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EXHIBIT 10.2    
  

PURCHASE AND SALE AGREEMENT  

DATED:
January 31, 2003 

BETWEEN:
SELLERS

CAPITAL
LANE PROPERTY HOLDING, LP, a Delaware limited partnership ("Capital I") and CAPITAL LANE PROPERTY HOLDING II, LP, a Delaware limited partnership
("Capital II"). Each of Capital I and Capital II is hereinafter sometimes individually referred to as a
"Seller", and Capital I and Capital II are hereinafter sometimes collectively referred to as "Sellers". 

AND:
PURCHASER

KEYSTONE
OPERATING PARTNERSHIP, L.P. ("Purchaser") 

        A.
Capital I owns the parcels of land described in Exhibit A, attached hereto, (the "Capital I
Land") together with all the reversions, remainders, easements, rights of way, appurtenances, tenements, hereditaments and water rights (if any) appertaining to or otherwise
benefiting the Capital I Land or any of the Capital I Improvements (as defined below). 

        B.
Capital I also owns the warehouse buildings containing approximately 1,005,281 square feet of rentable space (the "Capital I
Buildings") and the other facilities, structures and improvements now or hereafter erected on the Capital I Land (the "Capital I
Improvements"). 

        C.
Capital II owns the parcels of land described in Exhibit B, attached hereto (the "Capital II
Land"), together with all the reversions, remainders, easements, rights of way, appurtenances, tenements, hereditaments and water rights (if any) appertaining to or otherwise
benefiting the Capital II Land or any of the Capital II Improvements (as defined below). 

        D.
Capital II also owns the warehouse buildings containing approximately 538,431 square feet of rentable space (the "Capital II
Buildings") and the other facilities, structures and improvements now or hereafter erected on the Capital II Land (the "Capital II
Improvements"). 

        E.
The Capital I Land and the Capital II Land are hereinafter sometimes collectively referred to as the "Land". The Capital I Buildings
and the Capital II Buildings are hereinafter sometimes collectively referred to as the "Buildings". The Capital I Improvements and the Capital II
Improvements are hereinafter sometimes collectively referred to as the "Improvements". The Land, the Buildings and the Improvements owned by an
individual Seller are hereinafter sometimes collectively referred to as a "Property". The Land, the Buildings, the Personal Property and the
Improvements owned by both Sellers are hereinafter sometimes collectively referred to as the "Properties". All intangible assets of any nature relating
to the Properties (including, but not limited to, guaranties or warranties relating to the Properties or any elements thereof; plans, specifications, drawings and prints of the Properties; trademarks
or trade names associated with the Properties; and all licenses, permits, approvals, certificates of occupancy, dedications, subdivision maps and entitlements now or hereafter issued, approved or
granted in connection with the Properties) are hereinafter sometimes collectively referred to as the "Intangibles". The Properties, together with
Sellers' right, title and interests in and to, the Leases, the Service Contracts which Purchaser elects to assume pursuant to this Agreement and the Intangibles (if any) are sometimes hereinafter
referred to as the "Project". 

        F.
Capital I has entered into the leases described in Exhibit C, attached hereto (the "Capital I
Leases") and Capital II has entered into the leases described in Exhibit D, attached hereto (the
"Capital II Leases"). The Capital I Leases and the Capital II Leases are hereinafter sometimes collectively referred to as the
"Leases". 

 

        G.
Capital I and Capital II have entered into those service contracts maintenance contracts and equipment leases relating to the operation of the Buildings described in Exhibit E,
attached hereto (the "Service Contracts"). 

        I.
Sellers desire to sell, and Purchaser desires to purchase, the Project, subject to the terms of this Agreement. 

        NOW,
THEREFORE, intending to be legally bound the parties agree as follows: 

1.    PURCHASE AND SALE OF THE ENTITY INTERESTS  

        Sellers agree to sell and convey to Purchaser, and Purchaser agrees to purchase from Sellers, free and clear of all liens, pledges, claims, assignments, security
interests and other encumbrances of any nature, and subject to the terms and conditions set forth in this Agreement, the Project. 

2.    TOTAL PURCHASE PRICE AND DEPOSIT  

        2.1.    Purchase Price. The total purchase price for the Project is Forty-Seven Million Five Hundred Thousand Dollars
($47,500,000) (the "Purchase Price"). 

        2.2.    Deposit. One (1) business day after the full and final execution of this Agreement, Purchaser shall deposit the
sum of Two Hundred Fifty Thousand and No/100 Dollars ($250,000) in immediately available funds (the "Deposit") with the Title Company (as hereinafter
defined) as escrow agent (in such capacity, "Escrow Agent") pursuant to the escrow instructions attached as  Exhibit H hereto. If this Agreement is not
terminated on or before the expiration of the Review Period (as hereinafter defined), the Deposit
shall be non-refundable except as herein provided and shall be held and delivered by Escrow Agent in accordance with the provisions of such escrow instructions. Any interest earned on the
Deposit shall be considered a part of the Deposit. Except as expressly set forth herein, the Deposit shall be applied against the Purchase Price on the Closing Date (as hereinafter defined). The
balance of the Purchase Price, adjusted for all prorations, credits and debits provided for herein, shall be paid in cash or immediately available funds at the Closing (as hereinafter defined) as
provided in Section 8 below. 

3.    PURCHASER'S REVIEW PERIOD  

        Purchaser shall have until 5:00 p.m. (Chicago time) on February 10, 2003 (the "Review Period") to
satisfy itself concerning all aspects of the Project, including, without limitation, the status of title thereto; the physical and environmental condition of the Properties; the insurance policies,
contracts, leases and all other operational and financial aspects of the Properties and all other Due Diligence Materials (as hereinafter defined) and to obtain all needed committee approvals of this
transaction. During the Review Period, Purchaser shall have the right at Purchaser's expense to perform such tests, inspections and feasibility studies on the Properties as Purchaser may deem
necessary (collectively, the "Inspections") on and subject to the terms and conditions of that certain Property Access Agreement dated January 9,
2003 (the "Access Agreement"). Without limitation of the foregoing, Purchaser shall have access to the Properties for purposes of such inspections
pursuant to the Access Agreement. On or before the end of the Review Period Purchaser may, in Purchaser's sole discretion, elect to terminate this Agreement by delivery of written notice to Seller for
any or no reason, whereupon this Agreement shall automatically terminate, the Deposit shall be returned to Purchaser, and, except for the Post-Termination Obligations referred to  Section 12.1 below,
 neither party shall have any obligations to the other by virtue of this Agreement. Purchaser shall remain subject to the
confidentiality obligations set forth in the Access Agreement, which obligations shall expire on the Closing Date provided the parties proceed to Closing. 

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        Purchaser
shall provide (without any representation or warranty as to the accuracy or completeness thereof) to Sellers copies of any final, third party reports by or for Purchaser in
connection with its inspections. 

        Purchaser
will continue to maintain the liability insurance as required pursuant to the Property Access Agreement dated January 9, 2003 between Seller and Purchaser. 

4.    TITLE TO THE PROPERTIES  

        4.1.    Title Report. At Purchaser's sole cost, Purchaser has obtained commitments for ALTA extended coverage owner's title
insurance policies (the "Title Reports") issued by Fidelity National Title Insurance Company (the "Title
Company") with respect to each Property. Purchaser shall have until the end of the Review Period in which to notify Sellers in writing of Purchaser's disapproval of exceptions
shown in the Title Reports or disclosed by the Updated Surveys (as defined below). Those exceptions shown on the Title Reports and the Updated Surveys and not objected to by Purchaser shall become the
"Permitted Exceptions", except for Liquidated Items (as hereinafter defined) which shall be deemed objected to by Purchaser. Sellers shall notify
Purchaser within five (5) days of such notice of disapproval
whether Sellers will eliminate any such disapproved exceptions. If Sellers choose not to eliminate such exceptions or fail to respond to such notice, Purchaser may (a) terminate this Agreement
by giving written notice to Sellers on or before that date that is five (5) days after Purchaser's receipt of Sellers' notice of its election not to eliminate any disapproved exception (or five
(5) days following the expiration of such five (5)-day period if Sellers fail to respond to such notice of disapproval), whereupon the Deposit shall be returned to Purchaser, and,
except for the Post-Termination Obligations referred to in Section 12.1 below, neither party shall have any obligations to the other
by virtue of this Agreement or (b) agree that title to the Properties may remain as disclosed by the Title Reports and the Updated Surveys (subject to the cure by Sellers of any exceptions
Sellers have agreed to cure) and close this transaction. Notwithstanding anything contained herein to the contrary, Sellers shall be obligated to cure and remove (or procure title insurance over in
form reasonably acceptable to Purchaser) all of the following classes of title defects, liens or encumbrances ("Liquidated Items"), if any:
(i) the liens of any mortgage, trust deed or deed of trust evidencing an indebtedness owed by either Seller; (ii) tax liens for delinquent ad valorem real estate taxes;
(iii) mechanics liens pursuant to a written agreement either between (x) the claimant (the "Contract Claimant") and either Seller or its
employees, officers or managing agents (the "Seller Parties") or (y) the Contract Claimant and any other contractor, materialman or supplier with
which a Seller or its Seller Parties have a written agreement; (iv) broker's liens claimed by, through or under either Seller or their respective Seller Parties; and (v) judgment liens
against Seller. If Sellers fail to cure and remove any Liquidated Items, Purchaser may elect to: (i) terminate this Agreement by written notice to Seller, whereupon the Deposit shall be
returned to Purchaser, and, except for the Post-Termination Obligations referred to in Section 12.1 below, neither party shall have
any obligations to the other by virtue of this Agreement; or (ii) proceed to Closing and deduct from the Purchase Price the amount necessary to cure and remove any Liquidated Items. 

        4.2.    Survey. Purchaser acknowledges that Sellers have delivered to Purchaser existing ALTA minimum detail surveys of the
Properties within its possession (the "Existing Surveys"). On or prior to February 8, 2003, Purchaser, at Sellers' sole cost, shall obtain and
deliver to Sellers updates of the Existing Surveys containing a certification substantially in the forms attached hereto as Exhibit G which
reflect the title exceptions set forth in the Title Reports ("Updated Surveys"). The Updated Surveys shall be certified to Purchaser and/or such parties
as Purchaser shall designate. 

        4.3.    Later Date Defects. In the event that any update to, or date down of, the Title Reports or the Updated Surveys first
reveals any lien, claim, encumbrance, encroachment or other defect not previously disclosed in the Title Reports or the Updated Surveys, Purchaser may object to such lien, claim, encumbrance,
encroachment or other defect by delivery of written notice to Seller within five 

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(5) business days after the delivery to Purchaser of the applicable item of title evidence, in which event the cure provisions and rights contained in Sections
4.1 above shall apply. 

5.    DOCUMENTATION REQUIRED FOR REVIEW PERIOD  

        5.1.    Copies of Plans, Service Contracts, Other Information. To the extent not previously delivered as set forth in  Exhibit I, Sellers shall
deliver to the following materials, documents and information: (i) Copies of the Service Contracts;
(ii) all, if any, architectural, engineering or construction contracts then in effect and not fully performed with respect to any of the Land or Buildings (the
"Improvement Contracts"); (iii) a certificate of good standing and resolution for each Seller; (iv) statements of all income and expenses
of ownership, maintenance and operation of the Properties for Sellers' period of ownership; (v) an accounts receivable and collection report of the tenants for Sellers' period of ownership,
(vi) copies of all bills and invoices for utilities paid for Sellers' period of ownership; (vii) property tax and assessment bills and complete files on any ongoing tax protest
proceedings; (viii) all environmental reports and assessments (including asbestos and lead paint), to the extent in either Seller's possession (as opposed to the possession of Sellers' property
manager); (ix) copies of all plans, specifications and architectural drawings for the Improvements in the possession of either Seller or under the control of either Seller; (x) a
complete file with respect to all pending litigation (including any condemnation) affecting any Property or Sellers or any threatened litigation (including condemnation) known to either Seller and
affecting any Property or either Seller; (xi) true and complete copies of all Leases; (xii) a schedule of all licenses, permits and certificates of occupancy for the Properties currently
in effect and known to either Seller, together with copies thereof and all amendments thereto to the extent in either Sellers' possession or control; (xiii) copies of any and all notices,
reports, studies, correspondence and other materials concerning the environmental condition of the Properties received by Seller during Sellers' period of ownership or in Sellers' possession (as
opposed to the possession of its property manager); (xiv) copies of all billing statements, operating statements related to Sellers' period of ownership and all CAM reconciliations delivered or
prepared during Seller's period of ownership; (xv) copies of Sellers' general ledger for the Project for the period of Sellers' ownership; and (xvi) copies of all lease proposals
relating to the Properties delivered to or by the Sellers during Sellers' period of ownership (collectively, the "Due Diligence Materials"). 

        5.2.    Rent Roll and Leases. Attached as Exhibit P hereto and made a
part hereof is a rent roll, which rent roll (the "Rent Roll") identifies by tenant name and unit number the Leases currently in effect at the Buildings,
any guarantors of the Leases, the commencement and expiration dates of the Leases, any not yet performed rent concessions and any security deposits and the extent to which the same have been applied,
the amount of monthly rent owed under the Leases, the dates through which such rents have been paid, and any material defaults under the Leases of which either Seller has actual knowledge. 

6.    SELLERS' AND PURCHASER'S REPRESENTATIONS  

        6.1.    Sellers' Representations. Sellers represent and warrant to Purchaser that the following are true, accurate and complete
as of the date hereof and will be true, accurate and complete in all material respects as of the Closing Date: 

        (a)    Marketable Title.    Each Seller owns fee simple title to the Properties designated on Exhibits A and B as
being owned by it. No party has any right or option to purchase all or any portion of the Properties. 

        (b)    No Violation of Zoning and Other Laws.    No Seller nor, to the best of Sellers' knowledge, any agents or
employees of any Seller, has received during Sellers' period of ownership any written notice of any violation on any Property of any applicable law, ordinance, statute, rule, order or regulation,
including but not limited to, the subdivision, zoning, housing, building, safety 

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and fire ordinances of Lower Swatara Township, that remains uncured, nor does Seller have any of the foregoing in its possession (as opposed to the possession of its property manager). 

        (c)    Eminent Domain.    Neither Seller has received any written notice of any pending or contemplated eminent domain
or condemnation of the Land or Improvements or any portion thereof. 

        (d)    Environmental Matters.    Sellers have delivered to Purchaser true, accurate and complete copies of any and all
reports, studies, analysis, correspondence and other materials and information in Sellers' possession (as opposed to the possession of Sellers' property manager) (the
"Environmental Information"). Other than as may be set forth in the Environmental Information, neither Seller nor either Seller's agents or employees
have received any written notice during Sellers' period of ownership alleging or asserting that either Property is in violation of any law, ordinance, rule or regulation related to environmental
matters, which violation remains uncured. 

        (e)    Assessments.    Neither Seller has received any written notice of any special assessments to be levied against
any Property which are in addition to those disclosed in the Title Reports. There is no pending contest of real estate taxes initiated by Sellers against any Property and Sellers have delivered to
Purchaser any notice of reassessment received by any Seller, or any agent or employee of any Seller, since the last tax bill issued. 

        (f)    No Breach of Agreements.    Each Seller's execution of this Agreement and the consummation of the transaction
evidenced by this Agreement do not violate any other agreement to which such Seller is a party, nor, to the best of Sellers' knowledge, any law, statute or ordinance which is binding upon any Property
or any Seller. 

        (g)    Organization and Authority of Sellers.    Each Seller is a limited partnership, duly organized and validly
existing under the laws of the State of Delaware. Each Seller's execution, delivery of and performance under this Agreement are undertaken pursuant to authority validly and duly conferred upon such
Seller and the signatories hereto. 

        (h)    Nonforeign Status.    Neither Seller is a "foreign person" as
defined in Section 1445 of the Internal Revenue Code of 1986, as amended (as amended, the "Code"). Each Seller shall deliver to Purchaser
at closing a Certificate of Nonforeign Status setting forth such Seller's address and United States taxpayer identification number and certifying that it is not a foreign person as so defined. 

        (i)    Executory Agreements.    Exhibit E contains a true and complete listing of all Service Contracts
affecting the Properties which, absent Purchaser's election to assume, could be binding upon or impose any liability or obligation upon a Purchaser or either Property following the Closing, and
correctly set forth their expiration dates or the notice period which must precede their termination. To the best of each Seller's knowledge, no default exists under any of the Service Contracts and
all Service Contracts are currently in full force and effect. 

        (j)    Utility Services.    To Sellers' knowledge, neither Seller has received any written notice of any potential
stoppage or interruption of utility services serving any of the Improvements. 

        (k)    Lease Obligations.    Except as set forth in the Rent Roll, any and all alterations, installations,
decorations, tenant improvement and other work required to be performed by Sellers (or others on behalf of a Sellers, as landlord) under the provisions of any Leases or other agreements affecting the
Properties have been (or shall be by the Closing Date) completed and paid for in full or credited to Purchaser. Exhibit N attached hereto and
made a part hereof sets forth all of the brokerage, finder or referral fees or commissions of any kind or nature that are or may become due and payable in connection with the Leases (the
"Brokerage Commissions"). Purchaser shall be responsible for causing the payment for any Brokerage Commission for a lease 

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renewal or expansion which may be due or payable after the Closing Date listed in Exhibit O attached hereto as Purchaser's Commissions. 

        (l)    Leases and Rent Roll.    The Rent Roll is true, accurate and complete in all material respects and, to the best
of each Seller's knowledge, each of the Leases is valid and in full force and effect. The lease documents identified on Exhibit I reflect all modifications, amendments or alterations of any
Lease. Except as expressly set forth in the Rent Roll, if at all, to each Seller's knowledge, no default by any tenant, whether before or after the expiration of any applicable cure period (including
any default with respect to the payment of rent), exists or is claimed to exist under any of the Leases; no default by either Seller, as the landlord (whether before or after the expiration of any
applicable cure period), exists or, to each Seller's knowledge, is claimed to exist under any Lease. Neither Seller has received any advance payment of rent (other than for the current month) on
account of any of the Leases; and there are no written or oral leases or tenancies or other occupancy arrangements of any kind or nature whatsoever affecting the Properties or any of them other than
the written Leases that are identified on Exhibit I.

        (m)    No Liens; No Defaults.    Neither Seller has received any written notice of any default or breach under any
covenant, condition, restriction, right of way, easement, mortgage, deed of trust, lien or license affecting any of the Properties, or any portion thereof, which has not been entirely corrected. 

        (n)    No Actions.    Neither Seller has received any written notice of or been served with summons and complaint with
respect to any actions, suits, proceedings, or claims pending, or to the best of each Seller's knowledge, contemplated or threatened in writing, with respect to or in any manner affecting any Property
or either Seller. 

        (o)    Financial Information; Bankruptcy.    Neither Seller (i) is in receivership or dissolution,
(ii) has made an assignment for the benefit of creditors or admitted in writing its inability to pay its debts as they mature, (iii) has been adjudicated a bankrupt or filed a petition
in voluntary bankruptcy or a petition or answer seeking reorganization or an arrangement with creditors under the Federal bankruptcy laws or any similar law or statute of the United States or any
other jurisdiction and no such petition has been filed against such Seller, and to each Seller's knowledge, none of the foregoing is pending or contemplated. 

        (p)    ERISA.    Neither Seller nor any holder of an interest in either Seller is a "party in
interest" to any employee benefit plans, and the Project is not an asset of an employee benefit plan covered under Part 4 of Title 1 of the Employee Retirement Income
Security Act of 1974, as amended (ERISA), or as defined in Section 49, 75(e)(1) of the Code. For purposes of the foregoing, the term "party in
interest" shall have the meaning assigned to such term in Section 3(14) of ERISA. 

        (q)    USA Patriot Act.    Neither Seller is a person or entity described by Section 1 of the Executive Order
(No. 13,224) Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism, 66 Fed. Reg. 49,079 (September 24, 2001), and neither
Seller engages in any dealings or transactions, or is otherwise associated, with any such persons or entities. 

        (r)    Employees.    Neither Seller has any employees or has ever had any employees. 

        (s)    Unrecorded Agreements.    Neither Seller has received any written notice of any private, unrecorded
restrictions or unrecorded agreements that affect the uses which may be made any of the Project, including size and cost of buildings, limitations on use and restriction in regard to heights of
buildings, agreements to submit architectural plans to an association, community organization or other group, provisions requiring improvements or provisions requiring joinder with others in group
actions. 

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        (t)    Personal Property.    There is no personal property owned by Capital I and/or Capital II that will be conveyed
in connection with this transaction. 

        (u)    Insurance.    Sellers carry the property insurance described in Exhibit M, attached hereto. 

        (v)    Copies.    The copies of the Leases, Service Contracts and other Due Diligence Materials delivered to Purchaser
by or on behalf of Sellers in connection with this Agreement are accurate and complete copies thereof. 

        (w)    Contracts.    To the best of each Seller's knowledge, there are no contracts or other agreements affecting
either or both Sellers that impose any obligations or otherwise will be binding on Purchaser or the Project after Closing, other than the Permitted Exceptions (which include the Leases) and the
Service Contracts that are not required to be terminated pursuant to the terms hereof. 

        (x)    Enforceability.    This Agreement has been, and each and all of the other agreements, instruments and documents
herein required to be made by Sellers pursuant hereto have been, or on the Closing Date will have been, executed by Sellers or on behalf of Sellers, and when so executed, are and shall be legal, valid
and binding obligations of Sellers, enforceable against Sellers in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, and other similar
laws affecting the rights of creditors generally and, as to enforceability, the general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). 

        (y)    Right, Power and Authority.    Each Seller has the full right, power and authority to sell the Project as
provided herein and to execute, deliver and carry out all of the provisions of this Agreement. The execution and delivery of this Agreement and any other documents required of Sellers hereunder and
the performance and observance of all of its terms, conditions and obligations have been or will be duly authorized by all necessary action of Sellers. 

        (z)    No Conflict.    The execution and delivery of, and consummation of the transactions contemplated by this
Agreement are not prohibited by, and will not conflict with, constitute grounds for termination of, or result in the breach of any of the agreements or instruments to which either or both Sellers are
now party or by which either or both are bound, or any order, rule or regulation of any court or other governmental agency or official. 

        Each
of the representations and warranties contained in this Section 6.1 is acknowledged by Sellers to be material and to be relied upon by Purchaser in proceeding with this
transaction. The knowledge of the Sellers shall be limited to the actual (except in those instances where another standard of knowledge is described) knowledge of only the following individuals (who
are employed by Sellers' property manager): Jeffrey Thomas and Andrew Zgutowicz and further limited to the knowledge obtained during Sellers' period of ownership. 

        6.2.    Survival of Warranties. All of Sellers' representations and warranties in this Agreement shall be deemed given as of the
date of this Agreement, and shall be updated in a certificate to be provided to Purchaser at and as of the Closing Date. All of the aforesaid representations and warranties shall survive the closing
of this transaction; provided, however, that any claim for any misrepresentation or breach shall be deemed to have been waived unless Purchaser notifies Sellers in writing of such claim for
misrepresentation or breach within one (1) year after the Closing Date; Notwithstanding anything above to the contrary, the survival provisions of this Section 6.2 will not apply to any
claims which are actually known to Purchaser at the time of Closing, including without limitation any matters disclosed by Seller to Purchaser or disclosed by any tenant to Purchaser, in a tenant
estoppel certificate. Furthermore, Sellers will have no obligation to pay any adjudicated claim which does not exceed Twenty-five thousand and no/00 dollars ($25,000.00) and Sellers will
have no obligation to pay any adjudicated claim to the extent it exceeds Five Million and no/00 Dollars ($5,000,000.00). 

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        6.3.    As Is.  

