of any principal or interest on the Liabilities then due and owing to Lender by
it as the Lender may determine.

 

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

 

(E)           Restriction
on Dividends. It will
not declare or pay, or authorize a declaration or payment of, any dividend,
whether a cash dividend or stock dividend, or make any distribution in cash,
property or securities in respect of, any class of its capital stock or
ownership interests, without Lender’s prior written consent, which consent will
not be unreasonably withheld.

 

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

 

12

 

(G)           Liens.  It will not create or permit to exist any mortgage, pledge, title
retention lien, mechanics’ lien, materialmen’s lien, or other lien, encumbrance
or security interest with respect to any assets now owned or hereafter
acquired, except for Permitted Liens.

 

(H)          Guaranties,
Loans or Advances.  It will not become or be a guarantor or
surety of, or otherwise become or be responsible in any manner (whether by
agreement to purchase any obligations, stock, assets, goods, services, or to
supply or advance any funds, assets, goods or services or otherwise) with
respect to any undertaking of any other Person, or make or permit to exist any
loans or advances to any other Person, except for the endorsement, in the
ordinary course of collection, of instruments payable to it or to its order,
except for transactions with Affiliates.

 

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

 

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

 

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

 

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

 

13

 

(M)         Maintenance
of Business.  It will preserve its
existence in the jurisdictions of establishment, as that may be from time to
time, and it will not engage in any new line of business that is materially
different from present business endeavors, except upon prior written notice to
Lender.  It shall give Lender prior
written notice of conducting business in any other jurisdiction or establishing
its principal business office in any jurisdiction other than as in effect on
the date of this Agreement.

 

(N)          Employee
Benefit Plans.  Borrower will not cause or permit any event
to occur, or fail to take any action required, which would either result in a
violation of any of the representations set forth in Section 3.1(L) of this
Agreement or result in liability to Borrower for the termination of any employee
benefit plan that would have a material adverse effect on Borrower’s financial
condition.

 

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

 

(P)           Good
Title.  It shall at all times maintain good and
marketable title to all of its assets.

 

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

 

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

 

(S)           Material
Adverse Change.  It shall give Lender prompt written notice
of any event, occurrence or other matter which has resulted or may result in a
material adverse change in its financial condition or business operations.

 

(T)           Minimum
EBITDA.  It shall maintain EBITDA of at least the
following amounts on a rolling, four-quarter basis:

 

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

 

14

 

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

 

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

 

(U)          Maximum
Total Debt to EBITDA.  It shall not
permit the ratio of its total debt to its EBITDA to exceed the following:

 

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

 

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

 

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

 

(V)           Negative
Pledge.  In addition to the terms of
Section 4.1(G) above, for so long as any amount is due or owing to Lender
hereunder, Borrower shall not grant, pledge, create or suffer to exist any
lien, other charge or encumbrance, or any other type of preferential
arrangement, upon or with respect to any of its real or personal property,
assets or rights of any nature whatsoever, whether now owned or hereafter
acquired.  Further, Borrower agrees to
not make any such covenant to any third party as long as any amount is due or
owing to Lender hereunder.

 

ARTICLE FIVE.  CONDITIONS PRECEDENT

 

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

 

(A)          Delivery
of Documents.  Lender shall have received each of the
following in form and substance satisfactory to Lender and its counsel:

 

(i)            Certified copies of all corporate
actions taken and consents made by Borrower to authorize the obtaining of
credit by Borrower pursuant to this Agreement, the Note, and the transactions
otherwise provided for or contemplated under this Agreement and the execution
and delivery of, and performance in accordance with the respective terms of,
the Documents;

 

(ii)           Certificates of the appropriate
officers, directors or shareholders of Borrower certifying the names of the
officer(s), director(s) or shareholder(s) of Borrower authorized to sign the
Documents, together with a sample of the

 

15

 

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

 

(iii)          Copies of Uniform Commercial Code, tax
lien and judgment searches made with the Missouri Secretary of State and any
other jurisdiction required by Lender;