        (a)    EXCEPT
AS IS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT OR IN ANY CONVEYANCE DOCUMENTATION OR CERTIFICATION, SELLER HEREBY SPECIFICALLY DISCLAIMS ANY WARRANTY (ORAL
OR WRITTEN) CONCERNING: (I) THE NATURE AND CONDITION OF THE PROPERTY AND THE SUITABILITY THEREOF FOR ANY AND ALL ACTIVITIES AND USES THAT PURCHASER ELECTS TO CONDUCT THEREON; (II) THE
MANNER, CONSTRUCTION, CONDITION AND STATE OF REPAIR OR LACK OF REPAIR OF THE IMPROVEMENTS; (III) THE COMPLIANCE OF THE LAND AND THE IMPROVEMENTS OR THEIR OPERATION WITH ANY LAWS, RULES,
ORDINANCES OR REGULATIONS OF ANY GOVERNMENT OR OTHER BODY; AND (IV) ANY OTHER MATTER WHATSOEVER EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT. EXCEPT AS IS OTHERWISE EXPRESSLY PROVIDED IN
THIS AGREEMENT OR IN ANY CONVEYANCE DOCUMENTATION OR CERTIFICATION, THE SALE OF THE PROPERTY AS PROVIDED FOR HEREIN IS MADE ON A STRICTLY "AS IS" "WHERE IS" BASIS AS OF THE CLOSING DATE, AND SELLER
MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, OR ARISING BY OPERATION OF LAW, INCLUDING, BUT IN NO WAY LIMITED TO, ANY WARRANTY OF QUANTITY, QUALITY, CONDITION, HABITABILITY,
MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE PROPERTY, ANY IMPROVEMENTS LOCATED THEREON OR ANY SOIL CONDITIONS RELATED THERETO. 

        (b)    PURCHASER
SPECIFICALLY ACKNOWLEDGES THAT PURCHASER IS NOT RELYING ON (AND SELLER HEREBY DISCLAIMS AND RENOUNCES) ANY
REPRESENTATIONS OR WARRANTIES MADE BY OR ON BEHALF OF SELLER OF ANY KIND OR NATURE WHATSOEVER, EXCEPT FOR THOSE PARTICULAR REPRESENTATIONS AND WARRANTIES EXPRESSLY PROVIDED IN THIS AGREEMENT OR IN ANY
CONVEYANCE DOCUMENTATION OR CERTIFICATION. EXCEPT TO THE EXTENT OF A BREACH OF ANY REPRESENTATION AND WARRANTY CONTAINED HEREIN OR IN ANY CONVEYANCE DOCUMENTATION OR CERTIFICATION, PURCHASER
REPRESENTS TO SELLER THAT PURCHASER HAS CONDUCTED, OR WILL CONDUCT PRIOR TO CLOSING,
SUCH INVESTIGATIONS OF THE PROPERTY, INCLUDING BUT NOT LIMITED TO, THE PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF, AS PURCHASER DEEMS NECESSARY TO SATISFY ITSELF AS TO THE CONDITION OF THE PROPERTY
AND THE EXISTENCE OR NONEXISTENCE OF, OR CURATIVE ACTION TO BE TAKEN WITH RESPECT TO, ANY HAZARDOUS OR TOXIC SUBSTANCES ON OR DISCHARGED FROM THE LAND OR THE IMPROVEMENTS, AND WILL RELY SOLELY UPON
SAME AND NOT UPON ANY INFORMATION PROVIDED BY, OR ON BEHALF OF, SELLER, ITS AGENTS AND EMPLOYEES WITH RESPECT THERETO, OTHER THAN SUCH REPRESENTATIONS AND WARRANTIES OF SELLER AS ARE EXPRESSLY SET
FORTH IN THIS AGREEMENT OR IN ANY CONVEYANCE DOCUMENTATION OR CERTIFICATION. FURTHER, EXCEPT TO THE EXTENT OF A BREACH OF ANY REPRESENTATION AND WARRANTY CONTAINED HEREIN OR IN ANY CONVEYANCE DOCUMENT
OR CERTIFICATION, PURCHASER, FOR PURCHASER AND PURCHASER'S SUCCESSORS AND ASSIGNS, HEREBY RELEASES SELLER FROM, AND WAIVES, ANY AND ALL CLAIMS AND LIABILITIES AGAINST SELLER FOR, RELATED TO, OR IN
CONNECTION WITH, ANY ENVIRONMENTAL OR PHYSICAL CONDITION AT THE PROPERTY (OR THE PRESENCE OF ANY MATTER OR SUBSTANCE RELATING TO THE ENVIRONMENTAL CONDITION OF THE PROPERTY), INCLUDING, BUT NOT
LIMITED TO, CLAIMS AND/OR LIABILITIES RELATING TO (IN ANY MANNER WHATSOEVER) 

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ANY HAZARDOUS, TOXIC OR DANGEROUS MATERIALS OR SUBSTANCES LOCATED IN, AT, ABOUT OR UNDER THE PROPERTY, OR FOR ANY AND ALL CLAIMS OR CAUSES OF ACTION (ACTUAL OR THREATENED) BASED UPON, IN CONNECTION
WITH, OR ARISING OUT OF, CERCLA, AS AMENDED BY SARA, AND AS MAY BE FURTHER AMENDED FROM TIME TO TIME, RCRA, OR ANY OTHER CLAIM OR CAUSE OF ACTION (INCLUDING ANY FEDERAL OR STATE BASED STATUTORY,
REGULATORY OR COMMON LAW CAUSE OF ACTION) RELATED TO ENVIRONMENTAL MATTERS WITH RESPECT TO, OR AFFECTING, THE PROPERTY. UPON CLOSING, EXCEPT TO THE EXTENT OF A BREACH OF ANY REPRESENTATION AND
WARRANTY CONTAINED HEREIN OR IN ANY CONVEYANCE DOCUMENTATION OR CERTIFICATION, PURCHASER SHALL ASSUME THE RISK THAT ADVERSE MATTERS, INCLUDING BUT NOT LIMITED TO, CONSTRUCTION DEFECTS AND ADVERSE
PHYSICAL AND ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY PURCHASER'S INVESTIGATIONS, AND PURCHASER, UPON CLOSING, EXCEPT TO THE EXTENT OF A BREACH OF ANY REPRESENTATION AND WARRANTY
CONTAINED HEREIN OR IN ANY CONVEYANCE DOCUMENT OR CERTIFICATION, SHALL BE DEEMED TO HAVE WAIVED, RELINQUISHED AND RELEASED SELLER FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION
(INCLUDING CAUSES OF ACTION IN TORT), LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING ATTORNEYS' FEES AND COURT COSTS) OF ANY AND EVERY KIND OR CHARACTER, KNOWN OR UNKNOWN, WHICH PURCHASER
MIGHT HAVE ASSERTED OR ALLEGED AGAINST SELLER, AT ANY TIME BY REASON OF OR ARISING OUT OF ANY LATENT OR PATENT CONSTRUCTION DEFECTS OR PHYSICAL CONDITIONS AND VIOLATIONS OF ANY APPLICABLE LAWS
(INCLUDING, WITHOUT LIMITATION, ANY ENVIRONMENTAL LAWS). 

        (c)    PURCHASER
ACKNOWLEDGES AND AGREES THAT THE WAIVERS, RELEASES AND OTHER PROVISIONS CONTAINED IN THIS SECTION 6.3 WERE A MATERIAL FACTOR IN SELLER'S ACCEPTANCE OF THE
PURCHASE PRICE AND THAT SELLER IS UNWILLING TO SELL THE PROPERTY TO PURCHASER UNLESS SELLER IS RELEASED AS EXPRESSLY SET FORTH ABOVE. PURCHASER, WITH PURCHASER'S COUNSEL, HAS FULLY
REVIEWED THE DISCLAIMERS AND WAIVERS SET FORTH IN THIS AGREEMENT, AND UNDERSTANDS THE SIGNIFICANCE AND EFFECT THEREOF. THE TERMS AND CONDITIONS OF THIS SECTION 6.3 WILL EXPRESSLY SURVIVE THE CLOSING,
WILL NOT MERGE WITH THE PROVISIONS OF ANY CLOSING DOCUMENTS, AND WILL BE INCORPORATED INTO THE DEED. 

        6.4.    Representations of Purchaser. Purchaser hereby warrants and represents to Sellers that the following are true, accurate
and complete as of the date hereof and will be true, accurate and complete in all material respects as of the Closing Date: 

        (a)    Right, Power and Authority.    Purchaser has the full right, power and authority to purchase the Properties as
provided herein and to execute, deliver and carry out all of the provisions of this Agreement. Purchaser will promptly notify Sellers of requisite committee approvals but in no event later than the
expiration of the Review Period. The execution and delivery of this Agreement and any other documents required of Purchaser hereunder and the performance and observance of all of its terms, conditions
and obligations have been or will be duly authorized by all necessary action of Purchaser. Purchaser is a limited partnership validly formed and duly organized and existing in good standing under the
laws of the State of Delaware. 

        (b)    USA Patriot Act.    Purchaser is not a person or entity described by Section 1 of the Executive Order
(No. 13,224) Blocking Property and Prohibiting Transactions With Persons Who 

9

 

Commit, Threaten to Commit, or Support Terrorism, 66 Fed. Reg. 49,079 (September 24, 2001), and Purchaser does not engage in any dealings or transactions, and is not otherwise associated, with
any such persons or entities. 

        (c)    Enforceability.    This Agreement has been, and each and all of the other agreements, instruments and documents
herein required to be made by Purchaser pursuant hereto have been, or on the Closing Date will have been, executed by Purchaser or on behalf of Purchaser, and when so executed, are and shall be legal,
valid and binding obligations of Purchaser, enforceable against Purchaser in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, and other
similar laws affecting the rights of creditors generally and, as to enforceability, the general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). 

        (d)    No Conflict.    The execution and delivery of, and consummation of the transactions contemplated by this
Agreement is not prohibited by, and will not conflict with, constitute grounds for termination of, or result in the breach of any of the agreements or instruments to which Purchaser is now party or by
which it is bound, or any order, rule or regulation of any court or other governmental agency or official. 

        Each
of the representations and warranties contained in this Section 6.4 is acknowledged by Purchaser to be material and to be relied upon by Seller in proceeding with this
transaction. 

7.    CONDITIONS TO CLOSING  

        7.1.    Purchaser's Conditions.  

        Purchaser's obligation to close this transaction is subject to the full satisfaction of each of the following conditions: 

        (a)    Seller's Compliance.    Sellers' timely fulfillment in all material respects of each of their respective
obligations under this Agreement. 

        (b)    Seller's Representations.    The continuing accuracy in all material respects of all of Sellers' warranties and
representations in this Agreement as of the Closing Date as if the same were made as of the Closing Date. 

        (c)    Status of Title.    As of the Closing Date, title to the Properties, (including the rights of Capital I and
Capital II, as applicable, to use any easements appurtenant to any Property it owns), shall be owned by Capital I and Capital II, as applicable, in fee simple, and title to each Property shall be good
and marketable and free and clear of all liens, encumbrances, restrictions, easements and other exceptions or objections to title, except for the Permitted Exceptions, and the Title Company shall
insure Purchaser as the fee owner of such title as aforesaid on the Closing Date in the amount of not less than the Purchase Price for the Properties at its regular rates, pursuant to a 1992 ALTA
Owner's Policy form (10-17-92) with "extended form coverage" (the "Title Policy"). As a further condition to Purchaser's
obligations under this Agreement, the Title Company must be willing to provide those endorsements that are legally available to owners in Pennsylvania and reasonably requested by Purchaser, including,
without limitation, non-imputation endorsements, owner's comprehensive endorsements, survey endorsements and single tax parcel endorsements, subject to the payment by Purchaser of any
applicable premium or surcharge. Any normal and customary indemnity reasonably required by the Title Company as a precondition to issuing any such endorsements must be provided by Sellers. 

        (d)    Material Condemnation.    The absence of any condemnation or the threat of institution of condemnation
proceedings which results or will result in the taking of any part of the Land, or any Improvement on any Property, with a value of more than Five Hundred Thousand Dollars 

10

 

($500,000), or a reduction in the number of any parking spaces below the minimum level required by law for use by the tenants of any Building, or any material limitation or restriction on pedestrian
or vehicular access to and from any public rights-of-way adjacent to the Land. If any of the foregoing shall occur, Purchaser may elect to terminate this Agreement by written
notice to Sellers within thirty (30) days after the date Purchaser receives written notice of such occurrence, whereupon the Deposit shall be returned to Purchaser, and, except for the
Post-Closing Obligations referred to in Section 12.1 below, neither party shall have any obligations to the other by virtue of this
Agreement. If Purchaser does not timely elect to terminate this Agreement and this transaction closes, or in the event of any condemnation that is not material, the applicable Seller shall assign or
pay to Purchaser the right to all condemnation awards and rights to awards which were not used to pay the reasonable costs of any restoration of the Land or Improvements necessitated by the
condemnation prior to Closing. No termination of this Agreement under this Section shall affect any Post Termination Obligations. 

        (e)    Material Casualty.    The absence of any material damage by casualty to the Improvements which has not been
repaired by the Closing Date. For the purposes hereof, a "material damage by casualty" shall be deemed any damage by fire or other casualty for which
the estimated cost of repair exceeds Five Hundred Thousand Dollars ($500,000). If the Improvements suffer any material damage by casualty, Purchaser shall have the right and option, as its sole
remedy, to terminate this Agreement within thirty (30) days after the date of the casualty or by the Closing Date, whichever first occurs, whereupon the Deposit shall be returned to Purchaser,
and, except for the Post-Closing Obligations referred to in Section 12.1 below, neither party shall have any obligations to the other
by virtue of this Agreement. If the estimated cost to repair any damage by casualty as of the Closing Date is less than Five Hundred Thousand Dollars ($500,000), Purchaser shall not have the right to
terminate this Agreement. If Purchaser does not elect timely to terminate this Agreement or does not have the right to terminate this Agreement, this transaction shall close without increase or
decrease in the Purchase Price. Sellers shall proceed to cause such repairs as are reasonably possible prior to Closing to be made unless otherwise agreed to in writing by Purchaser, and the
applicable Seller shall retain all insurance proceeds which are not used to pay the costs of such repairs; provided, however, that the applicable Seller shall assign to Purchaser all casualty
insurance proceeds payable on account of damage which is not repaired prior to Closing. Sellers shall also credit against the Purchase Price the amount of any deductible or self-insurance
applicable to such casualty (unless Sellers have caused such repairs to be completed and paid for prior to Closing). No termination of this Agreement under this Section shall affect any Post
Termination Obligations. 

        (f)    Change in Leases.    As of the Closing, there shall not have occurred a material default under any of the
Leases nor shall either Seller have provided or received any notice alleging a default or an event which may mature into a default. 

        (g)    Tenant Estoppel Certificates.    Purchaser shall have received tenant estoppel certificates substantially in
the form set forth on Exhibit F without material and adverse modification and consistent with the Rent Roll (each a
"Tenant Estoppel Certificates") from 80% of the tenants identified on the Rent Roll (determined on the basis of square footage) which 80% must include
each of the tenants listed on Exhibit J attached hereto as critical tenants, each dated no earlier than 30 days before the Closing Date.
Without limitation on the foregoing, Sellers shall use commercially reasonable efforts to obtain a Tenant Estoppel Certificate from each of the tenants of the Properties. 

        (h)    Management and Leasing Agreements.    Unless otherwise agreed to by Purchaser in writing, at Closing Sellers
shall cause all management and leasing agreements with respect to the Properties to be terminated and provide the Title Company with all lien waivers required by the Title Company to issue the Title
Policy. 

11

 

        (i)    8-K Audit Letter.    Prior to the expiration of the Review Period, Purchaser shall have obtained
from Seller or Seller's property manager: (i) such information as Purchaser deems necessary or advisable to complete a so-called
"8-K" audit on behalf of Keystone Property Trust (an affiliate of Purchaser) and which is reasonably acceptable to Sellers or Sellers'
property manager, as the case may be, and (ii) a representation letter (which is reasonably acceptable to Sellers' or Sellers' property manager), in form specified by, or otherwise satisfactory
to the Purchaser's accountants, signed by the individual(s) responsible for Sellers' (or Seller's property manager) financial reporting, as prescribed by generally accepted auditing standards
promulgated by the Auditing Standards Division of the American Institute of Certified Public Accountants, which representation letter may be required by the accountants in order to render an opinion
concerning Sellers' (or Seller's property manager's) financial statements, in connection with such "8-K" audit. If the parties are unable to
agree upon the foregoing, Purchaser's sole remedy shall be to terminate this Agreement be written notice to Sellers on or prior to the expiration of the Review Period, in which event the Deposit shall
be returned to Purchaser and neither party shall have any further liabilities hereunder except those liabilities that expressly survive a termination of this Agreement. 

        (j)    GE Letter.    Purchaser shall have received a letter from First Industrial, L.P. and First Industrial
Harrisburg, L.P. (collectively, "FR") in form acceptable to Purchaser whereby FR covenants and agrees not to execute and enter into (or allow any of its
affiliates to execute and enter into) any lease, license or comparable agreement with General Electric Company (or an affiliate of General Electric Company) that would entitle General Electric Company
("GE") to terminate that certain Lease dated December 8, 1997 between First Industrial Harrisburg, L.P.
(predecessor-in-interest to Seller) and Cadillac Plastic Group, Inc., predecessor-in-interest to GE (the "GE
Lease") pursuant to the terms of the GE Lease (such letter, the "GE Letter"); provided, however, that the GE Letter shall permit
FR to enter into a lease, license or comparable agreement with GE (or an affiliate thereof) that would otherwise permit the termination of the GE Lease (a "New GE
Lease") if, in fact, with respect to that particular New GE Lease, GE expressly waives its right to terminate the GE Lease for the benefit of Purchaser. 

        7.2.    Seller's Conditions. Seller's obligation to close this transaction is subject to Purchaser's fulfillment of each of its
obligations in all material respects under this Agreement in accordance with the terms hereof, including, without limitation payment of the Purchase Price. 

        7.3.    Failure of Condition. If any condition to Purchaser's obligation to close this transaction specified in
Section 7.1 is not satisfied on or before the Closing Date, Purchaser may, at its option, by written notice to Sellers, (i) waive such condition or (ii) terminate this Agreement,
in which case the Deposit shall be
returned to Purchaser and (iii) if the failure of the condition is due to a breach or default by Sellers of any representation, warranty, covenant, obligation or duty of Sellers hereunder,
pursue any of its remedies under Section 9.1 below, and (iv) if the failure of condition is not due to a material breach or default by Sellers as aforesaid, neither party shall have any
further liability hereunder, provided that the Post Termination Obligations shall survive any such termination. 

8.    CLOSING  

        8.1.    Closing Date. Subject to the parties' termination rights, this transaction shall close on or prior to
February 21, 2003 (the "Closing Date"); provided, however, that Purchaser may accelerate the Closing Date to a date no sooner than
February 12, 2003 by delivery of not less than three (3) business days prior written notice to Seller provided the condition precedent relative to the delivery of estoppel certificates
has been satisfied or is waived by Purchaser (and, to the extent such notice is provided prior to the expiration of the Review Period, such notice shall be deemed a waiver of Purchaser's right to
terminate the Agreement pursuant to Section 3 of this Agreement). 

12

 

        8.2.    Manner and Place of Closing. This transaction will be closed through an escrow by the Title Company at the offices of
Barack Ferrazzano Kirschbaum Perlman & Nagelberg or at such other place as the parties may mutually agree to in writing. Closing shall take place in the manner and in accordance with the
provisions set forth in this Agreement. 

        8.3.    Prorations, Adjustments.  

        (a)    All
ad valorem real property taxes with respect to the Properties, to the extent the tenants are not responsible for payment of such taxes, shall be prorated as of the
Closing Date, based upon the last ascertainable taxes and the fiscal years of the applicable taxing authorities. 

        (b)    All
unpaid allowances to tenants for alterations, installations, decorations and other tenant improvement work provided under the Leases will be credited to Purchaser at
Closing. 

        (c)    All
monetary obligations under all Service Contracts which are being assigned to Purchaser as provided herein (all of such monetary obligations being hereinafter
collectively referred to as the
"Expenses"), and all non-delinquent rentals from tenants and other non-delinquent use fees receivable under any Lease or other
agreement concerning the Properties (the "Income"), shall be prorated and adjusted between the parties as of the Closing Date. At Closing, all accrued
but unpaid Expenses (including interest and penalties, if any), and all prepaid but not accrued Income shall be credited against the Purchase Price, and all prepaid but not yet accrued Expenses shall
be added to the Purchase Price. Each party will pay its own legal fees. All amounts owing under any Service Contracts or other agreements which are being terminated shall be the sole obligation of
Sellers. 

        (d)    With
respect to any rentals past due on the Closing Date, Purchaser shall make good faith efforts to attempt to cause the same to be recovered from the tenant for a
period of sixty (60) days following the Closing Date. All rentals received from such tenant subsequent to the Closing Date shall be paid to Purchaser (or forwarded by Seller to Purchaser), and,
after deduction of collection costs, shall be applied first to the month in which the Closing Date occurs and adjusted and paid as provided in Section 8.3(c) above, then to any amounts due
which are attributable to any period after the Closing Date, and lastly to any amounts due which are attributable to any period prior to the Closing Date, which shall be paid over to Sellers. Nothing
contained in this subparagraph shall impair Sellers' rights to pursue (in Seller's respective names), any monetary claims against any tenant who is in default under any Lease prior to the Closing
Date, but such actions shall not include any evictions or lease termination petitions or any action adversely affecting a tenant's use or right to occupy the leased premises and shall not result in or
give rise to a tenant being able to assert a claim against any Purchaser or having a defense to such tenant's obligations under such tenant's lease or rental agreement. 

        (e)    All
utility billings which are not paid by tenants of the Properties shall be prorated as of the Closing Date. With respect to any utilities being paid for by Sellers,
Sellers will attempt to cause utility meters to be read as of the Closing Date. To the extent that this is not possible and to the extent that any other obligation for continuing services is incurred,
and statements are rendered for such services covering periods both before and after the Closing Date, the amount will be adjusted between the parties as soon as possible as of the Closing Date on a
per diem basis. 

        (f)    Sellers
and Purchaser shall each pay one-half of the escrow and "New York Style" closing fees charged by the
Title Company or its escrow affiliate. 

        (g)    At
the Closing, Sellers and Purchaser shall execute a closing settlement sheet to reflect the credits, prorations, and adjustments contemplated by or specifically
provided for in this Agreement. To the extent any of the closing prorations made under this Section 8 (including, without limitation, real estate taxes) are done on the basis of estimates, the
same shall be subject 

13

 

to post-Closing adjustment and reconciliation when the actual amounts of those adjustment items can be determined. Except as provided in Section 8.3(h) below, any such adjustment
shall be made within thirty (30) days after either party makes written demand therefor to the other accompanied by a summary of the actual amounts upon which the final adjustment should be made
and reasonable supporting documentation, which shall evidence those actual amounts. Any out of pocket expense
reasonably incurred by a party in collecting or obtaining a reduction of any amount prorated may be offset against the amount recovered or reduction obtained. This paragraph shall survive the Closing. 

        (h)    At
Closing, Sellers shall certify to Purchaser in writing the aggregate amount of all estimated payments on account of the obligation of tenants under the Leases to
reimburse the Sellers for the cost of operating the Properties (including, but not limited to, costs of real estates taxes, insurance and common area maintenance of the Properties) received from
tenants with respect to such calendar year (with a breakdown for the amounts received from each tenant), the aggregate amount of expenses subject to reimbursement from tenants paid or incurred with
respect to such calendar year by the Sellers as of the Closing Date, and, with respect to each tenant, the base expense amount (determined in accordance with each Lease), if any, on which such
tenant's share of costs is calculated. Purchaser shall certify to Sellers in writing within (90) days after the end of such calendar year the aggregate amount of expenses subject to
reimbursement paid or incurred by the Purchaser following the Closing Date during such calendar year, shall promptly cause tenants to be billed for amounts due in excess of the aggregate payments
theretofore made by such tenants and shall certify to Sellers, in writing, within 150 days after the end of such calendar year the aggregate amount of payments received by the Purchaser after
Closing from tenants with respect to such calendar year. The aggregate amounts so collected by or on behalf of the parties shall be apportioned between them based upon the ratio of the reimbursable
costs of operations paid or incurred before or after Closing with respect to such calendar year and any amount owed by one party to the other shall be promptly paid. Each party shall provide or cause
to be provided to the other full access to all books and records required in order to confirm any information required to be provided pursuant to this paragraph. The provisions of this paragraph shall
survive Closing. 

        (i)    Brokerage
Commissions of leasing and rental agents and tenant improvement allowances for any Leases relating to the base lease term or any renewal term that is elected
or with respect to which an option is exercised, as the case may be, prior to the date hereof shall be paid in full at or prior to Closing by Sellers, without contribution or proration from Purchaser
(any such commissions or tenant improvements allowances, "Seller's Commissions"). Brokerage Commissions of leasing and rental agents and tenant
improvement allowances for (x) any renewals (other than renewals elected or with respect to which an option is exercised prior to the date hereof or that are not disclosed as part of the Due
Diligence Materials) or expansions of any Lease, and (y) any new leases executed and entered into after the date hereof shall be the sole responsibility of Purchaser, without contribution or
proration from Sellers (any such commissions or tenant improvements allowances, "Purchaser's Commissions"). Sellers hereby indemnify, protect, defend
and hold Purchaser, and its successors and assigns (the "Purchaser's Indemnified Parties"), harmless from and against any and all loss, liability, cost
or expense (including reasonable attorneys' fees) ("Losses") that any or all of Purchaser and any Purchaser's Indemnified Parties actually suffer and
incur as a result of the failure by Sellers to timely pay or discharge any of the Seller's Commissions or any commissions or tenant improvement allowances that are not disclosed in the Due Diligence
Materials. Purchaser hereby indemnifies, protects, defends and holds Sellers harmless from and against all Losses that Sellers actually suffers or incurs as a result of the failure by Purchaser to
timely pay or discharge any of the Purchaser's Commissions. The terms of this Section 8.3(i) shall survive the Closing and the delivery of any
conveyance documentation. 

14

 

        (j)    At
or prior to Closing, Seller shall pay or discharge in full all liabilities for any retail sales taxes, bulk sales taxes or other similar obligations payable in
connection with Sellers' sale of the Properties (collectively, "Bulk Sales Taxes"). Sellers hereby indemnify, protect, defend and hold Purchaser
harmless from and against any Losses that any or all of Purchaser and any Purchaser's Indemnified Parties actually suffer and incur as a result of the failure by Sellers to timely pay or discharge any
Bulk Sales Taxes. The terms of this Section 8.3(j) hall survive the closing and the delivery of any conveyance documentation. 

        (k)    At
Closing, (i) Sellers shall pay for the entire cost of the Updated Surveys and one-half the cost of any transfer taxes; and (ii) Purchaser
shall pay for the entire cost of the Title Policies and one-half the cost of any transfer taxes. 

        8.4.    Payment of the Purchase Price. Subject to the prorations, credits and debits agreed to herein, Purchaser will pay
(through the closing escrow) the entire Purchase Price and all additional sums due from Purchaser to Sellers hereunder in cash or immediately available funds at Closing. 

        8.5.    Events of Closing. Provided the Title Company or its escrow affiliate has received the Purchase Price from Purchaser and
is in a position to cause the Title Policy to be issued as provided herein, this transaction will be closed (the "Closing") on the Closing Date as
follows (all of the following to be deemed to take place concurrently): 

        (a)    Sellers
shall deliver to Purchaser a certificate signed by Sellers updating and remaking Sellers' representations and warranties and disclosing any matters as facts
contrary to such representations and warranties; provided, that notwithstanding anything to the contrary contained in this Agreement, Purchaser acknowledges that the Sellers may have entered into new
leases or service contracts or otherwise amended or terminated leases in accordance with Section 10.5 below. 

        (b)    Sellers
shall deliver to Purchaser the Certificates of Non-foreign Status as provided in  Section 6.1(h) above. 

        (c)    Sellers
shall deliver to Purchaser the original copies (or certified copies if originals are not in either Seller's possession or control) of all of the Leases, Service
Contracts and Improvement Contracts relating to the Properties, together with an update to the certified Rent Roll delivered to Purchaser pursuant to  Section 5.2 above containing all information
required to be provided therein as of a date not earlier than five (5) days prior to the
Closing Date. 

        (d)    Sellers
shall provide Purchaser and the Title Company with documents evidencing Sellers' authority to enter into and consummate the transaction contemplated by this
Agreement. 

        (e)    The
Title Company or its escrow affiliate shall prepare a settlement statement which must be approved by Sellers and Purchaser, in their reasonable discretion, and the
parties shall be charged and credited accordingly. 

        (f)    Sellers
shall provide Purchaser with copies of notices of termination of contracts as required under Section 10.1
below. 

        (g)    Purchaser
shall pay through the closing escrow the entire Purchase Price to Sellers in cash or immediately available funds, adjusted for the charges, credits and escrow
deposits set forth in this Section 8. 

        (h)    Any
liens to be paid by Sellers at Closing pursuant to Section 4.1 above shall be paid and satisfied of record at
Sellers' expense. 

        (i)    The
Title Company shall confirm that it is irrevocably committed to issue the Title Policy to Purchaser in accordance with the requirements set forth herein. Sellers
agree to provide all 

15

 

ALTA statements, affidavits and other documents customarily required for issuance of title policies containing the provisions and endorsements of the Title Policy. 

        (j)    Sellers
shall assign to Purchaser and Purchaser shall accept and assume all warranties and warranty payments, insurance proceeds, and condemnation awards, the Leases,
and all Service Contracts to be assigned to Purchaser, such assignments to be in the respective forms set forth in Exhibit L (Assignment of
Leases) and Exhibit K (Assignment of Contracts and General Assignment), attached hereto. 

        (k)    Sellers
shall convey the Land and Improvements to Purchaser by special warranty deeds (the "Deeds"), each in form and
substance reasonably acceptable to Purchaser, subject only to the Permitted Exceptions. 

        8.6.    Possession. Sellers shall deliver possession of the Properties to Purchaser on the Closing Date. At Closing, Sellers
shall provide all tenants with written notice of the sale of the Properties to Purchaser and shall direct such tenants, as of the Closing Date, to regard Purchaser as their landlord and to make rental
payments payable to the party and at the address specified by Purchaser as set forth in such notice. Any rentals which are received by either Seller or its agents after Closing to the extent
attributable to any period on or after the Closing Date shall be immediately turned over to Purchaser. Purchaser shall be entitled to receive directly from the tenants all rents received after the
Closing Date. 

9.    DEFAULTS AND FAILURE TO CLOSE  

        9.1.    Default by Seller. If either Seller is in default under any of the covenants and agreements of Seller under this
Agreement, Purchaser may either (i) terminate Purchaser's obligations under this Agreement by written notice to Sellers, in which event (a) the Deposit shall be returned to Purchaser and
(b) upon Purchaser's receipt of the Deposit, this Agreement shall terminate and neither party shall have any further liability under this Agreement except for the Post Termination Obligations;
or (ii) Purchaser may file an action for specific performance. Purchaser shall have no other remedy for any default by Sellers. In the event of the failure of any condition precedent to
Purchaser's obligation to close expressly set forth in this Agreement, or in the event of the untruth or inaccuracy, in any material respect, of any Seller representation, Purchaser's sole remedy
under this Agreement, at law or in equity, shall be to terminate this Agreement by delivery of written notice to Seller on or prior to Closing, in which event the Deposit shall be returned to
Purchaser, and neither party shall have any further liability under this Agreement, except for the Post Termination Obligations. 

        9.2.    Seller's Remedies. In the event Purchaser defaults under this Agreement, then (i) Sellers shall be entitled to
(and shall) receive the Deposit as fixed and liquidated damages, this Agreement shall terminate and neither party shall have any further liability under this Agreement, except for the Post Termination
Obligations and (ii) Purchaser shall immediately direct the Title Company, in writing, to pay the Deposit to Sellers. Sellers shall have no other remedy for any default by Purchaser, including
any right to damages. PURCHASER AND SELLERS ACKNOWLEDGE AND AGREE THAT: (1) THE AMOUNT OF THE DEPOSIT IS A REASONABLE ESTIMATE OF AND BEARS A REASONABLE RELATIONSHIP TO THE DAMAGES THAT WOULD
BE SUFFERED AND COSTS INCURRED BY SELLERS AS A RESULT OF HAVING WITHDRAWN THE PROPERTY FROM SALE AND THE FAILURE OF CLOSING TO HAVE OCCURRED DUE TO A DEFAULT OF PURCHASER UNDER THIS AGREEMENT;
(2) THE ACTUAL DAMAGES SUFFERED AND COSTS INCURRED BY SELLERS AS A RESULT OF SUCH WITHDRAWAL AND FAILURE TO CLOSE DUE TO A DEFAULT OF PURCHASER UNDER THIS AGREEMENT WOULD BE EXTREMELY DIFFICULT
AND IMPRACTICAL TO DETERMINE; (3) PURCHASER SEEKS TO LIMIT ITS LIABILITY UNDER THIS AGREEMENT TO THE AMOUNT OF THE DEPOSIT IN THE EVENT THIS AGREEMENT IS TERMINATED AND THE TRANSACTION 

16

 

CONTEMPLATED BY THIS AGREEMENT DOES NOT CLOSE DUE TO A DEFAULT OF PURCHASER UNDER THIS AGREEMENT; AND (4) THE AMOUNT OF THE DEPOSIT SHALL BE AND CONSTITUTE VALID LIQUIDATED DAMAGES. All of the
foregoing shall be without limitation upon the rights and remedies of Seller with respect to the Post Termination Obligations. 

        9.3.    Defaults. Except for (a) either party's wrongful failure to deposit any document or sum as and when required by  Section 8 above,
and (b) either party's wrongful failure to close by the required Closing Date, no party shall be deemed in default under
this Agreement unless such party is given written notice of
its failure to comply with this Agreement and such failure continues for a period of five (5) business days following the date such notice is given. 

10.    CONDUCT OF BUSINESS  

        10.1.    Contracts. From the date of this Agreement until the Closing Date, Sellers will continue to cause the Project to be
operated in accordance with their current management, operation and leasing standards and practices and will not permit any steps or actions to be taken which it knows or has reason to know would be
detrimental to the value of the Project. Sellers will not enter into any contractual obligation (except Service Contracts and Leases as permitted under this Agreement) which will not be paid in full
prior to the Closing Date. Sellers agree to cause the termination by written notice to the other party(ies) thereto, effective as of Closing of any of the Service Contracts that Purchaser, pursuant to
written notice to Sellers, requests to be terminated provided that (i) the Service Contract(s) Purchaser so requests be terminated may, by their terms, be so terminated; (ii) Sellers
receive Purchaser's written request to cause such Service Contract(s) to be terminated prior to the expiration of the Review Period; and (iii) in no event shall Sellers be obligated to cause to
be delivered any notices of termination of any of the Service Contracts until after the expiration of the Review Period. Sellers shall deliver to Purchaser a copy of all notices of termination caused
to be given by Sellers hereunder. All of the Service Contracts, other than the Service Contracts which Sellers are obligated to cause to be terminated pursuant to this  Section 10.1, are herein
sometimes referred to as the "Approved Contracts". No existing
management or leasing agreement shall be an Approved Contract and any such agreement shall be terminated at or before Closing. 

        10.2.    Permits. From the date of this Agreement until the Closing Date, Sellers shall take all normal and customary actions to
(i) cause to be preserved intact and unimpaired any licenses or permits required for the lawful and proper operation and occupancy of any Property, (ii) cause to be filed timely all
reports, statements, renewal applications and other filings required in connection therewith and (iii) cause to be paid timely all fees and charges in connection therewith that are required to
keep such licenses and permits in full force and effect; Sellers shall not intentionally cause or knowingly permit any tenant to cause the violation of any law, ordinance, rule or regulation affecting
the Properties, and shall not apply for or join in any change in zoning, platting or similar pubic land use matters related to the Properties, or any laws relating to the Properties; and shall not
dispose of or remove or permit to be disposed of or removed any fixtures, equipment or personal property owned by Sellers constituting part of the Project unless the same are rendered obsolete or of
no further value, in which case the same shall be replaced by or on behalf of Sellers with similar items of substantially the same or better quality and value as the replaced items when new and that
are free and clear of any lien or encumbrance or title retention agreement. 

        10.3.    Payment of Obligations. From the date of this Agreement until the Closing Date, Sellers agree to (i) cause to be
paid in a timely fashion all taxes and other public charges against any of the Properties, and (ii) provide Purchaser, within five (5) business days of receipt, copies of any notices
either Seller receives with respect to any special assessments or proposed increases in the tax assessment of any of the Properties. 

17

 

        10.4.    Insurance. Sellers agree to cause to be continued and maintained the current casualty and liability insurance policies
covering the Properties until the Closing Date. 

        10.5.    Leases and Service Contracts. Between the date of this Agreement and the Closing Date, neither Seller shall, without
Purchaser's prior written consent, which consent shall not be unreasonably withheld or delayed, (i) renew any Leases or Service Contracts, (ii) amend any Leases or Service Contracts,
(iii) terminate Leases or Service Contracts (except as provided in Section 10.1 above with respect to Service Contracts), or
(iv) enter into any additional service contracts, leases, licenses or other occupancy agreement affecting any Property. It is understood that under no circumstances shall Purchaser approve any
Service Contract not terminable at no cost upon thirty (30) days' notice. 

        10.6.    Property Maintenance. Sellers shall cause to be maintained and repaired the Project between the date of this Agreement
and the Closing Date so the same shall be on the Closing Date in substantially the same condition existing as of the end of the Review Period, ordinary wear and tear excepted and subject to  Sections 7.1(d) and (e) above. Sellers shall promptly notify Purchaser regarding any item of repair,
replacement or maintenance of which either Seller becomes aware and which requires an expenditure in excess of Fifty Thousand Dollars ($50,000.00). 

        10.7.    Commitments. Sellers will not make any commitment on behalf of or that would be binding upon the Project after the
Closing Date, without first obtaining Purchaser's prior written consent. Sellers will not sell, assign or convey any right, title or interest whatsoever in the Project or permit to exist any lien,
encumbrance or charge thereon without promptly discharging the same. 

        10.8.    Notification to Purchaser. Until the Closing Date or the earlier termination of this Agreement, Sellers agree to notify
Purchaser in writing within five (5) days after receiving notice, or otherwise obtaining actual knowledge, of: 

        (a)    Any
fact or event which would make any of the representations or warranties of Sellers contained in this Agreement untrue or misleading in any material respect or which
would cause Sellers to be in violation of any of their covenants or other undertakings or obligations hereunder. 

        (b)    Any
violation of any law, ordinance, regulation or law which would or might materially affect the Properties or any portion thereof. 

        (c)    Any
proposed change in any zoning or law affecting the use or development of the Properties or any part thereof. 

        (d)    Any
pending or threatened (and unresolved) litigation which affects or relates to the Properties or any part thereof and would subject Purchaser or Sellers to liability
or which would materially and adversely affect the transaction contemplated hereby. 

        (e)    Any
material damage or destruction (excluding normal wear and tear) to the Properties or any part thereof. 

        (f)    Any
pending or threatened (and unresolved) condemnation or eminent domain proceeding affecting the Properties or any part thereof. 

        (g)    Any
threatened (and unresolved) or pending proceeding in bankruptcy or insolvency which would materially adversely affect any Seller or any Property. 

        (h)    Any
material default under any of the Service Contracts or any other agreement affecting all or any portion of the Project, or any act or omission which, with the
passage of time or the giving of notice, or both, would constitute a default. 

        (i)    Any
written notice or other communication, from the United States Environmental Protection Agency or any other federal, state or local governmental authority having
jurisdiction over any of the Properties, with respect to (i) any alleged violation concerning any of the 

18

 

Properties of any Environmental Laws; or (ii) the handling, release, use, discharge, storage or disposal of any Hazardous Materials at, on or from any of the Properties. 

        (j)    Any
written notice or other material written communication received from any tenant. 

        (k)    Any
notice of reassessment or other notice received from a taxing authority. 

        For
purposes of this Section 10.8, "actual knowledge" means the knowledge of the parties or their agents and representatives but
does not include or require such party to make any independent investigation. 

        10.9.    Reliance Letters. Sellers shall, at no third party cost to Sellers, reasonably assist Purchaser to obtain reliance
letters (the "Reliance Letters") for the engineering reports prepared in connection with a prior proposed acquisition of the Properties such that
Purchaser (and its successors and assigns) may rely on such reports provided that if Purchaser is unable to obtain the Reliance Letters despite Seller's reasonable assistance, Sellers shall not be in
default hereunder. 

        10.10.    Exhibits. Purchaser has agreed to assemble and attach those exhibits that are not attached to the Agreement not later
than Monday, February 2, 2003. 

11.    [INTENTIONALLY OMITTED]  

12.    GENERAL PROVISIONS  

        12.1.    Post Termination Obligations.    The parties agree that (a) Purchaser's
obligation to restore the Property under the Access Agreement, Purchaser's obligation to indemnify Seller under Section 12.9, and to maintain the
confidentiality of certain information under Section 12.13 below; (b) each Seller's obligation to indemnify Purchaser under  Section 12.9
hereof and to maintain the confidentiality of certain information referred to in  Section 12.13 hereof (all of such Purchaser's and Sellers' obligations being referred to in this Agreement as the
"Post
Termination Obligations"); and (c) the general provisions contained in this Section 12, shall all continue in full
force and effect notwithstanding any cancellation, termination, expiration or forfeiture of this Agreement. 

        12.2.    Time of Essence. Time is of the essence of each and every provision of this Agreement. 

        12.3.    Assignments and Successors. This Agreement shall be binding upon and inure to the benefit of the parties and their
respective successors and assigns. Neither this Agreement nor any of Purchaser's rights hereunder may be assigned or transferred by Purchaser without the prior written consent of Sellers, provided
that Sellers' consent to an assignment by Purchaser shall not be required if the assignee is an affiliate of Purchaser or a joint venture in which Purchaser or an affiliate of Purchaser is a
participant; provided, however, that Purchaser shall not be relieved of its obligations hereunder following such an assignment. 

        12.4.    Notices. Notices under this Agreement shall be in writing and if personally delivered, delivered by courier, or
telefaxed shall be effective when received. If mailed, a notice shall be deemed effective on
the third business day after deposited as registered or certified mail, postage prepaid, return receipt requested, directed to the other party at the address shown above. All notices to Sellers shall
be given to Sellers to the attention of Sherwin Jarol c/o Bradley & Associates, 225 North Michigan Avenue, 11th Floor, Chicago, Illinois 60601 with an additional copy to Much
Shelist Freed Denenberg Ament & Rubenstein P.C., 200 North LaSalle Street, Suite 2100 Chicago, Illinois 60610, Telecopier (312) 621-1750) (Effective February 1, 2003:
191 North Wacker Drive Suite 1800, Chicago, Illinois 60606, Telecopier (312) 521-2100). All notices to Purchaser shall be given to the Purchaser's address herein stated, to the
attention of Mr. Don Chase and Mr. Saul A. Behar, Keystone Property Trust, 200 Four Falls Corporate Center, West Conshohocken, Pennsylvania 19428, Telecopier,
(484) 530-0131, with a copy to with a copy to Barack Ferrazzano Kirschbaum Perlman & Nagelberg, 

19

 

attention: Mark J. Beaubien, 333 West Wacker Drive, Suite 2700, Chicago, Illinois 60606. Either party may change its address for notices by at least five (5) days advance written notice to the
other. 

        12.5.    Waiver. Failure of either party at any time to require performance of any provision of this Agreement shall not limit
the party's right to enforce the provision. Waiver of any breach of any provision shall not be a waiver of any succeeding breach of the provision or a waiver of the provision itself or any other
provision. 

        12.6.    Attorneys' Fees. In the event any suit or action is instituted to interpret or enforce the terms of this Agreement, the
prevailing party shall be entitled to recover from the other party such sum as the court may adjudge reasonable as attorneys' fees at trial, on any appeal, in any bankruptcy proceeding and in any
petition for review, in addition to all other sums provided in this Agreement. 

        12.7.    Prior Agreements. Without limitation of the terms of the Access Agreement, this Agreement supersedes and replaces all
written and oral agreements previously made or existing between the parties, including, without limitation, all correspondence and letters of intent related to the Properties. 

        12.8.    Applicable Law. This Agreement shall be construed, applied and enforced in accordance with the laws of the Commonwealth
of Pennsylvania, without reference to choice of law principles. All sums referred to in this Agreement shall be calculated by and be payable in the lawful currency of the United States. 

        12.9.    Real Estate Commissions. Sellers agree to pay any commission owed by Sellers to Cushman & Wakefield pursuant to
the terms of any then effective listing agreement between Sellers and Cushman & Wakefield. Each party hereto shall be responsible for all other commissions and finders' fees to which such party
agreed in writing or for which such party is otherwise legally liable by virtue of any dealings by such party with any broker or finder, and shall defend and indemnify the other party hereto against
any and all claims therefor. Each party represents and warrants to the other that it has dealt with no other broker or finder in connection with this transaction. This representation shall survive
Closing. 

        12.10.    Legal Relationships. This Agreement shall not create any partnership, joint venture, or other joint undertaking
between Sellers and Purchaser, and neither party shall be liable for the debts or have the authority to make any representations on behalf of the other. No third party is intended to be benefited or
afforded any legal rights under or by virtue of this Agreement. 

        12.11.    Changes in Writing. This Agreement and any of its terms may only be changed, waived, discharged or terminated by a
written instrument signed by the party against whom enforcement of the change, waiver, discharge or termination is sought. 

        12.12.    Indemnified Parties. Any indemnification contained in this Agreement for the benefit of Seller or Purchaser shall
extend to Sellers' and Purchaser's respective officers, partners, members, employees, and agents. 

        12.13.    Confidentiality and Return of Documents. Prior to Closing, Purchaser shall use and disclose information it obtains
about the Property solely in connection with its purchase evaluation. Sellers and Purchaser shall each maintain as confidential any and all materials obtained about the other, and, in the case of
Purchaser, concerning the Properties, and shall not disclose any such information to any third party except (a) to such parties' respective partners, employees, members, agents and permitted
assignees, consultants and attorneys; (b) as required by applicable law or any court of competent jurisdiction; and (c) for any information which is otherwise a matter of public record
or available from any non-confidential source. 

        12.14.    Invalidity of Provisions. In the event any provision of this Agreement, or any instrument to be delivered by Purchaser
at closing pursuant to this Agreement, is declared invalid or is 

20

 

unenforceable for any reason, such provision shall be deleted from such document and shall not invalidate any other provision contained in the document. 

        12.15.    Counterparts. This Agreement may be executed simultaneously or in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same Agreement. 

        12.16.    Saturday, Sunday and Legal Holidays. If the time for performance of any of the terms, conditions and provisions hereof
shall fall on a Saturday, Sunday or legal holiday, then the time of such performance shall be extended to the next business day thereafter. 

        12.17.    Tender. The tender by Sellers of executed Assignments and the tender by Purchaser of the Purchase Price are hereby
mutually waived; but nothing herein contained shall be construed as a waiver
of Sellers' obligations to deliver such Assignments and/or of the concurrent obligation of Purchaser to pay the Purchase Price. 

        12.18.    Joint and Several. The obligations of Sellers hereunder are joint and several. 

        12.19.    Independent Consideration. Notwithstanding anything to the contrary contained herein, in the event of termination of
this Agreement for any reason, Purchaser shall promptly pay to Sellers one hundred dollars ($100.00), as independent consideration for Sellers' execution and delivery of this Agreement. This amount is
nonrefundable. 

        12.20.    Section 1031 Exchange. Sellers hereby agrees to cooperate, at no third party expense to Sellers, with Purchaser
in a tax-deferred exchange should Purchase so elect. Purchaser hereby agrees to indemnify Sellers from any and all costs, taxes, assessments and/or liability that may be proximately caused
by such tax-deferred exchange. Said tax-deferred exchange shall not otherwise delay the close of escrow nor shall Sellers be required to take title to any property so as to
accommodate Purchaser's exchange. 