 

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

 

(v)           The Revolving Note duly executed;

 

(vi)          Certified copies of all documents
evidencing any and all required consents and governmental or regulatory
approvals, if any, with respect to the Documents;

 

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

 

(viii)        Certificates of good standing for
Borrower from the appropriate governmental authority in the jurisdiction of its
organization and in those jurisdictions in which a failure by Borrower to be
qualified to do business would have a material adverse effect on Borrower’s
business, financial condition or prospects;

 

(ix)           An
Opinion of Borrower’s Counsel duly executed and delivered, in form attached
hereto and made a part hereof as Exhibit 5.1(A)(ix) acceptable to Lender and
its counsel;

 

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

 

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

 

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

 

16

 

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

 

(E)           No
Material Adverse Change.  There shall have been no material adverse
change in the business of Borrower or the financial condition of Borrower from
the most recent financial statements submitted by each of them to Lender; and

 

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

 

(G)           Certificates of Insurance.   Borrower shall provide to Lender within
thirty (30) days of executing this Agreement a description of its insurance
policies as described in Section 3.1(Q) above.

 

ARTICLE SIX.  EVENTS OF DEFAULT

 

SECTION 6.1.        EVENTS OF DEFAULT.  Each of the
following acts, occurrences or omissions shall constitute an event of default
under this Agreement (herein referred to as an “Event of Default”), whatever
the reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment or
order of any court or any order, rule or regulation of any governmental or
nongovernmental body or tribunal:

 

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

 

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

 

(C)           Any representation or warranty made by
Borrower contained in the Documents shall at any time prove to have been
incorrect in any material respect when made; or

 

17

 

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

 

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

 

(F)           Borrower shall be dissolved, whether
voluntarily or involuntarily, and Borrower has not taken all actions required
to become reinstated; or

 

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

 

18

 

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

 

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

 

(J)            There shall be entered against the
Borrower one or more judgment or decrees which shall cause the aggregate amount
of judgments and decrees at any one time outstanding against the Borrower to
exceed $250,000.00,  excluding those judgments or decrees:  (i) that shall have been outstanding less
than 30 calendar days from the entry thereof; (ii) for which an appeal has been
taken in good faith by appropriate proceedings to the extent adequate reserves
have been established therefor; or (iii) for and to the extent which the
Borrower is insured and with respect to which the insurer has assumed
responsibility in writing or for and to extent which Borrower is otherwise
indemnified if the terms of such indemnification are satisfactory to Lender; or

 

(K)          There shall occur a cessation of a
substantial part of the business of Borrower for a period which significantly
effects Borrower’s capacity to continue its business on a profitable basis; or
Borrower shall suffer the loss or revocation for a period in excess of 30 days
of any license, permit consent or authorization now held or hereafter acquired
by Borrower, which is necessary to the continued or lawful operation of its
business; or Borrower shall be enjoined, restrained or in any way prevented by
court, governmental or administrative order from conducting all or any material
part of its business affairs; or

 

ARTICLE
SEVEN.  REMEDIES

 

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

 

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

 

19

 

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

 

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

 

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

 

ARTICLE
EIGHT.  MISCELLANEOUS

 

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

 

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

 

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

 

20

 

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

 

	
  If to Borrower:

  	
   

  	
  Elizabeth M. Baham

  
	
   

  	
   

  	
  Vice President, CFO

  
	
   

  	
   

  	
  EPIQ Systems, Inc.

  
	
   

  	
   

  	
  501 Kansas Avenue

  
	
   

  	
   

  	
  Kansas City, Kansas
  66105-1309

  
	
   

  	
   

  	
  Phone:  913-621-9500

  
	
   

  	
   

  	
  Fax No.: 913-321-1243

  
	
   

  	
   

  	
   

  
	
  With copies to:

  	
   

  	
  Robert C. Levy,
  Esq.

  
	
   

  	
   

  	
  Seigreid,
  Bingham, Levy,

  
	
   

  	
   

  	
  Seizer & Gee

  
	
   

  	
   

  	
  2800 Commerce
  Tower

  
	
   

  	
   

  	
  911 Main Street

  
	
   

  	
   

  	
  Kansas City, MO
  64105

  
	
   

  	
   

  	
  Phone:
  816-421-4460

  
	
   

  	
   

  	
  Fax No.:
  816-474-3447

  
	
   

  	
   

  	
   

  
	
  If to the
  Lender:

  	
   

  	
  LaSalle Bank
  N.A.

  
	
   

  	
   

  	
  135 South
  LaSalle Street, Suite 1125

  
	
   

  	
   

  	
  Chicago,
  Illinois 60603

  
	
   

  	
   

  	
  Attention: Keith
  J. Cable

  
	
   

  	
   

  	
  Phone:  312-904-7621

  
	
   

  	
   

  	
  Fax No.:  312-904-6242

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Robert M. Mintz,
  Esq.

  
	
   

  	
   

  	
  Holland &
  Knight LLC

  
	
   

  	
   

  	
  131 South
  Dearborn, 30th Floor

  
	
   

  	
   

  	
  Chicago,
  Illinois 60603

  
	
   

  	
   

  	
  Phone:  312-422-9090

  
	
   

  	
   

  	
  Fax No.:  312-578-6666

  

 

21

 

SECTION 8.4.        COSTS, EXPENSES AND TAXES.  Borrower
agrees to pay all reasonable fees plus out-of-pocket expenses of the Lender
(including, without limitation, field audit expenses and costs of outside
consultants, appraisers, counsel and paralegals to the Lender) in connection
with the preparation, administration and enforcement of the Documents and the
administration and enforcement of the Revolving Loans.  In addition, Borrower shall pay any and all
stamp, transfer and other taxes payable or determined to be payable in connection
with the execution and delivery of the Documents and agrees to hold the Lender
harmless from and against any and all liabilities with respect to or resulting
from any delay in paying or omission to pay such taxes.  If any action, suit or proceeding arising
from any of the foregoing is brought against the Lender, Borrower, to the
extent and in the manner directed by the Lender, will resist and defend such
action, suit or proceeding or cause the same to be resisted and defended by
counsel designated by Borrower (which counsel shall be subject to the approval
of the Lender, which approval shall not be unreasonably withheld).  If Borrower shall fail to do any act or
thing which it has covenanted to do under this Agreement or any representation
or warranty on the part of Borrower contained in this Agreement shall be
breached, the Lender may, in its sole and arbitrary discretion, after 20 days
written notice is sent to Borrower, do the same or cause it to be done or
remedy any such breach, and may expend its funds for such purpose; and any and
all amounts so expended by the Lender shall be repayable to the Lender by
Borrower immediately upon the Lender’s demand therefor, with interest at a rate
equal to the interest rate described in Section 2.3 of this Agreement in effect
from time to time during the period from and including the date funds are so
expended by the Lender to the date of repayment, and any such amounts due and
owing the Lender shall be an additional obligation of Borrower to the
Lender.  The obligations of Borrower
under this Section 8.4 shall survive the termination of this Agreement and the
discharge of the other obligations of Borrower under the Documents for a period
of two years.  Any payment required to
be made pursuant to this Agreement not paid within five days of the applicable
due date shall be subject to a late charge which Borrower hereby agrees to pay
equal to the lessor of:  (a) 5% of the
overdue amount; or (b) the maximum amount permitted by law.

 

SECTION 8.5.        COMPUTATIONS.  Where the character or amount of any asset
or liability or item of income or expense is required to be determined, or any
consolidation or other accounting computation is required to be made, for the
purpose of this Agreement, such determination or calculation shall, to the
extent applicable and except as otherwise specified in this Agreement, be made
in accordance with generally accepted accounting principles applied on a basis
consistent with those at the time in effect.