        12.21.    Environmental Agreements. 

        (a)    Seller
is subject to and benefits from a certain Agreement and Covenant Not to Sue with the United States Environmental Protection Agency in the Matter of First
Industrial Harrisburg, L.P. (Docket #III-95-48-DC) (the "EPA Agreement") recorded in the Office of Recorder of Deeds
of Dauphin County, Pennsylvania (the "Recorder's Office"). Purchaser acknowledges receipt of a copy of the EPA Agreement before the date of this
Agreement of Sale and acknowledges that, as Purchaser of the Property, Purchaser shall, after Closing, be subject to the EPA Agreement and further acknowledges that the Property is now and shall be,
after Closing, under and subject to the EPA Agreement, including, without limitation, the rights of the United States set forth in Section VII of the EPA Agreement (Access). Purchaser shall
comply with the terms of the EPA Agreement relative to the period from and after Closing. In accordance with EPA Agreement, Purchaser shall execute an Agreement and Certification of Successor in
Interest or Assign (as defined in the EPA Agreement) acknowledging Purchaser "s obligation to be bound by the obligations of the EPA Agreement.  

        (b)    Seller is subject to are parties to a Consent Order and Agreement dated as of June 26, 1995 entered into among First Industrial Harrisburg, L.P., Fruehauf Trailer
Corporation, and the Pennsylvania Department of Environmental Resources (now known as the Pennsylvania Department of Environmental Protection) in the Matter of Fruehauf Parcel (the
"PADEP Agreement") and recorded in the Recorder's Office. Purchaser acknowledges receipt of a copy of the PADEP Agreement before the date of this
Agreement of Sale and acknowledges that, as Purchaser of the Property, Purchaser shall, after Closing, be subject to the PADEP Agreement and further acknowledges that the Property is now and shall be,
after Closing, under and subject to the 

21

 

PADEP Agreement. Purchaser shall comply with the terms of the PADEP Agreement related to the period from and after Closing. 

        (c)    To
the best of Seller's knowledge, the EPA Agreement and the PADEP Agreement are in full force and effect. To the best of Seller's knowledge, (i) Seller has
timely complied with and performed its obligations under the EPA Agreement and the PADEP Agreement; (ii) Seller has not received any notice alleging or advising of any breach, default or
failure of performance on the part of Seller pursuant to the EPA Agreement or the PADEP Agreement or any further condition that with the passage of time will constitute a breach or default on the part
of Seller pursuant to the EPA Agreement or the PADEP Agreement. 

        (d)    Sellers
represents and warrants to Purchaser that Seller has, at Sellers' sole cost, provided the notice to the EPA contemplated by Section 50 of the EPA
Agreement (the "EPA Transfer Notice"). Sellers will also give the notice to the EPA contemplated by Section 53 of the EPA Agreement within the
applicable time frames. 

        12.22.    Water Tower. Prior to the Closing, Sellers shall, at Seller's sole expense, remove (or paint over in a manner
reasonably acceptable to Purchaser) the "First Industrial" logo located on the water tower on the Properties. 

        [Signature
Page to Follow] 

22

 

        IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in duplicate as of the day and year first above written. 

	SELLER:	 	CAPITAL LANE PROPERTY HOLDING, LP
	 	 	By:	Capital Lane General Partner, LP,

its sole general partner
	 	 	By:	Capital Lane Associates, LLC

its sole general partner
	 	 	By:	Capital Lane Venture, LP

its sole member
	 	 	By:	Bradley Associates L.L.C.

its sole general partner
	

 	
 	

By:	

/s/  SHERWIN N. JAROL      
 Sherwin N. Jarol, Sole Manager
	

 	
 	
CAPITAL LANE PROPERTY HOLDING II, LP
	 	 	By:	Capital Lane General Partner II, LP,

its sole general partner
	

 	
 	

By:	

Capital Lane Associates II, LLC

its sole general partner
	

 	
 	

By:	

Capital Lane Venture II, LP

its sole member
	

 	
 	

By:	

Bradley Associates L.L.C. its sole general partner
	

 	
 	

By:	

/s/  SHERWIN N. JAROL      
 Sherwin N. Jarol, Sole Manager
	
PURCHASER	
 	

KEYSTONE OPERATING PARTNERSHIP, L.P.
	

 	
 	
By:	

Keystone Property Trust, its sole general partner
	

 	
 	

By:	

/s/  JOHN B. BEIGER      
 John B. Beiger, Vice President

S-1

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EXHIBIT 10.2QuickLinks
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Exhibit 10.1    
  

EXECUTION COPY  

 
 
 
MEMBERSHIP INTEREST PURCHASE AGREEMENT  

 AMONG  

 JAY D. CHAZANOFF, STEPHEN R. SIMMS, RON L. JACOBS, AND KATHLEEN GERBER  

 AND  

 BANKRUPTCY SERVICES LLC  

 AND  

 EPIQ SYSTEMS ACQUISITION, INC.  

 AND  

 EPIQ SYSTEMS, INC.  

 Dated as of January 31, 2003  

  

 
 

MEMBERSHIP INTEREST PURCHASE AGREEMENT    
  

        THIS MEMBERSHIP INTEREST PURCHASE AGREEMENT (this "Agreement"), dated as of the 31st day of January,
2003, is made by and among EPIQ SYSTEMS, INC., a Missouri corporation ("Parent"), EPIQ SYSTEMS
ACQUISITION, INC., a New York corporation and a wholly owned subsidiary of Parent ("Buyer"), BANKRUPTCY SERVICES LLC, a
New York limited liability company ("Company"), JAY D. CHAZANOFF, an individual ("Chazanoff"), STEPHEN R.
SIMMS, an individual ("Simms"), RON L. JACOBS, an individual ("Jacobs"), and KATHLEEN
GERBER, an individual ("Gerber") (hereinafter, Chazanoff, Simms, Jacobs and Gerber are each individually referred to as a "Seller" and collectively referred to as "Sellers"). 

 
 

RECITALS    
  

        1.    Parent
develops, markets and licenses proprietary software solutions for workflow management and data communications infrastructure that serve the bankruptcy trustee
market and the infrastructure software market. 

        2.    Sellers
and Bankruptcy Services, Inc. are all of the members of Company which provides claims agent services as an agent of the United States Bankruptcy Court in
various jurisdictions throughout the United States, notice and legal publication services, claims tracking and reconciliation services, balloting and solicitation services, and property disbursement
services, for debtors, debtors' counsel and other advisers, creditors, and the federal court in Chapter 11 bankruptcy reorganizations (the "Business"). 

        3.    Buyer
desires to acquire all of the Membership Interests (as defined below) of Company, thereby acquiring the Business of Company, in order to expand and enhance Parent's
services to the bankruptcy industry and to other markets itself and through its subsidiaries. 

        4.    Chazanoff
owns 30% of the membership interests of Company, Simms owns 25.55% of the membership interests of Company, Jacobs owns 34.45% of the membership interests of
Company, and
Gerber owns 10% of the membership interests of Company, which collectively constitute all of the membership interests of Company (the "Membership Interests"). 

        5.    Buyer
desires to acquire the tangible and intangible assets and operations, including without limitation the goodwill, of Company through the purchase of the Membership
Interests from Sellers pursuant to the terms of this Agreement and the transfer of all of the Membership Interests to Buyer. 

        NOW,
THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein, the receipt and sufficiency of which are hereby acknowledged, the parties
hereto do hereby agree as follows: 

1

  

 
 

ARTICLE I
  
    DEFINITIONS    
  

        1.1  Definitions.    In addition to terms defined elsewhere in this Agreement, the following words and terms as used
in this Agreement have the following meanings: 

        "Affiliate" means any Person (whether for-profit or nonprofit) that "controls," or is "controlled" by, or is under common
"control" with, any other Person or one of its subsidiaries. For purposes of this definition, a Person "controls" another Person when the first Person possesses or exercises directly, or indirectly
through one or more other Affiliates or related entities, the power to direct the management and policies of the other Person, whether through the ownership of voting rights, membership, the power to
appoint a majority of the members, trustees or directors, by contract, or otherwise. 

        "Accounts Receivable" means, with respect to the Business, the amounts owing to Company as of the Closing Date for goods sold or services
rendered and delivered prior to the Closing Date, whether or not Company has submitted an invoice for such goods or services, and shall include, without limitation, all amounts in respect of unbilled
work-in-progress prior to the Closing Date. 

        "Ancillary Documents" means all agreements, certificates and other documents delivered simultaneously with the execution of this
Agreement, in each case, as more fully described in Article VI hereof. A "Sellers Ancillary Document" is an Ancillary Document to which Sellers
are, or will be, a party; and a "Buyer Ancillary Document" is an Ancillary Document to which Buyer or Parent is, or will be, a party. 

        "Chazanoff Consulting Agreement" means the Consulting Agreement to be entered into by and between Company and Chazanoff contemporaneously
with the execution of this Agreement, the form of which is attached as Exhibit 6.1.2(a) hereto. 

        "Consulting Agreement" means the Chazanoff Consulting Agreement or the Simms Consulting Agreement, as applicable. 

        "Code" means the Internal Revenue Code of 1986, as amended from time to time. 

        "Employment Agreement" means the Jacobs Employment Agreement or the Gerber Employment Agreement, as applicable. 

        "Encumbrance" means any lien, pledge, charge, assessment, security interest, mortgage, claim, option, easement, imperfection of title,
tenancy or other legal or equitable right of others, or other encumbrance of any character whatsoever. 

        "Gerber Employment Agreement" means the Employment Agreement to be entered into by and between Company and Gerber contemporaneously with
the execution of this Agreement, the form of which is attached as Exhibit 6.1.1(b) hereto. 

        "Governmental Authority" means any court, administrative agency, commission, state, municipality or other governmental authority or
instrumentality, domestic or foreign, national or international. 

        "Intellectual Property" means all (i) patents, patent applications, patent disclosures and inventions (whether or not patentable
and whether or not reduced to practice); (ii) trademarks, service marks, trade dress, trade names, corporate names, logos, slogans, URLs, websites and Internet domain names, together with all
goodwill associated with each of the foregoing; (iii) copyrights and copyrightable works; (iv) registrations, applications and renewals for any of the foregoing; (v) trade
secrets, confidential information, licenses to utilize catalogs, books or tapes and know-how (including, but not limited to, ideas, business and marketing plans and related information);
and (vi) computer software (including, but not limited to, data, databases and documentation) used in each case by Company, 

2

 

including without limitation, the intellectual property listed in Section 3.14 of the Disclosure Schedule, and any Contracts relating to
Intellectual Property rights of the Company. 

        "Jacobs Employment Agreement" means the Employment Agreement to be entered into by and between Company and Jacobs contemporaneously with
the execution of this Agreement, the form of which is attached as Exhibit 6.1.1(a) hereto. 

        "Laws" means all ordinances, statutes, rules, regulations, orders, injunctions, writs, or decrees of any government or political
subdivision or agency thereof, or any court, or any entity established, created or controlled by any thereof. 

        "Litigation" means any claim, action, suit, proceeding, arbitration, investigation, audit, inquiry or hearing before any court,
Governmental Authority or private arbitration tribunal. 

        "Person" means any individual, corporation, limited liability company, partnership, association, joint-stock company, trust,
unincorporated organization, joint venture, court or government, or political subdivision or agency thereof, or other entity, including a Governmental Authority. 

        "Pre-Closing Liabilities" means the duties, liabilities or obligations of Company, if any, arising prior to the Closing Date,
and shall specifically include, among other things, (i) any and all amounts that Company may be required to pay to Bankruptcy Services, Inc. pursuant to the terms of
Section 4.3(b) of that certain Second Amended and Restated Operating Agreement of Company, dated as of January 27, 2003; (ii) any liabilities for employment, income, sales,
property or other Taxes incurred or accrued by Company prior to and on the Closing Date; (iii) any fees or expenses incurred by Company in connection with the Transactions on or before the
Closing Date whether or not Company has received an invoice for such fees and expenses as of the Closing Date; (iv) any liabilities for sums borrowed at any time prior to the Closing Date from
banks or other Persons including any interest thereon or expenses related thereto arising prior to and including the Closing Date; (v) any debt, payables or other liabilities to Related
Persons; (vi) any liabilities related to any employee benefit plan, including, without limitation, any 401(k), profit sharing or pension plan, whether or not sponsored by Company, arising prior
to and including the Closing Date; (vii) any claims or litigation pending against Company as of the Closing Date, (viii) any liabilities for employee compensation (including commissions)
and bonuses up to and through the Closing Date to the extent such liabilities are not paid or otherwise satisfied pursuant to Section 2.4.6
hereof; and (ix) any amounts owing by Company as of the Closing Date for goods and services purchased prior to the Closing Date, whether or not Company has received an invoice for such goods
and services. 

        "Related Person" means any officer, director, employee or consultant of Company or any holder of five percent (5%) or more of any
membership interest of Company or any member of the immediate family of any such officer, director, employee, consultant or member or any entity controlled by any such officer, director, employee,
consultant or member or a member of the immediate family of any such officer, director, employee, consultant or member. 

        "Simms Consulting Agreement" means the Consulting Agreement to be entered into by and between Company and Simms contemporaneously with the
execution of this Agreement, the form of which is attached as Exhibit 6.1.2(b) hereto. 

        "Tax" or "Taxes" means taxes, levies or other like assessments, customs, duties, charges
or fees of any kind imposed by any Governmental Authority, including, without limitation, income, gross receipts,
excise, real or personal property, sales, use, payroll, franchise, withholding, social security, workers' compensation, unemployment compensation, or transfer and gains taxes, and in each instance
such term shall include any interest, penalties or additions to tax attributable to any such Tax. 

        "Tax Returns" means returns, reports, information statements, and other documentation filed or maintained in connection with the
calculation, determination, assessment or collection of any Tax. 

3

 

        "Transactions" means the transactions contemplated by this Agreement and the Ancillary Documents, including, without limitation, the
transfer of the Membership Interests described in Section 2.1. 

        "Updated Financial Statements" means the unaudited updated (i) balance sheet, (ii) income statement, (iii) statement
of cash flow, (iv) statement of equity and (v) notes to the foregoing financial statements of Company, for the periods up to and ending as of December 31, 2002, delivered by
Sellers to Buyer pursuant to Section 5.2.7.7 hereof. 

 
 

ARTICLE II
  
    PURCHASE AND SALE    
  

        2.1  Purchase, Sale and Transfer of Membership Interests.    On the terms and subject to the conditions set forth in
this Agreement, at the Closing (as defined in Section 2.2), each Seller shall sell, assign, transfer and convey to Buyer, free and clear of any
Encumbrances (other than Encumbrances relating to applicable federal and state securities laws), and Buyer shall purchase from each Seller, the number of Membership Interests set forth opposite such
Seller's name on Schedule 2.1 hereto. Such sales and purchases shall be affected on the Closing Date (as defined in  Section 2.2) by each Seller
delivering to Buyer assignments of the Membership Interests owned by such Seller, which collectively constitute all
of the Membership Interests of Company, and the certificates representing all such Membership Interests, duly endorsed in blank or accompanied by powers or other instruments of transfer duly executed
in blank, and Buyer shall deliver to each Seller, as described in Sections 2.3 and 2.4 hereof, such Seller's allocable portion of the (i) Closing
Cash Purchase Price (as defined in and determined in accordance with Section 2.3.1), (ii) Positive Balance (as defined in and determined
in accordance with Section 2.4), if any, and (iii) Stock Purchase Price (as defined in and determined in accordance with  Section 2.3.3.1),
with all Closing Shares (as defined in Section 2.3.3.1) delivered in
connection therewith being free and clear of any Encumbrances (other than Encumbrances relating to applicable federal and state securities laws as set forth in  Section 2.3.3.1 and Encumbrances
arising pursuant to the terms of Section 2.3.3.2 hereof).
 

        2.2  Time and Place of Closing.    On the terms and subject to the conditions set forth in this Agreement, the
closing of the purchases and sales of the Membership Interests contemplated by Section 2.1 hereto (the "Closing") shall take place
contemporaneously with each party's execution and delivery of this Agreement, at the offices of Willkie Farr & Gallagher, 787 Seventh Avenue, New York, New York 10019, or at such other time,
date, place or places as the parties hereto shall agree in writing (the "Closing Date"). 

        2.3  Aggregate Purchase Price.    The aggregate purchase price (the "Purchase Price") to be paid by Buyer to Sellers
in consideration for the sale to Buyer of the Membership Interests as contemplated hereby shall be Sixty-Six Million Dollars ($66,000,000) and shall be comprised of (i) the Closing
Cash Purchase Price (as defined in Section 2.3.1), (ii) the Contingent Cash Purchase Price (as defined in  Section 2.3.2) and (iii) the
Stock Purchase Price (as defined in Section 2.3.3.1).
The Purchase Price shall be paid by Buyer to Sellers as follows: 

        2.3.1  Closing Cash Purchase Price.    At Closing, Buyer shall pay to Sellers, in the aggregate,
Forty-Five Million Five Hundred Thousand Dollars ($45,500,000) (the "Closing Cash Purchase Price") in cash, with each Seller's allocable portion of the Closing Cash Purchase Price (as set
forth in this Section 2.3.1) to be paid to such Seller by wire transfer of immediately available funds to the account of each such Seller as
specified on Schedule 2.3.1. The Closing Cash Purchase Price shall be distributed among the Sellers as follows: 

        2.3.1.1  Thirteen Million Six Hundred Fifty Thousand Dollars ($13,650,000) shall be payable by Buyer to
Chazanoff; 

4

 

        2.3.1.2  Eleven Million Six Hundred Twenty-Five Thousand Two Hundred Fifty Dollars ($11,625,250)
shall be payable by Buyer to Simms; 

        2.3.1.3  Fifteen Million Six Hundred Seventy Four Thousand Seven Hundred Fifty Dollars ($15,674,750) shall be
payable by Buyer to Jacobs; and 

        2.3.1.4  Four Million Five Hundred Fifty Thousand Dollars ($4,550,000) shall be payable by Buyer to Gerber. 

        2.3.2  Contingent Cash Purchase Price.    Subject to the terms and conditions of this  Section 2.3.2, each Seller shall receive from
Buyer, and Buyer hereby agrees to pay to each Seller, as additional consideration for the
Membership Interests (the "Contingent Cash Purchase Price"), the sums set forth beside each Seller's name on Schedule 2.3.2 hereof. 

        2.3.2.1  Full Forfeiture by all Sellers.    If, and in the event that, either Jacobs or Gerber, or
both of them, shall, prior to January 31, 2008, (i) voluntarily terminate his or her employment with Company (other than for Good Reason (as defined in the relevant Employment Agreement)
or due to death or Disability (as defined in the relevant Employment Agreement), it being agreed that in the event of a termination of employment for Good Reason, death or Disability, Buyer shall,
notwithstanding such termination of employment, continue to be obligated to make the payments to each Seller, including Jacobs and Gerber, or, in the case of death, to the deceased Seller's
beneficiaries or estate, in the amounts and on the dates set forth on Schedule 2.3.2 hereto); or (ii) be terminated by Company for Cause
(as defined in the relevant Employment Agreement), but excluding a termination for Cause pursuant to Section 3(a)i.4.(ii) of the relevant Employment Agreement, in which case Buyer shall
continue to be obligated to make the Contingent Cash Purchase Price payments to all Sellers in accordance with the terms hereof, then, subject to Sections 2.3.2.3 and
2.3.2.4, each of the four (4) Sellers shall forfeit his and her allocable portion of the Contingent Cash Purchase Price, in recognition of the resulting impairment to
the goodwill of the Business. 

        2.3.2.2  Forfeiture by Chazanoff and/or Simms.    If, and in the event that, either Chazanoff or Simms
shall, prior to the expiration of the initial term of such Seller's Consulting Agreement, (i) voluntarily terminate his Consulting Agreement with Company (other than for Good Reason (as defined
in the relevant Consulting Agreement) or due to death or Disability (as defined in the relevant Consulting Agreement), it being agreed that in the event of a termination of a Consulting Agreement for
Good Reason, death or Disability, Buyer shall, notwithstanding such termination, continue to be obligated to make the payments to the terminating Seller, or, in the case of death, the terminating
Seller's beneficiaries or estate, in the amounts and on the dates set forth on Schedule 2.3.2 hereto); or (ii) be terminated by Company
for Cause (as defined in the relevant Consulting Agreement), but excluding a termination for Cause pursuant to Section 3(a)i.4.(ii) of the relevant Consulting Agreement, in which case
Buyer shall continue to be obligated to make the Contingent Cash Purchase Price payments to the Seller so terminated in accordance with the terms hereof, then, subject to  Sections 2.3.2.3 and 2.3.2.4,
the Seller so terminating his Consulting Agreement, or having been so terminated, shall forfeit his allocable portion of
the Contingent Cash Purchase Price, in recognition of the resulting impairment to the goodwill of the Business, it being understood that such a termination shall in no way affect Buyer's obligation to
pay to each other Seller his or her allocable portion of the Contingent Cash Purchase Price in accordance with Schedule 2.3.2 hereto. 

        2.3.2.3  Payment; Effective Date of Forfeiture.    Payment of the Contingent Cash Purchase Price to
each of the four (4) Sellers (or to a Seller's estate or beneficiaries, if applicable) shall be made on the dates and in the amounts set forth on  Schedule 2.3.2, if and in the event that

5

 

no Forfeiture Notice (as defined in Section 2.3.2.4) has been given hereunder, on or before the due dates of such payments, and such payments
shall be deemed earned as of such date. The forfeiture by any Seller of any portion of the Contingent Cash Purchase Price shall be effective solely with regard to payments of portions of the
Contingent Cash Purchase Price which have not been received or earned
by such Seller or Sellers as of the date of the Forfeiture Notice hereunder. No forfeiture or repayment shall be made by any Seller with regard to Contingent Cash Purchase Price payments received or
earned prior to the date of the Forfeiture Notice hereunder. 

        2.3.2.4  Notice; Dispute Resolution.    If Company believes that any Seller voluntarily terminated his
or her employment with Company or his Consulting Agreement (other than for Good Reason or due to death or Disability) or if Company has purportedly terminated any Seller for Cause hereunder (each of
such terminations being referred to hereinafter as a "Forfeiture Event"), Company shall provide to each Seller who, pursuant to the terms of Sections
2.3.2.1 and 2.3.2.2, may be affected by such Forfeiture Event (each an "Affected Seller") written notice (the "Forfeiture
Notice") within twenty (20) calendar days of such Forfeiture Event. Each Affected Seller shall have the right, during the twenty (20) calendar day period commencing from the date of
receipt by such Affected Seller of the Forfeiture Notice, to deliver notice to Buyer (the "Dispute Notice") disputing the facts asserted by Company in its Forfeiture Notice; if any Affected Seller
delivers a Dispute Notice, all Affected Sellers shall be deemed to have delivered a Dispute Notice. Failure by all Affected Sellers receiving the Forfeiture Notice to provide a Dispute Notice to Buyer
within the time frame prescribed above shall be deemed to be an agreement by all Affected Sellers to the full forfeiture or partial forfeiture as described in Sections 2.3.2.1
or 2.3.2.2, respectively, which is the subject of the Forfeiture Notice. If a Dispute Notice is timely received by Buyer and, if within ten (10) calendar days of Buyer's
receipt of such Dispute Notice, the Affected Seller or Affected Sellers providing such Dispute Notice and Buyer cannot resolve their dispute as to the facts and circumstances surrounding the
termination of the employment or the Consulting Agreement, as the case may be, of the relevant Seller, the Affected Seller(s) and Buyer shall submit the dispute for resolution to an arbitrator
pursuant to Section 10.2 hereof (the "Arbitrator"). If the Arbitrator determines that, in accordance with Sections
2.3.2.1, 2.3.2.2, 2.3.2.3 and/or this  Section 2.3.2.4, as applicable, Buyer is
required, notwithstanding the termination of the employment or the Consulting Agreement, as the case may
be, of the relevant Seller, to continue to make the payments of the Contingent Cash Purchase Price, then Buyer shall, within three (3) calendar days of such determination, pay to each Affected
Seller, by wire transfer of immediately available funds to the account or accounts such Affected Seller(s) shall specify to Buyer in writing the full amount of any and all payments of the Contingent
Cash Purchase Price that were scheduled to be paid to such Affected Seller(s) pursuant to Schedule 2.3.2 during the period in which the dispute
was pending; thereafter, Buyer shall remain obligated to make any and all payments of the Contingent Cash Purchase Price not yet then due and payable in accordance with  Schedule 2.3.2 hereto. If
the Arbitrator determines that, in accordance with Sections 2.3.2.1,  2.3.2.2, 2.3.2.3 and/or this
Section 2.3.2.4, as
applicable, Buyer is not required to continue to make the payments of the Contingent Cash Purchase Price to the Affected Seller(s), then Buyer's obligation to make any such payments to such Affected
Seller(s) in respect of any period ending on or after the date of the Forfeiture Event shall terminate, effective as of such date, in recognition of the resulting impairment to the goodwill of the
Business. For the avoidance of doubt, in making any determination under this Section 2.3.2.4 the Arbitrator shall consider, among other things,
the nature and cause of the termination, the date of the termination and the timeliness of any notice required to be given pursuant to the terms hereof. 

6

 

        2.3.3  Securities Portion of Purchase Price.

        2.3.3.1  Buyer shall pay the balance of the Purchase Price, or Sixteen Million Five Hundred Thousand Dollars
($16,500,000), to Sellers in accordance with the terms of this Section 2.3.3.1 (the balance of the Purchase Price being hereinafter referred to
as the "Stock Purchase Price"). In full satisfaction of Buyer's obligation to pay the Stock Purchase Price, at the Closing, and subject to  Section 2.3.3.2 below, Parent hereby agrees to issue and
deliver to each Seller, duly registered on the books of Parent in such Seller's name,
that number of fully paid and non-assessable shares of common stock, $.01 par value per share, of Parent (such stock is hereinafter referred to as "EPIQ Stock" or "Parent Common Stock")
set forth opposite such Seller's name on Schedule 2.3.3.1 hereto (the "Closing Shares"), it being understood that the aggregate number of shares
of EPIQ Stock being issued by Parent to Sellers hereunder has been determined by dividing Sixteen Million Five Hundred Thousand Dollars ($16,500,000) by the average of the closing prices of one share
of EPIQ Stock as reported as of the close of trading on the Nasdaq National Market for the fifty-five (55) calendar days immediately preceding the date that is five
(5) calendar days prior to the earlier of the (i) first public announcement of the Transactions contemplated by this Agreement and (ii) Closing Date (with any fractional shares
that would otherwise result from such calculation being rounded to the nearest whole number). The shares of EPIQ Stock to be issued to each Seller as a portion of the Stock Purchase Price
(i) will not be registered under the Securities Act of 1933, as amended (the "Securities Act"), (ii) will be issued to each Seller by EPIQ pursuant to Regulation D of the
Securities Act or another applicable exemption therefrom, (iii) are being issued by Parent and accepted by each Seller in reliance upon certain representations and warranties of each Seller,
Buyer and Parent, as applicable, as contained herein (including, in the case of Buyer and Parent, the representations and warranties of each Seller set forth in  Section 3.35 hereof) and
(iv) will carry the following restrictive legend on each stock certificate representing the shares of EPIQ Stock
issued to Sellers pursuant to the terms hereof: 

"The
securities evidenced hereby have not been registered under the Securities Act of 1933, as amended (the "Act"), and may not be transferred except pursuant to an effective registration under the
Act or in a transaction which, in the opinion of counsel reasonably satisfactory to EPIQ Systems, Inc., qualifies as an exempt transaction under the Act and the rules and regulations
promulgated thereunder." 

        2.3.3.2  Sellers hereby acknowledge and agree that, except as provided in the last sentence of this  Section 2.3.3.2, one-half of the Closing Shares
issued to and registered on the books of Parent in the names of Sellers hereunder,
with an aggregate value as of the date hereof, determined in accordance with Section 2.3.3.1 above, of Eight Million Two Hundred Fifty Thousand
Dollars ($8,250,000) shall not be transferred, pledged, hypothecated, mortgaged or disposed of, by gift or otherwise, or in any way encumbered by any Seller hereunder for a period of one
(1) year from and after the date hereof and that the share certificates representing such Closing Shares shall each bear a restrictive legend to the foregoing effect, with the number of Closing
Shares of each Seller subject to the foregoing one (1) year transfer restriction being allocated pro rata among all Sellers as set forth on  Schedule 2.3.3.2(a) hereto. Sellers hereby further
acknowledge and agree that, except as provided in the last sentence of this  Section 2.3.3.2, the remaining one-half of the Closing Shares issued to and registered in the names of Sellers hereunder,
with an
aggregate value as of the date hereof, determined in accordance with Section 2.3.3.1 above, of Eight Million Two Hundred Fifty Thousand Dollars
($8,250,000) shall not be transferred, pledged, hypothecated, mortgaged or disposed of, by gift or otherwise, or in any way encumbered by any Seller hereunder for a period of two (2) years from
and after the date hereof and that the share 

7

 

certificates representing such Closing Shares shall each bear a restrictive legend to the foregoing effect, with the number of Closing Shares of each Seller subject to the foregoing two
(2) year transfer restriction being allocated pro rata among all Sellers as set forth on Schedule 2.3.3.2(b) hereto. Except as provided in
the immediately following sentence, any transfer, hypothecation, mortgage, disposition or encumbrance, or any agreement to do any of the foregoing in violation of this  Section 2.3.3.2 shall be void
ab initio and of no force or effect and Sellers hereby agree that during such restrictive periods, Buyer may
deliver stop transfer instructions to the stock transfer agent for the EPIQ Stock in accordance with the foregoing agreement. Buyer and Parent hereby agree and acknowledge that notwithstanding
anything contained in this Section 2.3.3.2 to the contrary, in the event of the death of any Seller within the transfer restriction periods set
forth herein, the Closing Shares owned by such deceased Seller shall be transferable to such deceased Seller's beneficiaries, estate, heirs, executor or legal representative, it being understood that
upon receipt thereof, such Person shall be bound by and subject to the restrictions with respect to transfer set forth herein. 

        2.4  Closing Cash Balance. Schedule 2.4.1 hereto sets forth the Closing Cash Balance (as hereinafter defined). In the
event the Closing Cash Balance is a positive number (the "Positive Balance"), Company shall pay to Sellers, in the aggregate, an amount equal to the Positive Balance, with each Seller's allocable
portion of the Positive Balance (as set forth on Schedule 2.4 hereto) to be paid to such Seller by wire transfer of immediately available funds
to the account of such Seller as specified on Schedule 2.3.1. In the event the Closing Cash Balance is a negative number (the "Negative
Balance"), Sellers shall, immediately prior to the Closing, pay into the account of Company an amount equal to the Negative Balance, it being understood and agreed that the Negative Balance shall be
retained by Company following the Closing for general working capital needs. The cash balance of Company at Closing (the "Closing Cash Balance") represents and shall be determined by taking the sum
of: 

        2.4.1  the cash and the value of the cash equivalents held by Company in any demand, time, savings, checking,
depositary, securities or similar account maintained by Company with any bank, broker dealer, securities intermediary or other financial institution, in each case, as reflected on the books and
accounts of Company as of the Closing Date; plus

        2.4.2  all amounts (other than amounts in respect of the security deposit) paid by any Seller, Company or any
Affiliate thereof regarding the facility located at 757 Third Avenue, Suite 304, New York, New York 10017 (the "Referenced Property") for the office lease, construction, equipment purchases, other
related build-out, pre-paid rent for periods after the Closing Date (but not for any rent paid covering periods ending on or before the Closing Date), which amounts are all set
forth on Schedule 2.4.2 hereto; plus

        2.4.3  all amounts paid by any Seller, Company or any Affiliate thereof as a security deposit or
pre-paid rent for periods after the Closing Date (but not for any rent paid covering periods ending on or before the Closing Date) regarding the facility located at 135 East
57th Street, New York, New York 10022, which amounts are all set forth on Schedule 2.4.3 hereto;  less

        2.4.4  One Million Five Hundred Thousand Dollars ($1,500,000) in cash or cash equivalents held by Company to be
used by Company for working capital needs subsequent to the Closing; less

        2.4.5    all amounts in respect of customer retainers and similar deposit payments made by customers of Company as
reflected on the books and records of Company as of the Closing Date; less

        2.4.6  all amounts in respect of employee bonuses (other than retention bonuses, if any) and compensation,
including commissions, that have accrued but have not been paid (or set apart for payment) as of the Closing Date as reflected on the books and records of Company;  less

8

  

        2.4.7  all amounts necessary to satisfy the obligation of Company relating to the accrued vacation of the
employees of Company as reflected on Section 3.20 of the Disclosure Schedule. 

        2.5  Accounts Receivable.    Subject to the terms of  Section 2.6 herein, effective as of the Closing Date, Company agrees, and Buyer
shall cause Company to, (i) assign, transfer and convey to
(A) the Majority Sellers (as defined in Section 7.1), all of Company's (or any successor or assignee thereof) right, title and interest in
and to the Accounts Receivable that are attributable to any period ending on or before December 31, 2002 and (B) all Sellers, all of Company's (or any successor or assignee thereof)
right, title and interest in and to the Accounts Receivable that are attributable to any period from and after January 1, 2003 to the Closing Date and (ii) within twenty
(20) calendar days following the end of each calendar month following the Closing Date (each such month is hereinafter referred to as a "Monthly Period"), for a period of twelve
(12) months following the Closing Date (the "True-Up Period"), transfer and deliver to the Majority Sellers or all Sellers, as the case may be, the Net Amount (as defined in  Section 2.6 below),
 with each such Net Amount payment being made to the Majority Sellers or all Sellers, as the case may be, in accordance with  Schedule 2.5 hereto and by wire transfer of immediately available funds
to the accounts set forth on  Schedule 2.3.1 hereto or by such other method as the relevant Seller and Parent shall mutually agree. In connection with the Net Amount payments
by Company as contemplated hereby, Buyer and Company hereby agree that, from and after the Closing Date, without the prior written consent of each Seller, and except as contemplated by the immediately
following Section hereof, neither Company nor any successor or assignee thereof, shall forgive, discount or otherwise discharge or credit any amount due and owing to it or them against any Account
Receivable, and shall use commercially reasonable efforts to pursue the collection of, and shall not discriminate against, the Accounts Receivable, it being understood that neither Buyer nor Company
shall be required to incur any incremental cost in pursuing the collection of any Account Receivable. 

        2.6  Retained Liabilities.    Effective as of the Closing Date, (A) the Majority Sellers shall, jointly and
severally, assume and agree to satisfy any and all amounts that become due and payable following the Closing Date with respect to any Pre-Closing Liability attributable to any period
ending on or before December 31, 2002 and (B) all Sellers shall, jointly and severally, assume and agree to satisfy any and all amounts that become due and payable following the Closing
Date with respect to any Pre-Closing Liability attributable to any period from and after January 1, 2003 to the Closing Date, it being understood that in either case, except in the
case of a Shortfall Amount (as hereinafter defined), no Seller shall be required to make any cash payment to Company hereunder; rather, Company shall use any and all proceeds it receives in respect of
the Accounts Receivable during each Monthly Period to pay and satisfy in full any and all Pre-Closing Liabilities that are due and payable during such Monthly Period, with the net amount
thereof (the "Net Amount") being remitted to the Majority Sellers and/or all Sellers, as the case may be, in accordance with Section 2.5 above;  provided,
however, the parties hereto hereby agree that prior to determining the Net Amount as contemplated hereby, any and all Pre-Closing
Liabilities incurred in each Monthly Period shall be reduced by any expenses of Company in respect of such Monthly Period that any Seller, Company or any Affiliate thereof pre-paid prior
to the
Closing Date as set forth on Schedule 2.6 hereto (the "Pre-Paid Expense Credits"), it being understood that such pre-paid
expenses shall not include any pre-paid expenses referenced in Section 2.4 hereof. Within twenty (20) calendar days following
the end of each Monthly Period, and together with the Net Amount to be paid by Company pursuant to Section 2.5 above, Company shall deliver to
all Sellers a notice (the "Notice") setting forth all Accounts Receivable received and all Pre-Closing Liabilities paid by Company during such Monthly Period and all Pre-Paid
Expenses Credits attributable to such Monthly Period, such Notice to include evidence of each Account Receivable received and each Pre-Closing Liability paid during such Monthly Period
and, in the case of any Pre-Closing Liability which relates to a product purchased or a service rendered to Company during such period, such Notice shall also attach a copy of the invoice
from the seller or service provider thereof; provided, however, Buyer and Company hereby acknowledge and
agree that the payment obligations of each Seller with respect to the Pre-Closing Liabilities as contemplated by the immediately 

9

 

preceding sentence shall not include any amounts that may accrue from time to time as interest, penalty or other form of liquidated damages pursuant to the terms of any contract, invoice, purchase
order or other agreement relating to such Pre-Closing Liability to the extent such interest, penalty or other form of liquidated damages has accrued or become due and owing by Company due
to the failure of Buyer, Company or any Affiliate thereof to timely process and pay any invoice related thereto in accordance with the terms thereof. In the event that the aggregate
Pre-Closing Liabilities (as reduced by the Pre-Paid Expense Credits, if any) are greater than the aggregate Accounts Receivable during any Monthly Period (the "Shortfall
Amount"), as set forth in the Notice delivered by Company to Sellers pursuant to the terms hereof, then all Sellers, jointly and severally, agree to pay to Company such Shortfall Amount, such payment
to be made within five (5) business days following receipt of the Notice, by wire transfer of immediately available funds to the account or accounts designated by Company to Sellers in the
Notice or by such other method as Sellers and Company shall mutually agree. Notwithstanding the foregoing, all of Sellers' and Company's obligations under Sections
2.5 and 2.6 shall cease at the end of the True-Up Period. 

        2.7  Certain Leases.  

         2.7.1  Promptly following the Closing, Buyer shall replace the 10-year treasury bill which serves as collateral (the
"Current Collateral") under the letter of credit used as a security deposit for the Referenced Property, in such form as may be agreed between the landlord thereof and Buyer, and Buyer shall deliver
or direct the landlord to deliver to Sellers the Current Collateral. Promptly following the Closing, Parent agrees to (i) guarantee any and all amounts to be paid by Company with respect to the
lease, construction, equipment purchases and other related build-out of the Referenced Property and (ii) use all commercially reasonable efforts to cause the landlord thereof to
release the existing guarantee of Millennium Financial Services, Inc. 

        2.7.2  Promptly following the Closing, Parent agrees to (i) guarantee any and all amounts to be paid to
vendors under the terms of the equipment leases set forth on Schedule 2.7.2 and (ii) use all commercially reasonable efforts to cause the
vendor to release any Seller or Sellers who, as of the date hereof, are guarantors thereunder. 

        2.7.3  From and after the Closing Date, Millennium Financial Services, Inc. hereby agrees and
acknowledges that Company shall be entitled to continue to occupy the 6,115 rentable square feet on the 6th Floor of the property located at 70 East 55th Street, New York,
New York (the "East 55th Street Property") on the same terms and conditions as Company is occupying the East 55th Street Property as of the date hereof and otherwise subject to the terms and
conditions set forth in the primary lease and sublease relating thereto and any reasonable agreements Millennium Financial Services, Inc. may enter into with the landlord following the date
hereof in connection with an extension of the term thereof. In connection therewith, within three (3) business days following the end of each calendar month following the Closing Date, and
provided Company continues to occupy the East 55th Property as contemplated hereby, Company shall, and Buyer shall cause Company to, pay over to, and reimburse Millennium Financial
Services, Inc. for, any and all rent payments Millennium Financial Services, Inc. shall make to the sub-landlord and/or landlord of the East 55th Property pursuant to the
terms of the sublease and primary lease relating thereto and any agreements Millennium Financial Services, Inc. may enter into with the landlord following the date hereof in connection with an
extension of the term thereof. 

        2.7.4  If, and in the event that, Company, Buyer or Parent should suffer any loss, damage, cost, liability or
expense (including reasonable attorneys' fees) arising from or in connection with the expiration of the sublease and primary lease with respect to the East 55th Property which is set forth in
paragraph 3 of Section 3.3 of the Disclosure Schedule (collectively, the "East 55th Street Lease"), prior to the date upon which its
facilities at the Referenced Property become available and appropriate for occupancy, including, but not limited to, reasonable expenses of moving 

10

 

furniture or equipment to a location (other than the Referenced Property) other than the East 55th Property then, anything herein to the contrary notwithstanding, but subject to the immediately
following sentence hereof, Sellers do hereby indemnify and hold Company, Buyer and Parent harmless from and against any and all losses, damages, costs, liabilities or expenses arising therefrom.
Notwithstanding the foregoing, in no event shall Sellers be obligated to indemnify Company, Buyer or Parent or otherwise be liable to Company, Buyer or Parent for any cost, expense or other liability,
that is attributable to any additional and reasonable amounts Company, Buyer or Parent may be required to pay as additional or holdover rent as a result of Company occupying the East 55th Property
following the expiration of the East 55th Street Lease whether pursuant to the terms thereof or pursuant to the terms of any other agreement Company (or Millennium Financial Services, Inc., on
Company's behalf) may enter into with the landlord or sub-landlord of the East 55th Street Property (the "Landlord"). In furtherance of the foregoing, Buyer, Parent and following the
Closing, Company, hereby agree and acknowledge that Sellers shall have the exclusive right and sole authority to enter into discussions and negotiations with the Landlord regarding an extension or
other mutually agreeable arrangement with respect to Company's continued occupancy of the East 55th Street Property and Buyer, Parent and following the Closing, Company, agree not to interfere with or
otherwise attempt to enter into negotiations or discussions with the Landlord regarding the subject matter covered by this Section 2.7.4. 

 
 

ARTICLE III
  
    REPRESENTATIONS AND WARRANTIES OF SELLERS    
  

        Except as set forth in the disclosure schedule (the "Disclosure Schedule") attached hereto, Sellers, jointly and severally, represent and warrant to Buyer and
Parent, as of the date hereof and as of the
Closing Date, as applicable, as to themselves, Company and all Affiliates of Company, including, without limitation, Millennium Financial Services, Inc. and Omni Partnership
Services, Inc., insofar as such entities' operations relate to the assets or operation of the Business, as follows: 

        3.1  Authorization of Transactions.    Company and Sellers have full power, authority and legal capacity to execute
and deliver this Agreement and each of the Sellers Ancillary Documents and to perform their obligations under the terms hereof and thereof. The execution and delivery of this Agreement and each of the
Sellers Ancillary Documents and the performance of all of the obligations of Sellers and Company under the terms hereof and thereof have been duly authorized by all Company action, if applicable,
necessary to authorize execution, delivery and performance of this Agreement and the Transactions. This Agreement and the Sellers Ancillary Documents constitute, or upon execution (assuming due
execution and delivery by Buyer and Parent) will constitute, valid and binding obligations of Sellers and Company, enforceable against them in accordance with their respective terms, except as the
enforceability thereof may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting the enforceability of contractual obligations
and creditor's rights generally and by the application of equitable principles by courts of competent jurisdiction, sitting at law or in equity. 

        3.2  Membership Interests.

        3.2.1  There are one hundred (100) Membership Interests, constituting all of the Membership Interests,
issued and outstanding. All of the Membership Interests have been duly authorized and validly issued and are entitled to the benefits of Section 609(a) of the New York Limited Liability Company
Law. 

        3.2.2  Each Seller is the lawful, beneficial and record owner of its Membership Interests and has the full
right, power and authority to vote, sell, convey, transfer and deliver the Membership Interests it owns pursuant to this Agreement. The delivery of the certificates representing the Membership
Interests pursuant to this Agreement will transfer to Buyer legal and valid title 

11

 

thereto, free and clear of all Encumbrances (other than Encumbrances existing or arising under any federal or state securities laws). 

        3.2.3  There are no outstanding subscriptions, options, warrants, rights, convertible securities or other
Contracts of any character obligating Company to issue or repurchase any Membership Interests or otherwise relating to the issued or unissued Membership Interests of Company. 

        3.3  No Conflicts, Violations or Breaches.    The execution and delivery of this Agreement and each of the Sellers
Ancillary Documents by Sellers and by Company, the performance by Sellers and Company of their respective obligations hereunder and thereunder, and the consummation of the Transactions contemplated
hereby and the compliance with the terms hereof and thereof (a) do not conflict with or
contravene any (i) provisions of Company's articles of organization or operating agreement or (ii) judgment, order, decree, rule, regulation, statute or other law or restriction of any
court, government or governmental agency to which Sellers or Company are, or their respective properties or assets are, subject or by which Sellers or Company are, or their respective properties or
assets are, bound; (b) except as set forth in Section 3.3 of the Disclosure Schedule, do not conflict with, contravene, result in a breach
of any terms of, or constitute a default under, any provision of any Contract to which Sellers or Company are a party or by which any of their respective properties or assets are bound;
(c) will not result in the creation of any restriction or Encumbrance on the properties or assets of Company, other than restrictions and Encumbrances created under the Ancillary Documents;
(d) does not violate any law, judgment, order, decree, statute, ordinance, rule or regulation applicable to Sellers or Company, or any permit, license or approval of any Governmental Authority;
or (e) except as set forth in Section 3.3 of the Disclosure Schedule, do not require any notice to, or consent, approval, order or
authorization of, or the registration, declaration or filing with, any Person. 

        3.4  Organization and Qualification.

        3.4.1  Company is a limited liability company duly organized, validly existing and in good standing under the
laws of the State of New York and is duly qualified to conduct business in the State of New York, and in the states set forth in Section 3.4.1 of
the Disclosure Schedule. 

        3.4.2  Company has no direct or indirect equity interest in any Person, other than investments which constitute
cash or cash equivalents. 

        3.4.3  Company has all requisite power and authority to own, lease and operate its properties and to carry on
the Business as now being conducted, wherever located. 

        3.5  Company Documents.    Sellers have delivered to Buyer true and complete copies of the articles of organization
and the operating agreement of Company. Company is not in violation of any of the provisions of its articles of organization or operating agreement. Except as set forth in  Section 3.5 of the
Disclosure Schedule, the membership interest transfer records of Company are true and complete and reflect all issuances and
transfers of all of the Membership Interests of Company to date. Except as set forth in Section 3.5 of the Disclosure Schedule, the records of
the meetings of the members of Company since its formation accurately reflect all material Company actions and proceedings to date. 

        3.6  Financial Statements.  

         3.6.1  Included as Section 3.6 of the Disclosure Schedule are Company's audited
financial statements for the nine months ended September 30, 2002 (the "Audit Date"). Sellers warrant that (i) such audited financial statements and (ii) the audited financial
statements for the years ending December 31, 2001 and December 31, 2000, have been prepared in accordance with generally accepted accounting principles
(except as otherwise noted in the notes thereto) from the books and records of Company and present accurately and fairly in all material respects the financial position of Company as of the date
specified therein. 

12

 

        3.6.2  Sellers warrant that the Updated Financial Statements delivered by Sellers to Buyer pursuant to  Section 5.2.7.7 hereof, have been prepared from
the books and records of Company in accordance with generally accepted accounting principles
(except as otherwise noted in the notes thereto) and present accurately and fairly in all material respects the financial position of Company as of the date specified therein, and the results of
operation of Company for the periods covered thereby. 

        3.6.3  Sellers acknowledge that, following the Closing, the financial statements of Company will be included in
various filings and reports made by Parent to the Securities and Exchange Commission (the "SEC"), including in a Form 8-K to be filed by Parent with the SEC promptly following the
consummation of the Transactions contemplated hereby. 