 

22

 

SECTION 8.6.        FURTHER ASSURANCES.  Borrower
agrees to do such further acts and things and to execute and deliver to the
Lender such additional assignments, agreements, powers, documents and
instruments as the Lender may reasonably require or deem advisable to carry
into effect the purposes of the Documents, or to better assure and confirm unto
the Lender its rights, powers and remedies under the Documents.

 

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

 

SECTION 8.8.        BINDING EFFECTS; ASSIGNMENTS.  This
Agreement shall be binding upon, and inure to the benefit of Borrower, and its
respective successors and assigns. 
Borrower shall not assign any of its rights nor delegate any of its
obligations under this Agreement without the prior written consent of the
Lender, which consent shall not be unreasonably withheld, and no such consent
by the Lender shall, in any event, relieve Borrower of any of its obligations
under this Agreement.  Lender may assign
its rights hereunder.

 

SECTION 8.9.        HEADINGS.  Captions contained in this Agreement are
inserted only as a matter of convenience and in no way define, limit or extend
the scope or intent of this Agreement or any provision of this Agreement and
shall not affect the construction of this Agreement.

 

SECTION 8.10.      ENTIRE AGREEMENT.  This
Agreement contains the entire agreement between the parties hereto with respect
to the transactions contemplated herein and supersedes all prior agreements and
understandings, whether oral or written, related to the subject matter of the
Agreement.

 

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

 

SECTION 8.12.      SEVERABILITY OF PROVISIONS.  Any provision
of this Agreement which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective only to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
of this Agreement or affecting the validity or enforceability of such provision
in any other jurisdiction.

 

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

 

23

 

limited to, the Note or
any other instrument or document required or contemplated hereunder or
thereunder, the terms and provisions of this Agreement shall govern and
control.

 

SECTION 8.14.      JURISDICTION; WAIVERS.  BORROWER
ACKNOWLEDGES THAT THIS AGREEMENT IS BEING SIGNED BY THE LENDER IN PARTIAL
CONSIDERATION OF LENDER’S RIGHT TO ENFORCE IN THE JURISDICTION STATED BELOW THE
TERMS AND PROVISION OF THIS AGREEMENT AND THE DOCUMENTS.  BORROWER CONSENTS TO JURISDICTION IN THE
STATE OF ILLINOIS AND VENUE IN THE COUNTY OF COOK FOR SUCH PURPOSES AND WAIVES
ANY AND ALL RIGHTS TO CONTEST SAID JURISDICTION AND VENUE.  LENDER AND BORROWER  HEREBY EACH EXPRESSLY WAIVE ANY AND ALL
RIGHTS TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY
ANY OF THE PARTIES AGAINST ANY OTHER PARTY WITH RESPECT TO ANY MATTER
WHATSOEVER RELATING TO, ARISING OUT OF OR IN ANY WAY CONNECTED WITH THE
REVOLVING LOANS, THE DOCUMENTS OR THE TRANSACTIONS WHICH ARE THE SUBJECT OF THE
DOCUMENTS.

 

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

 

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

 

24

 

and all payments at any
time or times hereafter received by Lender on account of any obligations owed
by Borrower to Lender and Borrower agrees that Lender shall have the right to
apply payments received by Lender to the obligations in any order or manner as
Lender may deem advisable, including, without limitation, the continuing
exclusive right to apply and reapply such proceeds and payments in any order or
manner as Lender may deem advisable.

 

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

 

IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered at Chicago, Illinois, as of the date first above
written.

 

BORROWER:

 

	
   

  	
   

  	
   

  	
  EPIQ SYSTEMS, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
     /s/  Elizabeth M. Braham

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President and
  Chief

  
	
   

  	
   

  	
   

  	
   

  	
  Financial Officer

  
							

 

25

 

LENDER:

 

	
   

  	
   

  	
   

  	
  LaSALLE BANK N.A.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:  

  	
  /s/ Keith Cable

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Assistant Vice
  President

  	
   

  
							

 

26

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