        3.7  Absence of Certain Developments.    Except as set forth in  Section 3.7 of the Disclosure Schedule, since the Audit Date, there
has not been: 

        3.7.1  any material adverse change in the condition, financial or otherwise, of the assets, liabilities, rights
or Business of Company; 

        3.7.2  any sale, lease, transfer or assignment of any assets, tangible or intangible, of Company, other than in
the ordinary course of business; 

        3.7.3  any material damage, destruction or property loss, whether or not covered by insurance, affecting
adversely the properties or Business of Company; 

        3.7.4  any declaration, setting aside or payment of any distribution with respect to the Membership Interests or
any redemption, purchase or other acquisition of any such Membership Interests; 

        3.7.5  any mortgage or pledge of, or subjection to any lien, charge, security interest or other Encumbrance on,
any of the assets, tangible or intangible, of Company, except for liens for current Taxes and other liens arising in the ordinary course of business; 

        3.7.6  any incurrence of indebtedness or liability or assumption of obligations by Company, other than in the
ordinary course of business; 

        3.7.7  any cancellation or compromise by Company of any debt or claim, except for adjustments made in the
ordinary course of business which, in the aggregate, are not material; 

        3.7.8  any waiver or release by Company of any right of any material value; 

        3.7.9  any sale, assignment, transfer or grant by Company of any of its rights to any Intellectual Property,
other than in the ordinary course of business; 

        3.7.10  any arrangement, agreement or undertaking entered into with any employee of Company that is not
terminable on thirty (30) days or less notice without cost or liability (including, without limitation, any payment of or promise to pay any bonus or special compensation), or that increases
the compensation or benefits due, or to become due, to any employee, officer or member of Company, other than in the ordinary course of business; 

        3.7.11  any amendment made, or authorized, to Company's articles of organization or operating agreement; 

        3.7.12  any issuance, sale or other disposition by Company of any Membership Interests or other equity
securities, or any grant of any option, warrant or other right to purchase or obtain (including upon conversion or exercise), Membership Interests or other equity securities; 

        3.7.13  any loan from or other transaction with any officer, director or member of Company giving rise to any
claim or right of any such person against Company or any loan to any officer, 

13

 

director, member or other employee giving rise to any claim or right of Company against any such person; 

        3.7.14  any acceleration, termination, modification or cancellation, or, to the knowledge of Sellers, threat
thereof, by any party, to any Contract to which Company is a party or by which it is bound so as to affect adversely the properties or Business of Company; 

        3.7.15  entry by Company into any other transaction or commitment that is not in the ordinary course of
business; or 

        3.7.16  any Contract made or authorized to do any of the foregoing. 

        3.8  Assets of Company.    Company has good and valid title to all
of the assets used in the Business, free and clear of all Encumbrances, and no other party has any rights or claims to possession of any of the assets of the Business. None of the assets are subject
to any option, contract, arrangement or understanding that would restrict Sellers' or Company's ability to complete the Transactions as contemplated herein. Millennium Financial Services, Inc.
has transferred to Company all the assets that it had owned prior to the date of this Agreement utilized by Company in the operation of the Business as of the date hereof. All of the assets used by
Company in its Business are owned by Company, other than assets subject to leases, licenses or similar arrangements included in the list of Contracts in  Section 3.9 of the Disclosure Schedule. The
assets of the Business (whether owned, leased or licensed) constitute all the material assets
necessary to operate the Business immediately following the Closing substantially as currently conducted by Company as of the date hereof. Except as contemplated in  Section 2.4.5 of this Agreement,
all retainers and similar deposit payments made by customers of Company, are held by Company, and shall be
retained by Company, as of the Closing Date, in accordance with their terms. Company has never engaged in any business other than the Business. 

        3.9  Contracts.    Set forth in Section 3.9 of the Disclosure
Schedule is a list containing the parties, the name and the date of each and every material contract and material commitment to which Company is a party and which relates to the Business, including
but not limited to the following (collectively, the "Contracts"): 

        3.9.1  All labor contracts or collective bargaining agreements, if any; 

        3.9.2  All agreements pursuant to which Company provides its goods and services to its customers, in conjunction
with its conduct of the Business, including any ancillary agreements between Company and professional advisers of such customer, or other party; 

        3.9.3  All orders or other actions of any court or Governmental Authority necessary or appropriate for the
conduct of the Business; 

        3.9.4  All material distribution, service, license, sales, agency or advertising contracts; 

        3.9.5  All promissory notes, loans, agreements, indentures, evidences of indebtedness or other instruments
providing for the lending of money, whether as borrower, lender or guarantor; 

        3.9.6  All contracts containing covenants limiting the freedom of Company to engage in the Business or compete
with any Person or operate at any location with respect to the Business; 

        3.9.7  All joint venture or partnership agreements or joint development or similar agreements; 

        3.9.8  All agreements, contracts or other arrangements with any Affiliate of Company; 

        3.9.9  All license, option or other agreements relating in whole or in part to the Intellectual Property
described herein (including any license or other agreement under which Company is licensee or licensor of such Intellectual Property); 

14

 

        3.9.10  All mortgages, pledges, security agreements, deeds of trust or other instruments granting a lien or
other Encumbrance upon any of the assets utilized in the Business; and 

        3.9.11  Any exclusive retainer agreement or arrangement with attorneys, accountants, actuaries, appraisers,
investment bankers or other professional advisors related to the Business. 

Sellers
have delivered to Buyer a true and correct copy of each Contract identified in Section 3.9 of the Disclosure Schedule. Each Contract
described in Section 3.9 of the Disclosure Schedule (a) is a valid and binding obligation of Company enforceable against Company according
to the terms thereof, except as the enforceability thereof may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting the
enforceability of contractual obligations and creditor's rights generally and by the application of equitable principles by courts of competent jurisdiction, sitting at law or in equity; (b) is
now in full force and effect; (c) will not be adversely affected, as to its validity and enforceability, by Company, as a result of the Closing and the completion of the Transactions
contemplated by this Agreement; (d) has not been repudiated in whole or in part by any party to such agreement; and (e) to the knowledge of Sellers, is not now the subject of any
dispute, oral amendment, waiver or modification or agreement for delayed payment. Company is not and, to the knowledge of Sellers, no other party to any Contract set forth in  Section 3.9 of the
Disclosure Schedule is, in material breach or material default thereunder nor, to the knowledge of Sellers, has any event
occurred that, after the giving of notice, the passage of time or both, would constitute a material breach of or a material default under any such Contract by any party thereto. No customer, supplier
or
vendor of the Business has given any notice or made any threat or otherwise revealed an intent to cancel, modify or otherwise terminate its relationship with Company. 

        3.10 Pre-Bill.    Since the Audit Date, Company has not pre-billed or received prepayment
for products to be sold, services to be rendered, or expenses to be incurred in connection with the Business subsequent to the Closing Date, except in the ordinary course of business and consistent
with Company's prior practices, and as reflected on the Updated Financial Statements. 

        3.11 Absence of Undisclosed Liabilities.    Company has no liability or obligation whatsoever, accrued, absolute,
contingent or otherwise, except (i) as disclosed in Section 3.11 of the Disclosure Schedule or (ii) to the extent reserved for or
reflected on the Updated Financial Statements or (iii) for those liabilities or obligations that have been incurred or accrued in the ordinary course of business since December 31, 2002. 

        3.12 Taxes and Tax Returns.  

         3.12.1  Company has (a) filed all federal, state, county, local and foreign income, use, excise, property, sales, employment,
business activity and other Tax Returns, required to be filed on or before the date of this Agreement, (b) filed no extension of time, which is presently in effect, for filing any such return,
and (c) paid all Taxes, assessments, governmental charges and withholding deposits with respect to all returns for periods from Company's inception through the date hereof, or has made adequate
provisions for such taxes on the Updated Financial Statements. Company has made adequate provision in accordance with generally accepted accounting principles on the Updated Financial Statements for
all accrued and unpaid Taxes, assessments, governmental charges and withholding deposits, and all interest and penalties thereon for all periods through and including the date hereof. No deficiency
exists for unpaid Taxes, assessments, governmental charges or withholding deposits of any type that are not shown on the Updated Financial Statements. Company is not a party to any pending or
threatened, action or proceeding for assessment or collection of Taxes and no claim for assessment or collection of Taxes has been asserted against it. 

        3.12.2  No claim has been made against Company by any taxing authority in any jurisdiction that Company has
failed to file a return or pay the Tax claimed to be due. Company has withheld 

15

 

and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to employees, members, creditors, independent contractors or other third parties. There are no Tax
liens on any of Company's properties or assets, except statutory liens for Taxes not yet delinquent. Company has not granted any extension of the limitation period applicable to any Tax claims. 

        3.13 No Encumbrances.    Company owns all of its assets free and clear of any Encumbrances. 

        3.14 Intellectual Property.    Section 3.14 of the Disclosure Schedule contains a true and complete list of
all registered Intellectual Property used in the conduct of the Business by Company. Company has legal ownership of all Intellectual Property, free and clear of any Encumbrances or the contractual
right to use the Intellectual Property pursuant to licenses set forth in Section 3.14 of the Disclosure Schedule, except (a) liens for
current Taxes not yet due and (b) liens, if any, reflected on the Updated Financial Statements. Company has not licensed or sublicensed to any third party the use of any Intellectual Property
rights of Company. 

        3.15 Infringements.    To the knowledge of Sellers, Company has not violated or infringed upon any patent,
copyright, trademark, service mark, trade name or trade secret of any Person, and Company is not involved in unfair competition against any other Person nor has Company violated the terms of any
agreement limiting Company's, or, to the knowledge of Sellers, any of its employees' or agents', ability to compete against any Person. Sellers are not aware of any infringement or violation by a
third party of any interest in or right owned by Company with respect to any of the Intellectual Property. The consummation of the Transactions will not result in the loss or impairment of any of the
Intellectual Property rights. 

        3.16 Software.    Set forth in Section 3.16 of the
Disclosure Schedule is a list of all computer software used in connection with the Business and either owned by Company or licensed by Company from third parties (the "Software"). Except as set forth
in Section 3.16 of the Disclosure Schedule, Company has sufficient title and rights, by ownership or license, to use the Software to conduct the
Business in the manner conducted by Company as of the Closing Date. Company has sufficient rights in that portion of the Software that is included in the assets of Company, as owner or as licensee
thereof, such that Company shall have, subsequent to the Closing, good and valid title to the Software that is owned by Company and will hold a valid license, duly enforceable in accordance with its
terms, with respect to the Software that is licensed by Company as licensee. The consummation of the Transactions will not cause a breach or default under any license for the Software. 

        3.17 Accounts Receivable.    The Accounts Receivable recorded on the books of Company are valid and bona fide and
represent sales actually made or services actually performed during the ordinary course of business. No Account Receivable has been released by Company, in whole or in part, so as to reduce its value.
With respect to the Accounts Receivable, there are no outstanding customer credits or allowances (including allowances for bad debts) which have been authorized by Company prior to the Closing Date
except as are included in the reserves reflected in the books of account of Company and such credits or allowances granted by Company in the ordinary course of business consistent with past practice. 

        3.18 Employee Relations; Independent Contractor Relationships.    Set forth in  Section 3.18 of the Disclosure Schedule is a list of all of
Company's employees and independent contractor relationships and each person's
current compensation, primary work location and job title. Except as set forth in Section 3.18 of the Disclosure Schedule, Company has no
contract or arrangement, oral or written, whereunder (a) it has any obligation to its officers, directors or employees, or their beneficiaries, other than obligations to make current
compensation payments terminable on notice of thirty (30) days or less and obligations under the Plans (as defined below) or (b) any such person named above owes money to
Company. To the knowledge of Sellers, no member, director, officer or employee of Company owns, directly or indirectly, any material interest in, or is a director, officer, employee or 

16

 

agent of, any customer, supplier or competitor of Company or is subject to any noncompetition or confidentiality agreement with any third party. Company is not a party to, affected by, threatened
with or in danger of being a party to, or affected by, any labor dispute or union organizing effort. To the knowledge of Sellers, Company is not currently a party to any material dispute with any
employee with respect to any aspect of his or her employment relationship. Sellers are not aware of any event, condition, occurrence or other circumstance which has occurred or is threatened, which
would prevent any employee, including Jacobs and Gerber, from performing, subsequent to the Closing, their business activities and functions as they are being performed on the date hereof and, in the
case of Gerber and Jacobs, as contemplated by their respective Employment Agreements. 

        3.19 Employee Benefits.    Sellers have listed in  Section 3.19 of the Disclosure Schedule and have furnished to Buyer true and complete
copies of the following Company plans, which include plans
that were previously owned or sponsored by Millennium Financial Services, Inc. (individually a "Plan" and collectively the "Plans"): 

        3.19.1  all nonqualified deferred or incentive compensation or retirement Plans and arrangements; 

        3.19.2  all qualified retirement Plans or arrangements; 

        3.19.3  all other employee compensation, severance or termination pay or welfare benefit Plans, programs or
arrangements, including cafeteria Plans qualified under Section 125 of the Code; and 

        3.19.4  all related trusts, insurance contracts or other funding arrangements maintained, established or
contributed to by it or to which it is a party or otherwise is bound. 

        Except
as set forth in Section 3.19 of the Disclosure Schedule, Company does not maintain or contribute to any funded or unfunded
medical, health or life insurance Plan or arrangement for retirees or terminated employees, other than coverage mandated by Law. 

        Company
does not contribute to, nor does it have an obligation to make any payment or contribution to a multiemployer plan, as that term is defined in Section 3(37) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and it has no actual or potential liability under Section 4201 of ERISA for any complete or partial withdrawal from a
multiemployer plan. 

        Except
as set forth in Section 3.19 of the Disclosure Schedule, Company does not
maintain, contribute to or have any liability with respect to any employee pension benefit plan (as defined in Section 3(2) of ERISA) which meets the requirements of a qualified Plan under
Section 401(a) of the Code. With respect to each Plan listed in Section 3.19 of the Disclosure Schedule and except as otherwise noted in  Section 3.19 of the Disclosure Schedule, Seller has furnished to Buyer true and complete copies
of (i) the Plan documents, the summary plan descriptions, all benefits booklets, other employee communication materials and all related trust agreements, insurance contracts or other funding
arrangements, (ii) the latest financial statements for all funded Plans, (iii) the latest actuarial valuations, if any, and (iv) all documents filed with the Internal Revenue
Service or the Department of Labor since Company's inception. 

        Except
where the failure to so comply will not result in the imposition of any material liability on Company or any of its employees and except as set forth in  Section 3.19 of the Disclosure Schedule,
(A) all Plans and related trusts listed in  Section 3.19 of the Disclosure Schedule and maintained by the Company materially comply in form and in operation with all requirements of ERISA,
the Code and other applicable law, and (B) all required reports or descriptions with respect to such Plans required by applicable Law have been filed or distributed. 

17

 

        All
required contributions (including all employer contributions and employee salary reduction contributions), premiums and other payments due for the current Plan year, or any Plan year
ending on or before the Closing Date, under each Plan listed in Section 3.19 of the Disclosure Schedule have been made or properly accrued on the
Updated Financial Statements. 

        No
applications for rulings, determination letters, advisory opinions or prohibited transaction exemptions are currently pending before the IRS, the Department of Labor or the Pension
Benefit Guaranty Corporation ("PBGC") with respect to any such Plans or arrangements or any related trusts. None of such Plans or arrangements, any related trusts or the trustees of any related trusts
is the subject of, or a party to, any lawsuit, arbitration or other proceeding concerning any benefit claim or other benefit-related matter relating to Company or its employees (other than routine
claims in the ordinary course of business), and to the knowledge of Sellers, none are threatened, and Sellers have no knowledge of any facts which would give rise to, or could reasonably be expected
to give rise to, any such actions, suits, proceedings or claims. To Seller's knowledge, there have been no prohibited transactions as described in Section 406 of ERISA or as defined in
Section 4975 of the Code with respect to any Plan. 

        Except
as set forth in Section 3.19 of the Disclosure Schedule, the execution of this Agreement and the consummation of the
Transactions contemplated hereby will not (either alone or upon the occurrence of any additional or subsequent events provided for herein) constitute an event under any Plan or individual agreement
that will or may result in any payment (whether of severance pay or otherwise), acceleration of vesting or increase in benefits with respect to any employee; and no payment which will be or may be
made by Company to any employee in connection with the consummation of the
Transactions contemplated hereby will or could be characterized as an "excess parachute payment" with the meaning of Section 280G(b)(1) of the Code. 

        3.20 Overtime, Back Wages, Vacation and Minimum Wages.    Except as set forth in  Section 3.20 of the Disclosure Schedule, no Person has any claim against Company (whether by law,
employment agreement, or otherwise) on account of or for (a) overtime pay, other than overtime pay for the current payroll period; (b) wages or salary for any period other than the
current payroll period; (c) vacation, time off or pay in lieu of vacation or time off, or sick pay, except in each case, to the extent earned in the normal course of employment; or
(d) any violation of any statute, ordinance or regulation relating to minimum wage or maximum hours of work. 

        3.21 Discrimination, Occupational Safety and Other Statutes and Regulations.    No Person has made any claim, or,
to the knowledge of Sellers, has any basis to make any claim or bring an action or proceeding against Company, arising out of any statute, ordinance or regulation relating to discrimination in
employment or employment practices or occupational safety or health standards. 

        3.22 Labor Disputes, Unfair Labor Practices.    There is not pending, nor, to the knowledge of Sellers, threatened,
any labor dispute, strike or work stoppage which affects or which may affect the Business of Company or which may interfere with the continued operation of Company. 

        3.23 Books and Records.    Except as set forth in  Section 3.23 of the Disclosure Schedule, the books of account, files and other business
records of Company relating to the Business are complete
and correct and fairly reflect in all material respects the conduct and condition of the Business as of the Closing Date and have been maintained in accordance with good business practices. 

        3.24 Bonuses and Commissions.    Except as set forth in  Section 3.24 of the Disclosure Schedule, there are not any bonuses or commissions
attributable to periods of service prior to Closing with
respect to any of Company's employees that will remain due but unpaid at Closing. 

        3.25 Guarantees.    Company is not a guarantor of, or otherwise liable for, any indebtedness of any other Person. 

18

  

        3.26 Insurance.    Set forth in Section 3.26 of the
Disclosure Schedule is an accurate list of all policies of insurance covering Company or its assets and all pending claims against, or actions related to such policies. Sellers have delivered to Buyer
true, accurate and complete copies of Company's insurance binders. Company maintains policies of fire and casualty, liability, worker's compensation, health, professional liability, crime and other
forms of insurance, with all such insurance being maintained with financially sound and reputable insurers. Such policies have coverage limits, deductibles and policy provisions, and insure such risks
and losses, as are reasonable for the Business conducted by Company. Such policies are in full force and effect and will be in full force and effect through the Closing Date. Neither Sellers nor
Company has received notice of any pending or threatened termination of any of such policies or any premium increases for the current policy period with respect to any of such policies and to the
knowledge of Sellers, no condition or circumstance exists that would result in such termination or increase. Company has never been refused any insurance coverage for which it has made application. 

        3.27 Litigation.    There is no Litigation pending or, to the knowledge of Sellers, threatened against Sellers or
Company, which, if adversely determined, would prevent, hinder or delay the consummation of the Transactions, nor to the knowledge of Sellers is there any basis for any such action. Neither Sellers,
Company nor, to the knowledge of Sellers, any of Company's employees, is permanently or temporarily enjoined or barred by any order of a Governmental Authority from engaging in or continuing any
conduct or practice related to the conduct of the Business or required by any order of a Governmental Authority to take any action of any kind with respect to the Business. 

        3.28 Real Property.  

         3.28.1  Company does not own and has never owned any real property. 

        3.28.2  Set forth in Section 3.28.2 of the Disclosure
Schedule is a complete list of all real property leases to which Company is a party and all real property leases under which Company, although not a party thereto, occupies a portion of the space of
the property subject thereto (collectively, the "Office Leases"). A true and complete copy of each Office Lease has been delivered to Buyer prior to the date hereof. Neither Company nor any Affiliate
party thereto is in default in any payment of rent under any Office Lease and neither Company nor any Affiliate party thereto is in default in the performance or observance of any of the other terms
or covenants or conditions to be kept, observed or performed by it under any Office Lease, and neither Company nor the Affiliate party thereto has been informed in writing by the landlord under any
Office Lease (each an "Owner") that it is in default with respect to any term or covenant or condition thereunder. 

        3.28.3  Each Office Lease is in full force and effect and constitutes a legal, valid and binding obligation of
Company or the Affiliate party thereto and, to the knowledge of Sellers, the Owner thereunder, subject, in each case, to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting the enforceability of contractual obligations and creditor's rights generally and by the application of equitable principles by courts of competent jurisdiction,
sitting at law or in equity. Company has good right under each Office Lease to enjoy peaceful and undisturbed possession and occupancy of the leased office space subject to such Office Lease, and such
space is suitable for the continued conduct of the Business as presently conducted. To the knowledge of Sellers, no Owner under any Office Lease is in default of any terms or conditions, including any
service, repair or maintenance obligations under any such Office Lease. 

        3.29 Environmental Matters.    There are no outstanding or, to the knowledge of Sellers, threatened actions,
claims, proceedings, determinations or judgments by any party, including but not limited to any Governmental Authority, against or involving Company or involving Company's predecessors in interest in
any manner arising under any national, international, federal, state, local or 

19

 

other environmental, health or safety law, regulation, order or requirement, including without limitation, the Comprehensive Environmental Response, Compensation and Liability Act (collectively, the
"Environmental Laws"), requiring the remediation or removal of an existing condition or substance. Company has not received any notice of, nor do the Sellers have knowledge of, any outstanding or
threatened orders, determinations or notices of violation issued by any Governmental Authority administering any Environmental Law in connection with ownership of or operation by Company of the
Business which have not been complied with or resolved to the satisfaction of such Governmental Authority. 

        3.30 Licenses and Permits.    Company holds in its name all material federal, state, local and other governmental
licenses, permits, approvals and authorizations required to conduct the Business as presently conducted as of the date hereof, and to own, lease and occupy its properties and assets as presently,
owned, leased and occupied by Company as of the date hereof. 

        3.31 Transaction Consents.    Except as set forth in  Section 3.31 of the Disclosure Schedule, no registrations, filings, applications,
notices, consents, approvals, orders, qualifications, waivers,
authorizations or other actions of any kind are required to be made, filed, given, obtained or taken by Sellers or Company with, to or from any Governmental Authority, any landlord or
sub-landlord under any of the Office Leases or any other Person in order to enable Buyer to purchase the Membership Interests pursuant to this Agreement, and to conduct the operations of
the Business subsequent to the Closing as the Business is being conducted on the date hereof, that have not already been made, filed, given, obtained or taken by Sellers or Company. Company's customer
contracts, the court orders relating to Company's customer contracts and the disinterested party affidavits are not and will not be adversely affected with respect to their enforceability and
effectiveness by the sale of the Business to Buyer; provided, however, neither Company nor any Seller is
making any representation or warranty with respect to the enforceability and effectiveness of the court orders and the related disinterested party affidavits to the extent the enforceability and
effectiveness thereof is impacted due to (i) the failure of Buyer and/or Parent to timely amend, supplement or take such other action following the
Closing Date as is necessary with respect thereto to give effect to the consummation of the Transactions contemplated hereby or (ii) the fact that Buyer, Parent or an Affiliate thereof is not
disinterested from and unaffiliated with the debtor and the other interested parties to which such disinterested party affidavits relate. 

        3.32 Bank Accounts.    Set forth in Section 3.32 of the
Disclosure Schedule is a true and complete list showing (i) the name of each bank in which Company has an account, safe deposit box or depositor lock box and the names of all Persons authorized
to draw thereon or to have access thereto, and (ii) the names of all Persons, if any, holding powers of attorney from Company. 

        3.33 Broker's Fees.    No broker, finder or investment banker is entitled to any fee, to be paid by Sellers or
Company, in connection with this Agreement. 

        3.34 Completeness and Accuracy of Disclosure.    No representation or warranty by Sellers in this Agreement, nor
any (i) certificate delivered upon the Closing pursuant to the terms hereof, (ii) Disclosure Schedule or (iii) written response (as such written responses have been supplemented,
updated and amended from time to time) to Buyer's due diligence request list prepared in connection with the consummation of the Transactions, a copy of which is set forth in  Section 3.34 of the
Disclosure Schedule (the "Due Diligence Request List"), contains any untrue statement of a material fact or omits to state a
material fact necessary to make any statement herein or therein, in light of the circumstances made, not misleading in any material respect, taken as a whole;  provided, however, neither Company nor any Seller is making any representation or warranty with respect
to (i) the contents of any document listed in the Disclosure Schedule or the contents of any document (not including any document prepared by Sellers or their agents as a written response as
described in (iii) above to the Due Diligence Request List) that was otherwise provided to Buyer and Parent or 

20

 

(ii) any projections, related financial data (other than the financial statements referenced in Section 3.6 hereof) or other forward
looking statements (financial or otherwise) that Sellers, Company, and/or their respective agents may have furnished to Buyer and Parent in connection with the Transactions contemplated hereby.
Notwithstanding the foregoing, the provisos contained clauses (i) and (ii) immediately above, in no way limit, modify or otherwise qualify any of the representations and warranties made
by Sellers elsewhere in Article III of this Agreement, including without limitation the representations and warranties made by Sellers in Section 3.9 hereof. 

        3.35 Receipt of EPIQ Stock.  

         3.35.1  Each Seller acknowledges that he or she (i) has received from Parent copies of its annual report on
Form 10-K for the fiscal year ended December 31, 2001 (the "2001 Form 10-K"), its quarterly reports on Form 10-Q for the fiscal quarters
ended March 31, 2002, June 30, 2002, and September 30, 2002 (collectively, the "2002 Quarterly Reports"), each current report on Form 8-K filed by Parent with the SEC
in calendar year 2002 and the definitive proxy statement for the 2002 Annual Meeting of Shareholders of Parent, (all of which are collectively referred to as the "SEC Filings"); (ii) has
reviewed
each of the SEC Filings and has had access to all other filings by Parent with the SEC via the SEC's EDGAR system; (iii) has been afforded the opportunity to ask the questions he or she deemed
necessary of, and to receive answers from, representatives of Parent concerning Parent and the EPIQ Stock; and (iv) has been afforded the opportunity to request such additional information
concerning Parent and the EPIQ Stock as Parent can acquire without unreasonable effort or expense. 

        3.35.2    Each Seller represents that he or she has sufficient knowledge and experience in business and financial
matters in general, and investments such as the EPIQ Stock in particular, to enable such Seller to evaluate the risks involved in an investment in the EPIQ Stock. 

        3.35.3    Each Seller is purchasing the EPIQ Stock solely for its own account for investment purposes only, and
not with a view to, or in connection with, any distribution, resale, pledging, fractionalization, subdivision or other disposition thereof in violation of the Securities Act. 

        3.35.4    Each Seller acknowledges that the shares of EPIQ Stock to be issued to such Seller as a portion of the
Stock Purchase Price will be not be registered under the Securities Act, will be issued to such Seller pursuant to Regulation D under the Securities Act or another applicable exemption from
registration under the Securities Act, and that the EPIQ Stock is being issued to such Seller in reliance upon its representations and warranties contained herein and will carry the restrictive legend
on each stock certificate representing the EPIQ Stock that is set forth in Section 2.3.3.1 hereof. Each Seller further acknowledges that, in
addition to the transfer restrictions imposed by the Securities Act, the transfer of the shares of EPIQ Stock will be subject to further restrictions on transfer as set forth in  Section 2.3.3.2 of
this Agreement. 

 
 

ARTICLE IV
  
    REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT    
  

        Buyer and Parent hereby, jointly and severally, represent and warrant to each Seller, as of the date hereof and as of the Closing Date, as follows: 

        4.1  Organization.    Parent is a corporation duly organized, validly existing and in good standing under the laws
of the State of Missouri, Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of New York. Buyer is qualified to do business in New York and Parent
is duly qualified to conduct business in the State of Missouri, and in each of the states set forth on Schedule 4.1 hereto, Buyer and Parent have
all requisite power and authority to own, lease and operate their respective properties and to carry on their respective businesses as now being conducted, wherever located. 

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        4.2  Ownership of Buyer.    The authorized capital stock of Buyer consists of 20,000 shares of common stock, par
value $1.00 per share. All of the issued and outstanding shares of capital stock of Buyer are owned by Parent. 

        4.3  Authorization of Transactions.    Buyer and Parent each have full power, authority and legal capacity to
execute and deliver this Agreement and each of the Buyer Ancillary Documents and to perform all of their respective obligations under the terms hereof and thereof. Buyer's and Parent's execution and
delivery of this Agreement and each of the Buyer Ancillary Documents and their performance of all their obligations under the terms hereof and thereof have been duly authorized by all corporate action
on the part of Buyer and Parent necessary to authorize the execution, delivery and performance by each such entity of this Agreement, the Buyer Ancillary Documents and the Transactions. This Agreement
and each of the Buyer Ancillary Documents constitutes a legally valid and binding obligation of Buyer and Parent, enforceable against such entity according to its terms, except as the enforceability
thereof may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting the enforceability of contractual obligations and creditor's
rights generally and by the application of equitable principles by courts of competent jurisdiction, sitting at law or in equity. 

        4.4  Capitalization of Parent.    The authorized capital stock of Parent consists of: (i) 50,000,000 shares
of Parent Common Stock, $0.01 par value per share and (ii) 2,000,000 shares of preferred stock, $1.00 par value per share (the "Parent Preferred Stock"). (A) 16,541,104 shares of Parent
Common Stock were issued and outstanding, as of January 17, 2003, all of which are duly authorized, validly issued, fully paid and nonassessable and not subject to preemptive rights,
(B) no shares of Parent Preferred Stock are issued and outstanding, as of the date hereof, and (C) 2,777,801 shares of Parent Common Stock, as of January 27, 2003, were reserved
for issuance upon the exercise of outstanding stock options under Parent's 1995 Stock Option Plan (the "Option Plan"), as amended. Except in the case of employee stock options granted in the ordinary
course of business pursuant to the Option Plan, neither Parent nor any of its subsidiaries has outstanding any stock or other securities convertible into or exchangeable for any shares of capital
stock of Parent, any rights to subscribe for or to purchase or any options for the purchase of, or any agreements providing for the issuance (contingent or otherwise) of, or any calls, commitments or
claims of any other character relating to the issuance of, any capital stock of Parent, or any stock or securities convertible into or exchangeable for any capital stock of Parent. There are no
shareholders agreements, voting trusts or other agreements or understandings to which Parent is a party or by which it is bound relating to the voting, registration or disposition of any shares of the
capital stock of Parent. 

        4.5  Financial Statements and SEC Documents.  

         4.5.1  Parent has, as further set forth on Schedule 4.5.1, filed all forms,
reports and documents (including all exhibits thereto) required to be filed with the SEC since the date of Parent's initial public offering (collectively, the "SEC Reports"). The SEC Reports
(i) at the time filed, complied in all material respects with the requirements of the Securities Act, or the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as the case may
be, and (ii) did not at the time they were filed contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. None of Parent's subsidiaries is required to file any statements or
reports with the SEC pursuant to Sections 13(a) or 15(d) of the Exchange Act. 

        4.5.2  Included in the 2001 Form 10-K, are true and complete copies of the consolidated
audited balance sheet of Parent as of December 31, 2000 and 2001, and the related consolidated audited statements of operations, shareholders' equity and cash flows for the years ended
December 31, 1999, 2000 and 2001 (collectively, the "Audited Financial Statements"), accompanied 

22

 

by the report of Baird, Kurtz & Dobson, Inc. with respect to the year ended December 31, 1999 and by the report of Deloitte & Touche LLP with respect to the years ended
December 31, 2000 and 2001. Included in the 2002 Quarterly Reports are the requisite unaudited consolidated balance sheets of Parent and the related unaudited consolidated statements of income
and statements of cash flows of Parent for the relevant quarterly period to which such 2002 Quarterly Report relates (collectively, the "Unaudited Financial Statements" and together with the "Audited
Financial Statements" and any other financial statements of Parent contained in any SEC Report, the "Financial Statements"). The Financial Statements were prepared in accordance with generally
accepted accounting principles in the United States, applied consistently throughout the periods involved (except, in the case of the Audited Financial Statements, as may be indicated in the notes
thereto), and as of their respective dates, fairly present, in all material respects, the consolidated financial position (and changes in financial position) of Parent and the results of its
operations as of the time and for the periods indicated therein, except that any unaudited financial statements included therein are subject to normal year-end adjustments and do not
contain notes. 

        4.6    No Conflicts, Violations or Breaches.    The execution and delivery of this Agreement and each of
the Buyer Ancillary Documents by Parent and Buyer, the performance of Parent's and Buyer's obligations hereunder and thereunder, and the consummation of the Transactions contemplated hereby and the
compliance with the terms hereof and thereof (a) do not conflict with or contravene any (i) provisions of Buyer's or Parent's articles of incorporation or bylaws or (ii) judgment,
order, decree, rule, regulation, statute or other law or restriction of any court, government or governmental agency to which Buyer or Parent are, or their respective properties or assets are, subject
or by which Buyer or Parent are, or their respective properties or assets are, bound; (b) do not conflict with, contravene, result in a breach of any terms of, or constitute a default under,
any provision of any material contract to which Buyer or Parent is a party or by which any of their respective properties or assets are bound; (c) will not result in the creation of any
restriction or Encumbrance on the properties or assets of Buyer or Parent, other than restrictions and Encumbrances created under the Ancillary Documents or which, in the aggregate, will not result in
a material diminution of the value or utility of such properties and assets; and (d) does not violate any law, judgment, order, decree, statute, ordinance, rule or regulation applicable to
Buyer or Parent, or any permit, license or approval of any Governmental Authority (except that under no circumstances in this Agreement are Buyer and Parent representing and warranting to Sellers that
Company's customer contracts, the court orders relating to Company's customer contracts and the disinterested party affidavits are not and will not be adversely affected by the sale of the Membership
Interests to Buyer). 

        4.7  Litigation.    There is no Litigation pending or, the knowledge of Parent or Buyer, threatened against Parent,
Buyer or any subsidiary thereof, which, if adversely determined, would prevent, hinder or
materially delay the consummation of the Transactions, nor to the knowledge of Buyer or Parent is there any reasonable basis for any such action. 

        4.8  Absence of Undisclosed Liabilities.    Parent has no liability or obligation whatsoever, accrued, absolute,
contingent or otherwise, except for those liabilities and obligations which (i) are reserved for or reflected in the consolidated financial statements contained in the SEC Filings and
(ii) individually or in the aggregate would not have a material adverse effect. 

        4.9  No Material Adverse Changes.    Since December 31, 2001, except as disclosed in the SEC Reports filed
subsequent to that date, there has not been any material adverse change in the business, properties, assets, condition (financial or otherwise), prospects or operating results of Parent. 

        4.10 Broker's Fees.    No broker, finder or investment banker is entitled to any fee, to be paid by Buyer or
Parent, in connection with this Agreement. 

23

 

 
 

ARTICLE V
  
    CONDITIONS TO CLOSING    
  

        5.1  Conditions Precedent to Each Party's Obligation to Close.    The obligations of each of the parties to
consummate the Transactions are subject to satisfaction, at or before the Closing Date, of the following conditions: 

        5.1.1  No order of any court or governmental agency of competent jurisdiction shall have been issued and in
force as of the Closing Date and no legal action, proceeding or investigation by any Governmental Authority or other Person shall be pending on the Closing Date before any court or administrative
body, or threatened against any party which seeks to restrain, enjoin or otherwise prevent the consummation of the Transactions or to recover damages or obtain any other relief from any party to this
Agreement, or their agents, as the result of the consummation of the Transactions or which has or would, if successful, become a lien on any of the assets of Company; and 

        5.1.2  There shall have been no law, statute, rule or regulation, domestic or foreign, enacted or promulgated
which would make consummation of the Transactions illegal or would otherwise have a material adverse effect upon Company or its conduct of the Business. 

        5.2  Conditions Precedent to Buyer's Obligations to Close.    The obligations of Buyer to purchase and pay for the
Membership Interests and to consummate the other Transactions contemplated by this Agreement on the Closing Date, shall be subject to the performance by each Seller of its agreements theretofore to be
performed hereunder and to the satisfaction, prior thereto or concurrently therewith, of the following further conditions: 

        5.2.1  Performance of Agreements. Sellers and Company shall have materially complied
with and satisfied all the covenants and agreements contained herein and in any of the Ancillary Documents, and materially performed all acts required of Sellers and Company herein and therein. 

        5.2.2  Accuracy of Representations and Warranties. The representations and warranties of
Sellers set forth in Article III hereof or in any Seller Ancillary Document shall have been, and shall be, true and correct in all material
respects when made and as of the Closing Date and any additions or modifications to the Disclosure Schedule shall have been approved by Buyer. 

        5.2.3  Opinion of Counsel to Seller. Buyer shall have received the opinion of Willkie
Farr & Gallagher, counsel to Sellers, dated as of the Closing Date, the form of which is attached as Exhibit 5.2.3 hereto. 

        5.2.4  Opinion of Counsel to Company. Buyer shall have received the opinion of
Dorsey & Whitney, LLP, counsel to Company, dated as of the Closing Date, the form of which is attached as Exhibit 5.2.4 hereto. 

        5.2.5  Material Adverse Change. There shall not have occurred any material adverse
change in the assets, Business, condition (financial or otherwise), prospects or operations of Company, or the ability of Company to conduct the Business as presently conducted, since the Audit Date. 

        5.2.6  Consents. All consents, waivers, authorizations and approvals of governmental or
regulatory agencies, if any, required for the consummation of the Transactions and to conduct the operations of the Business subsequent to the Closing Date as the Business is being conducted on the
date hereof, shall have been obtained and shall be in full force and effect on the Closing Date and all consents, waivers, authorizations and approvals of any other Person, including without
limitation, any required consents of the landlords under any Office Leases, required in connection with the execution, delivery and performance of this Agreement and set forth on  Schedule 5.2.6
hereof shall have been obtained and shall be in full force and effect on the Closing Date and 

24

 

evidence thereof reasonably satisfactory to Buyer and Parent shall have been provided to each of them. 

        5.2.7  Deliveries. On the Closing Date, and in addition to the deliverables contemplated
above, Sellers (except in the case of Section 5.2.7.1 below which shall be delivered by each Seller) shall have delivered to Buyer the following: 

        5.2.7.1  a certificate stating that the conditions set forth in Sections
5.1 and 5.2 have been fully satisfied; 

        5.2.7.2  certified copies of the resolutions duly adopted by Company's members approving the execution, delivery
and performance of this Agreement, the Seller Ancillary Documents and the Transactions; 

        5.2.7.3  a good standing certificate of Company from the jurisdiction of its incorporation dated not earlier
than ten (10) days prior to the Closing Date; 

        5.2.7.4  a copy of its articles of organization certified by the Secretary of State of New York; 

        5.2.7.5  originals or copies of each of the Seller Ancillary Documents, duly executed by Sellers; 

        5.2.7.6  a copy, on electronic media form, of any and all Software owned by Company, including the source code
and object code, in machine readable form, and the data base of Company with respect to the Business and the operation thereof; 

        5.2.7.7  the Updated Financial Statements (a draft of which is to be provided to Buyer prior to Closing); and 

        5.2.7.8  such other documents as Buyer may reasonably request in connection with the Transactions. 

        5.2.8  Other Matters. All proceedings to be taken by Sellers in connection with the
consummation of the Transactions on the Closing Date and all documents required to be delivered by Sellers in connection with the Transactions, will be reasonably satisfactory in form and substance to
Buyer. 

        5.3  Conditions Precedent to Sellers' Obligations to Close.    The obligation of each Seller to deliver the
Membership Interest to Buyer and to consummate the other Transactions contemplated by this Agreement, shall be subject to the performance by Buyer and Parent of their agreements to be performed
hereunder and to the satisfaction, prior thereto or concurrently therewith, of the following conditions: 

        5.3.1  Performance of Agreements. Buyer and Parent shall have materially complied with
and satisfied all the covenants and agreements contained herein and in any of the Ancillary Documents, and materially performed all acts required of Buyer and Parent herein and therein. 

        5.3.2  Opinion of Counsel to Buyer and Parent. Sellers shall have received the opinion
of Seigfreid, Bingham, Levy, Selzer & Gee, counsel to Buyer and Parent, dated as of the Closing Date, the form of which is attached as  Exhibit 5.3.2 hereto. 

        5.3.3  Accuracy of Representations and Warranties. The representations and warranties of
Buyer and Parent set forth in Article IV hereof or in any Buyer Ancillary Document shall have been, and shall be, true and correct in all
material respects when made and as of the Closing Date. 

        5.3.4  Consents. All consents, waivers, authorizations and approvals of governmental or
regulatory agencies, if any, required for the consummation of the Transactions shall have been 

25

 

obtained and shall be in full force and effect on the Closing Date and all consents, waivers, authorizations and approvals of any other Person required in connection with the execution, delivery and
performance of this Agreement and set forth on Schedule 5.3.4 hereof, if any, shall have been obtained and shall be in full force and effect on
the Closing Date and evidence thereof reasonably satisfactory to Sellers shall have been provided to each of them. 

        5.3.5  Deliveries. On the Closing Date, in addition to the deliverables contemplated
above and the payments and deliverables contemplated by Section 2.1 hereof, Buyer and Parent shall each have delivered to Sellers: 

        5.3.5.1  an officer's certificate stating that the conditions set forth in Sections
5.1 and 5.3 have been fully satisfied; 

        5.3.5.2  originals or copies of each of the Buyer Ancillary Documents, duly executed by Buyer or Parent, as the
case may be; and 

        5.3.5.3  such other documents as Sellers may reasonably request in connection with the Transactions. 

        5.3.6  Other Matters. All proceedings to be taken by Buyer and Parent, as applicable, in
connection with the consummation of the Transactions on the Closing Date and all documents required to be delivered by Buyer and Parent, as applicable, in connection therewith will be reasonably
satisfactory in form and substance to Sellers. 

 
 

ARTICLE VI
  
    ADDITIONAL AGREEMENTS AND COVENANTS    
  

        Simultaneously with the execution and delivery of this Agreement, the agreements referenced in this Article VI will be executed and delivered. 

        6.1  Agreements for Key Employees.    Buyer, Parent and Sellers acknowledge that each of Chazanoff, Jacobs, Simms
and Gerber are integral to the transition of the Business to the ownership of Buyer and to the successful operation of the Business after the Closing and therefore, Buyer, Parent and Sellers agree as
follows: 

        6.1.1  Employment Agreements. At Closing, Parent and Company shall have entered into the Jacobs Employment
Agreement and the Gerber Employment Agreement with Jacobs and Gerber, respectively, pursuant to which Jacobs and Gerber have each agreed to be employed by Company conditioned and beginning on the
Closing, and ending five (5) years following the Closing Date. 

        6.1.2  Consulting Agreements. At Closing, Parent and Company shall have entered into the Chazanoff Consulting
Agreement and the Simms Consulting Agreement with Chazanoff and Simms, respectively, pursuant to which Chazanoff and Simms have each agreed to serve as a consultant to the Company for a period of two
(2) years and for a period of six (6) months, respectively, conditioned and beginning on the Closing. 

        6.2  Key Man Life Insurance.    Following the Closing, Jacobs and Gerber shall cooperate and provide such assistance
as Buyer, Company or Parent may reasonably request from time to time in connection with Buyer's efforts to obtain policies of key person insurance insuring the lives of Jacobs and Gerber, at the
expense of Buyer, with such policy limits and containing such terms and conditions as are acceptable to Buyer in its sole discretion. 

        6.3  Certain Tax Covenants. 

        6.3.1  Buyer, Parent and Sellers agree to report the purchase and sale of the Membership Interests in accordance
with Revenue Ruling 99-6 and to negotiate in good faith to enter into an agreement on or before the Closing Date concerning the allocation of the Purchase Price and any 

26

 

relevant liabilities of Company among the assets of Company (the "Allocation"). Buyer, Parent and Sellers further agree to act in accordance with the Allocation, if any, in any Tax Returns or similar
filings. 

        6.3.2  Buyer, Parent and Sellers agree to apply (i) a discount to the stated value of EPIQ Stock included
in the Stock Purchase Price that is restricted for one year of 18% and (ii) a discount to the stated value of EPIQ Stock included in the Stock Purchase Price that is restricted for two years of
25%, as it relates to the Allocation described in Section 6.3.1, which Buyer, Parent and Sellers acknowledge is intended to reflect the impairment to the value of the EPIQ Stock of the various
transfer and other restrictions imposed on Sellers with respect to such stock under this Agreement. 

        6.4  Updated Financial Statement.    On or before February 28, 2003, Sellers shall deliver to Buyer the
audited financial statements of Company for the year ended December 31, 2002. 

        6.5  January 31, 2003 Balance Sheet.    On or before February 28, 2003, Sellers, at Sellers' expense,
will cause Hays & Company to prepare and deliver to Company an unaudited balance sheet of Company for the period ended January 31, 2003, and Company shall provide Sellers and
Hays & Company reasonable access to the books and records of Company in order to prepare such balance sheet. 

 
 

ARTICLE VII
  
    INDEMNIFICATION; SURVIVAL    
  

        7.1  Indemnification of Buyer.    Subject to the terms and conditions of this Article VII, from and after the
Closing Date, Chazanoff, Simms and Jacobs (collectively, the "Majority Sellers" and each a "Majority Seller"), jointly and severally, shall indemnify and hold harmless Buyer, its Affiliates (including
Company), and each of their respective directors, members, officers, employees, agents, successors and assigns (collectively, the "Buyer Indemnified Parties") from and against any and all damages,
losses, deficiencies, liabilities, obligations, commitments, costs or expenses incurred by any of them (including legal and other expenses reasonably incurred in investigating and defending against
the same) (the
foregoing being individually and collectively referred to as "Losses") arising out of or resulting from (i) the breach of any representation or warranty made by Sellers in this Agreement or any
Disclosure Schedule hereto; (ii) any failure by Sellers to comply with any of their covenants or agreements set forth in this Agreement; and (iii) any liability of any kind, whether
absolute, accrued, contingent or otherwise, arising out of the conduct of the Business prior to the Closing Date; provided,  however, no Buyer Indemnified
Party shall be entitled to seek indemnification from any Majority Seller pursuant to the terms of this Article VII
in respect of any liability arising out of the conduct of the Business prior to the Closing Date to the extent such liability was paid or otherwise satisfied pursuant to  Section 2.5 and
Section 2.6 hereof. Payment by any Majority Seller to any Buyer
Indemnified Party pursuant to the terms hereof shall be limited to the amount of any Losses that remain after deducting therefrom any Tax benefit to the Buyer Indemnified Parties and any insurance
proceeds and any indemnity or contribution or similar payment actually recovered by the Buyer Indemnified Parties from any third party with respect to the claim for which indemnification is sought
hereunder. A Tax benefit will be considered to be recognized by the Buyer Indemnified Parties in the Tax period in which the indemnity payment occurs, and the amount of the Tax benefit shall be
determined by the Buyer Indemnified Party's actual tax rate, after any deduction or other allowances reportable with respect to any payment hereunder, at the time such indemnity payment is made. 

27

  

        7.2  Indemnification of Sellers.    Subject to the terms and conditions of this Article VII, from and after
the Closing Date, Buyer and Parent shall, jointly and severally, indemnify and hold harmless Sellers and their respective successors and assigns (collectively, the "Seller Indemnified Parties")
against any and all Losses arising out of or resulting from (i) the breach of any representation or warranty made by Buyer or Parent in this Agreement or any Schedule hereto; (ii) any
failure by Buyer or Parent to comply with any of their covenants or agreements set forth in this Agreement; and (iii) any liability of any kind, whether absolute, accrued, contingent or
otherwise, arising out of the conduct of the Business after the Closing Date. Payments by Buyer and/or Parent to any Seller Indemnified Party pursuant to the terms hereof shall be limited to the
amount of any Losses that remain after deducting therefrom any Tax benefit to the Seller Indemnified Parties and any insurance proceeds and any indemnity or contribution or similar payment actually
recovered by the Seller Indemnified Parties from any third party with respect to the claim for which the indemnification is sought hereunder. A Tax benefit will be considered to be recognized by the
Seller Indemnified Parties in the Tax period in which the indemnity payment occurs, and the amount of the Tax benefit shall be determined by the Seller Indemnified Party's actual tax rate, after any
deduction or other allowances reportable with respect to any payment hereunder, at the time such indemnity payment is made. 

        7.3  Indemnification for Third Party Claims.    Promptly after the receipt by any party hereto of notice of any
claim, action, suit or proceeding by any Person who is not a party to this Agreement (collectively, an "Action") which is subject to indemnification hereunder, such party (the "Indemnified Party")
shall give prompt written notice of such Action to the party from whom indemnification is claimed (the "Indemnifying Party"); provided,  however, that
failure to give such notice shall not affect the indemnification provided hereunder except to the extent the Indemnifying Party shall have
been actually prejudiced as a result of such failure. At the sole expense and liability of the Indemnifying Party and within a reasonable time after the giving of notice of the Action by the
Indemnified Party as provided above, the Indemnifying Party will: (a) notify the Indemnified Party in writing of the Indemnifying Party's intention to assume the defense of the Action, and
(b) retain legal counsel reasonably satisfactory to the Indemnified Party to conduct the defense of the Action. The Indemnified Party and the Indemnifying Party will cooperate in defending,
compromising or settling any Action in any manner that such party reasonably may request, and the Indemnifying Party shall reimburse each Indemnified Party for all its reasonable
out-of-pocket expenses incurred in connection therewith; provided, however, that
neither an Indemnified Party nor an Indemnifying Party shall be required pursuant to this Section 7.3 to disclose any privileged information or
any attorney work product. If the Indemnifying Party so assumes the defense of any Action, the Indemnified Party will have the right to employ separate counsel and to participate in (but not control)
the defense, compromise, or settlement thereof, but the fees and expenses of such counsel will be the sole expense of the Indemnified Party. If the Indemnified Party determines in good faith that
joint representation is inappropriate based on an actual or likely conflict of interest, the fees and expenses of any separate counsel employed by the Indemnified Party will be the expense of the
Indemnifying Party. No Indemnified Party will settle or compromise any Action for which it is entitled to indemnification hereunder without the prior written consent of the Indemnifying Party, unless
the Indemnifying Party has failed, after reasonable notice thereof, to undertake control of the Action in the manner provided above in this  Section 7.3. No
Indemnifying Party will settle or compromise any Action in which any relief other than the payment of money damages is sought against any Indemnified Party, unless the Indemnified Party consents in
writing to the compromise or settlement, which consent shall not be unreasonably withheld or delayed. 

        7.4  Limitations on Indemnification.    Notwithstanding anything contained in this Agreement to the contrary, no
claim may be made against any Majority Seller for indemnification pursuant to Section 7.1 hereof unless the aggregate Losses for which the Buyer
Indemnified Parties are entitled to indemnity under said Section 7.1 shall exceed Two Hundred Fifty Thousand Dollars ($250,000), it being
understood that once such threshold amount is exceeded, the Buyer Indemnified Parties shall be entitled to receive the aggregate of all such claims from the first dollar of Losses. Notwithstanding 

28

 

anything contained in this Agreement to the contrary, in no event will the aggregate liability of the Majority Sellers (taken as a whole, not individually) under  Section 7.1 or Buyer and Parent
(taken as a whole, not individually) under Section 7.2
exceed Nineteen Million Eight Hundred Thousand Dollars ($19,800,000), which represents thirty percent (30%) of the Purchase Price. 

        7.5  Survival.    Except as otherwise set forth below, all of the representations and warranties contained in this
Agreement and all indemnification obligations of the Majority Sellers, Parent and Buyer under Section 7.1 and  Section 7.2, respectively, with
respect to such representations and warranties and all indemnification obligations of the Majority Sellers with
respect to any liability arising out of the conduct of the Business prior to the Closing Date as set forth in Section 7.1(iii) hereof, shall
survive for a period of eighteen (18) months after the Closing Date and shall thereupon expire and terminate, unless a claim for indemnification (whether or not fixed as to liability or
liquidated as to amount) shall be made with respect thereto prior to the end of such eighteen (18) month period, in which case the claim (and only the claim) made with respect to such
representation or warranty or with respect to such pre-Closing liability, and the associated right to indemnification with respect to such claim, shall survive until such claim is
satisfied, settled or dismissed. Notwithstanding the foregoing, any representations and warranties relating to Tax matters, and all associated rights of indemnification, shall survive until the
expiration of the applicable statutory period of limitations for such matters (giving effect to any waivers of extensions thereof), if later. 

        7.6  Exclusive Remedy.    Sellers, Buyer and Parent each hereby acknowledges and agrees that (except in the case of
fraud or breach of any covenant set forth in Article VIII hereof, in which case each such Person reserves any and all rights and remedies available to it) its sole and exclusive remedy with
respect to any and all claims relating to the subject matter of this Agreement and the Transactions contemplated hereby shall be pursuant to the indemnification provisions set forth in this
Article VII. In furtherance of the foregoing, Sellers, Buyer and Parent each hereby waive, to the fullest extent permitted under applicable Law, any and all rights, claims and causes of action
it may have against any other party hereto or any of its Affiliates, arising under or based upon any Law (including, without limitation, any such rights, claims or causes of action arising under or
based upon common law or otherwise) with respect to any and all claims relating to the subject matter of this Agreement and the Transactions contemplated hereby. 

 
 

ARTICLE VIII
  
    COVENANTS    
  

        8.1  Non-Competition; Non-Solicitation.  

         8.1.1  Each Seller agrees that during the Non-Competition Period (defined below) each Seller will not, either directly or
indirectly, in any capacity, either separately, jointly, or in association with others, as an officer, director, consultant, agent, employee, owner, partner, or stockholder, engage or have a financial
interest in any business that offers claims agent services for bankruptcy cases or is involved in the claims, technology, or administrative services business in the bankruptcy, insolvency, mass tort,
class action or asbestos industry or any other business that competes with Buyer's or Company's then current or planned business, determined as of the date of the termination of employment with Buyer
or Company (excepting only the ownership of not more than five percent (5%) of the outstanding securities of any class listed on any national securities exchange or the National Association of
Securities Dealers, Inc. Automated Quotation System) within the United States, it being agreed that the Business currently operates all across the United States. The
"Non-Competition Period" is a period of ten (10) years from the Closing Date. Each Seller further agrees that during the Non-Competition Period each Seller will not,
either directly or indirectly, in any capacity, either separately, jointly, or in association with others, solicit or otherwise contact any customers or prospects of Buyer or Company if such
solicitation or contact 

29

 

is for the purpose of selling products or services that satisfy the same general needs as any products or services that Buyer or Company has available for sale to its customers or prospects. 

        8.1.2  Each party to this Agreement agrees that during the Non-Competition Period and at all times
thereafter each such party will refrain from making any disparaging remarks about any other party hereto, or to the extent applicable, any of such party's officers, directors, employees, agents,
representatives, affiliates, products, or services. It is understood and agreed, however, that this section is not intended to limit the right of any party hereto to give nonmalicious and truthful
testimony should any party hereto testify or be subpoenaed to give testimony in any proceeding or other action before any Governmental Authority. 

        8.1.3  Each Seller represents that such Seller's experience and capabilities are such that the provisions hereof
will not prevent such Seller from earning a livelihood. It is understood and agreed that in view of the Transactions contemplated by this Agreement and the Ancillary Documents, irreparable injury
would befall Buyer, Parent and Company should any one or more of Sellers violate the terms of this Article VIII. Each Seller hereby acknowledges that the period of restriction and geographic
area of restriction imposed by the provisions of this Article VIII are fair and reasonable and are reasonably
required for the protection of Buyer, Parent and Company following the Closing Date, and expressly waives any objection to or defense in respect to the geographic area of restriction and/or period of
restriction on competition provided for in this Agreement and agrees that said restriction may be enforced by Buyer, Parent or Company following the Closing Date in an action for injunction and/or in
an action for monetary damages. In the event that any of the provisions of this Article VIII relating to the geographic area of restriction or the period of restriction shall be determined by a
court of competent jurisdiction to exceed the maximum area or period of time that such court would deem enforceable, the geographic area of restriction and the period of restriction shall, for the
purposes of this Article VIII, be reduced to the maximum area or period that such court would deem valid and enforceable. In the event any party hereto brings an action for monetary or
injunctive relief based upon a violation of the terms of this Article VIII, then in addition to whatever other damages it may recover in connection with such action, if any, the prevailing
party in such action shall be entitled to be reimbursed by the non-prevailing party for its costs, including reasonable attorneys fees incurred by it in such action. 

        8.2  Non-Solicitation of Customers.    Each Seller acknowledges and agrees that the names and addresses
of Buyer's and Company's customers, including, specifically Persons to whom, or on behalf of whom Company or Buyer provide their respective services, and all attorneys, accountants, consultants and
other advisors retained by such customers, or involved, directly or indirectly, with Company or Buyer, in the provision of their respective services (the "Prohibited Parties") constitute Confidential
Information of Company, and that any Seller's unauthorized use or disclosure of any such Confidential Information for purposes of competing with Company or Buyer would constitute unfair competition.
Accordingly, each Seller agrees during the Non-Competition Period, each Seller shall not, directly or indirectly, either on behalf of himself or herself or for any other Person, do any of
the following acts: (a) solicit, serve or cater to, in a business relationship which is competitive with Company's or Buyer's, any of the Prohibited Parties whom a Seller solicited, served or
catered to on behalf of Company or Buyer or with whom a Seller became acquainted during the course of his employment or consultation with Company or Buyer, whether prior to or subsequent to the
Closing Date; (b) divert or attempt to divert any of Company's or Buyer's customers or any of the business or patronage of such Prohibited Parties; or (c) call upon, influence or attempt
to influence any of the Prohibited Parties to transfer their business or patronage from Company or Buyer to him or her or to any other Person engaged in a business similar to Company's or Buyer's
business. 

        8.3  Non-Solicitation of Company Personnel.    Each Seller acknowledges and agrees that the officers,
directors, consultants, employees and agents of Buyer, Parent and Company are valuable assets 

30

 

in the operation of Buyer's, Parent's and Company's businesses. Accordingly, each Seller agrees that during the Non-Competition Period, each Seller shall not, either directly or
indirectly, either on his or her own behalf or on behalf of any Person other than Buyer, Parent or Company, hire or attempt to hire, solicit, induce, recruit or encourage any officers, directors,
consultants, employees or agents of Buyer, Parent or Company to terminate their employment, consulting or agency relationship with Buyer, Parent, or Company in order to work for any other Person. 

        8.4  Confidentiality.    Upon the Closing, the terms of the letter agreement dated as of October 1, 2002, as
amended December 13, 2002 between Sellers and Parent regarding the confidentiality of certain information shall terminate and cease to be of any further force or effect. From and after the
Closing
Date, each Seller agrees (i) to treat and hold as confidential (and not disclose or provide access to any Person), in a manner consistent with its practices prior to the date hereof, all
information concerning Company and the Business that was previously treated by Sellers as confidential, (ii) in the event that any Seller becomes compelled by Law to disclose any such
information, to provide Parent with prompt written notice of such requirement so that Parent may seek a protective order or other remedy and (iii) in the event that such protective order or
other remedy is not obtained or is not available furnish only that portion of such confidential information that is legally required to be provided and use all reasonable efforts to obtain assurances
that confidential treatment will be accorded such information; provided, however, that this sentence
shall not apply to any information that, at the time of disclosure, is available publicly and was not disclosed in breach of this Section 8.4 by any Seller. 

        8.5  Public Disclosure.    Except for the disclosure and release of the press release which is attached as  Exhibit 8.5 hereto and
except as required by any Governmental Authority or pursuant to other applicable law, no party hereto shall make any
public disclosure of this Agreement or the Transactions contemplated hereby. 

        8.6  Access and Information.    Buyer shall not allow Company, unless otherwise consented to in writing by Sellers,
for a period of three (3) years following the Closing Date, to destroy or otherwise dispose of any of the books and records of Company in the possession of Company on the Closing Date without
first offering to surrender such books and records to Sellers by written notice to Sellers at least fifteen (15) days prior to the proposed date of such disposition or destruction. Company
(i) shall allow Sellers and their counsel, accountants and other representatives access to such books and records upon reasonable request and during normal business hours for the purpose of
examining and, at Sellers' expense, copying such books and records, and (ii) shall make available personnel of Company, to the extent reasonably required by Sellers in connection with the
preparation of any required Tax returns or in connection with the preparation for, or conduct or settlement of, any Litigation by or against Sellers arising out of Sellers' ownership of Company or
Company's conduct of the Business prior to the Closing; provided that (A) the foregoing shall be done in a manner so as not to unreasonably interfere with the normal conduct of the Business,
and (B) Sellers shall pay Company reasonable compensation for use of such personnel pursuant to this Section 8.6. 

        8.7  Further Assurances.    At any time or from time to time after the Closing, Buyer, Parent and Sellers shall, at
the request of the other party(ies), execute and deliver such further instruments or documents and take such further action as the other party(ies) may reasonably request in order to evidence the
consummation of the Transactions. 

        8.8  Employee Benefits Matters.    As soon as practicable following the Closing Date, Sellers shall cause Millennium
Financial Services, Inc., and Company shall take all actions necessary and appropriate to implement all the agreements and undertakings contained in the Agreement Regarding Employment and
Employee Benefits, by and between Company and Millennium Financial Services, Inc., dated January 30, 2003, and listed in  Section 3.9 of the Disclosure Schedule. 

31

 

 
 

ARTICLE IX
  
    TAXES    
  

        9.1  Returns and Tax Responsibility.    Sellers shall prepare the Tax Returns of Company for all periods ending on
or prior to the Closing Date. Sellers shall timely prepare and file all such returns and timely pay for Company's account all Taxes relating to such returns. At least fifteen (15) days prior to
the filing of the returns to be filed pursuant to this Section 9.1 with respect to Company's taxable years that end on or before the Closing
Date, Sellers shall provide Buyer with copies of the returns or portions of such returns relating to Company for Buyer's review and comment. 

        9.2  Audits.    Buyer shall promptly notify Sellers in writing upon receipt by Parent, Buyer or Company of notice of
any Tax audits, any pending or threatened Tax assessments, or any requests by a taxing authority to extend the applicable statute of limitations relating to taxable periods and Taxes of Company for
which Sellers have any liability under this Agreement. Sellers shall have the right, at Sellers' cost, to control Company's interests in any Tax audit or other examination by any taxing authority, and
to contest, resolve and defend against any assessment for additional Taxes, notice of Tax deficiency or other adjustment of Taxes of, or relating to, Company for taxable periods of Company ending on
or before the Closing Date, and to employ counsel of Sellers' choice at their expense, provided that Buyer has received assurance reasonably acceptable to Buyer that Sellers will pay any liability for
indemnification hereunder resulting therefrom; and provided further that Sellers shall not settle or otherwise resolve any issue which may affect the liability for Taxes of Company for any period
ending after the Closing Date with respect to which Buyer or Company has any responsibility for payments thereof, without Buyer's consent, which consent shall not be unreasonably withheld, delayed or
conditioned. 

        9.3  Cooperation.    Buyer and Sellers shall, and Buyer shall cause Company to, provide the requesting party with
such reasonable assistance as may be requested by such requesting party, including access to such personnel, books and records as may be reasonably requested, in connection with the preparation of any
return, or any Litigation or determination relating to liability for Taxes covered by this Article IX of Company, Sellers or Buyer, for a
reasonable period of time (but not less than six (6) years after the Closing Date or until expiration of all applicable statutes of limitation, including any extension thereof of which such
Person is notified in writing, whichever is later), any records or information which may be relevant to such return, Litigation or determination. Sellers shall cooperate with Buyer and make available
to Buyer such information (including estimates when available) reasonably requested by Buyer for purposes of determining the amount of net operating loss and other carryovers of Company attributable
to taxable periods after the Closing Date. 

 
 

ARTICLE X
  
    MISCELLANEOUS    
  

        10.1   Amendment.    This Agreement may be amended by the parties at any time only by an instrument in
writing signed on behalf of each of the parties to this Agreement. 

        10.2   Arbitration.    Any controversy or claim (except claims of discrimination under any federal or
state law) arising out of or relating to this Agreement, or any Ancillary Agreement as specified in Article VI, or any breach of any of those agreements shall be decided and settled by binding
arbitration in accordance with Title 9 of the U.S. Code (United States Arbitration Act) and the Commercial Arbitration Rules of the American Arbitration Association then in effect, subject to the
limitations and restrictions set forth below. Notice of a demand for arbitration shall be filed in writing with the American Arbitration Association and copies provided to all parties against whom
claims are made. Notice of such demand shall be made promptly after such claim or dispute arises and in no event may 

32

 

the demand for arbitration be made if institution of legal or equitable proceedings arising out of such claims or dispute would be barred by the applicable statute of limitations. The place of
arbitration shall be Columbus, Ohio. The arbitrator(s) shall have the discretion to order a pre-hearing exchange of information by the parties, including, without limitation, production of
requested documents, and examination by depositions of parties. In the event that the arbitrator(s) find that any provision of this Agreement is vague or ambiguous, the parties agree that the
arbitrator(s) shall construe such provision in accordance with the intent of the parties as determined by the arbitrator(s); and the arbitrator(s) shall not disregard or eliminate any such provision.
Notwithstanding any contrary provision contained herein, any Seller, Buyer or Parent may in its sole discretion file an action with a court seeking equitable or injunctive relief to maintain the
status quo until such time as the arbitration award is rendered or the controversy is otherwise resolved. The award rendered by the arbitrator(s) may be entered and enforced in any court having
jurisdiction thereof. 

        10.3   Expenses.    Except as otherwise provided herein, all costs and expenses, including attorneys'
and auditors' fees, incurred in connection with this Agreement, the Ancillary Documents and the Transactions will be paid by the party incurring such expenses. Sellers shall be responsible,
individually, for all costs and expenses, including attorneys' fees, incurred by Company prior to the Closing Date in connection with this Agreement, the Ancillary Documents and the Transactions. 

        10.4   Notices.    All notices and other communications hereunder shall be in writing and shall be
deemed validly given if delivered personally or sent by certified mail, return receipt requested, or by facsimile, to the parties at the following addresses and facsimile numbers: 

	                        Buyer:
	

 	
 	

EPIQ Systems Acquisition, Inc.

c/o EPIQ Systems, Inc.

501 Kansas Avenue

Kansas City, Kansas 66105

Attention: Christopher E. Olofson

President and Chief Operating Officer

Facsimile: (913) 621-7281

Telephone: (913) 621-9500
	

                        Parent:
	

 	
 	

EPIQ Systems, Inc.

501 Kansas Avenue

Kansas City, Kansas 66105

Attention: Christopher E. Olofson

President and Chief Operating Officer

Facsimile: (913) 621-7281

Telephone: (913) 621-9500
	

                        With a copy to:
	

 	
 	

Seigfreid, Bingham, Levy, Selzer & Gee, P.C.

911 Main, Suite 2800

Kansas City, Missouri 64105

Attention: Robert C. Levy, Esq.

Facsimile: (816) 474-3447

Telephone: (816) 421-4460

33

 

	

                        Sellers:
	

 	
 	

Jay D. Chazanoff

41 Benedict Road

Staten Island, New York 10304
	

 	
 	

Stephen R. Simms

115 Berkley Court

Briarcliff Manor, New York 10510
	

 	
 	

Ron L. Jacobs

90 East End Avenue

New York, New York 10028
	

 	
 	

Kathleen Gerber

36 Yorktown Road

Monmouth Junction, New Jersey 08852
	

                        With a copy to:
	

 	
 	

Willkie Farr & Gallagher

The Equitable Center

787 Seventh Avenue

New York, New York 10019-6099

Attention: William H. Gump, Esq.

Facsimile: 212-728-8111

Telephone: 212-728-8000
	

                        Company:
	

 	
 	

Bankruptcy Services LLC

70 E. 55th Street

New York, New York 10022

Facsimile: 212-376-8989

Telephone: 212-376-8902
	

                        With a copy to:
	

 	
 	

Dorsey & Whitney, LLP

250 Park Avenue

New York, New York 10177

Attention: Jonathan M. Herman, Esq.

Facsimile: 212-415-9200

Telephone: 212-953-7201

or
such other address or facsimile numbers as a party shall furnish in writing in accordance with the terms hereof. Any notice delivered personally or by facsimile shall be deemed received when
delivered (provided, in the case of a notice furnished via facsimile, such notice is thereafter sent to the recipient by Federal Express or other overnight carrier) and if mailed in one of the manners
provided above, it shall be deemed received on the day after it is postmarked. 

        10.5   Governing Law.    This Agreement shall be governed by, and construed and enforced in accordance
with, the laws of the State of New York without regard to conflicts of laws principles. 

        10.6   Entire Agreement.    This Agreement and the Ancillary Documents (including the Schedules and
Exhibits attached hereto and thereto) constitute the entire agreement and understanding of the 

34

 

parties with respect to the Transactions and supersede any and all prior agreements and understandings, oral or written, relating to the subject matter hereof and thereof. 

        10.7   Headings.    The section and article headings contained in this Agreement are inserted for
convenience of reference only and shall not affect the meaning or interpretation of this Agreement. 

        10.8   Binding Effect.    This Agreement shall be binding upon and inure to the benefit of the parties,
their successors and assigns, to the extent allowed hereby. 

        10.9   Assignment.    No assignment of any rights or delegation of any obligations provided for in this
Agreement shall be made by or be binding upon any party without the prior written consent of all other parties to this Agreement, which consent may be granted or withheld in the sole discretion of the
Person or Persons whose consent is required. 

        10.10  Counterparts.    This Agreement may be executed in any number of separate counterparts, each of
which shall be deemed to be an original, but which together shall constitute one and the same instrument. 

        10.11  Knowledge of Seller, Buyer or Parent.    Whenever a representation or warranty contained in
this Agreement or any Ancillary Document refers to the knowledge of a Seller, Sellers, Buyer or Parent or to matters known to a Seller, Sellers, Buyer or Parent such reference shall mean the actual
knowledge of any such Person, after due inquiry. 

        10.12  Parent Guarantee.    Parent hereby irrevocably and unconditionally guaranties to each Seller,
as and for its own account, the prompt performance of each and all of Buyer's and Company's (to the extent such obligation is a post-Closing obligation) obligations under this Agreement,
in each case when and as the same shall become due and payable and/or performable, including without limitation, the full and prompt payment of the Closing Cash Purchase Price and the Positive
Balance, if any, at the Closing and the Contingent Cash Purchase Price and the Net Amount after the Closing Date. 

THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.  

35

   
        IN WITNESS WHEREOF, each party to this Agreement has executed or has caused this Membership Interest Purchase Agreement to be duly
executed by its duly authorized officer, as of the day and year first above written. 

	 	 	/s/  JAY D. CHAZANOFF      
JAY D. CHAZANOFF
	

 	
 	

/s/  STEPHEN R. SIMMS      
STEPHEN R. SIMMS
	

 	
 	

/s/  RON L. JACOBS      
RON L. JACOBS
	

 	
 	

/s/  KATHLEEN GERBER      
KATHLEEN GERBER

	 	 	BANKRUPTCY SERVICES LLC
	

 	
 	
By:	

/s/  RON L. JACOBS      

	 	 	Name:	Ron L. Jacobs
	 	 	Title:	Member

	 	 	EPIQ SYSTEMS ACQUISITION, INC.
	

 	
 	
By:	

/s/  CHRISTOPHER E. OLOFSON      
 Christopher E. Olofson
 President and Chief Operating Officer

	 	 	EPIQ SYSTEMS, INC.
	

 	
 	
By:	

/s/  CHRISTOPHER E. OLOFSON      
 Christopher E. Olofson
 President and Chief Operating Officer

36

QuickLinks

Exhibit 10.1

MEMBERSHIP INTEREST PURCHASE AGREEMENT

MEMBERSHIP INTEREST PURCHASE AGREEMENT

RECITALS

ARTICLE I DEFINITIONS

ARTICLE II PURCHASE AND SALE

ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLERS

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT

ARTICLE V CONDITIONS TO CLOSING

ARTICLE VI ADDITIONAL AGREEMENTS AND COVENANTS

ARTICLE VII INDEMNIFICATION; SURVIVAL

ARTICLE VIII COVENANTS

ARTICLE IX TAXES

ARTICLE X MISCELLANEOUS

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